SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X] Filed by a party other than the
Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy stateme
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c )or Rule 14a-12
[ ] Confidential, For use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
WEIRTON STEEL CORPORATION
- ----------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1)
and 0-11.
(1) Title of each class of securities to which transactions
applies:
(2) Aggregate number of securities to which transactions 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:
April 23, 1999
A MESSAGE TO THE STOCKHOLDERS OF WEIRTON STEEL CORPORATION
I'm pleased to invite you to the Annual Meeting of
Stockholders of Weirton Steel Corporation to be held on Wednesday,
May 26, 1999 at 6:00 p.m. at the Serbian-American Cultural Center,
1000 Colliers Way, Weirton, West Virginia. I hope you will be able
to attend.
Whether or not you plan to be there, and regardless of
the number of shares you own, it is important that your shares be
represented at the Annual Meeting. Thus, I urge you to complete,
sign, date and return your proxy or ESOP Participant Voting
Instruction Form.
Again, the directors and officers of the Company look
forward to seeing you at the Annual Meeting.
Very truly yours,
/s/Richard R. Burt
Richard R. Burt
Chairman of the Board
of Directors
WEIRTON STEEL CORPORATION
400 THREE SPRINGS DRIVE
WEIRTON, WV 26062
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 26, 1999
Dear Stockholder:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of
Stockholders of Weirton Steel Corporation, a Delaware corporation
(the "Company"), will be held at the Serbian-American Cultural
Center, 1000 Colliers Way, Weirton, West Virginia, on Wednesday,
May 26, 1999, at 6:00 P.M., Eastern Daylight Time, for the
following purposes:
1. To elect five directors for a three-year term and until
their successors have been elected and qualified;
2. To ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants for the
fiscal year ending December 31, 1999;
3. To approve a proposal amending Article FIFTH of the
Company's Restated Certificate of Incorporation to change
the qualification limitation for service as a director
from age 65 to age 68;
4. To consider a shareholder proposal that relates to the
Board of Directors retaining an investment bank to
auction the Company for sale;
and
5. 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 March 31, 1999, as the
date for the determination of the holders of record of stock
entitled to notice of, and to vote at, the Annual 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.
Your attention is directed to the accompanying Proxy
Statement.
Stockholders who do not expect to attend the meeting in person
are requested to sign, date and mail the enclosed Proxy as promptly
as possible in the enclosed stamped envelope.
By Order of the Board of Directors,
WILLIAM R. KIEFER,
Secretary
Weirton, West Virginia
April 23, 1999
WEIRTON STEEL CORPORATION
400 THREE SPRINGS DRIVE
WEIRTON, WV 26062
______________
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Weirton Steel
Corporation, a Delaware corporation (the "Company"), of proxies for
use at the 1999 Annual Meeting of Stockholders (the "Annual
Meeting") to be held on May 26, 1999, and any adjournments thereof.
This Proxy Statement and the accompanying form of proxy are being
mailed on or after April 23, 1999 to stockholders of record as of
March 31, 1999.
If the enclosed proxy is executed, dated 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 Annual Meeting. If not revoked and no contrary
instructions are specified, all shares covered by a properly
signed, dated and returned proxy will be voted by the persons named
in the proxy:
FOR the election of five directors;
FOR the ratification of independent public accountants;
FOR a proposal seeking to amend Article FIFTH of the Company's
Restated Certificate of Incorporation to change the
qualification limitation for service as a director from
age 65 to age 68; and
AGAINST a proposal that relates to the Board of Directors
retaining an investment bank to auction the Company for sale,
all as specified in this Proxy Statement. 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.
A copy of the Company's Annual Report to Stockholders for the
year ended December 31, 1998 has been mailed to stockholders prior
to or with the mailing of this Proxy Statement.
All expenses of the solicitation of proxies for the Annual
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. The Company reimburses
brokerage firms, fiduciaries, custodians and other nominees holding
stock in their name or custody, for their expenses in forwarding
proxy materials to beneficial owners and seeking instructions
regarding proxies.
OUTSTANDING VOTING STOCK
Only holders of record of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), and Convertible Voting
Preferred Stock, Series A, par value $.10 per share (the
"Convertible Preferred Stock"), at the close of business on March
31, 1999 (the "Record Date") are entitled to vote on matters to be
presented at the Annual Meeting. On the Record Date, 41,566,977
shares of Common Stock and 1,658,096 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 Annual 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 allocated to the accounts of participants in the
Company's 1984 Employee Stock Ownership Plan (the "1984 ESOP") and
Convertible Preferred Stock allocated to the accounts of
participants in the Company's 1989 Employee Stock Ownership Plan
(the "1989 ESOP") will be voted by the holder of record, United
National Bank, as trustee, as directed by participants and in
accordance with the terms of the applicable ESOP.
QUORUM REQUIREMENTS
In order to transact business at the Annual 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 (the "Charter"),
which deals with certain significant holders. At this time, the
Board of Directors is not aware of any holder who would be
considered restricted under the Charter. If a quorum is not
present, the Annual Meeting may be adjourned from time to time
until a quorum is obtained.
ELECTION OF DIRECTORS
The Charter provides for a Board of Directors consisting of
14 persons. It requires that seven directors ("Independent
Directors") be persons who are not current or former employees of
the Company, or advisors or consultants to the Company or to the
Independent Steelworkers Union (the "ISU"), or have been affiliated
with such an advisor or consultant or have engaged in substantial
financial transactions with the Company, for a period of two years
prior to election as an Independent Director. The Charter provides
that one director ("ESOP Director"), who must have the
qualifications of an Independent Director, is to be nominated by an
ESOP Nominating Committee, which is elected by the 1984 ESOP and
1989 ESOP participants. The Charter provides that three directors
("Management Directors") must consist of the Chief Executive
Officer and two Company employees designated by the Chief Executive
Officer. The Charter provides that three directors ("Union
Directors") must consist of the President of the primary collective
bargaining agent for the represented employees of the Company
(currently the ISU) and two persons designated by the primary
collective bargaining agent.
The Charter also provides for the Board of Directors to be
divided into three classes, designated as Class I, Class II and
Class III. Each class serves a three-year term, and the term of
one class expires at each year's annual meeting of stockholders.
The terms of the Class I, Class II and Class III Directors expire
at the annual meetings of stockholders in 2000, 2001, and 1999,
respectively. The five Class III Directors, who will serve for a
term of three years, will be elected at this Annual Meeting.
The Board of Directors intends to present for action at the
Annual Meeting the election of the following Class III directors,
to serve for a term of three years, and until their successors are
elected and qualified: Craig T. Costello, Earl E. Davis, Management
Directors; and Robert J. D'Anniballe, Jr., George E.Doty, Jr. and
Mark G. Glyptis, Union Directors.
Unless authority to vote for any one or more of the Class III
director nominees is withheld as indicated on the enclosed proxy,
the shares represented by the enclosed proxy will be voted FOR such
persons.
The nominees receiving a plurality vote among the total votes
properly cast at the Annual Meeting, in person or by proxy, and who
are qualified under the Charter will be elected as directors.
The following table sets forth the name, age (as of March 15,
1999), period of service and principal occupation for at least the
last five years of each nominee for director of the Company and of
the remaining directors who are not standing for election at the
Annual Meeting.
Name Principal Occupation Director Since
Class III Directors: Nominees to Serve in Office until 2002
Craig T. Costello 1996
Age 51 (1) Executive Vice President (since 1995) & Chief
Operating Officer of the Company since 1997;
Vice President-Operations October 1993 to 1995;
General Manager-Operations 1989 to 1993;
employee of the Company since 1966.
Earl E. Davis 1997
Age 50 (1) Executive Vice President-Commercial of the
Company since October 1997; Vice President-
Finance and Chief Financial Officer from July
1995 to September 1997; Controller from May
1994 to July 1995; Assistant Controller from
August 1991 to May 1994; employee of the
Company since 1970.
