SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant / x /
Filed by a Party other than the Registrant / /
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e) (2))
/ x / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or
240.14a-12
Aluminum Company of America
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than
Registrant)
Payment of Filing Fee (Check the appropriate box):
/ x / No fee required.
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i) (4) and 0-11.
1) Title of each class of securities to which
transaction applies:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth in the amount on which the
filing fee is calculated and state how it was
determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule
and the date of its filing.
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1997 Notice of Annual Meeting and
Proxy Statement
To Alcoa Shareholders:
It is my privilege to invite you to the 1997 annual meeting
of Alcoa shareholders. We will meet on Friday, May 9, at
9:30 a.m. in the Westin William Penn Hotel in Pittsburgh,
Pennsylvania. I hope you will be able to attend and
participate in this review of your company's business and
operations.
The Westin William Penn Hotel is fully accessible to
disabled persons. In addition, headsets for the hearing-
impaired will be available.
If you plan to attend the meeting, you will need an
admission ticket. Your admission ticket is attached to the
proxy card that accompanies this proxy statement for
registered shareholders. Other shareholders may obtain a
ticket by contacting the corporate secretary.
Whether or not you plan to attend, it is important that
your shares are represented at the meeting. Please fill out
and return your proxy card promptly.
Sincerely,
/s/ Paul H. O'Neill
Paul H. O'Neill
Chairman of the Board and
Chief Executive Officer
March 12, 1997
Alcoa
425 Sixth Avenue
Pittsburgh, Pennsylvania
15219-1850
Notice of 1997 Annual Meeting
March 12, 1997
The annual meeting of shareholders of Aluminum Company of
America (Alcoa) is scheduled for Friday, May 9, 1997 at 9:30
a.m. We will meet in the William Penn Ballroom of the Westin
William Penn Hotel in Pittsburgh, Pennsylvania.
The purposes of the meeting are:
(1) to elect three directors for a term of three years;
(2) to approve an amendment to the company's Long Term
Stock Incentive Plan under which stock options are
granted; and
(3) to consider any other matters that properly may come
before the meeting or any adjournment of the meeting.
Owners of common stock of record at the close of business
on February 10, 1997 will be entitled to vote at the meeting.
A quorum is required in order to conduct business at the
meeting. The quorum requirement will be satisfied if
shareholders entitled to cast a majority of the votes that
all shareholders are entitled to cast at the meeting are
present either in person or by proxy. If a quorum is not
present, the meeting may be adjourned to a time and place
determined by those shareholders who are present. If the
meeting is adjourned, the shareholders present at the next
meeting will constitute a quorum for the purpose of electing
directors. In the event that the meeting is adjourned for
one or more periods totaling at least 15 days, the
shareholders present at this latest meeting will constitute a
quorum for acting upon any matter to be voted on at the
meeting.
Your attention is directed to the following proxy statement
and the accompanying proxy card.
On behalf of Alcoa's Board of Directors,
/s/ Barbara Jeremiah
Barbara Jeremiah
Secretary
Contents
Proxy solicitation and voting information . . . . . . . . 4
Board of Directors . . . . . . . . . . . . . . . . . . . 4
Meetings and committees of the Board . . . . . . . . . 8
Certain relationships and related transactions . . . . 8
Directors' compensation . . . . . . . . . . . . . . . 8
Security ownership. . . . . . . . . . . . . . . . . . . . 8
Performance graph. . . . . . . . . . . . . . . . . . . 9
Compensation of executive officers . . . . . . . . . . . 10
Compensation Committee report on
executive compensation . . . . . . . . . . . . . . . 10
1996 executive compensation . . . . . . . . . . . . . 11
Summary compensation table . . . . . . . . . . . . . 12
Long Term Stock Incentive Plan . . . . . . . . . . . 13
Option grants table . . . . . . . . . . . . . . . . 14
Aggregated option exercise table . . . . . . . . . . 15
Pension plans . . . . . . . . . . . . . . . . . . . 16
Pension plan table . . . . . . . . . . . . . . . . . 16
Proposal to approve an amendment to the
Long Term Stock Incentive Plan . . . . . . . . . . . . . 16
Other information . . . . . . . . . . . . . . . . . . . 18
Relationship with independent accountants. . . . . . . 18
1998 meeting--shareholder proposals. . . . . . . . . . 18
Other matters. . . . . . . . . . . . . . . . . . . . . 18
Alcoa
425 Sixth Avenue
Pittsburgh, Pennsylvania 15219-1850
Corporate secretary: (412) 553-4678
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Proxy Statement
Proxy solicitation and voting information
The accompanying proxy is solicited by the Board of Directors
of Aluminum Company of America (Alcoa or the company) for use
at the annual meeting of shareholders on Friday, May 9, 1997.
Proxies will be voted if properly signed, received by the
secretary of the company prior to the close of voting at the
meeting and not revoked.
Holders of record of Alcoa common stock at the close of
business on February 10, 1997 will be entitled to vote at the
meeting. On that date 173,106,093 shares of common stock
were outstanding. Shareholders are entitled to one vote per
share on each matter properly brought before the meeting.
Under Pennsylvania law and the company's Articles, a quorum
is required to conduct business at the annual meeting. A
quorum is the presence, in person or by proxy, of a majority
of the votes entitled to be cast at the meeting.
Abstentions, votes withheld from director nominees and broker
non-votes are counted to determine a quorum. If a quorum is
present, the candidate or candidates receiving the highest
number of votes will be elected directors, and any other
matter being voted on at the meeting will be approved if a
majority of the votes cast by shareholders is voted in favor
of such matter. Abstentions, broker non-votes and failures
to vote are disregarded in tabulating voting results.
Proxies representing shares of common stock held of record
also will represent full and fractional shares held under the
company's Dividend Reinvestment and Stock Purchase Plan and
full shares held under Alcoa's employee savings plans, if the
registrations are the same. Separate mailings are made for
shares not held under the same registration.
Employee savings plan shares for which no voting directions
are received from participants will be voted by the
independent trustee in the same proportion (for, against or
abstain) as the shares in all plans for which participant
directions are received.
A shareholder who has returned a proxy may revoke it at any
time before it is voted at the meeting by delivering a
revised proxy, by voting by ballot at the meeting, or by
written notice to the company's secretary withdrawing the
proxy. This notice may be mailed to the secretary at the
address on the first page of this booklet or may be given to
the judge of election at the meeting.
Proxies, ballots and voting tabulations that identify
shareholders will be held confidential, except in a contested
proxy solicitation or where necessary to meet legal
requirements. Corporate Election Services, Inc., the
company's independent proxy tabulator, has been appointed
judge of election for the meeting.
Alcoa pays the cost of soliciting proxies. To assist in
the solicitation process, Alcoa hired the firm of Morrow &
Co., Inc., for a fee of $7,000 plus out-of-pocket expenses.
Also, Alcoa directors and officers and other regular
employees may solicit proxies by mail, in person, or by
telephone or fax. The company will request that banks,
brokerage firms and other persons who hold stock in their
names for others, or in the name of nominees for others,
obtain voting instructions from beneficial owners of the
stock. Alcoa will reimburse such persons for their
reasonable expenses in obtaining voting instructions.
Shareholders' comments about any aspect of company business
are welcome. Space is provided for this purpose on the proxy
card given to registered shareholders. Other shareholders
may write to the company in care of the corporate secretary.
Although shareholder comments are not answered on an
individual basis, they do assist Alcoa management in
determining and responding to the needs of shareholders.
Board of Directors
The Alcoa Board of Directors consists of 12 members and is
divided into three classes. The terms of office of the three
classes of directors end in successive years.
John P. Diesel, a member of the class of directors whose
term of office expires at the 1997 annual meeting, is retiring
from the Board and, consequently, is not standing for
reelection. Mr. Diesel has served as a director for 17 years.
The Board has benefited greatly from his expertise and
commitment and will miss his wise counsel and leadership. The
Board extends its best wishes for a long and happy retirement
to Mr. and Mrs. Diesel.
The other three members of the 1997 class have been
nominated to serve for new three-year terms that will end in
2000. Effective at the May 1997 annual meeting, the Board
will be reduced to 11 members.
The accompanying proxy will be voted for the election of
these nominees, unless authority to vote for one or more
nominees is withheld. In the event that any of the nominees
is unable or unwilling to serve as a director for any reason
(which is not anticipated), the proxy will be voted for the
election of any substitute nominee designated by the Board of
Directors or its Executive Committee.
-4-
Nominees to serve for a three-year term expiring 2000
Kenneth W. Dam
Max Pam Professor of American and
Foreign Law, University of Chicago
Law School
Mr. Dam, 64, has been a director since 1987. He is Max Pam
Professor of American and Foreign Law at the University of
Chicago Law School. He served as President and Chief
Executive Officer of the United Way of America in 1992,
Vice President for Law and External Relations of
International Business Machines Corporation from 1985 to
1992, Deputy Secretary of State from 1982 to 1985 and
Provost of the University of Chicago from 1980 to 1982. He
serves on a number of nonprofit boards, including the
Council on Foreign Relations and the Brookings Institution.
Judith M. Gueron
President, Manpower Demonstration
Research Corporation, a nonprofit
research organization
Dr. Gueron, 55, has been a director since 1988. She has
been President of Manpower Demonstration Research
Corporation (MDRC) since 1986. She was Executive Vice
President for research and evaluation of MDRC from 1978 to
1986. Before joining MDRC, Dr. Gueron was director of
special projects and studies and a consultant at the New
York City Human Resources Administration.
