<PAGE> 1
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
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Century Aluminum Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate Number of securities to which transaction applies: N/A
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): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
|_| 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: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE> 2
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 8, 1999
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Century Aluminum Company (the
"Company") will be held at 9:00 a.m., local time, on Tuesday, June 8, 1999 at
the Executive Offices of the Company, 2511 Garden Road, Suite 200, Monterey,
California, for the following purposes:
1. To elect two directors to serve for a term of three years
expiring at the Annual Meeting of Stockholders to be held in 2002;
2. To consider and act upon a proposal to amend the Company's 1996
Stock Incentive Plan to increase the number of shares of common stock
reserved for issuance thereunder by 300,000 shares;
3. To consider and act upon a proposal to ratify the appointment
of Deloitte & Touche LLP as the Company's independent auditors for the
fiscal year ending December 31, 1999; and
4. To transact such other business as may properly come before the
Annual Meeting or at any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 16,
1999 as the record date for the determination of the stockholders entitled
to notice of and to vote at the Annual Meeting of Stockholders and at any
adjournments or postponements thereof.
By Order of the Board of Directors,
/s/ Gerald J. Kitchen
Gerald J. Kitchen
Executive Vice President,
General Counsel,
Chief Administrative Officer
and Secretary
Monterey, California
April 29, 1999
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
If you do not expect to attend the Annual Meeting, or if you do plan
to attend but wish to vote by proxy, please complete, sign, date and
return promptly the enclosed proxy card in the enclosed postage-paid
envelope.
- --------------------------------------------------------------------------------
<PAGE> 3
CENTURY ALUMINUM COMPANY
-----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
June 8, 1999
General
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of Century Aluminum Company, a Delaware
corporation (the "Company"), of proxies for use at the Annual Meeting of
Stockholders to be held on June 8, 1999, commencing at 9:00 a.m., local time, at
the Executive Offices of the Company, 2511 Garden Road, Suite 200, Monterey,
California, and at any adjournments or postponements thereof. The matters to be
considered and acted upon at the meeting are described below in this Proxy
Statement.
The principal executive offices of the Company are located at 2511 Garden
Road, Suite 200, Monterey, California 93940. The approximate mailing date of
this Proxy Statement and the accompanying proxy is April 29, 1999.
Voting Rights and Votes Required
Only stockholders of record at the close of business on April 16, 1999
will be entitled to notice of and to vote at the Annual Meeting. As of such
record date, the Company had outstanding 20,202,205 shares of common stock. Each
stockholder is entitled to one vote for each share of common stock held. The
holders of a majority of the outstanding shares will constitute a quorum for the
transaction of business at the meeting. Shares of common stock present in person
or represented by proxy (including shares which abstain or do not vote with
respect to one or more of the matters presented for stockholder approval) will
be counted for purposes of determining whether a quorum exists at the meeting.
The affirmative vote of the holders of a plurality of the shares of common
stock present or represented at the meeting is required for the election of
directors. The affirmative vote of the holders of a majority of the shares of
common stock present or represented at the meeting and entitled to vote is
required for the approval of each of the amendment to the Company's 1996 Stock
Incentive Plan and for the ratification of the appointment of Deloitte & Touche
LLP as the Company's independent auditors for the current fiscal year. Shares
represented by a properly signed proxy card received pursuant to this
solicitation will be voted in accordance with the instructions thereon.
Abstentions will be treated as shares that are present and entitled to vote for
purposes of determining the number of shares present and entitled to vote with
respect to any particular matter, but will not be counted as a vote in favor of
such matter. Accordingly, an abstention from voting on a matter will have the
same legal effect as a vote against the matter. If a broker or nominee holding
stock in "street name" indicates on the proxy that it does not have
discretionary authority to vote as to a particular matter, those shares will not
be considered as present and entitled to vote with respect to such matter.
A stockholder may revoke a proxy at any time before it is exercised by
submitting a later dated proxy, notifying the Secretary of the Company in
writing, or voting in person at the meeting.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Company's common stock as of March 31, 1999 (except
as otherwise noted) by (i) each person known by the Company to be the beneficial
owner of five percent or more of the outstanding shares of common stock, (ii)
each director of the Company, (iii) each executive officer of the Company named
in the Summary Compensation Table under the heading "Executive Compensation"
below, and (iv) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Percentage of
Name of Beneficial Owner Ownership(1) Class
- ------------------------ -------------------- -------------
<S> <C> <C>
Glencore International AG........................... 7,925,000(2) 39.2
Crabbe Huson Group, Inc............................. 2,812,100(3) 13.9
Wellington Management Company, LLP.................. 2,184,200(4) 10.8
Vanguard/Windsor Funds.............................. 2,000,000(5) 9.9
David W. Beckley.................................... 112,607(6) *
Roman A. Bninski.................................... 13,000(7) *
Craig A. Davis...................................... 221,105(8) 1.1
John C. Fontaine.................................... 13,250(9) *
William R. Hampshire................................ 29,200(10) *
Gerald J. Kitchen................................... 108,537(11) *
Gerald A. Meyers.................................... 142,812(12) *
Willy R. Strothotte................................. 13,000(13) *
All directors and executive officers as a group (8
persons)............................................ 653,511(14) 3.2
</TABLE>
- ----------
* Less than one percent.
(1) Each individual or entity has sole voting and investment power, except as
otherwise indicated.
(2) Glencore International AG ("Glencore International") beneficially owns
such shares through its subsidiaries, Glencore AG, which directly owns
2,742,214 shares, and Vialco Holdings Ltd. ("Vialco"), which directly owns
5,182,786 shares. The business address of each of Glencore International,
Glencore AG and Vialco is Baarermattstrasse 3, P.O. Box 555, CH 6341,
Baar, Switzerland.
(3) Based upon information as of December 31, 1998 set forth in a Schedule 13G
filing dated February 12, 1999. According to its filing, Crabbe Huson
Group, Inc. ("Crabbe Huson"), a registered investment advisor, has shared
investment power with respect to such shares, and shared voting power with
respect to 2,586,498 shares. The business address of Crabbe Huson is 121
S.W. Morrison, Suite 1400, Portland, Oregon 97204.
(4) Based upon information as of December 31, 1998 set forth in a Schedule 13G
filing dated February 9, 1999. According to its filing, Wellington
Management Company, LLP ("Wellington"), an investment advisor and parent
holding company, through its subsidiary, Wellington Trust Company, N.A.
("Wellington Trust"), has shared voting power with respect to 72,500
shares and shared investment power with respect to 2,184,200 shares. The
business address of Wellington and Wellington Trust is 75 State Street,
Boston, Massachusetts 02109.
(5) Based upon information as of December 31, 1998 set forth in a Schedule 13G
filing dated February 10, 1999. Vanguard/Windsor Funds ("Vanguard") has
sole voting power and shared investment power with respect to such shares.
Some or all of these shares are reported as beneficially owned by
Wellington. The business address of Vanguard is P.O. Box 2600, Valley
Forge, Pennsylvania, 19482.
(6) Includes 80,000 shares which are subject to options presently exercisable.
(7) Includes 13,000 shares which are subject to options presently exercisable.
(8) Includes 150,000 shares which are subject to options presently
exercisable. Excludes 7,925,000 shares beneficially owned by Glencore
International, of which Mr. Davis is a director.
(9) Includes 250 shares owned jointly with Mr. Fontaine's wife. Also includes
13,000 shares which are subject to options presently exercisable.
(Footnotes continued on following page)
-2-
<PAGE> 5
- ----------
(Footnotes continued from previous page)
(10) Includes 28,000 shares which are subject to options presently exercisable.
