<PAGE>
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
CHAPARRAL STEEL COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, 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 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / 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:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C>
300 Ward Road - Midlothian, Texas 76065-9651 - (214)
[LOGO] 775-8241
</TABLE>
August 29, 1995
DEAR STOCKHOLDER:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Chaparral Steel Company, to be held at 9:30 A.M. Central Daylight Time, on
Wednesday, October 18, 1995, at KERA-KDTN, 3000 Harry Hines Boulevard, Dallas,
Texas.
The following Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting. During the Meeting we will also
report on the operations of the Company. Our 1995 Annual Report accompanies this
Proxy Statement.
It is important that your shares be represented at the Meeting regardless of
the size of your holdings. If you are unable to attend in person, we urge you to
participate by voting your shares by proxy. You may do so by filling out and
returning the enclosed proxy card.
If you arrive early, you are invited to have coffee and meet informally with
the Directors.
Sincerely, [SIGNATURE]
GORDON E. FORWARD
PRESIDENT
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 18, 1995
The Annual Meeting of Stockholders of Chaparral Steel Company (the
"Company") will be held at KERA-KDTN, 3000 Harry Hines Boulevard, Dallas, Texas,
on Wednesday, October 18, 1995, at
9:30 A.M. (C.D.T.) for the following purposes:
1. To elect seven (7) Directors.
2. To transact such other business that may properly come before the
Meeting or any adjournment thereof.
Only Stockholders of record at the close of business on August 21, 1995,
will be entitled to vote at the meeting. A list of Stockholders will be open to
the examination of any Stockholder during ordinary business hours for a period
of ten days prior to the meeting at the office of the Company's Secretary at
1341 W. Mockingbird Lane, Dallas, Texas.
While you are encouraged to attend the meeting, you are requested to date,
sign and return promptly the accompanying proxy in the enclosed envelope
provided for that purpose.
By Order of the Board of Directors,
[SIGNATURE]
ROBERT C. MOORE
SECRETARY
Dallas, Texas
August 29, 1995
<PAGE>
[LOGO]
CHAPARRAL STEEL COMPANY
300 WARD ROAD
MIDLOTHIAN, TEXAS 76065
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 18, 1995
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by and
on behalf of the Board of Directors of Chaparral Steel Company, a Delaware
corporation (the "Company"), of proxies in the accompanying form for exercise at
the Annual Meeting of Stockholders of the Company to be held on October 18,
1995, and at any adjournment thereof. The approximate date on which this Proxy
Statement and accompanying proxy were first sent to Stockholders is August 29,
1995.
The cost of soliciting proxies in the accompanying form has been, or will
be, borne by the Company. In addition to solicitation by mail, the Company will
request banks, brokers and other custodians, nominees, and fiduciaries to send
proxy material to the beneficial owners and to secure their voting instructions,
if necessary. The Company will reimburse them for their expenses in so doing.
Officers and regular employees of the Company may solicit proxies personally, by
telephone or telegrams from some Stockholders, if proxies are not promptly
received. In addition, the Company has retained Chemical Banking Corporation to
assist in the solicitation of proxies at a cost of $1,500 plus reasonable
out-of-pocket expenses.
OUTSTANDING VOTING STOCK AND QUORUM
The outstanding voting securities of the Company as of August 21, 1995, were
29,679,900 shares of Common Stock of the Company. Each share is entitled to one
vote. The presence at the Meeting, in person or by proxy, of the holders of a
majority of the issued and outstanding Common Stock is necessary to constitute a
quorum to transact business.
