SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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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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Payment of filing fee (Check the appropriate box):
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(4) Date Filed:
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RTI LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY
STATEMENT
APRIL 25, 2003
2:00 P.M. EASTERN TIME
7440 South Avenue
Boardman, Ohio
RTI LOGO
1000 Warren Avenue
Niles, Ohio 44446
April 4, 2003
Dear RTI Shareholder:
You are cordially invited to attend our 2003 Annual Meeting of Shareholders on
April 25, 2003, at Mr. Anthony's, 7440 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 independent accountants.
Wesley W. von Schack, a director since the Company became publicly traded in
1990, has concluded not to stand for re-election due to the press of his other
duties. His wise counsel will be missed.
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 2003 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 -- ELECTION OF INDEPENDENT ACCOUNTANTS.............. 9
Security Ownership........................................................ 11
Executive Compensation.................................................... 12
Stock Performance Graph................................................... 15
Pension Benefits.......................................................... 15
Employment Agreements..................................................... 16
Other Information......................................................... 18
Audit Committee Charter................................................... 19
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
RTI INTERNATIONAL METALS, INC.
TIME:
2:00 p.m., Eastern Time
DATE:
April 25, 2003
PLACE:
Mr. Anthony's
7440 South Avenue
Boardman, Ohio
PURPOSE:
- Elect directors
- Elect independent accountants
- Conduct other business if properly raised
Only shareholders of record on February 28, 2003 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 4, 2003
3
PROXY STATEMENT
GENERAL INFORMATION
--------------------------------------------------------------------------------
- WHO MAY VOTE?
Shareholders of RTI as of the close of business on the record date, February 28,
2003, 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 and
the election of our independent accountants for 2003.
- VOTING RECOMMENDATIONS
The Board recommends that you vote FOR each of the nominees.
The Audit Committee recommends that you vote FOR PricewaterhouseCoopers LLP as
our independent accountants for 2003.
- 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 two 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.
- WHAT VOTES ARE NEEDED?
The director candidates receiving the most votes will be elected to the Board.
Election of the independent accountants requires the favorable vote of a
majority of the votes cast. Only votes for or against a 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.
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 met six
times during 2002.
The Nominating/Corporate Governance Committee will 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 2002 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 2002, the
Executive Committee held no meetings.
AUDIT COMMITTEE
The members of the Audit Committee, all of whom are independent directors, are
Wesley W. von Schack (Chairman), Craig R. Andersson, Neil A. Armstrong, Daniel
I. Booker, (until October 26, 2002), Ronald L. Gallatin, Charles C. Gedeon and
Edith E. Holiday (until October 26, 2002). The Committee has adopted, and the
Board has approved, the Committee charter attached as Exhibit I hereto.
The Audit Committee assists the Board in overseeing RTI's financial reporting
process and systems of internal accounting controls and 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 six meetings in 2002.
HUMAN RESOURCES COMMITTEE
The members of the Human Resources Committee, all of whom are non-employee
directors, are Craig R. Andersson, Neil A. Armstrong, Daniel I. Booker, Ronald
L. Gallatin, Charles C. Gedeon, Edith E. Holiday and Wesley W. von Schack.
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 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 Human Resources Committee held three meetings in 2002.
NOMINATING/CORPORATE GOVERNANCE COMMITTEE
The members of the Nominating/Corporate Governance Committee are Robert M.
Hernandez (Chairman), Daniel I. Booker 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
5
Committee is also responsible for developing and recommending to the Board
corporate governance principles applicable to RTI as well as their periodic
review.
The Nominating/Corporate Governance Committee held two meetings in 2002.
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. Mr. Hernandez has waived payment to him of a
retainer as Chairman of the Nominating/Corporate Governance Committee. One-half
of the annual retainer payable to non-employee directors and to non-employee
committee chairmen is paid in RTI common stock. In 2002, the Common Stock
utilized for this purpose and for the Chairman's annual retainer was based on
$9.865, the market value of the stock on August 1, 2002.
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 25, 2002, each director participating in the Plan was granted a stock
option for 3,000 shares at an exercise price of $9.575 per share and on January
31, 2003, a stock option for 3,000 shares at an exercise price of $10.22 per
share.
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 nine of the ten current directors for election. Mr. von
Schack concluded not to stand for re-election. Consequently the Board has set
the number of directors at nine as of the Annual Meeting. Each nominee for
election has previously been elected by the shareholders. Of the nine
individuals who are nominees for election, two are current RTI officers and the
remaining seven are independent 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.
