SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 Rule 14a-11(c) or Rule 14a-12
BIRMINGHAM STEEL CORPORATION
----------------------------
(Name of Registrant as Specified In Its Charter)
(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)(1) 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:
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[ ] 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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BIRMINGHAM STEEL
CORPORATION
September 20, 2000
Dear Fellow Stockholder:
You are invited to attend the Annual Meeting of Stockholders of
Birmingham Steel Corporation (the "Company"), which will be held on Friday,
October 20, 2000, at 10:00 A.M., local time, at the Grand Hyatt Atlanta,
Atlanta, Georgia 30305.
The formal notice of the meeting and the proxy statement appear on the
following pages and describe the matters to be acted upon. Time will be provided
during the meeting for discussion and you will have an opportunity to ask
questions about your Company.
Whether or not you plan to attend the meeting in person, it is
important that your shares be represented and voted. After reading the enclosed
notice of the Annual Meeting and proxy statement, please sign, date and return
the enclosed proxy card at your earliest convenience. Return of the signed and
dated proxy card will not prevent you from voting in person at the Annual
Meeting should you later decide to do so.
Sincerely yours,
/s/ John D. Correnti
---------------------
John D. Correnti
Chairman of the Board and
Chief Executive Officer
<PAGE>
BIRMINGHAM STEEL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On October 20, 2000
The Annual Meeting of Stockholders of Birmingham Steel Corporation (the
"Company") will be held at the Grand Hyatt Atlanta, Atlanta, Georgia, on
Friday, October 20, 2000, at 10:00 A.M., local time, for the following
purposes:
(1) To elect ten directors, each to serve until the next Annual Meeting of
Stockholders and until his or her successor has been elected and qualified.
(2) To approve the 2000 Management Incentive Plan of the Company.
(3) To approve the 2000 Director Stock Option Plan of the Company.
(4) To approve the bonus performance goals for the Chief Executive Officer.
(5) To approve and ratify the selection of Ernst & Young LLP as the independent
auditors for the Company and it's subsidiaries for the fiscal year ending
June 30, 2001.
(6) To transact such other business as may, in accordance with the Company's
Bylaws, be properly brought before the meeting or any adjournment or
postponement thereof.
Only stockholders of record at the close of business on September 12, 2000,
are entitled to notice of and to vote at the meeting or any adjournments or
postponements thereof.
Please sign and date the enclosed proxy card and return it promptly in the
enclosed reply envelope. If you are able to attend the meeting, you may, if you
wish, revoke the proxy and vote personally on all matters brought before the
meeting.
By Order of the Board of Directors,
/s/ Catherine W. Pecher
------------------------
Catherine W. Pecher
Vice President - Administration
and Corporate Secretary
Birmingham, Alabama
September 20, 2000
BIRMINGHAM STEEL CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Birmingham Steel Corporation, a Delaware
corporation (the "Company"), to be voted at the Annual Meeting of Stockholders
to be held at the Grand Hyatt Atlanta, Atlanta, Georgia, on Friday, October 20,
2000, at 10:00 A.M., local time, and at any adjournment or postponement thereof
(the "Annual Meeting").
All proxies in the enclosed form that are properly executed and received by
the Company prior to or at the Annual Meeting and not revoked will be voted at
the Annual Meeting or any adjournments thereof in accordance with the
instructions thereon, or, if no instructions are made, will be voted FOR
approval of proposals 1, 2, 3, 4 and 5 set forth in the Notice of Annual
Meeting. Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with the Secretary of the Company, at or before the taking of the vote at
the Annual Meeting, a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a subsequently dated proxy relating to the same
shares and delivering it to the Secretary of the Company before the Annual
Meeting, or (iii) attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute a
revocation of a proxy). Any written notice revoking a proxy should be sent to
Birmingham Steel Corporation, 1000 Urban Center Drive, Suite 300, Birmingham,
Alabama 35242, Attention: Catherine W. Pecher, Corporate Secretary, or hand
delivered to the Corporate Secretary at or before the taking of the vote at the
Annual Meeting. A stockholder may abstain or withhold his or her vote
(collectively, "abstentions") with respect to each item submitted for
stockholder approval. In addition, brokers and other nominees may not be
entitled to vote shares held in "street name" on certain non-routine items
absent customer instructions (known as a "broker nonvote"). Shares represented
by proxies indicating abstentions and broker nonvotes, if any, will be counted
as present for purposes of determining the existence of a quorum. Because the
election of directors is determined by a plurality of votes cast at the meeting,
abstentions and broker nonvotes, if any, will not affect such election. However,
with respect to other matters, abstentions and broker nonvotes will have the
effect of a vote against the proposal.
The mailing address of the principal executive offices of the Company is
1000 Urban Center Drive, Suite 300, Birmingham, Alabama 35242. This Proxy
Statement and the accompanying Notice of Annual Meeting and proxy card are first
being mailed to stockholders on or about September 20, 2000.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The record date for determination of stockholders entitled to receive
notice of and to vote at the Annual Meeting is September 12, 2000 (the "Record
Date"). At the close of business on the Record Date, 31,055,001 shares of common
stock, par value $.01 per share, of the Company (the "Common Stock") were
outstanding. Each share of Common Stock is entitled to one vote with respect to
each matter to be voted on at the Annual Meeting.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock, as of the Record Date, by (i) persons known to
the Company to be the beneficial owners of more than 5% of the Company's Common
Stock, (ii) each of the Company's directors and nominees for director, (iii)
each current executive officer included in the Summary Compensation Table, and
(iv) all directors and current executive officers of the Company as a group.
Unless otherwise noted in the footnotes to the table, the persons named in the
table have sole voting and investment power with respect to all outstanding
shares of Common Stock shown as beneficially owned by them.
<PAGE>
Number of Shares Percent
Name of Beneficial Owner Beneficially Owned of Class
------------------------ ------------------ --------
5% Shareholders
The Prudential Insurance Company of America..... 2,917,590 (1) 9.3%
The United Company ............................. 2,682,233 (2) 8.6%
Dimensional Fund Advisors Inc................... 1,873,300 (3) 6.0%
SLS Management, LLC............................. 1,733,100 (4) 5.6%
Directors and Officers
James W. McGlothlin............................. 2,712,038 (5)(6) 8.9%
James A. Todd, Jr............................... 335,460 (7) 1.1%
John D. Correnti................................ 178,474 (8) *
Robert G. Wilson................................ 36,421 (9) *
Philip L. Oakes................................. 23,786 (10) *
J. Daniel Garrett............................... 22,484 (11) *
Jerry E. Dempsey................................ 18,273 *
Richard de J. Osborne........................... 12,860 (12) *
Robert H. Spilman............................... 9,791 *
Donna M. Alvarado............................... 7,904 *
C. Stephen Clegg................................ 5,942 (13) *
Alvin R. Carpenter.............................. 5,728 (14) *
Steven R. Berrard............................... 5,563 *
Robert M. Gerrity............................... 4,881 *
Directors and executive officers
as a group (14 persons)........................ 3,379,605 (15) 10.8%
---------------
* Less than 1%
(1) This information was taken from a Schedule 13G/A filed by The Prudential
Insurance Company of America on January 31, 2000, reflecting information as
of December 31, 1999, and represents shares over which it may have direct
or indirect voting and/or investment discretion and which are held for its
own benefit or for the benefit of its clients by its separate accounts,
externally managed accounts, registered investment companies, subsidiaries
and/or other affiliates.
(2) This information was taken from a Form 4 filed by James W. McGlothlin on
September 6, 2000, reflecting information as of August 31, 2000, and
represents shares over which The United Company may have direct or indirect
voting and/or investment discretion and which are held for its own benefit
or for the benefit of its clients by separate accounts, externally managed
accounts, subsidiaries, and/or other affiliates. James W. McGlothlin, a
director of the Company, shares controlling ownership over The United
Company and therefore shares voting and dispositive powers with respect to
the aforementioned shares. See footnote (5).
(3) This information was taken from a Schedule 13G filed by Dimensional Fund
Advisors Inc. on February 3, 2000, reflecting information as of December
31, 1999, and represents shares held by various investment funds for which
Dimensional Fund Advisors Inc. acts as investment advisor or manager.
(4) This information was taken from a Schedule 13F filed by SLS Management,
LLC, on August 10, 2000 reflecting information as of June 30, 2000 and
represents shares over which it may have direct or indirect voting and/or
investment discretion.
(5) Includes 2,682,233 shares owned of record or beneficially owned by The
United Company and its affiliates. Mr. McGlothlin shares controlling
ownership over The United Company and therefore shares voting and
dispositive powers with respect to the aforementioned shares.
(6) Includes 25,000 shares owned directly by Mr. McGlothlin's spouse and 3,305
phantom stock units.
(7) Includes 74,549 shares owned directly by Mr. Todd's spouse, 100,000 shares
subject to stock options exercisable within 60 days and 746 shares held in
the Company's 401(k) Plan.
(8) Includes 100,000 shares of Restricted Stock awarded under the 1997
Management Incentive Plan, 1,087 shares held in the Company's 401(k) Plan
and 8,000 shares owned directly by Mr. Correnti's spouse.
(9) Includes 5,814 shares held in the Company's 401(k) Plan and 10,600 shares
subject to stock options exercisable within 60 days.
(10) Includes 375 shares of Restricted Stock awarded under the 1997 Management
Incentive Plan, 20,200 shares subject to stock options exercisable within
60 days and 82 shares held in the Company's 401(k) Plan.
(11) Includes 82 shares held in the Company's 401(k) Plan and 16,100 shares
subject to stock options exercisable within 60 days.
(12) Includes 1,500 shares subject to stock options granted under the 1996
Director Stock Option Plan and 4,500 shares owned jointly with his spouse.
(13) Includes 4,500 shares subject to stock options granted under the 1996
Director Stock Option Plan. Mr. Clegg has chosen not to stand for
re-election as a director of the Company.
(14) Includes 4,228 phantom stock units.
(15) Includes an aggregate of (i) 146,900 shares subject to stock options held
by certain officers of the Company, (ii) an aggregate of 7,811 shares held
in the Company's 401(k) Plan, (iii) an aggregate of 100,375 shares of
Restricted Stock awarded under the 1997 Management Incentive Plan, (iv) an
aggregate of 6,000 shares subject to options granted under the Company's
1996 Director Stock Option Plan, and (v) an aggregate of 7,533 shares
granted as phantom stock units.
The Company is not aware of any arrangement, including any pledge of
securities of the Company, which at a subsequent date could result in a change
of control of the Company.
AGENDA ITEM ONE
ELECTION OF DIRECTORS
Ten directors are to be elected at the Annual Meeting, each to hold office
until the next Annual Meeting and until his or her successor has been duly
elected and qualified. Proxies received from stockholders, unless directed
otherwise, will be voted FOR the election of the following nominees: John D.
Correnti, Donna M. Alvarado, Steven R. Berrard, Alvin R. Carpenter, Jerry E.
Dempsey, Robert M. Gerrity, James W. McGlothlin, Richard de J. Osborne, Robert
H. Spilman, and James A. Todd, Jr. If any nominee is unable to stand for
election, the persons named in the proxy may vote the same for a substitute
nominee. All of the nominees are currently directors of the Company. The Company
is not aware that any nominee is or will be unable to stand for re-election.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the Annual Meeting and entitled to vote on the
election of directors.
In August 1993, the Board of Directors approved a mandatory retirement
policy for its members, pursuant to which any person serving as a director of
the Company who attains age 75 shall retire from the Board of Directors upon the
expiration of his or her term of office at the next succeeding annual meeting of
stockholders; provided, however, that each incumbent director of the Company
serving at the date of adoption of the new policy will not be subject to
mandatory retirement, and may continue to serve as a director notwithstanding
the attainment of age 75.
Set forth below is the name, age, position with the Company, present
principal occupation or employment and five-year employment history of each of
the Company's nominees for director of the Company.
Name And Year First
Became Director Business Experience
-------------------- -------------------
John D. Correnti Chairman of the Board and Chief Executive Officer
1999 of the Company since December 2,1999; President,
(Age 53) Chief Executive Officer and Vice Chairman of Nucor
Corporation, a mini mill manufacturer of steel
products, from 1996 to 1999 and President and Chief
Operating Officer from 1991 to 1996; director of
Harnishchfeger Industries and Navistar International
Corporation.
Donna M. Alvarado Managing Director of Aguila International, an
1999 international business development consulting firm,
(Age 51) since 1994; President and Chief Executive Officer of
Quest International, a non-profit organization engaged
worldwide in developing, publishing, and marketing
training products for public and private education
systems, from 1989 to 1994; director of Harnischfeger
Industries and Park National Bank.
Steven R. Berrard Managing Partner of NewRiver Capital Partners,
1999 a private equity firm with an investment strategy
(Age 46) focused on branded specialty retail, e-commerce and
education; Co-Chief Executive Officer of AutoNation,
Inc., the world's largest automotive retailer and a
leading provider of vehicle rental services,from 1997
to 1999; President and Chief Executive Officer of the
Blockbuster Entertainment Group, a division of Viacom,
from 1994 to 1997; President and Chief Executive Officer
of Spelling Entertainment Group, Inc.from 1993 to 1996;
director of Gerald Stevens, Inc. and Boca Resorts, Inc.
Alvin R. Carpenter Vice Chairman of the Board of CSX Corporation; President
1999 amd CEO of CSX Transportation,Inc., a railroad
(Age 58) corporation,from 1992 to 1999; director of Regency
Realty,Inc., Florida Rock Industries and Stein Mart,Inc.
Jerry E. Dempsey Retired; Chairman of the Board and Chief Executive
1999 Officer of PPG Industries, Inc., a manufacturer of
(Age 67) protective and decorative coatings, fiberglass
products, and specialty chemicals, from 1993 until
1997; director of Eastman Chemical Company and
Navistar International Corporation.
Robert M. Gerrity Self-employed consultant since 1995; Vice Chairman
1999 of the Board of New Holland N.V., an agricultural
(Age 62) and industrial equipment manufacturing company, from
1991 to 1995; President and Chief Executive Officer of
Ford New Holland,Inc., from 1987 to 1991; director of
Standard Motor Products and Harnischfeger Industries.
James W. McGlothlin Chairman of the Board, Chief Executive Officer and
1999 President of The United Company, a financial services,
(Age 60) oil and gas, and real estate company, since 1987;
director of CSX Corporation.
Richard de J. Osborne Retired; Chairman of the Board and Chief Executive
1998 Officer of ASARCO Incorporated, a leading producer of
(Age 66) nonferrous metals from 1995 to 1999; director of
Schering-Plough Corporation, The BFGoodrich Company,
The Tinker Foundation and NACCO Industries, Inc.
Robert H. Spilman Sole-proprietor of Spilman Properties, an investment
1999 company; served in various capacities at Bassett
(Age 72) Furniture Industries, Inc., a manufacturer and retail
seller of home furniture, from 1957 until 1997,including
as Chairman of the Board and Chief Executive
Officer; director of Dominion Resources, Inc.
James A. Todd, Jr. Vice Chairman of the Board and Chief Administrative
1999 Officer of the Company; Chairman of the Board and Chief
(Age 72) Executive Officer of the Company from 1991 until January
1996.
The Board of Directors held thirty-seven (37) meetings, including five (5)
actions by unanimous written consent, during the fiscal year ended June 30,
2000. During fiscal 2000, each director attended at least 81% of the aggregate
number of meetings of the Board and of committees of the Board on which he or
she served.
The Company has Audit, Executive, Nominating, Environmental Affairs and
Safety, Finance, and Compensation and Stock Option Committees of the Board of
Directors.
The members of the Audit Committee are Messrs. Berrard (chairman), Clegg,
Gerrity, Osborne, and Spilman. The principal functions of the Audit Committee
are to make recommendations to the Board as to the engagement of independent
auditors, to review the scope of the audit and the engagement of independent
auditors, to review the scope of the audit and audit fees, to discuss the
results of the audit with the independent auditors and determine what action, if
any, is required with respect to the Company's internal controls, and to make a
general review of developments and financial reporting and accounting. The Board
of Directors adopted an Audit Committee Charter on April 20, 2000 and filed the
Charter with the New York Stock Exchange on May 17, 2000. The Audit Committee
held four (4) meetings during fiscal 2000.
