SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
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/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Aluminum Company of America
(Name of Registrant as Specified in Its Charter)
Denis A. Demblowski
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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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:(1)
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4) Proposed maximum aggregate value of transaction:
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[FN]
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
/ / 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 of Schedule and the
date of this filing.
1) Amount Previously Paid:
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4) Date Filed:
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Aluminum Company of America
425 Sixth Avenue, Alcoa Building
Pittsburgh, Pennsylvania 15219-1850
1994 Notice of Annual Meeting and
Proxy Statement
To Alcoa Shareholders:
It is my privilege to invite you to the 1994 annual meeting of Alcoa
shareholders. We will meet on Friday, May 6, at 9:30 a.m. in the
Allegheny Ballroom of Pittsburgh's Vista International Hotel. I hope
you will be able to attend and participate in this review of your
company's business and operations.
The Vista Hotel is fully accessible to disabled persons. In addition,
headsets for the hearing-impaired will be available.
If you plan to attend the meeting, please check the appropriate box on
the proxy card, then detach and retain the admission ticket that
accompanies the proxy form. You will need this ticket to be admitted to
the meeting.
Whether or not you plan to attend, it is important that your shares are
represented at the meeting. Please fill out and return your proxy card
promptly.
Sincerely,
/s/Paul H. O'Neill
Paul H. O'Neill
Chairman of the Board and
Chief Executive Officer
March 4, 1994
Notice of 1994 Annual Meeting
March 4, 1994
The annual meeting of shareholders of Aluminum Company of America (Alcoa)
is scheduled for Friday, May 6, 1994 at 9:30 a.m. We will meet in the
Allegheny Ballroom of the Vista International Hotel in Pittsburgh,
Pennsylvania.
The purposes of the meeting are:
(1) to elect four directors for a term of three years and one director
for a term of two years; and
(2) to consider any other matters that may properly come before the
meeting or any adjournment of the meeting.
Owners of common stock of record at the opening of business on
February 7, 1994 will be entitled to vote at the meeting.
The presence in person or by proxy of shareholders entitled to cast at
least a majority of the votes that all shareholders are entitled to cast
at the meeting will constitute a quorum for conducting business. If a
quorum is not present, the meeting may be adjourned to a time and place
determined by those shareholders present. If the meeting is adjourned,
the shareholders present at the next meeting will constitute a quorum
for the purpose of electing directors. In the event that the meeting
is adjourned for one or more periods totaling at least 15 days, the
shareholders present at such adjourned meeting will constitute a quorum
for acting upon any matter to be voted on at the meeting.
Your attention is directed to the following proxy statement and the
accompanying proxy card.
On behalf of Alcoa's Board of Directors,
Barbara S. Jeremiah
Secretary
Contents Page
Proxy solicitation and voting information . . . . . . . . 3
Board of Directors . . . . . . . . . . . . . . . . . . . 3
Security ownership. . . . . . . . . . . . . . . . . . . . 8
Compensation of executive officers . . . . . . . . . . . 8
Other information . . . . . . . . . . . . . . . . . . . 15
Proxy Statement
Proxy solicitation and voting information
The accompanying proxy is solicited by the Board of Directors of Aluminum
Company of America (Alcoa or the company) for use at the annual meeting of
shareholders scheduled for May 6, 1994. These proxies will be voted if
properly signed, received by the secretary of the company prior to the
close of voting at the meeting and not revoked.
Holders of record of Alcoa common stock at the opening of business on
February 7, 1994 will be entitled to vote at the meeting. On that date
88,641,950 shares of common stock were outstanding. Shareholders are
entitled to one vote per share on each matter properly brought before the
meeting.
Under Pennsylvania law and the company's Articles, if a quorum is
present, the candidate or candidates receiving the highest number of
votes will be elected directors. Abstentions are counted for purposes
of determining a quorum. Abstentions, broker non-votes or failure to vote
are disregarded in tabulating voting results.
Proxies representing shares of common stock held of record also will
represent full and fractional shares held under the company's Dividend
Reinvestment and Stock Purchase Plan and full shares held under Alcoa's
employee savings plans, if the registrations are the same. Separate
mailings will be made for shares not held under the same registration.
Employee savings plan shares for which no voting directions are received
from participants will be voted by the independent trustee in the same
proportion (for, against and abstain) as the shares in all plans for which
directions are received.
A shareholder who has returned a proxy may revoke it at any time before
it is voted at the meeting by delivering a revised proxy, by voting by
ballot at the meeting, or by delivering a written notice withdrawing the
proxy to the company's secretary. This notice may be mailed to the
secretary at the address at the top of the first page of this booklet or
may be given to the judge of election at the meeting.
Proxies, ballots and voting tabulations that identify shareholders will
be held confidential, except in a contested proxy solicitation or where
necessary to meet applicable legal requirements. Corporate Election
Services, Inc., the company's independent proxy tabulator, has been
appointed judge of election for the meeting.
Shareholders are welcome to attend the annual meeting. An admission
ticket will be required for entry. If you plan to attend, please detach
and retain the admission ticket that accompanies this proxy statement.
Shareholders who do not have admission tickets will be admitted to the
meeting upon verification of ownership.
Shareholders' comments about any aspect of company business are welcome,
and space is provided on the proxy card for this purpose. Although such
notes are not answered on an individual basis, they do assist Alcoa
management in determining and responding to the needs of shareholders.
Board of Directors
The Alcoa Board of Directors consists of ten members, divided into three
classes. The terms of office of the three classes of directors end in
successive years.
The four members of the class of directors whose term of office is
expiring have been nominated to serve for a new three-year term that will
end in 1997. In addition, Dr. Marina v.N. Whitman has been nominated to
serve for a two-year term expiring at the 1996 annual meeting.
