<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
GENEVA STEEL COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 20, 1997
[GENEVA STEEL LOGO]
You are cordially invited to attend the Annual Meeting of Shareholders of
Geneva Steel Company (the "Company"), which will be held on Thursday, February
20, 1997 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 approve and adopt the
Geneva Steel Company 1996 Incentive Plan;
(iii) To consider and vote upon a proposal to ratify the appointment
of Arthur Andersen LLP as independent auditor of the Company for the fiscal
year ending September 30, 1997; and
(iv) 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 January 3, 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
January 9, 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 20, 1997
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 Thursday, February 20, 1997, 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
January 9, 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 January 3, 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 13,605,821 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 32,757,169 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
(6) director nominees; (ii) FOR the approval and adoption of the Geneva Steel
Company 1996 Incentive Plan
<PAGE> 4
(the "Incentive Plan"); (iii) FOR the ratification of the appointment by the
Board of Directors of Arthur Andersen LLP to be the independent auditor of the
Company for the fiscal year ending September 30, 1997; and (iv) 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 each of 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 (6)
nominees receiving the highest number of votes will be elected. Approval and
adoption of the Incentive Plan requires approval by a majority of the votes cast
on the proposal at the Annual Meeting, provided that the total votes cast on the
proposal represent over 50% of all shares of Common Stock entitled to vote on
the proposal. Accordingly, abstentions and broker non-votes will have the effect
of a vote against the proposal to adopt the Incentive Plan. For approval of the
proposed ratification of the independent auditor, 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 proposed ratification.
ELECTION OF DIRECTORS
At the Annual Meeting, six (6) 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, except K. Fred Skousen, is currently a director of
the Company. 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 (6)
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, 47, 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, 47, 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
2
<PAGE> 5
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 Kimball, Parr, Waddoups, Brown & Gee,
specializing in real property and general corporate law. Mr. Grow also holds a
B.S. degree in Electrical Engineering from the University of Utah.
RICHARD D. CLAYTON, 40, has been a director of the Company since February
1993 and has served as Executive Vice President and Vice President of
Environment since November 1991. He was 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
Kimball, Parr, Waddoups, Brown & Gee, specializing in corporate counseling, real
property and tax law.
R.J. SHOPF, 62, 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 SteakHouses 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.
ALAN C. ASHTON, 53, has been a director of the Company since November 1996.
Dr. Ashton co-founded the former WordPerfect Corporation ("WordPerfect"), a
software applications company that was acquired by Novell, Inc. in June 1994.
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, 54, 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.
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), Madsen and Ashton; the members of the Compensation
Committee are Messrs. Shopf (Chairman), Madsen and Ashton; and the members of
the Corporate Governance Committee are Messrs. Shopf (Chairman), Cannon, Grow
and Ashton.
The Audit Committee met three times during the fiscal year ended September
30, 1996. Its functions are: (i) to review and recommend the selection of the
Company's independent auditor; (ii) to review the Company's internal controls
and all services performed by the Company's independent auditor; 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 four times during the 1996 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.
3
<PAGE> 6
The Corporate Governance Committee met five times during the 1996 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, 1996, 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.
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. 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.
In addition, each non-employee 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 non-employee 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.
EXECUTIVE OFFICERS
In addition to Messrs. Cannon, Grow and Clayton, certain information is
furnished with respect to the following executive officers of the Company:
MAX E. SORENSON, 47, has been Senior Vice President of Manufacturing,
Engineering and Technology of the Company since November 1991. He was Vice
President of Engineering from December 1989 through October 1991. Before joining
the Company, Mr. Sorenson was employed by Inland Steel Company, including as
Manager of Research and Development for Raw Materials and Primary Processes. Mr.
Sorenson holds a B.S. degree in Metallurgical Engineering from the University of
Utah and a Masters degree in Industrial Management from Purdue University.
DENNIS L. WANLASS, 47, 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.
KEN C. JOHNSEN, 38, has been Vice President and General Counsel of the
Company since November 1991 and has served as Secretary of the Company since
February 1992. He was 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 Kimball, Parr, Waddoups, Brown & Gee, 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.
PHILIP E. JONES, 61, 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.
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<PAGE> 7
CARL E. RAMNITZ, 49, 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.
RALPH F. POWERS, 62, has been Vice President of Manufacturing of the
Company since May 1992. From December 1991 until May 1992, Mr. Powers was
General Manager of Operational Improvements for the Company. Prior to joining
the Company, Mr. Powers was employed by USX and its related entities for more
than 30 years, most recently as Project Director with USX Engineers and
Consultants, Inc., where he managed the commissioning, testing and start-up of
an $850 million cold rolling facility in West Java, Indonesia.
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<PAGE> 8
EXECUTIVE COMPENSATION
The compensation of Joseph A. Cannon, the Company's Chief Executive
Officer, and the four other most highly paid executive officers (collectively,
the "Named Executive Officers") is discussed in the following tables and in the
report from the Compensation Committee of the Board of Directors.
SUMMARY COMPENSATION TABLE
The following table sets forth, for the fiscal years ended September 30,
1996, 1995 and 1994, the compensation paid to the Company's Named Executive
Officers.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------------------
AWARDS
ANNUAL COMPENSATION ----------------------- PAYOUTS
--------------------------------------- RESTRICTED SECURITIES ----------------------
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($) ($)(3) (#)(4) ($) ($)(5)
- -------------------- ---- ------- ------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph A. Cannon.... 1996 487,964 54,791 12,924 0 12,000 0 24,550
Chief Executive 1995 469,054 105,086 12,475 0 48,000 0 21,652
Officer 1994 450,000 31,236 0 0 12,000 0 17,829
Robert J. Grow...... 1996 435,200 48,867 12,924 0 11,000 0 24,550
President and Chief 1995 418,189 93,706 12,475 0 44,000 0 21,652
Operating Officer 1994 400,000 27,931 0 0 11,000 0 17,829
Richard D.
