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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / x /[X]
Filed by a Party other than the Registrant / /[_]
Check the appropriate box:
/ /[_] Preliminary Proxy Statement
/ /[_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ x /[X] Definitive Proxy Statement
/ /[_] Definitive Additional Materials
/ /[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Alcoa Inc.ALCOA INC.
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(Name of Registrant as Specified inIn Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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/ /[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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the filing fee is calculated and state how it was determined):
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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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ALCOA LOGO
2000-------------------------------------------------------------------------
Notes:
[Logo of Alcoa]
Notice of
Annual Meeting
and2001
& Proxy
Statement
TABLE OF CONTENTS
NOTICE OF 2000 ANNUAL MEETING 2
THE ANNUAL MEETING AND VOTING - QUESTIONS AND ANSWERS 3
BOARD OF DIRECTORS 5
ITEM 1 - ELECTION OF DIRECTORS 6
ALCOA STOCK OWNERSHIP AND PERFORMANCE 12
EXECUTIVE COMPENSATION 15
ReportAlcoa
201 Isabella Street at 7th Street Bridge
Pittsburgh, Pennsylvania 15212-5858
[Logo of the Compensation Committee
Summary Compensation Table
Option Grants in 1999
1999 Aggregate Option Exercises and Year-End
Option Values
Pension Plans
ITEM 2 - APPROVE AN AMENDMENT TO ALCOA'S 26
ARTICLES OF INCORPORATION TO INCREASE
COMMON STOCK
OTHER INFORMATION 28
ALCOA LOGOAlcoa]
TO ALCOA SHAREHOLDERS:
I cordially invite you to the 20002001 annual meeting of Alcoa shareholders.
The meeting this year is on Friday, May 12, 2000April 20, 2001 at 9:30 a.m. in the Allegheny
Ballroom of the DoubleTree HotelWestin Convention Center Pittsburgh in Pittsburgh, Pennsylvania.
The location is accessible to disabled persons, and we will have headsets
available for the hearing impaired.
I hope you will participate in this review of our company's business and
operations. This proxy statement describes the items you will vote on at the
meeting. In addition to voting, we will review the major developments of 19992000
and answer your questions.
If you plan to attend, you will need an admission ticket. For registered
holders, we have included an admission ticket with your proxy card. Other
shareholders may obtain tickets by contacting the corporate secretary.
Whether or not you plan to attend the meeting, your vote is important. Please
vote by returning your signed and dated proxy card in the postage-paid envelope
or by using the on-
lineon-line voting option.
I look forward to seeing you at the annual meeting.
Sincerely,
/s/Paul H. O'Neill
Paul H. O'Neill Alain J. P. Belda
- --------------------------
Alain J. P. Belda
Chairman of the Board
and Chief Executive Officer
February 25, 2000
Alcoa
201 Isabella Street at 7th Street Bridge
Pittsburgh, Pennsylvania 15212-5858
ALCOA LOGO22, 2001
[Logo of Alcoa]
NOTICE OF 20002001 ANNUAL MEETING
February 25, 200022, 2001
Alcoa's annual meeting of shareholders will be on Friday, May 12, 2000April 20, 2001 at 9:30
a.m. We will meet in the Allegheny Ballroom of the DoubleTree HotelWestin Convention Center
Pittsburgh, 1000 Penn Avenue, Pittsburgh, Pennsylvania. If you owned common
stock at the close of business on February 14, 2000,January 22, 2001, you may vote at this
meeting.
At the meeting, we plan to:
- -. elect threefour directors to serve for new terms;
- -. vote on a shareholder proposal relating to approve an amendment to Alcoa's Articlesa global set of Incorporation increasingcorporate
standards if presented at the number of authorized
shares of common stock;meeting; and
- -. attend to other business properly presented at the meeting.
The Board is not aware of any other proposals for the May 12,
2000April 20, 2001 meeting. Should another arise, the proxy committee
will vote your proxy according to its best judgment.
On behalf of Alcoa's Board of Directors,
/s/Denis A. Demblowski
Denis A. Demblowski Donna Dabney
- ------------------------------
Donna Dabney
Secretary
NOTICE OF 2001 ANNUAL MEETING
AND PROXY STATEMENT
TABLE OF CONTENTS
THE ANNUAL MEETING AND VOTING - 4
QUESTIONS AND ANSWERS
BOARD OF DIRECTORS 6
Committees and Meetings of the Board
Directors' Compensation
Transactions with Directors' Companies
ITEM 1 - ELECTION OF DIRECTORS 7
ALCOA STOCK OWNERSHIP AND PERFORMANCE 13
Stock Ownership of Certain Beneficial Owners
Stock Ownership of Directors and Executive Officers
Compliance with Section 16(a) Reporting
Stock Performance Graph
REPORT OF THE AUDIT COMMITTEE 16
EXECUTIVE COMPENSATION 18
Report of the Compensation Committee
Summary Compensation Table
Option Grants in 2000
2000 Aggregate Option Exercises and Year-End Option Values
Pension Plans
Pension Plan Table
ITEM 2 - SHAREHOLDER PROPOSAL RELATING 28
TO A GLOBAL SET OF CORPORATE STANDARDS
OTHER INFORMATION 31
APPENDIX A - AUDIT COMMITTEE CHARTER 32
THE ANNUAL MEETING AND VOTING - QUESTIONS AND ANSWERS
The Alcoa Board of Directors is soliciting proxies for the 2001 annual meeting
of shareholders. This booklet and proxy card contain information about the items
you will vote on at the annual meeting. These documents are first being mailed
or given to shareholders on or about February 22, 2001.
Who is entitled to vote and how many votes do I have?
If you are a common stock holderstockholder of record at the close of business on February 14, 2000,January
22, 2001, you can vote. For each matter presented for vote, you have one vote
for each share you own.
How do I vote?
You may vote in person by attending the meeting or by completing and returning a
proxy by mail or electronically using the Internet. To vote your proxy by mail,
mark your vote on the enclosed proxy card, then follow the directions on the
card. To vote your proxy using the Internet, see the instructions on the proxy
form, and have the proxy form available when you access the Internet Web site.
The homepage will prompt you to enter your control number; then follow the
instructions to record your vote. The proxy committee will vote your shares
according to your directions. If you do not mark any selections, your shares
will be voted as recommended by the Board of Directors. Whether you plan to
attend the meeting or not, we encourage you to vote by proxy as soon as
possible.
What does it mean if I receive more than one proxy card?
If you are a shareholder of record or participate in Alcoa's Dividend
Reinvestment and Stock Purchase Plan or employee savings plans, you will receive
one proxy card for all shares of common stock held in or credited to your
accounts as of the record date, if the account registrationsnames are exactly the same. If
your shares are registered differently and are in more than one account, you
will receive more than one proxy card. We encourage you to have all accounts
registered in the same name and address whenever possible. You can do this by
contacting our transfer agent, First Chicago Trust Company of New York, a
division of EquiServe, at 1 800 317 4445 (in the U.S. and Canada) or 1 201 324
0313 (all other calls) or by e-mail at FCTC@delphi.com.equiserve@equiserve.com.
How do I vote if I participate in one of the employee savings plans?
You should vote by proxy. The plans' independentemployee plan trustee will vote your Alcoashares as you
indicate on your proxy. If you do not vote, the plan trustee for employee savings plan shares according to your voting instructions or
as recommended by the Board of Directors if you give no
instructions on the proxy form. The trusteeplans
(other than Cordant plans) will vote planyour shares not voted by proxy in proportion to the way the
other plan participants voted their shares.voted. If you participate in Cordant plans and do not
vote, the plan trustee will vote your shares as directed by the Company.
Can I change my vote?
You can revoke your proxy before the time of voting at the meeting in several
ways:
- -ways (the revocation has to be received before the meeting to be counted):
. by mailing a revised proxy dated later than the prior proxy
- -. by voting again at the Internet Web site
- -. by voting in person at the meeting or
- -. by notifying Alcoa's corporate secretary in writing that you are revoking
your proxy.
Is my vote confidential?
Yes. Proxy cards, ballots and voting tabulations that identify shareholders are
kept confidential. There are exceptions for contested proxy solicitations or
where necessary to meet legal requirements. Corporate Election Services, Inc.,
the independent proxy tabulator used by Alcoa, counts the votes and acts as the
inspector of election for the meeting.
-3-4
Who can attend the annual meeting, and how do I obtain an admission ticket?
You may attend the meeting if you were a shareholder on February 14, 2000.January 22, 2001. If you
plan to attend the meeting, you will need an admission ticket, which is part of
your proxy form. If a broker holds your shares and you would like to attend,
please write to: Secretary,Secretary's Office, Alcoa Inc., 201 Isabella Street,
Pittsburgh, PA 15212-5858.Pennsylvania 15212-5858, Attention: Dolores A. Yura. Please include
a copy of your brokerage account statement or an omnibus proxy (which you can
get from your broker), and we will send you an admission ticket.
What constitutes a "quorum" for the meeting?
A majority of the outstanding shares, present or represented by proxy,
constitutes a quorum. A quorum is necessary to conduct business at the annual
meeting. You are part of the quorum if you have voted by proxy. Abstentions,
broker non-
votesnon-votes and votes withheld from director nominees count as "shares
present" at the meeting for purposes of determining a quorum. However,
abstentions and broker non-votes do not count in the voting results. A broker
non-vote occurs when a broker or other nominee who holds shares for another does
not vote on a particular item because the nominee does not have discretionary
voting authority for that item and has not received instructions from the owner
of the shares.
Director candidates who receive the highest number of votes cast will be
elected. Approval of each other item being considered requires a majority of the
votes cast.
At the close of business on February 14, 2000,January 22, 2001, the record date for the meeting,
Alcoa had outstanding 369,486,363866,339,457 shares of common stock.stock (excluding
treasury shares).
Who pays for the solicitation of proxies?
Alcoa pays the cost of soliciting proxies. We retain Morrow & Company, Inc. to
assist with the solicitation for a fee of $13,000 plus reasonable out-of-pocket
expenses. We will reimburse brokerage firms and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for sending proxy
materials to shareholders and obtaining their votes.
How do I comment on company business?
There is space for your comments on the proxy card or you may send your comments
to us in care of the corporate secretary. Although it is not possible to respond
to each shareholder, your comments help us to understand your concerns and
address your needs.
May I nominate someone to be a director of Alcoa?
If you are a shareholder entitled to vote at an annual meeting, you may nominate
one or more persons for election as directors of Alcoa at that meeting. You may
do this by sending a written notice to: Secretary,Secretary's Office, Alcoa Inc., 201
Isabella Street, Pittsburgh, PA 15212-5858.Pennsylvania 15212-5858, Attention: Janet
Duderstadt, Assistant Secretary. The notice must include certain information
about the persons that you nominate, and, for the 2002 annual meeting, we must
receive it at least 90 days before the annual meeting
date.by January 18, 2002. For complete details, contact the corporate
secretary.
When are the 20012002 shareholder proposals due?
The next Alcoa annual meeting is on April 20, 2001.19, 2002. You must submit shareholder
proposals in writing by November 1,
2000October 25, 2001 for them to be considered for the 20012002
proxy statement. No proposals received after January 19, 20018, 2002 may be raised at
the annual meeting. Address all shareholder proposals to the corporate secretary ofSecretary's Office,
Alcoa at the above
address.
-4-Inc., 201 Isabella Street, Pittsburgh, Pennsylvania 15212-5858, Attention:
Janet Duderstadt, Assistant Secretary.
5
BOARD OF DIRECTORS
COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors considers all major decisions of Alcoa. The Board met
nineeight times in 1999.2000. Attendance by directors at Board and committee meetings
averaged over 90%. All directors attended at least 75% of the meetings, except
Sir Ronald Hampel, who attended 60% of the meetings. The Board has the following
five standing committees:
The Audit Committee reviews Alcoa's auditing, financial reporting and internal
control functions and recommends the firm that Alcoa should retain as its
independent accountant. It also reviews the company's environmental, health and
safety audits and monitors compliance with Alcoa business conduct policies. The
members of the Audit Committee are independent, as defined under the New York
Stock Exchange listing standards. The independent accountants, the vice
president-environment, healthVice
President-Environment, Health & safety, auditSafety, Audit and complianceCompliance and the general counselGeneral
Counsel have access to the committeeCommittee without management's presence.any other members of management
being present. The committeeCommittee met four times in 1999.2000. In addition, the chairman
of this committeeCommittee met with management and the independent accountants prior tobefore the
announcement of quarterly earnings in April, July, October and October.January. The full committeeCommittee
reviewed quarterlyannual results, the Audit Committee report (see page 16 of this proxy
statement) and annual results in January.disclosure filings before filing.