Dr. Whitman, who is Distinguished Visiting Professor of Business
Administration and Public Policy at the University of Michigan, was
elected an Alcoa director effective in March 1994 when the Board also
increased the size of the Board from nine to ten members.
The accompanying proxy will be voted for the election of these nominees,
unless authority to vote for one or more nominees is withheld. In the
event that any of the nominees is unable or unwilling to serve as a
director for any reason (which is not anticipated), the proxy will be voted
for the election of any substitute nominee designated by the Board of
Directors or its Executive Committee.
Certain information about these nominees and the other directors is
shown on the following pages.
Nominees to serve for a three-year term expiring 1997
Kenneth W. Dam
Max Pam Professor of American and
Foreign Law, University of Chicago
Law School
(accompanying graphic omitted)
Mr. Dam, 61, was elected a director in October 1987. He is Max Pam
Professor of American and Foreign Law at the University of Chicago Law
School. He served as President and Chief Executive Officer of the
United Way of America in 1992, Vice President for Law and External
Relations of International Business Machines Corporation from 1985 to
1992, Deputy Secretary of State from 1982 to 1985 and Provost of the
University of Chicago from 1980 to 1982. He serves on the Advisory
Board of BMW of North America and on a number of nonprofit boards,
including the Council on Foreign Relations and the Brookings
Institution.
John P. Diesel
Former President, Tenneco, Inc.,
a diversified energy company
(accompanying graphic omitted)
Mr. Diesel, 67, has been a director since 1980. He had been a director
of Tenneco since 1976 and its President since 1979. He retired from
both positions at Tenneco at year-end 1988. Mr. Diesel is also a
director of Brunswick Corporation.
Judith M. Gueron
President, Manpower Demonstration
Research Corporation, a nonprofit
research organization
(accompanying graphic omitted)
Dr. Gueron, 52, has been a director since 1988. She has been President
of Manpower Demonstration Research Corporation (MDRC) since 1986. She
was Executive Vice President for research and evaluation of MDRC from
1978 to 1986. Before joining MDRC, Dr. Gueron was director of special
projects and studies and a consultant at the New York City Human
Resources Administration.
Paul H. O'Neill
Chairman of the Board and Chief
Executive Officer of Alcoa
(accompanying graphic omitted)
Mr. O'Neill, 58, has been a director since 1986. He was elected Chairman
of the Board and Chief Executive Officer of Alcoa effective in June 1987.
Before joining Alcoa, Mr. O'Neill had been an officer since 1977 and
President and a director since 1985 of International Paper Company. He
is also a director of General Motors Corporation, Gerald R. Ford
Foundation, Manpower Demonstration Research Corporation and The RAND
Corporation and is a member of the International Advisory Board of
National Westminister Bank Plc.
Nominee to serve for a two-year term expiring 1996
Marina v.N. Whitman
Distinguished Visiting Professor
of Business Administration and
Public Policy, University of Michigan
(accompanying graphic omitted)
Ms. Whitman, 58, is Distinguished Visiting Professor of Business
Administration and Public Policy, Graduate School of Business
Administration and the Institute of Public Policy Studies at the
University of Michigan. She was Vice President and Chief Economist
of General Motors Corporation (GMC) from 1979 to 1985, and Vice
President and Group Executive, Public Affairs and Marketing Staffs of
GMC from 1985 to 1992. Ms. Whitman was a member of the President's
Council of Economic Advisers from 1972 to 1973. Ms. Whitman is also a
director of The Procter & Gamble Company, Chemical Banking Corporation,
Browning-Ferris Industries Inc. and Unocal Corporation.
Continuing directors--term expiring 1996
Joseph T. Gorman
Chairman and Chief Executive
Officer, TRW Inc., a global company
serving the space and defense,
automotive and information systems
markets
(accompanying graphic omitted)
Mr. Gorman, 56, became a director in 1991. He has been Chairman and
Chief Executive Officer of TRW since December 1988. Mr. Gorman served
as Chief Operating Officer of TRW from 1985 until 1988 and as President
from 1985 until April 1991. He is also a director of TRW and The
Procter & Gamble Company.
John P. Mulroney
President and Chief Operating
Officer, Rohm and Haas Company,
a specialty chemicals manufacturer
(accompanying graphic omitted)
Mr. Mulroney, 58, has been a director since 1987. He has been President
and Chief Operating Officer of Rohm and Haas Company since March 1986.
In 1982 he was elected a director and Group Vice President and Corporate
Business Director of that corporation. Mr. Mulroney is also a director
of Teradyne, Inc.
Continuing directors--term expiring 1995
Sir Arvi Parbo
Chairman of Western Mining
Corporation Limited, an Australian
exploration and mining company,
and Chairman of Alcoa of
Australia Limited
(accompanying graphic omitted)
Sir Arvi, 68, has been a director since 1980. He has been Chairman of
Western Mining Corporation Limited since 1974. He served as Managing
Director of that company from 1971 to 1986. Western Mining and its
affiliates own approximately 48% of Alcoa of Australia Limited, an
Alcoa subsidiary. Sir Arvi is also a director of Hoechst Australian
Investments Pty. Ltd., Munich Reinsurance Company of Australia Ltd.,
Sara Lee Corporation, Western Mining Corporation Holdings Limited and
Zurich Australian Insurance Group.
Forrest N. Shumway
Former Vice Chairman,
Allied-Signal Inc., a diversified,
technologically-based corporation
(accompanying graphic omitted)
Mr. Shumway, 66, has been a director since February 1988 and served
previously as a director from 1982 to 1987. He retired as Vice
Chairman of the Board and Chairman of the Executive Committee of
Allied-Signal Inc. in 1987. Prior to 1985, he had served as Chairman
and Chief Executive Officer of The Signal Companies, Inc. Mr. Shumway
is also a director of American President Companies, Ltd., The Clorox
Company, First Interstate Bancorp and Transamerica Corporation.
