SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ( X )
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
( X ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
OREGON STEEL MILLS, INC.
-----------------------
(Name of Registrant as Specified In Its Charter)
L. Ray Adams
-----------------------
(Name of Person(s) Filing Proxy Statements if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
( X ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
( ) $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
O-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-ll (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
OREGON STEEL MILLS, INC.
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------
To be Held
April 29, 1997
9:30 A.M. Pacific 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 Portland Rivergate
Facility, 14400 N. Rivergate Boulevard, Portland, Oregon, on Tuesday,
April 29, 1997, at 9:30 a.m. Pacific 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 3, 1997 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,
LaNelle F. Lee
Secretary
March 14, 1997
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>
OREGON STEEL MILLS, INC.
1000 SW 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 Portland Rivergate Facility, 14400 N. Rivergate Boulevard, Portland, Oregon
on Tuesday, April 29, 1997, at 9:30 a.m. Pacific Time, and any adjournments
thereof.
Only stockholders of record at the close of business on March 3, 1997, are
entitled to notice of, and to vote at, the meeting. At the close of business on
that date, the Corporation had 25,693,471 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, the Trustees shall vote or take other action as they
deem appropriate. 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 14, 1997.
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
1
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.
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 Swindells; 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 1998 and 1999, 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 1997 Annual Meeting will serve
until the Annual Meeting of Stockholders in 2000 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.
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 15, 1997, 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 2000):
Thomas B. Boklund Mr. Boklund is the Chairman of the 57 1982
Board of Directors and Chief Executive
Officer of the Corporation. He was Chief
Operating Officer from May 1982 to July
1985, became Chief Executive Officer in
August 1985, and Chairman of the Board
of Directors in February 1992. He also
served as President from May 1982 to
February 1992, and was re-appointed as
President from April 1994 to December
1996. He is a director of Paragon Trade
Brands, Inc., a manufacturer of private
label infant disposable diapers, since
April 1993 and a director of Oregon
Metallurgical Corporation, an
integrated manufacturer of
titanium products, since April 1996.
2
Principal Occupation and Director
Name Certain Other Directorships Age Since
---- --------------------------- --- --------
Richard G. Landis Mr. Landis was President, Chairman 76 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.
James A. Maggetti Mr. Maggetti was employed by Kaiser 72 1987
Steel Corporation from 1955 until his
retirement in 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. Mr. Maggetti
served as a director of Napa Valley
Bank from June 1971 until April 1995
and as a director of WestAmerica
Bancorporation from July 1993 until
April 1995.
CLASS A (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 1998):
V. Neil Fulton Mr. Fulton was the Corporation's 68 1983
Secretary and Treasurer from 1970 to
April 1989. Mr. Fulton 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 1992.
Robert W. Keener Mr. Keener was employed by Northwest 65 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 72 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.
3
Principal Occupation and Director
Name Certain Other Directorships Age Since
---- --------------------------- --- --------
CLASS B (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 1999):
C. Lee Emerson Mr. Emerson was the Chairman of the 79 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.
Edward C. Gendron Mr. Gendron was the President, Chief 68 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.
William Swindells Mr. Swindells is the Chairman of 66 1994
the Board of Directors of
Willamette Industries, Inc. a
diversified wood products company,
a position he has held since 1985.
Mr. Swindells formally served as
Chief Executive Officer of Willamette
Industries, Inc., from 1985 until
September 1995. He is a director
of Standard Insurance Company and
Airborne Express Company, and
serves as a trustee of Willamette
University and as a trustee of
Oregon Health Science University
Foundation and the Oregon Historical
Society.
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.
The Corporation has a deferred compensation plan for directors, by 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 is payable to either the director, the
director's estate, or other designated beneficiary.
During 1996, the Board held four meetings, the Audit Committee held three
meetings and the Compensation Committee held three meetings. Each incumbent
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.
4
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, Keener, Landis, Maggetti, Sproul and Swindells.
The Compensation Committee establishes the general compensation policies of
the Corporation and the compensation plans and specific compensation levels for
executive officers, subject to approval of the Board. The members of the
Compensation Committee during 1996 were Messrs. Emerson, Fulton, Gendron,
Keener, Landis, Maggetti, Sproul and Swindells.
5
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of shares of the Common Stock as of January 31, 1997, 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
footnotes to the table.
