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SCHEDULE 14A
(RULE 14a)
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
/X/ Definitive Proxy Statement ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
THE LTV CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
THE LTV CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:___________________________________________________________
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NOTICE AND PROXY STATEMENT The LTV Corporation
ANNUAL MEETING OF STOCKHOLDERS 25 West Prospect Avenue
Cleveland, Ohio 44115
[LOGO] THE LTV CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, APRIL 15, 1996
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The Annual Meeting of Stockholders of The LTV Corporation will be held on
Monday, April 15, 1996 at nine o'clock a.m., Cleveland Time, in The Auditorium
Room of The Forum, One Cleveland Center, 1375 East Ninth Street, Cleveland, Ohio
44114 for the following purposes:
1. To elect four directors;
2. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for 1996; and
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Enclosed herewith is a Proxy Statement setting forth certain additional
information.
Only stockholders of record at the close of business on February 21,1996
will be entitled to notice of and to vote at the meeting. The meeting is
scheduled to adjourn at ten o'clock a.m.
Stockholders who do not expect to be present at the meeting are requested
to sign and date the enclosed proxy and return it promptly in the self-addressed
envelope enclosed for that purpose. No postage is required if mailed in the
United States. Any person giving a proxy has the power to revoke it at any time
before it is exercised, and stockholders who are present at the meeting may
withdraw their proxies and vote in person. Revocation may be effected in the
manner provided on page 1 of the Proxy Statement. Stockholders are also
requested to indicate by checking the appropriate box on the proxy if they
intend to attend the meeting in person.
By Order of the Board of
Directors
Glenn J. Moran
Senior Vice President,
General Counsel and Secretary
March 1,1996
<PAGE> 3
The LTV Corporation
25 West Prospect Avenue
Cleveland, Ohio 44115
[LOGO] THE LTV CORPORATION
March 1,1996
PROXY STATEMENT
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This Proxy Statement is furnished to stockholders of The LTV Corporation
(the "Company") in connection with the solicitation, by order of the Board of
Directors, of proxies for use at the Annual Meeting of Stockholders of the
Company to be held on Monday, April 15, 1996 (the "1996 Annual Meeting") at the
time and place and for the purposes set forth in the accompanying notice of the
meeting.
The accompanying proxy is solicited on behalf of the Board of Directors of
the Company and is revocable at any time before it is exercised. A proxy may be
revoked by written notice of revocation or by a later proxy, in either case
delivered to Chemical Mellon Shareholder Services. Attendance at the 1996 Annual
Meeting will not automatically revoke a proxy, but a stockholder in attendance
may request a ballot and vote in person, thereby revoking a prior granted proxy.
The Company has adopted a confidential voting policy which provides that
votes of all stockholders of the Company shall be held in confidence from the
Company and its officers, directors and employees except (i) as may be required
by law or to assert or defend claims for or against the Company, (ii) in the
case of a contested proxy solicitation, or (iii) in the case of stockholder
communications written on the returned proxy material. As part of the policy,
the Company employs the transfer agent for the Company's Common Stock (or
another third party) as an independent tabulator to receive and tabulate the
proxies and as independent inspectors of election.
All outstanding shares of the Company's common stock, par value $0.50
("Common Stock") and Series B Convertible Preferred Stock ("Series B Preferred
Stock"), represented by properly executed and unrevoked proxies received in the
accompanying form in time for the 1996 Annual Meeting will be voted. A
stockholder may, with respect to the election of directors, (i) vote for the
election of all nominees named herein as directors, (ii) withhold authority to
vote for all such director nominees or (iii) vote for the election of all such
director nominees other than any nominee with respect to whom the stockholder
withholds authority to vote by so indicating in the appropriate space on the
proxy. Withholding authority to vote for a director nominee will not prevent
such director nominee from being elected. A stockholder may, with respect to
each other matter specified in the notice of the meeting, (i) vote "FOR" the
matter, (ii) vote "AGAINST" the matter or (iii) "ABSTAIN" from voting on the
matter. A vote to abstain from voting on a matter has the legal effect of a vote
against such matter. Shares will be voted as instructed in the accompanying
proxy on each matter submitted to stockholders. If no instructions are given,
the shares will be voted for the election of all nominees named herein as
directors and for ratification of the selection of independent auditors.
A proxy submitted by a stockholder may indicate that all or a portion of
the shares represented by such proxy are not being voted by such stockholder
with respect to a particular matter. This may occur, for example, when a broker
is not permitted to vote stock held in street name on certain matters in the
absence of instructions from the beneficial owner of the stock. The shares
subject to any such proxy which are not being voted with respect to a particular
matter (the "non-voted shares") will be treated as shares not present and
entitled to vote on such matter, although such
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shares may be considered present and entitled to vote for other purposes and
will count for purposes of determining the presence of a quorum. Shares voted to
abstain as to a particular matter will not be considered non-voted shares.
Approval of each matter specified in the notice of the meeting requires the
affirmative vote of a majority, or in the case of the election of directors a
plurality, of the votes attributable to all shares present in person or by proxy
at the meeting and entitled to vote on such matter. Accordingly, non-voted
shares with respect to such matters will not affect the determination of whether
such matters are approved or the outcome of the election of directors.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of Common Stock of whom they have knowledge, and will reimburse them for
their expenses in so doing; and certain directors, officers and other employees
of the Company, not specially employed for the purpose, may solicit proxies,
without additional remuneration therefor, by personal interview, mail, telephone
or telegraph. The Company has retained Morrow & Co. to aid in the solicitation
of proxies for a fee of $9,500, plus out-of-pocket expenses.
Only holders of the Company's Common Stock and Series B Preferred Stock of
record at the close of business on February 21, 1996 will be entitled to vote at
the meeting. Each issued and outstanding share of Common Stock is entitled to
one vote upon each matter to be voted on at the 1996 Annual Meeting. Each issued
and outstanding share of Series B Preferred Stock will be entitled to 5.85138
votes upon each matter to be voted upon at such meeting. All such stock will
vote as a single class upon each matter proposed by the Company for
consideration. As of February 21, 1996, there were issued and outstanding
105,140,731 shares of Common Stock and 500,000 shares of Series B Preferred
Stock.
BUSINESS AGENDA
In addition to the matters relating to the election of directors which is
set forth immediately below, the proposal to ratify the selection of the
Company's independent auditors is set forth beginning at page 21.
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation as amended provides for
three classes of directors of as nearly equal size as possible and further
provides that the total number of directors (which is currently set at fourteen)
shall be determined by resolution adopted by the affirmative vote of a majority
of the entire Board of Directors, except that the total number of directors
shall be not less than three nor more than fifteen. The Restated Certificate
further provides that the term of each class of directors is three years. The
term of each class expires in rotation. No person is eligible to be elected a
director if such person is 70 years old or older at the time of election. In the
case of any director who is an officer or employee of the Company, such
director's term will expire at the end of the second month following such
director's retirement or resignation from his position as an officer or
employee.
Pursuant to the terms of the USWA Labor Agreement, the United Steelworkers
of America ("USWA") has the right to select a nominee for one seat on the Board
of Directors, and the Company is obligated, if the nominee is reasonably
satisfactory to the Company, to use its best efforts to secure the election of
such nominee. Pursuant to such right, the USWA nominated Edgar L. Ball to stand
for election as a director at the 1994 Annual Meeting, and he was elected a
director for a term expiring in 1996. He is standing for re-election at the 1996
Annual Meeting for a term expiring in 1999.
Further, pursuant to an agreement with Sumitomo Metal Industries, Ltd.
