1
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ 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 Section 240.14a-11(c) or
Section 240.14a-12
RTI INTERNATIONAL METALS, INC.
--------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------
(5) Total fee paid:
------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------
(3) Filing Party:
--------------------------------------------------
(4) Date Filed:
----------------------------------------------------
[ X ] No fee required
2
RTI LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
APRIL 27, 2001
2:00 P.M. EASTERN DAYLIGHT TIME
New York Marriott Financial Center
85 West Street
New York, New York
3
RTI LOGO
1000 Warren Avenue
Niles, Ohio 44446
April 6, 2001
Dear RTI Shareholder:
You are cordially invited to attend our 2001 Annual Meeting of Shareholders on
April 27, 2001, in the New York Marriott Financial Center, 85 West Street, New
York, New York.
The meeting will begin promptly at 2:00 p.m. Eastern Daylight 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 2001 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
4
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............................ 6
PROPOSAL NO. 2 -- ELECTION OF INDEPENDENT ACCOUNTANTS.............. 8
Security Ownership........................................................ 10
Executive Compensation.................................................... 11
Stock Performance Graph................................................... 14
Pension Benefits.......................................................... 14
Employment Agreements..................................................... 15
Other Information......................................................... 17
5
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF RTI INTERNATIONAL METALS, INC.
TIME:
2:00 p.m., Eastern Daylight Time
DATE:
April 27, 2001
PLACE:
New York Marriott Financial Center
85 West Street
New York, New York
PURPOSE:
- Elect directors
- Elect independent accountants
- Conduct other business if properly raised
Only shareholders of record on March 1, 2001 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 6, 2001
3
6
PROXY STATEMENT
GENERAL INFORMATION
--------------------------------------------------------------------------------
- WHO MAY VOTE?
Shareholders of RTI as of the close of business on the record date, March 1,
2001, 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 2001.
- 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 2001.
- 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
7
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 four
times during 2000. 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 2000, except for Mr. Armstrong who attended 4 of the 8 (50%) such
meetings.
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 2000 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 2000, the
Executive Committee held no meetings.
AUDIT COMMITTEE
The members of the Audit Committee, all of whom are non-employee directors, are
Wesley W. von Schack (Chairman), Craig R. Andersson, Neil A. Armstrong, Daniel
I. Booker and Edith E. Holiday.
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 Committee has the written charter attached
as Exhibit A. The Audit Committee held three meetings during 2000.
STOCK PLAN COMMITTEE
The members of the Stock Plan Committee, all of whom are non-employee directors,
are Craig R. Andersson, Neil A. Armstrong, Daniel I. Booker, Ronald L. Gallatin,
Edith E. Holiday and Wesley W. von Schack.
The Stock Plan Committee is responsible for administration of RTI's
stock-related plans, including the 1989 Stock Option Incentive Plan, the 1989
Employee Restricted Stock Award Plan and the 1995 Stock Plan. The Stock Plan
Committee held one meeting during 2000.
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
$30,000 (except for the Chairman) and the meeting fee $1,000. For his services
as non-employee Chairman Mr. Hernandez receives an annual retainer of $75,000:
$60,000 in RTI common stock and $15,000 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's
Common Stock. In 2000, the Common Stock utilized for this purpose and for the
Chairman's annual retainer was based on $13.75, the market value of the stock on
August 1, 2000.
5
8
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: 63
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: 70
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 USX Corporation. He is a member of the National Academy of Engineering.
DANIEL I. BOOKER Age: 53
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 an officer
and/or director of Pittsburgh Regional Alliance, the Pittsburgh Civic Light
Opera, United Way of Southwestern Pennsylvania and other community and
professional organizations.
6
9
RONALD L. GALLATIN Age: 55
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: 60
EXECUTIVE VICE PRESIDENT-RAW MATERIALS Director since 1991
AND DIVERSIFIED BUSINESSES
U.S. STEEL GROUP, USX CORPORATION
Mr. Gedeon joined USX 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 Board of Directors of the U.S.
Steel Group of USX Corporation and a member of the American Iron and Steel
Institute. He is also a member of the Board of Directors of
INROADS/Pittsburgh-Erie, Inc., a not for profit minority career development
organization.
ROBERT M. HERNANDEZ Age: 56
CHAIRMAN OF THE BOARD OF THE COMPANY Director since 1990
On December 1, 1994, Mr. Hernandez was elected to his current position, Vice
Chairman and Chief Financial Officer of USX Corporation. 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. In addition to being
a director of USX, he is a trustee of BlackRock Funds; a director and Chairman
of the Executive Committee of ACE Limited and a director of Transtar, Inc., the
Pennsylvania Chamber of Business and Industry and the Pennsylvania Business
Roundtable.
