<PAGE>
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))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
INLAND STEEL INDUSTRIES INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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The following letter and attachments were sent to LaSalle National Trust,
N.A., as trustee of the Inland Steel Industries, Inc. Thrift Plan, and to its
advisors, Oppenheimer Wolff & Donnelly and Duff & Phelps Capital Market Co.
<PAGE>
May 16, 1997
Mr. Jeffrey S. Schiedemeyer
Assistant Vice President
LaSalle National Trust, N.A.
135 South LaSalle Street
Chicago, IL 60674-9135
Dear Jeffrey:
Bob Darnall and I are looking forward to meeting with you next Wednesday, May
21. In addition to the material that I have already sent you, I thought you
would be interested in having a copy of the attached documents. Specifically I
am enclosing:
. A copy of the recently issue report from Institutional Shareholder Services
recommending that shareholders vote against the Greenway partners proposal to
spin off Ryerson Tull now,
. A copy of our press release of May 15, and
. A copy of Jay Gratz's letter to Greenway Partners in response to yet another
idea they proposed to him in a meeting on May 2.
If there are any questions that I might be helpful in answering prior to our
meeting next Wednesday, please feel free to contact me.
Sincerely,
M. Robert Weidner, III
General Manager
Communications & Stakeholder Relations
cc: Robert J. Darnall
<PAGE>
[LETTERHEAD OF INSTITUTIONAL SHAREHOLDER SERVICES (SM)]
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Proxy Analysis: INLAND STEEL
INDUSTRIES, INC.
IAD (NYSE)
Annual Meeting: May 28, 1997
Record Date: April 2, 1997
Security ID: 457472108 (CUSIP) 45747210 (CUSIP) 2462921 (SEDOL) 457470102
(CUSIP)
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MEETING AGENDA
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Item Code Proposals Mgt. Rec. ISS Rec.
================================================================================
[_]1 M0201 Elect Directors For FOR
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[_]2 M0101 Ratify Auditors For FOR
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Shareholder Proposal
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[_]3 S0810 Spin Off Metals Services Center
Business Against AGAINST
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Inland Steel Industries, Inc. * May 6, 1997 (C)1997, Institutional
Peter Gleason, Senior Analyst Shareholder Services
Phone: 301/718-2255
<PAGE>
[LETTERHEAD OF INSTITUTIONAL SHAREHOLDER SERVICES]
PAGE 2
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FINANCIAL SUMMARY
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INCOME STATEMENT SUMMARY ($ in millions except per share data)
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<TABLE>
<CAPTION>
1994 1995 1996 ACG*
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $4,497.00 $4,781.50 $4,584.10 1.0%
Net Income 107.40 146.80 45.70 -34.8%
EPS (Primary) 1.81 2.69 0.75 -35.6%
Dividends per share 0.00 0.20 0.20 NMF
Calendar year-end $35.12 $25.12 $19.50**
stock price
Dividends paid since: 1995
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* Annual Compound Growth
** Current Price
Fiscal Year Ended: December 31
Source: Company Annual Report
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PERFORMANCE SUMMARY
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1-Year 3-Year 5-Year
------ ------ ------
Total shareholder returns, company -20.3% -13.0% -2.6%
Total shareholder returns, index 19.7% 22.3% 16.4%
Total shareholder returns, peer group -12.8% -6.6% 6.6%
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Source: Company Proxy Statement
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BUSINESS: Distributor of value-added steel and related materials
ACCOUNTANTS: Price Waterhouse LLP
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Inland Steel Industries, Inc. * May 6, 1997 /C/1997, Institutional
Peter Gleason, Senior Analyst Shareholder Services
Phone: 301/718-2255
</TABLE>
<PAGE>
INSTITUTIONAL
SHAREHOLDER
SERVICES PAGE 3
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CORPORATE GOVERNANCE PROFILE
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GOVERNANCE PROVISIONS
================================================================================
Blank check preferred stock (Charter)
Confidential voting policy and independent inspectors of election
D&O liability protection for acts made in good faith (Charter, April 22, 1987)
No shareholder right to call special meetings (Charter)
Poison pill with sunset provision greater than two years (Adopted: Nov. 25,
1987)
Unequal voting rights
Director term limits that provide for mandatory retirement at age (70)
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GOVERNANCE MILESTONES
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Adopted policy requiring directors be paid 31% in stock
