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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
STEEL TECHNOLOGIES INC.
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
STEEL TECHNOLOGIES INC.
--------------
Notice of Annual Meeting of Shareholders
To Be Held on January 25, 1996
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NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of STEEL TECHNOLOGIES INC. (the "Company") will be
held at the Louisville Marriott East, 1903 Embassy Square
Boulevard (I-64 and Hurstbourne Lane), Louisville, Kentucky, on
Thursday, January 25, 1996 at 9:00 A.M. (Eastern Standard Time),
for the following purposes:
(1) To elect one class of three directors for a term
expiring in 1999 and one director for a term expiring
in 1997;
(2) To ratify the selection of Coopers & Lybrand L.L.P. as
the Company's independent auditors for the fiscal year
ending September 30, 1996; and
(3) To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only shareholders of record at the close of business on
December 8, 1995 are entitled to notice of and to vote at the
Annual Meeting. In the event the Annual Meeting should be
adjourned to a date or dates later than May 24, 1996, the Board
of Directors will establish a new record date for purposes of
determining those shareholders entitled to notice of and to vote
at any such adjournments. The transfer books will not be closed.
By Order of the Board of Directors
KENNETH R. BATES,
Vice President and Secretary
15415 Shelbyville Road
Louisville, Kentucky 40245
December 18, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE, WHICH DOES NOT REQUIRE ANY POSTAGE IF
MAILED IN THE UNITED STATES. IF YOU ARE ABLE TO ATTEND THE
MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT
ANY TIME BEFORE THE PROXY IS EXERCISED.
<PAGE>
STEEL TECHNOLOGIES INC.
15415 SHELBYVILLE ROAD
LOUISVILLE, KENTUCKY 40245
---------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of Steel
Technologies Inc., a Kentucky corporation (the "Company"), to be used at the
Annual Meeting of Shareholders of the Company to be held at 9:00 A.M. (Eastern
Standard Time), on Thursday, January 25, 1996, at the Louisville Marriott
East, 1903 Embassy Square Boulevard (I-64 and Hurstbourne Lane), Louisville,
Kentucky, and at any and all adjournments thereof, for the purposes set forth
in the accompanying Notice of the meeting.
Shares represented by duly executed proxies in the accompanying
form received prior to the meeting and not revoked will be voted at the meeting
or at any adjournments within 120 days thereof in accordance with the choices
specified on the ballot. If no choices are specified, it is the intention of
the persons named as proxies in the accompanying form of proxy to vote for the
nominees for election as directors and for the ratification of independent
auditors for the 1996 fiscal year. Such proxy may be revoked by the person
executing it at any time before the authority thereby granted is exercised by
giving written notice to the Secretary of the Company, by delivery of a duly
executed proxy bearing a later date or by voting in person at the meeting.
Attendance at the meeting will not have the effect of revoking a proxy unless
the shareholder so attending so notifies the secretary of the meeting in
writing prior to voting of the proxy.
The expenses of soliciting proxies for the Annual Meeting,
including the cost of preparing, assembling and mailing this proxy statement
and the accompanying form of proxy, will be borne by the Company. In addition
to the solicitation of proxies by mail, certain officers and regular employees
of the Company, without additional compensation, may use their personal efforts,
by telephone or otherwise, to obtain proxies. The Company will also request
persons, firms and corporations holding shares in their names, or in the names
of their nominees, which shares are beneficially owned by others, to send this
proxy material to and obtain proxies from such beneficial owners, and will
reimburse such holders for their reasonable expenses in so doing.
The presence in person or by proxy of shareholders holding a
majority of the outstanding shares of the Company's Common Stock will
constitute a quorum for the transaction of all business at the Annual Meeting.
A shareholder voting for the election of directors may withhold authority to
vote for all nominees for directors or may withhold authority to vote for
certain nominees for directors. A shareholder may also abstain from voting on
the proposal to ratify the selection of independent auditors for the 1996
fiscal year. Votes withheld from the election of any nominee for director and
abstentions from any other proposal will be treated as shares that are present
and entitled to vote for purposes of determining the presence of a quorum, but
will not be counted in the number of votes cast on any matter. If a broker
does not receive voting instructions from the beneficial owner of shares on a
particular matter and indicates on the proxy that it does not have
discretionary authority to vote on that matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
This proxy statement and the accompanying form of proxy are being
mailed to shareholders commencing on or about December 18, 1995.