Franklin A. Thomas
President, The Ford Foundation, a nonprofit charitable
foundation
(accompanying graphic omitted)
Mr. Thomas, 59, has been a director since 1977. He has been President
of The Ford Foundation since 1979. Mr. Thomas was President and Chief
Executive Officer of Bedford Stuyvesant Restoration Corporation from
its founding in 1967 until 1977. He is also a director of American
Telephone & Telegraph Co., CBS Inc., Citicorp/Citibank, N.A. and
Cummins Engine Company, Inc.
Meetings and committees of the Board
The Alcoa Board of Directors held seven meetings during 1993. The Board
has designated several standing committees, including the five described
below. Attendance by directors at meetings of the Board and of committees
on which they served averaged over 95%.
The Audit Committee, composed of Directors Dam, Gueron, Shumway and
Thomas (chairman), reviews the performance of the independent public
accountants and makes recommendations to the Board concerning the
selection of independent public accountants to audit the company's
financial statements. This Committee also reviews the audit plans,
audit results and findings of the internal auditors and the independent
accountants, reviews the environmental audits conducted by the company's
environmental staff and monitors compliance with Alcoa business conduct
policies. The Audit Committee meets regularly with the company's
management, Director-Internal Audit and independent public accountants
to discuss the adequacy of internal accounting controls and the
financial reporting process and with the company's management to discuss
environmental matters. The independent accountants and the Director-
Internal Audit have free access to the Audit Committee, without
management's presence. This Committee held six meetings in 1993.
The Compensation Committee, composed of Directors Dam, Diesel
(chairman), Mulroney and Thomas, determines the compensation of all
Alcoa officers (including salary and bonus), authorizes or approves
any contract for remuneration to be paid after termination of regular
employment of an officer and performs specified functions under company
plans including the granting of employee stock options. This Committee
reviews, but is not required to approve, the participation of officers
in the company's other benefit programs for salaried employees. Four
meetings were held in 1993.
The Executive Committee, composed of Directors Diesel, O'Neill
(chairman) and Thomas, has been granted the authority of the Board in
the management of the company's business and affairs. It meets
principally when specific action must be taken between Board meetings.
This Committee did not meet in 1993.
The Nominating Committee, composed of Directors Diesel, Gorman,
Mulroney (chairman) and Thomas, reviews the performance of incumbent
directors and the qualifications of nominees proposed for election to
the Board and makes recommendations to the Board with regard to
nominations for director. This Committee will consider proposed
nominees whose names and information regarding education and experience
are submitted in writing by shareholders to the secretary of the company.
This Committee held four meetings in 1993.
The Pension and Savings Plan Investment Committee, composed of Directors
Gorman, Gueron, Shumway (chairman) and Thomas, reviews and makes
recommendations to the Board concerning the investment management of
the assets of Alcoa's retirement plans and principal savings plans.
This Committee met twice in 1993.
Certain relationships and related transactions
Alcoa and its subsidiaries have transactions in the ordinary course of
business with a large number of persons and entities, including
corporations of which certain non-employee directors (outside directors)
are executive officers. Transactions with any of these corporations did
not exceed 5% of Alcoa's or the other corporation's consolidated gross
revenues for its last fiscal year. Alcoa does not consider these
transactions to be material.
Directors' compensation
A director who is not an Alcoa employee receives an annual retainer fee
and a meeting fee for each Board or committee meeting attended. The
annual cash retainer fee is $28,000 for members of the Audit Committee
and $25,000 for other non-employee directors. Each outside director
receives 200 shares of Alcoa common stock as an additional annual retainer.
The chairman of each Board committee also receives an additional annual
fee of $2,000. The meeting fee is $1,000 for Board meetings and $600
for committee meetings.
Directors may elect to defer receipt of some or all directors' fees.
Deferred accounts are credited with investment results comparable to
those of the investment options under Alcoa's principal savings plan
for salaried employees, as selected by the director. Transfers of
investments among options are permitted once each month. Deferred
accounts are unfunded and are paid out in cash after Board service ends.
A fee continuation arrangement also is provided to outside directors.
Benefits vest at 10% per year of service beginning with 50% for five years.
Payments begin after the later of age 65 or discontinuance of service as a
director and continue for life. The annual amount equals the vesting
percentage multiplied by the minimum annual retainer (cash and common
shares) in effect when Board service ends. However, if service ends
after attaining age 70 with at least five years of service, 100% of the
final retainer is paid.
Security ownership
The following table shows the beneficial ownership of Alcoa common stock
as of February 7, 1994 for each director, nominee for director and the
four highest paid executive officers, and for all directors and executive
officers as a group. The shares shown for the group represented less than
1% of the total shares outstanding. The first column shows shares which
the executives had the right to acquire within 60 days through the exercise
of employee options. The second column shows actual ownership, and
includes shares in benefit plans or owned outright that are not presently
transferable.
<TABLE>
<CAPTION>
Exercisable Shares
employee beneficially
Name options owned
<S> <C> <C>
Kenneth W. Dam -- 900
John P. Diesel -- 900
Joseph T. Gorman -- 608
Judith M. Gueron -- 913
John P. Mulroney -- 975
Paul H. O'Neill 127,469 24,470
Sir Arvi Parbo -- 1,238
Forrest N. Shumway -- 3,650
Franklin A. Thomas -- 1,008
Marina v.N. Whitman -- 0
Alain J. P. Belda 34,375 6,675
Richard L. Fischer 26,607 4,414
Ronald R. Hoffman 29,569 9,859
Jan H. M. Hommen 18,114 7,616
Directors and executive
officers as a group 386,029 90,494
</TABLE>
The company believes that all of its executive officers and directors
complied in 1993 with all applicable stock ownership reporting
requirements under Section 16(a) of the Securities Exchange Act of 1934,
except that R. L. Fischer, an executive officer, was 11 days late in
filing a report disclosing one common stock sale transaction in late
December 1993.
