<PAGE> 1
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
RMI TITANIUM COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
RMI TITANIUM COMPANY
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ X ] No fee required.
[ ] $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:
------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------
(3) Filing Party:
--------------------------------------------------
(4) Date Filed:
----------------------------------------------------
<PAGE> 2
RMI TITANIUM COMPANY
LOGO
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND PROXY STATEMENT
April 25, 1997
1:00 P.M. Eastern Daylight Saving Time
Paonessa's
871 McKay Court
Boardman, Ohio
-----------------------------------------------
TABLE OF CONTENTS
Page
Notice of Annual Meeting of Shareholders.... 3
Proxy Statement............................. 4
The Board of Directors.................... 4
Proposal No. 1 -- Election of Directors... 5
Nominees for Director................... 6
Proposal No. 2 -- Election of Independent
Accountants................................. 8
Other Information......................... 9
-----------------------------------------------
<PAGE> 3
LOGO 1000 Warren Avenue
Niles, Ohio 44446
March 31, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders to
be held on April 25, 1997, at Paonessa's, 871 McKay Court, Boardman, Ohio at
1:00 P.M., Eastern Daylight Saving Time. Your Board of Directors and management
look forward to greeting personally those shareholders who are able to attend.
The meeting will begin with a report on Company operations followed by
discussion and voting on the election of directors and independent accountants.
Whether or not you plan to attend, it is important that you vote your shares.
Please promptly read the Proxy Statement and then complete, sign, date and
return your proxy card in the enclosed prepaid envelope.
We look forward to seeing as many of you as possible at the 1997 Annual Meeting.
Sincerely,
/s/ ROBERT M. HERNANDEZ
- -----------------------
ROBERT M. HERNANDEZ
Chairman of the Board
<PAGE> 4
LOGO 11000 Warren Avenue
Niles, Ohio 44446
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 1997
The Annual Meeting of Shareholders of RMI Titanium Company will be held on
April 25, 1997, at 1:00 P.M., Eastern Daylight Saving Time, at Paonessa's, 871
McKay Court, Boardman, Ohio, for the following purposes:
1. To elect nine directors.
2. To elect independent accountants for 1997.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record as of the close of business on March 3, 1997, are
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
RICHARD M. HAYS
Secretary
Dated: March 31, 1997
YOU ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED PREPAID ENVELOPE. THE GIVING OF THE ENCLOSED PROXY WILL NOT AFFECT YOUR
RIGHT TO REVOKE SUCH PROXY OR TO VOTE IN PERSON SHOULD YOU LATER DECIDE TO
ATTEND THE MEETING.
3
<PAGE> 5
RMI TITANIUM COMPANY
1000 Warren Avenue, Niles, Ohio 44446
March 31, 1997
PROXY STATEMENT
This proxy statement, which is to be mailed on or about March 31, 1997, is
furnished in connection with the solicitation of proxies by the Board of
Directors of RMI Titanium Company (the "Company") for use at the 1997 Annual
Meeting of Shareholders to be held on April 25, 1997, at the time, place and for
the purposes described in the accompanying Notice of Annual Meeting, and at any
adjournment thereof. On March 3, 1997, there were 20,360,250 shares of Common
Stock of the Company outstanding and entitled to vote. Each share of Common
Stock is entitled to one vote. Shareholders whose names appeared of record on
the books of the Company at the close of business on March 3, 1997, will be
entitled to vote at the meeting. Shares cannot be voted at the meeting unless
the owner of record is present to vote or is represented by proxy.
Unless contrary instructions are indicated on the enclosed proxy, all shares
represented by valid proxies will be voted for the election of the nominees for
director named herein and for the election of Price Waterhouse LLP as
independent accountants for 1997. Directors are elected by a plurality of votes
cast and independent accountants by a majority of votes cast. Abstentions and
broker non-votes are not counted in determining the number of shares voted for
or against the independent accountants.
The Company knows of no business which may be presented for consideration at
the Annual Meeting other than as indicated in the Notice of Annual Meeting. If
any other business should properly come before the meeting, the persons named in
the proxy have discretionary authority to vote in accordance with their best
judgment. A proxy may be revoked by a shareholder at any time prior to its use
by a subsequent executed proxy, by giving notice of revocation to the Secretary
of the Company, or by voting in person at the Annual Meeting.
The cost of this solicitation of proxies will be borne by the Company. In
addition to soliciting proxies by mail, directors, officers and employees of the
Company, without receiving additional compensation therefor, may solicit proxies
by telephone, telegram, in person or by other means. Arrangements also will be
made with brokerage firms and other custodians, nominees and fiduciaries to
forward proxy solicitation material to the beneficial owners of shares of Common
Stock held of record by such persons and the Company will reimburse such
brokerage firms, custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred by them in connection therewith.
THE BOARD OF DIRECTORS
The business and affairs of the Company are under the general direction of a
Board of Directors as provided by the Code of Regulations of the Company and the
laws of the State of Ohio. The Board of Directors presently consists of nine
members, seven of whom are neither officers nor employees of the Company or its
subsidiaries. The Board of Directors met seven times during 1996. Each of the
directors attended more than 85% of the total number of meetings of the Board of
Directors and of the committees of the Board on which he served during 1996.
The Board of Directors will consider recommendations by shareholders for
nominees for election as director. Such recommendations, together with the
nominee's qualifications and consent to be considered as a nominee, should be
sent to the Secretary of the Company for presentation to the Board of Directors.
