<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12.
</TABLE>
Worthington Industries, Inc.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE 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)(1) and 0-11.
(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: ...........................................................
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<PAGE> 2
WORTHINGTON INDUSTRIES, INC.
1205 DEARBORN DRIVE
COLUMBUS, OHIO 43085
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
WORTHINGTON INDUSTRIES, INC.:
Notice is hereby given that the 1999 Annual Meeting of Shareholders of
Worthington Industries, Inc. (the "Company") will be held at the Worthington
Industries Athletic Center, 905 Dearborn Drive, Columbus, Ohio on September 23,
1999 at 2:00 p.m., local time. The meeting is being held for the following
purposes:
1. To elect four directors, each for a term of three years.
2. To ratify the selection of the firm of Ernst & Young LLP as
auditors of the Company for the fiscal year ending May 31, 2000.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
PLEASE COMPLETE, SIGN AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
ENVELOPE. THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE MEETING. IT
WILL, HOWEVER, HELP ASSURE A QUORUM AND AVOID ADDED PROXY SOLICITATION COSTS.
Very truly yours,
CHARLES D. MINOR, Secretary
August 16, 1999
<PAGE> 3
WORTHINGTON INDUSTRIES, INC.
1205 DEARBORN DRIVE
COLUMBUS, OHIO 43085
(614) 438-3210
------------------------------
PROXY STATEMENT
------------------------------
The enclosed Proxy is being solicited by the Board of Directors of
Worthington Industries, Inc. for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on September 23, 1999, or any adjournment(s)
thereof, and is being mailed to shareholders on or about August 16, 1999.
Without affecting any vote previously taken, the Proxy may be revoked by a
shareholder at any time before it is voted by delivering to the Company a
later-dated Proxy or by giving notice of revocation to the Company in writing or
in open meeting. All Proxies received prior to the Annual Meeting and not
revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted (1) FOR the election as directors of
the nominees listed below under "ELECTION OF DIRECTORS;" and (2) FOR the
ratification of the selection of auditors.
The cost of soliciting the Proxy will be borne by the Company. The Company
has retained Morrow & Company, Inc. to aid in the solicitation of proxies for a
fee of approximately $2,000 plus out-of-pocket expenses. Solicitation of proxies
may also be made by mail, personal interview, telephone, facsimile or telegraph
by the directors or regularly engaged officers and employees of the Company who
will not receive additional compensation for such activities.
As used herein, the term "Company" means Worthington Industries, Inc. or,
where appropriate, Worthington Industries, Inc. and its subsidiaries. The term
"Common Shares" means shares of the Company's Common Stock, no par value.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING RIGHTS
The total number of outstanding Common Shares entitled to vote at the
Annual Meeting is 89,733,956 shares. Only shareholders of record at the close of
business on August 6, 1999 are entitled to notice of and to vote at the Annual
Meeting or any adjournment(s) thereof. Each shareholder is entitled to one vote
for each Common Share held. There are no cumulative voting rights in the
election of directors.
Common Shares represented by signed Proxies that are returned to the
Company will be counted toward the quorum in all matters even though they are
marked as "Abstain," "Against" or "Withhold Authority" on one or more or all
matters or they are not marked at all. Broker /dealers, who hold their
customers' Common Shares in street name, may, under the applicable rules of the
exchange and other self-regulatory organizations of which the broker/dealers are
members, sign and submit Proxies for such Common Shares and may vote such Common
Shares on some matters, but broker/dealers may not vote such Common Shares on
other matters without specific instructions from the customer who owns such
Common Shares. Proxies signed and submitted by broker/dealers which have not
been voted on certain matters as described in the previous sentence are referred
to as broker non-votes. Such Proxies count toward the establishment of a quorum.
Abstentions, broker non-votes and other shares not voted will not be counted
1
<PAGE> 4
as shares voted on any of the proposals and the number of shares on which a
plurality or a majority is required will be reduced by the number of broker
non-votes and shares not voted.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the only person known by the Company to be
the beneficial owner of more than five percent of the outstanding Common Shares
on July 31, 1999:
<TABLE>
<CAPTION>
COMMON SHARES % OF COMMON
NAME AND ADDRESS OF BENEFICIALLY SHARES
BENEFICIAL OWNER OWNED OUTSTANDING
------------------- ------------------- ----------------
<S> <C> <C>
John H. McConnell.................................... 16,140,432(1) 17.9%
1205 Dearborn Drive
Columbus, Ohio 43085
</TABLE>
- ---------------
(1) Includes 13,402,982 Common Shares which are held of record by JDEL, Inc.