Robert J. D'Anniballe, Jr. 1990
Age 42 (2) Partner in Alpert, D'Anniballe & Visnic,
attorneys, General Counsel to the ISU since 1985.
George E. Doty, Jr. Nominee
Age 44 (2) Managing Director of Bear, Stearns &
Co. Inc. since 1992.
Mark G. Glyptis 1991
Age 47 (2) President of the ISU since August 1991;
employee of the Company since 1973.
Class I Directors: To continue in office until 2000
Richard K. Riederer 1993
Age 55 (1) President and Chief Executive Officer of the
Company since November 1995; President and
Chief Operating Officer since January 1995;
Executive Vice President-Finance and Chief
Financial Officer of the Company from September
1994 to January 1995; Vice President and Chief
Financial Officer of the Company from
January 1989 to September 1994; employee of the
Company since 1989; Director of Firstar
Funds, WesBanco, Carnegie Mellon University,
and Vice Chairman and Director of the American
Iron and Steel Institute.
Michael Bozic 1994
Age 58 (3) Vice Chairman, Kmart Corporation since 1998;
former Chairman, CEO and Director of Levitz
Furniture Corporation 1995-1998; former
President and Chief Executive Officer and
Director of Hills Stores Company 1991-1995;
Director of EagleMark Financial Services, Inc.,
Morgan Stanley, Dean Witter Advisors, Inc.
and The College Fund UNCF.
Richard R. Burt 1996
Age 52 (3) Chairman of the Board of the Company since
April 1996; Chairman of IEP Advisors, Inc.,
a strategic and financial advisory services
firm,since June 1993; from April 1991 to June
1993, Partner, McKinsey & Company, management
consultants ; United States Ambassador to the
Federal Republic of Germany from 1985 to 1989.
Director, Archer Daniels Midland Company,
Hollinger International Inc., Homestake Mining
Company, and Powerhouse Technologies.
Thomas R. Sturges 1986
Age 54 (3) Executive Vice President of The Harding
Group Inc., an investment firm, since February
1990.
Class II Directors: To Continue in Office until 2001
D. Leonard Wise 1998
Age 64 (4) President and Chief Executive Officer of
Carolina Steel Corporation from October 1994 to
March 1997; from 1988-1991, Director and from
1990-1991 as Vice Chairman and subsequently
as Chairman and CEO of WHX Corporation; served
as President and a director of Slater Industries,
Inc., an international specialty steel and metals
producing company listed on the Toronto Stock
Exchange 1986-1990. Director, Universal Stainless
& Alloy Corporation.
Ralph E. Reins 1998
Age 58 (3) Chairman and Chief Executive Officer of Reins
Enterprises since January 1998;
President and Chief Executive Officer of A P
Parts International from 1995 to January 1998;
President of Allied Signal Automotive Sector
from 1991-1994; President of United Technologies
Automotive from 1990-1991; Chairman, President and
Chief Executive Officer of Mack Truck, Inc. 1989-1990;
President and CEO of ITT Automotive Corporation and
Executive Vice President of ITT Corporation 1985-1989.
Director, Rofin/Sinar Technologies, Inc.; University of Michigan
National Advisory Committee.
Robert S. Reitman 1995
Age 65 (3) Chairman Emeritus since February 1998 and
Director of The Tranzonic Companies, a
manufacturer of paper and plastic products
principally for industrial/institutional use;
Principal of Riverbend Advisors since 1998.
Prior to February 1998, Chairman, Chief
Executive Officer and Director of the Tranzonic
Companies.
Richard F. Schubert 1983
Age 62 (3) Chairman Emeritus-International Youth
Foundation, Washington, DC since 1990.
Vice Chairman of the Drucker foundation, NY,
NY. Former President, The Points of Light
Foundation 1990-1995; prior to 1990, President
of the American Red Cross and Bethlehem Steel
Corporation ; Chairman of BioRelease, Inc., a
biotechnology firm; Director of National
Alliance of Business and Management Training Corporation.
Ronald C. Whitaker 1995
Age 51 (3) Former President, Chief Executive Officer and
Director Johnson Worldwide Associates, a
sporting goods manufacturer October 1996-March
1999; former President and Chief Executive Officer
of EWI, Inc. from 1995 to October 1996;
former Chairman,President and Chief Executive Officer
of Colt's Manufacturing Company from 1992 to 1995;
President of Wheelabrator Corporation from 1988 to 1992.
_______________________
(1) Management Director
(2) Union Director
(3) Independent Director
(4) ESOP Director
From 1992 through the Annual Meeting, Phillip A. Karber served
as a Union Director. Mr. Doty has been nominated for election to
serve as a Union Director succeeding Mr. Karber. Mr. Bozic was
formerly Chairman of the Board, President and Chief Executive
Officer of Levitz Furniture Inc., which filed a voluntary petition
under Chapter 11 of the Federal Bankruptcy Code on September 5,
1997. Mr. Bozic resigned as an officer of Levitz on November 20,
1998; he remains a member of its Board of Directors.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit
Committee, has appointed the firm of Arthur Andersen LLP,
independent public accountants, as auditors of the Company for the
fiscal year ending December 31, 1999, subject to ratification by
the stockholders. Such firm has audited the Company's accounts
since 1984. The Company is informed that no member of Arthur
Andersen LLP has any direct or any material indirect financial
interest in the Company. It is expected that representatives of
Arthur Andersen LLP will be present at the Annual Meeting where
they will have an opportunity to address the meeting, if they so
desire, and to respond to appropriate questions.
The affirmative majority of the total votes cast at the Annual
Meeting will be sufficient to ratify the appointment of the
independent public accountants.
If the appointment of Arthur Andersen LLP is not ratified by
the stockholders, the Audit Committee will reconsider its
recommendation.
PROPOSAL TO AMEND ARTICLE FIFTH
OF THE CHARTER TO CHANGE THE AGE
QUALIFICATIONS LIMITATION FOR DIRECTORS
The Board of Directors has adopted and is recommending to
stockholders for their approval an amendment to Article FIFTH of
the Charter increasing the age limitation to 68 for qualification
to serve as a director. The current limitation, adopted in 1994
and contained in Article FIFTH, provides that no director will be
eligible to serve for any term which commences after his or her
65th birthday.
The proposed change results from the submission of a
stockholder proposal to the Company by members of the ESOP
Nominating Committee which selects candidates to serve as ESOP
Directors. The proposal is the same as one which was proposed
and recommended by the Board at the 1997 Annual meeting and which
received a majority of votes, but an insufficient number to pass.
The proponents indicated that, in their judgment, particularly in
the case of the ESOP Director where there is a need to obtain
experienced candidates who have substantial available time to
devote to the position, that the age 65 limitation has operated
to exclude from consideration retired or semi-retired individuals
who otherwise would have been qualified for service.
The Board of Directors recognizes that it is important to
provide for a sufficient pool of director talent. However, the
Board is also mindful of the fact that, in recent years, the
trend of most large enterprises has been to establish written
policies of retirement ages for directors. Thus, in recent
years, an increasing number of major companies have established
a mandatory retirement age for directors. Moreover, the Board of
Directors understands that in other areas, such as the European
Union, director retirement ages are usually mandated by law.
The Board believes that the appropriateness of any specific
retirement age depends on the circumstances of the enterprise
involved and there may be differences of opinion on this subject.
