SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1997.
OR
/ / TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from __________ to __________
Commission file number 1-2394
WHX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3768097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 EAST 59TH STREET 10022
NEW YORK, NEW YORK (Zip code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 212-355-5200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Name of each exchange on
Title of each class which registered
------------------- ----------------
Common Stock, $.01 par value New York Stock Exchange
Series A Convertible Preferred Stock, $.10 par value New York Stock Exchange
Series B Convertible Preferred Stock, $.10 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
Aggregate market value of Common Stock held by non-affiliates of the Registrant
as of March 2, 1998 was $273.4 million, which value, solely for the purposes of
this calculation excludes shares held by Registrant's officers and directors.
Such exclusion should not be deemed a determination by Registrant that all such
individuals are, in fact, affiliates of the Registrant. The number of shares of
Common Stock issued and outstanding as of March 2, 1998 was 18,669,175,
including 340,649 shares of redeemable Common Stock.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The following sets forth certain information with respect to the
Directors of the Company:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FIRST YEAR
CLASS OF FOR THE PAST FIVE YEARS BECAME
NAME DIRECTOR AND CURRENT PUBLIC DIRECTORSHIPS AGE A DIRECTOR(1)
- ---- -------- -------------------------------- --- -------------
<S> <C> <C> <C> <C>
Neil D. Arnold III DIRECTOR. Group Finance Director 49 1992
since December 1996 and
Executive Vice President,
Corporate Development from
September 1996 through
December 1996 of Lucas
Varity plc, Senior Vice
President and Chief
Financial Officer from July
1990 through September 1996
of Varity Corporation. Lucas
Varity plc designs,
manufactures and supplies
advanced technology systems,
products and services in the
world's automotive, diesel
engine and aerospace
industries.
Paul W. Bucha II DIRECTOR. Chairman of the Board 54 1993
of Wheeling-Pittsburgh Steel
Corporation ("WPSC") since April
1998. President, Paul W. Bucha &
Company, Inc., an international
marketing consulting firm, since
1979; President, BLHJ, Inc., an
international consulting firm, from
July 1991 to present; President,
Congressional Medal of Honor
Society of U.S., since September
1995.
Robert A. Davidow III DIRECTOR AND VICE CHAIRMAN OF 56 1992
THE BOARD. Private investor since
January 1990. Mr. Davidow is also
a director of Arden Group, Inc.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FIRST YEAR
CLASS OF FOR THE PAST FIVE YEARS BECAME
NAME DIRECTOR AND CURRENT PUBLIC DIRECTORSHIPS AGE A DIRECTOR(1)
- ---- -------- -------------------------------- --- -------------
<S> <C> <C> <C> <C>
William Goldsmith I DIRECTOR. Management and 79 1987
Marketing Consultant since 1984;
Chairman of the Board of TMP,
Inc. from January 1991 to 1993;
Chairman of Overspin Golf since
1993; Chief Executive Officer of
Overspin Golf from January 1994
through October 1994; Chairman
of the Board and Chief Executive
Officer of Fiber Fuel International,
Inc., from 1994 to 1997; Life
Trustee to Carnegie Mellon
University since 1980.
Ronald LaBow III CHAIRMAN OF THE BOARD. 63 1991
President, Stonehill Investment
Corp. since February 1990. Mr.
LaBow is also a director of
Regency Equities Corp., a
real estate company.
Marvin L. Olshan II DIRECTOR AND, SINCE 1991, 70 1991
SECRETARY OF THE COMPANY.
Partner, Olshan Grundman Frome
& Rosenzweig LLP, since 1956.
Raymond S. Troubh II DIRECTOR. Financial Consultant for 71 1992
in excess of past five years. Mr.
