<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
RELIANCE STEEL & ALUMINUM CO.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
RELIANCE STEEL & ALUMINUM CO.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1999
------------------------
To the Shareholders of
Reliance Steel & Aluminum Co.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the shareholders of
Reliance Steel & Aluminum Co. (the "Company") will be held on Wednesday, May 19,
1999, at 10:00 a.m., California time, at the Ritz Carlton Huntington Hotel, 1401
South Oak Knoll Avenue, Pasadena, California 91106, for the following purposes:
1. To elect four directors to serve for two years and until their
successors have been elected and qualified. The nominees for election to the
Board are Douglas M. Hayes, Robert Henigson, Karl H. Loring and Leslie A. Waite.
2. To approve Ernst & Young LLP as the independent auditors of the Company.
3. To transact such other business as may properly come before the Annual
Meeting or adjournments thereof.
Only holders of shares of record on the books of the Company at the close
of business on April 16, 1999 are entitled to notice of, and to vote at, the
Annual Meeting or any adjournments thereof. Trading in the Company's Common
Stock will continue during the solicitation period.
A Proxy Statement and a proxy in card form are enclosed with this Notice.
All shareholders are requested to attend the Annual Meeting. However, whether or
not you plan to attend in person, you are requested to fill in, sign and mail
the enclosed proxy as promptly as possible in the enclosed envelope to which no
postage need be affixed if it is mailed in the United States. The giving of such
proxy will not affect your right to vote in person if you attend the Annual
Meeting.
By Order of the Board of Directors,
Yvette M. Schiotis
Secretary
Los Angeles, California
April 19, 1999
<PAGE> 3
RELIANCE STEEL & ALUMINUM CO.
2550 EAST 25TH STREET
LOS ANGELES, CALIFORNIA 90058
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1999
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Reliance Steel & Aluminum Co. ("Reliance" or the
"Company") for use at the Annual Meeting of its shareholders to be held at the
Ritz Carlton Huntington Hotel, 1401 South Oak Knoll Avenue, Pasadena, California
91106, on Wednesday, May 19, 1999 at 10:00 a.m., California time, or at any
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting.
INFORMATION CONCERNING PROXY
The persons named as proxies were selected by the Board of Directors. The
shares of Common Stock represented by the proxies will be voted at the Annual
Meeting. The cost of solicitation of proxies will be borne by Reliance. The
Board of Directors will solicit proxies by mail. In addition to solicitation by
mail, certain officers and agents of the Company may solicit proxies by
telephone, telegraph and personal interview (the cost of which will be nominal).
It is anticipated that banks, brokerage houses and other custodians, nominees
and fiduciaries will be requested to forward soliciting material to beneficial
owners and to obtain authorizations for the execution of proxies. They will be
reimbursed by Reliance for their out-of-pocket expenses incurred in connection
therewith.
The only matters of business which Reliance's management intends to present
at the Annual Meeting are the election of four directors to serve for the
ensuing two years and until their successors are duly elected and qualified and
the approval of the Board's selection of Ernst & Young LLP as the Company's
independent auditors for 1999. If no contrary instructions are indicated on the
proxy, each proxy will be voted FOR the election of the four nominees named
herein as directors, and FOR the approval of Ernst & Young LLP. If other matters
properly come before the meeting, each proxy will be voted by the persons named
therein in a manner which they consider to be in the best interests of the
Company.
Shareholders who execute proxies may revoke them at any time before they
are voted (i) by filing with the Secretary of Reliance either an instrument
revoking the proxy or a proxy bearing a later date, duly executed by the
shareholder, or (ii) by giving written notice to Reliance of the death or
incapacity of the shareholder who executed the proxy. In addition, the powers of
a proxy holder are suspended if the person executing the proxy is present at the
Annual Meeting and elects to vote in person.
An Annual Report with audited financial statements for the fiscal year
ended December 31, 1998 accompanied by a letter to the shareholders from the
Chairman of the Board is included herewith. Such report and letter are not
incorporated in, and are not a part of, this Proxy Statement and do not
constitute proxy-soliciting material. Reliance intends to mail this Proxy
Statement and accompanying material on or about April 19, 1999.
<PAGE> 4
INFORMATION CONCERNING THE COMPANY'S SECURITIES
Shares of common stock, no par value (hereinafter sometimes called "shares"
or "Common Stock"), are the only voting securities of Reliance. As of February
28, 1999 a total of 18,460,677 shares were issued and outstanding, all of which
may be voted at the Annual Meeting. Only holders of shares of record on the
books of the Company at the close of business on April 16, 1999 will be entitled
to vote at the Annual Meeting.
In the election of directors, shareholders are entitled to cumulate their
votes for candidates whose names have been placed in nomination prior to the
voting, if a shareholder has given notice at the Annual Meeting prior to the
voting of his or her intention to cumulate votes. Cumulative voting entitles
every shareholder who is otherwise entitled to vote at an election of directors
to cumulate its votes, that is, to give any one candidate a number of votes
equal to the number of directors to be elected, multiplied by the number of
votes to which the shareholder's shares are normally entitled, or to distribute
those cumulated votes on the same principle among as many candidates as a
shareholder thinks fit. If any one shareholder gives notice of the intention to
cumulate votes, all shareholders may cumulate their votes for candidates. On all
matters other than election of directors, each share has one vote.
The affirmative vote of at least a plurality of the aggregate number of
votes represented by the shares present at the Annual Meeting in person or by
proxy is required to elect directors. That means that the four individuals
receiving the largest number of votes cast will be elected as directors, whether
or not they receive a majority of the votes cast. The affirmative vote of a
majority of the votes cast is required to approve the independent auditors.
