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Bethlehem
Steel
Corporation
Notice of 1999 Annual
Meeting of Stockholders
and Proxy Statement
[LOGO OF BETHLEHEM STEEL APPEARS HERE]
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BETHLEHEM STEEL CORPORATION
1170 Eighth Avenue
Bethlehem, Pennsylvania 18016-7699
[LOGO OF BETHLEHEM STEEL APPEARS HERE]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Bethlehem Steel Corporation will be
held in the Main Ballroom, DoubleTree Hotel Wilmington (formerly known as the
Radisson Hotel), 4727 Concord Pike, U.S. Route 202, Wilmington, Delaware, on
Tuesday, April 27, 1999, at 10 a.m., for the following purposes:
(1) to elect thirteen directors to serve for terms of one year and until their
successors have been elected and qualified;
(2) to ratify the appointment of PricewaterhouseCoopers LLP as the independent
auditors for 1999; and
(3) to transact such other business as may properly come before the Meeting.
Stockholders of record at the close of business on March 1, 1999, are
entitled to receive notice of and to vote at the Meeting. A complete list of
such stockholders will be open for examination by any stockholder for any
purpose relevant 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.
William H. Graham
Secretary
March 12, 1999
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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.
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Table of Contents
1 General Information for Stockholders
1 Proxy Solicitation
1 Voting Policy and Procedure
2 Voting Tabulation and Results
3 Stockholder Proposals
3 Item 1 -- Election of Directors
3 General Information
3 Information Concerning Nominees
7 Board Meetings and Committees of the Board
8 Director Compensation
9 Retirement Policy
9 Certain Relationships and Related Transactions
10 Item 2 -- Ratification of the Appointment of Independent Auditors
11 Stock Ownership Information
11 Stock Ownership of Director Nominees and Executive Officers
12 Five Percent Stockholders
12 Section 16(a) Beneficial Ownership Reporting Compliance
13 Executive Compensation
13 Compensation Committee Report on Executive Compensation
17 Summary Compensation Table
18 Change in Control Arrangements
19 Stock Option/SAR Grants in 1998
19 Aggregated Stock Option/SAR Exercises in 1998 and December 31, 1998, Stock
Option Values
20 Pension Plan Table
21 Comparative Stock Performance
22 Additional Information
22 Indemnification Assurance Agreements
22 Other Matters
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Proxy Statement
The Board of Directors of Bethlehem Steel Corporation is furnishing this
Proxy Statement in connection with its solicitation of proxies for use at the
Annual Meeting of Stockholders to be held on April 27, 1999, and any
adjournments thereof. This Proxy Statement and the accompanying form of proxy
are being mailed to stockholders on or after March 12, 1999.
GENERAL INFORMATION FOR STOCKHOLDERS
Proxy Solicitation
Bethlehem's Board of Directors solicits proxies in order to provide every
stockholder with an opportunity to vote on all matters that properly come before
the Annual Meeting, whether or not the stockholder attends in person. When you
as a stockholder properly sign, date and return the enclosed form of proxy, the
persons named as proxies vote your shares in accordance with your directions. If
you send no directions, the persons named as proxies will vote your shares in
accordance with the Board's recommendation.
Bethlehem will bear the cost of soliciting proxies. A number of its
officers and regular employees may solicit proxies personally and by telephone.
In addition, Georgeson & Company, Inc. will assist Bethlehem in soliciting
proxies from brokers, bank nominees and institutional holders for an estimated
fee of $10,000 plus expenses. Brokerage houses, nominees and other custodians
and fiduciaries will send proxy material directly to their principals, and
Bethlehem will reimburse them for their expenses in doing so.
Voting Policy and Procedure
Holders of record of Bethlehem's Common Stock and ESOP Preference Stock on
March 1, 1999 (the "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.
Bethlehem has adopted a confidential voting policy, which provides that
votes will be held in confidence from Bethlehem, its directors, officers and
employees except:
. to allow the independent inspectors of election to certify the results of
the vote;
. as necessary to meet applicable legal requirements and to assert or defend
claims for or against Bethlehem;
. in case of a contested proxy solicitation; or
. in the event a stockholder has made a written comment on the proxy
material.
As part of the policy, Bethlehem will continue to employ an independent
tabulator to receive and tabulate the proxies and independent inspectors of
election.
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You may revoke your executed form of proxy or submit a revised form of
proxy at any time before it is voted. You may also vote by ballot at the Annual
Meeting, which cancels any proxy previously returned. If you wish to name
someone as your proxy other than those designated in the attached form of proxy,
you may do so by crossing out the names of the proxies appearing thereon and
inserting the name(s) of the person(s) you wish to have act as proxy. In such a
case, you must deliver the form of proxy to the person(s) named, and the
person(s) named must be present and vote at the Annual Meeting. You should not
mail any proxy form naming alternate proxies directly to Bethlehem.
The enclosed form of proxy indicates the shares of ESOP Preference Stock
and Common Stock allocated to your accounts in the following plans on the Record
Date:
. Bethlehem Steel Corporation Employee Stock Ownership Plan;
. Savings Plan for Salaried Employees of Bethlehem Steel Corporation and
Subsidiary Companies;
. Capital Accumulation Plan for Certain Salaried Employees of Bethlehem
Lukens Plate Division;
. Bethlehem Lukens Plate Division Group Capital Accumulation Plan;
. Capital Accumulation Plan for Certain Hourly Employees of the Bethlehem
Lukens Plate Division (USW, AFL-CIO, Coatesville, PA);
. Capital Accumulation Plan for Certain Hourly Employees of Washington Steel
Corporation (Houston and Washington, PA); and
. Capital Accumulation Plan for Certain Employees of Washington Steel
Corporation (Massillon, OH).
When you properly sign, date and return the enclosed form of proxy, you
tell the trustees under these plans to vote the shares allocated to your
accounts as you instruct them. In order for your voting instructions to have
effect, you must return the enclosed form of proxy to Bethlehem's tabulator
before the close of business on Friday, April 23, 1999. If you properly sign,
date and return the enclosed form of proxy, but you do not otherwise specify
instructions, the shares allocated to your accounts will be voted "For" the two
proposals referred to in this Proxy Statement. If you do not return the enclosed
form of proxy by the close of business on April 23, 1999, the trustees will vote
(a) the shares allocated to your Savings Plan account in accordance with
instructions of the Employee Benefits Administration Committee and (b) the
shares allocated to your other accounts, and unallocated shares held in the Loan
Suspense Account under the Capital Accumulation Plan for Certain Salaried
Employees of Bethlehem Lukens Plate Division, in the same proportion as the
shares for which such instructions are received.
Voting Tabulation and Results
The persons appointed as the independent inspectors of election will
tabulate the votes cast at the Annual Meeting. The inspectors 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. This will be done regardless of whether the proxy is
marked as casting a vote or abstaining. Likewise, the inspectors of election
will treat shares of Common Stock represented by "broker non-votes" as present
for purposes of determining a quorum.
