<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
National Steel Corporation
.............................................................................
(Name of Registrant as Specified In Its Charter)
National Steel Corporation
..............................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $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: _/
.......................................................................
4) Proposed maximum aggregate value of transaction:
.......................................................................
_/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] 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:
......................................................
Notes:
<PAGE>
LOGO
- --------------------------------------------------------------------------------
RONALD H. DOERR NATIONAL STEEL
President and Chief Executive Officer CORPORATION
4100 Edison Lakes
Parkway
Mishawaka, IN
46545
Telephone: (219)
273-7855
Facsimile: (219)
273-7868
March 16, 1994
To All National Steel Corporation Stockholders:
It is a pleasure to invite you to our first Annual Meeting of Stockholders
which will be held in South Bend, Indiana on Tuesday, April 26, 1994. We will
meet in Salon A of the Marriott Hotel at 10 a.m. Your continued interest in our
Company is appreciated, and I hope that as many of you as possible will attend
the Annual Meeting.
The annual election of Directors will take place at the Annual Meeting. In
the Proxy Statement you will find personal information about each nominee as
well as information about the functions of the Board and its committees. In
addition, we are also asking you to ratify the appointment of Ernst & Young as
National Steel's independent auditors for 1994.
Please read the formal notice of the Annual Meeting and the Proxy Statement
carefully. For those of you who cannot attend the Annual Meeting, I urge you to
participate by completing, signing, and returning your proxy in the enclosed
envelope. Your vote is important, and the management of National Steel
appreciates your cooperation in directing proxies to vote at the Annual
Meeting.
Sincerely,
LOGO
Ronald H. Doerr
President and
Chief Executive Officer
<PAGE>
LOGO
- --------------------------------------------------------------------------------
NATIONAL STEEL CORPORATION
4100 EDISON LAKES PARKWAY
MISHAWAKA, INDIANA 46545
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
The 1994 Annual Meeting of Stockholders of National Steel Corporation (the
"Company") will be held at the Marriott Hotel, 123 North St. Joseph Street,
South Bend, Indiana in Salon A on Tuesday, April 26, 1994 at 10:00 a.m. Central
Daylight Time.
The Annual Meeting will be held for the following purposes:
1. To elect eight Directors of the Company;
2. To ratify the appointment of the Company's independent auditors for
the year 1994; and
3. To transact any other business that may properly come before the
meeting.
Stockholders of record of the Company's Class A Common Stock and Class B
Common Stock at the close of business on March 15, 1994 are entitled to receive
notice of and to vote at the Annual Meeting.
A Proxy Statement with respect to the Annual Meeting accompanies and forms a
part of this notice.
By order of the Board of Directors,
LOGO
Richard E. Newsted, Vice President, Chief
Financial Officer and Secretary
March 16, 1994
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
MARK, DATE, AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. YOU MAY REVOKE YOUR PROXY AT
ANY TIME BEFORE IT IS VOTED BY WRITTEN NOTICE TO SUCH EFFECT, BY
SUBMITTING A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE ANNUAL
MEETING AND VOTING IN PERSON.
<PAGE>
LOGO
PROXY STATEMENT
GENERAL INFORMATION FOR STOCKHOLDERS
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of National Steel Corporation (the "Company") of proxies to
be voted at the Annual Meeting of Stockholders (the "Annual Meeting") to be
held on April 26, 1994 and at any and all adjournments of such Annual Meeting.
This Proxy Statement was initially mailed to stockholders on or about March
23, 1994 in order to provide every stockholder with an opportunity to vote on
all matters that properly come before the Annual Meeting, whether or not the
stockholder attends in person. In addition to solicitation by mail, the
Company will request banks, brokers and other custodian nominees and
fiduciaries to furnish proxy materials to beneficial owners of the Class B
Common Stock of whom they have knowledge and will reimburse them for their
expenses for doing so. Additional solicitation may be made by letter,
telephone or telecopier by officers and employees of the Company.
At the Annual Meeting, stockholders will vote on the election of directors
and the ratification of the appointment of Ernst & Young as the independent
auditors for the Company. All duly executed proxies received by management
prior to the Annual Meeting will be voted in accordance with the choices
specified by stockholders on their proxies. If no choice is specified by a
stockholder, the shares of such stockholder will be voted FOR the election of
the eight nominees for directors listed in this Proxy Statement that are to be
elected by the holders of the Company's Class A Common Stock and Class B
Common Stock, voting together as a single class, and FOR the ratification of
the appointment of Ernst & Young as the independent auditors of the Company.
Stockholders who execute proxies may revoke them at any time before they are
voted by filing with the Company a written notice of revocation, by delivering
a duly executed proxy bearing a later date or by attending the Annual Meeting
and voting in person.
It is the policy of the Company that proxies that identify the vote of
specific stockholders are kept confidential until the final vote is tabulated,
except in a contested proxy or consent solicitation or to meet applicable
legal requirements.
