SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. _ )
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[_] Preliminary Proxy Statement
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Rule 14a-6(e)(2))
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[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
_______________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
TITANIUM METALS CORPORATION
_______________________________________________________________________________
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[LOGO]
Titanium Metals Corporation
1999 Broadway, Suite 4300
Denver, Colorado 80202
April 11, 2001
Dear Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders of
Titanium Metals Corporation ("TIMET" or the "Company"), which will be held on
Tuesday, May 22, 2001, at 10:00 a.m. (local time), at the Company's executive
offices located at 1999 Broadway, Suite 4300, Denver, Colorado. In addition to
matters to be acted on at the meeting, which are described in detail in the
attached Notice of Annual Meeting of Stockholders and Proxy Statement, we will
update you on the Company. I hope that you will be able to attend.
Whether or not you plan to attend the meeting, please complete, date, sign and
return the enclosed proxy card or voting instruction form in the accompanying
envelope so that your shares are represented and voted in accordance with your
wishes. Your vote, whether given by proxy or in person at the meeting, will be
held in confidence by the Inspector of Election for the meeting in accordance
with TIMET's Bylaws.
Sincerely,
J. Landis Martin
Chairman of the Board,
President and Chief Executive Officer
Titanium Metals Corporation
1999 Broadway, Suite 4300
Denver, Colorado 80202
Notice of Annual Meeting of Stockholders
to be Held May 22, 2001
To the Stockholders of Titanium Metals Corporation:
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders (the
"Meeting") of Titanium Metals Corporation, a Delaware corporation ("TIMET" or
the "Company"), will be held on Tuesday, May 22, 2001, at 10:00 a.m. (local
time), at the Company's executive offices located at 1999 Broadway, Suite 4300,
Denver, Colorado, for the following purposes:
(1) To elect five directors to serve until the 2002 Annual
Meeting of Stockholders and until their successors are duly
elected and qualified; and
(2) To transact such other business as may properly come before
the Meeting or any adjournment or postponement thereof.
The Board of Directors of the Company set the close of business on March 23,
2001, as the record date (the "Record Date") for the Meeting. Only holders of
TIMET's common stock, $.01 par value per share, at the close of business on the
Record Date, are entitled to notice of, and to vote at, the Meeting. The stock
transfer books of the Company will not be closed following the Record Date. A
complete list of stockholders entitled to vote at the Meeting will be available
for examination during normal business hours by any TIMET stockholder, for
purposes related to the Meeting, for a period of ten days prior to the Meeting,
at TIMET's corporate offices located at 1999 Broadway, Suite 4300, Denver,
Colorado.
You are cordially invited to attend the Meeting. Whether or not you plan to
attend the Meeting in person, please complete, date and sign the accompanying
proxy card or voting instruction form and return it promptly in the enclosed
envelope to ensure that your shares are represented and voted in accordance with
your wishes. You may revoke your proxy by following the procedures set forth in
the accompanying Proxy Statement. If you choose, you may still vote in person at
the Meeting even though you previously submitted your proxy.
In accordance with the Company's Bylaws, your vote, whether given by proxy or in
person at the Meeting, will be held in confidence by the Inspector of Election
for the Meeting.
By order of the Board of Directors,
Joan H. Prusse
Vice President, Deputy
General Counsel and Secretary
Denver, Colorado
April 11, 2001
Titanium Metals Corporation
1999 Broadway, Suite 4300
Denver, Colorado 80202
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PROXY STATEMENT
---------------------
General Information
This Proxy Statement and the accompanying proxy card or voting instruction form
are being furnished in connection with the solicitation of proxies by and on
behalf of the Board of Directors (the "Board of Directors") of Titanium Metals
Corporation, a Delaware corporation ("TIMET" or the "Company"), for use at the
2001 Annual Meeting of Stockholders of the Company to be held on Tuesday, May
22, 2001, at 10:00 a.m. (local time), at the Company's executive offices located
at 1999 Broadway, Suite 4300, Denver, Colorado, and at any adjournment or
postponement thereof (the "Meeting"). This Proxy Statement and the accompanying
proxy card or voting instruction form will first be mailed to the holders of
TIMET's common stock, $.01 par value per share ("TIMET Common Stock"), on or
about April 13, 2001.
Purpose of the Meeting
Stockholders of the Company represented at the Meeting will consider and vote
upon (i) the election of five directors to serve until the 2002 Annual Meeting
of Stockholders of the Company and until their successors are duly elected and
qualified and (ii) such other business as may properly come before the Meeting.
The Company is not aware of any business to be presented for consideration at
the Meeting other than the election of directors.
Voting Rights and Quorum
The presence, in person or by proxy, of the holders of a majority of the shares
of TIMET Common Stock entitled to vote at the Meeting is necessary to constitute
a quorum for the conduct of business at the Meeting. Shares of TIMET Common
Stock that are voted to abstain from any business coming before the Meeting and
broker/nominee non-votes will be counted as being in attendance at the Meeting
for purposes of determining whether a quorum is present.
At the Meeting, directors of the Company will be elected by a plurality of the
affirmative vote of the outstanding shares of TIMET Common Stock present (in
person or by proxy) and entitled to vote. The accompanying proxy card or voting
instruction form provides space for a stockholder to withhold authority to vote
for any or all nominees for the Board of Directors. Neither shares as to which
authority to vote on the election of directors has been withheld nor
broker/nominee non-votes will be counted as affirmative votes to elect nominees
for the Board of Directors. However, since director nominees need only receive
the vote of a plurality of the shares represented (in person or by proxy) at the
Meeting and entitled to vote, a vote withheld from a particular nominee will not
affect the election of such nominee.
Except as otherwise required by the Company's Restated Certificate of
Incorporation, any other matter that may be submitted to a stockholder vote will
require the affirmative vote of a majority of the shares represented at the
Meeting (in person or by proxy) and entitled to vote. Shares of TIMET Common
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Stock that are voted to abstain from any business coming before the Meeting and
broker/nominee non-votes will not be counted as votes for or against the
approval of any such other matter.
First Chicago Trust Division of EquiServe ("First Chicago"), the transfer agent
and registrar for TIMET Common Stock, has been appointed by the Board of
Directors to ascertain the number of shares represented, receive proxies and
ballots, tabulate the vote and serve as Inspector of Election at the Meeting.
All proxies and ballots delivered to First Chicago will be kept confidential by
First Chicago in accordance with the Company's Bylaws.
The record date set by the Board of Directors for the determination of
stockholders entitled to notice of, and to vote at, the Meeting is the close of
business on March 23, 2001 (the "Record Date"). Only holders of shares of TIMET
Common Stock at the close of business on the Record Date are entitled to vote at
the Meeting. As of the Record Date, there were 31,824,905 shares of TIMET Common
Stock issued and outstanding, each of which will be entitled to one vote on each
matter that comes before the Meeting.
AS OF THE RECORD DATE, TREMONT CORPORATION ("TREMONT") AND OTHER ENTITIES
RELATED TO HAROLD C. SIMMONS HELD, IN THE AGGREGATE, APPROXIMATELY 47.1% OF THE
OUTSTANDING SHARES OF TIMET COMMON STOCK. TREMONT AND SUCH OTHER ENTITIES HAVE
INDICATED THEIR INTENTION TO HAVE SUCH SHARES REPRESENTED AT THE MEETING AND TO
VOTE SUCH SHARES "FOR" THE ELECTION OF ALL OF THE NOMINEES FOR DIRECTOR SET
FORTH IN THIS PROXY STATEMENT. IF ALL OF SUCH SHARES ARE VOTED AS INDICATED AND
ALL OTHER OUTSTANDING SHARES OF TIMET COMMON STOCK ARE REPRESENTED AND VOTED AT
THE MEETING, THE ADDITIONAL AFFIRMATIVE VOTE OF APPROXIMATELY 3.0% OR MORE OF
THE TIMET COMMON STOCK ENTITLED TO VOTE WILL ASSURE THE ELECTION OF EACH OF THE
DIRECTOR NOMINEES SET FORTH BELOW. IN ADDITION, ALL OF SUCH NOMINEES FOR
DIRECTOR WILL BE ELECTED IF NO OTHER PERSON RECEIVES THE VOTE OF MORE SHARES
THAN THE NUMBER OF SHARES VOTED BY TREMONT AND SUCH OTHER ENTITIES.
Proxy Solicitation
This proxy solicitation is being made by and on behalf of the Board of Directors
of the Company. The Company will pay all expenses of this proxy solicitation,
including charges for preparing, printing, assembling and distributing all
materials delivered to stockholders. In addition to solicitation by mail,
directors, officers and regular employees of the Company may solicit proxies by
telephone or personal contact for which such persons will receive no additional
compensation. The Company has retained D.F. King & Co., Inc. to aid in the
distribution of this Proxy Statement, at a cost that the Company estimates will
be approximately $3,000. In addition, upon request, the Company will reimburse
banking institutions, brokerage firms, custodians, trustees, nominees and
fiduciaries for their reasonable out-of-pocket expenses incurred in distributing
proxy materials and voting instructions to the beneficial owners of TIMET Common
Stock held of record by such entities.
All shares of TIMET Common Stock represented by properly executed proxies will,
unless such proxies have previously been revoked, be voted in accordance with
the instructions indicated in such proxies. If no instructions are indicated,
such shares will be voted (a) "FOR" the election of each of the five nominees
set forth below as directors and (b) to the extent allowed by federal securities
laws, in the discretion of the proxy holders on any other matter that may
properly come before the Meeting. Each holder of record of TIMET Common Stock
giving the proxy enclosed with this Proxy Statement may revoke it at any time,
prior to the voting thereof at the Meeting, by (i) delivering to First Chicago a
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written revocation of the proxy, (ii) delivering to First Chicago a duly
executed proxy bearing a later date, or (iii) voting in person at the Meeting.
Attendance by a stockholder at the Meeting will not in itself constitute the
revocation of a proxy previously given.
Election of Directors
The Bylaws of the Company currently provide that the Board of Directors shall
consist of a minimum of three and a maximum of seventeen persons, as determined
from time to time by the Board of Directors in its discretion. The number of
directors is currently set at five. The five directors elected at the Meeting
will hold office until the 2002 Annual Meeting of Stockholders of the Company
and until their successors are duly elected and qualified.
Each of the nominees set forth below is currently a director of the Company
whose term will expire at the Meeting. All nominees have agreed to serve if
elected. If any nominee is not available for election at the Meeting, the proxy
will be voted for an alternate nominee to be selected by the Board of Directors,
unless the stockholder executing such proxy withholds authority to vote for the
election of directors. The Board of Directors believes that all of its present
nominees will be available for election at the Meeting and will serve if
elected.
The Board of Directors recommends a vote "FOR" each of the nominees identified
below.
Nominees for Director
The following information has been provided by the respective nominees for
election to the Board of Directors.
Edward C. Hutcheson, Jr., 55, has been a director of TIMET since 1996. Since
February 2000, Mr. Hutcheson has been involved in private investment activities
and has provided consulting services to companies seeking capital. From March
1997 until February 2000, he served in several capacities with Pinnacle Global
Group, Inc., a publicly owned financial services company, and its predecessor
private companies. He served as Chief Operating Officer of the holding company
and was a Principal of the merchant banking subsidiary. Mr. Hutcheson co-founded
Crown Castle International, Inc. in 1994 and served as Chief Executive Officer
or Chairman from its inception to March 1997. Crown Castle, a public company,
owns and operates thousands of wireless communications sites in the US, UK and
Australia. During 1994, Mr. Hutcheson was involved in private investment
activities leading to the creation of the predecessor to Crown Castle. From 1987
through 1993, he served in senior management roles with Baroid Corporation, a
publicly owned petroleum services company. His assignments included serving as
President, Chief Operating Officer and a director of the holding company from
1990 through 1993. Mr. Hutcheson also serves on the board of directors of Crown
Castle International and Trico Marine Services. Mr. Hutcheson serves as Chair of
TIMET's Management Development and Compensation Committee (the "Compensation
Committee") and is a member of TIMET's Audit Committee and Nominations
Committee.
