<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
IMCO Recycling Center
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<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, La Cima Club, 5215 North O'Connor Blvd., Irving, Texas, on
Wednesday, May 12, 1999, 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 elect two directors to serve until the
2002 Annual Meeting of Stockholders. Your Board of Directors has unanimously
nominated these persons for election as directors. You are also being asked to
consider the approval of the IMCO Recycling Inc. Employee Stock Purchase Plan,
to consider the approval of the Corporation's Annual Incentive Compensation
Plan and to consider and ratify the appointment of Ernst & Young LLP as the
Corporation's independent accountants for 1999. Information concerning the
Board nominees, the Employee Stock Purchase Plan, the Annual Incentive
Compensation Plan 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 9, 1999
<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 12, 1999
---------------------
To the Stockholders of
IMCO Recycling Inc.
The 1999 Annual Meeting of Stockholders of IMCO Recycling Inc. (the
"Corporation") will be held at the Central Tower at Williams Square, Twenty-
Sixth Floor, La Cima Club, 5215 North O'Connor Blvd., Irving, Texas, on
Wednesday, May 12, 1999, at 9:00 A.M., Central Daylight Savings Time, for the
following purposes:
1. To elect two Class III directors to hold office until the 2002 Annual
Meeting of Stockholders.
2. To consider and vote on the approval of the Corporation's Employee Stock
Purchase Plan.
3. To consider and vote on the approval of the Corporation's Annual
Incentive Compensation Plan.
4. To consider and ratify the appointment of Ernst & Young LLP as the
Corporation's independent accountants for 1999.
5. 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 19, 1999 are entitled to notice of and to vote at the Annual
Meeting. A complete list of these stockholders of record 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 proxy card should be signed and returned to
ensure that all of your shares will be voted. The proxy card should be signed
by you exactly as your stock is registered. If you have already signed and
returned your proxy, you may revoke it at any time prior to the meeting, and
if you are present at the meeting, you 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 enclosed Proxy are
sent to you by order of the Board of Directors of the Corporation.
Paul V. Dufour
Secretary
Irving, Texas
April 9, 1999
<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 12, 1999
---------------------
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 12,
1999 and at any adjournment of the meeting. The Proxy Statement and the
enclosed proxy are first being mailed to stockholders on or about April 9,
1999.
This proxy solicitation is intended to give stockholders the opportunity to
vote on the matters set forth in the accompanying Notice of Annual Meeting.
The proxy permits stockholders to withhold voting for either or both nominees
for election to the Corporation's Board of Directors and to abstain from
voting on any other specified proposal if the stockholder chooses.
All holders of record of shares of the Corporation's Common Stock at the
close of business on March 19, 1999 (the "Record Date") are entitled to notice
of and to vote at the meeting. On the Record Date, the Corporation had
outstanding 16,464,991 shares of 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, so long as a quorum is
constituted, is required for the election of directors. The proposals to
approve the Employee Stock Purchase Plan and to approve the Annual Incentive
Compensation Plan each require for their approval the affirmative vote of a
majority of the votes cast by the stockholders represented at the Annual
Meeting, provided that the total vote cast on a proposal represents over 50%
in interest of all shares entitled to vote on that proposal. All other action
proposed in this Proxy Statement may be taken upon the affirmative vote of a
majority of the votes cast by the stockholders represented at the Annual
Meeting, so long as 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 approve the Employee Stock Purchase Plan
or the proposal to approve the Annual Incentive Compensation Plan will have
the effect of a negative vote because approval of those proposals requires the
affirmative vote of holders of a majority of the 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 approve the Employee Stock Purchase
Plan, the proposal to approve the Annual Incentive Compensation Plan and the
proposal to ratify the appointment of the auditors. Under 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
approve the Employee Stock Purchase Plan or the proposal to approve the Annual
Incentive Compensation Plan.
<PAGE>
A 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 signing a subsequent proxy or by voting in person at
the meeting (although simply attending the Annual Meeting without signing a
ballot or signing a subsequent proxy will not constitute revocation of a
proxy). Where a stockholder's signed 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 Corporation's Employee
Stock Purchase Plan; (iii) FOR the approval of the Corporation's Annual
Incentive Compensation Plan; and (iv) FOR the ratification of the appointment
of Ernst & Young LLP as the Corporation's independent accountants for 1999.
2000 ANNUAL MEETING
The Board presently intends to hold the Corporation's next Annual Meeting of
Stockholders on or about May 10, 2000. A Proxy Statement and Notice of this
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 2000 Annual Meeting of Stockholders, a proposal of a
stockholder must be received by the Corporation at its principal executive
offices in Irving, Texas, by December 11, 1999. All stockholder proposals of
this nature must comply with Rule 14a-8 promulgated by the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (the
"Exchange Act").
In addition, in order for a stockholder proposal to be raised from the floor
during the next year's annual meeting, written notice about that proposal must
be received by the Corporation by no later than December 11, 1999 and must
contain the necessary information as required by the Corporation's bylaws. In
order for a stockholder to make a director nomination at an annual meeting, it
is necessary to notify the Corporation not fewer than 120 days in advance of
the day specified in the Proxy Statement for this year's Annual Meeting. Thus,
since April 9, 1999 is specified as the mailing date in this year's Proxy
Statement, in order for any nomination notice to be timely for next year's
annual meeting, it must be received by the Corporation not later than December
11, 1999 (that is, 120 days prior to April 9) Also, the notice must meet all
the other requirements contained in the Corporation's bylaws for nominating
directors. If you would like a copy of the relevant bylaw provisions
containing the requirements for making stockholder proposals and nominating
director candidates, please contact the Corporation's corporate Secretary at
the executive headquarters of the Corporation. Also, under "Meetings of
Directors and Committees" you can find information about suggestions for
nominations to the Board of Directors.
VOTING AND PRINCIPAL STOCKHOLDERS
At the Record Date, there were outstanding 16,464,991 shares of Common Stock
which were held of record by 474 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 19, 1999, 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 and nominee
for 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>
Number Shares Underlying Total Percent
Name of of Options Exercisable Beneficial of
Beneficial Owner Shares(1) within 60 Days Ownership Class
- ---------------- --------- ------------------- ---------- -------
<S> <C> <C> <C> <C>
Don V. Ingram............. 1,254,710(2) 257,620 1,512,330 9.0%
2200 Ross Ave., Suite
4500-E
L.B. 170
Dallas, Texas 75201
William Warshauer......... 1,134,936(3) -0- 1,134,936 6.9%
430 W. Garfield Ave.
Coldwater, Michigan 49036
Mellon Bank Corporation... 1,969,280(4) -0- 1,969,280 12.0%
One Mellon Bank Center
Pittsburgh, Pennsylvania
15258
Eagle Asset Management,
Inc...................... 1,355,455(5) -0- 1,355,4550 8.2%
880 Carillion Parkway
St. Petersburg, Florida
33716
Steve Bartlett............ 2,425 -0- 2,425 *
J.M. Brundrett............ 17,678 7,526 25,204 *
Ralph L. Cheek............ 50,519 4,615 55,134 *
John J. Fleming........... 20,646 7,926 28,572 *
Jeb Hensarling............ 1,195 -0- 1,195 *
Don Navarro............... 3,678 7,926 11,604 *
Jack C. Page.............. 2,778 7,926 10,704 *
Hugh G. Robinson.......... -0- -0- -0- *
Paul V. Dufour............ 160,410 189,067 349,477 2.1%
Richard L. Kerr........... 85,780 148,467 234,247 1.4%
Denis W. Ray.............. 3,000 5,000 8,000 *
Thomas W. Rogers.......... 36,200 111,667 147,867 *
All Executive Officers and
Directors as a group (16
persons, including those
individuals named
above)................... 1,727,267 886,766(6) 2,614,033 15.1%
</TABLE>
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* 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 1,014,569 shares owned by Mr. Ingram directly, 78,141 shares
owned by Mr. Ingram's wife and 162,000 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) Represents 551,330 shares owned by Mr. Warshauer directly, 551,330 owned
by Mr. Warshauer's wife and 32,276 shares owned by a limited partnership
in which both Mr. Warshauer and his wife own a 50% partnership interest.
Includes 225,000 shares owned by Mr. Warshauer and his wife held in an
escrow fund and subject to return to the Corporation under certain
conditions under an Escrow Agreement among Mr. Warshauer, his wife and the
Corporation, entered into in connection with the Corporation's acquisition
of Alchem Aluminum, Inc. in 1997. Mr. Warshauer is a nominee for Class III
Director of the Corporation.
(4) Information with respect to beneficial ownership of shares by Mellon Bank
Corporation is based solely upon the latest report of Mellon Bank
Corporation on Schedule 13G dated February 4, 1999 as filed with the SEC.
Mellon Bank Corporation or certain of its direct or indirect subsidiaries
have sole and shared power to vote or to direct the vote for 1,869,947
shares and 5,630 shares, respectively, and sole and shared power to
dispose or to direct the disposition of 1,964,480 shares and 4,800 shares,
respectively.
(5) Information with respect to beneficial ownership of shares by Eagle Asset
Management, Inc. is based solely upon the latest report of Eagle Asset
Management, Inc. on Schedule 13G dated January 29, 1999 as filed with the
SEC.
(6) 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 19, 1999.
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
III Directors expires at the Annual Meeting of Stockholders to be held on May
12, 1999, the term of office of the Class II Directors expires at the 2000
Annual Meeting of Stockholders and the term of office of the Class I Directors
expires at the 2001 Annual Meeting of Stockholders.
The persons named in the proxy will vote for Hugh G. Robinson and William
Warshauer as nominees for election as Class III Directors except where
authority has been withheld as to a particular nominee or as to both nominees.
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 for any substitute
nominee designated by the Board.
Directors and Nominees for Election to the Board of Directors
NOMINEES
Class III Directors.
