SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
/ / Preliminary Proxy Statement
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BY RULE 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
UCAR INTERNATIONAL INC.
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(Name of Registrant as Specified In Its Charter)
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Registrant)
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[LOGO] UCAR INTERNATIONAL INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 7, 2002 AND
PROXY STATEMENT
This Proxy Statement is dated
March 29, 2002.
[LOGO]
UCAR INTERNATIONAL INC. Brandywine West, 1521 Concord Pike, Suite 301,
Wilmington, DE 19803
GILBERT E. PLAYFORD
Chairman of the Board
Fellow Stockholders:
It is my pleasure to invite you to our annual meeting, which will be held on
May 7, 2002, at 10:00 a.m., at the Hotel du Pont, Wilmington, Delaware.
In the following pages, you will find the formal notice of our annual meeting
and our proxy statement. After reading the proxy statement, please mark your
votes on the accompanying proxy or vote instruction card, sign it and promptly
return it in the accompanying envelope. Most of our stockholders hold their
shares in street name, and we are offering them the opportunity to vote by
telephone or via the Internet as instructed in the proxy statement or on the
vote instruction card. Please vote by whichever method is most convenient to
ensure your shares are represented at the meeting.
We hope that many of you will be able to attend our annual meeting in person. If
you wish to do so, please indicate your intention where requested on the
accompanying proxy or vote instruction card. In addition, please write your
name, where indicated, on the attached admission ticket and bring it with you to
the meeting.
We appreciate the continuing interest of our stockholders in our business, and
we look forward to seeing you at the meeting.
Sincerely,
/s/ G.E. Playford
Chairman of the Board
[LOGO]
UCAR INTERNATIONAL INC. Brandywine West, 1521 Concord Pike, Suite 301,
Wilmington, DE 19803
KAREN G. NARWOLD
Vice President,
General Counsel,
Human Resources
and Secretary
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 7, 2002
The annual meeting of stockholders of UCAR International Inc. will be held at
10:00 a.m. on May 7, 2002, at the Hotel du Pont, Wilmington, Delaware, for the
following purposes:
1. To elect 7 directors to serve on UCAR's Board of Directors until the
annual meeting of stockholders for 2003.
2. To amend the Amended and Restated Certificate of Incorporation of the
Corporation to change the name of the Corporation to GrafTech
International Ltd.
3. To transact such other business as may properly come before the meeting.
To ensure that your shares are represented at the meeting in the event that you
do not attend, please mark your votes on the accompanying proxy or vote
instruction card, sign it, date it and promptly return it in the accompanying
envelope or vote via the Internet or by telephone as instructed in question two
under "Questions and Answers" of the proxy statement or on the vote instruction
card.
By Order of the Board of Directors,
/s/ Karen G. Narwold
Vice President, General Counsel,
Human Resources and Secretary
[LOGO]
UCAR INTERNATIONAL INC. Brandywine West, 1521 Concord Pike, Suite 301,
Wilmington, DE 19803
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS FOR 2002
TABLE OF CONTENTS
PAGE
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Questions and Answers....................................... 1
Proposals on Which You May Vote............................. 5
Proposal One: Election of Directors......................... 6
Nominees for the Board of Directors......................... 6
The Board of Directors...................................... 9
Committees of the Board..................................... 10
Board Committee Membership Roster........................... 11
Change in Independent Accountants........................... 12
Audit and Finance Committee Report.......................... 13
Organization, Compensation and Pension Committee Report..... 14
Director Compensation....................................... 16
Stock Ownership Guidelines for Directors and Senior
Management................................................ 17
Executive Compensation...................................... 18
Summary Compensation Table................................ 18
Option Grants in 2001..................................... 19
Aggregated Option Exercises in 2001 and Option Values at
December 31, 2001....................................... 20
Retirement Plan Table..................................... 23
Stock Performance Graph................................... 25
Security Ownership of Management and Certain Beneficial
Owners.................................................... 26
Other Information........................................... 28
Section 16(a) Beneficial Ownership Reporting Compliance... 28
Certain Transactions...................................... 28
Proposal Two: Change the Name of the Corporation............ 29
QUESTIONS AND ANSWERS
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1. Q: WHAT IS THE PURPOSE OF THE PROXY?
A: This proxy statement and the accompanying proxy relate to
the annual meeting of stockholders of UCAR International
Inc., a Delaware corporation ("UCAR" or the "Corporation"
and, together with its subsidiaries, "we," "us" or "our"),
for 2002. UCAR's Board of Directors is soliciting proxies
from stockholders in order to provide every stockholder an
opportunity to vote on all matters submitted to a vote of
stockholders at the meeting, whether or not he or she
attends in person. The proxy authorizes a person other than
a stockholder, called the proxyholder, who will be present
at the meeting, to cast the votes which the stockholder
would be entitled to cast at the meeting if the stockholder
were present. This proxy statement and the accompanying
proxy will be first mailed to stockholders beginning on or
about March 29, 2002.
IMPACT ON ATTENDING IN PERSON. Submitting a proxy will not
affect your right to vote in person should you decide to
attend our annual meeting.
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2. Q: HOW DO I CAST MY VOTE?
A: If you hold your shares in street name (such as in a
brokerage account or in the name of a bank or other
nominee), there are four different ways you may cast your
vote. You can vote by:
- TELEPHONE, by calling the toll-free number on the vote
instruction card.
- THE INTERNET, by logging onto www.proxyvote.com and then
following the instructions as they appear on your computer
screen. The Internet voting procedures are designed to
authenticate stockholders' identities, to allow stockholders
to give their voting instructions and to confirm that
stockholders' instructions have been recorded properly.
Stockholders voting via the Internet should understand that
there may be costs associated with electronic access, such
as usage charges from Internet access providers and
telephone companies, that must be borne by the stockholder.
- MARKING, SIGNING, DATING AND MAILING the vote instruction
card and returning it in the envelope provided.
- ATTENDING AND VOTING AT THE MEETING, if you marked your vote
instruction card that you will attend the meeting and
obtained authorization from your bank, broker or nominee
pursuant to instructions on your vote instruction card.
DEADLINE FOR INTERNET AND TELEPHONE VOTING. Votes submitted
electronically via the Internet or by telephone must be
received by midnight, eastern daylight savings time, on May
6, 2002.
If you hold your shares registered in your name, there are
two different ways you may cast your vote. You may vote by:
- MARKING, SIGNING, DATING AND MAILING the accompanying proxy
and returning it in the envelope provided.
- ATTENDING AND VOTING AT THE MEETING after you have indicated
your intention to attend the meeting on the accompanying
proxy.
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1
3. Q: WHAT MATTERS ARE BEING SUBMITTED TO A VOTE?
A: The only matters known to management to be submitted to a
vote of stockholders at the meeting are (1) the election of
directors and (2) a change in the name of the Corporation.
If any of the nominees nominated by UCAR's Board of
Directors is not available for election at the time of the
meeting, discretionary authority will be exercised by the
proxyholders designated in the accompanying proxy to vote
for substitutes designated by UCAR's Board of Directors
unless UCAR's Board of Directors chooses to reduce the
number of directors.
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4. Q: HOW WILL THE PROXYHOLDERS VOTE MY SHARES?
A: When you give a proxy, regardless of the method by which
given, the proxyholders will vote your shares as instructed
on the proxy with respect to the matters specified on the
proxy.
In addition, if other matters are submitted to a vote of
stockholders at the meeting, your proxy on the accompanying
form gives the proxyholders the discretionary authority to
vote your shares in accordance with their best judgment on
that matter. Unless you specify otherwise, your shares will
be voted on that matter as recommended by UCAR's Board of
Directors.
If you submit a proxy but do not mark your votes, your
shares will be voted FOR the election of each nominee that
has been nominated by UCAR's Board of Directors and FOR the
amendment to the Amended and Restated Certificate of
Incorporation to change the name of the Corporation to
GrafTech International Ltd.
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5. Q: HOW DO I REVOKE A PROXY?
A: IF YOU HOLD YOUR SHARES REGISTERED IN YOUR NAME, you may
revoke your proxy by submitting a revised one at any time
before the vote to which the proxy relates. You may also
revoke it by voting by submitting a ballot at the meeting.
IF YOUR SHARES ARE HELD IN STREET NAME, THERE ARE SPECIAL
PROCEDURES THAT YOU MUST FOLLOW IN CONNECTION WITH REVOKING
A PROXY SUBMITTED VIA THE INTERNET OR BY TELEPHONE OR VOTING
BY BALLOT AT THE MEETING.
VOTING BEFORE THE DEADLINE OF MIDNIGHT, EASTERN DAYLIGHT
SAVINGS TIME, ON MAY 6, 2002. If you submit a proxy via the
Internet, by telephone or by marking, signing and returning
the vote instruction card, you may revoke your proxy at any
time and by any method before the deadline.
VOTING AFTER THE DEADLINE OF MIDNIGHT, EASTERN DAYLIGHT
SAVINGS TIME, ON MAY 6, 2002. If you submit a proxy via the
Internet, by telephone or by marking, signing and returning
the vote instruction card and wish to revoke it and submit a
new proxy after the deadline has passed, you must contact
your broker, bank or other nominee and follow the
requirements set by your broker, bank or other nominee. We
cannot assure you that you will be able to revoke your proxy
and vote your shares by any of the methods described above.
VOTING BY BALLOT AT THE MEETING. If you submit a proxy via
the Internet, by telephone or by marking, signing and
returning the vote instruction card and wish to revoke it
and vote at the meeting, you must contact your broker, bank
or other nominee and follow the requirements set by your
broker, bank or other nominee. We cannot assure you that you
will be able to revoke your proxy or attend and vote at the
meeting.
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2
6. Q: HOW DO I NAME ANOTHER PROXYHOLDER?
A: You may designate as your proxyholder(s) any person(s) other
than those named on the accompanying proxy by crossing out
those names and inserting the name(s) of the person(s) you
wish to have act as your proxy. No more than three persons
should be so designated. In such a case, you must deliver
the proxy to the person(s) you designated and they must be
present and vote at the meeting. Proxies on which other
proxyholders have been designated should not be mailed or
delivered to us.
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7. Q: WHO MAY VOTE?