("JDEL"), a Delaware corporation, which is a wholly-owned subsidiary of
JMAC, Inc. ("JMAC"), a private investment company. Mr. McConnell is the
President of JDEL, and the directors of JDEL have given Mr. McConnell sole
voting and investment power with respect to the Common Shares of the Company
held by JDEL. JMAC is substantially owned, directly or indirectly, by John
P. McConnell and a family partnership of John H. McConnell, John P.
McConnell and their families. Also included are 50,000 Common Shares subject
to currently-exercisable options and 506,250 Common Shares held by John H.
McConnell's wife, as to which 506,250 Common Shares beneficial ownership is
disclaimed. The table does not include 2,428,312 Common Shares (2.7% of
Common Shares outstanding) held by an independent trustee, in trust for the
benefit of Mr. McConnell's wife, his adult daughter and his son, John P.
McConnell, over which Common Shares the trustee has investment and voting
power, subject to the approval of Mrs. McConnell. Beneficial ownership of
these 2,428,312 Common Shares is disclaimed.
ELECTION OF DIRECTORS
The Board of Directors has designated the nominees listed below for
election as directors of the Company for terms expiring in 2002. The enclosed
Proxy will be voted as specified thereon, or if no instructions are given, FOR
the following nominees; however, the persons designated as proxies reserve full
discretion to cast votes for other persons in the event the nominee who would
otherwise receive the votes is unable to serve. The Board of Directors has no
reason to believe that any of the nominees will be unable to serve.
Under Ohio law and the Company's Code of Regulations, the four nominees
receiving the greatest number of votes will be elected as directors. Common
Shares as to which the authority to vote is withheld will be counted for quorum
purposes but will not be counted toward the election of directors, or toward the
election of the individual nominees specified on the form of Proxy.
The following table sets forth the nominees for election to the Board of
Directors, the directors of the Company whose terms in office will continue, and
certain information, as of July 31, 1999, with respect to each nominee,
continuing director, executive officer named in the
2
<PAGE> 5
Summary Compensation Table who is not a nominee or continuing director and all
directors and executive officers as a group.
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY PRINCIPAL COMMON SHARES
NAME AND AGE SINCE OCCUPATION BENEFICIALLY OWNED (1)
------------ ------------ ---------- ----------------------
<S> <C> <C> <C>
NOMINEES FOR TERMS EXPIRING IN 2002
John S. Christie, 49 N/A President & Chief Operating Officer 5,968
Michael J. Endres, 51 N/A Principal Owner in Stonehenge Holdings, Inc.,
a merchant-banking investment company 20,100
Peter Karmanos, Jr., 56 1997 Chairman, Chief Executive Officer and
Co-Founder of Compuware Corporation, which
develops and sells software products and
services 10,000
John H. McConnell, 76 1955 Chairman Emeritus & Founder 16,140,432(2)
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2000
John B. Blystone, 46 1997 Chairman, President & Chief Executive Officer
of SPX Corporation, which provides
components, service solutions and services
support to the motor vehicle industry 5,000
Charles R. Carson, 70 1986 Retired Senior Vice President, General
Electric Company, a diversified technology,
manufacturing and services company 3,375
William S. Dietrich, 61 1996 Chairman, Dietrich Industries, Inc., a
subsidiary of the Company 28,000
John F. Havens, 72 1988 Private Investor, Retired Chairman of Banc
One Corporation, a bank holding company 2,250
Charles D. Minor, 72 1962 Counsel, Vorys, Sater, Seymour and Pease LLP,
Attorneys at Law (3) 146,453(4)
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2001
John P. McConnell, 45 1990 Chairman & Chief Executive Officer 1,096,318(5)
Robert B. McCurry, 76 1972 Retired Senior Advisor to President, Toyota
Motor Sales, USA, Inc., which sells and
distributes transportation vehicles 50,455(6)
Gerald B. Mitchell, 71 1986 Retired Chairman & Chief Executive Officer,
Dana Corporation, a supplier of vehicular and
industrial products 2,584
Mary Schiavo, 43 1998 Attorney --
NAMED EXECUTIVES, NON-DIRECTORS
John T. Baldwin, 42 N/A Vice President & Chief Financial Officer 18,000
Edward A. Ferkany, 62 N/A Executive Vice President 83,352
Donal H. Malenick, 60 N/A President & Chief Operating Officer, retired
May 31, 1999 930,972
Ralph V. Roberts, 52 N/A President, The Worthington Steel Company 20,727
All directors, nominees, and executive officers as a group (21 people)................... 18,642,424(7)
</TABLE>
- ---------------
(1) All amounts are as of July 31, 1999 unless otherwise indicated, each named
person has sole voting and investment power over the listed Common Shares,
or shares such power with his or her spouse. Common Shares subject to
currently-exercisable options are included in the shareholdings of the
executive officers, see "Executive Compensation -- Option Exercises and
Holdings." John H. McConnell (17.9%), John P. McConnell (1.2%) and Donal H.
3
<PAGE> 6
Malenick (1%) are the only directors, nominees or executive officers with
beneficial ownership of more than 1% of the Company's outstanding Common
Shares.
