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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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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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 23, 1997
---------------------
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 23, 1997 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 2000;
(2) To ratify the selection of Coopers & Lybrand L.L.P. as
the Company's independent auditors for the fiscal year
ending September 30, 1997; 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 6, 1996 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 23, 1997, 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, 1996
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 23, 1997, 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 1997 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 1997 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, 1996.
<PAGE>
VOTING SECURITIES
Only shareholders of record at the close of business on
December 6, 1996 are entitled to vote at the Annual Meeting or
any adjournments within 120 days thereof. As of December 6,
1996, there were 11,962,238 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>
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME AND ADDRESS OWNERSHIP (1)(2)(3) CLASS (1)
---------------- ------------------- ---------
<S> <C> <C>
J. P. Morgan & Co. Incorporated ... 2,091,690(4) 17.49%
60 Wall Street
New York, New York 10260
Merwin J. Ray ..................... 1,665,961(5)(6) 13.88%
15415 Shelbyville Road
Louisville, Kentucky 40245
D.G.R. Family Limited Partnership . 1,054,665(7) 8.82%
15415 Shelbyville Road
Louisville, Kentucky 40245
All directors and officers
as a group (18 persons) ......... 2,790,308(8) 22.69%
</TABLE>
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(1) The table reflects share ownership and the percentage of
such share ownership as of December 6, 1996.
(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.
2
<PAGE>
(4) Based upon an amended Schedule 13G filed on December 29,
1995 with the Securities and Exchange Commission by J. P.
Morgan & Co. Incorporated. Includes 1,367,300 shares held
with sole voting power.
(5) Includes 27,000 shares held by Mr. Ray's wife.
(6) Includes 42,188 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 333,013 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 I directors are Ralph W. McIntyre,
Jimmy Dan Conner and Andrew J. Payton. Mr. McIntyre was most
recently elected by the shareholders at the 1994 annual meeting
for a three-year term expiring at the 1997 Annual Meeting, and
Mr. Conner was elected by the shareholders at the 1996 annual
meeting for a term expiring at the 1997 Annual Meeting. Andrew
J. Payton has been nominated to serve his first term as a
director of the Company. If elected, Messrs. McIntyre, Conner
and Payton will hold office for a three-year term expiring in
2000 and until their respective successors have 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 I directors will
be deemed elected directors. 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 I directors. In the
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.
3
<PAGE>
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>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AS
NAME AND YEAR FIRST OF DECEMBER 6, 1996
PRINCIPAL OCCUPATION BECAME ----------------------------------
OR EMPLOYMENT AGE DIRECTOR NUMBER OF SHARES PERCENT OF CLASS
-------------------- --- ---------- ---------------- ----------------
NOMINEES FOR DIRECTORS
CLASS I
(TERM EXPIRING IN 2000)
<S> <C> <C> <C> <C>
Ralph W. McIntyre........... 74 1973 390,963(1) 3.27%
Retired President,
Warren Tool Corporation
Jimmy Dan Conner............ 43 1995 1,000 *
President,
Old Colony Insurance
Service, Inc.
Andrew J. Payton............ 38 -- 1,612 *
Owner and President,
Professional Search Consultants
(executive and professional
recruiting services)
CONTINUING DIRECTORS
CLASS II
(TERM EXPIRING IN 1998)
William E. Hellmann......... 47 1985 750 *
Partner, Stites &
Harbison, Attorneys
Howard F. Bates, Jr. ....... 50 1985 102,008(2) *
Vice President -
Technical Services
Michael J. Carroll.......... 39 1992 169,877(3)(4) 1.41%
Executive Vice President
4
<PAGE>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AS
NAME AND YEAR FIRST OF DECEMBER 6, 1996
PRINCIPAL OCCUPATION BECAME ----------------------------------
OR EMPLOYMENT AGE DIRECTOR NUMBER OF SHARES PERCENT OF CLASS
-------------------- --- ---------- ---------------- ----------------
CLASS III
(TERM EXPIRING IN 1999)
Merwin J. Ray............... 67 1971 1,665,961(5)(6) 13.88%
Chairman of the Board and
Chief Executive Officer
Bradford T. Ray............. 38 1989 213,541(3)(7) 1.78%
President and Chief
Operating Officer
Dale L. Armstrong........... 72 1990 837 *
Retired Vice President,
Sales and Marketing,
Rouge Steel Company
</TABLE>
- --------------------
* Less than 1%
(1) Includes 82,379 shares held by Mr. McIntyre's wife.
(2) Includes 77,250 shares subject to outstanding options under
the Company's Incentive Stock Option Plan which are
presently exercisable.
(3) Includes 60,000 shares subject to outstanding options under
the Company's Incentive Stock Option Plan which are
presently exercisable.
