<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
IMCO RECYCLING INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
IMCO RECYCLING INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(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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<PAGE>
IMCO RECYCLING INC.
Dear Stockholder:
You are cordially invited to the Annual Meeting of Stockholders of IMCO
Recycling Inc. scheduled to be held at the Central Tower at Williams Square,
Twenty-Sixth Floor, LaCima Club, Lakeside Room, 5215 North O'Connor Blvd.,
Irving, Texas, on Tuesday, May 13, 1997, commencing at 9:00 A.M., Central
Daylight Savings Time. Your Board of Directors and management look forward to
greeting those stockholders able to attend in person.
At the meeting, you will be asked to consider and elect two directors to
serve until the 2000 Annual Meeting of Stockholders. Your Board of Directors has
unanimously nominated these persons for election as directors. You are also
being asked to consider and approve amendments to the Corporation's Annual
Incentive Program and to consider and ratify the appointment of Ernst & Young
LLP as the Corporation's independent accountants for 1997. Information
concerning the Board nominees, the amended Annual Incentive Program and the
proposal regarding the Corporation's independent accountants, as well as other
important information, is contained in the accompanying proxy statement which
you are urged to read carefully.
Whether or not you plan to attend in person and regardless of the number of
shares you own, it is important that your shares be represented and voted at the
meeting. Accordingly, you are requested to sign, date and mail the enclosed
proxy at your earliest convenience. Your shares will then be represented at the
meeting, and the Corporation will be able to avoid the expense of further
solicitation.
On behalf of IMCO's Board of Directors and employees, thank you for your
cooperation and continued support.
Sincerely,
Don V. Ingram
CHAIRMAN OF THE BOARD
April 10, 1997
<PAGE>
IMCO RECYCLING INC.
5215 NORTH O'CONNOR BLVD., SUITE 940
CENTRAL TOWER AT WILLIAMS SQUARE
IRVING, TEXAS 75039
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1997
------------------------
To the Stockholders of
IMCO Recycling Inc.
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of IMCO
Recycling Inc. (the "Corporation") will be held at the Central Tower at Williams
Square, Twenty-Sixth Floor, LaCima Club, Lakeside Room, 5215 North O'Connor
Blvd., Irving, Texas, on Tuesday, May 13, 1997, at 9:00 A.M., Central Daylight
Savings Time, for the following purposes:
1. To elect two Class II directors to hold office until the 2000 Annual
Meeting of Stockholders or until their respective successors shall have
been elected and qualified.
2. To consider and approve amendments to the Corporation's Annual Incentive
Program.
3. To consider and ratify the appointment of Ernst & Young LLP as the
Corporation's independent accountants for 1997.
4. To transact any other business which properly may be brought before the
meeting and any adjournment thereof.
Only holders of record of the Corporation's Common Stock at the close of
business on March 28, 1997 are entitled to notice of and to vote at the Annual
Meeting. A complete list of such stockholders will be open to the examination of
any stockholder at the Corporation's principal executive offices at 5215 North
O'Connor Blvd., Suite 940, Central Tower at Williams Square, Irving, Texas for a
period of ten days prior to the meeting. The meeting may be adjourned from time
to time without notice other than by announcement at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED. IF YOU RECEIVE MORE
THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR AT
DIFFERENT ADDRESSES, EACH SUCH PROXY CARD SHOULD BE SIGNED AND RETURNED TO
ENSURE THAT ALL OF YOUR SHARES WILL BE VOTED. THE PROXY CARD SHOULD BE SIGNED BY
ALL REGISTERED HOLDERS EXACTLY AS THE STOCK IS REGISTERED. ANY PERSON GIVING A
PROXY HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS EXERCISE AND, IF
PRESENT AT THE MEETING, MAY WITHDRAW IT AND VOTE IN PERSON. ATTENDANCE AT THE
ANNUAL MEETING IS LIMITED TO STOCKHOLDERS, THEIR PROXIES AND INVITED GUESTS OF
THE CORPORATION.
This Notice, the accompanying Proxy Statement, and the Proxy enclosed
herewith are sent to you by order of the Board of Directors of the Corporation.
Paul V. Dufour
SECRETARY
Irving, Texas
April 10, 1997
<PAGE>
IMCO RECYCLING INC.
5215 NORTH O'CONNOR BLVD., SUITE 940
CENTRAL TOWER AT WILLIAMS SQUARE
IRVING, TEXAS 75039
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1997
------------------------
SOLICITATION AND REVOCABILITY OF PROXIES
The Board of Directors of the Corporation is soliciting proxies to be voted
at the Annual Meeting of Stockholders to be held in Irving, Texas on May 13,
1997 and at any adjournment thereof. The Proxy Statement and the enclosed proxy
are first being mailed to stockholders on or about April 10, 1997 in connection
with this solicitation.
This proxy solicitation is intended to afford stockholders the opportunity
to vote on the matters set forth in the accompanying Notice of Annual Meeting
dated April 10, 1997. The proxy permits stockholders to withhold voting for any
or all nominees for election to the Corporation's Board of Directors (the
"Board") and to abstain from voting on any other specified proposal if the
stockholder so chooses.
All holders of record of shares of the Corporation's Common Stock at the
close of business on March 28, 1997 (the "Record Date") are entitled to notice
of and to vote at the meeting. On the Record Date, the Corporation had
outstanding 12,532,865 shares of Common Stock, par value $.10 per share (the
"Common Stock"). Each share of Common Stock is entitled to one vote on each
matter to come before the meeting. The presence, in person or by proxy, of
holders of a majority of the outstanding shares of Common Stock entitled to vote
as of the Record Date is necessary to constitute a quorum at the meeting. A
plurality of the votes of the shares present in person or represented by proxy
at the Annual Meeting, provided a quorum is constituted, is required for the
election of directors. All other action proposed herein may be taken upon the
affirmative vote of a majority of the votes cast by the stockholders represented
at the Annual Meeting, provided a quorum is constituted.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on all other proposals and
will be counted as present for purposes of the item on which the abstention is
noted. Abstentions on the proposal to amend the Annual Incentive Program will
have the effect of a negative vote because that proposal requires the
affirmative vote of holders of a majority of shares present in person or by
proxy and entitled to vote. Under the rules of the New York Stock Exchange,
brokers who hold shares in street names for customers have the authority to vote
on certain items when they have not received instructions from beneficial
owners. Brokers who do not receive instructions are entitled to vote on the
election of directors, the proposal to amend the Annual Incentive Program and
the proposal to ratify the appointment of the auditors. Under applicable
Delaware law, a broker non-vote will have no effect on the outcome of the
election of directors or the proposal to ratify the appointment of the auditors,
nor will it count as a vote cast in determining the total votes cast on the
proposal to amend the Annual Incentive Program.
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Any stockholder has the unconditional right to revoke his proxy at any time
before it is voted. Any proxy given may be revoked either by a written notice
duly signed and delivered to the Secretary of the Corporation prior to the
exercise of the proxy, by execution of a subsequent proxy or by voting in person
at the meeting (although attending the Annual Meeting without executing a ballot
or executing a subsequent proxy will not constitute revocation of a proxy).
Where a stockholder's duly executed proxy specifies a choice with respect to a
voting matter, the shares will be voted accordingly. If no such specification is
made, the shares will be voted (i) FOR the nominees for director identified
below; (ii) FOR the approval of the amendment of the Corporation's Annual
Incentive Program; and (iii) FOR the ratification of the appointment of Ernst &
Young LLP as the Corporation's independent accountants for 1997.
1998 ANNUAL MEETING
The Board presently intends to hold the Corporation's next Annual Meeting of
Stockholders on or about May 15, 1998. A Proxy Statement and Notice of such
meeting will be mailed to all stockholders approximately one month prior to that
date. In order to be eligible for inclusion in the Corporation's proxy statement
for the 1998 Annual Meeting of Stockholders, any proposal of a stockholder must
be received by the Corporation at its principal executive offices in Irving,
Texas, by December 11, 1997. All stockholder proposals must comply with Rule
14a-8 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
VOTING AND PRINCIPAL STOCKHOLDERS
At the Record Date, there were outstanding 12,532,865 shares of Common Stock
which were held of record by 555 stockholders. The holders of the Common Stock
have no appraisal or similar rights with respect to any of the matters being
voted on at the Annual Meeting.
