OREGON STEEL MILLS, INC.
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------
TO BE HELD
APRIL 29, 1999
9:30 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 Phoenix Airport
Marriott, 1101 North 44th Street, Phoenix, Arizona, on Thursday, April 29, 1999,
at 9:30 a.m. Mountain Time.
The meeting is being held for the following purposes:
1. To elect three Class B 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 2, 1999
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.
Admission to the meeting will be by Admission Ticket only. If you are a
stockholder of record or an ESOP participant and plan to attend the Annual
Meeting, please detach your proxy from the Admission Ticket and present the
ticket for admission to the meeting. If you are a stockholder whose shares are
not registered in your own name and you plan to attend the meeting, please bring
a copy of the voting form sent to you by the stockholder of record (your broker,
bank, etc.) or other evidence of stock ownership.
By Order of the Board of Directors,
LaNelle F. Lee
SECRETARY
March 19, 1999
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
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
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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 Phoenix Airport Marriott, 1101 North 44th Street, Phoenix, Arizona, on
Thursday, April 29, 1999, at 9:30 a.m. Mountain Time, and any adjournments
thereof.
Only stockholders of record at the close of business on March 2, 1999, are
entitled to notice of, and to vote at, the meeting. At the close of business on
that date, the Corporation had 25,776,804 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 against. 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 19, 1999.
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.
PROPOSAL 1: NOMINATION AND ELECTION OF CLASS B DIRECTORS
NOMINEES
The Corporation has a classified Board consisting of four Class A
directors, Messrs. Corvin, Fulton, Keener and Sproul; three Class B directors,
Messrs. Reynolds, Stathakis and Swindells; and three Class C directors, Messrs.
Boklund, Landis and Maggetti. The Class A and C directors serve until the Annual
Meetings of Stockholders to be held in 2001 and 2000, 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.
Effective January 31, 1999, two Class B directors who served in that
capacity since 1976 retired from the Board. Effective on January 31, 1999, Mr.
Stephen P. Reynolds was appointed to fill the vacancy left by Mr. Edward C.
Gendron and the Board was set at ten directors.
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<PAGE>
The nominees for election as Class B directors are Stephen P. Reynolds,
George J. Stathakis, and William Swindells all of whom are members of the
present Board. The Class B directors to be elected at the 1999 Annual Meeting
will serve until the Annual Meeting of Stockholders in 2002 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 B 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 B director and each other director, including
their names and ages as of February 15, 1999, business experience during the
past five years and directorships in other corporations.
Principal Occupation and Director
Name Certain Other Directorships Age Since
---- --------------------------- --- --------
CLASS B (NOMINEES FOR TERMS OF OFFICE TO EXPIRE IN 2002):
Stephen P. Reynolds Mr. Reynolds was the President 50 1999
and Chief Executive Officer of
PG&E Gas Transmission-Northwest
(formally Pacific Gas Transmission
Company) from 1987 until his
retirement in early 1998. Since
this time, Mr. Reynolds has been
President and Chief Executive
Officer of Reynolds Energy
International, an energy consulting
firm. He is also a director on the
Boards of the Oregon Shakespeare
Festival, Portland Center Stage,
the Oregon Independent College
Fund, The Nature Conservancy of
Oregon and the Oregon Health
Sciences University Foundation.
George J. Stathakis Mr. Stathakis was the Chairman of 68 1997
the Board and Chief Executive
Officer of Ramtron International
Corporation, a semi-conductor
company, from March 1990 until
June 1994. From 1986 until 1989
Mr. Stathakis served as Chairman
of the Board and Chief Executive
Officer of International Capital
Corporation, a subsidiary of
American Express. Since 1985 Mr.
Stathakis has had his own
business in international
investment banking. Prior to
1985, he spent 32 years with
General Electric Company,
holding various senior executive
positions in that company. He
is also a director on the Boards of
Ramtron International Corporation
and Calpine Corporation, an
independent power company.
William Swindells Mr. Swindells is the Chairman of 68 1994
the Board of Directors of
Willamette Industries, Inc., a
diversified wood products
company. He has held the position
of Chairman of the Board since
1985 and also held the position
of Chief Executive Officer from
1985 until September 1995 and
again from November 1997 until
December 1998. He is a director
of Standard Insurance Company
and Airborne Express Company,
and serves as a trustee of
Willamette University and the
Oregon Health Science
University Foundation.
