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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (As permitted by Rule
14A-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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ALLEGHENY TELEDYNE INCORPORATED
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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:
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(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.:
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(3) Filing Party:
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(4) Date Filed:
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[ X ] No fee required
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ALLEGHENY TELEDYNE INCORPORATED
1000 SIX PPG PLACE
PITTSBURGH, PENNSYLVANIA 15222-5479
NOTICE OF
1998 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
THURSDAY, MAY 14, 1998
11:00 A.M. PITTSBURGH TIME
ROOM 1000 AUDITORIUM, 10TH FLOOR
TWO MELLON BANK CENTER
(UNION TRUST BUILDING)
435 FIFTH AVENUE
PITTSBURGH, PENNSYLVANIA
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TABLE OF CONTENTS PAGE
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Letter from the Chairman, President and Chief Executive
Officer................................................... 1
Notice of Annual Meeting of Stockholders.................... 2
Proxy Statement............................................. 3
Election of Directors.................................. 4
Information About the Board of Directors............... 9
Security Ownership..................................... 12
Ratification of Selection of Independent Accountants... 15
Other Business to Come Before the Meeting.............. 15
Executive Compensation................................. 15
Cumulative Total Stockholder Return.................... 28
Certain Transactions................................... 28
1999 Annual Meeting and Stockholder Proposals.......... 31
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RICHARD P. SIMMONS
Chairman,
President and Chief Executive Officer
Allegheny Teledyne Logo
1000 Six PPG Place
Pittsburgh, PA 15222-5479
March 23, 1998
Dear Stockholder:
We are pleased to invite you to attend the annual meeting of the
stockholders of Allegheny Teledyne Incorporated to be held on Thursday, May 14,
1998, in Pittsburgh, Pennsylvania. The meeting will begin with a discussion and
voting on the matters set forth in the accompanying Notice of Annual Meeting and
Proxy Statement followed by a report on Company operations. I urge you to
attend.
If you are a stockholder of record and you plan to attend the meeting,
please complete and return the enclosed postage-paid ticket request card. An
admission ticket, which will expedite your admission to the meeting, will be
mailed to you prior to the meeting.
Whether you own few or many shares and whether or not you plan to attend
the meeting, it is important that you vote your shares. Please promptly read the
Proxy Statement and then complete, sign and return your proxy card in the
enclosed postage-paid envelope. If you sign and return your proxy card without
specifying your choices, it will be understood that you wish to have your shares
voted in accordance with the Directors' recommendations.
We look forward to seeing as many of you as possible at the 1998 Annual
Meeting.
Sincerely,
/s/ R.P. Simmons
R. P. Simmons
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ALLEGHENY TELEDYNE INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1998
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The Annual Meeting of Stockholders of Allegheny Teledyne Incorporated will
be held on Thursday, May 14, 1998, at 11:00 A.M., Pittsburgh time, at the Room
1000 Auditorium, 10th Floor, Two Mellon Bank Center (Union Trust Building), 435
Fifth Avenue, Pittsburgh, Pennsylvania, for the following purposes:
1. To elect five Class II directors to serve for a term of three years.
2. To ratify the selection of Ernst & Young LLP as independent auditors of the
Company for fiscal 1998.
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
Stockholders of record at the close of business on March 16, 1998 are
entitled to notice of and to vote at the meeting or any adjournments thereof. A
complete list of such stockholders will be open for examination by any
stockholder for any purpose germane to the meeting, during ordinary business
hours, at the offices of the Company, 1000 Six PPG Place, Pittsburgh,
Pennsylvania, for a period of 10 days prior to the meeting.
By order of the Board of
Directors
/s/ Jon D. Walton
Jon D. Walton
Senior Vice President, General
Counsel
and Secretary
Dated: March 23, 1998
YOU ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE. THE RETURN OF THE ENCLOSED PROXY CARD WILL
NOT AFFECT YOUR RIGHT TO REVOKE SUCH PROXY OR TO VOTE IN PERSON IF YOU ATTEND
THE MEETING.
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ALLEGHENY TELEDYNE INCORPORATED
1000 SIX PPG PLACE
PITTSBURGH, PENNSYLVANIA 15222-5479
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are being mailed
beginning on or about March 23, 1998 to stockholders in connection with the
solicitation of proxies by the Board of Directors of Allegheny Teledyne
Incorporated (the "Company") for use at the 1998 Annual Meeting of Stockholders
to be held May 14, 1998.
Stockholders whose names appeared of record on the books of the Company at
the close of business on March 16, 1998 are entitled to notice and to vote at
the meeting. On the record date for the meeting, there were 174,350,760 shares
of Common Stock of the Company outstanding and entitled to vote. Each share of
Common Stock is entitled to one vote per share on each matter properly brought
before the meeting. Shares can be voted at the meeting only if the stockholder
is present in person or is represented by proxy.
When your proxy card is returned properly signed, the shares represented
will be counted for quorum purposes and will be voted in accordance with your
instructions. You can specify your choices by marking the appropriate boxes on
the proxy card. Unless contrary instructions are indicated on your proxy card,
the shares will be voted as recommended by the Board of Directors. You may
revoke your proxy, by written notice to the Corporate Secretary of the Company,
at any time before it is voted at the meeting.
Your vote is important and you are urged to sign and return the
accompanying proxy card whether or not you plan to attend the meeting. If you do
attend, you may still vote by ballot at the meeting, which will automatically
cancel any proxy voting authority previously given. If you are a stockholder of
record and you are planning to attend the meeting in person, please complete and
return the enclosed postage-paid ticket request card promptly so that we can
mail your admission ticket. Stockholders without admission tickets will be
admitted upon verification of ownership.
Proxy cards, ballots and voting tabulations that identify individual
stockholders are normally available for examination only by the inspector of
elections, the Corporate Secretary and certain employees associated with
processing proxy cards and tabulating the vote. The Company does not disclose
the vote of any stockholder except as may be necessary to meet legal
requirements.
Each of the trustees of the Company's employee benefit plans has the sole
right to exercise all rights relating to Common Stock held for participants in
such plans. Participants in the defined contribution plans have the right,
however, to direct the trustee as to the manner in which voting and other rights
will be exercised with respect to the shares of Common Stock allocated to their
accounts and shown on the voting instruction card which they will receive from
the Plan Administrator. Generally, each trustee will vote shares for which no
participant's instructions are received in the same proportion as shares for
which participant instructions have been received.
Company stock held for the account of participants in the Allegheny
Teledyne Employee Stock Purchase Plan (also known as "The Stock Advantage")
(which was formerly known as the Teledyne Employee Stock Purchase Plan) will be
voted in accordance with the participant's signed voting instructions duly
delivered to
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the Plan Administrator for such Plan or, in the case of shares of Common Stock
for which instructions are not received, as the Plan Administrator determines in
the exercise of its duties.
If a stockholder is a participant in the Company's Automatic Dividend
Reinvestment Service for Stockholders, the proxy card represents authority to
vote the number of full shares in the participant's dividend reinvestment
service account on the record date, as well as shares registered in the
participant's name.
The cost of this solicitation of proxies will be borne by the Company. In
addition to solicitation by use of the mails, proxies may be solicited by
directors, officers and employees of the Company in person or by telephone,
telegram or other means of communication. The Company has retained Morrow & Co.,
at an estimated cost of $8,000 plus reimbursement of expenses, to assist in the
solicitation of proxies from brokers, nominees, institutions and individuals on
behalf of the Company. Arrangements will also be made with custodians, nominees
and fiduciaries for forwarding of proxy solicitation materials to beneficial
owners of Common Stock held of record by such custodians, nominees and
fiduciaries, and the Company will reimburse such custodians, nominees and
fiduciaries for reasonable expenses incurred in connection therewith.
Brokers, banks and other nominee holders will be requested to obtain voting
instructions of beneficial owners of Common Stock registered in their names.
Shares represented by a duly completed proxy card submitted by a nominee holder
on behalf of beneficial owners will be counted for quorum purposes and will be
voted to the extent instructed by the nominee holder on the proxy card. The
rules applicable to a nominee holder may preclude it from voting the shares that
it holds on certain kinds of proposals (sometimes referred to as "broker
non-votes") unless it receives voting instructions from the beneficial owners of
the shares. Broker non-votes on a particular proposal will not be counted as
having been voted for or against the proposal.
ELECTION OF DIRECTORS
(ITEM A ON PROXY CARD)
The business and affairs of the Company are managed under the direction of
the Board of Directors as provided in the by-laws of the Company and the laws of
the State of Delaware. The Board is not, however, involved in day-to-day
operations. Members of the Board are kept informed of the Company's business
through discussions with the Chairman, President and Chief Executive Officer,
the Vice Chairman of the Board, other members of senior management and other
officers and managers of the Company and its subsidiaries, by reviewing analyses
and reports sent to them, and by participating in Board and committee meetings.
Regular meetings of the Board were held six times in 1997. Special meetings are
scheduled when required; one was held in 1997. In 1997, the directors'
attendance at meetings of the Board and its committees was over 95% except for
Fayez Sarofim who attended less than 75% of the meetings of the Board and the
committee on which he serves.
Under the Company's certificate of incorporation, the Board has the power
to fix the number of directors. The Board of Directors currently consists of
fourteen members, three of whom are employees of the Company. Fayez Sarofim has
announced his intention to retire from the Company's Board of Directors for
personal reasons. His term will expire at the 1998 Annual Meeting of
Stockholders.
Pursuant to the Company's certificate of incorporation, the members of the
Board of Directors are divided into three classes. The term of the Class II
directors expires at the 1998 Annual Meeting of Stockholders. The terms of the
Class III and Class I directors will expire at the 1999 and 2000 Annual
Meetings, respectively. At each annual meeting, the directors elected to succeed
those whose terms expire are
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identified as being of the same class as the directors they succeed and are
elected for a term to expire at the third annual meeting of stockholders after
their election and until their successors are duly elected and qualified. A
director elected to fill a vacancy is elected to the same class as the director
such person succeeds, and a director elected to fill a newly created
directorship holds office until the next election of the class to which such
director is elected.
Four incumbent Class II directors are nominees for election this year for a
three-year term expiring at the annual meeting of stockholders to be held in the
year 2001. In addition, the Board of Directors is recommending the election of
Ray J. Groves as a Class II director. In the election, the five persons who
receive the highest number of votes actually cast will be elected. Broker
non-votes will not be treated as votes cast. Following the Annual Meeting, the
Board of Directors will consist of fourteen members.
The proxies named in the proxy card intend to vote for the election of the
five Class II nominees listed below unless otherwise instructed. If you do not
wish your shares to be voted for a particular nominee, you must identify the
exception in the appropriate space provided on the proxy card, in which case
your shares will be voted for the other listed nominees. If any nominee becomes
unable to serve, the proxies may vote for another person designated by the Board
of Directors or the Board may reduce the number of directors. The Company has no
reason to believe that any nominee will be unable to serve.
A brief statement of the background of each nominee and each continuing
Class III and Class I director, including their principal occupations during the
past five years, is provided on the following pages.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE FIVE CLASS II
NOMINEES.
NOMINEES FOR CONTINUING DIRECTORS--TERM EXPIRES 2001
CLASS II
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ARTHUR H. ARONSON Arthur H. Aronson has been Executive Vice President of the
Executive Vice President of the Company Company since August 1996 and is responsible for the
Company's specialty metals companies. He was President of
Director since 1996 Allegheny Ludlum Corporation ("Allegheny Ludlum") from
Age: 62 August 1994 to January 1998 and has served as a director of
Allegheny Ludlum since 1990. Mr. Aronson was the Chief
Executive Officer of Allegheny Ludlum from August 1994 to
August 1996. Previously, he served as Executive Vice
President and Chief Operating Officer of Allegheny Ludlum.
Mr. Aronson is a member of the Technology Committee. He is
also a director of Cooper Tire & Rubber Company.