<TABLE>
<CAPTION>
Name Age
---- ---
<S> <C>
Hugh G. Robinson......................................................... 66
William Warshauer........................................................ 66
</TABLE>
Hugh G. Robinson is Chairman and Chief Executive Officer of The Tetra Group,
Inc., a construction management firm located in Dallas, Texas. He has held
that position since 1989. Prior to then, Mr. Robinson was President of
Cityplace Development Corporation, a real estate development subsidiary of The
Southland Corporation. Mr. Robinson is a former Chairman and Board member of
the Federal Reserve Bank of Dallas. Mr. Robinson served as an officer in the
United States Army, retiring with the rank of Major General. He is currently a
member of the Boards of Directors of A.H. Belo Corporation, Guaranty Federal
Savings Bank and Circuit City Stores, Inc., and is on the Advisory board of TU
Electric.
William Warshauer is the Chief Executive Officer of Alchem Aluminum, Inc., a
secondary specification aluminum alloying firm that he founded in 1970. Alchem
primarily serves the automotive market from its facility located in Coldwater,
Michigan. In November 1997 the Corporation purchased all of the outstanding
capital stock of Alchem, where Mr. Warshauer has continued to serve as a
director and chief executive officer. Mr. Warshauer plans to resign his
position as officer and director of Alchem if he is elected to the Board.
DIRECTORS CONTINUING IN OFFICE
Class II Directors; Present Term Expires 2000.
<TABLE>
<CAPTION>
Name Age
---- ---
<S> <C>
John J. Fleming.......................................................... 59
Jeb Hensarling........................................................... 41
Don Navarro.............................................................. 54
</TABLE>
John J. Fleming has served as a director since May 1989. Mr. Fleming is
Chairman and Chief Executive Officer of TransAtlantic Petroleum Corp., 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
4
<PAGE>
company headquartered in Calgary, Alberta, Canada. Mr. Fleming also serves as
a director of Gothic Energy Corporation.
Jeb Hensarling is a principal and owner of F-H & Associates, a public
affairs and media relations consulting firm located in Dallas, Texas. Mr.
Hensarling has also served as vice president of Maverick Capital, an
investment management firm, and as executive director of the National
Republican Senatorial Committee. Mr. Hensarling managed U.S. Senator Phil
Gramm's 1990 Reelection Campaign.
Don Navarro has served as a director since June 1986. Mr. Navarro is the
owner and president of Strategic Value Advisors, a company which provides
business and management services to public and private companies, specializing
in assisting organizations to develop, refine and implement strategic plans.
Class I Directors; Present Term Expires 2001.
<TABLE>
<CAPTION>
Name Age
---- ---
<S> <C>
Don V. Ingram............................................................ 63
Steve Bartlett........................................................... 51
</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 1994. 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
TransAtlantic Petroleum Corp.
Steve Bartlett has served as a director since 1998. He serves as Chairman of
the Board and interim CEO of Saranda Corporation, a custom manufacturer of
injection molded products located in Phoenix, Arizona; Mr. Bartlett acquired
Saranda with other investors in 1996. He founded Meridian Products Corporation
of Dallas, Texas, also a manufacturer of injection molded products, in 1976,
serving as its Chairman of the Board until he retired and sold his interest in
1998. Mr. Bartlett served as Mayor of Dallas, Texas from 1991 until 1995, and
as a member of the United States Congress from 1983 until 1991. Mr. Bartlett
is also a director of Kaufman and Broad Home Corporation.
Ralph L. Cheek, who is not standing for reelection, will serve as a Director
Emeritus to the Corporation for a three-year term. J.M. Brundrett and Jack C.
Page are currently Class III Directors who are not eligible to stand for
reelection at the Annual Meeting.
The Board recommends that stockholders vote FOR Hugh G. Robinson and William
Warshauer as nominees for election as Class III Directors at the Annual
Meeting of Stockholders.
MEETINGS OF DIRECTORS AND COMMITTEES
The Board held a total of ten Board meetings in 1998. Each director attended
at least 75% of the meetings of the full Board and the committees of which he
was a member held during 1998. The Board has established four standing
committees to assist it in the discharge of its responsibilities. In addition,
the Board has created an Executive Compensation Subcommittee within the
Compensation Committee.
The Audit Committee reviews the professional services provided by the
Corporation's independent accountants and the independence of that 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 five meetings in 1998.
The current members of the Audit Committee are Mr. Page, Chairman, and Mr.
Fleming.
5
<PAGE>
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 (except with respect to matters entrusted to the Executive
Compensation Subcommittee, as described below). This Committee held thirteen
meetings in 1998. The current members of the Compensation Committee are
Mr. Navarro, Chairman, Mr. Fleming and Mr. Page.
The Executive Compensation Subcommittee was formed during 1997 to succeed to
certain principal functions previously reserved to the Compensation Committee.
The Executive Compensation Subcommittee's principal responsibility is to
review and advise the board with respect to performance-based compensation of
corporate officers who are, or who are likely to become, subject to Section
162(m) of the Internal Revenue Code (which limits the deductibility of
compensation in excess of $1,000,000 paid to a corporation's chief executive
and four other highest compensated executive officers, unless certain
conditions are met), and equity awards to corporate officers and directors who
are subject to Section 16 of the Exchange Act. The Subcommittee met three
times during 1998. Messrs. Fleming (Chairman) and Page currently comprise the
members of this subcommittee.
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
1998. The current members of the Environmental Committee are Dr. Brundrett,
Chairman, and Mr. Cheek.
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 of the Corporation at the
Corporation's principal executive offices, 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 five meetings in 1998. The members of the
Committee on Directors are Mr. Navarro, Chairman, Dr. Brundrett and Mr.
Ingram. See also, "2000 Annual Meeting."
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee of the Board of Directors of the Corporation has
furnished the following report on executive compensation. The Committee report
documents the components of the Corporation's executive officer compensation
programs and describes the compensation philosophy on which 1998 compensation
determinations were made by the Committee with respect to the executive
officers, including the Chief Executive Officer and the four other executive
officers that are named in the compensation tables (the "Named Executive
Officers"). Because certain of the functions of the Committee have been
transferred to the Executive Compensation Subcommittee, the Subcommittee joins
in this report. The Subcommittee was established in 1997 to address issues
before the Committee that require decisions by directors who qualify as
outside directors under Section 162(m) of the Internal Revenue Code, and as
non-employee directors under Section 16(b) of the Exchange Act.
Compensation Philosophy and Overall Objectives of Executive Compensation
Programs
It is the philosophy of the Corporation to ensure that executive
compensation be directly linked to continuous improvements in corporate
performance and increases in stockholder value. The following objectives have
been adopted by the Committee as guidelines for compensation decisions:
6
<PAGE>
Provide a competitive total executive compensation package that enables
the Corporation to attract and retain key executives.
Integrate all pay programs with the Corporation's annual and long-term
business objectives and strategy, and focus executives on the fulfillment
of these objectives.
Provide variable compensation opportunities that are directly linked with
the performance of the Corporation.
In 1998, the Committee engaged PricewaterhouseCoopers LLP ("PwC"),
recognized independent compensation consultants, to undertake a third-party
evaluation of current compensation arrangements in light of competitive market
conditions. PwC assisted the Committee in its deliberations in determining
1998 compensation awards and will assist the Corporation in implementing pay-
for-performance initiatives in 1999.
As a result of the Committee's continuing review of the competitiveness of
the Corporation's total compensation program for officers and other key
employees, the Committee has recommended to the Board of Directors that the
Corporation adopt the Annual Incentive Compensation Plan. See "Proposal to
Approve the IMCO Recycling Inc. Annual Incentive Compensation Plan."
Cash Compensation
Cash compensation for 1998 included base salary and the Corporation's Annual
Incentive Program awards. The base salary of each of the Named Executive
Officers is determined by an evaluation of the responsibilities of that
position and by comparison to the average level of salaries paid in the
competitive market in which the Corporation competes for comparable executive
ability and experience. Annually, the performance of each Named Executive
Officer is reviewed by the Subcommittee and, in the case of the other
executive officers, the Chief Executive Officer, taking into account the
Corporation's operating and financial results for that year, the contribution
of each executive officer to these results, the achievement of goals
established for each executive officer at the beginning of each year and
competitive salary levels for persons in those positions in the markets in
which the Corporation competes. To assist in its deliberations in 1998, the
Committee was advised by PwC in compiling comparable salary and incentive
compensation information for a number of representative companies in the
industry for comparison purposes. Following its review of the performance of
the Named Executive Officers, the Committee and Subcommittee reported their
recommendations for salary increases and incentive awards to the Board of
Directors. In 1998, annual base salary increases and incentive compensation
awards were approved by the Subcommittee and reported to the Board of
Directors for all of the Named Executive Officers, and incentive compensation
awards were approved by the Committee for all of the executive officers (other
than the Named Executive Officers). The Committee believes these recommended
salary increases and incentive awards were warranted and consistent with the
performance of these executives during 1998 based on the Committee's and
Subcommittee's evaluation of each individual's overall contribution to
accomplishing the Corporation's 1998 corporate goals and of each individual's
achievement of individual goals during the year. The 1998 corporate financial
target determinants were return on assets and earnings per share growth.
Long Term Incentives
The Committee believes that it is essential to align the interests of the
Named Executive Officers and other management personnel responsible for the
growth of the Corporation with the interests of the Corporation's
stockholders. The Committee believes the long-term alignment of its executives
to stockholders is best accomplished through the provision of stock-based
and/or cash-based long-term incentives consistent with a stock growth
orientation. Therefore, the Committee will review a plan concept in 1999 and
recommend a plan design that will provide for payment of various forms of
long-term incentive compensation to the Board of Directors for its approval.
The purpose of the new plan will be to foster and promote the long-term
financial success of the Corporation and materially increase the value of the
equity interests in the Corporation by: (a) encouraging the long-term
commitment of selected key employees, (b) motivating superior performance of
key
7
<PAGE>
employees by means of long-term performance related incentives, (c)
encouraging and providing key employees with a formal program for obtaining an
ownership interest in the Corporation, (d) attracting and retaining
outstanding key employees by providing incentive compensation opportunities
competitive with other major companies and (e) enabling participation by key
employees in the long-term growth and financial success of the Corporation.
The Committee will continue to review long-term incentives and make
recommendations, where it deems appropriate, to the Board of Directors, from
time to time, to assure that the Named Executive Officers and other key
employees are appropriately motivated and rewarded based on the long-term
financial success of the Corporation.