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<PAGE>
Principal Occupation and Director
Name Certain Other Directorships Age Since
---- --------------------------- --- --------
CLASS A (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 2001):
Joe E. Corvin Mr. Corvin is the President 54 1997
and Chief Operating Officer of
the Corporation. He was Vice
President and General Manager
of the Portland Steelworks
from May 1992 to June 1994, was
Senior Vice President of
Operations from June 1994 to May
1996, became Chief Operating
Officer in June 1994, was
President of the Corporation's
Oregon Steel Mills Division
from May 1996 to November 1996
and became President of the
Corporation in December 1996.
V. Neil Fulton Mr. Fulton was Vice President 70 1983
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 67 1994
Northwest Pipeline Corporation,
a natural gas transmission company,
from 1973 to January 1994. 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 74 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.
CLASS C (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 2000):
Thomas B. Boklund Mr. Boklund is the Chairman of 59 1982
the 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
also a director of Paragon Trade
Brands, Inc., a manufacturer of
private label infant disposable
diapers.
Richard G. Landis Mr. Landis was Chairman, President 78 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 74 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.
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<PAGE>
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 for five years or less 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 the year
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.
On July 31, 1997, the Board established and adopted, effective January
1, 1998, The Oregon Steel Mills, Inc. Directors' Retirement Plan (the
"Directors' Plan") to provide retirement benefits to directors. Starting with
the first business day in January following a director's retirement, and
continuing on an annual basis, retiring directors who have completed five years
of service as an outside director are paid $20,000 annually until the number of
payments equals the number of full years of service served as an outside
director. For directors who have met the five year service requirement, this
Directors' Plan supersedes and replaces the deferred compensation plan mentioned
in the preceding paragraph. The payment terms may be converted to a present
value lump-sum payment and paid at anytime: 1) by the sole discretion of the
Compensation Committee; 2) by a director terminating service with the
Corporation within three years following a Change in Control (as defined in the
Plan); or 3) upon the death of a director or ex-director.
For the two Board members who retired effective January 31, 1999,
under the Directors' Plan: 1) Mr. C. Lee Emerson who was an outside director
for six years is scheduled to receive an annual payment of $20,000 for six years
commencing in January 2000, and 2) Mr. Edward C. Gendron has received a
January 31, 1999 one-time lump-sum payment of $264,094 for his past 22 years
of service as an outside director.
During 1998, the Board held four meetings, the Audit Committee held two
meetings and the Compensation Committee held three meetings. Each incumbent
director attended at least 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 during 1998 were Messrs.
Boklund, Emerson and Corvin.
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 during 1998
were Messrs. Emerson, Fulton, Gendron, Keener, Landis, Maggetti, Sproul,
Stathakis 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 1998 were Messrs. Emerson, Fulton, Gendron,
Keener, Landis, Maggetti, Sproul, Stathakis and Swindells.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of shares of the Common Stock as of February 1, 1999, 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.
Number Percentage
Name of Shares of Class
---- --------- ----------
Thomas B. Boklund (1)(2) 79,818 (3) *
L. Ray Adams (2) 8,604 (4) *
Joe E. Corvin (1)(2) 31,868 (3) *
V. Neil Fulton (1) 7,568 *
Richard J. Kasten (2) 13,037 (4) *
Robert W. Keener (1) 5,000 *
Richard G. Landis (1) 5,600 *
James A. Maggetti (1) 7,000 *
Stephen P. Reynolds (1) 100 *
Steven M. Rowan (2) 19,850 (3) *
John A. Sproul (1) 2,000 *
George J. Stathakis (1) 2,000 *
William Swindells (1) 17,000 *
Oregon Steel Mills, Inc.
Employee Stock Ownership Plan Trust
1000 SW Broadway, Suite 2200
Portland, Oregon 97205 1,703,048 6.6%
Scudder Kemper Investments, Inc. (6)
345 Park Avenue
New York, New York 10154 2,403,415 9.3%
First Pacific Advisors, Inc. (7)
11400 West Olympic Boulevard, Suite 1200
Los Angeles, California 90064 2,761,300 10.7%
Citigroup, Inc. (8)
153 East 53rd Street
New York, New York 10043 1,347,924 5.2%
Dresdner RCM Global Investors LLC,
Dresdner Bank AG and Dresdner RCM
Global Investors US Holdings LLC
Four Embarcadero Center
San Francisco, California 94111 and
Jurgen-Ponte-Platz 1
60301, Frankfurt, Germany, respectively (9) 1,392,100 5.4%
All directors and executive officers
As a group (16) persons 232,276 (5) 1.2%
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* 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, Corvin and Rowan.
