SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Bayou Steel Corporation
________________________________________________
(Name of Registrant as Specified In Its Charter)
Board of Directors of Bayou Steel Corporation
________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which transaction
applies:
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transaction computed pursuant to Exchange Act Rule 0-
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* Set forth amount on which the filing is calculated
and state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
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[LOGO] BAYOU STEEL CORPORATION
NOTICE OF
ANNUAL MEETING OF
CLASS A, CLASS B AND
CLASS C COMMON
STOCKHOLDERS AND
PROXY STATEMENT
February 5, 1996
Dear Stockholders:
You are cordially invited to attend the Bayou Steel
Corporation Annual Meeting of Stockholders to be held at 2:00
p.m. (E.S.T.) on Friday, March 8, 1996, at 440 Park Avenue, New
York, New York 10022.
The attached Notice of Annual Meeting of Stockholders and the
accompanying Proxy Statement describe in detail the matters
proposed by your Board of Directors to be considered and voted
upon at the meeting.
It is important that your shares be represented at the
meeting, whether or not you are personally able to attend.
Accordingly, you are requested to sign, date and return the
enclosed proxy promptly. Your cooperation is appreciated. If you
do attend the Annual Meeting, you may still vote in person.
Sincerely,
/s/ Howard M. Meyers
HOWARD M. MEYERS,
Chairman and Chief
Executive Officer
Admission to the meeting will be by ticket only. If you plan to attend
the meeting, please retain the ticket attached to the enclosed
proxy form and check the appropriate box on the proxy form
to indicate you plan to attend and to validate your ticket. If your
proxy form does not have a detachable ticket and you wish to
attend the meeting, send a request in for a ticket, and we will send
you an admission ticket about two weeks prior to the meeting date. If
we receive your request for a ticket after February 23, 1996,
your ticket will be held for you at the door. Attendance at the meeting
will be limited to stockholders or their proxies. Proof of ownership
may be required. A stockholder may designate no more than one proxy to
represent him or her at the meeting.
BAYOU STEEL CORPORATION
138 Highway 3217
P. O. Box 5000
LaPlace, Louisiana 70069-1156
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
CLASS A COMMON, CLASS B COMMON AND CLASS C COMMON
NOTICE IS HEREBY GIVEN that the Annual Meeting of stockholders
(the "Meeting") of Bayou Steel Corporation (the "Company"), will
be held at 9:00 p.m. (E.S.T.) on Friday, March 8, 1996, at 440
Park Avenue, New York, New York 10022, for the purpose of
considering and voting upon the following matters as set forth in
the accompanying Proxy Statement:
1. Election of four (4) Class A and four (4) Class B
Directors.
2. Ratification of the appointment of Arthur Andersen LLP as
auditors of the Company for the fiscal year ending
September 30, 1996.
3. Approval of a proposed amendment to the certificate of
incorporation of the Company to provide for board
representation for the holder of the Company's Series A
Redeemable Preferred Stock (the "Amendment").
Only stockholders of record at the close of business on
January 25, 1996, are entitled to notice of and to vote at the
Meeting. A certified list of stockholders entitled to vote at the
Meeting will be available for examination, during business hours,
by any stockholder for any purpose germane to the Meeting for a
period of not less than ten days immediately preceding the
Meeting at the offices of Society Trust Company of New York, 5
Hanover Square, 10th Floor, New York, New York 10004.
Please sign the enclosed proxy and return it at your earliest
convenience in the accompanying envelope. It is important that
your shares be represented at the meeting. If you attend the
meeting, you may revoke your proxy and vote in person.
By order of the Board of Directors
/s/ Richard J. Gonzalez
RICHARD J. GONZALEZ, Secretary
February 5, 1996
BAYOU STEEL CORPORATION
138 Highway 3217
P.O. Box 5000
La Place, Louisiana 70069-1156
PROXY STATEMENT
Solicitation, Quorum, and Voting of Proxies
This Proxy Statement, which will be first mailed to
stockholders on or about February 5, 1996, is furnished in
connection with the Board of Directors' solicitation of proxies
from the holders of the Class A Common Stock of the Company at
the annual meeting of Stockholders of the Company to be held
March 8, 1996 (the "Meeting") at the time and place set
forth in the accompanying Notice.
The cost of preparing and mailing this Proxy Statement and
the accompanying proxy, and the cost of solicitation of proxies
on behalf of the Board of Directors, will be borne by the
Company. Solicitation will be made by mail. Some personal
solicitation may be made by directors, officers and employees
without special compensation, other than reimbursement for
expenses.
The Board of Directors has fixed the close of business on
January 25, 1996, as the record date for the Meeting and only
holders of record of the Class A, Class B and Class C Common
Stock on the record date are entitled to receive notice of and to
vote at the Meeting. The holders of a majority of the issued and
outstanding shares of Class A, Class B and Class C Common Stock
present in person, or represented by proxy, shall constitute a
quorum at the Meeting.
Stockholders who submit a properly executed proxy voting,
or abstaining from voting, on any issue will be counted as
present for purposes of constituting a quorum. If a quorum is
present: (A) the holders of the Class A Common Stock are
entitled to elect 40% of the entire board of directors, and the
holders of the Class B Common Stock are entitled to elect 60% of
the entire board of directors, in each case with the election of
directors being determined by plurality vote, (B) the affirmative
vote of (i) 80% of the total voting power of the issued and
outstanding shares of Class A, Class B and Class C Common Stock
voting together as a single class, and (ii) a majority of each
of the outstanding Class A and Class B Common Stock, each voting
as a separate class, is required to approve the Amendment and (C)
the affirmative vote of a majority of the Class A, Class B and
Class C Common Stock present or represented by proxy and entitled
to vote is required to ratify the appointment of independent
auditors.
Abstentions will have the effect of a vote against the
proposals to approve the Amendment and to ratify the appointment
of auditors.
If brokers who do not receive instructions from beneficial
owners as to the granting or withholding of proxies may not or do
not exercise discretionary power to grant a proxy with respect to
such shares (a "broker non-vote") on a proposal other than the
election of directors, shares not voted on such proposal as a
result will be counted as not present with respect to the
proposal. Because the proposal to ratify the appointment of
auditors must be approved by the affirmative vote of a majority
of the voting power present at the Meeting, the failure to
deliver a proxy to vote on that proposal will have no effect on
the outcome of the vote. However, because the proposal to approve
the Amendment requires the affirmative vote of the Class A Common
Stock and Class B Common Stock that is specified above, the
failure to deliver a proxy on that proposal will have the effect
of a vote against the proposal.
With respect to the proposals to ratify the appointment of
auditors and to approve the Amendment, and with respect to any
other matter to be voted upon at the Annual Meeting as to which
the Class A, Class B and Class C Common Stock will vote together
as a single class, each share of Class A and Class C Common Stock
is entitled to one vote and each share of Class B Common Stock is
entitled to 7.0097665 votes. The Amendment must also be approved
by each of the Class A and Class B Common Stock voting as a
separate class.
All proxies received by the Company in the form enclosed
will be voted as specified and if no contrary specification is
made, the proxy will be voted FOR the election of the Class A
Directors set forth in this Proxy Statement, FOR the ratification
of the appointment of Arthur Andersen LLP as auditors, and FOR
the Amendment.
Revocation
A proxy may be revoked any time prior to its exercise by
written notice of revocation to the Secretary of the Company or
by duly executing a proxy bearing a later date. A stockholder who
votes in person at the Meeting in a manner inconsistent with a
proxy previously filed on the stockholder's behalf will be deemed
to have revoked such proxy as it relates to the matter voted upon
in person.
