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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT No. )
---
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
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 25, 2001
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, 2001 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 2004;
(2) 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, 2000 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 25, 2001, 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
JOHN M. BAUMANN, JR.
Secretary
15415 Shelbyville Road
Louisville, Kentucky 40245
December 15, 2000
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, 2001, 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. 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. Votes withheld from the election
of any nominee for director 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 will not be 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 15, 2000.
1
<PAGE>
VOTING SECURITIES
Only shareholders of record at the close of business on
December 8, 2000 are entitled to vote at the Annual Meeting or
any adjournments within 120 days thereof. As of December 8,
2000, there were 10,316,251 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:
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME AND ADDRESS OWNERSHIP (1)(2)(3) CLASS (1)
---------------- ------------------- ---------
Merwin J. Ray .................... 1,442,551 (4) 13.98%
15415 Shelbyville Road
Louisville, Kentucky 40245
Dimensional Fund Advisors Inc. ... 915,400 (5) 8.87%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Bradford T. Ray .................. 529,202 (6) 5.13%
15415 Shelbyville Road
Louisville, Kentucky 40245
All directors and officers
as a group (22 persons) ......... 3,086,854 (7) 29.92%
---------------
(1) The table reflects share ownership and the percentage of
such ownership as of December 8, 2000.
(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.
(4) Includes 28,844 shares held by Mr. Ray's wife. Also
includes 62,500 shares subject to outstanding options under
the Company's stock option plans which are either presently
exercisable or will become exercisable within 60 days.
2
<PAGE>
(5) Based upon a Schedule 13F filed on September 30, 2000 with
the Securities and Exchange Commission by Dimensional Fund
Advisors Inc. Includes 915,400 shares held with sole voting
power.
(6) Includes 4,985 shares held by Mr. Ray's wife; 53,241 shares
held by Mr. Ray's children; and 74,500 shares subject to
outstanding options under the Company's stock option plans
which are either presently exercisable or will become
exercisable within 60 days.
(7) Includes 428,500 shares subject to outstanding options under
the Company's stock option plans which are either presently
exercisable or will become exercisable within 60 days.
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 II directors are Mr. Michael J.
Carroll, Mr. Howard F. Bates, Jr., and Mr. William E. Hellmann.
The Directors were most recently elected by the shareholders at
the 1998 annual meeting for a three-year term expiring at the
2001 Annual Meeting. If elected, Messrs. Carroll, Bates and
Hellmann will hold office for a three-year term expiring in 2004
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 II 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 II
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.
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.
3
<PAGE>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AS
OF DECEMBER 8, 2000
YEAR ----------------------
NAME AND FIRST NUMBER PERCENT
PRINCIPAL OCCUPATION BECAME OF OF
OR EMPLOYMENT AGE DIRECTOR SHARES CLASS
-------------------- --- -------- ------ -------
NOMINEES FOR DIRECTORS
CLASS II
(TERM EXPIRING IN 2004)
Michael J. Carroll .............. 43 1992 135,114 (1) 1.31%
President &
Chief Operating Officer
Howard F. Bates, Jr. ............ 54 1985 83,353 (2) *
Vice President -
Technical Services
William E. Hellmann ............. 51 1985 4,717 (3) *
Member,
Stites & Harbison, PLLC
CONTINUING DIRECTORS
CLASS III
(TERM EXPIRING IN 2002)
Merwin J. Ray ................... 71 1971 1,442,551 (4) 13.98%
Chairman of the Board
Bradford T. Ray ................. 42 1989 529,202 (5) 5.13%
Vice Chairman &
Chief Executive Officer
Doug A. Bawel ................... 45 1999 11,423 *
President, Jasper Engine &
Transmission Exchange
4
<PAGE>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AS
OF DECEMBER 8, 2000
YEAR ----------------------
NAME AND FIRST NUMBER PERCENT
PRINCIPAL OCCUPATION BECAME OF OF
OR EMPLOYMENT AGE DIRECTOR SHARES CLASS
-------------------- --- -------- ------ -------
CLASS I
(TERM EXPIRING IN 2003)
Ralph W. McIntyre 78 1973 322,947 (6) 3.13%
Retired President,
Warren Tool Corporation
Jimmy Dan Conner 47 1995 8,941 (7) *
President,
Old Colony Insurance
Service, Inc.
