FORM DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a)
of the Securities Exchange Act of 1934
Filed by the
Registrant þ
Filed by a Party other
than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of
the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
Allegheny Technologies Incorporated
(Name of Registrant
as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing
Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each
class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
o Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing. |
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
1000 Six PPG Place
Pittsburgh, PA
15222-5479
March 23, 2009
To our Stockholders:
We are pleased to invite you to attend the 2009 Annual Meeting
of Stockholders. The meeting will be held at 11:00 a.m.,
Eastern Time, on Thursday, May 7, 2009, in the William Penn
Ballroom, William Penn Level, Omni William Penn Hotel, 530
William Penn Place, Pittsburgh, Pennsylvania 15219. The location
is accessible to disabled persons.
This booklet includes the notice of meeting as well as the
Companys Proxy Statement. Enclosed with this booklet are
the following:
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Proxy or voting instruction card (including instructions for
telephone and Internet voting), and
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Proxy or voting instruction card return envelope (postage
pre-paid if mailed in the U.S.).
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A copy of the Companys Annual Report for the year 2008 is
also enclosed.
Your Board of Directors recommends that you vote:
(1) FOR the election of the four nominees named in this
Proxy Statement (Item A); and
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(2)
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FOR the ratification of the appointment of Ernst &
Young LLP to serve as the Companys independent auditors
for 2009 (Item B).
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This Proxy Statement also outlines many of the corporate
governance practices at ATI, discusses our compensation
practices and philosophy, and describes the Audit
Committees recommendation to the Board regarding our 2008
financial statements. We encourage you to read these materials
carefully.
We urge you to vote promptly, whether or not you expect to
attend the meeting.
If you are a stockholder of record and plan to attend the
meeting, please mark the appropriate box on the proxy card, or
enter the appropriate information by telephone or Internet, so
that we can send your admission ticket to you before the meeting.
We look forward to seeing as many of you as possible at the 2009
Annual Meeting.
Sincerely,
L. Patrick Hassey
Chairman, President and Chief Executive Officer
ALLEGHENY
TECHNOLOGIES INCORPORATED
Notice
of Annual Meeting of Stockholders
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Meeting Date: |
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Thursday, May 7, 2009 |
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Time: |
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11:00 a.m., Eastern Time |
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Place: |
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William Penn Ballroom
William Penn Level
Omni William Penn Hotel
530 William Penn Place
Pittsburgh, Pennsylvania 15219 |
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Record Date: |
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March 11, 2009 |
Agenda:
1) Election of four directors;
2) Ratification of the appointment of Ernst &
Young LLP as independent auditors for 2009; and
3) Transaction of any other business properly brought
before the meeting.
Stockholder
List
A list of stockholders entitled to vote will be available during
business hours for 10 days prior to the meeting at the
Companys executive offices, 1000 Six PPG Place,
Pittsburgh, Pennsylvania
15222-5479,
for examination by any stockholder for any legally valid
purpose. The list of stockholders also will be available for
examination at the meeting.
Admission
to the Meeting
Holders of Allegheny Technologies common stock or their
authorized representatives by proxy may attend the meeting. If
you are a stockholder of record and you plan to attend the
meeting, you may obtain an admission ticket from us by mail by
checking the box on the proxy card indicating your planned
attendance and returning the completed proxy card promptly, or
by entering the appropriate information by telephone or the
Internet. If your shares are held through an intermediary such
as a broker or a bank, you should present proof of your
ownership at the meeting. Proof of ownership could include a
proxy card from your bank or broker or a copy of your account
statement.
The approximate date of the mailing of this Proxy Statement and
proxy card, as well as a copy of ATIs 2008 Annual Report,
is March 23, 2009. For further information about Allegheny
Technologies, please visit our web site at
www.alleghenytechnologies.com.
On behalf of the Board of Directors:
Jon D. Walton
Corporate Secretary
Dated: March 23, 2009
Table
of Contents
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A-1
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YOUR
VOTE IS IMPORTANT
Please vote as soon as possible. You can help the Company
reduce expenses by voting your shares by telephone or Internet;
your proxy card or voting instruction card contains the
instructions. Or complete, sign and date your proxy card or
voting instruction card and return it as soon as possible in the
enclosed postage-paid envelope.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON MAY 7, 2009.
The proxy statement and 2008 annual report of Allegheny
Technologies Incorporated are available to review at:
http://bnymellon.mobular.net/bnymellon/ati
PROXY
STATEMENT FOR
2009 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS
AND ANSWERS
You can help the Company save money by electing to receive
future proxy statements and annual reports over the Internet
instead of by mail. See question 11 below.
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1.
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Who
is entitled to vote at the Annual Meeting?
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If you held shares of Allegheny Technologies Incorporated
(ATI or the Company) common stock, par
value $0.10 per share (Common Stock), at the close
of business on March 11, 2009, you may vote at the annual
meeting. On that day, 98,010,910 shares of our Common Stock
were outstanding. Each share is entitled to one vote.
Stockholders do not have cumulative voting rights.
In order to vote, you must either designate a proxy to vote on
your behalf or attend the meeting and vote your shares in
person. The Board of Directors (Board) requests your
proxy so that your shares will count toward a quorum and be
voted at the meeting.
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2.
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How
do I cast my vote?
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There are four different ways you may cast your vote. You may
vote by:
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telephone, using the toll-free number listed on each proxy or
voting instruction card;
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the Internet, at the address provided on each proxy or voting
instruction card;
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marking, signing, dating and mailing each proxy or voting
instruction card and returning it in the envelope provided (If
you return your signed proxy card but do not mark the boxes
showing how you wish to vote, your shares will be voted FOR the
election of the four nominees for director named in this Proxy
Statement, and FOR the ratification of the appointment of the
independent auditors); or
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attending the meeting and voting your shares in person, if you
are a stockholder of record (that is, your shares
are registered directly in your name on the Companys books
and not held in street name through a broker, bank
or other nominee).
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If you are a stockholder of record and wish to vote by telephone
or electronically through the Internet, follow the instructions
provided on the proxy card. You will need to use the individual
control number that is printed on your proxy card in order to
authenticate your ownership. The deadline for voting by
telephone or the Internet is 11:59 p.m., Eastern Time, on
May 6, 2009.
If your shares are held in street name (that is,
they are held in the name of broker, bank or other nominee), or
if your shares are held in one of the Companys savings or
retirement plans, you will receive instructions with your
materials that you must follow in order to have your shares
voted. For voting procedures for shares held in the
Companys savings or retirement plans, see question 6 below.
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3.
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How
do I revoke or change my vote?
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You may revoke your proxy or change your vote at any time before
it is voted at the meeting by:
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notifying the Corporate Secretary at the Companys
executive office;
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transmitting a proxy dated later than your prior proxy either by
mail, telephone or Internet; or
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attending the annual meeting and voting in person or by proxy
(except for shares held in street name through a
broker, bank or other nominee, or in the Companys savings
or retirement plans).
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The latest-dated, timely, properly completed proxy that you
submit, whether by mail, telephone or the Internet, will count
as your vote. If a vote has been recorded for your shares and
you submit a proxy card that is not properly signed and dated,
the previously recorded vote will stand.
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4.
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What
shares are included on the proxy or voting instruction
card?
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The shares on your proxy or voting instruction card represent
those shares registered directly in your name, those held on
account in the Companys dividend reinvestment plan and
shares held in the Companys savings or retirement plans.
If you do not cast your vote, your shares (except those held in
the Companys savings or retirement plans) will not be
voted. See question 6 for an explanation of the voting
procedures for shares in the Companys savings or
retirement plans.
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5.
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What
does it mean if I get more than one proxy or voting instruction
card?
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If your shares are registered differently and are in more than
one account, you will receive more than one card. Please
complete and return all of the proxy or voting instruction cards
you receive (or vote by telephone or the Internet all of the
shares on each of the proxy or voting instruction cards you
receive) in order to ensure that all of your shares are voted.
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6.
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How
are shares that I hold in a Company savings or retirement plan
voted?
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If you hold ATI Common Stock in one of the Companys
savings or retirement plans, you may tell the plan trustee how
to vote the shares of Common Stock allocated to your account.
You may either sign and return the voting instruction card
provided by the plan trustee or transmit your instructions by
telephone or the Internet. If you do not transmit instructions,
your plan shares will be voted as the plan administrator directs
or as otherwise provided in the plan.
The deadline for voting the shares you hold in the
Companys savings or retirement plans by telephone or the
Internet is 11:59 p.m., Eastern Time, on May 1, 2009.
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7.
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How
are shares held by a broker, bank or other nominee
voted?
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If you hold your shares of ATI Common Stock in street
name through a broker, bank or other nominee account, you
are a beneficial owner of the shares. In order to
vote your shares, you must give voting instructions to your
broker, bank or other intermediary who is the nominee
holder of your shares. The Company asks brokers, banks and
other nominee holders to obtain voting instructions from the
beneficial owners of shares that are registered in the
nominees name. Proxies that are transmitted by nominee
holders on behalf of beneficial owners will count toward a
quorum and will be voted as instructed by the nominee holder.
A majority of the outstanding shares present or represented by a
proxy at the Annual Meeting, constitutes a quorum. There must be
a quorum for business to be conducted at the Annual Meeting. You
are part of the quorum if you have voted by proxy or voting
instruction card. Abstentions, broker non-votes and votes
withheld from director nominees count as shares
present at the meeting for purposes of determining a
quorum.
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9.
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What
is the required vote for a proposal to pass?
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The director nominees receiving the highest number of votes will
be elected. Only votes for or withheld
affect the outcome. Checking the box on the proxy card that
withholds authority to vote for a nominee is the equivalent of
abstaining. Abstentions are not counted for the purpose of
election of directors.
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With respect to the ratification of the appointment of the
independent auditors (Item B), stockholders may vote in
favor of the proposal or against the proposal, or abstain from
voting. The affirmative vote of the majority of shares present
in person or by proxy and entitled to vote at the Annual Meeting
is required for approval of the proposal. A stockholder who
signs and submits a ballot or proxy is present, so
an abstention will have the same effect as a vote against the
proposal.
When a broker holding your shares in its name as a nominee does
not have discretionary authority to vote your shares on a
particular proposal and the broker does not receive voting
instructions from you, your shares are referred to as
broker non-votes with respect to that proposal.
Under New York Stock Exchange rules, a broker holding your
shares in its name as a nominee is permitted to vote your shares
in its discretion in the absence of voting instructions on the
election of directors (Item A) and the ratification of
the appointment of the independent auditors (Item B).
Because brokers have discretionary authority to vote on these
proposals in the absence of voting instructions, broker
non-votes will have no effect on the voting results with respect
to these proposals to be considered at the Annual Meeting.
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10.
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Is
my vote confidential?
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The Company maintains a policy of keeping stockholder votes
confidential.
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11.
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Can I,
in the future, receive my proxy statement and annual report over
the Internet?
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Stockholders can elect to view future Company proxy statements
and annual reports over the Internet instead of receiving paper
copies in the mail and thus can save the Company the cost of
producing and mailing these documents. Costs normally associated
with electronic access, such as usage and telephonic charges,
will be borne by you.
If you are a stockholder of record and you choose to
vote over the Internet, you can choose to receive future annual
reports and proxy statements electronically by following the
prompt on the voting page when you vote using the Internet. If
you hold your Company stock in street name (such as
through a broker, bank or other nominee account), check the
information provided by your nominee for instructions on how to
elect to view future proxy statements and annual reports over
the Internet.
Stockholders who choose to view future proxy statements and
annual reports over the Internet will receive instructions
containing the Internet address for those materials, as well as
voting instructions, approximately six weeks before future
meetings.
If you enroll to view the Companys future annual reports
and proxy statements electronically and vote over the Internet,
your enrollment will remain in effect for all future
stockholders meetings unless you cancel it. To cancel,
stockholders of record should access
www.bnymellon.com/shareowner/isd and follow the
instructions to cancel your enrollment. You should retain your
control number appearing on your enclosed proxy or voting
instruction card. If you hold your Company stock in street
name, check the information provided by your nominee
holder for instructions on how to cancel your enrollment.
If at any time you would like to receive a paper copy of the
annual report or proxy statement, please write to the Corporate
Secretary, Allegheny Technologies Incorporated, 1000 Six PPG
Place, Pittsburgh, Pennsylvania
15222-5479.
3
ATI
CORPORATE GOVERNANCE AT A GLANCE
This list provides some highlights from the Allegheny
Technologies corporate governance program. You can find
details about these and other corporate governance policies and
practices in the following pages of the Proxy Statement and in
the Our Corporate Governance section of the
About Us page of our web site at
www.alleghenytechnologies.com.
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Pursuant to our Corporate Governance Guidelines, over 75% of our
directors are independent. Mr. Hassey is the only ATI
officer on the Board and is the only non-independent, management
director.
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Independent directors meet in regularly scheduled executive
sessions without management.
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Stockholders can communicate with the independent directors.
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All of the standing committees of the Board of Directors are
composed entirely of independent directors.
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All standing committees have a written charter that is reviewed
and reassessed annually and is posted on our web site.
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Our Corporate Governance Guidelines have been adopted and are
disclosed on our web site.
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We have an annual self-evaluation process for the Board and each
standing committee.
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Our Board evaluates individual directors whose terms are nearing
expiration but who may be proposed for re-election.
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Our Nominating and Governance Committee will consider director
candidates recommended by stockholders. Stockholder-recommended
candidates will be evaluated on the same basis as other
candidates.
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The Chair of the Audit Committee has been designated as an
audit committee financial expert.
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Stockholders annually ratify the Audit Committees
selection of independent auditors.
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Our internal audit function reports directly to the Audit
Committee.
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Our Corporate Guidelines for Business Conduct and Ethics
for directors, officers, and employees are disclosed on our
web site.
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We have stock ownership guidelines for officers and for
directors.
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We provide confidential stockholder voting.
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Corporate governance and corporate responsibility are part of
our sustainability policies and practices, and are discussed
under the Sustainability Report tab of our
web site.
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4
OUR
CORPORATE GOVERNANCE
Corporate
Governance Guidelines
ATIs Board of Directors has adopted Corporate Governance
Guidelines, which are designed to assist the Board in the
exercise of its duties and responsibilities to the Company. They
reflect the Boards commitment to monitor the effectiveness
of decision making at the Board and management level, with a
view to achieving ATIs strategic objectives. They are
subject to modification by the Board from time to time.
You can find the Companys Corporate Governance Guidelines
on our web site at www.alleghenytechnologies.com, by
first clicking About Us and then Our Corporate
Governance. Copies will also be mailed to stockholders on
written request directed to the Corporate Secretary, Allegheny
Technologies Incorporated, 1000 Six PPG Place, Pittsburgh, PA
15222-5479.
Number
and Independence of Directors
The Board of Directors determines the number of directors. The
Board currently consists of nine members: L. Patrick Hassey
(Chairman), Diane C. Creel, James C. Diggs, J. Brett Harvey,
Barbara S. Jeremiah, Michael J. Joyce, James E. Rohr, Louis J.
Thomas and John D. Turner.
In accordance with the Corporate Governance Guidelines, at least
75% of the Companys directors are, and at least a
substantial majority of its directors will be,
independent under the guidelines set forth in the
listing standards of the New York Stock Exchange
(NYSE) and the Companys categorical Board
independence standards, which are set forth in the Corporate
Governance Guidelines and included in this Proxy Statement at
Appendix A. A director is independent
only if the director is a non-management director and, in the
Boards judgment, does not have a material relationship
with the Company or its management.
The Board considers L. Patrick Hassey, the current Chairman,
President and Chief Executive Officer of the Company, to not be
an independent director.
The Board, at its February 19, 2009 meeting, affirmatively
determined that the remaining eight of the Companys
current directors, Diane C. Creel, James C. Diggs, J. Brett
Harvey, Barbara S. Jeremiah, Michael J. Joyce, James E. Rohr,
Louis J. Thomas and John D. Turner, are independent in
accordance with the foregoing standards. Seven of the
Companys directors have no relationships with the Company
other than as directors and stockholders of the Company. One of
the Companys directors, James E. Rohr, is Chairman and
Chief Executive Officer of The PNC Financial Services Group,
Inc. (PNC). The Company has a $400 million
unsecured revolving credit facility with a syndicate of 13
financial institutions, including PNC Bank, National
Association, a subsidiary of PNC, as lender and administrative
agent. PNC Capital Markets LLC, an affiliate of PNC, served as
lead arranger with respect to this facility. The Company pays
fees to PNC Bank under the terms of this facility. The Company
also invests in three money market funds managed by BlackRock,
Inc. (BlackRock). PNC currently holds approximately
34% of the outstanding common stock of BlackRock. During 2008,
the Company paid fees to PNC and its affiliates representing a
de minimis portion of both the Companys revenues
and PNCs revenues, and therefore, all amounts were
substantially less than the thresholds set forth in the
NYSEs listing standards which disqualify a director from
being independent. Mr. Rohrs compensation is not
affected by the fees that the Company pays to PNC. The Board has
determined that (A) the transactions between the Company
and PNC (i) are commercial transactions carried out at
arms length in the ordinary course of business,
(ii) are not material to PNC or to Mr. Rohr,
(iii) do not and would not potentially influence
Mr. Rohrs objectivity as a member of the
Companys Board of Directors in a manner that would have a
meaningful impact on his ability to satisfy requisite fiduciary
standards on behalf of the Company and its stockholders, and
(iv) do not preclude a determination that
Mr. Rohrs relationship with the Company in his
capacity as Chairman and Chief Executive Officer of PNC is
immaterial, and (B) Mr. Rohr is an independent
director under NYSE existing guidelines and the Companys
categorical Board independence standards.
5
Audit Committee members must meet additional independence
standards under NYSE listing standards and rules of the
Securities and Exchange Commission (SEC);
specifically, Audit Committee members may not receive any
compensation from the Company other than their directors
compensation. The Board has also determined that each member of
the Audit Committee satisfies the enhanced standards of
independence applicable to Audit Committee members under NYSE
listing standards and the rules of the SEC.
Director
Terms
The directors are divided into three classes and the directors
in each class generally serve for a three-year term unless the
director is unable to serve due to death, retirement or
disability. The term of one class of directors expires each year
at the annual meeting of stockholders. The Board may fill a
vacancy by electing a new director to the same class as the
director being replaced. The Board may also create a new
director position in any class and elect a director to hold the
newly created position. It is expected that new directors
appointed to the Board will stand for election by the
stockholders at the next annual meeting.
Standing
Committees of the Board of Directors
The Board of Directors has the following five standing
committees: Audit Committee, Finance Committee, Nominating and
Governance Committee, Personnel and Compensation Committee, and
Technology Committee.
Only independent directors, as independence is determined by
NYSE rules, are permitted to serve on the Audit Committee, the
Nominating and Governance Committee, and the Personnel and
Compensation Committee. All of the standing committees of the
Board of Directors are comprised of independent directors.
Each committee has a written charter that describes its
responsibilities. Each of the Audit Committee, the Nominating
and Governance Committee and the Personnel and Compensation
Committee has the authority, as it deems appropriate, to
independently engage outside legal, accounting or other advisors
or consultants. In addition, each committee annually conducts a
review and evaluation of its performance and reviews and
reassesses its charter. You can find the current charters of
each committee on our web site at
www.alleghenytechnologies.com by first clicking
About Us, then clicking Our Corporate
Governance and then clicking Committee
Charters. The current charters will also be mailed to
stockholders upon written request.
Audit
Committee
The current members of the Audit Committee are Michael J. Joyce
(Chairman), James C. Diggs, Barbara S. Jeremiah, Louis J.
Thomas and John D. Turner. The Board of Directors has determined
that these committee members have no financial or personal ties
to the Company (other than director compensation and equity
ownership as described in this Proxy Statement) and that they
meet the NYSE and SEC standards for independence. The Board of
Directors has also determined that Michael J. Joyce meets the
SEC criteria of an audit committee financial expert
and meets the NYSE standard of having accounting or related
financial management expertise. Mr. Joyce has over
35 years of accounting, auditing and consulting experience,
having most recently served as New England Managing Partner of
Deloitte & Touche USA LLP prior to his retirement in
May 2004.
