<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------
CORDANT TECHNOLOGIES INC.
(Name of Subject Company)
CORDANT TECHNOLOGIES INC.
(Name of Person Filing Statement)
COMMON STOCK, $1.00 PAR VALUE
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
----------------
218412 104 (COMMON STOCK)
(CUSIP Number of Class of Securities)
----------------
EDWIN M. NORTH
VICE PRESIDENT AND CORPORATE SECRETARY
CORDANT TECHNOLOGIES INC.
15 WEST SOUTH TEMPLE, SUITE 1600
SALT LAKE CITY, UTAH 84101-1532
(801) 933-4000
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person Filing Statement)
----------------
COPY TO:
ERIC S. ROBINSON, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
(212) 403-1000
[_]Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
ITEM 1. SUBJECT COMPANY INFORMATION.
The name of the subject company is Cordant Technologies Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 15 West South Temple, Suite 1600, Salt Lake City, Utah 84101-
1532. The telephone number of the Company at its principal executive offices
is (801) 933-4000.
The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Statement")
relates is the Common Stock, par value $1.00 per share, of the Company (the
"Common Stock") and the associated preferred share purchase rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of May 22, 1997,
between the Company and First Chicago Trust Company of New York, as Rights
Agent (the "Rights Agreement"), as amended by Amendment No. 1 thereto, dated
as of March 14, 2000. As of March 3, 2000, there were 36,714,831 shares of
Common Stock outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSONS.
The filing person is the subject company. The Company's name, business
address and business telephone number are set forth in Item 1 above.
This Statement relates to the tender offer by Omega Acquisition Corp. (the
"Purchaser"), a Delaware corporation and a wholly owned subsidiary of Alcoa
Inc., a Pennsylvania corporation ("Alcoa"), to purchase all of the outstanding
shares of Common Stock and the associated Rights (the shares of Common Stock
together with any associated Rights are referred to in this Statement as the
"Shares"), at a purchase price of $57.00 per Share, net to the seller in cash
(the "Offer Price"), upon the terms and subject to the conditions set forth in
the Purchaser's Offer to Purchase, dated March 20, 2000, and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"). The Offer is described in a
Tender Offer Statement on Schedule TO (as amended or supplemented from time to
time, the "Schedule TO"), filed by Alcoa and the Purchaser with the Securities
and Exchange Commission (the "Commission") on March 20, 2000. The Offer is
being made in accordance with the Agreement and Plan of Merger, dated as of
March 14, 2000, among Alcoa, the Purchaser and the Company (the "Merger
Agreement"). The Merger Agreement provides that, subject to the satisfaction
or waiver of certain conditions, following completion of the Offer, and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), the Purchaser will be merged with and into the Company (the
"Merger"). Following the consummation of the Merger, the Company will continue
as the surviving corporation (the "Surviving Corporation") and will be a
wholly owned subsidiary of Alcoa. As more fully described in Item 3 below, at
the effective time of the Merger (the "Effective Time"), each issued and
outstanding Share (other than Shares owned by Alcoa, the Purchaser, any of
their respective subsidiaries, the Company or any of its subsidiaries, which
will be cancelled, and Shares, if any, held by stockholders who did not vote
in favor of the Merger Agreement and who comply with all of the relevant
provisions of Section 262 of the DGCL relating to dissenters' rights of
appraisal) will be converted into the right to receive $57.00 in cash or any
greater amount per Share paid pursuant to the Offer (the "Merger
Consideration").
The Schedule TO states that the principal offices of the Purchaser and Alcoa
are located at 201 Isabella Street, Alcoa Corporate Center, Pittsburgh,
Pennsylvania 15212.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Certain contracts, agreements, arrangements or understandings between the
Company or its affiliates and certain of its directors and executive officers
are, except as noted below, described in the Information Statement pursuant to
Rule 14f-1 under the Securities Exchange Act (the "Information Statement")
that is attached as Annex B to this Statement and is incorporated herein by
reference. Except as described in this Statement (including in the Exhibits
hereto and in Annex B hereto) or incorporated herein by reference, to the
knowledge of the Company, as of the date of this Statement there exists no
material agreement, arrangement or understanding or any actual or potential
conflict of interest between the Company or its affiliates and (1) the
Company's executive officers, directors or affiliates or (2) Alcoa, the
Purchaser or the their respective executive officers, directors or affiliates.
1
<PAGE>
THE MERGER AGREEMENT. The summary of the Merger Agreement and the
description of the conditions of the Offer contained in Sections 11 and 15,
respectively, of the Offer to Purchase of Alcoa and the Purchaser, dated
March 20, 2000 and filed as Exhibit (a)(1) to the Schedule TO, which is being
mailed to stockholders together with this Statement, are incorporated herein
by reference. Such summary and description are qualified in their entirety by
reference to the Merger Agreement, which has been filed as Exhibit (e)(1)
hereto and is incorporated herein by reference.
THE CORPORATE AGREEMENT AMENDMENT. On March 13, 2000, the Company, Cordant
Technologies Holding Company, a Delaware corporation and a wholly owned
subsidiary of the Company ("Holding"), and Howmet International Inc., a
Delaware corporation ("Howmet"), 84.6% of whose shares of common stock, par
value $0.01 per share ("Howmet Shares"), are owned by Holding, amended (the
"Corporate Agreement Amendment") the Corporate Agreement entered into by such
parties in connection with the initial public offering of Howmet Shares in
December 1997. Under the Corporate Agreement Amendment, the Company and
Holding agreed that neither they nor any of their affiliates will acquire
outstanding Howmet Shares not held by any of them (the "Publicly Held Howmet
Shares") if, after such acquisition, the number of Publicly Held Howmet Shares
would be less than 14% of the total number of outstanding Howmet Shares, other
than: (1) with the consent of a majority (but not less than two) of the non-
employee directors of Howmet who are not directors or employees of the
Company, Holding or their affiliates; or (2) the purchase of at least a
majority of the outstanding Publicly Held Howmet Shares pursuant to a tender
offer to acquire all of the Publicly Held Howmet Shares, which tender offer
(A) is conditioned upon there being tendered and not withdrawn prior to the
expiration of the offer not less than a majority of the outstanding Publicly
Held Howmet Shares (the "Howmet Minimum Tender"), and (B) provides a
commitment for a prompt merger or business combination following the purchase
of Howmet Shares in the tender offer as contemplated by clause (3) below; or
(3) pursuant to a merger or other business combination, within one year
following the completion of a tender offer described in clause (2) above that
satisfied the Howmet Minimum Tender, in which each Publicly Held Howmet Share
outstanding immediately prior to the effective time of such merger or business
combination is converted into the right to receive the same consideration paid
or issued in the tender offer; or (4) pursuant to a merger or other business
combination in which holders of all outstanding Publicly Held Howmet Shares
are treated the same which is approved by the holders of a majority of the
outstanding Publicly Held Howmet Shares.
LETTER AGREEMENT RELATING TO ALCOA'S COMPLIANCE WITH THE CORPORATE AGREEMENT
AMENDMENT. Alcoa and Howmet entered into a letter agreement on March 13,
2000, pursuant to which Alcoa agreed with Howmet to be bound by the same
limitations on purchasing Publicly Held Howmet Shares as bind the Company
under the Corporate Agreement Amendment.
EFFECTS OF THE OFFER AND THE MERGER UNDER COMPANY STOCK PLANS AND AGREEMENTS
BETWEEN THE COMPANY AND ITS EXECUTIVE OFFICERS.
The Merger Agreement provides that each outstanding option to purchase
shares of Common Stock (including any related alternative rights) granted
under any stock option or compensation plan or arrangement of the Company or
its subsidiaries (collectively, the "Company Option Plans") (including those
granted to current or former employees and directors of the Company or any of
its subsidiaries) (the "Employee Stock Options") will become exercisable, and
each share of restricted Common Stock granted under the Company Option Plans
will vest in full and become fully transferable and free of restrictions,
either prior to the purchase of Shares pursuant to the Offer or immediately
prior to the Effective Time, as permitted pursuant to the terms and conditions
of the applicable Company Option Plan. The Merger Agreement provides that the
Company will offer to each holder of an Employee Stock Option that is
outstanding immediately prior to the first purchase of Shares pursuant to the
Offer (whether or not then presently exercisable or vested) to cancel such
Employee Stock Option in exchange for an amount in cash equal to the product
obtained by multiplying (1) the difference between the Offer Price and the per
share exercise price of such Employee Stock Option, by (2) the number of
shares of Common Stock covered by such Employee Stock Option. Each Employee
Stock Option, the holder of which does not accept such offer, that remains
outstanding immediately before the Effective Time will be assumed by Alcoa and
converted, effective as of the Effective Time, into an option with respect to
that number (the "New
2
<PAGE>
Share Number") of shares of common stock, par value $1.00 per share, of Alcoa
("Alcoa Common Stock") that equals the number of shares of Common Stock
subject to such Employee Stock Option immediately before the Effective Time,
multiplied by an amount equal to the Merger Consideration divided by the Alcoa
Share Value (as defined below), rounded to the nearest whole number, with a
per-share exercise price equal to the aggregate exercise price of such option
immediately before the Effective Time, divided by the New Share Number,
rounded to the nearest whole cent. However, in the case of any such converted
Employee Stock Option that was granted as an "incentive stock option" within
the meaning of Section 422 of the Internal Revenue Code and did not cease to
qualify as such as a result of any acceleration of vesting provided for above
or otherwise, the number of shares subject to the new option will be rounded
down to the nearest whole number in determining the New Share Number, and the
new per-share exercise price will be determined by rounding up to the nearest
whole cent. The Alcoa Share Value means the average of the daily high and low
trading prices of the Alcoa Common Stock on the New York Stock Exchange on
each trading day during the period of 30 days ending the second trading day
prior to the Effective Time.
The purchase of Shares pursuant to the Offer will constitute a "change of
control" for purposes of the change-of-control employment agreements that the
Company has entered into with Messrs. Wilson, Corbin, Crippen, McNulty, Zorich
and certain other key employees, including all of the other executive officers
of the Company. Messrs. Wilson, Corbin, and McNulty and four other executive
officers will have "good reason" to terminate their employment under their
agreements as a result of the consummation of the transactions contemplated by
the Merger Agreement, and accordingly Alcoa has agreed that the Company will
pay them all cash severance benefits to which they are entitled under the
above agreements immediately upon the consummation of the Merger, regardless
of whether their employment terminates at that time. The cash severance
payable to these individuals, assuming the Merger occurs on June 1, 2000,
would be: Mr. Wilson, $8,115,515; Mr. Corbin, $3,050,841; Mr. McNulty,
$2,832,678; and the four other executive officers as a group, $3,214,803. We
estimate that if the other executive officers' employment were terminated
without cause on June 1, 2000, their cash severance would be: Mr. Crippen,
$3,263,136; and Mr. Zorich, $2,428,034. The executives' non-cash severance
benefits will in all cases be provided at the time their employment
terminates. To the extent that any payments to the executives with change-of-
control employment agreements are subject to the excise tax on excess
parachute payments, the Company will also be required to make them whole for
that tax.
In addition, Mr. Wilson and two other executive officers currently meet, or
as a result of the provisions of their agreements will meet, the eligibility
requirements for retiree medical benefits under the Company's retiree medical
plan. Alcoa has therefore agreed that the Company will provide such
individuals, and six other executives, with lifetime retiree medical benefits
not less favorable than those currently in effect for eligible retirees,
beginning when the period of continuation of active employee medical benefits
as part of their severance package (if applicable) expires; provided, that the
Company may satisfy this obligation in full by purchasing insurance coverage
providing such benefits at a cost to the Company not to exceed $450,000 in the
aggregate.
Under the Company's Key Executive Long-Term Incentive Plan, all cycles that
are ongoing at the time of the first purchase of Shares pursuant to the Offer
are required to be paid out based upon target or actual performance, whichever
is better. Assuming that such purchase occurs before June 30, 2000, the
payments under this plan to the executive officers will be: Mr. Wilson,
$2,033,358; Mr. Corbin, $760,434; Mr. Crippen, $1,049,326; Mr. McNulty,
$727,251; Mr. Zorich, $533,374; and all other executive officers as a group,
$668,359. Under the Key Executive Bonus Plan, the awards for 2000 are required
to be paid out upon the first purchase of Shares pursuant to the Offer,
without proration, based upon target or actual performance, whichever is
better. Assuming that such purchase occurs before June 30, 2000, the payments
under this plan to the executive officers will be: Mr. Wilson, $542,500; Mr.
Corbin, $176,000; Mr. Crippen, $167,500; Mr. McNulty, $167,500; Mr. Zorich,
$157,500; and all other executive officers as a group, $248,400.
Under the Company's Supplemental Executive Retirement Plan, participants
will be paid cash lump-sum benefits upon the first purchase of Shares pursuant
to the Offer, based upon their full benefit at normal retirement age, without
offsets except for benefits under the Company's qualified pension plan. In
addition, participants are entitled to receive a gross-up for all federal,
state and local income taxes and excess parachute excise tax imposed
3
<PAGE>
on the lump-sum payments. Assuming that these payments are made on June 1,
2000, the estimated payments (not including tax gross-ups) will be: Mr.
Wilson, $13,589,727; Mr. Corbin, $5,584,860; Mr. Crippen, $2,260,307; Mr.
McNulty, $4,917,777; and all other executive officers as a group, $5,065,101;
and the estimated aggregate income (but not excise) tax gross-ups for all
executive officers will be $29,059,218.
The Company intends to amend the relocation package to which Mr. Ayers is
currently entitled to provide that Mr. Ayers may elect to have the Company
purchase either the residence in Salt Lake City that he is currently having
built, or his existing residence in Ogden, Utah (currently the relocation
package provides only for the purchase of the Ogden residence).
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(A) RECOMMENDATION OF THE BOARD OF DIRECTORS. The Board of Directors of the
Company (the "Board" or the "Board of Directors"), at a meeting held on March
13, 2000, determined that the terms of the Offer and the Merger are fair to
and in the best interests of the stockholders of the Company. At this meeting,
the Board approved the Offer and the Merger and the other transactions
contemplated by the Merger Agreement, and approved the Merger Agreement,
including for purposes of the "interested stockholder" provisions of the DGCL
and the Company's Restated Certificate of Incorporation, as amended. THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES IN THE OFFER.