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The Board nominees who receive 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. Accordingly, so long as a quorum is
present, abstentions or broker non-votes will not affect the election of
directors.
The appointment of the independent auditors must be ratified by 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 Meeting, voting together as a single class. Therefore, abstentions
and broker non-votes will have the same effect as votes against this proposal.
Stockholder Proposals
You may include a proposal in the proxy statement for a future annual
meeting of stockholders if it is a proper subject for inclusion, is submitted to
Bethlehem on a timely basis and otherwise complies with Rule 14a-8 under Section
14(a) of the Securities Exchange Act of 1934 and the laws of the State of
Delaware. Each proposal you submit should include your full and correct
registered name and address, the number of shares you own and their dates of
acquisition. If you claim beneficial ownership, you must submit proof of it with
the proposal. In addition, you must appear personally or by proxy at the Annual
Meeting to present the proposal for action. In order for such proposals to be
included in the proxy statement for the Annual Meeting of Stockholders to be
held in 2000, Bethlehem must receive them on or before November 12, 1999.
Pursuant to Rule 14a-4 under Section 14(a) of the Securities Exchange Act of
1934, you may also submit proposals outside the framework of Rule 14a-8. In
accordance with these rules and the advance notice provisions of Bethlehem's
By-laws, stockholders who intend to submit proposals for consideration at the
2000 Annual Meeting outside the processes of Rule 14a-8 must forward such
proposals to Bethlehem in writing on or before January 27, 2000, and must
otherwise comply with such advance notice provisions and applicable Delaware
law.
The Board carefully considers all proposals and suggestions submitted by
stockholders. Management and the Board will usually adopt a proposal or
suggestion if it is practicable and in the best interests of Bethlehem and its
stockholders.
ITEM 1 -- ELECTION OF DIRECTORS
General Information
The business and affairs of Bethlehem are managed by or under the direction
of its Board of Directors. Stockholders elect directors in April of each year to
serve for terms of one year and until their successors have been elected and
qualified or until their earlier resignation, retirement or removal. 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. If any nominee
shall, prior to the Annual Meeting, become unavailable for election as a
director, the persons named in the accompanying form of proxy will vote for a
substitute nominee, if the Board recommends one.
Information Concerning Nominees
The following 13 nominees have been recommended by the Committee on
Directors and proposed by the entire Board of Directors. Of the 13 nominees, 10
are not employees of Bethlehem. These 10 non-employee Board members bring
valuable experience to Bethlehem from a variety of fields. None
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of them has carried on an occupation or employment with any subsidiary or other
affiliate of Bethlehem. All of the nominees 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. Each nominee is presently a director of Bethlehem and,
except for Mr. Landuyt, has previously been elected a director by the
stockholders.
[PHOTO OF CURTIS H. BARNETTE APPEARS HERE]
Curtis H. Barnette -- Mr. Barnette, age 64, has been a director of Bethlehem
since 1986. He was elected Chairman and Chief Executive Officer effective
November 1, 1992. He has been an employee of Bethlehem since 1967, holding
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. Mr. Barnette is also a director of Metropolitan Life
Insurance Company and Owens Corning.
[PHOTO OF BENJAMIN R. CIVILETTI APPEARS HERE]
Benjamin R. Civiletti -- Mr. Civiletti, age 63, was elected a director of
Bethlehem in 1993. He has been Chairman of Venable, Baetjer and Howard, a law
firm, since July 1993 and a partner since 1981. He had been Managing Partner of
that firm from 1987 until 1993. He previously served as Attorney General of the
United States from 1979 to 1981. Mr. Civiletti is also a director of MBNA
America Bank, N.A., MBNA International Bank Limited, The Wackenhut Corporation
and Wackenhut Corrections Corporation.
[PHOTO OF WORLEY H. CLARK APPEARS HERE]
Worley H. Clark -- Mr. Clark, age 66, was elected a director of Bethlehem in
1993. He is President of W "H" Clark Associates, Ltd., a consulting firm. He
retired as Chairman and Chief Executive Officer of Nalco Chemical Company, a
manufacturer of specialty chemicals, in 1994, having held the positions of Chief
Executive Officer since 1982 and Chairman since 1984 and having been an employee
of that company since 1960. Mr. Clark is also a director of NICOR Inc., USG
Corporation, Fort James Corporation, Ultramar Diamond Shamrock Corporation,
Merrill Lynch & Co., Inc. and Millennium Chemicals Inc.
[PHOTO OF JOHN B. CURCIO APPEARS HERE]
John B. Curcio -- Mr. Curcio, age 64, was elected a director of Bethlehem in
1988. He was Chief Executive Officer and a director of Mack Trucks, Inc., a
manufacturer of heavy-duty trucks, from 1983 until 1989 and Chairman 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
Dallas & Mavis Specialized Carrier Co. and Jupiter Logistics, de Mexico, S.A. de
C.V.
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[PHOTO OF LEWIS B. KADEN APPEARS HERE]
Lewis B. Kaden -- Mr. Kaden, age 56, was elected a director of Bethlehem in
1994. He has been a partner of Davis Polk & Wardwell, a law firm, and an Adjunct
Professor of Law at Columbia University since 1984, where he was a Professor of
Law from 1976 to 1984.
[PHOTO OF HARRY P. KAMEN APPEARS HERE]
Harry P. Kamen -- Mr. Kamen, age 65, was elected a director of Bethlehem in
1993. He retired in 1998 as Chairman of the Board and Chief Executive Officer of
Metropolitan Life Insurance Company, a mutual life insurance company, positions
he held since April 1993. He held the additional title of President of
Metropolitan Life from December 1995 to November 1997. Prior to his election as
Chairman of the Board and Chief Executive Officer, Mr. Kamen had been
serving as Senior 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, and had been an employee of
Metropolitan Life since 1959. Mr. Kamen is also a director of Banco Santander,
NVEST, L.P., Pfizer Inc. and National Association of Securities Dealers, Inc.
[PHOTO OF WILLIAM M. LANDUYT APPEARS HERE]
William M. Landuyt -- Mr. Landuyt, age 43, was elected a director of Bethlehem
in June 1998. He has been Chairman and Chief Executive Officer of Millennium
Chemicals Inc., an international chemicals company, since its demerger from
Hanson PLC on October 1, 1996. He has also been President of Millennium since
June 1997. Mr. Landuyt was a director and President and Chief Executive Officer
of Hanson Industries (which managed the U.S. operations of Hanson PLC until the
demerger) from June 1995 until the demerger, a director of Hanson PLC from 1992
until September 29, 1996, Finance Director of Hanson PLC from 1992 to May 1995,
and Vice President and Chief Financial Officer of Hanson Industries from 1988 to
1992. He joined Hanson Industries in 1983.
[PHOTO OF ROBERT MCCLEMENTS, JR. APPEARS HERE]
Robert McClements, Jr.-- Mr. McClements, age 70, was elected a director of
Bethlehem in 1989. He retired in 1992 as Chairman of the Board and a director of
Sun Company, Inc., a diversified energy company, positions he held since 1987
and 1979, respectively. Mr. McClements also served as Chief Executive Officer of
Sun from 1985 until 1991. Mr. McClements is also a director of Unisys
Corporation.