In the case of the Company, the age chosen in 1994 was intended
to allow for long-term service continuity, but also to provide
for planned, orderly succession on the Board. Based on
additional review since that time of retirement ages in effect at
other businesses, it appears that a somewhat later age remains
common. As a result, while the Board continues to believe it is
important to maintain an effective age for retirement from
service for directors, the Board has determined it is in the best
interests of the Company and its stockholders to enlarge the
potential pool of candidates by making a small increase in the
age from 65 to 68. Because the Company's Board is divided into
three classes with directors serving three year terms, the
current limitation, depending upon a particular director's age,
effectively functions to allow directors to serve until
approximately age 68. Accordingly, in the manner in which the
qualification requirement works, if the proposal is approved, no
director will be eligible to serve as a director for a term of
office which commences after the director's 68th birthday.
Therefore, under the proposed amendment to the Charter, depending
on a particular director's age at the conclusion of an expiring
term, directors effectively may remain in office up to
approximately age 71.
The proposed Charter amendment has been approved by the
Board of Directors and is being submitted to stockholders with
the recommendation of the Board for its approval at the Annual
Meeting. In order for the proposed amendment to be adopted, it
will require for passage the affirmative vote of not less than
80% of the Company's voting power entitled to vote thereon.
The Board recommends a vote FOR the above proposal.
PROPOSAL RELATING TO THE BOARD OF DIRECTORS RETAINING
AN INVESTMENT BANK TO AUCTION THE COMPANY FOR SALE
Proposal
Charles E. Cheever, III, 157 East 79th Street, New York, NY
10024, who states that he owns 73,000 shares of Common Stock, has
notified the Company that he intends to present a proposal for
action by the stockholders at the Annual Meeting. The text of
the proposal and the supporting statement submitted by the
proponent (reproduced as received by the Company) follow:
That the Board of Directors pass a resolution to hire an
investment bank to auction the Company for sale during 1999. The
auction process should be supervised by a group of Independent
Directors who are experienced in the sale of businesses and are
not affiliated with current Management or the Union. There
should be no "golden parachute" or resetting of options for
Management or favoritism toward the Union. But, because the
Union is a large "minority shareholder", I would propose that the
Union be entitled to have a separate third party investment firm
advise them on the enterprise value of the Company, the cost of
which (at a capped amount) would be paid by the Company.
Statement in Support of Proposal
Over the last twelve months, the economy has experienced its
8th consecutive year of growth. GDP for fiscal year 1998 is
estimated to be 3.5%. The equity markets are at a historical
high and are projected to increase again this year by 10%. Since
the last shareholders meeting, Weirton's common stock has
declined by approximately 50%. As you are aware, at the 1998
annual shareholders meeting, where I spoke, I asked the Board to
take necessary actions to enhance shareholder value. I feel that
the above Proposal allows for a favorable valuation of the
business and an opportunity to sell the Company for either cash
or stock provided that any stock swap involves a buyer with a
more stable share price than Weirton's or one that is willing to
make the necessary changes in the cost structure of this Company.
Your support in favor of this important proposal (which you
may indicate by marking "FOR" in the box provided) is
respectfully requested.
Recommendation and Response of the Board of Directors
The Board of Directors believes that the proposal advocated
by Mr. Cheever is not in the best interests of the Company's
stockholders at the present time. Therefore, the Board
recommends that the stockholders vote AGAINST the proposal.
The Board and management of the Company agree with Mr.
Cheever that improving stockholder value in the Company is a
vital priority. While every strategic evaluation requires
consideration of the entire spectrum of alternatives, including
such events as the sale of the Company, the Board believes that
current conditions argue against Mr. Cheever's proposal. The
Board also disagrees with Mr. Cheever concerning a number of
other issues stemming from his proposal, particularly with the
notion that decisions regarding the Company's strategic direction
can be appropriately addressed in proxy materials or should be
made into a stockholder referendum.
First, as part of their duties, the Board and senior
management regularly review and revise the Company's strategic
business plans and operating policies to establish long-term
goals for the Company and methods of attaining them. That
process includes evaluating the economic and business conditions
affecting the Company and its industry and consulting with
financial advisors and other experts concerning long-term
alternatives for the Company. This process of determining policy
is part of the Board's fiduciary responsibilities to the
stockholders. The process is an ongoing one, and is an important
reason why stockholders elect directors annually, namely to look
after their ownership interest in the Company and to make
judgments about the best policies and directions for the Company.
As stated in its latest Annual Report filed with the
Securities and Exchange Commission, the Company's strategic
objective is "to be a first tier global provider, in terms of
cost, quality and customer service, of plated, coated and cold
rolled products." The Board believes the Company can best attain
those objectives, and thereby enhance stockholder values, by
remaining an independent company over the long-term and not by
becoming a minority element in another business enterprise. The
Company's immediate predecessor was a part of another major
integrated steelmaker from 1929 until 1984, after which the
Company was once again established as an independent business.
During the Company's 14 years of independent operation, it has
proven that it can survive unfavorable economic conditions, can
renew and rebuild much of its physical plant and can operate
successfully and profitably. While the Board believes the
Company's efforts generally have not been reflected in the
trading markets in the last several years (either absolutely or
relative to its peer group competitors), the Board also believes
that is no justification for abandoning the policy of independent
operation. As a result, the present policy of the Board of
Directors is that the Company is not for sale.
The Board of Directors further believes that fundamental
decisions such as selling the Company's assets or seeking a
strategic combination with another enterprise are greatly
affected by timing. Thus, even if a sale of the Company were
considered as a strategic objective, the Board believes that
pursuing that goal in the near term would not likely achieve
values reflective of the Company's true worth and, therefore,
would not be satisfactory to a broad range of stockholders.
Simply put, the Board does not believe it would be prudent or
productive to seek to sell the Company at a time when steel
related assets are being deeply discounted or valued at historic
lows. The carbon steelmaking industry in the U.S. is a highly
cyclical business, increasingly sensitive to world market
conditions. In 1998, as it began to regain profitability from
the last downcycle, the U.S. steel industry in general, and the
Company in particular, were materially and adversely affected by
an unprecedented crisis stemming from record volumes of imported
foreign steel. (As the unfair trade cases filed by the Company
and other producers have now proven, much of this product was
being dumped illegally.) Although duties and other government
action have brought some relief in recent months, the Company and
the steel industry continue to suffer substantial damage and
fallout from this unfair competition, including price erosion,
reduced demand and production, overcapacity, operational
difficulties, layoffs and losses. During the past year, the
values of steel equities have dropped significantly and steel
credit obligations have been downgraded, even as many market
sectors saw sustained growth.
The Board of Directors believes that the current environment
makes it imprudent to attempt to maximize stockholder values in
the manner suggested by Mr. Cheever. There is, in fact, no
"quick fix" and certainly none that will be gained from disposing
of the Company's assets at "fire sale" prices. Instead, the
Board believes that the Company's best near term course is to
follow through vigorously on its recovery strategies from the
import crisis. Thus, rather than auctioning off its assets and
disrupting its business, the Company should be concentrating on
improving its operations. This includes focusing on more
efficient, lower cost production, exploiting niche products and
expanding markets to improve the mix, developing and partnering
in new ventures, acquiring productive assets on a selective
basis, and strengthening the Company's financial position by
deleveraging and improving working capital. A number of the
Company's strategies, such as its e-commerce business recently
launched through MetalSite L.P. have not yet begun to contribute
value to the Company's business, and its GalvPro L.P. galvanizing
joint venture is not expected to reach effective commercial
production until next year. The Board of Directors believes that
energy and determination applied to improving the fundamentals of
the Company's business is the most prudent course for improving
stockholder values. The Board believes that this is a long-term
course of action that requires perseverance and patience and is
not helped by speculative actions like commencing to auction off
the Company.
The Board also notes that there are a number of other issues
stemming from inaccuracies in the proposal. For example, the
Company's principal union is not a stockholder and would not be
entitled to any special treatment vis-a-vis any sale of the
Company. Employees of the Company do hold a significant voting
interest in the Company as individual participants in the ESOPs.