There are three principal committees of the Board of Directors. Committee
membership, the functions of the committees and the number of meetings held
during 1996 are described below.
EXECUTIVE COMMITTEE
The members of the Executive Committee are Robert M. Hernandez (Chairman),
Craig R. Andersson, Charles C. Gedeon, John H. Odle and Timothy G. Rupert.
4
<PAGE> 6
The Executive Committee was established to assist the Board in the discharge
of its responsibilities and may act on behalf of the Board when emergencies or
scheduling make it difficult to convene the Board. All actions taken by the
Committee must be reported at the Board's next meeting. During 1996, the
Executive Committee held no meetings.
AUDIT COMMITTEE
The members of the Audit Committee, which is composed entirely of directors
who are not employees of the Company, are Wesley W. von Schack (Chairman), Craig
R. Andersson and Daniel I. Booker.
The Audit Committee makes recommendations to the Board of Directors
regarding the independent accountants to be nominated for election by the
shareholders and reviews the independence of such accountants, approves the
scope of the annual audit activities, approves the audit fee payable to the
independent accountants, reviews audit results and regularly meets with the
Company's internal auditors. The Committee monitors developments in accounting
standards and principles followed by the Company in its financial reports and
discusses with management the system of internal accounting controls. The
independent accountants have full and free access to the Committee and may meet
with it, with or without management being present, to discuss all appropriate
matters. The Audit Committee held three meetings during 1996.
STOCK PLAN COMMITTEE
The members of the Stock Plan Committee, which is composed entirely of
directors who are not employees of the Company, are Craig R. Andersson, Neil A.
Armstrong, Daniel I. Booker, Ronald L. Gallatin and Wesley W. von Schack.
The Stock Plan Committee is responsible for administration of the Company's
stock-related plans, including the 1989 Stock Option Incentive Plan, the 1989
Employee Restricted Stock Award Plan and the 1995 Stock Plan. The Stock Plan
Committee held three meetings during 1996.
COMPENSATION OF DIRECTORS
Directors who are officers or employees of the Company receive no fees or
remuneration, as such, for their services as directors. For so long as USX
Corporation ("USX") is a shareholder, directors who are officers or employees of
USX will accept no fees or remuneration for their services as directors.
Non-employee directors receive an annual retainer plus a fee for each Board or
committee meeting attended, except that no fee is payable for attending a
committee meeting if there is a Board meeting on the same day. The annual
retainer is $22,500 and the meeting fee is $450. Each non-employee committee
chairman also receives an additional annual retainer of $2,500. One-half of the
annual retainer payable to non-employee directors and to non-employee committee
chairmen is paid in the Company's Common Stock. In 1996, the Common Stock
utilized for this purpose was based on $21.75, the market value of the stock on
August 2, 1996.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
The Code of Regulations of the Company provides for the annual election of
all members of the Board of Directors. L. Frederick Gieg, Jr. resigned from the
Board as of February 28, 1997, the date he retired as President and Chief
Executive Officer of the Company. The Board had previously set the number of
directors as nine, effective March 1, 1997. The Board has nominated the nine
incumbent directors for election this year. Each nominee for election has
previously been elected by the shareholders except for Messrs. Odle and Rupert,
both of whom were elected as directors by the Board on July 26, 1996. Each
director elected shall hold office until the next annual meeting of the
shareholders or until a successor is elected. Of the nine individuals who are
nominees for election, two are current officers of the Company and the remaining
seven have high level executive or professional experience. A brief statement of
the background of each nominee is given on the following pages. If any nominee
is unable to serve, proxies may be voted for another person designated by the
Board of Directors. The Company has no reason to believe that any nominee will
be unable to serve.
5
<PAGE> 7
NOMINEES FOR DIRECTOR
CRAIG R. ANDERSSON Age: 59
RETIRED VICE-CHAIRMAN Director since 1990
ARISTECH CHEMICAL CORPORATION
(CHEMICAL PRODUCER)
Mr. Andersson retired as a director and Vice-Chairman of Aristech Chemical
Corporation on April 30, 1995. Previously, he was President and Chief Operating
Officer, a position he had held since December, 1986. Mr. Andersson was
President of USS Chemicals Division of USX (the predecessor of Aristech) from
1985. He is a director of Albermarle Corporation and Duquesne University. He is
a member of the American Institute of Chemical Engineers and Alpha Chi Sigma (a
professional chemical society) and has served on the boards and executive
committees of The Society of the Chemical Industry, the Chemical Manufacturers
Association, the Pennsylvania Business Roundtable and the Greater Pittsburgh
Chamber of Commerce. He has a BS degree in chemical engineering from the
University of Minnesota and did graduate work in the same discipline at the
University of Delaware.
NEIL A. ARMSTRONG Age: 66
CHAIRMAN, AIL SYSTEMS, INC. Director since 1990
(A DEFENSE ELECTRONICS COMPANY)
Mr. Armstrong received a BS degree in aeronautical engineering from Purdue
University and an MS degree in aerospace engineering from the University of
Southern California. For 17 years he served with the National Aeronautics and
Space Administration and its predecessor agency as engineer, test pilot,
astronaut and administrator. From 1971 to 1979 he was professor of aerospace
engineering at the University of Cincinnati. He became Chairman of Cardwell
International, Ltd. in 1980; Chairman of CTA, Inc. in 1982; and Chairman of AIL
Systems, Inc. in 1989. He is a director of Cinergy Corporation, Cincinnati
Milacron, Inc., Eaton Corporation, Thiokol Corp. and USX. He is a member of the
National Academy of Engineering.
