<PAGE>
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
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Lukens Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Lukens Inc.
------------------------------------------------------------------------
(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:
<PAGE>
[LOGO OF LUKENS APPEARS HERE]
- --------------------------------------------------------------------------------
NOTICE OF
ANNUAL
MEETING March 25, 1996
AND PROXY
STATEMENT TO OUR STOCKHOLDERS:
It is a pleasure for me to invite you to our Annual
Meeting of Stockholders, which will be held on
Wednesday, April 24, 1996, starting at 1:30 P.M. in
the Company's Administrative Resources Center, Modena
Road, South Coatesville, Pennsylvania.
The following pages of this Notice of Annual Meeting
and Proxy Statement describe the matters which will be
discussed and acted upon at the meeting. In addition,
a current report on the Company's business and
activities will be presented.
I hope you will attend; however, whether or not you do
plan to attend, it is important that your shares,
regardless of the number, be represented. Accordingly,
I urge you to complete, sign, date and return your
Proxy in the envelope enclosed for your convenience.
Sincerely yours,
/s/ R. W. Van Sant
R. W. Van Sant
Chairman, President and
Chief Executive Officer
<PAGE>
NOTICE OF
ANNUAL MEETING
March 25, 1996
TO THE STOCKHOLDERS OF
LUKENS INC.:
This is to notify you that the Annual Meeting of Stockholders of Lukens Inc.
will be held at 1:30 P.M. on Wednesday, April 24, 1996, in the Company's
Administrative Resources Center, Modena Road, South Coatesville, Pennsylvania,
for the following purposes:
1. To elect three persons to the Board of Directors of the Company;
2. To consider and vote upon a proposal to amend the Company's 1985 Stock
Option and Appreciation Plan to increase by 900,000 the shares authorized for
issuance under the Plan; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The record date for determining stockholders entitled to notice of and to vote
at the meeting or any adjournment thereof was March 1, 1996, and only
stockholders of record at the close of business on that date are entitled to
notice of and to vote at the meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE ENCLOSED FOR YOUR
CONVENIENCE.
By Order of the Board of
Directors
/s/ William D. Sprague
William D. Sprague
Vice President, General Counsel
and Secretary
<PAGE>
PROXY STATEMENT
March 25, 1996
LUKENS INC.
50 South First Avenue
Coatesville, Pennsylvania 19320
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Lukens Inc. (the "Company") of Proxies for the Annual
Meeting of Stockholders to be held April 24, 1996, or any adjournment thereof.
Copies of this Proxy Statement, the accompanying Proxy and the Company's
Annual Report for 1995 are being mailed to the stockholders on or about March
25, 1996.
Subject to the conditions set forth in the Notice of Annual Meeting
accompanying this Proxy Statement, the shares represented by each executed
Proxy will be voted in accordance with the instructions given. If no
instruction is made on an executed Proxy, the Proxy will be voted FOR all
three of the nominees to the Board and FOR the proposal to amend the Company's
1985 Stock Option and Appreciation Plan. Any stockholder giving a Proxy has
the power to revoke it at any time before its exercise by attending the
meeting and voting in person, by giving notice of revocation to the Secretary
of the Company or by filing a later dated Proxy.
The holders of common stock and preferred stock of record at the close of
business on March 1, 1996 (the "Record Date") will be entitled to vote on all
matters to be voted upon at the Annual Meeting or any adjournment thereof. The
Proxy will also serve as voting instructions from participants to the trustees
under the Lukens Inc. Employees Capital Accumulation Plan, the Lukens Group
Employees Capital Accumulation Plan, the Lukens Inc. Capital Accumulation Plan
for Hourly Employees (USW, AFL-CIO, Coatesville, PA), the Washington Steel
Corporation Employees Capital Accumulation Plan (Washington, PA) and the
Washington Steel Corporation Employees Capital Accumulation Plan (Massillon,
OH) with respect to shares of common and/or preferred stock credited to a
participant's account on the Record Date and to American Stock Transfer &
Trust Company as the administrator under the Company's Dividend Reinvestment
Plan with respect to shares of common stock held therein on the Record Date.
Generally, each share of common stock is entitled to one vote per matter and
each share of preferred stock is entitled to three votes per matter, with
holders of common
<PAGE>
stock and holders of preferred stock generally voting together as a single
class. However, record holders are permitted to vote cumulatively with respect
to the election of Directors. In that case such holders have the right to
multiply the number of shares which they are entitled to vote by the number of
Directors to be elected and to cast the resulting number of votes all for one
candidate or to distribute them among any two or more candidates. In addition,
the Lukens Inc. Employees Capital Accumulation Plan provides that each
participant may direct the trustee how to vote such participant's pro rata
portion of unallocated shares of preferred stock, as well as shares of
preferred stock that have not been voted. Shares of common stock held in the
Lukens Inc. Employees Capital Accumulation Plan, the Lukens Group Employees
Capital Accumulation Plan, the Washington Steel Corporation Employees Capital
Accumulation Plans and the Dividend Reinvestment Plan for which signed Proxies
are not returned will not be voted. Shares of common stock held in the Lukens
Inc. Capital Accumulation Plan for Hourly Employees (USW, AFL-CIO,
Coatesville, PA) that have not been voted will, if directed by the Employee
Benefits Finance Committee of the Company, be voted by the trustee in the same
proportion as the shares held therein for which signed Proxies are returned by
the participants. Shares held in the Capital Accumulation Plans are subject to
confidential voting procedures.
The Company had approximately 14,775,544 shares of common stock and
approximately 493,463 shares of preferred stock issued and outstanding on the
Record Date. The presence at the meeting in person or by proxy of stockholders
entitled to cast at least a majority of the votes that all stockholders are
entitled to cast will constitute a quorum at the meeting. Abstentions will be
counted for the purpose of establishing a quorum but will not be voted. Broker
non-votes will not be counted for the purpose of establishing a quorum and
will not be voted. Stockholders entitled to vote may do so in person or by
proxy. The Company may require that any votes cast in person be cast by
written ballot.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes. Directors in
each class are elected to serve for a term of three years. The terms are
staggered so that approximately one-third of the Board stands for election
each year. At the 1996 Annual Meeting of Stockholders, three persons will be
elected to the Board to serve until the 1999 Annual Meeting or until their
successors are elected and qualified. The three nominees who receive the most
votes at the Annual Meeting will be elected to the Board. Management of the
Company believes that the Directors listed below will serve in their positions
for the remainder of their terms, with the exception of Stuart J. Northrop,
who will retire in October 1996 pursuant to Company policy.
2
<PAGE>
The Company's Board of Directors has nominated Michael O. Alexander, David B.
Price, Jr. and Joab L. Thomas for terms expiring at the 1999 Annual Meeting of
Stockholders. The persons named in the accompanying Proxy intend to vote for
the election of such nominees unless authority to vote for one or more of such
persons is specifically withheld in the Proxy. All of the nominees are
currently Directors of the Company. As far as is presently known, all of the
nominees are willing and able to serve as Directors. If any of them withdraws
or otherwise becomes unavailable for any reason, the persons named in the
Proxy will use their best judgment in selecting and voting for substitute
nominees unless the Board of Directors reduces the number of Directors
constituting the entire Board.
NOMINEES FOR TERMS EXPIRING IN 1999
Michael O. Alexander Mr. Alexander, 55, has been the President of The
International Forum Inc. since June 1993 and the
Director of the International Forum at the Wharton
School, University of Pennsylvania, since 1988. Mr.
Alexander has been a Director of the Company since
1993 and is a member of the Audit Committee and the
Finance Committee.
David B. Price, Jr. Mr. Price, 50, has been the President of the
Performance Materials Division of Monsanto Company
since 1995. Monsanto Company is a global producer of
chemicals, agricultural products, food ingredients
and pharmaceuticals. Previously at that company, he
was Vice President and General Manager of Commercial
Operations, the Industrial Products Division, from
1993 to 1995 and Vice President and General Manager
of the Performance Products Division from 1991 to
1993. Mr. Price was elected to the Board of Directors
effective February 1996.
Joab L. Thomas Mr. Thomas, 63, President Emeritus of The
Pennsylvania State University, was President of that
university from 1990 to 1995. Mr. Thomas has been a
Director of the Company since 1992 and is a member of
the Audit Committee, the Executive Committee and the
Finance Committee. He is also a director of Blount,
Inc. and Mellon Bank Corporation.
DIRECTORS WITH TERMS EXPIRING IN 1998
Rod Dammeyer
Mr. Dammeyer, 55, has been President and a director
since 1985, and Chief Executive Officer since 1993,
of Anixter
3
<PAGE>
International Inc., a value-added provider of
integrated networking and cabling solutions and
equipment, formerly known as Itel Corporation. He has
also been a director of Great American Management &
Investment, Inc., a diversified manufacturing
company, since 1992 and President and Chief Executive
Officer of that corporation since 1994. Mr. Dammeyer
was elected to the Board of Directors of the Company
effective September 1995. He also serves as a
director of Antec Corporation, Capsure Holdings
Corp., Falcon Building Products, Inc., IMC Global
Inc., Jacor Communications, Inc. and Van Kampen
American Capital, Inc.
Sandra L. Helton Ms. Helton, 46, has been Senior Vice President and
Treasurer of Corning Incorporated since July 1994.
Corning Incorporated is an international corporation
focused in four business segments: Specialty
Materials, Communications, Laboratory Services and
Consumer Products. From 1991 to July 1994 she served
as Vice President and Treasurer of that corporation.
She has been a Director of the Company since 1995.
Ms. Helton is a member of the Audit Committee and the
Finance Committee.
William H. Nelson, III Mr. Nelson, 67, was Executive Vice President and
President of the Natural Resources Division of Scott
Paper Company, primarily a manufacturer of pulp,
paper and forest-related products, from 1981 to 1986.
He has been a Director of the Company since 1972. He
is Chairman of the Audit Committee and a member of
the Executive Committee and the Executive Development
and Compensation Committee.
Stuart J. Northrop Mr. Northrop, 70, was Chief Executive Officer and
Chairman of Huffy Corporation, a manufacturer of
bicycles and other leisure products, from 1986 to
1994. He has been a Director of the Company since
1982. He is Chairman of the Executive Development and
Compensation Committee and is a member of the
Committee on the Board and the Executive Committee.
