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COMPENSATION DISCUSSION AND
ANALYSIS |
EXECUTIVE COMPENSATION SUMMARY
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Executive Compensation
Highlights
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WHAT WE DO
o
Link
compensation to ATI performance.
Performance drives pay. A significant portion of compensation opportunities for the NEOs is variable, that 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 Compensation aligned with stockholder interests.
Long-term incentive
compensation opportunities for the NEOs are equity-based and tied to business plan performance metrics. New simplified compensation program in effect for 2016 is more aligned with stockholders interests.
o
Double
trigger change in control agreements.
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.
In February 2016, stock ownership guidelines for management were updated to include 6X base salary ownership for the CEO and require 100% retention until ownership guidelines are met.
o Board compensation
risk oversight.
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
Independent Compensation Consultant
of the
Personnel & Compensation Committee.
o
162(m) compliant.
We intend that payouts under our short- and long-term incentive programs satisfy the requirements of qualified performance-based compensation under
Section 162(m) of the Internal Revenue Code.
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WHAT WE DONT DO
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 and club dues and tax gross-ups.
X
No hedging transactions or pledging of ATI stock by officers and directors.
We have always prohibited officers and directors from engaging in hedging or pledging transactions with
respect to ATI stock.
X
No repricing of awards.
No previously granted awards can be repriced or surrendered in exchange for new awards.
X
No defined benefit plan restoration.
The company froze future accruals under the Supplemental Pension Plan and the defined benefit portion of the Benefit Restoration Plan as of
December 31, 2014.
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2016 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
EXECUTIVE COMPENSATION SUMMARY
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2016 REDESIGNED
EXECUTIVE COMPENSATION PROGRAM THE PATH AHEAD
The incentive compensation plans in
effect for 2014 remained in place for 2015. However, as an outgrowth to the companys transformation and significant strategic investments over the past several years, and due to prior Say on Pay voting results, for 2016, we overhauled our
executive compensation program and took a clean sheet approach to its re-design. ATI engaged external compensation consultants and 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. In the fall of 2015, we also reached out to our largest stockholders to solicit their feedback on a tentative program design. As a
result of this extensive process, we developed a new executive compensation program that is more aligned with stockholders interests, easier to understand, retentive, and focused on ATIs business objectives.
For more information on
stockholder feedback about our executive compensation program, see the Investor Outreach sections on pages 22 and 46 of this proxy statement.
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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 stock 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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These changes are effective for awards
beginning in 2016. Due to their prospective nature, 2016 changes will not be fully reflected in the compensation of the NEOs until the applicable long-term incentive plans fully mature. To learn more about the 2016 executive compensation program,
please see the 2016 Executive Compensation Program Redesign Clean Sheet section on page 66 of this proxy statement.
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44
ATI
2016 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
EXECUTIVE COMPENSATION SUMMARY
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History of Executive Compensation Program Changes
The 2016 redesign of the executive compensation program follows years of continuous improvement to the program that continued to be in effect for the NEOs in 2015. The
changes described below were made effective for the compensation plans beginning in the years 2012, 2013 and 2014. This progression shows our willingness to incorporate compensation best practices and developments into our program and affirms our
responsiveness to and alignment with stockholders.
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Maintained CEO target opportunity at reduced levels from prior CEO
in AIP, PRSP and TSRP.
Reduced the maximum payout opportunity under TSRP
to 200% of base
salary from 300%.
Changed structure of long-term cash incentive plan to make financial
performance targets incrementally more challenging.
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Eliminated perquisites of personal use of corporate
aircraft,
payment of club dues, and related gross-ups.
Revised executive stock ownership guidelines to apply deeper into
organization and require retention of stock
until guidelines are met.
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2013
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Further reduced CEOs target award opportunity under PRSP and
TSRP.
Increased the minimum (threshold) level of Company performance
required for payout to be 35
th
percentile relative to peer group (from 25
th
percentile).
Under long-term cash incentive plan, reduced maximum payout
opportunity under Level I by half, while preserving rigorous performance goals, and discontinued Level II under which additional awards could be earned.
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Eliminated the excise tax gross-up provision from the CEOs
change in control agreement and new or modified agreements.
Restructured the benchmarking peer group to remove outlier
companies.
Eliminated remaining gross-ups.
Formalized long-standing policy to prohibit hedging and pledging of
stock by officers and directors.
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2014
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Reduced CEOs target opportunity under AIP from 125% to
115%.
Adopted the Long-Term Performance Plan, with two equity components,
TSR and LTSV, to replace awards under TSRP and KEPP. The maximum amount that can
be earned under the LTPP is lower than what had been available previously under the combination of the TSRP and KEPP.
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Froze the Supplemental Pension Plan effective
December 31,
2014.
Froze the defined benefit pension plan and related portion
of the
Benefit Restoration Plan effective December 31, 2014.
Increased CEOs stock ownership guideline to a minimum
of 125,000 shares.
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2015
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2016
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Stockholders adopted the 2015 Incentive Plan, including Clawback policy.
Revised benchmarking peer group.
Began process of
clean sheet redesign of entire executive compensation program
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Annual Performance Plan measures financial performance of profitability and cash flow at 90% and strategic/individual goals at 10%.
Long-Term Incentive Plan is streamlined and is
comprised of 70% performance share units and 30% time-vesting restricted stock units for leadership level participants.
Reduced CEO and NEOs target award
opportunities under LTI programs.
Updated stock ownership guidelines to require 6X base salary ownership for CEO.
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ATI
2016 Proxy Statement
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45
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COMPENSATION DISCUSSION AND
ANALYSIS |
INVESTOR OUTREACH AND THE EXECUTIVE COMPENSATION PROGRAM
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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 & 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 included two rounds of stockholder outreach in April and September of 2015, and will be an annual part of our process going forward. 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. Below is a table that outlines the stockholder feedback from those sessions, and ATIs responsive changes to our STI and LTI programs.
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Program Element
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Stockholder Feedback
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ATI 2016 Program Changes
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Annual Cash Incentive Plan
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Now that large capital investments have been completed, we prefer more weight on financial goals for the annual incentive plan.
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CEO and Executive Council members annual cash incentive plan changed to 90% financial goals (income and cash flow) from 70% financial goals.
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The discretionary bonus allowance outside/above the standard features in the annual incentive plan is unusual. Other plans incorporate strategic/ individual goals as part of the plan.
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This feature has been removed from the plan and strategic/individual goals are part of the plan, but limited to 10% of the plan for CEO and Executive Council members. Achievement of a minimum cash flow target
is a prerequisite to the achievement of strategic/individual goals.
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Is the annual incentive plan driving the ATI strategy?
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The plan now includes an all ATI component for all participants; everyone has at
least 20% of their participation based on ATIs financial results.
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Equity Incentive Plan
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Equity program seems complex; does it communicate and drive the right behaviors?
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Equity programs for CEO and Executive Council reduced 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.
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Long term incentives should include a heavier weight on ROIC.
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Performance Share equity programs for CEO, Executive Council members, and top leaders changed
to 50% ROIC and 50% Net Income
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Best Practices
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Are all programs following best practices?
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Additional features changed:
Stock Ownership guidelines updated to include 6X base salary ownership
for CEO and require 100% retention until guidelines are met.
LTI
changed to remove dividend payments on unvested shares.
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Level of Compensation
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Are all programs payout percentages in line with market data?
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LTI program percentage at target reduced for CEO and Executive Council members to reflect the
market median; reduction of 20%33%. All other compensation elements are at the median of the market for actual pay (base), or target opportunity (STI).
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Other Matters
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Board declassification is now a common practice. How is ATI managing this?
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ATI had a board declassification proposal in 2014 that was defeated. We are sponsoring another
declassification proposal for the annual meeting in 2016.
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2015 ATI Performance Impact on NEO Compensation
No amounts were earned under the long-term incentive plans in effect for the 2013-2015 performance period. Although our NEOs earned cash incentives under the 2015
Annual Incentive Plan (AIP), the Personnel and Compensation Committee determined that our CEO, Rich Harshman, would not be paid the earned AIP incentive award for 2015 due
46
ATI
2016 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
2015 ATI PERFORMANCE IMPACT ON NEO COMPENSATION
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to overall company performance falling below the pre-established threshold performance level. For the other NEOs, the Committee exercised negative discretion to the AIP formula and reduced actual
AIP incentive payouts by the 20% maximum to reflect ATIs overall performance.
The following table shows the compensation paid to each NEO based on ATIs
2015 performance.
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Named Executive Officer
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2015 Base Salary
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2015 AIP
(1)
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2013-2015 PRSP
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2013-2015 TSRP
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2013-2015 KEPP
(Gradient Achievement/
Multiple of Base Salary)
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Harshman
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1,050,692
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0
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0
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0
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0
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DeCourcy
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472,244
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80,909
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0
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0
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N/A
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Dalton
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507,679
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169,075
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0
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0
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0
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Sims
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507,673
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187,354
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0
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0
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0
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Kramer
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421,122
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71,638
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0
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0
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N/A
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(1)
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For named executive officers other than Mr. Harshman, reflects a below target award, further reduced by 20%.
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(2)
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Half of the performance/restricted stock award including accumulated dividends was forfeited. The remaining half of the award will vest in February 2018.
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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 Board 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 (EC), which is comprised of eight 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.
Since 2012, the Committee has retained Pay Governance, a
nationally recognized executive compensation consultant, for benchmarking compensation and program design and advice on a variety of compensation related matters. Pay Governance provides no other services to ATI and has been determined to be
independent by the Committee. Further, because Pay Governance is involved only in the business of compensation consulting, Pay Governance does not attempt to sell other services to the Company.
In 2015, management also retained Meridian Compensation Partners, LLC to provide market data and advice on design features and performance targets relating to the 2016
executive compensation program.
ATI
2016 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION PHILOSOPHY
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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 (generally three-year) 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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Competitive Compensation
The Committee reviews, with outside compensation and legal 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 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.
48
ATI
2016 Proxy Statement
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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 merit increases
and adjustments to 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
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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
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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. 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.
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2016 Proxy Statement
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49
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COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION SETTING PROCESS
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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.
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, the 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 2015 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 1.9. 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, Pay Governance, the Committees independent
compensation consultant, developed the following criteria to guide the selection of peer companies for benchmarking compensation.
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ATI
2016 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION SETTING PROCESS
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Specifically, peer companies should:
1)
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Be competitors for business and/or executive talent and be primarily from the metals industry or adjacent sectors;
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2)
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Be reflective of the general complexity and business orientation of ATI:
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Global footprint, product lines, foreign competition
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Revenues that approximate 50% to 200% of ATI with some flexibility
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Capital intensive businesses as indicated by lower asset turnover ratios (i.e., 0.5 to 1.5)
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Higher company stock price volatility, or beta (i.e., greater than 1.0)
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Market capitalization reasonably aligned with ATI; Some flexibility for outliers that may be aligned from different perspectives (i.e., revenues, competition)
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Similar number of employees
|
3)
|
Have stock prices reasonably correlated with ATI over the past five years indicating sensitivity to similar external market influences.
|
As a result, for performance measurement periods under the executive compensation plans beginning on January 1,
2015, the Benchmarking Peer Group consists of the following companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($millions) Company
|
|
Revenue
Actual
FY2015
|
|
|
Total
Assets
FY2015
|
|
|
Market
Capitalization
12/31/2015
|
|
|
Employees
|
|
|
Asset
Turnover
|
|
|
Beta
12/31/2015
|
|
Precision Castparts Corp.
|
|
$
|
10,005
|
|
|
$
|
19,428
|
|
|
|
$31,922
|
|
|
|
29,900
|
|
|
|
0.5
|
|
|
|
0.6
|
|
Reliance Steel & Aluminum Co.
|
|
$
|
9,351
|
|
|
$
|
7,122
|
|
|
|
$ 4,149
|
|
|
|
14,900
|
|
|
|
1.3
|
|
|
|
1.1
|
|
Steel Dynamics Inc.
|
|
$
|
7,594
|
|
|
$
|
6,202
|
|
|
|
$ 4,327
|
|
|
|
7,500
|
|
|
|
1.2
|
|
|
|
1.4
|
|
AK Steel Holding Corporation
|
|
$
|
6,693
|
|
|
$
|
4,084
|
|
|
|
$ 398
|
|
|
|
8,500
|
|
|
|
1.6
|
|
|
|
2.1
|
|
Terex Corporation
|
|
$
|
6,543
|
|
|
$
|
5,637
|
|
|
|
$ 2,005
|
|
|
|
20,400
|
|
|
|
1.2
|
|
|
|
2.4
|
|
Trinity Industries Inc.