The members of the Executive Committee are Messrs. Correnti (chairman),
Berrard, Dempsey, McGlothlin, and Todd. The Executive Committee exercises all
the powers of the Board of Directors during the intervals between meetings of
the Board of Directors, subject to certain limitations set forth in the
Company's Bylaws. The Executive Committee held four (4) meetings during fiscal
2000.
Ms. Alvarado and Messrs. Spilman (chairman), McGlothlin and Correnti
(non-voting) are members of the Nominating Committee. The Nominating Committee
makes recommendations to the Board of Directors respecting nominations for
director prior to each annual meeting of stockholders. The Nominating Committee
held no meetings during fiscal 2000.
Messrs. Gerrity (chairman), Carpenter, Clegg, and Todd are members of the
Environmental Affairs and Safety Committee. The Environmental Affairs and Safety
Committee monitors environmental and safety issues impacting the Company's
operations and reviews and evaluates environmental compliance, safety
performances, and processes at the Company's facilities. The Environmental
Affairs and Safety Committee held two (2) meetings during fiscal 2000.
Ms. Alvarado and Messrs. Dempsey (chairman), Carpenter, and Osborne are
members of the Finance Committee. The Finance Committee reviews and makes
recommendations with respect to the Company's financial policies, including cash
flow, borrowing and dividend policy and the financial terms of acquisitions and
dispositions. Acting with the Executive Committee, it reviews and makes
recommendations on significant capital investment proposals. The Finance
Committee held five (5) meetings during fiscal 2000.
Ms. Alvarado and Messrs. Carpenter (chairman), Dempsey, and Berrard are
members of the Compensation and Stock Option Committee. The Compensation and
Stock Option Committee reviews and approves employment agreements, annual
salaries, bonuses, profit participation, and other compensation of employees of
the Company and its subsidiaries. This Committee also reviews the executive
officers' and employees' performances and administers all stock-based and other
benefit plans (unless otherwise specified in plan documents) affecting officers'
direct and indirect remuneration. The Compensation and Stock Option Committee
held nine (9) meetings during fiscal 2000.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF THE NOMINEES NAMED IN THIS PROXY STATEMENT.
Section 16 (a) Beneficial Ownership Reporting Compliance
Section 16 (a) of the Securities Exchange Act of 1934 (the "Exchange Act")
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 SEC
reports of changes in ownership of the Common Stock of the Company held by such
persons. Such officers, directors and greater than 10% stockholders are also
required to furnish the Company with copies of all forms they file under this
regulation. To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company and representations that no other
reports were required, during fiscal year 2000 all Section 16 (a) filing
requirements applicable to its officers and directors were satisfied.
<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain summary information for the fiscal
years ended June 30, 2000, 1999 and 1998 concerning compensation paid or accrued
by the Company to or on behalf of the Company's Chief Executive Officer and each
of the four other most highly compensated executive officers of the Company who
were serving as executive officers at the end of the last fiscal year. As
required under applicable rules of the SEC, the table also provides summary
information for Robert A. Garvey, the Company's former Chief Executive Officer,
Brian F. Hill, the Company's former Chief Operating Officer, and Kevin E. Walsh,
the Company's former Chief Financial Officer, each of whom served in such stated
capacities for a portion of fiscal year 2000 (all of the foregoing current and
former officers are hereinafter referred to as the "Named Executive Officers").
"Long-Term Compensation" includes Restricted Stock awarded under both the 1990
and 1997 Management Incentive Plans ("1990 MIP" and "1997 MIP") and Restricted
Stock issued under the 1995 Stock Accumulation Plan ("SAP"). See footnotes (2),
(7) and (10) to the Summary Compensation Table.
<TABLE>
SUMMARY COMPENSATION TABLE
(AS OF JUNE 30, 2000, 1999, 1998)
Long Term
Annual Compensation Compensation Awards
--------------------------------------------- ---------------------------
<CAPTION>
Restricted Options/ All Other
Salary Bonus Other Annual Stock SARs Compendation
Name and Principal Position Year ($) ($)(1) Compensation ($) ($)(2) (#) ($)(3)
------------------------------------- ------ ------------ -------------- ----------------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
John D. Correnti (4)............ 2000 300,115(5) 288,300(5)(6) 0 630,250(7) 1,000,000 30,463
Chief Executive Officer
James A. Todd, Jr. (8).......... 2000 175,000(6) 0 236,441(9) 0 300,000 6,007
Chief Administrative Officer
Robert G. Wilson................ 2000 178,615(5) 0 0 0 98,000 10,266
Vice President - Rebar Sales 1999 166,262(5) 0 0 8,990(7) 2,000 11,504
1998 160,407(5) 5,401(5) 0 779(10) 3,000 11,248
Philip L. Oakes................. 2000 163,654(5) 0 0 0 72,000 27,260
Vice President - Human Resources 1999 139,702(5) 80,000 0 14,980(7) 28,000 24,519
1998 122,778(5) 9,004(5) 0 1,328(10) 15,000 25,231
J. Daniel Garrett............... 2000 161,923(5) 0 0 0 72,000 26,736
Chief Financial Officer 1999 137,375(5) 160,000(5) 0 38,682(7)(10) 28,000 23,494
Vice President - Finance 1998 120,832(5) 9,004(5) 0 1,328(10) 1,500 16,189
Robert A. Garvey (4)............ 2000 222,904(5) 0 0 56,608(10) 0 4,064,281
Former Chief Executive Officer 1999 367,967(5) 0 0 122,658(10) 175,000 64,956
1998 367,968(5) 0 0 122,665(10) 50,000 88,431
Brian F. Hill (11).............. 2000 219,231(5) 538,000(12) 0 0 0 656,148
Former Chief Operating Officer 1999 0 150,000 0 64,143(7)(10) 100,000 0
1998 -- -- -- -- -- --
Kevin E. Walsh (13)............. 2000 199,794(5) 0 0 0 0 672,677
Former Chief Financial 1999 235,819(5) 67,500(5) 0 102,944(7)(10) 110,000 18,225
Officer 1998 -- -- -- -- -- --
<FN>
---------------
(1) Represents cash incentive compensation accrued for the fiscal year (but
paid in the subsequent fiscal year). Does not include amounts foregone in
fiscal years 1999 and 1998 in connection with the receipt of shares of
Restricted Stock under the SAP, which is reflected in the "Restricted
Stock" column in the table above. See footnote (10) below.
(2) The value of the Restricted Stock awards shown in the table above reflects
the number of shares awarded during the year indicated multiplied by the
closing market price of the Company's unrestricted common stock on the date
of the award (net of any consideration paid by the Named Executive
Officer). The number and dollar value of all Restricted Stock holdings of
the Named Executive Officers with respect to which the restrictions have
not lapsed as of the Record Date, calculated using the closing market price
of the Company's unrestricted common stock on June 30, 2000, were as
follows: 100,000 shares ($387,420) by Mr. Correnti; 375 shares ($1,449) by
Mr. Oakes.
(3) The compensation reported represents Company contributions to the 401(k)
Plan, premiums for life insurance, contributions to the Birmingham Steel
Corporation Executive Retirement and Compensation Deferral Plan (the
"ERP/CDP") and severance payments to Messrs. Garvey, Hill and Walsh. The
following information is provided with respect to the specific allocation
of compensation shown in this column for the Named Executive Officers for
the fiscal year ended June 30, 2000.
Term And Whole Severance
Name 401(k)Plan $ Life Insurance $ ERP/CDP $ Settlement
---- ------------ ---------------- ---------- -----------
John D. Correnti....... 2,354 4,897 23,212
James A. Todd, Jr. .... 1,250 4,757 0
Robert G. Wilson....... 5,150 4,218 898
Philip L. Oakes ....... 5,381 4,190 17,689
J. Daniel Garrett ..... 5,982 4,294 16,460
Robert A. Garvey....... 1,659 1,392 31,230 4,030,000(a)
Brian F. Hill.......... 696 1,252 35,354 618,846
Kevin E. Walsh......... 7,435 1,147 21,787 642,308
(a) Represents amounts accrued at June 30, 2000 for severance, retirement,
and related benefits payable to Mr. Garvey upon his termination of
employment with the Company on December 2, 1999. On September 15,
2000, the Company reached a settlement with Mr. Garvey regarding these
benefits. The amount accrued at June 30, 2000 was sufficient to
satisfy the settlement.
(4) Mr. Correnti replaced Mr. Garvey as Chairman of the Board and Chief
Executive Officer of the Company on December 2, 1999.
(5) Includes amounts deferred by Named Executive Officers pursuant to the
ERP/CDP.
(6) Paid principally in common stock of the Company except for sufficient funds
to pay income taxes. Mr. Correnti's bonus resulted in 59,387 shares at a
share price of $3.00. Mr. Todd's compensation resulted in 29,593 shares at
an average share price of $4.00.
(7) Includes the value of Restricted Stock award(s) granted under the 1990 and
1997 MIP on the date of such grant(s). Restricted Stock awards under the
1990 and 1997 MIP are made in the discretion of the Compensation and Stock
Option Committee of the Board of Directors, and recipients pay only a
nominal consideration (par value) for the issuance of the Restricted Stock.
Mr. Correnti was awarded 100,000 shares on December 7, 1999 at a per share
price of $6.3125, which vest in equal increments of one-third over three
years. Mr. Wilson was awarded 935 shares on August 10, 1998, at a per share
price of $9.625, which vest at the end of two years. Mr. Oakes was awarded
1,558 shares on August 10, 1998 at a per share price of $9.625, which vest
at the end of two years. Mr. Garrett was awarded 1,558 shares on August 10,
1998 at a per share price of $9.625, which vest at the end of two years.
Mr. Hill was awarded 8,000 shares on June 21, 1999 at a per share price of
$5.25, which vested on January 21, 2000. Mr. Walsh was awarded 8,000 shares
on August 10, 1998, at a per share price of $9.625, which vested on March
3, 2000.
(8) Mr. Todd rejoined the Company as a director and Chief Administrative
Officer on December 2, 1999. Mr. Todd previously served as Chairman of the
Board and Chief Executive Officer of the Company from 1991 until January
1996.
(9) Represents retirement payments made to Mr. Todd under provisions of the
Company's Management Security Plan. Mr. Todd also received $227,684 in
fiscal 1999 and $227,685 in fiscal 1998 under the Management Security Plan.
(10) Includes the value of Restricted Stock issued under the SAP in lieu of cash
compensation to which the Named Executive Officer would otherwise be
entitled on the date of such issuance. Each of the Named Executive Officers
was required to take 10% of his bonus in shares of Restricted Stock under
the terms of the SAP, and could elect to take up to 20% of his base
compensation and 50% of his cash bonus in shares of Restricted Stock. The
SAP was terminated on January 14, 2000. Shares of Restricted Stock under
the SAP were issued at a 25% discount to the market, but the amounts shown
include the full market value of the shares issued. The shares were
restricted from transfer for a period of three years from the date of
issuance. The amount of cash compensation from both salary and bonus
foregone by the Named Executive Officers by participating in the plan was
as follows: Mr. Wilson: 2000 -- $-0-, 1999 -- $-0-, and 1998 -- $599; Mr.
Oakes: 2000 -- $-0-, 1999 -- $-0-, and 1998 -- $996; Mr. Garrett: 2000 --
$-0-, 1999 -- $17,778, and 1998 -- $996; Mr. Garvey: 2000 -- $42,458, 1999
-- $91,992, and 1998 -- $91,992; Mr. Hill: 2000 -- $-0- and 1999 --
$16,667; and Mr. Walsh: 2000 -- $-0-, and 1999 -- $13,065. Such amounts are
not included in the "Salary" or "Bonus" columns in the table above.
(11) Mr. Hill joined the Company in June 1999 and terminated employment with the
Company in January 2000.
(12) Represents bonus paid to Mr. Hill on October 15, 1999, prior to the change
in the Board of Directors in December 1999.
(13) Mr. Walsh joined the Company in July 1998 and terminated employment with
the Company in March 2000.
</FN>
</TABLE>
STOCK OPTION PLAN
The following table provides certain information concerning individual
grants of stock options under the 1990 MIP, the 1997 MIP, and the 2000 MIP made
during the fiscal year ended June 30, 2000, to each of the Named Executive
Officers:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates of
Individual Grants Stock Price Appreciation for
Option Term
------------------------------------------------------- ------------------------------
<CAPTION>
Number Of % Of Total
Securities Options
Underlying Granted To Exercise Or
Options Employees In Base Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date 5%($) 10%($)
----- --------- ------------ ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
John D. Correnti... 1,000,000(1) 44 4,6250 01/14/10 2,908,638 7,371,059
James A. Todd, Jr.. 300,000(2) 13 4.6250 01/14/10 872,591 2,211,318
Robert G. Wilson... 10,000(3) 4 4.6250 01/14/10 29,086 73,711
88,000(3) 4.5625 01/20/10 252,501 639,888
Philip L. Oakes... 10,000(3) 3 4.6250 01/14/10 29,086 73,711
62,000(3) 4.5625 01/20/10 177,899 450,830
J. Daniel Garrett 10,000(3) 3 4.6250 01/14/10 29,086 73,711
62,000(3) 3 4.5625 01/20/10 177,899 450,830
---------------
<FN>
(1) These options vest equally over a five-year period beginning with the first
anniversary from the grant date and every anniversary thereafter. These
options were granted to satisfy Mr. Correnti's employment contract agreed
to in the proxy contest.
(2) One-third of these options vested immediately on the grant date, January
14, 2000. The remaining options vest equally on the first and second
anniversary of the grant date.
(3) These options vest equally over a three-year period beginning with the
first anniversary from the grant date and every anniversary thereafter.
</FN>
</TABLE>
<PAGE>
Aggregated Option Exercises In Last Fiscal Year
And Fiscal Year-End Option Values
The following table provides certain information concerning each
exercise of stock options during the fiscal year ended June 30, 2000, by each of
the Named Executive Officers, and the fiscal year-end value of unexercised
options held by such persons, under the Company's 1986 Stock Option Plan, the
1990 MIP, the 1997 MIP and the 2000 MIP.
Number Of
Securities Value Of
Underlying Unexercised
Unexercised In-The-Money
Options At Options At
FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized($) Unexercisable Unexercisable(1)
----- --------------- ----------- ------------- ----------------
John D. Correnti... 0 0 0/1,000,000 0/0
James A. Todd, Jr.. 0 0 100,000/200,000 0/0
Robert G. Wilson... 0 0 10,600/100,400 0/0
Philip L. Oakes.... 0 0 20,200/94,800 0/0
J. Daniel Garrett.. 0 0 16,100/89,400 0/0
Robert A. Garvey... 0 0 325,000/0 (2) 0/0
Brian F. Hill...... 0 0 100,000/0 (3) 0/0
Kevin E. Walsh..... 0 0 110,000/0 (3) 0/0
(1) The stock options were granted under the 1986 Stock Option Plan, the 1990
MIP, the 1997 MIP and the 2000 MIP. The closing price of the Common Stock
at June 30, 2000, was $3.875 per share. The actual value, if any, an
executive may realize will depend upon the amount by which the market price
of the Company's Common Stock exceeds the exercise price when the options
are exercised.
(2) Mr. Garvey's options will expire December 2, 2000.
(3) Mr. Hill and Mr. Walsh's stock options vesting schedules were accelerated
pursuant to their severance agreements. Mr. Hill's options will expire
January 21, 2001 and Mr. Walsh's options will expire March 01, 2001.
The Company has 126,800 outstanding stock options with a strike price of
$18.625 per share, 175,000 outstanding stock options with a strike price of
$16.625 per share and 170,400 outstanding stock options with a strike price of
$9.625, all of which were significantly above the Company's stock price of
$3.1875 on September 12, 2000, the Record Date.