The Compensation Committee determines cash compensation for Alcoa officers,
approves posttermination contractsany special post retirement arrangements for retiring Alcoa officers
and performs other functions specified by the company's compensation plans. The
committeeCommittee also reviews the participation of officers in other benefit programs
for salaried employees. A subcommittee of the Compensation Committee administers
the company's stock incentive plan. In
addition, this committeeThe Compensation Committee issues the Report
of the Compensation Committee on executive compensation (see page 1518 of this
proxy statement). The committeeCommittee met sixfive times in 1999.2000.
The Executive Committee has authority to act on behalf of the Board. It meets
when specific action must be taken between Board meetings. This committeeThe Committee met
oncetwice in 1999.2000.
The Nominating Committee considers and recommends nominees for election as
directors and reviews the performance of incumbent directors. The committeeCommittee
reviews the names and qualifications of nominees that shareholders submit in
writing to the corporate secretary. This committeeThe Committee met once in 1999.2000.
The Pension and Savings Plan Investment Committee reviews and approves the
investment management of Alcoa's retirement plans and principal savings plans.
This committeeThe Committee met twiceonce in 1999.2000.
DIRECTORS' COMPENSATION
Alcoa pays each director who is not an Alcoa employee an annual retainer fee of
$100,000. Alcoa does not pay any additional fees, such as meeting or committee
fees.
Directors may elect to defer some or all of their annual retainer under the
company's deferred fee plan for nonemployeenon-employee directors. Alcoa encourages
directors to defer the maximum amount that their individual circumstances allow.
The company credits all fee deferrals to an Alcoa stock investment account,
except that directors may invest
deferrals exceeding 50% of the annual retainer fee may be invested
in other investment options under the plan. Alcoa credits deferred
accounts as if invested in the investment options under
Alcoa's principal savings plan for salaried employees.
Directors may change among investment options once each
month. Directors cannot however, transfer from the
required Alcoa stock investment option. Alcoa does not fund directors' deferred
accounts, but pays them out in cash from general funds of the company after
Board service ends.
TRANSACTIONS WITH DIRECTORS' COMPANIES
In the course of ordinary business, Alcoa and its subsidiaries may have
transactions with companies and organizations whose executive officers are also
Alcoa directors. None of these transactions in 2000 exceeded 5% of the gross
revenues of either Alcoa or the other organization.
-5-6
ITEM 1 - ELECTION OF DIRECTORS
In 2000 Alcoa's Board of Directors hashad 11 members who are divided into three classes.
Directors are elected for three-year terms. The terms for members of each class
end in successive years.
Mr. Paul H. O'Neill retired as Chairman of the Board of Alcoa December 31, 2000.
His term as director also expired on that date and he is not standing for re-
election.
The Board of Directors has nominated the threefour members of the class of directors
whose terms of office are expiring in 2001 to serve for new terms. Paul H. O'Neill, Alcoa's chairman and
one of the nominees, has indicated that he intends to retire
as chairman and as a director on December 31, 2000 and, as a
consequence, his new term as a director will expire at that
time. The new terms of the other two director nominees will
expire in 2003.
The proxy committee will vote your proxy for the election of these nominees
unless you withhold authority to vote for any one or more of them. If any
director is unable to stand for election, the Board may reduce its size or
choose a substitute.
NOMINEES TO SERVE FOR A THREE-YEAR TERM EXPIRING IN 2004
[Photo of Alain J. P. Belda]
Alain J. P. Belda
Age: 57
Director since: 1998
Principal occupation: Chairman of the Board and Chief
Executive Officer of Alcoa since
January 2001.
Alcoa Board Executive Committee (chair).
Committee:
Recent business Mr. Belda was President and Chief
experience: Executive Officer of Alcoa from
May 1999 to January 2001 and President
and Chief Operating Officer of Alcoa
from 1997 to May 1999. He served as
Alcoa's Vice Chairman from 1995 to
1997 and Executive Vice President from
1994 to 1995. From 1979 to 1994, he
was President of Alcoa Aluminio S.A. in
Brazil. In 1991, he was named
President-Latin America for the company
after he had been given responsibility
for all of Alcoa's interests in Latin
America (other than Suriname) in 1989.
Other directorships: Citigroup Inc., E. I. du Pont de
Nemours and Company and The Ford
Foundation.
7
NOMINEES TO SERVE FOR A THREE-YEAR TERM EXPIRING IN 2004 (continued)
[Photo of Hugh M. Morgan]
Hugh M. Morgan
Age: 60
Director since: 1998
Alcoa Board Compensation Committee and Pension and
Committees: Savings Plan Investment Committee.
Principal occupation: Managing Director, since 1986, and
Chief Executive Officer, since 1990,
of WMC Limited, an Australian mining
and minerals processing company.
Recent business Mr. Morgan was Executive Director of
experience: WMC from 1976 to 1986 and a director
of Alcoa of Australia Limited from
1977 to 1998.
Other directorships: Reserve Bank of Australia and a
number of industry, business, trade
and international associations and
advisory groups.
[Photo of Henry B. Schacht]
Henry B. Schacht
Age: 66
Director since: 1994
Alcoa Board Committee: Audit Committee (chair).
Principal occupation: Chairman and Chief Executive Officer,
Lucent Technologies Inc., a
communications systems and services
company, since October 2000.
Recent business Mr. Schacht is on unpaid leave from
experience: Warburg Pincus, where he has been
Managing Director since January 2000
and was Senior Advisor in 1999. Mr.
Schacht served as Chief Executive
Officer of Lucent Technologies Inc.
from February 1996 to October 1997,
Chairman from 1996 to 1998 and Senior
Advisor from February 1998 to
February 1999. Mr. Schacht was
Chairman of Cummins Inc. from 1977 to
1995 and its Chief Executive Officer
from 1973 to 1994.
Other directorships: Avaya Inc., Johnson & Johnson, Knoll,
Inc., Lucent Technologies Inc. and
The New York Times Company.
8
NOMINEES TO SERVE FOR A THREE-YEAR TERM EXPIRING IN 2004 (continued)
[Photo of Franklin A. Thomas]
Franklin A. Thomas
Age: 66
Director since: 1977
Alcoa Board Audit Committee, Compensation
Committees: Committee (chair), Executive
Committee, Nominating Committee and
Pension and Savings Plan Investment
Committee.
Principal occupation: Consultant, TFF Study Group, a
nonprofit institution assisting
development in South Africa, since
1996.
Recent business From 1979 until 1996, Mr. Thomas was
experience: President and Chief Executive Officer
of The Ford Foundation. He Was
President and Chief Executive Officer
of Bedford Stuyvesant Restoration
Corporation from its founding in 1967
until 1977.
Other directorships: Avaya Inc., Citigroup Inc., Conoco
Inc., Cummins Inc., Lucent
Technologies Inc. and PepsiCo, Inc.
DIRECTORS WHOSE TERMS EXPIRE IN 2002
[Photo of Joseph T. Gorman]
Joseph T. Gorman
Age: 63
Director since: 1991
Alcoa Board Compensation Committee, Nominating
Committees: Committee and Pension and Savings
Plan Investment Committee (chair).
Principal occupation: Chairman, TRW Inc., a global company
serving the automotive, space and
information systems markets, since
1988.
Recent business Mr. Gorman served as Chief Executive
experience: Officer of TRW Inc. from 1988 until
February 2001, President and Chief
Operating Officer from 1985 to 1988,
Executive Vice President from 1980 to
1985, Vice President and General
Counsel from 1976 to 1980 and in
various legal positions before 1976.
Other directorships: The Procter & Gamble Company,
Imperial Chemical Industries plc,
National City Corporation and TRW
Inc.
9
DIRECTORS WHOSE TERMS EXPIRE IN 2002 (continued)
[Photo of Sir Ronald Hampel]
Sir Ronald Hampel
Age: 68
Director since: 1995
Alcoa Board Nominating Committee and Pension and
Committees: Savings Plan Investment Committee.
Principal occupation: Chairman of United Business Media, a
U.K.-based media company with
interests in broadcasting, publish-
ing and news dissemination services,
since April 1999.
Recent business Sir Ronald was Chairman, Imperial
experience: Chemical Industries plc (ICI), a
diversified chemicals manufacturer,
from 1995 to 1999, Deputy Chairman
and Chief Executive of ICI from 1993
to 1995 and Chief Operating Officer
from 1991 to 1993. He was an ICI
director from 1985 to 1999. Sir
Ronald was Chairman of the UK
Committee on Corporate Governance.
Other directorships: BAE Systems plc, United Business
Media and the All England Lawn Tennis
Club (Wimbledon) Limited.
[Photo of John P. Mulroney]
John P. Mulroney
Age: 65
Director since: 1987
Alcoa Board Compensation Committee and Nominating
Committees: Committee (chair).
Principal occupation: Executive Director of the Opera
Company of Philadelphia, since
January 1999.
Recent business Mr. Mulroney was President and Chief
experience: Operating Officer, Rohm and Haas
Company, a specialty chemicals
manufacturer, from 1986 until his
retirement in 1998. He served as a
director of Rohm and Haas from 1982
to 1998.
Other directorships: Teradyne, Inc. and the William Penn
Foundation.
10
DIRECTORS WHOSE TERMS EXPIRE IN 2002 (CONTINUED)
[Photo of Marina v.N. Whitman]
Marina v.N. Whitman
Age: 65
Director since: 1994
Alcoa Board Audit Committee and Pension and
Committees: Savings Plan Investment Committee.
Principal occupation: Professor of Business Administration
and Public Policy, School of Business
Administration and the School of
Public Policy at the University of
Michigan, since 1992.
Recent business Dr. Whitman was Vice President and
experience: Group Executive, Public Affairs and
Marketing Staffs of General Motors
Corporation, a manufacturer of
automotive vehicles also engaged in
the communications, finance and
insurance industries, 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.
Other directorships: J.P. Morgan Chase & Co., Intelliseek,
The Procter & Gamble Company and
Unocal Corporation.
DIRECTORS WHOSE TERMS EXPIRE IN 2003
[Photo of Kenneth W. Dam]
Kenneth W. Dam
Age: 6768
Director since: 1987
Alcoa Board Audit Committee, Compensation Committees: Committee and
Committees: Executive Committee.
Principal occupation: Max Pam Professor of American and Foreign
Law, University of Chicago Law School
since 1992.
Recent business Mr. Dam served as President and Chief
experience: Executive Officer for United Way of
America in 1992, Vice President for Law
and External Relations of IBM Corporation
from 1985 to 1992, Deputy Secretary of
State from 1982 to 1985 and Provost of the
University of Chicago from 1980 to 1982.
Other directorships: Council on Foreign Relations and the
Brookings Institution.
-6-
NOMINEES TO SERVE FOR A THREE-YEAR TERM EXPIRING11
DIRECTORS WHOSE TERMS EXPIRE IN 2003 (continued)
[Photo of Judith M. Gueron]
Judith M. Gueron
Age: 5859
Director since: 1988
Alcoa Board Audit Committee and Pension and Savings Plan
Committees: Plan Investment Committee.
Principal occupation: President, Manpower Demonstration Research
Corporation (MDRC), a nonprofit research
organization, since 1986.
Recent business Dr. Gueron was MDRC's Executive Vice
experience: President for research and evaluation from
1978 to 1986. Before joining MDRC, she was
director of special projects and studies
and a consultant for the New York City
Human Resources Administration.
NOMINEE TO SERVE FOR A TERM EXPIRING DECEMBER 31, 2000
Paul H. O'Neill
Age: 64
Director since: 1986
Alcoa Board Executive Committee (chair).
Committee:
Principal occupation: Chairman of the Board of Alcoa.
Recent business Mr. O'Neill has served as Alcoa's Chairman
experience: of the Board since 1987 and was Chief
Executive Officer from 1987 to May 1999.
From 1985 to 1987, he was President and a
director of International Paper Company.
Other directorships: Eastman Kodak Company, Gerald R.
Ford Foundation, Lucent Technologies Inc.,
Manpower Demonstration Research
Corporation, National Association of
Securities Dealers, Inc. and The RAND
Corporation.
-7-
DIRECTORS WHOSE TERMS EXPIRE IN 2002
Joseph T. Gorman
Age: 62
Director since: 1991
Alcoa Board Compensation Committee, Nominating
Committees: Committee and Pension and Savings Plan
Investment Committee (chair).
Principal occupation: Chairman and Chief Executive Officer,
TRW Inc., a global company serving the
automotive, space and information
systems markets.
Recent business Mr. Gorman was TRW's President from 1985
experience: to 1991 and Chief Operating Officer
from 1985 to 1988. He has served as
Chairman and Chief Executive Officer of
TRW since 1988.
Other directorships: The Procter & Gamble Company and TRW.
Sir Ronald Hampel
Age: 67
Director since: 1995
Alcoa Board Nominating Committee and Pension and
Committees: Savings Plan Investment Committee.
Principal occupation: Since April 1999, Chairman of United
News & Media plc, a U.K.-based media
company with interests in broadcasting,
publishing and news dissemination
services.
