<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CLEVELAND-CLIFFS INC
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
JOHN E. LENHARD, SECRETARY AND ASSISTANT GENERAL COUNSEL
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
/ / 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:
Not Applicable
(2) Form, schedule or registration statement no.:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date filed:
Not Applicable
<PAGE> 2
[Insert Cleveland-Cliffs Logo]
March 25, 1994
To the Shareholders of
CLEVELAND-CLIFFS INC
Your Board of Directors and management hereby inform you that the Annual
Meeting of Shareholders of Cleveland-Cliffs Inc will be held at the Stouffer
Tower City Plaza Hotel, 24 Public Square, Cleveland, Ohio 44113 on Tuesday, May
10, 1994 at 9:00 A.M. (Cleveland time).
At the meeting, shareholders will act upon the election of Directors and a
proposal to ratify the appointment of Ernst & Young as independent public
accountants. An explanation of each of these matters is contained in the
attached Proxy Statement.
The Board of Directors and management believe that the proposed actions are
in the best interests of your Company. Whether or not you expect to be present
at the Annual Meeting, we urge you to exercise your voting right by signing and
dating the enclosed proxy card and returning it in the accompanying envelope to
ensure that your shares will be represented. Please note that failure to vote
surrenders voting power to those who exercise their voting right. If you attend,
you will be entitled to vote in person.
We look forward to meeting with shareholders at the Annual Meeting.
Sincerely,
/s/ M. Thomas Moore
M. THOMAS MOORE
Chairman and Chief Executive Officer
***************************************************************************
* IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
* WHETHER OR NOT YOU INTEND TO BE PRESENT, PLEASE SIGN AND DATE THE *
* ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PREPAID *
* ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. *
***************************************************************************
<PAGE> 3
[Insert Cleveland-Cliffs Logo]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 25, 1994
Dear Shareholder:
The Annual Meeting of Shareholders of Cleveland-Cliffs Inc, an Ohio
corporation ("Company"), will be held at the Stouffer Tower City Plaza Hotel, 24
Public Square, Cleveland, Ohio 44113 on Tuesday, May 10, 1994 at 9:00 A.M.
(Cleveland time) for the purpose of considering and acting upon:
1. A proposal to elect 12 Directors to hold office until the next
Annual Meeting of Shareholders and until their successors are
elected;
2. A proposal to ratify the appointment of Ernst & Young as the firm
of independent public accountants to examine the financial
statements of the Company and its consolidated affiliates for the
year 1994; and
3. Such other matters as may properly come before the Annual Meeting
and any adjournment or adjournments thereof.
Shareholders of record at the close of business on March 14, 1994, are
entitled to notice of and to vote at such meeting and any adjournment or
adjournments thereof.
Very truly yours,
/s/ John E. Lenhard
John E. Lenhard, Secretary
***************************************************************************
* IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. *
* WHETHER OR NOT YOU INTEND TO BE PRESENT, PLEASE SIGN AND DATE THE *
* ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PREPAID *
* ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. *
***************************************************************************
<PAGE> 4
[Insert Cleveland-Cliffs Logo]
------------------------------
PROXY STATEMENT
------------------------------
MARCH 25, 1994
SOLICITATION, USE AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of
Cleveland-Cliffs Inc, an Ohio corporation ("Company"), for use at the Annual
Meeting of Shareholders to be held on May 10, 1994, and any adjournment or
adjournments thereof ("Meeting"). Any proxy may be revoked by a later proxy, by
notice to the Company in writing or in open meeting, without affecting any vote
previously taken.
OUTSTANDING SHARES AND VOTING RIGHTS
As of March 14, 1994, the record date for the determination of persons
entitled to vote at the Meeting, there were 12,079,085 of the Company's Common
Shares, par value $1.00 per share ("Common Shares"), outstanding. Each Common
Share is entitled to one vote. This Proxy Statement and accompanying proxy card
are being first mailed or otherwise distributed to shareholders on or about
March 25, 1994.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
It is intended that proxies received will be voted, unless contrary
instructions are given, to elect the 12 nominees named in the following table to
serve until the next Annual Meeting of Shareholders and until their successors
shall be elected.
Should any nominee decline or be unable to accept such nomination to serve
as Director, an event which the Company does not currently anticipate, the
persons named as proxies reserve the right, in their discretion, to vote for a
lesser number or for substitute nominees designated by the Directors, to the
extent consistent with the Company's Regulations.
<PAGE> 5
INFORMATION CONCERNING DIRECTORS AND NOMINEES
Based upon information received from the respective Directors as of
February 28, 1994 (except as otherwise indicated), the following information is
furnished with respect to each person nominated for election as a Director.
<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPAL OCCUPATION AND FIRST BECAME
EMPLOYMENT DURING PAST FIVE YEARS DIRECTOR
-------------------------------------- ------------
<S> <C>
ROBERT S. COLMAN, 52, Founder and Partner since February, 1991 of Colman, Furlong 1991
& Co., a private merchant banking firm; previously Mr. Colman formed R. S.
Colman Company, also a merchant banking firm; from September, 1978 through
December, 1988, Mr. Colman was founding partner of Robertson, Colman &
Stephens, an investment banking firm. Mr. Colman is a Director of HealthCare
COMPARE Corp. and New Image Industries, Inc.
JAMES D. IRELAND III, 44, Managing Director since January 1, 1993 of Capital One 1986
Partners, Inc., a private merchant banking firm; Mr. Ireland is also
President since before 1989 of Briseis Capital Corporation a private
merchant banking firm. Mr. Ireland is a Director of Sun Coast Industries,
Inc.
G. FRANK JOKLIK, 65, Retired in June, 1993. Former President and Chief Executive 1994
Officer since before 1989 of Kennecott Corporation, an international mining
company. Mr. Joklik is a Director of First Security Corporation and U.S.
Borax Inc. Mr. Joklik is also Chairman of the Salt Lake City Bid Committee
for 2002 Olympic Winter Games.
E. BRADLEY JONES, 66, Retired. Former Chairman and Chief Executive Officer from 1985
July 1, 1982 through December 31, 1984 of LTV Steel Company, a major steel
manufacturer. During the same period, Mr. Jones was a Group Vice President
and Director of The LTV Corporation, a diversified manufacturer of steel,
aerospace and defense products. Mr. Jones is a Director of Birmingham Steel
Corporation, Consolidated Rail Corporation, Hyster-Yale Materials Handling,
Inc., NACCO Industries, Inc., RPM, Inc. and TRW Inc. Mr. Jones is also a
trustee of Fidelity Funds and First Union Real Estate Equity and Mortgage
Investments.
