<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
Ryerson Tull, 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:
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(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>
Neil S. Novich
Chairman, President and
Chief Executive Officer
March 17, 1999
Dear Stockholder:
Ryerson Tull, Inc. will hold its 1999 Annual Meeting of Stockholders on
Wednesday, April 28, 1999 at 10:30 a.m., Chicago time, at The Northern Trust
Company, 50 South LaSalle Street, Chicago, Illinois. I hope you will join us.
At the meeting we will discuss the Company's strategic initiatives and
financial performance. 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 April 28. 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. Whether in person or by proxy, your
participation in the annual meeting is important to the Company.
Cordially,
Neil S. Novich
Chairman, President and
Chief Executive Officer
2621 West 15th Place, Chicago, Illinois 60608
<PAGE>
2621 WEST 15th PLACE
CHICAGO, ILLINOIS 60608
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 1999
To Stockholders:
We will hold the Annual Meeting Stockholders of Ryerson Tull, Inc., a
Delaware corporation, at The Northern Trust Company, 50 South LaSalle Street,
Chicago, Illinois, on Wednesday, April 28, 1999, beginning at 10:30 a.m.,
Chicago time, for the purpose of:
1. Electing directors of the Company;
2. Electing PricewaterhouseCoopers LLP as the independent public accounting
firm to conduct the 1999 audit of the Company's accounts;
3. Considering and voting upon the Ryerson Tull 1999 Incentive Stock Plan;
and
4. Considering any other matter that may properly come before the meeting.
Holders of voting securities at the close of business on March 9, 1999 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 1998 Annual Report, which includes the Company's 1998
financial statements, accompanies this mailing. Additional copies are
available upon written request to the Ryerson Tull investor relations
department.
By order of the Board of Directors,
George A. Ranney, Jr.
Secretary
March 17, 1999
Chicago, Illinois
<PAGE>
(formerly Inland Steel Industries, Inc.)
2621 WEST 15th PLACE
CHICAGO, ILLINOIS 60608
PROXY STATEMENT
The Board of Directors (the "Board") of Ryerson Tull, Inc. (the "Company"),
formerly Inland Steel Industries, Inc. ("Inland"), solicits the enclosed proxy
for the 1999 Annual Meeting to be held on April 28, 1999.
Beginning on or about March 17, 1999, the Company will begin to solicit
proxies by mail. The Company also may solicit proxies through its directors,
officers and regular employees. The Company will pay all costs associated with
this proxy solicitation, including a fee of $7,500 plus out-of-pocket expenses
for MacKenzie Partners for its assistance. The Company will also reimburse
brokers, banks and similar organizations for reasonable charges and expenses
they incur in obtaining instructions from the beneficial owners of Company
common stock.
On July 16, 1998, Inland Steel Company ("ISC"), a wholly owned subsidiary of
Inland that constituted the steel manufacturing and related operations segment
of Inland's consolidated operations, merged into a subsidiary of Ispat
International, N.V. ("Ispat") pursuant to an agreement and plan of merger
dated as of May 27, 1998 and became a wholly owned subsidiary of Ispat (the
"ISC/Ispat Transaction").
On February 25, 1999, Ryerson Tull, Inc. ("Pre-Merger Ryerson Tull"), a
majority-owned subsidiary of Inland, merged with RT Merger Sub, Inc., and
became a wholly owned subsidiary of Inland, pursuant to an agreement and plan
of merger dated as of October 27, 1998, and each share of Pre-Merger Ryerson
Tull Class A common stock was converted into 0.61 shares of Inland common
stock. Pre-Merger Ryerson Tull then merged with Inland and Inland changed its
name to "Ryerson Tull, Inc." These mergers are together referred to as the "RT
Merger."
The Company's voting securities outstanding on March 9, 1999, consisted of
25,003,236 shares of common stock with one vote per share and 82,149 shares of
Series A $2.40 Cumulative Convertible Preferred Stock with one vote per share.
With respect to the matters expected to be voted upon at the Annual Meeting,
all voting securities vote together without regard to class.
If you sign, date and return the enclosed proxy by mail your shares will be
voted as you direct. If you do not give any voting instructions your shares
will be voted FOR the Board's nominees, FOR the election of
PricewaterhouseCoopers LLP as auditors and FOR the Ryerson Tull 1999 Incentive
Stock Plan (the "Incentive Stock Plan"), and in the discretion of the proxies
on any other matters that may come before the meeting. You may revoke your
proxy: (1) by submitting a revocation letter dated subsequent to the proxy,
(2) by delivering a second signed proxy dated later than the first signed
proxy, or (3) by attending the Annual Meeting and voting in person or by
proxy.
If you are in the Shareholder Investment Service's dividend reinvestment
program, shares credited to your account in that program will be voted only if
and in the same manner as you vote
1
<PAGE>
your stock held of record. If you are not a stockholder of record, Harris
Trust and Savings Bank, as custodian, will vote your shares only as you
instruct. If you are in the Ryerson Tull Savings Plan or Inland Steel Company
Savings Plan, shares credited to your account in the plan will be voted as you
direct, but any direction (or any revocation of a prior direction) must be
received by LaSalle National Bank, as Trustee for the ESOP Trust, by 5:00
p.m., Chicago time, on April 27, 1999. Shares in the ESOP Trust for which no
direction is received by that time will be voted in the same proportion as the
shares in the ESOP Trust for which directions are timely received.
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
Following the Annual Meeting, the Board will consist of eight 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, unless the Board has taken
prior action to reduce its membership. The directors elected at the 1999
Annual Meeting will serve a one-year term, expiring at the 2000 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 of the Company shown for each
nominee includes the period during which he or she served as a director of ISC
before Inland became a holding company for ISC and its subsidiaries. The Board
held ten meetings during 1998. 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 1999 Board are presently serving as
directors of the Company. Mr. Jean-Pierre Rosso, currently a director of the
Company, is not seeking re-election to the Board. Mr. Donald S. Perkins,
currently a director of the Company and a director of the Company and its
predecessor from 1967 to 1997, is retiring from the Board pursuant to the
Company's retirement policy for directors.
Jameson A. Baxter
Director of Pre-Merger Ryerson Tull since January 1999
Director of the Company since February 1999
Ms. Baxter, age 55, has been President of Baxter Associates, Inc.,
a management consulting and private investments firm, since 1986.
She also was Vice President and Principal of Regency Group, Inc.,
an investment banking firm, from 1989 to 1992. She served as Vice
President of The First Boston Corporation, an investment banking
firm, from 1975 to 1986, and held various other positions at The
First Boston Corporation from 1965 to 1975. She is a member of the
Compensation and Nominating and Governance Committees. She is a
director of Avondale Financial Corp., Banta Corporation and The
Putnam Funds.
2
<PAGE>
Richard G. Cline Director of Pre-Merger Ryerson Tull since 1996
Director of the Company since February 1999
Mr. Cline, age 64, has been Chairman of Hussmann International,
Inc., a manufacturer and service provider of merchandising and
refrigeration systems for the commercial food industry, since
January 1998. He is also Chairman of Hawthorne Investors, Inc., a
private management advisory services and investment firm, which he
founded in 1996. He served as Chairman of the Board of NICOR,
Inc., a diversified holding company with subsidiaries engaged in
natural gas distribution and containerized liner shipping, from
1986 to December 1995, as its Chief Executive Officer from 1986 to
May 1995, and as its President and Chief Operating Officer from
1985 to 1988 and from 1990 to 1994. For the previous 22 years, he
was an executive of Jewel Companies, Inc., becoming Chairman,
President and Chief Executive Officer in 1984. He is Chairman of
the Company's Audit Committee and a member of its Nominating and
Governance Committee. Mr. Cline also is a director of Kmart
Corporation and Whitman Corporation and a trustee of Northern
Institutional Funds, a registered investment company managed by
The Northern Trust Company and The Northern Trust Qualitative
Investment Advisors, Inc., and is a past chairman of the Federal
Reserve Bank of Chicago.
Gary L. Crittenden Director of the Company since February 1999
Mr. Crittenden, age 45, has been Senior Vice President and Chief
Financial Officer of Monsanto Company, a worldwide manufacturer
and seller of diversified lines of agricultural products,
nutrition and consumer products, pharmaceuticals and other
products, since 1998. He was Executive Vice President and Chief
Financial Officer of Sears, Roebuck and Co., a multi-line
retailer, from 1997 to 1998. He was also President of the Sears
Hardware division in 1997 and Executive Vice President, Strategy
and Business Development of Sears, Roebuck and Co. from 1996 to
1997. He was Senior Vice President and Chief Financial Officer of
Melville Corporation, a specialty retailer, from 1994 to 1996 and
Executive Vice President and Chief Financial Officer of Filene's
Basement, an off-price specialty chain of stores, from 1991 to
1994. He is a member of the Company's Compensation and Nominating
and Governance Committees.
James A. Henderson Director of Pre-Merger Ryerson Tull since 1996
Director of the Company since 1978
Mr. Henderson, age 64, is Chairman and Chief Executive Officer of
Cummins Engine Company, Inc., a manufacturer of diesel engines.
Mr. Henderson joined Cummins 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 a member of the Company's Audit
and Nominating and Governance Committees. Mr. Henderson is also a
director of Cummins Engine Company, Inc., Ameritech Corporation,
Rohm and Haas Company and International Paper Co.
Gregory P. Josefowicz Director of the Company since February 1999
Mr. Josefowicz, age 46, has been Chief Executive Officer of the
Jewel-Osco division of American Stores Company, which operates
food and drug stores in the greater Chicago, Illinois and
Milwaukee, Wisconsin areas, since 1997. Mr. Josefowicz joined
Jewel-Osco in 1974, and was elected Senior Vice President of
Marketing and Advertising in 1993. He is a member of the Company's
Audit and Nominating and Governance Committees.
3
<PAGE>
Neil S. Novich Director of Pre-Merger Ryerson Tull since 1994
Director of the Company since February 1999
Neil S. Novich, age 44, has been President, Chief Executive
Officer and Chief Operating Officer of the Company since February
1999, President of Joseph T. Ryerson & Son, Inc. ("Ryerson") and
Chairman of J. M. Tull Metals Company, Inc., subsidiaries of the
Company, since June 1994. Mr. Novich was President, Chief
Executive Officer and Chief Operating Officer of Pre-Merger
Ryerson Tull from 1994 to February 1999. He served as Chairman of
Ryerson from June 1994 to April 1995 and since June 1996. He was a
Senior Vice President of Inland from January 1995 to May 1996 and
a Vice President of Inland from June 1994 to January 1995. Prior
to joining Inland in 1994, Mr. Novich led the Distribution and
Logistics Practice at Bain & Company, an international management
consulting firm.
Jerry K. Pearlman Director of Pre-Merger Ryerson Tull since 1996
Director of the Company since February 1999
Mr. Pearlman, age 59, was Chairman of Zenith Electronics
Corporation, a manufacturer of consumer electronics and cable
television products, prior to his retirement in November 1995. He
was also Chief Executive Officer from 1983 through April 1995. He
is Chairman of the Company's Compensation Committee and a member
of its Nominating and Governance Committee. Mr. Pearlman is also a
director of Smurfit Stone Container Corporation and Royal
Packaging Industries Van Leer, N.V.
[Photo of Jerry Pearlman]
Ronald L. Thompson Director of Pre-Merger Ryerson Tull since 1996
Director of the Company since February 1999
Mr. Thompson, age 49, has been the Chairman of the Board, Chief
Executive Officer and President of Midwest Stamping Co., a metal-
stamping and assembly firm serving principally the automotive
original equipment industry, since 1994. Prior to joining Midwest
Stamping, he was Chairman of the Board and President of The GR
Group, Inc., a diversified holding company with interests in
manufacturing and service activities, from 1980 to 1993. He is a
member of the Company's Audit and Nominating and Governance
Committees. Mr. Thompson also is a director of Illinois Power
Company, Illinova Corporation and the Teachers Insurance and
Annuity Association.
[Photo of Ronald Thompson]
COMMITTEES OF THE BOARD OF DIRECTORS
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 registration statements and the
financial review section of the Company's annual report to stockholders, Form
10-K and Forms 10-Q; 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 three meetings in 1998.
4
<PAGE>
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 Ryerson Tull 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 five meetings in 1998.
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 one meeting in 1998.
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 2000 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 January 27, 2000. 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
Pursuant to the terms of the Company's Directors' Compensation Plan, each
director who is not an employee of the Company or any of its affiliates ("Non-
employee Directors") will receive an annual retainer of $40,000. Normally, the
Company will pay half of the retainer in shares of its common stock and half
in cash. However, directors may elect to receive all or any part of the cash
portion of their retainer in whole shares of common stock.
The Company pays the cash portion of the retainer quarterly for service
during the quarter. If a Non-employee Director serves for a fraction of a
quarter, the cash portion for that quarter is prorated in whole months. The
Company pays the stock portion of the retainer as restricted stock issued at
the beginning of the director's term. Over the director's term, the restricted
stock vests in quarterly increments. Directors are also entitled to any
dividends which accrue on the restricted stock. In addition, directors receive
$1,000 for attending a special Board meeting and a special committee meeting
not held in conjunction with a regular or special Board meeting. The Company
does not pay fees to directors for attending other committee meetings. A Non-
employee Director who serves as chairman of a standing committee of the Board
will receive an additional annual retainer of $4,000.
The Directors' Compensation Plan allows directors to elect to defer payment
of all or any portion of the retainers and fees which will become due over the
course of the year. Directors must make this election prior to January 1 of
each year. However, if a director is appointed or elected during a calendar
year, that director may make a deferral election within 30 days after becoming
a director. The Company will distribute deferred amounts in a lump sum or in
installments of cash or whole shares of common stock, at the election of the
director at the time of the deferral. Interest on cash deferrals will be
credited at the prime rate in effect from time to time at Bank One Corporation
(or its successor). Stock deferrals will be credited with dividends paid on
shares of common stock from time to time. The Company has reserved a total of
61,000 shares of common stock for issuance under the Directors' Compensation
Plan, subject to adjustment for certain corporate transactions affecting the
number or type of outstanding shares.
5
<PAGE>
The Ryerson Tull Directors' 1999 Stock Option Plan (the "Directors' Option
Plan") provides that each person who is a Non-employee Director as of the
close of each annual meeting, beginning with the 1999 Annual Meeting, will be
awarded a stock option having a value of $20,000 (based on the Black-Scholes
option pricing model) and an exercise price equal to the fair market value of
the Company's common stock on the date of grant. Individuals who become Non-
employee Directors other than at an annual meeting are awarded stock options
at the time of their election or appointment as a Non-employee Director having
a value that is prorated to reflect a partial year's service. The options
awarded under the Directors' Option Plan may not be exercisable prior to the
day after the six-month anniversary of the grant date and expire no later than
10 years after the date of grant. A total of 300,000 shares of the Company's
common stock are reserved for issuance under the Directors' Option Plan.