Paul H. O'Neill
Chairman of the Board and Chief
Executive Officer of Alcoa
Mr. O'Neill, 61, has been a director since 1986. He became
Chairman of the Board and Chief Executive Officer of Alcoa
in June 1987. Before joining Alcoa in 1987, Mr. O'Neill
had been an officer of International Paper Company since
1977 and President and a director since 1985. Mr. O'Neill
was named Chairman of The RAND Corporation in January 1997.
He is also a director of the Gerald R. Ford Foundation,
Lucent Technologies Inc., Manpower Demonstration Research
Corporation and The RAND Corporation.
-5-
Continuing directors--term expiring 1999
Joseph T. Gorman
Chairman and Chief Executive Officer,
TRW Inc., a global company serving
the automotive and space and defense
markets
Mr. Gorman, 59, became a director in 1991. He has been
Chairman and Chief Executive Officer of TRW since December
1988. Mr. Gorman served as Chief Operating Officer of TRW
from 1985 until 1988 and as President from 1985 until April
1991. He is also a director of TRW and The Procter &
Gamble Company and is a member of the BP America Inc.
Advisory Board.
Sir Ronald Hampel
Chairman, Imperial Chemical Industries PLC,
a diversified chemicals manufacturer
Sir Ronald, 64, has been a director since January 1995. He
has been Chairman of Imperial Chemical Industries PLC since
April 1995, and a director since 1985. From 1993 to 1995
he was Deputy Chairman and Chief Executive of Imperial
Chemical Industries and served as its Chief Operating
Officer from 1991 to 1993. He is a member of the Listed
Companies Advisory Committee of the London Stock Exchange
and the Nominating Committee of the New York Stock
Exchange. He is also a director of British Aerospace PLC.
John P. Mulroney
President and Chief Operating
Officer, Rohm and Haas Company,
a specialty chemicals manufacturer
Mr. Mulroney, 61, has been a director since 1987. He has
been President and Chief Operating Officer of Rohm and Haas
Company since 1986. In 1982 he was elected a director and
Group Vice President and Corporate Business Director of
that corporation. Mr. Mulroney is also a director of
Teradyne, Inc.
Marina v.N. Whitman
Professor of Business Administration and
Public Policy, University of Michigan
Dr. Whitman, 61, has been a director since 1994. She is
Professor of Business Administration and Public Policy,
School of Business Administration and the School of Public
Policy at the University of Michigan. Dr. Whitman was Vice
President and Group Executive, Public Affairs and Marketing
Staffs of General Motors Corporation from 1985 to 1992 and
Vice President and Chief Economist from 1979 to 1985. She
was a member of the President's Council of Economic
Advisers from 1972 to 1973. Dr. Whitman is also a director
of Browning-Ferris Industries, Inc., The Chase Manhattan
Corporation, The Procter & Gamble Company and Unocal
Corporation.
-6-
Continuing directors--term expiring 1998
Sir Arvi Parbo
Chairman of WMC Limited (formerly
Western Mining Corporation Holdings
Limited), an Australian exploration
and mining company
Sir Arvi, 71, has been a director since 1980. He has been
Chairman of WMC Limited since 1974. He served as Managing
Director of that company from 1971 to 1986. He was
Chairman of Alcoa of Australia Limited from 1978 to June
1996. Sir Arvi is also a director of Hoechst Australia
Limited, Munich Reinsurance Company of Australia Ltd., Sara
Lee Corporation and Zurich Australian Insurance Group.
Henry B. Schacht
Chairman and Chief Executive Officer,
Lucent Technologies Inc., a communications systems
and technology company
Mr. Schacht, 62, has been a director since 1994. He was
named Chairman and Chief Executive Officer of Lucent
Technologies in February 1996. Mr. Schacht was Chairman
from 1977 to 1995 and Chief Executive Officer from 1973 to
1994 of Cummins Engine Company, Inc., a leading
manufacturer of diesel engines. He served as Chairman of
the Executive Committee of the Board of Directors of
Cummins in 1995. Mr. Schacht is also a director of Cummins
Engine Company, Inc., The Chase Manhattan Corporation and
The Chase Manhattan Bank and Lucent Technologies.
Forrest N. Shumway
Former Vice Chairman,
AlliedSignal Inc., a diversified,
technologically-based corporation
Mr. Shumway, 69, has been a director since February 1988
and served previously as a director from 1982 to 1987. He
retired as Vice Chairman of the Board and Chairman of the
Executive Committee of AlliedSignal Inc. in 1987. Prior to
1985, he had served as Chairman and Chief Executive Officer
of The Signal Companies, Inc. Mr. Shumway is also a
director of American President Companies, Ltd., The Clorox
Company and Transamerica Corporation.
Franklin A. Thomas
Consultant, TFF Study Group,
a nonprofit institution focusing on South Africa
Mr. Thomas, 62, has been a director since 1977. From
1979 until he assumed his current position in 1996, he was
President of The Ford Foundation. Mr. Thomas was President
and Chief Executive Officer of Bedford Stuyvesant
Restoration Corporation from its founding in 1967 until
1977. He is also a director of Citicorp/Citibank, N.A.,
Cummins Engine Company, Inc., Lucent Technologies Inc. and
PepsiCo, Inc.
-7-
Meetings and committees of the Board
The Alcoa Board of Directors had seven meetings during 1996.
The Board has several standing committees, including the five
described below. Attendance by directors at meetings of the
Board and of committees on which they served averaged 95%.
All directors attended at least 75% of these meetings.
The Audit Committee, composed of Directors Dam, Gueron,
Schacht, Shumway, Thomas (chairman) and Whitman, reviews the
performance of the independent accountants and makes
recommendations to the Board concerning the selection of
independent accountants to audit the company's financial
statements. This committee also reviews the audit plans,
audit results and findings of the internal auditors and the
independent accountants, reviews the environmental audits
conducted by the company's environmental staff and monitors
compliance with Alcoa business conduct policies. The Audit
Committee meets regularly with the company's management, the
Director of Internal Audit and independent accountants to
discuss the adequacy of internal accounting controls and the
financial reporting process and with the company's management
to discuss environmental matters. The independent accountants
and the Director of Internal Audit have access to the Audit
Committee without management's presence. This committee met
eight times in 1996.
The Compensation Committee, composed of Directors Dam,
Diesel (chairman), Mulroney, Parbo and Thomas, determines the
compensation of all Alcoa officers (including salary and
bonus), authorizes or approves any contract for remuneration
to be paid after termination of an officer's regular
employment and performs specified functions under company
compensation plans. The Compensation Committee reviews, but
is not required to approve, the participation of officers in
the company's other benefit programs for salaried employees.
This committee met five times in 1996.
The Executive Committee, composed of Directors Diesel,
O'Neill (chairman) and Thomas, has been granted the authority
of the Board in the management of the company's business and
affairs. It meets principally when specific action must be
taken between Board meetings. This committee did not meet in
1996.
The Nominating Committee, composed of Directors Diesel,
Gorman, Hampel, Mulroney (chairman), Parbo and Thomas, reviews
the performance of incumbent directors and the qualifications
of nominees proposed for election to the Board and makes
recommendations to the Board with regard to nominations for
director. This committee considers proposed nominees whose
names and information regarding education and experience are
submitted in writing by shareholders to the secretary of the
company. This committee met once in 1996.
The Pension and Savings Plan Investment Committee, composed
of Directors Gorman, Gueron, Hampel, Shumway (chairman),
Thomas and Whitman, reviews and makes recommendations to the
Board concerning the investment management of the assets of
Alcoa's retirement plans and principal savings plans. This
committee met twice in 1996.
Certain relationships and related transactions
Alcoa and its subsidiaries have transactions in the ordinary
course of business with many people and organizations,
including corporations of which certain nonemployee directors
are executive officers. Transactions with any of these
corporations did not exceed 5% of Alcoa's or the other
corporation's consolidated gross revenues for its last fiscal
year. Alcoa does not consider these transactions to be
material.
Directors' compensation
The Board revised its compensation structure for nonemployee
directors in 1996. All nonemployee directors receive an
annual cash retainer of $85,000. No additional fees (such as
meeting or committee fees) are paid.
Directors may elect to defer receipt of some or all cash
fees, and they are encouraged to defer the maximum amount that
their individual circumstances allow. All deferrals by
directors are credited to the Alcoa stock investment option,
except that deferred amounts in excess of 50% of the annual
retainer fee may be invested in any investment option of the
deferred fee plan selected by the director. Deferred accounts
are credited with investment results comparable with those of
the investment options under Alcoa's principal savings plan
for salaried employees. Changes among investment options are
permitted once each month, except that no transfers may be
made from the Alcoa stock investment option. Deferred
accounts are unfunded and are paid out in cash after Board
service ends.
Security ownership
The following table shows the beneficial ownership of Alcoa
common stock as of January 31, 1997 for each director and the
CEO and four other highest paid executive officers, and for
all directors and executive officers as a group. The first
column shows shares that the officers had the right to acquire
within 60 days through the exercise of employee options. The
second column includes the number of shares beneficially
owned, and the third column lists the number of share
equivalent units credited to the individual director's or
officer's account under deferred fee or deferred compensation
plans. Total beneficial ownership for the group represented
approximately 1.5% of the total shares outstanding and deemed
outstanding.
