SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Allegheny Ludlum Corporation
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(Name of Registrant as Specified In Its Charter)
Allegheny Ludlum Corporation
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
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Notes:
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ALLEGHENY LUDLUM CORPORATION
1000 SIX PPG PLACE
PITTSBURGH, PENNSYLVANIA 15222-5479
NOTICE OF
1995 ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
FRIDAY, MAY 19, 1995
11:00 A.M. PITTSBURGH TIME
ROOM 1000 AUDITORIUM, 10TH FLOOR
TWO MELLON BANK CENTER
(UNION TRUST BUILDING)
435 FIFTH AVENUE
PITTSBURGH, PENNSYLVANIA
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TABLE OF CONTENTS PAGE
Letter from the Chairman of the Board........................................ 1
Notice of Annual Meeting of Shareholders..................................... 2
Proxy Statement.............................................................. 3
The Board of Directors.................................................. 4
Election of Directors................................................... 7
Ratification of Selection of Independent Auditors....................... 10
Other Information....................................................... 10
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[R.P.Simmons LETTERHEAD]
R. P. Simmons
Chairman of the Board
March 14, 1995
Dear Shareholder:
We are pleased to invite you to attend Allegheny Ludlum's 1995 Annual
Meeting to be held on Friday, May 19, in Pittsburgh, Pennsylvania. The meeting
will begin with a discussion and voting on the matters set forth in the
accompanying Notice of Annual Meeting and Proxy Statement followed by reports on
Company operations. I urge you to attend.
If you plan to attend the meeting, please complete and return the enclosed
postage-paid ticket request card. An admission ticket, which will expedite your
admission to the meeting, will be mailed to you prior to the meeting.
Whether you own few or many shares and whether or not you plan to attend
the meeting, it is important that you vote your shares. Please promptly read the
proxy statement and then complete, sign and return your proxy card in the
enclosed postage-paid envelope. If you sign and return your proxy card without
specifying your choices, it will be understood that you wish to have your shares
voted in accordance with the Directors' recommendations.
We look forward to seeing as many of you as possible at the 1995 Annual
Meeting.
Sincerely,
/s/ R. P. Simmons
R. P. Simmons
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ALLEGHENY LUDLUM CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1995
------------------
The Annual Meeting of the Shareholders of Allegheny Ludlum Corporation will
be held on Friday, May 19, 1995 at 11:00 A.M., Pittsburgh Time, at the Room 1000
Auditorium, 10th Floor, Two Mellon Bank Center (Union Trust Building), 435 Fifth
Avenue, Pittsburgh, Pennsylvania, for the following purposes:
1. To elect four Class II directors to serve for a term of three
years.
2. To ratify the selection of Ernst & Young LLP as independent
auditors of the Company for fiscal year 1995.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on March 6, 1995 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
By order of the Board of Directors
/s/ Jon D. Walton
JON D. WALTON
Vice President-General Counsel
and Secretary
Dated: March 14, 1995
YOU ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE. THE RETURN OF THE ENCLOSED PROXY CARD WILL
NOT AFFECT YOUR RIGHT TO REVOKE SUCH PROXY OR TO VOTE IN PERSON SHOULD YOU
ATTEND THE MEETING.
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ALLEGHENY LUDLUM CORPORATION
1000 SIX PPG PLACE
PITTSBURGH, PA 15222-5479
PROXY STATEMENT
This proxy statement and the accompanying proxy card are being mailed
beginning on or about March 14, 1995 to shareholders in connection with the
solicitation of proxies by the Board of Directors of Allegheny Ludlum
Corporation (the "Company") for use at the 1995 Annual Meeting of Shareholders
to be held on May 19, 1995.
Shareholders whose names appeared of record on the books of the Company at
the close of business on March 6, 1995 are entitled to notice of and to vote at
the meeting. On the record date for the meeting, there were 70,561,703 shares of
Common Stock of the Company outstanding and entitled to vote. Each share of
Common Stock is entitled to one vote per share on each matter properly brought
before the meeting. Shares can be voted at the meeting only if the shareholder
is present in person or is represented by proxy.
When your proxy card is returned properly signed, the shares represented
will be counted for quorum purposes and will be voted in accordance with your
instructions. You can specify your choices by marking the appropriate boxes on
the proxy card. Unless contrary instructions are indicated on your proxy card,
the shares will be voted as recommended by the Board of Directors. You may
revoke your proxy, by written notice to the Company's Secretary, at any time
before it is voted at the meeting.
Your vote is important; therefore, you are urged to sign and return the
accompanying proxy card whether or not you plan to attend the meeting. If you do
attend, you may still vote by ballot at the meeting which will automatically
cancel any previously given proxy card. If you are planning to attend the
meeting in person, please complete and return the enclosed postage-paid ticket
request card promptly so that we can mail your admission ticket. Shareholders
without admission tickets will be admitted upon verification of ownership.
Proxy cards, ballots and voting tabulations that identify individual
shareholders are normally available for examination only by the Judge of
Election, the Company's Secretary and certain employees associated with
processing proxy cards and tabulating the vote. The Company does not disclose
the vote of any shareholder except as may be necessary to meet legal
requirements.
The trustee of Allegheny Ludlum's Retirement Savings Plan, the Savings and
Security Plan of the Company's Tubular Products Division, the Savings and
Security Plan of the Company's Special Materials Division and the Personal
Retirement Account Plan (collectively, the "Company's Savings Plans") has the
sole right to exercise all rights relating to Common Stock held for participants
in such Plans. Participants have the right, however, to direct the trustee as to
the manner in which voting and other rights will be exercised with respect to
the full number of shares of Common Stock allocated to their accounts and shown
on the voting instruction cards which they will receive from the Plan
Administrator. The trustee will vote shares for which no participant
instructions are received in the same proportion as shares for which participant
instructions have been received. The trustee will exercise its sole discretion
in voting or not voting fractional shares.
If a shareholder is a participant in the Company's Automatic Dividend
Reinvestment Service for Shareholders, the proxy card represents the number of
full shares in the participant's dividend reinvestment service account on the
record date, as well as shares registered in the participant's name.
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The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made primarily by mail or by facsimile, but employees of
the Company may solicit proxies personally or by telephone.
Brokers, banks and other nominee holders will be requested to obtain voting
instructions of beneficial owners of stock registered in their names. Shares
represented by a duly completed proxy card submitted by a nominee holder on
behalf of beneficial owners will be counted for quorum purposes, and will be
voted to the extent instructed by the nominee holder on the proxy card. The
rules applicable to a nominee holder may preclude it from voting the shares that
it holds on certain kinds of proposals (sometimes referred to as "broker
non-votes") unless it receives voting instructions from the beneficial owners of
the shares. If a nominee holder fails to vote a beneficial owner's shares on a
particular proposal, the shares will not be counted as having been voted for or
against the proposal.
The Company's fiscal year ends on the Sunday nearest to December 31 in each
year. References in this proxy statement to fiscal years 1994, 1993 and 1992
mean, respectively, the fiscal years ended January 1, 1995, January 2, 1994, and
January 3, 1993.
THE BOARD OF DIRECTORS
The business and affairs of the Company are managed under the direction of
the Board of Directors as provided in the By-Laws of the Company and the laws of
the Commonwealth of Pennsylvania. The Board is not, however, involved in
day-to-day operating details. Members of the Board are kept informed of the
Company's business through discussions with the Chairman of the Board, the Vice
Chairman of the Board, the President and Chief Executive Officer and other
members of senior management and the other officers and managers of the Company,
by reviewing analyses and reports sent to them, and by participating in Board
and committee meetings. In fiscal year 1994, regular meetings of the Board were
held seven times. Special meetings are scheduled when required; none was held in
1994. Attendance by directors at meetings of the Board and of committees
averaged 97 percent.
The Board of Directors presently consists of thirteen members, two of whom
are employees of the Company. Under the By-Laws of the Company, the Board has
the power to fix the number of directors and to fill vacancies from time to time
by resolution, but there may not be fewer than three directors. No person may be
serve as a director of the Company after he becomes seventy-one years of age,
but a person who becomes seventy-one years of age may complete the term for
which he was elected before he became seventy-one years of age.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established four standing committees: the
Executive Committee, the Audit and Finance Committee, the Personnel and
Compensation Committee, and the Technology and Information Systems Committee.
EXECUTIVE COMMITTEE
The Executive Committee has broad powers to act on behalf of the full Board
of Directors, subject to certain limitations set forth in the By-Laws. In
practice, the Executive Committee acts when emergency issues or scheduling
problems make it difficult to convene a meeting of all directors and on specific
matters referred to the Committee by the Board of Directors. All actions taken
must be reported at the Board's next meeting. The Executive Committee acted
twice during fiscal year 1994. The members of the Executive Committee are
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Richard P. Simmons, Arthur H. Aronson, Robert P. Bozzone, C. Fred Fetterolf,
Thomas Marshall and Charles J. Queenan, Jr.
AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee is comprised of four directors, none of
whom is an officer or employee of the Company.
Among its principal audit functions, the Committee:
Recommends to the Board of Directors the appointment of the independent
accountants for the coming year.
Reviews the scope, general extent and proposed fees of the annual audit
plan and other activities of the independent accountants and the audit
plan of the internal auditors.
Reviews with management and the independent accountants, upon
completion of the annual audit, the financial statements and related
reports for their adequacy and compliance with generally accepted
accounting, reporting and disclosure principles.
Evaluates the effectiveness of the Company's internal and external
audit efforts, accounting and financial controls, policies and
procedures and business ethics policies and practices through a review
of reports by, and at regular meetings with, the internal and external
auditors and with management, as appropriate.
Among its principal finance functions, the Committee:
Reviews and evaluates proposed bank credit agreements and other major
financial proposals.
Reviews and evaluates Company relationships with banks and other
financial institutions.
Reviews and makes recommendations to the Board of Directors concerning
policies with respect to dividends, capital structure and authorized
stock.
The independent auditors have full and free access to the Committee and
meet with it, with or without management being present, to discuss all
appropriate matters. The present members of the Audit and Finance Committee are
Paul S. Brentlinger, C. Fred Fetterolf, W. Craig McClelland and James E. Rohr.
The Committee met three times in fiscal year 1994.
PERSONNEL AND COMPENSATION COMMITTEE
The Personnel and Compensation Committee is composed of Charles J. Queenan,
Jr., C. Fred Fetterolf, Thomas Marshall and W. Craig McClelland, none of whom is
an officer or employee of the Company. See the "Board Compensation Committee
Report on Executive Compensation" at page 23. The Committee held six meetings
during fiscal year 1994.
Among its principal duties, the Committee:
Makes recommendations to the Board of Directors concerning the
membership of committees of the Board and general executive management
organization matters.
Makes recommendations to the Board of Directors concerning compensation
and benefits for employees who are also directors of the Company,
consults with the Chief Executive Officer on
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compensation and benefit matters relating to other executive officers,
and makes recommendations to the Board of Directors concerning
compensation policies and procedures relating to executive officers
generally.
Makes recommendations to the Board concerning policy matters relating
to employee benefits and employee benefit plans.
Administers the Company's formal incentive compensation plans,
including the Performance Share Plan for Key Employees, the 1987 Stock
Option Incentive Plan, the Stock Acquisition and Retention Plan, and
the Director Share Incentive Plan.
TECHNOLOGY AND INFORMATION SYSTEMS COMMITTEE
The Technology and Information Systems Committee is composed of Richard K.
Pitler, Paul S. Brentlinger, George W. Tippins and Steven C. Wheelwright. It is
concerned with the impact of technologies and information systems which do or
could materially affect the success of the Company. The Committee is also
responsible for assessing the technical and information systems capabilities of
the Company and making recommendations to the Board of Directors concerning
priorities, asset deployment or other matters relevant to the technical
activities and information systems of the Company. The Committee also
participates, along with other members of the Lounsberry Award Committee, in the
selection of recipients of the Frank B. Lounsberry Award, which recognizes
extraordinary achievements of employees in advancing the technological base of
the Company relative to its strategic goals. The Committee held two meetings in
fiscal year 1994.
