SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
IMCO RECYCLING INC.
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(Name of Registrant as Specified In Its Charter)
IMCO RECYCLING INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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IMCO Recycling Inc.
Dear Stockholder:
You are cordially invited to the Annual Meeting of Stockholders of IMCO
Recycling Inc. scheduled to be held at the Central Tower at Williams Square,
Twenty-Sixth Floor, La Cima Club, 5215 North O'Connor Blvd., Irving, Texas, on
Wednesday, May 8, 2002, commencing at 9:00 A.M., Central Daylight Savings Time.
Your Board of Directors and management look forward to greeting those
stockholders able to attend in person.
At the meeting, you will be asked to elect two directors to serve until the
2005 Annual Meeting of Stockholders. Your Board of Directors has unanimously
nominated these persons for election as directors. You are also being asked to
ratify the appointment of Ernst & Young LLP as the Corporation's independent
auditors for 2002. Information concerning the Board nominees and the proposal
regarding the Corporation's independent auditors, as well as other important
information, is contained in the accompanying proxy statement which you are
urged to read carefully.
Whether or not you plan to attend in person and regardless of the number of
shares you own, it is important that your shares be represented and voted at
the meeting. Accordingly, you are requested to sign, date and mail the enclosed
proxy at your earliest convenience. Your shares will then be represented at the
meeting, and the Corporation will be able to avoid the expense of further
solicitation.
On behalf of IMCO's Board of Directors and employees, thank you for your
cooperation and continued support.
Sincerely,
Don V. Ingram
Chairman of the Board
April 9, 2002
IMCO RECYCLING INC.
5215 North O'Connor Blvd., Suite 1500
Central Tower at Williams Square
Irving, Texas 75039
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 8, 2002
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To the Stockholders of
IMCO Recycling Inc.
The 2002 Annual Meeting of Stockholders of IMCO Recycling Inc. (the
"Corporation") will be held at the Central Tower at Williams Square,
Twenty-Sixth Floor, La Cima Club, 5215 North O'Connor Blvd., Irving, Texas, on
Wednesday, May 8, 2002, at 9:00 A.M., Central Daylight Savings Time, for the
following purposes:
1. To elect two Class III directors to hold office until the 2005 Annual
Meeting of Stockholders.
2. To consider and ratify the appointment of Ernst & Young LLP as the
Corporation's independent auditors for 2002.
3. To transact any other business which properly may be brought before the
meeting and any adjournment thereof.
Only holders of record of the Corporation's common stock at the close of
business on March 15, 2002 are entitled to notice of and to vote at the Annual
Meeting. A complete list of these stockholders of record will be open to the
examination of any stockholder at the Corporation's principal executive offices
at 5215 North O'Connor Blvd., Suite 1500, Central Tower at Williams Square,
Irving, Texas for a period of ten days before the meeting. The meeting may be
adjourned from time to time without notice other than by announcement at the
meeting.
Whether or not you plan to attend the annual meeting, please sign and date
the enclosed proxy and return it in the envelope provided. If you receive more
than one proxy card because your shares are registered in different names or at
different addresses, each proxy card should be signed and returned to ensure
that all of your shares will be voted. The proxy card should be signed by you
exactly as your stock is registered. If you have already signed and returned
your proxy, you may revoke it at any time prior to the meeting, and if you are
present at the meeting, you may withdraw it and vote in person. Attendance at
the annual meeting is limited to stockholders, their proxies and invited guests
of the Corporation.
This Notice, the accompanying Proxy Statement and the enclosed Proxy are
sent to you by order of the Board of Directors of the Corporation.
Paul V. Dufour
Secretary
Irving, Texas
April 9, 2002
IMCO RECYCLING INC.
5215 North O'Connor Blvd., Suite 1500
Central Tower at Williams Square
Irving, Texas 75039
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PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 8, 2002
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SOLICITATION AND REVOCABILITY OF PROXIES
The Board of Directors of the Corporation is soliciting proxies to be voted
at the Annual Meeting of Stockholders to be held in Irving, Texas on May 8,
2002 and at any adjournment of the meeting. The Proxy Statement and the
enclosed proxy are first being mailed to stockholders on or about April 9, 2002.
This proxy solicitation is intended to give stockholders the opportunity to
vote on the matters set forth in the accompanying Notice of Annual Meeting. The
proxy permits stockholders to withhold voting for any or all nominees for
election to the Corporation's Board of Directors and to abstain from voting on
any other specified proposal if the stockholder chooses.
All holders of record of shares of the Corporation's common stock at the
close of business on March 15, 2002 (the Record Date) are entitled to notice of
and to vote at the meeting. On the Record Date, the Corporation had outstanding
15,306,467 shares of common stock. Each share of common stock is entitled to
one vote on each matter to come before the meeting. The presence, in person or
by proxy, of holders of a majority of the outstanding shares of common stock
entitled to vote as of the Record Date is necessary to constitute a quorum at
the meeting. A plurality of the votes of the shares present in person or
represented by proxy at the Annual Meeting, so long as there is a quorum, is
required for the election of directors. Approval of other proposals discussed
in this Proxy Statement requires the affirmative vote of a majority of the
votes cast by the stockholders represented at the Annual Meeting, assuming a
quorum is present.
With regard to the election of directors, votes may be cast in favor or
withheld. Votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on all other proposals and
will be counted as present for purposes of the item on which the abstention is
noted. Under the rules of the New York Stock Exchange (NYSE), brokers who hold
shares in street names for customers have the authority to vote on certain
items when they have not received instructions from beneficial owners. Brokers
who do not receive instructions are entitled to vote on the election of
directors and the proposal to ratify the appointment of the auditors. Under
Delaware law, a broker non-vote will have no effect on the outcome of the
election of directors or the proposal to ratify the appointment of the
independent auditors.
A stockholder has the unconditional right to revoke his or her proxy at any
time before it is voted. Any proxy given may be revoked either by a written
notice signed and delivered to the Secretary of the Corporation before the
proxy is exercised, by signing a subsequent proxy or by voting in person at the
meeting (although simply attending the Annual Meeting without either signing a
ballot or signing a subsequent proxy will not revoke a proxy). Where a
stockholder's signed proxy specifies a choice with respect to a voting matter,
the shares will be voted accordingly. If no such specification is made, the
shares will be voted (i) FOR the nominees for director identified below; and
(ii) FOR the ratification of the appointment of Ernst & Young LLP as the
Corporation's independent auditors for 2002.
1
2003 ANNUAL MEETING
The Board intends to hold the Corporation's next Annual Meeting of
Stockholders on or about May 14, 2003. A Proxy Statement and Notice of this
meeting will be mailed to all stockholders approximately one month prior to
that date. In order to be eligible for inclusion in the Corporation's proxy
statement for the 2003 Annual Meeting of Stockholders, a proposal of a
stockholder must be received by the Corporation at its principal executive
offices in Irving, Texas, by December 10, 2002. All stockholder proposals of
this nature must comply with Rule 14a-8 promulgated by the Securities and
Exchange Commission (SEC) under the Securities Exchange Act of 1934 (the
Exchange Act).
In addition, in order for a stockholder proposal to be raised from the floor
during next year's annual meeting, written notice about that proposal must be
received by the Corporation by no later than December 10, 2002 and must contain
the necessary information required by the Corporation's bylaws. In order for a
stockholder to make a director nomination at an annual meeting, it is necessary
to notify the Corporation not fewer than 120 days in advance of the date
specified in the Proxy Statement for this year's Annual Meeting. Thus, since
April 9, 2002 is specified as the mailing date in this year's Proxy Statement,
in order for any nomination notice to be timely for next year's annual meeting,
it must be received by the Corporation not later than December 10, 2002 (that
is, 120 days prior to April 9, 2003). Also, the notice must meet all the other
requirements contained in the Corporation's bylaws for nominating directors. If
you would like a copy of the relevant bylaw provisions containing the
requirements for making stockholder proposals and nominating director
candidates, please contact the Corporation's corporate secretary at the
executive headquarters of the Corporation. Also, under "Meetings of Directors
and Committees--Committee on Directors" you can find information about
suggestions for nominations to the Board of Directors.
