<PAGE> 1
LACLEDE STEEL COMPANY
ONE METROPOLITAN SQUARE
ST. LOUIS, MISSOURI 63102
NOTICE OF ANNUAL MEETING
June 22, 1994
To the Stockholders:
The annual meeting of stockholders of LACLEDE STEEL COMPANY (the "Company")
will be held at the Metropolitan Square Building, 40th Floor, 211 North
Broadway, in the City of St. Louis, State of Missouri, on Wednesday, August 3,
1994, at 9:30 a.m., Central Daylight Time, for the purpose of considering and
acting upon:
(1) The election of nine (9) directors; and
(2) Any other matters which may properly come before the meeting or any
adjournment thereof.
MICHAEL H. LANE
Secretary
YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE,
WHETHER YOU PLAN TO ATTEND THE MEETING IN PERSON OR NOT. YOU MAY REVOKE YOUR
PROXY AT ANY TIME PRIOR TO THE MEETING, OR IF YOU DO ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AT THAT TIME, IF YOU WISH.
<PAGE> 2
LACLEDE STEEL COMPANY
ONE METROPOLITAN SQUARE
ST. LOUIS, MISSOURI 63102
PROXY STATEMENT
To the Stockholders of
LACLEDE STEEL COMPANY
The accompanying proxy is solicited by the Board of Directors of Laclede
Steel Company (the "Company") for use at the annual meeting of stockholders of
the Company (the "Meeting") to be held at the Metropolitan Square Building, 40th
Floor, 211 North Broadway, St. Louis, Missouri 63102, on Wednesday, August 3,
1994, at 9:30 a.m., Central Daylight Time, and at any adjournment or
adjournments thereof. This proxy statement and accompanying proxy are first
being sent or given to stockholders of the Company on or about June 22, 1994.
VOTING RIGHTS AND PROXIES
The Board of Directors has fixed the close of business on June 13, 1994 as
the record date for determination of stockholders entitled to notice of and to
vote at the Meeting. As of the close of business on said record date, the only
stock of the Company outstanding consisted of 4,056,140 shares of Common Stock,
$13.33 par value. With respect to the election of directors at the Meeting, each
stockholder will have cumulative voting rights. That is, each stockholder will
be entitled to as many votes as equal the number of shares held by him
multiplied by the number of directors to be elected. Thus, since nine (9)
directors are to be elected, each stockholder may cast nine (9) votes for each
share held by him, and he may cast all such votes for one nominee or distribute
them among any two or more nominees as the stockholder sees fit. Unless contrary
instructions are given on the proxy card, if a stockholder votes "FOR" all
nominees for director, the proxies will allocate the stockholder's votes, in
their discretion, among all nominees; and if a stockholder withholds authority
to vote for any nominees for director, the proxies will allocate the
stockholder's votes, in their discretion, among the nominees except those for
whom the stockholder withholds authority to vote. With respect to matters other
than the election of directors brought before the Meeting and requiring a vote
of the stockholders, each stockholder will be entitled to one vote for each
share held; there will be no cumulative voting except in the election of
directors.
A majority of the outstanding shares entitled to vote at this meeting and
represented in person or by proxy will constitute a quorum. With regard to the
election of directors, since nine directors are to be elected, the nine nominees
receiving the largest number of affirmative votes will be deemed elected;
therefore, shares represented by proxies which are marked "withhold authority"
or "abstain" will have no effect. With regard to any other proposal submitted to
a vote, approval requires the affirmative vote of a majority of the shares
entitled to vote and represented in person or by proxy at this meeting. Shares
represented by proxies that are
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marked "withhold authority" or "abstain" with respect to any matter will be
counted as shares present for purposes of determining the presence of a quorum;
such shares will also be treated as shares present and entitled to vote, which
will have the same effect as a vote against such matter. Proxies relating to
"street name" shares which are not voted by brokers on one or more matters will
not be treated as shares present for purposes of determining the presence of a
quorum unless they are voted by the broker on at least one matter. Such
non-voted shares will be treated as shares represented at the meeting as to any
matter for which a non-vote is indicated on the broker's proxy.
Any stockholder executing the proxy hereby solicited has the power to
revoke the same at any time prior to the exercise of the authority conferred
thereby. Revocation may be made effective by giving written notice to the
Secretary of the Company at any time before the exercise of the proxy, by
signing and delivering to the Secretary prior to the Meeting a later-dated
proxy, or by attending the Meeting and voting the shares of stock in person.
Attendance at the Meeting will not in and of itself revoke a previously signed
and returned proxy. Unless revoked, each proxy will be voted in the manner
indicated thereon.
The expense of proxy solicitation will be borne by the Company. In addition
to the use of the mail, proxies may be solicited by telephone, telecopy,
telegram or in person.