VOTING OF PROXY
The proxy enclosed is designed to permit each Stockholder of record at the
close of business on August 21, 1995, to vote at the Annual Meeting and at any
adjournments thereof. Shares cannot be voted at the meeting unless the owner is
present or represented by proxy. Any proxy may be revoked prior to the voting by
notice in writing to the Secretary of the Company at 1341 W. Mockingbird Lane,
Dallas, Texas, 75247. The shares represented by any unrevoked proxy in the
accompanying form, if such proxy is properly executed and returned, will be
voted in accordance with the specifications made thereon, or in the absence of
such specifications, in accordance with the Board of Directors' recommendations.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of June 30, 1995, information with
respect to Texas Industries, Inc. ("TXI"), the only stockholder who is known to
the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock of the Company.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNER OWNED CLASS
- --------------------------------------------------------- ----------------- ----------
<S> <C> <C>
Texas Industries, Inc. 24,000,000 80.9%
1341 W. Mockingbird Lane
Dallas, Texas 75247
</TABLE>
ELECTION OF DIRECTORS
The bylaws of the Company provide for a board of not less than three nor
more than twenty-one directors with the actual number to serve at any time to be
determined by resolution of the Board. The Board has fixed as seven the number
of directors which will constitute the Board of Directors for the ensuing year
and the proxies solicited hereby cannot be voted for a greater number. Directors
hold office until the next Annual Meeting of Stockholders or until their
successors are elected and qualified. Directors are elected by plurality vote.
Unless otherwise indicated, all proxies that authorize the persons named therein
to vote for the election of directors will be voted for the election of the
nominees listed below. Each nominee is presently a Director of the Company. If
any nominee should not be available for election as a result of unforeseen
circumstances, it is the intention of the persons named in the proxy to vote for
the election of such substitute nominee, if any, as the Board of Directors may
propose.
<TABLE>
<CAPTION>
SERVED
AS
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE DURING PAST FIVE YEARS* SINCE
- --------------------------------- --- ---------------------------------------------------------------- -----------
<S> <C> <C> <C>
Robert D. Rogers................. 59 Chairman of the Board of the Company, President and Chief 1973
Executive Officer of Texas Industries, Inc.(a)(b)
Gordon E. Forward................ 59 President and Chief Executive Officer of the Company(a) 1982
Robert Alpert.................... 63 Chairman of the Board of Alpert Companies (investments), Dallas, 1989
Texas(a)(b)
John M. Belk..................... 75 Chairman of the Board of Belk Stores Services, Inc.(c) 1987
Gerald R. Heffernan.............. 76 President of G.R. Heffernan & Associates, Ltd., Toronto, 1973
Ontario, Canada(a)
Gerhard Liener................... 63 Advisor to the Chairman of Daimler-Benz Group on International 1987
Affairs since May 1995; Chief Financial Officer of Daimler-Benz
AG until May 1995(b)(d)
Eugenio Clariond Reyes........... 52 Director General and Chief Executive Officer of Grupo IMSA, 1993
S.A.; President, Mexico -- U.S. Chamber of Commerce; Director,
Instituto Tecnologico y de Estudias Superiores de Monterrey,
A.C.
<FN>
- --------------------------
* Based upon information provided by the Directors to the Company as of June
30, 1995.
(a) Messrs. Rogers, Forward, Alpert and Heffernan are members of the Board of
Directors of Texas Industries, Inc.
(b) Messrs. Rogers, Alpert and Liener are members of the Board of Directors of
Consolidated Freightways, Inc.
(c) Mr. Belk is a member of the Board of Directors of Lowe's Companies, Inc.
and Coca-Cola Bottling Co. Consolidated.
(d) Mr. Liener is a member of the Board of Directors of Daimler-Benz North
America Corporation.
</TABLE>
2
<PAGE>
BOARD COMMITTEES, MEETINGS, ATTENDANCE AND FEES
The Board of Directors of the Company has established Audit and Compensation
Committees which perform the functions described below. The Board of Directors
held four regular meetings during the fiscal year. All Directors, except for Mr.
Liener, who attended two meetings, attended at least 75% of all Board meetings.
The Audit Committee, composed during the last fiscal year of Directors
Heffernan, Liener and Clariond Reyes, reviews the scope, plan and results of the
annual audit with the independent auditors; approves and ratifies each
professional service provided by the independent auditors; considers the
independence of the auditors; and reviews and approves all non-audit fees paid
to the independent auditors. The Audit Committee met two times during the year.
All members, except for Mr. Clariond Reyes, who attended one meeting, attended
both meetings.