COMPENSATION OF DIRECTORS
In general, directors who are not employees of the Company are paid an
annual fee of $22,000, $1,000 for attendance at each meeting of the Board of
Directors and $1,000 for attendance at each meeting of a committee of the Board
on which they serve. In addition, each non-employee chairman of a committee is
paid an annual fee of $2,000. In April 1994, the non-employee directors of the
Company decided that they would not accept the annual and meeting fees that the
Company would otherwise have paid to them during the labor strike called by the
United Steelworkers of America on April 1, 1994, to indicate their support of
the actions taken by management and to join the efforts to conserve cash. The
strike continued for ten weeks.
Each non-employee director also participates automatically in the Director
Share Incentive Plan (the "Incentive Plan"). The Incentive Plan is intended as
an incentive to encourage such directors to increase their stock ownership and
proprietary interest in the Company and to continue as directors of the Company,
as well as to attract individuals of outstanding ability to serve as
non-employee directors of the Company. Under the Incentive Plan, on the first
business day of each calendar year, each non-employee director becomes entitled
to receive a number of shares of Common Stock (rounded to the nearest whole
share) with a fair market value on such date equal to $5,000. Pursuant to this
Plan, on January 3, 1994, each non-employee director received 209 shares of
Common Stock.
In order to continue to attract and retain outside directors of exceptional
ability, the Company maintains a Fee Continuation Plan for Non-Employee
Directors (the "Fee Continuation Plan"). Under the Fee Continuation Plan,
benefits will be payable to a person who serves as a non-employee director for a
period of five years or more and who retires from service as a director because
of the age limitation established by the Company's By-Laws or because of death,
disability or other circumstances specified in the Plan. The benefit will be an
amount equal to the annual fee for directors in effect immediately prior to the
participant's cessation of service as a
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director and will continue at the rate of one year of benefit for each year of
the participant's credited service as a director (as defined in the Fee
Continuation Plan) up to a maximum of ten years.
Having retired as employees of the Company effective December 31, 1994 and
August 1, 1994, respectively, Richard P. Simmons and Robert P. Bozzone became
eligible as of those dates for compensation as non-employee directors under the
arrangements described in the preceding paragraphs. Mr. Bozzone has agreed to
provide consulting services to the Company as described on page 29.
ELECTION OF DIRECTORS
(ITEM A ON PROXY CARD)
Pursuant to the Company's Restated Articles of Incorporation, the members
of the Board of Directors are divided into three classes. Each class is to
consist, as nearly as may be possible, of one-third of the whole number of the
Board. The term of the Class II directors expires at the 1995 Annual Meeting of
Shareholders. The terms of the Class III and Class I directors will expire at
the 1996 and 1997 Annual Meetings of Shareholders, respectively. At each Annual
Meeting the directors elected to succeed those whose terms expire are identified
as being of the same class as the directors they succeed and are elected for a
term to expire at the third Annual Meeting of Shareholders after their election
and until their successors are duly elected and qualified. A director elected to
fill a vacancy is elected to the same class as the director he succeeds, and a
director elected to fill a newly created directorship holds office until the
next election of the class to which such director is elected.
The four incumbent Class II directors are nominees for election this year
for a three-year term expiring at the 1998 Annual Meeting. In the election, the
four persons who receive the highest number of votes actually cast will be
elected. Broker non-votes will not be treated as votes cast. The proxies named
in the proxy card intend to vote for the election of the four Class II nominees
listed below unless otherwise instructed. If you do not wish your shares to be
voted for a particular nominee, you must identify the exception in the
appropriate space provided on the proxy card, in which event your shares will be
voted for the other listed nominees. If any nominee becomes unable to serve, the
proxies may vote for another person designated by the Board of Directors or the
Board may reduce the number of directors. The Company has no reason to believe
that any nominee will be unable to serve.
Shareholders may vote cumulatively in the election of directors, meaning
that every shareholder has the right to multiply the number of votes to which
the shareholder is entitled by the total number of directors to be elected and
to cast the whole number of such votes for one nominee or distribute them among
any two or more nominees. The persons named in the proxy cards will allocate the
cumulated votes represented by the proxy cards in the manner they deem proper in
their best judgment. A shareholder wishing to allocate the shareholder's vote in
a particular manner must be present at the meeting and vote by ballot.
The thirteen incumbent directors, including two current employees of the
Company, have high level executive or professional experience in a wide variety
of businesses or professions. A brief statement of the background of each
nominee and each continuing Class III and Class I director, including their
principal occupations during the past five years, is given on the following
pages.
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NOMINEES FOR DIRECTOR--TERM EXPIRES 1998
CLASS II
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<S> <C>
PAUL S. BRENTLINGER Paul S. Brentlinger is a General Partner in Morgenthaler
General Partner, Ventures, a venture capital group headquartered in
Morgenthaler Ventures Cleveland, Ohio. He is also a director of Ferro Corporation.
Director since 1987 Mr. Brentlinger is Chairman of the Audit and Finance
Age: 67 Committee and a member of the Technology and Information
Systems Committee.
THOMAS MARSHALL Thomas Marshall is Chairman of Aristech Chemical
Chairman, Corporation, a privately owned company engaged primarily in
Aristech Chemical Corporation the manufacture of chemical and polymer products. He also
Director since 1988 served as Chief Executive Officer of Aristech until October
Age: 66 1994. Mr. Marshall is a director of PNC Bank Corp. He is a
member of the Executive Committee and of the Personnel and
Compensation Committee.
JAMES L. MURDY James L. Murdy is Senior Vice President-Finance and Chief
Senior Vice President-Finance and Financial Officer of the Company. Mr. Murdy is also a
Chief Financial Officer of the Company director of United Meridian Corporation.
Director since 1988
Age: 56
CHARLES J. QUEENAN, JR. Charles J. Queenan, Jr. is a partner of Kirkpatrick &
Partner, Lockhart, outside attorneys for the Company. Mr. Queenan is
Kirkpatrick & Lockhart also a director of Crane Co., Fansteel, Inc. and Medusa
Director since 1980 Corporation. He is Chairman of the Personnel and
Age: 64 Compensation Committee and a member of the Executive
Committee.
</TABLE>
CONTINUING DIRECTORS--TERM EXPIRES 1996
CLASS III
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<S> <C>
ROBERT P. BOZZONE Robert P. Bozzone has been Vice Chairman of the Company
Vice Chairman of the Board since August 1994. Previously, he served as President of the
of the Company Company. He also served as Chief Executive Officer until
Director since 1981 1990. Prior to that time, he served as Chief Operating
Age: 61 Officer of the Company. Mr. Bozzone is also a director of
DQE Inc., whose principal subsidiary is Duquesne Light
Company, an electric utility. Mr. Bozzone is a member of the
Executive Committee.
</TABLE>
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<TABLE>
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C. FRED FETTEROLF C. Fred Fetterolf was President and Chief Operating Officer
Former President and Chief Operating Officer, of Aluminum Company of America prior to 1991. He is also a
Aluminum Company of America director of Mellon Bank Corporation, Union Carbide
Director since 1987 Corporation, Praxair, Inc. and Quaker State Corporation. Mr.
Age: 66 Fetterolf is a member of the Executive Committee, of the
Audit and Finance Committee and of the Personnel and
Compensation Committee.
RICHARD P. SIMMONS Richard P. Simmons is Chairman of the Board of the Company.
Chairman of the Board of the Company He was also Chief Executive Officer of the Company until
Director since 1980 1990. Mr. Simmons is a director of PNC Bank Corp. and
Age: 63 Consolidated Natural Gas Co. He is Chairman of the Executive
Committee.
STEVEN C. WHEELWRIGHT Steven C. Wheelwright is a Professor of Business
Professor of Business Administration, Administration at the Harvard University Graduate School of
Harvard University Business Administration. He is also a director of TJ
Director since 1988 International Corporation and Quantum Corporation.
Age: 51 Mr. Wheelwright is a member of the Technology and
Information Systems Committee.
</TABLE>
CONTINUING DIRECTORS--TERM EXPIRES 1997
CLASS I
<TABLE>
<S> <C>
ARTHUR H. ARONSON Arthur H. Aronson has been President and Chief Executive
President and Chief Executive Officer of the Company since August 1994. Previously, he
Officer of the Company served as Executive Vice President of the Company. He also
Director since 1990 served as Chief Operating Officer from 1990 to August 1994.
Age: 59 Mr. Aronson is a member of the Executive Committee.
W. CRAIG MCCLELLAND W. Craig McClelland has been Chairman and Chief Executive
Chairman and Chief Executive Officer, Officer of Union Camp Corporation, a manufacturer of paper
Union Camp Corporation products, since July 1994. Prior to that time, he served as
Director since 1987 President and Chief Operating Officer of Union Camp. He is
Age: 60 also a director of Union Camp Corporation, Quaker State
Corporation and PNC Bank Corp. Mr. McClelland is a member of
the Audit and Finance Committee and of the Personnel and
Compensation Committee.
RICHARD K. PITLER Richard K. Pitler performs private consulting work. At his
Former Senior Vice President and retirement in 1986, Dr. Pitler was Senior Vice President and
Technical Director of the Company Technical Director of the Company. He is Chairman of the
Director since 1981 Technology and Information Systems Committee.
Age: 67
</TABLE>
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<TABLE>
<S> <C>
JAMES E. ROHR James E. Rohr has been President of PNC Bank Corp. since
President, 1992. He also serves as President and Chief Executive
PNC Bank Corp. Officer of its Pennsylvania bank, PNC Bank, National
Director since 1988 Association. Previously, Mr. Rohr held other executive
Age: 46 positions with the bank and the holding company. Mr. Rohr is
also a director of PNC Bank Corp. and Sallie Mae (Student
Loan Marketing Association). He is a member of the Audit and
Finance Committee.
GEORGE W. TIPPINS George W. Tippins is Chairman of Tippins Incorporated, a
Chairman, privately owned company engaged primarily in the design,
Tippins Incorporated engineering and construction of rolling mills for the steel
Director since 1980 industry. Mr. Tippins is a member of the Technology and
Age: 69 Information Systems Committee.
</TABLE>
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(ITEM B ON PROXY CARD)
Ernst & Young LLP has served as independent auditors for the Company since
1980. The Board of Directors believes that Ernst & Young LLP is knowledgeable
about the Company's operations and accounting practices and is well qualified to
act in the capacity of independent auditors; therefore, it has selected that
firm as independent auditors for fiscal year 1995. The proposal to ratify the
selection of Ernst & Young LLP will be approved by the shareholders if it
receives the affirmative vote of a majority of the votes actually cast by
shareholders entitled to vote on the proposal. If your proxy card is
specifically marked as abstaining from voting on the proposal, your shares will
not be counted as having been voted for or against the proposal. If the
shareholders do not ratify the selection of Ernst & Young LLP, the appointment
of independent auditors will be reconsidered by the Board. It is expected that
representatives of Ernst & Young LLP will be present at the Annual Meeting and
will have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF
THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
OTHER BUSINESS TO COME BEFORE THE MEETING
In addition to the matters described above, there will be addresses by
Richard P. Simmons, Chairman of the Board of the Company, and by Arthur H.
Aronson, President and Chief Executive Officer of the Company, and a general
discussion period during which the shareholders will have an opportunity to ask
questions about the Company and its business.
The Company knows of no business which may be presented for consideration
at the Annual Meeting other than as indicated in the Notice of Annual Meeting.
If any other business should properly come before the meeting, the persons
designated as proxies in the proxy cards have discretionary authority to vote in
accordance with their best judgment.
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SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Company, as of March 1, 1995, no person or group
owned beneficially more than five percent of the outstanding Common Stock of the
Company except:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP CLASS
<S> <C> <C>
Mr. and Mrs. Richard P. Simmons 16,350,932(a)(b) 23.2%
1000 Six PPG Place
Pittsburgh, PA 15222
Robert P. Bozzone 5,798,924(a)(c) 8.2
1000 Six PPG Place
Pittsburgh, PA 15222
J.P. Morgan & Co., Incorporated 9,741,132(d) 13.8
60 Wall Street
New York, NY 10260
Pioneering Management Corporation 3,956,500(e) 5.6
60 State Street
Boston, MA 02109-1820
</TABLE>
(a) Includes shares held by the trustee under the savings part of the
Retirement Savings Plan (described on page 17) for the account of the named
person as of December 31, 1994.
