<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))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Inland Steel Industries, Inc.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
<PAGE>
INLAND STEEL INDUSTRIES, INC.
Robert J. Darnall
Chairman, President and
Chief Executive Officer
April 7, 1997
Dear Stockholder:
On Wednesday, May 28, 1997, we will hold our Annual Meeting of Stockholders
beginning at 10:30 a.m., Chicago time, at the First Chicago Center, One First
National Plaza, Chicago, Illinois. Hopefully, you will be able to join us.
At the meeting we will discuss significant new initiatives at our business
units to improve operating performance and to increase stockholder value. In
addition, you will have an opportunity to ask questions. The attached notice
of meeting and proxy statement describe the formal business of the meeting.
I am looking forward to seeing you on May 28. However, if you do not expect
to attend the meeting, please take a moment now to complete and return the
enclosed proxy card in the envelope provided.
Cordially,
/s/ Robert J. Darnall
Chairman, President and
Chief Executive Officer
30 West Monroe Street, Chicago, Illinois 60603
<PAGE>
INLAND STEEL INDUSTRIES, INC.
30 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1997
To the Stockholders of INLAND STEEL INDUSTRIES, INC.:
The Annual Meeting of Stockholders of Inland Steel Industries, Inc., a
Delaware corporation, will be held at the First Chicago Center, One First
National Plaza, Chicago, Illinois, on Wednesday, May 28, 1997, at 10:30 a.m.,
Chicago time, for the following purposes:
1. To elect directors of the Company;
2. To elect a firm of independent public accountants to audit the
accounts of the Company and its subsidiaries for the year 1997; and
3. To transact any other business that may properly come before the
meeting, including a stockholder proposal set forth in the attached
proxy statement.
The close of business on April 2, 1997 has been fixed as the record date for
determination of holders of voting securities entitled to notice of and to
vote at the Annual Meeting.
A Proxy Statement with respect to the Annual Meeting accompanies and forms a
part of this Notice. The Annual Report of the Company for the fiscal year
ended December 31, 1996 was previously mailed to holders of voting securities.
By order of the Board of Directors,
CHARLES B. SALOWITZ, Secretary
April 7, 1997
Chicago, Illinois
Holders of voting securities are cordially invited to attend this
meeting. Each holder of voting securities, whether or not he or she
expects to be present in person at the Annual Meeting, is requested to
SIGN, DATE AND RETURN THE ENCLOSED PROXY in the accompanying envelope as
promptly as possible.
<PAGE>
INLAND STEEL INDUSTRIES, INC.
30 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company. Such solicitation is being made by mail commencing approximately
April 7, 1997, and also may be made by directors, officers and regular
employees of the Company. The expense of such solicitation will be paid by the
Company. In addition, the Company has retained MacKenzie Partners, Inc. to
assist in the solicitation of proxies for a fee of $12,000 plus out-of-pocket
expenses. Brokers, banks and similar organizations will be reimbursed for out-
of-pocket and reasonable clerical expenses incurred in obtaining instructions
from beneficial owners.
Voting securities represented by an effective proxy given by the holder
thereof will be voted as directed by such holder. The voting securities of the
Company outstanding on the record date (April 2, 1997), together with the vote
to which each is entitled, consist of 48,909,052 shares of common stock (one
vote per share), 94,202 shares of Series A $2.40 Cumulative Convertible
Preferred Stock (one vote per share), 3,047,033 shares of Series E ESOP
Convertible Preferred Stock (1.25 votes per share), and $100,000,000 principal
amount of the Company's 10.23% Subordinated Voting Notes (30.604 votes per
$1,000 of principal amount). All such voting securities vote together without
regard to class on the matters expected to be voted upon at the Annual
Meeting. A holder of voting securities giving a proxy may revoke it at any
time prior to the voting of the proxy.
Shares standing to the credit of a participant in the Shareholder Investment
Service for the automatic reinvestment of common stock dividends will be voted
only if and in the same manner as such participant shall vote his or her
shareholdings of record. In the event a participant is not a stockholder of
record, Harris Trust and Savings Bank, as custodian, will vote shares held for
his or her account only in accordance with his or her instructions. Shares
standing to the credit of a participant in the Inland Steel Industries Thrift
Plan will be voted as such participant directs, provided that any such
direction (or any revocation of a prior direction) must be received by LaSalle
National Bank, as Trustee under the Thrift Plan, by 5:00 p.m. Chicago time on
May 27, 1997. Shares in the Thrift Plan as to which no direction is received
by such time will be voted in the same proportion as shares in the Thrift Plan
that have been timely directed.
It is the policy of the Company that proxies, consents, ballots and voting
materials that identify the vote of specific holders of voting securities are
kept confidential, except in a contested proxy or consent solicitation or to
meet applicable legal requirements. All such documents are returned to the
tabulator and are available to the inspectors of election to enable them to
certify the results of the vote. Harris Trust and Savings Bank acts as the
tabulator, and one or more officers or employees of the Harris Bank will serve
as inspectors of election.
<PAGE>
Comments written on or accompanying proxy cards will be provided to the
Company without indication of the vote of the holder of the voting securities
except where the vote is included in the comment or is necessary for an
understanding of the comment.
ELECTION OF DIRECTORS
Proxies not limited to the contrary will be voted for the nine nominees
listed below as directors of the Company for terms expiring on the date of the
Annual Meeting of the Company in 1998 and until their successors are duly
elected and qualified. Directors shall be elected by a plurality of the votes
of the voting securities present in person or by proxy at the Annual Meeting
and entitled to vote in the election, and the outcome of the election will
therefore not be affected by holders of voting securities who abstain from
voting or withhold authority to vote in the election, or by broker non-votes.
All such nominees are presently serving as directors of the Company and of
Inland Steel Company, a wholly owned subsidiary of the Company. The period of
service as a director shown for each nominee includes the period for which
such nominee served as a director of Inland Steel Company prior to the
effective date (May 1, 1986) of the plan of restructuring pursuant to which
the Company became a holding company for Inland Steel Company and its
subsidiaries. The Board of Directors held eight meetings during 1996. All
incumbent directors attended at least 75% of the combined total number of
meetings of the Board of Directors and committees on which they served.
In conjunction with the six-year labor agreement finalized in July 1993
between Inland Steel Company and the United Steelworkers of America, the
Steelworkers were provided the ability, through 1999, to designate as a
director nominee an individual acceptable to the Board of Directors of the
Company. Dr. McKersie was so designated and was first elected to the Board of
Directors by stockholders in 1994. Messrs. Darnall, Henderson and Rosso also
serve as directors of Ryerson Tull, Inc. ("Ryerson Tull"), a majority owned
subsidiary of the Company. On June 26, 1996, Ryerson Tull, formerly a wholly
owned subsidiary of the Company, became a publicly held company with the
issuance of 5,220,000 shares of its Class A common stock, par value $1.00 per
share ("Ryerson Tull Class A common stock") in a public offering (the
"Offering"). Mr. James W. Cozad, a director since 1991, and Mr. Donald S.
Perkins, a director since 1967, are retiring from the Board pursuant to the
Company's retirement policy for directors.
If any nominee should become unavailable for election (an event that is not
anticipated), proxies may be voted for the election of such other person or
persons as may be designated by the Board of Directors of the Company, unless
the Board has taken prior action to reduce its membership.
2
<PAGE>
INFORMATION CONCERNING NOMINEES
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[DIRECTOR A. Robert Abboud Director since 1974
PHOTO]
Mr. Abboud, age 67, is President of A. Robert Abboud and Company,
a private investment firm established by him in 1984. From April
1988 until March 1991 Mr. Abboud was Chairman and Chief Executive
Officer of First City Bancorporation of Texas, Inc., a bank
holding company, which in November 1992 consented to an
involuntary bankruptcy petition, had its plan of reorganization
confirmed by the bankruptcy court in May 1995, and completed the
plan of reorganization in July 1995. He is Chairman of the
Company's Finance and Retirement Committee and a member of its
Audit Committee. Mr. Abboud is also a director of AAR Corp.,
Alberto-Culver Company, and Hartmarx Corporation.
[DIRECTOR Robert J. Darnall Director since 1983
PHOTO]
Mr. Darnall, age 58, is Chairman, President and Chief Executive
Officer of the Company and Chairman of the Executive Committee.
He was elected President and Chief Operating Officer of the
Company in 1986 and assumed his present position in 1992. He
joined Inland Steel Company in 1962 and has served as its
Chairman since 1992, as its Chief Executive Officer from 1992 to
1995 and since April 1996, and as its President for certain
periods ending most recently in May 1996. He has been Chairman of
Ryerson Tull since April 1995, a position he also held from
November 1990 to June 1994. Mr. Darnall is also a director of
Cummins Engine Company, Inc., Household International, Inc., and
the Federal Reserve Bank of Chicago.
[DIRECTOR James A. Henderson Director since 1978
PHOTO]
Mr. Henderson, age 62, is Chairman and Chief Executive Officer of
Cummins Engine Company, Inc., a manufacturer of diesel engines.
He joined that company in 1964, was elected Executive Vice
President in 1971, and was elected Executive Vice President and
Chief Operating Officer in 1975. In 1977 he was elected President
and Chief Operating Officer, was elected President and Chief
Executive Officer in 1994, and assumed his present position in
1995. He is Chairman of the Company's Audit Committee and a
member of Inland Steel Company's Partnership Oversight Committee.
Mr. Henderson is also a director of Cummins Engine Company, Inc.,
Ameritech Corporation, and Rohm and Haas Company.
3
<PAGE>
INFORMATION CONCERNING NOMINEES (CONTINUED)
- -------------------------------------------------------------------------------
[DIRECTOR Robert B. McKersie Director since 1994
PHOTO]
Dr. McKersie, age 67, is a professor at the Sloan School of
Management at Massachusetts Institute of Technology. Dr. McKersie
was also Deputy Dean at the Sloan School of Management from 1991
to 1994. Prior to joining MIT in 1980, he served as Dean of the
New York State School of Industrial and Labor Relations at
Cornell University, and prior to that was on the faculty of the
Graduate School of Business at the University of Chicago. He is a
member of the Company's Audit Committee and Inland Steel
Company's Partnership Oversight Committee.
[DIRECTOR Leo F. Mullin Director since 1996
PHOTO]
Mr. Mullin, age 54, has been Vice Chairman of Unicom Corporation
and its principal subsidiary, Commonwealth Edison Company, an
electric services utility, since December 1995. He was President
and Chief Operating Officer of First Chicago Corporation, a bank
holding company, from November 1993 to July 1995. Prior to that
he was Chairman, President and Chief Executive Officer of
American National Bank and Trust Company of Chicago from April
1991 to November 1993. He is a member of the Company's Audit and
Finance and Retirement Committees. Mr. Mullin also is a director
of Pittway Corporation and Unicom Corporation.
[DIRECTOR Jean-Pierre Rosso Director since 1995
PHOTO]
Mr. Rosso, age 56, is Chairman, President and Chief Executive
Officer of Case Corporation, a worldwide designer, manufacturer
and distributor of farm and construction machinery, and has been
President and Chief Executive Officer of that company since April
1994. Prior to joining Case Corporation, he was President of the
Home and Building Control Division of Honeywell Inc., a producer
of advanced technology products, from 1991 to 1994 and President
of Honeywell Europe from 1987 until 1991. He is a member of the
Company's Compensation, Finance and Retirement, and Nominating
and Governance Committees. Mr. Rosso also is a director of ADC
Telecommunications Inc., Case Corporation, Crown Cork & Seal
Company, Inc., and Principal Mutual Life Insurance Company.