Security Ownership of Certain Beneficial Owners
On October 31, 1995, the Company had outstanding 10,613,380
shares of Class A Common Stock ($.01 par value), 2,271,127 shares
of Class B Common Stock ($.01 par value) and 100 shares of Class
C Common Stock ($.01 par value).
The following table lists persons other than executive
officers or directors of the Company who are known to the Company
to own beneficially more than 5% of each class of its outstanding
stock as of October 31, 1995. The information set forth below is
based upon information furnished by the persons listed. Unless
otherwise indicated, all shares shown as beneficially owned are
held with sole voting and investment power.
Title Beneficial Ownership
of as of October 31, 1995
Name and Address of Beneficial Owner Class Amount Percentage
- ------------------------------------ ----- ------ ----------
First Capital Corporation of Chicago A 838,200 7.91%
#3 First National Place
Suite 1330
Chicago, IL 60602
How & Company A 600,000 5.65%
c/o The Northern Trust Co.
P.O. Box 92303
Chicago, IL 60675
Bayou Steel Properties Limited<F1> B 2,271,127 100.00%
2777 Stemmons Freeway
Dallas, TX 75207
Voest-Alpine International Corporation C 100 100.00%
______________________
[FN]
<F1> See footnote 8 on page 6.
ELECTION OF DIRECTORS (PROPOSAL 1)
Nominee Directors
Each of the Class A Director nominees, who is currently a
member of the Board of Directors, will hold office until the next
Meeting of Stockholders and until their successors have been
elected. Unless authority to vote is specifically withheld by
appropriate designation on the proxy, it is the intention of the
persons named in the accompanying proxy to vote the Class A
shares represented thereby in favor of the reelection of Messrs.
John A. Canning, Jr., Lawrence E. Golub, Jeffrey P. Sangalis, and
Stanley S. Shuman, the four nominees named below, as Class A
Directors of the Company.
The Company has been advised by Bayou Steel Properties
Limited (BSPL), the holder of all of the Company's Class B
shares, that it is the intention of such holder to vote all of
its Class B shares in favor of the reelection of Messrs. Melvyn
N. Klein, Albert P. Lospinoso, Howard M. Meyers and Jerry M.
Pitts, the four nominees named below, as Class B Directors of the
Company. Under the Company's Certificate of Incorporation, the
holder of the shares of Class B Common Stock has the exclusive
power to elect up to 60% of the members of the Board of Directors.
Although no such intention currently exists, the holder of the
Class B Common Stock may determine to elect a full slate of six
directors to elect as directors persons other than those currently
named as nominees.
The Board of Directors recommends that Class A stockholders
vote FOR each of the Class A Director nominees named below, and,
unless a stockholder gives instructions on the proxy card to the
contrary, the proxies named thereon intend so to vote. Management
does not anticipate that any of the nominees for Class A Director
will be unable to serve, but if such a situation should arise, it
is the intention of the persons named in the accompanying proxy
to vote for the election of such other person or persons as the
Nominating Committee of the Board of Directors may recommend.
Information With Respect to Board of Directors
During the fiscal year ended September 30, 1995, the
Company's Board of Directors held seven meetings. Each member of
the Board of Directors, except Mr. Sangalis who was elected on
June 20, 1995, attended at least 80% of the meetings of the Board
and of each Board committee of which they were members.
The following table sets forth certain information as to
the Director nominees (and as to the ownership of the Company's
Class A and Class B Common Stock by Directors, named Executive
Officers, and all Executive Officers and Directors of the
Company, as a group) as of October 31, 1995. Unless otherwise
indicated, each of the directors has held the positions listed
for at least five years.
<TABLE>
<CAPTION>
Common Stock
----------------------------------------------------------------
Class A Class B
------------------------------- ------------------------------
Number of Shares Percent Number of Shares Percent
Name, Age and Director Beneficially Outstanding & Beneficially Outstanding &
Principal Occupation Since Owned Exercisable Owned Exercisable
- -------------------- ----- ----- ----------- ----- -----------
<S>
CLASS A DIRECTOR NOMINEES <C> <C> <C> <C> <C>
John A. Canning, Jr., 51 <F1> 1988 42,382 * -0- -0-
President of Madison Dearborn
Partners Inc., Capital
Advisory Services
Chicago, Illinois
Lawrence E. Golub, 36 <F2> 1988 103,000 * -0- -0-
President of Golub Associates, Inc.,
Equity Investment firm
New York, New York
Jeffrey P. Sangalis, 37 <F3> 1995 822,422 7.19 -0- -0-
Partner & Director of Rice Capital
Houston, Texas
Stanley S. Shuman, 60 <F4><F8> 1988 817,880 7.71 -0- -0-
Executive Vice President & Managing
Director of Allen & Company
Incorporated, investment bankers
New York, New York
CLASS B DIRECTOR NOMINEES
Melvyn N. Klein, 53 <F5><F8> 1988 60,000 * -0- -0-
President, JAKK Holding Corporation,
a General Partner of GKH Partners, L.P.
Corpus Christi, Texas
Albert P. Lospinoso, 59 <F6><F8> 1988 10,000 * -0- -0-
Chief Executive Officer and President
of RSR Corporation, nonferrous metals
recycle smelting and refining
Dallas, Texas
Howard M. Meyers, 53 <F7><F8> 1988 300,000 2.83 2,271,127 100
Chairman and Chief Executive Officer
of the Company
Jerry M. Pitts, 44 <F9> 1994 8,025 * -0- -0-
President and Chief Operating Officer
of the Company
NON-DIRECTOR NAMED EXECUTIVE OFFICERS
Richard J. Gonzalez - 4,930<F10> * -0- -0-
Vice President, Chief Financial
Officer, Treasurer and Secretary
Timothy R. Postlewait - 5,014<F10> * -0- -0-
Vice President of Plant Operations
Rodger A. Malehorn - 4,612<F10> * -0- -0-
Vice President of Commercial Operations
All directors and executive officers as
a group <F11> (12 persons) 2,180,419 19.04 2,271,127 100
</TABLE>
_________________________________________
* Less than one percent.
(footnotes on following pages)
[FN]
<F1> Mr. John A. Canning has been President of Madison Dearborn Partners, Inc.,
which is the management company for a private equity investment fund,
Madison Dearborn Capital Partners L.P., and a limited partnership, Madison
Dearborn Advisers, L.P., which provides venture capital advisory services
to First Chicago Corporation, since January 1993. For more than five years
prior to that, Mr. Canning was President of First Capital Corporation of
Chicago and First Chicago Investment Corporation, both subsidiaries of
First Chicago Corporation, engaged in venture capital projects. He is a
director of Tyco Toys, Inc., The Interlake Corporation, and The Milnot
Corporation.
<F2> Mr. Lawrence E. Golub has been President of Golub Associates, Inc., an
equity investment firm, since August 1994. From September 1993 to August
1994, Mr. Golub was a Managing Director of Bankers Trust Company in New
York, New York. From September 1992 to August 1993, Mr. Golub was a White
House Fellow. Mr. Golub was Managing Director of Wasserstein Perella
Capital Markets from February 1990 to August 1992 and an officer of Allen
& Company Incorporated, an investment banking firm, from 1984 to February
1990. He is Chairman of Mosholu Preservation Corporation. From February
21, 1991, until September 21, 1994, Mr. Golub served as a Director elected
by the Class B Common stockholder.
<F3> All 822,422 shares are subject to a warrant beneficially owned by Rice
Partners II, LP. Mr. Sangalis is a Partner and Director of Rice Capital
Partners II, LP and related entities. Mr. Sangalis disclaims beneficial
ownership of such shares. In addition, Rice Partners II, LP owns Preferred
Stock of the Company pursuant to a Preferred Stock and Warrant Purchase
Agreement, dated June 13, 1995, which among other things, allows the
holder to designate a director to the Company's Board. See "Proposed
Amendment to the Company's Certificate of Incorporation (Proposal 3)."