(2) See "Security Ownership of Certain Beneficial Owners."
(3) Vorys, Sater, Seymour and Pease LLP rendered legal services to the Company
during its last fiscal year and is rendering legal services to the Company
in the current fiscal year.
(4) Includes 45,500 Common Shares held by Mr. Minor's wife. Beneficial ownership
of these Common Shares is disclaimed.
(5) Included are 29,879 Common Shares held by John P. McConnell as custodian for
his minor children. Also includes 118,000 Common Shares held by The
McConnell Family Trust of which Mr. McConnell is co-trustee and has voting
and investment power. Also included are 149,428 Common Shares held in The
McConnell Educational Foundation, which benefits third parties, of which
John P. McConnell is a co-trustee and shares voting and investment power.
Beneficial ownership of these Common Shares is disclaimed. See also footnote
(1) under "Security Ownership of Certain Beneficial Owners."
(6) These 50,455 Common Shares are held by Mr. McCurry and his wife as trustees
of a family trust.
(7) See Notes 1-6 above. These 18,642,424 Common Shares represent 20.7% of the
Company's outstanding Common Shares.
The principal occupation of each of the nominees and directors during the
past five years has been as indicated in the table above under "Principal
Occupation," except as follows:
John P. McConnell became Chief Executive Officer on June 1, 1993, and
Chairman of the Board in September 1996. John P. McConnell is John H.
McConnell's son.
John H. McConnell's principal occupation had been the Chief Executive
Officer of the Company from its founding in 1955 until May 31, 1993 at which
time he retired as CEO. He remained Chairman of the Board until September 1996
when he resigned that position and assumed the role of Chairman Emeritus and
Founder.
Mr. Christie succeeded Donal H. Malenick who retired as President and Chief
Operating Officer ("COO") on May 31, 1999. Mr. Christie had served as President
of JMAC, Inc., (see footnote 1 under Security Ownership of Certain Beneficial
Owners) from 1995 through 1999. From 1988 through 1995 Mr. Christie was Senior
Vice President, Corporate Development for Battelle Memorial Institute, a
non-profit research and development institute, responsible for global business
development, marketing strategy development and community relations.
Mr. Blystone was Vice President-General Manager of GE Superabrasives in
Columbus, Ohio from 1991 through 1994. In 1994, he became President and Chief
Executive Officer of Nuovo Pignone and The Europe Power Pole Plus of GE Power
Systems in Florence, Italy, a division of General Electric, positions which he
held until December 1995. At that time, Mr. Blystone accepted the positions of
Chairman, President and Chief Executive Officer of SPX Corporation.
Ms. Schiavo works as a Professor at The Ohio State University since 1997 as
well as a practicing attorney. Prior to 1997 she was Inspector General for the
U. S. Department of Transportation for seven years. In 1996, she worked as a
Consultant and on-air commentator for ABC News. Also from 1996 to 1998 she
worked as a writer and consultant.
Mr. Endres was Chairman of Banc One Capital Partners, a financing entity,
as well as Vice Chairman of BancOne Capital Corporation, an investment brokerage
firm, for the five years preceding his move to Stonehenge Investors, Inc. on
August 1, 1999.
4
<PAGE> 7
The following directors and nominees are also directors of the companies
listed opposite their names:
<TABLE>
<S> <C>
Mr. Blystone......................... SPX Corporation
Mr. Christie......................... Neoprobe Corporation
Mr. Dietrich......................... Carpenter Technologies Corporation; Mallard Fund
Mr. Endres........................... BancOne Capital Corporation
Mr. Havens........................... The W. W. Williams Company; Cardinal Health, Inc.;
Banc One Corporation (emeritus)
Mr. Karmanos......................... Compuware Corporation
Mr. J. P. McConnell.................. Alltel Corporation
Mr. Mitchell......................... George Weston, Ltd. (Canada); West Point Stevens, Inc.
</TABLE>
Five meetings of the directors of the Company were held during the fiscal
year ended May 31, 1999. With the exception of Mr. Karmanos, each incumbent
director attended at least 75% of the aggregate of (i) the total number of
meetings of the directors and (ii) the total number of meetings held by all
committees of the directors on which he served.
COMPENSATION OF DIRECTORS
Non-management directors are paid $6,000 per quarter plus $1,500 for each
attendance at board meetings and $1,000 ($1,500 for committee chairmen) for each
attendance at meetings of committees of the directors.
The Company has adopted the Worthington Industries, Inc. Deferred
Compensation Plan for Directors pursuant to which the directors may elect to
defer a portion of their directors' fees. Under the Plan, participants may
generally elect to defer payment of these amounts until a specified date or
until they are no longer associated with the Company. Amounts deferred under
this Plan are converted into theoretical shares which increase or decrease in
value based upon (i) the change in the Company's book value per share (adjusted
to eliminate the effects of events outside normal business operations), plus
(ii) the equivalent of cash dividends per share.
