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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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[ X ] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
RTI INTERNATIONAL METALS, INC.
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RTI LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY
STATEMENT
MAY 6, 2005
12:00 NOON
The Hyatt Regency Hotel
1111 Airport Boulevard
Pittsburgh, Pennsylvania
RTI LOGO
1000 Warren Avenue
Niles, Ohio 44446
April 15, 2005
Dear RTI Shareholder:
You are cordially invited to attend our 2005 Annual Meeting of Shareholders on
May 6, 2005, at the Hyatt Regency Hotel, 1111 Airport Boulevard, Pittsburgh,
Pennsylvania.
The meeting will begin promptly at 12:00 noon with a report on Company
operations. We will then elect directors and ratify the appointment of
independent accountants.
You have a choice of voting your proxy via the Internet, by telephone or by
completing and returning the enclosed proxy card. Whether or not you plan to
attend, it is important that you vote your shares and we encourage you to do so
as soon as possible.
We look forward to seeing as many of you as possible at the 2005 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
General Information......................................... 4
The Board of Directors...................................... 5
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS............ 7
PROPOSAL NO. 2 -- RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.................. 10
Security Ownership......................................... 12
Executive Compensation..................................... 13
Stock Performance Graph.................................... 18
Retirement Benefits........................................ 18
Employment Agreements...................................... 20
Other Information.......................................... 22
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
RTI INTERNATIONAL METALS, INC.
TIME:
12:00 Noon
DATE:
May 6, 2005
PLACE:
Hyatt Regency Hotel
1111 Airport Boulevard
Pittsburgh, Pennsylvania
PURPOSE:
- Elect directors
- Ratify the appointment of independent registered public
accounting firm
- Conduct other business if properly raised
Only shareholders of record on April 14, 2005 may vote at the
meeting.
YOUR VOTE IS IMPORTANT. PLEASE VOTE PROMPTLY BY FOLLOWING THE
INSTRUCTIONS ON THE NEXT PAGE AND ON THE ENCLOSED PROXY CARD.
LOGO
DAWNE S. HICKTON
Secretary
April 15, 2005
3
PROXY STATEMENT
GENERAL INFORMATION
--------------------------------------------------------------------------------
- WHO MAY VOTE?
Shareholders of RTI as of the close of business on the record date, April 14,
2005, are entitled to vote at the Annual Meeting.
- WHAT MAY I VOTE ON?
You may vote on:
(1) the election of nominees to serve on our Board of Directors,
(2) the ratification of the appointment of our independent registered public
accounting firm for 2005, and
(3) any other matters that may be properly presented at the meeting.
- VOTING RECOMMENDATIONS
The Board recommends that you vote:
FOR each of the nominees presented in this proxy statement; and
FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as our
independent registered public accounting firm for 2005.
- SOLICITATION
This proxy statement is being furnished to shareholders in connection with the
solicitation by the Board of proxies to be voted at the Annual Meeting. RTI
intends to first mail this proxy statement to shareholders on or about April 15,
2005.
- HOW DO I VOTE?
You may vote in any one of the following three ways:
(1) By Internet: Go to the website shown on the enclosed proxy card
(www.cesvote.com) and follow the instructions.
(2) By Telephone: Call the toll-free number shown on the enclosed proxy card
(1-888-693-8683) and follow the voice prompts using a touch-tone
telephone.
(3) By Mail: Sign and date each proxy card you receive and return it in the
envelope provided. If you return a signed proxy card but do not mark the
boxes showing how you wish to vote, your shares will be voted FOR both
proposals.
You have the right to revoke your proxy at any time before the meeting by
sending a written notice of revocation or a later-dated proxy card to RTI's
Secretary, by voting subsequently through the Internet or by telephone or by
voting in person at the meeting.
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., Ronald L. Gallatin, Charles C. Gedeon, Robert M.
Hernandez and Edith E. Holiday all meet the New York Stock Exchange rules and
listing standards relating to independence generally and for all committees on
which they serve. None of the independent directors has a relationship with the
Company that is material.
The Board met five times during 2004. All of the directors attended more than
75% of the total number of meetings of the Board and of the committees on which
they serve. The Chairman of The Board chairs the regularly-scheduled executive
sessions of the non-management directors. In the Chairman's absence, the
chairperson of the Nominating/Corporate Governance Committee chairs the meeting.
It is the policy of the Nominating/Corporate Governance Committee to consider
recommendations by shareholders, directors, officers, employees, and others 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. Board Membership criteria
considered by the Committee is discussed below under the caption
"Nominating/Corporate Governance Committee" and is set forth in the Company's
Corporate Governance Guidelines, available on the RTI Website, www.rtiintl.com.