Mr. Northrop is also a director of Union Corporation,
Wolverine World Wide, Inc. and EFW, a subsidiary of
Elbit Systems of America.
4
<PAGE>
DIRECTORS WITH TERMS EXPIRING IN 1997
T. Kevin Dunnigan Mr. Dunnigan, 58, has been the Chief Executive
Officer of Thomas & Betts Corporation, a manufacturer
of electrical equipment, since 1985. He has also been
the Chairman of that corporation since 1992 and has
been a member of its board of directors since 1975.
Mr. Dunnigan has been a Director of the Company since
1994. He is Chairman of the Committee on the Board
and a member of the Executive Committee and the
Executive Development and Compensation Committee. He
is also a director of Elsag Bailey N.V. and C.R. Bard
Inc.
Ronald M. Gross Mr. Gross, 62, has been President and a director
since 1978, Chief Executive Officer since 1981 and
Chairman of the Board since 1984 of Rayonier Inc., a
forest products company, formerly known as ITT
Rayonier Inc. He also serves as a director of The
Pittston Company and as President and a director of
Rayonier Forest Resources Company, the managing
general partner of Rayonier Timberlands, L.P., a
publicly traded master limited partnership. Mr. Gross
has been a Director of the Company since 1991 and is
Chairman of the Finance Committee and a member of
both the Executive Development and Compensation
Committee and the Committee on the Board.
W. Paul Tippett Mr. Tippett, 63, has been a Director of the Company
since 1989. He was the President of Springs
Industries, Inc., a manufacturer of finished fabrics,
home furnishings and industrial fabrics from 1985
through 1989. Prior to that time Mr. Tippett was
Chairman and Chief Executive Officer of American
Motors Corporation. Mr. Tippett is a member of the
Committee on the Board, the Audit Committee and the
Executive Development and Compensation Committee. He
is also a director of Stride Rite Corporation.
R. W. Van Sant Mr. Van Sant, 57, has been Chairman of the Board,
President and Chief Executive Officer of the Company
since December 1991. He held the offices of President
and Chief Operating Officer from October 1991 to
December 1991. Mr. Van Sant served as President and
Chief Executive Officer of Blount, Inc., a company
engaged in construction and manufacturing
5
<PAGE>
operations, from December 1990 to October 1991. Mr.
Van Sant has been a Director of the Company since
1988, is Chairman of the Executive Committee and is a
member of both the Committee on the Board and the
Finance Committee. He is also a director of Amcast
Industrial Corporation.
DIRECTOR WITH TERM EXPIRING IN 1996
Nancy Huston Hansen Mrs. Hansen, 60, has been the Vice President of
Evangelical Affairs for The Huston Foundation since
1984 and the Chief Executive Officer of Hansen
Development Corporation, a company engaged in
construction and land development, since 1988. She
became a Director of the Company in 1985. Mrs. Hansen
is a member of the Audit Committee and the Finance
Committee. She is also a director of The Huston
Foundation and Hansen Development Corporation.
During the Company's 1995 fiscal year the Board of Directors held six
meetings. All members of the Board of Directors attended more than 75% of the
meetings of the Board and of the Committees of which such Directors were
members during the time period in which they served.
6
<PAGE>
MANAGEMENT
The following table sets forth as of March 1, 1996, the approximate number of
shares of common stock and preferred stock of the Company (rounded to the
nearest share) beneficially owned by each Director, by each Executive Officer
named in the Summary Compensation Table on page 11 and by all Directors and
Executive Officers of the Company as a group who were serving in such
capacities on that date.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY PERCENT
OWNED OF CLASS(1)
---------------------------------------------------
NAME COMMON PREFERRED COMMON PREFERRED
- ---- ---------- ----------------------- ------------
<S> <C> <C> <C> <C>
R. W. Van Sant 120,858(2) 550 less than 1% less than 1%
Michael O. Alexander 3,700(3) -0- less than 1% none
Rod Dammeyer 2,500 -0- less than 1% none
T. Kevin Dunnigan 2,400(4) -0- less than 1% none
Ronald M. Gross 5,000(3) -0- less than 1% none
Nancy Huston Hansen 261,599(5) -0- 1.8% none
Sandra L. Helton 1,200(6) -0- less than 1% none
T. Grant John 28,967(7) 226 less than 1% less than 1%
Richard D. Luzzi 15,876(8) 255 less than 1% less than 1%
William H. Nelson, III 4,800(3) -0- less than 1% none
Stuart J. Northrop 3,975(3) -0- less than 1% none
James J. Norton 10,500(9) -0- less than 1% none
Dennis M. Oates 58,427(10) 900 less than 1% less than 1%
David B. Price, Jr. 500 -0- less than 1% none
William D. Sprague 26,800(11) 891 less than 1% less than 1%
Joab L. Thomas 4,600(12) -0- less than 1% none
W. Paul Tippett 4,500(3) -0- less than 1% none
All Directors and
Executive Officers as a
Group
(20 Persons) 585,437(13) 4,978 3.9% 1%
</TABLE>
- ---------
(1) Rounded to the nearest one-tenth of one percent and based on (i) the
number of shares subject to options for common stock exercisable by such
person(s) on or before May 1, 1996, and 14,775,544 shares of common stock,
which on March 1, 1996, was the approximate number of shares outstanding
and (ii) 493,463 shares of preferred stock, which on March 1, 1996, was
the approximate number of shares outstanding.
(2) Includes options to purchase 120,000 shares of common stock that are
currently exercisable.
(3) Includes options to purchase 3,000 shares of common stock that are
currently exercisable or will become exercisable on May 1, 1996.
7
<PAGE>
(4) Includes options to purchase 2,000 shares of common stock that are
currently exercisable or will become exercisable on May 1, 1996.
(5) Mrs. Hansen has sole voting and investment power with respect to 36,145
shares and options to purchase 3,000 shares that are currently
exercisable or will become exercisable on May 1, 1996. She has shared
voting and investment power with respect to 214,600 shares owned by The
Huston Foundation, 165 shares held in a trust of which she is the trustee
for the benefit of her grandson and 4,500 shares held in a trust of which
she is a trustee for the benefit of one of her children. Also included
are 3,189 shares held by her late husband's estate, as to which she
disclaims beneficial ownership.
(6) Includes options to purchase 1,000 shares of common stock that will
become exercisable on May 1, 1996.
(7) Includes options to purchase 28,700 shares of common stock that are
currently exercisable and 41 shares held by his wife in a retirement
plan, as to which he disclaims beneficial ownership.
(8) Includes options to purchase 15,200 shares of common stock that are
currently exercisable.
(9) Includes 500 shares held jointly with his wife and options to purchase
10,000 shares of common stock that are currently exercisable.
(10) Includes options to purchase 49,350 shares of common stock that are
currently exercisable.
(11) Includes options to purchase 26,050 shares of common stock that are
currently exercisable and 300 shares held by his wife, as to which he
disclaims beneficial ownership.
(12) Includes 1,600 shares held jointly with his wife and options to purchase
3,000 shares of common stock that are currently exercisable or will
become exercisable on May 1, 1996.
(13) Includes options to purchase 302,750 shares of common stock that are
currently exercisable or will become exercisable on May 1, 1996, and
3,530 shares as to which beneficial ownership is disclaimed.
COMMITTEES OF THE BOARD
Among the standing committees of the Board of Directors are the Audit
Committee, the Executive Development and Compensation Committee and the
Committee on the Board.
The Audit Committee is appointed by the Board and currently consists of six
members, none of whom are members of the Company's management. It is
responsible for overseeing the Company's internal accounting and auditing
methods and procedures,
8
<PAGE>
and it recommends to the Board a firm of independent public accountants for
appointment by the Board. The Audit Committee meets periodically with the
auditors to review their findings and recommendations. During the Company's
1995 fiscal year this Committee held three meetings.
The Executive Development and Compensation Committee is appointed by the
Board and currently consists of five members. This Committee is responsible
for the administration of the Lukens Performance Incentive Plan, the 1985
Stock Option and Appreciation Plan and the supplemental retirement plans;
makes recommendations to the Board concerning such other executive
compensation arrangements and plans as it deems appropriate; reviews the
Company's policies and plans for the development and succession of executive
personnel; and performs such other duties as the Board may assign. During the
Company's 1995 fiscal year the Executive Development and Compensation
Committee held three meetings.
The Committee on the Board is appointed by the Board and currently consists
of five members. This Committee is empowered to consult with the Chief
Executive Officer on candidates for nomination to the Board; to recommend to
the Board policies and guidelines for qualification for service as a Director
and for Director compensation; and to monitor performance by individual
Directors. This Committee will consider nominees for Director recommended by
stockholders provided such recommendations are made in writing addressed to
the Secretary of the Company prior to the first of December so that the
Committee may review all recommendations in advance of the January meeting of
the Board at which time the nominees for election at the next Annual Meeting
are customarily considered. During the Company's 1995 fiscal year the
Committee on the Board held five meetings.
To be eligible for election to the Board of Directors, persons nominated
other than by the Committee on the Board must be nominated in accordance with
certain procedures set forth in the By-laws, which require that the Secretary
of the Company receive timely notice of such proposed nomination. Such notice
must be received by the Secretary not less than 50 days nor more than 75 days
prior to the meeting at which the Directors are to be elected (or, if fewer
than 65 days notice or prior public disclosure of the meeting date is given or
made to stockholders, no later than the 15th day following the day on which
the notice of the date of the meeting was mailed or such public disclosure was
made). Such notice must contain certain information about the nominee,
including his or her age, business and residence address and principal
occupation, the class and number of shares of capital stock beneficially owned
and such other information as will be required to be included in a Proxy
Statement soliciting proxies for the election of the proposed nominee, and
certain information about the stockholder proposing to nominate that person.
The Company may also require any proposed nominee to furnish other
9
<PAGE>
information reasonably required by the Company to determine the proposed
nominee's eligibility to serve as a Director.
In addition to the foregoing, the Executive Committee and the Finance
Committee are standing Committees of the Board.
SUMMARY OF EXECUTIVE COMPENSATION
The following information for the fiscal years ended December 25, 1993,
December 31, 1994 and December 30, 1995 is given as to the Chief Executive
Officer, each of the four other most highly compensated Executive Officers of
the Company who were serving as Executive Officers at the end of the 1995
fiscal year and whose base salary and bonus exceeded $100,000 during the 1995
fiscal year, and Dennis M. Oates, who was one of the four most highly
compensated Executive Officers during 1995 but was not serving as an Executive
Officer at the end of the fiscal year.
