<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
RULE 14A-6(E)(2))
[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)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
NATIONAL STEEL LOGO
- --------------------------------------------------------------------------------
OSAMU SAWARAGI NATIONAL STEEL
Chairman of the Board and Chief Executive Officer CORPORATION
4100 Edison Lakes
Parkway
Mishawaka, IN 46545
Telephone: (219)
273-7000
Facsimile: (219)
273-7868
March 20, 1997
To All National Steel Corporation Stockholders:
It is a pleasure to invite you to our Annual Meeting of Stockholders which
will be held at the Drake Hotel, 140 East Walton Place, Chicago, Illinois on
Monday, April 21, 1997 at 11:00 a.m. Central Daylight Time. Your continued
interest in our Company is appreciated, and I hope that as many of you as
possible will attend the Annual Meeting.
At the meeting you will be asked to elect eight directors to terms ending at
the next Annual Meeting of Stockholders and to ratify the appointment of Ernst
& Young LLP as National Steel's independent auditors for the fiscal year ending
December 31, 1997.
Regardless of the number of shares you own, it is important that they are
represented and voted at the meeting, whether or not you plan to attend.
Accordingly, you are requested to sign, date and mail the enclosed proxy at
your earliest convenience.
On behalf of the Board of Directors, thank you for your cooperation and
continued support.
Sincerely,
/s/ Osamu Sawaragi
Osamu Sawaragi
Chairman of the Board and Chief
Executive Officer
<PAGE>
LOGO
NATIONAL STEEL LOGO
NATIONAL STEEL CORPORATION
4100 EDISON LAKES PARKWAY
MISHAWAKA, INDIANA 46545
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
The 1997 Annual Meeting of Stockholders of National Steel Corporation (the
"Company") will be held at the Drake Hotel, 140 East Walton Place, Chicago,
Illinois on Monday, April 21, 1997 at 11:00 a.m. Central Daylight Time.
The Annual Meeting will be held for the following purposes:
1. To elect eight directors to serve until the next Annual Meeting of
Stockholders and until their successors have been elected and qualified;
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997; and
3. To transact any other business that may properly come before the
meeting.
March 1, 1997 has been designated as the date of record for the determination
of stockholders entitled to receive notice of and to vote at the Annual Meeting
and any adjournments thereof.
By order of the Board of Directors,
/s/ David A. Pryzbylski
David A. Pryzbylski
Senior Vice President, Administration and
Secretary
March 20, 1997
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 ENVELOPE WHICH HAS BEEN PROVIDED. 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>
NATIONAL STEEL 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 21, 1997 and at any and all adjournments of such Annual Meeting.
As of March 1, 1997, the record date for the Annual Meeting, there were issued
and outstanding 22,100,000 shares of Class A Common Stock, all of which are
owned by NKK U.S.A. Corporation, and 21,188,240 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.
Except as otherwise required by law or the Company's Certificate of
Incorporation, the holders of the Class A Common Stock and the Class B Common
Stock vote together, without regard to class, as to all matters upon which
stockholders are entitled to vote. The Class A Common Stock and Class B Common
Stock are sometimes referred to collectively herein as the "Common Stock" of
the Company.
This Proxy Statement and form of proxy were initially mailed to stockholders
on or about March 20, 1997. In addition to solicitation by mail, the Company
will request security dealers, banks, fiduciaries and nominees 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 facsimile by
officers and employees of the Company. In addition, the annual report of the
Company for the fiscal year ended December 31, 1996, including financial
statements, has been mailed to each stockholder of record and provided to
security dealers, banks, fiduciaries and nominees for mailing to beneficial
owners at the Company's expense.
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 and FOR the ratification of the appointment of
Ernst & Young LLP 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. Notice of revocation should be sent to the Secretary of the Company at
4100 Edison Lakes Parkway, Mishawaka, Indiana 46545.
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.
The Bylaws of the Company provide that, except as otherwise provided by law
or by the Certificate of Incorporation, the holders of a majority of the
voting power of the capital stock issued and outstanding and entitled to vote,
present in person or represented by proxy, but in no event less than one-third
of the shares entitled to vote at the meeting, shall constitute a quorum for
the transaction of business at the Annual Meeting. The Bylaws also provide
that (i) directors shall be elected by a plurality of the votes cast at the
Annual Meeting, and (ii) except as required by law, the Certificate of
Incorporation or the Bylaws, any other matter brought before the Annual
Meeting shall be decided by the vote of the holders of a majority of the
voting power of the capital stock represented and entitled to vote at the
Annual Meeting.
Votes cast at the Annual Meeting will be tabulated by the persons appointed
by the Company to act as inspectors of election for the Annual Meeting. The
inspectors of election will treat shares of voting stock represented by a
properly signed and returned proxy as present at the Annual Meeting for
purposes of determining a quorum, without regard to whether the proxy is
marked as casting a vote or abstaining. Likewise,
<PAGE>
the inspectors of election will treat shares of voting stock represented by
"broker non-votes" as present for purposes of determining a quorum at the
Annual Meeting. Broker non-votes as to particular proposals, however, will be
deemed shares not having voting power on such proposals, will not be counted
as votes for or against such proposals, and will not be included in
calculating the number of votes necessary for approval of such proposals.
"Broker non-votes" are proxies with respect to shares of voting stock held in
record name by brokers or nominees, as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote, (ii) the
broker or nominee does not have discretionary voting power under applicable
New York Stock Exchange rules or the instrument under which it serves in such
capacity, and (iii) the record holder has indicated on the proxy card or
otherwise notified the Company that it does not have authority to vote such
shares on that matter. As a result of the foregoing, shares not voted, whether
by abstention, broker non-votes or otherwise, will have no effect on the
election of directors. However, abstentions as to other proposals will have
the same effect as a vote against the proposal.
The expense of this solicitation will be paid by the Company. Brokers and
certain other holders for beneficial owners will be reimbursed for out-of-
pocket expenses incurred in the solicitation of proxies from the beneficial
owners of shares held in their names. The Company has retained the services of
ChaseMellon Shareholder Services, L.L.C. to assist in the solicitation of
proxies for a fee not expected to exceed in the aggregate $2,500 plus
reasonable out-of-pocket expenses.
ELECTION OF DIRECTORS
Eight directors are to be elected to hold office for terms expiring on the
date of the 1998 Annual Meeting of Stockholders and until their successors are
duly elected and qualified, or until their earlier resignation, retirement, or
removal. All of the nominees have been designated by the Board of Directors.
All nominees are members of the present Board, except for Mr. Bowsher and Mr.
Shimura who are standing for election for the first time. Each nominee has
consented to being named in the Proxy Statement as a nominee for director and
has agreed to serve as a director if elected. The proxies appointed by name in
the enclosed proxy form will vote as instructed by the stockholder for the
election of the nominees listed below. The proxies, however, reserve full
discretion to cast votes for any other person if any nominee shall be unable
to serve, or for good cause will not serve, except where authority is withheld
by the stockholder.
