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OUR CORPORATE
GOVERNANCE |
BOARD INFORMATION
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Board Committee
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Role and Primary Responsibilities
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Technology
Committee
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Chair:
John D. Turner
Members:
Carolyn Corvi
Barbara S. Jeremiah
David J. Morehouse
Louis J. Thomas
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Primarily responsible for reviewing changing technologies and
evaluating how they affect ATI and its technical capabilities and competitive position.
Considers the impact of technologies on the
well-being of the Company.
Assesses ATIs technical capabilities in relation to corporate strategies and plans.
Makes recommendations to the Board concerning
priorities, asset deployment, and other matters relating to the Companys technical activities.
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BOARDS ROLE IN RISK OVERSIGHT
The Board, as a whole, actively oversees the risk management of the Company. Enterprise risksthe specific financial, operational, business and strategic risks
that the Company faces, whether internal or externalare identified and prioritized by the Board and management together, and then each specific risk is assigned to the full Board or a Board committee for oversight.
Board/Committee Primary Areas of Risk Oversight
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Full Board
Strategic and business risks, such as those relating to our products, markets,
and capital investments, are overseen by the entire Board.
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Strategic, financial, operational and execution risk associated with the annual and long-term business plans, including capital investments, asset allocation, acquisitions or divestitures, regulatory and environmental
compliance.
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External risks associated with cybersecurity and other major safety and security matters, supply chain, and global markets.
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Audit
Committee
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Finance
Committee
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Nominating
and Governance
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Personnel and
Compensation
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Technology
Committee
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The Audit Committee and the Finance Committee oversee management
of market and operational risks that could have a financial impact, such as those relating to internal controls, liquidity or raw material availability.
Risks associatedwith financial matters, particularly financial reporting, taxes,
accounting, disclosure and internal control.
Risks associatedwith legal matters and the ethics compliance program.
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The Audit Committee and the Finance Committee oversee management
of market and operational risks that could have a financial impact, such as those relating to internal controls, liquidity or raw material availability.
Risks associatedwith liquidity, financial markets, pension plans (including
investment performance, asset allocation and funded status), currency and interest rate exposures, and insurance strategies.
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Committee
Manages the risks associated with governance issues, such as the independence of the Board. The Committee also periodically evaluates whether the identified risks are
assigned to the appropriate Board committee (or to the Board) for oversight.
Risks associatedwith Board effectiveness and organization, corporate governance
matters, director compensation, and director succession planning.
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Committee
Manages the risks associated with personnel and compensation issues, such as the Companys executive compensation plans and practices.
Risks associatedwith employee relations, benefit plans, management development and
training, and executive compensation matters.
In conjunctionwith the Board, risks associated key executive succession.
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Manages the risks associated with changing technologies and their
impact on ATIs technical capabilities and competitive position.
Risks associatedwith technology development, changes and disruption, product
development, and competitor changes.
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Management regularly reports to the Board or the relevant Committee on actions that the Company is taking to manage these risks. The
Board and management periodically review, evaluate and assess the risks relevant to the Company.
ATI
2017 Proxy Statement
/
25
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OUR CORPORATE
GOVERNANCE |
BOARD INFORMATION
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PROCESS FOR COMMUNICATING WITH
DIRECTORS
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We maintain a process for stockholders and interested parties to communicate with the Board, the Lead Independent Director, or any individual
director. ATI stockholders or interested parties who want to communicate with the Board, the Lead Independent Director, or any individual director can write to:
Lead Independent Director
c/o Corporate Secretary
Allegheny Technologies Incorporated
1000 Six PPG Place
Pittsburgh, PA 15222-5479
or call
1-877-787-9761
(toll free).
Your letter or message should indicate whether you are an ATI stockholder.
Depending on the subject matter, the Lead Independent Director and/or the Corporate Secretary
will:
forward the communication to the director or directors to whom it is
addressed;
attempt to handle the inquiry directly when, for example, it is a request for
information about the Company or it is a stock-related matter; or
not forward the communication if it is primarily commercial in nature or it
relates to an improper or irrelevant topic.
At each Board meeting, the Corporate Secretary
presents a summary of all communications received since the last meeting that were not forwarded and makes those communications available to the directors on request.
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Director Compensation
BOARD OF DIRECTORS ROLE AND COMPENSATION
Non-employee
directors receive compensation for their service that is designed to fairly compensate them for their board responsibilities and align their interests with our stockholders. The Nominating and
Governance Committee periodically reviews and evaluates our
non-employee
director compensation program to ensure that it is competitive with ATIs industry peers and best practices and serves the purposes
of attracting and retaining high quality directors. The Nominating and Governance Committee uses an independent consultant, Meridian Compensation Partners LLC, which is the same consultant retained by the Personnel and Compensation Committee, to
provide market and comparison data and information on current developments and practices in director compensation. ATIs
non-employee
director compensation program is competitive and market-based.
DIRECTOR STOCK OWNERSHIP GUIDELINES
The Board
encourages directors to obtain a meaningful stock ownership interest in ATI. Under the stock ownership guidelines applicable to all
non-employee
directors, each
non-employee
director is expected to own at least 10,000 shares of ATI Common Stock within five years of his or her initial election to the Board. Furthermore, directors are required to retain
one-third
of any awarded stock until compliance with the guidelines is achieved. Each of the directors was in compliance with the guidelines as of December 31, 2016 or is reasonably proceeding with compliance
as of the applicable five-year anniversary of his or her initial election to the Board.
26
ATI
2017 Proxy Statement
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OUR CORPORATE
GOVERNANCE |
DIRECTOR COMPENSATION
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Elements of Director Compensation
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Pay Component
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2016 Compensation
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Annual Retainer
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$225,000
$125,000 Cash
$100,000 Restricted Stock Value
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Lead Director Annual
Retainer
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$30,000
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Committee Chair
Retainers
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Audit and Personnel and Compensation Committees
$15,000
Finance, Nominating and Governance and Technology Committees
$10,000
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Board service travel expenses are also paid by the
Company
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In 2004, the Board froze and discontinued the Companys Fee Continuation Plan for
Non-Employee
Directors. Under the frozen plan, an amount equal to the annual retainer fee in effect for 2004 (which was $28,000) will be paid annually to each member of the Board as of December 31, 2004,
following the termination of his or her service as a Board member. In each case, the fee will be paid for each year of the directors credited service as a director (as defined in the Plan) up to a maximum of ten years.
2016
Non-Employee
Director Compensation
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Name(1)
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Fees Earned
Or Paid
In Cash
($)
(2)
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Stock
Awards
($)
(3)
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All Other
Compensation
($)
(4)
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Total
($)
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C. Corvi
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125,000
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93,911
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2,674
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221,585
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D. C. Creel
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165,000
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93,911
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2,674
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261,585
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J. C. Diggs
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135,000
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93,911
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2,674
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231,585
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J. B. Harvey
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125,000
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93,911
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2,674
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221,585
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B. S. Jeremiah
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125,000
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93,911
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2,674
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221,585
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D. J. Morehouse
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125,000
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93,911
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1,669
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220,580
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J. R. Pipski
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140,000
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93,911
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2,674
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236,585
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J. E. Rohr
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140,000
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93,911
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2,674
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236,585
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L. J. Thomas
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125,000
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93,911
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2,674
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221,585
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J. D. Turner
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135,000
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93,911
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2,674
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231,585
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Non-employee
directors are not granted option awards or
non-equity
incentive plan compensation awards, and do not have company pensions or
non-qualified
deferred compensation earnings.
(1)
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Richard J. Harshman, Chairman, President and Chief Executive Officer, does not receive any compensation for his service on the Board.
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(2)
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This column reflects annual retainer fees, including committee chair and Lead Independent Director fees, as well as Board and committee meeting fees paid to the directors.
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(3)
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This column reflects the aggregate grant date fair value, determined in accordance with FASB ASC Topic 718, of the restricted stock awards granted to directors under the Companys
Non-Employee
Director Restricted Stock Program. Shares vest on the third anniversary of the date of grant, or earlier upon retirement, death or change of control, and expense is recognized over the vesting
period. A discussion of the relevant assumptions made in the valuations may be found in Note 14 to the financial statements in the Companys Annual Report on Form
10-K
for the fiscal year ended
December 31, 2016.
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(4)
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Amounts in the column consist of dividends paid on directors restricted stock. Grants of restricted stock to
non-employee
directors accumulate stock dividends during the
restriction period, and directors are entitled to receive dividends paid on the restricted shares only when the restrictions lapse.
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ATI
2017 Proxy Statement
/
27
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OUR CORPORATE
GOVERNANCE |
RELATED PARTIES AND STOCK OWNERSHIP MATTERS
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Related Party Transactions
The Board of Directors has adopted a written Statement of Policy with respect to Related Party Transactions. The Policy applies to transactions or arrangements between
ATI and a related person (namely directors, executive officers, and their immediate family members, and 5% stockholders) with a direct or indirect material interest in the transaction, including transactions requiring disclosure under
Item 404(a) of Regulation
S-K.
Under the Policy, no related party transaction may occur unless it is approved or
ratified by the Audit Committee or approved by the disinterested members of the Board of Directors. The Audit Committee is primarily responsible for approving and ratifying related party transactions, and in doing so, will consider all matters it
deems appropriate, including the dollar value of the proposed transaction, the relative benefits to be obtained and obligations to be incurred by the Company, and whether the terms of the transaction are comparable to those available to third
parties.
Compensation Committee Interlocks and Insider Participation
No member of the Personnel and Compensation Committee is an officer or employee of the Company. No member of the Committee has a current or prior relationship, and none
of our executive officers have a relationship, to any other company that is required to be described under the SEC rules relating to disclosure of executive compensation.
Stock Ownership Information
Section 16(a) Beneficial Ownership Reporting Compliance
The rules of the SEC require the Company to disclose late filings of reports of stock ownership (and changes in stock ownership) by its directors and executive officers
and by persons who beneficially own more than ten percent of a registered class of the Companys equity securities. Based upon a review of filings with the SEC and written representations, the Company believes that, in 2016, all such persons
complied with the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934 on a timely basis.
28
ATI
2017 Proxy Statement
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STOCK OWNERSHIP
INFORMATION |
STOCK OWNERSHIP OF FIVE PERCENT OWNERS
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Five Percent Owners of Common Stock
The entities listed in the following table are beneficial owners of five percent or more of ATI Common Stock as of December 31, 2016, based on information filed
with the SEC. In general, beneficial ownership includes those shares a person has the power to vote or transfer currently, and shares such person has the right to acquire within 60 days.
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Name and Address of Beneficial Owner
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Amount and Nature of
Beneficial Ownership
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Percentage
Of Class
(1)
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BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
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10,952,832
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(2)
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10.06%
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The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355
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8,617,797
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(3)
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7.92%
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Franklin Resources, Inc.
One Franklin Parkway
San Mateo, CA 94403
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5,908,976
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(4)
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5.43%
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WS Management, LLLP
4306 Pablo Oaks Court
Jacksonville, FL 32224
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5,576,048
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(5)
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5.12%
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State Street Corporation
State Street Financial Center
One Lincoln Street
Boston, MA 02111
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5,561,288
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(6)
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5.11%
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(1)
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Percentages are based on shares of Company Common Stock outstanding as of March 15, 2017, as of which date there were 108,824,992 shares of Company Common Stock outstanding.
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(2)
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Based on a Schedule 13G/A filing under the Securities Exchange Act (the Exchange Act), made on January 9, 2017 by BlackRock, Inc., reporting sole voting power with respect 10,697,771 shares and sole
dispositive power with respect to 10,952,832 shares at December 31, 2016.
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(3)
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Based on a Schedule 13G/A filing under the Exchange Act made on February 9, 2017 by The Vanguard Group (Vanguard), Vanguard had sole voting power with respect to 129,276 shares, shared voting power with
respect to 11,600 shares, sole dispositive power with respect to 8,482,421 shares, and shared dispositive power with respect to 135,376 shares at December 31, 2016.
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(4)
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Based on a Schedule 13G/A filing under the Exchange Act made on February 9, 2017 by Franklin Resources, Inc., Charles B. Johnson and Rupert H. Johnson, Jr., the shares are beneficially owned at December 31,
2016 by one or more open- or
closed-end
investment companies or other managed accounts that are investment management clients of investment managers that are direct or indirect subsidiaries of Franklin
Resources. Charles B. Johnson and Rupert H. Johnson, Jr. each own in excess of 10% of the outstanding common stock of Franklin Resources and are its principal stockholders.
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(5)
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Based on a Schedule 13G/A filing under the Exchange Act, made on January 17, 2017 by WS Management LLLP, reporting sole voting power and sole dispositive power with respect to 5,576,048 shares at December 31,
2016.
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(6)
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Based on a Schedule 13G filing under the Exchange Act, made on February 9, 2017 by State Street Corporation, reporting shared voting power and shared dispositive power with respect to 5,561,288 shares at
December 31, 2016.
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ATI
2017 Proxy Statement
/
29
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STOCK OWNERSHIP
INFORMATION |
STOCK OWNERSHIP OF DIRECTORS, BOARD NOMINEES AND EXECUTIVE MANAGEMENT
|
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Stock Ownership of Directors, Board Nominees and Executive Management
The following table shows the shares of Common Stock reported to ATI as beneficially owned as of March 15, 2017 by the nominees for director, the continuing
directors, each officer named in the Summary Compensation Table, and for all directors, officers and other statutory insiders as a group. Unless indicated otherwise below, the information provided in the following table is based on the
Companys records, information filed with the SEC, and information furnished by the respective individuals and includes as beneficially owned those shares that each such person has the power to vote or transfer currently, or the
right to acquire within 60 days following March 15, 2017.
For biographical information regarding the beneficial owners,
please see information under Item
1Election of Directors and Members of ATIs Executive Management of this Proxy Statement
. The business address for each beneficial owner is c/o Allegheny Technologies Incorporated, 1000 Six PPG Place, Pittsburgh, PA
15222.
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Beneficial Owner
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Amount and Nature of
Beneficial Ownership
(1)
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Percentage
Of Class
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Carolyn Corvi
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18,730
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*
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Diane C. Creel
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41,242
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|
*
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Patrick J. DeCourcy
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60,538
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*
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James C. Diggs
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30,082
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*
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Richard J. Harshman
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464,745
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*
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J. Brett Harvey
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30,544
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*
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Barbara S. Jeremiah
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31,425
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*
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Kevin B. Kramer
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52,109
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*
|
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David J. Morehouse
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9,413
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|
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*
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John R. Pipski
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27,679
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|
|
|
*
|
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James E. Rohr
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58,944
|
|
|
|
*
|
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John D. Sims
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121,625
|
|
|
|
*
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Louis J. Thomas
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26,368
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|
|
|
*
|
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John D. Turner
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36,979
|
|
|
|
*
|
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Robert S. Wetherbee
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35,622
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|
|
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*
|
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All directors, nominees, named executive officers and other statutory
insiders as a group (18 persons)
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1,213,686
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|
1.12
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%
|
*
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Indicates beneficial ownership of less than one percent (1%) of the outstanding shares of Company Common Stock. As of March 15, 2017, there were 108,824,992 shares of Company Common Stock outstanding.
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(1)
|
The table includes aggregate restricted stock awards as follows: (a) 12,483 shares for each of our directors, other than Mr. Morehouse, who holds 9,413 shares of restricted stock; (b) the following shares of restricted
stock for each NEO: Mr. Harshman, 152,504; Mr. DeCourcy, 41,113; Mr. Kramer 31,045; Mr. Sims, 121,625; Mr. Wetherbee, 31,977; and (c) 522,747 shares of restricted stock held by all directors, nominees and officers as a group. The table includes
shares held jointly with the named individuals spouses. The table also includes 25,687 shares owned by Mr. Harshmans spouse with respect to which Mr. Harshman disclaims beneficial ownership. The table does not include restricted stock
units granted to our NEOs in 2016 and 2017, none of which vest within 60 days following March 15, 2017.
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30
ATI
2017 Proxy Statement
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STOCK OWNERSHIP
INFORMATION |
MEMBERS OF ATIS EXECUTIVE MANAGEMENT
|
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Members of ATIs Executive Management
The following lists our executive officers as of March 15, 2017.
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Name
|
|
Biographical information
|
Richard J. Harshman
, 60
Chairman, President and Chief
Executive Officer since 2011
|
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Mr. Harshman was President and Chief Operating Officer from 2010 until May 2011. Prior to that, he served
as Executive Vice President, Finance and Chief Financial Officer from 2003 to 2010. Mr. Harshman joined the Company in 1978 and served in several financial management roles for the Company.
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Patrick J. DeCourcy
, 55
Senior Vice President,
Finance and Chief Financial
Officer since December 2013
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Mr. DeCourcy was Interim Chief Financial Officer from July 2013 to December 2013. From 2011 to July 2013,
he provided assistance to ATI executive management with business integration and strategic investments. He was Senior Director, Strategic Projects and Business Integration, from March 2012 to July 2013. From 2000 to April 2010, he served as Vice
President, Finance and Administration of ATI Specialty Materials.
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John D. Sims
, 57
Executive Vice President, High Performance Materials and Components Segment since August 2015
|
|
Mr. Sims was Executive Vice President, High Performance Components Group from September 2013 to August
2015, and President, ATI Forged Products from September 2013 to April 2014. Previously, he served as Executive Vice President, Primary Titanium Operations, and Engineered Alloys and Products beginning in February 2013. Prior to that, Mr. Sims
served as Executive Vice President, Primary Metals and Exotic Alloys from May 2011 to February 2013 and President, ATI Specialty Alloys and Components from 2008 to February 2013. Previously, he was Group President, ATI Primary Metals and Exotic
Alloys from February 2011 to May 2011.
|
Robert S. Wetherbee
, 57
Executive Vice President, Flat Rolled Products since
January 2015
|
|
Mr. Wetherbee served as President, ATI Flat Rolled Products beginning in April 2014. Prior to that,
Mr. Wetherbee was President and Chief Executive Officer of Minerals Technologies, Inc. from March 2013 until February 2014. He was President of ATIs tungsten materials business from 2010 through 2012. Previously, Mr. Wetherbee was
Vice President of Market Strategy of Alcoa Inc. from 2006 through 2009.
|
Elliot S. Davis
, 55
Senior Vice President, General Counsel, Chief Compliance
Officer and Corporate Secretary since May 2011
|
|
Mr. Davis was Vice President and General Counsel from 2010 to May 2011. Previously, he served as Assistant
General Counsel from 2008, when he joined the Company, to 2010. Prior to that, Mr. Davis was a partner of the law firm K&L Gates LLP, where he practiced for nearly 20 years in its corporate, mergers and acquisitions and securities
group.
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Kevin B. Kramer
, 57
Senior Vice President, Chief Commercial since February 2014
|
|
Prior to joining ATI in February 2014, Mr. Kramer was PresidentStoneridge Wiring Division and Vice
President of Stoneridge, Inc., from May 2012 through January 2014. Previously, Mr. Kramer worked for Alcoa, Inc. from 2004 until 2012, where he served as PresidentGrowth Initiatives and PresidentWheel and Transportation
Products.
|
Elizabeth C. Powers
, 57
Senior Vice President, Chief Human Resources Officer since November 2014
|
|
Ms. Powers served as Vice President, Human Resources and Chief Administrative Officer for Dresser-Rand
Group, Inc. from 2010 until 2012 and from 2005 to 2009. She was named Vice President, Human Resources of Dresser-Rand Group in April 2004. From 2012 until she joined ATI in November 2014, Ms. Powers worked in academia. In 2009 and 2010,
Ms. Powers worked in the public policy and
non-profit
sectors.
|
Karl D. Schwartz
, 53
Vice President, Controller and Chief Accounting Officer since January 2016
|
|
Mr. Schwartz served as Controller and Chief Accounting Officer from May 2011 to January 2016, and
Controller and Principal Accounting Officer from 2010 to May 2011. Prior to that, Mr. Schwartz was Assistant Controller beginning in 2002, when he joined the Company.
|
ATI
2017 Proxy Statement
/
31
Item 2
Approval of Our 2017
Incentive Plan
We are asking our stockholders to approve a new 2017 Incentive Plan (the 2017 Incentive Plan or the
Plan) authorizing the issuance of a total of 5,200,000 shares of our common stock, which represents 4.78% of the 108,824,992 total shares of our common stock outstanding on the record date. The new Plan will enable us to continue
including in our executive compensation program equity-based long-term incentive compensation opportunities, which we believe are a key component to maintaining a competitive compensation program that is appropriately aligned with stockholder
interests.
The long-term incentive awards that we granted in 2016 and, most recently, in February 2017, were made under our 2015 Incentive Plan, which was
approved by our stockholders at our 2015 Annual Meeting of Stockholders. If the 2017 Incentive Plan is approved by our stockholders at the 2017 Annual Meeting, no new awards will be granted under the 2015 Incentive Plan. Grants previously made under
the 2015 Incentive Plan will remain in effect in accordance with their terms and the terms of the 2015 Incentive Plan.
The 2017 Incentive Plan authorizes
independent members of our Board or an authorized committee or subcommittee of independent members of the Board to make incentive awards, including stock-based awards, to Company employees, and stock-based awards to
non-employee
members of the Board. The following summary of the Plan is qualified by reference to the complete text of the Plan, which is attached as Appendix A to this Proxy Statement.
Section 162(m) of the Internal Revenue Code (the Code) imposes an annual deduction limit of $1 million on the amount of compensation paid to each
of the chief executive officer and certain other named executive officers. The deduction limit does not apply to performance-based compensation that satisfies the requirements of Section 162(m). In order for awards under the 2017 Incentive Plan
to be eligible to qualify as performance-based compensation for purposes of Section 162(m) of the Code, the material terms of the performance goals under which compensation may be paid must be disclosed to and approved by the
Companys stockholders. The material terms include (i) the persons eligible to receive awards under the 2017 Incentive Plan, (ii) a description of the business criteria on which the performance goals may be based and (iii) the
maximum amount of compensation that can be paid to an eligible person upon attainment of the performance goals in a given time period. Each of these aspects is discussed below, and approval of the 2017 Incentive Plan will constitute approval of,
among other things, the eligibility requirements, performance goals, and limits on various types of awards available for grant under the 2017 Incentive Plan for purposes of Section 162(m) of the Code.
Because the performance-based compensation exception under Section 162(m) of the Code requires a review of individual facts, and there is limited binding guidance
under Section 162(m), the Company cannot guarantee that the awards under the 2017 Incentive Plan to covered employees will qualify for exemption under Section 162(m) of the Code. In addition, even though we are seeking stockholder approval for
purposes of Section 162(m) of the Code, the Company may choose to grant awards under the 2017 Incentive Plan that do not qualify for the performance-based compensation exemption under Section 162(m) of the Code.
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ITEM 2 APPROVAL OF OUR 2017
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Plan Highlights Promotion of
Best Practices
We are committed to sound corporate governance and the application of
best practices to our equity compensation programs. Some key features of the Plan reflecting these principals are set forth below, and are more fully described under the caption Summary of the Plan.
Plan Limits
. The Plan authorizes an aggregate of 5.2 million
shares for grant, subject to anti-dilution adjustments upon the occurrence of significant corporate events. No participant may receive stock options, stock appreciation rights (SARs) or other stock grants for more than one million
shares in any calendar year.
Minimum Vesting and Performance Periods
. Awards in respect of 95%
of the shares authorized under the Plan may not vest prior to the first anniversary of the applicable grant date, except in connection with a Change in Control (as defined in the Plan), a qualifying termination of employment or any other event or
circumstances that the Company determines to be appropriate.
No Repricing or Discounted Awards
. The Plan prohibits repricing of
awards without stockholder approval. In addition, no awards of stock options or SARs will be granted with an exercise price of less than fair market value of Company Common Stock on the date of grant. The Plan prohibits various specific forms of
option or SAR repricing.
Robust Clawback provisions
. All Awards under the Plan are subject
to a repayment obligation to the extent the payment was the result of inaccurate or incomplete information that resulted or contributed to a larger than deserved payment.
No Evergreen Provision.
The Plan does not include an
evergreen feature, which would allow the number of shares available for issuance under the Plan to be automatically replenished.
No Liberal Share Counting.
The Plan prohibits shares of Common
Stock that are tendered in payment of the exercise price of an option or SAR, withheld to satisfy a tax withholding obligation relating to an option of SAR from being used to increase the number of shares available for grant under the Plan. The full
number of shares issued with respect to SARs are likewise counted against the Plans share pool.
Double Trigger Change in Control.
Awards under the Plan
that are assumed by the surviving entity as part of a change in to control will not vest solely upon the consummation of the change in control unless expressly provided in the applicable award agreement.
Dividends
. Dividends may accumulate on performance shares or units
and grants of restricted stock and restricted share units but are paid, if at all, only at the time that the restrictions lapse.
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Why You Should Vote to Approve the 2017 Incentive Plan
The Board of Directors recommends a vote in favor of approval of the 2017 Plan because it believes that it is in the best interests of the Company and its stockholders,
principally for the following reasons:
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Equity Compensation Awards Are a Critical Recruitment and Retention Tool.
We believe that our success and performance depends in part on our ability to attract, motivate and retain talented employees and
directors. Equity awards under our long-term incentive compensation programs are a key component to maintaining a total compensation package that is competitive in our industry and the markets in which we operate, which we believe is essential for
attracting and retaining key employees.
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Our Compensation Programs Are Aligned with Stockholder Interests.
We believe that equity compensation is, by its nature, performance-based compensation. Equity compensation has been an important component of
total compensation at our Company for many years because it fosters an employee ownership culture and motivates employees to create stockholder value. A significant portion of our compensation is performance-oriented and at risk for our
key employees, with achievement tied to the Companys performance. The Company has stock ownership guidelines for its executives and targets long-term incentive compensation at the midpoint of its peer group. Our equity compensation plans,
which emphasize restricted stock units and performance awards, are our principal means of aligning the interests of employees with those of stockholders. Equity compensation also promotes a focus on long-term value creation because equity
compensation awards are subject to vesting and/or performance conditions, and generally provide the greatest value to employees when held over the long-term.
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We are Committed to Sound Equity Compensation Practices and
Pay-For-Performance.
Our equity compensation practices are designed to
be in line with peer group norms, and we believe that our historical share usage has been responsible and mindful of stockholder interests. Moreover, as explained in the Compensation Discussion and Analysis section of this Proxy Statement, the
Companys long term compensation programs are tied to Company performance.
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Plan Approval Would Avoid Disruption in Compensation Programs.
At March 15, 2017, there were approximately 224,323 shares of Common Stock available for issuance to employees and directors under the 2015
Incentive Plan, which is not an adequate number of shares to support our current equity compensation programs, and therefore, a market-competitive executive compensation program, beyond 2017. If the 2017 Plan is not approved, we may be compelled to
increase significantly the cash component of our employee and director compensation, which may not necessarily align employee and director compensation interests with the investment interests of our stockholders as well as alignment provided by
equity-based awards. Replacing equity awards with cash also would increase cash compensation expense and use cash that could be better utilized if reinvested in our businesses or returned to our stockholders.
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The following includes aggregated information regarding our view of the overhang and dilution associated with our 2015 Incentive Plan and other legacy
plans (the Legacy Plans) and the potential stockholder dilution that would result if our proposed share authorization under the 2017 Plan is approved. The information below is as of March 15, 2017, on which approximately
108,824,992 shares of our Common Stock were outstanding:
Under the Legacy Plans
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Total shares of Common Stock subject to outstanding awards (comprised entirely of full-value awards): 4,405,997 shares of Common Stock (approximately 4.05 percent of our outstanding shares of Common Stock);
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Total shares of Common Stock available for future awards under the 2015 Plan: 224,323 shares of Common Stock (approximately 0.2 percent of our outstanding shares of Common Stock); however, as noted above, no further
grants will be made under the 2015 Plan upon the effective date of the 2017 Incentive Plan; and
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The total number of shares of Common Stock subject to outstanding awards (4,405,997 shares of Common Stock), plus the total number of shares of Common Stock available for future awards under the 2015 Plan (224,323
shares of Common Stock), represents a current overhang percentage of 4.25
percent (potential dilution of our stockholders represented by the Legacy Plans).
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2017 Proxy Statement
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Under the 2017 Incentive Plan
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Proposed shares of Common Stock available for awards under the 2017 Plan: 5,200,000 shares of Common Stock, which represents a new share request of approximately 4.78 percent of our outstanding shares of Common Stock.
This percentage reflects the dilution of our stockholders that would occur if the 2017 Incentive Plan is approved.
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Total potential overhang or dilution
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The total shares of Common Stock subject to outstanding awards as of March 15, 2017 (4,405,997 shares of Common Stock), plus the proposed new shares of Common Stock available for awards under the 2017 Plan
(5,200,000 shares of Common Stock), represent a total overhang of 9,605,997 shares (8.83 percent).
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Based on the closing price for a share of our
Common Stock on the NYSE on March 15, 2017 of $17.75 per share, the aggregate market value of the new 5,200,000 shares of Common Stock requested under the 2017 Incentive Plan was $92,300,000.
SUMMARY OF THE 2017 INCENTIVE PLAN
The following
is a general description of the material features of the Plan. This description is qualified in its entirety by reference to the full text of the Plan, a copy of which is attached to this Proxy Statement as Appendix A. We encourage our stockholders
to read the Plan in its entirety. Capitalized terms used and not otherwise defined in this Proposal have the meanings given to them in the Plan.
Purpose
The purpose of the Plan is to motivate and reward key executives and other employees who contribute to our profitability
and, in the case of stock-based awards, to give these individuals and members of our Board a vested ownership interest in the Companys growth and financial success. We believe that the Plan enhances our ability to attract and retain
individuals with exceptional managerial, technical and professional skills upon whom, in large measure, the sustained growth and profitability of the Company depend.
Eligibility for Awards
Awards may be granted
under the Plan to directors, officers, employees and consultants of the Company and any of its subsidiaries. As of the date of this Proxy Statement, ten
non-employee
directors and approximately 150 officers
and other employees participate in the Plan. Awards also may be granted to prospective directors, officers, employees and consultants who have accepted offers of employment or consultancy from the Company or any of its subsidiaries.
Administration
The Plan will be administered
by the Board directly, or if the Board elects, the Personnel and Compensation Committee of the Board, or such other committee of the Board as the Board may from time to time designate. Subject to applicable law, the Committee may allocate all or any
portion of its responsibilities and powers to one or more of its members or persons selected by it.
Subject to the terms and conditions of the Plan, the Committee
will have authority under the Plan to select individuals to whom awards may be granted, to determine the type of award as well as the number of shares of common stock to be covered by each award, and to determine the terms and conditions of any such
awards.
Vesting
Except for Awards granted
with respect to a maximum of five percent (5%) of the authorized Shares under the Plan, Award Agreements will not provide for vesting prior to the first anniversary of the Grant Date, provided that the
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Committee can provide for shorter vesting periods in connection with a Corporate Transaction, a qualifying termination of employment, or other event or circumstance deemed appropriate by the
Committee.
Shares Available; Adjustments
The aggregate number of shares of the Companys common stock available for issuance under the Plan is 5,200,000 and the maximum number of shares that may be
granted pursuant to stock options intended to be incentive stock options is 1,000,000 shares.
During any calendar year, no participant may be granted
performance-based equity awards intended to qualify under Section 162(m) of the Code (other than stock options and stock appreciation rights) covering in excess of 1,000,000 shares or stock options and stock appreciation rights covering in excess of
1,000,000 shares. In addition, no participant who is a
non-employee
director of the Company may be granted Awards covering shares with a grant date fair value in excess of $500,000 during any single calendar
year.
To the extent that any award under the Plan or any award under the 2015 Incentive Plan is forfeited, expires, or is settled for cash, the shares of common
stock subject to such awards not delivered as a result thereof will again be available for awards under the Plan. If the exercise price of or tax withholding obligations relating to any stock option or stock appreciation right is satisfied by
delivering shares (either by actual delivery or by attestation) or by withholding shares, the gross number of shares of common stock shall be deemed to have been granted under the Plan.