J. Landis Martin, 55, has been Chairman of the Board of TIMET since 1987, Chief
Executive Officer of TIMET since 1995 and President since 2000 and previously
from 1995 to 1996. Mr. Martin has served as Chairman of the Board of Tremont
since 1990, as Chief Executive Officer and a director of Tremont since 1988 and
as President of Tremont since 1987 (except for a period in 1990). Since 1987,
Mr. Martin has served as President and Chief Executive Officer, and, since 1986,
as a director of NL Industries, Inc. ("NL"), a manufacturer of titanium dioxide
pigments. Tremont and NL may be deemed to be affiliates of TIMET. Mr. Martin is
also a director of Halliburton Company, Apartment Investment and Management
Company, Crown Castle International Corporation and Special Metals Corporation.
3
Glenn R. Simmons, 73, has been a director of TIMET since 1999. Mr. Simmons is
Chairman of the Board of Keystone Consolidated Industries, Inc. ("Keystone"), a
steel fabricated wire products, industrial wire and carbon steel rod company and
CompX International Inc. ("CompX"), a manufacturer of ergonomic computer support
systems, precision ball bearing slides and security products. CompX is a
majority-owned, indirect subsidiary of Valhi, Inc. ("Valhi"), which is engaged
in the manufacture of titanium dioxide pigments through its majority interest in
NL and component products through its majority interest in CompX and also
engaged in waste management. Since 1987, Mr. Simmons has been Vice Chairman of
the Board of Valhi and of Contran Corporation ("Contran"), a diversified holding
company that directly and through related entities holds approximately 94% of
the outstanding shares of common stock of Valhi ("Valhi Common Stock") and 50%
of the outstanding shares of common stock of Keystone. Valhi, together with
other persons or entities related to Harold C. Simmons, holds approximately
80.1% of the outstanding shares of common stock of Tremont ("Tremont Common
Stock"). Valhi and Tremont hold approximately 60.2% and 20.4%, respectively, of
the outstanding shares of common stock of NL ("NL Common Stock"). Mr. Simmons
has been an executive officer and/or director of various companies related to
Valhi and Contran since 1969. Mr. Simmons is also a director of Tremont and NL.
Keystone, Valhi and CompX may be deemed to be affiliates of TIMET. Mr. Simmons
is a member of TIMET's Nominations Committee and Pension and Employee Benefits
Committee. Mr. Simmons is a brother of Harold C. Simmons.
General Thomas P. Stafford (retired), 70, has been a director of TIMET since
1996. Gen. Stafford was a co-founder of and has been affiliated with Stafford,
Burke and Hecker, Inc., a Washington-based consulting firm, since 1982. Gen.
Stafford graduated from the United States Naval Academy in 1952. He was
commissioned as an officer in the United States Air Force ("USAF") and attended
the USAF Experimental Flight Test School in 1958. He was selected as an
astronaut in 1962, piloted Gemini VI in 1965 and commanded Gemini IX in 1966. In
1969, Gen. Stafford was named Chief of the Astronaut Office and was the Apollo X
commander for the first lunar module flight to the moon. He commanded the
Apollo-Soyuz joint mission with the Soviet cosmonauts in 1975. After his
retirement from the USAF in 1979 as Lieutenant General, in which his last
assignment was Deputy Chief of Staff for Research, Development and Acquisitions,
he became Chairman of Gibraltar Exploration Limited, an oil and gas exploration
and production company, and served in that position until 1984, when he joined
General Technical Services, Inc., a consulting firm. In addition to serving as a
director of Tremont and NL, Gen. Stafford is a director of CMI Corporation and
The Wackenhut Corp. Gen. Stafford serves as Chair of TIMET's Audit Committee and
Nominations Committee and is a member of TIMET's Compensation Committee.
Steven L Watson, 50, has been a director of TIMET since February 2000. Mr.
Watson has been President and a director of Valhi and Contran since 1998 and has
served as an executive officer and/or director of Valhi, Contran and various
companies related to Valhi and Contran since 1980. Mr. Watson also serves on the
board of directors of Tremont, NL, CompX and Keystone. Mr. Watson serves on
TIMET's Nominations Committee.
For information concerning certain transactions to which certain director
nominees are parties and other matters, see "Certain Relationships and
Transactions" below.
Board Meetings
The Board of Directors held seven meetings in 2000. Each of the directors
participated in at least 75% of the total number of such meetings and of the
committee meetings (for committees on which they served) held during their
period of service in 2000.
Board Committees
The Board of Directors has established the following standing committees:
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Audit Committee. The responsibilities and authority of the Audit Committee are,
among other things, to review and recommend to the Board of Directors the
selection of the Company's independent auditors, to consider the independence
and effectiveness of the independent auditors, to review with the independent
auditors the scope and results of the annual auditing engagement and the system
of internal accounting controls, to review the Company's Annual Report on Form
10-K, including annual financial statements, to review and discuss with
management the Company's interim financial statements and to direct and
supervise special audit inquiries. The Company's Board of Directors has adopted
a written charter for the Audit Committee, a copy of which is attached as
Appendix A to this Proxy Statement. The Company believes that each of the
members of the Audit Committee is independent, in accordance with the
requirements of the New York Stock Exchange. The current members of the Audit
Committee are Gen. Thomas P. Stafford (Chair) and Edward C. Hutcheson, Jr. The
Audit Committee held three meetings in 2000 and took action by written consent
in lieu of a meeting twice in 2000. See "Independent Auditor Matters" below.
Management Development and Compensation Committee. The principal
responsibilities and authority of the Compensation Committee are to review and
approve certain matters involving executive compensation, including making
recommendations to the Board of Directors regarding certain compensation matters
involving the Chief Executive Officer, to review and approve grants of stock
options, stock appreciation rights and awards of restricted stock under the
Company's incentive plans, except as otherwise delegated by the Board of
Directors, to review and recommend adoption of or revision to compensation plans
and employee benefit programs, to review and recommend compensation policies and
practices and to prepare such compensation committee disclosures as may be
required, to review and recommend any executive employment contract, and to
provide counsel on key personnel selection, organization strategies and such
other matters as the Board of Directors may from time to time direct. The
current members of the Compensation Committee are Edward C. Hutcheson, Jr.
(Chair) and Gen. Thomas P. Stafford. The Compensation Committee held one meeting
in 2000 and took action by written consent in lieu of a meeting once in 2000.
Nominations Committee. The principal responsibilities and authority of the
Nominations Committee are to review and make recommendations to the Board of
Directors regarding such matters as the size and composition of the Board of
Directors, criteria for director nominations, director candidates, the term of
office for directors and such other related matters as the Board of Directors
may request from time to time. The current members of the Nominations Committee
are Gen. Thomas P. Stafford (Chair), Glenn R. Simmons, Edward C. Hutcheson, Jr.
and Steven L. Watson. The Nominations Committee held one meeting in 2000. In
February 2001, the Nominations Committee reviewed and made its recommendations
to the Board of Directors with respect to the election of directors at the
Meeting. The Nominations Committee will consider recommendations by stockholders
of the Company with respect to the election of directors if such recommendations
are submitted in writing to the Secretary of the Company and received not later
than December 31 of the year prior to the next annual meeting of stockholders.
Pension and Employee Benefits Committee. The Pension and Employee Benefits
Committee (the "Benefits Committee") is established to oversee the
administration of the Company's pension and employee benefit plans other than
the 1996 Long Term Performance Incentive Plan of Titanium Metals Corporation
(the "TIMET Stock Incentive Plan"). The Benefits Committee is currently composed
of Glenn R. Simmons. The Benefits Committee held two meetings during 2000 and
took action by written consent in lieu of a meeting once in 2000.
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Members of the standing committees will be appointed at the meeting of the Board
of Directors immediately following the Meeting. The Board of Directors has
previously established, and from time to time may establish, other committees to
assist it in the discharge of its responsibilities.
Compensation of Directors
During 2000, directors of the Company who were not employees of the Company
received an annual retainer of $15,000 in cash plus 500 shares of TIMET Common
Stock. In February, 2001, the retainer share award was increased to 1,000
shares. In addition, non-employee directors receive an attendance fee of $1,000
per meeting for each meeting of the Board of Directors or a committee of the
Board of Directors attended in person ($350 for telephonic participation).
Committee Chairs receive an additional attendance fee of $1,000 for each
committee meeting attended in person ($350 for telephonic participation).
Directors are also reimbursed for reasonable expenses incurred in attending
Board of Directors and committee meetings.
Under a director compensation plan adopted by the Company (the "Director
Compensation Plan"), each non-employee director was granted an option to acquire
5,000 shares of TIMET Common Stock at $3.9375 per share in 2000. The current
non-employee directors are Mr. Hutcheson, Mr. Simmons, Gen. Stafford and Mr.
Watson.
Executive Officers
Set forth below is certain information relating to the current executive
officers of the Company. Biographical information with respect to J. Landis
Martin is set forth under "Election of Directors" above. See also "Certain
Relationships and Transactions" below.
Name Age Position(s)
J. Landis Martin 55 Chairman of the Board, President and Chief Executive Officer;
Chairman of the Board, President and Chief Executive Officer
of Tremont; President and Chief Executive Officer of NL
Charles H. Entrekin, Jr., Ph.D. 52 Executive Vice President-Commercial
Christian Leonhard 55 Executive Vice President-Operations
Robert E. Musgraves 46 Executive Vice President and General Counsel; Vice President,
General Counsel and Secretary of Tremont
Mark A. Wallace 43 Executive Vice President, Chief Financial Officer and Treasurer; Vice
President, Chief Financial Officer and Treasurer of Tremont
6
Charles H. Entrekin, Jr., Ph.D., 52, has served as Executive Vice
President-Commercial of TIMET since January 2000. Dr. Entrekin was Vice
President of TIMET from 1997 to 2000 and President-North American Mill Products
Operations from 1999 to 2000. From 1997 to 1999, he was President of the
Company's wholly owned subsidiary Titanium Hearth Technologies, Inc. ("THT"),
from 1993 to 1997 he was Vice President-Commercial of THT and from 1985 to 1993
he was Vice President-Technology of THT.
Christian Leonhard, 55, has served as Executive Vice President-Operations of
TIMET since January 2000. Mr. Leonhard joined TIMET in 1988 as General Manager
of TIMET France. He was promoted to President of TIMET Savoie in 1996 and
President of European Operations in 1997.
Robert E. Musgraves has served as Executive Vice President of TIMET since
January 2000 and has been General Counsel since 1990. Mr. Musgraves was Vice
President from 1990 to 2000 and Secretary of TIMET from 1991 to 2000. Mr.
Musgraves has served as General Counsel and Secretary of Tremont since 1993 and
has been a Vice President of Tremont since 1994.
Mark A. Wallace has served as Executive Vice President, Chief Financial Officer
and Treasurer of TIMET since January 2000. Mr. Wallace served as Vice
President-Finance and Treasurer of TIMET from 1992 to 1997 and Vice
President-Strategic Change and Information Technology of TIMET from 1997 to
January 2000. Mr. Wallace has served as Vice President, Chief Financial Officer
and Treasurer of Tremont since February 2000 and was Vice President-Controller
and Treasurer of Tremont from 1992 to 1997.
Security Ownership
Ownership of TIMET Common Stock
The following table and accompanying notes set forth, as of the Record Date, the
beneficial ownership, as defined by the regulations of the Securities and
Exchange Commission (the "Commission"), of TIMET Common Stock held by (a) each
person or group of persons known to TIMET to beneficially own more than 5% of
the outstanding shares of TIMET Common Stock, (b) each director or nominee for
director of TIMET, (c) each current or former executive officer of TIMET listed
in the Summary Compensation Table below who is not a director or nominee for
director of TIMET and (d) all current executive officers and directors of TIMET
as a group. See note (3) following the table immediately below for information
concerning individuals and entities that may be deemed to indirectly
beneficially own those shares of TIMET Common Stock directly beneficially owned
by Tremont. All information has been taken from or is based upon ownership
filings made by such persons with the Commission or upon information provided by
such persons to TIMET.