Clayton........... 1996 291,902 32,776 12,924 0 9,000 0 21,155
Executive Vice 1995 279,635 62,853 11,753 0 36,000 0 16,896
President 1994 265,000 18,674 0 0 9,000 0 19,900
Max E. Sorenson..... 1996 231,717 26,036 11,799 0 9,000 0 25,970
Senior Vice 1995 210,919 48,492 5,753 0 31,500 0 18,194
President 1994 185,000 13,241 0 0 8,000 0 19,414
Dennis L. Wanlass... 1996 196,371 22,050 9,827 0 7,000 0 25,063
Vice President 1995 188,630 42,283 5,415 0 28,000 0 18,589
1994 175,000 12,562 0 0 7,000 0 19,000
</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 1996 and 1994 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, 1996.
(4) 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 new and
replacement options reflected as 1995 grants are as follows: Joseph A.
Cannon, 12,000 new, 36,000 replacements; Robert J. Grow, 11,000 new, 33,000
replacements; Richard D. Clayton, 9,000 new, 27,000 replacements; Max E.
Sorenson, 8,000 new, 23,500 replacements; Dennis L. Wanlass, 7,000 new,
21,000 replacements.
(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 1996, such
amounts were as follows: Joseph A. Cannon, $13,810 Company contributions,
$10,740 insurance premiums; Robert J. Grow, $13,810 Company contributions,
$10,740 insurance premiums; Richard D. Clayton, $13,721 Company
contributions, $7,434 insurance premiums; Max E. Sorenson, $15,230 Company
contributions, $10,740 insurance premiums; and Dennis L. Wanlass, $14,753
Company contributions, $10,310 insurance premiums.
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<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to individual
grants of stock options made by the Company to the Named Executive Officers
during the fiscal year ended September 30, 1996. The Company did not grant any
stock appreciation rights during the fiscal year ended September 30, 1996.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE
------------------------------------------------------- AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
- ---------------------------------- ------------- ------------ ----------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Joseph A. Cannon.................. 12,000 6.9% $ 4.125 8/20/01 7,933 22,973
Robert J. Grow.................... 11,000 6.3 4.125 8/20/01 7,272 21,059
Richard D. Clayton................ 9,000 5.2 3.750 8/20/06 21,225 53,789
Max E. Sorenson................... 9,000 5.2 3.750 8/20/06 21,225 53,789
Dennis L. Wanlass................. 7,000 4.0 3.750 8/20/06 16,508 41,836
</TABLE>
- ---------------
(1) Represents options granted on August 20, 1996 pursuant to the Geneva Steel
Key Employee Plan (the "Key Employee Plan"). The options granted to Messrs.
Cannon and Grow become exercisable according to the following schedule: 40%
on August 20, 1998 and an additional 30% on each of the next two
anniversaries thereof. The options granted to the other Named Executive
Officers become exercisable according to the following schedule: 40% on
August 20, 1998 and an additional 20% on each of the next three
anniversaries thereof.
(2) The market price of the underlying Class A Common Stock on the date of grant
was $3.75 per share.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to the exercise of
options to acquire shares of the Company's Class A Common Stock by the Named
Executive Officers during the fiscal year ended September 30, 1996, as well as
the aggregate number and value of unexercised options held by the Named
Executive Officers on September 30, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT SEPTEMBER 30, 1996(#) SEPTEMBER 30, 1996($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph A. Cannon......... 0 0 13,800 34,200 0 0
Robert J. Grow........... 0 0 55,650 31,350 0 0
Richard D. Clayton....... 0 0 64,900 28,600 0 0
Max E. Sorenson.......... 0 0 46,700 26,300 0 0
Dennis L. Wanlass........ 0 0 52,100 22,400 0 0
</TABLE>
EMPLOYMENT RELATED AGREEMENTS
The Company maintained during fiscal year 1996 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.
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<PAGE> 10
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company entered into an agreement on September 27, 1996 to loan 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. The
loan is evidenced by a promissory note which bears interest at the rate of 8.54%
and is payable on the earlier of September 27, 1997 or demand for repayment by
the Company. The loan is secured by interests in real and personal property
owned by Mr. Cannon and an affiliated entity.
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 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
1996. The Report also discusses the setting of 1996 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,
non-employee 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 Key Employee Plan 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;
8
<PAGE> 11
- Compensate executive officers based on the Company's progress toward
achievement of its short and long-term strategic goals, as well as
financial results;
- 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 1996 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 may be made based on the Committee's subjective
evaluation of the individual'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 who have, from time to time, been presented with other
employment offers. The Committee makes the final compensation decisions
concerning the Executive Officers. Salary levels for fiscal year 1996 were set
primarily on the basis of an informal review conducted by the Committee of
compensation of comparable executives in peer companies. In the fourth quarter
of fiscal 1996, the Committee retained William M. Mercer, a nationally
recognized compensation consulting firm to conduct a formal survey of the
compensation programs of approximately ten companies in the steel industry with
comparable levels of sales, as well as companies generally engaged in
manufacturing. The Committee expects to review the results of the survey and
make recommendations based on its findings in setting salary levels for fiscal
1997.
Incentive Bonuses. In fiscal 1996, 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 to all
management and union employees based upon the Company's volume of product
shipments. Cash payments made to Executive Officers under the Performance Plan
during fiscal year 1996 were determined according to the same formula used to
determine payments to all other managers.
The compensation of Executive Officers has at times also included incentive
compensation in the form of cash bonuses based on overall Company performance,
determined subjectively rather than pursuant to an objective formula or
criteria. In fiscal 1996, the Committee did not award any such incentive bonuses
to the Executive Officers. The Committee's action was based on its conclusion
that, in spite of superior personal performance of the Executive Officers, no
cash incentive bonuses should be awarded due to the recent declines in the
market price of the Class A Common Stock.
Stock Options. Geneva's Key Employee Plan provides the ability to award to
executive officers, managers and key employees, options to purchase Class A
Common Stock. The award of stock options is intended to align the interests of
the 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 the market price on the date of grant. Accordingly, the
executive officers derive a financial benefit from the option only if the price
of Class A Common Stock increases.