2
<PAGE> 5
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of February 28, 1999,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known to the Company who owns beneficially or of record more than
five percent (5%) of the Common Stock of the Company, (ii) each director and
each executive officer named in the Summary Compensation Table and (iii) for all
directors and executive officers as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
AMOUNT AND NATURE OUTSTANDING
OF BENEFICIAL SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP(2) OWNED
--------------------------------------- ----------------- -------------
<S> <C> <C>
Georgina T. Gimbel, as Trustee of the Gimbel Family
Trust................................................ 2,498,967(3) 13.54%
740 Chaucer
San Marino, CA 91108
Florence Neilan........................................ 2,798,727 15.16%
2888 Bayshore Dr., A-12
Newport Beach, CA 92663
Franklin Advisers, Inc. ............................... 1,094,350(4) 5.93%
777 Mariners Island Blvd.
San Mateo, CA 94404
Joe D. Crider.......................................... 61,201(5) *
400 A Mariposa
Sierra Madre, CA 91024
Thomas W. Gimbel....................................... 31,880(6) *
P.O. Box 50270
Pasadena, CA 91115
David H. Hannah........................................ 67,235(7) *
Douglas M. Hayes....................................... 1,500 *
2545 Roscomare Rd
Los Angeles, CA 90077
Robert Henigson........................................ 244,750 1.33%
P.O. Box 345
Deer Harbor, WA 98243
Karl H. Loring......................................... 19,723(8) *
4460 Wilshire Boulevard, #602
Los Angeles, CA 90010
Gregg J. Mollins....................................... 60,776(9) *
William I. Rumer....................................... 552,974(10) 3.00%
515 Ocean Avenue, #602 So.
Santa Monica, CA 90402
Leslie A. Waite........................................ 37,104 *
1640 Lombardy Road
Pasadena, CA 91106
William K. Sales, Jr................................... 3,253(11) *
All directors and executive officers as a group (12
persons)............................................. 1,111,476(12) 6.01%
</TABLE>
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* Less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is 2550
East 25th Street, Los Angeles, California 90058.
(2) The Company has been advised that the named shareholders have the sole
power to vote and to dispose of the shares set forth after their names,
except as noted.
(3) Excludes 18,430 shares with respect to which the Gimbel Family Trust, as
beneficiary, has a vested right and shared voting power pursuant to the
Company's ESOP (as defined in "Executive Compensation -- Employee Stock
Ownership Plan").
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<PAGE> 6
(4) A Schedule 13-G was filed on behalf of Franklin Resources, Inc., parent
holding company; Charles B. Johnson, principal shareholder of parent
holding company; Rupert H. Johnson, principal shareholder of parent holding
company; and Franklin Advisers, Inc., investment adviser, all of which
disclaim beneficial ownership of the shares, which securities are reported
to be beneficially owned by one or more open or closed-end investment
companies or other managed accounts which are advised by direct and
indirect investment advisory subsidiaries of Franklin Resources, Inc. Of
the reported shares, 1,077,200 shares are owned by Franklin Advisers, Inc.
and 17,150 shares are owned by Franklin Management, Inc.
(5) These shares are held by Mr. Crider as a Co-Trustee of the Crider Family
Trust, with his wife. Excludes 29,096 shares with respect to which Mr.
Crider has a vested right and shared voting power pursuant to the Company's
ESOP.
(6) Includes 500 shares which are owned jointly with Mr. Gimbel's wife.
(7) Includes 16,875 shares issuable upon the exercise of options held by Mr.
Hannah, with an exercise price of $12.17 per share. All of the shares are
owned jointly with Mr. Hannah's wife. Excludes 7,914 shares with respect to
which Mr. Hannah has a vested right and shared voting power pursuant to the
Company's ESOP.
(8) These shares are held by Mr. Loring as Trustee of The Loring Family Trust.
(9) Includes 16,875 shares issuable upon the exercise of options held by Mr.
Mollins, with an exercise price of $12.17 per share. Excludes 2,816 shares
with respect to which Mr. Mollins has a vested right and shared voting
power pursuant to the Company's ESOP.
(10) These shares are held by Mr. Rumer as Trustee of the Rumer Family Trust.
Excludes shares held by Mr. Rumer's adult children as to which he disclaims
beneficial ownership. Includes 1,000 shares held in Mr. Rumer's I.R.A.
(11) Includes 3,000 shares issuable upon the exercise of options held by Mr.
Sales, with an exercise price of $29.25 per share.
(12) See notes 3, 5, 7, 9 and 11. Also includes 4,604 shares owned and 8,437
shares issuable upon the exercise of options by Karla R. McDowell and
15,118 shares owned and 3,000 shares issuable upon the exercise of options
by James P. MacBeth.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall be
divided into two classes, as nearly equal in number as possible, and that one
class shall be elected each year and serve for a two-year term. The terms of
only four of the incumbent directors expire as of the date of the Annual
Meeting. THE NOMINEES OF THE BOARD OF DIRECTORS FOR ELECTION AT THE ANNUAL
MEETING AS DIRECTORS OF THE COMPANY ARE DOUGLAS M. HAYES, ROBERT HENIGSON, KARL
H. LORING AND LESLIE A. WAITE. The term of office for each director elected at
the Annual Meeting will be two years, until the second following Annual Meeting
of Shareholders and until their successors are duly elected and qualified.
In the absence of any direction to the contrary, the proxies will be voted
FOR the above-named nominees. In voting the proxies for election of directors,
the persons named as proxies have the right to cumulate the votes for directors
covered by the proxies (unless otherwise instructed) and may do so if such
action is deemed desirable.
The nominees for the office of director expiring in 1999 were elected to
their present term of office by vote of the shareholders of the Company at the
Annual Meeting of Shareholders held in May 1997, except for Mr. Hayes, who was
appointed to the Board of Directors in September 1997. Although it is not
contemplated that any nominee will decline or be unable to serve as a director,
in the event that, at the date of the Annual Meeting or any adjournment thereof,
any nominee declines or is unable to serve, the proxies will be voted for such
other person for director as the Board of Directors may select or, if no other
person is so selected, as the persons named in the proxies may, in their
discretion, select.
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<PAGE> 7
CERTAIN INFORMATION WITH RESPECT TO EACH NOMINEE IS SET FORTH IN
"MANAGEMENT" BELOW. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION OF EACH NOMINEE AS A DIRECTOR OF THE COMPANY.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the directors
and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
David H. Hannah(2).................... 47 President; Chief Executive Officer;
Director
Gregg J. Mollins(2)................... 44 Executive Vice President; Chief
Operating Officer; Director
James P. MacBeth...................... 51 Vice President, Carbon Steel
Operations
Karla R. McDowell..................... 33 Vice President; Chief Financial
Officer
William K. Sales, Jr.................. 41 Vice President, Non-Ferrous Operations
Joe D. Crider(2)...................... 69 Chairman of the Board; Director
Thomas W. Gimbel(2)................... 47 Director
Douglas M. Hayes(1)................... 54 Director
Robert Henigson(1)(3)(4).............. 73 Director
Karl H. Loring(1)(3)(4)............... 75 Director
William I. Rumer(2)(4)................ 72 Director
Leslie A. Waite(1)(3)(4).............. 53 Director
</TABLE>
- ---------------
(1) Term of office as a director expiring in 1999.