The Company's Compensation Committee, composed during the last fiscal year
of Directors Rogers, Alpert and Belk, recommends and approves the salaries of
the top management of the Company and all awards to employees of the Company
under the Company's compensation plans. Its actions are subject to the review
and approval of the Board of Directors. The Compensation Committee met three
times during the year. All members attended all of the meetings.
The Board of Directors, acting in lieu of a Nominating Committee, will
consider nominees for directors recommended by Stockholders. Communications to
the Board may be addressed in care of the Company's Secretary at the Company's
Executive Offices.
OTHER TRANSACTIONS
No reportable transaction occurred between the Company and any Director,
nominee for director, officer or any affiliate of, or a person related to, any
of the foregoing since the beginning of the Company's last fiscal year (June 1,
1994).
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company currently receive $15,000 per
year plus $1,000 for each day that a Board and/or a Committee Meeting is
attended. Under a deferred compensation arrangement, such amount may be deferred
in whole or in part at the election of the Director. Compensation so deferred is
denominated in shares of the Company's Common Stock determined by reference to
the average market price during the thirty (30) trading days prior to the date
of the arrangement. Dividends are credited to the account in the form of common
stock at a value equal to the fair market value of the stock on the date of
payment of such dividend. The Company also reimburses Directors for travel,
lodging and related expenses they may incur in attending Board and Committee
meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised exclusively of Directors who are not
officers or employees of the Company. Mr. Robert D. Rogers is the President and
Chief Executive Officer of TXI, the parent of the Company. The President of the
Company serves as a Director and on the Compensation Committee of TXI. No other
executive officer of the Company serves or has served on the Compensation
Committee or as a director of another company, one of whose executive officers
serves as a member of the Compensation Committee or as a Director of the
Company.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of June 30, 1995, the approximate number
of shares of Common Stock of the Company and common stock of TXI beneficially
owned by each Director, by each executive officer named in the Summary
Compensation Table and by all Directors and Executive Officers of the Company as
a group.
<TABLE>
<CAPTION>
COMPANY TXI
COMMON SHARES COMMON SHARES
------------------------------ ------------------------------
BENEFICIALLY BENEFICIALLY
OWNED** % (1) OWNED** % (2)
------------------- --------- ------------------- ---------
<S> <C> <C> <C> <C>
Robert Alpert........................................... 1,000 * 5,555(4) *
John M. Belk(5)......................................... 1,000 * 2,000(4) *
Eugenio Clariond Reyes.................................. None * None *
Gordon E. Forward....................................... 101,100(3) * 57,974(4) *
David A. Fournie........................................ 38,000(3) * 610 *
Gerald R. Heffernan(6)(7)............................... None * 122,000(4) 1.1%
Gerhard Liener.......................................... None * 2,000(4) *
Robert D. Rogers(8)..................................... 114,800(3) * 169,320(4) 1.5%
Libor F. Rostik......................................... 40,000(3) * 14 *
Jeffry A. Werner........................................ 41,570(3) * 33 *
Peter H. Wright......................................... 35,600(3) * None *
All Directors and Executive Officers as a Group (16
Persons)............................................... 526,108(3) 1.7% 427,886(4) 3.9%
<FN>
- ------------------------
* Represents less than one percent (1%) of the total number of shares
outstanding.
** Except as indicated in the notes below, each person has the sole voting and
investment authority with respect to the shares set forth in the above
table.
(1) Based on the sum of (i) 29,679,900 shares of Common Stock, which on June
30, 1995, was the approximate number of shares outstanding, and (ii) the
number of shares subject to options exercisable by such person(s) within 60
days of such date.
(2) Based on the sum of (i) 11,012,692 shares of common stock, which on June
30, 1995, was the approximate number of shares outstanding, and (ii) the
number of shares subject to options exercisable by such person(s) within 60
days of such date.
(3) Includes, with respect to such person(s), shares of Common Stock subject to
options exercisable within 60 days of June 30, 1995, as follows: Gordon E.
Forward, 86,000 shares; David A. Fournie, 32,500 shares; Robert D. Rogers,
74,000 shares; Libor F. Rostik, 35,000 shares; Jeffry A. Werner, 40,000
shares; Peter H. Wright, 32,000 shares; and all Directors and Executive
Officers as a Group, 446,500 shares.