<F4> Includes 522,528 shares of Class A Common Stock owned by Allen & Company
Holding, Inc., which owns all of the outstanding shares of Allen & Company
Incorporated; Mr. Stanley S. Shuman is an Executive Vice President and
Managing Director of both Allen & Company Holding, Inc. and Allen &
Company Incorporated. Mr. Shuman disclaims beneficial ownership of such
shares. Includes an aggregate of 60,000 shares of Class A Common Stock
owned by trusts for the benefit of Mr. Shuman's children, of which Mr.
Shuman disclaims beneficial ownership. Mr. Shuman has no voting or
investment power, shared or otherwise, in the foregoing shares. He is a
Director of The News Corporation Limited, Hudson General Corporation,
Global Asset Management, U.S.A., Sesac Inc., and Tower Air Inc.
<F5> Mr. Melvyn N. Klein has been a practicing attorney and private investor in
Corpus Christi, Texas. He has been a Director of Quexco since 1984. He is
the sole shareholder, sole director and President of JAKK Holding
Corporation, a General Partner of GKH Partners, L.P., which is the sole
General Partner of GKH Investments, L.P., an investment fund; founder and
principal of Questor Partners Fund, L.P.; and a director of Anixter
International, Inc., Santa Fe Energy Resources and Savoy Pictures
Entertainment, Inc.
<F6> Mr. Albert P. Lospinoso has been Chief Executive Officer and President of
RSR Corporation ("RSR") a privately owned, nonferrous metals recycle
smelting and refining company with offices in Dallas, Texas, and plants in
Dallas, Texas; Middletown, New York; Indianapolis, Indiana; and City of
Industry, California, since July 1995 and is a director of RSR and Quexco
Incorporated. From July 1992 until July 1995, Mr. Lospinoso was President
and Chief Operating Officer of RSR, and for more than five years prior to
that he was the Executive Vice President, Chief Operating Officer and a
director of RSR and its predecessor companies.
<F7> Mr. Howard M. Meyers has been Director, Chairman of the Board, Chief
Executive Officer of the Company since September 5, 1986, and was also
President until September 21, 1994. Since 1984 he has been Director,
Chairman of the Board, Chief Executive Officer and President of Quexco
Incorporated, a privately owned company, and the parent of RSR.
<F8> All 300,000 shares of Class A Common Stock are owned by a limited
partnership in which Mr. Meyers and his wife are the sole limited partners
and of which the general partner is a corporation all of the stock of
which is owned by Mr. Meyers. Through his control of the corporate general
partner of the limited partnership, Mr. Meyers has sole voting and
dispositive power over the 300,000 shares of Class A Common Stock. The
limited partnership also owns 60% of the Common Stock of Bayou Steel
Properties Limited (the "BSPL"), a Delaware corporation. Through his
control of the corporate general partner of the limited partnership, Mr.
Meyers controls BSPL's voting power. Since BSPL owns 100% of the Company's
Class B Common Stock, Mr. Meyers has sole voting and dispositive control
of the Class B Common stock. The Class B Common Stock accounts for a
maximum of 60% of the voting power of the Company. Therefore Mr. Meyers
may be deemed to "control" the Company. Allen & Co. Incorporated and
Messrs. Klein, Lospinoso, and Shuman are minority stockholders of BSPL
owning 2.08%, 2.77%, 0.76%, and 1.17%, respectively, and Messrs. Lospinoso
and Meyers are directors of BSPL.
<F9> Includes exercisable options for 6,000 shares of Class A Common Stock. Mr.
Jerry M. Pitts was elected Director, President and Chief Operating Officer
on September 21, 1994. He was elected Executive Vice President and Chief
Operating Officer of the Company on June 7, 1991. He had been Executive
General Manager of the Company since July 1, 1987. From 1986 to 1987, he
served the Company as General Manager of Operations; from 1984 to 1986, he
was Superintendent of Melting Operations; and from 1980 to 1984, he was
General Foreman of Melting. Mr. Pitts worked in various management
capacities related to production and process engineering at U.S. Steel
Corporation from 1974 to 1980.
<F10> Includes exercisable options for 3,000 shares of Class A Common stock for
each of Messrs. Gonzalez, Postlewait, and Malehorn.
<F11> Includes 839,422 shares of Class A Common Stock, subject to exercisable
warrants and stock options held by such persons.
Agreement Concerning Change in Control
The shares of common stock of BSPL owned by Mr. Howard M. Meyers may not
be sold, nor may shares of BSPL be issued, at a price which represents a premium
attributable to the underlying Class B Common Stock over the market price of the
Class A Common Stock, to any person or group if such sale, when aggregated with
all prior sales during the immediately preceding four-year period, would result
in such person or group owning more than 50% of the common stock of BSPL, unless
such person or group agrees to make a tender offer within 30 days for an
equivalent percentage of Class A Common Stock at the highest price paid by such
person or group (expressed in equivalent shares of Class B Common Stock) for the
shares of common stock of BSPL; provided that the Directors elected by the
holders of the Class A Common Stock waive the charter restriction prohibiting a
purchaser from acquiring 5% or more of the aggregate fair market value of the
Class A Common Stock. The agreement terminates when the holders of the Class B
Common Stock no longer have the right to elect a majority of the Board of
Directors of the Company.
The Company's Certificate of Incorporation provides that if Mr. Meyers
resigns, retires or is removed for cause as Chief Executive Officer of the
Company, the Class B Common Stock will no longer vote separately by class with
respect to the election of directors, and will only have one vote per share.
Committees of the Board
The Board of Directors has four committees, an Audit Committee, an
Environmental Health and Safety Audit Committee, a Compensation Committee, and a
Nominating Committee. During the fiscal year ended September 30, 1995, the Audit
Committee met twice, the Environmental Health and Safety Audit Committee twice,
the Nominating Committee once, and the Compensation Committee once.
The Audit Committee presently consists of Messrs. Klein (Chairman),
Lospinoso, Golub, and Sangalis, with Mr. Sangalis joining the committee in
October 1995. The Audit Committee is charged with the duties of making
recommendations to the Board of Directors regarding the selection of the
Company's independent auditors, reviewing the activities of such independent
auditors and of any internal audit activities of the Company, disposing and
deciding of major accounting policy matters directly or indirectly affecting the
Company, defining the scope of the annual audit of the Company, and such other
powers and duties as may be delegated to such committee by the Board of
Directors from time to time.
The Compensation Committee presently consists of Messrs. Shuman (Chairman)
and Canning. Messrs. Golub and Lospinoso were added October 1, 1995. The
Compensation Committee is empowered to establish compensation payable to
directors and executive officers of the Company, as well as any loans or
advances by the Company to such persons, subject to the provision that the chief
executive officer's compensation is controlled by an employment arrangement
between the chief executive officer and the Company.
The Nominating Committee presently consists of Messrs. Canning (Chairman),
Golub, and Shuman. The Nominating Committee is empowered to nominate persons
solely for election as Class A Directors at the annual meeting of stockholders.
The Committee will consider candidates for nominees for directors recommended by
Class A stockholders if such recommendations are submitted in writing to the
Secretary of the Company giving the background and qualifications of the
candidate.
Environmental, Health and Safety Audit Committee, which presently consists
of Messrs. Golub (Chairman), Klein, Lospinoso, Canning, and Shuman, is charged
with oversight of the Company's Health and Safety Policy and its Environmental
Compliance Policy, reviewing the independent audit reports of the independent
outside health, safety and environmental consultants engaged for such purposes,
defining the scope of such audits and such other powers and duties in the
health, safety and environmental areas as may be delegated to the Committee by
the Board of Directors.