Also includes 900 shares owned by Mr. Hampshire's wife and 300 shares
owned by Mr. Hampshire's grandchildren, as to which shares Mr. Hampshire
disclaims beneficial ownership.
(11) Includes 80,000 shares which are subject to options presently exercisable.
(12) Includes 100,000 shares which are subject to options presently
exercisable.
(13) Includes 13,000 shares which are subject to options presently exercisable.
Excludes 7,925,000 shares beneficially owned by Glencore International, of
which Mr. Strothotte is the Chairman and Chief Executive Officer.
(14) Includes 477,000 shares which are subject to options presently
exercisable. Excludes 7,925,000 shares beneficially owned by Glencore
International.
1. ELECTION OF DIRECTORS
The Company's Board of Directors consists of six members, divided into
three classes: Class I, Class II and Class III. Directors in each such class are
elected to serve for three-year terms, with each class standing for election in
successive years. At the Annual Meeting, two Class III Directors will be elected
to serve until the third succeeding Annual Meeting of the Stockholders of the
Company in 2002. If no direction is given to the contrary, all proxies received
by the Board of Directors will be voted "FOR" the election as directors of each
of the following nominees. In the event that any nominee declines or is unable
to serve, the proxy solicited herewith may be voted for the election of another
person in his stead at the discretion of the proxies. Each of the nominees
hereinafter named has indicated his willingness to serve if elected, and the
Board of Directors has no reason to believe that any of the nominees will not be
available to serve. Set forth below is certain information concerning the two
nominees for election and the other directors of the Company with unexpired
terms of office. Each nominee is currently a director of the Company.
Nominees For Election of Class III Directors For Terms to Expire in 2002
<TABLE>
<CAPTION>
Business Experience and Principal Occupation or Director
Name and Age Employment During Past 5 Years; Other Directorships Since
- ------------ --------------------------------------------------- -----
<S> <C> <C>
Craig A. Davis (1).................... Chairman and Chief Executive Officer of the Company 1995
58 since August 1995; Chairman and Chief Executive
Officer of Century Aluminum of West Virginia, Inc.
(3) (a subsidiary of the Company) since August
1995; Chairman and acting Chief Executive Officer
of Century Aluminum of West Virginia, Inc. from
April 1992 through July 1995; Director of Glencore
International since December 1993 and Executive of
Glencore International from September 1990 to June
1996; former Executive Vice President of Alumax
Inc.
William R. Hampshire (2).............. Vice-Chairman of the Company since August 1995; 1995
71 President and Chief Operating Officer of Century
Aluminum of West Virginia, Inc. (a subsidiary of
the Company) from April 1992 through January 1993;
Director of Century Aluminum of West Virginia,
Inc. since June 1993; Independent consultant since
1990; former President and Chief Executive Officer
of Howmet Aluminum Corporation.
</TABLE>
-3-
<PAGE> 6
Class I Directors Continuing In Office For Terms to Expire in 2000
<TABLE>
<CAPTION>
Business Experience and Principal Occupation or Director
Name and Age Employment During Past 5 Years; Other Directorships Since
- ------------ --------------------------------------------------- -----
<S> <C> <C>
Roman A. Bninski (1) .................... Partner, law firm of Curtis, Mallet-Prevost, Colt & 1996
52 Mosle, New York, New York since 1984; Secretary of
Century Aluminum of West Virginia, Inc. (a
subsidiary of the Company) from April 1992 through
February 1996.
Willy R. Strothotte...................... Chief Executive Officer of Glencore International 1996
54 since 1993 and Chairman of the Board of Glencore
International since 1994; Director of Xstrata
Aluminum Corporation (formerly Sudelektra Holding
AG) since 1990.
</TABLE>
Class II Directors Continuing in Office For Terms To Expire in 2001
<TABLE>
<CAPTION>
Business Experience and Principal Occupation or Director
Name and Age Employment During Past 5 Years; Other Directorships Since
- ------------ --------------------------------------------------- -----
<S> <C> <C>
John C. Fontaine (1) (2)................. Partner, law firm of Hughes Hubbard & Reed LLP since 1996
67 July 1997; President of Knight-Ridder, Inc. from
July 1995 to July 1997; Senior Vice President and
General Counsel of Knight-Ridder, Inc. from 1987
to January 1994, and Executive Vice President from
January 1994 to July 1995; Chairman of the Samuel
H. Kress Foundation; member of the Trustees'
Council of the National Gallery of Art.
Gerald A. Meyers......................... President and Chief Operating Officer of the Company 1995
49 since August 1995; President and Chief Operating
Officer of Century Aluminum of West Virginia, Inc.
(a subsidiary of the Company) since January 1993
and Director of Century Aluminum of West Virginia,
Inc. since April 1994; Operations Manager of Logan
Aluminum (joint venture between Alcan Aluminum
Limited and Atlantic Richfield Company) from
November 1988 to December 1992.
</TABLE>
- ----------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
(3) Formerly known as Ravenswood Aluminum Corporation.
Board and Committee Meetings; Directors' Compensation
The Board of Directors met six times during 1998. Each Director attended
more than 75% of the aggregate of the meetings of the Board and Board Committees
on which such director served, with the exception of Mr. Strothotte who attended
two meetings of the Board in 1998. The Board of Directors has appointed an Audit
Committee and a Compensation Committee to assist in handling the various
functions of the Board. The Board does not have a standing Nominating Committee.
The Audit Committee members are Messrs. Davis, Bninski and Fontaine. The
Audit Committee oversees the financial reporting process for which management is
responsible, reviews with the auditors the scope and results of the audit,
reviews with the Company's internal auditors the scope and results of the
Company's internal audit procedures, reviews the independence of the audit and
non-audit services provided by auditors, considers the range
-4-
<PAGE> 7
of audit and non-audit fees, reviews with the Company's independent auditors and
management the effectiveness of the Company's system of internal accounting
controls, and makes inquiries into other matters within the scope of its duties.
In 1998, the Audit Committee held three meetings.
The members of the Compensation Committee are Mr. Hampshire and Mr.
Fontaine. The Compensation Committee administers the Company's stock incentive
plans, and reviews and recommends compensation levels of the Company's executive
officers. In 1998, the Compensation Committee held two meeting.
Directors who are full-time salaried employees of the Company are not
compensated for their service on the Board or on any Board Committee.
Non-employee directors receive an annual retainer of $20,000 for their services,
except that the Vice-Chairman receives an annual retainer of $25,000, and a fee
of $750 for each Board or Committee meeting attended. In addition, each
Committee member receives an annual fee of $750. All directors are reimbursed
for their travel and other expenses incurred in attending Board and Committee
meetings.
Under the Company's Non-Employee Directors Stock Option Plan, each
director who is not an employee of the Company received a one-time grant of
options to purchase 10,000 shares of common stock, and the Vice-Chairman
received a one-time grant of options to purchase 25,000 shares of common stock.
Such grants became effective upon the consummation of the Company's initial
public offering at an exercise price equal to the initial public offering price,
except in the cases of Mr. Fontaine and Mr. Strothotte whose grants became
effective upon their election as directors at an exercise price equal to the
market price of the common stock at such time. The options vested one-third on
the grant date, with an additional one-third vesting on each of the first and
second anniversary dates. In addition, the Non-Employee Directors Stock Option
Plan provides for automatic annual grants of options to purchase 1,500 shares of
common stock at fair market value to each non-employee director continuing in
office after the annual meeting of stockholders in each year.