|
|
$
|
6,393
|
|
|
$
|
8,886
|
|
|
|
$ 3,672
|
|
|
|
22,030
|
|
|
|
0.7
|
|
|
|
1.6
|
|
Oshkosh Corporation
|
|
$
|
6,098
|
|
|
$
|
4,613
|
|
|
|
$ 2,854
|
|
|
|
13,300
|
|
|
|
1.3
|
|
|
|
1.4
|
|
Commercial Metals Company
|
|
$
|
5,943
|
|
|
$
|
3,372
|
|
|
|
$ 1,596
|
|
|
|
9,126
|
|
|
|
1.8
|
|
|
|
1.3
|
|
Worthington Industries, Inc.
|
|
$
|
3,384
|
|
|
$
|
2,085
|
|
|
|
$ 1,872
|
|
|
|
10,500
|
|
|
|
1.6
|
|
|
|
1.4
|
|
Westinghouse Air Brake Technologies Corporation
|
|
$
|
3,308
|
|
|
$
|
3,300
|
|
|
|
$ 6,862
|
|
|
|
13,000
|
|
|
|
1.0
|
|
|
|
1.2
|
|
Joy Global, Inc.
|
|
$
|
3,172
|
|
|
$
|
3,712
|
|
|
|
$ 1,235
|
|
|
|
13,400
|
|
|
|
0.9
|
|
|
|
2.2
|
|
The Timken
Company
(1)
|
|
$
|
2,872
|
|
|
$
|
2,790
|
|
|
|
$ 2,373
|
|
|
|
14,709
|
|
|
|
1.0
|
|
|
|
1.5
|
|
Crane Co.
|
|
$
|
2,741
|
|
|
$
|
3,362
|
|
|
|
$ 2,778
|
|
|
|
11,200
|
|
|
|
0.8
|
|
|
|
1.2
|
|
Kennametal Inc.
|
|
$
|
2,647
|
|
|
$
|
2,850
|
|
|
|
$ 1,528
|
|
|
|
12,718
|
|
|
|
0.9
|
|
|
|
1.6
|
|
Valmont Industries, Inc.
|
|
$
|
2,619
|
|
|
$
|
2,399
|
|
|
|
$ 2,443
|
|
|
|
10,697
|
|
|
|
1.1
|
|
|
|
1.1
|
|
Carpenter Technology Corp.
|
|
$
|
2,227
|
|
|
$
|
2,906
|
|
|
|
$ 1,487
|
|
|
|
4,900
|
|
|
|
0.8
|
|
|
|
1.5
|
|
Schnitzer Steel Industries, Inc.
|
|
$
|
1,915
|
|
|
$
|
962
|
|
|
|
$ 384
|
|
|
|
2,955
|
|
|
|
2.0
|
|
|
|
0.9
|
|
SPX Corporation
|
|
$
|
1,777
|
|
|
$
|
2,181
|
|
|
|
$ 381
|
|
|
|
6,000
|
|
|
|
0.8
|
|
|
|
0.8
|
|
25th Percentile
|
|
$
|
2,671
|
|
|
$
|
2,805
|
|
|
|
$ 1,497
|
|
|
|
8,675
|
|
|
|
0.8
|
|
|
|
1.1
|
|
Median
|
|
$
|
3,346
|
|
|
$
|
3,367
|
|
|
|
$ 2,189
|
|
|
|
11,959
|
|
|
|
1.1
|
|
|
|
1.4
|
|
75th Percentile
|
|
$
|
6,506
|
|
|
$
|
5,381
|
|
|
|
$ 3,467
|
|
|
|
14,382
|
|
|
|
1.3
|
|
|
|
1.6
|
|
ATI
|
|
$
|
3,720
|
|
|
$
|
5,752
|
|
|
|
$ 1,229
|
|
|
|
9,200
|
|
|
|
0.6
|
|
|
|
1.7
|
|
Percentile
|
|
|
54
|
%
|
|
|
78
|
%
|
|
|
18
|
%
|
|
|
30
|
%
|
|
|
4
|
%
|
|
|
83
|
%
|
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.
|
ATI
2016 Proxy Statement
/
51
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION SETTING PROCESS
|
|
|
For 2015, after the annual review of the benchmarking peer group, Pay Governance recommended the addition of, and the
Committee added Trinity Industries, Inc. and Oshkosh Corporation to the above peer group for use in benchmarking executive and director compensation levels.
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 59
.
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 managements 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 legal advisors during non-management executive
session in order to ensure independent feedback on all compensation-related matters.
2015 Executive
Compensation Program
The Committee believes that the compensation program strikes an appropriate balance of various forms of compensation:
|
|
the balance between annual and long-term compensation achieves consistency in goal setting that considers both short-term results and building a platform for longer-term profitable growth;
|
|
|
the cash to equity compensation ratio, along with the stock ownership guidelines for executives, puts a substantial majority of compensation at risk and payable only upon the achievement of performance goals
and aligns managements interests with the stockholders;
|
|
|
diversity in performance metrics enables us to measure success across many aspects of our operations and financial results and aligns the compensation plans with stockholder interests; and
|
|
|
the balance of payment forms, overlapping performance measurement periods, and complementary but diverse goals serve to substantially reduce the possibility that the compensation program could provide incentive to
undertake imprudent risk.
|
52
ATI
2016 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
2015 EXECUTIVE COMPENSATION PROGRAM
|
|
|
For 2015, the executive compensation program consisted of the following elements:
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Purpose
|
|
Relevant Performance
Metric and Description
|
|
|
ANNUAL
|
|
Base Salary
|
|
To provide fair and competitive compensation for individual performance and level of responsibility of position held.
|
|
Individual performance
|
|
FIXED
|
|
Annual Incentive Plan (AIP)
|
|
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.
|
|
Mix of metrics, including:
Operating
profit
Cash flow
Continuous improvements
Cost
reductions
Customer responsiveness
|
|
VARIABLE
|
LONG-TERM
|
|
Performance/Restricted Stock Program (PRSP)
|
|
To provide performance- and time-based equity compensation in the form of restricted stock to drive ATIs earnings and retain key
managers.
|
|
Net Income
Full award will vest after 3 years if performance targets are achieved; if not,
1/2 of award will be forfeited and remaining 1/2 will vest 5 years from grant date.
|
|
|
Long-Term Performance Plan (LTPP)
|
|
To provide a broader base of equity compensation by allowing for performance-based awards.
|
|
(1) TSR: Total stockholder return relative to an identified peer group
of companies (see peer group on page 59).
(2) LTSV: Strategic operational performance-based goals, including a return on capital
metric.
|
|
For 2015, beginning with AIP, PRSP and LTPP, the number of participants in each respective plan becomes increasingly more select
because the performance metrics in the plan are more aligned to and influenced by more senior executives, who are therefore, more able to influence ATIs performance. A prerequisite to the payment of any award is compliance with ATIs
Corporate Guidelines for Business Conduct and Ethics.
The pie charts below show the mix of aggregate NEO compensation by type, form, and length, at target
for 2015:
2015 ANNUAL INCENTIVE PLAN (AIP)
Overview.
The AIP is an annual, performance-based cash incentive plan in
which approximately 400 key employees (including the NEOs) participate. Performance is measured based on a weighted formula that takes into account several different factors as measurable indices of performance for ATI and its business units, as
further described below in the
ATI
2016 Proxy Statement
/
53
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
2015 EXECUTIVE COMPENSATION PROGRAM
|
|
|
discussion of each NEOs award. The diverse mix of performance criteria directs participants attention to the goals and achievements within their direct control.
Performance Criteria.
The performance goals for the 2015 AIP were set in
February 2015 based on ATIs business and operations plans for 2015. 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 consist of a mix of financial, operational, and strategic performance targets. The Committee recognized that opportunities for 2015 should
allow for competitive rewards for meeting, and larger amounts for exceeding, the performance goals that represented substantial challenges to AIP participants.
Relative weight for each performance metric was assigned to reflect the interests of stockholders, with profitability generally receiving the largest weighting
followed closely by internal cash generation. However, other hallmarks of performance, including cost reductions, operational improvement, and customer-oriented goals, are included because these factors support the financial performance goals. These
other, more operations-focused goals, are specific, measurable, and objectively verifiable. In accordance with SEC guidance to us, the details of the particular metrics are confidential because they are competitively sensitive.
Level of Difficulty.
The Committee sets the financial and operational AIP
measures 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.
Award Opportunities.
The opportunities for the NEOs under the AIP are granted at threshold, target and maximum levels expressed as a percentage of base salary. 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. 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 is earned for performance below the threshold level.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Percentage
|
|
Named Executive Officer
|
|
Below
Threshold
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
Harshman
|
|
|
0%
|
|
|
|
57.5%
|
|
|
|
115%
|
|
|
|
230%
|
|
DeCourcy
|
|
|
0%
|
|
|
|
35%
|
|
|
|
70%
|
|
|
|
140%
|
|
Dalton
|
|
|
0%
|
|
|
|
35%
|
|
|
|
70%
|
|
|
|
140%
|
|
Sims
|
|
|
0%
|
|
|
|
35%
|
|
|
|
70%
|
|
|
|
140%
|
|
Kramer
|
|
|
0%
|
|
|
|
35%
|
|
|
|
70%
|
|
|
|
140%
|
|
To calculate a potential award amount, the target percentage of salary for each NEO is multiplied by a formula based on performance.
Formula
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
as of December 31, 2015
|
|
|
|
x
|
|
|
|
Target Annual Incentive
Percentage
|
|
|
|
x
|
|
|
|
Performance Achievement
(0-200%)
|
|
|
|
=
|
|
|
|
Annual Incentive Payout
($)
|
|
|
54
ATI
2016 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
2015 EXECUTIVE COMPENSATION PROGRAM
|
|
|
2015 Earned and Paid Amounts For Each NEO:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At Target (100%)
|
|
|
Actual
|
|
Named Executive Officer
|
|
Target
(% of Base
Salary)
|
|
|
Dollar
Amount ($)
|
|
|
Actual
Weighted
Achievement
(% of Target)
|
|
|
Earned
Cash
Award ($)
|
|
|
Paid Cash
Award ($)
|
|
Harshman
|
|
|
115
|
|
|
|
1,219,000
|
|
|
|
30.1
|
|
|
|
366,919
|
|
|
|
0
|
|
DeCourcy
|
|
|
70
|
|
|
|
336,000
|
|
|
|
30.1
|
|
|
|
101,136
|
|
|
|
80,909
|
|
Dalton
|
|
|
70
|
|
|
|
357,000
|
|
|
|
59.2
|
|
|
|
211,344
|
|
|
|
169,075
|
|
Sims
|
|
|
70
|
|
|
|
357,000
|
|
|
|
65.6
|
|
|
|
234,192
|
|
|
|
187,354
|
|
Kramer
|
|
|
70
|
|
|
|
297,500
|
|
|
|
30.1
|
|
|
|
89,548
|
|
|
|
71,638
|
|
Although the NEOs earned cash incentives under the 2015 Annual Incentive Plan, the Personnel and Compensation Committee decided that
our CEO, Rich Harshman, would not be paid the earned AIP incentive award in 2015 due to overall company performance. The Committee exercised negative discretion under the plan to reduce the other NEOs AIP incentive award payouts by the 20%
maximum to reflect ATIs overall performance.
2015 Performance Goals and Achievement Levels for the Named Executive Officers:
Messrs. Harshman, DeCourcy, and Kramer:
The 2015 AIP awards
for Messrs. Harshman, DeCourcy and Kramer were determined by performance of the goals relevant to total ATI performance, as described below with relative weighting and achievement.
ATI Corporate
|
|
|
|
|
|
|
|
|
Performance Goals
|
|
Relative
Weighting (%)
|
|
|
2015
Actual
Achievement
(% of Threshold)
|
|
ATI Operating Profit
|
|
|
40
|
|
|
|
0
|
|
ATI Operating Cash Flow
|
|
|
30
|
|
|
|
0
|
|
Continuous Improvement
|
|
|
10
|
|
|
|
161.3
|
|
Cost Reductions
|
|
|
10
|
|
|
|
75.3
|
|
Customer Value Creation
|
|
|
10
|
|
|
|
64.8
|
|
|
|
|
100
|
%
|
|
|
30.1
|
%
|
2015 Achievement
: For 2015, the
threshold, target and maximum goals for ATI Operating Profit and ATI Operating Cash Flow, as defined, were as set forth below. AIP awards were earned based on the weighted achievement of each operating goal. The financial goals were not met.
