<PAGE>
<PAGE>
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
OREGON STEEL MILLS, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
L. Ray Adams
------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $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 the transaction applies:
2) Aggregate number of securities to which the transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Notes:
<PAGE>
<PAGE>
OREGON STEEL MILLS, INC.
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------
TO BE HELD
APRIL 28, 1994
9:30 A.M. PACIFIC TIME
10:30 A.M. MOUNTAIN TIME
--------------
TO THE STOCKHOLDERS:
You are invited to attend the Annual Meeting of Stockholders of Oregon
Steel Mills, Inc. (the "Corporation") to be held at the offices of its
subsidiary, CF&I Steel, L.P., 225 Canal Street, Pueblo, Colorado on Thursday,
April 28, 1994, at 10:30 a.m. Mountain Time.
The meeting is being held for the following purposes:
1. To elect three Class C directors.
2. To consider and transact such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 11, 1994
are entitled to notice of, and to vote at, the meeting and any adjournment or
postponement thereof. A list of stockholders entitled to vote at the meeting
is available for inspection at the offices of the Corporation.
By Order of the Board of Directors,
L. RAY ADAMS
Secretary
March 15, 1994
Portland, Oregon
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY MAIL THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED. YOUR PROMPT RESPONSE COULD SAVE THE CORPORATION
THE EXPENSE OF A FOLLOW-UP MAILING.<PAGE>
<PAGE>
OREGON STEEL MILLS, INC.
1000 S.W. BROADWAY BUILDING,
SUITE 2200
PORTLAND, OREGON 97205
(503) 223-9228
--------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
--------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Oregon Steel Mills, Inc.
(the "Corporation") to be voted at the Annual Meeting of Stockholders to be
held at the offices of its subsidiary, CF&I Steel, L.P., 225 Canal Street,
Pueblo, Colorado on Thursday, April 28, 1994, at 10:30 Mountain Time, and any
adjournments thereof.
Only stockholders of record at the close of business on March 11, 1994,
are entitled to notice of, and to vote at, the meeting. At the close of
business on that date, the Corporation had 19,377,343 shares of Common Stock,
$0.01 par value per share ("Common Stock"), outstanding. Holders of Common
Stock are entitled to one vote for each share of Common Stock held. There are
no cumulative voting rights.
When a proxy in the form accompanying this proxy statement is properly
executed and returned, the shares represented will be voted at the meeting in
accordance with the instructions specified in the proxy. If no instructions
are specified, the shares will be voted FOR Proposal 1 in the accompanying
Notice of Annual Meeting of Stockholders, and such votes will be counted
toward determining a quorum. Shares held of record by the Trustees of the
Corporation's Employee Stock Ownership Plan Trust (the "ESOP") will be voted
by the Trustees in accordance with instructions received from ESOP
participants or, if no such instructions are received, FOR Proposal 1. Any
person giving a proxy in the form accompanying this proxy statement has the
power to revoke it at any time before its exercise. A stockholder may revoke
a proxy by (i) written notice of such revocation to the Secretary of the
Corporation at the above address; (ii) a later-dated proxy received by the
Corporation; or (iii) attending the meeting and voting in person. Attendance
at the meeting will not by itself revoke a proxy.
Each share of Common Stock outstanding on the record date is entitled to
one vote per share at the Annual Meeting of Stockholders. Shares of Common
Stock represented in person or by proxy at the Annual Meeting (including
abstentions and broker non-votes) will be tabulated by the inspector of
election appointed for the meeting and will be counted in determining that
a quorum is present. A plurality of the votes cast at the Annual Meeting is
required to elect the directors. Proxies withholding authority to vote for a
nominee will be treated as votes cast. Broker non-votes will not be treated
as votes cast and therefore, will not be counted in calculating a plurality.
The approximate date on which this proxy statement and the accompanying
proxy card are being mailed to the Corporation's stockholders is March 15,
1994. Solicitation material will be furnished to brokerage houses,
fiduciaries and custodians holding shares in their names that are beneficially
owned by others to forward to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by one or more telephone, telegram or
personal solicitations by directors, officers or employees of the Corporation.
No additional compensation will be paid for any such services. Except as
described above, the Corporation does not intend to solicit proxies other
than by mail. Costs of solicitation will be borne by the Corporation.
1<PAGE>
<PAGE>
PROPOSAL 1: NOMINATION AND ELECTION OF CLASS C DIRECTORS
NOMINEES
The Corporation has a classified Board consisting of three Class A
directors, Messrs. Fulton, Keener* and Sproul; three Class B directors,
Messrs. Emerson, Gendron and Sikora; and three Class C directors, Messrs.
