<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
STEEL DYNAMICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
STEEL DYNAMICS, INC.
7030 POINTE INVERNESS WAY, SUITE 310
FORT WAYNE, INDIANA 46804
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1999
To our Stockholders:
The Annual Meeting of Stockholders of Steel Dynamics, Inc. (the
"Company") will be held in the John Whistler Ballroom of the Grand Wayne Center,
120 West Jefferson Boulevard, Fort Wayne, Indiana, on Friday, May 21, 1999, at
9:00 a.m., Fort Wayne time, for the following purposes:
1. To elect nine (9) Directors for a one-year term, until the
Annual Meeting of Stockholders in 2000 and until their
successors shall have been elected and qualified;
2. To ratify the appointment of Ernst & Young LLP to serve as
independent auditors of the Company for the fiscal year ending
December 31, 1999; and
3. To transact any other business that may properly come before
the meeting or any adjournment thereof.
Only Stockholders of record as of the close of business on April 16,
1999 are entitled to Notice of and to vote at the Annual Meeting. A complete
list of stockholders entitled to vote at the Annual Meeting will be maintained
at the Company's offices for a period of at least ten days prior to the Annual
Meeting.
By Order of the Board of Directors
Keith E. Busse
President and Chief Executive Officer
Fort Wayne, Indiana
April 26, 1999
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
ACCORDINGLY, PLEASE SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED
POSTAGE PAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOU MAY
REVOKE YOUR PROXY AT ANY TIME PRIOR TO ACTUAL EXERCISE.
<PAGE> 3
April 26, 1999
To our Stockholders:
You are cordially invited to attend Steel Dynamics, Inc.'s Annual
Meeting of Stockholders, which will be held in the John Whistler Ballroom of the
Grand Wayne Center, 120 West Jefferson Boulevard, Fort Wayne, Indiana, on
Friday, May 21, 1999 at 9:00 a.m., Fort Wayne time.
The matters to be acted upon at the Annual Meeting are described in the
Notice of Annual Meeting and Proxy Statement that accompany this letter.
It is important that your shares be represented at the Annual Meeting,
whether or not you personally plan to attend. Each Proxy is revocable and will
not affect your right to vote in person if you attend the Annual Meeting.
Accordingly, please sign, date, and return the enclosed Proxy in the postage
paid envelope that has been provided for your convenience.
The Board of Directors and Management look forward to greeting you
personally at the Annual Meeting.
Sincerely,
Keith E. Busse
President and Chief Executive Officer
<PAGE> 4
STEEL DYNAMICS, INC.
7030 POINTE INVERNESS WAY, SUITE 310
FORT WAYNE, IN 46804
TELEPHONE: (219) 459-3553
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1999
APRIL 26, 1999
INTRODUCTION
This Proxy Statement and the accompanying Proxy are being mailed to
stockholders of Steel Dynamics, Inc. (the "Company" or "SDI") on or about April
26, 1999, and are being furnished in connection with the solicitation of proxies
by the Company's Board of Directors to be voted at the Company's Annual Meeting
of Stockholders (the "Annual Meeting") to be held on Friday, May 21, 1999, in
the John Whistler Ballroom of the Grand Wayne Center, 120 West Jefferson
Boulevard, Fort Wayne, Indiana, commencing at 9:00 o'clock a.m., Fort Wayne
time, and at any and all adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting.
Expenses in connection with the solicitation of proxies will be borne
by the Company. The Company will also reimburse brokerage firms, nominees,
fiduciaries, custodians and other agents for their out-of-pocket costs and
expenses in distributing proxy materials to the beneficial owners of the
Company's common stock, in accordance with Securities and Exchange Commission
and NASDAQ requirements. In addition, certain directors, officers, and employees
of the Company may solicit proxies by telephone, telecopy, and/or personal
contact, without additional compensation.
VOTING OF SHARES
Any stockholder who executes a Proxy may revoke it at any time before
it is voted. Proxies may be revoked by (i) filing with Mr. Tracy L.
Shellabarger, Secretary of the Company, at or before the Annual Meeting, at the
Company's address shown above, a written notice of revocation relating to the
Proxy, (ii) duly executing a subsequent Proxy bearing a later date relating to
the same shares of Common Stock, and delivering it to the Secretary of the
Company at or before the Annual Meeting, or (iii) voting in person at the Annual
Meeting (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a Proxy). No such revocation will be effective,
however, with respect to any matter or matters upon which, prior to such
revocation, a vote shall have been cast pursuant to the authority conferred by
such Proxy.
Shares represented by properly executed Proxies received prior to the
Annual Meeting will be voted as specified by the stockholders. If no
instructions are indicated, Proxies will be voted FOR Item 1 (Election of the
Nominees for Directors), FOR Item 2 (Approval of the Appointment of Ernst &
Young LLP as Independent Auditors of the Company for 1999), and, in the
discretion of the persons named in the Proxy, on any other business that may
properly come before the meeting.
Under SDI's Amended and Restated Articles of Incorporation and Bylaws,
and under Indiana law, the vote required for the approval of Items 1 and 2 is
the affirmative vote of a majority of the shares of Common Stock entitled to
vote and represented in person or by Proxy at the Annual Meeting. Accordingly,
abstentions and non-votes of shares of Common Stock that are present at the
meeting, in person or by Proxy, but not voted on a particular matter, will have
the same effect as a vote "against" the matter presented, at least for purposes
of determining whether sufficient affirmative votes have been cast. Any shares
with respect to which Proxies are not received will not be counted as present
nor will they be voted for or against any matter to come before the Annual
Meeting. The Board of Directors has fixed April 16, 1999, as the record date for
the purpose of determining the
<PAGE> 5
stockholders entitled to notice of and to vote at the Annual Meeting or at any
adjournment thereof. As of such date, there were issued and outstanding and
entitled to vote 47,898,657 shares of Common Stock (par value $0.01 per share),
and each such share is entitled to one (1) vote on each matter to be voted on by
stockholders. The Company's Common Stock is the only class of capital stock
authorized and outstanding at the present time.
