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
[X] Definitive Proxy Statement BY RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ARMCO INC.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ARMCO INC.
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14-a6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
ARMCO INC.
ONE OXFORD CENTRE
301 GRANT STREET
PITTSBURGH, PA 15219-1415
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 25, 1997
-------------------
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of
Armco Inc. will be held at the Rivers Club, located at One Oxford
Centre, 301 Grant Street, Pittsburgh, Pennsylvania, on Friday, April 25,
1997, at 10:00 a.m., for the following purposes:
1. To elect directors.
2. To transact such other business as may properly come
before the meeting.
The close of business on February 28, 1997, was fixed as the
record date for the determination of shareholders entitled to notice of
and to vote at the meeting. The proxy statement, which follows, contains
more detailed information as to the actions proposed to be taken.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, PLEASE COMPLETE AND SIGN YOUR PROXY AND PROMPTLY RETURN IT
IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN
PERSON IF YOU WISH, EVEN THOUGH YOU HAVE PREVIOUSLY RETURNED YOUR
PROXY.
By Order of the Board of Directors
Gary R. Hildreth, Secretary
Pittsburgh, Pennsylvania
March 14, 1997
<PAGE>
ARMCO INC.
ONE OXFORD CENTRE
301 GRANT STREET
PITTSBURGH, PA 15219-1415
---------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 25, 1997
---------------------------
SOLICITATION AND VOTING OF PROXIES
The enclosed proxy is being solicited by the Board of Directors of Armco
Inc., an Ohio corporation (hereinafter ''Armco'' or the ''Corporation''), with
its principal executive offices located at One Oxford Centre, 301 Grant
Street, Pittsburgh, Pennsylvania 15219-1415, for use at the annual meeting of
shareholders (the ''Meeting'') of the Corporation to be held on April 25,
1997. This proxy statement and the accompanying proxy were first sent to
shareholders of the Corporation on or about March 14, 1997.
The close of business on February 28, 1997, has been fixed as the record
date for determining shareholders entitled to notice of and to vote at the
Meeting. On that date, the Corporation had outstanding and entitled to vote
106,457,166 shares of common stock, $.01 par value (the ''common stock''),
1,697,231 shares of Class A, $2.10 Cumulative Convertible Preferred Stock (the
''$2.10 preferred stock'') and 2,700,000 shares of Class A, $3.625 Cumulative
Convertible Preferred Stock (the "$3.625 preferred stock"). Holders of shares
of common stock, $2.10 preferred stock and $3.625 preferred stock are each
entitled to one vote for each share owned on all matters to come before the
Meeting.
Shares of common stock, $2.10 preferred stock and $3.625 preferred stock
represented by properly executed proxies will, unless such proxies have
previously been revoked, be voted at the Meeting in accordance with the
direction indicated on such proxies. Prior to its exercise, a proxy may be
revoked by a later proxy received by the Corporation or by giving notice to
the Corporation in writing or in open meeting.
With respect to the election of directors, shareholders may vote for the
election of the entire slate or may withhold their vote from the entire slate
by marking the proper box on the form of proxy, or may withhold their vote
from any one or more individual nominees by striking a line through the name
of such nominees in the form of proxy.
If no direction is given, an executed proxy will be voted FOR the
election of each of the eight persons named as nominees. If any nominee for
election as a director should be unable to serve, the proxy will be voted for
a nominee, if any, designated by the Board of Directors. Directors are
elected by a plurality of votes cast. Abstentions and broker non-votes will
have the same effect as a vote withheld in the case of the election of
directors.
The Board of Directors does not anticipate that any matters other than
those set forth herein will be brought before the Meeting. If, however, other
matters are properly presented, the persons named in the proxy will have
discretion, to the extent provided by applicable law, to vote on such matters.
1
<PAGE>
Under Ohio law, if any shareholder gives notice in writing to the
president, a vice president or the secretary of the Corporation, not less than
48 hours before the time fixed for holding the Meeting, that such shareholder
desires the voting for the election of directors to be cumulative, and if an
announcement of the giving of such notice is made upon the convening of the
Meeting by the chairman or secretary or by or on behalf of the shareholder
giving such notice, each shareholder shall have the right to cumulate his or
her voting power for the election of directors.
In the event of such an announcement, the persons named as proxies on the
enclosed proxy card will use their discretion in exercising such cumulative
voting power with respect to the shares represented thereby. Under the
cumulative voting method, each shareholder is entitled to the number of votes
equal to the number of shares held by such shareholder on the record date
multiplied by the number of directors to be elected, and all such votes may be
cast for a single nominee or distributed among the nominees as desired. The
Corporation intends that such persons named as proxies will (except as
otherwise provided by the shareholder submitting such proxy) have discretion
to cumulate votes for the election of directors so as to maximize the number
of directors elected from among the nominees proposed by the Board.
ELECTION OF DIRECTORS
As provided in Armco's Regulations, the Board of Directors has fixed the
number of directors at eight and eight persons have been nominated to serve as
directors of the Corporation until the next Annual Meeting of Shareholders and
until their successors are elected and qualified. These nominees are named in
the following table, which also sets forth information for each nominee
respecting age, principal occupation, business experience during the past five
years and certain other information. Mr. Burns, a director of the
Corporation, has elected not to be a nominee.
Age 49; Vice President and General Manager Residential
Insulation of Owens Corning, an advanced glass and
composite materials company. Prior to 1997,
[Photograph of Ms. Cholmondeley was Corporate Vice President,
Paula H.J. Owens Corning, and President of Owens Corning's Miraflex
Cholmondeley] Products business unit, and former Vice President Business
Development and Global Sourcing. Formerly Vice President
and Director - International Division of the Faxon Company,
a library subscription agency. A Director of the
Corporation since 1996; a member of the Audit Review
Committee and Corporate Responsibility Committee.
Paula H.J. Cholmondeley
Age 61; Retired Vice Chairman, Corning Incorporated, a
[Photograph of broad-based manufacturing and service company. A Director
David A. of the Corporation since 1989; a member of the Audit
Duke] Review Committee and Corporate Responsibility Committee.
Also a Director of Quest Diagnostics, Incorporated.
David A. Duke
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Age 43; Vice President - Investments of Alleghany
[Photograph of Corporation, an insurance and financial services holding
Dorothea C. company. Formerly Assistant Vice President of Chicago
Gilliam] Title & Trust Company, a title insurance company. Also a
trustee of CT&T Funds, an open-ended management investment
company.
Dorothea C. Gilliam
Age 67; Former Chairman of the Board of the Corporation.
[Photograph of Retired Chairman of the Board and Chief Executive Officer
John C. of Business International Corporation, a publishing,
Haley] consulting and advisory services firm. A Director of the
Corporation since 1975; a member of the Compensation
Committee and Corporate Responsibility Committee.
John C. Haley
Age 52; Executive Vice President of PNC Bank Corp., a
[Photograph of provider of broad-based banking and financial services.
Bruce E. Former President and Chief Executive Officer of PNC Bank,
Robbins] N.A. - Pittsburgh and former President of PNC Bank, Ohio,
N.A. A Director of the Corporation since 1994; a member
of the Compensation Committee and Nominating Committee.
Bruce E. Robbins
Age 69; Chairman of Sweetheart Holdings Inc., a private
[Photograph of partnership. Former Chairman of the Board and Chief
Burnell R. Executive Officer of The Mead Corporation, an integrated
Roberts] manufacturer of paper and forest products. A Director of
the Corporation since 1985; a member of the Audit Review
Committee and Compensation Committee. Also a Director of
DPL Inc., The Perkin-Elmer Corporation, Rayonier Inc. and
Universal Protective Packaging, Inc.
