<PAGE>
OREGON METALLURGICAL CORPORATION
530 Southwest 34th Avenue - P.O. Box 580
Albany, Oregon 97321-0177
[logo][REGISTERED TRADEMARK]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1995
The annual meeting of the shareholders of Oregon Metallurgical Corporation,
an Oregon corporation, will be held in the auditorium of the Company office
building at 530 Southwest 34th Avenue in Albany, Oregon, on the 27th day of
April, 1995, at 10 o'clock a.m., Oregon Time, for the following purposes:
(1) To elect nine directors for the ensuing year;
(2) Approval of amendment to the Restated Articles of Incorporation
regarding rights of employees to nominate persons to the Board of
Directors.
(3) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only shareholders of record as of the close of business on March 10, 1995,
will be entitled to notice of and to vote at the meeting.
You are cordially invited to attend the meeting in person. Whether or not
you plan to attend, please date, sign and mail the enclosed proxy to avoid the
expense of further solicitation. A majority of the outstanding shares must be
represented at the meeting in order to transact business, and, whether you own
few or many shares, your proxy is important in fulfilling this requirement.
If you attend the meeting, you may withdraw your proxy and vote in person.
March 24, 1995 BY ORDER OF THE BOARD OF DIRECTORS
ORVAL N. THOMPSON, Secretary
OREMET [REGISTERED TRADEMARK] is the registered trademark of Oregon
Metallurgical Corporation
<PAGE>
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1995
This statement is furnished in connection with the solicitation of proxies
for the annual meeting of shareholders of Oregon Metallurgical Corporation, (the
"Company" or "Oremet") an Oregon corporation, to be held April 27, 1995. These
proxies are solicited by the board of directors. A proxy may be revoked at any
time prior to its exercise. Revocation of a proxy may be effected by appearing
in person at the annual meeting or by a written revocation delivered to the
Secretary of the Company prior to the convening of the annual meeting. This
Proxy Statement and accompanying form of proxy were first sent or given to
shareholders on approximately March 24, 1995.
The Company has only one class of stock, namely, common stock. The close
of business on March 10, 1995, has been fixed as the record date for the
determination of shareholders entitled to notice of and to vote at the annual
meeting. On the record date, there were outstanding 10,895,604 shareholders
have cumulative voting rights. Proxies of shareholders will be voted by the
persons named as proxies, and, in the absence of special instruction, may be
cumulated in the manner authorized by the laws of Oregon, that is, either by
giving one nominee for director as many votes as the number of directors to be
elected (and for whose election the shareholder has a right to vote), such
number being nine (9) for 1995, multiplied by the number of shares owned by the
shareholder, or by distributing such votes on the same principal among any
number of nominees.
It is necessary that a majority of the outstanding common stock be
represented at the meeting in person or by proxy in order to constitute a quorum
for the transaction of business.
ANY SHAREHOLDER MAY OBTAIN WITHOUT CHARGE A COPY (WITHOUT EXHIBITS) OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1994, INCLUDING FINANCIAL STATEMENTS
AND SCHEDULES. Requests for the Form 10-K should be addressed to Dennis P.
Kelly, Vice President, Finance and Treasurer, at P.O. Box 580, Albany, Oregon
97321.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock at February 28, 1995 (i) by each person
known by the Company to own beneficially more than 5% of the Company's Common
Stock; (ii) by each of the Company's directors and certain executive officers
with annual salaries and bonuses in excess of $100,000; and (iii) by all
directors and named executive officers of the Company as a group.
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY OF
NAME OF BENEFICIAL OWNER OWNED(1) COMMON
STOCK
<S> <C> <C>
Oregon Metallurgical Corporation Employee Stock
Ownership Plan, 530 SW 34th Avenue, Albany, Oregon
97321 4,467,129 41.0%
Carlos E. Aguirre (2) 16,707 *
Gilbert E. Bezar 1,700 *
Robert P. Booth 13,788 *
Roger V. Carter 4,700 *
Nicholas P. Collins 7,100 *
Howard T. Cusic 3,800 *
David G. Floyd (2) 24,389 *
Dennis P. Kelly (4) 9,933 *
David H. Leonard 4,200 *
James S. Paddock (3) 202,000 1.8%
James R. Pate 1,400 *
Steven H. Reichman (2) 8,632 *
Orval N. Thompson 2,985 *
All directors and named executive officers as a group
(14 persons) (2) (4) 301,334 2.8 %
<FN>
* Less than 1%
(1) Except as otherwise noted, each person named in the table has sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned.
