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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
RTI INTERNATIONAL METALS, INC.
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Payment of filing fee (Check the appropriate box):
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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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[ X ] No fee required
RTI LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY
STATEMENT
APRIL 26, 2002
9:30 A.M. CENTRAL TIME
The St. Regis, Houston
1919 Briar Oaks Lane
Houston, Texas
RTI LOGO
1000 Warren Avenue
Niles, Ohio 44446
April 5, 2002
Dear RTI Shareholder:
You are cordially invited to attend our 2002 Annual Meeting of Shareholders on
April 26, 2002, in the St. Regis, Houston, 1919 Briar Oak Lane, Houston, Texas.
The meeting will begin promptly at 9:30 a.m. Central Time with a report on
Company operations. We will then elect directors and independent accountants.
Whether or not you plan to attend, it is important that you vote your shares.
Please sign, and return your proxy card as soon as possible.
We look forward to seeing as many of you as possible at the 2002 Annual Meeting.
Sincerely,
/s/ ROBERT M. HERNANDEZ
ROBERT M. HERNANDEZ
Chairman of the Board
/s/ TIMOTHY G. RUPERT
TIMOTHY G. RUPERT
President & Chief Executive Officer
TABLE OF CONTENTS
Notice of Annual Meeting.................................................... 3
Proxy Statement............................................................. 4
General Information...................................................... 4
The Board of Directors...................................................... 5
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS............................ 7
PROPOSAL NO. 2 -- ELECTION OF INDEPENDENT ACCOUNTANTS.............. 9
Security Ownership........................................................ 11
Executive Compensation.................................................... 12
Stock Performance Graph................................................... 15
Pension Benefits.......................................................... 15
Employment Agreements..................................................... 16
Other Information......................................................... 18
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
RTI INTERNATIONAL METALS, INC.
TIME:
9:30 a.m., Central Time
DATE:
April 26, 2002
PLACE:
The St. Regis, Houston
1919 Briar Oaks Lane
Houston, Texas
PURPOSE:
- Elect directors
- Elect independent accountants
- Conduct other business if properly raised
Only shareholders of record on March 1, 2002 may vote at the
meeting.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE, AND RETURN
YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
/S/ RICHARD M. HAYS
RICHARD M. HAYS
Secretary
April 5, 2002
3
PROXY STATEMENT
GENERAL INFORMATION
--------------------------------------------------------------------------------
- WHO MAY VOTE?
Shareholders of RTI as of the close of business on the record date, March 1,
2002, are entitled to vote at the Annual Meeting.
- WHAT MAY I VOTE ON?
You may vote on:
the election of nominees to serve on our Board of Directors and
the election of our independent accountants for 2002.
- HOW DOES THE BOARD RECOMMEND I VOTE?
The Board recommends that you vote FOR each of the nominees and FOR
PricewaterhouseCoopers LLP as our independent accountants for 2002.
- HOW DO I VOTE?
Sign and date each proxy card you receive and return it in the envelope
provided. If you return your signed proxy card but do not mark the boxes showing
how you wish to vote, your shares will be voted FOR the two proposals. You have
the right to revoke your proxy at any time before the meeting by:
(1) notifying RTI's Secretary;
(2) voting in person; or
(3) returning a later-dated proxy card.
- WHAT VOTES ARE NEEDED?
The director candidates receiving the most votes will be elected to the Board.
Election of the independent accountants requires the favorable vote of a
majority of the votes cast. Only votes for or against a proposal count.
Abstentions and broker non-votes do not count for voting purposes. Broker
non-votes occur when a broker returns a proxy but does not have authority to
vote on a particular proposal.
4
THE BOARD OF DIRECTORS
The business and affairs of RTI are under the general direction of the Board of
Directors. The Board presently consists of ten members, eight of whom are
neither officers nor employees of RTI or its subsidiaries. The Board met six
times during 2001. Each of the directors attended more than 75% of the total
number of meetings of the Board and Board Committees on which the director
served during 2001 except for Mr. Armstrong who attended 8 of the 11 (73%) such
meetings. In addition to attending Board and committee meetings, directors on
occasion also serve RTI through consultation with the Chairman and the President
and Chief Executive Officer and other members of management relative to matters
of mutual interest and concern to RTI. During 2001, Mr. Armstrong assisted RTI
by leading a team of senior management on an international business trip.
The Board will consider recommendations by shareholders for nominees for
election as director. Recommendations, together with the nominee's
qualifications and consent to be considered as a nominee, should be sent to the
Secretary of RTI for presentation to the Board of Directors.
There are three principal committees of the Board of Directors. Committee
membership, the functions of the committees and the number of meetings held
during 2001 are described below.