COMMITTEES OF DIRECTORS
The directors of the Company have an Audit Committee, whose members are
Messrs. Carson, Karmanos, Minor and Petropoulos and Ms. Schiavo. The Committee
met two times during fiscal 1999. Its functions are to review the adequacy of
the Company's system of internal controls, to investigate the scope and adequacy
of the work of the Company's auditors, and to recommend to the directors a firm
of accountants to serve as the Company's auditors.
The directors of the Company have a Compensation and Stock Option
Committee. Members are Messrs. Blystone, Havens, Mitchell and McCurry. The
Committee met three times during fiscal 1999. Its functions are to set and
review all base and bonus compensation for officers of the Company and to
administer the Company's Stock Option and Long-Term Incentive Plans.
The directors of the Company have a Nominating Committee, the members of
which are Messrs. Klisares, McCurry and John P. McConnell. The Committee met one
time during fiscal 1999. Its function is to recommend to the directors persons
to be nominated for election as directors. The Committee will consider nominees
recommended by shareholders, provided that such nominations are submitted in
writing not later than May 31 preceding the meeting to John P. McConnell, 1205
Dearborn Drive, Columbus, Ohio 43085. Each such submission must include a
statement of the qualifications of the nominee, a consent signed by the nominee
evidencing a willingness to serve as a director if elected, and a commitment by
the nominee to meet personally with the Committee.
5
<PAGE> 8
In accordance with the Company's Code of Regulations, any shareholder
wishing to make a nomination of a director otherwise than through the Nominating
Committee must give notice to the Secretary of the Company not less than 14 nor
more than 50 days prior to the meeting at which directors will be elected,
unless shareholders are given less than 21 days notice of the meeting, in which
case shareholder nominations would be permissible up to 7 days after the notice
of the meeting has been mailed. The notice of nomination must include the
nominee's name, address and principal occupation, the number of shares held
beneficially by such nominee and the nominating shareholder, a written consent
of the proposed nominee to serve if elected, and any other information
concerning the nominee required to be disclosed under the laws and regulations
governing proxy solicitations.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, during fiscal 1999, all filing requirements
applicable to officers, directors and beneficial owners of more than 10% of the
outstanding Common Shares under Section 16(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") were complied with except Mr. Malenick was
one month late in filing a Form 4 with respect to shares acquired by him in June
1998.
6
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth information for the fiscal years ended May
31, 1999, 1998 and 1997 as to cash compensation paid by the Company, as well as
certain other compensation paid or accrued for those years, to the Company's
Chief Executive Officer ("CEO") and its four other most highly compensated
executives (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------------
YEAR -------------------------------------- SECURITIES
NAME AND PRINCIPAL ENDED OTHER ANNUAL UNDERLYING ALL OTHER
POSITION LAST FISCAL YEAR MAY 31 SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- ------------------------- ------- --------- -------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John P. McConnell 1999 400,000 526,750 -- 120,000 8,866
Chairman & CEO 1998 400,000 494,550 -- 60,000 8,491
1997 325,000 470,000 -- 60,000 7,069
Donal H. Malenick 1999 260,000 397,325 -- -- 423,846
President & COO, 1998 260,000 370,325 -- 30,000 526,103
retired May 31, 1999 1997 260,000 350,075 -- 30,000 396,185
Edward A. Ferkany* 1999 175,000 287,400 -- 50,000 82,819
Executive Vice President 1998 175,000 267,100 -- 10,000 92,874
1997 175,000 252,000 -- 20,000 69,552
Ralph V. Roberts** 1999 147,500 310,000 -- 100,000 7,978
President, The Worthington 1998 118,333 260,933 -- 10,000 7,502
Steel Company 1997 -- -- -- -- --
John T. Baldwin*** 1999 108,333 215,000 -- 100,000 269
Vice President & 1998 67,844 145,000 23,986 10,000 174
Chief Financial Officer 1997 -- -- -- -- --
</TABLE>
- ---------------
* Mr. Ferkany served as Group Vice President-Processed Steel for the Company
from 1992 until June 1998 when he was named Executive Vice President.
** Mr. Roberts served as President of WAVE, a joint venture between the Company
and Armstrong World Industries, Inc., from its formation in June 1992 until
he became Vice President -- Corporate Development in June 1997. In June 1998
Mr. Roberts was named Group President of Worthington Steel.
*** Mr. Baldwin began working for the Company in September 1997 as Treasurer. In
December 1998 he became Vice President & Chief Financial Officer. Prior to
joining the Company, Mr. Baldwin served as Assistant Treasurer of Tenneco,
Inc. from 1994 until September 1997.