PAUL S. BRENTLINGER Paul S. Brentlinger is a Partner in Morgenthaler Ventures,
Partner, Morgenthaler Ventures a venture capital group headquartered in Cleveland, Ohio.
He served as a director of Allegheny Ludlum beginning in
Director since 1996 1987. Mr. Brentlinger is Vice Chairman of the Audit and
Age: 70 Finance Committee and Chairman of the Technology Committee.
He is also a director of Ferro Corporation.
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RAY J. GROVES Ray J. Groves is Chairman of Legg Mason Merchant Banking,
Chairman, Legg Mason Inc., a subsidiary of Legg Mason, Inc., based in Baltimore,
Merchant Banking, Inc. Maryland. Previously he served as Chairman and Chief
Age: 62 Executive Officer of Ernst & Young LLP until his retirement
in 1994. Mr. Groves is also a director of Consolidated
Natural Gas Company, Electronic Data Systems Corporation,
Lamalie Associates, Inc., Marsh & McLennan Companies, Inc.
and RJR Nabisco, Inc.
WILLIAM G. OUCHI William G. Ouchi is a professor of management in the
Professor of Management, Anderson Anderson Graduate School of Management, University of
Graduate School of Management, California at Los Angeles. Dr. Ouchi was a director of
University of California at Teledyne beginning in 1996. Dr. Ouchi is a member of the
Los Angeles Audit and Finance Committee, a member of the Personnel and
Compensation Committee and a member of the Stock Incentive
Director since 1996 Award Subcommittee. He is also a director of FirstFed
Age: 54 Financial Corp.
JAMES E. ROHR James E. Rohr has been President of PNC Bank Corp. since
President, PNC Bank Corp. 1992. He also serves as President and Chief Executive
Officer of its Pennsylvania bank, PNC Bank, National
Director since 1996 Association. Mr. Rohr served as a director of Allegheny
Age: 49 Ludlum beginning in 1988. He is a member of the Audit and
Finance Committee and of the Technology Committee. He is
also a director of PNC Bank Corp. and Equitable Resources,
Inc.
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CONTINUING DIRECTORS--TERM EXPIRES 1999
CLASS III
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ROBERT P. BOZZONE Robert P. Bozzone has been Vice Chairman of the Board of
Vice Chairman of the Board the Company since August 1996. He had served as Vice
of the Company Chairman of Allegheny Ludlum since August 1994, and
previously was President and Chief Executive Officer of
Director since 1996 Allegheny Ludlum. Mr. Bozzone served as a director of
Age: 64 Allegheny Ludlum beginning in 1981. Mr. Bozzone is a member
of the Executive Committee and a member of the Committee on
Governance. He is a director of DQE, Inc., whose principal
subsidiary is Duquesne Light Company.
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FRANK V. CAHOUET Frank V. Cahouet is the Chairman, President and Chief
Chairman, President and Chief Executive Executive Officer of Mellon Bank Corporation, a bank
Officer, Mellon Bank Corporation holding corporation, and Mellon Bank, N.A., a banking
corporation. He served as a director of Teledyne beginning
Director since 1996 in 1994. Mr. Cahouet is Chairman of the Audit and Finance
Age: 65 Committee and a member of the Committee on Governance. He
is also a director of Avery Dennison Corporation and
Saint-Gobain Corporation.
W. CRAIG MCCLELLAND W. Craig McClelland has been Chairman and Chief Executive
Chairman and Chief Executive Officer, Officer of Union Camp Corporation, a manufacturer of paper
Union Camp Corporation products, since July 1994. Prior to that time, he served as
President and Chief Operating Officer of Union Camp. Mr.
Director since 1996 McClelland was a director of Allegheny Ludlum beginning in
Age: 63 1987. He is Chairman of the Committee on Governance and a
member of the Personnel and Compensation Committee and the
Stock Incentive Award Subcommittee. He is also a director
of Union Camp Corporation and PNC Bank Corp.
CHARLES J. QUEENAN, JR. Charles J. Queenan, Jr. is Senior Counsel to Kirkpatrick &
Senior Counsel, Lockhart LLP, attorneys-at-law. Prior to January 1996, he
Kirkpatrick & Lockhart LLP was a partner in that firm. Mr. Queenan served as a
director of Allegheny Ludlum beginning in 1980. He is the
Director since 1996 Chairman of the Personnel and Compensation Committee and is
Age: 67 a member of the Executive Committee. Mr. Queenan is also a
director of Crane Co. and Medusa Corporation.
GEORGE A. ROBERTS George A. Roberts is a private investor. He was President
Former President and Chief Executive of Teledyne from 1966 to 1990 and Chief Executive Officer
Officer, Teledyne, Inc. from April 1968 to January 1991. Dr. Roberts was a director
of Teledyne beginning in 1966 and served as Chairman of the
Director since 1996 Board of Directors of Teledyne from January 1991 through
Age: 79 March 1993. Dr. Roberts is a member of the Committee on
Governance, a member of the Technology Committee and a
member of the Executive Committee. He is also a director of
Argonaut Group, Inc. and Unitrin, Inc.
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CONTINUING DIRECTORS--TERM EXPIRES 2000
CLASS I
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DIANE C. CREEL Diane C. Creel is Chief Executive Officer and President of
Chief Executive Officer and EarthTech, an international consulting engineering firm.
President, EarthTech Ms. Creel served as a director of Teledyne beginning in
1995. She is the Chair of the Stock Incentive Award
Director since 1996 Subcommittee and a member of the Personnel and Compensation
Age: 49 Committee. Ms. Creel is also a director of Glendale Federal
Bank, the Boards of the Corporations and Trusts which
comprise the Fixed Income Funds of the American Funds
Group, and The B. F. Goodrich Company.
C. FRED FETTEROLF C. Fred Fetterolf was President and Chief Operating Officer
Former President and Chief Operating of Aluminum Company of America prior to 1991. Mr. Fetterolf
Officer, Aluminum Company served as a director of Allegheny Ludlum beginning in 1987.
of America Mr. Fetterolf is a member of the Personnel and Compensation
Committee and a member of the Stock Incentive Award
Director since 1996 Subcommittee. He is also a director of Commonwealth
Age: 69 Aluminum Corp., Dentsply International Inc., Mellon Bank
Corporation, Union Carbide Corporation, Praxair, Inc. and
Quaker State Corporation.
ROBERT MEHRABIAN Robert Mehrabian has been Senior Vice President of the
Senior Vice President of the Company Company since August 1997 and is responsible for the
Company's aerospace and electronics companies. Previously,
Director since 1996 Dr. Mehrabian served as the President of Carnegie Mellon
Age: 56 University. He is a member of the Technology Committee. Dr.
Mehrabian is also a director of Mellon Bank Corporation,
PPG Industries Inc. and BEI Technologies, Inc.
RICHARD P. SIMMONS Richard P. Simmons has been Chairman of the Board of the
Chairman, President and Chief Executive Company since August 1996 and President and Chief Executive
Officer of the Company Officer since February 1997. Previously, he was Chairman of
the Board of Allegheny Ludlum, having begun his service on
Director since 1996 that Board in 1980. He also served as Chief Executive
Age: 66 Officer of Allegheny Ludlum until 1990. Mr. Simmons is
Chairman of the Executive Committee. He is also a director
of PNC Bank Corp. and Consolidated Natural Gas Company.
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INFORMATION ABOUT THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established six standing committees: the
Executive Committee, the Audit and Finance Committee, the Committee on
Governance, the Personnel and Compensation Committee, the Stock Incentive Award
Subcommittee and the Technology Committee.
EXECUTIVE COMMITTEE
The Executive Committee has broad powers to act on behalf of the full Board
of Directors. In practice, the Executive Committee acts when emergency issues or
scheduling problems make it difficult to convene a meeting of all directors and
on specific matters referred to the Committee by the Board of Directors. All
actions must be reported at the Board's next meeting. The Executive Committee
met four times during 1997. The members of the Executive Committee are Richard
P. Simmons, Chairman, Robert P. Bozzone, Charles J. Queenan, Jr. and George A.
Roberts.
AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee is comprised of five directors, none of
whom is an officer or employee of the Company.
Among its principal audit functions, the Committee:
- Makes recommendations to the Board of Directors regarding the appointment
of the independent accountants for the coming year.
- Reviews the scope, general extent and proposed fees of the annual audit
plan and other activities of the independent accountants and the audit
plan of the internal auditors.
- Reviews with management and the independent accountants, upon completion
of the annual audit, the financial statements and related reports for
their adequacy and compliance with generally accepted accounting,
reporting and disclosure standards.
- Evaluates the effectiveness of the Company's internal and external audit
efforts, accounting and financial controls, policies and procedures and
business ethics policies and practices through a review of reports by,
and at regular meetings with, the internal and external auditors and with
management, as appropriate.
Among its principal finance functions, the Committee:
- Reviews and evaluates proposed bank credit agreements and other major
financial proposals.
- Reviews and evaluates Company relationships with banks and other
financial institutions.
- Reviews and makes recommendations to the Board of Directors concerning
policies with respect to dividends, capital structure and authorized
stock.
The independent auditors and the internal auditors have full and free
access to the Committee and meet with it, with and without management being
present, to discuss all appropriate matters. The present members of the Audit
and Finance Committee are Frank V. Cahouet, Chairman, Paul S. Brentlinger, Vice
Chairman, William G. Ouchi, James E. Rohr and Fayez Sarofim. The Committee met
three times in 1997.
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COMMITTEE ON GOVERNANCE
The Committee on Governance is comprised of W. Craig McClelland, Chairman,
Robert P. Bozzone, Frank V. Cahouet, and George A. Roberts. The Committee held
two meetings in 1997.
The principal responsibilities of the Committee are to:
- Make recommendations to the Board of Directors with respect to candidates
for nomination as new Board members and with respect to incumbent
directors for nomination as continuing Board members.
- Make recommendations to the Board of Directors concerning the memberships
of committees of the Board and the chairpersons of the respective
committees.
- Make recommendations to the Board of Directors with respect to the
remuneration paid and benefits provided to members of the Board in
connection with their service on the Board or on its committees.
- Administer the Company's formal compensation programs for directors,
including the 1996 Non-Employee Director Stock Compensation Plan.
- Make recommendations to the Board of Directors concerning the
composition, organization and operations of the Board of Directors,
including the orientation of new members and the flow of information.
- Evaluate Board tenure policies as well as policies covering the
retirement or resignation of incumbent directors.
Under the Company's certificate of incorporation, recommendations by
stockholders of potential nominees must be directed to the Corporate Secretary
in the manner specified in the certificate of incorporation. See "1999 Annual
Meeting and Stockholder Proposals" below.
PERSONNEL AND COMPENSATION COMMITTEE
The Personnel and Compensation Committee is comprised of Charles J.
Queenan, Jr., Chairman, Diane C. Creel, Vice Chair, C. Fred Fetterolf, W. Craig
McClelland and William G. Ouchi, none of whom is an employee of the Company and
each of whom is an "outside director" for the purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). See the "Board
Compensation Committees Report on Executive Compensation" below. The Committee
held six meetings in 1997.
Among its principal duties, the Committee:
- Makes recommendations to the Board of Directors concerning general
executive management organization matters.
- Makes recommendations to the Board of Directors concerning compensation
and benefits for employees who are also directors of the Company,
consults with the Chief Executive Officer on compensation and benefit
matters relating to other officers who are required to file reports under
Section 16 of the Securities Exchange Act of 1934, as amended,
("statutory insiders") and makes recommendations to the Board of
Directors concerning compensation policies and procedures relating to
officers who are statutory insiders generally.
- Makes recommendations to the Board of Directors concerning policy matters
relating to employee benefits and employee benefit plans.
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- Makes recommendations to the Stock Incentive Award Subcommittee of the
Board of Directors with respect to awards of stock-based compensation to
officers who are statutory insiders of the Company.