EXECUTIVE COMMITTEE
The members of the Executive Committee are Robert M. Hernandez (Chairman), Craig
R. Andersson, Charles C. Gedeon, John H. Odle and Timothy G. Rupert.
The Executive Committee assists the Board in the discharge of its
responsibilities and may act on behalf of the Board when emergencies or
scheduling make it difficult to convene the Board. All actions taken by the
Committee must be reported at the Board's next meeting. During 2001, the
Executive Committee held no meetings.
AUDIT COMMITTEE
The members of the Audit Committee are Wesley W. von Schack (Chairman), Craig R.
Andersson, Neil A. Armstrong, Daniel I. Booker, Ronald L. Gallatin, Charles C.
Gedeon and Edith E. Holiday. Each member of the Committee is an independent
director as defined by New York Stock Exchange rules. The Committee has adopted
a written charter which has been approved by the Board of Directors.
The Audit Committee recommends the independent accountants to be nominated by
the Board for election by the shareholders and reviews the independence of the
accountants. It also approves the scope of the annual audit activities, approves
the audit fee payable to the independent accountants, reviews audit results and
regularly meets with RTI's internal auditors. The Committee monitors
developments in accounting standards and principles followed by RTI in its
financial reports and discusses with management the system of internal
accounting controls. The independent accountants have full and free access to
the Committee and may meet with it, with or without management being present, to
discuss all appropriate matters. The Audit Committee held four meetings during
2001.
HUMAN RESOURCES COMMITTEE
The members of the Human Resources Committee, all of whom are non-employee
directors, are Craig R. Andersson, Neil A. Armstrong, Daniel I. Booker, Ronald
L. Gallatin, Charles C. Gedeon, Edith E. Holiday and Wesley W. von Schack.
The Human Resources Committee is responsible for review and approval of
executive compensation programs, plans and awards; administering long-term
incentive plans and awards; review and approval of general employee pension
benefit plans and other benefit plans on an as-needed basis. It also reviews and
recommends director nominees to the Board. The Committee held one meeting in
2001.
5
COMPENSATION OF DIRECTORS
RTI employees receive no extra pay for serving as a director. Non-employee
directors receive an annual retainer plus a fee for each Board or committee
meeting attended, except that no fee is payable for attending a committee
meeting if there is a Board meeting on the same day. The annual retainer is
$35,000 (except for the Chairman) and the meeting fee $1,000. For his services
as non-employee Chairman; Mr. Hernandez receives an annual retainer of $80,000:
$62,500 in RTI common stock and $17,500 in cash. The non-employee committee
chairman retainer is $3,000. One-half of the annual retainer payable to
non-employee directors and to non-employee committee chairmen is paid in RTI
common stock. In 2001, the Common Stock utilized for this purpose and for the
Chairman's annual retainer was based on $12.76, the market value of the stock on
August 1, 2001.
RTI has adopted the 2002 Non-Employee Director Stock Option Plan providing for
the grant of options to purchase up to 500,000 shares during the 10 year term of
the Plan. All directors who are not employees of RTI participate in the Plan. On
January 25, 2002, each director participating in the Plan was granted a stock
option for 3,000 shares at an exercise price of $9.575 per share.
6
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
RTI's directors are elected for one year terms. Non-employee directors may not
stand for election after age 72. Employee directors leave the Board when they
retire from RTI.
The Board has nominated the ten current directors for election. Each nominee for
election has previously been elected by the shareholders. Of the ten individuals
who are nominees for election, two are current RTI officers and the remaining
eight have high level executive or professional experience. If any nominee is
unable to serve, your proxy may be voted for another person designated by the
Board.
NOMINEES FOR DIRECTOR
CRAIG R. ANDERSSON Age: 64
RETIRED VICE-CHAIRMAN Director since 1990
ARISTECH CHEMICAL CORPORATION
(CHEMICAL PRODUCER)
Mr. Andersson retired as a director and Vice-Chairman of Aristech Chemical
Corporation on April 30, 1995. Previously, he was President and Chief Operating
Officer, a position he had held since December, 1986. He is a director of
Albermarle Corporation and Duquesne University. He is a member of the American
Institute of Chemical Engineers and Alpha Chi Sigma (a professional chemical
society) and has served on the boards and executive committees of The Society of
the Chemical Industry, the Chemical Manufacturers Association, the Pennsylvania
Business Roundtable and the Greater Pittsburgh Chamber of Commerce. He has a BS
degree in chemical engineering from the University of Minnesota and did graduate
work in the same discipline at the University of Delaware.
NEIL A. ARMSTRONG Age: 71
CHAIRMAN, EDO CORPORATION Director since 1990
(ELECTRONIC AND ELECTROMECHANICAL SYSTEMS MANUFACTURER)
Mr. Armstrong received a BS degree in aeronautical engineering from Purdue
University and an MS degree in aerospace engineering from the University of
Southern California. For 17 years he served with the National Aeronautics and
Space Administration and its predecessor agency as engineer, test pilot,
astronaut and administrator. From 1971 to 1979 he was professor of aerospace
engineering at the University of Cincinnati. He became Chairman of Cardwell
International, Ltd. in 1980; Chairman of CTA, Inc. in 1982; Chairman of AIL
Systems, Inc. in 1989 and Chairman of EDO Corporation in 2000. He is a director
of Marathon Oil Company. He is a member of the National Academy of Engineering.
