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RTI INTERNATIONAL METALS, INC.
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RTI LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY
STATEMENT
APRIL 30, 2004
2:00 P.M. EASTERN TIME
Holiday Inn
7410 South Avenue
Boardman, Ohio
RTI LOGO
1000 Warren Avenue
Niles, Ohio 44446
April 5, 2004
Dear RTI Shareholder:
You are cordially invited to attend our 2004 Annual Meeting of Shareholders on
April 30, 2004, at the Holiday Inn, 7410 South Avenue, Boardman, Ohio.
The meeting will begin promptly at 2:00 p.m. Eastern Time with a report on
Company operations. We will then elect directors and ratify the appointment of
independent accountants and consider a proposal by the Board of Directors for
the 2004 Stock Plan.
Whether or not you plan to attend, it is important that you vote your shares.
Please sign, and return your proxy card as soon as possible.
We look forward to seeing as many of you as possible at the 2004 Annual Meeting.
Sincerely,
/s/ ROBERT M. HERNANDEZ
ROBERT M. HERNANDEZ
Chairman of the Board
/s/ TIMOTHY G. RUPERT
TIMOTHY G. RUPERT
President & Chief Executive Officer
TABLE OF CONTENTS
Notice of Annual Meeting..................................................... 3
Proxy Statement.............................................................. 4
General Information.......................................................... 4
The Board of Directors....................................................... 5
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS............................. 7
PROPOSAL NO. 2 -- RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT ACCOUNTANTS........................... 10
PROPOSAL NO. 3 -- 2004 STOCK PLAN................................... 11
Security Ownership.......................................................... 16
Executive Compensation...................................................... 17
Stock Performance Graph..................................................... 20
Pension Benefits............................................................ 20
Employment Agreements....................................................... 21
Other Information........................................................... 23
Audit Committee Charter..................................................... 24
2004 Stock Plan............................................................. 27
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
RTI INTERNATIONAL METALS, INC.
TIME:
2:00 p.m., Eastern Time
DATE:
April 30, 2004
PLACE:
Holiday Inn
7410 South Avenue
Boardman, Ohio
PURPOSE:
- Elect directors
- Ratify the appointment of independent accountants
- Consider 2004 Stock Plan
- Conduct other business if properly raised
Only shareholders of record on March 1, 2004 may vote at the
meeting.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE, AND
RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
/S/ RICHARD M. HAYS
RICHARD M. HAYS
Secretary
April 5, 2004
3
PROXY STATEMENT
GENERAL INFORMATION
--------------------------------------------------------------------------------
- WHO MAY VOTE?
Shareholders of RTI as of the close of business on the record date, March 1,
2004, are entitled to vote at the Annual Meeting.
- WHAT MAY I VOTE ON?
You may vote on:
the election of nominees to serve on our Board of Directors,
the ratification of the appointment of our independent accountants for 2004,
and
the 2004 Stock Plan
- VOTING RECOMMENDATIONS
The Board recommends that you vote
FOR each of the nominees.
FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as our
independent accountants for 2004.
FOR the 2004 Stock Plan.
- HOW DO I VOTE?
Sign and date each proxy card you receive and return it in the envelope
provided. If you return your signed proxy card but do not mark the boxes showing
how you wish to vote, your shares will be voted FOR the three proposals. You
have the right to revoke your proxy at any time before the meeting by:
(1) notifying RTI's Secretary;
(2) voting in person; or
(3) returning a later-dated proxy card.
4
THE BOARD OF DIRECTORS
The business and affairs of RTI are under the general direction of the Board of
Directors. The Board presently consists of ten members, eight of whom are
neither officers nor employees of RTI or its subsidiaries. The Board of
Directors has determined that Craig R. Andersson, Neil A. Armstrong, Daniel I.
Booker, Donald P. Fusilli, Jr., Charles C. Gedeon, Robert M. Hernandez and Edith
E. Holiday will meet the New York Stock Exchange rules and listing standards
relating to independence generally and for all committees on which they sit.
Those standards will become applicable to RTI as of April 30, 2004, the date of
the Annual Meeting of Shareholders. Ronald L. Gallatin will not meet these
standards since his adult son who does not live with him was employed by RTI's
independent accountants, PricewaterhouseCoopers LLP, until May, 2003. The Board
of Directors does not intend to re-appoint Mr. Gallatin to the Audit or Human
Resources Committee on April 30, 2004 at its organization meeting following the
Annual Meeting.
The Board met five times during 2003. All of the directors attended at least 75%
of the Board meetings and the meetings of the committees on which they sit.
It is the policy of the Nominating/Corporate Governance Committee to consider
recommendations by shareholders for nominees for election as director.
Recommendations, together with the nominee's qualifications and consent to be
considered as a nominee, should be sent to the Secretary of RTI for presentation
to the Committee.
There are four principal committees of the Board of Directors. Committee
membership, the functions of the committees and the number of meetings held
during 2003 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.
The Executive Committee assists 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 2003, the
Executive Committee held no meetings.
AUDIT COMMITTEE
The members of the Audit Committee are Robert M. Hernandez (Chairman), Craig R.
Andersson, Neil A. Armstrong, Donald P. Fusilli, Ronald L. Gallatin, and Charles
C. Gedeon. The Committee has adopted, and the Board has approved, the Committee
charter attached as Exhibit 1 hereto and available on the RTI Website,
www.rti-intl.com. The Board has determined that Messrs. Hernandez and Fusilli
are each qualified as an audit committee financial expert within the meaning of
Securities and Exchange Commission regulations and that each of the members of
the Audit Committee has accounting or financial management expertise within the
meaning of the listing standards of the New York Stock Exchange.
The Audit Committee assists the Board in overseeing RTI's financial reporting
process and systems of internal accounting controls and in monitoring RTI's
compliance with legal and regulatory requirements and the independence and
performance of RTI's internal auditors and independent accountants. The
Committee's responsibilities are listed in the attached charter.
The Audit Committee held twelve meetings in 2003.
HUMAN RESOURCES COMMITTEE
The members of the Human Resources Committee are Craig R. Andersson, Neil A.
Armstrong, Daniel I. Booker, Donald P. Fusilli, Ronald L. Gallatin, Charles C.
Gedeon and Edith E. Holiday.
The Committee discharges the Board's duties concerning executive compensation
and prepares the report on it required by the Securities and Exchange
Commission.
The Human Resources Committee is responsible for review and approval of RTI's
compensation philosophy; executive compensation programs, plans and awards; and
policies, principles and proce-
5
dures for selection and performance review of the CEO and other top management;
and for establishing the CEO and other top management's compensations levels
based on the Committee's evaluation of their performance. The Committee also
administers RTI's long term incentive plans and stock or stock-based plans. The
Committee has adopted, and the Board has approved, a Committee charter which is
available on the RTI Website, www.rti-intl.com.
The Human Resources Committee held three meetings in 2003.
NOMINATING/CORPORATE GOVERNANCE COMMITTEE
The members of the Nominating/Corporate Governance Committee are Daniel I.
Booker (Chairman), Robert M. Hernandez and Edith E. Holiday.
The Nominating/Corporate Governance Committee is responsible for considering
director candidates submitted by directors, officers, employees and
shareholders; recommending to the Board candidates for election to the Board at
the Annual Meeting of Shareholders or by the Board to fill vacancies occurring
on the Board; and also considering RTI's director compensation from time to
time. The Committee is also responsible for developing and recommending to the
Board corporate governance principles applicable to RTI as well as their
periodic review. The Committee has adopted, and the Board has approved, a
Committee Charter which is available on the RTI Website, www.rti-intl.com.
The Nominating/Corporate Governance Committee annually reviews the skills and
attributes of board members within the context of the current make-up of the
full Board. Board members should have individual backgrounds that when combined
provide a portfolio of experience and knowledge that well serve RTI's governance
and strategic needs. Board candidates may be suggested by members of the
Committee as well as other directors, management or shareholders and will be
considered on the basis of a range of criteria including broad-based business
knowledge and contacts, prominence, diversity of talents and background and
sound reputation in their fields as well as a global business perspective and
commitment to corporate citizen-ship. Additional information concerning director
candidates is contained in RTI's Corporate Governance Guidelines which are
available on the RTI Website at www.rti-intl.com.
The Nominating/Corporate Governance Committee held five meetings in 2003.
COMPENSATION OF DIRECTORS
RTI employees receive no extra pay for serving as a director. 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
$35,000 (except for the Chairman) and the meeting fee $1,000. For his services
as non-employee Chairman; Mr. Hernandez receives an annual retainer of $80,000:
$62,500 in RTI common stock and $17,500 in cash. The non-employee committee
chairman retainer is $3,000. One-half of the annual retainer payable to
non-employee directors and to non-employee committee chairmen is paid in RTI
common stock. In 2003, the Common Stock utilized for this purpose and for the
Chairman's annual retainer was based on $10.00, the market value of the stock on
August 1, 2003.
RTI has adopted the 2002 Non-Employee Director Stock Option Plan providing for
the grant of options to purchase up to 500,000 shares during the 10 year term of
the Plan. All directors who are not employees of RTI participate in the Plan. On
January 31, 2003, each director participating in the Plan was granted a stock
option for 3,000 shares at an exercise price of $10.22 per share.
Effective January 1, 2004, the form of compensation paid non-employee directors
was modified to provide that each director (except Mr. Hernandez) will be paid
an annual retainer of $60,000 and Mr. Hernandez will be paid an annual retainer
of $110,000 as non-employee Chairman. One-half of these retainers will be paid
in cash and one-half in restricted stock (assuming approval by the shareholders
of the 2004 Stock Plan). In addition the Audit Committee Chairman will be paid
an annual cash retainer of $10,000 and other committee chairmen an annual cash
retainer of $5,000. No fees will be paid for Board or committee meetings
attended except that if, in the opinion of the Chairman, circumstances require
that an extra-ordinary number of Board meetings be held, non-employee directors
will receive a meeting fee of $1,000 for each meeting attended thereafter. If
the 2004 Stock Plan is approved by the
6
shareholders, no further options will be granted under the 2002 Non-Employee
Director Stock Option Plan. No options have been granted under the Plan in 2004.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
RTI's directors are elected for one year terms. Non-employee directors may not
stand for election after age 72. Employee directors leave the Board when they
retire from RTI. The Board may determine to extend the retirement age for a
particular director. It has determined to make such an extension to age 75 in
the case of Mr. Armstrong.