- Administers the Company's formal incentive compensation plans, except to
the extent that such plans are administered by the Stock Incentive Award
Subcommittee.
STOCK INCENTIVE AWARD SUBCOMMITTEE
The Stock Incentive Award Subcommittee is comprised of Diane C. Creel,
Chair, C. Fred Fetterolf, W. Craig McClelland and William G. Ouchi, none of whom
is an employee of the Company and each of whom is a "non-employee director" for
the purposes of Rule 16b-3 of the Securities and Exchange Commission and an
"outside director" for the purposes of Section 162(m) of the Code. See the
"Board Compensation Committees Report on Executive Compensation" below. The
Committee held five meetings in 1997.
The Stock Incentive Award Subcommittee is responsible for administering the
Company's stock-based incentive compensation programs, as they apply to officers
of the Company who are statutory insiders.
TECHNOLOGY COMMITTEE
The Technology Committee is comprised of Paul S. Brentlinger, Chairman,
Arthur H. Aronson, Robert Mehrabian, George A. Roberts and James E. Rohr. It is
concerned with the impact of technologies which do or could materially affect
the success of the Company. The Committee is also responsible for assessing the
technical capabilities of the Company and making recommendations to the Board of
Directors concerning priorities, asset deployment and other matters relevant to
the technical activities of the Company. The Committee had one meeting in 1997.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid an annual fee of
$28,000, $1,500 for attendance at each meeting of the Board of Directors and
$1,000 for attendance at each meeting of a committee of the Board on which they
serve. In addition, each non-employee chairman of a committee is paid an annual
fee of $3,000. Directors who are employees of the Company do not receive any
compensation for their services on the Board or its committees.
Each non-employee director also participates in the 1996 Non-Employee
Director Stock Compensation Plan ("Director Stock Plan"). The purpose of the
Director Stock Plan is to promote the interests of the Company and its
stockholders by attracting, retaining and providing an incentive to non-employee
directors through the acquisition of an equity interest in the Company and an
increased personal interest in its performance. Under the Director Stock Plan,
options to purchase 1,000 shares of Common Stock are generally granted to each
non-employee director at the conclusion of each annual meeting of stockholders.
The purchase price of the Common Stock covered by the options is the fair market
value of the Common Stock (as defined in the Director Stock Plan) on the date
the option is granted.
The Director Stock Plan also provides that each director will receive at
least one-fourth of the annual retainer fee payment in the form of Common Stock
and/or options to purchase Common Stock. Each director may elect to receive
additional amounts of the annual retainer fee payment, and may elect to receive
all or any portion of such director's meeting fees, in the form of Common Stock
and/or options to purchase Common Stock. Options granted under this part of the
Director Stock Plan are intended to provide each electing
11
<PAGE> 14
director with options at an exercise value on the date of grant equal to the
foregone fees; that is, the difference between the exercise price and the market
value of the underlying shares of Common Stock on the date of grant is intended
to be equal to the foregone fees.
In order to continue to attract and retain outside directors of exceptional
ability and background, the Company also maintains a Fee Continuation Plan for
Non-Employee Directors (the "Fee Continuation Plan"). Under the Fee Continuation
Plan, benefits are payable to a person who serves as a non-employee director for
a period of five years or more (including service as a non-employee director of
Allegheny Ludlum or Teledyne). The benefit is an amount equal to the annual fee
for directors in effect immediately prior to the participant's cessation of
service as a director and is to continue at a rate of one year of benefit for
each year of the participant's credited service as a director (as defined in the
Fee Continuation Plan) up to a maximum of ten years.
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock by each person known by the Company to
own beneficially more than five percent of the outstanding Common Stock of the
Company as of March 16, 1998.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
---------------- -------------------- --------
<S> <C> <C>
Richard P. Simmons 16,362,644(a) 9.3%
1000 Six PPG Place
Pittsburgh, PA 15222
Henry E. Singleton 13,999,320 8.0%
335 North Maple Drive
Beverly Hills, CA 90210
J. P. Morgan & Co. Incorporated 15,298,242(b) 8.7%
60 Wall Street
New York, NY 10260
Delaware Management Holdings, Inc. 9,729,881(c) 5.6%
2005 Market Street
Philadelphia, PA 19103
</TABLE>
(a) Mr. Simmons has the sole power to direct the voting of all of these shares,
and sole power to direct the disposition of 8,276,252 of such shares. Mrs.
Richard P. Simmons has the sole power to direct the disposition of 8,086,392
of such shares. The amount shown includes shares held by the trustee under
the Retirement Savings Plan, which is described in note (9) to the Summary
Compensation Table below, for the account of Mr. Simmons as of January 31,
1998 and options to acquire 129,862 shares which may be acquired by Mr.
Simmons within 60 days of March 16, 1998 pursuant to Company stock incentive
plans. The amount shown does not include shares payable to Mr. Simmons as
his base salary for 1998; in 1998, the Stock Incentive Award Subcommittee
determined that Mr. Simmons' base salary for 1998 would be paid by the
issuance of 35,000 shares of Common Stock of the Company in January 1999.
The amount does not include 185,900 shares owned by the R. P. Simmons Family
Foundation; Mr. and Mrs. Simmons disclaim any beneficial ownership of such
shares.
12
<PAGE> 15
(b) J. P. Morgan & Co. Incorporated has filed an amended Schedule 13G under the
Securities Exchange Act of 1934, dated December 31, 1997, stating that as of
that date it held sole voting power with respect to 10,355,476 shares of
Common Stock, shared voting power with respect to 189,051 shares of Common
Stock, sole dispositive power with respect to 14,892,166 shares of Common
Stock and shared dispositive power with respect to 400,555 shares of Common
Stock.
(c) Delaware Management Holdings, Inc. has filed a Schedule 13G under the
Securities Exchange Act of 1934 dated February 9, 1998, stating that as of
that date it held sole voting power with respect to 6,848,600 shares of
Common Stock, sole dispositive power with respect to 9,281,081 shares of
Common Stock and shared dispositive power with respect to 448,800 shares of
Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of Common Stock of the
Company reported to the Company as of March 16, 1998, as being beneficially
owned by each nominee for director, each continuing director, each officer named
in the Summary Compensation Table, and all of such persons as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP(1) CLASS
---- ----------------------- -----
<S> <C> <C>
Arthur H. Aronson 153,954(2)(3) *
Robert P. Bozzone 5,092,289(3)(4) 2.9%
Paul S. Brentlinger 9,463(5) *
Frank V. Cahouet 41,672 *
Diane C. Creel 12,746 *
C. Fred Fetterolf 6,698(6) *
Ray J. Groves** 2,000 *
W. Craig McClelland 7,893(7) *
Robert Mehrabian 9,660(8) *
James L. Murdy 119,281(3) *
William G. Ouchi 11,544 *
Charles J. Queenan, Jr. 663,312(7)(9) *
George A. Roberts 821,175(10) *
James E. Rohr 12,126 *
William P. Rutledge*** 231,030 *
Fayez Sarofim 2,538,414(11) 1.5%
Richard P. Simmons 16,362,644(3)(12) 9.3%
Jon D. Walton 117,662(3)(7)(13) *
All nominees, directors and named officers as a 26,245,523(14) 15.0%
group (19 persons)
</TABLE>
* Less than one percent of the outstanding shares.
** Nominee for Class II Director.
*** Resigned as President and Chief Executive Officer of the Company in
February 1997.
(1) Each person has sole voting and investment power with respect to the shares
listed, unless otherwise indicated. Includes shares which may be acquired
by the named person within 60 days of March 16, 1998 pursuant to Company
stock incentive plans, as follows: Mr. Aronson, 65,000 shares; Mr. Bozzone,
22,000 shares; Messrs. Brentlinger, Fetterolf, McClelland, Queenan,
Roberts, Rohr and Sarofim, 2,000
13
<PAGE> 16
shares each; Mr. Cahouet, 41,480 shares; Ms. Creel, 12,016 shares; Dr.
Mehrabian, 8,660 shares; Mr. Murdy, 18,666 shares; Dr. Ouchi, 10,582
shares; Mr. Rutledge, 216,563 shares; Mr. Walton, 38,333 shares.
(2) Does not include 13,500 shares owned by Mrs. Arthur H. Aronson. Mr. Aronson
disclaims beneficial ownership of such shares.
(3) Includes shares held by the trustee under the Company's Retirement Savings
Plan for the account of the named person as of January 31, 1998.
(4) Does not include 240,000 shares owned by Mrs. Robert P. Bozzone and 71,700
shares owned by the Bozzone Family Foundation. Mr. Bozzone disclaims
beneficial ownership of such shares.
(5) Does not include 200 shares owned by Mrs. Paul S. Brentlinger. Mr.
Brentlinger disclaims beneficial ownership of such shares.
(6) Does not include 2,600 shares owned by the Fetterolf Family Foundation. Mr.
Fetterolf disclaims beneficial ownership of such shares.
(7) Includes shares held jointly with the named individual's spouse.
(8) Dr. Mehrabian has been designated as an individual eligible to participate
in the Company's Stock Acquisition and Retention Program for the 1998 Plan
Year and has indicated his intention to purchase the maximum number of
shares of Company Common Stock he is entitled to purchase under the
Program. Based on the closing market price of the shares of Company Common
Stock on December 31, 1997, Dr. Mehrabian would be entitled to purchase up
to 13,526 shares of Common Stock under the Program and would receive a
total of 6,763 shares of restricted stock. The actual number of shares Dr.
Mehrabian will purchase under the Program will depend on the value of the
Common Stock during the applicable measurement period under the Program.
(9) Does not include 54,100 shares owned by Mrs. Charles J. Queenan, Jr. Mr.
Queenan disclaims beneficial ownership of such shares.
(10) Shares are owned of record by a trust of which Dr. Roberts is sole trustee
with sole voting and dispositive power. Excludes 16,541 shares owned by a
trust of which Mrs. George A. Roberts is sole trustee with sole voting and
dispositive power. Dr. Roberts disclaims beneficial ownership of such
shares.
(11) Mr. Sarofim may be deemed to be the beneficial owner of 2,640,583 shares of
Common Stock. Of such shares, Mr. Sarofim has sole voting and dispositive
power as to 1,838,583 shares of Common Stock of which 50,829 are held by
the Pension and Profit Sharing Trusts of Fayez Sarofim & Co. (of which Mr.
Sarofim is the trustee). Mr. Sarofim has shared voting and dispositive
power with respect to 697,831 shares of Common Stock owned by Sarofim
International Management Company (a wholly owned subsidiary of Fayez
Sarofim & Co.). Does not include 104,169 shares of Common Stock held in
investment advisory accounts managed by Fayez Sarofim & Co. for numerous
clients. Pursuant to its investment advisory contract with its clients,
Fayez Sarofim & Co. has full investment discretion with respect to such
investment advisory accounts; however, the clients are entitled to the
economic benefits of ownership of such shares.
(12) See note (a) to the table regarding "Security Ownership of Certain
Beneficial Owners" above.
(13) Does not include 7,400 shares owned by Mrs. Jon D. Walton. Mr. Walton
disclaims beneficial ownership of such shares.
14
<PAGE> 17
(14) Includes an aggregate of 604,112 shares which may be acquired within 60
days of March 16, 1998 pursuant to Company stock incentive plans. Does not
include an aggregate of 406,437 shares with respect to which beneficial
ownership is disclaimed as described above.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(ITEM B ON PROXY CARD)
Ernst & Young LLP ("Ernst & Young") has served as independent auditors for
the Company since August 15, 1996 and served as independent auditors for
Allegheny Ludlum since 1980. The Board of Directors believes that Ernst & Young
is knowledgeable about the Company's operations and accounting practices and is
well qualified to act in the capacity of independent auditors. Therefore, the
Board of Directors has selected Ernst & Young as the Company's independent
auditors for 1998. The proposal to ratify the selection of Ernst & Young will be
approved by the stockholders if it receives the affirmative vote of a majority
of the shares present in person or represented by proxy at the meeting and
entitled to vote on the proposal. If your proxy card is specifically marked as
abstaining from voting on the proposal, your shares will, in effect, be voted
against the proposal. Broker non-votes will not be counted as being entitled to
vote on the proposal and will not affect the outcome of the vote. If the
stockholders do not ratify the selection of Ernst & Young, the appointment of
independent auditors will be reconsidered by the Board. It is expected that
representatives of Ernst & Young LLP will be present at the Annual Meeting and
will have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF
THE SELECTION OF ERNST & YOUNG AS INDEPENDENT AUDITORS.