The Company also pays the premiums on a business accident insurance policy
insuring each Non-employee Director for up to $500,000.
The Company terminated its Deferred Phantom Stock Unit Plan for Non-employee
Directors effective upon the RT Merger, at which time it paid in a lump sum
payment all benefits or amounts due or payable under that plan and under its
former director retirement plan, which had been terminated in January 1996.
The Deferred Phantom Stock Unit Plan was established for Non-employee
Directors who, on January 1, 1996, had not served on the Board for ten years.
Under the plan, participants were 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 was
elected as a director, beginning in 1996. Each Non-employee Director who
served on the Board on or before October 1, 1995 was credited with phantom
stock units until the participant reached his or her ninth anniversary as a
director. Each participant vested in the benefits under this plan on the
effective date of the RT Merger and received these benefits in cash as a lump
sum. At termination, the cash value of each phantom stock unit equaled $30.00
per share of Company common stock--the price at which the Company purchased
shares of Company common stock on August 24, 1998 in a Dutch auction tender
offer.
Prior to the RT Merger, Non-employee Directors received an annual retainer
of $35,000, of which $11,000 was paid in shares of the Company's common stock.
In addition, the Company paid each Non-employee Director an annual fee of
$3,000 for each standing committee of the Board on which he or she served, and
an additional annual fee of $5,000 for each standing committee that he or she
chaired. Directors could elect to defer payment of their fees until the end of
their Board service under the Deferred Compensation Plan for Directors.
Interest on the cash portion of any deferred fees accrued at a specified prime
rate. Amounts equal to the dividends that would have been paid on the stock
portion of any deferred fees were credited to the applicable director's
account and converted into additional deferred shares. This plan has been
terminated as of the RT Merger and all amounts credited to any director under
this plan will be paid to such director in five annual lump sum cash payments
with interest. Any deferred shares credited under the plan were valued at
$30.00 per share.
In January 1996, the Company terminated its director retirement plan.
Benefits accrued under the plan by non-employee directors with one or more
years of service on January 1, 1996 were payable at the later of a director's
termination of Board Service or reaching age 65. Under the terminated plan,
the annual benefits equaled the annual Board retainer in effect at the last
Board meeting attended by that director. The Company paid all accrued benefits
in cash as a lump sum on the RT Merger.
6
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table presents, as of March 1, 1999, the shares of Company
common stock beneficially owned by each of the directors of the Company, each
of the other named executive officers of the Company and the directors and
executive officers of the Company as a group. Except as indicated otherwise,
the beneficial owners have sole voting and investment power for these
securities. Company common stock includes preferred stock purchase rights. No
directors or executive officers beneficially owned any Series A Preferred
Stock.
<TABLE>
<CAPTION>
Number of Shares
or Amount of Percent of
Name and Address of Beneficial Owner Securities Owned(/1/) Class
- ------------------------------------ --------------------- ----------
<S> <C> <C>
Directors
Jameson A. Baxter............................. 1,572 *
Richard G. Cline.............................. 4,438 *
Gary L. Crittenden............................ 429 *
James A. Henderson............................ 6,022 *
Gregory P. Josefowicz......................... 429 *
Neil S. Novich................................ 131,532 0.5
Jerry K. Pearlman............................. 12,898 *
Ronald L. Thompson............................ 6,508 *
Named Executive Officers
Robert J. Darnall(/2/)........................ 146,102(/3/) 0.6
George A. Ranney, Jr.......................... 58,107 *
Jay M. Gratz.................................. 105,767 *
Stephen E. Makarewicz......................... 49,998 *
Gary L. Niederpruem........................... 46,675 *
All Directors and Executive Officers as a Group
.............................................. 791,761 3.2
</TABLE>
- --------
(1) Includes shares credited to individual accounts in the Ryerson Tull
Savings Plan; shares that the following have the right to acquire under
options exercisable within 60 days after March 1, 1999: Mr. Novich--
121,596, Mr. Darnall--48,000, Mr. Ranney--48,000, Mr. Gratz--87,800, Mr.
Makarewicz--45,075, Mr. Niederpruem--42,130, and all directors and
executive officers as a group--564,430; shares held under restricted
awards, as follows: Mr. Novich--3,050, Mr. Gratz--891, Mr. Makarewicz--
915, Mr. Niederpruem--915, and all directors and executive officers as a
group--10,046; and shares payable or deferred under the Ryerson Tull
Directors' Compensation Plan which are subject to forfeiture, as follows:
Ms. Baxter--572, Mr. Cline--233, Mr. Henderson--233, Mr. Pearlman--233,
Mr. Thompson--233, and all directors as a group--2,595.
(2) Resigned as a Chief Executive Officer and President of Inland on November
1, 1998 and resigned as Chairman of the Board on February 25, 1999.
(3) Includes 610 shares held by Mrs. Darnall.
* Less than 0.5%
7
<PAGE>
ADDITIONAL INFORMATION RELATING TO VOTING SECURITIES
The following table sets forth, as of December 31, 1998, the only holders
known to the Company to beneficially own more than 5% of its common stock.
<TABLE>
<CAPTION>
Number of Shares
or Amount of Percent of
Name and Address of Beneficial Owner Securities Owned Class
------------------------------------ ---------------- ----------
<S> <C> <C>
Sanford C. Bernstein & Co., Inc. 1,787,968(/1/) 8.2%
767 Fifth Avenue
New York, NY 10153
FMR Corp. 3,189,161(/2/) 14.7%
82 Devonshire Street
Boston, MA 02109
Morgan Stanley Dean Witter & Co. 2,178,478(/3/) 10.0%
1585 Broadway
New York, NY 10036
Northern Trust Corporation 1,107,153(/4/) 5.1%
50 South LaSalle Street
Chicago, IL 60675
Donald Smith & Co., Inc. 1,247,694(/5/) 5.7%
East 80 Route 4
Paramus, NJ 07652
</TABLE>
- --------
(1) Reported sole voting power as to 638,886 shares, shared voting power as to
13,223 shares and sole dispositive power as to 1,787,968 shares.
(2) FMR Corp., on behalf of itself, Edward C. Johnson 3d, Abigail P. Johnson,
Fidelity Management & Research Company and Fidelity Value Fund, reported
sole voting power as to 180,611 shares and sole dispositive power as to
3,189,161 shares.
(3) Morgan Stanley Dean Witter & Co. on behalf of itself, Miller Anderson &
Sherrerd, LLP and MAS Funds Value Portfolio, reported shared voting power
as to 1,844,078 shares and shared dispositive power as to 2,178,478
shares.
(4) Northern Trust Corporation, on behalf of itself and its subsidiaries The
Northern Trust Company, Northern Trust Quantitative Advisors, Inc. and
Northern Trust Bank of Florida N.A., reported sole voting power as to
1,075,887 shares, shared voting power as to 31,066 shares and sole
dispositive power as to 1,080,053 shares.
(5) Reported sole voting and dispositive power as to 1,247,694 shares.
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 shares vote together with the Company's
common stock, 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.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS REGARDING EXECUTIVE COMPENSATION
The Company's executive compensation programs are designed to attract and
retain outstanding individuals as officers and key employees by rewarding such
individuals based on their personal performance and on the financial
performance of the Company and its business units. The compensation system
also is designed to align the incentives of executive officers with the
interests of stockholders.
8
<PAGE>
The Company's Compensation Committee (and predecessor committees described
below) consist of independent non-employee directors, none of whom is or has
been an employee of Pre-Merger Ryerson Tull or the Company or any of the
Company's subsidiaries. Prior to February 25, 1999, Inland's executive
compensation programs were administered by the Compensation Committee of the
Inland Board of Directors, which consisted of Jean-Pierre Rosso, Chairman,
Joshua E. Smith and Arnold R. Weber (the "Inland Committee"). Prior to
February 25, 1999, Pre-Merger Ryerson Tull's programs were administered by the
Compensation Committee of the Pre-Merger Ryerson Tull Board of Directors,
which consisted of Jerry K. Pearlman, Chairman, Jameson A. Baxter, Donald S.
Perkins and Jean-Pierre Rosso. These individuals and Gary L. Crittenden now
comprise the Company's Compensation Committee (the "Ryerson Tull Committee").
The Inland Committee
The Inland Committee determined the compensation of Messrs. Darnall, Ranney
and (for the period through November 30, 1998) Gratz. The Company paid that
compensation and Pre-Merger Ryerson Tull reimbursed the Company for a portion
of that compensation.
The Inland Committee periodically met with outside compensation consultants
for assistance regarding the Company's executive compensation program. The
outside consultants provided 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 Inland Committee also considered the compensation practices of
steel manufacturing companies, including those in the S&P Steel Index and
other metals companies.
Prior to the RT Merger, the design of the Company's executive compensation
programs increasingly emphasized 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 intended both 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.
Messrs. Darnall and Ranney met regularly with the Inland Committee. In
addition, all of the outside directors conducted an annual review of the
financial, operating and organizational goals established by Mr. Darnall for
the Company for the year and an evaluation of Mr. Darnall's and Mr. Ranney's
performance as it related to the Company's achievement of the previous year's
goals. The results of these meetings were an important element in compensation
decisions made by the Inland Committee and the Board, both with respect to
Messrs. Darnall and Ranney and with respect to the other officers of the
Company.
The compensation program had three elements--base salary, short-term
incentive compensation and long-term incentive compensation.
Approximately half of a senior executive's total target compensation
opportunity, consisting of short-term and long-term incentive compensation,
was contingent on meeting annual financial targets, including operating profit
and total stockholder return. This target compensation was variable and
fluctuated significantly from year to year. Short-term incentive compensation
tied cash bonuses to financial performance objectives based on operating
profit established annually by the Inland Committee. Long-term incentive
compensation programs focused 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 Inland 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
could continue to
9
<PAGE>
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.
In February 1998, the base salaries of Messrs. Darnall and Ranney were
increased to $720,000 and $330,000 respectively, in recognition of their
leadership in developing and achieving strategic alternatives for the Company.
Short-term incentive compensation for 1998 was paid to Messrs. Darnall, Ranney
and (through November 30, 1998) Gratz in the amounts of $447,182, $138,900 and
$129,300, respectively, under the Inland Annual Incentive Plan. The Plan
provided for cash awards based on a specified percentage of a participant's
salary earnings and the extent to which corporate and business unit return on
operating assets targets were met. In 1998, Inland achieved 84.2% of the
target level of return on operating assets established for Inland.
In addition, each of Messrs. Darnall, Ranney and Gratz received a bonus in the
amount of $250,000 in recognition of his contribution to the Company's
successful completion of its tender offer and its preparation for the RT
Merger, and supplemental performance bonuses were paid to each of Messrs.
Ranney and Gratz in the amount of $30,000 in recognition of his contribution
to the Company's overall performance. These amounts are all included under the
"Bonus" column in the "Summary Compensation Table."
In 1998, long-term incentive compensation grants and awards were made by the
Inland Committee to Messrs. Darnall, Ranney and Gratz under the Inland 1995
Incentive Stock Plan. Grants and awards under the plan may consist of stock
options, stock appreciation rights, restricted stock awards, and performance
awards, or combinations thereof. Under the plan, stock options and stock
appreciation rights may be granted at not less than the fair market value of
Company common stock on the date of grant and are generally exercisable for a
period not exceeding ten years. The Inland Committee made no restricted stock,
stock appreciation rights or performance awards to named executive officers in
1998, but made option grants in recognition of outstanding individual
performance in achieving the Company's strategic goals. The Inland Committee
granted option awards totaling 165,000 shares to named executive officers of
the Company, including the following awards: Mr. Darnall, 60,000 shares; Mr.
Gratz, 80,000 shares; and Mr. Ranney, 25,000 shares.
In January 1998, the Inland Committee recommended and the Board approved an
increase in the level of severance benefits available to Messrs. Darnall,
Ranney and Gratz under their change in control agreements from two times their
annual pay and benefits to three times their annual pay and benefits. The
Inland Committee determined that the increase was appropriate in each case to
reinforce and encourage the continued dedication of these executives without
distraction in the face of the possibility of a change in control and was
consistent with competitive practices. The ISC/Ispat Transaction on July 16,
1998 constituted a change in control for purposes of the agreements, and each
of Messrs. Darnall, Ranney and Gratz was entitled to severance benefits in
accordance with each individual's change in control agreement upon a
termination of employment by the Company other than for cause or resignation
by the executive for "Good Reason." After such transaction but prior to their
resignation, Mr. Darnall's agreement and Mr. Ranney's agreement were further
amended to provide that a resignation would be treated as a resignation for
"Good Reason" and each of them agreed to a reduction in the amount of his
severance benefits to an amount which would not constitute excess parachute
payments for federal income tax purposes and to include an agreement not to
compete. The Inland Committee determined that, due to the change in Mr.
Gratz's responsibilities arising out of the sale of ISC, Mr. Gratz was
entitled to resign his employment and receive severance benefits in accordance
with his change in control agreement. In order to induce Mr. Gratz to continue
in the employ of Pre-Merger Ryerson Tull, the Inland Committee authorized an
amendment to Mr. Gratz's agreement pursuant to which he would be paid a
portion of the amount to which he would otherwise be entitled if he had
resigned and would be entitled to additional compensation contingent upon his
continuing in the employ of the post-merger Company.
Effective on the date of the closing of the ISC/Ispat Transaction, the
Inland Committee also vested all options and restricted stock then outstanding
under the Inland 1995 Incentive Stock Plan, accelerated
10
<PAGE>
payment of shares under the 1998 portion of performance awards made in 1997 to
officers and key employees (including payments of 24,750, 8,250 and 9,900
shares respectively to Messrs. Darnall, Ranney and Gratz), terminated the
performance awards as to future performance periods and extended the option
exercise period to up to one year after resigning from the Company (five years
in the case of retirement), but not beyond the original ten-year-term option
expiration date.
Inland Committee
Jean-Pierre Rosso, Chairman
Joshua Smith
Arnold R. Weber
The Ryerson Tull Committee
The compensation of Messrs. Gratz (after November 30, 1998), Novich,
Niederpruem and Makarewicz is determined by the Ryerson Tull Committee.
The Ryerson Tull Committee consults with outside compensation experts for
assistance with executive compensation programs. The Ryerson Tull Committee
intends to offer total compensation opportunities competitive with those
offered by comparable companies and compares its compensation opportunities to
other metal service center companies. However, because most metal service
companies are not publicly owned, because public information for those
publicly owned metal service center companies shows that few have long-term
incentive programs, and because no metal service center company has revenues
comparable to the revenues of Pre-Merger Ryerson Tull or the Company, the
Ryerson Tull Committee also compares the Company's compensation opportunities
to those offered by select general distribution, industrial and service
companies of comparable sales, assets and employees. The Ryerson Tull
Committee intends each of total compensation and base salary to be equivalent
to the median of such compensation component in the comparison group of
companies.