A: Stockholders as of the close of business on March 15, 2002
are entitled to notice of and to vote at the meeting. A list
of stockholders entitled to vote at the meeting will be
available for examination by stockholders during ordinary
business hours during the ten days prior to the annual
meeting at UCAR's principal executive offices at Brandywine
West, 1521 Concord Pike, Suite 301, Wilmington, DE 19803.
Each share of common stock, par value $.01 per share, of
UCAR is entitled to one vote. As of March 15, 2002,
56,795,279 shares of common stock were outstanding. Those
shares were held by 45 stockholders of record.
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8. Q: WHAT IF I PARTICIPATE IN THE SAVINGS PLAN?
A: If you participate in the UCAR Carbon Savings Plan, your
proxy will represent both the number of shares registered in
your name and the number of shares allocated to your account
in the Savings Plan. All of these shares will be voted by
the trustee for the Savings Plan in accordance with your
directions on the proxy submitted by you.
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9. Q: WHAT IS A QUORUM?
A: A quorum is the minimum number of outstanding shares of
common stock and other eligible voting stock, the holders of
which must be present at a meeting in order to duly convene
the meeting. The quorum for our annual meeting is the
presence, in person or by proxy, of holders of a majority of
the outstanding shares of our common stock.
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10. Q: WHAT VOTES ARE USED TO DETERMINE THE OUTCOME OF ANY MATTER
SUBMITTED TO A VOTE?
A: Only those votes cast for or against a proposal are used in
determining the results of a vote.
ABSTENTIONS AND BROKER NON-VOTES. The stockholders whose
proxies show abstentions or constitute broker non-votes are
included for purposes of determining the presence of a
quorum. With respect to the approval of any particular
proposal, however, since they are not affirmative votes for
the proposal they have the same effect as votes against the
proposal.
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11. Q: How many votes are required for each nominee to be elected
as a member of UCAR's Board of Directors?
A: Each nominee must receive a plurality of the votes cast in
order to be elected as a director.
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12. Q: HOW MANY VOTES ARE REQUIRED TO CHANGE THE NAME OF THE
CORPORATION?
A: The affirmative vote of the holders of a majority of the
outstanding shares of common stock is required to change the
name of the Corporation.
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3
13. Q: HOW MUCH DID THIS PROXY SOLICITATION COST?
A: The costs for the solicitation of proxies by UCAR's Board of
Directors is anticipated to be approximately $10,000, which
will be borne by us. We will request banks, brokers and
other nominees, including custodians and fiduciaries, to
forward soliciting material to beneficial owners of our
common stock and will pay such persons for forwarding such
material. In addition to the solicitation of proxies
generally by means of this proxy statement, officers or
other employees, without extra remuneration, may solicit
proxies by telephone or other means of personal contact.
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14. Q: WHO ARE UCAR'S INDEPENDENT ACCOUNTANTS AND WILL
REPRESENTATIVES THEREOF BE AVAILABLE TO RESPOND TO QUESTIONS
AT THE MEETING?
A: Deloitte & Touche LLP was our independent accountant for
2001. We have not yet selected an independent accountant for
2002.
Representatives of Deloitte & Touche will be present at the
meeting, will be given the opportunity to make a statement
if they desire to do so and will respond to appropriate
questions of stockholders. Deloitte & Touche has advised us
that neither it nor any of its members has any direct
financial interest in UCAR as a promoter, underwriter,
voting trustee, director, officer or employee.
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15. Q: WHEN ARE STOCKHOLDER PROPOSALS FOR THE 2003 ANNUAL MEETING
DUE?
A: Any proposal (including any nomination for election to
UCAR's Board of Directors) which a stockholder wishes to
have considered for inclusion in the proxy statement for the
annual meeting of stockholders for 2003 must be received by
the Secretary of UCAR at UCAR's principal executive office
on or before November 29, 2002 and must otherwise comply
with SEC rules.
UCAR's By-Laws provide that written notice of any proposal
(including any such nomination) by a stockholder must be
received by the Secretary of UCAR not later than the date
that is 105 days before the meeting before which such
proposal (or nomination) is to be brought, except in certain
circumstances, and must contain detailed information
regarding the proposal (and, if applicable, the nominee) and
the stockholder making the proposal (or nomination),
including the name of the stockholder and the number of
shares of common stock owned beneficially and of record by
the stockholder (including his or her affiliates, all groups
of which he or she is a member and all persons with whom he
or she is acting in concert (in each case identifying
them)). Any proposal (other than a nomination for election
to UCAR's Board of Directors) which a stockholder wishes to
have considered must also describe the stockholder's
material direct or indirect interest in UCAR (including any
material direct or indirect interest that his or her
affiliates, all groups of which he or she is a member and
all persons with whom he or she is acting in concert). A
stockholder proposing to nominate a candidate for election
to UCAR's Board of Directors must disclose any professional,
commercial, business or familial relationship the
stockholder (including his or her affiliates, all groups of
which he or she is a member and all persons with whom he or
she is acting in concert (in each case identifying them))
has to the nominee (including his or her affiliates, all
groups of which he or she is a member and all persons with
whom he or she is acting in concert (in each case
identifying them)). The chairman of the annual meeting for
2003 shall determine whether any such proposal (or
nomination) was properly brought. If such proposal (or
nomination) was not properly brought, then the chairman
shall not allow a vote on the proposal (or nomination).
Proxyholders named in the proxy accompanying the proxy
statement for the annual meeting for 2003 will have
discretionary authority to vote on any proposal submitted
after such deadline.
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4
PROPOSALS ON WHICH YOU MAY VOTE
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1. ELECTION OF DIRECTORS
Unless you specify otherwise, either when completing your proxy or a subsequent
proxy or by casting a ballot in person at the meeting, your shares represented
by a proxy in the form accompanying this proxy statement and returned to the
proxyholders named therein will be voted for the election to UCAR's Board of
Directors of each of the seven nominees listed below, beginning on page 6.
UCAR'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED
BELOW.
2. CHANGE THE NAME OF THE CORPORATION
Unless you specify otherwise, either when completing your proxy or a subsequent
proxy or by casting a ballot in person at the meeting, your shares represented
by a proxy in the form accompanying this proxy statement and returned to the
proxyholders named therein will be voted to approve an amendment to the Amended
and Restated Certificate of Incorporation of the Corporation to change the name
of the Corporation to GrafTech International Ltd. UCAR'S BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT.
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5
PROPOSAL ONE: ELECTION OF DIRECTORS
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NOMINEES FOR THE BOARD OF DIRECTORS
The seven nominees listed below were unanimously nominated by UCAR's Board
of Directors. Each nominee has consented to being named as a nominee for
election as a director and agreed to serve if elected. Each nominee who is
elected will serve as a director until his or her successor is elected at the
next annual meeting of stockholders or until his or her earlier removal or
resignation. Except as otherwise described below, if any of the nominees is not
available for election at the time of the meeting, discretionary authority will
be exercised to vote for substitutes designated by UCAR's Board of Directors
unless UCAR's Board of Directors chooses to reduce the number of directors.
Management is not aware of any circumstances that would render any nominee
unavailable.
The ages of the nominees are given as of March 1, 2002.
GILBERT E. PLAYFORD Director since 1998
[LOGO] Age 54
Mr. Playford joined UCAR as President and Chief Executive
Officer in June 1998. In September 1999, Mr. Playford also
became the Chairman of the Board. From January 1996 to June
1998, he was the President and Chief Executive Officer of
LionOre Mining International Ltd., a Toronto Stock Exchange
company which he founded and which is engaged in mining
nickel in Botswana and nickel/gold in Australia. Prior to
founding LionOre Mining International Ltd., of which he
continues to serve as a director and non-executive Deputy
Chairman, Mr. Playford spent his career with Union Carbide
Corporation. We are the successor to the Carbon Products
Division of Union Carbide. Mr. Playford began his career in
1972 with Union Carbide in Canada. In 1989, after several
years in Europe and Canada, he was appointed Corporate Vice
President, Strategic Planning of Union Carbide. In 1990, he
became Vice President, Corporate Holdings of Union Carbide.
He assumed the additional responsibility of President and
Chief Executive Officer of Union Carbide's Canadian
subsidiary in 1991. Mr. Playford was named Vice President,
Treasurer and Principal Financial Officer of Union Carbide
in 1992. In his capacity as Principal Financial Officer of
Union Carbide, he also served as a nominee of Union Carbide
on UCAR's Board of Directors from 1992 until our leveraged
equity recapitalization in January 1995. He took on
additional duties as Vice President for Union Carbide's
latex and paint business in 1993. Mr. Playford left Union
Carbide in January 1996.
6
R. EUGENE CARTLEDGE Director since 1996
[LOGO] Age 72
From 1986 until his retirement in 1994, Mr. Cartledge was
the Chairman of the Board and Chief Executive Officer of
Union Camp Corporation. Mr. Cartledge retired as Chairman of
the Board of Savannah Foods & Industries, Inc. in December
1997. He is a director of Chase Industries, Inc., Sun
Company, Inc., Delta Air Lines, Inc. and Formica
Corporation.
MARY B. CRANSTON Director since 2000
[LOGO] Age 54
Ms. Cranston is a partner and has served since 1999 as
Chairperson of Pillsbury Winthrop LLP, an international law
firm. Ms. Cranston is based in San Francisco, California.
Ms. Cranston has been practicing complex litigation,
including antitrust, telecommunications and securities
litigation, with Pillsbury Winthrop LLP since 1975. She is a
director of the San Francisco Chamber of Commerce and the
Bay Area Council, and a trustee of the San Francisco Ballet
and Stanford University.
JOHN R. HALL Director since 1995
[LOGO] Age 69
From 1981 until his retirement in 1997, Mr. Hall was
Chairman of the Board and Chief Executive Officer of Ashland
Inc. Mr. Hall had served in various engineering and
managerial capacities at Ashland Inc. since 1957. He retired
as Chairman of Arch Coal Inc. in 1998. He served as a
director of Reynolds Metals Company from 1985 to 2000. Mr.
Hall currently serves as a member of the Boards of Bank One
Corporation, Canada Life Assurance Company, CSX Corporation,
Humana Inc. and USEC Inc. Mr. Hall graduated from Vanderbilt
University in 1955 with a degree in Chemical Engineering and
later served as Vanderbilt's Board Chairman from 1995 to
1999.
