<PAGE> 1
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
<TABLE>
<S> <C>
Filed by the registrant [X]
</TABLE>
Filed by a party other than the registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary proxy statement [ ] Confidential, For use of
[X] Definitive proxy statement the Commission Only (as
[ ] Definitive additional materials permitted by Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Geneva Steel Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Geneva Steel Company
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
<TABLE>
<C> <S>
[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 transaction applies:
-----------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
-----------------------------------------------------------------------------------
(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
</TABLE>
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.
<TABLE>
<C> <S>
(1) Amount previously paid:
-----------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
-----------------------------------------------------------------------------------
(3) Filing party:
-----------------------------------------------------------------------------------
(4) Date filed:
-----------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 25, 1998
LOGO
You are cordially invited to attend the Annual Meeting of Shareholders of
Geneva Steel Company (the "Company"), which will be held on Wednesday, February
25, 1998 at 10:00 a.m., at the Screening Room, Sundance Resort, Sundance, Utah
84604 (the "Annual Meeting"), for the following purposes:
(i) To elect six directors of the Company, each to serve until the
next annual meeting of shareholders and until their respective successors
have been duly elected and qualified;
(ii) To consider and vote upon a proposal to ratify the appointment of
Arthur Andersen LLP to be the independent public accountant for the Company
for the fiscal year ending September 30, 1998; and
(iii) To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on December 30, 1997
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting and at any adjournment or
postponement thereof.
By Order of the Board of Directors
KEN C. JOHNSEN
Secretary
December 31, 1997
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, TO
ASSURE THAT YOUR SHARES WILL BE REPRESENTED, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES. YOUR PROXY WILL
NOT BE USED IF YOU ARE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE YOUR
SHARES PERSONALLY.
<PAGE> 3
GENEVA STEEL COMPANY
10 SOUTH GENEVA ROAD
VINEYARD, UTAH 84058
-------------------------------
PROXY STATEMENT
-------------------------------
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 25, 1998
SOLICITATION OF PROXIES
This Proxy Statement is being furnished to the shareholders of Geneva Steel
Company, a Utah corporation doing business as "Geneva Steel" (the "Company" or
"Geneva"), in connection with the solicitation by the Board of Directors of the
Company of proxies from holders of outstanding shares of the Company's Class A
Common Stock, no par value (the "Class A Common Stock" or "Class A Shares"), and
the Company's Class B Common Stock, no par value (the "Class B Common Stock" or
"Class B Shares"), for use at the Annual Meeting of Shareholders of the Company
to be held Wednesday, February 25, 1998, and at any adjournment or postponement
thereof (the "Annual Meeting"). The Class A Common Stock and the Class B Common
Stock are sometimes referred to collectively as the "Common Stock." This Proxy
Statement, the Notice of Annual Meeting of Shareholders and the accompanying
form of proxy are first being mailed to shareholders of the Company on or about
December 31, 1997.
The Company will bear all costs and expenses relating to the solicitation
of proxies, including the costs of preparing, printing and mailing to
shareholders this Proxy Statement and accompanying material. In addition to the
solicitation of proxies by mail, the directors, officers and employees of the
Company, without receiving additional compensation therefor, may solicit proxies
personally or by telephone. Arrangements will be made with brokerage firms and
other custodians, nominees and fiduciaries for the forwarding of solicitation
materials to the beneficial owners of the shares of Class A Common Stock held by
such persons, and the Company will reimburse such brokerage firms, custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.
VOTING
RECORD DATE
The Board of Directors has fixed the close of business on December 30, 1997
as the record date for determination of shareholders entitled to notice of and
to vote at the Annual Meeting (the "Record Date"). As of the Record Date, there
were issued and outstanding 14,080,317 shares of Class A Common Stock and
19,151,348 shares of Class B Common Stock. The holders of record of the shares
of Common Stock on the Record Date entitled to be voted at the Annual Meeting
are entitled to cast one vote per share on each matter submitted to a vote at
the Annual Meeting. Accordingly, a total of 33,231,665 votes are entitled to be
cast on each matter submitted to a vote at the Annual Meeting.
PROXIES
Shares of the Common Stock which are entitled to be voted at the Annual
Meeting and which are represented by properly executed proxies will be voted in
accordance with the instructions indicated on such proxies. If no instructions
are indicated, such shares will be voted (i) FOR the election of each of the six
director nominees; (ii) FOR the ratification of the appointment by the Board of
Directors of Arthur Andersen
<PAGE> 4
LLP to be the independent public accountant for the Company for the fiscal year
ending September 30, 1998; and (iii) in the discretion of the proxy holders as
to any other matters which may properly come before the Annual Meeting.
A shareholder who has executed and returned a proxy may revoke it at any
time prior to its exercise at the Annual Meeting by executing and returning a
proxy bearing a later date, by filing with the Secretary of the Company, at the
address set forth above, a written notice of revocation bearing a later date
than the proxy being revoked, or by voting the Common Stock covered thereby in
person at the Annual Meeting.
REQUIRED VOTE
A majority of the outstanding shares of Common Stock entitled to vote,
represented in person or by properly executed proxy, is required for a quorum.
Abstentions and broker non-votes, which are indications by a broker that it does
not have discretionary authority to vote on a particular matter, will be counted
as "represented" for the purpose of determining the presence or absence of a
quorum. Under Utah corporate law, once a quorum is established, shareholder
approval with respect to a particular proposal is generally obtained when the
votes cast in favor of the proposal exceed the votes cast against such proposal.
With respect to the matters to be considered and voted upon at the Annual
Meeting, holders of the Class A Common Stock and the Class B Common Stock will
vote together as one class. In the election of directors, the six nominees
receiving the highest number of votes will be elected. For approval of the
proposed ratification of the independent public accountant, the votes cast in
favor of the proposal must exceed the votes cast against the proposal.
Accordingly, abstentions and broker non-votes will not have the effect of being
considered as votes cast against the nominees or the proposed ratification.
ELECTION OF DIRECTORS
At the Annual Meeting, six directors of the Company are to be elected to
serve until the next annual meeting of shareholders and until their successors
shall be duly elected and qualified. Each of the nominees for director
identified below is currently a director of the Company, except Ken C. Johnsen.