(2) Term of office as a director expiring in 2000.
(3) Member of the Audit Committee.
(4) Member of the Compensation and Stock Option Committee.
Nominees for Directors to be Elected in 1999 With Terms Ending in 2001
DOUGLAS M. HAYES became a director of the Company in September 1997. Mr.
Hayes retired from Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
where he was Managing Director of Investment Banking from 1986 to May 1997,
after which he established his own investment banking firm, Hayes Capital
Corporation, located in Los Angeles, California. DLJ was an underwriter in the
1997 public equity offering of the Company and was also the underwriter in the
Company's initial public offering in 1994. Mr. Hayes is also a director of
Gametech International, Inc. a public company, the securities of which are
traded over the counter, where he serves on the Audit Committee and the
Compensation Committee.
ROBERT HENIGSON has been a director of the Company since 1964. Mr. Henigson
is a retired attorney, having been a partner of Lawler, Felix & Hall (the
predecessor to Arter & Hadden LLP, the Company's counsel) prior to his
retirement in 1986. Mr. Henigson is a member of the Audit Committee and the
Compensation and Stock Option Committee. Mr. Henigson is also a director of
Scope Industries, a public company listed on the American Stock Exchange.
KARL H. LORING has been a director of the Company since 1984. Mr. Loring is
retired, but continues to provide tax consulting services from time to time.
From 1983 to January 1992, Mr. Loring was an officer of Knapp Communications
Corporation, a publishing company. For more than five years prior to his
retirement in 1983, he was a tax partner for Ernst & Whinney. Mr. Loring is a
member of the Audit Committee and the Compensation and Stock Option Committee.
Mr. Loring serves as Chairman of the Audit Committee.
LESLIE A. WAITE has been a director of the Company since 1977. Mr. Waite is
an investment advisor and has been a principal of Waite & Associates since its
formation in 1978. Mr. Waite is a member of the Audit
5
<PAGE> 8
Committee and the Compensation and Stock Option Committee. Mr. Waite serves as
Chairman of the Compensation and Stock Option Committee.
Directors Whose Terms Continue Until 2000
JOE D. CRIDER became the Chairman of the Board of the Company in February
1997. Mr. Crider was the Chief Executive Officer of the Company from May 1994
until his retirement in January 1999. Mr. Crider was President of the Company
until November 1995. Before becoming the Chief Executive Officer, Mr. Crider had
been President and Chief Operating Officer and a director since 1987. Prior to
being named as the President and Chief Operating Officer, Mr. Crider had been
Executive Vice President and Chief Operating Officer since 1975. Mr. Crider is
also a director of American Steel, L.L.C.
THOMAS W. GIMBEL was appointed a director of the Company in January 1999.
Since 1984 Mr. Gimbel has been the President of Advanced System Group, which is
an independent computer consulting firm servicing human resource and payroll
systems requirements for diverse businesses of various sizes. From 1975 to 1984,
Mr. Gimbel was employed by Dun & Bradstreet.
DAVID H. HANNAH became the Chief Executive Officer of the Company in
January 1999, in addition to being President of the Company since November 1995.
Prior thereto, he was Executive Vice President and Chief Financial Officer from
1992 to 1995, Vice President and Chief Financial Officer from 1990 to 1992 and
Vice President and Division Manager of the Los Angeles Reliance Steel Company
division of the Company from July 1, 1989 to June 30, 1990. From January 1, 1987
to July 1, 1989, Mr. Hannah was Vice President and Chief Financial Officer of
the Company and, from 1981 to 1987, was Chief Financial Officer. Mr. Hannah
became a director of the Company in 1992. Mr. Hannah also serves as a director
of American Steel, L.L.C. For eight years before joining the Company in 1981,
Mr. Hannah, a certified public accountant, was employed by Ernst & Whinney in
various professional staff positions.
GREGG J. MOLLINS was appointed a director of the Company in September 1997
and became Executive Vice President and Chief Operating Officer in November
1995. Mr. Mollins was Vice President and Chief Operating Officer from 1994 to
1995 and Vice President from 1992 to 1994. Prior to that time he had been with
the Company for six years as Division Manager of the Santa Clara division. For
ten years before joining the Company in 1986, Mr. Mollins was employed by
certain of the Company's competitors in various sales and sales management
positions.
WILLIAM I. RUMER has been a director of the Company since 1957. Mr. Rumer
retired from Allied Aerospace where he was an aerospace engineer from 1961 to
1985. Mr. Rumer is a member of the Compensation and Stock Option Committee.
Executive Officers
In addition to Messrs. Hannah and Mollins, the following are executive
officers of the Company.
JAMES P. MACBETH became Vice President, Carbon Steel Operations in July
1998. Prior to this time, Mr. MacBeth served as Division Manager of the
Company's Los Angeles Division from September 1995 to June 1998. From December
1991 to September 1995, Mr. MacBeth was Vice President and Division Manager of
Feralloy Reliance Company, L.P., a joint venture owned 50% by the Company. Prior
to December 1991, Mr. MacBeth held various sales and management positions since
joining the Company in 1969.
KARLA R. MCDOWELL became Vice President and Chief Financial Officer of the
Company in January 1999. From 1995 to 1999, Ms. McDowell served as Vice
President and Controller of the Company. Ms. McDowell was Corporate Controller
of the Company from 1992 to 1995. For four years prior to joining the Company,
Ms. McDowell, a certified public accountant, was employed by Ernst & Young in
various professional staff positions.
WILLIAM K. SALES, JR. joined the Company as Vice President, Non-Ferrous
Operations in September 1997. From 1981 to 1997, Mr. Sales served in various
sales and management positions with Kaiser Aluminum & Chemical Corp., a producer
of aluminum products and a supplier of the Company.
