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EXHIBIT 10.19
[ALLEGHENY TECHNOLOGIES logo]
INFORMATION STATEMENT
FOR AWARDS GRANTED UNDER THE
TOTAL SHAREHOLDER RETURN
INCENTIVE COMPENSATION PROGRAM
OF THE
ALLEGHENY TECHNOLOGIES INCORPORATED
2000 INCENTIVE PLAN
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This document constitutes part of a Prospectus
covering securities that have been registered
under the Securities Act of 1933.
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Neither the Securities and Exchange
Commission nor any state securities
commission has approved or disapproved of
these securities or passed upon the
accuracy or adequacy of this Prospectus.
Any representation to the contrary is a
criminal offense.
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January 1, 2003
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NAME OF PROGRAM: Allegheny
Technologies Incorporated (the
"Company") Total Shareholder Return Incentive
Compensation Program ("TSRP" or the "Program").
PURPOSE:
The primary purposes of the TSRP are to:
(i) reward senior executives for the overall
success of the Company as determined by the value
created for stockholders relative to peer
companies; and (ii) provide a means of
encouraging Company stock ownership by senior
executives.
PERFORMANCE PERIOD: A performance period under
the TSRP is three
years. The initial performance period began
January 1, 2001 and will end December 31, 2003.
GRANT FREQUENCY: It is
anticipated that a new performance period
will begin every year,
which will create
overlapping performance periods.
TSRP STRUCTURE: Each
participant will be assigned a target number
of shares. Participants can earn from 50%
(at threshold)
to 200% (at maximum) of their target
shares based on performance. Performance below threshold
will earn 0%.
SIZE OF AWARDS:
Target awards will be established for each
participant, according to the following schedule:
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TARGET AWARDS AS
POSITION
PERCENT OF SALARY
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CEO
60%
Segment Executives, Selected Corporate
Officers
50%
Other Corporate Officers, Selected
Business Unit Heads
40%
Selected Business Unit General Managers
30%
Targeted Awards will be calculated
according to the following formula:
<TABLE>
<S>
<C>
Base Salary at
x Target Opportunity / Average Closing Price For
= Target
Beginning of
As a Percent of Salary 30 Trading Days Prior to
Number
of
Performance Period
Beginning of Three-Year
Shares
Performance Period
Awarded
</TABLE>
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PERFORMANCE MEASURE: Performance under the TSRP is
calculated as a function of
the percentile ranking of ATI's total shareholder return
during the performance period (TSR) versus a peer group
composed of Companies selected at the beginning of the
performance period. For the 2003 - 2005 performance
period, the peer companies shall be the companies
identified in Appendix A.
TSR is the return that a shareholder realizes through
stock price appreciation and dividend reinvestment on an
equity instrument throughout a specified period. The
return for a period is calculated as the stock price at
the end of a period plus the dividends paid during the
measurement period divided by the stock price at the
beginning of the performance period.
TSRP PAYOUTS:
TSRP payouts are equal to:
Target award
x Percent of target
earned from peer group percentile
ranking in TSR
PERFORMANCE GOALS: The following table shows the
performance reward
relationships for the TSRP:
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OUTCOME RELATIVE TO PEER GROUP TSR
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THREE-YEAR PERCENTILE PERCENT OF
TARGET
LEVEL OF PERFORMANCE RANKING IN TSR
AWARD EARNED
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Below Threshold
Below 35th percentile
0%
Threshold
35th percentile
50%
Target
50th percentile
100%
Excellent
75th percentile
200%
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NOTE: Interpolation between points will be made on a
straight-line basis on each scale. Below the 35th
percentile (and above the 75th percentile), there will be
no interpolation.
DIVIDENDS:
No dividends will be paid on shares that are not yet
earned.
FORM AND TIMING OF All payouts from the
TSRP will be made in Company Common
PAYOUT:
Stock, as soon as practicable following the award
calculation; however, stock may be withheld in order to
satisfy tax withholding requirements.