-8-
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Exercisable Shares
stock beneficially Deferred share
Name options owned equivalent units
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Kenneth W. Dam 0 2,700 903
John P. Diesel 0 2,700 2,502
Joseph T. Gorman 0 2,219 1,409
Judith M. Gueron 0 2,879 903
Sir Ronald Hampel 0 1,509 0
John P. Mulroney 0 3,011 895
Paul H. O'Neill 761,901 196,478 4,151
Sir Arvi Parbo 0 3,539 1,771
Henry B. Schacht 0 2,514 1,791
Forrest N. Shumway 0 9,200 0
Franklin A. Thomas 0 3,080 3,873
Marina v.N. Whitman 0 1,900 903
Alain J. P. Belda 242,593 15,984 1,896
Richard L. Fischer 95,030 41,956 2,555
Ronald R. Hoffman 157,560 42,754 1,641
J. H. M. Hommen 159,714 44,092 2,783
Directors and executive
officers as a group 2,008,743 495,077 32,605
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FMR Corp., 82 Devonshire Street, Boston, Massachusetts
02109, a parent holding company, reported to the Securities
and Exchange Commission (SEC) that it and its affiliates
(including Fidelity Management & Research Company, an
investment adviser; Fidelity Management Trust Company, a
bank; Edward C. Johnson 3rd, FMR's chairman; and Abigail P.
Johnson, a director of FMR) beneficially owned 13,375,143
shares, or 7.71% of the company's common stock as of December
31, 1996. It reported sole power to dispose of all of these
shares and sole voting power over 929,509 shares.
The Capital Group Companies, Inc., 333 South Hope Street,
Los Angeles, California 90071, a parent holding company,
reported to the SEC that it and its affiliates (including
Capital Research and Management Company and other investment
management companies) own 14,238,830 shares, or 8.2% of the
company's common stock as of December 31, 1996. It reported
sole power to dispose of all these shares and sole voting
power over 3,774,830 shares. The shares reported include
9,758,000 shares (or 5.6% of the outstanding shares) over
which Capital Research and Management Company has sole
dispositive power, but disclaims beneficial ownership.
Wellington Management Company LLP, 75 State Street, Boston,
Massachusetts 02109, an investment adviser and parent holding
company, reported to the SEC that it beneficially owned
11,329,724 shares, or 6.53% of the company's common stock as
of December 31, 1996. It reported shared power to dispose of
all of these shares and shared voting power over 2,195,000
shares. The Wellington holdings included shares owned by
Wellington Trust Company NA (a bank and wholly owned
subsidiary of Wellington) and various investment advisory
clients.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
The company believes that all Alcoa directors and officers
who are subject to the requirements of Section 16 of the
Securities Exchange Act of 1934 filed on a timely basis all
reports required to be filed by them during 1996 with respect
to their beneficial ownership of Alcoa common stock, except
that R. R. Hoffman, an executive officer, was 18 days late in
filing a report disclosing one common stock sale transaction.
Performance graph
The following graph illustrates the performance of Alcoa
common stock over the most recent five-year period compared
with the performance of the S&P 500 Index and a peer-group
index, all with dividends reinvested in additional shares on
the dates paid. The peer-group index (market capitalization
weighted) consists of Alcan Aluminium Limited and Reynolds
Metals Company. The peer-group index is being used rather
than the S&P Aluminum Industry Index, which includes Alcoa as
well as Alcan and Reynolds, because Alcoa's heavy market
capitalization weighting would distort a comparison with the
full index.
Comparison of five-year cumulative total return *
1991 1992 1993 1994 1995 1996
Alcoa 100.00 113.82 112.78 143.68 178.64 220.33
S&P 100.00 107.62 118.46 120.03 165.13 203.05
Peer Group 100.00 117.83 144.29 154.70 94.22 99.23
* Assumes the investment of $100 on December 31, 1991 and
the reinvestment of all dividends.
-9-
Compensation of executive officers
Compensation Committee report on executive compensation
The company's Compensation Committee determines the
compensation of all Alcoa officers. The Committee is
composed solely of independent, nonemployee directors. No
committee member is a current or former officer or employee,
and no member receives any compensation from Alcoa in any
capacity other than as a director.
The company's compensation policy, as developed by the
Committee, is to provide compensation and benefit programs
from a total compensation perspective which enable Alcoa to
hire, retain and motivate high-performing employees
worldwide. Total compensation includes salary, annual cash
incentives, long-term incentives and employee benefits.
Guiding principles include pay for individual and group
performance, competitive total compensation compared with
leading industrial companies and, particularly for
executives, total compensation that is highly leveraged based
on business performance -- both financial and nonfinancial.
The company engages executive compensation consulting firms
to provide comparative market compensation data and to assist
in analysis and interpretation of comparative practices. The
comparison groups surveyed for both total cash compensation
and long-term incentives include a cross section of over 20
leading manufacturing companies -- a select sample of well-
managed companies with whom Alcoa competes for talent. These
companies are among the largest and most highly regarded
corporations in a broad range of industries and serve as a
proxy for the market at large. Similar approaches are used
to compare position size within these companies, which
facilitate compensation comparisons.
Since 1987 the Committee has shifted executive compensation
away from higher fixed salaries and toward more at-risk short-
term and long-term performance-based incentives. Stock-based
incentives are an important element, helping to assure that
executives are focused on increasing shareholder value.
Cash compensation -- Targets for annual cash compensation
- -----------------
(salary and cash incentives) are set above the median for the
comparison group of high-performing industrial companies.
Payouts at target provide competitive levels of total cash
compensation when predetermined performance measures of
excellence are achieved. For senior management, the
Committee has moved to more leverage based on performance,
with the base salary structure below the median and annual
cash incentive targets above the median for the comparison
group.
Annual cash incentive payouts for executive officers are
based on the achievement of business plan goals for the year
by the company's various business units. At least 50% of the
business unit goals are based on financial measurements.
Other goals may include nonfinancial measurements such as
electrical efficiency per pound of aluminum produced, reduced
cycle time, inventory reduction, product quality improvements
and safety performance. The Committee believes that if the
company focuses on achieving excellence in those areas within
its control as measured by the proper nonfinancial
indicators, long-term growth in shareholder value will
result. Target awards, established as a percentage of base
salary, vary by position level. Adjustments to target awards
and special award flexibility may be made by the Committee in
its discretion to reflect individual performance. To provide
further congruency throughout the company, cash incentive
programs were revised in 1992 so that similar performance
measures apply both to executives and, under the performance
pay plan, to most other U.S. employees. The measures for
employees in business units are the goals of their individual
business unit. For most executive officers, the aggregate
performance against these goals for all business units is the
measure that determines the payout of their annual cash
incentive target. The maximum payout before adjustment for
individual performance is 150% of the target award.
Long-term incentives -- Long-term incentives are stock-based,
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consistent with the Committee's goal of encouraging stock
ownership and closely aligning management's interests with
those of shareholders.
Annual long-term awards are granted in the form of stock
options. They are designed to provide a competitive award
opportunity versus the comparison group of leading industrial
companies; stock performance then determines the amount
earned. The Committee has established guidelines on the
target number of shares to be covered by annual option grants
for executive officer and other management positions. The
guidelines reflect the Committee's assessment of levels of
responsibility of the company's manager and officer positions
as well as the relationship to the size of prior grants and
comparative award data. Individual annual grants are
ordinarily made at the guideline amount.
The continuation (reload) feature of the stock option
program was added in 1989 to provide further incentive for
increased stock ownership, not only for senior management but
for about 750 other optionees. This feature encourages early
exercise of options and retention of the Alcoa shares.
-10-
As a condition to obtaining continuation options, one-half of the
"appreciation" shares received upon exercise, after any share
withholding for taxes, is restricted against sale or pledge
during the employee's Alcoa career. These shares may be used
for further option exercises, after satisfaction of a minimum
holding period. Share ownership by optionees, including
executive officers, has increased significantly in the last
five years through use of the reload feature.
Deductibility of compensation -- To the extent practicable,
- -----------------------------
the company intends to preserve deductibility for federal
income tax purposes of compensation paid to executive
officers. In this regard, compensation paid as the result of
option exercises under the shareholder-approved Long Term
Stock Incentive Plan is deductible. A portion of the salary,
bonus and other cash and non-cash compensation paid to any
one of the named executive officers may not be deductible to
the extent exceeding $1 million annually.
Report on 1996 compensation of executive officers including
- -----------------------------------------------------------
the named officers --Salary and annual incentive dollar
- ------------------
targets were increased from 1995, reflecting comparable
increases in the comparison survey data. Cash payouts for
executive officers under the annual incentive plan based on
1996 performance averaged about 93% of target awards.
Stock option awards are granted annually. The Committee
has established guideline option awards by job grade based on
competitive data. The January 1996 stock option grants for
executive officers were made, in accordance with the
established guidelines, at the full levels for these
positions.
A large number of optionees exercised stock options in
1996. Most of the exercises by executive officers involved
the grant of continuation options. Consistent with the
intent of this feature, the exercises resulted in a large
percentage increase in Alcoa share ownership by executive
officers.