(B) (I) BACKGROUND OF THE OFFER; CONTACTS WITH ALCOA.
In early August 1999, following a meeting of the board of directors of a
corporation on whose board Mr. James R. Wilson, Chief Executive Officer of the
Company, and Mr. Alain J.P. Belda, President and Chief Executive Officer of
Alcoa, sit, Mr. Belda informally told Mr. Wilson that Alcoa had from time to
time considered the Company as a possible acquisition candidate and a possible
good fit with Alcoa's businesses. On August 12, 1999, Mr. Belda spoke with Mr.
Wilson and expressed an interest in meeting to discuss Alcoa's strategy and to
explore a possible business combination transaction with the Company.
Following their discussion, Messrs. Belda and Wilson arranged for
representatives of both companies to meet on October 1, 1999.
On October 1, 1999, Mr. Belda and Ms. Barbara S. Jeremiah, Vice President --
Corporate Development of Alcoa, met with Mr. Wilson and Mr. Richard L.
Corbin, Executive Vice President and Chief Financial Officer of the Company,
at the Company's offices in Salt Lake City. Mr. Belda suggested that, if the
Company had interest in further exploratory discussions, Alcoa and the Company
should work together to identify potential synergies that might be achieved
through a business combination transaction involving the Company and Alcoa.
Mr. Wilson told the Alcoa representatives that he would discuss with the
Company's Board of Directors Alcoa's expression of interest in exploring a
possible business combination transaction at an upcoming meeting of the Board
of Directors.
On October 14, 1999, at a regularly scheduled meeting of the Board of
Directors of the Company, Mr. Wilson advised the Board of Directors of the
contacts that he had had with Alcoa's representatives. The Board discussed the
relative advantages to the Company and its stockholders of pursuing the
Company's long-range strategic plan and a broad range of strategic
alternatives, including the possibility of a business combination transaction
with a larger company. Following its discussion, the Board authorized Mr.
Wilson and other members of senior management of the Company to continue
exploratory discussions with Alcoa.
On October 19, 1999, Mr. Wilson telephoned Mr. Belda and Ms. Jeremiah. He
stated that he had advised the Company's Board of Directors of Alcoa's
expression of interest. Mr. Wilson told the Alcoa representatives that the
Company was prepared to work with Alcoa to identify potential synergies that
might be achieved through a business combination transaction involving Alcoa
and the Company.
On November 9, 1999, representatives of Alcoa and the Company met in Salt
Lake City to conduct preliminary financial due diligence. On November 10,
1999, representatives of Alcoa contacted representatives of the Company to
continue their financial due diligence discussions.
4
<PAGE>
On December 2, 1999, Alcoa and the Company entered into a confidentiality
agreement to facilitate discussions between the two companies relating to a
possible business combination transaction.
At a regularly scheduled Board meeting on December 9, 1999, Mr. Wilson
advised the Company's Board of Directors of the status of discussions with
Alcoa.
During December 1999 and January 2000, representatives of Alcoa and the
Company met on several occasions to conduct further financial and business due
diligence. During this period, representatives of the Company had preliminary
contacts with several parties to assess their interest in and the feasibility
of a possible business combination.
On various occasions between February 9, 2000 and February 24, 2000, Mr.
Belda and Ms. Jeremiah discussed matters relating to a possible business
combination transaction with Messrs. Wilson and Corbin, including the status
of Alcoa's due diligence, structural matters relating to a possible
transaction, valuation ranges, the appropriate form of consideration to be
offered, termination fee provisions, the status and timing of the Company's
proposal on November 12, 1999 to acquire all of the outstanding Publicly Held
Howmet Shares for a price of $17.00 per share in cash, and the impact of that
proposal on a possible transaction between the Company and Alcoa.
On February 25, 2000, representatives of Alcoa and its financial advisors,
Salomon Smith Barney Inc., and its legal advisors, Skadden, Arps, Slate,
Meagher & Flom LLP, met in New York with representatives of the Company's
financial advisors, Morgan Stanley & Co. Incorporated ("Morgan Stanley"), and
its legal advisors, Wachtell, Lipton, Rosen & Katz, to discuss issues relating
to the Company's November 12, 1999 proposal to acquire the Publicly Held
Howmet Shares.
In the week of February 28, 2000, Mr. Belda and Ms. Jeremiah spoke with Mr.
Wilson to discuss Alcoa's views with respect to the discussions on February 25
relating to Howmet, and continued to discuss the possible structure and terms
of a business combination transaction involving the Company and Alcoa.
On March 3, 2000, Alcoa's legal advisors provided the Company's legal
advisors with a form of an acquisition agreement.
Between March 3, 2000 and March 6, 2000, Alcoa's and the Company's
respective legal advisors had a number of conversations relating to certain
corporate legal issues with respect to seeking the Howmet Board's approval for
Alcoa to become an "interested stockholder" of Howmet for purposes of Section
203 of the DGCL as a result of entering into an acquisition agreement with the
Company. Alcoa's legal counsel stated that Alcoa was not prepared to enter
into an acquisition agreement with the Company unless such Howmet Board
approval was given or the Company and Howmet entered into a definitive
acquisition agreement pursuant to which the Company would purchase the
Publicly Held Howmet Shares at an agreed upon price.
From March 7, 2000 to March 10, 2000, the Company's and Alcoa's respective
legal advisors began negotiating the proposed form of merger agreement.
On March 8, 2000, representatives of the Company advised representatives of
the committee of independent directors of the Howmet Board of Directors (the
"Howmet Special Committee") of the Company's discussions with Alcoa regarding
a possible transaction involving Alcoa and the Company. At that time the
Company requested that the Howmet Special Committee consider recommending to
the Board of Directors of Howmet that it approve Alcoa's becoming an
interested stockholder of Howmet under Section 203 of the DGCL as a result of
Alcoa's entering into an acquisition agreement with the Company, so that Alcoa
would not be restricted from entering into a business combination with Howmet
for three years without an affirmative vote of two-thirds of the disinterested
Howmet Shares.
Later on March 8, 2000, the Board of Directors of the Company held a special
meeting to discuss the status of the negotiations with Alcoa. At the meeting,
management and the Company's advisors described the course of the
negotiations, the terms of Alcoa's draft merger agreement and the response
that the Company had provided
5
<PAGE>
to Alcoa. Management and the Company's legal advisors also discussed with the
Board the status of discussions with the Howmet Special Committee and Alcoa's
stated position regarding Howmet Board approval for purposes of Section 203 of
the DGCL.
Over the next few days, representatives of the Company conducted discussions
with representatives of the Howmet Special Committee regarding the terms under
which the committee would consider recommending that the Howmet Board approve,
for purposes of Section 203, Alcoa's becoming an interested stockholder of
Howmet as a result of its entering into the proposed merger agreement with the
Company. In addition, representatives of the Company explored with
representatives of the Howmet Special Committee the possibility of negotiating
a definitive acquisition agreement to acquire the Publicly Held Howmet Shares.
During the course of these discussions, the Company made a proposal to the
Howmet Special Committee to acquire all of the Publicly Held Howmet Shares for
$18.75 per share, but following further discussions, no agreement was reached.
On March 9, 2000, representatives of Alcoa conducted additional due
diligence relating to the Company's fasteners division.
On March 10, 2000, the Board of Directors of Alcoa held a Board Meeting to
review the status of the discussions between Alcoa and the Company. For the
next couple of days, Alcoa completed its due diligence investigation based on
various information contained in disclosure schedules delivered by the Company
in connection with the negotiation of the proposed merger agreement.
On March 11, 2000, legal advisors to the Howmet Special Committee contacted
the Company's legal advisors and discussed the proposed terms for an amendment
to the Corporate Agreement between Howmet and the Company to provide for
additional restrictions on the Company's ability to purchase Publicly Held
Howmet Shares, and Alcoa's separately agreeing with Howmet to be bound by the
same restrictions as the Company under such amended agreement as conditions
for the Howmet Special Committee's recommending to the full Howmet Board of
Directors that it approve, for purposes of Section 203 of the DGCL, Alcoa's
becoming an "interested stockholder" of Howmet.
On March 12, 2000, the Board of Directors of the Company convened a special
meeting. Representatives of the Company's senior management and the Company's
financial and legal advisors made presentations and reviewed, among other
matters, the status of the negotiations with Alcoa, the matters set forth
below under "Reasons for the Recommendation of the Board of Directors," and
the conditions under which the Howmet Special Committee was willing to
recommend that the full Howmet Board approve, for purposes of Section 203 of
the DGCL, Alcoa's becoming an interested stockholder of Howmet.
On March 12, 2000 and March 13, 2000, representatives of Alcoa and the
Company satisfactorily resolved the issues relating to Alcoa's due diligence
concerns, agreed upon the purchase price and continued to negotiate the terms
of the proposed merger agreement.
In the morning on March 13, 2000, the Board of Directors of the Company met
by telephone conference to discuss the status of the negotiations with Alcoa,
and reconvened later that afternoon following further negotiations between the
Company and Alcoa.
In the afternoon on March 13, 2000, the executive committee of the Board of
Directors of Alcoa met to approve the terms of the Merger Agreement.
Later on March 13, 2000, the Howmet Board approved the terms of the proposed
Corporate Agreement Amendment described in Item 3 above, pursuant to which the
Company would agree to certain additional restrictions on its acquiring
Publicly Held Howmet Shares and Alcoa's separate agreement to be bound by the
same restrictions. In addition, the Howmet Board approved for purposes of
Section 203 of the DGCL, following receipt of the recommendation of the Howmet
Special Committee for such approval, Alcoa's becoming an interested
stockholder of Howmet as a result of its entering into the proposed merger
agreement.
6
<PAGE>
Following the Howmet Board meeting, on March 13, 2000, the Board of
Directors of the Company met to receive presentations from the Company's legal
and financial advisors and to consider the Offer, the Merger and the Merger
Agreement. At the meeting, Morgan Stanley delivered its written opinion that,
as of such date, and based upon and subject to certain matters and
assumptions, the consideration to be received by the holders of Shares
pursuant to the Merger Agreement is fair from a financial point of view to
such holders. Following such presentations and receipt of Morgan Stanley's
opinion, the Board of Directors of the Company determined that the terms of
the Offer and the Merger are fair to and in the best interests of the
stockholders of the Company, approved the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, and
determined to recommend that the Company's stockholders accept the Offer and
tender their Shares pursuant to the Offer and approve and adopt the Merger
Agreement. Following such meeting, the Company and Howmet entered into the
Corporate Agreement Amendment, Alcoa and Howmet entered into the letter
agreement described in Item 3 above and representatives of the Company's and
Alcoa's respective legal advisors finalized the Merger Agreement.
On March 14, 2000, Alcoa and the Company executed the Merger Agreement and
issued a joint press release announcing such execution.
On March 20, 2000, in accordance with the Merger Agreement, the Purchaser
commenced the Offer.
(II) REASONS FOR THE RECOMMENDATION OF THE BOARD OF DIRECTORS.
In reaching its recommendations described above in paragraph (a) of this
Item 4, the Board of Directors considered a number of factors, including the
following:
1. Company Operating and Financial Condition. The current and historical
financial condition and results of operations of the Company, as well as
the prospects and strategic objectives of the Company, including the
risks involved in achieving those prospects and objectives, and the
current and expected conditions in the industries in which the Company's
businesses operate.
2. Transaction Financial Terms/Premium to Market Price. The relationship of
the Offer Price and the Merger Consideration to the historical market
prices of the Shares. The $57.00 Offer Price and Merger Consideration
exceed the highest trading price of the Shares during the twelve-month
period preceding the announcement of the Merger Agreement ($52.38) and
represent a 92.8% premium over the $29.56 closing price of the Shares on
the New York Stock Exchange on March 13, 2000 (the last trading day
prior to the Board meeting at which the Board of Directors approved the
Merger Agreement). The Board also considered the form of consideration
to be paid to holders of Shares in the Offer and the Merger, and the
certainty of value of such cash consideration compared to stock. The
Board was aware that the consideration received by holders of Shares in
the Offer and Merger would be taxable to such holders for federal income
tax purposes.
3. Strategic Alternatives. The presentation of the Company's financial
advisor and the Board's review with respect to trends in the industries
in which the Company's businesses operate and the strategic alternatives
available to the Company, including the Company's alternative to remain
an independent public company, the possibility of acquisitions or
mergers with other companies in such industries, a break-up or leveraged
buy-out of the Company and other extraordinary corporate transactions,
as well as the risks and uncertainties associated with such
alternatives. The Board considered management's belief that the Company
and Alcoa have similar corporate cultures, the complementary nature of
the two companies' products, and the experience, reputation and
financial strength of Alcoa.
4. Morgan Stanley Fairness Opinion. Presentations from Morgan Stanley and
the opinion of Morgan Stanley, dated March 13, 2000, that, based upon
and subject to certain considerations and assumptions, the consideration
to be received by holders of Shares pursuant to the Merger Agreement is
fair from a financial point of view to such holders. A copy of the
opinion delivered by Morgan Stanley to the Board of Directors, setting
forth the procedures followed, the matters considered and the
assumptions made by Morgan Stanley in arriving at its opinion, is
attached hereto as Annex A and incorporated
7
<PAGE>
herein by reference. Stockholders are urged to read this opinion in its
entirety. The Board was aware that Morgan Stanley becomes entitled to
certain fees described in Item 5 upon the consummation of the Offer.
5. Timing of Completion. The Board considered the anticipated timing of
consummation of the transactions contemplated by the Merger Agreement,
including the structure of the transactions as a tender offer for all of
the Shares, which should allow stockholders to receive the transaction
consideration earlier than in an alternative form of transaction,
followed by the Merger in which stockholders will receive the same
consideration as received by stockholders who tender their Shares in the
Offer.
6. Limited Conditions to Consummation. Alcoa's obligation to consummate the
Offer and the Merger is subject to a limited number of conditions, with
no financing condition. The Board also considered the likelihood of
obtaining required regulatory approvals, and the terms of the Merger
Agreement regarding the obligations of both companies to pursue such
regulatory approvals.