Mr. Strothotte was designated to serve as a director of the Company by
Glencore International.
Executive Compensation
Summary Compensation Table
The following table sets forth information with respect to the
compensation paid or awarded by the Company to the Chief Executive Officer and
the four other most highly compensated executive officers (collectively, the
"Named Executive Officers") for services rendered in all capacities during 1996,
1997 and 1998.
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation Awards/Payouts
----------------------- ----------------------------------------------
Number of
Shares Performance
Name and Restricted Stock Underlying Shares All Other
Principal Position Year Salary ($) Bonus($)(1) Awards ($)(2) Options (#) Vested($)(3) Compensation ($)(4)
- ------------------ ---- ---------- ----------- ------------- ----------- ------------ -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Craig A. Davis (5) 1998 $596,458 $537,000 -0- -0- $ 193,241 $ 8,056
Chairman and Chief 1997 $577,500 -0- -0- -0- -0- $ 7,416
Executive Officer 1996 $320,833 $440,000 $2,043,750 150,000 -0- $ 53,249
Gerald A. Meyers 1998 $271,833 $185,000 -0- -0- $ 87,840 $ 6,935
President and Chief 1997 $262,500 -0- -0- -0- -0- $ 55,060
Operating Officer 1996 $250,000 $143,750 $1,362,500 100,000 -0- $ 547
Gerald J. Kitchen 1998 $217,292 $146,750 -0- -0- $ 52,700 $ 6,748
Executive Vice 1997 $210,000 -0- -0- -0- -0- $111,302
President, General 1996 $200,000 $105,000 $1,090,000 80,000 -0- $ 6,324
Counsel, Chief
Administrative
Officer and Secretary
</TABLE>
(Table continued on following page)
-5-
<PAGE> 8
- ----------
(Table continued from previous page)
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation Awards/Payouts
----------------------- ----------------------------------------------
Number of
Shares Performance
Name and Restricted Stock Underlying Shares All Other
Principal Position Year Salary ($) Bonus($)(1) Awards ($)(2) Options (#) Vested($)(3) Compensation ($)(4)
- ------------------ ---- ---------- ----------- ------------- ----------- ------------ -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
David W. Beckley 1998 $217,292 $126,500 -0- -0- $ 52,700 $ 6,748
Executive Vice 1997 $210,000 -0- -0- -0- -0- $ 6,324
President and Chief 1996 $200,000 $105,000 $1,090,000 80,000 -0- $108,203
Financial Officer
Steven R. Sedberry (6) 1998 $170,708 $123,000 -0- -0- $ 30,996 $ 98,188
Vice President of 1997 $164,700 -0- -0- -0- -0- $ 6,074
Sales and Marketing 1996 $150,000 $ 93,750 $ 681,250 50,000 -0- $ 82,404
</TABLE>
- ----------
(1) Bonus amounts in 1998 are comprised of: annual incentive awards of
$450,000, $145,000, $110,000, $95,000 and $90,000 paid to Messrs. Davis,
Meyers, Kitchen, Beckley and Sedberry, respectively; and special mid-year
bonuses in the amounts of $87,000, $40,000, $36,750, $31,500 and $33,000
paid to Messrs. Davis, Meyers, Kitchen, Beckley and Sedberry,
respectively. See "Report of the Compensation Committee on Executive
Compensation."
(2) The amounts reported in this column represent the dollar value of
restricted share awards, calculated by multiplying the closing market
price of the Company's common stock on March 29, 1996 (the first day of
trading of the common stock) by the number of restricted shares.
Restricted shares vested one-third on March 28, 1999, with an additional
one-third vesting on each of March 28, 2000 and March 28, 2001. The
aggregate number and value (based upon the last reported sale price of
$9.438 of the Company's common stock on the NASDAQ National Market on
December 31, 1998) of unvested restricted shares held by each of the Named
Executive Officers as of December 31, 1998 (after giving effect to the
vesting of restricted shares on March 28, 1999) was as follows: Craig A.
Davis, 100,000 ($943,800); Gerald A. Meyers, 66,667 ($629,203); Gerald J.
Kitchen, 53,334 ($503,366); and David W. Beckley, 53,334 ($503,366).
Dividend equivalents accrue on restricted shares and are paid upon
vesting.
(3) Represents performance share units vested as a result of 1998 performance,
valued at the last reported sale price of $9.438 of the Company's common
stock on the NASDAQ National Market on December 31, 1998. Also includes
accrued dividends paid to Messrs. Davis, Meyers, Kitchen, Beckley and
Sedberry upon the vesting of the performance share units in the amounts of
$4,010, $1,823, $1,094, $1,094 and $643, respectively.
(4) All Other Compensation is comprised of the Company's matching
contributions under the Company's Defined Contribution Retirement Plan for
each of the Named Executive Officers. In 1998, those contributions were
$6,000 for each of the Named Executive Officers. Also includes Company
paid life insurance premiums in 1998 in the amounts of $2,056, $935, $748,
$748 and $610 for Messrs. Davis, Meyers, Kitchen, Beckley and Sedberry,
respectively. In the case of Mr. Sedberry, the amount in 1998 includes
$91,578 for a one-time relocation adjustment relating to his relocation to
Monterey, California.
(5) Mr. Davis' 1996 salary reflects his employment agreement commencing with
the Company on June 1, 1996.
(6) Effective March 31, 1999, Mr. Sedberry ceased to be employed by the
Company.
Fiscal Year End Option Value Table
The following table sets forth information regarding the aggregate number
and value of options held by the Named Executive Officers as of December 31,
1998. No options were exercised by any of the Named Executive Officers in 1998.
-6-
<PAGE> 9
<TABLE>
<CAPTION>
Number of Shares
Underlying Unexercised Options Value of Unexercised Options
at December 31, 1998 (#) at December 31, 1998 ($)
------------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Craig A. Davis.................. 150,000 0 -0- --
Gerald A. Meyers................ 100,000 0 -0- --
Gerald J. Kitchen............... 80,000 0 -0- --
David W. Beckley................ 80,000 0 -0- --
Steven R. Sedberry.............. 50,000 0 -0- --
</TABLE>
Long-Term Incentive Plan Awards Table
The following table sets forth information with respect to performance
share units awarded to the Named Executive Officers in 1998 under the Company's
1996 Stock Incentive Plan. Performance share units were awarded with respect to
initial award cycle periods of 1998 and 1998 through 1999, as well as three-year
award cycle periods of 1998 through 2000 and 1999 through 2001.
Long-Term Incentive Plans - Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Performance or Estimated Future Payouts under Non-Stock
Other Period Price-Based Plans
Performance Maturation or -----------------------------------------------
Name Share Units Payout Threshold Target Maximum
(#)(1) (#)(2) (#)(3) (#)(4)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Craig A. Davis 28,644 1998 14,322 28,644 42,966
32,225 1998-1999 16,113 32,225 48,338
35,805 1998-2000 17,903 35,805 53,708
67,246 1999-2001 33,623 67,246 100,869
Gerald A. Meyers 13,020 1998 6,510 13,020 19,530
13,835 1998-1999 6,918 13,835 20,753
14,648 1998-2000 7,324 14,648 21,972
27,632 1999-2001 13,816 27,632 41,448
Gerald J. Kitchen 7,812 1998 3,906 7,812 11,718
9,114 1998-1999 4,557 9,114 13,671
9,765 1998-2000 4,883 9,765 14,648
18,396 1999-2001 9,198 18,396 27,594
David W. Beckley 7,812 1998 3,906 7,812 11,718
8,463 1998-1999 4,232 8,463 12,695
9,114 1998-2000 4,557 9,114 13,671
15,943 1999-2001 7,972 15,943 23,915
Steven R. Sedberry 4,595 1998 2,298 4,595 6,893
5,106 1998-1999 2,553 5,106 7,659
5,616 1998-2000 2,808 5,616 8,424
11,575 1999-2001 5,788 11,575 17,363
</TABLE>
- ----------
(1) Performance share units represent shares of Company common stock which,
upon vesting, are issued to the award recipient. Except as described
herein, performance share units are forfeited if the award recipient is
not employed full-time by the Company at the end of the award cycle
period. In the event of death, disability or retirement, the award
recipient will receive a pro rata award based upon the number of weeks
employed during the award cycle period. Dividend equivalents accrue on
performance share units and are paid upon vesting.