LESLIE L. KANUK, 64, Professor of Marketing since before 1989 at Baruch College, 1991
City University of New York. Dr. Kanuk is former Chairman of the Federal
Maritime Commission and Director (and former Chairman) of the
Containerization and Intermodal Institute, a U.S.-based forum for
international transportation issues. Other Board memberships include the
Board of Visitors, Maine Maritime Academy; Board of Trustees, United
Seamen's Service; Board of Advisors, Center for Management Research/Baruch
College; and (formerly) the Maritime Transportation Research Board of the
National Academy of Sciences.
GILBERT H. LAMPHERE, 41, Co-Chairman and Chief Executive Officer since November, 1991
1991, of The Noel Group, Inc., a diversified holding company; Mr. Lamphere
is also Chairman and Chief Executive Officer since January, 1990 and
President since November, 1989 of The Prospect Group, Inc., a diversified
holding company. Since before 1989 until November, 1989, Mr. Lamphere was
Chairman of the Executive Committee of The Prospect Group, Inc. Mr. Lamphere
is a Director of The Noel Group, Inc., The Prospect Group, Inc., Recognition
International Inc., Global Natural Resources Inc., Sylvan Foods Holdings,
Inc., Illinois Central Corporation, Illinois Central Railroad Company, R.P.
Scherer Corporation, Children's Discovery Centers of America, Inc., Lincoln
Snacks Company, Belding Heminway Company, Inc. and Simmons Outdoor
Corporation.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPAL OCCUPATION AND FIRST BECAME
EMPLOYMENT DURING PAST FIVE YEARS DIRECTOR
-------------------------------------- ------------
<S> <C>
M. THOMAS MOORE, 59, Chairman and Chief Executive Officer of the Company since 1986
May 10, 1988, and President and Chief Executive Officer since January 1,
1987. Mr. Moore is a Director of KeyCorp, Capitol American Financial
Corporation and The LTV Corporation. Mr. Moore is also a Director and member
of the executive committees of the American Iron and Steel Institute, the
American Iron Ore Association and the American Mining Congress.
STEPHEN B. ORESMAN, 61, President, since January, 1991, of Saltash, Ltd., 1991
management consultants; from September, 1988 through December, 1990, Mr.
Oresman served as Vice President of The Canaan Group, Ltd., management
consultants; from September, 1987 through September, 1988, Mr. Oresman
served as a Managing Director of Golenberg Associates, investment bankers;
and from May, 1986 through September, 1987, Mr. Oresman served as President
of the Diversified Agency Services Group of Omnicom and its predecessor,
BBDO, advertising groups. Prior to May, 1986, Mr. Oresman was with
Booz-Allen & Hamilton, Inc., management consultants, for 19 years where he
was Senior Vice President and Chairman of Booz-Allen & Hamilton
International. Mr. Oresman is a Director of Grossman's, Inc., Technology
Solutions Company, TriNet Corporate Realty Trust Inc. and Osiris
Therapeutics Inc.
ALAN SCHWARTZ, 53, Professor of Law at the Yale Law School and Professor at the 1991
Yale School of Organization and Management since before 1989. Mr. Schwartz
was a Resident Professor at the California Institute of Technology since
before 1987 through July 1987.
SAMUEL K. SCOVIL, 70, Retired. Former Chairman and Chief Executive Officer of the 1973
Company since before 1989. Mr. Scovil is a Director of Holnam Inc.
JEPTHA H. WADE, 69, Retired. Former partner in the law firm of Choate, Hall & 1957
Stewart since before 1989; from January 1, 1988 through December 31, 1989,
Mr. Wade was of counsel to that law firm. Mr. Wade is a trustee of the State
Street Research and Met-Life State Street Mutual Funds.
ALTON W. WHITEHOUSE, 66, Retired. Former Chairman and Chief Executive Officer 1972
since before 1989 of The Standard Oil Company (Ohio), an integrated
petroleum company. Mr. Whitehouse is a Director of The Timken Company.
</TABLE>
Mr. E. Mandell de Windt, currently a Director of the Company, reached
normal retirement age on March 31, 1993, and has not been nominated for
re-election as a Director.
THE DIRECTORS RECOMMEND A VOTE FOR EACH OF THE NOMINEES LISTED ABOVE.
BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board of Directors have diversified professional experience in general
management, mining, finance, law, education, and other fields. There is no
family relationship among any of the nominees and executive officers of the
Company. Ten of the twelve nominees have no present or former employment
relationship with the Company. None of the nominees have any business
relationship with the Company. All members of the Audit and Compensation and
Organization Committees are independent Directors. A majority of the members of
each other committee are independent Directors. The average age of the nominees
is 59, ranging from 41 to 70. The average service of the Directors is 9 years,
ranging from less than one year to 36 years.
During 1993, ten regularly scheduled and special meetings of the Board of
Directors were held and twenty meetings of all standing Board committees were
held. Directors also discharge their responsibilities by
3
<PAGE> 7
review of Company reports to Directors, visits to Company facilities,
correspondence with the Chairman, and telephone conferences with the Chairman,
Directors, and others regarding matters of interest and concern to the Company.
The Board of Directors have active Executive, Audit, Compensation and
Organization, Finance, Long Range Planning, and Public Affairs Committees. All
committees regularly report their activities, actions, and recommendations to
the Board. Four Directors attended 100 percent of the meetings of the Company's
Board of Directors and Board Committees of which they were a member, four
Directors attended over 90 percent of such meetings, two Directors attended over
80 percent of such meetings, and Mr. Oresman, due to surgery during the year,
and Mr. de Windt each attended under 75 percent of such meetings.
The Executive Committee consists of Messrs. Colman, Ireland, Jones,
Lamphere, Moore, Scovil and Wade and Mr. Moore serves as Chairman. This
Committee normally meets only when action is required before a regular Board
meeting. It is empowered to act for the full Board of Directors on all matters,
except it has no authority to fill vacancies among Directors or in any Committee
of Directors, change officers of the Company, or declare dividends. Its members
include the chairmen of the other standing committees. The Committee held no
meetings during 1993.
The Audit Committee consists of Dr. Kanuk and Messrs. Oresman, Schwartz and
Wade and Mr. Wade serves as Chairman. The Committee reviews with the Company's
management, the internal auditors and the independent public accountants, the
Company's policies and procedures with respect to internal control; reviews
significant accounting matters; approves the audited financial statements prior
to public distribution; approves any significant changes in the Company's
accounting principles or financial reporting practices; reviews independent
public accounting services; and recommends to the Board of Directors the firm of
independent public accountants to examine the Company's financial statements.
The Committee held three meetings during 1993.