7. Alternative Transactions. The Board of Directors considered that under
the terms of the Merger Agreement, while the Company is prohibited from
soliciting acquisition proposals from third parties, the Company may
engage in discussions or negotiations with, and may furnish non-public
information to, a third party who makes a written acquisition proposal
if, among other things, the Board determines in good faith with the
advice of its financial advisors that such acquisition proposal would,
if consummated, provide greater aggregate value to the Company's
stockholders from a financial point of view than the Offer and the
Merger. The Board considered that the terms of the Merger Agreement
permit the Company to terminate the Merger Agreement to enter into such
a superior transaction involving the Company if (a) financing for such
transaction is committed or, in the good faith judgment of the Board,
the transaction is capable of being financed by the person making the
proposal and (b) the Company pays Alcoa a $75 million termination fee
prior to terminating the Merger Agreement. The Board considered the
possible effect of these provisions of the Merger Agreement on third
parties who might be interested in exploring an acquisition of the
Company. In this regard, the Board recognized that the provisions of the
Merger Agreement relating to termination fees and solicitation of
acquisition proposals were insisted upon by Alcoa as a condition to
entering into the Merger Agreement. The Board of Directors also
considered the preliminary contacts that the Company had had with
certain third parties regarding a potential transaction involving the
Company, and took into account the views of management and Morgan
Stanley as to the likelihood that a third party would be prepared to pay
a higher price for the Shares than the consideration offered in the
Offer and the Merger in a transaction that could be completed on a
timely basis.
8. Potential Conflicts of Interest. The interests of certain Company
executives in the Offer and the Merger (see Item 3 "--Effects of the
Offer and the Merger Under Company Stock Plans and Agreements Between
the Company and its Executive Officers").
The foregoing includes all material factors considered by the Board of
Directors. In view of its many considerations, the Board did not find it
practical to, and did not, quantify or otherwise assign relative weights to
the specific factors considered. In addition, individual members of the Board
may have given different weights to the various factors considered. After
weighing all of these considerations, the Board determined to approve the
Merger Agreement and recommend that holders of Shares tender their Shares in
the Offer.
(c) INTENT TO TENDER. To the best knowledge of the Company, each executive
officer, director, affiliate or subsidiary of the Company who owns Shares
presently intends to tender in the Offer all Shares that they own of record or
beneficially, other than Shares, if any, that they may have the right to
purchase by exercising stock options and Shares, if any, that if tendered
would cause them to incur liability under the short-swing profits provisions
of the Securities Exchange Act.
ITEM 5. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
Pursuant to a letter agreement dated March 8, 2000, the Company formally
retained Morgan Stanley to act as its financial advisor in connection with the
proposed sale of the Company. The Board of Directors retained
8
<PAGE>
Morgan Stanley based upon Morgan Stanley's qualifications, experience and
expertise. Morgan Stanley is an internationally recognized investment banking
and advisory firm. Morgan Stanley, as part of its investment banking and
financial advisory business, is continuously engaged in the valuation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for
corporate and other purposes. In addition, Morgan Stanley is a full-service
securities firm engaged in securities trading, brokerage and financing
activities. In the ordinary course of Morgan Stanley's trading and brokerage
activities, Morgan Stanley or its affiliates may at any time hold long or
short positions, and may trade or otherwise effect transactions, for its own
account or the accounts of customers, in debt or equity securities or senior
loans of the Company or Alcoa. In the past, Morgan Stanley and its affiliates
have provided financial advisory and financing services for the Company,
including acting as financial advisor to the Company in connection with the
Company's proposal in November 1999 to purchase all of the outstanding
Publicly Held Howmet Shares, and for Alcoa, and have received customary fees
for the rendering of these services.
Pursuant to the Morgan Stanley engagement letter, the Company agreed to pay
Morgan Stanley an advisory fee, estimated at such time at approximately
$150,000 to $200,000, which, to the extent paid, would be credited against any
transaction fee payable, and a transaction fee of $15 million, which will
become payable upon consummation of the Offer. The Company has also agreed to
reimburse Morgan Stanley for reasonable expenses as incurred. In addition, the
Company has also agreed to indemnify Morgan Stanley and its affiliates, their
respective directors, officers, agents and employees and each person, if any,
controlling Morgan Stanley or any of its affiliates against certain
liabilities and expenses, including certain liabilities under the federal
securities laws, arising out of Morgan Stanley's engagement.
Except as described above, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to stockholders on its behalf concerning
the Offer.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
No transactions in Shares have been effected during the past 60 days by the
Company or, to the knowledge of the Company, by any executive officer,
director, affiliate or subsidiary of the Company.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
Except as set forth in this Statement, the Company is not currently
undertaking or engaged in any negotiations in response to the Offer that
relate to (1) a tender offer for or other acquisition of the Company's
securities by the Company, any subsidiary of the Company or any other person;
(2) an extraordinary transaction, such as a merger, reorganization or
liquidation, involving the Company or any subsidiary of the Company; (3) a
purchase, sale or transfer of a material amount of assets of the Company or
any subsidiary of the Company; or (4) any material change in the present
dividend rate or policy, or indebtedness or capitalization of the Company.
Except as set forth in this Statement, there are no transactions,
resolutions of the Board of Directors, agreements in principle, or signed
contracts in response to the Offer that relate to one or more of the events
referred to in the preceding paragraph.
ITEM 8. ADDITIONAL INFORMATION.
RIGHTS AGREEMENT. Each Right issued pursuant to the Rights Agreement
entitles the registered holder thereof to purchase one two-hundredth of a
share of Series A Junior Preferred Stock, par value $1.00 per share (the
"Preferred Shares"), of the Company at an exercise price of $120.00 per one
two-hundredth of a Preferred Share, subject to adjustment. On the earlier of
(1) the tenth day following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the outstanding Shares or (2) the tenth
business day (or such later date as may be determined by
9
<PAGE>
action of the Board of Directors prior to the time any person becomes an
Acquiring Person) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in that person becoming an Acquiring Person (the earlier of such
dates being the "Distribution Date"), the Rights become exercisable and trade
separately from the Common Stock. After the Distribution Date, each holder of
a Right (other than the Acquiring Person) will thereafter have the right to
acquire shares of Common Stock having a market value of two times the exercise
price of the Right; or, in certain circumstances, the right to acquire shares
of the Acquiring Person's capital stock having a market value of two times the
exercise price of the Right. The Rights may be redeemed at a price of $0.005
per Right at any time prior to a person becoming an Acquiring Person. The
foregoing description of the Rights gives effect to a two-for-one stock split
in the form of a stock dividend paid on March 13, 1998.
The Company and the Rights Agent under the Rights Agreement amended the
Rights Agreement as of March 14, 2000 to provide that (1) so long as the
Merger Agreement has not been terminated pursuant to the termination
provisions thereof, a Distribution Date will not occur or be deemed to occur,
and neither Alcoa nor the Purchaser will become an Acquiring Person, as a
result of the execution, delivery or performance of the Merger Agreement, the
announcement, making or consummation of the Offer, the acquisition of Shares
pursuant to the Offer or the Merger, the consummation of the Merger or any
other transaction contemplated by the Merger Agreement and (2) the Rights will
expire immediately prior to the consummation of the Offer.
DELAWARE GENERAL CORPORATION LAW. As a Delaware corporation, the Company is
subject to Section 203 of the DGCL. In general, Section 203 would prevent an
"interested stockholder" (generally defined as a person beneficially owning
15% or more of a corporation's voting stock) from engaging in a "business
combination" (as defined in Section 203) with a Delaware corporation for three
years following the date such person became an interested stockholder unless:
(1) before such person became an interested stockholder, the board of
directors of the corporation approved the transaction in which the interested
stockholder became an interested stockholder or approved the business
combination, (2) upon consummation of the transaction which resulted in the
interested stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding for purposes of
determining the number of shares of outstanding stock held by directors who
are also officers and by employee stock plans that do not allow plan
participants to determine confidentially whether to tender shares), or (3)
following the transaction in which such person became an interested
stockholder, the business combination is (x) approved by the board of
directors of the corporation and (y) authorized at a meeting of stockholders
by the affirmative vote of the holders of at least 66 2/3% of the outstanding
voting stock of the corporation not owned by the interested stockholder. In
accordance with the provisions of Section 203, the Board of Directors has
approved the Merger Agreement, as described in Item 4 above and, therefore,
the restrictions of Section 203 are inapplicable to the Merger.
REGULATORY APPROVALS.
United States Antitrust Compliance. Under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules that have
been promulgated thereunder by the Federal Trade Commission (the "FTC"),
certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the FTC and certain waiting period
requirements have been satisfied. The purchase of Shares pursuant to the Offer
is subject to such requirements.
Pursuant to the requirements of the HSR Act, the Purchaser has advised the
Company that it expects to file a Notification and Report Form with respect to
the Offer and Merger with the Antitrust Division and the FTC on or about March
21, 2000. In that event, the waiting period applicable to the purchase of
Shares pursuant to the Offer would be scheduled to expire at 11:59 p.m., New
York City time, on or about April 5, 2000. However, prior to such time, the
Antitrust Division or the FTC may extend the waiting period by requesting from
the Purchaser additional information or documentary material relevant to the
Offer. If such a request is made, the
10
<PAGE>
waiting period will be extended until 11:59 p.m., New York City time, on the
tenth day after substantial compliance by the Purchaser with such request.
Thereafter, such waiting period can be extended only by court order.
The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer. At any time before or after the consummation
of any such transactions, the Antitrust Division or the FTC could take such
action under the antitrust laws of the United States as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking divestiture of the Shares so acquired
or divestiture of substantial assets of Alcoa or the Company. Private parties
(including individual States) may also bring legal actions under the antitrust
laws of the United States. The Company does not, and Alcoa has advised the
Company that it does not, believe that the consummation of the Offer will
result in a violation of any applicable antitrust laws. However, there can be
no assurance that a challenge to the Offer on antitrust grounds will not be
made, or if such a challenge is made, what the result will be. See the
description of the Merger Agreement in Item 3 of this Statement for a
description of the conditions of the Offer with respect to litigation and
certain governmental actions and of certain termination rights.
Canadian Competition Act. The merger provisions of the Competition Act
permit the Commissioner of Competition appointed thereunder (the
"Commissioner") to apply to the Competition Tribunal (the "Tribunal") to seek
relief in respect of a merger which prevents or lessens, or is likely to
prevent or lessen, competition substantially. The relief that may be ordered
by the Tribunal includes, in the case of a completed merger, ordering a
dissolution of the merger or a disposition of assets or shares, and in the
case of a proposed merger, prohibiting or delaying completion of the
transaction.
The Competition Act also requires parties to certain proposed mergers that
exceed specified size thresholds to provide the Commission with prior notice
of and information relating to the transaction and the parties thereto, and to
await the expiration or termination of the prescribed waiting periods, prior
to completing the transaction. A prescribed notification form can be either
short-form or long-form. The waiting period in respect of a short-form filing
is 14 days and in respect of a long-form filing is 42 days. A party to a
proposed merger may also apply to the Commission for an advance ruling
certificate ("ARC") or some form of comfort letter, which may be issued by the
Commissioner if the Commissioner is satisfied there would not be sufficient
grounds on which to apply to the Tribunal for an order under the merger
provisions in respect of the transaction. The issuance of an ARC will also
terminate the waiting period. The parties intend to file a short-form pre-
notification with the Commissioner and apply for an ARC or some form of
comfort letter.
EEA and European National Merger Regulation. Alcoa and the Company each
conduct substantial operations in the European Economic Area. Council
Regulation (EEC) 4064/89, as amended, and Article 57 of the European Economic
Area Agreement (together, the "European Regulation") require that
concentrations with a "Community or EFTA dimension" be notified in prescribed
form to the Commission of the European Communities for review and approval. In
these cases, the European Commission, as opposed to the individual countries
within the European Economic Area, will, with certain exceptions, have
exclusive jurisdiction to review the concentration.
Alcoa and the Company have determined that the Offer and the Merger have a
"Community dimension," and thus, intend to file notification promptly in the
prescribed form with the European Commission in accordance with the European
Regulation.
This filing will trigger a one-month review period in which the European
Commission is required to determine whether the proposed merger is compatible
with the European common market or that there is sufficiently "serious doubt"
about the proposed merger's compatibility with the common market to require a
more complete review of the proposed merger. During the review process
conditions may be imposed and obligations of the parties may become necessary.
In cases of serious doubts as regards the compatibility of the merger with the
European common market, the total review period can be as long as five months
from the date of complete notification.
11
<PAGE>
Other Filings. Alcoa and the Company each conduct operations in a number of
foreign countries, and filings may have to be made with foreign governments
under their pre-merger notification statutes. The filing requirements of
various nations are being analyzed by the parties and, where necessary, the
parties intend to make such filings.
THE PURCHASER'S DESIGNATION OF PERSONS TO BE ELECTED TO THE BOARD OF
DIRECTORS. The Information Statement attached as Annex B to this Statement is
being furnished in connection with the possible designation by Alcoa, pursuant
to the terms of the Merger Agreement, of certain persons to be elected to the
Board of Directors other than at a meeting of the Company's stockholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
(a)(1) Letter to Stockholders of the Company, dated March 20, 2000.*
(a)(2) Opinion of Morgan Stanley & Co. Incorporated, dated March 13, 2000
(included as Annex A to the Statement).*
(a)(3) Joint Press Release issued by Alcoa and the Company on March 14,
2000 (incorporated by reference to press release under cover of
Schedule 14D-9 filed by the Company on March 14, 2000).
(a)(4) Sections 11 and 15 of the Offer to Purchase dated March 20, 2000
(incorporated by reference to Exhibit (a)(1) to the Schedule TO of
Alcoa and the Purchaser filed on March 20, 2000).
(e)(1) Agreement and Plan of Merger, dated as of March 14, 2000, among
Alcoa, the Purchaser and the Company (incorporated by reference to
Exhibit 7 to Amendment No. 2 to Schedule 13D with respect to the
Howmet Shares, filed by the Company and Holding on March 15,
2000).
(e)(2) Amendment, dated as of March 13, 2000, to Corporate Agreement,
among Howmet, the Company and Holding (incorporated by reference
to Exhibit 6 to Amendment No. 2 to Schedule 13D with respect to
the Howmet Shares, filed by the Company and Holding on March 15,
2000).
(e)(3) Letter Agreement, dated March 13, 2000, between Alcoa and Howmet
(incorporated by reference to Exhibit (d)(3) to the Schedule TO of
Alcoa and the Purchaser filed on March 20, 2000).