4
<PAGE>
INFORMATION CONCERNING NOMINEES (CONTINUED)
- -------------------------------------------------------------------------------
[DIRECTOR Joshua I. Smith Director since 1991
PHOTO]
Mr. Smith, age 56, is Chairman and Chief Executive Officer of The
MAXIMA Corporation, an information management service company
established by him in 1978. He serves as a trustee or director of
a number of professional, educational, and business boards and
associations and was formerly Chairman of the U. S. Commission on
Minority Business Development. He is a member of the Company's
Compensation, Finance and Retirement, and Nominating and
Governance Committees. Mr. Smith is also a director of Allstate
Corporation, Caterpillar, Inc. and Federal Express Corporation.
Nancy H. Teeters Director since 1991
[DIRECTOR Ms. Teeters, age 66, was Vice President and Chief Economist of
PHOTO] IBM Corporation, a manufacturer of business machines, from 1984
until her retirement in 1990. Prior to 1984, she was a Governor
of the Federal Reserve System and served as an economist in
positions in both the Executive and Legislative branches of the
Federal government. She was also a Senior Fellow of the Brookings
Institute. She is a member of the Company's Audit and Finance and
Retirement Committees. Ms. Teeters is also a director of a number
of registered investment companies managed by Prudential
Securities Mutual Funds and advised by Prudential Securities
Mutual Funds, Wellington Management or Blackrock Group.
[DIRECTOR Arnold R. Weber Director since 1985
PHOTO]
Dr. Weber, age 67, is Chancellor of Northwestern University. He
began his career in education in 1958 in the field of urban and
labor economics, served as a professor at the University of
Chicago and Dean of the Graduate School of Industrial
Administration at Carnegie-Mellon University, was President of
the University of Colorado from 1980 until 1985, and was
President of Northwestern University from 1985 until he assumed
his present position in January 1995. He has served as an
economic advisor to four national administrations and as a
consultant to several governmental agencies. He is a member of
the Company's Compensation, Executive, and Nominating and
Governance Committees, as well as Chairman of Inland Steel
Company's Partnership Oversight Committee. Dr. Weber is also a
director of Aon Corporation, Burlington Northern Santa Fe
Corporation, Deere & Company, PepsiCo, Inc., and Tribune Company.
5
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or any of its subsidiaries
receive an annual retainer of $35,000, of which $11,000 is paid in shares of
common stock of the Company pursuant to the Inland 1992 Stock Plan for Non-
Employee Directors. Such directors also receive $1,000 for each special meeting
of the Board of Directors of the Company and of Inland Steel Company attended
by them, except that if special meetings of both Boards are held on the same
day, only one meeting attendance fee is paid. In addition, each such director
who serves as a member of a standing committee of the Board of Directors is
paid an annual fee of $3,000 for service on each such committee on which he or
she serves, except that membership on the Compensation and Nominating and
Governance Committees is regarded as membership on only one committee for
purposes of the payment of such additional fee and that only one meeting
attendance fee is paid if standing committee meetings of both Boards are held
on the same day. Such directors also receive $1,000 for each special committee
meeting attended that is not held in connection with a regular or special
meeting of the Board of Directors, except that only one meeting attendance fee
is paid if special meetings of the same committees of both Boards are held on
the same day and that membership on the Compensation and Nominating and
Governance Committees is regarded as membership on only one committee for
purposes of the payment of such additional fee. No fees are paid for any
meeting of the Executive Committee. Each such director who is the chairman of a
standing committee of the Board of Directors of the Company receives an
additional annual retainer of $5,000 except that a chairman of the same
committee of both Boards receives only one fee. A director may elect to defer
payment of all or a portion of such fees until he or she ceases to be a
director of the Company. Interest on the cash portion of any fees with respect
to which payment is deferred is accrued at the prime rate in effect from time
to time at The First National Bank of Chicago or its successors. Amounts
equivalent to dividends that would have been paid on the stock portion of any
deferred fees are credited to the account of such director and converted into
additional deferred shares at market prices. The Company also pays the premiums
on a business accident insurance policy insuring each non-employee director for
amounts up to $500,000.
In January 1996, the Company terminated its director retirement plan except
as to accrued benefits of those non-employee directors with one or more years
of service at January 1, 1996. Vested benefit accruals under the terminated
plan will be paid at the later of a director's retirement from Board service or
his or her attaining age 65 and will continue for the number of full years of
service as a non-employee director completed at January 1, 1996, up to a
maximum of ten years. The amount of the annual benefit is equal to the amount
of the annual retainer paid for services as a member of the Board in effect at
the last Board meeting attended by such director. This plan provides that in
the case of a director who is 60 or older, the Company may purchase annuities
(and provide a tax gross-up payment to the director at the time of purchase)
either prior to or at the time of retirement to satisfy the Company's
obligations under this plan. Any annuities purchased for a director would be
designed to provide an after-tax benefit equivalent to the benefit provided
under the plan.
6
<PAGE>
The Company established a Deferred Phantom Stock Unit Plan for Non-Employee
Directors in January 1996 for each present and future non-employee director
who has served on the Board of Directors for less than ten years as of January
1, 1996 or who first becomes a director after January 1, 1996. The plan
provides that 1,000 phantom stock units (with common stock dividends credited
as additional units on each dividend payment date) will be credited to
participants' accounts as of the date of each of the first ten annual meetings
of stockholders of the Company at which such participant is elected as a
director, commencing with the May 22, 1996 annual meeting and continuing until
and including the tenth consecutive annual meeting of stockholders at which
the participant is elected a director. However, each participant who was a
director on and before October 1, 1995 will be credited with phantom stock
units on annual meeting dates only until the participant reaches his or her
ninth anniversary as a director. Except for a change in control, these
benefits will vest for each participant on the earlier of: (a) the tenth
consecutive annual meeting of stockholders at which the participant is elected
a director, or (b) the last date of the participant's service as a director,
provided the participant remains on the Board of Directors (i) until at least
the fifth consecutive annual meeting of stockholders after which the
participant was first elected a director and (ii) either until the participant
reaches age 70 or until his or her death at age 65 or older. Vested benefits
are paid in cash in a lump sum or, at the election of the participant, in up
to 40 quarterly installments, commencing at the later of age 65 or ceasing to
serve on the Board. The cash value of each phantom stock unit is equal to the
fair market value of one share of Company common stock on the payment date.
Those directors who also are non-employee directors of Ryerson Tull receive
remuneration under the Ryerson Tull Directors' Compensation Plan. Each
receives an annual retainer of $40,000, which is paid 50% in shares of Ryerson
Tull Class A common stock and 50% in cash, provided that a director may elect
to receive all or any part of the cash portion of such retainer in shares of
Ryerson Tull Class A common stock. Such directors also receive $1,000 for each
special meeting of the Board of Directors of Ryerson Tull, and for each
special committee meeting not held in conjunction with a regular or special
meeting of the Board of Directors of Ryerson Tull, attended by them. No fees
are paid for any meeting of the Executive Committee and membership on the
Compensation and Nominating and Governance Committees is regarded as
membership on only one committee for purposes of payment of fees for special
meetings. Each director who serves as chairman of a standing committee of the
Ryerson Tull Board of Directors will receive an additional annual retainer of
$4,000. Pursuant to the terms of the Ryerson Tull Directors' Compensation
Plan, each such director may also elect, prior to January 1 of each year, to
defer payment of all or any portion of the retainer and fees to which he or
she would otherwise become entitled during such year as a director of Ryerson
Tull. If a director becomes a director during a calendar year, the deferral
election may be made within 30 days after he or she becomes a director and
will be effective for the remainder of that year subsequent to the election.
Deferred amounts will be distributed in a lump sum or installments in cash or
shares of Ryerson Tull Class A common stock, all as elected by the director at
the time of the deferral. Interest on cash deferrals will be credited at the
prime rate in effect from time to time at The First National Bank of Chicago
(or its successor). Stock deferrals will be credited with dividends paid on
shares of Ryerson Tull Class A common stock from time to time. A total of
100,000 shares of Ryerson
7
<PAGE>
Tull Class A common stock has been reserved for issuance under the Ryerson
Tull Directors' Compensation Plan, subject to adjustment for certain corporate
transactions affecting the number or type of outstanding shares. Ryerson Tull
also pays the premiums on a business accident insurance policy insuring each
non-employee director for amounts up to $500,000.
COMMITTEES OF THE BOARD OF DIRECTORS
Among the standing committees of the Board of Directors, the Company has an
Audit Committee, a Compensation Committee and a Nominating and Governance
Committee. The members of these three committees, none of whom is an employee
of the Company or any of its subsidiaries, are identified above under
"Election Of Directors."
The duties of the Audit Committee are to review the proposed scope of the
annual audit and the results and recommendations of the independent auditors
on completion of the annual audit; to review the financial review sections of
the Company's annual report to stockholders and annual report on Form 10-K; to
review the minutes of the quarterly audit review of the independent auditors
and each quarterly report on Form 10-Q; to nominate a firm of independent
auditors to be submitted to the holders of voting securities for election at
the annual meeting; to approve all non-audit services to be performed by the
independent auditors; to approve the compensation of the independent auditors;
to review the Company's system of internal accounting controls and its system
of internal operating controls and the performance of its internal auditors;
to monitor compliance with the Company's Code of Business Conduct; and to
review registration statements prepared in connection with financings by the
Company and its subsidiaries. The Audit Committee held five meetings in 1996.
The duties of the Compensation Committee are to make recommendations to the
Board of Directors with respect to the salaries of the officers of the Company
and of the president of each of the Company's wholly owned subsidiaries; to
administer the Inland Steel Industries, Inc. Annual Incentive Plan and
incentive stock plans; and to make recommendations to the Board of Directors
with respect to the establishment or modification of executive compensation
plans and programs. The Compensation Committee held five meetings in 1996.
The duties of the Nominating and Governance Committee are to prepare and
maintain a list of qualified candidates to fill vacancies on the Board of
Directors and recommend to the Board of Directors candidates to fill any such
vacancies; to recommend to the Board of Directors annually a slate of
candidates for election as directors by the holders of voting securities at
the annual meeting; and to recommend the compensation to be paid to non-
management directors for their services as directors. The Nominating and
Governance Committee held two meetings in 1996.
The Nominating and Governance Committee will consider qualified candidates
recommended by the holders of voting securities for designation as nominees
for election at the Annual Meeting of Stockholders to be held in 1998 and
subsequent years. In order for a candidate recommended by a holder of voting
securities to be considered by the Nominating and Governance Committee
8
<PAGE>
for designation as a nominee for election at the Annual Meeting of
Stockholders to be held in 1998, the name of such candidate, together with a
written description of his or her qualifications, must be received by the
Secretary of the Company prior to January 1, 1998. The By-laws of the Company
provide a formal procedure, including an advance notice requirement, for
nominations by holders of voting securities of persons for election as
directors at annual meetings of the Company.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table presents, as of March 31, 1997, the Company and Ryerson
Tull equity securities beneficially owned (as that term is defined by the
Securities and Exchange Commission) by all directors of the Company, the other
named executive officers of the Company, and the directors and executive
officers of the Company as a group, in each case with sole voting and
investment power except as indicated. Company common stock includes preferred
stock purchase rights distributed in 1987 to holders of Company common stock.
