<PAGE> 1
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Information Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5(d)(2))
[X] Definitive Information Statement
</TABLE>
AMERISTEEL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant As Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) 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
[AMERISTEEL LOGO]
AMERISTEEL CORPORATION
5100 W. Lemon Street, Suite 312
Tampa, Florida 33609
INFORMATION STATEMENT
Written Consent of Stockholders
In Lieu of an
Annual Meeting of Stockholders
To the Stockholders of July 29, 1998
AmeriSteel Corporation:
This Information Statement is furnished pursuant to Regulation 14C of
the Securities Exchange Act of 1934, as amended, to provide information
regarding certain action to be taken by written consent by the holders of a
majority of the outstanding shares of Class B common stock (the "Class B Common
Stock") of AmeriSteel Corporation ("AmeriSteel" or the "Company"). Certain
stockholders of the Company, owning approximately 94.7% of the outstanding Class
B Common Stock, intend to act by written consent in lieu of an Annual Meeting of
Stockholders to elect eight directors, representing all of the members of the
Board of Directors of the Company. It is anticipated that the written consent is
to be submitted to the Company and become effective on or about August 20, 1998.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND TO
THE COMPANY A PROXY.
At the close of business on July 22, 1998, there were 10,561,939 shares
of Class B Common Stock outstanding, each of which is entitled to two votes.
There are no shares of Class A Common Stock outstanding, each of which is
entitled to one vote.
The approximate date on which this Information Statement is to be
mailed to stockholders is July 29, 1998.
1
<PAGE> 3
SECURITY OWNERSHIP
The following table sets forth, as of June 30, 1998, the number of
shares of the Company's Class B Common Stock beneficially owned by (i) each
person known to the Company as having beneficial ownership of more than 5% of
the Company's Class B Common Stock together with such person's address if other
than the Company's address, (ii) each of its directors and nominees to become a
director, (iii) each named executive officer (as defined herein under "Executive
Compensation" and pursuant to Securities and Exchange Commission rules) and (iv)
all directors and executive officers as a group:
<TABLE>
<CAPTION>
Name of Beneficial Owner Amount and Nature of
or Number in Group Beneficial Ownership (1) Percent of Class
-------------------------- -------------------------- ------------------
<S> <C> <C>
Kyoei Steel Ltd.(2)............................ 9,000,000 85.2%
Phillip E. Casey (3)........................... 1,005,792 9.5%
Tom J. Landa................................... 14,660 *
J. Donald Haney................................ 6,676 *
Shuzo Hikita................................... 0 -
Koichi Takashima............................... 500 *
Akihiko Takashima.............................. 0 -
Hideichiro Takashima........................... 300 *
Ryutaro Yoshioka............................... 0 -
Dennie Andrew.................................. 2,500 *
James S. Rogers, II............................ 2,500 *
All Directors and Executive Officers as
a Group (13 persons) .......................... 1,042,095 9.9%
</TABLE>
*Less than one percent
(1) Beneficial ownership of shares, as determined in accordance
with applicable Securities and Exchange Commission rules,
includes shares as to which a person has or shares voting
power and/or investment power. Except as otherwise indicated,
all shares are held of record with sole voting and investment
power. For purposes of this table, a person or group of
persons is deemed to have "beneficial ownership" of any shares
as of a given date which such person has the right to acquire
within 60 days after such date.
(2) All shares shown are directly owned by FLS Holdings, Inc., a
wholly owned subsidiary of Kyoei Steel Ltd. ("Kyoei"), Kyoei's
address is 18F Aqua Dojima, West Building, 1-4-16 Dojimahama,
Kita-Ku, Osaka 530, Japan.
(3) Includes 129,408 shares of Class B Common Stock, that have
been gifted by Mr. Casey pursuant to Transfer and Proxy
Agreements between Mr. Casey and certain donees. The gifted
shares are subject to certain restrictions set forth in the
agreements. Under the agreements, Mr. Casey is appointed as
attorney-in-fact with full power to vote the shares in
accordance with the decision of the holders of a majority of
the shares held by the donee stockholders and Mr. Casey. As a
result, Mr. Casey has the right to vote all 129,408 shares.
