<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:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
INLAND STEEL INDUSTRIES, INC.
Robert J. Darnall
Chairman, President and
Chief Executive Officer
April 21, 1998
Dear Stockholder:
You are invited to attend the 1998 Annual Meeting of Stockholders. The
meeting will be held on Wednesday, May 27, 1998, at 10:30 a.m. at the First
Chicago Center, One First National Plaza, Chicago, Illinois. I hope you will
be able to join us.
At the meeting we will discuss Inland Steel Industries' financial
performance and strategic initiatives. In addition, you will have an
opportunity to ask questions. The attached notice and proxy statement describe
the meeting's agenda.
I look forward to seeing you on May 27. 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,
LOGO
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 27, 1998
To the Stockholders of INLAND STEEL INDUSTRIES, INC.:
We will hold the Annual Meeting of Stockholders of Inland Steel Industries,
Inc., a Delaware corporation, at the First Chicago Center, One First National
Plaza, Chicago, Illinois, on Wednesday, May 27, 1998, beginning at 10:30 a.m.,
Chicago time, for the purpose of:
1. Electing directors of the Company;
2. Electing an independent public accounting firm to conduct the 1998
audit of the Company's accounts;
3. Considering a stockholder proposal regarding a spin-off of, or
distribution of "letter stock" relating to, Ryerson Tull, Inc., if
properly brought before the meeting;
4. Considering a stockholder proposal concerning the Company's Stockholder
Rights Plan, if properly brought before the meeting; and
5. Considering any other matter that may properly come before the meeting.
Holders of voting securities at the close of business on April 1, 1998 are
entitled to receive notice of and vote at the Annual Meeting.
Included with this Notice of the Annual Meeting is a Proxy Statement.
Holders of voting securities, whether or not they expect to be at the Annual
Meeting, are requested to vote their proxies by signing, dating and returning
the enclosed proxy card in the accompanying envelope as soon as possible.
The Company's 1997 Annual Report, which includes the Company's 1997
financial statements, was previously mailed to holders of voting securities.
By order of the Board of Directors,
CHARLES B. SALOWITZ, Secretary
April 21, 1998
Chicago, Illinois
<PAGE>
INLAND STEEL INDUSTRIES, INC.
30 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
PROXY STATEMENT
The Board of Directors solicits the enclosed proxy for the purpose of voting
on certain matters at the Company's 1998 Annual Meeting.
MacKenzie Partners, Inc. will assist in this solicitation. Proxies may also
be personally solicited by the directors and officers and other employees of
the Company. The Company will pay the cost of soliciting proxies, including a
fee of $12,000 plus expenses to MacKenzie Partners, Inc. The Company will also
reimburse brokers, banks and similar organizations for the reasonable expenses
they incur in distributing proxy materials to and obtaining instructions from
beneficial owners. Proxy statements will be first mailed on or about April 21,
1998.
The Company's voting securities outstanding on April 1, 1998 consisted of
48,896,466 shares of common stock with one vote per share, 94,101 shares of
Series A $2.40 Cumulative Convertible Preferred Stock with one vote per share,
2,979,232 shares of Series E ESOP Convertible Preferred Stock with 1.25 votes
per share, and $100,000,000 principal amount of 10.23% Subordinated Voting
Notes with 30.604 votes per $1,000 of principal amount. With respect to the
matters expected to be voted upon at the Annual Meeting, all voting securities
vote together without regard to class.
Voting securities for which an effective proxy is returned by signing,
dating, and mailing the enclosed proxy card will be voted as directed by the
holder. If the holder returns an effective proxy without direction, the voting
securities represented by that proxy will be voted for the Board's nominees,
for the election of Price Waterhouse LLP as auditors, and against the
stockholder proposals described herein. An effective proxy may be revoked by
the holder: (1) by submitting a revocation letter dated subsequent to the
proxy, (2) by delivering a second signed proxy dated subsequent to the first
signed proxy, or (3) by attending the Annual Meeting and voting in person or
by proxy.
Shares credited to a participant in the Shareholder Investment Service's
dividend reinvestment program will be voted only if and in the same manner as
that participant votes his or her stock held of record. If a participant is
not a stockholder of record, Harris Trust and Savings Bank, as custodian, will
vote the participant's shares only as instructed by the participant. Shares
credited to a participant in the Inland Steel Industries Thrift Plan will be
voted as the participant directs, but any direction (or any revocation of a
prior direction) must be received by LaSalle National Bank, as Trustee for the
Thrift Plan, by 5:00 p.m., Chicago time, on May 26, 1998. Shares in the Thrift
Plan for which no direction is received by that time will be voted in the same
proportion as the shares in the Thrift Plan for which directions are timely
received.
<PAGE>
Proxies, consents, ballots and voting materials that identify the vote of
specific holders are confidential, except in a contested proxy or consent
solicitation or as otherwise required by law. They 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 will act as the
tabulator, and officers or employees of the Harris Bank will serve as
inspectors of election.
The Company welcomes comments from holders of voting securities. 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 unless the vote
is included in the comment or is necessary to understand the comment.
ELECTION OF DIRECTORS
The Board consists of nine directors. All directors are elected by a
plurality of the votes cast at the Annual Meeting. The outcome of the election
is not affected by holders of voting securities who abstain from voting or
withhold authority to vote in the election, or by broker non-votes. If any
nominee should become unavailable for election, an event that is not
anticipated, proxies may be voted for the election of another person or
persons designated by the Board of Directors, unless the Board has taken prior
action to reduce its membership. The directors elected at the 1998 Annual
Meeting will serve a one-year term, expiring at the 1999 Annual Meeting and
until their successors are duly elected and qualified.
NOMINEES FOR ELECTION
The nominees for election to the Board are described in brief biographies
below. The period of service as a director shown for each nominee includes the
period during which he or she served as a director of Inland Steel Company
before the Company became a holding company for Inland Steel Company and its
subsidiaries. The Board held six meetings during 1997. All incumbent directors
attended at least 75% of the combined total number of meetings of the Board
and committees on which they served.
All nominees for the 1998 Board are presently serving as directors of the
Company and of Inland Steel Company, a wholly owned subsidiary of the Company.
In addition, Messrs. Darnall, Henderson and Rosso also serve as directors of
Ryerson Tull, Inc. ("Ryerson Tull"), a majority-owned subsidiary of the
Company.
As a part of the labor agreement between Inland Steel Company and the United
Steelworkers of America, the Steelworkers may designate an individual
acceptable to the Board of Directors as a director nominee through 1999. The
Steelworkers designated Dr. McKersie, who voting security holders first
elected to the Board in 1994.
2
<PAGE>
INFORMATION CONCERNING NOMINEES
- -------------------------------------------------------------------------------
[PHOTO] A. Robert Abboud Director since 1974
Mr. Abboud, age 68, is President of A. Robert Abboud and Company,
a private investment firm he established in 1984. He is Chairman
of the Company's Finance and Retirement Committee and a member of
its Audit, and Nominating and Governance Committees. Mr. Abboud
is also a director of AAR Corp., Alberto-Culver Company, and
Hartmarx Corporation.
[PHOTO] Robert J. Darnall Director since 1983
Mr. Darnall, age 60, is Chairman, President and Chief Executive
Officer of the Company. 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.
[PHOTO] James A. Henderson Director since 1978
Mr. Henderson, age 63, 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, Executive Vice President and Chief Operating
Officer in 1975, President and Chief Operating Officer in 1977,
and President and Chief Executive Officer in 1994, and assumed
his present position in 1995. He is Chairman of the Company's
Nominating and Governance Committee and a member of its Audit
Committee. He is also 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)
- -------------------------------------------------------------------------------
[PHOTO] Robert B. McKersie Director since 1994
Dr. McKersie, age 68, 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 and Nominating and Governance
Committees, and of Inland Steel Company's Partnership Oversight
Committee.
[PHOTO] Leo F. Mullin Director since 1996
Mr. Mullin, age 55, is President and Chief Executive Officer of
Delta Airlines Inc., having assumed that position in August 1997.