Name Number Percentage
---- of Shares of Class
--------- ----------
Thomas B. Boklund (1)(2)
L. Ray Adams (2) 79,515(3) *
Joe E. Corvin (2) 3,200(4) *
C. Lee Emerson (1) 31,564(3) *
V. Neil Fulton (1) 88,060 *
Edward C. Gendron (1) 6,568(4) *
Edward J. Hepp, Jr. (2) 2,000 *
Richard J. Kasten (2) 1,507(4) *
Robert W. Keener (1) 12,734(4) *
Richard G. Landis (1) 1,000 *
James A. Maggetti (1) 5,600 *
Robert R. Mausshardt (2) 7,000 *
John A. Sproul (1) 374(4) *
William Swindells (1) 2,000 *
Oregon Steel Mills, Inc. 5,000 *
Employee Stock Ownership Plan Trust
1000 SW Broadway, Suite 2200
Portland, Oregon 97205 2,026,054 7.9%
Scudder, Stevens & Clark, Inc. (6)
345 Park Avenue
New York, New York 10154 2,419,000 9.4%
The Crabbe Huson Special Fund, Inc.,
The Crabbe Huson Group, Inc. and
The Crabbe Huson Small Cap Fund (7)
121 S.W. Morrison, Suite 1400
Portland, Oregon 97204 2,270,000 8.8%
Travelers Group Inc, Smith Barney
Holdings Inc., and
Smith Barney, Inc. (8)
388 Greenwich Street
New York, NY 10013 1,720,405 6.7%
6
Name Number Percentage
---- of Shares of Class
--------- ----------
Wells Fargo Bank, N.A. (9)
464 California Street
San Francisco, California 94163 2,042,273 7.9%
All directors and executive
officers as a group
(19 persons) 309,826(5) 1.2%
- ------------------
* 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 and Corvin. 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 800 shares, 773 shares, 1,207, 12,334 shares and 19 shares held by
the ESOP for the accounts of Messrs. Adams, Fulton, Hepp, Kasten and
Mausshardt, respectively. Messrs. Adams, Fulton, Kasten, Hepp and Mausshardt
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.
(5) Includes 186,015 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, but they do not have investment power with respect to
such shares.
(6) Based on the information obtained from an Amendment #3 to Schedule 13G dated
February 10, 1997 filed by Scudder, Stevens & Clark, Inc. ("Scudder") with
the Securities and Exchange Commission: Scudder has the sole power to
dispose of 2,419,000 shares and the sole and shared power to vote 1,787,100
and 110,700, respectively, of such shares.
(7) Based on the information obtained from an Amendment #1 to Schedule 13G dated
February 7, 1997, filed by The Crabbe Huson Special Fund, Inc., The Crabbe
Huson Group, Inc., and The Crabbe Huson Small Cap Fund with the Securities
and Exchange Commission: The Crabbe Huson Special Fund, Inc. has the shared
power to dispose of and to vote 1,061,100 shares, The Crabbe Huson Group,
Inc. has the shared power to dispose of and to vote 1,157,100 shares, and
The Crabbe Huson Small Cap Fund has the shared power to dispose of and to
vote 51,800 shares.
(8) Based on the information obtained from a Schedule 13G dated February 11,
1997, filed by Travelers Group Inc., Smith Barney Holdings Inc., and Smith
Barney Inc. with the Securities and Exchange Commission: Each of the
Travelers Group Inc. and Smith Barney Holdings Inc. has the shared power to
dispose of and to vote 1,720,405 shares, and Smith Barney Inc. has the
shared power to dispose of and to vote 1,430,365 shares.
(9) Based on the information obtained from a Schedule 13G dated February 19,
1997, filed by Wells Fargo Bank, N.A. ("Wells Fargo") with the Securities
and Exhange Commission: Wells Fargo has the sole power to vote 11,500
shares, the shared power to vote 2,030,773 shares and the shared power to
dispose of 2,041,473 shares.
