<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
LACLEDE STEEL COMPANY
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(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
LACLEDE STEEL COMPANY
ONE METROPOLITAN SQUARE
ST. LOUIS, MISSOURI 63102
NOTICE OF ANNUAL MEETING
November 18, 1997
To the Stockholders:
The annual meeting of stockholders of LACLEDE STEEL COMPANY (the "Company")
will be held at the offices of the Company, Metropolitan Square Building, 15th
Floor, 211 North Broadway, in the City of St. Louis, State of Missouri, on
Tuesday, December 16, 1997, at 9:30 a.m., Central Standard 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> 3
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 offices of the Company,
Metropolitan Square Building, 15th Floor, 211 North Broadway, St. Louis,
Missouri 63102, on Tuesday, December 16, 1997, at 9:30 a.m., Central Standard
Time, and at any adjournments or postponements thereof. This proxy statement and
accompanying proxy are first being sent or given to stockholders of the Company
on or about November 24, 1997.
VOTING RIGHTS AND PROXIES
The Board of Directors has fixed the close of business on November 10, 1997
as the record date for the 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 voting stock of the Company outstanding consisted of 4,056,140 shares of
Common Stock, $0.01 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
2
<PAGE> 4
entitled to vote and represented in person or by proxy at this meeting. Shares
represented by proxies that are 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.
As of the date of mailing of this Proxy Statement, management is not aware
of any other matters, other than the election of directors, to come before the
Meeting.
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.
3
<PAGE> 5
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
nominee for 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 November 18, 1997.
<TABLE>
<CAPTION>
SHARES OF SHARES OF SERIES A
COMMON STOCK PREFERRED STOCK PERCENT
NAME AND ADDRESS OF BENEFICIALLY PERCENT OF BENEFICIALLY OF
BENEFICIAL OWNER OWNED(1) CLASS OWNED(1) CLASS
- ------------------- ------------ ---------- ------------------ -------
<S> <C> <C> <C> <C>
Birmingham Steel Corporation (2)........... 2,038,650 50.26%(3) 366,667 88.00%
1000 Urban Center Drive, Suite 300
Birmingham, Alabama 35242
Ivaco Inc. (2)............................. 1,009,325 24.88%(3) 183,333 44.00%
Place Mercantile
770 rue Sherbrooke ouest
Montreal, Quebec, Canada H3A 1G1
Joseph Alvarado (4)........................ 100 * -- --
Robert A. Garvey (4)....................... 375 * -- --
J. W. Hebenstreit.......................... 10,000 * 21,667 5.20%
Michael H. Lane............................ 10,600 * 5,000 1.20%
William R. Lucas, Jr. (4).................. 100 * -- --
Wayne P.E. Mang............................ 100 * -- --
John B. McKinney........................... 40,000 * 13,333 3.20%
Philip R. Morgan........................... 1,000 * -- --
H. Bruce Nethington........................ 1,000 * 5,000 1.20%
Robert H. Quenon........................... 300 * -- --
Larry J. Schnurbusch....................... 7,730 * 5,000 1.20%
George H. Walker III....................... 1,000(5) * -- --
All Directors and Executive Officers as a
Group (13 persons)....................... 71,205 1.76% 50,000 12.00%
</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) On September 26, 1997, a subsidiary of Ivaco, Inc. ("Ivaco"), sold one-half
of the Ivaco investment in the Company to a subsidiary of Birmingham Steel
Corporation ("Birmingham Steel"). The securities of the Company sold
consisted of 1,009,325 common shares and 183,334 shares of the Company's
Series A preferred stock. The preferred shares are convertible into 859,834
common shares of the Company. The transaction was effected through the sale
of a wholly-owned subsidiary of Ivaco which contained such shares to
Birmingham Steel. In connection with the transaction Ivaco, among other
4
<PAGE> 6
things, gave Birmingham Steel the voting rights on Ivaco's remaining
investment in the Company's common stock and, in any additional common stock
Ivaco may own as a result of the conversion of Ivaco's remaining Series A
preferred stock, subject to certain limitations. In addition, Ivaco agreed
not to sell any portion of its remaining investment in the Company prior to
September 24, 1998 and has provided Birmingham Steel with a right of first
refusal with respect to such interests until September 24, 2002. This
information is based upon Schedule 13D forms filed by Ivaco and Birmingham
Steel, filed on September 30, 1997 and October 6, 1997, respectively.