He was Vice Chairman of Unicom Corporation and its principal
subsidiary, Commonwealth Edison Company, an electric services
utility, from December 1995 to August 1997. 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 Chairman of the Company's Audit
Committee and a member of its Finance and Retirement and
Nominating and Governance Committees. Mr. Mullin is also a
director of Delta Airlines, Inc.
[PHOTO] Jean-Pierre Rosso Director since 1995
Mr. Rosso, age 57, 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 Chairman of the
Company's Compensation Committee and a member of its Finance and
Retirement and Nominating and Governance Committees. Mr. Rosso is
also a director of ADC Telecommunications Inc., Case Corporation,
and Crown Cork & Seal Company, Inc.
4
<PAGE>
INFORMATION CONCERNING NOMINEES (CONTINUED)
- -------------------------------------------------------------------------------
[PHOTO] Joshua I. Smith Director since 1991
Mr. Smith, age 56, is Chairman and Chief Executive Officer of The
MAXIMA Corporation, an information management service company he
established 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.
[PHOTO] Nancy H. Teeters Director since 1991
Ms. Teeters, age 67, was Vice President and Chief Economist of
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, Finance and
Retirement, and Nominating and Governance 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.
[PHOTO] Arnold R. Weber Director since 1985
Dr. Weber, age 68, 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 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>
BOARD COMMITTEES
The standing committees of the Board include the Audit Committee, the
Compensation Committee, and the Nominating and Governance Committee. The
members of these committees, none of whom is an employee of the Company or any
of its subsidiaries, are identified above.
Audit Committee -- The Audit Committee nominates an independent auditing
firm to be considered at the annual meeting, reviews the proposed scope and
results of the annual audit and recommendations of the independent auditors,
and approves all non-audit services performed by the auditors and the
auditors' compensation. The Audit Committee also reviews the financial review
section of the Company's annual report to stockholders, Form 10-K, Forms 10-Q
and registration statements; the Company's system of internal accounting and
operating controls; and the performance of its internal auditors; and monitors
compliance with the Company's Code of Business Conduct. The Audit Committee
held four meetings in 1997.
Compensation Committee -- The Compensation Committee makes recommendations
to the Board of Directors about the salaries of the officers of the Company
and the establishment or modification of executive compensation plans and
programs, approves the salary of the president of each of the Company's major
wholly owned subsidiaries and administers the Inland Steel Industries, Inc.
Annual Incentive Plan and incentive stock plans. The Report of the
Compensation Committee of the Board of Directors Regarding Executive
Compensation is included below. The Compensation Committee held four meetings
in 1997.
Nominating and Governance Committee -- The Nominating and Governance
Committee prepares and maintains a list of qualified candidates to fill
vacancies on the Board of Directors and recommends to the Board of Directors
candidates to fill any such vacancies; recommends to the Board a slate of
candidates for election as directors at the annual meeting; monitors corporate
governance issues; recommends to the Board policies and procedures for
effective corporate governance and assures compliance with adopted policies
and procedures; and recommends the compensation to be paid to non-employee
directors. The Nominating and Governance Committee held three meetings in
1997.
The Nominating and Governance Committee will consider qualified candidates
recommended by the holders of voting securities as nominees for election at
the annual meeting. To be considered by the Committee as a nominee for
election at the 1999 Annual Meeting, the name of the candidate and a written
description of his or her qualifications must be received by the Secretary of
the Company by December 31, 1998. The By-laws of the Company provide a formal
procedure, including an advance notice requirement, for holders of voting
securities who intend to nominate persons for election as directors at the
annual meetings.
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
the Company's common stock. In addition, the Company pays each non-employee
director an annual fee of $3,000 for each standing committee of the Board on
which he or she serves, and an additional annual fee of $5,000 for each
6
<PAGE>
standing committee that he or she chairs. If a non-employee director chairs
the same committee for both the Board and the Inland Steel Company Board of
Directors, that director will receive only one chair fee.
Non-employee directors also receive $1,000 meeting attendance fees for each
special meeting of the Board and of the Inland Steel Company Board of
Directors they attend that is not held on the same day as another meeting for
which they receive a fee. When directors attend special meetings or special
committee meetings of both boards on the same day, they receive only one
meeting attendance fee. For these purposes, membership on the Compensation
Committee and the Nominating and Governance Committee is regarded as
membership on only one committee.
Directors may elect to defer payment of their fees until the end of their
Board service. Interest on the cash portion of any deferred fees accrues at a
specified prime rate. Amounts equal to the dividends that would have been paid
on the stock portion of any deferred fees are credited to the applicable
director's account and converted into additional deferred shares. The Company
also pays premiums on a business accident insurance policy insuring each non-
employee director for up to $500,000.
In January 1996, the Company ended its director retirement plan. Benefits
accrued under the plan by non-employee directors with one or more years of
service on January 1, 1996 will be paid at the later of a director's
termination of Board Service or reaching age 65, and will continue for the
number of years of service completed on January 1, 1996, up to a maximum of
ten years. Under the terminated plan, the annual benefits equal the annual
Board retainer in effect at the last Board meeting attended by that director.
Concurrent with the elimination of the director retirement plan, the Company
established a Deferred Phantom Stock Unit Plan for non-employee directors who,
on January 1, 1996, had not served on the Board for ten years. Under the plan,
participants are credited with 1,000 phantom stock units (with common stock
dividends credited as additional phantom stock units) at each of the first ten
consecutive annual meetings at which he or she is elected as a director,
beginning in 1996. Each non-employee director who served on the Board on or
before October 1, 1995 will be credited with phantom stock units until the
participant reaches his or her ninth anniversary as a director. Except for a
change in control of the Company, each participant vests in the benefits under
this plan on the earlier of: (a) the tenth consecutive annual meeting at which
the participant is elected a director or (b) the last date he or she serves as
a director, if the participant remains on the Board (i) until at least the
fifth consecutive annual meeting after he or she was first elected a director
and (ii) until the earlier of his or her 70th birthday or death at age 65 or
older. Participants receive these benefits in cash, either as a lump sum or in
up to 40 quarterly installments. The cash value of each phantom stock unit
equals the fair market value of one share of Company common stock on the
payment date.
Non-employee directors of the Company who are also non-employee directors of
Ryerson Tull receive, from Ryerson Tull, an annual retainer of $40,000, which
is normally paid half in shares of Ryerson Tull Class A Common Stock and half
in cash. However, directors may elect to receive all or any part of the cash
portion of the retainer in shares of Class A Common Stock. In
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<PAGE>
addition, Ryerson Tull pays each non-employee director an annual fee of $4,000
for each standing committee of the Ryerson Tull Board of Directors that he or
she chairs. Non-employee directors also receive meeting attendance fees of
$1,000 for attending meetings of the Ryerson Tull independent directors,
special meetings of the Ryerson Tull Board of Directors and special committee
meetings not held in conjunction with a regular or special meeting of the
Board of Directors of Ryerson Tull. No fees are paid for attending meetings of
the Executive Committee.
Under the Ryerson Tull Directors' Compensation Plan, directors may elect to
defer payment of all or any portion of their retainers and fees, and to have
them distributed in a lump sum or installments in cash or shares of Ryerson
Tull Class A Common Stock at the end of their Board service. Interest on cash
deferrals accrues at a specified prime rate. Stock deferrals will be credited
with any dividends paid on shares of Ryerson Tull Class A Common Stock.
Ryerson Tull also pays premiums on a business accident insurance policy
insuring each non-employee director for up to $500,000.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table presents, as of April 1, 1998, the Company and Ryerson
Tull equity securities beneficially owned by the directors and named executive
officers of the Company, and all directors and executive officers of the
Company as a group. Except as indicated, each director and officer has sole
voting and investment power for these securities. The amounts listed under
both Company Common Stock and Ryerson Tull Class A Common Stock include
preferred stock purchase rights. The shares of Series E ESOP Preferred Stock
beneficially owned by the executive officers are held for their accounts in
the Inland Steel Industries Thrift Plan (in the case of Mr. Novich, in the
Ryerson Tull Savings Plan) and can be converted into an equal number of shares
of Company common stock (subject to adjustment in certain events) upon their
retirement or other termination of employment. Excluded from the shares of
Series E ESOP Preferred Stock listed below are shares 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.