ANNUAL REPORT
A copy of the Company's 1998 Annual Report to Stockholders, including
financial statements for the years 1998 and 1997, is being sent to all
stockholders of record concurrently herewith. It is not, however, a part of this
Proxy Statement.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS, AND EXECUTIVE OFFICERS
The following table, reflecting information as of the Record Date for
the Annual Meeting, discloses the beneficial ownership of the Company's Common
Stock by (i) each person known to the Company to beneficially own more than 5%
of the outstanding shares of its Common Stock, (ii) each Director and nominee
for Director, the Company's Chief Executive Officer and its four most highly
compensated officers (other than the Chief Executive Officer) as of the
Company's fiscal year ended December 31, 1998, and (iii) all officers and
directors of the Company as a group:
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK BENEFICIALLY PERCENT
NAMED EXECUTIVE OFFICERS OWNED AS OF APRIL 16, 1999 OWNED**
<S> <C> <C>
Keith E. Busse (1) 1,546,673 3.2%
Mark D. Millett (2) 1,081,031 2.3%
Richard P. Teets, Jr. (3) 1,155,217 2.4%
Tracy L. Shellabarger (4) 303,075 0.6%
Larry J. Lehtinen (5) 44,441 0.1%
OTHER DIRECTORS OR NOMINEES
Leonard Rifkin (6) 607,049 1.3%
John C. Bates (7) 3,030,492 6.3%
Joseph D. Ruffolo (8) 0 0.0%
William D. Strittmatter (9) 4,310,000 9.0%
Kazuhiro Atsushi (10) 353,750 0.7%
GREATER THAN 5% BENEFICIAL OWNERS
Salzgitter AG 5,539,865 11.6%
General Electric Capital Corporation 4,310,000 9.0%
Centaur, Inc./Heidtman Steel Products, Inc. (11) 3,030,492 6.3%
DIRECTORS AND OFFICERS AS A GROUP
(10 Persons) 12,431,728 26.0%
</TABLE>
2
<PAGE> 6
** Assumes exercise of all stock options (for 106,427 shares)
exercisable within 60 days, with a corresponding increase in the number of
outstanding shares from 47,898,657 on the record date to 48,005,084.
(1) President and Chief Executive Officer, a Director of the Company,
and President and Chief Executive Officer and a Director of Iron Dynamics, Inc.,
the Company's wholly-owned subsidiary. Includes 1,300 shares of Common Stock
held by Mr. Busse's minor son, with respect to which Mr. Busse disclaims
beneficial ownership. Includes 22,764 shares subject to currently exercisable
stock options or stock options exercisable within 60 days.
(2) Vice President and General Manager of the Company's Flat Roll
Division, a Director of the Company, and a Vice President and a Director of Iron
Dynamics, Inc., the Company's wholly-owned subsidiary. Includes 17,074 shares
subject to currently exercisable stock options or stock options exercisable
within 60 days.
(3) Vice President and General Manager of the Company's new Structural
Division and a Director of the Company. Includes 6,000 shares of Common Stock
owned by Mr. Teets' spouse and 17,074 shares subject to currently exercisable
stock options or stock options exercisable within 60 days.
(4) Vice President of Finance and Chief Financial Officer and a
Director of the Company. Includes 17,074 shares subject to currently exercisable
stock options or stock options exercisable within 60 days, 600 shares of Common
Stock held by Mr. Shellabarger's spouse, and 4,800 shares owned by Mr.
Shellabarger's spouse for the benefit of Mr. Shellabarger's minor children.
(5) Vice President of the Company and General Manager of Iron Dynamics,
Inc. Includes 32,441 shares subject to currently exercisable stock options or
stock options exercisable within 60 days.
(6) Director of the Company. Includes 6,000 shares of Common Stock held
by Mr. Rifkin's spouse. The balance of Mr. Rifkin's shares represents shares
distributed to him by Heavy Metal L.C. as part of the complete distribution in
April 1999 of all shares of the Company's Common Stock previously held of record
by Heavy Metal, L.C. for Mr. Rifkin and for all other beneficial owners. No
purchase or sale was involved in such distribution.
(7) Director of the Company. Consists of all 3,030,492 shares of Common
Stock held of record by Centaur, Inc. and Heidtman Steel Products, Inc., of
which Mr. Bates is the President and Chief Executive Officer.
(8) Nominee for Director of the Company.
(9) Director of the Company. Consists of 4,310,000 shares of Common
Stock held of record by General Electric Capital Corporation that Mr.
Strittmatter may be deemed to beneficially own due to his relationship with that
entity. Mr. Strittmatter is a Vice President and Business Unit Manager of
General Electric Capital Corporation's Structured Finance Group. Mr.
Strittmatter disclaims beneficial ownership of these shares.
(10) Nominee for Director of the Company. Consists of 353,750 shares
held of record by Sumitomo Corporation of America that Mr. Atsushi may be deemed
to beneficially own due to his relationship with that entity. Mr. Atsushi is
Vice President and General Manager of the Chicago office and Deputy General
Manager of the Rolled Steel & Ferrous Raw Materials Division of Sumitomo
Corporation of America. Mr. Atsushi disclaims beneficial ownership of these
shares.
(11) John C. Bates, a director of the Company, is the President and
Chief Executive Officer of Centaur, Inc. and its subsidiary Heidtman Steel
Products, Inc.
BOARD OF DIRECTORS, CORPORATE GOVERNANCE, AND COMMITTEES OF THE BOARD
During 1998, the Board of Directors consisted of eleven persons, each
serving a one-year term of office expiring on May 21, 1999. Under the Company's
Bylaws, however, the Board of Directors may amend the Bylaws to prescribe a
greater or lesser number of directors, and in accordance therewith has amended
the Bylaws to decrease the number of directors to nine for this coming year. At
the Annual Meeting, all nine directors will be elected, and each newly elected
director will serve for a one-year term, until the Annual Meeting of
Stockholders in 2000 and until their successors shall have been elected and
qualified.
During 1998, the Company held four regularly scheduled meetings of the
Board of Directors. All directors attended at least 75% or more of the meetings.
The Company paid no retainer fees, meeting attendance fees, or any other
compensation as such to any of its directors, whether employee or non-employee
directors, during 1998, although directors were entitled to reimbursement of
their actual out-of-pocket expenses incurred in attending meetings.
The Board of Directors has an Audit Committee, established to make
recommendations to the Board of Directors with respect to approval of the
selection and engagement of the Company's independent auditors for the ensuing
year; to review the independence of such auditors and the scope of the annual
audit activities of the auditors; to review actions by management on any
independent auditor's recommendations; to meet with management and the
independent auditors to review the effectiveness of the Company's system of
internal controls and internal audit procedures; to approve and recommend
payment of the audit fee payable to the independent auditors; and to review all
audit results. During 1998, the Audit Committee held three formal meetings.
