PRELIMINARY - Intended release date: April 26, 1994
WEIRTON STEEL CORPORATION
400 Three Springs Drive
Weirton, WV 26062
__________________
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held May 26, 1994
Dear Stockholder:
NOTICE IS HEREBY GIVEN that a Special Meeting of
Stockholders of Weirton Steel Corporation, a Delaware corporation
(the "Company"), will be held at the Jefferson County Civic
Arena, 3151 Johnson Road, Steubenville, Ohio on May 26, 1994, at
7:00 p.m., Eastern Daylight Time, for the following purposes:
1. To approve a proposal (the "Proposal") amending:
(A) Article FOURTH of the Company's Restated Certificate
of Incorporation to increase the number of shares comprising the
Company's authorized Common Stock, par value $.01 per share
("Common Stock"), from 30.0 million shares to 50.0 million shares
of Common Stock, provided that not less than 15.0 million of such
increased number of shares of Common Stock are to be issued only
in one or more BONA FIDE public offerings and up to 5.0 million
of such increased number of shares of Common Stock are to be
issued only pursuant to employee plans, as more fully described
in the accompanying Proxy Statement;
(B) Article FIFTH of the Company's Restated Certificate
of Incorporation to: (i) increase the number of directors of the
Company from 13 to 14; (ii) create a new category of director to
be known as the ESOP director; (iii) change the qualification
requirements for independent directors; and (iv) impose age
limits on directors, as more fully described in the accompanying
Proxy Statement; and
(C) Article III, Section 2.2(b) of the By-laws to
designate the ESOP director as an additional member of the
Nominating Committee; and
2. To consider and act upon any other matters which
properly may come before the meeting or any adjournment thereof.
In accordance with the provisions of the By-Laws, the Board
of Directors has fixed the close of business on April 25, 1994 as
the date for the determination of the holders of record of stock
entitled to notice of, and to vote at, the Special Meeting. A
complete list of such stockholders will be open for examination
by any stockholder for any purpose germane to the meeting for a
period of at least 10 days prior to the meeting. The list will
be available at the Company's office, 400 Three Springs Drive,
Weirton, West Virginia during ordinary business hours.
The Board of Directors has unanimously approved the
Proposal and unanimously recommends that the stockholders vote
FOR the Proposal.
Your attention is directed to the accompanying Proxy
Statement.
Stockholders who do not expect to attend the meeting in
person are requested to date, sign and mail the enclosed Proxy as
promptly as possible in the enclosed stamped envelope.
Participants in the Company's 1984 and 1989 Employee Stock
Ownership Plans are requested to complete the enclosed
Confidential Participant Instruction Form and return it to the
ESOP Trustee in the enclosed stamped envelope.
By Order of the Board of Directors
/s/ William R. Kiefer
WILLIAM R. KIEFER,
Secretary
Weirton, West Virginia
April , 1994
PRELIMINARY
(Intended release date: April 26, 1994)
WEIRTON STEEL CORPORATION
400 Three Springs Drive
Weirton, WV 26062
__________________
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by and on behalf of the Board of Directors of
Weirton Steel Corporation, a Delaware corporation (the
"Company"), of proxies and Confidential Participant Instruction
Forms for use at a Special Meeting of Stockholders (the "Special
Meeting") to be held on May 26, 1994, as stated in the
accompanying Notice of Meeting, and any adjournment thereof.
This Proxy Statement and the accompanying form of proxy are being
mailed on or after April 26, 1994 to stockholders of record as of
April 25, 1994 and to participants in the Company's 1984 and 1989
Employee Stock Ownership Plans (the "ESOPs").
SUMMARY OF PROXY STATEMENT PROPOSAL
This Proxy Statement presents a proposal (the "Proposal")
for stockholder approval to amend the Company's Restated
Certificate of Incorporation and By-laws as follows:
(i) Article FOURTH of the Restated Certificate of
Incorporation would be amended to increase the Company's
authorized capital from 30.0 million to 50.0 million shares of
Common Stock to be issued as described herein;
(ii) Article FIFTH of the Restated Certificate of
Incorporation would be amended to (a) increase the number of
directors from 13 to 14, (b) create a new category of ESOP
director, (c) change the qualification requirements to serve as
an independent director of the Company and (d) impose an age
limit on directors commencing a new term of office, all as
described herein; and
(iii) Article III of the By-laws would be amended to
designate the ESOP director as an additional member of the
Nominating Committee of the Board of Directors.
The Proposal will require an affirmative vote by at least
80% of the eligible votes for passage. Stockholders are urged to
review the Proposal carefully.
PROXIES
Proxies are solicited by the Board of Directors in order to
provide every stockholder with an opportunity to vote on all
matters that properly come before the Special Meeting, regardless
of whether the stockholder attends in person.
The enclosed form of proxy provides a means for stockholders
to vote on the Proposal and any other matters which may properly
come before the meeting. When the enclosed proxy is properly
signed, dated and returned, the shares represented by the proxy
will be voted in accordance with the stockholder's directions.
If the enclosed form of proxy is executed and returned, it
nevertheless may be revoked at any time before it has been voted
by (i) a later dated, properly executed proxy, or (ii) a vote in
person at the Special Meeting. If not revoked and no contrary
instructions are specified, or no specific instructions are
otherwise given, all shares covered by a properly signed and
returned proxy will be voted by the persons appointed therein FOR
the Proposal. In addition, the proxy will be voted in the
discretion of the proxy holders with respect to such other
business as may properly come before the meeting.
All expenses of soliciting proxies for the Special Meeting,
including the cost of mailing, will be borne by the Company.