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CERTAIN TERMINATIONS In the event of a participant's
death, disability, or
OF EMPLOYMENT:
retirement (when the executive is at least 55 years of age
with at least five years of service), pro rata awards
based on the number of full months worked during that
performance period will be calculated. Such awards will be
based on goal achievement over the entire performance
period. Awards in these situations will be calculated and
paid after the end of the performance period.
Amounts paid on account of death will be paid to a
beneficiary designated by the participant. If no
beneficiary has been designated, amounts will be paid to
the participant's estate.
OTHER TERMINATIONS In the event of a
termination of employment not
OF EMPLOYMENT:
constituting a disability, death or retirement discussed
above, the participant will forfeit any right to any
payout for all performance periods in progress under the
TSRP. For terminations after the end of a performance
period, however, but before payout, payout will be made as
though the termination had not occurred.
TAX CONSIDERATIONS: The employee must report
taxable income in the year in
which the award is paid.
TAX WITHHOLDING: The
Company has the right to deduct any taxes or statutory
deductions required by law to be withheld from all
payments under the TSRP. See "Certain Federal Income Tax
Consequences" below.
CHANGE IN
The number and kind of shares subject to outstanding
CAPITALIZATION:
awards will be appropriately adjusted to reflect any stock
dividend, stock split, combination or exchange of shares,
merger, consolidation or other change in capitalization
with a similar substantive effect upon the TSRP or the
awards granted under the TSRP. The Committee shall have
the power and sole discretion to determine the amount of
the adjustment to be made in each case.
CHANGE IN CONTROL: If a Change in Control
(as defined in the TSRP) is deemed
to have occurred, then all outstanding award cycles will
automatically vest and be paid out (with the consent of
the Committee, in cash) at the target level or the actual
performance level (as of the Change in Control), whichever
is larger.
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GENERAL INFORMATION ABOUT THE INCENTIVE
PLAN AND THE TSRP
The Allegheny Technologies Incorporated
2000 Incentive Plan (the "INCENTIVE
PLAN") was adopted by the Company's Board
of Directors on January 31, 2000 and
was approved by the Company's stockholders
on May 11, 2000. The purpose of the
Incentive Plan is to help attract and
retain key employees and promote their
commitment to achieving long-term corporate
objectives.
The Incentive Plan enables the Company to
award various types of stock-based
compensation. The following summary covers
the terms of the Incentive Plan that
relate to awards made by the Committee
under the TSRP. Because it is a summary,
it may not contain all the information that
could be important to you. A copy of
the complete text of the TSRP is attached
to this Information Statement as
Appendix A.1 and incorporated herein by
reference. At your request, the Company
will provide you with a copy of the
complete text of the Incentive Plan without
charge. See "Where You Can Find More
Information."
ADMINISTRATION
The Personnel and Compensation Committee of
the Company's Board of Directors
administers the Incentive Plan with respect
to participants in the Incentive
Plan other than persons who are subject to
the provisions of Section 16 of the
Securities and Exchange Act of 1934
("STATUTORY INSIDERS"). The Stock Incentive
Award Subcommittee of the Personnel and
Compensation Committee administers the
Incentive Plan as it applies to the
Company's statutory insiders. (The Stock
Incentive Award Subcommittee and the
Personnel and Compensation Committee are
referred to in this Information Statement
as the "COMMITTEE").
The Committee has full authority to
interpret the Incentive Plan, designate
eligible participants and categories of
eligible participants, set the terms and
conditions of performance awards and
establish and modify administrative rules
for the Incentive Plan. In addition, the
Board of Directors may exercise any of
the powers and authority of the Committee
under the Incentive Plan. The
Committee is comprised of directors who are
appointed by and serve at the
pleasure of the Company's Board of
Directors.