2
VOTING AND PRINCIPAL STOCKHOLDERS
At the Record Date, there were outstanding 15,306,467 shares of common stock
which were held of record by 425 stockholders. The holders of the common stock
have no appraisal or similar rights with respect to any of the matters being
voted on at the Annual Meeting.
The following table sets forth as of March 15, 2002, certain information
with regard to the beneficial ownership of common stock by (i) all persons
known by the Corporation to be the beneficial owner of more than 5% of the
outstanding common stock of the Corporation; (ii) each director and nominee for
director of the Corporation (see "Election of Directors"); (iii) each named
executive officer of the Corporation; and (iv) all executive officers and
directors as a group.
Shares Underlying Total Percent
Number Of Options Exercisable Beneficial of
Name of Beneficial Owner Shares (1) Within 60 Days Ownership Class
------------------------ ---------- ------------------- ---------- -------
Don V. Ingram.................................. 1,661,670 (2) 185,167 1,846,837 11.9%
2200 Ross Ave., Suite 4500-E
L.B. 170
Dallas, Texas 75201
William Warshauer.............................. 1,107,403 (3) 17,921 1,125,324 7.3%
80 Lane 530A Lake James
Fremont, Indiana 46737
Dimensional Fund Advisors Inc.................. 1,412,100(4) -0- 1,412,100 9.2%
1299 Ocean Avenue, 11 th Floor
Santa Monica, California 90401
Eagle Asset Management, Inc.................... 929,908 (5) -0- 929,908 6.1%
880 Carillion Parkway
St. Petersburg, Florida 33716
James C. Cooksey............................... -0- -0- -0- *
John J. Fleming................................ 29,254 20,990 50,244 *
John E. Grimes................................. 1,226 8,000 9,226 *
Jeb Hensarling................................. 10,086 10,540 20,626 *
Don Navarro.................................... 7,569 40,990 48,559 *
Hugh G. Robinson............................... 3,516 8,921 12,437 *
Paul V. Dufour................................. 321,323 (6) 155,500 476,823 3.1%
Richard L. Kerr................................ 177,164 (7) 115,500 292,664 1.9%
James B. Walburg............................... 8,470 37,759 46,229 *
M. Russ Robinson............................... 52,243 (8) 375,000 (9) 427,243 2.7%
All Executive Officers and Directors as a group
(15 persons, including those individuals
named above)................................. 3,412,097 1,040,322 (10) 4,452,419 27.2%
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* Less than 1%
(1) Except as otherwise indicated, the persons named in the table possess sole
voting and investment power with respect to all shares of common stock
shown as beneficially owned by them. Includes shares of common stock held
by wives and minor children of such persons and corporations in which such
persons hold a controlling interest.
3
(2) Represents 1,421,529 shares owned by Mr. Ingram directly, including 400,000
shares of restricted stock, 78,141 shares owned by Mr. Ingram's wife and
162,000 shares held by trusts and custodial accounts created for the
benefit of Mr. Ingram's children and relatives. Substantially all of these
shares, except the restricted stock, have been pledged or are held in
margin maintenance accounts.
(3) Represents 17,703 shares owned by Mr. Warshauer directly, 12,960 shares
owned by Mr. Warshauer's wife and 1,076,740 shares owned by a limited
partnership in which both Mr. Warshauer and his wife own a 50% partnership
interest. Of these shares, 90,000 shares are held in an escrow fund and
subject to return to the Corporation under certain conditions pursuant to
an Escrow Agreement by and among Mr. Warshauer, his wife and the
Corporation, entered into in connection with the Corporation's acquisition
of Alchem Aluminum, Inc. in 1997. Mr. Warshauer is not standing for
reelection as a director of the Corporation at the 2002 Annual Meeting of
Stockholders.
(4) Information with respect to beneficial ownership of shares of common stock
by Dimensional Fund Advisors Inc. is based solely upon the report of that
firm on Schedule 13G dated January 30, 2002 as filed with the SEC.
(5) Information with respect to beneficial ownership of shares of common stock
by Eagle Asset Management, Inc. is based solely upon the latest report of
that firm on Schedule 13G dated January 10, 2002.
(6) Includes 160,000 shares of restricted stock.
(7) Includes 90,000 shares of restricted stock.
(8) Represents 47,443 shares owned by Mr. Robinson directly and 4,800 shares
held by trusts created for the benefit of Mr. Robinson's children. Of the
shares owned by Mr. Robinson, 15,002 shares are held in an escrow fund and
subject to return to the Corporation under certain conditions pursuant to
an Escrow Agreement between Mr. Robinson and the Corporation, entered into
in connection with the Corporation's acquisition of U.S. Zinc Corporation
in 1998. Mr. Robinson resigned in December 2001 as an officer and director
of U.S. Zinc and its affiliates.
(9) Represents vested shares under a warrant granted to Mr. Robinson by the
Company in connection with the Company's acquisition of U.S. Zinc in 1998.
The exercise price under this warrant is $19.04 per share.
(10) Represents outstanding options under the Corporation's stock option plans
granted to executive officers and directors of the Corporation which are
exercisable within 60 days of March 15, 2002.
4
ELECTION OF DIRECTORS
General
The Certificate of Incorporation of the Corporation provides that the number
of directors that constitute the whole Board of Directors shall be fixed from
time to time exclusively by the Board of Directors (but not to less than three)
and that the directors will be divided into three classes as nearly equal in
number as possible. The term of office of the Class III Directors expires at
the Annual Meeting of Stockholders to be held on May 8, 2002, the term of
office of the Class II Directors expires at the 2003 Annual Meeting of
Stockholders and the term of office of the Class I Directors expires at the
2004 Annual Meeting of Stockholders.
The persons named in the proxy will vote for Hugh G. Robinson and James C.
Cooksey as nominees for election as Class III Directors except where authority
has been withheld as to a particular nominee or as to both nominees. Each
nominee has consented to being named in this Proxy Statement and to serve if
elected. If either nominee should for any reason become unavailable for
election, proxies may be voted with discretionary authority for any substitute
nominee designated by the Board.
Directors and Nominees for Election to the Board of Directors
NOMINEES
Class III Directors
Name Age
---- ---
Hugh G. Robinson 69
James C. Cooksey 53
Hugh G. Robinson has served as a director since 1999. He is Chairman and
Chief Executive Officer of The Tetra Group, Inc., a construction management
firm located in Dallas, Texas. He has held that position since 1989. Prior to
then, Mr. Robinson was President of Cityplace Development Corporation, a real
estate development subsidiary of the Southland Corporation. Mr. Robinson is a
former Chairman and Board member of the Federal Reserve Bank of Dallas. Mr.
Robinson served as an officer in the United States Army, retiring with the rank
of Major General. He is currently a member of the Boards of Directors of
Guaranty Federal Savings Bank and Circuit City Stores, Inc., and is on the
Advisory Board of TXU Electric Co.
James C. Cooksey was appointed as a director in March 2002. He is the owner
of Jackson & Cooksey, Inc., a Dallas, Texas-based corporate real estate
advisory firm that he founded in 1981. He is also the founder and principal of
Trinity Interests, a real estate management company based in Dallas, Texas. Mr.
Cooksey served as Director of the Dallas County Department of Planning,
Research and Grants from 1974 through 1980.
DIRECTORS CONTINUING IN OFFICE
Class II Directors; Present Term Expires 2003.