(b) Mr. and Mrs. Simmons own 16,293,518 shares jointly. Mr. Simmons has the
sole power to direct the voting of the jointly-owned shares, and Mr. and
Mrs. Simmons share the power to direct the disposition of such shares. In
addition, Mr. Simmons owns 14,000 shares; Mrs. Simmons disclaims any
beneficial ownership of such shares. Mrs. Simmons also owns 15,000 shares;
Mr. Simmons disclaims any beneficial ownership of such shares. Does not
include 245,000 shares owned by the R.P. Simmons Family Foundation. Mr. and
Mrs. Simmons disclaim any beneficial ownership of such shares.
(c) Does not include 240,000 shares owned by Mrs. Robert P. Bozzone and 346,700
shares owned by the Bozzone Family Foundation. Mr. Bozzone disclaims any
beneficial ownership of such shares.
(d) J.P. Morgan & Co., Incorporated has filed an amended Schedule 13G under the
Securities Exchange Act of 1934, as amended, dated December 30, 1994,
stating that as of that date it held sole voting power with respect to
6,091,786 shares of Common Stock, shared voting power with respect to
104,250 shares of Common Stock, sole dispositive power with respect to
9,486,482 shares of Common Stock and shared dispositive power with respect
to 250,150 shares of Common Stock.
(e) Pioneering Management Corporation has advised the Company that, as of March
7, 1995, it held sole voting power and shared dispositive power with
respect to 3,956,500 shares of Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of Common Stock of the
Company reported to the Company as of March 1, 1995, as being beneficially owned
by each nominee for director, each continuing director, each executive officer
listed in the Summary Compensation Table on page 15, and all of such persons and
the other executive officers of the Company as a group:
11
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OWNERSHIP(1) CLASS
<S> <C> <C>
Arthur H. Aronson 83,661(2)(3) *
Robert P. Bozzone 5,798,924(4) 8.2%
Paul S. Brentlinger 5,707(5) *
C. Fred Fetterolf 2,329(6) *
Thomas Marshall 7,174 *
W. Craig McClelland 3,707(7) *
James L. Murdy 5,255(3)(8) *
Richard K. Pitler 3,707(7) *
Charles J. Queenan, Jr. 724,557(7)(9) 1.0%
James E. Rohr 3,320 *
Robert W. Rutherford 42,508(3)(7)(10) *
Richard P. Simmons 16,335,932(11) 23.1%
George W. Tippins 30,707(7) *
Harry R. Wagner 53,373(3)(12) *
Steven C. Wheelwright 3,207(7) *
All directors and executive 23,391,314(3)(7)(13) 33.0%
officers as a group
(23 persons)
</TABLE>
*Less than one percent of the outstanding shares.
(1) Each person has sole voting and investment power with respect to the shares
listed, unless otherwise indicated.
(2) Does not include 13,500 shares owned by Mrs. Arthur H. Aronson. Mr. Aronson
disclaims any beneficial ownership of such shares. Includes 51,000 shares
which may be acquired within 60 days pursuant to a stock option plan.
(3) Includes shares held by the trustee under the savings part of the
Retirement Savings Plan (described on page 17) for the account of the named
person as of December 31, 1994.
(4) See notes (a) and (c) on page 11.
(5) Does not include 200 shares owned by Mrs. Paul S. Brentlinger. Mr.
Brentlinger disclaims any beneficial ownership of such shares.
(6) Does not include 1,600 shares owned by the Fetterolf Family Foundation. Mr.
Fetterolf disclaims any beneficial ownership of such shares.
(7) Includes shares held jointly.
(8) Does not include shares to be purchased or granted to Mr. Murdy under the
Allegheny Ludlum Corporation Stock Acquisition and Retention Plan ("SARP").
In November 1994 and February 1995, Mr. Murdy made irrevocable elections
under the SARP to purchase shares of Common Stock with a value as of the
applicable purchase dates (as defined in the SARP) of $215,000 and
$238,000, respectively. Mr. Murdy's elections will become effective at the
end of the first window period (as defined in the SARP) that occurs six
months after the date of such elections. One restricted share of Common
Stock will be granted for each two shares of Common Stock purchased by Mr.
Murdy under the SARP.
12
<PAGE>
(9) Does not include 54,100 shares owned by Mrs. Charles J. Queenan, Jr. Mr.
Queenan disclaims any beneficial ownership of such shares.
(10) Includes 28,926 shares which may be acquired within 60 days pursuant to a
stock option plan. Does not include shares to be purchased or granted to
Mr. Rutherford under the SARP. In January 1995, Mr. Rutherford made an
irrevocable election under the SARP to purchase shares of Common Stock with
a value as of the applicable purchase date (as defined in the Plan) of
$175,000. Mr. Rutherford's election will become effective at the end of the
first window period (as defined in the SARP) that occurs six months after
the date of such election. One restricted share of Common Stock will be
granted for each two shares of Common Stock purchased by Mr. Rutherford
under the SARP.
(11) See notes (a) and (b) on page 11.
(12) Includes 20,400 shares which may be acquired within 60 days pursuant to a
stock option plan.
(13) Includes 232,100 shares which may be acquired within 60 days pursuant to a
stock option plan. Does not include 330,641 shares with respect to which
beneficial ownership is disclaimed or shares that executive officers have
irrevocably elected to purchase under the SARP or shares to be granted to
executive officers under the SARP as a result of such purchases or as a
result of irrevocable designations of stock under the SARP. Carl R.
Moulton, Group Vice President, became a co-trustee of a family trust which
held shares of Company Common Stock, following the death of his father in
May 1994. The trust's initial report of its holdings of the Company shares
under the federal securities laws was filed in December 1994.
13
<PAGE>
CUMULATIVE TOTAL SHAREHOLDER RETURN
The first graph set forth below shows the cumulative shareholder return
(i.e., price change plus reinvestment of dividends) on the Company's Common
Stock during the five year period ended December 31, 1994/1/ as compared to the
S&P 500 Index and the S&P Steel Index. In addition to the five year performance
graph, which is required by the rules of the Securities and Exchange Commission,
a similar presentation for the period commencing on the date of the Company's
initial public offering and ending December 31, 1994 has been included to
provide additional perspective on the Company's Common Stock performance. The
two graphs assume that $100 was invested on January 1, 1990 and May 8, 1987,
respectively, for the periods ended December 31, 1994. In accordance with the
rules of the Securities and Exchange Commission, this presentation shall not be
incorporated by reference into any of the Company's Registration Statements
under the Securities Act of 1933.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG ALLEGHENY LUDLUM CORP., S&P 500 INDEX AND S&P STEEL INDEX
<CAPTION>
Measurement period ALLEGHENY S&P 500 S&P STEEL
(Fiscal year Covered) LUDLUM CORP. INDEX INDEX
--------------------- ------------ ------- ---------
<S> <C> <C> <C>
Measurement PT -
12/31/89 $100 $100 $100
FYE 12/31/90 $ 90.38 $ 96.90 $ 84.15
FYE 12/31/91 $110.00 $126.42 $103.41
FYE 12/31/92 $142.12 $136.05 $135.29
FYE 12/31/93 $199.59 $149.76 $178.02
FYE 12/31/94 $160.67 $151.74 $173.14
</TABLE>
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG ALLEGHENY LUDLUM CORP., S&P 500 INDEX AND S&P STEEL INDEX
<CAPTION>
Measurement period ALLEGHENY S&P 500 S&P STEEL
(Fiscal year Covered) LUDLUM CORP. INDEX INDEX
--------------------- ------------ ------- ---------
<S> <C> <C> <C>
Measurement PT -
5/8/87 $100 $100 $100
FYE 12/31/87 $ 91.12 $ 86.20 $103.41
FYE 12/31/88 $125.90 $100.52 $126.21
FYE 12/31/89 $174.97 $132.37 $122.08
FYE 12/31/90 $158.15 $128.26 $102.73
FYE 12/31/91 $192.47 $167.33 $126.24
FYE 12/31/92 $248.67 $180.08 $165.16
FYE 12/31/93 $349.24 $198.23 $217.32
FYE 12/31/94 $281.13 $200.85 $211.37
</TABLE>
/1/ As noted on page 4, the Company's fiscal year ends on the Sunday nearest to
December 31 in each year.
14
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following Summary Compensation Table shows, for fiscal years 1992, 1993
and 1994, the compensation paid to Messrs. Aronson and Bozzone, each of whom
served as Chief Executive Officer of the Company for part of 1994, and to each
of the other four most highly compensated executive officers who were serving as
executive officers as of December 31, 1994 (the "named executive officers").
Employees who became shareholders of the Company before the Company became
publicly-held, including Messrs. Simmons and Bozzone and others, have not
participated in the Company's long-term incentive programs. The participation of
Messrs. Simmons and Bozzone in the Company's annual incentive compensation
programs terminated when they stepped down as Chief Executive Officer of the
Company in May 1990 and August 1994, respectively.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ------------------------ --------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPEN- AWARD OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITIONS YEAR ($)(4) ($)(5) SATION ($) ($)(6) (NUMBER)(7) ($)(8) ($)(9)
------------------- ---- ------ ------ ---------- ------- ---------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Arthur H. Aronson 1994 $ 260,417 $ 0 $ 5,676 $ 125,356 0 shs. $ 205,624 $ 248,492
President and Chief 1993 250,000 193,634 36,000 151,625 121,310
Executive Officer (1)(2) 1992 235,417 177,217 0 126,125 129,466
Richard P. Simmons 1994 $ 250,002 * $ 10,272 * * * $ 44,924
Chairman of the 1993 300,000 * * * 244,822
Board (2) 1992 300,000 * * * 219,927
James L. Murdy 1994 $ 219,889 $ 0 $ 10,937 0 0 shs. $ 166,086 $ 122,865
Senior Vice President- 1993 215,050 148,587 28,000 164,188 72,123
Financial and Chief 1992 209,287 135,776 0 126,125 79,185
Financial Officer
Robert W. Rutherford 1994 $ 158,038 $ 0 $ 12,968 0 1,867 shs. $ 150,275 $ 81,532
Senior Vice President- 1993 152,000 82,618 25,200 151,625 42,890
Commercial 1992 147,625 74,606 0 126,125 47,973
Harry R. Wagner 1994 $ 144,238 $ 0 $ 3,370 $ 67,788 1,867 shs. $ 150,275 $ 56,521
Senior Vice President- 1993 134,400 80,390 25,200 164,188 28,501
Production 1992 130,800 74,566 0 140,000 30,060
Robert P. Bozzone 1994 $ 150,002 $ 0 $ 14,302 * * * $ 256,476
President and Chief 1993 360,000 472,969 * * 306,702
Executive Officer (2)(3) 1992 310,000 372,875 * * 157,949
</TABLE>
*The named executive officer was not eligible to participate in this plan or
program.
(1) Mr. Aronson was elected President and Chief Executive Officer of the
Company effective August 1, 1994.
(2) For a description of the Company's employment agreements with Messrs.
Aronson, Simmons and Bozzone, see page 22.
(3) Mr. Bozzone retired as President and Chief Executive Officer of the Company
effective August 1, 1994.
(4) Includes cash compensation deferred pursuant to the savings part of the
Company's Retirement Savings Plan, described in note (9) below. 1994
amounts reflect reductions in salary during the 10-week labor strike
15
<PAGE>
called by the United Steelworkers of America on April 1, 1994. For the
months of April and May, 1994, Messrs. Simmons and Bozzone each received a
base salary of $1 per month and the base salary of each of the other
executive officers was reduced 25%.
(5) For fiscal years 1992 and 1993, includes payments under the Company's
Performance Management System Plan and under the salaried employees'
profit-sharing plan, described in the "Board Compensation Committee Report
on Executive Compensation." In fiscal year 1994, as a result of the 10-week
labor strike called by the United Steelworkers of America on April 1, 1994,
the Company did not achieve the threshold level of earnings under these
plans and, as a result, no awards were paid under either of the plans.