<PAGE>
VOTING SECURITIES
Only shareholders of record at the close of business on December
8, 1995 are entitled to vote at the Annual Meeting or any adjournments within
120 days thereof. As of December 8, 1995, there were 11,975,265 shares of the
Company's Common Stock outstanding and entitled to vote.
Each share of Common Stock entitles the holder to one vote on all
matters presented at the Annual Meeting, except that cumulative voting applies
in the election of directors. Under cumulative voting, the holder of each
share of Common Stock has the right to cast as many votes in the aggregate as
he owns shares of such stock, multiplied by the number of directors to be
elected; and each shareholder may cast the whole number of such votes for one
nominee or distribute such votes in any proportion among two or more nominees.
The following table sets forth certain information regarding
those persons known to management of the Company to own of record or
beneficially more than five percent of the outstanding shares of the Company's
Common Stock and the ownership of such Common Stock by all directors and
officers of the Company as a group:
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME AND ADDRESS OWNERSHIP (1)(2)(3) CLASS (1)
---------------- ------------------- ---------
J. P. Morgan & Co. Incorporated .. 2,043,300(4) 17.06%
60 Wall Street
New York, New York 10260
Merwin J. Ray .................... 1,675,625(5)(6) 13.99%
15415 Shelbyville Road
Louisville, Kentucky 40245
D.G.R. Family Limited Partnership. 1,054,665(7) 8.81%
15415 Shelbyville Road
Louisville, Kentucky 40245
All directors and officers
as a group (15 persons) ....... 2,777,273(8) 23.19%
</TABLE>
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(1) The table reflects share ownership and the percentage of such share
ownership as of December 8, 1995.
(2) Except as otherwise indicated, each person or entity shown has sole
voting and investment power with respect to the shares of Common Stock
owned by him or it.
(3) Information with respect to beneficial ownership has been obtained from
the Company's shareholder records and from information provided by
shareholders.
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(4) Based upon an amended Schedule 13G filed on June 30, 1995 with the
Securities and Exchange Commission by J. P. Morgan & Co. Incorporated.
Includes 1,327,700 shares held with sole voting power.
(5) Includes 27,000 shares held by Mr. Ray's wife.
(6) Includes 43,125 shares subject to outstanding options under the Company's
Incentive Stock Option Plan which are presently exercisable.
(7) D.G.R. Family Limited Partnership was formed in December 1994 to provide
for the transfer of ownership to her children of shares of Steel
Technologies common stock previously held in trust for the benefit of
Dorothy Geraldine Ray. Merwin J. Ray, as trustee of the Dorothy
Geraldine Ray trust, is a limited partner of the Partnership and
contributed 1,046,665 shares of common stock previously owned by the
trust as its initial capital contribution. The general partners of the
Partnership are Bradford T. Ray, Stuart N. Ray, Heidi J. Gregg and Leslie
A. Carroll. Bradford T. Ray is President and Chief Operating Officer,
and Stuart N. Ray is Vice President, of the Company. Leslie A. Carroll
is the wife of Michael J. Carroll, Executive Vice President of the
Company.
(8) Includes 278,700 shares subject to outstanding options under the
Company's Incentive Stock Option Plan which are presently exercisable.
See "Election of Directors" below for share ownership information
with respect to nominees for election as directors and continuing directors.
ITEM I. ELECTION OF DIRECTORS
The Board of Directors is presently divided into three classes
consisting of three directors each. Each class is elected for a three year
term expiring in successive years. The nominees for election as Class III
directors whose current terms expire at the 1996 Annual Meeting are Merwin J.
Ray, Bradford T. Ray and Dale L. Armstrong. Each of these nominees was
elected by the shareholders at the 1993 annual meeting for a three-year term.
If elected, Messrs. Ray, Ray and Armstrong will hold office for a three-year
term expiring in 1999 and until their respective successors have been elected
and qualified. Jimmy Dan Conner has been nominated for election as a Class I
director. Mr. Conner was first appointed to the Board of Directors in July
1995 by the incumbent directors to fill a vacancy in Class I created by the
resignation of Timothy M. Graven from the Board of Directors in November 1994.
Class I directors were elected by the shareholders at the 1994 annual meeting
for a three-year term of office expiring in 1997. If elected, Mr. Conner will
hold office for the remaining unexpired portion of the Class I directors'
original term and until his successor has been elected and qualified.