The following table sets forth as of March 28, 1997, certain information
with regard to the beneficial ownership of Common Stock by (i) all persons known
by the Corporation to be the beneficial owner of more than 5% of the outstanding
Common Stock of the Corporation; (ii) each director of the Corporation (see
"Election of Directors"); (iii) each named executive officer of the Corporation;
and (iv) all executive officers and directors as a group.
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<TABLE>
<CAPTION>
SHARES UNDERLYING
NUMBER OPTIONS TOTAL PERCENT
OF EXERCISABLE BENEFICIAL OF
NAME OF BENEFICIAL OWNER SHARES(1) WITHIN 60 DAYS OWNERSHIP CLASS
- ---------------------------------------------------------- ---------- ------------------ ---------- -----------
<S> <C> <C> <C> <C>
Don V. Ingram............................................. 1,229,829(2) 43,065 1,272,894 10.1%
2200 Ross Ave., Suite 4500-E
L.B. 170
Dallas, Texas 75201
FMR Corp.................................................. 982,100(3) -- 982,100 7.8%
82 Devonshire Street
Boston, MA 02109
Mellon Bank Corporation................................... 754,000(4) -- 754,000 6.0%
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Chancellor LGT Asset Management, Inc...................... 728,800(5) -- 728,800 5.8%
50 California Street
San Francisco, California 94111
J.M. Brundrett............................................ 15,674 3,735 19,409 *
Ralph L. Cheek............................................ 68,515 824 69,339 *
John J. Fleming........................................... 18,892 4,135 23,027 *
Thomas A. James........................................... 5,374(6) 659 6,033 *
Don Navarro............................................... 1,674 4,135 5,809 *
Jack C. Page.............................................. 774 4,135 4,909 *
Paul V. Dufour............................................ 80,410 147,566 227,976 1.8%
Richard L. Kerr........................................... 43,039 81,400 124,439 1.0%
C. Lee Newton............................................. 11,458 116,033 127,491 1.0%
Thomas W. Rogers.......................................... 23,200 88,500 111,700 *
All Executive Officers and Directors
as a group (13 persons, including
those individuals named above).......................... 1,505,915 530,512(7) 2,036,427 15.6%
</TABLE>
- ------------------------
* Less than 1%
(1) Except as otherwise indicated, the persons named in the table possess sole
voting and investment power with respect to all shares of Common Stock shown
as beneficially owned by them. Includes shares of Common Stock held by wives
and minor children of such persons and corporations in which such persons
hold a controlling interest.
(2) Represents 991,688 shares owned by Mr. Ingram directly, 78,141 shares owned
by Mr. Ingram's wife and 160,000 shares held by trusts and custodial
accounts created for the benefit of Mr. Ingram's children and relatives (of
which Mr. Ingram is trustee). Substantially all of these shares have been
pledged or are held in margin maintenance accounts.
(3) Information with respect to beneficial ownership of shares of Common Stock
by FMR Corp. is based solely upon the latest report of FMR Corp. on Schedule
13G dated February 14, 1997 as filed with the Securities and Exchange
Commission. FMR Corp. has sole power to vote or to direct the vote for
527,500 shares and sole power to dispose or to direct the disposition of
982,100 shares.
(4) Information with respect to beneficial ownership of shares of Common Stock
by Mellon Bank Corporation is based solely upon the latest report of Mellon
Bank Corporation on Schedule 13G dated January 30, 1997 as filed with the
Securities and Exchange Commission. Mellon Bank Corporation or certain of
its direct or indirect subsidiaries has sole and shared power to vote or to
direct the vote for 750,000 shares and 2,000 shares, respectively, and sole
and shared power to dispose or to direct the disposition of 150,000 shares
and 604,000 shares, respectively.
(5) Information with respect to beneficial ownership of shares of Common Stock
by Chancellor LGT Asset Management, Inc. is based solely upon the latest
report of Chancellor Asset Management, Inc. on Schedule 13G dated February
7, 1997 as filed with the Securities and Exchange Commission.
(6) Does not include shares owned by Raymond James Financial, Inc. or its
subsidiaries of which Mr. James is Chairman of the Board and Chief Executive
Officer.
(7) Represents outstanding options under the Corporation's stock option plans
granted to officers and directors of the Corporation which are exercisable
within 60 days of March 28, 1997.
3
<PAGE>
ELECTION OF DIRECTORS
GENERAL
The Certificate of Incorporation of the Corporation provides that the number
of directors which shall constitute the whole Board of Directors shall be fixed
from time to time exclusively by the Board of Directors (but not to a number
less than three) and that the directors shall be divided into three classes as
nearly equal in number as possible. The term of office of the Class II directors
expires at the Annual Meeting of Stockholders to be held on May 13, 1997, the
term of office of the Class I directors expires at the 1998 Annual Meeting of
Stockholders and the term of office of the Class III directors expires at the
1999 Annual Meeting of Stockholders.
The persons named in the proxy will vote for John J. Fleming and Don Navarro
as nominees for election as Class II Directors except where authority has been
withheld as to a particular nominee or as to all nominees. Mr. Fleming and Mr.
Navarro are currently members of the Board of Directors. Each nominee has
consented to being named in this Proxy Statement and to serve if elected. If any
nominee should for any reason become unavailable for election, proxies may be
voted with discretionary authority by the persons named therein for any
substitute designated by the Board.
DIRECTORS AND NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
NOMINEES
CLASS II DIRECTORS; PRESENT TERM EXPIRES 1997.
<TABLE>
<CAPTION>
NAME AGE
- ---------------------------------------------------------------------------------------- ---
<S> <C>
John J. Fleming......................................................................... 57
Don Navarro............................................................................. 52
</TABLE>
John J. Fleming has served as a director since May 1989. Mr. Fleming is
Chairman and Chief Executive Officer of Profco Resources Ltd., a Canadian oil
and gas exploration and production company. Mr. Fleming served as Chairman and
Chief Executive Officer from 1980 until March 1991 of CanCapital Corporation, a
Canadian merchant banking, securities investment, and oil and gas exploration
and production company headquartered in Calgary, Alberta, Canada.
Don Navarro has served as a director since June 1986. Mr. Navarro is
president of The Navarro Group, a company which provides business and management
services to public and private companies, specializing in helping organizations
develop, refine and implement strategic plans. Mr. Navarro also serves as a
director of Pizza Inn, Inc.
DIRECTORS CONTINUING IN OFFICE
CLASS I DIRECTORS; PRESENT TERM EXPIRES 1998.
<TABLE>
<CAPTION>
NAME AGE
- ---------------------------------------------------------------------------------------- ---
<S> <C>
Don V. Ingram........................................................................... 61
Thomas A. James......................................................................... 54
</TABLE>
Don V. Ingram has served as a director since 1988. He was elected chief
executive officer of the Corporation on February 7, 1997 and has served as
Chairman of the Board of the Corporation since 1988. Mr. Ingram played the major
role in the Corporation's formation in 1986. Mr. Ingram has been owner and
President since 1984 of Summit Partners Management Co., a private investment
management company in Dallas. Mr. Ingram is also a director of Profco Resources
Ltd.
4
<PAGE>
Thomas A. James has served as a director since May 1995. Mr. James has been
since 1969 the Chairman of the Board and Chief Executive Officer of Raymond
James Financial, Inc. and Chairman of Raymond James & Associates, Inc., an
investment banking and securities firm located in St. Petersburg, Florida. Mr.
James also serves as director and officer of various affiliated entities. He is
a director of Arbor Health Care Company and the Heritage Family of Funds.
CLASS III DIRECTORS; PRESENT TERM EXPIRES 1999.
<TABLE>
<CAPTION>
NAME AGE
- ---------------------------------------------------------------------------------------- ---
<S> <C>
J.M. Brundrett.......................................................................... 72
Ralph L. Cheek.......................................................................... 66
Jack C. Page............................................................................ 71
</TABLE>
J. M. Brundrett, a retired Doctor of Veterinary Medicine, has served as a
director since March 1985. Prior to his election to the Board, Dr. Brundrett
served on the Creditors' Committee in connection with the reorganization
proceedings for Pioneer Texas Corporation, a predecessor of the Corporation. Dr.
