DEF 14A
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j8584301def14a.txt
ALLEGHENY TECHNOLOGIES INC.
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ALLEGHENY TECHNOLOGIES INCORPORATED
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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or the Form or Schedule and the date of its filing.
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* No fee required
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[Allegheny Technologies Logo]
1000 Six PPG Place
Pittsburgh, PA 15222-5479
March 14, 2001
To our Stockholders:
We are pleased to invite you to attend the 2001 Annual Meeting of Stockholders.
The meeting will be held at 11:00 a.m., Eastern Standard Time on Thursday, May
3, 2001, in the Room 1000 Auditorium, 10th Floor, Two Mellon Bank Center, 435
Fifth Avenue, Pittsburgh, Pennsylvania. The location is accessible to disabled
persons.
This booklet includes the notice of meeting as well as the Company's proxy
statement. Enclosed with this booklet are the following:
- Proxy or voting instruction card (including instructions for telephone and
Internet voting)
- Proxy or voting instruction card return envelope (postage paid if mailed in
the U.S.)
A copy of the Company's Annual Report for the year 2000 is also enclosed.
Please read the proxy statement and vote your shares as soon as possible. We
encourage you to take advantage of voting by telephone or Internet as explained
on the enclosed proxy or voting instruction card. Or, you may vote by
completing, signing and returning your proxy or voting instruction card in the
enclosed postage-paid envelope. It is important that you vote, whether you own a
few or many shares and whether or not you plan 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 2001 Annual Meeting.
Sincerely,
/s/ R. P. Bozzone
R. P. Bozzone
Chairman, President and Chief Executive Officer
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ALLEGHENY TECHNOLOGIES INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MEETING DATE: Thursday, May 3, 2001
TIME: 11:00 A. M., Eastern Standard Time
PLACE: Room 1000 Auditorium, 10th Floor
Two Mellon Bank Center (Union Trust Building)
435 Fifth Avenue
Pittsburgh, Pennsylvania
RECORD DATE: March 5, 2001
AGENDA
1) Election of a class of five directors;
2) Ratification of the appointment of independent auditors for 2001; 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 Company's executive offices, 1000 Six
PPG Place, Pittsburgh, Pennsylvania, for examination by any stockholder for any
legally valid purpose.
ADMISSION TO THE MEETING
Holders of Allegheny Technologies 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, please mark and promptly return the proxy card as indicated,
or enter the appropriate information by telephone or Internet, so that an
admission ticket can be mailed to you. 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 from your
bank or broker or a copy of your account statement.
On behalf of the Board of Directors:
/s/ Jon D. Walton
Jon D. Walton
Senior Vice President,
General Counsel and Secretary
Dated: March 14, 2001
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PROXY STATEMENT
TABLE OF CONTENTS
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PAGE
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Voting Procedures........................................... 1
Board Composition and Practices............................. 2
Item A on Proxy Card--Election of Directors................. 3
Committees of the Board of Directors........................ 7
Report of Audit Committee................................. 8
Director Compensation....................................... 9
Item B on Proxy Card--Ratification of Selection of
Independent Auditors...................................... 10
Other Business.............................................. 10
Stock Ownership Information................................. 11
Section 16(a) Beneficial Ownership Reporting Compliance... 11
Five Percent Owners of Common Stock....................... 11
Stock Ownership of Management............................. 12
Report on Executive Compensation............................ 13
Executive Compensation...................................... 17
Summary Compensation Table................................ 17
Stock Options............................................. 19
Long Term Incentive Program............................... 20
Pension Plans............................................. 21
Employment and Change in Control Agreements............... 22
Separation Agreement...................................... 22
Cumulative Total Stockholder Return......................... 23
Certain Transactions........................................ 24
Other Information........................................... 25
Annual Report on Form 10-K................................ 25
2002 Annual Meeting and Stockholder Proposals............. 25
Proxy Solicitation........................................ 25
Appendix A - Audit Committee Charter
YOUR VOTE IS IMPORTANT
PLEASE VOTE AS SOON AS POSSIBLE. YOU CAN HELP ALLEGHENY TECHNOLOGIES REDUCE
EXPENSES BY VOTING YOUR SHARES BY TELEPHONE OR INTERNET; YOUR PROXY CARD
CONTAINS THE INSTRUCTIONS. OR, COMPLETE, SIGN AND DATE YOUR PROXY CARD AND
RETURN IT AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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PROXY STATEMENT FOR
2001 ANNUAL MEETING OF STOCKHOLDERS
VOTING PROCEDURES
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WHO MAY VOTE
If you were a stockholder on the books of the Company at the close of business
on March 5, 2001 you may vote at the annual meeting. On that day, 80,133,152
shares of our Common Stock were outstanding.
Each share is entitled to one vote. 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 requests your proxy so that your shares will
count toward a quorum and be voted at the meeting.
METHODS OF VOTING
All stockholders may transmit their proxy votes by mail. Stockholders of record
can also vote by telephone or Internet. Stockholders who hold their shares
through a bank or broker can vote by telephone or Internet if their bank or
broker offers those options.
- BY MAIL. Stockholders may complete, sign, date and return their proxy cards in
the postage-paid envelope provided. If you sign, date and return your proxy
card without indicating how you want to vote, your proxy will be voted as
recommended by the Board of Directors.
- BY TELEPHONE OR INTERNET. Stockholders of record may vote by using the
toll-free telephone number or Internet website address listed on the proxy
card. Participants who hold stock in Company employee benefit plans also may
vote by telephone or the Internet. Your proxy or voting instruction card
contains a Control Number that will identify you as a stockholder when you
vote by telephone or Internet. You may use the telephone and Internet
procedures to vote your shares and to confirm that your votes were properly
recorded. Please see your proxy card for specific instructions.
REVOKING YOUR PROXY
You may change your mind and revoke your proxy at any time before it is voted at
the meeting by:
- sending a written notice to revoke your proxy to the Secretary of the Company;
- transmitting a proxy at a later date than your prior proxy either by mail,
telephone or Internet;
- attending the annual meeting and voting in person or by proxy (except for
shares held in the employee plans described below).
VOTING BY EMPLOYEE BENEFIT
PLAN PARTICIPANTS
Participants who hold Common Stock in one of the Company's defined contribution
savings or retirement or stock ownership plans may tell the plan trustee how to
vote the shares of Common Stock allocated to their accounts. You may either sign
and return the voting instruction card provided by the plan or transmit your
instructions by telephone or Internet. If you do not transmit instructions, your
shares will be voted as the plan administrator directs or as otherwise provided
in the plan.
VOTING SHARES HELD BY
BROKERS, BANKS AND OTHER
NOMINEES
If you hold your shares in a broker, bank or other nominee account, you are a
"beneficial owner" of Company Common Stock. 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 nominee's 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.
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QUORUM FOR MEETING
A majority of the outstanding shares, present or represented by a proxy,
constitutes a quorum. A quorum is necessary to conduct business at the annual
meeting. You are part of the quorum if you have voted by proxy. Abstentions,
broker non-votes and votes withheld from director nominees count as "shares
present" at the meeting for purposes of determining a quorum. However,
abstentions and broker non-votes do not count in the voting results. A broker
non-vote occurs when a broker, bank or other nominee who holds shares for
another does not vote on a particular item because the nominee does not have
discretionary authority for that item and has not received instructions from the
owner of the shares.
CONFIDENTIAL VOTING POLICY
The Company maintains a policy of keeping stockholder votes confidential.
BOARD COMPOSITION AND PRACTICES
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INFORMATION AND MEETINGS
The Board of Directors directs the management of the business and affairs of the
Company as provided in the by-laws of the Company and the laws of the State of
Delaware. The Board is not involved in day-to-day operations. Members of the
Board keep informed about the Company's business through discussions with the
senior management and other officers and managers of the Company and its
subsidiaries, by reviewing analyses and reports sent to them, and by
participating in Board and committee meetings.
Regular meetings of the Board were held seven times in 2000. Special meetings
are scheduled when required; two were held in 2000. In 2000, average attendance
at Board and committee meetings was approximately 95%.
NUMBER OF DIRECTORS
The Board of Directors determines the number of directors. The Board currently
consists of 12 members.
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 until the term of the class expires.
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ITEM A ON PROXY CARD -- ELECTION OF DIRECTORS
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The Board of Directors has nominated for election this year the class of five
incumbent directors whose terms expire at the 2001 Annual Meeting.
The nominees include George J. Kourpias, who was elected by the Board in July
2000. The United Steelworkers of America ("UWSA") proposed the nomination of Mr.
Kourpias as agreed to in connection with the 1998 labor negotiations with
Allegheny Ludlum Corporation, a subsidiary of the Company. At that time, the
Company agreed that the International President of the USWA may propose a
nominee for election as a director of the Company to the Company's Chairman,
President and Chief Executive Officer. The USWA 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 Committee on Governance and election to
the Board, the USWA nominee is expected to serve as a director during the term
of the labor agreement.
The five 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 in the
card will vote your shares for the election of the five 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.
Background information about the nominees and continuing directors follows.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE FIVE
NOMINEES.
NOMINEES - TERM TO EXPIRE AT 2004 ANNUAL MEETING (CLASS II)
PAUL S. BRENTLINGER
Age: 73
Director Since: 1996
ATI Board Committees: Audit Committee (Vice Chair), Finance Committee (Vice
Chair) and Technology Committee (Chair).
Principal Occupation: Partner in Morgenthaler, a venture capital group
headquartered in Cleveland, Ohio and Menlo Park,
California.
Other Directorship: Teledyne Technologies Incorporated.
RAY J. GROVES
Age: 65
Director Since: 1998
ATI Board Committees: Audit Committee, Finance Committee and Committee on
Governance.
Principal Occupation: Chairman of Legg Mason Merchant Banking, Inc., a
subsidiary of Legg Mason, Inc., based in Baltimore,
Maryland.
Recent Business Experience: Mr. Groves was Chairman and Chief Executive Officer of
Ernst & Young until his retirement in 1994.
Other Directorships: American Water Works Company, Inc., Boston Scientific
Corporation, Electronic Data Systems Corporation, Marsh &
McLennan Companies, Inc. and The New Power Company.
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GEORGE J. KOURPIAS
Age: 68
Director Since: 2000
ATI Board Committee: Technology Committee.
Recent Business Experience: Mr. Kourpias was International President, International
Association of Machinists and Aerospace Workers, prior to
his retirement in 1997.
Other Directorship: Northwest Airlines Corporation.
JAMES L. MURDY
Age: 62
Director Since: 1999
ATI Board Committee: Technology Committee.
Principal Occupation: Executive Vice President, Allegheny Technologies
Incorporated.
Recent Business Experience: Mr. Murdy has been Executive Vice President of the Company
since September 2000. He served as Executive Vice
President, Finance and Administration and Chief Financial
Officer from December 1996 to September 2000. He served as
Senior Vice President-Finance and Chief Financial Officer
from August 1996 to December 1996, having previously
served as the Senior Vice President-Finance and Chief
Financial Officer of Allegheny Ludlum Corporation.
Other Directorship: Federated Investors, Inc.