Name Age
---- ---
Don Navarro.... 57
John J. Fleming 62
Jeb Hensarling. 44
Don Navarro has served as a director since 1986. Mr. Navarro is the owner
and president of Don Navarro Company, a company which provides business and
management services to public and private companies, specializing in assisting
organizations to develop, refine and implement strategic plans. Mr. Navarro
also serves as a director of Optical Switch Corporation, Inc.
5
John J. Fleming has served as a director since 1989. Mr. Fleming serves as
chairman, president and chief executive officer of Bonanza Energy Ltd., a
private energy and investment company. Mr. Fleming also serves as a director of
TransAtlantic Petroleum Corp., Newfoundland Capital Corporation, CHC Helicopter
Corporation, Southwestern Gold Corporation, Aurora Platinum Corporation and
Roseland Resources Ltd.
Jeb Hensarling has served as a director since 1998. He is a principal and
owner of F-H & Associates, a public affairs and media relations consulting firm
located in Dallas, Texas. Mr. Hensarling served from 1993 to 1995 as vice
president of Maverick Capital, an investment management firm, and as executive
director of the National Republican Senatorial Committee. Mr. Hensarling
managed U.S. Senator Phil Gramm's 1990 Reelection Campaign.
Class I Directors; Present Term Expires 2004.
Name Age
---- ---
Don V. Ingram. 66
John E. Grimes 61
Don V. Ingram has served as a director since 1988. He was elected chief
executive officer of the Corporation in February 1997 and has served as
Chairman of the Board of the Corporation since 1994. Mr. Ingram played the
major role in the Corporation's formation in 1986. Mr. Ingram has been owner
and President since 1984 of Summit Partners Management Co., a private
investment management company in Dallas. Mr. Ingram is also a director of GRT
Corporation.
John E. Grimes has served as a director since 2001. Mr. Grimes retired in
July 2000 from his position as President and General Manager of the Dallas/Fort
Worth subsidiary of Enterprise Rent A Car, a national rental car company for
which he served in various positions since 1971.
The Board recommends that stockholders vote FOR Hugh G. Robinson and James
C. Cooksey as nominees for election as Class III Directors at the Annual
Meeting of Stockholders.
6
MEETINGS OF DIRECTORS AND COMMITTEES
Board Meetings. The Board held a total of five meetings in 2001. Each
director attended at least 75% of the meetings of the full Board and the
committees of which he was a member held during 2001. The Board has established
four standing committees to assist it in the discharge of its responsibilities.
Audit Committee. The Audit Committee reviews the professional services
provided by the Corporation's independent auditors and the independence of that
firm from management of the Corporation. This Committee also reviews the scope
of the audit coverage, the annual and quarterly financial statements of the
Corporation, the adequacy of the Corporation's internal accounting controls,
certain internal audit matters and such other matters with respect to the
accounting, auditing and financial reporting functions of the Corporation as it
may find appropriate or as have been brought to its attention. This Committee
held five meetings in 2001. The members of the Audit Committee are Hugh G.
Robinson, Chairman, Mr. Hensarling and Mr. Grimes.
Compensation Committee. The Compensation Committee reviews and recommends
the amount and form of compensation and benefits payable to all officers,
advises and consults with management regarding the benefit plans and
compensation policies and practices of the Corporation and administers the
Corporation's stock option, incentive and bonus plans. This Committee held
three meetings in 2001. The members of the Compensation Committee are Mr.
Robinson, Chairman, Mr. Hensarling and Mr. Grimes.
Environmental Committee. The Environmental Committee was established for
the purposes of providing oversight and reviewing, reporting on and making
recommendations to the Board regarding the Corporation's policies concerning
environmental, health and safety matters affecting the Corporation. This
Committee held three meetings in 2001. The current members of the Environmental
Committee are Mr. William Warshauer, Chairman and Mr. Navarro.
Committee on Directors. The Committee on Directors was established for the
purpose of recommending to the Board nominees for election or reelection as
director and to recommend policies regarding certain Board governance issues.
While the Committee on Directors normally is able to identify from its own
resources an ample number of qualified candidates, it will consider stockholder
suggestions of persons to be considered as nominees to fill future vacancies on
the Board. These suggestions must be sent in writing to the Secretary of the
Corporation at the Corporation's executive headquarters, and must be
accompanied by detailed biographical and occupational data on the prospective
nominee, along with a written consent of the prospective nominee to the
consideration of his or her name by the Committee on Directors. Additionally,
there must be no legal impediments to the nominee serving as a director.
However, the selection of nominees is solely within the discretion of the Board
of Directors. The Committee on Directors held one meeting in 2001. The members
of the Committee on Directors are Mr. Navarro, Chairman, Mr. Fleming and Mr.
Ingram.
7
AUDIT COMMITTEE REPORT TO STOCKHOLDERS
This Audit Committee Report to Stockholders is not "soliciting material" and
is not considered "filed" with the SEC and is not to be incorporated by
reference in any filing of the Corporation under the Securities Act of 1933
(the Securities Act) or the Exchange Act, whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
The Audit Committee is composed of three independent directors appointed by
the Board of Directors and operates under a written charter adopted by the
Board, a copy of which was attached to last year's Proxy Statement. The members
of the Audit Committee as of the date of this report are Hugh G. Robinson
(Chairman of the Committee), Jeb Hensarling and John E. Grimes.
Management is responsible for the Corporation's financial reporting process,
including its internal accounting and financial controls, the internal audit
function and compliance with the Corporation's legal and ethics programs, as
well as the preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States. The
Corporation's independent auditors are responsible for performing an
independent audit of the Corporation's consolidated financial statements in
accordance with generally accepted auditing standards and for the issuance of a
report on those financial statements. We have relied on management's
representation that the financial statements have been prepared with
objectivity and in conformity with accounting principles generally accepted in
the U.S., and on the representations of the independent auditors included in
their report on the Corporation's financial statements. It is not the duty or
responsibility of the Audit Committee to conduct auditing or accounting reviews
or procedures. Our members are not, and do not hold themselves out to be,
accountants or auditors by profession or experts in the fields of accounting or
auditing. Our responsibility is merely to monitor these processes and report
our findings to the full Board.
In this context, the Audit Committee has met and held discussions, both
separately and jointly, with management, the Corporation's internal auditors
and Ernst & Young. Management represented to the Audit Committee that the
Corporation's consolidated financial statements were prepared in accordance
with generally accepted accounting principles, and the Committee has reviewed
and discussed the consolidated financial statements with management and Ernst &
Young. Ernst & Young has discussed with the Audit Committee and provided
written disclosures to the Committee members on (1) that firm's independence as
required by the Independence Standards Board and (2) the matters required to be
communicated by Statement on Auditing Standards No. 61 (Communication with
Audit Committees). The Audit Committee reviewed the fees paid to Ernst & Young
for audit services compared with the fees paid for other services and concurred
with management that the fees paid for other services would not affect the
independence of the auditors in performing their audit function.
Based on the Audit Committee's discussions with management and the
independent accountants and the Audit Committee's review of the representations
of management and the report of Ernst & Young to the Audit Committee, the Audit
Committee recommended to the Board of Directors, and the Board of Directors
approved, that the audited consolidated financial statements be included in the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2001,
for filing with the SEC.
Respectfully submitted by the members of the Audit Committee of the Board of
Directors
March 14, 2002.
Hugh G. Robinson (Chairman)
Jeb Hensarling
John E. Grimes
8
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee of the Board of Directors of the Corporation (the
Committee) has furnished the following report on executive compensation. The
Committee report documents the components of the Corporation's executive
officer compensation programs and describes the compensation philosophy on
which 2001 compensation determinations were made by the Committee with respect
to the executive officers of the Corporation, including the Chief Executive
Officer and the four other executive officers that are named in the Summary
Compensation Table in this Proxy Statement (the Named Executive Officers).