NOMINEES FOR DIRECTOR
CRAIG R. ANDERSSON Age: 65
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: 72
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: 55
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. 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 Civic Light
Opera and of the Pittsburgh Regional Alliance and is active in other community
and professional organizations.
7
RONALD L. GALLATIN Age: 57
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: 62
EXECUTIVE VICE PRESIDENT-RAW MATERIALS Director since 1991
AND TRANSPORTATION
UNITED STATES STEEL CORPORATION
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 assumed his current position in
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: 58
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; a director and Chairman of the Executive Committee of ACE Limited; a
director of Eastman Chemical Company; a trustee of the University of Pittsburgh;
and a director of UPMC Health Systems.
EDITH E. HOLIDAY Age: 51
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;
Hercules Incorporated 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, II and III Trusts. She has BS and JD
degrees from the University of Florida.
JOHN H. ODLE Age: 60
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 25 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.
8
TIMOTHY G. RUPERT Age: 56
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
President of the International Titanium Association, a director of Columbus
Insurance Ltd., and a director of the Youngstown/Warren Regional Chamber of
Commerce.
PROPOSAL NO. 2 -- ELECTION OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP has served as independent accountants for RTI and its
predecessors for a number of years. For 2002, 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 internal audit and 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.
AUDIT FEES
The aggregate fees billed for professional services rendered for the audit of
RTI's annual financial statements for 2002 and review of financial statements in
RTI's Form 10-Q Reports in 2002 were $310,041.
ALL OTHER FEES
The aggregate fees billed for professional services rendered by
PricewaterhouseCoopers LLP during 2002 to RTI and its subsidiaries other than
fees disclosed above were $675,759. Included in other fees was approximately
$505,951 related to tax services and $94,048 related to internal audit services.
Beginning August 1, 2002, PricewaterhouseCoopers no longer provided internal
audit services to RTI. RTI has retained KPMG LLP to provide these services.
INDEPENDENT STATUS OF PRICEWATERHOUSECOOPERS LLP
The Audit Committee has considered whether the provision by
PricewaterhouseCoopers LLP of the professional services covered by the
above-described billings (other than those described under Audit Fees) was
compatible with the maintenance by PricewaterhouseCoopers LLP of its independent
status and has determined that it was.
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.
9
THE AUDIT COMMITTEE RECOMMENDS A VOTE FOR THE ELECTION OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS
FOR RTI FOR 2003.
AUDIT COMMITTEE REPORT
We have reviewed and discussed RTI's 2002 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.
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,
2002 for filing with the Securities and Exchange Commission.
Wesley W. von Schack (Chairman) Neil A. Armstrong
Craig R. Andersson Ronald L. Gallatin
Charles C. Gedeon
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS (TO BE UPDATED)
To the knowledge of RTI, as of February 28, 2003, 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
---------------- -------------------- -----
AXA Financial, Inc.............................. 2,266,541(1) 10.9%
1290 Avenue of the Americas
New York, NY 10104
ICM Asset Management, Inc....................... 2,021,117(2) 9.7%
601 W. Main Ave., Ste. 600
Spokane, WA 99201
Salomon Smith Barney Holdings Inc............... 1,859,218(3) 8.9%
388 Greenwich Street
New York, NY 10013
Smith Barney Fund Management LLC
125 Broad Street
New York, NY 10003
Citigroup Inc.
399 Park Avenue
New York, NY 10043
Dimensional Fund Advisors, Inc.................. 1,614,350(4) 7.8%
1299 Ocean Ave, 11th Floor
Santa Monica, CA 90401
Fuller & Thaler Asset Management, Inc. ......... 1,093,200(5) 5.3%
411 Borel Avenue, Suite 402
San Mateo, CA 94402
---------
(1) Based on Schedule 13G dated February 12, 2003, which indicates that
AXA had sole voting power over 1,985,586 shares, shared voting power
over 22,400 shares, sole dispositive power over 2,266,541 shares and
shared dispositive power over no shares.
(2) Based on Schedule 13G dated January 30, 2003, which indicates ICM
had sole voting power over no shares, shared voting power over
1,147,471 shares, sole dispositive power over no shares and shared
dispositive power over 2,021,117 shares.
(3) Based on Schedule 13G dated January 23, 2003, 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 1,859,218 shares.
(4) Based on Schedule 13G dated February 3, 2003, which indicates that
Dimensional Fund had sole voting power and sole dispositive power
over 1,614,350 shares and shared voting power and shared dispositive
power over no shares.
(5) Based on Schedule 13G filed February 13, 2003, which indicates
Fuller & Thaler had sole voting power over 958,500 shares, shared
voting power over no shares, sole dispositive power over 1,093,200
shares and shared dispositive power over no shares.