Troubh is also a director of
ARIAD Pharmaceuticals, Inc.,
Becton, Dickinson and Company, a
medical instrumentation and
equipment company, Diamond
Offshore Drilling, Inc., Foundation
Health Systems, Inc., General
American Investors Company,
Olsten Corporation, a
temporary help company,
Petrie Stores Corporation, a
retail chain, Starwood
Hotels & Resorts, Time
Warner Inc. and Triarc
Companies, Inc., restaurants
and soft drinks.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FIRST YEAR
CLASS OF FOR THE PAST FIVE YEARS BECAME
NAME DIRECTOR AND CURRENT PUBLIC DIRECTORSHIPS AGE A DIRECTOR(1)
- ---- -------- -------------------------------- --- -------------
<S> <C> <C> <C> <C>
John R. Scheessele I DIRECTOR AND FORMER PRESIDENT OF 50 1997
THE COMPANY. Chairman of the
Board, President and Chief
Executive Officer of WPSC
from March 1997 to April
1998; President and Chief
Executive Officer of The SKD
Company from February 1996
to February 1997; President
and Chief Executive Officer
of WCI Steel, Inc. ("WCI")
from November 1994 to
September 1995; Executive
Vice President and Chief
Financial Officer of WCI
from November 1993 to
November 1994; Chief
Financial Officer of WCI
from October 1988 to
November 1993.
</TABLE>
(1) The Company and its subsidiaries were reorganized into a new holding
company structure ("Corporate Reorganization") on July 26, 1994. Prior
to the Corporate Reorganization, all directors of the Company who were
directors at the time of the Corporate Reorganization were directors of
Wheeling-Pittsburgh Corporation ("WPC").
MEETINGS AND COMMITTEES
The Board of Directors met on five occasions and took action by
unanimous written consent on four occasions during the fiscal year ended
December 31, 1997. There are five Committees of the Board of Directors: the
Executive Committee, the Audit Committee, the Compensation Committee, the
Nominating Committee and the Stock Option Committee (for the 1991 Plan). The
members of the Executive Committee are Ronald LaBow, Robert A. Davidow, Marvin
L. Olshan, Raymond S. Troubh and Neil D. Arnold. The Executive Committee met on
one occasion and took action by unanimous written consent on seven occasions
during the fiscal year ended December 31, 1997. The Executive Committee
possesses and exercises all the power and authority of the Board of Directors in
the management and direction of the business and affairs of the Company except
as limited by law and except for the power to change the membership or to fill
vacancies on the Board of Directors or the Executive Committee. The members of
the Audit Committee are Robert A. Davidow, Raymond S. Troubh and Neil D. Arnold.
The Audit Committee met on two occasions and took action by written consent on
one occasion during the fiscal year ended December 31, 1997. The Audit Committee
annually recommends to the Board of Directors independent public accountants to
serve as auditors of the Company's books, records and accounts, reviews the
scope of the audits performed by such auditors and the audit reports prepared by
them, reviews and monitors the Company's internal accounting procedures and
monitors compliance with the Company's Code of Ethics Policy and Conflict of
Interest Policy. The members of the Compensation Committee are Robert A.
Davidow, William Goldsmith and Marvin L. Olshan. The Compensation Committee met
on two occasions and took action by unanimous written consent on three occasions
during the fiscal year ended December 31, 1997. The Compensation Committee
reviews compensation arrangements and personnel matters. The members of the
Nominating Committee are
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<PAGE>
Ronald LaBow, Marvin L. Olshan, Paul W. Bucha and Robert A. Davidow. The
Nominating Committee took action by written consent on one occasion during the
fiscal year ended December 31, 1997. The Nominating Committee recommends
nominees to the Board of Directors of the Company. The members of the Stock
Option Committee are Raymond S. Troubh and Robert A. Davidow. The Stock Option
Committee administers the granting of stock options under the 1991 Plan. The
Stock Option Committee took action by unanimous written consent on one occasion
during the fiscal year ended December 31, 1997.