Executive Retirement And Compensation Deferral Plan
The ERP/CDP is a non-qualified deferred compensation plan pursuant to which
the key members of management may defer compensation in amounts between 2% and
20% of bi-weekly base pay and 5% to 50% of bonus pay, which amounts are deemed
to be credited to their accounts under the Plan. The retirement components for
the ERP participants consist of ongoing Company contributions equal to 10% of
eligible compensation, which contributions are deemed to be credited at the end
of each quarter and are fully vested. Benefits under the ERP/CDP are unfunded
and are payable from the Company's general assets. The amounts deferred by
participants and amounts credited by the Company, as well as amounts credited
under the predecessor Management Security Plan ("MSP"), including any special
opening balances authorized by the Compensation and Stock Option Committee, are
deemed to be invested based upon the investment directions suggested by the
participants, subject to the Administrative Committee's approval of such. CDP
accounts are deemed to be credited with bonus interest of 4% for those employed
at the end of each plan year, which interest becomes 100% vested after
completion of five years of participation in the ERP/CDP, except full vesting
occurs in the event of a Change in Control or the participant's death,
disability, attainment of the normal retirement age of sixty-five, or attainment
of age sixty and completion of fifteen years of service. Upon normal retirement,
benefits are paid based upon the method of distribution previously selected by
the participant. A lump sum of the vested balance is paid upon other termination
of employment. Upon death, all account balances plus twice the participant's
annual base pay rate are paid to the participant's designated beneficiary.
Executive Severance Plan
The Birmingham Steel Corporation Executive Severance Plan (the "Severance
Plan") is limited to a select number of key members of management of the Company
as designated by the Board of Directors, including the current executive
officers named in the Summary Compensation Table, excluding Mr. Todd, and is
designed to reassure participants in the event of a Change in Control (as
defined below) of the Company, so that they can continue to focus their time and
energy on business-related concerns rather than personal concerns. A Change in
Control is generally defined as (i) the acquisition by any person, entity, or
group of 15% or more of the combined voting power of the Company's outstanding
securities; (ii) a change in the majority of the Board of Directors within a
period of two consecutive years or less unless the new directors were elected or
nominated by at least two-thirds of the continuing directors; or (iii) the
consummation of a transaction requiring stockholder approval for the acquisition
of the Company by an entity other than the Company or a subsidiary through the
purchase of assets, by merger, or otherwise. A participant is entitled to
benefits under the Severance Plan if, within two years after a Change in
Control, the participant's employment is terminated by the Company without
Substantial Cause (as defined below) or is voluntarily terminated by the
participant for Good Reason (as defined below). "Substantial Cause" for purposes
of the Severance Plan shall mean: (i) a participant's felony conviction (or
failure to contest prosecution for a felony); or (ii) a participant's willful
misconduct or dishonesty, in each case that is materially harmful to the
business or reputation of the Company. "Good Reason" is defined as: (i) the
assignment to the participant of duties that are materially inconsistent with
the participant's position immediately prior to the Change in Control or a
change in the participant's title or office from that in effect immediately
prior to the Change in Control without his or her consent; (ii) a reduction in
the participant's salary as in effect immediately prior to the Change in Control
or the Company's failure to increase the participant's salary by a specified
percentage and by a specified date; (iii) a change in the participant's
principal work location to a location more than 25 miles from his or her
principal work location immediately prior to the Change in Control; (iv) the
Company's failure to maintain any benefit or compensation plan (collectively,
"Plans") in which the participant was participating immediately prior to the
Change in Control, a reduction of the participant's benefits under the Plans, or
the failure to provide the participant with the same number of vacation days to
which he or she was entitled prior to the Change in Control; (v) the Company's
failure to pay the participant any compensation within seven days of its due
date; (vi) the failure of any successor to the Company to assume the obligations
pursuant to the Severance Plan; or (vii) any purported termination of the
participant's employment by the Company in a manner inconsistent with the
Severance Plan.
Severance payments and benefits under the Severance Plan include (i) a lump
sum payment equal to two or three times (as applicable) the sum of the
participant's annual salary and target bonus and (ii) continued participation in
Company welfare benefit plans for a number of years equal to the multiple
applicable to the participant as described in clause (i).
In the event any payment or benefit received by a participant is deemed to
be a "parachute payment" under the Internal Revenue Code (the "Code"), the
payments and benefits payable under the Severance Plan will be reduced so that
they will not be subject to the excise taxes imposed by the Code, but only if
reducing the payments and benefits will result in a greater after-tax benefit to
the participant.
The Severance Plan also covers former officers terminated in connection
with the December 1999 settlement of the proxy contest initiated by the United
Company Shareholder Group. The Company reached severance settlements with all
terminated officers, except for Harold Olden, the former General Manager at the
Memphis facility.
Director Compensation
For fiscal 2000 and pursuant to the Company's Directors' Compensation Plan
(the "1996 Plan"), the Company awarded each non-employee director 1,500 shares
of Company Common Stock as his or her annual retainer fee and paid each
non-employee director $1,000 (in Company stock) for each meeting of the Board of
Directors or committee thereof ($1,500 to the Chairman of a committee) attended
by such director, plus reasonable travel expenses. Directors who are also
employees of the Company are not separately compensated for their services as a
director.
A non-employee director is permitted to defer receipt of his or her annual
retainer award and/or meeting fees during the term of his or her directorship
pursuant to a Deferred Compensation Plan adopted by the Board of Directors.
Currently, two directors have elected to have meeting fees deferred and
accumulated in phantom stock units. Phantom stock units are hypothetical shares
of the Company's stock. Phantom stock units are credited to an account for each
such director and no tax is payable by the director at the time of such
crediting. Upon termination as a director of the Company, the director receives
actual shares of the Company in an amount equal to the number of deferred
phantom shares credited to such director's account. Upon a Change in Control,
all deferred accounts will be paid out to the directors.
Director Stock Option Plan
The Company's Board of Directors has adopted and the stockholders have
approved the Birmingham Steel Corporation Director Stock Option Plan (the
"Director Plan"). The purpose of the Director Plan is to provide stock-based
compensation to eligible directors of the Company in order to encourage the
highest level of director performance and to promote long-term stockholder
value. The Director Plan will provide such directors with a proprietary interest
in the Company's success and progress through annual grants of options to
purchase shares of the Company's Common Stock.
Participation in the Director Plan is limited to Company directors who are
not employees of the Company or any of its subsidiaries. There are currently
nine directors eligible to participate in the Director Plan. An aggregate of
100,000 shares of Common Stock is reserved for issuance under the Director Plan.
The Company has 26,500 shares remaining for issuance in the Director Plan.
Under the Director Plan, on the date of each annual meeting of the
Company's stockholders, each non-employee director will be granted a
non-qualified stock option to purchase 5,000 shares of Common Stock at a
purchase price equal to the fair market value per share of the common stock on
such grant date.
Each option granted under the Director Plan vests on the first anniversary
of the date of grant and remains exercisable for a period of ten (10) years
beginning on the date of its grant. In the event of termination of service of a
director by reason of disability or death, any options held by such director
under the Director Plan shall be immediately exercisable and may be exercised
until the earlier of the expiration of the stated term of the option or the
first anniversary of the death or disability of such director, as the case may
be. In the event of termination of service of a director by reason of
retirement, any options held by such director may thereafter be exercised (to
the extent then exercisable) until the earlier of the expiration of the stated
term of the option or the third anniversary of the effective date of the
director's retirement. If a director who has retired dies while any option is
still outstanding, the option may be exercised by the former director's legal
representative until the earlier of the expiration of the stated term of the
option or the first anniversary of the death of the former director.
Employment Agreements
The Company has entered into an Employment Agreement with John D. Correnti,
Chairman of the Board and Chief Executive Officer of the Company. See "REPORT OF
COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION."
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE ON EXECUTIVE COMPENSATION
Introduction
The Compensation and Stock Option Committee (the "Committee") of the Board
of Directors is comprised of four non-employee directors. The Committee
generally is responsible for the compensation and benefit plans for all
employees and is directly accountable for evaluating and approving compensation
and benefit plans, and payments and awards under those plans, for the Company's
senior executives, including the Chief Executive Officer and the other current
Named Executive Officers. The Committee represents the stockholders' interests
by ensuring an appropriate link exists between the Company's strategic goals,
business performance, stockholder returns, and the executive compensation plans.
Compensation Philosophy
The Company's compensation philosophy is to provide competitive wages and
salaries with the opportunity to earn above-average compensation through
performance-based incentives. The Committee believes that incentive compensation
provides the best means of motivating and rewarding performance while providing
necessary controls on cost. This philosophy is reflected in the Company's use of
incentive compensation at virtually every level of the organization, not just in
the executive ranks. In the case of production and supervisory employees, weekly
incentives may be earned for exceeding base production levels. Executives may
earn incentives based on Company or business unit profitability. In fiscal 2000,
production and supervisory incentives averaged 32% of total compensation, and
executive incentives averaged 10%. These percentages vary from year to year
based on performance.
Compensation Policy
The Company's executive compensation program is designed to achieve the
following objectives:
1. To attract, retain, motivate, and reward executives who have the
skills and experience necessary to conceive and implement a successful
business strategy.
2. To recognize the individual contributions of the executives to
stockholder value, as reflected in the profitability of the Company.
3. To align the interests of the executives with those of the
stockholders by linking a significant portion of executive
compensation to the value of the Company's Common Stock through the
award of stock incentives.
To accomplish these objectives, the Company has established an executive
compensation program consisting of base salary, an annual cash incentive based
on Company profitability, and long-term compensation plans which include stock
options, stock appreciation rights, restricted stock, and deferred compensation.
The Company's policies with respect to each element of the executive
compensation program are discussed below.
Base Salaries
To provide competitive base salaries while recognizing individual
performance, the Company, with the approval of the Committee, establishes and
maintains base salary ranges for salaried personnel. The competitiveness of the
salary ranges is reviewed annually with the assistance of an independent
consultant and through participation in salary surveys. The surveys used include
nationally publicized data from a number of sources, including ECS Top
Management Report, Ernst & Young LLP Executive Compensation Report, Towers
Perrin Cash Data Bank and The Conference Board Publication. The survey group is
comprised of a broad base of manufacturers in many different industries,
including the steel industry. Within this framework, executive salaries are
determined based on individual performance, level of responsibility, and
experience. The salary of the Chief Executive Officer is evaluated by the
Committee in consultation with the Board of Directors. Salaries for the other
Named Executive Officers are recommended by the Chief Executive Officer and
reviewed and approved by the Committee. The salaries of the Named Executive
Officers are listed in the Summary Compensation Table.
Management And Sales Incentive Bonus Plan
Effective November 1, 1998, the Company's Management and Sales Incentive
Bonus Plan was established. This plan is formula-based and provides participants
with an annual cash bonus award for the achievement of specified divisional and
corporation financial goals. The goals for each participant are the applicable
pre-tax income targets in the annual business plan. Each eligible position has
been assigned a "target" bonus percentage. The target represents a percent of
base salary and the bonus is earned only after accomplishing the financial goals
for the fiscal year. The bonus plan was designed to place a greater emphasis on
divisional performance and to achieve the financial goals of the Company. Under
this plan, the participants have a clearer understanding of what is required to
earn a bonus and have incentive to focus their attention on profitability.
The purpose of the cash bonus plan is to link directly a significant
portion of executive compensation to Company profitability. Under the plan,
executives and other key employees can earn annual cash incentives based upon
Company profitability. The plan is intended to motivate executives to increase
profitability and to reward them with respect to the Company's success. In
keeping with the Company's compensation philosophy and the incentive plans in
which the Company's other employees participate, the plan provides executives
the opportunity to earn significant bonuses, contingent upon profitable results.
Bonus awards for fiscal 2000 were paid by August 31, 2000, and represent
compensation earned for the fiscal year ended June 30, 2000.
Long-Term Incentive Plans
The purpose of the Company's long-term incentive plans discussed below is
to promote the Company's continued success by providing financial incentives to
executives and other key employees to increase the value of the Company, as
reflected in the price of its stock. By providing the opportunity to acquire a
significant proprietary interest in the Company, the plans align the interests
of the executives with those of the stockholders.
Under the 1990 MIP and the 1997 MIP, each of which were approved by the
Board of Directors and the stockholders of the Company, and the 2000 MIP which
was approved by the Board of Directors and is on the agenda for approval at the
2000 Annual meeting of stockholders, the Committee is authorized to make awards
of stock options, stock appreciation rights, restricted stock, and other
stock-related incentives. The Committee has the sole authority to select the
officers and other key employees to whom awards may be made under these plans.
Since the value of stock options and other stock awards is determined by the
price of the Company's Common Stock, the Committee believes these awards benefit
stockholders by linking a significant portion of executive compensation to the
performance of the Company's stock. In addition, these awards enable the Company
to attract and retain key employees and provide a competitive compensation
opportunity.
The 2000 MIP is merely intended to be a continuation of the Company's
incentive compensation program currently provided by the Company's 1990 MIP and
1997 MIP. Currently, the Company's 1990 MIP has no shares available for making
these awards. In addition, the 1997 MIP has less than 80,000 shares available
for making these awards. The 2000 MIP is necessary to allow the Company to
satisfy its obligations under Mr. Correnti's contract, as approved during the
proxy contest, and to provide the Company with sufficient shares to retain and
attract key management personnel. The 2000 MIP does not allow for awards to be
granted at an exercise or strike price below $4.5625 per share. The 2000 MIP is
also designed to comply with certain of the provisions of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), in order that certain
compensation attributable to awards under the Company's management incentive
program will qualify as performance-based compensation and therefore not be
subject to the limitation on the deductibility of compensation set forth in
Section 162(m) of the Code.
In fiscal 2000, options were granted under the 1990 MIP, the 1997 MIP and
the 2000 MIP to five (5) of the Named Executive Officers. During fiscal 2000, no
Named Executive Officers exercised stock options.
Chief Executive Officer Compensation
As of December 2, 1999, the Committee approved an employment agreement with
Mr. Correnti pursuant to which the Company has agreed to employ Mr. Correnti as
Chief Executive Officer. The employment agreement is similar in terms and
compensation to the proposed employment agreement that Mr. Correnti agreed to
with the dissident shareholder group when he joined the group as their Chief
Executive Officer and Chairman of the Board nominee during the proxy contest in
1999. The dissident shareholder group's proposed contract with Mr. Correnti
provided for an annual salary of $600,000; however, Mr. Correnti voluntarily
reduced his annual salary to $510,000 upon being elected as Chairman of the
Board and Chief Executive Officer of the Company.
The employment agreement has a five-year term and provides for a base
salary of $510,000 per year and a bonus equal to 1% of adjusted earnings before
interest, taxes, depreciation, and amortization. Mr. Correnti's bonus is payable
principally in shares of common stock of the Company except for cash sufficient
to pay the taxes incurred on the bonus award. Pursuant to the Employment
Agreement, if Mr. Correnti's employment is terminated (i) by the Company without
cause (ii) by Mr. Correnti for good reason, or (iii) as a result of a change in
control of the Company, Mr. Correnti will receive a severance payment equal to
three times (a) Mr. Correnti's currently effective annual base compensation plus
(b) the average bonuses received by Mr. Correnti for the three prior fiscal
years.
Pursuant to the Employment Agreement, Mr. Correnti received 100,000 shares
of the Company's common stock (the "Stock Award") on December 7, 1999 at the
fair market value of $6.3125 per share. Mr. Correnti becomes vested in one-third
of the Stock Award at the end of each of his first three years of service so
that at the end of his third year of service (the "Third Anniversary") he is
completely vested in the full amount of the Stock Award. Notwithstanding the
foregoing, if prior to the Third Anniversary, Mr. Correnti's employment is
terminated (i) without cause by the Company, (ii) for good reason by Mr.
