<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE
ACT OF 1934
(AMENDMENT NO.)
Filed by the registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
BETHLEHEM STEEL
(Name of Registrant as Specified In Its Charter)
BETHLEHEM STEEL
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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*
(4) Proposed maximum aggregate value of transaction:
- --------
*Set forth the amount on which the filing is calculated and state how it was
determined.
[_] 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:
Notes:
<PAGE>
BETHLEHEM
STEEL
CORPORATION
- --------------------------------------------------------------------------------
[LOGO OF BETHLEHEM
STEEL CORPORATION
APPEARS HERE]
NOTICE OF 1994
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY
STATEMENT
<PAGE>
[LETTERHEAD OF C. H. BARNETTE APPEARS HERE]
March 16, 1994
To All Bethlehem Stockholders:
It is a pleasure to invite you to the Annual Meeting of Stockholders which
will be held in Wilmington, Delaware on Tuesday, April 26, 1994. We will meet
in the Gold Ballroom of the Hotel du Pont at 11 a.m. Your continuing interest
in Bethlehem's business is appreciated, and I hope that as many of you as pos-
sible will attend the Meeting in person.
The annual election of directors will take place at the Meeting. Personal in-
formation about each nominee for the Board of Directors as well as information
about the functions of the Board and its committees is contained in the Proxy
Statement. All nominees except for Mr. Kaden have previously been elected by
the stockholders. As discussed on page 3 of the Proxy Statement, Mr. Kaden was
designated by the United Steelworkers of America ("USWA") for consideration as
a director of Bethlehem by Bethlehem's Committee on Directors pursuant to the
terms of the 1993 labor agreement between Bethlehem and the USWA. The Committee
on Directors recommended Mr. Kaden's election to the Board, and the Board
elected Mr. Kaden a director, effective March 16, 1994.
We are also asking stockholders to ratify the appointment of Price Waterhouse
as Bethlehem's independent accountants for 1994.
The Management Development and Compensation Committee proposed, and the Board
adopted on January 26, 1994, subject to stockholder approval, the 1994 Stock
Incentive Plan. If approved, the 1994 Stock Incentive Plan will replace the
1988 Stock Incentive Plan. The 1994 Plan provides for the award of stock op-
tions and shares of Bethlehem Common Stock to key employees of Bethlehem and
its subsidiaries. Stock options and stock are an important form of compensation
for our management personnel, just as they are in other major corporations. The
1994 Stock Incentive Plan is described in detail in the Proxy Statement and is
attached as Exhibit 1. We are asking stockholders to approve it at the Meeting.
In addition, the Board adopted on January 26, 1994, subject to stockholder
approval, the 1994 Non-Employee Directors Stock Plan. The 1994 Non-Employee Di-
rectors Stock Plan provides for an annual award of 500 shares of Bethlehem Com-
mon Stock to each non-employee director of Bethlehem. The awards are intended
to supplement the annual fees earned by the non-employee directors of Bethlehem
in a manner that links the directors' interests with those of the stockholders.
The 1994 Non-Employee Directors Stock Plan is described in detail in the Proxy
Statement and is attached as Exhibit 2. We are asking stockholders to approve
it at the Meeting.
Please read the formal notice of the Annual Meeting and the Proxy Statement
carefully. For those of you who cannot be present at the Meeting, I urge you to
participate by completing, signing and returning your proxy in the enclosed en-
velope. Your vote is important, and the management of Bethlehem appreciates the
cooperation of stockholders in directing proxies to vote at the Meeting.
Sincerely,
/s/ Curtis H. Barnette
----------------------------
Curtis H. Barnette,
Chairman
<PAGE>
BETHLEHEM STEEL CORPORATION
1170 EIGHTH AVENUE
BETHLEHEM, PENNSYLVANIA 18016-7699
[LOGO OF BETHLEHEM STEEL CORPORATION APPEARS HERE]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Bethlehem Steel Corporation ("Bethle-
hem") will be held in the Gold Ballroom, Hotel du Pont, Eleventh and Market
Streets, Wilmington, Delaware, on Tuesday, April 26, 1994, at 11 a.m., for the
following purposes:
(1) To elect sixteen Directors to serve for terms of one year and until their
successors have been elected and qualified;
(2) To ratify the appointment of Price Waterhouse as the independent accoun-
tants for 1994;
(3) To take action upon the 1994 Stock Incentive Plan of Bethlehem which, if
approved by stockholders, will replace the 1988 Stock Incentive Plan;
(4) To take action upon the 1994 Non-Employee Directors Stock Plan; and
(5) To transact such other business as may properly come before the Meeting.
Stockholders of record at the close of business on March 7, 1994 are entitled
to receive notice of and to vote at the Meeting. A complete list of such stock-
holders will be open for examination by any stockholder for any purpose germane
to the Meeting at the offices of The Corporation Trust Company at 1209 Orange
Street, Wilmington, Delaware, for a period of ten days prior to the Meeting.
This Notice, the Proxy Statement and the enclosed form of proxy are sent to
you by order of the Board of Directors.
G. Penn Holsenbeck
Secretary
March 16, 1994
- --------------------------------------------------------------------------------
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE MARK, DATE AND SIGN THE
ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
BETHLEHEM STEEL CORPORATION
BETHLEHEM, PENNSYLVANIA 18016-7699
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information for Stockholders....................................... 1
Proxy Procedure.......................................................... 1
Stockholder Proposals.................................................... 1
Election of Directors...................................................... 2
General Background....................................................... 2
Information Concerning Nominees.......................................... 3
Amount and Nature of Beneficial Ownership................................ 7
Committees of the Board.................................................. 8
Compensation Committee Interlocks and Insider Participation.............. 8
Ratification of the Appointment of Independent Accountants................. 9
Approval of 1994 Stock Incentive Plan...................................... 9
Summary of 1994 Stock Incentive Plan..................................... 9
Tax Effects.............................................................. 12
Other Information........................................................ 14
Approval of 1994 Non-Employee Directors Stock Plan......................... 15
Tax Effects.............................................................. 15
Vote Required............................................................ 15
Executive Compensation..................................................... 16
Compensation Committee Report on Executive Compensation.................. 16
Summary Compensation Table............................................... 19
Stock Option/SAR Grants in 1993.......................................... 21
Aggregated Stock Option/SAR Exercises in 1993 and 12/31/93 Stock Option
Values.................................................................. 21
Pension Plan Table....................................................... 21
Comparative Stock Performance............................................ 22
Additional Information..................................................... 23
Indemnification Assurance Agreements..................................... 23
Stockholders............................................................. 23
Other Matters............................................................ 24
</TABLE>
Exhibit 1 -- 1994 Stock Incentive Plan
Exhibit 2 -- 1994 Non-Employee Directors Stock Plan
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Bethlehem Steel Corporation ("Bethlehem") of proxies for
use at the Annual Meeting of Stockholders to be held on April 26, 1994, and any
adjournments thereof. This Proxy Statement and the accompanying form of proxy
are being mailed to stockholders on or after March 16, 1994.
GENERAL INFORMATION FOR STOCKHOLDERS
PROXY PROCEDURE
Proxies are solicited by the Board of Directors of Bethlehem in order to pro-
vide every stockholder with an opportunity to vote on all matters that properly
come before the Annual Meeting of Stockholders, whether or not the stockholder
attends in person. When the enclosed form of proxy is properly signed, dated
and returned, the shares represented will be voted by the persons named as
proxies in accordance with the stockholder's directions. If no direction is in-
dicated, the shares will be voted as recommended by the Board of Directors.
Bethlehem has adopted a confidential voting policy which provides that votes
of all stockholders of Bethlehem shall be held in confidence from Bethlehem,
its directors, officers and employees except (i) to allow the independent in-
spectors of election to certify the results of the vote; (ii) as necessary to
meet applicable legal requirements and to assert or defend claims for or
against Bethlehem; (iii) in case of a contested proxy solicitation; or (iv) in
the event a stockholder has made a written comment on the proxy material. As
part of the policy, Bethlehem will continue its current practice of employing
an independent tabulator to receive and tabulate the proxies and independent
inspectors of election.
Any stockholder executing a form of proxy may revoke that proxy or may submit
a revised form of proxy at any time before it is voted. A stockholder may also
vote by ballot at the Annual Meeting, thereby canceling any proxy previously
returned. Stockholders wishing to name as their proxy someone other than those
designated in the form of proxy may do so by crossing out the names of the
proxies appearing thereon and inserting the name(s) of the person(s) they wish
to have act as proxy. In such a case, it will be necessary that the form of
proxy be delivered by the stockholder to the person(s) named and that the per-
son(s) named be present and vote at the Annual Meeting. Any proxy form on which
alternate proxies have been named should not be mailed directly to Bethlehem.
Votes cast at the Annual Meeting will be tabulated by the persons appointed
as the independent inspectors of election for the Annual Meeting. The inspec-
tors of election will treat shares of Common Stock and of ESOP Preference Stock
represented by a properly signed and returned proxy as present at the Annual
Meeting for purposes of determining a quorum, without regard to whether the
proxy is marked as casting a vote or abstaining. Likewise, the inspectors of
election will treat shares of Common Stock and of ESOP Preference Stock repre-
sented by "broker non-votes" as present for purposes of determining a quorum.
The nominees for election to the Board of Directors receiving the greatest
number of the affirmative votes cast by holders of Common Stock and of ESOP
Preference Stock, up to the number of directors to be elected, will be elected
as directors. Accordingly, so long as a quorum is present, abstentions or bro-
ker non-votes as to the election of directors will have no effect on the elec-
tion of directors.
The affirmative vote of the holders of a majority of the shares of Common
Stock and of ESOP Preference Stock that are present in person or by proxy and
entitled to vote at the Annual Meeting, voting together as a single class, is
required to ratify the appointment of the independent accountants, approve the
1994 Stock Incentive Plan and approve the 1994 Non-Employee Directors Stock
Plan. Therefore, abstentions will have the same effect as votes against these
proposals. Broker non-votes as to such proposals, however, will be deemed
shares not entitled to vote on such proposals and will not count as votes for
or against such proposals.
STOCKHOLDER PROPOSALS
Stockholders may be asked to consider and take action on proposals submitted
by stockholders who are not members of management or the Board of Directors.
Proposals by stockholders may be included in the Proxy Statement if the propos-
als are proper subjects for inclusion, are submitted to Bethlehem on a timely
basis, and otherwise comply with Rule 14a-8 under Section 14(a) of the Securi-
ties Exchange Act of 1934 and the laws of the State of Delaware. Each proposal
submitted should include the full and correct registered name and address of
the stockholder(s) making the proposal, the number of shares owned and the
dates of acquisition thereof. If beneficial ownership is claimed, proof thereof
should be submitted with the proposal. In addition, proponents must appear per-
sonally or by proxy at the Annual Meeting to present the proposal for action.
In order for such
1
<PAGE>
proposals to be included for the Annual Meeting of Stockholders to be held in
1995, they must be received by Bethlehem on or before November 14, 1994.
The Board of Directors carefully considers all proposals and suggestions sub-
mitted by stockholders to determine if they are in the best interests of Beth-
lehem and the stockholders generally. When a stockholder presents, as a formal
resolution, a suggestion which is practicable, and in the best interests of
Bethlehem and its stockholders, and which can be implemented by management and
the Board without the necessity of stockholder approval, the suggestion is usu-
ally adopted without stockholder approval and the proponent withdraws the reso-
lution.
ELECTION OF DIRECTORS
GENERAL BACKGROUND
As provided by the laws of Delaware, Bethlehem's state of incorporation, the
business and affairs of Bethlehem are managed by or under the direction of the
Board of Directors of Bethlehem, which is currently comprised of sixteen mem-
bers. The Board of Directors represents the interests of the stockholders as a
whole and has responsibility for the overall performance of Bethlehem. Stock-
holders annually elect directors in April of each year to serve for terms of
one year and until their successors have been elected and qualified. This an-
nual election of directors is one of the important purposes of the Annual Meet-
ing.
Members of the Board are kept informed of Bethlehem's business by presenta-
tions made at Board meetings and by various reports sent to them by management.
The Board of Directors meets regularly and met twelve times during 1993. Direc-
tors also meet in committees of the Board, and information concerning the com-
mittees can be found beginning on page 8 of this Proxy Statement. During 1993,
the average attendance of directors at Board meetings and meetings of commit-
tees to which they belonged was approximately 95%.
Of the sixteen directors standing for election, thirteen are not employees of
Bethlehem. These thirteen non-employee Board members bring valuable experience
to Bethlehem from a variety of fields. None of them has carried on an occupa-
tion or employment with any subsidiary or other affiliate of Bethlehem.
Each non-employee director receives compensation of $22,000 annually for his
service as a Bethlehem director. The annual fee includes compensation for serv-
ice as a member of the Audit Committee, the Management Development and Compen-
sation Committee, the Finance Committee and the Committee on Directors. Each
non-employee director receives an attendance fee of $500 for each meeting of
the Board attended, for each group of committee meetings held in conjunction
with a meeting of the Board and for each meeting attended of any committee on
which he serves that is not held in conjunction with a meeting of the Board.
Non-employee directors are also reimbursed for any expenses which may be in-
curred by them in connection with the business and affairs of Bethlehem. None
of the directors who are employees of Bethlehem are compensated separately for
service as a member of the Board of Directors or any committee of the Board.
If stockholders approve the 1994 Non-Employee Directors Stock Plan at the An-
nual Meeting, each non-employee director of Bethlehem will receive on December
1 of each year commencing in 1994 an annual award of 500 shares of Bethlehem
Common Stock. See the description of the 1994 Non-Employee Directors Stock Plan
beginning on page 15.
Under the Post Retirement Retainer Plan, directors who are not and have not
been employees of Bethlehem or its subsidiaries and who retire from the Board
with ten or more years of service, will receive annual payments equal to 100%
of the annual retainer fee payable at retirement. Directors who retire with be-
tween five and ten years of service will receive annual payments starting at
50% of the annual retainer fee payable at retirement for directors with five
years of service and increasing 10% for each year of service up to ten years.
The annual payments will begin at retirement (or at age 65 if retirement is
prior to age 65) and will continue for a period equal to the director's years
of service with the Board. In the event of the death of a director, any unpaid
amount will be paid to the director's designated beneficiary or the director's
estate if there is no designated beneficiary.
The general retirement policy of the Board provides that non-employee direc-
tors shall retire at the end of their term as a director during which they
reach age 70, except that non-employee directors who were elected at the 1991
Annual Meeting of Stockholders (all current non-employee directors except
Messrs. Civiletti, Clark, Kaden and Kamen) shall retire at the end of their
term as a director during which they reach age 72. Employee directors shall re-
tire from the Board at the time of their retirement from Bethlehem. The present
retirement age for management employees of Bethlehem is 65.
2
<PAGE>
Pursuant to the terms of a 1993 labor agreement with the United Steelworkers
of America ("USWA"), the USWA has the right to designate a nominee for consid-
eration by the Committee on Directors and the Board of Directors for one seat
on the Board. The nominee is to be a prominent individual with experience in
public service, labor, education or business. The nominee shall not be or be-
come while serving as a director an officer, employee or director of the USWA.
Subject to complying with the same standards of conduct as every other Bethle-
hem director, and subject to annual election by the stockholders, the USWA nom-
inee will serve as a director during the term of the 1993 labor agreement,
which terminates July 31, 1999. Mr. Kaden was designated by the USWA for con-
sideration as a director of Bethlehem by the Committee on Directors. The Com-
mittee on Directors recommended Mr. Kaden's election to the Board, and the
Board elected Mr. Kaden a director, effective March 16, 1994.
The sixteen nominees whose biographies appear on the following pages have
been recommended by the Committee on Directors and proposed by the entire Board
of Directors. They have been recommended on the basis of their demonstrated
broad knowledge, experience and ability in their respective endeavors, and,
most importantly, on the basis of their ability to represent the interests of
all stockholders, rather than the special interests of a particular group.
INFORMATION CONCERNING NOMINEES
The persons named in the accompanying form of proxy intend to vote the shares
covered by proxies for the election of the director nominees named below. Each
nominee is presently a director of Bethlehem and has previously been elected a
director by the stockholders except for Mr. Kaden. If any nominee shall, prior
to the Annual Meeting, become unavailable for election as a director, which is
not expected, the persons named in the accompanying form of proxy will vote for
such substitute nominee, if any, as may be recommended by the Board of Direc-
tors. Directors elected at the Meeting will hold office until the next Annual
Meeting of Stockholders and until their successors have been elected and quali-
fied, or until their earlier resignation, retirement or removal.