Directors of the Company who are not employees of the Company or its
subsidiaries are entitled to receive compensation for serving as directors in
the amount of $40,000 per annum and $1,000 per Board Meeting, $800 per Committee
Meeting attended in person and $500 per telephonic meeting other than the Stock
Option Committee, and $1,000 per day of consultation and other services provided
other than at meetings of the Board or Committees thereof, at the request of the
Chairman of the Board. Committee Chairmen also receive an additional annual fee
of $1,800. Directors of the Company (other than the Chairman of the Board or
directors who are employees of the Company or its subsidiaries) also receive
options to purchase 8,000 shares of Common Stock per annum on the date of each
annual meeting of Stockholders up to a maximum of 40,000 shares of Common Stock
pursuant to the Company's 1993 Directors and Non-Employee Officers Stock Option
Plan (the "1993 Plan"). All directors of the Company permitted to participate in
the 1993 Plan have received the maximum number of shares permitted to be issued
thereunder. In addition, directors of the Company (other than the Chairman of
the Board or directors who are employees of the Company or its subsidiaries)
also received options to purchase 25,000 shares of Common Stock on December 1,
1997 and receive options to purchase 5,000 shares of Common Stock per annum on
the date of each annual meeting of Stockholders (commencing with the 1998 annual
meeting) up to a maximum of 40,000 shares of Common Stock pursuant to the
Company's 1997 Directors Stock Option Plan.
Pursuant to a management agreement effective as of January 3, 1991, as
amended (the "Management Agreement"), approved by a majority of the
disinterested directors of the Company, WPN Corp. ("WPN"), of which Ronald
LaBow, the Chairman of the Board of the Company is the sole stockholder and an
officer and director, provides financial, management, advisory and consulting
services to the Company, subject to the supervision and control of the
disinterested directors. In 1997, WPN received a monthly fee of $458,333.33,
with total payments in 1997 of $5,500,000. In 1997, the Company granted WPN
options to acquire 1,000,000 shares of Common Stock and a cash bonus of
$300,000. Such options are held by WPN as nominee for Ronald LaBow, Stewart E.
Tabin and Neale X. Trangucci, each of whom is an officer of WPN, and has the
right to acquire 600,000, 200,000 and 200,000 shares, respectively, of Common
Stock. The Company believes that the cost of obtaining the type and quality of
services rendered by WPN under the Management Agreement is no less favorable
than that at which the Company could obtain such services from unaffiliated
entities. The terms of such Management Agreement are reviewed annually. See
"Executive Officers -- Management Agreement with WPN."
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<PAGE>
EXECUTIVE OFFICERS
The following table contains the names, positions and ages of the
executive officers of the Company who are not directors.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR THE PAST
NAME FIVE YEARS AND CURRENT PUBLIC DIRECTORSHIPS AGE
- ---- ------------------------------------------- ---
<S> <C> <C>
James G. Bradley EXECUTIVE VICE PRESIDENT. Executive Vice President of the 46
Company and President and Chief Executive Officer of
WPSC since April 1998. President and Chief Operating
Officer of Koppel Steel Company from November 1997 to
March 1998. Vice President of the Company from October
1995 to October 1997; Executive Vice President-Operations
of WPSC from October 1995 to October 1997; Vice
President-Operations of International Mill Service from 1992
to October 1995; Vice President-Operations/Plant Manager of
USS/Kobe Steel Company from 1990 to 1992.
Robert D. LeBlanc EXECUTIVE VICE PRESIDENT. Executive Vice President of the 47
Company since April 1998. President and Chief Executive
Officer of Handy & Harman since April 1998. (Handy &
Harman was acquired by the Company in April 1998).
President and Chief Operating Officer of Handy & Harman
from July 1997 to April 1998. Executive Vice President of
Handy & Harman from November 1996 to July 1997.
Executive Vice President of Elf Atochem North America, Inc.
("Elf Atochem") from January 1994 to November 1996.
Group President of Elf Atochem from February 1990 to
January 1994.
Arnold Nance VICE PRESIDENT -- FINANCE. Vice President -- Finance since 41
April 1998. Special Assistant to the Chairman of the Board
of Directors since November 1995. Vice President of
Wheeling-Pittsburgh Radio Corporation from July 1993 to
November 1995. Vice President and Chief Financial Officer
of SH Holdings, Inc. from May 1991 through July 1993.
Howard Mileaf VICE PRESIDENT -- GENERAL COUNSEL. Vice President -- 60
General Counsel to the Company since April 1998; Vice
President -- Special Counsel to the Company from April 1993
to April 1998. Special Counsel to the Company, from
February 1992 to April 1993; Consultant, from August 1991
to April 1993; Vice President and General Counsel, Keene
Corporation, from August 1981 to August 1991;
Trustee/Director of Neuberger & Berman Equity Mutual
Funds, since 1984.