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Ownership of TIMET Common Stock
TIMET Common Stock
-----------------------------------------
Amount and Nature of Percent of
Beneficial Ownership (1) Class (2)
---------------------- --------------
Name of Beneficial Owner
- -------------------------
Greater than 5% Stockholders
Tremont Corporation (3)(4) 12,280,005 38.6%
Combined Master Retirement Trust (3) 2,720,900 8.5%
Dimensional Fund Advisors, Inc. (5) 2,344,500 7.4%
ICM Asset Management, Inc. and James W. Simmons (6) 1,857,463 5.8%
Schroeder Investment Management North America Inc. (7) 1,691,800 5.3%
Directors
Edward C. Hutcheson, Jr. (8) (9) 32,502 ---
J. Landis Martin (3)(9)(10) 316,719 ---
Glenn R. Simmons (3)(11) 13,000 ---
Gen. Thomas P. Stafford (12) 15,350 ---
Steven L. Watson (3) (13) 13,500 ---
Other Current Executive Officers
Charles H. Entrekin, Jr. (14) 60,800 ---
Christian Leonhard (15) 58,200 ---
Robert E. Musgraves (16)(17) 88,150 ---
Mark A. Wallace (17)(18) 97,500 ---
Former Executive Officer
Andrew R. Dixey (9)(17)(19) 81,690 ---
All Current Directors and Executive Officers of the Company as a group
(9 persons) (3)(8)(9)(10)(11)(12)(13)(14)(15)(16) (17)(18)(20) 695,721 2.2%
- ------------
(1) All beneficial ownership is sole and direct unless otherwise noted.
(2) No percent of class is shown for holdings of less than 1%. For
purposes of calculating individual and group percentages, the number
of shares treated as outstanding for each individual includes stock
options exercisable by such individual (or all individuals included
in the group) within 60 days of the Record Date and shares each
individual may acquire by conversion of convertible securities.
(3) Tremont and the Combined Master Retirement Trust (the "CMRT")
directly beneficially own approximately 38.6% and 8.5% of the
outstanding shares of TIMET Common Stock. Valhi established the CMRT
to permit the collective investment by master trusts that maintain
the assets of certain employee benefit plans adopted by Valhi and
related companies. Harold C. Simmons is the sole trustee of the CMRT
and a member of the trust investment committee of the CMRT. Valhi's
board of directors selects the trustee and members of the trust
investment committee for the CMRT. Harold C. Simmons, Glenn R.
Simmons and Steven L. Watson are each members of Valhi's board of
directors and are
8
participants in one or more of the employee benefit plans that invest
through the CMRT. However, each such person disclaims beneficial
ownership of the shares of TIMET Common Stock held by the CMRT,
except to the extent of his individual, vested beneficial interest
in the assets held by the CMRT.
Based upon information supplied to the Company by Valhi, Tremont
Group, Inc. ("TGI") and Tremont Holdings, LLC ("TRE Holdings") are
the direct holders of approximately 80.0% and 0.1%, respectively, of
the outstanding shares of Tremont Common Stock. Valhi and TRE
Holdings are the direct holders of 80.0% and 20.0%, respectively, of
the outstanding common stock of TGI. NL is the sole member of TRE
Holdings.
Valhi and Tremont are the direct holders of approximately 60.2% and
20.4%, respectively, of the outstanding shares of NL Common Stock.
Valhi Group, Inc. ("VGI"), National City Lines, Inc. ("National"),
and Contran are the holders of approximately 81.7%, 9.5%, and 1.8%,
respectively, of the outstanding shares of Valhi Common Stock.
National, NOA, Inc. ("NOA") and Dixie Holding Company ("Dixie
Holding") are the direct holders of approximately 73.3%, 11.4% and
15.3%, respectively, of the outstanding common stock of VGI. Contran
and NOA are the direct holders of approximately 85.7% and 14.3%,
respectively, of the outstanding common stock of National. Contran
and Southwest Louisiana Land Company, Inc. ("Southwest") are the
direct holders of approximately 49.9% and 50.1%, respectively, of the
outstanding common stock of NOA. Dixie Rice Agricultural Corporation,
Inc. ("Dixie Rice") is the direct holder of 100% of the outstanding
common stock of Dixie Holding. Contran is the holder of 100% of the
outstanding common stock of Dixie Rice and approximately 88.9% of the
outstanding common stock Southwest. Substantially all of Contran's
outstanding voting stock is held by trusts established for the
benefit of certain children and grandchildren of Harold C. Simmons
(the "Trusts"), of which Mr. Simmons is the sole trustee. As sole
trustee of the Trusts, Mr. Simmons has the power to vote and direct
the disposition of the shares of Contran stock held by the Trusts.
Mr. Simmons, however, disclaims beneficial ownership of any Contran
shares held by the Trusts.
Harold C. Simmons is Chairman of the Board and Chief Executive
Officer of TGI, Valhi, VGI, National, NOA, Dixie Holding, Dixie Rice,
Southwest and Contran. Mr. Simmons is also Chairman of the Board and
Chief Executive Officer of NL and a director of Tremont.
By virtue of the holding of the offices, the stock ownership, and his
service as trustee, all as described above, Mr. Simmons may be deemed
to control the entities described above, and Mr. Simmons and certain
of such entities may be deemed to possess indirect beneficial
ownership of the shares of Tremont, Valhi, NL and TIMET Common Stock
held directly by certain of such other entities. Mr. Simmons,
however, disclaims beneficial ownership of such shares beneficially
owned, directly or indirectly, by any of such entities, except to the
extent otherwise expressly indicated in this note.
Glenn R. Simmons and Steven L. Watson are directors of NL, Valhi and
Contran, J. Landis Martin is a director of NL and all of such persons
are directors of TGI and Tremont. Each of such persons disclaims
beneficial ownership of the shares of Tremont Common Stock that TGI,
NL, Valhi or Contran directly or indirectly beneficially holds and
the shares of TIMET Common Stock held by Tremont.
The Harold Simmons Foundation, Inc. (the "Foundation") directly holds
approximately 0.5% of the outstanding shares of Valhi Common Stock.
The Foundation is a tax-exempt foundation organized for charitable
purposes. Harold C. Simmons is Chairman of the Board and Chief
Executive Officer of the Foundation and may be deemed to control the
Foundation. Mr. Simmons, however, disclaims beneficial ownership of
any shares of Valhi Common Stock held by the Foundation.
The CMRT also directly holds approximately 0.1% of the outstanding
shares of Valhi Common Stock. Harold C. Simmons, Glenn R. Simmons and
Steven L. Watson each disclaim beneficial ownership of the shares of
Valhi and TIMET Common Stock held by the CMRT, except to the extent
of his individual, vested beneficial interest in the assets held by
the CMRT.
9
The Contran Deferred Compensation Trust No. 2 (the "CDCT No. 2")
directly holds approximately 0.4% of the outstanding shares of Valhi
Common Stock. U.S. Bank National Association serves as the trustee of
the CDCT No. 2. Contran established the CDCT No. 2 as an irrevocable
"rabbi trust" to assist Contran in meeting certain deferred
compensation obligations that it owes to Harold C. Simmons. If the
CDCT No. 2 assets are insufficient to satisfy such obligations,
Contran must satisfy the balance of such obligations. Pursuant to the
terms of the CDCT No. 2, Contran retains the power to vote the shares
of Valhi Common Stock held by the CDCT No. 2, retains dispositive
power over such shares and may be deemed the indirect beneficial
owner of such shares. Mr. Simmons, however, disclaims beneficial
ownership of the shares owned, directly or indirectly, by the CDCT
No. 2, except to the extent of his interest as a beneficiary of the
CDCT No. 2.
Valmont Insurance Company ("Valmont") and a subsidiary of NL directly
own 1,000,000 shares and 1,186,200 shares, respectively, of the
outstanding shares of Valhi Common Stock. Valhi directly holds 100%
of the outstanding common stock of Valmont. Pursuant to Delaware law,
Valhi treats the shares of Valhi Common Stock owned by Valmont and
the subsidiary of NL as treasury stock for voting purposes. For the
purposes of this footnote, such shares are not deemed outstanding.
Harold C. Simmons' spouse is the direct owner of 77,000 shares of
Valhi Common Stock and 69,475 shares of NL Common Stock. Mr. Simmons
may be deemed to share indirect beneficial ownership of such shares.
However, Mr. Simmons disclaims all such beneficial ownership.
The business address of TGI, Valhi, VGI, National, NOA, Dixie
Holding, Contran, the CMRT and the Foundation is Three Lincoln
Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697. The
business address of Dixie Rice is 600 Pasquiere Street, Gueydan,
Louisiana 70542. The business address of Southwest is 402 Canal
Street, Houma, Louisiana 70360. The business address of TRE Holdings
is 16825 Northchase Drive, Suite 1200, Houston, Texas 77060.
(4) The address of Tremont Corporation is 1999 Broadway, Suite 4300,
Denver, Colorado 80202.
(5) As reported in Amendment No. 1 to Statement on Schedule 13G filed
with the Commission dated February 2, 2001. The address of
Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th Floor,
Santa Monica, California 90401.
(6) As reported in Amendment No. 3 to Statement on Schedule 13G filed
with the Commission dated February 13, 2001. The address of ICM Asset
Management, Inc. and James M. Simmons is 601 W. Main Avenue, Suite
600, Spokane, Washington 99201.
(7) As reported in Statement on Schedule 13G filed with the Commission
dated February 14, 2001. The address of Schroeder Investment
Management North America Inc. is 787 Seventh Avenue, 34th Floor, New
York, NY 10019.
(8) The shares of TIMET Common Stock shown as beneficially owned by
Edward C. Hutcheson, Jr. include 12,750 shares that Mr. Hutcheson has
the right to acquire by the exercise of stock options within 60 days
of the Record Date under the Director Compensation Plan.
(9) Edward C. Hutcheson, Jr., J. Landis Martin and Andrew R. Dixey are
the holders of 13,332 (all held indirectly), 16,332 (13,332 held
indirectly) and 5,500 shares, respectively, of the 6-5/8% Convertible
Preferred Securities, Beneficial Unsecured Convertible Securities
("TIMET Trust Securities") of the TIMET Capital Trust I. See
"Ownership of TIMET Trust Securities" below. Such TIMET Trust
Securities are convertible into 17,852, 21,869 and 7,365 shares of
TIMET Common Stock, respectively, which amounts are included in the
respective TIMET Common Stock ownership numbers shown for each of Mr.
Hutcheson, Mr. Martin and Mr. Dixey. No other director, nominee for
director or executive officer of TIMET is known to hold any TIMET
Trust Securities.
10
(10) The shares of TIMET Common Stock shown as beneficially owned by J.
Landis Martin include (i) 180,600 shares that Mr. Martin has the
right to acquire by the exercise of stock options within 60 days of
the Record Date under the TIMET Stock Incentive Plan and (ii) 400
shares held by Mr. Martin's daughters, beneficial ownership of which
is disclaimed by Mr. Martin.
(11) The shares of TIMET Common Stock shown as beneficially owned by Glenn
R. Simmons include 10,000 shares that Mr. Simmons has the right to
acquire by the exercise of stock options within 60 days of the Record
Date under the Director Compensation Plan.
(12) The shares of TIMET Common Stock shown as beneficially owned by
Thomas P. Stafford include 12,750 shares that Gen. Stafford has the
right to acquire by the exercise of stock options within 60 days of
the Record Date under the Director Compensation Plan.
(13) The shares of TIMET Common Stock shown as beneficially owned by
Steven L. Watson include 5,000 shares that Mr. Watson has the right
to acquire by the exercise of stock options within 60 days of the
Record Date under the Director Compensation Plan.
(14) The shares of TIMET Common Stock shown as beneficially owned by
Charles H. Entrekin, Jr. include (i) 20,600 shares that Dr. Entrekin
has the right to acquire by the exercise of stock options within 60
days of the Record Date under the TIMET Stock Incentive Plan and (ii)
32,000 shares of TIMET Common Stock that represent restricted shares
under the terms of the TIMET Stock Incentive Plan with respect to
which shares Dr. Entrekin has the power to vote and receive
dividends.