Directors, officers and regular employees of the Company may
solicit proxies from stockholders personally or by means of
telecommunications. Such persons will receive no additional
compensation for those services. In addition, the Company is
requesting brokerage firms, fiduciaries, custodians and other
nominees holding stock in their name or custody, to forward proxy
materials to beneficial owners and to seek instructions regarding
proxies, and the Company will reimburse such persons for their
expenses in so doing. Further, the Company has engaged Georgeson
& Co. to solicit proxies on behalf of the Board of Directors from
individuals (excluding individuals in their capacities as
participants in the Company's ESOPs), brokers, nominees and
institutional holders. It is anticipated that Georgeson & Co.
will be paid a fee of $______ for its services and will be
reimbursed for its reasonable expenses.
ESOP VOTING INSTRUCTION FORMS
Participants in the ESOPs are also receiving the Notice of
Meeting and the Proxy Statement and will find enclosed a
Confidential Participant Instruction Form ("Instruction Form")
for use in instructing the trustee under the ESOPs as to how to
vote the shares of stock allocated to their participant accounts
in the ESOPs. The Instruction Form provides a means for
participants in the ESOPs to vote on the same issues to be
presented to stockholders of record at the Special Meeting. The
shares covered by the Instruction Forms will be voted by the
trustee as specifically indicated by participants. Forms with no
specific voting instructions will result in the related shares
being voted by the trustee as uninstructed shares under the
provisions of the ESOPs. The Instruction Form will also serve as
a means for participants in the ESOPs to vote on amendments to
those plans proposed by the Board of Directors to carry out some
of the changes described in this Proxy Statement. ESOP
participants will receive, in addition to this Proxy Statement,
an ESOP Disclosure Supplement explaining the proposed changes to
the ESOPs in more detail.
The Instruction Form may be changed or revoked only by a
later Instruction Form received by the trustee prior to
completion of the trustee's tabulation of votes to be cast at the
Special Meeting. An Instruction Form may not be revoked at the
Special Meeting. Since the trustee under the ESOPs is the only
holder of record of voting stock owned by the ESOPs, only the
trustee can cast a ballot at the Special Meeting on behalf of
ESOP participants. A participant may vote in person only to the
extent the participant has withdrawn shares of stock from the
ESOPs as of the Record Date referred to below.
Tabulation of the Instruction Forms is performed by an
independent third-party tabulator for, and reported
confidentially to, the trustee under the ESOPs. The provisions
of the ESOPs do not permit the Company to obtain voting
information concerning individual participants.
Directors, officers and regular employees of the Company may
solicit participants in the ESOPs to vote with regard to the
proposed amendments. Such persons will receive no additional
compensation for the performance of such services.
OUTSTANDING VOTING STOCK
Only holders of record of the Company's Common Stock, par
value $.01 per share ("Common Stock"), and Convertible Voting
Preferred Stock, Series A, par value $.10 per share ("Convertible
Preferred Stock"), at the close of business on April 25, 1994
(the "Record Date") are entitled to vote on matters to be
presented at the Special Meeting. On the Record Date, __________
shares of Common Stock and __________ shares of Convertible
Preferred Stock were outstanding and entitled to vote. The
holders of the Convertible Preferred Stock and the holders of the
Common Stock will vote as a single class at the Special Meeting.
Each share of Convertible Preferred Stock is entitled to ten
votes and each share of Common Stock is entitled to one vote.
Common Stock and Convertible Preferred Stock allocated to
the accounts of participants in the Company's ESOPs will be voted
by the holder of record, United National Bank-North, as trustee,
pursuant to confidential instructions from the respective
participants and in accordance with the terms of the applicable
ESOP. Common Stock for which no voting instructions are received
and Convertible Preferred Stock which has not yet been allocated
to the accounts of participants or for which no voting
instructions are received, will be voted by the holder of record,
United National Bank-North, as trustee, in accordance with the
terms of the applicable ESOP.
QUORUM REQUIREMENTS
In order to transact business at the Special Meeting, there
must be present, in person or by proxy, at least a majority of
the total votes of the outstanding shares of Common Stock and
Convertible Preferred Stock, without regard to any shares of
stock whose voting power is restricted under Article ELEVENTH of
the Company's Restated Certificate of Incorporation which deals
with certain significant holders. At this time, the Board of
Directors is aware of only one holder who would be so restricted
under such provision. See "Security Ownership of Certain
Beneficial Owners and Management." If a quorum is not present,
the Special Meeting may be adjourned from time to time until a
quorum is obtained.
AMENDMENT TO ARTICLE FOURTH OF THE RESTATED
CERTIFICATE OF INCORPORATION INCLUDED IN THE PROPOSAL
The Proposal would amend Article FOURTH of the Company's
Restated Certificate of Incorporation (the "Restated
Certificate") to increase the Company's authorized Common Stock
from 30.0 million shares to 50.0 million shares. Of the
increased number of shares, not less than 15.0 million must be
issued only in connection with one or more BONA FIDE public
offerings and up to 5.0 million only to employee plans, as
defined in Article ELEVENTH of the Restated Certificate. The
Board of Directors believes that the Company must increase equity
and reduce debt to improve its financial condition and that this
should be done primarily by selling Common Stock in the public
markets as favorable circumstances permit. To accomplish this
goal, the Board is recommending that stockholders approve the
Proposal which will give the Company the legal capacity to issue
additional shares of Common Stock from time to time as approved
by the Board.
See "Required Approval for Proposal" for additional steps
required to issue shares.
Purpose of Increasing Authorized Common Stock
The Proposal would increase authorized shares of Common
Stock to permit the Company's Board of Directors to sell shares
of Common Stock to the public to deleverage the Company. As
noted below, the Company does not have sufficient authorized but
unreserved shares to permit a public offering or to provide for
other significant issuances of stock. The 20.0 million
additional shares of Common Stock being authorized by the
Proposal may be used only for specific purposes. Thus, 15.0
million shares are to be used in BONA FIDE public offerings and
5.0 million shares are to be used for employee benefit plans, as
defined in the Restated Certificate, except that any shares of
Common Stock not sold through such plans after five years may be
used in BONA FIDE public offerings.