Brundrett is a private investor in real estate and securities.
Ralph L. Cheek has served as a director since May 1987. Mr. Cheek served as
Chairman, President and Chief Executive Officer of the Corporation and its
predecessors from 1987 to August 1994. Previously, Mr. Cheek held various
positions with Kaiser Aluminum and Chemical Corporation, most recently as Vice
President--Europe and Vice President--Pacific Northwest.
Jack C. Page has served as a director since November 1991. Mr. Page is an
independent management consultant with experience in conducting organizational,
marketing, management and computer studies in both the private and public
sectors. Before founding his own consulting business in 1972, Mr. Page headed
the Dallas and Mexico City offices of Booz, Allen & Hamilton, Inc., an
international consulting firm.
The Board recommends that stockholders vote FOR John J. Fleming and Don
Navarro as nominees for election as Class II Directors at the Annual Meeting of
Stockholders.
MEETINGS OF DIRECTORS AND COMMITTEES
The Board held a total of six Board meetings in 1996. Each incumbent
director attended at least 75% of the meetings of the full Board and the
committees of which he was a member held during 1996. The Board has established
five standing committees to assist it in the discharge of its responsibilities.
The Audit Committee reviews the professional services provided by the
Corporation's independent accountants and the independence of such firm from
management of the Corporation. This Committee also reviews the scope of the
audit coverage, the annual financial statements of the Corporation, the adequacy
of the Corporation's internal accounting controls and such other matters with
respect to the accounting, auditing and financial reporting practices and
procedures of the Corporation as it may find appropriate or as have been brought
to its attention. This Committee held two meetings in 1996. The members of the
Audit Committee are Mr. Fleming, Chairman and Mr. James.
The Compensation Committee reviews and recommends the amount and form of
compensation and benefits payable to all officers, advises and consults with
management regarding the benefit plans and compensation policies and practices
of the Corporation, and administers the Corporation's stock option, incentive
and bonus plans. This Committee held four meetings in 1996. The members of the
Compensation Committee are Mr. Navarro, Chairman, Mr. Fleming and Mr. Page.
The Investment and Finance Committee assists management in developing plans
for implementing and financing investment and expansion strategies of the
Corporation and presents its recommendations to
5
<PAGE>
the Board for its approval. This Committee held four meetings in 1996. The
members of the Investment and Finance Committee are Mr. Ingram, Chairman, Dr.
Brundrett and Mr. Page.
The Environmental Committee was established for the purposes of providing
oversight and reviewing, reporting on and making recommendations to the Board
regarding the Corporation's policies concerning environmental, health and safety
matters affecting the Corporation. This Committee held two meetings in 1996. The
members of the Environmental Committee are Dr. Brundrett, Chairman, Mr. Cheek
and Mr. Fleming.
The Committee on Directors was established for the purpose of recommending
to the Board nominees for election or reelection as director and to recommend
policies regarding certain board governance issues. While the Committee on
Directors normally is able to identify from its own resources an ample number of
qualified candidates, it will consider stockholder suggestions of persons to be
considered as nominees to fill future vacancies on the Board. Such suggestions
must be sent in writing to the Secretary at the Corporation's address, and must
be accompanied by detailed biographical and occupational data on the prospective
nominee, along with a written consent of the prospective nominee to the
consideration of his or her name by the Committee on Directors. Additionally,
there must be no legal impediments to the nominee serving as a director.
However, the selection of nominees is solely within the discretion of the Board
of Directors. The Committee on Directors held two meetings in 1996. The members
of the Committee on Directors are Mr. Ingram, Chairman, Dr. Brundrett and Mr.
Navarro.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Corporation's executive compensation program is administered by the
Compensation Committee of the Board of Directors. Each member of the Committee
is a non-employee director. During 1996 the Committee was comprised of Don
Navarro, Chairman, John J. Fleming and Jack C. Page.
COMPENSATION POLICY
The goal of the Corporation's executive compensation policy is to support
the overall objective of enhancing stockholder value, while at the same time
attracting, motivating and retaining highly qualified and productive employees.
It is the policy of the Corporation that a significant portion of the
compensation paid to the executive officers should be based on the Corporation's
results of operations and the growth in value of its equity. This policy aligns
the interests of the Corporation's management and stockholders by placing
increased emphasis on performance-based pay and reduced emphasis on fixed pay in
total compensation. To achieve its goals, the Corporation's executive
compensation policies have been designed to provide competitive levels of
compensation that integrate annual base compensation with bonuses based upon
corporate performance and individual initiatives and performance. Since 1990,
the Corporation has adopted and implemented stock option plans under which the
benefits realized by executives are directly related to stock price performance.
To further this objective of linking compensation to Corporation performance,
the Board adopted in 1992 a bonus participation plan (the "1992 Bonus Plan")
which established a bonus pool based on return on total assets from which yearly
bonuses were paid to the officers and other key managers of the Corporation.
During 1996, the Board of Directors and Compensation Committee determined
that the criteria for determining bonus amounts under the 1992 Bonus Plan should
be revised in order to change the emphasis from return on assets to a formula
based both upon return on assets and earnings per share. This change was
believed advisable to further the overall compensation objective of enhancing
stockholder value. As a result of these factors, the Compensation Committee
designed the Annual Incentive Program, the terms of which were approved by the
stockholders in May 1996.
For 1996, the principal elements of the Corporation's executive compensation
program consisted of base salary, cash bonuses and stock options. Following is a
description of the elements of the Corporation's
6
<PAGE>
current executive compensation program and how each relates to the objectives
and policies outlined above.
BASE SALARY
The Committee reviews each executive officer's salary annually. In
determining appropriate salary levels, the Committee considers compensation
levels for executive positions in the external market with similar duties and
responsibilities, corporate and individual performance, as well as internal
equity.
None of the Named Executive Officers of the Corporation received any raises
in 1996 over their base salaries for 1995. See "Remuneration of Directors and
Officers".
ANNUAL BONUSES
Under the Annual Incentive Program, in the event that the Corporation's
return on total assets is greater than ten percent (10%) with respect to a
fiscal year, then participants are eligible for a bonus to be determined
pursuant to a formula tied to the participant's salary. Participants are also
eligible for a bonus to be based upon the growth in average annual earnings per
share of the Corporation. After calculating the maximum bonuses payable under
the Annual Incentive Program, such amounts may be reduced by the Committee in
its sole discretion. Bonuses are payable in cash and in shares of Common Stock.
Because neither performance criteria under the Annual Incentive Program were
achieved with respect to 1996, none of the Named Executive Officers of the
Corporation received any cash bonuses for 1996.
LONG-TERM INCENTIVES
Through grants of stock options to the Named Executive Officers and others,
the Corporation's philosophy for long-term incentives is to retain and motivate
executives to improve corporate performance and stock value.
The Annual Incentive Program provides for the granting of stock options to
participants in the event that the return on total assets for any bonus year
exceeds 15%. The Committee may grant options covering a number of shares of
Common Stock to be determined pursuant to a formula based upon the total bonus
awarded to each participant.
The 1992 Stock Option Plan provides for options to be granted at the
discretion of the Compensation Committee for shares having an exercise price of
not less than the market value on the date of grant. To encourage early exercise
and stock retention, the 1992 Stock Option Plan provides for a replacement
option feature which results in automatic additional stock option grants if a
participant delivers Common Stock in payment of the exercise price and/or shares
are delivered to, or withheld by, the Corporation in payment of the
Corporation's tax withholding obligations, and contains provisions which
restrict the disposition of a portion of the Common Stock received by a
participant upon exercise for a specified period of time while he or she remains
employed by the Corporation. The Annual Incentive Program also contains these
features.
To further encourage stock ownership, the Committee has established stock
ownership and vested stock option guidelines for all officers of the Corporation
and all other participants in the Annual Incentive Program. These guidelines set
forth specified levels, as established from time to time by the Committee, of
stock ownership that officers are encouraged to meet in order to determine the
portions of each participant's Annual Incentive Program bonus to be payable in
stock and the portion payable in cash. In addition, the guidelines prohibit the
granting of additional stock options under the Annual Incentive Program to
officers who have outstanding vested stock options covering shares in excess of
specified amounts established by the Committee from time to time.