Options granted under the Key Employee Plan 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. Options granted under the Key Employee Plan generally have vested
at the rate of 40% of the underlying shares at the end of two years following
the grant and an additional 20% each year thereafter. The options are generally
exercisable for ten years from the date of grant at a price equal to 100% of the
fair market value of the underlying shares on such date. Because each of Messrs.
Cannon and Grow beneficially owns more than 10% of the voting power of the
Company, applicable tax laws require that
9
<PAGE> 12
incentive stock options granted to them must be exercisable for no more than
five years at a price equal to 110% of the fair market value on the date of
grant. Consequently, incentive stock options granted to Messrs. Cannon and Grow
generally vest in four rather than five years.
In fiscal 1996, the Committee determined to award 74,000 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.
Compensation of Chief Executive Officer. The Committee approved an
increase of approximately 4% of Mr. Cannon's base salary early in fiscal 1996,
commensurate with an increase of approximately 4% in the cost of living for the
previous 12 months, and consistent with the salary increases awarded the
Executive Officers. For the reasons discussed above with respect to the
Executive Officers, Mr. Cannon was not awarded any incentive bonus for 1996.
During the past fiscal year, Mr. Cannon received additional compensation of
$54,791 pursuant to the Performance Plan, based upon the formula applicable to
all Executive Officers and managerial employees. Mr. Cannon was also granted
options for the purchase of 12,000 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
Arch L. Madsen
Alan C. Ashton
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<PAGE> 13
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, 1996, compared
with the S&P 500 Index and the S&P Steel Index.
CUMULATIVE TOTAL RETURN
Based on reinvestment of $100 on September 30, 1991
<TABLE>
<CAPTION>
S&P(R) Iron &
Geneva Steel S&P 500(R) Steel Index
<S> <C> <C> <C>
Sep-91 $100 $100 $100
Sep-92 $ 42 $111 $102
Sep-93 $ 68 $125 $160
Sep-94 $100 $130 $206
Sep-95 $ 44 $169 $146
Sep-96 $ 17 $203 $144
</TABLE>
11
<PAGE> 14
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information as of November 29, 1996 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% 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 13,574,641 shares of Class A and
19,151,348 shares of Class B Common Stock outstanding as of November 29, 1996:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
AS OF NOVEMBER 29, 1996*
-----------------------------------
NUMBER OF PERCENTAGE OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OUTSTANDING
- -------------------------------------------------------------- ---------- -------------------
<S> <C> <C>
CLASS A COMMON STOCK:
Wellington Management Company................................. 1,309,500(1) 9.65%
75 State Street
Boston, Massachusetts 02109
Robert J. Grow................................................ 76,250(2) **
Richard D. Clayton............................................ 64,900(3) **
Dennis L. Wanlass............................................. 52,100(3) **
Max E. Sorenson............................................... 46,700(3) **
Joseph A. Cannon.............................................. 17,056(4) **
R.J. Shopf.................................................... 12,300 **
Alan C. Ashton................................................ 50,000 **
Arch L. Madsen................................................ 1,000 **
All directors and officers as a group (12 persons)............ 394,606(5) 2.91%
CLASS B COMMON STOCK(6):
Joseph A. Cannon.............................................. 10,142,204(7) 52.96%
Robert J. Grow................................................ 8,855,319 46.24
Richard D. Clayton............................................ 33,825(8) **
All directors and officers as a group (3 persons)............. 19,031,348 99.37%
</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) Wellington Management Company, LLP, ("WMC") is an investment adviser
registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended. As of November 29, 1996, WMC, in its
capacity as investment adviser, may be deemed to have beneficial ownership
of 1,309,500 shares of Class A Common Stock of Geneva Steel Company that are
owned by numerous investment advisory clients, none of which is known to
have such interest with respect to more than five percent of the class,
except for Vanguard/Windsor Funds, Inc. As of November 29, 1996, WMC had
voting power and dispositive power as follows:
<TABLE>
<S> <C>
Sole Voting Power.......................... 0 Shares
Shared Voting Power........................ 0 Shares
Sole Dispositive Power..................... 0 Shares
Shared Dispositive Power................... 1,309,500 Shares
</TABLE>
12
<PAGE> 15
(2) Includes 55,650 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.
(3) Represents shares subject to presently exercisable options.
(4) Includes 3,156 shares held by Riverwood Limited Partnership, of which Joseph
A. Cannon is general partner, and 13,800 shares subject to presently
exercisable options.
(5) Includes 306,250 shares subject to presently exercisable options.
(6) 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 1,031,276 shares of
Class A Common Stock, Mr. Grow would beneficially own 961,782 shares of
Class A Common Stock (including shares owned by his spouse), Mr. Clayton
would beneficially own 68,282 shares of Class A Common Stock (including
shares owned by his spouse) and all directors and officers as a group would
beneficially own 2,297,741 shares of Class A Common Stock (including all
shares subject to presently exercisable options). In the event of such
conversions, Mr. Cannon would own 6.7% of the outstanding Class A Common
Stock; Mr. Grow would own 6.2% 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 14.8% of the outstanding
Class A Common Stock.
(7) Includes 828,013 shares held by Riverwood Limited Partnership, of which
Joseph A. Cannon is general partner.
(8) 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.
Joseph A. Cannon and Robert J. Grow together beneficially own 99.2% of the
outstanding shares of Class B Common Stock and 58.1% 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 $1.7 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 and other
restrictions applicable to the transfer of Class B Common Stock could affect the
relative control positions of Messrs. Cannon and Grow.
APPROVAL OF INCENTIVE PLAN
GENERAL
On December 18, 1996, the Board unanimously adopted the Geneva Steel
Company 1996 Incentive Plan (the "Incentive Plan"), subject to shareholder
approval. The Board believes that it is imperative that the Company adopt a more
flexible, long-term incentive plan, which is both competitive with, and
responsive to, rapidly changing standards of compensation, and that will further
the Company's compensation philosophy and objectives. The compensation
philosophy and objectives of the Company include providing competitive levels of
compensation to attract and retain valuable personnel, compensating executives
based on the Company's progress toward achievement of strategic goals, and
strengthening the incentive for executive officers to increase the price of the
Company's Class A Common Stock. In its annual review of the Company's
compensation objectives and compensation programs, the Compensation Committee
noted that, in recent years, many companies have devised innovative and
sophisticated incentive award plans in order to enhance the effectiveness of
their compensation programs. Accordingly, the Compensation Committee recommended
the Incentive Plan to the Board of Directors as a plan that would provide the
Company with the ability to devise stock-based, cash-based or performance-based
incentive awards which are competitive with cutting-edge compensation programs,
and would serve to further the Company's compensation objectives.