<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.... 6,965 -- 1,000
Robert J. Darnall... 327,815 2,388 11,754
James A. Henderson.. 2,965 -- 3,463
Robert B. McKersie.. 1,722 -- 500
Leo F. Mullin....... 1,419 -- --
Jean-Pierre Rosso... 1,480 -- 5,640
Joshua I. Smith..... 1,965 -- --
Nancy H. Teeters.... 2,265 -- 150
Arnold R. Weber..... 2,065 -- 1,000
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
RYERSON TULL
COMPANY SERIES E ESOP CLASS A
COMMON STOCK(/1/) PREFERRED STOCK(/2/) COMMON STOCK(/3/)
----------------- -------------------- -----------------
<S> <C> <C> <C>
Named Executive Officers
Neil S. Novich........ 131 582 128,627
Dale E. Wiersbe....... 90,979 1,738 1,000
George A. Ranney, Jr.. 43,420 -- 500
Jay M. Gratz.......... 53,720 1,582 3,061
All Directors and
Executive Officers
as a Group............. 712,874 10,660 161,663(/4/)
</TABLE>
- --------
(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 approximately 1.5% of the outstanding common stock of the
Company. Includes shares held jointly with other persons, as follows --Mr.
Darnall --290, Dr. McKersie --200, Mrs. Teeters --2,265, Mr. Wiersbe --
212, and all directors and executive officers as a group --5,004; shares
that the following have the right to acquire under options exercisable
within 60 days after April 1, 1998 -- Mr. Darnall --251,000, Mr. Wiersbe
--85,280, Mr. Ranney --36,120, Mr. Gratz --47,520, and all executive
officers as a group--576,085; and shares held under restricted stock
awards as follows --Mr. Darnall --9,000, Mr. Ranney --4,800, Mr. Gratz --
2,200, and all executive officers as a group --20,000.
(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, except
Mr. Novich, who individually owns approximately 2.4% of such stock. All
directors and executive officers of the Company as a group own
approximately 3.1% of the outstanding Class A Common Stock of Ryerson
Tull. Includes 1,400 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 that the following have the
right to acquire under options exercisable within 60 days after April 1,
1998 -- Mr. Novich --112,556, and all executive officers of the Company as
a group --112,556; and shares held under restricted stock awards as
follows -- Mr. Darnall --3,654, Mr. Novich --8,654, Mr. Gratz --1,461, and
all executive officers as a group --15,737.
(4) Includes 404 deferred restricted shares of Ryerson Tull Class A Common
Stock payable under the Ryerson Tull Directors' Compensation Plan.
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
statements of changes in beneficial ownership of equity
9
<PAGE>
securities of the Company. To the Company's knowledge, based on review of the
copies of such reports furnished to the Company and written representations
that no other reports were required, all Section 16(a) filing requirements
applicable to its executive officers, directors and greater than 10%
beneficial owners were complied with.
ADDITIONAL INFORMATION RELATING TO VOTING SECURITIES
The following table sets forth, as of December 31, 1997, except as otherwise
noted, the holders known to the Company to beneficially own more than 5% of
its common stock, Series E ESOP Preferred Stock and 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
FMR Corp............................................. 6,420,881(/1/) 13.10%
82 Devonshire Street
Boston, MA 02109
Alfred D. Kingsley................................... 4,482,100(/2/) 9.14%
277 Park Avenue
New York, NY 10172
LaSalle National Bank................................ 3,860,273(/3/) 7.87%
135 South LaSalle Street
Chicago, IL 60674
Northern Trust Corporation........................... 2,866,224(/4/) 5.85%
50 South LaSalle Street
Chicago, IL 60675
Series E ESOP Preferred Stock
LaSalle National Bank................................ 3,014,548(/3/) 100%
120 South LaSalle Street
Chicago, Illinois 60603
10.23% Subordinated Voting Notes
NS Finance III, Inc.................................. $100,000,000(/5/) 100%
c/o Nippon Steel U.S.A., Inc.
10 East 50th Street, 29th Floor
New York, NY 10022
</TABLE>
- --------
(1) 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 281,281 shares of common stock and sole dispositive power as
to 6,420,881 shares as of December 31, 1997.
10
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(2) Mr. Kingsley, 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
4,454,100 shares, as of December 24, 1997.
(3) 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 the Plan, reported shared voting power as
to 3,860,273 shares of common stock, sole dispositive power as to
3,014,548 shares and shared dispositive power as to 845,725 shares
(including 3,014,548 shares issuable upon conversion of the Series E ESOP
shares and 845,725 shares held by the Trustee in agency and fiduciary
capacities unrelated to the ESOP Trust), but disclaims beneficial
ownership of all such Plan securities. As of December 31, 1997, the
outstanding shares of Series E ESOP Preferred Stock represented
approximately 7.87% of the voting power of the Company's outstanding
voting securities.
(4) Northern Trust Corporation, 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
163,424 shares, shared voting power as to 2,699,500 shares, sole
dispositive power as to 165,324 shares and shared dispositive power as to
2,699,400 shares. The Northern Trust Company held 2,699,400 shares as of
April 1, 1998, as Trustee of the Inland Steel Industries Pension Trust.
(5) NS Finance III, Inc., an indirect wholly owned subsidiary of Nippon Steel
Corporation ("NSC"), has agreed that it will be deemed to be present for
quorum purposes at all stockholder meetings. As of April 1, 1998, 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. The Company is required to repay the 10.23%
Subordinated Voting Notes in 1999 and has no right to prepay the Voting
Notes. However, upon the occurrence of certain events, the 10.23%
Subordinated Voting Notes can be prepaid at the option of NS Finance III,
Inc. See "Certain Relationships and Related Transactions" below. As of
April 1, 1998, NS Finance III, Inc. also owned 352,400 shares, or
approximately 0.7% of the outstanding shares, of common stock of the
Company.
Certain persons were also 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. Such persons 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, and none of the owners of the
Series A Preferred Stock own shares of Series A Preferred Stock having more
than 1% of the combined voting power of the Company's outstanding voting
securities.
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CROSS-OWNERSHIP WITH NSC
During 1989, the Company and NSC, through its indirect wholly owned
subsidiary NS Finance, Inc., each purchased 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. The
Company also 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, in general 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.
During 1995, NS Finance III, Inc. exchanged its Series F Exchangeable
Preferred Stock holdings for $185,000,000 principal amount of the Company's
10.23% Subordinated Voting Notes. The Company paid $85,000,000 of the Voting
Notes in 1996 and is required to pay the rest in 1999. The Company paid NSC
approximately $10,230,000 in interest on the Subordinated Voting Notes in
1997. 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 of Series F Exchangeable Preferred Stock
to NS Finance, Inc., the Company agreed to repurchase $185,000,000 of its
common stock on the open market. In December 1990, the Company suspended its
open-market stock purchases. At year-end 1997, the Company had spent a total
of approximately $157,000,000 to buy back approximately 5,100,000 shares of
common stock. 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, in order to meet its remaining repurchase obligation.
The Company and NSC or their respective affiliates have entered into a
number of agreements related primarily to joint ventures. The following
summarizes arrangements between the Company and NSC or their affiliates
currently in effect.
I/N TEK JOINT VENTURE
The Company and NSC have entered into a joint venture to construct and
operate a cold-rolling facility 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. Funded by capital 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 facility was completed in April
1990 at a total cost of approximately $525,000,000. The Company and NSC each
have guaranteed a portion of the third-party long-term financing of I/N Tek.
At December 31, 1997, the Company's share of such guarantee amounted to
$115,891,000.
12
<PAGE>
The partners made no subordinated loans to the partnership in 1997. I/N Tek
paid, in proportion to the partnership interests, approximately $3,500,000 of
subordinated loans that the partners had previously made to I/N Tek. The
partners expect to make subordinated loans of approximately $2,300,000 in 1998
for capital projects. I/N Tek made equity distributions in 1997 totaling
approximately $37,200,000 to the partners in proportion to their partnership
interests.