(3) Pursuant to Securities and Exchange Commission rules, the Ivaco shares
subject to the proxy referred to in footnote (2) above are reflected as
owned by both Ivaco and Birmingham Steel.
(4) Mr. Garvey is Chairman of the Board and Chief Executive Officer of
Birmingham Steel. Messrs. Alvarado and Lucas are executive officers of
Birmingham Steel. As a result of such positions, such individuals may be
deemed beneficial owners of the Company shares beneficially owned by
Birmingham Steel. Each of these individuals disclaims such beneficial
ownership.
(5) Does not include 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. On
October 8, 1997, three Birmingham Steel executive officers were appointed to the
board of directors of the Company. The Birmingham Steel executives joining the
Company board were Robert A. Garvey, Chairman and Chief Executive Officer;
William R. Lucas, Jr., Executive Vice President-Administration and General
Counsel; and Joseph Alvarado, Executive Vice President-Commercial. In addition,
Michael H. Lane, Vice President-Finance, Treasurer and Secretary of the Company,
was appointed to the board. Concurrent with the appointment of the Birmingham
Steel executives to the board, Donald F. Gunning, Lawrence K. Roos, Edwin J.
Spiegel, Jr., and Lester Varn, Jr. resigned as Company directors. In early
November 1997, A. William Hager and E. Lawrence Keyes, Jr. decided not to stand
for reelection at the Company's annual meeting of stockholders and resigned as
directors. On November 18, 1997, the Nominating Committee recommended to the
Board Wayne P.E. Mang and Philip R. Morgan, as nominees for director, to replace
Messrs. Hager and Keyes.
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 Joseph Alvarado, Robert A. Garvey, Michael H. Lane,
William R. Lucas, Jr., Wayne P.E. Mang, John B. McKinney, Phillip R. Morgan,
Robert H. Quenon, and George H. Walker III, all of whom (other than Messrs. Mang
and Morgan) 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.
5
<PAGE> 7
The following information is provided with respect to each nominee for
director.
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
NAME, AGE, OTHER POSITIONS WITH THE COMPANY, PRINCIPAL SERVED AS A
OCCUPATION AND DIRECTORSHIPS OF OTHER COMPANIES DIRECTOR SINCE
- ------------------------------------------------------ --------------
<S> <C>
Joseph Alvarado, 45......................................... 1997
Executive Vice President-Commercial of Birmingham Steel
(mini-mill steel producer) (1997 to date); President,
Inland Steel Bar Company (steel bar producer) (1995 to
1997); Vice President & General Manager -- Sales &
Marketing, Inland Steel Bar Company (1988 to 1994).
Robert A. Garvey, 59........................................ 1997
Chairman of the Board and Chief Executive Officer of
Birmingham Steel (mini-mill steel producer) (January 5,
1996 to date); President of North Star Steel (1984 to
1996). Director of Birmingham Steel.
Michael H. Lane, 54......................................... 1997
Vice President -- Finance, Treasurer and Secretary of the
Company (January 1983 to date).
William R. Lucas, Jr., 42................................... 1997
Executive Vice President-Administration and General
Counsel of Birmingham Steel (mini-mill steel producer)
(1996 to date); Executive Vice President & General
Counsel of Birmingham Steel (1995-1996); Managing
Partner of Lightfoot, Franklin, White & Lucas (law
firm) (1990 to 1995).
