Exhibit 10.2
SUMMARY OF EXECUTIVE COMPENSATION
(UPDATED: MAY 10, 2005)
The Company has previous filed employment agreements, each dated August 1, 1999,
with Timothy G. Rupert, John H. Oldle, Dawne S. Hickton, and Lawrence W. Jacobs
and an employment agreement dated November 1, 1999 with Gordon L. Berkstresser
(the "Named Executive Officers"). On January 28, 2005 the Human Resources
Committee of the Board of Directors met and set the salaries for these
individuals for 2005 and awarded bonuses for 2004 performance.
The chart below outlines the 2005 base salary, bonuses and long term awards
awarded in the first quarter of 2005 to each of the above Named Executive
Officers. This information should be read as amending the information filed with
respect to each of the executive's employment agreements. Additional information
regarding executive compensation is available in the Company's proxy statement
for the 2005 annual meeting of shareholders.
<Table>
<Caption>
NAME 2005 BASE SALARY CASH BONUS AWARDED MARKET VALUE OF NUMBER OF SHARES OF
ON JANUARY 28, 2005 RESTRICTED STOCK RTI COMMON STOCK
AWARDED ON JANUARY UNDERLYING OPTIONS
28, 2005(1) GRANTED ON JANUARY
28, 2005
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Timothy G. Rupert $450,000 $375,000 $537,500 15,000
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
John H. Odle $287,000 $125,000 $215,000 10,000
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Gordon L. Berkstresser $150,000 $ 65,000 $ 96,750 5,000
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Dawne S. Hickton $200,000 $100,000 $161,250 8,000
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Lawrence W. Jacobs $170,000 $ 65,000 $107,500 5,000
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</Table>
The attached Annex sets forth the Company's pay philosophy related to the Named
Executive Officers as well as the Company's other officers, which has been
adopted by the Human Resources Committee and serves as a basis in the
Committee's deliberations with respect to establishing yearly compensation
packages.
- -----------------------------------
(1) Market value on January 28,2005
PAY PHILOSOPHY AND GUIDING PRINCIPLES
COVERING OFFICER COMPENSATION AT
RTI INTERNATIONAL METALS, INC.
(As Amended by the Human Resources Committee on July 25, 2003)
1. SCOPE
The pay philosophy and guiding principles described herein are applicable to the
RTI International Metals, Inc. officer positions listed below, as well as any
other positions so designated by the Board of Directors:
OFFICER-DIRECTORS
President and Chief Executive Officer
Executive Vice President
OFFICERS
Vice Presidents
OVERALL PHILOSOPHY
RTI's officer compensation programs are designed to:
- - promote achievement of the company's business objectives and reinforce
its strategies
- - align the interests of the company's officers with those of RTI's
shareholders
- - provide pay that is externally competitive and internally equitable,
that rewards accomplishment to the extent identifiable and measurable
and that delivers significant rewards for exceptional performance.
GUIDING PRINCIPLES
I. Pay Program Characteristics. The Company's officer compensation programs
will be managed to help communicate desired results and promote
decisions and actions that produce these results. The programs will be
characterized by:
A. Variability. A large portion of total compensation will be based
on company performance, recognizing the highly cyclical nature
of the business and the need to maintain conservative
compensation levels during business downturns. While salaries
will generally be maintained at competitive levels, the major
opportunities for significant upward shifts in total
compensation will be provided from short- and long-term
incentive programs.
B. Clarity. Performance objectives for short- and long-term
incentive programs, whether quantitative or qualitative, will be
clearly articulated. Normally the objectives will be
predetermined and the related performance evaluations will be
straightforward - - with little need for after-the-fact
discretionary judgment. However, the opportunity to apply such
judgment, when deemed necessary by the Board, will be provided.
C. Communicability. Officers will be aware of and fully understand
their earnings potential for a given year and what specific
actions and results are necessary to achieve these earnings.
Specific areas of communication will be:
1. The factors considered in determining salary levels and
increases.
2. Annual incentive target objectives and results.
3. Annual target levels for restricted stock vesting,
performance measures and results.
D. Strategic Emphasis. The development and administration of
compensation programs will include recognition of the roles of
various elements of pay in attracting, retaining and motivating
employees, the aspects of performance that each element is best
suited to reward and the characteristics of the company and its
officer group that point to emphasis on specific elements of
pay.
The table below illustrates, for each officer position, the
approximate proportion of total direct compensation to be
represented by each element, assuming both short- and long-term
incentives are paid at target levels:
<Table>
<Caption>
Percent of Direct Compensation
--------------------------------------------------------
Incentives
---------------------------
Salary Short Term Long Term Total
---------------- ------------- ------------- -----------
President and Chief Executive Officer 35 20 45 100
Executive Vice President 40 20 40 100
Vice Presidents 45 15 40 100
</Table>
II. Pay Positioning and Delivery. Overall, direct compensation (salary,
bonus and long-term incentives) for RTI's officer group should provide
remuneration at about the comparator group (as described in Section III)
average or median when all aspects of performance are at target levels,
and at or above the comparator group when performance levels
significantly exceed the target.
A. Salary Administration
1. Salary Structure. The midpoint of the salary range for
each position will be maintained near the median of that
for similar positions at appropriate comparator
companies (as described in Section III), with the
maximum near the 75th percentile of the comparator
group. Midpoints will also be monitored to ensure that
each reflects the relative value of the position
compared with other RTI officer positions.
2. Salary. The major role of salary in rewarding
performance and accomplishment is the recognition of
consistent excellent performance over a number of years.