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<PAGE> 4
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
The following information is furnished with respect to each person known by
management of the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock of the Company, each director of the Company, each
executive officer of the Company and all directors and executive officers as a
group. The information is furnished as of May 20, 1994.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
------------------------------------------------------------------ ----------
<S> <C> <C>
Ivaco Inc.(2).............................. 2,243,650(3) 52.41%(4)
Place Mercantile
770 rue Sherbrooke ouest
Montreal, Quebec, Canada H3A 1G1
Ryback Management Corporation.............. 322,000(5) 7.94%
Lindner Fund, Inc.
7711 Carondelet Avenue
P.O. Box 16900
St. Louis, Missouri 63105
FMR Corporation............................ 274,100(6) 6.76%
82 Devonshire Street
Boston, Massachusetts 02109
Donald F. Gunning.......................... 150 *
A. William Hager........................... 500 *
J. W. Hebenstreit.......................... 10,000 *
E. Lawrence Keyes, Jr...................... 150 *
Michael H. Lane............................ 10,600 *
John B. McKinney........................... 35,000 *
H. Bruce Nethington........................ 1,000 *
Robert H. Quenon........................... 300 *
Lawrence K. Roos........................... 3,000 *
Larry J. Schnurbusch....................... 7,730 *
Edwin J. Spiegel, Jr....................... 350 *
Lester Varn, Jr............................ 300 *
George H. Walker III....................... 2,000(7) *
All Directors and Executive Officers
as a Group (13 persons).................. 71,080 1.75%
</TABLE>
- - - ---------------
* Represents less than one percent of the outstanding Common Stock of the
Company.
(1) Beneficial ownership of shares, as determined in accordance with applicable
Securities and Exchange Commission rules, includes shares as to which a
person directly or indirectly has or shares voting power and/or investment
power. Unless otherwise indicated, each holder has sole voting and
investment power over the shares reported.
(2) Under a Stock Purchase Agreement between Ivaco Inc. and the Company dated
October 11, 1983, Ivaco Inc. has an option to purchase an aggregate of
225,000 shares at $13.67 per share (the "Stock
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Option"). Pursuant to an agreement between Ivaco Inc. and the Company dated
September 28, 1993, the Stock Option was extended until October 11, 1994, in
consideration for an option granted by Ivaco Inc. to the Company for the
availability of semi-finished steel. Under a Stock Purchase Agreement dated
October 5, 1980 between Ivaco Inc. and the Company, Ivaco Inc. has the right
to maintain its percentage ownership of Common Stock of the Company if the
Company should issue any shares of Common Stock in the future. In an
agreement reached in 1991 (the "1991 Agreement"), the Company and Ivaco Inc.
agreed that the Company would take the necessary action to cause four
designees of Ivaco Inc. to be seated on the Company's nine-member Board of
Directors.
(3) Based upon Amendments No. 14 and 15 to Schedule 13D dated January 22, 1993
and September 28, 1993 filed by Ivaco Inc. The stated number of shares
includes 225,000 shares of Common Stock subject to the Stock Option which is
exercisable within 60 days. Not including such shares, Ivaco Inc. owns
2,018,650 shares, or 49.77%, of the Company's Common Stock.
(4) Calculated relative to total outstanding shares of 4,281,140, which includes
the 225,000 shares subject to the Stock Option.
(5) Based upon a Schedule 13G dated February 4, 1994, Ryback Management
Corporation, a registered investment adviser, and Lindner Fund, Inc. a
registered investment company, share voting and dispositive power over the
number of shares indicated and Lindner Fund, Inc. directly holds 319,500
shares (7.88%) of the outstanding Common Stock of the Company.
(6) Based upon a Schedule 13G dated February 11, 1994 and upon information
provided by FMR Corporation, FMR Corporation has sole power to dispose or to
direct the disposition of the number of shares indicated.
(7) Includes 1,000 shares of Common Stock owned by Mr. Walker's wife. Mr. Walker
disclaims beneficial ownership of such shares.
ITEM 1. ELECTION OF DIRECTORS AND INFORMATION WITH RESPECT
TO DIRECTORS AND EXECUTIVE OFFICERS.
The first Item to be acted on at the Meeting is the election of nine (9)
directors to the Board of Directors, each to hold office until the next annual
meeting of stockholders and until his successor is elected and qualified.
Each properly executed, unrevoked proxy that is timely received by the
Company will be voted at the Meeting "FOR" the election of the nine (9) nominees
listed below equally or in such other proportions as the proxies shall deem
appropriate, subject to any specific voting instructions received from any
stockholder by proxy to exercise his cumulative voting rights in a particular
way, including the withholding of authority to vote "FOR" any one or more of the
nominees. The nominees are Donald F. Gunning, A. William Hager, E. Lawrence
Keyes, Jr., John B. McKinney, Robert H. Quenon, Lawrence K. Roos, Edwin J.