Mr. Casey's address is 5100 W. Lemon Street, Suite 312, Tampa,
Florida 33609.
2
<PAGE> 4
ELECTION OF DIRECTORS
Directors are elected for one year terms and until their successors are
duly elected and qualified. The Company's By-Laws provide that directors shall
be elected by a plurality of the votes cast. As of July 29, 1998 there are eight
members on the Company's Board of Directors.
Stockholders owning approximately 94.7% of the outstanding shares of
Class B Common Stock (the "Majority Stockholders") intend by written consent in
lieu of an Annual Meeting of Stockholders of the Company to elect the following
eight nominees to act as directors of the Company.
Koichi Takashima
Akihiko Takashima
Phillip E. Casey
Tom J. Landa
J. Donald Haney
Shuzo Hikita
Hideichiro Takashima
Ryutaro Yoshioka
The proposed nominees for election as directors are willing to be
reelected as directors. If as a result of circumstances not now known or
foreseen, a nominee shall be unavailable or unwilling to serve as a director,
the Majority Stockholders may elect such other person as they deem advisable.
The following table sets forth certain information regarding the
nominees for directors:
<TABLE>
<CAPTION>
NAME AGE YEARS AS A DIRECTOR
---- --- -------------------
<S> <C> <C>
Koichi Takashima ................... 75 6
Akihiko Takashima................... 61 6
Phillip E. Casey.................... 55 4
Tom J. Landa ....................... 46 1
J. Donald Haney..................... 62 10
Shuzo Hikita........................ 55 2
Hideichiro Takashima................ 40 3
Ryutaro Yoshioka.................... 59 3
</TABLE>
KOICHI TAKASHIMA has been Chairman of Kyoei for many years.
AKIHIKO TAKASHIMA has been Director of Kyoei for 26 years.
3
<PAGE> 5
PHILLIP E. CASEY has been Chairman of the Board, Chief Executive
Officer and a director since June 1994. Prior to joining the Company, Mr. Casey
held various positions with Birmingham Steel, including Chief Financial Officer,
Executive Vice President and Vice Chairman of the Board from 1985 until 1994.
TOM J. LANDA has been Chief Financial Officer, Vice President and
Secretary of the Company since April 1995. Mr. Landa was elected a director of
AmeriSteel in March 1997. Before joining the Company, Mr. Landa spent over 19
years in various financial management positions with Exxon Corporation and its
affiliates worldwide.
J. DONALD HANEY has been Group Vice President, Fabricated Steel Group
since 1979 and a director of the Company since 1988. Mr. Haney joined the
Company in 1958 and has held various management and sales positions with the
Company. Mr. Haney is principally responsible for the Company's reinforcing
steel fabricating group.
SHUZO HIKITA has been Vice President, Engineering and Technology since
September 1996 and a director of the Company since September 1996. Prior to
September 1996, Mr. Hikita held several management positions with Kyoei
including Division Manager of Kyoei's Hirakata and Osaka mills from 1994 to
1996. From 1992 to 1993, Mr. Hikita was a Vice President with Auburn Steel.
HIDEICHIRO TAKASHIMA has been a director of the Company since 1995.
Since June 1995, Mr. Takashima has been President and Chief Operating Officer of
Kyoei. From June 1992 until June 1995, Mr. Takashima held other senior
management positions with Kyoei.
RYUTARO YOSHIOKA has been a director of the Company since 1995. Mr.
Yoshioka has been Managing Director of Kyoei since July 1, 1994. Prior to such
time, Mr. Yoshioka served as an executive of Bank of Tokyo for more than 5
years.
Koichi Takashima and Akihiko Takashima are brothers. Hideichiro
Takashima is the son of Koichi Takashima. None of the other directors are
related to one another.
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
The Board of Directors held two meetings during fiscal 1998. All
incumbent directors except Messrs. Koichi Takashima, Akihiko Takashima, and
Hideichiro Takashima attended at least 75% of all meetings of the Board.