(Footnotes continued on following page)
-7-
<PAGE> 10
- ----------
(Footnotes continued from previous page)
(2) Threshold payouts represent the minimum number of shares that will vest if
the Company meets a minimum percentage of a target level of earnings
before taxes for the period and exceeds industry return on invested
capital criteria. If the Company does not meet these performance criteria,
no shares will vest.
(3) Target payouts represent the target number of shares that will vest if the
Company meets 100% of the target level of earnings before taxes for the
period.
(4) Maximum payouts represent the maximum number of shares that will vest if
the Company reaches 125% of the target level of earnings before taxes for
the period. In cases where the target is exceeded, the number of shares
vested in excess of the target number of shares is calculated by
converting the excess award into cash and reconverting the excess award
into shares at the greater of the share price calculated at the time of
the award and the average share price for the month preceding the month in
which the shares vest.
Pension Plan Table
The Company maintains a non-contributory defined benefit pension plan for
salaried employees of the Company who meet certain eligibility requirements.
The following table shows estimated annual benefits payable upon
retirement in specified compensation and years of service classifications. The
figures shown include supplemental benefits payable to the Named Executive
Officers.
<TABLE>
<CAPTION>
Years of Credited Service
------------------------------------------------------------------------------------------
Remuneration 5 10 15 20 25 30 35 40
- ------------------ ------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 100,000........ $ 6,000 $ 12,000 $ 18,000 $ 24,000 $ 30,000 $ 36,000 $ 42,000 $ 48,000
$ 200,000........ $12,000 $ 24,000 $ 36,000 $ 48,000 $ 60,000 $ 72,000 $ 84,000 $ 96,000
$ 300,000........ $18,000 $ 36,000 $ 54,000 $ 72,000 $ 90,000 $108,000 $126,000 $144,000
$ 400,000........ $24,000 $ 48,000 $ 72,000 $ 96,000 $120,000 $144,000 $168,000 $192,000
$ 500,000........ $30,000 $ 60,000 $ 90,000 $120,000 $150,000 $180,000 $210,000 $240,000
$ 600,000........ $36,000 $ 72,000 $108,000 $144,000 $180,000 $216,000 $252,000 $288,000
$ 700,000........ $42,000 $ 84,000 $126,000 $168,000 $210,000 $252,000 $294,000 $336,000
$ 800,000........ $48,000 $ 96,000 $144,000 $192,000 $240,000 $288,000 $336,000 $384,000
$ 900,000........ $54,000 $108,000 $162,000 $216,000 $270,000 $324,000 $378,000 $432,000
$1,000,000........ $60,000 $120,000 $180,000 $240,000 $300,000 $360,000 $420,000 $480,000
$1,100,000........ $66,000 $132,000 $198,000 $264,000 $330,000 $396,000 $462,000 $528,000
$1,200,000........ $72,000 $144,000 $216,000 $288,000 $360,000 $432,000 $504,000 $576,000
$1,300,000........ $78,000 $156,000 $234,000 $312,000 $390,000 $468,000 $546,000 $624,000
</TABLE>
The plan provides lifetime monthly benefits at age 62 equal to the greater
of (i) 1.2% of final average monthly compensation multiplied by years of
credited service (up to 40 years), or (ii) $22.25 multiplied by years of
credited service (up to 40 years), less the total monthly vested benefit payable
as a life annuity at age 62 under plans of a predecessor. Final average monthly
compensation means the highest consecutive monthly average (36, 48 or 60 months)
in the 120-month period ending on the last day of the calendar month completed
at or prior to a termination of service. Participants' pension rights vest after
a five-year period of service, except that the Named Executive Officers are
immediately vested. Benefits are also available as a 30-year pension, an early
retirement benefit (actuarially reduced beginning at age 55), and as a
disability benefit.
The compensation covered by the plan includes all compensation, subject to
certain exclusions, before any reduction for 401(k) contributions, subject to
the maximum limits under the Internal Revenue Code of 1986, as amended (the
"Code").
The years of credited service for Messrs. Davis, Meyers, Kitchen, Beckley
and Sedberry at December 31, 1998 were approximately 3,6,3,3, and 4 years,
respectively.
-8-
<PAGE> 11
Employment Agreements
The Company entered into employment agreements with each of Messrs. Craig
A. Davis, Gerald A. Meyers, Gerald J. Kitchen, and David W. Beckley, effective
January 1, 1999, providing for terms of employment of three years. Under the
agreements, the base salaries of Messrs. Davis, Meyers, Kitchen and Beckley may
not be reduced below $610,000, $278,500, $222,500 and $222,500, respectively.
The agreements provide that the base salaries may be subject to increases
established from time to time by the Board of Directors. In addition, the
executives are eligible for bonuses in accordance with the Company's annual
incentive plan and stock option grants and performance share unit awards under
the Company's 1996 Stock Incentive Plan. The agreements also provide that the
executives will receive unfunded supplemental executive retirement benefits in
addition to any benefits received under the Company's qualified retirement
plans. The supplemental benefit for each executive will be equal to the amount
that would normally be paid under the Company's qualified retirement plans if
there were no limitations under Sections 415 and 401(a)(17) of the Code and as
if the executives were fully vested in the qualified retirement plan benefits.
In the event of termination of employment "without cause," the terminated
executive will be entitled to receive termination payments equal to 100% of his
base salary and bonus (based on the highest annual bonus payment within the
prior three years) for the remainder of the term of the agreement (with a
minimum of one year's salary plus bonus). Any termination payments under the
employment agreements may not be duplicated under the severance compensation
agreements described below.
Severance Compensation Arrangements
The Company has entered into severance compensation agreements with each
of the Named Executive Officers. The agreements provide that if within 36 months
following a change of control of the Company, the executive's employment is
terminated either (i) by the Company for other than cause or disability or (ii)
by such executive for good reason, then such executive will receive a lump sum
payment equal to three times the aggregate of the highest base salary and the
highest bonus received by such executive in any of the most recent five years.
Also, in the event of a change of control, the exercisability of stock options
and the vesting of performance share units held by such executives will be
accelerated.
The Code imposes certain excise taxes on, and limits the deductibility of,
certain compensatory payments made by a corporation to or for the benefit of
certain individuals if such payments are contingent upon certain changes in the
ownership or effective control of the corporation or the ownership of a
substantial portion of the assets of the corporation, provided that such
payments to the individual have an aggregate present value in excess of three
times the individual's annualized includible compensation for the base period,
as defined in the Code. The agreements provide for additional payments to the
executives in order to fully offset any excise taxes payable by an executive as
a result of the payments and benefits provided in the agreements.
Compensation Committee Interlocks And Insider Participation
During 1998, the members of the Board's Compensation Committee were Mr.