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 1,104 shares and 12,637 shares held by the ESOP for the
accounts of Messrs. Adams and Kasten, respectively. Messrs. Adams and
Kasten 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.
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<PAGE>
(5) Includes 169,842 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 #5 to Schedule 13G
dated February 16, 1999 filed by Scudder Kemper Investments ("Scudder")
with the Securities and Exchange Commission: Scudder has the sole power
to dispose of 2,403,415 shares and the sole and shared power to vote
1,701,815 and 151,400, respectively, of such shares.
(7) Based on the information obtained from an amendment #2 to Schedule 13G
dated February 12, 1999, filed by First Pacific Advisors, Inc. with the
Securities and Exchange Commission: First Pacific Advisors, Inc. has the
shared power to dispose of 2,761,300 shares and the shared power to vote
680,300 shares.
(8) Based on the information obtained from a Schedule 13G dated February
9, 1999 filed by Citigroup Inc. with the Securities and Exchange
Commission: Citigroup Inc. has the shared power to vote and dispose of
1,347,924 shares.
(9) Based on the information obtained from a Schedule 13G dated February 12,
1999, filed by Dresdner RCM Global Investors LLC, Dresdner Bank AG and
Dresdner RCM Global Investors US Holdings LLC with the Securities and
Exchange Commission: Each of the Dresdner RCM Global Investors LLC,
Dresdner Bank AG and Dresdner RCM Global Investors US Holdings LLC has
the sole power to vote 1,172,100 shares, the sole power to dispose of
1,392,100 shares and the shared power to dispose of 800 shares.
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 as of December 31, 1998.
<TABLE>
SUMMARY COMPENSATION TABLE
ALL OTHER
ANNUAL COMPENSATION(5) COMPENSATION(5)
---------------------------------------------------------------- ---------------
<CAPTION>
Name and ESOP Thrift Plan
Principal Position Year Salary Bonus(1) Contribution(2) SERP(3) Contribution(4)
- ------------------ ---- ------ --------- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Thomas B. Boklund 1998 $500,000 $ 30,938 $ 168 $3,785 -
Chairman of the 1997 500,000 50,687 4,608 2,750 -
Board and CEO 1996 451,875 47,341 318 2,687 -
Joe E. Corvin 1998 $398,333 $ 24,750 $ 168 $ 371 -
President and Chief 1997 356,250 38,480 4,608 129 -
Operating Officer 1996 242,250 35,647 318 108 -
L. Ray Adams 1998 $248,958 $ 15,469 $ 168 $ 167 $ -
Vice President of 1997 225,000 22,809 4,608 70 1,600
Finance and Chief 1996 198,938 20,724 318 59 1,500
Financial Officer
Steven M. Rowan 1998 $186,875 $ 11,523 $ 168 $ 89 $ -
Vice President, 1997 185,000 18,754 4,608 39 1,600
Materials and 1996 174,375 18,408 318 32 1,500
Transportation
Richard J. Kasten 1998 $175,000 $ 7,486 $ 168 $ 83 $1,600
Vice President, 1997 175,000 15,307 4,608 41 1,600
International 1996 170,625 25,246 318 34 1,500
Sales
</TABLE>
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(1) Amounts earned pursuant to the Corporation's Profit Participation Plan.
(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) Amounts paid under the Corporation's Supplemental Retirement Plan.
(4) Matching contributions made by the Corporation on behalf of the named
executive to the Corporation's Thrift Plan.
(5) Pension benefits accrued in 1998 are not included in this Summary
Compensation Table.
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<PAGE>
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.
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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
$600,000 150,000 200,000 250,000 300,000 350,000
$650,000 162,750 217,000 271,250 325,500 379,750
$700,000 (1) 175,500 234,000 292,500 351,000 409,500
(1) Represents at least 125% of the maximum compensation for the year ended
December 31, 1998.
(2) Based on the estimated straight-life annuity amounts for future service
using 1998 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 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, 1998, Messrs.
