<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
A.M. CASTLE & CO.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
A.M. CASTLE & CO.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
CASTLE METALS LOGO
MICHAEL SIMPSON
Chairman of the Board March 16, 1998
Dear Castle Stockholder:
You are cordially invited to attend A. M. Castle & Co.'s Annual Meeting of
Stockholders which will be held on Thursday, April 23, 1998 at 10:00 a.m. in our
offices at 3400 North Wolf Road, Franklin Park, Illinois.
At the meeting we will report to you on current business conditions and
recent developments at Castle. Members of the Board of Directors and many of our
executives will be present to discuss the affairs of Castle with you.
Whether or not you attend our Annual Meeting, it is important that you
sign, date and return your Proxy as soon as possible. If you do attend the
meeting and wish to vote in person, your Proxy will then be revoked at your
request so that you can vote personally. Therefore, I urge you to return your
Proxy even if you currently plan to be with us for the meeting.
I look forward, with other members of management, to the opportunity of
meeting you on April 23.
Sincerely,
MICHAEL SIMPSON SIGNATURE
Michael Simpson
<PAGE> 3
A. M. CASTLE & CO.
3400 North Wolf Road
Franklin Park, Illinois 60131
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------------
Franklin Park, Illinois, March 16, 1998
NOTICE IS HEREBY GIVEN, that the Annual Meeting of the Stockholders of A.
M. Castle & Co. will be held at the general offices of the Company, 3400 North
Wolf Road, Franklin Park, Illinois on THURSDAY, APRIL 23, 1998, at 10 o'clock in
the forenoon, Central Daylight Savings Time, for the purposes of considering and
acting upon the following:
1. The election of eleven Directors of the Company;
2. The ratification of the appointment of Arthur Andersen & Co. as
independent public accountants for the year 1998, and
3. The transaction of any other business which may properly come before
the meeting.
Stockholders of record at the close of business February 23, 1998, only,
are entitled to notice of, and to vote at, the meeting.
Stockholders who do not expect to attend in person are urged to execute and
return the accompanying Proxy in the enclosed envelope. No postage is needed if
mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
JERRY M. AUFOX
Secretary
<PAGE> 4
A. M. CASTLE & CO.
3400 North Wolf Road
Franklin Park, IL 60131
------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
APRIL 23, 1998
------------------
The enclosed Proxy is solicited by the Board of Directors of A. M. Castle &
Co. for use at the Annual Meeting. Any Proxy given pursuant to such solicitation
may be revoked by the Stockholder at any time prior to the voting of the Proxy.
Holders of shares of Common Stock, the only class of voting security of the
Company, are entitled to one vote per share on all matters to come before the
meeting. As of February 23, 1998, the record date for determining the
Stockholders entitled to notice of and to vote at the meeting, there were
14,040,972 outstanding shares of Common Stock of the Company.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the material enclosed herewith will be paid by the Company,
including upon request, expenses incurred by brokerage houses and fiduciaries in
forwarding Proxies and Proxy Statements to their principals. The original
solicitation of Proxies by mail may be supplemented by telephone, telegraph,
facsimile, written and personal solicitation by Officers, Directors, and
employees of the Company; however, no additional compensation will be paid to
such individuals.
The Annual Report of the Company for the fiscal year ended December 31,
1997, is enclosed with this Proxy Statement. The approximate date of mailing
this Proxy Statement and the enclosed Proxy is March 16, 1998.
CANDIDATES FOR ELECTION AS DIRECTORS
Eleven directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting. Proxies received by the Board of Directors will
be voted for the election of the nominees named below, unless otherwise
specified. In the event any of the nominees shall unexpectedly become
unavailable for election, votes will be cast pursuant to authority granted by
the enclosed Proxy for such persons as may be designated by the Board of
Directors. The persons elected as Directors are to serve a term of one year
until the next Annual Meeting and until their successors are elected and
qualified.
INFORMATION CONCERNING NOMINEES FOR DIRECTORS
The following information is given for individuals who have been
recommended for election by the Human Resources Committee of the Board of
Directors. Set forth below is the name of each nominee, the corporation or other
organization which is the principal employment of the nominee, the year in which
each nominee first became a Director of the Company, the nominee's age and the
committees on which each nominee serves.
1
<PAGE> 5
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------
DANIEL T. CARROLL Director since 1982 Age 72
Chairman of The Carroll Group, Inc. (Management Consulting
Firm). Mr. Carroll is also a Director of American Woodmark
Corp., Aon Corporation, Comshare, Inc., Diebold,
Incorporated, Oshkosh Truck Corporation, Homes Protection
Group, Inc. Recombinant BioCatalysis, Inc., Wolverine World
Wide, Inc. and Woodhead Industries, Inc.