William R. Hampshire and Mr. John C. Fontaine. Mr. Hampshire served as President
and Chief Operating Officer of Century Aluminum of West Virginia, Inc. (formerly
Ravenswood Aluminum Corporation) from April 1992 through January 1993.
Certain Transactions and Relationships
In 1998, the Company purchased primary aluminum and alumina from Glencore
Ltd. Such purchases, which were made at market prices, aggregated $43.7 million
(of which $24.0 million was for primary metal, $8.0 million was for rolling
ingot and $11.6 million was for alumina). In 1998, the Company also sold primary
aluminum to Glencore Ltd. Such sales, at market prices, excluding sales of the
Mt. Holly facility production described below, aggregated $19.0 million in 1998.
The Company, through its Mt. Holly facility, sold $55.3 million of primary
aluminum products at market prices to Glencore Ltd. in 1998. Such sales
constituted approximately 62% of the Company's revenue share of the Mt. Holly
facility. The Company has continued to purchase primary aluminum from and sell
primary aluminum to Glencore Ltd. in 1999 in arm's-length transactions made at
market prices.
As of December 31, 1998, the Company had outstanding forward sales
contracts with Glencore Ltd. for 65.6 million pounds of primary aluminum to
hedge 1999 production. In addition, as of such date, the Company had
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<PAGE> 12
outstanding forward purchase contracts with Glencore Ltd. for 17.3 million
pounds of primary aluminum to hedge 1999 sheet and plate aluminum sales.
Accounting standards require that such contracts be marked-to-market. As of
December 31, 1998, the Company recognized gains of $3.5 million on such
contracts. The Company intends to continue to enter into hedging arrangements
with Glencore Ltd. in the future.
Mr. Craig A. Davis, Chairman and Chief Executive Officer of the Company,
is a director of Glencore International and was an executive of Glencore
International and Glencore AG from September 1990 until June 1996. Mr. Willy R.
Strothotte, a director of the Company, is Chairman and Chief Executive Officer
of Glencore International.
Mr. Roman A. Bninski, a director of the Company, is a partner of Curtis,
Mallet-Prevost, Colt & Mosle, which furnishes legal services to the Company.
Report of the Compensation Committee on Executive Compensation
General
The Compensation Committee of the Board of Directors (the "Committee") is
comprised of Messrs. John C. Fontaine and William R. Hampshire, both of whom are
independent directors. The Committee reviews and recommends to the Board of
Directors compensation for the Company's executive officers, and it has
oversight responsibility for administering the Company's 1996 Stock Incentive
Plan, including the awarding of grants thereunder. The Company has a policy of
basing a significant portion of the compensation of its executive officers on
the operating performance of the Company.
Compensation Philosophy
The Company's compensation programs are designed to enable the Company and
its subsidiaries to attract and retain talented executives and management
personnel. In order to do this, the Company believes it must be able to provide
management personnel with opportunities for total compensation which is
competitive with compensation which would be available from employers with whom
the Company competes and companies which are seeking to hire and retain
management personnel of similar quality.
The Company's compensation programs are tied to the corporate performance
of the Company, as well as business unit and individual performance.
Compensation is heavily weighted to annual incentive awards and long-term
performance awards in the form of stock options and performance share units in
order to provide "pay-for-performance" and align management's and stockholders'
interests in the enhancement of stockholder value. The three principal
components of the Company's "pay-for-performance" executive compensation program
are: base salary, annual incentive cash bonuses, and long-term incentive
compensation.
Base Salary
The Committee annually reviews the salaries of the Company's executives.
Base salary levels are set at levels comparable to and competitive with the
salary levels of executives of peer corporations or other employers hiring
equivalent executive personnel. Actual salary levels for each individual vary
based upon a subjective assessment of individual performance, experience, level
of responsibility, potential contribution to the Company's future growth and the
overall Company financial circumstances. The Committee has not found it
practicable to assign relative weights to specific factors in determining base
salary adjustments, and the specific factors used may vary among individual
executives. Effective June 1, 1998, the Committee authorized increases in the
Named Executive Officers' annual base salaries in amounts ranging from 5.6% to
6.25% percent which, based on available studies, were comparable to and
competitive with the salary levels of equivalent executive personnel of peer
corporations.
Annual Incentive Awards
The Company has adopted an incentive compensation plan. Under this plan,
executive officers (including the Chief Executive Officer) are eligible to
receive each year as a bonus, a percentage of their base salary. The plan
provides for suggested percentage ranges of 50% to 100% for the Chief Executive
Officer and 35% to 75% for the other executive officers. Actual awards are made
on the basis of individual and Company performance and are subject to the
subjective evaluation of the Committee. Awards may only be made from a reserve
established under
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<PAGE> 13
the plan, which was credited with an initial reserve of $1,000,000. Subject to
the recommendation of the Committee, credits to the reserve will be made based
upon the achievement of prescribed return on investment rates as determined in
accordance with the plan. In June 1998, in recognition of the fact that no
bonuses or salary increases had been awarded to the executive officers at the
end of 1997 and due to the improved financial performance of the Company since
that time, special mid-year bonuses in the amounts of $87,000, $40,000, $36,750,
$31,500 and $33,000 were awarded to Messrs. Davis, Meyers, Kitchen, Beckley and
Sedberry, respectively. Based on 1998 performance, the Chief Executive Officer
was awarded a bonus of $450,000, which was in the approximate midpoint of the
plan's suggested range and took into consideration the mid-year bonus. In the
cases of the other executive officers, bonuses of $145,000, $110,000, $95,000
and $90,000 were awarded to Messrs. Meyers, Kitchen, Beckley and Sedberry,
respectively, which were generally in the approximate mid-point of the plan's
suggested ranges and took into consideration the mid-year bonuses.
Long-term Incentive Compensation
The Committee believes that option grants and performance share unit
awards align executive interests with stockholder interests by creating a direct
link between compensation and stockholder return. Option grants are made from
time to time to executives whose contributions have or will have a significant
impact on the Company's long-term performance. The Committee's determination of
whether option grants are appropriate each year is made with regard to
competitive considerations, and each executive's actual grant is based upon the
criteria described in the preceding paragraphs. The size of previous grants and
the number of options held are not determinative of future grants. No options
were granted to the Named Executive Officers in 1998. In 1998, the Committee
adopted implementation guidelines with respect to the granting of performance
share units. The guidelines provided for the award of performance share units
with performance cycles for 1998, 1998 and 1999, and 1998 through 2000, as well
as successive three-year award cycles for performance share units to be granted
in future years. Each award is determined by creating a monetary award within a
percentage range of the executive's base salary, and converting the award into
performance share units based upon the average closing price for the Company's
common stock for the month preceding the month in which the grant is made. The
percentage ranges of base salary are 80% to 100% in the case of the Chief
Executive Officer and 60% to 80% in the cases of the other executive officers.
Based upon these guidelines, the Named Executive Officers were awarded the
performance share units set forth under "Long-Term Incentive Plan Awards Table."
As set forth in the Long-Term Incentive Plan Awards Table, vesting of
performance share units is based upon the Company's performance relative to
target levels of earnings before taxes, and actual shares vested can range
between 0% and 150% of the performance share unit award. In cases where the
target is exceeded, the number of shares vested in excess of the target award is
calculated by converting the excess award into cash and reconverting the excess
award into shares at the greater of the share price calculated at the time of
the award and the average share price for the month preceding the month in which
the shares vest. Based upon the Company's earnings before taxes in 1998,
performance share unit awards for the 1998 performance cycle vested at a rate of
70%. See "Executive Compensation -- Summary Compensation Table."