DANIEL I. BOOKER Age: 49
MANAGING PARTNER Director since 1995
REED SMITH SHAW & MCCLAY
(LAW FIRM)
Mr. Booker is a partner of the law firm of Reed Smith Shaw & McClay. Since 1992,
he has been Managing Partner, or chief executive, of Reed Smith. He received an
undergraduate degree from the University of Pittsburgh and a law degree from the
University of Chicago. He is a member of the District of Columbia, Pennsylvania
and U.S. Supreme Court bars. Mr. Booker is an officer and/or director of Penn's
Southwest Association, the Pittsburgh Civic Light Opera, United Way of
Southwestern Pennsylvania and other community and professional organizations.
RONALD L. GALLATIN Age: 51
RETIRED MANAGING DIRECTOR Director since 1996
LEHMAN BROTHERS INC.
(INVESTMENT BANKING FIRM)
Mr. Gallatin served as a Managing Director of Lehman Brothers Inc., where he was
a member of the Firm's Operating Committee and its Director of Corporate
Strategy and Product Development until his retirement on December 31, 1995.
During his 24 years with Lehman, Mr. Gallatin had various senior roles in both
its investment banking and capital markets divisions and was responsible for a
series of financial innovations, most notably Zero Coupon Treasury Receipts,
Money Market Preferred Stock and Targeted Stock. He is currently a Senior
Advisor to Lehman Brothers Inc. and a director of Gabelli Securities, Inc. and
The First Mexico Income Fund, N.V. A graduate of New York University, and both
Brooklyn and New York University Law Schools, Mr. Gallatin has BS, JD and LLM
(Taxation) degrees and is a Certified Public Accountant.
6
<PAGE> 8
CHARLES C. GEDEON Age: 56
EXECUTIVE VICE PRESIDENT-RAW MATERIALS Director since 1991
AND DIVERSIFIED BUSINESSES
U.S. STEEL GROUP, USX CORPORATION
Mr. Gedeon joined USX in 1986 as Vice President-Raw Materials and President of
U.S. Steel Mining Co., Inc. He was promoted to Senior Vice President-Related
Resources for USX in 1988 and advanced to the position of President, U.S.
Diversified Group in 1990. He assumed his current position in 1992. From 1983
until he joined USX, Mr. Gedeon had been Vice President-Operations of National
Steel Corporation. Mr. Gedeon is a member of the Board of Directors of the U.S.
Steel Group of USX Corporation and a member of the American Iron and Steel
Institute.
ROBERT M. HERNANDEZ Age: 52
CHAIRMAN OF THE BOARD OF THE COMPANY Director since 1990
VICE CHAIRMAN AND CHIEF FINANCIAL OFFICER
USX CORPORATION
On December 1, 1994, Mr. Hernandez was elected Vice Chairman of USX. Mr.
Hernandez had been elected Executive Vice President--Accounting & Finance and
Chief Financial Officer and director of USX on November 1, 1991. He was Senior
Vice President-Finance & Treasurer of USX from October 1, 1990, to October 31,
1991. Mr. Hernandez was President-U.S. Diversified Group of USX from June 1,
1989, to September 30, 1990, and in such role had responsibilities for USX's
businesses not related to energy and steel. From January 1, 1987, until May 31,
1989, he was Senior Vice President and Comptroller of USX. Mr. Hernandez has his
undergraduate degree from the University of Pittsburgh and his MBA from the
Wharton Graduate School of the University of Pennsylvania. In addition to being
a director of USX, he is a trustee of Allegheny Health, Education and Research
Foundation, Allegheny General Hospital, and Compass Capital Funds; a director
and Chairman of the Executive Committee of ACE Limited and a director of
Marinette Marine Corporation, Transtar, Inc., the Pennsylvania Chamber of
Business and Industry and the Pennsylvania Business Roundtable.
JOHN H. ODLE Age: 54
EXECUTIVE VICE PRESIDENT Director since 1996
OF THE COMPANY
Mr. Odle was elected a director on July 26, 1996 and has been Executive Vice
President of the Company since June 1996. He was Senior Vice
President--Commercial of the Company and its predecessor from 1989 to 1996 and
served as Vice-President--Commercial from 1978 until 1989. Prior to that, Mr.
Odle served as General Manager--Sales. He has 18 years of service with the
Company and its predecessor and began his career as a commercial management
trainee with USX. He is a member of the American Society for Metals and the
International Titanium Association. He is a graduate of Miami University of
Ohio.
TIMOTHY G. RUPERT Age: 50
EXECUTIVE VICE PRESIDENT & Director since 1996
CHIEF FINANCIAL OFFICER OF
THE COMPANY
Mr. Rupert was elected a director on July 26, 1996 and has been Executive Vice
President & Chief Financial Officer of the Company since June 1996. He was
Senior Vice President & Chief Financial Officer from 1994 to 1996 and had served
as Vice President & Chief Financial Officer since September 1991 when he joined
the Company. Prior to that, Mr. Rupert was employed by USX for 23 years in
various accounting and finance positions. He is a director of the International
Titanium Association and Columbus Insurance Ltd. and a member of the Financial
Executives Institute. He has a BS degree from Indiana University of
Pennsylvania.