Member of Human Resources Committee
- -----------------------------------------------------------------------------------------------
EDWARD F. CULLITON Director since 1983 Age 56
Vice President and Chief Financial Officer of A. M. Castle &
Co. Mr. Culliton was elected Vice President in 1977 and CFO
in 1995.
- -----------------------------------------------------------------------------------------------
WILLIAM K. HALL Director since 1984 Age 54
Chairman and Chief Executive Officer of Falcon Building
Products, Inc. (Diversified Manufacturer of Building
Products). Dr. Hall is also a Director of Gencorp and Falcon
Building Products, Inc.
Chairman of Audit Committee
- -----------------------------------------------------------------------------------------------
ROBERT S. HAMADA Director since 1984 Age 60
Dean and Edward Eagle Brown Distinguished Service Professor
of Finance at the Graduate School of Business, University of
Chicago since 1993. Dr. Hamada is a Director of the National
Bureau of Economic Research, the Northern Trust Corporation
and The Chicago Board of Trade.
Member of Human Resources Committee
- -----------------------------------------------------------------------------------------------
PATRICK J. HERBERT, III Director since 1996 Age 48
President of Simpson Estates, Inc. (Private Management
Firm).
Member of Human Resources Committee
- -----------------------------------------------------------------------------------------------
JOHN P. KELLER Director since 1980 Age 58
President of Keller Group, Inc. (Industrial Manufacturing
and Coal Mining Company). Mr. Keller is also a Director of
Castle Energy Corporation, Old Kent Financial Corporation
and MacLean-Fogg Co.
Member of Audit Committee
- -----------------------------------------------------------------------------------------------
JOHN W. MCCARTER, JR. Director since 1983 Age 60
President of Field Museum (Chicago), prior to 1997 Senior
Vice President of Booz, Allen & Hamilton, Inc. (Management
Consulting Firm). Mr. McCarter is also a Director of W. W.
Grainger, Inc., The LaSalle Partner Funds, Inc., HT Insight
Funds, Inc. and a Trustee of Harris Insight Funds Trust
(Registered Investment Corporation).
Member of Audit Committee
- -----------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
JOHN MCCARTNEY Age 45
President, Client Access Business Unit, 3 Com Corporation.
Prior to the June 12, 1997 merger of 3 Com and U.S. Robotics
Corporation, Mr. McCartney was President and Chief Operating
Officer of U.S. Robotics. Prior to January 1997 he was
Executive Vice President and Chief Operating Officer and
prior to January 1996 Executive Vice President,
International Operations.
- -----------------------------------------------------------------------------------------------
RICHARD G. MORK Director since 1988 Age 62
President and Chief Executive Officer of A. M. Castle & Co.
Mr. Mork was elected Senior Vice President in 1988, Chief
Operating Officer in 1989 and President and Chief Executive
Officer in 1990.
- -----------------------------------------------------------------------------------------------
JOHN W. PUTH Director since 1995 Age 69
Principal -- J.W. Puth Associates (a Consulting Firm). Mr.
Puth is also a Director of Allied Products Corporation,
Brockway Standard, Inc., L.B. Foster, Inc., Lindberg
Corporation, System Software Associates, Inc., and U.S.
Freightways, Inc.
Chairman of Human Resources Committee
- -----------------------------------------------------------------------------------------------
MICHAEL SIMPSON Director since 1972 Age 59
Chairman of the Board of A. M. Castle & Co. Mr. Simpson was
elected Vice President of A. M. Castle & Co. in 1977 and
Chairman of the Board in 1979.
- -----------------------------------------------------------------------------------------------
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has two standing committees -- an Audit Committee,
and a Human Resources Committee.
The Audit Committee of the Board of Directors is comprised of four
Directors, none of whom may be employed on a full-time basis by the Company. The
Audit Committee is charged with recommending appointment of the independent
auditor, consulting with the independent auditors and reviewing the results of
internal audits, and the audit report of the independent auditors engaged by the
Company. The committee has oversight responsibilities for investment strategies
of the Company's pension plan investments. Further, the Audit Committee is
empowered to make independent investigations and inquiries into all financial
reporting or other financial matters of the Company as it deems necessary. The
Committee meets not less than twice a year.