Report on 1996 CEO compensation--The chief executive
- -------------------------------
officer's compensation is established based on the philosophy
and policies stated above for all executive officers. This
includes cash compensation (base salary and annual cash
incentive payouts) and long-term incentives (stock option
awards). The Compensation Committee meets annually without
the CEO and evaluates his performance in relation to
financial and nonfinancial goals previously established. A
consensus is reached and commensurate compensation
adjustments are made. This process is reported in full to
the entire Board for its consideration and concurrence. This
meeting is an executive session of nonemployee directors
only.
More specifically, Mr. O'Neill's base salary in 1996
($750,000) was the same as in 1995. By design, Mr. O'Neill's
salary remains below the median for the comparison group.
In January 1997, Mr. O'Neill was awarded a bonus of
$810,000, which was 90% of his target incentive award for
1996. The bonus amount was based in part on aggregate
business unit results compared with plan goals and, in part,
in recognition by the Committee of Mr. O'Neill's outstanding
leadership during 1996.
Mr. O'Neill's 1996 annual stock option award grant was made
at the established guideline number of shares for his
position as established by the Committee in November 1995.
Compensation Committee interlocks and insider
- ---------------------------------------------
participation -- In addition to the five current
- -------------
Committee members identified below, during 1996, Henry B.
Schacht served as a member of the Compensation Committee
from January until early September. Mr. Schacht is
Chairman and Chief Executive Officer of Lucent
Technologies Inc. In October 1996, Paul H. O'Neill was
elected a director of Lucent Technologies.
Summary--The Committee believes the company's compensation
programs help to maintain Alcoa's leadership position among
global industrial companies.
Compensation Committee
John P. Diesel, Chairman
Kenneth W. Dam
John P. Mulroney
Sir Arvi Parbo
Franklin A. Thomas
1996 executive compensation
A summary of the compensation for the company's chief
executive officer and for the four other executive officers
who were the highest paid for the fiscal year ended December
31, 1996 for services to Alcoa and its subsidiaries is shown
in the following table.
-11-
Summary Compensation Table
Long Term
Annual Compensation Compensation
------------------- ------------
Number of Securities
Name and Underlying Option All Other
Principal Position Year Salary (1) Bonus Grants (2) Compensation (3)
- ------------------ ---- ---------- ----- -------------------- ----------------
Paul H. O'Neill 1996 $750,000 $ 810,000 693,027 $172,062
Chairman of the Board and 1995 750,000 1,250,000 587,250 174,759
Chief Executive Officer 1994 700,200 750,000 433,042 159,012
Alain J. P. Belda 1996 540,600 525,000 120,304 100,670
Vice Chairman (4) 1995 446,823 600,000 65,000 90,809
1994 413,500 260,000 54,754 113,010
Richard L. Fischer 1996 370,200 325,000 255,657 69,188
Executive Vice President - 1995 366,900 400,000 275,736 69,945
Chairman's Counsel 1994 350,400 180,000 197,242 65,024
Ronald R. Hoffman 1996 370,200 325,000 271,073 74,642
Executive Vice President - 1995 366,900 400,000 305,686 72,335
Human Resources and 1994 350,400 180,000 196,810 69,024
Communications
Jan H. M. Hommen 1996 356,377 325,000 198,717 62,095
Executive Vice President 1995 316,776 400,000 204,233 88,036
and Chief Financial Officer 1994 310,800 180,000 118,106 56,648
(1) The most highly compensated executive officers are those
with the highest annual salary and bonus for the last
completed fiscal year. In addition to base salary, the salary
column in this table includes, when selected by the employee,
an extra week's pay in lieu of vacation as permitted under the
company's vacation plan for employees with 25 or more years of
service.
(2) New option grants made in 1996 totaled 160,000 for
Mr. O'Neill, 100,000 for Mr. Belda, and 52,800 each for
Messrs. Fischer, Hoffman and Hommen. All of these options were
granted at 100% of the fair market value of Alcoa common stock
on the grant date. The other option awards relate to previous
years' options grants and the use of the continuation (reload)
feature described in the next section. See the Option Grants
in Last Fiscal Year table on page 14.
(3) Company matching contributions to 401(k) and excess
savings (defined contribution) plans for 1996 were as follows:
Mr. O'Neill, $45,000; Mr. Belda, $31,824; Mr. Fischer,
$22,212; Mr. Hoffman, $22,212; and Mr. Hommen, $21,024. The
present value costs of the company's portion of 1996 premiums
for split-dollar life insurance, above the term coverage level
provided generally to salaried employees, were as follows:
Mr. O'Neill, $127,062; Mr. Belda, $67,946; Mr. Fischer,
$46,976; Mr. Hoffman, $52,430; and Mr. Hommen, $41,071. This
column also includes excess health care credits received as
cash for Mr. Belda of $900.
(4) Mr. Belda was elected President and Chief Operating
Officer of Alcoa in January 1997.
-12-
Long Term Stock Incentive Plan
This plan provides long-term incentives in the form of options
on Alcoa common stock to employees who may influence the long-
term performance of Alcoa and its subsidiaries. New stock
options are granted annually, currently in the month of
January. The option exercise price may not be less than 100%
of the fair market value of Alcoa stock on the grant date.
In 1989, a "reload" or continuation feature was added to the
plan for the purpose of encouraging early option exercise and
increased share ownership by optionees. This feature permits
the optionee to exercise a previously granted option and
receive option appreciation as shares, together with a
continuation option for a lesser number of shares and having a
new option price at current market value. The option
expiration date is the same as for the prior grant. The
continuation option covers the previous number of option
shares less the net "appreciation" shares received after any
share withholding for taxes. One-half of the net appreciation
shares is restricted against sale or pledge during the
employee's Alcoa career. The reload feature has resulted in
substantially increased share ownership by Alcoa executive
officers and other optionees.
In 1996, in connection with the exercise of options granted
in prior years, Mr. O'Neill received continuation option
grants covering 533,027 shares at exercise prices ranging from
$62.31 to $63.32 per share. Continuation grants were made to
the other named officers as follows: Mr. Belda, 20,304 shares
at exercise prices ranging from $60.44 to $63.43 per share;
Mr. Fischer, 202,857 shares at exercise prices ranging from
$52.52 to $65.07 per share; Mr. Hoffman, 218,273 shares at
exercise prices ranging from $51.07 to $65.88 per share; and
Mr. Hommen, 145,917 shares at exercise prices ranging from
$50.70 to $64.80 per share. These continuation option grants
have expiration dates which range from July 1997 to January
2005.
The following table shows annual options granted by the
Compensation Committee in 1996 to the named officers. It also
shows continuation (reload) options resulting from the
exercise in 1996 of options granted in prior years. The price
of Alcoa stock must appreciate in order for optionees to
realize any gain. As the stock price increases, all
shareholders benefit proportionately.
-13-
Option Grants in Last Fiscal Year
- --------------------------------------------------------------------------------------
Individual Grants
- --------------------------------------------------------------------------------------
% of Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base Expira-
Options in Fiscal Price tion Grant Date
Name Granted (1)(2) Year ($/Sh) Date Present Value (3)
- --------------------------------------------------------------------------------------
P. H. O'Neill 160,000 1.84% $ 50.56 1/11/06 $1,617,629
133,045 1.53% 63.19 1/13/05 985,568
95,261 1.09% 62.50 1/14/04 695,103
92,265 1.06% 62.50 1/15/03 673,242
46,131 0.53% 62.31 1/20/02 336,158
24,634 0.28% 62.31 1/23/01 179,509
25,895* 0.30% 62.42 1/22/00 189,026
25,243* 0.29% 63.32 5/04/99 183,673
27,490 0.32% 63.19 7/21/98 203,640
63,063 0.72% 62.31 6/15/97 459,542
A. J. P. Belda 100,000 1.15% 50.56 1/11/06 1,011,018
6,547 0.08% 60.44 1/23/01 44,015
7,013* 0.08% 63.43 1/22/00 51,565
6,744 0.08% 63.13 5/04/99 49,084
R. L. Fischer 52,800 0.61% 50.56 1/11/06 533,817
48,315 0.55% 52.52 1/13/05 282,025
44,174 0.51% 61.99 1/13/05 315,461
26,900* 0.31% 65.07 1/14/04 204,012
26,697* 0.31% 62.36 1/15/03 189,150
17,850* 0.20% 62.59 1/20/02 126,930
3,603 0.04% 60.94 1/23/01 25,030
5,231* 0.06% 62.83 1/23/01 37,343
9,220 0.11% 62.94 1/22/00 66,014
9,107* 0.10% 61.25 5/04/99 63,319
7,966* 0.09% 62.11 7/21/98 56,214
3,794* 0.04% 62.39 7/09/97 26,893
R. R. Hoffman 52,800 0.61% 50.56 1/11/06 533,817
49,057 0.56% 51.07 1/13/05 277,274
46,434 0.53% 56.49 1/13/05 305,879
11,656 0.13% 58.88 1/14/04 77,053
27,722* 0.32% 61.60 1/14/04 199,699
7,032 0.08% 63.13 1/15/03 51,223
19,480* 0.22% 62.43 1/15/03 141,275
13,127* 0.15% 63.48 1/20/02 96,152
8,664* 0.10% 63.00 1/23/01 62,909
9,224 0.11% 62.38 1/22/00 66,531
6,470* 0.07% 62.00 5/04/99 46,601
2,406 0.03% 65.88 5/04/99 18,320
1,722 0.02% 65.88 7/21/98 13,112
6,161 0.07% 62.38 7/21/98 44,438
9,118* 0.10% 62.46 7/09/97 65,851
J. H. M. Hommen 52,800 0.61% 50.56 1/11/06 533,817
39,003 0.45% 50.70 1/13/05 218,840
36,761 0.42% 56.53 1/13/05 242,334
21,521* 0.25% 64.80 1/14/04 161,858
17,288* 0.20% 62.45 1/15/03 125,739
3,840* 0.04% 64.72 1/15/03 28,919
8,447* 0.10% 62.17 1/20/02 61,231
4,270* 0.05% 64.73 1/23/01 32,163
184 0.00% 64.63 1/22/00 1,371
4,345 0.05% 62.31 1/22/00 31,204
3,404 0.04% 62.25 5/04/99 24,708
2,636 0.03% 64.75 7/21/98 19,811
426 0.00% 62.25 7/21/98 3,092
3,792 0.04% 64.75 7/09/97 28,499
- ---------------------------------------------------------------------------------
-14-
(1) Annual options (the first grant listed for each
named officer) become exercisable one year after date of
grant. All other grants are reload options, which become
exercisable after six months. For all options, optionees
may use shares they own to pay the exercise price and may
have shares withheld for payment of required taxes.
