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
[ ] Confidential, for use of the Commission only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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 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: N/A
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11(1): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
[ ] 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: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
- -----------
(1) Estimated pursuant to Rule 0-11(c) and (a)(4), based on the book value of
the securities to be received by the registrant upon consummation of the
Mergers.
<PAGE>
[BAYOU STEEL LOGO]
BAYOU STEEL CORPORATION
NOTICE OF
ANNUAL MEETING OF
CLASS A, CLASS B AND
CLASS C COMMON
STOCKHOLDERS AND
PROXY STATEMENT
January 15, 1997
Dear Stockholders:
You are cordially invited to attend the Bayou Steel Corporation Annual
Meeting of Stockholders to be held at 10:00 a.m. (E.S.T.) on Tuesday, February
11, 1997, at 1 West 54th Street, New York, NY 10019.
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,
HOWARD M. MEYERS,
CHAIRMAN AND CHIEF
EXECUTIVE OFFICER
<PAGE>
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 10:00
a.m. (E.S.T.) on Tuesday, February 11, 1997, at 1 West 54th Street, New York,
New York 10019, for the purpose of considering and voting upon the following
matters as set forth in the accompanying Proxy Statement:
1.Election of three (3) 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, 1997.
Only stockholders of record at the close of business on January 3, 1997, 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
RICHARD J. GONZALEZ,
SECRETARY
January 15, 1997
<PAGE>
BAYOU STEEL CORPORATION
138 HIGHWAY 3217
P.O. BOX 5000
LAPLACE, LOUISIANA 70069-1156
PROXY STATEMENT
SOLICITATION, QUORUM, AND VOTING OF PROXIES
This Proxy Statement, which will be first mailed to stockholders on or about
January 15, 1997, 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 February
11, 1997 (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 3, 1997,
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
and (B) 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 proposal 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.
With respect to the proposal to ratify the appointment of auditors 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.
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 and FOR
the ratification of the appointment of Arthur Andersen LLP as auditors.
<PAGE>
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, 1996, 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, 1996 except as otherwise
noted. 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
OF BENEFICIAL OWNERSHIP
NAME AND ADDRESS OF BENEFICIAL OWNER CLASS AMOUNT PERCENTAGE
First Chicago Equity Corporation................ A 838,200(1) 7.91%
#3 First National Place
Suite 1330
Chicago, IL 60602
Heine Securities Corporation.................... A 615,000(2) 5.79%
51 John F. Kennedy Parkway
Short Hills, NJ 07080
How & Company................................... A 540,300(1) 5.09%
c/o The Northern Trust Co.
P.O. Box 92303
Chicago, IL 60675
Bayou Steel Properties Limited(3)............... B 2,271,127(1) 100.00%
2777 Stemmons Freeway
Dallas, TX 75207
Voest-Alpine International Corporation.......... C 100(1) 100.00%
(1) As of October 31, 1996 (2) As of December 31, 1995 (3) See footnote 7 on
page 6.
2
<PAGE>
ELECTION OF DIRECTORS (PROPOSAL 1)
NOMINEE DIRECTORS
The Company's Certificate of Incorporation states that the number of
directors shall be between seven and thirteen, with the exact number to be set
by the directors. The Board of Directors has currently set the number of
directors at seven, of which three may be elected by the Class A Stockholders
and four may be elected by the Class B Stockholders. Each of the Class A
Director nominees, who is currently a member of the Board of Directors, has been
nominated for re-election by the Nominating Committee of the Board of Directors
for a one-year term expiring at 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. Lawrence E. Golub, Jeffrey P. Sangalis,
and Stanley S. Shuman, the three 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. Although no such
intention currently exists, the holder of the Class B Common Stock may determine
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, 1996, the Company's Board of
Directors held five meetings. Each member of the Board of Directors, except Mr.
Klein (who attended 67%), attended at least 75% 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, 1996. Unless otherwise
indicated, each of the directors has held the positions listed for at least five
years.
3
<PAGE>
<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
CLASS A DIRECTOR NOMINEES -------- --------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Lawrence E. Golub, 37 (1) ................... 1988 103,000 * -0- -0-
President of Golub Associates, Inc.,
Equity Investment firm
New York, New York
Jeffrey P. Sangalis, 38 (2) ................. 1995 822,422 7.19 -0- -0-
Managing Partner & Director of
Rice Sangalis Toole & Wilson
Investment Firm
Houston, Texas
Stanley S. Shuman, 61 (3)(7) ................ 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, 54 (4)(7) .................. 1988 60,000 * -0- -0-
President, JAKK Holding Corporation,
a General Partner of GKH Partners, L.P. .....