11
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 17, 2003, 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)(2) SHARES(3)
---- ------------ ---------
Craig R. Andersson........................... 58,300 --
Neil A. Armstrong............................ 21,122 --
Gordon L. Berkstresser....................... 25,583
Daniel I. Booker............................. 15,293 --
Ronald L. Gallatin........................... 51,000 --
Charles C. Gedeon............................ 8,615 --
Robert M. Hernandez.......................... 53,625 --
Dawne S. Hickton............................. 73,659 --
Edith E. Holiday............................. 6,395 --
Lawrence W. Jacobs........................... 63,604 --
John H. Odle................................. 212,996 1.0%
Timothy G. Rupert............................ 281,111 1.4%
Wesley W. von Schack......................... 18,051 --
-------
All directors and executive officers
as a group (13 persons).................... 889,354 4.3%
---------
(1) Includes 35,500 shares, 13,000 shares, 26,000 shares, 92,333 shares and
109,333 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 8,000 shares which the eight non-employee directors participating
in the 2002 Non-Employee Director Stock Option Plan had the right to acquire
within 60 days under the 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 2002. 2001, and 2000.
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........... 2002 $400,000 $400,000 -- $210,650 35,000 -- --
President & 2001 370,000 325,000 -- 236,720 25,000 -- --
Chief Executive Officer 2000 350,000 250,000 -- 171,856 30,060 -- --
John H. Odle................ 2002 270,000 160,000 -- 95,750 28,000 -- --
Executive Vice President 2001 265,000 135,000 -- 94,688 23,000 -- --
2000 250,000 160,000 -- 80,443 25,000 -- --
Gordon L. Berkstresser...... 2002 133,000 75,000 -- 19,150 13,000 -- --
Vice President & 2001 125,000 50,000 -- 23,672 10,000 -- --
Controller 2000 120,000 50,000 -- 21,939 7,000 -- --
Dawne S. Hickton............ 2002 170,000 110,000 -- 47,875 20,000 -- --
Vice President & General 2001 160,000 75,000 -- 47,344 12,000 -- --
Counsel 2000 150,000 70,000 -- 25,596 12,000 -- --
Lawrence W. Jacobs.......... 2002 154,000 80,000 -- 23,938 15,000 -- --
Vice President & 2001 145,000 55,000 -- 23,672 10,000 -- --
Chief Financial Officer 2000 140,000 50,000 -- 21,939 10,000 -- --
---------
12
The following tables set forth information with respect to stock option grants
and exercises in 2002 and December 31, 2002 stock option values:
STOCK OPTION GRANTS IN 2002
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM
GRANTED EMPLOYEES BASE PRICE EXPIRATION -------------------------
NAME (SHARES) IN 2002 ($/SH) DATE 5% 10%
---- -------- ---------- ------------ ---------- ----------- -----------
Timothy G. Rupert.................... 35,000 16.4% $9.575 1/24/12 $210,758 534,103
John H. Odle......................... 28,000 13.1 9.575 1/24/12 168,607 427,282
Gordon L. Berkstresser............... 13,000 6.1 9.575 1/24/12 78,282 198,381
Dawne S. Hickton..................... 20,000 9.3 9.575 1/24/12 120,433 305,202
Lawrence W. Jacobs................... 15,000 7.0 9.575 1/24/12 90,325 228,901
AGGREGATED STOCK OPTION EXERCISES IN 2002
AND DECEMBER 31, 2002 STOCK OPTION VALUES
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES DECEMBER 31, 2002 OPTIONS AT
ACQUIRED ON (SHARES)(1) DECEMBER 31, 2002
EXERCISE VALUE --------------------------- ---------------------------
NAME (SHARES) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Timothy G. Rupert.............. 0 0 109,333 61,667 $201,960 $47,595
John H. Odle................... 0 0 92,333 51,667 113,693 39,014
Gordon L. Berkstresser......... 0 0 13,000 22,000 13,683 13,787
Dawne S. Hickton............... 0 0 35,500 32,000 22,536 22,368
Lawrence W. Jacobs............. 0 0 26,000 25,000 18,781 17,714
---------
(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.
13
Market conditions in 2001 were improved somewhat over the previous year
until the events of September 11 severely impacted them. Despite the low
operating rates and level of business at RTI's facilities, RTI was able to
generate improved net income over 2000. In 2002, despite the continued decline
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 2001 against their objectives,
RTI's operating and financial performance, cash flow and return on assets and
shareholder return, in January 2002 the Committee approved the salary increases
and restricted stock and stock option awards shown in the Summary Compensation
Table. These actions were in accord with the Pay Philosophy and Guiding
Principles Statement.