Merit budgets, as well as individual promotional
increases, will reflect such factors as general economic
conditions, RTI's performance and the availability of
funds. An individual's salary may fall anywhere in the
range, up to and including the maximum. However,
individual salary increase levels will reflect a variety
of factors, including relevant experience, time in
position and individual performance as measured in an
annual performance review.
B. Incentive Compensation
1. Annual Incentive Compensation. The major role of annual
incentive, or bonus, payments is to motivate employees
through the recognition of attainment of specific key
objectives and/or other strategic milestones or
operational goals. Awards for officer employees are paid
under RTI's Annual Incentive Compensation Plan. The
Plan's award opportunity guidelines for participants,
shown below, will be maintained near the median of that
for similar positions at appropriate comparator
companies (as described in Section III).
<Table>
<Caption>
Percent of Salary
-----------------------------------------
Range Target
---------------------- ------------------
President and Chief Executive Officer 0 to 120 60
Executive Vice President 0 to 100 50
Vice Presidents 0 to 80 40
</Table>
The Board of Directors will approve a financial plan at the
first meeting of the year which will serve as the basis upon
which the awards are to be paid.
The Board may establish such individual performance objectives
for the year, as developed by management or by the Board itself,
which it deems relevant.
No award will be paid to participant whose performance is judged
to be unacceptable regardless of the level of corporate
performance. Likewise, the Board may pay one or more awards to
recognize exceptional individual performance regardless of the
level of corporate performance.
2. Long-Term Incentive Compensation. Opportunities for
payouts will be designed specifically to reward
increases in shareholder wealth, as measured by the
price of RTI's common stock and dividend levels, if any,
as well as improvement in earnings per share.
(A) Grant Levels. The table below shows target award
levels, as a percent of salary, for officer positions:
<Table>
<Caption>
Target Range
Long-Term Target Split
Incentive Award, Stock/
Position Percent of Salary Stock Options
----------------------------------------- ------------------------ -----------------------
President and Chief
Executive Officer 90 - 130 80/20
Executive Vice President 80 - 120 75/25
Vice Presidents 40 - 80 70/30
</Table>
(B) Grant Types and Valuation. Long-term incentive
grants will be made in a combination of
restricted stock and stock options. Stock
options may be traditional or nontraditional
stock options and may be granted with or without
stock appreciation rights settled in cash or
shares, all, at the discretion of the Human
Resources Committee and consistent with the
provisions of the 1995 Stock Plan.
The total projected value of the combination
grant for each grantee will be roughly divided,
as shown above, between the two types of grants.
The target split is intended as rough guidance
and the actual split is left to the discretion
of the Human Resources Committee. Projected
grant valuations may be based on any generally
accepted methodology, including mathematical
models, including the exercise of judgment.
(C) Grant Frequency. Unless otherwise determined by
the Human Resources Committee, grants of stock
and stock options will be made annually. A stock
grant may be a normal, target-level grant or a
"reload" grant that recognizes above-target
vesting.
(D) Timing Considerations.
(1) Restricted Stock. Unless otherwise
determined by the Human Resources
Committee, each grant of restricted
stock will be released from restrictions
at a minimum rate of 20 percent a year
beginning the year following the grant
year. This rate may be increased for any
year, to a maximum of 25 percent, based
on the actual percentage improvement in
average earnings per share, for the last
three consecutive years immediately
preceding the year in which the stock is
being vested, over the average for the
three consecutive years ending at the
beginning of the year preceding the year
in which the stock is being vested.
(2) Stock Options. Unless otherwise determined by the
Human Resources Committee, stock options will vest
in equal installments over a three-year period
beginning one year following the date of grant.
III. Comparative Data.
A. Data Selection Factors. Generally, because of the dearth of U.
S. companies that compete directly with RTI and because
managerial talent can be found in organizations other than
directly competing companies, the compensation data selected for
use in company and/or individual position comparisons will
include information on a broad group of U. S. industrial
companies similar to RTI. The primary determinant of similarity
will be sales volume; however, when available, other measures of
"size", such as assets, total capital, total market value, and
number of employees, will also be included. When appropriate and
available, data specific to the metals industry or a specific
position will be used.
B. Sources of Comparative Data. Compensation data used in
comparisons will be obtained from nationally recognized
compensation consulting firms, such as William M. Mercer, Hay
Management Consultants, Hewitt Associates, Towers Perrin, or
such other sources as are approved by the Chairman of the Board
of Directors.
IV. Benefits. The objective in providing benefits for RTI's officers will be
to deliver adequate benefits in the most effective way possible.
V. Perquisites. Perquisites, which will not be emphasized, will be reviewed
in their entirety by the Board of Directors from time to time.
VI. Stock Ownership Guidelines. Each officer will be expected to maintain a
meaningful equity position in the company's stock. The Board of
Directors may establish target ownership levels for officers from time
to time.
VII. Capital Accumulation/Estate Planning. In designing and administering
compensation programs, consideration will be given to provisions that
accommodate the capital accumulation and estate planning objectives of
officers.
VIII. Tax/Legal/Accounting Factors. The restrictions imposed by taxing
authorities, laws and required accounting treatments will be considered
in the design and administration of compensation programs. These will be
balanced by the desirability of preserving, to the degree possible, the
Board's decision-making flexibility.
IX. Decision-Making Authority. The Board of Directors will monitor and
review officer compensation programs, in aggregate, to ensure
consistency with the overall compensation philosophy and guiding
principles. The Board will approve the salaries of the individuals
holding the positions described herein as officers and will have
authority, with respect to incentives and benefits, as is described in
the relevant plan or program.