("Sumitomo"), Sumitomo has the right to designate or approve the nomination of
one person (who, if such person
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is not a current or former employee of Sumitomo or any of its subsidiaries, must
be reasonably acceptable to the Company) for election as a director of the
Company so long as Sumitomo holds five percent or more of the then outstanding
shares of Common Stock (assuming conversion of its convertible securities) and
at least one share of Series B Preferred Stock. See "Security Ownership of
Directors, Management and Principal Stockholders." Sumitomo's director selection
right has not yet been exercised. In the event such right is exercised in the
future, the total number of directors will be increased to fifteen. In the event
that the Company's Board of Directors is expanded to exceed fifteen directors,
Sumitomo will have the right to designate or approve the nomination of two
persons for election as directors to the Board of Directors.
In addition, under the Certificate of Designations of the Series B
Preferred Stock, if the Company does not pay dividends for six or more
consecutive quarters on its Series B Preferred Stock, the Company's Board of
Directors will be increased by two members and holders of the Series B Preferred
Stock will be entitled, voting separately as a single class, to elect two
directors of the Company.
At the present time it is intended that shares represented by the enclosed
proxy will be voted for the re-election of Edgar L. Ball, John E. Jacob, Edward
C. Joullian III and Samuel K. Skinner as Directors of the Second Class for a
three-year term expiring at the 1999 annual election, unless contrary
instructions are received.
All of the nominees named are currently members of the Board of Directors.
All incumbent directors attended during the last fiscal year more than 75
percent (except Messrs. Jacob and Poling) of the total number of meetings of the
Board and committees on which they served (held during the periods that they
served). In the event that any nominee should become unavailable for reasons not
now known, it is intended that such shares will be voted for such substitute
nominee as may be selected by the Board of Directors. Alternatively, the Board
may elect not to fill the vacancy and to reduce the number of directors.
The affirmative vote of a plurality of the votes attributable to all shares
entitled to vote, voting together as a single class, is required to elect the
nominees as Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTORS.
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INFORMATION ABOUT DIRECTORS AND NOMINEES FOR DIRECTORS
The names of the directors whose terms of office shall continue after the
1996 Annual Meeting and the nominees, their principal occupations during at
least the past five years, other directorships held, and certain other
information are set forth below. Ages shown are as of March 1, 1996.
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Directors of the Second Class Nominated for Election at the 1996 Meeting for
Terms Expiring in 1999
Edgar L. Ball, age 69, became a director of the
Company in April 1994. He served as International
Secretary-Treasurer of the USWA from March 1990 to March
1994. He also has been Chairman of both the Nonferrous
Industry Conference of the USWA and National Nonferrous
[ Photo ] Coordinating Bargaining Committee, was a director of the
Southern Labor Institute and has served as Chairman of the
USWA Leadership Development and Labor-Management
Participation Task Forces. Member of the Company's Audit
and Pension and Investment Committees.
John E. Jacob, age 61, became a director of the
Company in June 1993. Mr. Jacob has been Executive Vice
President and Chief Communications Officer for
Anheuser-Busch Companies, Inc. since June 1994. Prior
[ Photo ] thereto, he had been President and Chief Executive Officer
of the National Urban League Inc. since January 1982. He
also is a director of Coca-Cola Enterprises, Inc. and
Anheuser-Busch Companies, Inc. Member of the Company's
Audit and Pension and Investment Committees.
Edward C. Joullian III, age 66, became a director of
the Company in October 1976. For more than the past five
years, he has been Chairman of the Board and Chief
Executive Officer of Mustang Fuel Corporation (energy
development and services). He also is a director of
[ Photo ] American Fidelity Companies (insurance) and its
subsidiaries and Fleming Companies, Inc. (food
distribution). He also is a trustee of The Colonial
Williamsburg Foundation, Williamsburg, Virginia. Chairman
of the Company's Board Affairs Committee and member of the
Company's Executive and Compensation and Organization
Committees.
Samuel K. Skinner, age 57, became a director of the
Company in June 1993. He has been President and a director
of Commonwealth Edison Company since February 1, 1993.
Prior thereto, he served as Chief of Staff to the President
of the United States. Prior to his White House service, Mr.
[ Photo ] Skinner served as U.S. Secretary of Transportation for
nearly three years. Prior to February 1989, he practiced
law as a Senior Partner in the Chicago law firm of Sidley &
Austin, where he served on the firm's executive committee.
He is also a director of ANTEC Corporation (supplier to
communications industry) and a member of the International
Advisory Council of The Broken Hill Proprietary Company
Limited (Australian multinational minerals company).
Chairman of the Company's Audit Committee and member of the
Company's Executive and Pension and Investment Committees.
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Directors of the Third Class -- Terms Expire in 1997
John C. Evans, age 70, became a director of the
Company in January 1987. He has been an Advisory Director
of Morgan Stanley & Co., Incorporated (investment bank) for
more than the past five years and is a director and
Chairman of the Finance Committee of The Henry Luce
[PHOTO] Foundation, Inc. He is also the Chairman of the Board of
Trustees of Connecticut College and a director and Chairman
of the Finance and Budget Committee of Dia Center for the
Arts, a non-profit arts organization. Member of the
Company's Audit and Compensation and Organization
Committees.
David H. Hoag, age 56, became Chairman of the Board of
the Company in June 1991 and President and Chief Executive
Officer of the Company in February 1991. He has been a
director of the Company since June 1986. He was Executive
Vice President-Steel of the Company from June 1986 until
February 1991. He also is the Chairman of the Board and
Chief Executive Officer of LTV Steel Company, Inc. He also
[PHOTO] is a director of The Chubb Corporation (insurance) and The
Lubrizol Corporation (chemical manufacturing) where he
serves as the Chairman of its Compensation Committee. He
also serves as Chairman of Cleveland Tomorrow, a prominent
Cleveland business group, and as Chairman of the Board of
Trustees of Allegheny College. He also was a past Chairman
of the Board of the American Iron and Steel Institute.
Chairman of the Company's Executive Committee and member of
the Company's Board Affairs Committee.
Dr. Paul G. Stern, age 57, became a director of the
Company in June 1993. He is a partner of Thayer Capital
Partners. He was Chief Executive Officer of Northern
[PHOTO] Telecom Ltd. from April 1989 to March 1993 and its Chairman
of the Board from April 1990 to July 1993. He also is a
director of Whirlpool Corporation, Dow Chemical Company and
General Instrument Corporation. Member of the Company's
Board Affairs and Compensation and Organization Committees.
Stephen B. Timbers, age 51, became a director of the
Company in June 1993. He is President and Chief Executive
Officer of Zurich Kemper Investments, Inc. From 1992 to
1996 he was President, Chief Operating Officer, and a
director of Kemper Corporation. Prior thereto, since 1987,
he served as Chief Investment Officer of Kemper Financial
[PHOTO] Services and, from 1991 to 1993, of Kemper Corporation. He
also is a Trustee of the Kemper Mutual Funds and Closed-End
Funds and a governor of the Investment Company Institute.
Chairman of the Company's Pension and Investment Committee
and member of the Company's Executive and Compensation and
Organization Committees.
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Farah M. Walters, age 51, became a director of the
Company in June 1993. She is President and Chief Executive
Officer of University Hospitals Health System, Inc. and
University Hospitals of Cleveland. Prior thereto, beginning
in March 1991 until January 1992, she served as Senior
Executive Vice President of University Hospitals Health
[PHOTO] System, Inc. and Executive Director of University Hospitals
of Cleveland. From February 1987 until April 1989, she was
Senior Vice President and General Manager, Integrated
Health System Management Center. She also is a director of
Kerr-McGee Corporation (oil and gas) and Society National
Bank. Member of the Company's Audit and Board Affairs
Committees.