(2) Shares beneficially owned are in Mr. Aguirre's, Mr. Floyd's, and Mr.
Reichman's ESOP accounts.
(3) Shares shown include 200,000 which are issuable under a warrant agreement
with Mr. Paddock.
(4) Shares shown include 9,433 beneficially owned, which are in Mr. Kelly's
ESOP account, and 500 shares in which voting and investment power is
shared.
</TABLE>
The Oremet ESOP provides that the ESOP Trustee (U.S. National Bank of
Portland, Oregon) shall vote all Common Stock of the Company held by the ESOP as
directed by the ESOP Administrators in accordance with the directions of the
participants. Each participant has the right with respect to Common Stock
allocated to his or her ESOP account to direct the ESOP Trustee how to vote in
any matter put to a shareholder vote. With respect to any Common Stock which
has not been allocated to a participant's ESOP account or Common Stock as to
which the ESOP Trustee has not received direction from any participant, the ESOP
Trustee is required to vote the stock in the same proportion as it votes Common
Stock as to which directions have been received from the participants.
<PAGE>
A sale of shares of Common Stock by the ESOP pursuant to a tender or an
exchange offer is permitted only if approved by two-thirds of the votes cast by
the participants. Each participant, to the extent permitted by law, is
permitted one vote for each year of ESOP service. If a sale is approved, the
ESOP provides that each participant will have the right to determine whether the
shares allocated to his or her ESOP account should be tendered or exchanged. To
the extent permitted by law, unallocated shares are subject to tender or
exchange in the same proportion that allocated shares are approved for tender or
exchange by the participants.
ELECTION OF DIRECTORS
The board of directors of the Company consists of nine members. The board
of directors held five meetings during the last fiscal year. During the portion
of 1994 for which he was a director, each incumbent director attended at least
75% of the total of (i) the meetings of the board of directors and (ii) the
meetings held by all committees of the board of directors on which he served.
All nominees named for election are presently members of the board of
directors. The term of office for which each nominee is a candidate will expire
at the annual meeting of shareholders in 1996, and until a successor is elected.
The accompanying proxy, when properly executed and returned to the Company,
will, unless otherwise indicated, be voted for the nominees. If any nominee
should become unavailable for election (an event which management does not
anticipate), the proxy will be voted for the election of such substitute nominee
as may be designated by the board of directors. The board of directors does not
have a nominating committee. Nominations for directors are made by the board of
directors as a whole. All nominees have indicated they will serve if elected.
Beginning in 1997, directors, other than the President, must be under age 72,
and have less than twelve years of cumulative service as a director.
The Articles of Incorporation of the Company currently provide that, so
long as 40 percent of Company stock is held by the ESOP, management's nominees
to the board of directors must include the President of the Company, three
directors that are unaffiliated with the Company's hourly (union) or salaried
(non-union) employees, two persons selected by hourly employees and two selected
by salaried employees of the Company, and one person to be selected at the
discretion of the board. The proportional representation of nominees to the
board of directors continues, at reduced numbers of nominees at various ESOP
ownership levels, down to 10%. This provision of the Articles of Incorporation
is proposed to be amended. See PROPOSAL TO AMEND RESTATED ARTICLES OF
INCORPORATION, appearing at page 14, below.
<PAGE>
DIRECTORS
Information with respect to each person nominated for election as a
director is set forth below.
Carlos E. Aguirre, Ph.D., age 51, the President and Chief Executive Officer
of the Company, has been a director since June, 1993. Mr. Aguirre served as
President of Axel Johnson Metals, Inc. from 1982 to 1993. Prior to that, Mr.
Aguirre was the Vice President of Technology at Ingersoll-Johnson Steel
Corporation from 1979 to 1982.
Gilbert E. Bezar, age 64, has been a director of the Company since 1983.
He was Vice President, Administration of Armco Inc.'s Strategic Metals Group
from 1981 to 1985. He also held the similar position with Owens-Corning
Fiberglas Corporation from 1985 until his retirement in 1988.
Robert P. Booth, age 83, has been a director of the Company since its
founding in 1956. Since 1952 he has been a director, and since 1985 Chairman of
the Board, of Northwest Television, Inc., which operates three television
stations in Oregon and one in Idaho.