Compensation Philosophy and Overall Objectives of Executive Compensation
Programs
It is the philosophy of the Corporation that executive compensation should
be directly linked to improvements in corporate performance and the creation of
long-term stockholder value. The Committee has adopted the following objectives
as guidelines for compensation decisions:
. Provide a competitive total executive compensation package that enables
the Corporation to attract and retain key executives,
. Integrate all pay programs with the Corporation's annual and long-term
business objectives and strategy, and focus executives on the
fulfillment of these objectives, and
. Provide variable compensation opportunities that are directly linked
with the performance of the Corporation.
In 2001 the Committee engaged PricewaterhouseCoopers LLP ("PwC") to serve as
the Committee's independent consultant and assist the Committee in its
deliberations in determining 2001 compensation awards. During 2001, the
Corporation's executive compensation program consisted of three components: (1)
base salary, (2) an annual incentive award based on overall company
performance, business unit performance and individual performance, and (3) a
long-term incentive award which is intended to support the achievement of
superior results over time and to align executive officer and stockholder
interests. Awards of the second and third components of the executive
compensation program are at the discretion of the Committee.
Cash Compensation
Cash compensation components included base salary and the Corporation's
annual incentive compensation plan (the Incentive Plan) cash awards. The base
salary of each of the executive officers is determined by an evaluation of the
responsibilities of that position and by comparison to the average level of
salaries paid in the competitive market in which the Corporation competes for
comparable executive ability and experience. Annually, the performance of each
Named Executive Officer is reviewed by the Committee and, in the case of the
other executive officers, by the Chief Executive Officer, taking into account
the Corporation's operating and financial results for that year, the
contribution of each executive officer to these results, the achievement of
goals established for each executive officer at the beginning of each year and
competitive salary levels for persons in those positions in the markets in
which the Corporation competes. To assist in its deliberations, the Committee
is advised by PwC in compiling comparable salary and incentive compensation
information for a number of representative companies in the industry. Following
its review of the performance of the Named Executive Officers, the Committee
reports their recommendations for salaries and incentive awards to the Board of
Directors.
The Corporation implemented the Incentive Plan in 1999. The Committee
believes the Incentive Plan should be the principal short-term incentive plan
for providing cash bonus opportunities for the Corporation's executives
contingent upon profitability of operating results. The Incentive Plan
corporate financial targets for 2001 were return on net assets (RONA) compared
to the Corporation's peer group and budgeted earnings before interest, taxes,
depreciation and amortization (EBITDA).
9
As in the case of fiscal 2000, the Corporation did not meet the
predetermined Incentive Plan target goals for 2001, and there were no annual
base salary increases or Incentive Plan compensation awards for the Named
Executive Officers except for Mr. Walburg, whose annual base salary was
increased effective January 2002. Mr. Robinson's salary was paid under the
terms of an employment agreement entered into when the Corporation acquired
U.S. Zinc in 1998. In December 2001, the Committee approved 2002 EBITDA and
RONA target goals. The Committee will continue to review and modify the
performance goals for the Incentive Plan as necessary to ensure reasonableness,
achievability and consistency with overall Corporation objectives and
expectations.
Long Term Incentives
The Committee believes that it is essential to align the interests of the
Corporation's executive officers and other key management personnel responsible
for the growth of the Corporation with the interests of the Corporation's
stockholders. The Committee believes that this is best accomplished through the
provision of stock-based and cash-based long-term incentives that align
themselves to enhancing the Corporation's value. In 2001 the Committee awarded
stock options for 86,500 shares of common stock under the Incentive Plan to the
Named Executive Officers.
In 2000 the Board adopted, and the stockholders approved, the IMCO Recycling
Inc. Performance Share Unit Plan. A total of 97,000 performance share units
were awarded to the Named Executive Officers in 2001 for the three-year
performance period ending December 31, 2003.
In addition, during 2001, the Committee recommended, and the Board approved,
the IMCO Recycling Inc. 2000 Restricted Stock Plan, which provides the
Committee and the Board the flexibility to grant awards of restricted stock of
up to 300,000 total shares to executives and key employees as an alternative to
stock option grants. No awards under this plan have been made to date. However,
during 2000 and early 2001, the Compensation Committee recommended, and the
Board approved, grants of contractual restricted stock awards to Messrs.
Ingram, Dufour and Kerr of a total of 650,000 shares of restricted stock, in
connection with employment agreements entered into with each of these
individuals.
The Committee will continue to review long-term incentives and make
recommendations, where it deems appropriate, to the Board of Directors from
time to time, to assure that the Named Executive Officers and other key
employees are appropriately motivated and rewarded based on the long-term
financial success of the Corporation.
Chief Executive Officer Compensation
In determining the compensation of Don V. Ingram, the Chairman and Chief
Executive Officer, the Committee considered the Corporation's operating and
financial results for 2001, evaluated Mr. Ingram's individual performance and
contribution to those results and considered the compensation range for other
chief executive officers of companies in the industry. Based on that review and
assessment, there was no change to Mr. Ingram's base salary of $525,000 per
year, and Mr. Ingram received no cash bonus awards under the Incentive Plan.
Mr. Ingram was awarded 50,000 performance share units under the Performance
Share Unit Plan. The value of this award, if any, will be based on the
achievement of performance goals established for the three-year period ending
December 31, 2003. In addition, Mr. Ingram was awarded stock options for 25,500
shares of common stock under the Incentive Plan during 2001.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code disallows a corporation's tax
deduction for compensation paid to its chief executive officer and its named
executive officers in excess of $1,000,000 per person. Performance-
10
based compensation and certain other compensation are not subject to this
deduction limitation. Neither the Corporation's Chief Executive Officer nor any
of its Named Executive Officers received compensation in excess of this
limitation in 2001. The Corporation reviews its compensation plans to minimize
potential adverse effects of this legislation. The Committee will consider
recommending such steps as may be required to qualify either annual or
long-term incentive compensation as performance-based. However, the Committee
reserves the authority to award non-deductible compensation under circumstances
they consider appropriate and has not adopted a policy that all compensation
must be deductible.
Summary
As a result of the concepts incorporated into the Corporation's compensation
program, the Committee believes that the total compensation program for
executive officers is competitive with the compensation programs provided by
other corporations with which the Corporation competes, emulates programs of
high-performing companies and will serve the best interests of the stockholders
of the Corporation. The Committee also believes this program design will
provide opportunities to participants that are consistent with the expectations
of the Board of Directors and with returns that are generated on the behalf of
the Corporation's stockholders.
Respectfully submitted by the members of the Compensation Committee of the
Board of Directors
March 14, 2002
Hugh G. Robinson, Chairman
John E. Grimes
Jeb Hensarling
The Compensation Committee Report on executive compensation shall not be
deemed incorporated by reference by any general statement incorporating this
proxy statement by reference into any filing under the Securities Act or the
Exchange Act, except to the extent that the Corporation specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under those Acts.
11
STOCK PRICE PERFORMANCE GRAPH
The following performance graph compares the yearly percentage change in the
cumulative total stockholder return on the Corporation's common stock (as
measured by dividing: (i) the sum of (A) the cumulative dividends for the
measurement period and (B) the difference between the common stock share price
at the end and the beginning of the measurement period by (ii) the common stock
share price at the beginning of the measurement period) with the cumulative
total return assuming reinvestment of dividends of (1) The Standard and Poor's
500 Index, (2) The Standard and Poor's Small Cap 600 Index (which includes the
Corporation) and (3) an index of peer companies selected by the Corporation
consisting of: Wolverine Tube, Inc., Commonwealth Industries, Inc., Mueller
Industries, Inc., Century Aluminum Company, Special Metals Corporation, Brush
Engineered Materials Inc., Titanium Metals Corporation, Commercial Metals
Company and Lone Star Technologies Inc. The companies included in this index of
peer companies were selected based on the following factors: (a) their
participation in the metals industry, and (b) an asset base of between $400
million and $1.1 billion.