WILLIAM G. OUCHI
Age: 57
Director Since: 1996
ATI Board Committees: Audit Committee, Finance Committee, Personnel and
Compensation Committee and Stock Incentive Award
Subcommittee.
Principal Occupation: Sanford & Betty Sigoloff Professor in Corporate Renewal,
The Anderson Graduate School of Management, University of
California at Los Angeles.
Recent Business Experience: From 1998 to June 2000, Dr. Ouchi also served as the Vice
Dean and Faculty Director of Executive Education Programs,
The Anderson Graduate School of Management, University of
California at Los Angeles.
Other Directorships: First Federal Bank of California, Sempra Energy and Water
Pik Technologies, Inc.
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CONTINUING DIRECTORS -- TERM EXPIRES AT THE 2002 ANNUAL MEETING (CLASS III)
ROBERT P. BOZZONE
Age: 67
Director Since: 1996
ATI Board Committee: Executive Committee.
Principal Occupation: Chairman, President and Chief Executive Officer of
Allegheny Technologies Incorporated since December 2000.
Recent Business Experience: Mr. Bozzone had served as Vice Chairman of the Company
beginning in August 1996 and was Vice Chairman of
Allegheny Ludlum Corporation from August 1994 to August
1996. Previously, he was President and Chief Executive
Officer of Allegheny Ludlum Corporation.
Other Directorships: Water Pik Technologies, Inc. (Chairman of the Board), DQE,
Inc., whose principal subsidiary is Duquesne Light
Company, and Teledyne Technologies Incorporated.
FRANK V. CAHOUET
Age: 68
Director Since: 1996
ATI Board Committees: Audit Committee (Chair), Finance Committee (Chair),
Committee on Governance and Technology Committee.
Recent Business Experience: Mr. Cahouet was Chairman, President and Chief Executive
Officer of Mellon Financial Corporation, a bank holding
company, and Mellon Bank, N.A., a banking corporation,
until his retirement in December 1998.
Other Directorships: Saint-Gobain Corporation (Chairman of the Board), Avery
Dennison Corporation, Korn/Ferry International and
Teledyne Technologies Incorporated.
W. CRAIG MCCLELLAND
Age: 66
Director Since: 1996
ATI Board Committees: Committee on Governance (Chair), Personnel and
Compensation Committee and Stock Incentive Award
Subcommittee.
Recent Business Experience: Mr. McClelland was Chairman and Chief Executive Officer of
Union Camp Corporation, a manufacturer of paper products,
prior to his retirement in 1999.
Other Directorships: International Paper Company, The PNC Financial Services
Group and Water Pik Technologies, Inc.
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CHARLES J. QUEENAN, JR.
Age: 70
Director Since: 1996
ATI Board Committees: Executive Committee and Personnel and Compensation
Committee (Chair).
Principal Occupation: Senior Counsel of Kirkpatrick & Lockhart LLP,
attorneys-at-law.
Recent Business Experience: Prior to January 1996, Mr. Queenan was a partner of
Kirkpatrick & Lockhart LLP.
Other Directorships: Crane Co., Teledyne Technologies Incorporated and Water
Pik Technologies, Inc.
CONTINUING DIRECTORS - TERM EXPIRES AT 2003 ANNUAL MEETING (CLASS I)
DIANE C. CREEL
Age: 52
Director Since: 1996
ATI Board Committees: Committee on Governance, Personnel and Compensation
Committee and Stock Incentive Award Subcommittee (Chair).
Principal Occupation: Chief Executive Officer and President of Earth Tech, an
international consulting engineering firm.
Other Directorships: Board of the Corporations and Trusts which comprise the
Fixed Income Funds of the American Funds Group, Teledyne
Technologies Incorporated and The B.F. Goodrich Company.
C. FRED FETTEROLF
Age: 72
Director Since: 1996
ATI Board Committees: Personnel and Compensation Committee, Stock Incentive
Award Subcommittee and Technology Committee.
Recent Business Experience: Mr. Fetterolf was President and Chief Operating Officer of
Alcoa, Inc., prior to his retirement in 1991.
Other Directorships: Commonwealth Industries, Inc., Dentsply International Inc.
and Teledyne Technologies Incorporated.
JAMES E. ROHR
Age: 52
Director Since: 1996
ATI Board Committees: Executive Committee, Audit Committee, Finance Committee
and Technology Committee.
Principal Occupation: President and Chief Executive Officer, The PNC Financial
Services Group, Inc.
Recent Business Experience: Mr. Rohr has been Chief Executive Officer of The PNC
Financial Services Group since May 2000, having served as
President since 1992 and assuming the additional title of
Chief Operating Officer in 1998.
Other Directorships: The PNC Financial Services Group, Equitable Resources,
Inc. and Water Pik Technologies, Inc.
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COMMITTEES OF THE BOARD OF DIRECTORS
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STANDING COMMITTEES
The Board of Directors has seven standing committees--Executive, Audit, Finance,
Governance, Personnel and Compensation, Stock Incentive Award Subcommittee of
the Personnel and Compensation Committee and Technology--each of which has a
written charter. Prior to May 2000, the Audit Committee and the Finance
Committee functioned as a single committee.
EXECUTIVE COMMITTEE
The Executive Committee has broad powers to act on behalf of the Board of
Directors. In practice, the Executive Committee acts when emergency issues or
scheduling problems make it difficult to convene a meeting of all directors and
on specific matters referred to the Committee by the Board of Directors. The
Executive Committee reports all actions it takes at the next meeting of the
Board. The Executive Committee met twice during 2000.
AUDIT COMMITTEE
The Audit Committee is comprised of five members who, under the rules of the New
York Stock Exchange, are independent. The Committee operates under a written
charter adopted by the Board of Directors (Appendix A). The primary functions of
the Audit Committee are to:
- Recommend to the Board of Directors the appointment of the independent
accountants, considering the independence and effectiveness of the independent
accountants;
- Review the scope of the annual audit plan, proposed fees and other activities
of the independent accountants and the audit plan of the internal auditors;
- Review with management and the independent accountants, upon completion of the
annual audit, the financial statements and related reports to be filed with
the Securities and Exchange Commission;
- Provide the report of the Committee annually to the Board of Directors for
inclusion in the Company's annual meeting proxy statement; and
- Evaluate the Company's internal and external audit efforts, accounting and
financial controls and business ethics policies and practices by reviewing
reports by, and attending meetings with, the internal and external auditors
and management.
In addition, prior to the issuance of the Company's release of quarterly
earnings, the Chairman of the Committee reviews with the independent accountants
and management of the Company whether any matters are required to be
communicated to the Committee by the independent accountants under generally
accepted auditing standards.
Members of the Audit Committee also serve as members of the Finance Committee,
but members who attend a joint meeting of the two Committees receive a single
meeting fee for their attendance at that meeting.
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. The Committee met
separately once in 2000 and jointly with the Finance Committee four times in
2000. The Audit Committee report begins on page 8.
FINANCE COMMITTEE
The Finance Committee makes recommendations to the Board of Directors regarding:
- Company debt and credit arrangements and other major financial proposals;
- Company relationships with banks and other financial institutions; and
- Policies with respect to dividends, capital structure and authorized stock.
The Committee met separately once in 2000 and jointly with the Audit Committee
four times in 2000.
COMMITTEE ON GOVERNANCE
The Committee on Governance administers the Company's compensation programs for
directors. In addition, the Committee reviews, evaluates and makes
recommendations to the Board of Directors regarding:
- Candidates for nomination as new Board members and nomination of incumbent
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directors as continuing Board members when their terms expire;
- Assignments to Board committees and appointments of committee chairs;
- The composition, organization and operations of the Board, including the
orientation of new members and the flow of information; and
- Policies on Board tenure and the retirement or resignation of incumbent
directors.
The Committee met three times in 2000.
Recommendations by stockholders of potential nominees must be directed to the
Corporate Secretary in the manner specified in the Company's certificate of
incorporation. See "2002 Annual Meeting and Stockholder Proposals" on page 25.
PERSONNEL AND COMPENSATION COMMITTEE
The Personnel and Compensation Committee, together with the Stock Incentive
Award Subcommittee, establishes, and annually reassesses, the executive
compensation program. Their Report on Executive Compensation begins on page 13.
The Committee administers the Company's incentive compensation plans, except to
the extent the Stock Incentive Award Subcommittee administers the plans. The
Committee also reviews, evaluates and makes recommendations to the Stock
Incentive Award Subcommittee and/or the Board of Directors, and consults with
the Chief Executive Officer, as appropriate, regarding:
- Executive management organization matters;
- Compensation and benefits for officers who also serve as directors of the
Company;
- Compensation and benefit policies and procedures relating to officers who are
statutory insiders; and
- Policy matters relating to employee benefits and employee benefit plans.
None of the members of the Personnel and Compensation Committee is an employee
of the Company and each member is an "outside director" for the purposes of the
corporate compensation provisions contained in Section 162(m) of the Internal
Revenue Code. The Committee met six times in 2000.
STOCK INCENTIVE AWARD SUBCOMMITTEE
The Stock Incentive Award Subcommittee is responsible for administering and
making awards under the Company's stock-based incentive compensation programs
for officers, referred to as "statutory insiders," who are required to file
reports under Section 16 of the Securities Exchange Act of 1934.
None of the members of the Subcommittee is an employee of the Company. Each
member is a "non-employee director" for the purposes of Rule 16b-3 of the
Securities and Exchange Commission and an "outside director" for the purposes of
the compensation provisions of the Internal Revenue Code. See "Report on
Executive Compensation." The Subcommittee met three times in 2000.
TECHNOLOGY COMMITTEE
The Technology Committee assesses and makes recommendations to the Board of
Directors regarding:
- The impact of technologies that could materially affect the Company's success;
- The Company's technical capabilities; and
- Priorities, asset deployment and other matters related to the Company's
technical activities.
The Committee met once in 2000.
REPORT OF AUDIT COMMITTEE
The following is the report of the Audit Committee with respect to the Company's
audited financial statements for the fiscal year ended December 31, 2000, which
include the consolidated balance sheets of the Company as of December 31, 2000
and 1999, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 2000, and the notes thereto (collectively, the "Financial Statements").
Management is responsible for the Company's internal controls and financial
reporting process. Ernst & Young LLP ("Ernst & Young"), the Company's
independent accountants, are responsible for performing an independent audit of
the Company's Financial Statements in accordance with generally accepted
auditing standards and for issuing a report. One of the Audit Committee's
responsibilities is to monitor and oversee these processes.
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The Audit Committee has reviewed, met and held discussions with the Company's
management, internal auditors, and the independent accountants regarding the
Financial Statements, including a discussion of quality, not just acceptability,
of the Company's accounting principles, and Ernst & Young's judgment regarding
these matters.
The Audit Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Audit
Committee meets with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Company's 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 the Independence Standards Board and has also
considered the compatibility of non-audit services with Ernst & Young's
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 that the Financial Statements be included
in the Company's Annual Report on Form 10-K for the year ended December 31, 2000
as filed with the Securities and Exchange Commission.