Elimination of nonemployee director pension plan
Adoption of officer stock ownership requirements
Annual evaluation of CEO performance conducted by unaffiliated, independent
directors
Assigned committee of independent directors to recommend corporate governance
policies and to monitor compliance
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SEVERANCE AGREEMENTS
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Change-in-control provisions in executive stock option or other compensation
plans
Golden parachute severance agreements triggered by termination of employment
following a change in control
Pension parachutes, which provides accelerated pension benefits, triggered by a
change in control
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<TABLE>
<S> <C>
Inland Steel Industries, Inc. - May 6, 1997 /c/1997, Institutional Shareholder Services
Peter Gleason, Senior Analyst Phone: 301/718-2255
</TABLE>
<PAGE>
INSTITUTIONAL
SHAREHOLDER
SERVICES PAGE 4
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================================================================================
STATE STATUTES: Delaware
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Labor contract provision
Three-year freezeout provision
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<TABLE>
<S> <C>
Inland Steel Industries, Inc. - May 6, 1997 /c/1997, Institutional Shareholder Services
Peter Gleason, Senior Analyst Phone: 301/718-2255
</TABLE>
<PAGE>
INSTITUTIONAL
SHAREHOLDER
SERVICES PAGE 5
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DIRECTOR PROFILES
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<TABLE>
<CAPTION>
Name Classification Term Dir. No
Ends Since Stock
================================================================================
<S> <C> <C> <C> <C>
A. Robert Abboud IO 1998 1974
Robert J. Darnall I 1998 1983
James A. Henderson IO 1998 1978
Robert B. McKersie IO 1998 1994
Leo F. Mullin IO 1998 1996
Jean-Pierre Rosso IO 1998 1995
Joshua I. Smith IO 1998 1991
Nancy H. Teeters IO 1998 1991
Arnold R. Weber IO 1998 1985
</TABLE>
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Classified board: No CEO as chairman: Yes
Current nominees: 9 Retired CEO on board: No
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<TABLE>
<S> <C>
Inland Steel Industries, Inc. .May 6, 1997 (C)1997, Institutional Shareholder Services
Peter Glesson, Senior Analyst Phone: 301/718-2255
</TABLE>
<PAGE>
INSTITUTIONAL
SHAREHOLDER
SERVICES PAGE 6
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COMPOSITION OF COMMITTEES
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<TABLE>
<CAPTION>
Audit Type Compensation Type Nominating Type
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<S> <C> <C> <C> <C> <C>
A. Robert Abboud IO Jean-Pierre Rosso IO Jean-Pierre Rosso IO
James A. IO Joshua I. Smith IO Joshua I. Smith IO
Henderson
Robert B. IO Arnold R. Weber IO Arnold R. Weber IO
McKersie
Leo F. Mullin IO
Nancy H. Teeters IO
</TABLE>
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Committee Name Assigned by Company:
Audit: Audit Committee
Compensation: Compensation Committee
Nominating: Nominating and Governance Committee
<TABLE>
<CAPTION>
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Inland Steel Industries, Inc. - May 6, 1997 (C)1997, Institutional Shareholder Services
<S> <C>
Peter Gleason, Senior Analyst Phone: 301/718-2255
</TABLE>
<PAGE>
INSTITUTIONAL
SHAREHOLDER
SERVICES PAGE 7
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CAPITAL STRUCTURE
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Capital Structure
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<TABLE>
<CAPTION>
Type of Shares Votes per Authorized Shares
Share Shares Outstanding
<S> <C> <C> <C>
Series E ESOP Convertible 1.25 15,000,000 3,047,038
preferred stock
Series A $2.40 Cumulative 1.00 15,000,000 94,202
preferred stock
10.23% Subordinated Voting stock 30.604 votes $100,000,000
per $1,000 principal amount
Common stock 1.00 100,000,000 48,909,052
</TABLE>
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Ownership Information
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Beneficial Owner Total Voting Power
Officers & Directors 1.42%
Institutions 64.95%
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Sources: Proxy Statement, CDA Investment Technologies
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Note: The company has four types of voting securities: common stock, Series
A Cumulative Convertible Preferred Stock, Series E ESOP Convertible
preferred stock, and a 10.23 percent subordinated voting note. Each share
of common stock and Series A preferred stock entitles its holder to one
vote. Each share of ESOP preferred stock entitles the holder to 1.25 votes,
and each $1,000 of principal amount of 10.23 percent subordinated voting
note entitles its holder to 30.604 votes.
[_] Item 1: Elect Directors
This proposal seeks election of nine directors to serve one-year terms. Leo
Mullin is a new director nominee.