(4) Includes, with respect to such person(s), shares of common stock subject to
options exercisable within 60 days of June 30, 1995, as follows: Robert
Alpert, 3,000 shares; John M. Belk, 2,000 shares; Gordon E. Forward, 10,490
shares; Gerald R. Heffernan, 2,000 shares; Gerhard Liener, 2,000 shares;
Robert D. Rogers, 40,000 shares; and all Directors and Executive Officers
as a Group, 90,690 shares.
(5) Mr. Belk has sole voting power over 7,000 shares of Common Stock as trustee
under the John M. Belk Grantor Trust.
(6) The wife of Mr. Heffernan owns 971 shares of TXI common stock as to which
he disclaims beneficial ownership.
(7) Mr. Heffernan also owns 2,500 shares of $5 Preferred Stock of TXI,
approximately 41.8% of the class outstanding.
(8) The wife of Mr. Rogers owns 4,000 shares of Common Stock, as to which he
disclaims beneficial ownership.
</TABLE>
4
<PAGE>
EXECUTIVE COMPENSATION
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal year
ended May 31, 1995, of those persons who were, at May 31, 1995, (i) the Chief
Executive Officer, and (ii) the other four highly compensated executive officers
of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION PAYOUTS
AWARDS -----------
------------------------ ----------------- LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) STOCK OPTIONS(#) PAYOUTS($) COMPENSATION($)
- ------------------------------------- --------- ----------- ----------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Gordon E. Forward ................... 1995 300,000 43,628 60,000 7,580 3,945(1)
President and 1994 300,000 30,060 -- 4,262 3,442
Chief Executive Officer 1993 300,000 -- -- -- 24,017
Jeffry A. Werner .................... 1995 176,875 25,723 19,000 6,037 2,609(1)
Senior Vice President 1994 155,000 15,531 -- 3,394 1,860
Commercial 1993 155,000 -- -- 162,589 8,762
David A. Fournie .................... 1995 175,000 25,450 19,000 2,659 2,376(1)
Vice President 1994 140,000 14,028 -- 1,495 1,496
Operations 1993 140,000 -- -- 48,463 1,794
Libor F. Rostik ..................... 1995 156,250 22,723 19,000 746 2,261(1)
Senior Vice President 1994 130,000 13,026 -- 12,838 8,092
Engineering 1993 130,000 -- -- -- 1,909
Peter H. Wright ..................... 1995 151,250 21,996 19,000 2,602 2,259(1)
Vice President 1994 125,000 12,525 -- 1,463 1,506
Quality Engineering and SBQ Sales 1993 125,000 -- -- 70,045 6,997
<FN>
- ------------------------------
(1) Includes (i) vested and non-vested portions of employer contributions and
allocations to Retirement Savings Plan account, (ii) Company matching
portion of Stock Purchase Plan purchases, and (iii) payment of imputed
dividends on deferred profit sharing, respectively, for the named executive
officers as follows: Gordon E. Forward, $3,503, $48 and $394; Jeffry A.
Werner, $2,299, $48 and $262; David A. Fournie, $2,280, $96 and none; Libor
F. Rostik, $2,071, $48 and $142; and Peter H. Wright, $2,003, $48 and $208.
</TABLE>
None of the Company's executive officers are employed under contract. They
participate on the same basis as other employees in the Company's broad-based
employee benefits program which includes a retirement savings plan, group
medical coverage and life insurance. The Company's executive officers (except
the President) are also covered by a financial security plan that includes
disability benefits under certain circumstances and death benefits payable to
beneficiaries for a period of ten years or until the executive will have reached
the age of 65, whichever last occurs. An executive officer who retires at or
after attaining age 60 will be entitled to a supplemental retirement benefit. In
the event of termination of employment under certain circumstances following a
change of control (as defined in the plan), the executive officer will be deemed
to be fully vested in any supplemental retirement benefit, without reduction,
provided by the plan. The President of the Company is covered by a separate
financial security plan which is substantially similar to the executive
officers' financial security plan.