Wayne P.E. Mang, 60......................................... --
President and Chief Operating Officer, Russel Metals, Inc.
(steel product processor and distributor) (1991 to
1997). Director of Wainbee Ltd. and Maverick Tube
Corporation.
John B. McKinney, 65........................................ 1981
President and Chief Executive Officer of the Company
(January 1983 to date); Director, NationsBank Private
Client Board and The Automobile Club of Missouri.
Philip R. Morgan, 49........................................ --
President and Chief Executive Officer, Morgan Construction
Company (supplier of steel rolling mill technology and
equipment) (1986 to date).
Robert H. Quenon, 69........................................ 1992
Mining Consultant (1991 to date); Chairman of the Board,
Federal Reserve Bank of St. Louis (1993 to 1995);
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.
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
NAME, AGE, OTHER POSITIONS WITH THE COMPANY, PRINCIPAL SERVED AS A
OCCUPATION AND DIRECTORSHIPS OF OTHER COMPANIES DIRECTOR SINCE
- ------------------------------------------------------ --------------
<S> <C>
George H. Walker III, 66.................................... 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. and EAC
Corporation.
</TABLE>
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE
FOREGOING NOMINEES
BOARD MEETINGS AND COMMITTEES OF THE BOARD
The Board met five times during 1996. All of the incumbent directors
attended 75% or more of the total meetings of the Board and all committees on
which they serve. Prior to November 1, 1996, directors who were not otherwise
employed by the Company received a $1,250 monthly retainer and a per diem fee of
$1,250, plus expenses, for Board or committee meetings attended. Effective
November 1, 1996, the monthly retainer and the per diem fee paid to directors
not otherwise employed by the Company were reduced to $1,125. 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 two times in 1996, was
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. Since October 8, 1997,
the Audit Committee has been comprised of all directors of the Company other
than Mr. Lane and Mr. McKinney. 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 control policies and procedures;
and review the adequacy of the Company's system of internal controls.
The Compensation Committee. The Compensation Committee, which met once in
1996, was comprised of the following members: Edwin J. Spiegel, Jr., Chairman,
Donald F. Gunning and George H. Walker III. As of October 8, 1997, A. William
Hager, Chairman, Robert A. Garvey and George H. Walker III were appointed to the
Compensation Committee. As noted above, Mr. Hager has resigned as a director and
his position on the Compensation Committee has not yet been filled. 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 1996.
On November 18, 1997, 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 Robert A. Garvey
serving as Chairman. The other current members of the Nominating Committee are
Joseph Alvarado, William R. Lucas, Jr., Robert H. Quenon and George H. Walker,
III. 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
7
<PAGE> 9
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.
EXECUTIVE OFFICERS
The following persons are the executive officers of the Company:
John B. McKinney (age 65) has served as President and Chief Executive
Officer of the Company since 1983.
Michael H. Lane (age 54) has served as Vice President -- Finance, Treasurer
and Secretary of the Company since 1983.
J. William Hebenstreit (age 52) has served as Vice President -- Operations
of the Company since 1983.
Larry J. Schnurbusch (age 50) has served as Vice
President -- Administration since April 1993. Prior to that time, Mr.
Schnurbusch served as Director of Corporate Administration.
H. Bruce Nethington (age 56) 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 at the Directors' meeting immediately following the annual meeting of
stockholders in 1997 or until their successors have been duly elected and
qualified, or until earlier removed by action of the Board of Directors.