[PHOTO OF CURTIS H. Mr. Barnette, age 59, has been a director of Bethle-
CURTIS H. BARNETT hem since 1986. He was elected Chairman and Chief
BARNETTE Executive Officer, effective November 1, 1992. He
APPEARS has been an employee of Bethlehem since 1967, hold-
HERE] ing various positions. Prior to his election as
Chairman and Chief Executive Officer, Mr. Barnette
had been Secretary of Bethlehem since 1976, General
Counsel since 1977, Vice President, Law from 1977 to
1985, and Senior Vice President since 1985.
[PHOTO OF BENJAMIN R. Mr. Civiletti, age 58, was elected a director of
BENJAMIN R. CIVILETTI Bethlehem in March 1993. He has been Chairman of
CIVILETTI Venable, Baetjer and Howard, a law firm, since July
APPEARS 1993, and a partner since 1981. He had been Managing
HERE] Partner of that firm from 1987 until 1993. He previ-
ously served as Attorney General of the United
States from 1979 to 1981. Mr. Civiletti is also a
director of MBNA America Bank, N.A. and MBNA Inter-
national Bank Limited.
3
<PAGE>
[PHOTO OF WORLEY H. Mr. Clark, age 61, was elected a director of Bethle-
WORLEY H. CLARK hem in March 1993. He has been Chairman and Chief
CLARK Executive Officer of Nalco Chemical Company, a manu-
APPEARS facturer of specialty chemicals, since 1984 and an
HERE] employee of that company since 1960. Mr. Clark is
also a director of NICOR Inc., USG Corporation,
Northern Trust Company and James River Corporation.
[PHOTO OF HERMAN E. Dr. Collier, age 66, was elected a director of Beth-
HERMAN E. COLLIER, JR. lehem in 1987. He retired as President of Moravian
COLLIER, JR. College in 1986, a position he had held since 1969.
APPEARS He has been President of I&I Planning Associates,
HERE] Inc., a planning consulting firm, since 1988 and is
also Co-Director of that company.
[PHOTO OF JOHN B. Mr. Curcio, age 59, was elected a director of Beth-
JOHN B. CURCIO lehem in 1988. He was Chief Executive Officer and a
CURCIO director of Mack Trucks, Inc., a manufacturer of
APPEARS heavy-duty trucks, from 1983 until 1989, and Chair-
HERE] man of the Board from 1985 until his retirement. Mr.
Curcio is also a director of Minerals Technologies,
Inc. and Integrated Components Systems, Inc. and
Vice Chairman of Jupiter Logistics, USA, Inc. and
Jupiter Logistics, de Mexico, SA de C.V.
[PHOTO OF WILLIAM C. Mr. Hittinger, age 71, was elected a director of
WILLIAM C. HITTINGER Bethlehem in 1988. He retired as Executive Vice
HITTINGER President of RCA Corporation, an electronics manu-
APPEARS facturer, in 1986, a position he had held since
HERE] 1972. He was a director of that company from 1974 to
1982. Mr. Hittinger is also a director of Recogni-
tion International Inc., BioTechnica International,
Inc. and UNC, Inc.
[PHOTO OF THOMAS L. Mr. Holton, age 68, was elected a director of Beth-
THOMAS L. HOLTON lehem in 1987. He retired from Peat, Marwick, Mitch-
HOLTON ell & Co., an accounting firm, in 1986 after twenty-
APPEARS eight years as a partner. He served as Chairman and
HERE] Chief Executive Officer of Peat, Marwick, Mitchell &
Co. (U.S.) from 1979 until 1984, and as Chairman of
Peat Marwick International from 1983 to 1985. Mr.
Holton is also a member of the Advisory Board of Po-
tomac Investment Associates.
4
<PAGE>
[PHOTO OF LEWIS B. Mr. Kaden, age 51, was elected a director of Bethle-
LEWIS B. KADEN hem, effective March 16, 1994. He has been a partner
KADEN of Davis Polk & Wardwell, a law firm, and an Adjunct
APPEARS Professor of Law at Columbia University since 1984,
HERE] where he was a Professor of Law from 1976 to 1984.
[PHOTO OF HARRY P. Mr. Kamen, age 60, was elected a director of Bethle-
HARRY P. KAMEN hem in March 1993. He has been Chairman of the Board
APPEARS and Chief Executive Officer of Metropolitan Life In-
HERE] surance Company, a mutual life insurance company,
since April 1993. He has been an employee of Metro-
politan since 1959, holding various positions. Prior
to his election as Chairman of the Board and Chief
Executive Officer, Mr. Kamen had been serving as Se-
nior Executive Vice President since October 1991,
Executive Vice President from January to September
1991, Executive Vice President and General Counsel
from April 1989 to December 1990 and Senior Vice
President and General Counsel from January 1987 to
March 1989. Mr. Kamen is also a director of Banco
Santander.
[PHOTO OF WINTHROP Mr. Knowlton, age 63, was elected a director of
WINTHROP KNOWLTON Bethlehem in 1986. He is Chairman of Knowlton Broth-
KNOWLTON ers, Inc., an investment firm. From 1982 to 1987, he
APPEARS was the director of the Center for Business and Gov-
HERE] ernment at the John F. Kennedy School of Government,
Harvard University, as well as the Henry R. Luce
Professor of Ethics, Business and Public Policy. Mr.
Knowlton was Chairman of the Board of Harper & Row
Publishers, Inc., a book publisher, from 1979 to
1986 and served as Chief Executive Officer of that
company from 1970 through 1981. Mr. Knowlton is also
a director of Equitable Life Assurance Society of
the United States.
[PHOTO OF ROBERT Mr. McClements, age 65, was elected a director of
ROBERT MCCLEMENTS, Bethlehem in 1989. He retired in May 1992 as Chair-
MCCLEMENTS, JR. man of the Board and a director of Sun Company,
JR. Inc., a diversified energy company, positions he
APPEARS held since 1987 and 1979, respectively. Mr. McClem-
HERE] ents also served as Chief Executive Officer of that
company from 1985 until September 1991. Mr. McClem-
ents is also a director of Unisys Corporation.
[PHOTO OF GARY L. Mr. Millenbruch, age 56, was elected a director of
GARY L. MILLENBRUCH Bethlehem in 1991. Mr. Millenbruch was elected Exec-
MILLENBRUCH utive Vice President and Chief Financial Officer,
APPEARS effective November 1, 1992. He has been an employee
HERE] of Bethlehem since 1959, holding various positions.
Prior to his election as Executive Vice President
and Chief Financial Officer, he had been Senior Vice
President and Chief Financial Officer since 1986.
5
<PAGE>
[PHOTO OF ROGER P. Mr. Penny, age 57, was elected a director of Bethle-
ROGER P. PENNY hem in 1991. Mr. Penny was elected President and
PENNY Chief Operating Officer, effective November 1, 1992.
APPEARS He has been an employee of Bethlehem since 1958,
HERE] holding various positions. Prior to his election as
President and Chief Operating Officer, Mr. Penny had
been Senior Vice President, Steel Operations since
1987.
[PHOTO OF DEAN P. Mr. Phypers, age 65, was elected a director of Beth-
DEAN P. PHYPERS lehem in 1986. He was a Senior Vice President and a
PHYPERS director of International Business Machines Corpora-
APPEARS tion, an information technology and computer compa-
HERE] ny, from 1979 and 1982, respectively, until 1987.
Mr. Phypers is also a director of American Interna-
tional Group, Inc., Church & Dwight Co., Inc.,
Cambrex Corp. and Cytogen, Inc.
[PHOTO OF WILLIAM A. Mr. Pogue, age 66, was elected a director of Bethle-
WILLIAM A. POGUE hem in 1988. He retired in 1989 as Chairman of the
POGUE Board, President and Chief Executive Officer of CBI
APPEARS Industries, Inc., a manufacturer of storage tanks
HERE] and industrial gases, positions he had held since
1982 and as a director of that company, a position
he had held since 1972. Mr. Pogue is also a director
of Nalco Chemical Co. and Amerada Hess Corporation
and will be a director of The Northern Trust Corpo-
ration until April 1994.
[PHOTO OF JOHN F. Mr. Ruffle, age 56, was elected a director of Beth-
JOHN F. RUFFLE lehem in 1990. He retired in June 1993 as Vice
RUFFLE Chairman of the Board of J. P. Morgan & Co. Incorpo-
APPEARS rated, a bank holding company, and Morgan Guaranty
HERE] Trust Co. of New York, a commercial bank, positions
he held since 1985. Mr. Ruffle is also a director of
Student Loan Marketing Association (Sallie Mae) and
Trident Corporation.
In addition to the business activities described above, the director nominees
also participate in various other business, professional and charitable activi-
ties.
6
<PAGE>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
The following table shows the shares of Bethlehem Common Stock beneficially
owned, directly or indirectly, by each current director, Messrs. Jordan and
Post and all directors and executive officers as a group at March 16, 1994:
<TABLE>
<CAPTION>
SHARES OF SHARES SUBJECT
COMMON STOCK TO ACQUISITION
OWNED DIRECTLY WITHIN 60 PERCENT
NAME AND POSITION OR INDIRECTLY(1) DAYS(2) TOTAL OF CLASS(3)
- ----------------- ---------------- -------------- --------- -----------
<S> <C> <C> <C> <C>
Curtis H. Barnette...... 63,374 114,500 177,874 (4)
Benjamin R. Civiletti... 200 -- 200 (4)
Worley H. Clark......... 2,000 -- 2,000 (4)
Herman E. Collier, Jr... 1,100 -- 1,100 (4)
John B. Curcio.......... 1,000 -- 1,000 (4)
William C. Hittinger.... 1,000 -- 1,000 (4)
Thomas L. Holton........ 1,200 -- 1,200 (4)
Lewis B. Kaden.......... 1,000 -- 1,000 (4)
Harry P. Kamen.......... 1,000 -- 1,000 (4)
Winthrop Knowlton....... 1,100 -- 1,100 (4)
Robert McClements, Jr. . 1,000 -- 1,000 (4)
Gary L. Millenbruch..... 46,752 96,250 143,002 (4)
Roger P. Penny.......... 39,771 93,300 133,071 (4)
Dean P. Phypers......... 1,000 -- 1,000 (4)
William A. Pogue........ 1,500 -- 1,500 (4)
John F. Ruffle.......... 1,000 -- 1,000 (4)
John A. Jordan, Jr...... 21,471 67,000 88,471 (4)
David P. Post........... 12,971 33,000 45,971 (4)
- ---------
34 directors and execu-
tive officers as a
group (including those
named above).......... 288,034(5) 726,703 1,014,737(5) (4)
</TABLE>
- ---------
(1) The figures shown include shares allocated as of March 16, 1994, to the ac-
counts of participants under the Savings Plan for certain salaried employ-
ees of Bethlehem and its subsidiaries.
Shares of Bethlehem Common Stock acquired by the Trustee, State Street Bank
and Trust Company, for purposes of the Savings Plan are allocated to the
accounts of participants as of the end of each month. Participants are en-
titled to provide instructions as to the voting of the shares allocated to
their accounts. Shares not allocated to participants' accounts and shares
credited to the accounts of participants who do not provide voting instruc-
tions are voted in accordance with instructions of the Savings Plan Commit-
tee.
(2) The Securities and Exchange Commission deems a person to have beneficial
ownership of all shares which that person has the right to acquire within
60 days. The shares indicated represent stock options granted under the
1984 Stock Option and the 1988 Stock Incentive Plans of Bethlehem and held
by the particular individual or group.
(3) Based upon 108,876,296 total outstanding shares of Common Stock on March
16, 1994.
(4) The number of shares deemed to be owned by each director or executive offi-
cer represents less than 1% of the outstanding shares.
(5) The figure shown includes an aggregate of 1,353 shares held by, or for the
benefit of, the immediate families or other relatives of all directors and
executive officers as a group. Of this amount, directors and executive of-
ficers disclaim beneficial ownership of 1,318 shares.
- ---------
None of the directors or executive officers of Bethlehem own any shares of
Bethlehem's Preferred Stock or ESOP Preference Stock.
7
<PAGE>
COMMITTEES OF THE BOARD
Bethlehem's Board of Directors has established committees to assist it in
the discharge of its responsibilities. The principal committees, their current
members and the principal responsibilities of each are described below.
The Executive Committee is presently comprised of Messrs. Barnette (Chair-
man), Millenbruch and Penny. The Executive Committee serves as a policy-making
and supervisory body for all operations of Bethlehem. It has all the delegable
powers of the Board of Directors between meetings of the Board. The Committee
meets at appropriate times and met five times during 1993.
The Finance Committee is presently comprised of Messrs. Barnette (Chairman),
Civiletti, Clark, Collier, Curcio, Hittinger, Holton, Kamen, Knowlton, McClem-
ents, Millenbruch, Penny, Phypers, Pogue and Ruffle. The Finance Committee has
the authority to advise and consult with respect to all activities, plans and
policies affecting the financial affairs of Bethlehem, including dividends.
The Finance Committee meets at appropriate times and met eight times during
1993.
The Audit Committee is presently comprised of Messrs. Holton (Chairman),
Civiletti, Clark, Collier, Curcio, Hittinger, Kamen, Knowlton, McClements,
Phypers, Pogue and Ruffle. The Audit Committee is responsible for making rec-
ommendations to the Board of Directors as to the independent accountants of
Bethlehem and subsidiaries to be designated and appointed by the Board of Di-
rectors, for reviewing with the independent accountants the scope of their ex-
amination of the financial statements of Bethlehem, for meeting with repre-
sentatives of the independent accountants to review and consider questions re-
lating to their examination and any other report submitted, for reviewing gen-
erally with the independent accountants and internal auditors the internal ac-
counting controls and auditing procedures of Bethlehem and for reviewing other
professional services performed for Bethlehem by the independent accountants.
From time to time, the Audit Committee meets with the independent accountants
and Bethlehem's internal auditors without members of Bethlehem's management
being present. The Audit Committee meets at appropriate times and met three
times during 1993.
The Management Development and Compensation Committee is presently comprised
of Messrs. Pogue (Chairman), Civiletti, Clark, Collier, Curcio, Hittinger,
Holton, Kamen, Knowlton, McClements, Phypers and Ruffle. The Management Devel-
opment and Compensation Committee is responsible for management evaluation and
succession review, for administering Bethlehem's executive compensation pro-
grams and for determining the compensation of Bethlehem's executive officers.
The members of the Committee do not participate in the executive compensation
programs the Committee administers. The Committee's report on executive com-
pensation can be found beginning on page 16 of this Proxy Statement. The Man-
agement Development and Compensation Committee meets at appropriate times and
met five times during 1993.
The Committee on Directors is presently comprised of Messrs. Phypers (Chair-
man), Civiletti, Clark, Collier, Curcio, Hittinger, Holton, Kamen, Knowlton,
McClements, Pogue and Ruffle. The Committee on Directors has the authority to
search for persons qualified to be members of the Board and to make recommen-
dations with respect thereto to the Board, to review and evaluate members of
the Board, the Committees of the Board, and procedures and policies of the
Board. If any stockholder wishes to recommend a nominee for membership on the
Board of Directors, he should write to the Secretary of Bethlehem specifying
the name of the nominee and the qualifications of such nominee for membership
on the Board of Directors. Each submission must include the written consent of
the person proposed for nomination indicating that the person is willing and
able to serve as a director of Bethlehem. All such recommendations will be
brought to the attention of the Committee on Directors. The Committee on Di-
rectors meets at appropriate times and met four times during 1993.