In previous years, the Corporation's index of peer companies contained
companies in the resource recovery industry. In the Corporation's 2001 proxy
statement, only two representative companies were included in this peer index.
One of these companies, Envirosource, Inc., is no longer publicly traded. Due
to an increasing percentage of the Corporation's business being derived from
purchases and sales of metal, the Corporation now considers itself a part of
the metals industry, along with the other companies in the peer index for this
year's proxy statement. Wellman, Inc., the only remaining company in last
year's peer index, does not participate in the metals industry and is not
included in this year's peer index. A separate line for the 2001 peer index,
consisting solely of Wellman, Inc., is included in the performance graph.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG IMCO RECYCLING INC., THE S & P 500 INDEX,
THE S & P SMALLCAP 600 INDEX,
A NEW PEER GROUP AND AN OLD PEER GROUP
[CHART]
IMCO S&P 500 S&P SmallCap 600 New Peer Old Peer
Recycling Inc. Group Group
12/96 100 100.00 100.00 100.00 100.00
12/97 111.08 133.36 125.58 113.19 115.94
12/98 108.29 171.47 129.01 65.42 61.99
12/99 90.05 207.56 145.01 88.13 116.44
12/00 39.34 188.66 162.13 79.23 90.47
12/01 52.95 166.24 195.17 73.17 101.54
* $100 invested on 12/31/96 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31.
The foregoing graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act or the Exchange Act, except to the extent that
the Corporation specifically incorporates this information by reference, and
shall not otherwise be deemed filed under those Acts.
12
REMUNERATION OF DIRECTORS AND OFFICERS
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning
compensation paid or accrued by the Corporation to or on behalf of the
Corporation's chief executive officer and each of the other four most highly
compensated executive officers of the Corporation and its subsidiaries
determined as of the end of the last fiscal year (the Named Executive Officers)
for the fiscal years ended December 31, 2001, 2000, and 1999.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
--------------------------------- -------------------------------
Restricted Securities
Name and Other annual Stock underlying All other
Principal Position Year Salary Bonus(1)(2) compensation Award(s) ($) Options/SARs (#) Compensation(4)
------------------ ---- -------- ----------- ------------ ------------ ---------------- ---------------
D.V. Ingram................ 2001 $525,000 -- -- -- 25,500 $36,338
Chief Executive Officer 2000 $525,000 -- -- $2,125,000(3) -- $44,954
and President 1999 $495,000 $309,210 -- -- 25,000 $48,775
R.L. Kerr..................
Executive Vice President 2001 $300,000 -- $25,900(5) $ 395,100(3) 25,500 $11,958
and President, Aluminum 2000 $300,000 -- $25,900(5) -- -- $13,810
Division 1999 $288,000 $151,794 $12,950(5) -- -- $22,985
P.V. Dufour................
Executive Vice President, 2001 $292,000 -- $30,780(5) -- 25,500 $11,227
Chief Financial Officer and 2000 $292,000 -- $30,780(5) $ 850,000(3) -- $13,087
Secretary 1999 $280,000 $151,794 $15,390(5) -- -- $22,338
J.B. Walburg............... 2001 $149,000 -- -- -- 20,000 $ 7,757
Senior Vice President 2000 $149,000 -- -- -- -- $ 7,033
and Treasurer 1999 $140,000 $ 71,700 -- -- -- $15,068
M.R. Robinson.............. 2001 $216,000(6) -- -- -- -- $10,200
President, U.S. Zinc 2000 $216,000 $ 90,000 -- -- -- $ 4,800
Corporation 1999 $216,000 $ 90,000 -- -- -- $ 4,463
--------
(1) Amounts represent cash bonus payments made to Named Executive Officers (a)
in 2002 and 2001 with respect to fiscal year 2001; (b) in 2001 and 2000
with respect to fiscal year 2000; and (c) in 2000 and 1999 with respect to
fiscal year 1999.
(2) Does not include grants of performance share units during 2000 or 2001. See
"--Long-Term Incentive Plans--Awards in 2001" below.
(3) Represents restricted stock grants under award agreements in connection
with employment agreements entered into with Mr. Ingram and Mr. Dufour
during October 2000 and with Mr. Kerr during February 2001. The Corporation
is required to use the closing price per share of its common stock on the
date of the grant of the restricted stock award ($5.3125 on the NYSE on
October 12, 2000 for Mr. Ingram and Mr. Dufour, and $4.39 on the NYSE on
February 1, 2001 for Mr. Kerr) for valuation purposes under this column.
These restricted shares cannot be sold or pledged and are subject to
forfeiture during their restriction period under each grant. During the
restriction period for each grant, vesting of the shares awarded does not
begin until there is a "Change of Control" of the Corporation (as defined
in the employment agreements). If the awards are not assumed by the
Corporation's successor upon a Change of Control, or if equivalent
substitute awards are not granted, then the restricted stock awards vest in
full upon the Change of Control. If the awards are assumed or equivalent
substitute awards are granted in replacement of the old awards, then the
restriction period on the restricted stock awards will continue until the
date that is two years after the Change of Control, when they will then
fully vest. Dividends do not accrue and are not earned on the shares of
restricted stock unless there is a Change of Control. The award agreements
provide that upon a Change of Control, all stock options outstanding and
held by these executives as of the date of their restricted stock grants
and that remain unexercised as of the Change of Control event, will
automatically terminate. Based on the last reported sales price on December
31, 2001 of common stock on the NYSE of $7.15 per share, Mr. Ingram's
restricted stock holdings had a value of $2,860,000, Mr. Dufour's
restricted stock holdings had a value of $1,144,000 and Mr. Kerr's
restricted stock holdings had a value of $643,500. See "--Employment
Agreements" below.
(4) Represents compensation paid or accrued pursuant to the Corporation's
defined contribution plans and executive life and health insurance programs
described below.
Retirement Savings Plan. All of the Named Executive Officers except for
Mr. Robinson participate in the Corporation's Retirement Savings Plan,
which includes both a profit sharing plan feature and a 401(k) feature. Mr.
Robinson participated in a similar defined contribution plan sponsored by
U.S. Zinc.
13
The Corporation contributed the following amounts to these plans for the
accounts of the Named Executive Officers for the years 2001, 2000 and 1999:
2001 2000 1999
------- ------ -------
Don V. Ingram... $ 4,981 $4,812 $11,091
Richard L. Kerr. $ 4,700 $3,909 $13,000
Paul V. Dufour.. $ 6,800 $5,100 $13,000
James B. Walburg $ 5,960 $5,058 $13,000
M. Russ Robinson $10,200 $4,800 $ 4,463
Executive Life Insurance Programs. The Corporation has entered into
split-dollar life insurance agreements with certain of the Named Executive
Officers to provide them with death benefits in the following amounts: Mr.
Ingram--$3,000,000; Messrs. Kerr and Dufour--$1,000,000 each; Mr.
Walburg--$350,000. The amounts below include the entire dollar amount of
the term life portion of each insurance premium and include the present
value of the interest-free use of the non-term portion of each premium:
2001 2000 1999
------- ------- -------
Don V. Ingram... $31,357 $40,142 $37,664
Richard L. Kerr. $ 7,258 $ 9,901 $ 9,985
Paul V. Dufour.. $ 4,427 $ 7,987 $ 9,338
James B. Walburg $ 1,797 $ 1,975 $ 2,068
(5) Represents interest forgiven under the terms of the Executive Option
Exercise Loan Program. See "Option Exercises and Holdings--Loan Program"
below.
(6) See "--Employment Agreements" below.