Boklund, Landis and Maggetti. The Class A and B directors serve until the
Annual Meetings of Stockholders to be held in 1995 and 1996, respectively,
and until their successors are elected and qualified. At each Annual Meeting
of Stockholders, directors are elected for a term of three years to succeed
those directors whose terms expire at that annual meeting.
The nominees for election as Class C directors are Thomas B. Boklund,
Richard G. Landis and James A. Maggetti all of whom are members of the
present Board. The Class C directors to be elected at the 1994 Annual
Meeting will serve until the Annual Meeting of Stockholders in 1997 and
until their successors are elected and qualified.
Unless authority to vote for a director or directors is withheld, the
accompanying proxy, if properly executed and returned, will be voted for the
election of the Class C nominees named below. If authority to vote for one
or more of the nominees is withheld, the withheld votes will not be cast for
any of the other nominees unless the stockholder otherwise indicates on the
proxy. If any nominee is unable or unwilling to serve as a director, proxies
may be voted for such substitute nominees as may be designated by the Board.
The Board has no reason to believe that any of the nominees will be unable or
unwilling to serve as a director if elected.
*Mr. Keener was elected to the Board in January 1994 to fill the vacancy
left by the death of Mr. Alan C. Furth.
The following table sets forth information with respect to each person
nominated for election as a Class C director and each other director,
including their names and ages as of February 24, 1994, business experience
during the past five years and directorships in other corporations.
Principal Occupation and Director
Name Certain Other Directorships Age Since
---- --------------------------- --- --------
CLASS C (NOMINEES FOR TERMS OF OFFICE TO EXPIRE IN 1997):
Thomas B. Boklund Mr. Boklund is the Chairman of the 54 1982
Board of Directors and Chief
Executive Officer of the Corporation.
He became President and Chief
Executive Officer in July 1985,
Chairman in February 1992, and was
President and Chief Operating Officer
from May 1982 through June 1985. He is
currently a director of Paragon Trade
Brands, Inc., a manufacturer of
private label infant disposable
diapers.
2<PAGE>
<PAGE>
Principal Occupation and Director
Name Certain Other Directorships Age Since
---- --------------------------- --- --------
Richard G. Landis Mr. Landis was President, Chairman 73 1987
and Chief Executive Officer of the
Del Monte Corporation, a food and
beverage company, from 1971 to
November 1981 and President of the
Pacific area of R.J Reynolds
Industries, Inc., a tobacco, food,
beverage and transportation
conglomerate, from November 1981
until his retirement in July 1983.
Mr. Landis served as Chancellor of
the University of LaVerne from July
1984 to October 1985. Mr. Landis
served as a director of Potlatch
Corporation, a diversified forest
products company, from 1973 until
December 1990.
James A. Maggetti Mr. Maggetti was employed by Kaiser 69 1987
Steel Corporation from 1955 until
December 1983, where his last position
was as a Vice President responsible
for fabricating operations. He was
Chairman of the Board of Napa Valley
Bank from 1984 through April 1992 and
Vice Chairman of the Board of Napa
Valley Bancorp, the bank's holding
company, from April 1982 through
December 1991. He is currently a
Director of Napa Valley Bank and has
been a Director of Westamerica
Bancorporation since July 1993.
CLASS A (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 1995):
V. Neil Fulton Mr. Fulton was the Corporation's 65 1983
Secretary and Treasurer from 1970 to
April 1989. Mr. Fulton became a director
in April 1983 and was Vice President of
Finance and Chief Financial Officer of
the Corporation from October 1980 until
February 1991. He continued as an
employee of the Corporation until
December 31, 1992. From January 1993
to the present Mr. Fulton has been
retired.
Robert W. Keener Mr. Keener was employed by Northwest 62 1994
Pipeline Corporation from 1973 to
January 1994. Northwest Pipeline
Corporation operates a natural gas
transmission system in the Western
United States. In 1975 he became
Vice President - Gas Supply, and
was named Senior Vice President -
Gas Supply and Operations in 1980.
He served as President and Chief
Operating Officer from 1983 to
1992, and as Chief Executive Officer
from 1992 until his retirement in
January 1994. He is a former director
and executive committee member of
Key Bank Corporation of Utah.
