<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 (S) 240.14a-11(c) or (S) 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
Neil S. Novich
Chairman, President and
Chief Executive Officer
March 16, 2000
Dear Stockholder:
Ryerson Tull, Inc. will hold its 2000 Annual Meeting of Stockholders on
Thursday, April 27, 2000 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 our 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 27. If you do not expect to attend
the meeting, please take a moment now to complete and return the enclosed
proxy card in the envelope provided. Whether in person or by proxy, your
participation in the annual meeting is important to us.
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 27, 2000
To Stockholders:
We will hold the Annual Meeting of Stockholders of Ryerson Tull, Inc., a
Delaware corporation, at The Northern Trust Company, 50 South LaSalle Street,
Chicago, Illinois, on Thursday, April 27, 2000 beginning at 10:30 a.m.,
Chicago time, for the purpose of:
1. Electing directors of the Company; and
2. Considering any other matter that may properly come before the meeting.
Holders of voting securities at the close of business on March 7, 2000 are
entitled to receive notice of and vote at the Annual Meeting.
This Notice of the Annual Meeting includes a Proxy Statement. Please sign,
date and return the enclosed proxy card in the accompanying envelope as soon
as possible whether or not you expect to attend the Annual Meeting.
The Company's 1999 Annual Report, which includes the Company's 1999
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,
Joyce E. Mims
Secretary
March 16, 2000
Chicago, Illinois
<PAGE>
[LOGO OF RYERSON TULL]
2621 WEST 15th PLACE
CHICAGO, ILLINOIS 60608
PROXY STATEMENT
The Board of Directors of Ryerson Tull, Inc., formerly Inland Steel
Industries, Inc., solicits the enclosed proxy for the 2000 Annual Meeting to
be held on April 27, 2000.
Beginning on or about March 16, 2000, we will begin to solicit proxies by
mail. We also may solicit proxies through our directors, officers and regular
employees. We 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. We will also reimburse brokers, banks and similar
organizations for reasonable charges and expenses they incur in obtaining
instructions from the beneficial owners of our common stock.
On February 25, 1999, our majority-owned subsidiary became our wholly owned
subsidiary, then named Ryerson Tull, Inc., and each share of pre-merger
Ryerson Tull Class A common stock was converted into 0.61 shares of our common
stock. Pre-merger Ryerson Tull then merged with us and we changed our name to
"Ryerson Tull, Inc." These mergers are together referred to as the "RT
Merger."
Our voting securities outstanding on March 7, 2000 consisted of 24,769,782
shares of common stock with one vote per share and 82,124 shares of Series A
$2.40 Cumulative Convertible Preferred Stock with one vote per share. All
voting securities vote together without regard to class on the matter expected
to be voted upon at the Annual Meeting.
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 director 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 a participant 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 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.
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.
1
<PAGE>
We welcome comments from holders of voting securities. Comments written on
or accompanying proxy cards will be provided to us 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, which we do not anticipate, 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 2000
Annual Meeting will serve a one-year term, expiring at the 2001 Annual
Meeting, and until their successors are duly elected and qualified.
Nominees for Election
The nominees for election to the Board are described in brief biographies
below. The period of service as a director shown for Mr. James Henderson
includes the period during which he served as a director of our former
subsidiary Inland Steel Company. The Board held five meetings during 1999. All
incumbent directors attended at least 75% of the combined total number of
meetings of the Board and committees on which they served, except for Mr.
Josefowicz, who attended at least 75% of the meetings of the Board but less
than 75% of the total number of meetings of the Board and committees on which
he served. All nominees for the 2000 Board are presently serving as directors.
[PHOTO]
Jameson A. Baxter
Director of pre-merger Ryerson Tull since January 1999
Director of Ryerson Tull since February 1999
Mrs. Baxter, age 56, has been President of Baxter Associates,
Inc., a private management consulting and investment 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 our Compensation and Nominating and Governance Committees. She
is a director of Banta Corporation and The Putnam Funds.
[PHOTO]
Richard G. Cline Director of pre-merger Ryerson Tull since 1996
Director of Ryerson Tull since February 1999
Mr. Cline, age 65, 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
our Audit Committee and a member of our 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. He is a past chairman of the Federal Reserve Bank of Chicago.
2
<PAGE>
[PHOTO]
Gary L. Crittenden Director of Ryerson Tull since February 1999
Mr. Crittenden, age 46, 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. At Sears, Roebuck and Co., a multi-line
retailer, he was Executive Vice President and Chief Financial
Officer from 1997 to 1998, President of the Hardware Store
division in 1997 and Executive Vice President, Strategy and
Business Development 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
our Compensation and Nominating and Governance Committees.
[PHOTO]
James A. Henderson Director of pre-merger Ryerson Tull since 1996
Director of Ryerson Tull since 1978
Mr. Henderson, age 65, was the Chairman and Chief Executive
Officer of Cummins Engine Company, Inc., a manufacturer of diesel
engines, prior to his retirement on December 31, 1999. 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,
President and Chief Executive Officer in 1994, and Chairman and
Chief Executive Officer in 1995. He is Chairman of our Nominating
and Governance Committee and a member of our Audit Committee. Mr.
Henderson is also a director of SBC Communications Inc., Rohm and
Haas Company and International Paper Co.