Boklund, Corvin, Adams, Rowan and Kasten would receive lifetime annual payments
under the Plan and pension benefits pursuant to the SERP combined of $250,189,
$163,296, $103,004, $98,470 and $69,848, respectively. Their credited years of
service as of December 31, 1998 are twenty-five, twenty-nine, ten, twenty-six
and fourteen, 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, 1998 of $66,032, $7,448, $3,263, $1,718 and $1,570,
respectively. Future ESOP benefit additions, if any, would be derived from
discretionary annual ESOP allocations set by the Board of Directors.
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<PAGE>
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, Corvin, and Adams
("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 officers (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 1998 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, George J. Stathakis 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.
-9-
<PAGE>
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 1998 Compensation Committee is composed of nine independent, non-employee
directors.
COMPENSATION PRINCIPLES
The Committee believes that the compensation program for the
Corporation should be designed to attract, retain and motivate talented
employees to contribute to the Corporation's long-term success. To ensure that
compensation is competitive, the Committee periodically collects and analyzes
compensation practices of companies and competitors in its industry and uses
that information as the basis to determine whether the Corporation's
compensation program is in a competitive range. The Committee maintains 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 weighted towards compensation paid on the
basis of pre-tax profit. The Committee 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 Committee
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. Within this overall philosophy, the Committee's
objectives are to:
[BULLET] Offer a total compensation program that takes into consideration the
compensation practices of comparable companies with whom the
Corporation competes for executive talent.
[BULLET] Support a performance-oriented environment in which everyone is
working together in pursuit of the Corporation's short term and
long term goals.
[BULLET] To maximize 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.
In 1998, the Compensation Committee benchmarked its compensation
program by retaining an independent outside consulting firm to prepare a report
that compared the base salary and other benefits of the Corporation to other
durable goods manufacturing companies (the "Report"). The Report focused on
total compensation for the 14 most senior executive positions. In preparing the
Report, the consulting firm reviewed the executive position descriptions and
competitive practices and pay levels for numerous durable goods manufacturing
companies (including steel companies).
COMPENSATION ELEMENTS
There are three elements in the Corporation's executive officer
compensation program, all determined by individual performance and corporate
profitability.
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.
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.
-10-
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 in 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.
The Corporation also has a SERP (as discussed previously under the
heading "Defined Benefit Retirement Plans") whereby 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 aforementioned compensation
principles with respect to the salary of Mr. Boklund. In determining Mr.
Boklund's base salary for 1998, the Committee reviewed the Report, the
Corporation's less than planned financial results due to operating difficulties
and deteriorating steel market conditions, and Mr. Boklund's performance and
responsibilities. As a result of this review, the Committee determined to make
no changes in his compensation. Mr. Boklund shares in the Profit Participation
Plan 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.
COMPENSATION COMMITTEE DURING 1998
John A. Sproul, Chairman
C. Lee Emerson
V. Neil Fulton
Edward C. Gendron
Robert W. Keener
Richard G. Landis
James A. Maggetti
George J. Stathakis
William Swindells
-11-
<PAGE>
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 - 12/31/93 $100.00 $100.00 $100.00
FYE 12/31/94 64.10 101.36 97.28
FYE 12/31/95 58.92 139.31 90.19
FYE 12/31/96 73.83 171.21 80.38
FYE 12/31/97 96.47 228.26 81.74
FYE 12/31/98 55.81 293.36 70.91
- ----------
(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, 1993
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.
INDEPENDENT ACCOUNTANTS
During the fiscal year 1998, PricewaterhouseCoopers LLP ("PWC") served
as independent accountants to the Corporation. They have been appointed as the
Corporation's independent accountants for the fiscal year 1999 by the Board.
Representatives of PWC 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 1999 ANNUAL MEETING
Stockholder proposals submitted for inclusion in the 2000 proxy
materials and consideration at the 2000 Annual Meeting of Stockholders must be
received by the Corporation np later than November 19, 1999 and no earlier than
October 20, 1999. Any such proposal should comply with the rules promulgated by
the Securities and Exchange Commission governing stockholder proposals submitted
for inclusion in proxy materials.
In order to be considered at the 2000 Annual Meeting of Stockholders,
written notice of a non-Rule 14a-8 stockholder proposal or director nomination
must contain the information required by the Company's bylaws and must be
received by the Company no later than November 19, 1999 and no earlier than
October 20, 1999.