Recent business Sir Ronald was Chairman, Imperial
experience: Chemical Industries PLC (ICI), a
diversified chemicals manufacturer,
from 1995 to 1999, Deputy Chairman
and Chief Executive of ICI from 1993
to 1995 and Chief Operating Officer
from 1991 to 1993. He was an ICI
director from 1985 to 1999. Sir Ronald
is Chairman of the UK Committee on
Corporate Governance.
Other directorships: BAE Systems PLC and the All England
Lawn Tennis Club (Wimbledon) Limited.
-8-
DIRECTORS WHOSE TERMS EXPIRE IN 2002 (continued)
John P. Mulroney
Age: 64
Director since: 1987
Alcoa Board Compensation Committee and Nominating
Committees: Committee (chair).
Principal occupation: Former President and Chief Operating
Officer, Rohm and Haas Company, a
specialty chemicals manufacturer.
Recent business Mr. Mulroney was President and Chief
experience: Operating Officer of Rohm and Haas
Company from 1986 until his retirement
in 1998. He served as a director of
Rohm and Haas from 1982 to 1998.
Other directorships: Teradyne, Inc.
Marina v.N. Whitman
Age: 64
Director since: 1994
Alcoa Board Audit Committee and Pension and Savings
Committee: Plan Investment Committee.
Principal occupation: Professor of Business Administration
and Public Policy, School of Business
Administration and the School of Public
Policy at the University of Michigan,
since 1992.
Recent business Dr. Whitman was Vice President and Group
experience: 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.
Other directorships: The Chase Manhattan Corporation,
The Procter & Gamble Company and Unocal
Corporation.
-9-
DIRECTORS WHOSE TERMS EXPIRE IN 2001
Alain J. P. Belda
Age: 56
Director since: 1998
Principal occupation: President and Chief Executive Officer
of Alcoa since May 1999.
Recent business Mr. Belda was President and Chief
experience: Operating Officer of Alcoa from 1997 to
May 1999. He served as Alcoa's Vice
Chairman from 1995 to 1997 and Executive
Vice President from 1994 to 1995. From
1979 to March 1994, he was President of
Alcoa Aluminio S.A. in Brazil. In August
1991, he was named President-Latin America
for the company after he had been given
responsibility for all of Alcoa's
interests in Latin America (other than
Suriname) in 1989.
Other directorships: Citigroup Inc., Cooper Industries, Inc.,
E. I. du Pont de Nemours and Company and
The Ford Foundation.
Hugh M. Morgan
Age: 59
Director since: 1998
Alcoa Board Compensation Committee and Pension and
Committee: Savings Plan Investment Committee.
Principal occupation: Managing Director and Chief Executive
Officer, WMC Limited, an Australian mining
and minerals processing company.
Recent business Mr. Morgan has been Managing Director of
experience: WMC since 1986 and its Chief Executive
Officer since 1990. He was Executive
Director of WMC from 1976 to 1986 and
a director of Alcoa of Australia Limited
from 1977 to 1998.
Other directorships: Reserve Bank of Australia and a number
of industry, business, trade and
international associations and advisory
groups.
-10-
DIRECTORS WHOSE TERMS EXPIRE IN 2001 (continued)
Henry B. Schacht
Age: 65
Director since: 1994
Alcoa Board Audit Committee (chair).
Committee:
Principal occupation: Managing Director, E. M. Warburg,
Pincus & Co., LLC, a financial services
firm, since January 2000.
Recent business Mr. Schacht became Senior Advisor to
E. M. Warburg, Pincus in 1999. He was
Senior Advisor to Lucent Technologies
Inc. from February 1998 to February 1999.
He served as Chairman of Lucent
Technologies from 1996 to 1998 and was
its Chief Executive Officer from February
1996 to October 1997. Mr. Schacht was
Chairman of Cummins Engine Company, Inc.
from 1977 to 1995 and its Chief Executive
Officer from 1973 to 1994.
Other directorships: Cummins Engine Company, Inc., The Chase
Manhattan Bank, The Chase Manhattan
Corporation, Johnson & Johnson, Knoll,
Inc., Lucent Technologies Inc. and
The New York Times Company.
Franklin A. Thomas
Age: 65
Director since: 1977
Alcoa Board Audit Committee, Compensation Committee
Committees: (chair), Executive Committee, Nominating
Committee and Pension and Savings Plan
Investment Committee.
Principal occupation: Consultant, TFF Study Group, a nonprofit
institution assisting development in
South Africa, since 1996.
Recent business From 1979 until 1996, Mr. Thomas was
experience: President of the Ford Foundation. He was
President and Chief Executive Officer of
Bedford Stuyvesant Restoration
Corporation from its founding in 1967
until 1977.
Other directorships: Citigroup Inc., Conoco Inc., Cummins
Engine Company, Inc., Lucent Technologies
Inc. and PepsiCo, Inc.
-11-12
ALCOA STOCK OWNERSHIP AND PERFORMANCE
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following shareholders reported to the Securities and Exchange Commission
that they owned more than 5% of Alcoa common stock on December 31, 1999.2000.
Name and address Number of Percent of outstanding
of beneficial owner shares owned Alcoa common stock owned
- ----------------------------------------------------------------------------------------------
Capital Research and Management Company Company/(1) 23,061,300 6.30%/ 44,563,000 5.2%
333 South Hope Street
Los Angeles, CA 90071
Fidelity Management & Research Company, LLP (2) 37,799,385 10.316%
82 Devonshire Street
Boston, MA 02109
Wellington Management Company, LLP (3) 25,950,230 7.08%
75 State Street
Boston, MA 02109
(1) Capital Research and Management is a registered investment adviser that
provides investment advisory services to various investment companies. Capital
Research and Management reported that it has sole power to dispose of all of
the shares shown, but no power to vote the shares. It disclaimed beneficial
ownership of the reported shares.
LLP/(2) FMR is a parent holding company and its report also covered interests owned
or controlled by its affiliates. FMR reported sole power to vote 2,460,417 shares
and sole power to dispose of all shares shown. It did not share power to vote or
dispose of any shares.
(3) Wellington reported these amounts as an investment adviser; the shares are
owned by its clients. Wellington reported that it had shared power to dispose of
25,942,230 shares and shared voting power over 6,420,116/ 57,924,234 6.7%
75 State Street
Boston, MA 02109
(1) Capital Research and Management is a registered investment adviser that
provides investment advisory services to various investment companies.
Capital Research and Management reported that it has sole power to dispose
of all of the shares shown, but no power to vote the shares. It disclaimed
beneficial ownership of the reported shares.
(2) Wellington reported these amounts as an investment adviser; the shares are
owned by its clients. Wellington reported that it had shared power to
dispose of 57,914,434 shares and shared voting power over 15,553,084 of the
shares shown; it did not have sole power to vote or dispose of any shares.
Stock Ownership of Directors and Executive Officers:STOCK OWNERSHIP OF DIRECTORS
AND EXECUTIVE OFFICERS
The following table shows beneficial ownership of Alcoa common stock by
directors, nominees for director and executive officers as of December 31, 1999.2000.
The named executive officers are Paul H. O'Neill,Alain J.P. Belda, who served as chief executive
officer until
May 6, 1999, Alain J.P. Belda, who became the chief executive
officer on May 6,during 2000, and the four executive officers who were the highest paid
in 1999.2000.
No individual director, nominee or executive officer owned more than 1% of
Alcoa's common stock. The total ownership shown for directors and executive
officers as a group represents less than 2% of outstanding shares.
-12-
13
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Name Exercisable stock Number of shares Number of deferred
options (1)/(1)/ owned (2)/(2)/ share equivalent units (3)
- ----------------------------------------------------------------------------------------------------/(3)/
Alain J. P. Belda 661,659 273,213 6,1922,928,482 733,892 14,149
Kenneth W. Dam 0 6,400 5,57313,600 14,644
Joseph T. Gorman 0 4,647 5,8859,434 13,673
Judith M. Gueron 0 6,045 4,86912,289 11,591
Sir Ronald Hampel 0 5,26411,653 0
Hugh M. Morgan 0 200 3,207400 9,797
John P. Mulroney 0 6,321 4,84212,850 11,530
Paul H. O'Neill 2,298,609 800,360 1,0883,769,660 2,365,166 4,460
Henry B. Schacht 0 5,081 4,84218,597 11,530
Franklin A. Thomas 0 6,467 13,88113,145 31,675
Marina v.N. Whitman 0 3,800 4,869
George E. Bergeron 419,369 147,024 3,641
Richard L. Fischer 607,612 126,723 1,0047,600 11,591
L. Patrick Hassey 288,501 46,265 1,826657,032 108,033 4,177
Richard B. Kelson 378,196 95,061 2,378909,978 339,124 5,520
Robert F. Slagle 937,317 520,849 2,382
Directors and executive officers 5,822,254 2,082,360 74,581
executive officers12,833,429 5,206,764 172,777
as a group (23(24 individuals)
(1) This column lists the number of shares of Alcoa common stock that the officers
had a right to acquire within 60 days through exercise of employee stock options.
Nonemployee directors are not eligible for stock option grants under any Alcoa plan.
(2) This column includes shares held of record and shares owned through a bank,
broker or other nominee. It also includes, for executive officers, shares owned
through the Alcoa Savings Plan for Salaried Employees.
(3) Reported in this column are share equivalent units credited to an individual's
account under deferred fee or deferred compensation plans.
Compliance With SectionStock ownership is shown as of December 31, 2000.
(1) This column lists the number of shares of Alcoa common stock that the
officers had a right to acquire within 60 days through exercise of employee
stock options. Non-employee directors are not eligible for stock option
grants under any Alcoa plan.
(2) This column includes shares held of record and shares owned through a bank,
broker or other nominee. It also includes, for executive officers, shares
owned through the Alcoa Savings Plan for Salaried Employees.
(3) Reported in this column are share equivalent units credited to an
individual's account under deferred fee or deferred compensation plans.
COMPLIANCE WITH SECTION 16(a) Reporting:REPORTING
The rules of the Securities and Exchange Commission require that we disclose
late filings of reports of stock ownership by Alcoa directors and executive
officers. Due to the complexity of the reporting rules, the company has assumed
certain responsibilities for filing compliance and has instituted procedures to
assist officers and directors with these obligations. Based on a review of the
filings made for the year, we believe that all required reports were filed on a
timely basis in 1999.
-13-2000.
14
STOCK PERFORMANCE GRAPH
This graph compares the most recent five-year performance of Alcoa common stock
with the S&P 500 Index and a peer group
index.composite index of six direct peers. It shows an
investment of $100 on December 31, 19941995 and the reinvestment of all dividends.
Over the five-year period, your $100 investment in Alcoa stock would have grown
to $419.77$276 by the end of 1999.2000. This compares with $351.12$232 for the S&P 500 Index and
$179.00$132 for the direct peers. The composite of direct peers includes the following
publicly traded companies: Alcan Aluminium Ltd., Billiton plc*, Noranda Inc.,
Norsk Hydro ASA*, Pechiney SA* and Rio Tinto plc*. These peers were selected on
an industry or line of business basis. Information is also shown for the old
peer group, index.
The peer group index, which is weighted for market
capitalization, includescomprised Alcan Aluminium Limited and Reynolds Metals Company. Alcoa usesacquired
Reynolds in May of 2000. We changed the peer group index
insteadthis year because the
Reynolds acquisition reduced the members of that group to one other company. The
data for the S&P Aluminum Industry Index, whichold peer group includes AlcoaReynolds' performance through May 3, 2000,
when it ceased being traded.
* Traded as well as Alcan and Reynolds, because Alcoa's heavy
market capitalization weighting would distort a comparison
with the full index.American Depository Receipts.
1994 1995 1996 1997 1998 1999
- ---------------------------------------------------------------
As of 12/31 1995 1996 1997 1998 1999 2000
Alcoa $100.00 124.33 153.33 171.57 185.78 419.77Inc. $100 $123 $138 $149 $337 $276
S&P 500 $100.00 137.58 169.17 225.60 290.08 351.12100 123 164 211 255 232
Direct Peers 100 118 104 87 165 132
(6 Stocks)
Old Peer 100 107 99 96 147 127
Group
CUMULATIVE TOTAL RETURN
Based upon an initial investment of $100 on December 31, 1995 with dividends
reinvested.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE DIRECT PEER GROUP RETURN
AMONG ALCOA, S&P 500 INDEX, DIRECT PEER GROUP INDEX AND OLD PEER GROUP INDEX
Direct Old Peer
Measurement Period S&P 500 Peer Group
$100.00 122.46 131.29 121.37 116.58 179.00(Fiscal-year Covered) Alcoa Index Index Index
------- ------- ------ --------
Measurement PT -
12/31/95 $100 $100 $100 $100
FYE 12/31/96 $123 $123 $118 $107
FYE 12/31/97 $138 $164 $104 $ 99
FYE 12/31/98 $149 $211 $ 87 $ 96
FYE 12/31/99 $337 $255 $165 $147
FYE 12/31/00 $276 $232 $132 $127
-14-15
REPORT OF THE AUDIT COMMITTEE
Under the guidance of a written charter adopted by the Board of Directors, the
Audit Committee is responsible for overseeing the company's financial reporting
process on behalf of the Board of Directors. A copy of the charter is included
in Appendix A to this proxy statement.