</TABLE>
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<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth, for the
fiscal years indicated, all compensation awarded to, earned by or paid to (i)
the chief executive officer ("CEO") of the Company for the fiscal year ended
December 31, 1997 (Mr. James L. Wareham, who resigned from employment with the
Company effective February 28, 1997 and Mr. John R. Scheessele, who succeeded
Mr. Wareham as the Company's President and whose employment terminated on April
21, 1998), (ii) the four most highly compensated executive officers of the
Company other than the CEO whose salary and bonus exceeded $100,000 with respect
to the fiscal year ended December 31, 1997 and who were employed by the Company
at the end of fiscal 1997 and (iii) two additional individuals whose total
annual salary and bonus exceeded $100,000 during fiscal 1997 but who were not
employed by the Company at the end of fiscal 1997 (together with the CEO and the
executive officers identified in (ii) above, the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------- ------------------- ----------------------
Other Annual Securities
Salary Bonus Compensation Underlying All Other Compensation
Year ($) ($)(1) ($)(2) Options (#) ($)(3)
---- ----- ------- -------- ----------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
John R. Scheessele, 1997 358,974 -- 133,250(4) 240,000 49,333(5)
President (6) 1996 -- -- -- -- --
1995 -- -- -- -- --
James L. Wareham, 1997 66,667 -- 9,001(7) -- 4,260
President (8) 1996 400,000 -- -- -- 47,140(9)
1995 400,000 90,000 -- -- 46,825(9)
Howard A. Mileaf 1997 120,000 140,000 -- -- 6,998
Vice President 1996 120,000 40,000 -- -- 6,264
1995 120,000 20,000 -- -- 5,940
Garen Smith, 1997 223,210 25,000 -- 20,000 3,000
Vice President 1996 200,230 63,826 -- 10,000 3,000
1995 150,000(10) 30,000 -- -- 3,000
James G. Bradley, 1997 133,333 53,333(11) -- 65,000 5,260
Vice President(12) 1996 160,000 -- -- 10,000 2,922
1995 40,000 -- -- -- --
Frederick G. Chbosky 1997 140,000 -- 17,051(13) -- 9,938
Chief Financial Officer(14) 1996 140,000 -- -- -- 10,272
1995 140,000 22,384 -- -- 10,020
</TABLE>
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<PAGE>
- ----------------------------
(1) Includes bonuses paid in 1996 for services rendered in the prior year
pursuant to the WPSC Management Incentive Program ("WPSC Management
Incentive Program") covering officers and salaried employees of WPSC.
Messrs. Wareham and Smith are not eligible to participate in the WPSC
Management Incentive Program. Mr. Wareham's employment agreement
provided for an annual bonus to be awarded in the sole discretion of
the Company. Mr. Wareham was granted a bonus in 1996 for services
rendered in the prior year. Mr. Smith's employment agreement provides
for an annual bonus based upon the achievements of certain targets
specified by the Board of Directors of Unimast. Mr. Smith was granted
a bonus in 1996, 1997 and 1998 for services rendered in the prior
years. All bonus amounts have been attributed to the year in which the
services were performed.
(2) 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 annual salary and bonus reported for such named
executive officer.
(3) Amounts shown, unless otherwise noted, reflect employer contributions
to WPSC Salaried Employees Pension Plan, except in the case of Mr.
Smith which amount reflects other employer pension contributions.
(4) Includes relocation allowance of $87,865 and membership dues of
$37,930.
(5) Includes insurance premiums paid by the Company in 1997 of $45,000.
(6) Employment with the Company commenced February 7, 1997 and terminated
on April 21, 1998.
(7) Includes membership dues of $3,848 and financial planning fees of
$4,081.
(8) Resigned from employment with the Company effective February 28, 1997.
(9) Includes insurance premiums paid by the Company in 1996 and 1995 of
$40,000 annually.
(10) Employment with the Company commenced March 31, 1995.