LaNelle F. Lee
SECRETARY
Portland, Oregon
March 19, 1999
-12-
<PAGE>
1999 ANNUAL MEETING GUIDELINES
In the interest of an orderly and constructive meeting, the following
guidelines will apply for the 1999 Oregon Steel Mills, Inc. Annual Meeting of
Stockholders:
1. To gain entrance at the meeting, you must present the enclosed
admission ticket or evidence of ownership of Oregon Steel Mills,
Inc. stock.
2. Except those employed by the Corporation to provide a record of the
proceedings, the use of cameras, sound recording equipment,
microphones, megaphones and other noise making devices is prohibited.
Briefcases, purses and parcels may be examined or searched before you
are admitted to the meeting. No signs, placards, banners, leaflets or
similar materials may be brought into the meeting.
3. The business of the meeting is set forth in the Notice of Annual
Meeting of Stockholders and Proxy Statement dated March 19, 1999.
Whether or not you plan to attend the meeting, please sign, date and
return the proxy form in the envelope provided. If you wish to change
your vote or have not voted by proxy, a ballot will be distributed to
you at the meeting.
4. Please register your attendance at the meeting on the sign-up sheet at
the registration table. If you wish to comment on any of the proposals
which will be voted on at the meeting or ask an appropriate question
about the business of the Corporation at the end of the meeting, please
register your intention to do so on the sign-up sheet at the
registration table.
5. Time has been reserved at the end of the meeting for stockholder
questions that relate to the business of the Corporation. After you
have registered and at the appropriate time, please go to the
microphone, state your name and confirm that you are a stockholder
before asking your question. Please direct all comments or questions to
the Chairman. Comments or questions from the floor are limited to two
minutes to provide an opportunity for as many stockholders as possible.
6. Personal grievances or claims are not appropriate subjects for the
meeting.
7. The Chairman in his sole discretion shall have authority to conduct the
meeting and rule on any questions or procedures that may arise. Voting
results announced by the Inspector of Election at the meeting are
preliminary. Final results will be included in the summary of the
results of the meeting included in the Corporation's first quarter
Report on Form 10-Q.
-13-
<PAGE>
OREGON STEEL MILLS, INC.
ANNUAL MEETING -- APRIL 29, 1999
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, 1999 and
any 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]
ADMISSION TICKET
ADMISSION TICKET FOR THE 1999 OREGON STEEL MILLS, INC.
ANNUAL MEETING OF STOCKHOLDERS,
THURSDAY, APRIL 29, 1999, AT 9:30 A.M. MOUNTAIN TIME
AT THE PHOENIX AIRPORT MARRIOTT,
1101 NORTH 44TH STREET, PHOENIX, ARIZONA 85008
<PAGE>
Please mark [Square box
your votes in which an
as indicated "X" has been
in this example. marked]
1. Election of Class B 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.
Stephen P. Reynolds, George J. Stathakis, William Swindells
(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.
Date: , 1999
-----------
[To the left of "Date" -----------------------
appears a 3/8-inch,
horizontal black line; -----------------------
a perpendicular 3/8-inch Signature or Signatures
black line extends
downward from the right
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]
ADMISSION TICKET
ADMISSION TICKET FOR THE 1999 OREGON STEEL MILLS, INC. ANNUAL MEETING OF
STOCKHOLDERS, THURSDAY, APRIL 29, 1999, AT 9:30 A.M. MOUNTAIN TIME AT THE
PHOENIX AIRPORT MARRIOTT, 1101 NORTH 44TH STREET, PHOENIX, ARIZONA 85008.
THIS IS NOT A PROXY
Admits stockholder(s) named above or duly appointed proxy(ies) of record only.
NON-TRANSFERABLE.
THIS TICKET, OR OTHER EVIDENCE OF STOCK OWNERSHIP, MUST BE PRESENTED TO ENTER
THE MEETING.
Admittance will be based upon availability of seating.
THE DISTRIBUTION OF LEAFLETS AND OTHER MATERIAL IS NOT PERMITTED. CAMERAS, TAPE
RECORDERS, MICROPHONES, MEGAPHONES, AND OTHER NOISE MAKING DEVICES ARE
PROHIBITED IN THE MEETING. THANK YOU FOR YOUR COOPERATION.