There are four principal committees of the Board of Directors. Committee
membership, the functions of the committees and the number of meetings held
during 2004 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 2004, the
Executive Committee held two 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. All of the members of this Committee meet the New York Stock
Exchange's rules and listing standards for audit committee independence. The
Board has determined that Messrs. Hernandez, Fusilli, and Gallatin 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 control, RTI's compliance with legal
and regulatory requirements and qualifications, independence and performance of
RTI's internal auditors and independent registered public accounting firm. The
Committee has direct responsibility for the appointment, compensation, retention
and oversight of RTI's independent registered public accounting firm. The
Committee has adopted, and the Board has approved, the Committee charter,
available on the RTI Website, www.rtiintl.com.
The Audit Committee held ten meetings in 2004.
5
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. All of the members of this Committee meet the
NYSE's rules and listing standard for independence for purposes of this
Committee.
The Committee discharges the Board's duties concerning executive compensation
and prepares the report on such compensation 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 procedures 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.rtiintl.com.
The Human Resources Committee held five meetings in 2004.
NOMINATING/CORPORATE GOVERNANCE COMMITTEE
The members of the Nominating/Corporate Governance Committee are Daniel I.
Booker (Chairman), Robert M. Hernandez and Edith E. Holiday. All of the members
of this committee meet the New York Stock Exchange's rules and listings
standards for independence for purposes of this committee.
The Nominating/Corporate Governance Committee is responsible for identifying
individuals qualified to serve as directors; 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 considers director
candidates submitted by directors, officers, employees, shareholders and other
constituencies. 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 that is available on the RTI Website,
www.rtiintl.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, shareholders, and others, 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 citizenship. Additional information concerning
director candidates is contained in RTI's Corporate Governance Guidelines,
available on the RTI Website at www.rtiintl.com.
The Nominating/Corporate Governance Committee held four meetings in 2004.
COMPENSATION OF DIRECTORS
RTI employees receive no extra pay for serving as a director. Non-employee
directors (except for the Chairman) receive an annual retainer for their service
on the Board of $60,000 and Mr. Hernandez receives an annual retainer of
$110,000 as non-employee Chairman of the Board. One-half of these retainers are
paid in cash and one-half through awards of restricted stock under the 2004
Stock Plan (as approved by the Shareholders at the 2004 Annual Meeting). In
addition, the Audit Committee Chairperson receives an annual cash retainer of
$10,000 and other committee chairpersons receive an annual cash retainer of
$5,000. No fees are paid for Board or committee meetings attended except that
if, in the opinion of the Chairman of the Board, 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. During
2004, no additional fees were paid to directors for meeting attendance.
6
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. 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: 67
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 is a past director of
Albermarle Corporation and Duquesne University. He is a member of the American
Institute of Chemical Engineers and Alpha Chi Sigma (a professional chemical
society) and has served on the boards and executive committees of The Society of
the Chemical Industry, the Chemical Manufacturers Association, the Pennsylvania
Business Roundtable and the Greater Pittsburgh Chamber of Commerce. He has a BS
degree in chemical engineering from the University of Minnesota and did graduate
work in the same discipline at the University of Delaware.
NEIL A. ARMSTRONG Age: 74
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.
DANIEL I. BOOKER Age: 57
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.
7
DONALD P. FUSILLI, JR. Age: 53
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 and the Horticultural Society of Western Pennsylvania.
RONALD L. GALLATIN Age: 59
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: 64
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.
ROBERT M. HERNANDEZ Age: 60
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, lead director of ACE Limited and a director of Eastman Chemical Company.
8
EDITH E. HOLIDAY Age: 53
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; White Mountains Insurance Group, Ltd.; 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: 62
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 27 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: 58
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 REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP has served as the independent registered public
accounting firm for RTI and its predecessors for a number of years. For 2004,
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 an accounting control standpoint. It is knowledgeable about RTI's
operations and accounting practices and is well qualified to act as the
independent registered public accounting firm and the Audit Committee has
selected PricewaterhouseCoopers LLP as such for 2005.
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 Quarterly Reports on Form 10-Q in
2003 and 2004 were $340,675 and $2,667,952, 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
2003 and 2004 were $48,000 and $91,500, 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 2003 and 2004 were $461,298 and
$112,680, 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
2003 and 2004 were $34,000 and $105,965, respectively. In 2003, the services
comprising these fees were in the nature of internal audit and benefit plan Form
5500 preparation. In 2004, the services comprising these fees was in the nature
of tax consulting.
The Audit Committee on an annual basis preapproves the Audit Plan for the year
along with the estimated fees for the plan. At each regularly scheduled,
quarterly meeting, the Audit Plan and fees incurred to date are reviewed, and
any fees above the estimate are reviewed and approved at the meeting. In
addition, the Chairman of the Audit Committee has been delegated authority by
the full Committee to preapprove additional audit and non-audit fees between
meetings, subject to review by the full Committee at the next regularly
scheduled meeting.