Spiegel, Jr., Lester Varn, Jr., and George H. Walker III, all of whom are
currently directors of the Company.
If any of the nominees should decline or be unable to act as a director, it
is intended that the proxies will be voted "FOR" a successor nominee designated
by the Board. All of the nominees have indicated a willingness to serve and the
Board has no reason to believe that any of the nominees will decline or be
unable to serve, if elected.
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The following information is provided with respect to each nominee for
director:
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
SERVED AS
NAME, AGE, OTHER POSITIONS WITH THE COMPANY, A DIRECTOR
PRINCIPAL OCCUPATION AND DIRECTORSHIPS OF OTHER COMPANIES SINCE
- - - --------------------------------------------------------------------------------- ----------
<S> <C>
Donald F. Gunning, 58............................................................ 1981(1)
Consultant, Steel and Industrial Mineral Industries (1993 to date); President,
International Marble and Stone Co. Ltd. (producer of industrial minerals) (1985
to 1993)
A. William Hager, 69............................................................. 1991
Chairman of the Board, C. Hager & Sons Hinge Manufacturing Company
(manufacturer of hinges and builders' hardware) (1978 to date); Director of
Boatmen's Trust Company
E. Lawrence Keyes, Jr., 65....................................................... 1988(1)
President, Fortune Group Consulting, Inc. (November 1992 to date); Consultant,
Emerson Electric Co. (manufacturer of electrical products) (October 1986 to
September 1993); President of Emerson Electric Co. (October 1977 through
September 1986); Director of Central Trust Bank, Jefferson City, Missouri,
Equitable Resources, Inc., Potter Electric and Knowles Electronics, Inc.
John B. McKinney, 61............................................................. 1981
President and Chief Executive Officer of the Company (January 1983 to date);
Director of Boatmen's Trust Company and The Automobile Club of Missouri
Robert H. Quenon, 65............................................................. 1992
Chairman of the Board, Federal Reserve Bank of St. Louis (1993 to date); Mining
Consultant (1991 to date); Chairman (1990 to 1991) and President and Chief
Executive Officer (1983 to 1990) of Peabody Holding Company, Inc. (coal mining
and sales); Director of Union Electric Company and Newmont Gold Co.
Lawrence K. Roos, 76............................................................. 1984(1)
Interim Chancellor, St. Louis Community College (December 1990 to December
1991); Formerly, President, Federal Reserve Bank of St. Louis (March 1976
through January 1983); Director of Trans World Airlines, Inc. (TWA); Advisory
Director of Boatmen's Trust Company
Edwin J. Spiegel, Jr., 73........................................................ 1977
Consultant, Alton Packaging Corporation (producer of paperboard packaging)
(January 1982 to date); Director of The Automobile Club of Missouri
Lester Varn, Jr., 69............................................................. 1984(1)
President, Varn Investment Company and Affiliates (management of securities,
real estate, timberland and forest products manufacturing) (1973 to date);
Advisory Director of First Union National Bank of Florida, Jacksonville,
Florida, and Production Operations Corp., Houston, Texas
</TABLE>
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<TABLE>
<CAPTION>
SERVED AS
NAME, AGE, OTHER POSITIONS WITH THE COMPANY, A DIRECTOR
PRINCIPAL OCCUPATION AND DIRECTORSHIPS OF OTHER COMPANIES SINCE
- - - --------------------------------------------------------------------------------- ----------
<S> <C>
George H. Walker III, 63......................................................... 1990
Chairman of the Board, Stifel Financial Corp. (investment banking firm) and its
principal subsidiary Stifel, Nicolaus & Company, Incorporated (stock brokerage
firm) (1979 to date); Director of Laidlaw Corp.
</TABLE>
- - - -------------------------
(1) Messrs. Gunning, Keyes, Roos and Varn will serve on the Board as designees
of Ivaco Inc. pursuant to the provisions of the 1991 Agreement (this
Agreement is described in Note 2 to the table entitled "Beneficial
Ownership of the Company's Common Stock").
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE FOREGOING NOMINEES
BOARD MEETINGS AND COMMITTEES OF THE BOARD
The Board met six (6) times during 1993. All of the incumbent directors
attended 75% or more of the total meetings of the Board and all committees on
which they serve. Directors who are not otherwise employed by the Company
receive a $1,100 monthly retainer and a per diem fee of $1,250, plus expenses,
for Board or committee meetings attended. The members and functions of the Audit
Committee, Compensation Committee and Nominating Committee of the Board are as
follows:
The Audit Committee. The Audit Committee, which met three (3) times in
1993, is comprised of the following members: Donald F. Gunning, Chairman, A.