Management has the primary responsibility for the system of internal controls
and the financial reporting process. The independent accountants have the
responsibility to express an opinion on the financial statements based on an
audit conducted in accordance with generally accepted auditing standards. The
Audit Committee has the responsibility to monitor and oversee these processes.
In fulfilling its responsibilities, the Audit Committee recommended to the Board
the selection of the company's independent accountants, PricewaterhouseCoopers
LLP. That firm has discussed with the Committee and provided written disclosures
to the Committee on (1) that firm's independence as required by the Independence
Standards Board and (2) the matters required to be communicated under generally
accepted auditing standards.
The Committee reviewed with the Vice President - Environment, Health and Safety,
Audit and Compliance and the independent accountants the overall scope and
specific plans for their respective audits.
Without management present, the Committee met separately with the Vice President
- - Environment, Health and Safety, Audit and Compliance and the independent
accountants to review the results of their examinations, their evaluation of the
company's internal controls, and the overall quality of Alcoa's accounting and
financial reporting.
The Committee reviewed and discussed with management and the independent
accountants the company's audited financial statements.
Following these actions, the Committee recommended to the Board that the audited
financial statements be included in the company's Annual Report on Form 10-K for
the year ended December 31, 2000 for filing with the Securities and Exchange
Commission.
See page 6 of this proxy statement "Committees and Meetings of the Board" for
information on the Committee's meetings in 2000.
The Audit Committee
Henry B. Schacht, Chairman
Kenneth W. Dam
Judith M. Gueron
Franklin A. Thomas
Marina v.N. Whitman
February 8, 2001
16
Relationship with Independent Accountants
PricewaterhouseCoopers LLP has been the independent accounting firm that audits
the financial statements of Alcoa and most of its subsidiaries since 1950. In
accordance with standing policy, PricewaterhouseCoopers periodically changes the
personnel who work on the audit.
In addition to performing the audit of the company's consolidated financial
statements, PricewaterhouseCoopers provided various other services during 2000.
The aggregate fees billed for 2000 for each of the following categories of
services are set forth below:
. Audit and review of $5.3 million
the company's 2000
financial statements
All other services $7.2 million
PricewaterhouseCoopers did not provide any services related to financial
information systems design and implementation during 2000.
"All other services" includes (i) tax planning and the preparation of tax
returns of the company, (ii) acquisitions due diligence reviews and integration
services, and (iii) evaluating the effects of various accounting issues and
changes in professional standards.
The Audit Committee of Alcoa's Board reviews summaries of the services provided
by PricewaterhouseCoopers and the related fees and has considered whether the
provision of non-audit services is compatible with maintaining the independence
of PricewaterhouseCoopers.
On recommendation of the Audit Committee, the Board has appointed
PricewaterhouseCoopers to audit the 2001 financial statements. Representatives
from this firm will be at the annual meeting to make a statement, if they
choose, and to answer any questions you may have.
17
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
Our committee, the Compensation Committee, is responsible for determining
compensation for Alcoa corporate officers, andincluding executive officers. All
committee members are independent directors who have never been Alcoa employees.
We base our decisions on our understanding of Alcoa's businesses and long-term
strategy and our knowledge of the capabilities and performance of the company
and its executives. We believe Alcoa continues to demonstrate superior
performance, as indicated in the stock performance graph on page 15.
Compensation Philosophy - We believe that managing the company with a long-term
perspective, while striving to deliver consistently good annual results, will
best serve Alcoa shareholders. The company, therefore, designs its executive
compensation program to hire, reward, motivate and retain high-performing
employees worldwide.
Alcoa's total compensation program includes:
-. annual salary
-. annual cash incentives
-. long-term, stock-based incentives
and
-. employee benefits.benefits
. occasional multi-year incentive programs related
to specific goals.
We determine compensation based on certain principles:
-. pay for performance - both individual and team
performance
-. competitive total compensation compared with
leading industrial companies
and
-. total compensation that is highly leveraged to
financial and nonfinancialnon-financial business performance.
Our committee places less emphasis on high base salaries in favor of at-risk,
short-term and long-term incentives based on performance. We believe that the
company's executives will more effectively represent Alcoa shareholders if they
are shareholders themselves and have a meaningful portion of their personal
assets invested in Alcoa stock.
Annual Cash Compensation - Each year we review comparative market compensation
information prepared by internal and outside consultants. The outside
consultants survey leading manufacturing companies for both total cash
compensation and long-term incentive information. These companies are among the
largest and best performing in a broad range of industries and serve as a sample
of the larger market. We also compare the level of responsibility for executive
positions surveyed within these companies.
Total annual cash compensation for Alcoa senior managers includes base salary
and cash incentive awards. We set the annual cash compensation levels above the
median of high-performing industrial companies. In order to tie annual cash
compensation more closely to performance, we set base salaries at or slightly
below the median and annual cash incentive levels above it.
Annual Cash Incentives - Alcoa establishes targets for cash incentive awards,
which vary by position as a percentage of base salary. Our committee may make
adjustments in payout, however, to recognize and reward individual performance.
The maximum payout, before any adjustment for individual performance, is 200% of
the target.
Alcoa revised its cash incentive programs in 1992 to provide
more consistent performance measures for both executives and,
under a performance-based pay plan, most U.S. employees.
Alcoa measures its business unit employees according to the goals of their
individual units. The company bases annual cash incentive payouts for most
executive officers on the achievement of business plan goals by all of the
company's business units. Key financial measures for the business units and the
corporation include cost of goods sold (as a per-
-15-
centagepercentage of sales),
administrative and sales expenses, cash from operations, after-tax operating
income, net funds flow and return on capital. About 40% of the business unit
goals are nonfinancial.non-financial. They may include measurements for environmental, health
and safety performance,
18
customer satisfaction, employee development and succession planning, product
innovation, on-time delivery, manufacturing excellence, reduced cycle time,
inventory reduction and product quality improvements. The company believes that
if managers focus on the achievement of excellence in those areas within their
control, there will be long-term growth in shareholder value.
Special Performance Enhancement Program -
We haveIn 1998, we approved a performance enhancement reward program which iswas an
integral part of the company's three-year $1.1 billion cost-reduction
initiative. Under the program, special cash incentives, in addition to normal
variable compensation, willwere to be paid to eligible participants if the company
meetsand individual business units met certain aggressive financial goals forby the year
2000. The goals relaterelated to a target return on capital and reductions in cost of
goods sold as a percentage of sales, capital as a percentage of sales and
overhead expenses. If these goals are met,The company and several business units exceeded the threshold
for payments and a one-time payment will bewas made in 2001 to certain eligible
participants, including executive officers. Individual award payments could rangeranged
from 120%0% to 240% of target annual cash bonusincentive award levels.
Long-Term Incentives - A goal of our committee is to closely align management's
interests with those of shareholders. The company's long-term incentives are,
therefore, principally stock-based. We believe this encourages stock ownership
among Alcoa executives.
In 1999, the Alcoa Board adopted and shareholders approved a new stock incentive
plan under which long-term incentives are awarded to employees. The new plan is called the Alcoa Stock
Incentive Plan. It became effective on June 1, 1999 and
replaced a prior plan. The new planPlan provides for a variety of stock-based incentive award types,
including stock options, stock appreciation rights, contingent stock
(forfeitable, restricted stock) awards and performance awards. From June
through December 1999,This year we
awarded only stock options (principally reload options granted in connection with the
exercise of previously granted options) and a relatively small number of contingent stock
awards under this plan. Alcoa encourages all of its employees and directors to
own an increasing equity interest in the company. In January 1999 we approved
new stock ownership guidelines for Alcoa senior executives. The guidelines
became effective on January 1, 2000, and individuals have five years to reach
the minimum ownership requirement for their positions. The guidelines range from
10,00015,000 shares for most business unit presidents, to 20,00025,000 or 40,00050,000 shares for
most executive officers. The ownership target for the chief executive officer is
140,000160,000 shares. Amounts invested in the Alcoa stock fund of the Alcoa savings
plan (401(k) plan) as well as share equivalent units in the company's deferred
compensation plan are counted as ownership for purposes of the guidelines since
they represent an equity investment position for the executive. Most executives
including all of
the named executive officers, currently own more than the guideline number of shares for their positions. All
named executives exceed their guideline ownership levels.
To assist executives who are of relatively short tenure with the company to
achieve the guideline ownership requirement, we approved a program that provides
an incentive for those eligible to invest all or a portion of their annual cash
bonus in Alcoa stock. Under the program, Alcoa matches 25% of the portion of the
participant's annual cash bonus that is used to purchase Alcoa stock or that is
deferred into the notional Alcoa stock investment fund in the deferred
compensation plan. The match is in Alcoa shares or share credits that vest in three years.
If the executive voluntarily leaves the company prior tobefore the vesting date, other
than due to
-16- retirement, the company matching contribution is forfeited. None of
the named executive officers areis eligible to participate in this program.
0AnnualAnnual Awards of Stock Options - A subcommittee of our committee administers the
Alcoa Stock Incentive Plan. In January of each year we make new awards of long-termlong-
term incentives in the form of stock options to eligible key employees. The stock option program allows us to provide
awards that are competitive withWe set
award levels well above the samplemedian of leadinghigh performing industrial companies. The
performance of Alcoa stock determines the actual amount earned. The guidelines
used to establish the size of a stock option award include an executive's
19
level of responsibility, the size of prior grants and comparative award
information. Individual grants typically follow the guideline amounts.
Stock Option Reload Feature - Alcoa added a reload feature to its stock option
program in 1989. This feature encourages increased stock ownership and is
available to all participants who are active employees and whose awards were
granted under the current or predecessor plan (about 1,200 individuals). The
reload feature promotes the early exercise of options and the retention of Alcoa
shares.
Share ownership by executive officers and other stock option program
participants has increased significantly in the last several years due to the
reload feature. In 2000 we amended the plan administrative rules to provide that
reload grants on newly granted stock options will only be available where the
underlying or antecedent option award is exercised on a stock swap basis.
In 1997, we approved a dividend equivalent compensation plan. Under this plan,
Alcoa pays cash dividend equivalents, when approved by the Board, on a portion
of the exercisable options held by active and retired participants.
For U.S. federal income tax purposes, Alcoa may deduct compensation paid as the
result of option exercises under the shareholder-approved Alcoa Stock Incentive
Plan. The company may not, however, deduct portions of salary, bonus and other
cash and noncashnon-cash compensation in excess of $1 million paid to a named executive
officer.
Life Insurance - In January 2000, we approved a program to provide company-paid
life insurance for senior non-U.S. executives on assignment in the United States
to defray certain estate tax expenses. The objective of the program is to induce
current executives and future candidates to remain in critically important
assignments by providing a means for the executive's estate to defray certain
U.S. estate tax costs should the executive die while on U.S. assignment.
Compensation of Named Executive Officers in 19992000 - Our committee
increased salary and annual cash incentive targets for
executive officers this year, reflecting similar increases
in the comparison group. Annual incentive payouts to
named executive officers for 19992000 averaged about 155%116.9% of target based on
attainment of business unit financial and nonfinancialnon-financial goals. Some named
executive officers received salary increases in 2000, but salary ranges and
annual incentive targets were unchanged.
In January 1999,2000, Alcoa granted stock options to named executive officers at or
above the target levels for their positions.
Above-target grants reflected our judgment ofpositions except for Mr. O'Neill. As reported
in the significant contributions made by these individuals to the
overall growth and profitability of the company.2000 Proxy Statement, Mr. O'Neill did not receive a stock option grant in
2000. The majority of stock option exercises in 19992000 by named executive officers
also included thea grant of reload options.
Compensation of the Chief Executive Officer - Alcoa bases the chief executive
officer's compensation on the same philosophy and policies as for all executive
officers. This compensation includes base salary, annual cash incentives and
stock option awards.
Our committee meets annually without the chief executive officer and evaluates
his performance compared with previously established financial and nonfinancialnon-financial
goals. We reach a consensus as a committee and make the appropriate compensation
adjustments. Finally, we report in full to the other members of the Board for
their consideration and agreement. This meeting is an executive session of nonemployeenon-
employee directors only.
Paul H. O'Neill served as Alcoa chief executive officer until
May 6, 1999. In January 1999, we increased Mr. O'Neill's base
annual salary from $850,020 to $950,400. We also awarded him
a stock option covering 700,000 shares, which
-17-
was twice the guideline number of shares for his position.