The Human Resources Committee, comprised of four directors, reviews and
recommends compensation with respect to the Officers of the Company and
administers and directs operation of the 1989 Long Term Incentive Compensation
Plan, the 1996 Restricted Stock and Stock Option Plan and other compensation
benefits granted to various Officers. The Committee is also charged with making
recommendations to the Board of Directors concerning institution, continuation,
or discontinuation of benefit compensation plans and programs for officers and
succession planning for officers and key managers. In 1992 the Committee took on
the responsibilities formerly handled by the Nominating Committee. Therefore the
Committee also reviews applications, interviews, and recommends nominees to the
Board of Directors to be presented to Stockholders at the Annual Meeting. The
Committee has established standards and criteria for the selection and
nomination of candidates to the Board of Directors and for membership on the
various committees of the Board. Any Stockholder who wishes to recommend
individuals for nomination to the Board of Directors is invited to do so by
supplying in
3
<PAGE> 7
writing to the Human Resources Committee the name of the individual, and his or
her credentials and background material for review by the Human Resources
Committee.
During the last fiscal year, the Board of Directors held its four scheduled
meetings. In addition, there were two meetings of the Audit Committee and four
meetings of the Human Resources Committee. All the Directors attended 75 percent
or more of the aggregate of the total number of meetings of the Board of
Directors and the total number of meetings of each committee on which they
served.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
STOCK OWNERSHIP OF NOMINEES
The following table sets forth, with respect to the Company's common stock
(the only class of voting securities) the number of shares and percentage of the
Common Stock of the Company owned beneficially, directly, or indirectly by each
Director and nominee as of February 20, 1998:
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY PERCENT
NAME OF NOMINEE OR DIRECTOR OWNED(1) OF CLASS
--------------------------- ------------------ --------
<S> <C> <C>
Daniel T. Carroll........................................... 3,162 0.02%
Edward F. Culliton.......................................... 43,068(2) 0.31%
William K. Hall............................................. 1,053 0.01%
Robert S. Hamada............................................ 1,580 0.01%
Patrick J. Herbert, III..................................... 2,905,682(3) 20.69%
John P. Keller.............................................. 1,265 0.01%
John W. McCarter, Jr........................................ 2,303 0.01%
John McCartney.............................................. -- --
Richard G. Mork............................................. 78,134 0.56%
John W. Puth................................................ 1,625 0.01%
Michael Simpson............................................. 625,724(4) 4.46%
</TABLE>
- ------------------------------
(1) The nature of beneficial ownership of securities is direct unless otherwise
indicated by footnote. Beneficial ownership, as shown in the table, arises
from sole voting power and sole investment power, unless otherwise indicated
by footnote.
(2) Includes 671 shares owned by Mr. Culliton's wife. Mr. Culliton disclaims any
beneficial interest in such shares.
(3) Includes 62,805 shares with respect to which Mr. Herbert has sole voting
power and 2,837,922 shares to which voting power is shared. Mr. Herbert has
sole dispositive power with respect to 1,475,424 shares and shared
dispositive power over 893,006 shares. Mr. Herbert disclaims any beneficial
interest with respect to 2,900,727 shares.
(4) Includes 453,631 shares which Mr. Simpson also owns beneficially in five
trusts, and 67,463 shares held by another trust in which he is one of five
beneficiaries.
4
<PAGE> 8
PRINCIPAL STOCKHOLDERS
The only persons who held of record as of February 23, 1998, or, to the
knowledge of the Management, owned beneficially, more than 5% of the outstanding
shares of Common Stock of the Company are the following:
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS SHARES(1) OF CLASS
---------------- --------- --------
<S> <C> <C>
Patrick J. Herbert, III..................................... 2,905,682(2) 20.69%
Suite 1232
30 North LaSalle Street
Chicago, Illinois 60602-2504
First Chicago NBD Corporation............................... 2,300,444(3) 16.38%
One First National Plaza
Chicago, Illinois 60670-0287
W. B. & Co., an Illinois partnership........................ 1,967,060(4) 14.01%
Suite 1232
30 North LaSalle Street
Chicago, Illinois 60602-2504
Pioneering Management Corporation........................... 964,725 6.87%
60 State Street
Boston, Massachusetts 02109-1820
United States Trust Company of New York..................... 827,367(3) 5.89%
114 West 47th Street
New York City, New York 10036-1532
</TABLE>
- ------------------------------
(1) The nature of beneficial ownership of securities is direct unless otherwise
indicated by footnote. Beneficial ownership, as shown in this table, arises
from sole voting power and sole investment power unless otherwise indicated
by footnote.
(2) Includes 1,967,060 shares indicated below as owned by W. B. & Co. Mr.