DANIEL I. BOOKER Age: 54
PARTNER, Director since 1995
REED SMITH LLP
(LAW FIRM)
Mr. Booker is a partner of the law firm of Reed Smith LLP. From 1992 until
December 31, 2000 he was Managing Partner, or chief executive, of Reed Smith. He
received an undergraduate degree from the University of Pittsburgh and a law
degree from the University of Chicago. He is a member of the District of
Columbia, Pennsylvania and U.S. Supreme Court bars. Mr. Booker is a director of
Oce USA Holding, Inc. and the Pittsburgh Regional Alliance; Chairman and a
director of the Pittsburgh Civic Light Opera; and is active in other community
and professional organizations.
7
RONALD L. GALLATIN Age: 56
RETIRED MANAGING DIRECTOR Director since 1996
LEHMAN BROTHERS INC.
(INVESTMENT BANKING FIRM)
Mr. Gallatin served as a Managing Director of Lehman Brothers Inc., where he was
a member of the Firm's Operating Committee and its Director of Corporate
Strategy and Product Development until his retirement on December 31, 1995.
During his 24 years with Lehman, Mr. Gallatin had various senior roles in both
its investment banking and capital markets divisions and was responsible for a
series of financial innovations, most notably Zero Coupon Treasury Receipts,
Money Market Preferred Stock and Targeted Stock. He is currently a director of
CNA Financial Corporation. A graduate of New York University, and both Brooklyn
and New York University Law Schools, Mr. Gallatin has BS, JD and LLM (Taxation)
degrees and is a Certified Public Accountant.
CHARLES C. GEDEON Age: 61
EXECUTIVE VICE PRESIDENT-RAW MATERIALS Director since 1991
AND DIVERSIFIED BUSINESSES
UNITED STATES STEEL CORPORATION
Mr. Gedeon joined USX Corporation in 1986 as Vice President-Raw Materials and
President of U.S. Steel Mining Co., Inc. He was promoted to Senior Vice
President-Related Resources for USX in 1988 and advanced to the position of
President, U.S. Diversified Group in 1990. He assumed his current position in
1992. From 1983 until he joined USX, Mr. Gedeon had been Vice
President-Operations of National Steel Corporation. Mr. Gedeon is a member of
the American Iron and Steel Institute.
ROBERT M. HERNANDEZ Age: 57
CHAIRMAN OF THE BOARD OF THE COMPANY Director since 1990
On December 31, 2001, Mr. Hernandez retired as Vice Chairman and Chief Financial
Officer and director of USX Corporation. He was elected to this position on
December 1, 1994. Mr. Hernandez had been elected Executive Vice
President--Accounting & Finance and Chief Financial Officer and director of USX
on November 1, 1991. He was Senior Vice President-Finance & Treasurer of USX
from October 1, 1990, to October 31, 1991. Mr. Hernandez was President-U.S.
Diversified Group of USX from June 1, 1989, to September 30, 1990, and in such
role had responsibilities for USX's businesses not related to energy and steel.
From January 1, 1987, until May 31, 1989, he was Senior Vice President and
Comptroller of USX. Mr. Hernandez has his undergraduate degree from the
University of Pittsburgh and his MBA from the Wharton Graduate School of the
University of Pennsylvania. He is a trustee and Vice Chairman of BlackRock
Funds; a director and Chairman of the Executive Committee of ACE Limited; and a
director of the Strategic Investment Fund and UPMC Health Systems.
EDITH E. HOLIDAY Age: 50
ATTORNEY Director since 1999
Ms. Holiday was elected a director on July 29, 1999. She served as Assistant to
the President and Secretary of the Cabinet in the White House from 1990 to 1993.
Prior to that she held several senior positions in the United States Treasury
Department including General Counsel. She is a director of Amerada Hess
Corporation; Beverly Enterprises, Inc.; Canadian National Railway Company;
Digex, Inc.; Hercules Incorporated and H.J. Heinz Company. She is also a
director or trustee of a number of investment companies in the Franklin
Templeton Group of Funds. She has BS and JD degrees from the University of
Florida.
JOHN H. ODLE Age: 59
EXECUTIVE VICE PRESIDENT Director since 1996
OF RTI
Mr. Odle was elected a director on July 26, 1996 and has been Executive Vice
President since June 1996. He was Senior Vice President--Commercial from 1989 to
1996 and served as Vice-President--Commercial from 1981 until 1989. Prior to
that, Mr. Odle served as General Manager--Sales. He has 24 years of service with
RTI and its predecessor. He is a member of the American Society for Metals and
the International Titanium Association. He is a graduate of Miami University of
Ohio.