Correnti, (iii) after a change in control of the Company, or (iv) as a result of
his death or disability, Mr. Correnti will receive the full amount of the Stock
Award.
Pursuant to the Employment Agreement, Mr. Correnti received a total of
1,000,000 Stock Options (the "Options") vesting in increments of 200,000 shares
each year over a period of five years beginning on January 14, 2000. The Options
were granted under the 2000 MIP. All unvested Options will vest upon termination
of Mr. Correnti's employment other than termination for cause. The exercise
price for the Options is $4.625; the Options expire ten years from their grant
date.
Summary
The Company's executive compensation program encourages executives to
increase profitability and stockholder value. The emphasis on incentive
compensation for executives is consistent with the pay-for-performance policy
applied throughout the Company. The Committee believes this approach provides
competitive compensation and is in the best interests of the stockholders.
SUBMITTED BY THE COMPENSATION AND STOCK OPTION COMMITTEE
OF THE BOARD OF DIRECTORS:
Alvin R. Carpenter, Chairman
Donna M. Alvarado
Steven R. Berrard
Jerry E. Dempsey
<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of the Standard & Poor's ("S&P") 500 Stock Index and
the S&P Steel Industry Group Index for the period of five years commencing on
July 1, 1995, and ending on June 30, 2000. The graph assumes that the value of
the investment in the Company's Common Stock and each index was $100 on July 1,
1995, and that all dividends were reinvested.
[INSERT GRAPH]
<PAGE>
AGENDA ITEM TWO
APPROVAL OF 2000 MANAGEMENT INCENTIVE PLAN
When the new Board of Directors took over in December 1999, they found that
stock options available under the 1990 MIP and 1997 MIP were insufficient to
attract and retain the type of employees who are crucial to the future success
of the Company, including Mr. Correnti who was to be awarded a total of
1,000,000 options pursuant to his employment contract with the Company. In
response to this dilemma, the Board of Directors has approved a 2000 Management
Incentive Plan ("2000 MIP") which provides sufficient options and shares
necessary to attract and retain key officers and employees of the Company, and
to enable such employees to participate in the long-term growth of the Company
through an equity interest in the Company. In today's competitive labor market,
the Board of Directors believes stock options are a necessity to retain and
attract key executives who are essential to the Company's success. The Board has
established a minimum exercise price of $4.5625 for stock options issued under
the 2000 MIP. This exercise price is approximately fifty percent (50%) above the
closing price of $3.1875 of the Company's stock on September 12, 2000, the
Record Date.
The 2000 MIP is a continuation of the Company's incentive compensation
program currently provided by the 1990 MIP and 1997 MIP. The 2000 MIP, as
proposed, would provide additional shares for the grant of future stock based
awards to officers and key employees of the Company and to increase the maximum
awards allowed to any one individual. Shareholder approval is needed to approve
the terms of the 2000 MIP and to comply with certain provisions of Section
162(m) of the Code so that compensation under the 2000 MIP will qualify as
performance-based compensation and not be subject to the limitation on the
deductibility of compensation set forth in Section 162(m) of the Code. The Board
believes that grants of stock based awards are an effective method to attract
and retain officers and key employees and the availability of shares for future
awards is important to the Company's business prospects and operations.
The Board of Directors has approved and recommends to the Stockholders that
they approve the Company's 2000 Management Incentive Plan. A summary of the
major provisions of the 2000 MIP is set forth below. The summary is qualified in
its entirety by reference to the 2000 MIP, which is attached to this Proxy
Statement as Exhibit "A".
ADMINISTRATION
The 2000 MIP will be administered by the Compensation and Stock Option
Committee (the "Committee"), which will consist exclusively of individuals who
qualify both as "disinterested persons" as defined by Rule 16b-3 under the
Securities Exchange Act of 1934, and "outside directors" as defined under
Section 162(m) of the Code and the treasury regulations thereunder. The
Committee shall have sole authority to select the officers and other key
employees to whom grants may be made under the 2000 MIP, to determine the type
of incentive awards to be granted to the eligible employee, the number of shares
of stock to be covered by each award, and the terms and conditions of awards
granted under the 2000 MIP.
SHARES RESERVED UNDER THE 2000 MIP; LIMITATIONS
The total number of shares of the Company's common stock authorized and
available for distribution under the 2000 MIP shall be 2,900,000 (subject to
appropriate adjustments to reflect changes in the capitalization of the
Company). Such shares may consist of authorized and unissued shares or treasury
shares. Shares subject to lapsed, forfeited or canceled awards will be available
for distribution under the 2000 MIP.
The maximum number of shares subject to awards which may be granted under
the 2000 MIP to any participant in any one year is 1,100,000 shares (subject to
appropriate adjustments to reflect changes in the capitalization of the
Company). The purpose of this limitation is to comply with certain of the
provisions of Section 162(m) of the Code so that the compensation attributable
to stock options granted under the 2000 MIP would qualify for the performance
based exclusion in Section 162(m) of the Code and therefore would not be subject
to the limit on the deductibility of compensation set forth in Section 162(m) of
the Code.
ELIGIBILITY
Persons eligible for participation in the 2000 MIP shall include officers
and other key employees of the Company, its subsidiaries or its affiliates, but
excluding any person who serves only as a director of the Company. STOCK BASED
AWARDS
The 2000 MIP provides for the following types of incentive awards:
Stock Options. Stock options may be granted either alone or in conjunction
with other awards under the 2000 MIP. Stock options granted under the 2000 MIP
may be either incentive stock options (as defined under Section 422 of the
Code), non-qualified stock options, or both. To the extent that any stock option
fails to qualify as an incentive stock option, it shall constitute a
non-qualified stock option.
The exercise price per share of stock purchasable pursuant to exercise of a
stock option shall be 100% of the fair market value of the stock on the date of
grant of the option (or, in the case of a ten percent stockholder, 110%) but not
less than $4.5625. The term of each stock option shall be fixed by the
Committee, but no stock option granted under the 2000 MIP shall be exercisable
more than ten (10) years after the date of grant (or, in the case of a ten
percent stockholder, five years).
Stock options will be exercisable at such time or times and subject to such
terms and conditions as determined by the Committee. The conditions may include
time of service, price of the Company's stock or any other criteria.
Stock options may be exercised in whole or in part at any time during the
option period by giving written notice of exercise to the Company and tendering
payment in full for the shares. Payment may be made in cash or, if permitted by
the Committee, by surrender of shares of stock of the Company owned by the
optionee. While stock options are generally non-transferable other than by will
or by the laws of descent and distribution, non-qualified stock options may be
transferable, in the discretion of the Committee, to family members or trusts or
partnerships in which family members are the only partners.
In the event of termination of an optionee's employment with the Company
(or any subsidiary or affiliate), by reason of death or disability, options
which were otherwise exercisable at the date of termination of employment may be
exercised thereafter by the estate or legal representative of the optionee or
the optionee generally for a period of one (1) year from the date of termination
of employment or until the expiration of the stated term of the option,
whichever period is shorter. In the event of termination of employment by reason
of retirement, options which were otherwise exercisable at the date of
termination generally may be exercised for a period of one (1) year from the
date of termination of employment or expiration of the stated term of the
option, whichever period is shorter. If employment is terminated for reasons
other than death, disability, or retirement and the optionee was terminated
without cause, any option which was otherwise exercisable on the date of
termination of employment may be exercised for a period of three (3) months from
the date of termination or the balance of the stated term of the option,
whichever is shorter.
With respect to incentive stock options, the aggregate fair market value of
stock subject to option (determined at the time of grant) with respect to which
incentive stock options are first exercisable by an optionee during any calendar
year under all stock option plans of the Company and its subsidiaries shall not
exceed $100,000.
Stock Appreciation Rights. Stock Appreciation Rights ("SARs") may be
granted in conjunction with incentive or non-qualified stock options granted
under the 2000 MIP, or may be granted alone. SARs granted in conjunction with
stock options shall be exercisable only at such time or times and to the extent
that the stock options to which they relate shall be exercisable. Additionally,
the Committee, in its sole discretion, may provide that certain SARs can be
exercised only upon the occurrence of certain events, such as a "Change of
Control," as provided in the plan. Upon the exercise of a SAR, an optionee shall
be entitled to receive an amount in cash or shares of common stock equal in
value to the excess of the fair market value of one share of stock over the
exercise price per share specified in the related option or SAR, multiplied by
the number of shares in respect of which the SAR shall have been exercised. The
Committee shall have the right to determine the form of payment.
While SARs are generally non-transferable, other than by will or by the
laws of descent and distribution, and are generally exercisable during the
participant's lifetime only by the participant, SARs may be transferable to the
extent the underlying stock option is transferable.
Restricted Stock. Shares of Restricted Stock ("Restricted Stock") may be
issued either alone or in addition to other awards granted under the 2000 MIP
subject to such conditions as may be determined by the Committee. The Committee
may condition the grant of Restricted Stock upon the attainment of specified
performance goals or such other criteria as the Committee may determine in its
discretion. The Committee shall determine the time or times at which grants of
Restricted Stock will be made, the number of shares to be awarded, the
recipients of the award, and the price, if any, to be paid for the shares.
Stock certificates representing Restricted Stock granted to an employee
will be registered in the employee's name but will be held by the Company on
behalf of the employee until all restrictions attaching to the shares have
lapsed, and the participant shall deliver a stock power endorsed in blank to the
Company relating to the stock covered by the award. However, the employee will
have the right to vote the shares and receive dividends on such shares.
Subject to additional provisions which may be set by the Committee, all
Restricted Stock awards shall provide that the recipient shall not be permitted
to sell, transfer, pledge or assign shares of Restricted Stock awarded under the
2000 MIP during the applicable restriction period.
Upon termination of employment for any reason during the period while
restrictions still attach to the Restricted Stock, all shares still subject to
restrictions shall be forfeited by the participant and the participant shall
only receive the amount, if any, paid by the participant for the forfeited
shares. As shares are released from restrictions, a certificate will be
delivered to the participant for that number of released shares. In no event
shall restrictions, including risk of forfeiture, attach to the Restricted Stock
for a term exceeding ten years from the date of the award.
The Committee may, in its discretion, accelerate or waive any restrictions
attaching to Restricted Stock in whole or in part based upon performance or such
other factors as the Committee may determine, including special hardship
circumstances.
Performance Awards. The 2000 MIP authorizes the grant of performance awards
to employees payable in either stock or cash or a combination thereof, in the
sole discretion of the Committee ("Performance Award"). Generally, the Committee
will establish achievement objectives for an employee to whom a Performance
Award has been granted. The Committee shall determine to whom the award will be
made, the length of the performance period, conditions and terms of performance
goals and the manner of payment of the Performance Award. Generally, the period
during which achievement objectives must be attained will not be less than one
year nor more than five years. If at the end of the performance period the
specified objectives have been attained, the employee will be deemed to have
fully earned the Performance Award. If such objectives have not been fully
attained, the employee may be deemed to have earned a portion of the Performance
Award and be eligible to receive a portion of the total award, as determined by
the Committee. If the Committee in its discretion sets a required minimal level
of achievement which is not attained during the performance period, the employee
is entitled to no portion of the Performance Award. An employee granted a
Performance Award who terminates employment by reason of death, disability or
retirement before the end of the performance period will be entitled to receive
a portion of any earned Performance Award. Termination of employment for any
other reason will result in a forfeiture of all rights to the Performance Award.
Unless otherwise determined by the Committee, Performance Awards are intended to
qualify as performance-based compensation for purposes of Section 162(m) of the
Code and the treasury regulations thereunder.
AMENDMENTS
The Board at any time may amend, alter or discontinue the 2000 MIP, but no
such amendment, alteration or discontinuation shall be made which would impair
rights previously granted to any participant in the 2000 MIP without his or her
consent, or which, without the approval of the Company's stockholders would (1)
increase the total number of shares reserved to the 2000 MIP, (2) decrease the
exercise price of any option to less than 100% of the fair market value of the
Company's shares on the date of grant, (3) change the class of participants
eligible to participate in the 2000 MIP, or (4) extend the maximum term of a
stock option granted under the 2000 MIP.
The Committee may amend the terms of any award or option previously granted
under the 2000 MIP, but no such amendment shall impair the rights of any holder
without his or her consent.
PROVISION RELATING TO A CHANGE OF CONTROL
In the event of a Change of Control or a Potential Change of Control (as
defined in the 2000 MIP), any SARs and any stock options awarded under the 2000
MIP which were not previously exercisable and vested shall immediately fully
vest and shall become exercisable as of the date of such Change of Control or
Potential Change of Control and the restrictions and deferral limitations
applicable to any Restricted Stock award made under the 2000 MIP shall lapse and
such shares shall be deemed fully vested. The value of all outstanding stock
options, SARs, Restricted Stock or Performance Awards shall, to the extent
determined by the Committee, be cashed out on the basis of the "Change of
Control Price" as of the date of the Change of Control or Potential Change of
Control, unless another date is determined by the Committee. The Change of
Control Price shall mean the highest price per share paid in any transaction
reported on the New York Stock Exchange composite tape with respect to the
Company's shares or paid or offered in any transaction relating to the potential
or actual Change of Control at any time during the preceding 60 days, as
determined by the Committee, except that in the case of incentive stock options
and SARs granted in conjunction with incentive stock options, such price shall
be based only on transactions reported for the date on which the Committee
decides to cash out such options.
CHANGES AFFECTING COMPANY'S CAPITAL
In the event of certain changes in the Company's capital structure,
including any merger, reorganization, consolidation, recapitalization or stock
dividend, the Board of Directors will have the power to adjust the number and
kinds of shares covered by outstanding awards and to make other adjustments in
awards under the 2000 MIP as it deems appropriate. However, it is the policy of
the Board not to reprice options.
EFFECTIVE DATE OF PLAN; TERM
The 2000 MIP became effective on January 14, 2000, the date adopted by the
Company's Board of Directors, subject to approval by a majority vote of the
Company's stockholders within 12 months after its adoption, and any awards
granted prior to such approval shall be subject to such approval. No award under
the 2000 MIP may be granted on or after the tenth anniversary of the date of
stockholder approval of the 2000 MIP.
DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES
The following statements are based on current interpretations of existing
Federal income tax laws. The law is technical and complex and the statements
represent only a general summary of some of the applicable provisions.
Stock Options. There are no Federal income tax consequences either to the
optionee or to the Company upon the grant of a stock option. On exercise of an
incentive stock option, the optionee will not recognize any income and the
Company will not be entitled to a deduction for regular tax purposes, although
such exercise may give rise to liability for the optionee under the alternative
minimum tax provisions of the Code. Generally, if the optionee disposes of
shares acquired upon exercise of an incentive stock option within two years of
the date of grant or one year of the date of exercise, the optionee will
recognize compensation income and the Company will be entitled to a deduction
for income tax purposes in the amount equal to the excess of the fair market
value of the shares on the date of exercise over the option exercise price (or
the gain on sale, if less). Otherwise, the Company will not be entitled to any
deduction for tax purposes upon disposition of such shares, and the entire gain
or loss for the optionee will be treated as a capital gain or loss. On exercise
of a non-qualified stock option, the amount by which the fair market value of
the shares on the date of exercise exceeds the option exercise price will be
taxable to the optionee as compensation income and will be deductible for income
tax purposes by the Company. The disposition of shares acquired upon exercise of
a non-qualified stock option will generally result in a capital gain or loss for
the optionee, but will have no further tax consequences for the Company.
Stock Appreciation Rights. The grant of a SAR generally does not result in
income to the grantee or in a deduction for the Company. Upon the exercise of a
SAR, the grantee will recognize ordinary income and the Company will be entitled
to an income tax deduction measured by the fair market value of the shares plus
any cash received.