(e)(4) Confidentiality Agreement, dated December 2, 1999, between Alcoa
and the Company.
(e)(5) The Information Statement of the Company dated March 20, 2000
(included as Annex B to the Statement).*
</TABLE>
- --------
* Included with the Statement mailed to stockholders.
12
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
CORDANT TECHNOLOGIES INC.
By: /s/ Edwin M. North
----------------------------------
Edwin M. North
Vice President and Corporate
Secretary
Dated: March 20, 2000
13
<PAGE>
ANNEX A
[MORGAN STANLEY LOGO]
March 13, 2000
Board of Directors
Cordant Technologies Inc.
15 West S. Temple
Suite 1600
Salt Lake City, Utah 84101-1532
Members of the Board:
We understand that Cordant Technologies Inc. ("Target" or the "Company"), Alcoa
Inc. ("Buyer") and Omega Acquisition Corp., a wholly owned subsidiary of Buyer
("Acquisition Sub") propose to enter into an Agreement and Plan of Merger,
substantially in the form of the draft dated March 10, 2000 (the "Merger
Agreement"), which provides, among other things, for (i) the commencement by
Acquisition Sub of a tender offer (the "Tender Offer") for all outstanding
shares of common stock, par value $1.00 per share of Target (the "Common
Stock", and together with the rights issued pursuant to the rights agreement
associated with such shares, the "Shares") for $57.00 per share net to the
seller in cash, and (ii) the subsequent merger (the "Merger") of Acquisition
Sub with and into Target. Pursuant to the Merger, Target will become a wholly
owned subsidiary of Buyer and each outstanding share of Common Stock of Target,
other than shares held in treasury or held by Buyer, Acquisition Sub or any
affiliate of Buyer or as to which dissenters' rights have been perfected, will
be converted into the right to receive $57.00 per share in cash. The terms and
conditions of the Tender Offer and the Merger are more fully set forth in the
Merger Agreement.
You have asked for our opinion as to whether the consideration to be received
by the holders of shares of Common Stock pursuant to the Merger Agreement is
fair from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning the Company prepared by the management
of the Company;
(iii) reviewed certain financial projections prepared by the management of
the Company;
(iv) discussed the past and current operations and financial condition and
the prospects of the Company with senior executives of the Company;
(v) reviewed the reported prices and trading activity for the Common Stock;
(vi) compared the financial performance of the Company and the prices and
trading activity of the Common Stock with that of certain other
comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among representatives
of the Company, Buyer and certain other parties and their financial
and legal advisors;
(ix) reviewed the draft Merger Agreement and certain related documents; and
(x) performed such other analyses as we have deemed appropriate.
A-1
<PAGE>
[MORGAN STANLEY LOGO]
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company. We
have not made any independent valuation or appraisal of the assets or
liabilities of the Company nor have we been furnished with any such
appraisals. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of,
the date hereof.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Company and Buyer and have
received fees for the rendering of these services.
Based on the foregoing, we are of the opinion on the date hereof that the
consideration to be received by the holders of shares of Common Stock pursuant
to the Merger Agreement is fair from a financial point of view to such
holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
/s/ R. Bradford Evans
By: _________________________________
R. Bradford Evans
Managing Director
A-2
<PAGE>
ANNEX B
CORDANT TECHNOLOGIES INC.
15 W. SOUTH TEMPLE, SUITE 1600
SALT LAKE CITY, UTAH 84101-1532
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE
ACT OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about March 20, 2000 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Statement") of Cordant Technologies Inc. (the "Company"). You are receiving
this Information Statement in connection with the possible election of persons
designated by Alcoa Inc. ("Alcoa") to a majority of seats on the Board of
Directors (the "Board of Directors" or the "Board") of the Company. On March
14, 2000, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Alcoa and Omega Acquisition Corp. (the "Purchaser"),
a Delaware corporation and a wholly owned subsidiary of Alcoa, pursuant to
which the Purchaser is required to commence a tender offer to purchase all
outstanding shares of Common Stock, par value $1.00 per share, of the Company
(the "Common Stock") and the associated preferred share purchase rights (the
shares of Common Stock and any associated preferred share purchase rights are
referred to in this Statement as the "Shares"), at a price per Share of
$57.00, net to the seller in cash (the "Offer Price"), upon the terms and
conditions set forth in the Purchaser's Offer to Purchase, dated March 20,
2000, and in the related Letter of Transmittal (which, together with any
amendments and supplements thereto, collectively constitute the "Offer").
Copies of the Offer to Purchase and the Letter of Transmittal have been mailed
to stockholders of the Company and are filed as Exhibits (a)(1) and (a)(2)
respectively, to the Tender Offer Statement on Schedule TO (as amended from
time to time, the "Schedule TO") filed by Alcoa and the Purchaser with the
Securities and Exchange Commission (the "Commission") on March 20, 2000. The
Merger Agreement provides that, subject to the satisfaction or waiver of
certain conditions, following completion of the Offer, and in accordance with
the General Corporation Law of the State of Delaware (the "DGCL"), the
Purchaser will be merged with and into the Company (the "Merger"). Following
consummation of the Merger, the Company will continue as the surviving
corporation and will be a wholly owned subsidiary of Alcoa. At the effective
time of the Merger (the "Effective Time"), each issued and outstanding Share
(other than Shares that are owned by Alcoa, the Purchaser, any of their
respective subsidiaries, the Company or any of its subsidiaries, and Shares
held by stockholders of the Company who did not vote in favor of the Merger
Agreement and who comply with all of the relevant provisions of Section 262 of
the DGCL) will be converted into the right to receive $57.00 in cash or any
greater amount per Share paid pursuant to the Offer.
The Offer, the Merger, and the Merger Agreement are more fully described in
the Statement to which this Information Statement forms Annex B, which was
filed by the Company with the Commission on March 20, 2000 and which is being
mailed to stockholders of the Company along with this Information Statement.
This Information Statement is being mailed to you in accordance with Section
14(f) of the Securities Exchange Act and Rule 14f-1 promulgated thereunder.
The information set forth herein supplements certain information set forth in
the Statement. Information set forth herein related to Alcoa, the Purchaser or
the Alcoa Designees (as defined herein) has been provided by Alcoa. You are
urged to read this Information Statement carefully. You are not, however,
required to take any action in connection with the matters set forth herein.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on March
20, 2000. The Offer is currently scheduled to expire at 5:00 p.m., New York
City time, on Monday, April 24, 2000, unless the Purchaser extends it.
B-1
<PAGE>
GENERAL
The Common Stock is the only class of equity securities of the Company
outstanding which is entitled to vote at a meeting of the stockholders of the
Company. As of the close of business on March 3, 2000, there were 36,714,831
outstanding shares of Common Stock, of which Alcoa and the Purchaser own no
shares as of the date hereof.
RIGHTS TO DESIGNATE DIRECTORS AND ALCOA DESIGNEES
The Merger Agreement provides that, promptly upon the purchase of and
payment for Shares by the Purchaser pursuant to the Offer, Alcoa will be
entitled to designate such number of directors (the "Alcoa Designees") on the
Board of Directors, rounded up to the next whole number, as is equal to the
product obtained by multiplying the total number of directors on the Board by
the percentage that the number of Shares so purchased and paid for bears to
the total number of Shares then outstanding.
The Merger Agreement provides that the Company will, upon request of the
Purchaser, promptly increase the size of the Board of Directors or exercise
its best efforts to secure the resignations of such number of directors, or
both, as is necessary to enable the Alcoa Designees to be elected to the Board
and, subject to Section 14(f) of the Securities Exchange Act and Rule 14f-1
promulgated thereunder, will cause the Alcoa Designees to be so elected. At
such time, the Company will, if requested by Alcoa, also cause directors
designated by Alcoa to constitute at least the same percentage (rounded up to
the next whole number) of each committee of the Board of Directors as is on
the Board of Directors.
Notwithstanding the foregoing, if Shares are purchased pursuant to the
Offer, there will be until the Effective Time at least two members of the
Board who were directors on the date of the Merger Agreement and who are not
employees of the Company.
The Alcoa Designees will be selected by Alcoa from among the individuals
listed below. Each of the following individuals has consented to serve as a
director of the Company if appointed or elected. None of the Alcoa Designees
currently is a director of, or holds any positions with, the Company. Alcoa
has advised the Company that, to the best of Alcoa's knowledge, except as set
forth below, none of the Alcoa Designees or any of their affiliates
beneficially owns any equity securities or rights to acquire any such
securities of the Company, nor has any such person been involved in any
transaction with the Company or any of its directors, executive officers or
affiliates that is required to be disclosed pursuant to the rules and
regulations of the Commission other than with respect to transactions between
Alcoa and the Company that have been described in the Schedule TO or the
Statement.
The name, age, present principal occupation or employment and five-year
employment history of each of the individuals who may be selected as Alcoa
Designees are set forth below. Unless otherwise indicated, each such
individual has held his or her present position as set forth below for the
past five years and each occupation refers to employment with Alcoa. Unless
otherwise indicated, each such person is a citizen of the United States, and
the business address of each person listed below is 201 Isabella Street, Alcoa
Corporate Center, Pittsburgh, Pennsylvania 15212.
NAME, AGE, PRINCIPAL OCCUPATION AND EMPLOYMENT HISTORY
ALAIN J. P. BELDA, 56, President and Chief Executive Officer of Alcoa since
May 1999. Mr. Belda was President and Chief Operating Officer of Alcoa from
1997 to May 1999. He served as Alcoa's Vice Chairman from 1995 to 1997 and
Executive Vice President from 1994 to 1995. From 1979 to March 1994, he was
President of Alcoa Aluminio S.A. in Brazil. In August 1991, he was named
President-Latin America for the company after he had been given responsibility
for all of Alcoa's interests in Latin America (other than Suriname) in 1989.
Mr. Belda is a citizen of Brazil.
MICHAEL COLEMAN, 49, Vice President and President -- Alcoa Rigid Packaging
Division. Mr. Coleman joined Alcoa in January 1998. He had been Vice
President -- Operations of North Star Steel from 1993 to 1994, Executive Vice
President -- Operations from 1994 to 1996 and President from 1996 through
1997. Mr. Coleman joined North Star Steel in 1982.
B-2
<PAGE>
L. PATRICK HASSEY, 54, Vice President and President -- Alcoa Europe. Mr.
Hassey joined Alcoa in 1967 and was named Davenport Works Manager in 1985. In
1991, he was elected a Vice President of Alcoa and appointed President --
Aerospace/Commercial Rolled Products Division. He was appointed President --
Alcoa Europe in November 1997.
BARBARA S. JEREMIAH, 48, Vice President -- Corporate Development of Alcoa.
Ms. Jeremiah joined Alcoa in 1977 as an attorney and was elected Assistant
General Counsel in 1992 and Corporate Secretary in 1993. She was elected to
her current position in 1998, where she heads Alcoa corporate development
activities.
RICHARD B. KELSON, 53, Executive Vice President and Chief Financial Officer
of Alcoa. Mr. Kelson was elected Assistant General Counsel in 1989, Senior
Vice President -- Environment, Health and Safety in 1991 and Executive Vice
President and General Counsel in May 1994. He was named to his current
position in May 1997.
FRANK L. LEDERMAN, 50, Vice President and Chief Technical Officer of Alcoa.
Mr. Lederman was Senior Vice President and Chief Technical Officer of Noranda,
Inc., a Canadian-based, diversified natural resource company, from 1988-1995.
He joined Alcoa as a Vice President in May 1995 and became Chief Technical
Officer in December 1995. In his current position, Mr. Lederman directs
operations of the Alcoa Technical Center.
TIMOTHY S. MOCK, 58, Vice President and Controller of Alcoa. Mr. Mock joined
Alcoa in 1964 and was named president of Alcoa's Wire, Rod and Bar business
unit in 1988. He became managing director of Alcoa Italia in 1996 and was
president of Alcoa Automotive Structures business unit from 1998 to September
1999, when he was elected to his current position.
JOSEPH C. MUSCARI, 53, Vice President -- Environment, Health and Safety,
Audit and Compliance of Alcoa. Mr.Muscari joined Alcoa in 1969 and was named
President -- Alcoa Asia in 1993. In 1997, he was elected Vice President --
Audit. He was named to his current position in May 1999 and is responsible for
EHS policy, standards and strategy and the Alcoa integrated audit process. In
addition, Mr. Muscari is the chief compliance officer for the company.
PAUL H. O'NEILL, 64, Chairman of the Board of Alcoa. Mr. O'Neill has served
as Alcoa's Chairman of the Board since 1987 and was Chief Executive Officer
from 1987 to May 1999. From 1985 to 1987, he was President and a director of
International Paper Company.
G. JOHN PIZZEY, 54, Vice President and President -- Alcoa World Alumina and
Chemicals. Mr. Pizzey joined Alcoa of Australia Limited in 1970 and was
appointed to the board of Alcoa of Australia as Executive Director -- Victoria
Operations and Managing Director of Portland Smelter Services in 1986. He was
named President -- Bauxite and Alumina Division of Alcoa in 1994 and
President -- Primary Metals Division of Alcoa in 1995. Mr. Pizzey was elected
a Vice President of Alcoa in 1996 and was appointed President -- Alcoa World
Alumina in November 1997.
LAWRENCE R. PURTELL, 52, Executive Vice President and General Counsel of
Alcoa. Mr. Purtell joined Alcoa in November 1997. He had been Corporate
Secretary and Associate General Counsel of United Technologies Corporation
from 1989 to 1992. Mr. Purtell was Vice President and General Counsel of
Carrier Corporation, a unit of United Technologies Corporation and
international designer, manufacturer and marketer of heating, ventilating and
air conditioning equipment and services, from 1992 to 1993. He was Senior Vice
President and General Counsel and Corporate Secretary of McDermott
International, Inc. from 1993 to 1996. In 1996, Mr. Purtell joined Koch
Industries, Inc. as Senior Vice President, General Counsel and Corporate
Secretary.
ROBERT F. SLAGLE, 59, Executive Vice President, Human Resources and
Communications of Alcoa. Mr. Slagle was elected Treasurer in 1982 and Vice
President in 1984. In 1986, he was named Vice President -- Industrial
Chemicals and, in 1987, Vice President -- Industrial Chemicals and U.S.