SUBMITTED BY:
AUDIT COMMITTEE, whose members are:
Frank V. Cahouet, Chair
Paul S. Brentlinger
Ray J. Groves
William G. Ouchi
James E. Rohr
DIRECTOR COMPENSATION
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Directors who are not employees of the Company are paid an annual retainer fee
of $28,000. Directors also are paid $1,500 for each Board meeting and $1,000 for
each committee meeting attended. Each non-employee chair of a committee is paid
an annual fee of $3,000. Directors who are employees of the Company do not
receive any compensation for their services on the Board or its committees.
The non-employee directors also participate in the 1996 Non-Employee Director
Stock Compensation Plan ("Director Stock Plan"). The purpose of the Director
Stock Plan is to provide non-employee directors with an increased personal
interest in the Company's performance.
Under the Director Stock Plan, options to purchase 1,000 shares of Common Stock
are granted to non-employee directors at the conclusion of each annual meeting
of stockholders. The purchase price of the Common Stock covered by these annual
options is the fair market value of the Common Stock on the date the option is
granted.
The Director Stock Plan also provides that each non-employee director is to
receive at least 25 percent of the annual retainer fee in the form of Common
Stock and/or options to acquire Common Stock. Each director may elect a greater
percentage. The directors also may elect to receive all or a percentage of their
meeting fees in the form of Common Stock and/or options to acquire Common Stock.
Options granted under this part of the Director Stock Plan are intended to
provide each electing director with options having an exercise value on the date
of grant equal to the foregone fees; that is, the difference between the
exercise price and the market price of the underlying shares of Common Stock on
the date of grant is intended to be equal to the foregone fees.
In order to continue to attract and retain non-employee directors of exceptional
ability and experience, the Company also maintains a Fee Continuation Plan for
Non-Employee Directors. Under the plan, benefits are payable to a person who
serves as a non-employee director for at least five years. The annual benefit
equals the retainer fee in effect when the director retires from the Board.
Benefits are paid for each year of the participant's credited service as a
director (as defined in the plan) up to a maximum of ten years.
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ITEM B ON PROXY CARD -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
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Ernst & Young has served as independent auditors for the Company since August
15, 1996 and served as independent auditors for Allegheny Ludlum Corporation
since 1980. The Board of Directors believes that Ernst & Young is knowledgeable
about the Company's operations and accounting practices and is well qualified to
act in the capacity of independent auditors. Fees for the last fiscal year were:
annual audit - $1,623,849 (including audit related services of $704,849), other
non-audit (principally, tax-related services) - $851,485, and financial
information system design and implementation - $0.
For this proposal to be adopted, a majority of the votes cast must be voted for
approval. If the stockholders do not ratify the selection of Ernst & Young, the
Board will reconsider the appointment of independent auditors. It is expected
that representatives of Ernst & Young will be present at the meeting and will
have an opportunity to make a statement and respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR RATIFICATION OF THE SELECTION OF
THE INDEPENDENT AUDITORS.
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
in your proxy card may vote at their discretion.
Following adjournment of the formal business meeting, Robert P. Bozzone,
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.
10
15
STOCK OWNERSHIP INFORMATION
--------------------------------------------------------------------------------
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require the Company to
disclose late filings of reports of stock ownership (and changes in stock
ownership) by its directors and statutory insiders. To the best of the Company's
knowledge, all filings by these individuals were made on a timely basis in 2000.
FIVE PERCENT OWNERS OF COMMON STOCK
As of February 28, 2001, the Company had received notice that the individuals
and entities listed in the following table are beneficial owners of five percent
or more of Company Common Stock. 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
Beneficial Percent of
Name and Address of Beneficial Owner Ownership Class
--------------------------------------------------------------------------------------------
Richard P. Simmons.......................................... 7,759,902(a) 9.7%
Birchmere
Quaker Hollow Road
Sewickley, PA 15143
The Singleton Group LLC..................................... 5,775,000(b) 7.2%
335 North Maple Drive, Suite 177
Beverly Hills, CA 90210
J. P. Morgan Chase & Co..................................... 5,375,633(c) 6.7%
60 Wall Street
New York, NY 10260
(a) Based upon information provided to the Company, as of February 28, 2001, Mr.
Simmons had the sole power to direct the voting and disposition of all of
these shares. The amount shown includes options to acquire 58,216 shares
which Mr. Simmons may exercise within 60 days of February 28, 2001 under
Company incentive stock plans. Mr. Simmons disclaims beneficial ownership of
shares owned by the R. P. Simmons Family Foundation, and exercisable options
to acquire 113,368 shares (which are not shown in the table) which he
transferred as gifts to family members.
(b) As of December 31, 2000, The Singleton Group LLC, Caroline W. Singleton,
William W. Singleton and Donald E. Rugg held shared voting and dispositive
power with respect to 5,775,000 shares as indicated in a Schedule 13G, as
amended, filed under the Securities Exchange Act of 1934 (the "Exchange
Act") by Caroline W. Singleton. As indicated in a Schedule 13G filed under
the Exchange Act in April 2000, Donald E. Rugg also held sole voting and
dispositive power with respect to 158 shares.
(c) J. P. Morgan Chase & Co. filed a Schedule 13G, as amended, under the
Exchange Act indicating that as of December 31, 2000, it beneficially owned
5,375,633 shares of Common Stock, including 4,448,371 shares as to which it
had sole voting power; 214 shares as to which it had shared voting power;
5,291,854 shares as to which it had sole dispositive power; and 60,045
shares as to which it had shared dispositive power.
11
16
STOCK OWNERSHIP OF MANAGEMENT
The following table shows the shares of Common Stock reported to the Company as
beneficially owned as of February 28, 2001 by the nominees for director, the
continuing directors, each officer named in the Summary Compensation Table and
other statutory insiders of the Company.
Shares Shares That Total Shares-Percentage
Beneficially May Be Acquired if 1% or more of
Beneficial Owner Owned Within 60 Days Shares Outstanding
-----------------------------------------------------------------------------------------------------
Robert P. Bozzone.................... 2,702,883 13,605 2,716,488 3.4%
Paul S. Brentlinger.................. 6,718 2,268 8,986
Frank V. Cahouet..................... 96 37,089 37,185
Thomas A. Corcoran................... 79,196 77,789 156,985
Diane C. Creel....................... 1,267 14,438 15,705
C. Fred Fetterolf.................... 7,239 2,268 9,507
Ray J. Groves........................ 5,677 8,600 14,277
Douglas A. Kittenbrink............... 77,028 36,427 113,455
George J. Kourpias................... 396 0 396
W. Craig McClelland.................. 11,757 2,268 14,025
James L. Murdy....................... 157,630 60,949 218,579
William G. Ouchi..................... 10,481 10,130 20,611
Charles J. Queenan, Jr............... 355,458 2,268 357,726
James E. Rohr........................ 5,886 2,268 8,154
Jack W. Shilling..................... 110,793 42,039 152,832
Jon D. Walton........................ 119,601 54,335 173,936
All 18 nominees, continuing
directors, named officers and other
statutory insiders as a group...... 3,773,008 433,123 4,206,131 5.2%
-----------------------------------------------------------------------------------------------------
The table includes shares held as of February 28, 2001 in the Company's 401(k)
plans for the accounts of Messrs. Bozzone, Kittenbrink, Murdy, and Walton and
Dr. Shilling and shares held jointly with the named individual's spouse. The
table also includes the following shares where beneficial ownership is
disclaimed: 120,000 shares owned by Mr. Bozzone's wife; 100 shares owned by Mr.
Brentlinger's wife; 1,300 shares owned by the Fetterolf Family Foundation; 1,534
shares owned by Mr. Kittenbrink's children; 27,050 shares owned by Mr. Queenan's
wife; 3,700 shares owned by Mr. Walton's wife; and 219 shares held by the
spouses of other statutory insiders. Unless exercised, all of Mr. Corcoran's
options to acquire Common Stock will expire on March 15, 2001.
12
17
REPORT ON EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------
This report on executive compensation is furnished by the Personnel and
Compensation Committee and Stock Incentive Award Subcommittee (together referred
to as the "Committee"). In some discussions of stock awards to the named
officers in the Summary Compensation Table and other statutory insiders, the
term "Committee" refers to the Stock Incentive Award Subcommittee.
EXECUTIVE COMPENSATION CHARACTERISTICS
At Allegheny Technologies, total executive compensation has the following
characteristics:
- It is to be competitive in the aggregate, using a set of business and labor
market competitors, including data supplied by Hewitt Associates, a nationally
recognized executive compensation consulting firm, to gauge the competitive
marketplace. Competitive for these purposes is a target base compensation at
the 50th percentile (median) for comparable positions.
- It is to be performance oriented, with a substantial portion of total
compensation tied to internal and external measures of Company performance.
Superior performance should increase total compensation opportunities to well
above the 50th percentile level.
- It is to promote long-term careers with Allegheny Technologies.
COMPENSATION POLICIES AND PROGRAMS
Consistent with the characteristics outlined above, the Committee has adopted
the following policies and programs:
Base salary for all management positions will be at the industry or market
median for comparable positions unless there are sound reasons for significant
variations. Judgment is the guiding factor in base salary determinations, as
well as other compensation issues.
Short-term incentives under the Annual Incentive Plan ("AIP") are designed to
provide a competitive (50th percentile) award, based on the achievement of
predefined performance measures. Under the general provisions of the AIP, up to
200 percent of the target award is paid in the case of significant
overachievement. The majority of the award is based on financial performance
achievement, with a smaller portion tied to the achievement of pre-established
individual goals. Discretionary adjustments of plus or minus 20 percent are
allowed, so long as aggregate adjustments do not exceed plus five percent.
Awards are paid from a pool that generally will not exceed five percent of
operating profit.
For 2000, the AIP target award opportunity was set at 150% of the normal level
to reflect, in the view of the Committee, the stretch nature of the predefined
performance measures (in other words, performance measures which, in the
judgment of the Committee, were more difficult to attain). As in prior years, 40
percent of the award for AIP participants was based on the achievement of
predetermined levels of operating income, 40 percent was based on the
achievement of predetermined levels of return on capital employed and 20 percent
was tied to the achievement of specific individual objectives. Given the
importance the Company placed on safety, the Committee determined that one-half
of the individual performance objectives (that is, 10% of the total award) would
be tied to safety performance.
For 2000, awards under the program ranged from 4.5% to 94.6% percent of the 2000
target incentives because the targets and levels of achievement varied by
business unit and at the Company level. The bonus column of the Summary
Compensation Table contains the annual incentive award for 2000 for the named
officers.
Long-term incentives at the Company consist of the following three components:
(1) Stock Options -- Historically, stock options have been awarded annually to
key employees approved by the Committee. The amount of the award generally
depends on the employee's salary grade and are at levels generally perceived to
be competitive. In December 2000, the Committee decided to adopt a "dollar-cost
averaging" type approach to grant options periodically over the year to offset
the volatility of
13
18
the market price of common stock, and made stock option grants at one-fourth the
normal annual level for key employees. The Committee will consider additional
grants during 2001.
(2) Performance Share Program -- The Performance Share Program ("PSP") provides
grants of performance share units which can be earned if specified performance
objectives are met over a multi-year cycle, which generally lasts three years.