(6) Represents the closing market price on the New York Stock Exchange, on the
award date, of a number of shares of Common Stock equal to the number of
shares of restricted stock awarded to the named executive under the
Allegheny Ludlum Corporation Stock Acquisition and Retention Plan, which
was approved by the Company's shareholders at the 1994 Annual Meeting. The
market price does not take into account the diminution in value
attributable to the restrictions applicable to the shares awarded under the
Plan. See page 26 for a summary description of this Plan.In general, the
restricted shares will vest only if the participant retains the shares that
are purchased and/or designated by the participant as subject to the Plan
for a period of five years. Dividends are paid on all shares of restricted
stock at the same rate as on non-restricted shares. The number of shares of
Common Stock awarded to each executive in fiscal year 1994 under the Plan
and the closing market price of that number of shares on the New York Stock
Exchange on December 30, 1994 were: Mr. Aronson, 5,934 shares, $111,263;
and Mr. Wagner, 3,228 shares, $60,525. See notes (8) and (10) on pages 12
and 13, respectively.
(7) Reflects options awarded under the Company's 1987 Stock Option Incentive
Plan. The amount represents the number of shares which the executive
officer could purchase by exercising the options. See "Stock Options."
(8) Payments in fiscal year 1994 reflect the achievement of 97% of the
performance objectives for the 1991-1993 award period under the Company's
Performance Share Plan for Key Employees. Payment of the awards to the 43
participants over a three-year period began in 1994. Payments in fiscal
years 1993 and 1992 reflected the achievement of 120% of the performance
objectives for the 1988-1990 award period under the Performance Share Plan.
Payment of the awards to the 47 participants over a three-year period began
in February 1991. The last two annual payments of the 1988-90 award were
made in January 1992 and January 1993, respectively. In each case, the
amount represents the cash and the market value of the shares of Common
Stock distributed under the Plan on the relevant valuation dates.
(9) These amounts include the annual accruals made by the Company with respect
to possible future payments to the named executive officers under the
Company's Supplemental Pension Plan described at page 22. For fiscal year
1994, the amounts accrued were as follows: Mr. Aronson, $198,449; Mr.
Simmons, $0; Mr. Murdy, $82,483; Mr. Rutherford, $49,418; Mr. Wagner,
$26,641; and Mr. Bozzone, $163,349. Also included are the Company's
contributions to the accounts of the named executive officers pursuant to
the retirement portion of the Company's Retirement Savings Plan which in
fiscal year 1994 were $7,803 for Mr. Bozzone and $8,020 for the account of
each of the other named executive officers, and contributions by the
Company to the accounts of the named executive officers pursuant to the
savings part of the Company's Retirement Savings Plan which in fiscal year
1994 were as follows: Mr. Aronson, $4,313; Mr. Simmons, $3,750; Mr. Murdy,
$4,620; Mr. Rutherford, $4,494; Mr. Wagner, $4,495; and Mr. Bozzone,
$2,250. The amounts also include contributions by the Company to the plan
accounts of the named executive officers under the Company's Benefit
Restoration Plan which, in fiscal year 1994, were as follows: Mr. Aronson,
$16,098; Mr. Simmons, $28,658; Mr. Murdy, $10,632; Mr. Rutherford, $4,701;
Mr. Wagner, $2,954; and
16
<PAGE>
Mr. Bozzone, $25,780. For fiscal year 1994, also included are the
Company-paid premiums for "split dollar" term life insurance and the dollar
value of the benefit, if any, to the named persons, of the premiums paid by
the Company, as follows: Mr. Aronson, $2,762; Mr. Simmons, $4,496; Mr.
Murdy, $1,885; Mr. Rutherford, $1,124; Mr. Wagner, $636; and Mr. Bozzone,
$3,460. For fiscal 1994, the amounts also include the first of three annual
installments of cash awards made by the Personnel and Compensation
Committee during the first quarter of 1994 to a total of 43 management
personnel, including four of the named executive officers, in order to
recognize their contributions on behalf of the Company during 1991-1993, as
follows: Mr. Aronson, $18,850; Mr. Murdy, $15,225; Mr. Rutherford, $13,775;
and Mr. Wagner, $13,775. See page 27. Also included for Mr. Bozzone for
1994 are $41,666 in consulting fees paid pursuant to the consulting
agreement described on page 29 and $12,167 in director fees paid to Mr.
Bozzone since his retirement.
The Retirement Savings Plan is a qualified defined contribution plan within
the meaning of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Plan has two components: the retirement part and
the savings part. Employees eligible for the retirement part of the
Company's Retirement Savings Plan include salaried non-union employees. At
the end of 1994, a total of 1,788 employees participated in the retirement
part of the Plan. The savings part of the Retirement Savings Plan is
designed to encourage eligible employees to save for the future and
accumulate a fund to supplement retirement income through tax-deferred
contributions. All contributions by the Company or by participants are
subject to the applicable limits of the Code. The Company matches
participants' Basic Savings contributions on the terms set forth in the
Plan. Company contributions and earnings are invested only in a fund
invested solely in Common Stock of the Company, but may be transferred to
any other fund available under the Plan monthly following due notice. In
1994, a total of 1,530 employees participated in the savings part of the
Plan.
The Benefit Restoration Plan provides that the Company will supplement the
payments received by participants in the Company's Pension Plan for
Salaried Employees (see "Pension Plans" below) and the retirement and
savings parts of the Retirement Savings Plan by making payments to or
accruing benefits on behalf of such participants in amounts which are the
equivalent of the portion of the payments or benefits which cannot be paid
or accrued under such plans by reason of the limitations imposed by the
Code.
Compensation and benefits paid or furnished by the Company in the fiscal
years set forth in the above table to the executive officers, other than as set
forth in the table, were less than established reporting thresholds.
17
<PAGE>
STOCK OPTIONS
The following table sets forth information regarding the grant of stock
options during fiscal year 1994 under the Company's 1987 Stock Option Incentive
Plan (the "Option Incentive Plan") to each of the executive officers named in
the Summary Compensation Table and to all optionees as a group. No stock
appreciation rights were granted during fiscal 1994.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
----------------------------------------------------
%
NUMBER OF OF TOTAL POTENTIAL REALIZABLE
SECURITIES OPTIONS/ VALUE AT ASSUMED ANNUAL
UNDERLYING SARS RATES OF STOCK PRICE
OPTIONS/ GRANTED TO EXERCISE APPRECIATION FOR OPTION TERM(2)
SARS EMPLOYEES OR BASE --------------------------------
GRANTED IN FISCAL PRICE EXPIRATION 0% 5% 10%
NAME (NUMBER) YEAR ($/SHARE) DATE ($)(3) ($) ($)
---- ---------- ---------- --------- ---------- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
A. H. Aronson.............. 0 0% N/A N/A $0 $0 $0
R. P. Simmons.............. * 0 N/A N/A 0 0 0
J. L. Murdy................ 0 0 N/A N/A 0 0 0
R. W. Rutherford........... 1,867 5.6 $ 19.875 12/08/03 0 20,458 50,389
H. R. Wagner............... 1,867 5.6 19.875 12/08/03 0 20,458 50,389
R. P. Bozzone.............. * 0 N/A N/A 0 0 0
All Shareholders (4)....... N/A N/A N/A N/A N/A 773,921,076 1,906,226,317
All Optionees.............. 33,068 100% 19.875 12/08/03 0 362,346 892,485
As a % of all shareholders
gain....................... N/A N/A N/A N/A N/A 0.05% 0.05%
</TABLE>
* Employees who were shareholders of the Company before the Company became
publicly owned, including Messrs. Simmons and Bozzone and others, did not
participate in the Company's Option Incentive Plan.
(1) The 1994 awards were granted to reflect promotions or significant increases
in responsibilities. The exercise price of the options granted was the fair
market value of the Common Stock on the grant date. The options become
exercisable in one-half increments, on June 1, 1997 and June 1, 1998,
respectively. Options include the right to pay the exercise price in cash
or in previously acquired Common Stock, and the right to have shares
withheld by the Company to pay withholding tax obligations due in
conjunction with the exercise.
(2) These assumed "potential realizable values" are mathematically derived from
certain prescribed rates of stock price appreciation. The actual value of
these option grants is dependent on the future performance of the Common
Stock and overall stock market conditions. There is no assurance that the
values reflected in this table will be achieved. The Company did not use an
alternative formula for a grant date valuation, as it is not aware of any
formula which will determine with reasonable accuracy a present value based
on future unknown or volatile factors.
(3) No gain to the optionees is possible without stock price appreciation,
which will benefit all shareholders commensurately. Zero percent stock
price appreciation will result in zero dollars for the optionee.
(4) "All Shareholders" value is calculated from $19.875, the exercise price for
all options awarded in fiscal 1994, based on the number of outstanding
shares of Common Stock on March 1, 1995.
18
<PAGE>
The following table sets forth information regarding the exercise of stock
options during fiscal year 1994 and the unexercised options held as of the end
of the 1994 fiscal year by the executive officers named in the Summary
Compensation Table. No stock appreciation rights ("SARs") were exercised by any
of the named executive officers and none of the named executive officers held
any unexercised SARs at the end of the fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT FY-END IN-THE-MONEY OPTIONS/
ACQUIRED (NUMBER) SARS AT FY-END ($)(2)
ON EXERCISE VALUE REALIZED --------------------------- --------------------------
NAME (NUMBER) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Arthur H. Aronson 0 0 51,000 shs. 48,000 shs. $ 438,023 $ 95,250
Richard P. Simmons * * * * * *
James L. Murdy 45,666 shs. $ 519,146 0 37,334 0 74,089
Robert W. Rutherford 0 0 28,926 35,467 258,945 66,675
Harry R. Wagner 0 0 20,400 35,467 157,965 66,675
Robert P. Bozzone * * * * * *
</TABLE>
* Employees who were shareholders of the Company before the Company became
publicly-owned, including Messrs. Simmons and Bozzone and others, did not
participate in the Company's Option Incentive Plan.
(1) The amount shown as "value realized" is calculated by subtracting the
exercise price paid by an optionee upon exercise of an option from the mean
between the high and low sales prices of a share of Allegheny Ludlum
Corporation Common Stock on the New York Stock Exchange on the date the
option was exercised.
(2) The "value of unexercised in-the-money options" is calculated by
subtracting the exercise price from $18.6875, which was the mean between
the high and low sales prices of a share of Allegheny Ludlum Corporation
Common Stock on the New York Stock Exchange on December 30, 1994, the last
trading day in the Company's 1994 fiscal year.
19
<PAGE>
PERFORMANCE SHARE PLAN
Stock and cash awards granted to participants in the Company's Performance
Share Plan are contingent on the achievement by the Company of specified
performance objectives during a specified award period, and are paid in annual
installments after the end of the award period. The following table sets forth
information about awards made under the plan during fiscal year 1994.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF NON-STOCK PRICE-BASED PLANS
SHARES, -----------------------------------------------
UNITS
OR OTHER PERFORMANCE OR OTHER
RIGHTS PERIOD UNTIL MATURATION OR THRESHOLD TARGET ($ OR MAXIMUM
NAME (NUMBER) PAYOUT ($ OR NUMBER) NUMBER) ($ OR NUMBER)
--------------------- ----------- -------------------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Arthur H. Aronson 5,200 units 1995-1996 award period; 10,400 shs., 20,800 shs., 24,960 shs.,
payable 1997-1999 $130,000 $260,000 $312,000
Richard P. Simmons * * * * *
James L. Murdy 4,200 units 1995-1996 award period, 8,400 shs., 16,800 shs., 20,160 shs.,
payable 1997-1999 $105,000 $210,000 $252,000
Robert W. Rutherford 3,800 units 1995-1996 award period, 7,600 shs., 15,200 shs., 18,240 shs.,
payable 1997-1999 $95,000 $190,000 $228,000
Harry R. Wagner 3,800 units 1995-1996 award period, 7,600 shs., 15,200 shs., 18,240 shs.,
payable 1997-1999 $95,000 $190,000 $228,000
Robert P. Bozzone * * * * *
</TABLE>
* Employees who were shareholders of the Company before the Company became
publicly-owned, including Messrs. Simmons and Bozzone and others, did not
participate in the Company's Performance Share Plan.