INFORMATION CONCERNING NOMINEES FOR DIRECTORS
Set forth below for each nominee is his name and age; the date on which he
first became a director of the Company; the names of other companies of which
he serves as a director; and his principal occupation during at least the last
five years.
CHARLES A. BOWSHER
Mr. Bowsher, age 65, is standing for election as a director of the Company
for the first time. From 1981 to 1996, he served as Comptroller General of the
United States. Mr. Bowsher was associated with Arthur Andersen & Company from
1956 to 1967 and 1971 to 1981, and served as Assistant Secretary of the Navy
for Financial Management from 1967 to 1971. Mr. Bowsher also serves as a
director of American Express Bank, Ltd. and DeVry Inc.
FRANK J. LUCCHINO
Mr. Lucchino, age 57, has been a director of the Company since January 30,
1995. Since 1980 he has served as Controller of Allegheny County, Pennsylvania
and been a Partner with the law firm of Grogan, Graffam, McGinley & Lucchino,
PC. Mr. Lucchino also serves as a director of Rockwood Casualty Insurance
Company. Mr. Lucchino serves by nomination of the President of the United
States as a member of the U.S. National Commission on Libraries and
Information Science. Mr. Lucchino is also a member of the Board of Trustees of
the Carnegie, the Carnegie Science Center, the Carnegie Library of Pittsburgh,
and the Western Pennsylvania
2
<PAGE>
Historical Society. Mr. Lucchino was nominated to serve on the Board of
Directors pursuant to a collective bargaining agreement with the United
Steelworkers of America. Mr. Lucchino is a member of the Audit Committee.
DR. BRUCE K. MACLAURY
Dr. MacLaury, age 65, has been a director of the Company since April 30,
1996. From 1977 to 1995, Dr. MacLaury served as President of The Brookings
Institution which is engaged in public policy research and education. Dr.
MacLaury also serves as a director of American Express Bank, Ltd., the St.
Paul Companies Inc. and the Vanguard Funds. Dr. MacLaury is Chairman of the
Compensation Committee and a member of the Nominating Committee and Audit
Committee.
YOSHIHARU ONUMA
Mr. Onuma, age 54, has been a director of the Company since July 22, 1996.
He is currently serving as the Senior General Manager, Plant Construction &
Engineering of NKK Corporation ("NKK"), a Japanese steel manufacturer and the
parent company of NKK U.S.A. Corporation (the holder of all of the outstanding
shares of the Company's Class A Common Stock). Mr. Onuma has served in various
capacities with NKK since 1965. From July 1991 to June 1993 he served as
General Manager, Plant Engineering Department, Keihin Works. From July 1993 to
March 1996, he was General Manager, Plant Construction & Engineering. He
assumed his present position of Senior General Manager, Plant Construction &
Engineering in April of 1996. Mr. Onuma is a member of the Nominating
Committee.
KEIICHIRO SAKATA
Mr. Sakata, age 50, has been a director of the Company since December 9,
1996. He is currently Senior Legal Advisor of NKK. Mr. Sakata has served in
various capacities with NKK since 1969. From April 1990 to June 1993 he served
as Manager, Legal Affairs and assumed his present position of Senior Legal
Advisor in July of 1993. Mr. Sakata is a member of the Compensation Committee.
OSAMU SAWARAGI
Mr. Sawaragi, age 68, has been a director of the Company since June 26,
1990. He was elected Chairman effective January 1, 1994 and Chief Executive
Officer on August 20, 1996. Prior thereto, he served NKK as a director
beginning in 1984, Managing Director in 1986, Senior Managing Director in
1989, Executive Vice President from 1990 to 1994, and Senior Counsel from 1994
to 1996.
KENICHIRO SEKINO
Mr. Sekino, age 60, has been a director of the Company since January 1,
1994. He is currently Senior General Manager, Steel Division of NKK. He served
as Vice Chairman of the Board and Assistant to the Chairman of the Company
from July 1995 to February 1997. Mr. Sekino was employed in various capacities
with NKK Corporation from 1962 until July 1995. From 1994 to 1995, he served
as Senior General Manager, Steel Division. From 1991 to 1994 he served as
Senior General Manager, International Business Center, and from 1987 to 1991
he was President of NKK (UK) LTD. Mr. Sekino is Chairman of the Nominating
Committee.
MINEO SHIMURA
Mr. Shimura, age 45, is standing for election as a director of the Company
for the first time. Mr. Shimura has served as a senior executive for various
U.S. affiliates of NKK Corporation and presently holds the following positions
with NKK affiliates: President of NUF Corporation (a finance company),
Executive Vice President of NKK America, Inc. (a service company), Executive
Vice President of NKK U.S.A. Corporation (a holding company) and President of
NAF Corporation (a real estate holding company).
3
<PAGE>
THE BOARD OF DIRECTORS
The Board of Directors held 6 meetings during 1996.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has three standing committees: an Audit Committee, a
Compensation Committee and a Nominating Committee.
AUDIT 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, subject to ratification by the
stockholders at the Annual Meeting. In addition, the Audit Committee approves
the scope of, and fees related to, the annual audit and reviews the results
and recommendations of the independent auditors upon completion of the annual
audit. The Audit Committee also assists in evaluating the adequacy and
effectiveness of the Company's accounting procedures and internal controls.
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. Lucchino and Dr. MacLaury. The Audit Committee held 9 meetings in 1996.
COMPENSATION COMMITTEE
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 base salaries, employment agreements,
stock option grants and any severance payments for any of the Company's
executive officers. The Committee also establishes, administers, amends and
terminates plans, policies and procedures regarding incentive compensation and
other performance based compensation arrangements; reviews the executive
officer succession program; and oversees compliance with all Securities and
Exchange Commission and other applicable laws and regulations pertaining to
the disclosure of compensation paid to executive officers and directors. The
Compensation Committee is presently comprised of Dr. MacLaury, Chairman, and
Mr. Sakata. The Compensation Committee held 6 meetings during 1996.
NOMINATING COMMITTEE
The Nominating Committee has the authority to develop candidate
specifications for Board membership and to make recommendations as to
candidates for election to the Board of Directors and as to candidates to fill
vacancies on the Board of Directors. The Nominating Committee will consider
nominees for election to the Board of Directors recommended by stockholders of
the Company. Suggestions for candidates, accompanied by biographical material
and material regarding the candidate's qualifications to serve as a director,
should be sent to the Secretary of the Company. The Nominating Committee is
also responsible for reviewing the qualifications of the candidate nominated
to serve as a director by the United Steelworkers of America pursuant to their
collective bargaining agreement with the Company. The Nominating Committee is
presently comprised of Mr. Sekino, Chairman, Mr. Onuma and Dr. MacLaury. The
Nominating Committee held 4 meetings during 1996.