Stock Option Grants
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
--------------------------------------------------------------------------
Percent of total
options granted
Number of securities to employees Exercise or Hypothetical
underlying options in fiscal year base price Expiration Grant Date
Name granted (2) (#) (%) ($/Sh) date Value (1)
---- -------------------- ---------------- ----------- ---------- ------------
D.V. Ingram.. 25,500 4.78% $4.39 02/01/2011 $45,135
R.L. Kerr.... 25,500 4.78% $4.39 02/01/2011 $45,135
P.V. Dufour.. 25,500 4.78% $4.39 02/01/2011 $45,135
J.B. Walburg. 10,000 1.87% $4.39 02/01/2011 $17,700
10,000 1.87% 6.50 12/03/2011 $24,900
M.R. Robinson -0- -- -- -- --
--------
(1) The options are valued pursuant to the Black-Scholes valuation model, based
upon the following assumptions: (a) expected stock price volatility
calculated using monthly changes in stock price since January 1994,
resulting in a stock price volatility of 0.442; (b) a risk-free rate of
return calculated using the interest rates of five-year U.S. Treasury notes
as of the date of the grant, resulting in a risk-free rate of return
assumption of 3.11% and 4.66% for options granted on February 1, 2001 and
December 3, 2001, respectively; (c) a weighted dividend yield assumption of
0.00; and (d) a time of exercise assumption of four years (although the
actual option term is ten years, that period was reduced for valuation
purposes to reflect the non-transferability, vesting schedule and risk of
forfeiture of the options).
(2) All options granted to Named Executive Officers vest in three equal annual
increments beginning on the first anniversary of the date of grant.
14
Option Exercises and Holdings
General. No options were exercised by any of the Named Executive Officers
during 2001. The following table provides information with respect to the Named
Executive Officers concerning unexercised options held as of the end of 2001
under the Corporation's stock option plans:
AGGREGATED OPTION EXERCISES IN 2001 AND DECEMBER 31, 2001 OPTION VALUES
Exercisable Unexercisable
--------------------------------- ---------------------------------
Number of shares Value of Number of shares Value of
underlying unexercised underlying unexercised
Shares unexercised in-the-money unexercised in-the-money
acquired on Value options at options at options at options at
Name exercise (#) realized (1) 12/31/01 (#) 12/31/01 ($) (2) 12/31/01 (#) 12/31/01 ($) (2)
---- ------------ ------------ ---------------- ---------------- ---------------- ----------------
D.V. Ingram.. -0- -0- 176,667 $0 25,500 $70,380
R.L.Kerr..... -0- -0- 107,000 $0 25,500 $70,380
P.V. Dufour.. -0- -0- 147,000 $0 25,500 $70,380
J.B. Walburg. -0- -0- 34,425 $0 20,000 $34,100
M.R. Robinson -0- -0- -0- $0 -0- $ 0
--------
(1) Value realized would be calculated based on the difference between the
option exercise price and the closing market price of the common stock on
the date of exercise multiplied by the number of shares to which the
exercise relates.
(2) The last reported sale price of the Corporation's common stock on the NYSE
composite tape on December 31, 2001 was $7.15 per share.
Loan Program. During 1998, the Corporation, acting through the Compensation
Committee, extended loans to certain management employees under the
Corporation's Executive Option Exercise Loan Program (the Loan Program). The
Loan Program was designed to facilitate these employees' ability to exercise
their outstanding options and to pay their federal and state taxes realized
upon exercise. All loans under the Loan Program bear interest at the
"applicable federal rate," and all loans are secured by the shares purchased
with the proceeds of the loan. Each loan matures in 2003. Interest on each "Tax
Loan" is due and payable annually and at maturity. Interest on each "Exercise
Loan" is due and payable at maturity. However, on each anniversary date of an
Exercise Loan, if the employee remains employed with the Corporation, 50% of
the interest accrued during the most recent year will be forgiven and 50% of
the interest not forgiven from the prior year will also be forgiven. If still
employed at the maturity date, all remaining interest will be forgiven on the
maturity date.
On March 1, 2002, loans based upon the terms set forth above were
outstanding to two of the Named Executive Officers as follows: (i) Mr. Kerr,
$454,390 (Exercise Loan) and $131,784 (Tax Loan), and (ii) Mr. Dufour, $540,000
(Exercise Loan) and $305,822 (Tax Loan). In addition, as of March 1, 2002, the
Corporation had an aggregate of (i) $554,290 in Exercise Loans outstanding and
(ii) $167,975 in Tax Loans outstanding to three other executive officers who
are not Named Executive Officers.
15
Long-Term Incentive Plans--Awards in 2001
In 2000, the Board adopted the IMCO Recycling Inc. Performance Share Unit
Plan, which was approved by the Corporation's stockholders at the 2000 annual
meeting of stockholders. Grants of performance share units were made in 2000
and 2001. The following table shows the performance share unit awards granted
to the Named Executive Officers in 2001 under the Performance Share Unit Plan.
Estimated Future Payouts under
Non-Stock Price Plan
-------------------------------
Number of Performance or
Shares, Units Other Period Until
or Other Maturation or Threshold Target Maximum
Name Rights (#) Payout ($ or #) ($ or #) ($ or #)
---- ------------- ------------------ --------- ---------- ----------
D.V. Ingram. 50,000 01/01/01-12/31/03 $300,000 $1,500,000 $4,500,000
R.L. Kerr... 20,000 01/01/01-12/31/03 $120,000 $ 600,000 $1,800,000
P.V. Dufour. 20,000 01/01/01-12/31/03 $120,000 $ 600,000 $1,800,000
J.B. Walburg 7,000 01/01/01-12/31/03 $ 42,000 $ 210,000 $ 630,000
The amounts shown above under the Estimated Future Payouts columns are based
upon levels of achievement of performance goals designated by the Compensation
Committee for fiscal 2001 grants under the Performance Share Unit Plan.
Performance goals for these grants are based in part upon the Corporation's
return on net assets compared to a peer group of companies over the three-year
period following date of grant and aggregate earnings before interest, taxes,
depreciation and amortization (EBITDA) of the Corporation over this period. The
target amount will be earned if the Corporation achieves 100% of the targeted
EBITDA performance goals and is in the 60/th/ percentile of the return on net
assets achieved by its peer group. The threshold amount will be earned if the
Corporation achieves 90% of the targeted EBITDA performance goals and is in the
40/th/ percentile of the return on net assets achieved by its peer group. The
maximum award amount will be earned if the Corporation achieves 130% of the
targeted EBITDA performance goals and is in the 90/th/ percentile of the return
on net assets achieved by its peer group. Based on the Corporation's results of
operations for 2000 and 2001, no accruals for financial accounting purposes
have been made for any payout under the Performance Share Unit Plan.
Employment Agreements
The Corporation entered into an employment agreement with Mr. Ingram
effective September 1, 2000. The agreement expires on September 1, 2002, but is
automatically renewable for additional one year terms, unless either party
provides prior written notice of termination. This agreement provides for an
annual base salary to Mr. Ingram to be approved by the Board of Directors,
initially at the rate of $525,000 per year. The agreement also provides for Mr.
Ingram's participation in the Corporation's Incentive Plan, Performance Share
Unit Plan, stock option plans and other benefit plans made available to senior
executives.
If the employment agreement is terminated by the Corporation without cause
(as defined in the agreement) prior to a "change in control" (as defined in the
agreement), the Corporation will pay Mr. Ingram in a lump sum no later than the
termination date an amount equal to two times Mr. Ingram's "base amount" (his
average annual compensation includible in his income for the five years
preceding his termination, determined by reference to Section 280G of the
Internal Revenue Code). If Mr. Ingram resigns for "good reason" (as defined in
the agreement) before a change in control, the Corporation will pay to Mr.
Ingram an amount equal to two and one-half (2.5) times his base amount, payable
in installments over a 23-month period following the termination date.