Roger V. Carter, age 65, selected by the salaried employees, has been a
director of the Company since 1990. He has been an independent metals
technology consulting engineer since 1986. He was employed by the Boeing
Company from 1954 and served as Chief Metallurgist and Manager of Metals
Technology at the time of his retirement in 1986.
Nicholas P. Collins, age 62, selected by the salaried employees, has been a
director of the Company since 1990. He is the Vice Chairman of ESCO
Corporation, a steel technology company, where he has been employed since 1957.
Howard T. Cusic, age 70, has been a director of the Company since 1980 and
is Chairman of the board of directors. He retired as Senior Vice President of
Owens-Corning Fiberglas Corporation in 1989 and was Group Vice President for
Armco from 1981 to 1985. From 1973 to 1985, he was also President of HITCO,
which was a wholly owned subsidiary of Owens-Corning Fiberglas Corporation from
September 1985 to January 1987.
David H. Leonard, age 48, selected by the hourly employees, has been a
director of the Company since 1989. He has been a partner of the Salem, Oregon,
law firm of Churchill, Leonard, Brown, Lincoln, Lodine and Hendrie, since 1976.
He also serves on the Board of Trustees of Willamette University.
James S. Paddock, age 53, became a director in September 1994. Since
September 1994, he has been a Vice President of the Company and President, Chief
Executive Officer and Chief Operating Officer of Titanium Industries, Inc., an
80% owned subsidiary of the Company. From 1986 to 1994 Mr. Paddock was the
President, Chief Executive Officer and Chief Operating Officer of the
predecessor company to Titanium Industries, Inc.
<PAGE>
James R. Pate, age 49, selected by the hourly employees, has been a
director of the Company since 1989. He was Manager, Business Services, Oregon
Department of Corrections from 1990 to 1993, and is currently the Financial
Services Manager, Vocational Rehabilitation Division, Oregon Department of Human
Resources.
EXECUTIVE OFFICERS
Information about the five executive officers of the Company who are not
also members of the board of directors is set forth below.
David G. Floyd, age 52, has been Vice President, Commercial, since July,
1991. Mr. Floyd was Managing Director, International Sales for RMI Titanium
Company from 1984 to 1991.
Dennis P. Kelly, age 48, was appointed Vice President, Finance, Chief
Financial Officer and Treasurer of the Company in 1993. Mr. Kelly was the Vice
President Finance, Chief Financial Officer and Treasurer of Titanium Metals
Corporation from 1985 to 1993.
Steven H. Reichman, age 51, has been Vice President, Technology and
Corporate Development since November, 1993. Mr. Reichman was Director of R & D
at Wyman Gordon Company from 1983 to 1993.
Stephen C. Stocks, age 58, has been employed by the Company since 1966 and
is Vice President, Manufacturing and Engineering. Mr. Stocks was director of
Manufacturing for the Company from 1981 to 1988, and Vice President,
Manufacturing from 1988 to 1993.
Orval N. Thompson, age 80, has been Secretary and General Counsel for the
Company since 1956 and was Treasurer until April 1988. Mr. Thompson has been a
director of the Company from April 1988 and until September 1994, and for
various periods since the Company was incorporated. Mr. Thompson is of counsel
to the law firm of Weatherford, Thompson, Quick & Ashenfelter, P.C., of Albany,
Oregon.
COMMITTEES OF BOARD OF DIRECTORS
The board of directors has an executive committee, an audit committee and a
finance/compensation committee.
The Executive Committee currently consists of Mr. Cusic, Chairman, Mr.
Aguirre, Mr. Collins, and Mr. Leonard. The committee has authority to act on
behalf of the board on all but major corporate actions which are reserved by law
to the full board. In practice, the committee meets in place of the full board
when pressing matters arise which require action
<PAGE>
between regularly scheduled meetings of the board. All actions taken by the
committee are reported at the next board meeting. The committee held four
meetings during 1994.
The Audit Committee currently consists of Mr. Bezar (Chairman), Mr. Pate,
and Mr. Carter. The audit committee, which met twice during the fiscal year, is
responsible for (i) nominating independent auditors for selection by the board
of directors, (ii) reviewing the planned scope of the independent audit,
(iii) reviewing the results of the independent auditors' examination,
(iv) reviewing annual financial statements prior to issuance, and (v) reviewing
internal financial control procedures.
The Finance/Compensation Committee, which currently consists of Mr. Bezar,
Mr. Cusic, Mr. Collins and Mr. Leonard, held one meeting during 1994. The
Finance/Compensation Committee, when requested by the board, reviews and advises
the board on fiscal and compensation matters.