ATTENDANCE
All of the incumbent directors attended at least 75% of the Board and
committee meetings held in 1996 during the period they were members of the
Board or of a committee.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or any of its subsidiaries
receive an annual fee of $27,000 plus a fee of $1,000 for attendance at each
meeting of the Board of Directors and at each meeting of a committee
4
<PAGE>
of the Board of Directors. The meeting fee for the Chairman of the Board and
committee Chairmen is $1,300. All directors are reimbursed for expenses
incurred in attending Board and committee meetings. In addition, any non-
employee Director who, at the request of the Chairman of the Board, performs
special services or assignments on behalf of the Board, receives compensation
of $1,000 per day plus reasonable out-of-pocket expenses. 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
Non-Employee Directors Stock Option Plan. An additional stock option grant of
500 shares of Class B Common Stock is granted to each non-employee director at
each anniversary of Board service pursuant to that plan. Each option grant
will fully vest on the third anniversary of the date of grant or upon
disability, death or retirement, whichever is earliest.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors (the "Committee")
reviews and approves the philosophy and guidelines for compensation programs
and develops recommendations for the Board of Directors regarding compensation
levels for the Company's executive officers and directors. The Committee also
administers the Company's annual Management Incentive Compensation Plan
("MICP"). 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 1996.
OVERVIEW AND PHILOSOPHY
The Committee has 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 with the assistance of an independent compensation consulting
firm 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.
COMPONENTS OF EXECUTIVE OFFICER COMPENSATION
Individual executive officer compensation includes base salary, annual
incentive bonus and long term incentive compensation. With the assistance of
an independent consulting firm, the Committee determines the median amount of
base salary, annual incentive bonus and long term incentive compensation which
are appropriate for each executive officer position. These median amounts are
based upon compensation practices for comparable positions, as disclosed in
certain compensation surveys reviewed by the Committee, including surveys of
companies in the steel industry and surveys of general industrial companies.
In making its determination of median compensation amounts, the Committee
focuses on the salary, annual incentive bonus and long term incentive
compensation disclosed in these surveys for companies of comparable size and
scope of operations, including the five largest public integrated steel
companies with which the Company competes. However, since duties,
responsibilities and experience of an executive officer may differ from survey
norms in both content and scope, adjustments are made by the Committee, in its
judgment, for those factors. Therefore, compensation paid to some executive
officers may be lower, while compensation paid to other executive officers may
be higher, than median levels. All of the companies included in the Company's
peer group shown in the Performance Graph on page 16 of this Proxy Statement,
and many of the companies included in the Standard & Poor's Composite 500
stock index, participate in the surveys reviewed by the Committee.
5
<PAGE>
BASE SALARY
An increase in base salary for an executive officer is based on individual
performance, business performance and the median base salary amount for such
position, as disclosed in compensation surveys reviewed by the Committee. The
Committee does not rely on any specific formula nor does it assign specific
weights to the factors used in determining base salaries.
As Chairman and Chief Executive Officer, Mr. Sawaragi's annual rate of base
salary in 1996 was $500,000. Mr. Sawaragi's annual base salary rate is below
the median salary level for his position, as disclosed in compensation surveys
reviewed by the Committee and below that of his predecessor. Mr. Goodwin was
President and Chief Executive Officer until August 20, 1996 and had an annual
rate of base salary of $590,000 for the year 1996, which was also below the
median salary level for his position, as disclosed in compensation surveys
reviewed by the Committee.
ANNUAL INCENTIVES
The 1996 MICP approved by the Compensation Committee establishes the basis
for determining the amount of annual incentive bonus paid to each executive
officer. Under the MICP, each executive officer is given an annual incentive
target, equal to a percentage of base salary. This target is based upon the
median annual incentive compensation amount for such position, as disclosed in
compensation surveys reviewed by the Committee. The annual incentive target
may be adjusted by the Committee in its discretion, based upon its evaluation
of a particular executive officer's responsibilities and performance. The 1996
MICP provides that each executive officer can earn a percentage of this target
amount, ranging from 0 to 150%, depending upon the extent to which the Company
achieves the net income goal established by the Committee. This percentage can
also be adjusted by the Committee, in its discretion, in the event of
exceptional individual or Company performance or if other important business
or strategic objectives are met. In February 1997, Mr. Sawaragi was paid an
incentive bonus of $150,000 for 1996. The amount of this bonus exceeded the
percentage of Mr. Sawaragi's target amount which would have been payable under
the MICP based solely on the Company's actual net income for 1996. The
Committee determined, however, that this higher bonus amount was appropriate
in view of (a) Mr. Sawaragi's performance and leadership regarding business
and strategic objectives since becoming Chief Executive Officer of the
Company, and (b) the fact that Mr. Sawaragi's base salary during 1996 was less
than the median level disclosed in the salary surveys reviewed by the
Committee. Mr. Goodwin received a bonus of $207,147, which amount was
calculated in accordance with the provisions of his employment contract. This
amount represented a payment of 55% of his annual base salary, prorated for
his period of employment in 1996.
LONG TERM INCENTIVES
The Company's long term incentive compensation awards for executive officers
are designed to link executive compensation to the performance of 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.
Effective as of January 30, 1996, the Committee and the Board of Directors
granted long term incentive awards in the form of nonstatutory stock options
under the Company's Long Term Incentive Plan to certain of the Company's
executive officers. The amount of these awards was based primarily upon the
median level of long term incentive award for each executive officer position,
as disclosed in compensation surveys reviewed by the Committee. The Committee
also took into account its evaluation of the particular officer's
responsibilities and performance. These stock options vest completely three
years from the date the grants were awarded. The exercise price for all
options was equal to the market price of the Company's Class B Common Stock on
the date of the grant. Thus, these awards reward executives only to the extent
that the Company's Class B Common Stock share price increases over that market
price. On January 30, 1996, Mr. Goodwin was awarded options to purchase 50,000
shares at an exercise price of $13.00 per share, which award was below the
median level of
6
<PAGE>
long term incentive awards for his position, as disclosed in compensation
surveys reviewed by the Committee. No stock option grants were made to Mr.
Sawaragi in 1996 pursuant to the Company's Long Term Incentive Plan because he
was not an executive officer of the Company on January 30, 1996, the date on
which such stock option grants were awarded pursuant to that plan. Prior to
becoming an executive officer, however, Mr. Sawaragi was granted an option to
purchase 500 shares of stock at an exercise price of $10.625 on June 26, 1996
pursuant to the 1993 National Steel Corporation Non-Employee Directors' Stock
Option Plan. The exercise price was equal to the market price of the Company's
Class B Common Stock on the date of the grant.