Mr. Kaden, who was elected a director, effective March 16, 1994, will be as-
signed to appropriate Committees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Management Development and Compensation Committee is comprised exclu-
sively of directors who are not and have not been officers or employees of
Bethlehem or any of its affiliates. No executive officer of Bethlehem serves
or has served on the compensation committee or as a director of another com-
pany for which any member of the Management Development and Compensation Com-
mittee serves as a director or executive officer. Certain members of the Man-
agement Development and Compensation Committee are or have been executive of-
ficers of companies or partners of firms that sell products or services or ex-
tend credit to Bethlehem in the ordinary course of business. John F. Ruffle
retired in June 1993 as Vice Chairman of the Board of J.P. Morgan & Co. Incor-
porated and Morgan Guaranty Trust Co. of New York which perform commercial and
investment banking services for Bethlehem, including the extension of credit,
in the ordinary course of business. Benjamin R. Civiletti is Chairman of
Venable, Baetjer and Howard, a law firm which renders legal services to
8
<PAGE>
Bethlehem in the ordinary course of business. Worley H. Clark is Chairman and
Chief Executive Officer of Nalco Chemical Company which from time to time sells
products to Bethlehem in the ordinary course of business. Harry P. Kamen is
Chairman of the Board and Chief Executive Officer of Metropolitan Life Insur-
ance Company which from time to time sells insurance products to Bethlehem in
the ordinary course of business.
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors selects each year the accounting firm to perform the
audit and related work for Bethlehem for that year. Price Waterhouse has been
appointed by the Board of Directors as the independent accountants of Bethlehem
for 1994, with the intention that the appointment be presented for ratification
by the stockholders. In the event the stockholders do not ratify the appoint-
ment of Price Waterhouse, the selection of other independent accountants will
be considered by the Board of Directors.
Price Waterhouse has served as independent accountants of Bethlehem and its
subsidiaries for many years. It is believed that the knowledge of Bethlehem's
business gained through this period of service is most valuable. In accordance
with the established policy of Price Waterhouse, partners and employees of the
firm who work on the Bethlehem account are periodically rotated, thus giving
Bethlehem the benefit of new thinking and approaches in the audit area.
The aggregate cost for the audit-related professional services which Price
Waterhouse performed for Bethlehem during, or attributable to, 1993 was
$1,108,000.
Representatives of Price Waterhouse are expected to be present at the Annual
Meeting of Stockholders with an opportunity to make a statement if they desire
to do so and to be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares of Common
Stock and of ESOP Preference Stock that are present in person or by proxy and
entitled to vote at the Annual Meeting, voting together as a single class, is
required for ratification of the appointment of the independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF
THE APPOINTMENT OF THE INDEPENDENT ACCOUNTANTS.
APPROVAL OF 1994 STOCK INCENTIVE PLAN
On January 26, 1994 the Board of Directors adopted and recommended for sub-
mission to stockholders for their approval the 1994 Stock Incentive Plan (the
"1994 Plan"). The 1994 Plan is substantially similar to and would replace the
1988 Stock Incentive Plan (the "1988 Plan") which was previously approved by
stockholders. Virtually no shares remain available for future award under the
1988 Plan. The Board of Directors believes that it is desirable that Bethlehem
continue to have a stock incentive plan to help align the interests of execu-
tive officers and other key employees of Bethlehem and its subsidiaries with
the interests of stockholders. Encouraging ownership of Bethlehem Common Stock
by executive officers and key employees through a stock incentive plan will in-
crease the long term retention of such employees and provide additional incen-
tive for them to promote the success of Bethlehem and enhance stockholder val-
ue.
If approved by stockholders, the 1994 Plan would become effective on April
26, 1994 and would terminate on December 31, 2001.
SUMMARY OF 1994 STOCK INCENTIVE PLAN
The main features of the 1994 Plan are described below, but the description
is qualified in its entirety by reference to the complete text of the 1994 Plan
which appears as Exhibit 1 to this Proxy Statement.
1. There will be reserved for use upon the exercise of or the surrender of
the right to exercise options and pursuant to stock awards under the 1994 Plan
an aggregate of 4,000,000 shares of Bethlehem Common Stock (about 3.7% of the
shares of Common Stock outstanding and not held in treasury at March 16, 1994),
although the number of shares to be issued pursuant to stock awards shall not
exceed 1,000,000. Such shares may be in whole or in part, as the Board shall
from time to time determine, issued shares of Common Stock which have been re-
acquired by Bethlehem or authorized but unissued shares of Common Stock. The
number of shares is subject to adjustment in the event of changes in the out-
standing Common Stock of Bethlehem by reason of stock dividends, stock splits,
recapitalizations and the like. In general, if an option expires or terminates
or is forfeited or canceled for any reason without having been exercised or the
right to exercise it surrendered in
9
<PAGE>
full, the remaining shares covered thereby will again be available for the pur-
poses of the 1994 Plan, and if any stock award is forfeited before the restric-
tions provided for in such stock award lapse in full, the remaining shares cov-
ered thereby will again be available for the purposes of the 1994 Plan.
2. Only regular key employees (including officers) of Bethlehem or any of its
subsidiaries who shall be selected by the Board may receive option and stock
awards under the 1994 Plan. No officer or employee may receive option and stock
awards over the period the 1994 Plan is in effect for an aggregate of more than
400,000 shares under the 1994 Plan. In 1993, option awards covering approxi-
mately 531,000 shares were made to 314 key employees under the 1988 Plan. In
addition, restricted stock awards for an aggregate of 60,000 shares were made
to five executive officers on January 25, 1994 under the 1988 Plan.
3. Options may be "incentive stock options" within the meaning of Section
422(b) of the Internal Revenue Code of 1986 or nonqualified stock options. The
purchase price of the Common Stock covered by each option will be not less than
100% of the fair market value of the Common Stock at the time of granting the
option, determined as provided in the 1994 Plan. No outstanding option may be
amended to lower the purchase price of the Common Stock covered thereby. The
purchase price is payable in full at the time of exercise in cash or in whole
or in part with shares of Common Stock (valued at the closing sale price of a
share of Common Stock on the New York Stock Exchange on the date the option is
exercised). The ability to pay all or a portion of the purchase price of the
Common Stock covered by each option with shares of Common Stock would permit
possible payment in successive and substantially simultaneous exercises. Such
payment might permit an option holder to start with a relatively small number
of shares of Common Stock and exercise all his then exercisable stock options
without additional cash (except for fractional share adjustments and subject to
the general requirement that an option, unless it covers less than 100 shares
of Common Stock, may not be exercised as to less than 100 shares at any one
time) or any more investment other than the original shares of Common Stock
held by such holder. However, whether the option holder exercises the entire
stock option in a single exercise, or through a series of successive and sub-
stantially simultaneous exercises, the net increase in shares of Common Stock
held by the option holder as a result of either type of exercise would be iden-
tical.
4. The term of each option will be not more than ten years from the date of
grant, and will be subject to earlier termination or forfeiture as described
below. Options may be exercised, as determined by the Board and specified in
the written option agreement relating thereto, at any time or from time to
time, in one or more installments, as the Board in its discretion shall deter-
mine. The Board may also establish conditions to exercise based upon continued
employment, the attainment of specified financial performance goals and other
relevant factors.
5. Options and stock awards will not be transferable otherwise than by will
or the laws of descent and distribution.
6. If so authorized by the Board, the right to exercise an option, or a por-
tion thereof (but only to the extent and in the amounts that such option shall
then be exercisable), may be surrendered to Bethlehem in return for the payment
by Bethlehem of an amount equal to the excess of the fair market value of the
shares of Common Stock covered thereby or portion thereof over the option price
thereof. Any such payment may be made in shares of Common Stock (valued, gener-
ally, at the closing sale price of the Common Stock on the New York Stock Ex-
change on the date of surrender), or in cash, or partly in cash and partly in
shares of Common Stock, as the Board shall determine.
7. The Board may permit any taxes required to be withheld in connection with
any option or stock award to be paid in cash, in already-owned shares of Common
Stock, or by the withholding of shares of Common Stock otherwise issuable upon
the exercise or vesting of any such award, or any combination of the foregoing.
8. An option agreement may provide that (i) any shares of Common Stock issued
upon the exercise of the option provided for therein, (ii) any payment (whether
in shares of Common Stock, or in cash, or some combination thereof) made by
Bethlehem upon the surrender of the right to exercise the option provided for
therein, (iii) the option itself provided for therein or (iv) any combination
of the foregoing will be forfeited and returned to Bethlehem if the recipient
shall cease to remain in the employ of Bethlehem or one or more of its subsidi-
aries during the period or periods specified by such agreement. The holder of
an option will, as one of the conditions of the option agreement relating
thereto, agree to remain in the employ of Bethlehem or one or more of its sub-
sidiaries in order to exercise the option. Any such condition to remain in the
employ of Bethlehem or one or more of its subsidiaries will not apply (i) if
employment shall terminate or be terminated by reason of retirement, death or
permanent disability or (ii) if a change in control shall have occurred. The
term change in control means (i) the first purchase of shares pursuant to a
tender offer or exchange (other than a tender offer or exchange by Bethlehem)
for all or part of Bethlehem's Common Stock or any securities convertible into
such Common Stock, (ii) the receipt by Bethlehem of a Schedule 13D or other ad-
vice indicating that a person is the "beneficial owner" (as that term is de-
fined in Rule 13d-3 under the Securities Exchange Act of 1934) of 20% or more
of Bethlehem's
10
<PAGE>
Common Stock calculated as provided in paragraph (d) of said Rule 13d-3, (iii)
the date of approval by stockholders of Bethlehem of an agreement providing for
any consolidation or merger of Bethlehem in which Bethlehem will not be the
continuing or surviving corporation or pursuant to which shares of Common Stock
of Bethlehem would be converted into cash, securities or other property, other
than a merger of Bethlehem in which the holders of Common Stock of Bethlehem
immediately prior to the merger would have the same proportion of ownership of
common stock of the surviving corporation immediately after the merger, (iv)
the date of the approval by stockholders of Bethlehem of any sale, lease, ex-
change or other transfer (in one transaction or a series of related transac-
tions) of all of or substantially all the assets of Bethlehem or (v) the adop-
tion of any plan or proposal for the liquidation or dissolution of Bethlehem.
9. A holder of an option who retires or whose employment terminates or is
terminated by reason of permanent disability (and, if he shall die within five
years after such retirement or such termination by reason of permanent disabil-
ity, his estate or a person who has acquired the right to exercise such option
by bequest or inheritance) may exercise the option, or, subject to acceptance
by Bethlehem, surrender it as described in paragraph 6 above, at any time
within five years after such retirement or after such termination by reason of
permanent disability, but not after the expiration of the term of the option.
If the holder dies after such retirement or such termination by reason of per-
manent disability and during the period during which the option may be exer-
cised, his estate or such person who has acquired the right to exercise the op-
tion will be deemed to have offered, immediately prior to the termination of
such period, to surrender the right to exercise the option as described in par-
agraph 6 above, unless the option has theretofore been exercised or so surren-
dered or forfeited.
The term "permanent disability" means disability by bodily injury or disease,
either occupational or non-occupational in cause, preventing the employee on
the basis of satisfactory medical evidence from engaging in any employment of
the type normally performed by the employee.
10. If the holder of an option dies while employed by Bethlehem or by one or
more of its subsidiaries, the option may be exercised in whole or in part, or,
subject to acceptance by Bethlehem, the right to exercise the option may be
surrendered as described in paragraph 6 above, by his estate (or by a person
who has acquired the right to exercise such option by bequest or inheritance)
at any time within five years after the date of death.
11. Anything in the 1994 Plan to the contrary notwithstanding, if a change in
control shall occur, the right to exercise all outstanding options to the ex-
tent such options shall not theretofore have been forfeited or exercised or the
right to exercise such options theretofore surrendered shall automatically vest
in accordance with their respective terms. Upon the occurrence of a change in
control, an employee to whom an option shall have been granted may exercise the
portion, if any, of such option that shall then be exercisable, and any and all
installments of such option that shall not then be exercisable and shall not
theretofore have been forfeited shall automatically become exercisable on the
date or dates established in the option agreement relating thereto as the date
or dates on which such installment or installments shall become exercisable,
regardless of whether the conditions, if any, to exercise based upon continued
employment, the attainment of specified financial performance goals or any
other factor shall have been or shall thereafter be satisfied. Such employee
or, if such employee shall die, the estate of such employee (or a person who
shall have acquired the right to exercise such option by bequest or inheri-
tance) may exercise each such portion that shall become exercisable pursuant to
the immediately preceding sentence during the six-month period after it shall
have become exercisable, but not after the expiration of the term of the op-
tion.
12. Each stock award will be subject to such terms and conditions as the
Board in its discretion shall determine, which may include, without limitation,
conditions for issuance of shares of Common Stock pursuant thereto at any time
subsequent to the granting thereof or in installments from time to time or pro-
viding for forfeiture of such award or the shares issued or theretofore issued
pursuant thereto in designated circumstances. The Board may in its discretion
award unrestricted shares of Common Stock in consideration of services thereto-
fore rendered by the recipient. The Board in its discretion may require, among
other things, that the recipient pay the par value for the shares to be issued
pursuant to the award. A stock award made pursuant to the 1994 Plan may be sub-
ject to such terms, conditions and restrictions, including, without limitation,
substantial risks of forfeiture based upon requirements relating to continued
employment, the attainment of specified financial performance goals or other
relevant factors and for such period or periods as shall be determined by the
Board at the time that the stock is awarded. In the event of a recipient's ter-
mination of employment for any reason prior to the lapse of restrictions appli-
cable to a stock award made to such recipient, the Board may determine in its
sole discretion that any or all rights to shares of Common Stock as to which
there will still remain unlapsed restrictions will be forfeited by such recipi-
ent to Bethlehem without payment or any consideration by Bethlehem, or that the
restrictions with respect to all or a portion of such shares will terminate.
13. The 1994 Plan will be administered by the Board or by a committee ap-
pointed by the Board consisting of not less than three members of the Board.
Subject to the provisions of the 1994 Plan, the Board or such
11
<PAGE>
committee will determine the employees to whom options and stock awards shall
be granted, the type of awards, and the terms and conditions of each option and
stock award. No employee of Bethlehem or any subsidiary who shall also be a
member of the Board or such committee shall have any vote with regard to the
granting of an option or stock award to such employee or the terms and condi-
tions thereof. It is expected that the Management Development and Compensation
Committee (which is comprised only of non-employee directors who may not par-
ticipate in the 1994 Plan) will be appointed to administer the 1994 Plan.
14. The 1994 Plan may be amended by the stockholders of Bethlehem. The Board
may also amend the 1994 Plan, but it may not, without approval of the stock-
holders, (i) increase the maximum number of shares as to which options and
stock awards may be granted under the 1994 Plan (other than as described in
paragraph 1 above), (ii) change the manner of determining the option prices ex-
cept to change the manner of determining the fair market value of the Common
Stock as provided in the 1994 Plan, (iii) increase the maximum term of each op-
tion as set forth in the first sentence of paragraph 4 above, (iv) change the
provisions outlined in the third sentence of paragraph 13 above or (v) extend
the term of the 1994 Plan. No amendment of the 1994 Plan may adversely affect
any rights under an outstanding option or stock award without the consent of
the holder thereof.
15. Unless extended by approval of the stockholders, the 1994 Plan will ter-
minate on December 31, 2001; provided that the Board or the stockholders may
terminate the Plan at an earlier date. No termination of the 1994 Plan may ad-
versely affect any rights under an outstanding Option or Grant without the con-
sent of the holder thereof.
16. The 1994 Plan provides that its submission to stockholders for approval
will not be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options or stock otherwise than under
the 1994 Plan.
TAX EFFECTS
Incentive Stock Options. Under the Internal Revenue Code of 1986 (the
"Code"), if shares of Common Stock are issued to the original holder of an in-
centive stock option granted and exercised in accordance with the 1994 Plan,
and exercised during employment or within three months after the participant's
termination of employment (12 months in the case of permanent and total dis-
ability as defined in the Code), then (1) no income will be realized by such
holder at the time of the grant of the option or the transfer of such shares to
such holder pursuant to the exercise of such option; (2) for purposes of the
alternative minimum tax, the holder will have alternative minimum taxable in-
come resulting from the exercise of the option, and tax basis in the shares re-
ceived on exercise of the option, determined at the same time and in the same
amount as if the option were a nonqualified option (so that, for example, al-
ternative minimum taxable income will generally be based on the value of the
shares on the date of exercise of the option); (3) no deduction will be allow-
able to Bethlehem for Federal income tax purposes in connection with the grant
or exercise of such option; and (4) upon a sale or exchange of such shares af-
ter the later of (a) one year from the date of transfer of the shares to the
original holder and (b) two years from the date of the grant of the option, any
amount realized by such holder in excess of the option price will be taxed to
the holder as a long-term capital gain, and any loss sustained by the holder
will be a long-term capital loss.