(15) The shares of TIMET Common Stock shown as beneficially owned by
Christian Leonhard include (i) 18,200 shares that Mr. Leonhard has
the right to acquire by the exercise of stock options within 60 days
of the Record Date under the TIMET Stock Incentive Plan and (ii)
32,000 shares of TIMET Common Stock that represent restricted shares
under the terms of the TIMET Stock Incentive Plan with respect to
which shares Mr. Leonhard has the power to vote and receive
dividends.
(16) The shares of TIMET Common Stock shown as beneficially owned by
Robert E. Musgraves include (i) 37,800 shares that Mr. Musgraves has
the right to acquire by the exercise of stock options within 60 days
of the Record Date under the TIMET Stock Incentive Plan, (ii) 200
shares held by members of Mr. Musgraves' household, beneficial
ownership of which is disclaimed by Mr. Musgraves and (iii) 32,000
shares of TIMET Common Stock that represent restricted shares under
the terms of the TIMET Stock Incentive Plan with respect to which
shares Mr. Musgraves has the power to vote and receive dividends.
(17) Of the shares of TIMET Common Stock shown as beneficially owned by
Robert E. Musgraves, Mark A. Wallace and Andrew R. Dixey, 14,400,
8,000 and 22,465 shares (of which, 7,365 shares of Mr. Dixey's total
are represented by TIMET Trust Securities), respectively, are pledged
to TIMET to secure repayment of loans from TIMET to such individual
used to purchase such shares or pay taxes with respect to restricted
shares on which the restrictions have lapsed. See "Certain
Relationships and Transactions--Contractual Relationships--TIMET
Executive Stock Ownership Loan Plan" below.
(18) The shares of TIMET Common Stock shown as beneficially owned by Mark
A. Wallace include (i) 45,000 shares that Mr. Wallace has the right
to acquire by the exercise of stock options within 60 days of the
Record Date under the TIMET Stock Incentive Plan and (ii) 32,000
shares of TIMET Common Stock that represent restricted shares under
the terms of the TIMET Stock Incentive Plan with respect to which
shares Mr. Wallace has the power to vote and receive dividends.
(19) Andrew R. Dixey resigned as an executive officer of TIMET effective
February 4, 2000. The shares of TIMET Common Stock shown as
beneficially owned by Mr. Dixey include 41,400 shares that Mr. Dixey
has the right to acquire by the exercise of stock options within 60
days of the Record Date under the TIMET Stock Incentive Plan.
11
(20) The shares of TIMET Common Stock shown as beneficially owned by "All
Current Directors and Executive Officers as a group" include 342,700
shares that members of this group have the right to acquire by the
exercise of stock options within 60 days of the Record Date under the
TIMET Stock Incentive Plan or the TIMET Director Compensation Plan
and 47,086 shares that members of this group have the right to
acquire by the conversion of TIMET Trust Securities.
TIMET understands that Tremont and related entities may consider acquiring or
disposing of shares of TIMET Common Stock through open-market or privately
negotiated transactions, depending upon future developments, including, but not
limited to, the availability and alternative uses of funds, the performance of
TIMET Common Stock in the market, an assessment of the business of and prospects
for TIMET, financial and stock market conditions and other factors. TIMET may
similarly consider such acquisitions of shares of TIMET Common Stock and
acquisition or disposition of securities issued by related parties. TIMET does
not, and understands that Tremont also does not, presently intend to engage in
any transaction or series of transactions that would result in the TIMET Common
Stock's becoming eligible for termination of registration under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or ceasing to be traded on
a national securities exchange.
Ownership of Tremont Common Stock
By virtue of the share ownership described above, for purposes of the
Commission's regulations, Tremont may be deemed to be the parent of TIMET. The
following table and accompanying notes set forth the beneficial ownership, as of
the Record Date, of Tremont Common Stock held by (i) each director or nominee
for director of TIMET, (ii) each current or former executive officer identified
in the table under the heading "Ownership of TIMET Common Stock" and (iii) all
current directors and executive officers of TIMET as a group. Except as set
forth below and under the heading "Ownership of TIMET Trust Securities" below,
no securities of TIMET's subsidiaries or less than majority owned affiliates are
beneficially owned by any director, nominee for director or executive officer of
TIMET. All information has been taken from or is based upon, ownership filings
made by such persons with the Commission or upon information provided by such
persons to TIMET or Tremont.
12
Ownership of Tremont Common Stock
Tremont Common Stock
------------------------------------------
Amount and Nature of Percent of
Beneficial Ownership (1) Class (2)
----------------------- --------------
Name of Beneficial Owner
- -------------------------
Directors
Edward C. Hutcheson, Jr. -0- ---
J. Landis Martin (3)(4) 104,359 1.6%
Glenn R. Simmons (4)(5) 534 ---
Gen. Thomas P. Stafford (6) 4,000 ---
Steven L. Watson (4) 4,474 ---
Other Current Executive Officers
Charles H. Entrekin, Jr. -0- ---
Christian Leonhard -0- ---
Robert E. Musgraves (7) 9,500 ---
Mark A. Wallace 66 ---
Former Executive Officer
Andrew R. Dixey -0- ---
All Current Directors and Executive Officers of the Company as a group
(9 persons) (3)(4)(5)(6)(7)(8) 122,933 1.9%
- -------------
(1) All beneficial ownership is sole and direct unless otherwise noted.
(2) No percent of class is shown for holdings of less than 1%. For
purposes of calculating individual and group percentages, the number
of shares treated as outstanding for each individual includes stock
options exercisable by such individual (or all individuals included
in the group) within 60 days of the Record Date.
(3) The shares of Tremont Common Stock shown as beneficially owned by J.
Landis Martin include 60,000 shares that Mr. Martin has the right to
acquire by exercise of stock options within 60 days of the Record
Date under the Tremont 1988 Long Term Performance Incentive Plan
("Tremont Stock Incentive Plan").
(4) Based upon information supplied to the Company by Valhi, TGI and TRE
Holdings are the direct holders of approximately 80.0% and 0.1%,
respectively, of the outstanding shares of Tremont Common Stock. See
note (3) to the table appearing under the heading "Ownership of TIMET
Common Stock" above for information concerning individuals and
entities that may be deemed to indirectly beneficially own the shares
of Tremont Common Stock directly beneficially owned by such entities.
Glenn R. Simmons, Harold C. Simmons, Steven L. Watson and J. Landis
Martin disclaim beneficial ownership of all of the shares of Tremont
Common Stock owned by such entities, except as otherwise noted in
such note (3).
(5) The shares of Tremont Common Stock shown as beneficially owned by
Glenn R. Simmons include 515 shares that are held in Mr. Simmons'
individual retirement account.
(6) The shares of Tremont Common Stock shown as beneficially owned by
Thomas P. Stafford include 4,000 shares that Gen. Stafford has the
right to acquire by the exercise of stock options within 60 days of
the Record Date under the Tremont Corporation 1992 Non-Employee
Director Stock Option Plan ("Tremont Director Plan").
13
(7) The shares of Tremont Common Stock shown as beneficially owned by
Robert E. Musgraves represent shares that Mr. Musgraves has the right
to acquire by the exercise of stock options within 60 days of the
Record Date under the Tremont Stock Incentive Plan.
(8) The shares of Tremont Common Stock shown as beneficially owned by all
current directors and executive officers as a group include 73,500
shares that members of this group have the right to acquire by the
exercise of stock options within 60 days of the Record Date under the
Tremont Stock Incentive Plan or the Tremont Director Plan.
Ownership of TIMET Trust Securities
The TIMET Capital Trust I (the "TIMET Trust") is a statutory business trust
formed under the laws of the State of Delaware, all of whose common securities
are owned by TIMET. The TIMET Trust Securities represent undivided beneficial
interests in the TIMET Trust. The TIMET Trust exists for the sole purpose of
issuing the TIMET Trust Securities and investing in an equivalent amount of
6-5/8% Convertible Junior Subordinated Debentures due 2026 (the "Debentures") of
TIMET. The TIMET Trust Securities are convertible, at the option of the holder
thereof, into an aggregate of approximately 5.4 million shares of TIMET Common
Stock at a conversion rate of 1.339 shares of TIMET Common Stock for each TIMET
Trust Security. TIMET has, in effect, fully and unconditionally guaranteed
repayment of all amounts due on the TIMET Trust Securities.
The TIMET Trust Securities were issued pursuant to an offering exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"). Pursuant to an agreement with the original purchasers of the TIMET Trust
Securities, TIMET has filed a registration statement under the Securities Act to
register, among other things, the TIMET Trust Securities, the Debentures, the
TIMET Common Stock issuable upon the conversion of the TIMET Trust Securities,
and certain other shares of TIMET Common Stock that are held by, or may be
acquired by, Tremont. See "Certain Relationships and Transactions--Contractual
Relationships--Registration Rights" below. Except as set forth in note (9) to
the table under the heading "Ownership of TIMET Common Stock" above, no
director, nominee for director or executive officer of TIMET is known to hold
any TIMET Trust Securities.
Executive Compensation
Summary of Cash and Certain Other Compensation of Executive Officers
The following table and accompanying notes set forth certain information
regarding the compensation paid by TIMET to (i) TIMET's Chief Executive Officer,
(ii) TIMET's four other most highly compensated executive officers serving as
executive officers at the end of the last completed fiscal year and (iii) one
former executive officer for whom disclosures would have been provided in
category (ii) above but for the fact that he was not serving as an executive
officer at the end of the last completed fiscal year, in each case for services
rendered during each of the fiscal years 1998, 1999 and 2000 (regardless of the
year in which actually paid).
14
Summary Compensation Table (1)(2)
Long Term Compensation
Awards
Restricted Securities All Other
Annual Compensation Stock Awards Underlying Compensation ($)
Name and Principal Position Year Salary ($) Bonus ($) (3) ($)(4) Options (#) (5)
Current Executive Officers
J. Landis Martin (6) 2000 500,000 -0- -0- 250,000 13,670
Chairman of the Board and 1999 500,000 -0- -0- 111,000 9,760
Chief Executive Officer 1998 500,000 265,000 -0- 75,000 14,573
Charles H. Entrekin, Jr. 2000 245,833 30,000 185,000 -0- 12,760
Executive Vice President-Commercial 1999 200,000 40,000 -0- 18,000 10,096
1998 150,000 33,000 -0- 9,000 9,707
Christian J. M. Leonhard (7) 2000 244,121 30,000 185,000 -0- 108,295
Executive Vice President-Operations 1999 184,772 -0- -0- 18,000 55,568
1998 203,087 35,065 -0- 9,000 91,014
Robert E. Musgraves 2000 247,917 30,000 185,000 -0- 10,351
Executive Vice President and 1999 225,000 45,000 -0- 27,000 8,773
General Counsel 1998 175,000 84,000 -0- 15,000 13,108
Mark A. Wallace 2000 245,833 40,000 185,000 -0- 8,924
Executive Vice President, Chief 1999 200,000 40,000 -0- 30,000 7,453
Financial Officer and Treasurer 1998 150,000 72,000 -0- 15,000 10,076
Former Executive Officer
Andrew R. Dixey (8) 2000 9,615 -0- -0- -0- 309,257
Former President and Chief 1999 300,000 -0- -0- 54,000 35,565
Operating Officer 1998 300,000 159,000 -0- 36,000 47,273
- ---------------
(1) Columns required by the regulations of the Commission that would
contain no entries have been omitted.
(2) J. Landis Martin, Robert E. Musgraves, and Mark A. Wallace also
currently serve as executive officers of Tremont. The amounts shown
as salary and bonus for Mr. Martin, Mr. Musgraves and Mr. Wallace
represent the full amount paid by TIMET for services rendered by such
persons on behalf of both TIMET and Tremont during 1998, 1999 and
2000. Pursuant to an intercorporate services agreement, in each of
1998, 1999 and 2000 Tremont reimbursed TIMET for approximately 10% of
the TIMET salary and regular bonus of each of Mr. Martin and Mr.