Shareholders voting at the Annual Meeting may not vote for more
than the number of nominees listed in this Proxy Statement. Directors will be
elected by a plurality of the total votes cast at the Annual Meeting. That
is, the three nominees receiving the greatest number of votes for Class III
directors will be deemed elected directors. Additionally, the one nominee
receiving the greatest number of votes for Class I director will be deemed
elected a director. It is the intention of the persons named as proxies in
the accompanying form of proxy (unless authority to vote therefor is
specifically withheld) to vote for the election of the three nominees for
Class III and one nominee for Class I directors. In the
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<PAGE>
event that any of the nominees becomes unavailable (which is not now
anticipated by the Company), the persons named as proxies have discretionary
authority to vote for a substitute nominee designated by the present Board of
Directors. The Board of Directors has no reason to believe that any of said
nominees will be unwilling or unable to serve if elected.
The following table contains certain information regarding each
of the nominees for election as directors at this year's annual meeting and each
continuing director. Each of these individuals has furnished the respective
information shown. Except as otherwise indicated, each of the persons listed
below has sole voting and investment power with respect to the shares of
Common Stock owned by him.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AS
NAME AND YEAR FIRST OF DECEMBER 8, 1995
PRINCIPAL OCCUPATION BECAME ----------------------------------
OR EMPLOYMENT AGE DIRECTOR NUMBER OF SHARES PERCENT OF CLASS
- -------------------- --- ---------- ---------------- ----------------
NOMINEES FOR DIRECTORS
CLASS III
(TERM EXPIRING IN 1999)
Merwin J. Ray ......... 66 1971 1,675,625(1)(2) 13.99%
Chairman of the Board
and Chief Executive
Officer
Bradford T. Ray ....... 37 1989 206,041(3)(4) 1.72%
President and Chief
Operating Officer
Dale L. Armstrong ..... 71 1990 737 *
Retired Vice President,
Sales and Marketing,
Rouge Steel Company
CLASS I
(TERM EXPIRING IN 1997)
Jimmy Dan Conner ...... 42 1995 400 *
President,
Old Colony Insurance
Service, Inc.
4
<PAGE>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AS
NAME AND YEAR FIRST OF DECEMBER 8, 1995
PRINCIPAL OCCUPATION BECAME ----------------------------------
OR EMPLOYMENT AGE DIRECTOR NUMBER OF SHARES PERCENT OF CLASS
- -------------------- --- ---------- ---------------- ----------------
CONTINUING DIRECTORS
CLASS I
(TERM EXPIRING IN 1997)
Ralph W. McIntyre ..... 73 1973 415,443(5) 3.47%
Retired President,
Warren Tool Corporation
Charles A. Mays ....... 56 1985 800 *
Executive Vice President
and Chief Financial
Officer, Commonwealth
Bank and Trust Co.
CLASS II
(TERM EXPIRING IN 1998)
William E. Hellmann ... 46 1985 650 *
Partner, Stites &
Harbison, Attorneys
Howard F. Bates, Jr. .. 49 1985 94,508(6) *
Vice President -
Technical Services
Michael J. Carroll .... 38 1992 167,377(3)(7) 1.40%
Executive Vice
President
</TABLE>
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* Less than 1%
(1) Includes 43,125 shares subject to outstanding options under the Company's
Incentive Stock Option Plan which are presently exercisable.
(2) Includes 27,000 shares held by Mr. Ray's wife.
(3) Includes 52,500 shares subject to outstanding options under the Company's
Incentive Stock Option Plan which are presently exercisable.
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<PAGE>
(4) Includes 4,430 shares held by D.G.R. Family Limited Partnership, of
which Mr. Ray is a general partner.
(5) Includes 94,619 shares held by Mr. McIntyre's wife.
(6) Includes 69,750 shares subject to outstanding options under the Company's
Incentive Stock Option Plan which are presently exercisable.
(7) Includes 49,290 shares held by Mr. Carroll's wife. Also includes 4,430
shares held by D.G.R. Family Limited Partnership, of which Mrs. Carroll
is a general partner.
NOMINEES FOR DIRECTORS
Mr. Merwin J. Ray has served as Chairman of the Board of the
Company since its incorporation in 1971, and as Chief Executive Officer since
May 1985. He previously held the position of President from 1971 to May 1985.
Mr. Ray is the father of Bradford T. Ray, President and Chief Operating Officer
of the Company, and the father-in-law of Michael J. Carroll, Executive Vice
President of the Company.
Mr. Bradford T. Ray has served as President and Chief Operating
Officer of the Company since November 1994. He previously held the positions
of Executive Vice President of the Company from April 1993 to November 1994,
and Vice President--Manufacturing of the Company from January 1987 to April
1993.