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.
TAX TREATMENT
One factor which the Committee considers in establishing its compensation
policies is the expected tax treatment to the Company and its executive
officers of the various forms of compensation. Among other things, the
Committee considers the limitations imposed by Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), on the corporate deduction for
compensation paid to executive officers. The deductibility of certain types of
compensation may depend upon factors which are beyond the Committee's control,
such as the timing of the executive officer's exercise of stock options and
changes in law. Consequently, the Committee may not, in all cases, limit
executive compensation to that amount which is deductible under Section 162(m)
of the Code. The Committee will, however, consider methods of preserving the
deductibility of compensation benefits to the extent that it is reasonably
practicable and to the extent that it is consistent with the Committee's other
compensation goals and objectives. In 1996, the Company was not affected by
the limitations imposed by Section 162(m) of the Code.
The Committee believes the Company's executive compensation policies and
programs serve the interests of the stockholders and the Company. As the
Company moves forward in its efforts to create stockholder value in the years
ahead, the Committee will continue to review, monitor and evaluate the
Company's policies and programs regarding executive compensation. The
Committee intends to insure that these compensation policies and programs
continue to support the Company's strategy, continue to be competitive in the
marketplace to attract, retain and motivate the talent needed to succeed, and
appropriately reward the creation of value on behalf of the Company's
stockholders.
Compensation Committee
Bruce K. MacLaury, Chairman
Keiichiro Sakata
7
<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, each
individual who served as Chief Executive Officer of the Company during the
last fiscal year, and each of the other four most highly compensated executive
officers who were serving as executive officers at the end of the last fiscal
year (collectively referred to herein as the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------ ------------
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
POSITION YEAR ($) ($) ($)(1) (#)(2) ($)(3)
--------- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Osamu Sawaragi... 1996 $183,714 $150,000 $ -- 500 $ --
Chairman of the
Board and 1995 -- -- -- 500 --
Chief Executive
Officer (4) 1994 -- -- -- 500 --
V. John Goodwin.. 1996 358,823 207,147 13,414 50,000 1,958,110
President and
Chief 1995 390,000 280,000 47,972 145,000 24,868
Executive Officer
(5) 1994 175,000 225,000 4,130 100,000 --
Kenichiro Sekino. 1996 391,663 126,000 18,002 40,000 22,407
Vice Chairman of
the Board 1995 125,000 90,000 -- 50,500 --
and Assistant to 1994 -- -- -- 2,500 --
the Chairman (6)
Bernard D.
Henely.......... 1996 273,340 73,000 16,141 25,000 33,107
Senior Vice
President and 1995 84,604 50,000 -- 10,000 3,384
General Counsel
(7) 1994 -- -- -- -- --
Hiroshi
Matsumoto....... 1996 254,170 68,000 5,961 25,000 7,420
Executive Vice
President, 1995 189,996 160,000 22,096 50,000 7,419
Corporate
Planning and 1994 99,169 89,000 -- 30,000 --
Development (8)
David A.
Pryzbylski...... 1996 249,167 80,000 6,164 20,000 24,151
Senior Vice
President, 1995 185,004 155,000 15,034 15,000 13,389
Administration
and 1994 96,250 86,626 213 30,000 --
Secretary (8)
</TABLE>
- --------
(1) The amount shown represents amounts paid to the Named Executive Officer
for reimbursement of taxes.
(2) All option grants shown were made pursuant to the Long Term Incentive Plan
for executive officers except for the following grants which were made
pursuant to the Non-Employee Directors' Stock Option Plan: (a) all grants
shown for Mr. Sawaragi; and (b) grants of 2,500 shares in 1994 and 500
shares in 1995 for Mr. Sekino. The Company has not granted any SARs to the
Named Executive Officers.
(3) The amount shown for 1996 includes (a) the Company's contribution to the
National Steel Retirement Savings Program for Messrs. Goodwin, Henely and
Pryzbylski in the amounts of $6,000, $6,350 and $6,000, respectively; (b)
the dollar value of life insurance premiums paid by the Company on behalf
of the Named Executive Officer for Messrs. Goodwin, Sekino, Henely,
Pryzbylski and Matsumoto in the amounts of $15,768, $22,407, $20,090,
$7,672 and $7,420, respectively; (c) the Company's contribution to the
Executive Deferred Compensation Plan for Mr. Henely and Pryzbylski in the
amounts of $6,667 and $10,479, respectively; and (d) payments to Mr.
Goodwin in the amount of $1,936,342 pursuant to his employment agreement
following his resignation as President and Chief Executive Officer on
August 20, 1996.
(4) Mr. Sawaragi became an executive officer of the Company on August 20,
1996.
8
<PAGE>
(5) Mr. Goodwin became an executive officer of the Company on June 1, 1994 and
resigned his position on August 20, 1996.
(6) Mr. Sekino became an executive officer of the Company on July 25, 1995.
(7) Mr. Henely became an executive officer of the Company on September 18,
1995.
(8) Messrs. Matsumoto and Pryzbylski became executive officers of the Company
on June 1, 1994.
STOCK OPTION TABLES
The following table contains information relating to stock option grants
made to the Named Executive Officers in 1996.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
NUMBER OF SECURITIES PERCENT OF TOTAL OPTIONS EXERCISE OR BASE
UNDERLYING OPTIONS GRANTED TO EMPLOYEES IN PRICE EXPIRATION GRANT DATE PRESENT
NAME GRANTED (1)(#) FISCAL YEAR ($/SHARE) (2) DATE VALUE ($)(3)
- ---- -------------------- ------------------------ ---------------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Osamu Sawaragi (4) 500 0.2% $10.625 06/26/06 $ 3,602
V. John Goodwin 50,000 15.9% 13.00 01/30/06 440,700
Kenichiro Sekino 40,000 12.7% 13.00 01/30/06 352,560
Bernard D. Henely 25,000 8.0% 13.00 01/30/06 220,350
Hiroshi Matsumoto 25,000 8.0% 13.00 01/30/06 220,350
David A. Pryzbylski 20,000 6.4% 13.00 01/30/06 176,280
</TABLE>
- --------
(1) All options shown are nonstatutory stock options to purchase shares of the
Company's Class B Common Stock. Except for the options granted to Mr.
Sawaragi, all options shown were granted under the Company's Long Term
Incentive Plan. Options granted under the Long Term Incentive Plan can be
exercised after three years but no more than ten years from the date of
grant while the optionee is in the employ of the Company. Notwithstanding
the foregoing, in the event that termination of employment is by reason of
retirement, permanent disability or death, the options may be exercised in
whole or in part within 24 months of the date of any such occurrence, to
the extent they have vested as described in the Long Term Incentive Plan.