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
2015 Actual
Performance
|
|
ATI Operating Profit
|
|
$163
|
|
$275
|
|
$378
|
|
|
$(240)
|
|
ATI Operating Cash Flow
|
|
$111
|
|
$189
|
|
$261
|
|
|
$ (13)
|
|
|
|
ATI Operating Profit for AIP is defined as segment operating profit less corporate and interest expenses.
|
|
|
ATI Operating Cash Flow is derived from Cash Flow provided by Operating Activities as reported in the Consolidated Statement of Cash Flows and adjusted for capital expenditures.
|
For further information about ATI financial performance, please see ATIs Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed with
the SEC.
ATI
2016 Proxy Statement
/
55
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
2015 EXECUTIVE COMPENSATION PROGRAM
|
|
|
Mr. Dalton:
The 2015
AIP award for Mr. Dalton was determined by performance of the goals relevant to the ATI Specialty Materials business unit for seven full months, with relative weighting and achievement as described below, until August 2015, when
Mr. Daltons role changed to EVP, Strategic Growth Initiatives. His award was also based on ATI Corporate performance, described above, for five months of 2015. Mr. Daltons 2015 earned award was at 59.2% of target.
ATI Specialty Materials
|
|
|
|
|
|
|
|
|
Performance Goals
|
|
Relative
Weighting (%)
|
|
|
2015
Actual
Achievement
(% of Threshold)
|
|
ATI Specialty Materials Operating Profit
|
|
|
40
|
|
|
|
0
|
|
ATI Specialty Materials Operating Cash Flow
|
|
|
30
|
|
|
|
108.2
|
|
Continuous Improvements
|
|
|
10
|
|
|
|
200.0
|
|
Cost Reductions
|
|
|
10
|
|
|
|
150.6
|
|
Customer Value Creation
|
|
|
10
|
|
|
|
124.1
|
|
|
|
|
100
|
%
|
|
|
79.9
|
%
|
|
|
Business Unit Operating Profit is operating profit within the High Performance Materials & Components Segment.
|
|
|
Business Unit Cash Flow is cash flow generated by the business unit.
|
Mr. Sims:
The 2015 AIP award for Mr. Sims was determined by performance of the goals relevant to the ATI High Performance Components Group for seven full months, with
relative weighting and achievement as described below, until August 2015, when Mr. Sims became EVP, High Performance Materials & Components segment, which included responsibility for ATI Specialty Materials. His award was based on
achievement of the ATI Specialty Materials Business Unit and the High Performance Group for five months. Mr. Sims 2015 earned award was at 64.3% of target.
ATI High Performance Components Group
|
|
|
|
|
|
|
|
|
Performance Goals
|
|
Relative
Weighting
(%)
|
|
|
2015
Actual
Achievement
(% of Threshold)
|
|
ATI High Performance Components Group Operating Profit
|
|
|
40
|
|
|
|
0
|
|
ATI High Performance Components Group Operating Cash Flow
|
|
|
30
|
|
|
|
83.7
|
|
Continuous Improvements
|
|
|
5
|
|
|
|
104.7
|
|
Cost Reductions
|
|
|
5
|
|
|
|
200.0
|
|
Customer Value Creation
|
|
|
5
|
|
|
|
102.3
|
|
ATI Cast Products Expansion
|
|
|
5
|
|
|
|
100.0
|
|
ATI Rowley Operations Targets
|
|
|
5
|
|
|
|
51.2
|
|
ATI Richland Operations Targets
|
|
|
5
|
|
|
|
164.0
|
|
|
|
|
100
|
%
|
|
|
61.2
|
%
|
|
|
Group Operating Profit is operating profit within the High Performance Materials & Components Segment.
|
|
|
Group Cash Flow is cash flow generated by the group.
|
Under the AIP formulas in effect for 2015, the Committee, with
regard to the NEOs and other members of the management Executive Council, may assess qualitative performance factors in addition to the quantitative criteria described above. Based on the qualitative assessment of an individuals performance,
the Committee could increase or decrease an individuals award by up to a maximum of 20%. Generally, the sum of positive qualitative adjustments for all eligible participants cannot exceed 5% of the aggregate calculated awards. The Committee
expects that any such adjustments would be considered performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code).
56
ATI
2016 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
2015 EXECUTIVE COMPENSATION PROGRAM
|
|
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LONG-TERM INCENTIVE PLANS
In 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 has two componentsthe Total Shareholder Return Program (TSR) and the Long-Term Shareholder Value (LTSV). All of the programs with ongoing performance periods,
including those under which new awards were discontinued in 2014, are described separately below. The plans are intended to promote cooperative and effective actions by the various operations of ATI to drive achievement of strategic and operational
goals, aggregate earnings, and ultimately return and value creation for the stockholders. Employee participation in the programs is determined by relative responsibilities at the corporate or business unit level.
Performance/Restricted Stock Program (PRSP)
Overview.
Under the PRSP, shares of performance/restricted stock are
awarded to participants at the beginning of a three-year performance measurement period. The PRSP is designed to drive Company earnings while retaining key managers. Approximately 120 key managers, including the NEOs, participate in this plan.
One-half of the award under the PRSP has a performance-based vesting feature and the other half has both performance-based and time vesting components, as more fully described below. The performance goals in this plan are established with a primary
objective of being realistically achievable in the applicable three-year period in order to fulfill the purpose of the plan of aligning the incentives of managers and stockholders. The time-based vesting retention feature is used to retain those key
managers who represent the talent pool for future management.
Performance Criteria.
The PRSP uses an aggregate net income target that reflects ATIs baseline expectations for earnings under the three-year business plan. In February 2015, the Committee set the following performance criteria for
Executive Council members including the NEOs for 2015-2017 performance measurement period:
|
|
Performance Feature:
This one-half of the stock-based award granted will vest, if at all, only upon ATIs achievement of at least an aggregate of $325 million in net income (determined in accordance with
U.S. generally accepted accounting principles) for the period of January 1, 2015 through and including December 31, 2017, excluding Hot Rolling and Processing Facility start-up costs and underutilization costs associated with the Rowley,
Utah titanium sponge plant in the aggregate for fiscal years 2015, 2016 and 2017.
|
If the net income target is not reached or exceeded
on or before December 31, 2017, 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 will be forfeited.
Conversely, if the net income target is reached or exceeded on or before December 31, 2017, 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.
|
|
Time-Based and Performance Feature:
This one-half of each award will vest upon the earlier of (i) five years from the date of grant, or February 25, 2020 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) December 31, 2017, if the net income performance criteria is attained for the January 1, 2015 through December 31, 2017 period.
|
Award Opportunities.
The
Committee set the following incentive percentages for 2015 for each NEO using comparative market data provided by the compensation consultant.
The
threshold is the minimum amount, expressed as a percentage of base salary, that can be earned under the PRSP for the 2015-2017 performance measurement period and would be earned if only the time-based portion of the award vested.
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2016 Proxy Statement
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COMPENSATION DISCUSSION AND
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2015 EXECUTIVE COMPENSATION PROGRAM
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The target is also the maximum amount, expressed as a percentage of base salary, which can be earned if
the performance goals are met in the three-year performance measurement period and both portions of the award vest at that time.
|
|
|
|
|
|
|
The number of shares of an
individuals performance/restricted stock award is calculated as a percentage of base salary, or incentive percentage, 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.
|
|
|
Base Pay Percentages for 2015 for Each NEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Restricted Shares
|
|
Named Executive Officer
|
|
Base Pay
Percentage
|
|
|
Threshold/
Minimum
|
|
|
Target/
Maximum
|
|
Harshman
|
|
|
150
|
%
|
|
|
23,483
|
|
|
|
46,965
|
|
DeCourcy
|
|
|
100
|
%
|
|
|
7,089
|
|
|
|
14,178
|
|
Dalton
|
|
|
100
|
%
|
|
|
7,532
|
|
|
|
15,064
|
|
Sims
|
|
|
100
|
%
|
|
|
7,532
|
|
|
|
15,064
|
|
Kramer
|
|
|
100
|
%
|
|
|
6,277
|
|
|
|
12,554
|
|
Formula.
The number of shares of
performance/restricted stock awarded to each NEO is calculated by using the following formula:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
|
x
|
|
|
|
Target Incentive
Percentage
|
|
|
|
÷
|
|
|
|
$33.855 (Fair
Market Value of ATI stock on grant date of February 25, 2015)
|
|
|
|
=
|
|
|
|
Number of
restricted shares
awarded
|
|
|
Dividends declared on the Companys Common Stock are accumulated and paid in stock to the holders of performance/ restricted stock
when and if the restrictions lapse on the shares.
Performance.
|
|
|
|
|
|
|
2013-2015 Performance
. The
PRSP implemented in 2013 had a performance goal of aggregate net income of $450 million for the 2013-2015 performance measurement period. Based on ATIs actual aggregate net loss of $194.7 million over that time,
half of the award was
forfeited
as of January 28, 2016. The fair market value of ATI stock on the grant date of February 20, 2013 was $30.67.
|
|
|
Long-Term Incentive Performance Plan (LTPP)
The LTPP was discontinued beginning in 2016. It began as a stand-alone plan in 2014 (for the performance period 2014-2016) and was in effect in 2015 (for the
performance period 2015-2017).
58
ATI
2016 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
2015 EXECUTIVE COMPENSATION PROGRAM
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|
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Overview.
The Long Term
Incentive Performance Plan is designed to drive overall ATI performance and the achievement of strategic goals while retaining key managers.
|
|
|
TSR Component: Measures total stockholder return
|
|
LTSV Component: Measures long-term stockholder value
|
The Committee awards a target number of shares (the Opportunity 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.
Eligibility:
Approximately 60 key managers participate under this component of the
LTPP.
|
|
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.
Eligibility
: Members of the management Executive Council participate under this component 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.
For the performance measurement period beginning in 2015, the Committee selected the peer group companies listed below because of their similarity to ATIthe peer
companies are all in the materials business, sell to the same end users or markets, are actual competitors in one or more of the markets in which ATI competes, and have similar risk and stock volatility profiles. Most importantly, companies in the
peer group below are cyclical, similar to ATI, encountering the same challenges at the bottom of the business cycle and like underlying conditions at business cycle peaks. Therefore, we believe this is the appropriate group for reference to relative
TSR performance.
|
|
|
|
|
|
|
|
|
Relative Total Stockholder Return Peer Group
for 2015 TSR Component
|
|
|
|
|
AK Steel Holding Corporation
Alcoa Inc.
Carpenter Technology Corporation
Castle (A.M.) & Co.
Commercial Metals
Kennametal Inc.
Materion Corporation
Nucor Corporation
Precision Castparts Corp.
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|
Reliance Steel & Aluminum Co.
RTI International Metals, Inc.
Schnitzer Steel Industries, Inc.
Steel Dynamics, Inc.
The Timken Company
United States Steel Corporation
Universal Stainless & Alloy Products, Inc.
Worthington Industries, Inc.
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|
|
There is significant overlap between our TSR Peer Group and our benchmarking peer group, which is identified on page 51 of this
proxy statement.
Award Opportunities.
The Committee set the target
percentage of base pay, arriving at the number of opportunity shares, for each NEO under the TSR component for the 2015-2017 performance measurement period using comparative market data provided by the compensation consultant.
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2016 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
2015 EXECUTIVE COMPENSATION PROGRAM
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|
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Formula:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
|
x
|
|
|
|
Target Incentive
Percentage
|
|
|
|
÷
|
|
|
|
$33.54
(Average of high and low trading prices of ATI stock for 30 trading days preceding
January 1, 2015)
|
|
|
|
=
|
|
|
|
Target TSR Opportunity
Shares
|
|
|
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.
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Base Pay
Percentage
|
|
|
Number of
Opportunity
Shares
|
|
Harshman
|
|
|
150%
|
|
|
|
47,406
|
|
DeCourcy
|
|
|
100%
|
|
|
|
14,311
|
|
Dalton
|
|
|
100%
|
|
|
|
15,206
|
|
Sims
|
|
|
100%
|
|
|
|
15,206
|
|
Kramer
|
|
|
100%
|
|
|
|
12,671
|
|
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, for the 2015-2017 performance measurement period, the Committee established various strategic, operational goals,
the achievement of which are crucial to the completion and implementation of the Companys capital improvement, acquisitions, and business development strategies, and assigned relative weight was assigned to each performance metric.
|
|
|
|
|
Cast Products expansion on budget and on time
|
|
|
30%
|
|
Powder expansion on budget and on time
|
|
|
30%
|
|
Regain investment grade credit rating
|
|
|
15%
|
|
ROCE* target no less than 6.7% (16.6%**)
|
|
|
25%
|
|
**
|
Excluding Rowley and HRPF assets value
|
Award Opportunities.
The Committee set the incentive percentage for each NEO under the LTSV Component for the 2015-2017 performance measurement period using comparative market data provided by the compensation consultant.
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ATI
2016 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
2015 EXECUTIVE COMPENSATION PROGRAM
|
|
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Formula.