Director's Compensation
The Company pays each non-employee director $30,000 per year, payable in
quarterly installments, for serving as a director, plus expenses for each
meeting of the Board of Directors that a director attends. The Company does not
compensate directors who are officers of the Company for services as directors.
Mr. Meyers and Mr. Pitts are the only directors who are officers of the Company.
Certain Transaction
Under an agreement with Allen & Company Incorporated entered into on May
28, 1987, the Company granted Allen & Company a right of first refusal, on
competitive terms, to perform certain investment banking services for the
Company until September 4, 1996. For fiscal 1995, Allen & Company acted as co-
manager in conjunction with the placement of the Company's Series A Redeemable
Preferred Stock and warrants and received $160,000 for its services. Stanley S.
Shuman, a director of the Company, is Executive Vice President and Managing
Director of Allen & Company.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the Company's
Chief Executive Officer and the four other most highly-compensated executive
officers for the fiscal years 1992 through 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Annual Compensation Award of
Name and ------------------- Stock Options All Other
Principal Position Year Salary Bonus (# of Shares) Compensation<F1>
- ------------------ ---- ------ ----- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Howard M. Meyers 1995 $465,504 $ -0- -0- $ -0-
Chairman and Chief 1994 437,990 -0- -0- -0-
Executive Officer 1993 437,990 -0- -0- -0-
1992 435,041 -0- -0- -0-
Jerry M. Pitts 1995 225,000 112,500 -0- 1,538
President and Chief 1994 225,000 9,750 30,000 1,428
Operating Officer 1993 225,000 9,750 -0- 1,316
1992 225,000 9,750 -0- 1,702
Timothy R. Postlewait 1995 150,000 63,974 -0- 1,508
Vice President 1994 150,000 6,000 15,000 1,602
of Plant Operations 1993 150,000 6,000 -0- 1,560
1992 150,000 6,000 -0- 1,560
Richard J. Gonzalez 1995 147,000 77,910 -0- 1,489
Vice President, Chief Financial 1994 147,000 5,313 15,000 1,638
Officer, Treasurer and Secretary 1993 147,000 5,313 -0- 1,462
1992 147,000 5,313 -0- 1,498
Rodger A. Malehorn 1995 132,000 60,065 -0- 1,457
Vice President of 1994 120,000 -0- 15,000 1,488
Commercial Operations 1993 120,000 5,313 -0- 1,253
1992 120,000 5,313 -0- 1,253
_________________________________
<FN>
<F1> Includes amounts contributed by the Company to the Company's Savings Plan,
a 401(k) Plan in respect of matching contributions. For fiscal 1995, the
Company's contributions were $1,436 for Mr. Pitts, $1,406 for Mr.
Postlewait, $1,315 for Mr. Gonzalez, and $1,169 for Mr. Malehorn. Also
includes the dollar value of term life insurance premiums paid by the
Company for the benefit of these officers.
OPTION YEAR-END VALUE TABLE
The following table presents the value of unexercised options at September
30, 1995.
FISCAL YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
September 30, 1995 September 30, 1995<F1>
------------------ ------------------
Exercisable(E)/ Exercisable(E)/
Name Unexercisable(U) Unexercisable(U)
- ---- ---------------- ----------------
Howard M. Meyers -0- $ N/A
Jerry M. Pitts 6,000E/24,000U 3,375E/13,500U
Timothy R. Postlewait 3,000E/12,000U 1,687E/ 6,750U
Richard J. Gonzalez 3,000E/12,000U 1,687E/ 6,750U
Rodger A. Malehorn 3,000E/12,000U 1,687E/ 6,750U
_____________________
<FN>
<F1> At September 30, 1995, the closing sales price for Bayou Steel
Corporation's Class A Common Stock on the American Stock Exchange was
$4.9375.
Employment Contract
Pursuant to agreements between Mr. Howard M. Meyers and the Company, Mr.
Meyers is entitled to an annual cash salary equal to the greater of (x) a base
amount of $350,000 adjusted for increases in the consumer price index since
December 1985 or (y) 2% of the Company's pretax net income earned during the
immediately preceding year (or 1% if Mr. Meyers is no longer both the Chairman
and Chief Executive Officer of the Company with substantial day-to-day
managerial responsibilities).
Retirement Plan
The following table specifies the estimated annual benefits upon
retirement under the Retirement Plan to eligible employees of the Company of
various levels of average annual compensation and for the years of service
classifications specified:
PENSION PLAN TABLE
Years of Service
Average Annual ____________________________________________
Compensation 10 20 30 45
____________ ________ ________ ________ ________
$ 20,000 $ 1,200 $ 2,400 $ 3,600 $ 3,600
50,000 4,204 8,407 12,611 12,611
100,000 9,704 19,407 29,111 29,111
150,000 15,204 30,407 45,611 45,611
200,000 15,204 30,407 45,611 45,611
250,000 15,204 30,407 45,611 45,611
300,000 15,204 30,407 45,611 45,611
600,000 15,204 30,407 45,611 45,611
The Company has adopted the Bayou Steel Corporation Retirement Plan (the
"Retirement Plan") covering eligible employees of the Company not covered by a
collective bargaining agreement. Under the terms of the Retirement Plan, the
monthly retirement benefits of a participant payable at the participant's normal
retirement date are equal to (i) .6% of average monthly compensation, multiplied
by years of credited service (not to exceed 30 years), plus (ii) .5% of that
portion, if any, of average monthly compensation which is in excess of the
participant's average social security taxable wage base, multiplied by years of
credited service (not to exceed 30 years).
Annual retirement benefits are computed on a straight life annuity basis
without deduction for Social Security or other benefits. The Tax Code limits the
amount of annual compensation that may be counted for the purpose of calculating
pension benefits, as well as the annual pension benefits that may be paid, under
the Retirement Plan. For 1995, these amounts are $150,000 and $120,000,
respectively.
Earnings of the named executive officers, for purposes of calculating
pension benefits, approximate the aggregate amounts shown in the Annual
Compensation columns of the Summary Compensation Table, except for Messrs.
Meyers and Pitts whose earnings for purposes of such calculation are subject to
the $150,000 limitation discussed above.
The years of credited service under the Retirement Plan as of October 1,
1995 for each of the five most highly compensated officers of the Company are:
Howard M. Meyers, 9 years; Jerry M. Pitts, 14 years; Richard J. Gonzalez, 12
years; Rodger A. Malehorn, 11 years; and Timothy R. Postlewait, 14 years.
Compensation Committee Interlocks and Insider Participation
The members of the Company's Compensation Committee are Mr. John A.
Canning and Stanley S. Shuman. Neither member of the Compensation Committee has
been an officer or employee of the Company. No executive officer of the Company
served in the last fiscal year as a director or member of the compensation
committee of another entity, one of whose executive officers served as a
director or on the Compensation Committee of the Company.
REPORT OF THE COMPENSATION COMMITTEE
This report by the Compensation Committee shall not be deemed to be
incorporated by reference by any general statement which incorporates this Proxy
Statement by reference into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, as amended, (the "Acts"), and they shall not
otherwise be deemed filed under such Acts.
Compensation Committee Report on Executive Compensation
The Company's executive compensation program is designed to attract, retain,
reward and motivate executive management talent required to achieve its short
and long-term business objectives, maintain its competitive position in the
steel minimill industry, and increase shareholder value. This program is
administered and effected by the Company's management and monitored by the
Compensation Committee of the Board of Directors which is comprised of outside
directors of the Company.