Mellon Bank Corporation (MBC), One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258, a bank holding company, reported to the Securities
and Exchange Commission (SEC) that it and its subsidiaries beneficially
owned 4,736,000 shares, or approximately 5.36% of the company's common
stock as of December 31, 1993. Included in the MBC holdings were
4,4487,000 shares, or approximately 5.1% of the stock, held by Mellon
Bank, N.A. MBC stated in its report that it had sole power to vote
785,000 shares, sole power to dispose of 914,000 shares and shared power
to dispose of 1,508,000 shares. MBC also reported that both it and the
bank had shared voting power over 1,208,000 shares. The bank reported
sole voting power over 602,000 shares, sole power to dispose of 686,000
shares and shared power to dispose of 1,487,000 shares. Total holdings
of both include the company's principal employee savings plans; the bank
acts as trustee, although employees vote most of the shares.
Wellington Management Company, 75 State Street, Boston, Massachusetts
02109, an investment adviser and parent holding company, reported to the
SEC that it beneficially owned 10,447,799 shares, or approximately 11.85%
of the company's common stock as of December 31, 1993. It reported shared
power to dispose of all of these shares and shared voting power over
1,327,149 shares. The Wellington holdings included shares owned by
various investment advisory clients, of which only the Vanguard/Windsor
fund is known to beneficially own more than 5% of the company's stock.
Compensation of executive officers
A summary of the compensation for the company's chief executive officer
and for the four other executive officers who were the highest paid for
the fiscal year ended December 31, 1993 for services to Alcoa and its
subsidiaries is shown in the following table.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual Compensation Awards
--------------------------- ------
Securities
Name and Underlying All Other
Principal Position Year Salary($)(1)(2) Bonus ($) Options (#)(3) Compensation ($)(4)
- ------------------ ---- --------------- --------- -------------- -------------------
<S> <C> <C> <C> <C> <C>
Paul H. O'Neill 1993 $700,200 $343,000 62,600 $170,012
Chairman of the Board and 1992 627,000 575,000 143,948* 184,810
Chief Executive Officer 1991 558,250 0 28,469
Alain J. P. Belda (5) 1993 319,231 152,200 14,500 91,362
Vice President and
President - Latin America
and Alcoa Aluminio S.A.
Richard L. Fischer 1993 350,400 112,000 43,990* 70,024
Executive Vice President- 1992 331,454 123,552 47,671* 77,610
Chairman's Counsel 1991 301,626 0 14,998*
Ronald R. Hoffman 1993 350,400 112,000 37,023* 74,024
Executive Vice President- 1992 331,454 123,552 42,897* 83,610
Human Resources, Quality, 1991 316,115 0 10,334
and Communications
Jan H. M. Hommen 1993 300,000 162,200 27,080* 62,000
Executive Vice President 1992 260,200 110,150 19,040* 49,494
and Chief Financial Officer 1991 203,850 0 4,621
*Includes continuation options--see note 3 below
<FN>
(1) The most highly compensated executive officers are those with the
highest annual salary and bonus for the last completed fiscal year. In
addition to base salary, the salary column in this table includes, when
selected by the employee, an extra week's pay in lieu of vacation as
permitted under the company's vacation plan for employees with 25 or
more years of service. Also included is vacation premium for Mr. Belda,
paid pursuant to Brazilian law.
(2) Mr. Belda's salary was paid by Alcoa Aluminio S.A. in local Brazilian
currency.
(3) The annual stock option grants for each of the named officers in 1992
and for Messrs. Fischer, Hoffman and Hommen in 1993 were fractions of the
total option amounts reported in the table for those years. All of the
other options reported for 1993 and a large percentage of the other
options for 1992 relate to previous years' option grants and the use of
the continuation feature explained on page 10. Option amounts for 1992
and 1991 include earnout options (described on page 10) delivered for the
respective performance share award measurement periods ended in those
years.
(4) Company matching contributions to 401(k) and excess savings (defined
contribution) plans were as follows: Mr. O'Neill, $42,012;
Mr. Belda, $20,362; Messrs. Fischer and Hoffman, $21,024; and
Mr. Hommen, $18,000. The present value costs of the company's portion of
1993 premiums for split-dollar life insurance, above the term coverage
level provided generally to salaried employees, were as follows:
Mr. O'Neill, $128,000; Mr. Belda, $71,000; Mr. Fischer, $49,000;
Mr. Hoffman, $53,000; and Mr. Hommen, $44,000.
(5) Mr. Belda became an executive officer in 1993. Pursuant to SEC rules,
no information regarding his compensation for years prior to the year in
which he became an executive officer is required to be set forth in this
table.
</TABLE>
Long Term Stock Incentive Plan
This plan provides long term incentives, based on Alcoa stock, to
employees who may influence the long term performance of Alcoa and its
subsidiaries. Key features of the plan include stock options and
performance shares.
Stock options are granted annually, currently in the month of January.
The option price generally may not be less than 100% of the fair market
value of Alcoa stock on the grant date. In 1989, a "reload" or
continuation feature was added to the plan for the purpose of encouraging
early option exercise and increased share ownership by optionees. This
feature permits the optionee to exercise a previously granted option and
receive option appreciation as shares, together with a continuation option
for a lesser number of shares and having a new option price at current
market value. The option expiration date is the same as for the prior
grant. The continuation option covers the previous number of option
shares less the net "appreciation" shares received after any share
withholding for taxes. One-half of the net appreciation shares are
restricted against sale or pledge during the employee's Alcoa career.