10
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ------------
AWARDS
OTHER ------------
ANNUAL SECURITIES ALL OTHER
NAME AND COMPEN- UNDERLYING COMPEN-
PRINCIPAL SATION OPTIONS/ SATION
POSITION(S) YEAR SALARY($)(1) BONUS($)(1) ($)(1) SARS(#) ($)(1)
------------ ---- ------------ ----------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
R. W. Van
Sant 1995 $565,563 $214,529 $ 51,043(2) 27,735(3) $321,143(4)
Chairman, 1994 $536,508 $104,380 (5) -0- $ 18,247
President
and 1993 $536,508 $ 64,381 (5) -0- $ 18,454
Chief Exec-
utive Of-
ficer
T. G. John 1995 $204,959 $ 63,365 $ 34,914(6) 21,305(7) $ 9,986(8)
Senior Vice
President, 1994 $178,223 $ 50,741 $ 71,461 13,000 $ 9,726
Commercial 1993(9) $158,021 $ 77,810 $ 72,642 2,700 $ 1,431
R. D. Luzzi 1995 $174,899 $ 51,808 (5) 13,882(7) $ 7,466(10)
Vice Presi-
dent, 1994 $160,020 $ 25,000 $ 22,540 5,000 $ 7,041
Human Re-
sources 1993(11) $146,685 $ 40,000 $111,230 2,700 $ 507
J. J. Norton 1995 $193,210 $ 58,199 (5) 17,882(7) $ 6,750(12)
Vice Presi-
dent 1994 $181,840 $ 96,703 $ 48,075 -0- $ 3,025
1993 $181,125 $108,675 (5) -0- $ 2,489
W. D. Spra-
gue 1995 $173,473 $ 45,585 (5) 11,344(7) $ 8,933(13)
Vice Presi-
dent, 1994 $162,072 $ 15,000 (5) 5,000 $ 9,340
General
Counsel 1993 $162,072 $ 14,586 $ 18,390 2,800 $ 9,407
and Secre-
tary
D. M. Oates 1995(14) $191,182 $ 54,670 (5) 17,795(15) $ 65,166(16)
Senior Vice 1994 $175,920 $ 31,282 $ 23,500 9,000 $ 8,541
President 1993 $175,920 $ 50,101 (5) 4,100 $ 8,735
</TABLE>
- ---------
(1) Rounded to the nearest dollar.
(2) Includes $30,426 imputed to Mr. Van Sant for use of the Company airplane
and an automobile allowance provided by the Company of $13,512.
(3) Options granted as part of Mr. Van Sant's annual bonus. See pages 16-17.
(4) Represents $304,760 paid by the Company pursuant to the exercise by Mr.
Van Sant of certain rights granted under his employment agreement (see
page 13); $6,750 of Company contributions to the Lukens Inc. Employees
Capital Accumulation Plan, adopted pursuant to Section 401(k) of the
Internal Revenue Code of 1986, as amended; $5,850 of Company-paid
premiums for life insurance coverage above $50,000; and $3,783 of
premiums paid by the Company on
11
<PAGE>
another term life insurance policy which covers Mr. Van Sant and is owned
by the Company. The Company is the beneficiary under this second policy,
but has assigned the right to proceeds equal to 2 1/2 times Mr. Van Sant's
compensation to his designee.
(5) Does not exceed the lesser of $50,000 or 10% of the total of such
person's annual salary and bonus.
(6) Includes an automobile allowance provided by the Company of $13,512;
payment by the Company of country club dues of $11,438; and $9,964 of
relocation expenses paid by the Company.
(7) Is the aggregate of options granted as part of such Executive Officer's
annual bonus and regular annual option grants. See pages 16-17.
(8) Represents $6,750 of Company contributions to the Lukens Inc. Employees
Capital Accumulation Plan and $3,236 of Company-paid premiums for life
insurance coverage above $50,000.
(9) Mr. John became an employee of the Company in February 1993. This table
reflects compensation paid to him by the Company since that date.
(10) Represents $6,750 of Company contributions to the Lukens Inc. Employees
Capital Accumulation Plan and $716 of Company-paid premiums for life
insurance coverage above $50,000.
(11) Mr. Luzzi became an employee of the Company in February 1993. This table
reflects compensation paid to him by the Company since that date.
(12) Represents Company contributions to the Lukens Group Employees Capital
Accumulation Plan, adopted pursuant to Section 401(k) of the Internal
Revenue Code of 1986, as amended.
(13) Represents $6,750 of Company contributions to the Lukens Inc. Employees
Capital Accumulation Plan and $2,183 of Company-paid premiums for life
insurance coverage above $50,000.
(14) Mr. Oates ceased to be an Executive Officer in November 1995.
(15) Is the aggregate of options granted as part of Mr. Oates' annual bonus,
which options were subsequently cashed-out, and regular annual option
grants. See footnote 16.
(16) Represents $6,750 of Company contributions to the Lukens Inc. Employees
Capital Accumulation Plan; $916 of Company-paid premiums for life
insurance coverage above $50,000; a $10,000 severance payment; and
$47,500 paid in connection with the cash-out of options for 7,795 shares.
12
<PAGE>
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into an agreement with Mr. Van Sant which provides
for his employment by the Company until his 65th birthday. The agreement
provides for the following compensation: a minimum base salary of $565,563 per
annum, an annual bonus calculated and paid in accordance with the Lukens
Performance Incentive Plan at a target amount of 60% of base salary and
certain employee benefits. Pursuant to the agreement and adjusted to reflect a
50% stock dividend, Mr. Van Sant was issued 330,000 options to purchase common
stock of the Company at an exercise price of $23.375 per share, which, as
adjusted, was 85% of the fair market value of such common stock on the date of
the grant. Such options vest at a rate of 30,000 per year. In order to
reimburse Mr. Van Sant for certain compensation to which he would have
otherwise been entitled had he not terminated his employment with Blount,
Inc., the agreement also provides Mr. Van Sant with 30,476 rights, each of
which entitles him upon exercise to an amount in cash equal to the lesser of
(i) $10.00 and (ii) the excess over $10.125 of the market value of a share of
Class A Common Stock of Blount, Inc. Mr. Van Sant exercised such rights during
the 1995 fiscal year. See the Summary Compensation Table on page 11. The
agreement further provides that if Mr. Van Sant's employment is terminated by
the Company prior to his 65th birthday, other than for disability or for
cause, he will be entitled to continue to receive his full salary and certain
other benefits under the agreement until the earlier of the third anniversary
of his termination or his 65th birthday.
Messrs. Van Sant, John, Luzzi, Norton and Sprague, as well as four other
Executive Officers, are parties to agreements pursuant to which the Company
agreed to pay such persons a lump-sum amount generally equal to the sum of
approximately three times such person's annual base salary rate in effect in
the year of a change in control plus such person's average Lukens Performance
Incentive Plan award over the preceding three years, in the event of a change
in control of the Company and the termination of such person's employment at
any time during the two-year period thereafter. The Company also generally
agreed to provide three years additional pension and welfare benefits and to
"cash-out" such person's outstanding options. The total pension benefits and
the option "cash-out" will be payable in lump-sums. These agreements provide
for the payment of an amount necessary to pay any excise tax, and any taxes
thereon, due on the payments. The purpose of the agreements is to assure the
continued dedication of such persons to their duties and their unbiased
counsel in the event of an unsolicited tender offer.
In general, a "change in control" will be deemed to occur if (i) during a
period of two consecutive years, the individuals who constituted the Board of
Directors at the beginning of such period cease to constitute a majority of
the Board, (ii) any person or group acquires 20% or more of the combined
voting power of the Company's then
13
<PAGE>
outstanding securities, (iii) the Company is acquired by merger or
consolidation or (iv) the Company is liquidated or substantially all of its
assets are sold.
DIRECTOR COMPENSATION
An annual retainer of $24,000 is paid to Directors who are not employees of
the Company and an attendance fee of $900 is paid to such Directors for each
day or part of a day they attend a regular or special meeting of the Board. A
fee is also payable to such Directors for attendance at Board Committee
meetings. The fee is $800 for all Committees, except that members of the
Executive Committee are paid an attendance fee of $900. Attendance fees are
paid for Committee meetings on Board meeting days except for Committee
meetings of an administrative nature. An annual retainer of $2,500 per
Committee is also paid to Directors who serve as Committee Chairmen. Directors
who serve a partial year are paid a pro rata share of the annual retainer
based upon the number of months served.
Any Director of the Company who is separately compensated for Board services
may elect to defer compensation for distribution at a later date. Deferred
amounts may be invested in mutual funds or interest-bearing accounts and may
be paid in a lump sum or in annual installments over a period of ten years.
Each non-employee Director with five years or more of uninterrupted service
on the Board will receive annual retirement payments at the time of retirement
from the Board. After five years of service, a Director will receive
retirement payments in an amount equal to 50% of the Director's base retainer.
The percentage will increase by 10% for each full year of service thereafter
to a maximum of 100% of the base retainer after ten years. These retirement
payments may continue for a period equal to the lesser of the years of service
on the Board or ten years. In the event of the death of a Director, the
benefits which would have been payable to such Director will be paid to the
Director's designated beneficiary for the remainder of the period. In the
event of a change in control, this Plan also provides for a lump-sum payment
of the present value of the total accrued benefits payable calculated as if
the Director had retired on the date of the change in control.
Pursuant to the Company's Stock Option Plan for Non-Employee Directors, each
Director who is not an employee of the Company or any of its subsidiaries
receives an annual grant of options to purchase 1,000 shares of the Company's
common stock at an exercise price equal to the fair market value of the
Company's common stock on the date of grant. Options become exercisable one
year after the date of grant and expire ten years after the date of grant,
except that options terminate three years after a person ceases to be a
Director.
14
<PAGE>
RETIREMENT PLANS
The Lukens Inc. Salaried Employees Retirement Plan provides retirement
benefits to certain salaried employees who retire or otherwise terminate
employment after completing five or more years of service. The Lukens Inc.