Burnell R. Roberts
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<PAGE>
Age 51; President and Chief Executive Officer of
[Photograph of Copperweld Corporation, a manufacturer of tubular and
John D. bimetallic wire products. A Director of the Corporation
Turner] since 1994; a member of the Compensation Committee and
Nominating Committee.
John D. Turner
Age 58; Chairman of the Board, Chief Executive Officer and
[Photograph of President of the Corporation and former Chief Operating
James F. Officer of the Corporation. Formerly President and Chief
Will] Executive Officer of Cyclops Industries, Inc., a producer
of flat-rolled stainless and carbon steels, tubular steel
products and special alloys. A Director of the
Corporation since 1992; a member of the Corporate
Responsibility Committee. Also a Director of Alleghany
Corporation.
James F. Will
Board of Directors and Committees of the Board
In 1996, the Board of Directors of the Corporation met seven times.
In addition to the committees described below, the Board of Directors has
appointed a Corporate Responsibility Committee.
The Nominating Committee met once in 1996. This committee reviews the
qualifications of and recommends individuals for election as directors. It
advises on the optimum size and composition of the Board and reviews and
defines the responsibilities, duties and performance of the committees of the
Board. This committee also reviews and advises the Board on the Corporation's
organization and successors for key personnel. This committee will review
nominees suggested by shareholders in writing and sent to the attention of the
Secretary of the Corporation.
In accordance with the Corporation's Regulations, which were approved by
the shareholders, shareholders intending to nominate director candidates for
election at any annual meeting of shareholders must deliver written notice
thereof to the Secretary of Armco not later than 90 days prior to the date one
year from the date of the immediately preceding annual meeting of
shareholders. Such notice timely given by a shareholder shall set forth
certain information concerning such shareholder and his or her nominee(s). The
presiding officer at such annual meeting may refuse to acknowledge any
nomination not made in accordance with the foregoing and any person not so
nominated shall not be eligible for election as a director. Shareholders
intending to nominate director candidates for election at the 1998 annual
meeting of shareholders must deliver written notice, including specified
information, to the Secretary of the Corporation by January 25, 1998.
The Audit Review Committee met four times in 1996. This committee is
responsible for nominating the independent auditors, working with the
independent auditors and the internal auditing staff of the Corporation and
other corporate officials, reviewing the financial statements of the
Corporation, monitoring compliance with corporate policies relating to
conflict of interest, business ethics and antitrust and reporting on the
results of the audits to the Board, as well as submitting to the Board its
recommendations relating to the financial reporting, accounting practices and
policies, and financial accounting and operation controls.
The Compensation Committee reviews, determines and recommends to the
Board the principal compensation and benefit programs, including the
compensation of executive officers of the Corporation, reviews the Board's
delegation of fiduciary responsibility relating to certain benefit plans to
the Benefit Plans Administrative Committee and to the Benefit Plans Asset
Review Committee and administers and oversees grants and awards under the
Corporation's employee stock and other incentive plans. This committee met
four times in 1996. See "EXECUTIVE COMPENSATION -- Compensation Committee
Report on Executive Compensation".
4
<PAGE>
During 1996, no director attended less than 75% of the meetings of the
Board and committees on which he or she served.
Compensation of Directors
Each director, other than those who are employees of the Corporation or
its subsidiaries, is paid a retainer fee of $24,000 a year, plus travel and
other expenses incurred in connection with his or her work for the
Corporation. For each Board meeting attended, each such director receives
$1,000. For each committee meeting attended, each committee member receives
$800 and the committee chairperson receives $1,000. Directors who are
employees of the Corporation do not receive any additional compensation by
reason of their membership on, or attendance at meetings of, the Board or
committees thereof.
Under the 1995 Directors Stock Purchase and Deferred Compensation Plan
(the "Directors Stock Plan"), approved by the shareholders in 1995, each non-
employee director receives 25% (and may elect to receive up to 100%) of his or
her annual retainer fee in shares of common stock and the balance in cash.
Each non-employee director may also elect to defer receipt of any or all of
his or her director's fees. If a director so elects, he or she will be
credited with common stock units (representing a right to receive a share of
common stock at a future date) for any fees required to be received in shares
of common stock and for any other fees as such director may elect, with the
balance of the deferred fees being credited to a cash account. The number of
common stock units will be adjusted to reflect any dividends paid on the
common stock and the cash accounts will be credited quarterly with interest at
the prime rate. Distribution of common stock in respect of any common stock
unit credited to a director's account and of cash in any amounts credited to
his or her cash account will be made after such director ceases to be a
director of the Corporation.
Effective April 30, 1995, the Board of Directors locked and froze the
pension plan for the then outside directors. As a result, Mr. Haley and Mr.
Roberts, each of whom was fully vested at the maximum benefit, are each
entitled to receive an annual benefit of $20,400 (the annual retainer in
effect through April 30, 1995) in each of the ten years following their
retirement from the Board of Directors. Mr. Burns, Dr. Duke, Mr. Robbins and
Mr. Turner, each of whom was unvested, were credited with hypothetical
investments in 3,000, 5,500, 1,000 and 1,000 shares of common stock,
respectively (at a rate of 1,000 shares of common stock for each year of
service on the Board of Directors through April 30, 1995), in settlement of
their unvested benefits under this plan. The hypothetical investment in the
common stock will be credited as if dividends have been paid whenever a
dividend is paid on the common stock and such dividend shall be accounted for
as an additional investment in the common stock. Payments will be made in
cash after a director ceases to be a director of the Corporation.
The Corporation provides up to $100,000 of group life insurance to any
director who is not an employee of the Corporation. The Corporation also
provides non-employee directors with $250,000 of accidental death and
dismemberment insurance. These insurance benefits terminate upon a director's
resignation or retirement from the Board. During 1996, the Corporation paid
premiums aggregating $15,264 for this coverage.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
Set forth below is certain summary information with respect to the
compensation of Armco's chief executive officer and the four other most highly
compensated executive officers (the "Named Executives") who were serving as
executive officers at December 31, 1996 (based on amounts reported as salary
and bonus for 1996).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
---------------------------------------------------------------
Awards Payouts
--------------------------------------
Other Restricted Securities All Other
Name Annual Stock Underlying LTIP Compen-
and Principal Compen- Award(s) Options Payouts sation
Position Year Salary ($) Bonus ($) sation ($) (1) (#)(2) ($) ($)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James F. Will 1996 559,167 0 0 0 0 0 17,888 (3)
----
President 1995 530,000 0 0 749,572 124,929 0 17,040
----
& CEO 1994 530,000 0 0 1,512,739 150,338 0 35,554
----
John B. Corey 1996 195,200 0 0 265,472 62,464 0 4,622 (3)
----
V.P. 1995 180,500 0 0 195,053 34,295 0 4,562
----
1994 166,500 75,132 0 142,218 21,476 0 9,635
----
David G. Harmer 1996 248,000 0 0 0 0 0 6,760 (3)
----
V.P. & Chief 1995 237,500 0 0 264,643 44,107 0 5,866
----
Financial
Officer (4) 1994 225,000 0 0 587,771 55,607 0 16,929
----
Gary R. Hildreth 1996 217,284 0 0 0 0 0 6,913 (3)
----
V.P., 1995 210,003 0 0 239,406 39,901 0 6,300
----
General Counsel 1994 200,000 43,250 0 440,595 37,071 0 13,159
& Secretary ----
Gary L.