OTHER BUSINESS TO COME BEFORE THE MEETING
In addition to the matters described above, there will be an address by
Richard P. Simmons, Chairman, President and Chief Executive Officer of the
Company, and a general discussion period during which the stockholders will have
an opportunity to ask questions about the Company and its business.
The Company knows of no business which may be presented for consideration
at the Annual Meeting other than as indicated in the Notice of Annual Meeting.
If any other business should properly come before the meeting, the persons
designated as proxies in the accompanying proxy cards have discretionary
authority to vote in accordance with their best judgment.
EXECUTIVE COMPENSATION
BOARD COMPENSATION COMMITTEES REPORT ON EXECUTIVE COMPENSATION
This report on executive compensation is furnished by the Personnel and
Compensation Committee and the Stock Incentive Award Subcommittee of the Board
of Directors of the Company (sometimes referred to as the "Committees"). In
accordance with the rules of the Securities and Exchange Commission, this report
shall not be deemed incorporated by reference into any of the Company's
registration statements under the Securities Act of 1933.
After the combination of the businesses of Allegheny Ludlum Corporation
("Allegheny Ludlum") and Teledyne, Inc. ("Teledyne") in August 1996 (the
"Combination"), was consummated, the Committees
15
<PAGE> 18
began the development of a comprehensive compensation program for the executives
of the new company. The Committees retained the services of Hewitt Associates, a
nationally recognized executive compensation and benefits consulting firm, to
assist in this effort. In 1997, Hewitt Associates delivered its analysis of the
existing compensation programs of Allegheny Ludlum and Teledyne and made
recommendations to the Committees regarding changes to the existing programs.
Subsequently, with due consideration of the work of Hewitt Associates, the
Committees established the executive compensation program for the Company, which
included a statement of the Company's executive compensation philosophy.
Executive Compensation Philosophy. The Company's executive compensation
program is designed to be competitive in the aggregate, using a set of business
and labor market competitors (by industry segment, as appropriate) to gauge the
competitive marketplace. Competitive for these purposes is defined as a "target"
base compensation program at the 50th percentile (median) for comparable
positions. The competitor companies are not necessarily the same companies
included in the peer group for purposes of the graph on page 28.
The Company's executive compensation program is performance oriented, with
a substantial portion of total compensation tied to internal and external
measures of Company performance. It is anticipated that superior performance
will increase total compensation opportunities to well above the 50th percentile
level.
The Company's program is designed to promote long-term careers with the
Company.
Consistent with the general characteristics outlined above, the Committees
adopted the following statement of the Company's policy for base salaries,
short-term incentives and long-term incentives:
- Base salary for all management positions will be at the unit's industry
or market median for comparable positions unless there are sound reasons
for varying significantly from industry or market medians. The Committees
stress that judgment will always be the guiding factor in base salary
determinations, as well as any other compensation issue, and that no
system should be so rigid that it prevents the use of judgment in
appropriate circumstances.
- Short-term incentives under the Company's annual incentive plan allow for
competitive (50th percentile) cash compensation, based on the achievement
of predefined performance measures, with up to 200 percent of the target
award paid in the case of achievement significantly in excess of target
performance. It is contemplated that a majority of the award under the
annual incentive plan be based on financial performance achievement, with
a smaller portion tied to the achievement of preestablished individual
goals. A discretionary adjustment on an individual basis of plus or minus
20 percent is permitted under the plan, although aggregate increases will
not exceed 5 percent. All awards under the annual incentive plan will be
paid from a pool not to exceed five percent of operating profit, subject
to modification in appropriate circumstances by the Committees.
- Long-term incentives at the Company consist of three components:
-- Stock options, which are to be awarded periodically to the Chief
Executive Officer by the Stock Incentive Award Subcommittee (the
"Subcommittee"), in a number and subject to the terms and conditions
considered appropriate by the Subcommittee, and to other key employees,
generally annually by the appropriate Committees with due regard for
the recommendations of management;
-- A three-year performance share program opportunity, with a new
performance cycle beginning every three years for selected Company
officers and key executives under which payment of awards will depend
upon achievement of performance goals;
16
<PAGE> 19
-- A stock acquisition and retention program opportunity which will be
granted to selected officers and key executives.
Compensation of the Company's Chief Executive Officer. On February 12,
1997, Richard P. Simmons, the Chairman of the Board and Chairman of the
Executive Committee, was elected to serve as the Company's President and Chief
Executive Officer following the announcement by Mr. Rutledge that he was
resigning effective immediately as President and Chief Executive Officer of the
Company for personal and family reasons.
In March 1997, the Subcommittee took action regarding the compensation of
Mr. Simmons. Its action was based on its review, in consultation with Hewitt
Associates, of compensation packages for chief executive officers of comparable
companies. It was determined that the base salary and short-term incentive
opportunities the Company would provide to Mr. Simmons would have to be
competitive and should be set with a view to attracting and retaining
outstanding top management for the Company. It was also determined that the
short-term incentive should be large enough to provide a meaningful award
opportunity. Longer-term incentives would be in the form of options and
performance awards.
After consultation with Hewitt Associates, the Subcommittee determined that
the annual rate of Mr. Simmons' base salary for 1997 should be approximately
$705,000 and that such salary would be paid by the issuance of shares of Common
Stock. The applicable number of shares was determined to be 30,000 shares of
Common Stock, based on the closing price of a share of Common Stock on the New
York Stock Exchange prior to the date Mr. Simmons was elected to serve as the
Company's President and Chief Executive Officer. The number was prorated,
however, to reflect the fact that Mr. Simmons' service as President and Chief
Executive Officer commenced on February 12, 1997 and thus would be for less than
a full year of 1997. A total of 26,548 shares were issued to Mr. Simmons in
January 1998 in respect of his base salary for 1997.
In March 1997, the Subcommittee determined that for his 1997 incentive
bonus under the Company's 1996 Incentive Plan (the "Incentive Plan"), upon
attainment of the target level of performance, Mr. Simmons would receive 24,000
shares of Common Stock, or approximately 80% of his base salary. At that time,
corporate and individual performance objectives for Mr. Simmons were set. The
performance program contemplated that Mr. Simmons would receive a larger number
of shares if and to the extent the performance goals were exceeded by actual
performance, but that the aggregate payout would not exceed 160% of Mr. Simmons'
base salary.
For 1997, compensation of the Company's officers was based largely on the
plans of Allegheny Ludlum previously in effect, except that awards under the
Company's short-term incentive program for the Company's officers were generally
based on achievement of goals under Allegheny Ludlum's Performance Management
System ("PMS") and goals under the Economic Value Added ("EVA(R)")-based plan of
Teledyne, each for all business units of the respective entities weighted on the
basis of the employed capital of the specialty metals segment and other
businesses, respectively, as well as achievement of specific individual goals.
It was decided that the Company would not use an EVA(R)-based short-term
incentive plan after the 1997 fiscal year.
In February 1998, the Committees met to consider the proposed payment of
incentive awards to Allegheny Teledyne senior management, including Mr. Simmons,
for the 1997 fiscal year. The Subcommittee reviewed the provisions of the
short-term incentive program that had been adopted by the Committees in March
1997, including the incentive award which would be payable to Mr. Simmons under
the Incentive Plan,
- ---------------
EVA(R) is a registered trademark of Stern Stewart & Co.
17
<PAGE> 20
and discussed the award opportunities for Mr. Simmons expressed as a percentage
of base salary at the beginning of the year. The review involved an analysis of
the Company's performance against the corporate objectives and a comparison of
Mr. Simmons' performance against the performance standards previously
established by the Subcommittee. Background information regarding the award and
related objectives for Mr. Simmons were reviewed in detail. In reviewing the
performance of Mr. Simmons, the Subcommittee considered a broad range of
factors, including the following: (a) sales from the Company's continuing
operations increased to $3.647 billion despite a severe decline in commodity
stainless steel prices; (b) operating profit improved 5 percent to $453 million
or 12 percent of sales; (c) corporate expenses declined 23 percent to $31
million as a result of consolidating headquarter operations in Pittsburgh,
Pennsylvania; (d) cash from operating activities continued strong at $257
million; (e) return on capital employed improved to 21.6 percent and return on
equity increased to 29.3 percent before special items; and (f) the Company's
financial position continued to be strong.
The Subcommittee discussed the strong and effective leadership that Mr.
Simmons and other members of senior management had shown in combining the
businesses of Allegheny Ludlum and Teledyne, identifying solutions to important
strategic needs and objectives and capitalizing on new growth opportunities.
Particular attention was also given to the extraordinary effort of Mr. Simmons
and other members of the senior management team in connection with the variety
of strategic acquisitions contemplated by the Company.
The Subcommittee also specifically discussed the actions that Mr. Simmons
had taken to realize his individual objectives for 1997, which included the
effective implementation of a corporate-wide, corporate-driven cost and quality
improvement program which was essentially in place by July 1997; the review and
installation of improved cost and quality information systems in all operating
companies to enable company managers to understand and effectively manage each
cost element of their businesses; the establishment of a comprehensive appraisal
system for all company presidents and their direct reports; and significant
positive changes in the corporate culture of the Company which have established
Allegheny Teledyne as an operating company that adds significant value to its
family of companies, significantly raised the acceptable standard of performance
for each company and substantially increased the velocity of change. The
Subcommittee noted that Mr. Simmons and other members of the management team had
made substantial progress in beginning to evaluate the operating companies to
determine strategic fit, critical mass and opportunities for profitable growth.
Members of the Subcommittee also discussed their belief that, while
external factors, including severe pricing pressures for commodity stainless
steels and the current overcapacity in the commodity stainless steel industry as
well as concerns regarding the Asian monetary crisis have placed pressure on the
performance of the Company's Common Stock, the actions taken by Mr. Simmons and
the leadership he has provided to the Company have enhanced the overall value of
the Company.
Following discussion of each of the relevant factors, the Subcommittee then
proceeded to determine the actual amount of the incentive award to be paid to
Mr. Simmons under the Incentive Plan for 1997 relative to the incentive
guideline through a quantitative assessment of Mr. Simmons' performance as
measured against his performance objectives. Following discussion, taking the
foregoing and other appropriate factors into account, including the strength of
the Company's performance during the 1997 fiscal year and the exceptional and
extraordinary contributions that Mr. Simmons had made to that performance, the
Subcommittee determined that the incentive award paid to Mr. Simmons under the
Incentive Plan for the 1997 fiscal year would be set at 142 percent of annual
1997 base salary (as measured at the time the rate of base salary was set) or $1
million, with 60% of the award to be paid in the Common Stock of the Company and
40% paid in cash. This amount was within the range previously approved by the
Subcommittee.
18
<PAGE> 21
In 1997, the Stock Incentive Award Subcommittee granted Mr. Simmons options
to purchase 90,000 shares of Common Stock at an exercise price of $23.50 per
share, based on the price of the Company's Common Stock prior to the date Mr.
Simmons was elected to serve as the Company's President and Chief Executive
Officer. In determining the number of stock options to be granted, the
Subcommittee considered the recommendations of Hewitt Associates. Based on its
review of comparable companies, Hewitt Associates had recommended that the Chief
Executive Officer be granted options to purchase 90,000 shares of Company Common
Stock at the target level of performance, assuming, as was the case in 1997,
that Mr. Simmons did not participate in the Company's stock acquisition and
retention program in 1997. As previously noted, at the time of the grant, it was
anticipated that the annual stock option award would represent approximately 60%
of the total value of the long-term incentive component of Mr. Simmons'
compensation package, with the balance to be represented by a performance share
plan. The Committees did not, however, establish a performance share program for
1997.
