SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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
Rule 14a-6(e)(2))
/ X / Definitive Proxy Statement
/ X / Definitive Additional Materials
/___/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
________________
REYNOLDS METALS COMPANY
(Name of Registrant as Specified In Its Charter)
Board of Directors of Reynolds Metals Company
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
________________
Payment of Filing Fee (Check the appropriate box):
/ X / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
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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
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<PAGE>
REYNOLDS METALS COMPANY
6601 West Broad Street
Richmond, Virginia 23230
February 24, 1995
To Our Stockholders:
You are cordially invited to attend the 1995 Annual Meeting of
Stockholders of Reynolds Metals Company which will be held at the offices
of the Company, Reynolds Metals Building, 6601 West Broad Street, Richmond,
Virginia, on Wednesday, April 19, 1995, at 10:00 a.m., local time. All
holders of record of the Company's outstanding Common Stock and 7% PRIDES
(Service Mark), Convertible Preferred Stock at the close of business on
February 21, 1995 are entitled to vote at the Annual Meeting.
At the Meeting, Stockholders will consider the items of business
described in the accompanying Notice of Annual Meeting and Proxy Statement.
In addition, I will present a report on the Company's business operations.
We hope you will be able to attend the Annual Meeting. If you plan to
attend, please mark the attendance box located in the upper right hand
corner of the proxy card.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, I URGE YOU TO
COMPLETE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND, YOUR HAVING SENT IN YOUR PROXY WILL NOT RESTRICT YOUR RIGHT TO VOTE
IN PERSON.
Sincerely,
Richard G. Holder
Richard G. Holder
Chairman of the Board and
Chief Executive Officer
<PAGE>
REYNOLDS METALS COMPANY
6601 West Broad Street
Richmond, Virginia 23230
__________
NOTICE
OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 19, 1995
__________
To the Holders of Shares of Common Stock and 7% PRIDES, Convertible
Preferred Stock:
The Annual Meeting of Stockholders of Reynolds Metals Company will be
held on Wednesday, April 19, 1995, at 10:00 a.m., local time, at the
offices of the Company, Reynolds Metals Building, 6601 West Broad Street,
Richmond, Virginia, for the following purposes:
1. To elect Directors of the Company;
2. To approve amendment of the Company's Performance Incentive
Plan;
3. To ratify the selection of Ernst & Young LLP as independent
auditors of the Company for the year 1995; and
4. To transact such other business as may properly come before
the Meeting.
Stockholders of record at the close of business on February 21, 1995
are entitled to vote at the Meeting. Holders of Common Stock will be
entitled to one vote per share. Holders of 7% PRIDES, Convertible
Preferred Stock will be entitled to 4/5 of a vote per share.
By Order of the Board of Directors,
D. MICHAEL JONES
Secretary
February 24, 1995
<PAGE>
REYNOLDS METALS COMPANY
__________
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 19, 1995
__________
PROXY SOLICITATION AND VOTING
This Proxy Statement is furnished to holders of shares of Common
Stock, without par value (the "Common Stock"), and 7% PRIDES, Convertible
Preferred Stock (the "PRIDES"), of Reynolds Metals Company (the "Company")
in connection with the solicitation of proxies by the Board of Directors of
the Company for use at the Annual Meeting of Stockholders to be held on
April 19, 1995 and at any adjournments thereof.
Proxies may be solicited by mail, telephone, telegraph or other
electronic means and personal interview. The Company has retained Morrow &
Co., Inc., 909 Third Avenue, New York, New York 10022-4799, to aid in the
solicitation of proxies. For this service, Morrow & Co., Inc. will receive
a fee of $11,000, plus reimbursement of out-of-pocket expenses. Brokers,
banks and other custodians, nominees and fiduciaries will be requested to
forward soliciting material to the beneficial owners of Common Stock and
PRIDES. All costs of the solicitation will be borne by the Company.
Holders of Common Stock and PRIDES of record at the close of business
on February 21, 1995 are entitled to vote at the Annual Meeting. On that
date, the Company had outstanding and entitled to vote at the Meeting
62,185,902 shares of Common Stock, each entitled to one vote, and
11,000,000 shares of PRIDES, each entitled to 4/5 of a vote. Holders of
shares of Common Stock and PRIDES will vote together as one class. The
presence, in person or by proxy, of Stockholders entitled to cast at least
a majority of the votes which all Stockholders are entitled to cast will
constitute a quorum. The affirmative vote of Stockholders representing a
majority of the votes cast is required for the election of the Nominees
(Item 1) and the approval of Item 2. Abstentions will be treated as votes
against an item. "Non-votes" (in which a nominee holding shares for a
beneficial owner votes on certain matters pursuant to discretionary
authority or instructions from the beneficial owner but does not vote on
other matters for which the nominee has not received instructions from the
beneficial owner and may not exercise discretionary voting authority, the
latter being termed "non-votes") will have no effect on the vote.
Any Stockholder giving a proxy has the power to revoke it at any time
before its use. If a proxy is properly signed and is not revoked by the
Stockholder, the shares it represents will be voted at the Annual Meeting
in accordance with the instructions of the Stockholder, or where no
instructions are given, such shares will be voted FOR Items 1, 2 and 3.
It is anticipated that proxy materials will first be mailed to
Stockholders on or about March 6, 1995.
ITEM 1. ELECTION OF DIRECTORS
Information Concerning the Nominees
Effective April 19, 1995, the Board of Directors will consist of
sixteen persons. Unless otherwise instructed on the proxy, the shares
represented by proxies will be voted for the election of the sixteen
Nominees named below as Directors of the Company for the ensuing year. If
any Nominee becomes unavailable to serve as a Director for any reason, the
shares represented by such proxies may be voted for a substitute Nominee
designated by the Board of Directors.
Eleven of the Nominees were elected at the 1994 Annual Meeting of
Stockholders. James M. Ringler was elected by the Board of Directors
effective June 17, 1994. Patricia C. Barron was elected by the Board of
Directors effective November 16, 1994. William H. Joyce was elected by the
Board of Directors effective February 15, 1995. Mylle Bell Mangum and D.
Larry Moore have been nominated to serve as Directors effective upon
election at the 1995 Annual Meeting of Stockholders. David P. Reynolds and
Thomas A. Graves, Jr., Directors since 1945 and 1977, respectively, will
retire from the Board of Directors and not stand for reelection. Gerald
Greenwald, elected a Director in 1991, resigned from the Board of Directors
effective August 31, 1994 due to the demands of his new position as
Chairman and Chief Executive Officer of UAL Corp.
<PAGE>
The following table sets forth the names, ages and principal
occupations of, and certain other information regarding, the Nominees:
Director
Name-Age-Principal Occupation-Other Information Since
PATRICIA C. BARRON (52) 1994
Vice President, Xerox Corporation, a manufacturer of office
systems and equipment, and President, Engineering Systems
Division, Xerox Corporation, since 1993. President, Office
Products Division, Xerox Corporation, 1992-1993. Director,
Corporate Information Management, Xerox Corporation, 1990-1992.
Director, Quaker Chemical Corporation and Rochester Telephone
Corporation.
WILLIAM O. BOURKE (67) 1982
Retired. Chairman of the Board and Chief Executive Officer of
the Company, 1988-1992. Director, Merrill Lynch & Co., Inc.,
Premark International, Inc. and Sonat Inc.
YALE M. BRANDT (64) 1988
Vice Chairman of the Board of the Company since May 1992.
Executive Vice President, Fabricated Industrial Products of the
Company, 1990-1992.
JOHN R. HALL (62) 1985
Chairman of the Board and Chief Executive Officer, Ashland Inc.,
a petroleum refiner and supplier of petroleum products, since
1981. Director, Banc One Corporation, The Canada Life Assurance
Company, CSX Corporation and Humana Inc.
ROBERT L. HINTZ (64) 1986
Chairman of the Board, R. L. Hintz & Associates, a management
services firm, since 1989. Director, The Chesapeake Corporation,
Scott & Stringfellow, Inc. and Ashland Coal, Inc.
RICHARD G. HOLDER (63) 1984
Chairman of the Board and Chief Executive Officer of the Company
since May 1992. President and Chief Operating Officer of the
Company, 1988-1992. Director, Universal Corporation and CPC
International Inc.
WILLIAM H. JOYCE (59) 1995
President and Chief Operating Officer, Union Carbide Corporation,
a manufacturer of chemicals and plastics, since 1993. Executive
Vice President, Operations, Union Carbide Corporation, 1992-1993.
Executive Vice President, Union Carbide Chemicals and Plastics
Company Inc., a wholly-owned subsidiary of Union Carbide
Corporation, and Vice President, Union Carbide Corporation,
1990-1992. Director, Union Carbide Corporation and Melville
Corporation.
MYLLE BELL MANGUM (46) --
Executive Vice President, Strategic Management, Holiday Inn
Worldwide, a subsidiary of Bass PLC engaged in the operation of
hotels worldwide, since 1992. Director, Corporate Planning and
Development, BellSouth Corporation, 1987-1992. Director, Holiday
Inn Worldwide, Carpenter Technology Corporation and
Scientific-Atlanta, Inc.
<PAGE>
Director
Name-Age-Principal Occupation-Other Information Since
D. LARRY MOORE (58) --
President and Chief Operating Officer, Honeywell Inc., a global
manufacturer of automation and control systems, since April 1993.
Executive Vice President and Chief Operating Officer for Space
and Aviation, Honeywell Inc., 1990-1993. Director, Honeywell
Inc., Rohr Inc. and The Geon Company.
RANDOLPH N. REYNOLDS (53) 1984
Vice Chairman of the Board of the Company since January 1994.
Executive Vice President, International of the Company,
1990-1994. President, Reynolds International, Inc., a subsidiary
of the Company, since 1980, and Chief Executive Officer of that
subsidiary since 1981. Director, First Union Corporation.
JAMES M. RINGLER (49) 1994
President and Chief Operating Officer, Premark International,
Inc., a diversified manufacturer of premium brand name products,
since 1992. Executive Vice President, Premark International,
Inc., 1990-1992. Director, Premark International, Inc. and
Thiokol Corporation.
CHARLES A. SANDERS (63) 1992
Chairman, Glaxo Inc., a pharmaceutical company and subsidiary of
British drug company Glaxo PLC, since March 1994. Chairman and
Chief Executive Officer, Glaxo Inc., 1989-1994. Director,
Merrill Lynch & Co., Inc., Glaxo PLC and Morton International,
Inc.
HENRY S. SAVEDGE, JR. (61) 1992
Executive Vice President and Chief Financial Officer of the
Company since May 1992. Vice President, Finance of the Company,
1990-1992.
JEREMIAH J. SHEEHAN (56) 1994
President and Chief Operating Officer of the Company since
January 1994. Executive Vice President, Fabricated Products of
the Company, 1993-1994. Executive Vice President, Consumer and
Packaging Products of the Company, 1990-1993.
ROBERT J. VLASIC (68) 1987
Chairman Emeritus, Campbell Soup Company, a manufacturer of
prepared convenience foods, since November 1993. Chairman,
Campbell Soup Company, 1988-1993. Director, Campbell Soup
Company.
JOE B. WYATT (59) 1992
Chancellor, Vanderbilt University since 1982. Director, Sonat
Inc. and Ingram Industries, Inc.
Randolph N. Reynolds is a nephew of David P. Reynolds. William G.
Reynolds, Jr., a nephew of David P. Reynolds and the brother of Randolph N.
Reynolds, is a Vice President of the Company.
Meetings and Committees of the Board
The Board of Directors held nine meetings and one executive session in
1994. The Board has appointed from its members six standing committees of
the Board, which met periodically during 1994. Incumbent Directors'
attendance at meetings of the Board and of standing committees on which
they served averaged over 95% during 1994. All incumbent Directors serving
in 1994 attended at least 75% of such meetings.