Restricted Stock. The grant of restricted stock generally does not result
in income to the grantee or in a deduction for the Company, assuming the shares
transferred are subject to restrictions which constitute a "substantial risk of
forfeiture" and the grantee does not make a special tax election. If there are
no such restrictions and no special tax election, the grantee will recognize
compensation income upon receipt of the shares. Dividends paid to the grantee
while the stock is subject to such restrictions, absent a special tax election,
will be treated as compensation for Federal income tax purposes. At the time the
restrictions lapse, the grantee will recognize compensation income for the
difference between the fair market value and the price paid, if any, and the
Company will be entitled to an income tax deduction of an equal amount.
Performance Awards. The grant of a Performance Award generally does not
result in income to the grantee or in a deduction for the Company. Upon the
receipt of cash or shares of common stock under a performance unit, the grantee
will recognize compensation income and the Company will be entitled to an income
tax deduction measured by the fair market value of the shares plus any cash
received by the grantee.
VOTE REQUIRED AND BOARD OF DIRECTOR RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding shares
of common stock of the Company present or represented by proxy and entitled to
vote at the Annual Meeting will be necessary for stockholder approval of the
2000 MIP.
THE BOARD OF DIRECTORS UNAMIOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE 2000 MANAGEMENT INCENTIVE PLAN.
AGENDA ITEM THREE
APPROVAL OF 2000 DIRECTOR STOCK OPTION PLAN
The Board of Directors has approved and recommends to the Stockholders that
they approve the Company's 2000 Director Stock Option Plan (the "2000 Director
Plan"). The purpose of the 2000 Director Plan is to provide stock based
compensation to eligible directors of the Company in order to encourage the
highest level of director performance and to promote long-term shareholder
value. The 2000 Director Plan is intended to be a continuation of the Company's
current Director Plan. The 2000 Director Plan, as proposed, would provide
additional shares for the grant of future options to directors of the Company.
The Board has established a minimum exercise price of $4.5625 for stock options
issued under the 2000 Director Plan.
The primary features of the 2000 Director Plan are summarized below. The
summary is qualified in its entirety by reference to the specific provisions of
the 2000 Director Plan, the full text of which is set forth as Exhibit "B" to
this Proxy Statement.
Plan Summary and Other Information
Participation in the 2000 Director Plan is limited to Company directors who
are not employees of the Company or any of its subsidiaries. There are currently
nine directors eligible to participate in the 2000 Director Plan. An aggregate
of 200,000 shares of the Company's $.01 par value common stock is reserved for
issuance under the 2000 Director Plan. Shares of common stock issuable under the
2000 Director Plan may be authorized and unissued shares or shares held in
treasury.
Under the 2000 Director Plan, on the date of each annual meeting of the
Company's stockholders, each non-employee director will be granted, without the
necessity of action by the Compensation and Stock Option Committee (the
"Committee"), a non-qualified stock option to purchase 5,000 shares of the
Company's common stock at a purchase price equal to the fair market value per
share of the common stock on such grant date.
Each option granted under the 2000 Director Plan is exercisable for a
period of ten (10) years beginning on the date of its grant. Except in the event
of the death or disability of the director or in the event of a Change of
Control or a Potential Change of Control (as defined in the 2000 Director Plan),
an option may not be exercised during the first year after grant. In the event
of termination of service of a director by reason of disability or death, any
options held by such director under the 2000 Director Plan shall be immediately
exercisable and may be exercised until the expiration of the stated term of the
option. In the event of termination of service of a director by reason of
retirement, any options held by such director may thereafter be exercised (to
the extent then exercisable) until the expiration of the stated term of the
option. If a director who has retired dies while any option is still
outstanding, the option may be exercised by the former director's legal
representative until the expiration of the stated term of the option.
The option exercise price is payable (i) in cash, (ii) in unrestricted
shares of common stock of the Company based on the fair market value of the
Company's common stock on the date the option is exercised, or (iii) by such
other instrument as may be acceptable to the Committee.
<PAGE>
Amendment or Termination of the 2000 Director Plan
The Board of Directors may suspend or terminate the 2000 Director Plan or
any portion thereof at any time, and the Board of Directors may amend the 2000
Director Plan at any time as it deems to be in the best interest of the Company;
provided, however, that without the approval of the stockholders, no such
amendment, alteration or discontinuation shall be made (i) if such stockholder
approval is necessary to comply with any legal, tax or regulatory requirement,
including any approval requirement which is a prerequisite for exemptive relief
from Section 16(b) of the Securities and Exchange Act of 1934, as amended; (ii)
to increase the maximum number of shares subject to the Director Plan; or (iii)
to change the definition of persons eligible to receive awards under the 2000
Director Plan. The Board of Directors is further limited from making any
amendment, alteration or discontinuation of the 2000 Director Plan that would
impair the rights of a director with respect to options awarded, without such
director's consent. The 2000 Director Plan may not be amended more than once
every six months unless such amendment is necessary to comply with changes in
the Code, or the Employee Retirement Income Security Act of 1974, as amended, or
rules promulgated thereunder.
Transferability
During the optionee's lifetime, options are exercisable only by the
optionee. Options granted under the 2000 Director Plan may only be transferred
by will or by the laws of descent and distribution except that an optionee can
elect to have options transferred to members of the optionee's immediate family,
including trusts for the benefit of such family members and partnerships in
which such family members are the only partners.
Administration
The 2000 Director Plan will be administered by the Committee of the Board
of Directors of the Company.
Adjustment of Shares
In the event of a merger, reorganization, consolidation, recapitalization,
dividend payable in common stock of the Company or other change in corporate
structure affecting the Company's common stock, the 2000 Director Plan provides
that a substitution or adjustment will be made in the aggregate number of shares
reserved for issuance under the 2000 Director Plan and in the number and option
price of shares subject to outstanding options granted under the 2000 Director
Plan as may be determined to be appropriate by the Committee. It is the policy
of the Board not to reprice options.
Change of Control
Upon the occurrence of a Change of Control or a Potential Change of Control
(as defined in the 2000 Director Plan), all unexercised stock options shall
become fully vested and immediately exercisable. In addition, after an actual or
potential Change of Control, a participant shall, to the extent determined by
the Committee, receive in cash from the Company with respect to previous options
awarded under the 2000 Director Plan the following amount for such awards: (i)
the excess of the Change of Control Price (as defined below) over the exercise
price of the award, multiplied by (ii) the number of shares of the common stock
subject to the award. The "Change of Control Price" means the highest price per
share paid in any transaction reported on the New York Stock Exchange, or paid
or offered in any transaction related to a potential or actual Change of Control
of the Company, at any time during the preceding 60 day period as determined by
the Committee.
Certain Federal Income Tax Consequences
The following statements are based on current interpretations of existing
federal income tax laws. The law is technical and complex and the statements
represent only a summary of some of the applicable provisions of the law.
All options granted or to be granted under the 2000 Director Plan are
intended to be non-qualified options not entitled to special tax treatment under
Section 422 of the Code.
A participant in the 2000 Director Plan will recognize taxable income upon
the grant of a non-qualified stock option only if such option has a readily
ascertainable fair market value as of the date of the grant. Stock options of
the Company are presently not actively traded and therefore the options granted
under the 2000 Director Plan do not have a readily ascertainable fair market
value. As a result, there are no Federal income tax consequences either to the
optionee or to the Company upon the grant of a stock option. On exercise of a
non-qualified stock option, the amount by which the fair market value of the
shares on the date of exercise exceeds the option exercise price will be taxable
to the optionee as compensation income and will be deductible for income tax
purposes by the Company. The disposition of shares acquired upon exercise of a
non-qualified stock option will generally result in a capital gain or loss for
the optionee, but will have no further tax consequences for the Company.
The 2000 Director Plan permits the Committee to allow an optionee to pay
the purchase price for shares acquired pursuant to an exercise of a
non-qualified option by transferring to the Company other shares of the
Company's common stock owned by the optionee. If an optionee exchanges
previously acquired common stock pursuant to the exercise of a non-qualified
stock option, the Internal Revenue Service has ruled that the optionee will not
be taxed on the unrealized appreciation of the shares surrendered in the
exchange. In other words, the optionee is not taxed on the difference between
his or her cost basis for the old shares and their fair market value on the date
of the exchange, even though the previously acquired shares are valued at the
current market price for purposes of paying all or part of the option price.
General
The 2000 Director Plan is not qualified under Section 401(a) of the Code
and is not subject to the provisions of the Employee Retirement Income Security
Act of 1974.
VOTE REQUIRED AND BOARD OF DIRECTOR RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding shares
of common stock of the Company present or represented and entitled to vote at
the Annual Meeting will be necessary for stockholder approval of the 2000
Director Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE 2000 DIRECTOR PLAN.
AGENDA ITEM FOUR
APPROVAL OF CHIEF EXECUTIVE OFFICER PERFORMANCE GOALS
Pursuant to Mr. Correnti's employment agreement with the Company, he is
entitled to receive a bonus if the Company achieves positive adjusted earnings
before interest, taxes, depreciation and amortization ("the Bonus Performance
Goal"). See "Chief Executive Officer Compensation." Any such bonus will be equal
to one percent of adjusted earnings before interest, taxes, depreciation and
amortization and will be payable principally in common stock of the Company
except for cash sufficient to pay the taxes incurred on the bonus. The bonus is
intended to be qualified under Section 162(m) of the Code, and the Bonus
Performance Goal is being submitted to stockholders for approval in order to
qualify the bonus compensation for deduction under Section 162(m).
VOTE REQUIRED AND BOARD OF DIRECTOR RECOMMENDATION
Approval of this proposal requires the affirmative vote of the holders of a
majority of the outstanding shares of the Company present or represented by
proxy and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
PERFORMANCE GOAL.
AGENDA ITEM FIVE
APPROVAL AND RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors of the Company has, subject to approval and
ratification by the stockholders, selected Ernst & Young LLP as independent
auditors for the Company for the fiscal year ending June 30, 2001. The Company
has been informed that neither Ernst & Young LLP nor any of its partners has any
direct or indirect financial interest in the Company or any of its subsidiaries,
or has had any connection with the Company or any of its subsidiaries in the
capacity of promoter, underwriter, voting trustee, director, officer or
employee.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting. Such representative will have the opportunity to make a
statement if he desires to do so and will be available to respond to appropriate
questions.
VOTE REQUIRED AND BOARD OF DIRECTOR RECOMMENDATION
The affirmative vote of the holders of a majority of the votes cast at the
Annual Meeting by the stockholders entitled to vote on the matter will be
required to approve the selection of Ernst & Young LLP as independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL AND RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
The Company's Bylaws require that notice of nominations to the Board of
Directors proposed by stockholders be received by the Secretary of the Company,
along with certain other specified material, at least 60 days prior to the first
anniversary of the preceding year's annual meeting of stockholders. Accordingly,
notice of proposed nominees to the Board of Directors must be received by the
Secretary of the Company no later than August 21, 2001. Any stockholder who
wishes to nominate a candidate for election to the Board should obtain a copy of
the relevant section of the Bylaws from the Secretary of the Company.
Proposals of stockholders intended to be presented pursuant to Rule 14a-8
under the Exchange Act at the 2001 annual meeting must be received by the
Secretary of the Company no later than May 23, 2001, in order to be considered
for inclusion in the 2001 proxy statement. In order for proposals of
shareholders made outside of Rule 14a-8 to be considered "timely" within the
meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be received
by the Secretary of the Company no later than August 21, 2001.
GENERAL
The Board of Directors of the Company is not aware of any matters other
than the aforementioned matters that will be presented for consideration at the
Annual Meeting. If other matters properly come before the Annual Meeting, it is
the intention of the persons named in the enclosed proxy to vote thereon in
accordance with their best judgment.
The cost of preparing, printing and mailing this Proxy Statement and of the
solicitation of proxies by the Company will be borne by the Company.
Solicitation will be made by mail and, in addition, may be made by directors,
officers and employees of the Company personally, or by telephone, telegram,
courier service, telecopier, or the Internet. The Company has entered into an
agreement with ChaseMellon Consulting Services, L.L.C. pursuant to which
ChaseMellon will assist the Company with its solicitation of proxies.
ChaseMellon is to receive a fee of $7,500 for such services. The Company will
request brokers, custodians, nominees, and other like parties to forward copies
of proxy materials to beneficial owners of the Company's common stock and will
reimburse such parties for their reasonable and customary charges or expenses in
this endeavor.
The Company will provide to any stockholder of record, without charge, upon
written request to its Corporate Secretary, a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 2000.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON WE URGE YOU TO EXECUTE AND RETURN THE
ENCLOSED PROXY CARD IN THE REPLY ENVELOPE PROVIDED.
By Order of the Board of Directors,
/s/ Catherine W. Pecher
-------------------------
Catherine W. Pecher
Vice President - Administration and
September 20, 2000 and Corporate Secretary
PROXY
BIRMINGHAM STEEL CORPORATION
This proxy is solicited on behalf of the Board of Directors for use at the
2000 Annual Meeting of Stockholders to be held on October 20, 2000. The
undersigned hereby appoints John D. Correnti and Catherine W. Pecher, and each
of them, attorneys and proxies with full power of substitution, to vote in the
name of and as proxy for the undersigned at the Annual Meeting of Stockholders
of Birmingham Steel Corporation to be held on Friday October 20, 2000, at 10:00
a.m. local time at the Grand Hyatt Atlanta, Atlanta, Georgia and at any
adjournment or postponement thereof, according to the number of votes that the
undersigned would be entitled to cast if personally present.
PROPERLY EXECUTED PROXIES WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED, IF NO SUCH DIRECTIONS ARE GIVEN, SUCH PROXIES WILL BE VOTED FOR
ALL NOMINEES REFERRED TO IN PARAGRAPH (1) AND FOR THE PROPOSALS REFERRED TO IN
PARAGRAPHS (2), (3), (4) AND (5).
[X] Please mark your votes as in this sample.
(1) To elect the following nominees as directors to serve until the next Annual
Meeting of Stockholders and until their successors are elected and
qualified: John D. Correnti, Donna M. Alvarado, Steven R. Berrard, Alvin R.
Carpenter, Jerry E. Dempsey, Robert M. Gerrity, James W. McGlothlin,
Richard de J. Osborne, Robert H. Spilman, and James A. Todd, Jr.
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY
(except as indicated to the contrary below)
--------------------------------------------------------------------------------
(2) To approve the 2000 Management Incentive Plan, attached as Exhibit A to the
Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve the 2000 Director Stock Option Plan, attached as Exhibit B to
the Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) To approve the bonus performance goals for the Chief Executive Officer.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) To approve and ratify the selection of Ernst & Young LLP as the independent
auditors for the Company and its subsidiaries for the fiscal year ending
June 30, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) To consider and take action upon such other matters as may properly come
before the meeting or any adjournments or postponements thereof.
The undersigned revokes any prior proxies with respect to the shares covered by
this Proxy.
Dated: __________________, 2000
Signature
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Signature
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Title(s)
This Proxy should be dated and signed by the stockholder(s)
exactly as his or her name appears hereon and returned promptly in the
enclosed envelope. Persons in a fiduciary capacity should so indicate.
If shares are held by joint tenants or as community property, both
should sign.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
EXHIBIT A
BIRMINGHAM STEEL CORPORATION
2000 MANAGEMENT INCENTIVE PLAN
SECTION 1. General Purpose of Plan: Definitions.
The name of this plan is the Birmingham Steel Corporation 2000 Management
Incentive Plan (the "Plan"). The purpose of the Plan is to enable Birmingham
Steel Corporation (the "Company") and its Subsidiaries and Affiliates to attract
and retain employees who contribute to the Company's success by their ability,
ingenuity and industry, and to enable such employees to participate in the
long-term success and growth of the Company through an equity interest in the
Company.