13
<PAGE> 16
The principal provisions of the Incentive Plan are summarized below. This
summary, however, does not purport to be complete and is qualified in its
entirety by reference to the provisions of the Incentive Plan. Capitalized terms
used without definition in this summary have the meanings specified under the
Incentive Plan.
PURPOSE
The purpose of the Incentive Plan is to strengthen the Company by providing
an incentive to its employees, officers, consultants and directors and thereby
encouraging them to devote their abilities and industry to the success of the
Company's business enterprise. The Incentive Plan seeks to achieve this purpose
by extending to employees, officers, consultants and directors of the Company
long-term incentive for high levels of performance through the grant of
Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights,
Dividend Equivalent Rights, Performance Awards and Restricted Stock.
ADMINISTRATION
The Incentive Plan is to be administered by a committee consisting of at
least two directors of the Company (the "Committee"), and it may be administered
by the entire Board. If the Committee consists of less than the entire Board,
each member will be a "non-employee director" within the meaning of Rule 16b-3
promulgated under the Exchange Act. To the extent necessary for any Award to
qualify as performance-based compensation under Section 162(m) of the Code, each
member of the Committee must be an "outside director" within the meaning of
Section 162(m) of the Code and regulations promulgated thereunder.
Each Award under the Incentive Plan will be evidenced by an agreement that
sets forth the terms of the grant. Under the Incentive Plan, the Committee has
the authority to, among other things: (i) determine the Eligible Individuals to
whom Employee Options will be granted and the number of such options, prescribe
the terms and conditions of each Employee Option, and amend or modify any Option
Agreement consistent with the Incentive Plan; (ii) select the Eligible
Individuals to whom Awards will be granted, the terms and conditions of each
Award, and amend or modify any Award Agreement consistent with the Incentive
Plan; (iii) to construe and interpret the Incentive Plan and the Options and
Awards granted under the Incentive Plan, and to establish, amend and revoke
rules for the administration of the Incentive Plan; (iv) to determine leaves of
absence which may be granted to an Optionee or Grantee on an individual basis
without constituting a termination of service under the Incentive Plan; (v) to
exercise discretion with respect to its powers under the Incentive Plan; and
(vi) to generally act as the Committee deems advisable to promote the Company's
best interests with respect to the Incentive Plan. The Committee may take action
by a majority of a quorum at a meeting of the Committee, or in writing signed by
a majority of all members of the Committee.
Members of the Committee will not be liable for actions, failures to act or
determinations made in good faith with respect to the Incentive Plan, except for
liability arising from wilful misfeasance, gross negligence or reckless
disregard of duties. The Company has agreed under the Incentive Plan to
indemnify Committee members for expenses and, to the extent permitted by law,
liability incurred in connection with claims arising in connection with the
Incentive Plan.
SHARES AVAILABLE FOR ISSUANCE
Under the Incentive Plan, 1,500,000 shares of the Class A Common Stock (the
"Shares") will be available for the grant of Options and Awards to Eligible
Individuals, subject to the following limitations: (i) not more than one-third
of the allotted Shares may be the subject of Restricted Stock Awards; (ii) no
Eligible Individual may be granted Options and Awards in respect of more than
150,000 Shares per calendar year; (iii) no Eligible Individual may receive,
during the term of the Plan, Performance Units denominated in dollars in excess
of 100% of the Eligible Individual's base salary; and (iv) the Fair Market Value
of the Shares with respect to which Incentive Stock Options granted under the
Incentive Plan become exercisable for the first time by an Optionee during any
calendar year may not exceed $100,000. Upon a Change in Capitalization, however,
the Committee may adjust the maximum number and class of Shares with respect to
14
<PAGE> 17
which Options or Awards may be granted, the number and class of Shares which are
subject to outstanding Options or Awards and the purchase price thereof, the
number and class of Shares in respect of which Director Options are to be
granted, and the Performance Objectives.
Upon granting of an Option or Award, the number of Shares available for
granting further Options and Awards shall be reduced by (i) the number of Shares
in respect of which the Option or Award (other than a Performance Unit
denominated in dollars) is granted, and (ii) with respect to a Performance Unit
denominated in dollars, by an amount equal to the quotient of (a) the
denominated dollar amount of the Performance Unit, divided by (b) the Fair
Market Value of a Share on the date of grant of the Performance Unit. The Shares
available for further granting of Options or Awards may be increased by the
number of Shares allocable to an Outstanding Option or Award that expires, is
cancelled or otherwise terminated without having been exercised or paid.
STOCK OPTIONS
The terms and conditions of a grant of Employee Options to an Eligible
Individual will be set forth in an Agreement. The per Share purchase price of an
Employee Option granted under the Incentive Plan which, may be greater than, not
less than 80% of, or equal to the Fair Market Value on the date of grant, will
be determined by the Committee at the time of grant and set forth in the
Agreement, provided that the purchase price per Share under each Incentive Stock
Option must not be less than 100% of the Fair Market Value of a Share on the
date of grant (110% in the case of an Incentive Stock Option granted to a Ten
Percent Stockholder). Each Employee Option will be exercisable at such times and
in such installments as determined by the Committee. The Committee may
accelerate the exercisability of any Employee Option. Each Employee Option
terminates at the time determined by the Committee provided that the term of
each Employee Option may not exceed ten years (five years in the case of any
Incentive Stock Options granted to a Ten Percent Stockholder). An Employee
Option may not be adversely altered without the Optionee's consent.