The Executive Committee is composed of W. O. Bourke (Chairman), Y. M.
Brandt, R. G. Holder, R. N. Reynolds, H. S. Savedge, Jr. and J. J. Sheehan.
It has the power to act in place of the Board of Directors during intervals
between meetings of the Board and to review and approve the compensation of
Directors of the Company. This committee met three times and acted five
times by unanimous written consent in 1994.
The Finance Committee is composed of H. S. Savedge, Jr. (Chairman), P.
C. Barron, W. O. Bourke, R. L. Hintz, D. P. Reynolds, R. N. Reynolds, J.
J. Sheehan and R. J. Vlasic. Its principal function is to assist the Board
in fulfilling its oversight responsibilities with respect to the raising
and allocation of capital. It makes recommendations respecting long-term
and short-term financings, acquisitions, dispositions, investments and
major capital expenditures. It reviews the Company's capital budget, the
status of capital appropriations from time to time, and the Company's
insurance programs. This committee met seven times and acted once by
unanimous written consent in 1994.
The Audit Committee is composed of R. L. Hintz (Chairman), P. C.
Barron, J. R. Hall, J. M. Ringler and C. A. Sanders. The principal
function of the Audit Committee is to review the system of internal
controls which management and the Board of Directors have established and
the audit function of the Company's independent auditors and its Internal
Auditing Department. In this connection, the Audit Committee recommends to
the Board of Directors the firm to be engaged by the Company as its
independent auditors. It reviews, among other things, audit plans and
procedures, the Company's annual financial statements, the Company's
policies with respect to conflicts of interest and the prohibition of the
use of corporate funds or other assets for improper purposes, changes in
accounting policies and the use of independent auditors for nonaudit
services. This committee met three times in 1994.
The Compensation Committee is composed of J. R. Hall (Chairman), T. A.
Graves, Jr., J. M. Ringler, C. A. Sanders and J. B. Wyatt. The principal
functions of the Compensation Committee are to review and recommend to the
Board, or determine, the compensation paid to the Company's Executive
Officers and to administer designated executive compensation plans of the
Company, including the 1982, 1987 and 1992 Nonqualified Stock Option Plans
and the Performance Incentive Plan. See "Report of Compensation Committee
on Executive Compensation". This committee met three times and acted once
by unanimous written consent in 1994.
The Committee on Directors is composed of T. A. Graves, Jr.
(Chairman), W. O. Bourke, R. G. Holder, W. H. Joyce, D. P. Reynolds, C. A.
Sanders, R. J. Vlasic and J. B. Wyatt. The primary function of the
Committee on Directors is to recommend to the Board of Directors persons to
be considered for election to the Board. In making such recommendations,
the Committee on Directors will consider nominations submitted by
Stockholders. The Board of Directors has adopted a policy under which it
will not elect or nominate for election or reelection to the Board of
Directors any person who has attained age 70. An officer of the Company
serving as a member of the Board of Directors is expected to resign as a
Director at the time he ceases to be an officer, whether due to retirement
or otherwise. The Board of Directors has waived this requirement with
respect to W. O. Bourke, who retired in 1992. In addition, the policy
provides that if a nonemployee Director has a substantial change in
principal employment and/or responsibility, the Director is expected to
resign effective on the last day of the month in which the next regular
meeting of the Board is held, unless before that date the Board, based on a
review and determination by the Committee on Directors regarding whether
the Director's continued service on the Board is in the Company's best
interests, approves the withdrawal of the resignation. The Committee on
Directors will consider Stockholder nominations for the 1996 Annual Meeting
if submitted in writing in accordance with the procedures set forth under
"General Information - Stockholders' Proposals and Nominations". This
committee met three times and acted twice by unanimous written consent in
1994.
The Pension Investment Committee is composed of J. B. Wyatt
(Chairman), Y. M. Brandt, W. H. Joyce, R. N. Reynolds, J. J. Sheehan and R.
J. Vlasic. It oversees the financial administration of the assets of the
pension plans of the Company and certain subsidiaries, including the
selection of trustees and investment managers for the assets of these plans
and periodic review of investment results. It also maintains a
comprehensive statement of investment policy and appoints independent
auditors for each pension plan. This committee met three times and acted
once by unanimous written consent in 1994.
Board Compensation and Benefits
Directors who are not employed by the Company or any of its
subsidiaries ("Outside Directors") are paid an annual retainer of $27,500
for serving as a Director, and $3,000 for serving as committee chairman,
except the chairmen of each of the Audit Committee and Compensation
Committee are paid $4,000. Outside Directors are also paid $1,000 for each
Board and committee meeting attended, plus expenses reasonably incurred in
connection with Company business.
The Company has a Restricted Stock Plan for Outside Directors,
approved by Stockholders at the 1994 Annual Meeting. Under the plan,
Outside Directors are granted 1,000 shares of Common Stock subject to
forfeiture and transfer restrictions ("Restricted Stock") 60 days after
initial election to the Board. (Outside Directors elected to office by the
Stockholders at the 1994 Annual Meeting were each granted 1,000 shares of
Restricted Stock on June 1, 1994.) The restrictions expire as to 200
shares of Restricted Stock on the April 1 immediately following the date of
grant (or, if later, the date that is the six-month anniversary of the date
of grant). Restrictions expire as to an additional 200 shares on each
successive April 1, so that by the fifth April 1 following the date of
grant, restrictions on all 1,000 shares will have expired, assuming
continued service by the Outside Director throughout the period. The plan
provides for an additional grant of 1,000 shares of Restricted Stock to be
made to each Outside Director on June 1 of the year in which the
restrictions have expired as to all the shares covered by the Outside
Director's previous grant under the plan (assuming the Outside Director
continues to serve as an Outside Director on such June 1). If an Outside
Director ceases to be a member of the Board because of death or disability
or because of a Change in Control (as defined in the plan) of the Company,
restrictions on 200 shares will lapse immediately, with all other shares as
to which restrictions have not expired being forfeited. If an Outside
Director ceases to be a member of the Board for any other reason, all
shares as to which restrictions have not expired will be forfeited.
The Company has a deferred compensation plan under which a Director
may elect for each year to defer receipt of all or part of his or her
retainer and meeting fees. The deferred amounts will be paid in cash after
(a) a specified year, (b) the Director ceases to be a member of the Board
of Directors or (c) the Director reaches age 70, as the Director elects
(except that clause (b) applies in all cases where the deferred amounts are
credited with additional compensation in the form of share equivalents as
described in clause (ii) in the next sentence). Amounts deferred are
credited with additional compensation in the form (as elected by the
Director) of (i) interest at an annual rate set by the plan committee,
whose members are not eligible to participate in the plan, or (ii) a number
of equivalent shares of Common Stock, together with dividend equivalents
based on the dividends paid on such shares of Common Stock. Participants
have the option to receive payment in a lump sum or in annual installments
over a two- to ten-year period.
The Company also has a retirement plan for Directors who are not
active or retired employees of the Company or a subsidiary. The annual
retirement payment is equal to the annual retainer being paid for serving
as a member of the Board at the time the Director retires as a Director.
Payments will begin when the Director attains age 65 or, if later, when he
retires as a Director. Payments will be made quarterly and will continue
for the same number of calendar quarters as the person served as a
nonemployee Director. All payments will cease upon the former Director's
death.
In addition, the Company has a death benefit plan for Directors who
are not active or retired employees of the Company or a subsidiary. Any
such Director who serves until attaining age 65 will continue to be covered
after retirement. The amount of the death benefit is $50,000.
Other Compensation
The Company has a consulting agreement with W. O. Bourke, a Director
of the Company and former Chairman of the Board and Chief Executive Officer
of the Company, through April 30, 1997, providing for (i) payment of an
annual fee of $100,000, (ii) reimbursement of reasonable travel and other
related business expenses and (iii) making available to Mr. Bourke office
space, secretarial services and a car. For 1994, Mr. Bourke received
$111,051 in consulting fees and personal benefits.
The Company has a consulting agreement with D. P. Reynolds, a Director
of the Company and former Chairman of the Board and Chief Executive Officer
of the Company, through April 30, 1995. The agreement provides for (i)
payment of an annual fee of $200,000 (subject to increase for a particular
year, if so determined in the discretion of the Compensation Committee
after the close of such year, depending on the performance achieved during
such year), (ii) reimbursement of reasonable travel and other related
business expenses and certain club membership fees and (iii) making
available to Mr. Reynolds office space, secretarial services and a car.
For 1994, Mr. Reynolds received $316,321 in consulting fees and personal
benefits. As indicated above, Mr. Reynolds is retiring from the Board of
Directors and will not stand for reelection at the 1995 Annual Meeting.
ITEM 2. APPROVAL OF AMENDMENT OF THE PERFORMANCE INCENTIVE PLAN
The Company has a Performance Incentive Plan (the "Incentive Plan"),
adopted by the Board of Directors, providing competitive cash-based
incentive compensation opportunities to officers and key employees based on
achievement of annual business goals. Currently, all awards under the
Incentive Plan are paid in cash. On November 18, 1994, the Board of
Directors authorized amendment of the Incentive Plan, subject to
Stockholder approval, to permit awards to certain participants to be paid
part in cash and part in shares of Common Stock of the Company to
facilitate implementation of the Company's newly adopted Stock Ownership
Guidelines for Officers. See "Background" and "Beneficial Ownership of
Securities -- Stock Ownership Guidelines" below. If approved by
Stockholders, the Incentive Plan as proposed to be amended will be
effective January 1, 1996.
Background
On November 18, 1994, the Compensation Committee of the Board of
Directors approved Stock Ownership Guidelines for Officers (the
"Guidelines") under which officers and certain other senior managers of the
Company are expected to own Company Common Stock (or its equivalent) in an
amount equal to between one and three times salary (depending on management
level), as specified in the Guidelines.
To assist individuals subject to the Guidelines (currently 26 persons,
including all Executive Officers) in reaching the applicable minimum stock
ownership level, the Board of Directors approved the amendment of the
Incentive Plan, subject to Stockholder approval. The Incentive Plan as
proposed to be amended provides that if a participant in the Incentive Plan
who is subject to the Guidelines does not meet the applicable minimum stock
ownership level as of the year-end (beginning December 31, 1995)
immediately preceding the date of payment of an award under the Incentive
Plan, the next award to the participant under the Incentive Plan will be
paid part in cash and part in stock (up to one-half the value of the award
but not to exceed the participant's annual rate of base salary in effect at
the time of the award).
The following summary of the Incentive Plan as currently in effect and
of the Incentive Plan as proposed to be amended is subject to and qualified
in its entirety by the full text of the Incentive Plan and the amendment,
respectively. Any Stockholder desiring a copy of the Incentive Plan as
proposed to be amended may obtain it by writing to Reynolds Metals Company,
6601 West Broad Street, P.O. Box 27003, Richmond, Virginia 23261-7003,
Attention: Secretary.
Current Provisions of the Incentive Plan
Administration. The Incentive Plan is administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee is composed entirely of nonemployee Directors. No member of the
Committee is eligible to participate in the Incentive Plan.
Participation. Officers and key employees of the Company and its
subsidiaries who are recommended by the Company's Chief Executive Officer
and who are approved by the Committee are eligible to participate in the
Incentive Plan during a given year. A total of 270 persons (including all
current Executive Officers) were eligible to participate in the Incentive
Plan in 1994.
Awards. Under the Incentive Plan, the Company pays annual cash
incentives which vary in amount from year to year, or are not paid at all,
based on performance. The Incentive Plan does not specify particular
performance measures that must be taken into account, leaving the
determination of such measures to the Committee's discretion on an annual
basis. Corporate and business unit performance measures typically take
into account profitability, cash-flow and other short-term financial and
operating goals established at the beginning of the year. Individual
performance measures take into account the person's accomplishment of
individual goals and contribution to overall corporate performance.