As circumstances develop, the Board of Directors will
continue to review and make determinations, as it has from time
to time, as to what it believes are the best long-term methods
for improving stockholder values. At the present time, however,
the Board believes that Mr. Cheever's proposal lacks sufficient
value to represent a realistic course of action for the Company.
Accordingly, even though the proposal is not binding, the Board
of Directors nevertheless recommends that stockholders vote
against it.
OTHER BUSINESS
The Board of Directors is not aware of any matters to come
before the Annual Meeting other than those stated in this Proxy
Statement.
THE BOARD OF DIRECTORS: COMMITTEES, MEETINGS AND COMPENSATION
Audit Committee
The Board's Audit Committee is currently composed of Messrs.
Sturges (Chairman), Burt, D'Anniballe, Reins and Wise. The Audit
Committee reviews, at least annually, the services performed and
to be performed by the Company's independent public accountants
and the fees charged for their services, and, in that connection,
considers the effect of those fees on the independence of the
accountants. The Audit Committee also discusses with the
Company's independent public accountants and management the
Company's accounting policies and reporting practices, including
the impact of alternative accounting policies. The Audit
Committee also reviews with the Company's internal audit
department the scope and results of internal auditing procedures
and the adequacy of accounting and financial systems and internal
controls. The Audit Committee may authorize the Company's
independent accountants to perform special investigations or
supplemental reviews as deemed desirable. The Audit Committee
held four meetings during 1998.
Management Development and Compensation Committee
The Board's Management Development and Compensation
Committee is currently composed of Messrs. Reitman (Chairman),
Bozic, Schubert, Whitaker and Wise. A report of the Management
Development and Compensation Committee concerning its policies
and their application is set forth in this Proxy Statement under
"Report of the Management Development and Compensation Committee
on Executive Compensation". The Management Development and
Compensation Committee held five meetings in 1998.
Nominating Committee
The Nominating Committee is currently composed of Messrs.
Bozic (Chairman), Glyptis, Riederer, Whitaker and Wise. The
Company's By-Laws provide for a Nominating Committee of the Board
of Directors which identifies and recommends to the Board of
Directors candidates to be nominated as Independent Directors.
The Nominating Committee held six meetings in 1998.
Corporate Responsibility Committee
The Corporate Responsibility Committee is currently composed
of Messrs. Schubert (Chairman), Burt, Davis, D'Anniballe, Karber,
Glyptis, Sturges and Wise. The Corporate Responsibility
Committee advises management of the Company concerning matters of
public and internal policy with regard to such matters as
governmental and regulatory affairs, safety and health of
employees, charitable contributions and ethics, and recommends,
for action by the full Board, policies concerning those type of
matters where appropriate. The Corporate Responsibility
Committee held one meeting in 1998.
Finance and Strategic Planning Committee
The Finance and Strategic Planning Committee is currently
composed of Messrs. Whitaker (Chairman), Bozic, Burt, Costello,
Davis, Glyptis, Karber, Reins, Reitman and Wise. The Committee
reviews and confers with management on the following subject
matters in the finance function: (i) the Company's projected
financial condition and financial plans; (ii) the Company's
financial policies, including dividend recommendations; (iii) the
management and performance of the Company's employee benefit
funds; and (iv) the Company's policies and practices on financial
risk management.
In the strategic planning area, the Committee assists
management in the development of a viable strategic plan
including the following: (i) projections of the market and
competitive environment; (ii) assessment of the Company's core
strengths and weaknesses; (iii) identification of key
opportunities and threats; and (iv) articulation of the Company's
long-range direction, including action plans addressing both the
core business and growth opportunities. The Finance and
Strategic Planning Committee held one meeting in 1998.
Meetings and Attendance
The Board of Directors held six regular meetings and one
special meeting in 1998. All directors who served during 1998
attended at least 75% of the aggregate of the meetings of the
Board of Directors and Board committees occurring while they
served in 1998.
Directors' Compensation
Directors who are not officers or employees of the Company
receive an annual retainer of $25,000, $10,000 of which is in the
form of Common Stock, and the remaining $15,000 of which is
payable monthly in cash. Those directors also receive a meeting
fee of $800 for each meeting of the Board of Directors attended,
together with a meeting fee of $700 for each meeting of a
committee of the Board of Directors attended. The Chairman of
each committee is paid an additional $200 for each meeting
chaired. The Chairman of the Board of Directors serves
as a non-executive Chairman, devoting substantial time to this position
and receives an annual retainer of $120,000, payable quarterly,
but does not receive additional fees for attendance at meetings
of the Board or its committees. Directors who are officers or
other employees of the Company do not receive a retainer or
meeting fees. All directors who are not officers or other
employees of the Company are eligible to participate in the
Deferred Compensation Plan for Directors. The Plan permits
participants to defer part or all of their directors' fees for a
specified year. Amounts representing deferred fees are used to
purchase shares of the Company's Common Stock at 90% of the
market price of the Common Stock on the first or last trading day
of the year, whichever is lower. As to the portion of the
directors' retainer paid in the form of Common Stock and not
deferred, pricing is at 100% of the market price of the Common
Stock on the first or last trading day of the year. The deferred
shares are held in trust until distributed to the respective
participants in accordance with their election.
REPORT OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Management Development and Compensation Committee of the
Board of Directors (the "Compensation Committee") is responsible
for determining the Company's compensation policies for
executives, and for providing adequate development of future
executives. This report sets forth the policies, factors and
criteria used by the Compensation Committee in establishing
executive compensation plans, programs and structures. It also
relates the approach taken by the Compensation Committee in those
matters to specific plans and programs developed and in use at
the Company.
Compensation of All Executives.
In order to maximize corporate performance, the Compensation
Committee recognizes that the Company must be able to attract,
motivate and retain persons of superior talent and ability who
will make substantial contributions to the growth and success of
the Company and its businesses. The Compensation Committee
endeavors to reach this goal by providing competitive programs of
salary and other compensation for the Company's executives. The
Compensation Committee seeks to provide executive compensation
packages that recognize individual contributions, as well as a
wider range of corporate results.
In order to establish broad guidelines for the Company's
compensation structure, the Compensation Committee sets policies
for and reviews in general the compensation of the Company's
officers and other members of senior management covered by
performance incentive plans. As part of this process, it
establishes the remuneration of the Company's chief executive
officer and, together with the chief executive officer, reviews
in detail the compensation of the other Named Executive Officers
whose compensation is detailed in this Proxy Statement, and
others. These reviews are designed to address the needs of the
senior management team and also to ensure a consistent
application of the compensation programs across a broader range
of the Company's executives.
The Compensation Committee regularly reviews the total
compensation package for the Company's executives. The total
compensation package consists of three basic elements--annual
compensation, long-term compensation, primarily of the incentive
variety, and retirement, savings and other welfare programs. In
its more than 15 years of operation (nearly ten of which have
been as a public company), the Company has had a strong identity
of equity ownership by its employees. As a result, the emphasis
for long-term compensation has been, and the Committee believes
should remain, focused on incentive programs with values related
to Company stock. Significant stock ownership by executives
aligns their interests with the Company's public and employee
stockholders. In recent years, there has also been a growing
interest and importance of retirement and savings programs in
addition to traditional welfare benefit plans. As a result, the
Compensation Committee strives to develop and implement
compensation policies and programs with an effective balance
among the various elements.
In establishing compensation packages for executives, the
Compensation Committee looks first to the competitive marketplace
for executive talent, with specific comparative reference to
executives in similar positions in the domestic steel industry.