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
Ratification of the appointment of the independent registered public accounting
firm 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 from the beneficial owner to vote on a particular proposal.
10
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS
RTI'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2005.
AUDIT COMMITTEE REPORT
The committee met with management, PricewaterhouseCoopers LLP and the internal
auditors frequently throughout the year to consider the adequacy of RTI's
internal control over financial reporting and the objectivity of its financial
reporting, including compliance with Section 404 of the Sarbanes-Oxley Act of
2002. We also discussed with RTI's management and PricewaterhouseCoopers LLP the
process used for certifications by RTI's chief executive officer and chief
financial officer that are required for certain of RTI's filings with the
Securities and Exchange Commission. We have reviewed and discussed RTI's 2004
audited financial statements with management and with PricewaterhouseCoopers
LLP. The committee 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, the committee received from the independent accountants the written
disclosures required by Independence Standards Board Standard No. 1 and
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,
2004 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
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth each person or entity known to RTI that may be
deemed to have beneficial ownership of more than five percent of the outstanding
Common Stock of RTI based on information publicly available as of February 28,
2005.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
---------------- -------------------- -----
Citigroup Inc................................... 2,874,604(1) 13.6%
399 Park Avenue
New York, NY 10043
Dimensional Fund Advisors Inc................... 1,827,509(2) 8.6%
1299 Ocean Ave, 11th Floor
Santa Monica, CA 90401
AXA Financial, Inc.............................. 1,164,883(3) 5.5%
1290 Avenue of the Americas
New York, NY 10104
---------
(1) Based on the Schedule 13G filed with the SEC by Citigroup Inc. and
its affiliates, Citigroup Global Capital Markets Holdings Inc.,
Smith Barney Fund Management LLC and Citigroup Financial Products
Inc. (collectively, the "CG Affiliates"), on February 14, 2005 which
indicates shared voting and dispositive power over such shares. The
number reported above includes shares held by the CG Affiliates.
(2) Based on the Schedule 13G filed with the SEC by Dimensional Fund
Advisors Inc. ("Dimensional") on February 9, 2005 which indicates
sole voting and dispositive power over such shares. Dimensional is a
registered investment advisor that furnishes investment advise to
four registered investment companies and serves as manager to
certain other commingled group trusts and separate accounts.
Dimensional disclaims beneficial ownership of the shares reported
above.
(3) Based on the Schedule 13G filed with the SEC by AXA Financial, Inc.
and its affiliates, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, AXA Courtage Assurance Mutuelle and AXA (collectively,
the "AXA Affiliates"), on February 14, 2005 which indicates sole
dispositive power over 1,164,883 shares, sole voting power over
1,002,240 shares and shared voting power over 18,500 shares. These
numbers include shares held by the AXA Affiliates.
12
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 28, 2005, by each director and nominee, by
each executive officer named in the Summary Compensation Table and by all
directors and executive officers as a group:
AMOUNT AND
NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP CLASS(3)
---- -------------------- --------
Craig R. Andersson........................... 61,958(2) --
Neil A. Armstrong............................ 28,930(2) --
Gordon L. Berkstresser....................... 46,078(1)
Daniel I. Booker............................. 23,176(2) --
Donald P. Fusilli............................ 3,371
Ronald L. Gallatin........................... 15,000(2) --
Charles C. Gedeon............................ 16,423(2) --
Robert M. Hernandez.......................... 67,723(2) --
Dawne S. Hickton............................. 88,784(1) --
Edith E. Holiday............................. 14,203(2) --
Lawrence W. Jacobs........................... 71,566(1) --
John H. Odle................................. 214,748(1) 1%
Timothy G. Rupert............................ 224,544(1) 1%
-------
All directors and executive officers
as a group (13 persons).................... 876,504
---------
(1) Includes 42,500 shares, 26,000 shares, 29,667 shares, 113,000 shares and
71,000 shares, respectively, which Mrs. Hickton and Messrs. Berkstresser,
Jacobs, Odle and Rupert had the right to acquire within 60 days under the
Company's 2004 Stock Plan.
(2) Includes 5,000 shares which the non-employee director had the right to
acquire within 60 days under the 2002 Non-Employee Director Stock Option
Plan and the 2004 Stock Plan.
(3) There were 22,600,497 shares outstanding as of February 28, 2005. In
accordance with the rules and regulations of the SEC, in computing the
percentage ownership for each person listed, any shares which the listed
person had the right to acquire within 60 days are deemed outstanding,
however, shares which any other person had the right to acquire within 60
days are disregarded in the calculation. Therefore, the denominator used in
calculating beneficial ownership among the persons listed may differ for
each person. No percentage is shown for ownership of less than one percent.