McDaniel 1996 213,334 0 0 0 0 0 4,440 (3)
----
V.P. - 1995 184,168 0 0 306,454 53,882 0 3,224
----
Operations 1994 163,335 0 0 327,776 37,334 0 7,937
----
- ----------------------------------------------------------------------------------------------------
</TABLE>
- --------------------
(1) The value indicated is based on the closing price of the
common stock on the date of grant. The awards of restricted stock for
each of the Named Executives are comprised of shares of restricted
common stock awarded under the Corporation's shareholder-approved plans
to such Named Executives in lieu of all or part of the cash bonus
payable to such Named Executives for such year under the Annual
Incentive Compensation Plan. 30.8% of the restricted stock award to Mr.
Corey for 1996 is payable in cash at the date the award vests in lieu of
shares. Under a compensation program (the "1994 Program") implemented
by the Corporation in April 1994 for its senior executives, including
the Named Executives, each participant is required to receive at least
25% of
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any annual bonus under such an annual incentive plan approved by the
Corporation's Board of Directors for 1994, 1995 and 1996 in shares of
restricted common stock, valued at $3.50 per share (a 30% discount from
the market price of common stock at the time of the establishment of the
1994 Program). Also under the 1994 Program, each of the participants,
including the Named Executives, was permitted, at the time of the
implementation of the 1994 Program, to elect irrevocably to receive an
additional percentage, up to 100%, of any annual bonuses earned under
such an annual incentive compensation plan in restricted stock awards,
valued at $3.50 per share. The vesting of the awards of restricted
stock under the 1994 Program is 20% of such shares in April 1997, a
further 30% in April 1998 and the remaining 50% in April 1999.
The following table sets forth (based on the fair market value of $4.25
of common stock on the date of award) for each of the Named Executives
the value of the portion of those shares of restricted stock reflected
above for 1996 on which the restrictions will lapse in each of 1997,
1998 and 1999.
<TABLE>
<CAPTION>
Total
Name Value of Shares Vesting Value
---- -------------------------------- -----
1997 1998 1999
---- ---- ----
<S> <C> <C> <C> <C>
J. F. Will $ 0 $ 0 $ 0 $ 0
J. B. Corey $ 53,094 $ 79,642 $132,736 $265,472
D. G. Harmer $ 0 $ 0 $ 0 $ 0
G. R. Hildreth $ 0 $ 0 $ 0 $ 0
G. L. McDaniel $ 0 $ 0 $ 0 $ 0
</TABLE>
All of the Named Executives irrevocably elected in April 1994 to receive
100% of any incentive bonuses earned under such an annual incentive plan
for 1996 in restricted stock awards (had the 1994 Program and Mr.
Corey's election made thereunder not been in effect, Mr. Corey would
have received a $218,624 cash bonus payment for 1996. See "Compensation
Committee Report on Executive Compensation"). The aggregate number and
value (based on the closing price of the common stock of $4.125 at
December 31, 1996) of the restricted shares held by the Named Executives
at December 31, 1996 (which does not include restricted stock award for
1996 discussed above) was: Mr. Will - 381,267, $1,572,726; Mr. Corey -
93,862, $387,180; Mr. Harmer - 160,714, $662,945; Mr. Hildreth -
121,972, $503,134 and Mr. McDaniel - 91,216, $376,266. Dividends will
be paid on restricted shares, if, and only if, dividends are paid on the
common stock. Mr. Harmer's restricted stock was canceled as of the end
of the fiscal year due to his resignation.
(2) Also under the 1994 Program, each participant who is
awarded shares of restricted stock in lieu of cash bonus is granted an
option to purchase an equal number of shares of common stock at the
market value of the common stock on the date of such grant unless the
participant has elected to reduce the number of restricted shares for
federal and state income tax withholding purposes. Amounts shown for
1996 represent options granted on January 24, 1997, with respect to
bonuses earned for the fiscal year 1996. Such options are exercisable
in full on and after the second anniversary of the grant. See "Stock
Option Plans" and "Compensation Committee Report on Executive
Compensation" below.
(3) These amounts include:
(i) $2,250 each for Mr. Will, Mr. Corey, Mr. Harmer, Mr.
Hildreth and Mr. McDaniel, of matching contributions under the Armco
Inc. Retirement and Savings Plan;
(ii) $6,308 for Mr. Will, $1,647 for Mr. Corey, $2,304 for
Mr. Harmer, $3,150 for Mr. Hildreth and $1,240 for Mr. McDaniel,
representing contributions allocated to the trust established under the
Armco Inc. Executive Supplemental Deferred Compensation Plan in respect
of matching contributions not paid to the Armco Inc. Retirement and
Savings Plan by reason of Internal Revenue Code limitations; and
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<PAGE>
(iii) $9,330 for Mr. Will, $725 for Mr. Corey, $2,206 for
Mr. Harmer, $1,513 for Mr. Hildreth and $950 for Mr. McDaniel for
premiums for life insurance benefits provided to them.
(4) Mr. Harmer was an officer through December 31, 1996, when
his resignation from the Corporation became effective.
Stock Option Plans
The Corporation has granted stock options and has authority to make
future grants of stock options and stock appreciation rights ("SARs") to key
employees, including the Named Executives, under stock option plans previously
approved by the shareholders. The exercise price of all outstanding options
is 100% of the fair market value at the date of grant.
The following table sets forth information with respect to all stock
options granted by the Corporation to the Named Executives during 1996:
<TABLE>
Option Grants in Last Fiscal Year
---------------------------------
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term (1)
- ------------------------------------------------------------ ---------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in or Base Expiration
Name Granted (#)(2) Fiscal Year Price ($/sh) Date 5%( $) 10% ($)
- ---- -------------- ------------ ------------ ----------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
J. F. Will 124,929 13% 5.6875 2/23/06 446,581 1,132,407
J. B. Corey 34,295 4% 5.6875 2/23/06 122,668 310,864
D. G. Harmer(3) 44,107 5% 5.6875 2/23/06 157,764 399,804
G. R. Hildreth 39,901 4% 5.6875 2/23/06 142,719 361,679
G. L. McDaniel 53,882 6% 5.6875 2/23/06 192,727 488,409
- -------------------------
<FN>
(1) The dollar amounts under these columns are the result of
calculations at assumed 5% and 10% rates set by the Securities and
Exchange Commission and therefore are not intended to forecast possible
future appreciation, if any, of the stock price of the Corporation. The
total increase in value of all common shares outstanding, based upon the
10-year option term and 5% and 10% compound appreciation assumptions
above, would be $308,780,057 and $964,971,426, respectively. The Named
Executives would realize approximately two-tenths of one percent of the
total shareholders' appreciation in value.
(2) All options were granted on February 23, 1996, and each
award becomes 100% exercisable on the second anniversary of the date of
the grant.
(3) Under the terms of the plan, these options were canceled
when Mr. Harmer resigned as of December 31, 1996.
</TABLE>
8
<PAGE>
The following table sets forth information with respect to the options
exercised by the Named Executives in 1996 and the unexercised options held by
the Named Executives at December 31, 1996.