ISC generally has exclusive rights to the production capacity of the
facility, which it uses to produce cold-rolled steel under a tolling
arrangement with I/N Tek. In 1997, I/N Tek charged ISC approximately
$149,200,000 in tolling fees. NSC has the right to purchase up to 400,000 tons
of cold-rolled steel from ISC each year at market-based negotiated prices,
including steel processed by I/N Tek. During 1997, NSC, through its indirect
wholly owned subsidiary, NS Sales, Inc., purchased cold-rolled steel from ISC,
including I/N Tek products, for approximately $137,600,000.
I/N Tek, ISC, NSC and their affiliates have entered into various related
technology, management, administrative services and commercial agreements. I/N
Tek paid NSC approximately $505,000 in 1997 under these agreements 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
$1,410,000 in 1997 for various administrative and personnel support services
and $5,010,000 for certain production supplies. I/N Tek also made purchases
from Company subsidiaries of approximately $2,950,000 during 1997. The joint
venture and the associated agreements will terminate in 2009, unless otherwise
terminated or extended under the joint venture agreement.
I/N KOTE JOINT VENTURE
The Company and NSC have also 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 facility. I/N Kote, the general partnership formed for this joint
venture, is 50% owned by a subsidiary of ISC and 50% owned by a subsidiary of
NSC. The facility cost approximately $554,000,000, financed equally by the
partners through $120,000,000 in capital contributions and $60,000,000 in
subordinated loans and by third-party long-term financing. In 1997, the
partners made additional subordinated loans to I/N Kote of approximately
$1,250,000 each. ISC expects the partners to make further subordinated loans
of approximately $500,000 each in 1998. I/N Kote had approximately
$376,000,000 outstanding under its third-party long-term financing agreement
at December 31, 1997. ISC and NSC have each guaranteed the share of project
indebtedness attributable to their respective subsidiaries. In 1997, I/N Kote
made equity distributions of approximately $23,560,000 to the partners in
proportion to their partnership interests.
I/N Kote is required to buy all of its cold-rolled steel from ISC. ISC, in
turn, is required to furnish cold-rolled steel at prices that are based, in
part, on operating costs of I/N Kote and that result in an annual return on
equity to the partners of I/N Kote of up to 10% after operating and financing
costs. This price is subject to upward adjustments, if I/N Kote's operating
rate falls
13
<PAGE>
below a certain level or if ISC's return on sales is less than I/N Kote's
return on sales, and to downward adjustments, if I/N Kote's return on sales is
less than ISC's. These factors resulted in a downward price adjustment of
approximately $5,580,000 in 1997. In 1997, 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.
Under the joint venture agreement, ISC acts as sales agent for I/N Kote's
products in North America, and NSC limits its exports of similar products to
the U.S. and Canada. ISC incurred costs of approximately $25,100,000 to I/N
Kote for certain tolling services and scrap purchases in 1997. I/N Kote and
its partners also have entered into various technology, management,
administrative services and other agreements with respect to the project. I/N
Kote purchased from ISC approximately $320,600,000 of cold-rolled sheet steel
during 1997. I/N Kote paid affiliates of NSC approximately $1,350,000 in 1997
for engineering services and technology transfers and anticipates paying a
similar amount annually for such services through the term of the partnership.
I/N Kote paid approximately $8,140,000 to ISC and its subsidiaries in 1997 for
various administrative, engineering and sales services provided to I/N Kote by
ISC. In addition, Company subsidiaries made purchases of approximately
$1,680,000 from I/N Kote, and I/N Kote made purchases from Company
subsidiaries of approximately $503,000 in 1997. I/N Kote paid I/N Tek
approximately $10,990,000 in 1997 for shared utilities, maintenance material
and services. The joint venture and the associated agreements will terminate
in 2007, unless otherwise terminated or extended under the joint venture
agreement.
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 I/N Tek and I/N Kote or to require the first
party to buy its interests, in each case at fair market value.
OTHER AGREEMENTS
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 $2,000,000 for legal services and other
charges during 1997. 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 have retained Mayer, Brown & Platt for
services during 1998.
14
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS REGARDING EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY AND GOALS
The design of the Company's executive compensation programs increasingly
emphasizes pay-for-performance and stockholder value, with the goal of linking
compensation to total stockholder return and financial performance of the
Company by placing a significant portion of an executive's compensation at
risk. The Company intends each of overall executive compensation and base
salary to be equivalent to such compensation at the 50th percentile of
comparable positions in the comparison group of companies.
The Compensation Committee periodically meets with outside compensation
consultants for assistance regarding the Company's executive compensation
program. The outside consultants
provide advice on the competitiveness of the Company's executive compensation,
including comparisons between the Company's compensation program and those of
similarly sized industrial manufacturing companies. The Compensation Committee
also considers 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.
Mr. Darnall meets regularly with the Compensation Committee. In addition,
all of the outside directors conduct an annual review of his financial,
operating and organizational 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 these meetings are an important
element in compensation decisions made by the Committee and the Board, both
with respect to Mr. Darnall and with respect to the other officers of the
Company.
The compensation program has three elements -- base salary, short-term
incentive compensation and long-term incentive compensation.
Approximately half of an executive's total target compensation opportunity,
consisting of short-term and long-term incentive compensation, is contingent
on meeting annual financial targets, including operating profit and total
stockholder return. This target compensation is variable and fluctuates
significantly from year to year. Short-term incentive compensation ties cash
bonuses to financial performance objectives established annually by the
Compensation Committee and based on operating profit. Long-term incentive
compensation programs focus on encouraging stock ownership by executives by
offering opportunities to acquire stock by meeting annual financial and
strategic objectives, to tie executives' personal net worth to stock value,
primarily through the use of performance awards payable in stock. In previous
years, the Compensation Committee utilized restricted stock and stock options
in its long-term incentive compensation plan, which awards are disclosed in
this Proxy Statement. By emphasizing these aspects of compensation, the
Company can continue to attract and retain talented executive and key
employees, even in times of economic difficulties in the steel industry in
general and for the Company specifically, while creating strong financial
incentives for executives to increase stockholder value and achieve strategic
Company goals.
15
<PAGE>
As a further means of aligning the interests of executive officers and key
employees with those of Company stockholders, the Compensation Committee
established a Stock Ownership Guidelines Program applicable to approximately
140 executive officers and key employees. The program establishes stock
ownership goals based on salary levels to be met by certain officers and key
employees, generally by the end of 1998. Stock ownership goals are satisfied
by Company stock held by executives and their families, either directly or
through the Inland Steel Industries Thrift Plan, as well as stock options,
based on the difference between the stock market price and the option exercise
price.
COMPENSATION PROGRAM
The Compensation Committee reviews base salary compensation of executive
officers annually and makes recommendations to the Board of Directors. Mr.
Darnall's base salary, last adjusted in February 1995, was increased by 5.1%
to $720,000 in February 1998. The increase recognized his leadership in
developing strategic alternatives and in achieving significant improvements at
the Company's two principal business units. Short-term incentive compensation
is payable to officers and other key employees under the Inland Steel
Industries, Inc. Annual Incentive Plan. This plan provides cash awards based
on two factors: (1) a participant's salary and (2) the extent to which annual
corporate and/or business unit performance standards are achieved. In 1997,
all major units of the Company achieved the target threshold levels of return
on operating assets. The award payments to Messrs. Darnall, Gratz and Ranney
were computed based upon the 1997 return on operating assets achieved by the
corporate units of the Company, weighted with respect to the relative asset
value of each unit. Mr. Wiersbe's award payment was computed based upon the
1997 return on operating assets achieved by Inland Steel Company, of which he
is President and Chief Operating Officer. Mr. Novich's award payment is
determined by the Ryerson Tull Compensation Committee under the Ryerson Tull
Annual Performance Improvement Incentive Plan.
Long-term incentive compensation grants and awards are made by the
Compensation Committee under the Inland 1995 Incentive Stock Plan. The plan
allows grants and awards consisting of stock options, stock appreciation
rights, performance awards and restricted stock awards, or combinations
thereof. Any stock options and stock appreciation rights will be granted at
not less than 100% of the fair market value of the common stock on the date of
grant and are generally exercisable for a period not exceeding ten years.
Performance awards, payable in shares of common stock or cash, are contingent
on the achievement of performance objectives as established by the
Compensation Committee. Restricted stock awards, consisting of shares of
common stock, are contingent on continuing employment for specified periods
and 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.