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Directors of the First Class -- Terms Expire in 1998
Dr. Colin C. Blaydon, age 55, was elected a director
of the Company in September 1988. Dr. Blaydon is Dean
Emeritus and Buchanan Professor of Management of the Amos
Tuck School of Business Administration at Dartmouth
College. Dr. Blaydon is also a Senior Advisor of Putnam,
Hayes & Bartlett, Inc., a professional consulting firm, and
[PHOTO] a director of Tom's of Maine (consumer products) and
Chairman of the Board of ITP Systems (systems integration).
He is also a member of the Advisory Board of the University
of Southern California, Graduate School of Business
Administration and Trustee of the Lowell Whiteman School.
Member of the Company's Audit and Pension and Investment
Committees.
William H. Bricker, age 64, was elected a director of
the Company in March 1982. He was from July 1976 to May
1987 the Chief Executive Officer and from November 1979 to
May 1987 the Chairman of the Board of Diamond Shamrock
Corporation, now known as Maxus Energy Corporation (coal,
chemicals and oil and gas). He is Chairman of the Board and
[PHOTO] Chief Executive Officer of D.S. Energy Services, Inc.
(business consultants and international oil and gas), Trust
Manager of American Industrial Properties REIT and
President of Bear Creek Angus Ranch, Inc. Mr. Bricker also
is a director of Montana Floral Corporation and Eltech
Systems Corporation. Member of the Company's Audit and
Pension and Investment Committees.
M. Thomas Moore, age 61, became a director of the
Company in June 1993. Mr. Moore has been Chairman of the
Board of Cleveland-Cliffs Inc (iron ore) since May 10,1988
and its Chief Executive Officer since January 1, 1987, and,
prior thereto, he served as its President. He also is a
director of KeyCorp (banking) and Capitol American
[PHOTO] Financial Corporation. Mr. Moore is also a director of the
American Iron and Steel Institute, the American Iron Ore
Association, and the National Mining Association. Chairman
of the Company's Compensation and Organization Committee
and member of the Company's Board Affairs and Executive
Committees.
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Harold A. Poling, age 70, became a director of the
Company in November 1993. Mr. Poling, now retired, was
Chairman and Chief Executive Officer of Ford Motor Company
from March 1, 1990 to October 1993, and, prior thereto,
since October 1987 was Vice Chairman and Chief Operating
Officer of Ford Motor Company. He is also a director of
[PHOTO] Shell Oil Company, Kellogg Company and Flint Ink Corp. and
a member of the International Board of VIAG AG
(conglomerate) and the International Advisory Council of
The Broken Hill Proprietary Company Limited (Australian
multinational minerals company). He is also a member of the
PGA Tour Tournament Policy Board. Member of the Company's
Audit and Compensation and Organization Committees.
Vincent A. Sarni, age 67, became a director of the
Company in June 1993. Mr. Sarni, now retired, was Chairman
of the Board and Chief Executive Officer of PPG Industries,
[PHOTO] Inc. from November 1984 until September 1993. He is also a
director of PPG Industries, Inc., PNC Bank Corp., AMTROL
Corp. (water treatment equipment manufacturing) and Hershey
Foods Corporation. Member of the Company's Board Affairs
and Compensation and Organization Committees.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has standing Audit, Board Affairs, Compensation and
Organization, Pension and Investment and Executive Committees of the Board of
Directors. The members of these Committees have been identified above. The Board
of Directors met twelve times in 1995.
The Audit Committee recommends the selection of independent auditors to the
Board of Directors; reviews the plan of the audits to be performed by the
independent auditors and internal audit department, together with their audit
reports and any recommendations made by them; reviews the results of the audit
for the prior fiscal year with the independent auditors, reviews annual
financial statements before they are published, reviews the independence of the
independent auditors, reviews the reporting assignment of the internal audit
function, and reviews the Company's significant accounting policies, internal
controls and financial reporting practices. The Audit Committee also reviews the
Company's business conduct policies and reviews issues related to environmental,
safety, health and workers' compensation matters. The Audit Committee met five
times in 1995.
The Board Affairs Committee recommends to the full Board nominees for
election to the Board of Directors. The Board Affairs Committee also recommends
to the full Board all matters relating to Board composition, terms, ethics,
procedures, compensation and benefits and committee structures and assignments,
and, in conjunction therewith, reviews periodically the Board's written
corporate governance and committee guidelines. The Committee also reviews the
annual proxy statement before publication. The Board Affairs Committee met three
times in 1995.
The Compensation and Organization Committee determines the annual salary,
bonus and other benefits of the officers of the Company and certain officers of
its subsidiary, LTV Steel Company, Inc., and establishes and reviews, as
appropriate, executive compensation policies and performance standards under
compensation programs for such officers. The Compensation and Organization
Committee also recommends new employee benefit plans and changes to those plans
to the Board of Directors, grants stock related incentives and administers all
of the Company's employee benefit plans. The Compensation and Organization
Committee also recommends to the Board of Directors candidates for election as
corporate officers, reviews and monitors matters related to
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management development and succession including the evaluation of the Chief
Executive Officer, reviews and approves the service of certain officers of other
entities, and reviews the annual proxy statement before publication. The
Compensation and Organization Committee met seven times in 1995.
The Pension and Investment Committee sets funding and investment policies
for the pension plans and employee welfare benefit plans of the Company and its
subsidiaries, monitors compliance by the Company with the terms of the Company's
settlement agreement with the Pension Benefit Guaranty Corporation, and
appoints, monitors and terminates investment managers. The Pension and
Investment Committee met three times in 1995.
The Executive Committee is empowered to exercise all of the authority of
the Board of Directors, except that it does not have the power to rescind any
action previously taken by the Board of Directors or to take certain actions
enumerated in the Company's By-Laws (such as amend the Certificate of
Incorporation or adopt an agreement of merger or consolidation). The Executive
Committee meets as necessary and did not meet in 1995.
DIRECTOR COMPENSATION
Mr. Hoag receives no compensation for his service as a director. In 1995,
directors who are not employees of the Company received fees in accordance with
the following schedule.
<TABLE>
<S> <C>
Annual retainer
For Board service................................................... $30,000
For service as chairman of a committee.............................. $ 2,500
Attendance fees
Board meetings (per meeting)........................................ $ 1,000
Committee meetings (per meeting).................................... $ 1,000
</TABLE>
In addition, non-employee directors who own at least 1,000 shares of the
Company's Common Stock each receive immediately after each annual meeting of
stockholders an annual grant of options to purchase 1,000 shares of Common
Stock.
The Company has a Non-Employee Directors' Equity Compensation Plan which
permits non-employee directors to take all fees, or a portion thereof, in the
form of Common Stock of the Company. The Company also has a Non-Employee
Directors Deferred Compensation Plan which permits such directors to defer
receipt of their fees and provides eight notional investment options for such
fees, including a notional investment in the Company's Common Stock.
In 1995, the Board's Board Affairs Committee compared its non-employee
director compensation program with director compensation programs at selected
industrial companies similar in size to the Company and at other integrated
flat roll steel companies. The Committee concluded that when all cash and
non-cash benefits were considered, the Company's director compensation plan was
below average compensation levels at the comparison companies and that an
increase of $10,000 would make the Company's director compensation program
competitive with the average level of director compensation at the comparison
companies. The Committee considered and rejected a number of benefits found at
other companies and concluded that director compensation should be in the form
of cash and common stock only.