Compensation of the Company's Former Chief Executive Officer. The annual
rate of Mr. Rutledge's base salary for 1997 was $710,000. That base salary was
set by Teledyne in 1995.
For a discussion of Mr. Rutledge's separation agreement with the Company,
see "Separation and Severance Agreements" below.
Deductibility of Executive Compensation. Under Section 162(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), compensation paid to the
Company's Chief Executive Officer and certain officers who are statutory
insiders of the Company in excess of $1 million in any year may be
non-deductible for Federal income tax purposes unless the compensation qualifies
as "performance-based" compensation or is otherwise exempt under the law. The
Incentive Plan is intended to meet the deductibility requirements of the
regulations promulgated under Section 162(m). The Committees may determine in
any year that it would be in the best interests of the Company for an award or
awards to be paid under the Incentive Plan or otherwise in a manner that would
not satisfy the requirements of Section 162(m) and its regulations for
deductibility.
MEMBERS OF THE PERSONNEL AND COMPENSATION COMMITTEE
Charles J. Queenan, Jr., Chairman
Diane C. Creel, Vice Chair
C. Fred Fetterolf
W. Craig McClelland
William G. Ouchi
MEMBERS OF THE STOCK INCENTIVE AWARD SUBCOMMITTEE
Diane C. Creel, Chair
C. Fred Fetterolf
W. Craig McClelland
William G. Ouchi
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Personnel and Compensation Committee or Stock Incentive
Award Subcommittee during 1997 was an officer or employee of the Company. The
law firm to which Mr. Queenan serves as senior counsel provided services to the
Company during 1997 and 1998; Mr. Queenan does not participate in the earnings
or profits of, and does not receive compensation for any services that he may
provide to, such firm. Other than as indicated in the preceding sentence, no
member of the Committees during 1997 had a current or prior relationship, and no
officer who is a statutory insider of the Company had a relationship to any
other
19
<PAGE> 22
company, required to be described under the Securities and Exchange Commission
rules relating to disclosure of executive compensation.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following Summary Compensation Table sets forth, for fiscal years 1995,
1996 and 1997, information about the compensation paid by the Company and its
subsidiaries to the Chief Executive Officer of the Company and to each of the
other four most highly compensated officers required to file reports under
Section 16 of the Securities Exchange Act of 1934, as amended, who were serving
as such officers of the Company as of December 31, 1997 and to W. P. Rutledge
who served as the Chief Executive Officer of the Company prior to February 12,
1997 (the "named officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------------- ------------------------------------
OTHER
ANNUAL RESTRICTED SECURITIES
COMPEN- STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS SATION AWARD OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITIONS(1) YEAR ($)(2) ($)(3) ($)(4) ($)(5) (#)(6) ($)(7) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard P. Simmons 1997 $623,879(8) $1,000,000 $ 7,525 0 90,000 shs. 0 $ 223,961(9)
Chairman, President
and Chief Executive
Officer
Arthur H. Aronson 1997 $437,500 $ 350,000 $15,837 $118,703 20,000 shs. $296,400 $ 408,433(9)
Executive Vice 1996 400,000 257,560 12,216 201,759 36,000 197,626 553,711(9)
President(10) 1995 300,000 374,870 28,955 87,341 0 204,021 206,496(9)
James L. Murdy 1997 $335,000 $ 240,000 $10,677 $160,313 0 shs. $239,400 $ 302,581(9)
Executive Vice 1996 258,399 179,884 10,543 126,947 34,000 172,235 564,571(9)
President, Finance 1995 238,706 203,114 10,574 223,576 0 164,791 118,027(9)
and Administration and
Chief Financial
Officer(10)
Robert Mehrabian 1997 $145,833(11) $ 160,000(11) -- 0 0 shs. 0 $ 9,696(9)(11)
Senior Vice President
Jon D. Walton 1997 $250,000 $ 200,000 $ 9,491 $123,168 0 shs. $171,000 $ 182,026(9)
Senior Vice President, 1996 155,104 177,931 9,284 74,889 24,000 114,008 291,429(9)
General Counsel and 1995 140,415 85,594 9,313 134,344 0 117,708 48,770(9)
Secretary(10)
William P. Rutledge 1997 $129,256 $ 146,438 -- 0 0 shs. 0 $3,433,350(12)
Former President 1996 710,000 794,768 -- 0 288,750 0 3,000(12)
and Chief Executive 1995 710,000 715,385 -- 0 0 0 300(12)
Officer(12)
</TABLE>
(1) On February 12, 1997, Richard P. Simmons was elected as the Company's
President and Chief Executive Officer and William P. Rutledge resigned as
President and Chief Executive Officer of the Company. Previously, Mr.
Simmons had served as a non-employee Chairman of the Board of Allegheny
Teledyne and, prior to the Combination, as a non-employee Chairman of the
Board of Allegheny Ludlum. Prior to the consummation of the Combination,
Mr. Rutledge was Chairman of the Board of Directors and Chief Executive
Officer of Teledyne, Mr. Aronson was President and Chief Executive Officer
of Allegheny Ludlum, Mr. Murdy was Senior Vice President, Finance and Chief
Financial
20
<PAGE> 23
Officer of Allegheny Ludlum, and Mr. Walton was Vice President, General
Counsel and Secretary of Allegheny Ludlum. In August 1997, Dr. Mehrabian
was elected Senior Vice President and the segment executive for the
Company's aerospace and electronics companies. As described below, in 1995
and 1996, Messrs. Aronson, Murdy and Walton received benefits under the
applicable Allegheny Ludlum plans and Mr. Rutledge received benefits under
the applicable Teledyne plans.
(2) In the case of Messrs. Aronson, Murdy and Walton, includes cash
compensation deferred pursuant to the savings part of the Company's
Retirement Savings Plan. In the case of Mr. Rutledge, includes cash
compensation deferred under the Teledyne, Inc. 401(k) Plan and under the
Teledyne, Inc. Executive Deferred Compensation Plan. The Company's
Retirement Savings Plan and the Teledyne 401(k) Plan are qualified defined
contribution plans within the meaning of Section 401(a) of the Code.
(3) For 1997, represents payments under the Incentive Plan. Sixty percent of
the amount paid to Mr. Simmons was paid in Common Stock. All other amounts
were paid in cash. For 1995 and 1996, in the case of Messrs. Aronson, Murdy
and Walton, includes payments under Allegheny Ludlum's Performance
Management System Plan and salaried employees' profit-sharing plan, and in
the case of Mr. Rutledge, includes payments under the Teledyne Senior
Executive Performance Plan.
(4) In accordance with applicable regulations, the amounts set forth in this
column do not include perquisites and other personal benefits received by
the named officer unless the aggregate value of such perquisites and other
benefits exceeded the lesser of $50,000 or 10% of the total salary and
bonus reported for the named officer.
(5) Represents the closing market price on the New York Stock Exchange, on the
award date, of a number of shares of Common Stock equal to the number of
shares restricted stock awarded to the named executive for 1997 under the
Allegheny Teledyne Incorporated Stock Acquisition and Retention Program and
for 1995 and 1996 under the Allegheny Ludlum Stock Acquisition and
Retention Plan. The market price does not take into account any diminution
in value attributable to the restrictions applicable to the shares awarded
under the plan. In general, the restricted shares will vest only if the
participant retains the shares that are purchased and/or designated by the
participant as subject to the plan for a period of five years. The approval
by the Allegheny Ludlum shareholders of the Combination of Allegheny Ludlum
and Teledyne constituted a "change of control" as defined in the Allegheny
Ludlum Stock Acquisition and Retention Plan which caused the forfeiture
restrictions on the restricted shares then held by Messrs. Murdy and Walton
to lapse in 1996. The restrictions on Mr. Aronson's restricted shares did
not lapse as a result of the Combination. On December 31, 1997, Messrs.
Aronson, Murdy and Walton held 24,850, 6,750 and 5,186 restricted shares of
Common Stock, respectively, under the plan and program; based on the
closing market price of the Common Stock on the New York Stock Exchange on
December 31, 1997, the value of these restricted shares were $642,994,
$174,656 and $134,188, respectively. Prior to 1998, the Company's stock
acquisition and retention programs were only available to certain officers
of Allegheny Ludlum. See Note (11).
(6) Reflects options awarded under the Incentive Plan in 1997 and in prior
years under an employee stock option plan of Teledyne or Allegheny Ludlum,
as the case may be. The amount represents the number of shares the officer
could purchase by exercising the options. Does not include options awarded
to Mr. Simmons and Dr. Mehrabian under the Non-Employee Director Stock
Compensation Plan with respect to their service as non-employee directors.
See page 23 below.
(7) For Messrs. Aronson, Murdy and Walton, payments in 1997 reflect the
achievement of 120% of the performance objectives for the 1995-1996 award
period and payments in 1996 and 1995 reflect the
21
<PAGE> 24
achievement of 97% of the performance objectives for the 1991-1993 award
period, in each case under the Allegheny Ludlum Performance Share Plan for
Key Employees. Payment of the awards is made over a three-year period
beginning in the year immediately following the end of the award period.
The amount represents the cash and the market value of the shares of Common
Stock distributed under the plan on the relevant valuation dates. Mr.
Simmons and Dr. Mehrabian were not employees of Allegheny Ludlum during the
applicable award periods and did not therefore participate in the Allegheny
Ludlum Performance Share Plan.
(8) Mr. Simmons' base salary for 1997 was $1 in cash and 26,548 shares of
Common Stock. The value reflected in the table is based on the closing
price of the Common Stock on the New York Stock Exchange on the day prior
to the date of issuance of January 12, 1998.
(9) The amounts include, in the case of Mr. Simmons, $213,041 paid to him as a
retiree of Allegheny Ludlum under qualified and non-qualified plans of
Allegheny Ludlum prior to his election as the Company's President and Chief
Executive Officer in February 1997. The amounts include the annual accruals
made by the Company or Allegheny Ludlum, as the case may be, with respect
to possible future payments to the named officers under the Supplemental
Pension Plan described at "Pension Plans--Provisions Applicable to
Employees of Allegheny Teledyne and Former Employees of Allegheny Ludlum"
below. For 1997, the amounts accrued were as follows: Mr. Aronson,
$341,679; Mr. Murdy, $252,658; and Mr. Walton, $138,833. Also included are
the Company's contributions to each of the accounts of Messrs. Simmons,
Aronson, Murdy and Walton pursuant to the Retirement portion of the
Company's Retirement Savings Plan in the amount of $10,920 and in the
amount of $9,696 for Dr. Mehrabian for 1997 as well as the Company's
contributions to the accounts of the following officers pursuant to the
Savings portion of the Retirement Savings Plan, which in 1997 were as
follows: Mr. Aronson, $4,719; Mr. Murdy, $4,750; and Mr. Walton, $4,740.
The amounts also include contributions to the Company's Benefit Restoration
Plan which, in 1997, were as follows: Mr. Simmons, $95,152; Mr. Aronson,
$42,694; Mr. Murdy, $28,050; and Mr. Walton, $21,246. Under the Benefit
Restoration Plan, the Company supplements the payments received by
participants under the Pension Provisions described at "Pension Plans"
below and the Retirement and Savings parts of the Retirement Savings Plan
by making payments to or accruing benefits on behalf of such participants
in amounts which are the equivalent of the portion of the payments or
benefits which cannot be paid or accrued under such plans as a result of
the limitations imposed by the Code. For 1997, also included are the dollar
values of the benefits to the following officers of the remainder of the
Company-paid premiums for "split dollar" life insurance, as follows: Mr.