If such shares are disposed of before the holding period requirements in
clause (4) above are satisfied, then (i) the holder will recognize taxable or-
dinary income in the year of the disposition in an amount determined under the
rules of the Code; (ii) subject to the limitations described below, Bethlehem
will be entitled to a deduction in the amount of the ordinary income so recog-
nized; (iii) the holder will realize capital gain or loss, short-term or long-
term, as the case may be, in an amount equal to the difference between (x) the
amount realized by the holder upon sale or exchange of the shares and (y) the
option price paid by the holder increased by the amount of ordinary income, if
any, realized by the holder; and (iv) the alternative minimum tax calculation
described above will nevertheless still apply in the year of exercise, although
if the shares are sold to an unrelated party in the taxable year of exercise
there should generally be no adverse effect because the alternative minimum
taxable income will then be limited to the taxable gain on the sale as deter-
mined for regular tax purposes.
Nonqualified Options. Under the Code, if shares of Common Stock are issued to
the original holder of a nonqualified option (i.e., an option which is not an
incentive stock option, or an incentive stock option which is exercised more
than three months after the participant's termination of employment (or more
than 12 months thereafter in the case of permanent and total disability as de-
fined in the Code)) granted and exercised in accordance with the 1994 Plan,
then (1) no income will be recognized by the holder at the time of the grant of
the option; (2) unless the shares transferred to the holder upon exercise of
the option are subject to the
12
<PAGE>
restrictions described in clause (3) below, upon exercise of the option the
holder will recognize ordinary income in an amount equal to the excess of the
fair market value, at the time of exercise, of the shares acquired over the op-
tion price; (3) if, upon exercise of the option, the holder is restricted from
selling the shares so acquired because the holder would be subject to liability
under Section 16(b) of the Securities Exchange Act of 1934, then, unless the
holder elects pursuant to Section 83(b) of the Code to be taxed under the rules
of clause (2) above, (a) the holder will recognize ordinary income at the time
the Section 16(b) restrictions lapse in an amount equal to the excess of the
fair market value at that time over the option price, (b) the holder's holding
period for the shares will begin at that time and (c) dividends received by the
holder before that time will be taxable ordinary income; (4) upon the sale of
the shares acquired pursuant to the exercise of the option, the holder will re-
alize short-term or long-term capital gain or loss, as the case may be, in an
amount equal to the difference between the amount realized on such sale and the
holder's tax basis in the shares (determined as described in the following par-
agraph); and (5) subject to the limitation described below, Bethlehem will be
entitled to a deduction in an amount equal to the ordinary income realized by
the holder as set forth in clauses (2) and (3) above, including a deduction for
dividends paid to the holder where clause (3)(c) applies.
If payment of the option price is made entirely in cash, the tax basis of the
shares will be equal to their fair market value on the date of exercise (or, if
applicable, the date on which the six-month Section 16(b) period terminates),
but not less than the option price, and their holding period will begin on the
day after the tax basis of the shares is so determined. If the option recipient
uses previously owned shares of Common Stock to exercise an option in whole or
in part, the transaction will not be considered to be a taxable disposition of
the previously owned shares. The holder's tax basis and holding period of the
previously owned shares will be carried over to the equivalent number of shares
received on exercise. The tax basis of the additional shares received upon ex-
ercise will be the fair market value of the shares on the date of exercise (or,
if applicable, the date on which the six-month Section 16(b) period termi-
nates), but not less than the amount of cash used in payment, and the holding
period for such additional shares will begin on the day after the tax basis of
the shares is so determined.
Stock Appreciation Rights. In the event the Board authorizes the surrender of
the right to exercise an option in exchange for an amount equal to the excess
of the fair market value of the shares of Common Stock covered thereby over the
option price, such surrender shall be considered the exercise of a stock appre-
ciation right. On the exercise of a stock appreciation right for cash, the
holder will be taxed at ordinary income rates on the amount of cash received.
On the exercise of a stock appreciation right for shares, unless the next sen-
tence applies the holder will be taxed at that time on the fair market value of
the shares received. If the holder receiving the shares is restricted from
selling the shares because the exercise was within six months of the date of
grant and the holder is an officer or director subject to liability under Sec-
tion 16(b) of the Securities Exchange Act of 1934, then, unless the holder
makes an election under Section 83(b) of the Code within 30 days after exercise
to be taxed under the rule of the preceding sentence, (1) the holder will rec-
ognize taxable ordinary income at the time the six-month Section 16(b) period
terminates, (2) the amount of such ordinary income will be equal to the fair
market value of the shares at that time, (3) his holding period for the shares
will begin at that time, and (4) any dividends received on the shares before
that time will be taxable to the holder as compensation income. In all such
cases, subject to the limitation described below, Bethlehem will be entitled to
a deduction at the same time and in the same amount as the holder has income,
including a deduction for such dividends paid to the holder in the absence of
the election under Section 83(b).
Restricted Stock. If restricted shares of Common Stock are granted to a par-
ticipant under the 1994 Plan, then
(1) except as described in clauses (2) and (3) below, when the shares
cease to be subject to restrictions under the 1994 Plan, the participant
will recognize taxable ordinary income equal to the excess of the fair mar-
ket value of the shares at that time over the amount, if any, paid for such
shares;
(2) except as described in clause (3) below, if the holder of shares is
restricted from selling the shares for six months from the date of grant of
the shares because he is an officer or director subject to liability under
Section 16(b) of the Securities Exchange Act of 1934, the holder will rec-
ognize taxable ordinary income on the later of the lapse of restrictions
under the 1994 Plan or the end of such six-month period, in an amount equal
to the excess of the fair market value of the shares at that time over the
amount, if any, paid for such shares; and
(3) within 30 days after the date the shares are considered to be trans-
ferred to a participant, the participant may elect under Section 83(b) of
the Code to recognize taxable ordinary income at the time of transfer in an
amount equal to the excess of the fair market value of the shares at such
time over the amount, if any, paid for such shares, in which case (a) if
the shares are subsequently forfeited, no deduction of such amount will be
allowed and the participant will have a capital loss equal to the amount,
if any, paid for such shares and (b) no additional income will be recog-
nized upon the lapse of restrictions on the shares.
13
<PAGE>
The recipient's holding period for the shares will begin at the time taxable
income is recognized under these rules, and the tax basis in the shares will be
the amount of ordinary income so recognized plus the amount, if any, paid for
the shares. Moreover, any dividends received on the restricted shares prior to
the date the participant recognizes income as described above will be taxable
compensation income when received. Subject to the limitation described below,
Bethlehem is entitled to deduct amounts equal to the amounts of income recog-
nized by the participant.
Parachute Payment. If the exercisability of an option or the elimination of
the restrictions on stock acquired under the 1994 Plan is accelerated or if a
condition relating to the exercise of an option is eliminated as a result of a
change in control, all or a portion of the value of the option or stock at that
time may be a parachute payment for purposes of determining whether a 20% ex-
cise tax is payable by the employee as a result of the receipt of an excess
parachute payment pursuant to Section 4999 of the Code. Bethlehem will not be
entitled to a deduction for any amounts considered an excess parachute payment.
Limitation on Bethlehem's Deduction. Pursuant to the Omnibus Budget Reconcil-
iation Act of 1993, Bethlehem's tax deduction for all compensation (including
the value of restricted stock when it becomes taxable to the officer) paid to
specified officers in any one year after 1993 is limited to $1,000,000 in cer-
tain circumstances. Generally, "performance based" compensation, as defined in
Code Section 162(m), is not subject to the limitation. Accordingly, compensa-
tion resulting from the exercise or surrender of a stock option under the 1994
Plan will be exempt from this limitation if the 1994 Plan is approved by stock-
holders. However, compensation arising from the grant of restricted shares of
Common Stock under the Key Employee Stock Investment Award Program described on
page 17 will be subject to this limitation.
OTHER INFORMATION
Bethlehem intends to take such actions as may be required to keep the shares
of Common Stock reserved for purposes of the 1994 Plan registered under the Se-
curities Act of 1933, as amended, and listed on the New York Stock Exchange.
On March 7, 1994, the closing price of the Common Stock on the New York Stock
Exchange was $21.50 per share.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock and of ESOP Preference Stock that are present in person or by
proxy and entitled to vote at the Annual Meeting, voting together as a single
class, is required for approval of the 1994 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF
THE 1994 STOCK INCENTIVE PLAN.
14
<PAGE>
APPROVAL OF 1994 NON-EMPLOYEE DIRECTORS STOCK PLAN
On January 26, 1994 the Board of Directors adopted and recommended for sub-
mission to stockholders for their approval the 1994 Non-Employee Directors
Stock Plan (the "Director Stock Plan"). The purpose of the Director Stock Plan
is to increase the compensation of non-employee directors of Bethlehem to a
level more competitive with other companies and in a manner that links the di-
rectors' interests with those of the stockholders. If approved by stockholders,
the Director Stock Plan would become effective on April 26, 1994. The summary
of the Director Stock Plan that follows is qualified in its entirety by refer-
ence to the complete text of the Director Stock Plan which appears as Exhibit 2
to this Proxy Statement.
Participation in the Director Stock Plan is limited to directors of Bethlehem
who are not employees of Bethlehem or any of its subsidiaries. An aggregate of
100,000 shares of Common Stock is reserved for issuance under the Director
Stock Plan. Such number of shares may be appropriately adjusted in the event of
certain changes in Bethlehem's capitalization, such as stock dividends, stock
splits, recapitalizations and the like. Shares of Common Stock issuable under
the Director Stock Plan may be authorized and unissued shares of Common Stock,
Common Stock held in treasury, or any combination thereof.
If the Director Stock Plan is approved by stockholders, for each calendar
year beginning with the calendar year commencing January 1, 1994, each non-em-
ployee director of Bethlehem who is elected a director at the Annual Meeting of
Stockholders for such year or at any time thereafter during such year and con-
tinues to be a director as of December 1 of such year shall receive an award of
500 shares of Common Stock effective as of such December 1. Such shares may not
be sold, transferred or otherwise disposed of for a period of six months after
receipt (except in the case of the death or disability of the director).
The Director Stock Plan will be administered by the Management Development
and Compensation Committee of the Board of Directors of Bethlehem or such other
committee of the Board as may be appointed by the Board consisting of not less
than three members of the Board. The Board of Directors may amend the Director
Stock Plan in any respect, provided that no amendment may be made without
stockholder approval that (i) would materially increase the maximum number of
shares of Common Stock available for issuance under the Director Stock Plan,
(ii) would materially increase the benefits accruing to participants under the
Director Stock Plan, or (iii) would materially modify the requirements as to
eligibility for participation in the Director Stock Plan, and provided, fur-
ther, that the Director Stock Plan may not be amended more than once every six
months except to comport with changes in the Internal Revenue Code of 1986, as
amended, or the rules thereunder. The Board of Directors also has authority to
terminate the Director Stock Plan at any time.
TAX EFFECTS
Except as provided in the following sentence, a director will recognize ordi-
nary income six months following the date of receipt of the shares (i.e., at
the end of the period during which the director may not sell the shares) in an
amount equal to the fair market value of the shares at that time. Within 30
days after the date the director receives the shares, the director may elect
under Section 83(b) of the Code to recognize taxable ordinary income at the
time of receipt in an amount equal to the fair market value of the shares at
such time. Receipt of the shares shall be considered to have occurred as of the
December 1 on which the award is effective.
A director's holding period for the shares for tax purposes will begin at the
time taxable income is recognized, and the tax basis in the shares will be the
amount of ordinary income so recognized. Any dividends received on the shares
prior to the date the director recognizes income as described above will be
taxable compensation income when received. Bethlehem is entitled to a federal
income tax deduction equal to the amounts of income recognized by a director.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock and of ESOP Preference Stock that are present in person or by proxy and
entitled to vote at the Annual Meeting, voting together as a single class, is
required for approval of the Director Stock Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF
THE 1994 NON-EMPLOYEE DIRECTORS STOCK PLAN.
15
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Bethlehem's executive compensation programs are designed to attract, retain
and motivate highly qualified executives to cause the best possible performance
from them. Compensation for Bethlehem's executives is based both on individual
performance, and upon corporate and business unit performance, and consists of
the following elements:
. Salaries that are determined by individual contribution and performance,
and that are competitive in the marketplace.
. Incentive compensation bonuses that, if paid, are directly linked to cor-
porate and business unit profitability. No incentive compensation bonuses
were paid to Bethlehem's executive officers for 1993.
. Long term stock incentives that are designed to align the interests of
the executives with those of the stockholders and to increase the long
term retention of key employees.
. A broad-based employee benefits program which includes a pension program,
a savings plan, group medical coverage and life insurance.
The Management Development and Compensation Committee of the Board of Direc-
tors is responsible for administering Bethlehem's executive compensation pro-
grams and for determining the compensation of Bethlehem's executive officers.
The Committee has available to it extensive compensation surveys (primarily
with respect to salaries, annual incentive compensation and stock options), in-
dependent compensation consultants and information about executive compensation
within the steel industry and other industry groups. The Committee is composed
of directors who are not current or retired employees of Bethlehem and who do
not participate in the executive compensation programs which the Committee ad-
ministers. The directors whose names appear at the end of this Report were the
members of the Committee responsible for administering Bethlehem's executive
compensation programs for 1993.
Salaries. The Committee believes the salary of an executive must be based
primarily on the executive's level of responsibility and performance. In addi-
tion, the Committee believes that salaries should be competitive with executive
salaries provided by other corporations in the steel business, including the
peer group of integrated steelmakers shown in the comparative performance chart
on page 22, and by other manufacturing companies of comparable size and com-
plexity. The Committee reviews both publicly available information about the
salaries paid to executive officers of other steel companies and broad survey
data from over 300 manufacturing, non-utility and non-financial services compa-
nies to determine salary levels that compare to those at companies with similar
business performance, measured by such criteria as revenue, return on assets
and return on equity. Salary levels for Bethlehem's executives are targeted at
the median of such survey data for companies with annual revenues of between $3
billion and $6 billion. Since duties, responsibilities and experience of an ex-
ecutive officer may differ from survey norms in both content and scope, adjust-
ments are made by the Committee in its judgment for those factors as well as
for individual performance. Consequently, some salaries are lower and some
higher than survey medians. The Committee conducts periodic reviews of execu-
tive officer salaries and makes adjustments as warranted. Each of the named ex-
ecutive officers assumed new responsibilities on November 1, 1992 in connection
with Mr. Barnette's election as chief executive officer and the establishment
of a new top management team. Their 1993 salaries were increased to reflect
these additional responsibilities, and such increases were well within normally
expected ranges reported by various consultants. 1993 salary levels for these
officers do not, in the Committee's opinion, significantly deviate from survey
medians described above.
Incentive Compensation Bonuses. The Committee believes that competitive sala-
ries should be supplemented by incentive compensation bonus awards which are
directly linked to performance-oriented goals as measured by Bethlehem's annual
business plan. The awards may be granted in cash, stock or a combination there-
of.
Incentive compensation bonus awards for executive officers are paid pursuant
to a profit sharing plan for essentially all salaried employees. Under the
plan, employees and executive officers have the opportunity to earn a targeted
percentage of base salary which increases with higher position levels, thereby
placing a greater percentage of compensation at risk for those with greater re-
sponsibility. For the chief executive officer and the other four executive of-
ficers named in the Summary Compensation Table, payment of incentive compensa-
tion under this program is based entirely on the achievement of corporate prof-
itability goals, is targeted at 50% of base salary and cannot exceed 100% of
base salary. For other executive officers, incentive payments are based in part
on the achievement of corporate profitability goals and in part on the achieve-
ment of business unit or departmental profitability goals or cost objectives.
For 1993, no awards could be paid to Bethlehem's executive
16
<PAGE>
officers if Bethlehem did not earn a minimum annual net income of at least $50
million before income taxes and unusual and extraordinary items. Because Beth-
lehem did not achieve this level of earnings, no incentive compensation bonuses
were paid to Bethlehem's executive officers for 1993.