William Hager, E. Lawrence Keyes, Jr., Robert H. Quenon, Lawrence K. Roos, Edwin
J. Spiegel, Jr., Lester Varn, Jr. and George H. Walker III. The functions of the
Audit Committee are to: nominate the independent auditors of the Company for
appointment by the Board; arrange for and review the Company's annual audit;
approve professional services performed by the independent auditors and
determine that such services do not impair the independence of the auditors;
review and ratify auditors' fees; review the scope and results of internal audit
controls, policies and procedures; and review the adequacy of the Company's
system of internal controls.
The Compensation Committee. The Compensation Committee, which met four (4)
times in 1993, is comprised of the following members: Edwin J. Spiegel, Jr.,
Chairman, Donald F. Gunning and George H. Walker III. Its function is to study
and make recommendations to the Board with respect to compensation of directors
and officers of the Company.
The Nominating Committee. The Nominating Committee met once during 1993. On
May 16, 1994, the Nominating Committee recommended to the Board the nine
nominees for director. The Nominating Committee is comprised of all directors
who are not employees or former employees of the Company with Edwin J. Spiegel,
Jr. serving as Chairman and Donald F. Gunning, A. William Hager, E. Lawrence
Keyes, Jr., Robert H. Quenon, Lawrence K. Roos, Lester Varn, Jr. and George H.
Walker III serving as the other Committee members. Its responsibilities include
the selection of potential candidates for directorships, the recommendation of
such candidates to the Board for nomination, and the nomination of persons to
fill vacant directorships. The Committee will consider stockholders'
recommendations of nominees for directorships which are accompanied by the
consent of each recommended nominee to act as director. Written recommendations,
with the necessary consents, should be sent to Nominating Committee, c/o Michael
H. Lane, Corporate Secretary, Laclede Steel Company, One Metropolitan Square,
St. Louis, Missouri 63102.
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EXECUTIVE OFFICERS
The following persons are the executive officers of the Company:
John B. McKinney has served as President and Chief Executive Officer of the
Company since 1983.
Michael H. Lane has served as Vice President -- Finance, Treasurer and
Secretary of the Company since 1983.
J. William Hebenstreit has served as Vice President -- Operations of the
Company since 1983.
Larry J. Schnurbusch has served as Vice President -- Administration since
April 1993. Prior to that time, Mr. Schnurbusch served as Director of Corporate
Administration.
H. Bruce Nethington has served as Vice President -- Human Resources since
April 1993. From January 1, 1990 to April 12, 1993, Mr. Nethington served as
Director -- Industrial Relations. Prior to that time, he served as Director --
Human Resources.
All of the executive officers of the Company were elected for terms
expiring December 31, 1994 or until their successors have been duly elected and
qualified, or until earlier removed by action of the Board of Directors.
EXECUTIVE COMPENSATION
The following table presents summary information concerning compensation
for services rendered to the Company during each of the last three fiscal years
by those persons who at December 31, 1993 were the Chief Executive Officer and
the other executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ----------------------
OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND BONUS COMPENSATION STOCK AWARDS SARS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) ($)(1) ($)(2) ($)(3) (#)(4) ($)(5)
- - - ---------------------- ---- -------- -------- ------------ ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John B. McKinney...... 1993 $309,246 $198,600 $121,958 -- -- $ 24,344
President and Chief 1992 287,496 230,000 140,224 -- 7,500 24,344
Executive Officer 1991 261,360 -- -- $ 72,000 22,600 --
J. W. Hebenstreit..... 1993 $206,502 $ 99,450 $ 81,164 -- -- $ 6,452
Vice President -- 1992 192,000 115,200 42,678 -- 4,000 6,452
Operations 1991 174,240 -- -- $ 28,800 12,000 --
Michael H. Lane....... 1993 $206,502 $ 99,450 $ 45,116 -- -- $ 7,859
Vice President -- 1992 192,000 115,200 61,554 -- 4,000 7,813
Finance, Treasurer and 1991 174,240 -- -- $ 28,800 12,000 --
Secretary
H. Bruce Nethington... 1993 $117,789 $ 51,323 -- -- -- $ 1,132
Vice President -- 1992 99,330 59,506 -- -- 3,000 1,132
Human Resources 1991 84,000 -- -- -- 2,100 --
Larry J. Schnurbusch.. 1993 $140,134 $ 60,374 -- -- -- $ 1,110
Vice President -- 1992 130,680 73,180 -- -- 3,000 1,110
Administration 1991 118,800 -- -- $ 14,400 6,900 --
- - - ------------------------------------------------------------------------------------------------------------
</TABLE>
- - - ---------------
(1) The amounts represent annual bonuses earned under the Company's
Discretionary Incentive Compensation Plan.
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(2) Does not include certain perquisites which the executive officers received
in 1992 and 1993, the amount of which did not exceed the lesser of $50,000
or 10% of any such officer's salary and bonus. The Securities and Exchange
Commission does not require disclosure of information for 1991.