Mr. Armstrong retired February 1, 1989 as Vice President, Sales
and Marketing of Rouge Steel Company, a producer and seller of sheet steel. He
held that position for more than the previous five years. Mr. Armstrong
joined Rouge Steel after his retirement from USX Corporation (formerly U.S.
Steel). While at USX he served in various capacities, including Vice
President--Sales, Vice President and General Manager and Senior Vice
President.
Mr. Conner is the current President of Old Colony Insurance
Service, Inc., Crestwood, Kentucky. He has held that position since January
1993. From June 1991 to January 1993, Mr. Conner served as an account executive
with Old Colony Insurance Service. From May 1989 to June 1991, he was an
officer and part owner of Conner, Musselman & Calvert Insurance Agency,
Louisville, Kentucky.
CONTINUING DIRECTORS
Mr. McIntyre retired October 1, 1987 as President of Warren Tool
Corporation, Warren, Ohio, a manufacturer of hand tools. He had held that
position for more than the previous five years.
Mr. Mays is the current Executive Vice President and Chief
Financial Officer of Commonwealth Bank and Trust Company, Louisville, Kentucky.
He has held those positions since June 1990. From March 1985 to January 1990,
Mr. Mays served as President and Chief Executive Officer and as a director of
H. J. Scheirich Co., Louisville, Kentucky, a manufacturer of kitchen and bath
cabinetry. From January 1980 until March 1985, Mr. Mays served as Managing
Partner of Deming, Malone, Livesay & Ostroff, a Louisville, Kentucky
accounting firm.
6
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Mr. Hellmann is a partner in the law firm of Stites & Harbison,
Louisville, Kentucky. Stites & Harbison serves as general counsel to the
Company.
Mr. Bates has served as Vice President--Technical Services of the
Company since November 1981. From August 1977 to November 1981, he held the
position of Manager of Technical Services.
Mr. Carroll has served as Executive Vice President of the Company
since January 1995. He previously held the positions of Senior Vice
President--Sales of the Company from April 1993 to January 1995 and Vice
President--Sales of the Company from July 1987 to April 1993.
MEETINGS OF THE BOARD
The Board of Directors met five times during fiscal 1995. All
incumbent directors attended at least 75% of the aggregate number of meetings
of the Board and the committees of which they were members.
COMMITTEES OF THE BOARD
The Board of Directors has standing Compensation and Audit
Committees. Members of the Compensation Committee are Messrs. McIntyre, Mays
and Armstrong. Members of the Audit Committee are Messrs. McIntyre, Mays,
Hellmann and Armstrong. The Board of Directors has no nominating committee,
or committee performing a similar function.
The Compensation Committee, which met two times in fiscal 1995,
considers and recommends to the Board of Directors the compensation of the
Company's executive officers. In addition, the Compensation Committee
administers the Company's stock option plans, including recommending to the
Board of Directors the granting of stock options. The Audit Committee, which
met two times in fiscal 1995, reviews the scope of the audit and related
matters pertaining to the examination of the Company's financial statements
and the nature and extent of any non-audit services provided by the Company's
independent accountants, and makes recommendations to the Board of Directors
regarding the selection of independent auditors for the current fiscal year.