The Plan provides that in the event of certain extraordinary corporate transactions or events affecting the Company, the Committee will or may make such substitutions
or adjustments as it deems appropriate and equitable to (a) the aggregate number and kind of shares or other securities reserved for issuance and delivery under the Plan, (b) the various maximum limitations set forth in the Plan,
(c) the number and kind of shares or other securities subject to outstanding awards, (d) the number of shares considered delivered based on the type of award granted, and (e) the exercise price of outstanding options and stock
appreciation rights. In the event of a corporate transaction such as a merger or consolidation, such adjustments may include the cancellation of outstanding awards in exchange for cash or other property or the substitution of other property for the
shares subject to outstanding awards.
Awards Under the Plan
Awards may be granted under the Plan to eligible individuals; provided, however, that Incentive Stock Options may be granted only to employees of the Company and its
subsidiaries.
Stock Options and Stock Appreciation Rights
Stock options granted under the Plan may either be incentive stock options, which are intended to qualify for favorable treatment to the recipient under U.S. federal
tax law, or nonqualified stock options, which do not qualify for this favorable tax treatment. Stock appreciation rights granted under the Plan may either be tandem SARs, which are granted in conjunction with a stock option, or
free-standing SARs, which are not granted in tandem with a stock option.
Each grant of stock options or stock appreciation rights under the Plan will
be evidenced by an award agreement that specifies the exercise price, the duration of the award, the number of shares to which the award pertains, and such additional limitations, terms and conditions as the Committee may determine, including, in
the case of stock options, whether the options are intended to be incentive stock options or nonqualified stock options. The Plan provides that the exercise price of stock options and stock appreciation rights will be determined by the Committee,
but may not be less than the fair market value of the stock underlying the stock options or stock appreciation rights on the date of grant. Award holders may pay the exercise price in cash or, if approved by the Committee, in common stock (valued at
its fair market value on the date of exercise) or a combination thereof, or by cashless exercise through a broker or by withholding shares otherwise receivable on exercise. The term of stock options and stock appreciation rights will be
determined by the Committee but may not exceed ten years from the date of grant. The Committee will determine the
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vesting and exercise schedule of stock options and stock appreciation rights. Unless otherwise determined by the Committee or provided in the applicable award agreement, upon termination of
service, stock options and stock appreciation rights will be treated as follows:
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Termination by Reason of Death or Disability
. Any stock option or stock appreciation right will immediately vest in full and may thereafter be exercised until the earlier of the third anniversary of termination
of service and the expiration of its term.
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Termination by Reason of Retirement
. Any unvested stock option or stock appreciation right will terminate and any vested stock option or stock appreciation right may thereafter be exercised until the earlier of
the third anniversary of termination of service and the expiration of its term.
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Termination by the Company for Cause
. Any stock options and stock appreciation rights, whether vested or unvested, will terminate.
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Other Termination of Service
. Any stock option or stock appreciation right to the extent it is then exercisable at the time of termination, or on such accelerated basis as the Committee may determine, may be
exercised for the lesser of 90 days following the date of such termination of service and the balance of its term.
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Restricted Stock
Restricted stock may be
granted under the Plan with such restrictions as the Committee may designate. The Committee may provide at the time of grant that the vesting of restricted stock will be contingent upon the achievement of applicable performance goals and/or
continued service. Except for these restrictions and any others imposed under the Plan or by the Committee, upon the grant of restricted stock under the Plan, the recipient will have rights of a stockholder with respect to the restricted stock,
including the right to vote the restricted stock; however, whether and to what extent the recipient will be entitled to receive cash or stock dividends paid, either currently or on a deferred basis, will be set forth in the award agreement, provided
that in no event will any dividend be paid until the vesting of the underlying restricted stock. The award agreement may also provide for vesting upon certain qualifying terminations of employment.
Restricted Stock Units
. The Committee may grant restricted stock units payable in cash, shares of common stock, or both, conditioned upon continued service
and/or the attainment of applicable performance goals determined by the Committee. The Company is not required to set aside a fund for the payment of any restricted stock units, and the award agreement for restricted stock units will specify
whether, to what extent, and on what terms and conditions the applicable participant will be entitled to receive dividend equivalents with respect to the restricted stock units, provided that in no event will any dividend equivalent be paid until
the vesting of the underlying restricted stock unit. The award agreement may also provide for vesting upon certain qualifying terminations of employment.
Performance Units.
The Committee may grant performance units valued by reference to a designated amount of cash or other property (other than shares of common
stock) under the Plan, which will be payable in cash, shares of common stock, other property, or any combination thereof and conditioned upon attainment of applicable performance goals determined by the Committee. The award agreement may provide for
vesting upon certain qualifying terminations of employment. The maximum value of property, including cash, which may be paid or distributed to any plan participant pursuant to a grant of Performance Units made in any one calendar year will not
exceed $10 million.
Stock Bonus Awards.
The Committee may grant unrestricted shares of the Companys common stock, or other awards denominated in
the Companys common stock, alone or in tandem with other awards, in such amounts and subject to such terms and conditions as the Committee determines from time to time in its sole discretion.
Performance Awards.
Under the Plan, the Committee may determine that the grant, vesting, or settlement of an award granted under the Plan will be subject to the
attainment of one or more performance goals.
The Committee has the authority to establish any performance objectives to be achieved during the applicable
performance period when granting performance awards. If an award under the Plan is intended to qualify as
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performance-based compensation under Section 162(m) of the Code, however, the performance goals will be established with reference to one or more of the following, in each case with
respect to the Company or any one or more subsidiaries, divisions, business units, or business segments thereof, either in absolute terms or relative to the performance of one or more other companies (including an index covering multiple companies):
stock price, net income, operating income, gross profit, operating profit, income before taxes, earnings (whether based on earnings, earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and
amortization), earnings per share, return on investment or working capital, return on capital employed, return on equity, return on assets or operating assets, return or commissioning or qualification of particular capital expenditures or equipment,
economic value added (the amount, if any, by which net operating profit after tax exceeds a reference cost of capital, cash flow (before or after dividends), operating cash flow, cash flow per share (before or after dividends), cost control and/or
reductions, balanced scorecard, execution of growth strategy, integration or qualification of acquired businesses, manufacturing cycle time reductions, reductions in inventory, inventory turns,
on-time
delivery performance and improvements in safety or environmental performance. In establishing a performance goal, the Committee may determine whether or not to exclude or adjust for specific items that are unusual in nature or occur infrequently,
impact of charges for restructurings, discontinued operations, and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified on the Companys financial statements,
managements discussion and analysis or other Company filings with the SEC, provided that with respect to awards intended to remain qualified as performance-based compensation under Section 162(m) of the Code, such specific items
and/or adjustments must be objectively determinable and applied in a manner consistent with Section 162(m) of the Code.
Cash-Based Awards
Cash-based awards may be granted under the Plan. No participant may be granted cash- based awards that have an aggregate maximum payment value in any
calendar year in excess of $10 million if the awards are intended to qualify as
tax-deductible
performance-based compensation under Section 162(m) of the Code.
Effect of Change in Control
The Plan provides
that, unless otherwise set forth in an award agreement, in the event of a change in control (as defined in the Plan) and to the extent an award is not replaced by a replacement award (as described below), (a) each then-outstanding stock option and
stock appreciation right will become fully vested and exercisable, and each other award (other than a performance-based award) will vest, be free of restrictions, and be deemed to be earned and payable; and (b) each then-outstanding
performance-based award will be deemed to be earned and payable, with all applicable performance goals deemed achieved at the greater of (i) the applicable target level and (ii) actual performance, as determined by the Committee, through
the latest date practicable preceding the date of the change in control.
A replacement award is an award that is the same type as the replaced award with a value
equal to the value of the replaced award as of the date of the change in control, as determined by the Committee and if the underlying replaced award was an equity-based award, the replacement award relates to publicly traded equity securities of
the Company or the entity surviving the Company following the change in control and contains terms relating to vesting that are substantially identical to those of the replaced award and other terms and conditions are not less favorable than the
terms and conditions of the replaced award.
Unless otherwise determined by the Committee and set forth in the applicable award agreement, upon termination of
service other than for cause within 24 months following a change in control, (i) all replacement awards held will vest in full, be free of restrictions, and be deemed to be earned in full (with respect to performance goals, unless otherwise
agreed in connection with the change in control, at the greater of (x) the applicable target level and (y) actual performance, as determined by the Committee, through the latest date practicable preceding the termination of service) and
(ii) any outstanding stock option or stock appreciation right as of the date of the change in control that remains outstanding as of the date of such termination of service may thereafter be exercised until the expiration of its stated full
term.
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With respect to an award that constitutes nonqualified deferred compensation within the meaning of Section 409A of
the Code, a change in control will not constitute a settlement or distribution event with respect to such award unless such change in control is also a change in control for purposes of Section 409A of the Code, provided that such change in control
may result in accelerated vesting of such award.
Amendment and Termination of the Plan
The Board or the Committee may amend, alter or discontinue the Plan, but no amendment, alteration or discontinuation may be made that would materially impair the rights
of the Participant with respect to a previously granted Award without such Participants consent, except such an amendment made to comply with applicable law, including Section 409A of the Code, applicable exchange listing standards or
accounting rules. In addition, no amendment shall be made without the approval of the Companys stockholders to the extent such approval is required by applicable law or the listing standards of the applicable exchange. The Plan will become
effective on the date that it is approved by the Companys stockholders and, if not terminated earlier, will expire on the tenth anniversary thereof.
Federal Income Tax Consequences Relating to Equity Awards Granted under the Plan.
The following discussion summarizes certain
federal income tax consequences of the issuance, receipt, and exercises of stock options and the granting and vesting of restricted stock and restricted stock units, in each case under the Plan. The summary does not purport to cover federal
employment tax or other federal tax consequences that may be associated with the Plan, nor does it cover state, local, or
non-U.S.
taxes.
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Nonqualified Options
.
In general, in the case of a nonqualified stock option, the participant has no taxable income at the time of grant but realizes income in connection with exercise of the option in an
amount equal to the excess (at the time of exercise) of the fair market value of the shares acquired upon exercise over the exercise price. A corresponding deduction is available to the Company. Any gain or loss recognized upon a subsequent sale or
exchange of the shares is treated as capital gain or loss for which the Company is not entitled to a deduction.
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Incentive Stock Options
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In general, a participant realizes no taxable income upon the grant or exercise of an incentive stock option. The exercise of an incentive stock option, however, may result in an
alternative minimum tax liability to the participant. With certain exceptions, a disposition of shares purchased under an incentive stock option within two years from the date of grant or within one year after exercise produces ordinary income to
the participant (and a deduction for the Company) equal to the value of the shares at the time of exercise less the exercise price. Any additional gain recognized in the disposition is treated as a capital gain for which the Company is not entitled
to a deduction. If the participant does not dispose of the shares until after the expiration of these
one-
and
two-year
holding periods, any gain or loss recognized upon
a subsequent sale is treated as a long-term capital gain or loss for which the Company is not entitled to a deduction.
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Restricted Stock
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Unless a participant makes an election to accelerate recognition of the income to the date of grant as described below, the participant will not recognize income, and the Company will not
be allowed a tax deduction, at the time a restricted stock award is granted. When the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of the common stock as of that date, less any amount paid for the
stock, and the Company will be allowed a corresponding tax deduction at that time. If the participant files an election under Section 83(b) of the Code within 30 days after the date of grant of the restricted stock, the participant will recognize
ordinary income as of the date of grant equal to the fair market value of the common stock as of that date, less any amount the participant paid for the common stock, and the Company will be allowed a corresponding tax deduction at that time. Any
future appreciation in the common stock will be taxable to the participant at capital gains rates. If, however, the restricted stock award is later forfeited, the participant will not be able to recover the tax previously paid pursuant to his or her
Section 83(b) election.
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Restricted Stock Units
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A participant does not recognize income, and the Company will not be allowed a tax
deduction, at the time a restricted stock unit is granted. When the restricted stock units vest and are settled for cash
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or stock, the participant generally will be required to recognize as income an amount equal to the fair market value of the shares on the date of vesting. Any gain or loss recognized upon a
subsequent sale or exchange of the stock (if settled in stock) is treated as capital gain or loss for which we are not entitled to a deduction.
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Clawback Provision
Any Awards or amounts paid in respect thereof that were granted or paid based on financial statements or
performance metrics that are subsequently restated or revised may be subject to recovery by the Company. The determination whether to seek recovery of Awards or amounts paid in respect thereof from a Participant will be made by the Committee in its
discretion, provided that, such demand will be limited to Awards granted or amounts paid in respect thereof within the three-year period following the first public filing of the document requiring restatement.
Awards to Executives
While the Personnel and
Compensation Committee has established general guidelines with respect to its compensation programs for NEOs, which are described in the Compensation Discussion and Analysis section of this Proxy Statement, the designation of specific participants,
whether NEOs, executive officers as a group, other employees as a group or
non-employee
directors as a group, and the amount of any award that may be made under the Plan will be determined in the discretion of
the Personnel and Compensation Committee, up to the limitations on individual awards set forth in the Plan. Because awards under the Plan are discretionary, awards are generally not determinable at this time.
Recent Share Price
On March 15, 2017 (the
record date for the Annual Meeting), the closing trading price on the New York Stock Exchange for Company Common Stock was $17.75 per share.
Equity Compensation Plan Information
The
following table sets forth information regarding the securities authorized for issuance under our equity compensation plans as of March 15, 2017:
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(in thousands, except per share amounts)
Plan Category
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Number of Securities
to be Issued upon
Exercise of
Outstanding Options,
Warrants
and
Rights
(a)
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Weighted Average
Exercise
Price of Outstanding
Options, Warrants
and Rights
(b)
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Number of Securities
Remaining Available for
Future Issuance under
Equity Compensation
Plans (Excluding
Securities
Reflected in Column
(a)
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Equity compensation plans approved by stockholders
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4,406
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224
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Equity compensation plans not approved by stockholders
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Total
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4,406
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224
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Vote Required for Approval
Approval of the Plan requires the affirmative vote of a majority of votes cast by holders of shares of Common Stock present in person or represented by proxy and
entitled to vote at the meeting. The Board has approved the Plan and believes it to be in the best interests of the Company and the stockholders.
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Item 3
Say on
Pay Frequency
Under the Dodd-Frank Act, we are required to provide to our stockholders the ability to vote, at least every six years, on the frequency
with which we should seek an advisory vote on the compensation of our NEOs. At our 2011 annual meeting of stockholders, our stockholders voted, consistent with our Boards recommendation, to conduct annual say on pay advisory votes.
In voting on this Item 3, stockholders may indicate whether they would prefer an advisory vote on executive compensation once every year, every two years, or every three years.
After careful consideration, our Board of Directors has determined that an advisory vote on executive compensation that occurs every year is the most appropriate
alternative for the Company at this time, and therefore our Board of Directors recommends that you vote for a
one-year
interval for the advisory vote on executive compensation.
In formulating its recommendation, our Board of Directors considered that while our executive compensation policies are designed to promote a long-term connection
between pay and performance, executive compensation disclosures are made annually, and an annual advisory vote on executive compensation will allow our stockholders to provide us with their direct input on our compensation philosophy, policies and
practices as disclosed in the proxy statement every year.
The option of one year, two years or three years that receives the highest number of votes will be
considered by the Board to be preference of our stockholders, as expressed on an advisory basis. Because this vote is advisory and not binding on the Board of Directors or the Company, the Board may decide that it is in the best interests of our
stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option approved by our stockholders and may vary its practice based on factors such as discussions with stockholders and the adoption of
material changes to our compensation programs.
ATI
2017 Proxy Statement
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Item 4
Advisory
Vote to Approve the Compensation of the Companys Named Executive Officers
Each year we ask our stockholders to approve the
compensation of ATIs named executive officers. This proposal, commonly known as a Say On Pay proposal, gives our stockholders the opportunity to express their views on our NEOs compensation. This vote is not intended to
address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement.
While this vote is advisory, and not binding on our Company, it provides valuable information to our Personnel and Compensation Committee regarding investor sentiment
about our executive compensation philosophy, policies and practices. The Committee will consider the outcome of this vote when determining executive compensation for the remainder of 2017 and in future years. In 2016, our Say On Pay proposal
received the support of 76% of the shares voted at our Annual Meeting, as we introduced the 2016 redesign of our executive compensation program. Our clean sheet redesign effort stemmed from concerns expressed by our stockholders in
connection with the advisory vote on our 2015 executive compensation and our subsequent investor outreach efforts. We believe that ATIs 2016 executive compensation is appropriately aligned with stockholder interests.
Before voting, we encourage you to read the Compensation Discussion and Analysis section to learn more about our executive compensation program
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How We Use Executive Compensation to
Create Long-Term Stockholder Value
The Committee continually reviews the
compensation program for our NEOs to ensure that it achieves the desired goal of offering total compensation consisting of base salary competitive with an identified peer group of companies and incentive opportunities that are performance-oriented
and linked to the interests of stockholders.
When casting your Say on Pay vote, we urge you to
consider:
Linking compensation to ATI performance.
Approximately 81% of the CEOs 2016 compensation opportunities are
tied to performance and are at risk. Performance drives pay.
Short-term cash incentive and long-term equity incentive plans are based
on the attainment of business plan performance metrics such as operating profit, EBITDA, net income, cash flow, return on capital, strategic goals, and total stockholder return relative to a peer group.
Payments are made only when the performance targets are achieved.
Aligning compensation to stockholder interests.
All
of the long-term incentive compensation opportunities for the NEOs are equity-based.
The business plan performance metrics are aimed to achieve sustained
profitable growth.
In February 2016, we revised our stock ownership guidelines for senior
executives to denote ownership as a multiple of base salary, requiring 6X ownership for our CEO. The revised guidelines require 100% retention until ownership guidelines are met.
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42
ATI
2017 Proxy Statement
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ITEM 4 ADVISORY VOTE TO
APPROVE THE COMPENSATION OF THE COMPANYS NAMED EXECUTIVE OFFICERS
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For 2016, we redesigned the executive compensation
program.
We aligned our long-term incentives to match our business
strategies, with greater weighting on financial performance.
We simplified the program by reducing the number of plans and
components within the plans to make them more transparent and easier to understand.
We reduced the total compensation opportunities for the CEO and
other NEOs to align with the market median.
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We ask our stockholders to vote FOR the following resolution at the Annual Meeting:
RESOLVED, that the stockholders of Allegheny Technologies Incorporated approve, on an advisory basis, the compensation of the named executive
officers, as disclosed in the Companys Proxy Statement for the 2017 Annual Meeting of Stockholders, pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis,
the compensation tables and any related material disclosed in the Companys Proxy Statement for the 2017 Annual Meeting of Stockholders.
ATI
2017 Proxy Statement
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43
Executive Compensation
Compensation Discussion and Analysis
This section discusses material information relating to our executive compensation program and plans for the following executive officers of the Company:
Richard J. Harshman
Chairman, President and Chief Executive Officer
Patrick
J. DeCourcy
Senior Vice President, Finance, and
Chief Financial
Officer
John D. Sims
Executive Vice
President, High Performance Materials & Components Segment
Kevin B. Kramer
Senior Vice President, Chief Commercial and
Marketing Officer
Robert S. Wetherbee
Executive Vice President,
ATI Flat Rolled Products Group
Messrs. Harshman, DeCourcy, Sims, Kramer and
Wetherbee are collectively referred to as the named executive officers, or NEOs. Each of our NEOs is a member of our Executive Council, which also includes other key members of our senior management.
TABLE OF CONTENTS:
44
ATI
2017 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
EXECUTIVE COMPENSATION SUMMARY
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Executive Compensation Summary
ATIs BUSINESS
ATI is a global manufacturer of
technically advanced specialty materials and complex components. Over 50% of our sales are to the aerospace and defense market, particularly jet engines, and we have a strong presence in the oil and gas, electrical energy, medical, automotive and
other industrial markets. We are a market leader in manufacturing differentiated specialty alloys and forgings that require our unique manufacturing and precision machining capabilities and our innovative new product development competence. We
produce nickel-based alloys and superalloys, titanium and titanium-based alloys, specialty alloys, stainless steels, and zirconium and other related alloys in many mill product forms. We operate in two segments, our High Performance Materials and
Components, or HPMC, segment and our Flat Rolled Products, or FRP segment, and our capabilities range from alloy development, to melting and
hot-working,
through highly-engineered
finished components. We are also a leader in producing nickel-based alloy and titanium-based alloy powders for use in next-generation jet engine forgings and
3D-printed
products.
2016 BUSINESS PERFORMANCE
The full year 2016 has been
a period of transition for ATI as we made hard decisions and took important restructuring actions across both of our business segments to improve our cost structure and lay the groundwork for future long-term profitable growth. ATIs business
is cyclical, as are the end markets that use our products. Consequently, some of the challenges we faced were felt throughout our industry and the economy, such as the significant downturn in the oil and gas industry, which represents our second
largest market. Other factors influencing our recent performance, including the work stoppage at our Flat Rolled Products business resulting from our contract negotiations with the United Steelworkers, which extended from August 2015 to March 2016,
have been specific to our business.
Our financial performance for the full year 2016 reflected these conditions. Net loss attributable to ATI was
$641 million for the year, including $544 million (after tax) of restructuring and other
non-recurring
charges, and income tax valuation charges. Recognizing these challenges and the need for
significant changes to our operations to enable sustainable profitability, our management pursued a number of transformational initiatives in order to reposition our business for long-term growth and success.
We are beginning to see these
operational and strategic efforts reflected in our financial results
.
Our major strategic accomplishments during 2016 include:
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Continuing to reposition ATI as a growth-oriented aerospace and defense company
.
We positioned ATI as an increasingly important supplier to the commercial
aerospace industry, particularly in the production of next-generation engines and aircraft. More than 50% of our 2016 sales were to the aerospace and defense market, led by a 13% increase in 2016 sales of products for commercial aerospace jet
engines. Through recent acquisitions, alloy development, internal growth strategies, and long-term supply agreements on current and next-generation aero-engines and airframes, we are well positioned with a fully qualified asset base to meet the
expected multi-year growth in demand from the commercial aerospace market. Our HPMC segments isothermal and
hot-die
forge press utilization continues to improve to meet aerospace demand growth, including
new market share gains.
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Restructuring our HPMC segment titanium operations
.
During 2016, we restructured our HPMC titanium operations, including the indefinite idling of the Rowley, UT
titanium sponge production facility, to improve cost competitiveness. We entered into long-term, cost competitive supply agreements with several leading global producers of premium-grade and standard-grade titanium sponge, with the lower cost
titanium sponge purchased under these agreements replacing the titanium sponge produced at the Rowley facility.
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Restructuring the FRP business to focus on value, not volume
.
At
the end of 2015, which represented the third consecutive year of losses for our Flat Rolled Products business, we determined that prevailing structural market and competitive conditions compelled decisive actions to fundamentally change the Flat
Rolled Products business and enable its return to profitability. Our ultimate objective is to transition the business to be a cost competitive, innovative, technology-based and market-driven specialty materials business. Building on actions taken in
2015, we permanently idled our Midland, PA stainless steel melt shop and sheet finishing facility, and Bagdad, PA grain oriented electrical
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COMPENSATION DISCUSSION AND
ANALYSIS |
EXECUTIVE COMPENSATION SUMMARY
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steel, or GOES, finishing facility during 2016. These actions have significantly lessened ATIs exposure to more commoditized products and markets in the FRP segment. We continue
to reposition the FRP business to a higher value product mix, and achieved near-breakeven results in this segment in the fourth quarter of 2016, after four years of operating losses. We also reduced the size of the FRP salaried workforce by more
than 250 employees, consistent with operating as a smaller, more focused business emphasizing the production of high-value, differentiated products.
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Concluding difficult labor negotiations, ending a seven month work stoppage in March 2016
. We incurred approximately $49 million in costs in the first half of 2016,
primarily in the FRP segment, for operating inefficiencies and contractual obligations associated with the work stoppage and return to work of represented employees. Our new agreement with the United Steelworkers includes important changes to
retirement benefit programs, including a freeze to new entrants to ATIs defined benefit pension plan and the elimination of retiree medical benefits for new employees, and other changes affecting plant operations that improve our cost
competitiveness.
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Maintaining a solid liquidity position
.
We have maintained a solid liquidity position while addressing several near-term funding challenges, and ending the year
with $230 million in cash on hand and $310 million of available borrowing capacity under our asset-based domestic lending facility.
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Continuing to make capital investments to support our growth initiatives
.
We had $202 million of capital expenditures in 2016, including $85 million of
scheduled payments on the Hot Rolling and Processing Facility, and the expansion of nickel alloy powder production capacity in the HPMC segment. We are at the end of a significant, multi-year period of capital expansions, and expect our capital
expenditures to be well below depreciation expense for the next several years.
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These achievements built upon other actions that we took to transform
our business, including, among others: enhancements to our manufacturing capabilities in our High Performance Materials and Components segment for nickel alloy powder, titanium investment castings and forgings; management reorganizations and other
efforts to operate as one fully integrated and aligned business; initial
right-sizing
actions within our FRP business; and improvements in our liquidity position.
The actions that we took in 2015 and 2016 are the result of a disciplined management review process, taking into account current and expected future market conditions.
This disciplined process is a key part of our commitment to make the tough decisions that are required to strengthen and enhance ATIs ability to deliver sustainable, profitable growth and create value for our customers and our stockholders
over the long term
As noted above, we are beginning to recognize the results of this multi-faceted and multi-year strategy. Business segment operating profit for
2016, which excludes restructuring charges, was $6 million, a $91 million improvement over 2015, with stronger operating performance in our HPMC segment and a smaller operating loss in our FRP segment, particularly in the second half of
2016. While sales in 2016 decreased 16% to $3.1 billion, our cost of sales decreased 19%, compared to 2015, resulting in a 170% increase in gross profit margin, to $162.5 million, primarily as a result of our restructuring actions. Sales
to our largest end market, aerospace and defense, increased more than 5% compared to 2015. Our next-generation, differentiated jet engine product mix continued to grow, and our airframe titanium product shipments remained strong. Our FRP segment
made progress to achieve sustainable profitability, primarily as a result of our cost reduction and restructuring actions. Notably, we have achieved these improved results in spite of ongoing softness in a number of the markets that we serve other
than the aerospace market, including most significantly, oil and gas. In fact, ATIs sales to the oil and gas market declined 48% in 2016 compared to 2015. However, we are beginning to see signs of improving demand in this market and believe it
presents opportunities for future growth from which our business is poised to benefit.
In sum, although 2016 was a transitional year for our Company, as reflected
in our financial results, we have successfully taken important steps toward returning or business to sustainable profitability, and our management remains committed to building long-term stockholder value.
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2017 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
EXECUTIVE COMPENSATION SUMMARY
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PAY FOR PERFORMANCE
Paying for performance is a key attribute of ATIs compensation philosophy. For many years, a fundamental principle of ATIs executive compensation program
has been to tie compensation to the achievement of specific financial and performance goals that further ATIs business strategies, reward actual performance and are effective in achieving the Companys underlying compensation goals. As
such, a significant portion of our NEOs compensation is subject to the achievement of rigorous performance goals and, therefore, is at risk. The Company uses three-year performance measurement periods for all but our annual cash
incentive plan in recognition of performance over a longer period of time and to mitigate compensation risk.
ATI
Performance Impact on NEO Compensation
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For both 2015 and 2016, our Personnel and Compensation
Committee determined that our CEO, Rich Harshman, should forego his earned annual cash award under our annual incentive programs due to overall Company financial performance. Mr. Harshman did not receive a salary increase for 2016. In 2015, he
was paid only his base salary, as no amounts were earned under the long-term incentive plans in effect for the 20132015 performance period.
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Our NEOs other than Mr. Harshman received cash incentives for 2016 under our short term incentive program, the 2016 Annual
Performance Plan or APP.
The TSR portion of our long-term incentive program in effect for the 2014-2016 performance period was earned at a rate equal
to 63% of the applicable target awards, and the LTSV portion of the 2014-2016 program also resulted in a payout.
The following table shows the compensation paid
to each NEO based on ATIs 2016 performance.
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Named Executive Officer
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2016 Base Salary ($)
(1)
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2016 APP ($)
(2)
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2014-2016 PRSP
($)
(3)
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2014-2016
TSRP($)
(4)
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2014-2016 LTSV
($)
(5)
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Harshman
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1,060,000
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0
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0
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613,154
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741,407
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DeCourcy
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480,000
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38,400
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0
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175,762
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318,794
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Kramer
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425,000
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29,750
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0
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163,495
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296,554
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Sims
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510,000
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265,200
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0
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202,340
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367,001
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Wetherbee
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500,714
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40,000
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0
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122,626
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N/A
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(1)
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Mr. Wetherbees base salary was $450,000 for the first two months of 2016 and $510,000 for the balance of the year.
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Reflects a below target award for named executive officers other than Mr. Harshman, who did not receive an award. Mr. Wetherbees award reflects his change in base salary effective February 23, 2016.
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(3)
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Half of the performance/restricted stock award, including accumulated dividends, was forfeited. The remaining half of the 2014 award will vest in February 2019, for participants who remain employed by the Company on the
vesting date.
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Reflects achievement at 63% of the target award.
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(5)
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Reflects achievement at target.
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The following comparison of target compensation to realized compensation for our NEOs
demonstrates our 2016 reduction in target compensation levels to better align with market median in connection with the redesign of our executive compensation program, as well as our ongoing commitment to compensating our leadership based on the
Companys performance and placing a significant proportion of senior executive compensation at risk:
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Named Executive Officer
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2014 Target
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2015 Target
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2016 Target
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2016 Realized
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Harshman
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$
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6,150,000
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$
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6,519,000
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$
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4,992,600
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$
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2,575,179
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DeCourcy
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$
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2,021,000
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$
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2,256,000
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$
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1,632,000
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$
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1,082,848
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Kramer
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$
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1,880,000
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$
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1,997,500
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$
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1,402,500
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$
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1,125,682
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Sims
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$
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2,326,500
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$
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2,397,000
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$
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1,734,000
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$
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1,429,344
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Wetherbee
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N/A
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$
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2,115,000
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$
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1,716,000
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$
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721,309
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2017 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
EXECUTIVE COMPENSATION SUMMARY
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2017 Say on Pay Proposal
Why should you vote in favor of our 2017 Say on Pay proposal?
We took a clean sheet approach resulting in the substantial redesign of our
compensation program in 2016 and developed a new executive compensation program that is more aligned with stockholders interests. Among other changes, we:
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Redesigned our short-term cash
incentive program and related financial measures to place greater emphasis on financial results. Awards to our CEO and Executive Council members are 90% contingent on ATIs financial performance. Additionally, the Personnel and Compensation
Committee of our Board has the authority to reduce or eliminate the remaining 10% of such awards, which is contingent on the achievement of individual strategic goals, based on the Companys overall financial results and in order to align as
closely as possible with stockholder interests.
Redesigned our long-term incentive program, which incorporates
3-year
equity performance-based incentives that are aligned with our
business strategies. Awards to our CEO and Executive Council are comprised 70% of performance shares.
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Decreased the 2016 long-term
incentive opportunities for our CEO and Executive Council members reflecting our lower financial performance and current market trends.
Adopted a simplified overall incentive
compensation structure that is more transparent and easier to understand.
Implemented market-leading stock ownership
guidelines for executives, officers and other top leadership positions.
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Our business faced a number of challenges during 2016, following a similarly difficult year in 2015, as our management continued to
execute the right sizing and other initiatives described above under the heading 2016 Business Performance that we believe position us well for sustainable, profitable long-term growth in 2017 and beyond.
The compensation of our senior executives during 2016 under our new clean sheet program
reflects our financial results. Our CEO and NEOs (other than Mr. Wetherbee) did not receive salary increases in 2016, and our NEOs whose awards under our 2016 Annual Performance Plan were contingent on our overall corporate results and/or the
results of our FRP business did not receive any portion of the 90% of their awards that were contingent on such results. Our Personnel and Compensation Committee determined, after consideration of the Companys overall financial results, that
although our CEO earned the 10% of his 2016 Annual Performance Plan award tied to the achievement of strategic goals, his entire award should be forfeited in the interest of stockholder alignment. Moreover, a portion of the long-term incentive
awards granted to our NEOs for the performance period ending in 2016 did not vest, because the applicable performance criteria were not satisfied.