THOMAS MARSHALL Director since 1998
[LOGO] Age 73
Mr. Marshall retired in 1995 as Chairman of the Board and
Chief Executive Officer of Aristech Chemical Corporation, a
spinoff of USX Corporation, which positions he had held
since 1986. Mr. Marshall had previously served as President
of the U.S. Diversified Group, a unit covering 18 divisions
and subsidiaries, including Manufacturing, Fabricating and
Chemicals, of USX Corporation. Mr. Marshall serves on the
Board of the National Flag Foundation. He is a trustee of
the University of Pittsburgh and Chairman of the Thomas
Marshall Foundation.
7
FERRELL P. MCCLEAN Director since February 2002
[LOGO] Age 55
Ms. McClean was the Managing Director and Senior Advisor to
the head of the Global Oil & Gas Group in Investment Banking
at J.P. Morgan Chase & Co. from 2000 through the end of
2001. Ms. McClean joined J.P. Morgan & Co. Incorporated in
1969 and founded the Leveraged Buyout and Restructuring
Group within the Mergers & Acquisitions Group in 1986. From
1991 until 2000, Ms. McClean was the Managing Director and
co-headed the Global Energy Group within the Investment
Banking Group at J.P. Morgan & Co.
MICHAEL C. NAHL Director since 1999
[LOGO] Age 59
Mr. Nahl is Senior Vice President and Chief Financial
Officer of Albany International Corporation, a manufacturer
of paper machine clothing, which are the belts of fabric
that carry paper stock through the paper production process.
He joined Albany International Corporation in 1981 as Group
Vice President, Corporate and was appointed to his present
position in 1983. Mr. Nahl is a member of the Chase
Manhattan Corporation Northeast Regional Advisory Board.
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8
THE BOARD OF DIRECTORS
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STRUCTURE OF THE BOARD
- Under the By-Laws, UCAR's Board of Directors fixes the number of
directors. UCAR's Board of Directors currently consists of seven members,
each of whom is an outside director except for Mr. Playford, UCAR's
President and Chief Executive Officer.
- UCAR's Board of Directors has adopted a requirement that directors retire
as such no later than the annual meeting of stockholders following the
date on which they attain 74 years of age.
- UCAR's Board of Directors has established three standing committees, each
of which is comprised of outside directors, so that certain important
matters can be addressed in greater depth than may be possible in a
meeting of the entire Board.
AGREEMENTS IN CONNECTION WITH ELECTION OF DIRECTORS
In connection with the settlement in October 1999 of the securities class action
lawsuit which had been commenced in April 1998 against UCAR and certain former
and current directors and officers, UCAR agreed that it would take and cause to
be taken all reasonable and appropriate steps for the nomination for re-election
and the re-election of Ms. Cranston at our annual meetings through 2002 unless
she resigns, retires, dies, becomes disabled, is removed or not re-nominated for
good cause shown, is removed or resigns in connection with a change of control
of UCAR, or is not re-elected by our stockholders. UCAR has also agreed that
Ms. Cranston would be appointed as a member of the Audit and Finance Committee.
MEETINGS OF THE BOARD
- UCAR's Board of Directors met 5 times in 2001.
- Each director who was then serving attended at least 75% of the total
number of meetings of UCAR's Board of Directors and meetings of committees
of UCAR's Board of Directors of which he or she was a member.
COMMITTEES OF THE BOARD
A description of the functions of each committee is set forth on page 10 and the
members of each committee at March 1, 2002 and the number of meetings held by
each committee in 2001 are set forth under the Board Committee Membership Roster
on page 11.
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9
COMMITTEES OF THE BOARD
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AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee is responsible, on an independent and objective
basis, for:
- monitoring systems for accounting, auditing, financial reporting and
internal controls, including internal controls relating to finance
(including financial obligations and covenants) and legal compliance
(including business ethics and conflicts of interests);
- fostering adherence to and continuous improvement in those systems at all
levels within the enterprise;
- providing for open communication among independent accountants, financial
and senior management, internal auditors and UCAR's Board of Directors;
- reviewing and evaluating audits by the independent accountants and
internal auditors;
- reviewing and evaluating internal strategic risk assessments and audits;
and
- reviewing, prior to public dissemination or filing with the SEC or any
stock exchange or market, financial statements, financial reports and
other material financial information to be publicly disseminated or so
filed.
ORGANIZATION, COMPENSATION AND PENSION COMMITTEE
The Organization, Compensation and Pension Committee is responsible for:
- monitoring organizational systems, including those relating to management
development and succession planning, and providing for open communication
among senior management, the human resources department and UCAR's Board
of Directors;
- fostering continuous improvement in those systems at all levels within the
enterprise, to attract and retain qualified employees, align interests of
stockholders and employees, incent employees to improve performance and
reward employees for improvements in performance, in each case on both a
long term and short term basis;
- monitoring the creation, modification, termination and funding of
compensation, retirement, benefit and welfare arrangements for senior
management and other employees generally;
- reviewing and evaluating compensation arrangements for senior management
and directors and reviewing, prior to filing with the SEC, compensation
reports and other material compensation information to be so filed; and
- reviewing and, to the extent specified by UCAR's Board of Directors,
administering stock-based compensation plans.
NOMINATING COMMITTEE
The Nominating Committee is responsible for:
- reviewing the criteria for nominees for election as a director of UCAR and
recommending individuals to UCAR's Board of Directors for nomination for
election as directors of UCAR.
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10
BOARD COMMITTEE MEMBERSHIP ROSTER
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ORGANIZATION,
COMPENSATION
AUDIT AND AND
NAME FINANCE(1) PENSION NOMINATING
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Gilbert E. Playford
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R. Eugene Cartledge x x(2)
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Mary B. Cranston x x
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John R. Hall x(2)
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Thomas Marshall x(3) x
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Ferrell P. McClean
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Michael C. Nahl x(2) x
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Number of Meetings in 2001 7 2 2
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(1) All members of the Audit and Finance Committee are independent within the
meaning of the rules of the New York Stock Exchange.
(2) Committee Chairperson.
(3) Ms. McClean will replace Mr. Marshall as a member of the Audit and Finance
Committee effective April 15, 2002.
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11
CHANGE IN INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
IN ACCORDANCE WITH THE RULES AND REGULATIONS OF THE SEC, THE FOLLOWING
INFORMATION RELATING TO INDEPENDENT ACCOUNTANTS SHALL NOT BE DEEMED TO BE
SOLICITING MATERIAL WITHIN THE MEANING OF REGULATIONS 14A AND 14C UNDER THE
SECURITIES EXCHANGE ACT OF 1934, FILED WITH THE SEC UNDER THE EXCHANGE ACT OR
OTHERWISE SUBJECT TO REGULATIONS 14A OR 14C OR THE LIABILITIES OF SECTION 18 OF
THE EXCHANGE ACT AND SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO
ANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE EXCHANGE ACT, NOTWITHSTANDING
ANY GENERAL INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT INTO ANY OTHER
DOCUMENT FILED WITH THE SEC.
On May 8, 2001, UCAR's Board of Directors, upon the recommendation of the Audit
and Finance Committee, appointed Deloitte & Touche as the independent
accountants to audit the financial statements of UCAR and its consolidated
subsidiaries for the fiscal year ending December 31, 2001. Deloitte & Touche
replaced UCAR's prior independent accountants, KPMG LLP. UCAR's Board of
Directors appointed Deloitte & Touche after the completion of a proposal
process.
The reports of KPMG on the consolidated financial statements of UCAR as of and
for the fiscal years ended December 31, 1999 and 2000 did not contain any
adverse opinion or disclaimer of opinion. These reports were not qualified or
modified as to uncertainty, audit scope or accounting principles. During the
fiscal years ended December 31, 1999 and 2000 and during the period between
December 31, 2000 and May 8, 2001, there were no disagreements between KPMG and
UCAR on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of KPMG, would have caused KPMG to make reference to the
subject matter of the disagreements in connection with their reports.
Furthermore, during the fiscal years ended December 31, 1999 and 2000 and during
the period between December 31, 2000 and May 8, 2001, there were no "reportable
events" as described in Paragraph 304(a)(1)(v) of Regulation S-K.
During the fiscal years ended December 31, 1999 and 2000 and during the period
between December 31, 2000 and May 8, 2001, neither UCAR nor anyone on its behalf
consulted Deloitte & Touche regarding either (i) the application of accounting
principles to a specified transaction (either completed or proposed) or the type
of audit opinion that might be rendered on UCAR's consolidated financial
statements or (ii) any matter that was either the subject of a disagreement (as
described in Paragraph 304(a)(1)(iv) of Regulation S-K) or a reportable event
(as described in Paragraph 304(a)(1)(v) of Regulation S-K).
UCAR provided KPMG with a copy of this disclosure and requested KPMG to furnish
UCAR with a letter addressed to the SEC stating whether it agrees with the above
statements. A copy of KPMG's letter was filed as an exhibit to the Current
Report on Form 8-K filed by UCAR with the SEC on May 15, 2001 to report this
event.
--------------------------------------------------------------------------------
12
AUDIT AND FINANCE COMMITTEE REPORT
--------------------------------------------------------------------------------
IN ACCORDANCE WITH THE RULES AND REGULATIONS OF THE SEC, THE FOLLOWING REPORT OF
THE AUDIT AND FINANCE COMMITTEE SHALL NOT BE DEEMED TO BE SOLICITING MATERIAL
WITHIN THE MEANING OF REGULATIONS 14A AND 14C UNDER THE SECURITIES EXCHANGE ACT
OF 1934, FILED WITH THE SEC UNDER THE EXCHANGE ACT OR OTHERWISE SUBJECT TO
REGULATIONS 14A OR 14C OR THE LIABILITIES OF SECTION 18 OF THE EXCHANGE ACT AND
SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933 OR THE EXCHANGE ACT, NOTWITHSTANDING ANY GENERAL
INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT INTO ANY OTHER DOCUMENT FILED
WITH THE SEC.
UCAR's Board of Directors has established an Audit and Finance Committee,
consisting of three directors. Each of the members of the Audit and Finance
Committee is independent within the meaning of the rules of the New York Stock
Exchange. UCAR's Board of Directors has adopted a written charter for the
Committee.
The Committee assists UCAR's Board of Directors in fulfilling its oversight
responsibilities as described on page 10.