At the beginning of each cycle, the Committee selects the eligible participants
and approves the performance objectives. For statutory insiders and other
corporate executives, performance is generally measured at the Company level.
The amount of the award opportunity generally depends on the executive's salary
grade at the beginning of the award period. At the time the award opportunity is
set, the awards are denominated two-thirds in shares of Common Stock (based on
the value of the shares immediately prior to the beginning of the award period)
and one-third in cash. Awards under the PSP may range from zero to 200 percent
of the target incentive opportunity depending on the extent to which the
performance goals are achieved. Awards are generally paid to participants in
three annual installments after the conclusion of the performance cycle so long
as they remain Company employees (with exceptions for retirement, disability and
death).
In 2000, a new award period for 2000-2002 was established for 61 participants.
For this award period, the target incentive opportunity has been doubled to
reflect the stretch nature of the predefined performance objectives. See "Long
Term Incentive Program," page 20.
(3) Stock Acquisition and Retention Program -- The Stock Acquisition and
Retention Program ("SARP") is designed to encourage key executives to acquire
and retain Common Stock.
Under the SARP, key executives selected by the Committee may purchase shares or
designate already-owned shares of Common Stock which the Company matches with a
grant of restricted Common Stock, for years beginning after January 1, 2000,
equal to 75 percent of the number of shares purchased or designated by the
participant. The restricted shares generally vest only if the participant holds
the purchased or designated shares for five years; the restrictions will lapse
if there is a change in control of the Company or the participant retires or
dies.
For each SARP year, participants may purchase or designate a maximum number of
shares having a market price equal to the participant's base salary.
The Company will loan a participant the funds to purchase shares under the SARP
at an interest rate equal to the minimum rate necessary to avoid imputed
interest income under the federal income tax rules. The purchased shares are
pledged and held as security for these loans. Dividends paid on the purchased
and related restricted shares are applied to loan payments. The loan has a
maximum term of ten years.
Stock Ownership Guidelines. The Company has adopted stock ownership guidelines
for its key executives, which call for a minimum level of stock ownership based
on the executive's base salary, and are designed to further link these
executives' interests to increased stockholder value. The guidelines are as
follows:
CEO 4 times salary
Executive and Senior Vice
Presidents, Presidents of
Allegheny Ludlum, Allvac and the
High Performance Metals Group 3 times salary
Other Presidents/Officers
(35%-45% AIP Target) 2 times salary
Other Officers/Key Employees
(25% AIP Target) 1 times salary
The executives have until 2005 to reach the targeted ownership levels.
14
19
COMPENSATION OF CHIEF EXECUTIVE OFFICER - ROBERT P. BOZZONE
On December 6, 2000, Robert P. Bozzone, the Vice Chairman of the Board, was
elected to serve as the Company's Chairman, President and Chief Executive
Officer following the announcement that Mr. Corcoran had resigned as Chairman,
President and Chief Executive Officer and was leaving the Company to pursue
other interests.
Since Mr. Bozzone's service began in December 2000, he did not participate in
the Company's performance-based plans for that year. In December 2000, the
Committees took action regarding the compensation of Mr. Bozzone for 2001
consistent with the compensation program, including the performance-based
components of the program, that the Committees had, with the advice of Hewitt
Associates, adopted for the Company's chief executive officer. Mr. Bozzone will
be paid an annual base salary of $800,000 and will participate in the Company's
compensation programs, including the AIP, SARP and PSP at the same target levels
as Mr. Corcoran had participated as President and Chief Executive Officer. Mr.
Bozzone's target incentive opportunity under the 2000-2002 PSP award period was
prorated based upon the date his employment began. The Committee continues to
believe, based upon the advice of consultants, that the compensation program for
the Company's chief executive officer is competitive and appropriate.
In December 2000, Mr. Bozzone received options to purchase 15,000 shares of
Company Common Stock. As discussed above, the amount of this stock option award
was at one-fourth the normal annual target amount. The Committee will consider
making additional grants during the year.
In 2000, Mr. Bozzone designated 61,832 shares of Common Stock previously owned
by him under the SARP. As a result of this designation, the Company awarded Mr.
Bozzone 46,374 restricted shares of Common Stock.
COMPENSATION OF FORMER CHIEF EXECUTIVE OFFICER -- THOMAS A. CORCORAN
Thomas A. Corcoran resigned as the Company's Chairman, President and Chief
Executive Officer on December 6, 2000. Under the terms of his employment
agreement, Mr. Corcoran was paid a base salary of $746,031 and $264,621 which
was an amount agreed upon in his separation agreement in connection with his
participation under the AIP for 2000. During 2000, Mr. Corcoran designated
25,000 shares of Common Stock previously owned by him under the SARP. As a
result of this designation, the Company awarded Mr. Corcoran 18,750 restricted
shares of Common Stock.
For a discussion of Mr. Corcoran's employment and separation agreements, see
"Employment and Change in Control Agreements" and "Separation Agreement."
15
20
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(a) of the Internal Revenue Code imposes limits on tax deductions for
annual compensation paid to a chief executive officer and other highly
compensated officers unless the compensation qualifies as "performance-based" or
is otherwise exempt under the law. The Company's Incentive Plan is intended to
meet the deductibility requirements of the regulations promulgated under Section
162(m). However, the Committee may determine in any year that it would be in the
best interests of the Company for certain awards to be paid under the Incentive
Plan that would not satisfy the requirements of Section 162(m) for
deductibility.
SUBMITTED BY:
PERSONNEL AND COMPENSATION STOCK INCENTIVE AWARD
COMMITTEE, whose members are: SUBCOMMITTEE, whose members are:
Charles J. Queenan, Jr., Chair Diane C. Creel, Chair
Diane C. Creel, Vice Chair C. Fred Fetterolf
C. Fred Fetterolf W. Craig McClelland
W. Craig McClelland William G. Ouchi
William G. Ouchi
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Personnel and Compensation Committee or Stock Incentive Award
Subcommittee is an officer or employee of the Company. Mr. Queenan serves as
senior counsel to a law firm that provided services to the Company during 2000
and 2001. The firm does not compensate Mr. Queenan and he does not participate
in its earnings or profits. No other member of the Committee has a current or
prior relationship, and no officer who is a statutory insider of the Company has
a relationship to any other company, required to be described under the
Securities and Exchange Commission rules relating to disclosure of executive
compensation.
16
21
EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth information about the
compensation paid by the Company to Robert P. Bozzone, who became Chairman,
President and Chief Executive Officer on December 6, 2000 and to each of the
other four most highly compensated officers required to file reports under
Section 16 of the Securities Exchange Act of 1934, as of December 31, 2000, and
to Thomas A. Corcoran who served as President and Chief Executive Officer from
October 1, 1999 until December 6, 2000 (the "named officers").
Annual Compensation Long Term Compensation
----------------------------------- --------------------------------------
Awards Payouts
------ -------
Other Securities
Annual Under-
Name and Compen- Restricted lying LTIP All Other
Principal Salary Bonus sation Stock Options Payouts Compensation
Positions(1) Year ($)(2) ($)(3) ($)(5) Award($)(6) (Shares)(7) ($)(8) ($)(9)
------------------------------------------------------------------------------------------------------------------------------
Robert P. Bozzone 2000 57,143 0 0 602,862 15,000 0 1,679,360
Chairman, President and
Chief Executive Officer
Thomas A. Corcoran 2000 746,032 (4) 106,241 343,359 0 0 4,713,817
Former Chairman, President 1999 233,331 0 360 2,568,750 233,367 0 2,215,106
and Chief Executive Officer
James L. Murdy 2000 406,667 326,019 12,530 585,953 5,000 55,468 377,556
Executive Vice President 1999 370,000 229,770 631,027 122,079 40,000 220,920 942,540
1998 346,666 325,222 12,251 209,098 22,674 252,420 375,370
Jack W. Shilling 2000 322,500 238,550 11,194 473,248 5,000 33,126 180,288
President, High Performance
Metals Group
Jon D. Walton 2000 287,500 238,550 12,201 431,358 5,000 41,403 177,673
Senior Vice President, 1999 275,000 170,775 473,028 97,687 40,000 157,800 777,025
General Counsel and Secretary 1998 258,333 231,026 9,711 144,068 22,674 180,300 195,493
Douglas A. Kittenbrink 2000 241,383 198,792 6,410 361,861 5,000 19,511 68,589
President, Allegheny Ludlum
(1) Mr. Murdy currently serves as Executive Vice President in charge of
corporate business development and human service functions. Prior to
September 1, 2000, Mr. Murdy served as Executive Vice President, Finance and
Administration and Chief Financial Officer. Dr. Shilling became President,
High Performance Metals Group and Mr. Kittenbrink became President,
Allegheny Ludlum, and both became statutory insiders of the Company, on
April 1, 2000. See "Employment and Change of Control Agreements" on page 22.
(2) Includes cash compensation deferred pursuant to the savings portion of the
Company's Retirement Savings Plan, a qualified defined contribution plan
under Section 401(a) of the Internal Revenue Code.
(3) Includes payments under the Company's AIP.
(4) See note (8) with respect to payments made under Mr. Corcoran's separation
agreement in connection with his participation in the AIP.
(5) In accordance with applicable regulations, with the exception of Mr.
Corcoran, the amounts do not include perquisites and other personal benefits
received by the named officers because the aggregate value of such benefits
did not exceed the lesser of $50,000 or 10 percent of the total annual
salary and bonus for the named officers.
(6) Represents the closing market price on the award date of shares of
restricted Common Stock awarded to the named officers under the Company's
SARP; amounts for 2000 include awards for the 2000 and 2001 SARP years.
Dividends are paid on the restricted shares. The number of restricted shares
held by the named officers on December 31, 2000 and closing market price of
such shares (if unrestricted) on the last business day of 2000 were: Mr.
Bozzone, 46,374 shares,
17
22
($736,187); Mr. Corcoran, 93,750 shares ($1,488,281); Mr. Murdy, 52,743
shares ($837,295); Dr. Shilling, 42,905 shares ($681,117); Mr. Walton,
37,195 shares ($590,471); and Mr. Kittenbrink, 31,479 shares ($499,729).
Prior to 2000, Mr. Corcoran was not eligible to participate in the SARP.
(7) Reflects options granted under the Company's Incentive Plan. The amount
shown represents the number of shares the officer could purchase by
exercising the options.
(8) The amounts shown include cash and the closing market price of Common Stock
distributed under the PSP. For 2000, the payments were made under the
Company's PSP for the 1998-1999 award period. For 1999 and 1998, the
distributions were made under the Allegheny Ludlum PSP for the 1995-1996
award period. Under both programs, awards are paid over a three-year period
beginning in the year following the end of the award period.
(9) Includes annual accruals by the Company for possible future payments to the
named officers under the Supplemental Pension Plan described under "Pension
Plans" on page 21. For 2000, the amounts accrued were: Mr. Bozzone,
$1,228,333; Mr. Corcoran, $198,495; Mr. Murdy, $316,554; Dr. Shilling,
$135,008; Mr. Walton, $131,202; and Mr. Kittenbrink, $42,103. Includes 2000
Company contributions pursuant to the retirement portion of the Company's
Retirement Savings Plan to Mr. Bozzone of $3,757 and to the accounts of each
other named officer in the amount of $11,570 each. Includes 2000 Company
contributions pursuant to the savings portion of the Retirement Savings Plan
to the accounts of Messrs. Corcoran, Murdy, Walton, Kittenbrink and Dr.