Chief Executive Officer Compensation
In determining the compensation of Don V. Ingram, the Chairman and Chief
Executive Officer, the Subcommittee, with the assistance of PwC, considered
the Corporation's operating and financial results for fiscal year 1998,
evaluated Mr. Ingram's individual performance and substantial contribution to
those results and considered the compensation range for other chief executive
officers of companies in the industry. Based on that review and assessment,
the Subcommittee recognized that an increase in base salary was warranted as a
result of his performance and to bring his base salary in line with the
marketplace. However, PwC is currently reviewing the job content of each of
the Named Executive Officers to properly benchmark the positions to the
marketplace, and the Committee believes it prudent to recommend, and the Board
of Directors has acknowledged, the deferral of any base salary increase to
Mr. Ingram and other Named Executive Officers until after this review is
completed. Once the review is completed, the Subcommittee will recommend a
base salary increase, if any, based upon the review and will notify the Board
of Directors of its action.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code disallows a corporation's tax
deduction for compensation paid to its chief executive officer and its
executive officers in excess of $1,000,000 per person. Performance-based
compensation and certain other compensation are not subject to this deduction
limitation. The Corporation continually reviews its compensation plans to
minimize or avoid potential adverse effects of this legislation. The Committee
will consider recommending such steps as may be required to qualify either
annual or long-term incentive compensation as performance-based, whenever that
appears appropriate. However, the Board, the Committee and the Subcommittee
reserve the authority to award non-deductible compensation under circumstances
they deem appropriate.
Summary
Once the review of the Corporation's executive compensation program is
completed and pay-for-performance concepts are incorporated into the program,
the Committee believes that the total compensation program for Named Executive
Officers will be competitive with the compensation programs provided by other
corporations with which the Corporation competes, and will serve the best
interests of the stockholders of the Corporation. The Committee also believes
that the proposed Annual Incentive Compensation Plan and a long-term incentive
program design, primarily in the form of stock-based incentives, will provide
opportunities to participants that are consistent with the returns that are
generated on the behalf of Corporation's stockholders.
Compensation Committee
Compensation Committee Members:
Don Navarro, Chairman John J. Fleming Jack C. Page
Executive Compensation Subcommittee Members:
John J. Fleming, Chairman Jack C. Page
8
<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 Exchange Act, except to the extent that the Corporation
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under those Acts.
Compensation Committee Interlocks and Insider Participation
During 1998, the Corporation paid Strategic Value Advisors, a firm owned by
Mr. Navarro, $210,000 for representing the Corporation in connection with the
bankruptcy of a major customer of the Corporation and other collection
situations that required the expertise of Mr. Navarro's firm. In addition,
Mr. Ingram, Chief Executive Officer and Chairman of the Board of the
Corporation, is a director of TransAtlantic Petroleum Corp., a Canadian oil
and gas exploration and production company. Mr. Fleming is the President,
Chairman and Chief Executive Officer of TransAtlantic Petroleum Corp. Other
than the foregoing, the Corporation has no interlocking relationships or other
transactions involving any of its Compensation Committee members that are
required to be reported under this heading by SEC rules, and no current or
former officer of the Corporation serves on its Compensation Committee.
9
<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 (which
includes the Corporation) and (3) an index of peer companies selected by the
Corporation consisting of: Wellman Inc. and EnviroSource Inc. Safety-Kleen,
Inc., a former member of the Corporation's index of peer companies, was
acquired on May 18, 1998 by Laidlaw Environmental Services, Inc. As a result
of this transaction, the common stock of Safety-Kleen, Inc. is no longer
publicly traded, and the company is therefore not included in the
Corporation's index of peer companies for 1998. The Corporation considers
itself a part of the resource recovery industry, along with the other
companies in the peer index.
[PERFORMANCE GRAPH APPEARS HERE]
CUMULATIVE TOTAL RETURN
-------------------------------------------------
12/93 12/94 12/95 12/96 12/97 12/98
IMCO RECYCLING INC. 100 126 205 123 137 134
PEER GROUP 100 143 117 92 106 51
S & P 500 100 101 139 171 229 294
S & P SMALLCAP 600 100 95 124 150 189 194
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 or the Exchange Act, except to the extent that
the Corporation specifically incorporates this information by reference, and
shall not otherwise be deemed filed under those Acts.
10
<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 officers and each of the other four most highly
compensated executive officers of the Corporation determined as of the end of
the last fiscal year (referred to collectively as the "Named Executive
Officers") for the fiscal years ended December 31, 1998, 1997, and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards
------------------------------ -------------------------------------
Other annual Securities underlying All other
Name and Principal Position Year Salary Bonus(1) compensation options (#) compensation(2)
- --------------------------- ---- -------- -------- ------------ --------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
D.V. Ingram............. 1998 $361,200 $100,910 -- 200,000 $19,141
Chief Executive Officer 1997 $320,833 $243,000 -- 155,000 --
1996 -- -- -- -- --
R.L. Kerr............... 1998 $258,000 $ 62,447 -- 45,000 $21,238
President and Chief
Operating Officer 1997 $247,058 $183,000 -- 95,000 $13,770
1996 $214,700 -- -- 33,000 $12,307
P.V. Dufour............. 1998 $242,520 $ 62,427 -- 45,000 $21,293
Executive Vice
President, Chief 1997 $232,000 $175,400 -- 95,000 $13,935
Financial Officer and
Secretary 1996 $199,000 -- -- 33,000 $11,985
D.W. Ray................ 1998 $146,900 $ 50,000 $102,756(3) 40,000 $ 7,673
Senior Vice President,
Operations 1997 -- -- -- -- --
1996 -- -- -- -- --
T. W. Rogers............ 1998 $179,740 $ 47,070 -- 25,000 $15,083
Senior Vice President, 1997 $172,000 $ 72,000 -- 10,000 $13,478
Marketing And Sales 1996 $161,500 -- -- 12,500 $11,423
</TABLE>
- ---------------------
(1) Amounts represent cash bonus payments made to Named Executive Officers (a)
in 1999 and 1998 with respect to fiscal year 1998; (b) in 1998 and 1997
with respect to fiscal year 1997; and (c) in 1997 and 1996 with respect to
fiscal year 1996.
(2) Represents compensation paid or accrued under the Corporation's Retirement
Savings Plan and Executive Life and Health Insurance Programs described
below.
Retirement Savings Plan. 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 plan feature and a 401(k)
feature.
The Corporation contributed the following amounts to the Retirement Savings
Plan for the accounts of the Named Executive Officers during 1998, 1997 and
1996:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Don V. Ingram...................................... $11,161 -- --
Richard L. Kerr.................................... $13,000 $12,750 $12,307
Paul V. Dufour..................................... $13,000 $12,750 $11,985
Denis W. Ray....................................... -- -- --
Thomas W. Rogers................................... $13,000 $12,750 $11,423
</TABLE>
Executive Life Insurance Programs. The Corporation has entered into split-
dollar life insurance agreements with the Named Executive Officers to
provide them with death benefits in the following amounts: Mr. Ingram--
$3,000,000; Messrs. Kerr and Dufour--$1,000,000 each; Messrs. Ray and
Rogers--$500,000 each. The amounts below include the entire dollar amount of
the term life portion of each insurance premium and includes, for Messrs.
Kerr, Dufour, Ray and Rogers for 1998 only, the present value of the
interest-free use of the non-term portion of each premium:
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Don V. Ingram......................................... $7,980 -- --
Richard L. Kerr....................................... $8,238 $1,020 $ 861
Paul V. Dufour........................................ $8,293 $1,185 $1,171
Denis W. Ray.......................................... $7,673 -- --
Thomas W. Rogers...................................... $2,083 $ 728 $ 686
</TABLE>
(3) Represents reimbursement of moving expenses to Mr. Ray under the
Corporation's relocation policy.
11
<PAGE>
Stock Options
The options shown below were awarded during 1998 pursuant to the
Corporation's 1992 Stock Option Plan and Annual Incentive Program:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------------------
Percent of total
Number of securities options granted Hypothetical
underlying options to employees in Exercise or Expiration Grant Date
Name granted(2) fiscal year base price date Value(1)
- ---- -------------------- ---------------- ----------- ---------- ------------
(#) (%) ($/Sh)
<S> <C> <C> <C> <C> <C>
D.V. Ingram............. 40,000 6.4% $16.063 1/2/2008 $ 184,000
160,000 25.5% $13.000 12/11/2008 $ 547,200
R.L. Kerr............... 45,000 7.2% $13.000 12/11/2008 $ 153,900
P.V. Dufour............. 45,000 7.2% $13.000 12/11/2008 $ 153,900
D.W. Ray................ 15,000 2.4% $16.250 3/27/2008 $ 70,500
25,000 4.0% $13.000 12/11/2008 $ 85,500
T.W. Rogers............. 25,000 4.0% $13.000 12/11/2008 $ 85,500
Executive Group......... 40,000 6.4% $16.063 1/2/2008 $ 184,000
15,000 2.4% $16.250 3/27/2008 $ 70,500
330,000 52.6% $13.000 12/11/2008 $1,128,600
Non-Employee Director
Group.................. 12,696 2.0% $13.688 12/15/2008 $ 46,214
Non-Executive Officer, 15,000 2.4% $16.063 4/21/2008 $ 69,600
Employee and Consultant
Group.................. 215,000 34.2% $13.000 12/11/2008 $ 735,300
</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 January 1994,
resulting in a stock price volatility of 0.312; (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 5.40%, 5.59%, 5.60%, 4.47% and 4.47% for options granted on
January 2, 1998, March 27, 1998, April 21, 1998, December 11, 1998 and
December 15, 1998; (c) a weighted dividend yield assumption of 1.82,
determined by dividing the current $0.24 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) All options granted to officers and employees will vest in three equal
annual increments beginning on the first anniversary date of the grant.