7
<PAGE>
Because no cash bonuses were awarded under the Annual Incentive Program for
1996, none of the Named Executive Officers received grants of stock options
during 1996 under the Annual Incentive Program. However, Mr. Romanelli and the
other Named Executive Officers received stock option grants under the 1992 Stock
Option Plan during 1996. See "Summary Compensation Table," "Option Grants in
Last Fiscal Year" and "Proposal to Approve Amendments to the IMCO Recycling Inc.
Annual Incentive Program" below.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Romanelli's base salary was $275,000 for 1996. Mr. Romanelli's
participation in total option grants made by the Corporation during 1996 under
the 1992 Stock Option Plan was based upon Mr. Romanelli's level and scope of
responsibilities to the Corporation during 1996. In December 1996, the Committee
awarded options to purchase 56,000 shares of Common Stock under the 1992 Stock
Option Plan to Mr. Romanelli. In February 1997, Mr. Romanelli resigned as the
Corporation's President and Chief Executive Officer, and as director. The
Corporation has entered into a Consulting Agreement with Mr. Romanelli pursuant
to which the Corporation has agreed to pay Mr. Romanelli a monthly retainer of
$20,000 for a period not to exceed 18 months.
Following Mr. Romanelli's resignation, Don V. Ingram assumed the duties of
Chief Executive Officer in addition to his duties as Chairman of the Board of
Directors of the Corporation. Mr. Ingram's annual base salary was fixed at
$350,000. See "Election of Directors". In addition, Mr. Kerr's annual base
salary was increased to $250,000 and Mr. Dufour's annual base salary was
increased to $235,000.
SUMMARY
The Committee believes that the Corporation's executive compensation
policies and programs serve the interests of the stockholders and the
Corporation effectively. The various compensation programs are believed
appropriately balanced to provide the motivation for executives to contribute to
the Corporation's overall success and enhance the value of the Corporation for
the stockholders' benefit. The Committee will continue to monitor the
effectiveness of the Corporation's total compensation program and continue to
make proposals where applicable to meet the current and future needs of the
Corporation.
COMPENSATION COMMITTEE
Don Navarro, Chairman; John J. Fleming; Jack C. Page
The Compensation Committee Report on executive compensation shall not be
deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent that the
Corporation specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
8
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following performance graph compares the yearly percentage change in the
cumulative total stockholder return on the Corporation's Common Stock (as
measured by dividing: (i) the difference between the Common Stock share price at
the end and the beginning of the measurement period by (ii) the Common Stock
share price at the beginning of the measurement period) with the cumulative
total return assuming reinvestment of dividends of (1) The Standard and Poor's
500 Index, (2) The Standard and Poor's Small Cap 600 Index and (3) an index of
peer companies selected by the Corporation consisting of: Wellman Inc.,
Safety-Kleen Corp., EnviroSource Inc. and Allwaste, Inc. Proler International
Corp., a former member of the Corporation's index of peer companies, was
acquired on November 29, 1996 by Schnitzer Steel, Inc. As a result of this
transaction, the securities of Proler International Corp. are no longer publicly
traded and the company is therefore not included in the Corporation's index of
peer companies for 1996. The Corporation considers itself a part of the resource
recovery industry, along with the other companies in the peer index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG IMCO RECYCLING INC., THE S & P 500 INDEX,
THE S & P SMALLCAP 600 INDEX AND A PEER GROUP
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
IMCO RECYCLING INC. PEER GROUP S & P 500 S & P SMALLCAP 600
<S> <C> <C> <C> <C>
12/91 $100 $100 $100 $100
12/92 228 98 108 121
12/93 183 74 118 144
12/94 230 85 120 137
12/95 374 79 165 178
12/96 226 75 203 216
</TABLE>
The foregoing graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Corporation specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
9
<PAGE>
REMUNERATION OF DIRECTORS AND OFFICERS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Corporation to or on behalf of the
Corporation's chief executive officer and each of the other most highly
compensated executive officers of the Corporation determined as of the end of
the last fiscal year (herein referred to collectively as the "Named Executive
Officers") for the fiscal years ended December 31, 1996, 1995, and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -------------------
------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS (#) COMPENSATION(2)
- --------------------------- --------- ---------- ---------- ------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
F.H. Romanelli 1996 $ 275,000 -- -- 56,000 $ 12,375
President and Chief 1995 $ 275,000 $ 202,000 -- 18,050 $ 730
Executive Officer 1994 -- -- -- 80,000 --
R.L. Kerr 1996 $ 214,700 -- -- 33,000 $ 12,307
President--Metals 1995 $ 214,700 $ 151,000 $ 18,144(3) 13,800 $ 11,286
Division and Chief 1994 $ 193,867 $ 120,438 -- 60,000 $ 11,229
Operating Officer
P.V. Dufour 1996 $ 199,000 -- -- 33,000 $ 11,985
Executive Vice President, 1995 $ 199,000 $ 138,000 -- 12,800 $ 11,589
Chief Financial Officer 1994 $ 157,333 $ 92,298 -- 67,000 $ 11,521
and Secretary
T.W. Rogers 1996 $ 161,500 -- -- 12,500 $ 11,423
Senior Vice President, 1995 $ 161,500 $ 112,000 -- 9,000 $ 11,139
Marketing and Sales 1994 $ 148,500 $ 95,495 -- 20,000 $ 11,111
C.L. Newton 1996 $ 150,500 -- -- 12,500 $ 11,257
Senior Vice President, 1995 $ 150,500 $ 96,000 -- 8,500 $ 11,050
Operations 1994 $ 132,500 $ 83,171 $ 24,252(3) 20,000 $ 11,012
</TABLE>
- ------------------------
(1) Amounts represent cash bonus payments to Named Executive Officers (a) in
1996 and 1995 with respect to fiscal year 1995; and (b) in 1995 and 1994
with respect to fiscal year 1994.
(2) Represents compensation paid or accrued pursuant to the Corporation's
Retirement Savings Plan and Executive Life and Health Insurance Programs
described below.
RETIREMENT SAVINGS PLAN. The Named Executive Officers who have served for
at least one year are eligible to participate in the Corporation's
Retirement Savings Plan, which includes both a profit sharing feature and,
effective July 1, 1996, a 401(k) feature.
10
<PAGE>
The Corporation contributed the following amounts to the Retirement Savings
Plan for the accounts of the Named Executive Officers during 1996, 1995 and
1994:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Frank H. Romanelli........................................... $ 12,375 -- --
Richard L. Kerr.............................................. $ 12,307 $ 10,500 $ 10,500
Paul V. Dufour............................................... $ 11,985 $ 10,500 $ 10,500
Thomas W. Rogers............................................. $ 11,423 $ 10,500 $ 10,500
C. Lee Newton................................................ $ 11,257 $ 10,500 $ 10,500
</TABLE>
EXECUTIVE LIFE INSURANCE PROGRAMS. The Corporation has entered into
split-dollar life insurance agreements with the Named Executive Officers to
provide each of them with death benefits of $500,000 ($350,000 in the case
of Mr. Newton) under life insurance policies. Under the split-dollar life
insurance agreements, the Corporation paid the following premiums on behalf
of the following officers with respect to term life insurance portions of
these policies during 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Frank H. Romanelli............................................... $ 785 $ 730 --
Richard L. Kerr.................................................. $ 861 $ 786 $ 729
Paul V. Dufour................................................... $ 1,171 $ 1,089 $ 1,021
Thomas W. Rogers................................................. $ 686 $ 639 $ 611
C. Lee Newton.................................................... $ 601 $ 550 $ 512
</TABLE>
(3) Represents reimbursements of moving expense to Mr. Kerr and Mr. Newton under
the Corporation's relocation policy.