The Compensation and Organization Committee consists of Messrs. Colman, de
Windt, Ireland, Jones and Lamphere and Mr. Jones serves as Chairman. The
Committee recommends to the Board of Directors the officers, director nominees,
and compensation of officers and directors; administers the Company's
compensation plans for officers and directors; reviews various matters relating
to organization and compensation; and obtains the advice of outside experts with
regard to compensation matters. Shareholders wishing to nominate director
candidates for consideration by the Committee can do so by writing to the
Secretary of the Company, giving the candidate's name, appropriate biographical
data and qualifications. The Committee held eight meetings during 1993.
The Finance Committee consists of Messrs. Ireland, Jones, Lamphere and
Whitehouse and Mr. Ireland serves as Chairman. The Committee reviews the
Company's financial condition, financial policies, investment plans and benefit
funds management. The Committee recommends dividend and other actions to the
Board of Directors. The Committee held three meetings during 1993.
The Long Range Planning Committee consists of the full Board of Directors
and Mr. Moore serves as Chairman. The Committee facilitates informed decisions
by the Board through comprehensive review of business strategy and other
subjects. The Committee held four meetings during 1993.
The Public Affairs Committee consists of Messrs. Oresman, Schwartz, Scovil
and Whitehouse and Mr. Scovil serves as Chairman. The Committee reviews the
Company's programs in regard to public policy matters. The Committee held two
meetings during 1993.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company receive an annual retainer
of $18,000 and a fee of $750 for each Board of Directors' meeting and for each
Board committee meeting attended, together with certain insurance benefits. The
Chairmen of the Audit, Compensation and Organization, Finance, and Public
Affairs Committees each receive an annual retainer of $2,500. Under the
Company's 1992 Incentive Equity Plan, non-employee Directors receive an option
to purchase 500 Common Shares of the Company when such person first becomes a
non-employee Director, and receive an additional option to purchase 500 Common
Shares immediately after each annual meeting thereafter for so long as such
person continues to be a non-employee Director. In order to attract and retain
qualified Directors, the Company has had a Retirement Plan
4
<PAGE> 8
for Non-Employee Directors since 1984. Upon completing five years of active
service as a member of the Board of Directors, or upon a "change of control", a
non-employee Director is eligible to participate in such plan. Pursuant to such
plan, the participant receives during his or her lifetime the annual retainer
paid to all non-employee Directors, reduced for service of less than five years
in the event of a change of control, subsequent to such participant's retirement
from the Board of Directors. During 1981, the Company established a Plan for
Deferred Payment of Directors' Fees pursuant to which any Director may elect to
defer payment of all or a portion of compensation earned as a Director. At the
election of the Director, compensation deferred is payable in a lump sum or
installments over a period of not more than ten years, and the payment may
commence in the calendar year following either the year in which the Director
ceases to serve as a Director or the year in which the Director attains his or
her sixty-fifth birthday. The Company has entered into trust agreements with
Society National Bank relating to the Retirement Plan for Non-Employee Directors
and the Plan for Deferred Payment of Directors' Fees in order to establish
arrangements for the funding and payment of the Company's obligations to
beneficiaries under such Plans.
In addition to the annual retainer and meeting fees to which Mr. Scovil is
entitled, he received in 1993 $20,000 for consulting and advisory services. From
January 1, 1994 through December 31, 1996, Mr. Scovil will receive $20,000 per
year for consulting and advisory services.
SECURITIES OWNERSHIP OF MANAGEMENT AND CERTAIN OTHER PERSONS
The following table sets forth the amount and percent of Common Shares
which, as of February 28, 1994 (except as otherwise indicated), are deemed under
the rules of the Securities and Exchange Commission ("SEC") to be "beneficially
owned" by each Director, excluding the Chief Executive Officer, by the five most
highly compensated executive officers, by such persons and the other executive
officers as a group, and by any person or "group" (as that term is used in the
Securities Exchange Act of 1934) known to the Company as of that date to be a
"beneficial owner" of more than 5% of the outstanding Common Shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF "BENEFICIAL OWNERSHIP"(1)
DIRECTORS (EXCLUDING ---------------------------------------------------------------------------
DIRECTOR AND INVESTMENT POWER VOTING POWER
CHIEF EXECUTIVE OFFICER BENEFICIAL ------------------- ------------------- PERCENT OF
M.T. MOORE) OWNERSHIP(2) SOLE SHARED SOLE SHARED CLASS(3)
- ---------------------------- ------------ ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Colman............ 1,155 1,155 -0- 1,155 -0- --
E. Mandell de Windt......... 1,500 1,500 -0- 1,500 -0- --
James D. Ireland III........ 269,142 2,500 266,642(4) 2,500 266,642(4) 2.23%
G. Frank Joklik............. -0- -0- -0- -0- -0- --
E. Bradley Jones............ 1,500 1,500 -0- 1,500 -0- --
Leslie L. Kanuk............. 1,155 1,155 -0- 1,155 -0- --
Gilbert H. Lamphere......... 1,155 1,155 -0- 1,155 -0- --
Stephen B. Oresman.......... 1,155 1,155 -0- 1,155 -0- --
Alan Schwartz............... 1,155 1,155 -0- 1,155 -0- --
Samuel K. Scovil............ 15,598 15,598 -0- 15,598 -0- --
Jeptha H. Wade.............. 6,000 6,000 -0- 6,000 -0- --
Alton W. Whitehouse......... 1,400 1,400 -0- 1,400 -0- --
</TABLE>
<TABLE>
<CAPTION>
NAMED EXECUTIVE OFFICERS
- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
M. Thomas Moore............. 52,000 52,000 -0- 52,000 -0- --
William R. Calfee........... 19,910 19,905 5 19,905 5 --
Frank S. Forsythe........... 10,915 8,408 2,507 8,408 2,507 --
John S. Brinzo.............. 27,818 18,957 8,861 18,957 8,861 --
Thomas J. O'Neil............ 2,000 2,000 -0- 2,000 -0- --
All Directors and Executive
Officers as a Group
(18 Persons).............. 426,729 148,714 278,015 148,714 278,015 3.53%
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF "BENEFICIAL OWNERSHIP"(1)
-----------------------------------------------------------------------------------
INVESTMENT POWER VOTING POWER
BENEFICIAL ----------------------- ----------------------- PERCENT OF
OTHER PERSONS OWNERSHIP(2) SOLE SHARED SOLE SHARED CLASS(3)
- ------------------------------------ ------------ --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Harris Associates L.P. (5)
2 North LaSalle Street, Suite 500
Chicago, IL 60602................. 1,186,383 1,153,783 32,600 -0- -0- 9.83%
Merrill Lynch & Co., Inc. (6)
800 Scudders Mill Road
Princeton, NJ 08543............... 1,063,125 -0- 1,063,125 -0- 1,063,125 8.80%
Neuberger & Berman (7)
605 Third Avenue
New York, NY 10158................ 897,900 -0- 897,900 702,500 192,300 7.47%
</TABLE>
- ---------------
(1) Under the rules of the SEC, "beneficial ownership" includes having or
sharing with others the power to vote or direct the investment of
securities. Accordingly, a person having or sharing the power to vote or
direct the investment of securities is deemed to "beneficially own" the
securities even if he has no right to receive any part of the dividends on
or the proceeds from the sale of the securities. Also, because "beneficial
ownership" extends to persons, such as co-trustees under a trust, who share
power to vote or control the disposition of the securities, the very same
securities may be deemed "beneficially owned" by two or more persons shown
in the table. Information with respect to "beneficial ownership" shown in
the tables above is based upon information supplied by the Directors and
executive officers of the Company and filings made with the SEC or furnished
to the Company by any shareholder.