12
<PAGE>
Option Exercises and Holdings
General. The following table provides information with respect to the Named
Executive Officers concerning the exercise of options granted under the
Corporation's Amended and Restated Stock Option Plan (1990) and 1992 Stock
Option Plan during the last fiscal year and unexercised options under the
Amended and Restated Stock Option Plan (1990), the 1992 Stock Option Plan and
the Annual Incentive Program held as of the end of the fiscal year:
AGGREGATED OPTION EXERCISES IN 1998 AND DECEMBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
Exercisable Unexercisable
------------------------------ ------------------------------
Number of Value of Number of Value of
shares underlying unexercised shares underlying unexercised
Value unexercised in-the-money unexercised in-the-money
Shares acquired realized options at options at options at options at
Name on exercise(#) (1) 12/31/98(#) 12/31/98(2) 12/31/98(#) 12/31/98(2)
---- --------------- -------- ----------------- ------------ ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
D.V. Ingram............. -- -- 197,620 $ 40,209 333,832 $401,666
R.L. Kerr............... 48,800 $329,460 123,468 $126,017 125,332 $127,896
P.V. Dufour............. 80,000 $745,000 164,068 $242,717 123,732 $124,596
D.W. Ray................ -- -- -- -- 40,000 $ 60,938
T.W. Rogers............. 13,000 $131,463 111,667 $411,938 39,833 $ 69,188
</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 NYSE composite
tape on December 31, 1998 was $15.4375 per share.
Loan Program. During 1998, the Corporation, acting through the Compensation
Committee, extended loans to certain management employees under the
Corporation's Executive Option Exercise Loan Program adopted by the Board of
Directors in 1998. The Loan Program facilitated these individuals' ability to
(i) exercise their stock options under the Company's Amended and Restated
Stock Option Plan (1990) and (ii) pay federal and state taxes realized upon
exercises. All loans under the Loan Program bear interest at the "applicable
federal rate" under Section 1274 of the Internal Revenue Code in effect as of
the date the loan was made (5.70%), and all loans are secured by the shares
purchased with the proceeds of the loan. Each loan matures in five years,
except that the Corporation may accelerate any loan upon (i) an employee's
termination of employment, or (ii) the date the employee sells the shares
purchased with the loan proceeds. Interest on each "Tax Loan" is due and
payable annually and at maturity. Interest on each "Exercise Loan" is due and
payable at maturity. However, so long as the employee remains employed by the
Corporation, on each anniversary date of an Exercise Loan, 50% of the interest
accrued during the most recent year will be forgiven and 50% of the interest
not forgiven from the prior year will also be forgiven; all remaining interest
will be forgiven on the fifth anniversary maturity date.
On February 28, 1999, loans based upon the terms set forth above were
outstanding to three of the Named Executive Officers as follows: (i) Mr. Kerr,
$454,390 (Exercise Loan) and $131,784 (Tax Loan), (ii) Mr. Dufour, $540,000
(Exercise Loan) and $305,822 (Tax Loan), (iii) Mr. Rogers, $77,350 (Exercise
Loan) and $59,158 (Tax Loan). In addition, as of February 28, 1999, the
Corporation had an aggregate of (i) $212,690 in Exercise Loans outstanding and
(ii) $181,204 in Tax Loans outstanding to two other executive officers.
Directors' Compensation
The Annual Incentive Program provides that each non-employee director shall
be granted as a retainer on a quarterly basis (i) a number of shares of Common
Stock to be determined from time to time by the Board (the
13
<PAGE>
"retainer shares") plus (ii) a cash payment equal to the fair market value of
the retainer shares, determined over the five successive trading days prior to
the quarterly retainer award date. If a director elects prior to the beginning
of the fiscal quarter, the director may take a total retainer for that quarter
equal to twice the number of the retainer shares, in lieu of the cash portion
of the quarterly retainer for such quarter. During 1998, the number of shares
determined by the Board to constitute the number of retainer shares to be
granted each quarter to each non-employee director was 250 shares; the
aggregate number of shares issued by the Corporation as retainer shares during
1998 was 7,570 and the aggregate cash payments made were $76,485. 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.
The Chairman of the Compensation Committee is to receive an annual cash
retainer of $4,000; the Chairmen of the other standing committees are each to
receive annual retainers of $2,000.
The Corporation's 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 aggregate fair market value (determined over the
previous four fiscal quarters when calculating the fair market value of the
Common Stock retainer component) of the retainer granted to each director by
the fair market value per share of Common Stock on December 15th. On December
15, 1998, pursuant to the 1992 Stock Option Plan, each such non-employee
director was granted an option to purchase 2,368 shares of Common Stock. The
exercise price per share with respect to these options granted is $13.6875.
Compliance with Section 16(a)
Section 16(a) of the Exchange Act 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 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 upon the Corporation's review of those forms furnished to it 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 except
that Ralph L. Cheek, Director of the Corporation, did not timely file a Form 4
relating to the sale of 20,000 shares of Common Stock in May 1998.
PROPOSAL TO APPROVE THE IMCO RECYCLING INC.
EMPLOYEE STOCK PURCHASE PLAN
General
In February 1999, the Board approved the IMCO Recycling Inc. Employee Stock
Purchase Plan (the "Purchase Plan"). The Purchase Plan was adopted in order to
advance the long-range interests of the Corporation by encouraging the
acquisition and ownership of Common Stock by employees of the Corporation and
its subsidiaries. The Purchase Plan is intended to increase the employees'
proprietary interest in the Corporation's long-term performance and success
and to provide employees with a means of obtaining an equity ownership
interest in the Corporation. The Purchase Plan is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code.
A copy of the Purchase Plan is attached to this Proxy Statement as Appendix A,
and the following description is qualified in its entirety by reference to
Appendix A.
Description of the Plan
The Purchase Plan, if approved by the stockholders, will allow all employees
who are employed for more than 20 hours per week and who have been employed by
the Corporation for at least six months prior to the first day of an "offering
period" (as described below) to authorize payroll deductions at a rate of 1%
to 15% of base compensation (including overtime) to be applied toward the
purchase of Common Stock. There are 800,000
14
<PAGE>
shares of Common Stock reserved for issuance under the Purchase Plan, subject
to adjustments for stock dividends and similar events. As of February 28,
1999, there were approximately 1,800 employees eligible to participate in the
Purchase Plan. The Purchase Plan, which is administered by a Plan Committee
appointed by the Compensation Committee of the Board of Directors, will
terminate (i) at such time as is determined in the discretion of the Board or
(ii) at such time as all shares reserved under the Purchase Plan have been
purchased.
Under the Purchase Plan, separate six-month offering periods commence on
January 1 and July 1 of each year. An employee must authorize a payroll
deduction before the start of an offering period in order to participate in
that offering period. On the last business day of the offering period, the
employee will be deemed to have exercised the option to purchase as many
shares as the employee's payroll deduction will allow, at the option price.
The option price is 85% of the lesser of:
. the fair market value of the Common Stock on the first day of the
offering period, or
. the fair market value of the Common Stock on the last day of the
offering period.
Fractional shares will not be issued under the Purchase Plan, and any funds
remaining in employee plan accounts after such purchase shall be retained for
the next offering period. Fair market value shall be determined by reference
to the closing share prices as reported by the composite transaction reporting
system for securities listed on the NYSE. The closing price of the
Corporation's Common Stock as reported on the NYSE on March 19, 1999 was
$13.50.
Shares purchased will be held by the Plan Administrator for the benefit of
Purchase Plan participants, and participants may direct the Plan Administrator
to sell purchased shares from their plan accounts. The initial Plan
Administrator is ChaseMellon Shareholder Services, L.L.C. Participants may
elect to receive stock certificates for purchased shares from their plan
accounts.
An employee may withdraw from an offering period at any time. Upon
withdrawal, the amount in the employee's account will be refunded, without
interest. Employees who withdraw from an offering may not thereafter
participate in that offering, and those employees will also be ineligible to
participate in the next offering period. However, if a withdrawing employee is
otherwise eligible, that employee may participate in any other future offering
periods under the Purchase Plan.
If an employee is terminated for any reason (including death or disability),
that employee's participation in the Purchase Plan will immediately terminate.
All cash remaining in that former employee's account will be refunded, without
interest.
No employee shall be permitted to purchase any shares under the Purchase
Plan if that employee, immediately after such purchase, owns shares possessing
five percent or more of the total combined voting power or value of all
classes of stock of the Corporation. The fair market value of all shares
purchased by an employee under the Purchase Plan during any calendar year may
not exceed $25,000 (determined as of the first day of the offering period).
Because the purchase of shares under the Purchase Plan is discretionary with
all eligible employees, it would not be meaningful to include information as
to the amount of shares which would have been distributable during fiscal 1998
to all employees, or to groups of employees, or to any particular employee of
the Corporation had the Purchase Plan been in effect during that fiscal year.
The Compensation Committee of the Board of Directors may at any time amend
or terminate the Purchase Plan, provided that no employee's existing rights
under any offering already commenced may be adversely affected thereby. No
amendment may be made to the Purchase Plan without prior approval of the
stockholders of the Corporation if the amendment would increase the number of
shares reserved thereunder, reduce the purchase price per share of Common
Stock, or materially modify the eligibility requirements for participants.
15
<PAGE>
If the Corporation's stockholders have not approved the Purchase Plan prior
to the last day of the first offering period (i.e., December 31, 1999), then
funds in a participant's plan account may not be used to purchase shares until
stockholder approval has been obtained, and in that event, the purchase date
for the first offering period shall be the fifth business day after the date
of stockholder approval. If the stockholders have not approved the Purchase
Plan by February 24, 2000 (i.e., the date which is 12 months after the date of
adoption of the Purchase Plan by the Board of Directors), the Purchase Plan
will terminate and all funds held in participants' plan accounts shall be
returned to the participants in cash, plus interest at 5% per annum.
Federal Income Tax Consequences Relating to the Purchase Plan
The federal income tax consequences of an employee's participation under the
Purchase Plan will vary. The following discussion is only a summary of the
general federal income tax guidelines applicable to the Purchase Plan.
Employees should consult their own tax advisors since a taxpayer's particular
situation may be such that some variation of the tax matters described below
will apply.
The Purchase Plan and the right of participants to make purchases thereunder
are intended to qualify under the provisions of Section 421 and 423 of the
Internal Revenue Code. Under those provisions, no income will be taxable to a
participant at the time of grant of the option to purchase or the purchase of
shares for federal income tax purposes. However, a participant may become
liable for tax upon dispositions of shares acquired under the Purchase Plan
(or if he or she dies holding such shares), and the tax consequences will
depend on how long a participant has held the shares prior to disposition.