The Compensation Committee specifically considers the peer group
against which the Company is compared under "Common Stock
Performance" in the Proxy Statement, and similarly sized or
situated manufacturing companies generally. The Compensation
Committee retains the services of management compensation
consultants to supply information about corporate compensation
levels and considers their recommendations in establishing
compensation policies and structuring compensation plans. The
Compensation Committee tries to set executive base salaries
initially in the lower to middle range compared to base salaries
of executives in comparable positions, with the Company's
performance awards and other compensation elements directed more
to the upper middle range. While individual circumstances may
differ, for the overall executive compensation package, the
Compensation Committee intends to provide a compensation level
for Company executives that, compared to other similarly situated
companies, is in the middle range.
Annual Compensation.
The base salaries of executives are determined in
accordance with a comparative approach to executive salaries as
set forth in the preceding paragraph.
For a number of years, additional performance compensation,
or bonus, for executives depended on participation in the
Company-wide Profit Sharing Plan ("Profit Sharing Plan") together
with, in some cases, individually structured awards which varied
from year-to-year. The Profit Sharing Plan generally provides
that one third of the Company's adjusted net income is payable to
its employees as profit sharing. For 1995, however, the Company
created a Performance Incentive Plan ("PIP") to reward the
performance of approximately 44 management participants,
including the Named Executive Officers and other executives,
measured against financial and individual goals set on an annual
basis. Due mainly to the focus of the PIP on short-term
financial goals and the judgment of the Compensation Committee
that a long-term incentive plan was preferable, the PIP was not
continued in its original form for 1996. Instead, the PIP was
amended as described below.
For future periods when long-term incentive programs may not
be in effect, the Compensation Committee anticipates that annual
compensation for executives will depend primarily on salary and
bonus, either pursuant to individual awards or contracts or from
the Profit Sharing Plan.
Long-term Incentive Compensation.
The Compensation Committee amended the PIP for 1996 and
afterward (the "Amended PIP") to serve as the primary means of
executive long-term, performance based incentive compensation.
Participation in the Amended PIP for 1996 included the Chief
Executive Officer, the other Named Executive Officers, and
substantially the same other executive and management personnel
as had previously participated in the PIP. For 1997 and 1998,
participation in the Amended PIP was expanded to include a total
of approximately 235 positions in recognition of the potential
contributions other management personnel could make to the
improvement goals of the Amended PIP.
In a manner similar to the PIP, the Amended PIP focused on
pre-established financial and operational goals as the basis for
incentive awards and aligned the achievement of these goals with
the Company's strategic plan for the three year period 1996
through 1998. However, in recognition of its nature
as a long-term program, i.e. with greater risk and deferred payout, the
Amended PIP had higher threshold and maximum reward levels than
the PIP. Under the Amended PIP, total incentive awards were
separated into annual and multi-year components, with the latter
representing a majority of the overall award opportunity. The
annual component was earned only for those years in which the
applicable operating standards for that particular year, such as
safety improvement, delivery performance or customer
satisfaction, were met. The multi-year component consisted of
"threshold," "target" and "maximum" opportunity levels of award
and was based on measuring the Company's adjusted operating
income improvement from the last fiscal quarter of 1995 to the
first fiscal quarter of 1999. Gathering of the multi-year
measurement details had not been completed at the time of this
report.
Payment of awards under the Amended PIP may be in cash,
Company stock or a combination in the discretion of the
Compensation Committee. Payment of the annual award component
normally would be made after each year in the cycle during which
an award was earned, and payment of the multi-year award
component, if earned, normally would be made after the end of the
measuring period. However, the Amended PIP also provides that no
payment, annual or multi-year, will be made during any year when
the Company is not also making payments pursuant to the Profit
Sharing Plan. As a result of this feature, payments which
otherwise might have been made for one or more of the three years
have been deferred, subject to a "sunset provision." The sunset
provision recognizes that the improvements brought about by the
plan must also result in other Company employees being able to
obtain profit sharing (which is based on measuring the Company's
net income and not its operating income) within a reasonable
time. As a result, all accrued and unpaid Amended PIP awards,
both annual and multi-year, for the 1996-1998 period will lapse,
if profit sharing is not paid to the other Company employees by
the end of the year 2001.
The Committee is in the process of reviewing the Amended PIP
with a view to aligning it more closely with the Company's
strategic plans for the next three to five years. As a result,
the performance goals and other standards of the Amended PIP, or
a replacement plan, might differ substantially from those
utilized in the 1996-1998 period.
In addition, long-term incentive compensation for Company
executives historically has included awards of stock options.
Stock option awards are designed to promote stock ownership by
executives, encourage them to remain in the employ of the Company
and provide a greater community of interest between key employees
as stockholders and stockholders in general through gains in
stock price over an extended period of time. The Company's
origins are tied to employee stock ownership, and option awards
are intended to increase that sense of identification among
executives, some of whom were not employed by the Company when
major allocations of stock were made under the Company's first
ESOP. For stock based awards, the long-term gains (and risks)
attributable to Company equity values are not limited to fixed
measurement periods, such as performance based awards under the
Amended PIP. The Company's 1987 Stock Option Plan (the "1987
Option Plan"), which allowed for the granting of options on up to
750,000 shares of Common Stock, was extended in 1997 for an
additional term of 10 years; however, the number of shares
subject to grant under the plan was not increased. As a result,
new options at current market prices may be granted only as prior
option grants (most of which were for ten year terms at
historical fair market prices significantly higher than recent
Common Stock trading prices) lapse unexercised. Thus, the 1987
Option Plan will not have any broad scale role in
providing long-term, equity based incentive compensation value to executives.
In March 1998, the Board of Directors adopted a new 1998
Stock Option Plan (the "1998 Option Plan") covering the granting
of options to purchase up to an aggregate of 3,250,000 shares of
the Company's Common Stock. Like the 1987 Option Plan, the 1998
Option Plan provides only for the granting of non-qualified
options. In connection with the adoption, the Committee, as
allowed by the 1998 Option Plan, converted stock appreciation
rights granted in 1997 to senior executives, including the Named
Executives, into grants of options to acquire the Company's
Common Stock. These option grants carry special incentive
provisions. According to the provisions, the options are
exercisable only on the last day of a five year period.
However, the options may vest and become exercisable on an
accelerated basis depending upon sustained, significant improved
trading prices for the Common Stock during the option term. In
particular, accelerated vesting commences only after the Common
Stock exceeds the following limits for 30 consecutive trading
days: $4.25, $6.50, $7.25 and $10.00 for 10%, 20%, 30% and 40% of
the awards cumulatively. Utilizing the new 1998 Option Plan in
this manner ties participants' compensation directly to increased
trading prices for the Company's Common Stock in the public
markets, thereby aligning the interests of senior executives
directly with investor goals. As a practical matter,
participants can only be sure of realizing meaningful
compensation if the sustained trading price for the stock shows
significant improvement from the prevailing levels at the time of
the awards. Although not required, future option grants under
the 1998 Plan may be made with similar types of conditions as the
Compensation Committee deems best to incentivize executives.
The 1998 Stock Option Plan requires up to an aggregate of
3,250,000 shares of Common Stock to satisfy option exercises. At
March 31, 1999, the Company had approximately 1,904,000
authorized shares of Common Stock which were either unissued or
held in treasury and unreserved for other purposes. Since the
number of shares required for use by the 1998 Option Plan may
exceed those now available, the Company may be required to take
additional steps to implement the plan such as buying stock in
the public markets or seeking to increase authorized capital
stock above current levels.
Supplemental Executive Retirement Plans.
For senior managers who participate in the Company's
non-qualified Supplemental Executive Retirement Plans (the "SERPs"),
annual value is received by participants through payments made to
fund retirement benefits and to provide for the payment of
applicable income taxes. For a further description, see "Pension
Plan".
Compensation of Chief Executive Officer.