The Audit Committee assists the Board in its oversight of the
integrity of the Companys financial statements, compliance
with legal and regulatory requirements, the qualifications and
independence of the Companys independent auditors, and the
performance of the Companys internal audit function and
independent auditors. The Committee has the authority and
responsibility for the appointment, retention, compensation and
oversight of ATIs independent auditors, including
pre-approval of all audit and non-audit services to be performed
by the independent auditors. The independent auditors and the
internal auditors have full access to the Committee and meet
with the Committee with, and on a routine basis without,
management being present, to discuss all appropriate matters.
6
The Audit Committee is also responsible for reviewing, approving
and ratifying related party transactions. For more information,
see the Certain Transactions section of this Proxy
Statement.
The Audit Committee Report appears on page 22 of this Proxy
Statement.
Finance
Committee
The Finance Committee makes recommendations and provides
guidance to the Board regarding major financial policies of the
Company. It also serves as named fiduciary of the employee
benefit plans maintained by the Company.
Nominating and
Governance Committee
The Nominating and Governance Committee is responsible for
overseeing corporate governance matters. It oversees the annual
evaluation of the Companys Board and its committees. It
also recommends to the Board individuals to be nominated as
directors, which process includes evaluation of new candidates
as well as an individual evaluation of current directors who are
being considered for re-election. In addition, this Committee is
responsible for administering ATIs director compensation
program. The Committee also performs other duties as are
described in the Corporate Governance Guidelines.
Personnel and
Compensation Committee
The Personnel and Compensation Committee, on behalf of the Board
of Directors, establishes and annually reassesses the executive
compensation program and the Companys philosophy on
executive compensation, which is more fully discussed in the
Executive Compensation Compensation Discussion
and Analysis section of this Proxy Statement.
One of the duties of the Personnel and Compensation Committee is
to oversee Chief Executive Officer (CEO) and
executive officer compensation. The Committee reviews and
approves corporate goals and objectives relevant to CEO and
executive officer compensation, evaluates the CEOs
performance in light of those goals and objectives, and
determines and approves the CEOs compensation level
(either as a Committee or together with the other independent
directors, as directed by the Board) based on this evaluation.
The Committee also reviews and approves non-CEO executive
officer compensation, and makes recommendations to the Board
with respect to incentive compensation plans and equity-based
plans that require Board approval. In addition, the Personnel
and Compensation Committee administers ATIs incentive
compensation plans. For other executives, the Committee reviews
and approves recommendations from management within plan
parameters. However, the Committee may not delegate any
authority under those plans for matters affecting the
compensation and benefits of the executive officers.
The Personnel and Compensation Committee, under the terms of its
charter, has the sole authority to retain, approve fees and
other terms for, and terminate any compensation consultant used
to assist the committee in the evaluation of the Chief Executive
Officer or other executive compensation. The Committee may also
obtain advice and assistance from internal or external legal,
accounting or other advisors. Each year, the Committee retains a
compensation consultant; for years 2006, 2007 and 2008, the
Committee retained Mercer Human Resources Consulting, Inc.
(Mercer), an outside compensation and executive
benefits consulting firm. In making its determination to retain
Mercer, the Committee reviewed Mercers qualifications,
including independence, and has assured itself of Mercers
independence on an ongoing basis. Mercer was retained to assist
the Committee to review market conditions and peer company
practices and to benchmark the Companys executive
compensation programs against those parameters. Mercer performed
market analyses of peer group companies and the general market
for executive talent, and made recommendations to the Committee
as to the form of and incentive opportunities for executive
compensation. The Committee has also retained external legal
advisors. Please see the Executive
Compensation Compensation Discussion and
Analysis section of this Proxy Statement for more
discussion about the role of the compensation consultant.
7
Mercer and the Companys legal advisors periodically attend
meetings of the Committee. For portions of those meetings, the
Chief Executive Officer and the Executive Vice President of
Human Resources, Chief Legal and Compliance Officer, General
Counsel and Corporate Secretary also attend. The Chief Executive
Officer and the Executive Vice President of Human Resources
express their views on executive compensation to the Committee.
Please see the Executive Compensation
Compensation Discussion and Analysis section of this Proxy
Statement for more discussion about executive officer
compensation.
Each member of the Personnel and Compensation Committee is a
non-employee director of the Company as defined
under
Rule 16b-3
of the Securities Exchange Act of 1934, and each member is also
an outside director for the purposes of the
corporate compensation provisions contained in
Section 162(m) of the Internal Revenue Code.
The Compensation Committee Report appears on page 23 of
this Proxy Statement.
Technology
Committee
The Technology Committee reviews changing technologies and
evaluates how they affect the Company and its technical
capabilities.
Board
and Committee Membership Director Attendance at
Meetings
During 2008, the Board of Directors held seven meetings. The
Boards committees consisted of the five standing
committees already described. In 2008, all directors attended at
least 75% of the total Board meetings and meetings of Board
committees of which they were members, and average attendance at
Board and committee meetings was approximately 98.5%.
The independent, non-management directors meet separately in
regularly scheduled executive sessions without members of
management (except to the extent that the non-management
directors request the attendance of a member of management).
When, as is currently the case, the Chairman of the Board is a
management director, or if the Chairman would otherwise so
choose, the position of Chair of the meetings of the
non-management directors rotates on a per meeting basis in the
order specified in the Corporate Governance Guidelines among the
non-management Chairs of the Boards committees. If not a
member of management, the Chairman of the Board would serve as
Chair of these meetings.
A Board meeting is typically scheduled in conjunction with our
annual meeting of stockholders and it is expected that our
directors will attend absent good reason, such as a scheduling
conflict. In 2008, all directors then on the Board attended our
annual meeting of stockholders. W. Craig McClelland and Robert
P. Bozzone retired from the Board at the 2008 Annual Meeting of
Stockholders. H. Kent Bowen retired from the Board effective
June 30, 2008. Barbara S. Jeremiah joined the Board on
October 31, 2008.
8
The table below identifies the directors that the Board has
determined to be independent and provides information with
respect to current Board committee memberships. The table also
sets forth the number of meetings held by each Board committee
in 2008.
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Nominating
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Personnel
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and
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and
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Director
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Independent
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Audit
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Finance
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Governance
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Compensation
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Technology
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D. C. Creel
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X
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X
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X
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*
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X
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J. C. Diggs
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X
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X
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X*
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X
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J. B. Harvey
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X
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X
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X
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L. P. Hassey
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B. S. Jeremiah
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X
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X
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X
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M. J. Joyce
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X
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X*
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X
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J. E. Rohr
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X
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X
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*
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L. J. Thomas
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X
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X
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X
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J. D. Turner
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X
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X
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X
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X*
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Number of Meetings held in 2008
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11
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6
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7
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6
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1
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*
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Denotes Committee Chair.
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Director
Compensation
Effective January 1, 2007, the non-employee director
compensation program consisted of: an annual retainer fee
comprised of a cash payment of $60,000 and restricted stock
valued at $75,000; Committee chairperson cash retainer fee of a
$10,000; $1,500 per day fee for attending Board meetings; and
$1,500 for each committee meeting attended.
On August 1, 2008, the Board of Directors approved certain
changes to the non-employee director compensation program, and
specifically, increased: the restricted stock portion of the
annual retainer fee to $100,000; the per day Board meeting
attendance fee to $2,500; and the Committee attendance fee to
$1,500. Other than the changes described, there were no changes
to the compensation program. The non-employee directors serving
on the Board on August 1, 2008 were granted additional
restricted stock valued at $25,000 on that day.
The Company also pays for ATI orientation or training of Board
members outside of Board and committee meetings, and for the
directors travel, lodging, meal and other expenses
connected with their Board service. In addition, in 2008,
certain benefits were made available to Mr. Robert P.
Bozzone, the retired Chairman, President and Chief Executive
Officer, including office space, secretarial services and
parking space at ATIs headquarters building.
Mr. Bozzone retired from the Board at the 2008 Annual
Meeting of Stockholders.
9
The non-employee directors of the Board earned the following in
2008:
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Change in
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Pension Value
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and Non-
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Fees
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Qualified
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Earned Or
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Non-Equity
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Deferred
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Paid
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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In Cash
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name(1)
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($)(4)
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($)(5)
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($)
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($)
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($)
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($)
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($)
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H. K.
Bowen(2)
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80,500
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41,685
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122,185
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R. P.
Bozzone(2)
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69,500
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25,013
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22,038
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(6)
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116,551
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D. C. Creel
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123,500
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45,160
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168,660
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J. C. Diggs
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128,000
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45,160
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173,160
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J. B. Harvey
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102,500
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22,236
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124,736
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B. S.
Jeremiah(3)
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24,688
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1,390
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26,078
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M. J. Joyce
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118,500
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45,160
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163,660
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W. C.
McClelland(2)
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83,500
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25,013
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108,513
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J. E. Rohr
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102,500
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45,160
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147,660
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L. J. Thomas
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102,500
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45,160
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147,660
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J. D. Turner
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120,500
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45,160
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165,660
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(1) |
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L. Patrick Hassey, President and
Chief Executive Officer of the Company, is Chairman of the Board
of Directors and does not receive any compensation for his
service on the Board of Directors. All compensation paid to
Mr. Hassey by the Company for his service as an executive
officer is reflected under Summary Compensation Table for
2008.
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(2) |
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Mr. Bowen retired from the
Board on June 30, 2008 and Messrs. Bozzone and
McClelland retired from the Board on May 8, 2008. Amounts
paid to Messrs. Bowen, Bozzone and McClelland reflect their
2008 service.
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(3) |
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Ms. Jeremiah joined the Board
in October 2008 and amounts paid to her were pro-rated for her
2008 service.
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(4) |
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This column reflects the annual
retainer fee, committee chair fees, and meeting fees paid to
each director.
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(5) |
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This column reflects the restricted
stock awards granted to directors under the Companys
Non-Employee Director Restricted Stock Program. Shares vest on
the third anniversary of the date of grant, or earlier if
retirement, death or change of control, and expense is
recognized over the vesting period. This column sets forth the
2008 recognized expense of the grant date fair value of
restricted stock awards made as part of the annual retainer fee,
computed in accordance with Statement of Financial Accounting
Standards (FAS) No. 123(R) Share-Based Payments (FAS 123(R)).
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(6) |
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Represents the aggregate
incremental cost to the Company of office space, secretarial
services and parking space at the Companys headquarters
building during 2008.
|
The Board encourages directors to obtain a meaningful stock
ownership interest in the Company. Non-employee directors are
expected to own shares of Company Common Stock having a market
value of at least two times the annual retainer amount by
December 31, 2009 or within five years of first becoming a
director, whichever occurs later, and at least three times the
annual retainer amount within a reasonable time thereafter.
In December 2004, the Board froze and discontinued the
Companys Fee Continuation Plan for Non-Employee Directors.
Under the frozen plan, an amount equal to the annual retainer
fee in effect for 2004, which was $28,000, will be paid annually
to the members of the Board as of January 1, 2005,
following the termination of the directors service as a
Board member, for each year of the directors credited
service as a director (as defined in the Plan) up to a maximum
of ten years.
10
Corporate
Guidelines for Business Conduct and Ethics
ATI has a code of ethics, which we refer to as the Corporate
Guidelines for Business Conduct and Ethics (the
Guidelines), that applies to all directors, officers
and employees, including our principal executive officer, our
principal financial officer, and our controller and chief
accounting officer. ATI has had a code of conduct for many
years. We require all directors, officers and employees to
adhere to these Guidelines in addressing legal and ethical
issues encountered in their work. These Guidelines require that
our directors, officers and employees avoid conflicts of
interest, comply with all laws, conduct business in an honest
and ethical manner and otherwise act with integrity and honesty
in all of their actions by or on behalf of the Company. These
Guidelines include a financial code of ethics specifically for
our Chief Executive Officer, our Chief Financial Officer, and
all other financial officers and employees, which supplements
the general principles set forth in the Guidelines and is
intended to promote honest and ethical conduct, full and
accurate reporting, and compliance with laws as well as other
matters.
Employees are required to certify that they have reviewed and
understand the Guidelines. In addition, each year, all officers
and managers are required to certify as to their compliance with
the standards set forth in the Guidelines. Also, beginning in
2006, the Company implemented an online ethics training program,
administered by a third party. We require all directors,
officers and employees to take an interactive online ethics
course at least annually.
The Company encourages employees to communicate concerns before
they become problems. We believe that building and maintaining
trust, respect and communications between employees and
management and between fellow employees is critical to the
overriding goal of efficiently producing high quality products,
providing the maximum level of customer satisfaction, and
ultimately fueling profitability and growth. Only the Audit
Committee of the Board can amend or grant waivers from the
provisions of the Guidelines relating to the Companys
executive officers and directors, and any such amendments or
waivers will be promptly posted on our web site at
www.alleghenytechnologies.com. To date, no such
amendments have been made or waivers granted.
A copy of the Corporate Guidelines for Business Conduct and
Ethics, which includes the financial code of ethics, is
available on our web site at
www.alleghenytechnologies.com by first clicking
About Us and then Our Ethics and will be
mailed to stockholders and other interested parties on written
request directed to the Corporate Secretary, Allegheny
Technologies Incorporated, 1000 Six PPG Place, Pittsburgh, PA
15222-5479.
Identification
and Evaluation of Candidates for Director
The Board is responsible for recommending director nominees to
the stockholders and for selecting directors to fill vacancies
between stockholder meetings. The Nominating and Governance
Committee recommends candidates to the Board. The Nominating and
Governance Committee is comprised entirely of independent
directors under the applicable rules and regulations of the New
York Stock Exchange and Securities and Exchange Commission. The
Committee operates under a written charter adopted by the Board
of Directors. A copy of the Committees charter is
available at the Companys web site at
www.alleghenytechnologies.com by first clicking
About Us and then Our Corporate
Governance. Paper copies can be obtained by writing to the
Corporate Secretary, Allegheny Technologies Incorporated, 1000
Six PPG Place, Pittsburgh, PA
15222-5479.
The Committee considers director candidates suggested by members
of the Committee, other directors, senior management and
stockholders. For information on how to submit a candidate for
consideration, please see the caption 2010 Annual Meeting
and Stockholder Proposals below.
Preliminary interviews of director candidates may be conducted
by the Chair of the Nominating and Governance Committee or, at
her request, any other member of the Committee or the Chairman
of the Board. Background material pertaining to director
candidates is distributed to the Committee for review.
11
Director candidates who the Committee determines merit further
consideration are interviewed by the Chair of the Committee and
other Committee members, directors and key senior management.
The results of these interviews are considered by the Nominating
and Governance Committee in its deliberations.
Director candidates are generally selected on the basis of the
following criteria: their business or professional experience,
recognized achievement in their respective fields, integrity and
judgment, ability to devote sufficient time to the affairs of
the Company, the diversity of their backgrounds and the skills
and experience that their membership adds to the overall
competencies of the Board, and the needs of the Company from
time to time. Nominees must also represent the interests of all
stockholders. In accordance with the retirement policy for
directors set forth in the Corporate Governance Guidelines, a
person who is 72 years of age or older cannot be nominated
to serve on the Board.
In evaluating the needs of the Board, the Nominating and
Governance Committee considers the qualifications of sitting
directors and consults with other members of the Board
(including as part of the Boards annual self-evaluation),
the Chairman, President and Chief Executive Officer and other
members of executive management. At a minimum, all recommended
candidates must exemplify the highest standards of personal and
professional integrity, meet any required independence
standards, and be willing and able to constructively participate
in and contribute to Board and committee meetings. Additionally,
the Committee conducts individual reviews of current directors
whose terms are nearing expiration, but who may be proposed for
re-election, in light of the considerations described above and
their past contributions to the Board.
Ms. Jeremiah, who joined the Board of Directors on
October 31, 2008, was initially selected as a director
nominee upon the recommendation of the Chairman.
Process
for Communications with Directors
We maintain a process for stockholders and interested parties to
communicate with the Board of Directors or any individual
director. ATI stockholders or interested parties who want to
communicate with the Board or any individual director can write
to:
Allegheny Technologies Incorporated
Corporate Secretary
Board Administration
1000 Six PPG Place
Pittsburgh, PA
15222-5479
or call 1-877-787-9761 (toll free). Your letter or message
should indicate whether you are an ATI stockholder. Depending on
the subject matter, the Corporate Secretary will:
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forward the communication to the director or directors to whom
it is addressed;
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attempt to handle the inquiry directly when, for example, it is
a request for information about the Company or it is a
stock-related matter; or
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not forward the communication if it is primarily commercial in
nature or it relates to an improper or irrelevant topic.
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At each Board meeting, the Corporate Secretary presents a
summary of all communications received since the last meeting
that were not forwarded and makes those communications available
to the directors on request.
12
2010
Annual Meeting and Stockholder Proposals
Under
Rule 14a-8
of the Securities and Exchange Commission, proposals of
stockholders intended to be presented at the 2010 Annual Meeting
of Stockholders must be received no later than November 25,
2009 for inclusion in the proxy statement and proxy card for
that meeting. In addition, the Companys certificate of
incorporation provides that in order for director nominations or
other business to be properly brought before an annual meeting
by a stockholder, the stockholder must give timely notice
thereof in writing to the Corporate Secretary. The notice must
contain certain information, including information about the
proposal and the interest, if any, of the stockholder who is
making the proposal, as well as the name, address and share
ownership of the stockholder giving notice.
Stockholders may nominate candidates for election to the Board
by following the procedures described in ATIs certificate
of incorporation. Stockholder-recommended candidates will be
evaluated on the same basis as other candidates. The provisions
of ATIs certificate of incorporation generally require
that written notice of a nomination be received by the Corporate
Secretary, who will forward the information to the Nominating
and Governance Committee of the Board of Directors for the
Committees consideration. The notice must contain certain
information about the nominee, including his or her age,
address, occupation and share ownership, as well as the name,
address and share ownership of the stockholder giving notice.
For all such notices to be timely, the provisions of the
Companys certificate of incorporation generally require
that notice be received by the Corporate Secretary not less than
75 days and not more than 90 days before the first
anniversary of the date of the preceding years annual
meeting. For our annual meeting in the year 2010, we must
receive this notice on or after February 6, 2010 and on or
before February 21, 2010.
Stockholders may obtain a copy of the full text of the
provisions of our certificate of incorporation by writing to the
Corporate Secretary, Allegheny Technologies Incorporated, 1000
Six PPG Place, Pittsburgh,
PA 15222-5479.
A copy of our certificate of incorporation has been filed with
the Securities and Exchange Commission and can be viewed on our
web site at www.alleghenytechnologies.com by first clicking
About Us and then Our Corporate
Governance.
The SEC has adopted rules that permit companies and
intermediaries such as brokers to satisfy delivery requirements
for proxy statements with respect to two or more stockholders
sharing the same address and the same last name by delivering a
single proxy statement addressed to those stockholders. This
process, which is commonly referred to as
householding, potentially provides extra convenience
for stockholders and cost savings for the Company. The Company
and some brokers household proxy materials, delivering a single
proxy statement to multiple stockholders sharing an address,
unless contrary instructions have been received from the
affected stockholders. Once stockholders have received notice
from their broker or the Company that materials will be sent in
the householding manner to the stockholders address,
householding will continue until otherwise notified or until the
stockholder revokes such consent. If, at any time, stockholders
no longer wish to participate in householding and would prefer
to receive a separate proxy statement, they should notify their
broker, if shares are held in a brokerage account, or the
Company, if holding registered shares. The Company will deliver
promptly, upon written or oral request, a separate copy of the
annual report or proxy statement, as applicable, to a
stockholder at a shared address to which a single copy of the
documents was delivered. Any such notice should be addressed to
the Corporate Secretary of the Company at 1000 Six PPG Place,
Pittsburgh, PA
15222-5479,
or notice may be given by calling the Company at
(412) 394-2800
(i) to receive a separate copy of an annual report or proxy
statement for this meeting, (ii) to receive separate copies
of those materials for future meetings, or (iii) if the
stockholder shares an address and wishes to request delivery of
a single copy of annual reports or proxy statements, if now
receiving multiple copies of annual reports or proxy statements.