Supplemental Retirement Plan for Lukens Performance Incentive Plan
Participants provides supplemental retirement benefits to participating
managerial level employees. Benefits under this Plan are offset by benefits
payable under the Lukens Inc. Salaried Employees Retirement Plan. In addition,
the Lukens Inc. Supplemental Retirement Plan for Designated Executives
provides supplemental retirement benefits to participating executives. Under
this Plan benefits for participating executives are calculated by crediting
the executive with service in addition to the executive's actual period of
service as an employee. Benefits payable under this Plan are offset by
benefits payable under the Lukens Inc. Salaried Employees Retirement Plan.
Each of the Executive Officers named in the Summary Compensation Table on
page 11, other than Mr. Norton, participates in the Lukens Inc. Salaried
Employees Retirement Plan. Messrs. John, Luzzi and Sprague also participate in
the Lukens Inc. Supplemental Retirement Plan for Lukens Performance Incentive
Plan Participants. Mr. Van Sant also participates in the Lukens Inc.
Supplemental Retirement Plan for Designated Executives. Benefits under these
Plans are payable monthly and are based upon formulas which consider years of
service and compensation (as defined in the Plans) and age at retirement.
The following table shows the approximate annual retirement benefits that
Messrs. Van Sant, John, Luzzi, Sprague and Oates would receive under the Plans
described above based on credited years of service if they retire at normal
retirement age. Lesser amounts may be payable following a termination of
employment before normal retirement age.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
REMUNERATION (1) 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ---------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 16,700 $ 25,000 $ 33,300 $ 41,700 $ 43,300 $ 45,000
200,000 34,000 51,000 68,000 85,000 95,000 105,000
300,000 54,000 81,000 108,000 135,000 150,000 165,000
400,000 74,000 111,000 148,000 185,000 205,000 225,000
500,000 94,000 141,000 188,000 235,000 260,000 285,000
600,000 114,000 171,000 228,000 285,000 315,000 345,000
700,000 134,000 201,000 268,000 335,000 370,000 405,000
800,000 154,000 231,000 308,000 385,000 425,000 465,000
900,000 174,000 261,000 348,000 435,000 480,000 525,000
1,000,000 194,000 291,000 388,000 485,000 535,000 585,000
</TABLE>
- ---------
(1) The estimated benefit calculated is based on salary plus bonus, as
designated in the Summary Compensation Table on page 11.
15
<PAGE>
Benefits payable under the Lukens Inc. Supplemental Retirement Plan for
Lukens Performance Incentive Plan Participants and the Lukens Inc.
Supplemental Retirement Plan for Designated Executives are computed on a
straight life annuity basis and are subject to offset by any Social Security
benefits to which the participant is entitled.
Messrs. John, Luzzi, Sprague and Oates have credited service of approximately
three, three, eight and 22 years, respectively, in the Lukens Inc. Salaried
Employees Retirement Plan and, except for Mr. Oates, in the Lukens Inc.
Supplemental Retirement Plan for Lukens Performance Incentive Plan
Participants. Mr. Van Sant has credited service of approximately four years
under the Lukens Inc. Salaried Employees Retirement Plan and 23 years under
the Lukens Inc. Supplemental Retirement Plan for Designated Executives. Each
Plan, with the exception of the Lukens Inc. Salaried Employees Retirement
Plan, contains provisions for a present value lump-sum payment payable in the
event of a change in control.
STOCK OPTION DATA
Under the Company's 1985 Stock Option and Appreciation Plan, options to
purchase common stock of the Company are granted on an annual basis to certain
officers and other key employees of the Company and its subsidiaries at the
fair market value of the common stock on the date of grant. Under the Lukens
Performance Incentive Plan, options to purchase common stock of the Company
are also granted to Executive Officers as part of their annual bonuses; these
options are governed by the terms of the 1985 Stock Option and Appreciation
Plan. The following table contains information regarding each type of option
grant to each Executive Officer named in the Summary Compensation Table on
page 11 during the 1995 fiscal year.
16
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE OR
OPTIONS IN FISCAL BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(#) YEAR (1) ($/SH) DATE (2) PRESENT VALUE ($)
- ---- ---------- ---------- ----------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
R. W. Van Sant 27,735(3) 11.7% $28.56 1/03/02 $264,037(4)
T. G. John 13,000(5) 5.5% $27.75 1/31/05 $130,520(6)
8,305(3) 3.5% $28.56 1/03/02 $ 79,064(4)
R. D. Luzzi 7,500(5) 3.2% $27.75 1/31/05 $ 75,300(6)
6,382(3) 2.7% $28.56 1/03/02 $ 60,757(4)
J. J. Norton 10,000(5) 4.2% $27.75 1/31/05 $100,400(6)
7,882(3) 3.3% $28.56 1/03/02 $ 75,037(4)
W. D. Sprague 5,000(5) 2.1% $27.75 1/31/05 $ 50,200(6)
6,344(3) 2.7% $28.56 1/03/02 $ 60,395(4)
D. M. Oates 10,000(5) 4.2% $27.75 1/31/05 $100,400(6)
7,795(7) 3.3% $28.56 1/03/02 $ 74,208(4)
</TABLE>
- ---------
(1) Rounded to the nearest one-tenth of one percent.
(2) Outstanding options may expire earlier due to death, disability or
termination of employment. The Company has agreed to cash-out outstanding
options of certain Executive Officers upon a change in control. See page
13.
(3) Non-qualified options granted as part of the Executive Officer's annual
bonus. The options granted in 1995 will become exercisable on January 3,
1998.
(4) Based on the Black-Scholes option pricing model, using the following
assumptions: (a) 7 year option term; (b) 7.91% risk-free interest rate;
(c) 28.5% volatility; and (d) 3.1% dividend yield.
(5) Regular option grants under the 1985 Stock Option and Appreciation Plan
include options which qualify as incentive stock options under Section 422
of the Internal Revenue Code of 1986, as amended, and options which do not
so qualify. The options granted in 1995 became exercisable on January 31,
1996.
(6) Based on the Black-Scholes option pricing model, using the following
assumptions: (a) 10 year option term; (b) 7.6% risk-free interest rate;
(c) 28.5% volatility; and (d) 3.1% dividend yield.
(7) Non-qualified options granted as part of Mr. Oates' annual bonus and
subsequently cashed-out. See pages 11-12.
17
<PAGE>
The following table presents information about stock options exercised during
the 1995 fiscal year by the Executive Officers named in the Summary
Compensation Table on page 11 and the amount and value of unexercised options
held by such Executive Officers at fiscal year-end, distinguishing between
options that were vested (i.e., exercisable at year-end) and options that were
not vested (i.e., becoming exercisable in the future).
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END (#) FISCAL YEAR-END($)(1)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. W. Van Sant -0- -0- 120,000 237,735 $645,000 $1,134,020
T. G. John -0- -0- 15,700 21,305 -0- $ 14,578
R. D. Luzzi -0- -0- 7,700 13,882 -0- $ 8,713
J. J. Norton -0- -0- -0- 17,882 -0- $ 11,498
W. D. Sprague -0- -0- 21,050 11,344 $ 36,584 $ 6,205
D. M. Oates -0- -0- 39,350 10,000 $150,625 $ 10,000
</TABLE>
- ---------
(1) Rounded to the nearest dollar. Based on the difference between the closing
price of the Company's common stock on the New York Stock Exchange
Composite Tape at fiscal year-end and the exercise price of the options.
REPORT OF EXECUTIVE DEVELOPMENT AND
COMPENSATION COMMITTEE
The members of the Executive Development and Compensation Committee of the
Board, none of whom are employees of the Company, hereby present to the
stockholders of the Company this report concerning the compensation of the
Company's Executive Officers, including the Executive Officers named in the
Summary Compensation Table set forth on page 11. The role of the Committee,
among other things, is to establish the broad compensation policy of the
Company with respect to its Executive Officers and to determine the actual
amounts of the salary and bonus components of the compensation of each such
person as well as to approve the performance standards and award opportunities
for the incentive programs for Executive Officers.
18
<PAGE>
COMPENSATION POLICY
The goal of the Company's executive compensation program is to attract,
motivate and retain executives of the highest caliber. In the belief that this
goal is most effectively achieved by closely linking executive compensation to
corporate performance and returns to stockholders, the Company has established
an executive compensation plan that conditions a substantial portion of such
compensation on the Company's achievement of specified performance goals and
on increases in the value of the Company's common stock. Effective in 1995,
based on recommendations made by an independent executive compensation
consultant, the Committee made certain changes in the method of determining
incentive awards which conditioned a greater proportion of incentive
compensation for Executive Officers on the long-term performance of the
Company's common stock.
In determining compensation for the Company's Executive Officers for 1995,
the Committee relied on compensation guidelines established with the
assistance of such compensation consultant. These guidelines were developed by
reference to a peer group of companies, including some steel companies, that
had revenues generally comparable to the Company's and were engaged in heavy
manufacturing. The Committee believes that this sampling reflects the
marketplace in which the Company competes for senior executives and is large
enough to be meaningful.
This comparative sampling of companies used by the Committee for compensation
guidelines is different from the S & P Steel Index, which is the group of
companies used for purposes of the performance graph set forth on page 23,
comparing cumulative stockholder return on common stock. Comprised of steel
companies exclusively, this group and the Company operate in similar
environments and thus are similarly affected in terms of regulation,
competition, industry trends and the other factors that affect performance.
However, in recruiting, the Company looks to a wider field which includes
manufacturing companies, not just steel companies, and so considers
compensation in relation to this wider group.
The compensation guidelines provide that fixed compensation should fall at or
near the 50th percentile of the comparative group. For variable "at risk"
compensation, the Committee sets targets that will provide an incentive to
management to achieve above-average performance. Incentive compensation is
paid only in years in which the Company is successful in meeting those
targets.
The Company's annual executive compensation program has three principal
components, each described more fully below: (i) base salaries, (ii) awards
under the Lukens Performance Incentive Plan (the "LPIP"), consisting of cash
bonuses and the
19
<PAGE>
grant of stock options, and (iii) incentives under the Company's 1985 Stock
Option and Appreciation Plan ("the Stock Option Plan"), consisting of the
grant of stock options. Cash awards under the LPIP are based primarily on
achievement of pre-established levels of return on net assets and operating
earnings and thus are directly linked to Company performance. The values of
option awards under the LPIP and the Stock Option Plan indirectly reflect the
Company's performance through changes in the market price of the Company's
common stock. Both the LPIP and the Stock Option Plan have been designed to
align the interests of the Company's Executive Officers with those of the
Company's stockholders.