The shares of Series E ESOP Preferred Stock shown as beneficially owned by the
executive officers are held for their respective accounts in the Inland Steel
Industries Thrift Plan and could be converted upon retirement or other
termination of employment into an equal number of shares of common stock of
the Company (subject to adjustment in certain events). Excluded from the
number of shares of Series E ESOP Preferred Stock as beneficially owned are
allocated shares of Series E ESOP Preferred Stock that the ESOP Trustee is
required to vote or dispose of in the manner and proportion in which allocated
shares are directed to be voted or disposed of. Ryerson Tull Class A common
stock also includes preferred stock purchase rights.
<TABLE>
<CAPTION>
RYERSON TULL
COMPANY SERIES E ESOP CLASS A
COMMON STOCK(/1/) PREFERRED STOCK(/2/) COMMON STOCK(/3/)
----------------- -------------------- -----------------
<S> <C> <C> <C>
Directors
A. Robert Abboud....... 6,546 -- 1,000
Robert J. Darnall...... 300,124 2,070 11,754
James W. Cozad......... 2,046 -- --
James A. Henderson..... 2,546 -- 2,212(/4/)
Robert B. McKersie..... 1,303 -- 500
Leo F. Mullin.......... 1,000 -- --
Donald S. Perkins...... 4,046 -- 6,212(/4/)
Jean-Pierre Rosso...... 1,061 -- 3,424
Joshua I. Smith........ 1,546 -- --
Nancy H. Teeters....... 1,846 -- 150
Arnold R. Weber........ 1,646 -- 1,000
Named Executive Officers
Neil S. Novich......... 130 459 95,615
Dale E. Wiersbe........ 74,925 1,455 1,000
Judd R. Cool........... 125,670 88 1,500
H. William Howard...... 93,176 78 1,000
All Directors and
Executive Officers
as a Group............. 760,814 8,937 133,896
</TABLE>
9
<PAGE>
- --------
(1) Excludes shares of common stock into which Series E ESOP Convertible
Preferred Stock may be converted. No director or named executive officer
of the Company individually owns 1% or more of the outstanding common
stock of the Company; all directors and executive officers of the Company
as a group own 1.6% of the outstanding common stock of the Company.
Includes shares held jointly with other persons, as follows--Dr.
McKersie--200, Mr. Darnall--290, Mr. Wiersbe--212, and all directors and
executive officers as a group--2,704; shares which the following have the
right to acquire under options exercisable within 60 days after April 2,
1997--Mr. Darnall--221,000, Mr. Cool--101,880, Mr. Howard--83,880, Mr.
Wiersbe, 67,520, and all executive officers as a group--591,005; and
shares held under restricted stock awards as follows--Mr. Darnall--15,000,
Mr. Cool--4,800, Mr. Howard--4,800, Mr. Wiersbe, 3,600 and all executive
officers as a group--38,200.
(2) Each director and named executive officer individually owns and all
directors and executive officers as a group collectively own less than 1%
of the Series E ESOP Preferred Stock of the Company.
(3) No director or named executive officer of the Company individually owns 1%
or more of the outstanding Class A common stock of Ryerson Tull. All
directors and executive officers of the Company as a group own 2.5% of the
outstanding Class A common stock of Ryerson Tull. Includes 2,400 shares of
Ryerson Tull Class A common stock held directly or indirectly by family
members of an executive officer, for which beneficial ownership is
disclaimed; shares which the following have the right to acquire under
options exercisable within 60 days after April 2, 1997--Mr. Novich--
75,359, and all executive officers of the Company as a group--75,359; and
shares held under restricted stock awards as follows--Mr. Darnall--3,654,
Mr. Novich--18,156, and all executive officers as a group--51,617.
(4) Includes 1,212 restricted shares of Ryerson Tull Class A common stock
payable under the terms of the Ryerson Tull Directors' Compensation Plan,
the receipt of which has been deferred.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, officers and certain stockholders to file with the Securities and
Exchange Commission an initial statement of beneficial ownership and certain
statements of changes in beneficial ownership of equity securities of the
Company. A late filing for one open-market acquisition of 500 shares of
Company common stock was made on behalf of Mr. Rosso during 1996.
10
<PAGE>
ADDITIONAL INFORMATION RELATING TO VOTING SECURITIES
The following table sets forth, as of December 31, 1996, except as otherwise
noted, the only holders known to the Company to own beneficially more than 5%
of its common stock, Series E ESOP Preferred Stock, and its 10.23% Subordinated
Voting Notes.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OR
AMOUNT OF PERCENT
NAME AND ADDRESS OF SECURITIES OF
BENEFICIAL OWNER OWNED CLASS
- ------------------- ------------ -------
<S> <C> <C>
Common Stock
Barclays Global Investors, N.A....................... 2,875,700(/1/) 5.88
45 Fremont Street
San Francisco, CA 94105
FMR Corp............................................. 5,967,417(/2/) 12.19
82 Devonshire Street
Boston, MA 02109
Alfred D. Kingsley................................... 3,479,200(/3/) 7.11
277 Park Avenue
New York, NY 10172
LaSalle National Bank................................ 3,910,500(/4/) 7.99
135 South LaSalle Street
Chicago, IL 60674
Northern Trust Corporation........................... 3,970,135(/5/) 8.11
50 South LaSalle Street
Chicago, IL 60675
Norwest Corporation.................................. 3,513,793(/6/) 7.18
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479
Series E ESOP Preferred Stock
LaSalle National Bank................................ 3,080,790(/4/) 100
10.23% Subordinated Voting Notes
NS Finance III, Inc.................................. $100,000,000(/7/) 100
c/o Nippon Steel U.S.A., Inc.
10 East 50th Street, 29th Floor
New York, NY 10022
</TABLE>
- --------
(1) Barclays Global Investors, N.A., filing on behalf of itself and Barclays
Global Investors, LTD., Barclays Trust and Banking Company (Japan) Ltd.,
Barclays Bank PLC, and Barclays Global Fund Advisors, reported sole voting
power as to 2,619,004 shares, sole dispositive power as to 2,853,940 shares
and shared dispositive power as to 21,760 shares.
11
<PAGE>
(2) FMR Corp., on behalf of itself, Edward C. Johnson 3rd, Abigail P. Johnson
and Fidelity Management & Research Company reported aggregate sole voting
power as to 168,230 shares of common stock and sole dispositive power as
to 5,967,417 shares as of February 28, 1997.
(3) Mr. Kingsley, filing as of February 21, 1997, on behalf of himself and for
a group including Gary K. Duberstein, Greenway Partners, L.P., Greenbelt
Corp., Greenhouse Partners, L.P., Greenhut, L.L.C., Greenhut Overseas
L.L.C., Greensea Offshore, L.P., and Greentree Partners, L.P., reported
sole voting and dispositive power as to 28,000 shares and shared voting
and dispositive power as to 3,451,200 shares.
(4) LaSalle National Bank, as successor to LaSalle National Trust, N.A.,
Trustee of the Inland Steel Industries Thrift Plan (the "Plan") and
Trustee of the ESOP Trust within such Plan, reported shared voting power
as to 3,910,500 shares of common stock, sole dispositive power as to
3,080,790 shares of common stock and shared dispositive power as to
829,710 shares (including 3,080,790 shares issuable upon conversion of the
Series E ESOP shares and 829,710 shares of common stock held by the
Trustee in agency and fiduciary capacities unrelated to the ESOP Trust on
behalf of participants in the Plan). The Trustee expressly disclaims
beneficial ownership of all such Plan securities. As of December 31, 1996,
the outstanding shares of Series E ESOP Preferred Stock represented
approximately 6.89% of the voting power of the Company's outstanding
voting securities.
(5) Northern Trust Corporation, reporting on behalf of itself and its
subsidiaries The Northern Trust Company, Northern Trust Bank of California
N.A. and Northern Trust Bank of Florida N.A. reported sole voting power as
to 56,250 shares of common stock, shared voting power as to 3,911,385
shares, sole dispositive power as to 58,580 shares of common stock and
shared dispositive power as to 3,909,685 shares. The Northern Trust
Company held 3,657,585 shares as of April 2, 1997, as Trustee of the
Inland Steel Industries Pension Trust.
(6) Norwest Corporation on behalf of itself and Norwest Colorado, Inc.,
Norwest Bank Colorado, National Association, and certain other
subsidiaries, reported aggregate sole voting power as to 3,185,636 shares
of common stock, shared voting power as to 4,300 shares, sole dispositive
power as to 3,508,978 shares, and shared dispositive power as to 2,115
shares.
(7) NS Finance III, Inc., is an indirect wholly owned subsidiary of Nippon
Steel Corporation ("NSC"). NS Finance III, Inc. has agreed that it will be
deemed to be present for quorum purposes at all stockholder meetings. As
of April 2, 1997, the outstanding principal amount of the Company's 10.23%
Subordinated Voting Notes represented approximately 5.5% of the voting
power of the Company's outstanding voting securities. In addition, as of
April 2, 1997, NS Finance III, Inc. owned 352,400 shares, or approximately
0.7% of the outstanding shares, of common stock of the Company. The 10.23%
Subordinated Voting Notes are required to be repaid in 1999 and cannot be
prepaid. See "Certain Relationships and Related Transactions" below.
No persons were known to the Company to be the beneficial owners of more
than 5% of the outstanding shares of Series A $2.40 Cumulative Convertible
Preferred Stock. Holders of such preferred stock vote together with the
holders of the common stock, the Series E ESOP Preferred Stock, and the 10.23%
Subordinated Voting Notes as a single class on each matter being submitted to
holders of the Company's voting securities.
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1989, the Company and NSC, through its indirect wholly owned
subsidiary NS Finance, Inc., each purchased in the open market approximately
$15,000,000 of the other company's common stock. The Company purchased
2,500,000 shares of NSC common stock, representing 0.04% of the then
outstanding shares of NSC. NS Finance, Inc. later transferred ownership of its
Company common stock to NS Finance III, Inc., also an indirect wholly owned
subsidiary of NSC. On December 18, 1989, the Company sold 185,000 shares of
its Series F Exchangeable Preferred Stock to NS Finance III, Inc., for $1,000
per share. NSC, on behalf of itself and its affiliates, had agreed not to
acquire additional shares of the Company's stock prior to the redemption of
the Series F Exchangeable Preferred Stock or to transfer such Preferred Stock
without the Company's approval. Such Preferred Stock was exchangeable at the
Company's option, with the consent of NS Finance III, Inc., for $185,000,000
principal amount of 10.23% Subordinated Voting Notes and on August 1, 1995 the
Company exchanged its 10.23% Subordinated Voting Notes for such Preferred
Stock. On December 18, 1996, the Company repaid $85,000,000 principal amount
of such Subordinated Voting Notes pursuant to their terms, and it is required
to repay the remaining principal amount in 1999. The Company paid NSC
approximately $20,000,000 in interest on the Subordinated Voting Notes in
1996. So long as NS Finance III, Inc. and certain transferees beneficially own
at least $100,000,000 aggregate principal amount of such Subordinated Voting
Notes, the Company has agreed to nominate a mutually agreeable individual as
NSC's designee for election to the Board of Directors. No such individual is
being nominated by the Company at this time. In connection with the initial
sale, the Company agreed to repurchase $185,000,000 of its common stock. At
year-end 1996, a total of approximately $153,000,000 had been spent to buy
back approximately 4,900,000 shares of common stock. The Company suspended
open-market stock purchases in December 1990. Until the repurchase is
completed, the Company has agreed to maintain cash, certain securities, a
surety bond or letter of credit, or some combination thereof, currently equal
to $13,000,000, in order to meet its remaining repurchase obligation.