Shilling in the approximate amount of $5,200 each. Includes 2000 Company
contributions to the Benefit Restoration Plan, as follows: Mr. Corcoran,
$45,843; Mr. Murdy, $39,372; Dr. Shilling, $17,612; Mr. Walton, $23,550; and
Mr. Kittenbrink, $6,631. Under the Benefit Restoration Plan, the Company
supplements the payments received by participants under the pension
provisions described under "Pension Plans" on page 21 and the Retirement
Savings Plan by making payments to or accruing benefits on behalf of the
participants in amounts which are equivalent to the portion of the payments
or benefits which cannot be paid or accrued under such plans due to
limitations imposed by the Internal Revenue Code. Also included are the
dollar value of the benefit to the named officers of the remainder of
Company-paid premiums for "split dollar" life insurance; for 2000, such
amounts were as follows: Mr. Bozzone, $2,270; Mr. Corcoran, $23,167; Mr.
Murdy, $4,881; Dr. Shilling, $10,898; Mr. Walton, $6,101; and Mr.
Kittenbrink, $3,035. For Mr. Bozzone, also includes annual retainer and
board meeting fees in the amount of $45,000 that he received during the
period he served as a non-employee director of the Company, comprised of
cash and Common Stock, as well as a payment of $400,000 from the
Supplemental Pension Plan to him as a retired employee prior to becoming
Chairman, President and Chief Executive Officer on December 6, 2000. For Mr.
Corcoran, includes a $600,000 special bonus paid under his employment
agreement on February 1, 2000, relocation costs of $70,289 and $3,759,203
paid in connection with his separation from the Company (of which $264,621
was the agreed upon amount paid in connection with Mr. Corcoran's
participation in the AIP for 2000). See "Employment and Change in Control
Agreements" and "Separation Agreement."
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23
STOCK OPTIONS
The first table sets forth information regarding options granted during 2000
under the Allegheny Technologies Incentive Plan.
The second table indicates the named officers who exercised stock options during
2000 and sets forth the unexercised options held at December 31, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
--------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants(1) Price Appreciation for Option Term(4)
-------------------------------------------------------------------------------------- ---------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise or
Granted in Fiscal Base Price Expiration 0% 5% 10%
Name (#) Year ($/Share) Date ($)(3) ($) ($)
---- ------------ ------------ ------------- ----------------- ------ ---------- ---------
R. P. Bozzone(2)..... 15,000 4.9% 18.50 12/13/2010 0 174,450 442,200
T. A. Corcoran....... 0 N/A N/A N/A N/A N/A N/A
J. L. Murdy.......... 5,000 1.6% 18.50 12/13/2010 0 58,150 147,400
J. W. Shilling....... 5,000 1.6% 18.50 12/13/2010 0 58,150 147,400
J. D. Walton......... 5,000 1.6% 18.50 12/13/2010 0 58,150 147,400
D. A. Kittenbrink.... 5,000 1.6% 18.50 12/13/2010 0 58,150 147,400
All Optionees........ 304,075 100% 18.47-18.50 3/28/2010- 0 3,536,070 8,962,843
12/13/2010
--------------------------------------------------------------------------------------------------------------------------------
(1) In general, except for limited instances, including estate planning
purposes, and at the discretion of the Committee, stock options become
exercisable in three annual installments beginning one year after the date
of grant. Options include the right to pay the exercise price in cash,
Common Stock or a combination, and the right to have shares withheld by the
Company to pay withholding tax obligations due on the exercise.
(2) Does not include options granted to Mr. Bozzone under the Director Stock
Plan during the period he served as a non-employee director.
(3) No gain to the optionees is possible without stock price appreciation, which
will benefit all stockholders commensurately.
(4) These assumed "potential realizable values" are mathematically derived from
certain prescribed rates of stock price appreciation. The actual value of
these option grants depends on the future performance of the Common Stock
and overall stock market conditions. There is no assurance that the values
reflected in this table will be achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
--------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options at
Shares Options at FY-End(#) FY-End($)(3)
Acquired Value --------------------------- ---------------------------
Name on Exercise(#) Realized($)(2) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- -------------- ----------- ------------- ----------- -------------
R. P. Bozzone (1)................. 0 0 13,605 16,000 0 0
T. A. Corcoran.................... 0 0 77,789 155,578 0 0
J. L. Murdy....................... 0 0 57,170 45,649 0 0
J. W. Shilling.................... 4,762 6,638 40,149 27,405 0 0
J. D. Walton...................... 13,038 14,244 50,556 43,760 0 0
D. A. Kittenbrink................. 0 0 35,009 25,988 0 0
(1) Includes options granted to Mr. Bozzone with respect to his service as a
non-employee director.
(2) The amount shown for "value realized" is calculated by subtracting the
exercise price paid upon exercise of options from the market price for the
Company Common Stock at the time of the sale.
(3) The exercise prices of the unexercised options range from $47.41 to $21.53.
For purposes of this chart, the "value" of unexercised options is calculated
by subtracting the exercise price per share from $15.71, which was the
average of the high and low sales prices of a share of Company Common Stock
on the New York Stock Exchange on the last business day of 2000.
19
24
LONG TERM INCENTIVE PROGRAM
The following table sets forth information about awards for the 2000-2002 award
period established in 2000 under the PSP (see page 14).
The amounts included in the Estimated Future Payouts columns represent the
potential payments of Common Stock and cash to the named officers depending on
the level of achievement (i.e., threshold, target or maximum) of the performance
goals for the three-year award period. Participants will not receive any payment
of Common Stock or cash under the program if the Company and/or designated
business unit does not achieve the threshold level of performance objectives
during the award period.
PERFORMANCE SHARE PROGRAM--AWARDS IN LAST FISCAL YEAR
--------------------------------------------------------------------------------
Estimated Future Payouts
Under Non-Stock Price-Based Plans
Number of Performance or ----------------------------------------------
Shares Units Other Period Until Threshold Target Maximum
Name or Other Rights(#) Maturation or Payout ($ or # ) ($ or #) ($ or #)
--------------------- ------------------- ----------------------- ------------- ------------- --------------
R. P. Bozzone(1)..... * 2000-2002 award period 35,955 shares 47,940 shares 95,880 shares
2003-2005 payout period $400,000 $533,333 $1,066,666
T. A. Corcoran....... * 2000-2002 award period 53,925 shares 71,910 shares 143,800 shares
2003-2005 payout period $600,000 $800,000 $1,600,000
J. L. Murdy.......... * 2000-2002 award period 20,786 shares 27,715 shares 55,430 shares
2003-2005 payout period $231,249 $308,333 $616,666
J. W. Shilling....... * 2000-2002 award period 16,854 shares 22,472 shares 44,944 shares
2003-2005 payout period $187,500 $250,000 $500,000
J. D. Walton......... * 2000-2002 award period 15,449 shares 20,599 shares 41,198 shares
2003-2005 payout period $171,875 $229,167 $458,334
D. A. Kittenbrink.... * 2000-2002 award period 11,640 shares 15,521 shares 31,042 shares
2003-2005 payout period $129,500 $172,667 $345,334
(1) For Mr. Bozzone the amount of the award opportunity was prorated based upon
the date his employment with the Company began.
* The amount of the award is generally based on base salary at the beginning of
the award period. At the time the award opportunity was set, the awards were
denominated two-thirds in shares of Common Stock (with the number of shares
based on average price of a share of Common Stock on the New York Stock
Exchange for a fixed period immediately prior to the beginning of the award
period) and one-third in cash.
20
25
PENSION PLANS
The Company maintains a 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. One formula applies to individuals who were employees of Allegheny
Ludlum Corporation ("Allegheny Ludlum") in 1988 when that company established a
defined contribution program and ceased accruals under the defined benefit
pension plan except for those employees who met certain age and service criteria
in 1988.
The benefits payable from a qualified defined benefit plan are limited by the
Internal Revenue Code. The Company has established a non-qualified plan to
restore benefits to employees affected by those limitations. The following table
shows the estimated annual benefits calculated on a straight life annuity basis
payable under the Allegheny Ludlum provisions of the ATI Pension Plan and the
defined benefit portion of the benefit restoration plan to salaried participants
in specified compensation and years of service classifications upon attainment
of age 65:
Estimated Annual Pension Benefits for
Representative Years of Continuous Service*
-------------------------------------------------------------------------
Remuneration 20 25 30 35 40 45
---------------------------------------------------------------------------------------
2$00,000.... $ 64,000 $ 80,000 $ 96,000 $ 112,000 $ 128,000 $ 144,000
300,000.... 96,000 120,000 144,000 168,000 192,000 216,000
400,000.... 128,000 160,000 192,000 224,000 256,000 288,000
500,000.... 160,000 200,000 240,000 280,000 320,000 360,000
600,000.... 192,000 240,000 288,000 336,000 384,000 432,000
800,000.... 256,000 320,000 384,000 448,000 512,000 576,000
1,000,000.. 320,000 400,000 480,000 560,000 640,000 720,000
1,500,000.. 480,000 600,000 720,000 840,000 960,000 1,080,000
2,000,000.. 640,000 800,000 960,000 1,120,000 1,280,000 1,440,000
2,500,000.. 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000
* The formula used to determine retirement benefits under the pension
provisions applicable to employees of Allegheny Ludlum in 1988 considers the
participant's annual eligible earnings in the highest five consecutive years
of the last ten years prior to retirement or, in the case of Allegheny Ludlum
employees with frozen benefits, prior to 1988, and the number of the
participant's years of service. Eligible earnings include base salary,
including tax-deferred contributions by the employee under the Company's
savings plans, and awards, when received, under the Company's short-term
incentive plans. Benefits are not subject to deduction for social security or
other offset amounts.
As of December 31, 2000, credited years of service under the Allegheny Ludlum
provisions of the ATI Pension Plan were 39.17 for Mr. Bozzone, 0.58 for Mr.
Murdy, 27.92 for Dr. Shilling, and 2.83 for Mr. Walton. Messrs. Corcoran and
Kittenbrink do not participate under the Allegheny Technologies Pension Plan.
In addition, the Company has established a Supplemental Pension Plan which
provides certain key employees of the Company and its subsidiaries, including
Messrs. Bozzone, Corcoran, Murdy, Walton, Kittenbrink and Dr. Shilling (or their
beneficiaries in the event of death), with monthly payments in the event of
retirement, disability or death, equal to 50 percent of monthly base salary as
of the date of retirement, disability or death. Monthly retirement benefits
start two months following the later of (1) age 62, if actual retirement occurs
prior to age 62 but after age 58 with the approval of the Board of Directors, or
(2) the date actual retirement occurs and generally continue for a 118-month
period. Provisions applicable to Mr. Corcoran are described at "Separation
Agreement" below. The plan describes the events that will terminate an
employee's participation in the plan. Since the payment of benefits to the
participants is contingent on future events, the amount to be paid in the future
with respect to such officers cannot be determined at this time.