The amounts included in the Estimated Future Payouts columns above
represent the potential payments to the named executive officers under the
Company's Performance Share Plan depending on the level of achievement (i.e.,
threshold, target or maximum) of the performance goals for the two-year award
period beginning in 1995. Participants will not receive any payment of stock or
cash under the Plan if the Company does not achieve the threshold level (80%) of
its performance objectives during the award period. A summary description of the
Plan is included on page 25 of this proxy statement.
In February 1994, the Board of Directors established a 1994-1996 award
period under the Performance Share Plan and the performance objectives to be
achieved during that award period, based on the Company's aggregate operating
income during the award period, were set. Subsequently, the Board of Directors
determined that the award for that award period no longer provided Plan
participants with the intended long-term incentive opportunity because of the
effect of the 10-week labor strike called by the United Steelworkers of America
on the Company's 1994 operations. Thus, in November 1994, the Board of Directors
established the 1995-1996 award period under the Performance Share Plan. The
award to each participant for that award period, which represented the same
number of units that had previously been awarded for the 1994-1996 award period,
replaced the award for the 1994-1996 award period. The performance objectives to
be achieved during the 1995-1996 award period, based on the achievement of
specified levels of operating income during the 1995-1996 award period, have
been set. The base value of each unit consists of $50 in cash and four shares of
Common Stock.
20
<PAGE>
PENSION PLANS
In 1988, the Company adopted the retirement part of the Retirement Savings
Plan (formerly known as the Retirement Security Program) referred to in note (9)
on page 17, and amended the Company's Pension Plan for Salaried Employees (the
"Pension Plan") to provide that no additional benefits would accrue thereunder
from and after December 31, 1988 except for those employees who were
grandfathered under the Pension Plan. Benefits accrued prior to January 1, 1989
will be paid at the time, in the form and in the amount determined under the
Pension Plan.
The following table shows the estimated annual benefits calculated on a
straight life annuity basis payable under the Pension Plan and the defined
benefit portion of the Benefit Restoration Plan described at note (9) on page 17
to participants in specified compensation and years of service classifications
upon attainment of age 65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE ANNUAL ELIGIBLE EARNINGS
FOR HIGHEST FIVE CONSECUTIVE YEARS
IN TEN-YEAR PERIOD PRECEDING ESTIMATED ANNUAL PENSION BENEFITS FOR
RETIREMENT REPRESENTATIVE YEARS OF CONTINUOUS SERVICE
---------------------------------- ----------------------------------------------------------------------
15 20 25 30 35 40
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 48,000 $ 64,000 $ 80,000 $ 96,000 $ 112,000 $ 128,000
300,000 72,000 96,000 120,000 144,000 168,000 192,000
400,000 96,000 128,000 160,000 192,000 224,000 256,000
500,000 120,000 160,000 200,000 240,000 280,000 320,000
600,000 144,000 192,000 240,000 288,000 336,000 384,000
800,000 192,000 256,000 320,000 384,000 448,000 512,000
1,000,000 240,000 320,000 400,000 480,000 560,000 640,000
</TABLE>
The formula used to determine retirement benefits under the Pension Plan
considers the participant's average annual eligible earnings in the highest five
consecutive years of the last ten years prior to retirement and the number of
the participant's years of service. Eligible earnings include base salary,
including tax-deferred contributions by the employee under the Company's savings
plans, and awards when received under the Performance Management System Plan.
Eligible earnings for the purposes of the Pension Plan and the defined benefit
portion of the Benefit Restoration Plan for the 1994 calendar year for the named
executives who are participants under the Pension Plan are as follows: Mr.
Aronson, $289,683; Mr. Simmons, $300,000; Mr. Murdy, $244,074; Mr. Rutherford,
$178,145; Mr. Wagner, $163,613; and Mr. Bozzone, $313,848.
In certain circumstances, pension benefits are subject to integration with
Social Security and reduction for other payments made to the participant or his
or her spouse. The benefits payable from a qualified defined benefit plan are
also limited by Section 415 of the Code to an annual benefit of $120,000 payable
at age 65 with actuarial reduction for earlier commencement. The amounts shown
in the table indicate the aggregate of payments under the Pension Plan and the
defined benefit portion of the Benefit Restoration Plan described at note (9) on
page 17.
As of December 31, 1994, Messrs. Aronson, Simmons, Murdy, Rutherford,
Wagner, and Bozzone had .08, 41, 0.58, 31, 28 and 39 credited years of service,
respectively, for purposes of the Pension Plan. For vesting purposes, Messrs.
Aronson and Murdy each had 6 years of service and are now fully vested in the
Pension Plan. Mr. Simmons' credited years of service has been calculated as
described in the discussion of his employment agreement at page 22.
21
<PAGE>
In addition, the Company has established a Supplemental Pension Plan which
provides certain key employees of the Company (or their beneficiaries in the
event of death) with monthly payments in the event of retirement, disability or
death, equal to 50 percent of monthly base salary as of the date of retirement,
disability or death. Monthly retirement benefits start two months following the
later of (i) age 62, if actual retirement occurs prior to age 62 but after age
58 with the approval of the Board of Directors, or (ii) the date actual
retirement occurs, and continue for a 118-month period. The Plan describes the
events which will terminate an employee's participation in the Plan. As
previously noted, Messrs. Simmons and Bozzone retired as employees of the
Company in 1994. Under the Plan, monthly payments to Mr. Simmons of $16,667
began in March 1995 and monthly payments to Mr. Bozzone of $15,000 will begin in
October 1995. Since the payment of benefits to the other named executive
officers is contingent on future events, the amount to be paid in the future
with respect to such officers cannot be determined at this time.
EMPLOYMENT AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
Mr. Aronson is employed pursuant to an Employment Agreement with the
Company dated March 1, 1994 with a term that initially will expire on February
28, 1997 but which will automatically be extended for a period of one year
thereafter on March 1 of each year commencing March 1, 1997 unless terminated by
written notice by either party. The agreement provides for a base salary of at
least $250,000 annually exclusive of any compensation he may receive pursuant to
any other plan of the Company or which may be otherwise authorized by the Board
of Directors. The agreement also provides for his participation in any incentive
plan of the Company and in the various benefit plans maintained by the Company,
including its various pension, supplemental pension, disability, medical,
insurance, sick leave and other similar benefit and retirement arrangements.
Mr. Simmons retired as an employee of the Company effective December 31,
1994. In accepting his retirement, the Board of Directors affirmed his election
as Chairman of the Board of Directors of the Company and Chairman of the
Executive Committee. Prior to his retirement, Mr. Simmons was employed pursuant
to an Employment Agreement with the Company dated January 1, 1981, as amended.
The agreement provided for an annual salary of not less than $240,000, exclusive
of any other compensation he might receive pursuant to any bonus, profit sharing
or additional compensation plan of the Company or which might be otherwise
authorized by the Board of Directors. The agreement provides that Mr. Simmons is
entitled to the benefits provided by the Supplemental Pension Plan and that his
base salary for purposes of the Supplemental Pension Plan is an amount not less
than $400,000 per year. The agreement also provides that he is entitled to a
supplemental pension, payable from the general assets of the Company, based on
15 years of service in addition to those he has served as a Company employee,
and that for purposes of the Benefit Restoration Plan his annual benefit under
the Pension Plan will be calculated based on such 15 years of additional
service.
Mr. Bozzone retired as the President and Chief Executive Officer of the
Company effective August 1, 1994. In accepting his retirement, the Board of
Directors elected Mr. Bozzone to serve as the Vice Chairman of the Board of
Directors. Prior to his retirement, Mr. Bozzone was employed pursuant to an
Employment Agreement with the Company dated July 13, 1990 which expired on the
date of the Annual Meeting of Shareholders in 1994 and provided for a base
salary of at least $310,000 annually exclusive of any other compensation he
might receive pursuant to any other plan of the Company or which might be
otherwise authorized by the Board of Directors. The agreement also provides for
his participation in any bonus plan of the Company and in the various benefit
plans maintained by the Company, including its various pension, supplemental
pension, disability, medical, insurance, sick leave and other similar benefit
and retirement arrangements. At his retirement, Mr. Bozzone entered into an
agreement with the Company which provides for Mr. Bozzone to provide consulting
services to the Company, as described at page 29 of this proxy statement.
22
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BOARD COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The principal duties of the Personnel and Compensation Committee of the
Board of Directors (the "Committee") are described on pages 5 and 6. These
duties include the making of recommendations to the Board concerning the
compensation and benefits of executives who are also directors of the Company
(currently, Messrs. Aronson and Murdy). The Committee also consults periodically
with the Company's Chief Executive Officer concerning the compensation and
benefits of other executive officers of the Company.
The following is the Committee's report to the shareholders with respect to
the Company's executive compensation policies and with respect to the
compensation of the Chief Executive Officer for fiscal year 1994. In accordance
with the rules of the Securities and Exchange Commission, this report shall not
be incorporated by reference into any of the Company's Registration Statements
under the Securities Act of 1933.
EXECUTIVE OFFICERS' COMPENSATION POLICY
The Company's executive compensation program is strongly oriented toward
incentives designed to achieve specific corporate performance objectives so that
the interests of management will be further aligned with the interests of the
Company's shareholders. The twin goals of the program are to reward the
Company's key employees appropriately for their contributions in years in which
the Company has had significant success, and conversely to impact their
compensation negatively when the Company has been less successful. A meaningful
and substantial portion of an executive's total cash compensation is at risk due
to the variable nature of the incentives.
The Committee shares management's view that the Company's executive
compensation program is an important component in the implementation of the
Company's overall business plans and management philosophy. The Company believes
that its annual and long-term strategic plans should reflect difficult-to-
achieve standards and objectives and that the performance objectives of its key
employees, including its executive officers, should be linked directly to the
Company's plans. The Company also believes that effective management requires
the timely measurement of performance.
It is not anticipated that any Allegheny Ludlum executive officer will
receive non-performance based compensation in excess of $1,000,000 during 1994
or in the near future. Thus, during 1994 the Committee did not take any action
with respect to Section 162(m) of the Internal Revenue Code. The Committee will
continue to monitor this issue and will take appropriate action if, in the
judgment of the Committee, it is determined to be warranted in the future.
BASE SALARY
The base salary component of the Company's compensation program for all
salaried employees, including executive officers, represents the basic rate of
pay provided to an employee for carrying out the overall responsibilities of the
job. Base salary is determined on the basis of performance, experience and other
factors as may be appropriately considered. The base salary for each executive
officer does not exceed the established salary range which is intended to
approximate the ranges of base pay for positions of comparable responsibility in
other companies in the steel industry about which appropriate compensation
information is available to the Company, including certain of the companies in
the S&P Steel Index. The minimum base salaries of the executive officers that
have been specified in the respective employment agreements described at page 22
above reflect this policy. The Company believes that the base salaries of its
executive officers have generally been at or below the median of the base
salaries for executive officers of those steel companies.
The base salary of each executive officer is reviewed on a periodic basis.
Merit increases reflect the officer's individual performance and are based on an
evaluation of (i) the officer's performance in relation to standards
23
<PAGE>
which describe, in measurable terms, the results needed to satisfy the general
responsibilities of the job and (ii) personal traits and characteristics. The
merit program is designed to reward better performers with larger percentage
increases as well as to recognize employment market conditions. Other increases
in base salary are made to reflect changes in the officer's responsibilities.
On April 1, 1994, the United Steelworkers of America called a strike at the
expiration of its contract with the Company, which continued for ten weeks. In
the Summary Compensation Table on page 15, 1994 base salary reflects reductions
in base salary during the labor strike. For the months of April and May 1994,
Messrs. Simmons and Bozzone each received a base salary of $1 per month and the
base salary of each of the other executive officers was reduced 25%.
INCENTIVE PROGRAMS
It is intended that the incentive payments made to the Company's executive
officers and other key employees, in the form of cash and/or securities, may
vary significantly from year to year, depending upon the results that have been
achieved for the benefit of the Company's shareholders. Short-term incentive
payments represent specific payments for the achievement of measurable
short-term objectives and recognize both the overall performance of the Company
and the performance of individual officers in a given year. Long-term incentives
are designed to reward the accomplishment of specified long-term objectives and
further align management's goals with those of the shareholders through Company
stock ownership.