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. Pursuant to the terms of his
employment agreement, the options granted to Mr. Goodwin will continue to
vest for a period of three years following the date of the termination of
his employment on August 20, 1996, and will continue to be exercisable
during this three year period on the same terms as if Mr. Goodwin had
remained an employee during the three year period. On January 20, 1997,
the Board of Directors adopted a resolution providing that the options
granted to Mr. Sekino would continue to vest for a period of three years
following his resignation as an employee of the Company as of January 31,
1997. These options will continue to be exercisable by Mr. Sekino during
this three year period on the same terms as if Mr. Sekino had remained an
employee of the Company during the three year period.
(2) The exercise price for all option grants was equal to the fair market
value of the Class B Common Stock on the grant date.
(3) The grant date present value was determined using the Black-Scholes
valuation methodology with the following assumptions:
<TABLE>
<CAPTION>
ASSUMPTIONS
-----------
<S> <C>
Expected Volatility.............................................. 0.463
Expected Dividend Yield.......................................... 0.00%
Expected Risk Free Rate of Return................................ 6.70%
Expected Timing of Exercise...................................... 10 years
Black-Scholes Ratio.............................................. 0.678
</TABLE>
The Company does not advocate or necessarily agree that the Black-Scholes
model can properly determine the value of an option. The actual value, if
any, a Named Executive Officer may realize will depend on the
9
<PAGE>
excess of the stock price over the exercise price on the date the option is
exercised so that there is no assurance the value realized by an individual
will be at or near the value estimated by the Black-Scholes model.
(4) Mr. Sawaragi participated in the 1993 National Steel Corporation Non-
Employee Directors Stock Option Plan prior to his election as Chief
Executive Officer on August 20, 1996. The option grant shown for Mr.
Sawaragi was made pursuant to this plan. The terms applicable to options
granted pursuant to this plan are described in this Proxy Statement under
the caption "Compensation of Directors."
The following table sets forth certain information concerning options to
purchase the Company's Class B Common Stock which were exercised by the Named
Executive Officers during 1996 and the value of unexercised options held by
the Named Executive Officers as of December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1996 AND DECEMBER 31, 1996 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, AT DECEMBER 31, 1996
1996 (#) ($)(1)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Osamu Sawaragi.......... 0 $ 0 2,500 1,500 $ 0 $ 0
V. John Goodwin......... 0 0 66,666 228,334 0 0
Kenichiro Sekino........ 0 0 0 93,000 0 0
Bernard D. Henely....... 0 0 0 35,000 0 0
Hiroshi Matsumoto....... 0 0 20,000 85,000 0 0
David A. Pryzbylski..... 0 0 20,000 45,000 0 0
</TABLE>
- --------
(1) None of the outstanding stock options held by the Named Executive Officers
were in-the-money as of December 31, 1996, as they all have exercise
prices in excess of the $9.25 closing price for the Company's Class B
Common Stock on December 31, 1996.
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. Benefits shown are computed at the plan's normal retirement age of 65
based on a straight life annuity.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE ANNUAL YEARS OF SERVICE
ELIGIBLE COMPENSATION -----------------------------------------------------
PRECEDING RETIREMENT 10 15 20 25 30 35
--------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000............... $ 13,500 $ 20,000 $ 27,000 $ 33,500 $ 40,500 $ 47,000
150,000............... 20,500 31,000 41,000 51,500 61,500 72,000
200,000............... 28,000 42,000 56,000 70,000 84,000 98,000
250,000............... 35,500 53,500 71,000 89,000 106,500 124,500
300,000............... 43,000 64,500 86,000 107,500 129,000 150,500
350,000............... 50,500 76,000 101,000 126,500 151,500 177,000
400,000............... 58,000 87,000 116,000 145,000 174,000 203,000
450,000............... 65,500 98,500 131,000 164,000 196,500 229,500
500,000............... 73,000 109,500 146,000 182,500 219,000 255,500
600,000............... 88,000 132,000 176,000 220,000 264,000 308,000
700,000............... 103,000 154,500 206,000 257,500 309,000 360,500
800,000............... 118,000 177,000 236,000 295,000 354,000 413,000
900,000............... 133,000 199,500 266,000 332,500 399,000 465,500
</TABLE>
10
<PAGE>
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 sixty highest consecutive months
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. 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 a particular year are included in the
following year as eligible compensation under the retirement plans.
The table set forth below shows for each of the Named Executive Officers (a)
the years of service under the retirement plans as of December 31, 1996, and
(b) the amount of eligible compensation under the retirement plan for 1996:
<TABLE>
<CAPTION>
YEARS OF ELIGIBLE
NAME SERVICE COMPENSATION
---- -------- ------------
<S> <C> <C>
Osamu Sawaragi...................................... 0.33 $183,714
V. John Goodwin(1).................................. -- --
Kenichiro Sekino.................................... 1.42 481,663
Bernard D. Henely................................... 1.33 323,340
Hiroshi Matsumoto................................... 2.58 379,169
David A. Pryzbylski(2).............................. 2.58 364,167
</TABLE>
- --------
(1) As a result of his resignation on August 20, 1996, Mr. Goodwin will not
receive any amounts pursuant to the Pension Plans described above. See the
discussion below under the caption "Employment Contracts" for a
description of certain retirement benefits which will be paid by the
Company to Mr. Goodwin under the terms of his employment agreement.
(2) Pursuant to the terms of his employment agreement, Mr. Pryzbylski will
receive credit for 14.67 years of service with a previous employer for the
purpose of determining his pension benefit from the Company. The benefits
of Mr. Pryzbylski under the Company's qualified defined benefit retirement
plan and non-qualified retirement plans will be reduced by the amount of
his pension benefits from the previous employer. See discussion below
under the caption "Employment Contracts."
EMPLOYMENT CONTRACTS
The Company has entered into employment contracts (the "Contracts") with
certain executives, including the Named Executive Officers identified below.
Set forth below is a summary of certain terms of the Contracts applicable to
such named Executive Officers.
Mr. Sawaragi's Contract provides for (i) non-competition for a period of two
years subsequent to termination of employment by Mr. Sawaragi without "good
reason;" and (ii) other post termination covenants including non-disclosure,
non-solicitation of employees, cooperation during a transition period, and
release of employment claims. Mr. Sawaragi's Contract has a term ending
October 5, 1998 (his 70th birthday) and provides for payment of a minimum
annual base salary of $500,000, and an annual target incentive compensation
opportunity equal to 50% of base salary.