Andrew J. Payton 42 1997 7,834 *
Owner and President,
Professional Search Consultants
(executive and professional
recruiting services)
---------------
* Less than 1%
(1) Includes 31,164 shares held by Mr. Carroll's children. Also includes
56,500 shares subject to outstanding options under the Company's stock
option plans which are either presently exercisable or will become
exercisable within 60 days.
(2) Includes 55,500 shares subject to outstanding options under the
Company's stock option plans which are either presently exercisable or
will become exercisable within 60 days.
(3) Includes 1,574 shares, the receipt of which has been deferred under
the nonemployee directors' stock plan.
(4) Includes 28,844 shares held by Mr. Ray's wife. Also includes 62,500
shares subject to outstanding options under the Company's stock option
plans which are either presently exercisable or will become
exercisable within 60 days.
(5) Includes 4,985 shares held by Mr. Ray's wife; 53,241 shares held by
Mr. Ray's children; and 74,500 shares subject to outstanding options
under the Company's stock option plans which are either presently
exercisable or will become exercisable within 60 days.
(6) Includes 48,469 shares held by Mr. McIntyre's wife. Also includes
1,574 shares, the receipt of which has been deferred under the
nonemployee directors' stock plan.
(7) Includes 3,149 shares, the receipt of which has been deferred under
the nonemployee directors' stock plan.
5
<PAGE>
NOMINEES FOR DIRECTORS
Mr. Michael J. Carroll has served as President & Chief
Operating Officer of the Company since November 1999. He
previously held the positions of Executive Vice President from
January 1995 to November 1999, Senior Vice President--Sales of
the Company from April 1993 to January 1995, and Vice President-
Sales from July 1987 to April 1993.
Mr. Howard F. Bates, Jr. 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. William E. Hellmann is a member in the law firm of
Stites & Harbison, PLLC, Louisville, Kentucky. Stites & Harbison
serves as general counsel to the Company.
CONTINUING DIRECTORS
Mr. Merwin J. Ray has served as Chairman of the Board
of the Company since its incorporation in 1971. He previously
held the position of Chief Executive Officer from May 1985 to
November 1999 and President from 1971 to May 1985. Mr. Ray is
the father of Bradford T. Ray, Vice Chairman & Chief Executive
Officer of the Company.
Mr. Bradford T. Ray has served as Vice Chairman of the
Board & Chief Executive Officer of the Company since November
1999. He previously held the positions of President & Chief
Operating Officer from November 1994 to November 1999, Executive
Vice President from April 1993 to November 1994, and Vice
President-Manufacturing from January 1987 to April 1993.
Mr. Doug A. Bawel has served as President of Jasper
Engine & Transmission Exchange since 1987. He has over 25 years
in the automotive industry and is a well-known lecturer on the
subject of the automotive aftermarket.
Mr. Ralph W. 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. Jimmy Dan 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.
Mr. Andrew J. 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.
6
<PAGE>
MEETINGS OF THE BOARD
The Board of Directors met four times during fiscal
2000. 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, Conner, Payton, and Bawel. The Compensation
Committee, which met four times in fiscal 2000, 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 four times in fiscal 2000, is chaired by Mr.
Payton, and also includes Messrs. Bawel, Conner, Hellmann, and
McIntyre. Each member of the Committee is independent as defined
in the listing standards of the National Association of
Securities Dealers, on which the Company's common stock is
listed. The principal functions and responsibilities of the
Audit Committee, are to (i) monitor the integrity of the
Company's financial process and systems of internal controls
regarding finance, accounting, and legal compliance; (ii) monitor
the independence and performance the Company's independent
accountants; and (iii) provide an avenue of communication among
the independent accountants, management and the Board of
Directors regarding the Audit Committee's duties and
responsibilities. The Audit Committee operates under a written
charter adopted by the Board of Directors which is included in
this Proxy Statement as Exhibit A.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In fiscal 2000, none of the executive officers of the
Company served on the compensation committee or on any other
committee of the board of directors performing similar functions
of any other entity, any of whose officer or directors served on
the Company's Board of Directors or Compensation Committee.