The Compensation Committee, in light of its intent to focus executives on
pay-for-performance, granted performance awards in 1997 for a total of 180,000
shares payable over three
16
<PAGE>
years to Messrs. Darnall, Gratz, Ranney and Wiersbe, with an award of 75,000
shares to Mr. Darnall. (Long-term incentive compensation for Mr. Novich is
determined by the Ryerson Tull Compensation Committee under the Ryerson Tull
1996 Incentive Stock Plan.) The Compensation Committee made no awards of
restricted stock or stock options to named executive officers in 1997. In
making the determination to make only performance awards to executive officers
and key employees of the Company, the Compensation Committee considered the
amount and terms of prior awards of options, restricted stock and performance
awards.
Under the 1997 performance awards, which are payable in three installments
related to each of calendar years 1997, 1998 and 1999, the performance shares
will be paid only if the Company achieves specified annual performance goals
for operating profit and specified total stockholder return goals for the one-
, two-, and three-year period beginning in 1997, established through
comparison to specified steel companies. Both goals must be met in order for
shares to be paid. No performance shares were paid related to 1997.
TAX DEDUCTIBILITY
Internal Revenue Code Section 162(m) limits the Company's ability to deduct
certain compensation for named executive officers. The Compensation Committee
generally intends that Company compensation plans satisfy the requirements of
Section 162(m) to allow maximum deductibility for Federal income tax purposes
of payments made under such plans to named executive officers, except that use
of the performance goal "total stockholder return," because it was not
specified as a performance measure in the Inland 1995 Incentive Stock Plan,
causes performance awards made to named executive officers not to satisfy the
requirements of Internal Revenue Code Section 162(m). If the Compensation
Committee determines that it is advisable to grant awards to named executive
officers that may not qualify for maximum deductibility, the Compensation
Committee reserves the right to make such awards, taking into consideration
the financial effects of such awards on the Company.
Jean-Pierre Rosso, Chairman
Joshua I. Smith
Arnold R. Weber
17
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table presents the compensation paid to the chief executive
officer and the four other most highly compensated executive officers of the
Company for 1995, 1996 and 1997. The table shows compensation earned by the
named executive officers in all capacities in which they served and includes
compensation paid by or accrued with the Company and its subsidiaries,
including Ryerson Tull.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM COMPENSATION
COMPENSATION AWARDS
---------------------- ---------------------------
SECURITIES
NAME AND RESTRICTED UNDERLYING
PRINCIPAL STOCK STOCK ALL OTHER
POSITION YEAR SALARY BONUS AWARDS(/1/) OPTIONS (#) COMPENSATION(/2/)
- --------- ---- -------- -------- ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Robert J.
Darnall 1997 $684,996 $393,873 $ 0 0 $34,248
Chairman,
President
and 1996 684,996 316,100 104,488(/4/) 100,000 33,833
Chief Execu-
tive Offi-
cer 1995 690,961(/3/) 515,800 169,500 30,000 34,545
Neil S.
Novich(/5/) 1997 $418,309 $329,600 $ 0 60,000 $20,908
President
and Chief 1996 400,095 386,600 70,625(/6/) 42,000(/7/) 18,845
Executive 1995 387,113 400,400 84,750(/6/) 14,000(/7/) 19,351
Officer of
Ryerson Tull
Dale E.
Wiersbe(/8/) 1997 $412,508 $202,748 $ 0 0 $20,634
Senior Vice 1996 365,008 112,568 0 54,000 18,248
President;
President
and Chief
Operating
Officer of
Inland Steel
Company
Jay M. Gratz 1997 $309,584 $142,409 $ 0 0 $15,474
Vice Presi-
dent and 1996 224,274 104,200 54,900 36,000 11,097
Chief Finan-
cial Offi-
cer 1995 173,752 104,200 28,250 4,000 8,696
George A.
Ranney,
Jr.(/9/) 1997 $313,750 $144,325 $ 0 0 $ 7,685
Vice Presi-
dent 1996 300,000 60,200 54,900 36,000 15,275
and General
Counsel 1995 132,692 90,300 56,400 12,000 16,128
</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. 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, 1997,
based on the closing market price of the Company's common stock on
18
<PAGE>
that date, were: Mr. Darnall, 9,000 shares/$154,125; Mr. Gratz, 2,200
shares/$37,675; and Mr. Ranney, 4,800 shares/$82,200. The number and value
of the aggregate restricted stock holdings of Ryerson Tull Class A Common
Stock on December 31, 1997 were: Mr. Darnall, 3,654 shares/$50,699; Mr.
Novich, 8,654 shares/$120,074; and Mr. Gratz, 1,461 shares/$20,271.
(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) Differences between 1995 salary and that in subsequent years reflects
extra days of pay due to a change to a salaried payroll system with 24 pay
periods per year from one with 26 pay periods per year.
(4) 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.
(5) 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.
(6) Mr. Novich's 1997 and 1996 awards consisted of restricted shares of
Ryerson Tull Class A Common Stock issued under the Ryerson Tull 1996
Incentive Plan. His 1995 outstanding restricted stock awards of Company
common stock were replaced, as of the consummation of the initial public
offering of Ryerson Tull Class A Common Stock (the "Offering"), by
restricted shares of Ryerson Tull 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 to 1.
(7) Mr. Novich's 1996 and 1995 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.
(8) Mr. Wiersbe was not an executive officer of the Company in 1995.
Compensation for 1996 reflects the full fiscal year.
(9) Mr. Ranney joined the Company in July 1995.
19
<PAGE>
INDIVIDUAL OPTION GRANTS IN 1997
The following table presents information with respect to individual grants
of options made during the last fiscal year to named executive officers and
(b) the present value of such options on the grant date. No grants of options
for Company stock were made during the last fiscal year to the named executive
officers, except for a grant of Ryerson Tull Class A Common Stock made by the
Ryerson Tull Compensation Committee to Mr. Novich.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME GRANTED(/1/) FISCAL YEAR PRICE(/2/) DATE VALUE(/3/)
- ---- ------------ ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Neil S. Novich..... 60,000 18.5% $14.0625 3/25/2007 $417,600
</TABLE>
- --------
(1) All options were for Ryerson Tull Class A Common Stock and become
exercisable in equal installments on the first three anniversaries of the
grant date. The options are transferable, with the advance written consent
of the Compensation Committee of the Board of Directors of Ryerson Tull,
(a) to a spouse or descendants, or (b) to a trust for the benefit of the
optionee, his or her spouse or descendants. See "Change in Control of the
Company" for option provisions regarding any change in control.
(2) The exercise price is the average of the high and low price of Ryerson
Tull's Class A common stock on the New York Stock Exchange Composite
Transactions on the date of grant. It may be paid by delivery of already-
owned shares, and an optionee may elect to have Ryerson Tull withhold
shares of stock (or accept already-owned shares) to satisfy related tax
withholding obligations.
(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 1997. The 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 volatility of
Ryerson Tull Class A common stock is 32.47% (calculated using monthly
stock prices of a comparable peer group for the seven-year period prior to
the grant date), the ten-year risk-free interest rate is 6.76%, the
annualized dividend rate is $0 per share, and the expected term is seven
years. The value of the options depends upon the actual performance of
Ryerson Tull Class A 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 Ryerson Tull Class A
common stock over the exercise price on the date the option is exercised.
20
<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 1997 and the
value of such holdings. No options were exercised by named executive officers
in 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT FISCAL YEAR-END AT FISCAL YEAR-END
NAME (EXERCISABLE/UNEXERCISABLE)(/1/) (EXERCISABLE/UNEXERCISABLE)(/1/)
- ---- -------------------------------- --------------------------------
<S> <C> <C>
Robert J. Darnall....... 217,000/67,000 $ 0
Neil S. Novich.......... 50,994/94,282 0
Dale E. Wiersbe......... 66,920/36,180 0
Jay M. Gratz............ 35,280/24,120 0
George A. Ranney, Jr.... 23,880/24,120 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, 1997.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
NUMBER MEASURING ---------------------------------
NAME OF SHARES(/1/) PERIOD THRESHHOLD (#) TARGET/MAXIMUM (#)
- ---- -------------- --------- -------------- ------------------
<S> <C> <C> <C> <C>
Robert J. Darnall....... 50,000 (/2/) 25,000 50,000
Dale E. Wiersbe......... 40,000 (/2/) 20,000 40,000
Jay M. Gratz............ 20,000 (/2/) 10,000 20,000
George A. Ranney, Jr.... 16,750 (/2/) 8,375 16,750
</TABLE>
- --------
(1) Awards consist of performance awards payable in Company common stock for
the measuring period ending December 31, 1998, and in shares of common
stock or cash or a combination of cash and stock, at the discretion of the
Compensation Committee, for the measuring period ending December 31, 1999.