The Committee reviewed and discussed UCAR's audited consolidated financial
statements for the year ended December 31, 2001 with UCAR's management and
Deloitte & Touche, UCAR's independent accountants. The Committee also discussed
with Deloitte & Touche the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees). This included
a discussion of the independent accountants' judgment as to the quality, as well
as the acceptability, of UCAR's accounting principles and such other matters
that generally accepted auditing standards require to be discussed with an audit
committee. The Committee also received the written disclosures and the letter
from Deloitte & Touche required by Independence Standards Board Standard No. 1
(Independence Discussion with Audit Committees) and the Committee discussed with
Deloitte & Touche the independence of Deloitte & Touche from us and our
management. The Committee also determined that the provision of non-audit
services by Deloitte & Touche to us was compatible with the maintenance by
Deloitte & Touche of its independence from UCAR.
Based on its review and discussions noted above, the Committee recommended to
UCAR's Board of Directors that it approve, and UCAR's Board of Directors
approved, the inclusion of UCAR's audited consolidated financial statements in
UCAR's Annual Report on Form 10-K for the year ended December 31, 2001 filed
with the SEC.
All professional services rendered by Deloitte & Touche during 2001 were
furnished at customary rates. Below is a summary of the fees we paid to
Deloitte & Touche for services provided in 2001:
- AUDIT FEES: We paid Deloitte & Touche approximately $700,000 in connection
with their audit of our 2001 financial statements and their reviews of our
financial statements for the second and third quarter of 2001.
- FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES: We did not
pay any financial information systems design and implementation fees to
Deloitte & Touche.
- ALL OTHER FEES: We paid Deloitte & Touche approximately $1,000,000 in all
other fees, principally related to tax matters.
AUDIT AND FINANCE COMMITTEE
Michael C. Nahl, Chairperson
Mary B. Cranston
Thomas Marshall
--------------------------------------------------------------------------------
13
ORGANIZATION, COMPENSATION AND PENSION COMMITTEE REPORT
--------------------------------------------------------------------------------
IN ACCORDANCE WITH THE RULES AND REGULATIONS OF THE SEC, THE FOLLOWING REPORT OF
THE ORGANIZATION, COMPENSATION AND PENSION COMMITTEE AND THE TABLE AND OTHER
INFORMATION UNDER "STOCK PERFORMANCE GRAPH" ON PAGE 25 SHALL NOT BE DEEMED TO BE
SOLICITING MATERIAL WITHIN THE MEANING OF REGULATIONS 14A AND 14C UNDER THE
SECURITIES EXCHANGE ACT OF 1934, FILED WITH THE SEC UNDER THE EXCHANGE ACT OR
OTHERWISE SUBJECT TO REGULATIONS 14A OR 14C OR THE LIABILITIES OF SECTION 18 OF
THE EXCHANGE ACT AND SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO
ANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE EXCHANGE ACT, NOTWITHSTANDING
ANY GENERAL INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT INTO ANY OTHER
DOCUMENT FILED WITH THE SEC.
UCAR's philosophy has always been, and continues to be, to seek to align the
interests of management with the interests of stockholders. UCAR seeks to
implement this philosophy through a combination of base compensation (including
benefits) and stock- and cash-based incentives. In general, base compensation is
intended to be sufficient to attract, retain and motivate qualified management
employees. Stock-based incentive compensation is designed to reward management
for increases in the market value of the common stock. The Committee believes
that this is the primary interest of stockholders and that, over the long term,
improvements in the performance of UCAR's business will be the primary drivers
of such increases. The Committee also recognizes that, notwithstanding
improvements in performance, increases in market value may not be realized on a
timely basis due to external factors beyond management's control. The Committee
believes that cash-based incentive compensation is an important element in
keeping management focused on improving UCAR's performance despite the impact of
those external factors.
Implementation of this philosophy is tempered by several factors. First,
competition for qualified management employees is intense. Second, UCAR
continues to bear a significant burden relating to antitrust and other legal
issues even though many of those issues have been resolved. At the same time, it
has encountered a very difficult business environment. This is due to, among
other things, economic conditions which are materially adversely affecting the
steel and metals industries that are UCAR's principal customers.
Consistent with this philosophy, compensation of senior management consists
primarily of base salary, annual cash bonuses and stock options and restricted
stock. Each of the components mentioned is awarded to the chief executive
officer by UCAR's Board of Directors based on recommendations of the Committee
and to the other members of senior management by UCAR's Board of Directors based
on recommendations by the chief executive officer as well as the Committee.
Base salary for each member of senior management is determined after taking into
account his or her current or new position and current base salary, salaries and
other compensation offered by other companies for individuals in equivalent
positions, the performance during the prior year of the business or functional
unit for which he or she was responsible and, to the extent relevant, the
geographic area in which he or she is or will be employed.
Annual cash bonuses awarded to each member of senior management are determined
based on the factors mentioned above, achievement of specified goals during the
prior year and performance of UCAR as a whole during the prior year. Annual cash
bonuses for each year are determined and payable in the following year. Plans
for annual cash bonuses were suspended during the 2001 first half due to UCAR's
financial performance at that time. These plans were reinstated during the 2001
second half following successful completion of UCAR's public offering of common
stock in July 2001. The specified goals for 2001 related to return on invested
capital, net debt and achievement of corporate and division strategic
milestones. Annual cash bonuses for 2001 were not awarded by UCAR's Board of
Directors as a result of UCAR's financial performance during 2001. The goals and
form of award for 2002 have not yet been specified or approved by UCAR's Board
of Directors.
14
Stock options granted to each member of senior management are determined based
on the same factors as those mentioned above. A stock option grant was made in
September 2001 to over 180 management employees, including members of senior
management. Most of these stock options had a long-term vesting period designed
to retain management employees for an extended period. A portion of the stock
options granted to six members of senior management vested immediately in
recognition of extraordinary efforts made by them during the 2001 first half in
connection with certain strategic initiatives.
Mr. Playford's compensation for 2001 was determined on the same basis as other
members of senior management (commensurate with his position).
Section 162(m) of the Internal Revenue Code of 1986 limits the deductibility by
public companies of certain executive compensation in excess of $1 million per
executive per year, but excludes from the calculation of the $1 million limit
certain elements of compensation, including performance based compensation,
provided that certain requirements are met. While the Committee and UCAR's Board
of Directors considered the impact of Section 162(m) in connection with adopting
and implementing the philosophy described above, they do not believe that
Section 162(m) is a significant factor in determining the amount or types of
compensation to be paid to senior management or the conditions to payment of
such compensation.
ORGANIZATION, COMPENSATION
AND PENSION COMMITTEE
John R. Hall, Chairperson
R. Eugene Cartledge
Thomas Marshall
--------------------------------------------------------------------------------
15
DIRECTOR COMPENSATION
--------------------------------------------------------------------------------
Employee directors do not receive compensation for rendering services as
directors. All directors are entitled to reimbursement for all expenses incurred
in rendering services as directors. Non-employee directors are entitled to
receive the compensation described below.
- ANNUAL RETAINER: $25,000 ($27,000, if chairperson of one or more
committees).
- MEETING FEE: $1,000 for each meeting attended, regardless of whether the
meeting is held on the same day as other meetings and regardless of
whether the meeting continues for more than one day.
- STOCK OPTION GRANTS: Options for the purchase of shares of common stock as
described below.
REGULAR STOCK OPTION GRANTS. We have adopted a policy of granting to
non-employee directors then serving options to purchase that number of shares of
common stock fixed annually by UCAR's Board of Directors (the "ANNUAL GRANTS").
We have also adopted a policy of granting to non-employee directors options to
purchase 5,000 shares of common stock (the "INITIAL GRANTS") as well as a
prorated portion of the Annual Grants upon their initial election as directors.
For 2001, the Annual Grant covered 7,700 shares of common stock and, for 2002,
6,200 shares of common stock. All of these options vest one year after the date
of grant so long as the director is then serving as a director. The exercise
price per share of these options is fair market value on the date of grant,
which is defined under the relevant stock option plan as the closing sale price
of a share of common stock on the last trading date preceding the date of grant.
Vested options granted to a non-employee director expire upon the earlier of ten
years after the date of grant or four years after the director ceases to be a
director. Other provisions relating to these options are the same as those
relating to options granted to management as described on page 21.
OTHER COMPENSATION. We have in the past and may in the future award additional
cash or stock-based compensation to one or more directors for special services
rendered to UCAR.
STOCK OPTION GRANTS IN LIEU OF CASH PAYMENTS. Each non-employee director agreed
to receive a grant of options in lieu of payment for meeting fees earned during
2001 as set forth in the following table. These options vested on the date of
grant. The exercise price, term and other provisions are the same as those
described above.
SHARES UNDERLYING OPTIONS
GRANTED IN LIEU OF 2001
NAME MEETING FEES
-----------------------------------------------------------------------------------------
R. EUGENE CARTLEDGE 3,720
-----------------------------------------------------------------------------------------
MARY B. CRANSTON 3,340
-----------------------------------------------------------------------------------------
JOHN R. HALL 2,710
-----------------------------------------------------------------------------------------
THOMAS MARSHALL 4,490
-----------------------------------------------------------------------------------------
FERRELL P. MCCLEAN --
-----------------------------------------------------------------------------------------
MICHAEL C. NAHL 4,490
-----------------------------------------------------------------------------------------
TOTAL 18,750
-----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16
STOCK OWNERSHIP GUIDELINES FOR DIRECTORS AND SENIOR MANAGEMENT
--------------------------------------------------------------------------------
UCAR's Board of Directors has adopted guidelines for ownership of common stock
by directors and senior management. Compliance with the guidelines is voluntary.
Under the guidelines, each non-employee director should, within a reasonable
period of time after election as a director, own shares of common stock with a
market value equal to at least $150,000. UCAR's Board of Directors has adopted a
policy providing that we will not finance the purchase or holding of these
shares by directors.
In addition, under the guidelines, certain members of senior management should,
within five years after appointment as a member of senior management, own shares
of common stock with a market value equal to his or her annual base salary (or,
in the case of the chief executive officer, three times his annual base salary).
--------------------------------------------------------------------------------
17
EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------
The following table sets forth certain information concerning compensation
received by our chief executive officer at December 31, 2001 and each of our
other four most highly compensated executive officers at December 31, 2001 who
received total salary and bonus compensation in excess of $100,000 for services
rendered in all capacities (including service as a director of UCAR or an
officer or director of one or more of our subsidiaries) during our last fiscal
year. The individuals listed in the following table are sometimes called the
"named executive officers."