During 1998, the Audit Committee consisted of two non-employee directors, Paul
B. Edgerley and William Laverack, Jr. For the coming
3
<PAGE> 7
year, it is contemplated that the Audit Committee will consist of William D.
Strittmatter and Joseph D. Ruffolo, if elected as directors.
ITEM 1
NOMINEES (INCLUDING ALL EXECUTIVE OFFICERS) FOR ELECTION
AS DIRECTORS
The following table sets forth, with respect to each nominee for
Director, his age, principal occupation during the past five years, other
positions he holds with the Company or its subsidiary, other directorships he
holds, if any, and the year in which he first became a Director of the Company.
Four of the five persons required to be identified as "Named Executive Officers"
in the "Executive Compensation" section of this Proxy Statement are nominees for
Director and are described herein.
DIRECTOR NOMINEES
NAMES & OCCUPATIONS
DURING PERIOD SINCE 1993
KEITH E. BUSSE, AGE 56
DIRECTOR SINCE 1993
President and Chief Executive Officer and a Director of SDI since its
inception, and President and Chief Executive Officer and a Director of
Iron Dynamics, Inc. ("IDI"), the Company's wholly-owned subsidiary.
Prior to 1993, for a period of twenty-one years, Mr. Busse worked for
Nucor Corporation wherein he last held the office of Vice President.
Mr. Busse is a director of Tower Financial Corporation, a bank holding
company.
MARK D. MILLETT, AGE 39
DIRECTOR SINCE 1993
Vice-President and General Manager of the Company's Flat Roll Division,
a Director of SDI since its inception, and a Vice-President and a
Director of IDI. Prior to 1993, Mr. Millett worked for Nucor
Corporation, which he joined in 1982.
RICHARD P. TEETS, JR., AGE 43
DIRECTOR SINCE 1993
Vice-President and General Manager of the Company's new Structural
Division and a Director of SDI since its inception. Prior to 1993, Mr.
Teets worked for Nucor Corporation, which he joined in 1987.
TRACY L. SHELLABARGER, AGE 42
DIRECTOR SINCE 1994
Vice-President of Finance and Chief Financial Officer and a Director
since July 1994. From 1987 to 1994, Mr. Shellabarger worked for Nucor
Corporation.
LEONARD RIFKIN, AGE 68
DIRECTOR SINCE 1994
Mr. Rifkin was the President and Chief Executive Officer and a director
of OmniSource Corporation from 1959 to 1996, and since September 1996,
has been its Chairman of the Board and a director. OmniSource
Corporation is a supplier of steel scrap to the Company. Mr. Rifkin is
a director of Tower Financial Corporation, a bank holding company.
JOHN C. BATES, AGE 55
DIRECTOR SINCE 1994
Mr. Bates is the President and Chief Executive Officer and a director
of Heidtman Steel Products, Inc., which he joined in 1963, and for
which he has served as its President and Chief Executive Officer and a
director since 1969. Heidtman Steel Products, Inc. is a customer of the
Company's manufactured steel products.
4
<PAGE> 8
WILLIAM D. STRITTMATTER, AGE 42
DIRECTOR SINCE 1994
Mr. Strittmatter is a Vice-President and Business Unit Manager of
General Electric Capital Corporation's Structured Finance Group. He
joined General Electric Capital Corporation in 1982.
JOSEPH D. RUFFOLO, AGE 57
NEW DIRECTOR NOMINEE
Mr. Ruffolo has been a principal in Ruffolo Richard LLC, a business and
financial consulting firm, since 1994. Prior to that, Mr. Ruffolo was
the president and chief executive officer of North American Van Lines,
Inc. Mr. Ruffolo is a director of Tower Financial Corporation, a bank
holding company.
KAZUHIRO ATSUSHI, AGE 50
NEW DIRECTOR NOMINEE
Mr. Atsushi has been Vice President and General Manager of the Chicago
office and Deputy General Manager of the Rolled Steel & Ferrous Raw
Materials Division of Sumitomo Corporation of America since April 1998.
Prior to that, Mr. Atsushi was Executive Vice President of Michigan
Steel Processing, Inc., a subsidiary of Sumitomo Corporation of
America, from October 1996 through April 1998. From 1972 through 1996,
Mr. Atsushi held a number of positions within Sumitomo Corporation.
Sumitomo Corporation of America is a customer of Steel Dynamics' flat
rolled steel products and is also a licensee of the Company's Iron
Dynamics subsidiary's ironmaking technology.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED ELECTION OF DIRECTORS
DESCRIBED IN THIS PROXY STATEMENT.
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation paid by the Company for services rendered for 1996, 1997, and 1998
for the Chief Executive Officer and the other four most highly compensated
executive officers of the Company whose salary and bonus amounts exceeded
$100,000 (collectively, the "Named Executive Officers"). The amounts shown
include compensation for services rendered in all capacities.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
AWARDS
--------------------------------- ------------------------
RESTRICTED
OTHER ANNUAL STOCK SECURITIES ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION AWARDS UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) OPTIONS (#) ($)(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Keith E. Busse 1998 325,000 301,328 9,782 17,853
President and Chief 1997 310,000 596,111 7,982 20,454
Executive Officer 1996 290,000 219,000 5,000 7,460
Mark D. Millett 1998 200,000 188,609 7,337 12,997
Vice President 1997 187,000 341,770 5,987 17,526
1996 175,000 115,000 3,750 6,727
Richard P. Teets, Jr. 1998 200,000 188,609 7,337 13,343
Vice President 1997 187,000 341,770 5,987 17,791
1996 175,000 115,000 3,750 6,821
Tracy L. Shellabarger 1998 168,000 159,753 7,337 13,079
Vice President and 1997 157,000 288,877 5,987 17,452
Chief Financial Officer 1996 135,000 81,000 1,050,837 (2) 3,750 6,710
Larry J. Lehtinen 1998 130,000 86,671 5,503 12,546
Vice President 1997 120,000 88,258 38,163 162,137
</TABLE>
(1) Represents matching contributions made by the Company under its
Retirement Savings Plan, contributions under the Profit Sharing Plan, and
life insurance premiums and, in the case of Larry J. Lehtinen for the
1997 year, relocation expense reimbursements ($144,817). Excludes
perquisites and other personal benefits unless the aggregate amount of
such compensation exceeds the lesser of either $50,000 or 10% of the
total of the annual salary and bonus reported for such Named Executive
Officer.