For purposes of the Plan, the following terms shall be defined as set forth
below:
a. "Affiliate" means any corporation (other than a Subsidiary),
partnership, joint venture or any other entity in which the Company owns,
directly or indirectly, at least a 10 percent beneficial ownership
interest.
b. "Board" means the Board of Directors of the Company.
c. "Cause" means a felony conviction of a participant or the failure
of a participant to contest prosecution for a felony, or a participant's
willful misconduct or dishonesty which is harmful to the business or
reputation of the Company or any Subsidiary or Affiliate.
d. "Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
e. "Committee" means a committee of the Board appointed for the
purpose of administering the Plan, which committee shall consist
exclusively of Disinterested Persons.
f. "Commission" means the Securities and Exchange Commission.
g. "Company" means Birmingham Steel Corporation, a corporation
organized under the laws of the State of Delaware (or any successor
corporation).
h. "Disability" means total and permanent disability as determined
under the Company's long term disability program.
i. "Disinterested Person" shall mean a member of the Company's Board
who satisfies the requirements for being (i) a "disinterested person"
within the meaning set forth in Rule 16b-3(b)(3) as promulgated by the
Commission under the Exchange Act, or any successor definition adopted by
the Commission, and (ii) an "outside director" within the meaning set forth
in Section 162(m) of the Code and the treasury regulations promulgated
thereunder, as amended from time to time.
j. "Early Retirement" means retirement from active employment with the
Company, any Subsidiary and any Affiliate on or after the date on which a
participant reaches the age of fifty-five (55) but before the date on which
the participant reaches the age of sixty-five (65).
k. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor thereto.
l. "Fair Market Value" means, as of any given date, the closing price
of the Stock on such date (or if no transactions were reported on such date
on the next preceding date on which transactions were so reported) on the
New York Stock Exchange Composite Tape or if the Stock is not on such date
listed on the New York Stock Exchange, in the principal market in which
such Stock is traded on such date.
m. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422
of the Code.
n. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
o. "Normal Retirement" means retirement from active employment with
the Company, any Subsidiary, and any Affiliate on or after the date on
which a participant reaches the age of sixty-five (65).
p. "Performance Award" means an award of shares of Stock or cash to
the executives pursuant to Section 8 contingent upon achieving certain
performance goals.
q. "Plan" means this 2000 Management Incentive Plan.
r. "Restricted Stock" means an award of shares of Stock that are
subject to restrictions under Section 7 hereof.
s. "Retirement" means Normal or Early Retirement.
t. "Stock" means the Common Stock of the Company.
u. "Stock Appreciation Right" means a right granted under Section 6
hereof, which entitles the holder to receive a cash payment or an award of
Stock in an amount equal to the difference between (i) the Fair Market
Value of the Stock covered by such right at the date the right is granted,
unless otherwise determined by the Committee pursuant to Section 6 and (ii)
the Fair Market Value of the Stock covered by such right at the date the
right is exercised multiplied by the number of shares covered by the right.
v. "Stock Option" means any option to purchase shares of Stock granted
to employees pursuant to Section 5.
w. "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
x. "Ten Percent Shareholder" means a person who owns (after taking
into account the attribution rules of Code Section 424(b)) more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company.
SECTION 2. Administration.
The Plan shall be administered by the Committee which shall at all times
consist of not less than three Disinterested Persons.
The Committee shall have the power and authority to grant to eligible
employees, pursuant to the terms of the Plan: (i) Stock Options; (ii) Stock
Appreciation Rights; (iii) Restricted Stock; or (iv) Performance Awards.
In particular, the Committee shall have the authority:
(i) to select the officers and other key employees of the Company, its
Subsidiaries, and its Affiliates to whom Stock Options, Stock Appreciation
Rights, Restricted Stock, or Performance Awards or a combination of the
foregoing from time to time will be granted hereunder;
(ii) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock,
or Performance Awards or a combination of the foregoing, are to be granted
hereunder;
(iii) to determine the number of shares of Stock to be covered by each
such award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder including, but not
limited to, any restriction on any Stock Option or other award and/or the
shares of Stock relating thereto based on performance and/or such other
factors as the Committee may determine, in its sole discretion, and any
vesting features based on performance and/or such other factors as the
Committee may determine, in its sole discretion;
(v) to determine whether, to what extent and under what circumstances
Stock and other amounts payable with respect to an award under this Plan
shall be deferred either automatically or at the election of a participant,
including providing for and determining the amount (if any) of deemed
earnings on any deferred amount during any deferral period.
Subject to Section 10, the Committee shall have the authority to adopt,
alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall, from time to time, deem advisable; to interpret the terms
and provisions of the Plan and any award issued under the Plan (and any
agreements relating thereto); and to otherwise supervise the administration of
the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any award hereunder shall be within the sole discretion of the
Committee, may be made at any time, and shall be final, conclusive, and binding
upon all persons, including the Company, any employee, any holder or beneficiary
of any award granted hereunder and any shareholder.
SECTION 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available for distribution
under the Plan shall be 2,900,000. Such shares may consist, in whole or in part,
of authorized and unissued shares or treasury shares.
The maximum number of shares subject to awards which may be granted under
the Plan to any individual in any one year is 1,100,000 (subject to appropriate
adjustments to reflect changes in the capitalization of the Company).
If any shares of Stock that have been subject to Stock Options cease to be
subject to Stock Options, or if any shares subject to any Restricted Stock award
granted hereunder are forfeited or such award is otherwise terminated, such
shares shall again be available for distribution in connection with future
awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Stock, a substitution or adjustment shall be made in the aggregate
number of shares reserved for issuance under the Plan, in the number and option
price of shares subject to outstanding Stock Options granted under the Plan and
in the number of shares subject to Restricted Stock awards granted under the
Plan as may be determined to be appropriate by the Committee, in its sole
discretion, provided that the number of shares subject to any award shall always
be a whole number. Such adjusted option price shall also be used to determine
the amount payable by the Company upon the exercise of any Stock Appreciation
Right associated with any Stock Option.
SECTION 4. Eligibility.
Officers and other key employees of the Company, its Subsidiaries or its
Affiliates (but excluding members of the Committee and any person who serves
only as a director) who are responsible for or contribute to the management,
growth and/or profitability of the business of the Company, its Subsidiaries, or
its Affiliates, are eligible to be granted Stock Options, Stock Appreciation
Rights, Restricted Stock or Performance Awards. The optionees and participants
under the Plan shall be selected from time to time by the Committee, in its sole
discretion, from among those eligible, and the Committee shall determine, in its
sole discretion, the number of shares covered by each award or grant.
SECTION 5. Stock Options.
Stock Options may be granted either alone or in addition to other awards
granted under the Plan. Any Stock Option granted under the Plan shall be in such
form as the Committee may from time to time approve, and the provisions of Stock
Option awards need not be the same with respect to each optionee.
The Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights) except that Incentive Stock
Options shall not be granted to employees of an Affiliate. To the extent that
any Stock Option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option.
Except as provided in Section 5(j) hereof, no term of this Plan relating to
Incentive Stock Options shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be so exercised, so as to
disqualify either the Plan or any Incentive Stock Option under Section 422 of
the Code. Notwithstanding the foregoing, in the event an optionee voluntarily
disqualifies an option as an Incentive Stock Option within the meaning of
Section 422 of the Code, the Committee may, but shall not be obligated to, make
such additional grants, awards or bonuses as the Committee shall deem
appropriate, to reflect the tax savings to the Company which results from such
disqualification.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the time of
grant but shall not be less than 100% of the Fair Market Value of the Stock
on the date of the grant of the Stock Option; provided, however, if the
Option is an Incentive Stock Option granted to a Ten Percent Shareholder,
the option price for each share of Stock subject to such Incentive Stock
Option shall be no less than one hundred ten percent (110%) of the Fair
Market Value of a share of Stock on the date such Incentive Stock Option is
granted.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, provided that no Stock Option which is granted to a Ten Percent
Shareholder shall be exercisable more than five (5) years after the date
such Stock Option is granted and that no Stock Option which is granted to
an optionee that is not a Ten Percent Shareholder shall be exercisable more
than ten (10) years after the date such Stock Option is granted.
(c) Exercisability. Subject to paragraph (j) of this Section 5 with
respect to Incentive Stock Options, Stock Options shall be exercisable at
such time or times and subject to such terms and conditions, including,
without limitation, vesting conditions tied to Stock price or other
criteria, as shall be determined by the Committee at grant. If the
Committee provides, in its discretion, that any Stock Option is exercisable
only in installments, the Committee may waive such installment exercise
provision at any time in whole or in part based on performance and/or such
other factors as the Committee may determine in its sole discretion.
(d) Method of Exercise. Stock Options may be exercised in whole or in
part at any time during the option period, by giving written notice of
exercise to the Company specifying the number of shares to be purchased,
accompanied by payment in full of the purchase price, in cash, by check or
such other instrument as may be acceptable to the Committee. As determined
by the Committee, in its sole discretion, at or after grant, payment in
full or in part may also be made in the form of unrestricted Stock owned by
the optionee or, in the case of the exercise of a Non-Qualified Stock
Option, Restricted Stock subject to an award hereunder or any other
property acceptable to the Committee may be used for payment (based, in
each case, on the Fair Market Value of the Stock or other property on the
date the option is exercised, as determined by the Committee). If payment
of the option exercise price of a Non-Qualified Stock Option is made in
whole or in part with shares of Restricted Stock the shares received upon
the exercise of such Stock Option shall be restricted or deferred, as the
case may be, in accordance with the original term of the Restricted Stock
award in question, except that the Committee may direct that such
restrictions or deferral provisions shall apply only to the number of such
shares equal to the number of shares of Restricted Stock surrendered upon
the exercise of such option. No shares of unrestricted Stock shall be
issued until full payment therefor has been made. An optionee shall have
the rights to dividends or other rights of a stockholder with respect to
shares subject to the option when the optionee has given written notice of
exercise and has paid in full for such shares.
(e) Non-transferability of Options. Except as otherwise set forth in
this Section 5(e), no Stock Option shall be transferable by the Optionee
otherwise than by will or by the laws of descent and distribution. All
Stock Options shall be exercisable, during the optionee's lifetime, only by
the optionee. The Committee shall have the discretionary authority,
however, to grant Non-Qualified Stock Options which would be transferable
to members of an optionee's immediate family (which shall include, for
purposes of this section, spouses and children and grandchildren, whether
natural or adopted), and to trusts for the benefit of such family members
and partnerships in which such family members are the only partners. For
purposes of paragraphs (f), (g), (h) and (i) of this Section 5, a
transferred option may be exercised by the transferee only to the extent
that the optionee would have been entitled had the option not been
transferred.
(f) Termination of Employment by Reason of Death. Unless otherwise
determined by the Committee, if any optionee's employment with the Company,
any Subsidiary, and any Affiliate terminates by reason of death, the Stock
Option may thereafter be immediately exercised, to the extent then
exercisable (or on such accelerated basis as the Committee shall determine
at or after grant), by the legal representative of the estate or by the
legatee of the optionee under the will of the optionee, for a period of one
(1) year from the date of such death or until the expiration of the stated
term of such Stock Option, whichever period is the shorter.
(g) Termination of Employment by Reason of Disability. Unless
otherwise determined by the Committee, if any optionee's employment with
the Company, and Subsidiary and any Affiliate terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be
exercised, to the extent it was exercisable at the time of termination due
to Disability (or on such accelerated basis as the Committee shall
determine at or after grant), but may not be exercised after one (1) year
from the date of such termination of employment or the expiration of the
stated term of such Stock Option, whichever period is the shorter;
provided, however, that, if the optionee dies within such one-year period,
any unexercised Stock Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death
for a period of twelve months from the date of such death or for the stated
term of such Stock Option, whichever period is the shorter. In the event of
termination of employment by reason of Disability, if an Incentive Stock
Option is exercised after the expiration of the exercise periods that apply
for purposes of Section 422 of the Code, such Stock Option will thereafter
be treated as a Non-Qualified Stock Option.
(h) Termination of Employment by Reason of Retirement. Unless
otherwise determined by the Committee, if any optionee's employment with
the Company, any Subsidiary and any Affiliate terminates by reason of
Normal or Early Retirement, any Stock Option held by such optionee may
thereafter be exercised to the extent it was exercisable at the time of
such Retirement (or on such accelerated basis as the Committee shall
determine at or after grant), but may not be exercised after one (1) year
from the date of such termination of employment or the expiration of the
stated term of such Stock Option, whichever period is the shorter;
provided, however, that if the optionee dies within such one-year period
any unexercised Stock Option held by such optionee shall thereafter be
exercisable, to the extent to which it was exercisable at the time of
death, for a period of twelve months from the date of such death or for the
stated term of the Stock Option, whichever period is the shorter. In the
event of termination of employment by reason of Retirement, if an Incentive
Stock Option is exercised after the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.
(i) Other Termination of Employment. Unless otherwise determined by
the Committee, if an optionee's employment with the Company, any Subsidiary
and any Affiliate terminates for any reason other than death, Disability or
Retirement, the Stock Option shall thereupon terminate, except that such
Stock Option may be exercised for the lesser of three months from the date
of termination or the balance of such Stock Option's term if the optionee's
employment with the Company, and Subsidiary and any Affiliate is
involuntarily terminated by the optionee's employer without Cause.
(j) Limit on Value of Incentive Stock Option First Exercisable
Annually. The aggregate Fair Market Value (determined at the time of grant)
of the Stock for which Incentive Stock Options are exercisable for the
first time by an optionee during any calendar year under the Plan (and/or
any other stock option plans of the Company, any Subsidiary and any
Affiliate) shall not exceed $100,000. For purposes of this paragraph (j) of
Section 5, Incentive Stock Options will be taken into account in the order
in which they were granted.
SECTION 6. Stock Appreciation Rights.
(a) Grant and Exercise When Granted in Conjunction With Stock Options.
Stock Appreciation Rights may be granted in conjunction with all or part of
any Stock Option granted under the Plan and may contain terms and
conditions different from those of the related Stock Option, except as
otherwise provided below. In the case of a Non-Qualified Stock Option, such
rights may be granted either at or after the time of the grant of such
Non-Qualified Stock Option. In the case of an Incentive Stock Option, such
rights may be granted only at the time of the grant of such Incentive Stock
Option.
A Stock Appreciation Right or applicable portion hereof granted with
respect to a given Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock Option,
except that, unless otherwise provided by the Committee at the time of
grant, a Stock Appreciation Right granted with respect to less than the
full number of shares covered by a related Stock Option shall only be
reduced if and to the extent that the number of shares covered by the
exercise or termination of the related Stock Option exceeds the number of
shares not covered by the Stock Appreciation Right.
A Stock Appreciation Right may be exercised by an optionee, in
accordance with paragraph (c) of this Section 6, by surrendering the
applicable portion of the related Stock Option. Upon such exercise and
surrender, the optionee shall be entitled to receive an amount determined
in the manner prescribed in paragraph (c) of this Section 6. Stock Options
which have been so surrendered, in whole or in part, shall no longer be
exercisable to the extent the related Stock Appreciation Rights have been
exercised.
(b) Grant and Exercise When Granted Alone. Stock Appreciation Rights
may be granted at the discretion of the Committee in a manner not related
to an award of a Stock Option. The Stock Appreciation Right, granted under
Section 6(b), shall be exercisable in accordance with Section 6(c) over a
period not to exceed ten years. Any Stock Appreciation Right which is
outstanding on the last day of the exercisable period shall be
automatically exercised on such date for cash or Common Stock, as
determined by the Committee, without any action by the holder.
(c) Terms and Conditions. Stock Appreciation Rights shall be subject
to such terms and conditions, not inconsistent with the provisions of the
Plan, as shall be determined from time to time by the Committee, including
the following:
(i) Stock Appreciation Rights granted pursuant to Section 6(a)
shall be exercisable only at such time or times and to the extent that
the Stock Options to which the Stock Appreciation Rights relate shall
be exercisable in accordance with the provisions of Section 5 and this
Section 6 of the Plan.