(2) Included in the shares shown are Common Shares subject to options granted by
the Company which entitle the holder to acquire said shares within 60 days
from February 28, 1994. Except for Mr. Moore, Mr. Scovil and Mr. Joklik,
each of the Directors has such options with respect to 1,000 Common Shares;
each of the executive officers named in the table has such options as
follows: Mr. Moore, 15,032 Common Shares; Mr. Calfee, 4,375 Common Shares;
Mr. Forsythe, 4,250 Common Shares; Mr. Brinzo, 8,000 Common Shares; and Mr.
O'Neil, -0-Common Shares; and the Directors and executive officers as a
group have such options with respect to 44,157 Common Shares.
(3) Less than 1%, except as otherwise indicated.
(4) Of the 269,142 shares deemed under the rules of the SEC to be beneficially
owned by Mr. Ireland, he is a record holder of 2,500 shares. The remaining
266,642 shares are held in trusts, substantially for the benefit of a
charitable foundation, as to which Mr. Ireland is a co-trustee with shared
voting and investment powers. Of such shares in trusts, Mr. Ireland has an
interest in the income or corpus with respect to 18,474 shares.
(5) The information shown above was taken from the Amendment No. 3 to Schedule
13G dated February 11, 1994, as filed by Harris Associates L.P. and Harris
Associates, Inc., the sole General Partner of Harris Associates L.P., with
the SEC.
(6) The information shown above was taken from the Schedule 13G dated February
14, 1994, as filed by Merrill Lynch & Co., Inc., Merrill Lynch Group, Inc.,
Princeton Services, Inc., Merrill Lynch Asset Management, L.P. and Merrill
Lynch Capital Fund, Inc. with the SEC.
(7) The information shown above was taken from the Schedule 13G dated January
31, 1994, as filed by Neuberger & Berman with the SEC.
6
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth all compensation provided to the Company's
five most highly compensated executive officers during or with respect to the
year shown for services rendered to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------------------
AWARDS
ANNUAL COMPENSATION -------------------------
----------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING
NAME AND SALARY BONUS COMPENSATION(1) AWARDS(3) OPTIONS
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#)
- --------------------------------- ---- -------- -------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
M. Thomas Moore 1993 $422,500 $175,000 -- $109,442(4) -0-
(Chairman and Chief Executive 1992 395,000 150,000 -- -0- -0-
Officer) 1991 395,000 225,000 -- 52,930(5) -0-
William R. Calfee 1993 250,000 60,000 -- 48,514(4) -0-
(Senior Executive-Commercial) 1992 239,000 60,000 -- -0- -0-
1991 239,000 100,000 -- 34,011(5) -0-
Frank S. Forsythe 1993 235,000 60,000 -- 28,607(4) -0-
(Senior Executive-Operations) 1992 225,000 55,000 -- -0- -0-
1991 225,000 75,000 -- 11,086(5) -0-
John S. Brinzo 1993 210,000 65,000 -- 54,388(4) -0-
(Senior Executive-Finance) 1992 200,000 55,000 -- -0- -0-
1991 179,375 75,000 -- 28,378(5) -0-
Thomas J. O'Neil 1993 147,500 30,000 -- -0-(4) -0-
(Senior Vice President-Technical) 1992 140,000 25,000 50,216 -0- -0-
1991 17,500(2) -0- -- 71,250(6) -0-
<CAPTION>
ALL OTHER
NAME AND COMPENSATION(7)(8)
PRINCIPAL POSITION YEAR ($)
- --------------------------------- ---- ------------------
<S> <C> <C>
M. Thomas Moore 1993 $ 14,978
(Chairman and Chief Executive 1992 16,296
Officer) 1991 --
William R. Calfee 1993 8,250
(Senior Executive-Commercial) 1992 8,495
1991 --
Frank S. Forsythe 1993 11,599
(Senior Executive-Operations) 1992 7,528
1991 --
John S. Brinzo 1993 7,447
(Senior Executive-Finance) 1992 8,636
1991 --
Thomas J. O'Neil 1993 5,236
(Senior Vice President-Technical) 1992 4,200
1991 --
</TABLE>
- ---------------
(1) The executive officers are reimbursed for business club membership expenses
and other business perquisites, in amounts that are less than the reporting
thresholds established by the Securities and Exchange Commission. In 1992,
Mr. O'Neil was reimbursed for moving, temporary living and real estate
commission expenses in the amount of $45,109.
(2) Mr. O'Neil joined the Company as Senior Vice President-Operations in
November, 1991.
(3) The aggregate number of shares of Restricted Stock held by Messrs. Moore,
Calfee, Forsythe, Brinzo and O'Neil, as of December 31, 1993 was 4,057,
1,828, 1,511, 1,888, and 1,200, respectively. The aggregate value of such
shares as of December 31, 1993 was $151,630, $68,321, $56,474, $70,564, and
$44,850, respectively. Dividends are payable on the shares of Restricted
Stock reported in this column at the same rate as dividends on the Company's
other Common Shares.
(4) On July 28, 1993, the Company made awards to Messrs. Moore, Calfee,
Forsythe, Brinzo and O'Neil of 3,447, 1,528, 901, 1,713 and -0-shares of
Restricted Stock, respectively. These awards of Restricted Stock are tied to
certain stock options granted in 1987, 1988 and 1990. The shares of
Restricted Stock will vest in the same proportion as the underlying stock
options to which such shares are tied when such options are exercised by the
optionee; however, in no event will the shares of Restricted Stock vest
prior to one year following the date of the award.
(5) On March 11, 1991, the Company made awards to Messrs. Moore, Calfee,
Forsythe, Brinzo and O'Neil of 1,757, 1,129, 368, 942 and -0-shares of
Restricted Stock, respectively. These awards of Restricted Stock were tied
to certain stock options granted in 1987 and 1988, all of which have been
exercised. The shares of Restricted Stock vested in the same proportion as
the underlying stock options to which such shares were tied when such
options were exercised by the optionee; however, in no event did the shares
of Restricted Stock vest prior to six months following the date of the
award.