Threshold, target and maximum award levels are established by the Committee
to reward performance based on corporate, business unit and individual
goals. None of the goals has a specific weight, although overall levels of
corporate profitability are generally a threshold factor in determining
incentive awards. See "Report of Compensation Committee on Executive
Compensation -- Annual Cash Incentives".
After the close of each year, management recommends awards for
participants (other than for the Chief Executive Officer) for that year
based on its assessment of corporate, business unit and individual
performance for the year. The Committee makes its own assessment of
corporate and individual performance in determining any award to be paid to
the Chief Executive Officer. The Committee grants awards it deems
appropriate after considering management's recommendations and the total
annual cash compensation levels necessary to be competitive with levels
paid by a comparison group of comparably-sized, capital intensive
companies. In special cases of meritorious performance, after consultation
with management, the Committee may make awards to individuals not
previously designated as eligible for participation during the year. In
addition, if a participant has died during the year, an award may be made
to the participant's spouse or legal representative if the Committee so
determines. All awards are paid in cash.
A total of 336 persons received awards under the Incentive Plan for
1994. Cash awards granted for 1994 are included in the Summary
Compensation Table as bonuses.
Deferral of Awards. Participants may defer receipt of their awards
under the Incentive Plan in accordance with the provisions of the Company's
New Management Incentive Deferral Plan. Under amendments to the New
Management Incentive Deferral Plan effective for 1995 and 1996, when annual
compensation payable to the Company's Chief Executive Officer or any of its
other four most highly compensated Executive Officers would not be
deductible under the Internal Revenue Code in a given year, payment of
awards under the Incentive Plan will automatically be deferred to the
extent necessary to make the Executive Officer's annual compensation fully
deductible. Any amounts so deferred will be paid out after the Executive
Officer's retirement in accordance with a schedule elected by the Executive
Officer. For additional information on the deductibility of executive
compensation and the New Management Incentive Deferral Plan, see "Report of
Compensation Committee on Executive Compensation -- Deductibility of
Compensation" and "Executive Compensation -- Certain Arrangements".
Amendment or Termination. The Board of Directors, without Stockholder
approval, may amend, suspend or terminate the Incentive Plan.
Incentive Plan as Proposed to be Amended
Under the Incentive Plan as proposed to be amended, the current
provisions of the Incentive Plan as described above will continue in effect
except as set forth below.
Form of Awards. The proposed amendment of the Incentive Plan will
change the form of payment of awards to certain participants who are
subject to the Guidelines. Specifically, the Incentive Plan as proposed to
be amended provides that if a participant in the Incentive Plan who is
subject to the Guidelines does not meet the applicable minimum stock
ownership level of the Guidelines as of the December 31 (beginning no
earlier than December 31, 1995) immediately preceding the date of payment
of an award under the Incentive Plan, the next award to the participant
under the Incentive Plan will be paid part in cash and part in the form of
shares of Company Common Stock. Awards to all other participants in the
Incentive Plan will continue to be paid entirely in cash. The number of
shares issued will be equal to the number of shares that would have been
necessary to bring the participant into compliance with the Guidelines as
of the December 31 immediately preceding the date of payment of the award,
except that no more than one-half of the value of a participant's award
(not to exceed the participant's annual rate of base salary in effect at
the time of the award) may be paid in the form of stock. The portion of
the cash award to be paid in stock will be converted into shares based on
the arithmetic average of the high and low sales prices of the Common Stock
as reported on the New York Stock Exchange Composite Transactions on the
day preceding the date on which the award is paid. Any fractional share
will be paid in cash. The amendment of the Incentive Plan will have no
effect on the size of any award granted to any participant.
The mandatory share award provision will not apply to the extent the
participant has already elected under the Company's New Management
Incentive Deferral Plan to defer a portion of his or her award under the
Incentive Plan and to have such deferred award credited with additional
income based on shares of phantom stock of the Company. Also, to the
extent a participant is subject to a mandatory deferral of the payment of
part or all of an award under the Incentive Plan (to avoid the loss of tax
deductions by the Company under the Internal Revenue Code), the mandatory
deferral will apply first to the part of the award that is payable in cash.
To the extent the award that would be paid in shares of stock remains
subject to the mandatory deferral, the payment that would otherwise be made
in the form of shares will instead be deferred under the New Management
Incentive Deferral Plan to earn income based on shares of phantom stock of
the Company. See "Executive Compensation -- Certain Arrangements".
Amendment or Termination. Under the Incentive Plan as proposed to be
amended, the Board of Directors may amend, suspend or terminate the
Incentive Plan. Notwithstanding the foregoing, the Board of Directors may,
in any circumstance where it deems such approval necessary or desirable,
and will, to the extent necessary to maintain compliance with Rule 16b-3
under the Securities Exchange Act of 1934 as in effect from time to time,
require Stockholder approval as a condition to the effectiveness of any
amendment or modification of the Incentive Plan.
Number of Shares. The Board of Directors has initially reserved
100,000 shares of Common Stock for issuance under the Incentive Plan as
proposed to be amended, subject to Stockholder approval of the amendment.
However, the number of shares which may be issued in a particular year or
over the term of the Incentive Plan, as well as the number of participants
who may be required to receive part of their awards in the form of shares
of stock, is not currently determinable.
Shares of stock reserved for issuance under the Incentive Plan as
proposed to be amended will be subject to adjustment for stock dividends,
stock splits, mergers, consolidations or other recapitalizations or
reorganizations of the Company. The shares may be authorized but unissued
shares, shares reacquired by the Company or a combination of both.
The table below sets forth information with respect to the amount and
form of awards (i.e., cash or cash and shares of stock) which would have
been received by the specified named individuals and groups for 1994,
assuming (i) the Incentive Plan as proposed to be amended had been in
effect for 1994 and (ii) the Guidelines had imposed the mandatory share
award provision on participants subject to the Guidelines who did not meet
the applicable minimum stock ownership levels as of December 31, 1994. The
aggregate amount of the award for each of the specified named individuals
is the same as shown in the bonus column for 1994 in the Summary
Compensation Table on page 18.
<TABLE>
NEW PLAN BENEFITS
PERFORMANCE INCENTIVE PLAN
AS PROPOSED TO BE AMENDED
<CAPTION>
Incentive Award
---------------------------
Name and Position Cash Number of Shares
----------------- ---- ----------------
<S> <C> <C>
R. G. Holder, Chairman of the Board and
Chief Executive Officer $400,000 0 shs.
J. J. Sheehan, President and Chief
Operating Officer 102,528 1,938 shs.
Y. M. Brandt, Vice Chairman of the Board 155,000 0 shs.
R. N. Reynolds, Vice Chairman of the Board;
President and Chief Executive Officer,
Reynolds International, Inc. 160,000 0 shs.
H. S. Savedge, Jr., Executive Vice
President and Chief Financial Officer 145,000 0 shs.
J. W. Wagner, Executive Vice President, Raw
Materials, Metals and Industrial Products 72,508 1,371 shs.
Executive Officer Group (24 persons) 1,835,987 12,161 shs.
Non-Executive Officer Director Group
(11 persons) 0 0 shs.
Non-Executive Officer Employee Group
(2 persons) 73,315 221 shs.
</TABLE>
On February 23, 1995, the last reported sale price of the Company's
Common Stock on the New York Stock Exchange Composite Transactions Tape was
$52 1/8 per share.
The Board of Directors recommends that Stockholders vote FOR the
approval of the Incentive Plan as proposed to be amended. Shares
represented by proxies will be voted for approval unless instructions to
the contrary are given on the proxy. If the Incentive Plan as proposed to
be amended is not approved by Stockholders, the current provisions of the
Incentive Plan will continue in effect, and all payments thereunder will be
made in cash.
ITEM 3. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of its Audit
Committee, has selected Ernst & Young LLP as independent auditors to
examine and report upon the financial statements of the Company and its
consolidated subsidiaries for the year 1995 and is submitting this matter
to Stockholders for their ratification. Ernst & Young LLP served as the
Company's independent auditors in 1994 and in prior years. If Stockholders
do not ratify the selection of Ernst & Young LLP, other independent
auditors will be considered. One or more partners of the firm of Ernst &
Young LLP will be present at the Annual Meeting to make a statement if they
desire to do so and to respond to appropriate questions that may be asked
by Stockholders.
The Board of Directors of the Company recommends that Stockholders
vote FOR the ratification of the selection of Ernst & Young LLP as
independent auditors to examine and report upon the financial statements of
the Company and its consolidated subsidiaries for the year 1995. Shares
represented by proxies will be voted for approval unless instructions to
the contrary are given on the proxy.
ITEM 4. OTHER PROPOSED ACTION
The Board of Directors is not aware that any matters other than those
stated in this Proxy Statement will come before the Annual Meeting. Should
any matters requiring the vote of Stockholders arise, it is intended that
shares represented by proxies will be voted in accordance with the
discretion of the person or persons holding the proxy.
<PAGE>
BENEFICIAL OWNERSHIP OF SECURITIES
Principal Holders
Stockholders who were known to the Company to own beneficially more
than five percent of any class of voting securities of the Company at
February 21, 1995 are set forth in the following table. Under the rules of
the Securities and Exchange Commission ("SEC"), "beneficial ownership" is
deemed to include any shares with respect to which the person, directly or
indirectly, has or shares voting and/or investment power, whether or not
such shares are held for the person's benefit.
Amount and
Nature of
Beneficial
Ownership Percent
(Number of of
Title of Class Shares) Class
-------------- ---------- -------
Wellington Management Company Common Stock 8,822,917(1) 14.2%
75 State Street
Boston, Massachusetts 02109
FMR Corp. Common Stock 8,811,121(2) 13.7%(2)
82 Devonshire Street
Boston, Massachusetts 02109
Vanguard/Windsor Fund, Inc. Common Stock 5,262,700(3) 8.5%
P. O. Box 2600
Valley Forge,
Pennsylvania 19482
Franklin Resources, Inc. Common Stock 3,266,863(4) 5.2%(4)
777 Mariners Island Blvd.
San Mateo, California 94404
____________________
[FN]
(1) As reported in an Amendment No. 3 dated January 30, 1995 to a Schedule
13G dated February 10, 1993 filed with the SEC. Based on the
information contained in such filing, of the number of shares of
Common Stock shown as beneficially owned, Wellington Management
Company, an investment advisor and parent holding company, has shared
voting power with respect to 710,518 shares, shared dispositive power
with respect to all of the shares, and sole voting and dispositive
power with respect to none of the shares. The reported shares are
owned by a variety of investment advisory clients of Wellington
Management Company, including Vanguard/Windsor Fund, Inc. See
footnote (3).
(2) As reported in an Amendment No. 3 dated February 13, 1995 to a
Schedule 13G dated April 10, 1992 filed with the SEC. Based on the
information contained in such filing, of the shares of Common Stock
shown as beneficially owned, FMR Corp., a parent holding company, has
sole voting power with respect to 396,943 shares, sole dispositive
power with respect to all of the shares, and shared voting and
dispositive power with respect to none of the shares. The filing
indicates that it was filed jointly on behalf of FMR Corp., Edward C.
Johnson 3d, chairman of FMR Corp., and Fidelity Management & Research
Company, an investment advisor and wholly-owned subsidiary of FMR
Corp. The reported shares include 2,353,564 shares of Common Stock
that would result upon conversion of 2,870,200 shares of PRIDES.
(Each share of PRIDES may be converted into .82 of a share of Common
Stock.) The percentage figure assumes 2,353,564 additional shares of
Common Stock would be outstanding as a result of such conversion.