7
<PAGE> 9
WESLEY W. VON SCHACK Age: 52
CHAIRMAN, PRESIDENT AND Director since 1991
CHIEF EXECUTIVE OFFICER, NEW YORK
STATE ELECTRIC & GAS CORP.
(ENERGY SERVICES COMPANY)
Mr. von Schack joined New York State Electric & Gas Corp. in September, 1996.
Prior to that he had served as Chairman of the Board, President and Chief
Executive Officer of DQE and of Duquesne Light Company since 1986. DQE is the
parent company of Duquesne Light. He is also a director of Mellon Bank
Corporation, Mellon Bank, N.A., and Edison Electric Institute and Vice Chairman
of the Board of Trustees and a Life Trustee of Carnegie Mellon University. Mr.
von Schack has an AB in economics from Fordham University, an MBA from St.
John's University and a Doctorate Degree from Pace University.
PROPOSAL NO. 2 -- ELECTION OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP has served as independent accountants for the Company
and its predecessors for a number of years. For the year 1996, Price Waterhouse
LLP rendered professional services in connection with the audit of the financial
statements of the Company and its subsidiaries, including examination of certain
employee benefit plans; review of quarterly reports and review of filings with
the Securities and Exchange Commission. It is knowledgeable about the Company's
operations and accounting practices and is well qualified to act in the capacity
of independent accountants.
Representatives of Price Waterhouse LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF PRICE WATERHOUSE
LLP AS INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR 1997.
8
<PAGE> 10
OTHER INFORMATION
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Company, as of March 3, 1997, no person or group
owned beneficially more than five percent of the outstanding Common Stock of the
Company except:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------ -------------------- ---------
<S> <C> <C>
USX Corporation............................. 5,483,600(1) 27.0%
600 Grant Street
Pittsburgh, PA 15219-4776
Smith Barney Inc............................ 1,411,686(2) 6.9%
Smith Barney Holdings Inc.
Travelers Group Inc.
338 Greenwich Street
New York, NY 10013
Husic Capital Management.................... 1,419,700(3) 7.0%
Frank J. Husic and Co.
Frank J. Husic
555 California Street, Suite 2900
San Francisco, CA 94104
</TABLE>
- ---------
(1) Based on Schedule 13G dated February 12, 1997 which indicates that
USX had sole voting power over 5,483,600 shares, shared voting power
over no shares, sole dispositive power over 5,483,600 shares and
shared dispositive power over no shares. In December 1996, USX issued
in a public offering 6 3/4% Exchangeable Notes due February 1, 2000
("Debt Exchangeable for Common Stock" or "DECS") the principal amount
of which is mandatorily exchangeable at maturity (including as a
result of acceleration or otherwise) for up to 5,483,600 shares of
the Company's Common Stock owned by USX or, at USX's option, an
equivalent amount of cash.
(2) Based on Schedule 13G dated January 28, 1997 which indicates that
each reporting person had sole voting power over no shares, shared
voting power over 1,411,686 shares, sole dispositive power over no
shares and shared dispositive power over 1,411,686 shares.
(3) Based on Schedule 13G dated February 4, 1997 which indicates that
each reporting person had sole voting power over no shares, shared
voting power over 1,419,700 shares, sole dispositive power over no
shares and shared dispositive power over 1,419,700 shares.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reflects the number of shares of Common Stock of the
Company beneficially owned, as of March 3, 1997, by each director, by each
executive officer named in the Summary Compensation Table and by all directors
and executive officers as a group:
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF OUTSTANDING
NAME SHARES(1) SHARES(2)
---- --------- -----------
<S> <C> <C>
Craig R. Andersson....................... 36,239 --
Neil A. Armstrong........................ 12,431 --
Daniel I. Booker......................... 2,752 --
Ronald L. Gallatin....................... 5,517 --
Charles C. Gedeon........................ 2,220(3) --
L. Frederick Gieg, Jr.................... 83,781 --
Robert M. Hernandez...................... 10,000(3) --
John H. Odle............................. 57,654 --
Timothy G. Rupert........................ 33,486 --
Wesley W. von Schack..................... 8,739 --
Harry B. Watkins......................... 18,509 --
All directors and executive officers
as a group (11 persons)................ 271,328 1.3%
</TABLE>
- ---------
(1) Includes 38,775 shares, 16,970 shares, 14,000 shares and 6,250 shares,
respectively, which Messrs. Gieg, Odle, Rupert and Watkins had the right to
acquire within 60 days under the Company's 1989 Stock Option Incentive Plan
and 1995 Stock Plan.
(2) No percent is shown for ownership of less than one percent.
9
<PAGE> 11
(3) Messrs. Gedeon and Hernandez may be deemed to have shared voting power over
the shares of Common Stock beneficially owned by USX. Each of them disclaims
beneficial ownership of such shares.