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48
ATI
2017 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION PHILOSOPHY
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Our Compensation Philosophy
ROLE OF THE PERSONNEL AND COMPENSATION COMMITTEE
The
Committees primary responsibility is to design compensation plans that drive the Boards and managements long-term strategic vision for ATI, and to ensure that those plans support ATIs goal of creating stockholder value over
the long-term. Over the last several years, the Committee has emphasized design clarity and transparency to better communicate with our stockholders and to ensure that our compensation programs are aligned with evolving best practices.
The Committee is composed of four independent,
non-employee
directors. The Committee has the sole responsibility to carry out
ATIs overarching policy of linking the executive compensation program to the interests of stockholders. The Committee is responsible for determining compensation for the NEOs and other members of the management Executive Council, which is
comprised of seven members of senior management, including the CEO. The Committee also has the responsibility for oversight of the Companys equity plans, variable compensation plans for management employees and supervising managements
implementation of those plans to ensure a continuing source of leadership and succession planning for ATI. In addition, the Committee reviews compliance with independence standards applicable to ATIs compensation consultant.
ROLE OF INDEPENDENT COMPENSATION CONSULTANTS
The
Committee, under its charter, has the sole authority to retain and terminate any compensation consultant used in the evaluation of executive compensation and has the sole authority to approve the retention terms of the consultant, including fees.
The compensation consultant retained by the Committee is responsible only to the Committee. The Committee reviews the qualifications of the consultant, including independence. The Committee
re-evaluates
the
consultants independence on an ongoing basis. The Committee may, at any time, contact the consultant without interaction from management.
In September 2016,
the Committee retained Meridian Compensation Partners, LLC, a nationally recognized executive compensation consultant, for benchmarking compensation and program design and advice on a variety of compensation related matters. Prior to that, Pay
Governance served as the Committees independent compensation consultant. Meridian provides no other services to ATI and has been determined to be independent by the Committee. Further, because Meridian is involved only in the business of
executive compensation consulting, Meridian does not attempt to sell other services to the Company.
OUR PHILOSOPHY
The Committees approach to compensation is to offer a base salary that is competitive with an identified benchmarking peer group of companies and incentive
opportunities that are performance-oriented and linked to the interests of stockholders. The Committee has developed a balance of annual and long-term programs using diverse criteria to discourage inappropriate risk taking. For the NEOs, the program
consists of base salary, an annual performance-based cash incentive, and longer-term performance-based compensation opportunities.
The Committee views the
executive compensation program as a management tool that, through a detailed and quantitative target-setting process establishes challenging financial performance goals that encourage the management team to achieve or surpass ATIs business
objectives.
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The Committee has determined that the
executive compensation program should:
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pay competitively
by setting overall target
compensation, which is realized when performance targets are met, in line with target compensation at peer companies and other companies and industries with which ATI competes for executive talent;
provide
performance-oriented incentive pay opportunities
that are linked to the interests of stockholders by (i) putting substantial portions of potential compensation at risk, (ii) supporting ATIs business strategy by tying performance
goals to specific Company annual and longer-term strategic objectives; and
retain executives
that are essential to driving ATIs strategies and
future growth.
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COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION PHILOSOPHY
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Competitive Compensation
The Committee reviews, with outside compensation and other advisors, the compensation policies and practices at peer companies that ATI competes with for talent and
skill sets in the Companys multiple locations, or are in our industry and serving our end markets. We use this information to help establish base compensation levels throughout the management organization at the approximate median of these
groups. The incentive plans provide opportunities to earn additional amounts if performance goals are met or exceeded, but do not pay out if performance goals are not met.
Performance-Oriented and Linked to the Interests of Stockholders
The Committee believes that the more senior the manager, the larger the percentage of compensation that, over time, should be at risk. The goals and targets used across
all management levels include both company-wide financial performance measures as well as
pre-set
goals within a particular participants area of responsibility. They are designed to encourage a
team-oriented approach to achieving ATI profitability and strategic objectives and positioning the Company for the future challenges. The Committee scales compensation challenges and opportunities by level of responsibility and focuses performance
on the measures that particular managers can most directly influence.
The Committee implements its
pay-for-performance
philosophy by using performance metrics that are linked to the interests of stockholders, such as operating profit, EBITDA, net income/earnings,
total stockholder return, and/or strategic goals that are designed to help create stockholder value over the long-term. In the new compensation program design for 2016, performance goals focus on income, cash flow, and ROIC (return on invested
capital). ATIs business plans have focused on internal generation of the funds necessary for sustainable profitable growth and both product and end market diversification.
Attract and Retain Talent
We designed our
program to attract and retain a deep pool of managerial talent who share ATIs commitment to enhancing stockholder value in the short- and longer-terms. The Committee believes that the plans and performance goals will attract, challenge, and
retain superior managers experienced in ATIs businesses and direct their efforts toward achieving specific tasks that the Board and senior management determine to be necessary for profitable growth through business cycles.
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2017 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION PHILOSOPHY
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Executive Compensation
Highlights
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o
Link compensation to ATI performance.
Performance drives pay. A significant portion of compensation
opportunities for the NEOs is variable, meaning it is tied to performance. Cash and equity incentive plans are based on the attainment of business plan performance metrics. Payments are made only when the performance targets are achieved.
o
Balanced compensation
program.
The compensation program includes complementary but diverse performance goals, a balance of types of compensation, and caps on the amount of compensation that can be awarded.
o
Compensation
aligned with stockholder interests.
Long-term incentive compensation opportunities for the NEOs are equity-based and tied to business plan performance metrics.
o
Double trigger change in
control agreements.
o
Independent Compensation Consultant.
Our Personnel and Compensation Committee works closely with an independent compensation consultant.
o
Clawback
policy.
Clawback arrangements require the return of compensation to the extent that information used to calculate the achievement of earnings or other performance measures is subsequently determined to be materially incorrect.
o
Robust Stock
Ownership Guidelines for Directors and Executive Management.
Our stock ownership guidelines for management include 6X base salary ownership for the CEO and require 100% retention until ownership guidelines are met.
o
Limits on
severance arrangements.
In 2016, we adopted a policy that limits future severance arrangements to 2.99X base salary.
o
Board compensation risk
oversight.
o
162(m) compliant.
Our incentive programs are designed with the intent that payouts will satisfy the requirements of qualified
performance-based compensation under Section 162(m) of the Internal Revenue Code.
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X
No employment agreements for executive officers.
X
No excise tax
gross-ups
in change in control agreements.
X
Executive
perquisites.
We do not have executive perquisites such as personal air travel, club dues or tax
gross-ups.
X
No hedging
transactions or pledging of ATI stock by officers and directors.
We prohibit officers and directors from hedging or pledging ATI stock.
X
No repricing of
awards.
No previously granted awards can be repriced or surrendered in exchange for new awards.
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ATI
2017 Proxy Statement
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51
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COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION SETTING PROCESS
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Compensation Setting Process
SETTING COMPENSATION LEVELS AND OPPORTUNITIES
This
section explains the Committees multi-step process for setting compensation levels and opportunities and validating our pay targets. The table below, and description that follows, summarizes the analyses involved in this process:
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Process Step/
Analysis
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Responsibility or
Data Source
|
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Purpose
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How Its Used
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When Its Conducted
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Review of Annual and Long-Term Business Plans
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Board/ management
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Aligning incentive compensation with business objectives
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To support determination of performance targets in incentive plans
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December
February
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Individual Performance Assessments
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Committee; Executive feedback
|
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Evaluating individual performance of CEO and Executive Council (EC) members (for EC members,
based on CEO input)
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To determine short-term incentive award payments for the award period that recently ended and to assist in
setting individual award opportunities for the next year/ award cycle
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December
January
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Company Achievement of Performance Goals
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Board/ management
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Determining award payments based on Company performance in completed performance periods
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Considered when determining appropriate performance goals for upcoming periods
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January
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Market and Peer Analysis
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Compensation consultants
|
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Setting pay for our executives
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To set competitive base pay and short- and long-term incentive targets and compensation opportunities for the
next year/award cycle
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December
February
|
Pay and Performance
Analysis
|
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Publicly available financial and compensation information
|
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Evaluating pay and performance to validate individual compensation plans that were
established in February
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To assess achievement under the incentive plans relative to Company and peer performance
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Ongoing
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Tally Sheets
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Compensation consultants; Internal compensation and benefits data
|
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Evaluating total remuneration and internal pay equity of our executives
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To evaluate the total remuneration and projected payments to the NEOs under various termination scenarios. This
helps to determine if each executives compensation package is appropriately aligned with that of internal peers and whether any adjustments to our compensation plans or programs, or an individuals pay package, is necessary
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Ongoing
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Stockholder Outreach
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Board/
management
|
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To obtain stockholder feedback on concerns and questions relating to plan design and
performance
|
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To understand expectations of investors and monitor trends in executive compensation from the perspective of
stockholders. Used to evaluate compensation policies, practices and plans.
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Ongoing
|
Near the end of each year, the Board (including members of the Committee) reviews ATIs annual and long-term business and
strategic plans with management. Generally at the Committees January meeting, following the review of the Companys
year-end
financial results, the Committee determines the award payments to be made
under the compensation plans with performance measurement periods that concluded at the end of the previous year based upon the Committees assessment of the achievement of the predefined financial goals and objectives.
Generally, at the Committees February meeting, the Committee authorizes compensation plans for future periods and establishes the specific financial performance
goals under the incentive plans in light of the Board-approved business and strategic plans for that future period.
52
ATI
2017 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION SETTING PROCESS
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The Committee considers which incentive plans, award levels and performance goals would optimize the achievement of
ATIs future business objectives without introducing systemic risk driven by the executive compensation program. The Committee solicits the views of its advisors as to whether the plans under consideration reflect and support achievement of the
Companys short-term and long-term business objectives and strategies. In addition, at that time, the Committee approves individual participation levels in the compensation plans for the CEO and members of the management Executive Council, and
directs executive management to establish participation levels in the plans for other eligible employees within the guidelines given by the Committee. Generally, all prospective compensation opportunities under the long-term compensation plans are
made at the Committees February meeting.
INTERNAL PAY EQUITY
Using market data, our independent compensation consultant advises the Committee on relative compensation among the Executive Council members, including the NEOs. The
compensation levels generally reflect the job functions normally associated with a particular title and the degree of responsibility inherent with the job duties.
In setting compensation opportunities, the Committee considers the ratios of CEO compensation opportunities and the compensation opportunities of each of the other
NEOs. The ratio of the 2016 total realized compensation for Mr. Harshman, Chairman, President and Chief Executive Officer, compared to the average of the compensation of the other NEOs, as reflected in the Total Realized Compensation Table, is
approximately 2.36. Recognizing his ultimate management responsibility as Chairman, President and CEO, base pay and compensation opportunities are significantly greater for the CEO than for the other NEOs of the Company.
BENCHMARKING PEER GROUP
The Committee considers, with information provided by the compensation consultant, the compensation practices across a broader group of manufacturing companies. The
Committee uses the peer group as a reference in developing its executive compensation program and in determining the competitiveness of its executive compensation levels. The Committee also uses the broader manufacturing company practices as a check
against the peer group information. Annually, the Committee reviews the peer group to ensure that the companies constituting the peer group remain relevant and provide meaningful comparisons for compensation and business purposes. ATI believes that
there are no public companies that engage in the full range of the Companys specialty materials and components manufacturing, fabrication, marketing and distribution. To address this reality, the Committees independent compensation
consultant developed the following criteria to guide the selection of peer companies for benchmarking compensation.
Specifically, peer companies should:
1)
|
Be competitors for business and/or executive talent and be primarily from the metals industry or adjacent sectors;
|
2)
|
Be reflective of the general complexity and business orientation of ATI:
|
Global footprint, product lines, foreign competition
Revenues that approximate 50% to 200% of ATI with some flexibility
Capital intensive businesses as indicated by lower asset
turnover ratios (i.e., 0.5 to 1.5)
Higher stock price
volatility, or beta (i.e., greater than 1.0)
Market capitalization reasonably aligned with ATI; Some
flexibility for outliers that may be aligned from different perspectives (i.e., revenues, competition)
Similar number of employees
3)
|
Have stock prices reasonably correlated with ATI over the past five years indicating sensitivity to similar external market influences.
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ATI
2017 Proxy Statement
/
53
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COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION SETTING PROCESS
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As a result, for performance measurement periods under the executive compensation plans beginning on January 1,
2016, the Benchmarking Peer Group consists of the following companies:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($millions) Company
|
|
Revenue
Actual
FY2016
|
|
|
Total
Assets
FY2016
|
|
|
Market
Capitalization
12/31/2016
|
|
|
Employees
|
|
|
Asset
Turnover
|
|
|
Beta
12/31/2016
|
|
Reliance Steel & Aluminum Co.
|
|
$
|
8,578
|
|
|
$
|
7,585
|
|
|
|
$5,772
|
|
|
|
14,000
|
|
|
|
1.25
|
|
|
|
1.34
|
|
Steel Dynamics Inc.
|
|
$
|
7,458
|
|
|
$
|
6,788
|
|
|
|
$8,673
|
|
|
|
7,510
|
|
|
|
1.12
|
|
|
|
1.47
|
|
Oshkosh Corporation
|
|
$
|
6,279
|
|
|
$
|
4,514
|
|
|
|
$4,776
|
|
|
|
13,800
|
|
|
|
1.38
|
|
|
|
1.77
|
|
AK Steel Holding Corporation
|
|
$
|
6,007
|
|
|
$
|
3,921
|
|
|
|
$2,433
|
|
|
|
8,500
|
|
|
|
1.50
|
|
|
|
2.67
|
|
Terex Corporation
|
|
$
|
5,046
|
|
|
$
|
5,569
|
|
|
|
$3,311
|
|
|
|
70,400
|
|
|
|
1.13
|
|
|
|
2.42
|
|
Trinity Industries Inc.
|
|
$
|
5,031
|
|
|
$
|
9,136
|
|
|
|
$4,225
|
|
|
|
22,030
|
|
|
|
0.73
|
|
|
|
2.22
|
|
Commercial Metals Company
|
|
$
|
4,611
|
|
|
$
|
3,131
|
|
|
|
$2,497
|
|
|
|
8,388
|
|
|
|
1.42
|
|
|
|
1.38
|
|
Westinghouse Air Brake Technologies Corporation
|
|
$
|
3,004
|
|
|
$
|
3,428
|
|
|
|
$7,394
|
|
|
|
13,000
|
|
|
|
1.00
|
|
|
|
1.11
|
|
Worthington Industries, Inc.
|
|
$
|
2,827
|
|
|
$
|
2,143
|
|
|
|
$2,968
|
|
|
|
10,000
|
|
|
|
1.36
|
|
|
|
1.35
|
|
Crane Co.
|
|
$
|
2,747
|
|
|
$
|
3,409
|
|
|
|
$4,227
|
|
|
|
11,200
|
|
|
|
0.81
|
|
|
|
1.18
|
|
The Timken
Company
(1)
|
|
$
|
2,729
|
|
|
$
|
2,819
|
|
|
|
$3,089
|
|
|
|
14,709
|
|
|
|
0.99
|
|
|
|
1.63
|
|
Valmont Industries, Inc.
|
|
$
|
2,481
|
|
|
$
|
2,384
|
|
|
|
$3,172
|
|
|
|
10,697
|
|
|
|
1.02
|
|
|
|
1.05
|
|
Joy Global, Inc.
|
|
$
|
2,371
|
|
|
$
|
3,426
|
|
|
|
$2,753
|
|
|
|
10,000
|
|
|
|
0.66
|
|
|
|
1.98
|
|
SPX Corporation
|
|
$
|
2,113
|
|
|
$
|
2,750
|
|
|
|
$1,342
|
|
|
|
8,000
|
|
|
|
0.65
|
|
|
|
|
|
Kennametal Inc.
|
|
$
|
2,020
|
|
|
$
|
2,307
|
|
|
|
$2,499
|
|
|
|
11,178
|
|
|
|
0.80
|
|
|
|
1.95
|
|
Carpenter Technology Corp.
|
|
$
|
1,747
|
|
|
$
|
2,814
|
|
|
|
$2,814
|
|
|
|
4,500
|
|
|
|
0.64
|
|
|
|
2.00
|
|
Schnitzer Steel Industries, Inc.
|
|
$
|
1,353
|
|
|
$
|
891
|
|
|
|
$ 688
|
|
|
|
2,818
|
|
|
|
1.46
|
|
|
|
1.64
|
|
25th Percentile
|
|
$
|
2,371
|
|
|
$
|
2,750
|
|
|
|
$2,497
|
|
|
|
8,388
|
|
|
|
0.80
|
|
|
|
1.35
|
|
Median
|
|
$
|
2,827
|
|
|
$
|
3,409
|
|
|
|
$3,089
|
|
|
|
10,697
|
|
|
|
1.02
|
|
|
|
1.64
|
|
75th Percentile
|
|
$
|
5,046
|
|
|
$
|
4,514
|
|
|
|
$4,227
|
|
|
|
13,800
|
|
|
|
1.36
|
|
|
|
1.99
|
|
ATI
|
|
$
|
3,135
|
|
|
$
|
5,170
|
|
|
|
$1,735
|
|
|
|
8,500
|
|
|
|
0.60
|
|
|
|
2.38
|
|
Percentile
|
|
|
57
|
%
|
|
|
79
|
%
|
|
|
13
|
%
|
|
|
34
|
%
|
|
|
0
|
%
|
|
|
92
|
%
|
Source: Standard & Poors Capital IQ Database (Compustat financials)
Data represents each companys fiscal year, which may not align with ATIs fiscal year end of December 31
(1)
|
In July 2014, The Timken Company spun off its steel-making business into a public company, TimkenSteel Corporation. The Timken Company remains part of the benchmarking peer group.
|
The peer group used for measuring the Companys relative total stockholder return (TSR Peer Group) is different from the benchmarking peer group. The
TSR Peer Group companies, though having a range of sizes, all remain aligned with ATI on the basis of relative similarity to one or more of the aspects of the Companys businesses. These companies compete in one or more of the markets in which
ATI competes, and the risk profiles typically assigned to those companies by the capital markets are similar to ATI.
For further information, please see
page 63
.
MONITORING OF PERFORMANCE AND PROGRESS THROUGHOUT THE YEAR
The Committee meets regularly during the year to monitor the Companys performance as well as the individual performance of members of our management Executive
Council, relative to the incentive plan goals. At these meetings, the Committee is provided with current financial data and with internal status reports on key performance measures. The Committee uses this information to:
|
|
assess managements interim progress toward achieving the predetermined performance goals and the potential payouts under the various executive compensation plans, and
|
|
|
assist in the evaluation of whether the compensation plans continue to support and direct performance as required to achieve the Companys business goals.
|
Members of management attend portions of these meetings. The Committee also meets with its outside compensation and other advisors during non-management executive
session in order to ensure independent feedback on all compensation-related matters.
54
ATI
2017 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
INVESTOR OUTREACH AND THE EXECUTIVE COMPENSATION PROGRAM
|
|
|
Investor Outreach and the Executive
Compensation Program
Beginning in December 2014, and as a result of concerns expressed by ISS and Glass Lewis in prior years, ATI management was
commissioned by the Personnel and Compensation Committee of the Board of Directors to undertake a Clean Sheet approach to executive compensation, including the short-term incentive
(STI-annual
cash incentive) and long-term incentive
(LTI-equity)
programs. The new approach initially included two rounds of stockholder outreach in April and September of 2015. Specifically, we engaged with our 50
largest stockholders, which represent over 60% of our share ownership, and discussed stockholders comments on our executive compensation program and corporate governance practices. The results of our engagement are best reflected in our
corporate governance practices and our new clean sheet executive compensation program. We conducted further outreach efforts throughout 2016, and will include stockholder outreach as an annual part of our process going forward. The
following table summarizes stockholder feedback from our 2015 outreach initiatives, and ATIs responsive changes and proposals.
|
|
|
|
|
Program Element
|
|
2015 Stockholder Feedback
|
|
ATI 2016 Program Changes
|
|
|
|
Annual Cash Incentive Plan
|
|
The annual incentive plan should place more emphasis on financial performance and should be designed to drive ATIs strategy.
|
|
We increased the proportion of CEO and Executive Council members annual cash incentive plan that is contingent upon the achievement of financial goals (income and cash flow) to
90%
from 70%, beginning
in 2016. We also removed discretionary bonuses as a potential component of our program. Strategic/individual goals are part of the plan, but are limited to 10% of the plan for CEO and Executive Council members.
|
|
|
|
|
|
|
|
The plan now includes an all ATI component for all participants; at least 20% of
each participants award is contingent upon ATIs financial results.
|
|
|
|
Equity Incentive Plan
|
|
ATIs equity program seems complex; does it communicate and drive the right behaviors?
|
|
We reduced the number of equity programs in which our CEO and Executive Council participate from 3 programs with multiple measures to 2 programs: Performance Shares (70%) and Time Vested Shares (30%). There
are no separate programs for CEO and Executive Council members.
|
|
Long term incentives should include a heavier weight on ROIC.
|
|
Awards granted to our CEO, Executive Council members and other top leaders under the
Performance Share component of our new program are contingent on the achievement of ROIC (50%) and Net Income (50%) performance goals.
|
|
|
|
Best Practices
|
|
Are all programs following best practices?
|
|
To keep pace with current best practices, we:
updated our Stock Ownership guidelines to include 6X base salary ownership for CEO
and require 100% retention until guidelines are met; and
stopped paying
dividends on unvested shares subject to LTI awards.
|
|
|
|
Level of Compensation
|
|
Are all programs payout percentages in line with market data?
|
|
To better reflect the market median, we significantly reduced target payouts (as a percentage
of base compensation) to our CEO and Executive Council members under our LTI program, generally resulting in reductions of 20%33%. All other compensation elements are at the median of the market for actual pay (base), or target opportunity
(STI).
|
|
|
|
|
|
|
|
Our 2016
program changes and proxy disclosure improvements were very well received by ATI stockholders, based on feedback that we received as part of our 2016 stockholder outreach program. Additionally, our stockholders expressed their appreciation for
ATIs ongoing commitment to strong corporate governance, noting in particular our adoption of proxy access
by-law
provisions in 2016.
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ATI
2017 Proxy Statement
/
55
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|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
HISTORY OF EXECUTIVE COMPENSATION PROGRAM CHANGES
|
|
|
History of
Executive Compensation Program Changes
The 2016 redesign of the executive compensation program follows years of continuous improvement to our executive
compensation programs. This progression shows our willingness to incorporate compensation best practices and developments into our program and demonstrates our responsibility to stockholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
|
|
|
Increased rigor of financial targets and reduced
maximum payouts under
two incentive plans
|
|
|
|
Revised management and director stock ownership guidelines, added retention requirement
|
|
|
|
|
|
|
|
Hired new independent compensation consultant
|
|
|
|
Eliminated NEO perks and related tax gross-ups
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
|
|
|
|
Reduced CEOs target
award opportunities by 20% under two incentive plans
|
|
|
|
Increased minimum level of company performance needed for payout under the Total Stockholder Return Plan
Reduced maximum payout opportunity
|
|
|
|
|
|
|
|
Formalized long-standing policy prohibiting hedging/pledging of ATI Stock
Included clawbacks in executive compensation arrangements
|
|
|
|
Eliminated excise tax
gross up
Restructured
benchmarking peer
group to right-size
peer companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
Increased CEO stock ownership guidelines
|
|
|
|
Reduced NEO target award opportunities by 10% under annual incentive plan
|
|
|
|
|
|
|
|
Adopted new Long Term Performance Plan with two performance components; Total Stockholder Return (TSR) and Long-term Stockholder Value (LTSV) subject to
four strategic operational goals
|
|
|
|
Froze ATI Pension
Plan and Supplemental Pension Plan accruals
effective 12/31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Revised benchmarking peer group
|
|
|
|
|
|
|
|
Embedded clawback policy in 2015 Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
New executive
compensation program implemented; simplified
and better aligned with business goals
|
|
|
|
Updated stock ownership guidelines to require 6X base salary ownership for CEO
|
|
|
|
Reduced CEO and NEOs target award opportunities under LTI programs
|
|
|
|
Adopted proxy access
by-law provisions
Future severance arrangements limited
to 3X base salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56
ATI
2017 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
2016 EXECUTIVE COMPENSATION PROGRAM
|
|
|
2016 Executive Compensation Program
|
|
|
|
|
|
|
|
|
For 2016, we overhauled our executive compensation program and took a clean sheet approach to its redesign.
ATI engaged external compensation consultants and other advisors to provide research and review peer company practices and the practices of other manufacturing companies. We also considered the business challenges and goals and motivation and
retention issues that we face and reached out to our largest stockholders to solicit their feedback on a tentative program design.
The clean sheet process included:
|
|
|
|
|
Evaluation of alternative annual and long-term incentive plan
designs to vet and refine incentive designs deemed to be a
best-fit
for the business and
best-in-class;
Benchmarking executive compensation levels, as well as short term
incentives and long-term incentive opportunities, to ensure total compensation levels would be aligned with (or lower than) the market median;
Modeling the impact of incentive designs and compensation
reductions;
|
|
Introduction of new financial performance metrics, including return
on invested capital (ROIC) and one ATI initiative and ensuring affordability;
Increasing performance expectations embedded in the annual and
long-term incentive plan goals to ensure meaningful progress was achieved before payouts were generated; and
Reducing individual long-term incentive target opportunity for the
CEO and Executive Council members as well as other executive participants to be aligned with market median.
|
|
|
|
|
The resulting program consists of the Annual
Performance Plan and the Long-Term Incentive Plan. Specifically, we:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redesigned our short-term incentive
program (annual cash performance-based incentive)
Changed our financial measures to put more
emphasis on total ATI results through income/income-related and cash flow measures.
Changed the weighting of the financial portion
to 90% for the CEO and Executive Council members.
Program prohibits positive discretion to
increase award amounts.
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Redesigned our long-term incentive
program
(3-year
equity performance-based incentive)
Re-aligned
our long-term incentives to match our future business strategies, with 70% weighting on performance shares for the CEO, Executive Council members, and other top leaders.
New long-term incentive financial performance
metrics, with a focus on two metrics: ROIC (return on invested capital), and net income.
Maintained total stockholder return performance
relative to a peer group of companies as a modifier to ROIC and net income performance.
No dividends are earned on restricted share
units.
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Simplified our Executive Compensation
Program
Long-term equity performance-based incentive program has been reduced from its current format of three plans with multiple metrics and features.
There are no separate programs for the CEO and
Executive Council members.
The new executive compensation program is more transparent and easier to understand.
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Competitive and
Market-Based
Decreased the 2016 long-term incentive opportunities for the CEO and all Executive Council members to reflect a target at the market median based on position. This resulted in decreases from 20%
to 33% as a percentage of base salary. Specifically, the CEOs LTI was reduced from 400% of base salary to 320%.
Contemporary design that aligns with other
mid-sized
and large manufacturing companies.
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2017 Proxy Statement
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57
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COMPENSATION DISCUSSION AND
ANALYSIS |
2016 EXECUTIVE COMPENSATION PROGRAM
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The new executive compensation program is designed to be more aligned with stockholders interests, more
transparent, easier to understand, retentive, and focused on ATIs business objectives, such as driving the achievement of financial goals and emphasizing alignment between the interests of ATIs management and ATIs stockholders. The
changes are reflective of investor feedback, a market analysis of competitive practices, and a goal to simplify the overall structure. We intend for this new program to be in place for the next several years.
Our newly redesigned executive compensation program for 2016 consists of the following elements for our NEOs:
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Plan
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Purpose
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Relevant Performance
Metric and Description
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ANNUAL/SHORT TERM INCENTIVE
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Base Salary
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To provide fair and competitive compensation for individual performance and level of
responsibility of position held.
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Individual performance
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FIXED
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2016 Annual Performance Plan (APP)
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To provide performance-based annual cash award for ATI and
business unit performance to motivate and reward key employees for achieving our short-term business objectives and drive performance.
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Mix of metrics, including:
EBITDA/
Segment operating profit
Cash flow
Strategic/Individual goals
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VARIABLE
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LONG-TERM INCENTIVE
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Long-Term Incentive Plan: Performance Share Units (PSUs) (70%)
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To provide performance-based equity compensation in the form of restricted share units to drive ATIs earnings and retain key
managers.
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Awards vest at the end of a three-year performance period based on
achievement of specified goals tied to:
Net Income (50%)
Return on invested income (ROIC) (50%) 20% +/- TSR modifier for Executive
Council and other leadership participants.
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Long-Term Incentive Plan: Restricted Share Units (RSUs) (30%)
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To enhance the programs ability to retain participants and
drive long-term behavior by allowing for time-based awards.
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The RSUs are time-vested awards.
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While our legacy long-term incentive programs continued to impact the compensation realized by our NEOs in 2016, base salary and
incentive award opportunities for 2016 further reflected both the underlying approach and goals of our clean-sheet redesign effort and the challenges that our business faced in 2015 and 2016. Specifically, for 2016:
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Base salaries for the CEO and NEOs (other than Mr. Wetherbee) remained at 2015 levels.
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Our incentive programs promote our one ATI philosophy by placing greater emphasis on financial metrics that measure total ATI performance, rather than segment or individual results, for all participants.
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Our incentive programs are now more heavily weighted toward performance-contingent awards, particularly for NEOs. Short-term incentive awards to our NEOs for 2016 were 90% contingent on total ATI and (as applicable)
segment financial performance, compared to 70% for our 2015 awards, and 70% of each long-term award is performance-vested.
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The Committee substantially reduced NEO award levels at target under the new LTIP by
20%-33%
compared to award levels for prior years. Our CEOs target long-term award
opportunity was reduced from 400% of base salary to 320% of base salary, and awards were weighted to emphasize performance-vested shares. Specifically:
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The PSUs awarded at target as a percentage of base salary were 224% for the CEO and 140% for each other NEO; and
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The RSUs awarded at target as a percentage of base salary are 96% for the CEO and 60% for each other NEO.
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58
ATI
2017 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS
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2016 EXECUTIVE COMPENSATION PROGRAM
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The pie charts below show the mix of aggregate NEO compensation by type, form, and length, at target for 2016:
2016 ANNUAL PERFORMANCE PLAN (APP)
Adopted in connection with our 2016 clean-sheet redesign effort, the APP is a short-term cash incentive plan in which approximately 400 key employees (including the
NEOs) participate. For Executive Council members, 90% of the performance goals are based on financial metrics, and 10% on strategic/individual goals, as described below.
For Corporate participants (including our CEO):
For Business Segment NEOs:
Performance Criteria.
The performance
goals for the 2016 APP were set in February 2016 based on ATIs business and operations plans for 2016. Corporate-wide goals are established in a
bottom-up
process through which each business units
business plan and business conditions are separately reviewed in setting targets, as are the expectations for other performance factors at each business unit. The performance goals include a mix of financial targets and strategic and/or individual
performance goals.
Level of Difficulty.
The Committee sets
the APP metrics so that the relative difficulty of achieving the target level is consistent from year to year. The objective is to establish target goals in any given year that are challenging yet achievable, with a much higher level of difficulty
to achieve performance that generates the maximum payout.
60% on ATI EBITDA
30% on ATI cash flow
10% on strategic/ individual goals
30% on ATI EBITDA
30% on Business Unit/Segment
Operating Profit
30% of Business Unit/Segment
Operating Cash Flow
10% on strategic/ individual goals
ATI
2017 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
2016 EXECUTIVE COMPENSATION PROGRAM
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Award Opportunities.
The opportunities for the NEOs under the APP are granted at threshold, target and maximum levels expressed as a percentage of base salary and based on predetermined
levels of performance. The Committee sets the potential award ranges as percentages of base salary (the annual incentive percentage) for each NEO using comparative market data provided by the compensation consultant. In general, our
short-term incentive program is designed so that the payout associated with achieving threshold performance is equal to 50% of target while the payout associated with achieving the maximum performance level is capped at 200% of target. No payout
with respect to the financial performance component is earned for performance below the threshold level.