Long Term Stock Incentives. The Committee believes that stock incentives are
an important element of Bethlehem's executive compensation program. They align
the interests of Bethlehem's executives with those of the stockholders and in-
crease the long-term retention of key employees. As discussed below, the Com-
mittee has made stock option and restricted stock awards to executive officers
and other key employees under the 1988 Stock Incentive Plan. Virtually no
shares remain available for future awards under the 1988 Stock Incentive Plan.
Accordingly, as discussed on pages 9-14, stockholders are being asked to ap-
prove the 1994 Stock Incentive Plan which is substantially similar to and would
replace the 1988 Stock Incentive Plan.
Executive officers and other key employees have received annual grants of
stock options under the 1988 Stock Incentive Plan and will be eligible to re-
ceive stock option grants under the 1994 Stock Incentive Plan if it is approved
by stockholders. The Committee believes that stock options provide an incentive
that focuses the executive's attention on managing Bethlehem from the perspec-
tive of an owner with an equity stake in the business. Options are awarded with
an exercise price equal to the market price of Common Stock on the date of
grant, have a maximum term of ten years, become exercisable for half of the op-
tion shares one year from the date of grant and for all of the option shares
two years from the date of grant and may be awarded in tandem with stock appre-
ciation rights. Executives are encouraged to hold the stock received through
the exercise of options and stock appreciation rights. In determining the num-
ber of option shares to be awarded to an executive officer the Committee con-
siders the performance of the individual and annual salary level. The Commit-
tee, in its judgment, may adjust the number of shares based on a comparison of
option awards (using grant date value) of the survey companies (described under
"Salaries"). The Committee, in its judgment, may also elect to reduce the size
of an award if an executive has disposed of shares received through any previ-
ous exercise of options or stock appreciation rights. Applying these factors,
during 1993 the Committee awarded 314 key employees, including the executive
officers named in the table on page 21, options to purchase Bethlehem Common
Stock at a price of $19.00 per share (the fair market value of Bethlehem Common
Stock on the date of the award). The awards to the named executive officers in
the table on page 21 are generally less than option awards at the survey compa-
nies.
The Committee has also implemented a Key Employee Stock Investment Award Pro-
gram under the 1988 Stock Incentive Plan which is designed to increase the
long-term retention of key employees, encourage their ownership of stock, and
align their interests with the interests of the stockholders. The Committee
plans to continue awards under this Program if the 1994 Stock Incentive Plan is
approved by stockholders. Under this Program, executive officers and other key
employees have been awarded restricted shares of Common Stock which may not be
sold, transferred or assigned while the shares are restricted. Depending upon
the age of the recipient at the time of the award, unless otherwise determined
by the Committee the restrictions on the shares generally expire either (i) at
the later of age 62 or retirement or (ii) after five years as to one-half of
the shares awarded and at the later of age 62 or retirement as to the remaining
shares. The shares are forfeited if the employee voluntarily leaves the employ-
ment of Bethlehem or is terminated for cause before the restrictions expire.
The size of restricted stock awards under this Program is determined by the
Committee in its judgment based on a number of factors including level of re-
sponsibility, individual performance and potential to make a contribution to
Bethlehem's future success, overall corporate progress toward achieving sus-
tained profitability and the Committee's understanding of restricted stock
practice at other companies. The Committee assigns no specific weight to any of
these factors when making its determinations. Recent awards to executive offi-
cers under this Program are described below.
Compensation of Chief Executive Officer. Mr. Barnette was elected chief exec-
utive officer of Bethlehem, effective November 1, 1992. Based upon a detailed
review of the salaries of chief executive officers of other steel companies and
companies of similar size and complexity, the Committee set Mr. Barnette's base
salary for 1993 at $500,000. Because of Bethlehem's losses in recent years, his
base salary is below the median salary level of chief executive officers in the
survey group.
During Mr. Barnette's tenure as chief executive officer, Bethlehem's finan-
cial results improved significantly. Excluding restructuring charges and the
cumulative effect of accounting changes, Bethlehem had net income of $24 mil-
lion for 1993, a significant improvement over the net loss of $210 million for
1992. In addition, a number of important goals have been achieved, including
the decentralization of operations into separate business units better able to
respond rapidly to customer needs, the negotiation of new long term labor con-
tracts at the principal business units, the achievement of significant remedies
in trade cases against unfairly traded steel imports, the advancement of impor-
tant modernization projects at Burns Harbor and Pennsylvania Steel Technolo-
gies, the receipt by Sparrows Point of ISO 9000 quality certification making it
the first major integrated steel facility in the United States to be so certi-
fied, the substantial reduction in general corporate overhead costs
17
<PAGE>
and the reengineering of corporate service functions, including entering into
an information technology partnership with Electronic Data Systems and estab-
lishing a new Corporate Services Division, and the successful completion of two
major corporate financing programs.
In view of these important accomplishments, and in order to retain and moti-
vate Mr. Barnette and Messrs. Penny, Millenbruch, Jordan and Post and further
align their interests with those of the stockholders, the Committee determined
that it was appropriate to award each of them restricted shares of Common Stock
under the Key Employee Stock Investment Award Program discussed under Long Term
Stock Incentives above. On January 25, 1994, Mr. Barnette was awarded 30,000
shares, Mr. Penny, 10,000 shares, Mr. Millenbruch, 10,000 shares, Mr. Jordan,
5,000 shares, and Mr. Post, 5,000 shares. The shares are restricted and may not
be sold, transferred or assigned until age 62. The shares will be forfeited if
the recipients voluntarily leave the employment of Bethlehem or are terminated
for cause before the restrictions expire. The number of shares awarded was
based on those factors described in the last paragraph under Long Term Stock
Incentives above.
As discussed under Incentive Compensation Bonuses above, no incentive compen-
sation bonuses were paid to Mr. Barnette or to other executive officers for
1993.
In April 1993, Mr. Barnette was awarded a nonqualified stock option to pur-
chase 50,000 shares of Bethlehem Common Stock at a price of $19.00 per share,
the fair market value of Bethlehem Common Stock on the date of the award. The
number of shares covered by Mr. Barnette's option was primarily determined by
his salary level and was generally less than option awards to chief executives
at competitors and manufacturers of similar size and complexity.
New Limitation on Deductibility of Executive Compensation. During 1993, new
Section 162(m) of the Internal Revenue Code was enacted which denies a publicly
held corporation, such as Bethlehem, a federal income tax deduction for compen-
sation in excess of $1 million per year paid to or accrued for each of its
chief executive officer and four other most highly compensated executive offi-
cers. Certain "performance based" compensation, such as a stock option awarded
at fair market value, is not subject to the limitation on deductibility pro-
vided that certain stockholder approval and independent director requirements
are met. Final regulations have not yet been adopted under this new Internal
Revenue Code provision.
Because of Bethlehem's substantial net loss carryforwards ($1.6 billion at
December 31, 1993) and the fact that the compensation paid to each of
Bethlehem's executive officers has not exceeded $1 million per year, the Com-
mittee does not believe that the new limitation on deductibility of executive
compensation is currently material to Bethlehem. Nevertheless, the Committee
will continue to review the situation in light of the final regulations and fu-
ture events with an objective of achieving deductibility to the extent appro-
priate. In this regard, the Committee intends to take such action as may be re-
quired by the final regulations to make stock option awards under the 1994
Stock Incentive Plan exempt from the deduction limitation. Restricted stock
awards under the Key Employee Stock Investment Award Program would not be ex-
empt from the limitation, but the Committee feels that such awards are a neces-
sary and appropriate incentive to motivate executives and align their interests
with the interests of stockholders.
Management Development and
Compensation Committee
William A. Pogue, Chairman
Benjamin R. Civiletti
Worley H. Clark
Herman E. Collier, Jr.
John B. Curcio
William C. Hittinger
Thomas L. Holton
Harry P. Kamen
Winthrop Knowlton
Robert E. McClements, Jr.
Dean P. Phypers
John F. Ruffle
18
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows the aggregate compensation awarded or paid to, or
earned by, Bethlehem's chief executive officer and each of Bethlehem's other
four most highly compensated executive officers. In accordance with regula-
tions of the Securities and Exchange Commission, Mr. Barnette's compensation
is shown only for 1992 (the year in which he was elected chairman and chief
executive officer of Bethlehem) and 1993 and Mr. Post's compensation is shown
only for 1992 (the year in which he was first elected an executive officer of
Bethlehem) and 1993.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------- --------------------------
OTHER SHARES
ANNUAL RESTRICTED UNDERLYING
COMPEN- STOCK OPTIONS/SARS ALL OTHER
SALARY ($) BONUS(2) ($) SATION(3) ($) AWARD(4) ($) AWARDS (#) COMPENSATION(5) ($)
---------- ------------ ------------- ------------ ------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
Curtis H. Barnette
Chairman and Chief
Executive Officer
1993.................. $500,000 $ 0 $ 95,647(3) $648,750(4) 50,000 $50,976
1992.................. 383,333(1) 0 0 0 18,000 36,016
John A. Jordan, Jr.
Senior Vice President
1993.................. 302,500 0 90,337(3) 108,125(4) 19,000 30,405
1992.................. 280,000 0 0 0 14,000 24,536
1991.................. 265,000 67,850(2) 0 142,375 13,000 --
Gary L. Millenbruch
Executive Vice Presi-
dent
1993.................. 375,000 0 251,185(3) 216,250(4) 23,500 33,898
1992.................. 337,500 0 0 0 16,500 27,084
1991.................. 317,500 87,025(2) 0 201,000 15,000 --
Roger P. Penny
President
1993.................. 425,000 0 243,581(3) 216,250(4) 26,000 37,171
1992.................. 345,833 0 0 0 16,500 26,843
1991.................. 317,500 92,925(2) 0 201,000 15,000 --
David P. Post
Senior Vice President
1993.................. 250,000 0 61,954(3) 108,125(4) 15,000 22,591
1992.................. 192,167 0 0 0 6,000 16,138
</TABLE>
- -----------
(1) Mr. Barnette was elected chief executive officer of Bethlehem effective
November 1, 1992. His compensation for 1992 consists primarily of compen-
sation paid and stock options awarded for the first ten months of 1992
prior to his election as chief executive officer.
(2) Represents the fair market value of restricted stock bonus awards on the
date of award. The bonus amounts shown for 1991 for Messrs. Jordan,
Millenbruch and Penny consisted of 4,600, 5,900 and 6,300 shares of re-
stricted stock, respectively, valued at $14.75 per share on the date of
the award.
(3) Represents the amount of payments to cover tax liabilities arising from
the purchase of individually owned annuities to secure a portion of the
unfunded retirement benefits payable to such officers under the Excess
Benefit Plan and Supplemental Benefits Plan.
(4) Fair market value at date of issuance of restricted shares of Common Stock
awarded under the Employee Stock Investment Award Program. Generally the
restrictions expire after five years for one-half of the shares awarded
and at the later of age 62 or retirement for the remaining shares. Divi-
dends, if declared, are payable upon the restricted stock.
The aggregate number of shares of restricted stock awarded under the Key
Employee Stock Investment Award Program or as restricted stock bonus awards
and held by each of the named individuals at December 31, 1993 and the ag-
gregate value of these shares based on a market value of $20.375 per share
at December 31, 1993 is as follows: Mr. Barnette, 12,000 restricted shares
with a value of $244,500; Mr. Jordan, 8,500 restricted shares with a value
of $173,188; Mr. Millenbruch, 12,000 restricted shares with a value of
$244,500; Mr. Penny, 12,000 restricted shares with a value of $244,500; and
Mr. Post, 5,000 shares with a value of $101,875.
19
<PAGE>
As discussed in the Compensation Committee Report on Executive Compensa-
tion, on January 25, 1994, each of these officers was awarded additional
shares of restricted stock under the Key Employee Stock Investment Award
Program with an aggregate value based on a market value of $21.625 per
share on the date of award as follows: Mr. Barnette, 30,000 restricted
shares with an aggregate value of $648,750; Mr. Jordan, 5,000 shares with
an aggregate value of $108,125; Mr. Millenbruch, 10,000 shares with an ag-
gregate value of $216,250; Mr. Penny, 10,000 shares with an aggregate value
of $216,250; and Mr. Post, 5,000 shares with an aggregate value of
$108,125. The shares are restricted and may not be sold, transferred or as-
signed until age 62. The shares will be forfeited if the recipients volun-
tarily leave the employment of Bethlehem or are terminated for cause before
the restrictions expire. These restricted stock awards are not included in
the December 31, 1993 restricted stock amounts described in the prior para-
graph.
(5) "All Other Compensation" only includes amounts for 1993 and 1992 and con-
sists of the following components:
1993 1992
------- -------
C. H. Barnette
(1) Supplemental Insurance cost......................... $10,486 $ 9,457
(2) Matching Company contribution to Savings Plan....... 6,289 6,103
(3) Cash or single premium annuities purchased to cover
shortfall of matching Company contribution to
Savings Plan due to Internal Revenue Code
limitation.......................................... 25,000 14,600
(4) Value of split dollar insurance benefit*............ 9,201 5,856
J. A. Jordan, Jr.
(1) Supplemental Insurance cost......................... $ 7,498 $ 6,769
(2) Matching Company contribution to Savings Plan....... 6,289 6,103
(3) Cash or single premium annuities purchased to cover
shortfall of matching Company contribution to
Savings Plan due to Internal Revenue Code
limitation.......................................... 10,500 8,000
(4) Value of split dollar insurance benefit*............ 6,118 3,664
G. L. Millenbruch
(1) Supplemental Insurance cost......................... $ 6,952 $ 6,274
(2) Matching Company contribution to Savings Plan....... 6,289 6,103
(3) Cash or single premium annuities purchased to cover
shortfall of matching Company contribution to
Savings Plan due to Internal Revenue Code
limitation.......................................... 15,800 11,700
(4) Value of split dollar insurance benefit*............ 4,857 3,007
R. P. Penny
(1) Supplemental Insurance cost......................... $ 4,901 $ 4,431
(2) Matching Company contribution to Savings Plan....... 6,289 6,103
(3) Cash or single premium annuities purchased to cover
shortfall of matching Company contribution to
Savings Plan due to Internal Revenue Code
limitation.......................................... 19,500 12,200
(4) Value of split dollar insurance benefit*............ 6,481 4,109
D. P. Post
(1) Supplemental Insurance cost......................... $ 5,077 $ 4,593
(2) Matching Company contribution to Savings Plan....... 6,289 6,121
(3) Cash or single premium annuities purchased to cover
shortfall of matching Company contribution to
Savings Plan due to Internal Revenue Code
limitation.......................................... 6,700 2,416
(4) Value of split dollar insurance benefit*............ 4,525 3,008
- -----------
* Split Dollar insurance is in lieu of the Group Term Life Insurance generally
provided by Bethlehem to its salaried employees. Each executive pays his own
premium for the term life portion of the insurance policy. Bethlehem is re-
imbursed for the total premium amount advanced out of the proceeds of the
insurance policy if the individual dies while the split dollar arrangement
is in effect or out of the built-up cash value of the policy if the arrange-
ment terminates prior to the death of the individual. As security for repay-
ment, Bethlehem is a collateral assignee of the policy to the extent of any
such unreimbursed premium.
20
<PAGE>
STOCK OPTION/SAR GRANTS IN 1993(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------
POTENTIAL REALIZABLE HISTORIC (1983-1993)
VALUE AT ASSUMED ANNUAL RATE OF
NUMBER PERCENT OF TOTAL ANNUAL RATES OF STOCK STOCK PRICE
OF SHARES OPTIONS/SARS PRICE APPRECIATION FOR APPRECIATION
UNDERLYING GRANTED EXERCISE OPTION TERM(2) (DECLINE)
OPTIONS/SARS TO EMPLOYEES PRICE EXPIRATION ---------------------- --------------------
GRANTED (#) IN 1993 (PER SHARE) DATE 5% 10% (1%)
------------ ---------------- ----------- ---------- ---------- ----------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Curtis H. Barnette...... 50,000 9.39% $19.000 4-27-03 $ 597,450 $ 1,514,055 0
John A. Jordan, Jr. .... 19,000 3.57% 19.000 4-27-03 227,091 575,341 0
Gary L. Millenbruch..... 23,500 4.41% 19.000 4-27-03 280,801 711,606 0
Roger P. Penny.......... 26,000 4.88% 19.000 4-27-03 310,674 787,309 0
David P. Post........... 15,000 2.82% 19.000 4-27-03 179,235 454,217 0
All Optionees (314
executive officers and
key employees)......... 532,600 100.0% 19.000 4-27-03 6,364,037 16,127,713 0
</TABLE>
- -----------
(1) All stock options granted in 1993 were granted in tandem with stock appre-
ciation rights ("SARs"), have a term of ten years, and may be exercised
for up to one-half of the shares covered by the option commencing one year
from the date of grant and for all of the shares covered by the option
commencing two years from the date of the grant. The exercise price (per
share) of the option is the market price of Common Stock on the date the
option is awarded.