8
<PAGE> 10
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, 1996 were the Chief Executive Officer and
the other executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------
OTHER ANNUAL ALL OTHER
NAME AND SALARY BONUS COMPENSATION COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) ($)(3)
------------------ ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
John B. McKinney........................ 1996 $364,500 $ -- $288,923 $36,971
President and Chief Executive Officer 1995 364,500 -- 562,528 36,848
1994 339,372 277,020 168,431 44,076
J. W. Hebenstreit....................... 1996 $243,504 $ -- $156,875 $12,928
Vice President -- Operations 1995 243,504 -- 312,005 12,915
1994 226,629 138,797 66,185 24,125
Michael H. Lane......................... 1996 $243,504 $ -- $190,293 $15,017
Vice President -- Finance, Treasurer and 1995 243,504 -- 339,222 14,964
Secretary 1994 226,629 138,797 129,254 26,293
Larry J. Schnurbusch.................... 1996 $178,008 $ -- $122,503 $ 6,981
Vice President -- Administration 1995 178,008 -- 125,771 6,943
1994 165,813 94,700 48,408 15,044
H. Bruce Nethington..................... 1996 $167,508 $ -- $121,596 $ 9,094
Vice President -- Human Resources 1995 167,508 -- 145,307 8,921
1994 156,024 89,114 45,703 17,347
</TABLE>
- ---------------
(1) The amounts represent annual bonuses earned under the Company's
Discretionary Incentive Compensation Plan. No bonuses were earned for 1996
or 1995.
(2) Amounts reported as Other Annual Compensation consist primarily of income
tax payments related to Company contributions to the Key Employee Retirement
Plan. Such contributions represent taxable income to Plan participants and,
under the terms of the Plan, the Company is obligated to reimburse
participants for the payment of such taxes.
As a result of a reduction in benefits under the Key Employee Retirement
Plan agreed to in 1996, the Company does not anticipate Plan contributions
and, therefore, income tax payments in 1997 to Messrs. McKinney,
Hebenstreit and Lane.
Certain perquisites which the executive officers received in 1994, 1995 and
1996, the aggregate amount of which did not exceed the lesser of $50,000 or
10% of any such officer's salary and bonus, are not included in Other
Annual Compensation.
(3) The amounts shown represent life insurance premiums paid by the Company on
behalf of the executive officers.
9
<PAGE> 11
The Company did not grant any stock appreciation rights or stock options in
1996. The following table presents certain information concerning stock
appreciation rights exercised by the Company's executive officers during 1996:
AGGREGATED SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SARS AT FISCAL IN-THE-MONEY SARS
NUMBER OF YEAR-END(#) AT FISCAL YEAR-END($)(2)
SHARES UNDERLYING --------------------- -------------------------
SARS VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISED(#) ($)(1) UNEXERCISABLE UNEXERCISABLE
---- ----------------- -------------------- --------------------- -------------------------
<S> <C> <C> <C> <C>
John B. McKinney -- -- 7,500/-- --/--
J. W. Hebenstreit -- -- 2,000/-- --/--
Michael H. Lane -- -- 2,000/-- --/--
Larry J. Schnurbusch -- -- 3,000/-- --/--
H. Bruce Nethington -- -- 1,500/-- --/--
</TABLE>
- ---------------
(1) Cash payments to be received equal 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,
1996.
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 certain of the executive officers. Under the Supplement
Plan, the eligible employees were guaranteed that the total amount received by
them each year during retirement from the Pension Plan, Federal Social Security
and the Supplement Plan would be equal to 70% of the average of their highest
aggregate three consecutive calendar year salary and bonus during their last 10
years of employment with the Company ("Salary Level"), assuming retirement at
age 60. In connection with a Company-wide cost reduction program initiated in
1996, in October 1996 the executive officers agreed to a reduction in retirement
benefits under the Supplement Plan by a change in the percentage of Salary Level
benefits from 70 to 65%. If the employee retires prior to age 60, the applicable
percentage of the Salary Level will be reduced 2.5% for each year of retirement
age below age 60.