If the shares are disposed of at a point in time which is (a) at least two
years after the date of the beginning of the offering period and (b) at least
one year after the stock is purchased in accordance with the terms of the
Purchase Plan (or if the employee dies while holding the shares), the
following tax consequences will apply: The lesser of (1) the excess of fair
market value of the shares at the time of such disposition over the option
price of the shares, or (2) the excess of the fair market value of the shares
at the time the option was granted over the option price (which will be
computed as of the first day of the offering period) will be treated as
ordinary income to the participant. Any further gain upon disposition
generally will be taxed at long-term capital gain rates. If the shares are
sold and the sales price is less than the option price, there is no ordinary
income and the participant has a long-term capital loss equal to the
difference. If an employee holds the shares for this period, no deduction in
respect of the disposition of such shares will be allowed to the Corporation.
If the shares are sold or disposed of (including by way of gift) before the
expiration of either the two year or the one year holding periods described
above, the following tax consequences will apply: The amount by which the fair
market value of the shares on the date the option is exercised (which is the
last business day of the offering period and which is referred to as the
"termination date") exceeds the option price will be treated as ordinary
income to the participant. This excess will constitute ordinary income in the
year of sale or other disposition even if no gain is realized on the sale or a
gratuitous transfer of the shares is made. The balance of any gain will be
treated as capital gain and will qualify for long-term capital gain treatment
if the shares have been held for more than one year following the exercise of
the option. Even if the shares are sold for less than their fair market value
on the termination date, the same amount of ordinary income is attributed to a
participant and a capital loss is allowed equal to the difference between the
sales price and the value of such shares on such termination date. The
Corporation, in the event of an early disposition, will be allowed a deduction
for federal income tax purposes equal to the ordinary income realized by the
disposing employee.
Vote Required
The affirmative vote of the holders of a majority of the shares of Common
Stock represented in person or by proxy at the Annual Meeting and entitled to
vote thereon, provided a quorum is present, is required for the approval of
the Purchase Plan.
16
<PAGE>
The Board recommends that stockholders vote FOR the proposal to approve the
adoption of the Purchase Plan.
PROPOSAL TO APPROVE THE IMCO RECYCLING INC.
ANNUAL INCENTIVE COMPENSATION PLAN
General
On February 24, 1999, the Board adopted and approved the terms of the IMCO
Recycling Inc. Annual Incentive Compensation Plan (the "Incentive Plan"),
subject to approval by the Corporation's stockholders at the Annual Meeting.
In 1993, the United States Congress adopted Section 162(m) of the Internal
Revenue Code, the terms of which (along with the treasury regulations under
Section 162(m)) place limits on the Corporation's ability to deduct certain
compensation in excess of $1,000,000 for any taxable year paid to certain of
its executive officers. One exception to these limitations is for
"performance-based" compensation that has been disclosed to and approved by
stockholders prior to payment of the awards.
In response to Section 162(m) and the adoption of the related final treasury
regulations, the Corporation adopted its Annual Incentive Program in 1996,
which was intended to comply with the performance-based exception to Section
162(m) (the "1996 Program"). The 1996 Program provided for the granting of
cash and stock bonuses, directors' retainers payable in cash and stock, and
stock options to key employees, consultants, officers and directors of the
Corporation and its subsidiaries. The 1996 Program was amended in 1998 to
increase the number of shares reserved for issuance under the plan from
500,000 to 900,000.
During fiscal 1998, in connection with the Compensation Committee's review
of its compensation programs, the Compensation Committee determined that a new
annual incentive compensation plan should be adopted, both to reflect certain
different performance criteria that the Committee then felt more relevant and
also to afford the Committee additional flexibility to be able to change the
performance determinants under the plan in order to address particular
performance objectives from year to year. As a result, the Compensation
Committee recommended for approval the terms of the Incentive Plan. In the
event the terms of the Incentive Plan are approved by the stockholders at the
1999 Annual Meeting, the Corporation will amend the 1996 Program to delete its
provisions concerning annual bonuses, but to retain the provisions concerning
discretionary grants of stock options to key employees, officers, non-employee
directors and consultants of the Corporation and its subsidiaries, and the
payment of the quarterly stock and cash retainers to non-employee directors of
the Corporation.
If the Incentive Plan is not approved by the Corporation's stockholders, the
Incentive Plan will not be implemented and no amounts will be paid to
employees in accordance with the terms of the plan.
The provisions of the Incentive Plan (which include the material terms of
the performance-based compensation provisions) are summarized below. The
Incentive Plan is not a "qualified plan" within the meaning of Section 401 of
the Internal Revenue Code.
Purpose
The purpose of the Incentive Plan is to advance the interests of the
Corporation and its stockholders by providing certain of the Corporation's key
employees with annual cash incentive compensation which is tied to the
achievement of preestablished performance goals. The Incentive Plan is
designed to provide the Corporation with flexibility in achieving those
purposes and to implement performance-based compensation strategies that will
attract and retain officers and employees who are considered important to the
long-term success of the Corporation.
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Administration
The Incentive Plan is administered by the Compensation Committee; bonus
awards under the Incentive Plan to "covered employees," that is, the chief
executive officer and the other four highest compensated officers of the
Corporation as of the last day of the taxable year, must be made only by the
"outside director" (as that term is used under Section 162(m)) members of the
Compensation Committee (that is, the members of the Executive Compensation
Subcommittee of the Compensation Committee). See "Compensation Committee
Report to Stockholders".
Bonuses under the Incentive Plan
Eligibility. Only key employees of the Corporation or its subsidiaries
selected by the Compensation Committee are eligible to participate in the
Incentive Plan. The Compensation Committee (and the Executive Compensation
Subcommittee of the Committee in the case of all "covered employees") shall
within 90 days after the commencement of each fiscal year, select the
particular key employees of the Corporation and its subsidiaries to whom
bonuses under the Incentive Plan may be granted. Approximately 50 employees
are currently eligible to participate in the Incentive Plan. Subject to the
terms of the Incentive Plan, employees who participate in the Incentive Plan
may also participate in other incentive or benefit plans of the Corporation or
any of its subsidiaries.
Bonuses will be calculated and awarded under the Incentive Plan according to
the participant's position, or job classification, within the Corporation and
its subsidiaries. Participants will be classified according to position within
the Corporation as designated by the Compensation Committee. Grouping by
different positions or levels are relevant as to the weighting percentages to
be applied to the annual incentive award amounts based upon achievement of
corporate, business unit and/or individual performance measures.
Performance Measures. Under the Incentive Plan, the Compensation Committee
will establish for each participant, depending on his position, corporate
performance measures, business unit performance measures and/or individual
performance measures. The corporate performance measures shall be the key
financial and strategic objectives established by the Compensation Committee
for the particular fiscal year in question and will be based on the measures
and objectives as the Committee then deems most relevant and meaningful for
the Corporation. Examples of such corporate measures include earnings before
interest, taxes, depreciation and amortization (EBITDA); revenue growth; free
cash flow; return on operating assets; return on assets; and return on equity.
For fiscal 1999, the corporate performance measures are based upon (1) actual
consolidated EBITDA of the Corporation compared to budgeted targeted EBITDA,
and (2) return on consolidated assets of the Corporation compared to
percentile returns on assets for a peer group of companies selected by the
Compensation Committee. With respect to certain positions, a portion of the
participant's incentive award will be based on performance measures for a
particular business unit (i.e., subsidiaries, divisions, operating segments,
etc.). These business unit performance measures may include financial measures
similar to or different from the corporate performance measures described
above, and non-financial measures, as determined by the Compensation Committee
from year to year. The business unit performance measures are not expected to
apply to any of the "covered employees". The individual performance measures
will be specific goals and objectives established by the Committee each fiscal
year during the first 90 days of each fiscal year.
The Committee shall then assign weights to, and determine the percentages
of, the total bonus amount that is to be paid on the basis of achievement of
corporate performance measures, achievement of individual performance measures
and/or achievement of business unit measures, as the case may be.
The Committee will next fix the bonus amount payable, which will be the
target incentive amount if the target performance measure levels are achieved.
The Committee will determine a target incentive for each participant which is
a percentage, not to exceed 100%, of the participant's "base salary midpoint"
established at the beginning of the fiscal year by the Compensation Committee
for the participant's job classification. The Committee also fixes the
percentage amounts of target bonus payable based on actual achievement levels
with
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respect to those performance measures, so that the participant can earn a
range equal to 0% to 200% of his target bonus amount under the Incentive Plan.
The bonus payable to a participant for any particular year can not exceed 200%
of his target incentive, so that a bonus cannot exceed 200% of the
participant's base salary midpoint established at the beginning of the year.
No participant may receive a bonus amount in excess of $1,000,000 for any
particular year.
In this manner, the Committee will determine the minimum level of
performance (threshold performance) in relation to the performance measures
determined before any bonus will be payable under the Incentive Plan, and the
maximum level of performance (maximum performance) in relation to the
performance measures determined that will permit the maximum bonus to be paid
under the Incentive Plan. The Incentive Plan provides that the Compensation
Committee must, within 90 days after the commencement of the fiscal year in
question, establish all of these performance measures and minimum, target and
maximum levels of performance with respect to each "covered employee".
Payment and Adjustments. The Compensation Committee will calculate the bonus
amounts on the basis of the incentive award criteria for that fiscal year and
the level of achievement of performance measures for each participant. On the
preliminary payment date, which shall be in the last month of the fiscal year
in question, the Compensation Committee shall calculate the bonuses and
distribute 70% of the aggregate of the actual bonus, if any, awarded to a
participant. On the final payment date, which shall occur after the
Corporation's independent auditors render their final opinion with respect to
the fiscal year in question, the Compensation 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. Final awards
under the Incentive Plan will be paid in cash as soon as practicable after the
Compensation Committee's certification of the bonuses payable following each
fiscal year. The Committee may, in its sole discretion, adjust the bonus for
any participant by adjusting the relative weights applicable to a particular
participant to reflect any material change in circumstances during the fiscal
year. However, the bonus amounts calculated for any participant who is a
"covered employee" under Section 162(m) may not be increased.