[PHOTO]
Gregory P. Josefowicz Director of Ryerson Tull since February 1999
Mr. Josefowicz, age 47, has been President, Chief Executive
Officer and a director of Borders Group, Inc., an operator of book
superstores and mall-based bookstores, since November 1999. He was
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, from 1997 until
June 1999 when American Stores merged into Albertson's Inc., a
retail food-drug chain. At that time Mr. Josefowicz became
Albertson's Inc. President, Midwest Region. Mr. Josefowicz joined
Jewel-Osco in 1974, and was elected Senior Vice President of
Marketing and Advertising in 1993. He is a member of our Audit and
Nominating and Governance Committees.
[PHOTO]
Neil S. Novich Director of pre-merger Ryerson Tull since 1994
Director of Ryerson Tull since February 1999
Neil S. Novich, age 45, has been our Chairman, President and Chief
Executive Officer since February 1999. Mr. Novich was President,
Chief Executive Officer and Chief Operating Officer of pre-merger
Ryerson Tull from 1994 to February 1999. He was our Senior Vice
President from January 1995 to May 1996. Prior to joining us in
1994, Mr. Novich led the Distribution and Logistics Practice at
Bain & Company, an international management consulting firm. Mr.
Novich is also a director of W.W. Grainger, Inc. and MetalSite
General Partner, LLC.
3
<PAGE>
[PHOTO]
Jerry K. Pearlman Director of pre-merger Ryerson Tull since 1996
Director of Ryerson Tull since February 1999
Mr. Pearlman, age 60, 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 of Zenith from 1983 through April
1995. He is Chairman of our Compensation Committee and a member of
our Nominating and Governance Committee. Mr. Pearlman is also a
director of Smurfit Stone Container Corporation and Nanophase
Technologies Corporation.
[PHOTO]
Ronald L. Thompson Director of pre-merger Ryerson Tull since 1996
Director of Ryerson Tull since February 1999
Mr. Thompson, age 50, 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 our Audit and Nominating and Governance Committees. Mr.
Thompson also is a director of Ralston Purina Company and the
Teachers Insurance and Annuity Association.
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 Ryerson Tull or
any of its subsidiaries, are identified above.
Audit Committee--The Audit Committee appoints an independent auditing firm
to audit our financial books and records. The Audit Committee reviews the
proposed scope and results of the annual audit, the recommendations of the
independent auditors, and all non-audit services performed by the auditors. It
also approves the auditors' compensation. The Audit Committee also reviews
registration statements and the financial review section of our annual report
to stockholders and Form 10-K; reviews our system of internal accounting and
operating controls and the performance of our internal auditors; monitors
compliance with our Code of Business Conduct; and reviews the minutes of the
audit review by the independent auditors. The Audit Committee held two
meetings in 1999.
Compensation Committee--The Compensation Committee makes recommendations to
the Board of Directors about the promotions and salaries of our officers and
the establishment or modification of executive compensation plans and
programs; and administers the Ryerson Tull Annual Incentive Plan, our
incentive stock plans and our pension and retirement plans and trusts. The
Report of the Compensation Committee of the Board of Directors Regarding
Executive Compensation is included below. The Compensation Committee held
three meetings in 1999.
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; recommends to the Board a process for evaluating the Board and
oversees the process when it is adopted; recommends the compensation to be
paid to non-employee directors; and manages and controls the administration of
directors' compensation plans. The Nominating and Governance Committee held
one meeting in 1999.
4
<PAGE>
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 2001 Annual Meeting, the name of the candidate and a written
description of his or her qualifications must be received by the Secretary of
Ryerson Tull no sooner than November 16, 2000 and no later than December 16,
2000. Our By-laws 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 meeting.
COMPENSATION OF DIRECTORS
Our Directors' Compensation Plan provides that each director who is not an
employee of Ryerson Tull or any of our affiliates will receive an annual
retainer of $40,000. Normally, we will pay half of the retainer in shares of
our 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.
We pay the cash portion of the retainer quarterly. If a director serves for
a fraction of a quarter, the cash portion for that quarter is prorated in
whole months. We pay 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 that accrue on the restricted stock. In addition, non-employee
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. We do not pay fees to directors for attending other Board or
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. We 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 made 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. We have 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.
The Ryerson Tull Directors' 1999 Stock Option Plan provides that each non-
employee director at the close of each 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 our 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' Stock Option Plan are 50% exercisable beginning the day after the
six-month anniversary of the grant date and 100% after the earlier of the one-
year anniversary of the grant date or the date of the next annual meeting.
They expire no later than 10 years after the date of grant. A total of 300,000
shares of our common stock are reserved for issuance under the Directors'
Stock Option Plan.
We also pay the premiums on a business accident insurance policy insuring
each non-employee director for up to $500,000.