(11) Represents retention bonus paid upon conclusion of the strike by the
United Steel Workers of America.
(12) Resigned from employment with the Company effective October 31, 1997.
Effective April 23, 1998, Mr. Bradley replaced John R. Scheessele as
President and Chief Executive Officer of WPSC.
(13) Includes $6,223 for personal use of leased automobile and $7,265 of
membership dues.
(14) Resigned as an officer of the Company effective November 1, 1997.
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<PAGE>
OPTION GRANTS TABLE. The following table sets forth certain information
regarding stock option grants made to each of the Named Executive Officers
during the fiscal year ended December 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual Rates
of Stock Price Appreciation for
INDIVIDUAL GRANTS Option Term
% of Total
Options
Number of Securities Granted to Exercise
Underlying Options Employees in Price Expiration
NAME Granted (#)(1) Fiscal Year ($/SH) Date 5%($) 10%($)
---- -------------- ------------- ------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
John R. Scheessele 240,000 22.6% 13.8125 9/25/07 2,084,786 5,283,257
James L. Wareham 0 0% -- -- -- --
Howard A. Mileaf 0 0% -- -- -- --
Garen Smith 20,000 1.9% 6.875 4/06/07 86,473 219,140
James G. Bradley 65,000(2) 6.1% 13.8125 9/25/07 564,630 1,430,882
Frederick G. Chbosky 0 0% -- -- -- --
</TABLE>
- -------------------
(1) All options were granted under the Company's 1991 Incentive and
Nonqualified Stock Option Plan and vest ratably over a three-year
period. This period commenced February 6, 1996.
(2) Options terminated on October 31, 1997 upon Mr. Bradley's resignation
from employment with the Company.
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<PAGE>
Aggregated Option Exercises in Last Fiscal Year
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officers as of December
31, 1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-
Underlying Unexercised the-Money Options at
Options at 1997 Fiscal 1997 Fiscal Year-
Year-End(#) Exercisable/ End($)(1) Exercisable/
Unexercisable Unexercisable
NAME -------------------------- ---------------------------
- ----
<S> <C> <C>
John R. Scheessele 0/240,000 0/0
James L. Wareham 0/0 0/0
Howard A. Mileaf 25,000/0 $16,875/0
Garen Smith 3,333/26,667 0/$102,500
James G. Bradley 0/0 0/0
Frederick G. Chbosky 0/0 0/0
</TABLE>
- ------------------
(1) On December 31, 1997, the last reported sales price of WHX Common Stock
as reported on the New York Stock Exchange Composite Tape was $12.00.
LONG-TERM INCENTIVE AND PENSION PLANS. The Company does not have any
long-term incentive or defined benefit pension plans.
DEFERRED COMPENSATION AGREEMENTS. Certain key employees of the Company
are parties to deferred compensation agreements and/or severance agreements. The
deferred compensation agreements generally provide that if the employee remains
continuously in the employ of the Company until the fifth anniversary of the
approval of the Company's Plan of Reorganization (the "Plan") (which Plan was
approved on January 3, 1991), or if the employee's employment is terminated
within such period by reason of permanent disability, retirement at age 65 or
involuntary termination without good cause, the employee is entitled to receive,
over a fifteen-year period commencing at the later of age 65 or termination of
employment, an amount equal to twice his base salary for the most recent
twelve-month period of his employment prior to January 3, 1996. The annual
benefits payable to Mr. Chbosky upon retirement are $18,667. Certain other
deferred compensation payments are payable by WPSC in certain circumstances,
such as a demotion in job status without good cause, death or as a result of a
change of control of the Company. Mr. Chbosky is a party to a deferred
compensation agreement such as is described above. Except as described in this
paragraph, and in the next paragraph with respect to the employment agreements
of Messrs. Scheessele and Wareham, no plan or arrangement exists which results
in compensation to a Named Executive Officer in excess of $100,000 upon such
officer's future termination of employment or upon a change-of-control.