Alumina Operations. Mr. Slagle served as Vice President -- Raw Materials,
Alumina and Industrial Chemicals in 1989, and Vice President of Alcoa and
Managing Director -- Alcoa of Australia Limited in 1991. He was named
President -- Alcoa World Alumina in 1996 and was elected to his current
position in November 1997.
B-3
<PAGE>
G. KEITH TURNBULL, 64, Executive Vice President -- Alcoa Business System.
Dr. Turnbull was appointed Assistant Director of Alcoa Laboratories in 1980.
He was named Director -- Technology Planning in 1982, Vice President --
Technology Planning in 1986 and Executive Vice President -- Strategic
Analysis/Planning and Information in 1991. In January 1997 he was named to his
current position, with responsibility for company-wide implementation of the
Alcoa Business System.
ROBERT G. WENNEMER, 47, Vice President and Treasurer of Alcoa. Mr. Wennemer
joined Alcoa as Vice President and Treasurer in 1996. He had been treasurer of
BMW of North America, Inc. since 1987 and held a variety of financial
positions, including director international finance, with Nabisco Brands since
1975.
B-4
<PAGE>
STOCK OWNERSHIP
COMMON STOCK OWNERSHIP BY 5% STOCKHOLDERS, OFFICERS, AND DIRECTORS
The following table shows the Common Stock ownership (1) for each person or
group known by the Company to beneficially own more than 5% of the Common
Stock as of March 1, 2000; and (2) for each director of the Company, the
executive officers named in the Executive Compensation Tables below, and all
of the directors and executive officers of the Company as a group, and the
ownership of shares of Common Stock of Howmet International Inc. ("Howmet") by
each such director and executive officer, in each case as of March 17, 2000.
Unless otherwise indicated in the footnotes, each named person and member of
the group has sole voting and investment power with respect to the shares
shown.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF
BENEFICIAL AMOUNT AND NATURE OF BENEFICIAL PERCENT OF CLASS NUMBER OF
OWNER OWNERSHIP (2) OUTSTANDING HOWMET SHARES
------------------- ----------------------------------- ---------------- -------------
<S> <C> <C> <C> <C>
BENEFICIAL OWNERS OF
MORE THAN 5% (1)
FMR Corp................ Aggregate Amount: 5,261,540 14.33%
82 Devonshire Street Sole Voting Power: 377,000 **
Boston, MA 02109 Shared Voting Power: -0-
Sole Dispositive Power: 5,261,540 14.33%
Shared Dispositive Power: -0-
DIRECTORS
James R. Wilson......... 381,869 ** 7,000
Neil A. Armstrong....... 3,266(3) ** -0-
Michael P.C. Carns...... 1,384(3) ** -0-
Edsel D. Dunford........ 8,004(3) ** 13,733
Robert H. Jenkins....... 966(5) ** -0-
Steven G. Lamb.......... 948(4) ** -0-
David J. Lesar.......... 948(4) ** -0-
D. Larry Moore.......... 3,866(3) ** 6,733
William O. Studeman..... 1,266(3) ** -0-
Donald C. Trauscht...... 1,666(3) ** -0-
OTHER NAMED EXECUTIVES
Richard L. Corbin....... 84,434 ** 3,000
Robert L. Crippen....... 35,300 ** -0-
James E. McNulty........ 109,588 ** -0-
Bruce M. Zorich......... 12,750 ** -0-
ALL DIRECTORS AND
EXECUTIVE OFFICERS AS A
GROUP (18 PERSONS)...... 738,642 2.0% 38,466
</TABLE>
- ------------------
**Less than 1%
(1) As reported on Schedule 13G dated February 14, 2000.
(2) Includes shares which may be acquired presently or within 60 days upon
exercise of stock options: Messrs. Corbin: 74,900; Crippen: 29,700;
McNulty: 95,700; Wilson: 354,633; Zorich: 10,700; and all directors,
nominees and executive officers as a group: 644,916 shares.
(3) Includes 866 shares contingently granted pursuant to the Directors'
Restricted Stock Program.
(4) Includes 948 shares contingently granted pursuant to the Directors'
Restricted Stock Program.
(5) Includes 966 shares contingently granted pursuant to the Directors'
Restricted Stock Program.
B-5
<PAGE>
BOARD OF DIRECTORS
TERMS OF DIRECTORS
The directors are divided into three classes. At each annual meeting, the
term of one class expires. Directors in each class serve three-year terms.
DIRECTORS
ELECTED AT THE 1999 ANNUAL MEETING
TERMS EXPIRE AT THE 2002 ANNUAL MEETING
Neil A. Armstrong (3)
Director since October 1989
Neil A. Armstrong, 68, serves as Chairman of AIL Systems, Inc., an electronics
and systems company with sales primarily to the federal government. He is a
director of Cinergy, Inc., Milacron Inc., RTI International Metals, Inc., and
USX Corporation. He holds a Bachelor of Science degree in Aeronautical
Engineering from Purdue University and a Master of Science degree in Aerospace
Engineering from the University of Southern California.
William O. Studeman (3)
Director since January 1996
Admiral William O. Studeman, 59, is the Vice President and Deputy Group
General Manager for Intelligence & Information Superiority, TRW Systems and
Information Technology Group of TRW Inc., an automotive, space, defense and
information technologies company, and a director of Paracel Corporation.
Admiral Studeman retired from the Navy in 1995 after a distinguished 33-year
career that included serving as Deputy Director of Central Intelligence. He
holds a Bachelor of Arts degree from the University of the South and a Masters
of Arts from George Washington University.
Donald C. Trauscht (1) (2) (3)
Director since August 1993
Donald C. Trauscht, 65, has served since 1996 as Chairman of BW Capital
Corporation, a private investment company. From 1991 to 1995 he served as
Chairman and Chief Executive Officer of Borg Warner Corporation (and its
successor company), a diversified manufacturing and service company. He is a
director of Blue Bird Corporation, Burns International Services Corporation,
ESCO Electronics Corporation, Wynns International Inc., Global Motorsports
Inc., and Hydac International Corporation. Mr. Trauscht holds a Bachelor of
Science degree from St. Mary's University and a Master of Business
Administration from the University of Chicago.
ELECTED AT THE 1998 ANNUAL MEETING
TERMS EXPIRE AT THE 2001 ANNUAL MEETING
Edsel D. Dunford (1) (2) (4)
Director since January 1995
Edsel D. Dunford, 63, served as President and Chief Operating Officer of TRW
Inc., a manufacturer of automotive, space, defense and information technology,
from 1991 until his retirement in December 1994. Mr. Dunford is a director of
Cooper Tire & Rubber Company, Howmet International Inc., and National Steel
Corporation, and is a trustee of the Foundation of the University of
California at Los Angeles. Mr. Dunford holds a Bachelor of Science degree from
the University of Washington and a Masters of Engineering degree from the
University of California at Los Angeles.
B-6
<PAGE>
Robert H. Jenkins (2) (4)
Director since October 1998
Robert H. Jenkins, 56, is the retired Chairman of the Board, President and
Chief Executive Officer of Sundstrand Corporation, a position held from 1997
to July 1999. From 1995 to 1997 he was the President and Chief Executive
Officer of Sundstrand. Sundstrand, which merged into United Technologies
Company in 1999, designed and manufactured proprietary technology-based
components and subsystems serving world industrial and aerospace markets. He
is a director of AK Steel Holding Corporation, CLARCOR, Inc., Pella
Corporation, Sentry Insurance and Solutia, Inc. Mr. Jenkins holds a Bachelor
of Science degree from the University of Wisconsin.
James R. Wilson (1)
Director since October 1993
James R. Wilson, 58, has served as Chairman of the Board, President and Chief
Executive Officer of the Company since October 1995, and served as President
and Chief Executive Officer from October 1993 to October 1995. He has served
as a director of the Company since October 1993. Mr. Wilson is a director of
The BFGoodrich Company, Cooper Industries, Inc., First Security Corporation
and Howmet International Inc., and is a member of the Board of Trustees of the
College of Wooster. He holds a Bachelor's degree from the College of Wooster
and a Masters of Business Administration from Harvard University.
ELECTED AT THE 1997 ANNUAL MEETING
TERMS EXPIRE AT THE 2000 ANNUAL MEETING
Michael P.C. Carns (3)
Director since January 1995
General Michael P.C. Carns, 61, is a director of Mission Research Corporation
and is a member of the Board of Trustees of the Monterey Institute of
International Studies. General Carns retired as Vice Chief of Staff of the
United States Air Force in 1994 with 36 years of distinguished military
service. He holds a Bachelor of Science degree from the United States Air
Force Academy and a Masters of Business Administration from Harvard
University.
Steven G. Lamb (4) (5)
Director since August 1998
Steven G. Lamb, 42, is the President and Chief Operating Officer of CNH Global
N.V., a manufacturer of farm and construction equipment created from the
merger of Case Corporation and New Holland N.V., a position held since 1999.
Joining Case in 1993, he served in various executive positions including
President and Chief Operating Officer. Mr. Lamb holds a Bachelor of Science
degree from the United States Military Academy and a Masters of Business
Administration from Harvard University.
David J. Lesar (3) (5)
Director since August 1998
David J. Lesar, 45, is the President and Chief Operating Officer of
Halliburton Company, a global energy, engineering and services company, a
position held since 1997. Joining Halliburton in 1993, he held various
executive positions including Executive Vice President and Chief Financial
Officer. Prior to joining Halliburton, Mr. Lesar was a Partner with Arthur
Andersen LLP. Mr. Lesar is also a director of the Southern Company. Mr. Lesar
holds a Bachelor of Science degree and Masters of Business Administration from
the University of Wisconsin.
B-7
<PAGE>
D. Larry Moore (2) (4) (5)
Director since June 1997
D. Larry Moore, 62, is the retired President and Chief Operating Officer of
Honeywell, Inc., an electronic automation and control systems manufacturer, a
position held from April 1993 to June 1997. Dr. Moore is a director of Geon
Company, Howmet International Inc., and Reynolds Metals Company. Dr. Moore
holds a Doctorate in Economics from Arizona State University and Bachelor of
Science degree and Masters of Business Administration from the University of
Arizona.
(1) Member of the Executive Committee.
(2) Member of the Compensation and Management Development Committee.
(3) Member of the Audit Committee.
(4) Member of the Nominating and Board Governance Committee.
(5) Member of the Finance Committee.
DIRECTOR COMPENSATION
The Board's compensation program is designed to provide compensation at
levels to meet competitive conditions for the retention and recruitment of
qualified individuals to serve as directors on the Board of Directors. The
compensation program consists of an annual $30,000 cash retainer and an annual
retainer of $20,000 paid in the form of restricted stock designed to align a
portion of a director's compensation with the performance of the Company's
common stock. A fee of $1,000 and travel expenses are paid for each Board
meeting attended. Each Committee chairman also receives an annual retainer of
$3,000. Directors who are employees of the Company receive no compensation for
their services as directors. Mr. James R. Wilson is the only employee serving
as a director.
The Company maintains a Deferred Fees Plan under which non-employee
directors may elect to defer all or part of the payment of their directors'
compensation until such time as they cease to be a director. Directors may
elect to have their deferred account credited with amounts in cash (similar to
interest) or with amounts reflecting the change in the price of the Company's
common stock and payment of dividends. All distributions of a director's
account are made in cash. Edsel D. Dunford, David J. Lesar, D. Larry Moore,
and Robert H. Jenkins participate in the Plan. Two retired directors with an
interest in the Plan are receiving benefits.
The Company's director restricted stock grants are made contingent upon a
director remaining a member of the Board of Directors. The shares do not vest
until the director's retirement or in the event of disability or death or
change in control of the Company. In the event a director resigns from the
Board or otherwise elects not to stand for election as a director, the
restricted shares granted to such director are forfeited unless 80 percent of
the directors then in office, with the affected director abstaining, otherwise
take formal action to waive such forfeiture. During the tenure of such
director's service on the board, the shares are restricted with respect to
transferability, assignability or encumbrance, and such restrictions are only
released upon the director's retirement, death or disability unless otherwise
waived by formal action by the Board of Directors, as described above. During
such time as the restrictions apply to the Company's common stock granted to
the director, the director has voting rights and receives dividends and other
distributions or adjustments on such common stock. The number of shares of
director restricted stock granted to each non-employee director is calculated
by dividing the average of the high and low New York Stock Exchange price on
the first trading day of July into the $20,000 stock retainer with each
fractional share rounded up to the next whole share.
DIRECTOR RETIREMENT AT AGE 70
The By-Laws of the Company provide that, among other qualifications to serve
as a director, a person must not have attained the age of seventy years. The
By-Laws further provide that whenever any director shall cease to be qualified
to serve as a director, his term shall expire, but he shall continue to serve
until his successor is elected and qualified; provided, however, that no
director's term shall so expire if the Board of Directors waives such
qualification.
B-8
<PAGE>
1999 BOARD MEETINGS
The Board met eight times during 1999. All directors were present for 75
percent or more of the meetings of the Board. With the exception of Mr. Lamb,
each director was present for 75 percent or more of the aggregate of the Board
meetings and the meetings of the Committees on which he served.
BOARD COMMITTEES IN 1999
The Board has Audit, Compensation and Management Development, Nominating and
Board Governance, Finance and Executive Committees.
AUDIT COMMITTEE. The Audit Committee recommends to the Board the independent
auditors to be selected to audit the Company's annual financial statements,
reviews the fees charged for such audits and for any special assignments given
the independent auditors and appraises the independence and general
performance of the independent auditors. The Committee reviews the annual
audit and its scope, including the independent auditors' comment letter and
management's responses and the implementation of management's responses;
issues arising under the Company's business ethics and conflict of interest
policies; any major accounting changes made or contemplated; and the
effectiveness and efficiency of the Company's internal audit program. In
addition, the Committee confirms that no restrictions have been imposed by
Company personnel on the scope of the independent auditors' and the internal
auditors' examinations. The Committee receives any reports pursuant to the
Private Securities Litigation Reform Act of 1995 of independent auditors with
respect to illegal acts that have been detected or otherwise come to its
attention. Also, the Committee annually meets with the Senior Vice President
and General Counsel to assess the adequacy and effectiveness of corporate
policies, procedures and monitoring compliance with legal and regulatory
requirements. The Board adopted a written charter for the Audit Committee in
May 1999. All of the members of the Committee are independent directors as
defined by the New York Stock Exchange. Members of this Committee appointed by
the Board in May 1999 are Messrs. Donald C. Trauscht (Chairman), Neil A.