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[PHOTO OF GARY L. MILLENBRUCH APPEARS HERE]
Gary L. Millenbruch -- Mr. Millenbruch, age 61, was elected a director of
Bethlehem in 1991. He was elected Executive Vice President and Chief Financial
Officer effective November 1, 1992, and Treasurer effective September 1, 1994.
He has been an employee 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.
[PHOTO OF ROGER P. PENNY APPEARS HERE]
Roger P. Penny -- Mr. Penny, age 62, was elected a director of Bethlehem in
1991. He was elected President and Chief Operating Officer effective November 1,
1992. He has been an employee of Bethlehem since 1958, 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 SHIRLEY D. PETERSON APPEARS HERE]
Shirley D. Peterson -- Mrs. Peterson, age 57, was elected a director of
Bethlehem in January 1996. She became President of Hood College in 1995. She was
a member of Steptoe & Johnson, a law firm, from 1993 through 1994, Commissioner
of the Internal Revenue Service from 1992 to 1993, and an Assistant Attorney
General (Tax Division), United States Department of Justice, from 1989 to 1992.
Mrs. Peterson is also an Independent Trustee of Kemper Mutual Funds.
[PHOTO OF DEAN P. PHYPERS APPEARS HERE]
Dean P. Phypers -- Mr. Phypers, age 70, was elected a director of Bethlehem in
1986. He was a Senior Vice President and a director of International Business
Machines Corporation, an information technology and computer company, from 1979
and 1982, respectively, until 1987. Mr. Phypers is also a director of American
International Group, Inc., Church & Dwight Co., Inc. and Cambrex Corp.
[PHOTO OF JOHN F. RUFFLE APPEARS HERE]
John F. Ruffle -- Mr. Ruffle, age 61, was elected a director of Bethlehem
in 1990. He retired in 1993 as Vice Chairman of the Board of J.P. Morgan & Co.
Incorporated, a bank holding company, and Morgan Guaranty Trust Co. of New York,
a commercial bank, positions he held since 1985. Mr. Ruffle is also a director
of Trident Corporation, American Shared Hospital Services, Inc., The Wackenhut
Corporation and Wackenhut Corrections Corporation, a Trustee of JP Morgan Series
Trust II and a member of the Board of Managers of the North Moore Fund, LLC and
JP Morgan Global Emerging Markets Fund, LLC.
In addition to the business activities described above, the director nominees
also participate in various other business, professional and charitable
activities.
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Board Meetings and Committees of the Board
Directors are kept informed of Bethlehem's business by presentations made
at Board meetings and by various reports sent to them by management. The Board
of Directors meets regularly and met 11 times during 1998. Directors also meet
in committees of the Board. During 1998, the average attendance of directors at
Board meetings and meetings of committees to which they belonged was
approximately 96%.
Executive Committee. This Committee consists of Messrs. Barnette (Chairman),
Millenbruch and Penny and met 8 times in 1998. It has all of the powers of the
Board during intervals between Board meetings.
Finance Committee. This Committee consists of Mr. Barnette (Chairman) and all
other directors and met 8 times in 1998. It advises the Board, the Executive
Committee and the officers and employees of Bethlehem with respect to all
activities, plans and policies affecting the financial affairs of Bethlehem,
including dividends.
Audit Committee. This Committee consists of Messrs. Ruffle (Chairman),
Civiletti, Kaden, Kamen and Landuyt and Mrs. Peterson and met 4 times in 1998.
It assists the Board in reviewing and overseeing Bethlehem's accounting,
auditing, internal controls, financial reporting and legal compliance and has,
but is not limited to, the following powers:
. to review the performance of the independent auditors and make
recommendations to the Board about the appointment, reappointment or
termination of the independent auditors;
. to review with Bethlehem's general auditor and the independent auditors
their annual audit plans;
. to meet with management, the independent auditors and Bethlehem's general
auditor to discuss the appropriateness of Bethlehem's internal controls;
. to meet separately, in executive session, on a regular basis, with
Bethlehem's general auditor and the independent auditors to discuss the
results of their examinations and their evaluations of Bethlehem's internal
controls and financial reporting;
. to review the appointment and dismissal of Bethlehem's general auditor; and
. to review with Bethlehem's general counsel the practices, procedures and
any material issues relating to litigation management, provisions for
contingent litigation liabilities and the legal compliance program.
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Compensation Committee. This Committee consists of Messrs. Clark (Chairman),
Curcio, McClements and Phypers and met 7 times in 1998. It has the
responsibility for management compensation and review and has, but is not
limited to, the following powers:
. to fix the compensation to be paid to the principal corporate officers of
Bethlehem;
. to administer the Annual Incentive Compensation Plan for Key Employees of
Bethlehem, the 1998, 1994 and 1988 Stock Incentive Plans of Bethlehem, and
the 1994 Non-Employee Directors Stock Plan; and
. to review and approve Bethlehem's report on executive compensation
contained in this Proxy Statement.
The members of this Committee do not participate in the executive
compensation programs the Committee administers.
Committee on Directors. This Committee consists of Mr. Phypers (Chairman) and
all other non-employee directors and met 6 times in 1998. It advises the Board
on corporate governance issues and has, but is not limited to, the following
powers:
. to search for persons qualified to be members of the Board and to make
recommendations about them to the Board;
. to review and evaluate the members of the Board, the Committees of the
Board and procedures and policies of the Board;
. to review and evaluate the performance of Bethlehem and its management;
. to review compensation and benefits for members of the Board; and
. to review organization, strategic planning and scheduling for the Board and
the Committees of the Board.
If you as a stockholder wish to recommend a nominee for membership on the
Board of Directors, you should write to the Secretary of Bethlehem specifying
the name of the nominee and his or her qualifications. Each submission must
include the written consent of the person proposed for nomination indicating
that he or she 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.
Director Compensation
Each non-employee director receives the following compensation for service:
. an annual retainer of $22,000, payable quarterly;
. an annual retainer of $2,500, payable quarterly, to the Chairman of the
Audit Committee, Committee on Directors and Compensation Committee;
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. attendance fees of $1,000 for the Annual Meeting of Stockholders, any
regular or special Board of Directors meeting, any committee meeting(s)
held on a day other than a day on which a Board meeting is held and any
special meeting attended by request of the Chairman and held on a day other
than a day on which a Board or committee meeting is held; and
. 500 shares of Bethlehem Common Stock awarded on December 1 of each year
pursuant to the 1994 Non-Employee Directors Stock Plan, which was approved
by stockholders.
Non-employee directors also receive reimbursement for any expenses they
incur in connection with the business and affairs of Bethlehem. None of the
directors who are employees of Bethlehem receive compensation separately for
service as a member of the Board of Directors or any committee of the Board.