(3) As reported in an Amendment No. 2 dated February 10, 1995 to a
Schedule 13G dated February 10, 1993 filed with the SEC. Based on the
information contained in such filing, Vanguard/Windsor Fund, Inc., an
investment company, has sole voting and shared dispositive power with
respect to all of the reported shares, and shared voting and sole
dispositive power with respect to none of the reported shares.
(4) As reported in a Schedule 13G dated February 6, 1995 filed with the
SEC. Based on the information contained in such filing, of the number
of shares of Common Stock shown as beneficially owned, Franklin
Resources, Inc., a parent holding company, has sole voting power with
respect to 3,147,963 shares, sole dispositive power with respect to
none of the shares, shared voting power with respect to 101,900 shares
and shared dispositive power with respect to all of the shares. The
reported shares include 437,609 shares of Common Stock that would
result upon conversion of 533,670 shares of PRIDES. The percentage
figure assumes 437,609 additional shares of Common Stock would be
outstanding as a result of such conversion. The reported shares are
held by Franklin Resources Inc., its subsidiaries and investment
companies advised by such subsidiaries, including, among others,
various Franklin and Templeton funds.
b[/FN]
<TABLE>
Directors, Nominees and Executive Officers
The following table sets forth the beneficial ownership (as defined above), as of February 21,
1995, of the Company's voting securities by each Director and Nominee, each of the Executive
Officers named in the Summary Compensation Table, and all Directors and Executive Officers of the
Company as a group.
<CAPTION>
Amount and Nature
Of Beneficial Ownership
(Number of Shares)
---------------------------------------------------
Sole Voting Shared Voting
and/or and/or Percent
Investment Investment of
Title of Class Power(1) Power(2) Total(3) Class(4)
-------------- ----------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Directors, Nominees and
Certain Executive Officers
Patricia C. Barron Common Stock 1,000 --- 1,000
William O. Bourke Common Stock 305,600 23,786 329,386 0.5%
Yale M. Brandt Common Stock 129,429 19,628 149,057 0.2%
Thomas A. Graves, Jr. Common Stock 1,718 --- 1,718
John R. Hall Common Stock 4,200 --- 4,200
Robert L. Hintz Common Stock 1,500 --- 1,500
Richard G. Holder Common Stock 329,594 20,934 350,528 0.6%
William H. Joyce Common Stock --- --- ---
Mylle Bell Mangum Common Stock --- --- ---
D. Larry Moore Common Stock --- --- ---
David P. Reynolds Common Stock 506,758 1,119,831 1,626,589 2.6%
PRIDES(5) --- 195,000 195,000 1.8%
Randolph N. Reynolds Common Stock 194,124 168,030 362,154 0.6%
James M. Ringler Common Stock 1,000 --- 1,000
Charles A. Sanders Common Stock 3,000 --- 3,000
Henry S. Savedge, Jr. Common Stock 59,293 3,130 62,423
Jeremiah J. Sheehan Common Stock 65,500 693 66,193 0.11%
Robert J. Vlasic Common Stock 4,000 2,000 6,000
J. Wilt Wagner Common Stock 50,000 2,510 52,510
Joe B. Wyatt Common Stock 1,500 --- 1,500
All Directors and
Executive Officers
as a group (35 in
number) Common Stock 2,234,349 1,409,802 3,644,151 5.9%
PRIDES(5) 200 195,000 195,200 1.8%
__________________
<FN>
(1) Reported in this column are shares held of record individually or held in the name of a bank,
broker or nominee for the person's account and other shares with respect to which Directors,
Nominees and Executive Officers (or their spouses, minor children or other relatives who share
their home) have sole voting and/or investment power, including shares held as sole trustee or
custodian for the benefit of others. Also included in this column are the following shares of
the Company's Common Stock which may be acquired within 60 days after February 21, 1995 under
the Company's 1982, 1987 and 1992 Nonqualified Stock Option Plans: W. O. Bourke, 280,000
shares; Y. M. Brandt, 129,329 shares; R. G. Holder, 278,000 shares; R. N. Reynolds, 115,000
shares; H. S. Savedge, Jr., 50,250 shares; J. J. Sheehan, 61,500 shares; J. W. Wagner, 50,000
shares; and all Directors and Executive Officers as a group, 1,493,779 shares.
(2) Reported in this column are shares with respect to which Directors, Nominees and Executive
Officers (or their spouses or minor children) share voting and/or investment power, including
shares held jointly with others or as co-trustee for the benefit of others and shares credited
as of December 31, 1994 to the accounts of participants under the Company's Savings and
Investment Plan for Salaried Employees and Tax Reduction Act Stock Ownership Plan for Salaried
Employees.
(3) Each Director, Nominee and Executive Officer disclaims beneficial ownership of all securities
which are not held for his or her benefit. Each of W. O. Bourke, J. R. Hall, R. G. Holder, R.
N. Reynolds and J. J. Sheehan also disclaims beneficial ownership of the following shares of
Common Stock of the Company held by his wife: Mrs. W. O. Bourke, 400 shares; Mrs. J. R. Hall,
200 shares; Mrs. R. G. Holder (as trustee and co-trustee of trusts for the benefit of her
daughters), 11,100 shares; Mrs. R. N. Reynolds, 1,806 shares; and Mrs. J. J. Sheehan, 4,000
shares. R. N. Reynolds also disclaims beneficial ownership of 4,986 shares held by two sons.
An Executive Officer not named in the table disclaims beneficial ownership of 140 shares held
by his wife as custodian for the benefit of a son. Another Executive Officer not named in the
table disclaims beneficial ownership of 200 shares of PRIDES held by his wife. All disclaimed
shares are included in the table.
(4) Unless otherwise indicated, beneficial ownership of any named individual does not exceed 0.1%
of the outstanding shares.
(5) Each share of PRIDES may be converted into .82 of a share of Common Stock.
</FN>
</TABLE>
Stock Ownership Guidelines
The Company has established Stock Ownership Guidelines for Officers
under which officers and certain other senior managers of the Company are
expected to maintain a significant ownership position in Company Common
Stock (or its equivalent, including phantom stock under incentive and
salary deferral plans). Under the guidelines, the following individuals
are expected to own at least the following amount of Company Common Stock:
the Chief Executive Officer: three times salary; the President, any Vice
Chairman of the Board, and any Executive Vice President: two times salary;
and any other officer or senior manager of the Company subject to the
Guidelines: one times salary. No specific period of time is established
within which the minimum level must be reached, although each individual
subject to the Guidelines is expected to meet the applicable minimum stock
ownership level as soon as reasonably practicable. To facilitate
compliance with the guidelines, the Board of Directors has authorized
amendment of the Company's Performance Incentive Plan, subject to
Stockholder approval, to permit awards to participants who do not meet the
applicable minimum stock ownership level to be paid part in cash and part
in shares of Common Stock of the Company. See Item 2 above.
The Company has also established Stock Ownership Guidelines for
Outside Directors under which each Outside Director is expected to own at
least 1,500 shares of Company Common Stock (or its equivalent, including
share equivalents under a deferred compensation plan). No specific period
of time is established within which the minimum level must be reached. The
Board of Directors believes it appropriate that the Committee on Directors
consider an Outside Director's failure to make reasonable progress toward
meeting the minimum level in weighing the Outside Director's renomination
to the Board.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Stockholders
Reynolds Metals Company
The Compensation Committee of the Board of Directors (the "Committee")
has general oversight responsibilities for compensation paid to Executive
Officers.
The Company's executive compensation program is designed to help the
Company become the premier supplier and recycler of aluminum and other
products in the global markets it serves by (i) building and retaining a
management team with exceptional abilities and (ii) focusing management's
attention, energy and skill on achieving short-term business goals,
securing profitable growth and maximizing long-term shareholder interests.
The key elements of the program are base salary and variable compensation
consisting of annual cash incentives and stock option awards. Annual cash
incentives are highly leveraged against performance, with lower incentive
awards payable as performance drops below preestablished goals and
relatively higher incentive awards payable for superior performance. The
higher the executive grade level, the greater the proportion of
compensation contingent on the accomplishment of business objectives.
The Committee meets regularly with management and periodically with an
independent compensation consultant to review the Company's executive
compensation program. In its review, the Committee compares the total
compensation of the Company's Executive Officers to that of a comparison
group of companies. The comparison group currently consists of 30
comparably sized, capital intensive companies about which the Company's
independent consultant has comprehensive compensation data. The group
includes three of the companies in the aluminum and metals industry peer
group against which the Company's shareholder return is measured in the
Performance Graphs on page 17. Differences in size among the comparison
group are adjusted by regression analysis based on sales levels. The
Committee believes the comparison group, which is a more varied selection
of companies than the industry peer group, is a representative sample of
types of companies which are the Company's most direct competitors for
executive talent. The Company targets individual components of executive
compensation against the comparison group but has no specific target for
total compensation.
Deductibility of Compensation. The Committee reviews, with the
assistance of appropriate corporate personnel, the impact of changes in
regulatory requirements on executive compensation. In 1994, the Committee
focused on the possible effects of the Omnibus Budget Reconciliation Act of
1993, which limits the deductibility by the Company of certain compensation
in excess of $1 million paid to the Company's Chief Executive Officer and
the other four most highly compensated Executive Officers. At the
Committee's recommendation, the Board of Directors adopted amendments to
the Company's New Management Incentive Deferral Plan and Salary Deferral
Plan for Executives to add mandatory deferral features which will take
effect when annual compensation payable to any of these five Executive
Officers would not be deductible. (For a description of the plans as
amended, see "Executive Compensation -- Certain Arrangements".) The
amendments are intended to be an interim measure for avoiding the loss of
tax deductions, pending the adoption of final regulations by the Internal
Revenue Service. Compensation paid to Executive Officers for 1994 was
fully deductible. Based on currently available information and in view of
the plan amendments described above, executive compensation paid in 1995
should also be fully deductible. For purposes of the proposed regulations,
the Committee is composed entirely of "outside directors", and stock option
awards under the Company's existing plan qualify as performance-based
compensation not subject to the $1 million cap. The Committee will
continue to monitor this area and to assess various alternatives to
minimize or eliminate any loss of tax deductions in future years, provided
the alternatives are consistent with the objectives of the Company's
executive compensation program.
Salaries. The Company pays salaries to Executive Officers which,
beginning in 1995, are targeted to be at the size-adjusted median for the
comparison group. For 1994, salaries were targeted to be somewhat below
the size-adjusted median for the comparison group. The Committee modified
the target based on information provided by the Company's independent
compensation consultant, which indicated that the comparison group used by
the Company, consisting of a large number of companies in cyclical
industries, generally has base salary levels below general industry levels.
The Committee therefore believed that the Company's policy should not
target base salaries below the median of the current comparison group.
Each year management recommends to the Committee the salaries of all
Executive Officers (other than the Chief Executive Officer). The Committee
makes its own assessment of the Chief Executive Officer's salary. In its
review, the Committee considers the Executive Officer's job
responsibilities and performance, the business outlook for the Company, the
general state of the economy and pay practices of the comparison group,
including salary data provided by the Company's independent compensation
consultant. Based on its review, the Committee makes recommendations to
the Board as it deems appropriate.
Salaries paid to Executive Officers in 1994 were somewhat below the
size-adjusted median for the comparison group, due principally to the
holdover effects of a salary freeze implemented for 1993 as a cost-saving
measure, combined with the Company's policy for 1994 that the average time
between increases in base salary rates be 24 months or greater, except in
the case of promotions involving increased responsibilities. In addition,
a salary freeze remained in effect in 1994 for Executive Officers at the
level of Executive Vice President and above (except in the case of
promotions involving increased responsibilities). As a result, three of
the Executive Officers named in the Summary Compensation Table (Messrs.
Holder, Brandt and Savedge) did not receive an increase in base salary rate
in 1994 (although 1994 data for Mr. Savedge include twelve full months for
a promotional increase given during 1993); the other three (Messrs.