The Board has nominated the ten current directors for election. Each nominee for
election has previously been elected by the shareholders except for Donald P.
Fusilli who was elected by the Board on July 24, 2003. Of the ten individuals
who are nominees for election, two are current RTI officers and the remaining
eight are high level executives with professional experience. If any nominee is
unable to serve, your proxy may be voted for another person designated by the
Board.
The ten director candidates receiving the most votes will be elected to the
Board.
NOMINEES FOR DIRECTOR
CRAIG R. ANDERSSON Age: 66
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. He retired as a director
of Albermarle Corporation on December 31, 2002. He is a director of 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: 73
RETIRED CHAIRMAN, EDO CORPORATION Director since 1990
(ELECTRONIC AND ELECTROMECHANICAL SYSTEMS MANUFACTURER)
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; Chairman of AIL
Systems, Inc. in 1989 and Chairman of EDO Corporation in 2000. He retired as
Chairman of EDO in 2002 and from the other positions in prior years. He is a
member of the National Academy of Engineering.
7
DANIEL I. BOOKER Age: 56
PARTNER, Director since 1995
REED SMITH LLP
(LAW FIRM)
Mr. Booker is a partner of the law firm of Reed Smith LLP. From 1992 until
December 31, 2000 he was Managing Partner, or chief executive, of Reed Smith and
he continues to serve on its Executive Committee. 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 a director of Oce USA Holding, Inc.; Chairman
and a director of the Pittsburgh Regional Alliance; and a director of other
community and professional organizations.
DONALD P. FUSILLI, JR. Age: 52
PRESIDENT AND CHIEF EXECUTIVE OFFICER Director since 2003
MICHAEL BAKER CORPORATION
(ENGINEERING AND ENERGY SERVICES)
Mr. Fusilli was elected President and Chief Executive Officer of Michael Baker
on April 25, 2001. He joined the company in 1973 and spent 6 years in the
engineering department before obtaining his law degree in 1979. He became
General Counsel in 1984, Executive Vice President-Administration of the Energy
Group in 1994 and Executive Vice President and General Manager of the Group in
1995. He was elected President and Chief Operating Officer in March 2000. He is
a Civil Engineering graduate of Villanova University and holds a JD from
Duquesne University School of Law. He also attended the Advanced Management
Program at the Harvard University Business School. He is a Director of Robert
Morris University, the Horticultural Society of Western Pennsylvania and
Pittsburgh Vision Services.
RONALD L. GALLATIN Age: 58
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. 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.
CHARLES C. GEDEON Age: 63
CONSULTANT Director since 1991
Mr. Gedeon joined United States Steel Corporation 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 in 1988 and advanced to the position of
President, U.S. Diversified Group in 1990. He became Executive Vice
President-Raw Materials and Transportation of U.S.Steel in 2003. He retired from
this position on June 30, 2003. From 1983 until he joined U.S.Steel, Mr. Gedeon
had been Vice President-Operations of National Steel Corporation. Mr. Gedeon is
a member of the American Iron and Steel Institute.
8
ROBERT M. HERNANDEZ Age: 59
CHAIRMAN OF THE BOARD OF THE COMPANY Director since 1990
On December 31, 2001, Mr. Hernandez retired as Vice Chairman and Chief Financial
Officer and director of USX Corporation. He was elected to this position on
December 1, 1994. 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. He is a trustee and Vice Chairman of BlackRock Funds
and a director of ACE Limited and Eastman Chemical Company.
EDITH E. HOLIDAY Age: 52
ATTORNEY Director since 1999
Ms. Holiday was elected a director on July 29, 1999. She served as Assistant to
the President and Secretary of the Cabinet in the White House from 1990 to 1993.
Prior to that she held several senior positions in the United States Treasury
Department including General Counsel. She is a director of Amerada Hess
Corporation; Beverly Enterprises, Inc.; Canadian National Railway Company and
H.J. Heinz Company. She is also a director or trustee of a number of investment
companies in the Franklin Templeton Group of Funds. She is operating trustee of
TWE Holdings I and II Trusts. She has BS and JD degrees from the University of
Florida.
JOHN H. ODLE Age: 61
EXECUTIVE VICE PRESIDENT Director since 1996
OF RTI
Mr. Odle was elected a director on July 26, 1996 and has been Executive Vice
President since June 1996. He was Senior Vice President--Commercial from 1989 to
1996 and served as Vice-President--Commercial from 1981 until 1989. Prior to
that, Mr. Odle served as General Manager--Sales. He has 26 years of service with
RTI and its predecessor. He is a member of the American Society for Metals and
the International Titanium Association. He is a graduate of Miami University of
Ohio. He serves on the Advisory Board of The Kent State University.
TIMOTHY G. RUPERT Age: 57
PRESIDENT & CHIEF Director since 1996
EXECUTIVE OFFICER OF RTI
Mr. Rupert was elected a director on July 26, 1996 and President & Chief
Executive Officer on July 30, 1999. He had been Executive Vice President & Chief
Financial Officer 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 RTI's predecessor. He has
a BS degree from Indiana University of Pennsylvania. He is a director and Past
President of the International Titanium Association, a director and member of
the Executive Committee of Columbus Insurance Ltd., and a director and Vice
Chairman of the Youngstown/Warren Regional Chamber of Commerce.
9
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP has served as independent accountants for RTI and its
predecessors for a number of years. For 2003, PricewaterhouseCoopers LLP
rendered professional services in connection with the audit of the financial
statements of RTI 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 also provided tax consulting services
and reviewed RTI's enterprise resource planning software system from the
accounting controls standpoint. It is knowledgeable about RTI's operations and
accounting practices and is well qualified to act in the capacity of independent
accountants. The Audit Committee has selected PricewaterhouseCoopers LLP as
RTI's independent accountants for 2004.
AUDIT FEES
The aggregate fees billed for professional services rendered by
PricewaterhouseCoopers LLP for the audit of RTI's annual financial statements
and review of financial statements in RTI's Form 10-Q Reports in 2002 and 2003
were $310,041 and $340,675, respectively.
AUDIT-RELATED FEES
The aggregate fees billed for assurance and related services rendered by
PricewaterhouseCoopers LLP that were related to the services described above in
2002 and 2003 were $53,260 and $48,000, respectively. The services comprising
these fees were in the nature of benefit plan audits.
TAX FEES
The aggregate fees billed for professional services rendered by
PricewaterhouseCoopers LLP for tax services in 2002 and 2003 were $505,951 and
$461,298, respectively. The services comprising these fees include federal and
state tax return compliance, assistance related to the Company's examination by
the IRS for the years 1998 through 2001 and various federal, state and
international tax consulting projects.
ALL OTHER FEES
Other than fees disclosed above, the aggregate fees billed for professional
services rendered by PricewaterhouseCoopers LLP to RTI and its subsidiaries in
2002 and 2003 were $116,548 and $34,000, respectively. In 2002, the services
comprising these fees were in the nature of internal audit and benefit plan Form
5500 preparation. In 2003, the services comprising these fees was in the nature
of benefit plan Form 5500 preparation and Sarbanes-Oxley Section 404 compliance
assistance.
Representatives of PricewaterhouseCoopers 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.
VOTE REQUIRED
Election of the independent accountants requires the favorable vote of a
majority of the votes cast. Only votes for or against the proposal count.
Abstentions and broker non-votes do not count for voting purposes. Broker
non-votes occur when a broker returns a proxy but does not have authority to
vote on a particular proposal.
10
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS
FOR RTI FOR 2004.
AUDIT COMMITTEE REPORT
We met with management, the independent accountants and the internal auditors
periodically during the year to consider the adequacy of RTI's internal controls
and the objectivity of its financial reporting. We also discussed with RTI's
management and independent accountants the process used for certifications by
RTI's chief executive officer and chief financial officer which are required for
certain of RTI's filings with the Securities and Exchange Commission. We have
reviewed and discussed RTI's 2003 audited financial statements with management
and with PricewaterhouseCoopers LLP. We have also discussed with the independent
accountants the matters required to be communicated by Statement on Auditing
Standard (SAS) No. 61 as amended by SAS No. 90 (Communications With Audit
Committees).
In addition we have received from the independent accountants the written
disclosures required by Independence Standards Board Standard No. 1 and have
discussed with them their independence from RTI and its management. We have
considered whether the provision by PricewaterhouseCoopers LLP of the
professional services described above was compatible with the maintenance by
PricewaterhouseCoopers LLP of its independent status and have determined that it
was.
Based on these reviews and discussions, we recommended to RTI's Board of
Directors, and the Board has approved, that the Audited Financial Statements be
included in RTI's Annual Report on Form 10-K for the year ended December 31,
2003 for filing with the Securities and Exchange Commission.
Robert M. Hernandez (Chairman) Neil A. Armstrong
Craig R. Andersson Donald P. Fusilli
Ronald L. Gallatin Charles C. Gedeon
PROPOSAL NO. 3
RTI INTERNATIONAL METALS, INC. 2004 STOCK PLAN
RTI has historically sought to further align the interests of its employees and
directors with that of its shareholders through stock ownership. Like many
companies, we have elected to do so through various equity-based compensatory
arrangements. Employees have been granted stock based awards under our 1995
Stock Plan (the "1995 Plan"). We have historically compensated our non-employee,
or "outside," directors through a combination of cash, stock awards and stock
options. The stock awards to our outside directors have been granted annually as
partial payment of the directors' annual retainers. Stock options to our outside
directors have been granted pursuant to the terms of our 2002 Non-Employee
Director Stock Option Plan (the "2002 Plan").