Herbert has sole voting power with respect to 62,805 shares and shared
voting power with respect to 2,837,922 shares; he has sole dispositive power
with respect to 1,475,424 shares and shared dispositive power with respect
to 893,006 shares.
(3) Beneficial ownership acquired in behalf of others via either a
trust/fiduciary capacity and/or portfolio management/agency relationship.
(4) See Footnote (3) under "Stock Ownership of Nominees".
MANAGEMENT STOCK OWNERSHIP
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT OF
NAME OF OFFICER OWNED CLASS
--------------- ------------ ----------
<S> <C> <C>
Michael Simpson.................................. 625,724(1) 4.46%
Richard G. Mork.................................. 78,134 0.56%
Edward F. Culliton............................... 43,068(1) 0.31%
Alan D. Raney.................................... 12,563 0.09%
Stephen V. Hooks................................. 34,836 0.25%
All Directors and Officers as a Group............ 3,805,870 27.11%
</TABLE>
- ------------------------------
(1) See Footnotes under "Stock Ownership of Nominees".
SECTION 16(A) EXCHANGE ACT REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission, the
American Stock Exchange and the Chicago Stock Exchange. Executive officers and
directors are required by SEC regulations to furnish the Company with copies of
5
<PAGE> 9
all Section 16(a) forms they file. Based solely on a review of the copies of
such forms furnished to the Company and written representations from the
Company's executive officers and directors, the Company believes that all
Section 16(a) filing requirements applicable to its executive officers and
directors were met.
DIRECTORS' COMPENSATION
Directors who are not Officers of the Company, or of a Subsidiary, received
an annual retainer of $14,000 and $1,000 for each meeting of the Board of
Directors and meetings of committees of the Board attended, except Directors who
Chair a Board committee receive an additional retainer of $1,000 annually.
In 1987, the Board of Directors adopted the Director's Deferred
Compensation Plan. Under the Plan maintained by the Company, Directors who are
not Officers of the Company have the option to defer payments of the retainer
and meetings fees in either a stock equivalent unit account or an interest
account. Fees held in the interest account are credited with interest at the
rate of 6 percent per year compounded annually. Fees deferred in the stock
equivalent accounts are divided by the A. M. Castle & Co. common stock price on
the 15th day after the meeting for which payment is made. The resultant are
called share units. The stock equivalent account will be credited on a dividend
payment date with units equal to the product of the declared dividend per share
multiplied by the number of stock equivalent units in the Director's account on
the record date of the dividend. The share units are maintained until the
account is closed. Disbursement of the interest account and the stock equivalent
unit account can be made only upon resignation or retirement from the Board or
upon death of a Director.
Payment from the stock equivalent unit account is made in shares of A. M.
Castle & Co. common stock, it will be made as of the date of the request or
termination event, whichever occurs last. The stock distribution will be
treasury shares, shares purchased on the open market, or authorized or unissued
shares as determined under the Plan.
Only fees earned as a Director of A. M. Castle & Co. can be deferred under
the Plan. In 1997 $117,500 was paid to Directors and $60,500 was deferred under
the Plan.
In 1995, the Board of Directors adopted the 1995 Directors Stock Option
Plan, which authorized the issuance of up to 150,000 shares of common stock of
the Company to outside (non-employee) directors. This Plan was approved by the
shareholders at the annual meeting held in April of 1995. Under the Plan,
non-employee directors are granted an option to purchase 1,500 shares of the
Company's common stock on the first business day in June of each year at a price
equal to the closing price of the Company's common stock as reported by the
American Stock Exchange and/or Chicago Stock Exchange for that date; or if no
trade occurred on that date, the next preceding date for which there is a
reported sale.
The option expires five (5) years after the date on which it is granted.
The option also expires upon the outside director's termination of service from
the Board, unless it is due to death, disability or retirement, in which case
there is a period of either six (6) months or one (1) year in which to exercise.
Pursuant to the Plan, last year the eight (8) outside directors were granted an
option of 1,500 shares each at the option price of $21.875.
COMPENSATION COMMITTEE'S REPORT TO SHAREHOLDERS
The executive compensation program is administered by the Human Resources
Committee of the Board of Directors (the "Committee") which is comprised of the
individuals listed below who are directors of the corporation with
responsibilities for all compensation matters for the corporation's senior
management. The Committee has overall responsibility to review and recommend
broad based compensation plans to the Board of Directors and annual
compensation, including salary, cash bonus programs, long term incentive plans
and executive benefits for the officers of the Company.