10
<PAGE> 12
The 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>
175,000............................................. $ 85,313 $ 93,844 $102,375 $113,750
225,000............................................. 109,688 120,656 131,625 146,250
275,000............................................. 134,063 147,469 160,875 178,750
325,000............................................. 158,438 174,281 190,125 211,250
375,000............................................. 182,813 201,094 219,375 243,750
425,000............................................. 207,188 227,906 248,625 276,250
475,000............................................. 231,563 254,719 277,875 308,750
525,000............................................. 255,938 281,531 307,125 341,250
575,000............................................. 280,313 308,344 336,375 373,750
625,000............................................. 304,688 335,156 365,625 406,250
675,000............................................. 329,063 361,969 394,875 438,750
</TABLE>
- ---------------
* Salary level assumes the average of the highest average aggregate three
consecutive calendar year earnings for eligible executive officers during the
last ten years of their employment.
Messrs. McKinney, Hebenstreit, Lane, Schnurbusch and Nethington have
accumulated 40, 29, 24, 28 and 29 credited years of service, respectively. The
current salary level for each of the eligible executive officers in the
Supplement Plan is: Mr. McKinney, $547,243; Mr. Hebenstreit $326,193; Mr. Lane,
$326,193; Mr. Schnurbusch, $221,627; and Mr. Nethington, $193,919.
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.
COMPENSATION OF DIRECTORS
Directors who are not otherwise employed by the Company receive a $1,125
monthly retainer and a per diem fee of $1,125, 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 30, 1996, Mr. McKinney's Employment Agreement provides for a minimum salary
of $364,500 for his services as President and Chief Executive Officer, while the
Employment Agreements of Messrs. Hebenstreit and Lane provide for a minimum
salary of $243,500 for their services, respectively, as Vice
President -- Operations and Vice President -- Finance, Treasurer and Secretary.
Also effective July 30, 1996, Mr. Schnurbusch's Employment Agreement provides
for a minimum salary of $178,000 for his services as Vice President --
Administration and Mr. Nethington's Employment Agreement provides for a minimum
salary of $167,500 for his services as Vice President -- Human Resources. The
Employment Agreements continue through August 2, 1999.
11
<PAGE> 13
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. Historically
the executive compensation program has combined 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
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. Because the Company
did not achieve the financial performance goals established by the Committee, no
incentive compensation awards were made to executive officers for 1995.
In January 1996, the Committee met to evaluate the performance and set the
annual compensation for 1996 of the Company's Chief Executive Officer, as well
as the other executive officers. Because the Company was undertaking a
restructuring of operations at the Alton Plant in 1996, and the timing of
expected benefits was uncertain, the Committee determined that it would not be
feasible to adopt a bonus plan for 1996 based on the Company's operating
performance or attainment of financial performance goals. No incentive
compensation awards were made to executive officers for the year 1996.
Compensation for each of the executive officers in 1996 was limited to a
base salary and payments related to the Company's Key Employee Retirement Plan.
Based on the Committee's review in 1994 of an independent compensation survey,
the Committee believes the salary and incentive compensation established for
each of the executive officers is competitive with that paid to senior managers
with comparable qualifications, experience and responsibilities. The survey used
to review compensation included 231 manufacturing companies in 13 manufacturing
subcategories, including steel.
The annual salary level for each executive officer, including the Chief
Executive Officer, is reviewed and approved by the Committee in each fiscal
year. In its 1994 review, the Committee compared the Company's executive
salaries with those of survey companies with sales volume similar to the
Company's. Salary increases are also based on the Committee's 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 are not based on specific
criteria. Because the salaries of Mr. McKinney and the other executive officers
were reviewed and adjusted in late 1994 and considering the Company's current
financial situation, the Committee determined that salaries for 1995 and 1996
would remain at the same level. The Board approved the executive officer
compensation program recommended by the Committee for 1996.
Cash bonus awards under the Discretionary Incentive Compensation Plan have
represented the primary means of incentive compensation for executive officers
in recent years. The Company's 1989 Stock Appreciation Rights Plan has
terminated and all rights previously granted have expired.