(2) Data on continuation (reload) options reflect
consolidation of certain individual grants into groupings
(marked by an *) based on common expiration date and a
spread of grant prices not exceeding 3% of the lowest price
for that option grouping. Individual continuation grants
totaled 11 for Mr. O'Neill, 4 for Mr. Belda, 20 for Mr.
Fischer, 23 for Mr. Hoffman and 19 for Mr. Hommen.
(3) In accordance with SEC rules, the Black Scholes option
pricing model was chosen to estimate the Grant Date Present
Value of the options set forth in this table. The company's
use of this model should not be construed as an endorsement of
the accuracy of this model at valuing options. All stock
option models require a prediction about the future movement
of the stock price. The following assumptions were made for
purposes of calculating Grant Date Present Value: volatility
- - 25%; average risk-free rate of return - 5.7%; dividend yield
- - 2.2%; expected life - annual grants - 3 years, continuation
grants - 1 year. The real value of the options in this table
depends upon the actual performance of Alcoa stock during the
applicable period and upon when the options are exercised.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
- ---------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End at Fiscal Year-End
- ----------------------------------------------------------------------------------------------------------
Shares
Acquired on Value
Name Exercise (1) Realized (2) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------
P. H. O'Neill 587,250 $6,113,630 68,874 693,027 $4,356,281 $2,697,514
A. J. P. Belda 25,754 610,588 143,336 120,304 3,674,376 1,346,924
R. L. Fischer 218,901 1,720,017 50,856 158,160 144,089 857,228
R. R. Hoffman 234,074 1,678,898 99,753 110,607 120,970 1,058,113
J. H. M. Hommen 158,040 1,297,586 70,153 89,561 47,784 961,542
- ----------------------------------------------------------------------------------------------------------
(1) The net number of shares issued to these five
officers was 103,641. The table shows the gross shares
underlying option exercises, as required by SEC rules.
However, most of the shares were not issued, since in
essentially all exercises by these officers, shares were
used to pay the exercise price and shares were withheld
for taxes.
(2) Values were realized in shares and are shown before
reduction for payment of applicable withholding taxes.
Most of the shares received after taxes (all for
Mr. O'Neill) still are owned by the officers.
-15-
Pension plans
The company's pension plans cover a majority of its salaried
employees on a noncontributory basis. The plans, which
include both tax-qualified plans and non tax-qualified excess
plans, provide the following annual benefits at executive
remuneration levels.
Pension Plan Table
- ------------------------------------------------------------------------------
Years of Service
- ------------------------------------------------------------------------------
Remuneration 15 20 25 30 35 40
- ------------------------------------------------------------------------------
$ 100,000 $ 20,930 $ 27,900 $ 34,880 $ 41,850 $ 49,220 $ 57,370
300,000 57,170 76,220 95,280 114,330 129,020 144,490
500,000 94,650 126,200 157,750 189,300 213,550 238,570
700,000 131,500 175,330 219,170 263,000 296,630 331,050
900,000 168,600 224,800 281,000 337,200 380,300 424,170
1,100,000 203,540 271,380 339,240 407,070 459,070 511,850
1,300,000 241,150 321,530 401,920 482,300 543,880 606,250
1,500,000 274,680 366,240 457,800 549,360 619,500 690,410
- ------------------------------------------------------------------------------
The amount of pension is based upon the employee's average
compensation for the highest five years in the last ten years
of service. For the executive level, covered compensation
includes base salary and 50% of annual cash bonus. Data
shown in the table reflect salary at target plus bonus at
target. Payments are made as a straight life annuity,
reduced by 5% where a surviving spouse pension is taken. The
table shows benefits at age 65, before applicable reductions
for surviving spouse coverage. At March 1, 1997, pension
service for the named officers was as follows: Mr. Belda, 28
years; Mr. Fischer, 31 years; Mr. Hoffman, 42 years; Mr.
Hommen, 26 years; and Mr. O'Neill, 22 years, reflecting an
employment contract that provides somewhat more than double
credit for his years with the company, with the resulting
pension offset by pension payments from his previous
employer.
Proposal to approve an amendment to the Long Term Stock
Incentive Plan
The Long Term Stock Incentive Plan (formerly the Employees'
Stock Option Plan) has been in effect since 1965, and was last
approved by shareholders in 1995. The Plan is designed to
provide long-term incentives based on Alcoa common stock to
key employees who may contribute to the company's continued
growth and profitability. These incentives encourage
participating employees to manage the company's business to
promote its long-term growth and success, as measured by
Alcoa's stock price, and thus create an identity of interest
with Alcoa's shareholders.
Recent Plan Changes
In January and February 1997, Alcoa's Board of Directors,
through its Compensation Committee, adopted amendments to the
Plan. The principal amendment provides additional shares for
the ongoing operation of the Plan. This amendment will become
effective only if approved by shareholders. The additional
shares will be used for new annual stock option awards and for
awards of reload or continuation options under the Plan.
In recent years, optionees have been encouraged to exercise
their options and acquire Alcoa common stock through the use
of the reload feature of the Plan (see "Reload Options"
below). In order to assure continued compliance with
applicable external requirements, the Plan's administrative
rules for reload options were clarified and restated by the
committee in January 1997. The purpose of the committee's
action is to preserve the incentives of the reload program for
optionees without any appreciable increase in cost to the
company or shareholders.
Specifically, the Compensation Committee decided to permit
optionees to use cash or already-owned shares to pay the
purchase price of original grant options where the reload
feature was being elected. This action is designed to further
encourage optionees, particularly new participants in the
program, to use the reload feature to increase share
ownership. As a result, however, the number of shares used
for purposes of the Plan is expected to increase, although the
benefits realized by individual participants will be no
greater than those previously available to optionees electing
reload grants.
Shares available for future grants under the Plan at January
1, 1997 were less than the number required to operate the Plan
for a full year. Therefore, the Board approved an amendment
authorizing an additional 8.6 million shares for use in the
Plan (approximately 4.9% of all shares currently outstanding)
and recommends that shareholders approve this additional
authorization.
Two other amendments to the Plan also were made in 1997.
These changes (1) permit new options to be transferred to
immediate family members or trusts for their benefit (see
"Transferability" below); and (2) eliminate the Plan's
performance share feature, which has not been used since 1992.
Implementation of these two changes is not dependent upon
shareholder approval under the Plan.
The major features of the Plan, as amended, are summarized
below.
Plan description
Purpose--The purposes of the Plan are to motivate key
employees, to permit them to share in Alcoa's long-term growth
and financial success by giving them an increased incentive to
promote its well-being, and to link the interest of key
employees to the long-term interests of Alcoa's shareholders.
-16-
Administration--The Plan is administered by a committee of
directors appointed by Alcoa's Board. Committee members must
not have been eligible to participate in the Plan for at least
12 months. No committee member is a current or former officer
or employee, and no member receives any compensation from
Alcoa in any capacity other than as a director. The Plan
permits the committee to delegate certain authority to senior
officers in limited instances.
Term--The Plan has no fixed expiration date; however, no new
awards may be granted under the Plan after January 1, 2002.
Types of Awards--Awards under the Plan are in the form of
stock option grants. Stock option awards entitle an optionee
to purchase shares of the company's common stock at a fixed
price during the option term.
Participation--Participation in the Plan is limited to
employees who play a key role in the management, operation,
growth or protection of a part or all of the business of the
company and who are selected from time to time by the
committee. Approximately 1,100 current and former employees
hold stock options.
1997 Awards--In January 1997, the committee awarded stock
options to 824 employees. If shareholders do not approve the
amendment to the Plan, those options will be null and void.
The January 1997 options covered 3,321,750 shares at an
exercise price of $70.75 per share. Awards to the named
executive officers were as follows: Mr. O'Neill, 175,000
shares; Mr. Belda, 125,000 shares; Mr. Fischer, 65,000 shares;
Mr. Hoffman, 60,000 shares; and Mr. Hommen, 52,800 shares; and
all executive officers as a group (13 individuals), 722,000
shares. Employees other than executive officers were awarded
options for a total of 2,599,750 shares. Nonemployee
directors are not eligible to participate in this plan.