The number of
shares of performance/restricted stock awarded to each NEO is calculated by using the following formula:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
|
x
|
|
|
|
Target Incentive
Percentage
|
|
|
|
÷
|
|
|
|
$33.855 (Fair
Market Value of ATI stock on grant date of February 25, 2015)
|
|
|
|
=
|
|
|
|
Number of restricted shares
awarded
|
|
|
Performance.
At the end of the
performance measurement period, the Committee will determine the degree to which each of the performance goals has been met, and may determine that such goals have been partially met. The achievement level of the respective performance goals with
relative weighting will be added together and the sum, expressed as percentage, will be 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.
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Base Pay
Percentage
|
|
|
Number of
Restricted
Shares
|
|
Harshman
|
|
|
100%
|
|
|
|
31,310
|
|
DeCourcy
|
|
|
100%
|
|
|
|
14,178
|
|
Dalton
|
|
|
100%
|
|
|
|
15,064
|
|
Sims
|
|
|
100%
|
|
|
|
15,064
|
|
Kramer
|
|
|
100%
|
|
|
|
12,554
|
|
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.
|
|
|
|
|
|
|
No new awards are being made under the following two
plans. The final performance period under which awards were issued was for 2013-2015.
|
|
|
Total Shareholder Return Incentive Compensation Program (TSRP)
As noted above, the separate TSRP was discontinued as a stand-alone plan beginning in 2014.
The following describes the TSRP as in effect for awards made in 2013
and prior years.
|
|
|
|
|
|
|
2013-2015 Performance
. ATIs relative TSR for the 2013-2015 performance measurement period
was at the 33rd percentile, which is below threshold, therefore
yielding no payment
.
|
|
|
Overview.
The purpose of this program was
to focus management directly on returns to stockholders. Approximately 60 key executives (including the NEOs, other than Mr. Kramer) participated in this plan.
The TSRP was an equity-based incentive plan in which awards are denominated in shares of ATI Common Stock. Under the TSRP, participants had an opportunity to earn a
number of shares based on the Companys TSR over a three-year performance measurement period, compared to the TSR of a peer group of companies approved by the Committee for the same performance measurement period. The target number of
Opportunity Shares was determined at the start of the three-year performance measurement period using a per share value equal to the average of the high and low trading prices over the 30 trading days immediately preceding the first day of the
performance measurement period. The number of shares, if any, received by the participants at the end of the period was determined by the Companys TSR over the period relative to the TSR of the selected peer group.
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COMPENSATION DISCUSSION AND
ANALYSIS |
2015 EXECUTIVE COMPENSATION PROGRAM
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Performance Criteria, including Peer Group.
The Committee established an annual three-year TSRP performance measurement period, the last of which expired at the end of 2015. Under the terms of the TSRP, the Committee selected the eligible participants, established
the Opportunity Shares for each participant, and constructed the peer group of companies for that performance measurement period. The Committee selected peer group companies on the basis of relative similarity to one or more of the aspects of the
Companys businesses, actual competition in one or more of the markets in which ATI competes, similar risk profiles and stock volatility, and similar business cycles to ATI, encountering the same challenges at the bottom of the business cycle
and similar conditions at business cycle peaks.
Award Opportunities.
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. At the end of the three-year performance measurement period, participants could earn percentages of their respective Opportunity Shares that vary depending on the percentile rank of the Companys TSR for
the performance measurement period as compared to the TSR of the selected peer group for the same period. Interpolation was made between these points on a straight-line basis.
Opportunity Shares, if any, were issued to the participants after the end of the performance measurement period once the Companys relative TSR for the period was
determined. The dollar value of any Opportunity Shares received could exceed the dollar value of the Opportunity Shares at the time of the grant because a focus of the TSRP was to increase returns to stockholders, and performance above the target
level could contribute to a higher trading price of the Common Stock. Similarly, depending on ATIs performance, the value of Opportunity Shares ultimately received could be less than the dollar value of the shares when granted.
Measurement Criteria.
The performance ranges for threshold, target and
maximum performance are as follows, which are rigorous and consistent with other TSR-measured plans:
|
|
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 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.
When the TSRP program was initially adopted, it used the then conventional structure of threshold at the 25th percentile and 50% of shares, target at 50th percentile
and 100% of shares, outstanding at 75th percentile for 200% of shares and maximum at 90th percentile and 300% of shares. In recent years, the Committee responded to industry trends and (i) capped the maximum reward at 200%, (ii) eliminated the
outstanding level completely and (iii) raised the minimum from the 25th percentile to the 35th percentile (interpolation between levels above threshold).
Key Executive Performance Plan (KEPP)
As noted above, the KEPP was discontinued beginning in 2014
. The following describes the KEPP as in effect for awards in the performance period 2013-2015, the
last performance period for which KEPP awards exist as a result of the discontinuance of the KEPP in 2014.
|
|
|
|
|
|
|
KEPP Performance
. For the
recently completed 2013-2015 KEPP performance measurement period,
no awards were earned or paid
. The threshold target of $1,085 million in aggregate income before taxes was not met.
|
|
|
Overview.
The KEPP was a cash-based
incentive plan with a three-year performance measurement period. Only members of the managements Executive Council were eligible to participate in this plan. The overall objective of the KEPP was to position ATI for long-term, profitable
growth as a result of the achievement of defined financial goals.
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2016 Proxy Statement
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COMPENSATION DISCUSSION AND
ANALYSIS |
2015 EXECUTIVE COMPENSATION PROGRAM
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Performance Criteria.
As described below, for the 2013-2015 KEPP plan, cash targets under the KEPP were based on only one levelLevel I. Level I focuses on income before taxes, or IBT, achievement over a three-year period.
In prior years, the cash targets also were based on a second level, known as Level II, which focused on the accomplishments of specific, operational, team-oriented strategic objectives designed to position the Company for future opportunities. Level
II was discontinued for the 2013-2015 KEPP.
KEPP Level I
. For the 2013-2015 KEPP plan, Level I consisted of predetermined levels of aggregate
IBT for the applicable performance measurement period. Level I was directed at Company earnings because this measure generates the resources for the Company to create and sustain stockholder value. Level I incentive awards increased on a graduated
scale as aggregate IBT increases through the specified gradients to a maximum level of aggregate IBT at the highest of the five gradients. The Committee set the IBT gradients to drive year-over-year earnings growth for ATI, recognizing the
inherently cyclical nature of the Companys business. The Committee intended for the IBT levels for this plan to be increasingly challenging as achievement levels move from the first performance gradient (threshold/target) to the maximum
performance gradient.
KEPP Gradients
. For the 2013-2015 KEPP performance measurement period, the Level I threshold performance target was set at an
aggregate of $1.085 billion in IBT to a maximum of $2.255 billion at the fifth (maximum) gradient.
Vesting Feature
.
The KEPP had a vesting feature
whereby, if the actual achievement for any one or more years in the performance measurement period exceeds the threshold IBT pro-rated for that year, a KEPP payment may be reserved until the end of the performance measurement period. All vested
amounts under the KEPP were not payable until the completion of the applicable performance measurement period and were subject to forfeiture prior to the end of the period if employment was terminated for reasons other than death, disability or
retirement. Once the relevant performance measurement period was completed, awards were paid out at the greater of: the performance level at the end of the period, or the total of vested amounts for the year(s) earned.
Other Compensation Policies
Employment Agreements; Change in Control Agreements.
ATI does not have any employment agreements with its named executive officers.
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; Clawbacks
The
payment of awards under the incentive compensation plans is conditioned on adherence to the Companys
Corporate Guidelines for Business Conduct and Ethics
, which are published on our website
www.atimetals.com
. There are clawback
agreements with each member of the management Executive Council (which includes the NEOs) that provide for key executives to return compensation to the extent that information used to calculate achievement of earnings or other performance measures
is subsequently determined to be materially incorrect.
Pension and Retirement Plans
ATI maintains a qualified defined benefit pension plan that 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
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COMPENSATION DISCUSSION AND
ANALYSIS |
OTHER COMPENSATION POLICIES
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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, Dalton and Sims 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
Over the past several years, the
Company has adopted policies to eliminate the personal use of corporate aircraft by employees without reimbursement to ATI, payment of club membership dues of employees, and tax reimbursement arrangements related to the payment of club membership
dues and parking at corporate headquarters. There has been, and will be, no compensation to employees in connection with the elimination of these perquisites. 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.
The Company may elect to enter into aircraft timeshare agreements with certain executives
pursuant to which the Company will be reimbursed for any personal use of Company-leased aircraft at reimbursement rates permitted under Federal Aviation Administration regulations (14 C.F.R. Section 91.501). ATI entered into an Aircraft Time
Sharing Agreement with Mr. Harshman effective January 1, 2012.
Tax Deductibility of Compensation Expense.
Section 162(m) of the Internal Revenue 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.
In general, the 2015 incentive opportunities for executive officers were designed in a manner intended to be exempt from the deduction limitation of Section 162(m)
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 executive team annual cash incentives and long-term
awards in a manner intended to be exempt from Section 162(m) and therefore not subject to its deduction limits, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued
thereunder, no assurance can be given that compensation we intend to satisfy the requirements for exemption from Section 162(m) in fact will.
64
ATI
2016 Proxy Statement
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|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
OTHER COMPENSATION POLICIES
|
|
|
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 has 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. The ownership guidelines for the CEO and management that were in effect for 2015, which required that executives own a specified number of shares of ATI common stock
commensurate with their position, are as follows:
|
|
|
|
|
Chief Executive Officer
|
|
|
125,000
|
|
Executive Council members
|
|
|
35,000
|
|
Business Unit Presidents
|
|
|
15,000
|
|
Vice Presidents & Corporate Officers
|
|
|
10,000
|
|
Business Unit Vice Presidents and other Executives as deemed
appropriate
|
|
|
5,000
|
|
As of year-end 2015, all of the NEOs owned shares that surpassed their required share ownership guideline.
|
|
|
|
|
|
|
|
|
|
|
The Personnel and Compensation Committee, at its
February 2016 meeting, approved new stock ownership requirements based on targeting actual ownership as a multiple of base salary. Effective for 2016, the new stock ownership requirements for the NEOs and other Executive Council members are as
follows:
|
|
|
|
|
Chief Executive Officer:
|
|
6 times base salary
|
|
|
|
|
|
|
Executive Vice Presidents
and
the Chief Financial Officer:
|
|
3 times base salary
|
|
|
|
|
|
|
Senior Vice Presidents:
|
|
2 times base salary
|
|
|
|
|
Executives will also be required to retain 100% of the after-tax value of shares issued upon the vesting of restricted stock units and
performance share units until the ownership requirement is satisfied.
This change, from a fixed number of shares as the method of determining ownership percentage
to targeting a multiple of base salary, requires a meaningful level of ownership for the CEO and 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
2016 Proxy Statement
/
65
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|
COMPENSATION DISCUSSION AND
ANALYSIS |
2016 EXECUTIVE COMPENSATION PROGRAM REDESIGN
|
|
|
2016 Executive Compensation Program Redesign Clean
Sheet
|
|
|
|
|
|
|
For 2016, we overhauled our executive compensation program and took a clean
sheet approach to its
re-design.
This was an as an outgrowth to the Companys transformation and strategic capital investments over the past several years and as a result of prior say on pay
votes.
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 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 targets 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. 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.
|
|
|
ANNUAL PERFORMANCE PLAN (APP)
This is the short-term cash incentive plan. For Executive Council members, 90% of the performance goals will be based on financial metrics, and 10% on
strategic/individual goals, as described below.
The APP imposes a minimum cash flow target as a prerequisite to achievement of strategic/individual goals and prohibits the use of
positive discretion to increase award amounts.
Individual APP opportunities are granted at Threshold, Target and Maximum levels, which are predetermined levels of
achievement of certain financial performance goals that are expressed as a percentage of base salary. The respective opportunities granted to the NEOs under the 2016 APP are:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Below
Threshold
|
|
|
Threshold
(50% of Target)
|
|
|
Target
|
|
|
Maximum
(200% of Target)
|
|
CEO
|
|
|
0%
|
|
|
|
57.5%
|
|
|
|
115%
|
|
|
|
230%
|
|
Other NEOs
|
|
|
0%
|
|
|
|
35-40%
|
|
|
|
70-80%
|
|
|
|
140-160%
|
|
The CEOs individual APP target remained constant with his prior year target, at 115%.