Incentive Stock Options are not transferable except by will or the laws of
descent and distribution, and may be exercised during the Optionee's lifetime
only by the Optionee. Other Options or Awards may be transferred to the extent
provided in the Option or Award Agreement. Exercise of an Option will be made by
delivery of a written notice to the Secretary of the Company accompanied by
payment for the number of Shares to be purchased. In the discretion of the
Committee, the purchase price for Shares may be paid in cash or by transferring
Shares to the Company. In addition, Options may be exercised through a
registered broker-dealer pursuant to such cashless exercise procedures (other
than Share withholding) which are, from time to time, deemed acceptable by the
Committee. The number of Shares that may be purchased upon exercise of an Option
shall be rounded to the nearest number of whole Shares.
If the Fair Market Value of the Shares exceeds the exercise price of an
Option, an Optionee may request that the Committee authorize payment to the
Optionee of the difference between the Fair Market Value of part or all of the
Shares subject to the Option and the exercise price of the Option. The Committee
in its sole discretion may grant or deny such a request. To the extent granted,
the Committee will direct the Company to make the payment to the Optionee in
cash or Shares or any combination thereof. An Option will be deemed to be
exercised and canceled to the extent that the Committee grants the request. An
Optionee will not be deemed the owner of Shares subject to an Option until the
Option has been exercised, the Shares issued to the Optionee, and the Optionee's
name entered as a stockholder of record on the Company's books. At that time,
the Optionee shall have full voting, dividend and other ownership rights with
respect to such Shares, subject to any terms and conditions that may be set
forth in the applicable Agreement.
Unless otherwise provided in an employment agreement between an Optionee or
Grantee and the Company, or the applicable Option or Award Agreement, a
Termination of Employment shall have the following effects under the
circumstances indicated. If an Optionee has a Termination of Employment for any
reason other than for Cause or voluntarily by the Optionee prior to serving five
years as an employee of the Company (a "Voluntary Termination"), Options which
were exercisable as of the date of the Termination of Employment will remain
exercisable until the earlier of (i) ninety days after the date of the
Termination of Employment or (ii) the expiration of the stated term of the
Option. Upon a Termination of Employment by
15
<PAGE> 18
the Company for Cause or a Voluntary Termination, unless determined otherwise by
the Committee, any unexercised Options held by such Optionee will terminate and
expire concurrently with the Termination of Employment. Upon a Termination of
Employment caused by an Optionee's Disability, any unexercised Options held by
such Optionee which were exercisable on the date of the Termination of
Employment will expire one year after the date of the Termination of Employment
or, if earlier, the expiration date of the Option. Upon Termination of
Employment caused by death of an Optionee, Options which were exercisable as of
the date of death will remain exercisable by the Optionee's beneficiary until
the earlier of (i) one year after the Optionee's death or (ii) the expiration of
the stated term of the Option.
In the event of a Change in Control, outstanding Options will become
immediately and fully exercisable. In addition, to the extent set forth in a
particular Option Agreement, an Optionee may surrender for cancellation within
60 days after such Change in Control any Employee Option not yet exercised and
the Optionee will be entitled to receive cash in an amount equal to the excess,
if any, of (x) (A) in the case of a Nonqualified Stock Option, the greater of
(1) the Fair Market Value on the date preceding the surrender of the Shares
subject to the Employee Option surrendered or (2) the Adjusted Fair Market Value
of the Shares subject to the Employee Option surrendered or (B) in the case of
an Incentive Stock Option, the Fair Market Value on the date preceding the
surrender of the Shares subject to the Employee Option surrendered, over (y) the
purchase price for such Shares under the Employee Option surrendered. If an
Optionee's employment or service as a Director with the Company is terminated by
the Company following a Change in Control, Options held by the Optionee that
were exercisable on the date of termination shall remain exercisable until the
earlier of the first anniversary of the termination or the expiration date of
the Option.
DIRECTOR OPTIONS
The Incentive Plan also provides for the non-discretionary grant of Options
to each of its non-employee directors ("Director Options") as follows: (i) each
non-employee director who becomes a director after January 1, 1997 shall be
granted a Director Option in respect of 4,000 Shares upon election or
appointment; and (ii) annually on the first business day on or after January 1
of each calendar year that the Incentive Plan is in effect, all non-employee
directors who are members of the Board at that time shall be granted a Director
Option in respect of 2,000 Shares; provided, however, that a director shall not
be entitled to receive an annual grant during the year in which such director is
first appointed or elected. Director Options will be granted at a purchase price
equal to the Fair Market Value of the Shares subject to such Director Options on
the date of grant. Director Options vest with respect to 40% of the Shares
subject to such Director Options on the second anniversary of the date of grant;
and with respect to an additional 20% of such Shares on each of the third,
fourth and fifth anniversaries of the date of grant; provided that the director
remains in service as a director on each such date. Director Options generally
have ten-year terms, unless earlier terminated as follows. If an Optionee's
service as a director terminates for any reason other than Disability, death or
cause, the Optionee may exercise Options that were exercisable as of such
termination for three months after such termination, after which all such
Optionee's Options shall terminate. If an Optionee's service as a director
terminates by reason of Disability, the Optionee may exercise Options that were
exercisable as of such termination for one year after such termination, after
which all such Optionee's Options shall terminate. If an Optionee's service as a
director terminates for Cause, all Options granted to such Optionee will
immediately terminate. If an Optionee dies while a director, or within three
months after termination of service for any reason other than Disability, death
or Cause, or within 12 months after termination of service due to Disability,
such Optionee's Options, that were exercisable on the date of death or earlier
termination of Optionee's service, may be exercised for 12 months after the
Optionee's death by the Optionee's beneficiary, after which all such Optionee's
Options will terminate.
STOCK APPRECIATION RIGHTS ("SARs")
The Incentive Plan permits the granting of SARs either in connection with
the grant of an Employee Option (a "Tandem SAR") or as a freestanding right (a
"Freestanding SAR"). A SAR permits a Grantee to receive upon exercise of the
SAR, cash and/or Shares, at the discretion of the Committee, in an amount equal
to (i) the excess, if any, of the Fair Market Value of a Share on the date
preceding the SAR's exercise over
16
<PAGE> 19
the Fair Market Value of a Share on the date the SAR was granted (or the
purchase price in the case of a SAR granted in connection with an Option),
multiplied by (ii) the number of Shares as to which the SAR is being exercised.