EXECUTIVE COMPENSATION
The following table shows the annual and long term compensation paid by RTI and
its subsidiaries or otherwise accrued to the chief executive officer and the
other four most highly compensated executive officers of RTI for services
rendered in all capacities in 2004, 2003 and 2002.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------- ------------------------------------
AWARDS PAYOUTS
----------------------- ----------
LONG TERM
OTHER RESTRICTED SECURITIES INCENTIVE
NAME AND $ ANNUAL STOCK UNDERLYING PLAN ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION $(1) OPTIONS PAYOUTS COMPENSATION
------------------ ---- ------ ----- ------------ ---- ------- ------- ------------
Timothy G. Rupert........... 2004 $435,000 $375,000 -- $418,880(2) 15,000 -- --
President & 2003 415,000 300,000 306,856(3) 30,000
Chief Executive Officer 2002 400,000 400,000 210,650(4) 35,000
John H. Odle................ 2004 $280,000 $125,000 $179,520(2) 12,000 -- --
Executive Vice President 2003 275,000 100,000 136,437(3) 24,000
2002 270,000 160,000 95,750(4) 28,000
Gordon L. Berkstresser...... 2004 $145,000 $ 65,000 $ 74,800(2) 5,000 -- --
Vice President & 2003 140,000 50,000 39,092(3) 11,000
Controller 2002 133,000 75,000 19,150(4) 13,000
Dawne S. Hickton............ 2004 $190,000 $100,000 $112,200(2) 8,000 -- --
Vice President & General 2003 180,000 85,000 72,051(3) 17,000
Counsel 2002 170,000 110,000 47,875(4) 20,000
Lawrence W. Jacobs.......... 2004 $165,000 $ 65,000 $ 74,800(2) 5,000 -- --
Vice President & 2003 160,000 50,000 43,691(3) 12,000
Chief Financial Officer 2002 154,000 80,000 23,938(4) 15,000
13
---------
(1) This column shows the market value of restricted stock awards on the grant
date. The aggregate holdings and market value of restricted stock held on
December 31, 2004, by the individuals listed in this table were: Mr. Rupert,
72,700 shares, $1,493,258; Mr. Odle, 31,400 shares, $644,956; Mr.
Berkstresser, 10,200 shares, $209,508; Mrs. Hickton, 17,200 shares,
$353,288; and Mr. Jacobs, 10,500 shares, $215,670.
(2) Represents restricted stock awards granted January 30, 2004 as follows: Mr.
Rupert, 28,000 shares; Mr. Odle, 12,000 shares; Mr. Berkstresser, 5,000
shares; Mrs. Hickton, 7,500 shares; and Mr. Jacobs 5,000 shares. The awards
vest in five equal installments beginning on the first anniversary of the
grant date, subject to acceleration at the discretion of the board of
directors.
(3) Represents restricted stock awards granted January 31, 2003 as follows: Mr.
Rupert, 30,025 shares; Mr. Odle, 13,350 shares; Mr. Berkstresser, 3,825
shares; Mrs. Hickton, 7,050 shares; and Mr. Jacobs, 4,275 shares. The awards
vest in five equal installments beginning on the first anniversary of the
grant date, subject to acceleration at the discretion of the board of
directors.
(4) Represents restricted stock awards granted January 25, 2002 as follows: Mr.
Rupert, 22,000 shares; Mr. Odle, 10,000 shares; Mr. Berkstresser, 2,000
shares; Mrs. Hickton, 5,000 shares; and Mr. Jacobs, 2,500 shares. The awards
vest in five equal installments beginning on the first anniversary of the
grant date, subject to acceleration at the discretion of the board of
directors.
The following tables set forth information with respect to stock option grants
and exercises in 2004 and December 31, 2004 stock option values:
STOCK OPTION GRANTS IN 2004
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM(2)
GRANTED EMPLOYEES BASE PRICE EXPIRATION -------------------------
NAME (SHARES)(1) IN 2004 ($/SH) DATE 5% 10%
---- ----------- ---------- ------------ ---------- ----------- -----------
Timothy G. Rupert.................. 15,000 15.3% $14.960 1/30/14 $141,124 $357,636
John H. Odle....................... 12,000 12.2% $14.960 1/30/14 $112,899 $286,109
Gordon L. Berkstresser............. 5,000 5.1% $14.960 1/30/14 $ 47,041 $119,212
Dawne S. Hickton................... 8,000 8.2% $14.960 1/30/14 $ 75,266 $190,739
Lawrence W. Jacobs................. 5,000 5.1% $14.960 1/30/14 $ 47,041 $119,212
---------
(1) Options to purchase shares of RTI common stock were granted with an exercise
price equal to the fair market value of RTI common stock on the date of
grant. These options vest in three equal installments beginning on the first
anniversary of the grant date.