13
Section 16(a)
Beneficial Ownership Reporting Compliance
The rules of the Securities and Exchange Commission (SEC)
require the Company to disclose late filings of reports of stock
ownership (and changes in stock ownership) by its directors and
statutory insiders. Based upon a review of filings with the SEC
and written representations, the Company believes that, in 2008,
the Companys directors and statutory insiders complied
with the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934 and all filings by these
individuals with respect to Company Common Stock were made on a
timely basis.
Five
Percent Owners of Common Stock
The individuals and entities listed in the following table are
beneficial owners of five percent or more of Company Common
Stock as of December 31, 2008, based on information filed
with the SEC. In general, beneficial ownership
includes those shares a person has the power to vote or
transfer, and options to acquire Common Stock that are
exercisable currently or within 60 days.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
Percent of
|
|
|
Name and Address of Beneficial
Owner
|
|
|
Beneficial Ownership
|
|
Class(4)
|
|
|
|
Capital Group International, Inc.
|
|
|
|
12,987,850
|
(1)
|
|
|
13.3
|
%
|
|
|
Capital Guardian Trust Company
11100 Santa Monica Boulevard
Los Angeles, CA 90025
|
|
|
|
|
|
|
|
|
|
|
|
The Guardian Life Insurance Company of America
|
|
|
|
6,265,429
|
(2)
|
|
|
6.4
|
%
|
|
|
7 Hanover Square
H-26-E
New York, NY 10004
|
|
|
|
|
|
|
|
|
|
|
|
Riofisa Holding, S.L.
|
|
|
|
5,121,000
|
(3)
|
|
|
5.3
|
%
|
|
|
Arbea Campus Empresarial
Edificio 5
Carretera de Fuencarral a Alcobendas M 603
Km 3800 Alcobendas (Madrid)
Spain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on a Schedule 13G filing
under the Securities Exchange Act of 1934 made on
February 12, 2009 by Capital Group International, Inc.
(CGII) and Capital Guardian Trust Company
(CGTC). CGII had sole voting power with respect to
an aggregate of 11,180,990 shares and sole dispositive
power with respect to an aggregate of 12,987,850 shares at
December 31, 2008. CGTC had sole voting power with respect
to an aggregate of 5,116,720 shares and sole dispositive
power with respect to an aggregate of 6,302,580 shares at
December 31, 2008. CGII and CGTC disclaim beneficial
ownership of 12,987,850 shares and 6,302,580 shares,
respectively.
|
|
(2) |
|
Based on a Schedule 13G filing
under the Securities Exchange Act of 1934 made on
February 10, 2009 by The Guardian Life Insurance Company of
America, which shares voting power and dispositive power with
respect to an aggregate of 6,265,429 shares with both
Guardian Investor Services LLC and RS Investment Management Co.
LLC at December 31, 2008.
|
|
(3) |
|
Based on a Schedule 13G filing
under the Securities Act of 1934 made on June 9, 2008 by
Riofisa Holding, S.L, which had sole voting and sole dispositive
power with respect to an aggregate of 5,121,000 shares at
May 30, 2008.
|
|
(4) |
|
As of December 31, 2008, there
were 97,330,966 shares of Company Common Stock outstanding.
|
14
Stock
Ownership of Management
The following table sets forth the shares of Common Stock
reported to the Company as beneficially owned as of
February 22, 2009 by the nominees for director, the
continuing directors, each officer named in the Summary
Compensation Table (named officers) and all
directors, nominees, named officers and other statutory insiders
as a group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
Percent of
|
|
|
Beneficial Owner
|
|
Beneficial
Ownership(1)
|
|
Class(2)
|
|
|
|
Diane C. Creel
|
|
|
15,789
|
|
|
|
|
*
|
|
|
|
|
James C. Diggs
|
|
|
4,629
|
|
|
|
|
*
|
|
|
|
|
Terry L. Dunlap
|
|
|
69,222
|
|
|
|
|
*
|
|
|
|
|
Richard J. Harshman
|
|
|
157,091
|
|
|
|
|
*
|
|
|
|
|
J. Brett Harvey
|
|
|
5,091
|
|
|
|
|
*
|
|
|
|
|
L. Patrick Hassey
|
|
|
529,946
|
|
|
|
|
*
|
|
|
|
|
Barbara S. Jeremiah
|
|
|
2,972
|
|
|
|
|
*
|
|
|
|
|
Michael J. Joyce
|
|
|
6,558
|
|
|
|
|
*
|
|
|
|
|
Douglas A. Kittenbrink
|
|
|
36,412
|
|
|
|
|
*
|
|
|
|
|
James E. Rohr
|
|
|
19,982
|
|
|
|
|
*
|
|
|
|
|
Louis J. Thomas
|
|
|
6,365
|
|
|
|
|
*
|
|
|
|
|
John D. Turner
|
|
|
12,526
|
|
|
|
|
*
|
|
|
|
|
Jon D. Walton
|
|
|
163,205
|
|
|
|
|
*
|
|
|
|
|
|
All directors, nominees, named officers and other statutory
insiders as a group (14)
|
|
|
1,075,402
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
*
|
Indicates beneficial ownership of
less than one percent (1%) of the outstanding shares of Company
Common Stock.
|
|
|
(1)
|
The table includes shares of
restricted stock (with respect to directors) and
performance/restricted stock (with respect to named officers and
statutory insiders) in the following amounts: each of
Ms. Creel and Messrs. Diggs, Joyce, Rohr, Thomas and
Turner, 2,224; Mr. Harvey, 1,601; Ms. Jeremiah, 972;
Mr. Hassey, 118,786; each of Messrs. Harshman and
Walton, 34,920; Mr. Kittenbrink, 11,289; and
Mr. Dunlap, 25,800; and all directors, nominees, named
officers and other statutory insiders as a group, 260,890. The
table includes shares held in the Companys 401(k) plans
for the accounts of Messrs. Kittenbrink and Walton and
other members of the group and shares held jointly with the
named individuals spouses.
|
The table also includes the
following shares where beneficial ownership is disclaimed:
47,257 shares owned by Mr. Hasseys spouse;
25,687 shares owned by Mr. Harshmans spouse;
45,599 shares owned by Mr. Waltons spouse; and
273 shares held by the spouses of other statutory insiders.
The table includes shares issuable
pursuant to options that are currently exercisable or may become
exercisable on or before April 30, 2008 in the following
amounts: Mr. Harshman, 15,000; Mr. Joyce, 1,000;
Mr. Rohr, 7,567; Mr. Thomas, 2,000; Mr. Turner,
3,000; Mr. Walton, 15,000; and for all directors, nominees,
named officers and other statutory insiders as a group, 43,567.
|
|
(2)
|
The percentages in the column were
calculated based on 97,330,966 outstanding shares of Company
Common Stock at December 31, 2008. As of February 22,
2009, there were 98,025,965 shares of Company Common Stock
outstanding.
|
15
PROPOSALS REQUIRING
YOUR VOTE
Election
of Directors Item A on Proxy Card
The Board of Directors has nominated for election four incumbent
directors. Diane C. Creel, James E. Rohr and Louis J. Thomas are
Class I directors standing for re-election to the Board for
a three-year term expiring in 2012. Barbara S. Jeremiah, a
Class II director, was elected by the Board in October 2008
and is standing for election to the Board for a one-year term
expiring in 2010. The Board of Directors determined that each of
the nominees qualifies for re-election under the criteria for
evaluation of directors described under Identification and
Evaluation of Candidates for Director on page 11 of
this Proxy Statement. The Board of Directors determined that
Mses. Creel and Jeremiah, and Messrs. Rohr and Thomas
qualify as independent directors under applicable rules and
regulations and the Companys categorical Board
independence standards. See Identification and Evaluation
of Candidates for Director at page 11 of this Proxy
Statement and Number and Independence of Directors
at page 5 of this Proxy Statement.
The United Steelworkers (USW) initially proposed the
nomination of Louis J. Thomas in connection with the 2004 labor
negotiations with Allegheny Ludlum Corporation, a Company
subsidiary. At that time, the Company agreed that the
International President of the USW may propose a nominee for
election as a director of the Company to the Companys
Chairman, President and Chief Executive Officer. The USW nominee
is to be a prominent individual with experience in public
service, labor, education or business who meets the antitrust
and conflicts of interest screening required of all Company
directors. Upon recommendation by the Nominating and Governance
Committee and election to the Board, the USW nominee is expected
to serve as a director during the term of the labor agreement.
The four nominees who receive the highest number of votes cast
will be elected. If you sign and return your proxy card, the
individuals named as proxies on the card will vote your shares
FOR the election of the four nominees named below unless you
provide other instructions. You may withhold authority for the
proxies to vote your shares on any or all of the nominees by
following the instructions on your proxy card. If a nominee
becomes unable to serve, the proxies will vote for a
Board-designated substitute or the Board may reduce the number
of directors. The Company has no reason to believe that any of
the four nominees for election named below will be unable to
serve.
Background information about the nominees and the continuing
directors, including their business experience during the past
five years, follows.
THE BOARD OF
DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE ELECTION OF THE FOUR NOMINEES
LISTED ON THE NEXT PAGE.
16
Nominees
Term to Expire at the 2012 Annual Meeting
(Class I)
|
|
|
|
|
|
Diane C. Creel
|
|
|
|
|
|
Age:
|
|
60
|
|
|
|
Director Since:
|
|
1996
|
|
|
|
Recent Business Experience:
|
|
Prior to her retirement in September 2008, Ms. Creel served as
Chairman, Chief Executive Officer and President of Ecovation,
Inc., a subsidiary of Ecolab Inc. and a waste stream technology
company using patented technologies, since May 2003. Ecovation,
Inc. became a subsidiary of Ecolab, Inc. in February 2008.
Previously, Ms. Creel served as Chief Executive Officer and
President of Earth Tech, an international consulting engineering
firm, from 1992 to May 2003.
|
|
|
|
Other Directorships:
|
|
Goodrich Corporation.
|
|
|
|
James E. Rohr
|
|
|
|
|
|
Age:
|
|
60
|
|
|
|
Director Since:
|
|
1996
|
|
|
|
Principal Occupation:
|
|
Chairman and Chief Executive Officer, The PNC Financial Services
Group, Inc., a diversified financial services organization.
|
|
|
|
Recent Business Experience:
|
|
Mr. Rohr served as President of The PNC Financial Services Group
from 1992 to 2002 and assumed the position of Chief Executive
Officer in 2000. He was named Chairman in 2001.
|
|
|
|
Other Directorships:
|
|
Equitable Resources, Inc., The PNC Financial Services Group,
Inc., and BlackRock, Inc. The PNC Financial Services Group, Inc.
holds approximately a 34% interest in BlackRock, Inc.
|
|
|
|
Louis J. Thomas
|
|
|
|
|
|
Age:
|
|
66
|
|
|
|
Director Since:
|
|
2004
|
|
|
|
Recent Business Experience:
|
|
Mr. Thomas served as Director, District 4, United Steelworkers
for the Northeastern United States and Puerto Rico prior to his
retirement in May 2004.
|
Nominee
Term to Expire at the 2010 Annual Meeting
(Class II)
|
|
|
|
|
|
Barbara S. Jeremiah
|
|
|
|
|
|
Age:
|
|
57
|
|
|
|
Director Since:
|
|
2008
|
|
|
|
Recent Business Experience:
|
|
Prior to her retirement in January 2009, Ms. Jeremiah served as
Executive Vice President of Alcoa, Inc. from July 2002 until
July 2008, when she also assumed the position of
Chairmans Counsel.
|
|
|
|
Other Directorships:
|
|
Equitable Resources, Inc.
|
17
Continuing
Directors Term to Expire at the 2010 Annual Meeting
(Class II)
|
|
|
|
|
|
L. Patrick Hassey
|
|
|
|
|
|
Age:
|
|
63
|
|
|
|
Director Since:
|
|
2003
|
|
|
|
Principal Occupation:
|
|
Chairman, President and Chief Executive Officer of Allegheny
Technologies Incorporated.
|
|
|
|
Recent Business Experience:
|
|
Mr. Hassey has been President and Chief Executive Officer of the
Company since October 2003. He was elected to the Companys
Board of Directors in July 2003 and assumed the position of
Chairman in May 2004. Prior to this position, he worked as an
outside management consultant to Allegheny Technologies
executive management. Mr. Hassey was Executive Vice President
and a member of the corporate executive committee at Alcoa Inc.
at the time of his early retirement in February 2003. He had
served as Executive Vice President of Alcoa and Group President
of Alcoa Industrial Components from 2000 to 2002. Prior to 2000,
he served as Executive Vice President of Alcoa and President of
Alcoa Europe Inc.
|
|
|
|
Other Directorship:
|
|
Ryder System, Inc.
|
|
|
|
John D. Turner
|
|
|
|
|
|
Age:
|
|
63
|
|
|
|
Director Since:
|
|
2004
|
|
|
|
Recent Business Experience:
|
|
Mr. Turner served as Chairman and Chief Executive Officer of
Copperweld Corporation, a manufacturer of tubular and bimetallic
wire products, until his retirement in March 2003.
|
|
|
|
Other Directorship:
|
|
Matthews International Corporation
|
18
Continuing
Directors Term to Expire at the 2011 Annual Meeting
(Class III)
|
|
|
|
|
|
James C. Diggs
|
|
|
|
|
|
Age:
|
|
60
|
|
|
|
Director Since:
|
|
2001
|
|
|
|
Principal Occupation:
|
|
Senior Vice President, General Counsel and Secretary of PPG
Industries, Inc., a producer of coatings, glass and chemicals.
|
|
|
|
Recent Business Experience:
|
|
Mr. Diggs has been Senior Vice President, General Counsel of PPG
Industries, Inc. since 1997. He assumed the position of
Secretary in September 2004.
|
|
|
|
J. Brett Harvey
|
|
|
|
|
|
Age:
|
|
58
|
|
|
|
Director Since:
|
|
2007
|
|
|
|
Principal Occupation:
|
|
President and Chief Executive Officer of CONSOL Energy, Inc., a
high Btu bituminous coal and coal bed methane company, since
1998, and Chairman and Chief Executive Officer of CNX Gas
Corporation (a subsidiary of CONSOL Energy, Inc.) since
January 2009.
|
|
|
|
Recent Business Experience:
|
|
Prior to 1998, he was President and Chief Executive Officer of
PacifiCorp Energy Inc., and served in several other management
positions at PacifiCorp.
|
|
|
|
Other Directorships:
|
|
CONSOL Energy, Inc., CNX Gas Corporation (a subsidiary of
CONSOL Energy, Inc.), and Barrick Gold Corporation
|
|
|
|
Michael J. Joyce
|
|
|
|
|
|
Age:
|
|
67
|
|
|
|
Director Since:
|
|
2004
|
|
|
|
Recent Business Experience:
|
|
Mr. Joyce served as New England Managing Partner of Deloitte
& Touche USA LLP, a public accounting firm, prior to his
retirement in May 2004.
|
|
|
|
Other Directorships:
|
|
A. C. Moore Arts & Crafts, Inc. (Chairman of the Board) and
Brandywine Realty Trust.
|
19
Ratification
of Selection of Independent Auditors Item B on
Proxy Card
Ernst & Young LLP (Ernst &
Young) has served as independent auditors for the Company
since August 15, 1996. They have unrestricted access to the
Audit Committee to discuss audit findings and other financial
matters. The Audit Committee of the Board of Directors believes
that Ernst & Young is knowledgeable about the
Companys operations and accounting practices and is well
qualified to act in the capacity of independent auditors.
In appointing Ernst & Young as the Companys
independent auditors for the fiscal year ending
December 31, 2009, and making its recommendation that
stockholders ratify the appointment, the Audit Committee
considered whether the audit and non-audit services
Ernst & Young provides are compatible with maintaining
the independence of the our outside auditors.
If the stockholders do not ratify the selection of
Ernst & Young, the Audit Committee will reconsider the
appointment of Ernst & Young as the Companys
independent auditors.
Representatives of Ernst & Young will be present at
the Annual Meeting. They will be given the opportunity to make a
statement if they desire to do so, and they will be available to
respond to appropriate questions following the Annual Meeting.
THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG
LLP AS
INDEPENDENT AUDITORS FOR FISCAL YEAR 2009.
20
Audit
Committee Pre-Approval Policy
The Audit Committee has adopted a policy that sets forth the
manner in which the Audit Committee will review and approve all
services to be provided by Ernst & Young before the
firm is retained to perform the service. Under this policy, the
engagement terms and fees of all audit services and all
audit-related services are subject to the specific pre-approval
of the Audit Committee. In addition, while the Committee
believes that the independent auditor may be able to provide tax
services to the Company without impairing the auditors
independence, absent unusual circumstances, the Audit Committee
does not expect to retain the independent auditor to provide tax
services. Under the policy, the Committee has delegated limited
pre-approval authority to the Chair of the Committee with
respect to permitted, non-tax related services; the Chair is
required to report any pre-approval decisions to the Audit
Committee at its next scheduled meeting. The Audit Committee
pre-approved all audit and non-audit services provided by
Ernst & Young in 2008 and 2007.
Independent
Auditor: Services and Fees
The fees and expenses billed by Ernst & Young for the
indicated services performed during 2008 and 2007 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
2008
|
|
|
2007
|
|
|
|
|
Audit fees
|
|
|
$3,160,000
|
|
|
|
$3,018,000
|
|
Audit-related fees
|
|
|
224,000
|
|
|
|
348,000
|
|
Tax fees
|
|
|
26,000
|
|
|
|
|
|
All other fees
|
|
|
4,000
|
|
|
|
4,000
|
|
|
Total
|
|
|
$3,414,000
|
|
|
|
$3,370,000
|
|
|
Audit fees consisted of fees related to the annual
audit of the Companys consolidated financial statements
and review of the financial statements in our Quarterly Reports
on
Form 10-Q,
Sarbanes-Oxley Section 404 attestation services, audit and
attestation services related to statutory or regulatory filings,
the issuance of consents, and captive insurance company audits.
Audit-related fees consisted of fees related to the
audits of employee benefit and pension plans.
Tax fees consisted of fees related to IRS transcript
reviews.
All other fees consisted of subscriptions to
Ernst & Youngs web-based EYOnline accounting
reference library.
21
Audit
Committee Report
The following is the report of the Audit Committee with respect
to the Companys audited financial statements for the year
ended December 31, 2008, which include the consolidated
balance sheets of the Company as of December 31, 2008 and
2007, and the related consolidated statements of operations,
stockholders equity and cash flows for each of the three
years in the period ended December 31, 2008, and the notes
thereto (collectively, the Financial Statements).
Management is responsible for the Companys internal
controls and financial reporting process. Ernst &
Young LLP (Ernst & Young), the
Companys independent auditors, are responsible for
performing an independent audit of the Companys Financial
Statements in accordance with generally accepted auditing
standards and expressing an opinion as to their conformity with
generally accepted accounting principles and for attesting to
managements report on the Companys internal control
over financial reporting. One of the Audit Committees
responsibilities is to monitor and oversee the financial
reporting process and to review and discuss managements
report on the Companys internal control over financial
reporting.
The Audit Committee has reviewed, met and held discussions with
the Companys management, internal auditors, and the
independent auditors regarding the Financial Statements,
including a discussion of quality, not just acceptability, of
the Companys accounting principles, and Ernst &
Youngs judgment regarding these matters.
The Audit Committee discussed with the Companys internal
auditors and independent auditors matters required to be
discussed by SAS 61 (Codification of Statements on Auditing
Standards, AU§ 380). The Audit Committee met with the
internal auditors and independent auditors, with and without
management present, to discuss the results of their
examinations, their evaluations of the Companys internal
controls, and the overall quality of the Companys
financial reporting. The Audit Committee has also discussed with
Ernst & Young matters required to be discussed by
applicable auditing standards.