(3) The amounts represent the closing price of the Company's Common Stock on the
date of grant times the number of shares awarded. A total of 50,000 shares
were awarded pursuant to the Company's 1990 Stock Bonus Plan in November
1990 and January 1991; of such shares, 20% become transferable on each
anniversary of November 20, 1990. The Stock Bonus Plan was not in effect
during 1992 or 1993. The number and market value (based on the closing price
of the Company's Common Stock on December 31, 1993) of all shares of
restricted stock held by the executive officers at fiscal year end is as
follows: Mr. McKinney, 10,000 shares at $152,500; Mr. Hebenstreit, 4,000
shares at $61,000; Mr. Lane, 4,000 shares at $61,000; and Mr. Schnurbusch,
2,000 shares at $30,500. The Company pays dividends on restricted stock to
the extent that dividends are paid on the Company's Common Stock generally.
(4) Represents the number of stock appreciation rights awarded pursuant to the
Company's 1989 Stock Appreciation Rights Plan for Officers which was in
effect during 1991, 1992 and 1993.
(5) The amounts represent life insurance premiums paid by the Company on behalf
of the executive officers during 1992 and 1993. The Securities and Exchange
Commission does not require disclosure of information for 1991.
The Company did not grant any stock appreciation rights or stock options in
1993. The following table presents certain information concerning stock
appreciation rights exercised by the Company's executive officers during 1993:
AGGREGATED SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SARS AT FISCAL IN-THE-MONEY SARS AT
NUMBER OF YEAR-END(#) FISCAL YEAR-END($)(2)
SHARES UNDERLYING ------------------------- -------------------------
NAME SARS EXERCISED(#) VALUE REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - - --------------------------- ----------------- -------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
John B. McKinney........... 32,600 $389,175 39,300/-- $ 6,000/--
J. W. Hebenstreit.......... 28,500 $311,578 14,000/-- $ 1,000/--
Michael H. Lane............ 16,000 $152,500 14,000/-- $ 1,000/--
H. Bruce Nethington........ 3,000 $ 24,750 3,500/-- $ 750/--
Larry J. Schnurbusch....... 6,000 $ 48,750 18,300/-- $ 41,175/--
</TABLE>
- - - ---------------
(1) Cash payments received equal to the number of shares subject to the SAR
times the difference between the closing price of the Company's Common Stock
on the last trading day preceding the date of exercise and the base price.
The base price equals the closing price of the Company's Common Stock on the
last trading day preceding the date of grant.
(2) Based on the closing price of the Company's Common Stock on December 31,
1993.
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BENEFIT PLANS
The Company maintains the Laclede Salaried Employees' Pension Plan (the
"Pension Plan"), a defined benefit plan which provides a monthly pension to
salaried employees of the Company (excluding employees covered by a collective
bargaining agreement) who retire or terminate with vested rights in accordance
with the provisions of the Pension Plan. Benefits are based upon years of
credited service and covered compensation, offset by the participant's Primary
Insurance Amount under the Federal Social Security Act. The Company also
maintains the Key Employee Retirement Plan (the "Supplement Plan"), the purpose
of which is to provide additional retirement income to certain key employees of
the Company, including the executive officers. Under the Supplement Plan, as
amended, the eligible employees are guaranteed that the total amount received by
them each year during retirement from the Pension Plan, Federal Social Security
and the Supplement Plan will be equal to 60% of the average of their highest
aggregate three consecutive calendar year salary and bonus during their last 10
years of employment with the Company, assuming retirement at age 60. If the
employee retires prior to age 60, the applicable percentage of the average
earnings will be reduced 2.5% for each year of retirement age below age 60.
The estimated aggregate annual benefits payable pursuant to the Pension
Plan, the Supplement Plan and Federal Social Security at various assumed salary
levels and retirement ages are summarized as follows:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT
BENEFIT AT THE RESPECTIVE AGES LISTED
--------------------------------------------------------------
SALARY LEVEL* 50 53 56 60
- - - --------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$125,000......................... $ 56,250 $ 61,875 $ 67,500 $ 75,000
$175,000......................... $ 78,750 $ 86,625 $ 94,500 $105,000
$225,000......................... $101,250 $111,375 $121,500 $135,000
$275,000......................... $123,750 $136,125 $148,500 $165,000
$325,000......................... $146,250 $160,875 $175,500 $195,000
$375,000......................... $168,750 $185,625 $202,500 $225,000
$425,000......................... $191,250 $210,375 $229,500 $255,000
$475,000......................... $213,750 $235,125 $256,500 $285,000
</TABLE>
- - - ---------------
* Salary level assumes the average of the highest aggregate three consecutive
calendar year earnings for eligible executive officers during the last ten
years of their employment.