The performance shares will be paid only if the Company achieves specified
annual performance goals for operating profit and specified total
stockholder return goals established through comparison to specified steel
companies during the applicable measuring period. Both goals must be met
in order for shares to be paid. The Compensation Committee made no
performance awards to Mr. Novich, because the Ryerson Tull Compensation
Committee determines Mr. Novich's compensation.
(2) Up to 50% of the shares are payable with respect to the measuring period
January 1, 1997 through December 31, 1998. The remainder are payable with
respect to the measuring period January 1, 1997 through December 31, 1999.
21
<PAGE>
PENSION BENEFITS; EMPLOYMENT, RETIREMENT AND TERMINATION AGREEMENTS
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 the Company and Ryerson Tull Pension
Plans. Mr. Novich is covered by the Ryerson Tull Pension Plan. The Company and
certain of its subsidiaries and affiliates, including Ryerson Tull, provide
pensions 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, benefits are based on an
individual's years of service and highest earnings for a consecutive 36-month
period during the ten years prior to retirement. For this purpose, earnings
generally consist of salary compensation plus bonus compensation. Benefits for
salaried employees under the Ryerson Tull Pension Plan were frozen as of
January 1, 1998. Except for employees eligible for transition rules relating
to age and service, no years of service or earnings after December 31, 1997
are taken into account under the Ryerson Tull Pension Plan. All benefit
amounts shown below are subject to offset, based upon Social Security
earnings.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE
ANNUAL
EARNINGS FOR
THE
APPLICABLE
YEAR-OF-
SERVICE ANNUAL PENSION BENEFITS FOR YEARS OF SERVICE SHOWN
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>
As of April 7, 1998, the executive officers named in the Summary
Compensation Table were credited with the following years of service under the
applicable Pension Plan: Mr. Darnall--35 years; Mr. Novich--3 years; Mr.
Wiersbe--27 years; Mr. Gratz--22 years; and Mr. Ranney--17 years.
Certain pension benefits in excess of the limitations imposed by the
Internal Revenue Code will be paid by the Company or Ryerson Tull under
unfunded non-contributory supplemental retirement plans. Ryerson Tull has
assumed the Company's liabilities under the Company's supplemental retirement
plans with respect to current and former employees of Ryerson Tull, including
Mr. Novich. For any officer or employee who is age 55 or older with at least
five years of service and annual compensation in excess of $150,000 ($160,000
for years after 1996), these
22
<PAGE>
plans generally permit the Company (or Ryerson Tull, as applicable) to satisfy
obligations to pay benefits upon retirement at age 65 by (a) purchasing
annuities (and paying a tax gross-up to the officer or employee) or (b) paying
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 1997.
In the event of a change in control (as defined in the applicable plan), all
benefits accrued under the pension plan and under the supplemental retirement
plans will become vested and distributable to participants as provided by the
terms of the plans. If, within three years of a change in control, there is an
event of termination, merger or consolidation of the pension plan, substantial
reductions in accruals or a transfer of assets to another plan, and if the
pension plan has more assets than necessary to pay benefit obligations, the
surplus assets will first be used to provide retiree medical benefits and then
will be used to provide additional benefits. During this three-year period,
limitations have been placed on amendments to the pension plan.
To supplement retirement benefits to employees of the Company and its
affiliates who participate in the Inland Steel Industries Thrift Plan and
whose benefits under the Thrift Plan are limited by the provisions of Sections
415 and 401(a)(17) of the Code, the Company established a Nonqualified Thrift
Plan. Generally, the Nonqualified Thrift Plan permits eligible employees to
make contributions to the Nonqualified Thrift Plan in an amount not exceeding
10 percent of base compensation and to receive matching contributions of 100
percent of such contributions that do not exceed 5 percent of base
compensation. Matching contributions under the Nonqualified Thrift Plan become
vested in the same manner as matching contributions under the Thrift Plan.
Benefits under the Nonqualified Thrift Plan are paid from the Company's
general assets. Benefits under the Nonqualified Thrift Plan are generally paid
in a lump sum at the time of termination. Certain Ryerson Tull employees
participate in its Nonqualified Savings Plan which provides benefits which are
substantially similar to the Nonqualified Thrift Plan.
The Company has an Agreement with Mr. Ranney that provides that Mr. Ranney's
aggregate pension benefits will be calculated (unless he chooses to leave the
company or is discharged for cause within five years of his rehire date of
July 23, 1995) as if he had been continuously employed by the Company since
February 26, 1973, but reduced by the actuarial equivalent of the pension
benefit, if any, payable to Mr. Ranney for such period by Mayer, Brown &
Platt, a Chicago law firm of which Mr. Ranney is a partner. Amounts payable
pursuant to this provision will be paid in the same form as benefits payable
under the Company's supplemental retirement plan. The Agreement also
guarantees Mr. Ranney three years of salary and benefits but reduces any
payments made under his change in control agreement by any payments under the
three-year guarantee. Under the Agreement, Mr. Ranney can retain his law firm
partnership but cannot receive financial benefit from the firm for his work
with the Company.
23
<PAGE>
CHANGE IN CONTROL OF THE COMPANY
Upon the occurrence of a change in control event of the Company, (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 will not be cashed out until six months after the grant
date and (b) restricted stock awards may immediately vest; 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, the present terms of which expire on December 31, 1998, but which
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 other limited events occur. The Company has not given such
notice of nonrenewal during 1998.
With respect to Messrs. Darnall, Gratz, Ranney and Wiersbe, these agreements
generally provide that if an executive's employment is terminated within three
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 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 three times the sum of (1) the current annual base salary
plus (2) the average annual incentive bonus paid for the five years preceding
termination of employment; (b) cash in lieu of any allocations, unpaid awards
or rights under the Company's annual or other incentive compensation plans;
(c) cash equal to the value of outstanding stock options granted under the
Company's stock option plans at specified prices; (d) vesting of outstanding
performance awards that would have been earned for the year in which the
change in control occurs had the applicable performance targets been satisfied
for that year; (e) life, disability, accident and health insurance as provided
in the Company's insurance programs for a period of 36 months after
termination of employment; (f) cash in lieu of three years of additional
accrued benefits under the Company pension plan; and (g) legal fees and
expenses incurred as a result of such termination. The Company has also
entered into change in control agreements with Mr. Novich and other executives
that are generally the same as the agreements with Messrs. Darnall, Gratz,
Ranney and Wiersbe, but provide protections and, if applicable, payments for a
period of 24 months (rather than 36 months) following a change in control of
the Company. The agreements do not limit or reduce any benefits that the
executive may be entitled to receive pursuant to any other agreement upon a
change in control of the Company. The agreements provide that the executive
will be paid an additional amount equal to any excise tax imposed. While this
provision will preserve the severance agreement benefits for the executives,
the Company will not be entitled to a federal income tax deduction for this
excise tax payment.
24
<PAGE>
For purposes of the Agreements, a "change in control of the Company" shall
generally be deemed to occur if (i) any person becomes the owner of 40% or
more of the combined voting power of the Company's then-outstanding
securities; (ii) during any two-year period, the majority of the 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) holders of the Company's 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;
(iv) holders of the Company's voting securities approve 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 of 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 the Company or a majority-owned subsidiary of
the Company. A "Related Company" is an executive'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 under Rule 405 of the
Securities Act of 1933.