(4) 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.
(5) Includes 42,188 shares subject to outstanding options under
the Company's Incentive Stock Option Plan which are
presently exercisable.
(6) Includes 27,000 shares held by Mr. Ray's wife.
(7) Includes 4,430 shares held by D.G.R. Family Limited
Partnership, of which Mr. Ray is a general partner.
NOMINEES FOR 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.
5
<PAGE>
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.
Mr. Payton is the owner and President of Professional
Search Consultants, an executive and professional recruiting and
consulting firm located in Louisville, Kentucky. Prior to
acquiring Professional Search Consultants in 1995, Mr. Payton
served as the Director of Administration for the law firm of
Brown, Todd & Heyburn PLLC, Louisville, Kentucky, from October
1993 to January 1996, and Director of Marketing for Brown, Todd &
Heyburn PLLC from October 1988 to October 1993.
CONTINUING DIRECTORS
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.
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.
MEETINGS OF THE BOARD
The Board of Directors met four times during fiscal
1996. All incumbent directors attended at least 75% of the
aggregate number of meetings of the Board and the committees of
which they were members.
6
<PAGE>
COMMITTEES OF THE BOARD
The Board of Directors has standing Compensation and
Audit Committees. Members of the Compensation Committee are
Messrs. McIntyre, Armstrong, Conner and Charles A. Mays. Members
of the Audit Committee are Messrs. McIntyre, Mays, Hellmann,
Armstrong and Conner. The Board of Directors has no nominating
committee, or committee performing a similar function.
The Compensation Committee, which met two times in
fiscal 1996, 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 the granting of stock options under
such plans. The Audit Committee, which met two times in fiscal
1996, 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 which in April 1996 was increased
to $15,000 from $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. Beginning
January 1, 1997, all nonemployee directors who, as of the first
day of any calendar year, have not attained the age of 60, will
receive one-half of their annual retainer fee in the form of
shares of Steel Technologies Common Stock. In addition, any
nonemployee director may elect to receive some or all of the
remaining portion of his or her annual retainer fee in the form
of Common Stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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% shareholders 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 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 1996.
7
<PAGE>
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,
1996, 1995 and 1994 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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- -----------------
SECURITIES
UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTION ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS (# SHARES) COMPENSATION (3)
- ------------------ ---- ------ ----- ------------ ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Merwin J. Ray 1996 $230,000 $167,221 $ 64,300(1) 20,000 $ 6,750
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
Bradford T. Ray 1996 167,308 139,456 (2) 15,000 6,750
President and Chief 1995 153,431 76,078 (2) 0 6,750
Operating Officer 1994 126,673 98,995 (2) 0 9,441
Michael J. Carroll 1996 142,308 115,582 (2) 15,000 6,750
Executive Vice President 1995 129,615 64,765 (2) 0 6,750
1994 111,346 98,995 (2) 0 9,405
Howard F. Bates, Jr. 1996 120,000 95,597 (2) 10,000 6,750
Vice President - 1995 118,654 64,765 (2) 0 6,750
Technical Services 1994 114,077 98,995 (2) 0 9,802
Kenneth R. Bates 1996 93,654 47,853 (2) 5,000 5,810
Vice President Finance, 1995 86,769 34,825 (2) 0 6,031
Chief Financial Officer, 1994 76,935 61,873 (2) 0 6,380
Secretary and Treasurer
</TABLE>
- ---------------
(1) Amount includes approximately $45,000 in 1996, $98,000 in
1995 and $71,000 in 1994 for personal use of certain
company aircraft.
(2) Amount does not exceed 10% of salary and bonus.
(3) Amount reported for each individual includes the company
contribution to the Company's 401(k) defined contribution
plan.
INCENTIVE STOCK OPTIONS
The following table presents information with respect to
grants of incentive stock options that were made during the
fiscal year ended September 30, 1996 to each of the named
executive officers.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants(1)
-----------------------------------------------------
Potential Realizable
Number of Value at Assumed
Securities % of Total Annual Rates of Stock
Underlying Options Price Appreciation
Options Granted to Exercise for Option Term
Granted Employees in Price Expiration ---------------------
Name (# shares) Fiscal Year ($/share)(2) Date 5% 10%
---- ---------- ------------ ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Merwin J. Ray............. 20,000 18.18% 12.788 01/24/01 $ 70,660 $156,140
Bradford T. Ray........... 15,000 13.64% 11.625 01/24/06 109,665 277,905
Michael J. Carroll........ 15,000 13.64% 11.625 01/24/06 109,665 277,905
Howard F. Bates, Jr. ..... 10,000 9.09% 11.625 01/24/06 73,110 185,270
Kenneth R. Bates.......... 5,000 4.55% 11.625 01/24/06 36,555 92,635
</TABLE>
- ---------------
(1) Options granted in 1996 to each of the named individuals
except Merwin J. Ray become exercisable at a rate of 20%
per year beginning with the first anniversary of the grant.