Armstrong, Michael P.C. Carns, David J. Lesar, and William O. Studeman. The
Committee met three times during calendar year 1999. Except for Messrs. Lesar
and Studeman, each Committee member attended 75 percent or more of the
Committee meetings while a member of the Committee.
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE. The Compensation and
Management Development Committee annually reviews and reports to the Board on
the Chairman of the Board, President and Chief Executive Officer's
performance. The Committee makes recommendations to the Board with respect to
the creation and amendment of compensation, retirement and other benefit plans
of the Company and its subsidiaries. The Committee reviews and approves the
Company's executive compensation policies and reviews and approves the
compensation actions for the Chairman of the Board, President and Chief
Executive Officer, Executive Officers and other key employees. The Committee
administers the Company's short and long-term executive bonus programs,
including the approval of performance goals, and the stock option and awards
plans. The Committee reviews and approves the Committee's report for the proxy
statement, retains outside compensation consultants, and determines the
Company's policy concerning the deductibility of the Company's compensation
under the Internal Revenue Code. Members of the Committee appointed by the
Board in May 1999 are Messrs. Edsel D. Dunford (Chairman), Robert H. Jenkins,
D. Larry Moore, and Donald C. Trauscht. The Committee met four times and took
action by written unanimous consent one time during calendar year 1999. Each
Committee member attended 75 percent or more of the Committee meetings while a
member of the Committee. The Committee's report on Executive Compensation is
set forth below.
NOMINATING AND BOARD GOVERNANCE COMMITTEE. The Nominating and Board
Governance Committee reviews the size, structure, and composition of the
Board, identifies and evaluates criteria for selecting directors, evaluates
individuals for potential membership on the Board, including nominees, makes
recommendations to the Board of individuals to fill vacancies or new
positions, makes recommendations to the Board of individuals to be proposed to
stockholders for election to the Board at the annual meetings of stockholders
and makes recommendations to the Board regarding Committee structures and
responsibilities. The Committee also reviews and makes recommendations to the
Board as to the compensation and benefits of non-employee directors and Board
committee members. Periodically, the Committee will report to the Board on the
assessment of the
B-9
<PAGE>
effectiveness of the Board's performance. The Committee accepts nominations of
persons for election to the Board from stockholders that are made pursuant to
timely notice in writing to the Secretary of the Company. The notice must set
forth all information about each proposed nominee as required under Regulation
14A of the Securities Exchange Act. The notice must also set forth, as to the
stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination is made, their names and record addresses and the class
and number of shares that they beneficially own. Members of the Committee
appointed by the Board in May 1999 are Messrs. Edsel D. Dunford (Chairman),
Robert H. Jenkins, Steven G. Lamb, and D. Larry Moore. The Committee met one
time and took action by written unanimous consent two times during calendar
year 1999. Except for Messrs. Jenkins and Lamb, each Committee member attended
75 percent or more of the Committee meetings while a member of the Committee.
FINANCE COMMITTEE. The Finance Committee makes recommendations to the Board
regarding the planning of the capital structure of the Company and the raising
of long-term capital including the incurrence or redemption of long-term debt.
The Committee will make recommendations to the Board regarding dividend policy
and the issuance or repurchase of the Company's capital stock. The Committee
will act and report to the Board regarding the appointment or changes of
investment managers, trustees, actuaries, or administrative committees and
changes in investment guidelines or actuarial assumptions with respect to the
Company's pension and savings plans. Annually, the Committee will review and
report to the Board with respect to the actuarial assumptions of the Company's
retirement plans and investment performance of the Company's retirement and
savings plans. The Committee will also approve material hedging transactions
and review the Company's corporate income tax practices and investments of
cash reserves. Members of the Committee appointed by the Board in May 1999 are
D. Larry Moore (Chairman), Steven G. Lamb and David J. Lesar. The Committee
met three times and took action by written unanimous consent one time during
calendar year 1999. Except for Messrs. Lamb and Lesar, each Committee member
attended 75 percent or more of the Committee meetings while a member of the
Committee.
EXECUTIVE COMMITTEE. The Executive Committee may exercise all of the powers
and authority of the Board of Directors, except that the Committee does not
have the power to amend the Company's By-Laws or Certificate of Incorporation
(except to fix the designations, preferences and other terms of any preferred
stock), authorize the issuance of stock, declare dividends, adopt an agreement
of merger or consolidation, adopt a certificate of ownership and merger under
Delaware law, or recommend to Company stockholders the sale, lease or exchange
of all or substantially all of its property and assets, a dissolution of the
Company or a revocation of a dissolution. Members of this Committee appointed
by the Board in May 1999 are Messrs. James R. Wilson (Chairman), Edsel D.
Dunford and Donald C. Trauscht. There were no Committee meetings and the
Committee took action by written unanimous consent one time during calendar
year 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, there were no Executive Compensation Committee interlocks or
other comparable relationships requiring disclosure under applicable rules of
the Commission.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge based on review of copies of such forms furnished
to the Company and written representations, all Forms 3, 4, and 5 required by
Section 16(a) of the Securities Exchange Act have been timely filed with
respect to the most recently concluded fiscal year.
B-10
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The Summary Compensation Table sets forth the compensation for both long-
term and short-term, for services in all capacities earned by those
individuals who were as of December 31, 1999, (i) the Chief Executive Officer
and (ii) the other four most highly compensated Executive Officers of the
Company. The Summary Compensation Table also sets forth the compensation for
the six-month transition period July 1 to December 31, 1998 (1998T) reflecting
the change in the Company's fiscal year end and for the fiscal years ended
June 30, 1998 and 1997.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ---------------------------------------
AWARDS PAYOUTS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3) OPTIONS/SARS# PAYOUTS(4) COMPENSATION(5)
- ----------------------------------------------------------------------------------------------------------------
James R. Wilson 1999 $735,000 $1,029,000 $ 0 330,450 $ 1,000,000 $ 49,100
Chairman of the Board, 1998T 350,000 490,000 0 50,000 0 0
President and Chief 1998 575,000 792,750 0 40,000 425,000 4,525
Executive Officer 1997 540,000 583,000 0 70,000 850,000 4,800
- ----------------------------------------------------------------------------------------------------------------
Richard L. Corbin 1999 331,000 331,000 0 99,272 360,000 19,860
Executive Vice 1998T 157,500 157,500 0 16,100 0 1,494
President
and Chief Financial 1998 255,000 250,000 0 8,000 168,000 4,006
Officer
1997 235,000 209,250 0 15,000 336,000 4,650
- ----------------------------------------------------------------------------------------------------------------
Robert L. Crippen 1999 315,000 315,000 0 51,550 393,986 18,900
Vice President, 1998T 150,000 148,500 0 16,100 0 2,100
President
Thiokol Propulsion 1998 290,000 286,260 0 8,000 0 6,002
1997 160,417 150,000 0 19,000 0 423
- ----------------------------------------------------------------------------------------------------------------
James E. McNulty 1999 315,000 315,000 0 94,500 331,200 18,663
Executive Vice 1998T 150,000 150,000 0 16,100 0 1,250
President
Human Resources and 1998 250,000 243,750 190,234 8,000 146,300 5,875
Administration 1997 225,000 198,450 324,884 15,000 274,000 4,770
- ----------------------------------------------------------------------------------------------------------------
Bruce M. Zorich 1999 289,000 144,500 0 86,725 320,000 17,340
Vice President 1998T 137,500 137,500 0 16,100 0 3,363
President, Huck 1998 255,962 215,000 0 8,000 0 0
International, Inc. 1997 199,487 180,000 0 6,000 0 0
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) During 1998, the Company changed its fiscal year-end from June 30 to
December 31. Executive compensation for the six-month transition period
July 1 to December 31, 1998 is shown as 1998T.
(2) Bonuses accrued under the Company's Key Executive Bonus Plan are paid
after the fiscal year in which they are accrued.
(3) Amounts paid to Mr. McNulty represent Supplemental Cash Payments made upon
the exercise of stock options pursuant to stock options granted prior to
fiscal year 1992. Such payments reflect tax gross-up amounts pursuant to
the terms of the stock options granted. There are no stock options
remaining unexercised that contain a tax gross-up supplemental payment.
(4) The fiscal 1999 LTIP payouts were made in July 1999 from the Company's Key
Executive Long-Term Incentive Plan for the plan period July 1, 1996
through June 30, 1999. The fiscal 1998 and 1997 LTIP Payouts were made,
respectively, in August of the subsequent fiscal year, with regard to the
three-year Plan periods ending June 30, 1998 and June 30, 1997. LTIP
payments are made 50 percent in cash and 50 percent in Company common
stock valued at market on June 30. Messrs. Wilson, Corbin, Crippen,
McNulty and Zorich received 5,791, 2,084, 2,281, 1,991 and 2,050 shares,
respectively, in 1999. Messrs. Wilson, Corbin and McNulty received 2,209,
1,172, and 861 shares, respectively, in 1998 and 7,548, 3,078 and 2,080
shares, respectively, in 1997. Messrs. Crippen and Zorich first became
eligible for payment of Plan benefits in 1999.
(5) The amounts are the Company's matching contributions on behalf of each
named individual under the Company's Employee Retirement Savings and
Investment Plan, a 401(k) plan and the Company's 401(k) restoration plan,
a non-tax qualified deferred compensation plan. Amounts deferred to the
401(k) plan are included in salary compensation.
B-11
<PAGE>
OPTION/SAR GRANTS IN 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------- ----------------------
EXERCISE POTENTIAL REALIZABLE
PERCENT OF OR VALUE AT ASSUMED
NUMBER OF TOTAL BASE ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE PRICE
UNDERLYING GRANTED TO PER APPRECIATION FOR
OPTIONS/SARS EMPLOYEES IN SHARE EXPIRATION OPTION TERM(2)
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James R. Wilson 180,450 17.87 $37.40 3/18/09 $4,253,206 $10,732,361
150,000 14.85 30.53 9/10/09 2,885,207 7,281,715
- ----------------------------------------------------------------------------------------
Richard L. Corbin 54,150 5.36 37.40 3/18/09 1,276,315 3,220,600
45,125 4.47 30.53 9/10/09 867,966 2,190,582
- ----------------------------------------------------------------------------------------
Robert L. Crippen 0 -- -- -- -- --
51,550 5.10 30.53 9/10/09 991,588 2,502,483
- ----------------------------------------------------------------------------------------
James E. McNulty 51,550 5.10 37.40 3/18/09 1,215,033 3,065,965
42,950 4.25 30.53 9/10/09 826,131 2,084,997
- ----------------------------------------------------------------------------------------
Bruce M. Zorich 47,300 4.68 37.40 3/18/09 1,114,861 2,813,193
39,425 3.90 30.53 9/10/09 758,328 1,913,877
- ----------------------------------------------------------------------------------------
</TABLE>
(1) All stock option grants are issued at market value on the date of grant.
Options issued during 1999 are exercisable in an increment of one-fourth
each year of a four-year vesting period. Options issued during 1998 are
exercisable in an increment of one-third each year of a three-year vesting
period. Options issued prior to August 21, 1997 became exercisable one year
after the date of grant. All options have a ten-year term. Options lapse
three months after the date of termination of employment except for
retirement, death or disability. For Executive Officers named in the table
and other key employees, the stock option grants prior to October 1993
contain limited stock appreciation rights exercisable immediately only upon
the change of control of the Company as defined under the section
"Termination of Employment and Change of Control Agreements."
(2) No gain will be realized by an optionee without an increase in the price of
the Company's common stock that will correspondingly increase the value of
the common stock outstanding held by all stockholders. At December 31,
1999, a 5 percent and a 10 percent gain over the ten-year option period
would increase the total value of the Company's outstanding common stock by
$763.3 million and $1,926.4 million, respectively. There can be no
assurance that the gains shown in the table will be realized since any gain
is dependent on the performance of the Company's common stock price which
is attributable to many factors including but not limited to Company
performance and stock market conditions. The value of the realized gains
shown in this table is provided solely for illustrative purposes only in
compliance with rules promulgated by the Commission.
B-12
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1999
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED ON YEAR END (#) YEAR END (1)
EXERCISE VALUE EXERCISABLE/ ($) EXERCISABLE/
NAME (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James R. Wilson 0 0 354,633/377,117 $5,700,130/370,313
Richard L. Corbin 0 0 74,900/112,675 1,155,975/111,402
Robert L. Crippen 0 0 29,700/64,950 188,218/127,264
James E. McNulty 0 0 95,700/107,900 1,675,092/106,033
Bruce M. Zorich 0 0 10,700/100,125 0/97,330
</TABLE>
- --------------------------------------------------------------------------------
(1) Value is calculated based on the average closing New York Stock Exchange
price of the Company's common stock as of December 31, 1999, minus the
option exercise price.
B-13
<PAGE>
LONG-TERM COMPENSATION
During 1999, the Compensation and Management Development Committee
discontinued the Company's Key Executive Long-Term Incentive Plan ("LTIP") and
replaced it with stock option grants for Messrs. Wilson, Corbin, McNulty and
Zorich. Messrs. Wilson, Corbin, McNulty and Zorich participate in the LTIP for
the 2.5 year Plan performance period beginning July 1, 1998 and ending
December 31, 2000 and the three-year Plan performance period beginning July 1,
1997 and ending June 30, 2000. The LTIP remains in place for the Key
Executives at Thiokol Propulsion including Mr. Crippen through the Plan period
ending December 31, 2002.
The Plan provides a target bonus opportunity based on a percentage of each
participant's base annual compensation determined by the participant's salary
grade. The opportunity ranges from 65 percent of base annual compensation for
the lowest salary grade covered by the Plan to 100 percent of base annual
compensation for the highest salary grade covered by the Plan. The amount of
the bonus award paid will vary from 25 percent of the target bonus opportunity
being paid if the threshold bonus opportunity goals are achieved; 100 percent
of the target bonus opportunity if the target bonus goals are achieved; and a
maximum bonus of 200 percent of the target bonus opportunity if the maximum
bonus targets are achieved. The bonus earned is paid 50 percent in cash and 50
percent in Company common stock.