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
executive's employer or a parent of that employer, and such employer or parent
agrees to become a successor to the Company under the executive's agreement,
or if the executive is covered by an agreement which provides benefits on a
change in control of the executive's employer under circumstances described in
(a), (b) or (c) in the paragraph above. No "change in control" of the Company
is deemed to occur with respect to an executive if the event first giving rise
to a "potential change in control" of the Company (as described below)
involves a publicly announced transaction or proposed transaction which has
not been previously approved by the Board, the executive is part of a
"purchasing group" which consummates the change in control transaction or the
change in control of the Company would otherwise occur under circumstances
described in paragraph (iv) next above due to the sale of a significant
subsidiary of the Company, which significant subsidiary constitutes all or
substantially all of the assets of the Company, and the executive is not an
employee of the Company or the significant subsidiary which is part of the
transaction. Generally, the executive will be considered to be part of a
"purchasing group" if he or she is an equity participant in the purchasing
company or group, other than passive ownership of less than one percent of
stock of the purchasing company or insignificant equity participation in the
purchasing company or group as determined by a majority of the continuing non-
employee members of the Board.
25
<PAGE>
The agreements also provide benefits if the executive's employment is
terminated by the Company for a reason other than cause coincident with or
prior to a change in control and 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 coincident with or within six months after
his or her termination. A "potential change in control" generally occurs if
(i) the Company enters into an agreement, the consummation of which would
result in the occurrence of a change in control, (ii) any person (including
the Company) publicly announces an intention to take or to consider taking
actions that, if consummated, would constitute a change in control, (iii) any
person who is or becomes the owner of 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 (iv) 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.
Ryerson Tull has also entered into an agreement with Mr. Novich in the event
that his 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 that constitute a change in control under the Company
Agreements with respect to the Company). This agreement provides benefits
substantially similar to those provided under his Company change in control
agreement. 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.
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, 1997,
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, 1992 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.
26
<PAGE>
<TABLE>
[PERFORMANCE GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG INLAND STEEL INDUSTRIES, INC., S&P 500 AND S&P STEEL INDEX
<CAPTION>
Measurement Period INLAND STEEL S&P STEEL
(Fiscal Year Covered) INDUSTRIES INC. S&P 500 INDEX
- ------------------- --------------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-
12/31/1992 $100 $100 $100
FYE 12/31/93 $147 $110 $132
FYE 12/31/94 $155 $111 $128
FYE 12/31/95 $112 $153 $119
FYE 12/31/96 $ 90 $188 $106
FYE 12/31/97 $ 78 $250 $112
</TABLE>
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 1998. 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 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 PROPOSALS
Greenway Partners, L.P., 277 Park Avenue, New York, New York 10172, has
advised the Company that it intends to present the following proposals for
consideration and action at the Annual Meeting:
27
<PAGE>
RYERSON TULL PROPOSAL
"RESOLVED, that it is hereby recommended that the Board of Directors
distribute Inland's ownership of Ryerson Tull to its shareholders through a
spin-off transaction or the issuance of "letter stock'."
STATEMENT IN SUPPORT OF PROPOSAL
This stockholder has submitted the following statement in support of the
proposal:
"Ryerson Tull could be spun off by the Company making a dividend to its
shareholders of shares of Ryerson Tull's capital stock. As a consequence,
Ryerson Tull would cease to be a subsidiary of the Company and the
shareholders of the Company at the time of the dividend would also own the
shares of Ryerson Tull. Alternatively, the issuance of "letter stock' through
a dividend would entail an amendment to the Company's charter to create a
class of stock, commonly known as "letter stock,' that would be designed to
reflect the financial performance of Ryerson Tull and would have such rights
and attributes as would be determined by the Company's Board of Directors.
"The proponent and the other participants described below and their
associates and affiliates own over 4,400,000 shares of Inland, making them one
of the largest stockholders with over 9%. We continue to believe that 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 87% of the economic interest in Ryerson Tull--the largest metals
service center in the United States.
"We believe value can be created for shareholders if Inland distributes its
ownership of Ryerson Tull to Inland shareholders. Alternatively, if more
advantageous from a tax point of view, Inland could instead distribute to its
shareholders a so-called "letter stock' reflecting Inland's economic interest
in Ryerson Tull's business. We suggested the use of "letter stock' last year
in answer to management's allegation then that federal income taxes would
increase significantly if Ryerson Tull were spun off and its income could no
longer be offset by Inland's substantial tax loss carryforwards. Distributing
"letter stock,' we believe, solves any tax concerns.
"Spin-offs have become a much admired and accepted practice which 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.
"Companies such as AT&T/Lucent; Pacific Telesis/Air Touch; Sears
Roebuck/Dean Witter Discover; and Santa Fe Energy/Monterey Resources 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.
28
<PAGE>
"Likewise, the concept of "letter stock' is not new and has been used in the
steel industry by USX Corp. Although USX Corp. remains as one company, its
steel, oil and natural gas businesses trade separately as "letter stocks.'
Similarly, the Hughes Electronics business of General Motors trades as a
"letter stock,' as did Electronic Data Systems until its full spin-off.
"Following the distribution of Ryerson Tull through a spin-off or the
issuance of "letter stock,' we believe Ryerson Tull would be 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.
"We also continue to believe some consolidation in the domestic steel
industry is desirable and should occur as is happening among foreign
producers. 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, Inland's Board also should consider actively seeking a merger
partner.
"We recommend that the shareholders vote FOR the adoption of the foregoing
shareholder proposal."
STATEMENT OF THE BOARD OF DIRECTORS IN OPPOSITION TO STOCKHOLDER PROPOSAL
On March 17, 1998, the Company announced that it has entered into a binding
letter agreement to sell Inland Steel Company to Ispat International N.V.
("Ispat International") for a total transaction value of approximately $1.43
billion (including approximately $1.12 billion in cash). As part of the
transaction, Ispat International will pay to the Company (i) $650 million for
the common stock of Inland Steel Company, (ii) $238.2 million for preferred
stock of Inland Steel Company, and (iii) the amount of Inland Steel Company
intercompany debt at the closing, which amount was $230.7 million at December
31, 1997, and assume debt owed to third parties of approximately $307.9
million. The Company intends to distribute a significant portion of the net
proceeds from the sale to its stockholders through stock repurchases,
dividends or a combination thereof. However, the Board of Directors has taken
no action and has not yet approved a plan as to the amounts or the range of
amounts of the net proceeds to use for such purposes. The determination of
whether to engage in stock repurchases and/or to pay dividends and the amount
of net proceeds to be used for such purposes is within the discretion of the
Board of Directors and, until the Board of Directors has taken such action,
there can be no assurances that any stock repurchases and/or dividends will
occur or as to the amount of net proceeds that will be used for such purposes.
Following the sale, the Company's primary business will be metals
distribution, presently conducted by Ryerson Tull. The Company is currently
considering a plan to combine with Ryerson Tull into one entity subsequent to
the closing of the sale. The transaction is subject to a definitive agreement,
antitrust clearance, other closing conditions, and the need to give the United
Steelworkers of America the opportunity to make an offer to purchase Inland
Steel Company. The transaction would be accomplished through a merger between
Inland Steel Company and a direct or indirect subsidiary of Ispat
International. The Board of Directors
29
<PAGE>
believes that the proposed transaction is in the best interest of stockholders
and will effect the separation of Ryerson Tull from Inland Steel Company in a
more advantageous manner than the spin-off suggested by the Proponent. Based
on an opinion of counsel, the Company believes applicable law does not require
stockholder approval of the transaction with Ispat International and,
therefore, the Company is not requesting stockholder approval of that
transaction. The vote on the stockholder proposal would not affect the
transaction with Ispat International.
In addition to repeating its spin-off proposal from 1997, Proponent has
submitted as an alternative the possible issuance of "letter stock" reflecting
the Company's ownership of Ryerson Tull. The Board believes that creating the
proposed "letter stock" when there is already a publicly traded class of
Ryerson Tull equity would be confusing and undesirable. Moreover, the Board
believes that the proposed sale of Inland Steel Company is a better way to
separate it from Ryerson Tull.
Your Board carefully considered the proposal this year as it did last year.