The Company has adopted the Worthington Industries, Inc. Deferred
Compensation Plan for Executive Officers, pursuant to which certain executive
officers may elect to defer a portion of their bonuses. Under this Plan,
participants may generally elect to defer payment of these amounts until a
specified date or until they are no longer associated with the Company. Amounts
deferred under this Plan are converted into theoretical shares which increase or
decrease in value based upon (i) the change in the Company's book value per
share (adjusted to eliminate the effects of events outside normal business
operations), plus (ii) the equivalent of cash dividends per share. Any amounts
deferred under this Plan for the Named Executives are included in the "Bonus"
column. For fiscal 1999, Messrs. Malenick and Ferkany had $411,702 and $72,700
respectively, accrued on amounts in their Deferred Compensation Plan accounts,
which is included in "All Other Compensation."
The Named Executives also participate in the Company's Deferred Profit
Sharing Plan (the "Deferred Plan"), together with substantially all of the other
regular full-time employees of the
7
<PAGE> 10
Company except those represented by labor unions. Contributions made by the
Company are based on profits and are allocated quarterly to employee accounts
based upon total compensation and length of service. Distributions under the
Deferred Plan are generally deferred until retirement, death or total and
permanent disability. In addition to the contributions made by the Company, the
Named Executive Officers may elect to make additional voluntary contributions
from their salary or bonus. These voluntary contributions are included in the
"Salary" or "Bonus" columns, as appropriate, in the Summary Compensation Table.
Allocations under the Deferred Plan attributable to Company contributions for
fiscal 1999 for the benefit of Messrs. McConnell ($6,875), Malenick ($6,951),
Ferkany ($6,891) and Roberts ($6,891) are included as "All Other Compensation."
Also included in "All Other Compensation" for the fiscal 1999 are the
following costs of providing term life insurance for the benefit of the Named
Executives: Messrs. McConnell ($1,991); Malenick ($5,192); Ferkany ($3,228);
Roberts ($1,087) and Baldwin ($269).
OPTION GRANTS:
The following table sets forth information with respect to individual
grants of stock options made to the Named Executives during fiscal 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
COMMON SHARES % OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS TO EXERCISE OR FOR OPTION TERM(1)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ---------------------
NAME GRANTED (#) IN FY ($/SH) DATE 5%($) 10%($)
---- ------------- ---------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
J. P. McConnell....... 120,000(2) 5.57 13.00 11/18/08 981,076 2,486,238
D. H. Malenick........ -- -- -- -- -- --
E. A. Ferkany......... 50,000(2) 2.32 13.00 11/18/08 408,781 1,035,932
R. V. Roberts......... 100,000(2) 4.64 13.00 11/18/08 817,563 2,071,865
J. T. Baldwin......... 100,000(2) 4.64 13.00 11/18/08 817,563 2,071,865
</TABLE>
- ---------------
(1) The amounts reflected in this table represent certain assumed rates of
appreciation only, and assume the options are held until their expiration
date. Actual realized values, if any, on option exercises will be dependent
upon the actual appreciation in the price of the Common Shares of the
Company between the grant date and the date they are exercised. There can be
no assurances that the Potential Realizable Values reflected in this table
will be achieved.
(2) The options become exercisable in 20% per year increments on each
anniversary of their effective date. In the event of a change in control of
the Company (as defined in the applicable plan), unless the Board of
Directors explicitly provides otherwise, all stock options which have been
outstanding at least six months before the date of such change in control
become fully exercisable.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executives concerning the exercise of stock options during fiscal 1999 and
unexercised stock options held as of May 31, 1999.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
COMMON SHARES VALUE (1) OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 5/31/99 AT 5/31/99 ($)
SHARES ------------------------- -------------------------
ACQUIRED ON VALUE (1) NOT NOT
NAME EXERCISE (#) REALIZED ($) EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
- ---- ------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
J. P. McConnell........... -0- -0- 214,000 76,000 -0- -0-
D. H. Malenick............ -0- -0- -0- 50,000 -0- -0-
E. A. Ferkany............. -0- -0- 74,000 66,500 -0- 145,314
R. V. Roberts............. -0- -0- 109,200 15,800 -0- 32, 290
J. T. Baldwin............. -0- -0- 108,000 2,000 -0- -0-
</TABLE>
- ---------------
(1) Pre-tax value based on the spread between the exercise price and the May 28,
1999, the last working day of the Company's fiscal year, closing price of
$12.81 per share.