(6) On November 18, 1991, the Company awarded 2,000 shares of Restricted Stock
to Mr. O'Neil. One-fifth of such Restricted Stock vested on each of the
first and second anniversaries of such award and the balance will vest to
the extent of one-fifth on each of the third, fourth and fifth anniversaries
of the date of the award.
(7) Amounts indicated for 1993 include cash contributed by the Company under the
Cliffs Salaried Employees Supplemental Retirement Savings Plan as follows:
$5,392, $8,250, $5,202, $5,127 and $5,236 on behalf of Messrs. Moore,
Calfee, Forsythe, Brinzo and O'Neil, respectively; cash contributed by the
Company under the Voluntary Non-Qualified Deferred Compensation Plan as
follows: $9,586, $-0-, $3,139, $2,320, and $-0-on behalf of Messrs. Moore,
Calfee, Forsythe, Brinzo and O'Neil, respectively; and cash in the amount of
$3,258 contributed by the Company under the Investment Credit Employee Stock
Ownership Plan on behalf of Mr. Forsythe.
(8) In accordance with the transitional provisions applicable to the revised
rules on director and executive officer compensation disclosure adopted by
the Securities and Exchange Commission, amounts of All Other Compensation
are not required to be presented for the 1991 fiscal year.
7
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information about stock options exercised by
the Company's five most highly compensated executive officers during the last
fiscal year and the number of Common Shares covered by unexercised options and
the aggregate value of options held at the end of such fiscal year.
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED "IN-THE-MONEY" OPTIONS
ON VALUE OPTIONS AT FY-END(#) AT FY-END ($)
EXERCISE REALIZED ----------------------------- -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ---------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
M. Thomas Moore 13,000 $182,223 17,000 -0- $ 293,378 -0-
William R. Calfee 4,375 48,050 4,375 -0- 75,502 -0-
Frank S. Forsythe 4,250 64,844 4,250 -0- 73,344 -0-
John S. Brinzo 7,000 82,678 8,000 -0- 138,060 -0-
Thomas J. O'Neil -0- -0- -0- -0- -0- -0-
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's officers average 23 years of experience in the iron and steel
business. The Committee believes that the officers and other management
personnel have generally directed the affairs of the Company effectively under
difficult business conditions in a changing and cyclical industry.
COMPENSATION POLICIES AND OBJECTIVES
The Company's philosophy is to maintain total compensation for all
employees which is competitive with industrial companies, considering individual
responsibilities and other comparative factors. The Company's compensation
structure assists in retention of experienced employees and places a significant
portion of executive compensation at risk with the performance of the Company
and the individual.
Executive compensation consists of salary, current incentive, long-term
incentive, general employee benefits, and certain minor executive benefits. In
determining the actual level and components of compensation, the Committee
reviews survey information, Company and individual performance, recommendations
of the Chief Executive Officer, and the general business environment. The
Committee also uses independent consultants from time to time and has recently
employed a consultant to assist the Committee in designing an equity incentive
program under the 1992 Incentive Equity Plan.
In establishing salary and bonus target compensation levels for management
positions, the Company reviews survey data representing a broad group of
companies of comparable scope and activity, including steel companies and many
other industrial companies. The Company has selected the S&P Steel Group Index
and the S&P Miscellaneous Metals Group Index for use in the stock price
performance graph on page 11 because no meaningful iron ore producer peer group
index is available and the steel industry is the Company's sole customer base.
The Committee has reviewed the proposed regulations under the federal
income tax legislation adopted during 1993 which limits the deductibility of
certain executive compensation in excess of $1 million and has determined that
any non-deductible payments under the Company's existing compensation programs
would be highly unlikely.
BASE SALARIES
The Company's objective is to maintain base salaries at the 50th percentile
of industry survey data. Merit salary increases are awarded periodically based
on individual performance when economic conditions allow. Executive officers
received no salary increases in 1991 and 1992 except for certain promotional
increases. On January 1, 1993, executive officers received merit increases
averaging approximately 5 percent; however, their annual bonus targets were
reduced by approximate offsetting amounts in order to mitigate the Company's
cost impact.
8
<PAGE> 12
CURRENT INCENTIVE (ANNUAL BONUS OPPORTUNITY)
The Company maintains a Management Performance Incentive Plan ("MPI Plan")
which provides the opportunity for executive officers and other eligible
management employees to earn an annual cash bonus. The MPI Plan was established
in 1993 as a successor plan to the previous Incentive Bonus Plan. The MPI Plan
essentially adopted the principles of the previous plan but broadened the
eligible group of employees. The change was designed to be cost-neutral to the
Company.
Under the MPI Plan, each participant has a designated "target" bonus
according to the participant's position level. The target for executive officers
ranges from 30 to 70 percent of the officer's salary range midpoint. Actual
awards may range from zero to 150 percent of the target amount for a
participant.
Company and executive officer goals are reviewed by the Board of Directors
at the beginning of each year and performance is reviewed at regular Board
meetings throughout the year. At the end of each year, the Committee determines
the total bonus pool and individual awards, considering the Chief Executive
Officer's recommendations and the Committee's review of Company, unit, and
individual performance for the year in relation to past results, current year
goals, strategic objectives, and the competitive and economic environment.
Judgment rather than a formula is used in determining current incentive
awards. The Company's earnings trend is a key determinant, but other
accomplishments or disappointments with implications for future Company results
may be more important in any year. MPI Plan awards may reflect judgment of
individual or group performance in the primary area of responsibility of the
individual or group, in such areas as sales, new business development, operating
cost reduction, technological advances, product and process quality, safety and
environmental management, financial planning, expenditure control, human
resource policies, legal activities, and public affairs. The benefit to the
Company of the cumulative performance and experience of the executive may also
be considered. All such matters are evaluated collectively without assignment of
weights to individual factors.
Bonuses for the executive officers, excluding the Chief Executive Officer,
totaled $242,000 for 1993 (average 65 percent of target bonus) versus $251,000
for 1992 (average 54 percent of target bonus) and $373,000 for 1991 (average 79
percent of target bonus). In determining the 1993 bonuses for these officers,
the factors described above were considered, including the Company's increased
earnings, the Company's performance on numerous business objectives, and the
individual performance of the officers in regard to their responsibilities and
objectives.
LONG-TERM INCENTIVES
Under the 1987 and 1992 Incentive Equity Plans approved by the
shareholders, the Committee can award stock options or other forms of equity
incentives to motivate participants to increase the value of the Company to
shareholders. Individual awards are scaled in accordance with level of
responsibility. No stock options have been awarded to executive officers since
1990.
The exercise price of all stock options has been the market price when
awarded, adjusted for business spinoffs and special distributions to
shareholders. Options have not been repriced for "under water" situations. In
1993, the price of unexercised options was reduced and restricted stock awards
were made to reflect the equivalent value of The LTV Corporation claim recovery
which was distributed to the Company's shareholders. The executive officers were
awarded 8,192 shares of restricted stock in 1993 to reflect the LTV claim
recovery distribution and to correct a deficiency in prior option price
adjustments for a special distribution to shareholders in 1991.