As of March 15, 1994, there were issued and outstanding 22,100,000 shares of
Class A Common Stock and 14,261,100 shares of Class B Common Stock. Holders of
Class A Common Stock are entitled to two votes per share while holders of
Class B Common Stock are entitled to one vote per share. The Class A Common
Stock and Class B Common Stock are sometimes referred to collectively herein
as the "Common Stock" of the Company. Those persons who were stockholders of
record of either class of Common Stock at the close of business on March 15,
1994 will be entitled to vote at the Annual Meeting.
ELECTION OF DIRECTORS
In accordance with the Company's Bylaws, the Board has set the number of
directors at nine. Currently, one vacancy exists which is being reserved for a
candidate to be nominated by the United Steelworkers of America (the "USWA"),
in accordance with the terms of the Company's settlement agreement with the
USWA reached on July 31, 1993, subject to the review and approval of the
Nominating Committee and the Board of Directors. If elected, all of the eight
nominees listed below will serve as Directors of the Company for terms
expiring on the date of the 1995 Annual Meeting of Stockholders and until
their successors are duly elected and qualified, or until their earlier
resignation, retirement, or removal. The Board of Directors meets regularly
and met 7 times in 1993. All Directors attended all meetings of the Board held
during their term of office, with the exception of one Director who missed one
meeting. A brief statement of the background of each nominee is given on the
following pages. If any nominee shall be unable to serve, proxies may be voted
for another person designated by the Board of Directors. The Company has no
reason to believe that any nominee will be unable to serve.
1
<PAGE>
INFORMATION CONCERNING NOMINEES FOR DIRECTORS
EDWIN V. CLARKE, JR.
Mr. Clarke, age 68, has been a Director of the Company since November 3,
1993. He currently serves as a Director of Provident Insurance Company, J.A.
Jones Construction Company, Trion, Inc., Warren Wilson College and Pittsburgh
Theological Seminary. He was an employee of Westinghouse Electric Corporation
from 1948 until his retirement in 1985, and held the position of Senior Vice
President, Corporate Resources from 1983 until his retirement.
RONALD H. DOERR
Mr. Doerr, age 53, has been a Director of the Company since June 1990. He
was elected President and Chief Executive Officer effective October 14, 1993.
He has been an employee of the Company since 1966 and an executive officer
since 1984. Prior to his election as President and Chief Executive Officer,
Mr. Doerr had been President and Chief Operating Officer since 1990, and
Executive Vice President and Chief Financial Officer from 1987 to 1990. He
currently serves as a Director of 1st Source Bank.
MASAYUKI HANMYO
Mr. Hanmyo, age 53, has been a Director of the Company since November 3,
1993. He has been employed by NKK Corporation ("NKK") in various positions
since 1963 and has been a Director of NKK since 1992. Mr. Hanmyo was General
Manager, Production Administration Department of Keihin Works from 1988 to
1991, and has been General Manager, Technology Planning and Coordination
Department since 1991.
KEISUKE MURAKAMI
Mr. Murakami, age 55, has been a Director of the Company since October 14,
1993 and Vice President, Administration effective October 14, 1993. He has
been an employee and an executive officer of the Company since 1991 serving as
Vice President, Administration and Technical & Management Coordination until
his most recent appointment. Prior thereto he served with NKK as General
Manager, Building and Construction Products Center.
OSAMU SAWARAGI
Mr. Sawaragi, age 65, has been a Director of the Company since June 1990. He
was elected Chairman effective January 1, 1994. He is concurrently serving
with NKK as Executive Vice President and as a Director. Prior thereto he was
employed by NKK as a Director beginning in 1984, Managing Director in 1986,
and Senior Managing Director in 1989.
KENICHIRO SEKINO
Mr. Sekino, age 57, has been a Director of the Company since January 1,
1994. He is currently serving with NKK where he has been employed since 1962.
Since 1991, he has served as Senior General Manager, International Business
Center. From 1989 to 1991, Mr. Sekino was President of NKK UK.
ROBERT J. SLATER
Mr. Slater, age 56, has been a Director of the Company since April 1991. He
has been President and Director of Jackson Consulting, Inc., and/or its
predecessor companies since 1985. He is also a Director of Southdown, Inc.
YOSHITO TOKUMITSU
Mr. Tokumitsu, age 57, has been a Director of the Company since June 1990.
He was elected Senior Vice President and Assistant to the Chief Executive
Officer effective October 14, 1993. He has been an employee and an executive
officer of the Company since 1987. Prior to his current position, he served as
Vice President and Assistant to the Chairman from 1992 to 1993. Prior thereto
he served in various management positions with NKK.
2
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or any of its subsidiaries
receive an annual fee of $24,000 plus a fee of $1,000 for attendance at each
meeting of the Board of Directors and at each meeting of a committee of the
Board of Directors not held on the same day as a Board meeting. Directors who
are currently employees of NKK have waived receipt of the aforementioned fees.