Mr. Novich, as Chief Executive Officer of Pre-Merger Ryerson Tull and, since
the RT Merger, the Company, meets regularly with the Ryerson Tull Committee
and with the non-management directors. These meetings include an annual review
by all of the outside directors of the chief executive officer's financial,
operating and organizational goals and an evaluation of Mr. Novich's
performance as it relates to achievement of the prior year's goals. The
results of that evaluation are an important element in compensation decisions
made by the Ryerson Tull Committee, the Pre-Merger Ryerson Tull Board of
Directors and the Board, both with respect to the chief executive officer and
with respect to the other executive officers.
The Ryerson Tull Committee reviews the base salary compensation of executive
officers annually, reviews comparable positions in the comparison group of
companies, and then makes recommendations to the Board. Generally, base
compensation represents approximately one-half of the total target
compensation opportunity for executive officers. The remainder of such total
target compensation consists of short-term and long-term incentive
compensation and is variable, fluctuating from year to year depending on
individual performance, business unit performance, corporate performance, and
industry performance. In February 1998, the base salary of Mr. Novich was
increased to $445,000 in recognition of his operational improvements and
management skill at Pre-Merger Ryerson Tull.
Short-term incentive compensation was payable to Mr. Gratz (for the portion
of the year after November 30, 1998) and Messrs. Novich, Niederpruem and
Makarewicz under the Ryerson Tull, Inc. Annual Performance Improvement
Incentive Plan and is included in the amount set forth under the "Bonus"
column of the "Summary Compensation Table." This plan provides for cash awards
based on a specified percentage of a participant's salary earnings and the
extent to which corporate and (or) business unit performance standards are
achieved for the year. In 1998, all but two business units of Ryerson Tull
achieved each of the threshold levels of return on operating assets and
revenue growth
11
<PAGE>
established for such units. The Ryerson Tull Committee computed the award
payments to Mr. Gratz (for the portion of the year after November 30, 1998)
and to Mr. Novich based upon the 1998 return on operating assets and revenue
growth achieved by Pre-Merger Ryerson Tull overall. The award payments to
Messrs. Makarewicz and Niederpruem were computed based upon the 1998 return on
operating assets achieved by their respective business units.
Grants and awards made in 1998 by the Ryerson Tull Committee under the
Ryerson Tull 1996 Incentive Stock Plan were 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 Pre-
Merger Ryerson Tull and thereby more closely align their interests with those
of the stockholders. Forms of awards under this plan are substantially similar
to these discussed above for the Inland 1995 Incentive Stock Plan. On the date
of the RT Merger, all outstanding stock awards, grants and options under the
Ryerson Tull 1996 Incentive Stock Plan were replaced by stock awards, grants
and options for Company common stock at a ratio of 0.61 shares of Company
common stock for each share of Pre-Merger Ryerson Tull Class A common stock.
The exercise price of each option and SAR under this Plan was adjusted to
equal its pre-conversion price divided by 0.61. Converted awards, grants and
options continue to be governed by the terms of the Ryerson Tull 1996
Incentive Stock Plan.
The Ryerson Tull Committee established new stock awards after review of a
compensation analysis for officer positions of Pre-Merger Ryerson Tull, based
on a comparative company survey of compensation practices at the comparison
group of companies and a summary of executive compensation issues prepared by
Pre-Merger Ryerson Tull's outside executive compensation consultants. These
awards were intended to provide incentives to improve stockholder value, to
encourage executive retention and to remain competitive in executive
recruitment. The Ryerson Tull Committee granted to named executive officers
option awards totaling 117,000 shares during 1998 payable in Pre-Merger
Ryerson Tull Class A common stock, including the following awards: Mr. Novich,
60,000 shares; Mr. Niederpruem, 30,000 shares; and Mr. Makarewicz, 27,000
shares; and granted to Mr. Novich an award of 90,000 stock appreciation rights
in Pre-Merger Ryerson Tull Class A common stock payable in cash or payable in
shares under limited circumstances. The Ryerson Tull Committee made no
restricted stock awards or performance awards to named executive officers in
1998. Pursuant to a 1997 performance award to Mr. Niederpruem for 2,000 shares
payable over two years, 750 shares were paid out for the performance period
ended December 31, 1997 and 200 shares for the performance period ended
December 31, 1998. The Ryerson Tull Committee accelerated the vesting of a
restricted stock award for 3,654 shares of Pre-Merger Ryerson Tull Class A
common stock made to Mr. Darnall in 1996 to the date of the RT Merger.
In 1993, Section 162(m) was added to the Internal Revenue Code, which limits
deductibility of certain compensation for named executive officers. The
Ryerson Tull Committee intends that Company compensation plans generally
satisfy the requirements of Section 162(m) for maximum deductibility by the
Company for Federal income tax purposes of payments made under such plans to
named executive officers. Therefore, the Ryerson Tull Committee has
recommended, and the Board of Directors has adopted, subject to stockholder
approval, the Incentive Stock Plan in a form designed to satisfy these
requirements. See "Proposal to Approve the Ryerson Tull 1999 Incentive Stock
Plan." In the event the Ryerson Tull Committee determines that it is advisable
to grant awards to named executive officers that may not so qualify for
deductibility, the Ryerson Tull Committee reserves the right to make such
awards, taking into consideration the financial effects of such awards on the
Company.
Ryerson Tull Committee
Jerry K. Pearlman, Chairman
Jameson A. Baxter
Gary L. Crittenden
Donald S. Perkins
Jean-Pierre Rosso
12
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following chart compares the Company's cumulative total stockholder
return on its common stock for the five-year period ended December 31, 1998,
with the cumulative total return of the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500 Index"), Standard and Poor's Mid Cap 400 Index (the
"S&P Mid Cap 400 Index"), the Standard and Poor's Steel Index (the "S&P Steel
Index") and to a peer group. Previously, the Company was included in both the
S&P 500 Index and the S&P Steel Index; however, during 1998 the Company was
removed from the S&P 500 Index and the S&P Steel Index based upon changes in
the Company's market capitalization and line of business as determined by
Standard and Poor's. Also during 1998, the Company was added to the S&P Mid
Cap 400 Index. Since there is no nationally recognized industry index
consisting of metals distributors to be used as a peer group index, the
Company constructed its own peer group consisting of seven other public
companies in the metals distribution industry. The peer group includes A.M.
Castle & Co., Friedman Industries, Incorporated, Huntco Inc., Metals USA,
Inc., Olympic Steel, Inc., Reliance Steel & Aluminum Co. and Steel
Technologies Inc. This comparison assumes the investment of $100 on
December 31, 1993 and the reinvestment of dividends.
<TABLE>
<CAPTION>
Ryerson Tull Inc. Peer Group S&P 500 S&P Midcap 500 S&P Steel
<S> <C> <C> <C> <C> <C>
12/93 100.00 100.00 100.00 100.00 100.00
12/94 106.04 69.38 101.32 96.42 97.26
12/95 76.29 81.56 139.40 126.25 90.19
12/96 61.29 111.87 171.41 150.49 80.52
12/97 52.97 118.00 228.59 199.03 81.92
12/98 52.68 79.54 293.92 227.74 71.00
</TABLE>
13
<PAGE>
EXECUTIVE COMPENSATION
The following table presents the 1996, 1997 and 1998 compensation for
Messrs. Darnall and Ranney, who acted as chief executive officers of the
Company during 1998, and the Company's other four most highly compensated
executive officers. The compensation listed in the table includes compensation
paid by the Company, Pre-Merger Ryerson Tull and other subsidiaries of the
Company.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
-------------------------- -------------------------------------
Awards Payouts
------------------------ ------------
Other Securities All
Annual Restricted Underlying Other
Name and Compen- Stock Stock LTIP Compen-
Principal Position Year Salary Bonus sation Awards(/1/) Options(/2/) Payouts(/3/) sation(/4/)
- ------------------ ---- -------- -------- -------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert J. Darnall(/5/) 1998 $597,083 $697,182 $ 0 $ 0 60,000 $681,400 $1,471,854
Chairman, Director, 1997 684,996 393,873 0 0 0 0 34,248
President and Chief 1996 684,996 316,000 0 104,883 100,000 0 33,833
Executive Officer
George A. Ranney,
Jr.(/6/) 1998 $329,230 $418,900 $ 0 $ 0 25,000 $227,133 $ 8,444
President and 1997 313,750 144,325 0 0 0 0 7,685
Chief Executive Officer 1996 300,000 110,800 0 54,900 36,000 0 15,275
Neil S. Novich(/7/) 1998 $441,472 $146,900 $ 0 $ 0 150,000 0 $ 17,665
President, Chief 1997 418,309 329,600 0 0 60,000 0 20,908
Executive Officer and 1996 400,095 386,600 0 70,625 42,000 0 18,845
Director of Pre-Merger
Ryerson Tull
Jay M. Gratz 1998 $329,834 $417,000 $ 0 $ 0 80,000 $272,560 $ 168,249
Vice President and 1997 309,584 142,409 0 0 0 0 15,474
Chief Financial Officer 1996 224,274 104,200 0 54,900 36,000 0 11,097
Stephen E. Makarewicz 1998 $194,786 $ 86,000 $ 0 $ 0 27,000 0 $ 7,798
President--Tull 1997 187,809 89,439 0 0 27,000 0 8,353
1996 181,041 100,000 0 21,188 18,000 0 7,352
Gary J. Niederpruem 1998 $227,857 $ 79,100 $119,968(/8/) $ 0 30,000 $ 1,969 $ 9,110
President--Ryerson
Central 1997 199,527 114,262 0 0 30,000 0 9,967
1996 180,809 43,700 0 21,188 18,000 0 9,040
</TABLE>
- --------
(1) Awards consist of restricted common stock of the Company or of restricted
Class A common stock of Pre-Merger Ryerson Tull and are valued at the
aggregate market value as of the date of grant, based on the closing
market price on such date. Dividends are paid on such shares to the extent
paid on the Company's or Pre-Merger Ryerson Tull's common stock. All
shares were originally scheduled to 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 restricted Company common stock made to Mr. Darnall scheduled to
vest on May 20, 1999. In connection with the ISC/Ispat Transaction, the
Inland Committee vested all shares of restricted Company common stock and
the Ryerson Tull Committee accelerated the vesting of a restricted stock
award for 3,654 shares of Pre-Merger Ryerson Tull Class A common stock
made to Mr. Darnall in 1996 to the date of the RT Merger. Vesting may be
accelerated at the discretion of the Ryerson Tull Committee in the event
of exceptional individual performance and (or) significant progress by the
Company or the appropriate business unit in meeting its operating and
financial objectives. At December 31, 1998, no named executive officer
held any restricted common stock of the Company. The number and value of
the aggregate restricted stock holdings of Pre-Merger Ryerson Tull Class A
common stock on December 31, 1998 were: Mr. Novich, 5,000 shares/$48,750;
and Mr. Gratz, 1,461 shares/$14,245.
14
<PAGE>
(2) Awards to Messrs. Darnall, Ranney and Gratz consist of options to purchase
Company common stock. Awards to Messrs. Novich, Makarewicz and Niederpruem
consist of options to purchase Pre-Merger Ryerson Tull Class A common
stock. Includes a grant of 90,000 stock appreciation rights to Mr. Novich
in 1998 payable in cash, or in shares under limited circumstances. At the
effective time of the RT Merger, each outstanding option to purchase
shares of Pre-Merger Ryerson Tull Class A common stock was replaced by an
option to purchase 0.61 shares of Company common stock. The 1996 options
granted to Messrs. Novich, Makarewicz and Niederpruem were initially
options for Inland stock under Inland's incentive stock plans. Upon the
consummation of the initial public offering of Pre-Merger Ryerson Tull
shares, they were replaced by substitute options to purchase Ryerson Tull
Class A common stock under the Ryerson Tull 1996 Incentive Stock Plan.
(3) Awards consisted of performance share awards payable in Company common
stock for the measuring period ended December 31, 1998. The Inland
Committee accelerated payment of such awards to the date of the ISC/Ispat
Transaction.
(4) For Mr. Darnall, amounts include $720,000 in severance payments paid under
his change-in-control agreement with the Company and $720,000 paid in
consideration for his agreement not to compete. For Mr. Gratz, amounts
include $150,000 for agreeing not to become an employee of, or provide
consulting or other services to, certain competitors prior to November 6,
2000. Amounts otherwise represent the value of vested and unvested
employer contributions and allocations to the Ryerson Tull Savings Plan
and the Ryerson Tull Non-Qualified Savings Plan (including amounts
allocated under the Inland Steel Industries Thrift Plan, which merged with
the Ryerson Tull Savings Plan effective December 31, 1998) and under the
Inland Steel Industries Non-Qualified Thrift Plan, which merged with the
Ryerson Tull Non-Qualified Savings Plan effective with the ISC/Ispat
Transaction.
(5) Resigned as President and Chief Executive Officer of Inland on November 1,
1998.
(6) Elected President and Chief Executive Officer effective on November 1,
1998. Mr. Ranney also held the positions of Vice President and General
Counsel of Inland during 1998.
(7) Mr. Novich resigned as Senior Vice President of Inland in May 1996 to
devote his entire efforts to serving as President and Chief Executive
Officer of Pre-Merger Ryerson Tull. His compensation for 1996 includes
compensation paid both by Inland and Pre-Merger Ryerson Tull.
(8) Represents reimbursement of relocation expenses and related tax gross-up.
15
<PAGE>
Individual Option/SAR Grants in 1998
The following table presents information with respect to (a) individual
grants of options and stock appreciation rights ("SARs") that were made during
the last fiscal year to the named executive officers and (b) the present value
of such options and SARs on the grant date.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------------
Percent of
Total
Number of Options/SARs Grant
Securities Granted Date
Underlying Options/ to Employees in Exercise Expiration Present
Name SARs Granted(/1/) Fiscal Year Price(/2/) Date(/1/) Value(/3/)
- ---- ------------------- --------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Inland Option Recipients
Robert J. Darnall....... 60,000 25.5% $19.21875 01/27/08 $399,600
George A. Ranney, Jr.... 25,000 10.6% 18.15630 09/02/08 172,500
Jay M. Gratz............ 30,000 34.1% 19.21875 01/27/08 199,800
50,000 18.15630 09/02/08 345,000
Ryerson Tull Option
Recipients
Neil S. Novich.......... 150,000 35.6% 13.37500 01/28/08 374,400
Stephen E. Makarewicz... 27,000 6.4% 13.37500 01/28/08 168,480
Gary J. Niederpruem..... 30,000 7.1% 13.37500 01/28/08 187,200
</TABLE>
- --------
(1) Awards to Messrs. Darnall, Ranney and Gratz consist of options to purchase
Company common stock. Awards to Messrs. Novich, Makarewicz and Niederpruem
consist of options to purchase Pre-Merger Ryerson Tull Class A common
stock and an award to Mr. Novich of stock appreciation rights payable in
cash with respect to 90,000 shares of Pre-Merger Ryerson Tull Class A
common stock. Company options granted become exercisable with respect to
50% of the shares after one year from date of grant and are fully
exercisable after two years from date of grant. Ryerson Tull options
become exercisable with respect to 33% of the shares after one year from
the date of grant, 67% after two years from the date of grant, and are
fully exercisable after three years from the date of grant. All options
granted in 1998 were transferable, with the advance written consent of the
applicable Compensation Committee, (a) to a spouse or descendants, (b) to
a trust for the benefit of the optionee, his or her spouse or descendants,
or, for Company options granted prior to December 31, 1998 only, (c) as a
charitable contribution. See "--Employment and Change in Control
Agreements" for option provisions regarding any change in control of the
Company. The option grant to Mr. Darnall and the option grant for 30,000
shares to Mr. Gratz became fully exercisable as of the effective date of
the ISC/Ispat Transaction.