Mr. Crippen participates in the LTIP Plan and received an Award for the
three-year period January 1, 1999 through December 31, 2001. The Plan's bonus
opportunity for Mr. Crippen has been set on attainment of certain financial
and performance targets to be achieved with respect to the management of
Thiokol Propulsion and the RSRM shuttle contract. Mr. Crippen's threshold,
target and maximum bonus opportunity set forth in the table reflect the
combined value of the cash and stock contingently granted at the beginning of
the three-year performance period.
LONG-TERM INCENTIVE PLAN AWARDS IN 1999
<TABLE>
<CAPTION>
PERFORMANCES ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
OR OTHER PRICE-BASED PLANS
PERIOD UNTIL ----------------------------------------------
MATURATION OR
NAME PAYOUT THRESHOLD ($) TARGET ($) MAXIMUM ($)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James R. Wilson -- 0 0 0
Richard L. Corbin -- 0 0 0
Robert L. Crippen 3 years 66,938 267,750 535,000
James E. McNulty -- 0 0 0
Bruce M. Zorich -- 0 0 0
- -------------------------------------------------------------------------------------
</TABLE>
RETIREMENT PLAN
The Company maintains a defined benefit Pension Plan for non-bargaining unit
employees and funds its entire cost. The following table shows the estimated
annual benefits payable upon retirement (including amounts attributable to the
defined benefit excess plan) for the specified compensation and years of
service.
PENSION PLAN TABLE
<TABLE>
-----------------------------------------------------------------
<CAPTION>
YEARS OF SERVICE
- -----------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 55,451 $ 75,435 $ 96,419 $117,403 $ 138,386 $ 153,186
- -----------------------------------------------------------------------
400,000 114,851 156,135 199,419 242,703 285,986 315,586
- -----------------------------------------------------------------------
600,000 174,251 236,835 302,419 368,003 433,586 477,986
- -----------------------------------------------------------------------
800,000 233,651 317,535 405,419 493,303 581,186 640,386
- -----------------------------------------------------------------------
1,000,000 293,051 398,235 508,603 618,603 728,786 802,786
- -----------------------------------------------------------------------
1,500,000 441,551 599,985 765,919 931,853 1,097,786 1,208,786
- -----------------------------------------------------------------------
</TABLE>
B-14
<PAGE>
As of December 31, 1999, the named Executive Officers had the following
credited service for determining pension benefits: James R. Wilson, 10.6
years; Richard L. Corbin, 5.8 years; Robert L. Crippen, 3.2 years; and James
E. McNulty, 10.6 years.
Except for Bruce M. Zorich, all of the Executive Officers named in the
Summary Compensation Table participate in the Plan. Pension benefits are based
on the average earnings for the highest five consecutive years of the final
ten years of service. Compensation included in the final average earnings for
pension benefit computation includes base annual salary and annual bonuses but
excludes payments from the Company's Executive Long-Term Incentive Plan and
all other annual compensation shown in the Summary Compensation Table.
Unreduced pension benefits are calculated pursuant to the Plan's benefit
formula as a straight life annuity payable at age 67. Executive Officers of
the Company retire at age 65. Benefits may be payable in the form of a joint
and survivor or a ten-year certain option.
Because the Pension Plan is subject to the benefit and compensation limits
under the Internal Revenue Code of 1986 (the "Code"), the Company has
established an unfunded Excess Benefit Plan that provides for payment of
amounts that would have been paid to employees under the pension formula
absent the benefit limitations of the Code.
The Company also maintains a Supplemental Executive Retirement Plan ("SERP")
designed to provide unfunded supplemental retirement benefits to certain
Executive Officers and key employees of the Company. The SERP is designed to
provide such selected employees a benefit at retirement equal to 60 percent of
the participant's average five highest consecutive years of compensation
during the last ten years. The SERP also pays the benefit that would otherwise
be payable from the Excess Benefit Plan. Plan benefits are offset by amounts
the participant receives from the Company's Retirement Plan and any pension
benefits received from other employer plans including military pensions. A
reduced early retirement benefit is available only at the discretion of the
Chairman of the Board or President. The SERP provides accelerated benefit
accrual, vesting, payment and tax gross up in the event of a change of control
of the Company as defined by the Board of Directors. Messrs. Wilson, Corbin,
Crippen and McNulty participate in the SERP.
The Company may elect to fund and secure all or a part of the Excess Benefit
Plan and SERP benefits through the use of a "Rabbi" Trust meeting the Code
requirements. All such funding is subject to the claims of the Company's
creditors.
Bruce M. Zorich participates in the Huck International, Inc. Personal
Retirement Account Plan ("PRA"), a cash balance plan, providing benefits based
on age and salary. Mr. Zorich's estimated annual retirement benefit at age 65
is $41,895. Mr. Zorich also participates in the Huck International, Inc.
Excess Benefit Plan for Selected Employees ("Plan") which is designated to
provide supplemental benefits in addition to the PRA benefits. Mr. Zorich's
estimated Plan benefit payable from the Excess Benefits Plan in the form of a
lump sum at age 65 is $1,298,487.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
The Company has entered into change of control employment agreements with
Messrs. Wilson, Corbin, Crippen, McNulty, Zorich and certain other key
employees. These agreements are intended to provide for continuity of
employment in the event of a change of control as defined by the agreements,
including the following events: (i) acquisition by any person of 20 percent or
more of the voting securities of the Company; (ii) changes of the "incumbent
Board" as defined in the agreements; (iii) reorganization, merger or
consolidation of the Company; or (iv) liquidation or sale of the Company. Each
of the agreements requires continued employment of the executive following a
change of control on a basis equivalent to his employment immediately before
such change. In the event that during the three-year period following a change
of control, the executive terminates his employment for "good reason" (as
defined in the agreements) or for any reason during the 30-day period
commencing one year after the change of control or the Company terminates the
executive's employment "without cause" (as defined in the agreements), the
executive would be entitled to receive a lump sum payment
B-15
<PAGE>
equal to three times the sum of the executive's salary, average long-term
bonus and highest annual bonus plus service and earnings credits under any
Company retirement plan which would have been earned during the employment
period and the continuance of fringe benefits during the three years after
such termination. The agreements provide that payments from the Company which
(a) constitute "parachute payments" as defined in Section 280G of the Code and
(b) would subject the executive to the 20 percent excise tax (the "Excise
Tax") contained in Section 4999 of the Code, will be "grossed up" by an
additional payment in an amount defined by the agreements which takes into
account the Excise Tax, tax penalties and interest, as the case may be, with
respect to any such "parachute payments." The amounts of such parachute
payments, pursuant to the terms described above, are only determinable with
specificity on the date such payment obligations, if any, are triggered. See
Item 3 of the Statement for information regarding estimated payments in
respect of the change of control employment agreements of the Company's
executive officers in connection with the transactions contemplated by the
Merger Agreement.
B-16
<PAGE>
BOARD COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Policy
The Committee's Compensation Policy is designed to provide a competitive
compensation program to attract, retain, motivate and reward talented
individuals as Executive Officers and as key employees of the Company. The key
executive compensation programs are administered by the Committee. The
Committee's policies are implemented by the Company's compensation and
benefits staff under the direction of the Executive Vice President of Human
Resources and Administration. The components of the program as amended by the
Committee during 1999 include base annual salary, annual cash and long-term
stock based incentives, benefits and perquisites. Compensation grades and
ranges adopted by the Committee are set based upon nationally recognized
compensation surveys: (i) the Hewitt Total Compensation Measurement Survey
consisting of 338 companies; and (ii) Towers Perrin Compensation Data Bank
consisting of 630 companies. The Committee also considers the compensation of
peer group companies. Base salaries are set between the 25th and 75th
percentile, based on performance of salaries offered for like positions by
comparable companies. Annual cash incentives are designed to provide above
average total compensation when performance of the Company or an operating
unit exceeds targets set by the Committee. Annual incentives are related to
the Company and operating unit performance and individual achievement of
qualitative individual and strategic goals. Long-term equity-based incentives
in the form of stock option grants are designed to align the results achieved
for stockholders in share price performance. The total compensation program is
designed to reflect the overall level of the Company's or operating unit's
financial performance, achievement of strategic goals, and the Company's stock
performance. Total compensation will vary from year to year depending on the
actual performance achieved against the predetermined goals set both
financially and qualitatively and the Company's share price reflected in
stock-based compensation awards.
During 1999, the Committee reviewed the Company's compensation structure and
adopted a policy of providing long-term incentives in the form of equity-based
compensation to align senior executive compensation with the results achieved
for stockholders in share price performance. The Committee also reviewed
management performance and the competitive market conditions for recruiting
and retaining experienced senior executives. As the result of this review, the
Committee deemed that base salary adjustments were warranted for the Chief
Executive Officer and certain other senior executives consistent with paying
base compensation between the 50th and 75th percentile of market, based on
performance.
The principal elements of the compensation program administered by the
Committee under the Compensation Policy for the Chief Executive Officer, the
Executive Officers, and other key employees are as follows:
Base Annual Salary
Base annual salaries are set against one of seven established salary grades
reflecting the position, duties and level of responsibilities of each
Executive Officer, including the Chief Executive Officer, and other key
employees.
Annual Bonus Program
The Key Executive Bonus Plan provides annual cash incentive opportunities to
Executive Officers and other key employees selected by the Committee. Each
bonus amount is based upon the Company or respective operating unit achieving
predetermined earnings goals and the attainment of individual qualitative
strategic goals relative to the participant's position, duties and
responsibilities with the Company ("Target Bonus Goals"). The Board of
Directors sets the Company's earnings goals effective the beginning of the
year. Subject to Committee review and approval, the Chief Executive Officer
sets the earnings and strategic goals for operating unit participants. The
Plan permits Committee discretion in adjusting incentives for Plan
participants (as well as penalties for non-achievement) of certain
predetermined qualitative strategic, operating, and financial goals not
necessarily tied to earnings of the Company ("Strategic Goals").
B-17
<PAGE>
The Plan also permits the Committee to designate employees, including
Executive Officers, as special participants to receive discretionary bonus
payments made by the Committee in recognition of outstanding achievements or
accomplishments.
Annual bonuses accrued during 1999 reflect the level of earnings achieved
for corporate or operating unit Plan participants and achievement of strategic
goals against Target Bonus Goals set for the year. All Executive Officers,
including the Chief Executive Officer, named in the Summary Compensation Table
earned bonuses from the Plan.
Long-Term Incentive Plan and Stock Options
During 1999, the Committee, with assistance from its compensation
consultant, reviewed the effectiveness of the long-term incentive compensation
policy. As the result of this review and to meet the objective of more closely
aligning the Executive Officers and other Key Employees who are in a position
to influence the performance of the Company, the Key Executive Long-Term
Incentive Plan was discontinued except for the three-year performance periods
still outstanding. The Key Executive Long-Term Plan remains in place for Key
Executives at Thiokol Propulsion including Mr. Crippen through December 31,
2002. The Committee replaced the Key Executive Long-Term Plan with a new Stock
Option Grant Policy in order to more directly align the long-term compensation
incentives of Executive Officers and other Key Executives to the interests of
stockholders. Under this new policy, the Committee grants stock options based
on a competitive formula utilizing a nationally recognized stock option
valuation model, base salary and a position factor reflecting the executive's
position of responsibility with the Company.
For the three-year performance period remaining under the Key Executive
Long-Term Incentive Plan, the Plan provides that 50 percent of the Target
Bonus opportunity (ranging from 65 percent to 100 percent of base annual
compensation) be awarded in cash and 50 percent in shares of Company common
stock. The number of shares of Company common stock is determined at the
beginning of each three-year performance period. Messrs. Wilson, Corbin,
Crippen, McNulty and Zorich received payments from the Plan.
Stock Ownership Guidelines
With the objective of more closely aligning the financial interests of the
Company's executives to the performance of the Company's stock, the Committee
has adopted stock ownership guidelines for the Chief Executive Officer and
senior executives who are his direct reports.
Perquisites
The Committee reviews annually the Executive Officers', including the Chief
Executive Officer's, perquisites to determine if they are competitive and
reflect the usual and customary industry practices based on compensation
survey data.
Determination of the Chief Executive Officer's Compensation
The 1999 compensation for Mr. James R. Wilson, Chairman of the Board,
President and Chief Executive Officer, consisted of a base annual salary, an
annual bonus, long-term incentive bonus, stock option grants, employee
benefits provided to salaried employees as a group, and perquisites that are
usual and customary for the position.
The Committee has determined Mr. Wilson's salary grade and salary range
based on his position as Chairman of the Board, President and Chief Executive
Officer using the salary data described above. Considering the financial
performance of the Company compared to other aerospace and industrial
manufacturing companies, the industries and markets the Company serves and the
size of the Company, the Committee increased Mr. Wilson's base annual
compensation, effective January 1, 2000, to $735,000.
B-18
<PAGE>
Pursuant to the terms of the Key Executive Bonus Plan, during 1999 Mr.
Wilson earned an annual bonus award of $1,029,000 or 200 percent of his Target
Bonus Opportunity. This payment, made in February 2000, reflects the bonus
goals set by the Committee at the beginning of the year. The bonus reflects
the achievement of the earnings per share goal and subjectively measured
qualitative goals under the Plan as reviewed and approved by the Committee for
the period.
Mr. Wilson's 1999 Key Executive Long-Term Incentive Plan bonus payment of
$1,000,000 represents the achievement of earnings per share and return on
capital financial goals exceeding the target goals established at the
beginning of the three-year plan period beginning July 1, 1996 and ending
June 30, 1999. This bonus payment was paid 50 percent in cash and 50 percent
in Company common stock based on the market price on June 30, 1999.
Mr. Wilson's compensation and the compensation of the other named Executive
Officers in the Summary Compensation Table reflect the financial performance
of the Company and its operating units for 1999. The Committee also considered
the accomplishments of predetermined strategic activities achieved during
1999.
1993 Tax Act Compensation Limits
Section 162(m) of the Code restricts the tax deductibility for certain non-
formula performance-based executive compensation exceeding $1 million in a
year. Mr. Wilson's compensation exceeded the $1 million compensation limit for
1999. To the extent that such compensation in excess of the $1 million limit
does not meet the performance-based compensation requirements, the Company may
not receive the benefit of a corresponding tax deduction. The Committee has
determined that retaining the flexibility to determine all or part of the
criteria for the Executive Officer incentive compensation awards outweighs the
tax benefit of the corresponding tax deduction that might otherwise have been
received for such compensation meeting Code requirements.