John A. Sproul Mr. Sproul was an Executive Vice 69 1989
President of Pacific Gas and Electric
Company from 1977 to 1989. During
most of that period, he was also
Chairman of the Board and Chief
Executive Officer of Pacific Gas
Transmission Company, an interstate
pipeline company. Since 1989 Mr. Sproul
has been retired.
3<PAGE>
<PAGE>
Principal Occupation and Director
Name Certain Other Directorships Age Since
---- --------------------------- --- --------
CLASS B (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 1996):
C. Lee Emerson Mr. Emerson was the Chairman of the 76 1976
Board of Directors of the Corporation
from May 1982 through January 1992. He
formerly served as President and Chief
Executive Officer of the Corporation.
Since 1992 he has been retired.
Edward C. Gendron Mr. Gendron was the President, Chief 65 1976
Operating Officer and a director of
Midland-Ross Corporation from 1976 to
April 1983. In April 1983, Mr. Gendron
became Vice Chairman of the Board of
Directors and Chief Administrative
Officer of Midland-Ross Corporation,
positions he held until August 1986.
Mr. Gendron has been President of
E. C. Gendron Enterprises, a financial
consulting firm, since 1986.
Robert J. Sikora Mr. Sikora is the President and Chief 51 1992
Operating Officer of the Corporation.
He became President and Chief Operating
Officer in February 1992, and a director
in April 1992. He was Vice President
of Manufacturing from 1985 through
January 1992.
DIRECTORS' COMPENSATION, MEETINGS AND STANDING COMMITTEES
The Board has standing Executive, Audit and Compensation committees. The
Board does not have a nominating committee. Directors who are not full-time
employees of the Corporation receive an annual fee of $21,000, plus $1,200 for
each Board and committee meeting attended and reimbursement of expenses.
Directors who are full-time employees of the Corporation do not receive fees
for serving on the Board or on committees.
During 1991, the Executive Committee enacted a deferred compensation plan
for directors, by virtue of which all former and present outside directors of
the Corporation who have served in the capacity of director since the 1986
Annual Meeting of Stockholders will be paid a benefit by the Corporation of
$6,000 per year for each year served as an outside director up to a maximum of
ten years. This benefit is to be paid commencing with the calendar year
following which such person ceases to be a director of the Corporation and
payable to either the director, the director's estate, or other designated
beneficiary.
During 1993, the Board held four meetings, the Audit Committee held two
meetings and the Compensation Committee held one meeting. Each director
attended more than 75% of the aggregate number of Board meetings and meetings
of committees of which he is a member which were held during the period for
which he was a director.
The Executive Committee may exercise all the authority of the Board,
subject to actions of the full Board and except as otherwise provided by the
Corporation's restated certificate of incorporation, the Corporation's bylaws
or applicable law. The members of the Executive Committee are Messrs. Boklund,
Emerson and Fulton.
The Audit Committee reviews services provided by the Corporation's
independent auditors, reviews with them the results of their audit, the
adequacy of internal accounting controls, the quality of financial reporting
and any recommendations they may have, and makes recommendations to the Board
concerning their engagement or discharge. The members of the Audit Committee
are Messrs. Emerson, Fulton, Gendron, Landis, Maggetti and Sproul. Mr. Alan C.
Furth was also a member until his death during the year.
4<PAGE>
<PAGE>
The Compensation Committee reviews the general compensation policies of
the Corporation and its subsidiaries and establishes the compensation plans and
specific compensation levels for executive officers prior to consideration of
such matters by the Board as a whole. The members of the Compensation Committee
during 1993 were Messrs. Emerson, Gendron, Landis, Maggetti and Sproul. Mr.
Alan C. Furth was also a member until his death during the year.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of shares of the Common Stock as of February 24, 1994, by
(i) each director, director nominee and named executive officer; (ii) each
person known to the Corporation to be a beneficial owner of more than 5% of the
outstanding shares of Common Stock; and (iii) all current directors and
executive officers as a group. The persons named in the table have sole voting
and investment power with respect to all shares shown as beneficially owned by
them, subject to community property laws where applicable and to the
information contained in the other footnotes to the table.
Number Percentage
Name of Shares of Class
---- ----------- ----------
Thomas B. Boklund(1)(2) 79,065(3) *
C. Lee Emerson(1) 92,040 *
V. Neil Fulton(1) 6,568(4) *
Edward C. Gendron(1) 1,000 *
Edward J. Hepp, Jr.(2) 798(3) *
Robert W. Keener(1) -- *
Richard G. Landis(1) 5,600 *
James A. Maggetti(1) 6,000 *
Robert R. Mausshardt(2) 149(3) *
James R. McCaughey(2) 5,064(3) *
Robert J. Sikora(1)(2) 44,548(4) *
John A. Sproul(1) 1,000 *
Oregon Steel Mills, Inc.