66
ATI
2016 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
2016 EXECUTIVE COMPENSATION PROGRAM REDESIGN
|
|
|
The financial performance goals under the 2016 APP are weighted as follows:
|
|
For Corporate participants (including the CEO)
: 60% on ATI EBITDA, 30% on ATI cash flow and 10% on strategic/individual goals.
|
|
|
For Business Segment NEOs
: 30% on ATI EBITDA, 30% on business segment operating profit, 30% on business segment operating cash flow and 10% on strategic/individual goals.
|
Strategic/individual goals can be operational or project-based goals.
LONG-TERM INCENTIVE PLAN (LTIP)
This plan consists of two componentsperformance share units and restricted share
units. 70% of the LTIP for NEOs is performance-based entirely on quantitative performance measures, the remaining 30% of the long-term incentive program is time-based to provide retention incentives.
|
|
|
|
|
|
|
Vehicle
|
|
Performance Metric
|
|
Vesting
|
|
Payout Ranges
|
Performance
Share Units (70%)
|
|
Income 50%
Return
on Invested Capital 50%
h
or
¯
TSR Modifier of 20% for Executive Council members and leadership level
participants
|
|
3-Year performance
period
|
|
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
See page 68
|
Restricted Share
Units (30%)
|
|
N/A
|
|
3-Year Ratable Vesting
|
|
|
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 have been reduced from 2015. The CEOs target is below
the market median and the other NEOs targets align with the market median, as follows:
|
|
|
|
|
|
|
|
|
|
|
2015 Target
|
|
|
2016 Target
|
|
CEO
|
|
|
400%
|
|
|
|
320%
|
|
Other NEOs
|
|
|
300%
|
|
|
|
200%
|
|
All LTIP participants have a PSU component based on income and ROIC metrics.
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 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 will be accumulated or paid on the PSUs.
ATI
2016 Proxy Statement
/
67
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
2016 EXECUTIVE COMPENSATION PROGRAM REDESIGN
|
|
|
2016 Payout Percentages if Performance Goals are Met
For the 2016 PSU component, 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 is facing relating to industry and pricing uncertainty.
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:
Restricted Stock 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.
2016 Award Opportunities:
For the 2016 LTIP, the Committee substantially reduced NEO award levels at target by 20%-33% from the respective
long- term incentive award levels for the previous periods.
The aggregate number of units granted to an individual under the LTIP components is determined by dividing a predetermined percentage of the
individuals base salary by the average of the high and low trading prices of a share of the Companys common stock on the date of grant.
Base Salaries:
For 2016, base salaries for the CEO and NEOs remain at 2015 levels.
PSU Awards:
The PSUs awarded at Target as a percentage of base salary are
224% for the CEO and 140% for each other NEO.
RSU Awards:
The
RSUs awarded at Target as a percentage of base salary are 96% for the CEO and 60% for each other NEO.
68
ATI
2016 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
2015 TOTAL REALIZED COMPENSATION
|
|
|
2015 Total Realized Compensation
The Committee views the amounts in the Summary Compensation Table as the target compensation opportunity for each NEO under the executive compensation program. When
making determinations and awards under the 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
2014 Total Realized
Compensation
|
|
|
2015 Total Realized
Compensation
|
|
|
|
Percentage
Change
|
|
Harshman
|
|
|
$3,289,353
|
|
|
$1,431,303
|
|
|
|
|
(56%)
|
|
DeCourcy
|
|
|
$895,137
|
|
|
$ 672,371
|
|
|
|
|
(25%)
|
|
Dalton
|
|
|
$1,330,309
|
|
|
$ 809,692
|
|
|
|
|
(39%)
|
|
Sims
|
|
|
$1,246,772
|
|
|
$ 843,211
|
|
|
|
|
(32%)
|
|
Kramer
|
|
|
N/A
(1)
|
|
|
$ 741,144
|
|
|
|
|
N/A
|
|
(1)
|
Mr. Kramer was not a named executive officer in 2014.
|
Total Realized Compensation is calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation
as determined by SEC rules and set forth 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 2015 Summary Compensation Table)
|
|
-
|
|
any
vested amounts
for the KEPP performance period 2013-2015 (as
reflected in the Non-Equity Incentive Plan Compensation column
of the 2015 Summary Compensation Table),
which amount is zero for all participants
|
|
-
|
|
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 2015 Summary Compensation
Table)
|
|
+
|
|
if any,
the
value realized in 2015 from shares awarded
under the 2013-2015 TSRP and PRSP;
which amount is zero for all participants,
as no shares vested under those plans for 2013- 2015 (as reflected in the Options
Exercised and Stock Vested Table)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2016 Proxy Statement. The Committee furnishes
this Report for inclusion in the 2016 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
2016 Proxy Statement
/
69
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
SUMMARY COMPENSATION TABLE FOR 2015
|
|
|
Summary Compensation Table for 2015
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, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary
($)(3)
|
|
|
Bonus
($)(4)
|
|
|
Stock
Awards
($)(5)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)(6)
|
|
|
Change in
Pension Value and
Non-Qualified Deferred
Compensation
Earnings
($)(7)
|
|
|
All Other
Compensation
($)(8)
|
|
|
Total
($)
|
|
Richard J. Harshman
|
|
|
2015
|
|
|
|
1,050,692
|
|
|
|
|
|
|
|
4,638,181
|
|
|
|
0
|
|
|
|
803,656
|
|
|
|
380,611
|
|
|
|
6,873,140
|
|
Chairman, President and
|
|
|
2014
|
|
|
|
993,019
|
|
|
|
|
|
|
|
3,846,929
|
|
|
|
1,376,450
|
|
|
|
1,532,375
|
|
|
|
209,731
|
|
|
|
7,958,504
|
|
Chief Executive Officer
|
|
|
2013
|
|
|
|
954,006
|
|
|
|
|
|
|
|
3,181,302
|
|
|
|
0
|
|
|
|
169,063
|
|
|
|
358,810
|
|
|
|
4,663,181
|
|
Patrick J. DeCourcy
(1)
|
|
|
2015
|
|
|
|
472,244
|
|
|
|
|
|
|
|
1,550,711
|
|
|
|
80,909
|
|
|
|
59,893
|
|
|
|
119,218
|
|
|
|
2,282,975
|
|
Senior Vice President, Finance
|
|
|
2014
|
|
|
|
430,000
|
|
|
|
|
|
|
|
1,236,931
|
|
|
|
338,715
|
|
|
|
117,354
|
|
|
|
64,476
|
|
|
|
2,187,476
|
|
and Chief Financial Officer
|
|
|
2013
|
|
|
|
275,792
|
|
|
|
|
|
|
|
305,367
|
|
|
|
0
|
|
|
|
(9,532
|
)
|
|
|
61,356
|
|
|
|
632,983
|
|
Hunter R. Dalton
(2)
|
|
|
2015
|
|
|
|
507,679
|
|
|
|
|
|
|
|
1,647,648
|
|
|
|
169,075
|
|
|
|
599,085
|
|
|
|
132,938
|
|
|
|
3,056,425
|
|
Executive Vice President,
|
|
|
2014
|
|
|
|
488,252
|
|
|
|
|
|
|
|
1,423,947
|
|
|
|
580,734
|
|
|
|
1,025,950
|
|
|
|
63,969
|
|
|
|
3,582,852
|
|
Strategic Growth Initiatives
|
|
|
2013
|
|
|
|
449,302
|
|
|
|
|
|
|
|
1,002,708
|
|
|
|
0
|
|
|
|
150,574
|
|
|
|
106,805
|
|
|
|
1,709,389
|
|
John D. Sims
|
|
|
2015
|
|
|
|
507,673
|
|
|
|
|
|
|
|
1,647,648
|
|
|
|
187,354
|
|
|
|
202,863
|
|
|
|
148,184
|
|
|
|
2,693,722
|
|
Executive Vice President, High
|
|
|
2014
|
|
|
|
484,141
|
|
|
|
|
|
|
|
1,423,947
|
|
|
|
518,364
|
|
|
|
443,088
|
|
|
|
80,750
|
|
|
|
2,950,290
|
|
Performance Materials &
|
|
|
2013
|
|
|
|
436,378
|
|
|
|
|
|
|
|
943,858
|
|
|
|
0
|
|
|
|
(106,801
|
)
|
|
|
216,725
|
|
|
|
1,490,160
|
|
Components segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin B. Kramer
|
|
|
2015
|
|
|
|
421,122
|
|
|
|
150,000
|
|
|
|
1,373,053
|
|
|
|
71,638
|
|
|
|
|
|
|
|
98,384
|
|
|
|
2,114,197
|
|
Senior Vice President, Chief
Commercial and Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr. DeCourcy was named Interim Chief Financial Officer in July 2013 and Senior Vice President, Finance and Chief Financial Officer in December 2013.
|
(2)
|
Mr. Dalton will retire from the Company effective March 31, 2016.
|
(3)
|
Reflects actual amounts of target base salary paid in 2015. There is no increase to base salary levels in 2016.
|
(4)
|
Signing bonus agreed to in February 2014 when Mr. Kramer joined ATI; $150,000 to be paid annually for three years. The last payment was made in February 2016.
|
(5)
|
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 PRSP, LTPP-TSR and LTSV in 2015,
each of which has a three-year performance measurement period. 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 2015 amounts for each NEO would be as follows: Mr. Harshman, $6,783,303; Mr. DeCourcy, $2,198,284; each of Mr. Dalton and Mr. Sims, $2,335,720; and Mr. Kramer, $1,946,416.
|
|
The fair value of nonvested performance/restricted stock awards granted under the PRSP is measured based on the stock price at the grant date, adjusted for non-participating dividends, as applicable, based on the
current dividend rate. For nonvested stock awards to employees made under the PRSP, one-half of the nonvested stock (performance shares) vests only upon the attainment of a cumulative net income target measured over a three-year period.
The remaining one-half of the nonvested stock award vests over a service period of five years, with accelerated vesting to three years if the performance shares vesting criterion is attained. The per share fair value of the PRSP awards made in
2015 is $31.85.
|
|
Fair values for the LTPP-TSR awards at target were estimated using Monte Carlo simulations of stock price correlation, projected dividend yields and other variables over three-year time periods matching the TSRP
performance periods. The per share fair value of the LTPP-TSR awards made in 2015 is $45.25.
|
|
The fair value of nonvested performance/restricted stock awards granted under the LTSV is measured based on the stock price at the grant date, adjusted for non-participating dividends, as applicable, based on the
current dividend rate. For nonvested stock awards to employees made under the LTSV, performance shares vest only upon the achievement of various pre-set strategic operational goals that are expected to create stockholder value over the long term
measured over a three-year period. The per share fair value of the LTSV awards made in 2015 is $31.85.
|
|
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, 2015.
|
(6)
|
Non-equity Incentive Plan Compensation:
Consists of performance-based cash awards paid under the 2015 AIP. The Committee exercised negative discretion to reduce amounts based on ATIs 2015 financial
performance.
|
(7)
|
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, Dalton and Sims participate. In 2015, payment of AIP pertaining to fiscal year 2014 had the effect of increasing the 2015 value of certain pension
benefits to the NEOs. In 2015, the discount rate used was 4.65% and had the effect of decreasing the pension benefit to the NEOs.
|
(8)
|
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 2015 that follows for additional information.
|
70
ATI
2016 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
ALL OTHER COMPENSATION FOR 2015
|
|
|
ALL OTHER COMPENSATION FOR 2015
In addition to those items reported in footnote 8 to the Summary Compensation Table, 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
|
|
|
205,187
|
|
|
|
25,392
|
|
|
|
10,578
|
|
|
|
138,144
|
|
|
|
1,310
|
|
|
|
380,611
|
|
DeCourcy
|
|
|
52,429
|
|
|
|
24,612
|
|
|
|
2,466
|
|
|
|
38,401
|
|
|
|
1,310
|
|
|
|
119,218
|
|
Dalton
|
|
|
53,392
|
|
|
|
21,275
|
|
|
|
7,643
|
|
|
|
50,528
|
|
|
|
100
|
|
|
|
132,938
|
|
Sims
|
|
|
66,118
|
|
|
|
26,225
|
|
|
|
4,979
|
|
|
|
49,552
|
|
|
|
1,310
|
|
|
|
148,184
|
|
Kramer
|
|
|
35,308
|
|
|
|
26,225
|
|
|
|
4,085
|
|
|
|
31,456
|
|
|
|
1,310
|
|
|
|
98,384
|
|
(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)
|
For Messrs. Harshman, DeCourcy, Sims and Kramer, 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.