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
Edsel D. Dunford, Chairman
Robert H. Jenkins
D. Larry Moore
Donald C. Trauscht
The report of the Compensation Committee and the following stock performance
graph are not deemed to be "soliciting material" or to be "filed" with the
Commission or subject to Regulation 14A or 14C or to the liabilities of
Section 18 of the Securities Exchange Act, except to the extent the Company
specifically requests that such information be treated as soliciting material
or specifically incorporates it by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act.
B-19
<PAGE>
PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative stockholder
return on the common stock of the Company for the five-year period beginning
January 1, 1995, and ending December 31, 1999, as measured against (i) the
Standard & Poor's 500 Stock Index and (ii) the Standard & Poor's Aerospace and
Defense Index.
The returns shown assume that $100 was invested in the Company's common
stock and in each of the two indices starting on January 1, 1995. The returns
shown also assume that all dividends paid during the five-year period were
reinvested. Stockholders are cautioned against drawing any conclusions from
the data contained therein, as past performance is no guarantee of future
results.
[COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN GRAPH]
<TABLE>
<CAPTION>
12/94 12/95 12/96 12/97 12/98 12/99
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cordant Technologies Inc. $100.00 124.13 166.56 305.54 284.74 253.22
Standard & Poor's 500 Index $100.00 137.47 169.19 225.44 290.24 351.32
Standard & Poor's Aerospace/Defense
Index $100.00 165.49 221.36 227.73 174.57 169.95
- -------------------------------------------------------------------------------
</TABLE>
B-20
<PAGE>
Cordant Technologies Inc.
15 W. South Temple
Suite 1600
Salt Lake City, Utah 84101-1532
March 20, 2000 [Cordant Technologies Logo]
Dear Stockholder:
I am pleased to inform you that Cordant Technologies Inc. has entered into a
merger agreement with Alcoa Inc., pursuant to which a wholly owned subsidiary
of Alcoa has commenced a tender offer to purchase all of the outstanding shares
of Cordant's common stock for $57.00 per share in cash. The tender offer is
conditioned upon, among other things, a minimum of a majority of Cordant's
shares outstanding on a fully diluted basis being tendered and not withdrawn
and the receipt of required regulatory approvals. The tender offer will be
followed by a merger, in which each share of Cordant common stock not purchased
in the tender offer will be converted into the right to receive $57.00 per
share in cash.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE TERMS OF THE ALCOA OFFER AND
THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF CORDANT'S STOCKHOLDERS, AND
UNANIMOUSLY RECOMMENDS THAT CORDANT'S STOCKHOLDERS ACCEPT THE ALCOA OFFER AND
TENDER THEIR SHARES OF CORDANT COMMON STOCK PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors considered a number
of factors, as described in the attached Schedule 14D-9, including the written
opinion of the Company's financial advisor, Morgan Stanley & Co. Incorporated,
that, as of the date of the opinion, the consideration to be received by the
holders of Cordant common stock pursuant to the merger agreement with Alcoa is
fair from a financial point of view to Cordant's stockholders. A copy of Morgan
Stanley's written opinion, which sets forth the assumptions made, procedures
followed and matters considered by Morgan Stanley in rendering its opinion, can
be found in Annex A to the Schedule 14D-9. You should read the opinion
carefully and in its entirety.
Enclosed are the Alcoa Offer to Purchase, dated March 20, 2000, Letter of
Transmittal and related documents. These documents set forth the terms and
conditions of the tender offer. The Schedule 14D-9 describes in more detail the
reasons for your Board's conclusions and contains other information relating to
the tender offer. We urge you to consider this information carefully.
/s/ James R. Wilson
James R. Wilson
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
Exhibit (e)(4)
CORDANT TECHNOLOGIES INC.
15 West S. Temple
Suite 1600
Salt Lake City, Utah 84101-1532
December 2, 1999
Alcoa Inc.
201 Isabella Street
Pittsburgh, Pennsylvania 15212-5858
Gentlemen:
In connection with considering a possible transaction (a
"Transaction") between you and Cordant Technologies Inc. (including its
subsidiaries, the "Company"), the Company may make available to you from time to
time certain nonpublic information concerning the Company's business, financial
condition, operations, assets and liabilities, either orally or in writing or by
inspection. As a condition to our entering into any discussions with you
relating to a Transaction, you agree to treat any nonpublic information
concerning the Company (whether prepared by the Company, its directors,
officers, employees, agents, advisors or other representatives (including,
without limitation, attorneys, accountants, consultants, bankers and financial
advisors) (collectively, "Representatives") or otherwise and irrespective of the
form of communication) which is furnished hereunder to you or your
Representatives now or in the future by or on behalf of the Company
(collectively referred to in this letter agreement as the "Evaluation Material")
in accordance with the provisions of this letter agreement, and to take or
abstain from taking certain other actions hereinafter set forth.
(1) Evaluation Material. The term "Evaluation Material" does not include
-------------------
information which (i) is or becomes generally available to the public other than
as a result of a breach of this letter agreement by you or your Representatives,
(ii) was within your possession prior to its being furnished to you by or on
behalf of the Company; provided that the source of such information was not
known by you to be bound by a confidentiality agreement with, or other
contractual, legal or fiduciary obligation of confidentiality to, the Company or
any other party, or (iii) is or becomes available to you on a non-confidential
basis from a source other than the Company or any of its Representatives;
provided that such source was not known by you to be bound by a confidentiality
agreement with, or other contractual, legal or fiduciary obligation of
confidentiality to, the Company with respect to such information.
(2) Use of Evaluation Material. You agree that you and your
--------------------------
Representatives shall use the Evaluation Material solely for the purpose of
evaluating a possible Transaction between the parties, and that the Evaluation
Material will be kept confidential
<PAGE>
and you and your Representatives will not disclose or use for purposes other
than the evaluation of a possible Transaction any of the Evaluation Material in
any manner whatsoever; provided that any of such information may be disclosed to
your Representatives who need to know such information for the sole purpose of
evaluating a possible Transaction between the parties (it being understood that
such Representatives shall be informed by you of the confidential nature of such
information and that by receiving such information they are agreeing to be bound
by this letter agreement). You agree to be responsible for any breach of this
letter agreement by any of your Representatives.
(3) Non-Disclosure of Discussions; Communications. In addition, you
---------------------------------------------
agree that, without the prior written consent of the Company, you and your
Representatives will not disclose to any other person the fact that any
Evaluation Material has been made available hereunder, that discussions or
negotiations are taking place concerning a possible Transaction or any of the
terms, conditions or other facts with respect thereto (including the status
thereof); provided that you may make such disclosure if in the opinion of your
counsel, such disclosure is necessary to avoid committing a violation of law or
of any rule or regulation of any securities association, stock exchange or
national securities quotation system on which your securities are listed or
traded. In such event, you shall use your best efforts to give advance notice to
the Company. All communications to the Company regarding the Transaction,
including any requests for additional information, will be made only through
designated representatives of the Company.
(4) Required Disclosure. In the event that you or your Representatives
-------------------
are requested or required (by oral questions, interrogatories, requests for
information or documents in legal proceedings, subpoena, civil investigative
demand or other similar process) to disclose any of the Evaluation Material or
any of the facts disclosure of which is prohibited under paragraph (3) of this
letter agreement, you shall provide the Company with prompt notice of any such
request or requirement so that the Company may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this letter
agreement. If, in the absence of a protective order or other remedy or the
receipt of a waiver by such other party, you or any of your Representative
should nonetheless, in the opinion of your or (in the case of disclosure
requested or required of a Representative) such Representative's counsel,
disclose the Evaluation Material, you or your Representatives may, without
liability hereunder, disclose only that portion of the other party's Evaluation
Material which such counsel advises is legally required to be disclosed;
provided that the party requested or required to make the disclosure exercises
its reasonable efforts to preserve the confidentiality of the Evaluation
Material, including, without limitation, by cooperating with the Company to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded the Evaluation Material.
(5) Termination of Discussions. If either party decides that it does not
--------------------------
wish to proceed with discussions or negotiations relating to a Transaction with
the other party, the party so deciding will promptly inform the other party of
that decision. In that case, or at any time upon the request of the Company for
any reason, you will promptly
-2-
<PAGE>
deliver to the Company or, at your option, destroy all written (and electronic)
Evaluation Material (and all copies thereof and extracts therefrom) furnished to
you or your Representatives by or on behalf of the Company pursuant hereto. In
the event of such a decision or request, all other Evaluation Material prepared
by you shall be destroyed and no copy thereof shall be retained. Notwithstanding
the termination of any discussions or the return or destruction of the
Evaluation Material, you and your Representatives will continue to be bound by
their obligations of confidentiality and other obligations hereunder for a
period of five (5) years from the date hereof, except that the obligations under
paragraph (6) (subject to paragraph (10) hereof) shall survive for a period of
eighteen (18) months from the date hereof and the obligations under paragraph
(9) below shall survive for a period of two (2) years from the date hereof.
(6) Standstill. For a period of eighteen (18) months from the date
----------
hereof you shall not, and you shall cause your subsidiaries (as defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) not to, and neither you nor any such subsidiary shall assist, provide or
arrange financing to or for others or encourage others to, directly or
indirectly (including through any Representative), acting alone or in concert
with others, in each case unless specifically requested in writing in advance by
the Company's Board of Directors:
A. acquire or agree, offer, seek or propose to acquire, ownership
(including, but not limited to, beneficial ownership as defined in Rule
13d-3 under the Exchange Act) of more than 1% of any class of voting
securities issued by the Company, or any rights or options to acquire
such ownership (including from a third party);
B. offer, seek or propose a merger, consolidation or similar transaction
involving the Company;
C. offer, seek or propose to purchase, lease or otherwise acquire all or
a substantial portion of the assets of the Company;
D. seek or propose to influence or control the management or policies of
the Company or to obtain representation on the Company's Board of
Directors, or solicit or participate in the solicitation of any proxies
or consents with respect to the securities of the Company;
E. enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the
foregoing; or
F. seek or request permission to do any of the foregoing or seek any
permission to make any public announcement with respect to any of the
foregoing;
-3-
<PAGE>
provided, that in the event a third party shall have (a) filed a Schedule 13D
- --------
with the Securities and Exchange Commission indicating its intention to commence
a tender or exchange offer for voting securities of the Company representing 30%
or more of the outstanding voting power of the securities of the Company other
than pursuant to an agreement with the Company (an "Unsolicited Offer") or (b)
commenced an Unsolicited Offer, then from the date of filing of such Schedule
13D or commencement of such Unsolicited Offer and continuing until the date such
third party files an amended Schedule 13D indicating it no longer has such an
intention or, if earlier, the earlier of the expiration or termination of such
Unsolicited Offer, nothing in this paragraph (6) shall prohibit you from
communicating to the Company a nonpublic indication of interest to engage in a
transaction described in subparagraphs (A) through (C) of this paragraph (6) to
the extent that such nonpublic communication does not (x) constitute an offer to
engage in such transaction or (y) set forth the specific price or other terms of
any such transaction.
(7) Miscellaneous. Each party agrees that unless and until a definitive
-------------
agreement between the parties with respect to any Transaction has been executed
and delivered, neither the Company nor you will be under any legal obligation of
any kind whatsoever with respect to a Transaction by virtue of this or any
written or oral expression with respect to such a Transaction by any of its or
your Representatives except for the matters specifically agreed to in this
letter agreement. Neither the Company nor its Representatives makes any
representation or warranty as to the accuracy or completeness of the Evaluation
Material provided to you or your Representatives, and nothing contained in any
discussions between us or our Representatives or in the Evaluation Material
shall be deemed to constitute a representation or warranty. You further agree
that the Company shall not have any obligation to furnish Evaluation Material to
you or to authorize or pursue with you any Transaction. You acknowledge and
agree that the Company reserves the right, in its sole and absolute discretion,
to reject any and all proposals and to terminate discussions and negotiations
with you at any time subject to the provisions set forth herein. The agreements
set forth in this letter agreement may be modified or waived only by a separate
writing between the parties hereto.
(8) Injunctive Relief. It is further understood and agreed that money
-----------------
damages would not be a sufficient remedy for any breach of this letter agreement
and that the Company shall be entitled to equitable relief, including injunction
and specific performance, as a remedy for any such breach. Such remedies shall
not be deemed to be the exclusive remedies for a breach of this letter agreement
but shall be in addition to all other remedies available at law or equity.
(9) Nonsolicitation. For two years from the date hereof, you agree that,
---------------
without the prior written consent of the Company, you will not directly or
indirectly solicit for hire any current executive officers of the Company;
provided, however, that the foregoing shall not apply to (i) any such executive
officer who was terminated by the Company prior to the commencement of any such
solicitation or who independently seeks employment with you without any such
solicitation on your part, or (ii) generalized searches for employees by
-4-
<PAGE>
use of advertisements in the media which are not targeted on employees of the
employing party.
(10) Early Termination of Standstill. In the event the Company enters
-------------------------------
into a confidentiality agreement with any third party concerning a possible
transaction comparable to the Transaction being discussed between you and the
Company which confidentiality agreement contains standstill restrictions that by
their terms terminate on a date (the "Third Party Expiration Date") prior to the
eighteen-month anniversary of the date hereof, then (a) the standstill
restrictions contained in paragraph (6) hereof will terminate as of the Third
Party Expiration Date and (b) the Company shall, no later than forty-five (45)
days prior to the Third Party Expiration Date, advise you in writing of such
Third Party Expiration Date.
-5-
<PAGE>
Please confirm your agreement with the foregoing by signing and
returning one copy of this letter agreement to the undersigned, whereupon it
shall become our binding agreement to be governed by Delaware law.
Very truly yours,
CORDANT TECHNOLOGIES INC.
By: /s/ James R. Wilson
--------------------------
Name: James R. Wilson
Title: Chairman and Chief
Executive Officer
Accepted and Agreed as of
the date first written above:
ALCOA INC.
By: /s/ Barbara Jeremiah
---------------------------
Name: Barbara Jeremiah
Title: V.P. Corporate Development
-6-