The Audit Committee has received the written disclosures and the
letter from Ernst & Young required by applicable
requirements of the Public Company Accounting Oversight Board
regarding the independent accountants communications with
the Audit Committee concerning independence and has also
considered the compatibility of non-audit services with
Ernst & Youngs independence. This information
was also discussed with Ernst & Young.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors at the
February 19, 2009 meeting of the Board that the Financial
Statements be included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2008 as filed with the
Securities and Exchange Commission. The Board has approved this
inclusion.
Submitted by:
AUDIT COMMITTEE, whose members are:
Michael J. Joyce, Chairman
James C. Diggs
Barbara S. Jeremiah
Louis J. Thomas
John D. Turner
OTHER
BUSINESS
The Company knows of no business that may be presented for
consideration at the meeting other than the items indicated in
the Notice of Annual Meeting. If other matters are properly
presented at the meeting, the persons designated as proxies on
your proxy card may vote at their discretion.
Following adjournment of the formal business meeting, L. Patrick
Hassey, Chairman, President and Chief Executive Officer, will
address the meeting and will hold a general discussion period
during which the stockholders will have an opportunity to ask
questions about the Company and its business.
22
EXECUTIVE
COMPENSATION
Compensation
Committee Report
The Personnel and Compensation Committee (referred to in this
Report as the Committee) has reviewed and discussed
the following Compensation Discussion and Analysis with Company
management. Based on such review and discussion, the Committee
recommends to the Board of Directors that the Compensation
Discussion and Analysis be included in the Companys 2009
Proxy Statement. The Committee furnishes this Report for
inclusion in the 2009 Proxy Statement and recommends its
inclusion in the Companys annual report on
Form 10-K.
Submitted by:
PERSONNEL AND COMPENSATION
COMMITTEE, whose members are:
James E. Rohr, Chairman
Diane C. Creel
J. Brett Harvey
Compensation
Discussion and Analysis
Executive
Summary
This Compensation Discussion and Analysis
(CD&A) reviews the Companys executive
compensation programs, and the policies and decisions of the
Personnel and Compensation Committee of the Board of Directors
(the Committee) with respect to the Companys
named executive officers listed in the Summary Compensation
Table on page 39 (the named officers).
The Committee has a two-fold task with respect to the
Companys compensation programs:
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linking executives compensation to performance objectives
that mesh with the Companys business plans and advance the
interests of its stockholders, and
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supervising managements implementation of the compensation
programs for the Companys other key employees.
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The purposes of the Companys executive compensation
programs are:
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to provide compensation levels benchmarked to attract and retain
exceptional managerial talent for the present and
future, and
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to offer incentive-based programs in order to challenge managers
to achieve business goals within their area of authority and in
the interests of Company stockholders.
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The Company uses a pyramid approach to administer
its compensation programs. Under this pyramid
approach, an individuals position and level of
responsibility determines the compensation plans in which the
individual is entitled to participate. The performance pyramid
below summarizes the principles of each of the compensation
plans in which the named officers participate.
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©
2009 ATI
Key Executive
Performance Plan (KEPP)
The KEPP is a cash-based incentive plan with a three-year
performance measurement period. Only the members of
managements executive committee (a group that includes the
named officers) are eligible to participate in this plan.
Performance is measured by the degree to which pre-set Company
income before tax level and specific operational, team-oriented
goals are achieved over the three-year period. The purpose of
the program has been to drive the Companys earnings and
simultaneously target the specific business objectives over the
three-year period. The overall objective has been to reposition
the Company to achieve long-term, profitable growth.
Total Shareholder
Return Incentive Compensation Program
(TSRP)
Under the TRSP, awards denominated in shares of Company Common
Stock are earned to the extent that returns on Company Common
Stock (generally, trading price increase plus dividends) exceed
the returns on common stock of members of a peer group over a
three-year performance measurement period. Approximately 50 key
executives (including the named officers) participate in this
plan. The purpose of this program is to focus management
directly on returns to stockholders.
Performance/Restricted
Stock Program (PRSP)
Shares of performance/restricted stock are awarded to
participants under the PRSP. The restrictions provide that
one-half of each award will vest, if at all, only if pre-set
earnings targets are achieved over a three-year period. Vesting
of the other half will accelerate if the performance targets are
reached after three years but otherwise will vest only if the
employee is employed by the Company on the fifth anniversary of
the grant. Approximately 100 key managers participate in this
plan (including the named officers). However, because this
broader group of managers represents the pool of talent for
future management, the plan has a time-based vesting retention
feature. This program is primarily designed to drive Company
earnings.
Annual Incentive
Plan (AIP)
The AIP is a cash-based, annual incentive bonus plan in which
approximately 350 key employees participate (including the named
officers). Performance is measured based on a weighted formula
that takes into account operating earnings, operating cash flow,
manufacturing improvements, employee safety, environmental
compliance and responsiveness to customers. This diverse matrix
of measures allows the Committee, for the named officers, to
direct attention to goals and achievements within each
participants direct control.
Base
Salary
All salaried employees are paid a base salary that is
benchmarked against a group of public companies with which the
Company competes for salaried employees. For reasons driven by
the geography of the Companys operating locations and
based on skill-set requirements, the peer group for salary
benchmarking is somewhat different from the peer group used for
measuring relative stock price returns. The peer group for stock
price returns is focused more on the Companys industrial
and capital markets classifications.
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Compensation
Philosophy
For many years, and continuing in 2008, the Committees
approach to all manager compensation has been to offer a package
consisting of base salary competitive with an identified peer
group of companies and incentive opportunities that are
performance-oriented and linked to the interests of
stockholders. The Committee develops a prudent balance of annual
and three-year measures to discourage inappropriate risk. With
respect to the named officers, the program consists of base
salary, potential annual cash-based incentives, and longer-term
(generally three-year) cash
and/or
equity compensation plans. The Committees intention is for
a substantial portion of the named officers compensation
to be at risk, and for total compensation for the named officers
to be at approximately the midpoint of peer group compensation,
if actual Company performance is at the midpoint of actual peer
group performance.
The Committee has consistently determined that the executive
compensation program be:
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Performance-oriented with opportunities for superior
compensation for superior results;
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Attractive for long-term careers with the Company;
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Linked to the interests of stockholders; and
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Competitive in the aggregate.
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Performance-Oriented
The Committee believes that management employees should have
significant portions of compensation at risk by linking
compensation to the attainment of Company performance
goals that is, the more senior the manager, the
larger percentage of compensation should be at risk. The
Committee believes that, if performance exceeds goals, total
compensation should exceed the midpoint of compensation for the
peer group described below, and that total compensation should
be less than the midpoint of the peer group if actual Company
performance is not at target levels.
The Committee views the executive compensation program as a
management tool that, through goal and target setting,
encourages the management team to achieve or surpass the
Companys business objectives. The array of goals and
targets used as incentives across all management levels, which
include both financial performance measures as well as pre-set
goals within a particular participants area of
responsibility, are designed to encourage a team-oriented
approach to achieving Company profitability objectives and
positioning the Company for the challenges of the future. The
Committee scales compensation challenges and opportunities by
level of responsibility and focuses performance on measures
particular managers can most directly influence. The Committee
believes that the performance goals and targets will challenge,
attract and retain superior managers experienced in the
Companys businesses and direct their efforts toward
achieving specific tasks that the Board and senior executives
determine to be necessary for profitable growth.
Attractive for
Long-Term Careers
The executive compensation program is designed to attract and
retain a deep pool of managerial talent that shares the
Companys commitment to enhancing stockholder value in the
short and longer terms. Base salaries are generally intended to
be at the approximate mid-point of the peer groups described
below. In addition, the Company offers a number of competitive
retirement plans which are described in more detail under the
heading Other Compensation Policies Defined
Contribution Plans.
Linking
Compensation to the Interests of Stockholders
Over the last several years, the Committee has implemented its
pay-for-performance philosophy by using performance metrics,
such as earnings, income before taxes and stock price
performance, as the principal goals for the performance-oriented
programs, particularly for the named officers. Since 2004, the
Companys business plans have progressively focused on the
profitable growth of the Company, proceeding through stages of
reversing losses incurred in years prior to 2004, then
diversifying the Companys mix of products and then toward
achieving market leadership in core product lines with an
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emphasis on the most profitable product lines. Throughout, the
Companys business plans have focused on internal
generation of the funds necessary for sustainable profitable
growth and product and end market diversification. The Committee
believes that focusing compensation programs first on earnings,
income before taxes and stock performance directs
managements energies toward achieving those longer term
goals.
The Company also has implemented stock ownership guidelines for
its directors and officers, as discussed in the Other
Compensation Policies section on page 36 of this
proxy statement.
Competitive in
the Aggregate
The Committee reviews with outside advisors Mercer Human
Resources Consulting, Inc. (Mercer) and K&L
Gates LLP the compensation forms and practices at peer groups of
companies (i) with which the Company competes for talent
and skill sets in the Companys multiple locations and
(ii) in our industrial classification. The Committee uses
this information as benchmarks to set base compensation levels
throughout the management team at approximate mid-points of
these groups. As described above, the incentive portions of the
compensation programs provide opportunities to earn additional
amounts if performance goals are met or exceeded, or less if
performance goals are not met.
Process
Role of the
Committee
The Personnel and Compensation Committee is composed of three
independent, non-employee directors. With regard to the named
officers and other members of managements executive
committee, the Committee has the sole responsibility to carry
out the Companys overarching policy of linking the
compensation program to the interests of stockholders. The
Committee also has the responsibility to outline the programs
for management employees more generally and to supervise
managements implementation of those programs to ensure a
continuing source of leadership for the Company.
Monitoring of
Performance and Progress Throughout the Year
The Committee meets periodically during the year to monitor
Company and individual performance. At these meetings, the
Committee is provided with current but unaudited financial data
and with internal Company reports on key performance measures to
determine managements interim progress toward achieving
business objectives and the potential payouts under the plans.
Portions of these meetings are attended by members of executive
management and, from time to time, by the Committees
outside compensation and legal advisors. These meetings assist
the Committee with its evaluation of whether the compensation
programs continue to support and direct performance as required
to achieve the Companys business goals.
Compensation
Advisors
For 2008, the Committee retained Mercer to serve as its
independent outside compensation consultant. Mercer assists the
Committee in reviewing the continued suitability of the peer
group used for setting base pay amounts and stockholder return
achievement, and reports on comparable company executive
compensation practices. The compensation advisors are retained
solely by the Committee and are responsible only to the
Committee.
Peer Group
Companies and Benchmarking
The Committee recognizes that there are no public companies that
engage in the full range of the Companys specialty metals
production, fabrication, marketing and distribution. The
Committee has selected the peer group companies on the bases of
relative similarity to one or more of the aspects of the
Companys businesses and on the risk profiles typically
assigned by the capital markets.
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The Committee recognizes that some companies in the peer group
are more heavily involved in one aspect of the Companys
business than in others. For example, two members of the peer
group are involved almost exclusively in the titanium business
(and one more in fabrication than production) while others
businesses are primarily focused on less specialized stainless
steel production and distribution, and some are more heavily
involved in sales rather than in production or fabricating.
However, on balance, the Committee believes the peer group is
representative of companies in the Companys industry that
serve similar markets and the balance of companies allows for
effective benchmarks to inform Committee judgments.
In 2008, the Committee expanded the Companys peer group to
include eleven additional companies. The number of companies in
the prior group had decreased due to acquisitions. The current
peer group is a broader group of companies, and reflects a
broader view of the Companys products, markets and
services. For 2008 (including the
2008-2010
performance period), the peer group consisted of the following
companies:
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AK Steel Holding Corporation
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Precision Castparts Corp.
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Alcoa Inc.
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Quanex Corporation**
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Brush Engineered Materials
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Reliance Steel & Aluminum Co.
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Carpenter Technology Corporation
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RTI International Metals, Inc.
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Castle (AM) & Co.
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Schnitzer Steel Industries, Inc.
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Commercial Metals
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Steel Dynamics, Inc.
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Gerdau Ameristeel Corp.
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Timken Co.
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Kennametal Inc.
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Titanium Metals Corporation
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Ladish Co.
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United States Steel Corporation
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Metal Management Inc.*
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Universal Stainless & Alloy Products
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Nucor Corporation
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Worthington Industries
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* Metal Management Inc. was acquired by SIMS Group Ltd in March
2008.
** The steel business of Quanex Corporation was acquired by
Gerdau Ameristeel Corp. in April 2008.
The Five-Year Total Stockholder Return section of
this Proxy Statement shows the peer groups performance
over the past five years relative to Company performance and the
S&P 500 Index.
In addition to peer group information, Mercer also provides the
Committee with information as to the compensation practices
across a wider group of industrial companies. This
benchmarking process assists the Committee with
assessing the competitiveness of the Companys programs and
earnings opportunities relative to, as well as determining the
approaches to compensation used by, the peer companies and other
industrial enterprises.
Inherent in this process is a review of the financial
performance of such companies to determine the relative efficacy
of the programs they use in comparison to the Companys
goals and plans. The Committee considers the Companys
financial performance and other information they receive in the
course of their service on the Board of Directors and on other
Board committees. All of the foregoing information enables the
Committee to evaluate the relative performance of the
Companys senior management team individually and in the
aggregate and to make informed judgments concerning compensation
programs, methods and award opportunities.
The Committee believes that the benchmarking process provides an
important frame of reference for measurement and a perspective
of competitive practices, but should not be the sole determinant
of compensation practices at the Company. The Committee also
takes into account the Companys specific business plans
and opportunities in order to fashion compensation programs
intended to incentivize employees to achieve the Company
business plans.
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Internal Pay
Equity
The Committee has been advised by Mercer regarding the relative
compensation among named officers. For the past several years,
the Committees practices for setting base compensation and
incentive opportunities for named officers have differed from
practices used by companies within the peer group. Peer company
practices generally focus on job function. Instead, the
Committee has elected for the last several years (including
2008) to support a team-oriented and collective
responsibility approach by approving equal base salary and
incentive opportunities for the executive vice presidents of the
Company. In setting compensation opportunities, the Committee
maintains an approximate ratio from year to year between the CEO
compensation opportunities and the compensation opportunities of
the executive vice presidents of the Company. Recognizing the
ultimate management responsibility of the CEO, base pay and
compensation opportunities are significantly greater for the CEO
than for executive vice presidents of the Company. However, the
Committee has been advised by Mercer that the degree of
difference between the CEO of the Company and the executive vice
presidents of the Company is not as great as in companies within
the peer group.
Implementation of
Compensation Levels and Opportunities
Near the end of each year, the Board (including members of the
Committee) receives the Companys annual and longer-term
business plans and has several opportunities to question
management about those plans. For the last several years, at the
Committees January meeting, the Committee thoroughly
discussed which compensation programs, levels and goals were
effective for the performance measurement periods then recently
ended in December and which programs, levels and goals would
optimize the achievement of the Companys business plans
for future periods. Generally, at the Committees next
meeting, in February or March, the Committee authorizes
compensation programs for future periods and sets specific
performance goals for senior management in light of approved
business plans. In addition, at that time, the Committee designs
compensation programs for other members of the management group
and directs senior managers to make awards under those programs
consistent with guidelines given by the Committee. Members of
executive management, primarily the CEO, have the discretion to
fashion specific awards to key employees who are not named
officers. No compensation awards under the long-term
compensation plans have been made after the Committees
February or March meeting in which compensation programs are
authorized for future periods, as discussed above. However,
awards may be made under the Annual Incentive Plan after that
time and awards under the AIP can be adjusted or pro-rated as
necessary during the course of the year.
When setting compensation under the AIP and for the three-year
performance measurement periods of the longer term incentive
plans, the Committee looks to the prospective periods, and does
not take into account amounts earned in prior periods. The peer
review process indicates this to be the industry practice.
Moreover, the Committee does not believe it to be in the best
interests of the Company to reduce prospective compensation
opportunities merely because excellent performance in past
periods has produced maximum cash awards and has caused the
value of equity awards to increase significantly from the value
on date of grant.
At its target setting meetings and its periodic monitoring
meetings, the Committee provides Mercer with the opportunity to
ask questions and discuss concepts without the presence of
Company personnel.
Committee
Discretion
The Committee has always retained broad discretion to make
compensation awards for recruitment and retention purposes as
well as to reward extraordinary performance. The key concept in
the named officer compensation program is and has been to
provide comparatively modest compensation for average
performance but to recognize superior performance with top
quartile compensation. The Committee has the discretion to make
awards above the amounts awarded under any plan to recognize
extraordinary performance. In past years, the Committee
exercised its discretion to increase awards when circumstances
indicated it to be appropriate. The Committee did not exercise
this overarching discretion in 2008 with regard to any
employees, including the named officers.
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Compensation
Elements
Base
Salary
The Committee views the executive compensation program as
integrated through several levels of the Companys
management employees. Base salary for the named officers was
benchmarked using a peer group survey prepared by Mercer. In
general, base compensation for the named officers is set at or
near the mid-point of the peer group. However, for 2008, the
Committee was advised by Mercer that, even after giving effect
to the February 2008 increases to the base salaries of the named
officers, base salaries for the Companys named officers
were still less than the 50th percentile of base pay for
the peer group. Rather than increasing base salaries to match
the peer group, the Committee chose to increase the
opportunities of the named officers to earn incentive
compensation under the Companys existing long-term
incentive compensation plans, as discussed below. See the
Salary column of the Summary Compensation Table on
page 39 for more information regarding the 2008 base
salaries of the named officers.
Annual Incentive
Plan or AIP
Overview. The AIP is a cash-based, incentive bonus plan
in which approximately 350 key employees (including the named
officers) participate. Performance is measured based on a
weighted formula that takes into account operating earnings,
operating cash flow, manufacturing improvements, employee
safety, environmental compliance and responsiveness to
customers. This diverse matrix of measures allows the Committee,
for senior managers (including the named officers), and
management, for other managers, to direct attention to goals and
achievements within each participants direct control. A
prerequisite to any award under the AIP is compliance with
ATIs Corporate Guidelines for Business Conduct and
Ethics.
Performance Criteria. In considering performance targets
for the 2008 AIP, the Committee took into account the
Companys business and operations plans. Corporate wide
goals are set in a
bottom-up
process. Each operating divisions business plan and
business conditions for 2008 were separately reviewed in setting
targets, as were the expectations for manufacturing
improvements, safety and environmental improvements, and
customer responsiveness at each division. The resulting
aggregate targets shown below are corporate wide and the focus
for named officer compensation. The Committee recognized that
opportunities for 2008 should allow for reasonable rewards for
meeting, and larger amounts for exceeding, the performance goals
that represented substantial challenges to AIP participants. The
Company performance goals for 2008 consisted of the following
components, weighted as indicated:
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AIP Goal
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Weighting
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Operating Earnings Achievements
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40
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%
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Operating Cash Flow Achievements (before capital expenditures)
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30
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%
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Manufacturing Improvements
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10
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%
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(Inventory Turns 5%)
(Yield Improvements 5%)
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Safety and Environmental Compliance
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10
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%
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(Lost Time Incidents 5%)
(Recordable Incidents 5%)
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Customer Responsiveness
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10
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%
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(Delivery Performance 5%)
(Quality/Complaints 5%)
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The Committee selected these factors as the measurable indices
of performance.
Relative weight was assigned to reflect the interests of
stockholders, with earnings receiving the largest weighting
followed closely by internal cash generation. However, the
day-to-day
hallmarks of performance, including inventory turns, yield,
avoidance of lost time injuries, degree of safety and
environmental compliance, meeting delivery goals and absence of
customer complaints at the operating divisions are included,
since these factors can give managers indicators of problems in
a way to make timely corrections.
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In setting the financial goals for these day-to-day measures,
the Committee looks to prior years achievement and the
planned activities at a particular operating division to set the
requirements for the coming year.
The performance criteria are determined solely on a
corporate-wide basis for all of the named officers except for
Mr. Dunlap; that is, for Messrs. Hassey, Harshman,
Kittenbrink and Walton, attainment of the performance goals for
determining individual 2008 AIP bonuses was based on the
performance of the Company as a whole. For Mr. Dunlap,
attainment of the performance goals for determining his 2008 AIP
bonus was based 20% on the degree to which the Company as a
whole attained the foregoing predetermined performance levels
with relative weighting, and 80% on the degree to which the
Companys ATI Allegheny Ludlum business unit attained the
foregoing predetermined performance levels at the business unit
level, with the same relative weighting.