COMPENSATION OF DIRECTORS
Directors who are not officers or employees of the Company
receive an annual fee of $10,000 for their services as a director and are
reimbursed for travel and other expenses incurred in connection with their
attendance at meetings of the Board.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers and persons who own more than 10% of the
outstanding Common Stock of the Company, to file with the Securities and
Exchange Commission reports of changes in ownership of the Common Stock of the
Company held by such persons. Officers, directors and greater than 10%
stockholders are also required to furnish the Company with copies of all forms
they file under this regulation. To the Company's knowledge, based solely on
a review of the copies of such reports furnished to the Company
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<PAGE>
and representations that no other reports were required, all Section 16(a)
filing requirements applicable to all of its officers and directors were
complied with during fiscal 1995.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth cash and other compensation
information for the fiscal years ended September 30, 1995, 1994 and 1993 paid or
accrued by the Company, and its subsidiaries, as well as the stock awards
granted, to the Company's Chief Executive Officer and its four other most highly
compensated executives.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------- ------------
SECURITIES
OTHER UNDERLYING
NAME AND ANNUAL STOCK OPTION ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS (# SHARES) COMPENSATION (3)
- ------------------ ---- ------ ----- ------------ ----------------- ----------------
Merwin J. Ray
Chairman of the Board of 1995 $230,000 $113,343 $117,750(1) 0 $ 6,750
Directors and Chief 1994 226,423 173,241 89,800(1) 0 10,613
Executive Officer 1993 207,500 168,978 93,700(1) 56,250 0
Bradford T. Ray 1995 153,431 76,078 (2) 0 6,750
President and Chief 1994 126,673 98,995 (2) 0 9,441
Operating Officer 1993 116,500 94,484 (2) 22,500 658
Michael J. Carroll 1995 129,615 64,765 (2) 0 6,750
Executive Vice President 1994 111,346 98,995 (2) 0 9,405
1993 97,500 94,484 (2) 22,500 692
Howard F. Bates, Jr. 1995 118,654 64,765 (2) 0 6,750
Vice President - 1994 114,077 98,995 (2) 0 9,802
Technical Services 1993 108,750 98,634 (2) 22,500 762
Kenneth R. Bates 1995 86,769 34,825 (2) 0 6,031
Vice President Finance, 1994 76,935 61,873 (2) 0 6,380
Chief Financial Officer, 1993 72,250 60,348 (2) 15,000 600
Secretary and Treasurer
</TABLE>
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(1) Amount includes approximately $98,000 in 1995, $71,000 in 1994 and
$74,000 in 1993 for personal use of certain company aircraft.
(2) Amount does not exceed 10% of salary and bonus.
(3) Amount reported for each individual includes the company contribution to
the Company's 401(k) defined contribution plan.
8
<PAGE>
INCENTIVE STOCK OPTIONS
There were no grants of incentive stock options that were made
during the fiscal year ended September 30, 1995 to any of the named executive
officers.
OPTION EXERCISES AND HOLDINGS
The following table presents information as to the status and
current value of unexercised incentive stock options held by the named
executive officers as of September 30, 1995. There were no exercises of stock
options by any of the named executive officers during the last fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED
SEPTEMBER 30, 1995 IN-THE-MONEY OPTIONS AT
(# SHARES) SEPTEMBER 30, 1995(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Merwin J. Ray .................... 43,125 28,125 $46,905 $ 0
Bradford T. Ray .................. 52,500 16,500 39,996 9,999
Michael J. Carroll ............... 52,500 16,500 39,996 9,999
Howard F. Bates, Jr. ............. 69,750 16,500 39,996 9,999
Kenneth R. Bates ................. 5,250 11,250 7,499 7,499
</TABLE>
- ---------------
(1) Pre-tax value based on the fiscal year-end closing price of $10.00 per
share.
RETIREMENT PLAN
The Company maintains a 401(k) defined contribution retirement
plan. The Company's matching contribution to each of the named executive
officer's defined contribution plan has been included under the caption "All
Other Compensation" in the summary compensation table.
CERTAIN TRANSACTIONS
Bradford T. Ray is a director and a shareholder of The Vega
Company ("Vega"). Vega was organized in 1994 to engage in the business of
purchasing and reselling scrap steel products. Steel Technologies is a major
customer of Vega. Total amounts paid by Vega to Steel Technologies in fiscal
1995 for scrap steel products were approximately $1,125,000. Veronica V. Ray is
the other shareholder and a director of Vega. Her husband, Stuart N. Ray, also
serves as a director of Vega. Stuart N. Ray
9
<PAGE>
is the brother of Bradford T. Ray and Vice President of the Company and
executive vice president of Mi-Tech Steel, Inc., the Company's fifty percent
owned corporate joint venture. In July 1995, the Board of Directors approved
the sale of scrap steel products to Vega, in such amounts, for such prices and
upon such terms as the authorized officer of the Company from time to time
determines to be in the best interests of the Company. The Board of Directors
directed management to report all transactions with Vega to the Audit
Committee as frequently as requested by the committee, but at least annually.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for administering the Company's executive compensation program.
The Committee consists of Ralph W. McIntyre, Chairman, Charles A. Mays and
Dale L. Armstrong, all of whom are outside Directors. William E. Hellmann
served as a member of the Compensation Committee until January 27, 1995 and
participated in Committee discussions concerning executive compensation for
fiscal year 1995. The Committee meets at least annually to review the
compensation program for the executive officers of the Company. All decisions
by the Committee relating to the compensation of the Company's executive
officers are reviewed by the full Board of Directors except where required to
be made solely by the Committee. No member of the Committee is eligible to
participate in any of the compensation plans or programs it administers.
