DEF 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant þ
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Check the appropriate box:
o Preliminary Proxy Statement
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þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12
Century Aluminum Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
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TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 9, 2006
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Century Aluminum Company will be held at 9:00 a.m.,
local time, on Friday, June 9, 2006, at the Executive Offices of Century, 2511 Garden Road,
Building A, Suite 200, Monterey, California, for the following purposes:
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To elect three Class I Directors to Centurys board, each for a term of
three years; |
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2. |
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To ratify the appointment of Deloitte & Touche LLP as Centurys independent
auditors for the fiscal year ending December 31, 2006; and |
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3. |
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To transact such other business as may properly come before the Annual
Meeting or at any adjournments or postponements thereof. |
The board has fixed the close of business on May 10, 2006, as the record date to determine the
stockholders entitled to notice of and to vote at the Annual Meeting on June 9, 2006 and at any
adjournments or postponements thereof. Stockholders are reminded that shares cannot be voted
unless the signed proxy card is returned or other arrangements are made to have the shares
represented at the meeting.
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By order of the Board of Directors, |
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Robert R. Nielsen |
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Executive Vice President, |
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General Counsel, |
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and Secretary |
Monterey, California
May 16, 2006
YOUR VOTE IS IMPORTANT
If you do not expect to attend the Annual Meeting, or if you do plan to
attend but wish to vote by proxy, please complete, sign, date and return
promptly the enclosed proxy card in the enclosed postage-paid envelope.
CENTURY ALUMINUM COMPANY
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
June 9, 2006
General
This Proxy Statement is being furnished in connection with the solicitation by the board of
directors of Century Aluminum Company, a Delaware corporation, of proxies for use at the Annual
Meeting of Stockholders to be held on June 9, 2006, commencing at 9:00 a.m., local time, at the
Executive Offices of Century, 2511 Garden Road, Building A, Suite 200, Monterey, California, and at
any adjournments or postponements thereof. The matters for our stockholders to consider and act on
at the meeting are described below in this Proxy Statement. The approximate mailing date of this
Proxy Statement and the accompanying proxy card is May 16, 2006.
Voting Rights and Votes Required
You can vote at the Annual Meeting if you were a stockholder of record at the close of
business on May 10, 2006. On May 10, 2006, there were 32,424,969 shares of Century common stock
outstanding. Each stockholder is entitled to one vote for each share of common stock held. The
holders of a majority of the outstanding shares will constitute a quorum for the transaction of
business at the meeting. Only shares of common stock that are present, either in person or
represented by proxy (including shares that the holder abstains from voting or does not vote with
respect to one or more of the matters presented for stockholder approval), will be counted for
purposes of determining whether a quorum exists at the meeting.
Directors are elected by a plurality of votes, which means that the three nominees that
receive the highest number of votes will be elected as directors, even if a nominee does not
receive a majority of the votes cast. The other items submitted to stockholders for a vote at the
meeting require the affirmative vote of a majority of the votes cast. Shares represented by a
properly signed proxy card received pursuant to this solicitation will be voted in accordance with
the instructions indicated by those proxy cards. Abstentions will be treated as shares that are
present and entitled to vote for purposes of determining a quorum for a matter, but will not be
counted as a vote in favor of such matter. Accordingly, an abstention from voting on a matter will
have the same legal effect as a vote against the matter. If a broker or nominee holding stock in
street name indicates on the proxy that it does not have discretionary authority to vote as to a
particular matter, those shares will have no impact on the vote for that matter.
A stockholder may revoke a proxy at any time before it is exercised by submitting a
later-dated proxy, notifying our Corporate Secretary in writing, or by voting in person at the
meeting.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Our board of directors is divided into three classes: Class I, Class II and Class III.
Directors in each such class are elected to serve for three-year terms, with each class standing
for election in successive years. Three Class I Directors will be elected at the 2006 Annual
Meeting to serve a three-year term that will expire at the 2009 Annual Meeting. The persons named
as proxies in the enclosed proxy card intend to vote for the election of each of the nominees
listed below unless you indicate on the proxy card that your vote should be withheld from any or
all of such nominees. If any nominee declines or is unable to serve, the persons named as proxies
will use their best judgment in voting for any available nominee. Each of the nominees hereinafter
named has indicated his willingness to serve if elected, and the board of directors has no reason
to believe that any of the nominees will not be available to serve. Set forth below is background
information for the three nominees for election as well as the other members of the board whose
terms expire in 2007 and 2008. Each nominee is currently a director of Century.
Class I Directors standing for election with Terms to Expire in 2009
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Business Experience and Principal Occupation or |
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Director |
Name and Age* |
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Employment During Past 5 Years; Other Directorships |
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Since |
Logan W. Kruger
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55 |
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President and Chief Executive Officer since
December 2005; President, Asia/Pacific for Inco
Limited, from September 2005 to November 2005;
Executive Vice-President, Technical Services for
Inco Limited from September 2003 to September
2005; Chief Executive Officer of Anglo American
Chile Ltd., from July 2002 to September 2003; and
President and Chief Executive Officer, Hudson Bay
Mining & Smelting Co., Limited, from September
1996 until June 2002.
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2005 |
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Willy R. Strothotte (1)
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62 |
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Chairman of the Board of Glencore International AG
since 1994 and Chief Executive Officer from 1993
to December 2001; Director of Minara Resources
Ltd. since 2000; Chairman of the Board of Xstrata
AG (formerly Südelektra Holding AG) since 1990.
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1996 |
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Jarl Berntzen
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39 |
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Managing Director Mergers and Acquisitions,
ThinkEquity Partners LLC since March 2006; Senior
Vice President, Barrington Associates, LLC from
April 2005 to February 2006; Founder, Berntzen
Capital Management, LLC from March 2003 to April
2005; Managing Director of Providence Capital,
Inc. from September 2002 to March 2003; Vice
President, Mergers and Acquisitions of Goldman,
Sachs & Co. from July 1998 to December 2001.
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2006 |
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Class II Directors with Terms to Expire in 2007
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Business Experience and Principal Occupation or |
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Director |
Name and Age* |
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Employment During Past 5 Years; Other Directorships |
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Since |
John C. Fontaine
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74 |
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Of Counsel, law firm of Hughes Hubbard & Reed LLP
since January 2000 and partner from July 1997 to
December 1999; President of Knight-Ridder, Inc.
from July 1995 to July 1997; Chairman of the
Samuel H. Kress Foundation; Trustee of the
National Gallery of Art.
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1996 |
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John P. OBrien
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64 |
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Managing Director of Inglewood Associates Inc.
since 1990; Chairman of Allied Construction
Products since March 1993; Director of Oglebay
Norton Company since April 2003; Director of
International Total Services, Inc. from August
1999 to January 2003; Director of American Italian
Pasta Company from March 1997 to November 2002;
Chairman and CEO of Jeffrey Mining Products L.P.
from October 1995 to June 1999.
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2000 |
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-2-
Class III Directors with Terms to Expire in 2008
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Business Experience and Principal Occupation or |
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Director |
Name and Age* |
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Employment During Past 5 Years; Other Directorships |
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Since |
Craig A. Davis
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65 |
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Chairman of the Board since August 1995; Chief
Executive Officer from August 1995 to December
2002 and from October 2003 to December 13, 2005;
Director of Glencore International AG since
December 1993 and Executive of Glencore from
September 1990 to June 1996.
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1995 |
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Robert E. Fishman, Ph.D
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54 |
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Executive Vice President of Calpine Corporation
since 2001; President of PB Power, Inc. from 1998
to 2001 and Senior Vice President from 1991 to
1998.
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2002 |
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Jack E. Thompson
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56 |
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Director of Stillwater Mining Co. since 2002;
Director of Phelps Dodge Corp. since 2003;
Director of Tidewater Inc. since 2005; Vice
Chairman of Barrick Gold Corporation from December
2001 to April 28, 2005; Chairman of the Board and
Chief Executive Officer of Homestake Mining
Company from 1998 to 2001, and Chairman, President
and Chief Executive Officer from 1998 to 1999;
member of the advisory board of Resource Capital
Funds III, LLP since 2002; member of the Industry
Advisory Counsel for the College of Engineering at
the University of Arizona since 2002.
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2005 |
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* |
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Ages as of June 9, 2006 |
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Mr. Strothotte was designated to serve as one of our directors by Glencore International. |
Board and Committee Meetings; Directors Compensation; Communication with Directors
Our board presently consists of 10 directors. Two of our directors, Mr. Roman A. Bninski and
Mr. Stuart M. Schreiber, notified the board that they would not stand for reelection when their
current terms expire on the date of our 2006 Annual Meeting. On March 8, 2006, the board elected
Jarl Berntzen to serve as a Class I director. Our board is responsible for supervision of the
overall affairs of Century. The board met 5 times during 2005. To assist it in carrying out its
duties, the board has delegated certain authority to several committees. During 2005, overall
attendance at board and committee meetings was 88%. Attendance was at least 75% for each director.
We encourage, but do not require, the attendance of board members at our Annual Meetings. Two
directors attended the 2005 Annual Meeting.
Independent Directors
The board has determined that each of Jarl Berntzen, Roman A. Bninski, Robert E. Fishman, John
C. Fontaine, John P. OBrien, and Jack E. Thompson is independent under the criteria established
by NASDAQ.
Board Committees and Meetings
The table below identifies the name and current members of each standing committee of our
board.