Sheehan, Reynolds and Wagner) received increases as a result of promotions.
See footnotes (6)-(9) to the Summary Compensation Table.
Annual Cash Incentives. The Company has a Performance Incentive Plan
under which it pays Executive Officers and other key employees annual cash
incentives which vary in amount from year to year, or are not paid at all,
based on performance. For a detailed description of the current provisions
of the Plan and of the Plan as proposed to be amended, subject to
Stockholder approval, see Item 2 above.
The Plan does not specify particular performance measures that must be
taken into account, leaving the determination of such measures to the
Committee's discretion on an annual basis. Corporate and business unit
performance measures typically take into account profitability, cash-flow
and other short-term financial and operating goals established at the
beginning of the year. For 1994, such goals included achieving the
Company's 1994 profit plan; accomplishing a new performance improvement
goal at an annual rate of $200 million by the end of the year; improving
customer satisfaction; improving employee empowerment and satisfaction;
reducing cycle time on significant products and work processes; improving
cash management; and updating the corporate blueprint for strategic,
profitable growth. Individual performance measures take into account the
person's accomplishment of individual goals and contribution to overall
corporate performance for the year. Threshold, target and maximum award
levels are established by the Committee to reward performance based on
corporate, business unit and individual goals. None of the goals has a
specific weight, although overall levels of corporate profitability are
generally a threshold factor in determining incentive awards.
After the close of each year, management recommends cash awards for
Executive Officers (other than the Chief Executive Officer) for that year
based on its assessment of corporate, business unit and individual
performance for the year. The Committee makes its own assessment of
corporate and individual performance in determining any cash award to be
paid to the Chief Executive Officer. The Committee grants cash awards it
deems appropriate after considering management's recommendations and the
total annual cash compensation levels necessary to be competitive with
levels paid by the comparison group. When performance is superior, annual
cash incentives are targeted to be such that total annual cash compensation
paid (i.e., salary and incentive for the year) will be in the top quartile
of the comparison group. Conversely, poor performance will result in total
annual cash compensation in the bottom quartile of the comparison group.
For 1994, management recommended that the Committee grant incentive
awards under the Plan. The principal factor taken into account was the
Company's return to profitability. The Committee accepted the
recommendation and granted awards to Executive Officers in the range of 35%
of the targeted maximum incentive opportunity payable under the Plan.
Stock Options. The Company maintains a 1992 Nonqualified Stock Option
Plan, under which the Committee grants annually to Executive Officers and
other key employees options to purchase Common Stock of the Company. The
options provide a long-term incentive to build the Company's businesses and
align management's objectives with shareholders' interests by rewarding
management only when shareholder value is created. All options granted
under the 1992 Plan are exercisable no earlier than one year or later than
ten years from the date of grant at an exercise price equal to the fair
market value of the underlying Common Stock on the date of grant. Except
for required adjustments to reflect changes in the Company's capital
structure, such as stock splits, the Company has never adjusted the price
nor amended the financial terms of outstanding options. As a result,
Executive Officers cannot benefit from stock price appreciation unless
shareholders also benefit. The ten-year Performance Graph on page 17,
which compares the Company's shareholder return over the last ten years
with that of the S&P 500 Stock Index and an aluminum and metals industry
peer group, corresponds to the term of the stock options.
Stock options are currently the Company's sole incentive tied to
long-term performance. The size of the option award granted to each
Executive Officer is based on a stock option grant schedule, approved by
the Committee, which allocates shares authorized for stock options under
the 1992 Plan to eligible employees based on salary grade and long-term
incentive compensation data provided by the Company's independent
compensation consultant. The schedule is used as a guide for what a
typical award might be for each eligible employee, including each Executive
Officer, while actual awards may vary based on the experience, achievements
and anticipated future contributions to the Company of each individual.
(The number of options and shares currently held by an optionee is not a
factor in determining individual grants.) The schedule was adjusted for
1994 to target awards nearer to the size-adjusted median for long-term
compensation in the comparison group of companies, using values based on
option pricing models provided by the Company's compensation consultant.
As a result of the adjustment, stock option awards to Executive Officers in
1994 averaged approximately 5% above the median. (In 1993, the awards had
averaged approximately 20% below the median.) In approving the schedule
and the size of the awards for 1994, the Committee's decisions were based
on its own judgment exercised within the framework described above, rather
than on any particular corporate performance measure.
Chief Executive Officer Compensation. Compensation for the Company's
Chief Executive Officer is established in accordance with the executive
compensation philosophy and policies described above.
In an enhancement to the Company's corporate governance practices,
beginning for 1994, the Board of Directors meets after the close of each
year in executive session to review the performance of the Company
generally, senior management as a group and the Chief Executive Officer
individually. The Chairman of the Committee acts as "lead director" for
this executive session.
Mr. Holder's salary level is generally the result of: (i) the salary
grade level assigned to his position, which takes into account knowledge
and level of responsibility; (ii) time in his current position and
individual performance; (iii) salary data provided by the Company's
independent compensation consultant; and (iv) salary budget guidelines for
the year which take into account the business outlook for the Company. By
design, Mr. Holder's salary should be at the size-adjusted median for the
comparison group, consistent with the Company's executive compensation
philosophy. At Mr. Holder's request, Mr. Holder's base salary for 1994
remained at the same level as in 1993 and 1992, consistent with the freeze
on salaries of all Executive Officers at the level of Executive Vice
President and above, which was continued from 1993 as a cost-saving
measure. Due to the salary freeze, Mr. Holder's salary during 1994 was
more than 24% below the size-adjusted median for the comparison group.
The Committee approved a cash incentive award to Mr. Holder for 1994
under the Performance Incentive Plan of $400,000. In making this award,
the Committee noted Mr. Holder's vision and initiative in overseeing the
Company's return to profitability in 1994. Under Mr. Holder's leadership,
the Company had profit before tax of $190.1 million in 1994, compared to a
loss of $515.1 million in 1993. The Company also exceeded its 1994
performance improvement goal to achieve performance improvements at an
annual rate of $200 million, pretax, by year-end. In addition, the Company
implemented customer and employee satisfaction measurement processes and
completed several strategic transactions which should better position the
Company to achieve its goal of long-term strategic growth. These included,
among others, (i) the public offering of $505 million of preferred stock
which provided funding for a portion of the Company's 1994 capital
expenditure program and supported strategic expansion of its core
businesses, particularly in cans and wheels; (ii) the purchase of Bev-Pak,
Inc., which strengthened the Company's can-manufacturing position in the
Midwest; (iii) the sale of the Company's 40% interest in the Boddington
Gold Mine in Western Australia; and (iv) the acquisition of an additional
6% equity interest (bringing the Company's stake to 56%) in the Worsley
Joint Venture bauxite and alumina operation in Western Australia.
The Committee approved a 1994 stock option grant to Mr. Holder of
65,000 shares, which was at the scheduled amount for his salary grade
level. The grant was lower than for the prior year, which reflected
special consideration for Mr. Holder's first full year as Chief Executive
Officer and the Committee's determination to weight his 1993 compensation
package toward long-term objectives and to recognize the role he played in
restructuring activities and achieving substantial progress toward
performance improvement targets.
The members of the Committee during 1994 were J. R. Hall (Chairman),
T. A. Graves, Jr., R. L. Hintz, C. A. Sanders and R. J. Vlasic. Effective
January 1, 1995, the membership of the Committee was reconstituted to
consist of J. R. Hall (Chairman), T. A. Graves, Jr., J. M. Ringler, C. A.
Sanders and J. B. Wyatt.
COMPENSATION COMMITTEE
John R. Hall, Chairman
Thomas A. Graves, Jr.
Robert L. Hintz
James M. Ringler
Charles A. Sanders
Robert J. Vlasic
Joe B. Wyatt
February 24, 1995
Richmond, Virginia
<PAGE>
PERFORMANCE GRAPHS
Following are two line graphs comparing the cumulative total
shareholder return on the Company's Common Stock with the cumulative total
returns of the S&P 500 Stock Index and a peer group which consists of
companies included by S&P in its published indices for the Aluminum
Industry (Alcoa, Alcan and the Company) and the Metals Industry (ASARCO,
Amax (1), Cypress Minerals, Inco and Phelps Dodge). The returns of each
component company in the peer group were weighted according to the
respective company's stock market capitalization. The first graph compares
the returns over a five-year period; the second compares the returns over a
ten-year period, which corresponds to the term of the stock options granted
to Executive Officers during 1994. See "Executive Compensation - Stock
Option Grants in 1994".
The graphs assume that the value of the investment in the Company's
Common Stock and each index was $100 on December 31, 1989 and December 31,
1984, respectively, and that all dividends were reinvested. Since December
31, 1989, the cumulative total shareholder return on the Company's Common
Stock was 5%; since December 31, 1984, the return was 272%.
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
COMPANY, S&P 500, AND ALUMINUM & METALS INDUSTRY
<CAPTION>
Measurement Period Company S&P 500 Aluminum &
(Fiscal Year Covered) Metals
Industry
<S> <C> <C> <C>
Measurement Pt-12/31/89 $100 $100 $100
FYE 12/31/90 $110 $97 $92
FYE 12/31/91 $109 $126 $101
FYE 12/31/92 $109 $136 $106
FYE 12/31/93 $ 96 $150 $112
FYE 12/31/94 $105 $152 $135
</TABLE>
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
COMPANY, S&P 500, AND ALUMINUM & METALS INDUSTRY
<CAPTION>
Measurement Period Company S&P 500 Aluminum &
(Fiscal Year Covered) Metals
Industry
<S> <C> <C> <C>
Measurement Pt-12/31/84 $100 $100 $100
FYE 12/31/85 $116 $132 $105
FYE 12/31/86 $126 $156 $ 99
FYE 12/31/87 $303 $164 $158
FYE 12/31/88 $343 $191 $201
FYE 12/31/89 $353 $252 $237
FYE 12/31/90 $387 $244 $218
FYE 12/31/91 $386 $318 $240
FYE 12/31/92 $385 $343 $251
FYE 12/31/93 $337 $377 $265
FYE 12/31/94 $372 $382 $320
- -------------------
<FN>
(1) Amax was deleted from the published Metals Industry Index effective
upon the merger of Amax with Cyprus Minerals in 1993.
</FN>
</TABLE>
<TABLE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth for each of the last three fiscal years the total annual and
long-term compensation of the Company's Chief Executive Officer and its other five most highly
compensated Executive Officers who were serving as Executive Officers at December 31, 1994:
<CAPTION>
Annual Long-Term
Compensation Compensation
------------------------------ ------------
Awards
Other -----------
Annual Securities All Other
Compen- Underlying Compen-
Name and Salary Bonus sation Options/SARs sation
Principal Position Year ($) ($)(1) ($)(2) (#)(3) ($)(4)
- -------------------------- ------- ------ ------- ------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Richard G. Holder,
Chairman of the Board and 1994 $575,000 $400,000 $3,858 65,000 shs. $25,056
Chief Executive Officer, 1993 575,000 -0- -0- 80,000 shs. 25,516
Reynolds Metals Company 1992(5) 541,667 -0- -0- 30,000 shs. 23,099
Jeremiah J. Sheehan,
President and Chief 1994(6) $348,750 $205,000 $ 375 30,000 shs. $23,718
Operating Officer, 1993 280,000 -0- -0- 19,000 shs. 8,820
Reynolds Metals Company 1992 271,667 -0- -0- 12,000 shs. 8,400
Yale M. Brandt,
Vice Chairman of the 1994 $375,000 $155,000 $ 613 25,000 shs. $12,556
Board, Reynolds Metals 1993 375,000 -0- -0- 21,000 shs. 12,406
Company 1992 366,667 -0- -0- 16,000 shs. 11,918
Randolph N. Reynolds,
Vice Chairman of the 1994(7) $347,083 $160,000 $3,038 25,000 shs. $16,713
Board, Reynolds Metals 1993 315,000 -0- -0- 19,000 shs. 12,457
Company; President and 1992 306,667 -0- -0- 16,000 shs. 11,637
Chief Executive Officer,
Reynolds International, Inc.