Accordingly, effective January 1, 1996, the Company increased its annual
retainer for non-employee directors from $30,000 to $40,000 and provided that,
beginning July 1, 1996, half of such retainer, which is payable quarterly in
arrears, would be payable in the form of Common Stock. In that connection, the
Company's Non-Employee Directors' Equity Compensation Plan was amended to
require payment of at least 50% of the retainer in Common Stock. The primary
purpose of the Board in making 50% of the annual retainer payable in stock was
to more closely align the interests of the directors with those of the Company's
stockholders. Board and Committee meeting fees ($1,000 per meeting) and the
annual fee for non-employee directors for service as a chairman of a committee
($2,500 annually) were not changed.
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SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the ownership
as of December 31, 1995 of each class of the Company's equity securities by (i)
each of the directors, (ii) the five executives named in the summary
compensation table below and (iii) all current directors and officers as a
group. No persons are known by management to be beneficial owners of more than
5% of any class of the Company's equity securities, except as noted below. All
such holders have sole voting and investment powers unless otherwise indicated.
<TABLE>
<CAPTION>
NUMBER BENEFICIALLY OWNED % OF CLASS
--------------------------- -----------------------
SHARES OF SERIES A SHARES OF SERIES A
NAME COMMON STOCK WARRANTS COMMON STOCK WARRANTS
- --------------------------------------------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C>
DIRECTORS
David H. Hoag................................ 199,439(c)(d)(e) 158 (a) (a)
Edgar L. BaIl................................ 0 0 0 0
Dr. Colin C. Blaydon......................... 3,000(e) 0 (a) 0
William H. Bricker........................... 116(c) 29 (a) (a)
John C. Evans................................ 3,006(c)(e) 11 (a) (a)
John E. Jacob................................ 3,000(e) 0 (a) 0
Edward C. Joullian III....................... 6,127(b)(c)(e) 50 (a) (a)
M. Thomas Moore.............................. 6,247(e)(f) 0 (a) 0
Harold A. Poling............................. 3,000(e) 0 (a) 0
Vincent A. Sarni............................. 3,000(e) 0 (a) 0
Samuel K. Skinner............................ 3,000(e) 0 (a) 0
Dr. Paul G. Stern............................ 3,000(e) 0 (a) 0
Stephen B. Timbers........................... 3,000(e) 0 (a) 0
Farah M. Walters............................. 3,000(e) 0 (a) 0
FOUR OTHER OFFICERS NAMED IN
SUMMARY COMPENSATION TABLE
J. Peter Kelly............................... 56,888(d)(e) 0 (a) 0
Arthur W. Huge............................... 31,725(d)(e) 0 (a) 0
Glenn J. Moran............................... 18,996(d)(e) 0 (a) 0
James F. Haeck............................... 20,206(d)(e) 0 (a) 0
All current directors and executive
officers (twenty-two, including above)..... 403,721(c)(d)(e) 248 (a) (a)
</TABLE>
- ---------------
(a) Less than 1% of class.
(b) Mr. Joullian has a beneficial interest in 3,000 shares of Common Stock and
23 Series A Warrants owned by Joullian & Co., a limited partnership.
(c) Includes shares of Company Common Stock issuable upon exercise of the Series
A Warrants. Each Series A Warrant is exercisable for 0.5582 of a share of
Common Stock.
(d) Includes shares of Company Common Stock in the following amounts which are
subject to conditions of forfeiture and restrictions on sale, transfer or
other disposition: Mr. Hoag--68,600 shares; Mr. Kelly--11,700 shares; Mr.
Huge--5,500 shares; Mr. Moran--4,650 shares; Mr. Haeck--5,500 shares and All
Current Directors and Executive Officers as a Group--104,123 shares.
(e) Includes shares of Common Stock in the following amounts which are not now
owned but which could be acquired by exercise of stock options: Each
non-employee Director (except Messrs. Ball and Bricker)--2,000 shares; Mr.
Hoag--114,333 shares; Mr. Kelly--39,832 shares; Mr. Huge--23,056 shares; Mr.
Moran--12,583 shares; Mr. Haeck--13,056 shares and All Current Directors and
Executive Officers as a Group--248,442 shares.
(f) Excludes 842,253 shares of Company Common Stock owned by Cleveland-Cliffs
Inc, for which Mr. Moore serves as Chairman and Chief Executive Officer.
9
<PAGE> 12
Sumitomo and its affiliates own 100% of the Company's Series B Preferred
Stock (500,000 shares) and 3,328,220 shares of the Company's Common Stock.
Sumitomo and its affiliates, through conversion of its Series B Preferred Stock
and convertible notes, together with its existing shares of the Company's Common
Stock, could acquire up to 11,382,113 shares or approximately 10% of the
Company's Common Stock. The address of Sumitomo's U.S. affiliate is c/o Sumitomo
Metal USA Corporation, 8750 West Bryn Mawr Avenue, Suite 1000, Chicago, Illinois
60631.
In February 1996, Vanguard Windsor Fund, Inc. ("Vanguard") and Wellington
Management Company ("WMC") shared beneficial ownership of 7.8 million shares of
Common Stock or 7.4% of the outstanding Common Stock as of such date. Vanguard
and WMC reported that Vanguard had sole voting authority and that Vanguard and
WMC shared dispositive authority as to all such shares. Address: 75 State
Street, 19th Floor, Boston, Massachusetts 02109.
10
<PAGE> 13
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following Summary Compensation Table sets forth the cash compensation
and other components of the compensation of David H. Hoag, the Chairman and
Chief Executive Officer of the Company, and the other four most highly
compensated executive officers of the Company in 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- -------------------------------------
AWARDS PAYOUTS
------------------------- -------
NUMBER OF
RESTRICTED SECURITIES ALL OTHER
STOCK UNDERLYING LTIP COMPEN-
SALARY BONUS AWARD(S) OPTIONS PAYOUTS SATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) GRANTED ($) ($)
- ------------------------------- ---- ------- ------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
David H. Hoag 1995 587,500 340,000 0 70,000 0 48,740
Chairman and Chief 1994 550,000 360,000 1,189,825 43,000 0 43,285
Executive Officer 1993 550,000 200,000 0 150,000 0 40,975
J. Peter Kelly 1995 343,750 201,000 109,200 19,500 0 111,122
President and Chief 1994 312,500 200,000 73,613 19,500 0 92,307
Operating Officer 1993 297,917 187,500 0 50,000 0 137,668
LTV Steel
Arthur W. Huge 1995 241,000 135,000 0 9,170 0 50,781
Senior Vice President and 1994 232,500 155,000 103,813 9,170 0 46,913
Chief Financial Officer 1993 225,000 168,750 0 30,000 0 80,273
Glenn J. Moran 1995 221,000 115,000 0 7,750 0 48,258
Senior Vice President, 1994 215,004 135,000 87,769 7,750 0 44,084
General Counsel 1993 215,004 161,250 0 15,000 0 78,387
and Secretary
James F. Haeck 1995 209,167 125,000 0 7,750 0 51,784
Senior Vice President- 1994 169,650 125,000 103,813 9,170 0 35,314
Commercial 1993 143,100 72,000 0 15,000 0 47,151
</TABLE>
- ------------
(1) The number of shares and year-end value of restricted Common Stock awards
held as of December 31, 1995 were as follows: Mr. Hoag--68,600 shares and
$943,250; Mr. Kelly--11,700 shares and $160,875; Mr. Huge--5,500 shares and
$75,625; Mr. Moran--4,650 shares and $63,938 and Mr. Haeck--5,500 shares and
$75,625. Dividends are payable on restricted stock awards to the same extent
and in the same manner as all other shares of Common Stock. All restricted
stock awards granted under the Company's Management Incentive Program vest
on the fifth anniversary of the date of grant.