EXECUTIVE COMPENSATION
The following table shows the annual and long term compensation paid the
former chief executive officer and the other three executive officers of the
Company for services rendered in all capacities to the Company and its
subsidiaries in 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------
PAYOUTS
ANNUAL COMPENSATION AWARDS ----------
----------------------------------- -------------------------- LONG TERM
OTHER RESTRICTED STOCK INCENTIVE
NAME AND ANNUAL STOCK OPTIONS PLAN ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS (SHARES) PAYOUTS COMPENSATION
------------------ ----- -------- -------- ------------ ---------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
L. Frederick Gieg, Jr....... 1996 $273,783 $165,000 -- 20,000 50,000 -- --
President and Chief 1995 260,400 70,000 -- -- -- -- --
Executive Officer 1994 259,367 -- -- -- 75,000(1) -- 43,125
(retired February 28, 1997)
John H. Odle................ 1996 173,856 120,000 -- 10,000 20,000 -- --
Executive Vice President- 1995 131,256 35,000 -- -- -- -- --
Commercial and Research 1994 130,735 -- -- -- 40,000(1) -- 24,150
Timothy G. Rupert........... 1996 163,190 120,000 -- 10,000 20,000 -- --
Executive Vice President 1995 108,264 30,000 -- -- -- -- --
& Chief Financial
Officer 1994 107,834 -- -- -- 40,000(1) -- 20,700
Harry B. Watkins(2)......... 1996 116,675 60,000 -- 10,000 10,000 -- --
Vice President-Technical
Marketing & Tubular Group
</TABLE>
- ---------
(1) Does not include 127,042 shares, 65,643 shares and 26,877 shares covered by
unexercised options held by Messrs. Gieg, Odle and Rupert, respectively,
which were granted prior to 1994 and were repriced in 1994 to take into
account the one-for-ten reverse stock split effective March 31, 1994 and the
subsequent rights offering.
(2) Elected Vice President April 25, 1996
The following tables set forth information with respect to stock option
grants and exercises in 1996 and December 31, 1996 stock option values:
STOCK OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME (SHARES) 1996 ($/SH) DATE 5% 10%
---- -------- ------------ ------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
L. Frederick Gieg, Jr........... 50,000 23.25% $21.62 04/25/06 $680,000 $ 1,723,000
John H. Odle.................... 20,000 9.3% 21.62 04/25/06 272,000 689,200
Timothy G. Rupert............... 20,000 9.3% 21.62 04/25/06 272,000 689,200
Harry B. Watkins................ 10,000 4.6% 21.62 04/25/06 136,000 344,600
</TABLE>
AGGREGATED STOCK OPTION EXERCISES IN 1996
AND DECEMBER 31, 1996 STOCK OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES DECEMBER 31, 1996 OPTIONS AT
ACQUIRED ON (SHARES)(1) DECEMBER 31, 1996
EXERCISE VALUE ----------------------------- -----------------------------
NAME (SHARES) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- ----------- ------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
L. Frederick Gieg, Jr............ 141,285 $2,359,360 56,970 50,000 $ 574,063 $ 325,250
John H. Odle..................... 20,674 359,645 36,970 40,000 1,153,441 611,350
Timothy G. Rupert................ 6,000 140,625 14,000 40,000 336,875 611,350
Harry B. Watkins................. 9,869 207,744 6,250 22,500 150,390 335,831
</TABLE>
- ---------
(1) Adjusted for one-for-ten reverse stock split effective March 31, 1994 and
subsequent rights offering.
10
<PAGE> 12
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
In 1995, the Board of Directors determined that in most instances, in view
of the size of the Company and also of the Board, the full Board should itself
handle compensation matters. The Stock Plan Committee, which is composed
entirely of directors who are not employees of the Company or of USX,
administers the Company's stock-related plans; namely the 1989 Stock Option
Incentive Plan, the 1989 Employee Restricted Stock Award Plan and the 1995 Stock
Plan. The Committee approves grants under the 1995 Stock Plan. No further grants
can be made under the 1989 Plans.
To assist it in its compensation actions, the Board has adopted a
comprehensive statement entitled "Pay Philosophy and Guiding Principles
Governing Officers and Key Manager Compensation at RMI Titanium Company".
Principal components of the statement are as follows:
The Philosophy is to have RMI's officer/key manager compensation programs:
- promote achievement of the Company's business objectives and reinforce its
strategies.
- align the interests of the Company's officers and key managers with those
of its shareholders.
- provide pay that is externally competitive and internally equitable, that
rewards accomplishment to the extent identifiable and measurable and that
delivers significant rewards for exceptional performance.
The Guiding Principles are described as:
1. Pay programs will be characterized by variability, clarity,
communicability and strategic emphasis. Specific areas of communication will be
factors considered, annual target incentive objectives and results and annual
target levels for restricted stock vesting performance measures and results. The
strategic emphasis will include recognition of the roles of various elements of
pay in attracting, retaining and motivating employees, the aspects of
performance that each element is best suited to reward and the characteristics
of the Company and its officer/key manager group that point to emphasis on
specific elements of pay.
2. Specific descriptions of salary administration and annual and long term
incentive compensation administration are set forth. Annual incentive
compensation is accomplished through the Company's Incentive Compensation Plan
while long term incentive compensation is handled under the 1995 Stock Plan.
Market conditions in the titanium industry improved very substantially in
1996. Management continued to carefully control operating costs while managing
increasing raw materials and labor costs and inventory adjustments accompanying
the increased production volumes as well as issuance of additional equity
through a successful public offering. Management also continued to pursue new
product applications in the energy industry and elsewhere.
In January, 1996 the Board of Directors reviewed the 1995 performance of
executive management and key managers against their objectives for that year.
After considering their performance and the Company's improving financial
results, the Board approved compensation increases for executive management (as
well as the bonuses for 1995 for Messrs. Gieg, Odle and Rupert shown in the
Summary Compensation Table).
The Stock Plan Committee approved grants of restricted stock in January,
1996 and of stock options in April, 1996. In each case the grants to executive
management were in line with the long term incentive compensation administration
guidelines mentioned above.