General. In fiscal 1994, the Company engaged an independent compensation
consultant to review the competitiveness of its total executive compensation
package. Total compensation includes base pay, annual incentive pay, and long-
term incentives. The consultant, with management participation, selected a peer
group of 14 public steel minimills, and reviewed compensation of comparable
executive positions in the peer group over a three year period. Adjusting for
market capitalization, assets, and sales, the consultant determined a target
level of total compensation for each of the Company's executive officers. The
report of the independent consultant, which was presented to and accepted by the
Board of Directors, made recommendations intended to maintain total executive
compensation at a competitive level. The Compensation Committee basically used
this approach as the compensation policy for 1994 and 1995, although certain
subjective elements, including individual performance, scope of
responsibilities, and unusual activities, such as acquisitions and financing
transactions, are also considered.
Base Pay. Salaries of the Company's executive officers are determined by the
Chief Executive Officer within the general compensation guidelines developed by
the independent consultant and adopted by the Committee. Based on the study of
the peer group of steel minimills, base salaries are targeted at the fifty
percentile of salaries in the peer group adjusted for sales, assets, and market
capitalization. Besides maintaining competitive market levels, subjective
criteria, such as the impact the executive has on the Company, the skills and
experience required by the job, individual performance and internal equities are
considered in determining salary levels. During 1995, the salary of the Vice
President - Commercial Operations was increased to that base salary considered
to be an appropriate level based on the criteria mentioned above.
Annual Incentive Pay. A significant portion of the compensation paid to the
Company's executive officers consists of an annual incentive cash bonus. The
Committee believes that incentive compensation provides the best means of
motivating and rewarding performance while providing necessary controls on cost.
The Company has instituted an Incentive Compensation Plan (the "ICP") to provide
annual cash incentives for the attainment of corporate financial objectives to
all executive officers, except Mr. Meyers. The Administrative Committee,
composed of one or all of the Company's officers, including Howard M. Meyers, as
appointed by the Compensation Committee, determines quantitative measures of
performance relating to financial or other indicators of performance for the
Company and measurable individual goals prior to the commencement of each year.
Two independent consultants reviewed the ICP in fiscal 1995, particularly for
the adequacy of the overall financial measures. The Administrative Committee
reviewed these measures with a subcommittee of the Board as to appropriateness.
In fiscal 1995, the ability of the Company's executive officers to earn
incentive bonuses under the ICP were dependent upon the Company's achievement of
certain levels of return on assets (the "ROA") percentage (income, before
interest, tax, depreciation, and amortization to defined assets), using the
historical ROA experience of six peer competitors. If the threshold level below
which no incentives would be paid is exceeded, the cash incentive bonuses
incrementally increase based upon specified ROA levels pre-established by the
Administrative Committee. Additionally, other specific goals, including
shipments, cost reduction, environment, and safety, were established as goals.
The awards were objective and entailed precise weighing and measurement of
various factors. The overall performance and cash payout for fiscal 1995 were
reviewed by the entire Board of Directors.
Long-Term Incentives. The purposes of long-term incentive compensation is to
promote the Company's long-term goals by providing financial incentives to
executives to increase the value of the Company, as reflected in the price of
its stock, and to focus on the intermediate and long-term development and
prosperity of the Company. By providing the opportunity to acquire a significant
proprietary interest in the Company, the plans link the interests of the
executives with those of the stockholders.
Using the independent compensation consultant report and based on analysis of
peer steel minimill companies, a target level for long-term incentives for
executives as a percentage of total compensation was established using the
Black-Scholes valuation model. The Board uses incentive stock options as its
long-term incentive. Since this component of total compensation was not
previously utilized, the Company's initial awards in fiscal 1994 were two to
three times targeted annual awards. As a result, no awards were made in 1995.
The vesting schedule provides features intended to encourage long-term retention
and loyalty of its executive officers. It is anticipated that periodic awards
will be given to executive officers in the future so that, over time, target
levels are achieved. Once the value of the long-term incentive component is
determined, the numbers of incentive options was determined based on the Black-
Scholes Model and adjusted based on elapsed time since the last award and other
factors. The ultimate value of incentive stock option is based solely on the
increase in value of the shares over grant price, which has been market value on
the date of the grant.
Conclusion. Total compensation is evaluated over a period of several years
since both the annual incentive component and long-term incentive component can
vary significantly from year to year depending on the cyclical nature of the
industry, Company performance, and individual performance. The Compensation
Committee believes that current total compensation for executive officers is
reasonable and competitive. The Compensation Committee believes that fiscal year
1995 compensation is consistent with its current compensation philosophy and
reflects corporate performance.
Compensation of Chief Executive Officer. The compensation payable to Mr.
Meyers for all services performed on behalf of the Company in any capacity is
determined by the terms of agreements dated July 26, 1988, and August 28,
1986, to which the Company and Mr. Meyers are parties. The two agreements
provide that Mr. Meyers is entitled to the greater of (x) a base amount of
$350,000 adjusted for increases in the consumer price index since December 1995
or (y) 2% of the Company's pretax net income earned in the previous year (or 1%,
if Mr. Meyers is no longer both the Chairman and Chief Executive Officer of the
Company with substantial day-to-day managerial responsibilities).
Policy on Deductibility of Compensation. Section 162(m) of the Internal
Revenue Code limits to $1 million the Company's tax deduction for compensation
paid to each of the Company's most highly paid executive officers, unless
certain requirements are met. The Committee believes it unlikely in the short
term that the limitation will affect the Company. Additionally, the Company has
substantial net operating loss carryforwards to reduce income taxes. The
Committee's present intention is to structure executive compensation so that it
will be fully deductible provided that such continues to be in the best interest
of the Company and its stockholders.
Submitted by the Compensation Committee
John A. Canning, Jr., Chairman
Stanley S. Shuman
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the change in the cumulative total shareholder
return on the Company's Common Stock with the total return of the Standard &
Poor's 500 Stock Index and an index of peer companies, in the minimill steel
industry, selected by the Company for the period of five years commencing on
October 1, 1990 and ending on September 30, 1995. The graph assumes an
investment on October 1, 1990 of $100 in Bayou Steel Corporation Common Stock,
Standard & Poor's 500 Stock Index and the common stock of the peer group, and
that all dividends were reinvested. The peer group consists of eight domestic
steel minimills.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
BAYOU STEEL CORPORATION
[CHART TO GO HERE]
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Bayou Steel 100 143 129 176 236 282
S&P 500 100 131 146 164 171 221
Peer Group 100 108 131 179 179 157
The peer group consists of the following corporations: Birmingham Steel
Corporation, Chaparral Steel Company, Commercial Metals Company, Laclede Steel
Company, New Jersey Steel Corporation, N.S. Group, Inc., Roanoke Electric Steel
Corporation, and Northwestern Steel and Wire Company.
RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS AUDITORS (PROPOSAL 2)
The Board of Directors has appointed the firm of Arthur Andersen LLP,
independent certified public accountants, to examine the financial statements of
the Company for the year ending September 30, 1996. Arthur Andersen LLP has been
employed as independent auditors to the Company and its predecessor since its
inception in 1979. Stockholders are asked to ratify the action of the Board of
Directors in making such an appointment.
If the appointment of Arthur Andersen LLP for fiscal year 1996 is not
ratified by the Stockholders, the selection of other independent auditors will
be considered by the Board of Directors.
Representatives of Arthur Andersen LLP are not expected to be present at the
Meeting, but will be afforded the opportunity to make a statement by open
telephone, if they so desire, and will also be available to respond to
appropriate questions by open telephone.
The Board of Directors recommends a vote FOR ratification of the appointment
of Arthur Andersen LLP as auditors and it is intended that proxies will be so
voted unless marked to the contrary or as abstentions.
PROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION (PROPOSAL 3)
General
The Board of Directors is proposing a related group of amendments
(collectively, the "Amendment") to the Company's Certificate of Incorporation
(the "Charter") that are intended to provide for the possible expansion, under
certain conditions, of the maximum size of the Board of Directors from ten to 13
members. The Amendment, a copy of which is attached hereto as Appendix A, is
intended to assure that the Company has the ability to fulfill certain
obligations pursuant to a Preferred Stock Purchase Agreement dated June 20, 1995
between the Company and Rice Partners II (the "Preferred Stockholder"). If the
Amendment is approved by the Company's stockholders, the Company and the
Preferred Stockholder have agreed to amend the Preferred Stock Purchase
Agreement (as currently in effect and as proposed to be amended, the "Purchase
Agreement") such that, coupled with the Amendment, the Company would be able to
fulfill such obligations. Failure to approve the Amendment could cause the
Company to fail to fulfill such obligations, in which case it would be required
to issue to the Preferred Stockholder warrants to acquire shares of Class A
Common Stock (the "Additional Warrants") that could dilute the economic
interests of all holders of the Common Stock.
Background
The Charter currently provides for a Board of Directors of not less than
seven nor more than ten directors, with the actual Board size being established
from year to year by resolution of the Board. The Charter also provides that
the holders of the Class A Common Stock have the right to elect 40% (rounded to
the nearest whole number) and the holder of the Class B Common Stock has the
right to elect 60% (rounded to the nearest whole number) of the members of the
Board of Directors. The current number of directors has been set at ten;
accordingly, the holders of the Class A Common Stock have the right to elect up
to four and the holder of the Class B Common Stock has the right to elect up to
six of the members of the Board of Directors.
In June 1995 the Company entered into the Purchase Agreement with the
Preferred Stockholder pursuant to which the Company issued Series A Preferred
Stock (the "Series A Preferred Stock"), together with warrants (the "Base
Warrants") to purchase 6% (on a fully diluted basis) of the Company's Class A
Common Stock. The proceeds of the issuance were used to retire indebtedness
that had been incurred in connection with the Company's acquisition in April
1995 of a steel minimill in Harriman, Tennessee, an acquisition that the Board
believed was in the best interests of the Company and its stockholders.
Pursuant to the Purchase Agreement as currently in effect, the Preferred
Stockholder was granted the right to appoint immediately one director to the
Board, with the right to appoint up to two additional directors (for a total of
three) at any time that the Company became in arrears on its payment of
dividends on the Series A Preferred Stock or is in default of certain covenants
(the "Material Covenants") of the Purchase Agreement. Under the proposed
amendment to the Purchase Agreement, the Preferred Stockholder would only have
the right to appoint one additional director (the "Additional Director") (for a
total of two directors), if the Company failed to pay dividends on the Series A
Preferred Stock for two consecutive calendar quarters ( or was at any time in
default of the Material Covenants).
The current Charter provides for a maximum of ten directors elected by the
holders of the Common Stock and does not provide for any Board members
representing the Preferred Stockholder. Thus, to satisfy its obligation under
the Purchase Agreement to provide the Preferred Stockholder with an immediate
representative on the Company's Board, at its June 1995 meeting the Board of
Directors increased the size of the Board from seven to ten, thereby increasing
the number of directors elected by the holders of the Class A Common Stock from
three to four and the number of directors elected by the holders of the Class B
Common Stock from four to six. The Board of Directors appointed Mr. Jeffrey
Sangalis, a partner and director of the Preferred Stockholder (which owns not
only all of the Series A Preferred Stock but also all of the Base Warrants), to
fill the vacancy in the Class A Common Stock directors, and the Preferred
Stockholder agreed that the appointment of Mr. Sangalis to fill this vacancy
satisfied the obligations of the Company under the Purchase Agreement to appoint
a Preferred Stockholder representative as a director. Although two vacancies
were created in the class of directors elected by the Class B Common Stock by
virtue of the increase of the Board's size from seven to ten, the holder of the
Class B Common Stock elected for the time being not to fill the vacancies, with
the result that the Board of Directors currently consists of eight directors.
The Board of Directors believes it is prudent and important to implement the
Amendment promptly in order to provide both for the possibility that the
Preferred Stockholder may no longer find the current arrangement satisfactory,
as well as to provide for the possible appointment of the Additional Director
under the circumstances described above.
Terms of the Amendment
Under the Amendment, the size of the Board of Directors would be between
seven and 13 directors, as established from time to time by the Board, and the
holders of the Class A Common Stock and the holder of the Class B Common Stock
would have the right to elect 40% (or up to five directors) and 60% (or up to
eight directors), respectively. However, at such time as the Preferred
Stockholder notifies the Board that it wishes to exercise its right under the
Purchase Agreement to elect its own representative on the Board of Directors,
the Board of Directors will automatically be increased to 13 directors (if it is
not already so), with the holders of the Class A Common Stock having the right
to elect five directors, the holder of the Class B Common Stock having the right
to elect seven directors, and the Preferred Stockholder having the right to
elect one director. Thus, the first director appointed by the Preferred
Stockholder would have the effect of reducing the number of directors that the
holder of the Class B Common Stock would otherwise be entitled to elect from
eight to seven.
The Amendment further provides that if the Preferred Stockholder becomes
entitled to elect the Additional Director and notifies the Company of its
intention to exercise such right, then the number of directors elected by the
holders of the Class A Common Stock will immediately be reduced from five to
four, with the holder of the Class B Common Stock continuing to have the right
to elect seven directors, and the Preferred Stockholder having the right to
elect two directors. Thus, the Additional Director would have the effect of
reducing the number of directors elected by the holders of the Class A Common
Stock from five to four. If the Company was subsequently able to cure the
covenant default or pay any unpaid dividend, the Additional Director would be
required by the terms of the Purchase Agreement to relinquish his position on
the Board, and the number of Class A Common Stock directors would be returned to
five.
To provide for the possibility that the circumstances giving rise to the
right of the Preferred Stockholder to elect the Additional Director may occur
between Annual Meetings, the Amendment provides that each year one of the five
directors to be elected by the Class A Common Stock will be designated as
the director (the "Designated Director") whose term will expire immediately in
order to create the vacancy necessary to accommodate the appointment of the
Additional Director. Once the Additional Director relinquishes his position on
the Board, the vacancy created thereby may be filled by the remaining Class A
Common Stock directors. At any time that the first director appointed by the
Preferred Stockholder relinquishes his position on the Board, the vacancy
created thereby may be filled by the remaining Class B Common Stock directors.
Potential Consequences of Failure to Approve Amendment
Failure to approve the Amendment will continue to subject the holders of the
Common Stock to the risk of dilution if the Company was unable to accommodate a
proper request by the Preferred Stockholder for Board representation. Under the
terms of the Purchase Agreement, for each calendar quarter that the Company is
not able to accommodate the appointment of the Board representative to which the
Preferred Stockholder is entitled, a warrant to acquire a number of shares of
Class A Common Stock equal to .2857% of the then outstanding shares of Class A
Common Stock (on a fully diluted basis) becomes immediately exercisable at $.01
per share. The beneficial owner of the Class B Common Stock, who is also the
beneficial owner of 2.83% of the outstanding Class A Common Stock, has advised
the Board of Directors that he intends to vote his shares of Class A and Class B
Common Stock in favor of the Amendment at the Annual Meeting only if it has been
approved by the necessary vote of the holders of the Class A Common Stock. For
information on the stockholder vote required to approve the Amendment, see
"Solicitation, Quorum, and Voting of Proxies."