If any of the nominees should be unavailable to serve, which is not now
anticipated, the proxies solicited hereby will be voted for such other persons
as shall be designated by the present Board of Directors. The six nominees
receiving the highest number of votes at the Annual Meeting will be elected.
NOMINEES FOR ELECTION AS DIRECTORS
Certain information with respect to each nominee is set forth below.
JOSEPH A. CANNON, 48, has been a director of the Company since its
inception in February 1987, and has served as Chairman of the Board of Directors
from March 1987 to the present. Mr. Cannon served as President of the Company
from July 1987 to May 1991 and as Chief Executive Officer from July 1987 to July
1991. Following an absence from July 1991 to October 1992, Mr. Cannon returned
to the Company as Chief Executive Officer and has continued to serve in such
capacity. From February 1985 to September 1987, Mr. Cannon was engaged in the
private practice of law with Pillsbury, Madison & Sutro in its Washington, D.C.
office, specializing in environmental law. From May 1981 to February 1985, he
was employed in various capacities by and became Assistant Administrator of the
Environmental Protection Agency. As Assistant Administrator, Mr. Cannon was
responsible for the development, implementation and enforcement of federal air
quality and radiation regulations throughout the United States.
ROBERT J. GROW, 48, has been Chief Operating Officer of the Company since
December 1989 and was elected as President in May 1991. Mr. Grow was elected
1996 Chairman of the American Iron & Steel Institute ("AISI"). AISI is the
premier industry association for steel companies in the United States, Canada
and Mexico. From August 1988 to December 1989, he was employed by the Company in
various capacities, including Vice President, Executive Vice President and
General Counsel. He has served as a director of the Company from its inception.
From 1976 to September 1987, Mr. Grow was engaged in the private practice of law
with the Salt Lake City, Utah law firm of Parr, Waddoups, Brown, Gee & Loveless,
specializing in real
2
<PAGE> 5
property and general corporate law. Mr. Grow also holds a B.S. degree in
Electrical Engineering from the University of Utah.
KEN C. JOHNSEN, 39, has been Executive Vice President and General Counsel
of the Company since November 1997 and has served as Secretary of the Company
since February 1992. He served as Vice President and General Counsel from
November 1991 to November 1997 and as Manager of Special Projects for the
Company from February 1991 through October 1991. From 1986 to 1991, Mr. Johnsen
was engaged in the private practice of law with Parr, Waddoups, Brown, Gee &
Loveless, specializing in corporate counseling and civil litigation. Mr. Johnsen
received his law degree from Yale Law School and a B.A. degree in Finance from
Utah State University.
R. J. SHOPF, 63, has been a director of the Company since September 1989
and served as an independent advisor to the Company from March 1988 to September
1989. Mr. Shopf currently serves as the Chairman of the Board for companies
which own and operate two Ruth's Chris Steak Houses in Indianapolis. He is also
the President of Southwest Business Associates, a consulting company (a position
which he previously held from 1984 to February 1988, and from January 1989 to
October 1992), and has served in this capacity since August 1994. Mr. Shopf
served as President and Chief Executive Officer of Pioneer Chlor Alkali
Investments, Inc. ("Pioneer"), from August 1993 until August 1994. Mr. Shopf
also served as President of Imperial West Chemical Company, an affiliate of
Pioneer, from January 1992 until August 1994, and as President of All Pure
Chemical Company, also an affiliate of Pioneer, from October 1992 until August
1994. Mr. Shopf obtained an MBA degree from the Harvard Graduate School of
Business and Administration in 1959.
ALAN C. ASHTON, 54, has been a director of the Company since November 1996.
Dr. Ashton co-founded the former WordPerfect Corporation ("WordPerfect"), a
software applications company. Dr. Ashton served as an executive officer and a
director of WordPerfect and its subsidiaries for over five years, including as
Co-Chairman of the Board of Directors of WordPerfect from January through June
1994, and as President and Chief Executive Officer of WordPerfect from January
1993 through December 1993. He served as a director of Novell, Inc. from June
1994 until he resigned in December 1996.
K. FRED SKOUSEN, 55, has been the Dean of the Marriott School of Management
at Brigham Young University, Provo, Utah since 1989. From 1983 to 1989, Dr.
Skousen held the Peat Marwick Mitchell Professorship and from 1974 to 1983
served as Director of the School of Accountancy at Brigham Young University. He
also serves as a director of Life Re Corporation, a publicly-traded company
listed on The New York Stock Exchange. Dr. Skousen is a certified public
accountant.
CONTINUING DIRECTORS
On May 30, 1997, two members were elected to the Board of Directors by the
holders of the Company's 14% Cumulative Redeemable Exchangeable Series B
Preferred Stock (the "Preferred Stock") who have the exclusive right to elect 25
percent of the total number of the Board of Directors upon a default in payment
of dividends on the Preferred Stock. The term for directors elected by holders
of Preferred Stock continues until accumulated dividends in arrears are paid in
full and dividends are paid in full for two consecutive dividend payments
thereafter. Information with respect to these directors is as follows:
KEVIN S. FLANNERY, 53, has been since December 1997 Executive Vice
President of Dominick & Dominick, a New York-based investment banking firm. From
1993 to December 1997, he was President of Whelan Management Corp., a
Connecticut company engaged in management of investments. He previously served
as Senior Managing Director of Bear Stearns, an investment banking firm, for 16
years.
GREGORY T. HRADSKY, 37, has been since 1991 Managing Director of UBS
Securities LLC, a New York-based investment banking firm. From 1988 to 1991, Mr.
Hradsky was Assistant Vice President of The First Boston Corporation in the
Distressed Securities Group. Mr. Hradsky obtained an MBA in Finance from the
Wharton School in 1988.
3
<PAGE> 6
COMMITTEES AND MEETINGS
The Board of Directors has a standing Audit Committee, Compensation
Committee and Corporate Governance Committee. The members of the Audit Committee
are Messrs. Shopf (Chairman), Skousen and Ashton; the members of the
Compensation Committee are Messrs. Shopf (Chairman), Skousen and Ashton; and the
members of the Corporate Governance Committee are Messrs. Ashton (Chairman),
Cannon, Grow and Shopf. Committee assignments may change after election of
directors at the Annual Meeting.