Mr. John R. Scheessele commenced employment as President of the
Company, President of WPC and President, Chairman of the Board and Chief
Executive Officer of WPSC pursuant to a three-year employment agreement, dated
as of February 7, 1997, which is automatically extended for successive
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<PAGE>
three-year periods unless earlier terminated pursuant to the provisions of such
agreement. The agreement provided for an annual salary to Mr. Scheessele of
$400,000 and an annual bonus to be awarded in the sole discretion of the
Company. In addition, the employment agreement provided for Mr. Scheessele to
receive the cash surrender value of life insurance contracts purchased by the
Company upon termination of his employment. On April 21, 1998, Mr. Scheessele's
employment was terminated by the Company. Mr. Scheessele was succeeded by James
G. Bradley as President and Chief Executive Officer of WPSC. The employment
agreement provides that in the event Mr. Scheessele's employment is terminated
without cause, he will be entitled to receive a payment of $1,200,000, and other
specified benefits for a period of one year from the date of termination.
Mr. Wareham was employed pursuant to an agreement that provided for an
annual salary to Mr. Wareham of $400,000 and an annual bonus awarded in the sole
discretion of the Company. In addition, the employment agreement provided for
Mr. Wareham to receive the cash surrender value of life insurance contracts
purchased by the Company upon termination of his employment. In February 1997,
Mr. Wareham resigned from his positions with the Company and was succeeded by
Mr. Scheessele.
In November 1997, Mr. Frederick G. Chbosky resigned from his positions
as Chief Financial Officer of each of the Company, WPC and WPSC. In 1998, Mr.
Chbosky will receive from WPSC a severance payment of $128,100.
Mr. Garen Smith is a Vice President of the Company and is employed as
President and Chief Executive Officer of Unimast under a three-year employment
agreement dated as of April 8, 1994. The agreement provides for an annual salary
to Mr. Smith of $200,000 per year and an annual bonus of up to 37.5% of Mr.
Smith's annual base salary upon the achievement of certain performance targets
specified by the Board of Directors of Unimast. In the event Mr. Smith's
employment is terminated without cause, he is entitled to receive his annual
salary and health insurance benefits for an eighteen month period following his
termination.
COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION. Messrs.
Davidow, Goldsmith and Olshan each served as a member of the Compensation
Committee of the Board of Directors during the fiscal year ended December 31,
1997. Mr. Olshan is a member of Olshan Grundman Frome & Rosenzweig LLP, which
has been retained as outside general counsel to the Company since January 1991.
Fees received from the Company by such firm during the fiscal year ended
December 31, 1997 were approximately $814,000.
MANAGEMENT AGREEMENT WITH WPN. Pursuant to the Management Agreement,
approved by a majority of the disinterested directors of the Company, WPN
provides financial, management, advisory and consulting services to the Company,
subject to the supervision and control of the disinterested directors. Such
services include, among others, identification, evaluation and negotiation of
acquisitions, responsibility for financing matters, review of annual and
quarterly budgets, supervision and administration, as appropriate, of all of the
Company's accounting and financial functions and review and supervision of the
Company's reporting obligations under Federal and state securities laws. In 1996
and 1997, WPN received an annual fee of $5.5 million. Commencing on January 1,
1998, WPC has agreed to contribute $2.5 million towards the payment of such
annual fee in consideration of services to be received. In 1997, the Company
granted WPN options to acquire 1,000,000 shares of Common Stock and a cash bonus
of $300,000. Such options are held by WPN as nominee for Ronald LaBow, Stewart
E. Tabin and Neale X. Trangucci, each of whom is an officer of WPN, and has the
right to acquire 600,000, 200,000 and 200,000 shares, respectively, of Common
Stock. The Company provides indemnification for WPN's employees, officers and
directors against any liability, obligation or loss resulting from their actions
pursuant to the Management Agreement. The Management Agreement has
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<PAGE>
a two year term and is renewable automatically for successive two year periods,
unless terminated by either party upon 60 days' notice. Mr. LaBow is the sole
stockholder and an officer and director of WPN. WPN has not derived any other
income and has not received reimbursement of any of its expenses (other than
health benefits and standard directors' fees) from the Company in connection
with the performance of services described above. The Company believes that the
cost of obtaining the type and quality of services rendered by WPN under the
Management Agreement is no less favorable than the cost at which the Company
could obtain such services from unaffiliated entities.