(2) Represents forgiveness of indebtedness income to Mr. Shellabarger
($750,000) and amounts reimbursed to him for the payment of interest on
the $750,000 and taxes on the forgiveness of indebtedness income
($300,837) in connection with a July 7, 1994 $750,000 promissory note
payable to the Company, which was executed by Mr. Shellabarger for the
purchase of SDI Common Stock at the time of his employment and which was
forgiven, as required under Mr. Shellabarger's Employment Contract, in
connection with the November 21, 1996 initial public offering of the
Company's Common Stock.
6
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
FOR OPTION TERM
---------------------
SECURITIES
UNDERLYING % OF TOTAL OPTIONS EXERCISE OR
OPTIONS GRANTED GRANTED TO EMPLOYEES BASE PRICE EXPIRATION
NAME (# OF SHARES) IN 1998 ($/SH) DATE 5% ($) 10% ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Keith E. Busse 3,856 0.95% 20.75 05/21/03 22,106 48,848
5,926 1.46% 13.50 11/21/03 22,103 48,841
Mark D. Millett 2,892 0.71% 20.75 05/21/03 16,579 36,636
4,445 1.10% 13.50 11/21/03 16,579 36,635
Richard P. Teets, Jr 2,892 0.71% 20.75 05/21/03 16,579 36,636
4,445 1.10% 13.50 11/21/03 16,579 36,635
Tracy L. Shellabarger 2,892 0.71% 20.75 05/21/03 16,579 36,636
4,445 1.10% 13.50 11/21/03 16,579 36,635
Larry J. Lehtinen 2,169 0.53% 20.75 05/21/03 12,435 27,477
3,334 0.82% 13.50 11/21/03 12,435 27,478
</TABLE>
NOTE
All full-time employees, including senior officers, participate in the Steel
Dynamics, Inc. 1996 Incentive Stock Option Plan. Certain key employees,
excluding Messrs. Busse, Millett, Teets and Shellabarger, participate in the
Steel Dynamics, Inc. 1994 Incentive Stock Option Plan. Under both plans, stock
options are granted at 100% of the market value on the date of grant. During
1998, employees, other than the above-named senior officers, were granted stock
options for 368,260 shares (91% of the total stock options granted to all
employees), at exercise prices ranging from $13 to $23. The potential realizable
value of the stock options granted to these employees was $2,141,441 at 5%
annual stock price appreciation and $4,985,491 at 10% annual stock price
appreciation.
DIRECTOR COMPENSATION
No separate compensation, awards, or fees were paid to or accrued for
directors of the Company during 1998 for their services as such, other than
reimbursement of expenses incurred with respect to such services. Directors who
were also officers and employees of the Company, including Messrs. Busse,
Millett, Teets, and Shellabarger, received only the compensation paid to them as
officers and employees and described elsewhere hereunder.
EMPLOYMENT AGREEMENTS
Effective as of June 24, 1994, the Company entered into an Employment
Agreement with Keith E. Busse for a term of five years, to serve as President
and Chief Executive Officer. Mr. Busse received a Base Salary of $290,000 for
1996, $310,000 for 1997, and $325,000 for 1998. Mr. Busse's Base Salary for 1999
is also $325,000. The Employment Agreement also provides for an annual bonus (an
"Annual Bonus"). The Annual Bonus, solely under Mr. Busse's Employment
Agreement, is determined by a process involving an award among executive
employees selected by the Board of Directors, in proportion to their respective
base salaries, out of an "Annual Bonus Pool" consisting of 4% of the Company's
pre-tax earnings, less an amount equal to 10% of the "equity investment" in the
Company, determined as of the beginning of the year. The Annual Bonus is subject
first, to a maximum payment of 200% of Base Salary in cash, then, a maximum
payment of 100% of Base Salary in SDI restricted stock vesting ratably over four
years. For the first five years of employment, the Annual Bonus is guaranteed at
an amount not less than 60% of Base Salary, regardless of the Company's
profitability. Mr. Busse's actual bonus, however, is determined by the greater
of the amount of the Annual Bonus under his Employment Agreement, as described
above, or the amount determined under the Company's 1996 Officer and Manager
Cash and Stock Bonus Plan, described later in this section and under the
subheading "Annual Bonus" in the following section. For 1998, Mr. Busse's Annual
Bonus was $301,328. In addition, Mr. Busse received additional compensation of
$30,000 during each of the years 1996 and 1997.
7
<PAGE> 11
Upon termination of Mr. Busse's employment due to his disability or
death, the Company will continue paying Mr. Busse or his estate, as the case may
be, the prescribed Base Salary during the remainder of the five-year term;
provided that in the case of disability, such payments will be reduced to the
extent of any benefits paid by workers' compensation, or under any state
disability benefit program or under any disability policy maintained by the
Company.
Effective June 24, 1994, the Company also entered into five-year
Employment Agreements with Mark D. Millett and Richard P. Teets, Jr., pursuant
to which Mr. Millett, as Vice President of Melting and Casting, and Mr. Teets,
as Vice President of Rolling and Finishing, each received a Base Salary of
$175,000 for 1996, $187,000 for 1997, and $200,000 for 1998. Mr. Millett's and
Mr. Teets' Base Salaries for 1999 are each also $200,000. Both Mr. Millett and
Mr. Teets are also entitled to an Annual Bonus, calculated in the same manner
and subject to the same limitations as that described for Mr. Busse, including
the interplay between the Annual Bonus determined under each of their Employment
Agreements and the amount of the Annual Bonus calculated under the 1996 Bonus
Plan. The termination provisions contained in the Employment Agreements with
Messrs. Millett and Teets are identical to those contained in the Employment
Agreement with Mr. Busse. For 1998, Mr. Millett and Mr. Teets' Annual Bonuses
were each $188,609.
Effective July 7, 1994, the Company entered into a four-year Employment
Agreement with Mr. Shellabarger, to serve as Chief Financial Officer. Mr.