Amount for Mr. Dalton is a patent award.
|
ATI
2016 Proxy Statement
/
71
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
GRANTS OF PLAN-BASED AWARDS FOR 2015
|
|
|
Grants of Plan-Based Awards for 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
AIP
|
|
|
|
|
|
|
609,500
|
|
|
|
1,219,000
|
|
|
|
2,438,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,483
|
|
|
|
46,965
|
|
|
|
46,965
|
|
|
|
|
|
|
|
|
|
1,495,835
|
|
|
|
LTPP-TSR
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,703
|
|
|
|
47,406
|
|
|
|
94,812
|
|
|
|
|
|
|
|
|
|
2,145,122
|
|
|
|
LTPP-LTSV
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
(3)
|
|
|
31,310
|
|
|
|
31,310
|
|
|
|
|
|
|
|
|
|
997,224
|
|
|
|
Total
|
|
|
|
|
|
|
609,500
|
|
|
|
1,219,000
|
|
|
|
2,438,000
|
|
|
|
47,186
|
|
|
|
125,681
|
|
|
|
173,087
|
|
|
|
|
|
|
|
|
|
4,638,181
|
|
DeCourcy
|
|
AIP
|
|
|
|
|
|
|
168,000
|
|
|
|
336,000
|
|
|
|
672,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,089
|
|
|
|
14,178
|
|
|
|
14,178
|
|
|
|
|
|
|
|
|
|
451,569
|
|
|
|
LTPP-TSR
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,156
|
|
|
|
14,311
|
|
|
|
28,622
|
|
|
|
|
|
|
|
|
|
647,573
|
|
|
|
LTPP-LTSV
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
(3)
|
|
|
14,178
|
|
|
|
14,178
|
|
|
|
|
|
|
|
|
|
451,569
|
|
|
|
Total
|
|
|
|
|
|
|
168,000
|
|
|
|
336,000
|
|
|
|
672,000
|
|
|
|
14,245
|
|
|
|
42,667
|
|
|
|
56,978
|
|
|
|
|
|
|
|
|
|
1,550,711
|
|
Dalton
|
|
AIP
|
|
|
|
|
|
|
178,500
|
|
|
|
357,000
|
|
|
|
714,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,532
|
|
|
|
15,064
|
|
|
|
15,064
|
|
|
|
|
|
|
|
|
|
479,788
|
|
|
|
LTPP-TSR
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,603
|
|
|
|
15,206
|
|
|
|
30,412
|
|
|
|
|
|
|
|
|
|
688,072
|
|
|
|
LTPP-LTSV
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
(3)
|
|
|
15,064
|
|
|
|
15,064
|
|
|
|
|
|
|
|
|
|
479,788
|
|
|
|
Total
|
|
|
|
|
|
|
178,500
|
|
|
|
357,000
|
|
|
|
714,000
|
|
|
|
15,135
|
|
|
|
45,334
|
|
|
|
60,540
|
|
|
|
|
|
|
|
|
|
1,647,648
|
|
Sims
|
|
AIP
|
|
|
|
|
|
|
178,500
|
|
|
|
357,000
|
|
|
|
714,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,532
|
|
|
|
15,064
|
|
|
|
15,064
|
|
|
|
|
|
|
|
|
|
479,788
|
|
|
|
LTPP-TSR
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,603
|
|
|
|
15,206
|
|
|
|
30,412
|
|
|
|
|
|
|
|
|
|
688,072
|
|
|
|
LTPP-LTSV
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
(3)
|
|
|
15,064
|
|
|
|
15,064
|
|
|
|
|
|
|
|
|
|
479,788
|
|
|
|
Total
|
|
|
|
|
|
|
178,500
|
|
|
|
357,000
|
|
|
|
714,000
|
|
|
|
15,135
|
|
|
|
45,334
|
|
|
|
60,540
|
|
|
|
|
|
|
|
|
|
1,647,648
|
|
Kramer
|
|
AIP
|
|
|
|
|
|
|
148,750
|
|
|
|
297,500
|
|
|
|
595,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,277
|
|
|
|
12,554
|
|
|
|
12,554
|
|
|
|
|
|
|
|
|
|
399,845
|
|
|
|
LTPP-TSR
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,336
|
|
|
|
12,671
|
|
|
|
25,342
|
|
|
|
|
|
|
|
|
|
573,363
|
|
|
|
LTPP-LTSV
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
(3)
|
|
|
12,554
|
|
|
|
12,554
|
|
|
|
|
|
|
|
|
|
399,845
|
|
|
|
Total
|
|
|
|
|
|
|
148,750
|
|
|
|
297,500
|
|
|
|
595,000
|
|
|
|
12,613
|
|
|
|
37,779
|
|
|
|
50,450
|
|
|
|
|
|
|
|
|
|
1,373,053
|
|
(1)
|
Represents the Companys Annual Incentive Plan (AIP), Performance/Restricted Stock Program (PRSP), the TSR component of the LTPP (LTPP-TSR) and the LTSV component of the LTPP (LTPP-LTSV).
|
(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. For the PRSP nonvested stock award, one-half of the award (performance shares) vests only upon the attainment of a cumulative net income target measured over a three-year performance measurement
period. The fair value of a PRSP nonvested stock award as presented above is measured based on the stock price at the grant date, with the assumption that the performance criteria will be achieved. The remaining one-half of the nonvested PRSP stock
award vests over a service period of five years, with accelerated vesting to three years if the performance shares vesting criterion is attained. Fair value for the LTPP-TSR award was estimated using Monte Carlo simulations of stock price
correlation, projected dividend yields and other variables over a three-year time period matching the performance measurement period. For nonvested stock awards made under the LTSV, performance shares vest only upon the achievement of various
pre-set strategic operational goals that are expected to create stockholder value over the long term measured over a three-year period. The fair value of a LTSV nonvested stock award as presented above is measured based on the stock price at the
grant date, with the assumption that the performance criteria will be achieved. 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, 2015.
|
(3)
|
Under the LTPP-LTSV, vesting of awards is dependent upon the degree that the pre-set strategic, operational goals are achieved. The threshold value, which could be a percentage of target, assumes minimum achievement of
goals. No amounts greater than target can vest.
|
72
ATI
2016 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END FOR 2015
|
|
|
Outstanding Equity Awards at Fiscal
Year-End for 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
199,586
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2013
|
|
|
|
23,354
|
|
|
|
262,733
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/2014
|
|
|
|
24,027
|
|
|
|
270,304
|
|
|
|
24,027(4)
|
|
|
|
270,304
|
|
|
|
|
2/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
44,749(5)
|
|
|
|
503,426
|
|
|
|
|
2/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
32,036(6)
|
|
|
|
360,405
|
|
|
|
|
2/25/2015
|
|
|
|
23,483
|
|
|
|
264,184
|
|
|
|
23,482(4)
|
|
|
|
264,173
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
26,547(5)
|
|
|
|
298,654
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
31,310(6)
|
|
|
|
352,238
|
|
|
|
|
|
|
|
|
88,605
|
|
|
|
996,807
|
|
|
|
182,151
|
|
|
|
2,049,200
|
|
DeCourcy
|
|
|
2/22/2012
|
|
|
|
1,548
|
|
|
|
17,415
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2013
|
|
|
|
2,242
|
|
|
|
25,223
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/2014
|
|
|
|
6,888
|
|
|
|
77,490
|
|
|
|
6,887(4)
|
|
|
|
77,479
|
|
|
|
|
2/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
12,828(5)
|
|
|
|
144,315
|
|
|
|
|
2/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
13,775(6)
|
|
|
|
154,969
|
|
|
|
|
2/25/2015
|
|
|
|
7,089
|
|
|
|
79,751
|
|
|
|
7,089(4)
|
|
|
|
79,751
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
8,014(5)
|
|
|
|
90,158
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
14,178(6)
|
|
|
|
159,503
|
|
|
|
|
|
|
|
|
17,767
|
|
|
|
199,879
|
|
|
|
62,771
|
|
|
|
706,175
|
|
Dalton
|
|
|
2/22/2012
|
|
|
|
4,931
|
|
|
|
55,474
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2013
|
|
|
|
7,361
|
|
|
|
82,811
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/2014
|
|
|
|
7,929
|
|
|
|
89,201
|
|
|
|
7,929(4)
|
|
|
|
89,201
|
|
|
|
|
2/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
14,767(5)
|
|
|
|
166,129
|
|
|
|
|
2/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
15,858(6)
|
|
|
|
178,403
|
|
|
|
|
2/25/2015
|
|
|
|
7,532
|
|
|
|
84,735
|
|
|
|
7,532(4)
|
|
|
|
84,735
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
8,515(5)
|
|
|
|
95,794
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
15,064(6)
|
|
|
|
169,470
|
|
|
|
|
|
|
|
|
27,753
|
|
|
|
312,221
|
|
|
|
69,665
|
|
|
|
783,732
|
|
Sims
|
|
|
2/22/2012
|
|
|
|
4,222
|
|
|
|
47,498
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2013
|
|
|
|
6,929
|
|
|
|
77,951
|
|
|
|
|
|
|
|
|
|
|
|
|
2/26/2014
|
|
|
|
7,929
|
|
|
|
89,201
|
|
|
|
7,929(4)
|
|
|
|
89,201
|
|
|
|
|
2/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
14,767(5)
|
|
|
|
166,129
|
|
|
|
|
2/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
15,858(6)
|
|
|
|
178,403
|
|
|
|
|
2/25/2015
|
|
|
|
7,532
|
|
|
|
84,735
|
|
|
|
7,532(4)
|
|
|
|
84,735
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
8,515(5)
|
|
|
|
95,794
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
15,064(6)
|
|
|
|
169,470
|
|
|
|
|
|
|
|
|
26,612
|
|
|
|
299,385
|
|
|
|
69,665
|
|
|
|
783,732
|
|
Kramer
|
|
|
2/26/2014
|
|
|
|
6,407
|
|
|
|
72,079
|
|
|
|
6,407(4)
|
|
|
|
72,079
|
|
|
|
|
2/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
11,933(5)
|
|
|
|
134,246
|
|
|
|
|
2/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
12,814(6)
|
|
|
|
144,158
|
|
|
|
|
2/25/2015
|
|
|
|
6,277
|
|
|
|
70,616
|
|
|
|
6,277(4)
|
|
|
|
70,616
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
7,096(5)
|
|
|
|
79,830
|
|
|
|
|
2/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
12,554(6)
|
|
|
|
141,233
|
|
|
|
|
|
|
|
|
12,684
|
|
|
|
142,695
|
|
|
|
57,081
|
|
|
|
642,162
|
|
ATI
2016 Proxy Statement
/
73
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END FOR 2015
|
|
|
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, and (ii) awards under each of the LTPP-TSR and LTPP-LTSV for the performance measurement periods ending in 2016 and
2017. Half of the PRSP shares awarded in each of the years 2012 and 2013 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 and 2018, respectively, generally subject to the continued employment of the participant.
|
(2)
|
Consists of shares of time-based restricted stock under the PRSP. 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. With respect to the 2014 and 2015 PRSP grants, such shares may vest earlier upon the Companys achievement of a cumulative net income target during the applicable performance measurement period.
|
(3)
|
Amounts were calculated using $11.25 per share, the closing price of Company Common Stock at December 31, 2015.
|
(4)
|
Consists of shares of performance-based restricted stock under the PRSP. The number of shares reported represents the number of shares that would be awarded if the applicable performance measures under the PRSP grants
made in 2014 and 2015 are met at the end of their respective three-year performance measurement periods.
|
(5)
|
Represents the number of shares that would be awarded if the next higher performance measure (threshold, target, or maximum) was achieved under the LTPP-TSR. In accordance with applicable SEC rules and interpretations,
for the 2014-2016 and 2015-2017 performance measurement periods, performance is disclosed at target because TSR performance for the award periods ended December 31, 2015 was below target.
|
(6)
|
Consists of shares of performance-based restricted stock under the LTPP-LTSV. The number of shares reported represents the number of shares that would be awarded if all applicable performance measures under the LTSV
grants made in 2014 and 2015 are met at the end of the applicable three-year performance measurement period.
|
Option Exercises and Stock Vested for 2015
|
|
|
|
|
|
|
Stock Awards
|
Name
|
|
Number of
Shares
Acquired
on Vesting
(#)(1)
|
|
Value
Realized
on Vesting
($)
|
Harshman
|
|
0
|
|
0
|
DeCourcy
|
|
0
|
|
0
|
Dalton
|
|
0
|
|
0
|
Sims
|
|
0
|
|
0
|
Kramer
|
|
0
|
|
0
|
The Company does not issue stock option awards and has not issued stock options to its employees since 2003.