5
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table presents, as of March 1, 2000, the shares of Ryerson
Tull common stock beneficially owned by each of our directors, each of the
other named executive officers and our directors and executive officers as a
group. Except as indicated otherwise, the beneficial owners have sole voting
and investment power for these securities. Our 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 Percent
Amount of Securities of
Name and Address of Beneficial Owner Owned(/1/) Class
- ------------------------------------ -------------------- -------
<S> <C> <C>
Directors(/2/)
Jameson A. Baxter................................. 6,440 *
Richard G. Cline.................................. 7,185 *
Gary L. Crittenden................................ 3,187 *
James A. Henderson................................ 8,798 *
Gregory P. Josefowicz............................. 3,187 *
Neil S. Novich.................................... 212,190(/3/) *
Jerry K. Pearlman................................. 17,024 *
Ronald L. Thompson................................ 10,356 *
Named Executive Officers
George A. Ranney, Jr.(/4/)........................ 35,107(/5/) *
Jay M. Gratz...................................... 143,322(/6/) *
Gary L. Niederpruem............................... 71,910(/7/) *
Thomas S. Cygan................................... 39,680(/8/) *
Stephen E. Makarewicz............................. 63,802(/9/) *
All Directors and Executive Officers as a Group.... 743,675(/10/) 2.9
</TABLE>
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(1) Includes shares credited to individual accounts in the Ryerson Tull
Savings Plan. Shares shown as "subject to option" are subject to stock
options exercisable on or prior to April 29, 2000.
(2) Includes, for each non-employee Director, 1,870 shares subject to option
and 290 shares payable or deferred under the Ryerson Tull Directors'
Compensation Plan which are subject to forfeiture.
(3) Includes 202,239 shares subject to option.
(4) Resigned as a Chief Executive Officer and President effective upon the RT
Merger, retired on April 1, 1999 and resigned as General Counsel on June
7, 1999.
(5) Includes 25,000 shares subject to option.
(6) Includes 125,355 shares subject to option and 4,050 shares held in trust
for family members.
(7) Includes 67,632 shares subject to option.
(8) Includes 36,908 shares subject to option and 435 shares held jointly.
(9) Includes 59,203 shares subject to option.
(10) Includes 639,416 shares subject to option, 610 shares held under
restricted stock awards, 435 shares held jointly, 4,050 shares held in
trust for family members and 250 shares held by the spouse of an
executive officer.
*Less than 1.0%
6
<PAGE>
ADDITIONAL INFORMATION RELATING TO VOTING SECURITIES
The following table sets forth, as of December 31, 1999, the only holders
known to us to beneficially own more than 5% of our common stock.
<TABLE>
<CAPTION>
Number of Shares
Name and Address of Beneficial or Amount of Percent of
Owner Securities Owned Class
------------------------------ ---------------- ----------
<S> <C> <C>
FMR Corp. 3,596,511(/1/) 14.12
82 Devonshire Street
Boston, MA 02109
Merrill Lynch & Co., Inc. 1,996,388(/2/) 8.06
250 Vesey Street
World Financial Center North Tower
New York, NY 10281
Donald Smith & Co., Inc. 1,245,688(/3/) 5.02
East 80 Route 4
Paramus, NJ 07652
</TABLE>
- --------
(1) FMR Corp., on behalf of itself, Edward C. Johnson 3d, Abigail P. Johnson,
Fidelity Management & Research Company and Fidelity Equity-Income Fund,
reported sole voting power as to 21,087 shares and sole dispositive power
as to 3,596,511 shares.
(2) Merrill Lynch & Co., Inc., on behalf of Merrill Lynch Asset Management
Group and Merrill Lynch Special Value Fund, reported shared voting and
dispositive power as to 1,996,388 shares.
(3) Reported sole voting and dispositive power as to 1,245,688 shares.
Certain persons were also known to us to own beneficially more than 5% of
the outstanding shares of Series A $2.40 Cumulative Convertible Preferred
Stock. These shares vote together with our common stock, as a single class, on
each matter being submitted to holders of our 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 our outstanding
voting securities.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS REGARDING EXECUTIVE COMPENSATION
Our 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 Ryerson Tull and its business units. The compensation system
also is designed to align the incentives of executive officers with the
interests of stockholders.
The Compensation Committee (and predecessor committees described below)
consists of independent non-employee directors, none of whom is or has been an
employee of pre-merger Ryerson Tull, Ryerson Tull or any of their
subsidiaries. Prior to the RT Merger, our executive compensation programs were
administered by a Compensation Committee consisting of Jean-Pierre Rosso,
Chairman, Joshua E. Smith and Arnold R. Weber (the "Inland Committee"), and
pre-merger Ryerson Tull's programs were administered by the compensation
committee of its board of directors, which consisted of Jerry K. Pearlman,
Chairman, Jameson A. Baxter, Donald S. Perkins and Jean-Pierre Rosso.
Effective upon the RT Merger, these last four individuals and Gary L.
Crittenden comprised the Ryerson Tull Compensation Committee until our 1999
Annual Meeting of Stockholders. The Committee is now comprised of Mr.
Pearlman, Chairman, Mrs. Baxter and Mr. Crittenden.
7
<PAGE>
The Inland Committee
The Inland Committee determined the compensation of Mr. Ranney in his
capacity as Chief Executive Officer and President. Inland Steel Industries,
Inc. paid that compensation and was reimbursed by pre-merger Ryerson Tull for
a portion of that compensation.
The Inland Committee periodically met with outside compensation consultants
for assistance regarding our executive compensation program. The outside
consultants provided advice on the competitiveness of the executive
compensation, including comparisons between our compensation program and those
of similarly sized industrial manufacturing companies. The Inland Committee
also considered the compensation practices of other steel manufacturing
companies.
The design of our executive compensation programs increasingly emphasized
pay-for-performance and stockholder value, with the goal of linking
compensation to our total stockholder return and financial performance by
placing a significant portion of an executive's compensation at risk. We
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.
Mr. Ranney met regularly with the Inland Committee. In addition, all of the
outside directors conducted an evaluation of Mr. Ranney's performance as it
related to our 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 Inland Board of Directors.