Compensation of the Chief Executive Officer
Compensation of the Chief Executive Officer was determined in accordance
with the criteria set forth above. See "Executive Compensation -- Summary
Compensation Table." The Committee believes that CEO compensation was
appropriately based upon the Company's financial performance.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Code places a limit of $1,000,000 on the amount of
compensation that may be deducted by the Company in any one year with respect to
each of the Company's five most highly paid executive officers. However, subject
to certain limitations, Section 162(m) provides that the deduction limit does
not apply to any remuneration paid pursuant to compensation agreements or plans
entered into prior to the consummation of the Company's initial public offering.
Consequently, to the extent the compensation paid to the Named Executive
Officers is paid pursuant to such agreements, it is currently exempt from the
Section 162(m) deduction limits.
Respectfully Submitted,
Compensation Committee
John C. Fontaine William R. Hampshire
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<PAGE> 14
Performance Graph
The following line graph compares the Company's cumulative total return to
stockholders since the common stock became publicly traded on March 29, 1996
with the cumulative total return of the S&P 500 Index and the Media General
Aluminum Group Index during the period from March 29, 1996 through December 31,
1998. These comparisons assume the investment of $100 on March 29, 1996 and the
reinvestment of dividends
Century Aluminum Company
Comparison of Cumulative Total Return to
Stockholders March 29, 1996
through December 31, 1998
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
3/29/96 6/30/96 12/31/96 6/30/97 12/31/97 6/30/98 12/31/98
<S> <C> <C> <C> <C> <C> <C> <C>
S&P 500 Index 100 104.49 116.70 140.74 155.63 183.19 200.10
Media General Aluminum Group Index (1) 100 91.42 101.61 116.87 102.57 101.70 105.53
Century Aluminum Company 100 115.60 127.42 108.68 100.97 111.01 71.76
</TABLE>
- ----------
(1) In the Company's proxy statements for 1997 and 1998, the industry index
used by the Company for comparison purposes was the Media General Aluminum
Refining Group Index ("MG Refining Index"). The composition of the MG
Refining Index was as follows: Alcan Aluminum Limited, Alumax Inc.,
Aluminum Company of America, Century Aluminum Company, Commonwealth
Industries, Inc., IMCO Recycling Inc., Kaiser Aluminum Corporation,
Reynolds Metals Company, and Tredegar Industries, Inc. The Company has
been informed by Media General Financial Services ("Media General") that
following a restructuring of Media General's industry group classification
system, it no longer supports the MG Refining Index. The Company has
selected MG Group 132 Aluminum ("MG Aluminum Index") as the new industry
index to be used in future performance graphs in lieu of the MG Refining
Index. The composition of the MG Aluminum Index is as follows: Alcan
Aluminum Limited, Aluminum Company of America, Century Aluminum Company,
Commonwealth Industries, Inc., Easco, Inc., Kaiser Aluminum Corporation,
Pechiney S.A., and Reynolds Metals Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons owning more than ten
percent of a registered class of the Company's equity
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<PAGE> 15
securities, to file with the Securities and Exchange Commission reports of
ownership and changes in ownership of equity securities of the Company. Such
persons are also required to furnish the Company with copies of all such forms.
Based solely upon a review of the copies of such forms furnished to the
Company and, in certain cases, written representations that no Form 5 filings
were required, the Company believes that, with respect to the 1998 fiscal year,
all required Section 16(a) filings were made, except that Mr. Lawrence Frost
reported late the following: (i) the Company's grant of 75,000 stock options and
75,000 performance share units, and (ii) Mr. Frost's forfeiture of 75,000 stock
options and 75,000 performance share units upon his departure from the Company.
2. AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN
The Board of Directors adopted on March 5, 1999, subject to approval by
the stockholders, an amendment (the "1999 Amendment") to the Company's 1996
Stock Incentive Plan (as presently in effect, the "1996 Plan"). The 1999
Amendment increases from 1,200,000 to 1,500,000 the number of shares of the
Company's common stock available for issuance under the 1996 Plan. The Company
has in the past used, and intends in the future to use, stock options and
performance share units as incentive devices to motivate and compensate its
salaried officers and other key employees and believes that equity incentives
represented by stock options and performance share units enhance the Company's
ability to attract and retain needed personnel. As of March 31, 1999, 202,205
shares had been issued upon the vesting of performance share units awarded under
the 1996 Plan; as of such date, options to purchase 496,400 shares of common
stock and performance share units representing 587,360 unvested shares of common
stock were outstanding under the 1996 Plan. Accordingly, no shares remained
available under the 1996 Plan as of such date. Performance share unit awards for
the award cycle 1999 through 2002 for the Named Executive Officers, as set forth
in the Long-Term Incentive Plan Awards Table, were granted subject to
stockholder approval of the 1999 Amendment.
Under the terms of the 1996 Plan, the Company is authorized to make awards
of performance share units and to grant stock options that qualify as incentive
stock options ("ISOs") under Section 422 of the Code and nonqualified stock
options ("NQSOs") to salaried officers and other key employees of the Company
and its subsidiaries who are in a position to affect materially the
profitability and growth of the Company and its subsidiaries, for up to an
aggregate of 1,200,000 shares of common stock. The following summary of certain
features of the 1996 Plan is qualified in its entirety by reference to the full
text of the 1996 Plan, a copy of which will be furnished to any stockholder,
upon written request of such stockholder directed to Mr. Gerald J. Kitchen,
Executive Vice President, General Counsel, Chief Administrative Officer and
Secretary, 2511 Garden Road, Suite 200, Monterey, California 93940.
Summary of the 1996 Plan and the 1999 Amendment.
General. The 1996 Plan permits the Company to grant ISOs, NQSOs, and
performance share units (collectively, "Awards") to salaried officers and other
key employees. The 1996 Plan terminates on February 28, 2006 and no Awards may
be granted after the termination date. The 1996 Plan covers a maximum of
1,200,000 shares of common stock (subject to share adjustments as described
below), which may be either authorized and unissued shares of common stock or
shares held in the Company's treasury. When an Award lapses, expires, terminates
or is forfeited, the related shares of common stock may be available for
distribution in connection with future Awards. Adjustments may be made in the
number of shares reserved under the 1996 Plan, in the number of shares subject
to a performance share unit, the financial performance goals contained in a
performance share unit, in the option price and in the number of shares subject
to stock options, in the event of a merger, reorganization, consolidation,
recapitalization or stock dividend, and in the event of certain other changes
described in the 1996 Plan or any other changes in the Company's corporate
structure that affect the common stock or has an effect similar to any of the
foregoing. No employee may be granted Awards covering, in the aggregate, more
than 300,000 shares of common stock in any fiscal year of the Company (subject
to adjustment as provided above).
Because grants under the 1996 Plan are discretionary, the Company cannot
now determine the number of Awards to be received by any particular current
executive officer, by all current executive officers as a group or by
non-executive officer employees or directors as a group. The number of such
Awards shall be determined by the Compensation Committee, pursuant to the terms
of the 1996 Plan. For information with respect to the Compensation Committee's
guidelines for awarding performance share unit awards, see "Report of the
Compensation Committee on Executive Compensation - Long-term Incentive
Compensation." It is currently
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<PAGE> 16
estimated that there are approximately 50 employees currently eligible to
participate in the 1996 Plan. For information concerning the ownership of Awards
by the Named Executive Officers, see "Executive Compensation" above.