Mr. Riederer has served as President and Chief Executive
Officer of the Company since 1995. Mr. Riederer has an
employment agreement with the Company providing for the following
significant items: (i) an annual base compensation (which was
increased from $375,000 to $435,000 in 1998); (ii) a severance
payment of two times the base compensation in the event that his
employment agreement is terminated by the Company without cause
or in the event of a change in control in the Board of Directors
of the Company; (iii) continued participation in certain
incentive plans; (iv) receipt of life insurance benefits in
excess of those provided pursuant to the Company's basic program
of insurance for its employees; and (v) funding of benefits under
the SERPs in excess of other participants in those Plans. The
Compensation Committee believes that Mr. Riederer's compensation
package is consistent with the policies described elsewhere in
this report.
Limitation on Deductibility of Certain Executive Compensation.
Section 162(m) of the Internal Revenue Code denies a
publicly held corporation, such as the Company, a federal income
tax deduction for certain compensation in excess of $1.0 million
per year paid to or accrued for each of its chief executive
officer and four other most highly compensated executive
officers. "Performance based" compensation, such as that tied to
increases in stock prices or achievement of pre-established
goals, is generally not subject to the limitation on
deductibility.
Based on the Company's substantial net loss carryforwards
and the insignificant effect of this provision in the case of one
Company officer, the Compensation Committee believes that the
limitation on deductibility is not material to the Company or its
current executive compensation policies.
Management Development and Compensation Committee
Robert S. Reitman, Chairman
Michael Bozic
Richard F. Schubert
Ronald C. Whitaker
D. Leonard Wise
COMMON STOCK PERFORMANCE
The following graph compares the cumulative return of an
assumed investment of $100 in the Company's Common Stock over the
periods presented with the cumulative return on an equal
investment over the same periods in a market capitalization
weighted index comprising the Company's peer group. This group
of companies is composed of the other nine companies that, when
combined with the Company, represent (in terms of net tonnage
shipped) the ten largest, publicly traded domestic integrated
steelmakers, namely: U.S. Steel Group of USX Corporation,
Bethlehem Steel Corporation, LTV Corporation, National Steel
Corporation, Ispat Inland, Inc., AK Steel Holding Corporation,
Rouge Industries, Inc., WHX Corporation and Geneva Steel Company.
The calculated return assumes the reinvestment of all dividends.
The data used to construct the peer group includes the
performance of National Steel Corporation, LTV Corporation, AK
Steel Holding Corporation and Rouge Steel Company (the
predecessor of Rouge Industries, Inc.) since 1994, as public
trading did not commence in the common stocks of these companies
in their current forms until such respective dates. The graph
also compares an equal investment over the same periods in the
S&P 500.
<TABLE>
<CAPTION>
Year Company Peer Group S&P 500
- ---- ------- -------------- -------
<S> <C> <C> <C>
1993 100.00 100.00 100.00
1994 141.18 96.83 101.32
1995 64.71 81.00 139.40
1996 54.90 72.03 171.40
1997 42.15 68.40 228.59
1998 24.50 59.17 293.91
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 15, 1999, the
only persons (including any group of persons) who, to the
knowledge of the Company, may be deemed to be the beneficial
owners 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 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
Share
Name and address of beneficial owner Amount Percent of class
<S> <C> <C>
United National Bank, 9,813,179(1) 23.6%
as Trustee under the 1984 ESOP
1501 Market Street
Wheeling, WV 26003
<CAPTION>
Convertible Preferred Stock
Share
Name and address of beneficial owner Amount Percent of class
<S> <C> <C>
United National Bank, 1,581,948(2) 87.9%
as Trustee under the 1989 ESOP
1501 Market Street
Wheeling, WV 26003
<FN>
(1) All shares have been allocated to the accounts of
participants in the 1984 ESOP consisting of approximately 6,256
employees and former employees of the Company. Participants
generally have full voting but limited dispositive power over
securities allocated to their accounts.
(2) Includes 1,366,188 shares allocated to the accounts of
participants in the 1989 ESOP consisting of approximately 7,118
employees and former employees of the Company. Participants
generally have full voting but limited dispositive power over
securities allocated to their accounts.
</TABLE>
The following table sets forth, as of March 15, 1999, the
total number of shares of Company Common Stock owned beneficially
by each nominee for director, director, the Named Executive
Officers (as hereinafter defined) and all directors and officers
of the Company as a group. Included are those shares of Common
Stock, if any, allocated under the 1984 ESOP. 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, 1998), and the percentage of
outstanding Common and Convertible Preferred Stock represented
thereby. Unless otherwise indicated, and except for shares
allocated to the accounts of employees 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>
Convertible
Common Stock Preferred Stock
Share Share
Amount % of Class Amount % of Class
(1) (1)
<S> <C> <C> <C> <C>
Michael Bozic 45,943(2)(4) * - -
Richard R. Burt 18,320(2) * - -
Craig T. Costello 53,505(3) * 855 *
Robert J.D'Anniballe 3,628(4) - - -
Jr.
Earl E. Davis 50,012(3) * 691 *
George E. Doty, Jr. - - - -
Mark G. Glyptis 3,719 * 421 *
Phillip A. Karber 3,265(4) - - -
Narendra M.Pathipati 35,000(3) * 705 *
Ralph E. Reins 23,628(4) - - -
Robert S. Reitman 54,088(2)(4) * - -
Richard K. Riederer 157,775(3) * 1,065 *
David L. Robertson 43,300(3) * 288 *
Richard F. Schubert 4,928(4) * - -
Thomas R. Sturges 30,839(2)(4) * - -
Ronald C. Whitaker 53,470(2)(4) * - -
D. Leonard Wise 3,265(4) - - -
All directors and 653,716(5) 1.6% 6,676 *
executives as
a group(20 persons)
<FN>
(1) An asterisk in this column indicates ownership of less than
1%.
(2) Includes 29,958, 18,320, 50,460, 19,827, and 47,842 shares
credited to the accounts of Messrs. Bozic, Burt, Reitman, Sturges,
and Whitaker, respectively, under the Deferred Compensation
Plan for Directors, over which shares the named individuals do
not exercise voting and/or investment power until distribution.
(3) Includes shares subject to options currently exercisable (or
exercisable within 60 days):
Messrs. Costello 35,000, Davis 28,000, Pathipati 28,000,
Riederer 90,000, and Robertson 33,000.
(4) Includes stock credited for 1998 directors' fees
(5) Includes 255,668 shares subject to options currently
exercisable (or exercisable within 60 days).
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth information for each of the
Company's last three fiscal years, summarizing the compensation
paid to the Company's Chief Executive Officer and each of the
Company's next four most highly compensated executive officers
(collectively, the "Named Executive Officers") who were serving
as such at the end of the Company's last completed fiscal year.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compens-
Annual Compensation ation
Awards
Securities underlying
Name&Principal Position Year Salary Bonus(1) Other Annual Options/(SARS)
All Other
($) ($) Compensation($)(2)(3)Compensation(4)
(#) ($)
<S> <C> <C> <C> <C> <C> <C>
Richard K. Riederer 1998 $425,000 $ - $349,626 - $ 219
President, & Chief 1997 375,000 - 321,658 517,500 330
Executive Officer 1996 375,000 - 464,507 - 317
Craig T. Costello 1998 $264,589 $ - $233,574 - $ 221
Executive Vice Pres. 1997 250,000 - 368,102 402,50 330
Manufacturing&Chief 1996 198,000 - 191,204 - 317
Operating Officer
David L. Robertson 1998 $231,795 $ - $ 56,183 - $ 218
Executive Vice Pres. 1997 213,981 - 42,960 402,500 330
Human Resources&Law 1996 157,857 25,000 188,723 33,000 104
Earl E. Davis 1998 $225,006 $ - $ 43,759 21,000 $ 219
Executive Vice Pres. 1997 198,754 - 30,103 402,500 330
Commercial 1996 168,750 - 40,017 - 317
Narendra M.Pathipati 1998 $183,567 $ - $ 11,457 21,000 $ 219
Sr. Vice President 1997 156,086 25,000 7,037 402,500 330
Corporate Development 1996 137,705 - 3,335 - 317
& Strategy
_______________________
<FN>
(1) Mr. Robertson received the sum indicated pursuant to the
terms of an employment agreement entered into in connection
with the commencement of his employment in 1996. For 1998,
$54,167, $22,750, $19,507, $19,507, and $30,966; for 1997, $54,167,
$18,939, $17,535, $35,069 and $30,064; and for 1996, $100,000, $35,069,
$35,069, $35,069, and $22,104 were accrued for the accounts of
Messrs. Riederer, Costello, Robertson, Davis and Pathipati,
respectively, in connection with the annual award component of
the Amended PIP. Payment of annual awards is deferred until such time as
payments are made to the employees pursuant to the
Company's Profit Sharing Plan. If no Profit Sharing Plan payments
are made by 2001, all annual awards will be considered forfeited.