Mr. Sawaragi's Contract also provides for certain payments and benefits upon
termination of his employment. If Mr. Sawaragi's employment terminates due to
death or disability, he will receive a payment equal to the average incentive
compensation paid to him in the three preceding years, or, if greater, his
target incentive compensation percentage amount, in each case pro-rated to
reflect the part of the year completed before termination. If his employment
is terminated by the Company without "cause" or by Mr. Sawaragi for "good
reason," he would be entitled to special termination benefits consisting of:
(i) a severance payment equal to 50% of his annual base salary; (ii) a pro-
rata incentive compensation payment for the year of termination; (iii)
continued stock option vesting and exercisability for a five year period; and
(iv) a two year continuation of health
11
<PAGE>
care and certain other employee benefits on the same basis as if Mr. Sawaragi
had remained an employee for such period. During the benefit continuation
period, Company provided employee benefits would be secondary to any benefits
provided under an NKK sponsored benefit plan, or any Japanese government
benefit plan or other available benefit plan. If Mr. Sawaragi is age 69 at the
time of a qualifying termination, the benefit continuation period is reduced to
one year. If termination occurs on or after age 70, there is no benefit
continuation period. After expiration of his Contract term, Mr. Sawaragi would
be entitled to the special termination benefits described above in the event he
terminates his employment with or without "good reason," or if the Company
terminates his employment without "cause." The Contract also provides that the
Company will reimburse Mr. Sawaragi for expenses incurred in seeking in good
faith to enforce his Contract.
The Contracts with Messrs. Pryzbylski and Henely also provide for (i) non-
competition for a period of two years subsequent to termination of employment
by them without "good reason;" and (ii) other post termination covenants
including non-disclosure, non-solicitation of employees, cooperation during a
transition period, and release of employment claims. These Contracts have an
initial term ending July 1, 1998, and are subject to automatic month-to-month
extensions unless either party elects not to extend the term. Prior to the date
Messrs. Pryzbylski or Henely reaches age 65, an election by the Company not to
extend the term will automatically result in a termination of employment
without "cause." The Contracts provide for the payment of a minimum annual base
salary of $255,000 for Mr. Pryzbylski and $280,000 for Mr. Henely and an annual
target incentive compensation opportunity for each of them equal to 40% of
annual base salary. Mr. Pryzbylski's Contract also provides that, for purposes
of determining his pension benefit with the Company, he will receive credit for
his years of service with his previous employer, and his pension benefits from
the Company will be reduced by his pension benefits from his previous employer.
The Company has also agreed to provide Mr. Pryzbylski with retiree health care
under certain circumstances.
The Contracts with Messrs. Pryzbylski and Henely provide for certain payments
and benefits upon termination of employment. If employment terminates for any
reason on or after age 65, or due to death or disability, the executive will
receive a payment equal to the average incentive compensation paid to the
executive in the three preceding years or, if greater, the executive's target
incentive compensation percentage amount, in each case pro-rated to reflect the
part of the year completed before termination. If employment is terminated by
the Company without "cause" or by the executive for "good reason" before the
executive reaches age 64, the executive would be entitled to special
termination benefits consisting of: (i) a severance payment equal to two times
the executive's annual base salary, a pro-rata incentive compensation payment
for the year of termination, plus, if such termination follows a change of
control, an additional amount equal to two times the average incentive
compensation paid to the executive in the three preceding years or, if greater,
the executive's target incentive compensation percentage amount; (ii) continued
stock option vesting and exercisability for a two year period; (iii)
outplacement services; and (iv) a two year continuation of health care and
certain other employee benefits on the same basis as if the executive had
remained an employee for such period. During the benefit continuation period,
Company provided health care benefits would be secondary to any health care
benefits provided under another employer provided plan. Mr. Henely's Contract
provides that he will not be eligible to receive the special termination
benefits described above unless he has been employed by the Company for two
years, or unless a change of control has occurred, prior to any termination by
the Company without "cause" or by Mr. Henely for "good reason." If a qualifying
termination occurs after the executive reaches age 64, the two year severance
and two year benefit continuation period are reduced to one year and if a
qualifying termination occurs after the executive reaches age 65, there is no
severance payment and no benefit continuation period.
The Contracts with Messrs. Pryzbylski and Henely also provide that, in the
event of a change of control, the benefits provided under the various Company
plans and programs may not be less favorable than those provided at any time
during the 120 day period immediately preceding the change of control. If a
termination by the Company without "cause" or by the executive for "good
reason" follows a change of control, a lump sum cash payment equal to the
actuarially equivalent value of non-qualified unfunded retirement benefits will
be paid to Messrs. Pryzbylski and Henely. If payments under the Contracts
following a change in control are subject to excise tax, the Company will make
a "gross-up" payment sufficient to ensure that the net after-tax amount
12
<PAGE>
retained by Messrs. Pryzbylski and Henely (taking into account all taxes,
including those on the gross-up payment) is the same as would have been the
case had such excise tax not applied. The Contracts also provide that the
Company will reimburse the executive for expenses incurred in seeking in good
faith to enforce his Contract.
Mr. Goodwin, following his resignation as President, Chief Executive Officer
and Chief Operating Officer on August 20, 1996, received amounts totaling
$1,936,342 in partial payment of amounts due him under his Contract with the
Company. Mr. Goodwin is also entitled to receive accrued vacation pay and
retirement benefits in accordance with his Contract which provides that (1)
his service with his prior employer will be treated as service with the
Company; (2) certain limitations under the Internal Revenue Code will not
apply; and (3) his pension benefits from the Company will be reduced by his
pension benefits from his prior employer. For a three year period following
resignation, Mr. Goodwin is also entitled to receive health care benefits,
life insurance coverage equal to three times his annual base salary and target
incentive compensation percentage, and disability insurance coverage on the
same basis as if he had remained an employee for such period. Thereafter, Mr.
Goodwin and his eligible dependents would be entitled to retiree health care
benefits in accordance with the Company's retiree health care plan. If the
benefit plans described in the two preceding sentences do not allow for
continued participation following his resignation, Mr. Goodwin is entitled to
a cash payment actuarially equivalent on an after tax basis to the value of
such benefits which he would have received had he continued to participate in
such plans. During the benefit continuation period, Company provided health
care benefits would be secondary to any health care benefits provided under
another employer provided plan. The Company has also agreed to provide Mr.
Goodwin with outplacement services, as well as continued vesting and
exercisability of his stock options for a three year period. Mr. Goodwin will
also be reimbursed for any expenses incurred in seeking in good faith to
enforce his Contract. Although the Company and Mr. Goodwin have not yet
reached a final agreement with respect to certain unresolved Contract issues,
negotiations are continuing. If the parties are unable to resolve the open
issues on a mutually acceptable basis, these issues will be submitted to
arbitration in accordance with the dispute resolution provisions of Mr.
Goodwin's Contract.
13
<PAGE>
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 Corporation
beneficially owned by each of the Company's directors, nominees for director
and Named Executive Officers and by the Company's directors and executive
officers as a group as of March 1, 1997 in the case of the Company's Class B
Common Stock and as of December 31, 1996 in the case of NKK Corporation common
stock. None of the Company's directors, nominees for director or Named
Executive Officers beneficially owned any shares of the Company's Class A
Common Stock. Except as otherwise indicated, each director, nominee for
director or Named Executive Officer had sole voting and investment power with
respect to any shares beneficially owned.