Performance share awards are granted contingently and are earned only
if and to the extent that Alcoa and its subsidiaries meet performance
goals set by the Compensation Committee. A performance share is a unit
equal in value to one share of Alcoa common stock. Performance share
awards, to the extent earned at the end of a performance cycle, are
distributed in the form of options for Alcoa stock with an option price
of $1 per share (earnout options). Earnout options generally expire
five years after retirement. Cash dividend equivalents are paid on these
earnout options, which have no continuation feature. Effective in
January 1993, no new performance share awards are being made under the
plan.
The following table shows annual options granted by the Compensation
Committee for 1993 to the named officers. It also shows continuation
(reload) options resulting from the exercise in 1993 of options granted
in prior years. No earnout options were granted for the performance
share award measurement period ended December 31, 1993.
The price of Alcoa stock must appreciate in order for optionees to
realize any gain. As the stock price increases, all shareholders
benefit proportionately. The potential gain for all Alcoa optionees
(over 700 individuals) is less than 2% of the gain to all shareholders
and optionees from future stock appreciation.
Option Grants in Last Fiscal Year (1)
<TABLE>
<CAPTION>
Individual Grants
- -----------------------------------------------------------------------------
Number of % of Total Potential Realizable Value at
Securities Options Assumed Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation for Option
Options Employees or Base Expira- Term (2)
Granted in Fiscal Price tion ---------------------
Name Type (#) (1) Year ($/Sh)(1) Date(3) 0% ($) 5% ($) 10% ($)
- ---- ------- ----------- ----------- --------- -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Potential future Alcoa stock price (2) . . . . . . . . . . . . . . . . . . $69.25/share $113/share $180/share
P. H. O'Neill Annual 62,600 4.2% $69.250 1/15/03 $ 0 $2,726,300 $6,909,000
A. J. P. Belda Annual 14,500 1.0 69.250 1/15/03 0 631,500 1,600,300
R. L. Fischer Annual 18,200 1.2 69.250 1/15/03 0 792,600 2,008,700
Continuation 189 0.0 73.125 7/9/97 0 3,300 7,200
Continuation 1,323 0.1 75.125 7/9/97 0 20,900 45,000
Continuation 988 0.1 76.000 7/9/97 0 15,800 34,000
Continuation 955 0.1 75.125 7/21/98 0 19,500 42,900
Continuation 386 0.0 75.375 7/21/98 0 7,900 17,400
Continuation 3,740 0.3 76.000 7/21/98 0 77,100 170,000
Continuation 1,829 0.1 76.000 5/4/99 0 45,000 101,500
Continuation 2,967 0.2 77.125 5/4/99 0 74,100 167,000
Continuation 1,477 0.1 73.125 1/23/01 0 50,900 121,700
Continuation 265 0.0 77.125 1/23/01 0 8,900 21,000
Continuation 4,762 0.3 75.625 1/20/02 0 196,300 482,300
Continuation 6,909 0.5 76.938 1/20/02 0 289,700 711,900
R. R. Hoffman Annual 18,200 1.2 69.250 1/15/03 0 792,600 2,008,700
Continuation 3,250 0.2 76.000 7/9/97 0 52,000 111,800
Continuation 1,880 0.1 72.688 7/21/98 0 37,800 83,400
Continuation 2,208 0.1 77.125 7/21/98 0 46,200 101,800
Continuation 2,801 0.2 77.125 1/22/00 0 79,400 182,200
Continuation 5,241 0.4 75.125 1/20/02 0 199,900 484,500
Continuation 1,199 0.1 75.375 1/20/02 0 45,900 111,200
Continuation 2,244 0.2 76.000 1/20/02 0 86,600 209,800
J. H. M. Hommen Annual 14,500 1.0 69.250 1/15/03 0 631,500 1,600,300
Continuation 2,201 0.1 77.125 5/4/99 0 55,000 123,900
Continuation 1,201 0.1 76.000 1/22/00 0 33,600 77,000
Continuation 1,618 0.1 77.125 1/22/00 0 45,900 105,200
Continuation 2,046 0.1 73.125 1/23/01 0 70,500 168,600
Continuation 3,477 0.2 75.000 1/20/02 0 142,100 349,300
Continuation 2,037 0.1 76.938 1/20/02 0 85,400 209,900
<FN>
(1) This table includes both annual option grants and continuation grants
made in 1993. The continuation grants pertain to previous stock option
grants for the years 1987-1992. Earnout options delivered in January 1993
for the performance period ended in 1992 are included in 1992 compensation
information in this year's and last year's proxy statements (see note 3 to
the table on page 9). No earnout options were delivered for the
performance period ended in 1993.
(2) The dollar amounts in the last two columns are the result of calcula-
tions at the 5% and 10% compound annual rates set by the SEC and are not
intended to forecast future appreciation of Alcoa's stock. The potential
future Alcoa stock prices per share are keyed to the 1993 annual grant.
The company did not use an alternative formula for valuation at grant
because it is not aware of any formula which will determine with
reasonable accuracy a present value based on unknown future factors.
The potential realizable values shown in the table represent future
opportunity and have not been reduced to present value in 1993 dollars.
In the opinion of the Compensation Committee, inclusion of full potential
values for continuation options, as required by the SEC, greatly
overstates the value this feature adds to Alcoa's stock option program.
(3) Annual options become exercisable one year after grant, earnout
options are immediately exercisable, and continuation options become
exercisable after six months. For all options, optionees may use shares
they own to pay the exercise price and may have shares withheld for taxes.
</TABLE>
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
<TABLE>
<CAPTION>
Number of Securi-
ties Underlying
Unexercised Value of Unexercised
Options at Fis- In-the-Money Options
Shares cal Year-end (#) at Fiscal Year-End ($)
Acquired on Value ------------------ ----------------------
Exercise Realized Exer- Unexer- Exer- Unexer-
Name (#) ($) cisable cisabl cisable cisable
- ---- ------------ -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
P. H. O'Neill 0 $0 176,075 62,600 $2,354,630 $7,825
A. J. P. Belda 0 0 31,352 14,500 668,256 1,813
R. L. Fischer 33,968 662,090 25,688 30,653 57,230 2,275
R. R. Hoffman 24,233 427,777 18,672 37,023 0 2,275
J. H. M. Hommen 13,196 81,135 17,743 19,520 317,875 1,813
</TABLE>
Retirement plans
The company's retirement plans cover a majority of its salaried employees
on a non-contributory basis. The plans, which include both tax-qualified
plans and nontax-qualified excess plans, provide the following annual
benefits at executive remunerations levels.