As a condition to eligibility for payment of a bonus with respect to any
fiscal year, a participant shall be required to be employed by the Corporation
or one of its subsidiaries during that year and on each payment date. In the
event a participant dies, becomes permanently disabled, retires from the
Corporation under retirement policies then in effect, or resigns under
circumstances constituting "termination for Good Reason" as defined in the
Incentive Plan during the year in question or before the final payment date,
the Committee may award all or a portion of the bonus accrued for that
participant.
In the event of a "Change in Control" as defined in the Incentive Plan, all
Incentive Awards will be based on the same performance measures as in effect
prior to the Change in Control and will be paid to participants. A "Change in
Control" is defined as any of the following events: (i) any merger or
consolidation under which shares of the Corporation's Common Stock would be
converted into cash, securities or other property, or any sale, lease,
exchange or other disposition (excluding disposition by way of mortgage,
pledge or hypothecation), in one transaction or a series of related
transactions, of all or substantially all of the assets of the Corporation (a
"Business Combination"), in each case unless, following such Business
Combination, all or substantially all of the holders of the outstanding Common
Stock immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50.1% of the outstanding common stock or
equivalent equity interests of the corporation or entity resulting from such
Business Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
the Business Combination, of the outstanding Common Stock, (ii) the
stockholders of the Corporation approve any plan or proposal for the complete
liquidation or dissolution of the Corporation, (iii) any individual or entity
or any "group" (as such term is used in Rule 13d-5 promulgated under the
Exchange Act), other than the Corporation or any successor of the Corporation
or any subsidiary of the Corporation or any employee benefit plan of the
Corporation or any subsidiary (including the plan's trustee), becomes a
beneficial owner for purposes of Rule 13d-3 promulgated under the Exchange
Act, of securities of the Corporation
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representing 50.1% or more of the Corporation's then outstanding securities
having the right to vote in the election of directors, or (iv) during any
period of two consecutive years, individuals who, at the beginning of such
period constituted the entire Board of Directors, cease for any reason (other
than death) to constitute a majority of the directors, unless the election, or
the nomination for election, by the Corporation's stockholders, of each new
director was approved by the vote of at least a majority of the directors then
still in office who were directors at the beginning of the period.
"Cause" means (a) breach of a written employment agreement by that
participant; or (b) misconduct, dishonesty, disloyalty, disobedience or action
that might reasonably injure the Corporation or any of its subsidiaries or
their business interests or reputation. A termination for "Good Reason" means
that the participant resigned within two years following a Change in Control,
the resignation was caused by any of the following occurrences, and the
participant resigns within 30 days of any of the following: the Corporation
(x) assigns the participant duties which are materially inconsistent with
participant's position, duties and status with the Corporation at the time of
a Change in Control; (y) takes action which results in a material diminution
in the position, duties or status of the participant at the time of the Change
in Control or any transfer or proposed transfer of the participant for any
extended period to a location outside his principal place of employment at the
time of the Change in Control; or (z) reduces the annual base salary of a
participant.
Amendment; Assignment
The Incentive Plan provides that except as indicated above, the Board of
Directors may at any time and from time to time without the consent of the
participants amend or terminate the Incentive Plan. The rights and interests
of a participant under the Incentive Plan may not be assigned, encumbered or
transferred, except by will or the laws of descent and distribution. No
employee or other person shall have any claim or right to receive benefits
under the Incentive Plan except as provided in the Incentive Plan.
Certain Federal Income Tax Aspects
An award under the Incentive Plan will be deductible by the Corporation and
taxable as ordinary income to a participant in the year or years in which the
award is paid or made available to the participant. The Corporation shall have
the right to deduct from all payments made under the Incentive Plan any taxes
required by law to be withheld with respect to such payments.
If a termination occurs after a change in control, any amounts paid under
the Incentive Plan would be included in determining whether or not a
participant has received an "excess parachute payment" under Section 280G of
the Internal Revenue Code, which could result in a loss of deduction to the
Corporation and the imposition of a federal excise tax (in addition to federal
income tax) payable by the participant. The Incentive Plan contains provisions
limiting the amount a participant would otherwise be entitled to receive in
order for the Corporation to avoid being considered to have paid an "excess
parachute payment".
New Plan Benefits
As set forth above, bonuses under the Incentive Plan will be based upon
performance measures with respect to fiscal 1999 and future years. No
incentive compensation under these terms has yet been earned by any
participant. Accordingly, the amount of annual incentive compensation to be
paid in the future to participants, including the Corporation's current or
future named executive officers subject to Section 162(m), cannot be
determined at this time, since actual amounts will depend on actual corporate
and individual performance measured against the attainment of the
preestablished performance measures and the Compensation Committee's or
Subcommittee's discretion to adjust those amounts. Additionally, the Committee
has not yet obtained and compiled part of the data on which the corporate
performance measures would have been calculated (such as the results of
operation for 1998 and the assets as of January 1, 1998 for all of the peer
group of companies.
The Board recommends that stockholders vote FOR the proposal to approve the
Incentive Plan.
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PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board, upon the recommendation of its Audit Committee, has selected
Ernst & Young LLP as its independent auditors to examine the consolidated
financial statements of the Corporation for 1999. 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 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
1999.
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 these brokerage firms and other custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by
them in connection with forwarding such materials. In addition, the
Corporation has retained the services of Kissel-Blake, a proxy solicitation
firm, for assistance in connection with the Annual Meeting at a cost of
approximately $7,000 plus reimbursement of their reasonable out-of-pocket
expenses.
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,
1998, which includes financial statements, accompanies this Proxy Statement.
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 to you
if you send a written request addressed to IMCO Recycling Inc., Attn: Paul V.
Dufour, 5215 N. O'Connor Blvd., Suite 940, Central Tower at Williams Square,
Irving, Texas 75039, telephone (972) 401-7200. The Corporation also will
furnish its 10-K annual report to you at no charge if you are a "beneficial
owner" of Common Stock, if you send a written request, addressed to Mr.
Dufour, containing a good faith representation that at the record date you
were a beneficial owner of Common Stock of the Corporation entitled to vote at
the annual meeting of stockholders to be held May 12, 1999. 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.
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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 9, 1999
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Appendix A
IMCO RECYCLING INC.
EMPLOYEE STOCK PURCHASE PLAN
This Plan is intended to advance the long-range interests of IMCO Recycling
Inc., a Delaware corporation (the "Company"), by encouraging the acquisition
and ownership of capital stock of the Company ("Common Stock"), upon the terms
herein set forth, by employees of the Company and certain of its subsidiaries,
in order that their proprietary interest in the Company's long-term
performance and success, and their continuance as employees of the Company,
may be enhanced. The Plan is also intended to provide employees with an
opportunity to acquire a proprietary interest in the Company through the
purchase of shares of the Common Stock of the Company. This Plan shall be
known as the "IMCO Recycling Inc. Employee Stock Purchase Plan." The Plan is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code"). The provisions of
the Plan shall be construed in a manner consistent with requirements of
Section 423 of the Code.
1. Shares Offered. The total number of shares of Common Stock ($.10 par
value) available for purchase by Participants under all Offerings (defined in
Section 3 below) is 800,000 shares, which are either authorized but unissued
Common Stock or Common Stock held by the Company in its treasury. If any
Offering shall expire without all shares available under such Offering having
been purchased, such unpurchased shares shall be added to the shares otherwise
available for future Offerings.
2. Administration. The Plan shall be administered by a committee (the "Plan
Committee") appointed by the compensation committee of the Board of Directors
(the "Compensation Committee"), which Plan Committee shall consist of not less
than three members. Subject to the express provisions of the Plan, the Plan
Committee shall have authority, in its discretion, to interpret and construe
any and all provisions of the Plan, to adopt rules and regulations for
administering the Plan, and to make all other determinations necessary or
advisable for administering the Plan. The Plan Committee's determination on
the foregoing matters shall be conclusive. The Plan Committee shall have the
power to appoint and remove an independent third party (which may, but need
not, be a bank or trust company) to act as administrator of the Plan and
custodian of all stock certificates issued under the Plan, and to provide such
other services as the Plan Committee may determine (the "Administrator"), and
the Plan Committee is authorized to enter into an agreement with the
Administrator concerning its duties under the Plan.
The Compensation Committee may from time to time appoint members of the Plan
Committee in substitution for or in addition to members previously appointed,
and may fill vacancies, however caused, in the Plan Committee. The Plan
Committee may select one of its members as its Chairman and shall hold its
meetings at such times and places as it shall deem advisable, and may hold
telephonic meetings. A majority of its members shall constitute a quorum. All
determinations of the Plan Committee shall be made by a majority of its
members. The Plan Committee may correct any defect or omission, or reconcile
any inconsistency in the Plan, in the manner and to the extent it shall deem
desirable. Any decision or determination reduced to writing and signed by a
majority of the members of the Plan Committee shall be as fully effective as
if it had been made by a majority vote at a meeting duly called and held. The
Plan Committee may appoint a secretary and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
3. Offerings. The Plan Committee shall make an offering to Eligible
Employees (defined in Section 4 below) to purchase Common Stock under the Plan
(each an "Offering") during the six-month periods from January 1 through June
30 and from July 1 through December 31, until the Plan terminates; each such
six-month offering period during which any such Offering is open is referred
to herein as an "Offering Period." The January 1 or July 1 which is the first
day of an Offering Period is the "Offering Date" for such Offering Period. For
each Offering Period, payroll deductions of Participants for all payroll
periods which end during the Offering Period (including a payroll period which
ends on the last day of an Offering Period) shall be considered Payroll
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Deductions during such Offering Period and shall be used to purchase Common
Stock at the end of the Offering Period in accordance with Section 7 below.
Unless otherwise specified by the Plan Committee, the number of shares of
Common Stock that may be purchased under an Offering shall be the balance of
the 800,000 shares authorized in Section 1 above which have not been
previously purchased under the terms of this Plan.
4. Eligibility. The Compensation Committee shall designate the subsidiaries
of the Company whose employees are eligible to participate in the Plan
("Participating Subsidiaries").