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Governance & |
Name |
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Audit |
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Compensation |
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Nominating |
Jarl Berntzen |
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X |
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Robert E. Fishman |
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X |
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X |
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John C. Fontaine |
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X |
* |
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X |
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John P. OBrien |
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X |
* |
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X |
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Jack E. Thompson |
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X |
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X |
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X |
* |
-3-
Audit Committee
The Audit Committee oversees the financial reporting process for which management is
responsible, approves the engagement of the independent auditors for audit and non-audit services,
monitors the independence of the independent auditors and reviews and approves all audit and
non-audit services and fees, reviews the scope and results of the audit with the independent
auditors, reviews the scope and results of internal audit procedures with our internal auditors,
evaluates and discusses with the independent auditors and management the effectiveness of our
system of internal accounting controls, and makes inquiries into other matters within the scope of
its duties.
During 2005, the members of the Audit Committee were Messrs. Fishman, Fontaine, OBrien and
Thompson. Effective March 8, 2006, Mr. Fontaine was succeeded on the Audit Committee by Jarl
Berntzen, who was elected to the board on March 8, 2006. In 2005, the Audit Committee held four
meetings.
Compensation Committee
The Compensation Committee reviews and establishes the compensation for our executive officers
and has oversight responsibility for administering and awarding grants under our 1996 Stock
Incentive Plan, as amended (the 1996 Plan). Each member of the Compensation Committee is
independent as required under applicable NASDAQ listing standards. During 2005, the members of
the Compensation Committee were Messrs. Fontaine, OBrien and Thompson. The Compensation Committee
held eight meeting in 2005.
Nominating/Governance and Nominating Committee
Effective December 9, 2005, the board redesignated its Nominating Committee as the Governance
and Nominating Committee. The Governance and Nominating Committee is responsible for (i)
evaluating the size and composition of the board, (ii) recruiting and recommending candidates for
election to the board, (iii) overseeing corporate governance matters, and (iv) reviewing and making
recommendations concerning our corporate governance policies and procedures.
The Governance and Nominating Committee solicits recommendations for potential board
candidates from a variety of sources, including directors, officers, other individuals with whom
the Governance and Nominating Committee members are familiar, through its own research, and
third-party research. The Governance and Nominating Committee will also consider nominees
recommended by stockholders who submit such recommendations in writing to our Corporate Secretary.
The qualifications and standards the Governance and Nominating Committee will apply in evaluating
any recommendations for nomination to the board include, but are not limited to: (i) significant
business or public experience; (ii) a willingness and ability to make a sufficient time commitment
to Centurys affairs in order to perform effectively the duties of a director, including regular
attendance at board and committee meetings; (iii) skills in finance, international business and
knowledge about Centurys business or industries; (iv) personal qualities of leadership, character,
judgment and integrity; and (v) requirements relating to composition of the board under applicable
law and listing standards.
During 2005, the members of the Nominating Committee were Messrs. Fontaine and OBrien.
Effective December 9, 2005, Mr. Fishman and Mr. Thompson were appointed to serve on the Governance
and Nominating Committee with Mr. Fontaine and Mr. OBrien resigned from that committee Each
member of the Governance and Nominating Committee is independent as required under applicable
NASDAQ listing standards.
In addition to recommending Messrs Kruger, Strothotte and Berntzen as nominees for election as
Class I Directors at the 2006 Annual Meeting, the Governance and Nominating Committee considered
and recommended the appointment of Mr. Fontaine as the lead director to preside at meetings of the
independent directors without management, and recommended assignments for the committees of the
board. During 2005, in addition to its other responsibilities, the Governance and Nominating
Committee had as a primary responsibility, identifying, interviewing and recommending to the board
the eventual successor to Mr. Davis, as our Chief Executive Officer. The full board approved the
recommendations of the Governance and Nominating Committee and adopted resolutions approving the
slate of director nominees to stand for election at the 2006 Annual Meeting, the appointment of a
lead director, assignments for the committees of the board, and the appointment of Logan W. Kruger,
as our President and Chief Executive Officer. In 2005, the Nominating Committee held 23 meetings.
Since the date of the 2005 Annual Meeting, on the recommendation of a search firm engaged by
the Governance and Nominating Committee, the committee interviewed Jarl Berntzen as a prospective
board member,
-4-
and recommended to the full board that he be elected as a director. Mr. Berntzen was
subsequently elected to the board effective March 8, 2006.
The board has adopted a Governance and Nominating Committee Charter which is available in the
Investors section of our website, located at www.centuryaluminum.com.
Lead Director/Meetings of Independent Directors
On the recommendation of the Governance and Nominating Committee, the board has designated
John C. Fontaine to serve as the Lead Director for meetings of the independent board members
outside the presence of management. The independent directors met three times during 2005. The
independent directors will meet in executive session without the presence of management no fewer
than two times each year.
Directors Compensation
Directors who are full-time salaried employees of Century are not compensated for their
service on the board or on any board committee. Non-employee directors (other than Mr. Davis)
receive an annual retainer of $25,000 for their services. In addition, each non-employee director
received a fee of $2,000 during 2005 for each board or board committee meeting attended. Mr.
OBrien, as Chairman of the Audit Committee, receives an additional $5,000 annual retainer and an
additional $1,000 per Audit Committee meeting attended. All directors are reimbursed for their
travel and other expenses incurred in attending board and board committee meetings. The following
chart indicates the amounts paid to each director in 2005 for retainers and meeting fees.
2005 Director Cash Compensation
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Annual |
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Board/Committee |
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Board Meeting |
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Committee |
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Director |
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Retainers |
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Fees |
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Fees |
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Total |
Roman A. Bninski |
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$ |
25,000 |
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$ |
10,000 |
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$ |
35,000 |
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Robert E. Fishman, Ph.D |
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$ |
25,000 |
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$ |
10,000 |
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$ |
18,000 |
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$ |
53,000 |
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John C. Fontaine |
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$ |
25,000 |
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$ |
10,000 |
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$ |
72,000 |
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$ |
107,000 |
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John P. OBrien |
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$ |
30,000 |
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$ |
10,000 |
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$ |
76,000 |
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$ |
116,000 |
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Stuart M. Schreiber |
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$ |
25,000 |
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$ |
10,000 |
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$ |
34,000 |
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$ |
69,000 |
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Jack E. Thompson |
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$ |
25,000 |
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$ |
8,000 |
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$ |
15,750 |
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$ |
48,750 |
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Note: |
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Neither Mr. Kruger nor Mr. Davis, who were employees of Century in 2005, received
compensation for serving as a member of the board. Mr. Strothotte waives his right to receive cash
compensation for serving as a member of the board. |
Mr. Davis retired as our employee on December 31, 2005. Mr. Davis continues to serve as
Chairman of the board at the request and at the discretion of the board. For the period from
January 1, 2006 to June 30, 2006, Mr. Davis will receive $250,000 for his services as Chairman.
Thereafter, he will receive an annual retainer of $100,000 for his services. In addition, beginning
July 1, 2006, as a non-employee director, Mr. Davis will receive the meeting fees, travel and other
expense reimbursement and other compensation generally paid to our non-employee directors.
Each non-employee director receives a one-time grant of options to purchase 10,000 shares of
Century common stock. Mr. Bninskis grant became effective upon the closing of Centurys initial
public offering at an exercise price equal to the initial public offering price. Grants to Messrs.
Berntzen, Fishman, Fontaine, OBrien, Schreiber, Strothotte and Thompson became effective upon
their election as directors at an exercise price equal to the market price of our common stock at
such times. The options vest one-third on the grant date, and an additional one-third vest on each
of the first and second anniversaries of the grant date. In addition, each non-employee director
continuing in office after the Annual Meeting of stockholders each year receives an annual grant of
options that vest one-fourth on each of the three, six, nine and 12 month anniversaries of the date
of grant. The annual option grants have an exercise price equal to the market price of such shares
on the date of the grant. During 2005, non-employee directors each received options to purchase
3,000 shares.
-5-
Stockholder Communications with the Board of Directors
Stockholders may communicate with the board or any individual director(s) by sending a written
communication in an envelope addressed to the board or the appropriate director(s) in care of our
Corporate Secretary at the address indicated on the cover page of this proxy statement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of May 10, 2006, we had 32,424,969 shares of common stock outstanding. The following table
sets forth certain information concerning the beneficial ownership of our common stock as of May
10, 2006 (except as otherwise noted) by: (i) each person known by us to be the beneficial owner of
five percent or more of the outstanding shares of common stock, (ii) each of our directors, (iii)
each of our executive officers named in the Summary Compensation Table under the heading Executive
Compensation below, and (iv) all of our directors and executive officers as a group.