EDITH E. HOLIDAY Age: 49
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.; 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.
7
10
JOHN H. ODLE Age: 58
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 21 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.
TIMOTHY G. RUPERT Age: 54
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: 56
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. Prior to that he had served as Chairman
of the Board, President and Chief Executive Officer of DQE and of Duquesne Light
Company since 1986. DQE is the parent company of Duquesne Light. He 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 2000, 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 2000 and review of financial statements in
RTI's Form 10-Q Reports in 2000 were $213,650.
8
11
ALL OTHER FEES
The aggregate fees billed for professional services rendered by
PricewaterhouseCoopers LLP during 2000 to RTI and its subdivisions other than
fees disclosed above were $465,426.
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.
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 2001.
AUDIT COMMITTEE REPORT
We have reviewed and discussed RTI's 2000 audited financial statements with
management and with PricewaterhouseCoopers LLP. We have also discussed with the
independent accountants the matters required to be discussed by Statement on
Auditing Standards No. 61 (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,
2000 for filing with the Securities and Exchange Commission.
Wesley W. von Schack (Chairman) Neil A. Armstrong
Craig R. Andersson Daniel I. Booker
Edith E. Holiday
9
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of RTI, as of March 1, 2001, 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
---------------- -------------------- -----
AXA Financial, Inc.............................. 2,341,164(1) 11.2%
1260 Avenue of the Americas
New York, NY 10104
SSB Citi Fund Management LLC.................... 2,237,034(2) 10.7%
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, NY 10013
Citigroup Inc.
399 Park Avenue
New York, NY 10043
ICM Asset Management, Inc....................... 2,093,286(3) 10.0%
601 W. Main Ave., Ste. 600
Spokane, WA 99201
Dimensional Fund Advisors, Inc.................. 1,606,210(4) 7.7%
1299 Ocean Ave, 11th Floor
Santa Monica, CA 90401
---------
(1) Based on Schedule 13G dated February 12, 2001, which indicates that
AXA had sole voting power over 1,982,100 shares, shared voting power
over 29,200 shares, sole dispositive power over 2,341,164 shares and
shared dispositive power over no shares.
(2) Based on Schedule 13G/A dated February 1, 2001, which indicates that
each reporting person had sole voting power and sole dispositive
power over no shares; SSB Citi Fund Management LLC and Salomon
Brothers Holding Company Inc. had shared voting power and shared
dispositive power over 2,234,534 shares; and Citigroup Inc. had
shared voting power and shared dispositive power over 2,237,034
shares.
(3) Based on Schedule 13G dated February 6, 2001, which indicates ICM
had sole voting power over 1,164,186 shares, shared voting power
over no shares, sole dispositive power over 2,093,286 shares and
shared dispositive power over no shares.
(4) Based on Schedule 13G dated February 2, 2001, which indicates that
Dimensional Fund had sole voting power over 1,606,210 shares shared
voting power over no shares, sole dispositive power over 1,606,210
shares and shared dispositive power over no shares.
10
13
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 19, 2001, 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........................... 56,783 --
Neil A. Armstrong............................ 16,975 --
Gordon L. Berkstresser....................... 8,243
Daniel I. Booker............................. 11,146 --
Ronald L. Gallatin........................... 35,000 --
Charles C. Gedeon............................ 4,468 --
Robert M. Hernandez.......................... 28,991 --
Dawne S. Hickton............................. 47,391 --
Edith E. Holiday............................. 2,248 --
Lawrence W. Jacobs........................... 40,882 --
John H. Odle................................. 165,527 --
Timothy G. Rupert............................ 198,079 --
Wesley W. von Schack......................... 19,636 --
-------
All directors and executive officers
as a group (13 persons).................... 635,369 3.0%
---------
(1) Includes 16,666 shares, 1,666 shares, 8,667 shares, 60,333 shares and 67,333
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 2000, 1999 and 1998.