Under the 2008 AIP, no payments were to be made to the named
officers if the operating earnings achieved were less than the
established minimum, notwithstanding the level of achievement of
the other performance criteria for the year. For 2008, the
threshold, target and maximum targets for the aggregate
Operating Earnings Achievements and Operating Cash Flow
Achievements, as defined, were as follows (in millions):
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Threshold
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Target
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Maximum
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Operating Earnings Achievements (40%)
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$
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909
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$
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1,130
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$
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1,251
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Operating Cash Flow Achievements (before capital expenditures)
(30%)
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$
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533
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$
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577
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$
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649
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The 2008 target level of operating earnings achievement was held
approximately even with 2007 actual performance.
Award Opportunities. The opportunities for the named
officers under the AIP, as measured in percentages of base pay,
are set each year in connection with the review of peer group
practices and levels in light of the philosophy to award equal
opportunities to executive vice presidents. Individual AIP
opportunities are granted at Threshold,
Target and Maximum levels, which are
predetermined levels of achievement of the performance goals and
are expressed as a percentage of base salary. The table below
sets forth the potential awards as percentages of base salary in
effect for 2008 for each named officer:
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Named Officer
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Threshold
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Target
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Maximum
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L. Patrick Hassey
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87.5
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%
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175
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%
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350
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%
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Richard J. Harshman
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50
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%
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100
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%
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200
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%
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Douglas A. Kittenbrink
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50
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%
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100
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%
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200
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%
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Jon D. Walton
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50
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%
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100
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%
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200
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%
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Terry L. Dunlap
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40
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%
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80
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%
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160
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%
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Level of Difficulty. The Committee sets the threshold,
target and maximum levels for all AIP measures, including those
relating to manufacturing improvements, safety and environmental
compliance, and customer responsiveness, so the relative
difficulty of achieving the target level is consistent from year
to year. The objective is to achieve target, on average over a
period of years, but to make it difficult to achieve the maximum
payout in any given year. Over the past three years, the named
officers received the maximum payout for 2006 and 2007 and
payout above target for 2008.
Committee Discretion. Under the AIP, even if the
operating earnings goals are met, the Committee retains negative
discretion to reduce actual amounts payable to each individual
by up to 20% if the individual does not achieve the other
predetermined goals for that year. The Committee also has the
discretion under the AIP to pay up to an additional 20% of an
individuals calculated award as annual bonus if the
Committee determines that such additional amounts are warranted
under the circumstances, including achieving financial
performance in excess of the maximum performance goals set for
the year. No discretionary additional amount would be
performance-based compensation for purposes of
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code). The Committee did not exercise
discretion with regard to any awards under the AIP for any of
the named officers in 2008.
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The
Performance/Restricted Stock Program or
PRSP
Overview. Under the PRSP, shares of
performance/restricted stock are awarded to participants. The
earnings threshold under the PRSP is set with respect to a
three-year business plan. The PRSP program is primarily designed
to drive Company earnings. One-half of the awards under the PRSP
have performance-based vesting only and the other half has both
a performance-based and time vesting component, as more fully
described below. Approximately 100 key managers participate in
this plan (including the named officers). However, because the
broader group of managers represents the pool of talent for
future management, the plan includes the time-based vesting
retention feature. Because of its retention element, the
earnings levels in this plan are not as challenging as the
earnings levels in other incentive programs.
Performance Criteria. In February 2008, the Committee
determined that for the
2008-2010
performance measurement period:
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One-half of the stock-based award granted will vest, if at all,
only upon the Companys achievement of at least an
aggregate of $1.2 billion in net income (determined in
accordance with U.S. generally accepted accounting
principles) for the period of January 1, 2008 through and
including December 31, 2010. If the net income target is
not reached or exceeded on or before December 31, 2010, or
if the individual leaves the employ of the Company for a reason
other than retirement, death or disability, this one-half of the
stock-based award will be forfeited.
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The other one-half of the stock-based award is traditional
restricted stock but also has a performance element. This
one-half of each award will vest upon the earlier of
(i) February 22, 2013 (if, except in the case of
retirement, death or disability, the participant is still an
employee of the Company on that date) or (ii) attainment of
the $1.2 billion in net income performance criteria for the
January 1, 2008 through December 31, 2010 period.
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Shares may also vest under the PRSP upon death and disability.
The Committee decided to increase the minimum amount of net
income required for vesting under the PRSP to $1.2 billion
for the
2008-2010
measurement period from the $900 million requirement in the
2007-2009
performance measurement period. The Committees decision
was motivated principally by the Companys expectations for
increased earnings at the time of grant.
Award Opportunities. The share amount of an
individuals performance/restricted stock award is
calculated as a percent of base salary, based on the average
trading price of the stock on the New York Stock Exchange on the
date of the award, which was $84.445 per share on
February 21, 2008. Furthering the Committees
practices with respect to internal pay equities among the named
officers, the respective percentages of base salary as set for
2008 used to determine the number of shares of
performance/restricted stock for the named officers are as
follows: Mr. Hassey, 200%, Messrs. Harshman,
Kittenbrink and Walton, 125% and Mr. Dunlap, 100%.
Dividends on performance/restricted stock granted in 2008 are
paid in cash.
The Total
Shareholder Return Incentive Compensation Program or
TSRP
Overview. The TSRP is an equity-based incentive plan in
which awards are denominated in shares of Company Common Stock
and participants have an opportunity to earn a number of shares
based on a comparison of the Companys total stockholder
return (change in stock price plus dividends paid, or
TSR) for a three-year performance measurement
period, compared to the TSR for the same performance measurement
period of a peer group of companies approved by the Committee.
The target number of shares awarded (the Opportunity
Shares) is determined at the start of the three-year
performance measurement period using a per share value equal to
the average of the high and low trading prices over the 30
trading days immediately preceding the first day of the
performance measurement period. The percentile rank of returns
on the Companys Common Stock, or TSR, compared with actual
TSR of the peer group for a three-year performance measurement
period determines the number of shares, if any, received by the
participants at the end of the period. The purpose of this
program is to focus management directly on returns to
stockholders. Approximately 50 key executives (including the
named officers) participate in this plan.
31
Performance Criteria. The Committee established a new
TSRP performance measurement period starting on January 1,
2008 and ending on December 31, 2010. Under the terms of
the TSRP, the Committee selected the eligible participants,
established the Opportunity Shares for each participant, and
constructed the peer group of companies for that performance
measurement period. The peer group used for the
2008-2010
performance measurement period is set forth on page 27.
At the end of the
2008-2010
performance measurement period, participants can earn varying
percentages of their individual Opportunity Shares depending on
the percentile rank of the Companys TSR for the
performance measurement period as compared to the TSR of the
peer group for the same period. Interpolation is made between
these points. Company performance below the 25th percentile
results in participants receiving no shares for the performance
measurement period.
Award Opportunities. For the
2008-2010
performance measurement period, an individuals Opportunity
Shares was calculated by dividing a predetermined percentage of
an individuals base salary for 2008 by the average high
and low trading prices of a share of Company Common Stock for
the thirty trading days preceding January 1, 2008, or
$91.084. The Opportunity Shares for each of the named officers
are as follows: Mr. Hassey, 19,982; each of
Messrs. Harshman, Walton and Kittenbrink, 5,874;
Mr. Dunlap, 4,227.
For the
2008-2010
performance measurement period, the named officers can earn from
50% of their Opportunity Shares for Company performance at
threshold, to 100% of the Opportunity Shares for
Company performance at target, to a
maximum of 300% of the Opportunity Shares for
performance at the 90th percentile or above, as described
above. The table below sets forth for each named officer for the
2008-2010
performance measurement period the percentage of the named
officers base salary used to determine the number of
shares awarded under the TSRP at various TSR percentiles.
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Percentage of Opportunity Shares Earned at Various TSR
Percentiles
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(Maximum)
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(Threshold)
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(Target)
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90th Percentile and
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25th Percentile
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50th Percentile
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60th Percentile
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70th Percentile
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80th Percentile
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Above
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For all Named Officers
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50
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%
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100
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%
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150
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%
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200
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%
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250
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%
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300
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%
|
The number of shares of Company Common Stock earned, if any, are
issued to the participants after the end of the performance
measurement period. The number of shares earned, and their
dollar value when earned, may exceed the dollar value of target
at the time of the grant because this plan increases the number
of shares that may ultimately be awarded for performance above
the target level and because performance above the target level
may contribute to a higher trading price. Similarly, depending
on the Companys performance, the number of shares
ultimately received may be less than the target level and the
dollar value of awards earned could be less than the dollar
value of the awards when granted.
The Key Executive
Performance Plan or KEPP
Overview. The KEPP is a cash-based incentive plan with a
three-year performance measurement period. Only the members of
managements executive committee (a group that includes the
named officers) are eligible to participate in this plan. The
KEPP was established by the Committee initially in 2004 in order
to keep the Companys long-term incentive programs
competitive with peer companies. The overall objective of the
KEPP has been to reposition the Company to achieve long-term,
profitable growth. For purposes of the compensation tables,
three KEPP performance measurement periods are applicable:
2006-2008
(KEPP III),
2007-2009
(KEPP IV),
2008-2010
(KEPP V). See the KEPP graph on page 33 of this Proxy
Statement.
As described below, cash targets under the KEPP are based on two
levels Level One and Level Two.
Level One uses improvement in income before taxes
(IBT) over a three-year base period to determine
achievement. For the
2004-2006
performance measurement period, Level One achievement was
measured using net income, rather than IBT. Beginning with the
2005-2007
performance measurement period, following the recapture of a
deferred tax asset, the Committee changed the Level One
measurement to IBT, so that the KEPP targets would not be
distorted by the reversal of valuation allowances associated
with the Companys deferred tax asset. Level Two
awards are based on the accomplishment of specific operational
team tasks keyed to positioning the Company for future
challenges, and are subject to the
32
negative discretion of the Committee. No payments are permitted
under Level Two if Level One achievements are below
the threshold or at or above the maximum.
Performance Criteria. Since KEPP was adopted in 2004, its
focus has been Company earnings because stockholders consider
earnings when evaluating the Companys performance and
because earnings generate the resources for the Company to
reposition itself through capital investment. The Level Two
operational goals are developed as a roadmap for management to
use to achieve the Level One financial goals.
For the
2006-2008
performance measurement period (KEPP III), the focus of the plan
was to internally generate capital to invest in the higher
margin businesses. The
2007-2009
performance measurement period (KEPP IV) focuses on
optimizing the capital assets in which the Company invested over
the recent past. The
2008-2010
performance measurement period (KEPP V) focuses on the
completion of key capital improvement projects.
For purposes of the compensation tables, for the
2006-2008
performance measurement period of KEPP III, an aggregate of
$900 million in income before taxes was required at
threshold, and each of the successive nine gradients required an
additional $100 million in aggregate income before taxes.
No additional amount was paid for performance achieving income
before taxes above the highest gradient. Actual income before
taxes was nearly $2.9 billion; therefore, the KEPP III
maximum performance levels were achieved for the
2006-2008
performance measurement period.
For the
2007-2009
performance measurement period of KEPP IV, an aggregate of
$2.5 billion in income before taxes is required at
threshold, and each of the successive nine gradients requires an
additional $100 million in aggregate income before taxes.
No additional amount will be paid for performance achieving
income before taxes above the highest gradient.
For the
2008-2010
performance measurement period of KEPP V, an aggregate of
$3.1 billion in income before taxes is required at
threshold, and each of the successive nine gradients requires an
additional $100 million in aggregate income before taxes.
No additional amount will be paid for performance achieving
income before taxes above the highest gradient.
33
KEPP Level One. Performance Criteria
Under Level One, participants will receive cash
payments if, but only if, a predetermined level of aggregate IBT
is attained or exceeded for the applicable performance
measurement period, as set forth in the chart above.
Level One bonus pools increase on a graduated scale as
aggregate IBT increases through the specified gradients to a
maximum level of aggregate IBT at the highest of the ten
gradients. The Committee sets the IBT targets at levels it
believes would drive year-over-year earnings growth for the
Company. The Committee intends for the IBT targets for this plan
to be particularly challenging. Through KEPP V, this
required continued substantial improvement over the rolling
three-year prior period, which in and of itself included
exceeding previous record earnings years. For each KEPP
performance measurement period through KEPP V other than the
2008-2010
period, the minimum threshold performance level exceeded the
maximum level when compared to the prior KEPP performance
measurement period.
Award Opportunities For KEPP participants,
Lever One target awards are set at one times base salary and
achievement of each gradient of IBT above target increases
potential awards by approximately one times base salary, to a
maximum of ten times base salary.
Opportunities under KEPP are scaled so that the aggregate
compensation of participants will be at or below median of the
peer group if performance is less than the threshold level of
payment, but will result in aggregate compensation to KEPP
participants at approximately the 90th percentile of the
peer group if performance is at the highest pre-set gradient.
Threshold and gradients are intended to be substantial
challenges to participants and, through KEPP V, were set
with reference to improvements in IBT over the preceding
periods actual results. No additional amount will be paid
for performance achieving IBT above the highest gradient.
Amounts payable under Level One are generally calculated as
follows. Once the Companys actual IBT achievement for the
applicable performance measurement period is determined, the
corresponding IBT gradient level is ascertained. Level One
payments for each participant in KEPP are a multiple of that
individuals base pay in effect at the beginning of the
three-year measurement period that corresponds to the actual IBT
gradient achieved during the three-year measurement period.
For the completed
2006-2008
performance measurement period, actual IBT was nearly
$2.9 billion, which means that the maximum IBT gradient was
achieved. Thus, the KEPP participants received total award
payments under Level One for the
2006-2008
performance measurement period at ten times their respective
base salaries, of: Mr. Hassey $8,500,000, Mr. Harshman
$4,000,000, Mr. Kittenbrink $4,000,000, Mr. Walton
$4,000,000, and Mr. Dunlap $3,500,000. These amounts are
shown in the column entitled Non-Equity Incentive Plan
Compensation of the Summary Compensation Table on
page 39.
KEPP Level Two. The purpose of Level Two is to
direct the actions of the management team to perform specific
strategic actions that, if achieved, the Company expects will
result in outstanding earnings over a three-year period.
Level Two is a separate bonus pool formed if pre-set
strategic action goals are achieved that permits participants to
earn awards even if the pre-set financial goals under
Level One are not achieved. This is due to the fact that
certain goals under Level Two, by their nature, require
more than one year to implement, and perhaps several years for
it to be determined whether those goals were achieved. The
specific goal tasks under Level Two are proprietary, but
have in the past included acquiring assets required to penetrate
predetermined niche markets, efficiently increasing the
Companys titanium production capacity, specific cost
control measures, increasing overseas presence and production
and other team-oriented tasks key to the Companys long
term business plan designed to fundamentally reposition the
Company to succeed in cyclical markets. Therefore,
Level Two permits KEPP participants to be rewarded for
achieving the pre-set operational goals even though the benefits
in earnings under Level One have been delayed.
Level Two bonus pools, subject to the Committees
negative discretion, increase at the same graduated scale used
for Level One for the first five gradients of aggregate
IBT, and thereafter, the Level Two bonus pool decreases on
a graduated scale as aggregate IBT increases through the
gradients so that no bonus pool under Level Two is
available at the highest gradient of aggregate IBT. In each KEPP
performance period since the inception of KEPP, no payments have
been made under Level Two because actual earnings under
Level One resulted in maximum KEPP payments. The Committee
may exercise negative discretion to reduce any awards otherwise
earned under Level Two based on the Committees
evaluation of the extent to which designated key operational
objectives are achieved.
34
Banking Feature. For the
2006-2008,
2007-2009
and
2008-2010
performance measurement periods, the KEPP plan has a
banking feature whereby, if the actual achievement
for any one or more years exceeds the average annual targets for
that year, a KEPP payment may be reserved to be paid after the
end of the measurement period at that achievement level. All
banked amounts under the KEPP are not payable until
the completion of the applicable performance measurement period
and are subject to forfeiture prior to the end of the
performance measurement period if employment is terminated for
reasons other than death, disability or retirement. Once the
relevant performance measurement period is completed, awards are
paid out at the greater of the (i) performance level at the
end of the period, or (ii) total of banked amounts for the
first two years earned.
Employment
Contracts and Change in Control Agreements
For retention purposes, the Committee has authorized two
employment contracts and double trigger change in control
severance agreements, all of which reflect competitive practices
as advised by Mercer.
The two employment agreements to which the Company is a party
are a three-year evergreened agreement with Mr. Hassey that
was entered into when Mr. Hassey was recruited in 2003, and
a one-year evergreened agreement with Mr. Walton that was
entered into in 1996 when Allegheny Ludlum Corporation and
Teledyne, Inc. combined. For a more detailed discussion of these
agreements, see the Employment and Change in Control
Agreements section of this Proxy Statement.
The Company has entered into a change in control agreement with
each of the named officers except for Mr. Hassey. The
change in control agreements are intended to better enable the
Company to retain the named officers in the event that the
Company is the subject of a potential change in control
transaction and are in the interests of the Company and its
stockholders. Based on past advice from the compensation
consultant, the Committee believes that the potential payments
under the change in control agreements are, individually and in
the aggregate, in line with competitive practices. The Committee
takes the value of these contracts, as well as the qualified and
non-qualified plans discussed below, into account when setting
named officer compensation. Please see the Employment and
Change in Control Section of this Proxy Statement.
Other
Compensation Policies
Adherence to
Ethical Standards; Clawbacks
The payment of awards under the AIP is conditioned on adherence
to the Companys Corporate Guidelines for Business
Conduct and Ethics. Furthermore, the Committee has included
clawback provisions in each compensation program that require
participants in plans to return compensation to the extent that
earnings or other performance measures are improperly reported.
Pension
Plans
The Company also sponsors a number of defined contribution and,
for some executives that were employees of Allegheny Ludlum
Corporation or Teledyne, Inc. prior to the 1996 combination
(which includes all of the named officers except for
Mr. Hassey), defined benefit retirement arrangements, with
non-qualified programs compliant with Section 409A of the
Code aimed at restoring the effects of limitations imposed by
the Code. The benefits payable under these programs are more
modest than the benefits payable under restoration plans
sponsored by other manufacturing companies, in large part
because accruals for former Teledyne, Inc. employees under the
applicable qualified defined benefit plan have been curtailed
and because the defined benefit plan for former Allegheny Ludlum
Corporation employees was frozen in 1988. The Company does
sponsor a Supplemental Pension Plan covering certain
corporate officers, including all of our named officers except
for Mr. Dunlap, as a non-qualified plan that pays one half
of the individuals salary at retirement to the executive
(or spouse) for ten years after retirement at age 62 or at
or after age 58 with the consent of the Company. The
Company maintains these programs in order to offer competitive
compensation and as retention devices. For more information
regarding the pension plans of the named officers, see the
Pension Benefits table and accompanying narrative beginning on
page 43.
35
No Stock
Options
The Committee ceased awarding stock options to employees as a
matter of policy after 2003 and to directors after 2006.
Subsequently, the Company became an early adopter of Statement
of Financial Accounting Standards (FAS) No. 123(R)
Share-Based Payments (FAS 123(R)).
Some stock options granted before that time remain outstanding
as reported elsewhere in this Proxy Statement. The Committee
retains discretion to award stock options to employees but there
is no present intent to do so, except possibly in recruitment or
retention situations. At the time that the Committee ceased
awarding stock options, it chose to implement the PRSP for a
smaller, more senior group of managers, including all of the
named officers, than the group previously considered for option
awards. The Committees view was that the PRSP, by putting
half of each award at risk for performance for the
limited group of employees, would more efficiently provide a
strong performance incentive to the management employees more
able to influence corporate earnings and goal achievement.