(2) The exercise price is equal to the average of the high and low price of
the Company's common stock or Pre-Merger Ryerson Tull's Class A common
stock on the New York Stock Exchange Composite Transactions on the date of
grant. The exercise price may be paid by delivery of already-owned shares,
and an optionee may elect to have the Company withhold shares of stock (or
accept already-owned shares) to satisfy tax withholding obligations with
respect to option exercises or payments.
(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 under the incentive stock plans during 1998.
The use of this pricing model should not be construed as an endorsement of
the model's accuracy at valuing options. For purposes of calculating the
value of the options as of the grant date, the following assumptions were
made: the option term is 10 years, the volatility of Company common stock
is 31.86% and 38.15% respectively for grants made in January and September
1998 and of Pre-Merger Ryerson Tull stock is 31.93% (calculated using
monthly stock prices of a comparable peer group for the five-year period
(seven years for Pre-Merger Ryerson Tull options) prior to the grant
date), the ten-year risk-free interest rate is 5.53% and 5.00%
respectively for Company grants made in January and September 1998 and
5.70% for
16
<PAGE>
Pre-Merger Ryerson Tull options, the annualized dividend yield is 1% per
Company share and 0% per Pre-Merger Ryerson Tull Class A common share. The
expected term is five years for Company options and seven years for Pre-
Merger Ryerson Tull options. The value of the options granted in 1998
depends upon the actual performance of the Company's common stock during
the applicable period; the actual value, if any, that an option grantee
will realize upon exercise of an option will depend on the excess of the
market value of such common stock over the exercise price on the date the
option is exercised.
Aggregated Option/SAR Exercises and Year End Option/SAR Values
The following table presents the value realized upon option exercises during
1998 and the number of securities underlying the option/SAR holdings at the
end of 1998 of the named executive officers and the value of such holdings
based on the closing price on December 31, 1998 for the Company's common stock
and Pre-Merger Ryerson Tull Class A common stock.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities Underlying In-The-Money
Shares Unexercised Options/SARs at Options/SARs at
Acquired Value Fiscal Year-End Fiscal Year-End
Name on Exercise Realized (Exercisable/Unexercisable)(/1/) (Exercisable/Unexercisable)
- ---- ----------- ---------- -------------------------------- ---------------------------
<S> <C> <C> <C> <C>
Inland Option Exercises
and Holdings
Robert J. Darnall....... 293,000(/2/) $1,638,375(/2/) 48,000/0 $0/0
George A. Ranney, Jr.... -- -- 48,000/25,000(/3/) 0/0(/3/)
Jay M. Gratz............ -- -- 87,800/50,000(/3/) 0/0(/3/)
Ryerson Tull Class A
Option Exercises and
Holdings
Neil S. Novich.......... -- -- 88,191/207,085 0/0
Stephen E. Makarewicz... -- -- 48,572/52,327 0/0
Gary J. Niederpruem..... -- -- 41,733/57,337 0/0
</TABLE>
- --------
(1) The value of unexercised in-the-money options/SARs is based on the closing
price of the Company's common stock or Pre-Merger Ryerson Tull's Class A
common stock, as applicable, on the New York Stock Exchange Composite
Transactions on December 31, 1998.
(2) Represents the cash-out of options to purchase such shares of Company
common stock in an amount equal to the excess of the change in control
price of $29.625 over the exercise price per share in accordance with Mr.
Darnall's change in control agreement.
(3) See "--Employment and Change in Control Agreements" for information
concerning the value of these options under Messrs. Ranney's and Gratz's
change in control agreements.
Pension Benefits
Prior to April 30, 1996, certain Pre-Merger Ryerson Tull employees were
eligible to participate in the Inland Pension Plan. Effective April 30, 1996,
the portion of the Inland Pension Plan covering Pre-Merger Ryerson Tull's
current and former employees was separated and became the Ryerson Tull Pension
Plan. Employees covered by the Ryerson Tull Pension Plan were credited with
the number of years of service credited to them under the Inland Pension Plan
at the separation date. Messrs. Darnall, Ranney and Gratz remained covered by
the Inland Pension Plan. Pre-Merger Ryerson Tull and the Company provide
pension benefits to eligible salaried employees of Tull under a separate
benefit schedule of the Ryerson Tull Pension Plan, as discussed below.
Benefits for salaried employees under the Ryerson Tull Pension Plan were
frozen as of January 1, 1998, subject to transition rules for employees
meeting specified age and service criteria. Inland salaried employees
transferred to the Ryerson Tull Pension Plan after such date were credited
with the number of years credited to them
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under the Inland Pension Plan at their transfer date, but otherwise are
subject to the frozen benefit formula and transition rules as if in the
Ryerson Tull Pension Plan of December 31, 1998. Pre-Merger Ryerson Tull
implemented a defined contribution plan, the Ryerson Tull Savings Plan, to
provide benefits in place of the pension plan benefits.
Effective as of July 16, 1998 (the "Transfer Date"), the portion of the
Inland Pension Plan covering active employees and certain former employees of
Inland and its subsidiaries (other than ISC and its subsidiaries) was
transferred to the Ryerson Tull Pension Plan and the Inland Pension Plan was
assumed by ISC. Affected employees were credited with the number of years of
service credited to them under the Inland Pension Plan at the Transfer Date.
As of the Transfer Date, benefits for salaried employees whose benefits were
transferred to the Ryerson Tull Pension Plan were frozen in the same manner as
described above. Employees who remained employed by Inland, however, did not
participate in the Ryerson Tull Savings Plan.
Under the Ryerson Tull Pension Plan and the Inland Pension Plan prior to the
Transfer Date, the Company provides pensions 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 for salaried
employees are based on two factors: (1) years of benefit service, and (2)
average monthly earnings, based on the highest 36 months of earnings during
the participant's last ten years of service, except for employees eligible for
the transition rules relating to age and service. For this purpose, earnings
generally consist of salary plus bonus as reported in the Summary Compensation
Table.
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 the applicable plan. All benefit amounts shown
in this table are subject to offset based upon Social Security earnings.
Pension Plan Table
<TABLE>
<CAPTION>
Average Annual Earnings Annual Pension Benefits for Years of Service Shown
for the Applicable --------------------------------------------------------------
Years-of-Service Period 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
- ----------------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000...... $ 17,000 $ 34,000 $ 51,000 $ 68,000 $ 85,000 $102,000 $119,000
400,000...... 34,000 68,000 102,000 136,000 170,000 204,000 238,000
600,000...... 51,000 102,000 153,000 204,000 255,000 306,000 357,000
800,000...... 68,000 136,000 204,000 272,000 340,000 408,000 476,000
1,000,000...... 85,000 170,000 255,000 340,000 425,000 510,000 595,000
1,200,000...... 102,000 204,000 306,000 408,000 510,000 612,000 714,000
</TABLE>
As of March 1, 1999, the named executive officers were credited with the
following years of service under the Ryerson Tull Pension Plan: George A.
Ranney, Jr.--26 years (including the credited service described under "--
Employment and Change in Control Agreements"); Jay M. Gratz--23 years; Neil S.
Novich--3 years; Stephen E. Makarewicz--15 years; and Gary J. Niederpruem--25
years. Pension benefits for Messrs. Ranney, Gratz, Makarewicz and Niederpruem,
whose age and service met certain transition criteria adopted in connection
with the freeze of the Ryerson Tull Pension Plan, will continue to accrue
pension benefits until the earlier of December 31, 2002 or their date of
retirement. At that date, their pension benefit will be frozen. Until then,
they are subject to limits on certain Company paid contributions to employees'
accounts under the Ryerson Tull Savings Plan. The Company paid a lump-sum
retirement benefit under non-qualified supplemental retirement plans to Mr.
Darnall, who resigned as an executive officer of the Company on November 1,
1998 with 36 years of service.
Certain pension benefits in excess of the limitations imposed by the
Internal Revenue Code of 1986 (the "Code") will be paid by the Company under
unfunded non-contributory supplemental
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retirement plans (the "Supplemental Plans"). For any officer or employee who is
age 55 or older with at least five years of service and annual compensation in
excess of $160,000, these plans generally permit the Company 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 Pre-Merger
Ryerson Tull established any such annuities for named executive officers in
1998.
In the event of a change in control (as defined in the applicable plan), all
benefits accrued under the Ryerson Tull Pension Plan and the Supplemental Plans
will become fully and irrevocably vested and distributable to participants as
provided by the terms of such plans. If, within three years following a change
in control, there is a termination of the Ryerson Tull Pension Plan, or a
substantial reduction in accruals under the Ryerson Tull Pension Plan, assets
will first be used to provide retiree medical benefits and then will be applied
to increase retirement benefits to affected participants on a pro rata basis.
Special rules also apply if, after a change in control, the Ryerson Tull
Pension Plan is merged with another plan or if assets are transferred from the
Ryerson Tull Pension Plan to another plan. This distribution would occur within
three years of a change in control, and, within this three-year period, there
are limitations on amendments to the Ryerson Tull Pension Plan.
The Company provides pension benefits to eligible salaried employees of Tull
under a separate benefit schedule. The Tull benefit schedule is not subject to
the benefit freeze described above. The maximum annual pension benefits payable
under this schedule are approximately 3% higher than those shown in the above
table for comparable earnings and service. The Tull benefit schedule does not
cover any executive officers, but Mr. Makarewicz is credited with 11 years of
service under the Ryerson Tull Pension Plan according to the Tull benefit
schedule and has a lump sum benefit accrued as his Tull benefit.
Employment and Change in Control Agreements
Under the Inland 1988 Incentive Stock Plan, the Inland 1992 Incentive Stock
Plan, the Inland 1995 Incentive Stock Plan (collectively, the "Prior Stock
Plans") and the Incentive Stock Plan, if approved by the stockholders at the
Annual Meeting, upon the occurrence of a change in control event, (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 Ryerson Tull Committee.
The Company has entered into agreements with each of the named executive
officers, the present terms of which expire on December 31, 1999, 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 to date.
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
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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 of Rule 405 under 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 (iv) in the prior paragraph due to the sale of a significant
subsidiary of the Company which 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. 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 through passive ownership of less than
one percent of the stock of the purchasing company or an insignificant equity
participation in the purchasing company or group as determined by a majority
of the continuing non-employee members of the Board.
These agreements generally provide that if an executive resigns from
employment within the period ending 24 months after the month in which a
change in control of the Company occurs, either (i) other than for cause or
other than as a consequence of death, disability or retirement or (ii) for
reasons relating to a diminution of responsibilities, compensation or benefits
or a significant relocation of the executive's principal place of business
("Good Reason"), he or she will receive: (a) a lump sum payment (the
"Severance Payment") equal to three times (two times in the case of Mr.
Makarewicz) the sum of (1) the current annual base salary plus (2) the average
annual incentive bonus paid for the five years preceding resignation from
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 (24 months in the case
of Mr. Makarewicz) after resignation from 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 resignation. 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 which, after payment of all taxes thereon, is 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.
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<PAGE>
The agreements also provide benefits if the executive resigns from
employment 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 resignation. 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 beneficial
ownership of such securities by 5% or more over the percentage so owned on the
date of the agreements, or (iv) the Board adopts a resolution that a potential
change in control of the Company has occurred for purposes of the agreements.
The ISC/Ispat Transaction constituted a change in control under the change
in control agreements with respect to Inland and ISC but not with respect to
Pre-Merger Ryerson Tull. After the ISC/Ispat Transaction, the Company and
Messrs. Darnall, Ranney and Gratz entered into amendments to their respective
change in control agreements. Under their amended agreements they continue to
be entitled to legal fees and payments with respect to any excise taxes in
accordance with the original agreements. Pursuant to Mr. Darnall's amended
change in control agreement, upon his resignation for Good Reason on November
1, 1998 as an executive officer of the Company, he (1) received a lump sum
payment of $720,000 in lieu of the Severance Payment otherwise payable under
his agreement; (2) elected prior to his resignation from employment to have
all of his out-of-the-money options to purchase the Company's common stock
continue to be exercisable in accordance with their terms and elected to
receive a cash payment for his in-the-money options as set forth above under
"Executive Compensation--Aggregated Option/SAR Exercises and Year End
Option/SAR Value"; and (3) will receive certain life, disability, accident and
health insurance benefits. Mr. Darnall also received $720,000 following the
date of his resignation in connection with his agreement not to become an
employee of, or provide consulting or other services to, certain of the
Company's competitors for a period of two years following the date of
resignation from his employment. Pursuant to Mr. Ranney's amended agreement,
(1) his resignation from the Company for Good Reason becomes effective as of
any resignation from his employment with the Company; (2) he received a lump-
sum payment of $76,500 in lieu of three years of additional accrued benefits
under the Company pension plan; (3) his resignation will be deemed an early
retirement with the consent of the Inland Committee which will permit him to
exercise his stock options for up to five years after resignation from
employment; (4) he will be entitled to certain employee benefits for 36 months
after his resignation from employment; (5) he received a lump sum severance
amount of $260,000; and (6) he will be able to elect to have all of his out-
of-the-money options continue to be exercisable in accordance with their terms
or to have them cashed out at the change in control price of $29.625 per share
(for which he would realize $255,000). Mr. Ranney also received $400,000 for
agreeing not to be employed by or perform services for certain competitors for
a period of two years following his resignation from employment. Under an
agreement entered into when he rejoined the Company in 1995, Mr. Ranney will
be treated for nonqualified pension purposes as if he had been continuously
employed by the Company from 1973, when he first joined the Company. That
agreement further provides that he can retain his law firm partnership but
cannot receive financial benefit from the firm for his work with the Company.