Options granted to Mr. Ray become exercisable at a rate of
25% per year.
(2) Option grants to all named individuals except Merwin J. Ray
were made at 100% of fair market value on the date of
grant. Option grants to Mr. Ray were made at 110% of fair
market value on the date of grant.
OPTION EXERCISES AND HOLDINGS
The following table presents information with respect
to incentive stock options exercised during the last fiscal year
by the named executive officers, as well as the status and
current value of unexercised incentive stock options held as of
September 30, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options at Value of Unexercised
Shares September 30, 1996 In-the-Money Options at
Acquired (# shares) September 30, 1996(2)
on Exercise Value -------------------------- ---------------------------
Name (# shares) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Merwin J. Ray........ 15,000 $74,093(1) 42,188 34,062 $ 32,485 $10,828
Bradford T. Ray...... None 0 60,000 24,000 190,270 29,622
Michael J. Carroll... None 0 60,000 24,000 190,270 29,622
Howard F. Bates, Jr.. None 0 77,250 19,000 232,915 25,247
Kenneth R. Bates..... None 0 10,500 11,000 37,246 15,373
</TABLE>
- ---------------
(1) Pre-tax value based on closing price on exercise date.
(2) Pre-tax value based on the fiscal year-end closing price of
$12.50 per share.
9
<PAGE>
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 1996 for scrap steel
products were approximately $2,961,000. Additionally, Steel
Technologies purchased approximately $101,000 of certain plant
supplies from Vega in 1996. 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 is the brother
of Bradford T. Ray and Vice President of the Company and
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. Management reports all
transactions with Vega to the Audit Committee of the Board of
Directors 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 presently consists
of Ralph W. McIntyre, Chairman, Charles A. Mays, Dale L.
Armstrong and Jimmy Dan Conner, all of whom are outside
Directors. 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.
10
<PAGE>
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 "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 initial Incentive Stock Option Plan (the
"Prior Plan") expired in 1995. The executive officers of the
Company still have outstanding options under the Prior Plan but
no new options can be granted under the Prior Plan.
11
<PAGE>
The shareholders approved the Steel Technologies Inc.
1995 Stock Option Plan (the "1995 Plan") at the annual meeting of
shareholders on January 27, 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 interest of the
executive officers with the interest 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.
A total of 65,000 options were granted to executive
officers under the 1995 Plan in 1996.
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 and considers the reported compensation of companies
included in its peer group.
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 1996,
the Committee noted the Company's financial results for fiscal
1995 in relation to prior years. The Committee took into
consideration 1995 results, as well as Mr. Ray's recommendation,
and made no increase in Mr. Ray's existing base salary and bonus
percentage.
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.
12
<PAGE>
SECTION 162(M) OF THE INTERNAL REVENUE CODE
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
Section 162(m) 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 regulations issued by the Internal Revenue
Service, outstanding stock options granted under the Company's
Prior Plan will be unaffected by Section 162(m).
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
opportunity for compensating the Company's key executives whether
or not a portion of any compensation which might be derived
thereunder is non-deductible. The Committee will continue to
assess the practical impact of Section 162(m) on the Company's
executive compensation program and determine what additional
action, if any, is appropriate. For the foreseeable future, the
Committee does not expect Section 162(m) to have any practical
effect on the Company's compensation program.
COMPENSATION COMMITTEE
Ralph W. McIntyre, Chairman
Charles A. Mays
Dale L. Armstrong
Jimmy Dan Conner
13
<PAGE>
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, 1991 and that all dividends were
reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FOR THE YEAR ENDED SEPTEMBER 30, 1996
STEEL TECHNOLOGIES INC., RUSSELL 2000 INDEX AND PEER GROUP
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered)
--------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Steel Technologies Inc. $100 $96 $263 $226 $125 $157
Russell 2000 Index $100 $109 $145 $149 $184 $208
Peer Group $100 $101 $154 $171 $157 $193
Values are presented as of September 30 of each year.
</TABLE>
14
<PAGE>
ITEM II. RATIFICATION OF INDEPENDENT AUDITORS
The Company's Annual Report to Shareholders for the
fiscal year ended September 30, 1996, 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 6,
1996. 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, 1997. 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, 1997 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, 1996
15
<PAGE>
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 23, 1997, 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: Ralph W. McIntyre, Jimmy Dan Conner, Andrew
J. Payton
(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, 1997.
[ ] 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