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Amount and Nature of |
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Name of Beneficial Owner |
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Beneficial Ownership(1) |
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Percentage of Class |
Glencore International AG |
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9,320,089 |
(2) |
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28.7 |
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Wellington Management Company, LLP |
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2,936,240 |
(3) |
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9.1 |
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Credit Suisse |
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1,797,986 |
(4) |
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5.5 |
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David W. Beckley |
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9,086 |
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* |
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Jarl Berntzen |
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3,333 |
(5) |
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* |
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Michael A. Bless |
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10,000 |
(6) |
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* |
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Roman A. Bninski |
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18,750 |
(7) |
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* |
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Craig A. Davis |
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124,787 |
(8) |
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* |
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Robert E. Fishman |
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750 |
(9) |
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* |
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John C. Fontaine |
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12,500 |
(10) |
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* |
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E. Jack Gates |
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19,649 |
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* |
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Gerald J. Kitchen |
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12,788 |
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* |
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Daniel J. Krofcheck |
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* |
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Logan W. Kruger |
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* |
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Robert R. Nielsen |
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8,333 |
(11) |
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* |
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John P. OBrien |
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15,250 |
(12) |
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* |
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Stuart M. Schreiber |
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5,250 |
(13) |
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* |
|
Willy R. Strothotte |
|
|
18,750 |
(14) |
|
|
* |
|
Jack E. Thompson |
|
|
5,750 |
(15) |
|
|
* |
|
All directors and executive officers as a group (18 persons) |
|
|
286,873 |
(16) |
|
|
* |
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
Each individual or entity has sole voting and investment power, except as otherwise indicated. |
|
(2) |
|
Based on information set forth in a Schedule 13D filing dated May 25, 2004, Glencore
International AG beneficially owns such shares through its subsidiary, Glencore AG (together with
Glencore International AG, Glencore). The principal business address of each of Glencore
International AG and Glencore AG is Baarermattstrasse 3, P.O. Box 555, CH 6341, Baar,
Switzerland. |
|
(3) |
|
Based on information set forth in a Schedule 13G filing dated February 14, 2006, Wellington
Management Company, LLP beneficially owns such shares in its capacity as an investment advisor.
The business address of Wellington Management Company, LLP is 75 State Street, Boston,
Massachusetts 02109. |
|
(4) |
|
Based on information set forth in a Schedule 13G filed on February 14, 2006, by Credit Suisse
on behalf of its Investment Banking division, such shares are beneficially owned through Credit
Suisse subsidiaries to the extent they constitute the Investment Banking division. The principal
business address of Credit Suisse in the United States is Eleven Madison Avenue, New York, New
York 10010. |
|
(5) |
|
Includes 3,333 shares which are subject to options exercisable within 60 days of May 10, 2006. |
|
(6) |
|
Includes 10,000 shares which are subject to options exercisable within 60 days of May 10,
2006. |
|
(7) |
|
Includes 18,875 shares which are subject to options exercisable within 60 days of May 10,
2006. |
|
(8) |
|
Excludes 9,320,089 shares beneficially owned by Glencore, of which Mr. Davis is a director. |
(footnotes continued on following page)
-6-
(footnotes continued from previous page)
|
|
|
(9) |
|
Includes 750 shares which are subject to options exercisable within 60 days of May 10, 2006. |
|
(10) |
|
Includes 12,250 shares which are subject to options exercisable within 60 days of May 10,
2006. Also includes 250 shares that Mr. Fontaine owns jointly with his wife. |
|
(11) |
|
Includes 8,333 shares which are subject to options exercisable within 60 days of May 10, 2006.
(12) Includes 10,250 shares which are subject to options exercisable within 60 days of May 10,
2006. |
|
(13) |
|
Includes 5,250 shares which are subject to options exercisable within 60 days of May 10, 2006. |
|
(14) |
|
Includes 18,750 shares which are subject to options exercisable within 60 days of May 10,
2006. Excludes 9,320,089 shares beneficially owned by Glencore, of which Mr. Strothotte serves as
Chairman. |
|
(15) |
|
Includes 2,250 shares which are subject to options exercisable within 60 days of May 10, 2006. |
|
(16) |
|
Includes 94,249 shares which are subject to options exercisable within 60 days of May 10,
2006. Excludes 9,320,089 shares beneficially owned by Glencore. |
Executive Compensation
Summary Compensation Table
The following table sets forth the compensation earned by each person who served as chief
executive officer during 2005 and the four other most highly compensated executive officers
(referred to collectively as the Named Executive Officers) for services rendered to us in all
capacities for each of the last three fiscal years.
Summary Compensation Table
|
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|
Long-Term Compensation |
|
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|
|
|
|
|
|
Annual Compensation |
|
Awards |
|
Payouts |
|
|
|
|
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|
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Other |
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Annual |
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Restricted |
|
Securities |
|
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|
All Other |
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|
|
|
|
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|
Compen- |
|
Stock |
|
Underlying |
|
|
|
|
|
Compen- |
Name and Principal |
|
|
|
|
|
|
|
|
|
|
|
|
|
sation |
|
Awards |
|
Options |
|
LTIP Payouts |
|
sation |
Position |
|
Year |
|
Salary |
|
Bonus ($) |
|
($)(1) |
|
($)(2) |
|
(#) |
|
($)(3) |
|
($)(4) |
Logan W. Kruger(5) |
|
|
2005 |
|
|
$ |
62,500 |
|
|
$ |
475,000 |
|
|
|
|
|
|
$ |
1,183,500 |
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
President and |
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer |
|
|
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig A. Davis(5) |
|
|
2005 |
|
|
$ |
876,562 |
|
|
$ |
3,658,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,360,578 |
|
|
$ |
7,650 |
|
Chairman and |
|
|
2004 |
|
|
$ |
809,167 |
|
|
$ |
1,810,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,233,515 |
|
|
$ |
9,600 |
|
Chief Executive Officer |
|
|
2003 |
|
|
$ |
558,333 |
|
|
$ |
525,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,092,036 |
|
|
$ |
8,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerald J. Kitchen(6) |
|
|
2005 |
|
|
$ |
298,167 |
|
|
$ |
215,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
562,983 |
|
|
$ |
12,074 |
|
Executive Vice President, |
|
|
2004 |
|
|
$ |
281,292 |
|
|
$ |
497,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
339,591 |
|
|
$ |
24,848 |
|
General Counsel, Chief |
|
|
2003 |
|
|
$ |
269,333 |
|
|
$ |
130,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
292,917 |
|
|
$ |
27,179 |
|
Administrative Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David W. Beckley(7) |
|
|
2005 |
|
|
$ |
295,667 |
|
|
$ |
337,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
557,162 |
|
|
$ |
11,365 |
|
Executive Vice President |
|
|
2004 |
|
|
$ |
279,083 |
|
|
$ |
431,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
335,971 |
|
|
$ |
13,065 |
|
and Chief Financial
Officer |
|
|
2003 |
|
|
$ |
266,896 |
|
|
$ |
129,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
289,929 |
|
|
$ |
10,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E. Jack Gates(8) |
|
|
2005 |
|
|
$ |
332,292 |
|
|
$ |
225,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
476,207 |
|
|
$ |
11,681 |
|
Executive Vice President |
|
|
2004 |
|
|
$ |
310,417 |
|
|
$ |
511,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
207,019 |
|
|
$ |
14,249 |
|
and Chief Operating
Officer |
|
|
2003 |
|
|
$ |
235,842 |
|
|
$ |
125,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
165,539 |
|
|
$ |
13,114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel J. Krofcheck |
|
|
2005 |
|
|
$ |
206,375 |
|
|
$ |
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
302,655 |
|
|
$ |
10,845 |
|
Vice President and |
|
|
2004 |
|
|
$ |
195,292 |
|
|
$ |
341,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
173,164 |
|
|
$ |
13,202 |
|
Treasurer |
|
|
2003 |
|
|
$ |
187,135 |
|
|
$ |
86,000 |
|
|
$ |
5,795 |
|
|
|
|
|
|
|
|
|
|
$ |
159,340 |
|
|
$ |
14,456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents reimbursement of interest on funds borrowed to pay estimated taxes due upon the
vesting of performance share grants. |
(footnotes continued on following page)
-7-
(footnotes continued from previous page)
|
|
|
(2) |
|
The value reflected represents the dollar value of 50,000 restricted shares awarded to Mr.
Kruger on December 14, 2005, based on the last reported sale price of our common stock on The
NASDAQ National Market on December 14, 2005 of $23.67. Mr. Krugers restricted shares will
vest one-half on January 1, 2007 and one-half on January 1, 2008. The aggregate number and
value of unvested restricted shares held by Mr. Kruger as of December 31, 2005 was 50,000
($1,310,500), based upon the last reported sale price of our common stock on The NASDAQ
National Market on December 30, 2005 of $26.21. To the extent we pay dividends on our common
stock, dividend equivalents will accrue on the restricted shares from the date of grant and
will become payable upon vesting. |
|
(3) |
|
LTIP Payouts for 2005 represent the value realized by the Named Executive Officers for
performance share units that vested based on our achievement of award targets for the
three-year period from 2003 through 2005. The value of the vested performance share units was
calculated using a per share price of $36.27, the average of the high and low sales price of
our common stock on The NASDAQ National Market on March 7, 2006, the date of vesting. See
Long-Term Incentive Plan Awards Table. LTIP Payouts for 2004 represent the value realized
by the Named Executive Officers for performance share units that vested based on our
achievement of award targets for the three-year period from 2002 through 2004. The value of
the vested performance share units was calculated using a per share price of $33.37, the
average of the high and low sales price of our common stock on the NASDAQ National Market on
March 21, 2005, the date of vesting. Also includes accrued dividend equivalents paid to
Messrs. Davis, Kitchen, Beckley, Gates and Krofcheck upon the vesting of the performance share
units in the amounts of $5,744, $1,520, $1,503, $926 and $775, respectively. LTIP Payouts for
2003 represent the value realized by the Named Executive Officers for performance share units
that vested based on our achievement of award targets for the three-year period from 2001
through 2003. The value of the vested performance share units was calculated using a per
share price of $24.35, the average of the high and low sales price of our common stock on the
NASDAQ National Market on April 13, 2004, the date of vesting. Also includes accrued dividend
equivalents paid to Messrs. Davis, Kitchen, Beckley, Gates and Krofcheck upon the vesting of
the performance share units in the amounts of $15,474, $4,151, $4,108, $2,346 and $2,258,
respectively. |
|
(4) |
|
All other compensation is comprised of matching contributions under our Defined Contribution
Retirement Plan for each of the Named Executive Officers. In 2005, those contributions were
$7,650, $7,967, $7,900, $7,560, and $7,430 for each of Messrs. Davis, Kitchen, Beckley, Gates
and Mr. Krofcheck, respectively. All other compensation also includes Company-paid life
insurance premiums in 2005 in the amounts of $3,465, $2,445, $4,055 and $3,415 for Messrs.
