<PAGE> 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CLEVELAND-CLIFFS INC
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:_______
(2) Aggregate number of securities to which transaction applies:__________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):____________
(4) Proposed maximum aggregate value of transaction:______________________
(5) Total fee paid:_______________________________________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_______________________________________________
(2) Form, Schedule or Registration Statement No.:_________________________
(3) Filing Party:_________________________________________________________
(4) Date Filed:___________________________________________________________
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 2
Cleveland-Cliffs Inc
1100 Superior Avenue * Cleveland, Ohio 44114-2589
March 23, 1995
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 Forum
Conference Center, located in One Cleveland Center, 1375 East Ninth Street,
Cleveland, Ohio 44114 on Tuesday, May 9, 1995 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 LLP 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
Cleveland-Cliffs Inc
1100 Superior Avenue * Cleveland, Ohio 44114-2589
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 23, 1995
Dear Shareholder:
The Annual Meeting of Shareholders of Cleveland-Cliffs Inc, an Ohio
corporation ("Company"), will be held at The Forum Conference Center, located in
One Cleveland Center, 1375 East Ninth Street, Cleveland, Ohio 44114 on Tuesday,
May 9, 1995 at 9:00 A.M. (Cleveland time) for the purpose of considering and
acting upon:
1. A proposal to elect 11 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 LLP as the
firm of independent public accountants to examine the financial
statements of the Company and its consolidated affiliates for the
year 1995; 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 13, 1995, 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 and Assistant General
Counsel
***************************************************************************
* *
* 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
Cleveland-Cliffs Inc
1100 Superior Avenue * Cleveland, Ohio 44114-2589
------------------------------
PROXY STATEMENT
------------------------------
MARCH 23, 1995
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 9, 1995, 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 13, 1995, the record date for the determination of persons
entitled to vote at the Meeting, there were 12,104,892 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 23, 1995.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
It is intended that proxies received will be voted, unless contrary
instructions are given, to elect the 11 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, 1995 (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, 53, 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 Access
Healthnet, Inc., HealthCare COMPARE Corp. and New Image Industries, Inc.
JAMES D. IRELAND III, 45, Managing Director since January 1, 1993 of Capital One 1986
Partners, Inc., a private merchant banking firm; Mr. Ireland is also
President since before 1990 of Briseis Capital Corporation, a private
merchant banking firm. Mr. Ireland is a Director of Sun Coast Industries,
Inc.
G. FRANK JOKLIK, 66, Retired. Former President and Chief Executive Officer since 1994
before 1990 of Kennecott Corporation, an international mining company. Mr.
Joklik is a Director of First Security Corporation. Mr. Joklik is also
Chairman of the Salt Lake City Bid Committee for 2002 Olympic Winter Games.
E. BRADLEY JONES, 67, 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, NACCO Materials Handling Group,
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, 65, Professor of Marketing since before 1990 at Baruch College, 1991
City University of New York; Dr. Kanuk is also President of Leslie Kanuk
Associates, management consultants. Dr. Kanuk is a former Chairman of the
Federal Maritime Commission and, since before 1990, a Director of the
Containerization and Intermodal Institute; member of the Board of Visitors,
Maine Maritime Academy; Board of Trustees, United Seamen's Service; and
since 1994, Board of Advisors, Weissman Center for International Business.
M. THOMAS MOORE, 60, 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 Capitol American Financial Corporation,
KeyCorp, and The LTV Corporation. Mr. Moore is also a Director of the
American Iron and Steel Institute, American Iron Ore Association, and
National Mining Association.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPAL OCCUPATION AND FIRST BECAME
EMPLOYMENT DURING PAST FIVE YEARS DIRECTOR
- ---------------------------------------------------------------------------------------------
<S> <C>
STEPHEN B. ORESMAN, 62, 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. 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., Osiris Therapeutics Inc., Technology Solutions Company and
TriNet Corporate Realty Trust Inc.