Employee Stock Ownership Plan Trust
1000 SW Broadway, Suite 2200
Portland, Oregon 97205 2,772,791 14.3%
FMR Corp.(6)
Edward C. Johnson 3d
Fidelity Management & Research Company
82 Devonshire Street
Boston, Massachusetts 02109 1,059,800 5.5%
All directors and
executive officers as a group
(18 persons)(5) 371,713 1.9%
- - ----------
5<PAGE>
<PAGE>
*Less than 1% of the outstanding Common Stock.
(1) Member of the Board of Directors.
(2) Named executive officer.
(3) All shares are held by the ESOP for Messrs. Boklund, Hepp, Mausshardt and
McCaughey. Participants in the ESOP have the power to vote these shares
under the terms of the ESOP, but they do not have investment power with
respect to such shares.
(4) Includes 773 shares and 44,348 shares held by the ESOP for Mr. Fulton and
Mr. Sikora's accounts, respectively. Messrs. Fulton and Sikora have the
power to vote these shares under the terms of the ESOP, but do not have
investment power with respect to such shares.
(5) Includes 259,558 shares held by the ESOP for the accounts as to which the
respective beneficial owners have the power to direct the vote under the
terms of the ESOP.
(6) Based on information obtained from a Schedule 13G dated February 11, 1994
filed by FMR Corp. with the Securities and Exchange Commission: Fidelity
Management & Research Company ("Fidelity"), a wholly-owned subsidiary of
FDR Corp., is the beneficial owner of 1,023,600 shares as a result of
acting as investment adviser to several registered investment companies.
Edward C. Johnson 3d, FMR Corp., through its control of Fidelity, and the
Funds each has sole power to dispose of, but no power to vote, the
1,023,600 shares owned by the Funds. Fidelity Management Trust Company,
another wholly-owned subsidiary of FMR Corp., is the beneficial owner of
36,200 shares as a result of its serving as investment manager of several
institutional account(s). FMR Corp., through its control of Fidelity
Management Trust Company, has sole dispositive power over 36,200 shares
and sole power to vote or to direct the voting of 13,500 shares, and no
power to vote or to direct the voting of 22,700 shares of Common Stock
owned by the institutional account(s) as reported above. Edward C. Johnson
3d is the Chairman of FMR Corp. and owns 34.0% of the outstanding voting
common stock of FMR Corp. Various Johnson family members and trusts for
the benefit of the Johnson family members own FMR Corp. voting stock.
These Johnson family members, through their ownership of voting common
stock form a controlling group with respect to FMR Corp.
6<PAGE>
<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to or accrued by the Corporation and its
subsidiaries for the Chief Executive Officer and each of the four most highly paid executive officers
of the Corporation and its subsidiaries.
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ALL OTHER COMPENSATION
--------------------------------------------- -----------------------------------------------
Name and Other Annual ESOP Thrift Plan
Principal Position Year Salary Bonus(1) Compensation Contribution(2) Contribution(3) Total
------------------ ---- -------- -------- ------------ --------------- --------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas B. Boklund 1993 $400,000 $ 45,180 -- $ 3,776 -- $ 3,776
Chairman of the 1992 395,000 134,798 -- 15,532 -- 15,532
Board and Chief 1991 360,000 160,452 -- 17,763 -- 17,763
Executive Officer
Robert J. Sikora 1993 $240,000 $ 27,108 -- $ 3,776 $847 $ 4,623
President and 1992 232,500 76,513 -- 15,532 636 16,168
Chief Operating 1991 178,267 77,469 -- 17,763 767 18,530
Officer
Edward J. Hepp, Jr. 1993 $175,000 $ 18,138 $33,601(4) $ 3,776 $847 $ 4,623
Vice President of 1992 146,250 44,324 66,797(4) 15,099 873 15,972
Marketing 1991 35,000 -0- -- -- 175 175
Robert R. Mausshardt 1993 $195,000 $ 22,025 -- $ 3,776 $847 $ 4,623
Vice President of 1992 193,125 66,260 -- 15,532 -- 15,532
Marketing, 1991 177,500 77,469 -- 17,763 -- 17,763
Tubular Products
James R. McCaughey 1993 $195,000 $ 22,025 -- $ 3,776 $847 $ 4,623
Vice President and 1992 193,125 66,260 -- 15,532 794 16,326
General Manager, 1991 176,674 76,090 -- 17,763 427 18,190
Napa Facility
- - --------------
<FN>
(1) Amounts paid pursuant to the Corporation's Profit Participation Plan. It includes amounts paid pursuant to the Profit
Participation Plan in 1993 with respect to the fourth quarter of 1992. Excludes amounts paid pursuant to the Profit
Participation Plan in 1994 with respect to the fourth quarter of 1993.