Corpus Christi, Texas
Albert P. Lospinoso, 60 (5)(7) .............. 1988 10,000 * -0- -0-
Chairman of the Board of RSR Corporation,
a nonferrous metals recycling company
Dallas, Texas
Howard M. Meyers, 54 (6)(7) ................. 1988 300,000 2.83 2,271,127 100
Chairman and Chief Executive Officer
of the Company
Jerry M. Pitts, 45 (8) ...................... 1994 14,410 * -0- -0-
President and Chief Operating Officer
of the Company
NON-DIRECTOR NAMED EXECUTIVE OFFICERS
Richard J. Gonzalez, 49 ..................... -- 9,410(9) * -0- -0-
Vice President, Chief Financial
Officer, Treasurer and Secretary
Timothy R. Postlewait, 46 ................... -- 8,515(9) * -0- -0-
Vice President of Plant Operations
Rodger A. Malehorn, 54 ...................... -- 7,984(9) * -0- -0-
Vice President of Commercial Operations
All directors and executive officers as
a group (10) (11 persons) ................... 2,157,934 18.79 2,271,127 100
</TABLE>
* Less than one percent.
(FOOTNOTES ON FOLLOWING PAGES)
4
<PAGE>
(1) 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.
(2) 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 Sangalis
Toole & Wilson, Rice 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.
(3) 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., Tower Air Inc., and Vulcano Entertainment,
LLC.
(4) 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.
(5) Mr. Albert P. Lospinoso has been the chairman of the Board of RSR
Corporation ("RSR"), a privately owned, nonferrous metals recycling company
with offices in Dallas, Texas, and plants n Dallas, Texas; Middletown, New
York; Indianapolis, Indiana; and city of Industry, California, since May
1996 and is a Director of Quexco Incorporated. From July 1995 until May
1996, Mr. Lospinoso was President and Chief Executive Officer of RSR
Corporation. 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 Executive Vice President, Chief Operating Officer and a
Director of RSR and its predecessor companies.
(6) 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.
5
<PAGE>
(7) 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.
(8) Includes exercisable options for 12,000 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.
(9) Includes exercisable options for 6,000 shares of Class A Common Stock for
each of Messrs. Gonzalez, Postlewait, and Malehorn.
(10) 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.
6
<PAGE>
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, 1996, 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. 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),
Golub, and Lospinoso. 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. Shuman (Chairman),
Golub, and Sangalis. 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, 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
During fiscal 1996, Mr. Lawrence E. Golub, a director of the Company,
received compensation for consulting services rendered.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by the Company's
Chief Executive Officer and the four other most highly-compensated executive
officers for the fiscal years 1992 through 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
AWARD OF
NAME AND ANNUAL COMPENSATION STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (# OF SHARES) COMPENSATION(1)
------------------ ---- -------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Howard M. Meyers................................ 1996 $474,675 $ -0- -0- $ -0-
Chairman and Chief 1995 465,504 -0- -0- -0-
Executive Officer 1994 437,990 -0- -0- -0-
1993 437,990 -0- -0- -0-
1992 435,041 -0- -0- -0-
Jerry M. Pitts.................................. 1996 225,000 -0- -0- 2,477
President and Chief 1995 225,000 112,500 -0- 1,538
Operating Officer 1994 225,000 9,750 30,000 1,428
1993 225,000 9,750 -0- 1,316
1992 225,000 9,750 -0- 1,702
Timothy R. Postlewait........................... 1996 150,000 -0- -0- 2,062
Vice President 1995 150,000 63,974 -0- 1,508
of Plant Operations 1994 150,000 6,000 15,000 1,602
1993 150,000 6,000 -0- 1,560
1992 150,000 6,000 -0- 1,560
Richard J. Gonzalez............................. 1996 147,000 -0- -0- 1,855
Vice President, Chief Financial 1995 147,000 77,910 -0- 1,489
Officer, Treasurer and Secretary 1994 147,000 5,313 15,000 1,638
1993 147,000 5,313 -0- 1,462
1992 147,000 5,313 -0- 1,498
Rodger A. Malehorn.............................. 1996 132,000 -0- -0- 1,636
Vice President of 1995 132,000 60,065 -0- 1,457
Commercial Operations 1994 120,000 -0- 15,000 1,488
1993 120,000 5,313 -0- 1,253
1992 120,000 5,313 -0- 1,253
</TABLE>
(1) Includes amounts contributed by the Company to the Company's Savings Plan,
a 401(k) Plan in respect of matching contributions. For fiscal 1996, the
Company's contributions were $2,374 for Mr. Pitts, $1,888 for Mr.