STOCK OPTIONS
The options shown below were awarded during 1996 pursuant to the 1992 Stock
Option Plan:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED HYPOTHETICAL
UNDERLYING TO EMPLOYEES IN EXERCISE OR EXPIRATION GRANT DATE
NAME OPTIONS GRANTED FISCAL YEAR BASE PRICE DATE VALUE (1)
- ------------------- ----------------- ----------------- ----------- ----------- --------------
(#) (%) ($/SH)
<S> <C> <C> <C> <C> <C>
F.H. Romanelli..... 56,000(2) 14.2% $ 16.25 12/12/2006 $ 272,720
R.L. Kerr.......... 33,000(2) 8.4% $ 16.25 12/12/2006 $ 160,710
P.V. Dufour........ 33,000(2) 8.4% $ 16.25 12/12/2006 $ 160,710
T.W. Rogers........ 12,500(2) 3.2% $ 16.25 12/12/2006 $ 60,875
C.L. Newton........ 12,500(2) 3.2% $ 16.25 12/12/2006 $ 60,875
Executive Group.... 170,800 43.2% $ 16.25 12/12/2006 $ 831,796
Non-Employee
Director Group... 12,922 3.3% $ 16.25 12/16/2006 $ 63,189
Non-Executive
Officer Employee
and Consultant
Group............ 211,700 53.5% $ 16.25 12/12/2006 $1,030,979
</TABLE>
- ------------------------
(1) The options are valued pursuant to the Black-Scholes valuation model, based
upon the following assumptions: (a) expected stock price volatility
calculated using monthly changes in stock price since
11
<PAGE>
January 1994, resulting in a stock price volatility of 0.305; (b) a
risk-free rate of return calculated using the interest rates of five-year
U.S. Treasury notes as of the date of the grant, resulting in a risk-free
rate of return assumption of 6.13% for options granted on December 12, 1996
and a risk-free rate of return assumption of 6.22% for options granted on
December 16, 1996; (c) a dividend yield assumption of 1.23%, determined by
dividing the current $0.20 per share annualized dividends by the fair market
value of the common stock on the date of the grant; and (d) a time of
exercise assumption of four years (although the actual option term is ten
years, that period was reduced for valuation purposes to reflect the
non-transferability, vesting schedule and risk of forfeiture of the
options).
(2) These options will vest in three equal annual increments beginning on the
first anniversary date of the grant. The 1992 Stock Option Plan provides
that in the event of a "change in control" of the Corporation (as defined in
the plan), all stock options will become fully vested.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the Named Executive
Officers concerning the exercise of options granted under the 1990 Stock Option
Plan and the 1992 Stock Option Plan during the last fiscal year and unexercised
options under the 1990 Stock Option Plan and the 1992 Stock Option Plan held as
of the end of the fiscal year:
AGGREGATED OPTION EXERCISES IN 1996 AND DECEMBER 31, 1996 OPTION VALUES
<TABLE>
<CAPTION>
EXERCISABLE
--------------------------------- UNEXERCISABLE
NUMBER OF --------------------------------------
SHARES VALUE OF NUMBER OF SHARES VALUE OF
SHARES UNDERLYING UNEXERCISED UNDERLYING UNEXERCISED
ACQUIRED VALUE UNEXERCISED IN-THE-MONEY UNEXERCISED IN-THE-MONEY
ON EXERCISE REALIZED OPTIONS AT OPTIONS AT OPTIONS AT OPTIONS AT
NAME (#) (1) 12/31/96 (#) 12/31/96 (2) 12/31/96 (#) 12/31/96 (2)
- --------------- ----------- -------- -------------- ---------------- ---------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
F.H.
Romanelli.... 4,316 $ 38,505 22,016 $ 20,000 116,034 $60,000
R.L.Kerr....... 32,300 $675,070 81,400 $292,910 76,200 $51,500
P.V. Dufour.... -- -- 147,566 $734,500 80,234 $61,500
T.W. Rogers.... 12,000 $215,100 88,500 $430,275 41,000 $25,500
C.L. Newton.... 14,000 $178,353 116,033 $782,045 37,967 $22,800
</TABLE>
- ------------------------
(1) Value realized is calculated based on the difference between the option
exercise price and the closing market price of the Common Stock on the date
of exercise multiplied by the number of shares to which the exercise
relates.
(2) The last reported sale price of the Common Stock on The New York Stock
Exchange ("NYSE") composite tape on December 31, 1996 was $14.625 per share.
DIRECTORS' COMPENSATION
Non-employee directors of the Corporation are presently entitled to receive
directors' fees of $30,000 per year. In addition, any director serving as a
member of a committee of the Board is entitled to receive $750 per committee
meeting attended and $250 for telephonic meetings. Chairmen of the Compensation
and the Investment and Finance Committees are to receive an annual retainer of
$4,000; the Chairmen of the other standing committees are to receive annual
retainers of $2,000. The Annual Incentive Program provides that one-half of the
annual director's fee amount shall be paid quarterly in shares of Common Stock
determined by dividing one-eighth of such fee amount by the closing price per
share of Common Stock on the NYSE on the third trading day prior to the last day
of each fiscal quarter. Any fractional shares shall be paid in cash.
12
<PAGE>
The 1992 Stock Option Plan provides that each non-employee director will
automatically be granted on December 15th of each year a nonqualified stock
option to purchase that number of shares of Common Stock determined by dividing
the annual director's fee amount then in effect by the fair market value per
share of Common Stock on that date. On December 16, 1996, pursuant to the 1992
Stock Option Plan, each such non-employee director was granted an option to
purchase 824 shares of Common Stock. The exercise price per share with respect
to these options granted is $16.25.
The Corporation has had in effect a Consulting Agreement with Mr. Ingram on
a month-to-month basis with respect to operations of the Corporation. In
December 1995, Mr. Ingram's consulting fee was increased to $15,000 per month
effective January 1, 1996. The Consulting Agreement was terminated effective
February 1, 1997. A total of $180,000 was paid to Mr. Ingram under the
Consulting Agreement during 1996.
COMPLIANCE WITH SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers, directors and persons who own more than 10% of the
Corporation's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC"). Such
persons are required by SEC regulations to furnish the Corporation with copies
of all Section 16(a) forms filed by such person.
Based solely on the Corporation's review of such forms furnished to the
Corporation and written representations from certain reporting persons, the
Corporation believes that all filing requirements applicable to the
Corporation's executive officers, directors and 10% stockholders were complied
with.
PROPOSAL TO APPROVE AMENDMENTS TO THE IMCO RECYCLING INC.
ANNUAL INCENTIVE PROGRAM
GENERAL
The Corporation's Annual Incentive Program (the "Incentive Plan") was
adopted by the Board in February 1996 and approved by the stockholders at the
Corporation's 1996 Annual Meeting. In February 1997, the Board approved, subject
to approval by the Corporation's stockholders, certain amendments to the
Incentive Plan.
The provisions of the amendments to the Incentive Plan are summarized below.
The statements herein concerning the terms and provisions of these amendments
are summaries only and are qualified in their entirety by reference to the full
text of these amendments, a copy of which is attached hereto as Appendix A.
The principal amendment to the Incentive Plan permits the Committee to grant
discretionary stock options to any employee of the Corporation or any subsidiary
of the Corporation, or any non-employee director, officer or consultant of the
Corporation or any subsidiary, in recognition of such individual's contributions
or potential contributions. The provisions of the Incentive Plan prior to such
amendment permitted the annual granting of options under the Incentive Plan only
to key management employees of the Corporation, and only as long as the
Corporation achieved a return on total assets (as defined in the plan) of 15%
with respect to that fiscal year. It was originally intended by the Board that
grants of discretionary options to employees would continue to be made from time
to time under the Corporation's 1992 Option Plan. However, during 1996 and early
1997, the Corporation granted discretionary options under the 1992 Option Plan
covering a total of 421,942 shares, leaving, as of March 28, 1997, only 13,222
shares available for grant under the 1992 Option Plan.
The Board of Directors believes that maintaining a source of shares for
discretionary grants of stock options is in the best interests of the
Corporation in order for the Corporation to attract and retain talented
individuals. The ability of the Corporation to make discretionary grants to a
broader class of
13
<PAGE>
Incentive Plan stock option participants preserves the Corporation's flexibility
to attract new employees as well as reward existing employees for their
contributions. In addition, this amendment enables the Corporation to make
discretionary grants to non-employee directors, officers or consultants under
appropriate circumstances. This amendment increases the Corporation's ability,
at any time and from time to time, to reward and retain those individuals who
have been identified as important to the success of the Corporation or its
subsidiaries.