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Annual Incentive Percentage
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Named Executive Officer
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Below
Threshold
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Threshold
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Target
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Maximum
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Harshman
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0%
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57.5%
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115%
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230%
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DeCourcy
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0%
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40%
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80%
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160%
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Kramer
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0%
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35%
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70%
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140%
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Sims
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0%
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40%
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80%
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160%
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Wetherbee
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0%
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40%
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80%
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160%
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To calculate a potential award amount, the target percentage of salary for each NEO is multiplied by a formula based on performance.
Formula
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Base Salary
as of December 31, 2016
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x
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Target Annual Incentive
Percentage
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x
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Performance Achievement
(0-200%)
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=
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Annual Incentive Payout
($)
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2016 Earned and Paid Amounts For Each NEO:
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At Target (100%)
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Actual
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Named Executive Officer
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Target
(% of Base
Salary)
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Dollar
Amount ($)
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Actual
Weighted
Achievement
(% of Target)
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Earned
Cash
Award ($)
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Paid Cash
Award ($)
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Harshman
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115
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1,219,000
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10
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121,900
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0
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DeCourcy
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80
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384,000
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10
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38,400
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38,400
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Kramer
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70
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297,500
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10
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29,750
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29,750
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Sims
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80
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408,000
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65
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265,200
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265,200
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Wetherbee
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80
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400,000
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10
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40,000
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40,000
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The Personnel and Compensation Committee decided that our CEO, Rich Harshman, would not be paid the earned APP incentive award in
2016 due to overall Company financial performance.
60
ATI
2017 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
2016 EXECUTIVE COMPENSATION PROGRAM
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2016 Performance Goals and Achievement Levels for the Named Executive Officers:
Messrs. Harshman, DeCourcy and Kramer:
The 2016 APP awards
for Messrs. Harshman, DeCourcy and Kramer were determined by (a) total ATI performance relative to the financial metrics and (b) each such executives individual performance relative to strategic and/or individual goals, in each case
established at the inception of the awards in February 2016. The following table describes the relative weighting of each metric and the individual goals, as well as ATIs and each executives relative level of achievement for the year:
ATI Corporate
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Performance Goals
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Relative
Weighting (%)
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2016
Actual
Achievement
(% of Threshold)
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ATI EBITDA
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60
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0
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ATI Cash Flow
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30
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0
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Individual/Strategic Goals
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10
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100
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100
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%
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10
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%
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2016 Achievement
: For 2016, the threshold, target and maximum goals for
ATI EBITDA and ATI Operating Cash Flow, as defined, were as set forth below. APP awards were earned based on the weighted achievement of each operating goal. The financial goals were not met.
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(millions)
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Threshold
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Target
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Maximum
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2016 Actual
Performance
(a)
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ATI EBITDA
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$161
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$261
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$361
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$77
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ATI Cash Flow
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$156
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$216
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$316
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$137
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(a)
|
ATI EBITDA was $29.2 million including $471.3 million of non-cash restructuring charges, and ATI cash flow from operations was $(43.7) million. Actual 2016 APP Award performance includes certain adjustments to both the
EBITDA and Cash Flow metrics. EBITDA adjustments include certain idling and shutdown costs related to the August 2016 idling of our titanium sponge production facility in Rowley, UT. Cash Flow adjustments include the $115 million contribution to our
U.S. qualified defined benefit pension plan, adjustments for the Rowley idling, and other adjustments affecting unplanned changes in managed working capital balances.
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Mr. Sims:
The 2016 APP award for Mr. Sims was determined by the
achievement of goals relevant to both total ATI performance and performance of the ATI High Performance Materials & Components segment, as well as his performance relative to individual strategic goals. Mr. Sims 2016 earned award
was at 64.3% of target, as described in the following table:
ATI High Performance Materials & Components
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Performance Goals
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Relative
Weighting
(%)
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2016
Actual
Achievement
(% of Threshold)
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ATI EBITDA
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30
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0.00
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ATI High Performance Materials Components Segment Operating Profit
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30
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67.90
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ATI High Performance Materials Components Segment Operating Cash
Flow
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30
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115.57
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Individual/Strategic Goals
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10
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100.00
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100
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%
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65.00
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%
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2017 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
2016 EXECUTIVE COMPENSATION PROGRAM
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Mr. Wetherbee:
The
2016 APP award for Mr. Wetherbee was determined by the achievement of goals relevant to both total ATI performance and performance of the ATI FRP business, as well as his performance relative to individual strategic goals.
Mr. Wetherbees 2016 earned award was at 10% of target, as described in the following table:
ATI Flat Rolled Products
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Performance Goals
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Relative
Weighting (%)
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|
2016
Actual
Achievement
(% of Threshold)
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ATI EBITDA
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30
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0
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ATI Flat Rolled Products Operating Profit
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30
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0
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ATI Flat Rolled Products Operating Cash Flow
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30
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0
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Individual/Strategic Goals
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10
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100
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100
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%
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10
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%
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For further information about ATI financial performance, please see ATIs Annual Report on Form
10-K
for the fiscal year ended December 31, 2016 filed with the SEC.
LONG-TERM INCENTIVE PLAN (LTIP)
The long-term incentive portion of our redesigned compensation program, the Long-Term Incentive Plan, or LTIP, consists of two components, including
performance share units and restricted share units, each of which were awarded in 2016. For our NEOs, 70% of the aggregate LTIP award is performance-based and entirely contingent on the achievement of quantitative performance measures, while the
remaining 30% of the LTIP award is time-based to provide retention incentives.
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Vehicle
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Performance Metric
|
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Vesting
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Payout Ranges
|
Performance
Share Units
(70%)
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Income 50%
Return on
Invested Capital 50%
h
or
¯
TSR Modifier of 20% for Executive Council members and leadership level
participants
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3-Year
performance
period
|
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Threshold = 50% of
Target*
Target = 100%
Maximum = 200% of Target*
* At the inception of the award period, the Committee can reduce the threshold and maximum payout levels at their discretion.
For 2016:
Threshold = 25% of Target
Target = 100%
Maximum =
150% of Target
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Restricted Share
Units (30%)
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N/A
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3-Year
Ratable Vesting
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Individual opportunities under the LTIP are granted at Threshold, Target and Maximum levels, which are expressed as a
percentage of base salary.
The respective opportunities granted to the CEO and NEOs under the 2016 LTIP were reduced from 2015, as follows:
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2015 Target
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2016 Target
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CEO
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400%
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320%
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Other NEOs
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300%
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200%
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The CEOs 2016 target was below the market median, while the other NEOs 2016 targets aligned with the market median.
All LTIP participants have a PSU component based on income and ROIC metrics.
62
ATI
2017 Proxy Statement
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|
COMPENSATION DISCUSSION AND
ANALYSIS |
2016 EXECUTIVE COMPENSATION PROGRAM
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Performance Share Units (PSUs):
PSUs will vest to the extent that cumulative earnings (defined as income from continuing operations attributable to ATI) and return on invested capital
(ROIC, defined as net operating profit after taxes divided by average invested capital) meet or exceed a Threshold, Target or Maximum level of performance set by the Committee at the beginning of the three-year performance measurement
period. ROIC performance will be averaged over the three year performance measurement period. Whether the income or ROIC performance goals are met, and the extent to which the PSUs vest, will be determined by the Personnel and Compensation Committee
at the end of the performance measurement period. When vested, each PSU will convert into a share of the Companys common stock. No dividends are accumulated or paid on the PSUs.
2016 Payout Percentages if Performance Goals are Met
For the 2016 PSU
component, which is scheduled to vest subject to goal achievement on December 31, 2018, the Committee reduced the Threshold and Maximum payout percentages from the plan design of 50% Threshold and 200% Maximum, to 25% Threshold and 150%
Maximum, as a result of the challenges that the Company faced at the times the awards were made.
Total Shareholder Return Adjustment.
If the Committee
determines that the income and ROIC goals for the 2016-2018 performance measurement period meet or exceed Threshold, the number of shares earned may be increased or decreased by up to an additional 20% based on the Companys TSR relative to the
TSR of a peer group of companies, as follows:
For 2016 awards, we used the SPDR S&P Metals and Mining ETF (XME) as our TSR peer group.
Restricted Share Units (RSUs)
:
In order to provide a retention component to the long-term incentive program, granted RSUs will vest ratably over three years so long as the individual remains an
employee of the Company. If and when vested, each RSU converts into a share of Company common stock. No dividends will be accumulated or paid on the RSUs.
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2017 Proxy Statement
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63
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COMPENSATION DISCUSSION AND
ANALYSIS |
LEGACY LONG-TERM INCENTIVE COMPENSATION PROGRAMS
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LEGACY PLANS
In 2014 and 2015, the Company issued equity awards under two long-term equity incentive plans, the Performance/Restricted Stock Program (PRSP) and the
Long-Term Incentive Performance Plan (LTPP), which had two components, including the Total Shareholder Return Program (TSR) and the Long-Term Shareholder Value (LTSV), each of which is described below.
Both
t
he PRSP and LTPP were discontinued beginning in 2016
. These programs were replaced with our new clean sheet long-term incentive programs and no new awards are being made under either plan.
Legacy Performance/Restricted Stock Program (PRSP)
Overview.
Under the PRSP, shares of performance/restricted stock were
awarded to participants at the beginning of a three-year performance measurement period. Approximately 120 key managers, including the NEOs, participated in this plan.
One-half
of the award under the remaining
PRSP awards has a performance-based vesting feature and the other half has both performance-based and time vesting components, as more fully described below.
Performance Criteria.
The PRSP used an aggregate net income target that
reflected ATIs baseline expectations for earnings under the applicable three-year business plan. For awards under the 20142016 and 20152017 performance measurement periods:
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Performance Feature:
One-half
of the stock-based award is scheduled vest, if at all, only upon ATIs achievement of at least a minimum, predetermined aggregate net
income target for the applicable three-year performance period, in the case of the 20142016 award, excluding certain facility
start-up
costs and underutilization costs associated with our Rowley, Utah
titanium sponge plant in the aggregate for fiscal years 2014, 2015 and 2016.
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If the net income target is not reached or exceeded on
or before the end of the three-year performance period, or if the individual leaves the employ of the Company for a reason other than retirement, death or disability before that date, this
one-half
of the
award is forfeited.
Conversely, if the net income target is reached or exceeded on or before the end of the performance period, the vesting of the
remaining
one-half
of the award (described below) will accelerate so that 100% of the award is payable at the end of the third year.
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Time-Based and Performance Feature:
For our NEOs,
one-half
of each award will vest upon the earlier of (i) five years from the date of grant, if the participant is
still an employee of the Company on that date (or if the participant has retired, died or become disabled), or (ii) the last day of the applicable three-year performance period, if the net income performance criteria for the performance period
is attained.
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2014-2016 Performance.
The PRSP
implemented in 2014 had a performance goal of aggregate net income of $250 million for the 2014-2016 performance measurement period, excluding certain facility
start-up
costs and underutilization costs
associated with our Rowley, Utah titanium sponge plant in the aggregate for fiscal years 2014, 2015 and 2016. Based on ATIs actual aggregate net loss of $950.8 million over that time,
half of each of the 2014-2016 awards was
forfeited
as of January 27, 2017. The remaining half of each such award will vest in February 2020, if the participant is still an ATI employee as of that date or has retired, died or become disabled. The fair market value of ATI stock on
the grant date of February 26, 2014 was $31.215.
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64
ATI
2017 Proxy Statement
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|
COMPENSATION DISCUSSION AND
ANALYSIS |
LEGACY LONG-TERM INCENTIVE COMPENSATION PROGRAMS
|
|
|
Legacy Long-Term Incentive Performance Plan (LTPP)
Overview.
The Long Term Incentive Performance Plan, which was designed to drive overall ATI performance
and the achievement of strategic goals while retaining key managers, included two components:
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TSR Component: Measures total stockholder return
|
|
LTSV Component: Measures long-term stockholder value
|
The Committee awarded a target number of shares to the recipient for the applicable performance measurement
period calculated using a specified percentage of base pay. At the end of the applicable performance measurement period, the number of shares received by the recipient, if any, is based on the Companys total stockholder return (generally, the
change in the trading prices of a share of Company common stock plus dividends paid) (TSR) relative to the TSR of a peer group of publicly traded companies deemed comparable by the Committee. Approximately 60 key managers participated in
this portion of the LTPP.
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The Committee grants performance restricted stock which will vest after three years, in whole or in part, subject to the achievement of various
pre-set
strategic operational goals that are expected to create stockholder value over the long-term, using specified percentages of base pay to calculate the grant. Only members of our Executive Council participated in this portion of the LTPP.
|
Total Shareholder Return (TSR) Component
Performance Criteria, Including Peer Group.
The Committee established a three-year performance measurement
period selected the eligible participants, established the Opportunity Shares for each participant, and identified the peer group of companies for that performance measurement period. The target number of shares of an individuals TSR component
is calculated as a percentage of base salary on the date of grant, then divided by the average of the high and the low trading prices of ATIs Common Stock on the NYSE on the date of grant.
Measurement Criteria.
The performance ranges for threshold, target and maximum performance are as
follows, which are rigorous and consistent with other
TSR-measured
plans used by peers:
|
|
Threshold
:
35th percentile of the peer group results in a payout equal to 50% of target;
|
|
|
Target:
50th percentile of the peer group results in a payout equal to 100% of target; and
|
|
|
Maximum
:
90th percentile or greater of the peer group results in a payout capped at 200% of target.
|
Interpolation is used to determine the payout for performance between threshold, target, and maximum performance levels.
Long Term Shareholder Value (LTSV) Component
Performance Criteria.
Under the LTSV component, the Committee established various strategic, operational goals, the achievement of which were considered crucial to the completion and
implementation of the Companys capital improvement, acquisitions, and business development strategies, and assigned relative weight to each performance metric. At the end of the performance measurement period, the Committee determines the
degree to which each of the performance goals has been met. The achievement level of the respective performance goals with relative weighting will be added together and the sum, expressed as percentage, is multiplied by the number of shares of
restricted stock granted to each participant, to determine the number of shares of restricted stock that will vest. Dividends declared on the Companys Common Stock are accumulated and paid in stock to the holders of this performance/
restricted stock when and if the restrictions lapse on the shares.
|
|
|
|
|
|
|
2014-2016 Performance.
For the
20142016 Performance Period, ATIs total shareholder return was at the 39
th
percentile relative to the TSR for each member of its peer group for that performance period, resulting in
the payment of awards equal to 63% of each participants target award.
The Committee determined that the operational goals established under the LTSV for the 20142016 Performance Period were successfully achieved. As a result, ATIs total shareholder return was at the 39
th
percentile relative to the TSR for each member of its peer group for that performance period, resulting in the payment of awards equal to 63% of each participants target award.
|
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ATI
2017 Proxy Statement
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65
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|
COMPENSATION DISCUSSION AND
ANALYSIS |
OTHER COMPENSATION POLICIES
|
|
|
Other Compensation Policies
Employment Agreements; Change in Control Agreements.
ATI does not have any employment agreements with its NEOs.
The Company has change
in control agreements with each NEO and Executive Council member in the event that a change in control occurs and the individual is terminated from his or her position (double trigger). These change in control agreements do not include
an excise tax
gross-up
provision. The change in control agreements are intended to better enable ATI to retain the NEOs in the event that it is the subject of a potential change in control transaction. Based
on past advice from its compensation consultant, the Committee believes that the potential payments under these agreements are, individually and in the aggregate, in line with competitive practices.
For a more detailed discussion of these agreements, see the
Employment and Change in Control Agreements
section of this Proxy Statement.
Adherence to Ethical Standards; Clawback Policy
Incentive awards (paid in cash or equity) are conditioned on adherence to the Companys
Corporate Guidelines for Business Conduct and Ethics
, which are
published on our website www.atimetals.com. We have clawback agreements with each member of the management Executive Council (which includes the NEOs) that provide for the return of compensation to the extent that information used to calculate
achievement of earnings or other performance measures is subsequently determined to be materially incorrect (including but not limited to circumstances under which any such inaccuracy results in a financial restatement).
Pension and Retirement Plans
ATI maintains a
qualified defined benefit pension plan, which has a number of benefit formulas that apply separately to various groups of employees and retirees. Effective December 31, 2014, the Company froze future benefit accruals in the ATI Pension Plan for
all participating employees other than those in collectively bargained employment arrangements. Also effective December 31, 2014, the Company froze the defined benefit-type
non-qualified
deferred
compensation plans in which salaried employees participate, which includes the Supplemental Pension Plan in which Mr. Harshman participates and the defined benefit portion of the ATI Benefit Restoration Plan in which Messrs. Harshman, DeCourcy,
Sims and Wetherbee participate. The Company continues to sponsor a qualified defined contribution plan and a
non-qualified
defined contribution restoration plan compliant with Section 409A of the Code
aimed at restoring the effects of limitations on defined contribution accruals imposed by the Code. For more information regarding the pension plans of the NEOs, see the
Pension Benefits
table and accompanying narrative.
Perquisites
ATI does not generally provide our
executives with perquisites such as the personal use of corporate aircraft without reimbursement to the Company, payment of club membership dues or tax reimbursement arrangements. ATI does provide a parking benefit to the NEOs who work at corporate
headquarters on the same terms as provided to a broader group of corporate employees.
Tax Deductibility of Compensation Expense.
Section 162(m) of the Code places a $1 million limit on the amount of compensation a company can deduct in any one year for compensation paid to
the chief executive officer and the three most highly-compensated executive officers employed by the company at the end of the year (other than the chief financial officer). However, the $1 million deduction limit generally does not apply to
compensation that is performance-based and provided under a stockholder-approved plan. While the Committee considers the deductibility of awards as one factor in determining executive compensation, the Committee also looks at other factors in making
its decisions, and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible by the Company for tax purposes.
66
ATI
2017 Proxy Statement
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|
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|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
OTHER COMPENSATION POLICIES
|
|
|
In general, the 2016 incentive opportunities for executive officers were designed in a manner intended to be exempt
from the deduction limitation of Section 162(m) of the Code because they are paid based on achievement of
pre-determined
performance goals established by the Committee pursuant to our stockholder-approved
equity incentive plan.
If the Committee were to exercise its discretion to increase the compensation paid under these plans to recognize extraordinary
performance, such upward adjustments may not be deductible for federal income tax purposes.
Despite the Committees efforts to structure the NEOs
annual cash incentives and long-term awards in a manner intended to be exempt from Section 162(m) of the Code and therefore not subject to its deduction limits, because of ambiguities and uncertainties as to the application and interpretation of
Section 162(m) of the Code and the regulations issued thereunder, no assurance can be given that compensation we intend to satisfy the requirements for exemption from Section 162(m) of the Code in fact will.
No Hedging or Pledging of Stock
ATI policy
prohibits directors, officers and key employees from engaging in publicly traded options and hedging transactions with regard to ATI securities, including the pledging of shares to secure personal loans.
Stock Ownership Guidelines
The Company
maintains the following robust stock ownership guidelines in place that are applicable to its executives, including for all of the NEOs, which are designed to further link these executives interests with the interests of stockholders
generally:
|
|
|
|
|
Chief Executive Officer
|
|
|
6X Base Salary
|
|
Executive Vice Presidents and Chief Financial Officer
|
|
|
3X Base Salary
|
|
Senior Vice Presidents
|
|
|
2X Base Salary
|
|
Executives are required to retain 100% of the
after-tax
value of shares issued upon the vesting
of restricted share units and performance share units until the ownership requirement is satisfied.
We adopted our current guidelines in 2016, transitioning from
using a fixed number of shares as the method of determining ownership to targeting a multiple of base salary, which we believe requires a meaningful level of ownership for all NEOs, even during the cyclicality in our markets and declining stock
prices.
Executives subject to the guidelines have until the later of February 25, 2021 or five years from the date of promotion to one of the designated
positions, as the case may be, to meet the guideline applicable to his/ her position.
ATI
2017 Proxy Statement
/
67
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|
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|
COMPENSATION DISCUSSION AND
ANALYSIS |
2016 TOTAL REALIZED COMPENSATION
|
|
|
2016 Total Realized Compensation
The Personnel and Compensation Committee views the amounts in the Summary Compensation Table as the target compensation opportunity for each NEO under our executive
compensation program. When making determinations and awards under our incentive plans, the Committee looks to the actual dollar value of awards to be delivered to the NEOs in any given year, as illustrated by the Total Realized Compensation figures
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
2016 Target
Compensation
|
|
|
2016 Total Realized
Compensation
|
|
|
|
% of Target
Realized
|
|
Harshman
|
|
|
$4,992,600
|
|
|
$2,575,179
|
|
|
|
|
51.6%
|
|
DeCourcy
|
|
|
$1,632,000
|
|
|
$1,082,848
|
|
|
|
|
66.3%
|
|
Kramer
|
|
|
$1,402,500
|
|
|
$1,125,682
|
|
|
|
|
80.3%
|
|
Sims
|
|
|
$1,734,000
|
|
|
$1,429,344
|
|
|
|
|
82.4%
|
|
Wetherbee
|
|
|
$1,716,000
|
|
|
$ 721,309
|
|
|
|
|
42.0%
|
|
Total Realized Compensation is calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Compensation
as determined by SEC rules in the Total column of the Summary Compensation Table
|
|
-
|
|
the
aggregate grant date fair value of equity awards
(as reflected in the Stock Awards column of the 2016 Summary Compensation Table)
|
|
-
|
|
the
year-over-year change in pension value and
non-qualified
deferred compensation
(as reflected in the Change in Pension Value and
Non-Qualified
Deferred
Compensation Earnings column of the 2016 Summary Compensation Table)
|
|
+
|
|
the
value realized in 2016 from shares earned
under the 2014-2016 TSR and LTSV award programs (as reflected in the Options Exercised and Stock Vested Table; no shares vested under the 2014-2016 PSRP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following comparison of target compensation to realized compensation for our NEOs demonstrates our 2016 reduction in target
compensation levels to better align with market median in connection with the redesign of our executive compensation program, as well as our ongoing commitment to compensating our leadership based on the Companys performance and placing a
significant proportion of senior executive compensation at risk:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
2014 Target
|
|
|
2015 Target
|
|
|
2016 Target
|
|
|
2016 Realized
|
|
Harshman
|
|
|
$6,150,000
|
|
|
$
|
6,519,000
|
|
|
|
$4,992,600
|
|
|
|
$2,575,179
|
|
DeCourcy
|
|
|
$2,021,000
|
|
|
$
|
2,256,000
|
|
|
|
$1,632,000
|
|
|
|
$1,082,848
|
|
Kramer
|
|
|
$1,880,000
|
|
|
$
|
1,997,500
|
|
|
|
$1,402,500
|
|
|
|
$1,125,682
|
|
Sims
|
|
|
$2,326,500
|
|
|
$
|
2,397,000
|
|
|
|
$1,734,000
|
|
|
|
$1,429,344
|
|
Wetherbee
|
|
|
N/A
|
|
|
$
|
2,115,000
|
|
|
$
|
1,716,000
|
|
|
|
$ 721,309
|
|
68
ATI
2017 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION COMMITTEE REPORT
|
|
|
Compensation Committee Report
The Personnel and Compensation Committee (referred to in this Report as the Committee) has reviewed and discussed the preceding Compensation
Discussion and Analysis with Company management. Based on this review and discussion, the Committee recommends to the Board of Directors that the Compensation Discussion and Analysis be included in the Companys 2017 Proxy Statement. The
Committee furnishes this Report for inclusion in the 2017 Proxy Statement and recommends its inclusion in ATIs Annual Report on Form
10-K.
Submitted by:
PERSONNEL AND COMPENSATION COMMITTEE,
Members:
James E. Rohr, Chairman
Carolyn Corvi
Diane C. Creel
J. Brett Harvey
ATI
2017 Proxy Statement
/
69
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
SUMMARY COMPENSATION TABLE FOR 2016
|
|
|
Summary Compensation Table for 2016
The following Summary Compensation Table sets forth information about the compensation paid by the Company to the Chief Executive Officer, the Chief Financial Officer,
each of the other three most highly compensated executives who were serving as executive officers as of December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary
($)(3)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)(4)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)(5)
|
|
|
Change in
Pension Value and
Non-Qualified Deferred
Compensation
Earnings
($)(6)
|
|
|
All Other
Compensation
($)(7)
|
|
|
Total
($)
|
|
Richard J. Harshman
|
|
|
2016
|
|
|
|
1,060,000
|
|
|
|
|
|
|
|
3,438,446
|
|
|
|
0
|
|
|
|
211,890
|
|
|
|
160,618
|
|
|
|
4,870,954
|
|
Chairman, President and
|
|
|
2015
|
|
|
|
1,050,692
|
|
|
|
|
|
|
|
4,638,181
|
|
|
|
0
|
|
|
|
803,656
|
|
|
|
380,611
|
|
|
|
6,873,140
|
|
Chief Executive Officer
|
|
|
2014
|
|
|
|
993,019
|
|
|
|
|
|
|
|
3,846,929
|
|
|
|
1,376,450
|
|
|
|
1,532,375
|
|
|
|
209,731
|
|
|
|
7,958,504
|
|
Patrick J. DeCourcy
|
|
|
2016
|
|
|
|
480,000
|
|
|
|
|
|
|
|
973,147
|
|
|
|
38,400
|
|
|
|
38,707
|
|
|
|
69,892
|
|
|
|
1,600,146
|
|
Senior Vice President, Finance
|
|
|
2015
|
|
|
|
472,244
|
|
|
|
|
|
|
|
1,550,711
|
|
|
|
80,909
|
|
|
|
59,893
|
|
|
|
119,218
|
|
|
|
2,282,975
|
|
and Chief Financial Officer
|
|
|
2014
|
|
|
|
430,000
|
|
|
|
|
|
|
|
1,236,931
|
|
|
|
338,715
|
|
|
|
117,354
|
|
|
|
64,476
|
|
|
|
2,187,476
|
|
Kevin B.
Kramer
(1)
|
|
|
2016
|
|
|
|
425,000
|
|
|
|
150,000
|
|
|
|
861,638
|
|
|
|
29,750
|
|
|
|
|
|
|
|
60,884
|
|
|
|
1,527,272
|
|
Senior Vice President, Chief
|
|
|
2015
|
|
|
|
421,122
|
|
|
|
150,000
|
|
|
|
1,373,053
|
|
|
|
71,638
|
|
|
|
|
|
|
|
98,384
|
|
|
|
2,114,197
|
|
Commercial and Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John D. Sims
|
|
|
2016
|
|
|
|
510,000
|
|
|
|
|
|
|
|
1,033,956
|
|
|
|
265,200
|
|
|
|
145,533
|
|
|
|
84,803
|
|
|
|
2,039,492
|
|
Executive Vice President, High
|
|
|
2015
|
|
|
|
507,673
|
|
|
|
|
|
|
|
1,647,648
|
|
|
|
187,354
|
|
|
|
202,863
|
|
|
|
148,184
|
|
|
|
2,693,722
|
|
Performance Materials &
|
|
|
2014
|
|
|
|
484,141
|
|
|
|
|
|
|
|
1,423,947
|
|
|
|
518,364
|
|
|
|
443,088
|
|
|
|
80,750
|
|
|
|
2,950,290
|
|
Components segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S.
Wetherbee
(2)
|
|
|
2016
|
|
|
|
500,714
|
|
|
|
|
|
|
|
1,033,956
|
|
|
|
40,000
|
|
|
|
15,669
|
|
|
|
57,968
|
|
|
|
1,648,307
|
|
Executive Vice President,
ATI Flat Rolled Products Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr. Kramer was not a named executive officer in 2014.
|
(2)
|
Mr. Wetherbee most recently joined the Company in 2014 and was not a named executive officer in 2014 or 2015.
|
(3)
|
Reflects actual amounts of target base salary paid in 2016. Other than Mr. Wetherbee, our NEOs did not receive any increases to target base salary levels between 2015 and 2016.
|
(4)
|
Stock awards:
The values in this column are based on the aggregate grant date fair value, determined in accordance with FASB ASC Topic 718, of awards made under the Companys LTIP in 2016. For our NEOs, the
2016 LTIP awards were comprised 70% of PSUs and 30% of time-vested RSUs. The PSUs vest based on performance over a three-year performance period relative to predetermined metrics. The RSUs vest over three years based on employment service, with
one-third
of the award vesting on each of the first, second and third anniversaries of the grant date. Grant date fair values of the awards are calculated based on the expected outcome of the related performance
conditions to which the awards are subject, as applicable. If maximum performance were to be achieved, the 2016 amounts for each NEO would be as follows: Mr. Harshman, $4,648,866; Mr. DeCourcy, $1,315,719; Mr. Kramer, $1,164,955;
Mr. Sims, $1,397,936; and Mr. Wetherbee $1,397,936. Fair values for the PSU awards at target were estimated using Monte Carlo simulations of stock price correlation, projected dividend yields and other variables over three-year time
horizons matching the PSU performance measurement period. The per share fair value of PSU awards made to the NEOs in 2016 was $11.99. The fair value of nonvested restricted share unit awards, or RSUs, are measured based on the stock price at the
grant date. For the 2016 RSU awards, the values were calculated using the average of the high and low trading prices of the Companys common stock on the date of grant (February 25, 2016), which was $11.76. A discussion of the relevant
assumptions made in the valuations may be found in Note 14 to the financial statements in the Companys Annual Report on Form
10-K
for the fiscal year ended December 31, 2016.
|
(5)
|
Non-equity
Incentive Plan Compensation:
Consists of performance-based (and not discretionary) cash awards paid under the 2016 APP. The Committee determined that, based on
ATIs overall performance during the year, Mr. Harshman should not receive the award under the 2016 APP that he otherwise would have earned based on the terms of the award.
|
(6)
|
Changes in Pension Value and
Non-Qualified
Deferred Compensation Earnings:
The amounts in this column include amounts that are not vested and may not ultimately be received
by the named executive officer. The amounts reflect the actuarial change in the present value of the NEOs benefits under all defined benefit pension plans established by the Company, determined using interest rate and mortality rate
assumptions consistent with those used in the Companys financial statements. Effective December 31, 2014, the Company froze future benefit accruals in the ATI Pension Plan for all participating employees other than those in contractual
employment arrangements. Also effective December 31, 2014, the Company froze the defined benefit-type
non-qualified
deferred compensation plans in which salaried employees participate, which includes the
Supplemental Pension Plan in which Mr. Harshman participates and the defined benefit portion of the ATI Benefit Restoration Plan in which Messrs. Harshman, DeCourcy, Sims and Wetherbee participate. In 2016, payment of APP pertaining to fiscal
year 2015 had the effect of increasing the 2016 value of certain pension benefits to the NEOs. In 2016, the discount rate used was 4.45% and had the effect of increasing
the pension benefit to the NEOs.
|
(7)
|
All Other Compensation:
The values of any perquisites are calculated based on the aggregate incremental cost to the Company. The Company does not provide perquisites or personal benefits of air travel or club
memberships, or tax reimbursements relating to perquisites or personal benefits.