COMPENSATION POLICY
The Finance/Compensation Committee (the "Committee") consists of four (4)
Directors, none of whom are executive officers of the Company. The Committee
advises the Board on compensation matters when requested by the Board. The
Board adopted compensation policies in 1987 with the implementation of the
Oremet ESOP. Specifically, under its Wage and Salary Synchronization
resolution, adopted on November 11, 1987, the salaries of all salaried
employees, including all executive officers, were reduced by approximately
16.5%. Salaries were then fixed at the reduced levels for the seven years
ending December 11, 1994. However, salaries were increased for cost-of-living
adjustments, and to match increases in the wages accorded to the Company's
hourly employees. In accordance with the Synchronization Policy, salaried
employees were granted pay increases effective August 1, 1991, as follows: 5%
for the balance of 1991; 2% for 1992; and 2.5% for 1993. The compensation paid
to all salaried employees is audited each year to assure compliance with the
Wage and Salary Synchronization Policy.
All executive officers who were employed at the time of the implementation
of the ESOP, were subject to the Synchronization Policy. This currently applies
to Mr. Stocks. In cases where executive officer positions have become vacant,
or been created by the Board, during the course of the ESOP, the Board has
discretion to award a compensation package that it believes is competitive with
other companies in order to attract and retain such executives. Pursuant to
such policy, the Board authorized employment contracts for the following new or
vacant positions during the last two years: President and Chief Executive
Officer (Mr. Aguirre); Vice President, Finance, Chief Financial Officer and
Treasurer (Mr. Kelly); and Vice President, Technology and Corporate Development
(Mr. Reichman). The agreements with the new executive officers of the Company
generally provide for a base compensation, a bonus paid at the time of execution
of the agreement, and an annual bonus. The annual bonus is reduced if certain
ESOP, profit-based bonuses are awarded. Relocation expenses were not awarded
under the executive officers' employment agreements.
<PAGE>
COMPENSATION POLICIES AND TITANIUM INDUSTRIES, INC., ACQUISITION
The Company entered into several agreements with Mr. Paddock at the time of
the Company's acquisition of Titanium Industries, Inc. ("TII") in order to
assure the continued services of Mr. Paddock as President, Chief Executive
Office and Chief Operating Officer after the acquisition. Mr. Paddock's
compensation and benefits are paid by TII.
A Corporate Organization and Shareholders Agreement ("COSA") between Mr.
Paddock and Oremet sets forth the rights of Mr. Paddock as the minority
shareholder of TII. The COSA provides Mr. Paddock with an annual right to sell
to Oremet up to 50,000 of his 200,000 TII shares starting in 1999, and obligates
Oremet to purchase at least 30,000 shares annually from Mr. Paddock starting in
2004. The purchase price is based on the net book value of TII as defined in
the agreement. Mr. Paddock also entered into a Non-Competition and
Confidentiality Agreement with both TII and Oremet, and was issued a warrant to
purchase 200,000 shares of Oremet stock at $6.375 per share. Finally, Mr.
Paddock entered into employment agreements with the Company and TII making him a
Vice President of Oremet, and President, Chief Executive Officer and Chief
Operating Officer of TII. Under the employment agreement with TII, Mr. Paddock
is paid an annual salary of $225,000, and TII will institute an incentive bonus
program that will reward Mr. Paddock an annual bonus based on TII's financial
performance compared to key performance targets set by the TII board of
directors each year. If Mr. Paddock voluntarily terminates his employment, or
is terminated for cause, as defined in the agreement, the warrants (or
underlying shares, if the warrants are exercised) to purchase Oremet stock, and
the shares held by Mr. Paddock in TII, are partially forfeitable in accordance
with schedules in the respective agreements.
PERFORMANCE AND COMPENSATION
In adopting the ESOP, the Board stated its belief that participation of
employees in the growth and profits of the corporation through an ESOP and
related agreements would be a benefit to the corporation. Executive officers of
the Company have acquired the following cumulative number of shares in their
ESOP accounts: Mr. Aguirre, 16,707; Mr. Stocks, 40,586; Mr. Floyd, 24,389; Mr.
Reichman, 8,632; and Mr. Kelly, 9,433. Mr. Paddock and Mr. Thompson are not
eligible to participate in the ESOP.
Commencing in 1995, the Company will implement a bonus program for all
hourly and salaried employees, including executive officers, but excluding
employees of subsidiaries, based on profitability of the Company as measured by
return on equity, provided that such return on equity is at least 3%. Final
details of this profit sharing have not yet been decided.