(ii) Upon the exercise of a Stock Appreciation Right granted
pursuant to Section 6(a), an optionee shall be entitled to receive an
amount in cash or shares of Stock equal in value to the excess of the
Fair Market Value of one share of Stock over the option price per
share specified in the related Stock Option multiplied by the number
of shares in respect of which the Stock Appreciation Right shall have
been exercised, with the Committee having the right to determine the
form of payment. Upon the exercise of a Stock Appreciation Right
granted pursuant to Section 6(b), the holder shall be entitled to
receive an amount in cash or shares of Stock equal in value to the
excess of the Fair Market Value of one share of Stock over the Fair
Market Value of one share of Stock at the date the Stock Appreciation
Right was granted multiplied by the number of shares in respect of
which the Stock Appreciation Right shall have been exercised, with the
Committee having the right to determine the form of payment.
(iii) Stock Appreciation Rights shall be transferable only when
and to the extent that any underlying Stock Option would be
transferable under paragraph (e) of Section 5 of the Plan. Otherwise,
Stock Appreciation Rights shall not be transferable by the holder
other than by will or the laws of descent and distribution. Except as
set forth above, all Stock Appreciation Rights shall be exercisable,
during the holder's lifetime, only by the holder.
(iv) Upon the exercise of a Stock Appreciation Right granted
pursuant to Section 6(a), the Stock Option, or part thereof to which
such Stock Appreciation Right is related, shall be deemed to have been
exercised for the purpose of the limitation set forth in Section 3 of
the Plan on the number of shares of Stock to be issued under the Plan.
(v) A Stock Appreciation Right granted in connection with an
Incentive Stock Option pursuant to Section 6(a) may be exercised only
if and when the market price of the Stock subject to the Incentive
Stock Option exceeds the exercise price of such Stock Option.
(vi) In its sole discretion, the Committee may provide, at the
time of grant of a Stock Appreciation Right under this Section 6, that
such Stock Appreciation Right can be exercised only in the event of a
"Change of Control" and/or a "Potential Change of Control" (as defined
in Section 12 below).
(vii) The Committee, in its sole discretion, may also provide
that in the event of a "Change of Control" and/or a "Potential Change
of Control" (as defined in Section 12 below) the amount to be paid
upon the exercise of a Stock Appreciation Right shall be based on the
"Change of Control Price" (as defined in Section 12 below).
(viii) Any exercise by a participant of all or a portion of a
Stock Appreciation Right for cash, may only be made during the period
beginning on the third business day following the date of the
Company's release of its quarterly or annual summary statements of
sales and earnings to the public and ending on the twelfth business
day following such date; provided, however, that the foregoing shall
not apply to any exercise by a participant of a Stock Appreciation
Right for cash where the date of exercise is automatic or fixed in
advance under the Plan and is outside the control of the participant.
SECTION 7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee
shall determine the officers and key employees of the Company and its
Subsidiaries and Affiliates to whom, and the time or times at which, grants
of Restricted Stock will be made, the number of shares to be awarded, the
price, if any, to be paid by the recipient of Restricted Stock (subject to
Section 7(b) hereof), the time or times within which such awards may be
subject to forfeiture, and all other conditions of the awards. However, in
no event shall any restriction, including risk of forfeiture, attach to the
Restricted Stock for a term to exceed ten years from the date such Stock
was granted. The Committee may also condition the grant of Restricted Stock
upon the attainment of specified performance goals, or such other criteria
as the Committee may determine, in its sole discretion. The provisions of
Restricted Stock awards need not be the same with respect to each
recipient.
(b) Awards and Certificates. The prospective recipient of an award of
shares of Restricted Stock shall not have any rights with respect to such
award, unless and until such recipient has executed an agreement evidencing
the award (a "Restricted Stock Award Agreement") and has delivered a fully
executed copy thereof to the Company, and has otherwise complied with the
then applicable terms and conditions.
(i) Awards of Restricted Stock must be accepted within a period
of 60 days (or such shorter period as the Committee may specify) after
the award date by executing a Restricted Stock Award Agreement and
paying whatever price, if any, is required.
(ii) Each participant who is awarded Restricted Stock shall be
issued a stock certificate in respect of such shares of Restricted
Stock.
Such certificate shall be registered in the name of the
participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such award,
substantially in the following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and conditions
(including forfeiture) of the Birmingham Steel Corporation 2000
Management Incentive Plan and a Restricted Stock Agreement
entered into between the registered owner and Birmingham Steel
Corporation. Copies of such Plan and Agreement are on file in the
offices of Birmingham Steel Corporation, 1000 Urban Center Drive,
Suite 300, Birmingham, Alabama 35242-2516."
(iii) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of
any Restricted Stock award, the participant shall have delivered a
stock power, endorsed in blank, relating to the Stock covered by such
award.
(c) Restrictions and Conditions. The shares of Restricted Stock
awarded pursuant to this Section 7 shall be subject to the following
restrictions and conditions:
(i) Subject to the provisions of this Plan and Restricted Stock
Award Agreements, during the period established by the Committee in
which the Restricted Stock is subject to forfeiture (the "Restriction
Period"), the participant shall not be permitted to sell, transfer,
pledge or assign shares of Restricted Stock awarded under the Plan.
Within these limits, the Committee may, in its sole discretion,
provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions in whole or in part based on
performance and/or such other factors as the Committee may determine,
in its sole discretion.
(ii) Except as provided in paragraph (c)(i) of this Section 7,
the participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a stockholder of the Company, including
the right to receive any dividends.
Dividends paid in cash with respect to shares of Restricted Stock
shall not be subject to any restrictions or subject to forfeiture.
Dividends paid in stock of the Company or stock received in connection
with a stock split with respect to Restricted Stock shall be subject
to the same restrictions as on such Restricted Stock. Certificates for
shares of unrestricted Stock shall be delivered to the participant
promptly after, and only after, the period of forfeiture shall expire
without forfeiture in respect of such shares of Restricted Stock.
(iii) Subject to the provisions of the Restricted Stock Award
Agreement and this Section 7, upon termination of employment for any
reason during the Restriction Period, all shares still subject to
restriction shall be forfeited by the participant, and the participant
shall only receive the amount, if any, paid by the participant for
such forfeited Restricted Stock.
(iv) In the event of special hardship circumstances of a
participant whose employment is involuntarily terminated (other than
for Cause), the Committee may, in its sole discretion, waive in whole
or in part any or all remaining restrictions with respect to such
participant's shares of Restricted Stock.
(d) Section 162(m) Provisions. Unless otherwise determined by the
Committee, performance goals established for the top five most highly
compensated officers of the Company shall be pre-established objective
performance goals within the meaning of Section 162(m) of the Code and
treasury regulations promulgated thereunder. Furthermore, unless
otherwise determined by the Committee, once the Committee has
established one or more performance goals with respect to Restricted
Stock granted to one of the top five most highly compensated officers
of the Company which was, when granted, intended to be pre-established
objective performance goals within the meaning of Section 162(m) of
the Code and the treasury regulations thereunder, the Committee shall
not waive or alter the targets after the earlier of (i) the expiration
of twenty-five percent (25%) of the performance period or (ii) the
date on which the outcome under the objectives is substantially
certain. Unless otherwise determined by the Committee, if any
provision of the Plan or any Restricted Stock granted to an individual
who is one of the top five most highly compensated officers of the
Company hereunder would disqualify the award of Restricted Stock with
respect to such individual, or would otherwise not comply with Section
162(m) of the Code, such provision or award of Restricted Stock shall
be construed or deemed amended to conform to Section 162(m) of the
Code.
SECTION 8. Performance Awards.
(a) Administration. Shares of Common Stock or a payment in cash
may be distributed under the Plan upon the attainment of performance
goals to an employee as a Performance Award. The Committee shall
determine the officers and key employees of the Company and its
Subsidiaries and Affiliates to whom the Performance Award is granted,
the terms and conditions of the performance goals, the term of the
performance period and the level and form of the payment of the
Performance Award.
(b) Performance Goals. The Committee, at its sole discretion may
establish, under this Section 8, performance goals either in terms of
Company-wide goals or in terms of goals that are related to the
specific performance of the employee or the division, subsidiary,
department or function within the Company in which the employee is
employed. A minimum level of acceptance, at the discretion of the
Committee, may be established.
If at the end of the performance period the specified goals have
been attained, the employee is deemed to have fully earned the
Performance Award. If such performance goals have not been attained,
the employee is deemed to have partly earned the Performance Award and
becomes eligible to receive a portion of the total award, as
determined by the Committee. If a required minimum level of
achievement has not been met, the employee is entitled to no portion
of the Performance Award. Subject to Section 8(d) below, the Company
may adjust the payment of awards or the performance goals if events
occur or circumstances arise which would cause a particular payment or
set of performance goals to be inappropriate as a measure of
performance.
(c) Terms and Conditions. An employee to whom a Performance Award
has been granted is given performance goals to be reached over a
specified period, referred to herein as the "performance period".
Generally this period shall be not less than 1 year but in no case
shall the period exceed 5 years.
An employee granted a Performance Award pursuant to this Section
8 who by reason of death, disability or retirement terminates
employment before the end of the performance period is entitled to
receive a portion of any earned Performance Award.
An employee who terminates employment for any other reason
forfeits all rights under the Performance Award.
(d) Section 162(m) Provisions. Unless otherwise determined by the
Committee, performance goals established for the top five most highly
compensated officers of the Company shall be pre-established objective
performance goals within the meaning of Section 162(m) of the Code and
treasury regulations promulgated thereunder. Furthermore, unless
otherwise determined by the Committee, once the Committee has
established one or more performance goals with respect to a
Performance Award granted to one of the top five most highly
compensated officers of the Company which were, when granted, intended
to be pre-established objective performance goals within the meaning
of Section 162(m) of the Code and the treasury regulations thereunder,
the Committee shall not waive or alter the targets after the earlier
of (i) the expiration of twenty-five percent (25%) of the performance
period or (ii) the date on which the outcome under the objectives is
substantially certain. Unless otherwise determined by the Committee,
if any provision of the Plan or any Performance Award granted to an
individual who is one of the top five most highly compensated officers
of the Company hereunder would disqualify the Performance Award with
respect to such individual, or would otherwise not comply with Section
162(m) of the Code, such provision or Performance Award shall be
construed or deemed amended to conform to Section 162(m) of the Code.
SECTION 9. Loan Provisions.
With the consent of the Committee, the Company may make, or arrange for, a
loan or loans to an employee with respect to the exercise of any Stock Option
granted under the Plan and/or with respect to the payment of the purchase price,
if any, of any Restricted Stock awarded hereunder. The Committee shall have full
authority to decide whether to make a loan or loans hereunder and to determine
the amount, term and provisions of any such loan or loans, including the
interest rate to be charged in respect of any such loan or loans, whether the
loan or loans are to be with or without recourse against the borrower, the terms
on which the loan is to be repaid and the conditions, if any, under which the
loan or loans may be forgiven.
SECTION 10. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan as it shall deem
advisable or to conform to any change in any applicable law or regulation
applicable thereto (including, without limitation, applicable federal securities
laws and regulations and applicable federal income tax laws and regulations);
provided, however, that no amendment, alteration, or discontinuation shall be
made which would impair the right of an optionee or participant under a Stock
Option, Stock Appreciation Right, Restricted Stock, or Performance Award
theretofore granted, without the optionee's or participant's consent, or which
without the approval of the stockholders would:
(a) except as expressly provided in this Plan, increase the total
number of shares reserved for the purpose of the Plan;
(b) decrease the option price of any Stock Option to less than 100% of
the Fair Market Value on the date of the granting of the option;
(c) change the participants or class of participants eligible to
participate in the Plan; or
(d) extend the maximum option period under paragraph (b) of Section 5
of the Plan.
The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any holder without his or her consent. Subject to the provisions of
Section 3 above, the Committee may also substitute new Stock Options for
previously granted Stock Options including options granted under other plans
applicable to the participant and previously granted Stock Options having higher
option prices.
SECTION 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing set forth herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payment in lieu of or with respect to awards
hereunder; provided, however, that the existence of such trusts or other
arrangements shall be consistent with the unfunded status of the Plan. It is the
intention that the Plan be unfunded for tax purposes and for purposes of Title I
of the Employee Retirement Income Security Act of 1974, as amended.
A participant's rights to benefit payments under the Plan are not subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the participant or the
participant's beneficiary.
SECTION 12. Change of Control.
The following acceleration and valuation provisions shall apply in the
event of a "Change of Control" or "Potential Change of Control," as defined in
this Section 12:
(a) In the event of a "Change of Control" as defined in paragraph (b)
of this Section 12, unless otherwise determined by the Committee or the
Board in writing at or after grant, but prior to the occurrence of such
Change of Control, or, if and to the extent so determined by the Committee
or the Board in writing at or after grant (subject to any right of approval
expressly reserved by the Committee or the Board at the time of such
determination) in the event of a "Potential Change of Control," as defined
in paragraph (c) of this Section 12:
(i) any Stock Appreciation Rights and any Stock Options awarded
under the Plan, if not previously exercisable and vested shall become
fully exercisable and vested;
(ii) the restrictions and deferral limitations applicable to any
Restricted Stock award under the Plan shall lapse and such shares and
awards shall be deemed fully vested; and
(iii) the value of all outstanding Stock Options, Stock
Appreciation Rights, Restricted Stock or Performance Awards shall, to
the extent determined by the Committee at or after grant, be cashed
out on the basis of the "Change of Control Price" (as defined in
paragraph (d) of this Section 12) as of the date the Change of Control
occurs or Potential Change of Control is determined to have occurred,
or such other date as the Committee may determine prior to the Change
of Control or Potential Change of Control. In the sole discretion of
the Committee, such settlements may be in cash, in stock, or other
consideration as shall be necessary to effect the desired accounting
treatment for the transaction resulting from the "Change of Control."
(b) For purpose of paragraph (a) of this Section 12, a "Change of
Control" means the happening of any of the following:
(i) when any "person", as such term is used in Section 13(d) and
14(d) of the Exchange Act (other than the Company or a Subsidiary or
any Company employee benefit plan (including its trustee)), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly of securities of the Company
representing 20 percent or more of the combined voting power of the
Company's then outstanding securities;
(ii) when, during any period of two consecutive years or less
during the existence of the Plan, individuals who, at the beginning of
such period, constituted the Board of Directors (the "Incumbent
Directors") cease, for any reason other than death, to constitute at
least a majority thereof; provided, however, that any director who was
elected or nominated by at least two-thirds of the Incumbent Directors
who remain on the Board of Directors at the time of such election or
nomination shall, for all purposes of this subparagraph (ii), be
treated as an Incumbent Director; or
(iii) the occurrence of a transaction requiring stockholder
approval for the acquisition of the Company by an entity other than
the Company or a Subsidiary through purchase of assets, or by merger,
or otherwise.
(c) For purposes of paragraph (a) of this Section 12, a "Potential
Change of Control" means the happening of any of the following:
(i) the entering into an agreement by the Company, the
consummation of which would result in a Change of Control of the
Company as defined in paragraph (b) of this Section 12; or
(ii) the acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than the Company or
a Subsidiary or any Company employee benefit plan (including its
trustee)) of securities of the Company representing 5 percent or more
of the combined voting power of the Company's outstanding securities
and the adoption by the Board of Directors of a resolution to the
effect that a Potential Change of Control of the Company has occurred
for purposes of this Plan.
(d) For purposes of this Section 12, "Change of Control Price" means
the highest price per share paid in any transaction reported on the New
York Stock Exchange Composite Tape, or paid or offered in any transaction
related to a potential or actual Change of Control of the Company at any
time during the preceding sixty (60) day period as determined by the
Committee, except that in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such price shall
be based only on transactions reported for the date on which the Committee
decides to cash out such options.
SECTION 13. General Provisions.
(a) All certificates for shares of Stock delivered under the Plan
shall be subject to such stock transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Commission, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.
(b) Nothing set forth in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements
may be either generally applicable or applicable only in specific cases.
The adoption of the Plan shall not confer upon any employee of the Company,
any Subsidiary or any Affiliate, any right to continued employment with the
Company, a Subsidiary or an Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company, a Subsidiary or an
Affiliate to terminate the employment of any of its employees at any time.