SUMMARY COMPENSATION TABLE(A)
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
VARIABLE OTHER ANNUAL RESTRICTED SECURITIES LONG TERM
NAME AND PRINCIPAL COMPENSATION COMPENSATION STOCK UNDERLYING PLAN ALL OTHER
POSITIONS YEAR SALARY (B) (C) AWARDS OPTIONS PAYOUTS COMPENSATION(D)
-----------------------------------------------------------------------------------------------------------------------------------
GILBERT E. PLAYFORD 2001 $650,000 $ -- $200,729 -- 274,000 -- $83,695
CHAIRMAN OF THE 2000 650,000 -- 213,447 100,000 300,000 -- 86,474
BOARD, CHIEF 1999 540,000 645,000 261,514 -- -- -- 79,946
EXECUTIVE OFFICER AND
PRESIDENT(E)
-----------------------------------------------------------------------------------------------------------------------------------
CORRADO F. DE GASPERIS 2001 230,000 -- 55,584 -- 57,500 -- 13,683
VICE PRESIDENT, CHIEF 2000 210,000 -- 22,364 -- 90,000 -- 14,033
FINANCIAL OFFICER AND 1999 181,005 175,000 127,698 -- -- -- 14,359
CHIEF INFORMATION
OFFICER(F)
-----------------------------------------------------------------------------------------------------------------------------------
SCOTT C. MASON 2001 285,312 -- 44,266 -- 87,000 -- 16,854
EXECUTIVE VICE 2000 225,000 155,000 93,614 -- 230,000 -- 5,625
PRESIDENT, ADVANCED
ENERGY TECHNOLOGY
DIVISION(G)
-----------------------------------------------------------------------------------------------------------------------------------
KAREN G. NARWOLD 2001 230,000 -- 45,218 -- 57,500 -- 11,419
VICE PRESIDENT, 2000 200,000 -- 27,847 -- 70,000 -- 12,387
GENERAL COUNSEL, 1999 170,000 145,000 115,740 -- 10,000 -- 11,962
HUMAN RESOURCES AND
SECRETARY(H)
-----------------------------------------------------------------------------------------------------------------------------------
CRAIG S. SHULAR 2001 285,312 -- 58,623 -- 87,000 -- 18,449
EXECUTIVE VICE 2000 275,000 -- 250,000 27,683 -- 130,000 -- 19,213
PRESIDENT, GRAPHITE 1999 225,000 78,322 -- 150,000 -- 20,477
POWER SYSTEMS
DIVISION(I)
-----------------------------------------------------------------------------------------------------------------------------------
(a) Includes, for each year, compensation earned but deferred under compensation
deferral or other applicable plans or statutory provisions.
(b) Consists of cash bonuses under various plans or as otherwise approved by
UCAR's Board of Directors and, for Mr. Mason, a one-time sign-on bonus paid
upon commencement of employment.
(c) Includes for 2001, 2000 and 1999 (respectively and as applicable, except as
otherwise noted): for Mr. Playford, $7,268, $17,843 and $4,851, for Mr. De
Gasperis, $5,925, $3,750 and $10,925, for Mr. Mason, $4,440 and $13,475, for
Ms. Narwold, $5,925, $3,750 and $10,925, and for Mr. Shular, $5,925, $3,750
and $13,125, of financial planning services and related tax advice and, in
certain cases, tax return preparation services; for Mr. Playford, $136,923,
$172,319 and $134,245, for Mr. De Gasperis, $14,791, $18,614 and $14,502,
for Mr. Mason, $19,016 and $18,099, for Ms. Narwold, $12,677, $15,954 and
$10,745, and for Mr. Shular, $19,016, $23,933 and $18,454, of imputed
interest income and reimbursement for tax liabilities on
18
non-interest bearing loans made under various programs; for Mr. Playford,
$19,576, $23,285 and $24,795, and for 2000, Mr. Mason, $14,750, of
reimbursement for miscellaneous expenses and, if applicable, reimbursement
for tax liabilities thereon; for Mr. Playford, $36,962, $0 and $97,623, for
Mr. De Gasperis, $34,868, $0 and $102,271, for Mr. Mason, $20,810 and
$47,290, for Ms. Narwold, $26,616, $8,143 and $94,070, and for Mr. Shular,
$22,721, $0 and $46,743, of reimbursement for relocation expenses and, if
applicable, reimbursement for tax liabilities thereon; and for 2001, for
Mr. Shular, $10,961, for allowances for international service.
(d) Includes for 2001, 2000 and 1999 (respectively and as applicable, except as
otherwise noted): for Mr. Playford, $74,062, $77,100 and $70,948, for
Mr. De Gasperis, $4,050, $4,803 and $5,361, for 2001, for Mr. Mason,
$10,479, for Ms. Narwold, $5,044, $6,012 and $5,962, and for Mr. Shular,
$12,074, $12,838 and $14,477, for annual life insurance premiums paid on a
split dollar life contract; and for Mr. Playford, $9,633, $9,374 and $8,998,
for Mr. De Gasperis, $9,633, $9,230 and $8,998, for Mr. Mason, $6,375 and
$5,625, for Ms. Narwold, $6,375, $6,375 and $6,000, and for Mr. Shular,
$6,375, $6,375 and $6,000, for employer contributions to the Savings Plan.
The amount of the whole life insurance portion reported as paid for the
executive is the entire premium minus that portion of the premium actually
paid by the executive. We recover our contributions following the latest of
the executive's retirement, attainment of age 65 or fifteenth year of
participation.
(e) Mr. Playford joined us as Chief Executive Officer and President in
June 1998 and became Chairman of the Board in September 1999.
(f) Mr. De Gasperis joined us as Controller in July 1998, became Vice President
and Chief Information Officer in February 2000 and became Vice President,
Chief Financial Officer and Chief Information Officer in May 2001.
(g) Mr. Mason joined us as Director of Mergers and Acquisitions of UCAR and
Chief Financial Officer of our subsidiary, Graftech Inc., in April 2000 and
became Executive Vice President, Advanced Energy Technology Division, in
August 2001.
(h) Ms. Narwold joined us as Regulatory and Commercial Counsel in July 1990,
became Assistant General Counsel in May 1995, became Deputy General Counsel
in January 1999, became Vice President, General Counsel and Secretary in
September 1999, and became Vice President, General Counsel, Human Resources
and Secretary in August 2001.
(i) Mr. Shular joined us as Vice President and Chief Financial Officer in
January 1999, became Executive Vice President, Electrode Sales and
Marketing, and Chief Financial Officer in February 2000 and became Executive
Vice President, Graphite Power Systems Division in August 2001.
The following table sets forth certain information relating to options granted
to the named executive officers during 2001.
OPTION GRANTS IN 2001
INDIVIDUAL GRANTS
PERCENT
NUMBER OF TOTAL POTENTIAL REALIZABLE
OF OPTIONS VALUE AT ASSUMED ANNUAL
SECURITIES GRANTED EXERCISE RATES OF STOCK PRICE
UNDERLYING TO PRICE APPRECIATION FOR OPTION
OPTIONS EMPLOYEES PER EXPIRATION TERM
NAME GRANTED IN 2001 SHARE DATE 5% 10%
---------------------------------------------------------------------------------------------------
GILBERT E. PLAYFORD 274,000 15.8% $8.85 9/25/11 $1,525,007 $3,864,666
---------------------------------------------------------------------------------------------------
CORRADO F. DE GASPERIS 57,500 3.3% 8.85 9/25/11 320,029 811,016
---------------------------------------------------------------------------------------------------
SCOTT C. MASON 87,000 5.0% 8.85 9/25/11 484,217 1,227,102
---------------------------------------------------------------------------------------------------
KAREN G. NARWOLD 57,500 3.3% 8.85 9/25/11 320,029 811,016
---------------------------------------------------------------------------------------------------
CRAIG S. SHULAR 87,000 5.0% 8.85 9/25/11 484,217 1,227,102
---------------------------------------------------------------------------------------------------
19
The following table sets forth certain information relating to the exercise of
previously granted options by the named executive officers during 2001.
AGGREGATED OPTION EXERCISES IN 2001
AND OPTION VALUES AT DECEMBER 31, 2001
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT DECEMBER OPTIONS AT
ACQUIRED VALUE 31, 2001 DECEMBER 31, 2001
NAME ON EXERCISE REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
-------------------------------------------------------------------------------------------------
GILBERT E. PLAYFORD -- -- 641,000/533,000 $75,850/$1,073,050
-------------------------------------------------------------------------------------------------
CORRADO F. DE GASPERIS -- -- 108,500/135,000 23,125/211,650
-------------------------------------------------------------------------------------------------
SCOTT C. MASON -- -- 65,000/252,000 27,750/304,400
-------------------------------------------------------------------------------------------------
KAREN G. NARWOLD -- -- 77,579/123,334 28,538/190,250
-------------------------------------------------------------------------------------------------
CRAIG S. SHULAR -- -- 165,000/202,000 27,750/347,200
-------------------------------------------------------------------------------------------------
EMPLOYMENT AND OTHER AGREEMENTS
In June 1998, we entered into a five-year employment agreement with
Mr. Playford to serve as President and Chief Executive Officer, which was
amended in August 2001. The agreement automatically renews for successive
additional one-year terms, unless we give written notice of non-renewal no later
than 90 days prior to any renewal date or Mr. Playford gives written notice of
non-renewal at least one year prior to the first renewal date or nine months
prior to any subsequent renewal date.
Mr. Playford is entitled to receive a base salary (which may be increased by
UCAR's Board of Directors) of $650,000 and annual cash bonuses (commensurate
with his position). In addition, for the purpose of calculating Mr. Playford's
benefits under the UCAR Carbon Retirement Program, (1) Mr. Playford earns,
ratably over the initial term of the agreement, credit for 26.5 years of prior
service, substantially all of which was with Union Carbide, and (2) the amount
of benefits receivable by Mr. Playford under the UCAR Carbon Retirement Program
will be likewise ratably offset by the amount of benefits receivable by him
under the Union Carbide Retirement Program.