Eligible participants under the discretionary option provisions of the
Incentive Plan, as proposed to be amended, include key employees, consultants,
officers and directors of the Corporation and its subsidiaries selected by the
Committee from time to time. At December 31, 1996, the Corporation estimates
that approximately 70 individuals were eligible to participate in the Incentive
Plan, 25 of whom were participants. As of March 28, 1997 no options to purchase
shares of Common Stock had been granted under the Incentive Plan, because the
Corporation's return on total assets for fiscal 1997 (as computed under the
terms of the Incentive Plan) did not equal or exceed 15%. See "Compensation
Committee Report to Stockholders". As of March 28, 1997, 495,282 shares of
Common Stock are available for future grants of options under, and for other
purposes of, the Plan.
The Board is not requesting an increase in the number of shares of Common
Stock reserved and authorized for issuance under the Incentive Plan. The maximum
number of shares so authorized and reserved (subject to adjustment as provided
under the provisions of the Incentive Plan) remains at 500,000.
No bonuses were paid and no stock options were granted during 1996 under the
Incentive Plan to the Named Executive Officers and the Corporation's executive
officers, employees and consultants as a group. See "Remuneration of Directors
and Officers."
TERMS OF THE INCENTIVE PLAN
Unless sooner terminated by action of the Board, the Incentive Plan will
terminate on February 28, 2006, and thereafter no awards may be granted
thereunder.
BONUSES. The Committee has the authority to grant bonuses to key employees
of the Corporation or any majority-owned subsidiary at such time, and in such
amounts and under such terms as the Committee determines in accordance with the
Incentive Plan. The Incentive Plan authorizes the Committee to award two types
of bonuses: (i) a ROTA bonus, and (ii) an EPS bonus. The Committee is authorized
to grant ROTA bonuses to key management employees if the Corporation's return on
total assets ("ROTA") is greater than ten percent (10%) with respect to a fiscal
year. The Incentive Plan also provides that participants selected by the
Committee may be eligible for a bonus based on the Corporation's earnings per
share ("EPS") for the current fiscal year as compared with the average of the
Corporation's EPS for the prior three years. The maximum bonus amounts for any
participant as calculated above may be reduced by an amount of up to 50% by the
Committee in its sole discretion; however, the total maximum bonus amounts to
any participant may not be increased. In addition, the maximum total bonus
payable to any participant with respect to any bonus year shall not exceed
$750,000. The Committee shall also, from time to time, establish guidelines for
the ownership of shares of the Corporation's Common Stock for participants (the
"Guidelines"). On June 1 of each year, each participant shall irrevocably elect,
in writing, the percentages of such participant's bonus to be paid in cash and
in shares of Common Stock (the "Annual Election"). On November 30 of each year,
the Committee shall determine, by reference to the Guidelines, whether a
participant's stock ownership then meets or exceeds the Guidelines. If, as of
such November 30, a participant's Common Stock ownership meets or exceeds the
Guidelines, such participant's bonus, after giving effect to deductions of
amounts for applicable tax withholding requirements, shall be paid in
proportions of cash and shares of Common Stock in accordance with the allocation
set forth in such participant's Annual Election. If, on the other hand, such
participant's Common Stock ownership does not then meet such Guidelines, such
participant's bonus, after giving effect to deductions for applicable tax
withholding requirements, shall be paid in accordance with percentages of Common
14
<PAGE>
Stock and cash established by the Committee under the Guidelines then in effect
with respect to the applicable bonus year. On the preliminary payment date,
which shall be in the last month of the fiscal year in question, the Committee
shall calculate the bonuses and distribute 80% of the aggregate of the actual
ROTA bonus and EPS bonus, if any, awarded to a participant. On the final payment
date, which shall occur after the Corporations independent auditors render their
final audit opinion with respect to the fiscal year in question, the Committee
shall calculate the bonus, and distribute the portions of the bonus which had
not been previously distributed to participants on the preliminary payment date.
The Incentive Plan does not prohibit the corporation from granting
discretionary bonuses to employees from time to time.
OPTIONS. The terms of the Incentive Plan as proposed to be amended permit
the Committee from time to time, but not less often than annually, to grant
options to selected key members of management of the Corporation or any
majority-owned subsidiary eligible to receive grants of options under the
Incentive Plan, if ROTA for that particular fiscal year exceeds 15%. In
addition, the amended Incentive Plan will permit the Committee at any time and
from time to time to grant options on a discretionary basis to a broader base of
potential participants (i.e. key employees, officers, non-employee directors and
consultants of the Corporation or any majority-owned subsidiary), without regard
to whether the 15% ROTA amount has been attained with respect to that fiscal
year.
The aggregate number of shares of Common Stock that may be represented by
grants of stock options made to any individual participant under the Incentive
Plan in any fiscal year may not exceed 100,000 shares.
The exercise price for nonqualified stock options granted pursuant to the
Incentive Plan cannot be less than the fair market value of Common Stock on the
date of grant, and the Committee shall provide for the exercise of such options
in installments and on such terms, conditions and restrictions as it may
determine. The exercise price for an incentive stock option cannot be less than
100% (110% in the case of certain employees owning more than 10% of the
outstanding shares of Common Stock) of the fair market value of Common Stock on
the date of grant, and the Committee shall provide for the exercise of such
options in installments and on such terms, conditions and restrictions as it may
determine. The option period may not extend longer than ten years from the date
the option is granted and, in the case of incentive stock options, is limited to
five years from the date of grant for certain eligible participants owning more
than 10% of the outstanding shares of Common Stock, subject to earlier
expiration upon death, disability, retirement or termination of service.
The options granted under the Incentive Plan are not transferable other than
by will or by the laws of descent and distribution or pursuant to the terms of a
qualified domestic relations order. The exercise of incentive stock options
shall be subject to a $100,000 calendar year limit based on the fair market
value of the Common Stock at the time the option was granted. During the
lifetime of the optionee, his stock options may be exercised only by him unless
the particular stock option agreement provides that his guardian or legal
representative may do so.
EXERCISE OF OPTIONS; RELOAD OPTIONS. The exercise price of options granted
under the Incentive Plan may be paid in cash or in shares of Common Stock valued
at their fair market value on the date of exercise (or in any combination of
cash and shares of Common Stock having an aggregate fair market value equal to
the exercise price). In the event that shares are delivered by a participant in
payment of all of a portion of the exercise price and/or shares to be delivered
to, or withheld by, the Corporation in payment of the Corporation's tax
withholding obligations upon exercise, the participant so exercising a
nonqualified stock option shall automatically be granted a replacement
nonqualified stock option (or a participant exercising an incentive stock option
shall automatically be granted a replacement incentive stock option) (in either
case, a "Reload Stock Option") to purchase that number of shares so delivered
to, or withheld by, the Corporation at an exercise price equal to the fair
market value per share of Common Stock on such date of
15
<PAGE>
exercise. The option period for a Reload Stock Option will commence on the date
of grant and expire on the expiration date of the original stock option it
replaces.
In the event that a participant exercises a stock option and receives a
Reload Stock Option as described above, the participant is restricted from
transferring or pledging that number of shares received by the participant upon
exercise of the original stock option, which is equal to one-half of the total
number of shares delivered to and/or withheld by the Corporation upon the
participants exercise of the stock option (the "Restricted Stock"). These
restrictions will continue in effect until the earliest to occur of the
following: (i) the expiration of five years from the date of issuance of the
Restricted Stock, (ii) in the case of an employee, the retirement of such
participant from the Corporation or the subsidiary in accordance with standard
retirement policies, (iii) in the case of a non-employee director, officer or
consultant of the Corporation, the cessation of service to the Corporation of
such participant in such capacity, (iv) the death of such participant, (v) the
total and permanent disability of such participant, or (vi) a Change in Control
of the Corporation (as defined in the Incentive Plan). However, shares of
Restricted Stock may be used in payment of the exercise price of a stock option
or in satisfaction of the Corporation's tax withholding obligations upon any
such exercise. Except for those restrictions on transfer, participants receiving
shares of Restricted Stock shall have all of the rights of a stockholder of the
Corporation, including the right to vote the shares and the right to receive any
dividends or distributions thereon. In addition, the Committee is empowered, in
its discretion, to waive the restrictions on transfer imposed on shares of
Restricted Stock.