The Board met several times in executive session to consider matters
relating to the scheduled retirement of the President and Chief Executive
Officer in February 1997. As a result of these deliberations, Messrs. Odle and
Rupert were elected as Executive Vice Presidents in June, 1996, elected to the
Board in July, 1996 and each entered into the new employment agreements
hereinafter described, effective as of September 1, which involved increased
compensation for these executives.
In January, 1997 the Board reviewed executive performance against 1996
objectives and awarded the bonuses shown in the Summary Compensation Table.
Again these bonuses were in line with the Pay Philosophy and Guiding Principles
Statement. The Board also took other compensation actions.
11
<PAGE> 13
The Pay Philosophy and Guiding Principles Statement applies to the chief
executive officer. In taking compensation actions with regard to him, the Board
considered as well his leadership and effectiveness in dealing with continuing
Company performance through and following his retirement. As is described
hereinafter, he has entered into a consulting agreement to continue to serve the
Company as requested. In January 1997 the Board awarded him the bonus for 1996
shown in the Summary Compensation Table, after taking into account his excellent
performance and the Company's very successful results for 1996.
<TABLE>
<S> <C> <C>
Craig R. Andersson Neil A. Armstrong Daniel I. Booker
Ronald L. Gallatin Charles C. Gedeon Robert M. Hernandez
John H. Odle Timothy G. Rupert Wesley W. von Schack
</TABLE>
BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION
Robert M. Hernandez, Chairman of the Board, John H. Odle, Executive Vice
President and Timothy G. Rupert, Executive Vice President & Chief Financial
Officer are members of the Board of Directors. Mr. Hernandez receives no
compensation from the Company. Messrs. Odle and Rupert are not present at Board
meetings when compensation matters relating to either of them are considered.
None of them is a member of the Stock Plan Committee.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Harry B. Watkins, Vice President of the Company, was late in filing a Form 3
report concerning his election as Vice President and a Form 4 report for one
transaction in the Company's Common Stock. Both reports are required pursuant to
Section 16(a) of the Securities Exchange Act of 1934.
12
<PAGE> 14
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the five year cumulative total
return to stockholders on the Company's Common Stock with the cumulative total
return of the S&P 500 Stock Index and a titanium industry group index consisting
of the Company, Oregon Metallurgical Corporation and Tremont Corporation (Timet
Corporation after June 4, 1996, the date its stock first became publicly
traded).
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG RMI, INDUSTRY PEER GROUP AND S&P 500
<TABLE>
<CAPTION>
MEASUREMENT PERIOD TITANIUM INDUSTRY RMI TITANIUM CO.
(FISCAL YEAR COVERED) S&P 500
<S> <C> <C> <C>
1/1/92 100.000 100.000 100.000
12/31/92 107.608 63.141 66.667
12/31/93 118.383 60.407 57.143
12/31/94 119.875 99.123 86.429
12/31/95 164.641 137.884 125.714
12/31/96 202.344 363.107 441.964
</TABLE>
* Assumes $100 investment on January 1, 1992 and reinvestment of dividends.
PENSION BENEFITS
The Company has two defined benefit plans, which first became effective at
RMI Company (the Company's immediate predecessor) in 1971, in which
substantially all salaried employees of the Company and its subsidiaries
automatically participate (the "Pension Plan"). The Pension Plan recognizes, for
certain purposes, services and compensation with RMI Company, Reactive Metals,
Inc. (a predecessor of RMI Company), USX, Quantum Chemical Corporation
("Quantum"), or subsidiaries of each. The amounts payable under the Pension Plan
will be paid monthly after a participant retires. The table below shows the
annual pension benefits for retirement at age 65 (or earlier under certain
circumstances) assuming no election of any dependent or surviving spouse
feature, for various levels of eligible earnings which would be payable to
employees retiring with representative years of service based on a formula of a
specified percentage (dependent on years of service) of average annual eligible
earnings in the five consecutive years of the ten years prior to retirement in
which such earnings are highest. Eligible compensation includes only base
salary. Incentive awards and similar benefits are excluded, although the amount
of such benefits is included on the Summary Compensation Table. Benefits payable
under the Pension Plan, and amounts reflected in the following table are subject
to offsets for social security benefits and, in certain instances, pensions
payable
13
<PAGE> 15
under the USX and the Quantum pension plans. As of December 31, 1996, Messrs.
Gieg, Odle, Rupert and Watkins had 44, 19, 28 and 11 credited years of service,
respectively.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL GROSS BENEFITS PAYABLE FROM PENSION
PLANS
---------------------------------------------------------
AVERAGE
CONSECUTIVE ANNUAL BENEFITS FOR YEARS OF SERVICE
HIGHEST 5 YEARS OF ---------------------------------------------------------
COMPENSATION 10 15 30 40 45
- ------------------ ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000 $12,500 $18,750 $37,500 $ 51,000 $ 57,750
200,000 25,000 37,500 75,000 102,000 115,500
300,000 37,500 56,260 112,500 153,000 173,250
</TABLE>
Under the employment agreement dated as of September 1, 1996 between the
Company and Mr. Odle, hereinafter described, the Company agreed that if he
continues in active employment with the Company until either age 65 or such
earlier date as the Company's Board of Directors may approve, the Company at his
retirement will pay him a one time lump sum payment of the then present value of
the 9.16 years of non-personable service attributable to periods he was employed
by USX (3.58 years) and the Company (5.58 years) which pre-date his current
period of employment, calculated pursuant to the provisions for determining
accrued pension benefits set forth in the Company's Pension Plan and its
Supplemental Pension Program applicable to him at date of retirement and based
on his average monthly earnings (or then applicable pensionable earnings) at
such time.