Henry S. Savedge, Jr.,
Executive Vice President 1994 $265,000 $145,000 $-0- 22,500 shs. $10,951
and Chief Financial Officer, 1993(8) 262,083 -0- -0- 20,000 shs. 10,868
Reynolds Metals Company 1992(8) 220,000 -0- -0- 7,500 shs. 9,600
J. Wilt Wagner,
Executive Vice President, 1994(9) $265,000 $145,000 $ 527 22,500 shs. $10,951
Raw Materials, Metals and 1993 230,000 -0- -0- 19,000 shs. 9,917
Industrial Products, 1992(9) 215,667 -0- -0- 8,000 shs. 9,481
Reynolds Metals Company
____________________
<FN>
(1) Amounts shown in this column are cash awards granted under the Company's Performance Incentive
Plan.
(2) Amounts shown in this column represent tax reimbursements for certain travel expenses.
(3) Option awards were granted under the Company's 1992 Nonqualified Stock Option Plan. See the
section below entitled "Stock Option Grants in 1994". None of the options has stock
appreciation rights attached.
(4) Amounts shown in this column for 1994 include the following:
(a) Company contributions to the Company's Savings and Investment Plan for Salaried Employees
(the "Savings Plan") in the amount of $4,502 for R. G. Holder; $4,502 for J. J. Sheehan;
$4,503 for Y. M. Brandt; $4,501 for R. N. Reynolds; $4,503 for H. S. Savedge, Jr.; and
$4,503 for J. W. Wagner.
(b) Amounts credited as Company contributions under the Company's Benefit Restoration Plan for
the Savings Plan in the amount of $12,755 for R. G. Holder; $5,966 for J. J. Sheehan;
$6,754 for Y. M. Brandt; $5,913 for R. N. Reynolds; $3,448 for H. S. Savedge, Jr.; and
$3,448 for J. W. Wagner.
(c) Amounts paid under the Company's Financial Counseling Assistance Plan for Officers in the
amount of $7,800 for R. G. Holder; $13,250 for J. J. Sheehan; $1,300 for Y. M. Brandt;
$6,300 for R. N. Reynolds; $3,000 for H. S. Savedge, Jr.; and $3,000 for J. W. Wagner.
(5) Mr. Holder was elected Chairman of the Board and Chief Executive Officer of the Company
effective May 1, 1992, having previously served as President and Chief Operating Officer of the
Company since 1988. Effective May 1, 1992, Mr. Holder's annual base salary rate increased from
$475,000 to $575,000 as part of his promotional salary increase; the 1992 stock option award
was granted before he assumed the new position.
(6) Mr. Sheehan was elected President and Chief Operating Officer of the Company effective January
21, 1994, having previously served as Executive Vice President, Fabricated Products of the
Company since 1993. Effective February 1, 1994, Mr. Sheehan's annual base salary rate
increased from $280,000 to $355,000 as part of his promotional salary increase.
(7) Mr. Reynolds was elected a Vice Chairman of the Board of the Company effective January 21,
1994, having previously served as Executive Vice President, International of the Company since
1990. Effective February 1, 1994, Mr. Reynolds' annual base salary rate increased from
$315,000 to $350,000 as part of his promotional salary increase.
(8) Mr. Savedge was elected Executive Vice President and Chief Financial Officer of the Company
effective May 1, 1992, having previously served as Vice President, Finance since 1990.
Effective February 1, 1993, Mr. Savedge received an increase in annual base salary rate from
$230,000 to $265,000 -- part of a promotional increase which lagged the effective date of his
1992 promotion. The 1992 stock option award was granted before he assumed the new position.
(9) Mr. Wagner was elected Executive Vice President, Fabricated Industrial Products of the Company
effective May 1, 1992, having previously served as Vice President, Mill Products Division of
the Company since 1990. (His title was subsequently changed to Executive Vice President, Raw
Materials, Metals and Industrial Products.) Effective January 1, 1994, Mr. Wagner received an
increase in annual base salary rate from $230,000 to $265,000 -- part of a promotional increase
which lagged the effective date of his 1992 promotion. The 1992 stock option award was granted
before he assumed the new position.
</FN>
</TABLE>
<TABLE>
Stock Option Grants in 1994
The following table sets forth information with respect to stock options granted by the Company
to each of the six named Executive Officers during 1994 and the grant-date present value of such
options. The grant-date present value is a theoretical value which is not necessarily indicative of
the ultimate value of the options to the Executive Officers. Ultimately, value is dependent on the
amount, if any, by which the market price of the Common Stock at any point in time exceeds the
exercise price. (See footnote (4) to the table.)
<CAPTION>
Individual Grants
---------------------------------------------------
% of
Number of Total
Securities Options Exercise
Underlying Granted to or Base Grant-Date
Options Employees Price Per Expiration Present
Name Granted(1) in 1994(2) Share(3) Date Value (4)
- ------------------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
R. G. Holder 65,000 8.9% $45.375 5/19/04 $1,142,050
J. J. Sheehan 30,000 4.1 45.375 5/19/04 527,100
Y. M. Brandt 25,000 3.4 45.375 5/19/04 439,250
R. N. Reynolds 25,000 3.4 45.375 5/19/04 439,250
H. S. Savedge, Jr. 22,500 3.1 45.375 5/19/04 395,325
J. W. Wagner 22,500 3.1 45.375 5/19/04 395,325
____________________
<FN>
(1) All options were granted under the Company's 1992 Nonqualified Stock Option Plan (the "1992
Plan"), approved by Stockholders at the 1991 Annual Meeting. Each option entitles the optionee
to purchase one share of Common Stock from the Company, and is exercisable no earlier than one
year or later than ten years from the date of grant at an exercise price equal to the fair
market value of the underlying Common Stock on the date of grant. The options granted in 1994
will become exercisable on May 19, 1995. None of the options has stock appreciation rights
attached. If there is a Change in Control (as defined in the 1992 Plan) of the Company, the
1992 Plan provides that all options already granted thereunder will become immediately
exercisable thirty days after the Change in Control occurs, unless the Compensation Committee
determines that the Change in Control presents no material risk of loss of options to any
optionee and directs that no such acceleration of exercisability should occur. To the extent
necessary to preserve the exemption from short-swing profit liability under Section 16(b) of
the Securities Exchange Act of 1934, the date as of which options first become exercisable by
optionees who are Executive Officers or Directors may not be accelerated to occur earlier than
six months from the date of the respective grant.
(2) A total of 459 persons were granted options in 1994 under the 1992 Plan, covering an aggregate
of 727,950 shares of Common Stock, which constituted approximately 36% of the shares available
for options under the 1992 Plan.
(3) The exercise price may be paid by the optionee in cash, in shares of Common Stock valued at
fair market value on the date of exercise, or pursuant to an exercise procedure under which a
brokerage firm makes a loan to the optionee for the payment of the option exercise price and
all applicable withholding taxes. The optionee may repay the loan by selling the purchased
shares immediately through the brokerage firm, or the loan may remain outstanding until the
shares are later sold or the loan is otherwise repaid by the optionee.
(4) THE VALUES SHOWN ARE PURELY THEORETICAL. The options had no immediate value on the date of
grant and will have no value until one year after the grant and then only to the extent that
the market price of the Common Stock exceeds the exercise price. The values shown are based on
the Black-Scholes option pricing model, a complex mathematical formula used to value
publicly-traded options. The following assumptions were used to calculate the values under the
Black-Scholes formula: (i) an expected volatility rate of .265 with respect to the Common
Stock based on the average weekly price change of the Common Stock for the six months before
the date of grant; (ii) a risk-free rate of return of 7.0% based on the 10-year Treasury bond
yield on the date of grant; (iii) a dividend yield of 2.2% based on the current annual dividend
of $1.00 per share; and (iv) an option term of ten years, an option exercise price of $45.375
per share and an exercise date of May 19, 2004. The Black-Scholes formula does not take into
account, and the values shown in the table were not adjusted for, two important aspects of
options awarded under the 1992 Plan. First, the formula assumes that a liquid market exists
for the options; however, options awarded under the 1992 Plan may not be transferred. Second,
it assumes that the options may be exercised immediately; however, options awarded under the
1992 Plan may not be exercised earlier than one year from the date of grant.
The values assigned to the reported options are provided solely to comply with SEC rules. No
prediction is made as to possible future appreciation, if any, of the Company's stock price.
See page 8 for a recent price of the Common Stock.
</FN>
</TABLE>
<TABLE>
Aggregated Option Exercises in 1994 and
Option Values at December 31, 1994
The table below sets forth information with respect to options exercised by each of the six
named Executive Officers during 1994 and the number and value of unexercised options held at the end
of 1994:
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Number of December 31, 1994 December 31, 1994
Shares ----------------- -----------------
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized(1) Unexercisable Unexercisable(2)
- ------------------- ----------- ----------- ------------- ----------------
<S> <C> <C> <C> <C>
R. G. Holder -0- -0- 278,000/65,000 $1,345,000 /$235,625
J. J. Sheehan 4,000 $14,500 61,500/30,000 87,063 / 108,750
Y. M. Brandt -0- -0- 129,329/25,000 495,886 / 90,625
R. N. Reynolds -0- -0- 115,000/25,000 382,500 / 90,625
H. S. Savedge, Jr. -0- -0- 50,250/22,500 99,375 / 81,563
J. W. Wagner -0- -0- 50,000/22,500 87,063 / 81,563
__________________
<FN>
(1) Based on the difference between the option exercise price and the closing price of the
Company's Common Stock on the date of exercise as reported on the New York Stock Exchange
Composite Transactions Tape.
(2) Based on the difference between the option exercise price and the closing price of $49 per
share of the Company's Common Stock on December 31, 1994 as reported on the New York Stock
Exchange Composite Transactions Tape.
</FN>
</TABLE>
<TABLE>
Pension Plan Table
The following table sets forth the total estimated annual benefits payable under the Company's
defined benefit pension plan, called the New Retirement Program for Salaried Employees (the "New
Retirement Program"), and benefit restoration plans upon retirement to persons in specified final
average earnings and years-of-benefit-service classifications. The amounts shown are based on the
Social Security Act in effect for retirement in 1995. Such amounts are not necessarily indicative
of amounts that are or may actually become payable.
<CAPTION>
Years of Benefit Service at Retirement (1)
-------------------------------------------------------------------------------------
Final
Average
Earnings 5 10 15 20 25 30 35 40
- --------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$150,000 $ 12,780 $ 25,561 $ 38,341 $ 51,122 $ 63,903 $ 70,683 $ 77,464 $ 84,244
300,000 26,280 52,561 78,841 105,122 131,403 145,683 159,964 174,244
450,000 39,780 79,561 119,341 159,122 198,903 220,683 242,464 264,244
600,000 53,280 106,561 159,841 213,122 266,403 295,683 324,964 354,244
750,000 66,780 133,561 200,341 267,122 333,903 370,683 407,464 444,244
900,000 80,280 160,561 240,841 321,122 401,403 445,683 489,964 534,244
1,050,000 93,780 187,561 281,341 375,122 468,903 520,683 572,464 624,244
1,200,000 107,280 214,561 321,841 429,122 536,403 595,683 654,964 714,244
1,350,000 120,780 241,561 362,341 483,122 603,903 670,683 737,464 804,244
1,500,000 134,280 268,561 402,841 537,122 671,403 745,683 819,964 894,244
___________________________
<FN>
(1) Benefits are computed as if paid on the basis of a straight life annuity, assuming retirement
at age 65.