The Company and NSC or their respective affiliates previously had entered
into a number of agreements related primarily to certain joint ventures and
certain technical projects concerning the Company's steel manufacturing
operations, and additional transactions have been and may be entered into in
the future upon terms to be determined through negotiation between the
parties. The following is a summary of arrangements and transactions between
the Company and NSC or their affiliates in effect since at least the beginning
of 1996 or presently proposed.
JOINT VENTURES
In July 1987, the Company and NSC entered into a joint venture for a cold-
rolling facility to be constructed near New Carlisle, Indiana. I/N Tek, the
general partnership formed for this joint venture, is 60% owned by a wholly
owned subsidiary of Inland Steel Company ("ISC") and 40% owned by an indirect
wholly owned subsidiary of NSC. The facility was completed in April 1990 at a
cost of approximately $525,000,000. Funds for the project were provided by
capital
13
<PAGE>
contributions by the two partners ($111,600,000 by ISC's subsidiary and
$74,400,000 by NSC's subsidiary) and by third-party financing. The partners
made subordinated loans to the partnership for capital projects in the
aggregate amount of approximately $5,400,000 (in proportion to their
respective partnership interests) in 1996. The partnership made payments to
the partners in 1996 in proportion to their partnership interests of
approximately $3,300,000 in connection with subordinated loans the partners
had previously made to the partnership. Further subordinated loans of
approximately $1,000,000 are expected to be made by the partners in 1997 for
capital projects. I/N Tek made equity distributions in 1996 totaling
approximately $36,000,000 to the partners in proportion to their partnership
interests. ISC generally has exclusive rights to the production capacity of
the facility and an obligation to use the facility for its production of cold-
rolled steel through a tolling arrangement with I/N Tek. I/N Tek charged ISC
approximately $144,800,000 in tolling fees during 1996. NSC has the right to
purchase up to 400,000 tons of cold-rolled steel from ISC in each year at
market-based negotiated prices, including steel processed by I/N Tek. During
1996, NSC, through NS Sales, Inc., an indirect wholly owned subsidiary of NSC,
made purchases from ISC of cold-rolled steel, including I/N Tek products,
totalling approximately $148,500,000. The joint venture will terminate on
December 31, 2009, unless otherwise terminated or extended pursuant to the
provisions of the joint venture agreement. I/N Tek and its partners have
entered into various technology, management, administrative services and
commercial agreements with respect to the project, which agreements will
terminate upon termination of the joint venture. Pursuant to such agreements,
I/N Tek paid to NSC approximately $600,000 in 1996 and expects to pay to NSC a
similar amount annually for certain personnel support services through the
term of the partnership. I/N Tek also paid ISC approximately $1,300,000 in
1996 for various administrative and personnel support services and $4,800,000
for certain production supplies. In addition to the transactions described
above, during 1996 I/N Tek made purchases from Company subsidiaries of
approximately $3,100,000.
In September 1989, the Company and NSC entered into a joint venture for a
400,000-ton electrogalvanizing line and 500,000-ton hot-dip galvanizing line
adjacent to the I/N Tek venture. I/N Kote, the general partnership formed for
this joint venture, is 50% owned by subsidiaries of each of ISC and NSC. The
electrogalvanizing line began start-up operations in September 1991 and the
hot-dip galvanizing line began start-up operations in November 1991. The
project cost approximately $554,000,000. Permanent financing for the project,
as well as for capitalized interest and a portion of the working capital, was
provided by third-party long-term financing, by capital contributions by the
two partners of $60,000,000 each and by subordinated partner loans of
$30,000,000 each. The partners made subordinated loans to the partnership for
capital projects in the aggregate amount of approximately $1,300,000 (in
proportion to their respective partnership interests) in 1996. Further
subordinated loans of approximately $2,500,000 are expected to be made by the
partners (in proportion to their respective partnership interests) in 1997 for
capital projects. Equity distributions of approximately $16,200,000 offset by
equity contributions of approximately $11,000,000 (used to fund a price
adjustment payment for 1996 as described below) were made in 1996 to the
partners in proportion to their respective partnership interests. ISC and NSC
have each guaranteed the share of project indebtedness attributable to
14
<PAGE>
their respective subsidiaries. I/N Kote had approximately $416,000,000
outstanding under its long-term financing agreement at December 31, 1996. The
joint venture will terminate on December 31, 2007, unless otherwise terminated
or extended pursuant to provisions of the joint venture agreement. I/N Kote is
required to buy all of its cold-rolled steel from ISC, which is required to
furnish such cold-rolled steel at a price that results in an annual return on
equity to the partners of I/N Kote, depending upon operating levels, of up to
10% after operating and financing costs; this price is subject to upward price
adjustments if I/N Kote's operating rate falls below a certain level or if
ISC's return on sales is less than I/N Kote's return on sales, and downward
price adjustments, to the extent of previously recorded upward return-on-sales
adjustments, if I/N Kote's return on sales is less than ISC's. During 1996,
the relative levels of return on sales resulted in an upward price adjustment
of approximately $11,000,000. Prices of cold-rolled steel sold by ISC to I/N
Kote are determined pursuant to the terms of the joint venture agreement and
are based, in part, on operating costs of I/N Kote. In 1996, the prices at
which ISC sold cold-rolled sheet steel to I/N Kote exceeded production costs,
but were less than the market prices for cold-rolled steel products. ISC acts
as sales agent for I/N Kote's products in North America, and NSC has agreed to
certain limitations on its shipment of similar products into the U.S. and
Canada. ISC incurred costs of approximately $24,500,000 to I/N Kote for
certain tolling services and scrap purchases in 1996. I/N Kote and its
partners also have entered into various technology, management, administrative
services and other agreements with respect to the project. All of these
agreements will terminate upon termination of the joint venture. I/N Kote paid
ISC approximately $300,000 for cold-rolled sheet steel during 1996. I/N Kote
paid approximately $1,300,000 to NSC in 1996 for engineering services and
technology transfers and I/N Kote anticipates paying NSC a similar amount
annually for such services through the term of the partnership. I/N Kote made
payments of approximately $8,600,000 to ISC in 1996 in connection with various
administrative, engineering and sales services provided to I/N Kote by ISC. In
addition to the transactions described above, Company subsidiaries made
purchases of approximately $2,100,000 from I/N Kote in 1996 and during the
year I/N Kote made purchases from Company subsidiaries of approximately
$300,000. I/N Kote paid I/N Tek approximately $10,200,000 in 1996 for shared
utilities, maintenance material and services.
In the event of certain changes in control of either the Company or NSC, or
if the Company makes or permits certain dispositions of specified portions of
ISC's business or interests in ISC, the other party has the right to purchase
the first party's interests in these ventures or to require the first party to
buy its interests, in each case at fair market value.
OTHER AGREEMENTS
Commencing in 1981, the Company and NSC have entered into various agreements
pursuant to which NSC has provided technical services and licenses with
respect to specific Company research and engineering projects. Pursuant to
certain of such agreements, ISC paid approximately $9,000 for technical
services and engineering services provided to ISC by NSC in 1996 and for
related administrative costs, and anticipates no additional payments in 1997
for such NSC services (and related costs) to be provided under such
agreements. ISC also purchased
15
<PAGE>
approximately $10,500,000 of steel slabs from NSC in 1996 and does not
anticipate any additional purchases of steel slabs in 1997.
During 1996, the Company and its subsidiaries paid the law firm of Mayer,
Brown & Platt, of which George A. Ranney, Jr., Vice President and General
Counsel of the Company, is a partner, approximately $1,730,000 for legal
services. Mr. Ranney's employment agreement with the Company provides that he
will retain his partnership at Mayer, Brown & Platt but will receive no
financial benefit from the law firm for his work with the Company. The Company
and its subsidiaries intend to retain Mayer, Brown & Platt for services during
1997.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table presents the compensation for fiscal 1994, 1995 and 1996
paid to the chief executive officer and the four other most highly compensated
executive officers of the Company. The table shows compensation earned by the
named executive officers in all capacities in which they served and includes
compensation paid or accrued by the Company and its subsidiaries, including
Ryerson Tull.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------ ---------------------------
SECURITIES
RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(/1/) OPTIONS (#) COMPENSATION(/2/)
- ------------------ ---- ------ -------- ------------ ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Darnall 1996 $684,996 $316,100 0 $104,488(/3/) 100,000 $33,833
Chairman, President and 1995 690,961 515,800 0 169,500 30,000 34,545
Chief Executive Officer 1994 602,389 363,000 0 185,250 30,000 30,122
Neil S. Novich(/4/) 1996 400,095 386,600 0 70,625(/5/) 42,000(/6/) 18,845
President and Chief 1995 387,113 400,400 0 84,750(/5/) 14,000(/6/) 19,351
Executive Officer of 1994 174,054 212,900 94,034(/7/) 265,825(/5/) 34,000(/6/) 1,266
Ryerson Tull
Dale E. Wiersbe(/8/) 1996 365,008 112,568 0 0 54,000 18,248
Senior Vice President
Judd R. Cool 1996 331,750 160,325 0 0 36,000 15,275
Vice President-- 1995 322,385 225,877 0 0 12,000 16,128
Human Resources 1994 297,213 144,600 0 148,200 12,000 14,866
H. William Howard 1996 289,170 144,525 0 0 36,000 13,813
Vice President-- 1995 283,941 203,064 0 0 12,000 14,190
Information Technology 1994 258,288 127,700 0 148,200 12,000 13,145
</TABLE>
- --------
(1) Awards consist of restricted common stock of the Company or of restricted
Class A common stock of Ryerson Tull and are valued at the aggregate
market value as of the date of grant, based on the closing market price of
the Company's common stock or of Ryerson Tull Class A common stock on such
date. Dividends are paid on such shares to the extent paid on the
Company's or Ryerson Tull's common stock. The vesting schedule for the
restricted stock
16
<PAGE>
awards provides that all shares will vest at the end of three-year periods
beginning on the date of grant, except for a July 24, 1996 grant for 3,000
shares of Company restricted stock made to Mr. Darnall that will vest on May
20, 1999. Vesting may be accelerated at the discretion of the Company's
Compensation Committee in the event of exceptional individual performance
and (or) significant progress by the applicable company or the appropriate
business unit in meeting its operating and financial objectives. The number
and value of the aggregate restricted stock holdings of Company common stock
at December 31, 1996, based on the closing market price of the Company's
common stock on December 31, 1996, were: Mr. Darnall, 15,000
shares/$300,000; Mr. Cool, 4,800 shares/$96,000; Mr. Wiersbe, 3,600
shares/$72,000; and Mr. Howard, 4,800 shares/$96,000. The number and value
of the aggregate restricted stock holdings of Ryerson Tull Class A common
stock on December 31, 1996 were: Mr. Darnall, 3,654 shares/$49,329; and Mr.