8
TIMOTHY G. RUPERT Age: 55
PRESIDENT & CHIEF Director since 1996
EXECUTIVE OFFICER OF RTI
Mr. Rupert was elected a director on July 26, 1996 and President & Chief
Executive Officer on July 30, 1999. He had been Executive Vice President & Chief
Financial Officer since June 1996. He was Senior Vice President & Chief
Financial Officer from 1994 to 1996 and had served as Vice President & Chief
Financial Officer since September 1991 when he joined RTI's predecessor. He is a
director and President of the International Titanium Association, a director of
Columbus Insurance Ltd.; and a member of the Financial Executives Institute. He
has a BS degree from Indiana University of Pennsylvania.
WESLEY W. VON SCHACK Age: 57
CHAIRMAN, PRESIDENT AND Director since 1991
CHIEF EXECUTIVE OFFICER,
ENERGY EAST CORPORATION
(ENERGY SERVICES COMPANY)
Mr. von Schack joined Energy East Corporation's predecessor New York State
Electric & Gas Corp. in September, 1996. He is a director of Energy East and is
also a director of Mellon Financial Corporation, Mellon Bank, N.A.; American Gas
Association; The Business Council of New York State, Inc.; The Peconic Land
Trust and Aegis Insurance Limited. Mr. von Schack has an AB in economics from
Fordham University, an MBA from St. John's University and a Doctorate Degree
from Pace University.
PROPOSAL NO. 2 -- ELECTION OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP has served as independent accountants for RTI and its
predecessors for a number of years. For 2001, PricewaterhouseCoopers LLP
rendered professional services in connection with the audit of the financial
statements of RTI and its subsidiaries, including examination of certain
employee benefit plans, review of quarterly reports and review of filings with
the Securities and Exchange Commission. It also provided internal audit and tax
consulting services and reviewed RTI's enterprise resource planning software
system from the accounting controls standpoint. It is knowledgeable about RTI's
operations and accounting practices and is well qualified to act in the capacity
of independent accountants.
AUDIT FEES
The aggregate fees billed for professional services rendered for the audit of
RTI's annual financial statements for 2001 and review of financial statements in
RTI's Form 10-Q Reports in 2001 were $296,435.
ALL OTHER FEES
The aggregate fees billed for professional services rendered by
PricewaterhouseCoopers LLP during 2001 to RTI and its subsidiaries other than
fees disclosed above were $613,295. Included in other fees was approximately
$284,000 related to tax services, $174,000 related to internal audit services,
$63,000 related to due-diligence services and $32,000 related to employee
benefit plans. RTI and PricewaterhouseCoopers LLP have agreed that beginning
August 1, 2002, PricewaterhouseCoopers will no longer provide internal audit
services to RTI.
INDEPENDENT STATUS OF PRICEWATERHOUSECOOPERS LLP
The Audit Committee has considered whether the provision by
PricewaterhouseCoopers LLP of the professional services covered by the
above-described billings (other than those described under Audit Fees) was
compatible with the maintenance by PricewaterhouseCoopers LLP of its independent
status and has determined that it was.
9
Representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS
FOR RTI FOR 2002.
AUDIT COMMITTEE REPORT
We have reviewed and discussed RTI's 2001 audited financial statements with
management and with PricewaterhouseCoopers LLP. We have also discussed with the
independent accountants the matters required to be communicated by Statement on
Auditing Standard (SAS) No. 61 as amended by SAS No. 90 (Communications With
Audit Committees).
In addition we have received from the independent accountants the written
disclosures required by Independence Standards Board Standard No. 1 and have
discussed with them their independence from RTI and its management.
Based on these reviews and discussions, we recommended to RTI's Board of
Directors, and the Board has approved, that the Audited Financial Statements be
included in RTI's Annual Report on Form 10-K for the year ended December 31,
2001 for filing with the Securities and Exchange Commission.
Wesley W. von Schack (Chairman) Neil A. Armstrong
Craig R. Andersson Daniel I. Booker
Ronald L. Gallatin Charles C. Gedeon
Edith E. Holiday
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of RTI, as of March 1, 2002, no person or group owned
beneficially more than five percent of the outstanding Common Stock of RTI
except:
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
---------------- -------------------- -----
ICM Asset Management, Inc....................... 2,704,586(1) 13.0%
601 W. Main Ave., Ste. 600
Spokane, WA 99201
AXA Financial, Inc.............................. 2,565,812(2) 12.3%
1290 Avenue of the Americas
New York, NY 10104
Salomon Smith Barney Holdings Inc............... 2,412,063(3) 11.6%
388 Greenwich Street
New York, NY 10013
Smith Barney Fund Management LLC
125 Broad Street
New York, NY 10003
Citigroup Inc.