5
<PAGE>
1995 STOCK OPTION GRANTS
The following table sets forth certain information concerning options
granted during the fiscal year ended May 31, 1995 to each executive officer
named in the Summary Compensation Table under the Company's stock option plans.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE OF
% OF TOTAL ASSUMED ANNUAL RATES OF STOCK
OPTIONS EXERCISE OR PRICE APPRECIATION FOR OPTION
NO. OF GRANTED TO BASE PRICE TERM($)(2)
OPTIONS EMPLOYEES PER ---------------------------------
NAME GRANTED(1) IN 1995 SHARES($) EXPIRATION DATE 0% 5% 10%
- --------------------------------- ----------- ----------- ----------- ---------------- --- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Gordon E. Forward................ 60,000 17.4% 8.375 January 18, 2005 -0- 315,300 799,500
Jeffry A. Werner................. 19,000 5.5% 8.375 January 18, 2005 -0- 99,845 253,175
David A. Fournie................. 19,000 5.5% 8.375 January 18, 2005 -0- 99,845 253,175
Libor F. Rostik.................. 19,000 5.5% 8.375 January 18, 2005 -0- 99,845 253,175
Peter H. Wright.................. 19,000 5.5% 8.375 January 18, 2005 -0- 99,845 253,175
<FN>
- ------------------------------
(1) Options become exercisable in annual installments beginning two years from
the date of grant.
(2) The dollar amounts under these columns are the result of calculation at 0%
and at the 5% and 10% rates set by the Securities and Exchange Commission
and are not intended to forecast possible future appreciation, if any, of
the price of the Company stock. The Company did not use an alternative
formula for a grant date value as it is not aware of any formula which will
determine with reasonable accuracy a present value based on future unknown
or volatile factors.
</TABLE>
OPTION EXERCISES AND YEAR-END VALUES
The following table provides information concerning each option exercised
during the 1995 fiscal year ended May 31, 1995 by each of the named executive
officers and the value of unexercised options held by such executive officer at
May 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
SHARES END FISCAL YEAR END ($)(1)
ACQUIRED VALUE ----------------------- -----------------------
NAME ON EXERCISE REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------------------- ----------- --------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Gordon E. Forward.......................... -0- -- 86,000/84,000 -0-/67,500
Jeffry A. Werner........................... -0- -- 40,000/29,000 -0-/21,375
David A. Fournie........................... -0- -- 32,500/29,000 4,650/21,375
Libor F. Rostik............................ -0- -- 35,000/29,000 -0-/21,375
Peter H. Wright............................ -0- -- 32,000/27,000 -0-/21,375
<FN>
- ------------------------------
(1) Computed based upon the difference between aggregate fair market value and
aggregate purchase price.
</TABLE>
6
<PAGE>
PERFORMANCE GRAPH
The following chart compares the Company's cumulative total stockholder
return for the five-year period ended May 31, 1995, with the cumulative total
return of the Standard & Poor's 500 Composite Stock Index (the "S&P 500") and
the Standard & Poor's Steel Index (the "S&P Steel Group"). These comparisons
assume the investment of $100 on May 31, 1990 and the reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CHAPARRAL STEEL S&P STEEL GROUP S&P 500
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 105.26 91.26 111.79
1992 121.77 104.61 122.81
1993 106.74 157.38 137.06
1994 99.34 178.10 142.90
1995 107.32 150.05 171.75
</TABLE>
7
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of three
non-employee Directors. It is the goal of the Committee to insure that policies
and processes exist so that all of the Company's employees will be fairly and
competitively compensated. The Committee evaluates the performance of the senior
executive group against predetermined goals with the guidance of the President
and evaluates the performance of the President. The Committee also evaluates
human resource development, and succession planning within the Company.
GENERAL. The role of the Company's compensation program is to aid the
Company in the attraction and retention of the most productive employees in the
marketplace. The compensation program's guidelines are such that if individuals
are performing in the top ten percent of effectiveness compared to others that
might be available in the marketplace to fill similar positions, their total
compensation should be in the upper twenty-five percent of those with whom the
Company competes for equivalent talent. The makeup of an executive's total
compensation should provide adequate direct compensation, high incentive
compensation and modest indirect or fringe compensation. A significant portion
of the executive officer's compensation is linked to the financial performance
of the Company.