Limitation on Awards--The Plan was amended in 1995 to provide
a limit of one million shares that may be granted as stock
options in a calendar year to any individual optionee.
Option Price--The option price is determined under a formula
set by the committee. This price cannot be less than 100% of
the fair market value of Alcoa stock on the grant date, except
for earnout options delivered upon earning of performance
shares. The performance share feature is no longer in effect
and no new earnout options are granted under the Plan. The
Plan also permits the committee to use 100% of an average
market value, as determined by the committee, over a period of
up to 10 business days instead of the value on the grant date.
Duration of Options--The option period is limited to 10 years,
except for outstanding earnout options which expire five years
after the end of the optionee's Alcoa career. If the optionee
dies during employment or retires, existing options must be
exercised within five years. Shorter periods, generally three
months, apply following most other terminations of employment.
The Plan authorizes the committee to establish other rules
regarding the treatment of options upon termination of
employment by reason of death, disability, retirement or other
approved reason. The committee may shorten the period of any
option if the optionee takes any action which is not in
Alcoa's best interests.
Transferability--Effective with option grants beginning
January 1997, options may be transferred to immediate family
members or trusts for their benefit. No other transfers are
permitted. This feature, if elected, will afford optionees an
estate-planning opportunity. There is no appreciable
additional cost to the company for this feature.
Exercise--The option price must be paid in full upon exercise.
The optionee may pay the price in cash, by surrendering shares
of Alcoa common stock that were owned for a certain minimum
period and whose value equals the option price, or by a
combination of cash and shares.
Reload Options--Reload options are designed to increase
ownership of Alcoa shares by encouraging early exercise of
options and retention of the shares. An employee exercising
an option may elect reload treatment if the spread is at least
$2.50 per share and if the exercise price is paid using
already-owned shares or, where original grant options are
being exercised, using shares or cash. With a reload
election, a new option is granted at the market price at the
time of exercise and with the same expiration date as the
option being exercised. The reload option covers the number
of shares exercised less the net number of "profit" shares
delivered to the optionee after withholding for taxes. Half
of the profit shares are restricted--they are not transferable
for the optionee's remaining career with Alcoa. A reload
stock option may not be exercised for six months. Under a
separate dividend equivalent compensation plan, the Board may
authorize payment of a dividend equivalent on a portion of the
exercisable options held by active employees under a formula
approved by the committee.
Employment Obligation--The optionee must agree to remain in
employment for at least one year, or until retirement at least
six months after the granting of the option. An option is not
exercisable unless this obligation is met. This obligation
does not apply to reload options.
Plan Amendments--The Board may amend, modify, suspend or
terminate the Plan but no such action (1) shall impair,
without the optionee's consent, any outstanding option or
(2) shall be taken without shareholder approval under certain
circumstances. Under the Plan, shareholder approval is
required for any action that would materially increase the
benefits accruing to participants, materially increase the
maximum number of shares that may be issued under the Plan, or
materially modify the Plan's eligibility requirements.
-17-
Shares Available--On January 1, 1997, there were 14,689,877
shares of Alcoa common stock reserved for issuance under the
Plan. Options granted in 1996 and in prior years covered
10,033,942 of those shares. Thus, 4,655,935 shares were then
available for the future granting of stock option awards. In
addition, except as otherwise specified by the committee,
shares used upon option exercise to pay required withholding
taxes and/or shares delivered in payment of the option
exercise price also will be available for issuance under the
Plan. Future grants under the Plan also may cover shares that
cease to be covered by awards by reason of total or partial
expiration, termination or voluntary surrender of an option or
failure to earn an award. The Plan also provides for
adjustment of awards and the share reserve in the event of
stock splits and other changes in stock.
The amendment adds 8.6 million shares to the shares of
company common stock that may be issued under the Plan. This
is approximately 4.9% of the outstanding shares of company
stock.
Recent Share Price--On February 10, 1997 (the record date for
the annual meeting), the closing market price for Alcoa common
stock was $66.625 per share.
Tax Consequences--The grant of a stock option under the Plan
has no U.S. federal income tax consequences for the optionee
or the company. Upon exercise of a stock option, the company
is entitled to a tax deduction and the optionee realizes
ordinary income. The amount of such deduction and income is
equal to the difference between the option price and the fair
market value of the shares on the date of exercise. The
committee may permit the use of Alcoa shares to pay the
required withholding taxes.
Vote required for approval
For this amendment to be approved, a majority of the votes
cast by shareholders must be voted for approval.
The Alcoa Board of Directors recommends that shareholders
vote FOR approval of this amendment to the company's Long Term
Stock Incentive Plan (Item 2 on the proxy card).
Other information
Relationship with independent accountants
Coopers & Lybrand L.L.P. has been the independent accounting
firm auditing the financial statements of Alcoa and most of
its subsidiaries since 1950. In accordance with standing
policy, the Coopers & Lybrand personnel who work on the audit
are changed periodically.
In connection with the audit function, Coopers & Lybrand in
1996 reviewed the company's periodic filings with the
Securities and Exchange Commission, prepared or reviewed
special financial or audit reports to lenders and others,
including governmental agencies, and evaluated the effects of
various technical accounting issues. Coopers & Lybrand also
conducted audits and due diligence reviews in connection with
several acquisitions made by the company.
In addition, Coopers & Lybrand provides other professional
services to the company and its subsidiaries. A substantial
portion of these other services involves assistance in tax
planning and preparation of tax returns for expatriate
employees, executives and various foreign locations, and
consultation on accounting, information systems and cost
reduction opportunities.
The Audit Committee of Alcoa's Board reviews summaries of
the actual services, both audit and non-audit, rendered by
Coopers & Lybrand and the related fees.
Upon recommendation of the Audit Committee, the Board has
reappointed Coopers & Lybrand to audit the 1997 financial
statements. As in past years, representatives of Coopers &
Lybrand will be present at the annual meeting of
shareholders. 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.
1998 meeting--shareholder proposals
Alcoa's 1998 annual meeting of shareholders will be on May 8,
1998. To enable the Board to adequately analyze and respond
to shareholder proposals, any shareholder proposal to be
presented at that meeting must be received by the secretary
of the company by November 18, 1997 to be timely received for
inclusion in Alcoa's proxy statement for that meeting.
Other matters
The Board of Directors does not know of any other matters
that are to be presented for action at the May 9, 1997
meeting. Should any other matter come before the meeting,
the accompanying proxy will be voted with respect to the
matter in accordance with the best judgment of the persons
voting the proxy.
-18-
Alcoa's Vision
Alcoa is a growing worldwide company dedicated to excellence
through quality-creating value for customers, employees and
shareholders through innovation, technology, and operational
expertise.
Alcoa will be the best aluminum company in the world, and a
leader in other businesses in which we choose to compete.
Alcoa's Values
Integrity
Alcoa's foundation is the integrity of its people. We will
be honest and responsible in dealing with customers,
suppliers, coworkers, shareholders, and the communities where
we have an impact.
Environment, Health and Safety
We will work safely in a manner that promotes the health and
well-being of the individual and the environment.
Quality and Excellence
We will provide products and services that meet or exceed the
needs of our customers. We will relentlessly pursue
continuous improvement and innovation in everything we do to
create significant competitive advantage compared to world
standards.
People
People are the key to Alcoa's success. Every Alcoan will
have equal opportunity in an environment that fosters
communication and involvement while providing reward and
recognition for team and individual achievement.
Profitability
We are dedicated to earning a return on assets that will
enable growth and enhance shareholder value.
Accountability
We are accountable-individually and in teams-for our actions
and results.
-19-
Alcoa
425 Sixth Avenue
Pittsburgh, Pennsylvania 15219-1850
Graphics Appendix List
Page Where
Graphic Appears Description of Graphic or Cross-Reference
page 5 Photograph of Kenneth W. Dam, Nominee for
Director
page 5 Photograph of Judith M. Gueron, Nominee
for Director
page 5 Photograph of Paul H. O'Neill, Nominee for
Director
page 6 Photograph of Joseph T. Gorman, Continuing
Director
page 6 Photograph of Sir Ronald Hampel,
Continuing Director
page 6 Photograph of John P. Mulroney, Continuing
Director
page 6 Photograph of Marina v.N. Whitman,
Continuing Director
page 7 Photograph of Sir Arvi Parbo, Continuing
Director
page 7 Photograph of Henry B. Schacht, Continuing
Director
page 7 Photograph of Forrest N. Shumway,
Continuing Director
page 7 Photograph of Franklin A. Thomas,
Continuing Director
page 9 Comparison of five-year cumulative total
return
APPENDIX
--------
LONG TERM STOCK INCENTIVE PLAN
OF
ALUMINUM COMPANY OF AMERICA
(Revised, Effective January 1, 1997)
ARTICLE I
DEFINITIONS
The following words as used herein shall have the following
meanings unless the context otherwise requires.
PLAN means the Long Term Stock Incentive Plan of Aluminum Company
of America, as amended from time to time, which is a continuation
of the Employees' Stock Option Plan.
COMPANY means Aluminum Company of America.
SUBSIDIARY means any corporation in which the Company owns,
directly or indirectly, stock possessing 50% or more of the total
combined voting power of all classes of stock in such other
corporation, and any corporation, partnership, joint venture or
other business entity as to which the company possesses a direct
or indirect ownership interest where either (a) such interest
equals 50% or more or (b) the Company directly or indirectly has
power to exercise management control.