399 Park Avenue
New York, NY 10043
Dimensional Fund Advisors, Inc.................. 1,652,300(4) 8.0%
1299 Ocean Ave, 11th Floor
Santa Monica, CA 90401
---------
(1) Based on Schedule 13G dated February 5, 2002, which indicates ICM
had sole voting power over no shares, shared voting power over
1,604,340 shares, sole dispositive power over no shares and shared
dispositive power over 2,704,586 shares.
(2) Based on Schedule 13G dated February 11, 2002, which indicates that
AXA had sole voting power over 2,217,800 shares, shared voting power
over 23,300 shares, sole dispositive power over 2,565,812 shares and
shared dispositive power over no shares.
(3) Based on Schedule 13G/A dated January 29, 2002, which indicates that
each reporting person had sole voting power and sole dispositive
power over no shares; and shared voting power and shared dispositive
power over 2,412,063 shares.
(4) Based on Schedule 13G dated January 30, 2002, which indicates that
Dimensional Fund had sole voting power and sole dispositive power
over 1,652,300 shares and shared voting power and shared dispositive
power over no shares.
11
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reflects the number of shares of Common Stock of RTI
beneficially owned, as of February 18, 2002, by each director, by each executive
officer named in the Summary Compensation Table and by all directors and
executive officers as a group:
PERCENT OF
NUMBER OF OUTSTANDING
NAME SHARES(1) SHARES(2)
---- --------- ---------
Craig R. Andersson........................... 55,525 --
Neil A. Armstrong............................ 18,347 --
Gordon L. Berkstresser....................... 14,822
Daniel I. Booker............................. 12,518 --
Ronald L. Gallatin........................... 60,000 --
Charles C. Gedeon............................ 5,840 --
Robert M. Hernandez.......................... 46,289 --
Dawne S. Hickton............................. 57,916 --
Edith E. Holiday............................. 3,620 --
Lawrence W. Jacobs........................... 52,138 --
John H. Odle................................. 186,029 --
Timothy G. Rupert............................ 237,209 1.1%
Wesley W. von Schack......................... 19,125 --
-------
All directors and executive officers
as a group (13 persons).................... 769,378 3.7%
---------
(1) Includes 25,166 shares, 5,665 shares, 17,333 shares, 71,333 shares and
86,000 shares, respectively, which Mrs. Hickton and Messrs. Berkstresser,
Jacobs, Odle and Rupert had the right to acquire within 60 days under the
Company's 1989 Stock Option Incentive Plan and 1995 Stock Plan.
(2) No percent is shown for ownership of less than one percent.
EXECUTIVE COMPENSATION
The following table shows the annual and long term compensation paid the chief
executive officer and the other four most highly compensated executive officers
of RTI for services rendered in all capacities in 2001, 2000 and 1999.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-------------------------------------
PAYOUTS
ANNUAL COMPENSATION AWARDS ----------
---------------------------------- ------------------------ LONG TERM
OTHER RESTRICTED STOCK INCENTIVE
NAME AND $ ANNUAL STOCK OPTIONS PLAN ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION $ (SHARES) PAYOUTS COMPENSATION
------------------ ---- ------ ----- ------------ - -------- ------- ------------
Timothy G. Rupert(1)........ 2001 $370,000 $325,000 -- $236,720 25,000 -- --
President & 2000 350,000 250,000 -- 171,856 30,060 -- --
Chief Executive Officer 1999 285,000 75,000 -- 630,000 15,000 -- --
John H. Odle................ 2001 265,000 135,000 -- 94,688 23,000
Executive Vice President 2000 250,000 160,000 -- 80,443 25,000 -- --
1999 243,333 65,000 -- 453,250 15,000 -- --
Gordon L. Berkstresser(2)... 2001 125,000 50,000 -- 23,672 10,000
Vice President & 2000 120,000 50,000 -- 21,939 7,000 -- --
Controller 1999 100,000 30,000 -- -- 5,000 -- --
Dawne S. Hickton............ 2001 160,000 75,000 -- 47,344 12,000
Vice President & General 2000 150,000 70,000 -- 25,596 12,000 -- --
Counsel 1999 135,583 50,000 -- 160,375 7,000 -- --
Lawrence W. Jacobs(3)....... 2001 145,000 55,000 -- 23,672 10,000
Vice President & 2000 140,000 50,000 -- 21,939 10,000 -- --
Chief Financial Officer 1999 121,667 35,000 -- 157,250 6,000 -- --
---------
(1) Elected President and Chief Executive Officer July 30, 1999.
(2) Elected Vice President and Controller October 29, 1999.
(3) Elected Chief Financial Officer July 30, 1999.