Perquisites
The Company provides a limited number of perquisites, having
eliminated the use of automobiles and reimbursement for country
club memberships several years ago. In the process of recruiting
Mr. Hassey in 2003, the Company agreed to accommodate his
request that he be able to avoid relocating his family from its
Salt Lake City residence. In order to do so, Mr. Hassey
periodically uses Company leased aircraft so that he can
maintain a full schedule with the Company. For more information
regarding the perquisites of the named officers, please see the
All Other Compensation column of the Summary
Compensation Table beginning on page 39.
Federal Income
Taxes/ Tax Deductibility
The Committee has intended that the compensation programs be
performance-based within the meaning of Section 162(m) of
the Code. All compensation earned under these programs is
intended to be deductible by the Company for federal income tax
purposes. The Committee retains discretion to adjust
compensation paid under these programs to recognize
extraordinary performance. If that discretion is exercised,
upward adjustments may not be deductible for federal income tax
purposes.
Stock Ownership
Guidelines
The Company has stock ownership guidelines for its officers,
including all of the named officers. The guidelines call for a
minimum level of stock ownership based on the executives
base salary, which is designed to further link these
executives interests to increased stockholder value, as
follows: Chief Executive Officer, three times base salary;
Executive Officers, two times base salary; and Vice Presidents,
one times base salary. The executives are required to have
achieved the target ownership levels before September 2008 or
five years from the date executives employment began,
whichever is later. All of the named individuals met these
guidelines during 2008. The Company also has stock ownership
guidelines for its non-employee directors, which are discussed
in the Director Compensation section of this Proxy
Statement.
Mix of
Compensation Components
The Committee believes that it strikes an appropriate balance
for named officers between cash and stock compensation
opportunities and between one year and longer term
opportunities. At target levels of awards, based on stock
trading values when the award is made, approximately 45% of
compensation opportunities for executive officers are payable in
cash (base pay, AIP and KEPP) and 55% is payable in stock (PRSP
and TSRP). The Committee believes the balance between one year
and longer term compensation achieves consistency in goal
setting that considers both the short term results and building
a platform for future profitable growth. The Committee also
believes this cash and equity compensation ratio, along with the
stock ownership guidelines for executives, focuses
managements attention on the interests of stockholders and
encourages executives to retain shares of stock. It is expected
that the Committee will strive to retain these general ratios.
36
The Committee believes it utilizes an optimal allocation between
guaranteed and at risk named officer compensation.
The graph below illustrates the at risk percentage
of actual compensation for Mr. Hassey and each of the other
named individuals for the period 2006 through 2008, which the
Committee understands is a higher at risk percentage
than exhibited in the comparable group:
For the purposes of this graph, total compensation for each year
in the three-year period is base compensation and AIP earned in
the year and PRSP, TSRP and KEPP awards paid for the measurement
periods ending on the last day of the year. Stock values for
PRSP and TSRP are measured as of the date the award was paid to
the executives.
Analysis of 2008
Compensation Decisions
The net result of the Committees compensation actions with
respect to the named officers for 2008 was to decrease the
weight of base pay relative to the sum of base pay and target
incentive opportunities to approximately 13% for Mr. Hassey
and 18% for Messrs. Harshman, Kittenbrink and Walton and
21% for Mr. Dunlap (using the same stock price at the end
of the period as used to denominate the awards). The Committee
was advised by Mercer that base salaries for the Companys
named officers for 2008 were less than the 50th percentile
of base pay for the peer group. Instead of increasing base
salaries to match the peer group, the Committee chose to
increase the opportunities to earn incentive compensation under
the longer term plans, so that if target levels of performance
under the PRSP and TSRP were achieved (using the same stock
price at the end of the period as used to denominate the
awards), the aggregate compensation paid to the named officers
would approximate the 75th percentile of the peer group. If
the target level of performance is reached under the KEPP, the
aggregate compensation for named officers is expected to exceed
the 90th percentile for the
2008-2010
performance measurement period.
The Committee believes that these comparatively high opportunity
levels are justified not only by the relative weighting of
incentive to guaranteed compensation, but also by the aggressive
target performance levels set by the Committee. The Committee
believes that the target requirements are significant challenges
to management. If achieved, the rewards to management would be
relatively high as compared to the peer group, but the Company
will have been positioned for continued profitable growth with
enhanced titanium sponge, titanium melt, nickel-based superalloy
melt, and finishing capabilities and improvements in its other
businesses. Mercer advised the Committee that the performance
requirements set by the Committee are at growth levels that
exceed the average of the growth levels of other members of the
peer group.
Moreover, at its December 2008 and January 2009 meetings, in
connection with the review and approval of payouts for the
2006-2008
performance measurement period, the Committee discussed the fact
that the fourth quarter of 2008 showed weakness and the
Companys stock performance declined in line with the stock
performance of the S&P 500 in 2008. The Committee was also
advised that, notwithstanding, the Company expected to achieve
its second best year of revenues and earnings in 2008. The
Committee further reviewed the fact that, combined with the
Companys financial achievements of 2006 and 2007, the
37
performance metrics under the PRSP, TSRP and KEPP for the
2006-2008
performance measurement period would be met. Therefore, even
though the Companys 2008 financial performance was not as
strong as the Companys performance in 2007, the
Companys financial achievements caused achievement of the
maximum performance metrics under the PRSP and KEPP, and
performance above target for TSRP, for the
2006-2008
performance measurement period.
Based on these considerations, the Committee has determined
that, due to solid Company performance in 2008, the 2008 AIP
award at above target, the TSRP award at above target, and the
PRSP and KEPP payouts at maximum over the three-year performance
measurement period of
2006-2008,
are appropriate and consistent with the Committees design
of the Companys executive compensation program.
Five-Year Total
Stockholder Return
The following graph is the same five-year graph appearing in
Item 5 of the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and shows the
cumulative total stockholder return (i.e., price change plus
reinvestment of dividends) (TSR) on our Common Stock
for five years, from December 31, 2003 through
December 31, 2008, as compared to the S&P 500 Index
and two peer groups of companies. We believe the peer groups of
companies are representative of companies in our industry that
serve similar markets during the applicable periods. The total
stockholder return for the peer group is weighted according to
the respective issuers stock market capitalization at the
beginning of each period. The graph assumes that $100 was
invested on December 31, 2003.
Please see the information under the caption Compensation
Discussion and Analysis Peer Group and
Benchmarking on page 26 of this Proxy Statement for a
discussion of the peer group for 2008. The peer group
through 2007 consisted of AK Steel Holding Corp., ALCAN
Inc. (through 2006), ALCOA Inc., Carpenter Technology
Corp., IPSCO Inc. (through 2006), Kennametal Inc., Nucor
Corp., Quanex Corp. (through 2007), Reliance Steel &
Aluminum Co., RTI International Metals Inc., Steel Dynamics
Inc., Titanium Metals Corp. and United States Steel Corp.
The peer groups depicted above are the peer groups used in the
TSRP for the applicable performance measurement periods. Under
the TSRP, the TSR of the Company is compared to the TSR of the
applicable peer group on an absolute basis, and is not weighted
for market capitalization. The amount of the award, if any, is
determined by measuring the Companys TSR performance
against the relative performance of all applicable peer group
companies without regard to their size. This is unlike the above
performance graph, in which the returns are weighted for market
capitalization, causing the TSR performance of a large
capitalization company to have greater weight than the TSR
performance of a small capitalization company. As a result, in
the performance graph, weak performance of a large
capitalization company will have a greater weight than the
strong performance of a small capitalization company.
38
Summary
Compensation Table for 2008
The following Summary Compensation Table sets forth information
about the compensation paid by the Company to the Chief
Executive Officer, the Chief Financial Officer and to each of
the other three most highly compensated executives required to
file reports under Section 16 of the Securities Exchange
Act of 1934, as of December 31, 2008 (the named
officers).
COMPARISON OF
CUMULATIVE FIVE YEAR TOTAL RETURN
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Change in
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|
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|
Pension
|
|
|
|
|
|
|
|
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|
|
|
|
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Value and
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Non-Qualified
|
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Non-Equity
|
|
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Deferred
|
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Name and
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Stock
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|
Option
|
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Incentive Plan
|
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Compensation
|
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|
All Other
|
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|
|
Principal
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
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Total
|
|
Position
|
|
Year
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
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($)(5)
|
|
|
($)(6)
|
|
|
($)
|
|
|
|
|
L. Patrick Hassey
|
|
|
2008
|
|
|
|
907,917
|
|
|
|
0
|
|
|
|
3,269,452
|
|
|
|
0
|
|
|
|
5,514,208
|
|
|
|
367,554
|
|
|
|
722,645
|
|
|
|
10,781,776
|
|
Chairman, President and
|
|
|
2007
|
|
|
|
880,042
|
|
|
|
323,886
|
|
|
|
3,120,420
|
|
|
|
0
|
|
|
|
17,959,447
|
|
|
|
639,524
|
|
|
|
567,172
|
|
|
|
23,490,491
|
|
Chief Executive Officer
|
|
|
2006
|
|
|
|
850,000
|
|
|
|
1,337,584
|
|
|
|
1,800,408
|
|
|
|
0
|
|
|
|
10,445,749
|
|
|
|
330,000
|
|
|
|
615,248
|
|
|
|
15,378,989
|
|
Richard J. Harshman
|
|
|
2008
|
|
|
|
427,000
|
|
|
|
0
|
|
|
|
1,190,760
|
|
|
|
0
|
|
|
|
2,160,733
|
|
|
|
(77,209
|
)
|
|
|
162,719
|
|
|
|
3,864,003
|
|
Executive Vice
|
|
|
2007
|
|
|
|
413,733
|
|
|
|
12,582
|
|
|
|
917,316
|
|
|
|
0
|
|
|
|
7,707,418
|
|
|
|
669,873
|
|
|
|
134,845
|
|
|
|
9,855,767
|
|
President, Finance and
Chief Financial Officer
|
|
|
2006
|
|
|
|
400,000
|
|
|
|
130,912
|
|
|
|
514,560
|
|
|
|
1,788
|
|
|
|
4,702,421
|
|
|
|
310,000
|
|
|
|
127,869
|
|
|
|
6,187,550
|
|
Douglas A.
Kittenbrink(1)
|
|
|
2008
|
|
|
|
427,000
|
|
|
|
0
|
|
|
|
1,190,760
|
|
|
|
0
|
|
|
|
2,160,733
|
|
|
|
1,520
|
|
|
|
164,698
|
|
|
|
3,944,711
|
|
Executive Vice President,
|
|
|
2007
|
|
|
|
413,733
|
|
|
|
12,582
|
|
|
|
917,316
|
|
|
|
0
|
|
|
|
7,707,418
|
|
|
|
119,030
|
|
|
|
136,443
|
|
|
|
9,306,522
|
|
Corporate Planning and International Business Development
|
|
|
2006
|
|
|
|
400,000
|
|
|
|
130,912
|
|
|
|
518,124
|
|
|
|
1,788
|
|
|
|
4,702,421
|
|
|
|
140,000
|
|
|
|
123,635
|
|
|
|
6,016,880
|
|
Jon D. Walton
|
|
|
2008
|
|
|
|
427,000
|
|
|
|
0
|
|
|
|
1,190,760
|
|
|
|
0
|
|
|
|
2,160,733
|
|
|
|
62,803
|
|
|
|
172,474
|
|
|
|
4,013,770
|
|
Executive Vice President,
|
|
|
2007
|
|
|
|
413,733
|
|
|
|
12,582
|
|
|
|
917,316
|
|
|
|
0
|
|
|
|
7,707,418
|
|
|
|
61,616
|
|
|
|
145,086
|
|
|
|
9,257,751
|
|
Human Resources, Chief
Legal and Compliance Officer, General Counsel and
Corporate Secretary
|
|
|
2006
|
|
|
|
400,000
|
|
|
|
130,912
|
|
|
|
514,560
|
|
|
|
1,788
|
|
|
|
4,702,421
|
|
|
|
300,000
|
|
|
|
131,808
|
|
|
|
6,181,489
|
|
Terry L. Dunlap
|
|
|
2008
|
|
|
|
386,667
|
|
|
|
0
|
|
|
|
840,660
|
|
|
|
0
|
|
|
|
1,658,803
|
|
|
|
(435
|
)
|
|
|
117,315
|
|
|
|
3,003,310
|
|
Group President, ATI
Flat-Rolled Products and ATI
Allegheny Ludlum Business
Unit President
|
|
|
2007
|
|
|
|
366,500
|
|
|
|
48,400
|
|
|
|
610,344
|
|
|
|
0
|
|
|
|
6,568,267
|
|
|
|
(279
|
)
|
|
|
107,243
|
|
|
|
7,700,475
|
|
|
|
|
|
(1) |
|
Mr. Kittenbrink resigned his
position with the Company effective March 1, 2009.
|
|
(2) |
|
Consists of discretionary cash
bonuses.
|
|
(3) |
|
The values set forth in this column
are based on the aggregate grant date fair value of
performance/restricted stock awards, awards under the
Companys TSRP and for 2006, stock options, computed in
accordance with FAS 123(R) and represent the expense
recorded under FAS 123(R), and include
performance/restricted stock and TSRP awards made in 2006, 2007
and 2008 (for 2008 values), 2005, 2006 and 2007 (for 2007
values), and 2004, 2005, and 2006 (for 2006 values), each of
which has a three-year performance measurement period, and stock
options granted in 2003 with a three-year vesting period. The
fair value of nonvested performance/restricted stock awards is
measured based on the stock price at the grant date, adjusted
for non-participating dividends, as applicable, based on the
current dividend rate. For nonvested stock awards to employees
in 2008, 2007, and 2006, one-half of the nonvested stock
(performance shares) vests only on the attainment of
an income target, measured over a cumulative three-year period.
The remaining nonvested stock awarded to employees vests over a
service period of five years, with accelerated vesting to three
years if the performance shares vesting criterion is
attained. Expense for each of these awards is recognized based
on estimates of attaining the performance criterion. As of
December 31, 2008, the income statement metrics for the
2008 and 2007 awards were expected to be attained for the
performance shares, and expense for both portions of the awards
is being recognized on a straight line basis based on a
three-year vesting assumption. Fair values for the TSRP awards
were estimated using Monte Carlo simulations of stock price
correlation, projected dividend yields and other variables over
three-year time horizons matching the TSRP performance periods.
|
|
(4) |
|
Consists of performance-based (and
not discretionary) cash awards earned for the years indicated
under the AIP and the KEPP, respectively, as follows. For 2008,
the KEPP amounts set forth below are the banked
amounts earned under the
2006-2008
KEPP and under ongoing KEPP plans (for the
2007-2009
and
2008-2010
performance measurement periods) based on 2008 performance.
Amounts banked under the
2006-2008
KEPP based on performance in 2007 and 2006 were reported in the
prior respective years and are included in the Summary
Compensation Table above.
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
2006-2008
|
|
|
2007-2009
|
|
|
2008-2010
|
|
|
|
AIP
|
|
KEPP
|
|
|
KEPP
|
|
|
KEPP
|
|
|
|
|
L. P. Hassey
|
|
$2,149,875
|
|
$
|
2,833,333
|
|
|
$
|
531,000
|
|
|
$
|
0
|
|
R. J. Harshman
|
|
$577,800
|
|
$
|
1,333,333
|
|
|
$
|
249,600
|
|
|
$
|
0
|
|
D. A. Kittenbrink
|
|
$577,800
|
|
$
|
1,333,333
|
|
|
$
|
249,600
|
|
|
$
|
0
|
|
J. D. Walton
|
|
$577,800
|
|
$
|
1,333,333
|
|
|
$
|
249,600
|
|
|
$
|
0
|
|
T. L. Dunlap
|
|
$238,163
|
|
$
|
1,166,667
|
|
|
$
|
225,000
|
|
|
$
|
0
|
|
|
Banked amounts under the KEPP are not payable until
the completion of each KEPPs performance measurement
period and are subject to forfeiture prior to the end of the
performance measurement period if employment is terminated for
reasons other than death, disability or retirement. Once the
relevant performance measurement period is completed, awards are
paid out at the greater of the (i) performance level at the
end of the period, or (ii) total of banked amounts for the
first two years earned.
|
|
|
(5) |
|
The amounts in this column reflect
the actuarial change in the present value of the named
officers benefits under all defined benefit pension plans
(both qualified and non-qualified) established by the Company
determined using interest rate and mortality rate assumptions
consistent with those used in the Companys financial
statements and include amounts which the named officer currently
may not be entitled to receive because such amounts are not
vested.
|
|
(6) |
|
Other amounts in the All
Other Compensation Column include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
made by the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) and
|
|
|
|
|
|
Dividends on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
|
|
|
|
|
|
Nonvested
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
|
Defined
|
|
|
|
|
|
Performance/
|
|
|
|
|
|
|
|
|
|
Tax
|
|
|
Restoration
|
|
|
Contribution
|
|
|
Insurance
|
|
|
Restricted
|
|
|
City Club
|
|
|
|
|
|
|
Reimbursements
|
|
|
Plan
|
|
|
Plans
|
|
|
Premiums
|
|
|
Stock
|
|
|
Membership
|
|
|
Parking
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
L. Patrick Hassey
|
|
|
38,359
|
*
|
|
|
420,150
|
|
|
|
23,220
|
|
|
|
13,952
|
|
|
|
7,178
|
|
|
|
3,512
|
|
|
|
1,286
|
|
Richard J. Harshman
|
|
|
3,291
|
**
|
|
|
127,135
|
|
|
|
23,220
|
|
|
|
2,164
|
|
|
|
2,111
|
|
|
|
3,512
|
|
|
|
1,286
|
|
Douglas A. Kittenbrink
|
|
|
3,263
|
**
|
|
|
127,135
|
|
|
|
23,220
|
|
|
|
2,164
|
|
|
|
2,111
|
|
|
|
3,512
|
|
|
|
1,286
|
|
Jon D. Walton
|
|
|
3,262
|
**
|
|
|
127,135
|
|
|
|
23,220
|
|
|
|
11,948
|
|
|
|
2,111
|
|
|
|
3,512
|
|
|
|
1,286
|
|
Terry L. Dunlap
|
|
|
0
|
|
|
|
91,400
|
|
|
|
23,220
|
|
|
|
1,268
|
|
|
|
1,427
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
*
|
|
For air travel, city club
membership and parking.
|
|
**
|
|
For city club membership and
parking.
|
|
|
|
|
|
Mr. Hassey and
Mr. Kittenbrink also received perquisites and personal
benefits in 2008 of $214,988 and $2,007, respectively, for air
travel. The values of any perquisites, including personal travel
amounts, are calculated based on the aggregate incremental cost
to the Company. Amounts relating to air travel are calculated
based on the variable costs of hourly and fuel surcharges and
excise taxes paid by the Company for the leased aircraft used.
Fixed costs are not included. In the process of recruiting
Mr. Hassey in 2003, the Company agreed to accommodate his
request that he be able to avoid relocating his family from its
Salt Lake City residence. In order to do so, Mr. Hassey
periodically uses Company leased aircraft to travel to and from
Mr. Hasseys family home in Salt Lake City, Utah so
that he can maintain a full schedule with the Company.