6
<PAGE> 10
The Committee and the management of the Company are committed to the
principle that remuneration should be commensurate with performance and the
attainment of pre-determined financial and strategic objectives, while at the
same time externally competitive in order to attract and keep highly qualified
personnel. In carrying out this objective, the compensation for executives is
broken down into three basic categories: base salary, short term incentive and
long term incentive compensation.
BASE COMPENSATION
The base salary is set in the middle of the range of base salaries offered
by companies of comparable size. In establishing base salaries, the Committee
utilizes outside consultants and industrial surveys to assure that such base
salaries are proper and externally competitive.
SHORT TERM INCENTIVE COMPENSATION
Short term incentive compensation opportunities are provided by the
Company's Management Incentive Plan. The Management Incentive Plan pays annual
cash incentives upon achievement of short term financial objectives which are
set by the Board. Each year the Board establishes an objective for the rate of
return on net worth, after taxes, for the forthcoming fiscal year for the
Company as a whole, and further approves other objectives for each business unit
for the Company. The objectives when met will result in the Company reaching the
established rate of return. An executive's incentive is based upon performance
of the segment for which he is responsible and/or on the Company as a whole. The
incentive is earned on a prorata basis as the established goals are exceeded.
Under the Plan, if the established goals are not reached, no incentive is paid.
LONG TERM INCENTIVE COMPENSATION
The long term incentive program for executives consists of two types:
Incentive Stock Options granted by the Committee under the 1996 Restricted Stock
and Stock Option Plan approved by the shareholders in 1996 -- and long term
incentive awards under the Company's 1989 Long Term Incentive Plan approved by
the shareholders in 1989.
STOCK OPTIONS
Stock Option Grants provide the right to purchase shares of common stock at
an exercise price (the closing price of Castle common stock on the date of the
grant). Each stock option becomes exercisable after one year following the
grant, and has a five (5) year term. The Committee has granted stock options to
senior management, officers and other key employees on an annual basis. The
option grants cover shares of common stock authorized under stockholder approved
plans. Stock options were granted by the Committee in 1996. The Committee
granted stock options reflected in the tables that follow this report. The
number of options when granted reflect competitive industry practice as reported
and analyzed by independent industrial surveys, based on position,
responsibilities and performance of the recipient.
LONG TERM INCENTIVE AWARDS
The long term incentive participations are made annually and are awarded at
the end of a three (3) year cycle, subject to the achievement of a three (3)
year compound total return to shareholders which exceeds the compound return of
the S&P 500 by at least 1.5 percentage points. For the three year cycle ending
on December 31, 1997, the Committee named and the board ratified the three key
members of senior management Mr. Simpson, Mr. Mork and Mr. Culliton as
participants. The awards are not made if the performance threshold of compound
total rate of return of Castle common stock does not exceed the S&P 500 by 1.5
percentage points. 100% of the award is attained if the three (3) year average
compound rate of return of the Company stock exceeds the S&P 500 by 5.5
percentage points. The awards are made in restricted stock which vests fifty
percent (50%) after one year and the remaining fifty percent (50%) after the
second year. During the two (2) year vesting period after the
7
<PAGE> 11
stock is granted, the participant receives dividends of the shares and also has
a right to vote the awarded shares. For the three (3) year cycle ending with
1996, the Committee reviewed the degree of achievement on cumulative shareholder
return established in the Long Term Incentive Plan for 1995 - 1997, and
determined that the Company's three year compound rate of return did not exceed
the S&P 500 by 1.5 percentage points. As a result no awards were made.
Also for 1997, the corporate performance under the Management Incentive
Plan exceeded the established threshold return on net worth after taxes for the
Company as a whole. Messrs. Simpson, Mork and Culliton received an incentive
award. Messrs. Raney and Hooks, who had a portion of their objective based on
the performance of the Advanced Materials Products Group and Midwest Region,
respectively, exceeded their objectives and attained an incentive award.
CHANGE IN CONTROL AGREEMENTS
On January 25, 1996, the Board of Directors of A. M. Castle & Co. approved
Change in Control Agreements between the Company and the three senior
executives, Messrs. Michael Simpson, Richard G. Mork and Edward F. Culliton. The
Change in Control Agreements require two events to occur before any payments can
be made. Upon the occurrence of the two events (commonly referred to as a double
trigger), the Agreement provides for a lump sum, based on total compensation
paid to the executives over the twelve (12) month period prior to the occurrence
of a "Change in Control Event", to be paid upon the executive's termination of
employment. Except for Mr. Mork, the amount paid under the Agreement cannot
exceed 2.99 times the executive's total average compensation over the prior five
years. Mr. Mork's agreement provides that if the lump sum exceeds 2.99 times his
total average compensation over the prior five years, the amount paid will be
increased to cover this amount of any excise tax which may be levied on the
amount paid.