Novich, 18,156 shares, $245,106.
(2) Amounts represent the value of vested and unvested employer contributions
and allocations to the Inland Steel Industries Thrift Plan and the Inland
Steel Industries Non-Qualified Thrift Plan.
(3) Mr. Darnall, who is also Chairman of Ryerson Tull, received restricted
stock awards on July 24, 1996, for Company stock and for Ryerson Tull Class
A common stock (under the Ryerson Tull 1996 Incentive Stock Plan) valued
respectively at $52,875 and $51,613.
(4) Mr. Novich resigned as Senior Vice President of the Company in May 1996 to
devote his entire efforts to serving as President and Chief Executive
Officer of Ryerson Tull. His compensation for 1996 includes compensation
paid both by the Company and Ryerson Tull. Mr. Novich joined the Company in
June 1994.
(5) Mr. Novich's 1996 award consisted of restricted shares of Ryerson Tull
Class A common stock issued under the Ryerson Tull 1996 Incentive Plan. His
1995 and 1994 outstanding restricted stock awards of Company common stock
were replaced, as of the consummation of the Offering, by restricted shares
of Ryerson Class A common stock in the same ratio as the average value
(average closing price of such stock for the first ten trading days
following the substitution) that a share of Company common stock bore to
the average value of a share of Ryerson Tull Class A common stock, which
ratio was 1.218254.
(6) Mr. Novich's options, as shown here, were awarded as options for Company
stock under the Company's incentive stock plans. Upon the consummation of
the Offering, Mr. Novich's outstanding options for Company stock were
replaced by substitute options to purchase Ryerson Tull Class A common
stock under the Ryerson Tull 1996 Incentive Stock Plan at the ratio and
pursuant to the methodology described in footnote (5) above.
(7)Reimbursement of moving expenses including tax gross-up payment of $30,515.
(8) Mr. Wiersbe was not an executive officer of the Company in 1994 or 1995.
Compensation for 1996 reflects the full fiscal year.
INDIVIDUAL OPTION GRANTS IN 1996
The following table presents information with respect to (a) individual
grants of options that were made during the last fiscal year to the named
executive officers and (b) the grant date present value of such options.
17
<PAGE>
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME GRANTED(/1/) FISCAL YEAR PRICE(/2/) DATE(/1/) PRESENT VALUE(/3/)
---- ------------ ------------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Robert J. Darnall....... 100,000 7.1% $24.6875 3/26/2006 $873,000
Neil S. Novich.......... 42,000 3.0 24.6875 3/26/2006 366,660
Dale E. Wiersbe......... 42,000 3.0 24.6875 3/26/2006 366,660
12,000 0.8 22.6875 5/20/2006 97,920
Judd R. Cool............ 36,000 2.5 24.6875 3/26/2006 314,280
H. William Howard....... 36,000 2.5 24.6875 3/26/2006 314,280
</TABLE>
- --------
(1) All options are for Company common stock and were granted by the Company on
March 27, 1996, except for an option grant of 12,000 shares made to Mr.
Wiersbe on May 21, 1996. The options become exercisable with respect to 33%
of the shares after one year from the grant date, 67% of the shares after
two years from the grant date, and are fully exercisable after three years
from the grant date. Mr. Novich's options subsequently were replaced on the
consummation of the Offering by equivalent options to purchase shares of
Ryerson Tull Class A common stock. The number of shares of Ryerson Tull
Class A common stock subject to the substitute options and the exercise
price thereof were determined in accordance with Section 424 of the
Internal Revenue Code and regulations thereunder, with a substitution ratio
of 1.218254 Ryerson Tull shares for each Company share. All options are
transferable, with the advance written consent of the Compensation
Committee of the Board of Directors of the applicable company, (a) to a
spouse or descendants, (b) to a trust for the benefit of the optionee, his
or her spouse or descendants, or (c), for Company options, as a charitable
contribution. See "Change in Control of the Company" for option provisions
regarding any change in control of the Company.
(2) The exercise price is equal to the average of the high and low price of the
Company's common stock on the New York Stock Exchange Composite
Transactions on the date of grant. The exercise price may be paid by
delivery of already-owned shares, and an optionee may elect to have the
Company withhold shares of stock (or accept already-owned shares) to
satisfy tax withholding obligations with respect to option exercises.
(3) In accordance with Securities and Exchange Commission rules, the Black-
Scholes option pricing model was chosen to estimate the grant date present
value of the options granted during 1996. All options are valued as Company
options; however, Mr. Novich's options were subsequently replaced as
described in footnote (1). The Company's use of this model should not be
construed as an endorsement of the model's accuracy at valuing options. The
following assumptions were made for purposes of calculating the present
value of the options as of the grant date: the option term is 10 years, the
volatility of Company common stock is 31.83% (31.75% for the May 21, 1996
grant) (calculated using monthly stock prices for the five-year period
prior to the grant date), the ten-year risk-free interest rate is 6.13%
(6.47% for the May 21, 1996 grant), the dividend yield is 1.08%, and the
expected term is five years. The value of the options granted in 1996
depends upon the actual performance of the Company's common stock during
the applicable period; the actual value, if any, that an optionee will
realize upon exercise of an option will depend on the excess of the market
value of the Company's stock over the exercise price on the date the option
is exercised.
18
<PAGE>
YEAR-END OPTION/SAR VALUES
The following table presents the number of securities underlying the
option/SAR holdings of the named executive officers at the end of 1996 and the
value of such holdings. No options were exercised by named executive officers
in 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS/SARS AT MONEY OPTIONS/SARS AT FISCAL
FISCAL YEAR-END YEAR-END
NAME (EXERCISABLE/UNEXERCISABLE)(/1/) (EXERCISABLE/UNEXERCISABLE)(/1/)
---- -------------------------------- --------------------------------
<S> <C> <C>
Robert J. Darnall....... 169,000/115,000 $0/0
Neil S. Novich.......... 49,947/ 59,694 0/0
Dale E. Wiersbe......... 43,700/ 60,000 0/0
Judd R. Cool............ 84,000/ 42,000 0/0
H. William Howard....... 66,000/ 42,000 0/0
</TABLE>
- --------
(1) All such options are for common stock of the Company except for Mr.
Novich's, which are for Ryerson Tull Class A common stock; value is based
on the closing price of the Company's common stock or Ryerson Tull's Class
A common stock on the New York Stock Exchange Composite Transactions on
December 31, 1996.
PENSION BENEFITS; EMPLOYMENT, RETIREMENT AND TERMINATION AGREEMENTS
Effective April 30, 1996, that portion of the Company Pension Plan covering
Ryerson Tull's current and former employees was separated and became the
Ryerson Tull Pension Plan, which covers Mr. Novich. Employees covered by the
Ryerson Tull Pension Plan were credited with the number of years of service
credited to them under the Company Pension Plan at the later of the separation
date or the date they became employees of Ryerson Tull.
The following table shows the maximum annual pension benefits payable on a
straight life annuity basis to employees in various earnings classifications
upon retirement at age 65 under both Pension Plans. All benefit amounts shown
in such table are subject to offset based upon Social Security earnings.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE
ANNUAL
EARNINGS FOR
THE APPLICABLE ANNUAL PENSION BENEFITS FOR YEARS OF SERVICE SHOWN
YEAR-OF-SERVICE --------------------------------------------------------------
PERIOD 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
--------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000...... $ 17,000 $ 34,000 $ 51,000 $ 68,000 $ 85,000 $102,000 $119,000
400,000...... 34,000 68,000 102,000 136,000 170,000 204,000 238,000
600,000...... 51,000 102,000 153,000 204,000 255,000 306,000 357,000
800,000...... 68,000 136,000 204,000 272,000 340,000 408,000 476,000
1,000,000...... 85,000 170,000 255,000 340,000 425,000 510,000 595,000
1,200,000...... 102,000 204,000 306,000 408,000 510,000 612,000 714,000
1,400,000...... 119,000 238,000 357,000 476,000 595,000 714,000 833,000
1,600,000...... 136,000 272,000 408,000 544,000 680,000 816,000 952,000
</TABLE>
19
<PAGE>
As of April 2, 1997, the executive officers named in the Summary Compensation
Table were credited with the following years of service under the applicable
Pension Plan: Mr. Darnall -- 34 years; Mr. Novich -- 2 years; Mr. Wiersbe -- 26
years; Mr. Cool -- 9 years; and Mr. Howard -- 6 years.
Pensions are provided by the Company and certain of its subsidiaries and
affiliates under non-contributory plans to eligible employees (including
employees who are directors or officers) who, at retirement, have met certain
service or service and age requirements. In general for salaried employees,
benefits are based on years of service and individual earnings for the highest
consecutive 36-month period of earnings during the last ten 12-month periods of
service prior to retirement. For this purpose, earnings generally consist of
salary compensation plus bonus compensation.
Certain pension benefits in excess of limitations imposed by the Internal
Revenue Code will be paid by the Company or Ryerson Tull pursuant to unfunded
non-contributory supplemental retirement plans. Ryerson Tull has assumed the
Company's liabilities under the Company's supplemental pension plans with
respect to current and former employees of Ryerson Tull, including Mr. Novich.
For any officer or employee with at least five years of service, annual
compensation in excess of $150,000, and age 55 or older, these plans permit the
Company (or Ryerson Tull, as applicable) to satisfy its obligations for
benefits payable upon retirement at age 65 by (a) purchase of annuities either
prior to or at the time of retirement (and a tax gross-up payment to the
officer or employee at the time of purchase), or (b) the payment of a lump-sum
amount at the time of retirement. Neither the Company nor Ryerson Tull
established any such annuities or individual letters of credit for named
executive officers in 1996.
All accrued benefits under the pension plan vest, and all benefits accrued
under the supplemental retirement plans will become fully and irrevocably
vested and distributable to participants as provided by the terms of such plans
then in effect, in the event of a change in control of the Company. Any surplus
assets under the plan are to be used to provide additional benefits in the
event of a termination, merger or consolidation of the plan, or a transfer of
assets to another plan, within three years of such a change in control, and
limitations have been placed on amendments to the plan within such three-year
period.
In connection with Mr. Novich's election as President and Chief Executive
Officer of Ryerson Tull, Inc., Ryerson Tull assumed the Company's obligations
under an Employment Agreement with Mr. Novich. The Company must perform any
obligations under this Agreement to the extent not performed by Ryerson Tull.
The Agreement provides that, in the event of termination of his employment for
any reason other than malfeasance prior to the third anniversary of his
employment, the Company would pay the present value of (a) his monthly base
salary in effect at the time of such termination times the number of months
remaining in the 36-month period, plus (b) 1/12th of the average annual award
paid to him under the Company's Annual Incentive Plan times the number of
months remaining in the 36-month period. In addition, all of his restricted
stock will become fully vested, all options will become fully exercisable, and
the Company will continue life insurance, disability insurance, and dental and
20
<PAGE>
health care coverage consistent with such coverages for active employees until
such third anniversary date. The Agreement terminates June 15, 1997.