Kitchen, Beckley, Gates and Krofcheck, respectively. |
|
(5) |
|
Mr. Davis served as our Chief Executive Officer from August 1995 to December 2002 and from
October 2003 through his retirement on December 13, 2005, when he was succeeded by Logan W.
Kruger. Mr. Davis continues to serve as Chairman of the Board, a position he has held since
August 1995. |
|
(6) |
|
Mr. Kitchen retired effective April 30, 2006. |
|
(7) |
|
Mr. Beckley retired effective March 31, 2006. |
|
(8) |
|
Mr. Gates was elected Executive Vice President effective April 1, 2003. |
-8-
Option Grants in Last Fiscal Year Table
The following table sets forth information regarding the options granted to Named Executive
Officers during the year ended December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realized Value at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumed Annual Rates of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Price Appreciation for |
Individual Grants |
|
Option Term |
|
|
|
|
|
|
% of Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
Granted to |
|
|
|
|
|
|
|
|
|
|
Underlying Options |
|
Employees in |
|
Exercise |
|
Expiration |
|
|
|
|
Name |
|
Granted (#) |
|
Fiscal Year |
|
Price ($/sh) |
|
Date |
|
5% |
|
10% |
Logan W. Kruger |
|
|
100,000 |
(1) |
|
|
52.40 |
|
|
$ |
23.98 |
|
|
|
12/14/2015 |
|
|
$ |
195,304 |
|
|
$ |
621,979 |
|
Craig A. Davis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerald J. Kitchen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David W. Beckley |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E. Jack Gates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel J. Krofcheck |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
December 14, 2005 grant of stock options. The options will vest and become exerciseable in
three installments, one-third on the first anniversary of the date of grant, one-third on the
second anniversary of the date of grant and the remaining one-third on the third anniversary
of the date of grant. The options will expire and cease to be exercisable on the 10th
anniversary of the date of grant. |
|
(2) |
|
The exercise price is based upon the average of the high and low sale price for our common
stock on The NASDAQ National Market on December 14, 2005, the date of grant. |
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Value Table
The following table sets forth information regarding the shares acquired and value realized by
the Named Executive Officers upon the exercise of options during 2005 and the aggregate number and
value of options held by the Named Executive Officers at December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
|
|
|
|
|
|
|
|
|
|
Underlying |
|
Value of |
|
|
Shares |
|
|
|
|
|
Unexercised Options |
|
Unexercised Options |
|
|
Acquired On |
|
Value |
|
at December 31, 2005 (#) |
|
at December 31, 2005 ($)(2) |
Name |
|
Exercise (#) |
|
Realized ($)(1) |
|
Exercisable |
|
Unexercisable |
|
Exercisable |
|
Unexercisable |
Logan W. Kruger |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
$ |
223,000 |
|
Craig A. Davis |
|
|
23,000 |
|
|
$ |
324,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerald J. Kitchen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David W. Beckley |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E. Jack Gates |
|
|
10,000 |
|
|
$ |
134,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel J. Krofcheck |
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
|
|
|
$ |
99,600 |
|
|
|
|
|
|
|
|
(1) |
|
The value realized represents the difference between the exercise price of the options and
the last reported sale price of Centurys common stock on The NASDAQ National Market on the
respective dates the options were exercised. |
|
(2) |
|
Value of unexercised options is calculated on the basis of the difference between the
respective option exercise prices and $26.21, the last reported sale price for Centurys
common stock on The NASDAQ National Market on December 30, 2005. |
-9-
Long-Term Incentive Plan Awards Table
The following table sets forth information with respect to performance shares awarded to the
Named Executive Officers during 2005 under the 1996 Plan.
Long-Term Incentive Plans Awards in Last Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance or |
|
Estimated Future Common Stock Payouts |
|
|
|
|
|
|
Other Period Until |
|
Under Non-Stock Price-Based Plans |
|
|
Performance |
|
Maturation or |
|
Threshold |
|
|
|
|
Name |
|
Shares (#)(1) |
|
Payout |
|
(#) |
|
Target (#)(2) |
|
Maximum (#)(3) |
Logan W. Kruger |
|
|
|
|
|
|
2005-2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig A. Davis |
|
|
29,778 |
|
|
|
2005-2007 |
|
|
|
-0- |
|
|
|
29,778 |
|
|
|
44,667 |
|
Gerald J. Kitchen |
|
|
8,600 |
|
|
|
2005-2007 |
|
|
|
-0- |
|
|
|
8,600 |
|
|
|
12,900 |
|
David W. Beckley |
|
|
8,526 |
|
|
|
2005-2007 |
|
|
|
-0- |
|
|
|
8,526 |
|
|
|
12,789 |
|
E. Jack Gates |
|
|
9,588 |
|
|
|
2005-2007 |
|
|
|
-0- |
|
|
|
9,588 |
|
|
|
14,382 |
|
Daniel J. Krofcheck |
|
|
4,469 |
|
|
|
2005-2007 |
|
|
|
-0- |
|
|
|
4,469 |
|
|
|
6,704 |
|
|
|
|
(1) |
|
Performance shares represent shares of our common stock that, upon vesting, are issued to
the award recipient. Except as described herein, performance shares are forfeited if the
award recipient is not employed full-time by us at the end of the award cycle period. Upon
death, disability or retirement, the award recipient will receive a pro rata award based upon
the number of weeks employed during the award cycle period. As a result, Messrs. Davis,
Beckley and Kitchen will continue to participate in the 2004-2006 and 2005-2007 awards while
retired. To the extent dividends are paid on our common stock, dividend equivalents accrue
on performance shares and are paid upon vesting. |
|
(2) |
|
Target payouts represent the target number of shares that will vest if we achieve specified
performance targets (Award Targets) in their entirety for the period. Award Targets are
based upon guidelines adopted under the 1996 Plan. Our Compensation Committee has retained
full discretion to modify awards under the guidelines. If Award Targets are not achieved in
their entirety, awards may be adjusted downward or eliminated in their entirety. In addition,
regardless of performance against Award Targets, the committees discretion includes the right
to determine that, should circumstances warrant, no award would be payable. |
|
(3) |
|
Maximum payouts represent the maximum number of shares that the Compensation Committee is
authorized to award if we exceed all of the Award Targets. In cases where the target is
exceeded, the number of shares vested in excess of the target number of shares is calculated
by converting the excess award into cash and reconverting the excess award into shares at the
greater of (i) the share price at the time of the award, or (ii) the average share price for
the month preceding the month in which the shares vest. |
Pension Plan Table
We maintain a non-contributory defined benefit pension plan for our salaried employees that
meet certain eligibility requirements. The following table shows estimated annual benefits payable
upon retirement in specified compensation and years of service classifications. The figures shown
include supplemental benefits payable to the Named Executive Officers, exclusive of benefits
payable under the enhanced supplemental retirement plan described below.