TERMINATION OF EMPLOYMENT OR SERVICE. The Incentive Plan states that upon
termination of an optionee's employment or service with the Corporation by
reason of death, total and permanent disability, or otherwise, his nonqualified
stock option will be exercisable for a period of 180 days after such termination
to the extent the option was exercisable on the date of such termination (so
long as the option is exercised prior to the date of its stated expiration).
With respect to incentive stock options, the options will terminate 90 days
after termination of employment, except that if the optionee's employment with
the Corporation terminates by reason of death or total and permanent disability,
the options will terminate 180 days after the termination of the optionee's
employment with the Corporation. The Incentive Plan provides that more
restrictive terms than the foregoing concerning exercises following termination
of service may be provided for in the particular stock option agreement.
However, the Committee is also authorized, in its discretion, to extend the date
upon which any option granted under the Incentive Plan ceases to be exercisable.
The Incentive Plan provides that if an optionee who is an employee
(including any employee-director) retires in accordance with standard policies
of the Corporation, all stock options held by the optionee will become fully
exercisable and vested. If an option granted under the Incentive Plan terminates
or expires without having been exercised in full, the unexercised shares subject
to that option will be available for further grants of options under the
Incentive Plan.
The Incentive Plan provides that in the event of a Change in Control (as
defined therein) of the Corporation, all stock options will become fully
exercisable and vested, regardless of provisions under option agreements
requiring shares to be exercised in installments.
DIRECTORS' ANNUAL RETAINER
The Corporation may pay an annual retainer, in amounts as may be established
and modified from time to time at the discretion of the Board, to non-employee
directors with respect to their service as members of the Board and committees
thereof (the "Annual Retainer"). The Incentive Plan provides that one-half of
the amount of the Annual Retainer shall be paid quarterly in shares of Common
Stock determined by dividing one-eighth of the Annual Retainer by the closing
price per share of the Common Stock as quoted on the NYSE on the third trading
day prior to the last day of the fiscal quarter. Any fractional shares shall be
paid in cash. On the last day of each fiscal quarter of the Corporation's fiscal
16
<PAGE>
year, each non-employee director shall receive in cash an amount equal to
one-fourth of the portion of the Annual Retainer which is not to be paid in
shares of Common Stock with respect to that calendar year.
ADMINISTRATION OF THE INCENTIVE PLAN
The Incentive Plan is administered by the Compensation Committee of the
Board. The Committee may grant options and bonuses subject to the terms of the
Incentive Plan and determine the terms of options granted to participants. See
"Compensation Committee Report to Stockholders".
AMENDMENT OF THE INCENTIVE PLAN
The Incentive Plan provides that the Board may from time to time discontinue
or amend the Incentive Plan without the consent of the participants. In
particular, the Board may amend the Incentive Plan in order for stock options to
qualify for the exemption under Rule 16b-3 under the Exchange Act or to qualify
as performance-based compensation under Section 162(m) of the Code.
ADJUSTMENTS
The Incentive Plan provides that the number of shares issuable in payment of
bonuses and upon exercises of stock options and the exercise price of such
options are subject to such adjustments as the Corporation may deem appropriate
to reflect any stock dividend, stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, reorganization, sale of
substantially all of the Corporation's assets, liquidation or such similar
events or occurrence, of or by the Corporation.
CERTAIN FEDERAL INCOME TAX ASPECTS
The following is a summary of the principal federal income tax consequences
associated with grants of options under the Incentive Plan. It does not describe
all federal income tax consequences under the Incentive Plan, nor does it
describe foreign, state or local tax consequences. Each participant is urged to
consult his or her personal tax advisor to determine the specific tax
consequences to him or her of the Incentive Plan.
BONUSES. Under current law, bonuses paid in cash will be included for
federal income tax purposes in the recipient's income as taxable compensation in
the year paid, and the Corporation will generally receive an income tax
deduction at the same time and for the same amount. Similarly, the fair market
value of shares of Common Stock issued in payment of a portion of a recipient's
bonus shall be recognized as taxable income to the recipient in the year issued,
and the Corporation will generally receive an income tax deduction at the same
time and for the same amount.
NONQUALIFIED STOCK OPTIONS. The Incentive Plan is not a qualified plan
within the meaning of Section 401 of the Code. The granting of a nonqualified
stock option will not result in federal income tax consequences to either the
Corporation or the optionee. Upon exercise of a nonqualified stock option, the
optionee will recognize ordinary income in an amount equal to the difference
between the fair market value of the shares on the date of exercise and the
exercise price, and the Corporation will be entitled to a corresponding
deduction.
For purposes of determining gain or loss realized upon a subsequent sale or
exchange of such shares, the optionee's tax basis will be the sum of the
exercise price paid and the amount of ordinary income, if any, recognized by the
optionee. Any gain or loss realized by an optionee on disposition of such shares
generally will be a long-term capital gain or loss (if the shares are held as a
capital asset for at least one year) and will not result in any tax deduction to
the Corporation.
INCENTIVE STOCK OPTIONS. In general, no income will be recognized by an
optionee and no deduction will be allowed to the Corporation at the time of the
grant or exercise of an incentive stock option granted
17
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under the Incentive Plan. When the stock received on exercise of the option is
sold, provided that the stock is held for more than two years from the date of
grant of the option and more than one year from the date of exercise, the
optionee will recognize long-term capital gain or loss equal to the difference
between the amount realized and the exercise price of the option related to such
stock. If these holding period requirements under the Code are not satisfied,
the subsequent sale of stock received upon exercise of an incentive stock option
is treated as a disqualifying disposition. In general, the optionee will
recognize taxable income at the time of a disqualifying disposition as follows:
(i) ordinary income in an amount equal to the excess of the lesser of the fair
market value of the Common Stock on the date the incentive stock option is
exercised or the amount realized on such disqualifying disposition over the
exercise price and (ii) capital gain to the extent of any excess of the amount
realized on such disqualifying disposition over the fair market value of the
Common Stock on the date the incentive stock option is exercised (or capital
loss to the extent of any excess of the exercise price over the amount realized
on disposition). Any capital gain or loss recognized by the optionee will be
long-term or short-term depending upon the holding period for the stock sold.
The Corporation may claim a deduction at the time of the disqualifying
disposition equal to the amount of the ordinary income the optionee recognizes.
Although an optionee will not realize ordinary income upon the exercise of
an incentive stock option, the excess of the fair market value of the shares
acquired at the time of exercise over the exercise price is included in
alternative minimum taxable income for purposes of calculating the optionee's
alternative minimum tax, if any, pursuant to Section 55 of the Code.
WITHHOLDING. Withholding of federal income taxes at applicable rates will
be required in connection with any ordinary income realized by a participant by
reason of the payment of a bonus in cash or in shares of Common Stock and by
reason of the exercise of stock options granted pursuant to the Incentive Plan.
Such taxes may be deducted, withheld or remitted to the Corporation prior to the
receipt of any Common Stock certificates.
The Board recommends that stockholders vote FOR the proposal to approve the
amendments to the Incentive Plan.
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board, upon the recommendation of its Audit Committee, has selected
Ernst & Young LLP as independent auditors to examine the consolidated financial
statements of the Corporation for 1997. Stockholders are being asked to ratify
this appointment. The Corporation has been informed that neither Ernst & Young
LLP nor any of its partners have any direct financial interest or any material
indirect financial interest in the Corporation nor have had any connection
during the past three years with the Corporation in the capacity of promoter,
underwriter, voting trustee, director, officer or employee.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they so desire and to
be available to respond to appropriate questions.
The Board recommends that stockholders vote FOR the ratification of the
appointment of Ernst & Young LLP as the Corporation's independent auditors for
1997.
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OTHER MATTERS
The Corporation will bear all costs of this proxy solicitation. In addition
to soliciting proxies by mail, directors, executive officers and employees of
the Corporation, without receiving additional compensation, may solicit proxies
by telephone, by telegram or in person. Arrangements will also be made with
brokerage firms and other custodians, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of shares of the Common Stock,
and the Corporation will reimburse such brokerage firms and other custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection with forwarding such materials.