Aronson, $8,421; Mr. Murdy, $6,203; and Mr. Walton, $6,287.
(10) For a description of the Company's employment agreements with Messrs.
Aronson, Murdy and Walton, see "Employment Agreements" below.
(11) Represents amounts paid to Dr. Mehrabian as an employee of the Company for
the five-month period beginning August 1997. Previously, Dr. Mehrabian was
the President of Carnegie Mellon University. Dr. Mehrabian has been
designated as an individual eligible to participate in the Company's Stock
Acquisition and Retention Program for the 1998 Plan Year and has indicated
his intention to purchase the maximum number of shares of Company Common
Stock he is entitled to purchase under the Program. Based on the closing
market price of the shares of Company Common Stock on December 31, 1997,
Dr. Mehrabian would be entitled to purchase up to 13,526 shares of Common
Stock under the Program and would receive a total of 6,763 shares of
restricted stock. The actual number of shares
22
<PAGE> 25
Dr. Mehrabian will purchase under the Program will depend on the value of
the Common Stock during the applicable measurement period under the
Program.
(12) For 1997, the amounts include $3,355,548 in payments made to Mr. Rutledge
under his Separation Agreement with the Company, a contribution of $300
under the Teledyne, Inc. 401(k) Plan and $77,502 in payments made to him
under the provisions of the Allegheny Teledyne Pension Plan applicable to
employees of Teledyne and Teledyne Pension Equalization Plan described
below. See "Separation Agreement" and "Pension Plans" below.
STOCK OPTIONS
The following table sets forth information regarding the grant of stock
options during 1997 under the Incentive Plan, to each of the officers named in
the Summary Compensation Table and to all employee optionees as a group.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)(2)
------------------------------------------------------
%
NUMBER OF OF TOTAL POTENTIAL REALIZABLE
SECURITIES OPTIONS/ VALUE AT ASSUMED ANNUAL
UNDERLYING SARS RATES OF STOCK PRICE
OPTIONS/ GRANTED TO EXERCISE APPRECIATION FOR OPTION TERM (3)
SARS EMPLOYEES OR BASE ----------------------------------
GRANTED IN FISCAL PRICE EXPIRATION 0% 5% 10%
NAME (#) YEAR ($/ SHARE) DATE ($)(4) ($) ($)
---- ---------- ---------- ------------ ---------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard P. Simmons 90,000 82% $23.50 2/13/07 $0 $1,330,000 $3,370,000
Arthur A. Aronson 20,000 18 28.25 3/31/07 0 355,400 900,400
All Optionees 110,000 100 0 1,690,000 4,270,000
</TABLE>
(1) Options granted to Messrs. Simmons and Aronson are exercisable at the rate
of 25% per year, commencing on the first anniversary date of the grant.
Options include the right to pay the exercise price in cash or in previously
acquired Company Common Stock, and the right to have shares withheld by the
Company to pay withholding tax obligations due in conjunction with the
exercise.
(2) The grants shown do not include grants made under the 1996 Non-Employee
Director Stock Compensation Plan. During fiscal 1997, Mr. Simmons was
granted options to purchase 4,933 shares of Common Stock at an exercise
price of $15.21 per share pursuant to his election under such plan to
receive payment of director fees in the form of stock options in lieu of
cash for his service as a non-employee director during 1996. He was granted
options to purchase 455 shares of Common Stock under such plan in January
1998 at an option price of $17.56 with respect to his service as a
non-employee director during 1997. Under a similar election, during fiscal
year 1997, Dr. Mehrabian was granted options to purchase 4,604 shares of
Common Stock at an exercise price of $15.21 and options to purchase 1,000
shares of Common Stock at an exercise price of $26.875 for his service as a
non-employee director during 1996 and 1997. He was also granted options to
purchase 1,082 shares of Common Stock under such plan in January 1998 at an
option price of $17.56 for his service as a non-employee director during
1997. During 1997, a total of 31,203 stock options were granted under the
plan to all electing non-employee directors.
(3) These assumed "potential realizable values" are mathematically derived from
certain prescribed rates of stock price appreciation. The actual value of
these option grants is dependent on the future performance
23
<PAGE> 26
of Company Common Stock and overall stock market conditions. There is no
assurance that the values reflected in this table will be achieved.
(4) No gain to the optionees is possible without stock price appreciation, which
will benefit all stockholders commensurately. Zero percent stock price
appreciation will result in zero dollars for the optionee.
The following table sets forth information regarding the exercise of stock
options during 1997 and the unexercised options held as of the end of 1997 by
the named officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE MONEY OPTIONS/
SHARES FY-END (#) SARS AT FY-END ($) (2)
ACQUIRED VALUE REALIZED --------------------------- ---------------------------
NAME ON EXERCISE (#) ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard P. Simmons 0 0 6,907(3) 90,000 $ 69,805 $ 225,000
Arthur H. Aronson 0 0 60,000 68,000 622,500 212,250
James L. Murdy 0 0 18,666 43,333 57,165 165,750
Robert Mehrabian 0 0 6,578(3) 1,000(3) 66,255 0
Jon D. Walton 0 0 38,333 31,667 397,707 140,480
William P. Rutledge 1,078,000 $16,722,669 0 360,938 0 4,946,654
</TABLE>
(1) The amount shown for Mr. Rutledge as "value realized" is calculated by
subtracting the exercise price paid upon exercise of an option from the
closing price of a share of Company Common Stock on the New York Stock
Exchange on the date the option was exercised.
(2) In the case of Messrs. Simmons, Aronson, Murdy, Mehrabian and Walton, the
"value of unexercised in-the-money options" is calculated by subtracting the
exercise price from $26.00, which was the mean between the high and low
sales prices of a share of Company Common Stock on the New York Stock
Exchange on December 31, 1997. In the case of Mr. Rutledge, the "value of
unexercised in-the-money options" is calculated by subtracting the exercise
price from $25.875, which was the closing sales price of a share of Company
Common Stock on the New York Stock Exchange on December 31, 1997.
(3) These options were granted to Mr. Simmons and Dr. Mehrabian under the
Non-Employee Director Stock Compensation Plan with respect to their service
as non-employee directors.
PENSION PLANS
In 1996, the underfunded defined benefit pension plans of Allegheny Ludlum
and subsidiaries were merged with overfunded defined benefit pension plans of
Teledyne and subsidiaries. The plan mergers created the Allegheny Teledyne
Incorporated Pension Plan (the "Allegheny Teledyne Pension Plan"), which is a
single defined benefit plan, qualified under the Code. The benefit formulas and
distribution provisions applicable to the respective employee participants of
Teledyne and Allegheny Ludlum prior to the Combination did not change as a
result of the Combination or plan mergers.
The benefits payable from a qualified defined benefit plan are limited by
Section 415 of the Code to an annual benefit of $120,000 (indexed as announced
from time to time by the Secretary of the Treasury) payable at age 65 with an
actuarial reduction for earlier commencement. In addition, the Code imposes an
annual limit upon the amount of compensation which may be included in the
calculation of a benefit from a
24
<PAGE> 27
tax-qualified plan; in 1996, the maximum includable compensation was $150,000
(which amount has subsequently been increased to $160,000 by announcement of the
Secretary of the Treasury). The amounts shown in the table below indicate the
aggregate of payments under the Allegheny Teledyne Pension Plan and, in the case
of Mr. Rutledge, Teledyne's Pension Equalization Plan described below and, in
the case of Messrs. Simmons, Aronson, Murdy and Walton, the defined benefit
portion of the Company's Benefit Restoration Plan described in note (9) to the
Summary Compensation Table.
Provisions Applicable to Employees of Allegheny Teledyne and Former
Employees of Allegheny Ludlum. In 1988, Allegheny Ludlum adopted the Retirement
part of its Retirement Savings Plan referred to in note (9) to the Summary
Compensation Table, and amended its pension plan for salaried employees, which
is now a part of the Allegheny Teledyne Pension Plan (the "Pension Provisions"),
to provide that no additional benefits would accrue thereunder from and after
December 31, 1988, except for those employees who were grandfathered under the
Pension Provisions. Under the Pension Provisions, the formula used to determine
retirement benefits considers the participant's average annual eligible earnings
in the highest five consecutive years of the last ten years prior to retirement
and the number of the participant's years of service. All participants who
either were age 55 or had 25 or more years of service on December 31, 1977 are
eligible to have their pension benefits calculated using a higher benefit
formula and eligible earnings base. For such participants, the eligible earnings
base is calculated in the three consecutive years of the ten years prior to
retirement in which such earnings were the highest. In connection with the
amendment of the Pension Plan in 1988, Allegheny Ludlum guaranteed that eligible
participants who were either age 45 with 15 years or more of service or whose
age and service totaled 65 or more at December 31, 1988 will receive at
retirement a benefit at least equal to the benefit they would have received if
the Allegheny Teledyne Pension Plan had continued to accrue benefits. Benefits
accrued prior to January 1, 1989 will be paid at the time, in the form and in
the amount determined under the Pension Provisions.
The following table shows the estimated annual benefits calculated on a
straight life annuity basis payable under the Pension Provisions and the defined
benefit portion of the Benefit Restoration Plan described at note (9) to the
Summary Compensation table to participants in specified compensation and years
of service classifications upon attainment of age 65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION BENEFITS FOR
REMUNERATION REPRESENTATIVE YEARS OF CONTINUOUS SERVICE
- ----------------------------------------------------------------------------------------------------
15 20 25 30 35 40
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 48,000 $ 64,000 $ 80,000 $ 96,000 $ 112,000 $ 128,000
300,000 72,000 96,000 120,000 144,000 168,000 192,000
400,000 96,000 128,000 160,000 192,000 224,000 256,000
500,000 120,000 160,000 200,000 240,000 280,000 320,000
600,000 144,000 192,000 240,000 288,000 336,000 384,000
800,000 192,000 256,000 320,000 384,000 448,000 512,000
1,000,000 240,000 320,000 400,000 480,000 560,000 640,000
1,500,000 360,000 480,000 600,000 720,000 840,000 960,000
2,000,000 480,000 640,000 800,000 960,000 1,120,000 1,280,000
2,500,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000
</TABLE>
25
<PAGE> 28
The formula used to determine retirement benefits under the Pension
Provisions considers the participant's annual eligible earnings in the highest
five consecutive years of the last ten years prior to retirement or, in the case
of Allegheny Ludlum employees with frozen benefits, prior to 1988, and the
number of the participant's years of service. Eligible earnings include base
salary, including tax-deferred contributions by the employee under the Company's
savings plans, and awards, when received, under the Company's short-term
incentive plans.
In certain circumstances, pension benefits are subject to integration with
Social Security and reduction for other payments made to the participant and his
or her spouse.
As of December 31, 1997, Messrs. Simmons, Aronson, Murdy and Walton had
42.5, 0.08, 0.58 and 2.83 credited years of service, respectively. Mr. Simmons'
credited years of service have been calculated under the employment agreement he
had with Allegheny Ludlum prior to his retirement from Allegheny Ludlum, which
provided that he was entitled to a supplemental pension, payable from the
general assets of Allegheny Ludlum, based on 15 years of service in addition to
those he served as an Allegheny Ludlum employee. Messrs. Aronson, Murdy and Mr.
Walton are fully vested in the Pension Provisions.
In addition, the Company has established a Supplemental Pension Plan which
provides certain key employees of the company and its subsidiaries (or their
beneficiaries in the event of death) with monthly payments in the event of
retirement, disability or death, equal to 50 percent of monthly base salary as
of the date of retirement, disability or death. Monthly retirement benefits
start two months following the later of (1) age 62, if actual retirement occurs
prior to age 62 but after age 58 with the approval of the Board of Directors, or
(2) the date actual retirement occurs, and continue for a 118-month period. The
plan describes the events that will terminate an employee's participation in the
plan. Since the payment of benefits to the participants is contingent on future
events, the amount to be paid in the future with respect to such officers cannot
be determined at this time.