The existing 1995 Plan will expire on April 26, 2005 by its terms, except with
respect to outstanding awards under the plan. The Board of Directors believes
that it is important, and in the best interests of RTI and its shareholders, to
continue to provide long-term equity-based incentive compensation to valued
employees beyond the expiration of the 1995 Plan. We believe that doing so will
aid the Company and its subsidiaries in attracting and retaining exceptional
talent and motivating our management team and key employees to achieve
long-range performance goals.
We also continue to believe that a significant portion of our outside director
compensation should be paid in equity awards. We believe that by doing so, we
will increase our directors' interest in the growth and performance of RTI and
we will continue to attract and retain qualified directors. Due to recent
changes in applicable New York Stock Exchange Rules, continued grants of shares
of RTI stock to our non-employee directors in partial payment of their annual
retainers will now require the annual approval of our stockholders.
11
These facts have caused us to take a comprehensive look at all of our stock
based compensation and to propose the 2004 Stock Plan to replace the 1995 Plan
and both the previous practice of granting shares in partial payment of annual
retainers to directors and the 2002 Plan. To that end, the Board of Directors
has unanimously adopted the 2004 Stock Plan and recommended that the plan be
submitted to the shareholders for approval.
The Board believes that the 2004 Stock Plan is a well-suited tool for RTI to
utilize in the implementation of its compensation goals, particularly in today's
corporate governance environment. Specifically:
- The plan limits the number of shares available for issuance to 2,500,000 (plus
any shares covered by options already outstanding under the 1995 Plan and 2002
Plan that expire or are terminated without being exercised and any shares
delivered in connection with the exercise of any outstanding awards under the
1995 Plan and 2002 Plan) during its ten-year term and limits the number of
shares available for grants of restricted stock to 1,250,000;
- The plan provides for a fixed allocation of shares, thereby requiring
shareholder approval of any additional allocation of shares;
- The maximum term for awards made pursuant to the plan is ten years;
- The exercise price of stock options, stock appreciation rights and other
similar instruments awarded under the plan may not be less than the fair
market value of RTI stock on the date of grant or award;
- The plan prohibits the repricing of stock options and stock appreciation
rights;
- The plan focuses on granting equity awards in partial payment of directors'
annual retainers and not the grant of options to directors. Although subject
to change, the Board does not presently intend to grant options to directors
under the plan; and
- Grants of awards in partial payment of director's annual retainers will be
awards of restricted stock under the plan unlike the stock grants under the
prior system which were not subject to restriction other than as required by
applicable securities laws.
SUMMARY OF THE PLAN
The principal features of the plan are summarized below, however, we do not mean
for this summary to provide all of the important information in the plan which
is shown as Exhibit 2 to this proxy statement.
PLAN ADMINISTRATION. The plan is administered by the Board or any Committee of
the Board.
It is intended that the Human Resources Committee will be appointed by the Board
to administer the plan and, notwithstanding such appointment, the full Board may
exercise any authority under and otherwise administer the plan. All of the
members of the Human Resources Committee will meet the New York Stock Exchange
standard for director independence.
ELIGIBILITY. All of our non-employee directors and any of our employees,
including executive officers, and our subsidiaries' employees are eligible to be
selected by the Administrator to receive any type of award under the plan. The
selection of the recipients of awards will be wholly within the discretion of
the Administrator. RTI and its subsidiaries had approximately 1,112 employees
and eight non-employee directors as of January 31, 2004.
AWARDS. The plan provides for the grant of shares of RTI common stock,
incentive (or "qualified") stock options, non-qualified stock options, stock
appreciation rights, restricted stock, restricted stock unit awards, other
rights, interests or options relating to RTI common stock.
SHARES SUBJECT TO THE PLAN. The plan authorizes the issuance of up to 2,500,000
shares of RTI common stock over its ten-year term (plus any shares covered by
options already outstanding under the 1995 Plan and 2002 Plan that expire or are
terminated without being exercised and any shares
12
delivered in connection with the exercise of any outstanding awards under the
1995 Plan and 2002 Plan). Upon stockholder approval of this plan, no further
awards of any kind may be made under either the 1995 Plan or the 2002 Plan. Any
shares subject to an award under the 2004 Stock Plan that is forfeited,
cancelled, expires, lapses or otherwise terminates without the issuance of such
shares will again be available for grant under the plan. Likewise, shares that
are tendered to RTI by a participant as full or partial payment of the exercise
price of any stock option granted under the plan or in payment of any
withholding tax incurred in connection with any award under the plan shall be
available for issuance under the plan. The shares issued under the plan may
consist, in whole or in part, of authorized but unissued shares or treasury
shares.
ADJUSTMENTS. In the event of a merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, reverse stock split, spin-off or
similar transaction or other change in corporate structure or capitalization
affecting RTI common stock, adjustments and other substitutions will be made to
the plan by the Administrator, including adjustments in the maximum number of
shares subject to the plan and other numerical limitations. In such event,
adjustments may also be made to the terms and conditions of awards under the
plan as Administrator, in its sole discretion, deems equitable.
STOCK OPTIONS. Options to purchase shares of RTI common stock may be granted
under the plan. The price at which a share may be purchased under an option may
not be less than the fair market value of a share on the date the option is
granted. The plan permits the Administration to establish the term of each
option, but no option shall have a term of longer than ten years. Options may be
granted to employees as qualified (or "incentive") stock options or
non-qualified stock options. Options granted to outside directors may only be
non-qualified stock options. Unless otherwise determined by the Administrator at
the time of a grant or award under the plan, all outstanding awards shall vest
and become fully exercisable in the event a change of control occurs as
described below.
STOCK APPRECIATION RIGHTS. Stock Appreciation Rights meaning a right to receive
a payment in cash and/or shares of RTI common stock equal to the excess of the
fair market value of a share on the date the Stock Appreciation Right is
exercised over the fair market value of a share at the date of the award of the
Stock Appreciation Right may be granted either alone or in addition to other
awards granted under the Plan and may, but need not, relate to a specific option
granted under the plan.
RESTRICTED STOCK. Restricted stock awards may be made to participants for no
cash consideration or for such minimum consideration as may be required by
applicable law, either alone or in connection with other awards under the plan.
Restricted stock awards may be subject to forfeiture and other limitations on
transfer and may be conditioned upon continued employment, performance measures
and other conditions, as determined by the Administrator at the time of the
making of the award. No more than 1,250,000 shares of restricted stock may be
issued during the ten year term of the plan.
ANNUAL RETAINER TO DIRECTORS. Under the plan, non-employee directors shall
receive an annual retainer in an amount to be determined by the Board. Up to 50%
of such annual retainer may be paid in the form of restricted stock awards. If a
portion of non-employee directors' retainers is payable in restricted stock
awards, the number of shares of restricted stock to be awarded shall be equal to
the portion of the annual retainers to be paid in restricted stock divided by
the fair market value of a share of RTI common stock on the day on which the
award is made. Restricted stock awards in partial payment of non-employee
directors' retainers, will be made to participants upon the completion of each
annual meeting of shareholders held during the term of the plan. Restricted
stock payable for a portion of a directors retainer vests and becomes fully
exercisable immediately prior to the annual meeting of shareholders following
such award. In the event a director's service on the Board terminates other than
by reason of death, disability or retirement, any non-vested shares shall
terminate and all rights, title and interest therein shall be forfeited.
CHANGE IN CONTROL. Unless otherwise determined by the Board at the time of the
grant of an award, in the event of a change in control of RTI, all outstanding
awards will become fully vested. A "change in control" means, with certain
exceptions: (i) an acquisition of beneficial ownership of 20% or more of either
the outstanding common stock or the combined voting power of the outstanding
voting securities of RTI, unless the shares are acquired directly from RTI, by
an employee benefits plan or in certain
13
approved transactions; (ii) a change in the composition of the Board of
Directors during any two-year period such that the individuals who, as of the
beginning of such two-year period, constitute the Board, together with other
individuals selected by such incumbent directors, cease to constitute a majority
of the Board; (iii) the approval by our shareholders of a merger, reorganization
or consolidation or a disposition of all or substantially all of RTI's assets,
under certain circumstances; or (iv) the approval by our shareholders of a
complete liquidation or dissolution of RTI.
EFFECTIVE DATE, TERM, AMENDMENT AND TERMINATION. If approved by shareholders,
the plan will become effective as of the date of such approval and will remain
in effect until the ten-year anniversary of the effective date unless otherwise
terminated by the Board. Termination will not affect grants and awards then
outstanding under the plan. The Board may terminate or amend the plan at any
time without shareholder approval, unless such approval is necessary to comply
with the Securities Exchange Act of 1934, the Internal Revenue Code, New York
Stock Exchange rules, or other applicable law. In any event, shareholder
approval will be required to, among other things, increase the maximum number of
shares issuable under the plan, or reduce the exercise price of options and
stock appreciation rights by repricing or replacing such awards.
RESTRICTION ON TRANSFER. Awards granted under the plan to employees are
generally non-transferable, except by will or the laws of descent and
distribution. Non-employee directors are permitted to transfer awards to members
of their immediate family and to trusts for the benefit of the director or his
or her immediate family.
OTHER PROVISIONS. The Administrator may establish procedures providing for the
delivery of shares of RTI common stock in satisfaction of withholding tax
obligations and delivery of shares of RTI common stock, cash or other property
in payment of the exercise price of awards under the plan.