COMPENSATION OF DIRECTORS
Directors who are not officers or employees of the
Company receive an annual fee of $20,000 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. All nonemployee directors who, as of the first day of any
calendar year, have not attained the age of 60, receive one-half
of their annual retainer fee in the form of shares of Steel
Technologies Common Stock. Any nonemployee director may elect to
receive 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. Mr.
Carroll failed to timely file, by less than one month, one such
report covering one transaction made by each of his children. To
the Company's knowledge, based solely on a review of the copies
of such reports furnished
7
<PAGE>
to the Company and representations that no other reports were
required, all Section 16(a) filing requirements applicable to all
other of its officers and directors were complied with during
fiscal 2000.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth cash and certain other
compensation for the fiscal years ended September 30, 2000, 1999,
and 1998 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
executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES
UNDERLYING
OTHER STOCK OPTION ALL
NAME AND ANNUAL AWARDS OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (# SHARES) COMPENSATION (3)
------------------ ---- ------ ----- ------------ ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Merwin J. Ray 2000 $275,000 $182,408 (1) (2) 0 $7,200
Chairman of the Board (1) 1999 268,846 255,813 (1) (2) 10,000 7,200
1998 255,000 122,984 $61,000(1) 50,000 7,200
Bradford T. Ray 2000 241,250 166,990 250,000(4) 0 7,200
Vice-Chairman & 1999 210,385 222,993 (2) 10,000 7,200
Chief Executive Officer (4) 1998 200,000 105,414 (2) 30,000 7,200
Michael J. Carroll 2000 203,751 155,589 (2) 0 7,200
President & 1999 180,385 203,208 (2) 10,000 7,200
Chief Operating Officer 1998 170,000 87,846 (2) 25,000 7,200
Howard F. Bates, Jr. 2000 143,750 68,403 (2) 0 7,200
Vice President - 1999 135,385 105,210 (2) 5,000 7,200
Technical Services 1998 125,000 70,276 (2) 10,000 7,200
Joseph P. Bellino (5) 2000 166,000 68,403 (2) 10,000 7,200
Chief Financial Officer and 1999 156,924 95,086 (2) 10,000 7,200
Treasurer 1998 140,192 32,727 (2) 25,000 0
---------------
</TABLE>
(1) Amount includes approximately $56,000 in 1998 for personal
use of certain company aircraft. The decrease in 1999 and
2000 attributable to personal use of the aircraft results
from a change to the SIFL method of valuation approved by the
Internal Revenue Service.
(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.
(4) Amount includes $250,000 execution bonus required by the
Employment Agreement.
(5) Mr. Bellino was appointed Chief Financial Officer in October
1997.
8
<PAGE>
EMPLOYMENT AGREEMENT
Effective March 16, 2000, the Company entered into an
Employment Agreement with Bradford T. Ray (the "Employment
Agreement"). Pursuant to the Employment Agreement, Mr. Ray will
serve as Vice Chairman of the Board of Directors & Chief
Executive Officer of the Company at an annual base salary of
$250,000, subject to an annual review by the Compensation
Committee to determine whether an increase is advisable. In
addition to his base salary, Mr. Ray is eligible to participate
in the Company's cash bonus plan and other employee benefit plans
available to the Company's executive officers. The Employment
Agreement has a term of four years and, pursuant to its terms,
Mr. Ray received a $250,000 execution bonus upon entering into
the Employment Agreement. The Employment Agreement provides
that Mr. Ray shall receive a retention bonus in the amount of
$175,000 on the last day of each of the four years of the
Employment Agreement payable if, and only if, Mr. Ray is employed
by the Company on each corresponding date.