At the time he entered into the employment agreement, Mr. Playford received
options to purchase 300,000 shares of common stock. Two-thirds of the options
vested on the second anniversary of the date of grant and the balance of the
options vested on the third anniversary of the date of grant. The exercise price
per share of the options ($30.58 per share) was equal to the fair market value
at the date of grant, which was defined at that time under the relevant stock
option plan as the average of the high and low trading prices for the 20
business days immediately preceding the date of grant. The options expire in
January 2007. Other provisions relating to the options are described below. In
recognition of Mr. Playford's appointment as Chairman of the Board in
September 1999, in addition to President and Chief Executive Officer, and to
provide incentives to him during difficult operating circumstances, UCAR's Board
of Directors approved a grant to Mr. Playford of 100,000 shares of restricted
stock, of which 70,000 shares will vest in June 2003 and 30,000 shares will vest
in December 2004, in both cases assuming Mr. Playford is still employed by us.
The grant was effective on January 1, 2000.
The agreement provides for termination (subject to certain notice and other
procedural provisions) by us for cause or without cause or by Mr. Playford for
good reason and contains a noncompetition covenant which continues for a period
of two years beyond the expiration of the then current term. If we terminate
Mr. Playford's employment without cause or Mr. Playford resigns for good reason,
then Mr. Playford will be entitled to severance payments and enhanced pension
benefits and all of his years
20
of prior service, substantially all of which was with Union Carbide, will be
immediately recognized. Those severance payments will equal 2.99 times the sum
of Mr. Playford's base salary and the cash bonus paid or payable for the
calendar year ending on or immediately before termination. Mr. Playford's
pension benefits will be enhanced by assuming that he had an additional three
years of age and three years of service. These benefits are payable commencing
immediately following termination of employment and are not reduced for early
commencement of benefits.
We have agreed that, for the purpose of calculating Mr. Mason's and
Mr. Shular's benefits under the UCAR Carbon Retirement Program, Mr. Mason and
Mr. Shular earn, ratably over five years, credit for 18.5 years and 22.5 years,
respectively, of prior service, all of which was with Union Carbide, with the
same offset arrangement as Mr. Playford.
UCAR's Board of Directors has approved severance compensation agreements for the
named executive officers and other members of senior management. In the case of
the named executive officers, the agreements provide for severance compensation
equal to 2.99 times the officer's base salary and, with respect to U.S.
employees, extended insurance coverage and reimbursement for certain excise tax
liabilities (and income tax liabilities on this reimbursement). The officers are
entitled to the compensation if they are terminated (other than for cause) or
resign for good reason within three years after a change of control. A change of
control has the same meaning under the agreements as it has under the stock
option plans described below.
STOCK OPTION PLANS
We maintain several plans which provide for the grant of options to purchase
shares of common stock to management employees and which are amended from time
to time. Non-employee directors are eligible to receive options under one of the
plans and the number of shares of common stock subject to plans in which named
executive officers and non-employee directors are eligible to participate is
about 5,400,000 including shares subject to options that are currently
outstanding. Management employees have been and may be granted vested or
unvested options at the discretion of UCAR's Board of Directors or the
Organization, Compensation and Pension Committee. Unvested options granted to
management employees have vested or may vest on satisfaction of such employment
or performance conditions as may be provided in the plan or as may be imposed by
UCAR's Board of Directors or the Organization, Compensation and Pension
Committee at the time of grant. Currently, the definition of fair market value
under those plans means the closing sale price of a share of common stock on the
last trading day preceding the relevant date. The exercise price of options may,
under certain circumstances, be paid with the proceeds from the sale of shares
to be issued upon exercise of such options. Our option plans are administered
through a third party broker. Any shares subject to, and the exercise prices of,
options are subject to adjustment for stock dividends, stock splits, share
combinations and certain other events. All options which have been granted, and
substantially all options which may be granted, under the plans are nonqualified
stock options. Options awarded to employees expire on, among other dates, the
date fixed by UCAR's Board of Directors or the Organization, Compensation and
Pension Committee at the time the options are granted, but must expire within no
more than 12 years under one plan, or 10 years under other plans, after the date
of grant.
We have the right to cancel substantially all outstanding options in the event
of a change of control, in which event we are required to pay optionees an
amount equal to the difference between the exercise price of the canceled
options and the fair market value of the underlying shares. For this purpose, a
change of control occurs on:
- the date on which any person or group becomes the beneficial owner of 15%
or more of the then outstanding common stock or voting securities of UCAR,
except that with respect to pre-existing stockholders who beneficially
owned 15% or more of the common stock or voting securities of UCAR as of a
specified date, a change of control occurs on the date such
21
pre-existing stockholders beneficially own 22.5% or more of the common
stock or voting securities of UCAR;
- the date on which any person or group acquires the right to vote on any
matter, by proxy or otherwise, with respect to 15% (or 22.5%, in the case
of such pre-existing stockholders) or more of the then outstanding common
stock or voting securities of UCAR;
- the date, at the end of any two-year period, on which individuals, who at
the beginning of such period were directors of UCAR, or individuals
nominated or elected by a vote of two-thirds of such directors or
directors previously so elected or nominated, cease to constitute a
majority of UCAR's Board of Directors;
- the date on which stockholders of UCAR approve a complete liquidation or
dissolution of UCAR; or
- the date on which UCAR consummates certain reorganizations, mergers, asset
sales or similar transactions.
COMPENSATION DEFERRAL PLAN
We maintain a compensation deferral plan for the benefit of United States-paid
management employees who participate in a cash bonus or other variable
compensation program. The plan is effective for compensation that would
otherwise be payable on or after January 1, 2000. Under the plan, participants
are able to defer up to 85% of their variable compensation, up to 50% of their
base salary and up to 100% of their lump sum payments from our nonqualified
retirement plans. Distributions from the plan generally will be made upon
retirement or other termination of employment, unless further deferred by the
participant. In addition, a participant may irrevocably elect to receive interim
distributions prior to retirement or other termination of employment.
SAVINGS PLAN
We maintain the UCAR Carbon Savings Plan, which is qualified under Sections
401(a) and 401(k) of the Code. All of our regular, full-time employees in the
U.S. are eligible to participate in the Savings Plan. The Savings Plan consists
of two types of accounts, a personal investment account to which participants
may make contributions on an after-tax basis and a tax deferred account to which
participants may make contributions on a pre-tax basis. For each eligible
employee who elects to participate in the Savings Plan and makes a contribution,
we make a matching contribution. As of December 31, 2001, the matching
contribution is 50% of the amount contributed by the employee to the extent that
the employee contributes between 1% and 7 1/2% of the employee's compensation.
The maximum contribution for any participant for any year is 17 1/2% of such
participant's compensation. Contributions to the Savings Plan are invested, as
the employee directs, in various funds offered under the Savings Plan from time
to time, including funds that invest entirely in our common stock (either at
fair market value or, subject to restrictions on resale and reinvestment, at a
discount of 10% from fair market value). Distributions from the Savings Plan
generally will be made only upon retirement or other termination of employment,
unless deferred by the participant.
Effective January 1, 2002, we implemented a number of changes to the Savings
Plan. Participants, other than union employees, may, subject to statutory
limits, contribute as much as 50% of compensation and matching contribution will
be 100% of the first 3% of compensation and 50% of the next 2% of compensation
that a participant contributes. In addition, for participants, other than union
employees and eligible employees who have elected to remain in the qualified
retirement plan described below, we will also contribute each year an amount
equal to 2.5% of the participant's compensation up to the social security
taxable wage base for the year, plus 5% of compensation above the social
security wage
22
base. A participant becomes fully vested in these additional contributions once
he or she has completed five years of service. These additional contributions
are called "Defined Contributions."
RETIREMENT PROGRAM
Prior to February 25, 1991, substantially all of our domestic employees
participated in the Union Carbide Retirement Program. Effective February 25,
1991, we adopted the UCAR Carbon Retirement Program, which was similar to the
Union Carbide Retirement Program at that time. The cost of the UCAR Carbon
Retirement Program is borne entirely by us. The UCAR Carbon Retirement Program
covers substantially all of our employees in the U.S. and certain U.S. nationals
employed by our foreign subsidiaries. Retirement and death benefits related to
employee service through February 25, 1991 are covered by the Union Carbide
Retirement Program. Benefits paid by the Union Carbide Retirement Program are
based on final average pay through February 25, 1991 plus salary increases (not
to exceed 6% per year) through January 26, 1995. All of our employees who
retired prior to February 25, 1991 are covered under the Union Carbide
Retirement Program. Subject to certain limitations, all service and earnings
recognized under the Union Carbide Retirement Program prior to February 25, 1991
are recognized under the UCAR Carbon Retirement Program.
RETIREMENT PLAN TABLE
The following table sets forth the estimated annual benefits payable, based on
the indicated credited years of service and the indicated average annual
compensation used in calculating benefits, assuming a normal retirement at age
65 in 2001, under the Union Carbide Retirement Program and the UCAR Carbon
Retirement Program on a combined basis.
AVERAGE ANNUAL YEARS OF SERVICE
COMPENSATION 15 20 25 30 35 40
---------------------------------------------------------------------------------------
$ 100,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500 $ 60,000
150,000 33,570 45,000 56,520 67,500 78,750 90,000
250,000 56,520 75,000 93,750 112,500 131,250 150,000
500,000 112,500 150,000 187,500 225,000 262,500 300,000
1,000,000 225,000 300,000 375,000 450,000 525,000 600,000
---------------------------------------------------------------------------------------
Under the UCAR Carbon Retirement Program, the monthly amount of an employee's
retirement benefit upon retirement at age 65 is a percentage of average monthly
compensation received during the thirty-six month period preceding retirement,
or the highest average monthly compensation received during any three calendar
years in the ten calendar years preceding retirement if it would result in a
higher pension benefit, multiplied by the number of years of service credit,
less up to 50% of projected primary Social Security benefits and less any public
pension (except any military pension or any benefit under the Social Security
Act). An employee who is (1) age 62 or over with ten or more years of service
credit or (2) whose age and service credit add up to 85 may voluntarily retire
earlier than age 65 with a retirement benefit unreduced because of early
retirement, based on years of service credit at the date of retirement. The
compensation covered by the UCAR Carbon Retirement Program includes salary and
certain variable compensation, including group profit sharing in an amount up to
8% through 1999, and 12% thereafter, of the employee's base salary. The benefits
payable reflected in the preceding table are calculated on a straight life
annuity basis and are subject to an offset for such Social Security benefits.