The Audit Committee met three times during the fiscal year ended September
30, 1997. Its functions are: (i) to review and recommend the selection of the
Company's independent public accountant; (ii) to review the Company's internal
controls and all services performed by the Company's independent public
accountant; and (iii) to review and report to the Board of Directors with
respect to the scope of audit procedures, accounting practices and internal
accounting and financial controls of the Company.
The Compensation Committee met seven times during the 1997 fiscal year. Its
functions are: (i) to determine and adopt compensation arrangements for
executive officers of the Company, subject to approval by the Board of
Directors; and (ii) to review and administer any stock option, stock award and
employee benefit plan or arrangement established for the benefit of the
executive officers of the Company.
The Corporate Governance Committee met three times during the 1997 fiscal
year. The function of the committee is to review, make recommendations and
formulate policies with respect to matters of corporate governance, including
the nomination of directors, director compensation and formulation of corporate
governance guidelines for directors. The Corporate Governance Committee does not
have a formal procedure for considering nominees to the Board of Directors
recommended by the shareholders.
During the fiscal year ended September 30, 1997, there were eight meetings
held by the Board of Directors of the Company. No director attended fewer than
75 percent of the total number of meetings of the Board and of the committees on
which he served, except for Mr. Ashton who attended 50 percent of the Audit
Committee meetings and 67 percent of the Corporate Governance Committee meetings
held subsequent to his appointment to the respective Committees.
DIRECTOR COMPENSATION
Directors who are not employees of the Company are paid a director's fee of
$22,000 per year for serving on the Board of Directors, $3,000 per year for
serving as chairman of any committee, $1,500 for each Board meeting attended and
$1,000 for each committee meeting attended. Mr. Shopf serves as outside "lead"
director for which he receives an additional $12,000 per year. All directors are
also reimbursed by the Company for their out-of-pocket travel and related
expenses incurred in attending all Board and committee meetings.
Under the Geneva Steel Company 1996 Incentive Plan (the "Incentive Plan"),
each nonemployee director is granted an option to purchase 4,000 shares of the
Company's Class A Common Stock upon appointment or election and each nonemployee
director who is serving on the first business day on or after January 1 of each
calendar year is granted an option to purchase 2,000 shares. Options are
exercisable for ten years at the fair market value of the shares on the date of
grant and are subject to a vesting schedule.
In addition, each nonemployee director who serves for not less than five
years receives a deferred compensation payment in each of the five years after
termination of service in the amount of the retainer paid to such director for
services as a director during the year preceding termination of such services.
If a nonemployee director's service is terminated prior to five years of service
by reason of death or disability, deferred compensation is paid for a period
equal to the period for which the director served.
4
<PAGE> 7
EXECUTIVE OFFICERS
In addition to Messrs. Cannon, Grow and Johnsen, certain information is
furnished with respect to the following executive officers of the Company:
RICHARD D. CLAYTON, 41, has been a director of the Company since February
1993 and has served as Senior Vice President of Marketing and Distribution since
May 1997. Mr. Clayton's service as a director will conclude at the Annual
Meeting. He was Executive Vice President and Vice President of Environment from
November 1991 to May 1997, Vice President of Environment and Special Projects of
the Company from December 1989 through October 1991 and Vice President of Energy
and Special Projects from July 1989 to December 1989. From 1981 to July 1989,
Mr. Clayton was engaged in the private practice of law with Parr, Waddoups,
Brown, Gee & Loveless, specializing in corporate counseling, real property and
tax law.
DENNIS L. WANLASS, 48, has been Vice President, Treasurer and Chief
Financial Officer of the Company since September 1989 and was Controller of the
Company from January 1988 to September 1989. Before joining the Company, Mr.
Wanlass was employed by Eastman Christensen, then a joint venture of Norton
Company and Texas Eastern, in various accounting and financial capacities. Mr.
Wanlass is a certified public accountant.
TIM CLARK, 33, has been Vice President of Manufacturing since May 1997. He
has been employed by the Company since 1993 in several positions, including
Project Manager -- Plate Finishing and Shipping, Director of Corporate
Communications, Director -- Delta Project and Assistant to the President. Mr.
Clark obtained B.A. and M.A. degrees from Brigham Young University and the
University of Utah in 1988 and 1993, respectively.
CARL E. RAMNITZ, 50, has been Vice President of Human Resources since
October 1988 and was Vice President of Human Resources and Public Affairs of the
Company from September 1987 to September 1988. Prior to joining the Company, he
was employed by USX for 18 years in various employment and labor related
capacities, most recently as Manager of Employee Relations for the Geneva Steel
plant before it was acquired by the Company and for USX's Pittsburgh, California
steel plant.
PHILIP E. JONES, 62, has been Vice President of Customer Service and
Marketing of the Company since September 1990. From October 1989 to September
1990, Mr. Jones was Senior Director of Customer Service, Marketing and Sales of
the Company and was Manager of Customer Technical Services from October 1987 to
October 1989. Prior to joining the Company, he was a consultant to Lone Star
Steel and had been employed by USX Corporation ("USX") for 30 years, primarily
at the Geneva Steel plant where he held several positions, including Chief
Metallurgist. Mr. Jones is a graduate of the University of Utah with a B.S.
degree in Metallurgical Engineering.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The compensation of Joseph A. Cannon, the Company's Chief Executive
Officer, and the four other most highly paid executive officers (collectively,
the "Named Executive Officers") is discussed in the following tables and in the
report from the Compensation Committee of the Board of Directors.
SUMMARY COMPENSATION TABLE
The following table sets forth, for the fiscal years ended September 30,
1997, 1996 and 1995, the compensation paid to the Company's Named Executive
Officers.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- ----------------------- -----------------------
PAYOUTS
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($) ($)(3) (#)(4) ($) ($)(5)
- -------------------- ---- ------- ------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph A. Cannon.... 1997 463,337 50,932 13,858 0 100,000 0 16,726
Chief Executive 1996 487,964 54,791 12,924 0 12,000 0 17,390
Officer 1995 469,054 105,086 12,475 0 48,000 0 15,634
Robert J. Grow...... 1997 413,236 45,425 13,858 0 123,000 0 16,726
President and Chief 1996 435,200 48,867 12,924 0 11,000 0 17,390
Operating Officer 1995 418,189 93,706 12,475 0 44,000 0 15,634
Richard D.