ALAN SCHWARTZ, 54, Professor of Law at the Yale Law School and Professor at the 1991
Yale School of Management since before 1990. Mr. Schwartz was a Professor of
Law and Social Science at the California Institute of Technology since
before 1987 through July, 1987.
SAMUEL K. SCOVIL, 71, Retired. Former Chairman and Chief Executive Officer of the 1973
Company since before 1990. Mr. Scovil is a Director of Holnam Inc.
JEPTHA H. WADE, 70, Retired. Former partner in the law firm of Choate, Hall & 1957
Stewart since before 1990; 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, 67, Retired. Former Chairman and Chief Executive Officer 1972
since before 1990 of The Standard Oil Company (Ohio), an integrated
petroleum company. Mr. Whitehouse is a Director of The Timken Company.
</TABLE>
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. Nine of the eleven 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, Board Affairs, 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 61, ranging from 45 to 71. The average service of the
Directors is 11 years, ranging from one year to 37 years.
The Company has maintained a progressive and independent Board governance
process for many years. During 1994, eight regularly scheduled and special
meetings of the Board of Directors were held and nineteen meetings of all
standing Board committees were held. Directors also discharge their
responsibilities by 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 Executive, Audit, Board Affairs,
Compensation and Organization, Finance, Long Range Planning, and Public Affairs
Committees. All committees regularly report their activities, actions, and
recommendations to the Board. Eight Directors attended 100 percent of the
meetings of the Company's Board of Directors and Board Committees of which they
were a member; one Director attended over 95 percent of such meetings; and two
Directors attended over 80 percent of such meetings.
The Executive Committee consists of Messrs. Ireland, Jones, Moore, Oresman,
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
3
<PAGE> 7
dividends. Its members presently consist of the chairmen of the other standing
committees. The Committee held one meeting during 1994.
The Audit Committee consists of Dr. Kanuk and Messrs. Oresman and Schwartz
and Mr. Oresman 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 two meetings during 1994.
The Board Affairs Committee consists of Messrs. Colman, Jones, Wade and
Whitehouse and Mr. Wade serves as Chairman. The Committee administers the
Company's compensation and benefit plans for Directors; monitors the Board
governance process and provides counsel to the Board and the Chairman and Chief
Executive Officer on Board governance and other matters; recommends changes in
membership and responsibility of Board committees; and acts as the Board's
Nominating Committee and Proxy Committee in the election of Directors.
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 one meeting during 1994.
The Compensation and Organization Committee consists of Messrs. Colman,
Ireland, Joklik and Jones and Mr. Jones serves as Chairman. The Committee
recommends to the Board of Directors the officers, and compensation of officers;
administers the Company's compensation plans for officers; reviews organization
and management development; evaluates the performance of the Chief Executive
Officer and obtains the advice of outside experts with regard to compensation
matters. The Committee held eight meetings during 1994.
The Finance Committee consists of Messrs. Ireland, Schwartz 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 two meetings during 1994.
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 three meetings during 1994.
The Public Affairs Committee consists of Dr. Kanuk and Messrs. Joklik and
Scovil 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 1994.
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, Board Affairs, 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 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,
4
<PAGE> 8
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 Key Trust Company of Ohio, N.A.