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) (SHARES) PAYOUTS COMPENSATION
------------------ ---- ------ ----- ------------ -------- -------- ------- ------------
Timothy G. Rupert(1)........ 2000 $350,000 $250,000 -- 23,500 30,060 -- --
President & 1999 285,000 75,000 -- 50,000 15,000 -- --
Chief Executive Officer 1998 229,167 113,000 -- 11,000 11,000 -- --
John H. Odle................ 2000 250,000 160,000 -- 11,000 25,000 -- --
Executive Vice President 1999 243,333 65,000 -- 36,000 15,000 -- --
1998 229,167 103,000 -- 11,000 11,000 -- --
Gordon L. Berkstresser(2)... 2000 120,000 50,000 -- 3,000 7,000 -- --
Vice President & 1999 100,000 30,000 -- -- 5,000 -- --
Controller
Dawne S. Hickton............ 2000 150,000 70,000 -- 3,500 12,000 -- --
Vice President & General 1999 135,583 50,000 -- 12,750 7,000 -- --
Counsel 1998 120,084 60,000 -- 4,975 6,500 -- --
Lawrence W. Jacobs(3)....... 2000 140,000 50,000 -- 3,000 10,000 -- --
Vice President & 1999 121,667 35,000 -- 12,500 6,000 -- --
Chief Financial Officer 1998 77,651 35,000 -- 4,000 10,000 -- --
---------
(1) Elected President and Chief Executive Officer July 30, 1999.
(2) Elected Vice President and Controller October 29, 1999.
(3) Elected Vice President and Treasurer effective March 23, 1998; elected Chief
Financial Officer July 30, 1999.
11
14
The following tables set forth information with respect to stock option grants
and exercises in 2000 and December 31, 2000 stock option values:
STOCK OPTION GRANTS IN 2000
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM
GRANTED EMPLOYEES BASE PRICE EXPIRATION -------------------------
NAME (SHARES) IN 2000 ($/SH) DATE 5% 10%
---- -------- ---------- ------------ ---------- ----------- -----------
Timothy G. Rupert.................... 30,000 16.8% $7.3130 1/27/10 $357,363 569,041
John H. Odle......................... 25,000 14.0 7.3130 1/27/10 297,803 474,201
Gordon L. Berkstresser............... 7,000 3.9 7.3130 1/27/10 83,385 132,776
Dawne S. Hickton..................... 12,000 6.7 7.3130 1/27/10 142,945 227,616
Lawrence W. Jacobs................... 10,000 5.6 7.3130 1/27/10 119,121 189,680
AGGREGATED STOCK OPTION EXERCISES IN 2000
AND DECEMBER 31, 2000 STOCK OPTION VALUES
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES DECEMBER 31, 2000 OPTIONS AT
ACQUIRED ON (SHARES)(1) DECEMBER 31, 2000
EXERCISE VALUE --------------------------- ---------------------------
NAME (SHARES) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Timothy G. Rupert.............. -- -- 67,333 43,667 $262,623 $238,730
John H. Odle................... 11,374 79,720 60,333 38,667 189,123 181,856
Gordon L. Berkstresser......... -- -- 1,666 10,334 4,487 56,413
Dawne S. Hickton............... -- -- 16,666 18,834 4,956 96,909
Lawrence W. Jacobs............. -- -- 8,667 17,333 4,249 80,993
---------
(1) Adjusted for one-for-ten reverse stock split effective March 31, 1994 and
subsequent rights offering.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
In 1995, the Board of Directors determined that in most instances, in view of
the size of RTI and also of the Board, the full Board should itself handle
compensation matters. The Stock Plan Committee, which is composed entirely of
directors who are not employees of RTI, administers RTI's stock-related plans;
namely the 1989 Stock Option Incentive Plan, the 1989 Employee Restricted Stock
Award Plan and the 1995 Stock Plan. The Committee approves grants under the 1995
Stock Plan. No further grants can be made under the 1989 Plans.
To assist it in its compensation actions, the Board 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
12
15
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.
Market conditions in the titanium industry declined in 1999 and weakened further
in 2000. Titanium mill product shipments in both years were the lowest since the
severely depressed conditions in 1983. By virtue of management's focus on value
added products and cost controls, RTI was profitable in each year. During 1999
each of the officers named in the Summary Compensation Table received
compensation increases and restricted stock grants in connection with receiving
increased responsibilities in several cases and the entering into new four year
employment agreements in all cases. Thus no salary increases were approved for
the officers in January, 2000. In light of the officers' 1999 performance
against their objectives and RTI's financial performance in a difficult year,
the Board approved the bonuses for 1999 shown in the Summary Compensation Table.
These awards were well below the target levels in the Pay Philosophy and Guiding
Principles Statement.
The Stock Plan Committee approved grants of restricted stock and stock options
in January, 2000. The grants to officers were in line with the long term
incentive compensation guidelines mentioned above.