Clayton........... 1997 277,171 30,468 13,858 0 109,500 0 17,362
Senior Vice
President 1996 291,902 32,776 12,924 0 9,000 0 16,199
of Marketing and 1995 279,635 62,853 11,753 0 36,000 0 12,796
Distribution
Ken C. Johnsen...... 1997 200,220 21,886 9,073 0 50,000 0 14,021
Executive Vice 1996 195,083 22,050 9,307 0 9,000 0 17,077
President and 1995 180,575 41,365 2,808 0 58,000 0 12,236
General Counsel
Dennis L. Wanlass... 1997 186,461 20,497 9,073 0 84,500 0 15,650
Vice President and 1996 196,371 22,050 9,827 0 7,000 0 18,190
Chief Financial
Officer 1995 188,630 42,283 5,415 0 28,000 0 13,102
</TABLE>
- ---------------
(1) Includes compensation deferred or accrued at the election of the Named
Executive Officer under the Company's Management Employee Savings and
Pension Plan (the "Management Plan").
(2) Represents cash incentive bonuses for performance in the indicated fiscal
years, as well as payments under the Company's Performance Dividend Plan in
such years. Amounts for 1997 and 1996 represent only Performance Dividend
Payments payable to all management and union employees based upon the
Company's volume of product shipments.
(3) None of the Named Executive Officers received any restricted stock awards
during the three years presented, nor did any of them hold any such stock as
of September 30, 1997.
(4) 1997 option grants represent new options granted on February 20, 1997 and
the repricing on March 26, 1997 of options granted to the Named Executive
Officers in fiscal year 1991. The number of replacement options reflected as
1997 grants are as follows: Robert J. Grow, 33,000; Richard D. Clayton,
49,500 and Dennis L. Wanlass, 39,500. 1995 option grants represent new
options granted on March 28, 1995, and the repricing on November 28, 1995 of
options granted to the Named Executive Officers in fiscal years 1993 through
1995. The number of replacement options reflected as 1995 grants are as
follows: Joseph A. Cannon, 36,000; Robert J. Grow, 33,000; Richard D.
Clayton, 27,000; Ken C. Johnsen, 51,000 and Dennis L. Wanlass, 21,000.
(5) Includes contributions made by the Company pursuant to the Management Plan
and the dollar value of premiums paid by the Company pursuant to the
Company's split dollar life insurance plan. For fiscal year 1997, such
amounts were as follows: Joseph A. Cannon, $13,146 Company contributions,
$3,580 insurance premiums; Robert J. Grow, $13,146 Company contributions,
$3,580 insurance premiums;
6
<PAGE> 9
Richard D. Clayton, $14,884 Company contributions, $2,478 insurance
premiums; Ken C. Johnsen, $11,697 Company contributions, $2,324 insurance
premiums and Dennis L. Wanlass, $12,213 Company contributions, $3,437
insurance premiums.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to individual
grants of stock options made by the Company to the Named Executive Officers
during the fiscal year ended September 30, 1997. The Company did not grant any
stock appreciation rights during the fiscal year ended September 30, 1997.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL
-------------------------------------------------------- RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------
NAME GRANTED(#) FISCAL YEAR(3) ($/SH)(4) DATE 5%($) 10%($)
- ------------------------------ ---------- -------------- ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Joseph A. Cannon.............. 100,000(1) 12.5% $2.25 02/20/07 141,501 358,592
Robert J. Grow................ 90,000(1) 11.2 2.25 02/20/07 127,351 322,733
33,000(2) 7.75 01/02/00 -- --
Richard D. Clayton............ 60,000(1) 7.5 2.25 02/20/07 84,901 215,155
49,500(2) 7.75 01/02/00 -- --
Ken C. Johnsen................ 50,000(1) 6.2 2.25 02/20/07 70,751 179,296
Dennis L. Wanlass............. 45,000(1) 5.6 2.25 02/20/07 63,676 161,366
39,500(2) 7.75 01/02/00 -- --
</TABLE>
- ---------------
(1) Represents new options granted on February 20, 1997 pursuant to the
Incentive Plan. The options granted to the Named Executive Officers become
exercisable 50 percent on February 20, 1998 and 50 percent on February 20,
1999.
(2) Represents repricing of previously granted options effected on March 26,
1997. See "-- Ten-Year Option/SAR Repricings" and "-- Compensation Committee
Report -- Stock Options."
(3) Calculated without reference to options which were repriced during the 1997
fiscal year.
(4) The market price of the underlying Class A Common Stock on the date of grant
was $2.25 per share on February 20, 1997 and $2.375 per share on March 26,
1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to the exercise of
options to acquire shares of the Company's Class A Common Stock by the Named
Executive Officers during the fiscal year ended September 30, 1997, as well as
the aggregate number and value of unexercised options held by the Named
Executive Officers on September 30, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT SEPTEMBER 30, 1997(#) SEPTEMBER 30, 1997($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph A. Cannon......... 0 0 25,200 122,800 $-- $ 137,500
Robert J. Grow........... 0 0 56,100 110,900 -- 123,750
Richard D. Clayton....... 0 0 73,700 79,800 -- 82,500
Ken C. Johnsen........... 0 0 49,600 67,400 -- 68,750
Dennis L. Wanlass........ 0 0 59,100 60,400 -- 61,875
</TABLE>
7
<PAGE> 10
TEN-YEAR OPTION/SAR REPRICINGS
The following table sets forth information with respect to the repricing of
outstanding stock options that was effected on March 26, 1997 and on November
28, 1995. See "-- Compensation Committee Report -- Stock Options." No other
option repricings have occurred since the Company became a reporting company in
March 1990.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE REMAINING AT DATE
OPTIONS/SARS TIME OF AT TIME OF NEW OF REPRICING OR
REPRICED OR REPRICING OR REPRICING OR EXERCISE AMENDMENT
NAME DATE AMENDED(#) AMENDMENT($) AMENDMENT($) PRICE($) (MONTHS)
- -------------------- --------- ------------ ------------- ------------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Joseph A. Cannon.... 11/28/95 12,000 $7.00 $ 12.93 $ 7.75 27
Chief Executive 11/28/95 12,000 7.00 16.50 7.75 40
Officer 11/28/95 12,000 7.00 11.96 7.75 52
Robert J. Grow...... 03/26/97 33,000 2.38 10.91 7.75 32
President and 11/28/95 11,000 7.00 12.93 7.75 27
Chief Operating 11/28/95 11,000 7.00 16.50 7.75 40
Officer 11/28/95 11,000 7.00 11.96 7.75 52
Richard D.