Shellabarger's Base Salary was $135,000 for 1996, $158,000 for 1997, and
$168,000 for 1998. For 1999, Mr. Shellabarger's Base Salary is also $168,000. At
the commencement of his employment, the Company also sold to Mr. Shellabarger
280,601 shares of its Common Stock, at an aggregate purchase price of $750,100,
for which he executed a promissory note for $750,000, secured by a pledge of the
stock, due and payable in July 1998. Installments of interest were payable by
Mr. Shellabarger in July 1995 through 1997. Under his Employment Contract, to
offset the interest payments due on the note, Mr. Shellabarger received an
additional $70,000 bonus, plus additional compensation to offset taxes on this
bonus amount, so long as the promissory note remained outstanding and Mr.
Shellabarger remained employed by the Company. Pursuant to the terms of his
Employment Agreement, the promissory note was forgiven in November 1996, in
connection with the Company's initial public offering of its Common Stock. Mr.
Shellabarger is also entitled to an Annual Bonus, calculated in the same manner
and subject to the same limitations as that described for Mr. Busse and
applicable as well to Messrs. Millett and Teets. Mr. Shellabarger's Annual Bonus
for 1998 was $159,753.
Effective January 2, 1997, Mr. Lehtinen entered into a five-year
Employment Agreement with Iron Dynamics, Inc. to serve as its Vice President and
General Manager. His Base Salary was $120,000 for 1997, $130,000 for 1998, and
is $145,000 for 1999. During the first two years of employment, Mr. Lehtinen was
also eligible for an annual bonus of not less than $78,000 per year. His bonus
was $86,671 for 1998. Mr. Lehtinen is a participant as a "Manager", under the
Company's Incentive Stock Option Plan and, from 1999 forward, is eligible for
participation as a "Manager" in the 1996 Bonus Plan.
With respect to Messrs. Busse, Millett, Teets, and Shellabarger, after
the initial employment term expires, and although each of the foregoing
Employment Agreements continue only on a month-to-month basis thereafter (unless
renewed), each is entitled to six months of severance pay, at their Base Salary,
if employment is in fact not continued.
All five Named Executive Officers receive major medical and long-term
disability, Mr. Lehtinen receives term life insurance equal to his Base Salary,
and Messrs. Busse, Millett, Teets, and Shellabarger receive term life insurance
equal to twice their Base Salaries.
In October 1996, the Board of Directors adopted, and the stockholders
approved, an Officer and Manager Cash and Stock Bonus Plan (the "1996 Bonus
Plan"), which is described elsewhere in the Proxy Statement in the "Report of
the Board of Directors on Executive Compensation." The 1996 Bonus Plan, which
also covers Messrs. Busse, Millett, Teets, Shellabarger, and Lehtinen,
prescribes its own cash and stock bonus awards, but provides that any bonus
amounts payable to Messrs. Busse, Millett, Teets, or Shellabarger under their
respective Employment Agreements are to be deducted from the amount of their
bonus, if any, payable under the 1996 Bonus Plan. The 1996 Bonus Plan was not
made effective for the 1996 compensation year, and thus no bonus awards were
made for 1996 under its provisions. Beginning in 1997, bonus amounts, if any,
began to be calculated under the 1996 Bonus Plan. In each case, the Annual Bonus
amounts shown for each of the Named Executive Officers in the Compensation
Table, and described above, were bonus amounts calculated under the 1996 Bonus
Plan.
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<PAGE> 12
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Company's Executive Compensation Program is administered directly
by the Board of Directors and is structured to promote the achievement of the
Company's business goals and, thereby, to maximize Company performance and
stockholder value. The Company's executive compensation consists primarily of
Base Salary, Annual Bonus awards (payable in cash and, if applicable, in
restricted Company stock), and grants of stock options. The Board of Directors
believes that executive compensation should reflect a substantial incentive
component, thus aligning its philosophy of executive compensation with the
Company's culture and compensation philosophy that characterizes the rest of its
work force. The Board of Directors also believes that stock option incentives
play a major role in aligning executive compensation with long-term stockholder
interests. The total compensation for each of the Company's executive officers
consists of both cash and non-cash compensation. The cash compensation component
consists of both Base Salary and the cash portion of any annual bonus earned by
that executive pursuant to his Employment Agreement, or otherwise applicable
under the 1996 Bonus Plan (for years subsequent to 1996). The non-cash component
consists of stock options and, for years subsequent to 1996, depending upon the
Company's profitability, the stock bonus portion, if any, of the 1996 Bonus
Plan.
In evaluating its overall Executive Compensation Program, the Board of
Directors considers numerous factors such as the need to provide a mix of
compensation elements sufficient to attract and retain the type of executive
talent the Company strives to attract, given available data on the payment of
executive officers at comparable companies and by the Company's most direct
competitors. The overall objectives of the Company's compensation strategy are
to attract and retain the best possible executive talent, to motivate the
Company's executives to achieve goals fundamental to the Company's business
strategy, to link executive and stockholder interests, and to provide a
compensation package that recognizes individual contribution as well as overall
business results.
BASE SALARY
The Board of Directors establishes the Base Salary for each executive
officer during the final month of each fiscal year for the following fiscal
year. Increases in Base Salary are determined on the basis of individual
performance and level of responsibility. The Board reviews the performance of
each executive officer and establishes a Base Salary commensurate with the
officer's individual contributions to the success of the Company.
ANNUAL BONUS
For 1996 and prior years, the written Employment Agreement between the
Company and Messrs. Busse, Millett, Teets, and Shellabarger determined whether
an Annual Bonus would be payable to that person and, if so, the amount thereof.
For 1998, there were two sources for this determination: the written Employment
Agreement and the 1996 Bonus Plan (effective January 1997). (See the prior
discussion under "Employment Agreements.") The "annual bonus pool" that is
calculated under the 1996 Bonus Plan is allocated among the key executive
employees identified to constitute the bonus pool, in proportion to each
person's Base Salary. The identification of participants in the bonus pool is by
the Board of Directors and can include more than the Named Executive Officers.
During the first five years of employment under their written Employment
Agreements, however, Messrs. Busse, Millett, Teets, and Shellabarger are
entitled to a minimum Annual Bonus equal to sixty percent of their Base Salary,
regardless of the Company's profitability. During 1996, because the pre-tax
earnings calculation for the Company's first full year of operations did not
equal the minimum Annual Bonus formula, the minimum Annual Bonus was in fact
paid to each of the Named Executive Officers.