When a SAR is granted, however, the Committee may establish a limit on the
maximum amount a Grantee may receive on exercise.
A Tandem SAR will be exercisable only at such times and to the extent the
related Employee Option is exercisable and may be transferred only to the extent
the related Employee Option may be transferred. Upon exercise of a Tandem SAR,
the Employee Option will be cancelled to the extent of the number of Shares as
to which the SAR is exercised. Upon the exercise of an Employee Option granted
in connection with a Tandem SAR, the SAR will be cancelled to the extent of the
number of Shares as to which the Employee Option is exercised. Freestanding SARs
will have such conditions as to exercisability, vesting and limitation as the
Committee determines, but shall in no event have a term longer than 10 years.
SARs will be exercised by the Grantee delivering written notice to the
Secretary of the Company. Payment of the SAR to the Grantee may be made in
Shares, cash or a combination thereof. No Award of SARs may be adversely altered
without the Grantee's consent.
In the event of a Change in Control of the Company, all SARs become
immediately and fully exercisable. In addition, to the extent set forth in a
particular SAR Agreement, an Grantee may receive cash or Shares with a value
equal to the excess, if any, of (A) the greater of (1) the Fair Market Value, on
the date preceding the exercise, of the Shares subject to the SAR exercise and
(2) the Adjusted Fair Market Value of the Shares on such date of such Shares
over (B) the Fair Market Value, on the date the SAR was granted, of the Shares
subject to the SAR exercised. If a Grantee's employment with the Company is
terminated by the Company following a Change in Control, SARs held by the
Grantee that were exercisable on the date of termination shall remain
exercisable until the earlier of the first anniversary of the termination or the
expiration date of the SAR.
DIVIDEND EQUIVALENT RIGHTS ("DERs")
DERs may be granted in tandem with an Option or Award, and may be payable
currently or deferred until the lapsing of the restrictions on the DERs or until
the vesting, exercise, payment, settlement or other lapse of restrictions on the
related Option or Award. DERs may be settled in cash or Shares or a combination
thereof, in a single installment or multiple installments.
RESTRICTED STOCK
The Committee will determine the terms of each Restricted Stock Award at
the time of grant, including the price, if any, to be paid by the Grantee for
the Restricted Stock, the restrictions placed on the Shares, and the time or
times when the restrictions will lapse. In addition, at the time of grant, the
Committee, in their discretion, may decide: (i) whether any dividends declared
or paid on Shares by the Company will be paid to Grantee or will be held for the
account of the Grantee until the restrictions imposed on the Restricted Stock
lapse, (ii) whether any deferred dividends will be reinvested in additional
Shares or held in cash, (iii) whether interest will be accrued on any deferred
dividends held in cash and (iv) whether any stock dividends paid will be subject
to the restrictions applicable to the Restricted Stock Award. Payment of
deferred dividends in respect of Restricted Stock will be made upon the lapsing
of the applicable restrictions. Dividends deferred in respect of Restricted
Stock shall be forfeited upon forfeiture of such Restricted Stock.
Shares of Restricted Stock shall be issued in the name of the Grantee after
the Award is granted, provided that the Grantee has executed an Agreement
evidencing the Award, the appropriate blank stock powers and, in the discretion
of the Committee, an escrow agreement and any other documents which the
Committee may require as a condition to the issuance of such Shares. The
Committee may require that the Shares of Restricted Stock and stock powers be
deposited with an escrow agent designated by the Committee. Unless the Committee
provides otherwise in the Agreement, upon delivery of the Shares to the escrow
agent, the Grantee shall have all of the rights of a stockholder with respect to
such Shares, including the right to vote and to receive dividends. Shares of
Restricted Stock may not be transferred in any manner, nor delivered to the
Grantee, until all restrictions upon the Shares have lapsed. Unless otherwise
provided at the time of grant,
17
<PAGE> 20
the restrictions on the Restricted Stock will lapse upon a Change in Control.
Upon the lapse of the restrictions on Shares of Restricted Stock, the Committee
shall cause a stock certificate representing such Shares to be delivered to the
Grantee, free of all restrictions under the Incentive Plan. The Committee may
modify outstanding Awards of Restricted Stock or accept the surrender of
outstanding Shares of Restricted Stock (to the extent the restrictions on such
Shares have not yet lapsed) and grant new Awards in substitution for them, but
may no modification shall adversely alter or the Award without the Grantee's
consent.
PERFORMANCE UNITS AND PERFORMANCE SHARES
Performance Units and Performance Shares will be awarded as the Committee
may determine, and the vesting of Performance Units and Performance Shares will
be based upon the Company's attainment within an established period of specified
performance objectives to be expressed by the Committee in terms of: earnings
per Share, Share price, pre-tax profits, net earnings, return on equity or
assets, revenues, EBITDA, market share or market penetration, or any combination
of the foregoing (the "Performance Objectives"). The agreements evidencing the
Award of Performance Shares or Performance Units will set forth the terms and
conditions thereof including those applicable in the event of the Grantee's
Termination of Employment.
Performance Units may be denominated in dollars or in Shares, and payments
in respect of Performance Units will be made in cash, Shares, Shares of
Restricted Stock or any combination of the foregoing, as determined by the
Committee. Payments in respect of vested Performance Units will be made after
the last day of the Performance Cycle to which the Award relates, unless the
Award Agreement provides for deferred payment. Performance Units vest when and
to the extent the Performance Objectives are satisfied for the Performance
Cycle.