Clayton........... 03/26/97 49,500 2.38 10.91 7.75 32
Senior Vice 11/28/95 9,000 7.00 11.75 7.75 87
President 11/28/95 9,000 7.00 15.00 7.75 100
11/28/95 9,000 7.00 10.88 7.75 112
Max E. Sorenson..... 11/28/95 7,500 7.00 11.75 7.75 87
Senior Vice 11/28/95 8,000 7.00 15.00 7.75 100
President 11/28/95 8,000 7.00 10.88 7.75 112
Dennis L. Wanlass... 03/26/97 39,500 2.38 10.91 7.75 32
Vice President 11/28/95 7,000 7.00 11.75 7.75 87
11/28/95 7,000 7.00 15.00 7.75 100
11/28/95 7,000 7.00 10.88 7.75 112
Kenneth C.
Johnsen........... 11/28/95 37,000 7.00 11.75 7.75 87
Executive Vice 11/28/95 7,000 7.00 15.00 7.75 100
President 11/28/95 7,000 7.00 10.88 7.75 112
Philip E. Jones..... 11/28/95 5,000 7.00 11.75 7.75 87
Vice President 11/28/95 5,500 7.00 15.00 7.75 100
11/28/95 5,500 7.00 10.88 7.75 112
Carl E. Ramnitz..... 03/26/97 6,600 3.28 10.91 7.75 32
Vice President 11/28/95 5,500 7.00 11.75 7.75 87
11/28/95 5,500 7.00 15.00 7.75 100
11/28/95 5,500 7.00 10.88 7.75 112
Ralph F. Powers..... 11/28/95 6,000 7.00 11.75 7.75 87
Vice President 11/28/95 6,000 7.00 15.00 7.75 100
11/28/95 6,000 7.00 10.88 7.75 112
</TABLE>
CHANGE IN CONTROL EMPLOYMENT CONTRACTS, SEVERANCE PAYMENTS AND OTHER EMPLOYMENT
ARRANGEMENTS
In May 1997, the Company entered into Change of Control Employment
Agreements with Messrs. Cannon, Grow, Clayton, Johnsen and Wanlass (the
"Employment Agreements"). The Employment Agreements provide for benefits in the
event of a Change of Control (change of control is defined in the Employment
Agreement) and for severance payments in the event of termination of an
Executive Officer without cause or upon termination of employment by an
Executive Officer for Good Reason.
Upon termination of employment of any of the Executive Officers within two
years after a change in control of the Company (the "Change in Control Period"),
including by an Executive Officer during a 30-day Window Period commencing one
year after a Change in Control, the Employment Agreements provide for severance
pay and benefits. During the Change in Control Period, severance pay and
benefits will not be paid if employment is terminated because of death,
disability or retirement, or by the Company for cause, or by the Executive
Officer other than for Good Reason (except during the Window Period). The
Employment
8
<PAGE> 11
Agreements provide for a lump sum payment equal to the Executive's annual base
salary (12 times the highest monthly base salary paid during the 12 month period
immediately preceding the Change of Control) plus a sum equal to the average
annual bonus received by the Executive over the preceding three fiscal years and
any other amounts or benefits which the Executive is entitled to receive under
any plan, program, policy, practice, contract or agreement of the Company. Other
provisions of the Employment Agreements require the Company to maintain for the
benefit of the Executive Officer for a period of two years after his
termination, all employee benefits which would have been provided to the
Executive if his employment had not been terminated and to provide the Executive
with outplacement services at the Company's expense.
In the case of any other termination by the Company which is not for cause
or by an Executive Officer for Good Reason, which termination is not related to
a Change in Control, the Executive shall be entitled to the same benefits as
would be payable in the event of termination in connection with a Change in
Control.
The Company maintained during fiscal year 1997 a supplemental retirement
plan (the "Supplemental Plan") which benefits certain executive officers and
management personnel. The Supplemental Plan generally provides for the payment
of supplemental benefits to covered individuals upon retirement at age 62, based
on the number of years of Company employment. The maximum benefit under the
Supplemental Plan, which is available after sixteen and two-thirds years of
service, is $50,000 per year, payable for ten years. All of the Named Executive
Officers are covered by the Supplemental Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors to file initial reports of ownership and reports of changes in
ownership with the SEC and the New York and Pacific Stock Exchanges. Executive
officers and directors are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on a review of
the copies of such forms furnished to the Company and written representations
from the Company's executive officers and directors, the Company noted that all
required forms were timely filed during the past fiscal year, except that Forms
5 for Messrs. Grow, Clayton, Johnsen and Wanlass, which were timely filed, were
subsequently amended to report repricing of options in March 1997 which were
inadvertently omitted from the initial filings on Form 5.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company entered into an agreement on September 27, 1996 to lend up to
$500,000 to Joseph A. Cannon, its Chief Executive Officer. Pursuant to such
agreement, the Company loaned $250,000, $210,000 and $40,000 on September 27,
1996, October 4, 1996 and December 23, 1996, respectively, to Mr. Cannon. On
February 17, 1997, the Company authorized an increase in the loan amount to
$700,000 and advanced an additional $200,000. The loans were evidenced by
promissory notes which bear interest at the rate of 8.53% and were payable on
the earlier of September 27, 1997 or upon demand for repayment by the Company.
On October 17, 1997, Mr. Cannon paid $240,000 on the notes and the payment date
of the notes was extended to April 30, 1998. The loan is secured by interests in
real and personal property owned by Mr. Cannon and an affiliated entity. On
December 17, 1997, Mr. Cannon paid an additional $400,000 on the notes.