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 1994 $20,000 for consulting and advisory services. From
January 1, 1995 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, 1995 (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............ 1,655 1,655 -0- 1,655 -0- --
James D. Ireland III........ 269,642 3,000 266,642(4) 3,000 266,642(4) 2.23%
G. Frank Joklik............. 1,000 1,000 -0- 1,000 -0- --
E. Bradley Jones............ 2,000 2,000 -0- 2,000 -0- --
Leslie L. Kanuk............. 1,655 1,655 -0- 1,655 -0- --
Stephen B. Oresman.......... 1,655 1,655 -0- 1,655 -0- --
Alan Schwartz............... 1,655 1,655 -0- 1,655 -0- --
Samuel K. Scovil............ 14,713 14,713 -0- 14,713 -0- --
Jeptha H. Wade.............. 6,500 6,500 -0- 6,500 -0- --
Alton W. Whitehouse......... 1,900 1,900 -0- 1,900 -0- --
</TABLE>
<TABLE>
<CAPTION>
NAMED EXECUTIVE OFFICERS
- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
M. Thomas Moore............. 40,000 40,000 -0- 40,000 -0- --
John S. Brinzo.............. 27,835 18,974 8,861 18,974 8,861 --
William R. Calfee........... 19,805 19,805 -0- 19,805 -0- --
Frank S. Forsythe........... 4,648 2,141 2,507 2,141 2,507 --
A. Stanley West............. 13,171 13,171 -0- 13,171 -0- --
All Directors and Executive
Officers as a Group
(16 Persons).............. 415,834 137,824 278,010 137,824 278,010 3.44%
</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>
Merrill Lynch & Co., Inc. (5)
World Financial Center, North
Tower
250 Vesey Street
New York, NY 10281................ 1,061,129 -0- 1,061,129 -0- 1,061,129 8.77%
Neuberger & Berman (6)
605 Third Avenue
New York, NY 10158................ 944,000 -0- 944,000 582,400 212,000 7.80%
Farmers Group, Inc. (7)
4680 Wilshire Boulevard
Los Angeles, CA 90010............. 754,500 -0- 754,500 -0- 754,500 6.23%
<FN>
- ---------------
(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 table 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, 1995. All Directors, except for Mr. Joklik, Mr. Moore and
Mr. Scovil have such options with respect to 1,500 Common Shares, and Mr.
Joklik 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, 10,000 Common Shares; Mr. Brinzo, 8,000 Common Shares; Mr. Calfee,
4,375 Common Shares; Mr. Forsythe, -0- Common Shares; and Mr. West, 2,500
Common Shares; and the Directors and executive officers as a group have such
options with respect to 37,875 Common Shares. Performance shares awarded in
1994 to Messrs. Moore, Brinzo, Calfee, Forsythe, and West as described under
"Long-Term Incentive Plans -- Awards in Last Fiscal Year" on page 8 are not
included in the shares shown in the table.
(3) Less than 1%, except as otherwise indicated.
(4) Of the 269,642 shares deemed under the rules of the SEC to be beneficially
owned by Mr. Ireland, he is a record holder of 3,000 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) Except for Percent of Class, the information shown above was taken from the
Amendment No. 2 to Schedule 13G, dated February 10, 1995, 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.
(6) Except for Percent of Class, the information shown above was taken from the
Amendment No. 2 to Schedule 13G, dated February 10, 1995, as filed by
Neuberger & Berman with the SEC.
(7) Except for Percent of Class, the information shown above was taken from the
Schedule 13G, dated February 9, 1995, as filed by Farmers Group, Inc. and
B.A.T. Industries p.l.c., with the SEC.
</TABLE>
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 ALL OTHER
NAME AND SALARY BONUS COMPENSATION(1) AWARDS(2) OPTIONS COMPENSATION(4)
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- ----------------------------- ---- -------- -------- --------------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
M. Thomas Moore 1994 $431,250 $222,000 -- $ -0- -0- $ 17,666
Chairman and Chief Executive 1993 422,500 175,000 -- 109,442(3) -0- 14,978
Officer 1992 395,000 150,000 -- -0- -0- 16,296
John S. Brinzo 1994 217,500 105,000 -- -0- -0- 8,897
Senior Executive-Finance 1993 210,000 65,000 -- 54,388(3) -0- 7,447
1992 200,000 55,000 -- -0- -0- 8,636
William R. Calfee 1994 250,000 95,000 -- -0- -0- 10,245
Senior Executive-Commercial 1993 250,000 60,000 -- 48,514(3) -0- 8,250
1992 239,000 60,000 -- -0- -0- 8,495
Frank S. Forsythe 1994 235,000 47,500 -- -0- -0- 9,625
Senior Executive-Operations 1993 235,000 60,000 -- 28,607(3) -0- 11,599
(Mine Partnerships) 1992 225,000 55,000 -- -0- -0- 7,528
A. Stanley West 1994 154,000 55,000 -- -0- -0- 6,314
Senior Vice President-Sales 1993 148,000 27,000 -- 19,145(3) -0- 5,254
1992 142,000 25,000 -- -0- -0- 7,224
- ---------------
<FN>
(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.