Board Recommendation
The Board of Directors believes that the Amendment best serves the interests
of the Company and its stockholders. The Amendment would enable the Company to
fulfill its obligations under the Purchase Agreement, while preserving to the
extent practicable the existing relationship between the Class A and Class B
Common Stock by assuring that the holder of the Class B Common Stock would
continue to have the right to elect a majority of the Board and the holders of
the Class A Common Stock would continue to have substantial and proportionate
representation on the Board. The Board of Directors unanimously recommends that
the Class A stockholders vote FOR the Amendment.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not know
of any other matters to be presented for consideration at the Annual Meeting. If
other matters should properly come before the Annual Meeting, the persons named
in the enclosed form of Proxy, or their substitutes, will vote the shares
represented by the proxies with respect to any such matters in accordance with
their best judgement.
Proposals which stockholders wish to include in the Company's proxy materials
relating to the 1997 Annual Meeting of Stockholders must be received by the
Company no later than October 8, 1996.
Please promptly complete and return your proxy in the enclosed self-
addressed, stamped envelope.
By order of the Board of Directors
/s/ Richard J. Gonzalez
RICHARD J. GONZALEZ,
Secretary
La Place, Louisiana
February 5, 1996
Appendix A
BAYOU STEEL CORPORATION
CERTIFICATE OF AMENDMENT OF CERTIFICATE
OF INCORPORATION
Pursuant to Sections 103 and 242 of the Delaware General
Corporation Law, the undersigned, being the duly authorized
Chairman of the Board of Directors of Bayou Steel Corporation
(the "Corporation"), does hereby certify that the following
amendment to the Corporation's Second Restated Certificate of
Incorporation, was duly adopted by resolution of the
Corporation's Board of Directors and approved by the holders of a
majority of each class of the Corporation's outstanding capital
stock entitled to so vote and voting as separate classes:
Article 5.1 is hereby amended to add the following:
"Designated Director" shall have the meaning
ascribed to it in Article 5.2.3(c).
"Preferred Stock Purchase Agreement" shall
mean the Preferred Stock and Warrant Purchase
Agreement between Bayou Steel Corporation and
Rice Partners II, L.P., dated June 20, 1995,
as amended from time to time.
"Series A Preferred Stockholder" shall mean
Rice Partners II, L.P. and any successors or
assigns to its rights under the Preferred
Stock Purchase Agreement.
Article 5.2.3(b) is hereby amended to read in its entirety:
(b) Right to Elect Directors. The holders of the
Class A Common Stock shall have the right at any annual
meeting or other meeting of stockholders called for the
purpose of electing directors, subject to the
provisions of Article 5.2.3(d) hereof, solely to vote
for and elect, as a class, that number of directors
which, rounded to the nearest whole number, represents
40% of the number of directors then comprising the
Board of Directors and to remove such directors with or
without cause at any time and to fill all vacancies in
such directorships; provided, however, that as long as
the Class A Common Stock is listed on the American
Stock Exchange and in order to maintain such listing,
then from and after the time that the number of
outstanding shares of Class B Common Stock is less than
12.5% of the aggregate number of outstanding shares of
Common Stock, in addition to the foregoing right to
elect the number of directors as set forth above, the
Class A Common Stock will vote as one class with the
Class B Common Stock for the election of the remaining
directors comprising the Board of Directors, with the
Class B Common Stock having ten votes per share and the
Class A Common Stock having one vote per share.
Notwithstanding the foregoing, however, from and after
the resignation (provided, however, that the expiration
of the term of the Employment Agreement shall not, in
and of itself, be deemed a resignation), or Removal for
Cause or retirement of Howard M. Meyers as Chief
Executive Officer of the Corporation, or death or
Permanent Disability of Howard M. Meyers (except with
respect to the cessation of Permanent Disability
pursuant to Article 5.3.3(a)(i) hereof), or such time
as more than 1,362,676 shares (as such number may be
adjusted from time to time under Article 5.5(a)) of
Class B Common Stock have been converted into Class A
Common Stock, the holders of the outstanding Class A
Common Stock shall be entitled to one vote per share in
the election of directors of the Corporation, voting
together with the holders of the Class B Common Stock
and the Class C Common Stock, each of which shall have
one vote per share, and not as a separate class,
subject to any rights of the Series A Preferred
Stockholder to elect directors as provided in the
Preferred Stock Purchase Agreement.
Article 5.2.3 is hereby further amended to add the
following:
(c) The Designation of Designated Director. For
any election (i) at which the holders of the Class A
Common Stock have the right to vote for and elect, as a
class, five directors, one director so elected by the
holders of the Class A Common Stock, and (ii) at which
the holders of the Class A Common Stock and Class B
Common Stock no longer elect directors separately by
class, one director so elected, shall be designated by
the Nominating Committee of the Board of Directors as
the Designated Director ("Designated Director").
(d) Effect of Series A Preferred Stockholder
Rights. If the Series A Preferred Stockholder
delivers a written notice to the Corporation of its
intent to elect one director to the Board of Directors
pursuant to Section 4.16 of the Preferred Stock
Purchase Agreement at a time that it is entitled to
give such notice, then, in accordance with Article 9,
the Board of Directors, if it does not already consist
of thirteen directors, shall immediately be increased
to thirteen directors and, if the holders of the Class
A Common Stock and Class B Common Stock are still
electing directors separately by class, the number of
directors to be elected by the Class A Common Stock
shall be five, the number of directors to be elected by
the Class B Common Stock shall be seven and the number
of directors to be elected by the Series A Preferred
Stockholder shall be one. If the Series A Preferred
Stockholder delivers an additional notice to the
Corporation of its intent to elect a second director to
the Board of Directors (the "Second Director") pursuant
to Section 4.16 of the Stock Purchase Agreement at a
time that it is entitled to give such notice, and if
the holders of the Class A Common Stock and Class B
Common Stock are still electing directors separately by
class, the number of directors to be elected by the
Class A Common Stock shall be four, the number of
directors to be elected by the Class B Common Stock
shall be seven and the number of directors to be
elected by the Series A Preferred Stockholder shall be
two. Any director so elected by the Series A Preferred
Stockholder shall hold office until the next annual
meeting, unless such director's term expires before
such meeting in accordance with Article 5.2.3(f)
hereof. During the term(s) of any such director(s),
the Series A Preferred Stockholder shall also have the
right solely to remove any such director(s) with or
without cause at any time and to fill all vacancies in
such directorships, except as provided in Article
5.2.3(f) hereof.
(e) Term of the Designated Director; Election of
Director(s) by Series A Preferred Stockholder. In the
event that the Corporation receives written notice from
the Series A Preferred Stockholder, at a time that does
not coincide with an annual meeting, that the Series A
Preferred Stockholder wishes to elect its Second
Director pursuant to Section 4.16 of the Preferred
Stock Purchase Agreement at a time when the Series A
Preferred Stockholder is entitled to give such notice,
the term of the Designated Director shall expire.
Within seven days of receipt of this written notice,
the Board shall take the necessary action to fill the
vacancy created by the expiration of the term of the
Designated Director with the nominee of the Series A
Preferred Stockholder.
(f) End of Term of a Director Elected by the
Series A Preferred Stockholder; Filling of Vacancy.
If, in accordance with Section 4.16 of the Preferred
Stock Purchase Agreement, the Series A Preferred
Stockholder ceases to be entitled to elect any
director(s) who is (are) currently holding office, the
Corporation shall deliver written notice of such
development to the Series A Preferred Stockholder, and
the term(s) of such director(s) will immediately and
automatically expire. The first vacancy created by
such expiration may be filled by the unanimous vote of
the remaining directors elected by the holders of the
Class A Common Stock, and the second vacancy may be
filled by the unanimous vote of the remaining directors
elected by the holders of the Class B Common Stock (or,
in each case, by a majority of the entire Board of
Directors if directors are no longer elected by class).