BOARD means the Board of Directors of the Company and includes
any duly authorized Committee when acting in lieu thereof.
EMPLOYEE means any employee of the Company or a Subsidiary.
AWARD means any stock option award granted or delivered under the
Plan.
OPTIONEE means any person who has been granted a stock option
under the Plan.
COMMITTEE means the Committee established under Section 1 of
Article V to administer the Plan.
COMPANY STOCK means common stock of the Company and such other
stock and securities, described in Section 2 of Article IV, as
shall be substituted therefor.
FAIR MARKET VALUE means, with respect to Company Stock, (1) the
mean of the high and low sales prices of such stock (a) as
reported on the composite tape (or other appropriate reporting
vehicle as determined by the Committee) for a specified date or,
if no such report of such price shall be available for such date,
as reported for the New York Stock Exchange for such date or (b)
if the New York Stock Exchange is closed on such date, the mean
of the high and low sales prices of such stock as reported in
accordance with (a) above for the next preceding day on which
such stock was traded on the New York Stock Exchange, or (2) at
the option of and as determined by the Committee, the average of
the mean of the high and low sales prices of such stock as
reported in accordance with (1) above for a period of up to ten
consecutive business days.
OPTION PERIOD means the period of time provided pursuant to
Section 4 of Article III within which a stock option may be
exercised, without regard to the limitations on exercise imposed
pursuant to Section 5 of Article III.
ARTICLE II
PARTICIPATION
SECTION 1. Purpose. The purposes of the Plan are to motivate
key employees, to permit them to share in the long-term growth
and financial success of the Company and its Subsidiaries while
giving them an increased incentive to promote the well-being of
those companies, and to link the interests of key employees to
the long-term interests of the Company's shareholders.
SECTION 2. Eligibility. Employees who, in the sole opinion of
the Committee, play a key role in the management, operation,
growth or protection of some part or all of the business of the
Company and its Subsidiaries (including officers and employees
who are members of the Board) shall be eligible to be granted
Awards under the Plan. The Committee shall select from time to
time the Employees to whom Awards shall be granted. No Employee
shall have any right whatsoever to receive any Award unless
selected therefor by the Committee.
SECTION 3. Limitation on Optioned Shares. In no event may any
stock option be granted to any Employee who owns stock possessing
more than five percent of the total combined voting power or
value of all classes of stock of the Company. The maximum number
of shares subject to options awarded to any one individual in any
calendar year may not exceed one million shares.
SECTION 4. No Employment Rights. The Plan shall not be
construed as conferring any rights upon any person for a
continuation of employment, nor shall it interfere with the
rights of the Company or any Subsidiary to terminate the
employment of any person and/or take any personnel action
affecting such person without regard to the effect which such
action might have upon such person as an Optionee or prospective
Optionee.
ARTICLE III
TERMS OF OPTIONS
SECTION 1. General. The Committee from time to time shall
select the Employees to whom stock options shall be granted, the
type of stock options and the number of shares of Company Stock
to be included in each such option. Each option granted under
the Plan shall be subject to the terms and conditions required by
this Article III, and such other terms and conditions not
inconsistent therewith as the Committee may deem appropriate in
each case.
SECTION 2. Option Price. The price at which each share of
Company Stock covered by an option may be purchased shall be
determined by the Committee. In no event shall such price be
less than one hundred percent of the Fair Market Value of Company
Stock either on the date the option is granted or over a period
of up to ten business days as specified by the Committee. The
option price of each share purchased pursuant to an option shall
be paid in full at the time of such purchase. The purchase price
of an option shall be paid in cash, provided however that, to the
extent permitted by and subject to any limitations contained in
any stock option agreement or in rules adopted by the Committee,
such option purchase price may be paid by the delivery to the
Company of shares of Company Stock having an aggregate Fair
Market Value on the date of exercise which, together with any
cash payment by the Optionee, equals or exceeds such option
purchase price. The Committee shall determine whether and if so
the extent to which actual delivery of share certificates to the
Company shall be required. The foregoing provisions relating to
the delivery of Company Stock in lieu of payment of cash upon
exercise of an option apply to all outstanding options.
SECTION 3. Types of Options. The Committee shall have the
authority, in its sole discretion, to grant to Employees from
time to time non-qualified stock options and such other types of
options as are permitted by law or the provisions of the Plan.
SECTION 4. Period for Exercise. The Committee shall determine
the period or periods of time within which the option may be
exercised by the Optionee, in whole or in part, provided that the
Option Period shall not exceed ten years from the date the option
is granted.
SECTION 5. Special Limitations. Notwithstanding the Option
Period provided in Section 4 of this Article III, a stock option
(other than a reload stock option) shall not be exercisable until
one year after the date the option is granted.
SECTION 6. Termination of Employment.
(a) Subject to the provisions of Section 4 and 5 of this
Article III, the Committee shall specify in administrative rules
or otherwise, the rules that shall apply to stock options with
respect to the exercise of any stock options upon termination of
the Optionee's employment.
(b) Following the Optionee's death, the option may be
exercised by the Optionee's legal representative or
representatives, or by the person or persons entitled to do so
under the Optionee's last will and testament, or, if the Optionee
shall fail to make testamentary disposition of the option or
shall die intestate, by the person or persons entitled to receive
said option under the intestate laws.
(c) The Committee in its sole discretion may shorten the
period of exercise of any such stock option in the event that the
Optionee takes any action which in the judgment of the Committee
is not in the best interests of the Company and its Subsidiaries.
SECTION 7. Transferability; Beneficiaries; Etc. Each stock
option shall be nontransferable by the Optionee except by last
will and testament or the laws of descent and distribution and is
exercisable during the Optionee's lifetime only by the Optionee
or a legal representative. Notwithstanding the foregoing and the
preceding Section 6, at the discretion of the Committee,
(a) some or all Optionees may be permitted to transfer some or
all of their options to one or more immediate family
members, and/or
(b) some or all Optionees may be permitted to designate one or
more beneficiaries to receive some or all of their Awards
and stock appreciation rights in the event of death prior
to exercise thereof, in which event a permitted benefi-
ciary or beneficiaries shall then have the right to exer-
cise or receive payment for each affected Award or stock
appreciation right in accordance with its other terms and
conditions.
SECTION 8. Employment Obligation. In consideration for the
granting of each stock option, except options delivered under
Section 11 of this Article III, the Optionee shall agree to
remain in the employment of the Company or one or more of its
Subsidiaries, at the pleasure of the Company or such Subsidiary,
for a continuous period of at least one year after the date of
grant of such stock option or until retirement, on a date which
is at least six months after the date of such grant, under any
retirement plan of the Company or a Subsidiary, whichever may be
earlier, at the salary rate in effect on the grant date or at
such changed rate as may be fixed from time to time by the
Company or such Subsidiary. At the discretion of the Committee,
this obligation may be deemed to have been fulfilled under
specified circumstances, such as if the Optionee enters
government service.
SECTION 9. Date Option Granted. For the purposes of the Plan, a
stock option shall be considered as having been granted on the
date on which the Committee authorized the grant of such stock
option, except where the Committee has designated a later date,
in which event such designated date shall constitute the date of
grant of such stock option, provided, however, that in either
case notice of the grant of the option shall be given to the
Employee within a reasonable time.
SECTION 10. Alternative Settlement Methods. Where local law may
interfere with the normal exercise of an option, the Committee in
its discretion may approve stock appreciation rights or other
alternative methods of settlement for stock options.
SECTION 11. Reload Stock Options. The Committee shall have the
authority to specify, either at the time of grant of a stock
option or at a later date, that upon exercise of all or a portion
of that stock option (except an option referred to in the next
section, Section 12) a reload stock option shall be granted under
specified conditions. A reload stock option may entitle the
Optionee to purchase shares (i) which are covered by the
exercised option or portion thereof at the time of exercise of
such option or portion but are not issued upon such exercise, or
(ii) whose value (on the date of grant) equals the purchase price
of the exercised option or portion thereof and any related tax
withholdings. The exercise price of the reload stock option
shall be the Fair Market Value at the time of grant, determined
in accordance with Section 2 of this Article III. The duration
of a reload stock option shall not extend beyond the expiration
date of the option it replaces. The specific terms and
conditions applicable for reload stock options shall be
determined by the Committee and shall be set forth in rules
adopted by the Committee and/or in agreements or other
documentation evidencing reload stock options.
SECTION 12. Dividend Equivalents. Stock options delivered in
payment of contingent awards of performance shares (effective
January 1993, these types of awards are no longer granted) may
provide the Optionee with dividend equivalents payable in cash,
shares, additional discount options or other consideration prior
to exercise.
ARTICLE IV
COMPANY STOCK
SECTION 1. Number of Shares. The shares of Company Stock that
may be issued under the Plan, out of authorized but heretofore
unissued Company Stock, or out of Company Stock held as treasury
stock, or partly out of each, shall not exceed 8.6 million shares
plus an additional number of share equal to the number of shares
which at January 1, 1997 were reserved for issuance under the
Plan as then in effect. Except as otherwise determined by the
Committee, the number of shares of Company Stock so reserved
shall be reduced by the number of shares issued upon an Option
exercise, less (i) the shares, if any, used to pay withholding
taxes and/or (ii) the shares, if any, delivered by the Optionee
in full or partial payment of the option purchase price. Unless
the Committee otherwise determines, shares not purchased under
any option granted under the Plan which are no longer available
for purchase thereunder by virtue of the total or partial
expiration, termination or voluntary surrender of the option and
which were not issued upon exercise of a related stock
appreciation right and shares referred to in clauses (i) or (ii)
of the preceding sentence shall continue to be otherwise
available for the purposes of the Plan. Payments for Awards in
cash shall reduce the number of shares available for issuance by
such number of shares as has a Fair Market Value at the time of
such payment equal to such cash.