<TABLE>
Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year-End Option Values
---------------------------------------
<CAPTION>
Number of
Securities
Underlying Value of
Unexercised In-the-Money
Options Options
Shares at Fiscal at Fiscal
Acquired Year End (#) Year End ($)
on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable(1) Unexercisable
- ---- ------------ ---------------- ------------ -----------------
<S> <C> <C> <C> <C>
J. F. Will -0- -0- 48,750/291,517 -0-/-0-
J. B. Corey -0- -0- 19,250/58,012 -0-/-0-
D. G. Harmer -0- -0- 15,000/104,714 -0-/-0-
G. R. Hildreth -0- -0- 32,450/80,722 -0-/-0-
G. L. McDaniel -0- -0- 6,000/93,216 -0-/-0-
<FN>
- -------------------------
(1) Mr. Harmer's options were canceled as of the end of the fiscal
year due to his resignation.
</TABLE>
Pension Plans
Effective January 1, 1995, the Corporation amended the Non-Contributory
Pension Plan (the "NCPP") by adopting a different defined benefit formula
called the Retirement Accumulation Pension Plan (the "RAPP") for eligible
nonrepresented salaried employees participating in the NCPP ("NCPP
participants") or the 2% Defined Contribution Plan ("DCP") as of December 31,
1994. NCPP participants received an opening balance in the RAPP equal to the
value of the NCPP benefit earned as of December 31, 1994, calculated based on
the accrued regular monthly benefit that would otherwise have been payable to
the employee upon attainment of age 62 based on final pay-related formulas.
Eligible nonrepresented salaried employees, including Mr. Harmer and Mr.
McDaniel, ceased participation in the DCP and all contributions to the 2% DCP
are 100% vested in the Armco Inc. Retirement & Savings Plan.
Each RAPP participant receives "pay credits" to a future account. For
former participants in the DCP and employees hired after December 31, 1994,
pay credits are 2% of annual pensionable earnings. Former NCPP participants
receive between 2% and 9% of annual pensionable earnings depending on age and
years of service on December 31, 1994. Annual pensionable earnings include
base salary, bonus and other incentive forms of compensation (corresponding
generally to the salary and bonus reflected in the Summary Compensation Table
above).
NCPP participants' opening accounts earn a minimum annual rate of 7.5%
and a maximum of 12.5%. Future accounts earn a minimum annual rate of 3% and
a maximum of 12.5%. Rates are based on the annualized 5-year treasury bond
rate at November 30 of the prior year. A participant's opening account ceases
to earn interest when the participant attains age 65. Pay credits and
interest are posted to participants' accounts at the end of each quarter.
The Corporation has established an Excess Retirement Accumulation Pension
Plan ("Excess RAPP") to provide highly compensated employees a nonqualified
benefit equivalent to that which would be payable under the RAPP but for
limitations under the Internal Revenue Code.
On December 31, 1996, the combined RAPP and Excess RAPP accounts of the
Named Executives were as follows: Mr. Will - $971,872, Mr. Corey - $256,163,
Mr. Harmer - $17,773, Mr. Hildreth - $632,663 and
9
<PAGE>
Mr. McDaniel - $15,190. The pay credits for each of the Named Executives is
as follows: Mr. Will - 6%, Mr. Corey - 7%, Mr. Harmer - 2%, Mr. Hildreth -
8% and Mr. McDaniel - 2%. If employment were continued until the mandatory
retirement age of 65 at the 1996 rates of remuneration, and assuming a
constant 7.5% rate of interest accrual for future accounts, Messrs. Will,
Corey, Hildreth and McDaniel would have account balances under the RAPP and
Excess RAPP of $2,100,047, $1,027,929, $1,229,115 and $248,118, respectively.
The Corporation has also established a Supplemental Executive Retirement
Plan ("SERP") replacing the former Minimum Pension Plan ("MPP") for key
executives, including the Named Executives, whose participation has been
approved by the Board of Directors. The SERP provides a supplemental pension
benefit for those whose pension under the RAPP and Excess RAPP is limited by
reason of short service with the Corporation. The normal retirement age under
the SERP is 65. Participants who have reached age 62 and have at least ten
years of service with Armco and five years of participation in the SERP can
receive the benefit immediately on an unreduced basis. Participants with 5
years of participation in the SERP who attain age 55 with at least 10 years of
service or who complete at least 30 years of service at any age may elect an
early retirement and receive a reduced benefit. Participants would receive,
at normal retirement age, an aggregate minimum pension of 50% of their average
annual pensionable earnings before retirement.
The benefit derived from the foregoing calculation is offset by RAPP and
Excess RAPP benefits and any qualified or non-qualified defined benefit or
defined contribution benefit from prior employers not affiliated with Armco.
In addition, the equivalent of 50% of the normal Social Security retirement
benefit and any employer-provided disability benefits would also be offset.
If 1996 employment were continued until mandatory retirement at age 65,
at their 1996 rates of remuneration, Messrs. Will, Corey, Hildreth and
McDaniel would be entitled to total yearly pensions of $489,980, $149,520,
$170,240 and $192,710, respectively, under all plans.
Severance Arrangements
Armco's severance policy applicable to each of the Named Executives
provides a minimum severance pay of twelve months' base salary, plus
additional months (up to a maximum of 24) of pay based on a combination of age
and service.
In addition, Armco has agreements with each of the Named Executives
providing for certain benefits upon actual or constructive termination of
employment, or termination of employment by reason of disability, death or an
employee's resignation under certain circumstances, generally following a
"change in control" of Armco, as defined in the agreements. A "change of
control" under these agreements generally occurs when (1) any person or group
other than the Corporation and certain related entities becomes the beneficial
owner of securities representing 25% or more of the combined voting power of
Armco's securities, (2) during any period of two consecutive years, there is a
change in the composition of a majority of the Corporation's Board of
Directors that was not approved by at least two-thirds of the existing
directors who were so approved or (3) the shareholders of the Corporation
approve a merger or consolidation of the Corporation, subject to certain
exceptions, or the complete liquidation of the Corporation or the sale of all
or substantially all of its assets. Under these agreements, Armco has
reserved the right to terminate employment for "cause", as defined in the
agreements, without the payment of such benefits. Generally, upon the
occurrence of an event which triggers these benefits, an employee would be
entitled to a lump sum payment equal to a multiple (of two times for the Named
Executives) the sum of such employee's annual base salary (annualized at the
highest rate paid during any month during the 24 months preceding notice of
termination) and bonus and other incentive compensation paid during the
calendar year preceding the termination, and continuation for two years of
coverage under Armco's welfare benefit plans, including life, health and other
insurance benefits. The agreements also provide, in the event of a change in
control and termination of employment, for (i) a cash payment in exchange for
each employee's outstanding stock options in an amount equal to the difference
between the option price and the higher of the per share market value of the
common stock on the date of termination and the average value of the
consideration per share paid to Armco shareholders in the transaction
resulting in the change in control and (ii) the lapse, immediately upon the
change in control, of all restrictions applicable to restricted share awards.
Insurance
Upon the occurrence of an extended illness or accident, eligible
nonrepresented salaried employees, including the Named Executives, are
provided payments equal to their then base salary for up to six months.
Thereafter, the
10
<PAGE>
Corporation will provide such individuals with long-term disability payments
in an amount equal to 60% of their base salary at the time such disability
occurred, less Social Security benefits and any pension benefits paid by the
Corporation prior to age 65. Such payments will continue until age 65, at
which time payments cease.