The full board comprises one insider and eight independent outsiders. The
Audit Committee comprises five independent outsiders. The Compensation and
Nominating & Governance committees each comprise three independent
outsiders. We support the
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Inland Steel Industries, Inc. - May 6, 1997
Peter Gleason, Senior Analyst
/c/ 1997, Institutional Shareholder Services
Phone: 301/718-2255
<PAGE>
[LETTERHEAD OF INSTITUTIONAL SHAREHOLDER SERVICES]
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independent nature of the key board committees, which include no insiders or
affiliated outsiders.
We recommend a vote FOR the directors.
[_] Item 2: Ratify Auditors
The board recommends that Price Waterhouse LLP be approved as the company's
independent accounting firm for the coming year. Note that the auditors'
report contained in t he annual report is unqualified, meaning that in the
opinion of the auditor, the company's financial statements are fairly
presented in accordance with generally accepted accounting principles.
We recommend a vote FOR the auditors.
Shareholder Proposal
[_] Item 3: Spin Off Metals Services Center Business
Greenway Partners LP, one of the company's largest shareholders, has
submitted this nonbinding proposal requesting that Inland distribute all of
the stock of Ryerson Tull that Inland holds to Inland shareholders through a
tax-free spin-off. The proponent believes that "Inland took a step in the
right direction when it established Ryerson Tull as a separately traded
company. But the crucial step to unlock shareholder value remains undone."
Greenway indicates that the until the separation of the two companies is
complete, Inland will remain undervalued in the market. Greenway has also
suggested that Inland's board should actively seek a merger partner to
capitalize on what it believes is a "desirable" trend towards consolidation
in the steel industry.
ISS spoke with Al Kingsley and Gary Duberstein of Greenway, who indicated
that management's actions to date have been very beneficial to the company
and that they believe Ryerson Tull is far ahead of any other steel products
distributor in the industry. However, they believe that because of Ryerson
Tull's small public flost and Inland's continued ownership of more than 87
percent of Ryerson Tull's small public float and Inland's continued
ownership of more than 87 percent of Ryerson Tull's economic interest and 96
percent of its voting power, the market is not recognizing the value of the
company as a stand-alone entity. Mr. Kingsley indicated that the Ryerson
Tull's limited liquidity is hindering the Company's ability to make
acquisitions in the market and attract institutional investors. By spinning
off the division. Greenway believes the market will be
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Inland Steel Industries, Inc. May 8, 1997, 1997, Institutional Shareholder
Peter Gleason, Senior Analyst Services/Phone: 301/718-2285
<PAGE>
INSTITUTIONAL
SHAREHOLDER
SERVICES Page 9
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able to fairly value both companies and that Ryerson Tull will have additional
common stock to fund future acquisitions.
Greenway refers to numerous companies including AT&T Corp., Pacific Telesis
Group, and Sears, Roebuck & Co. that have had initial public offerings of less
than 20 percent of one of their operating subsidiaries and later followed the
offering with a spin-off of the remaining equity interest of the subsidiaries.
The proponent argues that spin-offs allow management to focus attention on the
respective businesses and allow investors and analysts to value the separate
businesses more efficiently. Greenway believes that Inland should follow the
lead of the companies that have had successful spin-offs by spinning off Ryerson
Tull.
ISS spoke with Inland representative Robert Darnell, CEO; Charles Salowitz,
associate general counsel and secretary; and M. Robert Weidner III, general
manager of communications and stakeholder relations. The three representatives
indicated their understanding of Greenway's position, but also that management
has evaluated numerous strategies for improving shareholder value at Inland over
the past year. The company began a strategic reassessment of Inland more than a
year ago and considers the reassessment an ongoing process. Mr. Darnell
indicated that a significant portion of each board meeting is devoted to the
company's strategic options and that the public offering of Ryerson Tull was the
result of that strategic planning. Management maintains that the public offering
achieved many of the same results as a spin-off, including independent access to
capital markets, improved management focus on the individual business unit, and
enhanced investor ability to evaluate Ryerson Tull.
Management also indicated that it is not opposed to a spin-off, but believes
that spinning off Ryerson Tull immediately would diminish the company's
financial flexibility. Inland began a deleveraging strategy in late 1992 which
reduced fixed obligations by retiring high-cost debt and eliminated certain
restrictive debt provisions. Part of that strategy was the public offering
of Ryerson Tull, the proceeds of which allowed the company to reduce long-term
debt by more than $700 million and lowered interest costs by approximately $70
million annually.