SECTION 2. Adjustments in Stock.
(a) Stock Dividends. If a dividend shall be declared upon
Company Stock payable in shares of said stock, (i) the number of
shares of Company Stock subject to outstanding Awards and (ii)
the number of shares reserved for issuance pursuant to the Plan
shall be adjusted by adding to each such share the number of
shares which would be distributable thereon if such share had
been outstanding on the date fixed for determining the
shareholders entitled to receive such stock dividend.
(b) Reorganization, Etc. In the event that the outstanding
shares of Company Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities
of the Company or of another corporation, whether through
reorganization, recapitalization, stock split-up, combination of
shares, merger or consolidation, or otherwise, then there shall
be substituted for each share of Company Stock subject to
outstanding Awards and for each share of Company Stock reserved
for issuance pursuant to the Plan, the number and kind of shares
of stock or other securities which would have been substituted
therefor if such share had been outstanding on the date fixed for
determining the shareholders entitled to receive such substituted
stock or other securities.
(c) Other Changes in Stock. In the event there shall be
any change, other than as specified in subsections (a) and (b) of
this Section 2, in the number or kind of outstanding shares of
Company Stock or of any stock or other securities into which such
Company Stock shall be changed or for which it shall have been
exchanged, then and if the Committee shall at its discretion
determine that such change equitably requires an adjustment in
the number or kind of shares subject to outstanding Awards or
which have been reserved for issuance pursuant to the Plan, such
adjustments shall be made by the Committee and shall be effective
and binding for all purposes of the Plan and each outstanding
stock option and other Award.
(d) General Adjustment Rules. No adjustment or
substitution provided for in this Section 2 shall require the
Company to sell or deliver a fractional share under any stock
option or other Award and the total substitution or adjustment
with respect to each Award shall be handled in the discretion of
the Committee either by deleting any fractional shares or by
appropriate rounding up to the next whole share. In the case of
any such substitution or adjustment, the option price per share
for each stock option shall be equitably adjusted by the
Committee to reflect the greater or lesser number of shares of
stock or other securities into which the stock subject to the
option may have been changed.
ARTICLE V
GENERAL MATTERS
SECTION 1. Administration. The Plan shall be administered by a
Committee of not less than three Directors appointed by the
Board, none of whom shall have been eligible to receive an Award
under the Plan within the twelve months preceding their
appointment.
SECTION 2. Authority of Committee. Subject to the provisions of
the Plan, the Committee shall have full and final authority to
determine the Employees to whom Awards shall be granted, the type
of Awards to be granted, the number of shares to be included in
each Award, and the other terms and conditions of the Awards.
Nothing contained in this Plan shall be construed to give any
Employee the right to be granted an Award or, if granted, to any
terms and conditions therein except such as may be authorized by
the Committee. The Committee is empowered, in its discretion, to
(i) modify, amend, extend or renew any Award theretofore granted,
subject to the limitations set forth in Article III and with the
proviso that no modification or amendment shall impair without
the Optionees' consent any option theretofore granted under the
Plan, (ii) adopt such rules and regulations and take such other
action as it shall deem necessary or proper for the
administration of the Plan and (iii) delegate any or all of its
authority (including the authority to select eligible employees
and to grant stock options) to one or more senior officers of the
Company, except with respect to Awards for officers or any
performance share awards, and except in the event that any such
delegation would cause this Plan not to comply with Securities
and Exchange Commission Rule 16b-3 (or any successor rule). The
Committee shall have full power and authority to construe,
interpret and administer the Plan, and the decisions of the
Committee shall be final and binding upon all parties.
SECTION 3. Withholding. The Company or any Subsidiary shall
have the right to deduct from all amounts paid in cash under this
Plan any taxes required by law to be withheld therefrom. In the
case of payments of Awards in the form of Company Stock, at the
Committee's discretion, (a) the Optionee may be required to pay
over the amount of any withholding taxes, (b) the Optionee may be
permitted to deliver to the Company the number of shares of
Company Stock whose Fair Market Value is equal to or less than
the withholding taxes due or (c) the Company may retain the
number of shares calculated under (b) above.
SECTION 4. Nonalienation. No Award shall be assignable or
transferable, except by will or the laws of descent and
distribution, and except that in its discretion the Committee may
authorize exercise by or payment to a beneficiary designated by
an Optionee. No right or interest of any Optionee in any Award
shall be subject to any lien, obligation or liability.
SECTION 5. General Restriction. Each Award shall be subject to
the requirement that if at any time the Board or the Committee
shall determine in its discretion that the listing, registration
or qualification of shares upon any securities exchange or under
any state or Federal law, rule, regulation or decision, or the
consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection with,
the granting of such Award or the issue, purchase or delivery of
shares or payment thereunder, such Award may not be exercised in
whole or in part and no payment therefor shall be delivered
unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any
conditions not acceptable to the Board or Committee.
SECTION 6. Effective Date and Duration of Plan. The Plan
initially became effective May 1, 1965. The Plan as amended
herein shall become effective January 1, 1997. No Awards shall
be granted under the Plan after January 1, 2002 although shares
thereafter may be delivered in payment of Awards granted prior
thereto.
SECTION 7. Amendments. The Board may from time to time amend,
modify, suspend or terminate the Plan, provided, however, that no
such action shall (a) impair without an Optionee's consent any
option theretofore granted under the Plan or deprive any Awardee
of any shares of Company Stock which that person may have
acquired through or as a result of the Plan or (b) be made
without the approval of the shareholders of the Company where
such change would materially increase the benefits accruing to
Optionees, materially increase the maximum number of shares which
may be issued under the Plan or materially modify the Plan's
eligibility requirements.
SECTION 8. Construction. The Plan shall be interpreted and
administered under the laws of the Commonwealth of Pennsylvania
without application of its rules on conflict of laws.
ARTICLE VI
[DELETED, Effective January 1997]
To Fellow Alcoa Shareholders:
Your 1997 Alcoa proxy card is attached below. Please read
both sides of the card, and vote, sign and date it. Then
detach and return it promptly using the enclosed envelope. We
urge you to vote your shares.
You are invited to attend the annual meeting of shareholders
on Friday, May 9, at 9:30 a.m. in the William Penn Ballroom of
the Westin William Penn Hotel in Pittsburgh, Pennsylvania.
If you plan to attend the meeting, please check the
appropriate box on the proxy card. Then detach and retain
the admission ticket which is required to attend the meeting.
Thank you in advance for voting.
Barbara Jeremiah
Secretary
Shareholder comments about any aspect of company business are
welcome. Although such comments are not answered on an
individual basis, they do assist Alcoa management in
determining and responding to the needs of shareholders.
(IF YOU HAVE COMMENTS, PLEASE DETACH AND RETURN WITH YOUR
PROXY CARD IN THE ENCLOSED ENVELOPE)
Alcoa
425 Sixth Avenue
Pittsburgh, PA 15219-1850
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned shareholder hereby authorizes Earnest J.
Edwards, Robert G. Wennemer and John M. Wilson, or any
one or more of them, with power of substitution to each,
to represent the undersigned at the annual meeting of
shareholders of Aluminum Company of America scheduled for
Friday, May 9, 1997, and any adjournment of the meeting,
and to vote the shares of stock which the undersigned
would be entitled to vote if attending the meeting, upon
the matters referred to on the reverse side of this card
and in accordance with the best judgment of such persons
upon other matters as may properly come before the
meeting or any adjournment of the meeting.
As described more fully in the proxy statement, this card
votes or provides voting instructions for shares of
common stock held under the same registration in any one
or more of the following manners: as a shareholder of
record, in the Alcoa Dividend Reinvestment and Stock
Purchase Plan and in Alcoa's employee savings plan.
If you plan to attend the annual meeting, please check
the box below.
/ / I will attend the annual meeting
(continued on the other side)
(continued from the other side)
(DETACH AND RETURN IN THE ENCLOSED ENVELOPE)
PROXY
Please specify your choices by clearly marking the
appropriate boxes. Unless specified, this proxy will be voted
FOR all listed nominees in item 1, and FOR the proposal in
item 2.
1. Election of Directors for a three-year term.
Nominees are: Kenneth W. Dam, Judith M. Gueron, Paul
H. O'Neill
/ / FOR all listed nominees
/ / WITHHOLD vote for all listed nominees
/ / WITHHOLD vote only from
DIRECTORS RECOMMEND A VOTE FOR THIS ITEM (#1)
2. Approve an amendment to the Long Term Stock Incentive
Plan.
/ / VOTE FOR / / VOTE AGAINST / / ABSTAIN
DIRECTORS RECOMMEND A VOTE FOR THIS ITEM (#2)
PLEASE VOTE, SIGN, DATE AND RETURN
- -------------------------------- Date-----------------
1997
(Sign exactly as name appears above, indicating position or
representative capacity, where applicable)