6
<PAGE> 9
BOARD OF DIRECTORS
Members of the Board of Directors of the Company who are not employees are
paid $4,500 per quarter, plus $1,000 for each Board or committee meeting
attended. In addition, the Chairmen of the Audit Committee and the Compensation
and Stock Option Committee are paid an additional $500 per quarter. All
directors are reimbursed for expenses incurred in connection with Board or
committee meetings. Under the Directors Stock Option Plan, non-employee
directors are entitled to receive options to acquire the Company's Common Stock
in accordance with that plan. During 1998, the Board of Directors met twelve
times. No person attended fewer than 75% of the aggregate of the total number of
Board meetings and the total number of committee meetings held by the committees
on which he served.
The Board of Directors has authorized two standing committees: the Audit
Committee and the Compensation and Stock Option Committee, but has no standing
Nominating Committee at the present time. Nominations for the Board of Directors
are made and considered by the Board of Directors acting as a whole.
The Audit Committee confers formally with the Company's independent
auditors, as well as with members of the Company's management and those
employees performing internal accounting functions, to inquire as to the manner
in which the respective responsibilities of these groups and individuals are
being discharged. Reports of the Audit Committee's findings are made to the
Board of Directors. The Audit Committee makes recommendations to the Board of
Directors with respect to the scope of the audit conducted by the independent
auditors of the Company and the related fees, the accounting principles being
applied by the Company in financial reporting, and the adequacy of internal
controls and financial accounting procedures. In 1998, the Audit Committee met
three times.
The Compensation and Stock Option Committee annually reviews the
compensation of officers of the Company and recommends to the Board of Directors
changes in that compensation, as well as administering the Company's stock
option plans and its Supplemental Executive Retirement Plan. The Committee has
the authority to designate officers, directors or key employees eligible to
participate in the plans, to prescribe the terms of any award of stock options,
to interpret the plans, and to make all other determinations for administering
the plans. In 1998, the Compensation and Stock Option Committee met two times.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
THE COMMITTEE
The four-member Compensation and Stock Option Committee of the Board of
Directors (the "Compensation and Stock Option Committee" or the "Committee"),
which is composed entirely of independent, non-employee directors, makes
recommendations to the Board of Directors regarding compensation of the
Company's officers. The following report submitted by the Compensation and Stock
Option Committee addresses the Company's compensation policies for 1998
applicable to the Company's executive officers, including the executive officers
named in the Summary Compensation Table, and the Stock Option Plan and
Supplemental Executive Retirement Plan (the "SERP").
PRINCIPLES AND PROGRAMS
The Company's executive compensation program is a pay for performance
program. It is designed to:
- motivate executives to enhance shareholder value with compensation plans
that are tied to Company performance; and
- target executive compensation at a level to ensure the Company's ability
to attract and retain superior executives.
CASH SALARIES AND INCENTIVE COMPENSATION PROGRAMS
To meet the above objectives, the program has both cash and equity elements
which consist of base salary, an annual cash (and stock) incentive bonus and
stock options. In determining executive compensation,
7
<PAGE> 10
the Compensation and Stock Option Committee evaluates both the total
compensation package and its individual elements. As part of its review, the
Committee considers compensation data publicly available with respect to the
Company's key competitors. When competitive data is used, the Committee gives
primary consideration to the companies in its peer group.
Generally, the base compensation is set in the mid-range for comparable
companies, and the cash and stock incentive bonus is used to compensate
employees for their performance. It is expected that total compensation will
vary annually based on Company and individual performance and individual
contributions to the Company and its performance. The Compensation and Stock
Option Committee and the management of the Company believe that compensation
should be based both on short-term and long-term measurements and be directly
tied to Company performance. The Compensation and Stock Option Committee applied
the same standards to Mr. Crider as Chief Executive Officer of the Company as to
other officers, except that, commencing with payments made in 1996, the
Committee determined to reduce the portion of Mr. Crider's total compensation
that is allocated to base salary, in exchange for additional vacation time.
Under the Company's Key-Man Incentive Plan, the cash portion of the annual
bonus is designed to provide a short-term (one-year) incentive to officers based
on an evaluation of their individual contribution to the Company's financial
performance for the year. Officers and division managers are eligible for
incentive payments. Incentive awards are made after the prior fiscal year's
results are known. Generally, the aggregate of all awards made as an annual
bonus may not exceed that amount which is equal to 20% of the amount by which
the Company's net income for that year exceeds the rate of return on a one-year
Treasury bill multiplied by the Company's net worth at the beginning of the
year. No awards are made unless the Company's net income for that year exceeds
the average rate of return on a one-year Treasury bill (considered as a
risk-free rate of return) multiplied by the Company's net worth. Upon
recommendation of the Compensation and Stock Option Committee, the Board
approves all officer incentive payments. Officers of the subsidiaries are not
currently eligible to participate in the Key-Man Incentive Plan, but are
eligible to participate in other plans that this Committee does not administer.
These plans are based on each subsidiary's financial performance for the year.
The formula used to distribute the Incentive Pool among the key personnel
is reviewed annually to reflect better the individuals' respective contributions
to the operational profitability of the Company. The Company's officers are
awarded points based on their individual performance, as determined appropriate
by the Committee. Participating Division Managers are ranked according to four
criteria (size of the division, measured in sales dollars; profitability of the
division, in dollars; pretax return on sales percentage; and pretax return on
division assets percentage) and awarded points based on their rankings. The
Incentive Pool is then allocated to all participants based on their respective
number of points.
The maximum incentive bonus for division managers is 40% of base
compensation. The maximum incentive bonus for the Company's officers ranges from
40% to 100% of base compensation. This incentive compensation bonus is payable
75% in cash and 25% in the Company's Common Stock, which is restricted for two
years and is considered a long-term incentive. For 1998 and 1997, the officers
of the Company with Corporate responsibilities had the option of having this
incentive compensation bonus payable 100% in cash.
With respect to stock options that may be granted, which are also
considered long-term incentives, the Compensation and Stock Option Committee has
its scope and authority defined for it by the Stock Option Plan which it
administers. The Committee has complete authority to interpret the Plan and make
all decisions with respect to how it functions. The Committee recommends to whom
and in what number, and with what terms and conditions, options should be
granted but the Board must authorize the issuance of the options.
The Committee recommended to the Board in 1998 that an aggregate of 193,000
options be issued to key employees, of which none were issued to named executive
officers, which recommendations were approved and options granted by the Board
in March 1998, June 1998 and October 1998.