(2) The aggregate number of shares of Restricted Stock held by Messrs. Moore,
Brinzo, Calfee, Forsythe and West, as of December 31, 1994 was 770, 426,
305, 180 and 218, respectively. The aggregate value of such shares as of
December 31, 1994 was $28,490, $15,762, $11,285, $6,660 and $8,066,
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.
(3) On July 28, 1993, the Company made awards to Messrs. Moore, Brinzo, Calfee,
Forsythe and West of 3,447, 1,713, 1,528, 901 and 603 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
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.
(4) Amounts indicated for 1994 include cash contributed by the Company under the
Cliffs Salaried Employees Supplemental Retirement Savings Plan as follows:
$6,468, $5,925, $6,120, $6,030 and $6,314 on behalf of Messrs. Moore,
Brinzo, Calfee, Forsythe and West, respectively; and cash contributed by the
Company under the Voluntary Non-Qualified Deferred Compensation Plan as
follows: $11,198, $2,972, $4,125, $3,595 and $-0- on behalf of Messrs.
Moore, Brinzo, Calfee, Forsythe and West, respectively.
</TABLE>
7
<PAGE> 11
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information about stock options exercised by
the Company's five most highly compensated executive officers during the last
fiscal year and the number of Common Shares covered by unexercised options and
the aggregate value of options held at the end of such fiscal year.
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED "IN-THE-MONEY" OPTIONS
ON VALUE OPTIONS AT FY-END (#) AT FY-END ($)
EXERCISE REALIZED ----------------------------- -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ---------- ------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
M. Thomas Moore 4,468 $91,192 12,532 -0- $ 211,571 -0-
John S. Brinzo -0- -0- 8,000 -0- 135,060 -0-
William R. Calfee -0- -0- 4,375 -0- 73,861 -0-
Frank S. Forsythe 4,250 86,626 -0- -0- -0- -0-
A. Stanley West -0- -0- 2,500 -0- 42,206 -0-
</TABLE>
<TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The following table below sets forth information relating to the long-term
incentive awards that were made under the 1992 Incentive Equity Plan during the
last fiscal year for the five most highly compensated executive officers.
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED
NUMBER OF PERFORMANCE PLANS(1)
SHARES, UNITS OR OTHER NUMBER OF SHARES
OR OTHER PERIOD UNTIL --------------------------------
NAME RIGHTS MATURATION OR PAYOUT THRESHOLD TARGET MAXIMUM
- ----------------------- ------------- -------------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
M. Thomas Moore 9,500 1/1/94 - 12/31/96 2,375 9,500 14,250
John S. Brinzo 4,000 1/1/94 - 12/31/96 1,000 4,000 6,000
William R. Calfee 4,000 1/1/94 - 12/31/96 1,000 4,000 6,000
Frank S. Forsythe 1,667 1/1/94 - 12/31/96 416 1,667 2,500
A. Stanley West 2,500 1/1/94 - 12/31/96 625 2,500 3,750
<FN>
- ---------------
(1) Assumes performance objectives are met.