Administration. The 1996 Plan is administered by the Compensation
Committee. The Compensation Committee is comprised of directors who are
non-employee directors within the meaning of Rule 16b-3 promulgated under the
Exchange Act. The Compensation Committee has the sole and complete discretion,
subject to the terms of the 1996 Plan, to (i) select the individuals from among
the eligible employees of the Company and its subsidiaries to whom Awards may be
granted, (ii) determine the type of Awards to be granted and the terms and
conditions of any Awards granted, and (iii) determine the number of shares of
common stock subject to each Award granted. In addition, the Compensation
Committee is authorized to interpret the 1996 Plan, to make and rescind rules
and regulations related thereto, and to make all determinations necessary or
advisable for the administration of the 1996 Plan.
Stock Options. Stock options granted under the 1996 Plan may be either
ISOs or NQSOs. Stock options may be granted alone or in addition to other Awards
granted under the 1996 Plan. The aggregate fair market value (determined as of
the time of the grant of an ISO) of the common stock with respect to which ISOs
are exercisable for the first time by a single optionee during any calendar year
under the Plan and any other stock option plan of the Company may not exceed
$100,000.
The exercise price for stock options shall be determined by the
Compensation Committee and shall be set forth in an option agreement entered
into with the optionee, provided, however, that the exercise price for an option
shall not be less than the fair market value of a share of common stock on the
date of grant (110% in the case of an ISO granted to a 10% or more stockholder).
On April 28, 1999, the last reported sale price of the Company's common stock on
the NASDAQ National Market was $7.625 per share.
The Compensation Committee is to specify the time or times at which such
options will be exercisable, except that the termination date for any stock
option shall not exceed 10 years from the date of grant (five years in the case
of an ISO granted to a 10% or more stockholder). Options may be exercised within
three months following the retirement or permanent disability of an optionee and
within twelve months following the death of an optionee; provided, that no
option may be exercised following the period of exercisability set forth in the
agreement related thereto. Stock options may provide for acceleration of
exercisability in the event of the death, disability or retirement of the
optionee.
Stock options may be exercised by an optionee in whole or in part by
giving notice to the Company and the exercise price therefor may be paid by
delivering cash or shares of unrestricted common stock having a fair market
value equal to the cash exercise price of the options being exercised. Optionees
may also utilize a cashless exercise feature which will enable them to exercise
their options without a concurrent payment of the option price, provided that
the purchased option shares are immediately sold by a designated broker and the
option price is paid directly to the Company out of the sale proceeds.
Stock options are nontransferable other than by will or by the laws of
descent and distribution, and stock options are exercisable during the
optionee's lifetime only by the optionee.
Performance Share Units. The Compensation Committee may award performance
share units to eligible employees under the 1996 Plan. Performance share units
may be granted alone or in addition to other Awards granted under the 1996 Plan.
Each performance share unit granted shall be evidenced by an agreement executed
by the Company and the recipient thereof. Each such agreement shall contain such
restrictions, terms and conditions as the Compensation Committee may, in its
sole discretion, determine.
Performance share units entitle the grantee to receive one share of common
stock per performance share unit upon vesting of the performance share units.
The Compensation Committee will determine (i) the time or times at which
performance share units shall be granted and (ii) the time or times at which
performance share units shall become vested or forfeited. Vesting of performance
share units shall be based upon the Company's attainment of specified financial
performance objectives and/or the passage of time. Company financial performance
objectives may be expressed in terms of (i) earnings per share, (ii) pre-tax
profits (either on the Company or business unit level), (iii) net earnings or
net worth, (iv) return on equity or assets, (v) any combination of the
foregoing, or (vi) any other standard or standards deemed appropriate by the
Compensation Committee at the time the award is granted.
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<PAGE> 17
Until such time as the performance share units vest and shares of common stock
are issued, the performance share units may not be sold, transferred, pledged,
assigned or otherwise disposed of. The recipient of performance share units
shall have no right to vote the shares underlying the performance share units
until vesting. Dividend equivalents accrue on performance share units and are
paid upon vesting.
Upon termination of employment of a recipient, all unvested performance
share units shall be forfeited, provided, however, that performance share units
may provide for the termination of all or a portion of the restrictions related
thereto in the event of the death, disability or retirement of the recipient.
Change of Control. In the event of a "Change of Control," as defined in
the 1996 Plan, all options outstanding shall be immediately and fully
exercisable and all performance share units shall become fully vested.
Amendments. The Board of Directors may terminate, suspend or amend the
1996 Plan, provided that such amendment, suspension, or termination may not
affect the validity of the then outstanding options or performance share units,
and provided further that the Board may not, without the approval of
stockholders (i) increase the maximum number of shares which may be issued
pursuant to the provisions of the 1996 Plan, (ii) change the class of
individuals eligible to receive options or performance share units under the
1996 Plan, (iii) materially increase the benefits accruing to participants under
the 1996 Plan, or (iv) extend the term of the 1996 Plan.
Withholding Taxes. The 1996 Plan provides that the Company may deduct from
any distribution to an employee an amount equal to all federal, state and local
income taxes or other amounts as may be required by law to be withheld with
respect to any Award. An employee exercising an NQSO or acquiring shares
pursuant to the vesting of performance share units may elect to have a specified
percentage of his shares withheld by the Company in order to satisfy tax
obligations.
Federal Income Tax Consequences
The following general description of federal income tax consequences is
based upon current statutes, regulations and interpretations. This description
is not intended to address specific tax consequences applicable to individual
participants.
Incentive Stock Options. No regular income tax consequences result from
the grant of an ISO or the exercise of an ISO by the employee, provided the
employee continues to hold the stock acquired on the exercise of an ISO for the
requisite holding periods described below. The employee will be taxed only upon
the sale or disposition of the stock acquired under an ISO and the gain
recognized at that time will be long-term capital gain. The holding period
requirements necessary for ISO treatment are as follows: (i) such shares may not
be disposed of within two years from the date the ISO is granted, and (ii) such
shares must be held for at least one year from the date the shares are
transferred to the employee upon the exercise of the ISO. In addition, to
receive ISO treatment, the option holder generally must be an employee of the
Company or a subsidiary of the Company from the date the stock option is granted
until three months before the date of exercise.
If an employee disposes of stock acquired upon exercise of an ISO before
expiration of the applicable holding periods, the employee will be taxed at
ordinary income tax rates on the date of disposition measured by the lesser of:
(i) the fair market value of the stock on the date of exercise of the ISO minus
the option price or (ii) the amount realized on disposition minus the option
price, and the Company will receive a corresponding income tax deduction. In the
case of a sale where a loss, if sustained, would be recognized, the amount of
the optionee's income, and the amount of the Company's corresponding expense
deduction, will not exceed the difference between the sale price and the
adjusted basis of the shares.
The amount by which the fair market value of shares received upon exercise
of an ISO exceeds the option price constitutes an item of tax preference that
may be subject to the alternative minimum tax. If an employee is subject to the
alternative minimum tax as a result of the exercise of an ISO, for purposes of
calculating the gain on a disposition of the stock solely for purposes of the
alternative minimum tax, the amount treated as a preference item will be added
to his tax basis for the stock. Gain realized by an employee upon the
disposition of stock acquired through the exercise of an ISO is taxable in the
year of disposition, but such income is not subject to income tax withholding if
the requisite holding periods have been satisfied. If either of the holding
periods is not satisfied, however, the disposition of the stock may result in
taxable income to the employee as additional compensation which is subject to
withholding.