(2) Value of stock contributions made by the Corporation on behalf of the named executive to the Employee Stock Ownership
Plan Trust, as determined at the time of such contribution.
(3) Matching contributions made by the Corporation on behalf of the named executive to the Corporation's Thrift Plan.
(4) Amounts reimbursed for the payment of relocation expenses and related taxes, not expected to reoccur in 1994 and forward.
</TABLE>
7<PAGE>
<PAGE>
DEFINED BENEFIT RETIREMENT PLAN
The Corporation's pension plans are defined benefit plans qualified under
Section 401(a) of the Internal Revenue Code. Executive officers and most other
domestic employees of the Corporation are eligible to participate in the Oregon
Steel Mills, Inc. Pension Plan (the "Plan") or similar plans. Normal retirement
is at age 65.
The amount of an employee's pension benefit and the resulting monthly
payments an employee receives upon retirement are based upon the level of the
employee's prior annual compensation, the employee's number of years of benefit
service and other factors. The employee's annual pension benefit is equal to
the sum of:
(i) for each full or partial year of benefit service prior to January 1,
1994, 1% of the first $22,800 of Past Service Compensation, plus 1.6%
of Past Service Compensation in excess of $22,800. ("Past Service
Compensation" is the employee's average compensation for the years
1991, 1992 and 1993); plus,
(ii) for each full or partial year of benefit service beginning on or after
January 1, 1994, 1.2% of the employee's compensation during such year
up to the employee's "Covered Compensation" amount for the year, plus
1.7% of the employee's compensation in excess of such "Covered
Compensation" amount. ("Covered Compensation" for each year is
determined by the employee's age and is taken from a Social Security
Covered Compensation Table published annually in accordance with IRS
regulations. For any given age, the Covered Compensation amount in the
Table represents the average of the Social Security taxable wage bases
over the 35-year period ending in the year someone that age will reach
Social Security normal retirement age.)
The Pension Plan Table below shows the Covered Compensation portion
of the estimated annual benefits payable upon retirement at age 65 in
the specified compensation and years of service classifications.
PENSION PLAN TABLE
YEARS OF SERVICE
------------------------------------------
REMUNERATION(2) 15 20 25 30 35
--------------- ------ ------ ------ ------ ------
$125,000 28,875 38,500 48,125 57,750 67,375
$150,000 35,250 47,000 58,750 70,500 82,250
$175,000 35,250 47,000 58,750 70,500 82,250
$180,000(1) 35,250 47,000 58,750 70,500 82,250
(1) Represents 120% of the maximum compensation taken into account for years
beginning on or after January 1, 1994.
(2) Based on the estimated straight-life annuity amounts for future service
using 1994 as the first year of benefit service.
8<PAGE>
<PAGE>
For each named executive officer listed on the Summary Compensation Table,
the applicable compensation each year is the sum of the "Salary" and "Bonus"
compensation shown, limited as described below. Upon their retirement, assuming
retirement at age 65 and no increase in current rates of annual compensation,
and based upon years of service at December 31, 1993, Messrs. Boklund, Sikora,
Hepp, Mausshardt, and McCaughey would receive lifetime annual payments of
$96,704, $90,316, $46,911, $41,499, and $22,847, respectively. Their credited
years of service as of December 31, 1993 are twenty-one, sixteen, two, ten and
six years, respectively. Pension benefits accrued in 1993 under the Plan are
not included in the Summary Compensation Table above.
The portion of an employee's benefit attributable to years of benefit
service in excess of 35 years, is limited to 1.0% of his Past Service
Compensation for purposes of (i) above; and to 1.2% of his annual compensation
for purposes of (ii) above. Notwithstanding the foregoing, an employee's
compensation taken into account for any plan year after 1993 shall not exceed
$150,000 (or such other amount as may be prescribed for the relevant plan year
by the Secretary of the Treasury pursuant to Section 401(a)(17) of the Code).