In January 2003, the officers' performance was again evaluated, utilizing
the factors mentioned above. Performance was excellent, given the market
environment. Net income, cash flow, return on assets and shareholder return were
all better than the previous year. The Committee believed the performance
justified the bonuses shown in the Compensation Table. The Committee also
approved compensation increases and restricted stock and stock option grants to
the officers.
The procedures described above were followed in January 2002 and January
2003 in determining the CEO's salary increase, grants of restricted stock and
stock options and bonus for 2002. The CEO met all but one of his objectives for
2001, cash flow and return on assets were above plan, and although income was
below plan, the plan was based on a more robust business activity toward the end
of the year than actually occurred in the wake of September 11. Nonetheless
profit was better than in 2000. The Committee also considered comparative data
in determining the CEO's salary increase (as well as those of the other
officers) which suggested that RTI officers' salaries were below their peers.
Considering the low operating levels, the Committee deemed the CEO's performance
exemplary. The bonus determination in January, 2003 reflects the CEO's meeting
all of his objectives. RTI's excellent performance in 2002 in a very difficult
environment, and the Committee's view that the CEO had done an exceptional job.
Craig R. Andersson Neil A. Armstrong Daniel I. Booker
Ronald L. Gallatin Charles C. Gedeon Edith E. Holiday
Wesley W. von Schack
14
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 a titanium industry group index consisting of RTI,
Oregon Metallurgical Corporation (until March 15, 1998, the last date its stock
was publicly traded) and Timet Corporation.
COMPARISON OF CUMULATIVE TOTAL RETURN
RTI, INDUSTRY PEER GROUP AND S&P 500*
S&P 500 INDUSTRY RTI/RMI
------- -------- -------
1997 100 100 100
1998 129 50 70
1999 156 27 37
2000 141 51 71
2001 125 36 49
2002 97 40 50
* Assumes $100 investment on January 1, 1997 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, 2002, Mrs. Hickton had 5
credited years of service, and Mr. Jacobs 4, Mr. Odle 25, Mr. Berkstresser 3 and
Mr. Rupert 34.
15
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
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.
16
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.
17
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 February 28, 2003, 20,829,665 shares were outstanding and entitled to vote.
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 shareholder proposals for next year's meeting is December 5,
2003.
By Order of the Board of Directors
RICHARD M. HAYS
Secretary
Dated: April 4, 2003
18
EXHIBIT I
RTI INTERNATIONAL METALS, INC.
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee is appointed by the Board to assist the Board in overseeing
the financial reporting process and systems of internal accounting controls and
monitoring the compliance by the Company with legal and regulatory requirements,
and the independence and performance of the Company's internal auditors and
independent accountants.
In carrying out these audit oversight responsibilities, the Audit Committee is
not providing expert or special assurance as to the Company's financial
statements or certification as to the independent accountants' work.
COMPOSITION
The members of the Audit Committee shall be appointed annually by the Board and
shall consist of at least three members of the Board who meet the independence
and experience requirements of the New York Stock Exchange and the Securities
and Exchange Commission. Accordingly, all of the members will be directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company,
2. Who receive no compensation from the Company other than directors' fees,
and
3. Who are financially literate or who become financially literate within a
reasonable period of time after appointment to the Audit Committee. In
addition, at least one member of the Audit Committee should be a financial
expert as determined by the Board or if no member is such a financial
expert, the Company's Annual Report will explain why.
The Audit Committee shall meet, whether in person or telephonically, at least
four times each year. The Audit Committee shall make regular reports to the
Board.
The Audit Committee shall have unrestricted access to members of management and
other employees as well as the relevant information to carry out its
responsibilities.
RESPONSIBILITIES
1. Review and assess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval.
2. Review the annual audited financial statements with management and the
independent accountants prior to the filing by the Company of its annual
report on Form 10-K, including significant financial reporting matters
related thereto.
3. Review with management and the independent accountants the Company's
quarterly financial statements prior to the filing by the Company of its
reports on Form 10-Q.
4. Assist Board oversight of the integrity and completeness of the Company's
financial statements.
5. Discuss generally earnings press releases as well as financial information
and earnings guidance provided to analysts and ratings agencies.
6. Review with management the Company's major financial risk exposures and
the steps management has taken to monitor and control such exposures.
7. Review significant issues with respect to the Company's accounting
principles and practices as suggested by the independent accountants,
internal auditors or management.
8. Review with the independent accountants any audit problems or difficulties
and management's response to them.