See "Report of the Management Development and Compensation Committee
on Executive Compensation."
(2) Under the terms of the Company's
Supplemental Executive Retirement Plans (the "SERPs"),
the Company paid income taxes associated with
contributions made to trusts established under the
SERPs on behalf of the Named Executive Officers. The tax
gross-up payments are shown in the table. The amount of SERP
contribution, in the case of any individual, is determined
by various factors including: age, compensation, years of
service with the Company and anticipated retirement benefits
from qualified pension plans. In the case of Mr. Costello,
the funding of the SERP benefit was substantially completed
at the end of fiscal year 1998. Under assumptions
applicable to Mr. Riederer, the funding of the SERP benefit
should be substantially completed at the end of fiscal year 1999.
Aggregate amounts of perquisites and other personal
benefits that are the lesser of $50,000 or 10% of each of
the respective Named Executive Officer's combined salary and
bonuses, have been omitted from the table in accordance with
Securities andExchange Commission rules.
(3) For 1996 and 1998, the figures shown reflect option grants under
the 1987 Option Plan. For 1997, the figures reflect option
grants under the 1998 Option Plan which replaced stock
appreciation rights granted in 1997.
(4) Amounts reported represent contributions made by the
Company on behalf of the Named Executive Officers
pursuant to the terms of the 1989 ESOP.
</TABLE>
Option/SAR Grants
The following table sets forth information about stock
options and/or stock appreciation rights (SARs) granted during
1998 to the Named Executive Officers.
<TABLE>
<CAPTION>
Options/SAR Grants in last fiscal year
Individual Grants
- ----------------------------------------------------------------------------
Name Options/ % of Exercise Expira- Grant Date Present Value
SARs Total Or Base tion ($)
Granted in Options/ Price Date
1998 (#) SARs granted
(1) to employees (2)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
R.K. Riederer None
C.T. Costello None
D.L. Robertson None
E.E. Davis 21,000 12.1% $3.13 1/22/08 $41,790
N.M. Pathipati 21,000 12.1% $3.13 1/22/08 $41,790
- -----------------------------------------------------------------------------
<FN>
(1) Options granted to Messrs. Davis and Pathipati pursuant to
the 1987 Option Plan were granted on January 22, 1998 at a price
of $3.13, vesting in 1/3 increments on each of February 1 of
1998, 1999, 2000, with an expiration date of January 22, 2008.
(2) The Company used the Black-Scholes Option Valuation Model to
determine the grant date present value of the stock options. The
Company does not advocate or necessarily agree that the
Black-Scholes Model properly reflects the value of a stock option. The
assumptions used in calculating the grant date present value are
as follows: A risk-free interest rate of 5.53%; a dividend yield
of 0%; volatility of 0.53, calculated using monthly stock returns
for the 36 month period preceding the stock option award; a stock
price at the date of grant of $3.13; an option exercise price of
$3.13; and a ten year term (with a seven year expected life).
The valuation of a stock option under the Black-Scholes model
applying the preceding assumptions was $1.90.
</TABLE>
Option/SAR Exercises/Outstanding Options and Year-End Values
The following table sets forth information regarding the
exercise of stock options and SARs during 1998 and the
unexercised options/SARs held as of the end of the 1998 fiscal
year by the Named Executive Officers. No options/SARs were
exercised by any of the Named Executive Officers.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
Number of Value of
Securities underlying
Unexercised Unexercised
Options/SARS In-the-Money
at Fiscal Options/SARS
Year end at Fiscal Year-
(#) End ($)
- --------------------------------------------------------------------------
Name Shares Value Exercisable/ Exercisable/
Acquired on Realized Unexercisable Unexercisable
Exercise ($) (1) (2)
(#)
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
R.K. Riederer - - 120,000/517,500 -0-/-0-
C.T. Costello - - 35,000/402,500 -0-/-0-
D.L. Robertson - - 33,000/402,500 -0-/-0-
E.E. Davis - - 21,000/416,500 -0-/-0-
N.M. Pathipati - - 21,000/416,500 -0-/-0-
- -------------------------------------------------------------------------
<FN>
(1) The figures shown represent options granted under the 1987
Option Plan and the 1998 Option Plan. None of the options
granted under the 1998 Option Plan is exercisable.
(2) The "Value of Unexercised In-the-Money Options/SARs at Fiscal
Year-End" is equal to the difference between the closing price
($1.5625 per share) of the Company's Common Stock on the New York
Stock Exchange on its last closing day in 1998 (December 31,
1998) and the exercise price ($2.50 for the options granted in
1996), times the number of shares underlying the options.
</TABLE>
EMPLOYMENT AGREEMENTS WITH CERTAIN EXECUTIVES
Mr. Riederer, President and Chief Executive Officer and a
director, has an employment agreement with the Company providing
a base salary of $435,000. The agreement also provides for
supplemental disability income and supplemental life insurance.
The agreement may be terminated by the Company or by the
employee. For a further description of the employment agreement
of Mr. Riederer, see "Management Development and Compensation
Committee Report on Executive Compensation".
Messrs. Costello, Davis and Pathipati have employment
agreements with the Company which require the Company to pay 24
months compensation if such agreements are terminated by the
Company without cause as follows: 12 months in one lump sum
payable within 10 days following termination and 12 months in 12
monthly installments beginning in the 13th month following
termination. Mr. Robertson has an employment agreement with the
Company which requires the Company to pay 24 months compensation
in a lump sum if such agreement is terminated by the Company
without cause.
PENSION PLAN
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Years of Service
Final Average 15 20 25 30 35
Earnings
<S> <C> <C> <C> <C> <C>
$125,000 $61,875 $68,750 $68,750 $68,750 $74,375
150,000 74,250 82,500 82,500 82,500 89,250
200,000 99,000 110,000 110,000 110,000 119,000
250,000 123,750 137,500 137,500 137,500 148,750
300,000 148,500 165,000 165,000 165,000 178,500
400,000 198,000 220,000 220,000 220,000 238,000
500,000 247,500 275,000 275,000 275,000 297,500
600,000 297,000 330,000 330,000 330,000 357,000
</TABLE>
The figures in the Pension Table reflect the sum of annual
benefits from the qualified pension plan plus expected annual
benefits from the non-qualified SERPs (both administered by the
Company), payable for life following assumed retirement at age
62. The SERPs are "target benefit" plans under which the Company
contributes to separate trusts actuarially determined amounts
which are calculated to produce the defined target annual benefit
at age 62. Under both the qualified pension plan and the SERPs,
the amount of pension is based upon the employee's average
earnings (average of the highest five years of the last fifteen
years). For those participating in a SERP, expected benefits are
based on earnings defined as annual cash compensation (as
reported in the Salary and Bonus columns of the Summary
Compensation Table) and pension service credited under the SERPs.