The director so appointed to replace the Series A
Preferred Stockholder's Second Director will be
considered the Designated Director and will be subject
to the provisions of Article 5.2.3(e) hereof.
Article 5.3.3(b) is hereby amended to read as follows:
Right to Elect Directors. The holders of the
Class B Common Stock shall have the right at any annual
meeting or other meeting of stockholders called for the
purpose of electing directors, subject to the
provisions of Article 5.2.3(d), solely to vote for and
elect, as a class, that number of directors which,
rounded to the nearest whole number, represents 60% of
the number of directors then comprising the Board of
Directors and to remove such directors with or without
cause and to fill all vacancies in such directorships;
provided, however, that as long as the Class A Common
Stock is listed on the American Stock Exchange and in
order to maintain such listing, then from and after the
time that the number of outstanding shares of Class B
Common Stock is less than 12.5% of the aggregate number
of outstanding shares of Common Stock, the Class B
Common Stock will vote as one class with the Class A
Common Stock for the election of the number of
directors set forth above, with the Class B Common
Stock having ten votes per share and Class A Common
Stock having one vote per share. Notwithstanding the
foregoing, however, from and after the resignation
(provided, however, that the expiration of the term of
the Employment Agreement shall not, in and of itself,
be deemed a resignation), or Removal for Cause or
retirement of Howard M. Meyers as Chief Executive
Officer of the Corporation, or death or Permanent
Disability of Howard M. Meyers (except with respect to
the cessation of Permanent Disability pursuant to
Article 5.3.3(a)(i) above) or such time as more than
1,362,676 shares (as such number may be adjusted from
time to time under Article 5.5(a)), of Class B Common
Stock have been converted into Class A Common Stock,
the holders of the outstanding Class B Common Stock
shall be entitled to one vote per share, voting
together with the holders of the Class A Common Stock
and the Class C Common Stock and not as a separate
class, in the election of all directors of the
Corporation, subject to any rights of the Series A
Preferred Stockholder to elect directors as provided in
the Preferred Stock Purchase Agreement. The foregoing
rights of the holders of the Class B Common Stock to
elect directors, as a class, are modified by and
subject to the provisions of Article 5.4.3(c).
Article 9 is hereby amended to read in its entirety as
follows:
Number of Directors. The Board of Directors shall
consist of a minimum of seven and a maximum of thirteen
directors, with the number to be set by a vote of the
majority of the entire Board of Directors of the
Corporation; provided, however, that at any time when
(i) the Series A Preferred Stockholder has the right to
elect at least one director and (ii) the Corporation
receives written notice from the Series A Preferred
Stockholder stating that the Series A Preferred
Stockholder wishes to enforce its rights under Section
4.16 of the Preferred Stock Purchase Agreement to elect
one or more directors, the Board of Directors, if it
does not already at the time of the receipt of the
notice consist of thirteen directors, will immediately
and automatically be increased to thirteen directors,
with the holders of the Class A Common Stock and the
Class B Common Stock thereafter being entitled to elect
such number of directors as is provided by Article
5.2.3(d).
Executed and attested as of ____________, 1996 by the
President and Secretary of Bayou Steel Corporation.
President
ATTEST:
______________________________
Secretary
PROXY CARD
</TABLE>
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. Election of Directors 2. Ratification of the This proxy when properly executed will be
(see reverse) selection of inde- voted in the manner directed herein by the
pendent auditors. undersigned. If no direction is made, this
proxy will be voted FOR each of the
nominees for Class A Directors named on
the reverse side and FOR proposals 2 and 3.
For all, except vote withheld 3. Amendment to
from the following candidate(s): Certificate of
Incorporation.
The Board of Directors
recommends a vote FOR
proposals 1, 2 and 3.
Check Here To
4. Validate the
Attached Annual
Meeting Ticket.
</TABLE>
<TABLE>
<S> <C> <C>
SIGNATURE(S)______________________________________ DATE___________ The proxies will vote in accordance with
their discretion on such other matters as
may properly come before the meeting.
the undersigned hereby revoke all proxies
SIGNATURE(S)______________________________________ DATE___________ heretofore given by the undersigned to
NOTE: Please sign as name appears above. Joint vote at said meeting or any adjournments
owners should each sign. When signing as attorney, thereof.
executor, administrator, trustee or guardian,
please give full title as such.
</TABLE>
- -------------------------------------------------------------------------------
Dear BSC Stockholder:
Your vote is important. Attached is your 1996 Bayou Steel Corporation Proxy
Card. Please read both sides of the card, and mark, sign and date it.
Detach and return it promptly using the enclosed envelope. We urge you to
vote your shares.
You are invited to attend the Annual Meeting of Stockholders on Friday
March 8, 1996 at 2:00 p.m. at 440 Park Avenue, New York, New York 10017.
A ticket is required for admission. You need to check box number 4 on
the proxy form above to indicate you plan to attend and to validate your
attached preprinted ticket. Detach the ticket and bring it with you to
the meeting.
Thank you very much for your cooperation and continued loyalty as a Bayou
Steel Stockholder.
/s/ Richard J. Gonzalez
Richard J. Gonzalez
Secretary
- -------------------------------------------------------------------------------
BAYOU STEEL CORPORATION
[LOGO] TICKET OF ADMISSION
Annual Meeting of Stockholders Stockholders must have a ticket
for admission to the meeting.
March 8, 1996 This ticket is issued to the
stockholder whose name appears
2:00 p.m. on it and is non-transferable.
BAYOU STEEL CORPORATION
Proxy Solicited by Board of Directors
For Annual Meeting of Stockholders, March 8, 1996
The undersigned hereby appoints HOWARD M. MEYERS proxy, with power of
substitution, to vote all shares the undersigned is entitled to vote at the
Annual Meeting of Stockholders of Bayou Steel Corporation to be held at
440 Park Avenue, New York, New York 10022, on March 8, 1996 at 10:00 a.m.,
local time, and all adjournments thereof as directed below and on the
reverse side of this card and, in his discretion, upon any other matters
which may properly come before the Meeting or any adjournment thereof.
Please indicate below and on the reverse side of this card how your Class A
Common Stock is to be voted.
If not otherwise specified, shares will be voted FOR all Class A nominees
in Proposal 1, and FOR Proposals 2 and 3 on the reverse side of this card.
The Board of Directors Recommends a Vote FOR Proposals #1, #2, and #3.
1. Election of the following nominees as Class A Directors: John A.
Canning, Jr., Lawrence E. Golub, Jeffrey P. Sangalis and Stanley S.
Shuman.
2. Ratification of the appointment of Arthur Andersen LLP as
independent auditors.
3. Amendment to Certificate of Incorporation to provide for board
representation for the holder of the Series A Redeemable Preferred
Stock.
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
THIS IS YOUR TICKET OF ADMISSION TO THE 1996 ANNUAL MEETING OF STOCKHOLDERS
OF BAYOU STEEL CORPORATION, TO BE HELD AT 440 PARK AVENUE, NEW YORK, NEW YORK
10022 ON MARCH 8, 1996 AT 2:00 P.M. LOCAL TIME.
THIS TICKET WILL NOT BE VALID UNLESS THE BOX ON THE PROXY CARD IS CHECKED
INDICATING THAT YOU PLAN TO ATTEND THE ANNUAL MEETING.
NOTE: CAMERAS AND VIDEO EQUIPMENT ARE NOT PERMITTED AT THE ANNUAL MEETING.
DOORS WILL OPEN AT 1:00 P.M.
RICHARD J. GONZALEZ
SECRETARY