Effective January 1, 1995, the Company adopted a Savings Plan containing
salary reduction features in which executive officers will participate. The
Company will contribute one share of Oremet common stock for each day that an
employee works. As part of such plan, the Company will contribute a matching
contribution to the employee's contribution, and the match will be based on the
profitability of the Company. In no event will such match exceed 3% of an
employee's compensation.
<PAGE>
The Company is in the process of developing long-term incentive programs
for executive officers of the Company to be effective for 1995.
Mr. Aguirre's salary is not currently related to any performance-based
measurement. The Committee established Mr. Aguirre's compensation for 1994
based on a number of factors including the compensation levels of chief
executive officers at comparable companies, and Mr. Aguirre's qualifications.
The tables which follow and accompanying narrative and footnotes reflect
the above policies.
Gilbert E. Bezar Howard T. Cusic Nicholas P. Collins David H. Leonard
<PAGE>
SUMMARY COMPENSATION TABLE
The following table summarizes compensation for the last three years (or
since commencement of employment if less than three years) for the Chief
Executive Officer and for the next four most highly-compensated executive
officers of the Company whose total annual salary and bonuses for the last year
exceeded $100,000.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
Name and Other Annual All Other
Principal Salary Bonus Compensation Compensation
Position Year ($) ($) ($)(5) ($) (1)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Carlos E. Aguirre 1994 $195,000 $40,000 ---- $105,357
President & CEO 1993 $ 97,500 $105,000 ---- 67,042
1992(3) ---- ---- ---- ----
James S. Paddock 1994 $65,000 $90,000 ---- ----
Vice President 1993(4) ---- ---- ---- ----
(President & CEO of 1992(4) ---- ---- ---- ----
Titanium Industries,
Inc.)
Dennis P. Kelly 1994 $120,00 $ 10,000 ---- $ 70,318
Vice President 1993 $ 27,325 $ 50,000 ---- $ 16,706
Finance and Treasurery 1992(3) ---- ---- ---- ----
Steven H. Reichman 1994 $115,00 $ 10,000 ---- $64,757
Vice President 1993 $16,586 $35,000 ---- $ 11,690
Technology & 1992(3) ---- ---- ---- ----
Corporate
David G. Floyd 1994 $124,825 ---- ---- $ 56,290
Vice President, 1993 $122,956 ---- ---- 39,781
Commercial 1992 $118,800 ---- $ 30,637(2) 33,900
<FN>
(1) Includes contributions to ESOP, Excess Benefit Plan and Supplemental
Plan (together, the "Supplemental Shares") at December 31, values for
the respective years: For 1994, Mr. Aguirre received 7,255 shares in
the ESOP and 7,277 Supplemental Shares; Mr. Kelly received 9,433
shares in the ESOP and 266 Supplemental Shares; Mr. Reichman received
8,632 shares in the ESOP and 300 Supplemental Shares; and Mr. Floyd
received 7,602 shares in the ESOP and 162 Supplemental Shares. Mr.
Paddock does not participate in the ESOP or Supplemental Plan.
(2) Reimbursement for moving expense.
(3) The named officer was not employed by the Company in 1992.
(4) The named officer was not employed by the Company in 1992 or 1993.
(5) Certain perquisites and personal benefits which were less than the
lesser of $50,000 or 10% of the individual's bonus and salary are not
shown.
</TABLE>
<PAGE>
PENSION PLAN. The following table shows the estimated annual pension
benefits under the Company's qualified defined benefit pension plan, as well as
non-qualified supplemental pension plans that provide benefits for participants
that would otherwise be denied by reason of certain Internal Revenue Code
limitations on plan benefits. Benefits are payable on normal retirement at age
65 based on a straight single life annuity at specified salary levels (based on
the highest average of five (5) consecutive years) with various years of
service.
<TABLE>
<CAPTION>
Y E A R S O F S E R V I C E
=======================================================
SALARY 10 20 25 30 40
=======================================================
<S> <C> <C> <C> <C> <C>
$100,000 22,500 45,000 46,500 55,800 72,150
120,000 27,100 54,200 56,050 67,260 86,930
140,000 31,700 63,400 65,600 78,720 101,710
200,000 45,500 91,000 94,250 113,100 146,050
250,000 57,000 114,000 118,125 141,750 183,000
300,000 68,500 137,000 142,000 170,400 219,950
</TABLE>
The benefits listed above are not subject to any deduction for social
security benefits or other offset amounts. Salary used in determining
retirement benefits generally consists of an employee's specified annual salary,
including bonuses, as adjusted to the generally higher levels in existence prior
to the implementation of the ESOP. The Company's executive officers named in
the Summary Compensation Table have the following credited years of service
under the plan as of January 1, 1995: Mr. Aguirre, two years; Mr. Kelly, one
year; Mr. Reichman, one year; Mr. Floyd, four years.