(2) These amounts represent assumed rates of appreciation only. Actual gains,
if any, on stock option exercises and Common Stock holdings are dependent
on the future performance of the Common Stock and overall market condi-
tions. As is shown in the next column by the historic (1983-1993) annual
rate of stock price appreciation (decline) for Bethlehem Common Stock dur-
ing the last ten years, there can be no assurance that the amounts re-
flected in these columns will be achieved.
AGGREGATED STOCK OPTION/SAR EXERCISES IN 1993 AND 12/31/93 STOCK OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT 12/31/93 OPTIONS/SARS AT 12/31/93
------------------------- -------------------------
SHARES ACQUIRED VALUE
ON EXERCISE (#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
--------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Curtis H. Barnette...... 0 $ 0 80,500/59,000 $270,188/$125,000
John A. Jordan, Jr...... 1,269 43,875 50,500/26,000 120,938/ 69,875
Gary L. Millenbruch..... 0 0 76,250/31,750 219,938/ 83,875
Roger P. Penny.......... 0 0 72,050/34,250 256,200/ 87,313
David P. Post........... 0 0 22,500/18,000 64,425/ 39,375
</TABLE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFIT
-----------------------------------------------------------------------
25 30 35 40
COVERED YEARS OF YEARS OF YEARS OF YEARS OF
COMPENSATION SERVICE SERVICE SERVICE SERVICE
------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$100,000 $ 37,500 $ 45,000 $ 52,500 $ 60,000
200,000 75,000 90,000 105,000 120,000
300,000 112,500 135,000 157,500 180,000
400,000 150,000 180,000 210,000 240,000
500,000 187,500 225,000 262,500 300,000
600,000 225,000 270,000 315,000 360,000
</TABLE>
The table above shows the estimated annual retirement benefit (before any
deductions, including social security benefits) payable in the aggregate to
Bethlehem's named executive officers under its qualified defined benefit pen-
sion plan, its Excess Benefit Plan and its Supplemental Benefits Plan. The
benefit levels in the table assume retirement at age 62, the years of service
shown, and payment in the form of a single life annuity. In 1993, individually
owned annuities were purchased to secure a portion of the unfunded benefits
payable to the named executive officers under the Excess Benefit Plan and the
Supplemental Benefits Plan. The amount of the benefits which were funded by
the purchase of the annuities was based on the funded level of Bethlehem's
qualified defined benefit pension plan at June 30, 1993.
21
<PAGE>
Covered compensation for purposes of determining retirement benefits for the
named executive officers generally consists of salary and 50% of incentive com-
pensation reported in the "Bonus" column in the Summary Compensation Table. The
monthly retirement benefit payable is generally determined by multiplying aver-
age monthly covered compensation for the highest consecutive 60 months in the
last 120 months of continuous service times 1.5% times the number of credited
years of service. Benefits are subject to a deduction for social security bene-
fits as well as certain other adjustments.
As of December 31, 1993, the credited years of service under the Pension Plan
or Supplemental Benefits Plan for Messrs. Barnette, Jordan, Millenbruch, Penny
and Post were 31 years, 36 years, 34 years, 35 years and 37 years, respective-
ly.
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on Beth-
lehem Common Stock for the last five years with the cumulative total return for
the same period of the Standard & Poor's 500 Stock Index (S&P 500) and two peer
groups of publicly-traded integrated steelmakers described below. The graph as-
sumes the investment of $100 in Bethlehem Common Stock, the S&P 500 and the two
peer groups on December 31, 1988 and reinvestment of all dividends. The total
return for the two peer groups has been weighted for market capitalization at
the beginning of each period.
The Old Peer Group, which was included in Bethlehem's 1993 Proxy Statement,
consists of Armco, Inc., Inland Steel Industries, LTV Corporation and the U.S.
Steel Group of USX Corporation. Information is only included on USX-U.S. Steel
Group Common Stock for December 31, 1991, 1992 and 1993 since public trading
did not commence in that stock until April, 1991. During 1993, one of the com-
panies in the Old Peer Group, LTV Corporation, emerged from bankruptcy. As part
of its plan of reorganization, LTV's previously traded class of common stock
was extinguished and shares of a new class of common stock were issued. Holders
of shares of the old class of LTV common received warrants to purchase shares
of the new LTV common. Information has been included at December 31, 1993 for
LTV in the Old Peer Group based on the market value of the warrants at that
date. Bethlehem intends to discontinue use of the Old Peer Group in future
proxy statements.
The New Peer Group consists of the same integrated steelmakers as the Old
Peer Group except that information has only been included for the new LTV com-
mon stock at December 31, 1993 and information has been included at December
31, 1993 for National Steel Corporation, another integrated steelmaker whose
class B common stock first commenced public trading in March, 1993.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG BETHLEHEM COMMON STOCK, S&P 500 INDEX, OLD PEER GROUP AND NEW PEER GROUP
<CAPTION>
Bethlehem S&P Old Peer New Peer
Measurement period Common 500 Group Group
(Fiscal year Covered) Stock Index Index Index
- --------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Measurement PT -
12/31/88 $ 100.00 $ 100.00 $ 100.00 $ 100.00
FYE 12/31/89 $ 80.39 $ 131.69 $ 90.04 $ 94.16
FYE 12/31/90 $ 65.93 $ 127.59 $ 57.73 $ 61.44
FYE 12/31/91 $ 64.28 $ 166.47 $ 59.99 $ 63.02
FYE 12/31/92 $ 73.46 $ 179.16 $ 71.54 $ 76.55
FYE 12/31/93 $ 93.55 $ 197.21 $ 90.80 $ 93.30
</TABLE>
22
<PAGE>
ADDITIONAL INFORMATION
INDEMNIFICATION ASSURANCE AGREEMENTS
It is and has been Bethlehem's policy to indemnify its officers and direc-
tors against any costs, expenses and other liabilities to which they may be-
come subject by reason of their service to Bethlehem, and to insure its direc-
tors and officers against such liabilities, as and to the extent permitted by
applicable law and in accordance with the principles of good corporate gover-
nance. In this regard, Article IX of Bethlehem's By-laws requires Bethlehem to
indemnify its directors and officers to the maximum extent permitted by the
General Corporation Law of the State of Delaware.
Pursuant to this policy, Bethlehem has entered into individual Indemnifica-
tion Assurance Agreements with each of its directors and executive officers
pursuant to which Bethlehem has agreed to indemnify each of its directors and
executive officers to the full extent provided by applicable law and the By-
laws of Bethlehem as currently in effect. In addition, Bethlehem has estab-
lished in connection with its indemnification policy an irrevocable letter of
credit in an aggregate amount of $5 million to assure payment to each director
and executive officer of any amounts to which they may become entitled as in-
demnification pursuant to the By-laws in the event that, for any reason, Beth-
lehem shall not pay to them any such indemnification.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
permits a Delaware corporation to include in its certificate of incorporation
a provision eliminating the potential monetary liability of a director to the
corporation or its stockholders for breach of fiduciary duty as a director,
provided that such provision shall not eliminate the liability of a director
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for improper pay-
ment of dividends, or (iv) for any transaction from which the director re-
ceives an improper personal benefit. Bethlehem's Restated Certificate of In-
corporation includes such a provision in Article Ninth thereof.
STOCKHOLDERS
Holders of record of Bethlehem's Common Stock and ESOP Preference Stock at
the close of business on March 7, 1994 ("Record Date"), are entitled to notice
of the Annual Meeting and to vote at the Meeting the shares held on that date.
Each share of Common Stock and ESOP Preference Stock is entitled to one vote.
On the Record Date, a total of 91,520,720 shares of Common Stock of Bethlehem,
owned of record by approximately 42,100 stockholders, were outstanding and a
total of 2,764,616 shares of Preference Stock of Bethlehem, owned of record by
a trustee under a qualified plan for approximately 18,800 participants, were
outstanding. Set forth below are the only persons who, to the knowledge of the
Board of Directors, were the beneficial owners of 5% or more of Bethlehem's
Common Stock on the Record Date:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES CLASS
----------------------------------------------------- ---------- ----------
<S> <C> <C>
Wellington Management Company(1)
75 State Street
Boston, Massachusetts 02109.......................... 10,331,223 11.3%
Norwest Corporation(2)
Norwest Center, Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-1000.................... 7,807,998 8.5
FMR Corp.(3)
82 Devonshire Street
Boston, Massachusetts 02109-3614..................... 7,666,706 8.4
</TABLE>
- -----------
(1) Bethlehem received copies of Schedule 13Gs filed with the Securities and
Exchange Commission by Wellington Management Company and Vanguard/Windsor
Fund, Inc., indicating that, at December 31, 1993, Wellington Management
Company had aggregate beneficial ownership of 10,331,223 shares of Bethle-
hem Common Stock, including 7,561,000 shares of Bethlehem Common Stock
beneficially owned by Vanguard/Windsor Fund, Inc.
(2) Bethlehem received copies of Schedule 13Gs filed with the Securities and
Exchange Commission by Norwest Corporation, indicating that, at December
31, 1993, Norwest Corporation, through its subsidiaries, Norwest Colorado,
Incorporated and Norwest Bank Colorado, National Association, had aggre-
gate beneficial ownership of 7,807,998 shares of Bethlehem Common Stock
including shares issuable upon conversion of (i) 5,075 shares of
Bethlehem's $5.00 Cumulative Convertible Preferred Stock and (ii) 2,233
shares of Bethlehem's $2.50 Cumulative Convertible Preferred Stock.
23
<PAGE>
(3) Bethlehem received a copy of a Schedule 13G filed with the Securities and
Exchange Commission by FMR Corp. indicating that at December 31, 1993, FMR
Corp. had aggregate beneficial ownership of 7,666,706 shares of Bethlehem
Common Stock, including shares issuable upon conversion of (i) 127,100
shares of Bethlehem's $5.00 Cumulative Convertible Preferred Stock and (ii)
628,300 shares of Bethlehem's $3.50 Cumulative Convertible Preferred Stock,
and including 5,414,800 shares of Bethlehem Common Stock beneficially owned
by Fidelity Magellan Fund.
To the knowledge of the Board of Directors, there were no persons who benefi-
cially owned 5% or more of the ESOP Preference Stock on the Record Date.
OTHER MATTERS
Management and the Board of Directors do not know of any matters other than
those set forth in the form of proxy that will be presented for consideration
at the 1994 Annual Meeting. However, execution of a proxy, unless otherwise in-
dicated, confers on the persons named as proxies discretionary authority to
vote the shares represented in accordance with their best judgment on other
business, if any, that may properly come before the Meeting.
Bethlehem is undertaking a study of whether future Annual Meetings should be
rotated to locations other than Wilmington, including Bethlehem, Baltimore,
Chicago and New York. Interested stockholders should direct their suggestions
to the Secretary of Bethlehem, 1170 Eighth Avenue, Bethlehem, PA 18016-7699.
The cost of soliciting proxies will be borne by Bethlehem. A number of its
officers and regular employees may solicit proxies personally and by telephone.
Bethlehem has engaged Georgeson & Company, Inc. to assist in soliciting proxies
from brokers, bank nominees and institutional holders for an estimated fee of
$10,000 plus expenses. Arrangements have been made for brokerage houses, nomi-
nees and other custodians and fiduciaries to send proxy material to their prin-
cipals, and Bethlehem will reimburse them for their expenses in doing so.
March 16, 1994
24
<PAGE>
BETHLEHEM STEEL CORPORATION
P 1170 Eighth Avenue
R Bethlehem, PA 18016-7699
O
X This Proxy is Solicited on Behalf of the Board of Directors
Y for the Annual Meeting of Stockholders, April 26, 1994
The undersigned hereby appoints Curtis H. Barnette, Roger P. Penny and
Gary L. Millenbruch the proxies (each with power to act alone and with
power of substitution) of the undersigned to represent and vote the shares
of stock which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of Bethlehem Steel Corporation to be held on April 26,
1994, and at any adjournment or postponement thereof, as hereinafter
specified and, in their discretion, upon such other matters as may
properly come before the Meeting.
Election of Directors, Nominees:
C.H. Barnette, B.R. Civiletti, W.H. Clark, H.E. Collier, Jr.,
J.B. Curcio, W.C. Hittinger, T.L. Holton, L.B. Kaden, H.P.
Kamen, W. Knowlton, R. McClements, Jr., G.L. Millenbruch,
R.P. Penny, D.P. Phypers, W.A. Pogue, J.F. Ruffle
You are encouraged to specify your choice by marking the appropriate boxes
on the reverse side. On matters on which you do not specify a choice, your
shares will be voted in accordance with the recommendation of Bethlehem's
Board of Directors. Please mark, sign, date and return this proxy promptly
using the enclosed envelope.
SEE REVERSE
SIDE
<PAGE>
[X] Please mark your 1623
votes as in this
example.
If this card is properly executed, shares will be voted in the manner
directed herein by the undersigned. If no direction is made, shares will be
voted FOR Proposals 1, 2, 3 and 4.
- --------------------------------------------------------------------------------
Bethlehem's Board of Directors recommends a vote FOR election of directors
and Proposals 2, 3 and 4.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of [ ] [ ]
Directors.
(see reverse)
For, except vote withheld from the following nominee(s):
________________________________________
FOR AGAINST ABSTAIN
2. Ratification of appointment of [ ] [ ] [ ]
Independent Accountants.
3. Approval of 1994 Stock [ ] [ ] [ ]
Incentive Plan.
4. Approval of 1994 Non- [ ] [ ] [ ]
Employee Directors Stock
Plan.
SIGNATURE(S) __________________________________ DATE __________
NOTE: Please sign exactly as name appears above. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
<PAGE>
BETHLEHEM STEEL CORPORATION
1170 Eighth Avenue
Bethlehem, PA 18016-7699
Savings Plan for Salaried Employees of Bethlehem Steel Corporation
and Subsidiary Companies
Voting instructions for the Annual Meeting of Stockholders, April 26, 1994
To Savings Plan Committee:
The undersigned hereby instructs you to vote, in person or by proxy, upon all
matters properly brought before the Annual Meeting of Stockholders of
Bethlehem Steel Corporation to be held on April 26, 1994, and any adjournment
or postponement thereof, the shares of stock which were allocated to my
account as of March 7, 1994 under the Savings Plan for Salaried Employees of
Bethlehem Steel Corporation and Subsidiary Companies.
Election of Directors, Nominees:
C.H. Barnette, B.R. Civiletti, W.H. Clark, H.E. Collier, Jr.,
J.B. Curcio, W.C. Hittinger, T.L. Holton, L.B. Kaden, H.P. Kamen,
W. Knowlton, R. McClements, Jr., G.L. Millenbruch, R.P. Penny,
D.P. Phypers, W.A. Pogue, J.F. Ruffle
If you return this card properly signed but do not otherwise specify on the
reverse side, shares will be voted FOR Proposals 1, 2, 3 and 4. If you do not
return this card, shares will be voted by the Trustee in accordance with
instructions of the Savings Plan Committee.
SEE REVERSE
SIDE
<PAGE>
[X] Please mark your 1623
votes as in this
example.
If this card is properly executed, shares will be voted in the manner
directed herein by the undersigned. If no direction is made, shares will be
voted FOR Proposals 1, 2, 3 and 4.
- --------------------------------------------------------------------------------
Bethlehem's Board of Directors recommends a vote FOR election of directors
and Proposals 2, 3 and 4.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of [ ] [ ]
Directors.
(see reverse)
For, except vote withheld from the following nominee(s):
________________________________________
FOR AGAINST ABSTAIN
2. Ratification of appointment of [ ] [ ] [ ]
Independent Accountants.