In connection with the resignation of Max E. Sorenson, then Senior Vice
President of Engineering and Technology, on March 31, 1997, the Company agreed
to make payments to Mr. Sorenson of $115,875 over the 12 month period commencing
April 7, 1997 and to extend the period during which vested options held by Mr.
Sorenson could be exercised until expiration of the option term. Mr. Sorenson
released any and all claims arising out of his employment, agreed to provide
consulting services as requested, entered into a noncompete covenant and
affirmed his obligation to keep confidential all proprietary information
belonging to the Company.
COMPENSATION COMMITTEE REPORT
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that incorporates by
reference, in whole or in part, subsequent filings including, without
limitation, this
9
<PAGE> 12
Proxy Statement, the following Report of the Compensation Committee and the
Performance Graph hereinbelow set forth shall not be deemed to be incorporated
by reference into any such filings.
As required by the proxy rules promulgated by the Securities and Exchange
Commission (the "SEC"), this Report of the Compensation Committee (the
"Committee") of the Board of Directors describes the overall compensation goals
and policies applicable to the executive officers of Geneva, including the bases
for determination of the compensation of executive officers for fiscal year
1997. The Report also discusses the setting of 1997 compensation of Mr. Cannon.
The term "Executive Officers" is used below to refer to the executive officers
of Geneva other than Mr. Cannon.
Composition and Functions of the Committee. The Compensation Committee of
the Board of Directors of Geneva is comprised entirely of independent,
nonemployee directors. Subject to any action which may be taken by the full
Board of Directors, the Board has delegated to the Committee the authority:
- To determine the compensation of Joseph A. Cannon, Chairman of the
Board and Chief Executive Officer of Geneva, including discretionary awards
under Geneva's incentive compensation plans;
- To approve, upon recommendations by Mr. Cannon, the compensation
arrangements of Executive Officers of Geneva, including the Named Executive
Officers identified in the Summary Compensation Table above; and
- To carry out the duties and responsibilities of the Board of
Directors regarding Geneva's other compensation plans, including
administering and making awards under Geneva's option plans to Mr. Cannon,
the Executive Officers and other managers and key employees of Geneva.
Compensation Philosophy and Objectives. The Committee believes that
compensation of Geneva's executive officers should be set at a competitive level
and be based upon the Company's overall financial performance, achievement of
strategic goals, and individual performance, with a view toward building value
for the Company's shareholders. Within this overall philosophy, the following
principles guide Geneva's compensation policies for executive officers:
- Provide competitive levels of compensation that enable Geneva to
attract and retain experienced, talented executive officers;
- Compensate executive officers based on the Company's progress toward
achievement of its short and long-term strategic and financial goals;
- Compensate executive officers based on the performance of the
individual executive officer, and his contribution to the Company's
performance; and
- Maintain and strengthen the incentive for executive officers to
increase the price of Geneva's Class A Common Stock.
The Committee believes that adherence to these objectives is essential in order
to attract and retain highly-qualified officers whose contributions are
necessary for the continued growth and success of Geneva. Information concerning
the specific implementation of these policies in the 1997 compensation
arrangements of the Executive Officers and Mr. Cannon is provided below. The
Committee believes that the $1.0 million compensation deduction cap recently
promulgated under the Internal Revenue Code currently has no effect on the
Company's compensation policies.
Annual Salaries. Salaries of Executive Officers are generally reviewed on
an annual basis and adjustments made based on the Committee's subjective
evaluation of the individual's performance and the Company's performance, taking
into account both qualitative and quantitative factors. Among the factors
considered by the Committee have been the recommendations of Mr. Cannon and the
importance of retaining key Executive Officers. Subject to Board approval, the
Committee makes compensation decisions concerning the Executive Officers. Salary
levels for fiscal year 1997 were not increased because, in the Committee's
judgment, the Company's operating performance and stock price did not warrant
increases. In April 1997, five of the then nine highest paid Executive Officers
agreed to a 10 percent reduction in base compensation and the
10
<PAGE> 13
remaining Executive Officers agreed to a five percent reduction. Subsequent to
the end of the fiscal year after the Company reported modest income from
operations for the previous two quarters, base compensation for the Executive
Officers was restored to previous levels. Except in the case where a Executive
Officer undertook significantly greater management responsibilities, there have
been no increases in base compensation of Executive Officers during the past
eighteen months.
Incentive Bonuses. In fiscal 1997, Geneva continued to make awards under
the Performance Dividend Plan (the "Performance Plan") established in June 1993,
which provides for the monthly payment of additional cash compensation as a
percentage of base compensation to all management employees based upon the
Company's product shipments. Cash payments made to Executive Officers under the
Performance Plan during fiscal 1997 were determined according to the same
formula used to determine payments to all other management employees.
In March 1997, the Committee adopted the Geneva Steel Executive Bonus Plan
(the "Executive Bonus Plan"). Under the Executive Bonus Plan, designated
Executive Officers are eligible to receive a cash bonus based on a weighted
formula which is used to determine the amount to be paid. The Committee,
however, retains discretion to adjust any individual bonus up or down in
consultation with the Company's Chief Executive Officer. Factors used in
determining the bonus amount and the relative weight assigned to each include
the market price of the Company's Common Stock in relation to the steel industry
index (40%); net income (40%); and quality performance as determined by an
independent index (20%). No cash incentive bonuses were paid under the Executive
Bonus Plan in fiscal 1997, primarily because of the Company's stock and earnings
performance.
Stock Options. The Company's Incentive Plan and Key Employee Plan permit
the award of options to purchase Class A Common Stock to executive officers,
managers and key employees. The award of stock options is intended to align the
interests of Executive Officers with the shareholders by providing the Executive
Officers with an incentive to bring about increases in the price of Class A
Common Stock. Geneva's policy is to award options to purchase Class A Common
Stock at a price that equals or exceeds market price on the date of grant.