The Company has an Agreement with Mr. Cool under which he will receive the
excess, if any, of the amounts he would receive under the Company's pension
plans if he were credited under those plans with his years of service and his
earnings with his prior employer over the sum of actual payments he would
receive from the Company's pension plans plus those received by him under his
prior employer's pension plans. Mr. Cool's spouse will be deemed to be
immediately eligible to receive a surviving spouse benefit in the event of his
death. Mr. Cool is entitled to a salary continuation benefit if he retires at
or after age 62 equal to 400% of his annual base salary at retirement, paid in
240 equal monthly installments commencing at his date of retirement, or to his
spouse in the event of his death. The Agreement also provides that Mr. Cool
(or his spouse, if applicable), if not eligible on retirement to participate
in the Company's retiree health care program, will be entitled to equivalent
health care coverage upon the same terms, limits, coverages and costs
generally required of retirees eligible for such coverage, plus a tax gross up
payment to the extent of the value of health care coverage includible in gross
income. The Agreement also provides Mr. Cool with life insurance having a
death benefit of 300% of his then annual base salary determined as of January
1 of each year during his employment and, on his retirement, of 60% of the
death benefit in force at his retirement.
CHANGE IN CONTROL OF THE COMPANY
Upon the occurrence of an event constituting a change in control of the
Company, with certain exceptions, (i) the value of all outstanding stock
options, stock appreciation rights and restricted stock awards (whether or not
then fully exercisable or vested) will be cashed out at specified prices as of
the date of the change in control, except that (a) any stock options or stock
appreciation rights outstanding for less than six months are not cashed out
until six months after the applicable date of grant and (b) the Compensation
Committee of the Board of Directors may provide for immediate vesting instead
of cashing out of restricted stock awards; and (ii) all outstanding
performance awards will be cashed out in the amounts and manner determined by
the Compensation Committee.
The Company has entered into agreements with each of the named executive
officers (and Ryerson Tull has entered into a similar agreement with Mr.
Novich regarding change in control at Ryerson Tull), the present terms of
which expire on December 31, 1997, but are automatically extended for
additional one-year periods thereafter unless the Company gives notice prior
to June 30 that it does not wish to extend such agreements for another year or
unless a change in control (as defined below) of the Company or certain other
limited events occur. The Company has not given such notice of nonrenewal.
These agreements provide that if such executive's employment is terminated
within two years after a change in control of the Company either (i) by the
Company other than for "cause" or other than as a consequence of death,
disability or retirement (all as defined in such agreements) or (ii) by such
executive for reasons relating to a diminution of responsibilities,
compensation or benefits or a significant relocation of the executive's
principal place of business, he or she will receive: (a) a lump-sum payment
equal to two times the sum of (1) his current
21
<PAGE>
annual base salary plus (2) the average annual incentive bonus paid for the
five years preceding termination of employment (computed by dividing the
aggregate amount of all such incentive bonuses by the number of years in which
such bonuses were paid); (b) an amount in cash in lieu of any allocations,
unpaid awards or rights under the Company's annual or other incentive
compensation plans; (c) an amount in cash equal to the value of outstanding
stock options granted under the Company's stock option plans at specified
prices; (d) an amount in cash equal to the value for shares of common stock
awarded or issuable as performance and/or restricted shares under the Company's
incentive stock plans; (e) life, disability, accident and health insurance as
provided in the Company's insurance programs for a period of 24 months after
termination of employment; (f) an amount in cash in lieu of two years of
additional accrued benefits under the Company pension plan; and (g) legal fees
and expenses incurred as a result of such termination. Mr. Novich's agreement
provides, in addition, that the agreement will not limit or reduce any benefits
that he may be entitled to receive pursuant to any other agreement upon a
change in control of the Company. The agreements contain an excise tax "gross-
up" provision pursuant to which the executive will be paid an additional amount
upon the imposition of any excise tax. While this provision will preserve the
benefits receivable under the severance agreements for the executives, the
Company will not be entitled to a federal income tax deduction for a portion of
the severance payment. To the extent that an executive becomes entitled to
benefits under a Ryerson Tull Agreement and a Company Agreement upon a change
in control, benefits payable under the Company agreement will be reduced by the
amount of benefits payable under the Ryerson Tull Agreement. Other than as set
forth in the preceding sentence, in no event shall an executive be entitled to
benefits under both a Company Agreement and a Ryerson Tull Agreement on account
of the same events constituting a change in control.
On June 10, 1996, Ryerson Tull, Inc. entered into an agreement with Mr.
Novich that provides benefits substantially similar to those provided under the
Company change in control agreement in the event that the executive's
employment with Ryerson Tull is terminated following a change in control of
Ryerson Tull (defined to include events with respect to Ryerson Tull similar to
those which constitute a change in control under the Company Agreements with
respect to the Company.) In addition, Mr. Novich's Ryerson Tull change in
control agreement provides that payments under the agreement will not limit or
reduce any benefits that he may be entitled to receive pursuant to his
Employment Agreement.
A "change in control of the Company" shall generally be deemed to occur if
(i) with certain limited exceptions, any person becomes the owner of 40% or
more of the combined voting power of the Company's then-outstanding securities
(30% or more in the case of the Inland 1988 Incentive Stock Plan); (ii) during
any two-year period the majority of the membership of the Company's Board
changes without the approval of two-thirds of the directors who either were
directors at the beginning of the period or whose election was previously so
approved; (iii) the Company's holders of voting securities approve a merger or
consolidation with another company in which the Company's voting securities, in
combination with voting securities held by any trustee or fiduciary under any
Company employee benefit plan, do not continue to represent at least 60% of the
combined voting power of the voting securities of the surviving entity
(excepting certain recapitalizations of the Company); (iv) the Company's
holders of voting securities approve
22
<PAGE>
a complete liquidation of the Company or an agreement for the sale or
disposition of all or substantially all of the Company's assets; or (v) there
occurs with respect to a "Related Company" (A) a sale or disposition of
securities representing 50% or more of the combined voting power of the Related
Company's securities, (B) a merger or consolidation of a Related Company with a
person in which a majority-owned direct or indirect subsidiary of the Company
does not own at least 50% or more the combined voting power of the surviving
entity; or (C) the sale or disposition of all or substantially all of the
assets of a Related Company to a person other than a majority-owned subsidiary
of the Company. No change in control of the Company is deemed to occur if the
transaction includes or involves a sale to the public or a distribution to
Company holders of voting securities of more than 50% of the voting securities
of the employee's employer or a parent of that employer, and such employer or
parent agrees to become a successor to the Company under the employee's
severance agreement. A "Related Company" is an employee's employer, a direct or
indirect parent of the employer, or a subsidiary of the employer that is also a
significant subsidiary of the Company within the meaning of Rule 405 of the
Securities Act of 1933, as amended.
The agreements also provide benefits in the event the employee is terminated
by the Company for a reason other than cause within twelve months after the
occurrence of a "potential change in control" of the Company if a change in
control or certain other limited events occur within six months after his or
her termination. A "potential change in control" shall be deemed to have
occurred for purposes of the agreements if (A) the Company enters into an
agreement, the consummation of which would result in the occurrence of a change
in control, (B) any person (including the Company) publicly announces an
intention to take or to consider taking actions which, if consummated, would
constitute a change in control, (C) with certain exceptions, any person who is
or becomes the owner of securities of the Company representing 9.5% or more of
the combined voting power of the Company's then outstanding securities
increases his or her beneficial ownership of such securities by 5% or more over
the percentage so owned on the date of the agreements, or (D) the Board of
Directors of the Company adopts a resolution that a potential change in control
of the Company has occurred for purposes of the agreements.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS REGARDING EXECUTIVE COMPENSATION
The Company's executive compensation programs are designed to attract and
retain outstanding individuals as officers and key employees and to reward such
individuals based on their personal performance and contributions and on the
financial performance of the Company and its business units. Such programs
consist of three elements -- base salary compensation, short-term incentive
compensation, and long-term incentive compensation -- and are administered by
the Compensation Committee of the Board of Directors. The Compensation
Committee consists of five directors, none of whom is or has been an employee
of the Company or any of its subsidiaries. The Committee currently employs and
periodically meets with outside compensation consultants for assistance
regarding the Company's executive compensation programs.
23
<PAGE>
The 1996 compensation programs described in this Proxy Statement were
established prior to Mr. Novich's resignation from the position of Senior Vice
President of the Company to devote his entire efforts to Ryerson Tull. These
programs applied to Mr. Novich's compensation (except as indicated below) until
the consummation of the Offering, when the Board of Directors of Ryerson Tull
established a Compensation Committee to (among other responsibilities)
establish or modify executive compensation plans and programs, including review
of Mr. Novich's compensation. The Ryerson Tull Compensation Committee is
comprised entirely of non-employee directors of Ryerson Tull who are not
employees of the Company or of Ryerson Tull and who are not eligible to
participate in any of the executive compensation programs of the Company or of
Ryerson Tull.
Total compensation opportunities of the Company are intended to be
competitive with those offered by manufacturing companies of comparable size,
with particular attention paid to the compensation practices of steel
manufacturing companies, including those in the S&P Steel Index (see
"Comparison of Five-Year Cumulative Total Return" below), and other metals
companies. In recent years, as a result of economic difficulties in the steel
industry in general and for the Company specifically, the Compensation
Committee has been concerned about the retention of talented executive and
management personnel. The Committee has addressed this concern by paying
particular attention to base salary compensation and by the limited but
important use of restricted stock.
Base salary compensation of executive officers is reviewed annually by the
Compensation Committee, and recommendations of the Committee in that regard are
acted upon by the Board of Directors. Base salaries are targeted at the 50th
percentile of comparable positions in the comparison group of companies
described in the immediately preceding paragraph. Such base compensation
generally represents approximately one-half of the total target compensation
opportunity for executive officers of the Company. The other one-half of such
target compensation, consisting of short-term and long-term incentive
compensation in accordance with the factors described below, is variable and
fluctuates significantly from year to year as a result of the highly cyclical
condition of the steel industry. Mr. Darnall's base salary was increased in
February 1995 to $685,000 and was not adjusted in 1996.
Short-term incentive compensation is payable to officers and other key
employees under the Inland Steel Industries, Inc. Annual Incentive Plan. This
Plan, which is administered by the Compensation Committee, provides for cash
awards based on a specified percentage of a participant's salary earnings and
the extent to which corporate and (or) business unit performance standards are
achieved for the year. In 1996, all major corporate units of the Company
achieved the threshold levels of return on operating assets established for
such units. The award payments to Messrs. Darnall, Cool, and Howard were
computed based upon the 1996 return on operating assets achieved by the
corporate units of the Company, weighted with respect to the relative asset
value of each such unit. Mr. Wiersbe's award payment was computed based upon
the 1996 return on operating assets achieved by Inland Steel Company, of which
he is President and Chief Operating Officer. As the President and Chief
Executive Officer of Ryerson Tull, the award payment to Mr. Novich was computed
based upon the 1996 return on operating assets achieved by Ryerson Tull.