Profit-Sharing Plan. Incentives to maximize the annual profits of the
Company are provided by the Profit Sharing Plan for all salaried and hourly
employees, including executive officers. Under this plan, bonuses are paid from
a profit-sharing pool which is based on specified percentages of the Company's
pre-tax income in excess of $60 million. Each year, each participant receives a
cash bonus equal to a percentage of his or her participating wages as defined in
the plan. In the 1994 fiscal year, as a result of a 10-week strike called by the
United Steelworkers of America, the Company did not meet the targeted pre-tax
income objective and no cash bonuses were paid under this plan.
Performance Management System Plan. The Company's Performance Management
System Plan is designed to provide additional incentives to executive officers
and other key employees to maximize the Company's annual performance. Funds are
accrued for this plan if the adjusted earnings of the Company are greater than
$10 million. In general, the principal adjustments to earnings include the
adding back of accruals to the Performance Management System Plan, taxes on
income and interest expense.
The plan is administered according to the Company's Performance Management
System, which provides a corporate-wide system for planning and measuring the
performance of all participating employees, including Messrs. Aronson, Murdy,
Rutherford and Wagner./1/ (Approximately 100 employees were eligible to
participate in the plan in 1994.) Under this system, incentive compensation
awards are to be based on the achievement of specific, measurable objectives.
Objectives are to be linked specifically and directly to operating plans and
budgets.
Guideline incentives are established under the plan to reflect the size of
the award that can be expected when performance meets the objectives. Guideline
incentives have been established for each position included in the plan and are
expressed as a percentage of salary. Incentive opportunities are designed to be
large enough to provide a meaningful award. Because executive officers have a
greater impact on performance, they have a greater incentive opportunity as a
percentage of salary. All participants in the plan can earn up to twice the
guideline amount, depending upon corporate and individual performance.
---------
/1/The participation of Messrs. Simmons and Bozzone in the Company's
annual incentive compensation programs terminated when they stepped down
as Chief Executive Officer of the Company in May 1990 and August 1994,
respectively.
24
<PAGE>
Each year, performance objectives are set under the Performance Management
System Plan for each eligible employee in the areas of operating profit, return
on investment or working capital, and individual performance. Other financial
measurement objectives, such as reductions in inventory, inventory turns or
delivery performance, may also be included when determined to be appropriate.
Individual performance objectives are tailored to the individual position.
Operating profit, return on investment or working capital, and other financial
measurement objectives are set at the corporate level. The Committee shares
management's view that every effort should be made to formulate corporate as
well as individual performance objectives in quantitative terms to provide a
basis for more accurate performance evaluation.
The weight given to each performance goal varies depending on the nature
and level of the position and the strategic importance of the objective. The
relative weights are intended to identify the priority given to any given
objective. To emphasize the direction of the Company's strategic plans, 75
percent of the weight given to the performance goals is given to current overall
corporate financial objectives, while 25 percent of the weight is given to
measurable individual performance objectives.
The actual amount of an award under the Performance Management System Plan
is determined through a quantitative assessment of the employee's performance as
measured against the specific objectives for the employee's position. The
Committee can modify individual awards to recognize outstanding performance even
where individual objectives were not met due to changing business priorities.
The Committee can also modify awards in instances where a participant performs
at less than satisfactory levels even though the individual may have achieved
the pre-determined objectives.
At the beginning of the 1994 plan year, it was determined that incentives
would not be awarded under the Performance Management System Plan if the
threshold level of Company earnings established for 1994 was not met. As
previously noted, the strike called by the United Steelworkers of America on
April 1, 1994 continued for ten weeks. The strike had a significant adverse
impact on the Company's sales and earnings and caused the first quarterly
operating loss in its history in the second quarter of 1994. While the Company's
level of operations continued to improve throughout the second half of 1994, and
the Company's fourth quarter shipments and sales were at record levels compared
to historical fourth quarters, the Company did not achieve the threshold level
of earnings established for 1994 under the Performance Management System Plan.
As a result, and notwithstanding the strong individual performances of the
Company's management team, no awards were paid under the plan.
Long-Term Incentives. Awards under the Company's Performance Share Plan for
Key Employees (the "Performance Share Plan"), stock grants under the 1987 Stock
Option Incentive Plan (the "Option Incentive Plan") and participation in the
Stock Acquisition and Retention Plan (the "SARP") are designed to provide
additional incentives to achieve long-term corporate objectives and to further
align management's goals with those of the shareholders. Employees who were
shareholders of the Company before it became publicly owned (including Messrs.
Simmons and Bozzone and others) have not been participants in these plans, in
view of their existing substantial interest in maximizing the value of the
Company's Common Stock.
Under the Performance Share Plan, base value award amounts for each
executive officer and other key employees are established at the beginning of
each award period. For example, in November 1994, the Board of Directors
established fiscal years 1995-1996 as an award period. The Committee granted
awards to key employee participants in the plan, which established as the
performance objective for the 1995-1996 award period a specified amount of
operating income to be achieved by the Company over the two-year award period.
The base value of the award for each unit awarded, assuming targeted operating
income is achieved, is $50 and four shares of Company Common Stock. The amount
of the award generally depends on the executive's salary grade at the beginning
of the award period, which is based on the degree of responsibility associated
with the executive's position in the Company. The amount of the award for each
salary grade was established in 1987, upon the
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<PAGE>
adoption of the Performance Share Plan. After the end of the award period, the
Committee will determine the actual awards, based on the extent to which the
targeted income level was achieved. Participants will not receive any payment of
stock or cash under the plan if the Company does not achieve the threshold level
(80%) of its performance objectives during the award period. Actual award
amounts will be paid in three annual payments beginning in the year after the
end of the award period.
Awards under the Performance Share Plan, which are to be earned and paid
out over a number of years, are designed to give participants an ongoing
incentive to achieve long-term corporate objectives and to continue the
alignment of the interests of participants with the interests of Company
shareholders in enhancing the value of Company Common Stock, even after the
award has been earned. The multi-year award and payout periods are also designed
to assist in the retention of executive officers and other key employees, since
unpaid installments are forfeited if a participant's employment with the Company
terminates, unless the participant dies, is disabled, or retires with the
consent of the Chief Executive Officer.
Awards under the Option Incentive Plan are also designed to promote the
identity of the long-term interests between Company executives and its
shareholders and assist in the retention of executives. Historically, the
Committee has granted options to key employee participants in the Option
Incentive Plan, including executive officers, at three-year intervals. Options
granted at the three-year intervals have been made exercisable in three equal
annual installments beginning after the third anniversary date of the grant. The
last regular grant of options was made in 1993. The first one-third of these
options will become exercisable on June 1, 1996.
The amount of an option award generally depends on the executive's salary
grade, which is based on the degree of responsibility associated with the
executive's position. The amount of the award for each salary grade was
determined in 1987, upon the adoption of the Option Incentive Plan. From time to
time, interim awards have been made in the case of a new employee, promotion or
a significant increase in responsibilities. The number and value of options held
by an executive officer are generally not considered when determining the amount
of options to be granted to that officer. The number of options held by an
executive officer may be considered in the case of a promotion or significant
increase in responsibilities after the regular grant of options that occurs at
three-year intervals; in that case, additional options may be added to the
options granted to the officer at the beginning of the three-year period to
reflect the change in the officer's salary grade or responsibilities.
The SARP was approved by the Company's Board of Directors and adopted by
the shareholders in 1994. This plan is based on the Company's belief that
ownership of Common Stock by officers contributes to strong management by
further aligning the interests of management with those of the shareholders of
the Company. The plan is intended to provide participating officers with an
opportunity to purchase additional shares of Common Stock from the Company and
an incentive to retain ownership of such purchased shares and/or other shares
already owned or otherwise acquired by them. It provides this incentive by
offering participants an opportunity to receive grants of restricted shares of
Common Stock which will vest only if the participants retain the shares that are
purchased under the plan and/or other shares already owned or otherwise acquired
by the participants that are designated by them as subject to the plan. In
general, the restricted shares will vest only if the participant retains the
shares that are purchased and/or designated by the participant as subject to the
plan for a period of five years. The vesting period is shortened in the event of
death, retirement or a "change of control" as defined in the plan. All executive
officers of the Company who are eligible to participate in the SARP, including
Messrs. Aronson, Murdy, Rutherford and Wagner, have elected to participate in
the Plan for the 1994 and/or 1995 plan years.
Shares issuable under the Performance Share Plan, the Option Incentive Plan
and the SARP are intended to grow in value over time. In the Committee's view,
the share awards under these plans represent compensation which is attributable
to services performed by the employee from the time the award is made and so
long as the employee continues to own the shares.
26
<PAGE>
The Committee also has the discretion to make supplemental awards in
situations in which it deems such awards to be appropriate. In February 1994,
the Committee made cash awards to a total of 43 management personnel to
recognize the contributions of such individuals on behalf of the Company during
1991-1993. The awards were made payable in installments during the first quarter
of 1994, 1995 and 1996.
COMPENSATION OF THE COMPANY'S CHIEF EXECUTIVE OFFICER
As previously noted, the base salaries of the Company's executive officers,
including the Chief Executive Officer, do not exceed established salary ranges
which are intended to reflect the ranges of base pay for positions of comparable
responsibility in other companies in the steel industry. The specific amount of
base salary is determined on the basis of performance, experience and other
factors as may be considered appropriate.
Mr. Aronson was elected President and Chief Executive Officer of the
Company effective August 1, 1994. In connection with his election, Mr. Aronson's
compensation was increased from $250,000 to $300,000. In discussing the proposed
increase, the Committee reviewed the Company's compensation policy regarding the
balance between base salary and bonus, the increases in Mr. Aronson's duties,
functions and responsibilities, and his performance as the Company's Executive
Vice President and Chief Operating Officer. It considered the data the Committee
had reviewed in 1993 when the base salary of Mr. Bozzone, who then served as the
Company's President and Chief Executive Officer, was increased from $310,000 to
$360,000. This review indicated that Mr. Aronson's proposed base salary, as
increased, would remain at or below the median of the base salaries of chief
executive officers of companies reviewed by the Committee. It was further noted
that, in accordance with the Company's compensation policy, a substantial
portion of Mr. Aronson's compensation would depend on the performance of the
Company.
Short-term incentive compensation is generally provided to the Company's
Chief Executive Officer through his participation in the Performance Management
System Plan which is described on page 24. As previously noted, in the 1994
fiscal year, as a result of the 10-week strike called by the United Steelworkers
on April 1, 1994, the Company did not achieve threshold earnings under the plan.
Since it was determined at the beginning of 1994 that incentive awards would not
be made if the threshold level of Company earnings established under the plan
for 1994 was not achieved, no awards were paid under the Performance Management
System Plan notwithstanding the strong individual performance of Mr. Aronson and
the other members of the Company's management team.
Long-term incentives are provided to Mr. Aronson through his participation
in the Performance Share Plan, the Option Incentive Plan and the SARP. The LTIP
amount in the Summary Compensation Table on page 15 represents the payment of
awards under the Performance Share Plan that Mr. Aronson earned prior to the
time he became the Company's Chief Executive Officer. In November 1994, awards
were made under the Performance Share Plan to 43 managers of the Company,
including Mr. Aronson, for the 1995-1996 award period which replaced the award
for the 1994-1996 award period. The amount of the award, in the case of Mr.
Aronson, was based on his position as the Company's Executive Vice President and
Chief Operating Officer. See "Performance Share Plan" on page 20 for additional
information about awards for the 1995-1996 award period.
No awards were made to Mr. Aronson under the Option Incentive Plan during
1994.
In 1994, Mr. Aronson elected to designate 11,868 shares of Common Stock as
subject to the SARP. These shares had a market value, at the date of his
election, that approximated his base salary as of the beginning of 1994. As a
result of his election, he received an award of 5,934 restricted shares under
the SARP. As previously noted, the restricted shares will vest five years after
the date of grant on the terms and conditions set forth in the plan. In general,
Mr. Aronson must continue to hold the shares he designated as subject to the
SARP for this five year period. If he does not, the restricted shares he
received under the plan will be forfeited.