3. Approval of 1994 Stock [ ] [ ] [ ]
Incentive Plan.
4. Approval of 1994 Non- [ ] [ ] [ ]
Employee Directors Stock
Plan.
SIGNATURE(S) __________________________________ DATE __________
NOTE: Please mark, date, sign as name appears above and return in enclosed
envelope.
<PAGE>
Savings Plan for Salaried Employees of
Bethlehem Steel Corporation and Subsidiary Companies
To Participants in the Savings Plan:
The enclosed form is for use in causing the shares of Common Stock of
Bethlehem Steel Corporation acquired with your own and/or Company
contributions and allocated to your Savings Plan account to be voted in
accordance with your instructions at the 1994 Annual Meeting of Stockholders
of Bethlehem. The 1993 Annual Report of Bethlehem and the Proxy Statement,
dated March 16, 1994, relating to matters to be voted on at the Meeting, are
enclosed.
If you wish to have the shares allocated to your Savings Plan account
voted in accordance with your instructions, you should specify your choices on
the enclosed form, sign and date it and forward it to First Valley Bank in the
enclosed, pre-addressed, stamped envelope. To preserve confidentiality, voting
instructions from Savings Plan participants will be tabulated by First Valley
Bank, which will certify the results to the Savings Plan Committee. Your
individual voting instructions will not be seen by Bethlehem, the Savings Plan
Committee or State Street Bank and Trust Company, the Trustee under the
Savings Plan.
Your voting instructions will relate only to shares allocated to your
Savings Plan account as of March 7, 1994. Any shares held by you as a
stockholder outside the Savings Plan should be voted by execution of a proxy
which you will receive separately as such a stockholder.
If you do not provide voting instructions, the shares allocated to your
Savings Plan account will be voted by the Trustee in accordance with
instructions of the Savings Plan Committee.
Savings Plan Committee
Michael P. Dopers, Secretary
March 16, 1994
<PAGE>
BETHLEHEM STEEL CORPORATION
1170 Eighth Avenue
Bethlehem, PA 18016-7699
Employee Stock Ownership Plan
Voting Instructions for the Annual Meeting of Stockholders, April 26, 1994
To Employee Stock Ownership Plan Trustee:
The undersigned hereby instructs you to vote, in person or by proxy, upon all
matters properly brought before the Annual Meeting of Stockholders of
Bethlehem Steel Corporation to be held on April 26, 1994, and any adjournment
or postponement thereof, the shares of stock which were allocated to my
account as of March 7, 1994 under the Bethlehem Steel Corporation Employee
Stock Ownership Plan.
Election of Directors, Nominees:
C.H. Barnette, B.R. Civiletti, W.H. Clark, H.E. Collier, Jr.,
J.B. Curcio, W.C. Hittinger, T.L. Holton, L.B. Kaden, H.P. Kamen,
W. Knowlton, R. McClements, Jr., G.L. Millerbruch, R.P. Penny,
D.P. Phypers, W.A. Pogue, J.F. Ruffle
If you return this card properly signed but do not otherwise specify on the
reverse side, shares will be voted FOR Proposals 1, 2, 3 and 4. If you do not
return this card, shares will be voted by the Trustee in the same proportion
as the shares with respect to which voting instructions are received.
SEE REVERSE
SIDE
<PAGE>
[X] Please mark your 1623
votes as in this
example.
If this card is properly executed, shares will be voted in the manner
directed herein by the undersigned. If no direction is made, shares will be
voted FOR Proposals 1, 2, 3 and 4.
- --------------------------------------------------------------------------------
Bethlehem's Board of Directors recommends a vote FOR election of directors
and Proposals 2, 3 and 4.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of [ ] [ ]
Directors.
(see reverse)
For, except vote withheld from the following nominee(s):
________________________________________
FOR AGAINST ABSTAIN
2. Ratification of appointment of [ ] [ ] [ ]
Independent Accountants.
3. Approval of 1994 Stock [ ] [ ] [ ]
Incentive Plan.
4. Approval of 1994 Non- [ ] [ ] [ ]
Employee Directors Stock
Plan.
SIGNATURE(S) __________________________________ DATE __________
NOTE: Please mark, date, sign as name appears above and return in enclosed
envelope.
<PAGE>
Bethlehem Steel Corporation
Employee Stock Ownership Plan
To Participants in Bethlehem Steel Corporation Employee Stock Ownership Plan:
The enclosed form is for use in causing the shares of Preference Stock or
Common Stock of Bethlehem Steel Corporation allocated to your Employee Stock
Ownership Plan account to be voted in accordance with your instructions at the
1994 Annual Meeting of Stockholders of Bethlehem. The 1993 Annual Report of
Bethlehem and the Proxy Statement, dated March 16, 1994, relating to matters
to be voted on at the Meeting, are enclosed.
If you wish to have the shares allocated to your Employee Stock Ownership
Plan account voted in accordance with your instructions, you should specify
your choices on the enclosed form, sign and date it and forward it to First
Valley Bank in the enclosed, pre-addressed, stamped envelope. To preserve
confidentiality, voting instructions from Employee Stock Ownership Plan
participants will be tabulated by First Valley Bank, which will certify the
results directly to State Street Bank and Trust Company, the Employee Stock
Ownership Plan Trustee. Your individual voting instructions will not be seen
by any officer or employee of Bethlehem.
Your voting instructions will relate only to shares allocated to your
Employee Stock Ownership Plan account as of March 7, 1994. Any shares of
Bethlehem Common Stock held by you as a stockholder outside the Employee Stock
Ownership Plan should be voted by execution of a proxy which you will receive
separately as such a stockholder.
If you do not provide voting instructions, the shares allocated to your
Employee Stock Ownership Plan account will be voted by the Trustee in the same
proportion as the shares with respect to which voting instructions are
received.
Bethlehem Steel Corporation
Employee Stock Ownership Plan
Maureen R. Dresen, Representative of
Plan Administrator
March 16, 1994
<PAGE>
EXHIBIT 1
1994 STOCK INCENTIVE PLAN
OF
BETHLEHEM STEEL CORPORATION
1. PURPOSE OF THE PLAN.
This Stock Incentive Plan (the Plan) is intended to encourage ownership of
Common Stock of Bethlehem Steel Corporation (Bethlehem) by key employees of
Bethlehem and its subsidiaries and to provide additional incentive for them to
promote the success of the business.
2. STOCK SUBJECT TO THE PLAN.
Subject to certain adjustments as set forth in Section 15 hereof, there shall
be reserved for issuance upon the exercise or surrender of the right to exer-
cise options to be granted under the Plan (Options) and pursuant to stock
awards (Grants) an aggregate of 4,000,000 shares of the Common Stock of Bethle-
hem (Common Stock); provided, however, that the number of such shares issued
pursuant to Grants shall not exceed 1,000,000. Such shares may be, in whole or
in part, as the Board of Directors of Bethlehem (Board) shall from time to time
determine, issued shares of Common Stock which have been reacquired by Bethle-
hem or authorized but unissued shares of Common Stock. Except as otherwise pro-
vided in Section 7 hereof, if any Option shall expire, terminate or be for-
feited or canceled for any reason without having been exercised or the right to
exercise it surrendered in full, the remaining shares covered thereby shall
again be available for the purposes of the Plan, and if any Grant shall be for-
feited before the restrictions provided for in such Grant shall lapse in full,
the remaining shares covered thereby shall again be available for the purposes
of the Plan.
Options under the Plan may be incentive stock options within the meaning of
Section 422(b) of the Internal Revenue Code of 1986, as the same may be amended
from time to time, or nonqualified stock options and shall be designated ac-
cordingly in the applicable option agreement.
3. PERSONS TO WHOM AWARDS SHALL BE GRANTED.
Options and Grants (Awards) may be granted, separately or in such combina-
tions as the Board may in any individual case determine, to regular key employ-
ees (including officers) of Bethlehem or of any subsidiary of Bethlehem who
shall be selected as provided in Section 20 hereof. A director of Bethlehem or
of a subsidiary who shall not at the time also be an employee of Bethlehem or a
subsidiary shall not be eligible to receive an Award. An employee who shall
have been granted an Award may be granted one or more additional Awards; howev-
er, no employee may receive Awards under the Plan over the period the Plan is
in effect for an aggregate of more than 400,000 shares, subject to adjustment
as set forth in Section 15 hereof. The term "subsidiary" as used in this Plan
means a corporation more than 50% of the voting stock of which shall at the
time be owned directly or indirectly by Bethlehem.
OPTIONS
4. OPTION PRICES.
The purchase price of the Common Stock covered by each Option shall be not
less than 100% of the fair market value of the Common Stock at the time of
granting the Option. Such fair market value shall be determined by the Board
but shall not be less than the mean of the high and low prices of the Common
Stock on the New York Stock Exchange on the day the Option shall be granted. No
outstanding Option may be amended to lower the purchase price of the Common
Stock covered thereby.
5. TERM OF OPTIONS.
The term of each Option shall be not more than ten years from the date of
granting thereof and shall be subject to earlier termination or forfeiture as
herein provided.
6. EXERCISE OF OPTIONS.
An Option may be made exercisable at any time or from time to time, in one or
more installments, as the Board in its discretion shall determine; provided,
however, that an Option may not be exercised as to less than 100 shares at any
one time (or the remaining shares then covered by the Option, if less than 100
shares). The
<PAGE>
Board may also establish conditions to exercise based upon continued employ-
ment, the attainment of specified financial performance goals and other rele-
vant factors. The Board may waive any or all such conditions with respect to
any or all Option recipients and may accelerate the expiration of the period
during which any Option or portion of an Option shall not be exercisable.
The purchase price of the shares of Common Stock purchased upon the exercise
of an Option shall be paid in full at the time of exercise in cash or in whole
or in part with shares of Common Stock. The value of any share delivered in
payment of all or part of the purchase price upon the exercise of an Option
shall be the closing sale price of a share of Common Stock on the New York
Stock Exchange on the date the Option shall be exercised.
Except as provided in Sections 10 and 11 hereof, an Option may not be exer-
cised in whole or in part unless the holder thereof shall then be an employee
of Bethlehem or of a subsidiary. The holder of an Option shall not have any of
the rights of a stockholder with respect to the shares covered by his Option
until and except to the extent that the Option shall have been duly exercised
or the right to exercise the Option shall have been surrendered in whole or in
part for shares of Common Stock as provided in Section 7 hereof.
7. SURRENDER OF OPTIONS.
The Board, upon such terms and conditions as it shall deem appropriate, may
(but shall not be obligated to) authorize on behalf of Bethlehem the acceptance
of the surrender of the right to exercise an Option or a portion thereof (but
only to the extent and in the amounts that such Option shall then be exercis-
able) and the payment by Bethlehem therefor of an amount equal to the excess of
the fair market value of the shares of Common Stock covered by such Option or
portion thereof over the option price of such shares. Such payment shall be
made in shares of Common Stock (valued at fair market value), or in cash, or
partly in cash and partly in shares of Common Stock, as the Board shall deter-
mine. For the purposes of this Section 7, such fair market value shall be
deemed to be the closing sale price of the Common Stock on the New York Stock
Exchange on the date of surrender or, with respect to surrenders during the pe-
riod beginning on the third business day following the date of release by Beth-
lehem of its quarterly financial results and ending on the twelfth business day
following the date of such release, such fair market value shall be determined
by the Board but shall not exceed the highest closing sale price or be less
than the lowest closing sale price of the Common Stock on the New York Stock
Exchange during such period. The shares of Common Stock covered by an Option or
portion thereof the right to exercise which shall have been so surrendered
shall not again be available for the purposes of the Plan.
8. OPTION AGREEMENTS.
Each Option shall be evidenced by a written option agreement which agreement
(and any amendment thereof) shall contain such terms and provisions, consistent
with the requirements of the Plan, as the Board in its discretion shall deter-
mine. Option agreements need not be identical.
9. CONTINUING EMPLOYMENT OF OPTION RECIPIENTS.
An option agreement may provide that (i) any shares of Common Stock issued
upon the exercise of the Option provided for therein, (ii) any payment (whether
in shares of Common Stock, or in cash, or some combination thereof) made by
Bethlehem upon the surrender as provided in Section 7 hereof of the right to
exercise the Option provided for therein, (iii) the Option itself provided for
therein or (iv) any combination of the foregoing shall be forfeited and re-
turned to Bethlehem if the recipient shall cease to remain in the employ of
Bethlehem or one or more of its subsidiaries during the period or periods spec-
ified by such agreement. The holder of an Option shall, as one of the terms of
the option agreement relating thereto, agree to remain in the employ of Bethle-
hem or one or more of its subsidiaries in order to exercise the Option. Such
employment shall be at the pleasure of each employing corporation and at such
compensation as such employing corporation shall reasonably determine. Any such
condition to remain in the employ of Bethlehem or its subsidiaries shall not
apply (i) if employment shall terminate or be terminated by reason of retire-
ment, death or permanent disability or (ii) if a change in control as defined
in this Section 9 shall have occurred. For purposes of this Plan, the term
change in control shall mean (i) the first purchase of shares pursuant to a
tender offer or exchange (other than a tender offer or exchange by Bethlehem)
for all or part of Bethlehem's Common Stock or any securities convertible into
such Common Stock, (ii) the receipt by Bethlehem of a Schedule 13D or other ad-
vice indicating that a person is the "beneficial owner" (as that term is de-
fined in Rule 13d-3 under the Securities Exchange Act of 1934) of 20% or more
of Bethlehem's Common Stock calculated as provided in paragraph (d) of said
Rule 13d-3, (iii) the date of approval by stockholders of Bethlehem of an
agreement providing for any consolidation or merger of Bethlehem in which Beth-
lehem will not be the continuing or surviving corporation or pursuant to which
shares of Common Stock of Bethlehem would be converted into cash, securities or
other property, other than a merger of Bethlehem in which the holders of Common
Stock of Bethlehem immediately prior to the merger would have
2
<PAGE>
the same proportion of ownership of common stock of the surviving corporation
immediately after the merger, (iv) the date of the approval by stockholders of
Bethlehem of any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
Bethlehem or (v) the adoption of any plan or proposal for the liquidation or
dissolution of Bethlehem.
10. RETIREMENT OR TERMINATION OF EMPLOYMENT OF OPTION RECIPIENTS BY REASON OF
PERMANENT DISABILITY.
If an employee to whom an Option shall have been granted shall retire, or if
his employment shall terminate or be terminated by reason of permanent disabil-
ity, such employee (and, if he shall die within five years after such retire-
ment or such termination by reason of permanent disability, then the estate of
such employee or a person who shall have acquired the right to exercise such
Option by bequest or inheritance) may exercise such Option in whole or in part,
and/or the Board may authorize the acceptance of the surrender of the right to
exercise such Option or any portion thereof as provided in Section 7 hereof, at
any time within five years after such retirement or after such termination by
reason of permanent disability, but not after the expiration of the term of the
Option.
If an employee to whom an Option shall have been granted shall die after such
retirement or such termination by reason of permanent disability and during the
applicable period during which such Option may be exercised, his estate or the
person who shall have acquired the right to exercise such Option by bequest or
inheritance shall be deemed to have offered, immediately prior to the termina-
tion of such period, to surrender the right to exercise such Option pursuant to
the provisions of Section 7 hereof, unless such Option shall have theretofore
been exercised, or the right to exercise such Option shall have theretofore
been so surrendered, or such Option shall have been forfeited.
If the employment of an employee to whom an Option shall have been granted
shall be terminated otherwise than by reason of retirement, death or permanent
disability, such Option shall, to the extent not theretofore forfeited or exer-
cised or the right to exercise it theretofore surrendered, be canceled upon
such termination of employment, and, if so provided in the related option
agreement, the shares of Common Stock issued upon the exercise of the Option or
the shares of Common Stock, or cash, or combination thereof paid by Bethlehem
upon the surrender of the Option shall be forfeited and returned to Bethlehem.
An Option shall not be affected by any change of duties or position of the
holder or any temporary leave of absence granted to him by the employing corpo-
ration. Nothing in the Plan or in any option agreement entered into pursuant to
the Plan shall confer upon any employee any right to continue in the employ of
Bethlehem or of any of its subsidiaries or interfere in any way with the right
of Bethlehem or any such subsidiary to terminate the employment of such em-
ployee at any time.