(c) No employee shall have any rights as a shareholder of the Company
as a result of the grant of a Stock Option to him or to her under this Plan
or his or her exercise of such Stock Option pending the actual issuance of
Stock subject to such Stock Option to such employee.
(d) Each participant shall, no later than the date as of which the
value of an award first becomes includable in the gross income of the
participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld
with respect to the award. The obligations of the Company under the Plan
shall be conditional on such payment or arrangements and the Company (and,
where applicable, its Subsidiaries and Affiliates), shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
of any kind otherwise due to the participant. Subject to applicable laws
and regulations regarding transactions in Company Stock by persons who are
deemed insiders, a participant may elect to have the withholding tax
obligations or, in the case of all awards hereunder except Stock Options
which have related Stock Appreciation Rights, if the Committee so
determines, any additional tax obligation with respect to any awards
hereunder satisfied by (a) having the Company withhold shares of Stock
otherwise deliverable to the participant with respect to the award or (b)
delivering to the Company shares of unrestricted Stock.
(e) At the time of grant or purchase, the Committee may provide in
connection with any grant or purchase made under this Plan that the shares
of Stock received as a result of such grant or purchase shall be subject to
a right of first refusal, pursuant to which the participant shall be
required to offer the Company any shares that the participant wishes to
sell, with the price being the then Fair Market Value of the Stock, subject
to provisions of Section 13 hereof and to such other terms and conditions
as the Committee may specify at the time of grant.
(f) No member of the Board or the Committee, nor any officer or
employee of the Company acting on behalf of the Board or the Committee,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of
the Board or the Committee and each and any officer or employee of the
Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such
action, determination or interpretation.
(g) If any provision of the Plan or any agreement representing an
award granted hereunder is or becomes or is deemed to be invalid, illegal,
or unenforceable in any jurisdiction or as to any person or award, or would
disqualify the Plan or any award granted hereunder under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the award, such provision shall be
stricken as to such jurisdiction, person or award and the remainder of the
Plan and any such award shall remain in full force and effect.
(h) Each award under the Plan shall be subject to the requirement
that, if at any time the Committee shall determine that (a) the listing,
registration or qualification of the shares of Stock subject or related
thereto upon any securities exchange or under any state or federal law, or
(b) the consent or approval of any government regulatory authority, or (c)
an agreement by the recipient of an award with respect to the disposition
of shares of Stock, is necessary or desirable as a condition of, or in
connection with, the granting of such award or the issue or purchase of
shares of Stock thereunder, such award may not be consummated in whole or
in part unless such listing, registration, qualification, consent, approval
or agreement shall have been effected or obtained free of any conditions
not acceptable to the Committee. A participant shall agree, as a condition
of receiving any award under the Plan, to execute any documents, make any
representations, agree to restrictions on stock transferability and take
any actions which in the opinion of legal counsel to the Company is
required by any applicable law, ruling or regulation.
(i) Nothing in the Plan shall affect the right or power of the Company
or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business, or any merger or consolidation of the
Company, or any issue of stock or of options, warrants or rights to
purchase stock or of bonds, debentures, preferred or prior preference
stocks whose rights are superior to or affect the Stock or the rights
thereof or which are convertible into or exchangeable for Stock, or the
dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
(j) Headings are given to the sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 14. Effective Date of Plan.
The effective date of this Plan shall be the date it is adopted by the
Board; provided that the shareholders of the Company shall approve the Plan
within twelve (12) months after the date of adoption; and, provided further,
that any awards granted under this Plan before the date of such shareholder
approval shall be granted subject to such approval.
SECTION 15. Term of Plan.
No Stock Option, Stock Appreciation Right, Restricted Stock or Performance
Award shall be granted pursuant to the Plan on or after the tenth anniversary of
the date of stockholder approval, but awards theretofore granted may extend
beyond that date.
EXHIBIT B
BIRMINGHAM STEEL CORPORATION
2000 DIRECTOR STOCK OPTION PLAN
Section 1. Purpose of the Plan.
The purpose of the Birmingham Steel Corporation 2000 Director Stock Option
Plan (the "Plan") is to provide stock based compensation to non-employee
directors of Birmingham Steel Corporation (the "Company") in order to encourage
the highest level of director performance and to promote long-term shareholder
value by providing such directors with a proprietary interest in the Company's
success and progress through grants of options ("Options") to purchase shares of
the Company's common stock ("Common Stock").
Section 2. Certain Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Change of Control" has the meaning set forth in Section 7(b) hereof.
(c) "Change of Control Price" shall have the meaning set forth in Section 7(d)
hereof.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Compensation and Stock Option Committee of the Board.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Birmingham Steel Corporation, a Delaware corporation.
(h) "Disability" means a permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan. The
determination of Disability for purposes of this Plan shall not be
construed to be an admission of disability for any other purpose.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(j) "Fair Market Value" means, as of any given date, the closing price of the
Common Stock on the New York Stock Exchange Composite Tape or, if not
listed on such exchange, any other national exchange on which the Common
Stock is listed or on NASDAQ. If there is no regular public trading market
for such stock, the Fair Market Value of the Common Stock shall be
determined by the Committee in good faith.
(k) "Non-Employee Director" means each member of the Board who is not an
employee of the Company or any of its subsidiaries at the date of each
grant or award.
(l) "Options" means options to purchase shares of Common Stock granted pursuant
to Section 6 of the Plan.
(m) "Plan" means the Birmingham Steel Corporation 2000 Director Stock Option
Plan.
(n) "Potential Change of Control" has the meaning set forth in Section 7(c)
hereof.
(o) "Rule 16b-3" means Rule 16b-3, as currently in effect or as hereinafter
amended or modified, promulgated under the Exchange Act. Section 3.
Administration of the Plan.
The Plan shall be administered by the Committee of the Board of Directors
of the Company. Grants of Options to purchase Common Stock under the Plan shall
be made automatically as provided in Section 6 hereof. However, the Committee
shall have full authority to interpret the Plan, to promulgate such rules and
regulations with respect to the Plan as it deems desirable, and to make all
other determinations necessary or appropriate for the administration of the
Plan, and such determination shall be final and binding upon all persons having
an interest in the Plan. Section 4. Common Stock Subject to the Plan.
The total number of shares of Common Stock reserved and available for
distribution under the Plan shall be 200,000. Such shares may consist, in whole
or in part, of authorized and unissued shares or treasury shares. If any shares
of Common Stock that have been optioned cease to be subject to option, such
shares shall again be available for distribution in connection with future
awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, Common Stock dividend, or other change in corporate structure
affecting the Common Stock, a substitution or adjustment shall be made in the
aggregate number of shares reserved for issuance under the Plan and in the
number and option price of shares subject to outstanding Stock Options granted
under the Plan as may be determined to be appropriate by the Committee, in its
sole discretion, provided that the number of shares subject to any award shall
always be a whole number. Section 5. Participation.
Each Non-Employee Director shall be eligible to participate in the Plan.
Section 6. Non-Qualified Stock Options.
(a) General. Options granted to Non-Employee Directors under the Plan shall be
options which are not intended to be "incentive stock options" within the
meaning of Section 422 of the Code.
(b) Annual Grant of Options. Options covering 5,000 shares of common stock of
the Company shall be granted to each Non-Employee Director automatically on
the date of the annual meeting of the Company's stockholders each year.
(c) Terms of Options. Options granted under the Plan shall be evidenced by a
written agreement in such form as the Committee shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
(i) Option Price. The option price per share of Common Stock purchasable
under an Option shall not be less than 100% of the Fair Market Value
of the Common Stock on the date of the grant of the Option.
(ii) Option Term. Each Option shall be exercisable for a term of ten (10)
years from the date such Option is granted (subject to prior
termination as hereinafter provided).
(iii)Exercisability. Except as provided in Sections 7 and 8, Options shall
not become first exercisable by their terms until the expiration of
one (1) year from the date of the grant of the Option.
(iv) Method of Exercise. Options may be exercised in whole or in part at
any time during the option period by giving written notice of exercise
to the Company specifying the number of shares to be purchased,
accompanied by payment in full of the purchase price, in cash, by
check or such other instrument as may be acceptable to the Committee.
Payment in full or in part may also be made in the form of
unrestricted Common Stock already owned by the optionee (based on the
Fair Market Value of the Common Stock on the date the Option is
exercised). No shares of Common Stock shall be issued until full
payment therefor has been made. An optionee shall have the right to
dividends or other rights of a stockholder with respect to shares
subject to an Option for which the optionee has given written notice
of exercise and has paid in full for such shares.
(d) Non-transferability of Options; Exception. Except as otherwise set forth in
this Section 6(v), no Option shall be transferable by the optionee
otherwise than by will or by the laws of descent and distribution, and all
Options shall be exercisable, during the optionee's lifetime, only by the
optionee. Notwithstanding the foregoing, an optionee can elect to have
Options transferred to members of an optionee's immediate family, including
trusts for the benefit of such family members and partnerships in which
such family members are the only partners. For purposes of Section 8, a
transferred Option may be exercised by the transferee only to the extent
that the optionee would have been entitled had the option not been
transferred. Section 7. Change of Control.
The following acceleration and valuation provisions shall apply in the
event of a "Change of Control" or "Potential Change of Control," as defined
in this Section 7: (a) In the event of a "Change of Control," as defined in
Section 7(b) below, unless otherwise determined by the Committee or the
Board in writing at or after the grant of awards hereunder, but prior to
the occurrence of such Change of Control, or, if and to the extent so
determined by the Committee or the Board in writing at or after the grant
of awards hereunder (subject to any right of approval expressly reserved by
the Committee or the Board at the time of such determination) in the event
of a "Potential Change of Control," as defined in Section 7(c) below:
(i) any Options awarded under the Plan not previously exercisable and
vested shall become fully exercisable and vested;
(ii) the value of all outstanding Options shall, to the extent
determined by the Committee on or after grant, be cashed out on
the basis of the "Change of Control Price" (as defined in Section
7(d) below) as of the date the Change of Control occurs or
Potential Change of Control is determined to have occurred, or
such other date as the Committee may determine prior to the
Change of Control or Potential Change of Control.
(b) For purposes of Section 7(a) above, a "Change of Control" means the
happening of any of the following:
(i) when any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company or any Company
employee benefit plan, including its trustee), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting
power of the Company's then outstanding securities;
(ii) when, during any period of two consecutive years or less during
the existence of the Plan, individuals who, at the beginning of
such period, constituted the Board of Directors (the "Incumbent
Directors") cease, for any reason other than death, to constitute
at least a majority thereof; provided, however, that any director
who was elected or nominated by at least two-thirds of the
Incumbent Directors who remain on the Board of Directors at the
time of such election or nomination shall, for all purposes of
this subparagraph (iii), be treated as an Incumbent Director; or
(iii) the occurrence of a transaction requiring stockholder
approval for the acquisition of the Company by an entity other
than the Company or a subsidiary of the Company through purchase
of assets, or by merger, or otherwise. (c) For purposes of
Section 7(a) above, a "Potential Change of Control" means the
happening of any of the following: (i) the entering into an
agreement by the Company, the consummation of which would result
in a Change of Control of the Company as defined in Section 7(b)
above; or (ii) the acquisition of beneficial ownership directly
or indirectly, by any entity, person or group (other than the
Company, a subsidiary of the Company, or any Company employee
benefit plan, including its trustee) of securities of the Company
representing five percent (5%) or more of the combined voting
power of the Company's outstanding securities and the adoption by
the Board of Directors of a resolution to the effect that a
Potential Change of Control of the Company has occurred for
purposes of this Plan. (d) For purposes of this Section 7,
"Change of Control Price" means the highest price per share paid
in any transaction reported on the New York Stock Exchange, or
paid or offered in any transaction related to a potential or
actual Change of Control of the Company at any time during the
preceding sixty (60) day period as determined by the Committee,
except that, in the case of Options, such price shall be based
only on transactions reported for the date on which the Committee
decides to cash out such Options. Section 8. Termination of
Directorship. (a) Termination by Reason of Disability or Death.
Upon the termination of a Non-Employee Director by reason of
Disability or death, any Options held by such optionee shall be
immediately exercisable, notwithstanding the provisions of
Section 6 hereof, and may be thereafter be exercised by the
optionee or, in the case of death, by the legal representative of
the estate or by the legatee of the optionee under the will of
the optionee, until the expiration of the stated term of such
Options. (b) Termination by Reason of Retirement. If an
optionee's status as a Non-Employee Director with the Company
terminates by reason of retirement, any Options held by such
optionee may thereafter be exercised, to the extent exercisable
under the provisions of Section 6 hereof, until the expiration of
the stated term of the Options. If the retired optionee dies
while any Options are still outstanding, such Options may be
exercised by the legal representative of the estate or by the
legatee of the optionee under the will of the optionee, until the
expiration of the stated term of the Options. (c) Other
Termination. Upon the termination of a Non-Employee Director with
the Company for any reason other than Disability, death or
retirement, any Options held by such optionee shall terminate as
of the effective date of such Non-Employee Director's
termination. Section 9. Termination or Amendment of the Plan.
The Board may suspend or terminate the Plan or any portion
thereof at any time, and the Board may amend the Plan from time
to time as may be deemed to be in the best interests of the
Company; provided, however, that no such amendment, alteration or
discontinuation shall be made (a) that would impair the rights of
a Non-Employee Director with respect to Options theretofore
awarded, without such person's consent, or (b) without the
approval of the stockholders (i) if such approval is necessary to
comply with any legal, tax or regulatory requirement, including
any approval requirement which is a prerequisite for exemptive
relief from Section 16(b) of the Exchange Act; or (ii) to
increase the maximum number of shares subject to this Plan, or
change the definition of persons eligible to receive awards under
this Plan, or (c) if the Plan has been amended within the
preceding six (6) months, unless such amendment is necessary to
comply with changes in the Internal Revenue Code of 1986, as
amended, or the Employee Retirement Income Security Act of 1974,
as amended, or rules promulgated thereunder. Section 10. Section
16.
It is intended that the Plan and any grants made to a person
subject to Section 16 of the Exchange Act meet all of the
requirements of Rule 16b-3. If any provision of the Plan or any
award hereunder would disqualify the Plan or such award, or would
otherwise not comply with Rule 16b-3, such provision or award
shall be construed or deemed amended to conform to Rule 16b-3.
Section 11. General Provisions.
(a) No Right of Continued Service. Nothing in the Plan shall be deemed to
create any obligation on the part of the Board to nominate any
Non-Employee Director for reelection by the Company's stockholders.
(b) Payment of Taxes. Any optionee shall, no later than the date as of
which the value of any portion of the Option first becomes includable
in the optionee's gross income for federal income tax purposes, make
arrangements satisfactory to the Committee regarding payment of any
federal, state, local or FICA taxes of any kind required by law to be
withheld with respect to the Option.
(c) Shares. The shares of Common Stock issued upon the exercise of Options
under the Plan may be either authorized but unissued shares or shares
which have been or may be reacquired by the Company, as determined
from time to time by the Board.
(d) Governing Law. The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of
Delaware (other than its law respecting the choice of law). The Plan
shall be construed to comply with all applicable laws, and to avoid
liability to the Company or a Non-Employee Director, including,
without limitation, liability under Section 169(b) of the Exchange
Act.
(e) Term of Plan.No Option shall be granted pursuant to the Plan on or
after the tenth anniversary of the effective date of the Plan, but
awards granted prior to such date may extend beyond that date.
(f) Headings. The headings contained in this Plan are for reference
purposes only and shall not affect the meaning or interpretation of
this Plan.
(g) Severability. If any provision of this Plan shall for any reason be
held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, and this
Plan shall be construed as if such invalid or unenforceable provision
were omitted.
(h) Successor and Assigns. This Plan shall inure to the benefit of and be
binding upon each successor and assign of the Company. All obligations
imposed upon a Non-Employee Director, and all rights granted to the
Company hereunder, shall be binding upon the Non-Employee Director's
heirs, legal representatives and successors.