Musgraves, and, in 2000, of Mr. Wallace, plus, in each case, a
proportionate share of applicable estimated fringe benefits and
overhead expense for each, as follows:
Year Martin Musgraves Wallace
2000 $ 60,000 $33,360 $31,570
1999 $ 60,000 $32,760 -0-
1998 $ 91,800 $31,080 -0-
TIMET expects that Mr. Martin, Mr. Musgraves and Mr. Wallace will
each devote approximately 10% of his total TIMET/Tremont time during
2001 to Tremont matters. Accordingly, it is anticipated that Tremont
will reimburse TIMET for such proportionate percentage of the 2001
salary and regular bonus paid by TIMET to such individuals (plus a
proportionate share of applicable estimated fringe benefits and
overhead expense for each) pursuant to an intercorporate services
agreement. See "Certain Relationships and Related
Transactions--Contractual Relationships--Tremont Intercorporate
Services Agreement" below.
15
(3) Under TIMET's variable incentive compensation plan (the "Employee
Cash Incentive Plan") applicable during 1998, 1999 and 2000 to Dr.
Entrekin, Mr. Leonhard, Mr. Musgraves and Mr. Wallace, a portion of
the compensation payable to such individuals under this plan is based
upon TIMET's financial performance, while the balance is based on the
assessed performance of the individual officer. (Mr. Leonhard was
under a variation of this program in Europe during 1998 and 1999.) In
lieu of participating in the TIMET Employee Cash Incentive Plan, Mr.
Martin participates and, for the years shown, Mr. Dixey participated,
in TIMET's Senior Executive Cash Incentive Plan (the "Senior
Executive Cash Incentive Plan") which provides for payments based
solely upon TIMET's financial performance. Except as reflected in
note (5) below, the amounts shown in the "Bonus" column represent
amounts paid under the Employee Cash Incentive Plan or the Senior
Executive Cash Incentive Plan, as applicable to such individual.
(4) The amounts shown for Dr. Entrekin, Mr. Leonhard, Mr. Musgraves and
Mr. Wallace under the heading "Long Term
Compensation--Awards--Restricted Stock Awards" represent 40,000
shares each of restricted TIMET Common Stock granted to such
individuals under the TIMET Stock Incentive Plan effective as of
February 23, 2000, valued at the closing price for TIMET Common Stock
on such date ($4.625 per share). As of December 31, 2000, each such
person held 40,000 shares of restricted TIMET Common Stock (valued at
$270,000 each at the $6.75 per share closing price of TIMET Common
Stock on December 29, 2000). The restrictions lapse as to 20% of such
shares on each of the first five anniversaries of such grant date.
Any shares as to which restrictions have not lapsed are subject to
forfeiture in the event of the termination of the individual's
employment with TIMET (for reasons other than death, disability or
retirement). Holders of restricted stock are entitled to vote and
receive dividends with respect to such shares prior to the date
restrictions lapse thereon.
(5) Except as otherwise indicated in notes (6), (7) and (8) below, "All
Other Compensation" amounts represent (i) matching contributions made
or accrued by TIMET pursuant to the savings feature of TIMET's
Retirement Savings Plan, (ii) retirement contributions made or
accrued by TIMET pursuant to the Retirement Savings Plan and (iii)
life insurance premiums paid by TIMET, as follows:
Year Martin Entrekin Leonhard Musgraves Wallace
Savings Match ($) 2000 5,000 4,920 -0- 2,509 2,456
1999 1,600 3,946 -0- 1,600 1,600
1998 6,400 3,911 -0- 6,400 4,501
Retirement 2000 8,670 7,350 -0- 6,290 5,100
Contribution ($)
1999 8,160 4,800 -0- 5,920 4,800
1998 8,160 4,500 -0- 5,920 4,800
Life Insurance ($) 2000 -0- 490 563 1,552 1,368
1999 -0- 1,350 -0- 1,253 1,053
1998 -0- 1,296 -0- 788 775
(6) The amounts shown as "Bonus" for Mr. Martin do not reflect any
portion of the previously reported special bonus of $2 million
awarded by Tremont in 1996, of which $145,000 was paid by Tremont to
Mr. Martin in 1998. Interest on the unpaid balance was paid in 1998
at 8.75% per annum, which amount is reflected in the "All Other
Compensation" column for Mr. Martin to the extent such interest was
in excess of 120% of the applicable federal long-term interest rate
($13 in 1998).
(7) The amounts shown for 1998, 1999 and 2000 represent amounts paid or
accrued by TIMET, TIMET's wholly owned subsidiary, TIMET UK, Ltd.
("TIMET UK"), or TIMET UK's 70%-owned subsidiary, TIMET Savoie, S.A.
("TIMET Savoie"). The portion of Mr. Leonhard's compensation paid by
TIMET UK was paid in British pounds sterling. The exchange rate used
was (pound)1 = $1.66 for 1998, (pound)1 = $1.62
16
for 1999 and (pound)1 = $1.52 for 2000. The portion of Mr. Leonhard's
compensation paid by TIMET Savoie was paid in French francs. The
exchange rate used was FF1 = $.17 for 1998, FF1 = $.16 for 1999 and
FF1 = $.15 for 2000. The amounts shown in "All Other Compensation"
include $107,732 in 2000, $55,568 in 1999 and $91,014 in 1998 paid to
or on behalf of Mr. Leonhard in connection with his foreign
assignments (including housing and car allowance, tax equalization
payments, relocation costs and income taxes with respect to certain
of such payments).
(8) The amounts shown for 1998, 1999 and 2000 represent amounts paid or
accrued either by TIMET or TIMET UK. The portion of Mr. Dixey's
compensation paid by TIMET UK was paid in British pounds sterling.
The exchange rate used was (pound)1 = $1.66 for 1998, (pound)1 =
$1.62 for 1999 and (pound)1 = $1.52 for 2000. For Mr. Dixey, "All
Other Compensation" represents the amount contributed or accrued by
TIMET UK with respect to Mr. Dixey's TIMET UK supplemental pension
plan. See "Pension Plans" below. Mr. Dixey resigned as an executive
officer of TIMET effective February 4, 2000, and for 2000, the
amounts shown as "All Other Compensation" for Mr. Dixey also include
$272,456 in severance payments.
Pension Plans
The TIMET UK Limited Pension Plan (the "TIMET UK Pension Plan") covers
substantially all of TIMET UK's senior salaried employees. Such employees
generally became eligible to receive a retirement benefit under such plan after
completion of two years of service. Benefits under the TIMET UK Pension Plan are
generally formulated on the basis of a straight-line annuity based upon the
number of years of pensionable service credited to the participant, up to a
maximum of 32 years, divided by 48 years and multiplied by the final pensionable
pay of the participant after deducting a basic state pension offset. Final
pensionable pay is calculated using the average pay during the three years of
employment in which the individual's pay was the highest.
The following table lists annual benefits under the TIMET UK Pension Plan for
the pensionable pay and years of pensionable service set forth below:
Years of Pensionable Service
-----------------------------------------------------------------------
15 20 25 30 35
Final Pensionable Pay ((pound))
(maximum of(pound)91,800) 25,216 34,779 44,341 53,904 57,728
Final pensionable pay pursuant to the TIMET UK Pension Plan is capped at
(pound)91,800. Andrew R. Dixey is the only executive named in the Summary
Compensation Table who participates in the TIMET UK Pension Plan. Since Mr.
Dixey's compensation exceeded the earnings cap under the TIMET UK Pension Plan,
his pensionable pay under the TIMET UK Pension Plan is equal to the earnings
cap. As of December 31, 2000, Mr. Dixey was credited with approximately five
years of pensionable service under the TIMET UK Pension Plan.
In addition to the TIMET UK Pension Plan, Mr. Dixey participates in a
supplemental pension plan through TIMET UK. The TIMET UK supplemental plan
requires monthly contributions by TIMET UK of 20% of that portion of Mr. Dixey's
basic monthly salary that exceeds the TIMET UK Pension Plan earnings cap. Upon
Mr. Dixey's retirement, TIMET UK's contributions to the plan are required to be
paid to Mr. Dixey.
Stock Option/SAR Grants in Last Fiscal Year
The following table and accompanying notes provide information, with respect to
the executive officers of TIMET named in the "Summary Compensation Table" above,
concerning the grant of stock options under the TIMET Stock Incentive Plan
during fiscal year 2000. No stock appreciation rights ("SARs") have been granted
under the TIMET Stock Incentive Plan.
17
Option/SAR Grants in Last Fiscal Year
Percent of
Total Potential Realizable
Number of Options Value at Assumed Annual
Securities Granted to Exercise or Rates of Stock Price
Underlying Employees in Base Price Appreciation for Option
Date of Options Fiscal Year (2) Expiration Term ($) (3)
Name Grant Granted (1) ($/Share) Date 5% 10%
J. Landis Martin 2/23/00 100,000 7.00 2/23/2010 23,000 451,000
2/23/00 100,000 9.00 2/23/2010 -0- 251,000
2/23/00 50,000 99% 11.00 2/23/2010 -0- 25,500
- ---------------
(1) Options become exercisable 40% on the second anniversary of the date
of grant and 20% on each of the third, fourth and fifth anniversaries
of such date.
(2) The exercise prices of $7.00, $9.00 and $11.00 per share were
arbitrarily chosen above-market values. They represent $2.5625,
$4.5625 and $6.5625, respectively, above the "fair market value" of
TIMET Common Stock of $4.4375 on the grant date, calculated as the
mean of the highest and lowest sales prices on such date (the "Grant
Date FMV").
(3) Pursuant to the rules of the Commission, these amounts reflect the
calculations at assumed 5% and 10% appreciation rates from the Grant
Date FMV. Such calculations are not intended to forecast future
appreciation, if any, and do not necessarily reflect the actual
value, if any, that may be realized. The actual value of such
options, if any, would be realized only upon the exercise of such
options and will depend upon the actual future performance of TIMET
Common Stock. No assurance can be made that the amounts reflected in
these columns will be achieved. The potential realizable value was
computed as the difference between the appreciated value (at the end
of the ten-year term of the options) of TIMET Common Stock into which
the identified stock options are exercisable and the aggregate
exercise price of such options. The appreciated value per share at
the end of the ten-year term would be $7.23 and $11.51 at the assumed
5% and 10% appreciation rates, respectively.
Stock Option Exercises and Holdings
Prior to 1996, executive officers of TIMET were granted stock options pursuant
to the Tremont Stock Incentive Plan. Since 1996, such executive officers have
been granted stock options pursuant to the TIMET Stock Incentive Plan. The
following table and accompanying notes provide information, with respect to the
executive officers of TIMET listed in the "Summary Compensation Table" above,
concerning the exercise of TIMET and Tremont stock options during the last
fiscal year and the value of unexercised TIMET and Tremont stock options held as
of December 31, 2000. None of Mr. Dixey, Dr. Entrekin, Mr. Leonhard or Mr.
Wallace holds any Tremont stock options. No SARs have been granted under the
TIMET Stock Incentive Plan or the Tremont Stock Incentive Plan. TIMET has
previously agreed to reimburse Tremont for the difference between the market
price of Tremont Common Stock on the date of exercise of a Tremont stock option
held by a TIMET employee (up to $16.625 per share) and the exercise price of
such option. See also "Certain Relationships and Transactions--Contractual
Relationships--Option Reimbursement Agreement" below.