The Committee shall provide, at the time an Award of Performance Shares is
made, the time at which the actual Shares represented by such Award shall be
issued to Grantee; provided, however, that no Performance Shares shall be issued
until the Grantee has executed an Agreement evidencing the Award, the
appropriate blank stock powers and, in the discretion of the Committee, an
escrow agreement and any other documents which the Committee may require. At the
discretion of the Committee, Shares issued in connection with an Award of
Performance Shares shall be deposited together with the stock powers with an
escrow agent designated by the Committee. The Committee may determine whether
the Grantee shall have, upon delivery of the Shares to the escrow agent, all of
the rights of a stockholder with respect to such Shares, including the right to
vote and to receive dividends. Until any restrictions upon the Performance
Shares shall have lapsed, such Performance Shares may not be transferred in any
manner, nor may they be delivered to the Grantee. Restrictions upon Performance
Shares awarded hereunder shall lapse and such Performance Shares shall become
vested at such time and on such terms, conditions and satisfaction of
Performance Objectives as the Committee may, in its discretion, determined at
the time an Award is granted.
At the time the Award of Performance Shares is granted, the Committee may
determine that the payment to the Grantee of dividends declared or paid on
actual Shares represented by such Award which have been issued by the Company to
the Grantee shall be (i) deferred until the lapsing of the restrictions imposed
upon such Performance Shares and (ii) held by the Company for the account of the
Grantee until such time. The Committee may determine whether deferred dividends
are to be reinvested in Shares or held in cash and, if held in cash, whether to
pay interest on the account and the rate of such interest. Payment of such
deferred dividends shall be made upon the lapsing of restrictions on the
Performance Shares, and any dividends deferred in respect of any Performance
Shares shall be forfeited upon the forfeiture of such Performance Shares.
Upon the lapse of the restrictions on Performance Shares, the Committee
shall cause a stock certificate to be delivered to the Grantee, free of all
restrictions under the Incentive Plan. The Committee may modify or accept the
surrender of outstanding Performance Awards and grant new Performance Awards in
substitution for them, but no such modification may adversely alter the Award
without the Grantee's consent.
In the event of a Change in Control, unless otherwise determined by the
Committee, all Performance Units will vest and all restrictions on Performance
Shares will lapse.
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<PAGE> 21
EFFECTIVE DATE; AMENDMENTS AND TERMINATION
The effective date of the Incentive Plan shall be the date of its adoption
by the Board, subject to Shareholder approval at the Annual Meeting. The
Incentive Plan will terminate on the day preceding the tenth anniversary of the
date of its adoption by the Board of Directors. The Board of Directors may at
any time and from time to time amend or terminate the Incentive Plan; provided,
however, that, to the extent necessary under applicable law, no such change will
be effective without the requisite approval of the Company's stockholders. In
addition, no such change may adversely alter or impair any Awards or Options
previously granted under the Incentive Plan, except with the consent of the
Grantee or Optionee, nor deprive any Optionee or Grantee of Shares he or she may
have acquired through the Incentive Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is generally a summary of the principal United
States federal income tax consequences under current federal income tax laws
relating to grants or awards to employees under the Incentive Plan. This summary
is not intended to be exhaustive and, among other things, does not describe
state, local or foreign income and other tax consequences.
Stock Options. An Optionee will not recognize any taxable income upon the
grant of a Nonqualified Stock Option and the Company will not be entitled to a
tax deduction with respect to such grant. Generally, upon exercise of a
Nonqualified Stock Option, the excess of the Fair Market Value of Shares subject
to the Option on the date of exercise over the per Share purchase price will be
taxable as ordinary income to the Optionee. If the Company complies with
applicable withholding requirements, the Company will be entitled to a tax
deduction in the same amount and at the same time as the Optionee recognizes
ordinary income, subject to any deduction limitation under Section 162(m) of the
Code (which is discussed below). The subsequent disposition of shares acquired
upon the exercise of a Nonqualified Stock Option will ordinarily result in
capital gain or loss.
Subject to the discussion below, an Optionee will not recognize taxable
income at the time of grant or exercise of an Incentive Stock Option and the
Company will not be entitled to a tax deduction with respect to such grant or
exercise. However, the exercise of an Incentive Stock Option may result in an
alternative minimum tax liability for the Optionee.
Generally, if an Optionee has held Shares acquired upon the exercise of an
Incentive Stock Option for at least one year after the date of exercise and for
at least two years after the date of grant of the Incentive Stock Option, upon
disposition of the Shares by the Optionee, the difference, if any, between the
sales price of the Shares and the per Share purchase price will be treated as
long-term capital gain or loss to the Optionee. Generally, upon a sale or other
disposition of Shares acquired upon the exercise of an Incentive Stock Option
within one year after the date of exercise or within two years after the date of
grant of the Incentive Stock Option (a "disqualifying disposition"), any excess
of the Fair Market Value of the Shares at the time of exercise of the Option
over the exercise price of such Option will constitute ordinary income to the
Optionee. Any excess of the amount realized by the holder on the disqualifying
disposition over the Fair Market Value of the Shares on the date of exercise
will generally be capital gain. Subject to any deduction limitation under
Section 162(m) of the Code, the Company will be entitled to a deduction equal to
amount of such ordinary income recognized by the holder.
If an Option is exercised through the use of Shares previously owned by the
holder, such exercise generally will not be considered a taxable disposition of
the previously owned Shares and thus no gain or loss will be recognized with
respect to such Shares upon such exercise. However, if the Option is an
Incentive Stock Option and the previously owned Shares were acquired on the
exercise of an Incentive Stock Option and the holding period requirement for
those Shares is not satisfied at the time they are used to exercise the Option,
such use will constitute a disqualifying disposition of the previously owned
Shares resulting in the recognition of ordinary income in the amount described
above.
Special rules may apply in the case of an Optionee who is subject to
Section 16 of the 1934 Act.
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<PAGE> 22
Stock Appreciation Rights. The amount of any cash (or the Fair Market
Value of any Shares) received upon the exercise of a SAR right under the
Incentive Plan will be includible in the Grantee's ordinary income and, subject
to satisfying applicable withholding requirements and any Company deduction
limitation under Section 162(m) of the Code.
Restricted Stock. A Grantee generally will not recognize taxable income
upon the grant of Restricted Stock, and the recognition of any income will be
postponed until such Shares are no longer subject to the restrictions or the
risk of forfeiture. When either the restrictions or the risk of forfeiture
lapses, the Grantee will recognize ordinary income equal to the Fair Market
Value of the Shares of Restricted Stock at the time that such restrictions lapse
and, subject to satisfying applicable withholding requirements and deduction
limitation under Section 162(m) of the Code, the Company will be entitled to a
deduction. A Grantee may elect to be taxed at the time of the grant of
Restricted Stock and, if this election is made, the Grantee will recognize
ordinary income equal to the excess of the Fair Market Value of the Shares of
Restricted Stock at the time of grant determined without regard to any of the
restrictions thereon over the amount paid, if any, by the Grantee for such
Shares.