Under the Post Retirement Retainer Plan, non-employee directors who retire from
the Board with 10 or more years of service will receive annual payments equal to
100% of the annual retainer fee payable at retirement. Non-employee directors
who retire with between 5 and 10 years of service will receive annual payments
starting at 50% of the annual retainer fee payable at retirement for directors
with 5 years of service and increasing 10% for each year of service up to 10
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.
Retirement Policy
The general retirement policy of the Board of Directors provides that
non-employee directors shall retire at the end of the term in which they reach
age 70. However, the current non-employee directors who were elected at the 1991
Annual Meeting of Stockholders (Messrs. Curcio, McClements, Phypers and Ruffle)
shall retire at the end of the term in which they reach age 72. Employee
directors shall retire from the Board at the time of their retirement from
Bethlehem. The present retirement age for management employees of Bethlehem is
65.
Certain Relationships and Related Transactions
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 consideration 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 become, 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 Bethlehem director, and subject to annual election by the stockholders,
the USWA nominee 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 consideration as a director of Bethlehem by the Committee on Directors. The
Committee on Directors recommended Mr. Kaden's election to the Board, the Board
elected Mr. Kaden a director in March 1994 and the stockholders elected Mr.
Kaden a director at the 1994 through 1998 Annual Meetings of Stockholders.
As noted above, Mr. Civiletti is Chairman of Venable, Baetjer and Howard
and Mr. Kaden is a partner of Davis Polk & Wardwell. Both of these law firms
render legal service to Bethlehem in the ordinary course of business.
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ITEM 2 -- RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, on the recommendation of the Audit Committee, has
appointed the firm of PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") as
independent auditors to examine the financial statements of Bethlehem and its
consolidated subsidiaries for the year 1999.
PricewaterhouseCoopers is a member of the SEC Practice Section of the
American Institute of Certified Public Accountants and has submitted a copy of
its peer review results to the Audit Committee. The peer review consists of a
review and an evaluation of the quality of a firm's accounting and auditing
services by partners and managers from another CPA firm or from several CPA
firms.
PricewaterhouseCoopers states that no partner or professional employee of
that firm has any direct financial interest or any material indirect financial
interest in Bethlehem or in any of its subsidiaries.
Representatives of PricewaterhouseCoopers are expected to be present at the
Annual Meeting of Stockholders. There they will have an opportunity to make a
statement if they so desire and are 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 auditors. The
Board of Directors recommends that stockholders vote "For" ratification of the
appointment of the independent auditors.
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STOCK OWNERSHIP INFORMATION
Stock Ownership of Director Nominees and Executive Officers
The following table shows the shares of Bethlehem Common Stock beneficially
owned, directly or indirectly, by each current director, Messrs. Dunham and Post
and all directors and executive officers as a group on the Record Date. None of
the directors or executive officers of Bethlehem, except for Mr. Kamen, own any
shares of Bethlehem's Preferred Stock or ESOP Preference Stock. Mr. Kamen
beneficially owns 1,000 shares of Bethlehem's $5.00 Preferred Stock.
Amount and Nature of
Name Beneficial Ownership(1)(2) Percent of Class(3)
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Curtis H. Barnette 442,693 (4)
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Benjamin R. Civiletti 3,700 (4)
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Worley H. Clark 4,500 (4)
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John B. Curcio 4,000 (4)
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Duane R. Dunham 147,526 (4)
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Lewis B. Kaden 3,500 (4)
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Harry P. Kamen 7,900 (4)
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William M. Landuyt 900 (4)
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Robert McClements, Jr. 3,500 (4)
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Gary L. Millenbruch 280,053 (4)
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Roger P. Penny 280,753 (4)
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Shirley D. Peterson 2,000 (4)
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Dean P. Phypers 5,500 (4)
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John F. Ruffle 3,500 (4)
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David P. Post(5) 134,460 (4)
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28 directors and executive officers as a
group (including those named above) 2,222,948(6) 1.7%
==============================================================================
(1) The figures shown include a total of 58,063 shares allocated on the Record
Date to the accounts of participants under the Savings Plan for Salaried
Employees of Bethlehem Steel Corporation and Subsidiary Companies.
Bethlehem matches employee contributions up to 4% of base salary. These
matching contributions are in the form of Bethlehem Common Stock. Employees
also have the option to have their contributions invested in Bethlehem
Common Stock. As of the Record Date, there were 5,110 participants
(including about 88% of eligible employees) in the Savings Plan, holding a
total of 4,302,863 shares of Bethlehem Common Stock, representing
approximately 3% of total outstanding shares.
(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 figures shown also include stock options subject to
acquisition within 60 days that were granted under the 1988, 1994 and 1998
Stock Incentive Plans of Bethlehem to the following individuals or group:
Mr. Barnette, 293,250 shares; Mr. Dunham, 87,450 shares; Mr. Millenbruch,
179,750 shares; Mr. Penny, 199,750 shares; Mr. Post, 110,750 shares; and
the directors and executive officers as a group, 1,383,250 shares.
(3) Based upon 130,330,752 total outstanding shares of Common Stock on the
Record Date.
(4) The number of shares deemed to be owned by each director or executive
officer represents less than 1% of the outstanding shares.
11
<PAGE>
(5) Mr. Post retired on December 31, 1998.
(6) The figures shown include an aggregate of 2,475 shares held by, or for the
benefit of, the immediate families or other relatives of all directors and
executive officers as a group. Directors and executive officers disclaim
beneficial ownership of all of these shares.
Five Percent Stockholders
On the Record Date, there were outstanding a total of (a) 130,330,752
shares of Bethlehem Common Stock, owned of record by approximately 34,300
stockholders and (b) 2,147,658 shares of Bethlehem ESOP Preference Stock, owned
of record by State Street Bank and Trust Company as trustee under a qualified
plan for approximately 11,400 participants. To the knowledge of the Board, no
other person beneficially owned 5% or more of the ESOP Preference Stock and the
only persons beneficially owning 5% or more of the Common Stock on the Record
Date were:
Name and Address of Beneficial Owner Number of Shares % of Class
=============================================================================
State Street Bank and Trust Company(1)
225 Franklin Street
Boston, Massachusetts 02110 10,205,275 7.8%
- -----------------------------------------------------------------------------
The Equitable Companies Incorporated(2)
1290 Avenue of the Americas
New York, New York 10104 9,989,750 7.7%
=============================================================================
(1) State Street Bank and Trust Company, acting in various fiduciary
capacities, filed a Schedule 13G with the Securities and Exchange
Commission indicating that, at December 31, 1998, it had aggregate
beneficial ownership of Bethlehem Common Stock, including (i) sole voting
power for 1,725,095 shares, (ii) shared voting power for 8,359,980 shares
(includes 2,177,484 convertible preferred shares), (iii) sole dispositive
power for 3,085,720 shares, and (iv) shared dispositive power for 7,119,555
shares (includes 2,177,484 convertible preferred shares).