ELIGIBILITY
You are eligible to receive awards under
the Incentive Plan if you are an
officer or key employee of the Company or
its subsidiaries who has been
designated as a participant by the
Committee in its sole discretion.
STOCK SUBJECT TO THE INCENTIVE PLAN
The Company may issue a maximum of up to
10% of its outstanding shares of Common
Stock under the Incentive Plan. The
Committee may adjust this number in certain
instances.
The Common Stock offered under the
Incentive Plan may be either authorized and
unissued shares or issued shares that the
Company has reacquired and holds in
its treasury. If for any reason an award
terminates or expires, the shares of
Common Stock covered by the award will
again be available for the grant of new
awards under the Incentive Plan.
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THE TOTAL SHAREHOLDER RETURN INCENTIVE
COMPENSATION PROGRAM
The Committee adopted Administrative Rules
under the Incentive Plan, effective
as of January 1, 2001, that establish the
TSRP.
PROGRAM ELIGIBILITY
The Committee has the sole discretion to
designate those executives and senior
managers who it believes most directly
effect the Company's long-term success as
eligible for the Program. The Committee
makes these determinations and
designations based on the recommendations
of the Company's Chief Executive
Officer (the "CEO").
AWARD AGREEMENTS
The terms and conditions of an Award, as
established by the Committee, are set
forth in a total shareholder return
incentive compensation award agreement
between the Company and the participant who
has been granted the Award. These
agreements need not contain similar
provisions with respect to Awards made to
different participants or Awards made to
the same participant at different
times.
Each award agreement describes:
o The performance period
for measuring the achievement of performance
objectives, in
whole or in part;
o the performance levels
for the TSRP, including the target level of
performance, to
be achieved during the performance period, and the number
of shares of
Common Stock available to the participant upon achieving the
target level of
performance (the "TARGET AWARD"); and
o the applicable
percentage of the target award that will be paid depending
on the extent to
which the target level of performance is fully or
partially
achieved or surpassed (the "PERCENT OF TARGET AWARD EARNED").
For the 2003-2005 performance period, the
maximum Award, equal to 200% of your
target award, is payable if the Company's
three year percentile ranking in TSR
is at or above the 75th percentile of the
applicable peer group. No Award is
paid if the Company's three-year percentile
ranking in TSR is below the 35th
percentile.
PAYMENT OF AWARDS
After the end of the award period, the
Committee determines the number of shares
of Common Stock, if any, to be paid based
on the extent to which the target
level of performance was fully or partially
achieved or surpassed. All payouts
will be made as soon as practicable
following the award calculation. Generally,
however, you will forfeit your right to
payment of any Award under the TSRP
unless you are continuously an employee of
the Company or any of its affiliates
from the date of grant of the Award to the
date of payment. There are
exceptions, however, in the case of
retirement, disability or death, as
described above.
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You do not have the right to vote or
receive dividends on the shares or have any
other rights of a stockholder with respect
to the shares, unless and until the
shares are issued to you.
NONASSIGNABILITY
Awards under the Program are not
transferable other than by will or by laws of
descent and distribution. During your
lifetime, Awards are payable only to you.
AMENDMENT AND TERMINATION
The Incentive Plan will remain in effect
until terminated by the Board of
Directors. The Board may at any time amend
or terminate the Incentive Plan or
the TSRP. Without your consent, no such
action may materially impair your rights
with respect to awards previously granted
to you.
MISCELLANEOUS
The Committee has the discretion to suspend
the payment of an Award if it
determines that any of the following
actions are necessary or desirable:
o any listing or
registration of the shares of Common Stock;
o obtaining any consent or
approval of any governmental body; or
o obtaining any other
agreement or consent.
In that situation, the Award will be
suspended until the Committee is satisfied
that the applicable action has been
completed in a manner satisfactory to the
Committee.