The Corporation provides all eligible nonrepresented salaried employees
hired prior to January 1, 1995, with group term life insurance equal to 24
times an employee's monthly base salary as of December 31, 1994, except that,
for exempt salaried employees who were employed on or before December 31,
1989, this insurance equals the greater of 30 times the employee's monthly
base salary as of December 31, 1989, or 24 times the employee's monthly base
salary at the time of death. From 1995 and thereafter, that life insurance
benefit will equal the greater of the level as of December 31, 1994, and 12
times monthly base salary. All employees hired as of January 1, 1995, or
thereafter will have a life insurance benefit equal to 12 times the employee's
monthly base salary.
Following retirement with attainment of age 65 and at least five years of
service, age 55 and at least 15 years of service, 30 years of service
(regardless of age), or permanent incapacitation with 15 years of service, an
employee is eligible for group term life insurance based upon age and years of
service as of January 1, 1995. An employee who is age 50 or older or has
completed at least 30 years of service with the Corporation as of January 1,
1995, will receive retiree life insurance coverage equal to one-half the
coverage provided immediately prior to retirement for the first year following
retirement, with coverage in each of the 10 succeeding years thereafter
declining by 10% per year, provided that the minimum coverage in the eleventh
year after retirement and beyond will always be $10,000. Any employee who was
under age 50 and had less than 30 years of service as of January 1, 1995, will
have life insurance of $10,000 during retirement.
Mr. Will participates in an executive life insurance program for former
Cyclops Industries, Inc. key executives (in lieu of full participation in the
Corporation's group term life insurance) which provides greater coverage than
the group term life insurance would provide at the same cost to the
Corporation. There is no reduction at retirement. Mr. Will's group term life
insurance under the Corporation's plan is set at $50,000 while he is an active
employee and is subject to reduction at his retirement as stated above.
Certain key employees, including Mr. Corey and Mr. Hildreth, could
purchase supplemental coverage equal to 18 times their monthly base salary as
of January 1, 1987, at a personal cost equal to the amount of imputed income
allocated to such individual under the Internal Revenue Code. Participant
contributions cease upon retirement, and there is no decrease in the amount of
coverage for such key employees during retirement. If the value of the policy
at the time of death exceeds the amount of coverage, the Corporation will
recoup all or a portion of premiums paid by the Corporation. Participation in
this supplemental plan was frozen as of January 1, 1987. Messrs. Will and
McDaniel are not eligible for this supplemental coverage plan.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the
"Committee") is composed of independent directors. The Committee is
responsible for reviewing, determining and recommending to the Board the
annual salary, short- and long-term incentive compensation, stock awards
and other compensation of the executive officers of the Corporation.
This report describes the policies and rationales of the Committee in
establishing the principal components of executive compensation in 1996.
The Committee's review and determination of executive compensation
generally includes consideration of the following factors:
(a) industry, peer group and national compensation surveys;
(b) past and future performance contributions of each
executive officer to corporate performance;
(c) the overall performance of the Corporation, both
separately and relative to similar companies in the
specialty steel industry;
(d) historical compensation levels; and
(e) recommendations of independent compensation consultants
with respect to compensation competitiveness.
11
<PAGE>
Under the direction of the Committee, the Corporation has developed a
compensation strategy designed to compensate its executives on a
competitive basis relative to specific performance targets and
comparable to other companies in the steel industry, including companies
that are not included in the Specialty Steel Peer Group performance
graph under "Performance Graph" below, the five-year cumulative total
shareholder returns of which are graphically depicted in such graph.
Those companies, and the other companies surveyed by the Corporation for
their compensation policies, were selected for comparison on the basis
of industry similarities. The Specialty Steel Peer Group was not
considered exclusively because the Committee felt that it provided too
small a group for an appropriate basis and that other steel companies
should also be considered to provide a more meaningful comparison of
competitive compensation. The compensation program is intended to:
(a) attract and retain key executives critical to the
long-term success of the Corporation;
(b) facilitate the Corporation's short- and long-term
planning process; and
(c) most importantly, reward executives for long-term
strategic management and the enhancement of shareholder
value.
Compensation for each of the Corporation's executive officers,
including the Named Executives, consists of a fixed base salary and
variable components, including both short- and long-term incentive
compensation, as well as certain compensation under corporate benefit
plans available generally to corporate officers. At the beginning of
each year, an annual salary and performance incentive plan for each of
the Corporation's executive officers, other than the Chief Executive
Officer ("CEO"), is developed and prepared by the Corporation's Human
Resources staff under the direction of the CEO and submitted for
consideration by the Committee. The Committee reviews and fixes the
CEO's compensation based on criteria similar to those considered for all
executives, as well as an assessment of his past and future
contributions in leading Armco toward its objectives of becoming the
leading, low-cost domestic producer of specialty steel and achieving
improved long-term financial and operating results.
Base Salary. Armco's base salary policy is designed to recognize
-----------
the sustained and cumulative efforts toward achieving the Corporation's
objectives that its executives have demonstrated. In aggregate, the
levels of base salary for 1996 were determined primarily by competitive
conditions but were fixed at levels that are below competitive amounts
paid to executives with comparable qualifications at a broad range of
industrial companies, as reported by Hay Management Consultants Salary
Surveys. In addition, the Committee considered specific steel industry
compensation survey data and fixed 1996 salaries at or about the twenty-
fifth percentile for steel companies. Each of the Named Executives
received increases in annual base salary from the prior year in
recognition of their performance and/or increased responsibilities
associated with their executive positions.
Short-Term Incentives. Short-term incentives are paid to
---------------------
recognize performance that is related to the achievement of key
financial and operating goals that have been established for a fiscal
year. These short-term incentives are set at or about the mid-
percentile ranges of short-term incentive bonuses paid to executives at
the steel companies surveyed by Armco. Since short-term incentives
generally reflect one-year contributions, the size of the payments may
vary considerably from year to year, depending on performance. At the
beginning of each year, performance goals for the purposes of
determining annual incentive compensation are established under the
Corporation's Annual Incentive Compensation Plan, approved by
shareholders in 1995. These goals are objective, measurable and to a
reasonable degree controllable by the respective executive. The
executives are paid an annual bonus based on achieving these annual
goals.
For 1996, the Committee approved specific operating income and
working capital goals for each operating unit based on its approved
annual operating plan. These financial goals provided 80% of the
executive's aggregate targeted incentive opportunity. In addition, the
Committee approved specific strategic and operating goals, including
both qualitative and quantitative measures, such as market share,
productivity initiatives, customer service, safety performance
improvements, sale of non-strategic businesses and certain other
discretionary objectives. Achievement of these goals provided the
remaining 20% of the executive's aggregate targeted incentive
opportunity. In the case of certain executives, including Named
Executives, minimum threshold financial objectives were established. If
said minimum thresholds were not met, no incentive was payable for 1996.
The total amount of each executive's targeted incentive opportunity is
based upon a percentage of base salary, which percentage is based on the
comparative compensation data
12
<PAGE>
described above. The actual incentive payment to an executive officer
for any year may exceed the targeted incentive opportunity for that year
if applicable performance targets are exceeded.
Long-Term Incentives. The Committee recognizes long-term
---------------------
incentive compensation as the key component of the total pay package
linking executive pay and corporate performance. At Armco, long-term
incentive compensation is intended to link the interests of its
executives with the interests of Armco's shareholders. The core of
Armco's long-term incentives was the comprehensive 1994-1996 long-term
incentive compensation program for senior management, including the
Named Executives, adopted in 1994, under which a substantial portion of
the executives' annual (short-term) incentive compensation is paid in
restricted stock and stock options. The purpose of the program is
threefold:
1) attract and retain top management;
2) provide senior management a meaningful financial
incentive to improve the Corporation's performance,
including some personal risk capital, the value of
which is tied to the market returns to Armco
shareholders; and
3) encourage the acquisition and retention of Armco stock
by Armco's senior management.