While the criteria for the compensation program for executive officers are
subjective in nature, to insure that the compensation program is competitive,
the Committee takes into account factors relevant to the specific compensation
component being considered, such as comparisons to industry and geographic
salary surveys.
COMPENSATION ELEMENTS. The executive officers' total compensation
objectives, which are established over a five year span of time, consist of
three basic elements -- salaries, annual incentives and long-term incentives.
Annual and long-term incentives are a significant portion of the total
compensation and are strongly linked to financial performance and thereby align
the interests of the Company's executives and its stockholders to build
long-term value and improve the return to the Company's stockholders.
SALARIES. Approximately 45% of the total compensation objective of an
executive officer, other than the Chief Executive Officer, is composed of
salary. Salaries are reviewed periodically and compared to industry and
geographic salary surveys to assure that the salary levels remain competitive.
The impact that the executive has on the Company, the skills and experience
required by the position and the performance of the executive are also
considerations in determining salary level. During the last fiscal year, the
Compensation Committee reviewed and recommended salary increases for the Senior
Vice President -- Commercial, Vice President -- Operations, Senior Vice
President -- Engineering and Vice President -- Quality Engineering and SBQ
Sales.
ANNUAL INCENTIVES. Approximately 10% of the total compensation objective of
an executive officer is based on an annual incentive. The Board of Directors
annually considers employee profit sharing to provide additional incentives to
all employees, including the Company's executive officers. This short-term
incentive is totally dependent on measured financial performance of the Company.
An executive officer's profit share is not limited as a percentage of salary;
however, any portion over 20% is deferred into a phantom stock plan with
increments of phantom stock units being redeemed at five year intervals at a
price equal to the fair market value of the Company's Common Stock. Dividends
equivalent to the dividend declared and paid on the Company's Common Stock are
paid each year on each phantom stock unit. For the 1995 fiscal year, the
Directors approved a profit sharing distribution of 8% of the Company's pre-tax
income. A like profit sharing distribution has been approved for the 1996 fiscal
year.
LONG-TERM STOCK INCENTIVES. Approximately 45% of the executive officer's
total compensation objective consists of long-term incentives, which is provided
primarily through the Company's stock option plan and a performance share plan.
When granted, options under the stock option plan have
8
<PAGE>
exercise prices of not less than 100% of the then fair market value of the
Company's Common Stock and become exercisable 40% after two years, 60% after
three years, 80% after four years and 100% five years after grant, and all
expire not more than ten years after grant. The value of the option ultimately
realized will depend on the continued success of the Company; thus, the option
not only provides the executive an incentive for years after it has been awarded
but ties this incentive directly into increasing stockholder value. Long-term
stock options also strengthen the ability of the Company to attract, motivate
and retain executives of superior capability required to achieve the Company's
business objectives in an intensely competitive environment. An executive is
targeted to have between one and five times annual salary in accumulated options
as priced at the time of the grant. Under these guidelines, each of the named
executives were awarded stock options during fiscal year 1995.
The Company has maintained since 1976 a performance share plan under which
performance shares have been granted from time to time by the Board of Directors
acting in its discretion and upon recommendation of the Compensation Committee.
The value of a performance share is based upon the Company's annual financial
results averaged over the preceding five years and a cash dividend is paid on a
performance share at the end of each fiscal year equal to 10% of the Company's
earnings per share for such fiscal year, based on an assumed 4.5 million
performance shares. Performance shares are 40% vested after three years, 60%
vested after four years and 100% vested after 5 years. At five year intervals,
the plan requires, subject to several restrictions and conditions, that a
percentage of the vested portion be redeemed based on the age of the executive
such that 100% of vested shares are redeemed by the time the executive reaches
65 years of age. No performance shares have been granted under the plan since
1986 and it is not contemplated that there will be future grants under the plan.