24
<PAGE>
Long-term incentive compensation grants and awards may be made by the
Compensation Committee under the Inland 1995 Incentive Stock Plan and, with
respect to Mr. Novich after the consummation of the Offering, by Ryerson
Tull's Compensation Committee under the Ryerson Tull 1996 Incentive Stock
Plan, which is substantially similar to the Company's plan. These grants and
awards consist of stock options, stock appreciation rights, restricted stock
awards, and performance awards, or combinations thereof. Stock options and
stock appreciation rights may be granted at not less than 100% of the fair
market value of the applicable common stock on the date of grant and are
generally exercisable for a period not exceeding ten years. Restricted stock
awards, consisting of shares of common stock, are contingent on continuing
employment for specified periods, and performance awards, payable in shares of
common stock or cash, are contingent on the achievement over specified periods
of such performance objectives as are established by the compensation
committee making the award. Restricted stock awards may also be contingent
upon the achievement of performance measures. Grants and awards made under the
plans are intended to provide executive officers not only with additional
incentives for outstanding individual performance but also with an opportunity
to acquire an ownership stake in the Company and thereby more closely align
their interests with those of the stockholders.
Options to purchase a total of 304,300 shares of Company common stock and
restricted stock awards totaling 5,400 shares of common stock were granted to
named executive officers by the Compensation Committee in 1996, including
options to purchase 100,000 shares and a restricted stock award of 3,000
shares to Mr. Darnall. (Messrs. Darnall and Novich also were granted
restricted stock awards for 3,654 and 5,000 shares, respectively, by the
Ryerson Tull Compensation Committee in July 1996.) After consummation of the
Offering, the Ryerson Tull Compensation Committee substituted options for
Ryerson Tull Class A common stock for Mr. Novich's outstanding option awards
(including his 1996 award from the Company). The Company's Compensation
Committee considered the amount and terms of prior awards of options,
restricted stock and performance awards, and the likelihood that Ryerson Tull
executives and key employees would be eligible for grants and awards under the
Ryerson Tull 1996 Incentive Stock Plan, when deciding on option and restricted
stock awards for 1996. Such grants of options and restricted stock, including
those made to Mr. Darnall, were determined with reference to comparable
positions based on a compensation analysis for officer positions of the
Company, a comparative company survey of compensation practices at 26
industrial companies (including two companies in the S&P Steel Index) with
median sales revenues of $2.7 billion and a summary of executive compensation
issues prepared by the Company's outside executive compensation consultants.
These grants were intended to provide strong incentives to improve stockholder
value, to encourage executive retention in a highly cyclical industry and to
remain competitive in executive recruitment. The restrictions on the Company
restricted stock awards will lapse, and the shares vest, at the end of the
three-year period beginning May 21, 1996, except for a July 24, 1996 grant for
3,000 shares of Company stock made to Mr. Darnall that will vest on May 20,
1999. However, vesting may be accelerated at the discretion of the
Compensation Committee in the event of exceptional individual performance and
(or) significant progress by the Company or the respective business unit in
meeting its operating and financial objectives.
25
<PAGE>
In January 1997, the Compensation Committee approved grants of performance
awards to all named executive officers and to certain executive officers and
employees of the Company as part of the long-term incentive program. The
performance shares will vest only if the Company achieves specified annual
performance goals established for both operating profit and total stockholder
return as compared to specified steel companies. Use of the performance goal
"total stockholder return", because not specified as a performance measure in
the Inland 1995 Incentive Stock Plan, results in the performance awards not
satisfying the requirements of Internal Revenue Code Section 162(m) for
maximum deductibility for Federal income tax purposes of payments made to
named executive officers. No performance awards were granted to named
executive officers in 1996. Performance award payouts were made to Messrs.
Cool, Howard and Wiersbe in May 1996 based on success in achieving cost
control criteria during the performance period ended March 31, 1996 and in
January 1997 based on success in achieving safety and cost control criteria
during the performance period ended December 31, 1996.
The Compensation Committee established in 1994 a Stock Ownership Guidelines
Program applicable to approximately 140 executive officers and key employees.
The Program is designed to align the interest of the Company's executive
officers and key employees with those of Company stockholders to create value
for stockholders. The Program establishes stock ownership goals keyed to
certain salary grades to be met by such officers and key employees within five
years of December 31, 1993, or promotion to such salary grade levels. Stock
ownership goals are satisfied by Company stock held by executives and their
families, Company stock held in the Inland Steel Industries Thrift Plan, and
stock options, based on the difference between the market price and the
exercise price.
In 1993, Internal Revenue Code Section 162(m) was added to the Code, which
limits deductibility of certain compensation for named executive officers. The
Compensation Committee intends that Company compensation plans satisfy the
requirements of Section 162(m) for maximum deductibility by the Company for
Federal income tax purposes of payments made under such plans to named
executive officers. In the event the Compensation Committee determines that it
is advisable to grant awards to named executive officers that may not so
qualify for deductibility, the Compensation Committee reserves the right to
make such awards, taking into consideration the financial effects of such
awards on the Company.
Mr. Darnall meets frequently with the Compensation Committee and with the
non-management directors. These meetings include an annual review, by all of
the outside directors, of his financial, operating, and organization goals for
the Company for the year and an evaluation of his performance as it relates to
the Company's achievement of the previous year's goals. The results of that
evaluation are an important element in compensation decisions made by the
Committee and the Board of Directors, both with respect to Mr. Darnall and
with respect to the other executive officers of the Company.
James W. Cozad, Chairman Joshua I.
Donald S. Perkins Smith
Arnold R.
Jean-Pierre Rosso Weber
26
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following chart compares the Company's cumulative total stockholder
return on its common stock for the five-year period ended December 31, 1996,
with the cumulative total return of the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500 Index") and the Standard & Poor's Steel Index (the
"S&P Steel Index"), both of which indices include the Company. This comparison
assumes the investment of $100 on December 31, 1991 and the reinvestment of
dividends. In addition to the Company, the S&P Steel Index includes Allegheny
Teledyne, Inc., Armco, Inc., Bethlehem Steel Corporation, Nucor Corp., the
U.S. Steel Group of USX Corporation, and Worthington Industries, Inc.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
INLAND S&P 500 S&P STEEL INDEX
<S> <C> <C> <C>
1991 100.0000 100.0000 100.0000
1992 104.6243 107.5732 130.8286
1993 153.1792 118.2427 172.0559
1994 162.4277 119.6250 167.3400
1995 116.8620 164.0668 155.1026
1996 93.9369 201.1737 138.4021
</TABLE>
27
<PAGE>
ELECTION OF AUDITORS
Proxies not limited to the contrary will be voted for the election of Price
Waterhouse LLP to audit the accounts of the Company and its subsidiaries for
the year 1997. Any proxy indicating a contrary choice will be voted in
accordance with that choice. Price Waterhouse LLP has audited the accounts of
the Company since January 1, 1918.
Representatives of Price Waterhouse LLP will be present at the Annual
Meeting and will be given the opportunity to make a statement if they desire
to do so. They will also be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
ELECTION OF PRICE WATERHOUSE LLP AS AUDITORS.
STOCKHOLDER PROPOSAL
Greenway Partners, L.P., 277 Park Avenue, New York, New York 10172, has
advised the Company that it intends to present the following proposal for
consideration and action at the Annual Meeting:
"RESOLVED, that shareholders hereby recommend that the Board of Directors
distribute all of the stock of Ryerson Tull that Inland holds to Inland
shareholders by means of a tax-free spin-off."
STATEMENT IN SUPPORT OF PROPOSAL
This stockholder has submitted the following statement in support of the
proposal:
"The proponent and its affiliates own approximately 3,600,000 shares of
Inland, making us one of the largest shareholders. We believe that Inland took
a step in the right direction when it established Ryerson Tull as a separately
traded public company. But the crucial step to unlock shareholder value
remains undone. The stock market is not yet granting Inland and Ryerson Tull
the full benefits of a separation into two independent companies because
Inland still holds approximately 96% of the voting power and approximately 87%
of the economic interest in Ryerson Tull. Consequently, Inland shares remain
undervalued.
"During 1996, the stock market favored the metals service centers group over
the integrated steel group. Yet Ryerson Tull -- which is the largest metals
service center in the United States-- did not benefit from this market
sentiment. In our opinion, only after Inland distributes all of its Ryerson
Tull stock to Inland's shareholders will such shareholders profit from the
stronger stock market prices granted to metals service centers and reap the
full advantages of a spin-off.
"Spin-offs have become a much admired and accepted practice. Spin-offs allow
managements to become more focused upon and more accountable for their
respective businesses. Investors, potential capital sources and analysts are
able to price more efficiently the separate businesses.
28
<PAGE>
Following a spin-off in which Ryerson Tull becomes totally independent from
Inland, we believe Ryerson Tull would have a higher multiple stock than at
present that could be used to purchase other metals service centers or to raise
cash in the public market for business expansion.
"Companies such as AT&T/Lucent; Pacific Telesis/Air Touch; and Sears
Roebuck/Dean Witter Discover have had an initial public offering of less than
20% of the economic interest in one of their separate businesses followed by a
spin-off distribution of the remaining equity interest to their shareholders.
We urge Inland to follow this successful pattern with Ryerson Tull.
"In addition, we believe some consolidation in the steel industry is
desirable. As a steel producer, Inland ranks only sixth in the nation, with
annual revenues of approximately $2.5 billion. Given Inland's size in the steel
industry, the Board also should consider actively seeking a merger partner.
"As indicated by the performance graph on page 27 of this Proxy Statement,
Inland has lagged far behind the performance of the S&P 500 Index and its peer
group. Something must be done. Consistent with the proxy rules, the spin-off
proposal is couched as a recommendation to the Board and its passage cannot
compel action. However, a substantial shareholder vote in favor should, in our
opinion, be regarded as a mandate to the Board to develop a spin-off program.
SEND A STRONG MESSAGE TO MANAGEMENT. VOTE "FOR" THE SPIN-OFF PROPOSAL TO UNLOCK
VALUE FOR ALL SHAREHOLDERS."
STATEMENT OF THE BOARD OF DIRECTORS IN OPPOSITION TO STOCKHOLDER PROPOSAL
Your Board of Directors understands the views expressed by Proponent. After
careful consideration, however, your Board has concluded that spinning off
Ryerson Tull at this time would NOT be in the best interest of stockholders.
Over a year ago the Board and management began an exhaustive strategic
reassessment of the Company. We took several actions as a result. Among them
were public offerings of Ryerson Tull stock and debt that achieved the primary
benefits of a spin-off -- independent access to capital markets, improved
management focus on each business unit and enhanced investor ability to
evaluate Ryerson Tull. We also recapitalized the Company -- retiring higher-
cost debt, eliminating certain restrictive debt provisions, lowering overall
financial costs and increasing financial flexibility.
As recently as January 1997, the Board again reviewed the costs and benefits
of spinning off Ryerson Tull. Our detailed reassessment, however, made clear
that a spin-off at this time would have serious drawbacks. Some key reasons
are:
. THE COMPANY CURRENTLY HAS THE FINANCIAL STRENGTH AND FLEXIBILITY IT
NEEDS. Spinning off Ryerson Tull at this time would diminish this.
29
<PAGE>
. FEDERAL INCOME TAXES WOULD INCREASE SIGNIFICANTLY if Ryerson Tull were
spun off now because its income could no longer be offset by the
Company's substantial tax carryforwards of net operating losses and
alternative minimum tax credits. A spin-off at this time would benefit
the Federal tax collections at the expense of the Company and its
stockholders.
. OVERALL VALUATION COULD SUFFER, based on current equity market
conditions, the trading patterns for equity of Ryerson Tull and the
Company, the valuation of companies comparable to Ryerson Tull and the
Company, and other factors.