An "Eligible Employee" is a person who (i) is actively employed by the
Company or one of the Participating Subsidiaries, (ii) is actively employed on
the first day of the calendar month prior to an Offering Period, and (iii) is
not excluded pursuant to the following sentence. The following persons shall
not be Eligible Employees: (1) employees whose customary employment with the
Company and all Participating Subsidiaries is twenty (20) hours or less per
week, (2) employees who have not been employed by the Company or a
Participating Subsidiary for at least six (6) consecutive months, and (3) an
employee who owns capital stock of the Company (including all capital stock
which may be purchased under outstanding Offerings under the Plan or
outstanding options under any stock plan of the Company) possessing 5% or more
of the total combined voting power or value of all classes of capital stock of
the Company or of its subsidiary corporations (for the foregoing purposes, the
rules of Section 424(d) of the Code shall apply in determining stock
ownership), as provided in Code Section 423(b)(3). All Eligible Employees may
participate in the Plan. A person shall be considered actively employed when
the person is presently performing his/her regular duties with the Company or
a Participating Subsidiary. A person's period of employment with a company
acquired by the Company or by one of its subsidiaries shall be included in
determining an employee's length of employment for the purpose of this
paragraph, provided that such acquired company is a Participating Subsidiary
on the Offering Date. A person who is a director but not an employee shall not
be eligible under the Plan.
5. Offering Rights. With respect to each Offering, each Eligible Employee
may elect to participate by having a portion of his Compensation (defined in
Section 6 below) withheld and applied to the purchase of shares of Common
Stock at the end of the Offering Period. The amount withheld from each
paycheck issued to the Eligible Employee during the Offering Period is the
Participant's "Payroll Deduction" (in accordance with Section 6 below), and
the Plan Committee shall apply such Payroll Deductions during an Offering
Period to the purchase of the Company's Common Stock at the end of the
Offering Period in accordance with Section 7 below. In no event may the number
of shares of Common Stock which may be purchased by all Participants for an
Offering exceed the number of shares available during the Offering Period (as
determined in accordance with Section 3 above).
6. Participation; Payroll Deductions. An Eligible Employee who completes and
delivers an authorization for Payroll Deduction on the form provided by the
Plan Committee ("Payroll Deduction Authorization Form") shall become a
participant in the Plan ("Participant"). A Participant may deliver a Payroll
Deduction Authorization Form to the Chief Financial Officer of the Company
prior to the Offering Date of an Offering Period, and in accordance with the
rules developed by the Plan Committee. On his Payroll Deduction Authorization
Form, the Participant shall elect to have deductions made on each payday which
may be any whole percentage from 1% up to and including 15% of the
Participant's Compensation in effect at the beginning of the Offering Period.
"Compensation" shall mean W-2 compensation, including overtime but excluding
commissions, bonuses and other special payments. A Participant who elects to
participate for an Offering Period through Payroll Deduction shall be deemed
to have elected to participate in the Plan on the same basis for each
successive Offering Period until such Participant changes his Payroll
Deduction in accordance with Section 8 below or withdraws (or is deemed to
withdraw) from an Offering pursuant to Section 12 below. A Participant shall
not be required to file additional Payroll Deduction Authorization Forms for
successive Offering Periods in order to continue participation in the Plan.
7. Participants' Plan Accounts. The Plan Committee will maintain, or cause
to have maintained, a Plan Account in the name of each Participant. On each
payday, a Participant's Payroll Deduction shall be withheld
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and credited to such Participant's Plan Account. As of the last day of the
Offering Period or such other date as designated by the Plan Committee if
required for proper administration of the Plan ("Purchase Date"), the amount
then in such Participant's Plan Account shall be applied to the purchase of
shares in accordance with Section 10 below; provided, however, that the first
Purchase Date after the adoption of the Plan may be delayed pursuant to
Section 27 below. The purchase of shares shall be made solely from amounts
credited to the Participants' Plan Accounts.
8. Payroll Deduction Changes. Except in the case of a withdrawal under
Section 12 below, a Participant may not change his Payroll Deduction during an
Offering Period. A Participant may, however, decrease or increase his Payroll
Deduction for a subsequent Offering Period prior to the commencement of the
next Offering Period, by filing a new Payroll Deduction Authorization Form
with the Chief Financial Officer of the Company during the time specified by
the Plan Committee.
9. No Interest. The Plan Committee shall not credit a Participant's Plan
Account with interest on any Payroll Deduction, except as provided in Section
27 below.
10. Purchase Price and Purchase of Shares. Subject to Section 28 below, the
purchase price for a share of Common Stock under any Offering will be the
lesser of:
(a) 85% of the closing sale price for shares of Common Stock as reported
by the composite transaction reporting system for securities listed on the
New York Stock Exchange (or such other principal national securities
exchange or the inter-dealer quotation system on which the stock is then
traded or quoted) on the Offering Date for such Offering or on the most
recently preceding date on which there was such a sale (the "Initial
Offering Price"); or
(b) 85% of the closing sale price for shares of Common Stock as reported
by the composite transaction reporting system for securities listed on the
New York Stock Exchange (or such other principal national securities
exchange or the inter-dealer quotation system on which the stock is then
traded or quoted) on the last day of the Offering Period or on the most
recently preceding date on which there was such a sale (the "Alternate
Offering Price").
As of the Purchase Date, the Alternate Offering Price shall be ascertained.
The Plan Committee will then apply all funds credited to the Participants'
Plan Accounts to purchase shares of Common Stock available under the Offering.
Unless a Participant has withdrawn prior to the Purchase Date pursuant to
Section 12, and subject to the provisions of Sections 25 and 28, a Participant
shall be deemed to have elected to purchase the maximum number of whole shares
of Common Stock which may be purchased with the amount credited to his Plan
Account as of the Purchase Date at the lower of the Initial Offering Price or
the Alternate Offering Price. Fractional shares will not be issued under the
Plan and any funds in a Participant's Plan Account which would have been used
to purchase fractional shares shall be retained in such Plan Account for the
next Offering Period.
11. Termination of Employment; Termination of Eligibility. In the event of a
Participant's termination of employment for any reason (including death or
disability), the Participant's participation in the Plan shall immediately
terminate without notice to the Participant, and all Payroll Deductions
credited to such Participant's Plan Account shall be returned to such
Participant in cash, without interest.
An Eligible Employee of a company included in the Plan which ceases to be a
Participating Subsidiary shall be deemed to have terminated employment for
purposes of this Section as of the date such company ceases to be a
Participating Subsidiary unless, as of such date, the Participant shall become
an Eligible Employee of the Company or of any Participating Subsidiary then
included in the Plan.
12. Withdrawal from Offering. Each Participant shall have the right, at any
time prior to the Purchase Date, to withdraw from an Offering by providing
fifteen (15) days' prior written notice to the Chief Financial Officer of the
Company revoking his Payroll Deduction. A Participant who elects to cease
participation in the Plan by revoking his Payroll Deduction may not resume
participation in the Plan until after the expiration of one full Offering
Period following the Offering Period in which he withdraws and ceases
participation. As promptly as practicable after the receipt of a revocation
notice, all Payroll Deductions credited to such Participant's Plan Account
shall be returned to such Participant in cash, without interest.
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13. Stock Certificates. As promptly as practicable after the Purchase Date
of each Offering, the Plan Committee will deliver to the Administrator all
shares of Common Stock purchased with the funds credited to the Plan Accounts.
The Administrator will hold the shares of Common Stock of all Participants in
its name or in the name of its nominee evidenced by as many or as few
certificates as the Administrator determines. No certificate representing
shares of Common Stock purchased for a Participant's Plan Account will be
issued to the Participant unless he or she makes a request in writing or until
his or her Plan Account is terminated, or such Participant withdraws from an
Offering. So long as the stock credited to a Participant's Plan Account is
held by the Administrator, all rights accruing to an owner of record of such
stock, including, without limitation, voting rights and rights of disposal,
shall belong to the Participant for whose account such stock is held.
A Participant may elect, at any time and from time to time, to receive a
stock certificate for shares credited to his Plan Account after the purchase
price for such shares has been paid in full. In such event, certificates for
shares of Common Stock shall be issued only in the name of the Participant
unless the Participant or the Participant's designee (in the event the
Participant has died) elects otherwise by written notice to the Plan Committee
and the Plan Committee gives prior written consent to such election.
If a Participant withdraws from an Offering, terminates employment for any
reason, or elects to terminate participation in the Plan, the Administrator
will transfer to the Participant a stock certificate for whole shares credited
to his Plan Account (and for which the purchase price has been paid in full),
unless the Participant elects to sell all or part of the Participant's shares
in accordance with Section 14 below.
14. Sale of Shares of Common Stock. A Participant may request that the
Administrator sell all or any part of the shares of Common Stock credited to
such Participant's Plan Account. Upon receipt of a written request from a
Participant, the Administrator, as the Participant's agent, will sell the
number of shares of Common Stock specified in the Participant's request within
five business days of receipt by the Administrator of instructions to sell the
shares of Common Stock, and will deliver to the Participant the proceeds of
the sale, less a handling charge, brokerage commissions, and other costs of
sale. Whole and fractional shares may be aggregated and sold with those of
other Participants, in which case the proceeds for each Participant will be
based on the average sales price of all shares aggregated and sold. Any sale
may, but need not, be made by purchase for other Plan Accounts, subject to and
in accordance with the terms of the Plan, in which case the price will be the
closing sale price of Common Stock as reported by the principal securities
exchange or the inter-dealer quotation system on which the stock is traded or
quoted on the date of receipt by the Administrator of the notice of the
Participant's desire to sell shares of Common Stock or, if the stock is not
traded on the date of receipt, the mean on the next prior date that it was so
traded. No sales of any fractional shares shall be permitted.
15. Voting of Shares of Common Stock. The Administrator will vote a
Participant's shares of Common Stock as instructed by the Participant on a
form to be furnished by and returned to the Administrator at least ten days
(or such shorter period as the law may require) before the meeting at which
such shares of Common Stock are to be voted. The Administrator will not vote
shares of Common Stock for which no instructions are received.