LONG-TERM INCENTIVE PLAN AWARDS
The following incentive table sets forth information with respect to
incentive awards made to the Named Executives during the fiscal year ended May
31, 1999 under the Company's Long-Term Incentive Plan.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
---------------------------------
PERFORMANCE OR OTHER PERIOD UNTIL THRESHOLD TARGET MAXIMUM
NAME MATURATION OR PAYOUT ($) ($) ($)
- ---- --------------------------------- ------------- ------- -------
<S> <C> <C> <C> <C>
J. P. McConnell.............. Three year period ended 5/31/01 100,000 200,000 300,000
D. H. Malenick............... Three year period ended 5/31/01 150,000 350,000 450,000
E. A. Ferkany................ Three year period ended 5/31/01 7,500 15,000 22,500
R. V. Roberts................ Three year period ended 5/31/01 5,000 10,000 15,000
J. T. Baldwin................ Three year period ended 5/31/01 5,000 10,000 15,000
</TABLE>
Payouts of awards are tied to achieving specified levels (threshold, target
and maximum) of economic value added and of earnings per share growth for the
performance period, with each performance measure carrying a 50% weighting. If
the performance level falls between threshold and target, or between target and
maximum, the award is prorated. Under the Plan, payouts will generally be made
in August following the end of the period. Performance awards may be paid in
cash, shares, other property or any combination thereof, in the sole discretion
of the Compensation and Stock Option Committee at the time of payment.
EXECUTIVE COMPENSATION REPORT AND PERFORMANCE GRAPH
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following Committee
Report and the information under "COMPARISON OF FIVE YEAR CUMULATIVE TOTAL
RETURN" shall not be incorporated by reference into any such filings.
9
<PAGE> 12
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
General Compensation Philosophy
A basic philosophy of Worthington Industries, Inc. is that all regular
full-time, nonunion employees of the Company have a meaningful portion of their
total compensation tied to the profitability of the Company. In furtherance of
this philosophy, all such employees in general participate in either the
Company's cash profit sharing plan or the executive cash bonus plan (the "Bonus
Plan") which has been in place since the 1960's. Cash profit sharing, which
covers the majority of the Company's employees, is computed as a fixed
percentage of quarterly profits.
The Company's CEO, its other executive officers and certain other key
employees, participate in the Bonus Plan. Under the Bonus Plan, bonuses paid to
participants are computed as a percentage of the Company's income before taxes,
but after adjustment for contributions to the Company's Deferred Plan. The total
amount of bonuses paid to all participants in the Bonus Plan may not exceed 15%
of the Company's pre-tax income. Bonuses are paid quarterly based upon the
quarterly financial results and generally account for in excess of 45% of a
participant's total compensation.
Compensation for Executives
Since bonus payments account for such a large percentage of total
compensation and since bonuses are tied to the Company's profitability, the
largest variable in determining total compensation of the CEO, the executive
officers, and other participants in the Bonus Plan is the profitability of the
Company. However, bonuses can be adjusted, up or down, based on the individual's
performance, subjectively determined by his or her supervisor, the CEO or the
Compensation and Stock Option Committee (the "Compensation Committee") as
appropriate.
In setting base salaries for the CEO and the executive officers, the
Compensation Committee, which is comprised of outside directors, has reviewed
information regarding compensation paid by other manufacturing companies of
similar size to officers with similar responsibilities. It is the Compensation
Committee's intent to set base salaries at levels so that when the Company
performs well, the bonus payments (which are tied to Company income) would put
Company officers in the upper range of total compensation being paid to officers
of comparable companies. Conversely, should the Company's performance be below
that of comparable companies, total executive compensation would fall below the
average compensation range.
Performance of the CEO
Consistent with the philosophy behind the Bonus Plan, profitability of the
Company has been the primary variable in the compensation paid to John P.
McConnell, the Company's CEO.
Toward the end of fiscal 1998, the Company made the strategic decision to
focus its efforts on its steel processing and metals related businesses, and to
divest its custom products and cast products segments. Management met the
Company's goal of successfully completing the divestitures during fiscal 1999.
In addition, the Company has undertaken a number of major strategic actions in
recent years, including acquisitions, the formation of joint ventures, and
significant investment in new plants and equipment for the Company's steel
processing and metals related businesses. The Compensation Committee believes
that these actions, headed by the CEO and the Management team, are in the best
interest of the Company and will have a significant positive long-term impact on
the Company.
As reported in past years, the Compensation Committee believes that the
CEO's total compensation was below that of CEO's of comparable companies.
Accordingly, effective March 1, 1997, the Compensation Committee increased the
base salary of the CEO to move his compensa-
10
<PAGE> 13
tion closer to that provided by comparable companies. Likewise, the
implementation of the long-term incentive program discussed below, enables the
Compensation Committee to add long-term incentive pay to the CEO's compensation
package to make it more competitive with that provided by comparable companies,
while at the same time further tying the CEO's compensation to Company
performance.
For the year, the Company's earnings per share decreased due to a change in
accounting and losses on the sale of certain of the Company's divested plastics
operations. Earnings per share from continuing operations increased 6%, despite
start up losses at the new steel processing plants and expenses tied to Year
2000 readiness. Mr. McConnell's base wages were the same as in fiscal 1998, and
his bonus compensation increased 6.5%, consistent with the increase in earnings
per share from continuing operations.
No payouts were made to the CEO under performance awards under the
Long-Term Incentive Plan for the period ending May 31, 1999, as the Company did
not meet its targeted return levels.