Please see the All Other Compensation Table for 2016 that follows for additional information.
|
70
ATI
2017 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
ALL OTHER COMPENSATION FOR 2016
|
|
|
ALL OTHER COMPENSATION FOR 2016
Amounts in the All Other Compensation Column include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Nonqualified Defined
Contribution
Plans
($)(1)
|
|
|
Contributions made by
the Company to 401(k)
and Other Defined
Contribution
Plans
($)
|
|
|
Insurance
Premiums
($)
|
|
|
Dividends on Nonvested
Performance/
Restricted
Stock
($)(2)
|
|
|
Other
($)(3)
|
|
|
Total
($)
|
|
Harshman
|
|
|
76,683
|
|
|
|
24,017
|
|
|
|
16,394
|
|
|
|
42,104
|
|
|
|
1,420
|
|
|
|
160,618
|
|
DeCourcy
|
|
|
31,234
|
|
|
|
22,052
|
|
|
|
2,512
|
|
|
|
12,674
|
|
|
|
1,420
|
|
|
|
69,892
|
|
Kramer
|
|
|
18,472
|
|
|
|
26,225
|
|
|
|
4,128
|
|
|
|
10,639
|
|
|
|
1,420
|
|
|
|
60,884
|
|
Sims
|
|
|
36,537
|
|
|
|
26,225
|
|
|
|
5,005
|
|
|
|
15,616
|
|
|
|
1,420
|
|
|
|
84,803
|
|
Wetherbee
|
|
|
18,839
|
|
|
|
26,225
|
|
|
|
4,850
|
|
|
|
7,334
|
|
|
|
720
|
|
|
|
57,968
|
|
(1)
|
Amounts relate to the ATI Benefit Restoration Plan or the Executive Deferred Compensation Plan, as applicable. Under the
non-qualified
defined contribution portion of the ATI
Benefit Restoration Plan, the Company supplements payments received by participants under the Companys defined contribution plan by accruing benefits on behalf of participants in amounts that are equivalent to the portion of the formula
contributions or benefits that cannot be made under such plan due to limitations imposed by the Code.
See also the narrative discussion preceding the
Non-Qualified
Deferred Compensation Table.
|
(2)
|
Quarterly dividends paid on shares of performance/restricted stock are paid either in cash or in stock, in which case are based on average of the high and low of the
intra-day
price of the shares on the applicable dividend payment date. The price used to reinvest shares, and the mechanism and manner in which the dividends are reinvested, are consistent with the Companys dividend reinvestment plan. The Company does
not pay cash dividends or dividend equivalents on future grants of
non-vested
performance stock until the amounts are earned.
|
(3)
|
Amounts are for parking. The parking benefit for the NEOs who work at corporate headquarters is provided on the same terms as to a broader group of corporate employees.
|
ATI
2017 Proxy Statement
/
71
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
GRANTS OF PLAN-BASED AWARDS FOR 2016
|
|
|
Grants of Plan-Based Awards for 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Possible Payouts
Under
Non-Equity
Incentive Plan Awards
|
|
|
Estimated
Future Payouts
Under Equity
Incentive Plan Awards
|
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
(#)
|
|
All Other
Option
Awards:
Number
of Securities
Underlying
Options
(#)
|
|
Exercise
Or Base
Price of
Option
Awards
($/sh)
|
|
Grant Date
Fair Value of
Plan-Based
Equity
Awards
($)(2)
|
|
Name
|
|
Description(1)
|
|
Grant
Date
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
|
Harshman
|
|
APP
|
|
|
|
|
|
|
609,500
|
|
|
|
1,219,000
|
|
|
|
2,438,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,531
|
|
|
|
|
|
|
1,017,605
|
|
|
|
PSU
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,476
|
|
|
|
201,905
|
|
|
|
302,858
|
|
|
|
|
|
|
|
|
|
2,420,841
|
|
|
|
Total
|
|
|
|
|
|
|
609,500
|
|
|
|
1,219,000
|
|
|
|
2,438,000
|
|
|
|
50,476
|
|
|
|
201,905
|
|
|
|
302,858
|
|
|
86,531
|
|
|
|
|
|
|
3,438,446
|
|
DeCourcy
|
|
APP
|
|
|
|
|
|
|
192,000
|
|
|
|
384,000
|
|
|
|
768,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,490
|
|
|
|
|
|
|
288,002
|
|
|
|
PSU
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,286
|
|
|
|
57,143
|
|
|
|
85,715
|
|
|
|
|
|
|
|
|
|
685,145
|
|
|
|
Total
|
|
|
|
|
|
|
192,000
|
|
|
|
384,000
|
|
|
|
768,000
|
|
|
|
14,286
|
|
|
|
57,143
|
|
|
|
85,715
|
|
|
24,490
|
|
|
|
|
|
|
973,147
|
|
Kramer
|
|
APP
|
|
|
|
|
|
|
148,750
|
|
|
|
297,500
|
|
|
|
595,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,684
|
|
|
|
|
|
|
255,004
|
|
|
|
PSU
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,649
|
|
|
|
50,595
|
|
|
|
75,893
|
|
|
|
|
|
|
|
|
|
606,634
|
|
|
|
Total
|
|
|
|
|
|
|
148,750
|
|
|
|
297,500
|
|
|
|
595,000
|
|
|
|
12,649
|
|
|
|
50,595
|
|
|
|
75,893
|
|
|
21,684
|
|
|
|
|
|
|
861,638
|
|
Sims
|
|
APP
|
|
|
|
|
|
|
204,000
|
|
|
|
408,000
|
|
|
|
816,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,020
|
|
|
|
|
|
|
305,995
|
|
|
|
PSU
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,179
|
|
|
|
60,714
|
|
|
|
91,071
|
|
|
|
|
|
|
|
|
|
727,961
|
|
|
|
Total
|
|
|
|
|
|
|
204,000
|
|
|
|
408,000
|
|
|
|
816,000
|
|
|
|
15,179
|
|
|
|
60,714
|
|
|
|
91,071
|
|
|
26,020
|
|
|
|
|
|
|
1,033,956
|
|
Wetherbee
|
|
APP
|
|
|
|
|
|
|
204,000
|
|
|
|
408,000
|
|
|
|
816,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,020
|
|
|
|
|
|
|
305,995
|
|
|
|
PSU
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,179
|
|
|
|
60,714
|
|
|
|
91,071
|
|
|
|
|
|
|
|
|
|
727,961
|
|
|
|
Total
|
|
|
|
|
|
|
204,000
|
|
|
|
408,000
|
|
|
|
816,000
|
|
|
|
15,179
|
|
|
|
60,714
|
|
|
|
91,071
|
|
|
26,020
|
|
|
|
|
|
|
1,033,956
|
|
(1)
|
Represents the Companys Annual Performance Plan and Long-Term Incentive Plan, consisting of Performance Share Units (PSU) and time-vested Restricted Share Units (RSU).
|
(2)
|
The values in this column are based on the aggregate grant date fair value of awards determined in accordance with FASB ASC Topic 718 and correspond to the aggregate values disclosed in the Stock Awards
column in the Summary Compensation Table.
|
72
ATI
2017 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END
FOR 2016
|
|
|
Outstanding Equity Awards at Fiscal
Year-End
for 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
Name
|
|
Grant Date
|
|
|
Number of Shares
or Units of
Stock
that Have Not
Vested
(#)(1)(2)
|
|
|
Market Value of
Shares or Units
of Stock
that Have
Not Vested
($)(3)
|
|
|
Equity Incentive Plan
Awards: Number
of
Unearned Shares,
Units or Other Rights
That Have Not Vested
(#)(1)
|
|
|
Equity Incentive Plan Awards:
Market or Payout Value of
Unearned Shares, Units or
Other Rights
that
Have Not Vested
($)(3)
|
|
Harshman
|
|
|
2/22/2012
|
|
|
|
17,741
|
|
|
|
282,614
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2013
|
|
|
|
23,354
|
|
|
|
372,029
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/2014
|
|
|
|
24,027
|
|
|
|
382,750
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2015
|
|
|
|
23,483
|
|
|
|
374,084
|
|
|
|
23,482(4)
|
|
|
|
374,068
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
47,406(5)
|
|
|
|
755,178
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
31,310(6)
|
|
|
|
498,768
|
|
|
|
|
2/25/2016
|
|
|
|
86,531
|
|
|
|
1,378,439
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
201,905(7)
|
|
|
|
3,216,347
|
|
|
|
|
|
|
|
|
175,136
|
|
|
|
2,789,916
|
|
|
|
304,103
|
|
|
|
4,844,361
|
|
DeCourcy
|
|
|
2/22/2012
|
|
|
|
1,548
|
|
|
|
24,660
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2013
|
|
|
|
2,242
|
|
|
|
35,715
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/2014
|
|
|
|
6,888
|
|
|
|
109,726
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2015
|
|
|
|
7,089
|
|
|
|
112,928
|
|
|
|
7,089(4)
|
|
|
|
112,928
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
14,311(5)
|
|
|
|
227,974
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
14,178(6)
|
|
|
|
225,856
|
|
|
|
|
2/25/2016
|
|
|
|
24,490
|
|
|
|
390,126
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
57,143(7)
|
|
|
|
910,288
|
|
|
|
|
|
|
|
|
42,257
|
|
|
|
673,155
|
|
|
|
92,721
|
|
|
|
1,477,046
|
|
Kramer
|
|
|
2/26/2014
|
|
|
|
6,407
|
|
|
|
102,064
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2015
|
|
|
|
6,277
|
|
|
|
99,993
|
|
|
|
6,277(4)
|
|
|
|
99,993
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
12,671(5)
|
|
|
|
201,849
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
12,554(6)
|
|
|
|
199,985
|
|
|
|
|
2/25/2016
|
|
|
|
21,684
|
|
|
|
345,426
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
50,595(7)
|
|
|
|
805,978
|
|
|
|
|
|
|
|
|
34,368
|
|
|
|
547,483
|
|
|
|
82,097
|
|
|
|
1,307,805
|
|
Sims
|
|
|
2/22/2012
|
|
|
|
4,222
|
|
|
|
67,256
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2013
|
|
|
|
6,929
|
|
|
|
110,379
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/2014
|
|
|
|
7,929
|
|
|
|
126,309
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2015
|
|
|
|
7,532
|
|
|
|
119,985
|
|
|
|
7,532(4)
|
|
|
|
119,985
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
15,206(5)
|
|
|
|
242,232
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
15,064(6)
|
|
|
|
239,970
|
|
|
|
|
2/25/2016
|
|
|
|
26,020
|
|
|
|
414,499
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
60,714(7)
|
|
|
|
967,174
|
|
|
|
|
|
|
|
|
52,632
|
|
|
|
838,428
|
|
|
|
98,516
|
|
|
|
1,569,361
|
|
Wetherbee
|
|
|
4/1/2014
|
|
|
|
3,973
|
|
|
|
63,290
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2015
|
|
|
|
6,646
|
|
|
|
105,871
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
13,417(5)
|
|
|
|
213,733
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
13,292(6)
|
|
|
|
211,742
|
|
|
|
|
2/25/2016
|
|
|
|
26,020
|
|
|
|
414,499
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
60,714(7)
|
|
|
|
967,174
|
|
|
|
|
|
|
|
|
36,639
|
|
|
|
583,660
|
|
|
|
87,423
|
|
|
|
1,392,649
|
|
The Company does not issue stock option awards and has not issued stock options to its employees since 2003.
(1)
|
This table relates to shares of (i) performance/restricted stock awarded under the PRSP, (ii) awards under each of the
LTPP-TSR
and LTPP-LTSV for the performance
measurement periods ending in 2017 and (iii) awards under the current LTIP, including time-vested RSUs granted in 2016, which vest ratably in
one-third
increments over a three-year period, and
performance-vested awards, or PSUs, for the performance measurement period ending in 2018. Half of the PRSP shares awarded in each of the years 2012, 2013 and 2014 were forfeited after three years because the Company did not meet the cumulative net
income target for that performance period; the remaining
one-half
of each such award will vest after five years, in 2017, 2018 and 2019, respectively, generally subject to the continued employment of the
participant.
|
ATI
2017 Proxy Statement
/
73
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END
FOR 2016
|
|
|
(2)
|
Consists of shares of time-based restricted stock under the PRSP and RSUs under the LTIP. The number of shares reported in this column represents the number of shares that would be awarded pursuant to the time-based
vesting portion of the PRSP grants made in 2012, 2013, 2014 and 2015 and the time-vested RSUs granted in 2016. With respect to the 2015 PRSP grants, such shares may vest earlier upon the Companys achievement of a cumulative net income target
during the applicable performance measurement period, which ends in 2017.
|
(3)
|
Amounts were calculated using $15.93 per share, the closing price of Company Common Stock at December 31, 2016.
|
(4)
|
Consists of shares of performance-based restricted stock under the PRSP. The number of shares reported represents the number of shares that would be awarded if the applicable performance measures under the PRSP grants
made in 2015 are met at the end of the applicable three-year performance measurement period.
|
(5)
|
Represents the number of shares that would be awarded if the next higher performance measure (threshold, target, or maximum) was achieved under the
LTPP-TSR.
In accordance with
applicable SEC rules and interpretations, for the 2015-2017 performance measurement period, performance is disclosed at target because TSR performance for the award periods ended December 31, 2016 was below target.
|
(6)
|
Consists of shares of performance-based restricted stock under the LTPP-LTSV. The number of shares reported represents the number of shares that would be awarded if all applicable performance measures under the LTSV
grants made in 2015 are met at the end of the applicable three-year performance measurement period.
|
(7)
|
Consists of PSUs granted under the LTIP in 2016. The number of shares reported represents the number of shares that would be awarded if all applicable performance measures under the 2016 PSU grants are met at the end of
the applicable three-year performance measurement period.
|
Option Exercises and Stock Vested for
2016
|
|
|
|
|
|
|
Stock Awards
|
Name
|
|
Number of
Shares
Acquired
on Vesting
(#)(1)
|
|
Value
Realized
on Vesting
($)(2)
|
Harshman
|
|
62,279
|
|
1,354,561
|
DeCourcy
|
|
22,738
|
|
494,556
|
Kramer
|
|
21,152
|
|
460,048
|
Sims
|
|
26,177
|
|
569,341
|
Wetherbee
|
|
5,638
|
|
122,627
|
The Company does not issue stock option awards and has not issued stock options to its employees since 2003.
(1)
|
Consists of shares awarded pursuant to the 2014 TSR based on payout at 63%. Half of the PRSP shares granted to the NEOs (other than Mr. Wetherbee) in 2014 were forfeited because the performance criteria were not
met; the remaining half of the shares granted will vest in February 2019.
|
(2)
|
Amounts were calculated using $21.75 per share, which was the average of the high and low trading prices of the Companys common stock on the NYSE on January 27, 2017.
|
Pension Benefits for 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Years of
Credited
Service
(#)(2)
|
|
|
Present
Value of
Accumulated
Benefit
($)
|
|
|
Payments
During Last
Fiscal Year
($)
|
|
Harshman
|
|
ATI Pension Plan
|
|
|
28
|
|
|
|
2,157,081
|
|
|
|
|
|
|
|
ATI Benefit Restoration Plan
|
|
|
21
|
|
|
|
8,626,575
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
10
|
|
|
|
3,730,513
|
|
|
|
|
|
DeCourcy
|
|
ATI Pension Plan
|
|
|
8
|
|
|
|
264,816
|
|
|
|
|
|
|
|
ATI
Non-Qualified
Benefit Restoration Plan
|
|
|
8
|
|
|
|
237,886
|
|
|
|
|
|
Kramer
(1)
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Sims
|
|
ATI Pension Plan
|
|
|
17
|
|
|
|
586,511
|
|
|
|
|
|
|
|
ATI
Non-Qualified
Benefit Restoration Plan
|
|
|
17
|
|
|
|
1,398,444
|
|
|
|
|
|
Wetherbee
|
|
ATI Pension Plan
|
|
|
3
|
|
|
|
91,847
|
|
|
|
|
|
|
|
ATI
Non-Qualified
Benefit Restoration Plan
|
|
|
3
|
|
|
|
122,055
|
|
|
|
|
|
(1)
|
Mr. Kramer does not participate in any defined benefit plans.
|
(2)
|
Years of credited service reflect the number of years of service used for determining benefits for each individual during their participation under the respective plans.
|
74
ATI
2017 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
PENSION BENEFITS FOR 2016
|
|
|
|
|
|
Plan
|
|
Benefit Formulas and Retirement Information
|
ATI Pension Plan
Qualified defined benefit plan
The Allegheny Technologies Incorporated Pension Plan (ATI Pension Plan) is the result of
the mergers of several plans previously sponsored by:
Allegheny Ludlum Corporation (Allegheny Ludlum),
Teledyne Inc. (TDY)
Effective December 31, 2014, the Company froze future benefit accruals under the ATI Pension
Plan for all participating employees other than those with contractual employment arrangements.
|
|
ATI Pension Plan has a number of benefit formulas that apply separately to various groups of employees and
retirees, generally, by work location and job classification. A principal determinant of which formula applied prior to December 31, 2014 is whether the employee was employed by TDY, as in the case of Messrs. Harshman and Sims, at the time the
respective companies became members of the controlled group that includes the Company. Mr. DeCourcy s pension benefit formula includes periods of service with both Allegheny Ludlum and TDY.
Allegheny Ludlum ceased pension accruals under its pension formula in 1988, except for employees who
then met certain age and service criteria.
Each formula for Allegheny Ludlum and TDY multiplies
years of service by compensation and then by a factor to produce a benefit amount payable as a straight life annuity. That benefit amount is reduced with respect to Social Security amounts payable to determine the annuity amount payable.
Participants can choose alternate benefit forms, including survivor benefits. The Allegheny Ludlum and TDY definitions of service and compensation differ somewhat, as do the factors used in the respective formulas. However, the differences in the
resulting benefits between the two formulas are small for the NEOs to which they apply.
Upon
becoming a corporate employee in 1998, Mr. Harshman ceased receiving credit for service under the TDY formula after having been credited with approximately
twenty-one
years of service under that
formula.
Normal retirement age under the ATI Pension Plan is age 65. Participants can retire with
immediate commencement of an undiscounted accrued benefit at the normal retirement age or after thirty years of service regardless of age for Allegheny Ludlum and TDY participants.
Participants can retire prior to attaining age 65 or thirty years of service with benefit payments
discounted for early payment at age 62 with at least ten years of service or, with a greater discount, at age 55 with at least ten years of service.
|
ATI
Benefit
Restoration Plan
Non-Qualified
benefit plan
Effective December 31, 2014, the Company froze future benefit accruals under the defined benefit
portion of the ATI Benefit Restoration Plan, under which Messrs. Harshman, DeCourcy, and Sims participated.
|
|
Under the
non-qualified
ATI Benefit Restoration Plan, the Company accrues benefits for the NEOs that restores to eligible NEOs the amounts that cannot be paid to them under the terms of the Companys defined
contribution plans or the defined benefit plan (the ATI Pension Plan), in either case due to the limitations set forth in the Code. All NEOs are eligible to participate in the ATI Benefit Restoration Plan to the extent of benefits that cannot be
accrued under the defined contribution plan in which the respective NEO participates.
Distributions under the ATI Benefit Restoration Plan are available only at the times and in the same forms as under the ATI Pension Plan, subject to payment delays to
comply with Section 409A of the Code.
|
Supplemental
Pension Plan
Effective December 31, 2014, the Company froze future benefit
accruals under the Supplemental Pension Plan
|
|
The Supplemental Pension Plan had provided
certain key employees of ATI and its subsidiaries, including Mr. Harshman (or their beneficiaries in the event of death), with monthly payments in the event of retirement, disability or death, equal to 50% of monthly base salary as of the date
of retirement, disability or death. Monthly retirement benefits start following the end of the two month period (subject to delay to comply with Section 409A of the Code) after the later of (i) age 62, if actual retirement occurs prior to age
62 but after age 58 with the approval of the Board of Directors, or (ii) the date actual retirement occurs, and generally continue for a
118-month
period. The plan describes the events that will terminate
an employees participation in the plan.
|
Non-Qualified
Deferred Compensation for 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Registrant
Contributions
In Last FY
($)
(1)
|
|
|
Aggregate
Earnings
In Last FY
($)
(2)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
|
Aggregate
Balance
at Last FYE
($)
|
|
Harshman
|
|
|
76,683
|
|
|
|
43,848
|
|
|
|
|
|
|
|
2,083,276
|
|
DeCourcy
|
|
|
31,234
|
|
|
|
2,988
|
|
|
|
|
|
|
|
141,985
|
|
Kramer
|
|
|
18,472
|
|
|
|
1,347
|
|
|
|
|
|
|
|
63,994
|
|
Sims
|
|
|
36,537
|
|
|
|
2,639
|
|
|
|
|
|
|
|
125,421
|
|
Wetherbee
|
|
|
18,839
|
|
|
|
1,252
|
|
|
|
|
|
|
|
59,456
|
|
ATI
2017 Proxy Statement
/
75
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
NON-QUALIFIED
DEFERRED COMPENSATION FOR 2016
|
|
|
(1)
|
Reflects contributions made pursuant to the
non-qualified
defined contribution portion of the ATI Benefit Restoration Plan. Under the terms of the plan, the participants do not
contribute; only the Company contributes to the plan on the participants behalf. These amounts are included in the All Other Compensation column of the Summary Compensation Table for 2016.
|
(2)
|
Aggregate earnings for the ATI Benefit Restoration Plan are calculated using the fiscal
year-end
balance, including current year contributions, multiplied by the interest rate on
the Fixed Income Fund investment option in the Companys qualified defined contribution plan. For 2016, this rate was 2.15%.
|
Employment and Change in Control Agreements
EMPLOYMENT AGREEMENTS
ATI does not have any employment agreements with its named executive officers.
CHANGE IN CONTROL AGREEMENTS
The Company has agreements with each continuing NEO and other key employees to assure that it will have the
continued support of the executive and the availability of the executives advice and counsel notwithstanding the possibility, threat or occurrence of a change in control. All members of the management Executive Council and corporate officers
have change in control agreements that do not include an excise tax
gross-up
provision.
|
|
|
|
|
|
|
|
|
Under the agreements, a
change in control
is defined as:
|
|
|
|
|
the
Companys actual knowledge that (x) an individual or entity has acquired beneficial ownership of 20% or more of the voting power of Company stock or (y) persons have agreed to act together for the purpose of acquiring 20% or more of
the voting power of Company stock,
the completion of a tender offer pursuant to which 20% or more of the voting power of Company stock has been acquired,
|
|
the
occurrence of a successful solicitation electing or removing 50% of the members of the Board or the Board consisting less than 51% of continuing directors, or
the occurrence of a merger, consolidation,
sale or similar transaction.
|
|
|
In general, the agreements provide for the payment of severance benefits if a change in control occurs, and within 24 months after the
change in control either:
|
|
the Company terminates the executives employment with the Company without cause, which is defined to mean a felony conviction, breach of fiduciary duty involving personal profit, or intentional failure
to perform stated duties after 30 days notice to cure; or
|
|
|
|
|
|
|
|
|
|
the executive terminates employment with the
Company for
good reason,
which is defined to mean:
|
|
|
|
|
a
material diminution of duties, responsibilities or status or the assignment of duties inconsistent with position,
relocation more than 35 miles from principal
job location,
reduction in annual salary or material reduction in other compensation or benefits,
|
|
failure
by the Company to cause a successor corporation to adopt and perform under the agreement, or
purported termination other than as
expressly permitted in the agreement.
|
|
|
76
ATI
2017 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
|
|
|
An executive officer entitled to severance benefits under a change in control agreement will be paid a lump sum cash
payment within thirty days of the date of termination equal to the sum of:
|
|
aggregate amounts accrued through the date of termination (including but not limited to accrued but unpaid salary or cash incentive compensation and amounts accrued under any qualified,
non-qualified
or supplemental employee benefit plan);
|
|
|
base salary plus annual cash incentive at the greater of target or the actual level of performance achieved through the date of termination projected through the end of the year times a multiple (which is 3x for
Mr. Harshman and 2x for Messrs. DeCourcy, Kramer, Sims and Wetherbee);
|
|
|
prorated annual incentive for the then uncompleted year measured at the greater of target or the level of performance achieved through the date of termination projected through the end of the year; and
|
|
|
the value of all long-term incentive awards for then uncompleted measurement periods determined at the greater of target or actual performance levels achieved to the date of termination projected through the remainder
of the measurement period.
|
He or she will also be provided:
|
|
the continuation of perquisites and welfare benefits for a period (36 months);
|
|
|
reimbursement for outplacement services up to $25,000 for Mr. Harshman and $15,000 for Messrs. DeCourcy, Kramer, Sims and Wetherbee; and
|
|
|
the number of years corresponding to the applicable multiples above of credited service and full vesting under the Companys supplemental pension plans in which the executive participates.
|
The agreements also provide for the lifting of restrictions on stock awarded.
The
agreements have a term of three years, which three-year term will continue to be extended until either party gives written notice that it no longer wants to continue to extend the term. If a change in control occurs during the term, the agreements
will remain in effect for the longer of three years or until all obligations of the Company under the agreements have been fulfilled.
The Personnel and
Compensation Committee has reviewed the change in control valuation, as well as the purposes and effects of the agreements, and determined that it is in the Companys best interests to retain the change in control agreements on their terms and
conditions.
Potential Payments upon Termination
The tables below reflect estimates of the amount of compensation in addition to the amounts shown in the compensation tables payable to each NEO in the event of
termination of such executives employment by reason of retirement, death or disability, or within 24 months following a change in control to the extent such termination is without cause or the result of the executives resignation for
good reason. The amounts shown assume that such termination was effective as of December 30, 2016. The closing price of Company Common Stock on the NYSE on that date was $15.93. The amounts shown are estimates of the amounts that would be paid
out to the executives upon their termination under the circumstances specified. For purposes of the tables, calculations are based on the greater of the target award or the value earned for actual performance against the preset performance goals
thorough the assumed date of termination. The actual amounts payable can only be determined at the time of such executives separation from the Company.
ATI
2017 Proxy Statement
/
77
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
|
|
|
Payments Made Upon Termination
Regardless of the manner in which a NEOs employment terminates, he may be entitled to receive amounts earned during his term of employment. Such amounts include:
|
|
non-equity
incentive compensation earned during the fiscal year;
|
|
|
amounts contributed under the savings portion of the defined contribution plan and the Benefit Restoration Plan;
|
|
|
unused vacation pay; and
|
|
|
amounts accrued and vested through the ATI Pension Plan and Supplemental Pension Plan.
|
Payments Made Upon Retirement
In the event of
the retirement of a NEO, in addition to the items identified above, such officer will be entitled (subject to the Companys consent for certain amounts) to:
|
|
receive a prorated share of each outstanding
LTPP-TSR
award upon the completion of such cycle when, if and to the extent such award is earned during the applicable performance
measurement period;
|
|
|
receive a prorated share of performance/restricted stock when the restrictions on such shares lapse upon the passage of time or the achievement of the applicable performance criteria; and
|
|
|
receive payments under the Supplemental Pension Plan, beginning two months after retirement, subject to Section 409A of the Internal Revenue Code.
|
Consent of the Company is required for payments of awards under the long-term compensation plans upon retirement as described.
Payments Made Upon Death or Disability
In the
event of the death or disability of a NEO, in addition to the benefits listed under the headings Payments Made Upon Termination and Payments Made Upon Retirement above, the NEO will receive benefits under the Companys
disability plan or payments under the Companys life insurance plan, as appropriate, each as generally available to all salaried employees.
Payments Made Upon a Change in Control
The Company is a party to a change in control severance agreement with each NEO that provides
the NEO with payments in the event his employment is terminated by the Company for reasons other than cause or by the NEO for good reason (defined to include diminishment of pay, benefits, title or job responsibilities or transfer from the home
office) within 24 months after a change in control. See the information under the caption Employment and Change in Control Agreements for definitions. The tables below illustrate the amount of payments due in various circumstances.
As noted, the column Involuntary Not for Cause Termination or Good Reason Termination by Executive (w/in 24 Months of a Change in Control) assumes that
there was a change in control at the December 30, 2016 closing price of $15.93 per share and all of the NEOs had a triggering event on December 30, 2016 and all cash amounts due, all deferred compensation enhancements, and all potential
benefit payments were to be paid in a single lump sum.