For federal income tax purposes, the amount of benefits that can be paid from a
qualified retirement plan is restricted. We have adopted nonqualified unfunded
plans for payment of those benefits at retirement that cannot be paid from our
qualified retirement plan. These nonqualified plans together with our qualified
retirement plan constitute the UCAR Carbon Retirement Program. Employees who
23
retire after January 1, 1994 may elect to receive the payment of benefits from
these nonqualified unfunded plans monthly or in a lump sum. Benefits under
certain of these plans, under certain circumstances, may be terminated if UCAR's
Board of Directors determines that an employee has engaged in activities which
are detrimental to the interests of, or are in competition with, us. Except with
respect to years of service as described above for Messrs. Playford, Mason and
Shular, the practical effect of these nonqualified plans, together with the
qualified plans, is to calculate benefits to all employees, including those who
are officers and directors, on a uniform basis.
Benefits under these nonqualified plans are generally paid out of our general
assets, although they may also be paid through grantor trusts adopted by us or
by purchase of annuities. When we purchase annuities, this does not increase the
after-tax amount of benefits to which employees are entitled, but does relieve
us of liability for the benefits under the nonqualified plans covered by such
annuities.
Effective January 1, 2002, we implemented a number of changes to the qualified
retirement plan. Except for union employees and employees who make the election
described below, all accrued benefits under the qualified plan have been frozen
as of December 31, 2001, and eligible employees will in the future receive
benefits under the new provisions of the Savings Plan. Employees who were
participants in the qualified plan and who had attained age 40 and completed
5 years of service as of December 31, 2001 have been given a one-time
opportunity to elect to remain in the qualified plan and continue accruing
benefits under that plan until December 31, 2006 (or such earlier date as we may
later determine). With respect to the named executive officers, only
Ms. Narwold was eligible to elect, and did so elect, to remain in the qualified
retirement plan.
In connection with the changes to the qualified retirement plan, we are also
considering changes to the nonqualified unfunded retirement plans.
As of February 28, 2002, the named executive officers were credited with the
number of years of service under the UCAR Carbon Retirement Program (unless
noted otherwise) as follows: Mr. Playford, age 54, is credited with 30 years of
service, 26.5 of which were with Union Carbide and which vest under the UCAR
Carbon Retirement Program ratably over five years ending in 2003; Mr. De
Gasperis, age 36, is credited with three years of service; Mr. Mason, age 43, is
credited with 20 years of service, 18.5 of which were with Union Carbide and
which vest under the UCAR Carbon Retirement Program ratably over five years
ending in 2005; Ms. Narwold, age 42, is credited with 11 years of service; and
Mr. Shular, age 49, is credited with 25 years of service, 22.5 of which were
with Union Carbide and which vest under the UCAR Carbon Retirement Program
ratably over five years ending in 2003.
BENEFIT SECURITY
We have adopted grantor trusts to assist us in providing for payment of certain
benefit plan obligations to management as well as certain compensation deferred
by management and earnings thereon under our compensation deferral plan, all of
which are otherwise payable out of our general assets. These obligations include
accrued benefits under nonqualified retirement plans and severance obligations
under employment and other agreements.
The trusts contain a benefits protection account which makes funds available to
the Administrative Committee to assist participants and their beneficiaries in
enforcing their claims with respect to those obligations, compensation and
earnings upon a change of control. We may from time to time contribute assets to
or, with the approval of a majority of UCAR's Board of Directors, withdraw
assets from the trusts (other than from the benefits protection account, to
which $250,000 has been contributed), except that no withdrawal can be made
after a change of control until all such obligations, compensation and earnings
are paid or discharged. UCAR has contributed 450,000 shares of unregistered
common stock, which are revocable by us, to the trusts. UCAR may at any time
register such shares for resale by the trusts. UCAR's Board of Directors may
amend or terminate the trusts at
24
any time prior to a change of control. Upon a change of control, the trusts
become irrevocable, UCAR is required to make contributions to the trusts
sufficient to discharge and pay such obligations, compensation and earnings and
the Administrative Committee is required to use the amounts held in the trusts
for such purposes. Upon a change of control, no amendment of the trusts may be
adopted without the written consent of a majority of the participants and the
beneficiaries who are receiving benefits thereunder. Consistent with the
requirements of applicable law, the assets of the trusts are subject to the
claims of creditors of UCAR in the event of UCAR's insolvency or bankruptcy. For
purposes of the grantor trusts, a change of control has the same definition as
described in the stock option plans.
STOCK PERFORMANCE GRAPH
The graph set forth below shows cumulative total return to stockholders on an
initial investment of $100 in the common stock as compared to an initial
investment of $100 in the Standard & Poor's 400 Midcap Index and the NYSE
Industrials Index over the period from December 31, 1996 through December 31,
2001. Total return assumes dividend reinvestment. The performance shown on the
graph is not necessarily indicative of future performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
UCAR International Inc. $118.33 $52.78 $52.78 $28.89 $28.43
S&P Midcap 400 Index $153.03 $180.09 $200.41 $237.21 $198.89
NYSE Industrials $152.52 $179.93 $200.30 $194.30 $148.81
31 DEC 31 DEC 31 DEC 31 DEC 31 DEC
97 98 99 00 01
---------------------------------------------------------------------------------------------------
UCAR INTERNATIONAL INC. $118.33 $52.78 $52.78 $28.89 $28.43
---------------------------------------------------------------------------------------------------
S&P MIDCAP 400 INDEX 153.03 180.09 200.41 237.21 198.89
---------------------------------------------------------------------------------------------------
NYSE INDUSTRIALS 152.52 179.93 200.30 194.30 148.81
---------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
25
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
--------------------------------------------------------------------------------
The following table sets forth, as of March 15, 2002, the number and percentage
of outstanding shares of common stock owned, both actually and beneficially as
determined pursuant to the rules promulgated by the SEC, by:
- each stockholder known by UCAR to own more than 5% of the outstanding
shares of common stock;
- each director of UCAR;
- each of the named executive officers; and
- all directors and executive officers as a group.
Actual ownership is the same as beneficial ownership, except that it does not
include options, some of which may be out-of-the-money as described in the
footnotes to the following table.
The number of shares of common stock outstanding as of March 15, 2002 was
56,795,279.
PERCENTAGE OF TOTAL NUMBER
NUMBER OF OUTSTANDING OF PERCENTAGE OF
SHARES SHARES SHARES OUTSTANDING SHARES
ACTUALLY (ACTUAL BENEFICIALLY (BENEFICIAL
BENEFICIAL OWNER OWNED OWNERSHIP) OWNED(A) OWNERSHIP)
-----------------------------------------------------------------------------------------------
Southeastern Asset 8,013,082 14.1% 8,013,082 14.1%
Management, Inc.(b)
6075 Poplar Avenue,
Suite 900
Memphis, TN 38119
-----------------------------------------------------------------------------------------------
Gabelli Fund, LLC(b) 4,182,755 7.4% 4,182,755 7.4%
One Corporate Center
Rye, NY 10580
-----------------------------------------------------------------------------------------------
Frontier Capital 3,567,170 6.3% 3,567,170 6.3%
Management Co. LLC(b)
99 Summer Street
Boston, MA 02110
-----------------------------------------------------------------------------------------------
Gilbert E. Playford 343,156 * 984,156 1.7%
-----------------------------------------------------------------------------------------------
Corrado F. De Gasperis(c) 59,104 * 167,604 *
-----------------------------------------------------------------------------------------------
Scott C. Mason 39,556 * 104,556 *
-----------------------------------------------------------------------------------------------
Karen G. Narwold 25,748 * 103,327 *
-----------------------------------------------------------------------------------------------
Craig S. Shular 55,918 * 220,918 *
-----------------------------------------------------------------------------------------------
R. Eugene Cartledge 14,600 * 40,250 *
-----------------------------------------------------------------------------------------------
Mary B. Cranston(d) 2,000 * 27,731 *
-----------------------------------------------------------------------------------------------
John R. Hall 12,000 * 36,030 *
-----------------------------------------------------------------------------------------------
Thomas Marshall 10,400 * 36,270 *
-----------------------------------------------------------------------------------------------
Ferrell P. McClean(e) 1,500 * 1,500 *
-----------------------------------------------------------------------------------------------
Michael C. Nahl 1,200 * 28,680 *
-----------------------------------------------------------------------------------------------
Directors and executive 565,182 * 1,751,022 3.0%
officers as a group
(11 persons)
-----------------------------------------------------------------------------------------------
26
* Represents holdings of less than one percent.
(a) Includes shares subject to vested options as follows: Mr. Playford, 641,000
shares, of which 600,000 are out-of-the-money; Mr. De Gasperis, 108,500
shares, of which 96,000 are out-of-the-money; Mr. Mason, 65,000 shares, none
of which are out-of-the-money; Ms. Narwold, 77,579 shares, of which 63,333
are out-of-the-money; Mr. Shular, 165,000 shares, of which 150,000 are
out-of-the-money; Mr. Cartledge, 25,650 shares, of which 8,200 are
out-of-the-money; Ms. Cranston, 25,731 shares, of which 8,051 are
out-of-the-money; Mr. Hall, 24,030 shares, of which 8,200 are
out-of-the-money; Mr. Marshall, 25,870 shares, of which 8,200 are
out-of-the-money; and Mr. Nahl, 27,480 shares, of which 8,200 are
out-of-the-money; and directors and executive officers as a group, 1,185,840
shares, of which 950,184 are out-of-the-money.
(b) Based solely upon the most recent amended Schedule 13G or Schedule 13D filed
through March 15, 2002 by such stockholder with the SEC. Such stockholder
may be part of a group which filed the amended Schedule 13G or Schedule 13D
jointly.
(c) Includes 4,500 shares owned by Mr. De Gasperis' spouse.
(d) Includes 2,000 shares owned by the Mary & Harold Cranston Family Trust, of
which Ms. Cranston is Trustee.
(e) Includes 1,500 shares owned by Ms. McClean's spouse.
--------------------------------------------------------------------------------
27
OTHER INFORMATION
--------------------------------------------------------------------------------
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires UCAR's directors
and officers and holders of more than 10% of the outstanding shares of common
stock to file with the SEC initial reports of ownership, and reports of changes
in ownership, of common stock and other equity securities of UCAR. UCAR believes
that, during 2001, its directors and officers and holders of more than 10% of
the outstanding shares of common stock complied with all reporting requirements
under Section 16(a), except for Messrs. Playford, De Gasperis and Shular and
Ms. Narwold, each of whom made one late filing which reported one transaction.