In setting compensation for Executive Officers, the Committee will, where
appropriate, take into account the $1,000,000 deduction limitation under
Section 162(m) of the Internal Revenue Code.
SPECIFIC COMPONENTS OF COMPENSATION PROGRAM
Salary. Base salaries for Executive Officers are the fixed component of their
total compensation package. In general, base salaries are set and adjusted
based on comparative standards and individual performance. For 1995, the
Committee determined the base salary for each Executive Officer, taking into
account Mr. Van Sant's evaluation of such Executive Officer's performance and
his recommendations to the Committee concerning adjustments to such Executive
Officer's base salary.
Bonus. Under the LPIP, the Committee determines the annual awards for the
Executive Officers (including Mr. Van Sant) based on (i) the performance of
the Company, as measured by attained levels of return on net assets and
operating earnings and (ii) the achievement of individual or team objectives.
For 1995, the corporate objectives determined 70%, and the individual or team
objectives determined 30%, of each Executive Officer's award. The specific
threshold, target and maximum levels of return on net assets and operating
earnings that are established each year by the Committee for corporate
performance are based on, among other things, past Company performance and
past industry performance. Team performance goals, some of which have
threshold, target and maximum levels, were proposed for 1995 by Mr. Van Sant
and approved by the Committee for each Executive Officer's department taking
into consideration current issues and projects on which that department was
working. Based on responsibility undertaken, position with the Company and
competitive standards, the Committee then establishes a percentage of salary
to be awarded as a bonus to participating Executive Officers at 100%
achievement of target corporate and individual or team objectives. Such
percentages range from 45% to 60% (for the Chief Executive Officer).
20
<PAGE>
At the beginning of the year, the Committee determines what each Executive
Officer's LPIP award would be for that year, assuming that the target
corporate and team objectives are achieved. Half of the projected LPIP award
at target is then granted in the form of stock options to each Executive
Officer. The number of stock options to be awarded is determined by taking
half of the total LPIP award at target, multiplying it by 135% (to compensate
for the risk of a longer term, non-cash award), and dividing that product by
the Black-Scholes value for the Company's common stock (a pricing model for
calculating the present value of options). Options granted as part of an LPIP
award are governed by the terms of the Stock Option Plan.
Cash awards for the remaining half of the LPIP award are made at the end of
the year based on the Committee's objective determination of whether the
thresholds for the applicable corporate and team goals were met. Executive
Officers may receive a bonus based on the achievement or partial achievement
of one set of performance factors (corporate or team) even if the threshold
for the other set of performance factors is not met.
For 1995, the Company exceeded not only the threshold but also the target
levels of return on net assets and operating earnings, and so each Executive
Officer received a cash award based on those performance factors. In addition,
all Executive Officers received a cash bonus based on the achievement of at
least some, if not all, of their team objectives.
Option Plan. Under the Company's Stock Option Plan, options to purchase
common stock of the Company are granted on an annual basis to Executive
Officers at the fair market value of such common stock on the date of grant.
Because the compensation element of options is dependent on increases in the
market value of such common stock, stock options represent compensation that
is tied to the Company's performance for up to 10 years (the period during
which such options may be exercised).
For 1995, the Committee set a range of the number of options that could be
granted for each level of Executive Officer. The number of options within the
applicable range granted to each Executive Officer was based on the
Committee's subjective assessment of such Executive Officer's individual
performance and other qualitative factors the Committee considered
appropriate.
1995 COMPENSATION OF CHIEF EXECUTIVE OFFICER
R. W. Van Sant has been Chairman, President and Chief Executive Officer of
the Company since December 1991. Mr. Van Sant's initial base salary of
$500,000 was established pursuant to the employment agreement discussed on
page 13 based upon the
21
<PAGE>
scope of his responsibilities for the Company and comparative group standards.
The Committee believes that the terms of Mr. Van Sant's employment agreement
are consistent with the compensation policies of the Committee. His salary,
which was $535,000 for 1993 and was kept at that level for 1994, was increased
to $565,563 for 1995 due to the Company's improved financial performance.
Mr. Van Sant received an LPIP option award of options for 27,735 shares of
common stock based on the calculation for LPIP options discussed above for the
other Executive Officers. He received an LPIP cash award of $214,529 because
the Company exceeded both threshold and target levels for the corporate
objectives and Mr. Van Sant achieved most of his individual objectives.
Pursuant to his employment agreement, Mr. Van Sant was granted options
totaling 330,000 that vest at a rate of 30,000 for each year of his continued
employment with the Company. Mr. Van Sant is eligible for additional stock
option grants in accordance with the Company's Stock Option Plan.
Executive Development and Compensation Committee
Stuart J. Northrop, Chairman
T. Kevin Dunnigan
Ronald M. Gross
William H. Nelson, III
W. Paul Tippett
22
<PAGE>
PERFORMANCE GRAPH
The following graph illustrates a five-year comparison at fiscal year-end
from 1990 through 1995 of the Company's cumulative total stockholder return on
common stock with the cumulative total return on the S&P 500 Stock Index and
the S&P Steel Index. These values assume an investment of $100 on January 1,
1991 and reinvestment of dividends. The companies included in the S&P Steel
Index are Armco Inc., Bethlehem Steel Corporation, Inland Steel Industries,
Inc., Nucor Corp., USX Corp.-U.S. Steel Group and Worthington Industries Inc.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
LUKENS INC. $100 102.78 166.15 141.86 124.90 127.39
S&P 500 INDEX $100 130.47 140.41 154.56 156.60 215.45
S&P STEEL INDEX $100 122.88 160.77 211.54 205.74 190.78
</TABLE>
23
<PAGE>
PROPOSED AMENDMENTS TO THE COMPANY'S 1985 STOCK OPTION AND
APPRECIATION PLAN
On February 27, 1985, the Company's Board of Directors adopted the Company's
1985 Stock Option and Appreciation Plan, as amended (the "Stock Option Plan"),
which permits the Committee administering the Plan to grant to officers and
other key employees of the Company incentive awards in the form of stock
options. The Company's stockholders approved the Stock Option Plan on April
24, 1985. The Board of Directors subsequently approved amendments to the Stock
Option Plan on January 27, 1988, increasing the number of shares available for
issuance from 250,000 to 550,000. These amendments were approved by the
stockholders on April 27, 1988. On July 27, 1988 and September 28, 1992, the
Company declared 50% stock dividends on its common stock, which increased the
number of shares available for issuance under the Stock Option Plan from
550,000 to 825,000 and from 825,000 to 1,237,500. On January 27, 1993, the
Board of Directors approved amendments to the Stock Option Plan to increase,
by 600,000, the number of shares available for issuance to a total of
1,837,500 and to extend the term of the Stock Option Plan to February 26,
1998. These amendments were approved by the stockholders on April 28, 1993.
The Stock Option Plan currently permits granting of options to purchase up to
1,837,500 shares of common stock to officers and other key employees and
expires on February 26, 1998.
When adjusted to reflect the effect of both stock dividends, as of March 1,
1996, options to purchase 907,182 shares have been granted and exercised and
options to purchase 835,787 shares have been granted but not exercised under
the Stock Option Plan. Accordingly, as of March 1, 1996, there were only
94,531 shares available for future grants under the Stock Option Plan.
The options granted but not exercised under the Stock Option Plan have a
weighted average exercise price per share of $30.11. On March 1, 1996, the
closing price of the Company's common stock on the New York Stock Exchange was
$27.
Options granted under the Stock Option Plan may be either options that
qualify as incentive stock options under Section 422 of the Internal Revenue
Code ("incentive stock options") or options that do not so qualify ("non-
qualified stock options"). Under the terms of the Stock Option Plan the option
exercise price may not be less than 100% of the fair market value of the
underlying stock at the time the option is granted. Options expire upon the
earlier of three months after the employee's termination of employment
(subject to extension in the case of death, disability or retirement), an
expiration date fixed by the Board of Directors and set forth in each
individual option agreement or ten years from the date of grant. Under the
terms of the Stock Option Plan the price payable to the Company on the
exercise of an option may be paid in cash or by the delivery of shares of the
Company's common stock that have been owned by the optionee for at
24
<PAGE>
least one year and have a fair market value on the date of exercise equal to
the option price, or any combination thereof.
The Board of Directors of the Company will make amendments to the Stock
Option Plan which it deems necessary or advisable, provided that the Board
shall seek stockholder approval of an amendment if it would (a) materially
increase benefits to participants, (b) materially increase the number of
shares issuable under the Stock Option Plan or (c) materially modify the
requirements as to eligibility for participation in the Stock Option Plan. The
Board has no present plans to adopt any further amendments to the Stock Option
Plan prior to its expiration.
On February 28, 1996, the Board of Directors of the Company unanimously
adopted a resolution authorizing management to amend the Stock Option Plan to
increase the number of shares available for issuance under the Stock Option
Plan by 900,000 to a total of 2,737,500. The Board of Directors believes that
it is advisable and in the Company's best interest to make additional shares
available for the granting of options to officers and other key employees
because options provide a valuable incentive for such persons to remain in the
employ of the Company and stimulate their best efforts on behalf of the
Company. The Board believes that options permit the Company to attract and
retain qualified officers and other key employees by enabling the Company to
offer such persons a stake in the Company and an incentive to promote the
Company's success generally without the cash outlay that might otherwise be
required to obtain comparable results.
Approximately 60 officers and key employees are eligible to participate in
the Stock Option Plan. The Company's Executive Development and Compensation
Committee selects the participants in, determines the awards under and
administers the Stock Option Plan. The Committee is composed entirely of non-
employee Directors. In 1995, options to purchase approximately 82,550 shares
were granted to Company officers and key employees under the Stock Option
Plan, not including Executive Officers. In 1995, options to purchase
approximately 154,797 shares were granted to current and former Executive
Officers as a group (including grants of options as part of annual bonuses and
regular grants under the Stock Option Plan). Such grants included options to
purchase 27,735 shares granted to Mr. Van Sant, Chairman, President and Chief
Executive Officer; options to purchase 21,305 shares granted to Mr. John,
Senior Vice President, Commercial; options to purchase 13,882 shares granted
to Mr. Luzzi, Vice President, Human Resources; options to purchase 17,882
shares granted to Mr. Norton, Vice President; options to purchase 11,344
shares granted to Mr. Sprague, Vice President, General Counsel and Secretary;
and options to purchase 17,795 shares granted to Mr. Oates, former Senior Vice
President. No options were granted to any other persons under the Stock Option
Plan.