USX has agreed to provide Messrs. Gieg and Rupert, each a former employee of
USX, certain pension and death and disability benefits necessary to supplement
like benefits payable under the Company plans so that the aggregate of such
payments to each such person equals what he would have received had he remained
employed by USX.
USX maintains the USX Corporation Pension Plan for Employees (the "USX
Plan") which provides defined benefits for USX employees using a different
formula than that used by the Company plan described above. Upon their
retirement from the Company, Messrs. Gieg and Rupert will each receive a pension
from the Company Pension Plan and the USX Plan, with the benefits paid from the
USX Plan calculated on service with USX and USX subsidiaries prior to their
employment by the Company. The combined benefits payable annually to Messrs.
Gieg and Rupert under the USX Plan (which relates to employment by USX) and from
USX pursuant to the supplemental agreements described above, if they retire at
age 65 and if their compensation remains at current levels, would be
approximately $231,624 and $101,906, respectively. Mr. Watkins is also a former
employee of USX and will receive a pension from the USX Plan calculated on his
service with USX and USX subsidiaries prior to his employment by the Company.
The benefit payable annually to him under the USX Plan if he retires at age 65
and if his compensation remains at its current level would be approximately
$24,428.
SUPPLEMENTAL PENSION PLAN
Officers and key employees who participate in the Incentive Compensation
Plan are also eligible for the RMI Company Supplemental Pension Program
("Supplemental Pension"), which first became effective at RMI Company on August
1, 1987. Eligible employees who retire or otherwise terminate employment after
age 60, or prior to age 60 with Company consent, under conditions of eligibility
for an immediate pension under the terms of the Pension Plan will be entitled to
receive a Supplemental Pension. The annual Supplemental Pension (which is paid
in monthly installments following retirement), is equal to the product of (i)
the annual average of the total bonuses paid or credited to the participant
pursuant to the Incentive Plan on or after January 1, 1985, during the five
years in which total bonus payments or credits were the highest out of the last
ten consecutive years prior to retirement, multiplied by (ii) a percentage equal
to 1.5% multiplied by the employee's years of continuous service with USX,
Quantum, any subsidiary of either company, RMI Company and the Company. Bonuses
paid under the Annual Incentive Compensation Plan while it was maintained by RMI
Company as well as any bonuses paid under any successor cash incentive plan
adopted by the Company will be recognized for purposes of benefit calculations.
Upon retirement, a participant's Supplemental Pension will not be less than the
greatest benefit that the participant would have been entitled to at the end of
any earlier year in which he was eligible to participate in the plan if the
participant had retired at that time. Participants may elect to receive an
actuarially equivalent lump sum payment in lieu of the monthly Supplemental
Pension. The Supplemental Pension Program also provides survivor benefits.
14
<PAGE> 16
As of December 31, 1996, Messrs. Gieg, Odle, Rupert and Watkins had 44, 19,
28 and 11 credited years of service, respectively, for purposes of this plan,
subject in the case of Mr. Odle to the provisions described above of his
employment agreement.
RMI EXCESS BENEFITS PLAN
The Company's Excess Benefits Plan, adopted by the Board of Directors on
July 18, 1991, provides for payment to eligible participants of pension benefits
that would be payable under the Pension Plan were it not for certain benefit
limitations set forth in the Internal Revenue Code of 1986, as amended. Such
benefits are generally payable at the same time and in the same form as benefits
under the Pension Plan, except that a participant may elect to receive an
actuarially equivalent lump sum distribution at the time such benefit payments
would otherwise commence.
As of December 31, 1996, Messrs. Gieg, Odle and Rupert were the only
participants in the Excess Benefits Plan.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements dated as of September 1, 1996
with Messrs. Odle and Rupert continuing their employment for an initial three
year term expiring August 31, 1999 and for additional one year terms each year
thereafter until the executive attains age 65 unless terminated prior thereto by
either party on 120 days notice. The agreements provide that each executive will
be paid an annual salary as set forth in the agreement, subject to increases
from time to time in the sole discretion of the Company. Each agreement also
provides that in the event of the executive's death, or if the executive's
employment is terminated because of physical or mental disability, the
executive's right to compensation under the agreement terminates. The Company
may terminate the services of the executive at any time for "cause" as defined
in the agreement. The executives each agree that he will not, for a period of 24
months after the end of the employment period or employment termination,
whichever occurs first, be employed by, or otherwise participate in, any
business which competes with the Company. This restriction does not apply if the
executive terminates employment with the Company under certain circumstances
following a "change in control" of the Company as defined in the agreement.
The Company entered into an employment agreement dated as of February 1,
1997 with Mr. Watkins continuing his employment for an initial three year term
expiring January 31, 2000 and for additional one year terms each year thereafter
until he attains age 65 unless terminated prior thereto by either party on 120
days notice. The agreement provides that he will be paid an annual salary as set
forth in the agreement, subject to increases from time to time in the sole
discretion of the Company. The agreement also provides that in the event of his
death, or if his employment is terminated because of physical or mental
disability, his right to compensation under the agreement terminates. The
Company may terminate his services at any time for "cause" as defined in the
agreement. He agrees that he will not, for a period of 24 months after the end
of the employment period or employment termination, whichever occurs first, be
employed by, or otherwise participate in, any business which competes with the
Company.