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<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information concerning ownership of the Common
Stock of the Company outstanding at April 15, 1998, by (i) each person known by
the Company to be the beneficial owner of more than five percent of the Common
Stock, (ii) each director, (iii) each of the executive officers named in the
summary compensation table and (iv) by all directors and executive officers of
the Company as a group. Unless otherwise indicated, each stockholder has sole
voting power and sole dispositive power with respect to the indicated shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE
OF BENEFICIAL OWNER(1) SHARES BENEFICIALLY OWNED OF CLASS(2)
---------------------- ------------------------- -----------
<S> <C> <C>
Merrill Lynch & Co., Inc.(3)
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281 2,921,816 15.5%
Founders Financial Group, L.P.
53 Forest Avenue
Old Greenwich, Connecticut 06870 (4) 1,518,954 8.1%
Dewey Square Investors Corporation (5)
One Financial Center
Boston, Massachusetts 02111 1,403,978 7.5%
Donald Smith & Co., Inc. (6)
East 80, Route 4
Paramus, New Jersey 07652 1,350,000 7.2%
Lazard Freres & Co. LLC (7)
30 Rockefeller Plaza
New York, New York 10020 1,472,000 7.9%
Dimensional Fund Advisors Inc. (8)
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 1,291,725 6.9%
WPN Corp.
126 Lower Broadford Road
Bellevue, Idaho 83313 1,029,483(9) 5.3%
Ronald LaBow 1,029,483(9) 5.3%
Neil D. Arnold 24,000(10) *
Paul W. Bucha 24,000(10) *
Robert A. Davidow 124,070(11) *
William Goldsmith 40,000(10) *
John R. Scheessele 0 *
Marvin L. Olshan 41,000(11) *
Raymond S. Troubh 34,000(12) *
James L. Wareham 0 *
Frederick G. Chbosky 6,028 *
James G. Bradley 0 *
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE
OF BENEFICIAL OWNER(1) SHARES BENEFICIALLY OWNED OF CLASS(2)
---------------------- ------------------------- -----------
<S> <C> <C>
Garen Smith 3,633 *
All Directors and Executive Officers as a Group (14
persons) 1,366,636(13) 6.9%
</TABLE>
- -------------------------
* less than one percent.
(1) Each director and executive officer has sole voting power and sole
dispositive power with respect to all shares beneficially owned by him
unless otherwise indicated.
(2) Based upon shares of Common Stock outstanding at April 28, 1998 of
18,669,175 shares.
(3) Based on a Schedule 13G filed in February 1997, Merrill Lynch & Co.,
Inc. ("ML&Co."), Fund Asset Management, L.P. ("FAM"), Merrill Lynch
Asset Management, L.P. ("MLAM"), Merrill Lynch Variable Series Fund,
Inc. ("MLVSF"), Merrill Lynch Phoenix Fund, Inc. ("Phoenix") and
Princeton Services, Inc. ("PSI") collectively beneficially hold
2,921,816 shares of Common Stock. This amount includes Common Stock
issuable upon conversion of Preferred Stock. The address of PSI, FAM,
MLAM, MLVSF and Phoenix is 800 Scudders Mill Road, Plainsboro, New
Jersey 08536. PSI disclaims beneficial ownership of such securities.
(4) Based on a Schedule 13G filed in February 1998, Founders Financial
Group, L.P, Forest Investment Management LLC, Michael A. Boyd, Inc. and
Michael A. Boyd collectively beneficially hold 1,518,954 shares of
Common Stock.
(5) Based on a Schedule 13G filed in February 1998, Dewey Square Investors
Corp. beneficially holds 1,403,978 shares of Common Stock. This amount
includes Common Stock issuable upon conversion of Preferred Stock.
(6) Based on Schedule 13G filed in February 1996, Donald Smith & Co., Inc.
beneficially holds 1,350,000 shares of Common Stock.
(7) Based on a Schedule 13G filed in February 1998, Lazard Freres & Co. LLC
beneficially holds 1,472,000 shares of Common Stock.