COMPENSATION POLICY
The compensation policy of the Committee is based upon several goals.
They are as follows:
-- To provide the Company's shareholders with proper and effective
management;
-- To provide management with the tools they need to effectively
operate the Company; and
-- To provide a fair wage and benefit program for the executive
officers of the Company.
EXECUTIVE COMPENSATION PROGRAM
The Committee believes that a meaningful portion of the compensation paid
to executive officers should relate to both the short term and long term
profitability of the Company. Therefore, the executive officers' compensation
program is composed of base salary, bonus and long term incentive
compensation. The Committee believes that this combination reflects the
Committee's policy that the executive officers' compensation should be related
to profitability.
BASE SALARY AND BONUS. The Committee's practices in determining base
salaries for the executive officers are largely subjective and not subject to
specific measurement criteria. The Committee reviews information regarding
historical compensation for each executive officer on an individual basis as
well as the relationship of the individual's compensation to the overall
compensation of all executive officers of the Company. Additionally, the
Committee considers the relationship of the executive officer's compensation
to the compensation of other executive officers in the intermediate steel
processing industry. This group includes the peer group used for stock
performance comparisons under the caption
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<PAGE>
"Performance Graph" appearing elsewhere in this Proxy Statement. The
Committee also solicits recommendations from the Chairman of the Board for
annual compensation of the executive officers.
The Company's executive officers all participate in the Company's cash
bonus plan (the "Bonus Plan"), which has been in place since the early 1970s.
Under the Bonus Plan, bonuses paid to participants are computed as a
percentage of the Company's net income determined before taxes, bonuses and
gains or losses on sale of property, plant and equipment. All full-time non-
union employees of the Company participate in the Bonus Plan. The total
amount of bonuses paid to all participants in this plan is equal to 15% of the
Company's adjusted net income. Bonuses paid can account for as much as 50% of
a participant's total annual compensation.
A significant amount of the executive's compensation is tied to the
Company's profitability and is the largest variable in determining annual
compensation. Each executive officer's participating percentage in the bonus
program can be adjusted, up or down, based upon performance as determined by
the Committee after consultation with the Chairman of the Board. The bonus
paid to an executive officer may not exceed the executive officer's base
salary in any given year.
The Committee believes that the bonus portion of the executive
compensation program is effective in motivating the executive officers of the
Company to use their leadership to improve the profitability of the Company.
The Committee also believes that an adequate base salary is necessary to
retain effective executive officers and to discourage management decisions
which might improve short term profitability but may not always be in the long
term best interest of the Company.
LONG-TERM INCENTIVES. The Committee believes that, in addition to the
cash bonus plan which should motivate the executive officers to improve
current profitability, it is appropriate for the Company to provide long term
incentives to motivate the executive officers to improve long term
profitability as well.
The Company's Incentive Stock Option Plan (the "ISO Plan") expired in
1995. The executive officers of the Company still hold outstanding options
under the ISO Plan but no new options can be granted under the ISO Plan.
The shareholders approved the Steel Technologies Inc. 1995 Stock Option
Plan (the "1995 Plan") at the annual meeting of shareholders on January 26,
1995. The purpose of the 1995 Plan is to further the interests of the Company
by encouraging key employees, including the executive officers, to remain as
employees and by providing the employees with additional incentives for
unusual industry and efficiency. The Committee believes the 1995 Plan will
give the Committee additional flexibility to provide incentives to the
executive officers to improve the performance of the Company consistent with
the long term best interests of the shareholders. The 1995 Plan includes both
qualified incentive stock options and non-qualified stock options. The
Committee believes that the 1995 Plan provides the Company with flexibility
sufficient to meet the goals of the executive compensation program as it
aligns the interests of the executive officers with the interests of the
shareholders by providing value to the executive officers directly tied to the
value of the Company's stock.
Factors considered by the Committee in granting new stock options to the
executive officers include the position held by each individual in the
Company, the individual's performance and the timing and amount of previous
grants. No stock options were granted to the executive officers in fiscal
year 1995.
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COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Consistent with the Committee's general philosophy for compensation,
Merwin J. Ray is compensated through base salary, bonus and long term
incentive compensation. As with other executive officers, the profitability
of the Company is the primary variable in the compensation paid to Mr. Ray.
In evaluating annual compensation for Mr. Ray, the Committee examines the
operating performance of the Company for prior years, as well as the
projections and expectations for the current year.