The Change in Control Event set forth in the agreements is either (i) a
change in ownership, direct or indirect, in excess of twenty five percent (25%)
of the outstanding shares of the Company by a group or person who did not have
such an amount on January 25, 1996; (ii) the occurrence of any transaction
relating to Castle required to be described pursuant to the requirements of Item
5(f) of Schedule 14(a) of Regulation 14(a) of the Securities and Exchange Act of
1934; or (iii) any change in composition of the Board of Directors over a two
year period which results in the present directors not constituting the majority
at the period two years thereafter, excluding any new individuals who are
elected under or by recommendation of the then present majority of the Board.
In addition to a Change in Control Event, the executive's right to payment
arises, if within twenty four (24) months of the Change in Control Event (1) the
duties or the responsibilities of the executive are substantially changed or
reduced; or the executive is transferred or relocated; or that the compensation
rate of the executive is reduced; and (2) the executive terminates his/her
employment, or the executive is discharged for whatever reason other than for
cause, death or disability.
THE HUMAN RESOURCES COMMITTEE
John W. Puth, Chairman
Robert S. Hamada
Patrick J. Herbert, III
8
<PAGE> 12
The tables which follow and the accompanying narrative and footnotes
reflect the decisions covered by the above discussion.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows, for the fiscal years ending December 31, 1995,
1996 and 1997 the cash compensation paid by the Company and its subsidiaries, as
well as other compensation paid or accrued for those years, to each of the five
(5) most highly compensated executive officers of the Company in all capacities
in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION --------------------- -------
- ----------------------------------------------------------------------- RESTRICTED OPTIONS/ ALL OTHER
OTHER ANNUAL STOCK SARS LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) (#) PAYOUTS (1)
--------------------------- ---- ------ ----- ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard G. Mork(1) 1997 345,000 198,337 15,258 18,300 23,060
President & CEO 1996 325,000 178,807 16,216 104,065 19,195 81,934 32,474
1995 310,000 183,741 14,988 87,356 68,644 20,600
Michael Simpson 1997 241,781 140,692 19,898 3,000 17,563
Chairman of the Board 1996 248,000 139,706 18,631 68,357 3,000 53,829 27,503
1995 260,000 168,887 23,315 65,812 51,687 19,010
Edward F. Culliton 1997 180,000 91,786 8,713 7,900 13,054
Vice President & CFO 1996 178,000 84,324 8,269 40,637 8,410 32,024 18,624
1995 173,000 96,570 6,680 48,094 21,626 18,384
Alan D. Raney 1997 152,000 82,089 4,946 7,200 10,762
Vice President -- Advanced 1996 144,000 68,400 4,957 7,650 15,404
Materials Group 1995 138,000 77,237 4,516 14,697
Stephen V. Hooks 1997 150,000 81,437 2,906 7,100 10,674
Vice President -- Mid-West 1996 142,000 67,200 2,918 7,550 15,057
Region
1995 1995 134,000 74,125 2,788 14,779
</TABLE>
- ------------------------------
(1) Consists of Company contribution to A. M. Castle & Co. Employees Profit
Sharing Plan (a defined Contribution Plan) and a Top Hat Supplemental Plan.
STOCK OPTIONS
The following table sets forth information with respect to the named
executives concerning the grants of stock options or restricted stock grants
made under the Company's 1996 Restricted Stock and Stock Option Plan during the
last fiscal year.
OPTION EXERCISE AND HOLDINGS
The following table sets forth information with respect to the named
executives concerning the exercise of options during the last fiscal year, and
the unexercised options held as of the end of the fiscal year. The price of A.