The Company intends to commence an underwritten public
offering of Common Stock and will seek to do so in the near
future if the Proposal is approved and if market conditions
permit. Depending upon market conditions, which would include
obtaining satisfactory pricing for any such issue, management
believes that 15.0 million of the newly-authorized shares of
Common Stock could be sold by the Company in a public offering.
To the extent that less than 15.0 million shares are sold in the
first such offering, the Company would make additional offerings
of Common Stock. As explained further under "Reasons for
Increasing Authorized Capital - Employee Stock Plans," a total of
5.0 million shares of Common Stock are intended to be made
available for purchases by employees over the next five years.
To the extent such shares are not so purchased within the five-
year period, the remaining shares would be available for BONA
FIDE public offerings.
Under the Restated Certificate, 7.5 million shares of
Preferred Stock without serial designation are authorized. On
the Record Date, 5.2 million shares of Preferred Stock remained
available for issuance. The Proposal does not affect the number
of shares of Preferred Stock available for issuance. The Company
has no agreements or current plans for issuing additional shares
of Preferred Stock at this time, except as part of reissuing
shares of Convertible Preferred Stock to the 1989 ESOP, as
described under "Reasons for the Articles Fifth and III
Amendments - New ESOP Director."
Reasons for Increasing Authorized Capital
Stockholders are urged to consider and approve the Proposal,
which will increase authorized Common Stock, for the following
reasons.
Lack of Authorized Shares. The Company has either issued or
reserved for issuance substantially all 30.0 million shares of
Common Stock currently authorized by the Restated Certificate.
At the Record Date, only 3,264,744 shares of Common Stock
remained available for future issuance, of which 2,853,285
already had been reserved for use. The Proposal must be approved
if the Company is to have the ability to sell Common Stock.
Need to Reduce Financial Leverage. The Company's
capitalization, as shown below, includes three main elements:
long-term debt obligations, redeemable stock, and stockholders'
equity.
<TABLE>
<CAPTION>
12/31/93 % of total 1/1/91 % of total
-------- ---------- ------ ---------
(Dollars in millions)
<S> <C> <C> <C> <C>
Long term debt $495.3 93% $398.9 55%
incl. current
Redeemable stock 36.7 7% 3.9 1%
Stockholders' Eq (1.4) --% 316.5 44%
----- --- ----- ---
Total Capital. $530.6 100% $719.3 100%
<FN>
* Includes the accounts of the Company's wholly owned
subsidiary, Weirton Receivables, Inc. effective August 25, 1993.
</TABLE>
[TEXT]
The significant decline in the Company's stockholders'
equity from January 1, 1991 through 1993 has been the result of
its net losses over this period of $335.7 million, which include
a pretax restructuring charge of $17.4 million and an after tax
extraordinary charge of $6.5 million, both of which were
recognized in 1993, and the net after tax effect of changes in
certain accounting procedures that reduced stockholders' equity
by $175.4 million. The Company's financial flexibility is
severely restricted by its heavy debt load and lack of equity.
The Board of Directors believes that the Company must reduce
its percentage of debt and improve its percentage of equity to
levels comparable with its major competitors in the steel
industry at the earliest possible date. The Board of Directors
believes that sales of Common Stock to the public equity markets
is the only way to accomplish that result in the near term.
During 1993 and thus far in 1994, the Company believes that its
major competitors have sold more than $2.6 billion of equity
securities in the public equity markets.
Borrowing Ability. The Company's existing long-term debt
was incurred primarily to finance its recently completed capital
program that allowed it to become a 100% continuously cast steel
producer and renovate its hot strip mill. Management believes
that the Company will,in the future, lack adequate financial
flexibility unless stockholders' equity is increased.
Facilitating Capital Improvements. The Company competes in
an industry which requires significant levels of capital spending
to improve operations in order to satisfy customer requirements
for improved quality at lower prices. The Company will not be
able to finance requisite capital expenditures beyond the near
term unless it substantially improves its capital structure. The
Board of Directors believes that the Company can only improve its
capital structure in the near term by selling Common Stock to the
public markets.
Lower Borrowing Costs. The Company is considered highly
leveraged by the financial markets because of its high percentage
of debt to equity. Highly leveraged borrowers pay higher
interest rates on their debt compared to borrowers who are not
highly leveraged. A reduction in leverage could reduce current
financing costs for the Company and should improve its ability to
make future borrowings at lower rates.
Participation in the Public Capital Markets. Since
commencing business in 1984, the Company has financed operations
through debt and earnings and has never sold Common Stock in the
public markets. The Company's 1984 ESOP sold Common Stock in
June 1989 for the benefit of participants and to establish a
public trading market for the Common Stock, but the Company did
not receive proceeds from that sale. Although the Company did
issue equity securities in three private transactions in recent
years, these sales occurred primarily to allow the Company to
maintain minimum equity levels under its debt covenants and one
such issuance involved redeemable preferred stock, which is not
included in stockholders' equity. During the same period, many
of the Company's competitors in the steel industry have sold
capital stock to reduce their leverage and help finance capital
improvements. In addition to raising equity, one or more
substantial public offerings of Common Stock by the Company could
help improve trading conditions for the Common Stock by
increasing the number of shares of Common Stock which public
investors could buy from time to time.
Employee Stock Plans. The Proposal provides 5.0 million
shares of Common Stock to implement plans encouraging employee
stock ownership. The Board of Directors believes that continued
employee ownership should be encouraged. The Company maintains a
number of these plans, including the ESOPs. If the plans are to
be maintained for the long term or new plans are to be
implemented, it will be necessary to increase the Company's
authorized shares. The Board of Directors has committed the 5.0
million shares allocated under the Proposal for employee benefit
plans to a new employee stock purchase plan to be submitted for
stockholder approval at the 1994 Annual Meeting. The plan,
intended to be a qualified stock purchase plan under Section
423(b) of the Internal Revenue Code of 1986, will permit
employees (subject to individual limitations) to purchase through
payroll deductions up to a total of 1.0 million shares of Common
Stock annually at 85% of the lower of the market price for the
stock at the beginning or the end of each calendar year.