The Inland Committee terminated Inland's short-term incentive plan
effective with the RT Merger on February 25, 1999, and made no further awards
under that plan. The Inland Committee made no awards under the Inland 1995
Incentive Stock Plan to Mr. Ranney, in view of his resignation as Chief
Executive Officer and President effective on the RT Merger and the fact that
the acquisition of Inland Steel Company by Ispat International, N.V. in 1998
constituted a change in control under Mr. Ranney's change in control
agreement. The Inland Committee authorized an amendment to Mr. Ranney's change
in control agreement pursuant to which he would receive severance benefits,
employee benefits and the ability 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 and he agreed not to be employed by or perform services for
certain competitors for a period of two years following his resignation from
employment. The members of the Inland Committee resigned as directors of
Inland effective with the RT Merger.
Inland Committee
Jean-Pierre Rosso, Chairman
Joshua Smith
Arnold R. Weber
The Ryerson Tull Committee
The compensation of Company officers, including the named executive
officers, 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. It compares the Company's compensation to
compensation of both metal service center companies and select general
distribution, industrial and service companies of comparable sales, assets and
number of employees. The Ryerson Tull Committee utilizes the general
distribution, industrial and service companies as its primary comparison group
because most metal service center companies are not publicly owned, public
8
<PAGE>
information for those publicly owned metal service center companies shows that
few have long-term incentive programs, and no metal service center company has
revenues comparable to the revenues of Ryerson Tull.
The Ryerson Tull Committee intends total compensation for executive
officers to be equivalent to the median of total compensation in the
comparison group of general distribution, industrial and service companies,
establishes base salaries generally at or below the median for base salaries
in the comparison group of companies, and sets short-term and long-term
incentives at or above the median for these incentives at the comparison group
of companies. The Ryerson Tull Committee generally targets base compensation
as one-half of the total target compensation opportunity for executive
officers and short- and long-term incentive pay as the remaining half. Short-
term and long-term incentive compensation is variable, fluctuating from year
to year depending on business unit performance, corporate performance, and
industry performance.
Mr. Novich, as Chief Executive Officer of pre-merger Ryerson Tull and,
since the RT Merger, of Ryerson Tull, 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 the compensation
decision made by the Ryerson Tull Committee and the Board of Directors of both
the Company and pre-merger Ryerson Tull.
The Ryerson Tull Committee reviews the base salary compensation of
executive officers annually, reviews comparable positions in the comparison
groups of companies, and then makes recommendations to the Board. In February
1999, Mr. Novich's base salary was increased to $500,000 in recognition of the
expansion of his responsibilities as chairman of the board of directors and
chief executive officer of the fully independent post-merger corporation.
Short-term incentive compensation is payable to the executive officers
named in the "Summary Compensation Table" under the Ryerson Tull, Inc. Annual
Incentive Plan and is included in the amount set forth under the "Bonus"
column of the table. This plan generally provides for cash awards based on a
specified percentage of a participant's salary earnings (the "AIP target") and
the extent to which corporate and (or) business unit performance standards are
achieved for the year. The Ryerson Tull Committee has historically used two
performance measures, operating return on operating assets and revenue growth,
with the formula weighted to operating return on operating assets.
In establishing the performance formulas under this Plan for 1999, the
Ryerson Tull Committee made certain adjustments to performance targets in
order to reflect additional corporate expenses associated with assumption of
corporate functions performed by the pre-merger parent company. After an
appraisal of base salary plus short-term incentives at the Company relative to
the comparison group, the Ryerson Tull Committee also adjusted the specified
AIP target percentage of salary earnings for the top three named executive
officers to reflect competitive factors. As a result of the latter adjustment,
in the case of Messrs. Novich, Gratz and Niederpruem, the AIP target
percentage of base salary was set at a percentage of the median base annual
salary for like positions in the comparison group of companies. These one-time
adjustments caused an increase in bonus paid relative to attainment of the
performance factors in 1999 compared to 1998.
In 1999, all but one business unit of Ryerson Tull achieved each of the
threshhold levels of return on operating assets and revenue growth established
for such units. The Ryerson Tull Committee computed the award payments to Mr.
Novich based upon the 1999 return on operating assets and revenue growth
achieved by the Company overall. The award payment to Mr. Gratz was computed
on a 50/50 split between the 1999 return on operating assets and revenue
growth of the Company and of
9
<PAGE>
its coil processing division, which reports to him; to Mr. Niederpruem on a
25/75 split between the 1999 return on operating assets and revenue growth
achieved by the Company and by four business units comprising the general line
business, which report to him; and to Messrs. Cygan and Makarewicz on the 1999
return on operating assets and revenue growth achieved by their respective
business units.
Grants and awards made in 1999 by the Ryerson Tull Committee under the
Ryerson Tull 1995 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
Ryerson Tull and thereby more closely align their interests with those of the
stockholders. 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 our common
stock on the date of grant and are generally exercisable for a period not
exceeding ten years. 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 our common stock at a
ratio of 0.61 shares of our 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 pre-merger Ryerson Tull 1996 Incentive Stock Plan.