In lieu of payments under his change in control agreement, Mr. Gratz and the
Company amended his employment agreement to provide that Mr. Gratz would
resign as Vice President and Chief Financial Officer of the Company on
November 30, 1998 and become employed by Pre-Merger Ryerson Tull. The
amendment provides that Mr. Gratz will be entitled to a change in control
agreement from Pre-Merger Ryerson Tull but would not be entitled to severance
benefits under his existing agreement upon resignation from employment with
the Company. Pursuant to his amended change of control agreement, Mr. Gratz is
entitled (i) to receive cash equal to the change in control price of $29.625
per
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share less the exercise price in lieu of shares of the Company's common stock
issuable upon exercise of options awarded to him prior to the closing of the
ISC/Ispat Transaction ($579,312 in the aggregate) at any time on or before
November 6, 2001 (but not beyond the original term of any such option); (ii)
upon resignation from his employment with the Company, to receive life,
disability, accident and health insurance benefits and other employee fringe
benefits; (iii) upon the earlier of the date of his resignation from
employment with the Company or January 1, 2001, to receive a lump sum payment
of all non-qualified retirement benefits from the Company, calculated as if he
had an additional three years of accrued benefits and as if payments were then
to start immediately without actuarial reduction; and (iv) to receive a
retention bonus of $250,000 on January 1, 2000, provided that he is employed
by the Company on that date or if his employment is terminated prior to that
date by reason of his death, disability or involuntary termination by the
Company. Mr. Gratz received $150,000 for agreeing not to become an employee
of, or provide consulting or other services to, certain competitors prior to
November 6, 2000.
ELECTION OF AUDITORS
Proxies not limited to the contrary will be voted for the election of
PricewaterhouseCoopers LLP to audit the accounts of the Company and its
subsidiaries for the year 1999. Any proxy indicating a contrary choice will be
voted in accordance with that choice. PricewaterhouseCoopers LLP has audited
the accounts of the Company since 1918.
Representatives of PricewaterhouseCoopers 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.
Approval of PricewaterhouseCoopers LLP as auditors will require the
affirmative vote of the holders of shares of the Company representing a
majority of the shares represented in person or by proxy and entitled to vote
at the Annual Meeting, with the result that shares which abstain from voting
would count as votes against PricewaterhouseCoopers LLP and broker non-votes
would have no effect on the outcome. Proxies not limited to the contrary will
be voted for approval of PricewaterhouseCoopers LLP.
The Board of Directors unanimously recommends a vote FOR approval of the
election of PricewaterhouseCoopers LLP as auditors.
PROPOSAL TO APPROVE THE RYERSON TULL 1999 INCENTIVE STOCK PLAN
The Company has used stock option plans and other stock plans as an integral
part of its executive incentive program for many years. Most recently, stock-
based grants and awards have been made under the Inland 1995 Incentive Stock
Plan. The Board has determined that a new stock plan is needed in order to
maintain a competitive executive incentive program and thereby more
effectively attract and retain and furnish incentives to outstanding
individuals as officers and key employees of the Company and its subsidiaries.
Accordingly, the Board has adopted, and is submitting to the stockholders for
their approval, the Incentive Stock Plan. The Incentive Stock Plan will become
effective immediately upon approval by the stockholders and will continue in
effect until terminated by the Board. If the Incentive Stock Plan is approved
by stockholders, the Prior Stock Plans will be discontinued, except as to
outstanding grants. The summary of the Incentive Stock Plan that follows is
qualified in its entirety by reference to the complete text of the Incentive
Stock Plan as set forth in Exhibit A.
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General Description
Participants in the Incentive Stock Plan shall consist of such officers and
other key employees of the Company and its subsidiaries as the Ryerson Tull
Committee may select from time to time. The Ryerson Tull Committee has
identified approximately 120 participants to participate in the Incentive
Stock Plan. In the discretion of the Ryerson Tull Committee, participants in
the plan may receive stock options, stock appreciation rights, restricted
stock awards or performance awards, either singly or in combination. The
maximum number of shares that may be issued under the plan is 1,000,000 shares
of Company common stock, plus the total number of shares available for
issuance under the Prior Stock Plans as of the effective date of the Incentive
Stock Plan. As of March 9, 1999, 2,293,999 shares of Company common stock were
subject to awards outstanding under the Prior Stock Plans and 28,093 shares
were available for grant thereunder. No further awards may be made under the
Prior Stock Plans. The form and amount of any grant or award, whether measured
by shares of Company common stock or otherwise, as well as the time and
conditions of exercise or vesting and any acceleration of the time of exercise
or vesting, are subject to the discretion of the Ryerson Tull Committee,
provided that no more than 335,000 shares may be issued pursuant to restricted
stock awards and performance awards under the Incentive Stock Plan. Except to
the extent otherwise determined by the Ryerson Tull Committee, any shares
subject to a grant or award under the Incentive Stock Plan or the Prior Stock
Plans which terminates by expiration, cancellation or otherwise without the
issuance of such shares (including shares underlying a stock appreciation
right exercised for stock, to the extent that such underlying shares are not
issued) or which are settled in cash (to the extent so settled), or, in the
case of a restricted stock award, which are forfeited prior to vesting, shall
again be available for future grants under the Incentive Stock Plan.
The Code places limitations on the deductibility, for Federal income tax
purposes, of annual compensation paid to certain executive officers, generally
the five most highly compensated officers of the Company on the last day of
the year. In order to permit certain grants and awards under the Incentive
Stock Plan to be deductible for Federal income tax purposes, the Incentive
Stock Plan limits, except in the case of grants and awards which by their
terms are not intended to comply with such Code limitations, the maximum
number of shares that may be granted or awarded under the Incentive Stock Plan
in any three-year period to any participant under the Incentive Stock Plan to
700,000 and the maximum aggregate cash payout that may be made under the
Incentive Stock Plan in any year to a named executive officer to $1,000,000.
The Ryerson Tull Committee has general authority to administer the Incentive
Stock Plan, including the authority to select participants, determine the form
and amount of awards and amend such awards or accelerate the time of exercise
or vesting thereof. The Ryerson Tull Committee also may authorize the
Company's Chairman or President, if then serving as a director, to act as a
subcommittee of the Ryerson Tull Committee for the purpose of making grants of
restricted stock, stock options, stock appreciation awards and performance
awards, not to exceed such number of shares as the Ryerson Tull Committee
designates annually, to employees of the Company and its subsidiaries who are
not subject to Section 16(a) of the Securities Exchange Act of 1934, as the
Chairman or President shall determine in his or her sole discretion after
consultation with the Vice President of Human Resources of the Company. The
Board may amend the Incentive Stock Plan in any respect, or terminate the
Incentive Stock Plan at any time, provided that no amendment may be made
without stockholder approval that would increase the maximum number of shares
available for issuance pursuant to grants under the Incentive Stock Plan if
such action would result in awards under the Incentive Stock Plan no longer
being exempt under Rule 16b-3 under the Securities Exchange Act of 1934 as
then in effect. At present, such actions would not result in such loss of
exemption and therefore may be taken without stockholder approval. No
amendment or termination may impair the rights of a participant under any
grant previously made under the Incentive Stock Plan without the consent of
such participant, unless required by law.
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A participant may elect to have the Company withhold shares of common stock
(or to accept already-owned shares) to satisfy tax withholding obligations
with respect to exercises or payments under the Incentive Stock Plan. Except
as otherwise permitted by the Ryerson Tull Committee, no stock option, stock
appreciation right, restricted stock award or performance award shall be
transferable except by will or the laws of descent and distribution. Under
rules adopted by the Ryerson Tull Committee, transfers may be made, subject to
certain limitations, to (a) a participant's spouse or descendants or (b) to a
trust for the benefit of an award holder, his or her spouse or descendants.
1999 Incentive Stock Plan Benefits
The 1999 Incentive Stock Plan is subject to stockholder approval at the
annual meeting. Following stockholder approval, the Ryerson Tull Committee may
make awards, in its discretion, under the Plan. Awards made may not be
indicative of awards for all of 1999 or awards in any fiscal year.
Stock Options
Options to purchase shares of Company common stock, including incentive
stock options within the meaning of Section 422 of the Code, may be granted
under the Incentive Stock Plan. The Ryerson Tull Committee will determine the
number of shares subject to each stock option and the manner and time of
exercise. No option, however, shall be exercisable more than ten years after
the date of grant. The per share option price shall not be less than par value
or the fair market value of a share of Company common stock at the date of
grant. Upon exercise, the option price may be paid in cash, in shares of
Company common stock having a fair market value equal to the option price, or
in a combination thereof. The Ryerson Tull Committee may also allow the
"cashless" exercise of options, subject to applicable rules and regulations,
and the exercise of options by any other means the Ryerson Tull Committee
determines to be consistent with the Incentive Stock Plan's purpose and
applicable law, including loans, with or without interest, made by the Company
to the holder of such option. The Incentive Stock Plan sets forth conditions
for the exercise of options under certain circumstances upon termination of
employment by reason of death, incapacity, retirement or otherwise. The option
may contain such other terms, provisions and conditions not inconsistent with
the Incentive Stock Plan as the Ryerson Tull Committee may determine.
Stock Appreciation Rights
Stock appreciation rights may be granted in tandem with a related stock
option or may be granted independently of a related stock option. Rights
granted in tandem with a related stock option shall be exercisable to the
extent that the related stock option is exercisable. The Ryerson Tull
Committee will determine the manner and time of exercise of rights granted
independently of a stock option, but no such right shall be exercisable more
than ten years after the date of grant. In the case of rights granted in
tandem with a related stock option, the grantee may elect to exercise either
the stock option or the rights (but not both) as to any of the same shares
subject to the stock option and the rights. The Incentive Stock Plan sets
forth conditions for the exercise of stock appreciation rights under certain
conditions upon termination of employment by reason of death, incapacity,
retirement or otherwise. The stock appreciation rights may contain such other
terms, provisions and conditions not inconsistent with the Incentive Stock
Plan as the Ryerson Tull Committee may determine.
Upon exercise of a stock appreciation right, the holder shall be paid the
excess of the then fair market value of the number of shares of Company common
stock to which the right relates over the fair market value of such number of
shares at the date of grant of the right or of the related stock option, as
the case may be. Such amount shall be paid in cash or in shares of Company
common stock having a fair market value equal to such excess, or in such
combination thereof, as may be provided in
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the grant of such right (which may permit the grantee to elect between cash
and Company common stock or to elect a combination thereof), or, if no such
provision is made in the grant, as the Ryerson Tull Committee shall determine
upon exercise of the right.
Restricted Stock Awards
Restricted stock awards consisting of shares of Company common stock may be
made under the Incentive Stock Plan. Such awards shall be contingent on the
employee's continuing employment with the Company or its subsidiaries or
affiliates for a period to be specified in the award, which shall not be more
than ten years from the date of award, and may be subject to such additional
terms and conditions as the Ryerson Tull Committee deems appropriate, which
may include performance measures. Except as otherwise determined by the
Ryerson Tull Committee at the time of the award, the holder of a restricted
stock award shall have the right to vote the restricted shares and to receive
dividends thereon, unless and until such shares are forfeited. If all
conditions to which such award is subject have been satisfied, the holder
shall be entitled to such shares free of all restrictions.
Performance Awards
Performance awards consisting of shares of Company common stock, monetary
units, or units which are expressed in terms of shares of Company common stock
may also be made under the Incentive Stock Plan. Subject to the following
paragraph, such awards shall be contingent on the achievement over a period of
not more than ten years of such corporate, division, subsidiary, group or
other measures and goals as shall be established by the Ryerson Tull
Committee. Subject to the following paragraph, such measures and goals may be
revised by the Ryerson Tull Committee from time to time during the performance
period. Except as may otherwise be determined by the Ryerson Tull Committee, a
performance award shall terminate if the holder of the award does not remain
continuously in the employ of the Company or its subsidiaries or affiliates at
all times during the applicable performance period. If a performance award
consists of shares of Company common stock or units which are expressed in
terms of shares of such common stock, amounts equal to dividends otherwise
payable on a like number of shares may, if the award so provides, be converted
into additional such shares or credited as additional units and paid to the
participant on payment of the award.
In order to permit performance awards to named executive officers to be
deductible by the Company for Federal income tax purposes, the Code and
related regulations require performance measures for such awards to be
specified in the Incentive Stock Plan and approved by stockholders. The
performance measures established in the Incentive Stock Plan for such purposes
are: safety (including, but not limited to, total injury frequency, lost
workday rates or cases, medical treatment cases and fatalities); quality
control (including, but not limited to, critical product characteristics and
defects); cost control (including, but not limited to, cost as a percentage of
sales); capital structure (including, but not limited to, debt and equity
levels, debt-to-equity ratios, and debt-to-total-capitalization ratios);
inventory turnover; customer performance or satisfaction; revenue measures
(including, but not limited to, gross revenues and revenue growth); revenue
growth as compared to market; net income; conformity to cash flow plans;
return measures (including, but not limited to, return on investment assets or
capital); operating profit to operating assets; share price measures
(including, but not limited to, fair market value of shares, growth measures,
and total shareholder return); working capital measures; operating earnings
(before or after taxes); economic value added, cash value added; and cash flow
return on investment.
The Ryerson Tull Committee has discretion to establish performance goals and
to adjust the goals and methods used to measure attainment of the goals. With
respect to awards which are intended to be exempt from the deduction
limitation, the Ryerson Tull Committee has discretion to adjust awards in a
manner that does not increase such awards or make any other change that could
cause such
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awards to become nondeductible under the regulations discussed above. The
Ryerson Tull Committee has discretion to amend or replace performance measures
applicable to the named executive officers in the event applicable regulations
change and to grant awards to named executive officers that would not be
deductible under the regulations based upon any performance measures it deems
appropriate.
Payment of a performance award following the end of the performance period,
if such award consists of monetary units or units expressed in terms of shares
of common stock, may be made in cash, shares of common stock, or a combination
thereof, as determined by the Ryerson Tull Committee. Any payment made in
common stock shall be based on the fair market value of such stock on the
payment date.
Antidilution Adjustments and Change in Control Provisions
The maximum number of shares issuable under the Incentive Stock Plan and the
number, class and/or price of shares or other consideration subject to any
outstanding stock option, stock appreciation right, restricted stock award or
performance award may be appropriately adjusted by the Ryerson Tull Committee
in the event of any change in corporate capitalization, such as a stock split,
reverse stock split, or stock dividend, or a corporate transaction, such as a
merger, consolidation, or separation, including a spin-off, or other
distribution of stock or property of the Company or its subsidiaries (other
than normal cash dividends), and any reorganization or partial or complete
liquidation of the Company or its subsidiaries. The Incentive Stock Plan also
provides that in the event of a Change in Control (as defined below), with
certain exceptions, (1) all outstanding stock options, stock appreciation
rights, and restricted stock awards shall automatically become fully
exercisable and vested and shall be cashed out on the basis of a Change in
Control Price (as defined in the Incentive Stock Plan) and (2) all outstanding
performance awards shall be cashed out in such manner and in such amount or
amounts as determined by the Ryerson Tull Committee at the time such awards
are made. For purposes of the Incentive Stock Plan, a Change in Control will
generally be deemed to have occurred if:
. any person becomes the beneficial owner of 40% or more of the combined
voting power of the Company's then outstanding securities;
. during any two-year period, the majority of the membership of the
Company's Board of Directors 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;
. the Company's stockholders approve a merger or consolidation of the
Company 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;
. the Company's stockholders approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of
all or substantially all of its assets; or
. there occurs with respect to a "Related Company" a sale or disposition
of securities representing 50% or more of the combined voting power of
the Related Company's securities, or a merger or consolidation of a
Related Company with another company in which a majority-owned direct or
indirect subsidiary of the Company does not own at least 50% of the
combined voting power of the voting securities of the surviving entity,
or a sale or disposition of all or substantially all of the assets of a
Related Company to a person other than a majority-owned direct or
indirect subsidiary of the Company.