25
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences relating to stock options are complex and
subject to change. Accordingly, the summary that follows is intended only as a
general guide.
The grant of an incentive stock option will have no federal income tax
consequences at the time of grant for either the Company or the employee. If
an employee exercises an incentive stock option, does not dispose of the
shares of stock transferred to him upon such exercise within (i) two years
from the date the option was granted, and (ii) one year after the transfer of
shares to him, and was an employee of the Company at all times from the date
the option was granted to the day three months (or, in the case of an employee
who is disabled within the meaning of Section 22(e)(3) of the Internal Revenue
Code, one year) before the date of such exercise, he will recognize no gain
for federal income tax purposes upon the exercise of the option. Under these
circumstances, the Company will not be entitled to any deduction. Any gain or
loss upon the later sale of the shares by the employee will be treated as
long-term capital gain or loss. In case of the death of any employee, the
following applies: (i) the minimum holding period requirements are waived; and
(ii) if the employment requirement was satisfied at the time of death, the
employment requirement on the date of exercise is waived.
If the shares are disposed of before the expiration of the period described
above, the employee will realize ordinary income in the year of such
disposition. The amount of such ordinary income will be equal to the lesser of
(i) the excess of the fair market value of the shares at the time of exercise
of the option over the option price, or (ii) if the disposition is a sale or
exchange with respect to which a loss (if sustained) would be recognized, the
amount of gain realized. Upon such a disposition, the Company will be entitled
to a deduction in the same amount.
The grant of a non-qualified stock option will have no federal income tax
consequences at the time of grant for either the Company or the employee. If
an employee exercises a non-qualified stock option, he will, except as noted
below, recognize ordinary income measured by the difference between the option
price and the fair market value of the shares on the date of exercise. The
optionee's basis for the shares will be equal to their fair market value on
the date the option is exercised. Under these circumstances, the Company will
be entitled to a deduction equal to such difference. Any difference between
such market value and the price at which the employee may subsequently sell
his shares will be treated as a short-term or long-term capital gain or loss,
depending on the period of time the shares have been held.
Different consequences may apply for participants who are subject to Section
16 of the Securities Exchange Act of 1934 or who are subject to the
alternative minimum tax.
26
<PAGE>
Furthermore, special federal income tax rules may apply where, as described
above, employees surrender shares in satisfaction of part or all of the option
price.
The text of the amendment is set forth in Exhibit A attached to this Proxy
Statement and incorporated herein by reference. The proposed amendment will be
approved if it receives the affirmative vote of a majority of votes entitled
to be cast by holders of shares represented in person or by proxy at the
Annual Meeting.
The Board of Directors unanimously recommends a vote FOR the proposal to
increase the number of shares available for issuance under the Stock Option
Plan by 900,000 to a total of 2,737,500.
27
<PAGE>
PRINCIPAL HOLDERS OF STOCK
The following table sets forth information, as of December 31, 1995,
regarding each person who is known by the Company to beneficially own more
than 5% of any class of stock of the Company. Such information was provided to
the Company by such persons or is based on data available to the Company.
<TABLE>
<CAPTION>
SHARES
TITLE OF BENEFICIALLY PERCENT OF
NAME AND ADDRESS CLASS OWNED CLASS(1)
- ---------------- --------- ------------ ----------
<S> <C> <C> <C>
State Street Bank and Trust Company
Boston, MA Preferred 491,712(2)(3) 100.0%
The Equitable Companies Incorporated
New York, NY Common 930,650(4) 6.3%
Lazard Freres & Co. LLC
New York, NY Common 836,505(5) 5.7%
Systematic Financial Management, Inc.
Fort Lee, NJ Common 1,019,001(6) 6.9%
</TABLE>
- ---------
(1) Rounded to the nearest one-tenth of one percent and based on the number of
shares of the applicable class outstanding on December 31, 1995.
(2) Rounded to the nearest share.
(3) Held as trustee of the Lukens Inc. Employees Stock Ownership Trust under
the Lukens Inc. Employees Capital Accumulation Plan, as to which State
Street disclaims beneficial ownership. The trustee's duties include
management of the trust and voting the preferred stock held in the trust.
See pages 1-2. Each share of preferred stock is convertible into three
shares of the Company's common stock. If all of the shares of preferred
stock were converted, State Street would hold 1,475,136 shares of common
stock as trustee. These shares, together with the 52,250 shares of common
stock held in separate or commingled funds managed by State Street, would
represent approximately 10.4% of the Company's common stock.
(4) Equitable Companies is a parent holding company, whose subsidiary Alliance
Capital Management L.P. beneficially owns such shares, as to all of which
it has sole dispositive power, as to 706,050 of which it has sole voting
power and as to 22,000 of which it has shared voting power.
(5) Lazard Freres has sole dispositive power with respect to all of such
shares and sole voting power with respect to 574,855 of such shares.
(6) Systematic Financial has sole dispositive power with respect to all of
such shares and shared voting power with respect to 104,320 of such
shares.
28
<PAGE>
CERTAIN TRANSACTIONS
During fiscal year 1995, the Company loaned $120,000 to Mr. John, Senior Vice
President, Commercial, and $224,700 to Mr. C.B. Houghton, Vice President and
Controller of the Company, on an interest free basis. The purpose of these
loans was to assist in their relocation when they became Executive Officers of
the Company. Messrs. John and Houghton expect to repay their loans following
the sale of their former residences.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 generally requires
the Company's Directors and Executive Officers and persons who own more than
10% of a registered class of the Company's equity securities ("10% owners") to
file with the Securities and Exchange Commission and the New York Stock
Exchange initial reports of ownership and reports of changes in ownership of
common stock and other equity securities of the Company. Directors, Executive
Officers and 10% owners are required by Securities and Exchange Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on review of copies of such
reports furnished to the Company and written representations that no other
reports were required to be filed during the 1995 fiscal year, all Section
16(a) filing requirements applicable to its Directors, Executive Officers and
10% owners were met.
INDEPENDENT PUBLIC ACCOUNTANTS
During the 1995 fiscal year Arthur Andersen LLP of Philadelphia,
Pennsylvania, served as independent public accountants to the Company. They
have been appointed as the Company's independent public accountants for the
1996 fiscal year by the Board of Directors. Representatives of Arthur Andersen
LLP are expected to be present at the Annual Meeting and will have the
opportunity to make a statement if they desire to do so. They will be
available to respond to proper questions regarding the independent public
accountants' responsibilities.
OTHER MATTERS
Management does not know of any matters other than those referred to in this
Proxy Statement that may come before the Annual Meeting. However, if any other
matters should properly come before the meeting, the persons named in the
accompanying Proxy will have discretionary authority to vote all Proxies with
respect to such matters in accordance with their best judgment.
29
<PAGE>
STOCKHOLDER PROPOSALS
If a stockholder wishes to present a proposal at the 1997 Annual Meeting, the
proposal must comply with the regulations of the Securities and Exchange
Commission and must be received by the Vice President, General Counsel and
Secretary of the Company at 50 South First Avenue, Coatesville, Pennsylvania
19320 no later than November 25, 1996, in order for it to be included in the
Proxy Statement for such meeting.
EXPENSE OF SOLICITATION
The cost of soliciting Proxies will be borne by the Company. Some of the
officers and employees of the Company may solicit Proxies personally and by
telephone. In addition, Corporate Investor Communications, Inc. will provide
assistance in soliciting Proxies by mail, telephone, telegraph and personal
interview at an expected cost of $4,000 plus expenses.
FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS PROXY
STATEMENT, UPON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K. (IF EXHIBITS ARE REQUESTED, A CHARGE OF 25 CENTS
PER PAGE WILL BE MADE.) SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO THE COMPANY
AT 50 SOUTH FIRST AVENUE, COATESVILLE, PENNSYLVANIA 19320, ATTENTION: VICE
PRESIDENT, GENERAL COUNSEL AND SECRETARY.
By Order of the Board of
Directors
/s/ William D. Sprague
William D. Sprague
Vice President, General Counsel
and Secretary
30
<PAGE>
EXHIBIT A
Section 2.1 of the Lukens Inc. 1985 Stock Option and Appreciation Plan is
amended to read as follows:
"The aggregate number of Shares which may be delivered upon exercise of
Options granted under the Plan (including Shares delivered under Section
4.7 hereof) shall not exceed 2,737,500, subject to appropriate adjustment
in the event the number of issued Shares shall be increased or reduced by
a change in par value, combination, split-up, merger, reclassification,
distribution of a dividend payable in stock, or the like. Shares covered
by Options which have lapsed or expired may again be optioned pursuant to
the Plan."
A-1
<PAGE>
LUKENS INC.
1985 STOCK OPTION AND APPRECIATION PLAN
AS AMENDED DECEMBER 17, 1986, FEBRUARY 25, 1987
APRIL 27, 1988, AUGUST 15, 1988, JANUARY 31, 1990
APRIL 28, 1993 AND PROPOSED TO BE AMENDED APRIL 24, 1996
The Lukens, Inc. 1985 Stock Option and Appreciation Plan is hereby amended
and renamed the Lukens Inc. 1985 Stock Option and Appreciation Plan (the
"Plan"). This Plan has been amended to conform to the changes in the law under
the Tax Reform Act of 1986, to reflect a deletion of the requirement of tender
of Shares by the Participant to the Company, to increase the number of Shares
issuable under the Plan, to reflect a three for two stock split effected August
15, 1988, and to provide for acceleration of Options upon a Change in Control.
The purpose of the Plan is to furnish an incentive to those officers and
other key employees who have demonstrated a capacity to contribute to the
success of the Company and its present or future subsidiaries by making
available to them a larger common stock ownership in the Company, to induce the
continued service of such employees, and to stimulate their efforts for the
continued success of the Company. Options granted under the Plan may be either
incentive stock options, as defined in Section 422A(b) of the Internal Revenue
Code of 1986, as amended (the "Code"), or options which do not meet the
requirements of said Section 422A(b) of the Code, herein referred to as non-
qualified stock options.
ARTICLE I. DEFINITIONS
-----------
1.1 As used in this Plan, the following definitions apply to the terms
indicated below:
(a) "Board" means the Board of Directors of Lukens Inc.