This was Mr. O'Neill's final annual stock option award as an
Alcoa officer, even though he will remain an Alcoa employee
through December 31, 2000. Mr. O'Neill was not granted a new
annual stock option award in January 2000. In January 2000,
we awarded him a bonus of $2 million, which was 175% of his
target incentive award for 1999. We based this amount on the
superior performance of the company, as reflected in total
business unit results compared with plan goals. The award
also recognized Mr. O'Neill's leadership role in the
transition of the chief executive officer position during
1999.
Alain J. P. Belda was elected Alcoa's chief executive officer on May 6, 1999.
During the year,1999, we increased his annual salary from $650,000 to $900,000. Mr.BeldaHis
salary for 2000 was unchanged from 1999. The Summary Compensation Table salary
column for the year 2000 reflects additional compensation as a result of Mr.
Belda's decision to take an extra week's pay instead of vacation, which is an
option for employees with 25 or more years of service. Mr. Belda received a new
annual stock option award in January 19992000 covering 210,000 shares, which was the guideline amount for his
then-current position as the company's chief operating
officer. We also awarded a special stock option grant
covering 350,000 shares in May 1999 at the time of his
election as chief executive officer. This award vests (and
becomes exercisable) in three installments: the option as to
100,000 shares vests on May 6, 2000, as to another
100,000 shares on May 6, 2001 and as to the final 150,000
shares on May 6, 2002. If Mr. Belda leaves the active
employment of Alcoa prior to an option installment vesting
date, he forfeits rights to exercise that portion of the
option. This special option award is intended as an
additional incentive for Mr. Belda to remain in the employ
of the company and to increase overall shareholder value
during his tenure as chief executive officer.680,000 shares.
20
All options granted have reload rights. InMr. Belda also received additional term
life insurance under the life insurance program described above.
Consistent with our belief that Alcoa has demonstrated superior performance, in
January 2000,2001, we awarded Mr. Belda a bonus of $1.5 million,$1,700,000, which was 170%157% of his
target incentive award for 1999.2000. We based this amount on total business unit
results compared with plan goals and in recognition, by our committee and all
other nonemployeenon-employee directors, of Mr. Belda's leadership of Alcoa during 1999.2000.
Mr. Belda also received a one-time award of $1,996,800 under the Special
Performance Enhancement Program, which is based on performance over a three-year
period.
We, as a committee, believe that Alcoa's compensation programs help to maintain
Alcoa's leadership position among global industrial companies.
The Compensation Committee
Franklin A. Thomas, Chairman
Kenneth W. Dam
Joseph T. Gorman
Hugh M. Morgan
John P. Mulroney
-18-February 8, 2001
21
SUMMARY COMPENSATION TABLE
This table summarizes the compensation for the CEO and the four highest paid
executive officers in 2000.
SUMMARY COMPENSATION TABLE
This table summarizes the compensation for the CEOs and the
four highest paid executive officers in 1999.
Annual Compensation Long-term Compensation
Awards Payouts
Name and Principal Year Salary(1)Salary/(1)/ Bonus Other Annual Number of SecuritiesLTIP All Other
Principal Position Compensation Securities Payouts Compensation
/(2)/ Underlying Compensation(4)/(4)/ /(5)/
Option Grants(3)
- ------------------------------------------------------------------------------------------------------------------------Grants/(3)/
Alain J. P. Belda
Chief Executive Officer since 2000 $917,308 $1,700,000 $ 25,009 1,764,608 $1,996,800 $352,669
May 1999; Chairman of the Board 1999 770,837 1,500,000 105,771 2,621,640 0 290,311
since January 2001 1998 640,707 1,100,000 16,020 1,047,036 0 185,211
Richard B. Kelson 2000 495,346 570,000 3,418 834,427 886,464 88,991
Executive Vice President 1999 452,396 620,000 2,514 889,336 0 130,613
and Chief Financial Officer 1998 400,200 500,000 4,657 502,648 0 91,677
L. Patrick Hassey
Executive Vice President 2000 389,319 626,100 1,368 393,430 863,298 339,950
and Group President, 1999 373,192 599,700 1,770 608,234 0 188,717
Alcoa Industrial Components 1998 354,231 584,700 147 167,200 0 175,433
Robert F. Slagle 2000 458,654 540,000 1,734 829,045 820,800 57,474
Executive Vice President, Human 1999 406,804 528,900 1,692 1,152,072 0 60,093
Resources and Communications 1998 378.462 500,000 9,032 750,428 0 60,404
Paul H. O'Neill 1999 $950,400 $2,000,000 $7,822 1,928,626 $150,1142000 950,400 0 16,521 2,327,542 2,189,722 131,303
Chairman of the Board; ChiefBoard 1999 950,400 2,000,000 7,822 3,857,252 0 150,114
through December 2000 1998 850,020 1,600,000 12,612 816,2201,632,440 0 153,236
Executive Officer through May 6 1997 850,020 1,250,000 10,411 649,168 171,206
Alain J. P. Belda 1999 770,837 1,500,000 105,771 1,310,820 290,311
President; Chief Executive 1998 640,707 1,100,000 16,020 523,518 185,211
Officer beginning May 6 1997 610,200 850,000 9,729 608,708 195,781
George E. Bergeron 1999 425,475 556,420 1,280 563,966 72,422
Executive Vice President 1998 397,038 700,000 2,487 180,448 73,358
Allied Products (5) 1997 368,577 381,300 3,362 288,628 77,754
Richard L. Fischer 1999 404,350 532,400 4,886 609,459 58,740
Executive Vice President- 1998 400,200 500,000 1,176 234,746 61,858
Chairman's Counsel (5) 1997 395,200 500,000 2,029 358,398 68,186
L. Patrick Hassey 1999 373,192 599,700 1,770 304,117 188,717
Vice President and President 1998 354,231 584,700 147 83,600 175,433
Alcoa Europe 1997 316,000 329,800 3,255 134,306 64,824
Richard B. Kelson 1999 452,396 620,000 2,514 444,668 130,613
Executive Vice President 1998 400,200 500,000 4,657 251,324 91,677
and Chief Financial Officer 1997 318,000 308,700 2,058 150,018 59,829
(1) The most highly compensated executive officers are those with the highest
annual salary and bonus for 1999. In addition to base salary, the salary
column includes, when chosen by the employee, an extra week's pay instead
of vacation for employees with 25 or more years of service.
(2) Amounts represent the reimbursement of taxes on certain personal benefits,
the value of which benefits is less than the reporting threshold. For
Mr. Belda, in 1999, this includes taxes on the additional term insurance
referred to in note 4 below.
(3) New option grants made in 1999 totaled 700,000 for Mr. O'Neill; 560,000
for Mr. Belda (including the special option award described in note 1 to the
Options Grant in 1999 table on page 21); 125,600 for Mr. Bergeron; 83,600
for Mr. Hassey; and 150,000 each for Messrs. Fischer and Kelson. The
company granted all of these options at 100% of the fair market value of
Alcoa common stock on the grant date. The other option awards relate to
previous years' option grants and the use of the reload feature described
earlier in the Report of the Compensation Committee. See also the table,
Option Grants in 1999.
-19-
(4) Company matching contributions to 401(k) and excess savings plans for
1999 were: Mr. O'Neill, $57,024; Mr. Belda, $45,500; Mr. Bergeron, $24,653;
Mr. Fischer, $24,261; Mr. Hassey, $21,990; and Mr. Kelson, $26,682. The
present value costs of the company's portion of 1999 premiums for split-dollar
life insurance, above the term coverage level provided generally to salaried
employees, were: Mr.O'Neill, $93,090; Mr. Belda, $142,386; Mr. Bergeron,
$47,769; Mr. Fischer, $34,479; Mr. Hassey, $48,707; and Mr. Kelson, $66,431.
The 1999 amount for Mr. Belda also includes $900 of unused health care credits
received as cash and $101,525, which is the annual premium cost of additional
term life insurance acquired for Mr. Belda in 1999. This insurance is
designed to address certain estate planning complications related to
Mr. Belda's status as a non-U.S. citizen residing in the U.S.
The 1999 amount for Mr. Hassey includes $118,020 in additional compensation
relating to his assignment in Europe. This amount is paid under standard
company programs for U.S. employees on international assignments.
Also included for Mr. Kelson is an additional one month's salary paid to
employees in the year they attain 25 years of service with the company.
(5) Mr. Bergeron assumed the title of President - Reynolds Integration, and
Mr. Fischer was named Special Counsel to the CEO, in January 2000. Both
individuals have indicated an intent to retire in the near future, once they
have completed a number of important ongoing assignments. Although they
remain senior executives of the company, neither continues to be an executive
officer for ongoing reporting purposes.
-20-(1) The most highly compensated executive officers are those with the highest
annual salary and bonus for 2000. In addition to base salary, the salary
column includes, when chosen by the employee, an extra week's pay instead of
vacation for employees with 25 or more years of service.
(2) Amounts represent the reimbursement of taxes on certain personal benefits,
the value of which benefits is less than the reporting threshold. For Mr.
Belda, in 2000, this includes taxes on the additional term insurance
referred to in note 5 below.
(3) New option grants made in 2000 totaled 680,000 for Mr. Belda; 148,600 for
Mr. Hassey; 195,600 for Mr. Kelson; and 195,600 for Mr. Slagle. No new
option grants were made to Mr. O'Neill in 2000. The company granted all of
these options at 100% of the fair market value of Alcoa common stock on the
grant date. The other option awards relate to previous years' option grants
and the use of the reload feature described earlier in the Report of the
Compensation Committee. See also the table, Option Grants in 2000. Share
amounts reflect stock splits.
22
(4) Amounts shown in this column for 2000 are payouts made in early 2001 under
the Special Performance Enhancement Program. See the Report of the
Compensation Committee on page 19. The multi-year performance enhancement
program provided one-time special cash incentives, in addition to annual
variable compensation, if the company met aggressive financial goals, set in
1998, by the end of the year 2000. The program was an integral part of the
company's $1.1 billion cost-reduction initiative. The goals related to cost
of goods sold as a percentage of sales, capital as a percentage of sales and
overhead expenses.
(5) Company matching contributions to 401(k) and excess savings plans for 2000
were: Mr. Belda $54,000; Mr. Hassey $22,932; Mr. Kelson $29,160; Mr. O'Neill
$57,024; and Mr. Slagle $27,000. The present value costs of the company's
portion of 2000 premiums for split-dollar life insurance, above the term
coverage level provided generally to salaried employees, were: Mr. Belda
$196,370; Mr. Hassey $43,448; Mr. Kelson $59,831; Mr. O'Neill $74,279; and
Mr. Slagle $30,474. The 2000 amount for Mr. Belda also includes $774 of
unused health care credits received as cash and $101,525, which is the
annual premium cost of additional term life insurance acquired for Mr. Belda
in 2000. This insurance is designed to address certain estate planning
complications related to Mr. Belda's status as a non-U.S. citizen residing
in the U.S. The 2000 amount for Mr. Hassey includes $273,570 in additional
compensation relating to his assignment in Europe. This amount is paid under
standard company programs for U.S. employees on international assignments.
