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Steelworkers' Union Calls for SEC Investigation of RTI
PITTSBURGH -- The United Steelworkers of America have asked the Securities and Exchange Commission to investigate whether titanium producer RTI International Metals, Niles, Ohio, violated federal securities law by failing to notify shareholders how much RTI's recent modification of its supplemental executive retirement plan will cost the company, union officials announced yesterday. The apparent effect of the modification is to substantially increase the retirement benefits of Timothy Rupert, RTI chief executive officer. RTI's change to the retirement plan, which involves granting Rupert credit under the plan for time spent with his previous employer, is briefly mentioned in RTI's most recent annual report and proxy statement filed with the SEC. However, the company fails to disclose exactly how many additional years and how much additional compensation Rupert will receive as a result of this change, union officials said. "This minimal level of disclosure is insufficient to advise RTI shareholders of the true nature of executive compensation being paid to Mr. Rupert," stated a letter from USWA Secretary-Treasurer Jim English to SEC Director of the Division of Corporation Finance Alan Beller. "Indeed, the company's treatment of Mr. Rupert's compensation through its filings suggests an effort to obscure, rather than illuminate the company's practices." The letter notes the similarity between RTI's treatment of Rupert's compensation with GE's failure to adequately disclose the value of retirement benefits paid to its former CEO Jack Welch. In September, the SEC punished GE for this failure with a cease and desist order. While discussing how RTI has failed to disclose the cost of the recent change to its supplemental executive retirement plan, USWA uses a number of sources -- including a pension plan for the company's salaried staff, copies of which are not routinely made available to the investment community -- to estimate the current annual cost of this change. According to this estimate, it appears that Rupert would receive annually an additional $96,255 in pension benefits if he were to retire today as a result of the change. RTI first discloses the recent change to its supplemental executive retirement plan, known as the RTI Supplemental Pension Program, in an exhibit to its 2003 annual report. This exhibit, a letter from RTI Chairman Robert Hernandez to Rupert, states that the "RTI Supplemental Pension Program shall be amended to provide that the benefits payable to you under the RTI Supplemental Pension Program will be calculated in a manner that includes your service with..." RTI and with USX Corp. Rupert was employed by USX prior to being employed by RTI, union officials noted. According to the USWA, RTI's 2004 proxy statement includes only one sentence concerning the plan amendment: "RTI has agreed with Mr. Rupert that his continuous service for purposes of the Program shall include his service with USX Corporation." The Steelworkers' letter to the SEC also notes that RTI's plan amendment seems to overstep what is authorized by the plan. The letter states that the plan only expressly authorizes the company to modify the list of eligible program participants or to "'terminate any or all of the provisions of this Program.' The change at issue here goes beyond simply adding or removing names from a list or deciding to end the Program." "Without seeking shareholder approval, RTI apparently took liberties with a retirement plan to further enrich its CEO during his golden years -- and it did so shortly after reporting a quarterly operating loss of $4.2 million," said USWA President Leo Gerard. "RTI camouflaged this change and failed to attach a dollar figure to it, and the SEC should investigate whether it broke the law by doing so." The United Steelworkers of America represents over 350 RTI employees in Niles, who have been locked out since October 2003. USWA members employed by RTI are RTI stockholders. They were awarded RTI stock as part of a 1995 collective bargaining agreement with the company, and many of them hold RTI stock in their 401(k) plans, USWA officials said. Visit United Steelworkers of America: www.uswa.org"