</TABLE>
The above table presents information about performance shares awarded
during the year pursuant to the 1992 Incentive Equity Plan. Each performance
share that is earned entitles the holder to receive Common Shares in accordance
with the above table, depending on the degree of achievement of specified
Company objectives. The objectives, weighted equally, are total shareholder
return (share price plus reinvested dividends) and value added (earnings less
the cost of capital employed) over a three-year performance period. Achievement
of the total shareholder return objective will be determined by the Company's
shareholder return relative to a predetermined group of steel, metal and mining
companies. Achievement of the value added objective will be determined by
comparing the Company's actual and target value added. The target payout is
calculated at 100% of the performance shares awarded and represents the number
of Common Shares that would be earned if a target level of the objectives is
achieved by the Company; maximum payout is calculated at 150% of the performance
shares awarded and represents the number of Common Shares that would be earned
if a superior level of the objectives is achieved by the Company; and threshold
payout is calculated at 25% of the performance shares awarded and represents the
number of Common Shares that would be earned if a minimum level of the
objectives is achieved by the Company. If achievement of one objective is below
threshold, achievement of the other objective must be at least at target for any
payout to occur. The number of Common Shares that will be earned will be reduced
to the extent necessary to prevent the value of the Common Shares paid to any
participant from exceeding twice the market value of the Common Shares covered
by the participant's award on the date it was granted.
8
<PAGE> 12
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
The Company's philosophy is to maintain competitive total compensation for
all employees, 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 opportunity,
long-term incentive opportunity, general employee benefits, and certain minor
executive benefits. In determining the actual level and components of executive
compensation, the Committee reviews survey information provided by a
compensation consulting firm, Company and individual performance,
recommendations of the Chief Executive Officer, and the general business
environment. Survey data represents a broad group of industrial companies of
comparable scope.
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 12 because no meaningful iron ore producer peer group index is available
and the steel industry is the Company's sole customer base. For statistical
validity, the survey group for executive compensation is larger than the steel
and metal company groups used for the stock price performance comparison.
The Committee periodically obtains advice from independent compensation
consultants. In 1994, a consultant assisted the Committee in designing a
long-term performance share program for designated key management employees
under the 1992 Incentive Equity Plan.
The Committee has reviewed the proposed regulations under the federal
income tax legislation enacted in 1993 which limits the deductibility of certain
executive compensation in excess of $1 million and has determined that
non-deductible payments under the Company's compensation programs in 1995 are
unlikely.
SALARIES
The Company's objective is to maintain aggregate salaries at the 50th
percentile of industry survey data. Individual salaries reflect responsibility,
performance, and experience. The Company's officers average 24 years of
experience in the iron and steel industries. 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 totaling approximately 5 percent and their annual bonus targets
were reduced by approximately offsetting dollar amounts. In 1994, salary and
current incentive structures were updated for all salaried employees, including
executive officers, based on industry survey data. As a result, executive
officers received a total salary increase of 4 percent on July 1, 1994 and their
total annual target bonus was reduced by 12.6 percent.
ANNUAL INCENTIVE OPPORTUNITY
The Company maintains a Management Performance Incentive Plan ("MPI Plan")
which provides the opportunity for 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 and Management Bonus Plan. The MPI Plan
essentially adopted the principles of the previous plans but consolidated the
eligible employee groups. In 1994, separate incentive plans were installed for
salaried personnel at operating units, thereby reducing the number of
participants in the MPI Plan and restricting it to corporate management and
certain other management employees. This change was designed to more closely
align annual incentives with the respective employee units and responsibilities.
Under the MPI Plan, each participant has a designated target bonus
reflecting the participant's position level. As a result of the salary and
incentive restructuring mentioned above, the target for executive officers now
ranges from 32 to 50 percent of the officer's salary range midpoint versus the
previous range of 30 to 70 percent. Actual awards may range from zero to 200
percent of the target amount for a participant. The previous target range was
zero to 150 percent.
9
<PAGE> 13
Company and executive officer objectives are reviewed by the Board of
Directors at the beginning of each year and performance reports are reviewed at
regular Board meetings throughout the year. At the end of each year, the
Committee determines the total bonus pool for the MPI Plan participants and the
individual awards for the officers based on the foregoing reports, the Chief
Executive Officer's recommendations, and the Committee's review of Company,
organizational unit, and individual performance for the year in relation to past
results, current year objectives, strategic plans, and the competitive and
economic environment.