(2) Assumes, from the date of grant through the option's ten year expiration
date, a hypothetical 5% and 10% per year appreciation (compounded annually)
in the fair market value of RTI's common stock. The 5% and 10% rates of
appreciation are set by the SEC and, therefore, are not intended to forecast
future appreciation.
14
AGGREGATED STOCK OPTION EXERCISES IN 2004
AND DECEMBER 31, 2004 STOCK OPTION VALUES
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES DECEMBER 31, 2004 OPTIONS AT
ACQUIRED ON (SHARES)(1) DECEMBER 31, 2004
EXERCISE VALUE --------------------------- ---------------------------
NAME (SHARES) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Timothy G. Rupert.............. 69,000 $905,445 100,333 46,667 $488,825 $422,695
John H. Odle................... 21,000 $264,610 121,667 37,333 728,643 338,150
Gordon L. Berkstresser......... 18,000 $161,862 17,000 16,000 148,502 145,385
Dawne S. Hickton............... 12,000 $168,972 54,500 26,000 324,805 237,300
Lawrence W. Jacobs............. 16,000 $152,610 34,000 18,000 200,917 167,085
---------
(1) Adjusted for one-for-ten reverse stock split effective March 31, 1994 and
subsequent rights offering.
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
This Committee administers RTI's stock-based compensation plans and is also
responsible for all other executive compensation matters. RTI had adopted a
comprehensive statement entitled "Pay Philosophy and Guiding Principles
Governing Officer Compensation" (the "Pay Statement") which is applicable to
RTI's President and CEO, Executive Vice President and each Vice President.
Principal components of the Pay Statement are as follows:
The philosophy set forth in the Pay Statement is to have RTI's officer
compensation programs:
- Promote achievement of RTI's business objectives and reinforce its
strategies;
- Align the interests of the Company's officers with those of its
shareholders; and
- 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 Pay Statement includes specific guiding principles. These include pay
program characteristics of:
- Variability: A large portion of total compensation will be based upon
Company performance, recognizing the highly cyclical nature of the
Company's business. While salaries will generally be maintained at
competitive levels, the major opportunities for significant upward shifts
in total compensation will be provided through short-term and long-term
incentive programs.
- Clarity: Performance objectives for short-term and long-term incentive
programs will be clearly articulated to executives and normally the
objectives will be predetermined and related performance evaluations will
thus be straightforward. However, if deemed necessary by the Company's
board, after-the-fact discretionary judgment will be applied.
- Communicability: Officers will be aware of and fully understand their
earnings potential for a given year and what specific actions and results
are needed to achieve these earnings.
- Strategic Emphasis: The Pay Statement sets out the approximate proportion
of total direct compensation to be represented by salary, short-term
(bonus) and long-term incentives assuming both short-term and long-term
incentives are paid at target levels by classes of officer as follows:
- President and CEO-35% salary, 20% bonus and 45% long-term incentives.
- Executive Vice President-40% salary, 20% bonus and 40% long-term
incentives.
- Vice Presidents-45% salary, 15% bonus and 40% long-term incentives.
15
The Pay statement provides that RTI's officers compensation should range at
about the average or median of the remuneration paid by the Company's comparator
group when aspects of performance are at target levels.
SALARY
Executive salary is to be paid to reward performance and accomplishment in
recognition of consistent excellent performance over a number of years. An
individual's salary may fall anywhere in a range the midpoint of which for each
position will be maintained near the median of that for similar positions at
appropriate comparator companies with a maximum near the seventy-fifth
percentile of the comparator group. However, individual salary increase levels
will reflect a variety of factors including relevant experience, time in
position and individual performance as measured in an annual performance review.
BONUSES
The major role of annual incentive, or bonus payments is to motivate officers
through the recognition of attainment of specific key objectives and/or other
strategic milestones or operational goals. Bonuses are to be paid pursuant to
the following guidelines and maintained near the median for that for similar
positions at appropriate comparator companies:
- President and CEO-Bonus may range from 0 to 120% of annual salary with a
target of 60% of annual salary.
- Executive Vice President-Bonus may range from 0 to 100% of annual salary
with a target of 50% of annual salary.
- Vice Presidents-Bonus may range from 0 to 80% of annual salary with a
target of 40% of annual salary.
No bonus will be paid to an officer whose performance is judged to be
unacceptable regardless of the level of corporate performance. Likewise, the
Board may pay bonuses to recognize exceptional individual performance regardless
of the level of corporate performance.
LONG-TERM INCENTIVES
Long-term incentive awards are designed specifically to reward increases in
shareholder wealth as measured by the price of the Company's common stock as
well as improvement in earnings per share. Long-term incentive grants will be
made pursuant to the Company's 2004 Stock Plan and may be made in a combination
of stock (which may be restricted shares, performance shares, phantom stock or
non-restricted shares) and stock options. The total projected value of long-term
incentive grants are to be divided roughly between stock and options and in the
ranges as follows:
- President and CEO-Long-term incentives should be split roughly 80% stock
and 20% stock options and should range in value between 90 and 130% of
annual salary.