All Directors are reimbursed for expenses incurred in attending Board and
committee meetings. In addition, each non-employee Director received, upon his
initial election to the Board of Directors, a stock option grant of 2,500
shares of Class B Common Stock at the then market price pursuant to the terms
of the 1993 National Steel Corporation Nonemployee Directors Stock Option
Plan. An additional stock option grant of 500 shares of Class B Common Stock
will be granted to each non-employee Director at each anniversary of Board
service. Each option grant will fully vest on the third anniversary of the
date of grant or upon disability, death or retirement, whichever is earliest.
COMMITTEES OF THE BOARD OF DIRECTORS
Among the standing committees of the Board of Directors, the Company has an
Audit Committee, a Compensation Committee, and a Nominating Committee.
The Audit Committee has responsibility for recommending to the Board of
Directors a firm of independent certified public accountants to serve as
auditors to be appointed by the Board and submitted to the stockholders for
ratification at the Annual Meeting. In addition, the Audit Committee approves
the scope and fees of the annual audit and reviews the results and
recommendations of the independent auditors upon completion of the annual
audit. The Audit Committee also assists the Board in fulfilling its fiduciary
responsibilities relating to accounting and reporting policies, practices and
procedures. The Audit Committee also has the authority to meet and confer with
such officers and employees of the Company as deemed appropriate in connection
with carrying out its responsibilities. The Audit Committee is presently
comprised of Mr. Slater, Chairman, and Mr. Clarke. The Audit Committee held
one meeting in 1993.
The duties of the Compensation Committee are to review and approve a
compensation philosophy and guidelines for the Company's executive officers
and Directors. In addition, the Compensation Committee reviews and recommends
for approval by the Board of Directors salary arrangements for, and any
employment agreement with, the Company's Chief Executive Officer. The
Compensation Committee is presently comprised of Mr. Sawaragi, Chairman, and
Messrs. Clarke and Slater. The Compensation Committee held one meeting during
1993.
The Nominating Committee has the authority to develop candidate
specifications for Board memberships and to make recommendations as to
candidates for election to the Board of Directors. The Nominating Committee
will consider nominees for election to the Board of Directors recommended by
stockholders of the Company. The Nominating Committee is presently comprised
of Mr. Doerr, Chairman, and Messrs. Sawaragi and Slater. The Nominating
Committee did not meet during 1993.
3
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth separately, for the fiscal years indicated,
each component of compensation paid or awarded to, or earned by, the Chief
Executive Officer ("CEO") of the Company and each of the four most highly
compensated executive officers who were serving as executive officers at the
end of the last fiscal year, other than the CEO (collectively referred to
herein as the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------- ---------------------
NAME AND NUMBER OF
PRINCIPAL SECURITIES UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS(5) OPTIONS COMPENSATION(6)
--------- ---- -------- -------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
Kokichi Hagiwara 1993 $520,008 $ 46,801 175,000 $547,412
Chief Executive 1992 450,008 171,603 -- --
Officer(1) 1991 400,008 19,000 -- --
Ronald H. Doerr 1993 351,000 25,448 140,000 40,219
President and
Chief 1992 303,750 107,055 -- 7,594
Executive Offi-
cer(2) 1991 270,000 12,825 -- 8,438
James N. Howell 1993 225,000 14,658 50,000 6,624
Senior Vice Pres-
ident, 1992 177,600 51,948 -- 4,440
Manufacturing and
Chief 1991 173,600 9,124 -- 5,376
Operating Offi-
cer(3)
Yoshito Tokumitsu 1993 210,000 14,448 50,000 --
Senior Vice Pres-
ident 1992 165,600 44,298 -- --
and Assistant to
the 1991 165,600 7,866 -- --
Chief Executive
Officer
Robert E.
Westergren 1993 210,000 14,448 30,000 6,285
Vice President
and 1992 165,600 52,578 -- 4,140
General Manager, 1991 165,600 7,866 -- 5,175
Midwest Division
Keisuke Murakami 1993 210,000 14,070 30,000 --
Vice President, 1992 111,600 35,520 -- --
Administration(4) 1991 16,800 -- -- --
</TABLE>
- --------
(1) Mr. Hagiwara resigned as CEO effective October 14, 1993.
(2) Mr. Doerr was appointed to the position of CEO effective October 14, 1993.
(3) Mr. Howell resigned from the Company effective February 3, 1994.
(4) Mr. Murakami became employed by the Company in November 1991.
(5) Amounts earned under the Management Incentive Compensation Plan ("MICP")
and payments made under the Productivity Gainsharing Plan and the Profit
Sharing Plan are reported under Bonus.