A composite judgment is made by the Committee in determining awards under
the MPI Plan. The Company's earnings are a key determinant, but other
accomplishments or disappointments with implications for future company results
may be more important in any year. MPI Plan awards reflect the Committee's
judgment of individual and organizational unit performance in such areas as
sales, new business development, operations, technology, product and process
quality, safety and environmental management, expenditure control, human
resource programs, financial management, 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 $347,500 for 1994 (93 percent of average target bonus) versus $242,000
for 1993 (65 percent of average target bonus) and $251,000 for 1992 (54 percent
of average target bonus). In determining the 1994 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 INCENTIVE OPPORTUNITY
All officers are shareholders of the Company.
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.
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 Company's bankruptcy claim
recovery from The LTV Corporation 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. Other than these special situations, there has been no
general award of restricted stock to executive officers since 1988 and no stock
options have been awarded to executive officers since 1990. There is no present
intention to make future general awards of stock options or restricted stock to
executive officers. However, the Committee may continue to use such incentives
for special purposes from time to time.
Under the 1992 Incentive Equity Plan, a long-term performance share program
("Performance Share Program") was installed in 1994 for designated key
management employees to further align their interests with the shareholders in
increasing return on invested capital and long-term shareholder value. The
Performance Share Program provides the participants the opportunity to receive
shares of Company stock based on Company performance against specified
objectives.
Awards of "performance shares" are made annually based on position level.
Performance for 1994 awards will be measured for the three year period
1994-1996, with the first earnings opportunity to occur in 1997 for the 1994
awards. The percentage of performance share awards earned as actual shares can
range from zero to 150 percent. The Committee may award equivalent cash value at
its discretion. For 1994, the executive officers, excluding the Chief Executive
Officer, were awarded 14,667 performance shares. For a detailed description of
the awards, objectives and estimated future payout opportunities for the initial
three-year performance period, see "Long-Term Incentive Plans -- Awards in Last
Fiscal Year" on page 8.
10
<PAGE> 14
CHIEF EXECUTIVE OFFICER COMPENSATION
M. Thomas Moore has 35 years of experience in the iron and steel
industries, including 28 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.
Under the competitive compensation restructuring described above, Mr.
Moore's annual target bonus under the MPI Plan for 1994 was reduced by $83,300
at his recommendation (from 70 percent to 50 percent of his salary range
midpoint), and the Board of Directors increased his annual salary by 4.1 percent
or $17,500 per year on July 1, 1994.
The MPI Plan award to Mr. Moore for 1994 was $222,000 (104 percent of his
target bonus) compared to $175,000 or 59 percent of his target bonus in 1993 and
$150,000 or 47 percent of his target bonus in 1992. The Committee determined
that such award for 1994 was appropriate in view of the Company's and Mr.
Moore's performance in 1994 on the factors described above, including the
Company's increased earnings, the Company's performance on numerous business
objectives, the Company's acquisition of Northshore Mining Company, and his
performance in regard to such objectives and his responsibilities. In accordance
with its policy, the Committee considered all matters collectively.
Except for the adjustments applicable to other Incentive Equity Plan
participants noted above under "Long-Term Incentive Opportunity", no stock
options or restricted stock were awarded to Mr. Moore during 1993 or 1994. Mr.
Moore was awarded 9,500 performance shares for 1994 under the Performance Share
Program.
The Chief Executive Officer is not present when the Committee reviews his
performance and determines his compensation.
OTHER
In 1987, after the depressed industry conditions of the 1982-1986 period,
the Company began a major restructuring and growth renewal. For the period 1987
through 1994, net income totaled $330 million, cash flow from operating
activities (before working capital changes) totaled $415 million, and the market
value of the Company's Common Shares, plus special distributions to
shareholders, increased by $463 million.