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A "Related Company" is a participant's employer (or any direct or indirect
parent company of such employer, or subsidiary of such employer that is a
significant subsidiary (within the meaning of Rule 405 under the Securities
Act) of the Company). A Change in Control of the Company shall not be deemed
to have occurred with respect to any employee, however, if the sale or other
transaction includes or involves a sale to the public or a distribution to the
stockholders of the Company of more than 50% of the voting securities of the
participant's employer or a direct or indirect parent of his or her employer
and the participant's employer (or a direct or indirect parent of the
participant's employer) agrees to become a successor to the Company under an
individual agreement or other contractual agreement providing for benefits.
Federal Tax Consequences
An employee who has been granted an incentive stock option will not realize
taxable income and the Company will not be entitled to a deduction at the time
of the grant or exercise of such option. If the employee makes no disposition
of shares acquired pursuant to an incentive stock option within two years from
the date of grant of such option, or within one year of the transfer of the
shares to such employee, any gain or loss realized on a subsequent disposition
of such shares will be treated as a long-term capital gain or loss. Under such
circumstances, the Company will not be entitled to any deduction for Federal
income tax purposes. If the foregoing holding period requirements are not
satisfied, the employee will generally realize ordinary income at the time of
disposition in an amount equal to the lesser of (1) the excess of the fair
market value of the shares on the date of exercise over the option price or
(2) the excess of the amount realized upon disposition of the shares, if any,
over the option price, and the Company will be entitled to a corresponding
deduction.
An employee will not realize taxable income at the time of the grant of an
option which does not qualify as an incentive stock option. Upon exercise,
however, of such non-qualified stock option, the employee (even if the option
has been transferred) will realize ordinary income in an amount measured by
the excess, if any, of the fair market value of the shares on the date of
exercise over the option price, and the Company will be entitled to a
corresponding deduction. Upon a subsequent disposition of such shares, the
employee (or, if applicable, the transferee) will realize short-term or long-
term capital gain or loss with the basis for computing such gain or loss equal
to the option price plus the amount of ordinary income realized upon exercise.
An employee will not realize taxable income at the time of the grant of a
stock appreciation right. Upon exercise, however, such employee will realize
ordinary income measured by the difference between the fair market value of
the Company common stock on the applicable date of grant and the fair market
value of such stock on date of exercise. The Company will be entitled to a
corresponding deduction in the year of exercise. Although the tax rules
governing transfers of stock appreciation rights are unclear, it appears that
an employee would be required to recognize ordinary income upon exercise of a
stock appreciation right by a transferee. An employee who has been granted a
restricted stock award will not realize taxable income at the time of grant,
and the Company will not be entitled to a deduction at that time, assuming
that the restrictions constitute a substantial risk of forfeiture for Federal
income tax purposes. Upon the vesting of shares subject to an award, the
employee (even if the award has been transferred) will realize ordinary income
in an amount equal to the fair market value of the shares at such time, and
the Company will be entitled to a corresponding deduction unless the employee
is one of the named executive officers and applicable provisions of the Code
regarding deductibility are not satisfied. Dividends paid to the employee
during the restriction period will also be compensation income to the employee
and deductible as such by the Company. An employee who receives a restricted
stock award may elect to be taxed at the time of grant of the award on the
then fair market value of the shares, in which case (i) the Company will be
entitled to a deduction at the same time and in the same amount, (ii)
dividends paid to such employee during the restriction period will be taxable
as dividends to such employee and not deductible by the Company, and (iii)
there will be no further tax consequences when the restrictions lapse. If an
employee who has made such an
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election subsequently forfeits the shares, he will not be entitled to any
deduction or loss. The Company, however, will be required to include as
ordinary income the lesser of the fair market value of the forfeited shares or
the amount of the deduction originally claimed with respect to the shares.
The Company has also been advised that an employee who has been granted a
performance award will not realize taxable income at the time of grant, and
the Company will not be entitled to a deduction at that time. The employee
(even if the award has been transferred) will have compensation income at the
time of payment (or vesting if the award is in stock), and the Company will
have a corresponding deduction unless the employee is one of the named
executive officers and applicable provisions of the Code regarding
deductibility are not satisfied.
Any acceleration of the payment of grants and awards under the Incentive
Stock Plan in the event of a change in control of the Company may cause part
or all of the consideration involved to be treated as an "excess parachute
payment" under the Code, which may subject the participant to a 20% excise tax
and which may not be deductible by the Company. A deduction otherwise
available to the Company for any year with respect to compensation payable to
a named executive officer may be denied to the extent that it exceeds
$1,000,000. For these purposes, restricted stock grants and performance awards
under the Plan may under certain circumstances qualify for, and it is
anticipated that grants of options and stock appreciation rights will
generally qualify for, an exception to that limitation for eligible
performance-based compensation.
Other Information
Approval of the Incentive Stock Plan will require the affirmative vote of
the holders of shares of the Company representing a majority of the shares
represented in person or by proxy and entitled to vote at the Annual Meeting,
with the result that shares which abstain from voting would count as votes
against the Incentive Stock Plan and broker non-votes would have no effect on
the outcome. Proxies not limited to the contrary will be voted for approval of
the Incentive Stock Plan. The closing price of the Company's common stock
reported on the New York Stock Exchange Composite Transactions for March 9,
1999 was $16 3/16.
The Board of Directors unanimously recommends a vote FOR approval of the
Ryerson Tull 1999 Incentive Stock Plan.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with NSC
During 1989, the Company and Nippon Steel Corporation ("NSC"), through an
indirect wholly owned subsidiary, each purchased approximately $15 million of
the other company's common stock and the Company sold 185,000 shares of its
Series F Exchangeable Preferred Stock to another NSC subsidiary, NS Finance
III, Inc., for $1,000 per share. During 1995, NS Finance III, Inc. exchanged
its Series F Exchangeable Preferred Stock holdings for $185 million principal
amount of the Company's 10.23% Subordinated Voting Notes with voting rights
representing approximately 9.7% of the votes eligible to be cast by the
Company's voting securities. The Company paid $85 million of the Subordinated
Voting Notes in 1996 and used $116.7 million to prepay the balance of the
Subordinated Voting Notes on August 3, 1998, including approximately $16.7
million in interest and prepayment premiums. The shares of NSC common stock
were sold to Ispat as part of the ISC/Ispat Transaction.
The Company and NSC or their respective affiliates entered into a number of
agreements related primarily to two joint ventures, I/N Tek and I/N Kote. The
following summarizes arrangements between the Company and NSC or their
affiliates in effect prior to July 16, 1998, the date of the ISC/Ispat
Transaction. As part of the ISC/Ispat Transaction, Ispat acquired the joint
ventures, Ispat assumed the obligations of the Company under the various
venture agreements and NSC and certain lenders released the Company of its
obligations under such agreements.
I/N Tek Joint Venture
The Company and NSC entered into a joint venture in 1987 to construct and
operate a cold-rolling facility near New Carlisle, Indiana. I/N Tek, the
general partnership formed for this joint venture, was 60% owned by a wholly
owned subsidiary of ISC and 40% owned by an indirect wholly owned subsidiary
of NSC. Funded by capital contributions by the two partners ($111.6 million by
ISC's subsidiary and $74.4 million by NSC's subsidiary) and by third-party
financing, the facility was completed in April 1990 at a total cost of
approximately $525.0 million. The Company and NSC each guaranteed a portion of
the third-party long-term financing of I/N Tek. As part of the ISC/Ispat
Transaction, Ispat assumed the Company's share of such guarantee, which
amounted to $128 million at July 16, 1998, the date of the ISC/Ispat
Transaction, and the I/N Tek lenders released the Company from its obligations
thereunder. During 1998 through July 16, I/N Tek paid, in proportion to the
partnership interests, approximately $1.9 million of subordinated loans that
the partners had previously made to I/N Tek. I/N Tek made equity distributions
during 1998 through July 16 totaling approximately $20 million to the partners
in proportion to their partnership interests.
ISC generally had exclusive rights to the production capacity of the
facility, which it used to produce cold-rolled steel under a tolling
arrangement with I/N Tek. During 1998 through July 16, I/N Tek charged ISC
approximately $77 million 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 1998 through
July 16, NSC, through an indirect wholly owned subsidiary, purchased cold-
rolled steel from ISC, including I/N Tek products, for approximately $77.4
million.
I/N Tek, ISC, NSC and their affiliates entered into various related
technology, management, administrative services and commercial agreements. I/N
Tek paid NSC approximately $0.2 million during 1998 through July 16 under
these agreements. I/N Tek also paid ISC approximately $0.6 million during 1998
through July 16 for various administrative and personnel support services and
$1.5 million for certain production supplies. I/N Tek also made purchases from
Company subsidiaries of approximately $0.8 million during 1998 through July
16.
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I/N Kote Joint Venture
The Company and NSC also entered into a joint venture in 1989 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, was 50% owned by a subsidiary of ISC and 50% owned by a
subsidiary of NSC. The facility cost approximately $554 million financed
equally by the partners through $120 million in capital contributions and $60
million in subordinated loans and by third-party long-term financing. During
1998 through July 16, the partners made additional subordinated loans to I/N
Kote of approximately $0.7 million each. I/N Kote had approximately $355
million outstanding under its third-party long-term financing agreement at
July 16, 1998. ISC and NSC each guaranteed the share of project indebtedness
attributable to their respective subsidiaries.
I/N Kote was required to buy all of its cold-rolled steel from ISC. ISC, in
turn, was required to furnish cold-rolled steel at prices that were based, in
part, on operating costs of I/N Kote and that resulted in an annual return on
equity to the partners of I/N Kote of up to 10% after operating and financing
costs. This price was subject to upward adjustments if I/N Kote's operating
rate fell below a certain level or if ISC's return on sales was less than I/N
Kote's return on sales, and to downward adjustments if I/N Kote's return on
sales was less than ISC's. These factors did not result in a price adjustment
in 1998 through July 16. During 1998 through July 16, 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 acted as sales agent for I/N Kote's
products in North America, and NSC limited its exports of similar products to
the United States and Canada. ISC incurred costs of approximately $5.2 million
to I/N Kote for certain tolling services and scrap purchases during 1998
through July 16. I/N Kote and its partners also entered into various
technology, management, administrative services and other agreements with
respect to the project. I/N Kote purchased from ISC approximately $182 million
of cold-rolled sheet steel during 1998 through July 16. I/N Kote paid
affiliates of NSC approximately $0.6 million during 1998 through July 16 for
engineering services. I/N Kote paid approximately $3.5 million to ISC and its
subsidiaries during 1998 through July 16 for various administrative,
engineering and sales services provided to I/N Kote by ISC. In addition,
Company subsidiaries made purchases of approximately $0.9 million from I/N
Kote, and I/N Kote made purchases from Company subsidiaries of approximately
$0.4 million, during 1998 through July 16. I/N Kote paid I/N Tek approximately
$11.5 million during 1998 through July 16 for shared utilities, maintenance
material and services.
Other Transactions
The Company and its subsidiaries paid the law firm of Mayer, Brown & Platt,
of which George A. Ranney, Jr., President, General Counsel and Secretary of
the Company prior to the RT Merger, is a partner, approximately $3.5 million
for legal services and other charges during 1998. 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 1999. Mr. Ranney resigned as
President of the Company at the time of the RT Merger but continues to serve
as its Secretary and General Counsel.
In February 1999, the Company made charitable contributions to the Chicago
Community Foundation Donor Advised Fund in the names of Messrs. Darnall and
Ranney in the amounts of $2,000,000 and $400,000, respectively, to honor their
services to the Company.
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PROPOSALS OF STOCKHOLDERS
Proposals of stockholders which are intended to be included in the Company's
proxy statement for the 2000 Annual Meeting pursuant to SEC Rule 14a-8 must be
received by the Company no later than November 18, 1999, and must otherwise
comply with that rule to be included in the Company's proxy materials for that
meeting.
A stockholder that intends to present business at the 2000 Annual Meeting
other than pursuant to Rule 14a-8 must comply with the requirements set forth
in the Company's By-laws. Among other things, to bring business before an
annual meeting, a stockholder must give written notice thereof, complying with
the By-laws, to the Secretary of the Company not less than 90 days and not
more than 105 days prior to the anniversary of the date on which the Company
first mailed its proxy materials for the prior year's annual meeting of
stockholders. Therefore, because the Company anticipates mailing its proxy
statement on March 17, 1999, the Company must receive notice of a stockholder
proposal submitted other than pursuant to Rule 14a-8 no sooner than December
3, 1999, and no later than December 18, 1999.
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,
George A. Ranney, Jr.
Secretary
March 17, 1999
Chicago, Illinois
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Each stockholder, whether or not he or she expects to be present in person
at the Annual Meeting, is requested to SIGN, DATE AND RETURN THE ENCLOSED
PROXY in the accompanying envelope as promptly as possible.
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EXHIBIT A
RYERSON TULL 1999 INCENTIVE STOCK PLAN
1.Purpose.
The purpose of the Ryerson Tull 1999 Incentive Stock Plan (the "Plan") is to
attract and retain outstanding individuals as officers and key employees of
Ryerson Tull, Inc. (the "Company") and its subsidiaries, and to furnish
incentives to such individuals through rewards based upon the ownership and
performance of the Common Stock (as defined in Section 3). To this end, the
Committee hereinafter designated and, in certain circumstances, the Chairman
of the Board of the Company (the "Chairman") or the President of the Company,
may grant stock options, stock appreciation rights, restricted stock awards,
and performance awards, or combinations thereof, to officers and other key
employees of the Company and its subsidiaries, on the terms and subject to the
conditions set forth in this Plan. As used in the Plan, the term "RT" shall
mean, collectively, the Company and its affiliates, and the term "subsidiary"
shall mean (a) any corporation of which the Company owns or controls, directly
or indirectly, 50% or more of the outstanding shares of capital stock entitled
to vote for the election of directors or (b) any partnership, joint venture,
or other business entity in respect of which the Company, directly or
indirectly, has comparable ownership or control.