<TABLE>
<CAPTION>
CLASS B COMMON STOCK OF
NKK CORPORATION STOCK COMPANY
--------------------------------- ------------------------------
NUMBER OF SHARES PERCENT OF NUMBER OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED (1) CLASS BENEFICIALLY OWNED CLASS
---- --------------------- ---------- ------------------ ----------
<S> <C> <C> <C> <C>
Charles A. Bowsher...... 0 0 0 0
Frank J. Lucchino....... 0 0 100 *
Dr. Bruce K. MacLaury... 0 0 0 0
Yoshiharu Onuma......... 11,344 * 0 0
Keiichiro Sakata........ 3,910 * 0 0
Osamu Sawaragi.......... 93,040 * 2,500(2) *
Kenichiro Sekino........ 14,000 * 2,500(2) *
Mineo Shimura........... 3,000 * 0 0
Susumu Terao............ 11,000 * 0 0
V. John Goodwin (3)..... 0 0 67,666(2) *
Bernard D. Henely....... 0 0 2,000 *
David A. Pryzbylski..... 0 0 20,500(2) *
Hiroshi Matsumoto....... 5,000 * 22,000(2) *
All directors and
executive officers
as a group (23
persons)............... 141,294 * 228,543(2)(4) 1.08%
</TABLE>
- --------
* Less than 1% of the outstanding shares on March 1, 1997 in the case of the
Company's Class B Common Stock and on December 31, 1996 in the case of NKK
Corporation common stock.
(1) NKK Corporation stock can be voted in units of 1,000 shares only, and
units of less than 1,000 shares have no voting power. In addition, Mr.
Onuma and Mr. Sakata have no voting power with respect to 1,344 and 2,870
shares of NKK Corporation stock, respectively, owned by them which are
held by the trustee of NKK Corporation's employee stock ownership program.
(2) Includes shares which the individual has the right to acquire through the
exercise of stock options which are exercisable within 60 days of March 1,
1997 in the following amounts: for Mr. Sawaragi 2,500 shares; for Mr.
Sekino 2,500 shares; for Mr. Goodwin 66,666 shares; for Mr. Matsumoto
20,000 shares; for Mr. Pryzbylski 20,000 shares; and for all directors and
executive officers as a group 216,666 shares.
(3) The amounts shown for Mr. Goodwin are based upon information available to
the Company as of the date of Mr. Goodwin's resignation on August 20,
1996. The Company has no knowledge as to changes in Mr. Goodwin's
beneficial ownership since his resignation.
(4) Includes 3,577 shares held by the trustee of the Company's Salaried
Employees Retirement Savings.
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. Based solely upon a review of the copies of the
forms furnished to the Company, or written representations from certain
reporting persons that Forms 5 were not required, the Company believes that
all Section 16(a) filing requirements with respect to its officers and
directors were met. The Company has no knowledge as to the compliance by Mr.
Goodwin with the filing requirements of Section 16(a) subsequent to his
resignation on August 20, 1996.
14
<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 the Company's Class A Common Stock or Class B
Common Stock as of March 1, 1997, unless otherwise indicated.
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NAME AND ADDRESS OF NUMBER OF SHARES CLASS OF PERCENT OF CLASS COMMON STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED COMMON STOCK OUTSTANDING OUTSTANDING
- ------------------- ------------------ ------------ ---------------- ----------------
<S> <C> <C> <C> <C>
NKK U.S.A. Corporation.. 22,100,000(1) Class A 100% 51.05%
32 Loockerman Square
Dover, Delaware 19901
Donald Smith & Co., Inc. 4,227,700(2) Class B 19.95% 9.77%
East 80 Route 4
Paramus, New Jersey
07652
Crabbe Huson Group, Inc. 3,596,100(3) Class B 16.97% 8.31%
121 SW Morrison, Suite
1400
Portland, Oregon 97204
Pioneering Management 2,346,800(4) Class B 11.08% 5.42%
Corporation............
60 State Street
Boston, Massachusetts
02109
Vanguard/Windsor Fund, 1,897,300(5) Class B 8.95% 4.38%
Inc....................
100 Vanguard Boulevard
Malvern, Pennsylvania
19355
Wellington Management 1,897,300(6) Class B 8.95% 4.38%
Company, LLP...........
75 State Street
Boston, Massachusetts
02109
</TABLE>
- --------
(1) NKK has sole voting and investment power with respect to all shares of
Class A Common Stock. As reported in a Schedule 13D dated February 13,
1995 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) According to a Schedule 13G dated February 7, 1997 filed with the
Securities and Exchange Commission, Donald Smith & Co., Inc. reported that
it had sole voting power and sole dispositive power with respect to
4,227,700 shares.
(3) According to a Schedule 13G dated February 7, 1997 filed with the
Securities and Exchange Commission, Crabbe Huson Group, Inc. reported that
it had shared voting power and shared dispositive power with respect to
494,700 shares which are owned by the Crabbe Huson Equity Fund, Inc. and
82,800 shares which are owned by the Crabbe Huson Asset Allocation Fund,
Inc. The Crabbe Huson Group, Inc. also reported that it had shared voting
power and shared dispositive power with respect to 3,018,600 shares owned
by approximately 65 investors for whom it serves as an investment advisor.
(4) According to a Schedule 13G dated January 20, 1997 filed with the
Securities and Exchange Commission, Pioneering Management Corporation
reported that it had sole voting power and shared dispositive power with
respect to 2,346,800 shares.
(5) According to a Schedule 13G dated February 7, 1997 filed with the
Securities and Exchange Commission, Vanguard/Windsor Fund, Inc. reported
that it had sole voting power and shared dispositive power with respect to
1,897,300 shares. Wellington Management Company has filed a Schedule 13G
which indicates that it may also be considered the beneficial owner of
these same shares. See footnote (6).
(6) According to a Schedule 13G dated January 24, 1997 filed with the
Securities and Exchange Commission, Wellington Management Company reported
that it had shared dispositive power with respect to 1,897,300 shares.
Vanguard/Windsor Fund, Inc. has filed a Schedule 13G which indicates that
it may also be considered the beneficial owner of these same shares. See
footnote (5).
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company had borrowings outstanding with NKK affiliates, related to the
rebuild of the No. 5 coke oven battery at the Great Lakes Division, totaling
$161.9 million as of December 31, 1996. During 1996, the Company paid $14.8
million in principal and recorded $12.1 million in interest expense related to
this loan. Accrued interest on the loan as of December 31, 1996 was $4.7
million. Additionally, deferred financing costs related to the loan were $2.3
million as of December 31, 1996.