-10-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years of Credited Service |
Remuneration |
|
5 |
|
10 |
|
15 |
|
20 |
|
25 |
|
30 |
|
35 |
|
40 |
$100,000 |
|
$ |
7,500 |
|
|
$ |
15,000 |
|
|
$ |
22,500 |
|
|
$ |
30,000 |
|
|
$ |
37,500 |
|
|
$ |
45,000 |
|
|
$ |
52,500 |
|
|
$ |
60,000 |
|
$200,000 |
|
$ |
15,000 |
|
|
$ |
30,000 |
|
|
$ |
45,000 |
|
|
$ |
60,000 |
|
|
$ |
75,000 |
|
|
$ |
90,000 |
|
|
$ |
105,000 |
|
|
$ |
120,000 |
|
$300,000 |
|
$ |
22,500 |
|
|
$ |
45,000 |
|
|
$ |
67,500 |
|
|
$ |
90,000 |
|
|
$ |
112,500 |
|
|
$ |
135,000 |
|
|
$ |
157,500 |
|
|
$ |
180,000 |
|
$400,000 |
|
$ |
30,000 |
|
|
$ |
60,000 |
|
|
$ |
90,000 |
|
|
$ |
120,000 |
|
|
$ |
150,000 |
|
|
$ |
180,000 |
|
|
$ |
210,000 |
|
|
$ |
240,000 |
|
$500,000 |
|
$ |
37,500 |
|
|
$ |
75,000 |
|
|
$ |
112,500 |
|
|
$ |
150,000 |
|
|
$ |
187,500 |
|
|
$ |
225,000 |
|
|
$ |
262,500 |
|
|
$ |
300,000 |
|
$600,000 |
|
$ |
45,000 |
|
|
$ |
90,000 |
|
|
$ |
135,000 |
|
|
$ |
180,000 |
|
|
$ |
225,000 |
|
|
$ |
270,000 |
|
|
$ |
315,000 |
|
|
$ |
360,000 |
|
$700,000 |
|
$ |
52,500 |
|
|
$ |
105,000 |
|
|
$ |
157,500 |
|
|
$ |
210,000 |
|
|
$ |
262,500 |
|
|
$ |
315,000 |
|
|
$ |
367,500 |
|
|
$ |
420,000 |
|
$800,000 |
|
$ |
60,000 |
|
|
$ |
120,000 |
|
|
$ |
180,000 |
|
|
$ |
240,000 |
|
|
$ |
300,000 |
|
|
$ |
360,000 |
|
|
$ |
420,000 |
|
|
$ |
480,000 |
|
$900,000 |
|
$ |
67,500 |
|
|
$ |
135,000 |
|
|
$ |
202,500 |
|
|
$ |
270,000 |
|
|
$ |
337,500 |
|
|
$ |
405,000 |
|
|
$ |
472,500 |
|
|
$ |
540,000 |
|
$1,000,000 |
|
$ |
75,000 |
|
|
$ |
150,000 |
|
|
$ |
225,000 |
|
|
$ |
300,000 |
|
|
$ |
375,000 |
|
|
$ |
450,000 |
|
|
$ |
525,000 |
|
|
$ |
600,000 |
|
$1,100,000 |
|
$ |
82,500 |
|
|
$ |
165,000 |
|
|
$ |
247,500 |
|
|
$ |
330,000 |
|
|
$ |
412,500 |
|
|
$ |
495,000 |
|
|
$ |
577,500 |
|
|
$ |
660,000 |
|
$1,200,000 |
|
$ |
90,000 |
|
|
$ |
180,000 |
|
|
$ |
270,000 |
|
|
$ |
360,000 |
|
|
$ |
450,000 |
|
|
$ |
540,000 |
|
|
$ |
630,000 |
|
|
$ |
720,000 |
|
$1,600,000 |
|
$ |
120,000 |
|
|
$ |
240,000 |
|
|
$ |
360,000 |
|
|
$ |
480,000 |
|
|
$ |
600,000 |
|
|
$ |
720,000 |
|
|
$ |
840,000 |
|
|
$ |
960,000 |
|
$2,000,000 |
|
$ |
150,000 |
|
|
$ |
300,000 |
|
|
$ |
450,000 |
|
|
$ |
600,000 |
|
|
$ |
750,000 |
|
|
$ |
900,000 |
|
|
$ |
1,050,000 |
|
|
$ |
1,200,000 |
|
$2,400,000 |
|
$ |
180,000 |
|
|
$ |
360,000 |
|
|
$ |
540,000 |
|
|
$ |
720,000 |
|
|
$ |
900,000 |
|
|
$ |
1,080,000 |
|
|
$ |
1,260,000 |
|
|
$ |
1,440,000 |
|
$2,800,000 |
|
$ |
210,000 |
|
|
$ |
420,000 |
|
|
$ |
630,000 |
|
|
$ |
840,000 |
|
|
$ |
1,050,000 |
|
|
$ |
1,260,000 |
|
|
$ |
1,470,000 |
|
|
$ |
1,680,000 |
|
The plan provides lifetime annual benefits starting at age 62 equal to 12 multiplied by
the greater of: (i) 1.5% of final average monthly compensation multiplied by years of credited
service (up to 40 years), or (ii) $22.25 multiplied by years of credited service (up to 40 years),
less the total monthly vested benefit payable as a life annuity at age 62 under plans of a
predecessor, with a minimum benefit of $225 per month. As a result of the supplemental plan
described below, certain highly compensated participants lifetime monthly benefits are a higher
dollar amount than is set forth in the plan. Final average monthly compensation means the highest
monthly average for 36 consecutive months in the 120-month period ending on the last day of the
calendar month completed at or prior to a termination of service. Participants pension rights
vest after a five-year period of service. An early retirement benefit (actuarially reduced
beginning at age 55) and a disability benefit are also available.
The compensation covered by the plan includes all compensation, subject to certain exclusions,
before any reduction for 401(k) contributions, subject to the maximum limits under the Internal
Revenue Code of 1986, as amended (the Code). The years of credited service for Messrs. Kruger,
Davis, Kitchen, Beckley, Gates and Krofcheck at December 31, 2005, were approximately 0, 13, 10,
10, 5, and 8, respectively.
Supplemental Retirement Income Benefit Plan
We adopted a Supplemental Retirement Income Benefit Plan in 2001 (the SERP). The SERP
provides selected senior executives with supplemental benefits in addition to those benefits they
are entitled to receive under our qualified retirement plans. Those benefits include an unfunded
supplemental amount equal to the amount that would normally be paid under our qualified retirement
plans if there were no limitations under Sections 415 and 401(a)(17) of the Code. In addition,
final average monthly compensation for purposes of calculating the supplemental benefit will be
based on the greater of (i) projected final annual compensation, assuming specified annual
increases until retirement age, or (ii) the average of the highest three years annual compensation
over the last 10 years of employment. Messrs. Beckley, Davis, Gates, Kitchen and Kruger were
eligible participate in these benefits in 2005. Messrs. Davis, Beckley and Kitchen retired on
December 31, 2005, March 31, 2006 and April 30, 2006, respectively.
The SERP also permits selected senior executives to achieve estimated levels of retirement
income when, due to the executives age and potential years of service at normal retirement age,
benefits under our existing qualified and nonqualified defined benefit pension plans are projected
to be less than a specified percentage of the executives estimated final average annual
compensation (the Enhanced SERP). Subject to certain vesting requirements, Messrs. Kruger,
Davis, Kitchen and Beckley were selected to participate in the Enhanced SERP at 50% of their final
average compensation. Each of Messrs. Davis, Kitchen and Beckley are fully vested in their
Enhanced SERP benefit. The estimated annual retirement benefits under our qualified and
nonqualified defined benefit pension plans payable to Messrs Davis, Kitchen and Beckley are
$930,000, $293,000, and, $258,000, respectively. Messrs. Davis,
-11-
Beckley and Kitchen retired on December 31, 2005, March 31, 2006 and April 30, 2006,
respectively. Mr. Krugers right to participate in the Enhanced SERP benefit begins on the fifth
anniversary of his employment date and vests 20 percent each year thereafter. If Mr. Kruger
remains employed by Century for a period of 10 years he will be fully vested in his Enhanced SERP
benefit. We have invested funds to meet a portion of our Enhanced SERP obligations through the
purchase of key-man life insurance policies on the lives of the vested participating executives
that are held in a rabbi trust.
Employment Agreements
We have an employment agreement with Logan W. Kruger effective December 13, 2005, the date Mr.
Kruger succeeded Craig A. Davis as our President and Chief Executive Officer. Under the terms of
his employment agreement, which extends through December 31, 2008, Mr. Kruger will receive a base
salary of $750,000 per year, subject to increase from time to time at the discretion of the
Compensation Committee, and will be eligible to receive an annual performance-based cash bonus
under Centurys incentive compensation plan of up to 100% of his base salary, subject to the
discretion of the Compensation Committee. Mr. Krugers agreement provides that his annual cash
bonus for 2006 will be no less than $325,000. In addition, he received a one-time cash signing
bonus of $475,000, options to purchase 100,000 shares of our common stock and a one-time grant of
50,000 shares of restricted stock. Mr. Kruger is also eligible to receive stock option grants and
performance share awards under the 1996 Plan.
Our employment agreement with Craig A. Davis set forth the terms of his employment through
December 31, 2005. Mr. Davis retired as our Chief Executive Officer on December 13, 2005, but
remained our employee for the remaining term of his employment agreement. On December 8, 2005, the
Compensation Committee approved the payment of a retention bonus of $913,750 and a success bonus of
$3 million to Mr. Davis, as provided for under the terms of his employment agreement. Mr. Davis
received $1 million of his $3 million success bonus in January 2005, reflecting services rendered
in 2004.
During 2005 and until they retired as our full-time employees, we had employment agreements
with David W. Beckley and Gerald J. Kitchen. Mr. Beckley and Mr. Kitchen retired on March 31, 2006
and April 30, 2006, respectively. The employment agreements with Messrs. Kitchen and Beckley
provided for base salaries of $325,000 and $305,000 per year, respectively. From January 1, 2006
to the date of their respective retirements, Messrs. Kitchen and Beckley received additional
monthly payments of $24,417 and $24,000, respectively, in addition to the base salaries provided
for under their employment agreements. Under the terms of Mr. Beckleys employment agreement, he
was paid a special bonus in January 2006 equal to 50% of his base pay at the time of his
retirement. Mr. Beckley has agreed to be available to act as a consultant following his
retirement. Upon Mr. Kitchens retirement, he was paid a bonus of $100,000 for the portion of 2006
that he was our employee. Mr. Kitchen has entered into a consulting agreement pursuant to which he
has agreed to act as a consultant following his retirement. Under his consulting agreement, Mr.
Kitchen will provide up to 900 hours of general consulting services during the 12 months following
his retirement as reasonably requested by the board or our Chief Executive Officer. The consulting
agreement provides that Mr. Kitchen will be paid a monthly retainer equal to his monthly base pay
at the time of his retirement. We also amended our employment agreement with E. Jack Gates on
December 8, 2005, to extend the term of his employment through December 31, 2006. Under the terms
of Mr. Gates agreement, his base salary is subject to increase from time to time at the discretion
of the board of directors, although it may not be less than $342,500 per year. Under the terms of
his employment agreement, Mr. Gates is also eligible for bonuses in accordance with our annual
incentive plan and stock option grants and performance share awards under the 1996 Plan.