78
ATI
2017 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard J. Harshman
($ in thousands):
|
|
|
|
|
|
|
|
|
|
Executive Benefit and Payments
Upon Separation
|
|
Retirement
|
|
|
Involuntary Not
for Cause
Termination or Good
Reason Termination
by Executive
(w/in 24 months of
Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
|
Base
Severance:
|
|
|
0
|
|
|
|
3,180
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Short-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APP
|
|
|
0
|
|
|
|
6,095
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Long-Term Incentive
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
702
|
|
|
|
4,595
|
|
|
|
702
|
|
|
|
702
|
|
|
|
|
|
PRSP
|
|
|
1,283
|
|
|
|
1,786
|
|
|
|
1,283
|
|
|
|
1,283
|
|
|
|
|
|
LTPP-TSR
|
|
|
503
|
|
|
|
755
|
|
|
|
503
|
|
|
|
503
|
|
|
|
|
|
LTPP-LTSV
|
|
|
333
|
|
|
|
499
|
|
|
|
333
|
|
|
|
333
|
|
|
|
|
|
Other
Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified
defined contribution plan
|
|
|
0
|
|
|
|
302
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Non-qualified
defined benefit plan
(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Health & Welfare Benefits
|
|
|
0
|
|
|
|
50
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Outplacement
|
|
|
0
|
|
|
|
25
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Supplemental Pension
Plan
(1)
:
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Total
|
|
|
2,821
|
|
|
|
22,287
|
|
|
|
2,821
|
|
|
|
2,821
|
|
|
|
|
|
(1) The Company froze future benefit accruals under the
non-qualified
defined benefit pension plan and the Supplemental Pension Plan effective December 31, 2014. In the event that Mr. Harshman retires, dies or becomes disabled, he (or his beneficiary) is entitled to receive amounts accrued and vested
under the ATI Pension Plan and Supplemental Pension Plan, payable in the ordinary course, as described above and under the heading Pension Benefits for 2016. As also described above, such amounts are payable on an accelerated, lump sum
basis if he is terminated without cause or resigns for good reason within 24 months following a change in control. The amounts presented above in the change in control column with respect to each such benefit plan represent the additional present
value of such lump sum payment of pension benefits.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick J. DeCourcy
($ in thousands):
|
|
|
|
|
|
|
|
|
|
Executive Benefit and Payments
Upon Separation
|
|
Retirement
|
|
|
Involuntary Not
for Cause
Termination or Good
Reason Termination
by Executive
(w/in 24 months of
Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
|
Base
Severance:
|
|
|
0
|
|
|
|
960
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Short-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APP
|
|
|
0
|
|
|
|
1,536
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
199
|
|
|
|
1,300
|
|
|
|
199
|
|
|
|
199
|
|
|
|
|
|
PRSP
|
|
|
266
|
|
|
|
396
|
|
|
|
266
|
|
|
|
266
|
|
|
|
|
|
LTPP-TSR
|
|
|
152
|
|
|
|
228
|
|
|
|
152
|
|
|
|
152
|
|
|
|
|
|
LTPP-LTSV
|
|
|
151
|
|
|
|
226
|
|
|
|
151
|
|
|
|
151
|
|
|
|
|
|
Other
Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified
defined contribution plan
|
|
|
0
|
|
|
|
91
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Non-qualified
defined benefit plan
(1)
|
|
|
0
|
|
|
|
281
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Health & Welfare Benefits
|
|
|
0
|
|
|
|
43
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Outplacement
|
|
|
0
|
|
|
|
15
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Total
|
|
|
768
|
|
|
|
5,076
|
|
|
|
768
|
|
|
|
768
|
|
|
|
|
|
(1) The Company froze future benefit accruals under the
non-qualified
defined benefit pension plan effective December 31, 2014. In the event that Mr. DeCourcy retires, dies or becomes disabled, he (or his beneficiary) is entitled to receive amounts accrued and vested under the ATI Pension Plan, payable
in the ordinary course, as described above and under the heading Pension Benefits for 2016. As also described above, such amounts are payable on a lump sum basis if he is terminated without cause or resigns for good reason within 24
months following a change in control. The amounts presented above in the change in control column with respect to each such benefit plan represent the additional present value of such lump sum payment of pension benefits.
|
|
|
|
ATI
2017 Proxy Statement
/
79
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin B. Kramer
($ in thousands):
|
|
|
|
|
|
|
|
|
|
Executive Benefit and Payments
Upon Separation
|
|
Retirement
|
|
|
Involuntary Not
for Cause
Termination or Good
Reason Termination
by Executive
(w/in 24 months of
Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
|
Base
Severance:
|
|
|
0
|
|
|
|
850
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Short-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APP
|
|
|
0
|
|
|
|
1,190
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
176
|
|
|
|
1,151
|
|
|
|
176
|
|
|
|
176
|
|
|
|
|
|
PRSP
|
|
|
133
|
|
|
|
200
|
|
|
|
133
|
|
|
|
133
|
|
|
|
|
|
LTPP-TSR
|
|
|
135
|
|
|
|
202
|
|
|
|
135
|
|
|
|
135
|
|
|
|
|
|
LTPP-LTSV
|
|
|
133
|
|
|
|
200
|
|
|
|
133
|
|
|
|
133
|
|
|
|
|
|
Other Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified
defined contribution plan
|
|
|
0
|
|
|
|
81
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Non-qualified
defined benefit plan
(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Health & Welfare
Benefits
|
|
|
0
|
|
|
|
42
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Outplacement
|
|
|
0
|
|
|
|
15
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Total
|
|
|
577
|
|
|
|
3,931
|
|
|
|
577
|
|
|
|
577
|
|
|
|
|
|
(1) The Company froze future benefit accruals under the
non-qualified
defined benefit pension plan effective December 31, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John D. Sims
($ in thousands):
|
|
|
|
|
|
|
|
|
|
Executive Benefit and Payments
Upon Separation
|
|
Retirement
|
|
|
Involuntary Not
for Cause
Termination or Good
Reason Termination
by Executive
(w/in 24 months of
Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
|
Base Severance:
|
|
|
0
|
|
|
|
1,020
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Short-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APP
|
|
|
0
|
|
|
|
1,632
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
211
|
|
|
|
1,382
|
|
|
|
211
|
|
|
|
211
|
|
|
|
|
|
PRSP
|
|
|
384
|
|
|
|
544
|
|
|
|
384
|
|
|
|
384
|
|
|
|
|
|
LTPP-TSR
|
|
|
161
|
|
|
|
242
|
|
|
|
161
|
|
|
|
161
|
|
|
|
|
|
LTPP-LTSV
|
|
|
160
|
|
|
|
240
|
|
|
|
160
|
|
|
|
160
|
|
|
|
|
|
Other
Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified
defined contribution plan
|
|
|
0
|
|
|
|
97
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Non-qualified
defined benefit plan
(1)
|
|
|
0
|
|
|
|
798
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Health & Welfare
Benefits
|
|
|
0
|
|
|
|
43
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Outplacement
|
|
|
0
|
|
|
|
15
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Total
|
|
|
916
|
|
|
|
6,013
|
|
|
|
916
|
|
|
|
916
|
|
|
|
|
|
(1) The Company froze future benefit accruals under the
non-qualified
defined benefit pension plan effective December 31, 2014. In the event that Mr. Sims retires, dies or becomes disabled, he (or his beneficiary) is entitled to receive amounts accrued and vested under the ATI Pension Plan, payable in the
ordinary course, as described above and under the heading Pension Benefits for 2016. As also described above, such amounts are payable on a lump sum basis in the event that he is terminated without cause or resigns for good reason within
24 months following a change in control. The amounts presented above in the change in control column with respect to each such benefit plan represent the additional present value of such lump sum payment of pension benefits.
|
|
|
|
80
ATI
2017 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S. Wetherbee
($ in thousands):
|
|
|
|
|
|
|
|
|
|
Executive Benefit and Payments
Upon Separation
|
|
Retirement
|
|
|
Involuntary Not
for Cause
Termination or Good
Reason Termination
by Executive
(w/in 24 months of
Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
|
Base
Severance:
|
|
|
0
|
|
|
|
1,020
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Short-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APP
|
|
|
0
|
|
|
|
1,632
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
211
|
|
|
|
1,382
|
|
|
|
211
|
|
|
|
211
|
|
|
|
|
|
PRSP
|
|
|
178
|
|
|
|
275
|
|
|
|
178
|
|
|
|
178
|
|
|
|
|
|
LTPP-TSR
|
|
|
142
|
|
|
|
214
|
|
|
|
142
|
|
|
|
142
|
|
|
|
|
|
LTPP-LTSV
|
|
|
142
|
|
|
|
212
|
|
|
|
142
|
|
|
|
142
|
|
|
|
|
|
Other
Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified
defined contribution plan
|
|
|
0
|
|
|
|
97
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Non-qualified
defined benefit plan
(1)
|
|
|
0
|
|
|
|
81
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Health & Welfare
Benefits
|
|
|
0
|
|
|
|
43
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Outplacement
|
|
|
0
|
|
|
|
15
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Total
|
|
|
673
|
|
|
|
4,971
|
|
|
|
673
|
|
|
|
673
|
|
|
|
|
|
(1) The Company froze future benefit accruals under the
non-qualified
defined benefit pension plan effective December 31, 2014. In the event that Mr. Wetherbee retires, dies or becomes disabled, he (or his beneficiary) is entitled to receive amounts accrued and vested under the ATI Pension Plan, payable in
the ordinary course, as described above and under the heading Pension Benefits for 2016. As also described above, such amounts are payable on a lump sum basis in the event that he is terminated without cause or resigns for good reason
within 24 months following a change in control. The amounts presented above in the change in control column with respect to each such benefit plan represent the additional present value of such lump sum payment of pension benefits.
|
|
|
|
ATI
2017 Proxy Statement
/
81
Item 5
Ratification of the
Selection of Independent Auditors
Ernst & Young LLP (Ernst & Young) has served as our independent
registered public accounting firm (the independent auditors) for several years. They have unrestricted access to the Audit Committee to discuss audit findings and other financial matters. The Audit Committee of the Board of Directors
believes that Ernst & Young is knowledgeable about ATIs operations and accounting practices and is well qualified to act in the capacity of independent auditors.
In appointing Ernst & Young as our independent auditors for the fiscal year ending December 31, 2017, and making its recommendation that stockholders
ratify the selection, the Audit Committee considered whether the audit and
non-audit
services Ernst & Young provides are compatible with maintaining the independence of our outside auditors.
If the stockholders do not ratify the selection of Ernst & Young, the Audit Committee will reconsider the selection of Ernst & Young as the
Companys independent auditors.
Representatives of Ernst & Young will be present at the Annual Meeting. They will be given the opportunity to make a
statement if they desire to do so, and they will be available to respond to appropriate questions following the Annual Meeting.
Audit
Committee
Pre-Approval
Policy
Under the
Pre-Approval
Policy, the Audit
Committee will review and approve all services to be provided by Ernst & Young before the firm is retained to perform any such services. Under this policy, the engagement terms and fees of all audit services and all audit-related services
are subject to the approval of the Audit Committee. In addition, while the Committee believes that the independent auditor may be able to provide tax services to the Company without impairing the auditors independence, absent unusual
circumstances, the Audit Committee does not expect to retain the independent auditor to provide tax services. Under the policy, the Committee has delegated limited
pre-approval
authority to the Chair of the
Committee with respect to permitted,
non-tax
related services; the Chair is required to report any
pre-approval
decisions to the Audit Committee at its next scheduled
meeting. The Audit Committee
pre-approved
all audit and
non-audit
services provided by Ernst & Young in 2016 and 2015.
Independent Auditor: Services and Fees
The
fees and expenses of Ernst & Young for the indicated services performed during 2016 and 2015 were as follows:
|
|
|
|
|
|
|
|
|
Service
|
|
2016
|
|
|
2015
|
|
Audit fees
|
|
$
|
4,044,000
|
|
|
$
|
3,944,000
|
|
Audit-related fees
|
|
|
13,000
|
|
|
|
12,000
|
|
Tax fees
|
|
|
0
|
|
|
|
0
|
|
All other fees
|
|
|
2,000
|
|
|
|
2,000
|
|
Total
|
|
$
|
4,059,000
|
|
|
$
|
3,958,000
|
|
Audit fees consisted of fees related to the annual audit of the Companys consolidated financial statements and review
of the consolidated financial statements in our Quarterly Reports on Form
10-Q,
Sarbanes-Oxley Section 404 attestation services, audit and attestation services related to statutory or regulatory filings,
the issuance of consents, and captive insurance company audits.
Audit-related fees consisted of fees related to a compliance audit and the audits of
employee benefit and pension plans.
All other fees consisted of subscriptions to Ernst & Youngs
web-based
EYOnline accounting reference library.
The board of directors recommends that you vote FOR
ratification of the selection of Ernst & Young LLP as independent auditors for fiscal year 2017.
82
ATI
2017 Proxy Statement
|
|
|
|
|
|
|
ITEM 5RATIFICATION OF THE
SELECTION OF INDEPENDENT AUDITORS |
AUDIT COMMITTEE REPORT
|
|
|
Audit Committee Report
The following is the report of the Audit Committee with respect to the Companys audited consolidated financial statements for the year ended December 31,
2016.
ROLES AND RESPONSIBILITIES
The Audit
Committee monitors and oversees the financial reporting process on behalf of the Board. Management has the primary responsibility for the Companys internal controls and financial reporting process. The Committee reviews and discusses
managements report on internal control over financial reporting. Ernst & Young LLP, our independent auditor, is responsible for performing an independent audit of ATIs financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States), expressing an opinion as to their conformity with U.S. generally accepted accounting principles, and for attesting to the effectiveness of the ATIs internal control over financial
reporting.
REQUIRED DISCLOSURES AND DISCUSSIONS
The Audit Committee has reviewed, met and held discussions with ATIs management, internal auditors, and the independent auditors regarding the financial
statements, including a discussion of quality, not just acceptability, of the Companys accounting principles, and Ernst & Youngs judgment regarding these matters.
The Audit Committee discussed with the internal auditors and independent auditors matters required to be discussed by SAS 61 (Codification of Statements on Auditing
Standards, AU§ 380). The Committee met with the internal auditors and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the companys internal controls over
financial reporting, and the overall quality of ATIs financial reporting. The Audit Committee has also discussed with Ernst & Young matters required to be discussed by applicable auditing standards.
The Audit Committee has received the written disclosures and the letter from Ernst & Young required by applicable requirements of the Public Company
Accounting Oversight Board (United States) regarding the independent accountants communications with the Audit Committee concerning independence. The Committee also considered the compatibility of
non-audit
services with Ernst & Youngs independence. This information was also discussed with Ernst & Young.
COMMITTEE RECOMMENDS INCLUDING THE FINANCIAL STATEMENTS IN THE ANNUAL REPORT
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in our annual
report on Form
10-K
for the year ended December 31, 2016 as filed with the Securities and Exchange Commission. The Board of Directors has approved this inclusion.
Submitted by:
AUDIT COMMITTEE:
|
|
|
|
|
|
|
|
|
|
|
|
|
Chair:
|
|
John R. Pipski
|
|
|
|
|
|
|
|
|
|
|
Members:
|
|
James C. Diggs
|
|
|
|
|
|
|
|
|
|
|
|
|
David J. Morehouse
|
|
|
|
|
|
|
|
|
|
|
|
|
Louis J. Thomas
|
|
|
|
|
|
|
|
|
|
|
ATI
2017 Proxy Statement
/
83
Annual Meeting Information
2017 Annual Meeting of Stockholders
Questions and Answers
You can help ATI save money by electing to receive future proxy statements and annual reports over the Internet instead of by mail.
See question 15
.
1.
|
Where is the 2017 annual meeting being held?
|
The 2017 Annual Meeting of
Stockholders will be held on Thursday, May 11, 2017, at 11:00 a.m. Central Time at the Hilton Milwaukee City Center, 509 W, Wisconsin Avenue, Milwaukee, Wisconsin 53203. We are holding the annual meeting in Wisconsin near the ATI Forged
Products facility in Cudahy, Wisconsin.
2.
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Who is entitled to vote at the annual meeting?
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If you held shares of Allegheny
Technologies Incorporated common stock, par value $0.10 per share (Common Stock), at the close of business on March 15, 2017, you may vote your shares at the annual meeting. On that day, 108,824,992 shares of Common Stock were
outstanding.
In order to vote, you must follow the instruction provided on your proxy card to designate a proxy to vote on your behalf or attend the meeting and
vote your shares in person. Please return your proxy as soon as possible to ensure that your shares are represented and will be voted at the meeting, whether or not you plan to attend the meeting.
3.
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How do I cast my vote?
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There are four different ways you may cast your vote. You
may vote by:
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telephone,
using the toll-free number listed on each proxy or voting instruction card;
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the
Internet,
at the web address provided on each proxy or voting instruction card;
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marking, signing, dating and mailing
each proxy or voting instruction card and returning it in the postage-paid envelope provided. If you return your signed proxy card, but do not mark the boxes showing how you
wish to vote on any particular item, your shares will be voted as the Board of Directors recommends for any such items; or
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attending the meeting and voting your shares in person,
if you are a stockholder of record (that is, your shares are registered directly in your name on the Companys books and are not held in street
name through a broker, bank or other nominee).
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If you are a stockholder of record wishing to vote by telephone or electronically through the
Internet, you will need to use the individual control number that is printed on your proxy card in order to authenticate your ownership.
The deadline for voting by telephone or the Internet is 11:59 p.m. Eastern Time on May
10,
2017.
If your shares are held in street name (that is, they are held in the name of broker, bank or other nominee), or if your shares are held in
one of the Companys savings or retirement plans, you will receive instructions with your materials that you must follow in order to have your shares voted.
For voting procedures for shares held in ATIs savings or retirement plans, see
the response to question 13 below.
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2017 Proxy Statement
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ANNUAL MEETING
INFORMATION |
2017 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS AND ANSWERS
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4.
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What is the difference between holding shares as a stockholder of record and as a beneficial owner?
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Most of our stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized below, there are some
differences between shares held of record and those owned beneficially.
Stockholders of Record.
If your shares are registered directly in your name with
our transfer agent, Computershare Shareowner Services, you are considered to be the stockholder of record with respect to those shares, and the Notice of Annual Meeting and proxy materials are being sent directly to you. As the stockholder of
record, you have the right to grant your voting proxy directly, to vote electronically, or to vote in person at the Annual Meeting. If you have requested printed proxy materials, we have enclosed a proxy card for you to use.
Beneficial Owners.
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in
street name, and the Notice of Annual Meeting and these proxy materials are being forwarded to you by your broker, bank or nominee who is considered to be the stockholder of record with respect to those shares. As the beneficial owner,
you have the right to direct your broker, bank or nominee on how to vote and are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting, unless
you request, complete and deliver a legal voting proxy from your broker, bank or nominee. If you requested printed proxy materials, your broker, bank or nominee has enclosed a voting instruction card for you to use in directing the broker, bank or
nominee regarding how to vote your shares.
5.
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How many votes can be cast by all stockholders?
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Each share of ATI Common Stock is
entitled to one vote. There is no cumulative voting. We had 108,824,992 shares of Common Stock outstanding and entitled to vote on the record date.
6.
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How many votes must be present to hold the annual meeting?
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A majority of the shares
entitled to vote as of the record date must be present in person or by proxy at the Annual Meeting in order to hold the Annual Meeting and conduct business. This is called a quorum. Your shares will be counted as present at the Annual
Meeting if you properly cast your vote in person, electronically or telephonically, or a proxy card has been properly submitted by you or on your behalf. Both abstentions and broker
non-votes
are counted as
present for the purpose of determining the presence of a quorum.
7.
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How many votes are required to elect directors (Item 1)?
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Directors are elected by a
plurality of the votes cast. This means that the four individuals nominated for election to the Board of Directors who receive the most FOR votes (among votes properly cast in person, electronically, telephonically or by proxy) will be
elected.
While directors are elected by a plurality of votes cast, our Bylaws include a director resignation policy. This policy states that in an uncontested
election, any director nominee who receives a greater number of votes WITHHELD from his or her election, as compared to votes FOR such election, must tender his or her resignation. The Nominating and Governance Committee of
the Board is required to make recommendations to the Board of Directors with respect to any such tendered resignation. The Board of Directors will act on the tendered resignation within 90 days from the certification of the vote and will publicly
disclose its decision, including its rationale.
Only votes FOR or WITHHELD are counted in determining whether a plurality has been cast in
favor of a director nominee; abstentions are not counted for purposes of the election of directors. If you withhold authority to vote with respect to the election of some or all of the nominees, your shares will not be voted with respect to those
nominees indicated. For a WITHHOLD vote, your shares will be counted for purposes of determining whether there is a quorum and will have a similar effect as a vote against that director nominee for purposes of our director resignation
policy.
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ANNUAL MEETING
INFORMATION |
2017 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS AND ANSWERS
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Full details of our director resignation policy are set forth in our Bylaws, which are available on our website at
www.atimetals.com
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8.
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How many votes are required to adopt the other proposals (Items 2, 3, 4 and 5)?
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All
of the other proposals will be approved if such items receive the affirmative vote of at least a majority of the shares of ATI Common Stock represented at the Annual Meeting and entitled to vote on the matter. If your shares are represented at the
Annual Meeting but you abstain from voting on any of these matters, your shares will be counted as present and entitled to vote on a particular matter for purposes of establishing a quorum, and the abstention will have the same effect as a vote
against that proposal.
Your vote on Items 3 (the frequency of future advisory votes on executive compensation) and 4 (executive compensation) is advisory,
which means the result of the vote is
non-binding.
Although
non-binding,
the Board and its committees value the opinions of our stockholders and will review and consider
the voting result when making future decisions regarding executive compensation.
9.
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What if I dont give specific voting instructions?
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Stockholders of
Record.
If you are a stockholder of record and you indicate when voting by Internet or by telephone that you wish to vote as recommended by our Board of Directors, or if you return a signed proxy card but do not indicate how you wish to vote,
then your shares will be voted:
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in accordance with the recommendations of the Board of Directors on all matters presented in this Proxy Statement; and
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as the proxy holders may determine in their discretion regarding any other matters properly presented for a vote at the meeting.
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If you indicate a choice with respect to any matter to be acted upon on your proxy card, the shares will be voted in
accordance with your instructions.
Beneficial Owners.
If you are a beneficial owner and hold your shares in street name and do not provide the organization
that holds your shares with voting instructions, the broker or other nominee will determine if it has the discretionary authority to vote on the particular matter. In very limited circumstances, brokers have the discretion to vote on matters deemed
to be routine. Under applicable law and the rules of the New York Stock Exchange, brokers generally do not have discretion to vote on most matters. For example, if you do not provide voting instructions to your broker, the broker could vote your
shares in its discretion with respect to the proposal to ratify the selection of Ernst & Young LLP as our independent auditors for 2017 (Item 5) because that is deemed to be a routine matter, but the broker likely could not vote your shares
for any of the other proposals on the agenda for the Annual Meeting. We encourage you to provide instructions to your broker regarding the voting of your shares.
If you do not provide voting instructions to your broker and the broker has indicated that it does not have discretionary authority to vote on a particular proposal,
your shares will be considered broker
non-votes
with regard to that matter. Broker
non-votes
will be considered as represented for purposes of determining a
quorum. Broker
non-votes
are not counted for purposes of determining the number of votes cast with respect to a particular proposal and are not considered to be shares entitled to vote on
non-routine
matters. Thus, a broker
non-vote
will make a quorum more readily obtainable, but the broker
non-vote
will not otherwise
affect the outcome of the vote on Items 2, 3, 4 and 5, which each require the affirmative vote of a majority of the shares present and entitled to vote.
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ANNUAL MEETING
INFORMATION |
2017 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS AND ANSWERS
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10.
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How do I revoke or change my vote?
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You may revoke your proxy or change your vote at
any time before it is voted at the meeting by:
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notifying the Corporate Secretary at ATIs executive office;
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transmitting a proxy dated later than your prior proxy, either by mail, telephone or Internet; or
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attending the meeting and voting in person or by proxy (except for shares held in street name through a broker, bank or other nominee, or in the Companys savings or retirement plans).
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The latest-dated, timely, properly completed proxy that you submit, whether by mail, telephone or the Internet, will count as your vote. If a vote
has been recorded for your shares and you subsequently submit a proxy card that is not properly signed and dated, the previously recorded vote will stand.
11.
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What shares are included on the proxy or voting instruction card?
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The shares
indicated on your proxy or voting instruction card represent those shares registered directly in your name, those held on account in the Companys dividend reinvestment plan and shares held in the Companys savings or retirement plans. If
you do not cast your vote, your shares (except those held in the Companys savings or retirement plans) will not be voted.
See question 13 for an explanation of the voting procedures for shares in the Companys savings or retirement
plans.
12.
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What does it mean if I receive more than one proxy or voting instruction card?
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If
your shares are registered differently and are in more than one account, then you will receive more than one card. Please complete and return
all
of the proxy or voting instruction cards you receive (or vote by telephone or the Internet all
of the shares on each of the proxy or voting instruction cards you receive) in order to ensure that all of your shares are voted.
13.
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How are shares that I hold in a company savings or retirement plan voted?
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If you
hold ATI Common Stock in one of the Companys savings or retirement plans, then you may tell the plan trustee how to vote the shares of Common Stock allocated to your account. You may either sign and
return the voting instruction card provided by the plan trustee or transmit your instructions by telephone or the Internet. If you do not transmit instructions, your plan shares will be voted as
the plan administrator directs or as otherwise provided in the plan.
The deadline for voting the shares you hold in the Companys savings or retirement
plans by telephone or the Internet is 11:59 p.m. Eastern Time on May 5, 2017.
14.
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Is my vote confidential?
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ATI maintains a policy of keeping stockholder votes
confidential.
15. Can I, in the future, receive my proxy
statement and annual report over the internet?
Stockholders can elect to view future
ATI proxy statements and annual reports over the Internet instead of receiving paper copies in the mail. This saves us the cost of producing and mailing these documents. Costs normally associated with electronic access, such as usage and telephone
charges, will be borne by you.
If you are a stockholder of record and you choose to vote over the Internet, you can choose to receive future annual reports and
proxy statements electronically by following the prompt on the voting page when you vote using the Internet. If you hold your Company stock in street name (such as through a broker, bank or other nominee account), check the information provided by
your nominee for instructions on how to elect to view future proxy statements and annual reports over the Internet.
Stockholders who choose to view future proxy
statements and annual reports over the Internet will receive instructions electronically that contain the Internet address for those materials, as well as voting instructions, approximately six weeks before future meetings.
If you enroll to view ATIs future annual reports and proxy statements electronically and vote over the Internet, your enrollment will remain in effect for all
future stockholders meetings unless you cancel it. To cancel, stockholders of record should access
www.computershare.com/investor
and follow the instructions to cancel your enrollment. You should retain your control number appearing on
your enclosed proxy or voting instruction card. If you hold
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ANNUAL MEETING
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2017 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS AND ANSWERS
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your Company stock in street name, check the information provided by your nominee holder for instructions on how to cancel your enrollment.
If at any time you would like to receive a paper copy of the annual report or proxy statement, please write to the Corporate Secretary, Allegheny Technologies
Incorporated, 1000 Six PPG Place, Pittsburgh, Pennsylvania 15222-5479.
16. What is householding?
The term
householding, means that we will deliver only one copy of our annual report and proxy statement to stockholders of record who share the same address and last name unless we have received contrary instructions from you. This procedure
reduces our printing costs and mailing costs and fees. Upon written or oral request, we
will promptly deliver a separate annual report and proxy statement to any stockholder at a shared address to which a single copy of either of those documents was delivered.
If you would like to receive a separate copy of the annual report or proxy statement for this meeting or opt out of householding, or if you are a stockholder eligible
for householding and would like to participate in householding, please send a request addressed to ATIs Corporate Secretary at 1000 Six PPG Place, Pittsburgh, PA 15222-5479, or call
(412) 394-2800.
Many brokerage firms have instituted householding. If you hold your shares in street name, please contact your bank, broker or other holder of record to request information about householding.
2018 Annual Meeting and Stockholder Proposals
Stockholder proposals submitted for inclusion in the proxy statement and form of proxy relating to the 2018 Annual Meeting of Stockholders must be received no later
than November
30
, 2017. Stockholder proposals should be sent to the Corporate Secretary, Allegheny Technologies Incorporated, 1000 Six PPG Place, Pittsburgh, PA 15222-5479.
If you wish to submit director nominations or other business to be properly brought before an annual meeting, you must give timely notice of your intent to submit a
proposal in writing to the Corporate Secretary. For such notices to be timely, notice must be received by the Corporate Secretary not less than 75 days and not more than 90 days before the first anniversary of the date of the preceding years
annual meeting. For our 2017 Annual Meeting of Stockholders, we must receive any such notice on or after February 5, 2017 and on or before February 20, 2017. The notice must contain certain information specified in the Companys
Certificate of Incorporation and Bylaws.
The Nominating and Governance Committee will consider director candidates recommended by stockholders. The Committee will
evaluate stockholder-recommended candidates on the same basis as other candidates. Stockholder recommendations should be sent to the Corporate Secretary at the address above, who will forward the information to the Committee.
Stockholders may obtain copies of our Certificate of Incorporation and Bylaws by writing to the Corporate Secretary at the address set forth above. Copies of our
Certificate of Incorporation and Bylaws have been filed with the SEC and can be viewed on our website,
www.atimetals.com
at About ATICorporate Governance.
Other Business and Information
The Company knows of no business to be presented for consideration at the meeting other than the items indicated in the Notice of Annual Meeting. If other matters are
properly presented at the meeting, the persons designated as proxies on your proxy card may vote on such matters at their discretion.
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ANNUAL MEETING
INFORMATION |
OTHER BUSINESS AND INFORMATION
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Following adjournment of the formal business meeting, Richard J. Harshman, Chairman, President and Chief Executive
Officer, will address the meeting and will hold a general discussion period during which the stockholders will have an opportunity to ask questions about the Company and its business.
Annual Report on Form
10-K
Copies of ATIs Annual Report on Form
10-K,
without Exhibits, can be obtained free of charge by written request to the
Corporate Secretary, Allegheny Technologies Incorporated, 1000 Six PPG Place, Pittsburgh, Pennsylvania 15222-5479 or by calling
(412) 394-2800.
Proxy Solicitation
We pay the cost of
preparing, assembling and mailing this proxy-soliciting material. We will reimburse banks, brokers and other nominee holders for reasonable expenses they incur in sending these proxy materials to our beneficial stockholders whose stock is registered
in the nominees name.
ATI has engaged Georgeson Inc., 199 Water Street, 26th Floor, New York, New York 10038 to help solicit proxies from brokers, banks and
other nominee holders of Common Stock at a cost of $10,000 plus expenses. Our employees may also solicit proxies for no additional compensation.
On behalf of the
Board of Directors:
Elliot S. Davis
Corporate Secretary
Dated: March 30, 2017
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Appendix A
Allegheny Technologies Incorporated
2017 Incentive Plan
SECTION 1. Purpose; Definitions
The purpose of this Plan is to give the Company a competitive advantage in attracting, retaining and motivating officers, employees, directors and/or consultants and to
provide the Company and its Subsidiaries and Affiliates with a stock plan providing incentives for future performance of services directly linked to the profitability of the Companys businesses and increases in Company shareholder value.
For purposes of this Plan, the following terms are defined as set forth below:
(a)
Affiliate
means a company or other entity controlled by, controlling or under common control with the Company.
(b)
Applicable Exchange
means the New York Stock Exchange or such other securities exchange as may at the applicable time be the principal market
for the Common Stock.
(c)
Award
means a Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Unit,
Other Stock-Based Award or Cash-Based Award granted pursuant to the terms of this Plan.
(d)
Award Agreement
means a written or electronic
document or agreement setting forth the terms and conditions of a specific Award.
(e)
Board
means the board of directors of the Company.
(f)
Business Combination
has the meaning set forth in Section 11(e)(iii)
(g)
Cash-Based Award
means an Award denominated in a dollar amount.
(h)
Cause
means, unless otherwise provided in an Award Agreement, (i) Cause as defined in any Individual Agreement to which the
Participant is a party as of the Grant Date, or (ii) if there is no such Individual Agreement or if it does not define Cause: (A) conviction of, or plea of guilty or
nolo contendere
by, the Participant for committing a felony under
federal law or the law of the state in which such action occurred, (B) willful and deliberate failure on the part of the Participant in the performance of his or her employment duties in any material respect, (C) dishonesty in the course
of fulfilling the Participants employment duties, (D) a material violation of the Companys ethics and compliance program or (E) prior to a Change in Control, such other events as shall be determined by the Committee.
Notwithstanding the general rule of Section 2(c), following a Change in Control, any determination by the Committee as to whether Cause exists shall be subject to
de novo
review.
(i)
Change in Control
has the meaning set forth in Section 11(e).
(j)
Code
means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto, the Treasury Regulations thereunder and
other relevant interpretive guidance issued by the Internal Revenue Service or the Treasury Department. Reference to any specific section of the Code shall be deemed to include such regulations and guidance, as well as any successor provision of the
Code.
(k)
Commission
means the Securities and Exchange Commission or any successor agency.
(l)
Committee
means the Committee referred to in Section 2.
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(m)
Common Stock
means common stock, $0.10 par value per share, of the Company.
(n)
Company
means Allegheny Technologies Incorporated, a Delaware corporation, or its successor.
(o)
Corporate Transaction
has the meaning set forth in Section 3(d).
(p)
Disability
means, unless otherwise provided in an Award Agreement, (i) Disability as defined in any Individual Agreement to
which the Participant is a party, or (ii) if there is no such Individual Agreement or it does not define Disability, permanent and total disability as determined under the Companys Long-Term Disability Plan applicable to the
Participant.
(q)
Disaffiliation
means a Subsidiarys or an Affiliates ceasing to be a Subsidiary or Affiliate for any reason
(including as a result of a public offering, or a spinoff or sale by the Company, of the stock of the Subsidiary or Affiliate) or a sale of a division of the Company and its Affiliates.
(r)
Effective Date
has the meaning set forth in Section 13(a).
(s)
Eligible Individuals
means directors, officers, employees and consultants of the Company or any of its Subsidiaries or Affiliates, and
prospective directors, officers, employees and consultants who have accepted offers of employment or consultancy from the Company or its Subsidiaries or Affiliates.
(t)
Exchange Act
means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.
(u)
Fair Market Value
means, except as otherwise determined by the Committee, the average of the high and low quoted sales prices of a Share on the
Applicable Exchange on the date of measurement or, if Shares were not traded on the Applicable Exchange on such measurement date, then on the next preceding date on which Shares were traded on the Applicable Exchange, as reported by such source as
the Committee may select. If there is no regular public trading market for such Common Stock, the Fair Market Value of the Common Stock shall be determined by the Committee in good faith and, to the extent applicable, such determination shall be
made in a manner that satisfies Section 409A and Section 422(c)(1) of the Code.
(v)
Forfeiture Amount
has the meaning set forth in Section
15(j)(i).
(w)
Free-Standing SAR
has the meaning set forth in Section 5(b).
(x)
Full-Value Award
means any Award other than a Stock Option or Stock Appreciation Right or Cash Based Award.
(y)
Grant Date
means (i) the date on which the Committee by resolution selects an Eligible Individual to receive a grant of an Award and
determines the number of Shares, or the formula for earning a number of Shares, to be subject to such Award or the cash amount subject to such Award, or (ii) such later date as the Committee shall provide in such resolution.
(z)
Incentive Stock Option
means any Stock Option designated in the applicable Award Agreement as an incentive stock option within the
meaning of Section 422 of the Code, and that in fact so qualifies.
(aa)
Incumbent Board
has the meaning set forth in Section 11(e)(ii).
(bb)
Individual Agreement
means an employment, consulting or similar agreement between a Participant and the Company or one of its Subsidiaries
or Affiliates, and, after a Change in Control, a change in control or salary continuation agreement between a Participant and the Company or one of its Subsidiaries or Affiliates. If a Participant is party to both
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APPENDIX A |
ALLEGHENY
TECHNOLOGIES INCORPORATED 2017 INCENTIVE PLAN
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an employment agreement and a change in control or salary continuation agreement, the employment agreement shall be the relevant Individual Agreement prior to a Change in Control,
and, the change in control or salary continuation agreement shall be the relevant Individual Agreement after a Change in Control.
(cc)
Nonqualified Stock Option
means any Stock Option that is not an Incentive Stock Option.
(dd)
Other Stock-Based Award
means
Awards of Common Stock and other Awards that are valued in whole or in part by reference to, or are otherwise based upon, Common Stock, including unrestricted stock, dividend equivalents, and convertible debentures.
(ee)
Outside Directors
has the meaning set forth in Section 12(a).