The Board of Directors has a standing Executive Compensation Committee
and Audit Committee.
The Executive Compensation Committee members are Mr. Koichi Takashima,
Mr. Akihiko Takashima and Mr. Ryutaro Yoshioka and included Mr. Takeshi Fujimura
until his retirement on June 25, 1997. No meetings of the Executive Compensation
Committee were held during fiscal 1998 although the committee did act by written
consent. The Compensation Committee's principal
4
<PAGE> 6
responsibility is to provide recommendations to the Board regarding compensation
for executive officers of the Company.
The Audit Committee members are Mr.Hideichiro Takashima and Mr. Ryutaro
Yoshioka and included Mr. Takeshi Fujimura until his retirement on June 25,
1997. No meetings of the Audit Committee were held during fiscal 1998. This
committee provides the opportunity for direct communication with the independent
certified public accountants and the Board. The Audit Committee communicates
with the certified public accountants periodically to review their effectiveness
during the annual audit program and to discuss the Company's internal control
policies and procedures.
The Board of Directors does not have a Nominating Committee because the
Board as a whole functions in this capacity.
COMPENSATION OF DIRECTORS
No director receives separate compensation for services rendered as a
director. Expenses incurred by directors who are employees of the Company to
attend meetings of the Board of Directors or committees thereof are covered by
the Company. The Company does not reimburse expenses incurred by non-employee
directors to attend board meetings.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16 of the Securities Exchange Act of 1934, as amended,
certain officers, directors and stockholders of the Company are required to file
reports of stock ownership and changes therein with the Securities and Exchange
Commission. Based solely upon its reveiw of such forms, for each of directors or
executive officers Koichi Takashima, Akihiko Takashima, Hideichiro Takashima,
Ryutaro Yoshioka and James S. Rogers, II, a Form 3 was not filed to report their
initial beneficial ownership upon becoming a director or executive officer; for
each of executive officers and/or directors Tom J. Landa, J. Donald Haney,
Dennie Andrews, J. Neal McCullohs, Robert P. Muhlhan and James S. Rogers, II, a
Form 5 was not filed to report the grant of options and a Form 5 was not filed
to report the grant of shares of restricted stock; for executive officer
Hiroyoshi Tsuchiya a Form 5 was not filed to report the grant of shares of
restricted stock; for executive officer and director Philip E. Casey a Form 5
was not filed to report gifts of shares of Class B Common Stock to various
persons made by Mr. Casey; and for each of directors Koichi Takashima and
Hideichiro Takashima a Form 5 was not filed to report the receipt of shares of
Class B Common Stock received as a gift. The Company is in the process of
preparing and filing the above referenced reports that are required to be filed
under Section 16 of the Securities Exchange Act of 1934.
5
<PAGE> 7
EXECUTIVE COMPENSATION COMMITTEE REPORT
This report is submitted by the Executive Compensation Committee with
respect to the compensation policies applicable to the Company's executive
officers for fiscal 1998. The Executive Compensation Committee is represented by
non-employee directors Mr. Koichi Takashima, Mr. Akihiko Takashima, and Mr.
Ryutaro Yoshioka and included Mr. Takeshi Fujimura until has retirement on June
25, 1997.
GENERAL POLICIES
The Company's executive compensation system is intended to attract,
retain, and motivate high quality executive officers who can enhance stockholder
value, and to support a performance-oriented environment that rewards
achievement of the Company's planned financial goals. The Committee believes
that linking executive compensation to corporate performance, through an
emphasis on performance bonuses, results in better alignment of compensation
with corporate goals and stockholder interests. The Committee also believes that
through stock ownership and stock options it has created a program that promotes
stockholder value creation in the long term. In evaluating the performance of
executive officers, the Committee's approach is to consult with the Chief
Executive Officer, except when evaluating his performance, in which case the
Committee's approach is to meet and deliberate independently without the Chief
Executive Officer being present.
The Company compensates its executive officers through three principal
types of compensation: annual base salary, annual incentive bonuses, and
long-term incentive awards through stock options and restricted stock. The
Committee's policies regarding the types of compensation are discussed below.