27
<PAGE>
Early in 1994, Mr. Bozzone announced his intention to retire from his
positions as President and Chief Executive Officer of the Company in 1994. No
change was made in the amount of Mr. Bozzone's annual base salary, which had
been increased to $360,000 in the 1993 fiscal year. As previously noted, the
strike by members of the United Steelworkers of America which began on April 1,
1994 continued for ten weeks. For the months of April and May 1994, Mr. Bozzone
elected to receive a base salary of $1 per month.
Prior to his retirement, incentive compensation was provided to Mr. Bozzone
principally through his participation in the Performance Management System Plan
described on page 24. As previously noted, due to the strike, no awards were
paid under the plan for the 1994 fiscal year notwithstanding Mr. Bozzone's
strong individual performance during 1994.
Mr. Bozzone became a shareholder of the Company before the Company became
publicly owned and did not participate in the Company's Performance Share Plan,
Option Incentive Plan or Stock Acquisition and Retention Plan in view of his
already existing substantial interest in maximizing the value of the Company's
Common Stock.
The foregoing report has been furnished by the members of the Personnel and
Compensation Committee:
<TABLE>
<S> <C>
Charles J. Queenan, Jr. C. Fred Fetterolf
Thomas Marshall W. Craig McClelland
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Personnel and Compensation Committee during fiscal year
1994 was an officer or employee of the Company. The Company retained the law
firm of which Mr. Queenan is a member to perform services for the Company during
fiscal years 1994 and 1995. Other than as indicated in the preceding sentence,
no member of the Committee during fiscal year 1994 had a current or prior
relationship to the Company, and no executive officer of the Company had a
relationship to any other company, required to be described under the proxy
rules relating to executive compensation.
CERTAIN TRANSACTIONS
The Company's 1990 credit agreement with a group of banks, including PNC
Bank, National Association ("PNB"), provides for unsecured borrowings of up to
$100 million on a revolving credit basis. In May 1994, the Company entered into
a second credit agreement with the same group of banks, including PNB, which
provides for additional unsecured borrowings of up to $50 million. No borrowings
were outstanding under the credit agreements during the 1994 fiscal year. PNB's
proportionate amount of commitment fees during fiscal year 1994 was $75,324.
James E. Rohr, a member of the Company's Board of Directors, is President of PNC
Bank Corp., an affiliate of PNB, and President and Chief Executive Officer of
PNB.
The Company and subsidiaries of the Company have engaged in investment
transactions with two limited partnership funds: Code, Hennessy and Simmons
Limited Partnership ("Fund I"), and Code, Hennessy & Simmons II L. P. ("Fund
II"). The objective of both funds is to seek maximum return by investing in
leveraged buyouts of operating companies. Profits and losses of Fund I and of
Fund II are allocated 80 percent to the limited partners and 20 percent to the
general partner. The general partner of Fund I is CHS Management Limited
Partnership ("CHS I"), and the general partner of Fund II is CHS Management II,
L. P. ("CHS II"). The general partners of CHS I and the shareholders of the
general partner of CHS II are Andrew W. Code, Daniel J. Hennessy and Brian P.
Simmons, each of whom has an equal interest in each of such firms. Brian P.
Simmons is the son of Richard P. Simmons, Chairman of the Board of the Company.
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<PAGE>
Investors made commitments to invest approximately $82.1 million in Fund I
when it was formed in 1989, including $25 million invested or to be invested by
a Companysubsidiary. Investors have made commitments to invest approximately
$155 million in Fund II, which was formed in 1993, including $30 million
invested or to be invested by the Company.
At the end of the first quarter of 1994, the Company voluntarily
contributed the limited partnership interest in Fund I to an irrevocable trust
established for the purpose of partially funding the retiree medical benefit
obligations the Company has to its employees represented by the United
Steelworkers of America. Later in the 1994 fiscal year, the Company voluntarily
contributed investments it had made in Fund II, in the amount of $5.625 million,
to the irrevocable trust.
A subsidiary of the Company continues to be the limited partner in CHS I
and to receive 10 percent of CHS I's 20 percent share of Fund I's net profits
and losses (i.e., 2 percent of Fund I's net profits and losses). The Company
subsidiary that invested in CHS I has made a commitment to invest as a limited
partner in CHS II, in exchange for which that subsidiary will receive five
percent of CHS II's 20 percent of Fund II's profits and losses (i.e., one
percent of Fund II's net profits and losses).
CHS I and CHS II are responsible for managing the selection and structuring
of their respective fund's investments. In 1994, CHS I received an annual
management fee of 2.58% of Fund I's total capital commitments, and CHS II
received an annual management fee of 1.75% of Fund II's total capital
commitments. In each case, the management fees were offset by fees which the
general partner charges to companies its fund acquires.
During 1994, the Company subsidiary that invested in Fund I made no
investments in Fund I. The Company's subsidiaries had invested a total of
$22,290,000 in Fund I as of the date the investment was contributed to the
irrevocable trust described above. The subsidiaries have received total cash
distributions of $24,087,257 from the fund, all of which was received prior to
fiscal year 1994.
In addition to the investment by the Company, Richard P. Simmons, Chairman
of the Board of the Company, Robert P. Bozzone, Vice Chairman of the Board of
the Company, and a subsidiary of PNC Bank Corp. have invested or will invest
$4,473,360, $1,250,000 and $5,000,000, respectively, in Fund I. In addition to
the investment by the Company, Messrs. Simmons and Bozzone, and a subsidiary of
PNC Bank Corp., directly or indirectly, have invested or will invest $5.2
million, $2.5 million and $7.5 million, respectively, in Fund II. James E. Rohr,
President of PNC Bank Corp., is a member of the Company's Board of Directors.
Pursuant to a written agreement with another subsidiary, the Company has
agreed to furnish consulting services which the subsidiary in turn has agreed to
furnish to CHS I. Under this agreement, no fee is to be paid for the services of
Richard P. Simmons, who is primarily responsible for such consultations, or
James L. Murdy, the Company's Senior Vice President-Finance and Chief Financial
Officer, for up to one day per week each. A similar arrangement may be made with
respect to CHS II. In 1993 and 1994, no substantial services were provided to
CHS I which required the payment of compensation. Richard P. Simmons also serves
as a member of Advisory Boards of Fund I and Fund II.
The Company retained the law firm of Kirkpatrick & Lockhart to perform
services for the Company during fiscal years 1994 and 1995. Charles J. Queenan,
Jr., a member of the Company's Board of Directors, is a member of that law firm.
See "Compensation Committee Interlocks and Insider Participation."
Pursuant to an agreement between Robert P. Bozzone, Vice Chairman, and the
Company, dated August 1, 1994, Mr. Bozzone has agreed to serve as an independent
consultant to the Company for compensation at an annual rate of $100,000 from
August 1, 1994 through July 31, 1995 and thereafter from year to year until
terminated by either party. During such period, Mr. Bozzone agrees to be
available to the Company for consulting purposes for approximately 480 hours per
year.
29
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Under the terms of the Stock Acquisition and Retention Plan, as approved by
the shareholders of the Company, executive officers of the Company may deliver a
promissory note, payable to the Company, as payment for the purchase price of
the shares of Common Stock purchased under the Plan. Each note has a term of not
more than 10 years and is secured by the shares of Common Stock being purchased
with the note. Interest accrues on the note at a rate, as determined on the
applicable purchase date, equal to the lesser of the average borrowing rate of
the Company or the prime lending rate of PNB, but not lower than the minimum
rate necessary to avoid imputed interest under the applicable federal income tax
laws. During the 1994 fiscal year, Douglas A. Kittenbrink, Vice
President-Engineering and Information Technology, and Robert S. Park, Vice
President-Treasurer, delivered promissory notes to the Company to pay the
purchase price of Common Stock purchased under the plan. The largest amount of
such indebtedness outstanding during the 1994 fiscal year and the amount
outstanding as of February 26, 1995 were $99,926 and $100,976 for Mr.
Kittenbrink and $121,608 and $122,830 for Mr. Park.
FINANCIAL STATEMENTS
Consolidated financial statements of the Company are included in its Annual
Report to Shareholders for fiscal year 1994. ADDITIONAL COPIES OF THE FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULE AND OF THE COMPANY'S ANNUAL REPORT
TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K, WITHOUT EXHIBITS, MAY BE
OBTAINED WITHOUT CHARGE FROM THE SECRETARY AT 1000 SIX PPG PLACE, PITTSBURGH,
PENNSYLVANIA 15222-5479. Financial statements are also on file with the
Securities and Exchange Commission, Washington, D.C., and the New York Stock
Exchange.
1996 ANNUAL MEETING AND SHAREHOLDER PROPOSALS
The 1996 Annual Meeting of Shareholders is tentatively scheduled for May
17, 1996. Proposals of shareholders intended to be presented at the 1995 Annual
Meeting of Shareholders must be received no later than November 14, 1995 for
inclusion in the Proxy Statement and proxy card for that meeting.
By order of the Board of Directors
/s/ Jon D. Walton
JON D. WALTON
Vice President-General Counsel
and Secretary
Dated: March 14, 1995
30
<PAGE>
ALLEGHENY LUDLUM CORPORATION
PROXY FOR 1995 ANNUAL MEETING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLEGHENY LUDLUM CORPORATION
The undersigned hereby appoints Robert P. Bozzone, Jon D. Walton and Mary W.
Snyder or any of them, each with power of substitution and revocation, proxies
or proxy to vote all shares of Common Stock which the undersigned is entitled
to vote with all powers which the undersigned would possess if personally
present, at the Annual Meeting of Shareholders of Allegheny Ludlum Corporation
on May 19, 1995, and any adjournments thereof, upon the matters set forth on
the reverse of this card, and, in their discretion, upon such other matters as
may properly come before such meeting.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS PROXY CARD AND TO
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION TO THE CONTRARY IS INDICATED, IT WILL BE VOTED "FOR"
ALL PROPOSALS.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
(Continued from reverse side)
ALLEGHENY LUDLUM CORPORATION
The Board of Directors recommends a vote FOR:
A. ELECTION OF DIRECTORS.
FOR all WITHHELD
nominees from
(except all
as nominees
indicated)
[_] [_]
A. Election of Paul S. Brentlinger, Thomas Marshall, James L. Murdy and Charles
J. Queenan, Jr. as Class II directors.
(To withhold authority to vote for any nominee(s), write the name(s) of the
nominee(s) in the space that follows:
__________________________________________________________________.)
B. SELECTION OF AUDITORS. Ratification of selection of Ernst & Young LLP as
independent auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
DATE:_____________________________________________________, 1995
___________________________________________________________
___________________________________________________________
(Signature or Signatures)
Please sign EXACTLY as your name appears at the left. When
signing as a fiduciary or corporate officer, give full title. For
joint accounts, please furnish both signatures.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD
YOUR VOTES"
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
[ALC Logo]
Dear Shareholder:
Enclosed are materials relating to Allegheny Ludlum Corporation's 1995 Annual
Meeting of Shareholders. The Notice of the Meeting and Proxy Statement describe
the formal business to be transacted at the meeting.
Your vote is important to us. Please complete, sign and promptly return the
attached proxy card in the accompanying postage-paid envelope whether or not
you expect to attend the meeting.
/s/ Jon D. Walton
Jon D. Walton
Vice President--General Counsel and Secretary
<PAGE>
ALLEGHENY LUDLUM CORPORATION
VOTING INSTRUCTION CARD FOR 1995 ANNUAL MEETING
SAVINGS AND SECURITY PLAN OF THE TUBULAR PRODUCTS DIVISION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLEGHENY LUDLUM CORPORATION
The undersigned hereby directs the Trustee of the above Plan to vote the full
number of shares of Common Stock allocated to the account of the undersigned
under the Plan, at the Annual Meeting of Shareholders of Allegheny Ludlum
Corporation on May 19, 1995, and any adjournments thereof, upon the matters set
forth on the reverse of this card, and, in its discretion, upon such other
matters as may properly come before such meeting.