CHIEF EXECUTIVE OFFICER COMPENSATION
M. Thomas Moore has 34 years of experience in the iron and steel
industries, including 27 years with the Company. Mr. Moore has served as a
senior officer of the Company since 1968, as Chief Executive Officer since
January 1, 1987, and as Chairman since May 10, 1988.
9
<PAGE> 13
The MPI Plan award to Mr. Moore for 1993 was $175,000 (59 percent of target
bonus) compared to $150,000 or 47 percent of target bonus in 1992 and $225,000
or 71 percent of target bonus in 1991. The Committee concluded that such award
for 1993 was appropriate in view of the Company's and Mr. Moore's performance in
1993 on the factors described above, including the Company's increased earnings,
the Company's performance on numerous business objectives, and his performance
in regard to such objectives and his responsibilities. In accordance with its
policy, the Committee considered all matters collectively in determining the
award.
Except for the adjustments applicable to other Incentive Equity Plan
participants noted above under "Long-Term Compensation", no stock options or
restricted stock was awarded to Mr. Moore during 1993.
The Chief Executive Officer is not present when the Committee reviews his
performance and determines his compensation.
OTHER
In 1987, the Company began a major restructuring and recovery from the
depressed basic industry conditions of the 1982-1986 period. For the period,
1987 through 1993, net income totaled $287 million, cash flow from operating
activities (before working capital changes) totaled $366 million, and the market
value of the Company's Common Shares, plus special distributions to
shareholders, increased by $466 million.
The total return, consisting of share price appreciation and assumed
reinvested dividends, on the Company's Common Shares between December 31, 1986
and December 31, 1993, substantially exceeded the total returns of the S&P 500
Stock Index, the S&P Steel Group Index, and the S&P Miscellaneous Metals Group
Index as shown on the accompanying graph. For the same period, personal income
on stock option exercises and restricted stock awards under the 1987 Incentive
Equity Plan for the Chief Executive Officer and all Incentive Equity Plan
participants equaled 0.6 percent and 3.1 percent, respectively, of the growth in
shareholder value. The Committee believes that such income represented a modest
cost to the Company in relation to the substantial increase in shareholder value
associated with the Company's recovery.
For the five-year period ended December 31, 1993, the total return on the
Company's Common Shares was 98.3 percent which exceeded the three comparative
indices as shown on the accompanying graph. The Committee believes that the
long-term and cyclical nature of the Company's business, plus independent
fluctuations in stock markets, make shorter term comparison of executive
compensation and stock prices inappropriate.
The foregoing report has been furnished by the members of the Compensation
and Organization Committee as set forth below:
E. B. Jones, Chairman
R. S. Colman
E. M. de Windt
J. D. Ireland III
G. H. Lamphere
10
<PAGE> 14
SHAREHOLDER RETURN PERFORMANCE
Set forth below is a line graph comparing the cumulative total shareowner
return on the Company's Common Shares against the cumulative total return of the
S&P 500 Stock Index, the S&P Steel Group Index and the S&P Miscellaneous Metals
Group Index for the period commencing January 1, 1987 and ending December 31,
1993.
COMPARISON OF CUMULATIVE TOTAL RETURN
CLIFFS' COMMON SHARES, S&P 500 STOCK INDEX, S&P STEEL GROUP INDEX, AND
S&P MISCELLANEOUS METALS GROUP INDEX
(YEARS 1987 THROUGH 1993)
<TABLE>
<CAPTION>
Year ending December 31 Cliffs' Common S&P 500 S&P Steel S&P Misc.
Group Metals Group
<S> <C> <C> <C> <C>
1986 $ 29.53 $ 81.56 $ 51.31 $ 43.14
1987 46.24 85.76 81.93 75.87
1988 100.00 100.00 100.00 100.00
1989 110.33 131.68 96.73 115.10
1990 105.98 127.59 81.39 109.35
1991 165.72 166.49 100.00 123.38
1992 168.96 179.18 130.82 132.38
1993 198.30 197.23 172.16 147.47
Percentage Increase 1986-1993 572% 142% 236% 242%
</TABLE>
Graph assumes reinvestment of all dividends. Cliffs' return includes the
reinvestment of proceeds from securities distributed to shareholders in 1988 and
1993.
11
<PAGE> 15
PENSION BENEFITS
The following table shows the approximate maximum annual pension benefit
under the Company's qualified pension plans, together with the Supplemental Plan
described below, which would be payable to employees in various compensation
classifications at age 65 with representative years of service. The amounts
listed in the table are computed on an automatic joint and survivorship annuity
basis and are subject to an offset for Social Security benefits through December
31, 1993 and the equivalent offset thereafter.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION FOR 60
HIGHEST CONSECUTIVE ANNUAL BENEFITS FOR
MONTHS IN LAST 120 YEARS OF SERVICE INDICATED
MONTHS PRECEDING -------------------------------------------------------------------------------------------
RETIREMENT 15 YRS. 20 YRS. 25 YRS. 30 YRS. 35 YRS. 40 YRS.
- ------------------------ ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $ 27,225 $ 35,100 $ 42,975 $ 50,850 $ 58,725 $ 66,600
150,000 39,038 50,850 62,663 74,475 86,288 98,100
200,000 50,850 66,600 82,350 98,100 113,850 129,600
250,000 62,663 82,350 102,038 121,725 141,413 161,100
300,000 74,475 98,100 121,725 145,350 168,975 192,600
350,000 86,288 113,850 141,413 168,975 196,537 224,100
400,000 98,100 129,600 161,100 192,600 224,100 255,600
450,000 109,913 145,350 180,788 216,225 251,662 287,100
500,000 121,725 161,100 200,475 239,850 279,225 318,600
550,000 133,538 176,850 220,163 263,475 306,788 350,100
600,000 145,350 192,600 239,850 287,100 334,350 381,600
650,000 157,163 208,350 259,538 310,725 361,913 413,100
675,000 163,069 216,225 269,381 322,538 375,694 428,850
</TABLE>
The table is based on a 1 1/2% pension formula, includes the impact of a 5%
add-on for employees who retire at age 65 under the 30 year or 65/10 retirement
provision between January 1, 1994 and December 31, 1999, and includes a $300
monthly pension supplement payable for 12 months after retirement for employees
who retire at age 65 under the 30 year or 65/10 retirement provisions after
January 1, 1994 and prior to January 1, 1997. The Internal Revenue Code of 1986
(the "Code") places limitations on the benefits which may be paid from a
qualified pension plan. The Company has a nonqualified Supplemental Retirement
Benefit Plan ("Supplemental Plan") providing for the payment from general funds
of the benefits which would be lost by Supplemental Plan participants as a
result of present or future Code or other government limitations.