For years after 1996, for purposes of the 1996 Bonus Plan, five percent
of an amount determined by subtracting from the Company's "Adjusted Pre-tax Net
Income" an amount equal to ten percent of "Stockholder's Equity" as determined
by the Company's Audited Consolidated Balance Sheets, is to be placed into a
"distribution pool," from which Annual Bonus awards are to be made. For purposes
of the calculation, Adjusted Pre-tax Net Income for any fiscal year is defined
as net income before taxes, extraordinary items and bonuses payable to
"Participants" under the 1996 Bonus Plan, as determined by the Company's outside
auditors, except that, to the extent reasonably determinable, any effect upon
Adjusted Pre-tax Net Income of any start-up expenses associated with significant
capital expenditures, for a period not to exceed twelve months following
start-up, are to be excluded from and not taken into account in determining
Adjusted Pre-tax Net Income.
Once the Distribution Pool has been calculated, and if it is a positive
number, the Participant's Annual Bonus will either be payable entirely in cash
or, if the Distribution Pool is sufficient, in cash and in stock of the Company,
up to the amount
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<PAGE> 13
prescribed in the 1996 Bonus Plan's formula. Specifically, each Participant is
entitled to receive a cash bonus in an amount determined by multiplying the
amount in the Distribution Pool by the Participant's "Bonus Percentage," up to a
defined maximum. With respect to an Officer (including all of the Named
Executive Officers) the cash bonus may not exceed two times that person's Base
Salary. In the case of a Manager, the cash bonus is not to exceed one hundred
percent of that person's Base Salary. For purposes of the calculation, a
Participant's "Bonus Percentage" means, in any year with respect to that
Participant, a fraction, the numerator of which is equal to either (i) with
respect to an Officer, two times the Officer's Base Salary, or (ii) with respect
to a Manager, the Manager's Base Salary (both (i) and (ii) are defined as the
"Participant's Adjusted Base Salary"), and the denominator of which is equal to
the sum of all of the Participants' Adjusted Base Salaries. There is an offset,
however, applicable to Messrs. Busse, Millett, Teets, and Shellabarger, to avoid
a duplication of Annual Bonus payments under both the 1996 Bonus Plan and under
each of their written Employment Agreements, and this offset requires that the
amount of any Annual Bonus payable under their respective Employment Agreements
be deducted from the Annual Bonus determined under the 1996 Bonus Plan.
At present, the Company's Board of Directors serves as the
Administrative Committee to administer the 1996 Bonus Plan, and this function
includes the selection from time to time of the Participants (which may only
include Officers and Managers). The 1996 Bonus Plan does contemplate that the
Board of Directors may appoint an Administrative Committee of at least two
members of the Board, each of whom should be both a "non-employee director" (as
defined in Rule 16(b)-3 under Section 16 of the Securities Exchange Act of 1934)
and an "outside director" (as defined in Section 162 of the Internal Revenue
Code).
If there is any excess in the Distribution Pool over the sum of the
aggregate cash bonuses payable to all Participants, after making necessary
adjustments, the amount thereof is to be distributed to the Participants in the
form of "Restricted Stock." If applicable, each Participant is to receive that
number of shares of Restricted Stock having a fair market value, at the time of
issuance, equal to the product of that Participant's Bonus Percentage and the
amount left over in the Distribution Pool (defined as the "Adjusted Distribution
Pool"), except that, with respect to an Officer, the aggregate fair market value
of the Restricted Stock so issued is not to exceed the Officer's Base Salary,
and, with respect to a Manager, the aggregate fair market value of the
Restricted Stock so issued is not to exceed fifty percent of the Manager's Base
Salary. The Restricted Stock is required to vest and become non-forfeitable
ratably over a four year period for each full year of employment commencing on
January 1 following the year with respect to which the Restricted Stock was
issued. Upon termination of a Participant's employment for any reason other than
retirement, all shares of Restricted Stock of that Participant which were not
vested at the time of termination of employment are required to be forfeited and
returned to the Company (although the Administrative Committee, in its
discretion, may waive the forfeiture provision). Until vested, Restricted Stock
is not permitted to be transferred, assigned, sold, pledged, or otherwise
disposed of in any manner, nor subject to levy, attachment or other legal
process and, while restricted, the stock certificates evidencing those shares
are required to be legended and held by the Company. Subject to these
limitations, however, and as long as a forfeiture has not occurred, the
Participant is treated as the owner of the Restricted Stock with full dividend
and voting rights.
For 1998, the Annual Bonuses payable to each of the Named Executive
Officers consisted only of cash, and no Restricted Stock grants were earned or
paid under the 1996 Bonus Plan.
Because the attainment of future Adjusted Pre-tax Net Income is by its
nature not certain, it is not possible to determine the benefits and amounts, in
cash and/or in Restricted Stock, that will be received in the future by any
individual Participant under the 1996 Bonus Plan.
STOCK OPTION PLAN
In October 1996, the Board of Directors adopted and the stockholders
approved the 1996 Incentive Stock Option Plan (the "1996 Option Plan"), which
covers all full-time employees of the Company (approximately 591 employees as of
December 31, 1998) and its subsidiaries, including Officers, Managers,
supervisors, professional staff, and hourly employees. A 1994 Incentive Stock
Option Plan, which is not applicable to officers, covers Managers, Supervisors,
and Professionals, although Mr. Nolan, a "Manager" at the time, received stock
options thereunder in 1994 and 1995.
Under the 1996 Option Plan, the Company grants automatic semi-annual
stock options to all such employees, by position category, based upon the fair
market value of the Company's Common Stock on each semi-annual grant date
(determined by the previous day's closing price), with an exercise price equal
to the same fair market value on the grant date (one hundred ten percent of the
fair market value in the case of any ten percent stockholder). As it pertains to
the Named Executive Officers, the semi-annual grants to the President, Keith E.
Busse, are required to aggregate $80,000 each in fair market value; in the case
of three of the Vice Presidents (Messrs. Millett, Teets, and Shellabarger), the
semi-annual option grants are required to aggregate $60,000 each in fair
10
<PAGE> 14
market value; and in the case of Mr. Lehtinen, the semi-annual option grants are
required to aggregate $45,000 in fair market value. The fair market value grants
to the other covered employees are at lesser amounts, ranging from semi-annual
$30,000 grants to Managers to semi-annual $2,500 grants to hourly employees.