(8) Based on a Schedule 13G filed in February 1998, Dimensional Fund
Advisors Inc. beneficially holds 1,291,725 shares of Common Stock.
(9) Based on a Schedule 13D filed jointly in December 1997 by WPN Corp.,
Ronald LaBow, Stewart E. Tabin and Neale X. Trangucci. Includes 917,833
shares of Common Stock issuable upon exercise of options within 60 days
hereof. Ronald LaBow, Chairman of the Board of the Company, is the sole
stockholder of WPN. Consequently, Mr. LaBow may be deemed to be the
beneficial owner of all shares of Common Stock owned by WPN. Mr. LaBow
disclaims beneficial ownership of the options to purchase 133,333
shares of Common Stock held by WPN as nominee for Messrs. Tabin and
Trangucci, respectively. Messrs. Tabin and Trangucci are officers and
directors of WPN and disclaim beneficial ownership of all shares of
Common Stock owned by WPN, except for options to purchase 133,333
shares of Common Stock held by WPN as nominee for Messrs. Tabin and
Trangucci. Each of Messrs. Tabin and Trangucci holds options,
exercisable within 60 days hereof, to purchase 301,666 shares of Common
Stock.
(10) Consists of shares of Common Stock issuable upon exercise of options
within 60 days hereof.
(11) Includes 40,000 shares of Common Stock issuable upon exercise of
options within 60 days hereof.
(12) Includes 32,000 shares of Common Stock issuable upon exercise of
options within 60 days hereof.
-14-
<PAGE>
(13) Includes 1,161,886 shares of Common Stock issuable upon exercise of
options within 60 days hereof.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
John R. Scheessele, a former officer of the Company, WPC and WPSC, and
Akimune Takewaka, a former director of WPSC and Wheeling-Nisshin, is a director
of Wheeling-Nisshin. Mr. Takewaka was also Chairman of the Board of
Wheeling-Nisshin. Paul W. Bucha, the Chairman of the Board of WPSC, has been
designated as WPSC's nominee to the Board of Wheeling-Nisshin to replace Mr.
Scheessele. Mr. Takewaka has been replaced by Masahiko Matsueda, a director of
Wheeling-Nisshin, as a director of WPSC. James D. Hesse, a former Vice President
of the Company, is President, Chief Executive Officer and a director of
Wheeling-Nisshin. The Company currently holds a 35.7% equity interest in
Wheeling-Nisshin.
In April 1998, Paul W. Bucha, a director of the Company, became
Chairman of the Board of WPSC. In connection therewith, Mr. Bucha has received
options to purchase 50,000 shares of Common Stock and will be paid a salary of
$300,000 per annum in connection with such position.
Marvin L. Olshan, a director and Secretary of the Company, is a member
of Olshan Grundman Frome & Rosenzweig LLP, which firm has been retained as
outside general counsel to the Company since January 1991. Fees received from
the Company by such firm during the fiscal year ended December 31, 1997 were
approximately $814,000.
MANAGEMENT AGREEMENT
Pursuant to a management agreement, as amended, between WHX and WPN, of
which Ronald LaBow, the Chairman of the Board of the WHX, is the sole
stockholder and an officer and a director, WPN provides financial, management,
advisory and consulting services to the Company. In 1996 and 1997, WPN received
an annual fee of $5.5 million. In 1997, the Company granted WPN options to
acquire 1,000,000 shares of Common Stock and a cash bonus of $300,000. Such
options are held by WPN as nominee for Ronald LaBow, Stewart E. Tabin and Neale
X. Trangucci, each of whom is an officer of WPN, and has the right to acquire
600,000, 200,000 and 200,000 shares, respectively, of Common Stock. The Company
believes that the cost of obtaining the type and quality of services rendered by
WPN under the Management Agreement is no less favorable than the cost at which
the Company could obtain such services from unaffiliated entities.
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<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report by the
undersigned, thereunto duly authorized in the City of New York, State of New
York on April 30, 1998.
WHX CORPORATION
By: /s/ Arnold Nance
-----------------------------
Name: Arnold Nance
Title: Vice President - Finance
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