Messrs. McKinney, Hebenstreit, Lane, Nethington and Schnurbusch have
accumulated 37, 26, 21, 26 and 25 credited years of service, respectively. The
salary level for each of the eligible executive officers in the Supplement Plan
is: Mr. McKinney, $428,900; Mr. Hebenstreit, $262,464; Mr. Lane, $262,464; Mr.
Nethington, $137,316; and Mr. Schnurbusch, $174,390.
The Company also maintains the Laclede Steel Company Salaried Employees'
Profit Sharing Plan (the "Profit Sharing Plan") for the purposes of encouraging
eligible employees to develop initiative and productivity and providing the
employees with additional retirement benefits. The Profit Sharing Plan is
intended to qualify as a cash deferred compensation arrangement under Section
401(k) of the Internal Revenue Code. Salaried employees of the Company are
eligible to participate in the Profit Sharing Plan.
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COMPENSATION OF DIRECTORS
Directors who are not otherwise employed by the Company receive a $1,100
monthly retainer and a per diem fee of $1,250, plus expenses, for Board or
committee meetings attended.
EMPLOYMENT CONTRACTS
Messrs. McKinney, Hebenstreit, Lane, Schnurbusch and Nethington each has an
employment agreement with the Company (the "Employment Agreements"). Effective
July 1, 1993, Mr. McKinney's Employment Agreement provides for a minimum salary
of $331,000 for his services as President and Chief Executive Officer, while the
Employment Agreements of Messrs. Hebenstreit and Lane provide for a minimum
salary of $221,000 for their services, respectively, as Vice President --
Operations and Vice President -- Finance, Treasurer and Secretary. Effective
January 1, 1994, Mr. Schnurbusch's Employment Agreement provides for a minimum
salary of $161,748 for his services as Vice President -- Administration and Mr.
Nethington's Employment Agreement provides for a minimum salary of $152,196 for
his services as Vice President -- Human Resources. The Employment Agreements
continue through August 1997. The Employment Agreements also provide that, in
the event of a change of control of the Company, Messrs. McKinney, Hebenstreit
and Lane (the "Senior Officers"), upon their respective termination of
employment if occurring within the time period set forth below, will be entitled
to receive lump sum payments equal to the lesser of $2,900,000, $1,400,000 and
$1,400,000, respectively, or one dollar less than 300% of the average earnings
(as determined by the respective officer's W-2 form) for the five consecutive
calendar years preceding the change of control. If a Senior Officer is
terminated by the Company at any time within two years following the occurrence
of a change of control, the officer will be entitled to receive the change of
control amount. If a Senior Officer terminates his employment with the Company
within the eighteen-month period beginning six months after the occurrence of a
change of control, he will also be entitled to the change of control amount.
However, no payment will be made if a Senior Officer voluntarily terminates his
employment without Good Reason as defined in the Employment Agreements within
six months after a change of control. The Employment Agreements of Messrs.
Schnurbusch and Nethington provide for lump sum payments equal to the lesser of
$550,000 and $350,000 respectively, or one dollar less than 300% of the average
earnings (as determined by the respective officer's W-2 form) for the five
consecutive years preceding the change of control, in the event of a change of
control followed by a termination of their employment by the Company within the
succeeding two years or by their termination of employment for Good Reason.
"Change of control" is defined as (a) the acquisition after the date of the
Employment Agreements of at least 25% of the voting securities of the Company by
any person, (b) the replacement of at least one third of the members of the
Board of Directors by persons not nominated by the Board, (c) the receipt of
proxies by stockholders representing at least 40% of the voting securities
voting against the slate nominated by the Board of Directors, or (d) certain
mergers, consolidations or sales of the Company's assets.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors administers the
Company's executive compensation program, which has been developed and
implemented by management under the supervision of the Committee to seek to
enhance the profitability and long-term viability of the Company. The executive
compensation program combines an annual salary with various incentive
opportunities designed to align the financial interests of the Company's
executive officers with those of its stockholders. The Committee has
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consistently maintained the Company's philosophy that the compensation of
executive officers should be directly and materially linked to the Company's
operating performance, taking into account conditions in the steel industry and
the economy as a whole, as well as individual performance. The executive
incentive compensation plan was originally adopted in 1981, and its basic
structure is based on the recommendations of McKinsey & Co., an independent
management consulting firm.
To achieve the result recommended by the McKinsey & Co. study, executive
compensation is weighted towards bonuses paid on the basis of the Company's
financial performance. Historically, in years in which the Company has had above
average success in relation to the industry, the executive officers have been
awarded higher bonuses. In less profitable years, executive officers' pay has
been negatively impacted. In 1991, for example, when the Company experienced an
operating loss, no incentive compensation awards were made to executive officers
or other employees.