The Ryerson Tull Committee established new stock awards after review of a
compensation analysis for officer positions of the Company, based on a
comparative company survey of compensation practices at the comparison group
of companies and a summary of executive compensation issues prepared by our
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 229,000
shares during 1999 payable in common stock, including the following awards:
Mr. Novich, 113,500 shares; Mr. Gratz, 43,500 shares; Mr. Niederpruem, 43,500
shares; Mr. Cygan, 13,500 shares; and Mr. Makarewicz, 15,000 shares. The
Ryerson Tull Committee made no restricted stock awards or performance awards
to named executive officers in 1999.
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 our compensation plans generally satisfy
the requirements of Section 162(m) for maximum deductibility for Federal
income tax purposes of payments made under such plans to named executive
officers. 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
Ryerson Tull.
Ryerson Tull Committee
Jerry K. Pearlman, Chairman
Jameson A. Baxter
Gary L. Crittenden
10
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following chart compares the cumulative total stockholder return on our
common stock for the five-year period ended December 31, 1999, with the
cumulative total return of the Standard and Poor's Mid Cap 400 Index, and to a
peer group of metals distributors. Our performance prior to 1999 reflects an
additional line of business, steel manufacturing, which at the time
represented approximately half of our business. The peer group's performance
for the entire time period reflects primarily the metals distribution
business. Our performance for 1999 does not include our former steel
manufacturing business.
Prior to 1999, we were included in both the Standard & Poor's 500 Composite
Stock Index and the Standard & Poor's Steel Index, but were removed from those
indices in 1998 due to changes in our market capitalization and line of
business as determined by Standard and Poor's. As a result, we no longer
include these indices in the chart below.
Also during 1998, we were added to the S&P Mid Cap 400 Index. Because there
is no nationally recognized industry index consisting of metals distributors
to be used as a peer group index, we constructed our 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, 1994 and the reinvestment of dividends.
[LINE CHART]
RYERSON TULL INC. PEER GROUP S&P MIDCAP 400
----------------- ---------- --------------
12/94 $100.00 $100.00 $100.00
12/95 $ 71.94 $123.16 $130.94
12/96 $ 57.80 $172.41 $156.08
12/97 $ 49.96 $181.06 $206.43
12/98 $ 49.68 $124.85 $236.21
12/99 $ 57.82 $138.27 $270.99
11
<PAGE>
The following chart compares the cumulative total stockholder return on pre-
merger and post-merger Ryerson Tull stock for the period from June, 1996,
following the pre-merger Ryerson Tull initial public offering, through December
31, 1999, with the cumulative total return of the Standard and Poor's Mid Cap
400 Index, and to the peer group of metals distributors. This comparison
assumes the investment of $100 on June 30, 1996 in the indices and in pre-
merger Ryerson Tull Class A common stock, the exchange of the Class A stock for
0.61 shares of our common stock on February 25, 1999 and the reinvestment of
dividends.
[CHART]
Ryerson Tull Inc. Peer Group S&P Midcap 400
----------------- ---------- --------------
6/96 100.00 100.00 100.00
12/96 83.72 89.70 109.15
12/97 86.43 94.20 144.35
12/98 60.47 64.96 165.18
12/99 74.03 72.00 189.50
12
<PAGE>
EXECUTIVE COMPENSATION
The following table presents the 1997, 1998 and 1999 compensation for
Messrs. Novich and Ranney, who acted as chief executive officers of the
Company during 1999, and the Company's other four most highly compensated
executive officers. The compensation listed in the table includes compensation
paid by us, pre-merger Ryerson Tull and other subsidiaries.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
-------------------------- ---------------------
Awards Payouts
------------ --------
Other Securities
Annual Underlying All Other
Name and Principal Compen- Stock LTIP Compen-
Position Year Salary Bonus sation Options(/1/) Payouts sation(/2/)
- ------------------ ---- -------- -------- -------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Neil S. Novich 1999 $492,300 $320,400 $ 0 113,500 $ 0 $ 34,387
Chairman, Director,
President 1998 441,472 146,900 0 150,000 0 33,858(/3/)
and Chief Executive
Officer 1997 418,309 329,600 0 60,000 0 20,908
George A. Ranney, Jr.(4) 1999 $ 81,008 $ 0 $ 0 0 $ 0 $720,288
President and 1998 329,230 418,900 0 25,000 227,133 8,444
Chief Executive Officer 1997 313,750 144,325 0 0 0 7,685
Jay M. Gratz 1999 $371,741 $203,000 $ 0 43,500 $ 0 $ 17,563
Executive Vice President
and 1998 329,834 417,000 0 80,000 272,560 168,274(/3/)
Chief Financial Officer 1997 309,584 142,409 0 0 0 15,474
Gary J. Niederpruem 1999 $276,262 $124,500 $ 0 43,500 $ 0 $ 12,820
Executive Vice President 1998 227,857 79,100 119,968(/5/) 30,000 1,969 9,443(/3/)
1997 199,527 114,262 0 30,000 0 9,967
Thomas S. Cygan 1999 $184,538 $ 77,500 $ 0 13,500 $ 0 $ 8,567
President--Ryerson West 1998 168,865 52,000 0 18,000 0 6,997
1997 161,881 69,917 0 18,000 0 7,533
Stephen E. Makarewicz 1999 $203,217 $ 84,800 $ 0 15,000 $ 0 $ 9,573
President--Tull 1998 194,786 86,000 0 27,000 0 8,083(/3/)
1997 187,809 89,439 0 27,000 0 8,353
</TABLE>
- --------
(1) Awards consist of options to purchase our common stock. Awards to Messrs.