(ff)
Outstanding Company Common Stock
has the meaning set forth in Section 11(e)(i).
(gg)
Outstanding Company Voting Securities
has the meaning set forth in Section 11(e)(i).
(hh)
Participant
means an Eligible Individual to whom an Award is or has been granted.
(ii)
Performance Goals
means the performance goals established by the Committee in connection with the grant of an Award. In the case of Qualified
Performance-Based Awards that are intended to qualify under Section 162(m)(4)(C) of the Code, (i) such goals shall be based on the attainment of specified levels of one or more of the following measures: stock price, net income, operating
income, gross profit, operating profit, income before taxes, earnings (whether based on earnings, earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and amortization), earnings per share,
return on investment or working capital, return on capital employed, return on equity, return on assets or operating assets, return or commissioning or qualification of particular capital expenditures or equipment, economic value added (the amount,
if any, by which net operating profit after tax exceeds a reference cost of capital, cash flow (before or after dividends), operating cash flow, cash flow per share (before or after dividends), cost control and/or reductions, balanced scorecard,
execution of growth strategy, integration or qualification of acquired businesses, manufacturing cycle time reductions, reductions in inventory, inventory turns,
on-time
delivery performance and improvements
in safety or environmental performance, in each case with respect to the Company or any one or more Subsidiaries, divisions, business units or business segments thereof, either in absolute terms or relative to the performance of one or more other
companies (including an index covering multiple companies) and (ii) such Performance Goals shall be set by the Committee within the time period prescribed by Section 162(m) of the Code. The Performance Goals may be adjusted as contemplated by
Section 3(d)(iv).
(jj)
Performance Period
means that period established by the Committee at the time any Performance Unit is granted or at any
time thereafter during which any Performance Goals specified by the Committee with respect to such Award are to be measured.
(kk)
Performance
Unit
means any Award granted under Section 8 of a unit valued by reference to a designated amount of cash or other property other than Shares, which value may be paid to the Participant by delivery of such property as the Committee
shall determine, including cash, Shares, or any combination thereof, upon achievement of such Performance Goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
(ll)
Person
has the meaning set forth in Section 11(e)(i).
(mm)
Plan
means the Allegheny Technologies Incorporated 2017 Incentive Plan, as set forth herein and as hereinafter amended from time to time.
(nn)
Qualified Performance-Based Award
means an Award intended to qualify for the Section 162(m) Exemption, as provided in Section 12.
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APPENDIX A |
ALLEGHENY
TECHNOLOGIES INCORPORATED 2017 INCENTIVE PLAN
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(oo)
Replaced Award
has the meaning set forth in Section 11(b).
(pp)
Replacement Award
has the meaning set forth in Section 11(b).
(qq)
Restricted Stock
means an Award granted under Section 6.
(rr)
Restricted Stock Unit
has the meaning set forth in Section 7(a).
(ss)
Restriction Period
has the meaning set forth in Section 6(c)(ii).
(tt)
Retirement
means, except as otherwise provided by the Committee, (i) retirement from active employment with the Company or any Affiliate
pursuant to the early or normal retirement provisions of the applicable retirement plan of such employer or (ii) pursuant to the retirement scheme applicable under local law or the local policies and procedures of the Company or any Affiliate.
(uu)
Section 16(b)
has the meaning set forth in Section 12(d).
(vv)
Section 162(m) Exemption
means the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in
Section 162(m)(4)(C) of the Code.
(ww)
Section 409A CIC
has the meaning set forth in Section 11(f).
(xx)
Separation from Service
has the meaning set forth in Section 1(eee).
(yy)
Share
means a share of Common Stock.
(zz)
Stock
Appreciation Right
means an Award granted under Section 5(b) or 5(c).
(aaa)
Stock Option
means an Award granted under Section
5(a).
(bbb)
Subsidiary
means any corporation, partnership, joint venture, limited liability company or other entity during any period in which
at least a 50% voting or profits interest is owned, directly or indirectly, by the Company or any successor to the Company.
(ccc)
Tandem SAR
has the meaning set forth in Section 5(b).
(ddd)
Term
means the maximum period during which a Stock Option or Stock Appreciation Right may
remain outstanding, subject to earlier termination upon Termination of Service or otherwise, as specified in the applicable Award Agreement.
(eee)
Termination of Service
means the termination of the applicable Participants employment with, or performance of services for, the Company and any of its Subsidiaries or Affiliates. Unless otherwise determined by the
Committee, (i) if a Participants employment with the Company and its Affiliates terminates but such Participant continues to provide services to the Company and its Affiliates in a
non-employee
capacity, such change in status shall not be deemed a Termination of Service and (ii) a Participant employed by, or performing services for, a Subsidiary or an Affiliate or a division of the Company and its Affiliates shall also be deemed to
incur a Termination of Service if, as a result of a Disaffiliation, such Subsidiary, Affiliate or division ceases to be a Subsidiary, Affiliate or division, as the case may be, and the Participant does not immediately thereafter become an employee
of, or service provider for, the Company or another Subsidiary or Affiliate. Temporary absences from employment because of illness, vacation or leave of absence and transfers among the Company and its Subsidiaries and Affiliates shall not be
considered Terminations of Service. Notwithstanding the foregoing provisions of this definition, with respect to any Award that constitutes a nonqualified deferred compensation plan within the meaning of Section 409A of the Code, a
Participant shall not be considered to
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have experienced a Termination of Service unless the Participant has experienced a separation from service within the meaning of Section 409A of the Code (a
Separation from Service
).
In addition, certain other terms used herein have definitions given to them in the first place in which they are
used.
SECTION 2. Administration
(a)
Committee
.
This Plan shall be administered by the Board directly, or if the Board elects, by the Personnel and Compensation Committee or such other committee of the Board as the Board may from time to time designate, which committee
shall be composed of not less than two directors, and shall be appointed by and serve at the pleasure of the Board. All references in this Plan to the Committee refer to the Board as a whole, unless a separate committee has been
designated or authorized consistent with the foregoing.
Subject to the terms and conditions of this Plan, the Committee shall have absolute authority:
(i) To select the Eligible Individuals to whom Awards may from time to time be granted;
(ii) To determine whether and to what extent Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Performance Units, Other Stock-Based Awards, Cash-Based Awards or any combination thereof are to be granted hereunder;
(iii) To determine the number of Shares to be covered by each Award granted hereunder or the amount of any Cash-Based Award;
(iv) To approve the form of any Award Agreement and determine the terms and conditions of any Award granted hereunder, including, but not limited to,
the exercise price (subject to Section 5(d)), any vesting condition, restriction or limitation (which may be related to the performance of the Participant, the Company or any Subsidiary or Affiliate) and any vesting acceleration or forfeiture waiver
regarding any Award and the Shares relating thereto (subject to Section 2(f)), based on such factors as the Committee shall determine;
(v) To
modify, amend or adjust the terms and conditions of any Award (subject to Sections 5(d) and 5(e)), at any time or from time to time, including, but not limited to, Performance Goals;
provided
,
however
, that the Committee may not adjust
upwards the amount payable with respect to any Qualified Performance-Based Award;
(vi) To determine to what extent and under what circumstances
Common Stock and other amounts payable with respect to an Award shall be deferred;
(vii) To determine under what circumstances an Award may be
settled in cash, Shares, other property or a combination of the foregoing;
(viii) To determine whether, to what extent and under what circumstances
cash, Shares and other property and other amounts payable with respect to an Award under this Plan shall be deferred either automatically or at the election of the Participant;
(ix) To adopt, alter and repeal such administrative rules, guidelines and practices governing this Plan as it shall from time to time deem advisable;
(x) To establish any blackout period that the Committee in its sole discretion deems necessary or advisable;
(xi) To interpret the terms and provisions of this Plan and any Award issued under this Plan (and any Award Agreement relating thereto);
(xii) To decide all other matters that must be determined in connection with an Award; and
(xiii) To otherwise administer this Plan.
(b)
Procedures
.
(i) The Committee may act only by a majority of its members then in office, except that the Committee may, except to the extent prohibited by
applicable law or the listing standards of the Applicable Exchange and subject to
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Section 12, allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person
or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time.
(ii) Subject to Section 12(c), any
authority granted to the Committee may be exercised by the full Board. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control.
(c)
Discretion of Committee
.
Subject to Section 1(h), any determination made by the Committee or pursuant to delegated authority under the provisions of
this Plan with respect to any Award shall be made in the sole discretion of the Committee or such delegate at the time of the grant of the Award or, unless in contravention of any express term of this Plan, at any time thereafter. All decisions made
by the Committee or any appropriately delegated officer pursuant to the provisions of this Plan shall be final, binding and conclusive on all persons, including the Company, Participants and Eligible Individuals.
(d)
Cancellation or Suspension
.
Subject to Section 5(d), the Committee shall have full power and authority to determine whether, to what extent and
under what circumstances any Award shall be canceled or suspended.
(e)
Award Agreements.
The terms and conditions of each Award (other than a Cash-Based
Award), as determined by the Committee, shall be set forth in a written (or electronic) Award Agreement, which shall be delivered to the Participant receiving such Award upon, or as promptly as is reasonably practicable following, the grant of such
Award. The effectiveness of an Award (other than a Cash-Based Award) shall be subject to the Award Agreements being signed by the Company and the Participant receiving the Award unless otherwise provided in the Award Agreement. Award
Agreements may be amended only in accordance with Section 13(d) hereof.
(f)
Minimum Vesting Period
. Except for Awards granted with respect to a
maximum of five percent of the Shares authorized in the first sentence of Section 3(a), Award Agreements shall not provide for vesting prior to the first anniversary of the Grant Date, provided that the Committee has the discretion to accelerate
vesting of an Award in connection with a Change in Control, a qualifying termination of employment or any other event or circumstance that the Committee determines to be appropriate.
SECTION 3. Common Stock Subject to Plan
(a)
Plan
Maximums
.
The maximum number of Shares that may be granted pursuant to Awards under this Plan shall be 5,200,000. The maximum number of Shares that may be granted pursuant to Stock Options intended to be Incentive Stock Options shall be
1,000,000 Shares. Shares subject to an Award under this Plan may be authorized and unissued Shares. On and after the Effective Date (as defined in Section 13(a)), no new awards may be granted under the Companys prior equity compensation plans,
it being understood that (i) awards outstanding under any such plans as of the Effective Date shall remain in full force and effect under such plans according to their respective terms, and (ii) to the extent that any such award granted
under the Companys 2015 Incentive Plan is forfeited, terminates, expires or lapses without being exercised (to the extent applicable), or is settled for cash, the Shares subject to such award not delivered as a result thereof shall again be
available for Awards under this Plan;
provided
,
however
, that dividend equivalents may continue to be issued under the Companys existing equity compensation plans in respect of awards granted under such plans which are
outstanding as of the Effective Date.
(b)
Individual Limits
.
No Participant may be granted Qualified Performance-Based Awards (other than Stock
Options and Stock Appreciation Rights) covering in excess of 1,000,000 Shares during any calendar year. No Participant may be granted Stock Options and Stock Appreciation Rights covering in excess of 1,000,000 Shares during any calendar year. No
Participant who is a
non-employee
director of the Company may be granted Awards covering Shares with a Grant Date Fair Market Value in excess of $500,000 during any single calendar year.
(c)
Rules for Calculating Shares Delivered
.
To the extent that any Award is forfeited, terminates, expires or lapses instead of being exercised, or any
Award is settled for cash, the Shares subject to such Awards not delivered as a result thereof
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shall again be available for Awards under this Plan. If the exercise price of, and/or the tax withholding obligations relating to, any Stock Option or Stock Appreciation Right is satisfied by
delivering Shares (either actually or through a signed document affirming the Participants ownership and delivery of such Shares) or withholding Shares relating to such Award, the gross number of Shares subject to the Stock Option or Stock
Appreciation Right shall nonetheless be deemed to have been granted for purposes of the first sentence of Section 3(a). If the tax withholding obligations relating to any Full-Value Award are satisfied by delivering Shares (either actually or
through a signed document affirming the Participants ownership and delivery of such Shares) or withholding Shares related to such Full-Value Award, the net number of Shares subject to the Award after payment of the tax withholding obligations
shall be deemed to have been granted for purposes of the first sentence of Section 3(a).
(d)
Adjustment Provisions
.
(i) In the event of a merger, consolidation, acquisition of property or shares, stock rights offering, liquidation, disposition for consideration of the
Companys direct or indirect ownership of a Subsidiary or Affiliate (including by reason of a Disaffiliation),
or similar event affecting the Company or any of its Subsidiaries (each, a
Corporate Transaction
), the
Committee or the Board may in its discretion make such substitutions or adjustments as it deems appropriate and equitable to (A) the aggregate number and kind of Shares or other securities reserved for issuance and delivery under this Plan,
(B) the various maximum limitations set forth in Sections 3(a) and 3(b) upon certain types of Awards and upon the grants to individuals of certain types of Awards, (C) the number and kind of Shares or other securities subject to
outstanding Awards; and (D) the exercise price of outstanding Awards.
(ii) In the event of a stock dividend, stock split, reverse stock split,
reorganization, share combination, or recapitalization or similar event affecting the capital structure of the Company, or a Disaffiliation, separation or spinoff, in each case without consideration, or other extraordinary dividend of cash or other
property to the Companys shareholders, the Committee or the Board shall make such substitutions or adjustments as it deems appropriate and equitable to (A) the aggregate number and kind of Shares or other securities reserved for issuance
and delivery under this Plan, (B) the various maximum limitations set forth in Sections 3(a) and 3(b) upon certain types of Awards and upon the grants to individuals of certain types of Awards, (C) the number and kind of Shares or other
securities subject to outstanding Awards; and (D) the exercise price of outstanding Awards.
(iii) In the case of Corporate Transactions, such
adjustments may include (A) the cancellation of outstanding Awards in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such Awards, as determined by the Committee or the Board in
its sole discretion (it being understood that in the case of a Corporate Transaction with respect to which shareholders of Common Stock receive consideration other than publicly traded equity securities of the ultimate surviving entity, any such
determination by the Committee that the value of a Stock Option or Stock Appreciation Right shall for this purpose be deemed to equal the excess, if any, of the value of the consideration being paid for each Share pursuant to such Corporate
Transaction over the exercise price of such Stock Option or Stock Appreciation Right shall conclusively be deemed valid); (B) the substitution of other property (including cash or other securities of the Company and securities of entities other
than the Company) for the Shares subject to outstanding Awards; and (C) in connection with any Disaffiliation, arranging for the assumption of Awards, or replacement of Awards with new awards based on other property or other securities
(including other securities of the Company and securities of entities other than the Company), by the affected Subsidiary, Affiliate, or division or by the entity that controls such Subsidiary, Affiliate, or division following such Disaffiliation
(as well as any corresponding adjustments to Awards that remain based upon Company securities).
(iv) The Committee may adjust the Performance Goals
applicable to any Awards to reflect any items that are unusual in nature or occur infrequently, impact of charges for restructurings, discontinued operations, and the cumulative effects of accounting or tax changes, each as defined by generally
accepted accounting principles or as identified in the Companys financial statements, notes to the financial statements, managements discussion and analysis or other Company filings with the Commission,
provided
that in the case
of Performance Goals applicable to Awards intended to remain Qualified Performance-Based Awards, such adjustment shall not violate Section 162(m) of the Code.
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(v) Any adjustments made pursuant to this Section 3(d) to Awards that constitute nonqualified
deferred compensation within the meaning of Section 409A of the Code shall be made in compliance with the requirements of Section 409A of the Code; and any adjustments made pursuant to Section 3(d) to Awards that are not considered
deferred compensation subject to Section 409A of the Code shall be made in such a manner as to ensure that after such adjustments, either (A) the Awards continue not to be subject to Section 409A of the Code or
(B) there does not result in the imposition of any penalty taxes under Section 409A of the Code in respect of such Awards.
(vi) Any adjustment
under this Section 3(d) need not be the same for all Participants.
(e)
Character of Shares
.
Any Shares issued hereunder may consist, in whole or in
part, of authorized and unissued Shares, treasury Shares or Shares purchased in the open market or otherwise.
SECTION 4. Eligibility
Awards may be granted under this Plan to Eligible Individuals;
provided
,
however
, that Incentive Stock Options may be granted only to
employees of the Company and its subsidiaries or parent corporation (within the meaning of Section 424(f) of the Code).
SECTION 5. Stock
Options and Stock Appreciation Rights
(a)
Types of Stock Options
.
Stock Options may be granted alone or in addition to other Awards granted
under this Plan and may be of two types: Incentive Stock Options and Nonqualified Stock Options. The Award Agreement for a Stock Option shall indicate whether the Stock Option is intended to be an Incentive Stock Option or a Nonqualified Stock
Option.
(b)
Types and Nature of Stock Appreciation Rights.
Stock Appreciation Rights may be Tandem SARs, which are granted in conjunction with
a Stock Option, or Free-Standing SARs, which are not granted in conjunction with a Stock Option. Upon the exercise of a Stock Appreciation Right, the Participant shall be entitled to receive an amount in cash, Shares, or both, in value
equal to the product of (i) the excess of the Fair Market Value of one Share over the exercise price of the applicable Stock Appreciation Right, multiplied by (ii) the number of Shares in respect of which the Stock Appreciation Right has
been exercised. The applicable Award Agreement shall specify whether such payment is to be made in cash or Common Stock or both, or shall reserve to the Committee or the Participant the right to make that determination prior to or upon the exercise
of the Stock Appreciation Right.
(c)
Tandem SARs
.
A Tandem SAR may be granted at the Grant Date of the related Stock Option. A Tandem SAR shall be
exercisable only at such time or times and to the extent that the related Stock Option is exercisable in accordance with the provisions of this Section 5, and shall have the same exercise price as the related Stock Option. A Tandem SAR shall
terminate or be forfeited upon the exercise or forfeiture of the related Stock Option, and the related Stock Option shall terminate or be forfeited upon the exercise or forfeiture of the Tandem SAR.
(d)
Exercise Price
.
The exercise price per Share subject to a Stock Option or Free-Standing SAR shall be determined by the Committee and set forth in the
applicable Award Agreement, and shall not be less than the Fair Market Value of a Share on the applicable Grant Date. In no event may any Stock Option or Stock Appreciation Right granted under this Plan be amended, other than pursuant to
Section 3(d), to decrease the exercise price thereof, be cancelled in exchange for cash or other Awards or in conjunction with the grant of any new Stock Option or Free-Standing SAR with a lower exercise price, or otherwise be subject to any
action that would be treated, under the Applicable Exchange listing standards or for accounting purposes, as a repricing of such Stock Option or Free-Standing SAR, unless such amendment, cancellation, or action is approved by the
Companys shareholders.
(e)
Term
.
The Term of each Stock Option and each Free-Standing SAR shall be fixed by the Committee, but no Stock Option
or Free-Standing SAR shall be exercisable more than 10 years after its Grant Date.
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(f)
Exercisability
.
Except as otherwise provided herein, Stock Options and Free-Standing SARs shall be
exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee.
(g)
Method of Exercise
.
Subject
to the provisions of this Section 5, Stock Options and Free-Standing SARs may be exercised, in whole or in part, at any time during the Term thereof by giving written notice of exercise to the Company specifying the number of Shares subject to
the Stock Option or Free-Standing SAR to be purchased.
In the case of the exercise of a Stock Option, such notice shall be accompanied by payment in full of the
aggregate purchase price (which shall equal the product of such number of Shares subject to such Stock Options multiplied by the applicable exercise price) per Share by certified or bank check, wire transfer, or such other instrument or method as
the Company may accept. If provided for in the applicable Award Agreement as approved by the Committee, payment in full or in part may also be made as follows:
(i) In the form of unrestricted Common Stock (by delivery of such Shares or by attestation) already owned by the Participant of the same class as the
Common Stock subject to the Stock Option (based on the Fair Market Value of the Common Stock on the date the Stock Option is exercised);
provided
,
however
, that, in the case of an Incentive Stock Option, the Participant shall only have
the right to make a payment in the form of already owned Shares of the same class as the Common Stock subject to the Stock Option if such right is set forth in the applicable Award Agreement.
(ii) To the extent permitted by applicable law, by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale necessary to pay the purchase price, and, if requested, by the amount of any federal, state, local or foreign withholding taxes. To facilitate the foregoing, the Company
may, to the extent permitted by applicable law, enter into agreements for coordinated procedures with one or more brokerage firms.
(iii) By
instructing the Company to withhold a number of such Shares having a Fair Market Value (based on the Fair Market Value of the Common Stock on the date the applicable Stock Option is exercised) equal to the product of (A) the exercise price per
Share multiplied by (B) the number of Shares in respect of which the Stock Option shall have been exercised.
(h)
Delivery; Rights of Shareholders
.
A Participant shall not be entitled to delivery of Shares pursuant to the exercise of a Stock Option or Stock Appreciation Right until the exercise price therefor has been fully paid and applicable taxes have been withheld. Except as otherwise
provided in Section 5(l), a Participant shall have all of the rights of a shareholder of the Company holding the class or series of Common Stock that is subject to such Stock Option or Stock Appreciation Right (including, if applicable, the right to
vote the applicable Shares), when the Participant (i) has given written notice of exercise, (ii) if requested, has given the representation described in Section 15(a) and (iii) in the case of a Stock Option, has paid in full for such
Shares.
(i)
Nontransferability of Stock Options and Stock Appreciation Rights
.
No Stock Option or Free-Standing SAR shall be transferable by a
Participant other than, for no value or consideration, (i) by will or by the laws of descent and distribution; or (ii) in the case of a Nonqualified Stock Option or Free-Standing SAR, as otherwise expressly permitted by the Committee
including, if so permitted, pursuant to a transfer to such Participants family members, whether directly or indirectly or by means of a trust or partnership or otherwise (for purposes of this Plan, unless otherwise determined by the Committee,
family member shall have the meaning given to such term in General Instructions A.1(a)(5) to Form
S-8
under the Securities Act of 1933, as amended, and any successor thereto). A Tandem SAR shall be
transferable only with the related Stock Option as permitted by the preceding sentence. Any Stock Option or Stock Appreciation Right shall be exercisable, subject to the terms of this Plan, only by the Participant, the guardian or legal
representative of the Participant, or any person to whom such stock option is transferred pursuant to this Section 5(i), it being understood that the term holder and Participant include such guardian, legal representative and
other transferee;
provided, however
, that the term Termination of Service shall continue to refer to the Termination of Service of the original Participant.
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(j)
Termination of Service
.
Unless otherwise determined by the Committee or provided in the applicable
Award Agreement, upon a Participants Termination of Service, his or her Stock Options and Stock Appreciation Rights shall be treated as set forth below:
(i)
Termination by Reason of Death
.
If a Participant incurs a Termination of Service by reason of death, any Stock Option or Stock
Appreciation Right held by such Participant shall immediately vest in full and may thereafter be exercised until the earlier of (A) the third anniversary of such Participants Termination of Service and (B) the expiration of the
stated full Term thereof. In the event of Termination of Service by reason of death, if an Incentive Stock Option is exercised after the expiration of the post-termination exercise periods that apply for purposes of Section 422 of the Code,
such Stock Option will thereafter be treated as a Nonqualified Stock Option.
(ii)
Termination by Reason of Disability
.
If a
Participant incurs a Termination of Service by reason of Disability, any Stock Option or Stock Appreciation Right held by such Participant shall immediately vest in full and may thereafter be exercised until the earlier of (A) the third
anniversary of such Participants Termination of Service and (B) the expiration of the stated full Term thereof. In the event of Termination of Service by reason of Disability, if an Incentive Stock Option is exercised after the expiration
of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Nonqualified Stock Option.
(iii)
Termination by Reason of Retirement
.
If a Participant incurs a Termination of Service by reason of Retirement, (A) any unvested
Stock Option or Stock Appreciation Right held by such Participant shall thereupon terminate and (B) any vested Stock Option or Stock Appreciation Right held by such Participant may thereafter be exercised until the earlier of (A) the third
anniversary of such Participants Termination of Service and (B) the expiration of the stated full Term thereof. In the event of Termination of Service by reason of Retirement, if an Incentive Stock Option is exercised after the expiration
of the post-termination exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Nonqualified Stock Option.
(iv)
Termination by the Company for Cause
.
If a Participant incurs a Termination of Service for Cause, any Stock Options and Stock
Appreciation Rights held by such Participant, whether vested or unvested, shall thereupon terminate.
(v)
Other Termination
.
If a
Participant incurs a Termination of Service for any reason other than death, Disability, or Retirement, or for Cause, and except as otherwise set forth in this Section 5(j) or Section 11(d) hereof, any Stock Option or Stock Appreciation Right held
by such Participant, to the extent it was then exercisable at the time of termination, or on such accelerated basis as the Committee may determine, may be exercised for the lesser of (A) 90 days following the date of such Termination of Service and
(B) the balance of the stated full Term thereof.
(vi) Notwithstanding the foregoing provisions of Section 5(j), the Committee shall have the
power, in its discretion, to apply different rules concerning the consequences of a Termination of Service,
provided
that if such rules are less favorable to the Participant than those set forth above, such rules are set forth in the
applicable Award Agreement.
(k)
Additional Rules for Incentive Stock Options
.
Notwithstanding any other provision of this Plan to the contrary, no
Stock Option that is intended to qualify as an Incentive Stock Option may be granted to any Eligible Employee who at the time of such grant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company
or of any Subsidiary, unless at the time such Stock Option is granted the exercise price is at least 110% of the Fair Market Value of a Share and such Stock Option by its terms is not exercisable after the expiration of five years from the date such
Stock Option is granted. In addition, the aggregate Fair Market Value of the Common Stock (determined at the time a Stock Option for the Common Stock is granted) for which Incentive Stock Options are exercisable for the first time by a Participant
during any calendar year, under all of the incentive stock option plans of the Company and of any Subsidiary, may not exceed $100,000. To the extent a Stock Option that by its terms was intended to be an Incentive Stock Option exceeds this $100,000
limit, the portion of the Stock Option in excess of such limit shall be treated as a Nonqualified Stock Option.
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(l)
Dividends and Dividend Equivalents
.
Dividends (whether paid in cash or Shares) and dividend
equivalents may not be paid or accrued on Stock Options or Stock Appreciation Rights;
provided
that Stock Options and Stock Appreciation Rights may be adjusted under certain circumstances in accordance with the terms of Section 3(d).
SECTION 6. Restricted Stock
(a)
Administration
.
Shares of Restricted Stock are actual Shares issued to a Participant and may be awarded either alone or in addition to other Awards granted under this Plan. The Committee shall determine the Eligible Individuals to whom
and the time or times at which grants of Restricted Stock will be awarded, the number of Shares to be awarded to any Eligible Individual, the conditions for vesting, the time or times within which such Awards may be subject to forfeiture and any
other terms and conditions of the Awards, in addition to those contained in Section 6(c).
(b)
Book Entry Registration or Certificated Shares
.
Shares
of Restricted Stock shall be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of one or more stock certificates. If any certificate is issued in respect of Shares of Restricted Stock, such
certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form:
The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Allegheny
Technologies Incorporated 2017 Incentive Plan and an Award Agreement. Copies of such Plan and Agreement are on file at the offices of Allegheny Technologies Incorporated, 1000 Six PPG Place, Pittsburgh, Pennsylvania 15222.
The Committee may require that the certificates evidencing such Shares be held in custody by the Company until the restrictions thereon shall have lapsed and that, as
a condition of any Award of Restricted Stock, the applicable Participant shall have delivered a stock power, endorsed in blank, relating to the Common Stock covered by such Award.
(c)
Terms and Conditions
.
Shares of Restricted Stock shall be subject to the following terms and conditions and such other terms and conditions as are
set forth in the applicable Award Agreement (including the vesting or forfeiture provisions applicable upon a Termination of Service):
(i) The
Committee shall, prior to or at the time of grant, condition (A) the vesting of an Award of Restricted Stock upon the continued service of the applicable Participant, or (B) the grant or vesting of an Award of Restricted Stock upon the
attainment of Performance Goals or the attainment of Performance Goals and the continued service of the applicable Participant. If the Committee conditions the grant or vesting of an Award of Restricted Stock upon the attainment of Performance Goals
or the attainment of Performance Goals and the continued service of the applicable Participant, the Committee may, prior to or at the time of grant, designate an Award of Restricted Stock as a Qualified Performance-Based Award. The conditions for
grant or vesting and the other provisions of Restricted Stock Awards (including any applicable Performance Goals) need not be the same with respect to each recipient.
(ii) Subject to the provisions of this Plan and the applicable Award Agreement, during the period, if any, set by the Committee, commencing with the
date of such Restricted Stock Award for which such vesting restrictions apply (the
Restriction Period
), and until the expiration of the Restriction Period, the Participant shall not be permitted to sell, assign, transfer, pledge
or otherwise encumber Shares of Restricted Stock.
(d)
Rights of a Shareholder
.
Except as provided in this Section 6 and the applicable Award
Agreement, the applicable Participant shall have, with respect to the Shares of Restricted Stock, all of the rights of a shareholder of the Company holding the class or series of Common Stock that is the subject of the Restricted Stock, including,
if applicable, the right to vote the Shares and the right to receive any dividends. As determined by the Committee in the applicable Award Agreement and subject to Section 15(e), (A) cash dividends on the class or series of Common Stock that is the
subject of the Restricted Stock Award shall be payable in cash or Common Stock (in an amount determined on the basis of the
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Fair Market Value of the Common Stock on the applicable dividend payment date) and shall, as determined by the Committee, be either (i) held subject to the vesting of the underlying
Restricted Stock, or held subject to meeting Performance Goals applicable only to dividends, or (ii) distributed in full or in part without regard to the vested status of the underlying Restricted Stock and (B) dividends payable in Common
Stock shall be paid in the form of Restricted Stock of the same class as the Common Stock with which such dividend was paid, and shall, as determined by the Committee, be held subject to the vesting of the underlying Restricted Stock, or held
subject to meeting Performance Goals applicable only to dividends.
(e)
Delivery of Unlegended Certificates
.
If and when any applicable Performance
Goals are satisfied and the Restriction Period expires without a prior forfeiture of the Shares of Restricted Stock for which legended certificates have been issued, unlegended certificates for such Shares shall be delivered to the Participant upon
surrender of the legended certificates.
(f)
Termination of Service
.
Unless otherwise determined by the Committee or provided in the applicable Award
Agreement, upon a Participants Termination of Service, his or her Restricted Stock shall be treated as set forth below:
(i)
Termination by
Reason of Death or Disability
.
If a Participant incurs a Termination of Service by reason of death or Disability, the restrictions, including any Performance Goals, applicable to any Restricted Stock shall lapse (and, with respect to
Performance Goals, be deemed earned in full based on the applicable target level), and such Restricted Stock shall become free of all restrictions and become fully vested and transferable to the full extent of the original grant.
(ii)
Other Termination
.
Except as otherwise provided by Section 11(d) hereof, if a Participant incurs a Termination of Service for any
reason other than death or Disability during the Restriction Period or before the requisite service period or applicable Performance Goals are satisfied, all Shares still subject to restriction shall be forfeited by the Participant;
provided
,
however
, that the Committee shall have the discretion to waive, in whole or in part, any or all remaining restrictions (other than, in the case of Restricted Stock that is a Qualified Performance-Based Award, satisfaction of the applicable
Performance Goals) with respect to any or all of such Participants Shares of Restricted Stock.
SECTION 7. Restricted Stock Units
(a)
Nature of Awards.
Restricted stock units and deferred share rights (together,
Restricted Stock Units
) are Awards denominated
in Shares that will be settled, subject to the terms and conditions of the Restricted Stock Units, in an amount in cash, Shares, or both, based upon the Fair Market Value of a specified number of Shares.
(b)
Terms and Conditions
.