The compensation used to determine benefits under the Company's pension
plans is the sum of salary and bonus paid to a participant during a calendar
year. Pensionable earnings for each of the Company's executive officers during
1993 included the amount shown for 1993 in the Salary column of the Summary
Compensation Table on page 7, plus 25 percent of the amount of bonus earned in
1992, as shown in the Bonus column of the Summary Compensation Table for 1992,
which amount was paid during 1993. Pensionable earnings in 1993 for Messrs.
Moore, Calfee, Forsythe, Brinzo and O'Neil were $460,000, $265,000, $248,750,
$223,750 and $153,750, respectively, because 75 percent of the bonus for 1992
was paid in 1992. Messrs. Moore, Calfee, Forsythe, Brinzo and O'Neil have 27,
21, 17, 24 and 2 years of credited service under the Company's qualified pension
plan, respectively.
12
<PAGE> 16
AGREEMENTS AND TRANSACTIONS
The Company has entered into agreements ("Agreements") dated February 1,
1992 with M. Thomas Moore, Chairman and Chief Executive Officer, William R.
Calfee, Senior Executive-Commercial, Frank S. Forsythe, Senior
Executive-Operations, and John S. Brinzo, Senior Executive-Finance, which
specify certain financial arrangements that the Company will provide upon the
termination of such individuals' employment with the Company under certain
circumstances. The Agreements are intended to ensure continuity and stability of
executive management of the Company. The Agreements provide that, in the event
of a "change of control" of the Company (as defined in the Agreements), such
individuals would continue their employment with the Company in their then
current positions for a period of 3 years following such "change of control".
Under the Agreements, during the 3-year period following a "change of
control", each officer would be entitled to receive base pay and incentive
compensation equivalent to that received prior to the "change of control", and
to continue participation in employee benefit plans. The Agreements also provide
that the officer would receive age and service pension credit through the 3-year
term for pension benefit purposes and provide 1 year of prior actual "industry
service" credit for every 2 years of service with the Company for the sole
purpose of determining when the officer would be eligible for commencement of a
30-year pension benefit. If during the 3-year period, the officer is terminated
by the Company without "cause", becomes disabled, or resigns after (i) not being
maintained in his prior position, (ii) being reduced in compensation or
benefits, (iii) determining he is unable to carry out his duties and
responsibilities, or (iv) being relocated or required to travel excessively
without his consent, such officer would be entitled to lump sum payments of the
then present value of the base pay, incentive compensation, and pension benefits
that he would be entitled to receive under the agreement for the remainder of
the 3-year period, and would be entitled to continue participation in medical
and other welfare benefit plans. The Agreements also entitle the officers to
welfare benefit continuation for life upon retirement or following termination,
unless the termination was for "cause". In addition, the Agreements provide that
officers are eligible for reimbursement of reasonable outplacement expenses. The
aggregate payments to any officer under the Agreements may not exceed the
maximum amount the Company can deduct for Federal income tax purposes, taking
into account the rules applicable under the Code.
None of these arrangements create employment obligations for the Company
unless a "change of control" has occurred, prior to which time the Company and
such officer each reserves the right to terminate their employment relationship.
Both before and after the occurrence of a "change of control", the Company may
terminate the employment of any of such officers for "cause", without an
obligation to pay severance compensation or benefits.
In January 1992, the Board of Directors of the Company approved and
adopted, effective February 1, 1992, the Severance Pay Plan for Key Employees
("Severance Plan") which presently covers 16 key employees. The Severance Plan
is designed to assure continuity, stability, and fair treatment of employees in
key positions in the event of a "change of control" of the Company (as defined
in the Severance Plan). Under the Severance Plan, if during the 3-year period
following a "change of control" a participant is terminated by the Company
without "cause" or resigns after (i) not being maintained in his or her prior
position, (ii) being reduced in compensation or benefits, (iii) determining he
or she is unable to carry out his or her duties and responsibilities, or (iv)
being relocated or required to travel excessively without consent, he or she is
entitled to receive (a) a lump sum payment in the amount of 1 or 2 years of base
pay and incentive compensation (depending upon position), (b) age and service
credit for the full 3-year term for pension benefit purposes, and (c) 1 year of
prior actual "industry service" credit for every 2 years of service with the
Company for the purpose of determining eligibility for commencement of 30-year
pension and other benefits. Participants are entitled to continue participation
in health and life insurance plans for 1 or 2 years or (if earlier) until
covered by similar plans sponsored by a subsequent employer, and are entitled to
medical and other welfare benefit continuation for life following termination,
beginning upon the date that the participant would have had 30 years of service
with the Company without such termination (including credit for the 3-year term
and "industry service" as described above). Also, participants are eligible for
reimbursement of reasonable outplacement expenses. Individuals who would be
covered by the Severance Plan, but who receive severance pay and benefits
pursuant to a "change of control" employment agreement or another plan or
agreement signed on behalf of the Company, are not entitled to benefits under
the Severance Plan. All benefits payable
13
<PAGE> 17
under the Severance Plan are to be derived from the Company's then current
operating funds. The aggregate payments to any participant under the Severance
Plan may not exceed the maximum amount the Company can deduct for Federal income
tax purposes, taking into account the rules applicable under the Code. None of
the obligations of the Company described above exist unless a "change of
control" has occurred.
The Company has entered into two trust agreements with Society National
Bank which relate to the Agreements and the Severance Plan. The first such trust
agreement provides for the payment of the benefits arising under the Agreements,
and the second trust agreement provides for reimbursement of legal fees and
expenses incurred by the officers in enforcing their rights under the Agreements
and by the the key employees under the Severance Plan.
The Company has entered into indemnification agreements ("Indemnification
Agreements") with each current member of the Board and Mr. Brinzo. The form and
execution of the Indemnification Agreements were approved by the Company's
shareholders at the Annual Meeting convened on April 29, 1987. Such agreements
essentially provide that to the extent permitted by Ohio law, the Company will
indemnify the indemnitee against all expenses, costs, liabilities and losses
(including attorneys' fees, judgments, fines or settlements) incurred or
suffered by the indemnitee in connection with any suit in which the indemnitee
is a party or otherwise involved as a result of his service as a member of the
Board or as an officer. In connection with the foregoing Indemnification
Agreements, the Company has entered into a trust agreement with Society National
Bank pursuant to which the parties to the Indemnification Agreements may be
reimbursed with respect to enforcing their respective rights under the
agreements.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL NO. 2)
A proposal will be presented at the Meeting to ratify the appointment of
the firm of Ernst & Young as independent public accountants to examine the books
of account and other records of the Company and its consolidated subsidiaries
for the fiscal year ending December 31, 1994. Representatives of Ernst & Young
are expected to be present at the Meeting. Such representatives will have an
opportunity to make a statement if they so desire and are expected to be
available to respond to appropriate questions. Although such ratification is not
required by law, the Board of Directors believes that shareholders should be
given this opportunity to express their views on the subject. While not binding
on the Board of Directors, the failure of the shareholders to ratify the
appointment of Ernst & Young as the Company's independent public accountants
would be considered by the Board in determining whether or not to continue the
engagement of Ernst & Young.