Novich, Makarewicz, Niederpruem and Cygan prior to the RT Merger consisted
of options to purchase pre-merger Ryerson Tull Class A common stock. 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 our common stock.
(2) For Mr. Ranney, amounts include $301,250 in severance payments under his
change-in-control agreement, $400,000 paid in consideration for his
agreement not to compete and $19,038 for accrued vacation pay. 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 defined contribution
plans of Ryerson Tull and its subsidiaries.
(3) Includes amounts representing a portion of employer contributions to the
Ryerson Tull Savings Plan and the Ryerson Tull Non-Qualified Savings Plan
which were not calculable in time for the 1999 Annual Meeting proxy
statement.
(4) Elected President and Chief Executive Officer effective November 1, 1998
and resigned as President and Chief Executive Officer February 25, 1999.
Mr. Ranney also held the positions of Vice President and General Counsel
during 1998. He retired on April 1, 1999 and resigned as General Counsel
on June 7, 1999.
(5) Represents reimbursement of relocation expenses and related tax gross-up.
13
<PAGE>
Individual Option Grants in 1999
The following table presents information with respect to (a) individual
grants of options that were made during the last fiscal year to the named
executive officers and (b) the present value of such options on the grant
date.
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options
Underlying Granted to Grant Date
Options Employees in Exercise Expiration Present
Name Granted(/1/) Fiscal Year Price(/2/) Date Value(/3/)
- ---- ------------ ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Neil S. Novich.......... 113,500 26.1% $16.0313 03/08/09 $741,155
Jay M. Gratz............ 43,500 10.0% 16.0313 03/08/09 284,055
Gary J. Niederpruem..... 43,500 10.0% 16.0313 03/08/09 284,055
Thomas S. Cygan......... 13,500 3.1% 16.0313 03/08/09 88,155
Stephen E. Makarewicz... 15,000 3.5% 16.0313 03/08/09 97,950
</TABLE>
- --------
(1) Awards consisted of options to purchase common stock that are
transferable, with the advance written consent of the Compensation
Committee, (a) to a spouse or descendants or (b) to a trust for the
benefit of the optionee, his or her spouse or descendants. See "--
Employment and Change in Control Agreements" for option provisions
regarding any change in control of Ryerson Tull.
(2) The exercise price is equal to the average of the high and low price of
our 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 Ryerson Tull 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 1999.
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 our common stock is
41.84% (calculated using monthly stock prices of a comparable peer group
for the five-year period prior to the grant date), the ten-year risk-free
interest rate is 5.2% for grants, the annualized dividend yield is 1%, and
the expected term is 5 years. The value of the options granted in 1999
depends upon the actual performance of our 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 our common stock over the exercise price on the date the option
is exercised.
Aggregated Option Exercises and Year End Option Values
The following table presents the value realized upon option exercises
during 1999, the number of shares underlying the options held at the end of
1999 by the named executive officers and the value of their holdings based on
the closing price on December 31, 1999 for our common stock.
<TABLE>
<CAPTION>
Shares Number of Shares Underlying Value of Unexercised In-
Acquired Unexercised Options at The-Money Options
on Value Fiscal Year-End at Fiscal Year-End
Name Exercise Realized (Exercisable/Unexercisable) (Exercisable/Unexercisable)
- ---- -------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Neil S. Novich.......... -- -- 121,596/186,883 $ 0/386,604
George A. Ranney, Jr.... 48,000 $255,000(/1/) 25,000/0 32,031/0
Jay M. Gratz............ -- -- 111,000/68,500(/2/) 38,591/180,200(/2/)
Gary J. Niederpruem..... -- -- 47,055/55,061 0/148,170
Thomas S. Cygan......... -- -- 25,096/25,213 0/45,984
Stephen E. Makarewicz... -- -- 43,218/31,471 0/51,093
</TABLE>
14
<PAGE>
- --------
(1) Represents the cash-out of options to purchase such shares of our 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. Ranney's
change in control agreement.
(2) See "--Employment and Change in Control Agreements" for information
concerning the value of these options under Mr. Gratz's change in control
agreement.
Pension Benefits
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 our pension plans. 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. 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, 2000, the named executive officers were credited with the
following years of service: Neil S. Novich--3 years; Jay M. Gratz--24 years;
Gary J. Niederpruem--26 years; Thomas S. Cygan--34 years and Stephen E.
Makarewicz--16 years. Pension benefits for Messrs. Gratz, Niederpruem, Cygan
and Makarewicz, whose age and service met certain transition criteria adopted
in connection with the freeze of the Ryerson Tull Pension Plan, effective
December 31, 1997, 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. Ryerson Tull paid a lump-sum retirement benefit under non-
qualified supplemental retirement plans to Mr. Ranney, who retired on April 1,
1999 credited with 26 years of service.
Certain pension benefits in excess of the limitations imposed by the
Internal Revenue Code of 1986 will be paid by Ryerson Tull under unfunded non-
contributory supplemental retirement 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 $170,000, these plans generally permit us 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. No annuities were established for named executive
officers in 1999.
In the event of a change in control (as defined in the applicable plan),
all benefits accrued under the pension plan and the supplemental plans will
become fully and irrevocably vested and distributable to participants as
provided by the terms of those 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
15
<PAGE>
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.