FEDERAL INCOME TAX CONSEQUENCES. We believe that under present law, the
following are the U.S. federal income tax consequences generally arising with
respect to stock options and restricted stock awards. The grant of an option
will create no tax consequences for a participant or RTI. A participant will
have no taxable income upon exercising an incentive stock option after the
applicable incentive stock option holding periods have been satisfied (except
that the alternative minimum tax may apply), and we will receive no deduction
when an incentive stock option is exercised. Upon exercising an option other
than an incentive stock option, a participant must recognize ordinary income
equal to the difference between the fair market value of the shares on the date
of exercise and the exercise price. We will be entitled to a deduction for the
same amount. The treatment to a participant of a disposition of shares acquired
through the exercise of an option depends on how long the shares were held and
on whether the shares were acquired by exercising an incentive stock option or
by exercising an option other than an incentive stock option. Generally, there
will be no tax consequence to RTI in connection with a disposition of shares
acquired under an option, except that we may be entitled to a deduction in the
case of a disposition of shares acquired under an incentive stock option before
the applicable incentive stock option holding periods have been satisfied. Upon
the lapsing of the risk of forfeiture (i.e., upon vesting) of shares of
restricted stock, the recipient must recognize ordinary income equal to the fair
market value of the shares on such date.
NEW PLAN BENEFITS TABLE. No benefits or amounts have been granted, awarded or
received under the 2004 Stock Plan. As awards under the plan are discretionary,
no awards are determinable at this time. Information about awards made under the
1995 Plan to the named executive officers is set forth in the Summary
Compensation Table and the Stock Option Grant Table in this proxy statement. Had
the 2004 Plan been in effect for 2003, there would have been no change in the
benefits or amounts which would have been received by named executive officers
from those identified with respect to the 1995 Plan.
14
The following chart presents the information related to anticipated awards of
restricted stock that will be received by or allocated to non-employee directors
for their annual retainer for fiscal 2004, subject to shareholder approval of
the plan, pursuant to the terms of the plan and the anticipated action of the
Board.
2004 STOCK PLAN
(AWARDS WITH RESPECT TO ANNUAL RETAINER TO DIRECTORS)
NAME AND POSITION DOLLAR VALUE NUMBER OF UNITS
----------------- ------------ ---------------
Named executive officers.................................... N/A N/A
Executive officers as a group............................... N/A N/A
Non-executive directors as a group.......................... $265,000(1)(3) 16,879(2)(3)
Employees (excluding executive officers) as a group......... N/A N/A
---------------
(1) Assumes annual retainers of $60,000 or each non-employee director other than
the chairman and $110,000 for the chairman and the payment of 50% of such
retainers in restricted stock awards. Assumes no options or other awards
will be granted.
(2) These estimated number of shares are based upon the mean of the high and low
market price of RTI Common Stock as reported on the New York Stock Exchange
on March 15, 2004. Actual grants will be priced as of the date of the 2004
Annual Meeting.
(3) The actual dollar value and number of shares to be issued will depend on
future variables such as stock prices, changes in the annual retainers paid
to directors and decisions by the Administrator to grant additional
compensation in the form of stock and is thus not currently determinable.
VOTE REQUIRED AND RECOMMENDATION OF BOARD OF DIRECTORS. The affirmative vote of
the majority of the common shares present in person or represented by proxy at
the meeting and entitled to vote on this proposal will be required for approval
of this proposal. Abstentions will be treated as being present and entitled to
vote on the matter and, therefore, will have the effect of votes against the
proposal. A broker "non-vote" is treated as not being entitled to vote on the
matter and, therefore, is not counted for purposes of determining whether the
proposal has been approved.
THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2004 STOCK PLAN.
15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of RTI, as of February 27, 2004, no person or group owned
beneficially more than five percent of the outstanding Common Stock of RTI
except:
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
---------------- -------------------- -----
Citigroup Global Markets Holdings, Inc.......... 2,068,237(1) 9.8%
388 Greenwich Street
New York, NY 10013
Smith Barney Fund Management LLC
333 West 34th Street
New York, NY 10001
Citigroup Inc.
399 Park Avenue
New York, NY 10043
AXA Financial, Inc.............................. 2,044,165(2) 9.7%
1290 Avenue of the Americas
New York, NY 10104
ICM Asset Management, Inc. and James M.
Simmons....................................... 1,619,867(3) 7.8%
601 W. Main Ave., Ste. 600
Spokane, WA 99201
Dimensional Fund Advisors, Inc.................. 1,531,036(4) 7.3%
1299 Ocean Ave, 11th Floor
Santa Monica, CA 90401
Barclays Global Investors, NA................... 1,055,049(5) 5.0%
Barclays Global Fund Advisors
45 Freemont Street
San Francisco, CA 94105
Barclays Private Bank Limited
59/60 Grosvenor Street
London, WIX 9DA England
---------
(1) Based on Schedule 13G dated February 10, 2004, which indicates that
each reporting person had sole voting power and sole dispositive
power over no shares; and shared voting power and shared dispositive
power over 2,068,237 shares.
(2) Based on Schedule 13G dated February 13, 2004, which indicates that
AXA had sole voting power over 1,819,906 shares, shared voting power
over 26,700 shares, sole dispositive power over 2,044,165 shares and
shared dispositive power over no shares.
(3) Based on Schedule 13G dated February 10, 2004, which indicates ICM
and James M. Simmons had sole voting power over no shares, shared
voting power over 837,571 shares, sole dispositive power over no
shares and shared dispositive power over 1,619,867 shares.
(4) Based on Schedule 13G dated February 6, 2004, which indicates that
Dimensional Fund had sole voting power and sole dispositive power
over 1,531,036 shares and shared voting power and shared dispositive
power over no shares.
(5) Based on Schedule 13G dated February 13, 2004, which indicates that
each reporting person had sole voting power and sole dispositive
power over no shares and shared voting power and shared dispositive
power over 1,055,049 shares.
16
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reflects the number of shares of Common Stock of RTI
beneficially owned, as of February 16, 2004, by each director, by each executive
officer named in the Summary Compensation Table and by all directors and
executive officers as a group:
PERCENT OF
NUMBER OF OUTSTANDING
NAME SHARES(1) SHARES(3)
---- --------- ---------
Craig R. Andersson........................... 59,300(2) --
Neil A. Armstrong............................ 24,872(2) --
Gordon L. Berkstresser....................... 35,800
Daniel I. Booker............................. 19,118(2) --
Donald P. Fusilli............................ 1,313
Ronald L. Gallatin........................... 34,750(2) --
Charles C. Gedeon............................ 12,365(2) --
Robert M. Hernandez.......................... 61,950(2) --
Dawne S. Hickton............................. 90,927 --
Edith E. Holiday............................. 10,145(2) --
Lawrence W. Jacobs........................... 75,843 --
John H. Odle................................. 223,518 1.1%
Timothy G. Rupert............................ 288,736 1.4%
-------
All directors and executive officers
as a group (13 persons).................... 938,657 4.5%
---------
(1) Includes 50,167 shares, 18,999 shares, 37,666 shares, 106,666 shares and
115,333 shares, respectively, which Mrs. Hickton and Messrs. Berkstresser,
Jacobs, Odle and Rupert had the right to acquire within 60 days under the
Company's 1995 Stock Plan.
(2) Includes 3,000 shares which the non-employee director had the right to
acquire within 60 days under the 2002 Non-Employee Director Stock Option
Plan.
(3) No percent is shown for ownership of less than one percent.
EXECUTIVE COMPENSATION
The following table shows the annual and long term compensation paid the chief
executive officer and the other four most highly compensated executive officers
of RTI for services rendered in all capacities in 2003, 2002 and 2001.
SUMMARY COMPENSATION TABLE
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 $ (SHARES) PAYOUTS COMPENSATION
------------------ ---- ------ ----- ------------ - -------- ------- ------------
Timothy G. Rupert........... 2003 $415,000 $300,000 -- $306,856 30,000 -- --
President & 2002 400,000 400,000 -- 210,650 35,000 -- --
Chief Executive Officer 2001 370,000 325,000 -- 236,720 25,000 -- --
John H. Odle................ 2003 275,000 $100,000 -- $136,437 24,000 -- --
Executive Vice President 2002 270,000 160,000 -- 95,750 28,000 -- --
2001 265,000 135,000 -- 94,688 23,000 -- --
Gordon L. Berkstresser...... 2003 140,000 $ 50,000 -- $ 39,092 11,000 -- --
Vice President & 2002 133,000 75,000 -- 19,150 13,000 -- --
Controller 2001 125,000 50,000 -- 23,672 10,000 -- --
Dawne S. Hickton............ 2003 180,000 $ 85,000 -- $ 72,051 17,000 -- --
Vice President & General 2002 170,000 110,000 -- 47,875 20,000 -- --
Counsel 2001 160,000 75,000 -- 47,344 12,000 -- --
Lawrence W. Jacobs.......... 2003 160,000 $ 50,000 -- $ 43,691 12,000 -- --
Vice President & 2002 154,000 80,000 -- 23,938 15,000 -- --
Chief Financial Officer 2001 145,000 55,000 -- 23,672 10,000 -- --
17
The following tables set forth information with respect to stock option grants
and exercises in 2003 and December 31, 2003 stock option values:
STOCK OPTION GRANTS IN 2003
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM
GRANTED EMPLOYEES BASE PRICE EXPIRATION -------------------------
NAME (SHARES) IN 2003 ($/SH) DATE 5% 10%
---- -------- ---------- ------------ ---------- ----------- -----------
Timothy G. Rupert.................... 30,000 16.3% $10.220 1/30/13 $192,819 $488,641
John H. Odle......................... 24,000 13.1% $10.220 1/30/13 $154,255 $390,913
Gordon L. Berkstresser............... 11,000 6.0% $10.220 1/30/13 $ 70,000 $179,169
Dawne S. Hickton..................... 17,000 9.3% $10.220 1/30/13 $109,264 $276,897
Lawrence W. Jacobs................... 12,000 6.5% $10.220 1/30/13 $ 77,128 $195,457
AGGREGATED STOCK OPTION EXERCISES IN 2003
AND DECEMBER 31, 2003 STOCK OPTION VALUES
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES DECEMBER 31, 2003 OPTIONS AT
ACQUIRED ON (SHARES)(1) DECEMBER 31, 2003
EXERCISE VALUE --------------------------- ---------------------------
NAME (SHARES) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Timothy G. Rupert.............. 0 0 139,333 61,667 $687,081 $173,014
John H. Odle................... 0 0 117,666 50,334 453,332 138,416
Gordon L. Berkstresser......... 0 0 22,999 23,001 107,264 64,266
Dawne S. Hickton............... 0 0 50,167 34,333 165,560 98,864
Lawrence W. Jacobs............. 0 0 37,666 25,334 133,846 74,150
---------
(1) Adjusted for one-for-ten reverse stock split effective March 31, 1994 and
subsequent rights offering.