- Executive Vice President-Long-term incentives should be split roughly 75%
stock and 25% stock options and should range in value between 80% and
120% of annual salary.
- Vice Presidents-Long-term incentives should be split roughly 70% stock
and 30% stock options and should range in value between 40% and 80% of
annual salary.
COMPARATIVE DATA
The Pay Statement recognizes that there is a dearth of U.S. companies that
compete directly with RTI and because managerial talent can be found in
organizations other than competing companies, the compensation data selected for
use in company and/or individual position comparisons should include information
on a broad group of U.S. industrial companies similar to RTI in terms of sales
16
volume, or as appropriate, assets, total capital, market value or number of
employees. When appropriate and available, data specific to the metals industry
or a specific position should be used.
COMPENSATION OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
The Human Resources Committee meets each year to evaluate the performance of Mr.
Rupert the results of which are used to determine his compensation. On January
30, 2004, the Committee set Mr. Rupert's salary for 2004. This year the
Committee met on January 28, 2005 to review Mr. Rupert's 2004 performance, award
him his bonus and long-term awards pursuant to the Pay Statement, and set his
2005 salary.
Market conditions in the titanium industry were severely impacted by the
terrorist attacks on September 11, 2001. During 2002 and 2003, the commercial
aerospace business remained weak and contributed to the decline in titanium mill
product demand during this time frame and into 2004. Mr. Rupert and the rest of
the management team focused on cutting production costs and expanding the
Company's capabilities and markets for its products.
After review of Mr. Rupert's performance in 2003 against his objectives, RTI
operating and financial performance, cash flow, return on assets and shareholder
return, in January 2004, the Committee set Mr. Rupert's 2004 annual salary at
$435,000. Mr. Rupert's percentage increase in his annual salary from 2003 to
2004 was approximately 4.8%.
In January 2005 the Committee reviewed Mr. Rupert's 2004 performance. The
Committee considered Mr. Rupert's performance leading the Company through the
labor negotiations with respect to the Company's Niles, Ohio facility as
outstanding. The Committee believes that tremendous value was built with the new
labor contract and an outstanding job was done serving the Company's customers
and our shareholders during the work stoppage. The Committee recognized that
shareholder value as expressed by the company's common stock price increased
approximately 22% during 2004. It was also noted that Mr. Rupert continued to
grow the Company in 2004 as evidenced by the acquisition of Claro Precision and
an 8% increase in sales during the year. The Committee also reviewed the
financial performance of the Company in 2004 and recognized that the Company
suffered a loss for the year. However, the Committee noted that the loss was
primarily attributable to the costs of implementation of Section 404 of
Sarbanes-Oxley, as well as certain non-reoccurring write-offs.
Overall the Committee believes that Mr. Rupert exceeded his predetermined
objectives for 2004 and as a result the Committee award Mr. Rupert a bonus for
2004 of $375,000 which is approximately 86% of his annual salary which is within
the range set by the Pay Statement and above the 60% target. Mr. Rupert's
long-term awards were commensurate with the high end of the Pay Statement and
are reflective of the Committee's belief that Mr. Rupert brought considerable
long-term value to the RTI in 2004 as well as our desire to continue to provide
incentive to the Company's top management to continue to build long-term value.
Craig R. Anderson Neil A. Armstrong Daniel I. Booker
Donald Fusilli Ronald L. Gallatin Charles C. Gedeon
Edith E. Holiday
17
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*
(PERFORMANCE GRAPH)
RTI TIMET S&P 500
--- ----- -------
1999 100 100 100
2000 191 150 91
2001 133 89 80
2002 135 42 62
2003 225 117 80
2004 274 268 89
* Assumes $100 investment on January 1, 1998 and reinvestment of dividends.
RETIREMENT BENEFITS
PENSION PLAN
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 which provides under
normal retirement amounts equal to 1.25% of the average monthly earnings
multiplied by continuous years of service up to and including 30 years; plus
1.35% of the average monthly earnings multiplied by continuous years of service
in excess of 30 years 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
18
pension plans. As of December 31, 2004, Mrs. Hickton had 7 credited years of
service, and Mr. Jacobs 6, Mr. Odle 27, Mr. Berkstresser 5 and Mr. Rupert 36.
Average annual eligible earnings as of December 31, 2004, for purposes of the
pension benefits under the RTI Pension Plan for each of the following named
executive officers are as follows: Mrs. Hickton, $170,000; Mr. Jacobs, $152,800;
Mr. Odle, $268,000; Mr. Berkstresser, $132,600 and Mr. Rupert, $394,000.