Under Mr. Ray's direction, the Company has made substantial investments
in recent years in new and improved equipment and facilities. This aggressive
commitment to capital expansion enables the Company to increase the products
and services offered to the marketplace and expand its capabilities to meet
its customers' increasing needs, all of which are expected to add to
shareholder value.
The Committee believes that Mr. Ray's performance and direction has been
critical to the success of the Company. In determining Mr. Ray's base salary
and bonus percentage for 1995, the Committee noted the Company's financial
results for fiscal 1994 in relation to prior years. The Committee took into
consideration 1994 results, which included increases in sales and net income
over the preceding fiscal year, and determined that Mr. Ray's existing base
salary and bonus percentage were appropriate.
The Committee believes the variable components of Mr. Ray's compensation
provide performance related compensation adequate to motivate Mr. Ray to use
his leadership to improve the Company's short and long term profitability. A
substantial portion of Mr. Ray's annual compensation corresponds directly to
the financial performance of the Company through his participation in the
Bonus Plan. Mr. Ray also benefits from the long term appreciation in value of
the Company's stock through the Company's stock option plans. The Committee
takes note of the fact that Mr. Ray owns a significant number of shares of the
Company's stock, and believes that his ownership interest creates an
additional incentive for Mr. Ray to provide the leadership necessary to
improve the long term profitability of the Company.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
Section 162(m) of the Internal Revenue Code, added as part of the Omnibus
Budget Reconciliation Act of 1993, imposes a limitation on deductions that can
be taken by a publicly held corporation for compensation paid to certain of
its executives. Under Section 162(m), a deduction is denied for compensation
paid in a tax year beginning on or after January 1, 1994, to a corporation's
chief executive officer or any of its other four most highly compensated
officers to the extent that such compensation exceeds $1 million. Certain
performance-based compensation, however, is specifically exempt from the
deduction limit.
The Committee has carefully considered the effect of this new legislation
on the Company's existing compensation program. For the foreseeable future,
the Committee anticipates that compensation received by its covered executives
will be well within the limits on deductibility. The Committee has been
advised that, based on proposed regulations issued by the Internal Revenue
Service, outstanding stock options granted under the Company's ISO Plan will
be unaffected by the new law.
The Committee is aware that compensation attributable to certain stock
options which may be granted in the future under the 1995 Plan may not qualify
for the exemption made for performance-based compensation. For the present
time, the Committee believes that the 1995 Plan provides a valuable
12
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opportunity for compensating the Company's key executives whether or not a
portion of any compensation which might be derived thereunder is non-
deductible. Once final regulations are issued, the Committee will assess the
practical impact of the new law on the Company's executive compensation
program and determine what additional action, if any, is appropriate.
COMPENSATION COMMITTEE
Ralph W. McIntyre, Chairman
Charles A. Mays
Dale L. Armstrong
13
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PERFORMANCE GRAPH
The following performance graph compares the performance of the
Company's Common Stock to the Russell 2000 Index and to a peer group for the
Company's last five fiscal years. Since there is no nationally recognized
industry index consisting of intermediate steel processors or specialty metal
distributors to be used as a peer group index, the Company constructed its own
peer group. This peer group is comprised of seven companies which represent
the other public companies in the industry -- Worthington Industries, Inc.,
A.M. Castle and Co., Huntco Inc., Shiloh Industries, Inc., Gibralter Steel
Corporation, Olympic Steel, Inc. and Cold Metal Products, Inc. The returns of
each member of the peer group are weighted according to each member's stock
market capitalization as of the beginning of the period measured. The graph
assumes that the value of the investment in the Company's Common Stock and
each index was $100 at September 30, 1990 and that all dividends were
reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FOR THE YEAR ENDED SEPTEMBER 30, 1995
STEEL TECHNOLOGIES INC., RUSSELL 2000 INDEX AND PEER GROUP
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Measurement Period
(Fiscal Year Covered)
------------------------------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Steel Technologies Inc. $100 $100 $97 $264 $227 $125
Russell 2000 Index $100 $145 $158 $211 $216 $267
Peer Group (1) $100 $148 $150 $228 $254 $233
</TABLE>
Values are presented as of September 30 of each year.
(1) The peer group index used in the Company's proxy statement for the 1995
annual meeting (the "1995 Index") included the only four public companies
in the industry with at least a twelve-month stock performance history,
Worthington Industries, Inc., A.M. Castle and Co., Huntco Inc. and Shiloh
Industries, Inc. Three other intermediate steel processors, Gibralter
Steel Corporation, Olympic Steel, Inc. and Cold Metal Products, Inc.,
went public during the Company's 1994 fiscal year and have been added to
the current peer group. If the four companies included in the 1995 Index
had comprised the current peer group index, the plot points for that
index, instead of those reflected in the table above, would have been as
follows: 1990, $100; 1991, $148; 1992, $150; 1993, $228; 1994, $254; and
1995, $232.