21
26
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
The Company entered employment agreements with Messrs. Murdy and Walton in
connection with the combination of Allegheny Ludlum and Teledyne in 1996. The
agreements provide for the payment of base salary as well as for eligibility to
participate in incentive compensation, equity, employee and fringe benefit plans
offered to senior executives of the Company. By their terms, the agreements
renew automatically each month absent notice from one party to the other, so
that the then remaining term is one year. The agreements generally terminate
prior to the expiration date without breach by any party in the event of the
death, disability or voluntary resignation of the employee. The Company may also
terminate the agreement for cause without breach by it. An employee may resign
for good reason (which is defined to include demotion, reduction in base pay or
movement of corporate headquarters) and receive severance payments equal to the
base pay and bonus, determined based on actual financial results, as well as
continued participation in certain compensation and employee benefit plans, for
one year, including certain supplemental pension benefits.
In 2000, the Company entered into change in control severance agreements, as
amended, with the named officers (other than Mr. Bozzone) and other key
employees to assure the Company that it will have the continued support of the
executive and the availability of the executive's advice and counsel
notwithstanding the possibility, threat or occurrence of a change in control (as
defined in the agreement). 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 executive's employment with
the Company without cause (as defined) or the executive terminates employment
with the Company for good reason (as defined). Severance compensation includes a
multiple of base salary (three for Messrs. Murdy, Walton, Kittenbrink and
Shilling), certain accrued benefits, a pro-rated payment of an incentive bonus
equal to that which would have been paid had the Company achieved 120% of
target, a lump sum payment under the PSP based on the Company's performance for
completed years and for future years assuming that the Company would have
achieved 120% of target, the continuation of welfare benefits for 36 months and
reimbursement for outplacement services. The agreements also provide for the
vesting of outstanding options and the lifting of restrictions on stock awarded
under the SARP. 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 of 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.
Mr. Corcoran entered into an employment agreement with the Company, dated
September 16, 1999, in connection with his employment as the Company's President
and Chief Executive Officer. The agreement had an initial term of five years and
for 2000 and beyond provided for, among other things, an annual base salary of
at least $800,000, special bonuses of $1,350,000, and participation in the
Company's executive compensation programs, including the AIP, PSP, SARP, the
stock option program and the Supplemental Pension Plan. The agreement provided
if Mr. Corcoran was terminated during the term without cause or resigned for
good reason (as defined in the agreement), he would be paid his base salary for
the balance of the term (or two years, if greater), the amount of his bonus for
the prior year times the number of years remaining in the term (or two, if
greater), the special bonuses that remained unpaid and any benefits or accruals
under any of the plans and arrangements in which he then participated.
SEPARATION AGREEMENT
On February 15, 2001, the Company entered into a separation agreement with Mr.
Corcoran which, in accordance with the terms of Mr. Corcoran's employment
agreement, provided that Mr. Corcoran be paid $2,880,000 representing base
salary for the remaining term of the employment agreement less certain expenses;
$264,621 which was the agreed upon amount paid in connection with Mr. Corcoran's
participation in the AIP for 2000; the unpaid special bonuses of $750,000; the
Company's standard contribution towards health, life and disability insurance
coverage through July 2004; retiree medical coverage after July 2004;
eligibility for Supplemental Pension Plan benefits for 12 months starting at age
62 if he does not accept a position with a for profit company before that time;
the lapse of the restrictions on 93,750 restricted shares of Common Stock; and
for any options to acquire Common Stock to be void after March 15, 2001. Mr.
Corcoran has also agreed to confidentiality and non-competition covenants until
January 2002.
22
27
CUMULATIVE TOTAL STOCKHOLDER RETURN
--------------------------------------------------------------------------------
The graph set forth below shows the cumulative total stockholder return (i.e.,
price change plus reinvestment of dividends) on the Common Stock from the first
day of trading in the Common Stock following the formation of the Company in the
combination of Allegheny Ludlum and Teledyne on August 15, 1996 through December
31, 2000 as compared to the S&P 500 Index and the S&P Iron & Steel Index. The
graph assumes that $100 was invested on August 16, 1996.
ALLEGHENY TECHNOLOGIES INC S&P 500 INDEX IRON & STEEL-500
-------------------------- ------------- ----------------
16 Aug-96 100.00 100.00 100.00
Dec-96 110.93 112.16 106.30
Dec-97 127.80 149.58 108.15
Dec-98 104.13 192.33 93.74
Dec-99 67.29 232.80 103.13
Dec-00 49.53 103.13 64.88
On November 29, 1999, the Company completed the Transformation, which included
the spin-offs of Teledyne Technologies Incorporated (NYSE: TDY) and Water Pik
Technologies, Inc. (NYSE: PIK). In the spin-offs, holders of record on November
22, 1999 received one Teledyne Technologies share for each seven shares of
Company Common Stock and one Water Pik share for each twenty shares of Company
Common Stock, based on the number of shares of Company Common Stock they held
prior to the one-for-two reverse stock split.
23
28
CERTAIN TRANSACTIONS
--------------------------------------------------------------------------------
Code, Hennessy & Simmons Funds. Allegheny Ludlum and subsidiaries of Allegheny
Ludlum have invested in two limited partnership funds: Code, Hennessy and
Simmons Limited Partnership ("Fund I"), and Code, Hennessy & Simmons II L.P.
("Fund II"). The objective of both Funds has been to seek maximum return by
investing in leveraged buyouts of operating companies. The investment in Fund I
has essentially been liquidated and no further information is provided in this
statement regarding that Fund. Profits and losses of Fund II are allocated 80
percent to the limited partners and 20 percent to the general partner. The
general partner of Fund II is CHS Management II, L.P. ("CHS II"), whose
stockholders are Andrew W. Code, Daniel J. Hennessy, and Brian P. Simmons, each
of whom has an equal interest in that firm. Brian P. Simmons is the son of
Richard P. Simmons, who beneficially owns more than 5% of the Common Stock. A
subsidiary of Allegheny Ludlum also is a limited partner in CHS II and receives
5 percent of CHS II's 20 percent share of Fund II's net profits and losses
(i.e., one percent of Fund II's net profits and losses). The Allegheny Ludlum
subsidiaries received cash distributions of approximately $1,480,389 in 2000.
CHS II is responsible for managing the selection and structuring of their
respective fund's investments. In 2000, the annual base management fee for CHS
II was 1.05 percent of the fund's total capital commitments. These fees were
offset by fees that the general partner charges to companies the fund acquires.
After the offset for fees, the net amounts received by CHS II was zero percent.
In addition to the investment by the Company, Robert P. Bozzone, Chairman,
President and Chief Executive Officer, and a subsidiary of The PNC Financial
Services Group, Inc. ("PNC") directly or indirectly, have invested or will
invest $2.5 million and $7.5 million, respectively, in Fund II. James E. Rohr,
President and Chief Executive Officer of PNC, is a member of the Company's Board
of Directors.
Kirkpatrick & Lockhart LLP. The Company retained the law firm of Kirkpatrick &
Lockhart LLP to perform services for the Company during 2000 and 2001. Charles
J. Queenan, Jr., a member of the Company's Board of Directors, is Senior Counsel
to that law firm. See "Compensation Committee Interlocks and Insider
Participation" on page 16.
Loans under Stock Acquisition and Retention Programs. Under the terms of the
Company's stock acquisition and retention programs, eligible participants may
deliver a promissory note, payable to the Company, as payment for the purchase
price of shares of Common Stock purchased under the programs. Each note has a
term of not more than 10 years and is secured by the shares of Common Stock
being purchased with the note. Interest accrues on the notes at a rate, as
determined on the applicable purchase date, equal to the lesser of the average
borrowing rate of the Company or the prime lending rate of PNC Bank, but not
lower than the minimum rate necessary to avoid imputed interest under applicable
federal income tax laws. During the 2000 fiscal year, Dr. Shilling, Messrs.
Murdy, Walton, and Kittenbrink and Terry L. Dunlap, a member of Mr. Bozzone's
immediate family, delivered promissory notes to the Company to pay the purchase
price of Common Stock purchased under the program. The largest amount of
indebtedness outstanding under the programs during the 2000 fiscal year and the
amount of indebtedness outstanding under the programs as of December 31, 2000
were $1,360,582 for Mr. Murdy, $1,134,026 for Dr. Shilling, $1,026,594 for Mr.
Walton, $677,691 for Mr. Kittenbrink and $100,174 for Mr. Dunlap.
24
29
OTHER INFORMATION
--------------------------------------------------------------------------------
ANNUAL REPORT ON FORM 10-K
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, WITHOUT EXHIBITS, CAN BE
OBTAINED WITHOUT CHARGE FROM THE SENIOR VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY AT 1000 SIX PPG PLACE, PITTSBURGH, PENNSYLVANIA 15222-5479 OR (412)
394-2800.
2002 ANNUAL MEETING AND STOCKHOLDER PROPOSALS
Under Rule 14a-8 of the Securities and Exchange Commission, proposals of
stockholders intended to be presented at the 2002 Annual Meeting of Stockholders
must be received no later than November 14, 2001 for inclusion in the proxy
statement and proxy card for that meeting. In addition, the Company's
certificate of incorporation provides that in order for 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. To be timely, a stockholder's notice must be delivered to the
Secretary not less than 75 days and not more than 90 days prior to the first
anniversary of the preceding year's annual meeting which, in the case of the
2002 Annual Meeting of Stockholders, would be no earlier than February 2, 2002
and no later than February 17, 2002. If, however, the date of the annual meeting
is advanced by more than 30 days or delayed by more than 60 days from such
anniversary date, to be timely, notice by the stockholder must be so delivered
not earlier than the 90th day prior to such annual meeting and not later than
the later of the 60th day prior to such annual meeting or the 10th day following
the day on which public announcement of the date of such meeting is first made.
The Company's certificate of incorporation also requires that such notice
contain certain additional information. Copies of the certificate of
incorporation can be obtained without charge from the Senior Vice President,
General Counsel and Secretary.
PROXY SOLICITATION
The Company pays the cost of preparing, assembling and mailing this
proxy-soliciting material. We will reimburse banks, brokers and other nominee
holders for reasonable expenses they incur in sending these proxy materials to
our beneficial stockholders whose stock is registered in the nominee's name.
The Company has engaged Morrow & Co. to help solicit proxies from brokers, banks
and other nominee holders of the Common Stock at a cost of $8,000 plus expenses.
Our employees may also solicit proxies for no additional compensation.
On behalf of the Board of Directors:
/s/ Jon D. Walton
Jon D. Walton
Senior Vice President, General Counsel and Secretary
Dated: March 14, 2001
25
30
APPENDIX A
AUDIT COMMITTEE CHARTER
The Board of Directors shall appoint annually the Audit Committee (the
"Committee") and appoint its Chairman. Members of the Committee shall serve at
the will of the Board of Directors.