(6) All Other Compensation includes Company matching contributions to the
National Steel Retirement Savings Plan 401(k) for Mr. Doerr: 1993--$4,497,
1992--$4,364, 1991--$5,925; Mr. Howell: 1993--$4,497, 1992--$4,364, 1991--
$5,273; and Mr. Westergren: 1993--$4,497, 1992--$4,140, 1991--$5,175 and
the Company match portion of the Executive Deferred Compensation Plan for
Mr. Doerr: 1993--$6,472, 1992--$3,230, 1991--$2,513; Mr. Howell: 1993--
$2,127, 1992--$76, 1991--$103; and Mr. Westergren: 1993--$1,788, 1992--$0,
1991--$0. In addition, Mr. Hagiwara received the following
4
<PAGE>
compensation upon his retirement in 1993: Lump Sum Bonus--$260,004,
Executive Deferred Compensation Payment--$254,912, and a Vacation Payment
of $32,500; and in 1993, Mr. Doerr received $29,250 for relocation in
addition to the normal relocation package.
LONG-TERM INCENTIVE PLAN
The following table contains information relating to stock option grants
made under the Company's Long-Term Incentive Plan in 1993. None of the options
are currently exercisable except for those granted to Mr. Hagiwara, which
became exercisable upon his retirement on December 31, 1993. Based on the
closing price for the Class B Common Stock on December 31, 1993, none of the
stock option grants to the Named Executive Officers were at prices below that
of the current market price of the Class B Common Stock.
OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS GRANT
UNDERLYING GRANTED TO EXERCISE DATE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION PRESENT
GRANTED(1) FISCAL YEAR PRICE(2) DATE VALUE(3)
---------- ------------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Kokichi Hagiwara(4)....... 43,750 7.5% $14.00 12/31/95 $164,762
Ronald H. Doerr........... 100,000 17.1% 14.00 03/23/03 767,438
40,000 6.8% 14.00 10/14/03 274,669
James N. Howell(5)........ 30,000 5.1% 14.00 03/23/03 230,231
20,000 3.4% 14.00 10/14/03 137,344
Yoshito Tokumitsu......... 30,000 5.1% 14.00 03/23/03 230,231
20,000 3.4% 14.00 10/14/03 137,344
Robert E. Westergren...... 30,000 5.1% 14.00 03/23/03 230,231
Keisuke Murakami.......... 30,000 5.1% 14.00 03/23/03 230,231
</TABLE>
- --------
(1) All option grants shown are nonstatutory stock options to purchase shares
of Class B Common Stock. They may be exercised after three years but no
more than ten years from the date of grant and only while the optionee is
in the employ of the Company. However, in the event that termination of
employment is by reason of retirement, permanent disability or death, the
option may be exercised in whole or in part within 24 months of the date
of any such occurrences. In the event of a change in control, as defined
in the Long-Term Incentive Plan, all options become immediately
exercisable unless provided otherwise at the time of grant of such
options.
(2) The exercise price of $14.00 for option grants to the Named Executive
Officers made on March 23, 1993 is equal to the offering price of the
Class B Common Stock in the Company's initial public offering. The
exercise price of $14.00 for option grants to the Named Executive Officers
on October 14, 1993 represents a premium of $2.00 over the fair market
value of Class B Common Stock on the grant date.
During 1993, the Company awarded 280,000 option grants to other
participants in its long term incentive program as follows: 220,000 on
March 23, 1993 at an exercise price of $14.00; 10,000 on October 1, 1993 at
an exercise price of $14.00; 20,000 on October 14, 1993 at an exercise
price of $14.00; 5,000 on November 3, 1993 at an exercise price of $12.375;
and 25,000 on November 19, 1993 at an exercise price of $14.00.
(3) The grant date present value was determined using the Black-Scholes
valuation methodology. The Black-Scholes ratio utilized in the valuation
is an industry average based on the three companies that comprise the
self-constructed peer group used in the peer group performance graph.
5
<PAGE>
<TABLE>
<CAPTION>
MARCH 1993 OCTOBER 1993
ASSUMPTIONS GRANT GRANT
- ----------- ---------- ------------
<S> <C> <C>
Expected Volatility..................................... 0.350 0.350
Expected Dividend Yield................................. 0.00% 0.00%
Expected Risk-free Rate of Return....................... 6.5% 5.7%
Expected Timing of Exercise............................. 10 years 10 years
Adjustment for risk of forfeiture (3%/year)............. 6.5% 6.5%
Black-Scholes Ratio..................................... 0.599 0.536
</TABLE>
(4) Mr. Hagiwara retired December 31, 1993; the grant represents 9/36 of the
original grant of 175,000 options. The Grant Date Present Value
incorporates this retirement event. Mr. Hagiwara's remaining options have
an expiration date of December 31, 1995.
(5) The options for Mr. Howell expired upon his resignation from the Company
on February 3, 1994.