23
OPTION GRANTS IN 19992000
INDIVIDUAL GRANTS
INDIVIDUAL GRANTS
Name Number of Securities % of Total Options Exercise or Expiration Grant Date
Underlying Options Granted to Employees Base Price ($/Sh) Date (5)/(5)/ Present Value
(6)
Granted (1)/(1 ) (2) (3)/ in Fiscal Year ($/(4)/Sh) (4)
- ------------------------------------------------------------------------------------------------------------ /(6)/
Paul H. O'Neill 700,000 3.21 $42.0937 2009/01/13 $7,455,000
299,544 1.37 44.5937 2008/01/13 2,983,458
309,663 1.42 44.5937 2007/01/13 3,084,243
28,927 0.13 64.125 2006/01/11 373,158
190,833 0.88 64.125 2005/01/13 2,461,746
135,464 0.62 64.125 2004/01/14 1,747,486
129,501 0.59 64.125 2003/01/15 1,670,563
64,267 0.29 64.125 2002/01/20 829,044
34,319 0.16 64.125 2001/01/23 442,715
36,108 0.17 64.125 2000/01/22 465,793
Alain J. P. Belda 210,000 0.96 42.0937680,000 2.20 $40.2187 2010/01/14 $ 7,752,000
320,522 1.04 36.5937 2009/01/13 2,236,500
350,000 1.61 61.50 2009/05/06 4,319,000
184,990 0.85 42.0937 2008/01/13 1,535,417
81,177 0.37 61.43773,012,907
236,140 0.76 36.9823 2008/01/13* 1,025,266
7,007 0.03 55.06252,186,895
13,126 0.04 31.0625 2007/01/13 69,790
181,398 0.83 61.5874101,727
229,868 0.74 34.1875 2006/01/11 1,949,281
147,995 0.48 31.0625 2005/01/13 1,146,961
61,182 0.20 31.0625 2004/01/14 474,161
43,339 0.14 31.0625 2003/01/15* 335,877
25,422 0.08 40.2187 2002/01/20 258,033
7,014 0.02 40.2187 2001/01/23 71,192
Richard B. Kelson 195,600 0.63 40.2187 2010/01/14 2,229,840
227,408 0.73 37.1875 2009/01/13 2,137,635
146,101 0.47 33.5747 2008/01/13* 1,263,091
92,890 0.30 37.1875 2007/01/13 2,247,521
128,041 0.59 61.4916873,166
78,124 0.25 37.4733 2006/01/11* 1,615,658
79,337 0.36 54.625739,890
4,344 0.01 37.1562 2005/01/13 790,197
32,798 0.15 54.62540,834
25,985 0.08 35.0633 2004/01/14 326,668
23,227 0.10 54.651514* 227,406
28,513 0.09 34.4014 2003/01/15* 231,341
4,005 0.02 61.9375 2003/01/15 49,622
15,477 0.07 54.625243,680
26,710 0.09 40.3182 2002/01/20 154,151
4,853 0.02 54.625 2001/01/23 48,336
8,510 0.04 61.696320* 271,107
8,752 0.03 40.4615 2001/01/23* 106,532
George E. Bergeron 125,600 0.58 42.0937 2009/01/13 1,337,640
75,385 0.35 61.3208 2008/01/13 934,020
92,336 0.42 42.0937 2008/01/13 766,389
81,918 0.38 43.625 2007/01/13 679,919
61,155 0.28 43.1875 2006/01/11 609,104
13,438 0.06 55.0625 2006/01/11 133,842
47,768 0.22 62.2187 2005/01/13 603,310
5,868 0.03 43.0312 2004/01/14 48,704
20,173 0.09 62.2187 2004/01/14 254,785
954 0.00 43.0312 2003/01/15 7,918
22,043 0.09 62.0659 2003/01/15* 273,853
11,231 0.05 62.3125 2002/01/20 139,152
-21-
George E. Bergeron 3,400 0.02 64.6562 2001/01/23 43,860
(Continued) 1,965 0.01 62.3125 2001/01/23 24,346
732 0.00 43.0312 2000/01/22 6,076
Richard L. Fischer 150,000 0.69 42.0937 2009/01/13 1,597,500
92,970 0.43 42.0937 2008/01/13 771,651
76,276 0.35 43.625 2007/01/13 633,091
7,928 0.04 55.0625 2007/01/13 78,963
89,626 0.41 61.875 2007/01/13 1,110,466
76,724 0.35 42.3125 2006/01/11 636,809
1,650 0.01 60.2187 2006/01/11 20,444
3,517 0.02 63.0312 2005/01/13 44,420
29,888 0.14 60.2187 2004/01/14 370,312
5,633 0.03 63.0312 2004/01/14 71,145
37,639 0.17 60.2187 2003/01/15 466,347
25,233 0.12 60.2187 2002/01/20 312,637
12,375 0.06 60.2187 2001/01/23 153,32688,833
L. Patrick Hassey 83,600 0.38 42.0937148,600 0.48 40.2187 2010/01/14 1,694,040
130,696 0.42 33.5625 2009/01/13 890,340
73,100 0.34 42.09371,097,846
114,134 0.37 33.6538 2008/01/13 606,730
70,076 0.32 43.625958,726
Robert F. Slagle 195,600 0.63 40.2187 2010/01/14 2,229,840
159,414 0.52 37.5845 2009/01/13* 1,523,968
84,932 0.27 36.6128 2008/01/13* 764,718
119,202 0.39 34.2134 2007/01/13* 958,384
55,635 0.18 34.2067 2006/01/11* 447,305
92,094 0.30 34.0091 2005/01/13* 777,859
55,570 0.18 34.2812 2004/01/14 446,783
44,276 0.14 34.2812 2003/01/15 355,979
22,322 0.07 33.5360 2002/01/20 185,552
Paul H. O'Neill 1,018,944 3.29 41.1250 2009/01/13 10,342,282
488,436 1.58 33.3437 2008/01/13 4,141,937
504,936 1.63 33.3437 2007/01/13 581,631
42,063 0.19 61.754,281,857
315,226 1.02 41.1250 2006/01/11 521,161
15,616 0.07 42.0156 2004/01/14 129,613
19,662 0.09 60.8125 2004/01/14 243,612
Richard B. Kelson 150,000 0.69 42.0937 2009/01/13 1,597,500
93,076 0.43 42.0937 2008/01/13 772,531
77,141 0.35 60.75 2008/01/13 955,777
27,347 0.13 43.1875 2006/01/11 272,376
1,702 0.01 55.0625 2006/01/11 16,952
2,513 0.01 53.125 2006/01/11 25,029
35,980 0.17 62.2187 2005/01/13 454,427
5,000 0.02 43.1875 2004/01/14 49,800
11,439 0.05 62.2187 2004/01/14 144,475
1,339 0.01 43.1875 2003/01/15 13,336
13,938 0.06 62.1348 2003/01/15* 175,039
10,956 0.05 43.1875 2002/01/20 109,122
6,004 0.03 61.9375 2002/01/20 74,390
1,812 0.01 43.1875 2001/01/23 18,048
3,427 0.02 61.9375 2001/01/23 42,461
2,994 0.01 43.1875 2000/01/22 29,820
-22-
(1) Alcoa grants annual options (the first grant listed for each officer) in January. These
options become exercisable one year after the grant date and have a term of ten years.
In addition to the January annual grant, Mr.Belda received a special option grant covering
350,000 shares on May 6, 1999 in connection with his election as chief executive officer.
This option becomes exercisable as to 100,000 shares on the first anniversary of the grant
date, as to another 100,000 shares on the second anniversary of the grant date and as to
the final 150,000 shares on the third anniversary of the grant date, provided that
Mr. Belda is an active employee of Alcoa on the related anniversary date of grant (this
condition is waived in the event of Mr. Belda's death while an active Alcoa employee). The
option has a term of 10 years from date of grant.
(2) All other option grants are reload option grants, which become exercisable after six months.
A reload option is available to active employees upon exercise of an outstanding option
(annual or reload) under the current or prior Alcoa option plan. The reload feature promotes
the early exercise of options and the retention of Alcoa shares, while continuing the
opportunity to gain from future appreciation on the stock. By exercising an outstanding
option, the participant realizes, in shares, the net profit or growth in value of that option
(the excess of the current fair market value over the option grant price), less applicable
withholding for taxes. Certain conditions apply: (i) the market value of Alcoa stock on the
exercise date of the underlying option must be at least $2.50 more than the grant price of
that option; and (ii) the participant must agree that one-half of the net profit shares
received on exercise of the underlying option will be held by the participant (directly or in
trust) for five years or until the participant's employment with Alcoa terminates, whichever
is earlier. A reload option has the same expiration date as the underlying option and is
granted at 100% of the market value of Alcoa stock on the grant date. The reload option
covers the number of shares exercised in the underlying option less the number of profit
shares delivered to the participant after withholding for taxes. Reload options may be granted
where the exercise price of the underlying option is paid using previously owned shares or,
subject to certain limitations, using cash.
(3) Options granted on or after June 1, 1999 provide for acceleration of vesting and become
immediately exercisable upon certain events constituting a change in control of Alcoa.
(4) The exercise price of all options is 100% of the fair market value of Alcoa stock on the
grant date. Option award participants may use shares they own for a minimum period to pay the
exercise price and may have shares withheld for payment of required withholding taxes.
Participants may transfer stock option awards to immediate family members or family trusts,
provided the transfer is made as a gift, for no consideration. The participant remains
responsible for payment of withholding taxes when the option is exercised by the family
member or trust. Otherwise, stock option awards are not transferable during the participant's
lifetime.
(5) We grouped together certain reload option grants for Messrs. Belda, Bergeron and Kelson
(the groupings are marked by an asterisk in the table). Each grouping reflects a consolidation
of two individual option grants (three grants for Mr. Bergeron) having the same expiration date
and a spread of grant prices not exceeding 3% of the lowest price in the grouping.
(6) The company uses the Black-Scholes option pricing model to estimate Grant Date Present Value
in this table. Our use of this model is not an endorsement of the model's accuracy in valuing
options. All stock option models require a prediction about future stock prices. We used the
following assumptions in calculating Grant Date Present Value: expected volatility - 37%;
average risk-free rate of return - 5%; dividend yield - 1.4%; expected life, special option
award for Mr. Belda - 3.5 years; expected life, annual grants - 2.5 years; expected life,
reload grants - 1.5 years. The real value of the options in this table depends on the actual
performance of Alcoa stock and the timing of exercises.
3,199,544
-23-24
(1) Alcoa generally grants annual options (the first grant listed for each
officer) in January. These options become exercisable one year after the
grant date and have a term of ten years. Mr. O'Neill did not receive an
annual option grant in 2000.
(2) All other option grants are reload option grants, which become exercisable
after six months. A reload option is available to active employees upon
exercise of an outstanding option (annual or reload) under the current or
prior Alcoa option plan. The reload feature promotes the early exercise of
options and the retention of Alcoa shares, while continuing the opportunity
to gain from future appreciation on the stock. By exercising an outstanding
option, the participant realizes, in shares, the net profit or growth in
value of that option (the excess of the current fair market value over the
option grant price), less applicable withholding for taxes. Certain
conditions apply: (i) the market value of Alcoa stock on the exercise date
of the underlying option must be at least $2.50 more than the grant price of
that option; and (ii) the participant must agree that one-half of the net
profit shares received on exercise of the underlying option will be held by
the participant (directly or in trust) for five years or until the
participant's employment with Alcoa terminates, whichever is earlier. A
reload option has the same expiration date as the underlying option and is
granted at 100% of the market value of Alcoa stock on the grant date. The
reload option covers the number of shares exercised in the underlying option
less the number of profit shares delivered to the participant after
withholding for taxes. Reload options may be granted where the exercise
price of the underlying option is paid using previously owned mature shares
or cash. Cash reloads are subject to limitations.
(3) Options granted on or after June 1, 1999 provide for acceleration of vesting
and become immediately exercisable upon certain events constituting a change
in control of Alcoa.
(4) The exercise price of all options is 100% of the fair market value of Alcoa
stock on the grant date. Option award participants may use shares they own
for a minimum period to pay the exercise price and may have shares withheld
for payment of required withholding taxes. Participants may transfer stock
option awards to immediate family members or family trusts, provided the
transfer is made as a gift, for no consideration. The participant remains
responsible for payment of withholding taxes when the family member or trust
exercises the option. Otherwise, stock option awards are not transferable
during the participant's lifetime.
(5) We grouped together certain reload option grants for Messrs. Belda, Kelson,
and Slagle (the groupings are marked by an asterisk in the table). Each
grouping reflects a consolidation of two or more individual option grants
having the same expiration date. The exercise price reflects the weighted
average values of these grants.
(6) The company uses the Black-Scholes option pricing model to estimate Grant
Date Present Value in this table. Our use of this model is not an
endorsement of the model's accuracy in valuing options. All stock option
models require a prediction about future stock prices. We used the following
assumptions in calculating Grant Date Present Value: expected volatility
- 40%; average risk-free rate of return - 6.1%; dividend yield - 1.6%;
expected life, annual grants - 2.5 years; expected life, reload grants - 2.0
years. The real value of the options in this table depends on the actual
performance of Alcoa stock and the timing of exercises.
25
2000 AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
This chart shows the number and value of stock options, both exercised and
unexercised, for the named executive officers during 2000.
1999 AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
This chart shows the number and value of stock options, both
exercised and unexercised, for the named executive officers
during 1999.
Name Shares Value
Number of Securities Value of Unexercised
Acquired RealizedShares Underlying Unexercised In-the-Money Options
on ExerciseAcquired Value Options at Fiscal Year-End at Fiscal Year-End Year-End/(1)
-------------------------- ----------------------
Exercisable /
Name on Exercise Realized Exercisable/(2)/ Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------
Paul H. O'Neill 1,587,205 $33,121,788 1,598,609 700,000 $57,671,146 $28,634,410
Alain J. P. Belda 829,516 15,914,127 256,049 963,131 8,980,727 24,769,583
George E. Bergeron 433,537 8,248,454 186,229 304,165 7,775,877 8,918,463966,131 $12,483,196 942,002 1,986,480 $ 3,199,060 $1,375,000
Richard L. Fischer 434,141 8,898,805 261,201 355,561 11,149,038 10,644,710B. Kelson 426,037 10,449,429 207,903 702,075 193,034 0
L. Patrick Hassey 170,595 3,540,006 143,176 145,325 5,749,493 4,749,856
Richard B. Kelson 312,672 5,844,732 137,465 297,929 5,861,093 9,327,220
(1) We calculated the value of unexercised options using the difference between the option
exercise price and the year-end stock price of $83.00 per share, multiplied by the
number of shares underlying the option.