Incentive Compensation
Bonuses. Although the Bonus Plan is tied to current profitability, the
Company has found it to provide a balance between incentives for current and
long-term profitability. Since the payment is based on current year income, the
incentive toward current profitability is obvious. However, since future
compensation for the officers will continue to be based in large part on the
Bonus Plan, the Plan also provides incentives to assure the long-term
profitability of the Company.
Long-term Incentives. Long-term incentives have historically been provided
through stock options. The Compensation Committee views stock options as
particularly appropriate long-term incentives because stock options align the
interest of the employee/optionholders with those of the shareholder by
providing value to the employee tied directly to stock option price increases.
The Committee believes that providing long-term compensation tied to sustained
financial achievement is also an appropriate method to motivate and reward the
Company's top executive officers.
To make the Company more competitive with comparable companies in providing
long-term compensation to its executives, the Company adopted its Long-Term
Incentive Plan ("LTIP") in 1997. Pursuant to the LTIP, the Compensation
Committee has implemented a long-term incentive program which anticipates
consideration of (i) annual stock option grants and (ii) long-term incentive
awards based on achieving measurable criteria performance over a multiple year
period, with payment in cash, stock or stock awards for achievement of those
goals.
For fiscal 1999, the LTIP awards were weighted heavily in favor of stock
options, with significant stock option grants going to top executives. With the
major restructuring which was occurring the Committee believed that the most
appropriate incentive and the best measure of success of this restructuring
would be the long-term growth of the Company's stock price. With the
divestitures being completed in fiscal 1999, the Committee anticipates returning
to more of a balance between annual stock options and long-term incentive awards
tied to certain performance criteria of the Company's continuing operations.
Stock options and performance awards granted to the CEO and other Named
Executives are shown under "Option Grants" and "Performance Awards."
Although the terms of the Company's 1990 Stock Option Plan and Long-Term
Incentive Plan are flexible, all options granted in the past 15 years have been
granted at 100% of the market value on the date of grant. As noted, pursuant to
the long-term incentive program, the Compensation Committee currently intends to
consider annual stock option grants and Performance Awards for the CEO and other
selected executives. The Compensation Committee will continue to review
11
<PAGE> 14
the appropriate time for option grants for other employees. Among the factors
which were considered for prior grants and which are likely to be considered for
any new grants would be the position held by the participant in the Company,
individual performance and the timing and amounts of previous grants.
Tax Deductibility
Section 162(m) of the Internal Revenue Code limits deductions for
compensation paid to a publicly-held corporation's five most highly compensated
executive officers to $1,000,000 per year per executive officer, excluding
"performance based compensation" meeting certain requirements. Federal
regulations issued under Section 162(m) define the provisions which compensatory
plans must contain to qualify for the "performance based" exemption under
Section 162(m). The Company's 1990 Stock Option Plan qualifies for the
exemption. The Compensation Committee intends to tailor the incentive programs
under the LTIP to also qualify for the exemption. Since no officer's annual
salary, plus bonuses, has reached $1,000,000, the Compensation Committee has not
attempted to revise the Bonus Plan to satisfy the conditions for the exemption,
but it may re-examine the matter if compensation paid thereunder would not
otherwise be deductible under Section 162(m) and such provisions would not
distort or discourage the existing incentives for performance that enhance the
value of the Company. In all cases, however, whether or not some portion of a
covered executive officer's compensation is tax deductible, the Company will
continue to carefully consider the net cost and value to the Company of its
compensation policies.
COMPENSATION AND STOCK OPTION COMMITTEE
John B. Blystone, Chairman
John F. Havens
Robert B. McCurry
Gerald B. Mitchell
Pete A. Klisares ex officio member
12
<PAGE> 15
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following graph compares the five year cumulative total shareholder
return on the Company's Common Shares, the S&P 500 Stock Index, the S&P
Industrials Index and the S&P Iron & Steel 500 Index, in each case assuming that
$100 was invested at May 31, 1994 and that dividends were reinvested when
received. The Company has elected to include a comparison to the S&P Iron &
Steel 500 Index, of which the Company is a component. This index is a more
specific index relative to the Company's largest line of business.
<TABLE>
<CAPTION>
WTHG S&P 500 S&P INDUST. IRON & STEEL 500
---- ------- ----------- ----------------
<S> <C> <C> <C> <C>
May 1994 100.00 100.00 100.00 100.00
May 1995 107.26 120.19 121.74 84.25
May 1996 106.29 154.37 156.66 84.19
May 1997 99.51 199.77 200.07 87.17
May 1998 97.54 261.08 258.24 87.19
May 1999 74.05 315.97 321.01 75.40
</TABLE>
RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS
Management will present at the Annual Meeting a resolution calling for the
ratification of the appointment of the firm of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending May 31, 2000. It is expected
that a representative of Ernst & Young LLP will be present at the Annual Meeting
and will be given the opportunity to make a statement and to respond to
appropriate questions. That firm has audited the accounts of the Company since
1964.