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
----------------------------------------------------------
Remuneration 15 20 25 30 35 40
- ------------ -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 21,350 $ 28,470 $ 35,590 $ 42,710 $ 50,170 $ 58,320
300,000 59,670 79,560 99,450 119,340 134,650 150,650
500,000 100,000 133,330 166,670 200,000 225,590 251,870
700,000 134,350 179,130 223,910 268,700 303,040 338,080
900,000 173,620 231,490 289,360 347,240 391,590 436,640
1,100,000 207,280 276,370 345,460 414,560 467,490 521,120
1,300,000 245,530 327,370 409,210 491,060 553,740 617,120
1,500,000 283,780 378,370 472,960 567,560 639,990 713,120
</TABLE>
The amount of pension is based upon the employee's average compensation
for the highest five years in the last ten years of service. For the
executive level, covered compensation includes base salary and 50% of
annual cash bonus. Data shown in the table reflect salary at target plus
bonus at target. Payments are made as a straight life annuity, reduced by
5% where a surviving spouse pension is taken. The table shows benefits at
age 65, before applicable reductions including the offset which recognizes
a portion of the company's cost for social security benefits. At March 1,
1994, pension service was as follows: Mr. Belda, 25 years;
Mr. Fischer, 28 years; Mr. Hoffman, 39 years; Mr. Hommen, 23 years;
and Mr. O'Neill, 15 years, reflecting an employment contract which
provides somewhat more than double credits for his years with the company,
with the resulting pension offset by pension payments from his previous
employer.
Shareholder return
The following graph illustrates the performance of Alcoa common stock over
a five-year period compared to the performance of the S&P 500 Index and a
peer group index, all with dividends reinvested in additional shares on
the dates paid. The peer group index (market capitalization weighted)
consists of Alcan Aluminium Limited and Reynolds Metals Company. The peer
group index is being used rather than the S&P Aluminum Industry Index,
which includes Alcoa as well as Alcan and Reynolds, because Alcoa's heavy
market capitalization weighting would distort a comparison to the full
index.
Comparison of five-year cumulative total return*
<TABLE>
Measurement Period Alcoa S&P 500 Index Peer Group Index
(Fiscal Year Covered)
<S> <C> <C> <C>
Measurement Pt 12/31/88 $100 $100 $100
FYE 12/31/89 $140 132 108
FYE 12/31/90 $113 128 105
FYE 12/31/91 $129 166 109
FYE 12/31/92 $147 179 103
FYE 12/31/93 $146 197 108
* Assumes the investment of $100 on December 31, 1988 and the reinvestment
of all dividends.
</TABLE>
Compensation Committee report on executive compensation
The company's Compensation Committee is composed solely of independent,
non-employee directors.
The company's compensation policy, as developed by the Committee, is to
provide compensation and benefit programs from a total compensation
perspective which enables Alcoa to hire, retain and motivate high-
performing employees worldwide. Total compensation includes salary,
annual cash incentives, long term incentives and employee benefits.
Guiding principles include pay for individual and group performance,
competitive total compensation compared to leading industrial companies
and, particularly for executives, total compensation which is highly
leveraged based on business performance -- both financial and non-
financial.
The company engages executive compensation consulting firms to provide
comparative market compensation data and assist in analysis and
interpretation of comparative practices. The comparison groups surveyed
for both total cash compensation and long term incentives include a cross
section of over 20 leading manufacturing companies -- a select sample of
well-managed companies with whom Alcoa competes for talent. The
comparator companies are among the largest and most highly regarded
corporations in a broad range of industries and serve as a proxy for the
market at large. Similar approaches are used to compare position size
within these companies, which facilitates compensation comparisons.
Since 1987 the Committee has shifted executive compensation away from
higher fixed salaries and toward more at-risk short term and long term
performance-based incentives. Stock-based incentives are an important
element, helping to assure that executives are focused on increasing
shareholder value.
Cash compensation -- Targets for annual cash compensation (salary and
cash incentives) are set slightly above the median for the comparison
group of high-performing industrial companies. Payouts at target
provide competitive levels of total cash compensation when predetermined
performance measures of excellence are achieved. For senior management,
the Committee has moved to more leverage based on performance, with the
base salary structure below the median and annual cash incentive targets
above the median for the comparison group.
Annual cash incentive payouts for executive officers are based one-half
on an approved corporate financial performance standard which is
consolidated return on equity (ROE) and one-half on the achievement of
business plan goals for the year. These may be financial goals and/or
non-financial measurements. Examples of such goals include electrical
efficiency per pound of aluminum produced, reduced cycle time, inventory
reduction, product quality improvements and safety performance. The
Committee believes that if the company focuses on achieving excellence
in those areas within its control as measured by the proper non-financial
indicators, long term growth in shareholder value will result. Target
awards, established as a percentage of base salary, vary by position level.
Adjustments to target awards and special award flexibility may be made
by the Committee in its discretion to reflect individual performance. To
provide further congruency throughout the company, cash incentive programs
were revised in 1992 so that similar performance measures apply both to
executives and, under the performance pay plan, to most other U.S.
employees. The measures for employees in business units (BUs) for the
portion of their awards based on business plan goals are the goals of
their individual BU. For most executive officers, the average
performance against these goals for all BUs is the measure that
determines the payout for this half of their annual cash incentive target.