COMPOSITION
The Committee shall be comprised of three or more directors, each of whom shall
be independent of management and the Company and free from any relationships to
the Company that might in the opinion of the Board of Directors interfere with
the exercise of his or her independent judgment in carrying out the functions of
the Committee. The Board of Directors shall apply the New York Stock Exchange
corporate governance listing standards for purposes of evaluating a Committee
member's independence. Each member of the Committee shall, when appointed to the
Committee, or within a reasonable period of time thereafter, be "financially
literate" in the business judgment of the Board of Directors. At least one
member of the Committee shall have accounting or related financial management
"expertise" as such qualification is interpreted by the Board of Directors in
its business judgment.
Members of the Committee shall also serve as members of the Finance Committee
and may also serve on other committees of the Board of Directors. The Chairman
of the Committee shall also serve as the Chairman of the Finance Committee and
shall receive one fee for his or her position as Chairman of both Committees.
Members of both the Audit Committee and the Finance Committee who attend a joint
meeting of the Committees shall receive a single meeting fee for their
attendance at such joint meeting.
RESPONSIBILITY
The Committee shall:
1. Provide assistance to the Board of Directors in fulfilling its statutory and
fiduciary responsibilities for fiscal examinations of the Company and in
monitoring management's and the independent accountants' participation in the
Company's accounting and financial reporting process.
2. Review the Company's administrative, operational and internal accounting
controls and its prescribed fiscal procedures and codes of conduct with the
independent accountants and the Company's financial management.
3. Review the engagement of the independent accountants and the audit plan of
the internal audit function.
4. Recommend to the Board of Directors whether, based on discussions with
management and the independent accountants, the financial statements shall be
included in the Company's Annual Report on Form 10-K.
5. Annually, review and reassess the adequacy of the Committee Charter.
Notwithstanding that the Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Committee to plan or conduct audits
or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
Management is responsible for preparing the Company's financial statements and
the independent accountants are responsible for auditing those financial
statements.
AUTHORITY
The Committee shall have authority to review any matter or activity involving
financial accounting, reporting, conflict of interest, or internal controls of
the Company.
FUNCTIONS
The Committee shall:
1. Recommend to the Board of Directors the appointment or nomination of the
independent accountants for the coming year, considering the independence and
effectiveness of the independent accountants. The independent accountants
shall be
31
accountable to the Committee and the Board of Directors, which have ultimate
authority and responsibility to select, evaluate and, where appropriate,
replace the independent accountants.
2. Review the scope and general extent of the annual audit plan and other
activities and proposed fees of the independent accountants and the audit
plan of the internal audit function. Obtain the written statement from the
independent accountants that the accountants are required to furnish to the
Committee under Independence. Standards Board Standard No. 1. Discuss with
the independent accountants any disclosed relationships or services that may
impair the objectivity and independence of the independent accountants in
order to recommend that the Company's Board of Directors take appropriate
action, as necessary, in response to such relationships in order to satisfy
itself of the accountants' independence.
3. Prior to the issuance of the Company's release of quarterly earnings, the
Chairman of the Committee shall review with the independent accountants and
management of the Company whether any matters are required to be communicated
to the Committee by the independent accountants under generally accepted
auditing standards. If matters are required to be communicated, the Committee
shall discuss such matters with the independent accountants and the
management of the Company.
4. Review and discuss with management and the independent accountants, upon
completion of the annual audit, the Company's financial statements and
related SEC reports for their adequacy and compliance with generally accepted
accounting, reporting and disclosure principles. Obtain communications from
the independent accountants concerning the matters relating to the scope and
results of the accountants' audit that the accountants are required to
provide to the Committee under Statement on Auditing Standards No. 61.
5. Provide annually to the Board of Directors (a) the report of the Committee,
for inclusion in the Company's annual meeting proxy statement, which includes
the written statement required to be made by the Committee in order to comply
with proxy reporting obligations and (b) such written affirmation regarding
the Committee as is required by New York Stock Exchange corporate governance
listing standards.
6. Evaluate the effectiveness of the internal and external audit efforts, the
effectiveness of the accounting and financial controls, policies and
procedures, and the effectiveness of the Company's business ethics policies
and practices through a review of reports by, and at regular meetings with,
the internal and external auditors and with management, as appropriate.
MEETINGS
The Committee shall hold at least four meetings each year and others as deemed
necessary by its chairperson. A report on all Committee meetings will be
provided to the Board of Directors.
A-2
32
If you sign and return this card but do not specify a vote, the proxies will Please mark
vote FOR all items and in their discretion on other matters. your votes as [ X ]
indicated in
this example
The Board of Directors recommends a vote FOR Items A and B:
A. Election of the five nominees as directors:
FOR WITHHELD
all nominees (except from all nominees 01 Paul S. Brentlinger 02 Ray J. Groves 03 George J. Kourpias 04 James L. Murdy
as indicated) 05 William G. Ouchi
(To withhold authority to vote for any nominee(s), write the name(s) of the
[ ] [ ] nominee(s) in the space that follows:
_________________________________________________________________________________.
B. Selection of Auditors.
FOR AGAINST ABSTAIN
Please check here to request an admission [ ]
[ ] [ ] [ ] ticket to the Meeting.
By checking the box to the right, I consent to [ ]
view the Company's Annual Reports and Proxy
_______ Statements electronically via the Internet.
| I understand that the Company may no longer
| distribute printed materials to me for any
| future stockholder meetings until my consent
is revoked. I understand that I may revoke
my consent at any time by giving written
notice to the Company.
Signature(s) __________________________________________ Signature(s) __________________________________________ Date____________
Please sign EXACTLY as your name appears above. When signing as a fiduciary or corporate officer, give full title.
For joint accounts, please furnish both signatures.
[ FOLD AND DETACH HERE ]
YOUR VOTE IS IMPORTANT. PLEASE VOTE PROMPTLY.
You can vote three ways:
1. Call toll-free 1-800-840-1208 on a touch-tone telephone and follow the
instructions below. There is NO CHARGE to you for this call.
or
2. Vote by Internet at our Internet address: http://www.proxyvoting.com/ati
or
3. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
[Graphic] VOTE BY TELEPHONE OR INTERNET [Graphic]
-----------------------------------------------------------------------
| **IF YOU WISH TO VOTE YOUR SHARES BY TELEPHONE OR INTERNET, |
| PLEASE FOLLOW THE INSTRUCTIONS BELOW** |
-----------------------------------------------------------------------
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE: FOR U.S. STOCKHOLDERS ONLY, CALL TOLL-FREE ON A TOUCH-TONE
TELEPHONE 1-800-840-1208 ANYTIME. THERE IS NO CHARGE TO YOU
FOR THIS CALL. You will be asked to enter a CONTROL NUMBER
which is located in the box in the lower right corner of this
form. After entering your Control Number you will hear these
instructions.
----------------------------------------------------------------------
| OPTION 1: To vote as your Board recommends on ALL items, press 1. |
----------------------------------------------------------------------
----------------------------------------------------------------------
| OPTION 2: If you choose to vote on each item separately, press 0. |
| You will hear these instructions: |
----------------------------------------------------------------------
Item A: To vote FOR ALL nominees, press 1; to WITHHOLD FOR
ALL nominees, press 9. To WITHHOLD FOR AN INDIVIDUAL
nominee, press 0 and listen to the instructions.
Item B: To vote FOR, press 1; AGAINST, press 9; ABSTAIN,
press 0.
You must confirm your vote, when asked, by pressing 1.
VOTE BY INTERNET: THE WEB ADDRESS IS
http://www.proxyvoting.com/ati
RETURN THE ABOVE PROXY CARD ONLY IF YOU
DO NOT VOTE BY TELEPHONE OR INTERNET
THANK YOU FOR VOTING.
33
ALLEGHENY TECHNOLOGIES INCORPORATED
PROXY FOR 2001 ANNUAL MEETING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ALLEGHENY TECHNOLOGIES INCORPORATED
The undersigned hereby appoints James L. Murdy, Mary W. Snyder and Jon D. Walton
or any of them, each with power of substitution and revocation, proxies or proxy
to vote all shares of Common Stock which the registered stockholder named herein
is entitled to vote with all powers which the stockholder would possess if
personally present, at the Annual Meeting of Stockholders of Allegheny
Technologies Incorporated on May 3, 2001, and any adjournments thereof, upon
the matters set forth on the reverse of this card, and, in their discretion,
upon such other matters as may properly come before such meeting.
STOCKHOLDERS MAY VOTE BY TOLL-FREE TELEPHONE OR INTERNET BY FOLLOWING THE
INSTRUCTIONS ON THE REVERSE SIDE OR STOCKHOLDERS MAY VOTE BY COMPLETING, DATING
AND SIGNING THIS PROXY CARD AND RETURNING IT PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
If you wish to use this card to vote your shares, please vote, date and
sign on the reverse side.
[ FOLD AND DETACH HERE ]
[ALLEGHENY TECHNOLOGIES LOGO]
Dear Stockholder:
Enclosed are materials relating to the Allegheny Technologies 2001 Annual
Meeting of Stockholders. The Notice of the Meeting and Proxy Statement describe
the formal business to be transacted at the meeting.
Your vote is important. Please vote your proxy promptly whether or not you
expect to attend the meeting. You may vote by toll-free telephone, by Internet
or by signing and returning the proxy card (above) in the enclosed postage-paid
envelope.
/s/ JON D. WALTON
Jon D. Walton
Senior Vice President,
General Counsel and Secretary
34
If you sign and return this card but do not specify a vote, the proxies will Please mark
vote FOR all items and in their discretion on other matters. your votes as [ X ]
indicated in
this example
The Board of Directors recommends a vote FOR Items A and B:
A. Election of the five nominees as directors:
FOR WITHHELD
all nominees (except from all nominees 01 Paul S. Brentlinger 02 Ray J. Groves 03 George J. Kourpias 04 James L. Murdy
as indicated) 05 William G. Ouchi
(To withhold authority to vote for any nominee(s), write the name(s) of the
[ ] [ ] nominee(s) in the space that follows:
_________________________________________________________________________________.
B. Selection of Auditors.
FOR AGAINST ABSTAIN
Please check here to request an admission [ ]
[ ] [ ] [ ] ticket to the Meeting.
By checking the box to the right, I consent to [ ]
view the Company's Annual Reports and Proxy
_______ Statements electronically via the Internet.
| I understand that the Company may no longer
| distribute printed materials to me for any
| future stockholder meetings until my consent
is revoked. I understand that I may revoke
my consent at any time by giving written
notice to the Company.
Signature(s) __________________________________________ Signature(s) __________________________________________ Date____________
Please sign EXACTLY as your name appears above. When signing as a fiduciary or corporate officer, give full title.
For joint accounts, please furnish both signatures.
[ FOLD AND DETACH HERE ]
YOUR VOTE IS IMPORTANT. PLEASE VOTE PROMPTLY.