(b) "Change in Control" means any of the following events:
(i) Any "person" or "group" (as such terms are used in Sections
3(a)(9), 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended), considered together with its or their "affiliates" and "associates"
(as such terms are defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended), is or becomes the
beneficial owner (as defined in Rule 13d-3 of the General Rules and Regulations
under the Securities Exchange Act
<PAGE>
of 1934, as amended), or acquires or holds voting control, directly or
indirectly, of securities of the Company which, when considered together with
any other securities which by their terms are convertible, even if not then
convertible, represent twenty percent (20%) or more of the voting power of the
then outstanding securities of the Company; or
(ii) A change in the composition of a majority of the Board within
24 months after any "person" or "group" (as such terms are used in Sections
3(a)(9), 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended), considered together with its or their "affiliates" or "associates" (as
such terms are defined in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended), is or becomes the beneficial
owner (as defined in Rule 13d-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended) or acquires or holds voting
control, directly or indirectly, of securities of the Company which, when
considered together with any other securities held by such person or group or
their affiliates or associates which by their terms are convertible, even if not
then convertible, represent twenty percent (20%) of the voting power of the then
outstanding securities of the Company; or
(iii) Any "person" or "group" (as such terms are used in Section
3(a)(9), 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended) commences a tender offer or exchange offer for securities of the
Company if, upon consummation thereof, the offeror, considered together with its
"affiliates" and "associates" (as such terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended), would own or control, directly or indirectly, securities of the
Company which, when considered together with any other securities held by such
person or group or their affiliates or associates which by their terms are
convertible, even if not then convertible, represent thirty percent (30%) or
more of the voting power of the then outstanding securities of the Company.
The terms "person" and "group", as used in this Section (b), shall
not include (i) the Company; (ii) any corporation in which the Company owns,
directly or indirectly, voting securities sufficient to elect at least a
majority of the directors of such corporation; (iii) any employee benefit plan
of the Company or of any corporation described in clause (ii) above; (iv) any
individual or entity organized, appointed or established by the Company for, or
pursuant to the terms of any employee benefit plan described in clause (iii)
above; and (v) a Participant. (as amended January 31, 1990)
2
<PAGE>
(c) "Committee" means the Committee appointed pursuant to Section 9.1
of the Plan.
(d) "Company" means Lukens Inc.
(e) "Eligible Employee" means any employee, who on the date of the
granting of an Option hereunder, is an officer or other key employee of the
Company or of any Subsidiary Corporation and who, in the opinion of the
Committee, has demonstrated a capacity for contributing to the success of the
Company and its subsidiaries.
(f) "Option" means a right to purchase Shares granted pursuant to the
Plan and evidenced by an option certificate in such form as the Committee may
adopt for general use from time to time.
(g) "Participant" means an Eligible Employee to whom an Option is
granted pursuant to this Plan.
(h) "Plan" means the Lukens Inc. 1985 Stock Option and Appreciation
Plan.
(i) "Shares" mean shares of the Company's common stock, par value
$.01.
(j) "Subsidiary Corporation" means any corporation, as defined in
Section 425(f) of the Code, now or hereafter existing in which the Company owns,
directly or indirectly, in an unbroken chain of corporations, stock possessing
50% or more of the total combined voting power of all classes of stock of such
corporation.
1.2 An Option shall be deemed "granted" under this Plan on the date on
which the Committee, by appropriate action, awards the Option to an Eligible
Employee, or on such subsequent date as the Committee may designate.
1.3 As used herein, the masculine includes the feminine and the plural
includes the singular.
1.4 For purposes of the Plan, the fair market value of the Shares on a
valuation date shall be the mean between the highest and lowest prices at which
the Company's stock was sold on the New York Stock Exchange on such date (or if
such date shall not be a business day, then the next preceding day which shall
be a business day), or if no sale takes place, then the mean between the bid and
asked prices on such date; if no bid and asked prices are quoted for such date
then such value as shall be determined by such method as the Committee shall
deem to reflect fair market value as of such date.
3
<PAGE>
ARTICLE II. SHARES SUBJECT TO THE PLAN
--------------------------
2.1 The aggregate number of Shares which may be delivered upon exercise of
Options granted under the Plan (including Shares delivered under Section 4.7
hereof) shall not exceed 2,737,500, subject to appropriate adjustment in the
event the number of issued Shares shall be increased or reduced by a change in
par value, combination, split-up, merger, reclassification, distribution of a
dividend payable in stock, or the like. Shares covered by Options which have
lapsed or expired may again be optioned pursuant to the Plan. (as amended April
27, 1988, August 15, 1988, April 28, 1993 and proposed to be amended April 24,
1996)
ARTICLE III. GRANTS OF OPTIONS
-----------------
3.1 The Committee may, at any time during the term of the Plan, grant to
any Eligible Employee an Option to purchase any number of Shares, subject to the
limitation in Section 3.2 hereof.
3.2 With respect to incentive stock options granted prior to January 1,
1987, the aggregate fair market value (determined as of the date the Option is
granted) of the Shares for which any Participant may be granted Options intended
to be incentive stock options in any calendar year (under all plans of the
Company and its subsidiaries) shall not exceed $100,000 plus any unused limit
carry-over (as described in Section 422A(c)(4) of the Code prior to amendment by
the Tax Reform Act of 1986) to such year. With respect to all incentive stock
options granted after December 31, 1986, the aggregate fair market value
(determined as of the date the Option is granted) of the Shares for which any
Participant may first exercise Options intended to be incentive stock options in
any calendar year (under all plans of the Company and its subsidiaries) shall
not exceed $100,000. (as amended December 17, 1986)
3.3 No Option intended to be an incentive stock option shall be granted to
an employee who, at the time the Option is granted, owns (within the meaning of
Section 422A(b)(6) of the Code) stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the corporation employing
such employee or of its parent corporation or subsidiary corporation (as defined
in Sections 425(e) and 425(f), respectively, of the Code).
3.4 The Committee may in its discretion grant Options that are not
intended to constitute incentive stock options. Such Options may be granted in
excess of the limitations provided in this Section or on terms differing from
those provided in Section 4.4 hereof.
4
<PAGE>
3.5 Each Option shall be evidenced by a written instrument, in such form
as the Committee shall from time to time approve, which shall state the terms
and conditions of the Option in accordance with the Plan and also shall contain
such additional provisions as may be necessary or appropriate under applicable
laws, regulations and rules.
ARTICLE IV. TERMS OF OPTIONS
----------------
4.1 At the time of granting the Option the Committee shall establish an
Option exercise price per Share not less than 100 percent of the fair market
value of a Share on the date the Option is granted.
4.2 Options shall not be transferable otherwise than by will or the laws
of descent and distribution. No Option shall be subject, in whole or in part,
to attachment, execution or levy of any kind.
4.3 A Participant may exercise an Option, subject to the terms of this
Plan and applicable rules and regulations of the Committee, only after such
Participant has completed one year of full time employment immediately following
the date of the grant of such Option.
4.4 Any Option granted before January 1, 1987, intended to be an incentive
stock option may not be exercised in whole or in part while there is outstanding
any incentive stock option which was granted before the granting of such Option
to such Participant to purchase stock in his or her employer corporation or in a
corporation which at the time of grant of such Option is a parent corporation or
subsidiary corporation (as defined in Section 425(e) and 425(f) respectively, of
the Code prior to amendment by the Tax Reform Act of 1986) of the employer
corporation or in a predecessor of any such corporations. For this purpose, an
incentive stock option shall be treated as outstanding until it is exercised in
full or expires by reason of lapse of time. (as amended December 17, 1986)
4.5 The expiration date of each Option shall be no more than ten years
after the date of grant.
4.6 All Options shall be exercisable during a Participant's lifetime only
by such Participant.
4.7 An Option may, in the discretion of the Committee, provide that upon
the exercise of the Option the Participant shall receive, in addition to the
Shares purchased upon exercise of the Option, an amount equal to the excess of
the then fair market value of the Shares purchasable on exercise of the Option
over the exercise price of the Option provided that such amount
5
<PAGE>
receivable shall not exceed the exercise price of the Option. Such additional
amount shall be delivered to the Participant in cash, in Shares (valued at their
then fair market value) or in a combination of cash and Shares as the Committee
in its sole discretion shall determine.
4.8 No Participant shall have any rights to dividends or other rights of a
stockholder with respect to Shares subject to an Option prior to the purchase of
such Shares upon the exercise of the Option.
4.9 An Option may, in the discretion of the Committee, provide that in the
event of a Change in Control, such Option shall automatically become fully
exercisable, notwithstanding any other provisions of the Plan to the contrary.
(as amended January 31, 1990)
ARTICLE V. EXERCISE RIGHTS UPON TERMINATION OF EMPLOYMENT
----------------------------------------------
5.1 If a Participant retires, the Participant's Option shall terminate
three years after the date of such retirement, but in no event later than the
date on which it would have expired if the Participant had not retired;
provided, however, that if the Option is exercised later than three months after
the date of retirement, it shall not constitute an incentive stock option.
After the date of retirement, the Participant may exercise the Option, in whole
or in part, notwithstanding the limitations of Section 4.3 hereof.
5.2 If a Participant becomes disabled, the Participant may exercise the
Option (i) within one year after the date of disability, but in no event later
than the date on which it would have expired if the Participant had not become
disabled, or (ii) within such other period, not exceeding three years after the
date of disability as shall be prescribed in the Option instrument; provided,
however, that if the Option is exercised later than one year after the date of
disability it shall not constitute an incentive stock option. During any such
period the Participant may exercise the Option in whole or in part,
notwithstanding the limitations of Section 4.3 hereof. For this purpose, a
Participant shall be deemed to be disabled if he or she is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for continuous period of not less than 12
months.
5.3 If a Participant dies during a period in which he or she is entitled
to exercise an Option (including the periods referred to in Sections 5.1, 5.2
and 5.4 hereof), the Participant's Option shall terminate three years after the
date
6
<PAGE>
of death, but in no event later than the date on which it would have expired if
the Participant had lived. During such period, the Option may be exercised by
the Participant's executor or administrator or by any person or persons who
shall have acquired the Option directly from the Participant by bequest or
inheritance. The Option may be exercised in whole or in part notwithstanding
the limitations of Section 4.3 hereof.