M. Castle & Co. common stock as of the close of business at the end of the
fiscal year was $22.875 per share.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END (#) AT FY-END ($)
------------- -------------
SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Richard G. Mork.................... 0 0 19,195/18,300 79,179/18,300
Michael Simpson.................... 0 0 3,000/3,000 12,375/3,000
Edward F. Culliton................. 0 0 8,416/7,900 34,716/7,900
Alan D. Raney...................... 0 0 7,650/7,200 31,556/7,200
Stephen V. Hooks................... 0 0 7,550/7,100 31,144/7,100
</TABLE>
9
<PAGE> 13
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
- ------------------------------------------------------------------------------- REALIZABLE ALTERNATIVE TO
VALUE AT ASSUMED (F) AND (G):
PERCENT OF ANNUAL RATES OF GRANT DATE
NUMBER OF TOTAL STOCK PRICE VALUE
SECURITIES OPTIONS/SARS APPRECIATION FOR ---------------
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------- GRANT DATE
GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($) PRESENT VALUE $
NAME(A) (B) (C) (D) (E) (F) (G) (H)
- ------- ------------ ------------ ----------- ---------- ------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard G. Mork......... 18,300 18.4% 21.875 7/24/02 105,408
Michael Simpson......... 3,000 3.0% 21.875 7/24/02 17,280
Edward F. Culliton...... 7,900 7.9% 21.875 7/24/02 45,504
Alan D. Raney........... 7,200 7.2% 21.875 7/24/02 41,472
Stephen V. Hooks........ 7,100 7.1% 21.875 7/24/02 40,896
</TABLE>
- ------------------------------
(h) The Grant Date Present Value was determined by using the Black-Scholes
pricing model.
LONG TERM INCENTIVE PLAN
There were no awards earned by the named executives under the Long Term
Incentive Plan during the last fiscal year under the Company's 1989 Long Term
Incentive Plan.
PENSION PLANS
The following table shows the estimated pension benefits payable to a
covered participant at normal retirement age under the Company's qualified
defined benefit pension plan, as well as nonqualified supplemental pension plans
that provide benefits that would otherwise be denied participants by reason of
certain Internal Revenue Code limitations on qualified plan benefits, based on
remuneration that is covered under the plan and years of service with the
Company and its subsidiaries:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------------------
REMUNERATION 10 15 20 25 30 35 40
------------ ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$145,000...................... 24,167 36,250 48,333 60,417 72,500 84,583 96,667
185,000...................... 30,833 46,250 61,667 77,083 92,500 107,917 123,333
200,000...................... 33,333 50,000 66,667 83,333 100,000 116,667 133,333
250,000...................... 41,667 62,500 83,333 104,167 125,000 145,833 166,667
275,000...................... 45,833 68,750 91,667 114,583 137,560 160,417 183,333
300,000...................... 50,000 75,000 100,000 125,000 150,000 175,000 200,000
325,000...................... 54,167 81,250 108,334 135,417 162,500 189,583 216,667
400,000...................... 66,667 100,000 133,333 166,667 200,000 233,333 266,667
450,000...................... 75,000 112,500 150,000 187,500 225,000 262,500 300,000
</TABLE>
The Pension benefits shown in the Pension table above are determined by the
remuneration, which is the average of the highest cash compensation paid
(approximately base salary plus bonus as shown in the Summary Compensation
Table), for any five (5) consecutive years of service prior to retirement.
Pensions are paid as a straight life annuity and subject to reduction for a
joint and survivor benefit, if elected. The amounts shown in the table above are
prior to reduction for social security benefits. Benefits are reduced based on
one-half (1/2) of the social security benefits for the individual attributable
to the working period with the Company.
The current fully accredited years of services for Messrs. Mork, Simpson,
Culliton, Raney and Hooks under the Plan are 41, 29, 33, 12 and 25 years,
respectively.
10
<PAGE> 14
COMPANY PERFORMANCE
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
The SEC requires that the Company include in this proxy statement a
line-graph presentation comparing the Company's cumulative, five-year
shareholder total returns to those of the S&P 500 Stock Index and either a
nationally recognized industry standard or a peer group of companies selected by
the Company. Since there is no nationally recognized industry standard
consisting of metal service centers or specialty metal distributors, and there
are three competitors of the Company two of which are publicly held and actively
traded on a national exchange, for a period of more than one year. The Board of
Directors has approved a peer group which also includes durable goods
manufacturers and distributors for purposes of this performance comparison.
These companies were selected based on comparable market capitalizations (both
more and less than the Company's). A list of these companies follows the graph
below:
<TABLE>
<CAPTION>
A.M. Castle & Co. S&P 500 Peer Group
<S> <C> <C> <C>
100 100 100
1993 151.8 110.0 132.6
1994 187.47 114.43 154.61
1995 (2) 387.32 153.33 194.54
1996 341.23 188.59 240.42
1997 (3) 405.04 251.21 312.93
</TABLE>
PEER GROUP COMPANIES:(1)
Binks Manufacturing Steel Technologies, Inc.
Lindberg Corporation Varlen Corporation
Reliance Steel & Aluminum Co. Weirton Steel Corporation
Ryerson Tull, Inc. Wynn's International, Inc.