Mr. Hasseys use of Company leased aircraft for these
purposes is a provision of Mr. Hasseys employment
agreement with the Company. Also, the Personnel and Compensation
Committee has required Mr. Hassey to use Company leased
aircraft for the Companys benefit.
|
|
|
|
Under the non-qualified Defined
Contribution Benefit Restoration Plan, the Company supplements
payments received by participants under the Companys
defined contribution plan (which is known as the
Retirement Savings Plan) by accruing benefits on
behalf of participants in amounts that are equivalent to the
portion of the formula contributions or benefits that cannot be
made under such plan due to limitations imposed by the Code. See
also the narrative discussion following the Non-Qualified
Deferred Compensation Table.
|
|
|
|
The quarterly dividends paid on
shares of performance/restricted stock, as described in
note 2 above, are based on the
intra-day
price of the shares on the applicable dividend payment date. The
price used to reinvest shares, and the mechanism and manner in
which the dividends are reinvested, are consistent with the
Companys dividend reinvestment plan.
|
40
Grants
of Plan-Based Awards for 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
Estimated
|
|
All Other
|
|
Awards:
|
|
Exercise
|
|
|
|
|
|
|
|
|
Possible Payouts
|
|
Possible Payouts
|
|
Stock
|
|
Number of
|
|
Or Base
|
|
Grant Date
|
|
|
|
|
|
|
Under Non-Equity
|
|
Under Equity
|
|
Awards:
|
|
Securities
|
|
Price of
|
|
Fair Value of
|
|
|
|
|
|
|
Incentive Plan Awards
|
|
Incentive Plan Awards
|
|
Number
|
|
Underlying
|
|
Option
|
|
Plan-Based
|
|
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
of Shares
|
|
Options
|
|
Awards
|
|
Equity
|
Name
|
|
Description(1)
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
of Stock (#)
|
|
(#)
|
|
($/sh)
|
|
Awards
($)(2)
|
|
|
L. Patrick Hassey
|
|
|
AIP
|
|
|
|
|
|
|
|
796,250
|
|
|
|
1,592,500
|
|
|
|
3,185,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,776
|
|
|
|
21,552
|
|
|
|
21,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,819,959
|
|
|
|
|
TSRP
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,991
|
|
|
|
19,982
|
|
|
|
59,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,557,572
|
|
|
|
|
KEPP
|
|
|
|
|
|
|
|
910,000
|
|
|
|
910,000
|
|
|
|
9,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
1,706,250
|
|
|
|
2,502,200
|
|
|
|
12,285,000
|
|
|
|
20,767
|
|
|
|
41,534
|
|
|
|
81,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,377,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard J. Harshman
|
|
|
AIP
|
|
|
|
|
|
|
|
214,000
|
|
|
|
428,000
|
|
|
|
856,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,168
|
|
|
|
6,335
|
|
|
|
6,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
534,959
|
|
|
|
|
TSRP
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,937
|
|
|
|
5,874
|
|
|
|
17,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
751,836
|
|
|
|
|
KEPP
|
|
|
|
|
|
|
|
428,000
|
|
|
|
428,000
|
|
|
|
4,280,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
642,000
|
|
|
|
856,000
|
|
|
|
5,136,000
|
|
|
|
6,105
|
|
|
|
12,209
|
|
|
|
23,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,286,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas A. Kittenbrink
|
|
|
AIP
|
|
|
|
|
|
|
|
214,000
|
|
|
|
428,000
|
|
|
|
856,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,168
|
|
|
|
6,335
|
|
|
|
6,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
534,959
|
|
|
|
|
TSRP
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,937
|
|
|
|
5,874
|
|
|
|
17,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
751,836
|
|
|
|
|
KEPP
|
|
|
|
|
|
|
|
428,000
|
|
|
|
428,000
|
|
|
|
4,280,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
624,000
|
|
|
|
832,000
|
|
|
|
5,147,418
|
|
|
|
6,105
|
|
|
|
12,209
|
|
|
|
23,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,286,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon D. Walton
|
|
|
AIP
|
|
|
|
|
|
|
|
214,000
|
|
|
|
428,000
|
|
|
|
856,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,168
|
|
|
|
6,335
|
|
|
|
6,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
534,959
|
|
|
|
|
TSRP
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,937
|
|
|
|
5,874
|
|
|
|
17,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
751,836
|
|
|
|
|
KEPP
|
|
|
|
|
|
|
|
428,000
|
|
|
|
428,000
|
|
|
|
4,280,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
624,000
|
|
|
|
832,000
|
|
|
|
5,147,418
|
|
|
|
6,105
|
|
|
|
12,209
|
|
|
|
23,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,286,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry L. Dunlap
|
|
|
AIP
|
|
|
|
|
|
|
|
160,000
|
|
|
|
320,000
|
|
|
|
640,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,280
|
|
|
|
4,559
|
|
|
|
4,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
384,985
|
|
|
|
|
TSRP
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,114
|
|
|
|
4,227
|
|
|
|
12,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
541,030
|
|
|
|
|
KEPP
|
|
|
|
|
|
|
|
385,000
|
|
|
|
385,000
|
|
|
|
3,850,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
545,000
|
|
|
|
705,000
|
|
|
|
4,490,000
|
|
|
|
4,394
|
|
|
|
8,786
|
|
|
|
17,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
926,015
|
|
|
|
|
|
(1) |
|
Represents the Companys
Annual Incentive Plan (AIP), Performance/Restricted Stock
Program (PRSP), Total Shareholder Return Incentive Compensation
Program (TSRP) and Key Executive Performance Plan (KEPP).
|
|
(2) |
|
The values set forth in this column
are based on the aggregate grant date fair value of awards
computed in accordance with FAS 123(R). For the PSRP
nonvested stock award, one-half of the award (performance
shares) vests only on the attainment of an income target,
measured over a cumulative three-year period. The remaining
nonvested PRSP stock awarded to employees vests over a service
period of five years, with accelerated vesting to three years if
the performance shares vesting criterion is attained. The
fair value of PSRP nonvested stock award as presented above is
measured based on the stock price at the grant date, including
the assumption that the performance shares criterion will be
achieved. Fair value for the TSRP award was estimated using
Monte Carlo simulations of stock price correlation, projected
dividend yields and other variables over a three-year time
horizon matching the TSRP performance period.
|
For the
2008-2010
performance measurement period, the payment to continuing KEPP
participants for threshold performance is approximately 0.112%
of the amount of income before taxes for each of Level One
and Level Two, and the payment opportunities increase to
approximately 0.869% of the designated amount of income before
taxes for Level One and for Level Two at the highest
gradient. No compensation is paid for performance in excess of
the highest gradient.
The percentage of the bonus pools that would or could be paid to
individual participants varies slightly at the various gradients
for the
2006-2008
and the
2007-2009
measurement periods. For those years, the CEOs percentage
of any pool is not greater than 24% at any gradient above
threshold and, at some gradients, is less. The other named
officers opportunities average approximately 11% each at
the various gradients for those performance measurement periods.
Beginning with the
2007-2009
performance measurement period, the gradients are a direct
function of base salary at each gradient. The CEOs
percentage of the potential pools for
2008-2010 is
approximately 26%.
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Market
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Number of
|
|
or Payout
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
Market
|
|
Unearned
|
|
Value of
|
|
|
|
|
Number of
|
|
Number of
|
|
Plan Awards:
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Shares,
|
|
Unearned
|
|
|
|
|
Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Units or
|
|
Shares,
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Other
|
|
Units or
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Underlying
|
|
Option
|
|
|
|
Stock that
|
|
Stock that
|
|
Rights that
|
|
Other Rights
|
|
|
|
|
Options
|
|
Options
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
that Have Not
|
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
Unearned
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Vested
|
|
Vested
|
Name
|
|
Grant Date
|
|
(#)(1)(2)
|
|
(#)(1)
|
|
Options (#)
|
|
($)
|
|
Date
|
|
(#)(1)(3)
|
|
($)(4)
|
|
(#)(1)
|
|
($)(4)
|
|
|
L. Patrick Hassey
|
|
|
2/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,423
|
|
|
$
|
215,039
|
|
|
|
8,422
|
(5)
|
|
$
|
215,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,037
|
(6)
|
|
$
|
511,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,776
|
|
|
$
|
275,111
|
|
|
|
10,776
|
(5)
|
|
$
|
275,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,982
|
(6)
|
|
$
|
510,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
19,199
|
|
|
$
|
490,150
|
|
|
|
59,217
|
|
|
$
|
1,511,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard J. Harshman
|
|
|
1/24/2003
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
5.70
|
|
|
|
1/24/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2003
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
$
|
3.63
|
|
|
|
2/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,477
|
|
|
$
|
63,238
|
|
|
|
2,477
|
(5)
|
|
$
|
63,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,886
|
(6)
|
|
$
|
150,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,168
|
|
|
$
|
80,879
|
|
|
|
3,167
|
(5)
|
|
$
|
80,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,874
|
(6)
|
|
$
|
149,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
5,645
|
|
|
$
|
144,117
|
|
|
|
17,404
|
|
|
$
|
444,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas A. Kittenbrink
|
|
|
2/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,477
|
|
|
$
|
63,238
|
|
|
|
2,477
|
(5)
|
|
$
|
63,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,886
|
(6)
|
|
$
|
150,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,168
|
|
|
$
|
80,879
|
|
|
|
3,167
|
(5)
|
|
$
|
80,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,874
|
(6)
|
|
$
|
149,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
5,645
|
|
|
$
|
144,117
|
|
|
|
17,404
|
|
|
$
|
444,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon D. Walton
|
|
|
1/24/2003
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
5.70
|
|
|
|
1/24/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2003
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
$
|
3.63
|
|
|
|
2/12/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,477
|
|
|
$
|
63,238
|
|
|
|
2,477
|
(5)
|
|
$
|
63,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,886
|
(6)
|
|
$
|
150,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,168
|
|
|
$
|
80,879
|
|
|
|
3,167
|
(5)
|
|
$
|
80,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,874
|
(6)
|
|
$
|
149,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
5,645
|
|
|
$
|
144,117
|
|
|
|
17,404
|
|
|
$
|
444,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry L. Dunlap
|
|
|
2/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,787
|
|
|
$
|
45,622
|
|
|
|
1,786
|
(5)
|
|
$
|
45,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,245
|
(6)
|
|
$
|
108,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,280
|
|
|
$
|
58,208
|
|
|
|
2,279
|
(5)
|
|
$
|
58,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,227
|
(6)
|
|
$
|
107,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
4,067
|
|
|
$
|
103,831
|
|
|
|
12,537
|
|
|
$
|
320,070
|
|
|
|
|
|
(1) |
|
This table relates to unexercised
options to purchase Company Common Stock as of December 31,
2008 and shares of performance/restricted stock and awards under
the TSRP that have not vested for performance measurement
periods ending in 2009 and 2010.
|
|
(2) |
|
Stock options awarded to named
officers vested in equal amounts annually over three years from
their respective dates of grant.
|
|
(3) |
|
Consists of shares of time-based
restricted stock. In conjunction with the shares set forth in
the Equity Incentive Plan Awards: Number of Unearned
Shares, Units or Other Rights that Have Not Vested column
of this table, the number of shares reported in this column
represent the number of shares that would be awarded if the
time-based vesting under the Performance/Restricted Stock
Program for the
2007-2009
and
2008-2010
measurement periods are met at the end of the applicable periods.
|
|
|
|
(4) |
|
Amounts were calculated using
$25.53 per share, the closing price of Company Common Stock at
December 31, 2008.
|
|
(5) |
|
Consists of shares of
performance-based restricted stock. In conjunction with the
shares set forth in the Number of Shares or Units of Stock
that Have Not Vested column of this table, the number of
shares reported in this column represent the number of shares
that would be awarded if the performance measure under the
Performance/Restricted Stock Program for the
2007-2009
and
2008-2010
performance measurement periods are met at the end of the
applicable performance measurement periods.
|
|
(6) |
|
Represents the number of shares
that would be awarded if the target level of performance was
achieved under the TSRP for the
2007-2009
and
2008-2010
performance measurement periods. In accordance with applicable
regulations, this assumption was made because performance under
the TSRP for the portions of those award periods ended
December 31, 2008 exceeded the threshold level but was less
than the target level.
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
Realized on
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
|
Exercise
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
($)
|
|
|
(#)(1)
|
|
|
($)(2)
|
|
|
|
|
L. Patrick Hassey
|
|
0
|
|
|
0
|
|
|
|
47,258
|
|
|
$
|
1,035,581
|
|
Richard J. Harshman
|
|
0
|
|
|
0
|
|
|
|
13,899
|
|
|
$
|
304,584
|
|
Douglas A. Kittenbrink
|
|
0
|
|
|
0
|
|
|
|
13,899
|
|
|
$
|
304,584
|
|
Jon D. Walton
|
|
0
|
|
|
0
|
|
|
|
13,899
|
|
|
$
|
304,584
|
|
Terry L. Dunlap
|
|
0
|
|
|
0
|
|
|
|
8,940
|
|
|
$
|
196,063
|
|
|
|
|
|
(1) |
|
Consists of shares of
performance/restricted stock awarded on February 22, 2006
pursuant to the Performance/Restricted Stock Program plus
dividends paid on such shares during the
2006-2008
performance measurement period in the form of additional shares
of performance/restricted stock, and shares awarded based on
performance pursuant to the TSRP above the 60th percentile,
respectively, in the following amounts for the named officers
(including dividend amounts): Mr. Hassey, 13,587 and
33,671; Messrs. Harshman, Kittenbrink and Walton, 3,996 and
9,903; Mr. Dunlap, 2,701 and 6,239.
|
|
(2) |
|
Amounts were calculated using the
award price of $21.59 per share, which was the average of the
high and low trading prices of Company Common Stock for
January 23, 2009, the business day prior to the award
payment date. The closing price of Company Common Stock on the
date that the performance measurement period ended,
December 31, 2008, was $25.53 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments
|
|
|
|
|
|
|
|
|
Present
|
|
During
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Last
|
|
|
|
|
|
|
Years Credited
|
|
Accumulated
|
|
Fiscal
|
|
|
|
|
|
|
Service
|
|
Benefit
|
|
Year
|
|
|
Name
|
|
Plan Name
|
|
(#)(1)
|
|
($)(2)
|
|
($)
|
|
|
|
|
L. Patrick Hassey
|
|
Supplemental Pension Plan
|
|
|
5
|
|
|
$
|
2,011,988
|
|
|
|
0
|
|
|
|
|
|
Richard J. Harshman
|
|
ATI Pension Plan
|
|
|
28
|
|
|
$
|
622,179
|
|
|
|
0
|
|
|
|
|
|
|
|
ATI Benefit Restoration Plan
|
|
|
21
|
|
|
$
|
746,980
|
|
|
|
0
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
8
|
|
|
$
|
819,026
|
|
|
|
0
|
|
|
|
|
|
Douglas A. Kittenbrink
|
|
ATI Pension Plan
|
|
|
14
|
|
|
$
|
449,135
|
|
|
|
0
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
17
|
|
|
$
|
894,474
|
|
|
|
0
|
|
|
|
|
|
Jon D. Walton
|
|
ATI Pension Plan
|
|
|
20
|
|
|
$
|
1,401,299
|
|
|
|
0
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
23
|
|
|
$
|
1,683,994
|
|
|
|
0
|
|
|
|
|
|
Terry L. Dunlap
|
|
ATI Pension Plan
|
|
|
5
|
|
|
$
|
19,388
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
(1) |
|
Years of credited service reflect
the number of years of service used for determining benefits for
each individual during their participation under the respective
plans.
|
|
(2) |
|
The present value of accumulated
benefit as of December 31, 2008 is computed using the
relevant actuarial assumptions consistent with those used to
value the Companys defined benefit pension plans in the
Companys 2008 audited financial statements.
|
ATI Pension
Plan
The Company maintains a qualified defined benefit pension plan,
called the Allegheny Technologies Incorporated Pension Plan
(ATI Pension Plan), which has a number of benefit
formulas that apply separately to various groups of employees
and retirees. In general, the variances among formulas are
determined by work location and job classification. A principal
determinant is whether an employee was employed by Allegheny
Ludlum Corporation (Allegheny Ludlum), as in the
case of Messrs. Kittenbrink, Walton and Dunlap, or by
Teledyne, Inc. (TDY), as in the case of
Mr. Harshman, in 1996 when those corporations were combined
to form the Company. Mr. Hassey does not participate in the
ATI Pension Plan under any formula.
Allegheny Ludlum ceased pension accruals under its pension
formula in 1988, except for employees who then met certain age
and service criteria. Mr. Walton and Mr. Dunlap have
modest frozen benefits under the Allegheny Ludlum formula. None
of Messrs. Kittenbrink, Walton or Dunlap participate in a
restoration plan for defined benefits.
43
Both the Allegheny Ludlum formula and the TDY formula multiply
years of service by compensation and then by a factor to produce
a benefit which, in turn, is reduced with respect to Social
Security amounts payable to determine a monthly amount payable
as a straight life annuity. Participants can choose alternate
benefit forms, including survivor benefits. The Allegheny Ludlum
and TDY definitions of service and compensation differ somewhat,
as do the factors used in the respective formulas. However, the
differences in the resulting benefits between the two formulas
are small for the named officers to which they apply.
Upon becoming a corporate employee, Mr. Harshman ceased
receiving credit for service under the TDY formula after having
been credited with approximately twenty years of service under
that formula. Mr. Harshman participates in a restoration
plan for defined benefits that would restore to him from
corporate assets the amount not payable under the TDY formula
due to limits under the Code (the ATI Benefit Restoration
Plan). See also the ATI Benefit Restoration
Plan caption below.
As an alternative benefit, if greater than the benefit under the
applicable Allegheny Ludlum or TDY formula, the named
individuals, other than Messrs. Hassey and Dunlap,
participate in the ATI Pension Plan at specified, actuarially
determined accrual rates per year that do not exceed annual
accrual rates permitted under the Code. No benefits were accrued
for any named officer in 2008 under this provision.
Normal retirement age under the ATI Pension Plan is age 65.
Participants can retire with immediate commencement of an
undiscounted accrued benefit at the normal retirement age or
after thirty years of service regardless of age. Participants
can retire prior to attaining age 65 or thirty years of
service with benefit payments discounted for early payment at
age 62 with at least ten years of service or, with a
greater discount, at age 55 with at least ten years of
service.
ATI Benefit
Restoration Plan
Under the non-qualified defined contribution ATI Benefit
Restoration Plan, the Company makes supplementary contributions
to those received by participants under the Companys
qualified contribution plan, known as the Retirement Savings
Plan, by accruing benefits on behalf of participants in amounts
that are equivalent to the portion of the formula contributions
or benefits that cannot be made under such plan due to
limitations imposed by the Code. Distributions under the ATI
Benefit Restoration Plan are available only at the times and in
the same forms as under the Retirement Savings Plan, subject to
payment delays to comply with Section 409A of the Code.
Supplemental
Pension Plan
In addition, the Company has established a Supplemental Pension
Plan that provides certain key employees of the Company and its
subsidiaries, including certain named officers (or their
beneficiaries in the event of death), with monthly payments in
the event of retirement, disability or death, equal to 50% of
monthly base salary as of the date of retirement, disability or
death. Monthly retirement benefits start following the end of
the two-month period after the later of (i) age 62, if
actual retirement occurs prior to age 62 but after
age 58 with the approval of the Board of Directors, or
(ii) the date actual retirement occurs, and generally
continue for a
118-month
period. The plan describes the events that will terminate an
employees participation in the plan. With respect to
Mr. Hassey, one year of payment is accrued for each year of
service, to a maximum of ten years. On October 30, 2008,
the Committee approved a form of letter agreement with
Mr. Walton by which the Company agrees to pay him (or his
beneficiary) a number of monthly installments, each in the
amount of one half of his monthly base compensation measured at
the date of his retirement, equal to the number of months that
Mr. Walton remains an employee of the Company after his
65th birthday commencing after all payments due to him
under the Companys Supplemental Pension Plan have been
made.