(2) Alcoa paid cash dividend equivalents in 1999 on a portion of the exercisable options
held by plan participants. Dividend equivalents are equal in amount to the company's
common stock dividend. The total amount of dividend equivalents paid in 1999 to all
plan participants was slightly less than $2 million.
156,700 3,935,753 263,602 393,430 1,980,518 0
Robert F. Slagle 515,393 5,896,381 253,286 684,031 232,340 0
Paul H. O'Neill 2,186,757 53,232,967 1,442,118 2,327,542 10,871,698 155,264
-24-(1) We calculated the value of unexercised options using the difference between
the option exercise price and the year-end stock price of $33.50 per share,
multiplied by the number of shares underlying the option.
(2) Alcoa paid cash dividend equivalents in 2000 on a portion of the exercisable
options held by plan participants. Dividend equivalents are equal in amount
to the company's common stock dividend. The total amount of dividend
equivalents paid in 2000 to all plan participants was approximately $2.8
million.
26
PENSION PLANS
Alcoa's pension plans cover a majority of salaried employees. Alcoa pays the
full cost of these plans, which include both tax-qualified and non tax-qualified
excess plans. This table shows the annual benefits payable at executive
compensation levels.
PENSION PLAN TABLE
Average Annual Annual Benefits for Years of Service Indicated
Compensation
- -----------------------------------------------------------------------------------------------15 20 25 30 35 40
15 20 25 30 35 40
$ 100,000 $ 20,59020,380 $ 27,45027,170 $ 34,32033,960 $ 41,18040,750 $ 48,47048,000 $ 56,62056,150
250,000 53,340 71,120 88,900 106,680 124,460 142,24053,220 70,960 88,700 106,440 124,180 141,920
500,000 108,650 144,870 181,080 217,300 253,520 289,740108,530 144,710 180,890 217,060 253,240 289,420
750,000 163,960 218,620 273,270 327,930 382,580 437,240163,840 218,460 273,070 327,690 382,300 436,920
1,000,000 219,280 292,370 365,460 438,550 511,640 584,740219,160 292,210 365,260 438,310 511,370 584,420
1,250,000 274,590 366,120 457,650 549,180 640,710 732,240274,470 365,960 457,450 548,940 640,430 731,920
1,500,000 329,900 439,870 549,830 659,800 769,770 879,740329,780 439,710 549,640 659,560 769,490 879,420
2,000,000 440,530 587,370 734,210 881,050 1,027,890 1,174,740440,410 587,210 734,010 880,810 1,027,620 1,174,420
2,500,000 551,150 734,870 918,580 1,102,300 1,286,020 1,469,740551,030 734,710 918,390 1,102,060 1,285,740 1,469,420
3,000,000 661,780 882,370 1,102,960 1,323,550 1,544,120 1,764,740661,660 882,210 1,102,760 1,323,310 1,543,870 1,764,420
3,500,000 772,280 1,029,710 1,287,140 1,544,560 1,801,990 2,059,420
The company bases the employee's amount of pension upon the average compensation
for the highest five years in the last ten years of service. For the executive
level, covered compensation includes base salary and annual cash bonus. We
calculate the amounts in the table using salary at target and bonus at target.
We also make payments as a straight life annuity, reduced by 5% when an employee
elects the surviving spouse feature. The table shows benefits at age 65, before
any reduction for surviving spouse coverage. The amounts shown do not include
social security benefits.
At March 1,December 31, 2000 pension service for the named officers was: Mr. Belda, 31 years; Mr. Bergeron, 31 years;
Mr. Fischer, 3432
years; Mr. Hassey, 3233 years; Mr. Kelson, 2526 years; Mr. O'Neill, 30 years, and
Mr. O'Neill, 28Slagle, 36 years. Mr. O'Neill's years reflectingof service reflect an employment
contract that providesprovided somewhat more than double credit for his years with the
company. The resulting pension for Mr. O'Neill will be offset by pension
payments from his previous employer.
-25-27
ITEM 2 - APPROVE AN AMENDMENTSHAREHOLDER PROPOSAL RELATING TO ALCOA'S ARTICLESA GLOBAL SET OF INCORPORATION TO INCREASE COMMON STOCK
Alcoa'sCORPORATE STANDARDS
The Benedictine Sisters, 530 Bandera Road, San Antonio, Texas 78228, owning 200
shares of common stock, and Convent Academy of the Incarnate Word, 2930 South
Alameda, Corpus Christi, Texas 78404-2798, owning 1,100 shares of common stock,
have notified Alcoa that they intend to present the following proposal at the
annual meeting. The proposal, as submitted, reads as follows:
Whereas, Alcoa, as a global corporation, faces numerous complex problems which
also affect our interests as shareholders. The international context within
which our company operates is becoming increasingly diverse as we enter the new
millennium.
A "Millennium Poll on Corporate Social Responsibility" interviewed over 25,000
citizens in 23 countries and found that two in three citizens want companies to
go beyond their historical role of making a profit, paying taxes, employing
people and obeying all laws; they want companies to contribute to broader
societal goals as well. (Environics International Ltd., October 1999)
Companies are faced with important concerns arising from diverse cultures and
political and economic contexts. These concerns require management to address
issues that include human rights, workers' right to organize and bargain
collectively, non-discrimination in the workplace and sustainable community
development. Workers need to have effective means to resolve complaints at local
levels.
We believe global companies need to implement comprehensive codes of conduct,
such as those found in the "Principles for Global Corporate Responsibility:
Bench Marks for Measuring Business Performance," developed by an international
group of religious investors. Companies need to formulate policies, programs and
practices to address the challenges they face in the global marketplace.
Our company should be in a position to assure shareholders that its employees
are treated fairly and paid a sustainable living wage wherever they work in the
global economy. One important element of ensuring compliance is the utilization
of independent monitors made up of respected local human rights, religious and
other non-governmental organizations that know the local culture. A number of
global companies are developing credible code enforcement mechanisms that
include independent monitoring.
Improving the quality of life for employees and their communities can lead to
increased productivity and enhance the bottom line for the company.
RESOLVED, the shareholders request the Board
of Directors has approved an amendment to Article FIFTHreview or amend, where applicable, its code or standards for its
international operations and report a summary of Alcoa's Articlesthis review to
shareholders by October 2001.
Supporting Statement
We recommend the review include the following areas:
1. A description of Incorporationpolicies which are designed to increaseprotect human rights--civil,
political, social, cultural and economic--consistent with respect for human
dignity and international labor rights standards.
2. A report of efforts to ensure that the numbercompany does not employ children under
the age of sharesfifteen, or younger than the age of authorized common stock
from 600 million shares to 1.8 billion shares. The amendmentcompleting compulsory
education in the country of manufacture where such age is subject to approval byhigher than
fifteen.
28
3. A report of company policies ensuring that there is no use of forced labor,
whether in the shareholders,form of prison labor, indentured labor or bonded labor.
4. Establishment of consistent standards for workers' health and the Board
recommends that shareholders vote to approve this amendment.
Approvalsafety
practices for handling hazardous wastes and protection of the amendment by shareholders is requiredenvironment, as
well as promoting a fair and dignified quality of life for workers and their
communities.
We believe a company poised to permit a Board-approved two-for-one split ofcompete in the common
stock.21st Century needs comprehensive
global standards to guide its decisions.
POSITION OF THE BOARD OF DIRECTORS
The Board of Directors on January 10, 2000,
authorized and declared, subject to shareholder approvalrecommends a vote "against" the proposal.
We oppose the proposal because we believe the objectives of the foregoing amendment to Alcoa's Articlesproposal are
already being met. Alcoa is a values based company. The foundation of Incorporation,our value
system and our corporate ethic is a two-for-one splitfundamental respect for the dignity of the
common stock. The split will
provide one shareindividual. Our management practices reinforce our expectation that all Alcoa
locations live our value system--wherever we operate.
Alcoa is committed to being a responsible employer in all regions of common stock for each authorized share
of common stock issued (including shares held in treasury)
or reserved for issuance at the close of business on May 26,
2000. The shares will be distributed on or about June 9, 2000.
The Board believes thatworld
where we operate. But we haven't stopped there. Alcoa's presence throughout the
stock split will broaden the
potential market for Alcoa common stock and result in a
wider distribution of shares, which the Board believesworld represents our long-term commitment to beinvest in the best interests of Alcoalocal people and its shareholders.
The proposed amendment to
Article FIFTH consists of revisingpositively impact the first paragraph oflocal community. We recognize that Article to read as follows:
"FIFTH. The authorized capital stock of the corporation
shall be 660,000 shares of Serial Preferred Stock of the par
value of $100 per share, 10,000,000 shares of Class B Serial
Preferred Stock of the par value of $1.00 per share and
1,800,000,000 shares of Common Stock of the par value of
$1.00 per share."
The proposed amendment would increase the number of shares
of common stock, $1.00 par value, that Alcoa is authorized
to issue from 600 million to 1.8 billion. The additional 1.2
billion shares would bewe are part of the
existing classtotal social fabric in these communities, and that our futures are
interdependent.
We strive to be an exemplary community citizen. This is not a new idea for us.
We have dealt proactively with this challenge for years, both directly and
through the Alcoa Foundation--which we created in 1952. As one illustration of
common
stockour accomplishments, since its creation, the Alcoa Foundation has invested over
$300 million around the world--primarily in organizations that provide important
services in our communities. In 2001, we will be adding additional corporate
money to complement the activities of the Alcoa Foundation. We are proud of our
track record, and ifwe will continue to aggressively support issues that are
aligned with our values--issues such as conservation and when issued, wouldsustainability, healthy
children and families, education, workforce skills, and community partnerships.
Many mandatory policies, shaped by our values, have been in place for over a
decade--and others are added as new challenges to these values dictate. By way
of example, our Environmental, Health and Safety Policy and Principles (the "EHS
Policy"), which has been translated into seven languages and distributed to all
employees throughout the same rightsworld, supports the Alcoa value that "we will work
safely in a manner that promotes the health and privileges aswell being of the sharesindividual and
the environment." The EHS Policy governs all of Alcoa's activities worldwide and
expressly states that Alcoa common stock presently
issuedwill not compromise environmental, health or safety
values for profit or production. The EHS Policy outlines a number of supporting
principles and outstanding. No holder of common stock has any
preemptive rights to acquire additional shares of common
stock. No changeis supplemented by implementation plan standards and procedures
that we audit. Core principles outlined in the $1.00 par valueEHS Policy include the following:
. clear and specific accountability;
. a commitment to work toward the prevention of illnesses, injuries, spills and
excursions;
. a commitment to not only abide by applicable laws, regulations and permits,
but also by the internal EHS standards of the common stock
is being proposed. Holderscompany where they are more
restrictive;
. a commitment to audit our operations and report on findings; and
. a commitment to openly and promptly report on the EHS aspects of common stock do not haveour
operations to individuals, communities, shareholders and the right to cumulate their sharespublic.
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Our performance and our progress against our values and our policies are
regularly monitored in votinga variety of ways, including through the use of reports,
audits and reviews with senior executives. Plans are required for directors.
At February 14, 2000, 369,486,363 shares of common stock
were outstanding, 25,209,563 shares were held in treasury,
73 million shares were reserved for issuance in connection
with the company's merger with Reynolds Metals Companyany identified
shortcomings, and an additional 38,819,977 million shares were reserved under
Alcoa benefitprogress must be demonstrated against such plans. The Board believes it is desirable to
increase the number of shares of common stock that Alcoa is
authorized to issue to accomplish the proposed stock split,
to reserve an amount of shares sufficient to satisfy the
requirements set forth above and to provide the company
with adequate flexibility in the future. Except for the
proposed stock split and in connection with current
reserves for the Reynolds transaction and existing benefit
plans, Alcoa has no present commitments, agreements or
intent to issue additional shares of common stock.
The proposed stock split cannot occur unless shareholders
approve the proposed amendment to Article FIFTHAudit
Committee of the
company's Articles of Incorporation. The proposed
amendment to Article FIFTH would permit the issuance of
additional shares up to the new 1.8 billion maximum
authorization without further action or authorization by
shareholders, except as may be required in a specific
case by applicable law or stock exchange regulations. The
Board believes it is prudent for the company to have this
flexibility.
-26-
The issuance of additional shares of common stock could
reduce existing shareholders' percentage ownership and
voting power in Alcoa and, depending on the transaction in
which the shares are issued, could affect the per share book
value or other per share financial measures. The
availability of additional shares of common stock could
discourage, or make more difficult, efforts to obtain
control of the company. For instance, the issuance of shares
in a public or private sale, merger or similar transaction
would increase the number of outstanding shares, thereby
possibly diluting the interest of a party attempting to
obtain control of the company. The proposed increase in the
number of authorized shares is not intended to inhibit a
change in control of Alcoa, and Alcoa is not aware of any
pending or threatened efforts to acquire control of the
company.