We entered into an employment agreement with Michael A. Bless effective January 23, 2006, the
date Mr. Bless succeeded Mr. Beckley as Executive Vice President and Chief Financial Officer. On
May 1, 2006, we entered into an employment agreement with Robert R. Nielsen, the day he succeeded
Mr. Kitchen as Executive Vice President and General Counsel. The employment agreements with
Messrs. Bless and Nielsen, which extend through December 31, 2008, provide that their base salaries
shall not be reduced below $375,000 and $350,000 per year, respectively, and shall be subject to
increase from time to time at the discretion of the Compensation Committee. Mr. Bless and Mr.
Nielsen will be eligible to receive an annual performance-based cash bonus under Centurys
incentive compensation plan of up to 100% of their base salary, subject to the discretion of the
Compensation Committee. The agreements provide that the 2006 annual cash bonuses for Messrs. Bless
and Nielsen will be no less than $187,500 and $122,500, respectively. In addition, Messrs. Bless
and Nielsen received options to purchase 30,000 and 25,000 shares, respectively, of our common
stock and a one-time grant of 20,000 and 15,000 shares,
-12-
respectively, of restricted stock. Messrs. Bless and Nielsen are also eligible for stock
option grants and performance share awards under the 1996 Plan and participation in the SERP.
Our employment agreements with Messrs. Kruger, Bless, Gates and Nielsen each provide that upon
termination of employment without cause, the terminated executive will be entitled to receive
termination payments equal to 100% of his base salary and bonus (based on the highest annual bonus
payment within the prior three years) for the remainder of the term of the agreement (with a
minimum of one years salary plus bonus). Any termination payments under the employment agreements
may not be duplicated under the severance compensation agreements described below. Prior to their
retirement, our employment agreements with Messrs. Davis, Beckley and Kitchen contained similar
terms.
Severance Compensation Arrangements
We have entered into severance compensation agreements with each of Messrs. Kruger, Gates,
Bless, Nielsen, and Krofcheck. The agreements provide that if within 36 months after we experience
a change in control the executives employment is terminated either (i) by us for other than cause
or disability, or (ii) by such executive for good reason, then such executive will receive a lump
sum payment equal to two to three times, as the case may be, the aggregate of the highest base
salary and the highest bonus received by such executive in any of the most recent five years.
Also, upon a change in control, the exercisability of stock options and the vesting of performance
shares held by such executives will be accelerated. Prior to their retirement, Messrs. Davis,
Beckley and Kitchen were party to severance compensation agreements that contained similar terms.
The Code imposes certain excise taxes on, and limits the deductibility of, certain
compensatory payments made by a corporation to or for the benefit of certain individuals if such
payments are contingent upon certain changes in the ownership or effective control of the
corporation or the ownership of a substantial portion of the assets of the corporation, provided
that such payments to the individual have an aggregate present value in excess of three times the
individuals annualized includible compensation for the base period, as defined in the Code. The
severance compensation agreements provide for additional payments to the executives in order to
fully offset any excise taxes payable by an executive as a result of the payments and benefits
provided in the agreements.
Certain Relationships and Related Transactions
Purchases from Glencore
In 2005, we purchased alumina and primary aluminum from Glencore. Such purchases, which
management believes were made on an arms-length basis at market prices, totaled $129.8 million in
2005. During 2005, we purchased from Glencore all of our alumina requirements for our Ravenswood,
West Virginia production facility and our 49.67% interest in a Mt. Holly, South Carolina production
facility under separate supply agreements. The supply agreements for Ravenswood and 54% of our
alumina requirements for Mt. Holly run through 2006. The supply agreement for the remaining 46% of
our requirements for Mt. Holly runs through January 31, 2008. Effective as of April 26, 2006, we
entered into an alumina supply agreement with Glencore that will supply all of our alumina
requirements for Ravenswood until December 31, 2009.
Sales to Glencore
We sold primary aluminum to Glencore in 2005 on an arms-length basis at market prices. For
the year ended December 31, 2005, net sales to Glencore amounted to $171.0 million, including gains
and losses realized on the settlement of financial contracts. Sales of primary aluminum to
Glencore amounted to 15.1% of Centurys total revenues in 2005.
We have a contract to sell Glencore approximately 50,000 metric tons of primary aluminum
produced at Mt. Holly each year through December 31, 2009 at a variable price determined by
reference to the LME. We have a contract to sell Glencore 20,000 metric tons per year of primary
aluminum produced at Ravenswood and Mt. Holly through December 31, 2013 at a variable price based
on the LME, adjusted by a negotiated U.S. Midwest market premium with a cap and floor as applied to
the current U.S. Midwest premium.
As of December 31, 2005, we had outstanding forward financial sales contracts with Glencore
for 1,057,850 metric tons of primary aluminum, of which 271,250 metric tons were designated as cash
flow hedges. These financial sales contracts are scheduled for settlement at various dates through
2008. In November 2004 and June
-13-
2005, we entered into forward financial sales contracts with Glencore for the years 2006
through 2010 and 2008 through 2015, respectively. These sales contracts, which are for a minimum
of 300,600 and 460,200 metric tons of primary aluminum, respectively, contain clauses that trigger
additional shipment volume when the market price for a contract month is above the contract ceiling
price. These contracts will be settled monthly, and if the market price exceeds the ceiling price
for all contract months through each contracts term, the maximum additional shipment volume under
each set of contracts would be 300,600 and 460,200 metric tons, respectively.
Other Transactions with Glencore
We are party to a 10-year LME-based alumina tolling agreement with Glencore for 90,000 metric
tons of expansion capacity being added at our Nordural production facility in Iceland. In December
2005, Glencore assigned 50% of its tolling rights under this agreement to Hydro Aluminum AS for the
period 2007 to 2010. The term of the agreement is expected to begin in July 2006.
Until June 30, 2005, our payment obligations under our outstanding industrial revenue bonds
were secured by a Glencore guaranteed letter of credit. Under that arrangement, we agreed to
reimburse Glencore for all costs related the letter of credit, including servicing costs, and we
secured our reimbursement obligation with a first priority security interest in 20% of our
ownership interest in the Hawesville facility. On June 30, 2005, we replaced the Glencore letter
of credit and our corresponding security obligations to Glencore were released.
Approval of Transactions with Glencore
All transactions with Glencore are approved by the audit committee or by a special committee
of independent directors.
Certain Business Relationships
Mr. Craig A. Davis, the Chairman of our board, is a director of Glencore International AG and
was an executive of Glencore International AG and Glencore AG from September 1990 until June 1996.
Mr. Willy R. Strothotte, a director, is Chairman of the Board of Directors of Glencore
International AG and served as its Chief Executive Officer from 1993 through 2001.
Mr. Roman A. Bninski, a director, is a partner of Curtis, Mallet-Prevost, Colt & Mosle LLP,
which furnishes legal services to us and Glencore. On March 8, 2006, Mr. Bninski informed the board
that he will not stand for reelection when his current term expires on the date of our 2006 Annual
Meeting.
Mr. Stuart M. Schreiber, a director, is the managing director and owner of Integis, Inc.,
which we paid $839,000 in fees for management and executive search services provided to us in 2005.
During 2005, Mr. Schreiber, who is not independent, served as a consultant to both the
Compensation Committee and the Nominating Committee. Our board determined that his service to
those committees was in the best interest of Century and its shareholders due to his unique
industry experience and knowledge. Mr. Schreiber received a fee of $2,000 per committee meeting he
attended as a consultant. In 2005, Mr. Schreiber attended four Compensation Committee and 12
Nominating Committee meetings. On March 8, 2006, Mr. Schreiber informed the board that he will not
stand for reelection when his current term expires on the date of our 2006 Annual Meeting.
Report of the Compensation Committee on Executive Compensation
General
The Compensation Committee is a standing committee of Centurys board of directors and is
composed of three independent directors. The committee reviews and establishes compensation for
Centurys executive officers and has oversight responsibility for administering and awarding grants
under Centurys 1996 Stock Incentive Plan.
Century has a policy of basing a significant portion of the compensation of its executive
officers on the operating performance of Century and its progress toward achieving its long term
strategic objectives of growing and diversifying its primary aluminum reduction capacity, lowering
its overall costs of production to improve its competitive position in the industry and expanding
upstream into bauxite and alumina.
-14-
Compensation Philosophy
Centurys compensation programs are designed to enable Century and its subsidiaries to attract
and retain talented executives and management personnel. To do this, Century believes it must be
able to provide management personnel with opportunities for total compensation that are competitive
with the compensation that would be available from employers with whom Century competes and other
companies that are seeking to hire and retain management personnel of similar quality.
Centurys compensation programs are tied to the overall performance of Century, as well as
business unit and individual performance. Compensation is weighted towards annual incentive awards
and long-term performance awards in the form of stock options and performance share units in order
to provide pay-for-performance and to align managements and stockholders interests in the
enhancement of stockholder value. The three principal components of Centurys
pay-for-performance executive compensation program are base salary, annual incentive cash bonuses
and long-term incentive compensation.
It has been the committees practice to use the services of Integis, Inc., a firm owned by Mr.
Stuart Schreiber that specializes in executive compensation matters, to provide data showing
executive compensation practices and information at comparable companies and other companies the
committee believes are relevant to its goals of providing competitive compensation. The committee
continued this practice in 2005. In addition, it engaged the services of another firm of executive
compensation experts that had no prior association with Century to review the committees
historical compensation policies, procedures and decisions. In its review, this consulting firm
interviewed the members of the committee and Centurys executive officers and performed analyses of
Century and comparable data that it considered relevant. The consultant provided the committee
with its initial report in October and a final written report prior to the December 2005 board
meeting. After carefully reviewing the consultants reports and discussing them with the
consultant, the committee concluded that its past procedures and compensation decisions had been
appropriate and so advised the board at its December meeting and thereafter in a written report.