YOU ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS CARD AND TO RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
THIS VOTING INSTRUCTION CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN. IF NO DIRECTION TO THE CONTRARY IS INDICATED, IT WILL
BE VOTED "FOR" ALL PROPOSALS.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
(Continued from reverse side)
ALLEGHENY LUDLUM CORPORATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
A. ELECTION OF DIRECTORS.
FOR all WITHHELD
nominees from
(except all
as nominees
indicated)
[_] [_]
A. Election of Paul S. Brentlinger, Thomas Marshall, James L. Murdy and Charles
J. Queenan, Jr. as Class II directors.
(To withhold authority to vote for any nominee(s), write the name(s) of the
nominee(s) in the space that follows:
__________________________________________________________________________.)
B. SELECTION OF AUDITORS. Ratification of selection of Ernst & Young LLP as
independent auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
DATE:___________________________________________________, 1995
______________________________________________________________
(Signature)
Please sign EXACTLY as your name appears at the left.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD
YOUR VOTES"
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
ALLEGHENY LUDLUM CORPORATION
SAVINGS AND SECURITY PLAN OF THE TUBULAR PRODUCTS DIVISION
March 14, 1995
Dear Participant:
Enclosed you will find a copy of the Allegheny Ludlum Corporation 1994 Annual
Report, a Notice of the 1995 Annual Meeting of Shareholders and Proxy
Statement, a voting instruction card (above), a postage-paid return envelope
addressed to Mellon Bank, N.A., as Trustee of the above-named Plan, and a
postage-paid ticket request card.
As a participant in the Plan, you have the right to direct the Trustee as to
the manner in which voting rights will be exercised at the meeting with respect
to the full number of shares of Common Stock of the Company allocated to your
Plan account and shown on the above voting instruction card. Your directions to
the Trustee will be held in complete confidence by the Trustee except as may be
necessary to meet legal requirements. The Trustee will vote shares for which no
participant instructions are received in the same proportion as shares for
which participant instructions have been received. The Trustee will also
exercise its sole discretion in voting or not voting fractional shares.
The enclosed Proxy Statement contains detailed information concerning voting
at the Annual Meeting and the matters that will be acted upon. You are
encouraged to read the enclosed materials carefully and to exercise your right
to direct the Trustee how to vote your Plan shares.
You must complete and sign the above voting instruction card, and it must be
received by the Trustee by May 16, 1995 in order to have your shares under the
Plan voted at the meeting.
You will also receive proxy solicitation materials, including a proxy card,
from the Company if you own shares of Common Stock that are not held by the
Trustee under the Plan. In order to vote your non-Plan shares, you should
complete and sign the proxy card and return it to the Company.
Very truly yours,
/s/ B.A. McGillivray
--------------------
B. A. McGillivray
Plan Administrator
<PAGE>
ALLEGHENY LUDLUM CORPORATION
VOTING INSTRUCTION CARD FOR 1995 ANNUAL MEETING
SAVINGS AND SECURITY PLAN OF THE SPECIAL MATERIALS DIVISION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLEGHENY LUDLUM CORPORATION
The undersigned hereby directs the Trustee of the above Plan to vote the full
number of shares of Common Stock allocated to the account of the undersigned
under the Plan, at the Annual Meeting of Shareholders of Allegheny Ludlum
Corporation on May 19, 1995, and any adjournments thereof, upon the matters set
forth on the reverse of this card, and, in its discretion, upon such other
matters as may properly come before such meeting.
YOU ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS CARD AND TO RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
THIS VOTING INSTRUCTION CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN. IF NO DIRECTION TO THE CONTRARY IS INDICATED, IT WILL
BE VOTED "FOR" ALL PROPOSALS.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
(Continued from reverse side)
ALLEGHENY LUDLUM CORPORATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
A. ELECTION OF DIRECTORS.
FOR all WITHHELD
nominees from
(except all
as nominees
indicated)
[_] [_]
A. Election of Paul S. Brentlinger, Thomas Marshall, James L. Murdy and Charles
J. Queenan, Jr. as Class II directors.
(To withhold authority to vote for any nominee(s), write the name(s) of the
nominee(s) in the space that follows:
___________________________________________________________________________.)
B. SELECTION OF AUDITORS. Ratification of selection of Ernst & Young LLP as
independent auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
DATE:____________________________________________________, 1995
_______________________________________________________________
(Signature)
Please sign EXACTLY as your name appears at the left.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD
YOUR VOTES"
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
ALLEGHENY LUDLUM CORPORATION
SAVINGS AND SECURITY PLAN OF THE SPECIAL MATERIALS DIVISION
March 14, 1995
Dear Participant:
Enclosed you will find a copy of the Allegheny Ludlum Corporation 1994 Annual
Report, a Notice of the 1995 Annual Meeting of Shareholders and Proxy
Statement, a voting instruction card (above), a postage-paid return envelope
addressed to Mellon Bank, N.A., as Trustee of the above-named Plan, and a
postage-paid ticket request card.
As a participant in the Plan, you have the right to direct the Trustee as to
the manner in which voting rights will be exercised at the meeting with respect
to the full number of shares of Common Stock of the Company allocated to your
Plan account and shown on the above voting instruction card. Your directions to
the Trustee will be held in complete confidence by the Trustee except as may be
necessary to meet legal requirements. The Trustee will vote shares for which no
participant instructions are received in the same proportion as shares for
which participant instructions have been received. The Trustee will also
exercise its sole discretion in voting or not voting fractional shares.
The enclosed Proxy Statement contains detailed information concerning voting
at the Annual Meeting and the matters that will be acted upon. You are
encouraged to read the enclosed materials carefully and to exercise your right
to direct the Trustee how to vote your Plan shares.
You must complete and sign the above voting instruction card, and it must be
received by the Trustee by May 16, 1995 in order to have your shares under the
Plan voted at the meeting.
You will also receive proxy solicitation materials, including a proxy card,
from the Company if you own shares of Common Stock that are not held by the
Trustee under the Plan. In order to vote your non-Plan shares, you should
complete and sign the proxy card and return it to the Company.
Very truly yours,
/s/ B.A. McGillivray
--------------------
B. A. McGillivray
Plan Administrator
<PAGE>
ALLEGHENY LUDLUM CORPORATION
VOTING INSTRUCTION CARD FOR 1995 ANNUAL MEETING
PERSONAL RETIREMENT ACCOUNT PLAN
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLEGHENY LUDLUM CORPORATION
The undersigned hereby directs the Trustee of the above Plan to vote the full
number of shares of Common Stock allocated to the account of the undersigned
under the Plan, at the Annual Meeting of Shareholders of Allegheny Ludlum
Corporation on May 19, 1995, and any adjournments thereof, upon the matters set
forth on the reverse of this card, and, in its discretion, upon such other
matters as may properly come before such meeting.
YOU ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS CARD AND TO RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION TO THE CONTRARY IS INDICATED, IT WILL BE VOTED "FOR"
ALL PROPOSALS.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
(Continued from reverse side)
ALLEGHENY LUDLUM CORPORATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
A. ELECTION OF DIRECTORS.
FOR all WITHHELD
nominees from
(except all
as nominees
indicated)
[_] [_]
A. Election of Paul S. Brentlinger, Thomas Marshall, James L. Murdy and Charles
J. Queenan, Jr. as Class II directors.
(To withhold authority to vote for any nominee(s), write the name(s) of the
nominee(s) in the space that follows:
____________________________________________________________________________.)
B. SELECTION OF AUDITORS. Ratification of selection of Ernst & Young LLP as
independent auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
DATE:____________________________________________________, 1995
_______________________________________________________________
(Signature)
Please sign EXACTLY as your name appears at the left.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD
YOUR VOTES"
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
ALLEGHENY LUDLUM CORPORATION
PERSONAL RETIREMENT ACCOUNT PLAN
March 14, 1995
Dear Participant:
Enclosed you will find a copy of the Allegheny Ludlum Corporation 1994 Annual
Report, a Notice of the 1995 Annual Meeting of Shareholders and Proxy
Statement, a voting instruction card (above), a postage-paid return envelope
addressed to Mellon Bank, N.A., as Trustee of the above-named Plan, and a
postage-paid ticket request card.
As a participant in the Plan, you have the right to direct the Trustee as to
the manner in which voting rights will be exercised at the meeting with respect
to the full number of shares of Common Stock of the Company allocated to your
Plan account and shown on the above voting instruction card. Your directions to
the Trustee will be held in complete confidence by the Trustee except as may be
necessary to meet legal requirements. The Trustee will vote shares for which no
participant instructions are received in the same proportion as shares for
which participant instructions have been received. The Trustee will also
exercise its sole discretion in voting or not voting fractional shares.
The enclosed Proxy Statement contains detailed information concerning voting
at the Annual Meeting and the matters that will be acted upon. You are
encouraged to read the enclosed materials carefully and to exercise your right
to direct the Trustee how to vote your Plan shares.
You must complete and sign the above voting instruction card, and it must be
received by the Trustee by May 16, 1995 in order to have your shares under the
Plan voted at the meeting.
You will also receive proxy solicitation materials, including a proxy card,
from the Company if you own shares of Common Stock that are not held by the
Trustee under the Plan. In order to vote your non-Plan shares, you should
complete and sign the proxy card and return it to the Company.
Very truly yours,
/s/ B.A. McGillivray
--------------------
B. A. McGillivray
Plan Administrator
<PAGE>
ALLEGHENY LUDLUM CORPORATION
VOTING INSTRUCTION CARD FOR 1995 ANNUAL MEETING
RETIREMENT SAVINGS PLAN
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLEGHENY LUDLUM CORPORATION
The undersigned hereby directs the Trustee of the above Plan to vote the full
number of shares of Common Stock allocated to the account of the undersigned
under the Plan, at the Annual Meeting of Shareholders of Allegheny Ludlum
Corporation on May 19, 1995, and any adjournments thereof, upon the matters set
forth on the reverse of this card, and, in its discretion, upon such other
matters as may properly come before such meeting.
YOU ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS CARD AND TO RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
THIS VOTING INSTRUCTION CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN. IF NO DIRECTION TO THE CONTRARY IS INDICATED, IT WILL
BE VOTED "FOR" ALL PROPOSALS.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
(Continued from reverse side)
ALLEGHENY LUDLUM CORPORATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
A. ELECTION OF DIRECTORS.
FOR all WITHHELD
nominees from
(except all
as nominees
indicated)
[_] [_]
A. Election of Paul S. Brentlinger, Thomas Marshall, James L. Murdy and Charles
J. Queenan, Jr. as Class II directors.
(To withhold authority to vote for any nominee(s), write the name(s) of the
nominee(s) in the space that follows:
___________________________________________________________________________.)
B. SELECTION OF AUDITORS. Ratification of selection of Ernst & Young LLP as
independent auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
DATE:_____________________________________________________, 1995
________________________________________________________________
(Signature)
Please sign EXACTLY as your name appears at the left.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD
YOUR VOTES"
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
ALLEGHENY LUDLUM CORPORATION
RETIREMENT SAVINGS PLAN
March 14, 1995
Dear Participant:
Enclosed you will find a copy of the Allegheny Ludlum Corporation 1994 Annual
Report, a Notice of the 1995 Annual Meeting of Shareholders and Proxy
Statement, a voting instruction card (above), a postage-paid return envelope
addressed to Mellon Bank, N.A., as Trustee of the above-named Plan, and a
postage-paid ticket request card.
As a participant in the Plan, you have the right to direct the Trustee as to
the manner in which voting rights will be exercised at the meeting with respect
to the full number of shares of Common Stock of the Company allocated to your
Plan account and shown on the above voting instruction card. Your directions to
the Trustee will be held in complete confidence by the Trustee except as may be
necessary to meet legal requirements. The Trustee will vote shares for which no
participant instructions are received in the same proportion as shares for
which participant instructions have been received. The Trustee will also
exercise its sole discretion in voting or not voting fractional shares.
The enclosed Proxy Statement contains detailed information concerning voting
at the Annual Meeting and the matters that will be acted upon. You are
encouraged to read the enclosed materials carefully and to exercise your right
to direct the Trustee how to vote your Plan shares.
You must complete and sign the above voting instruction card, and it must be
received by the Trustee by May 16, 1995 in order to have your shares under the
Plan voted at the meeting.
You will also receive proxy solicitation materials, including a proxy card,
from the Company if you own shares of Common Stock that are not held by the
Trustee under the Plan. In order to vote your non-Plan shares, you should
complete and sign the proxy card and return it to the Company.
Very truly yours,
/s/ B.A. McGillivray
--------------------
B. A. McGillivray
Plan Administrator