As part of the Omnibus Budget Reconciliation Act passed by Congress in
1993, a limit was created for the deductibility of compensation paid to
executive officers. The Company's Key Employee Retirement Plan (the "Supplement
Plan"), first put into place by the Board prior to the adoption of Section
162(m), requires payments which may be includable in determining compensation
for the purposes of Section 162(m). The Supplement Plan is amended from time to
time in order to ensure that total pension benefits of the Company's key
employees are consistent with retirement benefits in the industry. Should the
Supplement
12
<PAGE> 14
Plan cause compensation of any key employee, calculated pursuant to Section
162(m), to exceed the deductible limit, the Board of Directors intends to honor
the Company's contractual obligations to fund such Plan. The Board does not
expect any such non-deductible amount to have any material effect on taxes owed
by the Company.
COMPENSATION COMMITTEE
Edwin J. Spiegel, Jr., Chairman
Donald F. Gunning
George H. Walker III
The Compensation Committee was comprised of the following members during
1996: 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.
13
<PAGE> 15
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
Company has not paid dividends since 1991. 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.
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.
[GRAPH]
Assumes $100 invested on December 31, 1991 in Laclede Steel Company Common
Stock, the Russell 2000 Index and the Standard & Poor's Steel Index.
CERTAIN BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1996, the Company issued a total of 416,667 shares of Series A 6%
Preferred Stock to its then largest stockholder, Ivaco Inc., and to named
executive officers of the Company, ("Management Purchasers") for approximately
$6,250,000 in cash pursuant to a Stock Purchase agreement with Ivaco (the "Ivaco
Agreement") and a Management Stock Purchase Agreement with each of the
Management Purchasers. On October 28, 1996, at a special meeting of the
stockholders, an amendment was approved to the Company's Certificate of
Incorporation which reduced the par value of each share of common stock from
$13.33 per share to $0.01 per share and increased the number of authorized
common stock shares from
14
<PAGE> 16
5,000,000 shares to 25,000,000 shares. The stockholders also approved the
recapitalization of the Company's Series A 6% preferred stock to convertible
preferred stock. At such time each share of the preferred stock became
convertible into common stock at the option of the holder at a conversion price
of $3.20 into 4.69 shares of common stock.
In connection with the sale of Series A Preferred Stock to Ivaco Inc. and
to executive officers of the Company, the Company was required to use its best
efforts to obtain stockholder approval of the amendment to the Company's
Certificate of Incorporation. In addition such approval was necessary in order
for the Company to pursue a rights offering to all of the Company's
stockholders, entitling all such stockholders to subscribe for Series A
Preferred Stock (the "Rights Offering"). The Company, however, has postponed the
Rights Offering in order to allow time to improve operating results.
Pursuant to the Ivaco Agreement, the Company agreed that as long as Ivaco,
or Ivaco together with any person with which Ivaco is acting in concert in
connection with its investment in the Company, were the beneficial owner(s) of
40% or greater of the outstanding shares of Common Stock, on a fully diluted
basis (the "Ownership Threshold"), Ivaco had the right to cause the Company to
use its best efforts to cause its Board of Directors to nominate four persons
designated by Ivaco to serve on the Company's nine person Board of Directors and
to use its best efforts to cause the stockholders of the Company to elect such
Directors, and the Company would not change the number of Directors on the Board
of Directors to a number higher than nine. On September 26, 1997, a subsidiary
of Ivaco, Inc. sold one-half of the Ivaco investment in the Company to a
subsidiary of Birmingham Steel. The securities of the Company sold consisted of
1,009,325 common shares and 183,334 shares of the Company's Series A preferred
stock. In connection with the transaction Ivaco, among other things, gave
Birmingham Steel the voting rights on Ivaco's remaining investment in the
Company's common stock and, in any additional common stock Ivaco may own as a
result of the conversion of Ivaco's remaining Series A preferred stock, subject
to certain limitations. In addition, Ivaco agreed not to sell its remaining
investment in the Company prior to September 24, 1998 and has provided
Birmingham Steel with a right of first refusal for four years thereafter. (Such
transactions collectively referred to as the "Ivaco/Birmingham Transaction").