The recapitalization of the company and the public offering of Ryerson Tull was
designed to allow management to maintain a significant economic interest in the
subsidiary and to control the voting power. According to Mr. Darnell, that
structure will qualify the company for tax consolidation, which will allow it to
save significantly on its income taxes. Ryerson Tull's net income is credited
against Inland's net operating loss carryforward and alternative minimum tax
credit. Inland currently has more than $800 million in net operating loss
carryforward and alternative minimum tax credits that would be foregone if
Ryerson Tull was spun-off. The ownership structure maintained by Inland will
also preserve the tax-free spin-off option for Ryerson Tull in the future.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Inland Steel Industries, Inc. .May 6, 1997 /c/1997, Institutional Shareholder Services
<S> <C>
Peter Gleason, Senior Analyst Phone: 301/718-2255
</TABLE>
<PAGE>
INSTITUTIONAL
SHAREHOLDER
SERVICES Page 10
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To counter those concerns, Greenway recently announced a proposal to management
that it distribute Ryerson "letter stock" in a dividend to Inland shareholders,
which would trade similar to the letter stock at USX Corp.'s Marathon Oil Group,
Delphi Group, or U.S. Steel. Greenway maintains that the letter stock
distribution could be an interim step to a full spin-off and would preserve the
tax loss carryforward. It would also augment Ryerson Tull's financial strength
by enhancing total shareholder value and providing greater flexibility. Greenway
argues that the issuance of the letter stock will allow Ryerson Tull additional
equity to become an active participant in the consolidations which will occur in
the fragmented metals service center industry. Further, Greenway believes
Ryerson Tull's proposed strategy of entering into strategic acquisitions will be
hampered by its limited public float unless the company is either spun off or
Inland distributes Ryerson letter stock.
Greenway indicates that because its proposal is precatory in nature, supporting
it would only send a message to management to consider a spin-off or the use of
letter stock in a dividend. The idea is to send a message to management to
take some action to enhance the value of Inland through the use of
either of the two options Greenway has proposed. Management contends that the
board continually addresses its strategic options and considered the effects of
a spin-off as recently as January 1997 at the board's annual two-day strategy
meeting. Mr. Darnell indicated that the board is focused on increasing
shareholder value and that several of the company's directors are officers at
companies that have carried out spin-offs, which allows them the insight to
understand all of the implications. Right now, the board believes it is not
clear that a spin-off would create significant shareholder value given the
company's current tax savings and financial flexibility. Mr. Darnell stated
that the board "has considered a spin, and will continue to consider a spin, but
it is not in shareholders' best interests at this time."
Management also believes that its strategic evaluation of the company will help
it in assessing opportunities arising from any consolidation in the steel
industry. While Greenway has proposed that management seek a merger partner,
the company's recent disclosures that it was in discussions with U.S. Steel
Group last year indicate that it is moving in that direction.
Although the discussions were not successful, we believe management and the
board are evaluating all of the company's options with regard to enhancing
shareholder value. We also believe management has made significant strides in
improving Inland's performance over the past two years. The recapitalization
process has improved the company's balance sheet, and the capital investments
made have strategically positioned the company to further improve performance in
the future. Greenway's proposal to spin-off Ryerson Tull has its merits, and it
is clear that management also believes Greenway's proposal has some strategic
benefits. As with Greenway's spin-off proposals at other companies, the problem
at Inland is timing. Given the fact that the board is constantly reviewing the
company's
<TABLE>
<CAPTION>
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Inland Steel Industries, Inc. . May 6, 1997 (C)1997, Institutional Shareholder Services
<S> <C>
Peter Gleason, Senior Analyst Phone: 301/718-2255
</TABLE>
<PAGE>
[LETTERHEAD OF INSTITUTIONAL SHAREHOLDER SERVICES] PAGE 11
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strategic options, is open to taking action when appropriate, and has been
strategically improving the operations of the company, we believe management
is in a better position to determine the timing of its actions than is
Greenway. Further, we believe management has already heard the message that
Greenway is hoping shareholders will send them by supporting this proposal.
We recommend a vote AGAINST Item 3.
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Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60608
(312) 346-0300
Company Solicitor: Mackenzie Partners, Inc. (212) 929-5300
Shareholder Proposal Deadline: December 7, 1997
This proxy analysis has not been submitted to, or received approval from, the
Securities and Exchange Commission. While ISS exercised due care in compiling
this analysis, we make no warranty, express or implied, regarding the
accuracy, completeness, or usefulness of this information and assume no
liability with respect to the consequences of relying on this information for
investment or other purposes.
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Inland Steel Industries, Inc. * May 6, 1997 (C)1997, Institutional
Peter Gleason, Senior Analyst Services
Phone: 301/718-2255