In evaluating the performance and setting the compensation for 1993 of the
Company's Chief Executive Officer, as well as the other executive officers, the
Committee considered the progress of the Company's restructuring program, and
the fact that 1993 should be considered a transition year with respect to this
program as a significant portion of the program was first put into place during
the year. The restructuring program includes the addition of downstream low cost
production facilities in the pipe and wire operations, as well as the entry into
new markets for tubular products. The Committee continues to believe that senior
management of the Company is dedicated to achieving improvements in long-term
financial performance and that the compensation programs the Committee has
implemented and administered are contributing to the achievement of this goal.
Compensation for each of the executive officers is comprised of a base
salary and both annual and long-term incentive compensation. Based on the
Committee's review of an independent compensation survey, the Committee believes
the base salary established for each of the executive officers is competitive
with that paid to senior managers with comparable qualifications, experience and
responsibilities. The survey included 284 manufacturing companies in 13
manufacturing subcategories, including steel. In making its determination, the
Committee compared the Company's executive salaries with those of survey
companies with sales volume similar to the Company's. The annual salary level
for each executive officer, including the Chief Executive Officer, is reviewed
and approved by the Committee in the early part of each fiscal year. Salary
increases are based on the Committee's performance judgments as to the past and
expected future contributions of the individual senior executives, including
perception of performance and level of responsibility assumed. The Committee's
performance judgments are subjective and not subject to specific criteria. Based
on this assessment, Mr. McKinney's base salary for 1993 was increased from
$287,496 to $309,246 and the base salaries of the other executive officers
(excluding those who were not executive officers in 1992) increased 7.5% from
1992 levels.
Annual incentive compensation for executive officers is closely tied to the
Company's success in achieving specific financial and non-financial performance
goals as determined each year by the Committee. After the end of each year and
completion of the audit of the Company's financial statements for that year, the
Committee approves payment from the annual incentive fund under the Company's
Incentive Compensation Plan. The Committee then reviews with the Chief Executive
Officer management's recommendation for awards from the incentive fund to the
executive officers, and determines the amount of the specific award, if any, to
each executive officer. The Committee takes into account not only the Company's
financial performance but also strategic goals and other criteria that are
essential components of evaluating management performance. Company performance
is measured by earnings before income taxes as a percent
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of sales (as adjusted for items which are not considered to reflect current
operating results). The specific strategic goals are not included herein because
the Committee believes they represent confidential business information, the
disclosure of which could adversely affect the Company. Based on the Committee's
assessment of these criteria for 1993, the Committee awarded Messrs. McKinney,
Hebenstreit and Lane bonuses which represented 100% of the total awards possible
under the Plan. Mr. McKinney's bonus of $198,600 was also 100% of his total
possible award under the Plan and represented approximately 39% of his total
salary and bonus for 1993.
No stock appreciation rights were granted to any of the executive officers
during 1993.
The Board approved the executive officer compensation recommended by the
Committee for 1993.
COMPENSATION COMMITTEE
Edwin J. Spiegel, Jr., Chairman
Donald F. Gunning
George H. Walker III
The foregoing Compensation Committee Report shall not be deemed
incorporated by reference by any general statement of incorporation by reference
in any filing made under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed
filed under such Acts.
The Compensation Committee was comprised of the following members during
1993: Edwin J. Spiegel, Jr., Chairman, Donald F. Gunning and George H. Walker
III. No member of the Compensation Committee is a current or former officer or
employee of the Company or any of its subsidiaries.
COMPARISON OF CUMULATIVE TOTAL RETURN
The following graph compares the cumulative total stockholder return on the
Company's Common Stock, based on the market price of the Common Stock and
assuming reinvestment of dividends, with the cumulative total return of
companies on the Russell 2000 Index and Standard & Poor's Steel Index. The
indices are included for comparison purposes only and do not necessarily reflect
management's opinion that such indices are appropriate measures of the relative
performance of the Company's Common Stock. The graph is not intended to forecast
or be indicative of the future performance of the Company's Common Stock.
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The performance graph shall not be deemed incorporated by reference by any
general statement of incorporation by reference in any filing made under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, and shall not otherwise be deemed filed under such Acts.
<TABLE>
<CAPTION>
Measurement Period S & P Steel Laclede Steel
(Fiscal Year Covered) Russell 2000 Index Company
<S> <C> <C> <C>
1988 100 100 100
1989 114 97 75
1990 90 78 42
1991 129 88 45
1992 150 121 83
1993 175 158 75
</TABLE>
Assumes $100 invested on December 31, 1988 in Laclede Steel Company Common
Stock, the Russell 2000 Index and the Standard & Poor's Steel Index.