The employee's annual pension benefit is reduced to the extent of the
annuity value of: (i) any portion of the employee's account balances under the
Corporation's Profit Sharing Plan and the ESOP as of January 1, 1981
attributable to allocations on the basis of compensation in excess of the
Social Security taxable wage base; and (ii) any retirement benefits paid to the
employee under the Corporation's Pension Plan for Union Employees which was
terminated January 23, 1984. The Plan benefits are not subject to deduction for
social security.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
The Corporation entered into employment agreements (the "Employment
Agreements") with certain of its key employees, including Messrs. Boklund,
Mausshardt and Sikora ("Employees") in January 1989, and with Messrs. McCaughey
and Hepp (also "Employees") in February 1991 and September 1991, respectively.
Each Employment Agreement is effective until June 1 of each year, with (a)
automatic one-year extensions until the Employee reaches the age of 65 unless
either the Corporation or the Employee provides prior notice that the
Employment Agreement will not be extended, and (b) an automatic three-year
extension in the event of a change of control of the Corporation (a "Change in
Control"). Change in Control is defined to include, among other things, the
transfer of 25% or more of the Corporation's voting securities to any person or
entity other than the ESOP or the election of a majority of directors who were
not nominated by the then current Board. The Employment Agreements provide,
among other things, for severance compensation in the event that an Employee's
employment is terminated by the employer without cause or by the Employee with
good reason, all as defined in the Employment Agreements, during the three-year
period following a Change in Control. Such severance compensation is to be
calculated as the sum of (i) three times the Employee's annual base salary as
of the date of the Change in Control, (ii) the four most recent quarterly cash
distributions to such Employee from the Corporation's Profit Participation
Plan, and (iii) an amount equal to the lump sum present actuarial value of the
excess, if any, of the normal retirement allowance to which the Employee would
have been entitled under the Pension Plan, assuming that the Employee continued
as an active participant under such plan, without change in his rate of annual
pay, until the earlier of his 65th birthday or the tenth anniversary of the
date of the Change in Control, over the normal retirement allowance to which
the Employee is actually entitled under such plan as of the date of termination
9<PAGE>
<PAGE>
Under the Employment Agreements, any terminated Employee would also receive full
base salary through the date of such termination of employment, reimbursement
for any legal fees or expenses incurred by the Employee in seeking to enforce
the Employment Agreement and certain non-cash employee benefits as specified in
the Employment Agreements.
The Corporation has entered into Indemnification Agreements with each
director and certain executive officer(s) (an "Indemnified Person"). Each
agreement provides that the Corporation shall indemnify the Indemnified Person
if and when the Indemnified Person is or was a party or is threatened to be
made a party to any action, suit, arbitration, investigation, administrative
hearing or any other proceeding (a "Proceeding") because of the Indemnified
Person's status or former status as a director, officer or other agent of the
Corporation or because of anything done or not done by the Indemnified Person
in such capacity, against all expenses and liabilities actually and reasonably
incurred by the Indemnified Person or on the Indemnified Person's behalf in
connection with the investigation, defense, settlement or appeal of such
Proceeding. The Corporation will advance to the Indemnified Person all
reasonable defense expenses incurred in defense of any Proceeding. Further,
each agreement provides that upon the acquisition of 30% or more of the
outstanding shares of Common Stock, other than by the Corporation or the ESOP,
without approval by a majority of the Corporation's Board prior to such
acquisition, the Corporation will obtain and maintain over the term of the
agreement an irrevocable standby letter of credit on terms satisfactory to the
Indemnified Person in an appropriate amount (but not less than $500,000) naming
the Indemnified Person as the beneficiary in order to secure the Corporation's
obligation under the agreement. Finally, each agreement provides that the
Corporation must maintain director and officer insurance in the amount of at
least $2.0 million with coverage at least comparable to its then current
insurance for the Indemnified Person for the term of the agreement. The
Corporation may elect to not purchase the required insurance if the insurance
is not reasonably available or if, in the reasonable business judgment of the
directors of the Corporation, either the premium cost for such insurance is
disproportionate to the amount of coverage or the coverage provided by such
insurance is so limited that there is insufficient benefit from such insurance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1993 the Compensation Committee members were Alan C. Furth,
Chairman, now deceased, C. Lee Emerson, Edward C. Gendron, Richard G. Landis,
James A. Maggetti and John A. Sproul, current committee chairman. V. Neil
Fulton joined the Compensation Committee effective January 27, 1994. Mr.