Accordingly, the Executive Officers derive a financial benefit from an option
only if the price of Class A Common Stock increases. Options granted have not
had performance contingencies, but realization of the value provided through the
options has generally required the Executive Officer to remain employed by
Geneva until the options vest. Historically, options have vested at the rate of
40 percent of the underlying shares at the end of two years following the grant
and an additional 20 percent each year thereafter. The Committee modified the
vesting schedule of options granted in fiscal 1997 so that 50 percent become
vested after one year and the balance after two years. The modification to the
vesting schedule was made in recognition of the historical volatility of the
Company's Common Stock and a desire to increase the incentive represented by the
grant of stock options to Executive Officers. The options are generally
exercisable for ten years from the date of grant at a price equal to 100 percent
of the fair market value of the underlying shares on such date. Because each of
Messrs. Cannon and Grow beneficially own more than 10 percent of the voting
power of the Company, applicable tax laws require that incentive stock options
granted to them must be exercisable for no more than five years at a price equal
to the 110 percent of the fair market value on the date of grant.
In fiscal 1997, the Company determined to award 490,000 options to purchase
Class A Common Stock to Executive Officers of the Company. The number of options
awarded to Executive Officers was based upon the Committee's desire to maintain
and strengthen the incentive for Executive Officers to increase the price of the
Class A Common Stock and the recommendation of William M. Mercer, a
nationally-recognized compensation consulting firm engaged to advise the
Committee. In addition, in March 1997, the Committee approved the repricing of
options previously granted to Messrs. Grow, Clayton and Wanlass. The exercise
price of the affected options was reduced from $10.91 to $7.75, consistent with
a repricing in November 1995 of options granted to other Executive Officers.
Repriced options did not involve any right to acquire a greater number of
shares, nor any extension of expiration date, nor any shortening or other
alteration of the vesting schedules of the previously granted options.
11
<PAGE> 14
Compensation of Chief Executive Officer. For the reasons discussed above
with respect to the Executive Officers, there was no increase in Mr. Cannon's
base salary in fiscal 1997. Mr. Cannon also voluntarily agreed to a 10 percent
reduction in base compensation during part of the fiscal year. During the 1997
fiscal year, Mr. Cannon received additional compensation of $50,932, pursuant to
the Performance Plan, based upon the formula applicable to Executive Officers
and management employees. Mr. Cannon was also granted options for the purchase
of 100,000 shares of Class A Common Stock for the reasons stated above with
respect to the Executive Officers.
Other Compensation Plans. The Company maintains insurance and retirement
agreements with certain of its Executive Officers and managers, including Mr.
Cannon and the Named Executive Officers, which provide for payment of a death
benefit (net of premiums paid and recovered by the Company) to a designated
beneficiary or for payment of a retirement benefit upon reaching age 62. Geneva
also has a number of other broad-based employee benefit plans in which Executive
Officers participate on the same terms as other employees meeting the
eligibility requirements, subject to any legal limitations on amounts that may
be contributed to or benefits payable under the plans.
Submitted by the Compensation Committee of the Board of Directors:
R.J. Shopf
K. Fred Skousen
Alan C. Ashton
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total shareholder
return on the Company's Class A Common Stock, calculated on a dividend
reinvested basis, from September 30, 1992 through September 30, 1997, compared
with the S&P 500 Index and the S&P Steel Index.
CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF $100 ON SEPT. 1992 TO SEPT. 1997
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P IRON & STEEL
(FISCAL YEAR COVERED) GENEVA STEEL S&P 500 INDEX
<S> <C> <C> <C>
SEP-92 100 100 100
SEP-93 163 113 157
SEP-94 240 117 202
SEP-95 105 152 144
SEP-96 42 183 142
SEP-97 48 257 165
</TABLE>
SOURCE: Georgeson & Company Inc.
13
<PAGE> 16
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information as of November 28, 1997 with
respect to the beneficial ownership of shares of the Class A Common Stock and
Class B Common Stock by each person known by the Company to be the beneficial
owner of more than 5 percent of either of such classes of Common Stock, by each
director or nominee, by each of the Named Executive Officers, and by all
directors and officers as a group. The number of Class A Shares listed below
does not include Class A Shares issuable upon conversion of Class B Shares.
Unless otherwise noted, each person named has sole voting and investment power
with respect to the shares indicated. The percentages set forth below have been
computed based on the number of outstanding securities, excluding treasury
shares held by the Company, and are based on 14,050,515 shares of Class A Common
Stock and 19,151,348 shares of Class B Common Stock. The table also sets forth
information with respect to ownership of shares of the Company's 14% Series B
Preferred Stock which may be deemed to be beneficially owned by a director. As
of November 28, 1997, there were 400,000 shares of 14% Series B Preferred Stock
outstanding.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
AS OF NOVEMBER 28, 1997*
-----------------------------------
NUMBER OF PERCENTAGE OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OUTSTANDING
- -------------------------------------------------------------- ---------- -------------------
<S> <C> <C>
CLASS A COMMON STOCK:
Robert J. Grow................................................ 76,700(1) **
Richard D. Clayton............................................ 73,700(2) **
Dennis L. Wanlass............................................. 59,100(2) **
Alan C. Ashton................................................ 50,000 **
Ken C. Johnsen................................................ 49,600(2) **
Joseph A. Cannon.............................................. 28,456(3) **
R. J. Shopf................................................... 15,000 **
K. Fred Skousen............................................... 2,500 **
Kevin S. Flannery............................................. 0 **
Gregory T. Hradsky............................................ 0 **
All directors and officers as a group (14 persons)............ 409,556(4) 2.85%
CLASS B COMMON STOCK(5):
Joseph A. Cannon.............................................. 10,142,204(6) 52.96%
Robert J. Grow................................................ 8,855,319 46.24%
Richard D. Clayton............................................ 33,825(7) **
All directors and officers as a group (3 persons)............. 19,031,348 99.37%
14% SERIES B PREFERRED STOCK:
Gregory T. Hradsky............................................ 60,000(8) 15.00%
All directors and officers as a group (1 person).............. 60,000 15.00%
</TABLE>
- ---------------
* Beneficial ownership as a percentage of the class for each person holding
options exercisable within 60 days has been calculated as though shares
subject to such options were outstanding, but such shares have not been
deemed outstanding for the purpose of calculating the percentage of the
class owned by any other person.
** Less than 1% of outstanding shares.
(1) Includes 56,100 shares subject to presently exercisable options and 15,500
shares owned by Mr. Grow's spouse which may be deemed to be beneficially
owned by him. Mr. Grow disclaims beneficial ownership of the shares owned by
his spouse.