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate
|
|
|
Contributions
|
|
Contributions
|
|
Earnings
|
|
Withdrawals/
|
|
Balance
|
|
|
In Last FY
|
|
In Last FY
|
|
In Last FY
|
|
Distributions
|
|
at Last FYE
|
Name
|
|
($)(1)
|
|
($)(1)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
|
L. Patrick Hassey
|
|
0
|
|
|
420,150
|
|
|
|
67,226
|
|
|
|
0
|
|
|
|
1,506,879
|
|
Richard J. Harshman
|
|
0
|
|
|
127,135
|
|
|
|
25,534
|
|
|
|
0
|
|
|
|
571,876
|
|
Douglas A. Kittenbrink
|
|
0
|
|
|
127,135
|
|
|
|
26,414
|
|
|
|
0
|
|
|
|
591,514
|
|
Jon D. Walton
|
|
0
|
|
|
127,135
|
|
|
|
34,228
|
|
|
|
0
|
|
|
|
765,930
|
|
Terry L. Dunlap
|
|
0
|
|
|
91,400
|
|
|
|
14,994
|
|
|
|
0
|
|
|
|
336,066
|
|
|
|
|
|
(1) |
|
Reflects contributions made
pursuant to the ATI Benefit Restoration Plan. Under the terms of
the plan, the participants do not contribute; only the Company
contributes to the plan on the participants behalf. These
amounts are included in the All Other Compensation
column of the Summary Compensation Table for 2008.
|
|
|
|
(2) |
|
Aggregate earnings are calculated
using the fiscal year end balance, including current year
contributions, multiplied by the interest rate on the Fixed
Income Fund investment option in the Companys (qualified)
Defined Contribution Pension Plan. For 2008, this rate was 4.37%.
|
Employment
and Change in Control Agreements
Employment
Agreements
Mr. Hassey
In August 2003, the Company entered into an employment agreement
with L. Patrick Hassey in connection with his employment as
President and Chief Executive Officer, effective October 1,
2003. The agreement has an initial term of three years and
renews automatically each month thereafter for a successive
three-year term absent notice from one party to another of
termination. Under the terms of his employment agreement,
Mr. Hassey is paid an annual base salary of at least
$850,000. In the process of recruiting Mr. Hassey in 2003,
the Company agreed to accommodate his request that he be able to
avoid relocating his family from its Salt Lake City residence.
In order to do so, Mr. Hassey periodically uses Company
leased aircraft so that he can maintain a full schedule with the
Company. Mr. Hasseys use of Company leased aircraft
for these purposes is a provision of Mr. Hasseys
employment agreement with the Company. In addition, under the
terms of the employment agreement, Mr. Hassey is entitled
to participate in the Annual Incentive Plan and the
Companys other executive compensation programs, including
the TSRP, the KEPP and the Supplemental Pension Plan on the
terms outlined above. Mr. Hassey is bound by a
confidentiality provision, and he is subject to non-competition
and non-interference covenants during the term of his employment
and for one year thereafter. Also, a non-disparagement provision
survives for 24 months following the termination of his
employment.
The agreement also provides that:
|
|
|
if the Company terminates Mr. Hasseys employment for
reasons other than cause, which is defined in the
agreement to mean
|
|
|
|
|
(i)
|
a willful failure to perform substantially his duties after a
written demand for substantial performance is given,
|
|
|
|
|
(ii)
|
willful engagement in illegal conduct or gross
misconduct, or
|
|
|
|
|
(iii)
|
the breach of a fiduciary duty involving personal profit;
|
|
|
|
Or, if Mr. Hassey resigns for good reason,
which is defined in the agreement to mean:
|
|
|
|
|
(i)
|
the assignment of duties inconsistent with position,
|
|
|
|
|
(ii)
|
failure by the Company to pay compensation and benefits when due
other than a failure not occurring in bad faith,
|
|
|
|
|
(iii)
|
relocation of Company headquarters outside of Pittsburgh,
Pennsylvania or requiring substantially more business travel,
|
45
|
|
|
|
(iv)
|
purported termination other than as expressly permitted in the
agreement, or
|
|
|
|
|
(v)
|
failure by the Company to cause a successor corporation to adopt
and perform under the agreement;
|
then Mr. Hassey will receive all payments and obligations
accrued through the date of his termination, as well as a cash
severance payment equal to:
|
|
|
three times the sum of his then-current annual base salary plus
the amount of AIP bonus payable for the year of termination at
the greater of actual-to-date performance or target;
|
|
|
all accrued benefits under all qualified and nonqualified
pension, retirement and other plans in which he participates;
|
|
|
accelerated vesting of stock options and stock-based rights
which shall remain exercisable until the earlier of their
expiration or three years from the date of termination;
|
|
|
earned but not yet paid TSRP or other equity-based
awards; and
|
|
|
continued health and life insurance benefits for 36 months
following the date of termination, unless such termination or
resignation occurs after a change in control.
|
A change in control is defined to include:
|
|
|
|
(i)
|
the acquisition by an individual or entity of 20% or more of
Company voting stock,
|
|
|
|
|
(ii)
|
incumbent directors ceasing to constitute a majority of the
Board,
|
|
|
|
|
(iii)
|
approval by Company stockholders of a reorganization, merger or
consolidation,
|
|
|
|
|
(iv)
|
approval by the Company stockholders of a liquidation or sale or
disposition of 60% in value of the Companys assets, or
|
|
|
|
|
(v)
|
the occurrence of any of the preceding events within
90 days prior to the date of termination.
|
If such termination or resignation occurs within one year after
a change in control, Mr. Hassey will receive all payments
and obligations accrued through the date of his termination, as
well as a cash severance payment equal to:
|
|
|
three times the sum of his then-current annual base salary plus
the amount of AIP payable for the year at the greater of
actual-to-date performance or target;
|
|
|
all accrued benefits under all qualified and nonqualified
pension, retirement and other plans in which he participates;
|
|
|
accelerated vesting of stock options and stock-based rights
which shall remain exercisable until the earlier of their
expiration or three years from the date of termination;
|
|
|
payments with respect to the TSRP and KEPP for the completed and
uncompleted performance measurement periods;
|
|
|
vesting of equity-based awards at the target level of
performance;
|
|
|
continued health and life insurance benefits for 36 months
following the date of termination; and
|
|
|
reimbursement for taxes, including excise taxes, assessed.
|
Mr. Walton
The Company entered an employment agreement with Jon D. Walton
in connection with the combination of Allegheny Ludlum
Corporation and Teledyne, Inc. in 1996. The initial term under
the agreement was three years, but by its terms, the agreement
renews automatically each month absent notice from one party to
the other, so that the then remaining term is one year. The
agreement provides for the payment of base salary as well as for
eligibility to participate in incentive compensation, equity
compensation, employee and fringe benefit plans offered to
senior executives of the Company. The agreement generally
terminates prior to the
46
expiration date without breach by any party in the event of
Mr. Waltons death, disability or voluntary
resignation. The Company may also terminate the agreement for
cause (defined consistently with cause under
Mr. Hasseys agreement) without breach by it. If
Mr. Walton resigns for good reason (which is defined to
include demotion, reduction in base pay or movement of corporate
headquarters), or if the Company terminates his employment for
reasons other than cause or disability, then Mr. Walton is
entitled to receive continued payment of his base salary through
the date of termination, as well as payments equal to:
|
|
|
his base pay for the remaining term of the agreement;
|
|
|
cash bonus, determined based on actual financial results;
|
|
|
service credit for the period of the remaining term of the
agreement under Company deferred compensation plans and the ATI
Benefit Restoration Plan, and full vesting under such plans;
|
|
|
reimbursement of certain legal and tax audit fees; and
|
|
|
continued participation in certain compensation and employee
benefit plans for the remainder of the term, including certain
supplemental pension benefits.
|
Mr. Walton is subject to a confidentiality covenant and is
bound by a non-competition provision during the term of his
employment.
Change in Control
Severance Agreements
The Company has entered into certain change in control severance
agreements with the named officers (other than Mr. Hassey)
and other key employees to assure the Company that it will have
the continued support of the executive and the availability of
the executives advice and counsel notwithstanding the
possibility, threat or occurrence of a change in control. The
Company entered into amended and restated change in control
severance agreements with the named officers (other than
Mr. Hassey) effective as of December 31, 2008 to
account for certain changes in the Code; no other changes to the
terms of the agreement were made.
Under the agreements, a change in control is defined
as:
|
|
(i) |
the Companys actual knowledge that (x) an individual
or entity has acquired beneficial ownership of 20% or more of
the voting power of Company stock or (y) persons have
agreed to act together for the purpose of acquiring 20% or more
of the voting power of Company stock,
|
|
|
(ii) |
the completion of a tender offer entitling the holders to 20% or
more of the voting power of Company stock,
|
|
|
(iii) |
the occurrence of a successful solicitation electing or removing
50% of the Board or the Board consisting less than 51% of
continuing directors, or
|
|
|
(iv) |
the occurrence of a merger, consolidation, sale or similar
transaction.
|
In general, the agreements provide for the payment of severance
benefits if a change in control occurs, and within
24 months after the change in control either:
|
|
|
the Company terminates the executives employment with the
Company without cause, which is defined to mean a
felony conviction, breach of fiduciary duty involving personal
profit, or intentional failure to perform stated duties after
thirty days notice to cure, or
|
|
|
the executive terminates employment with the Company for
good reason, which is defined to mean:
|
|
|
|
|
(i)
|
a material diminution of duties, responsibilities or status or
the assignment of duties inconsistent with position,
|
|
|
|
|
(ii)
|
relocation more than 35 miles from principal job location,
|
|
|
|
|
(iii)
|
reduction in annual salary or material reduction in other
compensation or benefits,
|
47
|
|
|
|
(iv)
|
failure by the Company to cause a successor corporation to adopt
and perform under the agreement, or
|
|
|
|
|
(v)
|
purported termination other than as expressly permitted in the
agreement).
|
In addition to amounts accrued through the date of termination,
an employee entitled to severance benefits under a change in
control agreement will be paid a lump sum cash payment within
thirty days of the date of termination equal to the sum of:
|
|
|
base salary plus annual bonus at the greater of target or the
actual level of performance achieved through the date of
termination projected through the end of the year times a
multiple (which is 3x for Messrs. Harshman, Kittenbrink and
Walton and 2x for Mr. Dunlap);
|
|
|
prorated annual incentive for the then uncompleted year measured
at the greater of target or the level of performance achieved
through the date of termination projected through the end of the
year; and
|
|
|
the value of all long term incentive awards for then uncompleted
measurement periods determined at the greater of target or
actual performance levels achieved to the date of termination
projected through the remainder of the measurement period.
|
An employee eligible for severance will also be provided:
|
|
|
the continuation of perquisites and welfare benefits for a
period (36 months for Messrs. Harshman, Kittenbrink
and Walton and 24 for Mr. Dunlap);
|
|
|
reimbursement for outplacement services up to $25,000 for
Mr. Harshman, Kittenbrink and Walton and $15,000 for
Mr. Dunlap; and
|
|
|
the number of years corresponding to the applicable multiples
above of credited service and full vesting under the
Companys supplemental pension plans in which the executive
participates.
|
The agreements also provide for the lifting of restrictions on
stock awarded. Also, the Company will pay the employee a
gross-up
payment for excise taxes, if necessary.
The agreements have a term of three years, which three-year term
will continue to be extended until either party gives written
notice that it no longer wants to continue to extend the term.
If a change in control occurs during the term, the agreements
will remain in effect for the longer of three years or until all
obligations of the Company under the agreements have been
fulfilled.
In 2008, the Personnel and Compensation Committee reviewed the
then change in control valuation, as well as the purposes and
effects of the agreements, and determined that it is in the
Companys best interests to retain the change in control
agreements on their terms and conditions as amended.
Potential
Payments Upon Termination or Change in Control
The tables below reflect estimates of the amount of compensation
in addition to the amounts shown in the compensation tables to
each of the named officers of the Company in the event of
termination of such executives employment. The amount of
enhanced compensation payable to each named officer upon
voluntary termination, retirement, involuntary not for cause
termination, for cause termination, involuntary or good reason
termination within 24 months following a change in control
and in the event of disability or death of the executive is
shown below. The amounts shown assume that such termination was
effective as of December 31, 2008, and are estimates of the
amounts which would be paid out to the executives upon their
termination. On December 31, 2008, the closing price of
Company Common Stock on the NYSE was $25.53. The actual amounts
to be paid out can only be determined at the time of such
executives separation from the Company.
48
For purposes of the tables, the actual performance to the
assumed date of termination has been at or near maximum
performance targets for the uncompleted performance measurement
periods and that maximum performance level is projected through
the remainder of the uncompleted performance measurement
periods. Further, the tables show annual bonus amounts at the
highest level of performance. The actual amounts to be paid out
can only be determined at the time of such executives
separation from the Company. However, the amounts shown are
approximately the greatest amount that can be paid under the
circumstances prevailing at the assumed termination date of
December 31, 2008.
Payments Made
Upon Termination
Regardless of the manner in which a named officers
employment terminates, he may be entitled to receive amounts
earned during his term of employment. Such amounts include:
|
|
|
non-equity incentive compensation earned during the fiscal year;
|
|
|
amounts contributed under the savings portion of the Retirement
Savings Plan and the Benefit Restoration Plan;
|
|
|
unused vacation pay; and
|
|
|
amounts accrued and vested through the ATI Pension Plan and
Supplemental Pension Plan.
|
Payments Made
Upon Retirement
In the event of the retirement of a named officer, in addition
to the items identified above, such officer will be entitled to:
|
|
|
retain any outstanding stock options for the remainder of the
outstanding ten-year term;
|
|
|
receive a prorated share of each outstanding TSRP award upon the
completion of such cycle when, if and to the extent such award
is earned during the applicable performance measurement period;
|
|
|
receive all outstanding shares of performance/restricted stock
when and to the extent that the restrictions on such shares
lapse upon the passage of time or the achievement of the
applicable performance criteria;
|
|
|
receive that portion of the outstanding KEPP awards that were
earned at the time of retirement and a prorated share of the
remaining portion of each outstanding KEPP award;
|
|
|
receive payments under the Supplemental Pension Plan, beginning
two months after retirement, subject to Section 409A of the
Internal Revenue Code;
|
|
|
receive health and welfare benefits until age 65 and
receive health and welfare benefits for dependants, as
applicable, subject to the limitations applicable to all
salaried employees; and
|
|
|
receive life insurance benefits until death.
|
Consent of the Company is required for payments of the TSRP,
performance/restricted stock and KEPP awards described above
upon retirement.
Payments Made
Upon Death or Disability
In the event of the death or disability of a named officer, in
addition to the benefits listed under the headings
Payments Made Upon Termination and Payments
Made Upon Retirement above, the named officer will receive
benefits under the Companys disability plan or payments
under the Companys life insurance plan, as appropriate,
each as generally available to all salaried employees. In
addition, all outstanding performance/restricted share awards
vest on the death of a named officer.
49
Payments Made
Upon a Change in Control
As described in the Employment and Change in Control
Agreements section, the Company is a party to an
employment agreement with Mr. Hassey and a change in
control severance agreement with each other named officer that
provides the named officer with payments in the event his
employment is terminated by the Company for reasons other than
cause or by the named officer for good reason (defined to
include diminishment of pay, benefits, title or job
responsibilities or transfer from the home office) within twenty
four months after a change in control. See the information under
the caption Employment and Change in Control
Agreements for definitions. The tables below illustrate
the amount of payments due in various circumstances.
As noted, the column Involuntary or Good Reason
Termination w/in 24 Months of a Change in Control assumes
that there was a change in control at the December 31, 2008
closing price of $25.53 per share and all of the named officers
had a triggering event on December 31, 2008 and all cash
amounts due, all deferred compensation enhancements and all
potential benefit payments were to be paid in a single lump sum.
The aggregate of the payment to the named officers would be
approximately 2% of the indicated transaction value of
$2.5 billion, which represents the Companys
approximate equity market capitalization value at
December 31, 2008.
L. Patrick Hassey
($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(w/in 24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
months of
|
|
|
|
|
|
|
Executive Benefit and
|
|
|
Voluntary
|
|
|
|
|
|
Not for Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
Payments Upon Separation
|
|
|
Termination
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
Severance:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
7,508
|
|
|
|
|
0
|
|
|
|
|
7,508
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance/Restricted Stock
|
|
|
|
0
|
|
|
|
|
980
|
|
|
|
|
980
|
|
|
|
|
0
|
|
|
|
|
980
|
|
|
|
|
980
|
|
|
|
|
980
|
|
TSRP
|
|
|
|
0
|
|
|
|
|
1,022
|
|
|
|
|
1,022
|
|
|
|
|
0
|
|
|
|
|
1,022
|
|
|
|
|
1,022
|
|
|
|
|
1,022
|
|
KEPP
|
|
|
|
0
|
|
|
|
|
3,481
|
|
|
|
|
3,481
|
|
|
|
|
0
|
|
|
|
|
6,136
|
|
|
|
|
3,481
|
|
|
|
|
3,481
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified Savings Plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Non-qualified Retirement Plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Health & Welfare Benefits
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
37
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Life Insurance Proceeds
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Excise Tax & Gross Up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Outplacement
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Supplemental Pension Plan:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Total
|
|
|
|
0
|
|
|
|
|
5,483
|
|
|
|
|
12,991
|
|
|
|
|
0
|
|
|
|
|
15,683
|
|
|
|
|
5,483
|
|
|
|
|
5,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For 12 months after termination, Mr. Hassey is
obligated to refrain from competing with the Company and
soliciting employees or customers of the Company, and for
24 months after termination, Mr. Hassey is obligated
to refrain from disparaging the Company.
50
Richard J.
Harshman ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(w/in 24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
months of
|
|
|
|
|
|
|
Executive Benefit and
|
|
|
Voluntary
|
|
|
|
|
|
Not for Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
Payments Upon Separation
|
|
|
Termination
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
Severance:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
3,424
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance/Restricted Stock
|
|
|
|
0
|
|
|
|
|
288
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
288
|
|
|
|
|
288
|
|
|
|
|
288
|
|
TSRP
|
|
|
|
0
|
|
|
|
|
300
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
300
|
|
|
|
|
300
|
|
|
|
|
300
|
|
KEPP
|
|
|
|
0
|
|
|
|
|
1,636
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
2,884
|
|
|
|
|
1,636
|
|
|
|
|
1,636
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified Savings Plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
135
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Non-qualified Retirement Plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
649
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Health & Welfare Benefits
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
37
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Life Insurance Proceeds
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Excise Tax & Gross Up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Outplacement
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
25
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Supplemental Pension Plan:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
2,104
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Total
|
|
|
|
0
|
|
|
|
|
2,224
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
9,846
|
|
|
|
|
2,224
|
|
|
|
|
2,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas A.
Kittenbrink ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(w/in 24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
months of
|
|
|
|
|
|
|
Executive Benefit and
|
|
|
Voluntary
|
|
|
|
|
|
Not for Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
Payments Upon Separation
|
|
|
Termination
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
Severance:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
3,424
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance/Restricted Stock
|
|
|
|
0
|
|
|
|
|
288
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
288
|
|
|
|
|
288
|
|
|
|
|
288
|
|
TSRP
|
|
|
|
0
|
|
|
|
|
300
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
300
|
|
|
|
|
300
|
|
|
|
|
300
|
|
KEPP
|
|
|
|
0
|
|
|
|
|
1,636
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
2,884
|
|
|
|
|
2,191
|
|
|
|
|
2,191
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified Savings Plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
128
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Non-qualified Retirement Plan
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
394
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Health & Welfare Benefits
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
37
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Life Insurance Proceeds
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Excise Tax & Gross Up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Outplacement
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
25
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Supplemental Pension Plan:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
2,104
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Total
|
|
|
|
0
|
|
|
|
|
2,224
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
9,584
|
|
|
|
|
2,224
|
|
|
|
|
2,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
Jon D. Walton ($
in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(w/in 24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
months of
|
|
|
|
|
|
|
Executive Benefit and
|
|
|
Voluntary
|
|
|
|
|
|
Not for Cause
|
|
|
For Cause
|
|
|
Change in
|
|
|
|
|
|
|
Payments Upon Separation
|
|
|
Termination
|
|
|
Retirement
|
|
|
Termination
|
|
|
Termination
|
|
|
Control)
|
|
|
Disability
|
|
|
Death
|
Severance:
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
856
|
|
|
|
|
0
|
|
|
|
|
3,424
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance/Restricted Stock
|
|
|
|
0
|
|
|
|
|
288
|
|
|
|
|
288
|
|
|
|
|
0
|
|
|
|
|
288
|
|
|
|
|
288
|
|
|
|
|
288
|
|
TSRP
|
|
|
|
0
|
|
|
|
|
300
|
|
|
|
|
300
|
|
|
|
|
0
|
|
|
|
|
300
|
|
|
|
|
300
|
|
|
|
|
300
|
|
KEPP
|
|
|
|
0
|
|
|
|
|
1,636
|
|
|
|
|
1,636
|
|
|
|
|
0
|
|
|
|
|
2,884
|
|
|
|
|
1,636
|
|
|
|
|
1,636
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|