Alcoa has been advised by tax counsel that the proposed
stock split would result in no gain or loss or realization
of taxable income to holders of Alcoa common stock under
existing U.S. federal income tax laws. For tax purposes, the
cost basis of each new share and each retained share of
common stock would be equal to one-half the cost basis of
the corresponding share immediately preceding the stock
split. In addition, the holding period for the additional
share issued in the stock split would be deemed to be the
same as the holding period for the original share of common
stock. The laws of jurisdictions other than the United
States may impose income taxes on the issuance of the
additional shares, and shareholders are urged to consult
their tax advisers.
If shareholders sell or purchase shares of Alcoa common
stock following approval of the proposed amendment to
Article FIFTH of Alcoa's Articles of Incorporation and
the effectuation of the stock split, they may pay
higher brokerage commissions and stock transfer taxes
(if applicable) on the same relative interest in the
company because that interest is represented by a
greater number of shares. Consult your broker for
complete details.
If approved by shareholders, the amendment will become
effective upon filing of an appropriate certificate with the
Secretary of State of the Commonwealth of Pennsylvania.
For this amendment to be approved, a majority of the votes
cast by shareholders must be voted for approval.
Alcoa's Board of Directors, recommends that shareholders vote
FORwhich is composed entirely of outside
directors, reviews the results of these monitoring efforts in detail.
Like many large companies, we receive proposals from well-meaning organizations
regarding various social issues. Many of these proposals are commendable, and
their overall objectives are fully aligned with our values. However, the issues
raised by these proposals defy a single, agreed upon, worldwide definition.
Further, the adoption of such proposals would dilute Alcoa's united focus on its
common values, and distract Alcoan's from their continued progress against these
values.
We have values in place that are founded on a fundamental respect for the
proposed amendmentdignity of the individual. We are committed to Alcoa's Articlesthe communities where we have a
presence, and we strive to be an exemplary community citizen. We are accountable
for, and measured on, living our values. We have a structured, disciplined, and
effective process in place for monitoring our compliance with these values and
our policies, and for assuring that shortcomings are addressed.
Living our value system ensures that we are a responsible company, committed to
positively impacting the local people and their communities. We think that this
is simply the right business idea and direction for Alcoa as a global company
and as a local neighbor.
The Board of Incorporation.
-27-Directors therefore recommends a vote AGAINST Item 2. The proxy
committee will vote your proxy against this item unless you give instructions to
the contrary on the proxy.
30
OTHER INFORMATION
LEGAL PROCEEDING INVOLVING DIRECTORS AND EXECUTIVECERTAIN ALCOA OFFICERS
On October 15, 1999, Victoria Shaev, who represents that she is an Alcoa
shareholder, filed a lawsuit in the United States District Court for the
Southern District of New York, naming as defendants Alcoa, each member of the
company's Board of Directors, certain Alcoa executive officers and
PricewaterhouseCoopers LLP, Alcoa's independent accountants.
The suit purports to be a derivative action brought on behalf of the company
against the other defendants. The shareholder
did not make a demand on the company prior to filing this
lawsuit. Under relevant law, this demand is required.
The lawsuit alleges, among other things, that Alcoa's proxy statement for the
1999 annual meeting contained materially false and misleading representations
and omissions concerning one of the items voted on by shareholders at the 1999
meeting, the proposal to approve the Alcoa Stock Incentive Plan. The lawsuit
further alleges that the shareholder approval of the Plan, based upon those
alleged representations and omissions, was defective.
The lawsuit seeks, among other things, to invalidate the shareholder approval of
the Plan and enjoin its implementation. The plaintiff also requests that Alcoa
pay the fees and expenses of her counsel and experts retained in the lawsuit.
The defendants believe the suit is without merit.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLPIn April 2000, all defendants moved to dismiss the complaint on various grounds,
including plaintiff's failure to make a demand on the company's Board of
Directors before filing suit as required under relevant law; plaintiff's failure
to meet certain pleading requirements; and her failure to state a claim.
Discovery has been stayed until the independent
accounting firm that auditsCourt's resolution of defendants' motion to
dismiss. As of February 1, 2001, the financial statements of
Alcoa and most of its subsidiaries since 1950. In accordance
with standing policy, PricewaterhouseCoopers periodically
changes the personnel who work on the audit.
During 1999, PricewaterhouseCoopers reviewed Alcoa's filings
with the SEC, prepared or reviewed financial and audit
reportsmotion to lenders, including governmental agencies,
conducted audits and due diligence reviews for acquisitions
and evaluated the effects of various accounting issues,
information systems and business strategy opportunities.
They also helped in tax planning and the preparation of tax
returns for expatriate employees, executives and various
foreign locations of the company.dismiss is pending.
31
APPENDIX A - AUDIT COMMITTEE CHARTER
Purpose
The Audit Committee of Alcoa's Board reviews summaries of
the audit and nonaudit services provided by
PricewaterhouseCoopers and the related fees.
On recommendationprimary function of the Audit Committee is to assist the Board has
reappointed PricewaterhouseCoopersof Directors
to fulfill its oversight responsibilities by reviewing the financial reporting
process, the system of internal controls, the audit process and the Company's
process for monitoring compliance with laws and regulations and its business
conduct policies.
Membership and Qualifications
The Committee shall be comprised of at least three members, chosen annually by
the Board of Directors. Committee members shall be independent directors and
free from any relationship that, in the opinion of the Board, would interfere
with the exercise of independent judgment as a member of the Committee. All
members of the Committee shall have a working familiarity with basic finance
and accounting practices and at least one member shall have accounting or
related financial management expertise.
Duties and Responsibilities
1. Review and evaluate the performance of the independent accountants who are
accountable to the Board of Directors and the Committee. Make recommendations
to the Board of Directors with respect to the appointment, reappointment,
evaluation and, where appropriate, termination and replacement of the
independent accountants to audit the 2000Company's financial statements.
Representatives2. Review management's plans for engaging the independent accountants to
perform management advisory services during the coming year, considering both
the types of services and the projected fees. Receive annually from this firm will be
atthe
independent accountants a formal, written statement delineating all
relationships between such accountants and the Company. Discuss any disclosed
relationships or services that may impact the objectivity and independence of
the independent accountants, and if so determined by the Audit Committee,
recommend that the Board take appropriate action to satisfy itself of the
independence of the accountants.
3. Review with the Vice President - Audit/Director - Internal Audit and the
independent accountants their annual audit plans, including the degree of
coordination of the plans.
4. Meet regularly with management and the independent accountants and the Vice
President - Audit/Director - Internal Audit to discuss the adequacy of the
Company's internal controls.
5. Meet regularly with management and the independent accountants and the Vice
President - Audit/Director - Internal Audit to review and discuss the annual
meetingand quarterly financial reporting process. The Committee or the Chairman will
review quarterly earnings information with appropriate members of management
and the independent accountants prior to makethe earnings release.
6. Meet separately on a statement, if they choose,regular basis with the Vice President - Audit/Director
- Internal Audit and the independent accountants, without management present,
to answerdiscuss the results of their examinations, their evaluations of internal
accounting controls and the over-all quality of financial reporting.
7. Receive reports from the Company's General Counsel on the results of the
annual survey of compliance with the Company's business conduct policies, and
on any questions youdeviations from such policies.
8. Review and assess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval.
32
9. Review periodic reports from the Vice President - Audit/Director - Internal
Audit, the General Counsel, the Company's chief compliance officer and from
the independent accountants as to the efficacy of the Company's monitoring
and auditing systems.
10. Meet periodically with management to review the Company's major financial
risk exposures identified by management and the steps management has taken
to monitor and control such exposures. Report periodically to the Board of
Directors on its discussions, findings and recommendations, as the Committee
deems necessary.
11. Review legal matters that may have.
-28-
ALCOA LOGOhave a material impact on the financial
statements, the Company's compliance policies and any material reports or
inquiries received from regulators or governmental agencies.
12. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
13. Review major changes to the Company's auditing and accounting principles and
practices as suggested by the independent accountants, internal auditors or
management.
14. Discuss with the independent accountants the communications regarding the
conduct of the audit required of the independent accountants under
applicable auditing standards.
15. Determine the agenda for the Audit Committee and the areas in which it
wishes to receive further information from management or the independent
accountants and record the proceedings of its meetings through minutes.
33
[Logo of Alcoa]
Alcoa
201 Isabella Street at 7th Street Bridge
Pittsburgh, Pennsylvania 15212-5858
- -----------------------------------------
Printed in USA 00020102 Form A07-12000
Graphics Appendix List
Page Where
Graphic Appears Description of Graphic or Cross-Reference
page 6 Photograph of Kenneth W. Dam, Nominee for
Director
page 7 Photograph of Judith M. Gueron, Nominee for
Director
page 7 Photograph of Paul H. O'Neill, Nominee for
Director
page 8 Photograph of Joseph T. Gorman, Continuing
Director
page 8 Photograph of Sir Ronald Hampel, Continuing
Director
page 9 Photograph of John P. Mulroney, Continuing
Director
page 9 Photograph of Marina v.N. Whitman, Continuing
Director
page 10 Photograph of Alain J.P. Belda, Continuing
Director
page 10 Photograph of Hugh M. Morgan, Continuing
Director
page 11 Photograph of Henry B. Schacht, Continuing
Director
page 11 Photograph of Franklin A. Thomas, Continuing
DirectorA07-15010
Two Ways to Vote
VOTE BY MAIL
Return your proxy in the
postage-paid envelope provided.
VOTE BY INTERNET
Access this Webweb site to cast your vote.
http://www.votefast.com
Your Internet
Control Number is ------------------------________________________
Vote By Mail--Please mark, sign and date your proxy card and return it in the
postage-paid envelope provided.
Vote By Internet--Have your proxy card available when you access the Webweb site
http://www.votefast.com. You will be prompted to enter your control number, and then
follow the directions given to record your vote. If you vote through the
Internet, do not mail your proxy card. Vote 24 hours a day, 7 days a week. Your
Internet vote must be received by 5:00 p.m. EDT on Thursday, May 11, 2000April 19, 2001 to
be counted in the final tabulation.
Alcoa Annual Meeting of Shareholders
9:30 a.m. Friday, May 12, 2000
DoubleTree HotelApril 20, 2001
Westin Convention Center Pittsburgh
Allegheny Ballroom
Pittsburgh, Pennsylvania
Admission Ticket
This ticket is not transferable.
ALCOA LOGO
Please retain this ticket for admittance to the annual meeting.
Fold and detach here
(continued from the other side)
(RETURN IN THE ENCLOSED ENVELOPE)
1
PROXY
Please mark your choices clearly in the appropriate boxes. Unless specified, the
proxy committee will vote FOR both items.item 1 and AGAINST item 2.
DIRECTORS RECOMMEND A VOTE FOR THIS ITEM (#1) ___
---
1. Election ofOf Directors
Nominees to serve a three-year term:
Kenneth W. Dam
JudithAlain J. P. Belda
Hugh M. Gueron
Nominee to serve a term expiring December 31, 2000:
Paul H. O'NeillMorgan
Henry B. Schacht
Franklin A. Thomas
/ / FOR all listed nominees
/ / WITHHOLD vote for all listed nominees
/ / WITHHOLD vote only from ----------------------------____________________
DIRECTORS RECOMMEND A VOTE FORAGAINST THIS ITEM (#2) ---___
-------
2. Amendment to Articles of Incorporation Increasing Authorized
Common StockShareholder Proposal Relating To A Global Set
Of Corporate Standards
/ / VOTE FOR / / VOTE AGAINST / / ABSTAIN
PLEASE VOTE, SIGN, DATE AND RETURN
Date 2000
- ----------------------------- --------_______________, 2001
(Sign exactly as name appears above, indicating position or representative
capacity, where applicable)
Shareholder comments about any aspect of company business are welcome. There is
space on the bottom of this form for your comments. Although we do not respond
to these comments on an individual basis, they do assist management in
determining and responding to your needs as shareholders.
2
Please retain this ticket for admittance to the annual meeting.
Fold and detach here
ALCOA LOGO
Alcoa
201 Isabella St. at 7th St. Bridge
Pittsburgh, PA 15212-5858
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I authorize Thomas J. Meek, Timothy S. Mock Russell W. Porter, Jr. and Robert G.
Wennemer,William B. Plummer, together or
separately, to represent me at the annual meeting of shareholders of Alcoa Inc.
scheduled for Friday, May 12, 2000,April 20, 2001, and at any adjournment of the meeting. I
authorize them to vote the shares of stock that I could vote if attending the
meeting, in accordance with the instructions on the reverse side of this card.
The proxiesrepresentatives are authorized in their discretion to vote upon such other
business as may properly come before the meeting, and they may name others to
take their place.
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 plans.
If you plan to attend the annual meeting, please check the box below.
/ / I will attend the annual meeting.
Comments: ----------------------------------------------------------
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- -------------------------------------------------------------------
- -------------------------------------------------------------------_________________________________________
___________________________________________________
________________________________________________________________________________
(continued on the other side)
3