Employees purchasing stock will be required to hold it for a two
year period following acquisition. Any shares not purchased in
one year will be carried forward for purchase through the fifth
year of the plan, when unpurchased shares will be made available
for BONA FIDE public offerings by the Company.
Uses for Stock Sales Proceeds
The Board of Directors believes the Company should sell
Common Stock publicly and use the proceeds for the purposes
discussed below. The application of proceeds necessarily will
depend on the size of Common Stock offerings and their timing.
1998 Senior Notes. Up to $50.0 million of the
Company's $140.0 million outstanding principal amount of 11-1/2%
Senior Notes due 1998 (the "Senior Notes") can be redeemed at the
Company's option with the proceeds from the sale of capital
stock. A partial prepayment of the Senior Notes would both
reduce the amount of long-term debt of the Company and the
interest required to be paid by the Company on the Senior Notes.
The Company estimates that a $50.0 million reduction in Senior
Notes made from the proceeds of stock sales increasing
stockholders' equity by _______ million would have resulted in a
change in the Company's capitalization at December 31, 1993 to
approximately __% debt from 93% debt. Proceeds from stock sales
may also be used to repurchase Senior Notes in the open market,
which would further reduce interest costs and leverage.
Other Uses. Proceeds from stock sales may also be applied
to reduce leverage effects from other sources, including by
tendering for or repurchasing amounts of the Company's 10 7/8%
Senior Notes due 1999, repaying or defeasing other debt,
purchasing or redeeming other securities, reducing other
liabilities, or contributing to the Company's pension fund.
If the Proposal is approved, the Company will have enhanced
flexibility, subject to the approval of the Board of Directors,
to take advantage of future opportunities to sell Common Stock as
circumstances arise. There can be no assurance, however, that
the Company will succeed in completing one or more public
offerings of Common Stock to improve its financial condition.
Certain Additional Considerations
At the Record Date, the Company estimates that employees and
former employees held in the aggregate not less than 75% of the
total eligible votes, either directly or through their accounts
as participants in the ESOPs. Such percentage, if utilized
collectively, is sufficient to elect all members of the Company's
Board of Directors (except for those instances where the Restated
Certificate requires that a director have specified
qualifications), to approve issues presented to stockholders
which require an affirmative vote by a majority of eligible
votes, and to block the approval of issues presented to
stockholders. Sales of Common Stock by the Company from shares
newly authorized by the Proposal or by employees individually or
through the ESOPs, or a combination of both, will have the effect
of reducing the percentage of eligible votes held by employees.
The aggregate effects of such reductions will depend on the rate
at which shares are distributed or sold from the ESOPs, the size
of Company primary offerings and the nature of the securities
sold. To the extent employees acquire voting securities in the
future, such as through stock purchase plans or the ESOPs, the
effect of such reductions may be lessened.
On the assumption that the Company issues, on a primary
basis, not less than 15.0 million shares in the first proposed
public offering of Common Stock referred to under "Purpose of
Increasing Authorized Common Stock," the Company estimates that
total employee voting power immediately following such
transaction will be reduced to approximately the 53% level.
Under those circumstances, the voting power held by employees, if
used collectively, would be able to elect all members of the
Board of Directors, to approve stockholder issues requiring a
majority vote or to block approval of such issues. Such voting
power, if utilized collectively, would also remain sufficient to
block passage of matters in the Restated Certificate requiring an
80% affirmative vote. These issues include mergers, sales of
assets and liquidation, as well as transactions with significant
stockholders and aspects of the Company's governance structure.
The number of shares of Common Stock which the Company can
sell in one or more registered public offerings will also be
affected by the number of shares of Common Stock held by other
stockholders able to participate in any such offering. The only
stockholder having such a right at this time is the independent
fiduciary under the Company's pension plan, which holds the
shares of Common Stock indicated under "Security Ownership of
Certain Beneficial Owners and Management," and has registration
rights for those shares permitting it to participate in Company
offerings. The Company anticipates that the fiduciary will seek
to sell approximately [ ] million shares of Common Stock in the
first public offering being considered by the Company following
the Special Meeting. Under certain circumstances, the holder of
the Company's Series B Preferred Stock also could elect to
exchange such stock and participate in a public offering by the
Company.
Depending on the prices obtained, stockholders of the
Company may have their economic interest in the Company diluted
by future stock sales. It is not possible to predict what will
happen to the Company's stock prices in the future.
Stockholders are not entitled to preemptive rights to
subscribe to any new stock issue by the Company to the exclusion
of other prospective investors.
AMENDMENTS TO ARTICLE FIFTH OF THE RESTATED
CERTIFICATE OF INCORPORATION AND ARTICLE
III OF THE BY-LAWS INCLUDED IN THE PROPOSAL
This Articles FIFTH and III Amendments included in the
Proposal (the "Articles FIFTH and III Amendments") will (i)
increase the number of the Company's directors from 13 to 14,
(ii) create a new category of director to be known as the ESOP
director, (iii) change the definition of "independent" director,
(iv) impose an age limit for commencing service as a director,
and (v) amend the By-laws to increase the membership of the
Nominating Committee of the Board of Directors to designate the
ESOP director as the fifth member. For the convenience of
stockholders, the text of the Articles FIFTH and III Amendments
is set forth as Schedule A to this Proxy Statement. Portions of
the text to be amended are marked to show the proposed changes.
The Board of Directors has approved the Articles FIFTH and
III Amendments after consulting with various groups of the
Company's ESOP participants and its principal union. The Board
of Directors is recommending that stockholders approve the
Articles FIFTH and III Amendments portion of the Proposal because
the Board believes that such approval is in the best interests of
the Company and its stockholders.
Reasons for the Articles FIFTH and III Amendments
The Board of Directors believes that the Articles FIFTH and
III Amendments should be included in the Proposal for the
following reasons.