The Employment Agreement provides that, if Mr. Ray terminates
his own employment during the four-year term of the Employment
Agreement or the Company terminates Mr. Ray "for cause," Mr. Ray
would be prohibited from competing, directly or indirectly, with
the Company as defined in the Employment Agreement.
The Employment Agreement provides that, if the Company
terminates Mr. Ray "without cause," he shall be entitled to
receive a lump sum benefit equal to one time the sum of his base
salary and an amount equal to all bonuses paid to him by the
Company for the 12 month period immediately preceding the date of
his termination. If Mr. Ray dies during the term of the
Employment Agreement, in addition to any death benefits payable
under life insurance or other Company's employee benefit plans,
the Company will pay to the estate of Mr. Ray a death benefit
equal to 50% of his base salary plus an amount equal to all
bonuses he would have received through the end of the next four
fiscal quarters following his death. If Mr. Ray dies, becomes
disabled, or has his employment terminated without cause, the
Company will continue to pay any medical and life insurance
premiums for Mr. Ray and his dependants for the remainder of the
term of the Employment Agreement with the beneficiary of the
policy making the same contributions.
The Employment Agreement provides that Mr. Ray shall execute
and deliver a Promissory Note to the Company and receive a four-
year loan in the amount of $700,000 with an interest rate of
6.56% (the "Note"). The Note requires annual principal payments
of $175,000. The Employment Agreement provides that accrued
interest due annually under this Note shall be forgiven in the
event that Mr. Ray remains employed by the Company up to, and
including, the date that Note payments are due and payable. The
Employment Agreement also provides that Mr. Ray's compensation
will be grossed up, as defined in the Employment Agreement, to
account for any imputed income from the forgiveness of any
accrued interest.
The Employment Agreement and the Note provide that the Note
shall be repaid March 15, 2004 or within fourteen business days
of Mr. Ray's last day of employment by the Company, whichever
first occurs.
9
<PAGE>
INCENTIVE STOCK OPTIONS
The following table presents information with respect to
grants of incentive stock options that were made during the
fiscal year ended September 30, 2000 to each of the named
executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS (1)
---------------------
<TABLE>
<CAPTION>
Potential
Realizable
Number of Value at Assumed
Securities % of Total Annual Rates
Underlying Options of Stock Price
Options Granted to Exercise Appreciation For
Granted Employees in Price Expiration Option Term
Name (#shares) Fiscal Year ($/share) (2) Date 5% 10%
---- --------- ----------- ------------- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Bellino 10,000 100.00% $11.938 10/1/09 $79,870 $119,770
</TABLE>
---------------
(1) Options granted in fiscal year 2000 to the named individual
become exercisable at a rate of 20% per year beginning with
the first anniversary of the grant.
(2) Option grants granted in fiscal year 2000 to the named
individual were made at 100% of fair market value on the
date of grant.
10
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table presents information with respect
to 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,
2000.
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
SEPTEMBER 30, 2000 IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED (# SHARES) SEPTEMBER 30,2000(2)
ON EXERCISE VALUE --------- --------------------
NAME (# SHARES) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------- -------- ----------- ------------- ----------- -------------
<S> <S> <C> <C> <C> <C> <C>
Merwin J. Ray None $0 47,500 37,500 $0 $0
Bradford T. Ray None 0 63,500 29,000 0 0
Michael J. Carroll None 0 46,500 26,000 0 0
Howard F. Bates, Jr. None 0 50,500 12,000 0 0
Joseph P. Bellino None 0 12,000 33,000 0 0
</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
$6.313 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
Peregrine Company, formerly The Vega Company ("Peregrine").
Peregrine was organized in 1994 to engage in the business of
purchasing and reselling scrap steel products. Steel
Technologies is a major supplier to Peregrine. Total amounts
paid by Peregrine to Steel Technologies in fiscal 2000 for scrap
steel products were approximately $5,007,387. Stuart N. Ray, a
director of Peregrine, became the majority shareholder in April
1998. Stuart N. Ray is the brother of Bradford T. Ray and Vice
President of the Company. In July 1995, the Board of Directors
approved the sale of scrap steel products to Peregrine and its
predecessor entity, 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 Peregrine to the Audit
Committee of the Board of Directors as frequently as requested by
the Committee, but at least annually.