AVERAGE CONSECUTIVE
HIGHEST 5 YEARS OF
COMPENSATION IN
10 YEAR PERIOD ANNUAL BENEFITS FOR YEARS OF SERVICE
(PRECEDING ------------------------------------------------------------------------
RETIREMENT) 10 15 20 25 30 35 40
------------------- ------- ------- -------- -------- -------- -------- --------
$100,000 $12,500 $18,750 $ 25,000 $ 31,250 $ 37,500 $ 43,750 $ 50,000
$200,000 25,000 37,500 50,000 62,500 75,000 87,500 100,000
$300,000 37,500 56,250 75,000 93,750 112,500 131,250 150,000
$400,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000
$500,000 62,500 93,750 125,000 156,250 187,500 218,750 250,000
$600,000 75,000 112,500 150,000 187,500 225,000 262,500 300,000
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 HIGHEST 5
YEARS IN 10 YEAR ANNUAL BENEFITS FOR YEARS OF SERVICE
PERIOD (PRECEDING -------------------------------------------------------------------------
RETIREMENT) 10 15 20 25 30 35 40
---------------------- ------- -------- -------- -------- -------- -------- --------
$ 50,000 $ 7,500 $ 11,250 $ 15,000 $ 18,750 $ 22,500 $ 26,250 $ 30,000
$100,000 15,000 22,500 30,000 37,500 45,000 52,500 60,000
$150,000 22,500 33,750 41,250 52,500 67,500 78,750 90,000
$200,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000
$250,000 37,500 56,250 75,000 93,750 112,500 131,250 150,000
$300,000 45,000 67,500 90,000 112,500 135,000 157,500 180,000
$350,000 52,500 78,750 105,000 131,250 157,500 183,750 210,000
$400,000 60,000 90,000 120,000 150,000 180,000 210,000 240,000
$450,000 67,500 101,250 135,000 168,750 202,500 236,250 270,000
$500,000 75,000 112,500 150,000 187,500 225,000 262,500 300,000
RTI has agreed with Mr. Rupert that his continuous service for purposes of the
Supplemental Pension Program shall include his service with USX Corporation and
its predecessor U.S. Steel. As of December 31, 2004, Mrs. Hickton had 7 credited
years of service, and Mr. Jacobs 6, Mr. Odle 27, Mr. Berkstresser 5 and Mr.
Rupert 36. Average annual bonus as of December 31, 2004, for purposes of the
pension benefits under the RTI Supplemental Pension Program for each of the
19
following named executive officers are as follows: Mrs. Hickton, $88,000; Mr.
Jacobs, $60,000; Mr. Odle, $140,000; Mr. Berkstresser, $58,000 and Mr. Rupert,
$330,000.
The benefits shown above are based on a formula whereby the average annual bonus
for the highest five years in the preceding ten year period are multiplied times
a factor. The factor is determined by multiplying 1.5% for each year of
continuous service. Participants in the plan may elect to have the monthly
benefit as a result of the formula paid monthly for life or receive a lump sum
distribution based on the present value of the amounts payable. The plan
provides for surviving spouse benefits at a reduced rate.
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.
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
20
(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.
On December 6, 2003, RTI entered into a letter agreement with Mr. Rupert (the
"2003 Letter") with respect to Mr. Rupert's retirement benefits. The 2003 Letter
provided for an amendment to the RTI Supplemental Pension Program allowing the
benefits payable to Mr. Rupert under the RTI Supplemental Pension Program to be
calculated in a manner that includes Mr. Rupert's service with USX Corporation
and its predecessor U.S. Steel, and with RTI. This amendment was effected in
January 2004. RTI's obligations toward such benefit shall continue
notwithstanding any termination of the RTI Supplemental Pension Program. The
2003 Letter superceded a previous letter agreement with respect to Mr. Rupert's
benefits dated April 13, 1992, between Mr. Rupert and RMI Titanium Company,
signed by L.F. Gieg, Jr. In addition, the 2003 Letter provides that Mr. Rupert's
pension under the RTI Pension Plan is calculated based solely upon the terms of
the RTI Pension Plan, using Mr. Rupert's combined years of service with the USX
and RTI , reduced by the amount of any retirement benefits payable under the
U.S. Steel Pension Plan. Mr. Rupert further agreed in the 2003 Letter that RTI
will not have an obligation to make up any difference in (a) any pension benefit
Mr. Rupert would have received from the U.S. Steel Pension Plan had Mr. Rupert
remained employed by USX and (b) the actual combined pension benefit Mr. Rupert
will receive from the U.S. Steel Plan and RTI. Finally, in the event that Mr.
Rupert fails to receive from the U.S. Steel pension plan the pension benefits
owed to him (estimated to be approximately $33,436 per year), after using
reasonable efforts to collect his benefits through the U.S. Steel pension plan's
claims and appeals procedures, RTI agrees under the 2003 Letter to guarantee the
full payment of such benefits, and Mr. Rupert agrees to cooperate with RTI in
connection with any claim or action for reimbursement of all or any portion of
such payments made under such guarantee. The effects of the 2003 Letter are
reflected in the description of Mr. Rupert's pension benefits set forth above.