7
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
five most highly paid executive officers of the Corporation and its subsidiaries
as of December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
ALL OTHER
ANNUAL COMPENSATION(FN5) COMPENSATION(FN5)
--------------------------------------------------------------- -----------------
<CAPTION>
Name and ESOP Thrift Plan
Principal Position Year Salary Bonus(FN1) Contribution(FN2) SERP (FN4) Contribution(FN3)
- ------------------ ---- ------ ---------- ------------------ ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Thomas B. Boklund 1996 $451,875 $ 47,341 $ 318 $2,687 -
Chairman of the 1995 450,000 28,676 1,986 4,242 -
Board and CEO 1994 439,584 16,922 3,456 - -
L. Ray Adams 1996 $198,938 $ 20,724 $ 318 $ 59 $1,500
Vice President of 1995 195,000 12,426 1,986 26 924
Finance and Chief 1994 190,834 7,347 3,456 - 924
Financial Officer
Joe E. Corvin 1996 $242,250 $ 35,647 $ 318 $ 108 -
President and Chief 1995 240,000 15,294 1,986 48 -
Operating Officer 1994 229,584 8,816 3,456 - -
Edward J. Hepp, Jr. 1996 $230,500 $ 10,610 $ 318 $ 71 $1,500
Sr. Vice President 1995 218,750 13,896 1,986 80 924
1994 190,000 7,334 3,456 - 924
Richard J. Kasten 1996 $170,625 $ 25,246 $ 318 $ 34 $1,500
Vice President, 1995 174,996 11,151 1,986 14 924
International 1994 169,789 3,328 3,456 - 924
Plate Sales
Robert R. Mausshardt 1996 $195,000 $ 29,620 $ 318 $ 271 $1,500
Vice President of 1995 195,000 12,426 1,986 398 924
Marketing, Tubular 1994 195,000 7,527 3,456 - 924
Products
- -----------------
<FN>
(FN1) Amounts earned pursuant to the Corporation's Profit Participation Plan.
(FN2) 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.
(FN3) Matching contributions made by the Corporation on behalf of the named
executive to the Corporation's Thrift Plan.
(FN4) Amounts paid under the Corporation's Supplemental Retirement Plan.
(FN5) Pension benefits accrued in 1996 are not included in this Summary
Compensation Table.
</FN>
</TABLE>
8
DEFINED BENEFIT RETIREMENT PLANS
The Corporation's pension plans are defined benefit plans qualified under
section 401(a) of the Internal Revenue Code (the "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.)
In addition to the Plan, the Corporation initiated effective May 1, 1994 a
Supplemental Retirement Plan (the "SERP") to supplement the Plan and ESOP and
make up for benefits which were lost because of the dollar limits imposed by
sections 401(a)(17) and 415 of the Code on benefits and contributions under
those plans. The SERP results in highly-compensated employees receiving
retirement benefits calculated on the same basis as other employees. Employees
become eligible for benefits under the SERP whenever: (a) the employee has
service after the effective date; (b) the employee becomes eligible for benefits
under the Plan or an allocation under the ESOP; and (c) the employee's benefit
or allocation is limited by sections 401(a)(17) of the Code or by the dollar
amount under section 415 of the Code, or both. The benefit paid under the SERP
is the difference between the Plan benefit calculated as described above and the
amount that would have been paid under the Plan in the absence of the dollar
limits in sections 401(a)(17) and 415 of the Code; plus the difference between
the amount of ESOP benefit allocated to the participant under the ESOP after
1988 and the amount that would have been allocated in the absence of the dollar
limits in sections 401(a)(17) and 415 of the Code, plus dividends that would
have been paid on such shares after May 1994. Such benefit payments are made at
the time that the benefits under the Plan or ESOP, as applicable, are paid, or
earlier upon an adverse IRS ruling. The Compensation Committee of the Board of
Directors may amend or terminate the SERP at any time so long as rights already
accrued at the time of such amendment or termination are preserved.
9
The following Pension Plan Table shows the covered compensation portion of
the estimated annual benefits payable upon retirement at age 65 (including
benefits under the SERP) in the specified compensation and years of service
classifications.
PENSION PLAN TABLE
(QUALIFIED PLAN PLUS SERP)(3)
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 41,625 55,500 69,375 83,250 97,125
$200,000 48,000 64,000 80,000 96,000 112,000
$225,000 54,375 72,500 90,625 108,750 126,875
$250,000 60,750 81,000 101,250 121,500 141,750
$300,000 73,500 98,000 122,500 147,000 171,500
$350,000 86,250 115,000 143,750 172,500 201,250
$400,000 99,000 132,000 165,000 198,000 231,000
$450,000 111,750 149,000 186,250 223,500 260,750
$500,000 124,500 166,000 207,500 249,000 290,500
$550,000 137,250 183,000 228,750 274,500 320,250
$600,000(1) 150,000 200,000 250,000 300,000 350,000
(1) Represents 120% of the maximum compensation for the year ended
December 31, 1996.
(2) Based on the estimated straight-life annuity amounts for future
service using 1997 as the first year of benefit service. Social
Security Covered Compensation as defined above is assumed to be
$40,000.