SPS Technologies Inc.
(1) Control Steel & Wire Company was dropped from the Peer Group due to lack of
trade/pricing information.
(2) Reliance Steel & Aluminum Common Stock was first publicly traded on 9/16/94.
(3) Ryerson Tull, Inc. Common Stock was first publicly traded second quarter of
1996.
11
<PAGE> 15
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of its Audit Committee, the Board of Directors has,
subject to ratification by the Stockholders, appointed Arthur Andersen & Co. to
examine the consolidated financial statements and other records of the Company
for the fiscal year ending December 31, 1998, and the management will present to
the Annual Meeting a proposal that such appointment be ratified.
During 1997, Arthur Andersen & Co. examined the financial statements of the
Company and its Subsidiaries, including those included in the Annual Report to
Stockholders, and consulted on annual and quarterly reports filed with the
Securities and Exchange Commission and others.
Each year the Audit Committee reviews and approves in advance the scope of
the annual audit by the Company's independent accountant. The Audit Committee
also approves all non-audit professional services including the examination of
the financial statements of the Employee Retirement Plan, Profit Sharing Plan
and review of tax returns. The Audit Committee approved the non-audit services
and considered the possible effect on the accountant's independence at its
October meeting prior to those services being performed.
As at past years' Stockholders meeting, representatives of Arthur Andersen
& Co. are expected to be present at the Annual Meeting of Stockholders with the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions from Stockholders. The favorable
vote of the holders of a majority of the shares of common stock represented in
person or by Proxy at the meeting will be required for such ratification. If a
negative vote results, the matter will be referred to the Audit Committee for a
recommendation to the Board of Directors.
OTHER MATTERS
The Management does not know of any matters to be presented to the meeting
other than the matters set forth in the Notice of the Meeting. However, if any
other matters come before the meeting, it is intended that the holders of the
Proxies will vote thereon in their discretion.
STOCKHOLDER PROPOSALS
Proposals by Stockholders to be considered for inclusion in the Company's
Proxy Material for the next Annual Meeting of Stockholders must be received by
the Company at its principal executive office not later than December 18, 1998.
JERRY M. AUFOX
Secretary
March 16, 1998
12
<PAGE> 16
This Proxy is Solicited on Behalf of the Board of Directors
A.M. CASTLE & CO.
Annual Meeting of Stockholders on April 23, 1998
P
R
O
X
Y The undersigned hereby constitutes and appoints Michael Simpson and
John P. Keller and each of them, his true and lawful agents and proxies
with full power of substitution in each, to represent the undersigned
at the Annual Meeting of Stockholders of A.M. Castle & Co. to be held
at the office of the Company, 3400 North Wolf Road, Franklin Park,
Illinois on Thursday April 23, 1998, and at any adjournments thereof,
on all matters coming before said meeting.
Election of Directors, Nominees:
Daniel T. Carroll, Edward F. Culliton, William K. Hall, Robert S.
Hamada, Patrick J. Herbert, III, John P. Keller, John W. McCarter, Jr.,
John McCartney, Richard G. Monk, John W. Puth, and Michael Simpson.
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to
vote in accordance with the Board of Directors' recommendations. The
Proxy Committee cannot vote shares unless you sign and return this
card.
_____________________________
| |
| SEE REVERSE SIDE |
|_____________________________|
<PAGE> 17
<TABLE>
<S><C>
___
| | Please mark your |
| X | votes as in this |
|___| example. |______
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR Election of Directors,
and FOR Proposal 2.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of _____ _____ 2. Approval of Arthur Andersen & Co. _____ _____ _____
Directors | | | | As Independent Accountants for | | | | | |
|_____| |_____| the year 1998. |_____| |_____| |_____|
_____
Change of | |
FOR, except vote withheld from the following nominee(s): Address |_____|
________________________________________________________
_________________________________ Date_________________________,1997 __________________________________ Date _________________, 1997
SIGNATURE SIGNATURE IS HELD JOINTLY
(NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. EXECUTORS, ADMINISTRATORS, ATTORNEYS, GUARDIANS, TRUSTEES, ETC. SHOULD SO
INDICATE WHEN SIGNING, GIVING FULL TITLE AS SUCH. IF SIGNER IS A CORPORATION, EXECUTE IN FULL CORPORATE NAME BY AUTHORIZED
OFFICER IF SHARES ARE HELD IN THE NAME OF TWO OR MORE PERSONS ALL SHOULD SIGN.)
</TABLE>