Typically, the Committee receives recommendations from the executive
officers of the Company as to who should receive options and in what amounts and
then the Committee meets to review and discuss those recommendations. In making
its recommendations to the Board, the Committee considers the position of the
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<PAGE> 11
intended optionee, his or her importance to the Company's activities, the number
of options already granted to that individual and the option price or prices at
which those earlier granted options are exercisable, the total number of options
to be recommended for granting and the relative number of such recommended
option grants among the various individuals then under consideration for option
grants.
The Committee generally does not consider the number of options granted by
other unrelated companies to their respective employees, nor has it ever sought
such information.
Robert Henigson Karl H. Loring William I. Rumer Leslie A. Waite
EXECUTIVE COMPENSATION
The following table summarizes certain information concerning the
compensation paid by the Company during fiscal years 1996, 1997 and 1998 to its
chief executive officer and each of the other four most highly compensated
executive officers whose aggregate salary and bonus exceeded $100,000 for
services rendered in all capacities to the Company during fiscal 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-----------------------
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
NAME AND ------------------------------ STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) OTHER AWARDS SARs(#) COMPENSATION(6)
------------------ ---- -------- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joe D. Crider................. 1998 $275,000 $280,904 $151,369(8) $9,884
Chairman of the Board(2) 1997 262,500 267,969 6,755
1996 250,000 255,383 235,935(4) 22,500 8,350
David H. Hannah............... 1998 $325,000 $331,946 $9,884
President and Chief 1997 288,750 294,766 $343,508(5) 7,029
Executive Officer(2) 1996 275,000 280,904 22,500 6,651
Gregg J. Mollins.............. 1998 $235,000 $240,071 $9,884
Executive Vice 1997 210,000 214,375 $343,508(5) 6,208
President and Chief 1996 200,000 154,341 22,500 6,658
Operating Officer
Steven S. Weis................ 1998 $185,000 $142,779 $4,800
Senior Vice President 1997 175,000 134,896 1,910
and Chief Financial 1996 160,000 123,508 15,000 2,631
Officer(3)
William K. Sales, Jr. ........ 1998 $140,000 $108,092 $4,800
Vice President, 1997 49,467 36,236 12,000 --
Non-Ferrous Operations(7)
</TABLE>
- ---------------
(1) The amounts shown were paid under the Company's Key-Man Incentive Plan and
also include Christmas gifts. Under the Company's Key-Man Incentive Plan,
25% of the bonus was paid in Common Stock of the Company to all officers in
1996, and to Mr. Sales in 1997. For 1998 and 1997, 100% of the bonus paid to
the noted individuals, except Mr. Sales in 1997, under the Key-Man Incentive
Plan was paid in cash.
(2) Mr. Crider served as Chief Executive Officer of the Company through January
1999. Upon Mr. Crider's retirement, Mr. Hannah was appointed Chief Executive
Officer.
(3) Mr. Weis is now deceased.
(4) The 1996 amount represents the difference between the exercise price and
fair market value at date of exercise of non-qualified stock options.
(5) The 1997 amount represents the difference between the exercise price and
fair market value at date of exercise of non-qualified stock options.
(6) Amounts represent allocations to the accounts of each of the named executive
officers of contributions made to the Company's ESOP and the amount which
represents the Company's matching contribution to its 401(k) savings plan.
9
<PAGE> 12
(7) Mr. Sales joined the Company in September 1997.
(8) The 1998 amount represents the difference between the exercise price and
fair market value at date of exercise of non-qualified stock options. See
"Aggregated Options/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values".
During the fiscal years ended December 31, 1997 and 1996, non-qualified
stock options for 12,000 and 82,500 shares, respectively, of the Company's
Common Stock were granted to the executive officers named in the previous table.
No stock options were granted by the Company to the executive officers named in
the previous table during the fiscal year ended December 31, 1998.
The following table sets forth information for the executive officers named
above with regard to the aggregate stock options exercised during the year ended
December 31, 1998, and the stock options held as of December 31, 1998.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/ OPTIONS/SARs
SHARES ACQUIRED VALUE SARs AT FY-END(#) AT FY-END($)(1)
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Joe D. Crider............ 11,250 $151,369 -0-/11,250 -0-/$173,869
David H. Hannah.......... -0- -0- 11,250/11,250 $173,869/$173,869
Gregg J. Mollins......... -0- -0- 11,250/11,250 $173,869/$173,869
Steven S. Weis........... -0- -0- 7,500/ 7,500 $115,913/$115,913
William K. Sales, Jr..... -0- -0- 3,000/ 9,000 --/--(2)
</TABLE>
- ---------------
(1) The value of the shares as of December 31, 1998 was based on the closing
price on the New York Stock Exchange for that date or at the date of
exercise for computation of the value realized.
(2) The option price exceeded the closing price for these shares on December 31,
1998.
STOCK OPTION PLANS
In 1989, the Company adopted a Non-Qualified Stock Option Plan (the "1989
Plan"), which allowed the Company to grant options to officers, directors and
key employees to purchase up to 630,000 shares of the Company's Common Stock at
a price at least equal to the fair market value of the stock at the date of the
grant. No options were exercisable until one year after the date of the grant;
in each of the following four years, 25% of the options became exercisable on a
cumulative basis. The options expired five years from the date of the grant. The
1989 Plan expired, by its terms, on December 31, 1993.
In 1997, 81,775 options were exercised at a price of $7.19 per share, with
31,500 of those options exercised by named executive officers of the Company. In
1996, options to acquire 56,110 shares of Common Stock were exercised at a price
of $7.19 per share, with 15,750 of those shares exercised by named executive
officers of the Company. At December 31, 1997, all options outstanding under the
1989 Plan had been exercised or expired under the terms of the plan. There are
no shares available for future grants under the 1989 Plan.
In 1994, the Board of Directors of the Company adopted an Incentive and
Non-Qualified Stock Option Plan (the "1994 Plan"), which was approved by the
shareholders in May 1994. There are 1,125,000 shares of Common Stock reserved
for issuance under the 1994 Plan. The 1994 Plan provides for granting of stock
options that may be either "Incentive Stock Options" within the meaning of
Section 422A of the Internal Revenue Code of 1986 (the "Code") or "Non-Qualified
Stock Options" which do not satisfy the provisions of Section 422A of the Code.