Also, neither your selection for
participation in the Program nor the execution
of an award agreement will require the
Company to retain your services for any
period of time.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
This section summarizes the United States
federal income tax consequences as of
the date of this Information Statement to a
participant who is a United States
citizen with respect to shares of Common
Stock that may be received as payment
of an Award under the Program. THE COMPANY
URGES YOU TO CONSULT YOUR PERSONAL
TAX ADVISOR WITH RESPECT TO THE APPLICATION
OF THE FEDERAL INCOME TAX LAWS TO
YOUR PERSONAL CIRCUMSTANCES, CHANGES IN
THESE LAWS, AND THE POSSIBLE EFFECT OF
OTHER TAXES.
GENERAL INFORMATION
Payment of Awards will result in ordinary
income to you in the years in which
the shares of Common Stock are paid to you.
The taxable amount is the fair
market value (as defined in the Program) of
the shares. If you sell the shares
you received in payment of an Award, the
difference between any amount realized
on the sale and the fair market value of
these shares at the time they were paid
to you will be taxed as capital gain or
loss, which will be short-term or
long-term, depending on the length of time
you held these shares before sale.
The holding period for determining
short-term or long-term capital gains or
losses begins on the date of payment of an
Award.
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TAX RATES
The Award will be treated as supplemental
wages that require a minimum of 27%
federal income tax withholding. You should
also bear in mind that the federal
income tax rate on capital gains from sales
of property held for less than 12
months (short-term capital gains) generally
is the same as your maximum ordinary
income rate (maximum marginal federal rate
for 2003 is 38.6%). Also, the tax
rate on capital gains from sales of capital
assets held for more than 12 months
(long-term capital gains) is generally 20%.
The capital gains rate applicable to
property acquired after December 31, 2000
and held for more than five years is
generally 18%. State income taxes generally
apply to the Award and the
subsequent sale of the shares, and local
income taxes may also be applicable.
TAX WITHHOLDING
When payments are made to you of amounts
awarded under the Program, the Company
will notify you of the amount of
withholding taxes, if any, which must be paid
under federal, state or local law. The
Company may, with the consent of the
Committee, arrange for payment of the
withholding taxes in any one or
combination of the following ways:
o accepting your cash
payment of the amount;
o reducing the number of
shares to be issued to you under the Program by the
whole number of
shares having a fair market value (as defined in the
Program) equal
to or greater than the amount the Company is required to
withhold.
No shares of Common Stock will be delivered
to you under the Program until all
applicable taxes have been paid in
full.
RESELLING SHARES
The Program and the Incentive Plan
generally do not impose restrictions upon the
resale of Common Stock that you acquire
under the Program. However, under
certain circumstances, the Company may
refuse to issue shares in connection with
the Incentive Plan until it is satisfied
that you have complied with applicable
laws.
RESELLING BY AFFILIATES
Under the federal securities laws, if you
are deemed to be an "affiliate" of the
Company, you are restricted in the resale
of your Common Stock (whether acquired
under the Incentive Plan or otherwise). For
this purpose, an "affiliate" of the
Company is any person who controls the
Company, is controlled by the Company, or
is under common control with the Company,
whether directly or indirectly through
one or more intermediaries. A corporation's
"affiliates" would usually include
all persons whose security holdings are
substantial enough to affect the
corporation's management. Also, all
statutory insiders are presumed to be
"affiliates."
In general, unless specifically registered
for resale, shares owned by
affiliates can be sold only in compliance
with Rule 144 of the Securities and
Exchange Commission or another applicable
exemption from registration. Among
other things, Rule 144 imposes limitations
on the amount of securities sold by
an affiliate in any three-month period and
requires that sales be conducted
through a broker.
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SECTION 16 - RESTRICTIONS ON STATUTORY
INSIDERS
In addition, if you are subject to the
provisions of Section 16 of the
Securities Exchange Act - a "statutory
insider" of the Company - you must comply
with the reporting and short-swing profit
forfeiture provisions of that Section.
Section