The stock options are intended to qualify as "incentive stock options"
under the Internal Revenue Code, except to the extent that the aggregate fair
market value (determined as of the time of the option grant) of all shares of
Common Stock with respect to which incentive stock options are first exercisable
by an individual optionee in any calendar year (under all plans of the Company
and any parent or subsidiary) exceeds $100,000, in which case the excess of the
options over $100,000 will be issued as non-statutory stock option, not
qualifying as incentive stock options. In any fiscal year of the Company, no
employee may be granted options to purchase more than 300,000 shares of the
Company's Common Stock. During 1996, only one option grant was made by the
Company (in November 1996, concurrently with the effectiveness of the Company's
initial public offering of its Common Stock). Semi-annual option grants were
made during both 1997 and 1998.
The 1996 Option Plan is a five-year plan, which terminates December 31,
2001. Options issued under the 1996 Option Plan become exercisable six months
after the date of grant and must be exercised no later than five years
thereafter. Subject to certain exceptions, the employee must retain in the
continuous employment of the Company or any of its subsidiaries from the date of
grant to and including the date of exercise. Options are not transferable,
except by will or pursuant to a Qualified Domestic Relations Order, or permitted
under Section 422 of the Internal Revenue Code or under applicable Securities
and Exchange Commission rules, and may be exercised, during the optionee's
lifetime, only by the optionee. No shares of Common Stock may be issued until
full payment has been made, and an optionee has no right to any dividends or
other rights of a stockholder with respect to shares subject to an option until
such time as the stock has actually been issued in the optionee's name in
accordance with the 1996 Option Plan. If an option expires or terminates without
having been exercised in full, the unpurchased shares will continue to be
available for award under the 1996 Option Plan.
The 1996 Option Plan is currently administered by the Company's Board
of Directors, in the absence of an Administrative Committee of the Board
consisting of at least two members of the Board, each of whom must be both a
"non-employee director," as defined in Rule 16(b)-3 promulgated under Section 16
of the Securities Exchange Act of 1934, and an "outside director" as that term
is used in section 162 of the Internal Revenue Code. The 1996 Option Plan is
required to be administered so as to comply at all times with Rule 16(b)-3 of
the Securities Exchange Act of 1934 and Sections 162, 421, 422, and 424 of the
Internal Revenue Code. The Board may amend, alter, or discontinue the 1996
Option Plan at any time and from time to time.
OTHER COMPENSATION
In addition to Base Salary, and Annual Bonus, and Incentive Stock
Options issued under the 1996 Option Plan, the Company's Executive Compensation
Program (in which the Named Executive Officers participate, along with other
"eligible employees") consist of a Profit Sharing Plan and a Retirement Savings
Plan.
PROFIT SHARING PLAN
The Company has established a Profit Sharing Plan for eligible
employees, including the Named Executive Officers, which is a "qualified plan"
for federal income tax purposes. Under the Profit Sharing Plan, the Company each
year allocates to Profit Sharing Plan participants (the "profit sharing pool")
an amount equal to five percent of the Company's pre-tax profits. The profit
sharing pool is used to fund the Profit Sharing Plan, as well as a separate cash
profit sharing bonus which is paid to employees in March of the following year.
The allocation between the Profit Sharing Plan contribution and the cash bonus
amount is determined by the Board of Directors each year. The amount allocated
to the Profit-Sharing Plan is subject to a maximum legally established
percentage of compensation paid to participants. Employees become eligible to
participate in the Profit Sharing Plan after they have completed thirty days of
employment with the Company, and an employee is entitled to a Profit Sharing
Plan allocation only if that person has worked at least 1,000 hours during the
year. An employee becomes fully vested over a period of seven years of service
with the Company, subject to accelerated vesting in the event of retirement,
death, or disability. The amount allocated to the Company's Chief Executive
Officer for 1998 pursuant to the Profit Sharing Plan was $11,512.
RETIREMENT SAVINGS PLAN
The Company has also established a Retirement Savings Plan for eligible
employees, which is also a "qualified plan" for federal income tax purposes.
There are no service requirements for Employees to become eligible to
participate in the Retirement
11
<PAGE> 15
Savings Plan. Contributions to the Retirement Savings Plan by the employee may
be made on a pre-tax basis, and the income earned on such contributions is not
taxable to an employee until actually received at a later date. Generally,
employees may contribute on a pre-tax basis up to 8% of their eligible
compensation, and the Company matches employee contributions in an amount based
upon the Company's return on assets, with a minimum match of 5% and a maximum
match of 50%, subject to certain applicable tax law limitations. Employees are
immediately 100% vested with respect to their pre-tax contributions and the
Company's matching contributions. The amount contributed by the Company in
respect of its Chief Executive Officer for 1998 pursuant to the Retirement
Savings Plan was $995.
BOARD OF DIRECTOR INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors has not established a compensation committee,
nor has it established any other committee of the Board except for the Audit
Committee previously described herein. All decisions regarding the compensation
of executive officers, as well as all other decisions, are determined by the
full Board of Directors, and all directors participate in deliberations of the
Board on all matters, including the evaluation of executive officer performance.
Of the nine nominees for members of the Board of Directors, Messrs.
Busse, Millett, Teets, and Shellabarger are employee-directors. Of the remaining
five nominees, only Messrs. Strittmatter and Ruffolo are not affiliated with a
business entity whose relationship with the Company requires disclosure. Mr.
Rifkin is the Chairman of the Board and a Director of OmniSource Corporation,
the Company's exclusive supplier of steel scrap for its steel manufacturing
operations. John C. Bates is the President and Chief Executive Officer of
Heidtman Steel Products, Inc., the largest purchaser of manufactured steel
products produced by the Company. Mr. Atsushi is the Vice President and General
Manager of the Chicago office and Deputy General Manager of the Rolled Steel &
Ferrous Raw Materials Division of Sumitomo Corporation of America, which has an
exclusive license agreement with Iron Dynamics, Inc., the Company's wholly-owned
subsidiary, to sub-license Iron Dynamics' ironmaking technology internationally.
All such business relationships, and the particulars of each of the
relationships, have been considered and approved by the full Board of Directors
as beneficial to the Company, have been determined to be fair and equitable to
the Company in all respects, and in all events afford the Company terms and
conditions no less favorable than would be available from an independent
purchaser or supplier of such goods and services.
12
<PAGE> 16
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
stockholder return on the Company's common stock with the cumulative total
return of companies on the NASDAQ Stock Market - US Index and the Standard &
Poor's Iron and Steel Index for the limited period of November 22, 1996 (the
first day of trading on NASDAQ National Market System following the Company's
initial public offering of its Common Stock) and the last trading day prior to
December 31, 1998, and assumes the reinvestment of dividends (of which there
were none).