The Board's goal is to increase stockholder value, an objective it shares with
the Proponent and all other stockholders. The Board believes that it is in the
best position to develop and evaluate alternatives and reach a conclusion as
to the best course of action. The Board believes that the proposed sale of
Inland Steel Company to Ispat International is the best course of action and
that the proposed spin-off of Ryerson Tull should be rejected at this time.
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.
STOCKHOLDER RIGHTS PLAN PROPOSAL
"RESOLVED, that it is hereby recommended that the Board of Directors
terminate the Rights Agreement dated November 25, 1997 and redeem the rights
distributed thereunder unless the Rights Agreement is approved by the
affirmative vote of shareholders at a meeting and that this policy of
shareholder approval apply to all "rights plans" considered at any time by the
Board."
STATEMENT IN SUPPORT OF PROPOSAL
This stockholder has submitted the following statement in support of the
proposal:
30
<PAGE>
"The Company's Board of Directors has determined, without seeking
shareholder approval, to renew a rights plan scheduled to expire on December
17, 1997 by approving a new Rights Agreement dated November 25, 1997 (the
"Renewed Rights Agreement"), and distributing rights thereunder to the
shareholders on November 25, 1997.
"The proponent believes that these devices, often called "poison pills,"
serve to insulate management from direct shareholder accountability. Indeed,
the Company's actions in instituting the Renewed Rights Agreement without a
vote of its shareholders demonstrates such insulation. This resolution merely
asks that when the Company seeks to "protect" its shareholders through a
"rights plan" that it first asks its shareholders opinion.
"We recommend that the shareholders vote FOR the adoption of the foregoing
shareholder proposal."
STATEMENT OF THE BOARD OF DIRECTORS IN OPPOSITION TO STOCKHOLDER PROPOSAL
In 1987, the Board of Directors adopted a Stockholder Rights Plan (the
"Rights Plan") pursuant to which the Company authorized the distribution of
one preferred stock purchase right (a "Right") for each share of outstanding
common stock. On November 25, 1997, the Board renewed the Rights Plan which
was scheduled to expire on December 17, 1997. The Board adopted and renewed
the Rights Plan to guard against potential abuses and to ensure that all of
the Company's stockholders are treated fairly in the event of an unsolicited
takeover attempt of the Company.
The Board continues to believe, as it did when the Rights Plan was first
adopted, that in the event of an unsolicited offer for control of the Company,
the Rights Plan will allow the Board more time and flexibility to evaluate the
adequacy of a potential offer, to develop alternatives which may better
maximize stockholder value and, if deemed appropriate, to negotiate the
highest possible price from a potential acquiror. The Rights Plan does not
prevent unsolicited offers from occurring, nor prevent an acquisition at a
price that is fair and equitable for all stockholders. Instead, the Rights
Plan encourages a potential bidder to negotiate in good faith with the Board
of Directors, which is in the best position to negotiate on behalf of all
stockholders. The Board may amend or redeem the Rights and eliminate the
Rights Plan to facilitate an acquisition that the Board determines is in the
best interests of all stockholders.
A number of companies with stockholder rights plans have received
unsolicited takeover offers, and their boards have redeemed their rights after
determining that the negotiated price adequately reflected the value of the
company and that the acquisition was in the best interests of all
stockholders. In fact, two independent studies, one conducted in 1997 by
Georgeson & Company, a nationally recognized proxy solicitation and investor
relations firm, and the other conducted in 1993 and confirmed in 1995 by
Robert Comment and G. William Schwert of the Bradley Policy Research Center,
University of Rochester, found that companies with rights plans that were
acquired received higher takeover premiums than those companies acquired
without rights plans.
31
<PAGE>
Moreover, without the Rights Plan, a person could more easily acquire over
20% of the Company's common stock in the open market or privately negotiated
purchases, thereby acquiring undue influence or de facto "control" over the
Company. Your Board believes that the acquisition of effective (but less than
100%) control of the Company in such a manner is undesirable because it may
occur without each stockholder being paid a pro rata share of the premium that
"control" of a publicly traded company normally commands.
In deciding to adopt and to renew the Rights Plan, the Company's Board of
Directors considered its fiduciary responsibilities carefully, sought and
carefully weighed information and advice from experienced, independent
advisors, and drew on its collective experience with many other companies and
its extensive knowledge of the Company's own business and circumstances. Your
Board finds no merit in the Proponent's assertion that the Rights Plan reduces
the accountability of management to the stockholders. Eight of the nine
members of the Board are independent directors, not members of management, and
all directors recognize their obligation to use or redeem the Rights Plan in
any particular situation in the best interest of stockholders. Rights plans
have been adopted by the boards of over 2,500 corporations without stockholder
approval. No such approval is required. Your Board believes that the Rights
Plan continues to serve the best interests of the Company and its stockholders
because it represents a reasonable means of addressing and protecting against
potentially abusive and coercive tactics associated with unsolicited takeover
attempts.
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.
PROPOSALS OF HOLDERS OF VOTING SECURITIES
To be considered for inclusion in the Company's proxy statement and form of
proxy relating to the 1999 Annual Meeting, proposals of holders of voting
securities must be received in writing by the Secretary of the Company no
later than December 22, 1998 and must comply with the requirements of the
Securities and Exchange Commission. 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.
32
<PAGE>
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 21, 1998
Chicago, Illinois
- -------------------------------------------------------------------------------
Holders of voting securities, whether or not they expect to be present in
person at the Annual Meeting, are requested to SIGN, DATE AND RETURN THE
ENCLOSED PROXY in the accompanying envelope as promptly as possible.
33
<PAGE>
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
------------------------------------
INLAND STEEL INDUSTRIES, INC.
1998
<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 or in the Ryerson
Tull Savings Plan, I hereby direct LaSalle National Bank, as Trustee of the
Inland Steel Industries Thrift Plan ESOP Trust which forms a part of each of
such plans, 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 ESOP Trust as of April 1, 1998 at the Annual Meeting of
Stockholders of the Company to be held May 27, 1998 and at any adjournment
thereof. UNLESS OTHERWISE SPECIFIED, ALL SHARES ALLOCATED TO THE UNDERSIGNED'S
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 OR ISSUANCE OF LETTER STOCK FOR RYERSON TULL, INC., AGAINST THE
STOCKHOLDER PROPOSAL REGARDING THE RIGHTS AGREEMENT, 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' PLAN ACCOUNTS FOR WHICH PROPERLY
COMPLETED CONFIDENTIAL VOTING DIRECTIONS ARE NOT RECEIVED PRIOR TO 5:00 P.M.,
CHICAGO TIME, ON MAY 26, 1998 AND ALL UNALLOCATED SHARES HELD IN THE ESOP TRUST
IN THE SAME PROPORTION AS THE SHARES WITH RESPECT TO WHICH PROPERLY COMPLETED
CONFIDENTIAL VOTING DIRECTIONS HAVE BEEN TIMELY RECEIVED FROM PARTICIPANTS IN
THE ESOP TRUST.
(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
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.
For All [_] Withheld From All [_] For All Except [_]
- -----------------
Nominee Exception
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
2. The election of Price Waterhouse LLP as auditors for the year 1998.
For [_] Against [_] Abstain [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
3. Stockholder proposal regarding the spin-off or issuance of letter stock for
Ryerson Tull, Inc.
For [_] Against [_] Abstain [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
4. Stockholder proposal regarding the Rights Agreement.
For [_] Against [_] Abstain [_]
Dated:_____ , 1998 Signature__________________________________
___________________________________________
PLEASE DATE, SIGN AND RETURN PROMPTLY.
<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 27, 1998 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 OR ISSUANCE OF LETTER STOCK FOR RYERSON
TULL, INC., AGAINST THE STOCKHOLDER PROPOSAL REGARDING THE RIGHTS AGREEMENT,
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
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.
For All [_] Withheld From All [_] For All Except [_]
- -----------------
Nominee Exception
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
2. The election of Price Waterhouse LLP as auditors for the year 1998.
For [_] Against [_] Abstain [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
3. Stockholder proposal regarding the spin-off of or issuance of letter stock
for Ryerson Tull, Inc.
For [_] Against [_] Abstain [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
4. Stockholder proposal regarding the Rights Agreement.
For [_] Against [_] Abstain [_]
Dated:______,1998
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.