Base Salary
The committee annually reviews the salaries of Centurys executives. In addition to the
analysis provided by the consultant, the committee refers to other independent compensation surveys
for executive pay practices, and executive compensation data drawn from publicly available
information on comparable companies. Base salary levels are set at levels comparable to and
competitive with the salary levels of executives of comparable aluminum and other metals
corporations and employers hiring equivalent executive personnel. Actual salary levels for each
individual vary based upon an assessment of individual performance, experience, level of
responsibility, potential contribution to Centurys future growth and profitability, and the
financial circumstances of Century. The committee has not found it practicable to assign relative
weights to specific factors in determining base salary adjustments, and the specific factors used
may vary among individual executives. After reviewing information about salary increases at other
companies and the history of increases in the salaries of the named officers in recent years, the
committee authorized increases, effective August 1, 2005, of 7.5% in the case of Mr. Davis and from
5.2% to 5.5% in the case of the other named officers.
In December, the committee reviewed its historical practice of setting salary increases
effective August 1, and determined that it would be a better policy to review annual salary
increases at the time of awarding annual incentive awards. Accordingly, the committee determined
that future salary increases would be effective January 1 of each year. After reviewing the effect
of the change from August 1 to January 1 on the named officers, the committee authorized base
salary increases effective January 1, 2006, of 5.1% and 3.5% for Messrs. Gates and Krofcheck,
respectively. No adjustments were made at the December 2005 board meeting to the base salaries of
Messrs. Davis, Kitchen or Beckley established August 1, 2005. Thereafter, the committee approved a
base salary increase of 5.7% for Mr. Kitchen, effective January 1, 2006.
Annual Incentive Awards
Century has an annual incentive compensation plan. Under this plan, executive officers
(including the Chief Executive Officer) are eligible to receive each year as a bonus, a percentage
of their base salary. The plan provides for suggested percentage ranges of 35% to 100% for the
named officers. Actual awards are made by the committee, in its discretion, taking into account
the recommendation of the Chief Executive Officer (for officers other than himself), Company
performance and a subjective evaluation by the committee of individual performance. In reviewing
individual performances, the committee determined that annual incentive awards ranging from 47% to
-15-
80% of the officers salary would be appropriate in the case of the named officers and granted
incentive awards of $745,000, $215,000, $185,000, $225,000 and $100,000, respectively, to Messrs.
Davis, Kitchen, Beckley, Gates and Krofcheck.
Long-Term Incentive Compensation
The committee believes that option grants and performance share awards align executive
interests with stockholder interests by creating a direct link between compensation and stockholder
return.
Option grants are made from time to time to executives whose contributions have or will have a
significant impact on Centurys long-term performance. The committees determination of whether
option grants are appropriate each year is made with regard to competitive considerations, and each
executives actual grant is based upon the criteria described in the preceding paragraphs. The
size of previous grants and the number of options held are not determinative of future grants.
Except with regard to options awarded to Mr. Kruger pursuant to the terms of his employment
agreement, no options were granted to the named officers in 2005.
The committee has established guidelines governing the granting of performance shares. The
guidelines provide for the award of performance shares with performance cycles for successive
three-year periods of time. Each award is determined by creating a monetary award within a
percentage range of the executives base salary, and converting the award into performance shares
based on the average closing price for Centurys common stock for the month preceding that in which
the grant is made. The percentage ranges of base salary are 45% to 100% for the named officers.
Awards for the 2005-2007 performance cycle were granted in 2005. See Long-Term Incentive
PlansAwards in Last Fiscal Year. Vesting of performance shares is based on Centurys performance
relative to achievement of strategic, operating and financial targets, and actual shares vested can
range between 0% and 150% of the performance share award. Based on the committees assessment of
the degree to which Century had accomplished certain strategic and operating goals and its
financial results, performance shares for the period 2003-2005 were granted at 50% of performance
share award level. See Summary Compensation Table.
Compensation of the Chief Executive Officer
Mr. Craig A. Davis retired as Chief Executive Officer of Century on December 13, 2005. Mr.
Davis employment contract provided among other things, that if Mr. Davis remained as Chief
Executive Officer for up to two years (or such shorter period as the committee agrees) he would be
paid a retention bonus equal to one years base pay. In addition, he would be eligible for a
Success Bonus to be determined by the committee in its discretion if Century accomplished one or
more transactions which transformed Century. The bonus was intended to reflect Mr. Davis
contribution toward accomplishing the transforming transactions and the committee could take into
consideration, among other things, the strategic importance of the transactions, the committees
assessment of the success of the transactions taken as a whole, the increase in Centurys market
capitalization, the contribution to Centurys cash flow, earnings and earnings per share, the
impact on Centurys debt to equity ratio, the dilutive effect of the transactions on Mr. Davis
equity in Century and the increase in Centurys net worth.
In 2004, the committee determined that Mr. Davis role in accomplishing the Nordural
acquisition in 2004 was a transforming transaction that entitled him to a Success Bonus.
Accordingly, the committee authorized the payment in January 2005 of a $1.0 million installment of
the Success Bonus. The committee concluded that the continuing benefits to Century in 2005 of the
Nordural transaction and Mr. Davis leadership and efforts in 2005, including guiding Century
through the continued expansion at Nordural, on budget and earlier than expected, and taking into
account the considerations listed in the preceding paragraph, entitled him to a total Success Bonus
of $3.0 million. The balance of the Success Bonus, or $2.0 million, together with his retention
bonus and annual incentive award were paid in January 2006. The provisions of Mr. Davis agreement
and his compensation shown in the Summary Compensation Table reflect the committees evaluation of
his performance and his value to Century as chief executive officer.
Effective with Mr. Davis retirement, Logan W. Kruger was elected President and Chief
Executive Officer. Mr. Krugers base salary was set at $750,000. Mr. Kruger received a $475,000
signing bonus in connection with his employment arrangement, but otherwise did not receive an
annual incentive award. In addition, Mr. Kruger received options to purchase 100,000 shares of
Century common stock and a one-time grant of 50,000 shares of restricted stock.
-16-
Income Tax Consequences
For U.S. income tax purposes, Century may deduct compensation paid as a result of the exercise
of all options granted to the Named Executive Officers. Century may not, however, deduct portions
of salary, bonus and other cash and non-cash compensation in excess of $1 million paid to a named
officer.
Respectfully Submitted,
The Compensation Committee
John C. Fontaine John P. OBrien Jack E. Thompson
Performance Graph
The following line graph compares our cumulative total return to stockholders with the
cumulative total return of the S&P 500 Index and the Hemstock Aluminum Group Index during the
period from December 31, 2000 through December 31, 2005. These comparisons assume the investment
of $100 on December 31, 2000 and the reinvestment of dividends.
Century Aluminum Company
Comparison of Cumulative Total Return to Stockholders
December 31, 2000 through December 31, 2005
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12/31/00 |
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12/31/01 |
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12/31/02 |
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12/31/03 |
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12/31/04 |
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12/30/05 |
S&P Composite |
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100.0 |
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88.12 |
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68.64 |
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88.33 |
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97.94 |
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102.75 |
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Hemstock Aluminum Group Index |
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100.0 |
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107.53 |
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75.96 |
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131.03 |
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120.04 |
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114.63 |
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Century Aluminum Company |
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100.0 |
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118.96 |
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66.88 |
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171.58 |
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237.01 |
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236.56 |
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-17-
Audit Committee Report
The following report of the Audit Committee shall not be deemed to be soliciting material or
to be filed with the Securities and Exchange Commission, nor shall this information be
incorporated by reference into any future filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, each as amended, except to the extent that Century specifically incorporates
it by reference into a filing.
During 2005, the Audit Committee of the board of directors was comprised of Messrs. Robert E.
Fishman, John C. Fontaine, John P. OBrien and Jack E. Thompson. All members of the Audit
Committee are independent directors, as that term is defined under NASDAQ listing standards. The
Audit Committee operates under a written charter adopted by the board of directors. In accordance
with its charter, the Audit Committee assists the board of Directors in fulfilling its
responsibility for oversight of the quality and integrity of the accounting, auditing and financial
reporting practices of Century.
The Audit Committees job is one of oversight. Centurys management is responsible for the
preparation of Centurys financial statements and the independent auditors are responsible for
auditing those financial statements. The Audit Committee and the board recognize that management
(including the internal audit staff) and the independent auditors have more resources and time, and
more detailed knowledge and information regarding Centurys accounting, auditing, internal control
and financial reporting practices than the Audit Committee does; accordingly, the Audit Committees
oversight role does not include providing any expert or special assurance as to the financial
statements and other financial information provided by Century to its stockholders and others.
In discharging its oversight responsibility as to the audit process, the Audit Committee
obtained from the independent auditors a formal written statement describing all relationships
between the auditors and Century that might bear on the auditors independence, consistent with
Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees,
discussed with the auditors any relationships that may impact their objectivity and independence,
including the performance of non-audit services, and satisfied itself as to the auditors
independence. The Audit Committee also discussed with management, the internal auditors and the
independent auditors, the quality and adequacy of Centurys internal controls and the internal
audit functions organization, responsibilities, budget and staffing. The Audit Committee reviewed
with both the independent and the internal auditors their audit plans, audit scope, and
identification of audit risks. The Audit Committee has the authority to obtain advice from outside
legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties
and receives appropriate funding, as determined by the Audit Committee, from Century for such
advice and assistance.