Additional Qualifications for Independent Directors. The
Articles FIFTH and III Amendments provide additional
qualification requirements for service as an independent
director. In addition to never having been an employee of the
Company or its predecessor (or their subsidiaries or affiliates),
the new standards require that an independent director: (i)
never have been an employee of the Company's principal union;
(ii) not be an advisor or consultant to the Company or its
principal union, or have been such within two years prior to
service as a director; (iii) not have engaged in substantial
financial transactions (defined as having a value of at least
$100,000 over any 12 of the preceding 24 months), or been
affiliated with a person (except as a non-employee director) that
has engaged in substantial financial transactions, with the
Company or its subsidiaries or affiliates; and (iv) not be
related to a person specified above.
The Board of Directors believes these additional
requirements will provide greater assurance that the judgment of
independent directors will not be influenced by financial or
family ties to the Company. The Board believes that persons who
serve as consultants or advisors to the Company or who engage in
substantial financial transactions with it, either individually
or through a business organization, have, or may be perceived has
having, potential conflicts of interest between their personal or
business interests and the interests of the Company. To avoid
such potential conflicts, or the perception of conflicts, the
Board of Directors believes that such persons should not be
eligible to be independent directors.
The Board recognizes that the additional qualification
standards will exclude persons with personal and business ties to
the Company and, accordingly, eliminate some candidates otherwise
highly qualified from serving as independent directors. However,
the Board believes that the loss of such qualified candidates is
not as significant as eliminating potential or perceived
potential conflicts of interest. The new standards do allow the
Board of Directors to make exceptions for the performance of
services related to a director's position by an independent
director from time to time, if approved by a vote of the Board.
NEW ESOP DIRECTOR. The Article FIFTH Amendment included in
the Proposal also provides for the Board of Directors to be
increased from 13 to 14 to create a new category of director to
be designated as the ESOP director. When the Company established
the 1989 ESOP, it funded that plan with 1.8 million shares of
Convertible Preferred Stock which votes at a rate of 10 votes per
share on all matters with the Common Stock. Participants who
receive distributions of shares of Convertible Preferred Stock
from the 1989 ESOP are entitled to cause the Company to
repurchase the stock, and the Company has a further right of
first refusal to acquire such stock upon any proposed transfer of
it by a participant. Since 1989, the Company has acquired a
total of 8,937 shares of Convertible Preferred Stock in this
manner and currently holds such stock in treasury. Under
amendments being proposed to the 1989 ESOP which are subject to
the approval of ESOP participants, the Company will establish a
mechanism by which re-acquired shares of Convertible Preferred
Stock will be contributed to the 1989 ESOP and allocated to
participants, who consist only of Company employees, on a PER
CAPITA basis.
Under the above circumstances, it is anticipated that the
1989 ESOP, until it is terminated with the consent of
participants as provided in the plan, will always have
approximately 18 million votes. In recognition of the 1989 ESOP
having such number of votes, after discussions with ESOP
participants, elected union officials and union designated
members of the Board of Directors, and as further inducement for
such persons and the 1984 and 1989 ESOP participants to vote for
the Proposal, the Board of Directors agreed to increase the
number of directors from 13 to 14 and to designate the new
director as the ESOP director. In addition, an ESOP nominating
committee would be created under amendments to both ESOPs being
proposed by the Board of Directors, subject to the approval of
ESOP participants. The ESOP nominating committee, which would
consist of ESOP participants selected in accordance with the
terms of the 1984 and 1989 ESOPs, will certify its selection of
an ESOP director to the Board of Directors which will be required
to nominate such person as the ESOP director for election by the
stockholders.
The amendment to Article III of the By-laws provides that
the ESOP director will become a member of the Nominating
Committee of the Board of Directors established under the By-
laws. Thus, the ESOP director will be one of five directors (the
others being one management, one union and two independent
directors) charged with recommending candidates to serve as
independent directors.
The ESOP director must have the same qualifications as
independent directors and will be subject to removal for cause in
the same manner as all other directors. During a term, an ESOP
director also may fail to remain qualified, such as by becoming
an employee or consultant to the Company. However, the Proposal
provides that during any such term, an ESOP director will not
cease to be qualified solely by reason of having the
certification of his or her qualification withdrawn or revoked by
the ESOP nominating committee.
Age Limit for Directors. The Article FIFTH Amendment
included in the Proposal provides that no person can qualify for
election as a director of any category for a term commencing
after that person's 65th birthday. Under this provision, a
director who has his or her 65th birthday immediately following a
new term of office could serve until age 68. The Board of
Directors believes that this limit establishes an objective
policy which requires succession planning for directors.
Transition Regarding the Proposal
If the Proposal is approved, the Board of Directors expects
that an amendment to the Restated Certificate will be filed with
state authorities promptly after the Special Meeting and take
effect immediately. Since two present independent directors,
Messrs. Phillip H. Smith and Harvey L. Sperry, have terms
scheduled to expire at the 1994 Annual Meeting and would cease to
be qualified as such under the new standards, the new
qualifications requirements would not be made to apply to either
of them until the 1994 Annual Meeting. Mr. Smith is the parent
of a Company employee, and Mr. Sperry is a member of a law firm
which provides services to the Company. In addition, Mr. Smith
could not otherwise be nominated for a new term at the 1994
Annual Meeting since he is now more than 65 years of age.
REQUIRED APPROVAL FOR PROPOSAL
Since all the amendments are included in the Proposal, it
will require the affirmative vote of at least 80% of the eligible
votes for passage. Eligible votes means those votes from shares
whose voting power is not restricted. Abstentions and broker
non-votes, which are entitled to be counted for quorum purposes,
will be counted the same as votes against the proposed amendment.
Under the applicable provisions of Delaware law, there
are no dissenters rights on the proposed amendment.