Under the program:
1. Restricted Stock Awards. In lieu of payment in cash, each
------------------------
program participant, including the Named Executives, is paid at
least 25% of the participant's annual (short-term) incentive
payment under the annual incentive payment plans approved by the
Board of Directors for 1994, 1995 and 1996 (payable in the first
quarters of 1995, 1996 and 1997) in restricted stock issued under
the Corporation's shareholder-approved stock plans. Each
participant may irrevocably elect at least six months in advance
to increase this percentage up to a maximum of 100% of the
incentive payment in the manner discussed below. Each of the
Named Executives irrevocably elected in April 1994 to receive 100%
of any incentive bonuses earned under such annual incentive
payment plan for 1995 and 1996 in restricted stock awards.
The number of shares of restricted stock that is awarded in
lieu of the portion of the incentive payment that is mandatorily
payable in restricted stock or that the participant elected at the
start of the program in April 1994 to receive in restricted stock
is determined using a discounted price of $3.50 per share, i.e.,
by dividing the aggregate amount of the incentive payment to be
made in restricted stock by $3.50. These shares of restricted
stock vest in 1997, 1998 and 1999. The number of shares of
restricted stock that is awarded in lieu of the portion of the
incentive payment that the participant elects after the start of
the program in April 1994 to receive in restricted stock is
determined using a discounted price equal to 70% of the average
price per share of common stock over the five trading days
preceding the incentive payment date. These shares of restricted
stock will vest 20% in the third year following the grant year,
30% in the fourth year following the grant year and 50% in the
fifth year following the grant year. If the recipient leaves
Armco before any of the shares of restricted stock are vested, the
recipient will receive in cash only the lesser of (a) the dollar
amount of the incentive payment that had been applied to the
shares, or (b) the value on the date of termination of the shares
awarded in lieu of such amount.
2. Stock Option Awards. At the time that shares of restricted
-------------------
stock are allocated on the incentive payment date in 1995, 1996,
and 1997, the recipients, including the Named Executives, also
receive an option, under the 1993 Long-Term Incentive Plan, to
purchase one share of common stock for each share of restricted
stock allocated. These stock options will have an exercise price
equal to 100% of the market value of the common stock on the date
of grant, and are not exercisable until the second anniversary of
the date of grant, at which time
13
<PAGE>
they will be fully exercisable. If the option holder leaves the
Corporation before his options are exercisable, those options
generally will lapse.
The only Named Executive to receive a bonus incentive for 1996 is
Mr. Corey, whose bonus is payable in restricted stock and options as
described in the Summary Compensation Table.
Chief Executive Officer's 1996 Compensation. As set forth in the
--------------------------------------------
Summary Compensation Table, Mr. Will's 1996 total base salary, bonus and
other compensation (excluding the restricted stock grant in 1996 and the
option grants) was $577,055. Mr. Will earned $559,167 in base salary
and $17,888 in all other compensation.
In determining Mr. Will's 1996 compensation, the Committee
considered the various factors applied to compensation of all executive
officers discussed above. On the basis of these factors, Mr. Will's
base salary for 1996 was increased by 6.6%. Mr. Will also had the
opportunity to earn an annual incentive bonus targeted at 60% of his
annual base salary, which is comparable to other steel companies
surveyed by Armco.
Although Armco's performance continues to improve, the minimum
threshold 1996 financial objectives set at the beginning of 1996 were
not met and therefore Mr. Will was not awarded a 1996 bonus award.
Deductibility of Compensation Under Section 162(m) of the Internal
-------------------------------------------------------------------
Revenue Code. The Committee acknowledges the potential impacts of
- -------------
Internal Revenue Code Section 162(m), which limits a publicly held
corporation's allowable deduction for a covered employee's applicable
employee remuneration at $1 million for a taxable year. To enable the
Corporation to better preserve the deductibility of the Corporation's
compensation expenses under Section 162(m), the Board of Directors
approved the Annual Incentive Compensation Plan and the shareholders
approved it at the April 28, 1995 meeting. The Incentive Plan was
designed to allow the Committee to make awards thereunder that will be
treated as performance-based compensation that is exempt from the
limitations of Section 162(m).
The foregoing report has been approved by
all members of the Committee.
Burnell R. Roberts, Chairman
John C. Haley
Bruce E. Robbins
John D. Turner
14
<PAGE>
Performance Graph
The following Performance Graph compares the five-year cumulative total
shareholder return (assuming reinvestment of dividends) of the common stock of
Armco Inc., the S&P 500 Composite Index and a defined peer group of specialty
steel companies comprised of J & L Specialty Steel and Lukens Inc. (the
"Specialty Steel Peer Group"). The Specialty Steel Peer Group previously
included Allegheny Ludlum Corporation. In August of 1996, Allegheny Ludlum
Corporation merged with Teledyne Inc. to form Allegheny Teledyne Inc.
Teledyne Inc. was a manufacturing company with interests primarily in
commercial and government related aviation and electronics, specialty metals
for commercial, industrial and aerospace applications and consumer products.
Due to the diversified nature of Allegheny Teledyne Inc. and the size of its
specialty flat-rolled steel sales relative to its total sales, specialty flat-
rolled steel is not considered to be its principal line of business.
Therefore, Allegheny Teledyne Inc. (Allegheny Ludlum Corporation) has been
removed from the Specialty Steel Peer Group for all years presented.
<TABLE>
[GRAPH APPEARS HERE]
Comparison of Cumulative Total Return
Among Armco Inc., S&P 500 Composite Index
and Specialty Steel Peer Group
<CAPTION>
Measurement period Armco S&P 500 Specialty Steel
(Fiscal year covered) Inc. Composite Index Peer Group
- --------------------- ----- --------------- --------------
<S> <C> <C> <C>
Measurement PT -
FYE 12/31/91 $100 $100 $100
FYE l2/31/92 $126 $108 $164
FYE 12/31/93 $114 $118 $145
FYE 12/31/94 $123 $120 $152
FYE 12/31/95 $109 $164 $150
FYE 12/31/96 $ 77 $202 $100
</TABLE>
15
<PAGE>
MISCELLANEOUS
Information on the Auditors
On the recommendation of the Audit Review Committee, the Board of
Directors has appointed Deloitte & Touche LLP to examine the financial
statements of the Corporation for the fiscal year ending December 31, 1997 and
to perform other appropriate accounting services.
Representatives of Deloitte & Touche LLP are expected to be present at
the Meeting and will be given the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
Stock Ownership
The following table sets forth information as to stock ownership of
directors and executive officers of Armco as of February 28, 1997.
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Name Owned (1)(4)
- -----------------------------------------------------------------------------
<S> <C>
John J. Burns, Jr. 35,395 (2)(3)
Paula H.J. Cholmondeley 1,355
John B. Corey 140,365
David A. Duke 4,643
John C. Haley 8,288
David G. Harmer 21,918
Gary R. Hildreth 221,701
Bruce E. Robbins 1,822
Burnell R. Roberts 13,072
Gary L. McDaniel 154,946
John D. Turner 6,821
James F. Will 961,910 (3)
All Directors and Executive Officers as a Group
(19 persons including those named above) 2,184,458
<FN>
(1) No director or executive officer beneficially owns more than
1% of the total shares of common stock. The shares that are
beneficially owned by all directors and executive officers as a group
constituted 2% of the total shares of common stock outstanding. No
director or executive officer owns any shares of $2.10 preferred stock,
$3.625 preferred stock or $4.50 Cumulative Convertible Preferred Stock.