Postlewait, $1,681 for Mr. Gonzalez, and $1,348 for Mr. Malehorn. Also
includes the dollar value of term life insurance premiums paid by the
Company for the benefit of these officers.
8
<PAGE>
OPTION YEAR-END VALUE TABLE
The following table presents the value of unexercised options at September
30, 1996.
FISCAL YEAR-END OPTION VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SEPTEMBER 30, 1996 SEPTEMBER 30, 1996(1)
------------------ ------------------
EXERCISABLE(E)/ EXERCISABLE(E)/
NAME UNEXERCISABLE(U) UNEXERCISABLE(U)
Howard M. Meyers............... -0- $ N/A
Jerry M. Pitts................. 12,000E/18,000U -0-E/-0-U
Timothy R. Postlewait.......... 6,000E/9,000U -0-E/-0-U
Richard J. Gonzalez............ 6,000E/9,000U -0-E/-0-U
Rodger A. Malehorn............. 6,000E/9,000U -0-E/-0-U
(1) At September 30, 1996, the closing sales price for Bayou Steel
Corporation's Class A Common Stock on the American Stock Exchange was
$3.625.
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 Bayou Steel Corporation Retirement Plan (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 4,121 8,242 12,363 12,363
100,000 9,621 19,242 28,863 28,863
150,000 15,121 30,242 45,363 45,363
200,000 15,121 30,242 45,363 45,363
250,000 15,121 30,242 45,363 45,363
300,000 15,121 30,242 45,363 45,363
600,000 15,121 30,242 45,363 45,363
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The Company has adopted 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 1996, 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,
1996 for each of the five most highly compensated officers of the Company are:
Howard M. Meyers, 10 years; Jerry M. Pitts, 15 years; Richard J. Gonzalez, 13
years; Rodger A. Malehorn, 12 years; and Timothy R. Postlewait, 15 years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Messrs. Stanley S.
Shuman, Lawrence E. Golub, and Albert P. Lospinoso. No 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
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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 has basically
used this approach as the compensation policy since 1994, 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 equity are
considered in determining salary levels.
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 each year. The Administrative Committee
reviewed these measures with a subcommittee of the Board as to appropriateness.
In fiscal 1996, the ability of the Company's executive officers to earn
incentive bonuses under the ICP was 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.
Since the threshold level for ROA percentage was not obtained, there were no
awards under the ICP for fiscal 1996.
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 or
1996. 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
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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 valuation 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
1996 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 1985 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
Stanley S. Shuman, Chairman
Lawrence E. Golub
Albert P. Lospinoso
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, 1991 and ending on September 30, 1996. The graph assumes an
investment on October 1, 1991 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.
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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
BAYOU STEEL CORPORATION
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Bayou Steel 100 90 122 165 197 145
S&P 500 100 111 125 130 169 203
Peer Group 100 121 165 166 145 147
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, 1997. 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 1997 is not
ratified by the Stockholders, the selection of other independent auditors will
be considered by the Board of Directors.
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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.
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 1998 Annual Meeting of Stockholders must be received
by the Company no later than September 17, 1997.
PLEASE PROMPTLY COMPLETE AND RETURN YOUR PROXY IN THE ENCLOSED
SELF-ADDRESSED, STAMPED ENVELOPE.
By order of the Board of Directors
RICHARD J. GONZALEZ,
SECRETARY
LaPlace, Louisiana
January 15, 1997
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APENDIX A
BAYOU STEEL CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, FEBRUARY 11, 1997
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 1 West
54th Street, New York, New York 10019, on February 11, 1997 at 10:00 A.M.
(E.S.T.), and all adjournments thereof as directed below and on the reverse side
of this card and, in their 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 PROPOSAL 2 ON THE REVERSE SIDE OF THIS CARD.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS #1 AND #2.
1.Election of the following nominees as Class A Directors: Lawrence E.
Golub, Jeffrey P. Sangalis and Stanley S. Shuman.
2.Ratification of the appointment of Arthur Andersen LLP as independent
auditors.
<PAGE>
FOR WITHHELD
1. Election of Directors ----- -----
(see reverse) | | | |
----- -----
FOR AGAINST ABSTAIN
2. Ratification of the ----- ----- -----
selection of inde- | | | | | |
pendent auditors. ----- ----- -----
This proxy when properly executed will be voted in the manner directed herein by
the 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 proposal 2.
For all, except vote withheld from the following candidate(s):
The Board of Directors
recommends a vote FOR
proposals 1 and 2.
SIGNATURE(S) ____________________________________ DATE _______________________
SIGNATURE(S) ____________________________________ DATE _______________________
NOTE: Please sign as name appears above. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
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 heretofore given by the under- signed to vote at said meeting or any
adjournments thereof.