Emerson, was Chairman of the Board and an employee of the Corporation through
January 1992. Mr. Fulton was the Corporation's Vice President of Finance and
Chief Financial Officer until February 1991. He was an employee of the
Corporation through December 31, 1992.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board establishes the general
compensation policies of the Corporation and establishes the compensation plans
and specific compensation levels for executive officers. The Compensation
Committee is composed of six independent, non-employee directors.
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COMPENSATION PRINCIPLES
The Corporation is committed to providing a compensation program that
helps attract and retain the best people available. To ensure that compensation
is competitive, the Corporation regularly compares its pay practices with those
of comparable companies and sets pay parameters based on this review. The
Corporation has maintained the philosophy that compensation of all employees
should be directly and materially linked to operating and financial
performance. To achieve this linkage, employee compensation is heavily weighted
towards compensation paid on the basis of pre-tax profit. The Corporation has
also established stock ownership as part of non-union employee compensation to
promote the alignment of employee long range interests with those of the
stockholders. In addition, the Corporation believes that whenever possible the
compensation and benefit program provided to the executive officers should be
based on similar principles as for all other non-union employees. These
principles align all employee compensation with the Corporation's objectives,
operating strategy, management initiatives and financial performance. The
program:
. Attracts and retains key individuals critical to the long-term success
of the Corporation.
. Supports a performance-oriented environment in which everyone is working
together in pursuit of a common goal.
. Provides ownership in the Corporation encouraging long-term growth and
profitability and the enhancement of stockholder value.
COMPENSATION ELEMENTS
There are three elements in the Corporation's executive officer
compensation program, all determined by individual performance and corporate
profitability. The elements are:
BASE SALARY COMPENSATION
The Corporation sets base salaries for its executive officers near the
middle of the range of compensation levels of comparable executive positions of
comparably-sized companies and other steel companies including certain of those
in the S&P Steel Index illustrated in the Performance Graph. The impact the
individual has on the Corporation, the skills and experience required by the
job and the performance of the individual are also considerations in
determining base salary.
In 1993 the base salaries of two officers were adjusted upward by 23% in
view of their added responsibilities relative to managing the newly acquired
CF&I Steel, L. P. subsidiary. Other officer compensation was unchanged and
within pre-established salary ranges. The Corporation adopted a salary
structure system developed by an outside compensation consultant. It will be
implemented in 1994 and updated every four years.
ANNUAL INCENTIVE COMPENSATION
As noted above, the Corporation believes that all employees share in the
responsibility of achieving profits. Accordingly, the Corporation has
discretionary Profit Participation Plans under which it distributes quarterly
to most of its U.S. employees with over three months of employment 12% to 20%,
depending on location, of its domestic pre-tax earnings after adjustments for
certain non-operating items. Each employee, including executive officers,
receives a share of the distribution based on the level of the employee's base
compensation compared with the total base compensation of all eligible
employees. The Corporation may modify, amend or terminate the plans at the
discretion of the Board of Directors, subject to the terms of various labor
agreements.
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EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
The Corporation has an ESOP for qualified employees (generally those
employees with six months of employment) of Oregon Steel Mills, Inc. and its
subsidiaries, Napa Pipe Corporation and Oregon Steel Mills -- Fontana Division,
Inc. Annual contributions to the ESOP, which are at the discretion of the
Board, are based upon the financial performance of those entities. The annual
contribution may be in cash or Common Stock but historically has been Common
Stock. Shares are allocated to the accounts of qualified employees, including
executive officers, at the end of each year in proportion of the employees'
total eligible compensation compared with the total eligible compensation of
all eligible employees. As noted above, the purpose of this program is to
provide additional incentive for employees to work to maximize stockholder
value. The ESOP program utilizes vesting periods and diversification features
that encourage employees to retain ownership of the Corporation's Common Stock
and continue in the employ of the Corporation.
CHIEF EXECUTIVE OFFICER ("CEO") COMPENSATION
The Compensation Committee has adopted similar policies with respect to
the compensation of Mr. Boklund. Mr. Boklund's base salary was determined based
upon a review of the salaries of CEO's for similar companies of comparable
sales and capitalization, and upon a review by the committee of Mr. Boklund's
performance. He participates in the profits of the Corporation and the ESOP
under the same provisions and formulas as other U.S. employees of the
Corporation.
The steel industry for a number of years has been a difficult environment
in which to achieve acceptable financial performance. The Corporation has over
the past five years had operating income totalling $191 million while the
industry as a whole has reported marginal profits or operating losses. The
Corporation's performance over the last five years enabled stockholders to
realize a total return of 211% (or an annual compounded rate of return of 25%).