The Proposal was unanimously approved by the Board of
Directors. However, the Restated Certificate requires, in
addition to authorizing shares of capital stock for issuance,
that the particular terms and conditions of stock issuances
themselves be approved (with limited exceptions) by at least 90%
of the entire Board of Directors. Accordingly, if the Proposal
is approved by stockholders, the newly authorized shares may not
be sold in public offerings or to employee plans (with limited
exceptions) until such time as 90% of the entire Board of
Directors agrees to the terms of issuance. The Board of
Directors cannot predict whether a 90% vote of its members will
be obtained with respect to any proposed issuance of stock.
The Board of Directors Urges
Stockholders to Approve the Proposal
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1994, the
only persons (including any group of persons) who, to the
knowledge of the Company, may be deemed to be a beneficial owner
of more than 5% of the Company's Common or Convertible Preferred
Stock as of that date. A beneficial owner of a security includes
any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has the
power to vote or direct the voting of the security or who has
investment power over the security, which includes the power to
dispose of or direct the disposition of the security.
<TABLE>
<CAPTION>
COMMON STOCK
Name and address of Aggregate Amount % of Class
Beneficial Owner
- ------------------- ---------------- -----------
<S> <C> <C>
United National Bank 12,826,723(1) 48.0%
North as Trustee under
the 1984 ESOP
1501 Market Street
Wheeling, WV 26003
Wellington Management Co. 1,399,100(3) 5.3%
75 State Street
Boston, MA 02109
U.S. Trust Company of CA 5,870,968(4) 21.9%
Suite 2700
555 S. Flower Street
Los Angeles, CA 90071
<FN>
(1) All shares have been allocated to the accounts of
participants in the 1984 ESOP consisting of approximately 9,622
employees and former employees of the Company. Participants
generally have full voting and limited dispository power over
securities allocated to their accounts.
(3) The Company has received a copy of a Schedule 13-G filed with
the Securities and Exchange Commission by Wellington
Management Co. indicating that, at December 31, 1993,
Wellington Management Co. had [shared] investment discretion
over 1,399,100 shares of Common Stock.
(4) According to a Schedule 13-G filed by U.S. Trust Company of
California, N.A., at December 31, 1993, it held sole voting
and investment discretion over the reported shares, which are
held in a separate account in trust under the Company's
qualified defined benefit pension plan.
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCK
Name and Address of Amount % of Class
Beneficial owner
- -------------------- ---------- ----------
<S> <C> <C>
United National Bank 1,774,164(2) 98.6%
North as Trustee under
the 1989 ESOP
1501 Market Street
Wheeling, WV 26003
<FN>
(2) Includes 801,063 shares allocated to the accounts of
participants in the 1989 ESOP consisting of approximately
8,361 employees and former employees of the Company.
Participants generally have full voting and limited
dispository power over securities allocated to their
accounts.
</TABLE>
[TEXT]
The following table sets forth, as of March 31, 1994, the
total number of shares of Common Stock owned beneficially by each
director, including those shares of Common Stock, if any,
allocated under the 1984 ESOP, and those shares of Common Stock,
if any, allocated to a director's account under the terms of a
deferred compensation plan, and the percentage of outstanding
Common Stock represented thereby. The table also sets forth the
number of shares of Convertible Preferred Stock, if any,
allocated under the 1989 ESOP through the latest allocation date
(December 31, 1993), and the percentage of outstanding
Convertible Preferred Stock represented thereby. The same data
is supplied for all directors and officers as a group.
Unless otherwise indicated, and except for shares
allocated to the accounts of employees and directors under the
terms of the 1984 ESOP and 1989 ESOP, each beneficial owner has
full voting and investment power over the shares shown in the
table.
<TABLE>
<CAPTION>
COMMON STOCK CONV.PREFERRED STOCK
Name and Address Amount % of Class(1) Amount % of Class(1)
of Beneficial ------ ---------- ------ ----------
Owner
<S> <C> <C> <C> <C>
James B. Bruhn 3,852 * 480 *
R.J. D'Anniballe, -- -- -- --
Jr.
Herbert Elish 155,513(2) * 643 *
Mark G. Glyptis 2,265 * 161 *
Gordon C.Hurlbert 22,995(5) * -- --
Phillip A.Karber -- -- -- --
F.James Rechin 12,110(5) * -- --
Richard Riederer 32,275(3) * 503 *
Richard Schubert 300 * -- --
Phillip H.Smith 13,000(5) * -- --
Harvey L. Sperry 23,947(5) * -- --
Thomas R. Sturges 14,999(5) * -- --
David I.J. Wang 26,141(5) * -- --
All Directors
and executive
officers as a
Group(20 per)(4) 324,400 1.2% 5,077 *
<FN>
(1) An asterisk in this column indicates ownership of less
than 1%.
(2) Includes 150,000 shares subject to options currently
exercisable and 100 shares held for Mr. Elish's daughter.
(3) Includes 30,000 shares subject to options currently
exercisable.
(4) Includes 180,000 shares subject to options currently
exercisable and 100 shares held by immediate family
members of Directors.
(5) Includes 22,995, 11,610, 23,647, 14,999, 7,682 and 16,141
shares credited to the accounts of Messrs. Hurlbert,
Rechin, Sperry, Sturges, Smith, and Wang respectively, and
held in trust under the Company's Deferred Compensation
Plan for Directors, over which shares the named
individuals do not exercise voting and/or investment power
until distribution.
</TABLE>
[TEXT]
OTHER BUSINESS
The Board of Directors is not aware of any matters to come
before the Special Meeting other than those stated in this Proxy
Statement. The Company's By-laws permit only those matters
included in the Notice of Meeting to be properly brought before
the Special Meeting. However, if any other matters are sought to
be brought before the meeting, the persons appointed in the
accompanying proxy intend to vote the shares represented thereby
in accordance with their best judgment.