11
<PAGE>
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, Jimmy Dan Conner, Andrew J.
Payton, and Doug A. Bawel, 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 encourage the achievement of strong
financial and operational performance of the
Company;
- To align compensation with the Company's
annual and long-term business strategies and
objectives; and
- To attract, retain, and motivate top quality
executives.
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 officers' 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. No specific weighting is
given to any of the foregoing factors in evaluating annual
compensation for the executive officers.
12
<PAGE>
A significant amount of each executive's compensation
is tied to the Company's profitability and is the largest
variable in determining annual compensation. The Company's
executive officers, along with certain other key employees,
participate in the Company's cash bonus plan (the "Bonus Plan").
The Bonus Plan provides that the participants receive an amount
equal to approximately 6.5% of the Company's adjusted net income.
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. Bonuses paid can account for as much as 66.7% of a
participant's total annual compensation.
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 encourage management to make
decisions in the short and 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 executive officers of the Company still have
outstanding options under the initial Incentive Stock Option
Plan, which expired in 1995, and under the Steel Technologies
Inc. 1995 Stock Option Plan (the "1995 Plan"). 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 performance and efficiency. At the
January 27, 2000 Annual Shareholders Meeting, the Shareholders
approved the Steel Technologies Inc. 2000 Stock Option Plan (the
"2000 Plan"). The Committee believes the 2000 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 2000 Plan includes both qualified incentive stock options and
non-qualified stock options. The Committee believes that the
2000 Plan provides the Company with the ability 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. The Committee
issued 10,000 options to an executive officer in fiscal 2000, all
of which were previously authorized and from the 1995 Plan.
13
<PAGE>
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
On November 12, 1999, the Board of Directors promoted
Mr. Bradford T. Ray to the position of Vice Chairman of the Board
& Chief Executive Officer having previously held the positions of
President & Chief Operating Officer. Mr. Merwin J. Ray is the
Chairman of the Board of Directors and held the position of Chief
Executive Officer prior to November 12, 1999. Consistent with
the Committee's general philosophy for compensation, Merwin J.
Ray and Bradford T. Ray are compensated through base salary,
bonus and incentive compensation. As with other executive
officers, the profitability of the Company is the primary
variable in the compensation paid to these executive officers.
In evaluating annual compensation for these executive officers,
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 the direction of the Chief Executive Officer, Mr.
Merwin J. Ray, and, since November 12, 1999, Mr. Bradford T. Ray,
the Company has continued to make substantial capital
expenditures in new and improved equipment and facilities, as
well as investments in acquisitions, subsidiaries and joint
ventures, all with the effect of diversifying the Company's
products and services. This aggressive commitment to capital and
market 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 the performance and direction of these Chief Executive
Officers have been critical to the success of the Company. In
determining the Chief Executive Officers' base salary and bonus
percentage for 2000, the Committee noted these factors as well as
the Company's operational and financial results for fiscal 1999
in relation to fiscal 1998, including a 7% increase in revenues
and a 59% increase in net income. As described in the text of the
Proxy, the Board of Directors approved, upon recommendation of
the Committee, the Company entering into an Employment Agreement
with Mr. Bradford T. Ray effective March 16, 2000 (the
"Agreement"). The Committee concluded that it was in the best
interests of the Company to enter into this four-year agreement
with Mr. Bradford T. Ray. By entering into this Agreement, which
includes, among other things, a non-competition clause and a
Promissory Note which is required to be paid off over the next
four years, the Committee believes that the Company is in the
best position to retain the services of Mr. Bradford T. Ray.
Before deciding upon the terms of this Agreement, a survey was
conducted of the total compensation package for the Chief
Executive Officer of each company in its peer group. Based upon
the results of the survey, the Committee concluded that it has
included in the Agreement a total compensation package consistent
with the reported total Chief Executive Officer compensation
package of companies in its peer group.