The maximum payout before adjustment for individual performance is 200%
of target on the BU portion, while the corporate portion is uncapped. Any
portion of an award exceeding 160% of the individual's target award is
payable in fully vested shares of Alcoa common stock with transfer
restricted during the employee's career with the company.
Long term incentives -- Long term incentives are stock-based, consistent
with the Committee's goal of encouraging stock ownership and closely
aligning management's interests with those of shareholders.
Annual long term awards, which are granted in the form of stock options,
are designed to provide a competitive award opportunity versus the
comparison group of leading industrial companies; stock performance then
determines the amount earned. The Committee has established guidelines
on the target number of shares to be covered by annual option grants for
executive officer and other management positions. The guidelines reflect
the Committee's assessment of levels of responsibility of the company's
manager and officer positions as well as the relationship to the size of
prior grants and comparative award data. Individual annual grants are
ordinarily made at the guideline amount. From 1988 through 1992,
one-half of the award for senior managers was granted as performance
shares instead of stock options.
New performance share awards were discontinued beginning in January
1993, and target stock option awards for most executive officer positions
were increased. This change was instituted because the Committee
believes that stock options are a preferable means for the company to
deliver long term incentive opportunity to key employees. Performance
share award goals, based on attainment of internal financial measures,
do not directly track increased market value of Alcoa stock. Stock
options, on the other hand, more closely align the interests of
management and shareholders.
The continuation (reload) feature of the stock option program was added
in 1989 to provide further incentive for increased stock ownership, not
only for senior management but for about 700 other optionees. This
feature encourages early exercise of options and retention of the Alcoa
shares. To obtain continuation options, employees must already own
shares which are used to pay the exercise price. Further, one-half of
the "appreciation" shares received upon exercise, after any share
withholding for taxes, are restricted against sale or pledge during the
employee's Alcoa career. These shares may be used for further option
exercises.
Report on 1993 compensation of executive officers including the named
officers--Salary and annual incentive dollar targets were increased from
1992, reflecting comparable increases in the comparison survey data.
Cash payouts under the annual incentive plan based on 1993 performance
were about 49% of target awards for most executive officers. Average BU
performance against the respective goals, which represents one-half of
the award opportunity for executive officers, was approximately at target.
Worldwide ROE performance did not achieve the threshold so there was no
payout for any employee on the 50% portion which is based on overall
corporate performance. Bonus amounts for Messrs. Belda and Hommen for
1993 were based on the results against goals of their respective units
rather than the composite of all BUs.
Stock option awards are granted annually. Performance share awards
were granted annually prior to 1993, and comprised one-half of the long
term incentive opportunity for executive officers. With the
discontinuance of new performance share awards in 1993, the January 1993
stock options grants were made at the full levels for the respective job
grades, which, for most executive officers, resulted in option grants
which were double those made in 1992.
A large number of optionees exercised stock options in 1993. Most of
the exercises by executive officers involved the grant of continuation
options. Consistent with the intent of this feature, the exercises
resulted in a large percentage increase in Alcoa share ownership by
executive officers.
There were no performance share payouts in January 1994 from prior
years' awards since ROE performance averaged 8.6% over the 1988 through
1993 measurement period, which is below the minimum threshold of 10%
required for payout.
Report on 1993 CEO compensation--The chief executive officer's
compensation is established based on the philosophy and policies
enunciated above for all executive officers. This includes cash
compensation (base salary and annual cash incentive payouts) and long
term incentives (stock option awards). The Compensation Committee
meets annually without the CEO and evaluates his performance in relation
to financial and non-financial goals previously established. A consensus
is reached and commensurate compensation adjustments are made. This
process is reported in full to the entire Board for their consideration
and concurrence. This meeting is an executive session of non-employee
directors only.
More specifically, Mr. O'Neill's base salary was increased in January
1993 to keep pace with growth of CEO salaries in the comparison companies.
In making this increase, the Committee also considered the levels of
Mr. O'Neill's cash compensation for prior years and his leadership
contributions to the company during difficult economic times. By design,
Mr. O'Neill's salary remains below the median for the comparison group.
In January 1994, Mr. O'Neill was awarded a bonus of $343,000, which was
49% of his target incentive award for 1993, based on BU performance
compared to BU plan goals. Mr. O'Neill's 1993 total cash compensation
was below the median for the comparison companies.
Mr. O'Neill's 1993 annual stock option award grant was made at the
established guideline number of shares for his position.
In addition to ongoing compensation matters, the Committee also
considered and made certain decisions in 1993 regarding recently enacted
Section 162(m) of the Internal Revenue Code which limits the allowable
corporate deduction for compensation paid to executive officers named in
the proxy statement to $1 million per executive per year, unless certain
requirements are met.
Deferred compensation is excluded from the $1 million deduction limit,
as is compensation paid under certain performance-based plans. Alcoa has
several deferred compensation programs in place. These include tax-
qualified savings plans in which most U.S. hourly and salaried employees
are eligible to participate as well as unfunded excess benefit plans.
The company's Long Term Stock Incentive Plan, under which stock options
are granted, qualifies currently under IRS transition rules as a
performance-based plan. Alcoa intends to continue to qualify that plan
in the future, including seeking shareholder approval from time to time
for material changes to the plan. Since countable compensation for any
of the named officers is not expected to exceed $1 million by any material
amounts in the foreseeable future, the company has no plans to seek to
qualify any other compensation for exclusion from the deduction limit.
The Committee intends to monitor this situation, however, and will revisit
this position from time to time in light of circumstances then affecting
the company.
Compensation Committee
John P. Diesel, Chairman
Kenneth W. Dam
John P. Mulroney
Franklin A. Thomas
Other information
Relationship with independent public accountants
Coopers & Lybrand has been the independent public accounting firm auditing
the financial statements of Alcoa and most of its subsidiaries since 1950.