BASE SALARY
The annual base salary of each of AmeriSteel's executive officers is
based upon the scope of his or her responsibility and accountability within the
Company, as well as performance and experience criteria. In setting the level of
base salary for executive officers, other than the Chief Executive Officer, the
Committee's approach is to review the Chief Executive Officer's recommendations
together with other information from independent compensation consultants. The
Chief Executive Officer's salary is based primarily upon the terms of his five
year employment agreement dated June 1, 1994.
ANNUAL INCENTIVE COMPENSATION
Each year the Executive Compensation Committee recommends to the Board
of Directors cash bonuses primarily for a majority of the executive officers of
the Company. The awards are determined in accordance with AmeriSteel's Strategic
Value Added Executive Short-Term Incentive Plan (the "SVA Plan"), the purpose of
which is to award executives who substantially contribute in reaching specific
annual performance goals.
The SVA Plan is administered by the Executive Compensation Committee,
none of whom may participate in the awards. The Executive Compensation Committee
may appoint an officer of
6
<PAGE> 8
the Company to assist in the administration of the SVA Plan and it may grant
authority to such person to execute documents on its behalf.
The SVA Plan is designed to award for the attainment of a minimum
return on average capital employed for the year as determined at the beginning
of the fiscal year. Upon achievement, payments are made within two months of the
end of the fiscal year, provided, however, that all covenants governing the
Company's indebtedness for borrowed money are met prior to and after giving
effect to the payments. An award may also be paid in shares of the Company's
Common Stock if so determined by the Chief Executive Officer and approved by the
Board of Directors at any time prior to the payment of the award or in any
combination of cash and shares.
The Company has also implemented a performance based plan to award
virtually all other individuals who do not participate in the SVA Plan. The
Partners in Performance Plan ("PIP") ties a portion of an employee's pay to
established minimum performance requirements relative to the responsibilities of
their position. Generally, employees at the steel minimills have performance
criteria relating to tons of steel melted and/or tons of steel rolled, employees
associated with the fabricating operation have performance criteria relating to
manufacturing costs, employees at the rail products plants have performance
criteria relating to tons of finished steel product produced, employees
associated with the mills sales have performance criteria relating to tons
shipped, and general and administrative employees have performance criteria
relating to a combination of the above criteria. PIP awards are paid in cash in
the month following month of attainment except production employees at the steel
minimills and rail products operations, whose awards are paid the week following
the week of attainment.
LONG TERM INCENTIVE COMPENSATION
The Executive Compensation Committee believes that providing key
employees, including executive officers, with the opportunity to acquire stock
ownership over time is the most desirable way to align their interest with those
of the Company's stockholders. Stock options, awarded under the Company's 1996
Equity Ownership Plan (the "EOP"), provide an incentive that focuses the
attention of executive officers and other employees on managing the Company from
the perspective of an owner with an equity interest in the business. In
addition, stock options are a key part of the Company's program for motivating
and rewarding managers over the long term.
The Executive Compensation Committee, upon recommendation by the Chief
Executive Officer, determines and makes final decisions regarding stock options,
restricted stock and other awards under the EOP. Such factors as performance and
responsibilities of individual managers and the management team as a whole in
addition to general industry practices play an integral role in the
determination of the number of options awarded to a particular senior executive
or employee. Accordingly, the Company has granted stock options to a significant
number of employees in various positions to afford them an opportunity to
participate in the Company's future growth, particularly in the creation of
value for all stockholders. In the fiscal year ended March 31, 1998, the Company
granted stock options covering 72,750 shares to various employees, of which
options covering 9,700 shares were granted to executive officers. In June 1998,
the Company granted an additional 40,550 stock options to various employees none
of which were granted to executive officers. The options vest in one-third
increments each year beginning approximately two years after the grant date. In
7
<PAGE> 9
September 1997, the Company granted 40,000 restricted shares to various
employees of which 10,000 shares were granted to executive officers.