The benefits reflected in the Pension Table include maximum total
benefits, under all plans, of 55% of final average earnings upon
attainment of 16-2/3 years of pension service. Under a contract
between the Company and Mr. Riederer, his maximum total benefit
is 70% of final average earnings at age 62 and attainment of 10
years of service. For the Named Executive Officers, pension
service as of December 31, 1998 for the purpose of calculating
retirement benefits under the SERPs was as follows: Mr.
Riederer: 9.92 years; Mr. Costello: 32.92 years; Mr. Robertson:
10.25 years; Mr. Davis: 28.58 years; and Mr. Pathipati: 8.92
yrs. Under a contract with the Company, Mr. Robertson, who had
prior pension service with the Company through its predecessor,
was entitled to an additional five years of benefit service under
the SERPs upon commencement of employment.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's
proxy statement for the 2000 Annual Meeting of Stockholders,
proposals from stockholders should be sent to the Company, in
care of its Secretary, at its executive offices located at 400
Three Springs Drive, Weirton, West Virginia 26062. Proposals
must be received by the Company no later than 5:00 pm local time
on December 30, 1999. The Company strongly urges stockholders to
choose a form of transmission, such as certified mail or courier
delivery service, that will permit them to obtain proof of timely
receipt given by the authorized Company officer.
Suggestions for nominees for Independent Directors may be
made, not less than sixty (60) days prior to the Annual or
Special Meeting at which an election for directors is to occur,
by any stockholder in writing addressed to the Nominating
Committee, in care of the Secretary of the Company at the above
address.
By Order of the Board of
Directors,
/s/Richard K . Riederer
Richard K. Riederer,
President and Chief
Executive Officer
Weirton, West Virginia
April 23, 1999
CONFORMED COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1998 MAY BE OBTAINED WITHOUT CHARGE
BY ANY STOCKHOLDER TO WHOM THIS PROXY STATEMENT IS SENT, UPON
WRITTEN REQUEST TO THE DIRECTOR OF INVESTOR RELATIONS, WEIRTON
STEEL CORPORATION, 400 THREE SPRINGS DRIVE, WEIRTON, WEST
VIRGINIA 26062.
(front) WEIRTON STEEL CORPORATION CONVERTIBLE VOTING
COMMON STOCK PREFERRED STOCK
1984 and 1989 Employee Stock Ownership Plans
CONFIDENTIAL PARTICIPANT INSTRUCTION FORM
for
Annual Meeting of Stockholders, May 26, 1999
To United National Bank, as Trustee:
The undersigned participant in the Weirton Steel Corporation 1984 and/or
1989 Employee Stock Ownership Plans (the "ESOPs") hereby instructs you to
vote, as specified, in person or by proxy, all shares of Common Stock, par
value $.01 per share, and Convertible Voting Preferred Stock, Series A, par
value $.10 per share, if any, allocated to the undersigned's accounts which
you are entitled to vote at the Annual Meeting of Stockholders of Weirton
Steel Corporation to be held on May 26, 1999, at the Serbian-American Cultural
Center, 1000 Colliers Way, Weirton, WV, and at any and all adjournments or
postponements thereof.
(back)
I. DIRECTORS:
Class III: Craig T. Costello, Earl E. Davis, Robert J.D'Anniballe, Jr., George
E. Doty, Jr. and Mark G. Glyptis.
[ ] FOR All [ ] WITHHOLD All [ ] For All Except
_____________________
Nominee Exception(s)
Instruction: To withhold authority to vote for any individual nominee, mark
the oval "For all Except" and write that nominee's name in the space provided.
II. AUDITORS
Ratification of the appointment of Arthur Andersen LLP as the Company's
independent accountants for the fiscal year ending December 31, 1999.
[ ] FOR [ ] AGAINST
III. PROPOSAL
To amend Article FIFTH of the Company's Restated Certificate of
Incorporation to change the qualification limitation for service as a
director from age 65 to age 68.
[ ] FOR [ ] AGAINST
IV. A STOCKHOLDER PROPOSAL
That the Board of Directors pass a resolution to hire an investment bank
to auction the Company for sale during 1999.
[ ] FOR [ ] AGAINST
V. 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 and dated, shares will be voted as
"instructed shares" in accordance with the above directions.
If no direction is specified, all shares covered by this form will
be considered "uninstructed shares" under the ESOPs to be voted in
the same FOR and AGAINST proportion as are directed by all
other ESOP Participants.
Signature Date
Signature Date
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.
TO BE INCLUDED IN THE TRUSTEE'S CALCULATION, THIS FORM MUST BE RECEIVED BY
5:00 PM, MAY 24, 1999.
(front)
PROXY WEIRTON STEEL CORPORATION COMMON
STOCK
Annual Meeting of Stockholders, May 26, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of WEIRTON STEEL CORPORATION hereby appoints
Richard R. Burt, Richard K. Riederer and William R. Kiefer, 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 $.01 per share, of WEIRTON STEEL CORPORATION which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders to
be held on May 26, 1999 at the Serbian-American Cultural Center, 1000 Colliers
Way, Weirton, WV, and at any and all adjournments or postponements thereof,
with all powers which the undersigned would possess if personally present.
(back)
I. DIRECTORS:
Class III: Craig T. Costello, Earl E. Davis, Robert J. D'Anniballe, Jr.,
George E. Doty, Jr. and Mark G. Glyptis.
[ ] FOR All [ ] WITHHOLD All [ ] For All Except
___________________
Nominee Exception(s)
Instruction: To withhold authority to vote for any individual nominee, mark
the oval "For All Except" and write that nominee's name in the space provided.
II. AUDITORS
Ratification of the appointment of Arthur Andersen LLP as the Company's
independent accountants for the fiscal year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. PROPOSAL
To amend Article FIFTH of the Company's Restated Certificate of
Incorporation to change the qualification limitation for service as a
director from age 65 to age 68.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. A STOCKHOLDER PROPOSAL
That the Board of Directors pass a resolution to hire an investment bank
to auction the Company for sale during 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
V. 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 and dated, 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, Proposal II and Proposal III, and
AGAINST Proposal IV.
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
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY IN THE ENVELOPE PROVIDED.
(Front)
PROXY WEIRTON STEEL CORPORATION PREFERRED STOCK
Annual Meeting of Stockholders, May 26, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of WEIRTON STEEL CORPORATION hereby appoints
Richard R. Burt, Richard K. Riederer and William R. Kiefer, 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 Convertible
Voting Preferred Stock, Series A, par value $.10 per share, of WEIRTON STEEL
CORPORATION which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders to be held on May 26, 1999 at the Serbian-American
Cultural Center, 1000 Colliers Way, Weirton, WV, and at any and all
adjournments or postponements thereof, with all powers which the undersigned
would possess if personally present.
(back)
I. DIRECTORS:
Class III: Craig T. Costello, Earl E. Davis, Robert J. D'Anniballe, Jr.,
George E. Doty, Jr. and Mark G. Glyptis.
[ ] FOR All [ ] WITHHOLD All [ ] For All Except
__________________
Nominee Exception(s)
Instruction: To withhold authority to vote for any individual nominee, mark
the oval "For All Except" and write that nominee's name in the space provided.
II. AUDITORS
Ratification of the appointment of Arthur Andersen LLP as the Company's
independent accountants for the fiscal year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. PROPOSAL
To amend Article FIFTH of the Company's Restated Certificate of
Incorporation to change the qualification limitation for service as a
director from age 65 to age 68.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. A STOCKHOLDER PROPOSAL
That the Board of Directors pass a resolution to hire an investment bank
to auction the Company for sale during 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
V. 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 and dated, 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, Proposal II and Proposal III,
and AGAINST Proposal IV.
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
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY IN THE ENVELOPE PROVIDED.