The total available return to continuous shareholders from share price
appreciation and assumed reinvested dividends on the Company's Common Shares
between December 31, 1986 and December 31, 1994, was 587 percent, which
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 and 1992 Incentive Equity
Plans for the Chief Executive Officer and all participants equaled 0.7 percent
and 3.3 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 the Company's shareholder value.
For the five-year period ended December 31, 1994, the total return on the
Company's Common Shares was 84 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. Furthermore, the Committee believes
that the Company's compensation and incentive structure provides strong
alignment of the long-term interests of key management, the Company, and its
shareholders.
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
J. D. Ireland III
G. F. Joklik
11
<PAGE> 15
SHAREHOLDER RETURN PERFORMANCE
The following graphs show changes over the past five-year and eight-year
periods in the value of $100 invested in: (1) Cliffs' Common Shares; (2) S&P 500
Stock Index; (3) S&P Steel Group Index; and (4) S&P Miscellaneous Metals Group
Index. The values of each investment are based on price change plus reinvestment
of all dividends. Cliffs' values include the reinvestment of proceeds from
securities distributed to shareholders in 1988 and 1993.
<TABLE>
FIVE-YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED AT DECEMBER 31, 1989
<CAPTION>
MEASUREMENT PERIOD CLIFFS' S&P MISC.
(FISCAL YEAR COVERED) COMMON S&P 500 S&P STEEL METALS
<S> <C> <C> <C> <C>
1989 100 100 100 100
1990 96 97 84 95
1991 150 126 103 107
1992 153 136 135 115
1993 180 150 178 128
1994 184 152 173 149
</TABLE>
<TABLE>
<CAPTION>
VALUE AT DECEMBER 31
<S> <C> <C> <C> <C> <C> <C>
Cliffs' Common 100 96 150 153 180 184
S&P 500 100 97 126 136 150 152
S&P Steel Group 100 84 103 135 178 173
S&P Misc. Metals Group 100 95 107 115 128 149
</TABLE>
<TABLE>
EIGHT-YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED AT DECEMBER 31, 1986
<CAPTION>
MEASUREMENT PERIOD CLIFFS' S&P STEEL S&P MISC.
(FISCAL YEAR COVERED) COMMON S&P 500 GROUP METALS
<S> <C> <C> <C> <C>
1986 100 100 100 100
1987 157 105 160 176
1988 339 123 195 232
1989 374 161 189 267
1990 359 156 159 253
1991 561 204 195 286
1992 572 220 255 307
1993 672 242 336 342
1994 687 245 326 399
</TABLE>
<TABLE>
<CAPTION>
VALUE AT DECEMBER 31
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cliffs' Common 100 157 339 374 359 561 572 672 687
S&P 500 100 105 123 161 156 204 220 242 245
S&P Steel Group 100 160 195 189 159 195 255 336 326
S&P Misc. Metals Group 100 176 232 267 253 286 307 342 399
</TABLE>
12
<PAGE> 16
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, 1994 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
1994 included the amount shown for 1994 in the Salary column of the Summary
Compensation Table on page 7, plus the amount of bonus earned in 1993 and paid
in 1994, as shown in the Bonus column of the Summary Compensation Table for
1993. Pensionable earnings in 1994 for Messrs. Moore, Brinzo, Calfee, Forsythe
and West were $606,250, $282,500, $310,000, $295,000 and $181,000, respectively.
Messrs. Moore, Brinzo, Calfee, Forsythe and West have 28, 25, 22, 18 and 27
years of credited service under the Company's qualified pension plan,
respectively.
13
<PAGE> 17
AGREEMENTS AND TRANSACTIONS
The Company has agreements ("Agreements") dated February 1, 1992 with M.