In accordance with standing policy, the Coopers & Lybrand personnel who
work on the audit are changed periodically.
In connection with the audit function, Coopers & Lybrand in 1993 also
reviewed the company's periodic filings with the Securities and Exchange
Commission, prepared or reviewed special financial or audit reports to
lenders and others, including governmental agencies, and examined the
effects of various technical accounting issues. Coopers & Lybrand also
conducted audits and reviews in connection with several acquisitions made
by the company.
In addition, Coopers & Lybrand provides other professional services to
the company and its subsidiaries. A substantial portion of these other
services involves assistance in tax planning and preparation of tax
returns for expatriate employees, executives and various foreign
locations, and consultation on accounting and information systems and
government contracting.
The Audit Committee of Alcoa's Board reviews summaries of the actual
services, both audit and non-audit, rendered by Coopers & Lybrand and
the related fees.
Upon recommendation of the Audit Committee, the Board has reappointed
Coopers & Lybrand to audit the 1994 financial statements. As in past
years, representatives of Coopers & Lybrand will be present at the annual
meeting of shareholders. They will be given the opportunity to make a
statement if they desire to do so, and they will be available to respond
to appropriate questions.
1995 meeting--shareholder proposals
Alcoa's 1995 annual meeting of shareholders will be on May 12, 1995. To
enable the Board to adequately analyze and respond to shareholder
proposals, any shareholder proposal to be presented at that meeting must
be received by the secretary of the company by November 4, 1994 in order
to be timely received for inclusion in Alcoa's proxy statement for that
meeting.
Other matters
The Board of Directors does not know of any other matters that are to be
presented for action at the May 6, 1994 meeting. Should any other matter
come before the meeting, the accompanying proxy will be voted with respect
to thematter in accordance with the best judgment of the persons voting
the proxy.
Barbara S. Jeremiah
Secretary
Alcoa
425 Sixth Avenue, Alcoa Building
Pittsburgh, Pennsylvania 15219-1850
Printed in U.S.A. 9402
Form A07-15544
Graphics Appendix List
Page Where
Graphic Appears Description of Graphic or Cross-Reference
page 4 Photograph of Kenneth W. Dam, Nominee for Director
page 4 Photograph of John P. Diesel, Nominee for Director
page 4 Photograph of Judith M. Gueron, Nominee for Director
page 4 Photograph of Paul H. O'Neill, Nominee for Director
page 5 Photograph of Marina v.N. Whitman, Nominee for Director
page 5 Photograph of Joseph T. Gorman, Continuing Director
page 5 Photograph of John P. Mulroney, Continuing Director
page 6 Photograph of Sir Arvi Parbo, Continuing Director
page 6 Photograph of Forrest N. Shumway, Continuing Director
page 6 Photograph of Franklin A. Thomas, Continuing Director
page 12 Comparison of five-year cumulative total return
TO FELLOW ALCOA SHAREHOLDERS:
Here is your 1994 Alcoa proxy card. Please read both sides of the
card, and mark, sign and date it. Then detach and return it promptly
using the enclosed envelope. We urge you to vote your shares.
You are invited to attend the annual meeting of shareholders on Friday,
May 6, at 9:30 a.m. in the Allegheny Ballroom of the Vista International
Hotel in Pittsburgh, Pennsylvania.
If you plan to attend the meeting, please check the appropriate box on
the proxy card. Then detach and retain the admission ticket which is
required for admission to the meeting.
Thank you in advance for voting.
Barbara S. Jeremiah
Secretary
ALUMINUM COMPANY OF AMERICA
425 SIXTH AVENUE, ALCOA BUILDING
PITTSBURGH, PA 15219-1850
The undersigned shareholder hereby authorizes Mary Lou Ambrose, Earnest J.
Edwards and John M. Wilson, or any one or more of them, with power of
substitution to each, to represent the undersigned at the annual meeting
of shareholders of Aluminum Company of America scheduled for Friday, May 6,
1994, and any adjournment of the meeting, and to vote the shares of stock
which the undersigned would be entitled to vote if attending the meeting,
upon the matter referred to on the reverse side of this card and in
accordance with the best judgment of such persons upon other matters as
may properly come before the meeting or any adjournment of the meeting.
As described more fully in the proxy statement, this card votes or
provides voting instructions for shares of common stock held under the
same registration in any one or more of the following manners: as a
shareholder of record, in the Alcoa Dividend Reinvestment and Stock
Purchase Plan and in Alcoa's employee savings plan.
THIS PROXY IS SOLICITED ON BEHALF OF THE ALCOA BOARD OF DIRECTORS.
Please mark, sign, date and return this proxy, using the enclosed envelope.
(continued on the other side)
Your continuing interest in Alcoa is appreciated and there is space on the
proxy card to the right for your comments. Shareholder comments about any
aspect of company business are welcome. Although such notes are not
answered on an individual basis, they do assist Alcoa management in
determining and responding to the needs of shareholders.
Comments:----------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(continued from other side)
This proxy will be voted as you specify below. Where there is no
instruction, this proxy will be voted for the nominees listed.
Election of Directors
Nominees to serve a three-year term:
Kenneth W. Dam John P. Diesel
Judith M. Gueron Paul H. O'Neill
Nominee to serve a two-year term:
Marina v.N. Whitman
/ / VOTE FOR all nominees listed above, except
vote withheld from the following nominee(s), if any:
- ------------------------
- ------------------------
/ / VOTE WITHHELD from all nominees
/ / I will attend the May 6, 1994 annual meeting in Pittsburgh.
The signature(s) to this proxy should correspond to the name(s) shown on
this proxy. Each joint owner should sign. Please indicate title if you
are signing as executor, administrator, trustee, custodian, guardian or
corporate officer.
- -----------------------------------
Signature(s) of shareholder
- ------------------------------------
Dated -----------------, 1994.