9. Approve hiring of employees or former employees of the independent
accountants.
19
10. Exercise sole authority (subject to shareholder ratification) in the
appointment of the independent accountants, which firm reports directly to
the Audit Committee.
11. Meet with the independent accountants prior to the annual audit to review
the planning and scope of the audit. Exercise sole authority to approve
the terms of the audit engagement.
12. Exercise sole authority to approve the fees to be paid to the independent
accountants.
13. Approve all non-audit relationships with the independent accountants.
14. Receive periodic reports no less frequently than annually from the
independent accountants regarding all relationships between the
independent accountants and the Company, and the accountant's
independence, discuss such reports with the accountants, and if so
determined by the Audit Committee, recommend that the Board take
appropriate action to satisfy itself to the independence of the
accountants.
15. Obtain and review, at least annually, a report by the independent
accountants describing: (a) their internal quality control procedures; and
(b) any material issues raised by (i) the most recent internal quality
control review (ii) peer review of the firm, or (iii) any inquiry or
investigation by governmental or professional authorities within the
preceding five years concerning any independent audits by the firm, and
any steps taken to address such issues.
16. Evaluate together with the Board the performance and independence of the
independent accountants and, if so determined in the Audit Committee's
sole authority, replace the independent accountants.
17. Discuss with the independent accountants the matters required to be
discussed by Statement on Auditing Standards No. 61, as amended, relating
to the conduct of the annual audit and quarterly reviews.
18. Exercise sole authority in the appointment of the internal auditors, which
firm is ultimately accountable to the Audit Committee and the Board, and
in approving the fees to be paid to the internal auditors.
19. Review annually with management, and the independent accountants if deemed
appropriate by the Audit Committee, the internal audit budget and audit
plan.
20. Review with the internal auditors any audit problems or difficulties and
management's response to them.
21. Assist Board oversight of the internal auditors' responsibilities,
performance, and the adequacy of their resources to carry out their
responsibilities.
22. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
23. Assist Board oversight of, and review with the Company's counsel, legal
matters that may have a material impact on the financial statements and
any material reports or inquiries received from regulators or governmental
agencies.
24. Meet separately at each meeting with management, with the internal
auditors and with the independent accountants.
25. Establish procedures for handling complaints received by the Company
regarding accounting, internal accounting controls, or auditing matters
and the confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters.
26. As appropriate, obtain advice from outside legal, accounting or other
advisors.
20
COMMITTEE PERFORMANCE EVALUATION
The Committee shall annually conduct an evaluation of its performance in
fulfilling its responsibilities.
MEETINGS
A majority of Audit Committee members shall constitute a quorum for the
transaction of business. The action of a majority of those present at a meeting
at which a quorum is attained, shall be the act of the Audit Committee.
21
RTI INTERNATIONAL METALS, INC.
C/O CORPORATE TRUST SERVICES
MAIL DROP 10AT66--4129
38 FOUNTAIN SQUARE PLAZA
CINCINNATI, OH 45202
NAME APPEARS
FOLD AND DETACH HERE
--------------------------------------------------------------------------------
[X] PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE
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.
NAME APPEARS ____________________________________________ , 2003
____________________________________________________
Signature of Shareholder
____________________________________________________
Signature of Shareholder
Please sign EXACTLY as your name appears hereon.
When signing as fiduciary or corporate officer, give
full title. Joint owners should both sign.
RTI INTERNATIONAL METALS, INC.
1000 WARREN AVENUE, NILES, OHIO 44446
PROXY FOR 2003 ANNUAL MEETING
SOLICITED ON BEHALF OF THE DIRECTORS OF RTI INTERNATIONAL METALS, INC.
The undersigned hereby appoints ROBERT M. HERNANDEZ, TIMOTHY G. RUPERT,
JOHN H. ODLE 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 25, 2003, and any
adjournments thereof, upon such matters as may properly come before the meeting.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THIS PROXY CARD AND TO
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
1. Election of nine (9) Directors [ ] FOR all nominees [ ] WITHHOLD from all
01 Craig R. Andersson; 02 Neil A. Armstrong; 03 Daniel I. Booker; 04 Ronald L. Gallatin; 05 Charles C. Gedeon;
06 Robert M. Hernandez, 07 Edith E. Holiday, 08 John H. Odle and 09 Timothy G. Rupert
INSTRUCTION: To withhold authority to vote for any individual nominee, write the nominees name in the space below.
_________________________________________________________________________________________________________________
2. Election of PricewaterhouseCoopers LLP as independent accountants for 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE COMPLETE, DATE AND SIGN THE REVERSE SIDE.