Incentive Stock Options are required to be issued at an option exercise price
per share equal to the fair market value of a share of Common Stock on the date
of grant, except that the exercise price of options granted to any employee who
owns (or, under pertinent Code provisions, is deemed to own)
10
<PAGE> 13
more than 10% of the outstanding Common Stock must equal at least 110% of fair
market value on the date of grant. Non-Qualified Stock Options must be issued at
an option exercise price equal to at least fair market value on the date of
grant. Exercise of a stock option will be subject to terms and conditions
established by the Committee and set forth in the instrument evidencing the
stock option. Stock options may be exercised with either cash or shares of the
Company's Common Stock or other form of payment authorized by the Committee.
Stock options may not be granted more than ten years from the date of the 1994
Plan and expire five years from the date of the grant. In January 1996, options
to purchase 332,250 shares of the Company's Common Stock at $12.17 per share
were granted to employees of the Company, 82,500 of which were granted to named
executive officers of the Company. During 1997, options to purchase 28,500
shares of the Company's Common Stock were issued in January at $12.67 per share
and options to purchase 54,000 shares of the Company's Common Stock were issued
in September at $29.25 per share. Of these options, 12,000 options were issued
to named executive officers of the Company. In March 1998, options to purchase
81,000 shares of the Company's Common Stock were issued at $35.00 per share. In
June 1998, options to purchase 21,000 shares of the Company's Common Stock were
issued at $37.00 per share. In October 1998, options to purchase 91,000 shares
of the Company's Common Stock were issued at $29.81 per share. None of the
options granted during 1998 were granted to named executive officers. No options
under the 1994 Plan were exercisable during 1996. In 1997, options to acquire
16,375 shares of the Company's Common Stock were exercised at a price of $12.17
per share, none of which were exercised by named executive officers. In 1998,
options to acquire 43,250 shares of the Company's Common Stock were exercised at
$12.17 per share, 11,250 of which were exercised by named executive officers of
the Company.
In May 1998, the shareholders approved the adoption of a Directors Stock
Option Plan for non-employee directors (the "Directors Plan"). There are 200,000
shares of the Company's Common Stock reserved for issuance under the Directors
Plan. In February 1999, the Directors Plan was amended to allow the Board of
Directors of the Company to grant additional options to non-employee directors
to acquire the Company's Common Stock. Options under the Directors Plan are
non-qualified stock options, with an exercise price at fair market value at the
date of grant. All options granted expire five years from the date of grant.
Options to acquire 5,000 shares were granted to each non-employee director upon
approval of the Directors Plan. In total for 1998, options to purchase 25,000
shares of the Company's Common Stock were issued at $39.13 per share. None of
these options were exercisable during 1998.
PENSION PLAN
As of January 1, 1965, the Company adopted a noncontributory defined
benefit retirement plan to cover salaried and certain hourly employees of the
Company. Benefits were determined by the "traditional unit credit" method which
considers the participant's eligible compensation in each year of employment,
rather than by final compensation and years of service. On July 5, 1996,
benefits under the pension plan were frozen. In February 1997, the Board
approved the termination of the pension plan. Thus, during 1997 all participants
under the plan who were not receiving an annuity were offered a lump sum
distribution, an annuity, or a tax free roll-over into the Company's 401(k) Plan
or an I.R.A.
The lump sum distribution for each of the executive officers named above
was as follows:
<TABLE>
<CAPTION>
LUMP SUM
NAME DISTRIBUTION(2)
---- ---------------
<S> <C>
Joe D. Crider............................................... $435,017
David H. Hannah............................................. $ 59,577
Gregg J. Mollins............................................ $ 26,964
Steven S. Weis.............................................. $ --(1)
William K. Sales, Jr........................................ $ --(3)
</TABLE>
- ---------------
(1) Mr. Weis was not eligible for the above pension plan due to his length of
service at the time the pension plan was frozen.
(2) These amounts were included under the Company sponsored retirement plans for
calculation of net benefits payable under the Company's Supplemental
Executive Retirement Plan.
(3) Mr. Sales was not employed by the Company at the time the Pension Plan was
frozen.
11
<PAGE> 14
401(K) SAVINGS PLAN
In July 1996, the Company adopted a 401(k) Savings Plan. Non-union
employees were eligible to participate in this plan after six months of service;
however, at the date of adoption, all active non-union employees were eligible
for immediate participation. Under this plan, employees could contribute
amounts, not to exceed the maximum amounts established by the Internal Revenue
Service, and the Company would then contribute an amount to the plan on behalf
of the participant, based on a maximum percentage of the employee's
compensation, which was 6% in 1998, 1997 and 1996. The specified matching
percentage, which was 50% in 1998, 1997 and 1996, and the maximum amount of the
employee's compensation subject to the Company's match were determined at the
discretion of the Company's Board of Directors on an annual basis. The Company
contribution vested at a rate of 25% per year, commencing one year after the
employee entered the plan except existing employees as of July 1996, who vested
based on prior service. The Company contributions to this plan for the years
ended December 31, 1997 and 1996 were $742,000 and $342,000, respectively.
Certain of the Company's subsidiaries also maintained 401(k) retirement plans or
profit sharing plans. Eight of the subsidiaries merged their plans into the
Company's plan during 1998. Contributions to these plans were funded annually
and were determined at the discretion of each subsidiary's Board of Directors.
As of December 31, 1998, the Company had combined substantially all of the
existing 401(k) and profit sharing plans of the Company and its subsidiaries
into one master 401(k) and profit sharing plan, the Reliance Steel & Aluminum
Co. Master 401(k) Plan (the "Master Plan"). The Master Plan allows each
subsidiary's annual matching percentage and maximum compensation limit to be
determined independently at the discretion of the respective Board of Directors.
Participation has continued in accordance with each subsidiary's previous plan.
Eligible employees may participate after three months of service, and the
Company contribution vests at 25% per year, commencing one year after the
employee enters the plan. The Company contribution to the Master Plan for the
year ended December 31, 1998 was $2,965,000. Not all subsidiary plans were
merged into the Master Plan as of December 31, 1998.