PENSION PLANS
The following table shows the annual benefits payable under the Company's
qualified defined benefit retirement plan along with the non-qualified
retirement plans, which provide for the payment of retirement benefits in
excess of certain maximum limitations imposed by the Internal Revenue Code, to
eligible employees in various earnings groups and with various periods of
service.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE ANNUAL
ELIGIBLE
COMPENSATION YEARS OF SERVICE
PRECEDING -----------------------------------------------------
RETIREMENT 10 15 20 25 30 35
- -------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000............... $ 13,500 $ 20,500 $ 27,000 $ 34,000 $ 41,000 $ 47,500
150,000............... 21,000 31,500 41,500 52,000 62,500 73,000
200,000............... 28,500 42,500 56,500 71,000 85,000 99,500
250,000............... 36,000 54,000 71,500 89,500 107,500 125,500
300,000............... 43,500 65,000 86,500 108,500 130,000 152,000
350,000............... 51,000 76,500 101,500 127,000 152,500 178,000
400,000............... 58,500 87,500 116,500 146,000 175,000 204,500
450,000............... 66,000 99,000 131,500 164,500 197,500 230,500
500,000............... 73,500 110,000 146,500 183,500 220,000 257,000
600,000............... 88,500 132,500 176,500 221,000 265,000 309,500
700,000............... 103,500 155,000 206,500 258,500 310,000 362,000
800,000............... 118,500 177,500 236,500 296,000 355,000 414,500
</TABLE>
Eligible compensation covered by the Company's retirement plans include the
eligible employee's base salary, before reduction for any salary deferral
agreements, and MICP awards paid for the five highest consecutive years during
the last ten years of employment. Benefits paid under the Company's plans are
not subject to reduction for social security payments received by the
Company's executive officers.
MICP awards are shown in the bonus column of the Summary Compensation Table
in the year in which they were earned. No MICP awards were earned in 1993.
Eligible compensation under the retirement plans includes the bonus in the
year in which the payment was made, and as such, MICP awards earned in 1992
and paid in 1993 are included in 1993 as eligible compensation under the
retirement plans.
The years of service and amount of eligible compensation under the
retirement plans for the Named Executive Officers are as follows:
<TABLE>
<CAPTION>
CONTINUOUS ELIGIBLE
NAME OF PERSON SERVICE COMPENSATION
-------------- ---------- ------------
<S> <C> <C>
Kokichi Hagiwara.................................. 7 $485,667
Ronald H. Doerr................................... 27 318,991
James N. Howell................................... 19 207,281
Yoshito Tokumitsu................................. 6 178,936
Robert E. Westergren.............................. 32 207,891
Keisuke Murakami.................................. 2 169,071
</TABLE>
Benefits shown are computed at the plan's normal retirement age of 65 based
on a straight life annuity.
6
<PAGE>
EMPLOYMENT AGREEMENTS
Mr. Doerr has an employment agreement with the Company which expires October
1, 1996 and is renewable thereafter on a year-to-year basis. In the event that
this agreement is terminated, Mr. Doerr would receive an unreduced pension, a
severance payment equal to 24 months salary, full exercisability of stock
options granted and other benefits.
Mr. Westergren has an agreement with the Company which provides for an
unreduced pension at age 62, a severance payment equal to 12 months salary and
other benefits, upon Mr. Westergren's retirement.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth the number of shares of the Company's Class B
Common Stock and the number of shares of common stock of NKK beneficially
owned by each of the Company's Directors and Named Executive Officers and by
the Company's Directors and executive officers as a group on March 15, 1994.
None of the Company's Directors and Named Executive Officers beneficially
owned any shares of the Company's Class A Common Stock. Except as otherwise
indicated, each Director and Named Executive Officer had sole voting and
investment power with respect to any shares beneficially owned.
<TABLE>
<CAPTION>
NKK CORPORATION
COMMON STOCK CLASS B COMMON STOCK
--------------------- --------------------
NUMBER OF NUMBER OF
SHARES PERCENT SHARES PERCENT
BENEFICIALLY OF BENEFICIALLY OF
OWNED CLASS OWNED CLASS
------------ ------- ------------ -------
<S> <C> <C> <C> <C>
Kokichi Hagiwara.................. 35,424 * 43,750(1) *
Osamu Sawaragi.................... 80,571(2) * -- --
Yoshito Tokumitsu................. 3,800 * -- --
Ronald H. Doerr................... -- -- -- --
Keisuke Murakami.................. 15,000 * -- --
Kenichiro Sekino.................. 15,582(2) * -- --
Masayuki Hanmyo................... 13,972(2) * -- --
Edwin V. Clarke, Jr............... -- -- -- --
Robert J. Slater.................. -- -- -- --
James N. Howell................... -- -- -- --
Robert E. Westergren.............. -- -- -- --
Directors and executive officers
as a group (20 persons).......... 164,349 * 43,750 *
</TABLE>
- --------
* Less than 1% of the outstanding shares on March 15, 1994.
(1) Represents shares with respect to which Mr. Hagiwara had the right to
acquire beneficial ownership within 60 days through the exercise of
options received under the Company's Long Term Incentive Plan.
(2) Messrs. Sawaragi, Sekino and Hanmyo had shared voting power with respect
to 6,531, 5,182 and 5,892 shares, respectively, and sole investment power
with respect to all shares of NKK common stock beneficially owned.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and Directors and persons who owned greater
than 10% of a class of the Company's equity securities to file with the
Securities and Exchange Commission an initial statement of beneficial
ownership and certain statements of changes in beneficial ownership of equity
securities of the Company. During 1993, the initial statement of beneficial
ownership was filed late for Messrs. Clark, Goebel, Hanmyo, Leonard, and
Sekino. As a result of Mr. Howell's resignation on February 3, 1994, the
Company has no knowledge as to whether Mr. Howell has filed all reports
required pursuant to Section 16(a) for 1993.