(2) Consists of supplemental salary under the Design Your Benefits Program,
accruals under defined contribution pension plans, matching employer
contributions of cash to the Capital Accumulation Plan and service
recognition payments in the following respective amounts for 1995: Mr.
Hoag--$34,913, $0, $2,827 and $11,000; Mr. Kelly--$18,116, $83,579, $2,827
and $6,600; Mr. Huge--$10,219, $37,735, $2,827 and $0; Mr. Moran--$9,781,
$36,267, $2,210 and $0; and Mr. Haeck--$8,505, $37,295, $2,484 and $3,500.
11
<PAGE> 14
The following table sets forth certain information concerning options to
purchase Company Common Stock granted in 1995 to the five individuals named in
the Summary Compensation Table.
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM (3)
-------------------------------------------------------- --------------------------------------
% OF
TOTAL
OPTIONS
NUMBER OF GRANTED
SECURITIES TO
UNDERLYING EMPLOYEES EXERCISE OR
OPTIONS IN FISCAL BASE PRICE EXPIRATION
NAME GRANTED YEAR(1) ($/SHARE)(2) DATE 0($) 5%($) 10%($)
-------- ---------- --------- ------------ ---------- ---- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
David H. Hoag 70,000 21% $14.78 11/1/05 0 575,970 1,529,963
J. Peter Kelly 19,500 6% 14.78 11/1/05 0 160,449 426,204
Arthur W. Huge 9,170 3% 14.78 11/1/05 0 75,452 200,425
Glenn J. Moran 7,750 2% 14.78 11/1/05 0 63,768 169,389
James F. Haeck 7,750 2% 14.78 11/1/05 0 63,768 169,389
All Common Stock
Holders (4) -- -- -- -- 0 933,783,709 2,366,391,257
</TABLE>
- ---------------
(1) A total of 327,700 options were granted to employees in 1995. With respect
to each grant, one-third of the options becomes exercisable on November 1,
1996, one-third on November 1, 1997 and one-third on November 1, 1998,
unless the vesting schedule is accelerated to become fully exercisable upon
death, retirement, disability or a change in control as defined in the
Management Incentive Program. Each optionee must demonstrate the ownership
of a specified number of "qualifying shares" of Company Common Stock in
order to participate in future option awards. Each option is exercisable
with a payment of cash, stock or both for a period of 10 years and vests
immediately in the event of death, disability or retirement or in the event
certain change of control events occur. If shares are used to exercise an
option, the Compensation and Organization Committee of the Board of
Directors may grant a replacement option on the shares so used.
(2) The exercise price was based on an historical average trading price over a
thirty-day trading period prior to the award as provided in the Management
Incentive Program. On the date of such grants, the closing price of a share
of Common Stock as reported on the New York Stock Exchange was $14.125 a
share.
(3) The dollar amounts under these columns are the result of theoretical
calculations at 5% and 10% rates set by the Securities and Exchange
Commission, and therefore are not intended to forecast possible future
appreciation, if any, in the Company's stock price.
(4) The potential realizable value for all stockholders is based on 105,118,693
shares of Common Stock outstanding at December 31, 1995.
12
<PAGE> 15
The following table sets forth certain information concerning the exercise
in 1995 of options to purchase Company Common Stock by the individuals named in
the Summary Compensation Table and the unexercised options to purchase Company
Common Stock held by such individuals at December 31, 1995.
AGGREGATED OPTION EXERCISES IN 1995 AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS GRANTED AT YEAR END AT YEAR END ($)(1)
EXERCISE REALIZED ----------------------------- -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David H. Hoag 0 0 114,333 148,667 0 0
J. Peter Kelly 0 0 39,832 49,168 0 0
Arthur W. Huge 0 0 23,056 25,284 0 0
Glenn J. Moran 0 0 12,583 17,917 0 0
James F. Haeck 0 0 13,056 18,864 0 0
</TABLE>
- ---------------
(1) The value is calculated based on the aggregate amount of the excess of
$13.75 (the closing price of a share of the Company's Common Stock as
reported on the New York Stock Exchange Composite Transactions report for
December 29, 1995) over the relevant exercise price.
RETIREMENT BENEFIT PLANS
Restated Executive Benefit Plan
In January 1996, the Company replaced the Executive Benefit Plan (the
"Benefit Plan"), a defined benefit plan, with the Restated Executive Benefit
Plan (the "Restated Plan"), a defined contribution plan. The Restated Plan is
designed to provide a fixed annual contribution (expressed as a percentage of
covered compensation) to a participant which, together with projected investment
returns, will be sufficient to provide an annual retirement benefit at age 65
equal to the difference between (i) 55% of projected final average three year
compensation (salary plus annual incentive award) and (ii) the aggregate benefit
provided under all other retirement plans maintained by the Company. Such
benefit is prorated to the extent that years of service total less than 30.
Participants will invest such contributions in notional investment options.
Twenty executives of the Company and its subsidiaries (including Messrs. Kelly,
Huge, Moran and Haeck) currently are included in the Restated Plan. Mr. Hoag
will not be a participant in the Restated Plan.
With regard to participants who were also in the predecessor Benefit Plan
(which includes Messrs. Kelly, Huge and Moran), annual contributions will be
increased, if necessary, at retirement to provide a retirement benefit
equivalent to the defined benefit to which these participants would have been
entitled had the provisions of the predecessor Benefit Plan remained in effect.
These participants (along with Mr. Hoag) would also be provided the survivor and
disability benefits included in the predecessor Benefit Plan.
Predecessor Plan
Under the predecessor Benefit Plan, the maximum retirement benefit was 50%
of final average compensation after 15 years of participation or upon attaining
normal retirement age, whichever should first occur, after offsetting for
amounts payable under all other existing retirement benefits. For participants
whose employment terminated prior to normal retirement age and prior to 15 years
of participation, benefits accrued at the rate of 3 1/3% of final average
compensation per year of participation (prorated for each calendar month during
which the participant participated for at least one day). Final average
compensation was a participant's average annual compensation (base salary plus
awards under the Annual Incentive Program) for the 36 consecutive months which
13
<PAGE> 16
yielded the highest average compensation while a participant. Retirement
benefits were payable at the later of a participant's termination of employment
or normal retirement age or before normal retirement age with approval of the
Board of Directors of the Company. Normal retirement age under the Benefit Plan
was age 62 for individuals becoming participants as of or after January 1, 1985
and age 60 for those who became participants prior to January 1, 1985.
The disability benefit provided in the predecessor Benefit Plan was equal
to 100% of final average compensation for one year and 50% thereafter and a
survivor benefit payable to a participant's spouse (until death) and,
subsequently, to the participant's children collectively (until the last child
reached age 21). The survivor's benefit for active and disabled participants was
25% of final average compensation. Similar survivors of retired participants
would have received in the aggregate a benefit of 50% of the relevant
participant's pension. Furthermore, survivors of former participants who died
while still employed by LTV would have received a benefit of 50% of the pension
accrued while an active participant.
In 1995, six executive officers of the Company and its subsidiaries
(including Messrs. Hoag, Kelly, Huge and Moran) were participants in the
predecessor Benefit Plan. The Company closed the Benefit Plan to new
participants at year end 1993. As of December 31, 1995, the annualized
compensation of Messrs. Hoag, Kelly, Huge and Moran covered by the Benefit Plan
was approximately $990,000, $598,950, $393,600 and $358,400, respectively. As of
December 31, 1995, Messrs. Hoag, Kelly, Huge and Moran were credited with 12, 6,
3 and 3 years of participation, respectively. The following table shows the
estimated annual benefits payable upon retirement under the Benefit Plan for
employees in the classifications specified.