The Company also participates in various multi-employer pension plans
covering certain employees not covered under the Company's benefit plans
pursuant to agreements between the Company and the respective collective
bargaining units.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Also in 1996, the Company adopted a Supplemental Executive Retirement Plan
("SERP"), which provides post-retirement benefits to key officers of the
Company. Under the SERP, benefit payments equal 50% of the average of the
participant's highest five years of the last ten years of total cash
compensation, less benefits from other Company sponsored retirement plans,
including the Pension Plan, 401(k) Plan and ESOP. The Company expenses were
$575,000, $644,000 and $575,000 for this plan for the years ended December 31,
1998, 1997 and 1996, respectively, based on calculations made by the Company's
actuaries.
The estimated present value of annual benefits payable by the SERP, net of
amounts received under other Company sponsored retirement plans, at the normal
retirement age of 65 for each of the executive officers named above is as
follows:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS
NAME PAYABLE UPON RETIREMENT
---- -------------------------
<S> <C>
Joe D. Crider.......................................... $ 71,124(1)
David H. Hannah........................................ $195,132
Gregg J. Mollins....................................... $148,092
Steven S. Weis......................................... $153,996
William K. Sales, Jr. ................................. $ --(2)
</TABLE>
- ---------------
(1) Mr. Crider began receiving benefit payments from the SERP plan effective
February 1, 1999, upon his retirement from the Company.
(2) Mr. Sales did not become a participant in the SERP until January 1, 1999.
12
<PAGE> 15
INCENTIVE PLAN
The Company has maintained a Key-Man Incentive Plan for division managers
and officers since 1965, with subsequent amendments. The Incentive Plan was most
recently modified in January 1999, to reflect the current conditions of the
Company and the industry, and to allocate the incentive bonus pool in accordance
with the contributions of the eligible personnel. The initial incentive bonus
pool is calculated to equal 20% of the amount by which the Company's net income
for that year exceeds the rate of return on a one-year Treasury bill multiplied
by the Company's net worth at the beginning of the year. That pool is then
adjusted by additional calculations, including the accrual of the calculated
incentives. The Company's officers and division managers are eligible to
participate in the pool and are ranked according to certain criteria, and
awarded points based on their rankings. The incentive compensation bonus is
payable 75% in cash and 25% in the Company's Common Stock, except that, for 1998
and 1997, the Company's officers with Corporate responsibilities had the option
of having this bonus paid 100% in cash. Officers of the subsidiaries are not
currently eligible to participate under the Key-Man Incentive Plan. See
"Compensation and Stock Option Committee Report".
The Company also maintains a bonus plan for division managers that allows
them to participate in pre-tax income from their respective divisions if that
income exceeds an amount equal to a 15% return on division assets. This bonus
plan has been in effect for many years. In 1998, 18 out of 20 division managers
received bonuses under this plan. In addition, most divisions have informal
incentive compensation arrangements for other employees, which are proposed by
division managers and approved from time to time by executive officers of the
Company. The Company's subsidiaries have separate incentive bonus plans
structured in the same manner to provide bonuses to certain of the officers and
managers of these subsidiaries, based upon the earnings of the respective
subsidiary.
EMPLOYEE STOCK OWNERSHIP PLAN
In 1974, the Company adopted an Employee Stock Ownership Plan ("ESOP") that
was approved by the Internal Revenue Service as a qualified plan and that allows
eligible employees to acquire stock in the Company. Bank of America was the
trustee of the ESOP until March 1, 1999, when Union Bank of California was
appointed the ESOP trustee. All non-union employees, including officers, are
eligible to participate in the ESOP as of January 1 after one and one-half years
of service with the Company. An employee who is eligible to participate is fully
vested in the shares of the Company's Common Stock allocated to his/her ESOP
account. Allocation is based on the participant's compensation each year,
including bonuses, as compared to the total compensation of all participants,
subject to the maximum amounts established by the Internal Revenue Service. Each
year, the Company contributes to the ESOP an amount determined by the Board of
Directors, but no less than that amount necessary to cover the obligations of
the ESOP, including any trustee's fees. The Company's cash contributions were
$800,000 in both 1998 and 1997, and $600,000 in 1996. The cash contributions are
then used to purchase shares of the Company's Common Stock on the open market.
The shares are retained by the ESOP until a participant retires or otherwise
terminates his/her employment with the Company. Employees of the subsidiaries
are not eligible to participate under the Company's ESOP.
13
<PAGE> 16
PERFORMANCE GRAPHS
The following graph compares the performance of the Company's Common Stock
with that of the S&P 500, the Russell 2000 and a peer group selected by the
Company for the period from September 16, 1994, the effective date of the
initial public offering of the Company's Common Stock at an offering price of
$9.67 per share as adjusted for the 3:2 stock split in June 1997, through
December 31, 1998. The comparison of total return assumes that a fixed
investment of $100 was invested on September 16, 1994 in the Company's Common
Stock and assumes the reinvestment of dividends. Since there is no
nationally-recognized industry index consisting of metals service center
companies to be used as a peer group index, the Company constructed its own peer
group. The peer group consists of Steel Technologies Inc., Olympic Steel Inc.,
and Gibraltar Steel Corporation, all of which have securities listed for trading
on NASDAQ; A. M. Castle & Co., which has securities listed for trading on the
American Stock Exchange; and Huntco, Inc., Metals USA, Inc. and Ryerson Tull,
Inc. which have securities listed for trading on the New York Stock Exchange, as
of December 31, 1998. The returns of each member of the peer group are weighted
according to that member's stock market capitalization as of the period
measured. Although the performance of the Company's Common Stock has been better
than the performance of the securities of those companies in the peer group, the
stock price performance shown on the graph below is not necessarily indicative
of future price performance.
COMPARISON OF 51 MONTH CUMULATIVE TOTAL RETURN*
AMONG RELIANCE STEEL & ALUMINUM CO., THE S&P 500 INDEX, THE RUSSELL 2000
INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
RELIANCE STEEL &
ALUMINUM CO. PEER GROUP S&P 500 RUSSELL 2000
---------------- ---------- ------- ------------
<S> <C> <C> <C> <C>
9/94 100.00 100.00 100.00 100.00
12/94 87.00 87.00 98.00 98.00
12/95 144.00 94.00 135.00 126.00
12/96 246.00 131.00 166.00 146.00
12/97 316.00 124.00 220.00 179.00
12/98 295.00 102.00(1) 283.00 178.00
</TABLE>
- ---------------
* $100 Invested on September 16, 1994 in stock or index -- including
reinvestment of dividends. Fiscal year ending December 31.