(2) Subject to presently exercisable options.
(3) Includes 3,156 shares held by Riverwood Limited Partnership, of which Joseph
A. Cannon is general partner, and 25,200 shares subject to presently
exercisable options.
14
<PAGE> 17
(4) Includes 317,000 shares subject to presently exercisable options.
(5) The Class B Common Stock is convertible into Class A Common Stock at a rate
of ten shares of Class B Common Stock for one share of Class A Common Stock.
If they were to convert their shares of Class B Common Stock into shares of
Class A Common Stock, Mr. Cannon would beneficially own 1,042,676 shares of
Class A Common Stock, Mr. Grow would beneficially own 962,232 shares of
Class A Common Stock (including shares owned by his spouse), Mr. Clayton
would beneficially own 77,082 shares of Class A Common Stock (including
shares owned by his spouse) and all directors and officers as a group would
beneficially own 2,312,690 shares of Class A Common Stock (including all
shares subject to presently exercisable options). In the event of such
conversions, Mr. Cannon would own 6.5% of the outstanding Class A Common
Stock; Mr. Grow would own 6.0% of the outstanding Class A Common Stock; Mr.
Clayton would own less than 1.0% of the outstanding Class A Common Stock;
and all directors and officers as a group would own 14.2% of the outstanding
Class A Common Stock.
(6) Includes 828,013 shares held by Riverwood Limited Partnership, of which
Joseph A. Cannon is general partner.
(7) Includes 16,830 shares owned by Mr. Clayton's spouse which may be deemed to
be beneficially owned by him. Mr. Clayton disclaims beneficial ownership of
such shares.
(8) These shares are owned by UBS Securities, LLC, with which Mr. Hradsky is
affiliated. Mr. Hradsky disclaims beneficial ownership of these shares.
Joseph A. Cannon and Robert J. Grow together beneficially own 99.2% of the
outstanding shares of Class B Common Stock and 57.4% of the total voting power
of the Company. They are therefore able to determine the outcome of fundamental
corporate transactions such as the election of directors, amendments of the
Company's articles of incorporation (except for certain amendments which are, by
mandatory provisions of law, subject to a class vote of shareholders) and sale
of all or substantially all of the Company's assets, and to prevent certain
mergers or consolidations involving the Company. Joseph A. Cannon has currently
outstanding loans of approximately $1.1 million from a bank which are
collateralized by a pledge of Class B Common Stock. Enforcement of the loan
agreement could decrease the Class B Common Stock held by Mr. Cannon.
RATIFICATION OF SELECTION OF AUDITOR
The Audit Committee has recommended, and the Board of Directors has
selected, the firm of Arthur Andersen LLP, independent certified public
accountants, to audit the financial statements of the Company for the fiscal
year ending September 30, 1998, subject to ratification by the shareholders.
Arthur Andersen LLP has acted as independent public accountant of the Company
since 1987. The Board of Directors anticipates that one or more representatives
of Arthur Andersen LLP will be present at the Annual Meeting, will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
The Board of Directors unanimously recommends that shareholders vote FOR
ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountant.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other matters to be presented for action at the Annual Meeting. If any further
business should properly come before the meeting, the persons named as proxies
in the accompanying form will vote on such business in accordance with their
best judgment.
15
<PAGE> 18
PROPOSALS OF SHAREHOLDERS
Proposals which shareholders intend to present at the annual meeting of
shareholders to be held in calendar year 1999 must be received by Ken C.
Johnsen, Executive Vice President, Secretary and General Counsel of the Company,
at the Company's executive offices, 10 South Geneva Road, Vineyard, Utah 84058,
no later than September 30, 1998.
ADDITIONAL INFORMATION
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY PERSON FROM WHOM A PROXY IS
SOLICITED BY THE BOARD OF DIRECTORS, UPON THE WRITTEN REQUEST OF SUCH PERSON, A
COPY OF THE COMPANY'S 1997 ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO (AS WELL AS EXHIBITS THERETO, IF SPECIFICALLY
REQUESTED), REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
WRITTEN REQUESTS FOR SUCH INFORMATION SHOULD BE DIRECTED TO THE CORPORATE
COMMUNICATIONS DEPARTMENT OF THE COMPANY.
16
<PAGE> 19
PROXY
GENEVA STEEL COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph A. Cannon, Robert J. Grow and Ken C.
Johnsen, and each of them, as proxies, with full power of substitution, and
hereby authorizes them to represent and vote, as designated below, all shares of
Common Stock of Geneva Steel Company, a Utah corporation (the "Company"), held
of record by the undersigned on December 30, 1997 at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held at the Screening Room, Sundance
Resort, Sundance, Utah 84604, on February 25, 1998, at 10:00 a.m., local time,
or at any adjournment or postponement thereof, upon the matters set forth below,
all in accordance with and as more fully described in the accompanying Notice of
Annual Meeting and Proxy Statement, receipt of which is hereby acknowledged.
1. ELECTION OF DIRECTORS, each to serve until the next annual meeting of
shareholders of the Company and until their respective successors shall have
been duly elected and shall qualify.
[ ] FOR all nominees listed below (except as marked to the contrary). [ ]
WITHOUT AUTHORITY to vote for all nominees listed below. (INSTRUCTION: To
withhold authority to vote for any individual nominee, strike a line
through the nominee's name in the list below.)
<TABLE>
<S> <C> <C>
JOSEPH A. CANNON ROBERT J. GROW R.J. SHOPF
KEN C. JOHNSEN K. FRED SKOUSEN ALAN C. ASHTON
</TABLE>
2. PROPOSAL TO RATIFY the appointment of Arthur Andersen LLP as the independent
auditor of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
(continued)
<PAGE> 20
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES NAMED ABOVE AND FOR THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT
AUDITOR OF THE COMPANY.
Please complete, sign and date this proxy where indicated and return it
promptly in the accompanying prepaid envelope.
<TABLE>
<S> <C>
DATED: ------------------------------, 1998
-------------------------------------------------------
Signature
-------------------------------------------------------
Signature if held jointly
</TABLE>
(Please sign above exactly as the
shares are issued. When shares are
held by joint tenants, both should
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign
in full corporate name by president
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.)