<TABLE>
<CAPTION>
AGE/YEARS ANNUAL COVERED COMPENSATION--THREE-YEAR AVERAGE
OF --------------------------------------------------------------
PARTICIPATION $300,000 $450,000 $600,000 $750,000 $1,000,000
- ------------- -------- -------- -------- -------- ----------
ESTIMATED ANNUAL BENEFIT
<S> <C> <C> <C> <C> <C>
Age 59
5 years $ 50,000 $ 75,000 $100,000 $125,000 $166,667
10 years $100,000 $150,000 $200,000 $250,000 $333,333
15 years $150,000 $225,000 $300,000 $375,000 $500,000
Age 60/62
5 years $150,000 $225,000 $300,000 $375,000 $500,000
10 years $150,000 $225,000 $300,000 $375,000 $500,000
15 years $150,000 $225,000 $300,000 $375,000 $500,000
- ---------------
<FN>
Note: Benefits will be reduced by Social Security benefits and retirement and
disability benefits payable under other Company plans. For those
individuals who became participants after December 31, 1984, benefits are
also reduced to the extent benefits are payable by retirement plans of
former employers.
</TABLE>
Other Prior Retirement Plans
Officers included in the Summary Compensation Table, except for Mr. Huge,
were also covered by defined benefit plans at LTV and its steel subsidiary,
which have been frozen. Assuming retirement at age 65, the aggregate annual
benefit payable to Messrs. Hoag, Kelly, Moran and Haeck under these frozen
defined benefit retirement plans will be approximately $107,890, $75,450,
$35,970 and $14,520, respectively.
With respect to Messrs. Kelly, Moran and Haeck, their annual retirement
benefits under the frozen defined benefit plans described in the immediately
preceding paragraph are taken into account in calculating the annual
contribution under the Restated Plan and are taken into account as offsets to
any additional amount otherwise payable to them under the predecessor Benefit
Plan. In Mr. Huge's case, his annual retirement benefit at his prior employer is
offset against any additional amount payable under the predecessor Benefit Plan.
14
<PAGE> 17
In Mr. Hoag's case, the above-described annual benefit of $107,890 is in
addition to the accrued annual retirement benefit of $500,000 payable under
annuities purchased for Mr. Hoag under a prior employment contract, and annual
payments of $54,000 under two additional annuities previously purchased by the
Company pursuant to the above-described Benefit Plan. Accordingly, the aggregate
defined benefit pension amount payable to Mr. Hoag under all of the above at
retirement at age 60 or later would be $661,890 annually. In addition, Mr. Hoag
resumed participation following the expiration of his employment contract in the
Company's broad-based defined contribution plan effective February 1, 1996, and
those contributions will be included in the amounts shown in future Summary
Compensation Tables.
Executive Severance Pay Program
In January 1996, the Company adopted an Executive Severance Plan (the
"Severance Plan") which provides severance benefits for certain key executives
(including the executive officers named in the Summary Compensation Table) if
the executive's employment is involuntarily terminated for reasons other than
cause, or as the result of a change in control of the Company. The Severance
Plan provides for the following to be included in calculating the severance
benefit: (i) base salary and (ii) bonus award, if any, payable under the
Company's Annual Incentive Plan using a combination of actual corporate and
target individual performance criteria for that year. During the period for
which severance benefits are paid, the executive will continue to participate in
the Company's life and health insurance and retirement plans.
The maximum period during which plan benefits will be paid ranges from 6 to
24 months depending upon the participant's position level. The benefit (as
defined above) payable under the Severance Plan to the executives named in the
Summary Compensation Table is as follows: Mr. Hoag--24 months; Mr. Kelly--18
months; Mr. Huge--12 months; Mr. Moran--12 months and Mr. Haeck--12 months. The
severance payments would be offset by compensation received by such executives
from other employers. Members of senior management, including the five officers
named in the Summary Compensation Table, will be required to enter into a
non-compete agreement with the Company and release the Company from all
employment-related liabilities as a condition to receiving payments under the
Severance Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Contracts and Certain Commercial Relationships
From February 1991 through January 1996, the Company had in place an
employment agreement with Mr. Hoag which provided for employment during such
period at an annual salary of at least $550,000, his continued participation in
the Company's existing executive compensation plans and the purchase by the
Company of five annuities providing an aggregate annual retirement benefit of
$500,000 beginning at age 60. For a description of additional retirement
benefits payable to Mr. Hoag, see "Other Retirement Plans." The fifth annuity
was purchased by the Company in 1995 at a cost (including the tax gross up paid
by the Company on behalf of Mr. Hoag) of $1,272,585. The agreement also provided
for substantial severance benefits in the event Mr. Hoag was terminated or in
the event of a diminution in title or compensation during the contract period as
well as substantial benefits to his spouse in the event of his death during the
contract period.
In the ordinary course of business, the Company and its subsidiaries have
engaged in transactions with other corporations, whose directors or officers are
members of the Board of Directors of the Company. All such transactions,
including those described in the next paragraph and under "Compensation
Committee Interlocks and Insider Participation," were conducted on an arm's
length basis and on terms competitive with those generally available in the
marketplace at the time.
The Company paid $48.4 million for technical assistance and other fees,
steel mill product and interest and dividends on notes and preferred stock and
sold $13.7 million of steel product to
15
<PAGE> 18
Sumitomo and its affiliates in 1995. Subsidiaries of the Company and of Sumitomo
also are partners in two electro-galvanizing line joint ventures and a mini-mill
joint venture. The Company paid an aggregate of $119.1 million in processing
fees to the electro-galvanizing partnerships in 1995, and such partnerships paid
an aggregate of $2.8 million in rent and related fees to the Company in 1995.
Sumitomo and its affiliates are a significant stockholder of the Company. See
"Security Ownership of Directors, Management and Principal Stockholders."
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation and Organization Committee are
Messrs. Moore, Evans, Joullian, Poling, Sarni, Stern and Timbers. None of such
directors has ever been an employee of the Company.
Two members of the Compensation and Organization Committee are executive
officers of companies that have bought or sold products or services to the
Company in the ordinary course of business. Mr. Moore is the Chairman and Chief
Executive Officer of Cleveland-Cliffs Inc which is paid fees by the Company for
iron ore mine management, royalties and transportation services on an on-going
basis and which from time to time buys iron ore from and sells iron ore to the
Company in the ordinary course of business. Mr. Joullian is the Chairman and
Chief Executive Officer of Mustang Fuel Corporation which purchased products in
1995 from the Company's energy products business unit which was sold to a third
party in mid-1995.
COMPENSATION AND ORGANIZATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Introduction
The Compensation and Organization Committee of the Board of Directors has
the responsibility to review and approve compensation and benefit actions for
all officers of the Company. In addition, the Committee reviews compensation and
benefit programs applying to all non-union represented salaried employees. The
Committee meets with an independent executive compensation consultant and
obtains survey data on competitive pay and benefit practices.
Steel producers operate in a highly competitive and cyclical market
environment. Business cycles can have wide variations in intensity and duration.
The investments needed to maintain a leadership position are significant and
require an extended period of time to see a satisfactory profit return. The
Committee considers these conditions in administering the senior management
compensation program.
The Committee compares performance, compensation levels and compensation
programs of the Company with other integrated carbon flat roll steel companies
(a peer group consisting of AK Steel, Bethlehem, Inland, National and USX-U.S.
Steel Group -- those companies in the Performance Graph which are closer in size
to the Company -- the "Compensation Comparison Group"). The Committee also
reviews compensation practices of comparably-sized companies in general
industry.