THE DIRECTORS RECOMMEND A VOTE FOR THIS PROPOSAL TO RATIFY THE APPOINTMENT
OF ERNST & YOUNG AS YOUR COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
ANNUAL REPORT
The Company's 1993 Annual Report to Shareholders, including financial
statements, is being distributed to all shareholders of the Company together
with this Proxy Statement, in satisfaction of the requirements of the SEC.
Additional copies of such report are available upon request. To obtain
additional copies of such Annual Report please contact the Company's Investor
Relations Department at (216) 694-5459.
GENERAL INFORMATION
The cost of soliciting proxies will be paid by the Company. In addition to
solicitation by mail, solicitations may also be made by personal interview,
telegram and telephone. Arrangements will be made with brokerage houses and
other custodians, nominees and fiduciaries to send proxies and proxy material to
their principals, and the Company will reimburse them for their expenses in so
doing. Officers and other regular employees of the Company, as yet undesignated,
may also request the return of proxies by telephone, telegram, or in person.
Finally, the Company has retained Georgeson & Company Inc., New York, New York,
to assist in the solicitation of proxies using the means referred to above, at
an anticipated cost of $9,500, plus reasonable expenses.
14
<PAGE> 18
Pursuant to regulations of the SEC, the material appearing under the
captions "Compensation Committee Report on Executive Compensation" and
"Shareholder Return Performance" are not deemed to be soliciting material or to
be filed with the SEC or subject to Regulation 14A promulgated by the SEC or
Section 18 of the Securities Exchange Act of 1934.
The Common Shares represented by properly executed proxy cards will be
voted as specified. It is intended that the Common Shares represented by proxies
on which no specification has been made will be voted FOR the election of the
nominees for Director named herein or such substitute nominees as the Board of
Directors may designate, FOR ratification of Ernst & Young as the firm of
independent public accountants to examine the books of account and other records
of the Company and its consolidated affiliates for fiscal year 1994 and at the
discretion of the persons named as proxies on all other matters which may
properly come before the Meeting.
At the Meeting, the results of shareholder voting will be tabulated by the
inspector of elections appointed for the Meeting. The Company intends to treat
properly executed proxies that are marked "abstain" or that are held in "street
name" by brokers and are not voted on one or more particular proposals (if
otherwise voted on at least one proposal) as "present" for purposes of
determining whether a quorum has been achieved at the Meeting. The candidates
for Directors receiving the greatest number of votes will be elected. Votes
withheld in respect of the election of Directors will not be counted in
determining the outcome of that vote. In respect of the appointment of the
independent public accountants, abstentions will be treated as votes against the
proposal, and broker non-votes will be treated as having no effect on the
outcome of the vote.
If notice in writing shall be given by any shareholder to the President, a
Vice President or the Secretary, not less than 48 hours before the time fixed
for the holding of the Meeting, that such shareholder desires that the voting
for the election of Directors shall 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 such voting power as he or she
possesses at such election. Under cumulative voting a shareholder may cast for
any one nominee as many votes as shall equal the number of Directors to be
elected, multiplied by the number of his or her Common Shares. All of such votes
may be cast for a single nominee or may be distributed among any two or more
nominees as he or she may desire. If cumulative voting is invoked, and unless
contrary instructions are given by a shareholder who signs a proxy, all votes
represented by such proxy will be cast in such manner and in accordance with the
discretion of the person acting as proxy as will result in the election of as
many of the Board of Directors' nominees as is possible.
OTHER BUSINESS
It is not anticipated that any other matters will be brought before the
Meeting for action; however, if any such other matters shall properly come
before the Meeting, it is intended that the persons authorized under proxies
may, in the absence of instructions to the contrary, vote or act thereon in
accordance with their best judgment.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder intended to be presented at the 1995 Annual
Meeting of Shareholders must be received by your Company on or before November
23, 1994 to be included in the proxy materials of your Company relating to such
meeting.
***************************************************************************
* *
* IMPORTANT *
* --------- *
* TO ASSURE YOUR REPRESENTATION AND A QUORUM FOR THE TRANSACTION *
* OF BUSINESS AT THE MEETING, PLEASE SIGN, DATE AND RETURN THE *
* ENCLOSED PROXY CARD PROMPTLY. *
* *
***************************************************************************
15
<PAGE> 19
CLEVELAND-CLIFFS INC
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD ON
MAY 10, 1994
AND
PROXY STATEMENT
<PAGE> 20
PROXY CLEVELAND-CLIFFS INC
18TH FLOOR DIAMOND BUILDING - CLEVELAND, OHIO 44114-2589
COMMON THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SHARES
The undersigned hereby appoints R. S. Colman, E. M. de Windt,
J. D. Ireland III, E. B. Jones, and G. H. Lamphere, as Proxies,
each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote all of Cleveland-Cliffs
Inc Common Shares held of record by the undersigned on March 14,
1994, at the Annual Meeting of Shareholders to be held on May 10,
1994, or at any adjournment or adjournments thereof, as follows:
Election of Directors, Nominees:
R. S. Colman, J. D. Ireland III, G. Frank Joklik,
E. B. Jones, L. L. Kanuk, G. H. Lamphere,
M. T. Moore, S. B. Oresman, A. Schwartz,
S. K. Scovil, J. H. Wade, A. W. Whitehouse.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. WHEN
PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER; IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2 INCLUSIVE. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(TO BE SIGNED AND DATED ON OTHER SIDE)
SEE REVERSE
SIDE
<PAGE> 21
<TABLE>
<S> <C>
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
1. ELECTION OF / / / / 2. RATIFICATION OF THE APPOINTMENT / / / / / /
DIRECTORS OF ERNST & YOUNG AS INDEPENDENT
(see reverse) PUBLIC ACCOUNTANTS
For, except vote withheld from IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
the following nominee(s): OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
_______________________________________
</TABLE>
<TABLE>
<S> <C> <C>
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.
When signing as attorney, executor, administrator,
SIGNATURE(S)____________________________________ DATE _______ , 1994 trustee or guardian, please give full title as
such and if signing for a corporation please give
SIGNATURE(S) ___________________________________ DATE _______ , 1994 your title. When shares are in the names of more
than one person, each should sign.
</TABLE>