CERTAIN BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1993, the Company entered into an agreement with Ivaco Inc.
pursuant to which Ivaco Inc. granted the Company the option to purchase
semi-finished steel from Ivaco Inc.'s subsidiary, Atlantic Steel Company, for a
twelve-month period in the event of a strike by the Company's employees (the
"Steel Option"). The Steel Option was granted by Ivaco Inc. in consideration for
the Company's extension for one year of a stock option first granted to Ivaco
Inc. in October 1983 which would otherwise have expired in October 1993 (the
"Stock Option"). The Steel Option, which covered a product which at the time was
in short supply, formed a key component of the Company's plan to continue
operations in the event of a strike. The Stock Option permits Ivaco Inc. to
purchase up to 225,000 shares of the Company's Common Stock at a price of $13.67
per share, which was below the then market price of the Common Stock. Both the
Steel Option and the Stock Option were negotiated on an arm's length basis. The
Company entered into this agreement as a part of its contingency planning during
the negotiation of its labor agreement with the United Steel Workers ("USW")
with respect to hourly workers at the Company's Alton, Illinois mill. Subsequent
to entering into this agreement, the Company and the USW reached an agreement
which has been ratified by the employees. Accordingly, it is unlikely that the
Steel Option will be exercised. The agreement was unanimously approved by the
Company's disinterested directors.
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INDEPENDENT AUDITORS
Deloitte & Touche were the independent auditors for the Company for the
year ended December 31, 1993. The Board of Directors has again selected that
firm as auditors for the year ending December 31, 1994. Representatives of
Deloitte & Touche are expected to be present at the Meeting to respond to
appropriate questions that may be raised, and they will have an opportunity to
make a statement if they so desire.
STOCKHOLDER PROPOSALS
If stockholder proposals are to be considered for inclusion in the
Company's proxy statement for a forthcoming meeting of the Company's
stockholders, such proposals must be submitted on a timely basis and the
proposals and proponents thereof otherwise must meet the requirements
established by the Securities and Exchange Commission for stockholder proposals.
Proposals for the 1995 annual stockholders' meeting will not be deemed to be
timely submitted unless they are received by the Company at its principal
executive office no later than January 18, 1995. Such stockholder proposals,
together with any supporting statements, should be directed to the Secretary of
the Company.
GENERAL
It is not anticipated that any business other than as above specified will
be presented at the Meeting. However, if other matters should properly come
before the Meeting, the accompanying proxy will be voted in respect thereof with
discretionary authority.
By order of the Board of Directors.
MICHAEL H. LANE
Secretary
June 22, 1994
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<PAGE> 16
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PROXY LACLEDE STEEL COMPANY
ANNUAL MEETING OF STOCKHOLDERS AUGUST 3, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John B. McKinney, Michael H.
Lane and Frank P. Wolff, Jr., and each of them, with full power to
act alone, the true and lawful attorneys-in-fact and proxies of
the undersigned, with full power of substitution and revocation,
to vote all shares of common stock of Laclede Steel Company, a
Delaware corporation, which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of the Company to be held at
the Metropolitan Square Building, 40th Floor, 211 North Broadway,
St. Louis, Missouri, on Wednesday, August 3, 1994, at 9:30 a.m.,
Central Daylight Time, and at any adjournments thereof, with all
powers the undersigned would possess if personally present.
1. Election of Directors:
/ / FOR all nominees listed below (except as indicated to
the contrary below)
/ / WITHHOLD AUTHORITY to vote for all nominees listed
below
<TABLE>
<S> <C> <C> <C>
NOMINEES FOR DIRECTOR: Donald F. Gunning John B. McKinney Edwin J. Spiegel, Jr.
A. William Hager Robert H. Quenon Lester Varn, Jr.
E. Lawrence Keyes, Jr. Lawrence K. Roos George H. Walker, III
</TABLE>
(Instruction: To withhold authority to vote for an individual
nominee, write that nominee's name on the space provided below.)
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NOTE: Stockholders have cumulative voting rights with respect to
the election of directors. This means that each stockholder is
entitled to as many votes as equal the number of shares of common
stock of the Company owned by such stockholder multiplied by the
number of directors to be elected (nine). All such votes may be
cast for a single nominee or may be distributed among two or more
nominees. Unless contrary instructions are given, if you vote
"FOR" all nominees, the proxies will allocate your votes, in
their discretion, among the nominees listed above; if you
withhold authority to vote for any nominees the proxies will
allocate your votes, in their discretion, among the nominees
listed above except those for whom you withhold authority to
vote.
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
2. The proxies shall vote, in their discretion, on other
matters as may properly come before the Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDERS. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE
VOTED "FOR" PROPOSAL 1.
--------------------------------------------------
IF YOU PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS, PLEASE
CHECK THIS BOX / /
Signature Date , 1994
Signature Date , 1994
Please sign name or names exactly as printed
hereon. If signing as a representative,
please include capacity.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
- - - --------------------------------------------------------------------------------
[Reverse Side of Proxy Card]