See "Beneficial Ownership of the Company's Common Stock." Subsequent to the
consummation of the Ivaco/Birmingham Transaction, Ivaco notified the Company
that it was releasing the Company from its obligations to nominate directors
designated by Ivaco.
The sale of shares of Series A Preferred Stock to Ivaco and the Management
Purchasers was not registered with the Securities and Exchange Commission or
with any state's securities commission. Accordingly, to provide Ivaco and the
Management Purchasers with the ability to sell the Series A Preferred Stock (and
any shares of Common Stock issued upon conversion thereof) owned by them absent
an exemption from the registration requirements under the Securities Act of
1933, as amended, the Company, Ivaco and the Management Purchasers entered into
a Registration Rights Agreement (the "Registration Rights Agreement") pursuant
to which the Company agreed to provide three demand registration rights to Ivaco
for such shares (and any shares of Common Stock issued upon conversion thereof)
(collectively, the "Registrable Securities") and incidental registration rights
to Ivaco and the Management Purchasers.
In connection with the Registration Rights Agreement, the Company has
agreed to indemnify the holders of Registrable Securities against all losses,
claims, damages, liabilities or expenses to the extent such losses arise out of,
or are based upon, any untrue statement or alleged untrue statement of any
material fact contained in any registration statement.
15
<PAGE> 17
In connection with the purchase of shares of Series A Preferred Stock by
Ivaco and the Management Purchasers, as of July 30, 1996, the Company and each
of the Management Purchasers entered into amendments to existing Employment
Agreements to eliminate previously existing provisions regarding payments to be
made to the Management Purchasers upon a change of control. The other terms of
such Employment Agreements were not changed.
In 1997, the Company engaged Stifel, Nicolaus & Company, Incorporated to
assist in obtaining approval of changes to financial covenants and collateral
arrangements on its Solid Waste Revenue Bonds. Mr. George H. Walker III, a
Company Director, is the Chairman of the Board of Stifel Financial Corporation,
the parent of Stifel, Nicolaus & Company, Incorporated. The Company paid a fee
for these services of approximately $70,000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, certain officers and persons who own more than 10% of the outstanding
Common Stock of the Company, to file with the Securities and Exchange Commission
reports of changes in ownership of the Common Stock of the Company held by such
persons. Officers, directors and greater than 10% stockholders are also required
to furnish the Company with copies of all forms they file under this regulation.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during 1996 and to date in 1997 all Section 16(a) filing requirements
applicable to its officers and directors were satisfied except that the Form 3
required to be filed by Birmingham Steel in connection with the Ivaco/Birmingham
Transaction was filed 17 days late and each Form 3 required to be filed by
Messrs. Garvey, Lucas and Alvarado in connection with their appointment to the
board of directors of the Company was filed 3 days late.
INDEPENDENT AUDITORS
Deloitte & Touche LLP were the independent auditors for the Company for the
year ended December 31, 1996. The Board of Directors has again selected that
firm as auditors for the year ending December 31, 1997. Representatives of
Deloitte & Touche LLP 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 1998 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 February 1, 1998. Such stockholder proposals,
together with any supporting statements, should be directed to the Secretary of
the Company.
16
<PAGE> 18
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
November 18, 1997
17
<PAGE> 19
LACLEDE STEEL COMPANY
ANNUAL MEETING OF STOCKHOLDERS DECEMBER 16, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John B. McKinney and Michael H. Lane,
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, 15th Floor, 211 North Broadway, St. Louis,
Missouri, on Tuesday, December 16, 1997, at 9:30 a.m., Central Standard Time,
and at any adjournments thereof, with all the powers the undersigned would
possess if personally present.
(Continued and to be signed on other side)
- FOLD AND DETACH HERE -