12
The following tables set forth information with respect to stock option grants
and exercises in 2001 and December 31, 2001 stock option values:
STOCK OPTION GRANTS IN 2001
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM
GRANTED EMPLOYEES BASE PRICE EXPIRATION -------------------------
NAME (SHARES) IN 2001 ($/SH) DATE 5% 10%
---- -------- ---------- ------------ ---------- ----------- -----------
Timothy G. Rupert.................... 25,000 15.6% $ 15.78 1/26/11 $642,652 1,023,316
John H. Odle......................... 23,000 14.3 15.78 1/26/11 591,240 941,450
Gordon L. Berkstresser............... 10,000 6.2 15.78 1/26/11 257,061 409,326
Dawne S. Hickton..................... 12,000 7.5 15.78 1/26/11 308,473 491,192
Lawrence W. Jacobs................... 10,000 6.2 15.78 1/26/11 257,061 409,326
AGGREGATED STOCK OPTION EXERCISES IN 2001
AND DECEMBER 31, 2001 STOCK OPTION VALUES
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES DECEMBER 31, 2001 OPTIONS AT
ACQUIRED ON (SHARES)(1) DECEMBER 31, 2001
EXERCISE VALUE --------------------------- ---------------------------
NAME (SHARES) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Timothy G. Rupert.............. -- -- 86,000 50,000 $179,570 $ 59,740
John H. Odle................... 6,000 66,445 71,333 44,667 93,503 49,784
Gordon L. Berkstresser......... -- -- 5,665 16,335 7,439 13,940
Dawne S. Hickton............... -- -- 25,166 22,334 11,948 23,896
Lawrence W. Jacobs............. -- -- 17,333 18,667 9,956 19,914
---------
(1) Adjusted for one-for-ten reverse stock split effective March 31, 1994 and
subsequent rights offering.
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This Committee administers RTI's stock-based compensation plans and is also
responsible for all other executive compensation matters.
RTI has adopted a comprehensive statement entitled "Pay Philosophy and Guiding
Principles Governing Officer Compensation". Principal components of the
statement are as follows:
The Philosophy is to have RTI's officer compensation programs:
- promote achievement of RTI's business objectives and reinforce its
strategies.
- align the interests of RTI's officers with those of its shareholders.
- provide pay that is externally competitive and internally equitable, that
rewards accomplishment to the extent identifiable and measurable and that
delivers significant rewards for exceptional performance.
The Guiding Principles are described as:
1. Pay programs will be characterized by variability, clarity, communicability
and strategic emphasis. Specific areas of communication will be the factors
considered, annual target incentive objectives and results and annual target
levels for restricted stock vesting performance measures and results. The
strategic emphasis will include recognition of the roles of various elements of
pay in attracting, retaining and motivating employees, the aspects of
performance that each element is best suited to reward and the characteristics
of RTI and its officer group that point to emphasis on specific elements of pay.
2. Specific descriptions of salary administration and annual and long term
incentive compensation administration are set forth. Annual incentive
compensation is accomplished through RTI's Incentive Compensation Plan while
long term incentive compensation is handled under the 1995 Stock Plan.
13
Market conditions in the titanium industry were weak in 2000 with low titanium
mill product shipments. Both improved somewhat in 2001 until they were severely
impacted by the events of September 11. Despite the low operating rates and
level of business at RTI's facilities, management's focus on value added
products and cost controls resulted in RTI's remaining profitable in both years.
After review of the officers' excellent performance against their 2000
objectives, RTI's operating and financial performance in a difficult year, cash
flow achievement and shareholder return, in January 2001, the officers received
the salary increases and the restricted stock and stock option awards shown in
the Summary Compensation Table. These actions were in accord with the Pay
Philosophy and Guiding Principles Statement.
In January 2002, performance by the officers against the business plan and
individual objectives was evaluated. Considering market conditions, especially
in the fourth quarter of 2001, management again turned in an outstanding
performance. Income was down somewhat from that planned but cash flow was
excellent and in light of the market conditions the officers' performance was
deemed to be exemplary. Consequently, they were granted the bonuses shown in the
Summary Compensation Table. The Committee also approved compensation increases
and grants of restricted stock and stock options.
The procedures described above were followed in January 2001 and January 2002 in
determining the CEO's salary increase, grants of restricted stock and stock
options and bonus for 2001. The CEO performed well against his individual
objectives for 2000 and both income and cash flow were above plan for the year.
Shareholder return was excellent. The bonus determination for the 2001 bonus was
in accord with the Pay Philosophy and took into account the CEO's outstanding
performance.
Craig R. Andersson Neil A. Armstrong Daniel I. Booker
Ronald L. Gallatin Charles C. Gedeon Edith E. Holiday
Wesley W. von Schack
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STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the five year cumulative total return
to shareholders on RTI's Common Stock with the cumulative total return of the
S&P 500 Stock Index and a titanium industry group index consisting of RTI,
Oregon Metallurgical Corporation (until March 15, 1998, the last date its stock
was publicly traded) and Tremont Corporation (Timet Corporation after June 4,
1996, the date its stock first became publicly traded).