The Board does not know of any business to be presented for consideration at
the Annual Meeting other than that stated in the accompanying Notice. It is
intended, however, that the persons authorized under the Board's proxies may, in
the absence of instructions to the contrary, vote or act in accordance with
their judgment with respect to any other proposal properly presented for action
at such meeting.
The Annual Report to Stockholders for the fiscal year ended December 31,
1996, which includes financial statements, is enclosed herewith. The Annual
Report does not form a part of this Proxy Statement or the materials for the
solicitation of proxies to be voted at the annual meeting.
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES BUT NOT INCLUDING EXHIBITS, WILL BE FURNISHED AT NO
CHARGE TO EACH PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON RECEIPT OF A
WRITTEN REQUEST OF SUCH PERSON ADDRESSED TO IMCO RECYCLING INC., ATTN: PAUL V.
DUFOUR, 5215 NORTH O'CONNOR BLVD., SUITE 940, CENTRAL TOWER AT WILLIAMS SQUARE,
IRVING, TEXAS 75039, TELEPHONE (972) 869-6575. THE CORPORATION WILL ALSO FURNISH
SUCH ANNUAL REPORT ON FORM 10-K TO ANY "BENEFICIAL OWNER" OF SUCH SECURITIES AT
NO CHARGE UPON RECEIPT OF A WRITTEN REQUEST, ADDRESSED TO MR. DUFOUR CONTAINING
A GOOD FAITH REPRESENTATION THAT, AT THE RECORD DATE, SUCH PERSON WAS A
BENEFICIAL OWNER OF SECURITIES OF THE CORPORATION ENTITLED TO VOTE AT THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD MAY 13, 1997. COPIES OF ANY EXHIBIT TO THE
FORM 10-K WILL BE FURNISHED UPON THE PAYMENT OF A REASONABLE FEE.
Information contained in the Proxy Statement relating to the occupations and
security holdings of directors and officers of the Corporation is based upon
information received from the individual directors and officers.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES. A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT
WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
By Order of the Board of Directors
Paul V. Dufour
SECRETARY
Irving, Texas
April 10, 1997
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APPENDIX A
PROPOSED AMENDMENTS TO THE
IMCO RECYCLING INC.
ANNUAL INCENTIVE PROGRAM
I. A new defined term "Discretionary Option" is hereby added to Article I
of the Plan, to follow immediately the defined term "Date of Grant", and to read
as follows:
"DISCRETIONARY OPTION" has the meaning assigned to it in Section 8.1(b).
II. The defined term "Participant" contained in Article I of the Plan is
hereby deleted and substituted in lieu thereof is the following:
"PARTICIPANT" means any key employee of the Company or any of its
Subsidiaries that the Committee has determined to be eligible for participation
in the Plan and who, on the particular Payment Date is subject to Article IV of
the Plan, then employed by the Company or any of its Subsidiaries; provided
that, solely for purposes of Section 8.1(b) of the Plan and the Discretionary
Options which may be granted pursuant thereto, "Participants" shall mean any
employee of the Company or any Subsidiary of the Company or any non-employee
director, officer or consultant of the Company or any Subsidiary who is, or who
is proposed to be, a recipient of a Discretionary Option.
III. Article IV of the Plan is hereby amended by adding a new sentence to
follow the existing last sentence:
"In addition, the Committee shall from time to time, select the particular
employees, consultants, officers and directors of the Company and its
Subsidiaries to whom Discretionary Options to be granted pursuant to Section
8.1(b) of the Plan are to be granted."
IV. Section 8.1 of the IMCO Recycling Inc. Annual Incentive Program is
hereby deleted in its entirety and replaced with the following:
"8.1 GRANTS OF STOCK OPTIONS.
(a) ROTA BONUS OPTIONS. In the event that the ROTA for any Bonus Year
calculated in accordance with Article V exceeds 15%, then the Committee may
grant Stock Options under the Plan to Participants eligible for ROTA Bonuses
thereunder as follows:
(i) On, or as soon as reasonably practicable following, the Preliminary
Payment Date, the Committee shall calculate the number of shares of Common
Stock to be covered by the Stock Options to be granted by first multiplying
the dollar amount of the most recent Total Bonus actually awarded to each
such Participant, by 1.5 (the "Option Amount"); and
(ii) The number of shares of Common Stock issuable upon the exercise of
the Stock Option to be granted to such Participant shall be determined by
dividing the Option Amount by the Fair Market Price on the Date of Grant.
(b) DISCRETIONARY OPTIONS. Notwithstanding any provision contained in this
Plan to the contrary, the Committee may, in its sole discretion, at any time and
from time to time, select Participants and grant Stock Options ("Discretionary
Options") to any such Participant in recognition of such Participant's
contributions or potential contributions to the Company or any Subsidiary. In
this regard, the Committee shall consider and give appropriate weight to input
from representatives of management of the Company regarding the contributions or
potential contributions to the Company or a Subsidiary of particular employees,
officers or consultants or potential employees, officers or consultants of the
Company or a Subsidiary."
A-1
<PAGE>
REVOCABLE PROXY
IMCO RECYCLING INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Don V. Ingram and Paul V. Dufour, or
either of them, with full power of substitution, as proxies of the
undersigned, with all the powers that the undersigned would possess if
personally present to cast all votes that the undersigned would be entitled
to vote at the Annual Meeting of Stockholders of IMCO Recycling Inc. (the
"Corporation") to be held on Tuesday, May 13, 1997, at the Central Tower at
Williams Square, Twenty-Sixth Floor, LaCima Club, Lakeside Room, 5215 North
O'Connor Blvd., Irving, Texas, at 9:00 A.M., Central Daylight Savings Time,
and any and all adjournments and postponements thereof (the "Annual
Meeting"), including (without limiting the generality of the foregoing) to
vote and act as follows on the reverse side.
This Proxy will be voted at the Annual Meeting or any adjournments or
postponements thereof as specified. IF NO SPECIFICATIONS ARE MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED ON THE
REVERSE SIDE AND FOR PROPOSALS 2 AND 3. This Proxy hereby revokes all prior
proxies given with respect to the shares of the undersigned.
(CONTINUED ON REVERSE SIDE)
- FOLD AND DETACH HERE -
<PAGE>
<TABLE>
<S> <C> <C>
Please mark
your votes as X
indicated by
this example
1. Election of Directors.
The election of the following nominees to the Board of Directors as Class
II Directors, unless otherwise indicated below.
FOR AGAINST (a) John J. Fleming (b) Don Navarro
/ / / / IN THE EVENT THE UNDERSIGNED WISHES TO WITHHOLD AUTHORITY TO VOTE FOR ANY
PARTICULAR NOMINEE OR NOMINEES LISTED ABOVE, PLEASE SO INDICATE BY CLEARLY AND
NEATLY LINING THROUGH OR STRIKING OUT THE NAME OF ANY SUCH NOMINEE OR NOMINEES.
2. Proposal to amend the 3. Proposal to ratify the appointment 4. In their discretion upon such other
Corporation's Annual of Ernst & Young LLP as the independent matters as may properly come before the
Incentive Program. public accountants of the Corporation meeting or any adjournment thereof.
for 1997.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
/ / / / / / / / / / / / Please complete, date, sign and mail this Proxy
promptly in the enclosed envelope. No postage
is required for mailing in the United States.
Dated , 1997
---------------------------
---------------------------------------
Signature(s)
---------------------------------------
Signature(s)
IMPORTANT: Please date the Proxy and sign
exactly as your name appears on this Proxy.
If shares are held joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as such.
If a corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
</TABLE>
- FOLD AND DETACH HERE -
Dear Stockholder(s):
Enclosed you will find material relative to the Corporation's 1997 Annual
Meeting of Stockholders. The Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted at the meeting, as summarized
on the attached proxy card.
Whether or not you expect to attend the Annual Meeting, please complete and
return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. As a stockholder, please
remember that your vote is important to us. We look forward to hearing from
you.
IMCO Recycling Inc.