The Audit Committee met with and discussed with the independent auditors all matters required
to be discussed under generally accepted auditing standards, including those described in
Statement on Auditing Standards No. 61, Communication with Audit Committees, and, with and
without management present, discussed and reviewed the results of the independent auditors
examination of the financial statements. The Audit Committee also discussed the quality and
adequacy of Centurys internal controls and the results of the internal audit examinations.
The Audit Committee reviewed and discussed with management and the independent auditors the
interim financial information contained in each quarterly earnings announcement in 2005 prior to
its public release and the audited financial statements of Century as of and for the year ended
December 31, 2005.
Based on the above-mentioned review and discussions with management and the independent
auditors, the Audit Committee recommended to the board that Centurys audited financial statements
be included in its Annual Report on Form 10-K for the year ended December 31, 2005, for filing with
the Securities and Exchange Commission. The Audit Committee also recommended the reappointment,
subject to stockholder approval, of the independent auditors and the board concurred in such
recommendation. All audit and non-audit fees incurred in 2005 were pre-approved by the Audit
Committee.
Respectfully Submitted,
The Audit Committee
Robert E. Fishman John C. Fontaine John P. OBrien Jack E. Thompson
-18-
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons
owning more than 10% of a registered class of our equity securities, to file with the Securities
and Exchange Commission reports of ownership and changes in ownership of our equity securities.
These same persons are also required to furnish us with copies of all such forms. Based solely on
a review of the copies of the forms furnished to us and, in certain cases, written representations
that no Form 5 filings were required, we believe that, with respect to the 2005 fiscal year, all
required Section 16(a) filings were timely made, except that the Form 3 for Mr. Giulio Casello was
not timely filed.
PROPOSAL NO. 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The board of directors, on the recommendation of the Audit Committee, has appointed Deloitte &
Touche LLP to act as our independent auditors for the current fiscal year, subject to the
ratification of such appointment by the affirmative vote of the holders of a majority of shares of
common stock present in person or by proxy and entitled to vote at the Annual Meeting. If no
direction is given to the contrary, all proxies received by the Board of Directors will be voted
FOR ratification of the appointment of Deloitte & Touche LLP as our independent auditors for the
current fiscal year.
In addition to performing the audit of our consolidated financial statements, Deloitte &
Touche LLP provided various other services for Century during the last two years. The aggregate
fees billed for the last two years for each of the following categories of services are set forth
below:
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2005 |
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2004 |
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Audit Fees |
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1,857,000 |
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2,264,000 |
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Audit-Related Fees |
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99,000 |
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90,000 |
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Tax Fees |
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371,000 |
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275,000 |
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All Other Fees |
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Total All Fees |
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2,327,000 |
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$ |
2,629,000 |
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Audit Fees. Audit Fees include professional services rendered in connection with the audit of
Centurys consolidated financial statements, audit of managements assessment of the effectiveness
of Centurys internal control over financial reporting, audit of the effectiveness of Centurys
internal control over financial reporting, audit of the opening balance sheet of acquisitions
accounted for as a purchase, reviews of the consolidated financial statements included in Centurys
Quarterly Reports on Form 10-Q, consultation on accounting matters, and review of documents filed
with the Securities and Exchange Commission.
Audit-Related Fees. Audit-Related Fees include audits of Centurys employee benefit plans and
consultation on accounting matters or transactions.
Tax Fees. Tax fees include the preparation of federal and state tax returns, and consultation
related to tax planning, tax advice, tax compliance, and acquisitions.
All Other Fees. The aggregate fees for all other services include actuarial services and
evaluation and design of various employee benefit matters including consultation on employee
benefit matters.
All services rendered by Deloitte & Touche LLP are pre-approved by the Audit Committee in
accordance with the Committees pre-approval procedures. Under those procedures, the terms and
fees of annual audit services, and changes thereto, must be approved by the Audit Committee. The
Audit Committee also pre-approves the scope of audit-related, tax and other non-audit services that
may be performed by Centurys independent auditors during the fiscal year, subject to dollar
limitations set by the Committee. The foregoing pre-approval procedures are subject to the de
minimis exceptions for non-audit services described in Section 10A (i)(1)(B) of the Exchange Act
which are approved by the Audit Committee prior to completion of the audit. All of the audit and
non-audit services furnished were pre-approved by the Audit Committee.
-19-
Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting and
will be available to respond to appropriate questions from stockholders and make a statement if
they desire to do so.
The board of directors recommends that the stockholders vote FOR ratification of the
appointment of Deloitte & Touche LLP as our independent auditors for the current fiscal year.
OTHER MATTERS
As of the date of this Proxy Statement, the board of directors does not know of any other
matters which may come before the Annual Meeting, nor have we received notice of any matter by the
deadline prescribed by Rule 14a-4(c) under the Exchange Act. If any other matters properly come
before the meeting, the accompanying proxy confers discretionary authority with respect to any such
matters, and the persons named in the accompanying proxy intend to vote in accordance with their
best judgment on such matters. All expenses in connection with the solicitation of proxies will be
borne by us. In addition to this solicitation, officers, directors and regular employees of
Century, without any additional compensation, may solicit proxies by mail, telephone or personal
contact. Morrow & Co., Inc. has been retained to assist in the solicitation of proxies for a fee
of $4,000, plus reasonable out-of-pocket expenses. We will, upon request, reimburse brokerage
houses and other nominees for their reasonable expenses in sending proxy materials to their
principals.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials for the Annual Meeting in 2007
should be addressed to our Corporate Secretary, 2511 Garden Road, Building A, Suite 200, Monterey,
California 93940, and must be received no later than January 16, 2007. In addition, our restated
by-laws currently require that for business to be properly brought before an Annual Meeting by a
stockholder, regardless of whether included in our proxy statement, the stockholder must give
written notice of his or her intention to propose such business to our Corporate Secretary, which
notice must be delivered to, or mailed and received at, our principal executive offices not less
than forty-five (45) days prior to the date on which we first mailed our proxy materials for the
prior years Annual Meeting (which cut-off date will be April 1, 2007 in the case of the Annual
Meeting in 2007). Such notice must set forth as to each matter the stockholder proposes to bring
before the Annual Meeting: (i) a brief description of the business desired to be brought before the
meeting and the reasons for conducting such business at the meeting, (ii) the name and address of
the stockholder proposing such business, (iii) the class and number of shares which are
beneficially owned by the stockholder, and (iv) any material interest of the stockholder in such
proposal. The restated by-laws further provide that the chairman of the Annual Meeting may refuse
to permit any business to be brought before an Annual Meeting that does not comply with the
foregoing procedures.
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By Order of the Board of Directors, |
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Robert R. Nielsen |
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Executive Vice President, |
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General Counsel, |
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and Secretary |
Monterey, California
May 16, 2006
We will provide without charge to each person solicited hereby, upon the written request of
any such person, a copy of our Annual Report on Form 10-K for the fiscal year ended December 31,
2005, as filed with the Securities and Exchange Commission (without exhibits). Requests should be
made to Office of the General Counsel, 2511 Garden Road, Building A, Suite 200, Monterey,
California 93940.
-20-
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MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6
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000004
Least Address Line
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000000000.000 ext 000000000.000 ext 000000000.000 ext 000000000.000 ext 000000000.000 ext 000000000.000 ext 000000000.000 ext
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C 1234567890 J N T
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Mark this box with an X if you have made
changes to your name or address details above. |
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Annual Meeting Proxy Card
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A |
Election of Class I Directors for term to expire in 2009
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1. The Board of Directors recommends a vote FOR the listed nominees.
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For |
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Withhold |
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01 - Logan W. Kruger
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02 - Willy R. Strothotte |
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03 - Jarl Berntzen |
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The Board of Directors recommends a vote FOR the following proposal.
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For
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Against
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Abstain
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2. |
Proposal to ratify the appointment of Deloitte & Touche LLP as
the Companys
independent auditors for the fiscal year ending December 31, 2006.
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3. |
By signing below, the undersigned authorizes the proxies to vote, in their
discretion, upon such other matters as may properly come before the meeting.
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Please mark this box with an X if you plan to attend the annual meeting.
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C |
Authorized Signatures - Sign Here - This section must be completed for your
instructions to be executed. |
NOTE: Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy.
All joint holders must sign. When signing as attorney, trustee, executor, administrator, guardian or corporate officer, please provide
your FULL title.
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Signature 1 - Please keep signature within the box
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Signature 2 - Please keep signature within the box
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Date (mm/dd/yyyy) |
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/ / |
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0 0 9 4 8 8
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1 U P X
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C O Y
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Proxy - Century Aluminum Company
Proxy Solicited on Behalf of the Board of Directors for Annual Meeting on June 9, 2006
The undersigned appoints William J. Leatherberry and Peter C. McGuire the proxies
(each with power to act alone and with power of substitution) of the undersigned to vote
at the Annual Meeting of Stockholders of Century Aluminum Company to be held at the
executive offices of the Company, Monterey, CA at 9:00 a.m., local time, on Friday, June 9,
2006, and at any adjournment, all shares of stock which the undersigned is entitled to
vote thereat upon all matters properly brought before the meeting.
This proxy when properly executed, will be voted in the manner directed herein by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR Proposals 1 and 2.
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)