18
Aggregated Option Exercises in 2000 and 12/31/00 Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options Options at
Shares at 12/31/00 (#) 12/31/00 ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
TIMET
J. Landis Martin -0- -0- 109,200/440,800 -0-/-0-
Charles H. Entrekin, Jr. -0- -0- 11,600/25,400 -0-/-0-
Christian J. M. Leonhard -0- -0- 8,600/25,400 -0-/-0-
Robert E. Musgraves -0- -0- 21,000/45,600 -0-/-0-
Mark A. Wallace -0- -0- 27,600/47,400 -0-/-0-
Andrew R. Dixey -0- -0- 41,400/-0- -0-/-0-
Tremont
J. Landis Martin -0- -0- 60,000/-0- 1,338,750/-0-
Robert E. Musgraves 2,000 37,050 9,500/-0- 203,250/-0-
Severance Arrangements
In 1999, the Company adopted a policy applicable to certain executive officers
of the Company, including Mr. Martin, Mr. Musgraves and Mr. Wallace, providing
that the following payments will be made to each such individual in the event
his or her employment is terminated by TIMET without cause (as defined in the
policy) or such individual terminates his or her employment with TIMET for good
reason (as defined in the policy): (i) one times such individual's annual TIMET
base salary paid in the form of salary continuation, (ii) prorated bonus for the
year of termination and (iii) certain other benefits.
Dr. Entrekin is party to an agreement with THT providing for payment of one
times Dr. Entrekin's salary as a lump sum and certain other benefits in the
event his employment is terminated without cause (as defined in the agreement)
or Dr. Entrekin terminates his employment for good reason (as defined in the
agreement).
Mr. Leonhard is party to an agreement with TIMET Savoie and is eligible for
benefits under the statutory French indemnity scheme, pursuant to which he would
receive certain severance benefits if his employment were terminated without
cause, including: (i) six months' advance notice or payment of salary in lieu
thereof by TIMET Savoie and (ii) other severance payments that would be computed
based upon his age, seniority with the Company and his salary plus bonus at the
time of employment termination, a portion of which would be paid by TIMET Savoie
and a portion by the French government.
19
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Company's Board of Directors presents the
following report on executive compensation.
The Compensation Committee is composed of directors who are neither officers nor
employees of the Company, its subsidiaries or affiliates and who are not
eligible to participate in any of the employee benefit plans administered by it.
The Compensation Committee reviews and recommends compensation policies and is
responsible for approving all compensation paid directly by the Company to the
Company's executive officers other than base salary of the Chief Executive
Officer (the "CEO"). Any action regarding the base salary of the CEO is reviewed
and approved by the Board after recommendation by the Compensation Committee.
Compensation Program Objectives
The Compensation Committee believes that the Company's primary goal is to
increase stockholder value, as measured by dividends paid on and appreciation in
the value of the Company's equity securities. It is the Compensation Committee's
policy that compensation programs be designed to attract, retain, motivate and
reward employees, including executive officers, who can lead the Company in
accomplishing this goal. It is also the Compensation Committee's policy that
compensation programs maintain a strong risk/reward ratio, with a large
component of cash compensation being tied to the Company's financial results,
creating a performance-oriented environment that rewards employees for achieving
pre-set financial performance levels and increasing stockholder value, thereby
contributing to the long-term success of the Company.
During 2000, the Company's compensation program with respect to its executive
officers, including the CEO, consisted of three primary components: base salary,
variable compensation based upon Company and, in certain cases, individual
performance and non-cash incentive compensation in the form of stock options and
restricted stock granted under the TIMET Stock Incentive Plan.
Base Salaries
The Compensation Committee, in consultation with the CEO, reviews base salaries
for the executive officers other than the CEO generally no more frequently than
annually. The CEO's recommendation and the Compensation Committee's actions in
2000 regarding base salaries were based primarily upon a subjective evaluation
of past and potential future individual performance and contributions, changes
in individual responsibilities, and alternative opportunities that might be
available to the executives in question. Also reviewed was compensation data
from companies employing executives in positions similar to those whose salaries
were being reviewed, as well as market conditions for executives in general with
similar skills, background and performance, both inside and outside of the
metals industry, and other companies with similar financial and business
characteristics as the Company, or where the executive in question has similar
responsibilities.
Based upon the foregoing principles and the recommendation of the CEO, the
Compensation Committee approved base salary increases, effective February 1,
2000, for Dr. Entrekin, Mr. Leonhard, Mr. Musgraves and Mr. Wallace, as
reflected in the "Summary Compensation Table."
20
Cash Incentive Plans
Awards under TIMET's Employee Cash Incentive Plan represent a significant
portion of the potential annual cash compensation to employees of TIMET (from 0%
to 54% of base salary for 2000, depending upon the position held by such
employee) and consist of a combination of awards based on the financial
performance of TIMET and, in some cases, on individual performance. All of the
company's executive officers, other than Mr. Martin, were eligible to receive
benefits under the Employee Cash Incentive Plan for 2000.
Potential awards under the Employee Cash Incentive Plan attributable solely to
the performance of TIMET in 2000 were based on TIMET's achieving certain pre-set
return on equity (ROE) goals, which the Company believes should increase
stockholder value over time if they are met. Performance levels are tied to the
Company's corporate-wide ROE as follows:
Performance
ROE Level
less than 3% --
3%-6% A
6%-12% B
12%-24% C
over 24% D
In 2000, the Company achieved a return on equity of less than 3%, as calculated
under the Employee Cash Incentive Plan, resulting in no Company-performance
based payout.
An individual performance award may be made to an executive of TIMET under the
Employee Cash Incentive Plan if such executive's performance objectives were met
during the prior fiscal year. Payments made to participating executive officers
who are listed in the "Summary Compensation Table" above under this portion of
the Employee Cash Incentive Plan for services rendered in 2000 are included
under the "Bonus" column of the "Summary Compensation Table."
In 1996, the Board established the Senior Executive Cash Incentive Plan, which
was approved by the Company's stockholders in 1997. This plan is currently
applicable only to Mr. Martin. The Senior Executive Cash Inventive Plan provides
for payments based solely upon Company performance ranging between 0% for
corporate returns on equity of less than 10% up to 150% of base salary for
corporate returns on equity at 30% or greater. No payments were made to Mr.
Martin for 2000 under this plan based upon the Company's return on equity of
less than 10%.
Apart from the foregoing plans, the Compensation Committee or the Board may from
time to time award other bonuses as the Compensation Committee or Board deems
appropriate from time to time under its general authority or under a separate
discretionary plan.
Stock-Based Compensation
The TIMET Stock Incentive Plan supports the goal of the Compensation Committee
to maximize long-term stockholder value by providing for stock-based
compensation, the value of which is directly related to increases in stockholder
value. Stock option grants, in particular, are considered a significant element
of the Company's total compensation package for the CEO and the other executive
officers of the Company. The Compensation Committee believes that compensation
linked to stock price performance helps focus the executives' attention on
management of the Company from the stockholders' perspective. Grants of
long-term, stock-based incentives are intended to provide incentives to increase
stockholder value in the future and to reward past performance by the executive.
21
In 2000, taking into consideration such factors as the strong labor market
generally, the difficult business environment facing the Company, and the likely
prospect that the Company would not be paying meaningful bonuses under its cash
incentive program for the next several years (and had not made payments
thereunder since 1998), the Compensation Committee, based upon the
recommendation of the CEO, made grants of restricted stock to approximately 160
executives and managers, other than the CEO. Such restricted shares vest ratably
on each of the first five anniversaries of the grant date.
The Compensation Committee made a grant to the CEO of non-qualified incentive
stock options covering a total of 250,000 shares of TIMET Common Stock in
tranches of 100,000 shares, 100,000 shares and 50,000 shares at exercise prices
of $7.00, $9.00, and $11.00, respectively. Each tranche vests 40%, 20%, 20% and
20% on the second, third, fourth and fifth anniversaries, respectively, of the
grant date.
Grants were made to such executive officer based upon a subjective evaluation by
the Compensation Committee regarding such executive's performance and
responsibilities. Grants made in 2000 are reflected in the "Stock Option/SAR
Grants in Last Fiscal Year" table set forth above.
Tax Code Limitation on Executive Compensation Deductions
In 1993, Congress amended the Internal Revenue Code to impose a $1 million
deduction limit on compensation paid to the CEO and the four other most highly
compensated executive officers of public companies, subject to certain
transition rules and exceptions for compensation received pursuant to
non-discretionary performance-based plans approved by such company's
stockholders. The Company's stockholders have previously approved the TIMET
Stock Incentive Plan and the Senior Executive Cash Incentive Plan. Therefore,
the Compensation Committee believes that payments made pursuant to these two
plans qualify for exemption from the deductibility limit as "performance-based
compensation." The Compensation Committee does not currently believe that any
other existing compensation program of the Company could give rise to a
deductibility limitation at current executive compensation levels. The
Compensation Committee intends to periodically review the compensation plans of
the Company to determine whether further action in respect of this limitation is
warranted.
Chief Executive Officer Compensation
No changes to the compensation of Mr. Martin, as Chairman and CEO, were made or
proposed for 2000.
The foregoing report on executive compensation has been furnished by the
Company's Compensation Committee of the Board of Directors.
Management Development and Compensation Committee
Edward C. Hutcheson, Jr. (Chair)
General Thomas P. Stafford
22
Independent Auditor Matters
Independent Auditors
The firm of PricewaterhouseCoopers LLP served as TIMET's independent auditors
for the year ended December 31, 2000, has been appointed to review TIMET's
quarterly unaudited consolidated financial statements to be included in its
Quarterly Reports on Form 10-Q for the first three quarters of 2001 and is
expected to be considered for appointment to audit TIMET's annual consolidated
financial statements for the year ending December 31, 2001. Representatives of
PricewaterhouseCoopers LLP are expected to attend the Meeting.
Audit Committee Report
TIMET's management is primarily responsible for preparing TIMET's financial
statements in accordance with accounting principles generally accepted in the
United States and for the reporting process, including the system of internal
controls. TIMET's independent auditors are responsible for auditing TIMET's
consolidated financial statements in accordance with auditing principles
generally accepted in the United States. The Audit Committee serves as an
independent and objective party to oversee and review TIMET's auditing,
accounting and financial reporting processes on behalf of the Board of
Directors.
The Audit Committee has reviewed and discussed TIMET's audited consolidated
financial statements for the year ended December 31, 2000 with TIMET's
management and independent auditors. In fulfilling its oversight
responsibilities, the Audit Committee also discussed with the independent
auditors the quality, not just the acceptability, of the accounting principles,
the reasonableness of significant judgments and the clarity of disclosures in
the financial statements, as required by Statement on Auditing Standards No. 61.
The Audit Committee also received written disclosures from the independent
auditors required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and discussed with the independent auditors
their independence from management and the Company. The Audit Committee also
considered whether the independent auditors' provision of non-audit services to
TIMET and its subsidiaries is compatible with such auditors' independence.
Additionally, the Audit Committee discussed with TIMET's management and the
independent auditors such other matters as the Audit Committee deemed
appropriate. Based on the Audit Committee's review of TIMET's audited
consolidated financial statements and the Audit Committee's discussions with
TIMET's management and independent auditors of the matters identified above, the
Audit Committee recommended to the Board of Directors that TIMET's audited
consolidated financial statements for the year ended December 31, 2000 be
included in TIMET's Annual Report on Form 10-K for the year ended December 31,
2000, which has been filed with the Commission.
Audit Committee
Gen. Thomas P. Stafford (Chair)
Edward C. Hutcheson, Jr.
23
Audit and Other Fees
PricewaterhouseCoopers LLP has billed or is expected to bill to TIMET for
services rendered for 2000 as follows: Audit Fees of $454,300 and $198,000 for
all other fees. TIMET did not incur fees for Financial Information Systems
Design and Implementation during 2000. The Audit Fees include, without
duplication, (a) fees for the audit of TIMET's consolidated financial statements
for the year ended December 31, 2000, (b) reviews of the unaudited quarterly
financial statements appearing in TIMET's Forms 10-Q for each of the first three
quarters of 2000 and (c) estimated out-of-pocket costs PricewaterhouseCoopers
LLP incurred in such audits and reviews, for which TIMET reimburses
PricewaterhouseCoopers LLP.
Performance Graph
Set forth below is a line graph comparing, for the period June 5, 1996 (the date
upon which TIMET Common Stock was first registered under Section 12 of the
Exchange Act) through December 31, 2000, the cumulative total stockholder return
on TIMET Common Stock against the cumulative total return of (a) the S&P
Composite 500 Stock Index and (b) a self-selected peer group, comprised solely
of RTI International Metals, Inc. (NYSE: RTI) (formerly RMI Titanium Company),
the principal U.S. competitor of TIMET in the titanium metals industry for which
meaningful, same-period stockholder return information is available. The graph
shows the value at December 31 of each year, assuming an original investment of
$100 in each and reinvestment of cash dividends and other distributions to
stockholders.