For purposes of this Plan the term "permanent disability" means disability by
bodily injury or disease, either occupational or non-occupational in cause,
preventing the employee on the basis of satisfactory medical evidence from en-
gaging in any employment of the type normally performed by the employee.
11. DEATH OF OPTION RECIPIENT; CHANGE IN CONTROL.
If an employee to whom an Option shall have been granted shall die while em-
ployed by Bethlehem or one or more of its subsidiaries, such Option may be ex-
ercised in whole or in part, and/or the Board may authorize the acceptance of
the surrender of the right to exercise such Option or any portion thereof as
provided in Section 7 hereof, by the estate of such employee (or by a person
who shall have acquired the right to exercise such Option by bequest or inheri-
tance), at any time within five years after the death of such employee, but not
after the expiration of the term of the Option.
Anything in this Plan to the contrary notwithstanding, if a change in control
(as defined in Section 9 hereof) shall occur, the right to exercise all out-
standing Options to the extent such Options shall not theretofore have been
forfeited or exercised or the right to exercise such Options theretofore sur-
rendered shall automatically vest in accordance with their respective terms.
Upon the occurrence of a change in control, an employee to whom an Option shall
have been granted may exercise the portion, if any, of such Option that shall
then be exercisable, and any and all installments of such Option that shall not
then be exercisable and shall not theretofore have been forfeited shall auto-
matically become exercisable on the date or dates established in the option
agreement relating thereto as the date or dates on which such installment or
installments shall become exercisable, regardless of whether the conditions, if
any, to exercise based upon continued employment, the attainment of specified
financial performance goals or any other factor shall have been or shall there-
after be satisfied. Such employee or, if such employee shall die, the estate of
such employee (or a person who shall have acquired the right to exercise such
Option by bequest or inheritance) may exercise each such portion that shall
3
<PAGE>
become exercisable pursuant to the immediately preceding sentence during the
six-month period after it shall have become exercisable, but not after the ex-
piration of the term of the Option.
GRANTS
12. GRANTS.
A Grant shall be subject to such terms and conditions as the Board in its
discretion shall determine, which may include, without limitation, conditions
for issuance of shares of Common Stock pursuant thereto at any time subsequent
to the granting thereof or in installments from time to time or providing for
forfeiture of such Grant or the shares issued or theretofore issued pursuant
thereto in designated circumstances; provided, however, that upon the issuance
of shares pursuant to a Grant, the recipient shall, with respect to such
shares, be and become a Bethlehem stockholder except to the extent otherwise
provided in such Grant. The Board may in its discretion award unrestricted
shares of Common Stock in consideration of services theretofore rendered by the
recipient. The Board in its discretion may require, among other things, that
the recipient pay the par value for the shares to be issued pursuant to a
Grant. Each Grant shall be evidenced by a written instrument in such form as
the Board shall determine, including, without limitation, a certificate for
shares of Common Stock bearing a legend indicating the restrictions of the
Grant.
In the event of a recipient's termination of employment for any reason prior
to the lapse of restrictions applicable to a Grant made to such recipient, the
Board may determine in its sole discretion that any or all rights to shares of
Common Stock as to which there shall still remain unlapsed restrictions shall
be forfeited by such recipient to Bethlehem without payment or any considera-
tion by Bethlehem, and neither the recipient nor any successors, heirs, assigns
or personal representatives of such recipient shall thereafter have any further
rights or interest in such shares, or that the restrictions with respect to all
or a portion of such shares shall terminate.
13. RESTRICTED STOCK AGREEMENTS.
Each Grant of restricted shares shall be evidenced by a written restricted
stock agreement which agreement (and any amendment thereof) may contain such
terms and provisions, consistent with the requirements of the Plan, as the
Board in its discretion shall determine. Restricted stock agreements need not
be identical. Such agreements shall contain the following terms and conditions:
(a) Restriction Period. A Grant of restricted shares made pursuant to
this Plan may be subject to such terms, conditions and restrictions, in-
cluding, without limitation, substantial risks of forfeiture based upon re-
quirements relating to continued employment, the attainment of specified
financial performance goals or other relevant factors and for such period
or periods as shall be determined by the Board at the time that the Grant
shall be awarded. The Board shall have the power to permit, in its discre-
tion, an acceleration of the expiration of the applicable restriction pe-
riod with respect to any part of or all the restricted Common Stock awarded
to any recipient, and to waive any or all terms, conditions or restrictions
contained in any or all restricted stock agreements.
(b) Lapse of Restrictions. Each restricted stock agreement shall specify
the terms and conditions upon which any restrictions on the right to
receive shares representing restricted stock awarded under the Plan shall
lapse, as determined by the Board. Upon the lapse of such restrictions, a
certificate or certificates for shares of Common Stock without any
restriction shall be issued to the recipient or his legal representative.
TERMS OF GENERAL APPLICABILITY
14. NONTRANSFERABILITY OF AWARDS.
An Award shall not be transferable otherwise than by will or the laws of de-
scent and distribution, and an Option may be exercised or the right to exercise
an Option surrendered during the lifetime of the employee only by him, or if he
shall be incompetent his legal representative.
15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
In the event of changes in the outstanding Common Stock of Bethlehem by rea-
son of stock dividends, stock splits, recapitalizations, mergers, consolida-
tions, combinations or exchanges of shares, separations, reorganizations or
liquidations, the number and class of shares to be issued pursuant to outstand-
ing Awards and as to which Awards may be granted under the Plan shall be appro-
priately adjusted by the Board. An adjustment shall not be made in the minimum
number of shares which may be purchased at any time.
4
<PAGE>
16. NO LOANS IN CONNECTION WITH AWARDS.
Neither Bethlehem nor any subsidiary may directly or indirectly lend money to
any employee to acquire or carry shares of Common Stock purchased upon the ex-
ercise of an Option or to pay in whole or in part for shares to be issued pur-
suant to a Grant.
17. TAX WITHHOLDING.
Bethlehem or a subsidiary shall have the power and the right to deduct or
withhold or require a recipient of an Award to remit to Bethlehem or the sub-
sidiary the amount of any taxes required to be withheld in connection with the
grant, vesting or exercise of an Award. The Board may permit any taxes required
to be withheld to be paid in cash, in already-owned shares of Common Stock or
by the withholding of shares of Common Stock otherwise issuable upon the exer-
cise or vesting of any such award, or any combination of the foregoing. The
Board may from time to time establish procedures with respect to stock with-
holding consistent with applicable requirements of Rule 16b-3 promulgated by
the Securities and Exchange Commission.
18. EFFECTIVENESS OF THE PLAN.
The Plan shall become effective on April 26, 1994, upon its approval by the
stockholders at the 1994 Annual Meeting of Stockholders or at any adjournment
thereof. Unless the Plan shall be so approved, it shall be null and void.
19. TIME OF GRANTING OF AWARDS.
Nothing contained in the Plan or in any resolution adopted or to be adopted
by the Board or by any committee to which the Board shall have delegated power
pursuant to Section 20 hereof or by the stockholders of Bethlehem with respect
to the Plan shall constitute the granting of an Award. The granting of an Award
shall take place on the date on which the Board shall approve the granting of
such Award or such later date as the Board shall designate as the date of
granting of such Award.
20. ADMINISTRATION OF THE PLAN.
Subject to the express provisions of the Plan, the Board shall have plenary
authority, in its discretion, to determine the terms and conditions to be in-
cluded in any Award (which terms and conditions may differ with respect to re-
cipients), the time or times at which, and the employees of Bethlehem and its
subsidiaries to whom, Awards shall be granted, the type of such Awards, the
purchase price (if any, in the case of Grants), and the number of the shares to
be covered by each Award, the conditions of continuing employment, the time or
times when each Option may be exercised or the right to exercise such Option
may be surrendered and when restrictions provided for by any Grant may lapse
and whether in whole or in installments; to interpret the Plan; to prescribe,
amend and rescind the rules and regulations relating to it; and to make all
other determinations which the Board shall deem necessary or advisable for the
administration of the Plan. The Board may, however, at any time or from time to
time, delegate to the Management Development and Compensation Committee or such
other committee or committees (each of which shall consist of not less than
three members of the Board) appointed by the Board any of or all the powers and
duties of the Board under the Plan (except those relating to (i) the determina-
tion whether the shares of Common Stock reserved for use in connection with the
Plan shall be issued shares or unissued shares, (ii) the appointment of any
such committee and (iii) the termination or amendment of the Plan). The Board
may from time to time appoint members of any such committee in substitution for
or in addition to members previously appointed, may fill vacancies, however
caused, in any such committee and may discharge any such committee. So long as
any such delegation shall be in force, any action by the Management Development
and Compensation Committee or any other such committee within the scope of such
delegation shall be and be deemed to be action by the Board under the Plan.
Anything herein to the contrary notwithstanding, none of the employees of
Bethlehem or any subsidiary shall as a member of the Board or of the Management
Development and Compensation Committee or of any such other committee have any
vote with regard to the granting of an Award to such employee, the purchase
price (if any, in the case of Grants) of the shares of Common Stock covered by
any such Award, the time at which any such Award shall be granted, the number
of shares covered thereby, when an Option may be exercised or the right to ex-
ercise it surrendered or when restrictions with respect to shares of restricted
stock shall lapse and whether in whole or in installments, the conditions under
which the Award or shares of Common Stock issued pursuant thereto shall be for-
feited or the provisions of the related option or restricted stock agreement.
Words in the masculine gender used herein shall be deemed to include the fem-
inine gender.
5
<PAGE>
21. GOVERNMENT AND OTHER REGULATIONS.
The obligation of Bethlehem to sell and deliver shares of Common Stock under
the Options and pursuant to the Grants shall be subject to (i) all applicable
laws, rules and regulations and such approvals by any governmental agencies as
may be required, including, without limitation, the effectiveness of a regis-
tration statement under the Securities Act of 1933, as deemed necessary or ap-
propriate by counsel for Bethlehem, and (ii) the condition that such shares
shall have been duly listed on the New York Stock Exchange.
22. NONEXCLUSIVITY OF THE PLAN.
Neither the adoption of the Plan by the Board nor the submission of the Plan
to the stockholders of Bethlehem for approval shall be construed as creating
any limitations on the power of the Board to adopt such other incentive ar-
rangements as it may deem desirable, including, without limitation, the grant-
ing of stock options or stock otherwise than under the Plan, and such arrange-
ments may be either applicable generally or only in specific cases.
23. AMENDMENT OF THE PLAN.
The Plan may be amended by the stockholders of Bethlehem. The Board may also
amend the Plan in such respects as it shall deem advisable; provided, however,
that the Board may not, without approval of the stockholders of Bethlehem (i)
(except as provided in Section 15 hereof) increase the maximum number of shares
of Common Stock as to which Awards may be granted under the Plan, (ii) change
the manner of determining the Option prices except to change the manner of de-
termining the fair market value of the Common Stock as set forth in Sections 4
and 7 hereof, (iii) increase the maximum term of each Option as provided in
Section 5 hereof, (iv) change the provisions of the second paragraph of Section
20 hereof or (v) extend the term of the Plan as provided in Section 24 hereof.
No amendment of the Plan may adversely affect any rights under an outstanding
Option or Grant without the consent of the holder thereof.
24. TERMINATION OF THE PLAN.
Unless extended by approval of the stockholders, the Plan will terminate on
December 31, 2001; provided that the Board or the stockholders may terminate
the Plan at an earlier date. No termination of the Plan may adversely affect
any rights under an outstanding Option or Grant without the consent of the
holder thereof.
25. GOVERNING LAW.
To the extent that Federal laws do not otherwise control, the 1994 Plan and
all determinations made and actions taken pursuant hereto shall be governed by
the law of the State of Delaware.
6
<PAGE>
EXHIBIT 2
1994 NON-EMPLOYEE DIRECTORS STOCK PLAN
OF
BETHLEHEM STEEL CORPORATION
1. PURPOSE OF THE PLAN.
The purpose of the 1994 Non-Employee Directors Stock Plan (the "Plan") is to
increase the compensation of non-employee directors of Bethlehem Steel Corpora-
tion ("Bethlehem") to a level more competitive with other companies and in a
manner that links the directors' interests with those of the stockholders.
2. PARTICIPANTS.
Participants in the Plan shall consist of directors of Bethlehem who are not
employees of Bethlehem or any of its subsidiaries. The term "subsidiary" as
used in the Plan means a corporation more than 50% of the voting stock of which
shall at the time be owned directly or indirectly by Bethlehem.
3. SHARES RESERVED UNDER THE PLAN.
Subject to certain adjustments as set forth in Section 8 hereof, there shall
be reserved for issuance under the Plan an aggregate of 100,000 shares of Com-
mon Stock of Bethlehem ("Common Stock"). Shares of Common Stock to be issued
under the Plan may be authorized and unissued shares of Common Stock, Common
Stock held in treasury, or any combination thereof.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Management Development and Compensation
Committee of the Board of Directors of Bethlehem or such other committee of the
Board as may be appointed by the Board consisting of not less than three mem-
bers of the Board of Directors (the "Committee"). The Committee shall have au-
thority to interpret the Plan, to prescribe, amend and rescind the rules and
regulations relating to the administration of the Plan, and all such interpre-
tations, rules and regulations shall be conclusive and binding on all persons.
5. EFFECTIVE DATE OF THE PLAN.
The Plan shall be submitted to the stockholders of Bethlehem for approval at
the Annual Meeting of Stockholders to be held on April 26, 1994, or any ad-
journment thereof, and, if approved by the stockholders, shall be deemed to
have become effective on the date of such approval.
6. AWARD OF SHARES.
For each calendar year beginning with the calendar year commencing January 1,
1994, each non-employee director of Bethlehem who is elected a director at the
Annual Meeting of Stockholders for such year or at any time thereafter during
such year and continues to be a director as of December 1 of such year shall
receive an award of 500 shares of Common Stock effective as of such December 1.
A participant shall not be required to make any payment for any shares of Com-
mon Stock issued under the Plan. Upon the issuance of shares of Common Stock
under the Plan, the recipient shall have the entire beneficial ownership inter-
est in, and all rights and privileges of a stockholder as to, such shares, in-
cluding the right to vote such shares and the right to receive dividends.
7. RESTRICTION ON TRANSFER OF SHARES.
No shares of Common Stock received by a participant under the Plan may be
sold, assigned, transferred, assigned, pledged or otherwise encumbered or dis-
posed of for a period of six months after receipt of such shares, except in the
case of the death or disability of such participant prior to the expiration of
such six-month period.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
In the event of changes in the outstanding Common Stock of Bethlehem by rea-
son of stock dividends, stock splits, recapitalizations, mergers, consolida-
tions, combinations or exchanges of shares, separations, reorganizations or
liquidations, the number and class of shares to be issued under the Plan shall
be appropriately adjusted by the Committee.
<PAGE>
9. GOVERNMENT AND OTHER REGULATIONS.
The obligation of Bethlehem to deliver shares of Common Stock under the Plan
shall be subject to (i) all applicable laws, rules and regulations and such ap-
provals by any governmental agencies as may be required, including, without
limitation, the effectiveness of a registration statement under the Securities
Act of 1933, as amended, as deemed necessary or appropriate by counsel for
Bethlehem, and (ii) the condition that such shares shall have been duly listed
on the New York Stock Exchange.
10. AMENDMENT AND TERMINATION OF THE PLAN.
The Plan may be amended by the Board of Directors of Bethlehem in any re-
spect, provided that, without stockholder approval, no amendment shall (i) ma-
terially increase the maximum number of shares of Common Stock available for
issuance under the Plan, (ii) materially increase the benefits accruing to par-
ticipants under the Plan, or (iii) materially modify the requirements as to el-
igibility for participation in the Plan, and provided, further, that the Plan
may not be amended more than once every six months except to comport with
changes in the Internal Revenue Code of 1986, as amended, or the rules thereun-
der. The Plan may also be terminated at any time by the Board of Directors.
11. MISCELLANEOUS.
(a) No Right to Continue as Director. Nothing contained in this Plan shall be
deemed to confer upon any person any right to continue as a director of or to
be associated in any other way with Bethlehem.
(b) Governing Law. To the extent that Federal laws do not otherwise control,
the Plan and all determinations made and actions taken pursuant hereto shall be
governed by the law of the State of Delaware.
2