COMPARISON OF CUMULATIVE TOTAL RETURN
RTI, INDUSTRY PEER GROUP AND S&P 500*
S&P 500 INDUSTRY RTI/RMI
------- -------- -------
1996 100 100 100
1997 225 335 366
1998 289 167 255
1999 350 90 136
2000 318 176 260
2001 278 125 181
* Assumes $100 investment on January 1, 1996 and reinvestment of dividends.
PENSION BENEFITS
RTI's Pension Plan is a defined benefit plan which first became effective at RMI
Company (a predecessor of RTI) in 1971. The Pension Plan recognizes, for pension
benefits, services and compensation with RTI, RMI Titanium Company, RMI Company,
Reactive Metals, Inc. (a predecessor of RMI Company), USX Corporation, Quantum
Chemical Corporation, or subsidiaries of each. The amounts payable under the
Pension Plan will be paid monthly after a participant retires. The table below
shows the annual pension benefits for retirement at age 65 (or earlier under
certain circumstances) for various levels of eligible earnings which would be
payable to employees retiring with the years of service shown. The benefits are
based on a formula of a specified percentage (dependent on years of service) of
average annual eligible earnings in the five consecutive years of the ten years
prior to retirement in which such earnings are highest. Eligible earnings
includes only base salary. Incentive awards and similar benefits are excluded,
although the amount of such benefits is included in the Summary Compensation
Table. Benefits payable under the Pension Plan, and amounts reflected in the
following table are subject to offsets for social security benefits and, in
certain instances, pensions payable under the USX and the Quantum pension plans.
As of December 31, 2001, Mrs. Hickton had 4 credited years of service, and Mr.
Jacobs 3, Mr. Odle 24, Mr. Berkstresser 2 and Mr. Rupert 33.
15
AVERAGE
CONSECUTIVE ANNUAL BENEFITS FOR YEARS OF SERVICE
HIGHEST 5 YEARS OF --------------------------------------------------
COMPENSATION 10 15 30 40 45
------------------ ------- ------- -------- -------- --------
$100,000 $12,500 $18,750 $ 37,500 $ 51,000 $ 57,750
200,000 25,000 37,500 75,000 102,000 115,500
300,000 37,500 56,260 112,500 153,000 173,250
400,000 50,000 75,000 150,000 204,000 231,000
Under the employment agreement dated as of August 1, 1999 between RTI and Mr.
Odle, RTI agreed that if he continues in active employment with RTI until either
age 65, or such earlier date as the RTI Board of Directors may approve, RTI at
his retirement will pay him a one time lump sum payment of the then present
value of the 9.16 years of non-pensionable service attributable to periods he
was employed by USX (3.58 years) and the Company (5.58 years) which pre-date his
current period of employment, calculated pursuant to the RTI Pension Plan and
its Supplemental Pension Program.
SUPPLEMENTAL PENSION PROGRAM
Officers participating in the Incentive Compensation Plan are also eligible for
the RTI Supplemental Pension Program. If they retire or otherwise terminate
employment after age 60, or prior to age 60 with RTI consent, they will be
entitled to receive the benefits shown in the table below based on bonuses paid
under the Incentive Compensation Plan.
AVERAGE ANNUAL
BONUS FOR
FIVE HIGHEST YEARS ANNUAL BENEFITS FOR YEARS OF SERVICE
IN TEN YEAR PERIOD ------------------------------------
PRECEDING RETIREMENT 10 15 20
-------------------- ---------- ---------- ----------
$ 50,000 $ 7,500 $11,250 $15,000
100,000 15,000 22,500 30,000
150,000 22,500 33,750 45,000
200,000 30,000 45,000 60,000
250,000 37,500 56,250 75,000
300,000 45,000 67,500 90,000
In order to comply with the limitations of the Internal Revenue Code, pension
benefits will be paid directly by RTI when they exceed the amounts permitted by
the Code to be paid from federal income tax qualified pension plans.
EMPLOYMENT AGREEMENTS
On August 1, 1999, RTI entered into employment agreements with Mrs. Hickton and
Messrs. Jacobs, Odle and Rupert covering their employment for an initial four
year term and for additional one year terms each year thereafter until the
officer attains age 65 unless terminated prior thereto by either party on 120
days notice. Under the agreements, each officer will be paid the annual salary
set forth, subject to increases from time to time in the sole discretion of RTI.
RTI may terminate the services of the officer at any time for "cause" as defined
in the agreement. Officers each agree not, for a period of 24 months after the
end of the employment period or employment termination, whichever occurs first,
to be employed by, or otherwise participate in, any business which competes with
RTI. This restriction does not apply if the officer terminates employment with
RTI under certain circumstances following a "change in control" of RTI as
defined.
The employment agreements also provide that the officer will be entitled to
certain severance benefits in the event of termination of employment under
certain circumstances following a "change in control" as defined.