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This Committee administers RTI's stock-based compensation plans and is also
responsible for all other executive compensation matters.
RTI has adopted a comprehensive statement entitled "Pay Philosophy and Guiding
Principles Governing Officer Compensation". Principal components of the
statement are as follows:
The Philosophy is to have RTI's officer compensation programs:
- promote achievement of RTI's business objectives and reinforce its
strategies.
- align the interests of RTI's officers 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 the 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 RTI and its officer 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 RTI's Incentive Compensation Plan while
long term incentive compensation is handled under the 1995 Stock Plan.
18
Market conditions in the industry were severely impacted by the terrorist
attacks of September 11, 2001. In 2002, despite the continued decline after
September 11 in the commercial aerospace business with the consequent decline in
titanium mill product shipments, management's continued focus on profitable
business and cutting production costs resulted in RTI's improving net income for
the year by almost 25% compared with 2001.
After review of the officers' performance in 2002 against their objectives,
RTI's operating and financial performance, cash flow and return on assets and
shareholder return, in January 2003 the Committee approved the salary increases
and restricted stock and stock option awards shown in the Summary Compensation
Table.
In January 2004, the officers' performance was again evaluated. The year
2003 was a difficult year. Weak U. S. and global economies, the terrorist
attacks of September 11, the ongoing conflicts in the Middle East and the
worldwide outbreak of Severe Acute Respiratory Syndrome had severe adverse
effects on the overall titanium industry. The Niles plant, RTI's largest,
operated at less than 50% of capacity most of the year with two temporary
shutdowns for lack of work. RTI also had a work stoppage at the Niles Plant by
the union represented employees. Nonetheless shareholder return was very strong
and increased over the previous year and RTI generated a modest profit and
strong cash flow. The Committee considered this an exceptional performance in
the context of a dismal economic environment. Accordingly the Committee
concluded to award the bonuses shown in the Compensation Table which were in
line with the target amounts in the Pay Philosophy and Guiding Principles
Statement. The Committee also approved compensation increases and restricted
stock and stock option grants to the officers.
The procedures described above were followed in January 2003 and January
2004 in determining the CEO's salary increase, grants of restricted stock and
stock options and bonus for 2003. These are all shown in the Compensation Table.
The CEO met all of his objectives for 2002 and cash flow, return on assets and
income were above plan The Committee concluded that he had done an exceptional
job in 2002. The bonus determination in January, 2004 is based on Mr. Rupert's
leadership in RTI's outstanding performance in 2003 in a difficult economic
environment. The bonus awarded was in line with the target in the Pay
Philosophy.
Craig R. Andersson Neil A. Armstrong Daniel I. Booker
Donald P. Fusilli Ronald L. Gallatin Charles C. Gedeon
Edith E. Holiday
19
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the five year cumulative total return
to shareholders on RTI's Common Stock with the cumulative total return of the
S&P 500 Stock Index and Titanium Metals Corporation ("Timet").
COMPARISON OF CUMULATIVE TOTAL RETURN
RTI, TIMET AND S&P 500*
RTI/RMI TIMET S&P 500
------- ----- -------
1998 100 100 100
1999 54 54 121
2000 102 81 110
2001 71 48 97
2002 72 23 76
2003 120 63 97
* Assumes $100 investment on January 1, 1998 and reinvestment of dividends.
PENSION BENEFITS
RTI's Pension Plan is a defined benefit plan which first became effective at RMI
Company (a predecessor of RTI) in 1971. The Pension Plan recognizes, for pension
benefits, services and compensation with RTI, RMI Titanium Company, RMI Company,
Reactive Metals, Inc. (a predecessor of RMI Company), United States Steel
Corporation, USX Corporation, Quantum Chemical Corporation, 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) for various levels
of eligible earnings which would be payable to employees retiring with the years
of service shown. The benefits are 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 earnings includes only base salary. Incentive awards and
similar benefits are excluded, although the amount of such benefits is included
in 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 under the U.S.
Steel and the Quantum pension plans. As of December 31, 2003, Mrs. Hickton had 6
credited years of service, and Mr. Jacobs 5, Mr. Odle 26, Mr. Berkstresser 4 and
Mr. Rupert 35.
20
AVERAGE
CONSECUTIVE ANNUAL BENEFITS FOR YEARS OF SERVICE
HIGHEST 5 YEARS OF --------------------------------------------------
COMPENSATION 10 15 30 40 45
------------------ ------- ------- -------- -------- --------
$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
400,000 50,000 75,000 150,000 204,000 231,000
Under the employment agreement dated as of August 1, 1999 between RTI and Mr.
Odle, RTI agreed that if he continues in active employment with RTI until either
age 65, or such earlier date as the RTI Board of Directors may approve, RTI at
his retirement will pay him a one time lump sum payment of the then present
value of the 9.16 years of non-pensionable service attributable to periods he
was employed by U.S. Steel (3.58 years) and the Company (5.58 years) which
pre-date his current period of employment, calculated pursuant to the RTI
Pension Plan and its Supplemental Pension Program.
SUPPLEMENTAL PENSION PROGRAM
Officers participating in the Incentive Compensation Plan are also eligible for
the RTI Supplemental Pension Program. If they retire or otherwise terminate
employment after age 60, or prior to age 60 with RTI consent, they will be
entitled to receive the benefits shown in the table below based on bonuses paid
under the Incentive Compensation Plan.
AVERAGE ANNUAL
BONUS FOR
FIVE HIGHEST YEARS ANNUAL BENEFITS FOR YEARS OF SERVICE
IN TEN YEAR PERIOD ------------------------------------
PRECEDING RETIREMENT 10 15 20
-------------------- ---------- ---------- ----------
$ 50,000 $ 7,500 $11,250 $15,000
100,000 15,000 22,500 30,000
150,000 22,500 33,750 45,000
200,000 30,000 45,000 60,000
250,000 37,500 56,250 75,000
300,000 45,000 67,500 90,000
RTI has agreed with Mr. Rupert that his continuous service for purposes of the
Program shall include his service with USX Corporation.
In order to comply with the limitations of the Internal Revenue Code, pension
benefits will be paid directly by RTI when they exceed the amounts permitted by
the Code to be paid from federal income tax qualified pension plans.
EMPLOYMENT AGREEMENTS
On August 1, 1999, RTI entered into employment agreements with Mrs. Hickton and
Messrs. Jacobs, Odle and Rupert covering their employment for an initial four
year term and for additional one year terms each year thereafter until the
officer attains age 65 unless terminated prior thereto by either party on 120
days notice. Under the agreements, each officer will be paid the annual salary
set forth, subject to increases from time to time in the sole discretion of RTI.
RTI may terminate the services of the officer at any time for "cause" as defined
in the agreement. Officers each agree not, for a period of 24 months after the
end of the employment period or employment termination, whichever occurs first,
to be employed by, or otherwise participate in, any business which competes with
RTI. This restriction does not apply if the officer terminates employment with
RTI under certain circumstances following a "change in control" of RTI as
defined.
The employment agreements also provide that the officer will be entitled to
certain severance benefits in the event of termination of employment under
certain circumstances following a "change in control" as defined.
21
These are:
- a cash payment of up to three times the sum of the officer's current
salary plus the highest bonus in the four years before the date of
termination,
- all unvested restricted stock and options will vest immediately,
- life, disability, accident and health insurance benefits for 24 months
after termination,
- a cash payment of the amount necessary to insure that the payments listed
above are not subject to net reduction due to the imposition of federal
excise taxes.
The severance benefits are payable if, any time after a change in control, the
officer's employment is terminated by the officer for good reason or by RTI
other than for cause or disability. In addition the benefits are payable to Mr.
Odle or Mr. Rupert in the event either of them terminates employment within 90
days after a change in control.
The definition of a change in control for purposes of these agreements is
complex but is summarized as follows. It includes any change in control required
to be reported in response to Item 6(e) of Schedule 14A under the Securities
Exchange Act of 1934 and provides that a change in control will have occurred
if:
- any person not affiliated with RTI acquires 20 percent or more of the
voting power of our outstanding securities,
- the Board no longer has a majority made up of (1) individuals who were
directors on the date of the agreements and (2) new directors (other than
directors who join the Board in connection with an election contest)
approved by two-thirds of the directors then in office who (a) were
directors on the date of the agreements or (b) were themselves previously
approved by the Board in this manner.
- RTI merges with another company and RTI's shareholders end up with less
than 50 percent of the voting power of the new entity,
- our shareholders approve a plan of complete liquidation of RTI, or
- we sell all or substantially all of RTI's assets.
On November 1, 1999 RTI entered into an employment agreement with Mr.
Berkstresser covering his employment for an initial four year term 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. Under the
agreement, he will be paid the annual salary set forth, subject to increases
from time to time in the sole discretion of RTI. The agreement contains the
other terms and conditions described above as being contained in the agreements
with Mrs. Hickton and Mr. Jacobs.