Except as noted below, each director or executive officer has sole
voting power and sole investment power with respect to those shares
listed as beneficially owned by such director or executive officer.
(2) Mr. Burns disclaims beneficial ownership of 1,209 shares held
by his wife and 200 shares held by his wife as custodian for his
daughter.
(3) Mr. Burns and Mr. Will are directors, and Mr. Burns is
President and Chief Executive Officer, of Alleghany Corporation. As set
forth below in this section, "Stock Ownership", Alleghany Corporation
beneficially owned 5,643,355 shares of common stock as of December 31,
1996. Mr. Burns and Mr. Will disclaim beneficial ownership of such
shares.
16
<PAGE>
(4) For the executive officers and directors indicated, the
shares shown as beneficially owned include the number of shares such
persons had the right to acquire within 60 days after February 28, 1997,
pursuant to employee options granted by the Corporation: Mr. Will -
215,338 shares, Mr. Cory - 42,976 shares, Mr. Harmer - no shares, Mr.
Hildreth - 73,271 shares, Mr. McDaniel - 45,334 shares, and all
directors and executive officers as a group - 552,734 shares. The
shares shown also include any shares allocated as of such date to the
person's accounts under the Armco Inc. Retirement and Savings Plan. The
numbers of shares beneficially owned under this plan, in the aggregate,
for the persons indicated are as follows: Mr. Will - 147,755 shares,
Mr. Corey - 826, Mr. Harmer - 15,917 shares, Mr. Hildreth - 13,708
shares, Mr. McDaniel - 1,869 shares and all directors and executive
officers as a group - 196,681 shares. The numbers of restricted shares
owned subject to restrictions under Armco's long-term incentive plans
for the persons indicated are as follows: Mr. Will - 381,267 shares,
Mr. Corey - 137,087, Mr. Harmer - no shares, Mr. Hildreth - 121,972
shares, Mr. McDaniel - 107,716 shares and all directors and executive
officers as a group - 1,048,026 shares. The executive officers have no
voting, dividend or any other rights with respect to shares subject to
options under stock option plans until the options are exercised.
Subject to the restrictions under Armco's long-term incentive plans, the
recipients have all rights of a shareholder with respect to the
restricted shares awarded thereunder, including the right to vote and
receive all dividends and other distributions paid or made with respect
thereto. The shares shown as beneficially owned by certain of the
directors of the Corporation also include shares that would be received
under outstanding common stock units under the Directors Stock Plan upon
retirement: Mr. Burns - 7,288; Ms. Cholmondeley - 1,155; Mr. Haley -
7,288; Mr. Robbins - 1,822; and Mr. Roberts - 1,822.
</TABLE>
The following table lists the beneficial ownership of common stock and
$3.625 preferred stock with respect to all persons known by the Corporation to
be the "beneficial owners" (as defined in Securities and Exchange Commission
Rule 13d-3) of more than 5% of any such class. Except as indicated, the
information is as of December 31, 1996, and is based on reports filed with the
Securities and Exchange Commission. The percentage of the outstanding shares
of each class owned by each such person or entity is based on the outstanding
shares of such class as of December 31, 1996.
<TABLE>
<CAPTION>
Title of Name and Address Number of Shares % of Outstanding
Class of Beneficial Owner Beneficially Owned Shares of Class
- --------- ------------------- ------------------ ----------------
<S> <C> <C> <C>
Common Alleghany Corporation
Park Avenue Plaza
New York, NY 10055 5,643,355 (1) 5.30%
Common FMR Corp.
82 Devonshire Street
Boston, MA 02109 8,487,251 (2) 7.97%
Common Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479 7,409,188 (3) 6.96%
Common Sasco Capital, Inc.
10 Sasco Hill Road
Fairfield, CT 06430 8,218,100 (4) 7.72%
Common State of Wisconsin
Investment Board
P. O. Box 7842
Madison, WI 53707 10,597,700 (5) 9.95%
17
<PAGE>
<CAPTION>
Title of Name and Address Number of Shares % of Outstanding
Class of Beneficial Owner Beneficially Owned Shares of Class
- --------- ------------------- ------------------ ----------------
<S> <C> <C> <C>
Common T. Rowe Price
Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202 5,381,215 (6) 5.05%
$3.625 FMR Corp.
Preferred 82 Devonshire Street
Boston, MA 02109 730,800 (2) 16.62%
$3.625 Reliance Financial
Preferred Services Corporation
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055 390,000 (7) 8.87%
$3.625 Ryback Management Corporation
Preferred 7711 Carondelet Avenue, Suite 700
(Clayton)
St. Louis, MO 63105 271,900 (8) 6.18%
<FN>
- --------------------
(1) The reported beneficial ownership is as of December 31, 1996. The
beneficial owner reported that it had sole voting and investment power as
to 946,667 shares, shared voting power as to 4,696,688 shares.
(2) The reported beneficial ownership is indirectly through FMR Corp.'s
wholly owned investment adviser, Fidelity Management & Research Company
("Fidelity"), as to 7,803,539 shares owned by investment companies advised
by Fidelity. The number of shares of common stock owned by the investment
companies included 4,510,734 shares of common stock issuable upon the
conversion of 665,300 shares of the $3.625 preferred stock. The
beneficial owner and Mr. Edward C. Johnson 3rd, Chairman of FMR Corp.,
each has sole power to dispose of the 7,803,539 shares owned by the
Fidelity Funds. Neither Mr. Johnson nor FMR has the sole power to vote or
direct the voting of the shares owned directly by the Fidelity Funds.
Through FMR Corp.'s wholly owned bank subsidiary, Fidelity Management
Trust Company ("Fidelity Trust"), as to 683,712 shares owned by
institutional accounts for which Fidelity Trust acts as investment
manager, including 444,090 shares of common stock issuable upon the
conversion of 65,500 shares of the $3.625 preferred stock. The beneficial
owner reported that as to the common shares owned by Fidelity Trust, each
of it and Mr. Johnson has sole dispositive power over 683,712 shares and
sole power to vote or to direct the voting of 514,576 shares and no power
to vote or to direct the voting of 196,136 shares.
(3) The reported beneficial ownership is indirectly through Norwest
Corporation's subsidiaries, Norwest Colorado, Inc. and Norwest Bank
Colorado, N.A. (collectively with Norwest Corporation, "Norwest"). The
shares of common stock reported as beneficially owned include shares
issuable upon conversion of 2,032 shares of $2.10 preferred stock
beneficially owned and 2,712 shares issuable upon conversion of $3.625
preferred stock. Norwest reported that it had sole voting power as to
6,516,988 shares, shared voting power as to 2,000 shares, sole investment
power as to 7,403,076 shares and no shared investment power.
(4) The beneficial owner reported that it has sole voting power of
4,479,300 shares, no shared voting power and sole dispositive power of
8,218,100 shares.
18
<PAGE>
(5) The beneficial owner reported that it had sole voting and
dispositive power as to all of the shares beneficially owned.
(6) Disclosed to the Corporation as owned of record by a subsidiary,
T. Rowe Price Trust Company, Inc. (the "Trust Company"), as trustee of the
trust for some of the Corporation's benefit plans, including the Armco
Inc. Retirement and Savings Plan and the Armco Inc. Thrift Plan for Hourly
Employees, and the Trust Company's nominees. The Corporation believes
that for purposes of the reporting requirements of the Securities Exchange
Act of 1934, both T. Rowe Price Associates, Inc. and the Trust Company are
deemed to be beneficial owners of the reported securities, however, T.