(2) The following entities jointly filed a Schedule 13G with the Securities and
Exchange Commission reporting aggregate beneficial ownership of Bethlehem
Common Stock at December 31, 1998: (i) AXA Conseil Vie Assurance Mutuelle
(formerly Alpha Assurances Vie Mutuelle), AXA Assurances I.A.R.D. Mutuelle,
AXA Assurances Vie Mutuelle, and AXA Courtage Assurance Mutuelle, as a
group (collectively, the "Mutuelles AXA"), (ii) AXA (formerly AXA-UAP), and
(iii) The Equitable Companies Incorporated. The Mutuelles AXA, as a group,
filed as a parent holding company with respect to AXA; AXA filed as a
parent holding company with respect to the holdings of National Mutual
Funds Management (Australia), which had sole voting and sole dispositive
power for 2,500 shares of Bethlehem Common Stock; and The Equitable
Companies Incorporated filed as a parent holding company with respect to
the holdings of (a) Alliance Capital Management L.P., which had sole voting
power for 1,760,800 shares, shared voting power for 8,143,100 shares, and
sole dispositive power for 9,979,600 shares of Bethlehem Common Stock, (b)
Donaldson, Lufkin & Jenrette Securities Corporation, which had sole
dispositive power for 5,250 shares and shared dispositive power for 1,500
shares of Bethlehem Common Stock, and (c) The Equitable Life Assurance
Society of the United States, which had sole voting and sole dipositive
power for 900 shares of Bethlehem Common Stock.
Section 16(a) Beneficial Ownership Reporting Compliance
The Securities Exchange Act of 1934 requires Bethlehem's directors and
executive officers and certain other stockholders to file reports of ownership
and changes in ownership of Bethlehem stock with the Securities and Exchange
Commission and the New York Stock Exchange. To Bethlehem's knowledge, all such
reports for 1998 were timely filed.
12
<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 help 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
corporate and business unit profitability and performance that enhance
stockholder value.
. 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. Stock ownership fosters commitment to long-term
stockholder value, and executives are encouraged to own and hold Bethlehem
Common Stock through these stock incentive plans and the Savings Plan.
. A broad-based employee benefits program that includes a pension program, a
savings plan, group medical coverage and life insurance.
The Compensation Committee of the Board of Directors is responsible for
administering Bethlehem's executive compensation programs 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), independent 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 that the Committee administers.
Salaries. The Committee believes the salary of an executive must be based
primarily on the executive's level of responsibility and performance. In
addition, the Committee believes that salaries should be competitive with
executive salaries provided by other companies in the steel business, including
the peer group of integrated steelmakers shown in the comparative performance
chart on page 21, and by other companies that are appropriate to use for
comparison purposes because of similarities in size or the nature of the
businesses. 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
companies to determine salary levels that compare with 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
13
<PAGE>
and experience of an executive officer may differ from survey norms in both
content and scope, adjustments 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 executive officer salaries and makes adjustments as warranted. The
increase in the 1998 salaries of the executive officers named in the Summary
Compensation Table was based on individual performance and the continued
improvement in Bethlehem's performance and financial results during 1997. The
1998 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 salaries
should be supplemented by incentive compensation bonus awards that are directly
linked to performance-oriented goals as measured by Bethlehem's annual business
plan. The Committee also believes that achievement of these goals should create
value for Bethlehem's stockholders over time. The awards may be granted in cash,
stock or a combination thereof.
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 that increases with higher position levels,
thereby placing a greater percentage of compensation at risk for those with
greater responsibility. For the chief executive officer and the other four
executive officers named in the Summary Compensation Table, payment of incentive
compensation under this program is based on the achievement of corporate
objectives for return on net assets above a threshold goal. Payments may not
exceed 120% of base salary for the chief executive officer and 100% of base
salary for the other four executive officers. For other executive officers,
incentive payments are based on the achievement of corporate profitability and
budget goals and, in the case of executives at business units (including Mr.
Dunham through 1998), in part on the achievement of business unit profitability
goals and in part on the achievement of corporate profitability goals.
Long-Term Stock Incentives. The Committee believes that stock incentives are an
important element of Bethlehem's executive compensation program. They help align
the interests of Bethlehem's executives with those of the stockholders and
increase the long-term retention of key employees. Executive officers are
required to own or have plans to own Bethlehem Common Stock in amounts related
to their base salary and to hold and not dispose of shares they own. As
discussed below, the Committee has made stock option and restricted stock awards
to executive officers and other key employees under its stock incentive plans.
Also, Bethlehem's Savings Plan provides for matching company contributions which
are made entirely in Bethlehem Common Stock.
Executive officers and other key employees have received annual grants of
stock options under Bethlehem's stock incentive plans. The Committee believes
that stock options provide an incentive that focuses the executive's attention
on managing Bethlehem from the perspective 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 and have a maximum term of 10 years.
Options awarded in 1998
14
<PAGE>
may be exercised for up to one-fourth of the shares covered by the option each
year over a four-year period commencing on the date of grant. These options were
awarded in tandem with stock appreciation rights. Executives are encouraged to
hold the stock received through the exercise of options and stock appreciation
rights. In determining the number of option shares to award to an executive
officer, the Committee considers the performance of the individual and the
individual's position level. The Committee, 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". Applying these factors,
during 1998 the Committee awarded 308 key employees, including Mr. Barnette and
certain of the other executive officers named in the table on page 19, options
to purchase Bethlehem Common Stock at a price of $15.25 per share (the fair
market value of Bethlehem Common Stock on the date of the award).
The Committee has also implemented a Key Employee Stock Investment Award
Program under the 1998 Stock Incentive Plan that is designed to help increase
the long-term retention of key employees, encourage their ownership of stock and
align their interests with the interests of the stockholders. Under this
Program, executive officers and other key employees have been awarded restricted
shares of Bethlehem Common Stock that may not be sold, transferred or assigned
while the shares are restricted. Unless the Committee determines otherwise, (a)
the restrictions on the shares generally expire either (i) at age 64 or 65 or at
retirement, if later, or (ii) after five years as to one-half of the shares
awarded and at age 64 or retirement, if later, as to the remaining shares and
(b) the shares are forfeited if the employee voluntarily leaves the employment
of Bethlehem (unless, at Bethlehem's request, the employee enters into a
consulting and non-compete agreement) or is terminated for cause before the
restrictions expire. Dividends, if declared, are payable upon the restricted
shares. 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
responsibility, individual performance and potential to make a contribution to
Bethlehem's future success, overall corporate progress toward achieving
sustained profitability and the restricted stock practices at other companies.
The Committee assigns no specific weight to any of these factors when making its
determinations. In order to retain and motivate Mr. Barnette and certain of the
other named executive officers and further align their interests with those of
the stockholders, the Committee determined to award each of them restricted
shares of Common Stock under the Key Employee Stock Investment Award Program in
April 1998. Mr. Barnette was awarded 65,000 shares; Mr. Dunham, 20,000 shares;
Mr. Millenbruch, 20,000 shares; and Mr. Penny, 20,000 shares. Mr. Post did not
receive any restricted stock awards in 1998. Of the shares awarded to Mr.