In September 1995, the Board of Directors approved, upon recommendation
by the Executive Compensation Committee, a one time Stock Purchase/Option Plan
identified as the Shares in Success Plan (the "SIS Plan"). The SIS Plan was made
available to essentially all employees of the Company. Employees who purchased
stock were awarded stock options equal to six times the number of shares
purchased. A total of 37,689 shares were sold under the SIS Plan at a purchase
price of $10.63 per share, with 30,394 of these shares remaining outstanding as
of March 31, 1998. The options were granted at fair value at the date of the
grant, as determined by an independent appraisal as of the end of the previous
fiscal year-end. A total of 226,134 options were granted under the SIS Plan. No
options remain available for future grant under this plan. The issued options
become one-third vested two years from the grant date, another one-third vested
three years from the grant date and the remaining balance vested four years from
the grant date. Options may be exercised for up to 10 years from the grant date.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL 1998
Mr. Casey's salary is set annually by the Executive Compensation
Committee within the approved salary range and in accordance with the terms and
conditions of his employment agreement. Mr. Casey's salary for fiscal 1998 was
$255,000 which was unchanged from fiscal 1997. In fiscal 1998, Mr. Casey was
awarded a bonus of $255,000 under the SVA Plan due to the attainment of certain
performance targets. Mr. Casey did not participate in the stock options awards
made under the EOP during the fiscal year due to his ownership position in the
Company.
CONCLUSION
The Executive Compensation Committee believes that current total
compensation arrangements are reasonable and competitive. The Executive
Compensation Committee believes fiscal 1998 compensation for executive officers
is consistent with the current compensation philosophy and reflects corporate
performance. The Executive Compensation Committee will continue to monitor and
administer compensation programs for executive officers of the Company.
EXECUTIVE COMPENSATION COMMITTEE
Koichi Takashima - Committee Chairman
Akihiko Takashima
Ryutaro Yoshioka
8
<PAGE> 10
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the
Company's Common Stock with the cumulative total return of the companies in the
Standard & Poor's 500 Index and S&P 500 Iron and Steel Index. Cumulative total
return for each of the periods shown in the Performance Graph is measured
assuming an initial investment of $100 on July 29, 1996, the date the Company's
Class B Common Stock was registered under Section 12 of the Securities and
Exchange Act, and the reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
Measurement Period IRON & S&P 500
(Fiscal Year Covered) STEEL-500 INDEX AMERISTEEL
<S> <C> <C> <C>
June 29, 1996 100 100 100
March 1997 121.70 115.37 108.00
March 1998 146.04 170.75 160.00
</TABLE>
9
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of the end of fiscal 1998, the members of the Company's Executive
Compensation Committee were Messrs. Koichi Takashima, Hideichiro Takashima and
Ryutaro Yoshioka; Akihiko Takashima, a current director of the Company, and
Takeshi Fujimura, a former director, were members of the committee during fiscal
1998. Mr. Fujimura remains as a special advisor to the Chairman of the Board of
the Company. No other member of the Executive Compensation Committee has at any
time been an officer or employee of the Company.
Mr. Fujimura was advisor to the President of Kyoei until his retirement
in June 1997, while the other members of the committee and Akihiko Takashima
continue to be executive officers and/or directors of Kyoei.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into technical assistance arrangements with
Kyoei, which owns FLS Holdings, Inc. Under these arrangements the Company
reimburses Kyoei for the personnel costs of its consulting engineers and certain
travel and other expenses. Payments made by the Company under these arrangements
have been approximately $408,000, $2,000 and $49,000 in fiscal 1996, 1997 and
1998, respectively.
10
<PAGE> 12
EXECUTIVE COMPENSATION
The tables and descriptive information set forth below are being
furnished with respect to those persons who were the Company's Chief Executive
Officer and its four most highly compensated executive officers, other than the
Chief Executive Officer, whose salary and bonus exceeded $100,000 for the most
recent fiscal year (the "Named Executive Officers"). Tables have been omitted
where no compensation was awarded to, earned by or paid to any of the named
executives required to be reported in any fiscal year covered by that table.