Rowe Price Associates, Inc. and the Trust Company expressly disclaim that
they are, in fact, beneficial owners of such securities.
(7) The beneficial owner reported that as of December 31, 1996, it had
sole voting and investment power as to all of the shares beneficially
owned.
(8) The beneficial owner reported that it had sole power to vote and
sole power to dispose of such shares.
</TABLE>
Shareholder Proposals
Any proposals of shareholders intended to be presented at the 1998 annual
meeting must be received by the Corporation by November 17, 1997, in order to
be considered for inclusion in the proxy statement and form of proxy for that
meeting. In addition, as set forth above under ''ELECTION OF DIRECTORS --
Board of Directors and Committees of the Board", shareholders intending to
nominate director candidates for election at the 1998 annual meeting must
deliver written notice, including specified information, to the Secretary of
Armco at its address set forth on the first page of this proxy statement by
January 26, 1998.
Proxy Solicitation
The cost of soliciting proxies from the shareholders of the Corporation
will be borne by the Corporation. Proxies may be solicited by mail, personal
interviews, telephone and telegraph. It is anticipated that banks, brokerage
houses and other custodians, nominees or fiduciaries will be requested to
forward soliciting material to their principals and to obtain authorization
for the execution of proxies and will be reimbursed for their charges and
expenses incurred in connection therewith.
The Corporation has retained Georgeson & Company Inc., Wall Street Plaza,
New York, New York 10005, to assist in the solicitation of proxies by such
methods. Georgeson & Company Inc. will receive for such services a fee of
$10,000 plus out-of-pocket expenses and disbursements. Certain directors,
officers and regular employees of the Corporation may also solicit proxies by
such methods without additional remuneration therefor.
By Order of the Board of Directors
GARY R. HILDRETH, Secretary
March 14, 1997
19
<PAGE>
RIVERS CLUB
One Oxford Centre Admission Ticket
301 Grant Street Retain for Admittance
Pittsburgh, PA 15219
(412) 391-5227
FROM PITTSBURGH INTERNATIONAL AIRPORT:
Leaving the airport, follow Route 60 East to Pittsburgh. Take Parkway (376
East) following "Pittsburgh" signs to AND through the Ft. Pitt Tunnel. (Stay
in right lane.) Cross the Bridge bearing right, follow the Monroeville Exit.
Move to left lane to take the Grant Street Exit. Proceed on Grant Street to
3rd light, make a left turn onto 3rd Avenue. After proceeding through the
Stop sign make a right turn into the Oxford Centre Garage.
FROM MONROEVILLE:
Take Parkway (376 West) following "Pittsburgh" signs. Nearing Downtown, watch
for Grant Street Exit. Exit will be from the left lane of the Parkway. Take
Grant Street to the 3rd light. Make a left turn onto 3rd Avenue. After
proceeding through the Stop sign make a right turn into the Oxford Centre
Garage.
FROM NORTH:
Take 279 South following
"Pittsburgh" signs. As
you approach the city,
follow signs for 579
(Veterans Bridge) to
downtown. Exit at 6th
Avenue. Make a right
turn at the light. Go to
second light (William
Penn Highway), make a
left turn. This street
will become Cherry Way
after 2 blocks. After 4
lights, One Oxford Centre
Garage is on your right.
FROM SOUTH:
(From the Intersection of West
Liberty Avenue [Route 19] and
Saw Mill Run Boulevard [Route
51] the south end of the
Liberty Tunnels.) Go through
the Liberty Tunnels staying in
the right lane. Cross the
Liberty Bridge bearing right [MAP OF DOWNTOWN PITTSBURGH
going up the ramp staying to APPEARS HERE]
the left of the stop sign.
Make the left onto the
Boulevard of the Allies
staying in the right lane. Go
through the light switching to
the right lane (watching for
traffic coming up on your
right). At the 3rd light make
a right onto Smithfield
Street. At the light make a
right onto 3rd Avenue. One
Oxford Centre's Garage is on
the left.
FINDING THE CLUB:
(From the Garage)
The entrance to the Rivers Club is on the 4th level of the Oxford Centre
Parking Garage. As you enter from the garage on level 4 a door marked Rivers
Club will be on your right. Go through that door and a Brass elevator will be
on your right. You will be in a marble lobby. Take the elevator to level 3
(dining) on the button.
(From Oxford Centre)
Take the glass elevator to level 4. Follow the Rivers Club signs down the
Hallway through the double doors into the marble lobby. Take the Brass
elevator to level 3 (dining).
ARMCO INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 25, 1997
The undersigned hereby appoints James F Will, John C. Haley and Gary R.
Hildreth, and each or any of them, proxies, with full power of substitution,
to represent and to vote all shares of common stock and/or preferred stock of
Armco Inc. held of record by the undersigned on February 28, 1997, at the
annual meeting of shareholders to be held on April 25, 1997, and at any
adjournment thereof, notice of which meeting together with the related proxy
statement has been received. The proxies are directed to vote the shares the
undersigned would be entitled to vote if personally present.
Item 1 Authority to vote for the FOR [ ] WITHHOLD [ ]
- ----- election of directors: All nominees Authority to vote
listed (except
as marked to
the contrary below)
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in
the list below:
1. Paula H.J. Cholmondeley 4. John C. Haley 7. John D. Turner
2. David A. Duke 5. Bruce E. Robbins 8. James F. Will
3. Dorothea C. Gilliam 6. Burnell R. Roberts
Item 2 To transact such other business as may be properly brought before
- ------ the meeting.
(CONTINUED ON REVERSE SIDE)
<PAGE>
ARMCO INC.
One Oxford Centre
301 Grant Street
Pittsburgh, PA 15219-1415
The Annual Meeting of Shareholders will be held at the Rivers Club located at
One Oxford Centre, 301 Grant Street, Pittsburgh, Pennsylvania, on Friday,
April 26, 1996, at 10:00 a.m. The enclosed Notice of Meeting and Proxy
Statement contains additional information about the meeting.
INSTRUCTIONS
------------
1. Review and complete the Proxy Card; be sure to SIGN the card.
2. Detach and return the SIGNED Proxy Card in the enclosed return
envelope.
IMPORTANT
---------
YOU ARE URGED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY TO
ENSURE A PROPER REPRESENTATION AT THIS MEETING.
FOLD AND DETACH HERE
Please vote on the reverse side hereof, date and sign below and return this
proxy form promptly in the enclosed envelope. If you attend the meeting and
wish to change your vote, you may do so automatically by casting your vote at
the meeting.
THIS PROXY FORM, WHEN PROPERLY EXECUTED, WILL BE VOTED AND WILL BE VOTED IN
ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE SHAREHOLDER. IF NO DIRECTIONS ARE
GIVEN HEREON, THE PROXY FORM WILL BE VOTED FOR THE ELECTION OF DIRECTORS.
THIS PROXY DELEGATES DISCRETIONARY AUTHORITY WITH RESPECT TO ANY OTHER MATTERS
WHICH MAY COME BEFORE THE MEETING.
Dated , 1997
--------------------------
--------------------------------------
SIGNATURE
--------------------------------------
SIGNATURE IF SHARES HELD JOINTLY
Please sign exactly as name appears
opposite. Executors, trustees, and
administrators and other fiduciaries should
so indicate.