21
OTHER INFORMATION
CORPORATE GOVERNANCE AND BUSINESS ETHICS
Our Board of Directors is committed to maintaining sound policies relating
to corporate governance and business ethics throughout the entire RTI
organization. Copies of our Corporate Governance Guidelines as well as our Code
of Ethical Business Conduct, applicable to all directors, officers and employees
of RTI, are available on our website at www.rtiintl.com or in print by
submitting a written request to the corporate Secretary at RTI International
Metals, Inc., 1000 Warren Avenue, Niles OH 44446 for a reasonable charge limited
to our cost of providing such copies.
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, 2005, 22,600,497 shares were outstanding. 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 16, 2005. 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 March 1, 2006.
Shareholders wishing to recommend candidates to serve as directors for the
consideration of the Nominating/Corporate Governance Committee should send such
recommendations to the corporate Secretary, RTI International Metals, Inc., 1000
Warren Avenue, Niles OH 44446.
SHAREHOLDER AND OTHER INTERESTED PARTY COMMUNICATIONS
Shareholders, and any other interested party, who wishes 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
2004 Annual Meeting.
22
FORM 10-K ANNUAL REPORT
A copy of RTI's Annual Report on Form 10-K for the fiscal year ended December
31, 2004, as filed with the SEC, is available to shareholders. A shareholder may
obtain a copy of the Form 10-K free of charge on RTI's website (www.rtiintl.com)
or on the SEC's website (www.sec.gov) and a copy of any exhibits thereto upon
payment of a reasonable charge limited to RTI's costs of providing such copies
by writing to the corporate Secretary, 1000 Warren Avenue, Niles, Ohio 44446.
By Order of the Board of Directors
DAWNE S. HICKTON
Secretary
Dated: April 15, 2005
23
[RTI LOGO]
c/o National City Bank
Corporate Trust Operations
Locator 5352
P.O. Box 92301
Cleveland, OH 44101-4301
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VOTE BY TELEPHONE
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Have your proxy card available when you call
TOLL-FREE 1-888-693-8683 using a touch-tone phone and
follow the simple instructions to record your vote.
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VOTE BY INTERNET
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Have your proxy card available when you access the
website WWW.CESVOTE.COM and follow the simple
instructions to record your vote.
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VOTE BY MAIL
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Please mark, sign and date your proxy card and return
it in the POSTAGE-PAID ENVELOPE provided or return it
to: National City Bank, P.O. Box 535300, Pittsburgh
PA 15253-9837.
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VOTE BY TELEPHONE VOTE BY INTERNET VOTE BY MAIL
Call Toll-Free using a Access the Website and Return your proxy
touch-tone telephone: cast your vote: in the postage-paid
1-888-693-8683 WWW.CESVOTE.COM envelope provided
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VOTE 24 HOURS A DAY, 7 DAYS A WEEK!
YOUR TELEPHONE OR INTERNET VOTE MUST BE RECEIVED BY
6:00 A.M. EASTERN DAYLIGHT TIME ON MAY 6, 2005
TO BE COUNTED IN THE FINAL TABULATION.
IF YOU VOTE BY TELEPHONE OR OVER THE INTERNET, DO NOT MAIL YOUR PROXY CARD.
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PROXY CARD MUST BE SIGNED AND DATED BELOW.
- PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING. -
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RTI INTERNATIONAL METALS, INC.
1000 WARREN AVENUE, NILES, OHIO 44446
PROXY FOR 2005 ANNUAL MEETING
SOLICITED ON BEHALF OF THE DIRECTORS OF RTI INTERNATIONAL
METALS, INC.
[RTI LOGO]
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: , 2005
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Signature(s)
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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.
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Annual Meeting of
Shareholders, you can be sure your shares are represented at the
meeting by promptly returning your proxy in the enclosed
envelope.
PROXY CARD MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
-- PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING. --
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RTI INTERNATIONAL METALS, INC. PROXY
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The undersigned hereby appoints ROBERT M. HERNANDEZ, TIMOTHY G. RUPERT AND DAWNE
S. HICKTON, 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 May 6, 2005, 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 Directors: 1. Craig R. Andersson 2. Neil A. Armstrong 3. Daniel I. Booker
4. Donald P. Fusilli 5. Ronald L. Gallatin 6. Charles C. Gedeon
7. Robert M. Hernandez 8. Edith E. Holiday 9. John H. Odle
10. Timothy G. Rupert
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed above
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY 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 registered accountants for 2005.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE COMPLETE, DATE AND SIGN THE REVERSE SIDE.