(3) Does not include the ESOP benefit pursuant to the SERP which is
not determined by years of service and final compensation.
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). As
previously described, the SERP will pay benefits on the additional compensation
above that amount.
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 Participation Plan and the ESOP as of January 1, 1981
attributable to allocations on the basis of compensation in excess
10
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.
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 above. 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, 1996, Messrs. Boklund, Adams,
Corvin, Hepp, Kasten and Mausshardt would receive lifetime annual payments under
the Plan and pension benefits pursuant to the SERP combined of $245,167,
$88,370, $132,655, $71,529, $71,940 and $48,312, respectively. Their credited
years of service as of December 31, 1996 are twenty-three, eight, twenty-seven,
five, twelve and twelve, respectively. In addition, ESOP benefits pursuant to
the SERP would include dividends and the equivalent value of shares of common
stock accrued through December 31, 1996 of $82,350, $2,119, $3,887, $3,249,
$1,241, and $8,442, respectively. Future ESOP benefit additions, if any, would
be derived from discretionary annual ESOP allocations set by the Board of
Directors.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
The Corporation has employment agreements (the "Employment Agreements")
with certain of its key employees, including Messrs. Boklund, Adams, Corvin, and
Mausshardt ("Employees"). 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. 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 Agreement.
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
11
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 1996 the Compensation Committee members were John A. Sproul,
Chairman, C. Lee Emerson, V. Neil Fulton, Edward C. Gendron, Robert W. Keener,
Richard G. Landis, James A. Maggetti and William Swindells. 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, and was an employee of the Corporation
through December 1992.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board establishes the general
compensation policies of the Corporation and the compensation plans and specific
compensation levels for executive officers, subject to approval of the Board.
The Compensation Committee is composed of eight independent, non-employee
directors.
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
of the Corporation. 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 inter-
12
ests 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:
[BULLET] Attracts and retains key individuals critical to the long-term
success of the Corporation.
[BULLET] Supports a performance-oriented environment in which everyone is
working together in pursuit of the Corporation's goals.
[BULLET] Encourages the Corporation's long-term growth and profitability
and the enhancement of stockholder value.
COMPARATIVE EVALUATION
The Corporation seeks to align total compensation for its executive
officers with that of comparable executive positions in other manufacturing
companies and other steel companies.
To assist it in doing so, in 1993 the Compensation Committee commissioned a
study of executive compensation by an independent compensation consulting firm
(the "Study"). The Study focused on total compensation for the 11 most senior
executive positions. In preparing the Study, the consulting firm: (a) reviewed
extensive background data on the Corporation, including financial reports and
forecasts, compensation data, organizational charts, business plans, annual
reports and position descriptions; (b) conducted individual interviews with the
incumbents of the positions covered by the Study; (c) reviewed the compensation
practices of eleven steel companies as described in their proxy statements to
stockholders, including 5 of the 6 companies included in the S&P Steel Index
illustrated in the Performance Graph; and (d) reviewed competitive practices and
pay levels in over 200 durable goods manufacturing companies (including steel
companies) surveyed by the consultant.
COMPENSATION ELEMENTS
There are three elements in the Corporation's executive officer
compensation program, all determined by individual performance and corporate
profitability. Those elements and the relevant conclusions of the Study are as
follows:
BASE SALARY COMPENSATION
The Compensation Committee adjusts base salary levels within
pre-established ranges to reflect the responsibilities and performance of
individuals. The responsibilities assumed, the skills and experience required by
the job, and the performance of the individual are relatively equal
considerations in determining base salary. The Study concluded, among other
things, that the Corporation's base salaries for the senior executive positions
were in aggregate 4% below competitive levels, and that group benefit and
perquisite values were consistent with competitive levels. The Study noted that
in the past the success of the Profit Participation Plan and the capital
accumulation that occurred under the ESOP have historically offset the salary
level disparity and successfully provided both short and long-term incentives.
Effective January 1, 1996, the Compensation Committee made reductions in
salaries of the executive officers of the Corporation of ten or fifteen percent
as part of a corporate wide cost reduction and savings plan. The salaries of all
executive officers affected by this plan were reinstated on April 1, 1996 back
to their December 31, 1995 levels.
13
ANNUAL INCENTIVE COMPENSATION
As noted above, the Corporation believes that all employees share in the
responsibility for 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.
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. Annual
contributions to the ESOP, which are at the discretion of the Board, are based
upon the financial performance of the Corporation. 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 to each eligible employee's 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.