Barnette, 25,000 were restricted and could not be sold, transferred or assigned
until age 64. The remainder of the shares awarded to Mr. Barnette and the shares
awarded to the other named executives are restricted and may not be sold,
transferred or assigned until the later of age 65 or retirement. The size of the
awards was based on the factors discussed above.
15
<PAGE>
Compensation of Chief Executive Officer. In establishing Mr. Barnette's salary
for 1998, the Committee considered the salaries of chief executive officers of
other steel companies and companies of similar size and complexity. It also
considered Mr. Barnette's performance, the continued challenges facing Bethlehem
and his leadership in public policy areas of importance to Bethlehem and the
steel industry, including international trade. During 1997, Bethlehem took
significant actions to improve stockholder value. It successfully completed a
restructuring plan to exit several underperforming businesses, it announced a
$300 million investment in a new cold rolling mill complex at Sparrows Point and
it entered into a merger with Lukens Inc. that was completed in 1998. Bethlehem
also enhanced the competitiveness of its core steel Divisions and made steady
progress in dealing with its pension and health care legacy costs.
Mr. Barnette received an incentive compensation bonus award for 1998 that
is discussed under "Incentive Compensation Bonuses" above. He also received
stock option and restricted stock awards during 1998 that are discussed under
"Long-Term Stock Incentives" above.
Limitation on Deductibility of Executive Compensation. Section 162(m) of the
Internal Revenue Code denies a publicly held corporation, such as Bethlehem, a
federal income tax deduction for certain compensation 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 officers. "Performance-based"
compensation, such as stock options awarded under Bethlehem's 1998 Stock
Incentive Plan, is not subject to the limitation on deductibility.
Based on Bethlehem's substantial net loss carryforwards ($1.4 billion at
December 31, 1998) and the levels and types of compensation of Bethlehem's
affected executive officers, the Committee continues to believe that the
limitation on deductibility of certain compensation is currently not material to
Bethlehem. Nevertheless, the Committee will continue to review the situation and
future events with an objective of achieving deductibility to the extent
appropriate. Restricted stock awards under the existing Key Employee Stock
Investment Award Program are not exempt from the limitation, but the Committee
feels that such awards are a necessary and appropriate incentive to motivate
executives and align their interests with the interests of stockholders.
Compensation Committee
Worley H. Clark, Chairman
John B. Curcio
Robert McClements, Jr.
Dean P. Phypers
16
<PAGE>
Summary Compensation Table
The following table shows the aggregate compensation awarded or paid to, or
earned by, Bethlehem's chief executive officer and each of Bethlehem's other
four most highly compensated executive officers.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
----------------------------------------------- --------------------------------------
Other Securities
Annual Restricted Underlying All Other
Compen- Stock Options/ Compen-
Year Salary ($) Bonus(1)($) sation(2)($) Awards(3)($) SARs (#) sation(4)($)
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Curtis H. Barnette 1998 $ 725,000 $ 453,800 $ 0 $ 991,250 75,000 $ 69,236
Chairman and Chief 1997 675,000 694,600 931,277 0 50,000 69,677
Executive Officer 1996 655,000 90,400 0 412,500 50,000 70,718
- ---------------------------------------------------------------------------------------------------------------------
Duane R. Dunham 1998 $ 292,500 $ 146,400 $ 0 $ 305,000 25,000 $ 27,559
Executive Vice President 1997 262,500 263,000 414,825 0 20,000 25,641
(Commercial and Business 1996 237,500 26,800 0 275,000 20,000 19,859
Development) and Chief
Commercial Officer
- ---------------------------------------------------------------------------------------------------------------------
Gary L. Millenbruch 1998 $ 470,250 $ 212,800 $ 0 $ 305,000 35,000 $ 48,037
Executive Vice President 1997 455,000 392,100 554,843 0 30,000 51,123
(Finance), Treasurer and 1996 439,001 51,300 0 206,250 30,000 51,179
Chief Financial Officer
- ---------------------------------------------------------------------------------------------------------------------
Roger P. Penny 1998 $ 540,250 $ 291,800 $ 0 $ 305,000 40,000 $ 49,531
President and Chief 1997 521,500 451,300 714,877 0 35,000 53,641
Operating Officer 1996 501,001 58,600 0 206,250 35,000 54,678
- ---------------------------------------------------------------------------------------------------------------------
David P. Post (5) 1998 $ 332,500 $ 150,100 $ 0 $ 0 0 $ 28,391
Senior Vice President 1997 312,500 270,400 288,943 0 25,000 28,926
(Commercial) 1996 298,334 35,100 0 137,500 25,000 29,400
=====================================================================================================================
</TABLE>
(1) Each executive named in the table received an annual profit-sharing award
for 1998 as described under "Incentive Compensation Bonuses".
(2) Relates to the unfunded retirement benefits payable to such officers under
the Excess Benefit Plan and Supplemental Benefits Plan and represents the
amount of payments to cover tax liabilities arising from the purchase of
individually owned annuities to secure a portion of such benefits.
(3) Fair market value at date of issuance of restricted shares of Common Stock
awarded under the Key Employee Stock Investment Award Program. The shares
are restricted and generally may not be sold, transferred or assigned until
age 64 or 65 or at retirement, if later. Mr. Barnette's 1996 award and
25,000 shares of his 1998 award vested on February 1, 1999, and Mr. Post's
1996 award vested on January 1, 1998. Dividends, 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 and
held by each of the named individuals at December 31, 1998, and the
aggregate value of these shares based on a market value of $8.375 per share
at December 31, 1998, is as follows: Mr. Barnette, 101,000 restricted
shares with a value of $845,875; Mr. Dunham, 54,500 restricted shares with
a value of $456,438; Mr. Millenbruch, 66,000 restricted shares with a value
of $552,750; Mr. Penny, 41,000 restricted shares with a value of $343,375;
and Mr. Post, 5,000 restricted shares with a value of $41,875. During 1998,
restrictions ended on the following additional shares: Mr. Penny, 31,000
and Mr. Post, 10,000 shares.
17
<PAGE>
(4) "All Other Compensation" consists of supplemental insurance costs, Matching
Company Contributions to the Savings Plan, cash or single premium annuities
purchased to cover the shortfall of Matching Company Contributions to the
Savings Plan due to Internal Revenue Code limitations, and the value of
split dollar insurance benefits in the following respective amounts for
1998: Mr. Barnette, $14,213, $5,867, $43,155, $6,001; Mr. Dunham, $2,671,
$6,400, $9,973, $8,515; Mr. Millenbruch, $9,411, $5,867, $24,116, $8,643;
Mr. Penny, $6,607, $5,867, $29,374, $7,683; and Mr. Post, $6,868, $5,867,
$13,781, $1,875. 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 reimbursed 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 arrangement terminates prior to the death of the
individual. As security for repayment, Bethlehem is a collateral assignee
of the policy to the extent of any such unreimbursed premium.