7
<PAGE>
ADDITIONAL INFORMATION RELATING TO VOTING SECURITIES
The following table sets forth the only holders known to the Company to
beneficially own more than 5% of Class A Common Stock or Class B Common Stock
as of March 15, 1994, unless otherwise indicated.
<TABLE>
<CAPTION>
NAME AND CLASS PERCENT OF
ADDRESS OF NUMBER OF SHARES OF PERCENT OF TOTAL
BENEFICIAL BENEFICIALLY COMMON CLASS COMMON STOCK
OWNER OWNED STOCK OUTSTANDING OUTSTANDING
---------- ---------------- ------- ----------- ------------
<S> <C> <C> <C> <C>
NKK U.S.A. Corporation.... 22,100,000(1) Class A 100.0% 60.8%
32 Loockerman Square
Dover, Delaware 19901
Donald Smith & Co., Inc... 2,422,500(2) Class B 17.0% 6.7%
15 Essex Road
Paramus, New Jersey 07652
Lazard Freres & Co........ 821,500(3) Class B 5.8% 2.3%
One Rockefeller Plaza
New York, New York 10020
</TABLE>
(1) As reported in a Schedule 13D, dated March 30, 1993, filed with the
Securities and Exchange Commission, NKK had sole voting and investment
power with respect to 22,100,000 shares of Class B Common Stock listed as
beneficially owned as a result of its ownership of Class A Common Stock
convertible into an equal number of shares of Class B Common Stock.
(2) As reported in a Schedule 13G, dated February 1, 1994, filed with the
Securities and Exchange Commission, Donald Smith & Co. had sole voting
power with respect to 1,595,000 shares and sole investment power with
respect to 2,422,500 shares.
(3) As reported in a Schedule 13G, dated February 14, 1994, filed with the
Securities and Exchange Commission, Lazard Freres & Co. had sole voting
power with respect to 788,800 shares and sole investment power with
respect to 821,500 shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into a Subordinated Loan Agreement with a United
States subsidiary of NKK which expires in April 1995. This arrangement, which
has interest rates equal to or below that of the Company's revolving credit
facility, permits the Company to borrow up to $150 million on an unsecured
short-term basis. At December 31, 1993, there were no subordinated loans
outstanding. In addition, the Company had borrowings outstanding with an NKK
affiliate, related to the rebuild of the No. 5 coke oven battery at the Great
Lakes Division, totaling $343.3 million as of December 31, 1993. The Company
paid $6.7 million in principal and recorded $25.1 million in interest expense
related to this loan. Accrued interest on the loan as of December 31, 1993 was
$10.5 million. Additionally, deferred financing costs related to the loan were
$4.5 million as of December 31, 1993. The Company believes that the terms of
the Subordinated Loan Agreement and the financing arrangement with respect to
the rebuilding of the No. 5 coke oven battery at the Great Lakes Division are
more favorable than would otherwise be available from third party lenders.
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Company's Board of Directors (the
"Committee") reviews and approves the philosophy and guidelines for
compensation programs for the Company's executive officers. The Committee is
composed exclusively of independent Directors who are not eligible to
participate in any of management's compensation programs. The Committee
presents the following report on compensation for the Company's executive
officers for 1993. Actual awards during 1993 for the named executives are
shown in the Summary Compensation Table and the table of Option Grants in
1993.
OVERVIEW AND PHILOSOPHY
In 1993, the Committee adopted a written statement of executive compensation
purposes, guiding principles and objectives which guide its evaluation and
determination of executive compensation programs. This statement was developed
by the Committee and an independent compensation consultant familiar with
compensation policies within the industry and at other major corporations. The
statement provides that the purposes of executive compensation are to:
. attract, motivate and retain outstanding team members;
. align their success with the Company's stockholders; thereby
. motivating them to enhance stockholder value by attaining the Company's
short- and long-term performance objectives.
The Company and the Committee are studying the impact of Section 162(m) of the
Internal Revenue Code in light of the purposes and guiding principles for the
Company's executive compensation programs. Had the regulation been in place
for 1993, the Company would not have been materially affected by the million
dollar deduction limit.
COMPONENTS OF EXECUTIVE OFFICER COMPENSATION
Individual executive officer compensation includes base salary, annual
incentive bonus and long-term incentive compensation components.
BASE SALARY
Salary levels are assigned to positions within competitive standards based
on job responsibilities and a review of salary practices for comparable
positions at other major organizations as disclosed in pay surveys conducted
by independent consulting firms. These major organizations include the five
largest public integrated steel companies that the Company competes with for
business or executive talent, as well as companies in general industry of
comparable size and scope of operations. All of the companies used in the
Company's constructed peer group and many of the companies included in the S&P
500 comparison group participate in surveys used by the Company and the
Committee. The peer group companies included in the performance graph on page
11 are direct business competitors of the Company and were selected based on
similarities in product offerings, similarities in customers and whether there
was sufficient trading history of a company's stock to be included in the
graph.