If Mr. Ingram is terminated without cause in connection with a change in
control, or he resigns for good reason in connection with a change in control,
or if he resigns or is terminated within a 30-day period beginning on the first
anniversary date of the change in control, the Corporation will pay Mr. Ingram
an amount equal to 2.99 times his base amount, calculated as of the termination
date. This amount will be payable to him in a lump sum no later than the date
of termination, or in the case of a termination without cause, in installments
over a 23-month period following the termination date. In other instances, upon
resignation Mr. Ingram will be entitled to receive in installments over a
23-month period severance pay in an amount equal to one times his highest
16
annual base salary in effect over the term of the agreement. If he is
terminated for cause, but not in connection with a major criminal offense, he
will be entitled to severance pay in an amount up to his annual base salary
amount in effect as of the termination date, payable in installments over a
23-month period following termination. The Corporation will be obligated to pay
cash tax "gross-up" amounts to Mr. Ingram in the event that he becomes subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code as the
result of a change in control under Section 280G of the Code.
Under the agreement, Mr. Ingram agreed to certain confidentiality and
non-competition obligations and was granted 400,000 shares of restricted stock
under a restricted stock award agreement.
The Corporation entered into similar employment agreements with Mr. Dufour,
Mr. Kerr and Mr. Walburg. The date of Mr. Dufour's and Mr. Walburg's agreements
is September 1, 2000 and Mr. Kerr's is February 1, 2001. Each agreement is for
a two-year term, but is automatically renewable for additional one year terms,
unless either party provides prior written notice of termination. These
agreements provide for annual base salaries to Mr. Dufour of $292,000, Mr. Kerr
of $300,000 and Mr. Walburg of $149,000 and provide for their participation in
the Corporation's Incentive Plan, Performance Share Unit Plan, stock option
plans and other benefit plans made available to senior executives.
The overall terms of Messrs. Dufour's, Kerr's and Walburg's employment
agreements are similar to Mr. Ingram's, except that the amounts paid to Messrs.
Dufour, Kerr and Walburg upon termination of employment on the same conditions
contained in Mr. Ingram's agreement are either the same or less. The
Corporation is also obligated to pay cash tax "gross-up" amounts to Mr. Dufour
or Mr. Kerr in the event that either of them becomes subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code as the result of a change
in control under Section 280G of the Code. The agreements contain certain
confidentiality and non-competition obligations on the part of Messrs. Dufour,
Kerr and Walburg. In addition, the agreements provide that Messrs. Dufour and
Kerr are to be granted 160,000 and 90,000 shares, respectively, of restricted
stock under restricted stock award agreements. See "-- Summary of Cash and
Certain Other Compensation" and "Compensation Committee Report to Stockholders."
Mr. Robinson's Employment Agreement with U.S. Zinc terminated in December
2001 following Mr. Robinson's resignation from all positions with U.S. Zinc and
its affiliates.
Directors' Compensation
Retainers. The 1996 Annual Incentive Program provides that an annual
retainer in dollars will be set by the Board for each year. For fiscal 2001,
the annual retainer amount was $24,000. The retainer will be paid in four
quarterly installments following the annual meeting of stockholders of the
Corporation each year. One-half of the retainer will be paid in shares of
common stock, and the remaining one-half will be paid, at the election of the
director, in either cash or shares of common stock. The directors make their
election on the date of the annual meeting of stockholders of the Corporation.
The number of shares to be issued each quarter will be calculated by dividing
the amount of the retainer to be paid in stock for that installment by the
closing price per share of the common stock as of the close of business on the
last trading day of that quarter.
In addition, each director is entitled to receive $1,000 per Board or
committee meeting attended and $250 for telephonic meetings. The Chairmen of
the Compensation and Audit Committees are each to receive an annual cash
retainer of $4,000. Directors receive no attendance fees for attending
committee meetings occurring on the same date as a Board meeting.
Stock Options. The Corporation's 1992 Stock Option Plan provides that each
incumbent non-employee director will receive a grant of stock options for 4,000
shares of common stock on the date of the annual meeting of stockholders of the
Corporation for that particular year. The exercise price per share will be
equal to the closing price per share on the NYSE on the day the annual meeting
is held. For a newly-elected or newly-
17
appointed director, the Corporation will grant him or her a stock option for
8,000 shares effective on the date he or she is initially elected or appointed.
The exercise price will be equal to the closing price per share on the NYSE on
the date of grant. All options granted will fully vest six months after the
date of grant. On May 10, 2001, under the 1992 Stock Option Plan, each
non-employee director, with the exception of Mr. Grimes, was granted an option
to purchase 4,000 shares of common stock. Mr. Grimes was granted an option to
purchase 8,000 shares of common stock. The exercise price per share with
respect to those options is $6.50 (the closing price per share on the NYSE on
May 10, 2001).
Compliance with Section 16(a)
Section 16(a) of the Exchange Act requires the Corporation's officers,
directors and persons who own more than 10% of the Corporation's common stock
to file initial reports of ownership and reports of changes in ownership with
the SEC. These persons are required by SEC regulations to furnish the
Corporation with copies of all Section 16(a) forms filed by them. Based solely
upon the Corporation's review of those forms furnished to it and written
representations from certain reporting persons, the Corporation believes that
all filing requirements applicable to the Corporation's executive officers,
directors and 10% stockholders were complied with during 2001.
Certain Transactions
During 2001, the Corporation paid Don Navarro Company, a firm owned by Mr.
Don Navarro, $166,178 for representing the Corporation regarding potential
business opportunities for the Corporation and in connection with several
collection matters that required the expertise of Mr. Navarro's firm.
In 1999 the Corporation conveyed real property and improvements in Chicago,
Illinois to a limited liability company owned by M. Russ Robinson, the former
President of U.S. Zinc, and his brother. In exchange, the Robinsons' limited
liability company paid $10,000 cash and signed a $2,440,000 promissory note .
The debt under the note was scheduled to mature June 30, 2002, bore interest at
a rate of 8% per annum payable in monthly installments, and was secured by a
first lien mortgage on the property conveyed. The outstanding balance of this
indebtedness ($556,895) was repaid in full on April 11, 2001 and the mortgage
on the property was released.
The Corporation had also entered into a lease with the Robinsons' limited
liability company for the continued use of this property through December 31,
2001, at an annual rental cost of $195,000, payable in monthly installments.
The lease was terminated by agreement of the parties effective January 31,
2001. During 2001, the Corporation paid the limited liability company an
aggregate of $48,750 in rentals and related costs. However, until June 30,
2002, the limited liability company has the right, under certain circumstances,
to require the Corporation to repurchase the property for $2,450,000 in the
event the limited liability company becomes aware of certain environmental
liabilities concerning the property.
In addition, in July 2001 the Robinsons and the Corporation entered into a
settlement agreement to resolve disputes over the calculation of distributions
to the Robinsons under their earn-out agreement entered into in connection with
the Corporation's acquisition of U. S. Zinc in July 1998. The earn-out
agreement (which had been modified by the parties in 2000) had provided for
additional cash payments to the Robinsons if a formula-derived percentage of
U.S. Zinc's annual EBITDA exceeded certain specified annual thresholds. Under
the settlement agreement, the Corporation agreed to pay the Robinsons $400,000
as a purchase price adjustment with regards to the U.S. Zinc acquisition.
The Corporation also released to the Robinsons 50,000 shares of its common
stock that had been held in escrow to secure indemnity obligations of the
Robinsons under the U.S. Zinc acquisition agreement. The Robinsons also agreed
to release 80,000 shares of the Corporation's common stock to the Corporation
from the escrow. Any indemnification claims by the Corporation against the
Robinsons in connection with its acquisition of U.S. Zinc will be offset in an
amount up to the aggregate value of the 80,000 shares of common stock released
to the Corporation under the settlement agreement ($554,640, being the average
closing price per share of the Corporation's common stock for the 20
consecutive trading days ending three days prior to July 22, 2001, times 80,000
shares). The escrow agreement remains in effect except to the extent modified
by the settlement agreement. The Robinsons and the Corporation have terminated
their earn-out agreement.