Performance Shares and Performance Units. Generally, a Grantee will not
recognize any taxable income and the Company will not be entitled to a deduction
upon the award of Performance Shares or Performance Units. At the time the
Grantee receives the distribution in respect of the Performance Shares or the
Performance Units, the Fair Market Value of Shares or the amount of any cash
received in payment for such Awards generally is taxable to the Grantee as
ordinary income and, subject to the Company deduction limitation under Section
162(m) of the Code.
Dividend Equivalents. A Grantee realizes ordinary income upon the receipt
of Dividend Equivalents in an amount equal to any cash received.
Section 162(m). Section 162(m) of the Code generally disallows a federal
income tax deduction to any publicly held corporation for compensation paid in
excess of $1 million in any taxable year to the chief executive officer or any
of the four other most highly compensated executive officers who are employed by
the corporation on the last day of the taxable year, but does allow a deduction
for "performance-based compensation," the material terms of which are disclosed
to and approved by shareholders. The Company has structured and intends to
implement the Incentive Plan (except with respect to Options with an exercise
price less than the Fair Market Value of the underlying Shares on the date of
grant) so that compensation resulting therefrom would be qualified
"performance-based compensation." To allow the Company to qualify such
compensation, the Company is seeking shareholder approval of the Incentive Plan
and the material terms of the Performance Objectives applicable to Performance
Units under the Incentive Plan.
The Incentive Plan is designed to conform with Section 162(m) of the Code.
With respect to Options awarded under the Incentive Plan with an exercise price
less than the Fair Market Value of the underlying Shares on the date of grant,
there can be no assurance that the compensation attributable to such Options
will not be subject to the deduction limitations of Section 162(m) of the Code.
Section 280G of the Code. Under certain circumstances, the accelerated
vesting or exercise of Options or SARs, or the accelerated lapse of restrictions
with respect to other Awards, in connection with a Change of Control of the
Company might be deemed an "excess parachute payment" for purposes of the golden
parachute tax provisions of Section 280G of the Code. To the extent it is so
considered, the Grantee may be subject to a 20% excise tax and the Company may
be denied a tax deduction.
INTERPRETATION
Following the required registration of any equity security of the Company
pursuant to Section 12 of the Exchange Act, the Incentive Plan shall be
interpreted as follows. The Incentive Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee will interpret and
administer the Incentive Plan and Agreements in a manner consistent therewith.
Any provisions inconsistent with such Rule will be inoperative and will not
affect the validity of the Incentive Plan. Unless otherwise stated in the
relevant Agreement, each Option, SAR and Performance Award is intended to be
"performance-based compensation"
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<PAGE> 23
within the meaning of Section 162(m)(4)(C) of the Code. The Committee may not
exercise discretion otherwise authorized under the Incentive Plan if the ability
to exercise such discretion or the exercise of such discretion itself would
cause the Options or Awards to fail to qualify as performance-based
compensation.
NEW PLAN BENEFITS
As described above, the selection of the Eligible Individuals who will
receive Awards under the Incentive Plan, upon approval of the Plan by
shareholders, and the size and type of awards is generally to be determined by
the Committee in its discretion. Other than Director Options, no Awards have
been made or granted under the Incentive Plan, nor are any such Awards now
determinable. Thus, it is not possible to predict the benefits or amounts that
will be received by or allocated to particular individuals or groups of
employees in 1997. The table below sets forth certain information about Director
Options to be granted to non-employee directors after January 1, 1997, subject
to stockholder approval.
<TABLE>
<CAPTION>
DIRECTOR
NAME OPTIONS
------------------------------------------------------------ --------
<S> <C>
K. Fred Skousen............................................. 4,000
R.J. Shopf.................................................. 4,000
Alan C. Ashton.............................................. 4,000
All nonemployee directors as a group (3 persons)............ 12,000
</TABLE>
EFFECT ON THE GENEVA STEEL KEY EMPLOYEE PLAN
The adoption and approval of the Incentive Plan will not affect the Key
Employee Plan. Outstanding options granted under the Key Employee Plan will
remain in effect under the terms of their respective grants. As of November 29,
1996, there were 692,348 shares of Class A Common Stock reserved for issuance
upon the exercise of outstanding options granted under the Key Employee Plan and
284,827 shares of Class A Common Stock available for future grants.
VOTE REQUIRED
Approval and adoption of the Incentive Plan requires approval by a majority
of the votes cast on the proposal at the Annual Meeting, provided that the total
votes cast on the proposal represent over 50% of all shares of Common Stock
entitled to vote on the Proposal. For the reasons stated herein, the Board of
Directors unanimously recommends that shareholders vote for approval of the
Incentive Plan.
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, 1997, subject to ratification by the shareholders.
Arthur Andersen LLP has acted as independent auditor 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 auditor.
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.
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<PAGE> 24
PROPOSALS OF SHAREHOLDERS
Proposals which shareholders intend to present at the annual meeting of
shareholders to be held in calendar year 1998 must be received by Ken C.
Johnsen, 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, 1997.
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 1996 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.
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<PAGE> 25
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 January 3, 1997 at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held at the Screening Room, Sundance
Resort, Sundance, Utah 84604, on February 20, 1997, 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
RICHARD D. CLAYTON K. FRED SKOUSEN ALAN C. ASHTON
</TABLE>
2. PROPOSAL TO ADOPT the Geneva Steel Company 1996 Incentive Plan (the
"Incentive Plan")
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY the appointment of Arthur Andersen LLP as the independent
auditor of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
(continued)
<PAGE> 26
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, FOR THE ADOPTION
OF THE INCENTIVE PLAN, 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: , 1997
-----------------------------------
-------------------------------------------------------
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.)