22
OTHER INFORMATION
OTHER BUSINESS
We do not expect any business to come up for shareholder vote at the meeting
other than the items described in the Notice of Annual Meeting. If other
business is properly raised, your proxy card authorizes the people named as
proxies to vote as they think best.
OUTSTANDING SHARES
On March 1, 2004, 21,159,432 shares were outstanding and entitled to vote.
Restricted stock awards, whether vested or unvested, are included in shares
outstanding.
HOW WE SOLICIT PROXIES
In addition to this mailing, RTI employees may solicit proxies personally,
electronically or by telephone. RTI pays the costs of soliciting this proxy. We
also reimburse brokers and other nominees for sending these materials to you and
getting your voting instructions.
SHAREHOLDER PROPOSALS
The deadline for the submission of shareholder proposals that are intended to be
considered for inclusion in the Company's proxy statement for next year's
meeting is December 6, 2004. Additionally, the Board-appointed proxies will have
discretionary authority to vote on any proposals presented by shareholders at
the annual meeting from the floor unless notice of the intent to make such
proposal is received on or before February 19, 2005.
SHAREHOLDER COMMUNICATIONS
Shareholders who wish to communicate with the Chairman, one or more of the other
non-management directors, or the non-management directors as a group should mark
the communication Personal and Confidential and address it to the Chairman, RTI
International Metals Inc., 1000 Warren Avenue, Niles OH 44446.
BOARD ATTENDANCE AT ANNUAL MEETING
RTI Board members are normally expected to attend RTI's Annual Meetings of
Shareholders. All of the candidates for election at the meeting attended the
2003 Annual Meeting.
By Order of the Board of Directors
RICHARD M. HAYS
Secretary
Dated: April 5, 2004
23
EXHIBIT 1
RTI INTERNATIONAL METALS, INC.
AUDIT COMMITTEE CHARTER
The Board of Directors shall appoint annually the Audit Committee which shall
have the responsibility and authority and shall perform the functions as
described below.
COMPOSITION
1. The membership of the Committee will meet the requirements of the Audit
Committee Policy of the New York Stock Exchange. Accordingly, all of the
members will be directors independent of management and free from any
relationship that, in the opinion of the Board of Directors, would
interfere with the exercise of independent judgment as a Committee member.
2. No officers or employees of the Company or its subsidiaries will serve on
the Committee, until at least three (3) years following the termination of
the employment relationship. A former officer of the Company or any of its
subsidiaries may serve on the Committee (even though the former officer
may be receiving pension or deferred compensation payments from the
Company), if, in the opinion of the Board of Directors, the former officer
will exercise independent judgment and will materially assist the function
of the Committee. However, a majority of the Committee will be directors
who were not formerly officers of the Company or any of its subsidiaries.
3. Attendance by a majority of the Committee will constitute a quorum for
conducing a Committee meeting. Pursuant to the by-laws of the Company,
members of the Committee may participate in any meeting of such Committee
by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting shall constitute
presence in person at such meeting.
RESPONSIBILITY
The responsibility of the Audit Committee shall be to:
1. Provide assistance to the Board of Directors in fulfilling its statutory
and fiduciary responsibilities for examinations of the Company's financial
statement and in monitoring its accounting and financial reporting
practices.
2. Determine that the Company had adequate administrative, operational and
internal accounting controls and that the Company is operating in
accordance with its prescribed procedures and codes of conduct.
3. Serve as an independent and objective party in the review of the financial
information presented by management for distribution to shareholders and
the general public.
4. Exercise general and ongoing oversight of the quarterly reporting process.
5. Provide direction and supervision over the internal audit function and the
independent accountants.
AUTHORITY
The Audit Committee is granted the authority to investigate any matter or
activity involving financial accounting, reporting and internal controls of the
Company, and all employees shall be directed to cooperate with respect thereto
as requested by members of the Committee. The Committee is empowered to retain
persons having special competence, as necessary, to assist the Committee in
fulfilling its responsibility.
FUNCTIONS
The functions of the Audit Committee shall be to:
1. Appoint the independent accountants for the coming year.
24
2. Review and approve the audit plan of the independent accountants and the
internal auditors, including the steps planned for a review of the
Company's electronic data processing procedures and controls.
3. Evaluate the effectiveness of the internal and external audit efforts
through regular meetings with the internal auditors and the independent
accountants.
4. Determine through discussions with the independent accountants and the
internal auditors that no management restrictions are being placed on the
scope of their examinations.
5. Review the adequacy and effectiveness of the Company's accounting policies
and procedures as well as financial and accounting management through
observations and discussions with the independent accountants, internal
auditors and appropriate officers of the Company.
6. Monitor internal accounting controls through a review of the reports of
the independent accountants and the internal auditors that describe
internal accounting, organizational or operating control weaknesses and
determine that appropriate corrective action is being taken by management.
7. Review with management and the independent accountants quarterly
accounting and financial reporting to the public.
8. Arrange for periodic reports from management, the independent accountants
and the internal auditors to assess accounting or reporting developments
proposed by the FASB or the SEC, or any other significant matters that may
have a bearing on the financial statements or the annual examination.
9. Review and approve any material accounting changes.
10. Review and approve the Company's annual financial statements, Form 10-K
and annual report to shareholders with management and the independent
accountants.
11. Supervise and direct any special projects or investigations that the
Committee considers necessary.
12. Periodically review the Company's business ethics policies, the monitoring
of compliance with these policies and the disposition of reported
exceptions.
13. Meet regularly with the Company's general counsel, and outside counsel,
when appropriate, to discuss legal matters which may have a significant
impact on the Company's financial statements.
14. Consider in-house policies and procedures for regular review of officers'
expenses and perquisites, including any use of corporate assets and
inquire as to the results of the review.
15. The Committee should meet privately with the independent public accountant
periodically to request their opinion on various matters including the
quality of financial and accounting personnel.
16. Review the fees proposed and approve the final fees and expenses of the
independent accountants for audit services and the fee for any non-audit
services to be performed by the independent accountants for any non-audit
engagement.
17. Review on a periodic basis a formal written statement from the independent
accountants delineating all relationships between the independent
accountants and the company and determine, through discussion, whether
corrective action is necessary with respect to any disclosed relationships
or services that may impact the objectivity and independence of the
independent accountants and, if appropriate, recommend that the Board of
Directors take appropriate action to ensure the independence of the
independent accountants.
25
MEETINGS
The Committee shall hold at least three regular meetings each year and others as
deemed necessary by its chairperson. A report of all Committee meetings will be
made to the Board of Directors. The Secretary of the Company shall serve as
Secretary of the Audit Committee and shall prepare and keep minutes of all
meetings of the Committee.
Adopted by the Board of Directors on January 26, 2001, and amended March 10,
2004.
26
EXHIBIT 2
RTI INTERNATIONAL METALS, INC.
2004 STOCK PLAN
DATED , 2004
1. PURPOSE. The RTI International Metals, Inc. 2004 Stock Plan is
designed to: (i) promote the long-term financial interests and growth of RTI
International Metals, Inc. (together with any successors thereto, the "Company")
and its subsidiaries by attracting and retaining qualified individuals to serve
as directors and management personnel; (ii) motivate directors and management
personnel by means of growth-related incentives to achieve long-range growth
goals; and (iii) further the identity of interests of directors and management
personnel with those of the shareholders of the Company through opportunities
for increased ownership in common stock ($.01 par value) ("Common Stock") of the
Company.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
meanings set forth below:
(a) "Administrator" means the Board or a Committee to administer the
Plan; provided, however, that the Board, in its sole discretion, may,
notwithstanding the appointment of any Committee to administer the Plan,
exercise any authority under this Plan.
(b) "Annual Meeting" means the Company's annual meeting of stockholders.
(c) "Award" means any Option, Stock Appreciation Right, Restricted Stock
Award, or other stock-based award under the Plan.
(d) "Award Agreement" means any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan, which
may, but need not, be executed or acknowledged by a Participant.
(e) "Board" means the Board of Directors of the Company, as constituted
from time to time.
(f) "Change in Control" means 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, without limitation, such a
change in control shall be deemed to have occurred if:
(1) Any person (within the meaning of that term as used in Sections
13(d) and 14(d) of the Exchange Act (a "Person"), 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 (20%) or more of the combined voting power of the Company's then
outstanding voting securities; provided, however, that for purposes of
this Plan the term "Person" shall not include (i) the Company or any of
its majority-owned Subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
of its Subsidiaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company; or
(2) A change in composition of the Board during any two year period
such that the following individuals cease for any reason to constitute a
majority of the number of directors then serving on the Board:
individuals who, at the beginning of the two year period, are serving as
directors on the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for election by
the Company's stockholders was approved by a vote of at least two-thirds
( 2/3) of the directors then still in
27
office who either were directors at the beginning of the two year period
or whose appointment, election or nomination for election was previously
so approved, or
(3) There is consummated a merger or consolidation of the Company or
a Subsidiary thereof, 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 voting securities 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.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means a committee of the Board.
(i) "Director" means a member of the Board who is not an employee of the
Company or any Parent or Subsidiary thereof.
(j) "Disability" means a disability as determined by the Company's
disability policy as in effect from time to time or as determined by the
Administrator consistent therewith.
(k) "Effective Date" means that date on which the stockholders of the
Company approve this Plan.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means the mean of the high and low prices of the
Shares on the date specified rounded up to the next whole cent (or, if
there is no trading on the New York Stock Exchange on such date, then on
the first previous trading date) as reported in "New York Stock Exchange
Composite Transactions" in "The Wall Street Journal" or by WSJ.com or
Bloomberg L.P., or if unavailable, then by reference to any other source as
may be deemed appropriate by the Administrator.
(n) "Option" means a non-qualified or qualified option granted under
Section 6 of this Plan.
(o) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(p) "Participant" means an individual employee or Director who has
received an Award under the Plan.