In addition, Petrus J. Barnard and W. David Cate, who were subject to
Section 16(a) during part of 2001, each made one late filing which reported one
transaction.
CERTAIN TRANSACTIONS
UCAR's Board of Directors adopted an executive employee loan program in
September 1998. All members of senior management were eligible to participate in
the program. Under the program, participants were able to borrow, on a full
recourse basis, an amount equal to up to their annual base salary (or, in the
case of the chief executive officer, three times his annual base salary). The
loans are non-interest-bearing and become due upon the earlier to occur of
termination of employment or the expiration of five years from the date of
borrowing. We have agreed to reimburse the borrowers for the incremental income
tax liability (at such time as such liability is incurred) due on the interest
income imputed because of the interest-free nature of the loans. The outstanding
amount of each such loan to a named executive officer at December 31, 2001,
which is also the largest aggregate amount of each such loan outstanding during
2001, was: $1,620,000 for Mr. Playford; $175,000 for Mr. De Gasperis; $225,000
for Mr. Mason; $150,000 for Ms. Narwold; $225,000 for Mr. Shular; and an
aggregate of $2,395,000 for all executive officers as a group. No loans have
been made since 2000 and the program was closed with respect to new loans in
March 2002.
UCAR's Board of Directors has adopted an executive employee stock purchase
program. All members of senior management are eligible to participate in the
program. Under the program, participants are able to purchase shares of common
stock from UCAR in an amount equal to up to their annual base salary (or, in the
case of the chief executive officer, three times his annual base salary). The
purchase price per share under the program equals the closing price of a share
of common stock on the last trading day prior to the date of purchase. Since all
eligible participants had already purchased prior to 2001 virtually all shares
which they could have purchased under the program, no member of senior
management purchased shares of common stock under the program during 2001.
--------------------------------------------------------------------------------
28
PROPOSAL TWO: CHANGE THE NAME OF THE CORPORATION
--------------------------------------------------------------------------------
The Board of Directors adopted, subject to approval by the stockholders, and is
proposing for such approval the following amendment to the Amended and Restated
Certificate of Incorporation of the Corporation:
"Article "FIRST" of the Amended and Restated Certificate of
Incorporation of UCAR International Inc. be, and hereby is, amended in
its entirety to read as follows:
FIRST: NAME
The name of this corporation is GrafTech International Ltd. (the
"Corporation")."
In June 1998, we began to implement management changes which have resulted in a
new senior management team. This team has actively lowered costs, reduced debt
and developed growth initiatives. In early 2001, this team launched a strategic
initiative to strengthen our competitive position and to change our vision from
an industrial products company to a graphite and carbon technology-based energy
solutions company. In connection with this initiative, we have realigned our
company around two new operating divisions.
Our Graphite Power Systems Division manufactures and sells high quality graphite
and carbon electrodes and cathodes and related services that are key components
of the conductive power systems used to produce steel, aluminum and other
non-ferrous metals. We are the leading producer of graphite and carbon
electrodes and cathodes in the world. The strategic drivers of this division
include strengthening its position as the leading major low cost supplier and
consistently delivering high quality products and technical services from our
global network of facilities to industry leading customers around the world.
Our Advanced Energy Technology Division manufactures and sells high quality,
highly engineered natural and synthetic graphite- and carbon-based energy
technologies, products and services for the transportation, semiconductor,
aerospace, fuel cell power generation, electronics, thermal management and other
markets. In addition, this division provides cost-effective technical services
for a broad range of markets and licenses our proprietary technology in markets
where we do not anticipate engaging in manufacturing ourselves. The strategic
drivers of this division include product and service development and
commercialization.
Both of our divisions are founded upon graphite and carbon science and process
and manufacturing technology. Both of our divisions are focused on using that
science and technology to improve and expand the range of their products and
services. Both of our divisions seek to use that science and technology to
enhance their competitive advantage and generate revenue, earnings and cash flow
growth.
The name "UCAR" is derived from the name "Union Carbide," an industrial chemical
company and our former parent. We believe that it is important to change the
name of the Corporation to reflect our new emphasis on graphite and carbon
technology, our new competitive strategy and our new corporate vision. The name
"GrafTech" captures this change.
Adoption of the proposed amendment will not affect our business or operations
and will be accomplished at nominal cost to the Corporation. Our subsidiary
Graftech Inc. will retain is current name and our businesses will continue to
use the trade names and trademarks based on the names "UCAR" and "Graftech" as
they have in the past.
Adoption of the proposed amendment will not affect the capitalization or capital
structure of the Corporation, the rights of stockholders, the validity or
transferability of stock certificates or listing of the common stock on the
NYSE. The ticker symbol for the common stock on the NYSE will, however, change
to "GTI" to more closely represent the new name of the Corporation.
To become effective, the proposed amendment must be approved by the affirmative
vote of the holders of a majority of the outstanding shares of common stock.
UCAR's Board of Directors recommends that stockholders vote FOR the proposed
amendment.
--------------------------------------------------------------------------------
29
--------------------------------------------------------------------------------
ADMISSION TICKET
UCAR INTERNATIONAL INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 7, 2002 AT 10:00 A.M.
THE HOTEL DU PONT
WILMINGTON, DELAWARE
PRESENT THIS TICKET TO ADMIT ONE STOCKHOLDER AND ONE GUEST
Name of Stockholder: ___________________________________________________________
Address: _______________________________________________________________________
(See reverse side for directions)
--------------------------------------------------------------------------------
FROM THE NORTH ON I-95 SOUTH (including Philadelphia International Airport)
1. Take I-95 South through Chester to Wilmington.
2. Follow I-95 South to Exit 7A marked "52 South, Delaware Avenue."
3. Follow 11th Street in the middle lane through six traffic lights. Hotel du
Pont is on the right. Valet parking is available at Hotel entrance. For
self-parking, turn left on Orange Street; Car Park is on left.
FROM ROUTE 202
1. Follow Route 202 to I-95 intersection. Take I-95 South.
2. From I-95 South, follow steps 2 and 3 above.
FROM THE SOUTH ON I-95 NORTH
1. Follow I-95 North to Wilmington, take Exit 7 marked "Route 52, Delaware
Avenue."
2. From right lane, take Exit 7 onto Adams Street.
3. At the third traffic light, turn right onto 11th Street.
4. Follow 11th Street in the middle lane through six traffic lights. Hotel du
Pont is on the right. Valet parking is available at Hotel entrance. For
self-parking, turn left on Orange Street; Car Park is on left.
FROM THE NORTH ON THE NEW JERSEY TURNPIKE
1. Take the New Jersey Turnpike South to Delaware Memorial Bridge.
2. After crossing the Delaware Memorial Bridge, follow signs to I-95 North.
3. From I-95 North, follow steps 1-4 above.
FROM DOWNSTATE DELAWARE
1. Take Route 13 North, into Wilmington.
2. Follow signs marked "North Business, Route 13" to the eighth traffic light.
3. At the eighth light, make a left onto 10th Street.
4. Follow 10th Street three blocks to Orange Street, and make a right onto
Orange Street.
5. Next block is 11th Street. Turn right; Hotel du Pont is on the right. Valet
parking is available at Hotel entrance. For self-parking, continue on Orange
Street; Car Park is on left.
--------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
--------------------------------------------------------------------------------
A. ELECTION OF DIRECTORS
The Board of Directors recommends a vote FOR the listed nominees.
FOR WITHHOLD FOR WITHHOLD
01 - Gilbert E. Playford |_| |_| 05 - Thomas Marshall |_| |_|
02 - R. Eugene Cartledge |_| |_| 06 - Ferrell P. McClean |_| |_|
03 - Mary B. Cranston |_| |_| 07 - Michael C. Nahl |_| |_|
04 - John R. Hall |_| |_|
B. ISSUES
The Board of Directors recommends a vote FOR the following resolution.
FOR AGAINST ABSTAIN
Amend the Amended and Restated Certificate of Incorporation to change the name
of the Corporation to GrafTech International Ltd. |_| |_| |_|
Mark this box with an X if you plan to attend the meeting. |_|
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the meeting or any adjournment or postponement
thereof. Receipt of notice of the meeting and the related proxy statement is
acknowledged.
C. AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR
YOUR INSTRUCTIONS TO BE EXECUTED.
The signature on this proxy should correspond exactly with the names printed
above. In the case of joint tenancies, both stockholders should sign. Persons
signing as Attorney, Executor, Administrator, Trustee or Guardian should give
their full title.
Signature 1 Signature 2 Date (dd/mm/yyy)
---------------------------- ---------------------------- ----------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROXY - UCAR INTERNATIONAL INC.
--------------------------------------------------------------------------------
P.O. BOX 11202, NEW YORK, NY 10103-0202
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF UCAR
INTERNATIONAL INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 7, 2002
The undersigned appoints Gilbert E. Playford, Corrado F. De Gasperis and Karen
G. Narwold, and each of them individually, with full power of substitution in
each, as proxies of the undersigned to represent the undersigned and vote all
shares of common stock of UCAR International Inc. which the undersigned may be
entitled to vote at the meeting and at any adjournment or postponement thereof,
as indicated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE AND FOR THE AMENDMENT TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE
CORPORATION TO GRAFTECH INTERNATIONAL LTD. IF THE UNDERSIGNED IS A PARTICIPANT
IN THE UCAR CARBON SAVINGS PLAN (THE "SAVINGS PLAN"), THE FRONT OF THIS PROXY
SHOWS UNITS ALLOCATED TO THE UNDERSIGNED UNDER THE SAVINGS PLAN AND THIS PROXY
CONSTITUTES VOTING INSTRUCTIONS TO THE TRUSTEE UNDER THE SAVINGS PLAN. THE
ACTUAL NUMBER OF SHARES ALLOCATED TO THE UNDERSIGNED AND WHICH WILL BE VOTED ON
BEHALF OF THE UNDERSIGNED IN RESPECT OF SUCH UNITS MAY VARY SLIGHTLY IN
ACCORDANCE WITH THE PROVISIONS OF THE SAVINGS PLAN.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)