(1)
|
No shares were earned or paid under the 2013-2015 TSRP plan because Company performance was below threshold, at the 33
rd
percentile. Half of the PRSP shares granted
to the NEOs (other than Mr. Kramer) in 2013 were forfeited because the performance criteria were not met; the remaining half of the shares granted will vest in February 2018.
|
Pension Benefits for 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Years of
Credited
Service
(#)(2)
|
|
|
Present
Value of
Accumulated
Benefit
($)
|
|
|
Payments
During Last
Fiscal Year
($)
|
|
Harshman
|
|
ATI Pension Plan
|
|
|
28
|
|
|
|
2,156,646
|
|
|
|
|
|
|
|
ATI Benefit Restoration Plan
|
|
|
21
|
|
|
|
8,624,832
|
|
|
|
|
|
|
|
Supplemental Pension Plan
|
|
|
10
|
|
|
|
3,520,801
|
|
|
|
|
|
DeCourcy
|
|
ATI Pension Plan
|
|
|
8
|
|
|
|
244,426
|
|
|
|
|
|
|
|
ATI Non-Qualified Benefit Restoration Plan
|
|
|
8
|
|
|
|
219,569
|
|
|
|
|
|
Dalton
|
|
ATI Pension Plan
|
|
|
33
|
|
|
|
1,519,173
|
|
|
|
|
|
|
|
ATI Non-Qualified Benefit Restoration Plan
|
|
|
33
|
|
|
|
3,846,718
|
|
|
|
|
|
Sims
|
|
ATI Pension Plan
|
|
|
17
|
|
|
|
543,509
|
|
|
|
|
|
|
|
ATI Non-Qualified Benefit Restoration Plan
|
|
|
17
|
|
|
|
1,295,913
|
|
|
|
|
|
Kramer
(1)
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
2016 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
PENSION BENEFITS FOR 2015
|
|
|
|
|
|
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, Dalton and Sims, at the time
the respective companies became members of the controlled group that includes the Company. Mr. DeCourcys 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, Dalton 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 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Registrant
Contributions
In Last FY
($)
(1)
|
|
|
Aggregate
Earnings
In Last FY
($)
(2)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
|
Aggregate
Balance
at Last FYE
($)
|
|
Harshman
|
|
|
205,187
|
|
|
|
41,875
|
|
|
|
|
|
|
|
1,962,745
|
|
DeCourcy
|
|
|
52,429
|
|
|
|
2,299
|
|
|
|
|
|
|
|
107,763
|
|
Dalton
|
|
|
82,124
|
|
|
|
(26,942
|
)
|
|
|
|
|
|
|
673,112
|
|
Sims
|
|
|
66,118
|
|
|
|
1,840
|
|
|
|
|
|
|
|
86,245
|
|
Kramer
|
|
|
35,308
|
|
|
|
942
|
|
|
|
|
|
|
|
44,175
|
|
ATI
2016 Proxy Statement
/
75
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
NON-QUALIFIED DEFERRED COMPENSATION FOR 2015
|
|
|
(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 2015. Calculation also includes incremental adjustments in the account for the benefit of
Mr. Dalton under the Executive Deferred Compensation Plan, which ceased accepting new contributions from participants in 2003.
|
(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 2015, this rate was 2.18%.
|
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
2016 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
|
|
|
In addition to amounts accrued through the date of termination, an employee 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:
|
|
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, Dalton, Sims and Kramer);
|
|
|
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.
|
An employee eligible for severance 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, Dalton, Sims and Kramer; 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 or Change in Control
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. The amount of enhanced compensation payable to each NEO upon voluntary termination, retirement, involuntary not for cause termination, for cause termination, involuntary not for cause termination or
good reason termination by the executive within 24 months following a change in control, and in the event of disability or death of the executive, is shown as follows. The amounts shown assume that such termination was effective as of
December 31, 2015. The closing price of Company Common Stock on the NYSE on that date was $11.25. The amounts shown are estimates of the amounts that would be paid out to the executives upon their termination. 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
2016 Proxy Statement
/
77
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
|
|
|
Payments Made Upon Termination
Regardless of the manner in which a named executive officers 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 to (subject to the Companys consent for certain amounts):
|
|
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 31, 2015 closing price of $11.25 per share and all of the NEOs had a triggering event on December 31, 2015 and all cash amounts due, all deferred compensation enhancements, and all potential
benefit payments were to be paid in a single lump sum.
78
ATI
2016 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
|
|
|
POTENTIAL PAYMENTS UPON TERMINATION, RETIREMENT, DEATH, DISABILITY OR CHANGE IN CONTROL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard J. Harshman
($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefit and Payments
Upon Separation
|
|
Voluntary
Termination
|
|
|
Retirement
|
|
|
Involuntary Not
for Cause
Termination
|
|
|
For Cause
Termination
|
|
|
Involuntary Not
for Cause
Termination or Good
Reason Termination
by Executive
(w/in 24 months of
Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
|
Base
Severance:
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,180
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Short-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,095
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Long-Term Incentive
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
0
|
|
|
|
999
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,531
|
|
|
|
999
|
|
|
|
999
|
|
|
|
|
|
LTPP-TSR, TSRP
(1)
|
|
|
0
|
|
|
|
513
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,037
|
|
|
|
513
|
|
|
|
513
|
|
|
|
|
|
LTPP-LTSV
|
|
|
0
|
|
|
|
358
|
|
|
|
0
|
|
|
|
0
|
|
|
|
713
|
|
|
|
358
|
|
|
|
358
|
|
|
|
|
|
Other
Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified defined contribution
plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
302
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Non-qualified defined benefit plan
(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Health & Welfare Benefits
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
50
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Outplacement
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
25
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Supplemental Pension
Plan
(2)
:
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Total
|
|
|
0
|
|
|
|
1,870
|
|
|
|
0
|
|
|
|
0
|
|
|
|
17,933
|
|
|
|
1,870
|
|
|
|
1,870
|
|
|
|
|
|
(1) For all awards made under plans based on the Companys total stockholder return performance.
(2) The Company froze future benefit accruals under the
non-qualified defined benefit pension plan and the Supplemental Pension Plan effective December 31, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick J. DeCourcy
($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefit and Payments
Upon Separation
|
|
Voluntary
Termination
|
|
|
Retirement
|
|
|
Involuntary Not
for Cause
Termination
|
|
|
For Cause
Termination
|
|
|
Involuntary Not
for Cause
Termination or Good
Reason Termination
by Executive
(w/in 24 months of
Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
|
Base
Severance:
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
960
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Short-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,344
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Long-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
0
|
|
|
|
199
|
|
|
|
0
|
|
|
|
0
|
|
|
|
357
|
|
|
|
199
|
|
|
|
199
|
|
|
|
|
|
LTPP-TSR, TSRP
(1)
|
|
|
0
|
|
|
|
150
|
|
|
|
0
|
|
|
|
0
|
|
|
|
305
|
|
|
|
150
|
|
|
|
150
|
|
|
|
|
|
LTPP-LTSV
|
|
|
0
|
|
|
|
156
|
|
|
|
0
|
|
|
|
0
|
|
|
|
314
|
|
|
|
156
|
|
|
|
156
|
|
|
|
|
|
Other
Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified defined contribution
plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
91
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Non-qualified defined benefit plan
(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
213
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Health & Welfare Benefits
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
43
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Outplacement
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Total
|
|
|
0
|
|
|
|
505
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,642
|
|
|
|
505
|
|
|
|
505
|
|
|
|
|
|
(1) For all awards made under plans based on the Companys total stockholder return performance.
(2) The Company froze future benefit
accruals under the non-qualified defined benefit pension plan effective December 31, 2014.
|
|
|
|
ATI
2016 Proxy Statement
/
79
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hunter R. Dalton
($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefit and Payments
Upon Separation
|
|
Voluntary
Termination
|
|
|
Retirement
|
|
|
Involuntary Not
for Cause
Termination
|
|
|
For Cause
Termination
|
|
|
Involuntary Not
for Cause
Termination or Good
Reason Termination
by Executive
(w/in 24 months of
Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
|
Base
Severance:
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,020
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Short-Term Incentive Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,428
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Long-Term Incentive
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
0
|
|
|
|
314
|
|
|
|
0
|
|
|
|
0
|
|
|
|
486
|
|
|
|
314
|
|
|
|
314
|
|
|
|
|
|
LTPP-TSR, TSRP
(1)
|
|
|
0
|
|
|
|
168
|
|
|
|
0
|
|
|
|
0
|
|
|
|
337
|
|
|
|
168
|
|
|
|
168
|
|
|
|
|
|
LTPP-LTSV
|
|
|
|
|
|
|
175
|
|
|
|
0
|
|
|
|
0
|
|
|
|
348
|
|
|
|
175
|
|
|
|
175
|
|
|
|
|
|
Other
Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified defined contribution
plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
97
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Non-qualified defined benefit plan
(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
593
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Health & Welfare Benefits
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
43
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Outplacement
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Total
|
|
|
0
|
|
|
|
657
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,367
|
|
|
|
657
|
|
|
|
657
|
|
|
|
|
|
(1) For all awards made under plans based on the Companys total stockholder return performance.
(2) 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
|
|
Voluntary
Termination
|
|
|
Retirement
|
|
|
Involuntary Not
for Cause
Termination
|
|
|
For Cause
Termination
|
|
|
Involuntary Not
for Cause
Termination or Good
Reason Termination
by Executive
(w/in 24 months of
Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
|
Base
Severance:
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,020
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Short-Term Incentive
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,428
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Long-Term Incentive
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
0
|
|
|
|
301
|
|
|
|
0
|
|
|
|
0
|
|
|
|
473
|
|
|
|
301
|
|
|
|
301
|
|
|
|
|
|
LTPP-TSR, TSRP
(1)
|
|
|
0
|
|
|
|
168
|
|
|
|
0
|
|
|
|
0
|
|
|
|
337
|
|
|
|
168
|
|
|
|
168
|
|
|
|
|
|
LTPP-LTSV
|
|
|
0
|
|
|
|
175
|
|
|
|
0
|
|
|
|
0
|
|
|
|
348
|
|
|
|
175
|
|
|
|
175
|
|
|
|
|
|
Other
Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified defined contribution
plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
97
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Non-qualified defined benefit plan
(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
757
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Health & Welfare Benefits
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
43
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Outplacement
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Total
|
|
|
0
|
|
|
|
644
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,518
|
|
|
|
644
|
|
|
|
644
|
|
|
|
|
|
(1) For all awards made under plans based on the Companys total stockholder return performance.
(2) The Company froze future benefit
accruals under the non-qualified defined benefit pension plan effective December 31, 2014.
|
|
|
|
80
ATI
2016 Proxy Statement
|
|
|
|
|
|
|
COMPENSATION DISCUSSION AND
ANALYSIS |
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin B. Kramer
($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefit and Payments
Upon Separation
|
|
Voluntary
Termination
|
|
|
Retirement
|
|
|
Involuntary Not
for Cause
Termination
|
|
|
For Cause
Termination
|
|
|
Involuntary Not
for Cause
Termination or Good
Reason Termination
by Executive
(w/in 24 months of
Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
|
Base
Severance:
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
850
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Short-Term Incentive
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,190
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Long-Term Incentive
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSP
|
|
|
0
|
|
|
|
143
|
|
|
|
0
|
|
|
|
0
|
|
|
|
285
|
|
|
|
143
|
|
|
|
143
|
|
|
|
|
|
LTPP-TSR
|
|
|
0
|
|
|
|
137
|
|
|
|
0
|
|
|
|
0
|
|
|
|
277
|
|
|
|
137
|
|
|
|
137
|
|
|
|
|
|
LTPP-LTSV
|
|
|
0
|
|
|
|
143
|
|
|
|
0
|
|
|
|
0
|
|
|
|
285
|
|
|
|
143
|
|
|
|
143
|
|
|
|
|
|
Other
Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified defined contribution
plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
81
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Health & Welfare Benefits
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
42
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Outplacement
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Total
|
|
|
0
|
|
|
|
423
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,025
|
|
|
|
423
|
|
|
|
423
|
|
|
|
|
|
|
|
|
|
ATI
2016 Proxy Statement
/
81
Item 4
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, 2016, 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 2015 and 2014.
Independent Auditor: Services and Fees
The
fees and expenses of Ernst & Young for the indicated services performed during 2015 and 2014 were as follows:
|
|
|
|
|
|
|
|
|
Service
|
|
2015
|
|
|
2014
|
|
Audit fees
|
|
$
|
3,944,000
|
|
|
$
|
3,592,000
|
|
Audit-related fees
|
|
|
12,000
|
|
|
|
14,000
|
|
Tax fees
|
|
|
0
|
|
|
|
0
|
|
All other fees
|
|
|
2,000
|
|
|
|
2,000
|
|
Total
|
|
$
|
3,958,000
|
|
|
$
|
3,608,000
|
|
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.
82
ATI
2016 Proxy Statement
|
|
|
|
|
|
|
ITEM 4 RATIFICATION 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,
2015.
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, 2015 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
2016 Proxy Statement
/
83
Annual Meeting Information
2016 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 16
.