Provisions Applicable to W. P. Rutledge. Based on 10.16 years of credited
service and final average compensation of $86,026.63, following his retirement
from the Company in 1997, Mr. Rutledge began to receive $8,611 per month in
pension benefits under the provisions of the Allegheny Teledyne Pension Plan
applicable to employees of Teledyne and the Teledyne Pension Equalization Plan.
The Pension Equalization Plan is designed to restore benefits which would be
payable under the pension plan provisions applicable to Teledyne employees but
for the limits imposed by the Code, to the levels set forth in such pension plan
provisions, calculated pursuant to the formula in such provisions.
SEPARATION AGREEMENT
Mr. Rutledge resigned as a director, officer and employee of the Company
and its subsidiaries. Under a separation agreement dated as of March 6, 1997
between the Company and Mr. Rutledge (which superseded Mr. Rutledge's severance
agreement with Teledyne, under which he would have been entitled to payments
under certain circumstances), Mr. Rutledge received from the Company a cash
payment of $3.13 million on the effective date of the agreement. The agreement
also provides that Mr. Rutledge will serve as a consultant to the Chairman of
the Company until April 1, 2000 for which he will receive a monthly retainer of
$23,000 plus $500 per hour in addition to 40 hours served in any month and
continue to receive health and life insurance benefits (except to the extent
provided through other employment). Mr. Rutledge will also serve as a director
of Teledyne Industries International, Inc. ("TII"), a subsidiary of Teledyne,
Inc. Under the agreement, Mr. Rutledge also received a pro rata portion of his
1997 performance-based bonus, payable under the same criteria and at the same
time as 1997 performance-based bonuses are paid to other Company
26
<PAGE> 29
executives, as well as amounts carried to 1997 under Teledyne's EVA-based plans.
In addition, Mr. Rutledge will continue to have all rights and benefits under
his stock option agreements in accordance with their terms so long as he
continues to be a director of TII and will continue to be entitled to benefits
under Teledyne retirement plans to the extent accrued on the date he resigned as
an officer of the Company.
EMPLOYMENT AGREEMENTS
The Company is a party to employment agreements, which became effective at
the effective time of the Combination, with Messrs. Aronson, Murdy and Walton.
The agreements provide for the payment of base salary as well as for eligibility
to participate in incentive compensation, equity, employee and fringe benefit
plans offered to senior executives of the Company. The term of the agreement
with Mr. Aronson ends on his sixty-fifth birthday. The term of the agreements
with Messrs. Murdy and Walton are for an initial three-year term which, absent
notice from one party to the other, renews automatically each month on and after
the second anniversary of its effective date so that the then remaining term
will be no less than one year.
The agreements generally terminate prior to the expiration date without
breach by any party in the event of the death, disability or voluntary
resignation of the employee. The Company may also terminate the agreement for
cause without breach by it. An employee may resign for good reason (which is
defined to include demotion, reduction in base pay, or movement of corporate
headquarters) and receive severance payments equal to the base pay and bonus,
determined based on actual financial results, as well as continued participation
in certain compensation and employee benefit plans for the then remaining term,
including certain supplemental pension benefits.
27
<PAGE> 30
CUMULATIVE TOTAL STOCKHOLDER RETURN
The graph set forth below shows the cumulative total stockholder return
(i.e., price change plus reinvestment of dividends) on Company Common Stock from
the first day of trading in the Common Stock following the Combination through
December 31, 1997 as compared to the S&P 500 Index, the S&P Iron & Steel Index
and a peer group index consisting of Allied Signal, Inc., Crane Co., Tenneco,
Inc. and Textron Inc. The graph assumes that $100 was invested on August 16,
1996.
In accordance with the rules of the Securities and Exchange Commission,
this presentation shall not be incorporated by reference into any of the
Company's registration statements under the Securities Act of 1933.
TOTAL STOCKHOLDER RETURNS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ALLEGHENY S&P 500 S&P IRON &
(FISCAL YEAR COVERED) TELEDYNE INDEX STEEL INDEX PEER GROUP
<S> <C> <C> <C> <C>
AUGUST 16, 1996 100 100 100 100
DECEMBER 1996 110.93 112.16 106.30 107.32
DECEMBER 1997 127.81 149.58 108.15 125.08
</TABLE>
CERTAIN TRANSACTIONS
Argonaut Group, Inc. Two of the Company's directors, George A. Roberts and
Fayez Sarofim, also are directors of Argonaut Group, Inc. ("Argonaut Group"), a
former subsidiary of Teledyne. In addition, as of February 15, 1997, directors
of the Company beneficially owned in the aggregate more than 5.5% of the
outstanding stock of Argonaut Group.
Teledyne has provided Argonaut Group with certain investment trade
execution services. During 1997, Argonaut Group paid Teledyne approximately
$18,605 for these services. During 1997, Argonaut Insurance Company ("Argonaut
Insurance"), a subsidiary of Argonaut Group, paid Teledyne approximately
$944,582 pursuant to certain retrospective rating provisions of insurance
policies previously written by Argonaut Group for Teledyne. Future payments to
or from Argonaut Insurance may be required under the retrospective rating
provisions and reinsurance provisions of such policies. In 1997, the Company
paid approximately $1.6 million to AGI Properties, Inc. ("AGI"), a non-insurance
subsidiary of Argonaut Insurance, pursuant to a real
28
<PAGE> 31
property leases in Los Angeles, California. The Company believes that the
transactions described above have been entered into on terms no less favorable
than could have been negotiated with non-affiliated third parties.
Unitrin, Inc. Two of the Company's directors, George A. Roberts and Fayez
Sarofim also are directors of Unitrin, Inc. ("Unitrin"), a former subsidiary of
Teledyne. In addition, as of December 31, 1997, directors of the Company
beneficially owned in the aggregate more than 9.3% of the outstanding stock of
Unitrin.
Teledyne has provided Unitrin with certain investment trade execution and
other professional services, as well as the use of company aircraft. During
1997, Unitrin paid Teledyne approximately $163,155 for these services. Unitrin
provided data processing services to Teledyne for which Teledyne paid
approximately $811,916 in 1997. In addition, during 1997, Unitrin earned
premiums of approximately $5,831,103 million for group life insurance coverages
on Teledyne employees and their dependents. In prior years, pursuant to certain
contractual arrangements with Teledyne, Unitrin insured Teledyne and its
subsidiaries for certain coverages, including worker's compensation, general
liability and automobile liability. These insurance arrangements contained
retrospective rating and reinsurance provisions which reduce Unitrin's financial
exposure by giving it recourse against Teledyne and its subsidiaries. The
Company believes that the transactions described above have been entered into on
terms no less favorable than could have been negotiated with non-affiliated
third parties. In addition, Teledyne and Unitrin have certain indemnities with
respect to certain tax matters and the operation of Teledyne prior to the 1990
distribution of Unitrin stock to Teledyne's stockholders.
Code, Hennessy & Simmons Funds. Allegheny Ludlum and subsidiaries of
Allegheny Ludlum have engaged in investment transactions with two limited
partnership funds: Code, Hennessy and Simmons Limited Partnership ("Fund I"),
and Code, Hennessy & Simmons II L.P. ("Fund II"). The objective of both funds is
to seek maximum return by investing in leveraged buyouts of operating companies.
Profits and losses of Fund I and of Fund II are allocated 80 percent to the
limited partners and 20 percent to the general partner. The general partner of
Fund I is CHS Management Limited Partnership ("CHS I"), and the general partner
of Fund II is CHS Management II, L.P. ("CHS II"). The general partners of CHS I
and the stockholders of the general partner of CHS II are Andrew W. Code, Daniel
J. Hennessy, and Brian P. Simmons, each of whom has an equal interest in each of
such firms. Brian P. Simmons is the son of Richard P. Simmons, Chairman,
President and Chief Executive Officer of the Company.
At the end of the first quarter of 1994, Allegheny Ludlum voluntarily
contributed its limited partnership interest in Fund I to an irrevocable trust
established with respect to the funding the retiree medical and insurance
benefit obligations Allegheny Ludlum has to its employees represented by the
United Steelworkers of America. Later in the 1994 and 1995 fiscal years and in
the first quarter of 1996, Allegheny Ludlum voluntarily contributed investments
it had made in Fund II, in the amounts of $5.6 million, $7.5 million and $1.5
million, respectively, to the irrevocable trust. In February 1997, Allegheny
Ludlum contributed investments it had made in Fund II in the amount of $6
million to a subsidiary of Allegheny Ludlum. Subsequently, Allegheny Ludlum
voluntarily contributed its remaining investment in Fund II to the irrevocable
trust. Investors had made commitments to invest approximately $155 million in
Fund II, which was formed in 1993, including $30 million to be invested by
Allegheny Ludlum.
A subsidiary of Allegheny Ludlum continues to be the limited partner in CHS
I and CHS II and to receive 10 percent of CHS I's 20 percent share of Fund I's
net profits and losses (i.e., two percent of Fund I's net profits and losses).
The same subsidiary is a limited partner in CHS II and receives 5 percent of CHS
II's 20 percent share of Fund II's net profits and losses (i.e., one percent of
Fund II's net profits and losses). During 1997, the Allegheny Ludlum subsidiary
that invested in CHS I made no investments in, and received
29
<PAGE> 32
distributions of $240,091 from, CHS I. The same subsidiary made investments of
$55,169 in, and received distributions of $1,350,604 from, CHS II.
CHS I and CHS II are responsible for managing the selection and structuring
of their respective fund's investments. In 1997, the annual base management fee
for CHS I and CHS II were 1.4% and 1.9%, respectively, of the fund's total
capital commitments. In each case, the management fees were offset by fees which
the general partner charges to companies its fund acquires. After the offset for
fees, the net amounts received by CHS I and CHS II were 0.5% and 0%,
respectively.
In addition to the investment by the Company, Richard P. Simmons, Chairman,
President and Chief Executive Officer of the Company, Robert P. Bozzone, Vice
Chairman of the Board of the Company, and a subsidiary of PNC Bank Corp. have
invested or will invest $4,473,360, $1,250,000 and $5,000,000, respectively, in
Fund I. In addition to the investment by the Company, Messrs. Simmons and
Bozzone, and a subsidiary of PNC Bank Corp., directly or indirectly, have
invested or will invest $5.2 million, $2.5 million, and $7.5 million,
respectively, in Fund II. James E. Rohr, President of PNC Bank Corp., is a
member of the Company's Board of Directors.
Pursuant to a written agreement with another subsidiary, Allegheny Ludlum
agreed to furnish consulting services which the subsidiary in turn has agreed to
furnish to CHS I. Under this agreement, no fee is to be paid for the services of
Richard P. Simmons, who is primarily responsible for such consultations, or
James L. Murdy, the Executive Vice President, Finance and Administration and
Chief Financial Officer, for up to one day per week each. A similar arrangement
may be made with respect to CHS II. In 1996 and 1997, no substantial services
were provided to CHS I which required the payment of compensation. Richard P.
Simmons also serves as a member of the Advisory Boards of Fund I and Fund II and
a member of the Advisory Board of a third investment fund established by the
founders of CHS I and CHS II in which the Company elected not to invest.
Kirkpatrick & Lockhart LLP. The Company retained the law firm of
Kirkpatrick & Lockhart LLP to perform services for the Company during 1997 and
1998. Charles J. Queenan, Jr., a member of the Company's Board of Directors, is
senior counsel to that law firm. See "Compensation Committee Interlocks and
Insider Participation."
Loan Guarantee. Teledyne has guaranteed repayment to an unaffiliated
banking institution of $464,000 of Mr. Rutledge's loan obligations with respect
to his residence in Los Angeles. As of March 1, 1998, Mr. Rutledge was current
in this obligation.