14
<PAGE>
ITEM II. RATIFICATION OF INDEPENDENT AUDITORS
The Company's Annual Report to Shareholders for the fiscal year
ended September 30, 1995, including financial statements and the report of
Coopers & Lybrand L.L.P. thereon, is being mailed with this Proxy Statement to
each of the Company's shareholders of record at the close of business on
December 8, 1995. The Board of Directors, upon recommendation of the Audit
Committee, has selected Coopers & Lybrand L.L.P. as independent auditors of
the Company's accounts for the fiscal year ending September 30, 1996. Coopers
& Lybrand L.L.P. has audited the accounts of Steel Technologies (formerly
Southern Strip Steel, Inc.) and its subsidiaries since 1973. This selection
will be presented to shareholders for ratification at the Annual Meeting. If
the shareholders fail to ratify this selection, the matter of the selection of
independent auditors will be reconsidered by the Board of Directors.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
The selection of Coopers & Lybrand L.L.P. will be deemed ratified
if the votes cast in favor of the proposal exceed the votes cast against the
proposal. Abstentions and broker non-votes will not be counted as votes cast
either for or against the proposal.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next
annual meeting of shareholders must be received by the Company at its
principal executive offices in Louisville, Kentucky on or before August 20,
1996 for inclusion in the Company's proxy statement and form of proxy relating
to that meeting and must comply with the applicable requirements of the
federal securities laws.
OTHER MATTERS
The Board of Directors knows of no business which will be
presented for consideration at the Annual Meeting other than that described
above. However, if any such other business should properly come before the
Annual Meeting, it is the intention of the persons named in the accompanying
form of proxy to vote the proxies in respect of any such business in accordance
with their best judgment.
By Order of the Board of Directors
Kenneth R. Bates,
VICE PRESIDENT AND SECRETARY
Louisville, Kentucky
December 18, 1995
15
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PROXY
STEEL TECHNOLOGIES INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Merwin J. Ray and Bradford T.
Ray, and each of them, as proxies, with full power of substitution,
and authorizes them, and each of them, to vote and act with respect
to all shares of common stock of Steel Technologies Inc. which the
undersigned is entitled to vote at the Annual Meeting of Shareholders
to be held on Thursday, January 25, 1996, at 9:00 A.M. EST, at the
Louisville Marriott East, 1903 Embassy Square Boulevard (I-64 and
Hurstbourne Lane), Louisville, Kentucky, and at any and all
adjournments within 120 days thereof.
The Board of Directors recommends a vote FOR each of the
following proposals:
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all
to the contrary below) nominees listed
below
NOMINEES: Merwin J. Ray, Bradford T. Ray, Dale L.
Armstrong, Jimmy Dan Conner
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE
INDIVIDUAL NOMINEES, WRITE SUCH NAME OR NAMES IN THE SPACE
PROVIDED BELOW. UNLESS AUTHORITY TO VOTE FOR ALL THE NOMINEES
LISTED ABOVE IS WITHHELD, THIS PROXY WILL BE DEEMED TO CONFER
AUTHORITY TO VOTE FOR EVERY NOMINEE WHOSE NAME IS NOT ENTERED
BELOW.)
- ---------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE SELECTION OF COOPERS & LYBRAND
L.L.P. AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote
upon such other matters as may properly come before the meeting.
THIS PROXY MUST BE DATED AND SIGNED ON THE REVERSE SIDE
- -- -- -- -- -- -- -- -- -- --
THE PROXIES SHALL VOTE SUCH SHARES AS SPECIFIED HEREIN. IF A
CHOICE IS NOT SPECIFIED, THEY SHALL VOTE FOR THE ELECTION OF ALL
NOMINEES FOR DIRECTORS AND IN FAVOR OF PROPOSAL 2.
Dated: , 19
--------------------- --
----------------------------------
Signature
----------------------------------
Signature
Name(s) should be signed exactly as
shown to the left hereof. Title
should be added if signing as
executor, administrator, trustee,
etc.
PLEASE DATE, SIGN AND RETURN THIS PROXY
PROMPTLY IN THE ACCOMPANYING ENVELOPE