(5) Mr. Post retired on December 31, 1998.
Change in Control Arrangements
Bethlehem entered into change in control agreements with the executive
officers named in the Summary Compensation Table. The agreements provide
generally that the executive officer is entitled to certain severance benefits
if the executive officer's employment is terminated other than for cause,
retirement or disability within two years after a change in control (as defined
below) or if the executive officer terminates his or her employment for good
reason within such two-year period, or for any reason during the 30-day period
following the first anniversary of the change in control. The benefits include
the following:
. a lump-sum payment equal to three times annual base salary and average
bonus;
. a lump-sum payment with respect to the benefits to which the executive
officer is entitled under Bethlehem's Excess Benefit Plan or the
Supplemental Benefits Plan of Bethlehem Steel Corporation and Subsidiary
Companies;
. the continuation of life, disability and accident insurance and medical
plan coverage for three years; and
. an additional payment to compensate the executive officer with respect to
any Federal excise tax liability incurred as a result of payments to be
made under the agreement or otherwise in connection with the change in
control or the executive officer's termination of employment.
For purposes of the agreements, the term "change in control" generally means:
. a purchase of Bethlehem Common Stock, or securities convertible into Common
Stock pursuant to a tender or exchange offer;
. the acquisition by certain third parties of 20% or more of the voting power
of Bethlehem's outstanding stock;
. a majority change in the composition of Bethlehem's Board of Directors;
. the consummation of a merger or consolidation of Bethlehem with another
company resulting in more than a 25% change in stock ownership;
. the approval by Bethlehem's stockholders of a plan of liquidation; or
. the dissolution of Bethlehem or the sale of all or substantially all of
Bethlehem's assets.
18
<PAGE>
Stock Option/SAR Grants in 1998(1)
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------- Historic
Potential Realizable (1988-1998)
Percent Value at Assumed Annual Rate of
Number of of Total Annual Rates of Stock Stock Price
Shares Options/SARs Appreciation for Appreciation
Underlying Granted to Exercise Price Option Term(2) (Decline)
Options/SARs Employees Price Per Expiration -------------------------------------------
Granted(#) in 1998(%) Share($) Date 5%($) 10%($) (10%)
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Curtis H. Barnette 75,000 10.19% $ 15.25 4-29-08 $ 719,325 $ 1,822,875 0
- ------------------------------------------------------------------------------------------------------------------------
Duane R. Dunham 25,000 3.40 15.25 4-29-08 239,775 607,625 0
- ------------------------------------------------------------------------------------------------------------------------
Gary L. Millenbruch 35,000 4.75 15.25 4-29-08 335,685 850,675 0
- ------------------------------------------------------------------------------------------------------------------------
Roger P. Penny 40,000 5.43 15.25 4-29-08 383,640 972,200 0
- ------------------------------------------------------------------------------------------------------------------------
David P. Post 0 0 0 -- 0 0 0
- ------------------------------------------------------------------------------------------------------------------------
All Optionees (308
executive officers
and key employees) 736,250 100.00% $ 15.25 4-29-08 $ 7,061,374 $17,894,556 0
========================================================================================================================
</TABLE>
(1) All stock options granted in 1998 were granted in tandem with stock
appreciation rights ("SARs"), have a term of ten years and may be exercised
for up to one-fourth of the shares covered by the option each year over a
four-year period commencing on the date of grant. The exercise price (per
share) of the option is the market price of Bethlehem Common Stock on the
date the option is awarded.
(2) These amounts represent assumed rates of appreciation only. Actual gains,
if any, on stock option exercises and Bethlehem Common Stock holdings
depend on the future performance of the Common Stock and overall market
conditions. As is shown in the last column, which shows there has been an
annual rate of stock price decline for Bethlehem Common Stock during the
last 10 years, there can be no assurance that Bethlehem will achieve the
amounts reflected in these columns.
Aggregated Stock Option/SAR Exercises in 1998 and December 31, 1998, Stock
Option Values
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Shares Acquired Value Options/SARs at 12/31/98 (#) Options/SARs at 12/31/98
on Exercise(#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
=======================================================================================================
<S> <C> <C> <C> <C>
Curtis H. Barnette 0 0 224,500/162,500 0/0
- -------------------------------------------------------------------------------------------------------
Duane R. Dunham 0 0 121,200/60,000 0/0
- -------------------------------------------------------------------------------------------------------
Gary L. Millenbruch 0 0 141,000/87,500 0/0
- -------------------------------------------------------------------------------------------------------
Roger P. Penny 0 0 154,750/101,250 0/0
- -------------------------------------------------------------------------------------------------------
David P. Post 0 0 85,750/43,750 0/0
=======================================================================================================
</TABLE>
19
<PAGE>
PENSION PLAN TABLE
Estimated Annual Retirement Benefit
---------------------------------------------------
25 30 35 40
Covered Years of Years of Years of Years of
Compensation Service Service Service Service
============================================================================
$ 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
- ----------------------------------------------------------------------------
700,000 262,500 315,000 367,500 420,000
- ----------------------------------------------------------------------------
800,000 300,000 360,000 420,000 480,000
- ----------------------------------------------------------------------------
900,000 337,500 405,000 472,500 540,000
- ----------------------------------------------------------------------------
1,000,000 375,000 450,000 525,000 600,000
============================================================================
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 pension
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. Individually owned annuities were
purchased in 1993 and 1997 to secure a portion of the unfunded benefits payable
to the named executive officers under the Excess Benefit Plan and the
Supplemental Benefits Plan. An additional annuity was also purchased for Mr.
Post in 1995. The amount of the benefits that were funded by the purchase of the
annuities was based on the funded level of Bethlehem's defined benefit pension
plan at June 30, 1993, for the 1993 annuities; December 31, 1994, for the 1995
annuity purchased for Mr. Post; and December 31, 1996, for the 1997 annuities.
Covered compensation for purposes of determining retirement benefits for
the named executive officers generally consists of salary and incentive
compensation reported in the "Bonus" column in the Summary Compensation Table.
The monthly retirement benefit payable is generally determined by multiplying
average monthly covered compensation (for salary, the highest consecutive 60
months in the last 120 months of continuous service and for incentive
compensation, the 5 highest 12-month periods, whether or not consecutive, in the
last 120 months of continuous service) times 1.5% times the number of credited
years of service. The incentive compensation portion of the benefit is subject
to adjustment to the extent it results in the monthly retirement benefit
exceeding 55% of average monthly covered compensation. Benefits are also subject
to a deduction for social security benefits as well as certain other
adjustments.
As of December 31, 1998, the credited years of service under the Pension
Plan or Supplemental Benefits Plan for Messrs. Barnette, Dunham, Millenbruch,
Penny and Post were 36 years, 33 years, 39 years, 40 years and 42 years,
respectively.
20
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on
Bethlehem 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 a
peer group of publicly traded integrated steelmakers described below. The graph
assumes the investment of $100 in Bethlehem Common Stock, the S&P 500 and the
peer group on December 31, 1993, and reinvestment of all dividends. The total
return for the peer group has been weighted for market capitalization at the
beginning of each period.