5.4 If a Participant ceases to be employed by the Company or a Subsidiary
Corporation for any reason other than retirement, disability or death, the
Participant's Option shall terminate three months after the date of such
cessation of employment, but in no event later than the date on which it would
have expired if such cessation of employment had not occurred. During such
period the Option may be exercised only to the extent that the Participant was
entitled to do so under Section 4.3 hereof at the date of cessation of
employment unless the Committee, in its sole discretion, permits exercise of the
Option to a greater extent. The employment of a Participant shall not be deemed
to have ceased upon his or her absence from the Company or a Subsidiary
Corporation on a leave of absence granted in accordance with the usual
procedures of the Company or such Subsidiary Corporation.
ARTICLE VI. DELIVERY OF SHARES
------------------
6.1 No Shares will be delivered upon exercise of an Option until the
exercise price of the Option is paid (i) in full in cash, (ii) by the delivery
to the Company of Shares with fair market value equal to the exercise price of
the Option, or (iii) partly in cash and partly in Shares valued at their fair
market value provided, however, that Shares received upon exercise of an Option
under this Plan may be delivered in payment of the exercise price only after
they have been held by the Participant for one year subsequent to such prior
exercise. The Committee will establish procedures implementing the holding
period requirement. Fair market value shall be determined as of the close of
the business day immediately preceding the date on which the Option is
exercised, in the manner described in Section 1.4 hereof. If required by the
Committee, no Shares will be delivered upon the exercise of the Option unless a
Participant has given the Company a satisfactory written statement that the
Shares are being acquired for the Participant's account and not with a view to
the distribution of the Shares.
6.2 Share certificates issued to Participants upon exercise of Options
may, at the sole discretion of the Committee, bear language limiting their
transfer otherwise than in accordance with the Plan and applicable state and
federal law.
7
<PAGE>
ARTICLE VII. CONTINUATION OF EMPLOYMENT
--------------------------
7.1 Neither this Plan nor the grant of any Option hereunder shall confer
upon any Participant the right to continue in the employ of the Company or any
Subsidiary Corporation or limit in any respect the right of the Company or any
Subsidiary Corporation to terminate his employment at any time.
ARTICLE VIII. REORGANIZATION OF THE COMPANY
-----------------------------
8.1 In the event the Company is succeeded by another corporation in a
reorganization, which term includes a merger, consolidation, acquisition of all
or substantially all of the assets or common stock of the Company, separation or
liquidation, the Participant shall, at the same cost, be entitled upon the
exercise of an Option, to receive (subject to any required action by
stockholders) such securities of the surviving or resulting corporation and such
additional amount as provided in Section 4.7 hereof as the board of directors of
such corporation shall determine to be equivalent, as nearly as practicable, to
the nearest whole number and class of shares of stock or other securities and
related additional amount determined under Section 4.7 to which the Participant
would have been entitled under the terms of the agreement of reorganization,
(without adjustment for any fractional interest thereby eliminated), as if,
immediately prior to such event, the Participant had been the holder of record
of the number of Shares which were then subject to such Option. Such shares of
stock or other securities shall, after such reorganization be deemed to be
Shares for all purposes of the Plan including the right to an additional amount
as provided in Section 4.7 of the Plan.
ARTICLE IX. ADMINISTRATION
--------------
9.1 The Plan shall be administered by a Committee, consisting of not less
than three directors, appointed by the Board to serve at the pleasure of the
Board. No member of the Committee shall be eligible to receive Options
hereunder while serving thereon.
9.2 The Committee shall be empowered, subject to the provisions of the
Plan and to any other directives issued by the Board, to prescribe, amend and
rescind rules and regulations of general application relating to the operation
of the Plan and to make all other determinations necessary or desirable for its
proper administration. Decisions of the Committee shall be final, conclusive
and binding upon all parties, including the Company, the stockholders and the
Eligible Employees.
9.3 Neither the Company, any Subsidiary Corporation, nor any director or
officer thereof, nor the Committee nor any
8
<PAGE>
member of the Committee shall be liable for any act, omission, interpretation,
construction or determination made in connection with the Plan in good faith.
The Committee and each of its members shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense
(including counsel fees) arising therefrom to the full extent permitted by law
and under any directors and officers liability insurance coverage which may be
in effect from time to time.
ARTICLE X. DISPOSITION OF SHARES
---------------------
10.1 Each Participant, by accepting an incentive stock option hereunder
prior to February 28, 1987, agrees that, before disposing of any Shares acquired
pursuant to such Option, he will tender such Shares to the Company. The Company
shall have the right, within five (5) days following the receipt of tender of
such Shares, to purchase such Shares at a price equal to the fair market value
of such Shares, on the date of such tender. If the Company does not accept the
offer to purchase the Shares so tendered within the five (5) day period such
Shares shall thereafter be free of all restrictions affecting their disposition
under this Article X. (as amended February 28, 1987)
10.2 The instruments evidencing Options intended to be incentive stock
options shall provide that if, within two years from the date of grant of the
Option or within one year after the transfer of Shares of Common Stock to the
Participant on exercise of the Option, the Participant makes a disposition (as
defined in Section 425(c) of the Code) of any such Shares, the Participant shall
notify the Secretary of the Company within 10 days after such disposition. The
Committee may direct that a legend restricting transfer in the absence of
appropriate notification be affixed to any stock certificates representing
Shares transferred under the Plan.
ARTICLE XI. AMENDMENT AND DISCONTINUANCE
----------------------------
11.1 The Board is authorized to make such changes in the Plan as shall be
necessary to bring it into conformity with any regulations of any governmental
body having jurisdiction; and may otherwise alter the Plan subject, however, to
the prior approval of the stockholders of the Company if such alteration would:
(a) materially increase benefits to Participants, (b) materially increase the
number of Shares issuable under the Plan, or (c) materially modify the
requirements as to eligibility for participation in the Plan. The Board may at
any time suspend or discontinue the Plan. No action of the Board or of the
stockholders, however, shall alter or impair any Option theretofore granted
under the Plan except as herein provided.
9
<PAGE>
ARTICLE XII. MISCELLANEOUS
-------------
12.1 It is expressly understood that this Plan grants powers to the
Committee but does not require their exercise; nor shall any person, by reason
of the adoption of this Plan, be deemed to be entitled to the grant of any
Option; nor shall any rights be deemed to accrue under the Plan except as
Options may actually be granted hereunder.
12.2 The adoption of this Plan shall not preclude the Board from granting
options to purchase Shares to any person in connection with his employment by
the Company or by a Subsidiary Corporation without reference to, and outside of,
this Plan.
12.3 All expenses of the Plan, including the cost of maintaining records,
shall be borne by the Company.
12.4 The Company and any Subsidiary Corporation shall have the right to
deduct from all cash payments any federal, state, or local taxes required by law
to be withheld with respect to such cash payments.
12.5 The Plan shall be construed in accordance with and be governed by the
laws of the Commonwealth of Pennsylvania.
ARTICLE XIII. PLAN ADOPTION AND TERM
----------------------
13.1 This Plan shall become effective upon its adoption by the Board, and
Options may thereafter be granted, provided, however, that the Plan shall be
submitted to the Company's stockholders for their approval at the next following
Annual Meeting of Stockholders. If the Plan is not approved by the affirmative
vote of the holders of at least a majority of the Shares entitled to vote at the
meeting, then the Plan and all Options then outstanding shall immediately
automatically terminate and be of no force or effect.
13.2 Subject to the provisions of the Plan relating to amendment or
discontinuance, this Plan shall continue in effect until February 26, 1998. No
Option may be granted hereunder after such date, but Options granted before such
date may extend beyond the termination date of the Plan. (as amended April 28,
1993)
Executed this _____ day of _______________, 1996.
______________________________
Secretary to the Board
of Lukens Inc.
10
<PAGE>
PROXY
LUKENS INC.
The undersigned:
(i) as a holder of record of Lukens Inc. common stock hereby appoints Sandra
L. Helton, William H. Nelson, III and Stuart J. Northrop the proxies of the
undersigned (each with power to act alone and with power of substitution and
with discretionary authority to cumulate on the vote for the election of
Directors) to represent and vote, in the manner directed herein, the shares of
stock of Lukens Inc. which the undersigned would be entitled to vote if
personally present; or
(ii) as a participant in the capital accumulation plan specified on the
reverse side hereby instructs the trustee of such plan to vote all shares of
common stock and/or preferred stock of Lukens Inc. which are credited to the
undersigned's account in such plan in the manner directed herein (with
discretionary authority to cumulate on the vote for the election of Directors)
at the Annual Meeting of Stockholders of Lukens Inc. to be held at the
Administrative Resources Center, Modena Road, South Coatesville, Pennsylvania,
on April 24, 1996, at 1:30 P.M., EDT, or at any adjournment thereof, and in the
proxies' or the trustee's discretion, as applicable, upon such other business
as may come before the meeting, all as set forth in the notice of the meeting
and in the proxy statement furnished herewith.
The shares represented hereby will be voted in accordance with the
specifications made on the reverse side or, IF NO SPECIFICATION IS MADE, THEY
WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS NOMINATED AND FOR THE APPROVAL
OF THE AMENDMENT TO THE 1985 STOCK OPTION AND APPRECIATION PLAN.
(PLEASE FILL IN, SIGN AND DATE ON REVERSE SIDE)
-----------
SEE REVERSE
SIDE
-----------
<PAGE>
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. MANAGEMENT RECOMMENDS A VOTE
FOR THE DIRECTORS NOMINATED AND FOR PROPOSAL 2.
FOR WITHHELD
1. ELECTION OF [_] [_]
DIRECTORS
For, except vote withheld from the
following nominee(s):
- ------------------------------------------------------------
NOMINEES: MICHAEL O. ALEXANDER,
DAVID B. PRICE, JR. AND
JOAB L. THOMAS
To cumulate votes for any nominee(s), write the
name(s) and the amount allocated to such person(s)
in the space provided below:
- ------------------------------------------------------------
2. APPROVAL OF AMENDMENT FOR AGAINST ABSTAIN
TO 1985 STOCK OPTION AND [_] [_] [_]
APPRECIATION PLAN
NOTE: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as corporate officer,
attorney, executor, administrator, trustee or guardian, please
give full title as such.
- -----------------------------------------------------------
Signature
- -----------------------------------------------------------
Signature, if held jointly
DATE
------------------------------------------------------