SHAREHOLDER PROPOSALS
Any shareholder of the Company who intends to submit a proposal to the
Company at the 2000 Annual Meeting of Shareholders must submit such proposal to
the Company at its corporate offices not later than April 18, 2000 for inclusion
in the Company's Proxy Statement and form of Proxy relating to that meeting. If
a shareholder intends to present a proposal at the 2000 Annual Meeting of
Shareholders, but has not sought the inclusion of such proposal in the Company's
Proxy Statement and form of Proxy, such proposal must be received by the Company
at its corporate offices prior to July 2, 2000 or the Company's management
proxies for the 2000 Annual
13
<PAGE> 16
Meeting will be entitled to use their discretionary voting authority should such
proposal then be raised, without any discussion of the matter in the Company's
Proxy Statement or form of Proxy.
10-K REPORT
Consolidated financial statements for Worthington Industries, Inc. and its
subsidiaries are included in the Worthington Industries, Inc. Annual Report to
Shareholders which is attached as Appendix I to this Proxy Statement. Additional
copies of these statements and the Company's Annual Report on Form 10-K for the
year ended May 31, 1999 (excluding exhibits, unless such exhibits have been
specifically incorporated by reference therein) may be obtained from the
Company's Shareholder Relations Department at 1205 Dearborn Drive, Columbus, OH
43085. The Form 10-K is also on file with the Securities and Exchange
Commission, Washington, D.C. 20549.
OTHER MATTERS
Management knows of no other business which may be brought before the
Annual Meeting. However, if any other matter shall properly come before the
Annual Meeting, it is the intention of the persons named in the enclosed form of
Proxy to vote such Proxy in accordance with their best judgment on such matters.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS
WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON ARE URGED TO FILL IN,
SIGN AND RETURN THE PROXY IN THE ENCLOSED, SELF-ADDRESSED STAMPED ENVELOPE.
By order of the Board of Directors.
CHARLES D. MINOR, Secretary
Dated: August 16, 1999
14
<PAGE> 17
WORTHINGTON INDUSTRIES, INC.
PROXY
P
R
O The undersigned hereby constitutes and appoints John P. McConnell,
John S. Christie and Charles D. Minor, or any of them, the proxy or
X proxies of the undersigned to vote at the Annual Meeting of
Shareholders of Worthington Industries, Inc. (the "Company") to be held
Y at the Worthington Industries, Inc. Athletic Center, 905 Dearborn
Drive, Columbus, Ohio on September 23, 1999 at 2:00 P.M. and at any
adjournments thereof, all of the shares of Common Stock of the Company
which the undersigned is entitled to vote at such meeting or any
adjournments thereof.
-----------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
-----------
<PAGE> 18
[X] Please mark
votes as in
this example.
All Proxies previously given by the undersigned are hereby revoked. This
Proxy will be voted as specified. Unless otherwise specified, this Proxy
will be voted FOR Proposals 1 and 2.
<TABLE>
<S> <C>
1. The election of four directors, each for a 2. Ratification of the selection of the firm FOR AGAINST ABSTAIN
term of three years, expiring in 2002. Nominees: of Ernst & Young LLP as auditors for the [ ] [ ] [ ]
John S. Christie, Michael J. Endres, Peter current fiscal year.
Karmanos, Jr., and John H. McConnell.
FOR WITHHELD 3. In their discretion, the Proxies are
ALL [ ] [ ] FROM ALL authorized to vote upon such other
NOMINEES NOMINEES business (none known by the Company at
the time of solicitation of this Proxy)
as may properly come before the meeting
[ ] and any adjournments thereof.
--------------------------------------
FOR all Nominees Except As Noted Above
MARK HERE MARK HERE
FOR ADDRESS [ ] IF YOU PLAN [ ]
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
If any changes are required to your address, please mark the
address change box above, cross through the current information and
print the new information. The new address will be used by the
Transfer Agent for all future communications, including proxies and
dividend checks.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY. PLEASE SIGN AND DATE THIS PROXY ON THE LINES BELOW AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign your name exactly as it appears on this Proxy.
Executors, administrators, trustees, guardians, attorneys and
agents should give their full titles. If shareholder is a
corporation, sign in full corporate name by authorized officer.
Signature: Date: Signature: Date:
--------------------------- -------------- --------------------------- --------------
</TABLE>
<PAGE> 19
THE ANNUAL MEETING OF SHAREHOLDERS
WILL BE HELD
THURSDAY, SEPTEMBER 23, 1999 AT 2:00 P.M.
WORTHINGTON INDUSTRIES, INC.
ATHLETIC CENTER
905 DEARBORN DRIVE
COLUMBUS, OHIO