In January 2001 the Board reviewed executive performance against 2000 objectives
as well as RTI's operating and financial results. Performance against corporate
goals and individual objectives was outstanding and shareholder return during
the year was also noteworthy. As mentioned above, despite the low level of
business and operating rates at RTI facilities, RTI was profitable and generated
commendable cash flow. After taking these factors into account, as well as
return to shareholders, the Board awarded the bonuses for 2000 shown in the
Summary Compensation Table. The Board also approved compensation increases and
the Stock Plan Committee approved grants of restricted stock and stock options.
These grants were also in accord with the long-term incentive compensation
guidelines mentioned above.
The Board and the Stock Plan Committee followed the procedure described in the
preceding paragraphs in January, 2000 in determining the CEO's bonus for 2000
and in awarding him a salary increase and granting him restricted stock and
stock options. They both concluded that he had provided effective leadership
during a difficult year and performed well against his objectives.
Craig R. Andersson Neil A. Armstrong Daniel I. Booker
Ronald L. Gallatin Charles C. Gedeon Robert M. Hernandez
Edith E. Holiday John H. Odle Timothy G. Rupert
Wesley W. von Schack
BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION
Robert M. Hernandez, Chairman of the Board, John H. Odle, Executive Vice
President and Timothy G. Rupert, President & Chief Executive Officer are members
of the Board of Directors. Mr. Hernandez receives the compensation set forth on
page 5. Messrs. Hernandez, Odle and Rupert are not present at Board meetings
when compensation matters relating to them are considered. None of them is a
member of the Stock Plan Committee.
13
16
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
------- -------- -------
1995 100.00 100.00 100.00
1996 169.00 382.00 511.00
1997 225.00 335.00 366.00
1998 289.00 167.00 255.00
1999 350.00 90.00 136.00
2000 318.00 176.00 260.00
* Assumes $100 investment on January 1, 1995 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, 2000, Mrs. Hickton had 3 credited years of service, and Mr.
Jacobs 2, Mr. Odle 23, Mr. Berkstresser 1 and Mr. Rupert 32.
14
17
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.
USX has agreed to provide Mr. Rupert, a former employee of USX, certain pension
and death and disability benefits necessary to supplement like benefits payable
under the RTI plans so that the aggregate of such payments to him equals what he
would have received had he remained employed by USX.
USX maintains the USX Corporation Pension Plan for Employees which provides
defined benefits for USX employees using a different formula than that used by
the RTI plan. Upon his retirement from RTI, Mr. Rupert will receive a pension
from the RTI Pension Plan and the USX Plan, with the benefits paid from the USX
Plan calculated on service with USX and USX subsidiaries prior to his employment
by RTI. The combined benefits payable annually to Mr. Rupert under the USX Plan
(which relates to employment by USX) and from USX if he retires at age 65 and if
his compensation remains at its current level, would be $72,316.
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
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
15
18
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:
- 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.
16
19
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, 2001, 20,870,668 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 7,
2001.
By Order of the Board of Directors
RICHARD M. HAYS
Secretary
Dated: April 6, 2001
17
20
EXHIBIT A
RTI INTERNATIONAL METALS, INC.
AUDIT COMMITTEE CHARTER
The Board of Directors shall appoint annually the Audit Committee which shall
have the responsibility and authority and shall perform the functions as
described below.
COMPOSITION
1. The membership of the Committee will meet the requirements of the Audit
Committee Policy of the New York Stock Exchange. Accordingly, all of the
members will be directors independent of management and free from any
relationship that, in the opinion of the Board of Directors, would interfere
with the exercise of independent judgment as a Committee member.
2. No officers or employees of the Company or its subsidiaries will serve on the
Committee, until at least three (3) years following the termination of the
employment relationship. A former officer of the Company or any of its
subsidiaries may serve on the Committee (even though the former officer may
be receiving pension or deferred compensation payments from the Company), if,
in the opinion of the Board of Directors, the former officer will exercise
independent judgment and will materially assist the function of the
Committee. However, a majority of the Committee will be directors who were
not formerly officers of the Company or any of its subsidiaries.
3. Attendance by a majority of the Committee will constitute a quorum for
conducing a Committee meeting. Pursuant to the by-laws of the Company,
members of the Committee may participate in any meeting of such Committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting shall constitute presence in
person at such meeting.
RESPONSIBILITY
The responsibility of the Audit Committee shall be to:
1. Provide assistance to the Board of Directors in fulfilling its statutory and
fiduciary responsibilities for examinations of the Company's financial
statement and in monitoring its accounting and financial reporting practices.