2.Participants.
Participants in the Plan shall consist of: (a) such officers and other key
employees of the Company and its subsidiaries as the Committee in its sole
discretion may select from time to time to receive stock options, stock
appreciation rights, restricted stock awards or performance awards, either
singly or in combination, as the Committee may determine in its sole
discretion; and (b) if the Committee authorizes the Chairman or the President
to make grants or awards of stock options, stock appreciation rights,
restricted stock or performance awards, such employees of the Company and its
subsidiaries who are not subject to section 16(a) of the Exchange Act as the
Chairman or the President shall determine in his or her sole discretion after
consultation with the Vice President-Human Resources of the Company. Any
director of the Company or any of its subsidiaries who is not also an employee
of the Company or any of its subsidiaries shall not be eligible to receive
stock options, stock appreciation rights, restricted stock awards or
performance awards under the Plan.
3.Shares Reserved under the Plan.
Subject to adjustment pursuant to the provisions of Section 11 of the Plan,
the maximum number of shares of Common Stock, $1.00 par value per share, of
the Company ("Common Stock") which may be issued pursuant to grants or awards
made under the Plan shall not exceed the sum of (1) 1,000,000 and (2) the
total number of shares available for issuance under the Inland 1992 Incentive
Stock Plan and the Inland 1995 Incentive Stock Plan (collectively, the "Prior
Plans") as of the effective date of the Plan. No more than 335,000 shares of
Common Stock shall be issued pursuant to restricted stock awards and
performance awards under the Plan.
The following restrictions shall apply to all grants and awards under the
Plan other than grants and awards which, by their terms, are not intended to
comply with the "Performance-Based Exception" (defined below in this Section
3):
a. the maximum aggregate number of shares of Common Stock that may be
granted or awarded under the Plan to any participant under the Plan
during any three year period shall be 700,000; and
b. the maximum aggregate cash payout with respect to grants or awards under
the Plan in any fiscal year of the Company to any Named Executive
Officer (defined below in this Section 3) shall be $1,000,000.
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For purposes of the Plan, "Named Executive Officer" shall mean a participant
who is one of the group of "covered employees" as defined in the regulations
promulgated under section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code") or any successor statute, and "Performance-Based
Exception" shall mean the performance-based exception from the deductibility
limitations as set forth in Section 162(m) of the Code.
Except to the extent otherwise determined by the Committee, any shares of
Common Stock subject to grants or awards under the Plan that terminate by
expiration, cancellation or otherwise without the issuance of such shares
(including shares underlying a stock appreciation right exercised for stock,
to the extent that such underlying shares are not issued), that are settled in
cash (to the extent so settled), or, in the case of restricted stock awards,
that terminate without vesting, shall become available for future grants and
awards under the Plan. Shares of Common Stock to be issued pursuant to grants
or awards under the Plan may be authorized and unissued shares of Common
Stock, treasury Common Stock, or any combination thereof.
4.Administration of the Plan.
The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"), which
shall consist of two or more persons who constitute "non-employee directors"
within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and "outside directors" within the
meaning of Treas. Reg. (S) 1.162-27(e)(3). Subject to the provisions of the
Plan, the Committee shall have authority: (a) to determine which employees of
the Company and its subsidiaries shall be eligible for participation in the
Plan; (b) to select employees to receive grants under the Plan; (c) to
determine the form of grant, whether as a stock option, stock appreciation
right, restricted stock award, performance award or a combination thereof, the
number of shares of Common Stock or units subject to the grant, the time and
conditions of exercise or vesting, the fair market value of the Common Stock
for purposes of the Plan, and all other terms and conditions of any grant and
to amend such awards or accelerate the time of exercise or vesting thereof;
and (d) to prescribe the form of agreement, certificate or other instrument
evidencing the grant. Notwithstanding the foregoing, the Committee, subject to
the terms and conditions of the Plan, may delegate to the Chairman or the
President of the Company, if such individual is then serving as a member of
the Board, the authority to act as a subcommittee of the Committee for
purposes of making grants or awards of stock options, stock appreciation
rights, restricted stock or performance awards, not to exceed such number of
shares as the Committee shall designate annually, to such employees of the
Company and its subsidiaries who are not subject to section 16(a) of the
Exchange Act as the Chairman or the President shall determine in his or her
sole discretion after consultation with the Vice President-Human Resources of
the Company, and the Chairman or the President, as applicable, shall have the
authority and duties of the Committee with respect to such grants. The
Committee shall also have authority to interpret the Plan and to establish,
amend and rescind rules and regulations for the administration of the Plan,
and all such interpretations, rules and regulations shall be conclusive and
binding on all persons.
5.Effective Date of Plan.
The Plan shall be effective upon approval by the stockholder(s) of the
Company.
6.Stock Options.
a. Grants. Subject to the terms of the Plan, options to purchase shares of
Common Stock, including "incentive stock options" within the meaning of
Section 422 of the Code, may be granted from time to time to such
officers and other key employees of the Company and its subsidiaries as
may be selected by the Committee. Each grant of an option under the Plan
may designate whether the option is intended to be an incentive stock
option or a "nonqualified" stock option. Any option not so designated
shall be deemed to be a "nonqualified" stock option.
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b. Terms of Options. An option shall be exercisable in whole or in such
installments and at such times as may be determined by the Committee in
its sole discretion, provided that no option shall be exercisable more
than ten years after the date of grant. The per share option price shall
not be less than the greater of par value or 100% of the fair market
value of a share of Common Stock on the date the option is granted. Upon
exercise, the option price may be paid in cash, in shares of Common
Stock having a fair market value equal to the option price which have
been owned by the Participant for at least 6 months prior thereto, or in
a combination thereof. The Committee may also allow the cashless
exercise of options by holders thereof, as permitted under regulations
promulgated by the Board of Governors of the Federal Reserve System,
subject to any applicable restrictions necessary to comply with rules
adopted by the Securities and Exchange Commission, and the exercise of
options by holders thereof by any other means that the Committee
determines to be consistent with the Plan's purpose and applicable law,
including loans, with or without interest, made by the Company to the
holder thereof.
c. Restrictions Relating to Incentive Stock Options. To the extent required
by the Code, the aggregate fair market value (determined as of the time
the option is granted) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by an
employee during any calendar year (under the Plan or any other plan of
the Company or any of its subsidiaries) shall not exceed $100,000.
d. Termination of Employment. If an optionee ceases to be employed by the
Company or any of its affiliates by reason of (i) death, (ii) physical
or mental incapacity, (iii) retirement on or after the normal retirement
date provided for in and pursuant to any pension plan of the Company or
any affiliate of the Company in effect at the time of such retirement,
or (iv) early retirement (with the consent of the Committee) provided
for in and pursuant to any such pension plan, any option held by such
optionee may be exercised, with respect to all or any part of the Common
Stock as to which such option was not theretofore exercised (whether or
not such option was otherwise then exercisable), for such period from
and after the date of such cessation of employment (not extending,
however, beyond the date of expiration of such option) as the Committee
may determine at the time of the grant or at any time thereafter. If an
optionee ceases to be employed by the Company and any of its affiliates
for any reason other than a reason set forth in the immediately
preceding sentence, any option granted to such optionee may be exercised
for a period ending on the 30th day following the date of such cessation
of employment or the date of expiration of such option, whichever first
occurs, but only with respect to that number of shares of Common Stock
for which such option was exercisable immediately prior to the date of
cessation of employment, except as otherwise determined by the Committee
at the time of grant or any time thereafter.
e. Additional Terms and Conditions. The agreement or instrument evidencing
the grant of a stock option may contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined by the
Committee in its sole discretion.
7.Stock Appreciation Rights.
a. Grants. Subject to the terms of the Plan, rights entitling the grantee
to receive cash or shares of Common Stock having a fair market value
equal to the appreciation in market value of a stated number of shares
of such Common Stock from the date of the grant to the date of exercise,
or, in the case of rights granted in tandem with or by reference to a
stock option granted prior to the grant of such rights, from the date of
grant of such related stock option to the date of exercise, may be
granted from time to time to such officers and other key employees of
the Company and its affiliates as may be selected by the Committee.
A-3
<PAGE>
b. Terms of Grant. Such rights may be granted in tandem with or by
reference to a related stock option, in which event the grantee may
elect to exercise either the stock option or the right, but not both, as
to the shares subject to the stock option and the right, or the right
may be granted independently of a stock option. Rights granted in tandem
with or by reference to a related stock option shall, except as provided
at the time of grant, be exercisable to the extent, and only to the
extent, that the related option is exercisable. Rights granted
independently of a stock option shall be exercisable in whole or in such
installments and at such times as may be determined by the Committee,
provided that no right shall be exercisable more than ten years after
the date of grant. Further, in the event that any employee to whom
rights are granted independently of a stock option ceases to be an
employee of the Company and its affiliates, such rights shall be
exercisable only to the extent and upon the conditions that stock
options are exercisable in accordance with the provisions of paragraph
(d) of Section 6 of the Plan. The Committee may at the time of the grant
or at any time thereafter impose such additional terms and conditions on
the exercise of stock appreciation rights as it deems necessary or
desirable for any reason, including for compliance with Section 16(a) or
Section 16(b) of the Exchange Act and the rules and regulations
thereunder.
c. Payment on Exercise. Upon exercise of a stock appreciation right, the
holder shall be paid the excess of the then fair market value of the
number of shares of Common Stock to which the right relates over the
fair market value of such number of shares at the date of grant of the
right or of the related stock option, as the case may be. Such excess
shall be paid in cash or in shares of Common Stock having a fair market
value equal to such excess, or in such combination thereof, as may be
provided in the grant of such right (which may permit the holder to
elect between cash and Common Stock or to elect a combination thereof),
or, if no such provision is made in the grant, as the Committee shall
determine upon exercise of the right, provided, in any event, that the
holder shall be paid cash in lieu of any fractional share of Common
Stock to which such holder would otherwise be entitled.
d. Additional Terms and Conditions. The agreement or instrument evidencing
the grant of stock appreciation rights may contain such other terms,
provisions and conditions not inconsistent with the Plan as may be
determined by the Committee in its sole discretion.
8.Restricted Stock Awards.
Subject to the terms of the Plan, restricted stock awards consisting of
shares of Common Stock may be made from time to time to such officers and
other key employees of the Company and its affiliates as may be selected by
the Committee, provided that any such employee (except an employee whose terms
of employment include the granting of a restricted stock award) shall have
been employed by the Company or any of its affiliates for at least six months.
Such awards shall be contingent on the employee's continuing employment with
the Company or its affiliates for a period to be specified in the award (which
shall not be more than ten years from the date of award) and shall be subject
to such additional terms and conditions as the Committee in its sole
discretion deems appropriate, including, but not by way of limitation,
requirements relating to satisfaction of performance measures and restrictions
on the sale or other disposition of such shares during the restriction period.
Except as otherwise determined by the Committee at the time of the award, the
holder of a restricted stock award shall have the right to vote the restricted
shares and to receive dividends thereon, unless and until such shares are
forfeited.
9.Performance Awards
a. Awards. Performance awards consisting of (i) shares of Common Stock,
(ii) monetary units or (iii) units which are expressed in terms of
shares of Common Stock may be made from time
A-4
<PAGE>
to time to such officers and other key employees of the Company and its
affiliates as may be selected by the Committee. Subject to the
provisions of Section 12 below, such awards shall be contingent on the
achievement over a period of not more than ten years of such corporate,
division, subsidiary, group or other measures and goals as shall be
established by the Committee. Subject to the provisions of Sections 10
and 12 below, such measures and goals may be revised by the Committee at
any time and/or from time to time during the performance period. Except
as may otherwise be determined by the Committee at the time of the award
or at any time thereafter, a performance award shall terminate if the
grantee of the award does not remain continuously in the employ of the
Company or its affiliates at all times during the applicable performance
period.
b. Rights with Respect to Shares and Share Units. If a performance award
consists of shares of Common Stock or units which are expressed in terms
of shares of such Common Stock, amounts equal to dividends otherwise
payable on a like number of shares may, if the award so provides, be
converted into additional such shares (to the extent that shares are
then available for issuance under the Plan) or credited as additional
units and paid to the participant if and when, and to the extent that,
payment is made pursuant to such award.
c. Payment. Payment of a performance award following the end of the
performance period, if such award consists of monetary units or units
expressed in terms of shares of Common Stock, may be made in cash,
shares of Common Stock, or a combination thereof, as determined by the
Committee. Any payment made in Common Stock shall be based on the fair
market value of such stock on the payment date.
10.Performance Measures Applicable to Awards to Named Executive Officers
Unless and until the Committee proposes for stockholder vote a change in the
general performance measures set forth in this Section 10, the attainment of
which may determine the degree of payout or vesting with respect to awards
under the Plan which are designed to qualify for the Performance-Based
Exception, the performance measure(s) to be used for purposes of such awards
shall be chosen from among the following alternatives: safety (including, but
not limited to, total injury frequency, lost workday rates or cases, medical
treatment cases and fatalities); quality control (including, but not limited
to, critical product characteristics and defects); cost control (including, but
not limited to, cost as a percentage of sales); capital structure (including,
but not limited to, debt and equity levels, debt-to-equity ratios, and debt-to-
total-capitalization ratios); inventory turnover; customer performance or
satisfaction; revenue measures (including, but not limited to gross revenues
and revenue growth); net income; conformity to cash flow plans; return measures
(including, but not limited to, return on investment assets or capital);
operating profit to operating assets; share price measures (including, but not
limited to, fair market value of shares, growth measures, and total shareholder
return); working capital measures; operating earnings (before or after taxes);
economic value added, cash value added; and cash flow return on investment.
The Committee shall have the discretion to establish performance goals based
upon the foregoing performance measures and to adjust such goals and the
methodology used to measure the determination of the degree of attainment of
such goals; provided, however, that awards under the Plan that are intended to
qualify for the Performance-Based Exception and that are issued to or held by
Named Executive Officers may not be adjusted in a manner that increases such
award. The Committee shall retain the discretion to adjust such awards in a
manner that does not increase such awards. Furthermore, the Committee shall not
make any adjustment to awards under the Plan issued to or held by Named
Executive Officers that are intended to comply with the Performance-Based
Exception if the result of such adjustment would be the disqualification of
such award under the Performance-Based Exception.
A-5
<PAGE>
In the event that applicable laws change to permit the Committee greater
discretion to amend or replace the foregoing performance measures applicable
to awards to Named Executive Officers without obtaining stockholder approval
of such changes, the Committee shall have sole discretion to make such changes
without obtaining such approval. In addition, in the event that the Committee
determines that it is advisable to grant awards under the Plan to Named
Executive Officers that may not qualify for the Performance-Based Exception,
the Committee may make such grants upon any performance measures it deems
appropriate with the understanding that they may not satisfy the requirements
of Section 162(m) of the Code.