SUMMARY COMPENSATION TABLE
The following table provides information concerning the annual
compensation of each of the Named Executive Officers of the Company for services
rendered to the Company in each of the Company's last three fiscal years.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- ---------------------------
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
STOCK OPTIONS COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARD(S)(1) (#)(1) SATION(2)
--------------------------- ---- ------ ----- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Phillip E. Casey..................... 1998 $255,000 $255,000 $ -- -- $4,750
Chairman of the Board 1997 255,000 65,637 -- -- 3,278
and Chief Executive Officer 1996 255,000 80,453 -- -- 4,617
J. Donald Haney...................... 1998 216,684 219,120 33,750 2,700 4,334
Group Vice President 1997 210,954 53,893 -- 3,500 3,032
Fabricated Reinforcing Steel 1996 196,974 64,445 -- 1,368 2,620
Tom J. Landa......................... 1998 176,886 179,016 33,750 2,500 3,537
Vice President and 1997 170,217 43,886 -- -- 3,647
Chief Financial Officer 1996 160,389 153,019(3) 150,000 12,960 --
Dennie Andrew ....................... 1998 165,960 166,956 33,750 2,500 3,319
Vice President, Steel 1997 84,588 26,227 -- 3,000 2,939
Mill Operations(4)
James S. Rogers, II.................. 1998 129,514 129,514 33,750 2,000 2,590
Vice President, Human
Resources(5)
</TABLE>
(1) All references are to Class B Common Stock. The shares of restricted
stock shown are subject to a substantial risk of forfeiture which for
Mr. Casey lapses at the rate of 20% per year beginning as of June 1,
1995 and for Mr. Landa lapses at a rate of 33 % per year beginning as
of April 1, 1997. At the end of fiscal 1998, the aggregate restricted
stock holdings and value of such holdings were for Mr. Casey 300,000
shares and $6,000,000, respectively, and for Mr. Landa 10,500 shares
and $210,000, respectively. Dividends, if declared and paid on the
Common Stock generally, are payable on such restricted shares at the
same rate as paid to all stockholders. In fiscal 1998, Messrs. Haney,
Landa, Andrew and Rogers were granted 2,500 shares of restricted stock
each subject to a substantial risk of forfeiture which lapses at the
rate of 33 1/3% per year beginning as of October 1, 1999.
(2) These amounts consist of Company matching contributions made pursuant
to the Company's Savings Plan.
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<PAGE> 13
(3) Includes a $100,000 signing bonus pursuant to Mr. Landa's employment
offer in April 1995.
(4) Mr. Andrew was promoted to an executive officer position in October
1997. He was not employed by the Company in the 1996 fiscal year.
(5) Mr. Rogers was hired as an executive officer in fiscal 1998.
OPTIONS GRANTS TABLE
The following table shows information concerning stock options granted
during fiscal 1998 for the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
-------------------------- ----------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------- ---------- ------------ ----------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Philip E. Casey -- -- -- -- -- --
J. Donald Haney 2,700 3.71 13.50 6/5/07 21,923 58,092
Tom J. Landa 2,500 3.44 13.50 6/5/07 22,225 53,789
Dennie Andrew 2,500 3.44 13.50 6/5/07 21,225 53,789
James S. Rogers, II 2,000 2.75 13.50 6/5/07 16,980 43,030
</TABLE>
The options were granted under the Company's Equity Ownership Plan and
vest over three years beginning April 1, 1999 at an exercise price of $13.50 per
share.
OPTION EXERCISES AND YEAR-END VALUE TABLE
No stock options were exercised by any of the Company's executive
officers during fiscal 1998. The following table shows information concerning
stock option values as of the end of fiscal 1998 for each Named Executive
Officer.
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- --------------------------------------- ----------------------------- ------------------------------
<S> <C> <C>
Phillip E. Casey....................... 0/0 0/0
J. Donald Haney........................ 456/7,112 3,420/50,640
Tom J. Landa........................... 4,320/11,140 32,400/81,050
Dennie Andrew.......................... 0/5,500 0/38,750
James S. Rogers, II.................... 0/2,000 0/13,000
</TABLE>
(1) The latest appraisal of the Company's common stock, made as of March
31, 1998, sets forth a fair market value per share of $20.00.