By Order of the Board of Directors
/s/ Herbert Elish
HERBERT ELISH,
Chairman, President and
Chief Executive Officer
Weirton, West Virginia
April , 1994
PROXY WEIRTON STEEL CORPORATION COMMON STOCK
Special Meeting of Stockholders May 26, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of WEIRTON STEEL CORPORATION hereby
appoints Herbert Elish, Gordon C. Hurlbert, and David I.J. Wang,
and each or any one of them as the true and lawful attorneys,
agents and proxies of the undersigned with full power of
substitution and resubstitution for and in the name of the
undersigned, to vote as set forth below all shares of Common
stock, par value $0.01 per share, of WEIRTON STEEL CORPORATION
which the undersigned may be entitled to vote at the Special
Meeting of Stockholders to be held on May 26, 1994 at the
Jefferson County Civic Arena, 3151 Johnson Road, Steubenville,
Ohio , and at any and all adjournments or postponements thereof,
with all powers which the undersigned would possess if personally
present.
I. PROPOSAL AMENDING THE RESTATED CERTIFICATE OF INCORPORATION
AND BY-LAWS
____ FOR ____ AGAINST ____ ABSTAIN
To approve a proposal amending: (A) the Company's Restated
Certificate of Incorporation increasing authorized Common Stock
from 30 million shares to 50 million shares, with 15 million of
such additional shares to be issued only in connection with one
or more BONA FIDE underwritten public offerings and 5 million of
such additional shares to be issued pursuant to employee plans;
(B) the Company's Restated Certificate of Incorporation
increasing the number of Directors of the Company from 13 to 14,
creating a new category of ESOP director, changing the
qualification requirements for independent directors, and
imposing age limits on directors; and (C) the Company's By-Laws
to designate the ESOP director as an additonal member of the
Nominating Committee.
The Board of Directors recommends a vote for the above Proposal.
(over)
(continued from other side)
II. OTHER MATTERS Considering and acting upon any other
matters which may properly come before the meeting or any
adjournment thereof.
If this card is properly executed, shares will be voted in the
manner directed herein by the undersigned. if no direction is
specified, all shares covered by this proxy will be voted FOR
Proposal I.
Sign exactly as name(s) appear
hereon. IMPORTANT: When signing
as attorney, executor,
administrator, trustee, guardian
or corporate officer, please give
your full title as such. For
joint accounts, all co-owners must
sign.
SIGNATURE:
X___________________________________________________
X___________________________________________________
Date:_____________________________________, 1994
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY IN THE ENVELOPE
PROVIDED.
SCHEDULE A:
FIFTH. The business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors of
the Corporation which shall consist of fourteen (14) persons.
The terms, classifications, qualifications and election of the
Board of Directors and the filling of vacancies thereon shall be
as provided herein or in the By-Laws to the extent not
inconsistent with the provisions of this Certificate of
Incorporation. The members of the Board of Directors shall be
divided into three classes, namely Class I, Class II and Class
III, each of which shall be, as nearly as possible, of equal
size. The classification shall be such that the term of office
of one class shall expire each succeeding year, with the term of
office of Class I to expire at the 1991 annual meeting of
stockholders, the term of office of Class II to expire at the
1992 annual meeting of stockholders, and the term of office of
Class III to expire at the 1990 annual meeting of stockholders.
Members of the various classes of the Board of Directors
shall consist only of those individuals who are at the time of
their election an eligible candidate by virtue of satisfying the
qualifications described below and who thereafter continue to
satisfy the qualifications described below. Except as set forth
below with respect to an Agent no longer satisfying the
definition of "Union," the term of office of any incumbent
director shall be shortened and shall automatically expire, and
such individual's seat shall immediately become vacant, by reason
of such director's failure to continue to satisfy a qualification
requirement after such director's election to the Board of
Directors and initial qualification.
Three members of the Board of Directors shall be qualified
to serve by virtue of being the then President (or other chief
executive officer) of the Union and two other individuals who are
designated by certification of the Executive Committee (or other
executive person or body functioning as its successor) of the
Union (collectively, the "Union Directors"). As used in this
Restated Certificate of Incorporation, "Union" means the
recognized collective bargaining agent ("Agent") referred to in
subclause (z) of Section 8(a)(iii) of the Corporation's Employee
Stock Ownership Plan (ESOP), in the form adopted as of January
11, 1984, so long as such Agent represents at least 50% of all
employees of the Corporation, considering all bargaining units
represented by such Agent.
Three members of the Board of Directors shall be qualified
to serve by virtue of one of them being the officer designated as
the chief executive officer of the Corporation and two others
being employees of the Corporation who are not members of the
Union and who are designated by certification of such chief
executive officer (collectively, the "Management Directors").
Seven members of the Board of Directors shall be qualified
to serve by virtue of being individuals who satisfy the criteria
set forth in the definition of "Independent Director" contained
in this paragraph (collectively, the "Independent Directors").
"Independent Director" shall mean an individual who: (a) is not,
and has never been, an employee of the Corporation or its
predecessor or any of their respective subsidiaries or affiliates
or of the Union; (b) is not, and is not affiliated with a person
that is, an advisor or consultant to the Corporation or any of
its subsidiaries or affiliates or the Union or has been such
within the two-year period preceding such individual's election
or appointment as an Independent Director; (c) has not, and is
not affiliated with a person (except solely by reason of being a
director, trustee or person serving in a similar capacity not
employed by such person) that has, had a Substantial Financial
Transaction with the Corporation or any of its subsidiaries or
affiliates within the two-year period preceding such individual's
appointment or election as an Independent Director; and (d) is
not a spouse, parent, sibling or child of any person described by
(a) through (c). Notwithstanding the prior sentence, an
Independent Director may perform personal services related to the
director's position for the Corporation or any of its
subsidiaries or affiliates, if the Board of Directors so
requests. For purposes of this paragraph, the definitions of
"affiliate," "control" and "person" contained in Article ELEVENTH
shall be applicable and the following additional definitions
shall apply: (i) "subsidiary" of the Corporation means any
corporation, a majority of the voting stock of which is owned,
directly or indirectly through one or more other subsidiaries, by
the Corporation; and (ii) "Substantial Financial Transaction"
means one or more business transactions between a specified
person on the one hand and the Corporation or any of its
subsidiaries or affiliates on the other hand, wherein
consideration has been paid or rendered for the sale, exchange,
lease or other transfer for value of goods, services, money or
other property, including without limitation the sale of
securities, the fair market value of which during any 12-month
period preceding the date of measurement has amounted to more
than $100,000."