The peer group consists of LTV Corporation, National Steel Corporation, the
U.S. Steel Group of USX Corporation, Armco Inc. and Inland Steel Industries.
Information has only been included for Armco common stock at December 31,
1993-1994, and for Inland common stock at December 31, 1993-1997, since Armco
transferred its carbon steel business during 1994 to a separately traded public
company and Inland transferred its carbon steel business during 1998 to a
separately traded public company, making continuing comparison inappropriate.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
======================================================================================
<S> <C> <C> <C> <C> <C> <C>
Bethlehem Steel Corporation $100.00 $ 88.34 $ 68.10 $ 43.56 $ 42.64 $ 41.10
- --------------------------------------------------------------------------------------
S&P 500 $100.00 $101.32 $139.40 $171.40 $228.59 $293.91
- --------------------------------------------------------------------------------------
Peer Group $100.00 $ 96.86 $ 80.78 $ 74.55 $ 72.28 $ 51.12
======================================================================================
</TABLE>
21
<PAGE>
ADDITIONAL INFORMATION
Indemnification Assurance Agreements
Bethlehem is required under Article IX of its By-laws to indemnify its
directors and officers to the maximum extent permitted by the General
Corporation Law of the State of Delaware. In this regard, Bethlehem's policy is
and has been:
. to indemnify its officers and directors against any costs, expenses and
other liabilities to which they may become subject by reason of their
service to Bethlehem; and
. to insure its directors and officers against such liabilities, as and to
the extent permitted by applicable law and in accordance with the
principles of good corporate governance.
Pursuant to this policy, Bethlehem has entered into individual
Indemnification Assurance Agreements with each of its directors and executive
officers. In addition, Bethlehem has established an irrevocable letter of credit
in an aggregate amount of $5 million, to assure that each director and executive
officer is paid for any indemnification amounts to which he or she may become
entitled.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
permits a Delaware corporation to include a provision in its certificate of
incorporation eliminating the potential monetary liability of directors to the
corporation or its stockholders for breach of a fiduciary duty. However, the
provision may not eliminate a director's liability (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 payment of dividends, or (iv) for
any transaction from which the director receives an improper personal benefit.
The Ninth Article of Bethlehem's Second Restated Certificate of Incorporation,
as amended, includes such a provision.
Other Matters
Management and the Board do not know of any matters other than those set
forth in the form of proxy that will be presented for consideration at the 1999
Annual Meeting. However, if any additional matters properly come before the
Meeting, the persons named as proxies in an executed proxy have discretionary
authority to vote the shares represented in accordance with their best judgment.
March 12, 1999
22
<PAGE>
[PROXY CARD - FRONT/TOP]
[X] PLEASE MARK YOUR 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, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
Bethlehem's Board of Directors recommends a vote FOR election of directors and
Proposal 2.
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Election of 2. Ratification of appointment
Directors. [ ] [ ] of Independent Auditors. [ ] [ ] [ ]
(see reverse)
</TABLE>
FOR, EXCEPT VOTE WITHHELD FROM
THE FOLLOWING NOMINEE(S):
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.
SIGNATURE(S) DATE
[PROXY CARD - FRONT/BOTTOM]
Bethlehem Steel Corporation
1170 EIGHTH AVENUE
BETHLEHEM, PA 18016-7699
[LOGO OF BETHLEHEM STEEL APPEARS HERE]
March 12, 1999
To All Bethlehem Stockholders:
It is a pleasure to invite you to the Annual Meeting of Stockholders which
will be held on Tuesday, April 27, 1999. We will meet in the Main Ballroom of
the DoubleTree Hotel Wilmington (formerly known as the Radisson Hotel),
Wilmington, Delaware, at 10 a.m. Your continuing interest in Bethlehem's
business is appreciated, and I hope that as many of you as possible will attend
the Meeting in person.
The annual election of directors will take place at the Meeting. Personal
information 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 Mr. Landuyt, have previously been
elected by the stockholders.
You are also being asked to ratify the appointment of PricewaterhouseCoopers
LLP as Bethlehem's independent auditors for 1999.
Please read the formal notice of the 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
envelope. 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>
[PROXY CARD - BACK/TOP]
BETHLEHEM STEEL CORPORATION
1170 EIGHTH AVENUE
BETHLEHEM, PA 18016-7699
P
R THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O FOR THE ANNUAL MEETING OF STOCKHOLDERS, APRIL 27, 1999
X
Y
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 27, 1999, 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, J. B. Curcio,
L. B. Kaden, H. P. Kamen, W. M. Landuyt, R. McClements, Jr.,
G. L. Millenbruch, R. P. Penny, S. D. Peterson, D. P. Phypers,
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.
THIS CARD ALSO CONSTITUTES VOTING INSTRUCTIONS, AS DESCRIBED IN THE
NOTICE OF MEETING AND PROXY STATEMENT DATED MARCH 12, 1999, FOR ANY
SHARES OF STOCK ALLOCATED TO YOUR ACCOUNT UNDER THE FOLLOWING PLANS:
BETHLEHEM STEEL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN; SAVINGS PLAN
FOR SALARIED EMPLOYEES OF BETHLEHEM STEEL CORPORATION AND SUBSIDIARY
COMPANIES; CAPITAL ACCUMULATION PLAN FOR CERTAIN SALARIED EMPLOYEES OF
BETHLEHEM LUKENS PLATE DIVISION; BETHLEHEM LUKENS PLATE DIVISION GROUP
CAPITAL ACCUMULATION PLAN; CAPITAL ACCUMULATION PLAN FOR CERTAIN HOURLY
EMPLOYEES OF THE BETHLEHEM LUKENS PLATE DIVISION (USW, AFL-CIO,
COATESVILLE, PA); CAPITAL ACCUMULATION PLAN FOR CERTAIN HOURLY EMPLOYEES
OF WASHINGTON STEEL CORPORATION (HOUSTON AND WASHINGTON, PA); AND CAPITAL
ACCUMULATION PLAN FOR CERTAIN EMPLOYEES OF WASHINGTON STEEL CORPORATION
(MASSILLON, OH).
[SEE REVERSE SIDE]
[PROXY CARD - BACK BOTTOM]
INTERNET ACCOUNT ACCESS IS NOW AVAILABLE TO
REGISTERED STOCKHOLDERS
Through the Internet, you can view your share balance, access your account
history, and obtain current and historical stock prices. To view your account
on the Internet, please call First Chicago Trust Company of New York at 1-877-
843-9327 and they will mail a password that provides you secure access to
information.
BETHLEHEM'S
OBJECTIVES
. Increase stockholder value
. Serve our customers
. Partnerships among employees
. Be a good citizen
STRATEGY
. Concentrate on steel
. Rebuild our financial strength --
make the plans
. Improve continuously--
safety and total quality
FOCUS ON THE VISION [Logo of Bethlehem
Be the Premier Steel Company Steel appears here]