Comparison of Cumulative Return among Titanium Metals Corporation,
S&P Composite 500 Stock Index and Self-Selected Peer Group
[GRAPH]
24
Certain Relationships and Transactions
Relationships with Related Parties
As set forth under the heading "Security Ownership" above, TIMET may be deemed
to be controlled by Harold C. Simmons. Tremont and other entities that may be
deemed to be controlled by or related to Mr. Simmons sometimes engage in (a)
intercorporate transactions with related companies such as guarantees,
management and expense sharing arrangements, shared fee arrangements, tax
sharing agreements, joint ventures, partnerships, loans, options, advances of
funds on open account, and sales, leases and exchanges of assets, including
securities issued by both related and unrelated parties, and (b) common
investment and acquisition strategies, business combinations, reorganizations,
recapitalizations, securities repurchases, and purchases and sales (and other
acquisitions and dispositions) of subsidiaries, divisions or other business
units, which transactions have involved both related and unrelated parties and
have included transactions that resulted in the acquisition by one related party
of a publicly held, minority equity interest in another related party. TIMET
continuously considers, reviews and evaluates, and understands that Contran,
Valhi, NL, Tremont and related entities also consider, review and evaluate, such
transactions. Depending upon the business, tax and other objectives then
relevant, it is possible that TIMET might be a party to one or more of such
transactions in the future. It is the policy of TIMET to engage in transactions
with related parties on terms that are, in the opinion of TIMET, no less
favorable to TIMET than could be obtained from unrelated parties.
J. Landis Martin, Chairman of the Board, President and Chief Executive Officer
of TIMET, is also Chairman of the Board, President and Chief Executive Officer
of Tremont. Mr. Martin also serves as a director and President and Chief
Executive Officer of NL. Glenn R. Simmons, a director of TIMET, is also Chairman
of the Board of Keystone and CompX, Vice Chairman of the Board of Contran and
Valhi and a director of Tremont and NL. General Thomas P. Stafford, a director
of TIMET, is also a director of Tremont and NL. Steven L. Watson, a director of
TIMET, is also an executive officer of Contran and Valhi, and a director of
Contran, CompX, Keystone, Valhi, NL and Tremont and an Assistant Secretary of
Tremont. Robert E. Musgraves, Executive Vice President and General Counsel of
TIMET, is also Vice President, General Counsel and Secretary of Tremont. Mark A.
Wallace, Executive Vice President, Chief Financial Officer and Treasurer of
TIMET, is also Vice President, Chief Financial Officer and Treasurer of Tremont.
Joan H. Prusse, Vice President, Deputy General Counsel and Secretary of TIMET,
is also Assistant General Counsel and Assistant Secretary of Tremont. Robert D.
Hardy, Assistant Treasurer of TIMET, holds a similar position at Tremont and is
also Vice President and Controller of NL. Sandra K. Goebel is an Assistant
Secretary of both TIMET and Tremont. Elizabeth Maercklein and Robert Serocki are
Assistant Treasurers of both TIMET and Tremont. TIMET understands that all such
persons are expected to continue to serve in such capacities in 2001. Such
individuals divide their time among the companies for which they serve as
officers. Such management interrelationships and intercorporate relationships
may lead to possible conflicts of interest. These possible conflicts of interest
may arise from the duties of loyalty owed by persons acting as corporate
fiduciaries to two or more companies under circumstances in which such companies
may have conflicts of interest.
Although no specific procedures are in place that govern the treatment of
transactions among TIMET, Tremont, Contran, Valhi, and NL, the board of
directors of each of these companies (with the exception of Contran) includes
one or more members who are not officers or directors of any entity that may be
deemed to be related to TIMET. Additionally, under applicable principles of law,
in the absence of stockholder ratification or approval by directors who may be
deemed disinterested, transactions involving contracts among companies under
common control must be fair to all companies involved. Furthermore, directors
and officers owe fiduciary duties of good faith and fair dealing to stockholders
of all the companies for which they serve.
25
Contractual Relationships
Tremont Intercorporate Services Agreement
TIMET and Tremont are parties to an intercorporate services agreement (the
"Tremont ISA") that provides that TIMET will render certain management,
financial, tax and administrative services to Tremont, including provision for
the reimbursement by Tremont to TIMET of a portion of the salary, bonus and
overhead expense for the executive officers of Tremont. The Tremont ISA is
subject to automatic renewal and may be terminated by either party pursuant to
written notice delivered at least 30 days prior to a quarter-end. During 2000,
fees for services provided by TIMET to Tremont were approximately $0.3 million.
TIMET expects to enter into a similar agreement for 2001 providing for
comparable services and payments.
NL Intercorporate Services Agreement
TIMET and NL are parties to an intercorporate services agreement (the "NL ISA")
whereby NL makes available to TIMET certain services with respect to TIMET's
tax, insurance, risk management, real property and internal audit needs. TIMET
paid NL fees of approximately $0.4 million for services pursuant to the NL ISA
during 2000. The NL ISA is subject to automatic renewal and may be terminated by
either party pursuant to written notice delivered at least 30 days prior to a
quarter-end. In 2001, NL will cease providing real property and risk management
services to TIMET, and TIMET expects to pay a smaller amount to NL for services
provided in 2001.
Utility Services
In connection with the operations of TIMET's Henderson, Nevada facility, TIMET
purchases certain utility services from Basic Management, Inc. and its
subsidiaries (collectively, "BMI") pursuant to various agreements. A wholly
owned subsidiary of Tremont owns approximately 32% of the outstanding equity
securities of BMI (representing 26% of the voting securities of BMI). During
2000, fees for such utility services provided by BMI to TIMET were approximately
$2.3 million.
Shareholders' Agreement
In connection with the acquisition by TIMET in 1996 of IMI Titanium, TIMET,
Tremont, IMI, plc ("IMI") and two of IMI's affiliates, IMI Kynoch Ltd. and IMI
Americas Inc., entered into an agreement dated February 15, 1996, as amended
March 29, 1996 (the "Shareholders' Agreement"). The Shareholders' Agreement
contains provisions that regulate certain matters relating to the governance of
TIMET originally as among TIMET, Tremont and its affiliates and IMI and its
affiliates. TIMET agreed in the Shareholders' Agreement that, among other
things, so long as Tremont (as the only remaining shareholder party) continues
to hold at least 10% of the outstanding shares of TIMET Common Stock, TIMET will
not, without the approval of Tremont, cause or permit the dissolution or
liquidation of itself or any of its subsidiaries or the filing by itself of a
petition in bankruptcy, or the commencement by TIMET of any other proceeding
seeking relief from its creditors. TIMET also agreed to provide Tremont certain
periodic information about TIMET and its subsidiaries, which right is subject to
confidentiality restrictions.
Registration Rights
Under the Shareholders' Agreement, Tremont is entitled to certain rights with
respect to the registration under the Securities Act of the shares of TIMET
Common Stock that Tremont holds. The Shareholders' Agreement generally provides,
subject to certain limitations, that (i) Tremont has two rights, only one of
which can be on Form S-1, to require TIMET to register under the Securities Act
an amount of not less than $25 million of registrable securities, and (ii) if
TIMET proposes to register any securities under the Securities Act (other than a
registration on Form S-4 or Form S-8, or any successor or similar form), whether
or not pursuant to registration rights granted to other holders of its
securities and whether or not for sale for its own account, Tremont has the
right to require TIMET to
26
include in such registration the registrable securities held by Tremont or its
permitted transferees so long as Tremont holds in excess of 5% of the
outstanding shares of TIMET Common Stock (or to sell the entire balance of any
such registrable securities even though less than 5%). TIMET is obligated to pay
all registration expenses in connection with a registration under the
Shareholders' Agreement. Under certain circumstances, the number of shares
included in such a registration may be limited. TIMET has agreed to indemnify
the holders of any registrable securities to be covered by a registration
statement pursuant to the Shareholders' Agreement, as well as the holders'
directors and officers and any underwriters and selling agents, against certain
liabilities, including liabilities under the Securities Act.
Option Reimbursement Agreement
In 1996, IMI and UTSC, which were, along with Tremont, the sole shareholders of
TIMET at that time, each entered into a separate agreement with TIMET and
Tremont whereby IMI and UTSC each agreed to reimburse Tremont for a portion of
the cost to Tremont associated with the exercise of certain Tremont stock
options issued to employees of TIMET pursuant to the Tremont Stock Incentive
Plan. The reimbursement payments are calculated by multiplying (x) the number of
shares of Tremont Common Stock covered by such exercised option by (y) the
difference between (i) the closing sale price of Tremont Common Stock on the
NYSE Composite Tape on the date of exercise, not to exceed $34, minus (ii)
$16.625, and (z) multiplying the resulting product by (i) 0.16 in the case of
UTSC and (ii) 0.34 in the case of IMI. The maximum aggregate payments to be made
by IMI and UTSC to Tremont under such agreements are limited to $1.1 million and
$520,000, respectively. Pursuant to these agreements, reimbursements due from
IMI and UTSC to Tremont were approximately $77,000 and $36,000, respectively, at
December 31, 2000. In March 2001, UTSC, Tremont and TIMET agreed to the
termination of such agreement among them in consideration of a payment by UTSC
to Tremont of approximately $145,000.
Aircraft
NL owns a 25% undivided interest in an aircraft. NL charged $48,735 to TIMET for
use of the aircraft during 2000.
Insurance Commissions
Tall Pines Insurance Company ("Tall Pines," a wholly owned subsidiary of
Tremont), Valmont (a wholly owned subsidiary of Valhi), and EWI RE, Inc. ("EWI")
broker or issue certain of TIMET's and Tremont's insurance policies. Parties
related to Contran hold 100% of the outstanding common stock of EWI. Through
December 31, 2000, a son-in-law of Harold C. Simmons managed the operations of
EWI. Subsequent to December 31, 2000, such son-in-law provides advisory services
to EWI as requested by EWI. Consistent with insurance industry practices, Tall
Pines, Valmont and EWI receive commissions from the insurance and reinsurance
underwriters for the policies that they broker or issue. During 2000, TIMET and
Tremont paid approximately $2.4 million and $0.3 million, respectively, for
policies brokered or issued by Tall Pines, Valmont and EWI. These amounts
principally included payments for insurance and reinsurance premiums paid to
unrelated third parties, but also included commissions paid to Tall Pines,
Valmont and EWI. In TIMET's opinion, the amounts that TIMET paid for these
insurance policies are reasonable and similar to those it could have obtained
through unrelated insurance companies and/or brokers. TIMET understands that
Tremont takes the same view with respect to the amounts paid by Tremont. TIMET
expects that these relationships with Tall Pines, Valmont, and EWI will continue
in 2001.
TIMET Executive Stock Ownership Loan Plan
In 1998, the TIMET Board of Directors approved a loan plan designed to assist
TIMET's executive officers in meeting certain goals established with respect to
their ownership of TIMET Common Stock (extended in February 2001 to include
loans for the payment of taxes payable with respect to vesting
27
shares of restricted stock). Each executive may borrow up to 50% of his or her
base salary per calendar year and 200% of such base salary in the aggregate.