Overview of LTV Senior Management Compensation Program
The Company's senior management compensation program is designed to link
executive compensation to corporate performance, thereby enhancing the Company's
sustainable value to stockholders by rewarding superior performance and by
requiring management to have a significant ownership interest in the Company.
Salary level is determined based on an unweighted consideration of the
responsibilities of the position, experience of the incumbent, individual
performance and competitive salary levels of the Compensation Comparison Group.
16
<PAGE> 19
The Annual Incentive Program rewards individuals for:
- Success in meeting specific corporate objectives.
- Successful individual performance.
The Long-Term Incentive Program closely aligns the interests of management
and the stockholders by having Company executives obtain and maintain a
significant equity stake in the Company.
In its entirety, the senior management compensation program is expected to
enable the Company to create stockholder value and to attract and retain
outstanding individuals.
The Committee emphasizes total direct compensation consisting of salary,
annual incentive and long-term incentive, rather than any single element.
Salaries are targeted in the middle range of the Compensation Comparison Group.
Incentive "targets" were increased from the middle range of the Compensation
Comparison Group in 1994 to 5 to 10 percentage points above the middle range of
the Compensation Comparison Group in 1995. As part of this change, target
objectives were made more difficult, increasing the risk that payments would be
at less than target levels. Actual total direct compensation is a function of
the Company's performance against its objectives, changes in the fair market
value of the Company's Common Stock and individual performance.
The mix of salary, annual incentive and long-term incentive will vary based
on a position's impact and on competitive market practices. For positions with
major corporate impact, including those executive officers named in the
Company's Summary Compensation Table ("Named Executives"), between 50% and 60%
of target total direct compensation is delivered through annual and long-term
incentives (with the balance in salary). For positions with lesser impact,
salary represents a higher proportion of total direct compensation.
Additionally, all salaried employees, including each Named Executive, are
eligible to participate in the LTV Capital Accumulation Plan which includes a
provision to match a specified portion of the employee's contributions, based,
in part, on Company profitability. Matching contributions made to the accounts
of Named Executives in 1995 which are invested in shares of the Company's Common
Stock are included in the accompanying tables. To the extent matching
contributions exceed certain Internal Revenue Code limitations, they are
invested notionally in shares of Common Stock. Depending upon profitability,
matching contributions range from 25% to 100% of the participant's contribution
(up to 4% of base salary).
Salary
Salaries for officers are administered in a fashion similar to all other
non-union LTV employees. Salary adjustments are determined by evaluating the
responsibilities of the position, the competitive salary for the position (using
as a target the middle range of salaries of comparable positions in the
Compensation Comparison Group), the experience of the incumbent, the performance
of the incumbent and the performance of the Company. In 1995, four of the Named
Executives received salary increases ranging from 4.2% to 10%. The fifth Named
Executive received a 26% increase due, in part, to a promotion in 1995.
Annual Incentive Opportunity
Under the Annual Incentive Program, weighted objectives (using specific
performance measurements) are established in advance each year by the Committee.
Incentive awards are determined by measuring actual performance against these
objectives. Objectives are based on a combination of corporate and individual
performance criteria for most plan participants. For senior executive officers,
including the Named Executives, Annual Incentive Program awards are made on the
basis of individual and corporate performance.
17
<PAGE> 20
The Committee, working with senior management, is responsible for measuring
the attainment of all corporate and individual objectives for corporate
officers. Members of senior management are responsible for measuring the
attainment of individual goals for all other participants. The Committee has the
responsibility to review and approve all awards prior to payment. Based on
position impact and competitive pay opportunities, target annual incentive
opportunities range from 40% to 65% of salary. Actual individual awards often
vary above and below target levels. The Committee has the discretion to make
these awards in either cash or stock.
For 1995, the Committee established financial objectives and other focus
objectives (which will change from year to year). The Committee placed its
primary emphasis upon RONA (return on net assets) relative to an internal
standard and adjusted earnings relative to an industry peer group that includes
the companies shown on the performance graph. The weight for each measure
comprises 35% of the total. The remaining 30% weight was allocated to various
internal factors including working capital, product mix management, cost
reduction, quality and human resources/cultural diversity. The Committee
reviewed senior management's performance against these objectives, considered
the market environment in which the Company operated for the year, and used its
judgment and discretion in determining the awards.
Long-Term Incentive Opportunity
In order to facilitate the acquisition of an equity stake by its
executives, the Company designed its long-term incentive compensation program as
a combination stock ownership and stock compensation program. Long-term
incentive target levels are set based upon position impact and the middle range
of competitive practice. Actual long-term incentive awards also reflect
individual performance.
For 1995, long-term incentive awards are based primarily on stock option
awards, the terms of which appear in the accompanying tables. In 1994, the
Company implemented a three-year program of stock option and restricted stock
awards, which generally consists of annual stock option grants and front-loaded
restricted stock awards. The 1995 stock option awards reflect a continuation of
this program for all participants. As last year's proxy statement indicated,
Messrs. Hoag and Kelly did not receive a full front-loaded restricted stock
grant in 1994 and were to be considered for additional grants this year. Mr.
Hoag did not receive any additional restricted stock in 1995, but instead
received a commensurably larger stock option award. The long-term incentive plan
is expected to be administered in a similar manner in 1996. Mr. Kelly did
receive a restricted stock award that constitutes his final restricted stock
award under the program in addition to his regular stock option award. It is
expected that in 1996, use of restricted stock will be limited to participants
who enter the plan during 1996.
1995 Corporate Performance and CEO Compensation
Mr. Hoag's salary, established at $550,000 in 1992 pursuant to his
employment contract with the Company, was raised to $600,000 in 1995. This was
based on the same analysis used for other Company officers that is described
earlier in this report. This represents the first salary change for Mr. Hoag
since 1992.
Under the Annual Incentive Program, Mr. Hoag's target award is 65% of base
salary. The target award was raised from 50% of base pay by the Committee this
year to provide greater emphasis on performance-based compensation. Mr. Hoag's
Annual Incentive Program award of $340,000 is based upon 1995 performance
against the goals discussed earlier. In setting the award for 1995, the
Committee considered many factors including the Company's earnings improvement,
strengthening of the Company's financial position, strategic business
initiatives, and general leadership of the Company. The Committee made a
composite judgment without specifically weighting the factors.
In 1995, 70,000 stock options were granted to Mr. Hoag under the long-term
incentive program as described above. The Committee believes that the grant, in
conjunction with prior grants and
18
<PAGE> 21
existing stock ownership, places Mr. Hoag's interests in direct alignment with
the Company's stockholders.
Mr. Hoag's 1991 employment contract expired on January 31, 1996. Mr. Hoag
and the Committee agreed not to extend the contract. Mr. Hoag's employment
contract stipulated the terms of accrual for his retirement benefit during the
term of the contract. As a consequence, Mr. Hoag did not fully participate in
the Company's existing retirement programs. After reviewing this situation with
Mr. Hoag, the Committee has determined that Mr. Hoag should recommence full
participation in these programs effective February 1, 1996.
Policy Regarding Section 162(m)
The Committee's policy is that, effective for awards made after 1995,
executive compensation should be provided in such a manner as to comply with the
rules governing the deductibility of executive compensation under Section 162(m)
of the Internal Revenue Code.
Conclusion
The Committee believes the compensation program was prudently administered
during 1995, and that the overall design and objectives of the program are
consistent with the long-term interests of the Company and its stockholders.