Loans under Stock Acquisition and Retention Programs. Under the terms of
the Allegheny Ludlum Stock Acquisition and Retention Plan and the Allegheny
Teledyne Stock Acquisition Program adopted in 1997 (the "programs"), persons who
served as president or a vice president of Allegheny Ludlum could deliver a
promissory note, payable to the Company, as payment for the purchase price of
the shares of Common Stock purchased under the programs. Each note has a term of
not more than 10 years and is secured by the shares of Common Stock being
purchased with the note. Interest accrues on the notes at a rate, as determined
on the applicable purchase date, equal to the lesser of the average borrowing
rate of the Company or the prime lending rate of PNC Bank, but not lower than
the minimum rate necessary to avoid imputed interest under the applicable
federal income tax laws. During the 1997 fiscal year, James L. Murdy, Executive
Vice President, Finance and Administration and Chief Financial Officer, and Jon
D. Walton, Senior Vice President, General Counsel and Secretary, delivered
promissory notes to the Company to pay the purchase price of Common Stock
purchased under the plan. The largest amount of indebtedness outstanding under
the
30
<PAGE> 33
programs during the 1997 fiscal year and the amount of indebtedness outstanding
under the programs as of December 31, 1997 were $1,080,555 for Mr. Murdy and
$700,770 for Mr. Walton, respectively.
ANNUAL REPORT ON FORM 10-K
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, WITHOUT EXHIBITS, CAN
BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE CORPORATE SECRETARY AT
1000 SIX PPG PLACE, PITTSBURGH, PENNSYLVANIA 15222-5479.
1999 ANNUAL MEETING AND STOCKHOLDER PROPOSAL
Under Rule 14a-8 of the Securities and Exchange Commission, proposals of
stockholders intended to be presented at the 1999 Annual Meeting of Stockholders
must be received no later than November 23, 1998 for inclusion in the Proxy
Statement and proxy card for that meeting. In addition, the Company's
certificate of incorporation provides that in order for nominations or other
business to be properly brought before an annual meeting by a stockholder, the
stockholder must give timely notice thereof in writing to the Secretary of the
Company. To be timely, a stockholder's notice must be delivered to the Secretary
not less than 60 days and not more than 90 days prior to the first anniversary
of the preceding year's annual meeting which, in the case of the 1999 Annual
Meeting of Stockholders, would be no earlier than January 31, 1999 and no later
than February 15, 1999. If, however, the date of the annual meeting is advanced
by more than 30 days or delayed by more than 60 days from such anniversary date,
to be timely, notice by the stockholder must be so delivered not earlier than
the 90th day prior to such annual meeting and not later than the later of the
60th day prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made. The Company's
certificate of incorporation also requires that such notice contain certain
additional information. Copies of the certificate of incorporation can be
obtained without charge from the Corporate Secretary.
By order of the Board of Directors
/s/ Jon D. Walton
Jon D. Walton
Senior Vice President, General Counsel
and Secretary
Dated: March 23, 1998
31
<PAGE> 34
(continued from reverse side) Please mark
your vote as
indicated in [X]
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING ITEMS:
A. ELECTION OF DIRECTORS,
FOR WITHHELD
all nominees (except from all nominees
as indicated)
[ ] [ ]
A. Election of A.H. Aronson, P.S. Brentlinger, R.J. Groves, W.G. Ouchi, and
J.E. Rohr as Class II directors.
(To withhold authority to vote for any nominee(s), write the name(s) of the
nominee(s) in the space that follows:
_________________________________________________________________________.)
B. SELECTION OF AUDITORS.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
DATE:_______________________, 1998
__________________________________
__________________________________
(SIGNATURE OR SIGNATURES)
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS AT THE LEFT. WHEN SIGNING
AS A FIDUCIARY OR CORPORATE
OFFICER, GIVE FULL TITLE. FOR JOINT
ACCOUNTS, PLEASE FURNISH BOTH
SIGNATURES.
FOLD AND DETACH HERE
[LOGO] ALLEGHENY TELEDYNE
INCORPORATED
1000 Six PPG Place
Pittsburgh, PA 15222-
5479
Dear Stockholder:
Enclosed are materials relating to Allegheny Teledyne Incorporated's 1998
Annual Meeting of Stockholders. The Notice of the Meeting and Proxy Statement
describe the formal business to be transacted at the meeting.
Your vote is important. Please complete, sign and promptly return the
attached proxy card in the accompanying postage-paid envelope whether or not you
expect to attend the meeting.
/s/ JON D. WALTON
-----------------------------
John D. Walton
Senior Vice President,
General Counsel and Secretary
<PAGE> 35
ALLEGHENY TELEDYNE INCORPORATED
PROXY FOR 1998 ANNUAL MEETING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ALLEGHENY TELEDYNE INCORPORATED
The undersigned hereby appoints James L. Murdy, Mary W. Snyder and Jon D.
Walton or any of them, each with power of substitution and revocation, proxies
or proxy to vote all shares of Common Stock which the undersigned is entitled
to vote with all powers which the undersigned would possess if personally
present, at the Annual Meeting of Stockholders of Allegheny Teledyne
Incorporated on May 14, 1998, and any adjournments thereof, upon the matters
set forth on the reverse of this card, and, in their discretion, upon such
other matters as may properly come before such meeting.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS PROXY CARD AND TO
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
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.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE.
FOLD AND DETACH HERE
<PAGE> 36
(continued from reverse side) Please mark
your vote as
indicated in [X]
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING ITEMS:
A. ELECTION OF DIRECTORS,
FOR WITHHELD
all nominees (except from all nominees
as indicated)
[ ] [ ]
A. Election of A.H. Aronson, P.S. Brentlinger, R.J. Groves, W.G. Ouchi, and
J.E. Rohr as Class II directors.
(To withhold authority to vote for any nominee(s), write the name(s) of the
nominee(s) in the space that follows:
_________________________________________________________________________.)
B. SELECTION OF AUDITORS.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
DATE:_______________________, 1998
__________________________________
(Signature)
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS AT THE LEFT.
FOLD AND DETACH HERE
ALLEGHENY TELEDYNE INCORPORATED
PERSONAL RETIREMENT AND 401(k) SAVINGS ACCOUNT PLAN
RETIREMENT SAVINGS PLAN
SAVINGS AND SECURITY PLAN OF THE LOCKPORT AND WATERBURY FACILITIES
THE 401(k) SAVINGS ACCOUNT PLAN
OF ALLEGHENY LUDLUM CORPORATION (WASHINGTON PLANT)
March 23, 1998
Enclosed you will find a copy of the Allegheny Teledyne Incorporated 1997
Annual Report, a Notice of the 1998 Annual Meeting of Stockholders and Proxy
Statement, a voting instruction card (above), a postage-paid return envelope
addressed to Mellon Bank, N.A., as Trustee of each of the above-named Plans,
and a postage-paid ticket request card.
As a participant in one of the Plans, you have the right to direct the
Trustee as to the manner in which voting rights will be exercised at the
meeting with respect to the shares of Common Stock of the Company allocated to
your Plan account and shown on the above voting instruction card. Your
directions to the Trustee will be held in complete confidence by the Trustee
except as may be necessary to meet legal requirements. The Trustee will vote
shares for which no participant instructions are received in the same
proportion as shares for which participant instructions have been received.
The enclosed Proxy Statement contains detailed information concerning
voting at the Annual Meeting and the matters that will be acted upon. You are
encouraged to read the enclosed materials carefully and to exercise your right
to direct the Trustee how to vote your Plan shares.
You must complete and sign the above voting instruction card, and it must
be received by the Trustee by May 11, 1998 in order to have your shares under
the Plan voted at the meeting in accordance with your instructions.
You will also receive proxy solicitation materials, including a proxy
card, from the Company if you own shares of Common Stock that are not held by
the Trustee under the Plan. In order to vote your non-Plan shares, you should
complete and sign the proxy card and return it to the Company.
<PAGE> 37
ALLEGHENY TELEDYNE INCORPORATED
VOTING INSTRUCTION CARD FOR 1998 ANNUAL MEETING
PERSONAL RETIREMENT AND 401(k) SAVINGS ACCOUNT PLAN
RETIREMENT SAVINGS PLAN
SAVINGS AND SECURITY PLAN OF THE LOCKPORT AND WATERBURY FACILITIES
THE 401(k) SAVINGS ACCOUNT PLAN
OF ALLEGHENY LUDLUM CORPORATION (WASHINGTON PLANT)
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ALLEGHENY TELEDYNE INCORPORATED
The undersigned hereby directs the Trustee of the above Plans to vote the full
number of shares of Common Stock allocated to the account of the undersigned
under the Plans, at the Annual Meeting of Stockholders of Allegheny Teledyne
Incorporated on May 14, 1998, and any adjournments thereof, upon the matters
set forth on the reverse of this card, and, in its discretion, upon such other
matters as may properly come before such meeting.
PLAN PARTICIPANTS ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS CARD AND TO
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
THIS VOTING INSTRUCTION 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.
Please vote, date and sign on the reverse side.
FOLD AND DETACH HERE
<PAGE> 38
(Continued from reverse side) Please mark
your vote as
indicated in [X]
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING ITEMS:
A. ELECTION OF DIRECTORS,
FOR WITHHELD
all nominees (except from all nominees
as indicated)
[ ] [ ]
A. Election of A.H. Aronson, P.S. Brentlinger, R.J. Groves, W.G. Ouchi, and
J.E. Rohr as Class II directors.
(To withhold authority to vote for any nominee(s), write the name(s) of the
nominee(s) in the space that follows:
_________________________________________________________________________.)
B. SELECTION OF AUDITORS.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
DATE:_______________________, 1998
__________________________________
(Signature)
Please sign EXACTLY as your name
appears at the left.
FOLD AND DETACH HERE
ALLEGHENY TELEDYNE INCORPORATED
Teledyne, Inc. 401(k) Plan
March 23, 1998
Enclosed you will find a copy of the Allegheny Teledyne Incorporated 1997
Annual Report, a Notice of the 1998 Annual Meeting of Stockholders and Proxy
Statement, a voting instruction card (above), a postage-paid return envelope
and a postage-paid ticket request card.
As a participant in the Plan, you have the right to direct the Plan
Trustee as to the manner in which voting rights will be exercised at the
meeting with respect to the shares of Common Stock of the Company allocated
to your Plan account and shown on the above voting instruction card. Your
directions to the Trustee will be held in complete confidence by the Plan
Trustee except as may be necessary to meet legal requirements.
The enclosed Proxy Statement contains detailed information concerning
voting at the Annual Meeting and the matters that will be acted upon. You are
encouraged to read the enclosed materials carefully and to exercise your right
to direct the Trustee how to vote your Plan shares.
You must complete and sign the above voting instruction card, and it must
be received by the Trustee by May 11, 1998 in order to have your shares under
the Plan voted at the meeting in accordance with your instructions. If your
completed card is not received by May 11, 1998, the Administrative Committee
for the Plan may direct the Plan Trustee to vote your shares.
You will also receive proxy solicitation materials, including a proxy
card, from the Company if you own shares of Common Stock that are not held by
the Trustee under the Plan. In order to vote your non-Plan shares, you should
complete and sign the proxy card and return it to the Company.
<PAGE> 39
ALLEGHENY TELEDYNE INCORPORATED
VOTING INSTRUCTION CARD FOR 1998 ANNUAL MEETING
TELEDYNE, INC. 401(k) PLAN
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ALLEGHENY TELEDYNE INCORPORATED
The undersigned hereby directs the Trustee of the above Plan to vote the full
number of shares of Common Stock allocated to the account of the undersigned
under the Plans, at the Annual Meeting of Stockholders of Allegheny Teledyne
Incorporated on May 14, 1998, and any adjournments thereof, upon the matters
set forth on the reverse of this card, and, in its discretion, upon such other
matters as may properly come before such meeting.
PLAN PARTICIPANTS ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS CARD AND TO
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, NO POSTAGE IS REQUIRED.
THIS VOTING INSTRUCTION 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.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE.
FOLD AND DETACH HERE