Restricted Stock Units shall be subject to the following terms and conditions and such other terms and conditions as are set
forth in the applicable Award Agreement (including the vesting or forfeiture provisions applicable upon a Termination of Service):
(i) The
Committee shall, prior to or at the time of grant, condition (A) the vesting of Restricted Stock Units upon the continued service of the applicable Participant, or (B) the grant or vesting of Restricted Stock Units upon the attainment of
Performance Goals or the attainment of Performance Goals and the continued service of the applicable Participant. If the Committee conditions the grant or vesting of Restricted Stock Units upon the attainment of Performance Goals or the attainment
of Performance Goals and the continued service of the applicable Participant, the Committee may, prior to or at the time of grant, designate the Restricted Stock Units as Qualified Performance-Based Awards. The conditions for grant or vesting and
the other provisions of Restricted Stock Units (including any applicable Performance Goals) need not be the same with respect to each recipient. An Award of Restricted Stock Units shall be settled as and when the Restricted Stock Units vest, at a
later time specified by the Committee in the applicable Award Agreement, or, if the Committee so permits, in accordance with an election of the Participant.
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(ii) Subject to the provisions of this Plan and the applicable Award Agreement, during the
Restriction Period, if any, set by the Committee, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Restricted Stock Units.
(iii) The Award Agreement for Restricted Stock Units shall specify whether, to what extent and on what terms and conditions the applicable Participant
shall be entitled to receive payments of cash, Common Stock or other property corresponding to the dividends payable on the Common Stock (subject to Section 15(e)).
(c)
Rights of a Shareholder
.
A Participant to whom Restricted Stock Units are awarded shall have no rights as a shareholder with respect to the Shares
represented by the Restricted Stock Units unless and until Shares are actually delivered to the participant in settlement thereof. Unless otherwise determined by the Committee and subject to Section 15(e), an Award of Restricted Stock Units
shall be adjusted to reflect deemed reinvestment in additional Restricted Stock Units of the dividends that would be paid and distributions that would be made with respect to the Award of Restricted Stock Units if it consisted of actual Shares.
Notwithstanding the immediately preceding sentence, if an adjustment to an Award of Restricted Stock Units is made pursuant to Section 3(d) as a result of any dividend or distribution, no increase to such Award (by means of deemed reinvestment in
additional Restricted Stock Units) shall be made under this Section 7(c) as a result of the same dividend or distribution.
(d)
Termination of Service
.
Unless otherwise determined by the Committee or provided in the applicable Award Agreement, upon a Participants Termination of Service, his or her Restricted Stock Units shall be treated as set forth below:
(i)
Termination by Reason of Death or Disability
.
If a Participant incurs a Termination of Service by reason of death or Disability, the
restrictions, including any Performance Goals, applicable to any Restricted Stock Units shall lapse (and, with respect to Performance Goals, be deemed earned in full based on the applicable target level), and such Restricted Stock Units shall become
fully vested and settled to the full extent of the original grant.
(ii)
Other Termination
.
Except as otherwise provided by Section
11(d), if a Participant incurs a Termination of Service for any reason other than death or Disability during the Restriction Period or before the applicable Performance Goals are satisfied, all unvested Restricted Stock Units shall be forfeited by
the Participant;
provided
,
however
, that the Committee shall have the discretion to waive, in whole or in part, any or all remaining restrictions (other than, in the case of a Restricted Stock Unit Award that is a Qualified
Performance-Based Award, satisfaction of the applicable Performance Goals) with respect to any or all of such Participants Restricted Stock Units.
SECTION 8. Performance Units
Performance Units may be issued hereunder to Eligible Individuals, for no cash consideration or for such
minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under this Plan. The Performance Goals to be achieved during any Performance Period and the length of the Performance Period shall be
determined by the Committee upon the grant of each Performance Unit. The Committee may, in connection with the grant of Performance Units, designate them as Qualified Performance-Based Awards. The conditions for grant or vesting and the other
provisions of Performance Units (including any applicable Performance Goals) need not be the same with respect to each recipient. Performance Units may be paid in cash, Shares, other property or any combination thereof, in the sole discretion of the
Committee as set forth in the applicable Award Agreement. The maximum value of the property, including cash, that may be paid or distributed to any Participant pursuant to a grant of Performance Units made in any one calendar year shall be
$10 million.
SECTION 9. Other Stock-Based Awards
Other Stock-Based Awards may be granted either alone or in conjunction with other Awards granted under this Plan.
SECTION 10. Cash-Based Awards
Cash-Based Awards may
be granted under this Plan. Cash-Based Awards that are Qualified Performance-Based Awards shall be subject to the provisions of Section 12 of this Plan. In addition, no Eligible Individual may be granted
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Cash-Based Awards that are Qualified Performance-Based Awards that have an aggregate maximum payment value in any calendar year in excess of $10.0 million. Cash-Based Awards may be paid in
cash or in Shares (valued as of the date of payment) as determined by the Committee.
SECTION 11.
Change-in-Control
Provisions
(a)
General
.
The provisions of this Section 11 shall, subject to
Section 3(d), apply notwithstanding any other provision of this Plan to the contrary, except to the extent the Committee specifically provides otherwise in an Award Agreement.
(b)
Impact of Change in Control.
Upon the occurrence of a Change in Control, unless otherwise provided in the applicable Award Agreement: (i) all
then-outstanding Stock Options and Stock Appreciation Rights shall become fully vested and exercisable, and all Full-Value Awards (other than performance-based Awards) shall vest in full, be free of restrictions, and be deemed to be earned and
payable in an amount equal to the full value of such Award, except in each case to the extent that another Award meeting the requirements of Section 11(c) (any award meeting the requirements of Section 11(c), a
Replacement Award
)
is provided to the Participant pursuant to Section 3(d) to replace such Award (any award intended to be replaced by a Replacement Award, a
Replaced Award
), and (ii) any performance-based Award that is not replaced by a
Replacement Award shall be deemed to be earned and payable in an amount equal to the full value of such performance-based Award (with all applicable Performance Goals deemed achieved at the greater of (x) the applicable target level and
(y) the level of achievement of the Performance Goals for the Award as determined by the Committee not later than the date of the Change in Control, taking into account performance through the latest date preceding the Change in Control as to
which performance can, as a practical matter, be determined (but not later than the end of the applicable Performance Period)).
(c)
Replacement Awards.
An
Award shall meet the conditions of this Section 11(c) (and hence qualify as a Replacement Award) if: (i) it is of the same type as the Replaced Award; (ii) it has a value equal to the value of the Replaced Award as of the date of the
Change in Control, as determined by the Committee in its sole discretion consistent with Section 3(d); (iii) if the underlying Replaced Award was an equity-based award, it relates to publicly traded equity securities of the Company or the
entity surviving the Company following the Change in Control; (iv) it contains terms relating to vesting (including with respect to a Termination of Service) that are substantially identical to those of the Replaced Award; and (v) its
other terms and conditions are not less favorable to the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control) as of the date of the Change in
Control. Without limiting the generality of the foregoing, a Replacement Award may take the form of a continuation of the applicable Replaced Award if the requirements of the preceding sentence are satisfied. If a Replacement Award is granted, the
Replaced Award shall not vest upon the Change in Control. The determination whether the conditions of this Section 11(c) are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.
(d)
Termination of Service.
Notwithstanding any other provision of this Plan to the contrary and unless otherwise determined by the Committee and set forth
in the applicable Award Agreement, upon a Termination of Service of a Participant by the Company other than for Cause within 24 months following a Change in Control, (i) all Replacement Awards held by such Participant shall vest in full, be
free of restrictions, and be deemed to be earned in full (with respect to Performance Goals, unless otherwise agreed in connection with the Change in Control, at the greater of (x) the applicable target level and (y) the level of
achievement of the Performance Goals for the Award as determined by the Committee taking into account performance through the latest date preceding the Termination of Service as to which performance can, as a practical matter, be determined (but not
later than the end of the applicable Performance Period)), and (ii) unless otherwise provided in the applicable Award Agreement, notwithstanding any other provision of this Plan to the contrary, any Stock Option or Stock Appreciation Right held
by the Participant as of the date of the Change in Control that remains outstanding as of the date of such Termination of Service may thereafter be exercised until the expiration of the stated full Term of such Nonqualified Stock Option or Stock
Appreciation Right.
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(e)
Definition of Change in Control
.
For purposes of this Plan, a
Change in Control
shall mean the happening of any of the following events:
(i) An acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a
Person
) of beneficial ownership (within the meaning of Rule
13d-3
promulgated under the Exchange Act) of 20% or more of either (1) the then
outstanding shares of common stock of the Company (the
Outstanding Company Common Stock
) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of
directors (the
Outstanding Company Voting Securities
);
provided
,
however
, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition
directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (4) any acquisition
by any entity pursuant to a transaction that complies with clauses (1), (2) and (3) of subsection (iii) of this Section 11(e); or
(ii) A
change in the composition of the Board such that the individuals who, as of the Effective Date, constitute the Board (the
Incumbent Board
) cease for any reason to constitute at least a majority of the Board;
provided
,
however
, that, for purposes of this Section 11(e), any individual who becomes a member of the Board subsequent to the Effective Date whose election, or nomination for election by the Companys shareholders, was approved by a vote of at
least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board;
provided further
, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be considered as a member of the Incumbent Board; or
(iii) The consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its
subsidiaries or sale or other disposition of all or substantially all of the assets of the Company ,or the acquisition of assets or securities of another entity by the Company or any of its subsidiaries (a
Business Combination
),
in each case, unless, following such Business Combination, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock (or, for a noncorporate entity, equivalent securities) and the combined
voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or, for a noncorporate entity, equivalent securities), as the case may be, of the entity resulting from such Business Combination
(including an entity that, as a result of such transaction, owns the Company or all or substantially all of the Companys assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock (or, for a noncorporate
entity, equivalent securities) of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business
Combination, and (3) at least a majority of the members of the board of directors (or, for a noncorporate entity, equivalent body or committee) of the entity resulting from such Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(iv) The approval by the
shareholders of the Company of a complete liquidation or dissolution of the Company.
(f) Notwithstanding any other provision of this Plan, an Award Agreement or
any Individual Agreement, for any Award that constitutes
non-qualified
deferred compensation within the meaning of Section 409A of the Code, a Change in Control shall not constitute a settlement or
distribution event with respect to such Award or an event that otherwise
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changes the timing of settlement or distribution of such Award, unless the Change in Control also constitutes a change in ownership of the Company, a change in effective
control of the Company or a change in the ownership of a substantial portion of the assets of the Company, in each case, as defined under Section 409A of the Code (a Section 409A CIC);
provided, however
, that
whether or not a Change in Control is a Section 409A CIC, such Change in Control may result in the accelerated vesting of such Award as provided by the Award Agreement, this Plan, any Individual Agreement or otherwise by the Committee.
SECTION 12. Qualified Performance-Based Awards; Section 16(b); Section 409A
(a) The provisions of this Plan are intended to ensure that all Stock Options and Stock Appreciation Rights granted hereunder to any Participant who is or may be a
covered employee (within the meaning of Section 162(m)(3) of the Code) in the tax year in which such Stock Option or Stock Appreciation Right is expected to be deductible to the Company qualify for the Section 162(m) Exemption,
and, unless otherwise determined by the Committee, all such Awards shall therefore be considered Qualified Performance-Based Awards and this Plan shall be interpreted and operated consistent with that intention (including to require that all such
Awards be granted by a committee composed solely of members who satisfy the requirements for being outside directors for purposes of the Section 162(m) Exemption (
Outside Directors
)). When granting any Award other
than a Stock Option or Stock Appreciation Right, the Committee may designate such Award as a Qualified Performance-Based Award, based upon a determination that (i) the recipient is or may be a covered employee (within the meaning of
Section 162(m)(3) of the Code) with respect to such Award, and (ii) the Committee wishes such Award to qualify for the Section 162(m) Exemption, and the terms of any such Award (and of the grant thereof) shall be consistent with such
designation (including that all such Awards be granted by a committee composed solely of Outside Directors). To the extent required to comply with the Section 162(m) Exemption, no later than 90 days following the commencement of a Performance Period
or, if earlier, by the expiration of 25% of a Performance Period, the Committee will designate one or more Performance Periods, determine the Participants for the Performance Periods and establish the Performance Goals for the Performance Periods.
(b) Each Qualified Performance-Based Award (other than a Stock Option or Stock Appreciation Right) shall be earned, vested and/or payable (as applicable) upon the
achievement of one or more Performance Goals, together with the satisfaction of any other conditions, such as continued employment, as the Committee may determine to be appropriate.
(c) The full Board shall not exercise authority granted to the Committee to the extent that the grant or exercise of such authority would cause an Award designated as
a Qualified Performance-Based Award not to qualify for, or to cease to qualify for, the Section 162(m) Exemption.
(d) The provisions of this Plan are
intended to ensure that no transaction under this Plan is subject to (and all such transactions will be exempt from) the short-swing recovery rules of Section 16(b) of the Exchange Act (
Section 16(b)
). Accordingly, the
composition of the Committee shall be subject to such limitations as the Board deems appropriate to permit transactions pursuant to this Plan to be exempt (pursuant to Rule
16b-3
promulgated under the Exchange
Act) from Section 16(b), and no delegation of authority by the Committee shall be permitted if such delegation would cause any such transaction to be subject to (and not exempt from) Section 16(b).
(e) This Plan is intended to comply with the requirements of Section 409A of the Code or an exemption or exclusion therefrom and, with respect to Awards that are
subject to Section 409A of the Code, it is intended that this Plan be interpreted and administered in all respects in accordance with Section 409A of the Code. Each payment (including the delivery of Shares) under any Award that constitutes
nonqualified deferred compensation subject to Section 409A of the Code shall be treated as a separate payment for purposes of Section 409A of the Code. In no event may a Participant, directly or indirectly, designate the calendar year of any payment
to be made under any Award that constitutes nonqualified deferred compensation subject to Section 409A of the Code. Notwithstanding any other provision of this Plan, any Award Agreement or any Individual Agreement to the contrary, if a Participant
is a specified employee within the meaning of Section 409A of the Code (as determined in accordance with the methodology established by the
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Company as in effect on the date of Termination of Service), amounts that constitute nonqualified deferred compensation within the meaning of Section 409A of the Code that would otherwise be
payable by reason of a Participants Separation from Service during the
six-month
period immediately following such Separation from Service shall instead be paid or provided on the first business day
following the date that is six months following the Participants Separation from Service. If the Participant dies following the Separation from Service and prior to the payment of any amounts delayed on account of Section 409A of the Code,
such amounts shall be paid to the personal representative of the Participants estate within 30 days following the date of the Participants death.
SECTION 13.Term, Amendment and Termination
(a)
Effectiveness
.
This Plan was approved by the Board on [February 24, 2017],
subject to and contingent upon approval by the Companys shareholders. This Plan will be effective as of the date of such approval by the Companys shareholders (the
Effective Date
).
(b)
Termination
.
This Plan will terminate on the tenth anniversary of the Effective Date. Awards outstanding as of such date shall not be affected or
impaired by the termination of this Plan.
(c)
Amendment of Plan
.
The Board or the Committee may amend, alter, or discontinue this Plan, but no
amendment, alteration or discontinuation shall be made that would materially impair the rights of the Participant with respect to a previously granted Award without such Participants consent, except such an amendment made to comply with
applicable law, including Section 409A of the Code, Applicable Exchange listing standards or accounting rules. In addition, no amendment shall be made without the approval of the Companys shareholders to the extent such approval is
required by applicable law or the listing standards of the Applicable Exchange.
(d)
Amendment of Awards
.
Subject to Section 5(d), the Committee
may unilaterally amend the terms of any Award theretofore granted, but no such amendment shall, without the Participants consent, materially impair the rights of any Participant with respect to an Award, except such an amendment made to cause
this Plan or Award to comply with applicable law, Applicable Exchange listing standards or accounting rules.
SECTION 14. Unfunded Status of
Plan
It is intended that this Plan constitute an unfunded plan for incentive and deferred compensation. The Committee may authorize the creation
of trusts or other arrangements to meet the obligations created under this Plan to deliver Common Stock or make payments;
provided
,
however
, that unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the unfunded status of this Plan.
SECTION 15. General Provisions
(a)
Conditions for Issuance
.
The Committee may require each person purchasing or receiving Shares pursuant to an Award to represent to and agree with the
Company in writing that such person is acquiring the Shares without a view to the distribution thereof. The certificates for such Shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer.
Notwithstanding any other provision of this Plan or agreements made pursuant thereto, the Company shall not be required to issue or deliver any certificate or certificates for Shares under this Plan prior to fulfillment of all of the following
conditions: (i) listing or approval for listing upon notice of issuance, of such Shares on the Applicable Exchange; (ii) any registration or other qualification of such Shares of the Company under any state or federal law or regulation, or
the maintaining in effect of any such registration or other qualification that the Committee shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and (iii) obtaining any other consent, approval, or permit
from any state or federal governmental agency that the Committee shall, in its absolute discretion determine to be necessary or advisable.
(b)
Additional
Compensation Arrangements
.
Nothing contained in this Plan shall prevent the Company or any Subsidiary or Affiliate from adopting other or additional compensation arrangements for its employees.
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(c)
No Contract of Employment
.
This Plan shall not constitute a contract of employment, and adoption of
this Plan shall not confer upon any employee any right to continued employment, nor shall it interfere in any way with the right of the Company or any Subsidiary or Affiliate to terminate the employment of any employee at any time.
(d)
Required Taxes
.
No later than the date as of which an amount first becomes includible in the gross income of a Participant for federal, state, local
or foreign income or employment or other tax purposes with respect to any Award under this Plan, such Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or
foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Company, withholding obligations may be settled with Common Stock, including Common Stock that is part of the Award that gives
rise to the withholding requirement, having a Fair Market Value on the date of withholding equal to the amount required to be withheld for tax purposes (up to the maximum statutory rate), all in accordance with such procedures as the Committee
establishes. The obligations of the Company under this Plan shall be conditional on such payment or arrangements, and the Company and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment
otherwise due to such Participant. The Committee may establish such procedures as it deems appropriate, including making irrevocable elections, for the settlement of withholding obligations with Common Stock.
(e)
Limitation on Dividend Reinvestment and Dividend Equivalents
.
Reinvestment of dividends in additional Restricted Stock at the time of any dividend
payment, and the payment of Shares with respect to dividends to Participants holding Awards of Restricted Stock Units, shall only be permissible if sufficient Shares are available under Section 3 for such reinvestment or payment (taking into
account then-outstanding Awards). If sufficient Shares are not available for such reinvestment or payment, such reinvestment or payment shall be made in the form of a grant of Restricted Stock Units equal in number to the Shares that would have been
obtained by such payment or reinvestment, the terms of which Restricted Stock Units shall provide for settlement in cash and for dividend equivalent reinvestment in further Restricted Stock Units on the terms contemplated by this Section 15(e).
Notwithstanding any other provision of this plan, in no event may any dividends or dividend equivalents with respect to any Awards be paid until vesting (if any) of such Awards.
(f)
Designation of Death Beneficiary
.
The Committee shall establish such procedures as it deems appropriate for a Participant to designate a beneficiary
to whom any amounts payable in the event of such Participants death are to be paid or by whom any rights of such eligible individual, after such Participants death, may be exercised.
(g)
Subsidiary Employees
.
In the case of a grant of an Award to any employee of a Subsidiary, the Company may, if the Committee so directs, issue or
transfer the Shares, if any, covered by the Award to the Subsidiary, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Subsidiary will transfer the Shares to the employee in accordance with the
terms of the Award specified by the Committee pursuant to the provisions of this Plan. All Shares underlying Awards that are forfeited or canceled revert to the Company.
(h)
Governing Law and Interpretation
.
This Plan and all Awards made and actions taken hereunder shall be governed by and construed in accordance with the
laws of the State of Delaware, without reference to principles of conflict of laws. The captions of this Plan are not part of the provisions hereof and shall have no force or effect. Whenever the words include, includes or
including are used in this Plan, they shall be deemed to be followed by the words but not limited to and the word or shall be understood to mean and/or.
(i)
Non-Transferability
.
Except as otherwise provided in Sections 5(i), 6(c)(ii) and 7(b)(ii) or as
determined by the Committee, Awards under this Plan are not transferable except by will or by laws of descent and distribution.
(j)
Clawback Policy
.
(i)
Forfeiture
. Unless otherwise determined by the Committee, if the Company is required to prepare a material negative accounting restatement
due to the noncompliance of the Company with any financial reporting requirement under the securities laws [as a result of misconduct, and the Committee determines that (A) a Participant knowingly engaged in the misconduct, (B) was grossly
negligent with respect to such misconduct, or
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(C) knowingly or grossly negligently failed to prevent the misconduct,] the Company may require the Participant to pay to the Company an amount (the
Forfeiture Amount
), as
determined by the Committee in its sole and absolute discretion, up to the sum of (1) the Fair Market Value of any Shares held by the Participant as of the date that the Committee requires forfeiture that were acquired by the Participant
pursuant to an Award during the three-year period following the first public filing of the financial document requiring restatement, (2) the excess, if any, of (x) the proceeds from the sale (including sales to the Company) of any Shares
acquired by the Participant pursuant to an Award during the three-year period following the first public filing of the financial document requiring restatement, over (y) the amount, if any, paid by the Participant to purchase such Shares, and
(3) any proceeds received by the Participant upon cash settlement of any Award during the three-year period following the first public filing of the financial document requiring restatement. The Forfeiture Amount shall be paid by the
Participant within 30 days of receipt from the Company of written notice requiring payment by the Participant of the Forfeiture Amount.
(ii)
Committee Determination
. Without limiting the generality of Section 2, the Committee shall make all determinations required pursuant to this Section 15(j) in its sole and absolute discretion, and such determinations shall be conclusive
and binding on all Persons. Notwithstanding any provision of Section 15(j)(i) to the contrary, the Committee has sole and absolute discretion not to require a Participant to pay a Forfeiture Amount, and its determination not to require any
Participant to pay a Forfeiture Amount with respect to any particular act by any particular Participant shall not in any way reduce or eliminate the Committees authority to require payment of a Forfeiture Amount with respect to any other act
or other Participant.
(iii)
Effect of Change in Control
. Notwithstanding the foregoing, this Section 15(j) shall not be applicable to any
Participant following a Change in Control.
(iv)
Non-Exclusive
Remedy
. This Section 15(j) shall be a
non-exclusive
remedy and nothing contained in this Section 15(j) shall preclude the Company from pursuing any other applicable remedies available to it, whether in addition to, or in lieu of, application of this
Section 15(j).
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APPENDIX A |
ALLEGHENY
TECHNOLOGIES INCORPORATED 2017 INCENTIVE PLAN
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A-19
ATI
2017 Proxy Statement
ATI is a global manufacturer of technically advanced specialty materials and complex components.
With 2016 revenue of $3.1 billion, our largest market (over 50% of sales) is aerospace and defense, particularly jet engines, and we have a strong presence in the oil and gas,
electrical energy, medical, automotive, and other industrial markets.
ATI is a market leader in manufacturing differentiated specialty alloys and forgings that
require our unique manufacturing and precision machining capabilities and our innovative new product development competence.
ATI produces nickel-based alloys and
superalloys, titanium alloys, specialty alloys, stainless steels, and zirconium and other related alloys in many mill product forms.
We also are a leader in
producing nickel-based alloy and titanium-based alloy powders for use in next-generation jet engine forgings and
3D-printed
products.
Our Core Values
While we believe that change is
constant, one thing will not change. As we continue on our journey Building the Worlds Best Specialty Materials & Components Company we are guided by a shared commitment to ATIs Core Values.
Integrity as the cornerstone of our business.
To that end, we must be honest and forthright in
everything we do.
ATI is committed to more than just adherence to laws and regulations. Our commitment is to reflect the highest level of integrity and ethics in
our dealings with each other, and all of our stakeholders.
We expect everyone to be treated with dignity and respect and we embrace the values of innovation,
cooperation, accountability, and teamwork.
Safety, Health and Sustainability are the prerequisites to all operations, and our goal is to finish each day incident-
and injury-free.
Diversity, Creativity, Learning, and Freedom of people to reach their individual potential is ATIs culture.
Product Quality and Excellence is demonstrated in everything we do.
ATI
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Admission Ticket
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IMPORTANT ANNUAL MEETING INFORMATION
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Electronic Voting Instructions
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Available 24 hours a day, 7 days a week!
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Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
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VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
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Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Time, on May 10, 2017.
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Vote by Internet
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Go to
www.envisionreports.com/ati
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Or scan the QR code with your smartphone
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Follow the steps outlined on the secure website
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Vote by telephone
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Call toll free
1-800-652-VOTE
(8683) within the USA, US territories & Canada on a touch tone
telephone
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Using a
black ink
pen, mark your votes with an
X
as shown in this example. Please do not write outside the designated areas.
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☒
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Follow the instructions provided by the recorded message
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q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
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A
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Proposals
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The Board of Directors recommends a vote
FOR
all the nominees listed,
FOR
Proposals 2, 4 and 5 and for 1 YEAR on Proposal 3.
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1. Election of Directors:
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For
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Against
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Abstain
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For
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Against
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Abstain
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For
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Against
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Abstain
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+
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01 - James C. Diggs
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☐
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☐
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☐
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02 - J. Brett Harvey
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☐
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☐
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☐
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03 - David J. Morehouse
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For
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Against
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Abstain
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1 Year
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2 Years
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3 Years
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Abstain
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2.
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Approval of the Companys 2017 Incentive Plan.
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☐
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3.
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Advisory vote on the frequency of holding an advisory vote on executive compensation.
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For
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Against
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Abstain
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4.
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Advisory vote to approve the compensation of the Companys named executive officers.
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5.
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Ratification of the selection of Ernst & Young LLP as independent auditors for 2017.
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Change of Address
Please print your new address below.
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Comments
Please print your comments below.
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Meeting Attendance
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Mark the box to the right if you plan to attend the Annual Meeting.
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☐
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C
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
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Please sign EXACTLY as your name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, or custodian, please give your full title as such.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box.
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/ /
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02JRSB
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2017 Annual Meeting Admission Ticket
2017 Annual Meeting of
Allegheny Technologies
Incorporated Stockholders
Thursday, May 11, 2017
11:00 a.m. Central Time
Hilton Milwaukee City Center
509 W. Wisconsin
Avenue
Milwaukee, WI 53203
Upon arrival, please present this admission ticket
and photo identification at the registration desk.
For the personal use of the stockholder named hereon - not transferable
Dear Stockholder,
Enclosed or available on the Internet at
http://www.envisionreports.com/ati
are materials relating to the Allegheny Technologies Incorporated 2017 Annual Meeting of Stockholders. The Notice of the Meeting and Proxy Statement describe the formal business to be transacted at the meeting.
Your vote is important. Please vote your proxy promptly whether or not
you expect to attend the meeting. You may vote by toll-free telephone, by Internet or by signing and returning the proxy card (below) by mail in the enclosed postage-paid envelope.
Elliot S. Davis
Corporate Secretary
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders.
The Proxy Statement and the 2016 Annual Report to Stockholders are available at:
www.envisionreports.com/ati
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IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
Proxy Allegheny Technologies Incorporated
Proxy for 2017 Annual Meeting
Solicited on Behalf of the Board of Directors of Allegheny Technologies Incorporated
The undersigned hereby appoints Patrick J. DeCourcy, Elliot S. Davis and Amanda J. Skov or any of them, each with power of substitution and revocation,
proxies or proxy to vote all shares of Common Stock which the stockholder named herein is entitled to vote with all powers which the stockholder would possess if personally present, at the Annual Meeting of Stockholders of Allegheny Technologies
Incorporated on May 11, 2017, and any adjournments or postponements thereof, upon the matters set forth on the reverse side of this card and, in their discretion, upon such other matters as may properly come before such meeting.
STOCKHOLDERS MAY VOTE BY TOLL-FREE TELEPHONE OR THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE REVERSE SIDE OR STOCKHOLDERS MAY VOTE BY
COMPLETING, DATING AND SIGNING THIS PROXY CARD AND RETURNING IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
This proxy, when properly
executed, will be voted as directed herein, but if you do not specify a vote, the proxies will vote FOR Items 1, 2, 4 and 5 and for 1 YEAR on Item 3, and in their discretion on other matters.
If you wish to use this card to vote your shares, please vote, date and sign on the reverse side.
(Continued and to be marked, dated and signed, on the other side)
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IMPORTANT ANNUAL MEETING INFORMATION
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Electronic Voting Instructions
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Available 24 hours a day, 7 days a week!
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Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
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VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
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Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Time, on May 5, 2017.
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Vote by Internet
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Go to
www.envisionreports.com/ati
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Or scan the QR code with your smartphone
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Follow the steps outlined on the secure website
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Vote by telephone
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Call toll free
1-800-652-VOTE
(8683) within the USA, US territories & Canada on a touch tone
telephone
|
|
|
|
|
Using a
black ink
pen, mark your votes with an
X
as shown in this example. Please do not write outside the designated areas.
|
|
☒
|
|
|
|
Follow the instructions provided by the recorded message
|
q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
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A
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Proposals
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The Board of Directors recommends a vote
FOR
all the nominees listed,
FOR
Proposals 2, 4 and 5 and for 1 YEAR on Proposal 3.
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1. Election of Directors:
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For
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Against
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Abstain
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For
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Against
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Abstain
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For
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Against
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Abstain
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+
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01 - James C. Diggs
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☐
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☐
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☐
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02 - J. Brett Harvey
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☐
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☐
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☐
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03 - David J. Morehouse
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☐
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☐
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☐
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For
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Against
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Abstain
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1 Year
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2 Years
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3 Years
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Abstain
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2.
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Approval of the Companys 2017 Incentive Plan.
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☐
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☐
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☐
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3.
|
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Advisory vote on the frequency of holding an advisory vote on executive compensation.
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☐
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☐
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☐
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☐
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For
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Against
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Abstain
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4.
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Advisory vote to approve the compensation of the Companys named executive officers.
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☐
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☐
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☐
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5.
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Ratification of the selection of Ernst & Young LLP as independent auditors for 2017.
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☐
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☐
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☐
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Change of Address
Please print your new address below.
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Comments
Please print your comments below.
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Meeting Attendance
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Mark the box to the right if you plan to attend the Annual Meeting.
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☐
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C
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
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Please sign EXACTLY as your name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, or custodian, please give your full title as such.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box.
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/ /
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02JRUC
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The ATI Retirement Plan
The ATI 401(k)
Savings Plan
ATI Ladish Co., Inc. Hourly Savings and Deferral Investment Plan
As a Plan participant, you have the right to direct Mercer Trust Company, the
Trustee of the above Plans, how to vote the shares of Allegheny Technologies Incorporated Common Stock that are allocated to your Plan account and shown on the attached voting instruction card. The Trustee will hold your instructions in complete
confidence except as may be necessary to meet legal requirements.
You may vote by telephone, Internet or by completing, signing and returning voting instructions herein by mail. A postage-paid return envelope is
enclosed.
The Trustee must receive your voting instructions by
11:59 p.m., Eastern Time, on May 5, 2017. If the Trustee does not receive your instructions by such date, the Trustee shall vote your shares as the Plan Administrator directs.
You will receive a separate set of proxy solicitation materials for
any shares of Common Stock you own other than your Plan shares.
Your
non-Plan
shares must be voted separately from your Plan shares.
Important notice regarding the Internet availability of proxy materials for the
Annual Meeting of Stockholders.
The Proxy Statement and the 2016 Annual Report to Stockholders are available at:
www.envisionreports.com/ati
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q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
Voting Instruction Card for 2017 Annual Meeting
Allegheny Technologies Incorporated
The undersigned hereby directs Mercer Trust Company, the Trustee of the above Plans, to vote the full number of shares of Common Stock allocated to the
account of the undersigned under the Plans, at the Annual Meeting of Stockholders of Allegheny Technologies Incorporated on May 11, 2017 and any adjournments or postponements thereof, upon the matters set forth on the reverse of this card, and,
in its discretion, upon such other matters as may properly come before such meeting.
PLAN PARTICIPANTS MAY GIVE DIRECTIONS BY TOLL-FREE
TELEPHONE OR INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE REVERSE SIDE OR PARTICIPANTS MAY GIVE DIRECTIONS BY COMPLETING, DATING AND SIGNING THIS CARD AND RETURNING IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
If you wish to use this card to vote your shares, please vote, date and sign on the reverse side.
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