(q) "Plan" means this RTI International Metals, Inc. 2004 Stock Plan.
(r) "Prior Stock Plans" means the RTI International Metals, Inc. 1995
Stock Plan and the RTI International Metals, Inc. 2002 Non-Employee
Director Stock Option Plan.
(s) "Restricted Stock" means the Common Stock subject to a Restricted
Stock Award.
(t) "Restricted Stock Award" means a grant of Shares subject to a risk
of forfeiture or other restrictions that will lapse upon a specified amount
of time since the date on which the Company granted the Participant a
Restricted Stock Award or the completion of service by the Participant or
the achievement of performance or other objectives, as determined by the
Administrator.
(u) "Restricted Stock Unit Award" means a grant of Stock Units subject
to a risk of forfeiture or other restrictions that will lapse upon a
specified amount of time since the date of the grant of the Award or the
Participant's achievement of performance or other objectives, as determined
by the Administrator.
(v) "Retirement" means the end of a Director's service on the Board due
either (i) to the expiration of the term for which such Director was
elected; or (ii) the voluntary retirement from service on the Board before
the expiration of his or her term.
28
(w) "Shares" shall mean shares of the Common Stock.
(x) "Stock Appreciation Right" shall mean a right to receive a payment
in cash and/or Shares equal to the excess of the Fair Market Value of a
Share on the date the Stock Appreciation Right is exercised over the Fair
Market Value of a Share at the date of the Award of the Stock Appreciation
Right for a specified number of Shares.
(y) "Stock Unit" means the right to receive a Share at a future point in
time.
(z) "Subsidiary or Subsidiaries" means, as the case may be, one or more
"subsidiary corporations," whether now or hereafter existing, as defined in
Section 424(f) of the Code.
(aa) "Year" means a calendar year.
3. ELIGIBILITY. Each Director and Employees of the Company and its
Subsidiaries in responsible positions whose performance, in the judgment of the
Administrator, may affect the Company's success are eligible for Awards under
the Plan.
4. ADMINISTRATION. This Plan shall be administered by the Administrator.
Subject to the terms of the Plan and applicable law, the Administrator shall
have full power and authority, in its discretion:
(a) to interpret, construe and administer the Plan and any instrument or
agreement relating to, or Award granted under, the Plan;
(b) to select Participants to whom Awards may from time to time be
granted;
(c) to determine the amount and type of Awards, including any
combination thereof, to be granted to a Participant;
(d) to determine the number of Shares (if any) to be granted under an
Award;
(e) to determine the Fair Market Value of the Common Stock, in
accordance with this Plan;
(f) to determine and modify from time to time, in a manner consistent
with this Plan, the terms and conditions of any Award (including but not
limited to conditions applicable to the grant, issuance, exercisability and
vesting of an Award), and approve the forms of Award Agreements for use
under this Plan;
(g) to determine whether and to what extent an adjustment is required
under Section 5(e) of this Plan;
(h) to determine whether, to what extent and under what circumstances,
Shares and other amounts payable with respect to an Award under this Plan
shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount, if any, of
any deemed earnings on any deferred amount during any deferral period);
(i) to establish, amend, suspend or waive such rules and regulations and
appoint such agents as it deems appropriate for the proper administration
of the Plan;
(j) to make any other determination and take any other action that it
deems necessary or desirable for the administration of this Plan; and
(k) to delegate to management of the Company its duties under the Plan
subject to such conditions and limitations as the Administrator shall
prescribe except that only the Administrator may designate and make Grants
to Participants who are subject to Section 16 of the Exchange Act.
All decisions of the Administrator shall be final, conclusive and binding
upon all parties, including the Company and the Participants.
5. SHARES SUBJECT TO THE PLAN.
(a) Subject to adjustment as provided in Section 5(e) below, the number of
Shares available for issuance under the Plan over the 10 Year term of the Plan
shall be 2,500,000 plus the shares added to the Plan from the Prior Stock Plans
pursuant to Sections 5(b) and 5(c) hereof. Upon stockholder
29
approval of this Plan, no further grants or awards of any kind shall be made by
the Company under its Prior Stock Plans.
(b) To the extent that Options granted under the Plan or under the Prior
Stock Plans shall expire or terminate without being exercised or Shares awarded
under the Plan or under the Prior Stock Plans shall be forfeited, such Shares
shall remain available or be added to and shall increase the number of Shares
available for purposes of the Plan.
(c) Shares delivered in payment of the purchase price in connection with
the exercise of Options or Shares delivered or withheld to pay tax-withholding
obligations or otherwise under the Plan or under the Prior Stock Plans shall be
added to and shall increase the number of Shares available for purposes of the
Plan.
(d) Any Shares delivered pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or Shares held in treasury by the
Company.
(e) In the event that the Administrator shall determine that any dividend
or other distribution (whether in the form of cash, Shares, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company,
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Administrator to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Administrator shall, in such
manner as it may deem equitable, adjust any or all of: (i) the number and kind
of securities which may be delivered under this Plan; (ii) the number and kind
of securities subject to outstanding Awards (including the number and kind of
securities credited to any stock unit accounts); (iii) the exercise price with
respect to any Option or, if deemed appropriate, make provisions for a cash
payment to the holder of an outstanding Option; and (iv) the terms and
conditions of the Awards as it, in its discretion, deems appropriate. No
adjustment or substitution provided for in this Section 5(e) shall require the
Company to issue or to sell a fractional share and the total adjustment or
substitution with respect to each Award Agreement shall be limited accordingly.
6. OPTIONS. Options may be granted to Participants either alone or in
addition to other Awards granted under the Plan. The total number of Shares that
may be purchased pursuant to individual Option Awards shall be determined by the
Administrator at the time of grant. The Options granted may be either statutory
stock options intended to qualify under Section 422 of the Code or non-qualified
stock options that are not intended to qualify under Section 422 of the Code;
provided, however that Options granted to Directors will be non-statutory stock
options which will not qualify under Section 422 of the Code. Options shall have
the following terms and conditions:
(a) Price and Term of Options. The purchase price per share of Shares
deliverable upon the exercise of each Option shall be no less than 100% of
the Fair Market Value per share of the Shares on the date the Option is
granted. Each Option shall have a term not to exceed ten years from the
date of grant. Qualified stock options shall be priced and issued on terms
that comply with all relevant provision of the Code.
(b) Payment. The Administrator shall determine the method or methods by
which, and the form or forms, including, without limitation, cash, Shares,
or other property, or any combination thereof, having a Fair Market Value
on the exercise date equal to the relevant exercise price, in which payment
of the exercise price with respect to an Option may be made or deemed to
have been made. Exercise of an Option in any manner shall result in a
decrease in the number of Shares that thereafter may be available under the
Option by the number of Shares as to which the Option is exercised.
(c) Award Agreement. Each Option granted hereunder shall be evidenced by
an Award Agreement with the Company, which shall contain the terms and
provisions set forth herein and shall otherwise be consistent with the
provisions of this Plan.
30
7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted to
Participants either alone or in addition to other Awards granted under the Plan
and may, but need not, relate to a specific Option granted under Section 6
above. Any Stock Appreciation Right related to an Option may be granted at the
same time the Option is granted or at any time thereafter, before the expiration
or exercise of such Option. To the extent applicable, Stock Appreciation Rights
shall generally be subject to the same terms and conditions that are applicable
to Options pursuant to Section 6 above including, without limitation, being
evidenced by an Award Agreement.
8. RESTRICTED STOCK. Restricted Stock Awards may be issued to
Participants, for no cash consideration or for such minimum consideration as may
be required by applicable law, or for such other consideration as determined by
the Administrator, either alone or in addition to other Awards granted under the
Plan. All or part of a Restricted Stock Award may be subject to conditions
including, but not limited to, continuous service with the Company, achievement
of business objectives; individual, unit and Company performance and other
criteria; and provisions for forfeiture and restricting transfer. Subject to
such forfeiture and transfer restriction provisions as may be established by the
Administrator, any Participant receiving a Restricted Stock Award shall have all
the rights of a shareholder of the Company with respect to Shares of Restricted
Stock, including the right to vote the Shares and the right to receive any cash
dividends thereon, provided, however, that a dividend or other distribution with
respect to the Restricted Stock, other than a cash dividend, shall be delivered
to the Company (and the Participant shall, if requested by the Company, execute
and return one or more irrevocable stock powers related thereto) and shall be
subject to the same restrictions as the Restricted Stock with respect to which
such dividend or other distribution was made. To the extent applicable,
Restricted Stock Awards shall generally be subject to the same terms and
conditions that are applicable to Options pursuant to Section 6 above including,
without limitation, being evidenced by an Award Agreement.
9. ANNUAL RETAINER TO DIRECTORS.
(a) Director Retainer Payments. The Company shall pay each Director an
annual retainer in an amount to be determined by the Board (the "Retainer
Payment"); provided, however, that not more than fifty percent (50%) of the
Retainer Payment shall be paid in the form of Shares pursuant to this Section 9
and the balance of the Retainer Payment shall be paid in the form of cash.
(b) Grant of Restricted Stock. Each Director shall receive Restricted Stock
Awards consistent with Section 8 hereof and the other terms of this Plan upon
the completion of each Annual Meeting during the term of this Plan, and such
Award shall vest immediately prior to the next Annual Meeting following the date
of the grant. A stock certificate for the Shares under a Restricted Stock Award
will be issued in the name of the Participant and deposited, together with a
stock power endorsed in blank by the Participant, with the Company, until the
lapse of restrictions thereon. In the event a Participant is elected or
appointed on a date other than the date of the Annual Meeting, the Participant's
Award shall be pro-rated such that the Participant shall receive the Restricted
Stock awarded on the date of the immediately preceding Annual Meeting,
multiplied by (i) the number of full calendar months before the next Annual
Meeting, divided by (ii) 12.