18
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board, on the recommendation of its Audit Committee, has selected Ernst
& Young LLP as its independent auditors to examine the consolidated financial
statements of the Corporation for 2002. Stockholders are being asked to ratify
this appointment. The Corporation has been informed that neither Ernst & Young
nor any of its partners have any direct financial interest or any material
indirect financial interest in the Corporation nor have had any connection
during the past three years with the Corporation in the capacity of promoter,
underwriter, voting trustee, director, officer or employee.
If the stockholders fail to ratify this selection, the Board and the Audit
Committee will reconsider whether or not to retain Ernst & Young. Even if the
selection is ratified, the Board and the Audit Committee may direct the
appointment of a different independent accounting firm at any time during the
year if they determine that such a change would be in the best interests of the
Corporation.
The members of the Corporation's Audit Committee are independent, as that
term is defined in the rules of the NYSE for listed companies. During fiscal
2001, the Corporation engaged Ernst & Young to provide the following services:
. Audit Fees--Ernst & Young's fees for the Corporation's 2001 annual audit
and review of its interim financial information were $325,500.
. Financial Information Systems Design and Implementation Fees--No
services of this nature were performed by Ernst & Young for the
Corporation in 2001.
. All Other Fees--$102,000 was paid to Ernst & Young for all other
services rendered during 2001.
The services performed by Ernst & Young under the "All Other Fees" category
included (i) $25,000 for acquisition and due diligence reviews, and (ii)
$77,000 for other audit services including the audit of the Corporation's
employee benefit plans.
The Audit Committee considered the nature of the services rendered and the
non-audit-related services, and did not consider the non-audit services to be
incompatible with the auditors' independence.
Representatives of Ernst & Young LLP are expected to be present at the
annual meeting of stockholders with the opportunity to make a statement if they
so desire and to be available to respond to appropriate questions.
The Board recommends that stockholders vote FOR the ratification of the
appointment of Ernst & Young LLP as the Corporation's independent auditors for
2002.
OTHER MATTERS
The Corporation will bear all costs of this proxy solicitation. In addition
to soliciting proxies by mail, directors, executive officers and employees of
the Corporation, without receiving additional compensation, may solicit proxies
by telephone, by telegram or in person. Arrangements will also be made with
brokerage firms and other custodians, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of shares of the common stock,
and the Corporation will reimburse these brokerage firms and other custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection with forwarding such materials.
The Board does not know of any business to be presented for consideration at
the Annual Meeting other than that stated in the accompanying Notice. It is
intended, however, that the persons authorized under the Board's proxies may,
in the absence of instructions to the contrary, vote or act in accordance with
their judgment with respect to any other proposal properly presented for action
at such meeting.
19
The Annual Report to Stockholders for the fiscal year ended December 31,
2001, which includes financial statements, accompanies this Proxy Statement.
The Annual Report does not form a part of this Proxy Statement or the materials
for the solicitation of proxies to be voted at the annual meeting.
A copy of the Corporation's annual report on Form 10-K, including financial
statements and schedules but not including exhibits, will be furnished to you
if you send a written request addressed to IMCO Recycling Inc., Attn: Paul V.
Dufour, 5215 N. O'Connor Blvd., Suite 1500, Central Tower at Williams Square,
Irving, Texas 75039, telephone (972) 401-7200. The Corporation also will
furnish its 10-K annual report to you if you are a "beneficial owner" of its
common stock at no charge if you send a written request, addressed to Mr.
Dufour, containing a good faith representation that at the Record Date you were
a beneficial owner of common stock of the Corporation entitled to vote at the
annual meeting of stockholders to be held May 8, 2002. Copies of any exhibit to
the Form 10-K will be furnished upon the payment of a reasonable fee.
Information contained in the Proxy Statement relating to the occupations and
security holdings of directors and officers of the Corporation is based upon
information received from the individual directors and officers.
Please mark, sign, date and return the proxy card at your earliest
convenience in the enclosed return envelope. No postage is required if mailed
in the United States. A prompt return of your proxy card will be appreciated as
it will save the expense of further mailings.
By Order of the Board of Directors
Paul V. Dufour
Secretary
Irving, Texas
April 9, 2002
20
Please mark |\ /|
your vote as | \/ |
indicated in | /\ |
this example |/ \|
1. Election of Directors.
The election of the following nominees to the Board of Directors as Class III
Directors, unless otherwise indicated below.
FOR AGAINST 01 Hugh G. Robinson 02 James C. Cooksey
[ ] [ ] IN THE EVENT THE UNDERSIGNED WISHES TO WITHHOLD AUTHORITY
TO VOTE FOR ANY PARTICULAR NOMINEE OR NOMINEES LISTED ABOVE,
PLEASE SO INDICATE BY CLEARLY AND NEATLY LINING THROUGH OR
STRIKING OUT THE NAME OF ANY SUCH NOMINEE OR NOMINEES.
2. Proposal to ratify the appointment 3. In their discretion upon such other
of Ernst & Young LLP as the matters as may properly come before
independent auditors of the meeting or any adjournment
the Corporation for 2002. thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ] Please complete, date, sign and mail
this Proxy promptly in the enclosed
envelope. No postage is required for
mailing in the United States.
Dated ________________________, 2002
____________________________________
Signature(s)
____________________________________
Signature(s)
IMPORTANT: Please date the Proxy and
sign exactly as your name appears in
the Proxy. If shares are held by
joint tenants, EACH joint owner
should sign. Executors,
administrators, trustees, guardians,
and attorneys should indicate the
capacity in which they sign.
Attorneys should submit powers of
attorney. If a corporation, please
sign in full corporate name by
president or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
/\ FOLD AND DETACH HERE /\
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 4PM Eastern Time
the business day prior to annual meeting day.
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
Internet Telephone Mail
http://www.eproxy.com/imr 1-800-435-6710
Use the Internet to vote Use any touch-tone Mark, sign and
your proxy. Have your telephone to vote your date your proxy
proxy card in hand when proxy. Have your proxy card and return
you access the web site. OR card in hand when you OR it in the
You will be prompted to call. You will be enclosed
enter your control number, prompted to enter your postage-paid
located in the box below, control number, located envelope.
to create and submit an in the box below, and
electronic ballot. then follow the
directions given.
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
REVOCABLE PROXY
IMCO RECYCLING INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Don V. Ingram and Paul V. Dufour; or
either of them, each with full power of substitution, as proxies of the
undersigned, with all the powers that the undersigned would possess if
personally present to cast all votes that the undersigned would be entitled to
vote at the Annual Meeting of Stockholders of IMCO Recycling Inc. (the
"Corporation") to be held on Wednesday, May 8, 2002, at the Central Tower at
Williams Square, Twenty-Sixth Floor, LaCima Club, 5215 North O'Connor Blvd.,
Irving, Texas, at 9:00 A.M., Central Daylight Savings Time, and at any and all
adjournments and postponements thereof (the "Annual Meeting"), including
(without limiting the generality of the foregoing) to vote and act on the
matters as set forth on the reverse side.
This Proxy will be voted at the Annual Meeting and any adjournments or
postponements thereof as specified. IF NO SPECIFICATIONS ARE MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED ON THE REVERSE
SIDE AND FOR PROPOSAL 2 AND WILL GRANT DISCRETIONARY AUTHORITY PURSUANT TO ITEM
3. This Proxy hereby revokes all prior proxies given with respect to the shares
of the undersigned.
(Continued on reverse side)
/\ FOLD AND DETACH HERE /\
Dear Stockholder(s):
Enclosed you will find material relating to the Corporation's 2002 Annual
Meeting of Stockholders. The Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted at the meeting, as summarized on
the attached proxy card.
Whether or not you expect to attend the Annual Meeting, please complete and
return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. As a stockholder, please
remember that your vote is important to us. We look forward to hearing from you.
IMCO Recycling Inc.