Thomas Moore, Chairman and Chief Executive Officer, John S. Brinzo, Senior
Executive-Finance, William R. Calfee, Senior Executive-Commercial, and Frank S.
Forsythe, Senior Executive-Operations (Mine Partnerships), 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.
During 1994, the Board of Directors of the Company approved the renewal to
January 1, 1998 of the February 1, 1992 Severance Pay Plan for Key Employees
("Severance Plan") which presently covers 18 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
14
<PAGE> 18
signed on behalf of the Company, are not entitled to benefits under the
Severance Plan. All benefits payable 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 two trust agreements with Key Trust Company of Ohio, N.A.
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 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 Key Trust Company of Ohio, N.A.
pursuant to which the parties to the Indemnification Agreements may be
reimbursed with respect to enforcing their respective rights under the
agreements.
The Company and the United Steel Workers of America ("USWA") are discussing
criteria for a potential joint designee to the Board of Directors of the Company
pursuant to a tentative understanding between the USWA and certain Company
subsidiaries. If agreement is reached on such criteria and a designee, the
Company would expect to add such designee to the Board of Directors after the
Annual Meeting. In subsequent years, such designee would be subject to annual
re-nomination by the Company and election by vote of the shareholders.
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 LLP 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, 1995. Representatives of
Ernst & Young LLP 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 LLP 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 LLP.
THE DIRECTORS RECOMMEND A VOTE FOR THIS PROPOSAL TO RATIFY THE APPOINTMENT
OF ERNST & YOUNG LLP AS YOUR COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
ANNUAL REPORT
The Company's 1994 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.
15
<PAGE> 19
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.
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 LLP 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 1995 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.
16
<PAGE> 20
SHAREHOLDER PROPOSALS
Any proposal by a shareholder intended to be presented at the 1996 Annual
Meeting of Shareholders must be received by your Company on or before November
22, 1995 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. *
* *
***************************************************************************
17
<PAGE> 21
CLEVELAND-CLIFFS INC
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD ON
MAY 9, 1995
AND
PROXY STATEMENT
<PAGE> 22
<TABLE>
<S> <C> <C> <C>
P CLEVELAND-CLIFFS INC
R 18TH FLOOR DIAMOND BUILDING - CLEVELAND, OHIO 44114-2589
O THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X The undersigned hereby appoints R. S. Colman, E. B. Jones, J. H. Wade and A. W. Whitehouse, as Proxies, each with the power
Y 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 13, 1995, at the Annual Meeting of Shareholders to be held on May 9, 1995, or at
C any adjournment or adjournments thereof, as follows:
O
M Election of Directors, Nominees:
M
O R. S. Colman, J. D. Ireland III, G. F. Joklik,
N E. B. Jones, L. L. Kanuk, M. T. Moore,
S. B. Oresman, A. Schwartz, S. K. Scovil,
J. H. Wade, A. W. Whitehouse.
S
H YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES
A IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED
R IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER; IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2
E INCLUSIVE. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
S
(TO BE SIGNED AND DATED ON OTHER SIDE)
SEE REVERSE
SIDE
</TABLE>
<PAGE> 23
<TABLE>
<S> <C> <C>
/X/ PLEASE MARK YOUR |
VOTES AS IN THIS |
EXAMPLE. |____________
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD 2. RATIFICATION OF THE FOR AGAINST ABSTAIN
1. ELECTION OF / / / / APPOINTMENT OF / / / / / /
DIRECTORS ERNST & YOUNG LLP
(see reverse) AS INDEPENDENT
PUBLIC ACCOUNTANTS
For, except vote withheld from the following nominee(s):
________________________________________________________ IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.
When signing as attorney, executor, administrator,
SIGNATURE(S) ___________________________ DATE ___________ , 1995 trustee or guardian, please give full title as
such and if signing for a corporation please give
your title. When shares are in the names of
SIGNATURE(S) ___________________________ DATE ___________ , 1995 more than one person, each should sign.
</TABLE>