</FN>
</TABLE>
<TABLE>
The table below sets forth information relating to the New Retirement
Program with respect to the six Executive Officers named in the Summary
Compensation Table, assuming retirement (and eligibility for retirement) at
January 1, 1995:
<CAPTION>
Final Average Years of Benefit
Earnings Service Completed
------------- -----------------
<S> <C> <C>
R. G. Holder $917,000 36
J. J. Sheehan(1) 394,000 7
Y. M. Brandt 607,000 37
R. N. Reynolds 511,000 26
H. S. Savedge, Jr. 304,000 35
J. W. Wagner 298,000 31
_______________
<FN>
(1) The Company has agreed to pay J. J. Sheehan (a) certain early
retirement benefits equivalent to those he would have received from a
prior employer, if his employment with the Company is involuntarily
terminated before age 65, and (b) upon his death, surviving spouse
benefits equal to one-half of any amounts payable under clause (a).
</FN>
</TABLE>
The New Retirement Program provides participants an annual benefit
upon retirement determined pursuant to a formula which takes into account
final average earnings, years of benefit service (as defined in the New
Retirement Program), and Social Security benefits. For purposes of the New
Retirement Program, a participant's final average earnings include base
salary in effect, plus profit sharing and bonus awards, in the five
consecutive calendar years for which the average is highest during the
fifteen calendar years preceding retirement. (See the Summary Compensation
Table for salary and bonus information for the six named Executive Officers
for the years 1992-1994.) Benefits calculated pursuant to the formula are
reduced by an amount based upon both (a) the primary Social Security
benefit estimated to be payable upon retirement or, if later, at age 65 and
(b) years of benefit service. Regulations issued in 1991 to implement the
Tax Reform Act of 1986 and subsequent legislation may require the Company
to make changes in the benefit formula from time to time. Benefits payable
under the New Retirement Program are directly offset by benefits payable to
participants from the Company's Retirement Program for Salaried Employees,
which was terminated effective August 22, 1983.
The Internal Revenue Code and the Tax Reform Act of 1986 prescribe
limits on compensation that may be taken into account to calculate benefits
and the actual benefits payable under tax-qualified defined benefit plans.
The Company has nonqualified benefit restoration plans providing for the
payment from general funds of amounts otherwise payable under the New
Retirement Program but for these limitations.
Certain Arrangements
The Company has entered into severance agreements with key executives
designated by the Compensation Committee, including the six Executive
Officers named in the Summary Compensation Table. Each agreement provides
that termination compensation will be paid if the executive's employment is
terminated without Cause (as defined in the agreement) by the Company or
terminated by the executive in certain circumstances, in either case within
two years after a Change in Control (as defined in the agreement).
Termination compensation includes (a) a cash payment equal to three times
the sum of (i) annual base salary at the time of termination plus (ii) the
highest cash incentive award paid to the executive for any previous year,
(b) a cash settlement of stock options granted under the Company's stock
option plans but not yet exercisable at the date of termination, and (c) a
cash payment to give retirement benefits equal to those payable had the
executive (i) been vested (if not already vested at the time of
termination) and (ii) worked for the Company three additional years. In
addition, each agreement provides for continuation of medical, life and
disability benefits for three years, ownership of the car assigned to the
executive at the time of termination and making the executive whole for any
applicable excise taxes as a result of payment of the termination
compensation.
The Company has a New Management Incentive Deferral Plan (the "New
Deferral Plan") under which officers, including the six Executive Officers
named in the Summary Compensation Table, and other key employees who are
recommended by the Chief Executive Officer may defer receipt of up to 85%
of incentive compensation, if any, otherwise payable under the Company's
Performance Incentive Plan for services performed each year. Deferred
compensation is credited with additional income in the form of (i) interest
computed at a rate determined by the Compensation Committee for that year's
deferrals or (ii) in the case of mandatory deferrals described below or if
elected by a participant who is subject to the Company's Stock Ownership
Guidelines for Officers, a number of shares of phantom stock of the
Company. Deferrals must be for a period of at least five years, except in
the case of retirement. Payments will be made in a lump sum or in 5 or 10
annual installments, as elected by the participant. The New Deferral Plan
also contains a mandatory deferral feature effective for 1995 and 1996
providing that when annual compensation payable to the Company's Chief
Executive Officer or any of its other four most highly compensated
Executive Officers would not be deductible under the Internal Revenue Code
in a given year, payment of incentive compensation will automatically be
deferred to the extent necessary to make the Executive Officer's annual
compensation fully deductible. Any amounts so deferred will be paid out
after the Executive Officer's retirement in accordance with a schedule
elected by the Executive Officer. To the extent that incentive
compensation would have been paid in the form of shares of stock (under the
Performance Incentive Plan as proposed to be amended as described in Item 2
above) but for the above-described mandatory deferral provisions, the
deferred compensation will be credited with additional income based on
shares of phantom stock of the Company. In addition, before the beginning
of the calendar year, a participant who anticipates being subject to a
mandatory deferral may voluntarily elect to have any amounts subject to a
mandatory deferral earn additional income based on shares of phantom stock
of the Company. The New Deferral Plan allows the Compensation Committee to
accelerate payments to all participants if it determines that a major
challenge to the control of the Company exists or if other extraordinary
circumstances make such acceleration in the best interest of the Company as
determined by the Committee.
The Company also maintains a Management Incentive Deferral Plan (the
"Deferral Plan"). The Deferral Plan is essentially identical to the New
Deferral Plan except that the Deferral Plan (i) provides for deferrals of
up to 50% of incentive compensation, (ii) permits payments in either a lump
sum or in 5, 10, 15 or 20 annual installments, as the participant elects,
and (iii) contains no mandatory deferral provisions. As a result of
adoption of the New Deferral Plan, no further deferrals are being made
under the Deferral Plan, although amounts already deferred will continue to
accrue interest and will be paid out under the terms of the Deferral Plan.
The Company also has a Salary Deferral Plan for Executives (the
"Salary Deferral Plan") under which eligible employees whose annual base
salary exceeds the compensation that can be taken into account for
qualified pension plan purposes under the Internal Revenue Code may
irrevocably elect to defer a specified percentage of each year's base
salary to the extent the salary exceeds the statutory limit. Deferrals may
be in 5% increments, up to a maximum of 90% of salary in excess of the
statutory limit. Deferred amounts are credited with phantom earnings equal
to what would be earned if the deferred amounts were actually invested in
any of the investment funds available under the Company's Savings and
Investment Plan for Salaried Employees. Deferrals are not paid out until
the participant terminates employment and are paid in cash. Payments will
begin in the first, second, third or fourth January following the year in
which the participant terminates employment and may be in the form of
either a lump sum or five annual installments, in each case as the
participant elects. The Salary Deferral Plan also contains a mandatory
deferral feature effective for 1995 and 1996 to take effect when annual
compensation payable to the Company's Chief Executive Officer or any of its
other four most highly compensated Executive Officers would not be
deductible under the Internal Revenue Code in a given year in spite of any
mandatory deferral that has already been implemented under the New Deferral
Plan. In this situation, payment of salary will automatically be deferred
to the extent necessary to make the Executive Officer's annual compensation
fully deductible. The Salary Deferral Plan also allows the Compensation
Committee to accelerate payments to all participants if it determines that
a major challenge to the control of the Company exists or if other
extraordinary circumstances make such acceleration in the best interest of
the Company as determined by the Committee.
As described in footnote (1) to the table in the section entitled
"Stock Option Grants in 1994", the 1992 Plan provides that under certain
circumstances the exercisability of stock options granted to optionees,
including the six Executive Officers named in the Summary Compensation
Table, may be accelerated in the event of a Change in Control of the
Company.
GENERAL INFORMATION
Annual Report
The Annual Report of the Company containing audited financial
statements for the year 1994 is being mailed to each Stockholder with this
Proxy Statement.
Stockholders' Proposals and Nominations
Stockholders may present proposals which are proper subjects for
consideration at the 1996 Annual Meeting of Stockholders to the Company for
inclusion in its proxy materials relating to that meeting. These proposals
should be submitted in writing as specified by SEC rules to: Reynolds
Metals Company, 6601 West Broad Street, P.O. Box 27003, Richmond, Virginia
23261-7003, Attention: Secretary. They must be received by October 27,
1995 in order to be included in the proxy materials for the 1996 Annual
Meeting.
Stockholder nominations for Directors will be considered by the
Committee on Directors if submitted in writing to the Committee on
Directors, c/o Secretary, Reynolds Metals Company, 6601 West Broad Street,
P.O. Box 27003, Richmond, Virginia 23261-7003. Nominations must include
the information specified in clauses (ii) through (v) in the following
paragraph.
The Company's By-Laws require that Stockholders furnish written notice
to the Company of any business to be conducted at an annual meeting which
is not included in the Company's proxy materials or is not brought before
the meeting by or at the direction of the Board of Directors or the officer
presiding over the meeting. Such notice must contain the following
information: (i) a full description of each item of business proposed to
be brought before the meeting; (ii) the name and address of the person
proposing such business (or nominating a Nominee for Director); (iii) the
class and number of shares held of record, held beneficially and
represented by proxy by such person as of the record date for the meeting
(if publicly available) and as of the date of such notice; (iv) if any item
of such business involves a nomination for Director, all information
regarding each such Nominee that would be required to be set forth in a
definitive proxy statement filed with the SEC pursuant to SEC rules, and
the written consent of each such Nominee; and (v) all other information
that would be required to be filed with the SEC if, with respect to such
business, the person were a participant in a solicitation subject to
Section 14 of the Securities Exchange Act of 1934. Notice of business to
be brought before the 1996 Annual Meeting must be received by the Secretary
of the Company at the above address not later than January 25, 1996.
A copy of the By-Law provisions referred to above may be obtained,
without charge, upon written request to the Secretary.
D. MICHAEL JONES
Secretary
February 24, 1995
Richmond, Virginia
<PAGE>
Notice of
Annual Meeting
of Stockholders
April 19, 1995
and
Proxy Statement
(Reynolds logo)
<PAGE>
Appendix 1
REYNOLDS METALS COMPANY
Proxy Solicited by the Board of Directors
for Annual Meeting of Stockholders
April 19, 1995
The undersigned appoints Richard G. Holder and D. Michael Jones, and
each of them, proxies, with full power of substitution, to vote the shares
of Common Stock of Reynolds Metals Company which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company to be
held at Reynolds Metals Company Building, 6601 West Broad Street, Richmond,
Virginia, on Wednesday, April 19, 1995 at 10:00 A.M. (local time), and at
any adjournments thereof. The undersigned hereby confer(s) upon the
proxies and each of them authority to vote for a substitute Nominee or
substitute Nominees designated by the Board of Directors with respect to
the election of Directors if any Nominee is unavailable to serve for any
reason if elected.
For participants in the Company's Savings and Investment Plan for
Salaried Employees, Tax Reduction Act Stock Ownership Plan for Salaried
Employees, Savings Plan for Hourly Employees and/or Employees Savings Plan,
this card also provides voting instructions to the respective trustees
under such plans for the undersigned's allocable portion, if any, of the
total number of shares of Common Stock of the Company held by such plans as
indicated on the reverse side. (Note: The number of plan shares indicated
on the reverse side may not be the same as the number of shares shown on
the undersigned's last account statement(s) from the plans due to the use
of different valuation dates and/or accounting methods.) These voting
instructions are solicited and will be carried out in accordance with the
applicable provisions of such plans.
(continued and to be SIGNED on the Reverse Side)
- ---------------------------------------------------------------------------
[Front, tear-off portion]
(FOLD AND DETACH HERE)
Dear Stockholder:
Enclosed are materials relating to the Company's 1995 Annual Meeting
of Stockholders. The notice of the Meeting and Proxy Statement describe
the formal business to be transacted at the Meeting.