We provide pension benefits to eligible salaried employees of our
subsidiary, J. M. 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 12 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 our incentive stock plans, 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) certain stock options or stock appreciation rights
outstanding for less than six months will not be cashed out until six months
after the grant date and (b) restricted stock awards may immediately vest; and
(ii) all outstanding performance awards will be cashed out in the amounts and
manner determined by the Compensation Committee.
We have entered into change in control agreements with each of the named
executive officers, the present terms of which expire on December 31, 2000,
but which are automatically extended for additional one-year periods
thereafter, unless we give notice prior to June 30 that we do not wish to
extend such agreements for another year or unless a change in control (as
defined below) or other limited events occur. We have not given such notice of
nonrenewal to date.
For purposes of the agreements, a "change in control" shall generally be
deemed to occur if:
(1) any person becomes the owner of 40% or more of the combined voting
power of our then-outstanding securities;
(2) 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;
(3) holders of our voting securities approve a merger or consolidation
with another company in which our voting securities, in combination with
voting securities held by any trustee or fiduciary under any employee
benefit plan, do not continue to represent at least 60% of the combined
voting power of the voting securities of the surviving entity;
(4) holders of our voting securities approve a complete liquidation or
an agreement for the sale or disposition of all or substantially all of our
assets; or
(5) 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 Ryerson Tull 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 Ryerson Tull or a majority-owned subsidiary of
Ryerson Tull.
16
<PAGE>
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 Ryerson Tull within the meaning of Rule 405 under the Securities
Act of 1933.
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 occurs, either (1) other than for cause or other than as a
consequence of death, disability or retirement or (2) 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 lump sum payment (the "Severance Payment") equal to three times (two
times in the case of Messrs. Cygan and 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, excluding
any years in which the bonus was zero;
. cash in lieu of any allocations, unpaid awards or rights under our
annual or other incentive compensation plans;
. cash equal to the value of outstanding stock options granted under our
stock option plans at specified prices;
. 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;
. life, disability, accident and health insurance as provided in our
insurance programs for a period of 36 months (24 months in the case of
Messrs. Cygan and Makarewicz) after resignation from employment;
. cash in lieu of three years (two years in the case of Messrs. Cygan and
Makarewicz) of additional accrued benefits under our pension plan; and
. 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.
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, we will not be entitled to a federal income tax deduction for this
excise tax payment.
The agreements also provide benefits if the executive resigns from
employment with Ryerson Tull 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" 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:
. we enter into an agreement, the consummation of which would result in
the occurrence of a change in control;
. any person (including Ryerson Tull) publicly announces an intention to
take or to consider taking actions that, if consummated, would
constitute a change in control;
. any person who is or becomes the owner of 9.5% or more of the combined
voting power of our then-outstanding securities increases beneficial
ownership of such securities by 5% or more over the percentage so owned
on the date of the agreements; or
. the Board adopts a resolution that a potential change in control has
occurred for purposes of the agreements.
17
<PAGE>
Ispat International's acquisition of Inland Steel Company constituted a
change in control under the change in control agreements with respect to
Ryerson Tull and ISC but not with respect to pre-merger Ryerson Tull. After
that acquisition, Ryerson Tull and Messrs. 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. Ranney's amended agreement, (1) his resignation was for Good
Reason; (2) he received a lump-sum payment of $76,500 in lieu of three years
of additional accrued benefits under the pension plan; (3) his resignation was
deemed an early retirement with the consent of the Compensation Committee
which permits him to exercise his stock options for up to five years after his
resignation; (4) he is entitled to certain employee benefits for 36 months
after his resignation; (5) he received a lump sum severance amount of
$260,000; and (6) he elected to have certain of his options cashed out at the
change in control price of $29.625 per share (for which he realized $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. Under an earlier agreement, Mr. Ranney was treated for
nonqualified pension purposes as if he had been continuously employed from
1973, when he first joined Ryerson Tull.
We have instituted a practice of requiring non-compete and non-solicitation
agreements from executive officers, including each of the named executive
officers, that provide for a post-termination non-compete and non-solicitation
period and salary and benefit continuation if the executive is discharged
without cause or resigns for "good reason."
These agreements also generally provide that if an executive's termination
occurs, either (1) other than for cause or other than as a consequence of
death, disability or retirement or (2) for Good Reason (including the failure
to provide bonus opportunities or stock awards based on historical practice in
the case of Mr. Novich), he will receive his salary, bonus and benefits in
effect as of his termination date. The bonus shall be two (three in the case
of Mr. Novich) payments of the average annual amount of the award paid to him
for the three years immediately preceding that in which the termination date
occurs (excluding any years in which the bonus was zero in the case of Mr.
Novich). Twenty-four (thirty-six in the case of Mr. Novich) months of
additional age and service credit will be provided for determining an
executive's supplemental pension benefits using the methodology described in
his change in control agreement except that any lump sum payment will be made
twenty-four (thirty-six in the case of Mr. Novich) months after the
executive's termination date and only if he has not violated the
confidentiality, nonsolicitation and noncompetition provisions of his
employment agreement.
Mr. Novich's agreement further provides that all existing unvested options
as of his termination date would become vested and he would be afforded a 36-
month extension (but not beyond the original termination date of the option)
from his termination date to exercise any remaining unexercised options that
had not expired before his termination date. The agreement also provides Mr.
Novich with certain opportunities to exercise his options in a cashless
exchange, indemnification, financial services counselling, and executive
outplacement and office services following his termination.