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<PAGE> 18
Non-Qualified Stock Options. With regard to NQSOs, the employee will
recognize ordinary income at the time of the exercise of the option in an amount
equal to the difference between the exercise price and the fair market value of
the shares received on the date of exercise. Such income will be subject to
withholding. When the employee disposes of shares acquired upon the exercise of
the option, any amount received in excess of the fair market value of the shares
on the date of exercise will be treated as long-term or short-term capital gain,
depending upon the holding period of the shares. If the amount received upon
sale is less than the fair market value of the shares on the date of exercise,
the loss will be treated as long-term or short-term capital loss, depending upon
the holding period of the shares. The Company will be entitled to an income tax
deduction in the amount and at the time that the employee recognizes ordinary
income with respect to the exercise of the option.
Performance Share Units. An employee granted a performance share unit will
not recognize income at the time of grant but will recognize ordinary income
when the restrictions with respect to the shares of stock expire. The amount of
income recognized will be equal to the then fair market value of such shares
less any consideration paid by the employee. The Company generally will be
entitled to a deduction in an amount equal to the income recognized by the
employee at the time the employee recognizes such income, provided the Company
complies with applicable withholding requirements. Any dividends with respect to
the performance share units which are paid to an employee are treated as
additional compensation taxable as ordinary income to the employee and
deductible to the Company. The holder of performance share units may elect under
Section 83(b) of the Code to be taxed at the time of grant of the performance
share units on the market value of the performance share units less any
consideration paid by the employee, in which case (i) the Company will be
entitled to a deduction at the same time, subject to the provisions of the Code,
(ii) dividends paid to the employee on such performance share units during the
restriction period will be taxable as dividends and not deductible to the
Company, and (iii) there will be no further federal income tax consequences when
the restrictions lapse.
Section 162(m) of the Code generally prohibits the Company from deducting
compensation of a "covered employee" to the extent the compensation exceeds
$1,000,000 per year. For this purpose, "covered employee" means the chief
executive officer of the Company and the four other highest compensated officers
of the Company. Certain performance-based compensation (including, under certain
circumstances, stock option and performance share unit compensation) will not be
subject to, and will be disregarded in applying, the $1,000,000 deduction
limitation. It is the Company's intention that options and performance share
units awarded under the 1996 Plan qualify as "performance-based" compensation
under Section 162(m).
Recommendation and Vote
An affirmative vote of the holders of a majority of shares of common stock
present in person or by proxy and entitled to vote at the Annual Meeting is
required to approve the 1999 Amendment. If no direction is given to the
contrary, all proxies received by the Board of Directors will be voted "FOR"
approval of the 1999 Amendment.
The Board of Directors recommends that the stockholders vote "FOR"
approval of the 1999 Amendment.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP to act as the
Company's independent auditors for the current fiscal year, subject to the
ratification of such appointment by the affirmative vote of the holders of a
majority of shares of common stock present in person or by proxy and entitled to
vote at the Annual Meeting. If no direction is given to the contrary, all
proxies received by the Board of Directors will be voted "FOR" ratification of
the appointment of Deloitte & Touche LLP as the Company's independent auditors
for the current fiscal year.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting and will be available to respond to appropriate questions from
stockholders and to make a statement if they desire to do so.
The Board of Directors recommends that the stockholders vote "FOR"
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the current fiscal year.
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<PAGE> 19
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any other matters which may come before the Annual Meeting, nor has the
Company received notice of any matter by the deadline prescribed by Rule
14a-4(c) under the Exchange Act. If any other matters properly come before the
meeting, the accompanying proxy confers discretionary authority with respect to
any such matters, and the persons named in the accompanying proxy intend to vote
in accordance with their best judgment on such matters.
All expenses in connection with the solicitation of proxies will be borne
by the Company. In addition to this solicitation, officers, directors and
regular employees of the Company, without any additional compensation, may
solicit proxies by mail, telephone or personal contact. Morrow & Co., Inc. has
been retained to assist in the solicitation of proxies for a fee of $4,000, plus
reasonable out-of-pocket expenses. The Company will, upon request, reimburse
brokerage houses and other nominees for their reasonable expenses in sending
proxy materials to their principals.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials for the Annual
Meeting in 2000 should be addressed to the Company's Secretary, 2511 Garden
Road, Suite 200, Monterey, California 93940, and must be received no later than
December 31, 1999. In addition, the Company's By-laws currently require that for
business to be properly brought before an annual meeting by a stockholder,
regardless of whether included in the Company's proxy statement, the stockholder
must give written notice of his or her intention to propose such business to the
Secretary of the Company, which notice must be delivered to, or mailed and
received at, the Company's principal executive offices not less than forty-five
(45) days prior to the date on which the Company first mailed its proxy
materials for the prior year's Annual Meeting (which cut-off date will be March
15, 2000 in the case of the Annual Meeting in 2000). Such notice must set forth
as to each matter the stockholder proposes to bring before the Annual Meeting:
(i) a brief description of the business desired to be brought before the meeting
and the reasons for conducting such business at the meeting, (ii) the name and
address of the stockholder proposing such business, (iii) the class and number
of shares which are beneficially owned by the stockholder, and (iv) any material
interest of the stockholder in such proposal. The By-laws further provide that
the chairman of the Annual Meeting may refuse to permit any business to be
brought before an Annual Meeting without compliance with the foregoing
procedures.
By Order of the Board of Directors,
/s/ Gerald J. Kitchen
Gerald J. Kitchen
Executive Vice President,
General Counsel,
Chief Administrative Officer
and Secretary.
Monterey, California
April 29, 1999
The Company will provide without charge to each person solicited hereby,
upon the written request of any such person, a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998, as filed with
the Securities and Exchange Commission (without exhibits). Requests should be
made to Mr. Gerald J. Kitchen, Executive Vice President, General Counsel, Chief
Administrative Officer and Secretary, 2511 Garden Road, Suite 200, Monterey,
California 93940.
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<PAGE> 20
PROXY PROXY
CENTURY ALUMINUM COMPANY
Proxy Solicited on behalf of the Board of Directors for Annual Meeting,
June 8, 1999
The undersigned appointed Craig A. Davis and Gerald J. Kitchen the proxies
(each with power to act alone and with power of substitution) of the undersigned
to vote at the Annual Meeting of act alone and with power of substitution) of
the undersigned to vote at the Annual Meeting of Stockholders of Century
Aluminum Company to be held at the executive offices of the Company, Monterey,
CA at 9:00 a.m., local time, on Tuesday, June 8, 1999, and at any adjournment,
all shares of stock which the undersigned is entitled to vote thereat upon all
matters properly brought before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposals 1 through 3.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
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<PAGE> 21
CENTURY ALUMINUM COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY: |X|
For Withhold For all
All All (Except nominee(s) written
below
1. Election of Directors for term to |_| |_| |_| _____________________
expire in 2002 --
Nominees: Craig A. Davis and
William R. Hampshire
For Against Abstain
2. Proposal to amend the Company's |_| |_| |_|
1996 Stock Incentive Plan to
increase the number of shares of
common stock reserved for
issuance thereunder by 300,000
shares.
For Against Abstain
3. Proposal to ratify the appointment |_| |_| |_|
of Deloitte & Touche LLP as
auditors for fiscal year 1999.
4. In their discretion, upon such other matters as may properly come before the
meeting.
Dated: ______________________, 1999
Signature(s)____________________________________________________________________
________________________________________________________________________________
Please sign exactly as name or names appear on this proxy. When signing as
attorney, executor, administrator, trustee, custodian, guardian or corporation
officer, give full title. If more than one trustee, all should sign.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN DATE AND RETURN THE PROXY CARD PROMPLY
USING THE ENCLOSED ENVELOPE.