SEVERANCE ARRANGEMENTS. If there is a change in the ownership of a
majority of the outstanding capital stock of the Company, other than in
accordance with the existing ESOP, and within one year thereafter there is an
involuntary termination of the employment, Mr. Aguirre will be paid two years
salary as severance pay and continue to be eligible for all pension benefits
otherwise available to him from the Company at the end of the severance pay
period. Involuntary termination shall include a reduction in compensation or a
reduction of responsibility.
Messrs. Aguirre, Kelly and Reichman will receive severance pay equal to
twelve months of their current base salary if their employment is involuntarily
terminated within eighteen months from the date of their employment except if
such termination is due to certain specific acts of misconduct engaged in by the
employee as specified in the employee's employment agreement.
Mr. Paddock's Employment Agreement with Titanium Industries, Inc., provides
that if his employment is involuntarily terminated, in addition to receiving
compensation for the remaining
<PAGE>
period of the agreement, he will receive two times his base compensation and
bonus for the prior calendar year. If TII does not renew Mr. Paddock's
employment at any renewal date before December 31, 2005, Mr. Paddock will be
paid as a severance settlement 75 percent of his annual base compensation for
two years.
COMPENSATION OF DIRECTORS. Each member of the board of directors,
excluding Mr. Aguirre, Mr. Paddock and the Chairman of the Board, is paid
$6,000, and 300 shares of company stock, per year plus $600 for each board
meeting attended, $450 for each meeting of a board committee attended and $450
for each meeting of the ESOP committee attended that is not on the same day as a
board meeting. The Chairman of the board receives $9,000, and 450 shares of
company stock, per year and an additional $1,000 for each day, or portion of a
day, he spends on Company business. All directors are reimbursed for travel
expenses incurred in attending board and committee meetings. Under the
Company's Deferred Compensation Plan for directors, directors of the Company may
defer their compensation until after they cease serving as directors but before
they reach age 70. Amounts deferred earn interest at an annual rate of 10% and
are payable in cash either in a lump sum or in up to five annual installments.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. For 1994, no
member of the Compensation Committee was an officer or employee of Oremet.
PERFORMANCE GRAPH. Set forth below is a line-graph comparing the yearly
percentage change and cumulative shareholder return on Oremet common stock with
the cumulative total return of the Index for the NASDAQ Stock Market (U.S.
Companies) and a titanium industry group consisting of Oremet, RMI Titanium
Company and Tremont Corporation. The graph commences in October of 1990 which
is the date one of the peer companies started trading after its reorganization.
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
OREGON METALLURGICAL CORPORATION
PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES
Produced on 02/09/95 including data to 12/30/94
<TABLE>
<CAPTION>
LEGEND
<S> <C> <C> <C> <C> <C> <C> <C>
Symbol CRSP Total Returns Index for: 10/31/90 12/31/90 12/31/91 12/31/92 12/31/93 12/30/94
------ ----------------------------- -------- -------- -------- -------- -------- --------
______ - Oregon Metallurgical Corporation 100.0 100.0 87.4 57.1 67.8 103.4
...__. * Nasdaq Stock Market (US Companies) 100.0 114.3 183.4 213.4 243.4 238.0
------ TRIANGLE Self-Determined Peer Group 100.0 124.8 96.6 59.7 49.6 83.5
Companies in the SElf-Determined Peer Group
R M I TITANIUM CO TREMONT CORP NEW
NOTES:
A. The lines represent monthly index levels derived from compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 10/31/90.
</TABLE>
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In 1994 the Company paid Weatherford, Thompson, Quick & Ashenfelter, P.C.,
$152,368 as attorneys' fees, and Mr. Thompson's salary for his position as
Director and Secretary.
Mr. Collins filed a late report concerning his acquisiton of 2,000 shares
of Oremet stock under SEC stock transaction reporting rules. Other than this
single late report, Mr. Collins has otherwise timely filed all required reports
of his stock transactions, and Mr. Collins took immediate action to remedy the
oversight as soon as it was discovered.