16. Tender or Exchange Offer. If a tender offer or exchange offer is
commenced for shares of Common Stock, the Administrator, upon receipt of
information with respect thereto as the holder of record of the shares of
Common Stock, will either (i) forward, or arrange for the forwarding of,
information provided by the offeror to holders of record of Common Stock to
each Participant or (ii) provide to the offeror the name and mailing address
of each Participant as reflected on the records of the Administrator with
instructions to mail such material to each Participant. The Administrator will
tender all or part of a Participant's shares of Common Stock in response to
written instructions from the Participant in such form as the Administrator
may reasonably require and only if such instructions are received by the
Administrator at least five days (or such shorter period as may be required by
law) prior to the termination of the offer. Unless the Administrator has
received instructions in accordance with the previous sentence, it will not
tender a Participant's shares of Common Stock. Except to the extent disclosure
is required to tender shares of Common Stock pursuant to proper written
instructions, the Administrator will maintain the confidentiality of a
Participant's election to tender or not tender shares of Common Stock.
A-4
<PAGE>
17. Cash Dividends, Stock Dividends and Splits. Any cash dividends paid on
shares credited to a Participant's Plan Account will, when received by the
Administrator, be credited to the Participant's Plan Account and used to
purchase additional shares on the next Purchase Date. Any stock dividends and
any shares received as a result of a stock split on any shares of Common Stock
credited to a Participant's Plan Account will, when received by the
Administrator, be credited to the Participant's Plan Account.
18. Statements. As soon as practicable after the cash credited to the
Participant's Plan Account has been applied to the purchase of shares of
Common Stock (but in no event later than 20 calendar days after the purchase)
the Administrator will mail a statement to the Participant summarizing the
transactions in the Participant's Plan Account since the last statement.
19. No Rights as a Stockholder. None of the rights or privileges of a
stockholder of the Company shall exist with respect to shares of Common Stock
purchased under this Plan until a certificate representing such shares is
issued.
20. Rights not Transferable. Except as hereinafter set forth and unless
otherwise provided by law, no Participant shall have the right to sell,
assign, transfer, pledge, or otherwise dispose of or encumber either the right
to participate in the Plan or any interest in the Participant's Plan Account,
and such right and interest shall not be liable for or subject to the debts,
contracts, or liabilities of such Participant. If any such action is taken by
the Participant, or any claim asserted by another party in respect of such
right and interest, such action or claim will be treated as notice of
cancellation, and except as may otherwise be required by law, such event shall
be deemed to be a withdrawal from the Plan and the Participant's Plan Account
shall be repaid to him as provided in Section 12.
Provided, however, that a Participant may designate in writing (on a form
provided by the Plan Committee) the person who shall have the right to receive
the Participant's Plan Account in the event of the Participant's death. In the
event of death, if a Participant has not designated a person to receive the
Participant's Plan Account, such Participant's Plan Account shall be
distributed to the Participant's estate.
21. Application of Funds. All funds received or withheld by the Plan
Committee under this Plan as Payroll Deductions shall be held by the Company
without segregation and may be used for any general corporate purpose without
restriction.
22. Adjustments upon Changes in Capitalization. Notwithstanding any other
provision of the Plan, in the event of any change in the outstanding Common
Stock by reason of a stock dividend, recapitalization, merger, consolidation,
split-up, combination or exchange of shares, or the like, the aggregate number
and class of shares available under the Plan, the number and class of shares
subject to outstanding Offerings, the maximum number of shares which an
individual Eligible Employee may purchase, and the Initial Offering Price
shall be proportionately adjusted, and such other adjustments shall be made as
may be deemed equitable, by the Plan Committee, whose determinations shall be
conclusive.
23. Amendments of the Plan. Except as provided below, the Compensation
Committee may at any time, and from time to time, make such changes in and
additions to the Plan as the Compensation Committee deems advisable. However,
the following amendments may only be made by the Board of Directors with
approval by vote of the holders of a majority of shares of Common Stock voted
at a properly convened meeting at which a quorum is present: (a) increase the
maximum number of shares which may be purchased under the Plan, (b) reduce the
purchase price per share, or (c) amend the requirements for an Eligible
Employee. No amendment of the Plan may, without the consent of the Participant
with respect to any outstanding Offering, materially and adversely affect the
Eligible Employee's rights with respect to such Offering.
24. Termination of the Plan. This Plan shall terminate (a) on the date that
all of the shares authorized for sale under the Plan have been purchased,
except as otherwise extended by authorizing additional shares, or (b) at
A-5
<PAGE>
any time, at the discretion of the Board of Directors of the Company;
provided, however, that no termination shall affect outstanding Offerings.
Upon termination of the Plan and the exercise or lapse of all Offering
rights hereunder, all remaining amounts credited to Plan Accounts of
Participants shall be returned to such Participants in cash, without interest.
25. Allocation of Shares if Exceed Maximum Offered. If the total number of
shares which would otherwise be purchased by Participants through Payroll
Deductions under any Offering exceeds the shares available for purchase under
the Offering, the Plan Committee may allocate the available shares among the
Participants on any basis consistent with the terms of the Plan, and any
remaining funds credited to a Participant's Plan Account on the Purchase Date
shall be returned to the Participant in cash, without interest.
26. Governmental and Other Regulations. The obligation of the Company to
issue or transfer and deliver shares under this Plan shall be subject to (a)
compliance with all applicable laws, governmental rules and regulations and
administrative action, (b) the effectiveness of a Registration Statement under
the Securities Act of 1933, as amended, with respect to such issue or
transfer, if deemed necessary or appropriate by counsel for the Company, and
(c) the condition that the shares of Common Stock reserved for issuance upon
the purchase of shares subject to Offering under the Plan shall have been
listed (or authorized for listing upon official notice of issuance) upon each
securities exchange on which outstanding shares of the same class are then
listed or authorized for quotation on the inter-dealer quotation system on
which the shares are then quoted.
27. Approval of Stockholders. The Plan has been adopted by the Board of
Directors of the Company, subject to the approval of the stockholders of the
Company. If the stockholders have not approved the Plan by a vote of the
holders of a majority of shares of Common Stock voted at a properly convened
meeting at which a quorum is present within twelve (12) months after the date
of adoption of the Plan by the Board of Directors, the Plan shall terminate on
the date which is twelve (12) months after the date of adoption of the Plan by
the Board, and all funds held in Participants' Plan Accounts shall be returned
to such Participants in cash, with interest at 5% per annum from the date of
transfer to such accounts to the date of refund. If the stockholders have not
approved the Plan by a vote of the holders of a majority of shares of Common
Stock voted at a properly convened meeting at which a quorum is present prior
to the last day of the first Offering Period, no funds in a Participant's Plan
Account may be used to purchase shares under Section 7 above until such
stockholder approval has been obtained; in that event, the first Purchase Date
shall be the fifth business day after the date of stockholder approval.
28. $25,000 Limitation. No Eligible Employee shall be included in an
Offering which permits him to purchase Common Stock under all employee stock
purchase plans of the Company and its subsidiaries to accrue (within the
meaning of Section 423(b)(8) of the Code) at a rate which exceeds $25,000 of
fair market value of such capital stock (determined at the Offering Date) for
each calendar year in which such Offering is outstanding at any time.
29. Indemnification. No current or previous member of the Board of
Directors, the Compensation Committee, or the Plan Committee, nor any officer
or employee of the Company acting on behalf of the Board of Directors, the
Compensation Committee, or the Plan Committee, shall be personally liable for
any action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all such members of the Board of Directors, the
Compensation Committee, or the Plan Committee and each and any officer or
employee of the Company acting on their behalf shall, to the extent permitted
by law, be fully indemnified and protected by the Company in respect of any
such action, determination or interpretation. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such individuals may be entitled under the Company's Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise.
A-6
<PAGE>
30. Investment Intent. The Company may require that there be presented to
and filed with it by any Participant(s) under the Plan, such evidence as it
may deem necessary to establish that the rights to purchase Common Stock
granted or the shares of Common Stock to be purchased or transferred hereunder
are being acquired for investment and not with a view to their distribution.
31. No Right to Continue Employment. This Plan does not constitute a
contract of employment. Nothing in the Plan or in any related documentation
confers upon any employee the right to continue in the employ of the Company
or any of its subsidiaries or interferes with or restricts in any way the
right of the Company or any of its subsidiaries to discharge any employee at
any time (subject to any contract rights of such employee).
32. Governing Law. The law of the State of Delaware will govern all matters
relating to this Plan except to the extent it is superseded by the federal
laws of the United States of America.
33. Construction of Plan. The captions used in this Plan are for convenience
only and shall not be construed in interpreting the Plan. Whenever the context
so requires, the masculine shall include the feminine and neuter, and the
singular shall also include the plural, and conversely.
A-7
<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, each 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 Wednesday, May 12, 1999, at the Central Tower at
Williams Square, Twenty-Sixth Floor, LaCima Club, 5215 North O'Connor Blvd.,
Irving, Texas, at 9:00 A.M., Central Daylight Savings Time, and at 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, 3 AND 4 AND WILL GRANT DISCRETIONARY AUTHORITY
PURSUANT TO ITEM 5. 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>
Please mark
your vote as [X]
indicated in
this example
1. Election of Directors
The election of the following nominees to the Board of Directors as Class III
Directors, unless otherwise indicated below.
FOR AGAINST (a) Hugh G. Robinson (b) William Warshauer
[_] [_] 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 approve the Corporation's Employee Stock Purchase Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Proposal to approve the Corporation's Annual Incentive Compensation Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. Proposal to ratify the appointment of Ernst & Young LLP as the independent
public accountants of the Corporation for 1999.
FOR AGAINST ABSTAIN
[_] [_] [_]
------ 5. In their discretion upon such other
| matters as may properly come before
| the meeting or any adjournment
thereof.
Please complete, date, sign and mail
this Proxy promptly in the enclosed
envelope. No postage is required for
mailing in the United States.
Dated , 1999
-----------------------------
----------------------------------------
Signature(s)
----------------------------------------
Signature(s)
IMPORTANT: Please date the Proxy and
sign exactly as your name appears in the
Proxy. If shares are held by joint
tenants, EACH joint owner should sign.
Executors, administrators, trustees,
guardians, and attorneys should indicate
the capacity in which they sign.
Attorneys should submit powers of
attorney. 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.
FOLD AND DETACH HERE
Dear Stockholder(s):
Enclosed you will find material relating to the Corporation's 1999 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.