The Committee believes the variable components of the
Chief Executive Officer's compensation provide performance-
related compensation adequate to motivate the Chief Executive
Officer to use his leadership to improve the Company's
profitability. A substantial portion of the Chief Executive
Officer's annual compensation corresponds directly to the
financial performance of the Company through his participation in
the Bonus Plan. The Chief Executive Officer also benefits from
the appreciation in value of the Company's stock through the
Company's stock option plans. The Committee takes note of the
fact that Mr. Merwin J. Ray and Mr. Bradford T. Ray each own a
significant number of shares of the Company's stock, and believes
that their ownership interest creates an additional incentive to
provide the leadership necessary to improve the long-term
profitability of the Company.
14
<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, the 1995 Plan, and the 2000 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 2000 Plan may not qualify for the exemption made for
performance-based compensation. For the present time, the
Committee believes that the 2000 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
Doug A. Bawel
Jimmy Dan Conner
Andrew J. Payton
15
<PAGE>
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the
audited financial statements of the Company for the fiscal year
ended September 30, 2000, with the Company's management and
PricewaterhouseCoopers LLP. The Audit Committee has discussed
with PricewaterhouseCoopers LLP, the Company's independent
accountants, the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees),
as amended by Statement on Auditing Standards No. 90 (Audit
Committee Communications).
The Audit Committee has also received the written
disclosures and the letter from PricewaterhouseCoopers LLP
required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and the Audit
Committee has discussed the independence of
PricewaterhouseCoopers LLP with that firm.
Based on the Audit Committee's review and discussions
noted above, the Audit Committee recommended to the Board of
Directors that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2000, for filing with the
Securities and Exchange Commission.
AUDIT COMMITTEE
Andrew J. Payton, Chairman
Doug A. Bawel
Jimmy Dan Conner
William E. Hellmann
Ralph W. McIntyre
16
<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., Gibraltar 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, 1995 and that all dividends were
reinvested.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Steel Technologies, Inc., The Russell 2000 Index
And A Peer Group
Measurement Period
(Fiscal Year Covered)
--------------------------------------------------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Steel Technologies Inc. $100.00 $126.01 $126.52 $74.36 $120.74 $66.44
Russell 2000 Index $100.00 $113.13 $150.68 $122.03 $145.30 $161.60
Peer Group $100.00 $122.67 $126.67 $82.12 $98.65 $62.21
$100 INVESTED ON 09/30/95 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
17
<PAGE>
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 17, 2001 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.
The Company's Bylaws impose certain advance notice
requirements on a shareholder nominating a director or submitting
a proposal to a meeting of shareholders. Such notice must be
submitted to the Secretary of the Company no earlier than 90, nor
later than 60 days, before an annual meeting, and must contain
the information prescribed by the Bylaws, copies of which are
available from the Secretary. These requirements apply even if
the shareholder does not desire to have his or her nomination or
proposal included in the Company's proxy statement.
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
John M. Baumann, Jr.
Secretary
Louisville, Kentucky
December 15, 2000
18
<PAGE>
EXHIBIT A
STEEL TECHNOLOGIES INC.
AUDIT COMMITTEE CHARTER
-----------------------
ORGANIZATION
There shall be a committee of the Board of Directors to be
known as the Audit Committee. The Audit Committee shall be
composed solely of outside directors who are free of any
relationship that, in the opinion of the Board of Directors,
would interfere with their exercise of independent judgment as a
committee member. All committee members shall be financially
literate and at least one member shall have accounting or related
financial management expertise.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the
corporate directors in fulfilling their oversight responsibility
to the shareholders, potential shareholders, and investment
community relating to corporate accounting, internal controls,
financial reporting and disclosure practices of the corporation,
legal and ethical compliance procedures and the quality and
integrity of the financial reports of the corporation. In so
doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the
directors, the independent auditors, the internal auditors and
the financial management of the corporation. The Audit Committee
shall have a clear understanding with management and with the
independent auditors that the independent auditors are ultimately
accountable to the Board of Directors and the Audit Committee, as
representatives of the corporation's shareholders.