The Compensation and Organization Committee
<TABLE>
<S> <C>
M. Thomas Moore--Chairman
John C. Evans Vincent A. Sarni
Edward C. Joullian III Dr. Paul G. Stern
Harold A. Poling Stephen B. Timbers
</TABLE>
19
<PAGE> 22
PERFORMANCE GRAPH
The following graph compares the total stockholder return on the Company's
Common Stock with the cumulative total return on the Standard & Poor's 500 Stock
Index ("S&P lndex") and a Company-constructed peer group of publicly traded
integrated steelmakers consisting of Bethlehem Steel Corporation, Inland Steel
Industries, Inc., National Steel Corporation, Weirton Steel Corporation,
Wheeling-Pittsburgh, USX Corporation-Steel Group and Armco lnc./AK Steel Holding
Corporation (the "Peer Group"). Armco Inc., in a recapitalization, transferred
its carbon steel business to a wholly-owned subsidiary of AK Steel Holding
Corporation at the end of March 1994. Accordingly, the index includes Armco Inc.
for that period in the performance graph prior to the divestiture and AK Steel
Holding Corporation for the period thereafter.
The period shown consists of the date that the Company's Common Stock,
which was initially issued in connection with the Company's reorganization on
June 28, 1993, was registered under Section 12 of the Securities Exchange Act of
1934, as amended, through the end of the Company's last fiscal year. The graph
assumes the investment of $100 in the Company's Common Stock, the S&P Index and
the Peer Group on June 29, 1993 with immediate reinvestment of all dividends.
The Peer Group total return has been weighted for market capitalization based on
information contained in the public filings of members of the Peer Group.
LTV COMMON STOCK PERFORMANCE
LTV VS. TOTAL RETURNS OF S&P 500 AND PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) S&P 500 LTV PEER GROUP
<S> <C> <C> <C>
6/29/93 100 100 100
12/31/93 104.95 101.57 102.04
12/31/94 106.34 103.94 95.72
12/31/95 145.36 86.61 79.17
</TABLE>
PEER GROUP: MARKET WEIGHTED INDEX COMPRISED OF ARMCO/AK STEEL, BETHLEHEM STEEL,
INLAND, NATIONAL STEEL, WEIRTON, WHEELING-PITTSBURGH AND USX-STEEL GROUP.
CLOSING PRICE ON JUNE 29, 1993=$100
20
<PAGE> 23
- --------------------------------------------------------------------------------
PROPOSAL TO RATIFY SELECTION OF INDEPENDENT AUDITORS
Ernst & Young LLP and their predecessors have been the auditors for the
Company since 1957. Upon the recommendation of the Audit Committee, the Board of
Directors has selected Ernst & Young LLP to be the independent auditors of the
Company for the year ending December 31, 1996. The Board of Directors will offer
a resolution at the 1996 Annual Meeting to ratify this selection. It is
anticipated that representatives of Ernst & Young LLP will be present at the
1996 Annual Meeting to respond to appropriate questions, and they will have an
opportunity, if they desire, to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF INDEPENDENT AUDITORS.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR 1997 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1997 Annual
Meeting of Stockholders must be received by the Company by November 3, 1996 to
be considered for inclusion in the Company's Proxy Statement and Form of Proxy
relating to that meeting.
The Board Affairs Committee will consider nominees recommended by
stockholders as candidates for election to the Board of Directors at the 1997
Annual Meeting. A stockholder wishing to nominate a candidate for election to
the Board should give written notice to the Secretary of the Company of his or
her intention to make such a nomination and a written consent by such nominee
that he or she agrees to the nomination and will serve if elected. The notice of
nomination should contain background information about both the nominee and the
stockholder making the nomination. The Company may also require that the
proposed nominee furnish additional information to determine that person's
eligibility to serve as director.
Such proposals or nominations should be addressed to Glenn J. Moran, Senior
Vice President, General Counsel and Secretary, The LTV Corporation, 25 West
Prospect Avenue, Cleveland, Ohio 44115.
DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the 1996 Annual Meeting any
matters other than those specified in the notice of the meeting, and it does not
know of any business which persons other than the management intend to present
at the meeting. Should any other matter requiring a vote of the stockholders
properly come before the meeting, the persons named in the accompanying proxy
intend to vote the shares represented by them in accordance with their best
judgment.
By order of the Board of Directors
Glenn J. Moran
Senior Vice President,
General Counsel and Secretary
Cleveland, Ohio
March 1 ,1996
21
<PAGE> 24
[LOGO]
The LTV Corporation
25 West Prospect Avenue - Cleveland, Ohio 44115
<PAGE> 25
DIRECTION CARD
THE LTV CORPORATION
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 15, 1996
INSTRUCTIONS FOR VOTING SHARES HELD BY MELLON BANK, N.A., TRUSTEE UNDER
THE LTV CAPITAL ACCUMULATION PLAN ("PLAN")
Pursuant to the Plan, I hereby direct Mellon Bank, N.A., as Trustee, to vote in
person or by proxy all shares of Common Stock of the Corporation credited to my
stock fund account under the Plan at the Annual Meeting of Stockholders to be
held on April 15, 1996, and at any adjournment, or postponement thereof, as
specified, on all matters coming before said meeting. IF THE TRUSTEE DOES NOT
RECEIVE YOUR INSTRUCTIONS FOR VOTING, IT WILL VOTE THE SHARES CREDITED TO YOUR
STOCK FUND ACCOUNT IN THE SAME PROPORTION AS IT VOTES THOSE SHARES WITH RESPECT
TO WHICH IT DOES RECEIVE VOTING INSTRUCTIONS REGARDING THE ELECTION OF THE
NOMINEES FOR DIRECTOR LISTED IN ITEM 1 AND RATIFICATION OF AUDITORS LISTED AS
ITEM 2 ON THIS BALLOT AND ALL OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR PROPOSALS NO. 1 AND 2. THE TRUSTEE CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
No. See Reverse Side
FOLD AND DETACH HERE
<PAGE> 26
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS NO. 1 AND 2.
Please mark [x]
your vote as
indicated in
this example
1. Election of Directors (see reverse) 2. To vote to ratify the election of
auditors
FOR WITHHELD FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ]
For, except vote withheld from the
following nominee(s):
- ------------------------------------
Change of [ ] Plan to [ ]
Address Attend Meeting
Signature(s)__________________ Signature(s)___________________ Date _____, 1996
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- -------------------------------------------------------------------------------
February 28, 1996
TO: Participants of the LTV Capital Accumulation Plan
RE: VOTING INSTRUCTIONS FOR THE APRIL 15, 1996
ANNUAL MEETING OF SHAREHOLDERS OF THE LTV CORPORATION
-----------------------------------------------------
Mellon Bank, N.A. is Trustee for the LTV Capital Accumulation Plan ("Plan") in
which you are a participant. As Trustee of the Plan, we are the shareholder of
record and have the responsibility to vote, as you instruct, the shares of LTV
Common Stock that have been allocated to your particpant accounts. In order for
us to vote your shares in accordance with your instructions, please complete
and return the enclosed Proxy Direction Card for our receipt by April 11, 1996.
The Annual Report, Annual Meeting Notice and Proxy Statement have already been
forwarded with another proxy card mailed to you for other LTV Common Stock that
you own. This proxy material information will help you vote on an informed
basis.
After you review the proxy materials, please complete, sign, date and promptly
return the enclosed Proxy Direction Card to us in the enclosed postage-paid
envelope.
Your individual voting instructions are important, regardless of the number of
your shares and will be held in confidence by the Tabulating Agent and Trustee.
Your directions will not be divulged or released to any other person, including
officers or employees of The LTV Corporation, and its subsidiaries. Please do
not return the Proxy Direction Card to The LTV Corporation.
By responding promptly, you will ensure your instructions are tabulated and
voted accordingly.
Sincerely,
Mellon Bank, N.A.
Trustee for The LTV Capital Accumulation Plan