An increase in base salary for an executive officer is based on individual
performance, business performance and market compensation trends. The
Committee does not rely on any specific formula nor does it assign specific
weights to the factors used in determining base salaries. Strong individual
performance and strong business performance generally result in above-average
increases. Below-market increases or no increases generally occur in years
when business performance and individual performance are below expectations.
9
<PAGE>
For all executive officers, excluding the CEO, the Committee reviews base
salary adjustments developed by the Company's Vice President, Human Resources
and the Company's independent compensation consultant. In general, the
Company's executive officers receive base salaries at a median level of
competitiveness. For the CEO, the Committee reviews and approves, and if
necessary, modifies base salary adjustments recommended by the Vice President,
Human Resources and the consultant. Adjustments in CEO base pay are then
brought to the Company's full Board for approval.
As President and Chief Operating Officer, Mr. Doerr's salary in 1993 was
$351,000. On January 1, 1994, Mr. Doerr's salary was increased to $450,000 to
reflect Mr. Doerr's promotion to President and CEO on October 14, 1993. Mr.
Doerr's base salary is below the median level of pay targeted by the Committee
and below that of his predecessor, Mr. Hagiwara. Mr. Hagiwara was CEO until
October 14, 1993 and received a base salary of $520,008 for the year 1993.
ANNUAL INCENTIVES
On February 3, 1993, the Board of Directors approved the 1993 MICP and
incentive targets for each executive officer by taking into consideration the
responsibilities of each job, the needs of the Company and the pay practices
regarding incentives for comparable positions at other major corporations.
The 1993 MICP provided for an incentive pool to be created for potential
payouts if the Company achieved its net income target. This pool would then be
modified downward if other important business objectives were not met. Actual
payouts under the plan cannot exceed the pool created and are subject to Board
adjustment. Because the Company failed to meet its net income target, no
payouts were awarded under the 1993 MICP.
Executives of the Company also participate in the Company's broad-based
incentive plans known as the National Steel Profit Sharing Plan and the
National Steel Productivity Gain Sharing Plan. Payouts from the profit sharing
plan reduce payouts by an equal amount from the MICP. Therefore, participation
in this plan by executives does not create additional pay opportunities for
executives receiving an MICP award. Because the Company failed to meet its
goals for the profit sharing plan, no payouts were awarded. Mr. Doerr's payout
under the gain sharing plan was equal to $25,448, or 7.25% of his salary. Mr.
Hagiwara's award was equal to $46,801, or 9.00% of his salary.
LONG-TERM INCENTIVES
The Company's long-term incentive compensation awards for executive officers
are designed to link executive compensation to the Company's Class B Common
Stock share price. These awards also provide a retention incentive for
participants. To date, the Company has only granted stock options to executive
officers and other key employees.
During 1993, the Committee and the Board of Directors granted long-term
incentive awards in the form of nonqualified stock option awards under the
Company's Long-Term Incentive Plan. At that time, the Committee established
award guidelines for each executive for the stock option award by taking into
consideration responsibilities of each job and the practices of other major
organizations. These guidelines reflect median levels of competitiveness and
were established by an independent consultant who annually conducts a survey
of long-term incentive practices among major organizations. The Company's 1993
grants were consistent with the guidelines both for the executive officers as
a group and for the CEO in particular.
Ten-year nonqualified stock options which become fully exercisable three
years after the date of grant were awarded. These awards reward executives
only to the extent that the Company's Class B Common Stock share price
increases over the initial public offering share price of $14.00 per share. On
March 23, 1993, Mr. Doerr was granted an award to purchase 100,000 shares at
$14.00 per share. On the same date, Mr. Hagiwara was granted an award to
purchase 175,000 shares at $14.00 per share. Upon Mr. Hagiwara's retirement
effective December 31, 1993, his grant was reduced from 175,000 shares to
43,750 shares, in accordance with the plan. On October 14, 1993, the day Mr.
Doerr was promoted to CEO, he was granted an award to purchase an additional
40,000 shares at $14.00 per share, 16.7% above the then fair market value of
$12.00 per share.
10
<PAGE>
BENEFITS
The Company's executive officers also participate in pension, perquisite,
deferred compensation and other executive benefit programs. These programs are
designed to be within competitive standards as defined by the practices of
other major corporations.
The Compensation Committee believes the executive compensation policies and
programs serve the interests of the stockholders and the Company.
Compensation Committee
March 16, 1994
Osamu Sawaragi, Chairman
Edwin V. Clarke, Jr.
