PITTSBURGH, PA - The United Steelworkers of America (USWA) sent Alcoa (NYSE:AA) CEO Alain Belda a strongly-worded letter expressing concern about the company’s apparent failure to heed the will of Alcoa shareholders expressed in a shareholder resolution requiring that any agreement on "golden parachutes" be submitted to them for approval, and strongly encouraging him to instruct Alcoa’s Board of Directors to quit delaying on the matter.

Alcoa announced at its April 11 annual meeting that shareholders had approved a proposal relating to grossly excessive executive severance agreements, commonly known as golden parachutes. The proposal urged Alcoa’s Board of Directors to seek shareholder approval for future severance agreements with senior executives that provide benefits in an amount exceeding 2.99 times the sum of the executive’s base salary plus bonus. Despite the company recommending a vote against the proposal, 65% of votes were cast in its favor.

“Basically, Alcoa shareholders decided that they cannot trust Alcoa’s Board of Directors to look after their interests,” said USWA Vice President Andrew Palm, who co-signed the letter to Belda on behalf of over 13,500 USWA members working for Alcoa. “Based on our dealings with this company, we believe that’s a wise decision. Alcoa executives and directors clearly look out for each other, but they are often oblivious to the interests of employees and other stakeholders.”

The letter to Belda cites recent Alcoa pay practices as a reason why shareholders voted to reign in the company’s Board. For instance, a severance plan for senior executives adopted by Alcoa in 2002 provides the executives with a cash payment exceeding three times annual salary, continuation of benefits for three years, accelerated vesting of stock options and even reimbursement of taxes on plan proceeds. Also, Belda received $24.8 million in total compensation in 2002, despite Alcoa stock losing 34.6% of its value. This earned Alcoa and Belda mention in a Fortune Magazine cover story on excessive CEO pay titled “Have They No Shame?”

“Alcoa should be ashamed,” said Special Assistant to the President and head of the USWA Aluminum, Brick and Glass Division John Murphy, “and not only because of its Enron-style executive pay. It’s been months since Alcoa shareholders, through a democratic process, called on Alcoa to cede some control over executive severance pay. Alcoa taking no action on this matter is consistent with the company’s authoritarian management style and raises troubling questions about Alcoa’s corporate governance.”

The letter to Belda was copied to Alcoa Directors, nearly 2,000 of its top shareholders, the Council of Institutional Investors and the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO). AFL-CIO sponsored the resolution and it was presented at Alcoa’s annual meeting by USWA. The letter can be viewed at www.uswa.org/pdf/Letter_to_Belda.pdf .

Alcoa Inc.

Alcoa Inc.

Alcoa (NYSE:AA) is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap® foils and plastic wraps, Alcoa® wheels, and Baco® household wraps. Among its other businesses are closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 129,000 employees in 44 countries and has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com

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