Interest accrues at a rate equal to .0625% per annum above TIMET's effective
borrowing rate at the time of the loan, subject to annual adjustment, and is
payable quarterly. The effective interest rate in 2000 was 7.693% (approximately
8.226% for 2001). Principal is repayable in five equal annual installments
commencing on the sixth anniversary of the loan. Repayment of the loans is
secured by the stock purchased with the loan proceeds or the stock for which
loan proceeds were used to pay taxes. The loans are "full recourse" to the
executive personally, except that in the case of a sale of all of the collateral
by TIMET upon an event of default or upon the termination of the executive's
employment, whether for cause or otherwise, the borrower's personal liability
for repayment of the loan is limited to 70% of the principal amount remaining
after sale and application of the proceeds from the sale of the stock. The
following table identifies the executive officers of Tremont who were indebted
to TIMET under this program during 2000 and as of the Record Date:
Maximum Principal Principal
Amount Outstanding Outstanding as
during 2000 ($) of
March 23, 2001($)
Name
Andrew R. Dixey 158,807 161,878
Charles H. Entrekin, Jr. 46,755 -0-
Robert E. Musgraves 87,461 113,708
Mark A. Wallace -0- 26,313
In March 2000, the TIMET Board approved an extension of the repayment term for
Mr. Dixey (along with certain other former TIMET executives) until the earlier
of five years after termination of employment or the date on which the stock
collateral could be sold and the loan fully liquidated at no loss. Any accrued
interest during such period may be deferred, in which case it will be added to
the principal amount outstanding.
TIMET believes that the terms of the foregoing contractual relationships,
agreements and other transactions with related parties were no less favorable to
TIMET than it might have obtained from unaffiliated third parties.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires TIMET's executive officers,
directors, and persons who own beneficially more than 10% of a registered class
of TIMET's equity securities to file reports of ownership and changes in
ownership with the Commission and TIMET. Based solely on a review of copies of
the Section 16(a) reports furnished to TIMET and written representations by
certain reporting persons, TIMET believes that all of TIMET's executive
officers, directors and greater than 10% beneficial owners filed on a timely
basis all reports required during and with respect to the fiscal year ended
December 31, 2000, except for a single late report on Form 3 by David P.
Burlage, a former officer of TIMET.
28
Stockholder Proposals for 2002 Annual Meeting
Stockholders may submit proposals on matters appropriate for stockholder action
at TIMET's annual stockholder meetings, consistent with rules adopted by the
Commission. Such proposals must be received by TIMET no later than December 12,
2001 to be considered for inclusion in the proxy statement and form of proxy
relating to the 2002 Annual Meeting of Stockholders. Any such proposals should
be addressed to: Corporate Secretary, Titanium Metals Corporation, 1999
Broadway, Suite 4300, Denver, Colorado 80202.
Other Matters
The Board of Directors knows of no other business to be presented for
consideration at the Meeting. If any other matters properly come before the
Meeting, the persons designated as agents in the enclosed proxy card or voting
instruction form will vote on such matters in accordance with their best
judgment.
2000 Annual Report on Form 10-K
TIMET's 2000 Annual Report on Form 10-K, as filed with the Commission, is
included as a part of TIMET's 2000 Annual Report which accompanies this Proxy
Statement. Additional copies are available to stockholders without charge upon
request by writing: Investor Relations Department, Titanium Metals Corporation,
1999 Broadway, Suite 4300, Denver, Colorado 80202.
Appendix A
Appended to this Proxy Statement as Appendix A is the Corporation's Audit
Committee Charter.
TITANIUM METALS CORPORATION
Denver, Colorado
April 11, 2001
29
APPENDIX A
TITANIUM METALS CORPORATION
Committee Charter
May 17, 2000
----------------
ARTICLE I.
PURPOSE
The Audit Committee (the "Committee") of Titanium Metals Corporation
(the "Corporation") assists the Corporation's Board of Directors in fulfilling
its oversight responsibilities relating to the financial accounting and
reporting practices of the Corporation. The Committee's primary responsibilities
are to serve as an independent and objective party to review the Corporation's
auditing, accounting and financial reporting processes. The Committee will
primarily fulfill these responsibilities by carrying out the activities
enumerated in Article V of this Charter.
ARTICLE II.
RELATIONSHIP WITH THE OUTSIDE AUDITORS
The Corporation's outside auditor is ultimately responsible to the
Board of Directors and the Committee. The Board of Directors, with the advice of
the Committee, has the ultimate authority and responsibility to select, evaluate
and replace the outside auditors.
Management is responsible for preparing the Corporation's financial
statements. The Corporation's outside auditors are responsible for auditing the
financial statements. The activities of the Committee are in no way designed to
supersede or alter these traditional responsibilities.
The Corporation's outside auditors, management and internal auditors
have more available time and information about the Corporation than does the
Committee. Accordingly, the Committee's role does not provide any special
assurances with regard to the Corporation's financial statements, nor does it
involve a professional evaluation of the quality of the audits performed by the
outside auditors.
ARTICLE III.
COMPOSITION
The Committee shall be comprised of three or more directors as
determined by the Board (provided, however, that the number may be less than
three to the extent permitted by applicable law and the requirements of any
exchange on which the Corporation's securities are listed from time-to-time).
The Board of Directors shall also designate a chairperson of the Committee. The
Board of Directors shall, in its business judgment, assure that each member of
the Committee individually and the Committee as a whole satisfies in all respect
any requirements for audit committee membership or composition, including
without limitation any requirements with respect to independence, financial
literacy, or financial background, imposed under any applicable law or under the
requirements of any exchange on which the Corporation's securities are listed
from time-to-time.
A-1
ARTICLE IV.
MEETINGS
The Committee shall meet regularly and as circumstances dictate, all
as determined by the Committee. Regular meetings of the Committee may be held
without notice at such time and at such place as shall from time to time be
determined by the chairperson of the Committee or by the chief executive
officer, president or secretary of the Corporation. Special meetings of the
Committee may be called by or at the request of any member of the Committee, any
of the Corporation's executive officers, the Corporation's director of internal
auditing or the Corporation's outside auditors, in each case on at least
twenty-four hours notice to each member of the Committee.
If the Board of Directors, management of the Corporation, the
Corporation's director of internal auditing or the Corporation's outside
auditors desire to discuss matters in private, the Committee shall meet
separately with such person or group.
A majority of the Committee members shall constitute a quorum for the
transaction of the Committee's business. Unless otherwise required by applicable
law, the Corporation's certificate of incorporation or bylaws or the Board of
Directors, the Committee shall act upon the vote or consent of a majority of its
members at a duly called meeting at which a quorum is present. Any action of the
Committee may be taken by a written instrument signed by all of the members of
the Committee. Meetings of the Committee may be held at such place or places as
the Committee shall determine or as may be specified or fixed in the respective
notices or waivers of a meeting. Members of the Committee may participate in
Committee proceedings by means of conference telephone or similar communications
equipment by means of which all persons participating in the proceedings can
hear each other, and such participation shall constitute presence in person at
such proceedings.
ARTICLE V.
SPECIFIC ACTIVITIES
Without limiting the Committee's authority, the Committee shall carry
out the following specific activities. In doing so, the Committee shall have the
authority to investigate any matter brought to its attention, with full access
to all books, records, facilities, and personnel of the Corporation and the
power to retain outside counsel or other experts for this purpose.
Section 5.1. Review of Documents and Reports
(a) Review and reassess this Charter at least annually.
(b) Review of the Corporation's Annual Report on Form 10-K, including the
Corporation's year end financial statements, before its release each
year. Consider whether the information contained in the Annual Report
on Form 10-K is adequate and consistent with the Committee members'
knowledge about the Corporation and its operations. If determined to
be appropriate, recommend that the audited financial statements be
included in the Annual Report on Form 10-K.
(c) Review and discuss with the outside auditors the Corporation's
interim financial statements (which may be satisfied through a
discussion between the outside auditors and the chairperson of the
Committee).
A-2
(d) Review with management of the Corporation and the Corporation's
outside auditors the quality, not just the acceptability, of
accounting principles, the reasonableness of significant judgments,
and the clarity of disclosures in the financial statements.
(e) Review the internal reports to management prepared by the internal
auditors and management's response thereto.
Section 5.2. Internal Auditing
(a) Oversee the activities of the Corporation's internal auditors.
Section 5.3. Outside Auditors
(a) Recommend to the Board of Directors the selection of the outside
auditors, consider the independence and effectiveness of the outside
auditors, and approve the fees and other compensation to be paid to
the outside auditors. The Committee shall receive the written
disclosures required by generally accepted auditing standards. On an
annual basis, the Committee shall require the outside auditors to
provide the Committee with a written statement delineating all
relationships between the outside auditors and the Corporation. The
Committee shall actively engage in a dialogue with the outside
auditor with respect to any disclosed relationships or services that
may impact the objectivity and independence of the outside auditor.
The Committee shall recommend that the Board of Directors take
appropriate action in response to the outside auditors' report to
satisfy itself of the outside auditors' independence.
(b) Prior to the annual audit, review with the outside auditors the scope
and approach of the annual audit.
(c) After the annual audit, review with the outside auditors their report
on the results of the annual audit.
(d) Ensure that the outside auditors inform the Committee of any fraud,
illegal acts or deficiencies in internal control of which they become
aware and communicate certain required matters to the Committee.
(e) Review with the outside auditors their performance and recommend to
the Board of Directors any proposed discharge of the outside auditors
when circumstances warrant.
(f) Direct and supervise special audit inquiries by the internal or
outside auditors as the Board of Directors or the Committee may
request.
Section 5.4. Financial Reporting Processes
(a) Review significant accounting and reporting issues, including recent
professional and regulatory pronouncements or proposed
pronouncements, and understand their impact on the Corporation's
financial statements.
A-3
Section 5.5. Process Improvement
(a) Ensure that significant findings and recommendations made by the
internal and outside auditors are received and discussed on a timely
basis with the Committee and management.
(b) Review any significant disagreement among management and the internal
or outside auditors in connection with the execution of the annual
audit or the preparation of the financial statements.
Section 5.6. Reporting Responsibilities
(a) Regularly update the Board of Directors about Committee activities
and make appropriate recommendations.
ARTICLE VI.
MISCELLANEOUS
The Committee may perform any other activities consistent with this
Charter, the Corporation's certificate of incorporation and bylaws, and
governing law, as the Committee or the board deems necessary or appropriate.
A-4
[LOGO]
Titanium Metals Corporation
1999 Broadway, Suite 4300
Denver, Colorado 80202
PROXY
Titanium Metals Corporation
1999 Broadway, Suite 4300
Denver, Colorado 80202
Proxy for Annual Meeting of Stockholders
May 22, 2001
The undersigned hereby appoints Robert E. Musgraves, Joan H. Prusse and Mark A.
Wallace, and each of them, proxy and attorney-in-fact for the undersigned, with
full power of substitution, to vote on behalf of the undersigned at the 2001
Annual Meeting of Stockholders (the "Meeting") of Titanium Metals Corporation, a
Delaware corporation ("TIMET"), to be held at the TIMET's executive offices
located at 1999 Broadway, Suite 4300, Denver, Colorado on Tuesday, May 22, 2001,
at 10:00 a.m. (local time), and at any adjournment or postponement of said
Meeting, all of the shares of Common Stock ($.01 par value) of TIMET standing in
the name of the undersigned or which the undersigned may be entitled to vote on
the matters described on the reverse side of this card.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TITANIUM METALS
CORPORATION. PLEASE COMPLETE, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
(Continued and to be signed on the reverse side)
SEE REVERSE SIDE
[X] Please mark your votes as in this example.
This proxy, if properly executed, will be voted in the manner directed herein.
If no direction is made, this proxy will be voted "FOR" all nominees named in
Item 1 below.
The Board of Directors recommends a vote "FOR" each of the director nominees
named in Item 1 below.
1. Election of Five Directors FOR ALL WITHHELD AS TO ALL
(except as marked below)
[_] [_]
Nominees
Edward C. Hutcheson, Jr., J. Landis
Martin, Glenn R. Simmons, General
Thomas P. Stafford, Steven L. Watson
Vote withheld as to the following nominee(s):_________________________________
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting and any
adjournment or postponement thereof.
[_] Check this box if you consent to delivery of all future corporate
communications, including proxy statements and annual reports to
shareholders, electronically through TIMET's Internet Website.
Please sign exactly as your name appears on this card. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please show full
corporate name and sign authorized officer's name and title. If a
partnership, please show full partnership name and sign authorized person's
name and title.
The undersigned hereby revokes all proxies heretofore given by the
undersigned to vote at such meeting and any adjournment or postponements
thereof.
--------------------------------
2001
SIGNATURE(S) DATE