You can vote three ways:
1. Call toll-free 1-800-840-1208 on a touch-tone telephone and follow the
instructions below. There is NO CHARGE to you for this call.
or
2. Vote by Internet at our Internet address: http://www.proxyvoting.com/ati
or
3. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
[Graphic] VOTE BY TELEPHONE OR INTERNET [Graphic]
-----------------------------------------------------------------------
| **IF YOU WISH TO VOTE YOUR SHARES BY TELEPHONE OR INTERNET, |
| PLEASE FOLLOW THE INSTRUCTIONS BELOW** |
-----------------------------------------------------------------------
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE: FOR U.S. STOCKHOLDERS ONLY, CALL TOLL-FREE ON A TOUCH-TONE
TELEPHONE 1-800-840-1208 ANYTIME. THERE IS NO CHARGE TO YOU
FOR THIS CALL. You will be asked to enter a CONTROL NUMBER
which is located in the box in the lower right corner of this
form. After entering your Control Number you will hear these
instructions.
----------------------------------------------------------------------
| OPTION 1: To vote as your Board recommends on ALL items, press 1. |
----------------------------------------------------------------------
----------------------------------------------------------------------
| OPTION 2: If you choose to vote on each item separately, press 0. |
| You will hear these instructions: |
----------------------------------------------------------------------
Item A: To vote FOR ALL nominees, press 1; to WITHHOLD FOR
ALL nominees, press 9. To WITHHOLD FOR AN INDIVIDUAL
nominee, press 0 and listen to the instructions.
Item B: To vote FOR, press 1; AGAINST, press 9; ABSTAIN,
press 0.
You must confirm your vote, when asked, by pressing 1.
VOTE BY INTERNET: THE WEB ADDRESS IS
http://www.proxyvoting.com/ati
RETURN THE ABOVE PROXY CARD ONLY IF YOU
DO NOT VOTE BY TELEPHONE OR INTERNET
THANK YOU FOR VOTING.
35
ALLEGHENY TECHNOLOGIES INCORPORATED
VOTING INSTRUCTION CARD FOR 2001 ANNUAL MEETING
o PERSONAL RETIREMENT AND 401(K) SAVINGS ACCOUNT PLAN
o RETIREMENT SAVINGS PLAN
o SAVINGS AND SECURITY PLAN OF THE LOCKPORT AND WATERBURY FACILITIES
o THE 401(K) SAVINGS ACCOUNT PLAN OF ALLEGHENY LUDLUM CORPORATION
(WASHINGTON PLANT)
o THE 401(K) PLAN
o ALLEGHENY RODNEY (ALSTRIP) PROFIT SHARING PLAN
o TDY INDUSTRIES, INC. PROFIT SHARING PLAN FOR CERTAIN EMPLOYEES OF
METALWORKING PRODUCTS
The undersigned hereby directs Mellon Bank, N.A., the Trustee of the above
Plans, to vote the full number of shares of Common Stock allocated to the
account of the undersigned under the Plans, at the Annual Meeting of
Stockholders of Allegheny Technologies Incorporated on May 3, 2001, and any
adjournments thereof, upon the matters set forth on the reverse of this card,
and, in its discretion, upon such other matters as may properly come before such
meeting.
PLAN PARTICIPANTS MAY GIVE DIRECTIONS BY TOLL-FREE TELEPHONE OR INTERNET BY
FOLLOWING THE INSTRUCTIONS ON THE REVERSE SIDE OR PARTICIPANTS MAY GIVE
DIRECTIONS BY COMPLETING, DATING AND SIGNING THIS CARD AND RETURNING IT PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
IF YOU WISH TO USE THIS CARD TO VOTE YOUR SHARES, PLEASE VOTE,
DATE AND SIGN ON THE REVERSE SIDE.
[ FOLD AND DETACH HERE ]
o PERSONAL RETIREMENT AND 401(K) SAVINGS ACCOUNT PLAN
o RETIREMENT SAVINGS PLAN
o SAVINGS AND SECURITY PLAN OF THE LOCKPORT AND WATERBURY FACILITIES
o THE 401(K) SAVINGS ACCOUNT PLAN OF ALLEGHENY LUDLUM CORPORATION
(WASHINGTON PLANT)
o THE 401(K) PLAN
o ALLEGHENY RODNEY (ALSTRIP) PROFIT SHARING PLAN
o TDY INDUSTRIES, INC. PROFIT SHARING PLAN FOR CERTAIN EMPLOYEES OF
METALWORKING PRODUCTS
As a Plan participant, you have the right to direct Mellon Bank, N.A., the Plan
Trustee, how to vote the shares of Allegheny Technologies Common Stock that are
allocated to your Plan account and shown on the attached voting instruction
card. The Trustee will hold your instructions in complete confidence except as
may be necessary to meet legal requirements.
You may vote by telephone, Internet or by completing, signing and returning the
voting instruction card (above). A postage-paid return envelope is enclosed.
The Trustee must receive your voting instructions by April 30, 2001. If the
Trustee does not receive your instructions by April 30, 2001, the plan
administrator may instruct the Trustee to vote your shares as the administrator
directs.
You will receive a separate set of proxy solicitation materials for any shares
of Common Stock you own other than your Plan shares. Your non-plan shares must
be voted separately from your Plan shares.
36
If you sign and return this card but do not specify a vote, the proxies will Please mark
vote FOR all items and in their discretion on other matters. your votes as [ X ]
indicated in
this example
The Board of Directors recommends a vote FOR Items A and B:
A. Election of the five nominees as directors:
FOR WITHHELD
all nominees (except from all nominees 01 Paul S. Brentlinger 02 Ray J. Groves 03 George J. Kourpias 04 James L. Murdy
as indicated) 05 William G. Ouchi
(To withhold authority to vote for any nominee(s), write the name(s) of the
[ ] [ ] nominee(s) in the space that follows:
_________________________________________________________________________________.
B. Selection of Auditors.
FOR AGAINST ABSTAIN
Please check here to request an admission [ ]
[ ] [ ] [ ] ticket to the Meeting.
By checking the box to the right, I consent to [ ]
view the Company's Annual Reports and Proxy
_______ Statements electronically via the Internet.
| I understand that the Company may no longer
| distribute printed materials to me for any
| future stockholder meetings until my consent
is revoked. I understand that I may revoke
my consent at any time by giving written
notice to the Company.
Signature(s) __________________________________________ Signature(s) __________________________________________ Date____________
Please sign EXACTLY as your name appears above. When signing as a fiduciary or corporate officer, give full title.
For joint accounts, please furnish both signatures.
[ FOLD AND DETACH HERE ]
YOUR VOTE IS IMPORTANT. PLEASE VOTE PROMPTLY.
You can vote three ways:
1. Call toll-free 1-800-840-1208 on a touch-tone telephone and follow the
instructions below. There is NO CHARGE to you for this call.
or
2. Vote by Internet at our Internet address: http://www.proxyvoting.com/ati
or
3. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
[Graphic] VOTE BY TELEPHONE OR INTERNET [Graphic]
-----------------------------------------------------------------------
| **IF YOU WISH TO VOTE YOUR SHARES BY TELEPHONE OR INTERNET, |
| PLEASE FOLLOW THE INSTRUCTIONS BELOW** |
-----------------------------------------------------------------------
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE: FOR U.S. STOCKHOLDERS ONLY, CALL TOLL-FREE ON A TOUCH-TONE
TELEPHONE 1-800-840-1208 ANYTIME. THERE IS NO CHARGE TO YOU
FOR THIS CALL. You will be asked to enter a CONTROL NUMBER
which is located in the box in the lower right corner of this
form. After entering your Control Number you will hear these
instructions.
----------------------------------------------------------------------
| OPTION 1: To vote as your Board recommends on ALL items, press 1. |
----------------------------------------------------------------------
----------------------------------------------------------------------
| OPTION 2: If you choose to vote on each item separately, press 0. |
| You will hear these instructions: |
----------------------------------------------------------------------
Item A: To vote FOR ALL nominees, press 1; to WITHHOLD FOR
ALL nominees, press 9. To WITHHOLD FOR AN INDIVIDUAL
nominee, press 0 and listen to the instructions.
Item B: To vote FOR, press 1; AGAINST, press 9; ABSTAIN,
press 0.
You must confirm your vote, when asked, by pressing 1.
VOTE BY INTERNET: THE WEB ADDRESS IS
http://www.proxyvoting.com/ati
RETURN THE ABOVE PROXY CARD ONLY IF YOU
DO NOT VOTE BY TELEPHONE OR INTERNET
THANK YOU FOR VOTING.
37
ALLEGHENY TECHNOLOGIES INCORPORATED
VOTING INSTRUCTION CARD FOR 2001 ANNUAL MEETING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ALLEGHENY TECHNOLOGIES INCORPORATED
OREGON METALLURGICAL CORPORATION EMPLOYEE STOCK COMPENSATION PLAN
OREGON METALLURGICAL CORPORATION SAVINGS PLAN
The undersigned, a participant in the Plan, acting as a Named Fiduciary, hereby
directs the Trustee to vote in person or by proxy at the Annual Meeting of
Stockholders of Allegheny Technologies Incorporated on May 3, 2001 (a) all
common shares of Allegheny Technologies Incorporated credited to the
undersigned's account under the Plan on the record date ("allocated shares") and
(b) the proportionate number of common shares of Allegheny Technologies
Incorporated allocated to the accounts of other participants in the Plan, but
for which the Trustee does not receive valid voting instructions ("non-directed
shares") and as to which the undersigned is entitled to direct the voting in
accordance with the Plan provisions.
PLAN PARTICIPANTS MAY GIVE DIRECTIONS BY TOLL-FREE TELEPHONE OR INTERNET BY
FOLLOWING THE INSTRUCTIONS ON THE REVERSE SIDE OR PARTICIPANTS MAY GIVE
DIRECTIONS BY COMPLETING, DATING AND SIGNING THIS CARD AND RETURNING IT PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
IF YOU WISH TO USE THIS CARD TO VOTE YOUR SHARES, PLEASE VOTE,
DATE AND SIGN ON THE REVERSE SIDE.
[ FOLD AND DETACH HERE ]
[ALLEGHENY TECHNOLOGIES LOGO]
OREGON METALLURGICAL CORPORATION EMPLOYEE STOCK COMPENSATION PLAN
OREGON METALLURGICAL CORPORATION SAVINGS PLAN
As a Plan participant, you have the right to direct the Plan Trustee how to vote
the shares of Allegheny Technologies Common Stock that are allocated to your
Plan account and shown on the attached voting instruction card. The Trustee will
hold your instructions in complete confidence except as may be necessary to meet
legal requirements.
You may vote by telephone, Internet or by completing, signing and returning the
voting instruction card (above). A postage-paid return envelope is enclosed.
The Trustee must receive your voting instructions by April 30, 2001. Under the
Plan, shares allocated to the accounts of participants for which the Trustee
does not receive timely directions (in the form of a signed voting instruction
card, telephone directions, or internet directions), are voted by the Trustee as
directed by the participants who tender timely directions. By completing the
Voting Instruction Card, you are directing the Trustee, in your capacity as a
Named Fiduciary under the Plan, to vote allocated shares and a proportionate
share of the non-directed shares held in the Plan. The number of non-directed
shares for which you may instruct the Trustee to vote will depend on how many
other participants exercise their right to direct the voting of the non-directed
shares.
You will receive a separate set of proxy solicitation materials for any shares
of Common Stock you own other than your Plan shares. Your non-plan shares must
be voted separately from your Plan shares.