Your vote is important to us. Whether or not you expect to attend the
Meeting, please complete, sign and return promptly the attached proxy card
in the accompanying envelope, which requires no postage if mailed in the
United States.
If you plan to attend the Meeting, please also mark the attendance box
located in the upper right hand corner of the proxy card.
REYNOLDS METALS COMPANY
<PAGE>
[Reverse Side]
I plan to attend
the meeting
/___/
The Board of Directors recommends a vote FOR Items 1, 2 and 3.
Item 1 - Election of Directors:
FOR all Nominees - Patricia C. Barron, William
Nominees WITHHOLD O. Bourke, Yale M. Brandt, John R. Hall,
(except as AUTHORITY Robert L. Hintz, Richard G. Holder,
withheld in to Vote William H. Joyce, Mylle Bell Mangum,
the space for all D. Larry Moore, Randolph N. Reynolds,
provided) Nominees James M. Ringler, Charles A. Sanders,
Henry S. Savedge, Jr., Jeremiah J.
Sheehan, Robert J. Vlasic, Joe B. Wyatt
(To withhold authority to vote for any
individual Nominee, write that
Nominee's name in the space provided
below.)
/__/ /__/ _______________________________________
Item 2 Item 3
Approval of Amendment of Ratification of Selection of
Performance Incentive Plan Ernst & Young LLP as Independent
Auditors
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
/__/ /__/ /__/ /__/ /__/ /__/
Item 4
In their discretion the proxies are
authorized to vote upon such other
matters as may properly come before
the Meeting.
Date: ________________________________
______________________________________
Signature(s) of Stockholder(s)
______________________________________
Please mark, date and sign as your name
appears to the left and return in the
enclosed envelope. If signing as
attorney, executor, administrator,
trustee, guardian or in another
representative capacity, please give
your full title as such.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. THE
SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH ANY CHOICE
SPECIFIED BY THE STOCKHOLDER; WHERE THERE IS NO CHOICE, SUCH SHARES WILL BE
VOTED IN FAVOR OF ITEMS 1, 2 AND 3.
<PAGE>
REYNOLDS METALS COMPANY
Proxy Solicited by the Board of Directors
for Annual Meeting of Stockholders
April 19, 1995
The undersigned appoints Richard G. Holder and D. Michael Jones, and
each of them, proxies, with full power of substitution, to vote the shares
of 7% PRIDES (Service Mark), Convertible Preferred Stock of Reynolds Metals
Company which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at Reynolds Metals Company Building,
6601 West Broad Street, Richmond, Virginia, on Wednesday, April 19, 1995 at
10:00 A.M. (local time), and at any adjournments thereof. The undersigned
hereby confer(s) upon the proxies and each of them authority to vote for a
substitute Nominee or substitute Nominees designated by the Board of
Directors with respect to the election of Directors if any Nominee is
unavailable to serve for any reason if elected.
(continued and to be SIGNED on the Reverse Side)
- ---------------------------------------------------------------------------
[Front, tear-off portion]
(FOLD AND DETACH HERE)
Dear Stockholder:
Enclosed are materials relating to the Company's 1995 Annual Meeting
of Stockholders. The notice of the Meeting and Proxy Statement describe
the formal business to be transacted at the Meeting.
Your vote is important to us. Whether or not you expect to attend the
Meeting, please complete, sign and return promptly the attached proxy card
in the accompanying envelope, which requires no postage if mailed in the
United States.
If you plan to attend the Meeting, please also mark the attendance box
located in the upper right hand corner of the proxy card.
REYNOLDS METALS COMPANY
<PAGE>
[Reverse Side]
I plan to attend
the meeting
/___/
The Board of Directors recommends a vote FOR Items 1, 2 and 3.
Item 1 - Election of Directors:
FOR all Nominees - Patricia C. Barron, William
Nominees WITHHOLD O. Bourke, Yale M. Brandt, John R. Hall,
(except as AUTHORITY Robert L. Hintz, Richard G. Holder,
withheld in to Vote William H. Joyce, Mylle Bell Mangum,
the space for all D. Larry Moore, Randolph N. Reynolds,
provided) Nominees James M. Ringler, Charles A. Sanders,
Henry S. Savedge, Jr., Jeremiah J.
Sheehan, Robert J. Vlasic, Joe B. Wyatt
(To withhold authority to vote for any
individual Nominee, write that
Nominee's name in the space provided
below.)
/__/ /__/ _______________________________________
Item 2 Item 3
Approval of Amendment of Ratification of Selection of
Performance Incentive Plan Ernst & Young LLP as Independent
Auditors
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
/__/ /__/ /__/ /__/ /__/ /__/
Item 4
In their discretion the proxies are
authorized to vote upon such other
matters as may properly come before
the Meeting.
Date: ________________________________
______________________________________
Signature(s) of Stockholder(s)
______________________________________
Please mark, date and sign as your name
appears to the left and return in the
enclosed envelope. If signing as
attorney, executor, administrator,
trustee, guardian or in another
representative capacity, please give
your full title as such.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. THE
SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH ANY CHOICE
SPECIFIED BY THE STOCKHOLDER; WHERE THERE IS NO CHOICE, SUCH SHARES WILL BE
VOTED IN FAVOR OF ITEMS 1, 2 AND 3.
<PAGE>
Appendix 2
REYNOLDS METALS COMPANY
Performance Incentive Plan
As Proposed to be Amended and Restated
Effective January 1, 1996,
Subject to Stockholder Approval
<PAGE>
TABLE OF CONTENTS
Page
1. PURPOSE 1
2. ADMINISTRATION 1
3. PARTICIPATION 2
4. TARGET AWARD LEVELS 2
5. PERFORMANCE GOALS 2
6. DETERMINATION OF AWARDS 3
7. COMMUNICATION 3
8. PAYMENT OF AWARDS 3
9. COMPANY STOCK 6
10. EFFECTIVE DATE OF PLAN 7
<PAGE>
1. PURPOSE
The purpose of the Performance Incentive Plan (the "Plan") is to
promote the financial success of Reynolds Metals Company (the
"Company") by:
(a) providing compensation opportunities which are competitive with
those of other major companies;
(b) supporting the Company's goal-setting and strategic planning
process; and
(c) motivating key executives to achieve annual business goals by
allowing them to share in the risks and rewards of the business.
2. ADMINISTRATION
(a) The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors (the "Board"). No member
of the Committee shall be eligible to participate in the Plan.
(b) The Committee shall have the power and authority to adopt, amend
and rescind any administrative guidelines, rules, regulations,
and procedures deemed appropriate to the administration of the
Plan, and to interpret and rule on any questions relating to any
provision of the Plan.
(c) The decisions of the Committee shall be final, conclusive and
binding on all parties, including the Company and participating
employees.
(d) The Board may from time to time amend, suspend or terminate the
Plan, in whole or in part. Notwithstanding the foregoing, the
Board may, in any circumstance where it deems such approval
necessary or desirable, and shall, to the extent necessary to
maintain compliance with Rule 16b-3 under the Securities Exchange
Act of 1934 as in effect from time to time, require stockholder
approval as a condition to the effectiveness of any amendment or
modification of the Plan.
3. PARTICIPATION
Company officers and other key employees of the Company and its
subsidiaries who are recommended by the Chief Executive Officer of the
Company and who are approved by the Committee shall be eligible for
participation in the Plan during a Plan year.
4. TARGET AWARD LEVELS
After consultation with management, the Committee may designate target
award levels to be earned by participants for a given Plan year. Such
target awards may vary by management level.
5. PERFORMANCE GOALS
To the fullest extent possible, management shall establish performance
goals for participants to help it determine the awards it will
recommend for the Plan year. Such goals may relate to corporate
performance, divisional performance, and individual performance as
appropriate to the purpose of the Plan and the positions and
responsibilities of the participants.
6. DETERMINATION OF AWARDS
As soon as practicable following the close of each Plan year, the
Committee shall, after consultation with management, determine the
award earned by each participant for the Plan year. In special cases
of meritorious performance, after consultation with management, the
Committee may make awards to individuals who were not previously
designated as eligible for participation during the Plan year. If a
participant has died during the Plan year, an award may be made to the
participant's spouse or legal representative if the Committee so
determines.
7. COMMUNICATION
Participants shall be advised in writing of their participation in the
Plan and of any performance goals applicable to their awards.
8. PAYMENT OF AWARDS
Awards shall be payable in cash as soon after the close of the Plan
year as feasible; provided, however, that payment of part or all of
any award may be deferred in accordance with the terms of any
incentive deferral plan maintained from time to time by the Company.
(c) Any other provision of the Plan to the contrary notwithstanding,
except as otherwise determined by the Committee in accordance
with Paragraph 6(a) of the Company's Stock Ownership Guidelines
for Officers (the "Guidelines"), the following provisions shall
apply to the payment of an award to any participant who is
subject to the Guidelines and who had not met the applicable
minimum stock ownership level of the Guidelines as of the
December 31 immediately preceding the date of payment of an award
under the Plan.
The award to any such participant shall be paid part in cash and
part in the form of shares of Common Stock of the Company
("Shares"). The number of Shares issued under this provision
shall be equal to the number of Shares that would have been
necessary to bring the participant into compliance with the
Guidelines as of the December 31 immediately preceding the date
of payment of the award; provided, however, that in no event
shall more than half of the value of a participant's award be
paid in the form of Shares; and provided, further, that the part
of the award for any participant that is payable in Shares shall
not exceed the annual rate of base salary in effect for the
participant at the time of the award. The remainder of the
participant's award shall be paid in cash. Awards of Shares
shall be made without payment of a purchase price.
Any payment in accordance with this subsection (c) shall be
subject to the following terms and conditions:
(i) An award shall be converted into Shares by dividing (y) the
cash value of the part of the award to be paid in Shares by
(z) the arithmetic average of the high and low sales prices
of the Shares as reported on New York Stock Exchange
Composite Transactions on the date preceding the date on
which the award is paid. Any fractional Share shall be paid
in cash.
(ii) The mandatory share award provisions of this subsection (c)
shall not apply to the extent the participant has already
elected under the Company's New Management Incentive
Deferral Plan (y) to defer a portion of his or her award
under the Plan and (z) to have such deferred award be
credited with additional income based on shares of phantom
stock of the Company.
(iii) Except to the extent a participant has elected to have a
deferred award be credited with additional income based on
shares of phantom stock of the Company, any voluntary
deferral of the payment of part or all of an award under the
Plan shall apply only to the part of the award that is
payable in cash after the application of this subsection
(c); provided, however, that any such voluntary deferral
shall be reduced as necessary to ensure the payment of all
applicable payroll taxes.
(iv) To the extent a participant is subject to a mandatory
deferral of the payment of part or all of an award under the
Plan, the mandatory deferral shall apply first to the part
of the award that is payable in cash. To the extent the
award that would be paid in Shares remains subject to the
mandatory deferral, the payment that would otherwise be made
in the form of Shares shall instead be deferred under the
Company's New Management Incentive Deferral Plan to earn
income based on shares of phantom stock of the Company.
9. COMPANY STOCK
Shares reserved for issuance under the Plan may be authorized but
unissued shares, shares reacquired by the Company, or a combination of
both, as the Board may from time to time determine. If any stock
dividend is declared upon the Shares, or if there is any stock split,
stock distribution, or other recapitalization of the Company with
respect to the Shares, resulting in a split-up or combination or
exchange of shares, the Shares reserved for issuance under the Plan
shall be proportionately and appropriately adjusted.
10. EFFECTIVE DATE OF PLAN
The Plan as originally adopted was effective for the fiscal year
commencing January 1, 1983 and continued in effect thereafter as
amended from time to time. This amended and restated Plan shall be
effective January 1, 1996, subject to stockholder approval at the 1995
Annual Meeting, and shall continue in effect, as amended from time to
time, until it is terminated by the Board.