1.
|
Where is the 2016 annual meeting being held?
|
The 2016 Annual Meeting of
Stockholders will be held on Friday, May 6, 2016, at 11:00 a.m. Pacific Time in the Sequoia Ballroom of The Fairmont Newport Beach Hotel, 4500 MacArthur Boulevard, Newport Beach, California, 92660. We are holding the annual meeting in
California near the ATI Forged Products facility in Irvine, California.
2.
|
Who is entitled to vote at the annual meeting?
|
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 9, 2016, you may vote your shares at the annual meeting. On that day, 108,912,564 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.
|
How do I cast my vote?
|
There are four different ways you may cast your vote. You
may vote by:
|
|
telephone,
using the toll-free number listed on each proxy or voting instruction card;
|
|
|
the
Internet,
at the web address provided on each proxy or voting instruction card;
|
|
|
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
|
|
|
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).
|
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 5, 2016.
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 14 below.
84
ATI
2016 Proxy Statement
|
|
|
|
|
|
|
ANNUAL MEETING
INFORMATION |
2016 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS AND ANSWERS
|
|
|
4.
|
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
|
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.
|
How many votes can be cast by all stockholders?
|
Each share of ATI Common Stock is
entitled to one vote. There is no cumulative voting. We had 108,912,564 shares of Common Stock outstanding and entitled to vote on the record date.
6.
|
How many votes must be present to hold the annual meeting?
|
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.
|
How many votes are required to elect directors (Item 1)?
|
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.
ATI
2016 Proxy Statement
/
85
|
|
|
|
|
|
|
ANNUAL MEETING
INFORMATION |
2016 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS AND ANSWERS
|
|
|
Full details of our director resignation policy are set forth in our Bylaws, which are available on our website at
www.atimetals.com
.
8.
|
How many votes are required to amend the Companys Certificate of Incorporation to declassify the board of directors (Item 2)?
|
For Item 2 (amendments to our Certificate of Incorporation to declassify the Board of Directors), the affirmative vote of the holders of at least 75% of the shares
of ATI Common Stock outstanding and entitled to vote is necessary for approval. If your shares are represented at the Annual Meeting but you abstain from voting on Item 2, your shares will be counted as present and entitled to vote on
Item 2 for purposes of establishing a quorum, and the abstention will have the same effect as a vote AGAINST that Item. Similarly, broker non-votes will have the same effect as votes AGAINST Item 2 (see question 10
below).
9.
|
How many votes are required to adopt the other proposals (Items 3 and 4)?
|
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 Item 3 (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.
10.
|
What if I dont give specific voting instructions?
|
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:
|
|
in accordance with the recommendations of the Board of Directors on all matters presented in this Proxy Statement; and
|
|
|
as the proxy holders may determine in their discretion regarding any other matters properly presented for a vote at the meeting.
|
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 2016 (Item 4) 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.
86
ATI
2016 Proxy Statement
|
|
|
|
|
|
|
ANNUAL MEETING
INFORMATION |
2016 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS AND ANSWERS
|
|
|
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 and 4, which each require the affirmative vote of a majority of the shares present and entitled to vote.
11.
|
How do I revoke or change my vote?
|
You may revoke your proxy or change your vote at
any time before it is voted at the meeting by:
|
|
notifying the Corporate Secretary at ATIs executive office;
|
|
|
transmitting a proxy dated later than your prior proxy, either by mail, telephone or Internet; or
|
|
|
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).
|
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.
12. What shares are included on the proxy or voting instruction
card?
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 14 for an explanation of the voting procedures for shares in the Companys savings or retirement plans.
13. What does it mean if I receive more than one proxy or voting
instruction card?
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.
14. How are shares that I hold in a company savings or retirement
plan voted?
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 2,
2016.
15.
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Is my vote confidential?
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ATI maintains a policy of keeping stockholder votes
confidential.
ATI
2016 Proxy Statement
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87
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ANNUAL MEETING
INFORMATION |
2016 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS AND ANSWERS
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16. 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
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.
17.
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What is householding?
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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.
88
ATI
2016 Proxy Statement
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ANNUAL MEETING
INFORMATION |
2017 ANNUAL MEETING AND STOCKHOLDER PROPOSALS
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2017 Annual Meeting and Stockholder Proposals
Stockholder proposals submitted for inclusion in the proxy statement and form of proxy relating to the 2017 Annual Meeting of Stockholders must be received no later
than November 28, 2016. 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 ATI Corporate 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.
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
2016 Proxy Statement
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ANNUAL MEETING
INFORMATION |
OTHER INFORMATION
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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 28, 2016
90
ATI
2016 Proxy Statement
Appendix A
CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF ALLEGHENY TECHNOLOGIES INCORPORATED
ALLEGHENY TECHNOLOGIES INCORPORATED (the Corporation), a corporation organized and existing under and by virtue of the General Corporation Law of the State
of Delaware, DOES HEREBY CERTIFY:
FIRST:
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That a resolution was adopted by the Board of Directors of the Corporation duly setting forth the proposed amendment of the Restated Certificate of Incorporation of the Corporation, declaring said amendment to be
advisable and directing that it be submitted to the stockholders of the Corporation for approval and adoption. The resolution setting forth the proposed amendment is as follows:
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RESOLVED, that ARTICLE TEN of the Corporations Restated Certificate of Incorporation shall be amended to read in its entirety as follows:
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TEN: (A) Except as otherwise fixed pursuant to the provisions of Article FOUR hereof relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends
or upon liquidation to elect additional directors under specified circumstances, the number of directors of the Corporation shall be fixed from time to time by the affirmative vote of a majority of the whole Board of Directors. Until the election of
directors at the annual meeting of stockholders held in 2019, the Board of Directors, other than those directors who may be elected by the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon
liquidation, shall be classified, with respect to the time for which they severally hold office, into three classes, designated Class I, Class II and Class III. The terms of office of the classes of directors shall be as follows: the Class I
Directors shall hold office for a term to expire at the annual meeting of stockholders held in 2018; the Class II Directors shall hold office for a term to expire at the annual meeting of stockholders held in 2019; and the Class III Directors shall
hold office for a term to expire at the annual meeting of stockholders held in 2017; and, in the case of each class, shall serve until their respective successors are duly elected and qualified or until their respective earlier resignations or
removals. Commencing with the annual meeting of stockholders held in 2017, successors to the Class of directors whose terms expire at such meeting shall be elected to hold office for terms expiring at the next succeeding annual meeting of
stockholders, and shall serve until their respective successors have been duly elected and qualified or until their respective earlier resignations or removals; provided, however, that any director elected or appointed prior to the annual meeting of
stockholders held in 2017 shall complete the term to which such director has been elected or appointed, and until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. The division of directors into
classes shall terminate upon the election of directors at the annual meeting of stockholders held in 2019, and all directors shall be elected to hold office for terms expiring at the next succeeding annual meeting of stockholders and shall serve
until their respective successors have been duly elected and qualified or until their respective earlier resignations or removals.
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(B) Except as otherwise fixed pursuant to the provisions of Article FOUR hereof relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors:
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(a) In case of any increase in the number of directors, the additional director or directors, and in
case of any vacancy in the Board of Directors due to death, resignation, removal, disqualification or any other reason, the successors to fill the vacancies, shall be elected only by a majority of the directors then in office, even though less than
a quorum, or by a sole remaining director and not by the stockholders, unless otherwise provided by law or by resolution adopted by a majority of the whole Board of Directors.
ATI
2016 Proxy Statement
/
A-1
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APPENDIX A
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CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF ALLEGHENY TECHNOLOGIES INCORPORATED
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(b) Any director appointed in the manner provided in paragraph (a) due to a vacancy on the
Board of Directors resulting from the death, resignation, removal or disqualification of a prior director, or any other failure of a prior director to continue his or her term as a director, shall hold office for the unexpired term of his or her
predecessor in office and shall remain in office until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. Any director appointed in the manner provided in paragraph (a) to a newly created
directorship resulting from any increase in the authorized number of directors shall hold office for a term expiring at the next annual meeting of stockholders and shall remain in office until his or her successor is duly elected and qualified or
until his or her earlier resignation or removal.
(c) No decrease in the number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.
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(C) Except as otherwise fixed pursuant to the provisions of Article FOUR hereof relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors, any director or directors (i) serving in a class of directors for a term expiring at the third annual meeting of stockholders following the election of such class may be removed from office at any time, but only
for cause, and (ii) serving for a term expiring at the next succeeding annual meeting of stockholders may be removed from office at any time, with or without cause; provided, however, that in any case any such removal pursuant to this Article
10(C) shall be only by the affirmative vote of 75% of the Voting Power, voting together as a single class.
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SECOND:
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Pursuant to a resolution of its Board of Directors, a meeting of stockholders of the Corporation was duly called and held on May 6, 2016, upon notice in accordance with Section 222 of the Delaware General
Corporation Law, at which meeting the necessary number of shares as required by statute were voted in favor of said amendment.
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THIRD:
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That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
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A-2
ATI
2016 Proxy Statement
Our Core Values
While we believe that change is
constant, one thing will not change. As we continue on our journeyBuilding the Worlds Best Specialty Materials Components Companywe 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.
We expect everyone to be treated with dignity and respect and we embrace the values of innovation, cooperation, accountability, and teamwork.
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.
Safety, Health and Sustainability are the prerequisites to all operations, and our goal is to finish each day incident- and injury-free.
Product Quality and Excellence is demonstrated in everything we do.
Diversity, Creativity, Learning, and Freedom of people to reach their individual potential is ATIs culture.
Our commitment to Do Whats Right® continues to guide us throughout our global operations and business activities.
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Admission Ticket
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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, 2016.
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Vote by Internet
Go to
www.envisionreports.com/ati
Or
scan the QR code with your smartphone
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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Follow the instructions provided by the recorded
message
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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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x
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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.
▼
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A
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Proposals The Board of Directors recommends a vote
FOR
all the nominees listed and
FOR
Proposals 2, 3 and 4.
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Election of Class II Directors:
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01 - Richard J. Harshman
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02 - Carolyn Corvi
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03 - Barbara S. Jeremiah
04 - John D. Turner
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¨
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Mark here to vote
FOR
all nominees
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¨
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Mark here to
WITHHOLD
vote from all nominees
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¨
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For All
EXCEPT
- To withhold authority to vote for any
nominee(s),
write the name(s) of such nominee(s) below.
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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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2.
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Approval of amendments to the Companys Certificate of Incorporation to declassify the Board of Directors.
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4.
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Ratification of the selection of Ernst & Young LLP as independent auditors for 2016.
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3.
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Advisory vote to approve the compensation of the Companys named executive officers.
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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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02AMZA
2016 Annual Meeting Admission Ticket
2016 Annual Meeting of
Allegheny Technologies Incorporated Stockholders
Friday, May 6, 2016
11:00 a.m. Pacific Time
The Fairmont Newport Beach Hotel
Sequoia Ballroom
4500
MacArthur Boulevard
Newport Beach, California 92660
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 2016 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 2015 Annual Report to Stockholders are available
at:
www.envisionreports.com/ati
▼
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
▼
Proxy Allegheny Technologies Incorporated
Proxy for 2016 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 Marissa P. Earnest 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 6, 2016, 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, 3 and 4, 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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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 2, 2016.
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Vote by Internet
Go to
www.envisionreports.com/ati
Or scan the
QR code with your smartphone
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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Follow the instructions provided by the recorded message
|
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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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x
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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.
▼
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A
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Proposals The Board of Directors recommends a vote
FOR
all the nominees listed and
FOR
Proposals 2, 3 and 4.
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1.
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Election of Class II Directors:
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+
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01 - Richard J. Harshman
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02 - Carolyn Corvi
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03 - Barbara S. Jeremiah
04 - John D. Turner
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¨
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Mark here to vote
FOR
all nominees
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¨
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Mark here to
WITHHOLD
vote from all nominees
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¨
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For All
EXCEPT
- To withhold authority to vote for any
nominee(s),
write the name(s) of such nominee(s) below.
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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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2.
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Approval of amendments to the Companys Certificate of Incorporation to declassify the Board of Directors.
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¨
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¨
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¨
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4.
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Ratification of the selection of Ernst & Young LLP as independent auditors for 2016.
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¨
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¨
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¨
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3.
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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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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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¢
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Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan
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The ATI 401(k) Savings Plan
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ATI Precision Finishing, LLC Employees 401(k) and Profit Sharing Plan
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Allegheny Technologies Retirement Savings Plan
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ATI Ladish Co., Inc. Hourly Savings and Deferral Investment Plan
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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 2, 2016. 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 2015 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.
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Voting Instruction Card for 2016 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 6, 2016 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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