In addition to the Profit Participation and ESOP plans, the Study
recommended that consideration be given to various supplemental retirement and
other incentive plans. The Compensation Committee accepted in principal the
Study's recommendations as to supplemental retirement plans, and initiated in
1994 the SERP. As discussed previously under the heading "Defined Benefit
Retirement Plans", the SERP supplements pension and ESOP benefits, making up for
benefits which were lost because of the dollar limits imposed by sections
401(a)(17) and 415 of the Code.
CHIEF EXECUTIVE OFFICER ("CEO") COMPENSATION
The Compensation Committee has used the same policies with respect to the
compensation of Mr. Boklund. In determining Mr. Boklund's base salary for 1996,
the Committee reviewed the Study, additional industry information since the
Study and Mr. Boklund's performance and responsibilities. The Committee noted
the challenges, responsibilities and results attained by Mr. Boklund in 1996,
including overseeing the tremendous growth in capacity and implementing the
capital improvement program, and determined to increase his base salary
(effective August 1996) to $500,000. Mr. Boklund participates in the profits of
the Corporation and the ESOP under the same provisions and formulas as other
domestic employees of the Corporation.
The Corporation does not have any "Excessive Employee Remuneration" as
defined in section 162(m) of the Code.
14
COMPENSATION COMMITTEE DURING 1996
John A. Sproul, Chairman
C. Lee Emerson
V. Neil Fulton
Edward C. Gendron
Robert W. Keener
Richard G. Landis
James A. Maggetti
William Swindells
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 - 12/31/91 $100.00 $100.00 $100.00
FYE 12/31/92 122.26 107.61 130.81
FYE 12/31/93 123.41 118.38 172.07
FYE 12/31/94 79.11 119.99 167.39
FYE 12/31/95 72.72 164.92 155.18
FYE 12/31/96 91.11 202.69 138.37
(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, 1991.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Corporation's review of Forms 3, 4, and 5 furnished to the
Corporation pursuant to Section 16 of the Securities Exchange Act of 1934, as
amended, all such forms were filed on a timely basis.
15
INDEPENDENT ACCOUNTANTS
On July 25, 1996, the Corporation dismissed its prior independent
accountants, Coopers & Lybrand L.L.P. ("C&L") and engaged Price Waterhouse
L.L.P. ("PW") as its independent accountants. The reports of C&L on the
financial statements of the Corporation for the two fiscal years preceding the
dismissal contained no adverse opinion or disclaimers of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
The decision to dismiss C&L and engage PW was approved by the Corporation's
Audit Committee and ratified by the entire Board of Directors. During the two
most recent fiscal years and the subsequent interim periods preceding the
dismissal, there were no disagreements with C&L on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of C&L would
have caused them to make reference thereto in their report on the financial
statements for such years. During the two most recent fiscal years and
subsequent interim periods preceding the dismissal, there were no reportable
events (as such term is defined in Item 304 (a)(1)(v) of Regulation S-K).
Representatives of PW 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.
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 1998 ANNUAL MEETING
Stockholder proposals submitted for inclusion in the 1998 proxy materials
and consideration at the 1998 Annual Meeting of Stockholders must be received
by the Corporation by November 14, 1997. Any such proposal should comply with
the rules promulgated by the Securities and Exchange Commission governing
stockholder proposals submitted for inclusion in proxy materials.
LaNelle F. Lee
SECRETARY
Portland, Oregon
March 14, 1997
16
<PAGE>
OREGON STEEL MILLS, INC.
ANNUAL MEETING - APRIL 29, 1997
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 29, 1997,
andany adjournment thereof, with all powers that the undersigned would possess
if personally present, with respect to the item on the reverse side.
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.
PLEASE MARK, DATE, SIGN, AND RETURN THE PROXY CARD PROMPTLY.
(Continued and to be signed on reverse)
[TRIANGLE]FOLD AND DETACH HERE[TRIANGLE]
OREGON STEEL MILLS, INC.
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, April 29, 1997
<PAGE>
Please mark [Square box
your votes in which an
as indicated "X" has been
in this example marked]
1. Election of Class C Directors
FOR
[ ] 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
[ ] 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.
[To the left of "Date" Dated: _________________, 1997
appears a 3/8-inch,
horizontal black line; ------------------------------
a perpendicular 3/8-inch
black line extends ------------------------------
downward from the right Signature or Signatures
corner of the horizontal
line]
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.
[TRIANGLE]FOLD AND DETACH HERE[TRIANGLE]
OREGON STEEL MILLS, INC.
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, April 29, 1997