This total return compares to a five year return of 97% for the Standard &
Poors' 500 Stock Index and 72% for the Standard & Poors' Steel Index. Mr.
Boklund provides the strong leadership and direction that is essential for the
continued growth and profitability of the Corporation in an industry that is
beset by overcapacity and international competition.
1993 was a year of dramatic growth for the Corporation through its
acquisition of certain operating assets of CF&I Steel Corporation, and a full
year contribution from 60% owned Camrose Pipe Company which was acquired in
June of 1992. However, in keeping with the compensation principles stated
above, and since profits of the Corporation were lower in this period of
transition, Mr. Boklund's annual incentive compensation declined 66%, resulting
in an 18% reduction in his total compensation for the year.
COMPENSATION COMMITTEE DURING 1993
John A. Sproul, Chairman
C. Lee Emerson
Edward C. Gendron
Richard G. Landis
James A. Maggetti
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PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return of the Corporation's Common Stock, based on the market price of Common
Stock and assuming reinvestment of dividends, with the cumulative total return
of companies on the Standard and Poors' 500 Stock Index ("S&P 500 Index") and
the Standard & Poors' Steel Index ("S&P Steel Index").
STOCKHOLDER RETURN
- - ------------------
MEASUREMENT PERIOD OREGON S&P 500 S&P STEEL
(FISCAL YEAR COVERED) STEEL INDEX INDEX
--------------------- ------- ------- ---------
MEASUREMENT POINT - 12/31/88 $100.00 $100.00 $100.00
FYE 12/31/89 $137.45 $131.58 $ 96.79
FYE 12/31/90 $278.47 $127.47 $ 81.41
FYE 12/31/91 $252.16 $166.14 $100.01
FYE 12/31/92 $308.39 $178.79 $130.83
FYE 12/31/93 $311.31 $196.73 $172.09
- - ----------
(a) Dividends are reinvested at the end of the month in which they are paid.
(b) Assumes $100 invested in Oregon Steel, the S&P 500 Index companies and the
S&P Steel Index companies on December 31, 1988.
INDEPENDENT ACCOUNTANTS
During the fiscal year 1993, Coopers & Lybrand served as independent
accountants to the Corporation. They have been appointed as the Corporation's
independent accountants for the fiscal year 1994 by the Board of Directors.
Representatives of Coopers & Lybrand will be present at the Annual Meeting and
will be available to respond to appropriate questions. They do not expect to
make any statement but will have the opportunity to make a statement if they
desire to do so.
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OTHER MATTERS
The Board knows of no other matters to be brought before the Annual
Meeting. However, if any other business properly comes before the meeting, the
persons named in the accompanying form of proxy will vote or refrain from
voting thereon in accordance with their judgment pursuant to the discretionary
authority given them in the proxy.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Stockholder proposals submitted for inclusion in the 1995 proxy materials
and consideration at the 1995 Annual Meeting of Stockholders must be received
by the Corporation by November 17, 1994. Any such proposal should comply with
the rules promulgated by the Securities and Exchange Commission governing
stockholder proposals submitted for inclusion in proxy materials.
L. Ray Adams
Secretary
Portland, Oregon
March 15, 1994
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OREGON STEEL MILLS, INC.
ANNUAL MEETING -- APRIL 28, 1994
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned hereby appoints Thomas B. Boklund and L. Ray Adams, and
each of them, proxies with power of substitution to vote on behalf of the
undersigned all shares which the undersigned may be entitled to vote at the
Annual Meeting of Stockholders of Oregon Steel Mills, Inc. on April 28, 1994,
and any adjournment thereof, with all powers that the undersigned would possess
if personally present, with respect to the following:
1. Election of Class C Directors
[ ] FOR all nominees listed below (except as marked to the contrary below)
or, if any named nominee is unable to serve, for a substitute nominee.
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
Thomas B. Boklund, Richard G. Landis, James A. Maggetti
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line below.)
-------------------- -------------------- --------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
---
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
AS SPECIFIED ON THE REVERSE HEREOF. IF NO SPECIFICATION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1. THE PROXIES MAY VOTE IN THEIR DISCRETION AS TO OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
Date: --------, 1994
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Signature or Signatures
Please date and sign exactly as name is imprinted hereon, including designation
as executor, trustee, etc., if applicable. When shares are held jointly, each
joint owner should sign. If a corporation, please sign in full corporate name by
the president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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