2. Determine that the Company had adequate administrative, operational and
internal accounting controls and that the Company is operating in accordance
with its prescribed procedures and codes of conduct.
3. Serve as an independent and objective party in the review of the financial
information presented by management for distribution to shareholders and the
general public.
4. Exercise general and ongoing oversight of the quarterly reporting process.
5. Provide direction and supervision over the internal audit function and the
independent accountants.
AUTHORITY
The Audit Committee is granted the authority to investigate any matter or
activity involving financial accounting, reporting and internal controls of the
Company, and all employees shall be directed to cooperate with respect thereto
as requested by members of the Committee. The Committee is empowered to retain
persons having special competence, as necessary, to assist the Committee in
fulfilling its responsibility.
FUNCTIONS
The functions of the Audit Committee shall be to:
1. Recommend to the Board of Directors the appointment of the independent
accountants for the coming year who are ultimately accountable to the Board
of Directors and the Audit Committee.
2. Review and approve the audit plan of the independent accountants and the
internal auditors, including the steps planned for a review of the Company's
electronic data processing procedures and controls.
18
21
3. Evaluate the effectiveness of the internal and external audit efforts
through regular meetings with the internal auditors and the independent
accountants.
4. Determine through discussions with the independent accountants and the
internal auditors that no management restrictions are being placed on the
scope of their examinations.
5. Review the adequacy and effectiveness of the Company's accounting policies
and procedures as well as financial and accounting management through
observations and discussions with the independent accountants, internal
auditors and appropriate officers of the Company.
6. Monitor internal accounting controls through a review of the reports of the
independent accountants and the internal auditors that describe internal
accounting, organizational or operating control weaknesses and determine
that appropriate corrective action is being taken by management.
7. Review with management and the independent accountants quarterly accounting
and financial reporting to the public.
8. Arrange for periodic reports from management, the independent accountants
and the internal auditors to assess accounting or reporting developments
proposed by the FASB or the SEC, or any other significant matters that may
have a bearing on the financial statements or the annual examination.
9. Review and approve any material accounting changes.
10. Review and approve the Company's annual financial statements, Form 10-K and
annual report to shareholders with management and the independent
accountants.
11. Supervise and direct any special projects or investigations that the
Committee considers necessary.
12. Periodically review the Company's business ethics policies, the monitoring
of compliance with these policies and the disposition of reported
exceptions.
13. Meet regularly with the Company's general counsel, and outside counsel, when
appropriate, to discuss legal matters which may have a significant impact on
the Company's financial statements.
14. Consider in-house policies and procedures for regular review of officers'
expenses and perquisites, including any use of corporate assets and inquire
as to the results of the review.
15. The Committee should meet privately with the independent public accountants
periodically to request their opinion on various matters including the
quality of financial and accounting personnel.
16. Review the fees proposed and approve the final fees and expenses of the
independent accountants for audit services and the fee for any non-audit
services to be performed by the independent accountants for any non-audit
engagement.
17. Review on an annual basis a formal written statement from the independent
accountants delineating all relationships between the independent
accountants and the Company and determine, through discussion, whether
corrective action is necessary with respect to any disclosed relationships
or services that may impact the objectivity and independence of the
independent accountants and, if appropriate, recommend that the Board of
Directors take appropriate action to ensure the independence of the
independent accountants.
MEETINGS
The Committee shall hold at least three regular meetings each year and others as
deemed necessary by its chairperson. A report of all Committee meetings will be
made to the Board of Directors. The Secretary of the Company shall serve as
Secretary of the Audit Committee and shall prepare and keep minutes of all
meetings of the Committee.
19
22
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 Craig R. Andersson; FOR WITHHOLD
Neil A. Armstrong; Daniel I. Booker; all nominees from all
Ronald L. Gallatin; Charles C. Gedeon; [ ] [ ]
Robert M. Hernandez, Edith E. Holiday,
John H. Odle, Timothy G. Rupert and
Wesley W. von Schack as directors.
2. PROPOSAL NO. 2 - Election of FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP [ ] [ ] [ ]
as independent accountants
for 2001.
To withhold authority to vote for any individual nominee,
write that nominee's name in the space below:
--------------------------------------------------------------------------------
Signature(s) Dated: , 2001
------------------------------------------- -----------
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 *
23
RTI INTERNATIONAL METALS, INC.
1000 WARREN AVENUE, NILES, OHIO 44446
PROXY FOR 2001 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 27, 2001, 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 *