12
<PAGE> 14
PENSION BENEFIT
The table below sets forth the estimated annual benefits, payable as a
single life annuity beginning at retirement at age 65, at various remuneration
levels and for representative years of service at normal retirement date, under
the Company's tax qualified noncontributory defined benefit pension plan (the
"Retirement Plan"). Also, set forth below this section is information about the
estimated annual benefits (also reported as a single life annuity beginning at
retirement at age 65) payable under the Company's Supplemental Retirement Plan.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------------------------------
FINAL AVERAGE COMPENSATION 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- -------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000............................... $26,887 $33,609 $40,331 $47,053 $52,053
150,000................................ 41,887 52,359 62,831 73,303 80,803
200,000................................ 56,887 71,109 85,331 99,553 109,553
</TABLE>
Under the Retirement Plan, the compensation taken into account
generally includes all salary, bonuses and other taxable compensation, subject
to an annual compensation limit, which currently is $160,000. As of March 31,
1998, the final average compensation and years of credited service for the Named
Executive Officers for purposes of the Retirement Plan were as follows: $158,769
and four years for Phillip E. Casey; $198,896 for benefits earned through
September 30, 1994 and $151,428 for benefits earned subsequently and 40 years
for J. Donald Haney; $151,667 and three years for Tom J. Landa; $152,895 and two
years for Dennie Andrew; and $160,000 and 17 years for James S. Rogers, II. The
benefits under the Retirement Plan are not subject to any deduction for Social
Security or other offset amounts.
SUPPLEMENTAL RETIREMENT PLAN
The Company maintains a nonqualified, unfunded Supplemental Retirement
Plan (the "SRP"), which provides certain officers defined pension benefits in
addition to those provided under the Company's other plans. The SRP provides an
annual retirement benefit equal to the greater of (i) 50% of final average
compensation without regard to the $160,000 limit, and (ii) 2.4% of final
average compensation multiplied by years of service (up to 25), plus 1% of final
average compensation multiplied by years of service in excess of 25 (up to 10),
less (in either case) amounts to which the participant is entitled under other
retirement plans of the Company and prior employers and under Social Security.
As of March 31, 1998 the Company has accrued approximately $74,760 in
supplemental retirement benefits for the then one remaining active employee (J.
Donald Haney) covered by the SRP. No other Named Executive Officer is covered by
the SRP.
In connection with the acquisition of FLS Holdings Inc. by Kyoei, the
officers covered by the SRP have all waived certain rights, provided that if
such officers are terminated without cause (as defined in the mutually effective
severance agreements entered into with such officers), resign for good reason
(as defined in the mutually effective severance agreements) or die, retire or
become disabled, then such officers will be entitled to receive the amounts they
would have received had such officers not waived such rights.
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EMPLOYMENT AGREEMENTS
Effective June 1, 1994, the Company entered into a five-year employment
agreement with Phillip E. Casey to serve as the Company's Chairman of the Board
of Directors and Chief Executive Officer. The Agreement provides for a one time
signing bonus of $500,000, annual base salary of $300,000, a grant of 750,000
shares of Class B Common Stock (valued at $4.5 million) to vest ratably over
five years, a tax bonus in the amount of $1,946,000 with respect to such shares,
and other benefits commensurate with his position. Mr. Casey has placed 15% of
his annual salary at risk as part of the Company's annual incentive program.
Pursuant to the agreement, the Company also granted to Mr. Casey an option to
pursuant an additional 250,000 shares of Class B Common Stock for $1.5 million,
which Mr. Casey exercised. The agreement provides for certain termination
benefits and places restrictions on the disposition of the Company's Class B
Common Stock acquired by Mr. Casey.
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
The firm of Arthur Andersen LLP has been the Company's independent
certified public accountants since fiscal 1995. The Company anticipates
retaining Arthur Andersen LLP as the Company's independent certified public
accountants for the year ending March 31, 1999. Stockholder approval of the
selection of the Company's independent certified public accountants is not
required by the Company's By-Laws or otherwise.
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