These are:
16
- a cash payment of up to three times the sum of the officer's current
salary plus the highest bonus in the four years before the date of
termination,
- all unvested restricted stock and options will vest immediately,
- life, disability, accident and health insurance benefits for 24 months
after termination,
- a cash payment of the amount necessary to insure that the payments listed
above are not subject to net reduction due to the imposition of federal
excise taxes.
The severance benefits are payable if, any time after a change in control, the
officer's employment is terminated by the officer for good reason or by RTI
other than for cause or disability. In addition the benefits are payable to Mr.
Odle or Mr. Rupert in the event either of them terminates employment within 90
days after a change in control.
The definition of a change in control for purposes of these agreements is
complex but is summarized as follows. It includes any change in control required
to be reported in response to Item 6(e) of Schedule 14A under the Securities
Exchange Act of 1934 and provides that a change in control will have occurred
if:
- any person not affiliated with RTI acquires 20 percent or more of the
voting power of our outstanding securities,
- the Board no longer has a majority made up of (1) individuals who were
directors on the date of the agreements and (2) new directors (other than
directors who join the Board in connection with an election contest)
approved by two-thirds of the directors then in office who (a) were
directors on the date of the agreements or (b) were themselves previously
approved by the Board in this manner.
- RTI merges with another company and RTI's shareholders end up with less
than 50 percent of the voting power of the new entity,
- our shareholders approve a plan of complete liquidation of RTI, or
- we sell all or substantially all of RTI's assets.
On November 1, 1999 RTI entered into an employment agreement with Mr.
Berkstresser covering his employment for an initial four year term and for
additional one year terms each year thereafter until he attains age 65 unless
terminated prior thereto by either party on 120 days notice. Under the
agreement, he will be paid the annual salary set forth, subject to increases
from time to time in the sole discretion of RTI. The agreement contains the
other terms and conditions described above as being contained in the agreements
with Mrs. Hickton and Mr. Jacobs.
17
OTHER INFORMATION
OTHER BUSINESS
We do not expect any business to come up for shareholder vote at the meeting
other than the items described in the Notice of Annual Meeting. If other
business is properly raised, your proxy card authorizes the people named as
proxies to vote as they think best.
OUTSTANDING SHARES
On March 1, 2002, 20,807,772 shares were outstanding and entitled to vote.
HOW WE SOLICIT PROXIES
In addition to this mailing, RTI employees may solicit proxies personally,
electronically or by telephone. RTI pays the costs of soliciting this proxy. We
also reimburse brokers and other nominees for sending these materials to you and
getting your voting instructions.
SHAREHOLDER PROPOSALS
The deadline for shareholder proposals for next year's meeting is December 6,
2002.
By Order of the Board of Directors
RICHARD M. HAYS
Secretary
Dated: April 5, 2002
18
PLEASE MARK
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE [ X ]
This Proxy Card, when properly executed, will be voted in the manner
directed herein. If no direction to the contrary is indicated, it will be voted
"FOR" all Proposals.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
1. PROPOSAL NO. 1 - Election of 01 Craig R. Andersson; FOR WITHHOLD
02 Neil A. Armstrong; 03 Daniel I. Booker; all nominees from all
04 Ronald L. Gallatin; 05 Charles C. Gedeon; [ ] [ ]
06 Robert M. Hernandez, 07 Edith E. Holiday,
08 John H. Odle, 09 Timothy G. Rupert and
10 Wesley W. von Schack as directors.
2. PROPOSAL NO. 2 - Election of FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP [ ] [ ] [ ]
as independent accountants
for 2002.
To withhold authority to vote for any individual nominee,
write that nominee's name in the space below:
--------------------------------------------------------------------------------
Signature(s) Dated: , 2002
------------------------------------------- -----------
Please sign EXACTLY as your name appears hereon. When signing as fiduciary or
corporate officer, give full title. Joint owners should both sign.
* FOLD AND DETACH HERE *
RTI INTERNATIONAL METALS, INC.
1000 WARREN AVENUE, NILES, OHIO 44446
PROXY FOR 2002 ANNUAL MEETING
SOLICITED ON BEHALF OF THE DIRECTORS OF RTI INTERNATIONAL METALS, INC.
The undersigned hereby appoints ROBERT M. HERNANDEZ, TIMOTHY G. RUPERT,
JOHN H. ODLE AND RICHARD M, HAYS, or any of them, proxies to vote all shares of
Common Stock which the undersigned is entitled to vote with all powers which the
undersigned would possess if personally present, at the Annual Meeting of
Shareholders of RTI International Metals, Inc. on April 26, 2002, and any
adjournments thereof, upon such matters as may properly come before the meeting.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS PROXY CARD AND TO
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
PLEASE COMPLETE, DATE AND SIGN THE REVERSE SIDE.
* FOLD AND DETACH HERE *