The employment agreements with Messrs. Odle and Rupert also provide that the
executive will be entitled to certain severance benefits in the event the
executive terminates employment under certain circumstances following a "change
in control" as defined. These are (i) a cash payment of up to 2.958 times the
sum of the executive's current salary and the average annual bonus paid to him
in the three years immediately preceding the date of termination, (ii) all
options and restricted stock held by the executive shall irrevocably vest and
options shall be uncancellable by the Company, (iii) payment to the executive of
legal fees and expenses incurred as a result of termination of employment,
including fees and expenses incurred in enforcing the agreement, (iv) life,
disability, accident and health insurance benefits for a 24 month period after
termination; and (v) a cash payment of the amount necessary to insure that the
above-mentioned payments are not subject to net reduction due to imposition of
excise taxes which are payable under Section 4999 of the Internal Revenue Code.
The circumstances which occasion the executive becoming entitled to these
severance benefits are termination by the executive at his sole option within 90
days after a "change in control" or for "good reason" thereafter or by the
Company other than for "cause" or disability" at any time during the
15
<PAGE> 17
employment period after a "change in control". A "change in control" is defined
as a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
the Company is then subject to such reporting requirement; provided that such a
change in control shall be deemed to have occurred if (A) any "person" (as
defined in Sections 13(d) and 14(d) of the Exchange Act), but excluding USX, the
Company, its subsidiaries, fiduciaries under any Company benefit plans,
underwriters temporarily holding Company securities and corporations owned by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent or more of the combined
voting power of the Company's then outstanding voting securities; (B) there
shall cease to be a majority of the Board comprised as follows: individuals who
on the date of the agreement constitute the Board and any new director(s) (other
than a director whose initial assumption of office is in connection with an
election contest) whose appointment or election by the Board or nomination for
election by the Company stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors on
the date of the agreement or whose appointment, election or nomination for
election was previously so approved; or (C) there is consummated a merger or
consolidation of the Company or a Company subsidiary with any other corporation,
other than a merger or consolidation which would result in the holders of the
voting securities of the Company outstanding immediately prior thereto holding
securities which represent immediately after such merger or consolidation at
least 50% of the combined voting power of the entity surviving the merger or
consolidation (or the parent of such surviving entity) or the shareholders of
the Company approve a plan of complete liquidation of the Company, or there is
consummated the sale or other disposition of all or substantially all of the
Company's assets.
CONSULTING AGREEMENT
The Company has entered into an agreement with L. Frederick Gieg, Jr. who
retired on February 28, 1997 as a director and as President and Chief Executive
Officer of the Company providing for him to act in an independent consulting
capacity to the Company. The agreement's term commences on July 1, 1997 and ends
June 30, 2000. Under the agreement, Mr. Gieg will be paid annual fees of
$24,000; $1,000 for each actual or partial day on which consulting services are
performed; and authorized expenses he incurs.
CERTAIN TRANSACTIONS
The Company, in the ordinary course of business, purchases goods and
services from USX. The cost of such transactions to the Company in 1996 amounted
to approximately $572,000.
SHAREHOLDER PROPOSALS
Proposals of security holders intended to be presented at the 1998 Annual
Meeting of Shareholders must be received no later than December 1, 1997, for
inclusion in the proxy statement and proxy for that meeting.
By Order of the Board of Directors
RICHARD M. HAYS
Secretary
Dated: March 31, 1997
16
<PAGE> 18
RMI TITANIUM COMPANY
1000 Warren Avenue, Niles, Ohio 44446
PROXY For 1997 Annual Meeting
Solicited on Behalf of the Directors of RMI Titanium Company
The undersigned hereby appoints ROBERT M. HERNANDEZ, JOHN H. ODLE,
TIMOTHY G. RUPERT AND RICHARD M. HAYS, or any of them, proxies to vote all
shares of Common Stock which the undersigned is entitled to vote with all
powers which the undersigned would possess if personally present, at the Annual
Meeting of Shareholders of RMI Titanium Company on April 25, 1997, and any
adjournments thereof, upon such matters as may properly come before the
meeting. SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS PROXY CARD
AND TO RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
PLEASE COMPLETE, DATE AND SIGN THE REVERSE SIDE.
FOLD AND DETACH HERE
Please mark
your votes as
indicated in
this example
[ X ]
This Proxy Card, when properly executed, will be voted in the
manner directed herein. If no direction to the contrary is indicated, it
will be voted "FOR" all Proposals.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
1. PROPOSAL NO. 1 - Election of Craig R. Anderson; Neil A.
Armstrong; Daniel I. Booker; Ronald L. Gallatin; Charles C.
Gederon; Robert M. Hernandez, John H. Odle, Timothy G. Rupert
and Wesley W. von Schack as directors.
FOR WITHHOLD
all nominees from all
[ X ] [ X ]
(To withhold authority to vote for any individual nominee, write that nominee's
name in the space below:
2. PROPOSAL NO. 2 - Election of Price Waterhouse LLP as independent accountants
for 1997.
FOR AGAINST ABSTAIN
[ X ] [ X ] [ X ]
Signature(s) Dated: , 1997
-------------------------------------- -------------
Please sign EXACTLY as your name appears hereon. When signing as fiduciary or
corporate officer, give full title. Joint owners should both sign.
FOLD AND DETACH HERE