PROPOSAL TO AMEND
RESTATED ARTICLES OF INCORPORATION
The Board of Directors of Oremet has unanimously adopted the following
resolutions approving and recommending to shareholders for their approval the
stated amendments to the Restated Articles of Incorporation.
RESOLVED: That the Board of Directors hereby proposes the
following amendment to the Corporation's Articles of Incorporation for
approval of the shareholders of the Corporation at the next annual
meeting:
That the second paragraph of Article V.B of the Corporation's Articles
of Incorporation be amended to read in its entirety as follows:
(a) As long as 25% of the Corporation's outstanding stock is
held by defined contribution employee benefit plans which are
qualified under Internal Revenue Code Section 401(a) (including,
without limitation, the Oregon Metallurgical Corporation Employees
Stock Ownership Plan and the Oregon Metallurgical Corporation
Employees Savings Plan), four (4) of the nine (9) members of the Board
of Directors of the Corporation shall be nominated as follows: Two
(2) of said Directors shall be nominated by the Corporation's
employees affiliated with the United Steelworkers of America, Local
7150 (the "Union Employees"), and two (2) of said Directors shall be
nominated by the Corporation's employees who are not affiliated with
the United Steelworkers of America, Local 7150 (the "Salaried
Employees"); and
(b) In the event that less than 25% of the Corporation's
outstanding stock is held by such defined contribution employee
benefit plans which are qualified under Internal Revenue Code 401(a),
two (2) of the nine (9) members of the Board of Directors of the
Corporation shall be nominated as follows: One (1) of said Directors
shall be nominated by the Corporation's Union Employees, and one (1)
of said Directors shall be nominated by the Corporation's Salaried
Employees; and
<PAGE>
(c) Such proportional representation of defined contribution
employee benefit plans which are qualified under Internal Revenue Code
401(a) shall be maintained if the number of directors is increased or
decreased.
DESCRIPTION OF PROPOSAL
The Articles of Incorporation of the Company currently provide that, so
long as 40% of the outstanding stock of the Company is held by the ESOP,
management's nominees to the board of directors must include the President of
the Company, three directors that are unaffiliated with the Company's hourly
(union) or salaried (non-union) employees, two persons selected by hourly
employees and two selected by salaried employees of the Company, and one person
to be selected at the discretion of the board. The proportional representation
of nominees to the board of directors continues, at reduced numbers of nominees
at various ESOP ownership levels, down to 10%.
The proposed amendment replaces the current provisions providing for
advancement of nominees to the board of directors by the Oremet ESOP by lowering
the 40% threshold of stock ownership to 25% in order to retain four nominees.
The representation of the ESOP would continue at a reduced number of nominees,
two, if the number of ESOP shares falls below 10%. Finally, the proposed
amendment allows shares held by the new Oremet Savings Plan to be used in
determining the percentage of stock ownership held by employees.
The Proposal applies to all defined contribution employee benefit plans
qualified under Internal Revenue Code Section 401(a). There are only two such
plans sponsored by Oremet: The Oremet ESOP and the Oremet Savings Plan.
REASONS FOR THE PROPOSAL
The Company believes it has benefited from employee ownership through the
ESOP which provides employees the ability to participate in the ownership of the
Company. The provisions for representation on the board of directors by the
ESOP have given the employees further incentive to be actively engaged in the
success of the Company. Board members nominated by the ESOP and elected by all
shareholders have proven responsive to the concerns of the employee-owners, and
acted responsibly for the benefit of all shareholders.
The Initial Acquisition Loan to fund the Oremet ESOP was paid off in 1994.
All original acquisition shares acquired in 1987 on the implementation of the
ESOP have been fully allocated to all participants in the ESOP. The natural
attrition of ESOP ownership through employee terminations and diversity
elections has continued to the point where the ESOP owns approximately 41% of
all Company stock, compared to 67% in 1987. In order to avoid the reduction in
ESOP rights to nominate directors, which will be reduced to two, from the
current
<PAGE>
four, when ESOP ownership falls below 40%, the Company would continue such
representation at four nominees to the board until employee ownership reaches
25%.
The new Oremet Savings Plan will also provide for employee stock ownership
of the Company. The Savings Plan, effective January 1, 1994, is a 401(k) type
salary reduction plan. It is anticipated that the Company will contribute
Oremet stock to the Savings Plan in order to match employee salary reductions,
and as part of the profit sharing features of such plan.