CHIEF EXECUTIVE OFFICER COMPENSATION. The Chief Executive Officer's salary
is established in the same manner as other executive officers and he
participates on the same basis as such executive officers in the Company's
incentive programs. However, approximately 50% of the Chief Executive Officer's
total compensation objective is based on incentives linked to the financial
performance of the Company.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Internal
Revenue Code generally limits the corporate deduction to $1 million for
compensation paid to a person who on the last day of fiscal years beginning on
or after January 1, 1994 is either the chief executive officer or among the four
most highly compensated officers other than the chief executive officer, except
for qualified performance-based compensation. At this time, it is not
anticipated that any Company executive will receive any compensation in fiscal
year 1996 in excess of the limit. Therefore, during fiscal year 1995, the
Company did not take action to comply with such limit. The Company generally
intends to structure the compensation with its executives to achieve maximum
deductibility under Section 162(m) with minimum sacrifices in flexibility and
corporate objectives.
JOHN M. BELK, Chairman
ROBERT D. ROGERS, ROBERT ALPERT
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP were the Company's independent auditors for the last
fiscal year and will continue to be for the current year. A representative of
Ernst & Young LLP will attend the Stockholders' Meeting; and although he does
not intend to make a statement to the Stockholders, he will be available to
respond to any relevant questions of the Stockholders.
ANNUAL REPORT
A copy of the Company's Annual Report for the fiscal year ended May 31,
1995, is being mailed to each Stockholder of record along with the proxy
materials, but is not to be considered a part of the proxy soliciting material.
9
<PAGE>
1996 STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the next Annual
Meeting of Stockholders presently scheduled for October 16, 1996, must be
received by the Secretary of the Company not later than May 1, 1996, to be
eligible for inclusion in the proxy statement and form of proxy relating to that
meeting.
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors was not aware
that any matters not referred to in this Proxy Statement would be presented for
action at the Meeting. If any other matters should come before the Meeting, the
persons named in the accompanying proxy will have discretionary authority to
vote all proxies in accordance with their best judgment.
By Order of the Board of Directors,
[SIGNATURE]
ROBERT C. MOORE
SECRETARY
10
<PAGE>
FOR SHARES OF COMMON STOCK
CHAPARRAL STEEL COMPANY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS OCTOBER 18, 1995
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert D. Rogers,
John M. Belk and Gordon E. Forward, or any of them,
attorneys and proxies, with power of substitution and
revocation, to vote, as designated on the reverse side,
all shares of stock which the undersigned is entitled to
vote, with all powers which the undersigned would possess
if personally present, at the Annual Meeting (including
all adjournments thereof) of stockholders of Chaparral
Steel Company to be held on Wednesday, October 18, 1995
at 9:30 A.M. at KERA-KDTN, 3000 Harry Hines Blvd.,
Dallas, Texas.
(THIS PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE)
- -------------------------------------------------------------
-FOLD AND DETACH HERE-
<PAGE>
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS JUST SIGN
BELOW; NO BOXES NEED TO BE CHECKED
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2
<TABLE>
<CAPTION>
<C> <C> <S>
Item 1 - Election of Directors (see reverse). Robert Alpert, John M. Belk, Gordon E. Forward,
Gerald R. Heffernan, Gerhard Liener,
Eugenio Clariond Reyes and Robert D. Rogers
WITHHOLD
FOR all nominees AUTHORITY (Instruction: To withhold authority to vote for
(except as to vote for all nominees an individual nominee write that nominee's name
specified hereon) listed at right on the space provided below.)
/ / / / _______________________________________________
</TABLE>
Item 2 - To transact such other business that
may properly come before the meeting.
<TABLE>
<CAPTION>
<C> <S>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED. IN THE ABSENCE OF SUCH
INSTRUCTIONS THIS PROXY WILL BE VOTED FOR
THE NOMINEES LISTED IN ITEM 1 AND FOR THE
PROPOSAL IN ITEMS 2.
(Sign exactly as name(s) appear hereon. If
shares are held jointly each holder should
sign. If signing for estate, trust or
corporation, title or capacity should be
stated.)
Please date, sign and return this Proxy in
the enclosed business envelope.
________________________________________________
| "PLEASE MARK INSIDE BLUE BOXES SO THAT DATA | Dated:_______________________________, 1995
| PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"| ___________________________________________
|______________________________________________| ___________________________________________
</TABLE>
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-FOLD AND DETACH HERE-