RESPONSIBILITIES
In carrying out its responsibilities, the Board of Directors
believes the policies and procedures of the Audit Committee
should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that
the corporate accounting and reporting practices of the
corporation are in accordance with all requirements and are of
the highest quality.
In carrying out these responsibilities, the Audit Committee
will:
- Review and recommend to the Board of Directors the
selection and retention of independent auditors to
audit the financial statements of the corporation and
its divisions and subsidiaries, or the discharge of
such independent auditors. On an annual basis, the
Audit Committee should review and discuss with the
independent auditors all significant relationships the
independent auditors have with the corporation to
determine their continued independence. The Audit
Committee will discuss with the independent auditors
the matters included in the written disclosures
required by the Independence Standards Board.
- Meet with the independent auditors and financial
management of the corporation to review the scope of
the proposed audit for the current year and the audit
procedures to be utilized, and at the conclusion
thereof, review such audit, including any comments or
recommendations of the independent auditors. The Audit
Committee will also discuss the estimated cost of the
annual audit and the level and scope of non-audit
services provided by the independent auditors.
- Review with the independent auditors, the corporation's
internal auditors, and financial and accounting
personnel the adequacy and effectiveness of the
accounting and financial controls of the corporation
and adopt any recommendations for the improvement of
such internal control procedures or particular areas
where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the
adequacy of such internal controls to expose any
payments, transactions or procedures that might be
deemed illegal or otherwise improper.
- Review the internal audit function of the corporation
including the independence and authority of its
reporting obligations, the proposed audit plans for the
coming year, and the coordination of such plans with
the independent auditors.
- Review the financial statements contained in the annual
report to shareholders with management and the
independent auditors to determine that the independent
auditors are satisfied with the disclosure and content
of the financial statements to be presented to the
shareholders. Any changes in accounting principles
should be reviewed.
- Discuss with the independent auditors the
appropriateness of the accounting principles and
financial disclosure practices used or proposed to be
adopted by the corporation.
- Provide sufficient opportunity for the internal and
independent auditors to meet with the members of the
Audit Committee without members of Management present.
Among the items to be discussed in these meetings are
the independent auditors' evaluation of the
corporation's financial, accounting and auditing
personnel, and the cooperation that the independent
auditors received during the course of the audit. The
Audit Committee should consult periodically with the
independent auditors out of the presence of management
about the adequacy of the corporation's internal
control structure and the completeness and accuracy of
the corporation's financial statements.
- Establish, review and update when appropriate a code of
business conduct and ensure that management has
established a system to enforce this code.
- Conduct an appropriate review of all related party
transactions on a continuing basis and review potential
conflict of interest situations where appropriate.
- Review the corporation's accounting and financial
staffing.
- Submit the minutes of all meetings of the Audit
Committee to or discuss the matters discussed at each
committee meeting with, the Board of Directors.
- Investigate any matter brought to its attention within
the scope of its duties, with the power to retain
outside counsel for this purpose if, in its judgment,
that is appropriate.
- Review and update this Charter on an annual basis.
- Perform such other duties and functions consistent with
this Charter, the corporation's bylaws and governing
law, as the Audit Committee or the Board of Directors
deems necessary or appropriate.
<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 an
act with respect to all shares of common stock Steel Technologies
Inc. which the undersigned is entitled to vote a the Annual
Meeting of Shareholders to be held on Thursday, January 25, 2001
at 9:00 A.M. EST, at the Louisville Marriott East, 1903 Embassy
Square Boulevard (I-64 and Hurstbourne Lane), Louisville,
Kentucky, an 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: Michael J. Carroll, Howard F. Bates, Jr.,
William E. Hellmann
(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, the proxy will be deemed
to confer authority to vote for every nominee whose name is
not entered below.)
----------------------------------------------------------------
2. 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 proposals 2.
Dated:
--------------------, ------
----------------------------------
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.