11.Adjustments for Changes in Capitalization, Etc.
Subject to the provisions of Section 12 herein, in the event of any change
in corporate capitalization, such as a stock split, reverse stock split, stock
dividend, or a corporate transaction, such as a merger, consolidation, or
separation, including a spin-off, or other distribution of stock or property
of the Company or its affiliates (other than normal cash dividends), any
reorganization (whether or not such reorganization comes within the definition
of such term in Code Section 368) or any partial or complete liquidation of
the Company or its affiliates, such adjustment shall be made in the number and
class of shares which may be delivered under Section 3 (including the number
of shares referred to in the last sentence of the first paragraph of Section 3
and in subparagraph (a) of the second paragraph of Section 3), and in the
number and class of and/or price of shares subject to outstanding grants or
awards under the Plan, as may be determined to be appropriate and equitable by
the Committee, in its sole discretion, to prevent dilution or enlargement of
rights; provided, however, that the number of shares subject to any grants or
awards under the Plan shall always be a whole number.
12.Effect of Change in Control.
a. Acceleration of Benefits. Subject to the following sentence and the
terms of any agreement evidencing the terms of any award under the Plan,
in the event of a "Change in Control" as defined in paragraph (b) of
this Section 12, (i) the value of all outstanding stock options, stock
appreciation rights and restricted stock awards (whether or not then
fully exercisable or vested) shall be cashed out on the basis of the
"Change in Control Price" (as defined in paragraph (c) of this Section
12) as of the date the Change in Control occurs, provided, however, that
the Committee may provide for the immediate vesting instead of the
cashing out of restricted stock awards in such circumstances as it deems
appropriate; and (ii) all outstanding performance awards shall be cashed
out in such manner and in such amount or amounts as determined by the
Committee in its sole discretion.
b. Change in Control. For purposes of this Section 12, a Change in Control
means the happening of any of the following:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than (w) RT, (x) a trustee or other
fiduciary holding securities under an employee benefit plan of RT,
(y) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (z) a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of voting securities of the
Company, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such person any securities acquired directly
from the Company or its affiliates) representing 40% or more of the
combined voting power of the Company's then outstanding securities;
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new director
(other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction
A-6
<PAGE>
described in clauses (i), (iii) or (iv) of this paragraph (b)) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved cease for any reason to constitute a
majority thereof;
(iii) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity), in combination
with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of RT, at least 60% of
the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger
or consolidation, or a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no person acquires more than 50% of the
combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
A Change in Control shall also be deemed to occur with respect to any
Participant for purposes of the Plan if there occurs:
(1) a sale or disposition, directly or indirectly, other than to a person
described in subclause (w), (x) or (z) of clause (i) next above, of
securities of the Participant's employer, any direct or indirect parent
company of the Participant's employer or any company that is a
subsidiary of the Participant's employer and is also a significant
subsidiary (as defined below) of the Company (the Participant's
employer and such a parent or subsidiary being a "Related Company"),
representing 50% or more of the combined voting power of the securities
of such Related Company then outstanding;
(2) a merger or consolidation of a Related Company with any other
corporation, other than a merger or consolidation which would result in
50% or more of the combined voting power of the surviving company being
beneficially owned by a majority owned direct or indirect subsidiary of
the Company; or
(3) the sale or disposition of all or substantially all the assets of a
Related Company to a person other than a majority owned direct or
indirect subsidiary of the Company.
Notwithstanding the foregoing, no Change in Control shall be deemed to have
occurred with respect to a Participant for purposes of the Plan if (I) such
transaction includes or involves a sale to the public or a distribution to the
stockholders of the Company of more than 50% of the voting securities of the
Participant's employer or a direct or indirect parent of the Participant's
employer, and (II) the Participant's employer or a direct or indirect parent
of the Participant's employer agrees to become a successor to the Company
under an individual agreement between the Company and the Participant or the
Participant is covered by an agreement providing for benefits upon a change in
control of his or her employer following an event described clauses (1), (2)
or (3) next above. Notwithstanding any other provision of this Agreement, a
merger or consolidation of the Company with and into Inland Steel Industries,
Inc. ("ISI") (or any subsidiary of ISI) (regardless of whether or not the
Company or ISI is the surviving entity) shall not be considered a change in
control of the Company for purposes of the Plan. For purposes of the Plan, the
term "significant subsidiary" has the meaning given to such term under Rule
405 of the Security Act of 1933, as amended.
A-7
<PAGE>
c. Change in Control Price. For purposes of this Section 12, Change in
Control Price means:
(i) with respect to a Change in Control by reason of a merger or
consolidation of the Company described in paragraph (b)(iii) of
this Section 12 in which the consideration per share of Common
Stock to be paid for the acquisition of shares of Common Stock
specified in the agreement of merger or consolidation is all in
cash, the highest such consideration per share;
(ii) with respect to a Change in Control by reason of an acquisition of
securities described in paragraph (b)(i) of this Section 12, the
highest price per share for any share of the Common Stock paid by
any holder of any of the securities representing 40% or more of
the combined voting power of the Company giving rise to the Change
in Control; and
(iii) with respect to a Change in Control by reason of a merger or
consolidation of the Company (other than a merger or
consolidation described in paragraph (b)(iii) of this Section or
a change in the composition of the Board of Directors described
in paragraph (b)(ii) of this Section 12, or stockholder approval
of an agreement or plan described in paragraph (b)(iv) of this
Section 12 the highest price per share of Common Stock reported
on the Composite Transactions (or, if such shares are not traded
on the New York Stock Exchange, such other principal market on
which such shares are traded) during the sixty-day period ending
on the date the Change in Control occurs, except that, in the
case of incentive stock options and stock appreciation rights
relating to incentive stock options, the holder may not receive
an amount in excess of the maximum amount that will enable such
option to continue to qualify as an incentive stock option.
13.Amendment and Termination of Plan.
The Plan may be amended or terminated by the Board at any time and in any
respect, provided that, without the approval of the Company's stockholders, no
such amendment (other than pursuant to Section 11 of the Plan) shall be made
for which stockholder approval is necessary to comply with any applicable tax
or regulatory requirement, including for these purposes any approval
requirement which is a prerequisite for exemptive relief under Section 16(b)
of the Exchange Act, and provided that no such amendment or termination shall
impair the rights of any participant, without his or her consent, in any award
previously granted under the Plan, unless required by law. In the event of
termination of the Plan, no further grants may be made under the Plan but
termination shall not affect the rights of any participant under, or the
authority of the Committee with respect to, any grants or awards made prior to
termination.
14.Prior Plans.
Upon the effectiveness of this Plan, no further grants shall be made under
the Prior Plans. The discontinuance of the Prior Plans shall not affect the
rights of any participant under, or the authority of the Committee (therein
referred to) with respect to, any grants or awards made thereunder prior to
such discontinuance.
15.Miscellaneous.
a. No Right to a Grant. Neither the adoption of the Plan nor any action of
the Board or of the Committee shall be deemed to give any employee any
right to be selected as a participant or to be granted a stock option,
stock appreciation right, restricted stock award or performance award.
b. Rights as Stockholders. No person shall have any rights as a stockholder
of the Company with respect to any shares covered by a stock option,
stock appreciation right, or performance award until the date of the
issuance of a stock certificate to such person pursuant to such stock
option, right or award.
A-8
<PAGE>
c. Employment. Nothing contained in this Plan shall be deemed to confer
upon any employee any right of continued employment with the Company or
any of its affiliates or to limit or diminish in any way the right of
the Company or any such affiliate to terminate his or her employment at
any time with or without cause.
d. Taxes. The Company shall be entitled to deduct from any payment under
the Plan the amount of any tax required by law to be withheld with
respect to such payment or may require any participant to pay such
amount to the Company prior to and as a condition of making such
payment. In addition, the Committee may, in its discretion and subject
to such rules as it may adopt from time to time, permit a participant to
elect to have the Company withhold from any payment under the Plan (or
to have the Company accept from the participant), for tax withholding
purposes, shares of Common Stock, valued at their fair market value, but
in no event shall the fair market value of the number of shares so
withheld (or accepted) exceed the amount necessary to meet the required
Federal, state and local withholding tax rates then in effect that are
applicable to the participant and to the particular transaction.
e. Nontransferability. Except as permitted by the Committee, no stock
option, stock appreciation right, restricted stock award or performance
award shall be transferable except by will or the laws of descent and
distribution, and, during the holder's lifetime, stock options and stock
appreciation rights shall be exercisable only by, and shares subject to
restricted stock awards and payments pursuant to performance awards
shall be delivered or made only to, such holder or such holder's duly
appointed legal representative.
A-9
<PAGE>
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
-------------------------------
RYERSON TULL, INC.
1999
<PAGE>
PROXY PROXY
Ryerson Tull, Inc.
Confidential Voting Directions
Solicited on Behalf of the Board of Directors
As a Participant in the Ryerson Tull Savings Plan or the Inland Steel Company
Savings Plan, I hereby direct LaSalle National Bank, as Trustee of the ESOP
Trust which forms a part of each of such plans, to vote all shares of common
stock of Ryerson Tull, Inc. that are credited to my accounts in the ESOP Trust
as of March 9, 1999 at the Annual Meeting of Stockholders of the Company to be
held April 28, 1999 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 PricewaterhouseCoopers LLP as
auditors, FOR the Ryerson Tull, Inc. 1999 Incentive Stock Plan, and in 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 April 27, 1999 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>
[ ]
RYERSON TULL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. (0)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
1. Election of Directors.
Jameson A. Baxter, Richard G. Cline, Gary L. Crittenden, James A. Henderson,
Gregory P. Josefowicz, Neil S. Novich, Jerry K. Pearlman, Ronald L. Thompson
--------------------------
Nominee Exception
For All
For Withheld Except
( ) ( ) ( )
2. The election of PricewaterhouseCoopers LLP as auditors for the year 1999.
For Against Abstain
( ) ( ) ( )
3. Ryerson Tull, Inc. 1999 Incentive Stock Plan.
For Against Abstain
( ) ( ) ( )
4. In the discretion of the proxies to vote upon any and all other matters
which may properly come before such annual meeting or any adjournment
thereof.
Dated: _____________________________________________________________ , 1999
Signature_______________________________________________________________________
PLEASE DATE, SIGN AND RETURN PROMPTLY.
<PAGE>
INSTRUCTIONS TO PLAN PARTICIPANTS
Please date and sign your name (exactly as it appears on the accompanying
Confidential Voting Directions) in the space provided and return the
Confidential Voting Directions in the enclosed postage-paid envelope to direct
LaSalle National Bank, as Trustee of the ESOP Trust, to vote your shares in
the Plan.
All shares of the Company's common stock allocated to your accounts in the
Ryerson Tull Savings Plan or Inland Steel Company Savings Plan, as applicable,
whether vested or unvested, will be voted by LaSalle National Bank, Chicago,
Illinois, as the ESOP Trustee, according to your directions. IF THE
CONFIDENTIAL VOTING DIRECTIONS ARE RETURNED SIGNED WITH NO VOTING DIRECTIONS
MARKED, YOU WILL BE DEEMED TO HAVE DIRECTED THE ESOP TRUSTEE TO VOTE ALL
SHARES ALLOCATED TO YOUR ACCOUNTS IN THE MANNER SPECIFIED IN BOLDFACE TYPE ON
THE FRONT OF THE CONFIDENTIAL VOTING DIRECTIONS. THE ESOP TRUSTEE SHALL VOTE
ALL SHARES ALLOCATED TO PARTICIPANTS' ACCOUNTS FOR WHICH PROPERLY COMPLETED
CONFIDENTIAL VOTING DIRECTIONS ARE NOT RECEIVED PRIOR TO 5:00 P.M., CHICAGO
TIME, ON APRIL 27, 1999 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 DATE, SIGN AND RETURN THE CONFIDENTIAL VOTING DIRECTIONS PROMPTLY,
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, SO THAT YOUR SHARES
WILL BE VOTED IN THE MANNER YOU DESIRE. YOU MAY REVOKE YOUR VOTING DIRECTIONS
AT ANY TIME PRIOR TO 5:00 P.M., CHICAGO TIME, ON APRIL 27, 1999.
If, in addition to being a Participant with an account in the ESOP Trust,
you were a stockholder of the Company on March 9, 1999, you will receive a
separate Proxy and Proxy Statement from the Company. You are requested to
sign, date and return that Proxy in the postage-paid envelope provided. Legal
requirements provide for the separate solicitation of Participants with an
account in the ESOP Trust who are also stockholders of the Company.
<PAGE>
Dear Stockholder:
Enclosed are your Proxy and Proxy Statement for the 1999 Annual Meeting of
Stockholders of Ryerson Tull, Inc. Voting with respect to any common stock
held by you of record in certificate form, any common stock credited to your
account under the Shareholder Investment Service, and any Series A $2.40
Cumulative Convertible Preferred Stock held by you of record is consolidated
on the enclosed Proxy.
If, in addition to being a stockholder of the Company on March 9, 1999, you
are a participant with accounts in the ESOP Trust, you also will receive
Confidential Voting Directions and Instructions to Plan Participants from the
Company asking you to sign, date and return the Confidential Voting Directions
in the postage-paid envelope provided with such Directions.
PLEASE VOTE BY SIGNING, DATING AND RETURNING YOUR PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU DECIDE TO ATTEND THE
MEETING, TO ENSURE THAT YOUR VOTE IS REPRESENTED.
<PAGE>
PROXY PROXY
Ryerson Tull, Inc.
Proxy Solicited on Behalf of The Board of Directors
The undersigned hereby appoints Neil S. Novich, Jay M. Gratz and George A.
Ranney, Jr., 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 April 28, 1999 and at any adjournment thereof. Unless
otherwise specified, this proxy will be voted FOR the election of directors,
FOR the election of PricewaterhouseCoopers LLP as auditors, FOR the Ryerson
Tull, Inc. 1999 Incentive Stock Plan, and in 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>
[ ]
RYERSON TULL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. (0)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
1. Election of Directors.
Jameson A. Baxter, Richard G. Cline, Gary L. Crittenden, James A. Henderson,
Gregory P. Josefowicz, Neil S. Novich, Jerry K. Pearlman,
Ronald L. Thompson
--------------------------
Nominee Exception
For All
For Withheld Except
( ) ( ) ( )
2. The election of PricewaterhouseCoopers LLP as auditors for the year 1999.
For Against Abstain
( ) ( ) ( )
3. Ryerson Tull, Inc. 1999 Incentive Stock Plan.
For Against Abstain
( ) ( ) ( )
4. In the discretion of the proxies to vote upon any and all other matters
which may properly come before such annual meeting or any adjournment there-
of.
For Against Abstain
( ) ( ) ( )
Dated: _____________________________________________________________ , 1999
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.