One member of the Board of Directors (the "ESOP Director")
shall be qualified to serve by virtue of (a) meeting the
qualification requirements set forth in the preceding paragraph
with respect to Independent Directors and (b) being designated by
certification of the "ESOP Nominating Committee," as defined
under the Corporation's 1984 and 1989 Employee Stock Ownership
Plans (the "ESOPs") in the respective form of each such plan as
in effect on the date the amendment to the Certificate of
Incorporation effecting this change is filed with the Secretary
of State of Delaware; provided, that, except as provided
otherwise in this Article FIFTH with respect to the removal of
directors, the ESOP Director so designated by such certification
shall not cease to be qualified while serving such individual's
term of office solely by virtue of such certification being
withdrawn, lapsing or otherwise being revoked during such term.
No nomination of any candidate for election by stockholders
as an Independent Director shall be eligible for consideration
unless a written statement setting forth such candidate's name,
qualifications, and background is delivered to the Nominating
Committee of the Board of Directors (or if no such committee is
then constituted, then to the Board of Directors) not less than
sixty (60) days prior to the annual or special meeting at which
an election for directors is to occur.
No director need be a stockholder of the Corporation. No
director may be nominated or appointed for any term of office
which would begin after such person's 65th birthday.
The names, categories of qualification and business
addresses of those persons of each class to serve on the Board of
Directors commencing on the effective date hereof shall be as
follows:
Class I: Term of office expiring at 1991 annual meeting of
stockholders:
<TABLE>
<CAPTION>
Name Category of Qualif. Business Address
- ---------------- ------------------- -----------------
<S> <C> <C>
Warren E. Bartel Management 400 Three Springs
Weirton, WV 26062
Phillip H. Smith Independent 3150 Oliver Plaza
Pittsburgh, PA
15222-2602
Harvey L. Sperry Independent 153 East 53rd St.
New York, NY
10022
Thomas R. Sturges Independent 245 Park Avenue
Third Floor
New York, NY
10167
</TABLE>
[TEXT]
Class II: Term of office expiring at 1992 annual meeting of
stockholders:
<TABLE>
<CAPTION>
Name Category of Qualif. Business Address
- -------------- ------------------ ----------------
<S> <C> <C>
Gordon C. Hurlbert Independent 6 Gateway Center
Room 997
Pittsburgh, PA
15222
Lawrence M. Isaacs Independent Susquehanna Univ.
Selinsgrove, PA
17870
F. James Rechin Independent 9646 Rollin Road
Waite Hill, OH
44094
Richard F. Schubert Independent 431 18th St. NW
Washington, DC
20006
</TABLE>
[TEXT]
Class III: Term of office expiring at 1990 annual meeting of
stockholders:
<TABLE>
<CAPTION>
Name Category of Qualif. Business Address
- --------------- ------------------- ----------------
<S> <C> <C>
Irving Bluestone Union Wayne State Univ.
205 Reuther
Library
Detroit, MI 48202
Herbert Elish Management 400 Three Springs
Weirton, WV 26062
David M. Gould Management 400 Three Springs
Weirton, WV 26062
David L. Robertson Union 337 Penco Road
Weirton, WV 26062
Virgil Thompson Union 2971 West Street
Weirton, WV 26062
</TABLE>
[TEXT]
Subject to the foregoing and to the requirement set forth
above that each director shall at all times satisfy the
qualifications to be a director described herein for the
particular category pursuant to which they were elected to be a
director, at each annual meeting of stockholders the successors
to the class of directors whose term shall then expire shall be
elected to hold office for a term expiring at the third
succeeding annual meeting and until their successors shall be
duly elected and qualified.
Subject to the rights, if any, of the holders of any series
of Preferred Stock then outstanding, any vacancy occurring in the
Board of Directors, whether from death, resignation, retirement,
disqualification, removal from office or other cause shall be
filled from among eligible candidates of the same category (i.e.,
Union, Management, Independent or ESOP, as the case may be,
including any required certification) as held the vacant seat
immediately prior to the vacancy, solely by the concurring vote
of a majority of the directors then in office, whether or not a
quorum, and any director so chosen shall hold office for the
remainder of the full term of the class of directors in which the
vacancy occurred and until such director's successor shall have
been duly elected and qualified (so long as such director remains
qualified); provided, however, that (i) no Union Director shall
be deemed to be disqualified during such director's then current
term of office solely by virtue of the particular Agent no longer
satisfying the definition of 'Union' set forth herein, but if,
upon the expiration of any Union Director's term or upon any
vacancy of a Union Director's seat, the particular Agent does not
satisfy such definition of 'Union,' such seat shall be filled
only by a candidate qualified to serve as an Independent
Director; and (ii) no ESOP Director shall be deemed to be
disqualified during such director's then current term of office
solely by virtue of the termination or discontinuation of the
ESOPs, but if, upon the expiration of any ESOP Director's term or
upon any vacancy of an ESOP Director's seat, the ESOPs have been
terminated or otherwise discontinued, such seat shall be filled
only by a candidate qualified to serve as an Independent
Director.
No director may be removed except for cause and then only
by an affirmative vote of at least two-thirds of the Eligible
Votes at a duly constituted meeting of stockholders called for
such purpose. At least 30, but not more than 60, days prior to
such meeting of stockholders, written notice shall be sent to the
director or directors whose removal will be considered at such
meeting. Upon such affirmative vote to remove any director, the
office of such removed director shall immediately become vacant
and shall as promptly thereafter as practicable be filled as set
forth above.