Effective as of May 1, 1995, the Company entered into an Agreement for the
Transfer of Employees with NKK Corporation, which supersedes a prior
arrangement. This Agreement was unanimously approved by all directors of the
Company who were not then, and never have been, employees of NKK. Pursuant to
the terms of this Agreement, technical and business advice is provided through
NKK employees who are transferred to the employ of the Company. The Company
has agreed to reimburse NKK for the costs and expenses incurred by NKK in
connection with the transfer of the employees. The total amount of
reimbursable expenses which the Company is obligated to pay is capped at $11.7
million for the initial term of the Agreement which ran from May 1, 1995
through December 31, 1996. The Agreement can be extended from year to year
thereafter if approved by NKK and by a majority of those directors of the
Company who are not then, and have never been, employees of NKK. The Agreement
has been extended for 1997, with the total amount of reimbursable expenses
capped at $7.0 million.
16
<PAGE>
COMPARISON OF TOTAL RETURN
The chart below compares the Company's total stockholder return on its Class
B Common Stock for the period beginning March 23, 1993, the date of the
initial public offering of the Company's Class B Common Stock, and ending
December 31, 1996, with the cumulative return of the Standard & Poor's
Composite 500 stock index and a peer group consisting of the U.S. Steel Group
of USX Corporation, Bethlehem Steel Corporation, and Inland Steel Industries,
Inc. These comparisons assume an investment of $100 on March 23, 1993 in Class
B Common Stock of the Company, the Standard & Poor's Composite 500 stock index
and the peer group. Cumulative total returns are calculated assuming
reinvestment of dividends, and the peer group index is weighted to reflect the
market capitalization of the index members. The peer group companies are
direct business competitors of the Company and were selected based on
similarities in product offerings, customers and markets served and the extent
of the trading history of the Company's stock.
The comparisons in this graph are required by the Securities and Exchange
Commission and are not intended to forecast or be indicative of possible
future performance of the Company's stock.
TOTAL RETURN TO STOCKHOLDERS
NATIONAL STEEL CORPORATION: 3/23/93-12/31/96
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
COMPANY/INDEX 3/23/93 12/31/93 12/31/94 12/31/95 12/31/96
------------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
National Steel 100 85.71 105.35 91.96 66.07
S&P 500 100 106.16 107.56 147.98 181.96
Peer Group 100 115.00 103.71 84.09 73.73
</TABLE>
17
<PAGE>
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
On January 21, 1997, the Board of Directors appointed Ernst & Young LLP to
serve as independent auditors for the Company for the fiscal year ending
December 31, 1997, subject to ratification of such appointment at the 1997
Annual Meeting of Stockholders.
Ratification of the appointment requires the favorable vote of a majority of
the voting power of the outstanding shares of Common Stock present at the
meeting and constituting a quorum. If the stockholders do not ratify this
appointment, the selection of the independent auditors will be reconsidered by
the Board of Directors.
Representatives of Ernst & Young LLP 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 LLP as auditors.
PROPOSALS OF STOCKHOLDERS
In order to be considered for inclusion in the Company's proxy statement and
proxy for the Annual Meeting of Stockholders to be held in 1998, proposals of
stockholders pursuant to Securities and Exchange Commission Rule 14a-8
intended to be presented at the 1998 Annual Meeting must be received in
writing by the Secretary of the Company no later than November 20, 1997 and
otherwise meet the requirements of that rule.
OTHER MATTERS
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,
/s/ David A. Pryzbylski LOGO
David A. Pryzbylski
Senior Vice President,
Administration and
Secretary
March 20, 1997
Mishawaka, Indiana
18
<PAGE>
PROXY
FIDELITY MANAGEMENT TRUST COMPANY
If I sign and return this proxy to you, you are instructed to cause all National
Steel Corporation Common Stock in my National Steel Retirement Savings Plan or
National Steel Represented Employee Retirement Savings Plan Account to be voted
at the Annual Meeting of Shareholders of National Steel Corporation, to be held
on April 21, 1997, and any adjournment thereof, as follows:
As indicated by me on the reverse side, but, if I make no indication as to a
particular matter, then unless otherwise indicated, as recommended by management
on such matters, and, on such other matters as may properly come before the
meeting. The Trustee will keep the vote completely confidential.
If the Trustee does not receive a properly executed proxy by April 16, 1997 the
Trustee shall vote the shares represented by this proxy in the same proportion
as it votes those shares for which it does receive a properly executed proxy.
(OVER)
(Please sign on reverse side)
.FOLD AND DETACH HERE.
<PAGE>
Please mark [X]
your votes as
indicated in
this example
1. ELECTION OF DIRECTORS
FOR WITHHOLD NOMINEES: Charles A. Bowsher
all nominees AUTHORITY Frank J. Lucchino
listed to the right to vote for all Dr. Bruce K. MacLaury
(except as marked nominees listed Yoshiharu Onuma
to the contrary) to the right Keiichiro Sakata
Osamu Sawaragi
[_] [_] Kenichiro Sekino
Mineo Shimura
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- ------------------------------------------------------------------------------
2. Ratification of the appointment of Ernst & Young as the Company's
independent auditors for 1997.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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:_________________________________________,1997
----------------------------------------------------
(Signature)
----------------------------------------------------
(Signature if held jointly)
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
. FOLD AND DETACH HERE .
ADMISSION TICKET
Annual Meeting
of
National Steel Corporation Stockholders
Monday, April 21, 1997
11:00 a.m.
Drake Hotel
140 East Walton Place
Chicago, Illinois
Agenda
.Election of Directors
.Ratification of the appointment of independent auditors
.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 John A. Maczuzak and David A. Pryzbylski
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 21, 1997 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.
<PAGE>
Please mark [X]
your votes as
indicated in
this example
<TABLE>
<CAPTION>
<S> <C> <C>
1. ELECTION OF DIRECTORS
FOR WITHHOLD NOMINEES: Charles A. Bowsher
all nominees AUTHORITY Yoshiharu Onuma
listed to the right to vote for all Kenichiro Sekino
(except as marked nominees listed Frank J. Lucchino
to the contrary) to the right Keiichiro Sakata
[_] [_] Mineo Shimura
Dr. Bruce K. MacLaury
Osamu Sawaragi
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. Ratification of the appointment of Ernst & Young as the Company's
independent auditors for 1997.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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:________________________________, 1997
--------------------------------------------
(Signature)
--------------------------------------------
(Signature if held jointly)
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
.FOLD AND DETACH HERE.
ADMISSION TICKET
Annual Meeting
of
National Steel Corporation Stockholders
Monday, April 21, 1997
11:00 a.m.
Drake Hotel
140 East Walton Place
Chicago, Illinois
AGENDA
.Election of Directors
.Ratification of the appointment of independent auditors
.Discussion on matters of current interest
.Question and Answer Session