. THE MOST RELIABLE AND ENDURING WAY TO INCREASE STOCKHOLDER VALUE IS TO
IMPROVE OPERATING PERFORMANCE. Since the public offerings and
recapitalization, each business unit has implemented significant new
initiatives to improve results. The Board has unanimously concluded that
improving operating performance is the Company's highest priority.
A SPIN-OFF IS NOT A PANACEA. Selling some Ryerson Tull equity strengthened
our Company. Spinning off the rest at this time would be expensive, would risk
weakening our Company and impairing stockholder value, and would limit your
Board's ability to pursue other alternatives for maximizing stockholder value.
Weighing the risks and benefits of a major corporate action, such as a spin-
off, is a complex and difficult process. It takes in-depth knowledge of the
company and its businesses. Your Board of Directors and management have that
knowledge about the Company and are committed to using sound business judgment
to maximize stockholder value and to fulfill our fiduciary duties to all
stockholders.
We continue to evaluate a broad range of alternatives for overcoming the
challenges facing the Company. As we said in the public offering, the Company
intends to hold the Ryerson Tull stock but might in the future distribute all
or part of it to the Company's stockholders, or sell it to third parties in one
or more transactions. If and when we believe any such change will benefit the
Company's stockholders, we will take prompt and effective action.
For now, however, the Board has concluded that the possible advantages of a
spin-off simply do not justify all the costs, risks and other disadvantages
involved.
TO PRESERVE STOCKHOLDER VALUE, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "AGAINST" ADOPTION OF THE PROPOSAL.
VOTE REQUIRED
Approval of this proposal requires the affirmative vote of a majority of the
votes of the voting securities of the Company present in person or represented
by proxy and entitled to vote thereon at the meeting. Votes that are withheld
will have the effect of votes against this proposal, while broker non-votes
will not affect the outcome.
30
<PAGE>
PROPOSALS OF HOLDERS OF VOTING SECURITIES
Proposals of holders of voting securities must be received in writing by the
Secretary of the Company no later than December 7, 1997 and must comply with
the requirements of the Securities and Exchange Commission in order to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to the Annual Meeting of Stockholders to be held in 1998. Proposals
not included in a proxy statement for an annual meeting must comply with an
advance notice procedure set forth in the By-laws of the Company in order to be
properly brought before that annual meeting of stockholders.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those set forth in the Notice of the Annual Meeting.
However, if any other matters do come before the meeting, it is intended that
the holders of the proxies will vote thereon in their discretion.
By order of the Board of Directors,
CHARLES B. SALOWITZ, Secretary
April 7, 1997
Chicago, Illinois
- --------------------------------------------------------------------------------
Each holder of voting securities, whether or not he or she expects to be
present in person at the Annual Meeting, is requested to SIGN, DATE AND RETURN
THE ENCLOSED PROXY in the accompanying envelope as promptly as possible.
31
<PAGE>
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
------------------------------------
INLAND STEEL INDUSTRIES, INC.
1997
<PAGE>
- -
PROXY PROXY
INLAND STEEL INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert J. Darnall, George A. Ranney, Jr. and
Charles B. Salowitz, and each of them, as attorneys and proxies (with full
power of substitution in each) to vote all common stock of the Company that the
undersigned is entitled to vote (including any common stock credited to the
account of the undersigned under the Company's Shareholder Investment Service)
and all Series A $2.40 Cumulative Convertible Preferred Stock that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held May 28, 1997 and at any adjournment thereof. UNLESS
OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS,
FOR THE ELECTION OF PRICE WATERHOUSE LLP AS AUDITORS, AGAINST THE STOCKHOLDER
PROPOSAL REGARDING THE SPIN-OFF OF RYERSON TULL, INC., AND AT THE DISCRETION OF
THE PROXIES ON ANY AND ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE SUCH
ANNUAL MEETING OR ANY ADJOURNMENT THEREOF.
(Please complete on other side)
- -
<PAGE>
INLAND STEEL INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR For All
ITEMS 1 AND 2 AND A VOTE AGAINST ITEM 3. For Withheld Except
[_] [_] [_]
1. Election of Directors
Nominees: A. Robert Abboud, Robert J. Darnall,
James A. Henderson, Robert B. McKersie,
Leo F. Mullin, Jean-Pierre Rosso, Joshua I. Smith,
Nancy H. Teeters and Arnold R. Weber.
________________________
Nominee Exception
2. The election of Price Waterhouse LLP as auditors For Against Abstain
for the year 1997. [_] [_] [_]
3. Stockholder proposal regarding the spin-off of For Against Abstain
Ryerson Tull, Inc. [_] [_] [_]
4. In the discretion of the proxies to vote upon
any and all other matters which may properly
come before such annual meeting or any adjournment
thereof.
Dated: __________________________________________ , 1997
Signature(s)____________________________________________________________
________________________________________________________________________
PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. DATE AND RETURN PROMPTLY.
<PAGE>
- -
PROXY PROXY
INLAND STEEL INDUSTRIES, INC.
CONFIDENTIAL VOTING DIRECTIONS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
As a Participant in the Inland Steel Industries Thrift Plan, I hereby direct
LaSalle National Bank, as Trustee of the Employee Stock Ownership Plan
contained within the Thrift Plan, to vote all shares of common stock and all
shares of Series E ESOP Convertible Preferred Stock of Inland Steel Industries,
Inc. that are credited to my accounts in the Plan as of April 2, 1997 at the
Annual Meeting of Stockholders of the Company to be held May 28, 1997 and at
any adjournment thereof. UNLESS OTHERWISE SPECIFIED, ALL SHARES ALLOCATED TO
THE UNDERSIGNED'S THRIFT PLAN ACCOUNTS WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR THE ELECTION OF PRICE WATERHOUSE LLP AS AUDITORS, AGAINST THE
STOCKHOLDER PROPOSAL REGARDING THE SPIN-OFF OF RYERSON TULL, INC., AND AT THE
DISCRETION OF THE TRUSTEE OR ITS PROXIES UPON ANY AND ALL OTHER MATTERS THAT
MAY PROPERLY COME BEFORE SUCH ANNUAL MEETING OR ANY ADJOURNMENT THEREOF. THE
TRUSTEE SHALL VOTE ALL SHARES ALLOCATED TO PARTICIPANTS' ACCOUNTS FOR WHICH
PROPERLY COMPLETED CONFIDENTIAL VOTING DIRECTIONS ARE NOT RECEIVED PRIOR TO
5:00 P.M., CHICAGO TIME, ON MAY 27, 1997 AND ALL UNALLOCATED SHARES HELD IN THE
THRIFT PLAN IN THE SAME PROPORTION AS THE SHARES WITH RESPECT TO WHICH PROPERLY
COMPLETED CONFIDENTIAL VOTING DIRECTIONS HAVE BEEN TIMELY RECEIVED FROM
PARTICIPANTS IN THE PLAN.
(Please complete on other side)
- -
<PAGE>
INLAND STEEL INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR For All
ITEMS 1 AND 2 AND AGAINST ITEM 3. For Withheld Except
[_] [_] [_]
1. Election of Directors
Nominees: A. Robert Abboud, Robert J. Darnall,
James A. Henderson, Robert B. McKersie,
Leo F. Mullin, Jean-Pierre Rosso, Joshua I. Smith,
Nancy H. Teeters and Arnold R. Weber.
____________________
Nominee Exception
2. The election of Price Waterhouse LLP as auditors For Against Abstain
for the year 1997. [_] [_] [_]
3. Stockholder proposal regarding the spin-off of For Against Abstain
Ryerson Tull, Inc. [_] [_] [_]
4. In the discretion of the proxies to vote upon any
and all other matters which may properly come
before such annual meeting or any adjournment
thereof.
Dated: __________________________________________________ , 1997
Signature_______________________________________________________________
PLEASE DATE, SIGN AND RETURN PROMPTLY.
<PAGE>
DEAR STOCKHOLDER:
Enclosed are your Proxy and Proxy Statement for the 1997 Annual Meeting of
Stockholders of Inland Steel Industries, Inc. Voting with respect to any
common stock held by you of record in certificate form, any common stock
credited to your account under the Shareholder Investment Service, and any
Series A $2.40 Cumulative Convertible Preferred Stock held by you of record is
consolidated on the enclosed Proxy.
If, in addition to being a stockholder of the Company on April 2, 1997, you
are a participant in the Company's Thrift Plan, you also will receive
Confidential Voting Directions and Instructions to Thrift Plan Participants
from the Company. You are requested to sign, date and return the Confidential
Voting Directions in the postage-paid envelope provided with such Directions.
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED POSTAGE-
PAID ENVELOPE, WHETHER OR NOT YOU DECIDE TO ATTEND THE MEETING, TO ENSURE THAT
YOUR VOTE IS REPRESENTED.
<PAGE>
INSTRUCTIONS TO THRIFT PLAN PARTICIPANTS
Please date and sign your name (exactly as it appears on the accompanying
Confidential Voting Directions) in the space provided and return the
Confidential Voting Directions in the enclosed postage-paid envelope to direct
LaSalle National Bank, as Trustee of the Employee Stock Ownership Plan
contained within the Thrift Plan, to vote your shares in the Plan.
All shares of both the Company's common stock and its Series E ESOP
Convertible Preferred Stock allocated to your Thrift Plan accounts, whether
vested or unvested, will be voted by LaSalle National Bank, Chicago, Illinois,
as the Trustee, according to your directions. IF THE CONFIDENTIAL VOTING
DIRECTIONS ARE RETURNED SIGNED WITH NO VOTING DIRECTIONS MARKED, YOU WILL BE
DEEMED TO HAVE DIRECTED THE TRUSTEE TO VOTE ALL SHARES ALLOCATED TO YOUR
ACCOUNTS IN THE MANNER SPECIFIED IN BOLDFACE TYPE ON THE FRONT OF THE
CONFIDENTIAL VOTING DIRECTIONS. THE TRUSTEE SHALL VOTE ALL SHARES ALLOCATED TO
PARTICIPANTS' ACCOUNTS FOR WHICH PROPERLY COMPLETED CONFIDENTIAL VOTING
DIRECTIONS ARE NOT RECEIVED PRIOR TO 5:00 P.M., CHICAGO TIME, ON MAY 27, 1997
AND ALL UNALLOCATED SHARES HELD IN THE THRIFT PLAN, IN THE SAME PROPORTION AS
THE SHARES WITH RESPECT TO WHICH PROPERLY COMPLETED CONFIDENTIAL VOTING
DIRECTIONS HAVE BEEN TIMELY RECEIVED FROM PARTICIPANTS IN THE PLAN.
PLEASE DATE, SIGN AND RETURN THE CONFIDENTIAL VOTING DIRECTIONS PROMPTLY,
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, SO THAT YOUR SHARES
WILL BE VOTED IN THE MANNER YOU DESIRE. YOU MAY REVOKE YOUR VOTING DIRECTIONS
AT ANY TIME PRIOR TO 5:00 P.M., CHICAGO TIME, ON MAY 27, 1997.
If, in addition to being a Participant in the Thrift Plan, you were a
stockholder of the Company on April 2, 1997, you will receive a separate Proxy
and Proxy Statement from the Company. You are requested to sign, date and
return that Proxy in the postage-paid envelope provided. Legal requirements
provide for the separate solicitation of Participants in the Plan who are also
stockholders of the Company.