Robert J. Slater
COMPARISON OF TOTAL RETURN
The chart below compares the Company's total stockholder return on its Class
B Common Stock for the period ended December 31, 1993 with the cumulative
return of the S&P Composite 500 stock index and a peer group selected by
management. These comparisons assume an investment of $100 on March 23, 1993
in Class B Common Stock of the Company, the S&P Composite 500 stock index and
the peer group.
LOGO
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG NATIONAL STEEL, S&P 500 INDEX AND PEER GROUP
<CAPTION>
Measurement Period NATIONAL S&P
(Fiscal Year Covered) STEEL 500 INDEX PEER GROUP
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-
/ / $100 $100 $100
FYE 3/23/93 $100 $100 $100
FYE 6/30/93 $146 $101 $105
FYE 9/30/93 $ 86 $104 $ 85
FYE 12/30/93 $ 86 $106 $115
FYE / / $ $ $
</TABLE>
Peer Group: The U.S. Steel Group of USX Corporation, Bethlehem Steel
Corporation, and Inland Steel Industries, Inc.
11
<PAGE>
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young has served as the Company's independent auditors since the
1930's. In accordance with the established policy of Ernst & Young, partners
who work on the Company's account are periodically rotated, thus giving the
Company the benefit of new thinking and approaches in the audit area.
Proxies not limited to the contrary will be voted for the ratification of
the appointment of Ernst & Young to audit the accounts of the Company and its
subsidiaries for the year 1994. Any proxy indicating a contrary choice will be
voted in accordance with that choice.
Representatives of Ernst & Young will be present at the Annual Meeting and
will be given an opportunity to make a statement if they desire to do so. They
will also be available to respond to appropriate questions.
The Board of Directors unanimously recommends a vote FOR the appointment of
Ernst & Young as auditors.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders must be received in writing by the Secretary of
the Company no later than November 20, 1994 in order to be considered for
inclusion in the Company's proxy statement and proxy relating to the Annual
Meeting of Stockholders to be held in 1995.
OTHER MATTERS
The cost of preparing, printing and mailing this Proxy Statement, the
accompanying notice and the enclosed proxy, and all other costs in connection
with the solicitation of proxies, will be paid by the Company. The Company has
retained the services of Corporate Investor Communications, Inc. to assist in
the solicitation of proxies for a fee of $2,500 plus reasonable out of pocket
disbursements.
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those set forth in the Notice of Annual Meeting.
However, if any other matters do come before the Annual Meeting, it is
intended that the holders of proxies will vote thereon in their discretion.
By order of the Board of Directors,
LOGO
Richard E. Newsted, Vice President,
Chief Financial Officer and
Secretary
March 16, 1994
Mishawaka, Indiana
12
<PAGE>
1. ELECTION OF DIRECTORS
FOR WITHHELD NOMINEES: Edwin V. Clarke, Jr., Ronald H. Doerr,
all nominees AUTHORITY Masayuki Hanmyo, Keisuke Murakami, Osamu Sawaragi,
listed to the to vote for Kenichiro Sekino, Robert J. Slater, Yoshito
right (except all nominees Tokumitsu
as marked listed to the
to the right. (INSTRUCTION: To withhold authority to vote for
contrary). any individual nominee, write that nominee's name
in the space provided below.)
( ) ( )
_________________________________________________
2. Ratification of the 3. In their discretion, the Proxies are
appointment of Ernst & Young authorized to vote upon such other business as
as the Company's independent may properly come before the meeting.
auditors for 1994.
FOR AGAINST ABSTAIN
( ) ( ) ( )
Please sign exactly as name appears. When shares
are held by joint tenants, both should sign. When
signing as attorney, executor, administrator,
trustee, or guardian, please give full title as
such. If a corporation, please sign in full
corporate name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
Dated: __________________________________, 1994
_______________________________________________
(Signature)
_______________________________________________
(Signature if held jointly)
PLEASE MARK INSIDE BLUE PLEASE, SIGN, DATE, AND RETURN THE PROXY CARD
BOXES SO THAT DATA PROMPTLY USING THE ENCLOSED ENVELOPE
PROCESSING EQUIPMENT WILL
RECORD YOUR VOTE
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
ADMISSION TICKET
Annual Meeting
of
National Steel Corporation Stockholders
Tuesday, April 26, 1994
10:00 a.m.
Salon A
Marriott Hotel
123 North St. Joseph Street
South Bend, Indiana
Agenda
. Election of Directors
. Ratification of the appointment of independent auditors
. Report on results for the first quarter
. Discussion on matters of current interest
. Question and Answer Session
<PAGE>
PROXY
NATIONAL STEEL CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Ronald H. Doerr and Richard E. Newsted the
proxies, each with power to act alone and with power of substitution, and hereby
authorizes them to represent and vote, all the shares of Class B Common Stock of
National Steel Corporation which the undersigned is entitled to vote at the
Annual Meeting to be held April 26, 1994 or any adjournment thereof as
designated herein and, in their discretion, upon such other matters as may
properly come before the meeting.
(Continued, and to be marked, dated and signed, on the other side)
________________________________________________________________________________
FOLD AND DETACH HERE