In lieu of payments under his change in control agreement, Mr. Gratz's
employment agreement was amended to provide that Mr. Gratz would resign as
Vice President and Chief Financial Officer 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 Ryerson Tull. Pursuant to his amended
change of control agreement, Mr. Gratz is entitled (1) to receive cash equal
to the change in control price of $29.625 per share less the exercise price in
lieu of shares of our common stock issuable upon exercise of options
previously awarded to him ($579,312 in the aggregate) at any time on or before
November 6, 2001 (but not beyond the original term of any such option); (2)
upon resignation from his employment, to receive life, disability, accident
and health
18
<PAGE>
insurance benefits and other employee fringe benefits; (3) upon the earlier of
the date of his resignation or January 1, 2001, to receive a lump sum payment
of all non-qualified retirement benefits, 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 (4) to receive a retention
bonus of $250,000 on January 1, 2000. 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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We paid the law firm of Mayer, Brown & Platt approximately $1.6 million for
legal services and other charges during 1999. George A. Ranney, Jr., President
and Chief Executive Officer prior to February 25, 1999 in connection with the
winding down of Inland Steel Industries, Inc., and our General Counsel and
Secretary prior to June 7, 1999, is a partner with Mayer, Brown & Platt. Mr.
Ranney's employment agreement with us provided that he would retain his
partnership at Mayer, Brown & Platt but would receive no financial benefit
from the law firm for his work with us. We have retained Mayer, Brown & Platt
for services during 2000.
In February 1999, the Company made a charitable contribution in the name of
Mr. Ranney to the Chicago Community Foundation Donor Advised Fund in the
amount of $400,000 to honor his services to us. Effective as of April 1, 1999,
the Company retained Mr. Ranney for professional services for a fee payable to
Mayer, Brown & Platt of $10,000 per month, plus reasonable expenses. Under the
retainer agreement, Mr. Ranney agreed to make himself personally available to
advise and provide counsel on strategic and other issues.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders which are intended to be included in our proxy
statement for the 2001 Annual Meeting pursuant to SEC Rule 14a-8 must be
received by us no later than November 16, 2000, 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 2001 Annual Meeting
other than pursuant to Rule 14a-8 must comply with the requirements set forth
in our 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 Ryerson Tull not less than 90 days and not more
than 120 days in advance of the day corresponding to the date of mailing the
proxy materials for the prior year's annual meeting of stockholders.
Therefore, because we anticipate mailing our proxy statement on March 16,
2000, we must receive notice of a stockholder proposal submitted other than
pursuant to Rule 14a-8 no sooner than November 16, 2000, and no later than
December 16, 2000.
19
<PAGE>
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those set forth in the Notice of the Annual Meeting.
However, if any other matters do come before the meeting, it is intended that
the holders of the proxies will vote thereon in their discretion.
By order of the Board of Directors,
Joyce E. Mims
Secretary
March 16, 2000
Chicago, Illinois
- -------------------------------------------------------------------------------
Each stockholder, whether or not you expect 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.
20
<PAGE>
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
-------------------------------
RYERSON TULL, INC.
2000
<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, I hereby direct LaSalle
National Bank, as Trustee of the ESOP Trust which forms a part of such plan, to
vote all shares of common stock of Ryerson Tull, Inc. that are credited to my
account in the ESOP Trust as of March 7, 2000 at the Annual Meeting of
Stockholders of the Company to be held April 27, 2000 and at any adjournment
thereof. Unless otherwise specified, all shares allocated to the undersigned's
Plan account will be voted FOR the election of directors, 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 26, 2000 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 ITEM 1
1. Election of Directors.
01-Jameson A. Baxter, 02-Richard G. Cline, 03-Gary L. Crittenden,
04-James A. Henderson, 05-Gregory P. Josefowicz, 06-Neil S. Novich,
07-Jerry K. Pearlman, 08-Ronald L. Thompson
--------------------------
Nominee Exception
For All
For Withheld Except
( ) ( ) ( )
2. 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: _____________________________________________________________ , 2000
Signature(s)____________________________________________________________________
Please sign as name appears hereon. Joint owners should each sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. Date and return promptly.
<PAGE>
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 account in the
Ryerson Tull Savings Plan, 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 ACCOUNT IN THE MANNER SPECIFIED
IN BOLDFACE TYPE ON THE FRONT OF THE CONFIDENTIAL VOTING DIRECTION. 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 26, 2000 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 26, 2000.
If, in addition to being a Participant with an account in the ESOP Trust,
you were a stockholder of the Company on March 7, 2000, 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 2000 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 7, 2000, 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 Joyce E.
Mims, 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 27, 2000 and at any adjournment thereof. Unless
otherwise specified, this proxy will be voted FOR the election of directors,
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 ITEM 1
1. Election of Directors.
01-Jameson A. Baxter, 02-Richard G. Cline, 03-Gary L. Crittenden,
04-James A. Henderson, 05-Gregory P. Josefowicz, 06-Neil S. Novich,
07-Jerry K. Pearlman, 08-Ronald L. Thompson
--------------------------
Nominee Exception
For All
For Withheld Except
( ) ( ) ( )
2. In the discretion of the proxies to vote upon any and all other matters which
may properly come before such annual meeting of any adjournment thereof.
Dated: _____________________________________________________________ , 2000
Signature ______________________________________________________________________
- --------------------------------------------------------------------------------
Please date, sign and return promptly.