(c) Lapse of Restrictions. After the Shares of Restricted Stock vest, the
Company shall deliver the corresponding Shares free and clear of all
restrictions to the Participant (or the Participant's legal representative,
beneficiary or heir.)
(d) Forfeiture. In the event a Participant's membership on the Board
terminates for reasons other than death, Disability or Retirement, any
non-vested Shares of Restricted Stock shall terminate and all of the rights,
title and interest of the Participant thereunder shall be forfeited in their
entirety.
10. OTHER STOCK-BASED AWARDS. The Administrator is hereby authorized to
grant to Participants such other Awards (including, without limitation,
Restricted Stock Unit Awards and rights to dividends and dividend equivalents)
that are denominated or payable in, valued in whole or in part by reference to,
or otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares) as are deemed by the Administrator to be
consistent with the purposes of the Plan. Subject to the terms of the Plan, the
Administrator shall determine the terms and conditions of
31
such Awards. Shares or other securities delivered pursuant to a purchase right
granted under this Section 10 shall be purchased for such consideration, which
may be paid by such method or methods and in such form or forms, including,
without limitation, cash, Shares, other securities, other Awards, or other
property, or any combination thereof, as the Administrator shall determine, the
value of which consideration, as established by the Administrator, shall not be
less than the Fair Market Value of such Shares or other securities as of the
date such purchase right is granted.
11. ADDITIONAL MAXIMUMS. Subject to adjustment as provided in Section
5(e) above, the maximum number of Shares that can be granted in the form of
Restricted Stock is 1,250,000.
12. AMENDMENT AND TERMINATION. Except to the extent prohibited by
applicable law:
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue or terminate the Plan, including, without limitation, the
number of shares subject to Awards granted pursuant to this Plan, without
the consent of any stockholder, Participant, other holder or beneficiary of
any Award, or other person; provided, however, that no such amendment,
alteration, suspension, discontinuation or termination shall be made
without: (i) stockholder approval if such approval is necessary to qualify
for or comply with any tax or regulatory requirement for which or with
which the Board deems it necessary or desirable to qualify or comply; or
(ii) the consent of the affected Participant, if such action would
adversely affect the rights of such Participant under any outstanding
Award; and provided further, that no such amendment or alteration shall
increase the aggregate number of shares that may be issued under the Plan,
except as provided in Section 5(e). Notwithstanding any other provision of
the Plan or any Award Agreement, no such amendment, alteration, suspension,
discontinuation or termination shall be made that would (x) permit Options
to be granted with a per Share exercise price of less than the Fair Market
Value of a Share on the date of grant thereof or (y) except as provided in
Section 5(e), reduce the exercise price of any Option established at the
time of grant thereof.
(b) Correction of Defects, Omissions and Inconsistencies. The
Administrator may correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to carry the Plan into effect.
13. COMPLIANCE WITH GOVERNMENTAL REGULATIONS. Notwithstanding any
provision of the Plan or the terms of any agreement entered into pursuant to the
Plan, the Company shall not be required to issue any securities hereunder prior
to registration of the Shares subject to the Plan under the Securities Act of
1933, as amended, or the Exchange Act, if such registration shall be necessary,
or before compliance by the Company or any Participant with any other provisions
of either of those acts or of regulations or rulings of the Securities and
Exchange Commission thereunder, or before compliance with other federal and
state laws and regulations and rulings thereunder, including the rules of the
New York Stock Exchange and any other exchange or market on which the Shares are
listed or quoted. The Company shall use its reasonable best efforts to effect
such registrations and to comply with such laws, regulations and rulings
forthwith upon advice by its counsel that any such registration or compliance is
necessary.
14. COMPLIANCE WITH SECTION 16. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 (or its successor rule). To
the extent that any grant of an Award fails to so comply, it shall be deemed
null and void to the extent permitted by law and to the extent deemed advisable
by the Administrator.
15. CHANGE IN CONTROL PROVISIONS. Notwithstanding any provisions of the
Plan or any Award Agreement to the contrary, unless the Board shall determine
otherwise at the time of the grant of an Award with respect to such Award, in
the event of a Change in Control all outstanding Awards shall become fully
vested.
32
16. GENERAL PROVISIONS.
(a) No Rights of Stockholders. Except as otherwise provided herein, neither
a Participant nor a Participant's legal representative shall be, or have any of
the rights and privileges of, a stockholder of the Company in respect of any
Shares issuable under the Plan in connection with any Award or Account, in whole
or in part, unless and until certificates for such Shares shall have been
issued.
(b) Transferability of Awards. No Award, and no right under any such Award,
shall be assignable, alienable, saleable or transferable by an employee
Participant otherwise than by will or by the laws of descent and distribution.
No Award, and no right under any such Award, shall be assignable, alienable,
saleable or transferable by a Director Participant otherwise than: (i) by will
or by the laws of descent and distribution; (ii) to a trust for the benefit of
the Director or his or her immediate family; or (iii) to a member of the
Director's immediate family; provided, however, that with respect to Restricted
Stock Unit Awards, such Awards may not be transferred under paragraphs (ii) and
(iii) above until the issuance date of the Shares underlying the Stock Units.
During the Participant's lifetime, rights under an Award shall be exercisable
only by the Participant, or if permissible under applicable law, by the
Participant's guardian or legal representative.
(c) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company from adopting or continuing in effect other or
additional compensation arrangements, and such arrangements may be either
generally applicable or applicable only in specific cases.
(d) Governing Law. The validity, constrictions and effect of this Plan,
agreements entered into pursuant to this Plan, and of any rules, regulations,
determinations or decisions made by the Administrator relating to this Plan or
such agreements, and the rights of any and all persons having or claiming to
have any interest therein or thereunder, shall be determined exclusively in
accordance with applicable federal laws and the laws of the State of Ohio,
without regard to its conflict of laws principles.
(e) Severability. If any provision of the Plan or any Award Agreement is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction, or as to any person, Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Administrator, such provision shall
be construed or deemed amended to conform to applicable laws, or if it cannot be
so construed or deemed amended without, in the determination of the
Administrator, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, person or Award, and the
remainder of the Plan and any such Award shall remain in full force and effect.
(f) No Trust or Fund Created. Neither the Plan nor any Award (including the
establishment of a Stock Unit Account) shall create or be construed to create a
trust or separate fund of any kind or a fiduciary relationship between the
Company and a Participant or any other person. To the extent that any person
acquires a right to receive an Award, or Shares pursuant to an Award, from the
Company pursuant to this Plan, such right shall be no greater than the right of
any unsecured general creditor of the Company.
(g) Withholding. The Company shall be authorized to withhold from any
Awards granted or any transfer made under any Award or under the Plan or from
any dividend equivalents to be paid on Stock Units the amount (in cash, Shares,
other securities, or other property) of any taxes required to be withheld in
respect of a grant, exercise, payment or settlement of an Award or any payment
of dividend equivalents under Stock Units or under the Plan and to take such
other action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of any such taxes.
(h) No Right to Continued Employment or Board Membership. The grant of an
Award or establishment of a Stock Unit account shall not be construed as giving
a Participant the right to be retained as an employee or director of the
Company. The Board may at any time fail or refuse to nominate a Participant for
election to the Board, and the stockholders of the Company may at any election
fail or refuse to elect any Participant to the Board free from any liability or
claim under this Plan or any Award.
(i) Cancellation. Any provision of the Plan or any Award Agreement to the
contrary notwithstanding, the Administrator may cause any Award granted
hereunder to be cancelled in consideration of a cash
33
payment or alternative Award made to the holder of such cancelled Award equal in
value to the Fair Market Value of such cancelled Award on the date of
cancellation.
(j) Effective Date of Plan. The Plan shall be effective as of the Effective
Date.
(k) Term of the Plan. No Award shall be granted under the Plan after the
ten-year anniversary of the Effective Date of the Plan. However, unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Award granted prior to the termination of the Plan may extend beyond such
date, and the authority of the Administrator to amend, alter, adjust, suspend,
discontinue, or terminate any such Award, or to waive any conditions or rights
thereunder, and the authority of the Board to amend the Plan, shall extend
beyond such date.
34
DETACH CARD
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PROXY/VOTING INSTRUCTION CARD
RTI INTERNATIONAL METALS, INC.
1000 WARREN AVENUE, NILES, OHIO 44446
PROXY FOR 2004 ANNUAL MEETING
SOLICITED ON BEHALF OF THE DIRECTORS OF RTI INTERNATIONAL METALS, INC.
The undersigned hereby appoints ROBERT M. HERNANDEZ, TIMOTHY G. RUPERT, DAWNE S.
HICKTON 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 RTI International Metals, Inc. on April 30, 2004, and any
adjournments thereof, upon such matters as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
PROPOSAL NO. 1 -- Election of 01 Craig R. Andersson; 02 Neil A. Armstrong; 03
Daniel I. Booker; 04 Donald P. Fusilli; 05 Ronald L. Gallatin;
06 Charles C. Gedeon; 07 Robert M. Hernandez; 08 Edith E.
Holiday; 09 John H. Odle and 10 Timothy G. Rupert as
directors.
[ ] FOR all nominees (except as marked to the contrary below). [ ]
[ ] WITHHOLD AUTHORITY from all.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE BELOW.)
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PROPOSAL NO. 2 -- Ratification of appointment of PricewaterhouseCoopers LLP as
independent accountants for 2004.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL NO. 3 -- Approval of the 2004 Employee Stock Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE COMPLETE, DATE AND SIGN THE REVERSE SIDE.
DETACH CARD
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(CONTINUED FROM THE OTHER SIDE)
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.
Dated: --------------- , 2004
------------------------------
Signature(s)
------------------------------
Signature(s)
Please sign exactly as your
name appears hereon. When
signing as fiduciary or
corporate officer, give full
title. Joint owners must both
sign.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS PROXY CARD
AND TO RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.