COMPARISON OF 25 MONTH CUMULATIVE TOTAL RETURN*
AMONG STEEL DYNAMICS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P IRON & STEEL INDEX
CUMULATIVE TOTAL RETURN
-----------------------
11/22/96 12/96 12/97 12/98
-------- ----- ----- -----
Steel Dynamics ..................... 100 120 100 73
NASDAQ Stock Market (U.S.) .......... 100 106 130 183
S&P Iron & Steel ................... 100 108 110 95
* $100 INVESTED ON 11/22/96 IN STOCK OR ON 10/31/96 IN INDEX - INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
13
<PAGE> 17
ITEM 2
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT AUDITORS
On April 19, 1999, the Board of Directors, upon the recommendation of
the Audit Committee, appointed Ernst & Young LLP as independent auditors to
conduct the Company's Annual Audit for the fiscal year ending December 31, 1999,
subject to stockholder approval. If a majority of the shares voting at the
Annual Meeting does not approve of the appointment, the Board of Directors will
reconsider that appointment. It is believed that representatives of Ernst &
Young LLP will be present at the Annual Meeting, will have an opportunity to
make a statement if they desire, and will be available to respond to appropriate
questions from stockholders.
The 1997 and 1998 Annual Audits were conducted by Deloitte & Touche
LLP. The determination to appoint a new independent accounting firm for the 1999
Annual Audit was made by the Company and was approved by the Audit Committee.
The reports of Deloitte & Touche LLP for the past two fiscal years did not
contain any adverse opinion or any disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope, or accounting principles.
Furthermore, in connection with the audits of the Company's financial statements
for the two fiscal years ended December 31, 1997 and December 31, 1998, and
during the interim period through April 19, 1999, there were no disagreements
with Deloitte & Touche LLP on any matter of accounting principles or practices,
financial statement disclosures, or auditing scope or procedure. The Company did
not at any time prior to Ernst & Young's engagement consult with that firm
regarding the application of any accounting principles to any specified
transaction, the type of audit opinion that might be rendered, or with respect
to any matter that was either the subject of a disagreement with the Company's
prior auditors or that would constitute a reportable event within the scope of
Item 304(a) of SEC Regulation S-K.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's Directors and Executive Officers ("Reporting Persons") file with the
Securities and Exchange Commission initial reports of beneficial ownership of
the Company's Common Stock and other equity securities and reports of changes in
the beneficial ownership of such Common Stock or other equity securities of the
Company. Reporting Persons are required to provide the Company with a copy of
their required Section 16(a) Reports as and when they are filed. To the
Company's knowledge, based solely on its review of such reports furnished to the
Company, and written representations that no other reports were required, all
Section 16(a) filing requirements applicable to Reporting Persons were complied
with during the year ended December 31, 1998.
OTHER MATTERS
The Board of Directors does not intend to bring any other matters
before the Annual Meeting, nor is Management aware of any other matters that are
to be properly presented to the Annual Meeting by others. In the event that
other matters do properly come before the Annual Meeting or any adjournments
thereof, it is the intention of the persons named in the Proxy to vote such
Proxy in accordance with their best judgment on such matters.
STOCKHOLDER PROPOSALS FOR
2000 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who intends to present a proposal at the 2000 Annual
Meeting of Stockholders and desires that such proposal be considered for
inclusion in the Proxy Statement and Proxy for such Annual Meeting must furnish
the proposal in writing to the Secretary of the Company no later than November
30, 1999.
By Order of the Board of Directors
Keith E. Busse
President and Chief Executive Officer
Fort Wayne, Indiana
April 26, 1999
14
<PAGE> 18
PROXY
COMMON STOCK
STEEL DYNAMICS, INC.
ANNUAL MEETING OF SHAREHOLDERS MAY 21, 1999
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned, a Stockholder of Steel Dynamics, Inc. (the "Company"),
hereby revoking any proxy heretofore given, hereby appoints Keith E. Busse and
Tracy L. Shellabarger, or either of them, proxies with full power of
substitution and with the powers the undersigned would possess if personally
present and voting, for and in the name of the undersigned to attend the Annual
Meeting of Stockholders of the Company to be held in the John Whistler Ballroom
of the Grand Wayne Center, 120 West Jefferson Boulevard, Fort Wayne, Indiana, on
May 21, 1999, at 9:00 o'clock a.m., Fort Wayne time, and any adjournment or
adjournments thereof, and there, in accordance with the instructions on the
reverse side, to vote all shares of Common Stock of the Company held of record
by the undersigned on April 16, 1999, which the undersigned would be entitled to
vote if personally present at the Annual Meeting, upon all subjects that may
properly come before the meeting, including the matters described in the Proxy
Statement furnished herewith:
1. Election of Directors:
NOMINEES FOR DIRECTORS:
<TABLE>
<S> <C> <C> <C> <C>
Keith E. Busse Richard P. Teets, Jr. Mark D. Millett Tracy L. Shellabarger Leonard Rifkin
John C. Bates Joseph D. Ruffolo William D. Strittmatter Kazuhiro Atsushi
</TABLE>
(Continued and to be SIGNED on the OTHER SIDE)
-FOLD AND DETACH HERE-
<PAGE> 19
/X/ Please mark your
votes as in this
example.
FOR WITHHELD
1. Election of / / / /
Directors
(See Reverse)
2. Approval of FOR AGAINST ABSTAIN
Appointment / / / / / /
of Auditors.
For, except vote withheld from the following nominee(s):
- -------------------------------------------------------------
3. In their discretion, said proxies are authorized to vote upon any other
business which may properly come before the Annual Meeting. (Line out if you
do not wish to grant this discretionary authority.)
THIS PROXY WILL BE VOTED AS DIRECTED, IF NO CONTRARY INSTRUCTION IS INDICATED,
THE VOTE OF THE UNDERSIGNED WILL BE CAST "FOR" THE PROPOSED ELECTION OF
NOMINEES FOR DIRECTORS NAMED HEREIN AND "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR
1999.
NOTE: Your signature should appear as your name appears hereon. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
The Board of Directors request that you fill in, sign, date and return this
Proxy promptly using the enclosed, self-addressed envelope.
- --------------------------------------------------
- --------------------------------------------------
SIGNATURE(S) DATE
-FOLD AND DETACH HERE-