For these reasons, the Company believes stock ownership by the ESOP and the
Savings Plan should be aggregated in determining the threshold levels for
employees to advance nominees to the board of directors and be represented on
the board.
RECOMMENDATION AND REQUIRED VOTE
The Board of Directors recommends a vote FOR approval of the Proposal. The
proposal will be effective upon the proposal being approved by holders of
majority of shares voting on such amendment.
INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed the accounting firm of Coopers &
Lybrand, 400 Country Club Road, Suite 300, Eugene, Oregon 97401, as its
principal accountant to audit Oremet's financial statements for the 1995
calendar year. Coopers & Lybrand also examined and certified the financial
statements for Oremet for the year ending December 31, 1994. The Company
expects representatives of Coopers & Lybrand to be present at the annual meeting
and to be available to respond to appropriate questions from shareholders. The
accountants will have the opportunity to make a statement at the annual meeting
if they desire to do so.
1996 ANNUAL MEETING OF SHAREHOLDERS
The 1996 Annual Meeting of Shareholders is scheduled to be held in Albany,
Oregon, on April 25, 1996. Specific proposals of shareholders intended to be
presented at the 1996 annual meeting of shareholders must comply with the
requirements of the Securities Exchange Act of 1934, as amended, and be received
by the Company's Corporate Secretary by November 16, 1995, for inclusion in its
1996 proxy materials.
<PAGE>
OTHER MATTERS
Management knows of no matters to be brought before the meeting other than
those described above. However, should any other matters properly come before
the meeting, the persons named in the accompanying form of proxy will vote or
refrain from voting thereon in accordance with their judgment.
MISCELLANEOUS INFORMATION
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, some solicitations may be conducted by telephone,
telegraph, facsimile transmissions and personal interviews by a few regular
employees of the Company.
The Company does not expect to pay any compensation for the solicitations
of proxies, but may reimburse brokers and other persons holding stock in their
names, or in the names of nominees, for their reasonable expenses for furnishing
shareholder lists and sending proxy material to principals and obtaining their
proxies.
__________________________________________________
Albany, Oregon 97321
BY ORDER OF THE BOARD OF DIRECTORS
ORVAL N. THOMPSON, Secretary
<PAGE>
OREGON METALLURGICAL CORPORATION
Proxy solicited on behalf of the Board of Directors
Annual Meeting of Shareholders, April 27, 1995
The undersigned acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement in connection with the annual meeting above mentioned, and
hereby appoints CARLOS E. AGUIRRE and ORVAL N. THOMPSON, and each of them,
proxies of the undersigned, with full power of substitution, to attend said
annual meeting and any and all adjournments thereof, and to vote all shares of
Oregon Metallurgical Corporation stock the undersigned would be entitled to vote
if personally present.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. THIS PROXY WHEN PROPERLY
EXECUTED BY THE UNDERSIGNED STOCKHOLDER WILL BE VOTED IN THE MANNER SPECIFIED ON
THE REVERSE SIDE OF THIS PROXY. IF AUTHORITY IS NOT WITHHELD, THIS PROXY WILL
BE VOTED IN FAVOR OF THE NOMINEES AND FOR THE PROPOSAL LISTED ON THE REVERSE
SIDE OF THIS PROXY.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
-FOLD AND DETACH HERE-
OREGON METALLURGICAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 27, 1995
<PAGE>
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
/ / / /
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
DRAW A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Carlos E. Aguirre Roger V. Carter David H. Leonard
Gilbert E. Bezar Nicholas P. Collins James S. Paddock
Robert P. Booth Howard T. Cusic James R. Pate
2. PROPOSAL
Approval of Amendment to the Restated Articles of Incorporation regarding
rights of employees to nominate persons to the Board of Directors.
/ / For / / Against / / Abstain
DATED: _______________________________, 1995
____________________________________________
SIGNATURE(S)
____________________________________________
PLEASE SIGN ABOVE EXACTLY AS YOUR NAME
APPEARS ON THE LEFT SIDE HEREOF. IF MORE
THAN ONE NAME APPEARS, ALL SHOULD SIGN.
PERSONS SIGNING AS EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN, CORPORATE OFFICER OR IN
ANY OTHER OFFICIAL OR REPRESENTATIVE
CAPACITY, SHOULD ALSO PROVIDE FULL TITLE.
-FOLD AND DETACH HERE-
OREGON METALLURGICAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 27, 1995