(1) The Peer Group was adjusted to include Metals USA, Inc. in 1998.
14
<PAGE> 17
CERTAIN TRANSACTIONS
In addition to a provision authorizing the indemnification of directors,
the Company's Restated Articles of Incorporation include a provision which
limits or eliminates the personal liability of directors for monetary damages to
the Company or its shareholders for the breach of fiduciary duty as a director
in accordance with California corporate law. This provision does not limit or
eliminate the liability of a director for the following: (i) for acts or
omissions that involve intentional misconduct or a knowing and culpable
violation of law; (ii) for acts or omissions that a director believes to be
contrary to the best interests of the corporation or its shareholders, or that
involve the absence of good faith on the part of the director; (iii) for any
transaction from which a director derived an improper personal benefit; (iv) for
acts or omissions that show a reckless disregard of the director's duty to the
corporation or its shareholders in circumstances in which the director was
aware, or should have been aware, in the ordinary course of performing a
director's duties, of a risk of serious injury to the corporation or its
shareholders; (v) for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the
corporation or its shareholders; (vi) for transactions between the corporation
and a director, or between corporations having interrelated directors; and (vii)
for improper distributions and stock dividends, loans and guaranties. The
provisions of the Indemnification Agreements described below will be available
to directors in the event of claims made against a director for certain types of
liability which are not eliminated in the Restated Articles of Incorporation.
The Company's Bylaws require the Company to indemnify officers, directors,
employees and agents to the fullest extent permissible by California
Corporations Code Section 317 against expenses, judgments, fines, settlements or
other amounts actually and reasonably incurred by that person as a result of
being made or threatened to be made a party to a proceeding. The Company has
entered into indemnification agreements (such contracts are hereinafter referred
to as the "Indemnification Agreements") with all of its present directors and
all of its officers, to indemnify these persons against certain liabilities. The
form of these Indemnification Agreements was approved by the Board of Directors
and shareholders of the Company in March 1988, and the shareholders also
authorized the Board of Directors to enter into Indemnification Agreements with
all existing and future directors at the time they are so elected and to
determine, from time to time, whether similar Indemnification Agreements should
be entered into with other individual officers who are not directors. The
Indemnification Agreements provide for indemnification in cases where
indemnification might not otherwise be available in the absence of the
Indemnification Agreements under the Company's Restated Articles of
Incorporation.
Each Indemnification Agreement provides that the Company will indemnify the
indemnitee and hold him harmless, to the fullest extent permitted by law, from
all amounts which he pays or is obligated to pay as a result of claims against
him arising out of his service to the Company, including derivative claims by or
in the right of the Company. The Company has agreed to indemnify against the
amounts of all damages, judgments, sums paid in settlement (if approved by the
Company, which approval will not be unreasonably withheld), counsel fees, costs
of proceedings or appeals, and fines and penalties (other than fines and
penalties for which indemnification is not permitted by applicable law) within
the scope of the indemnification.
In addition, the Company has purchased directors and officers liability
insurance for the benefit of its directors and officers.
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the officers and directors of the Company and any person who directly or
indirectly is the beneficial owner of more than 10% of the Company's Common
Stock must file reports of beneficial ownership and any changes in such
ownership. The three forms used for reports are: the Form 3, which is an initial
statement of beneficial ownership of such securities; the Form 4, which reports
changes in beneficial ownership, generally occurring in the previous month; and
the Form 5, which is an annual statement to report changes that have not
previously been reported. Each of these forms must be filed at specified times.
15
<PAGE> 18
Based solely on the Company's review of such forms and written
representations made by certain of such reporting persons, the Company believes
that during the year ended December 31, 1998, all such persons have complied
with the requirements of Section 16(a).
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP has acted as the Company's independent auditors for more
than forty years. The Board of Directors has selected Ernst & Young LLP to serve
in that capacity again for 1999. A representative of Ernst & Young LLP will be
present at the Annual Meeting, will have an opportunity to make a statement if
he or she desires to do so, and will be available to respond to appropriate
questions. At the Annual Meeting, the shareholders will be asked to ratify and
approve this selection. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
OTHER MATTERS
While management has no reason to believe that any other business will be
presented at the Annual Meeting, if any other matters should properly come
before the Annual Meeting, the proxies will be voted as to such matters in
accordance with the best judgment of the proxy holders.
16
<PAGE> 19
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Shareholder proposals intended to be presented at the 2000 Annual Meeting
and included in the Company's proxy materials relating to such meeting must be
received not later than December 20, 1999. Such proposals must be addressed to
the Secretary of the Company.
The Company will furnish without charge to any shareholder, upon written
request directed to the Secretary of the Company at its address appearing at the
top of the first page of this Proxy Statement, a copy of its most recent Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
By Order of the Board of Directors,
Yvette M. Schiotis
Secretary
Los Angeles, California
April 19, 1999
17
<PAGE> 20
RELIANCE STEEL & ALUMINUM CO.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING OF SHAREHOLDERS ON MAY 19, 1999
P The undersigned hereby constitutes and appoints Joe D. Crider and David H.
Hannah, and each of them, his true and lawful agents and proxies with full
R power of substitution in each, to represent the undersigned at the Annual
Meeting of Shareholders of RELIANCE STEEL & ALUMINUM CO. to be held at
O 10:00 a.m. on Wednesday, May 19, 1999 at the Ritz Carlton Huntington Hotel,
1401 South Oak Knoll Avenue, Pasadena, California 91106, and at any
X adjournments thereof, on all matters coming before said meeting.
Y 1. Election of Directors, Nominees: (change of address/comments)
Douglas M. Hayes, Robert Henigson, ___________________________________
Karl H. Loring, Leslie A. Waite
___________________________________
2. Approval of Ernst & Young LLP as
independent auditors. ___________________________________
3. In their discretion on such other ___________________________________
matters as may properly come
before the meeting. (If you have written in the above
space, please mark the corresponding
box on the reverse side of this card)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE BOARD
OF DIRECTORS RECOMMENDS VOTING FOR ALL NOMINEES IN ITEM 1 AND FOR ITEMS 2
AND 3. THE PROXY COMMITTEE CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND
RETURN THIS CARD.
-----------
SEE REVERSE
SIDE
-----------
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 21
<TABLE>
<S> <C>
- ---- Please mark your / 3364
X votes as in this -------
- ---- example
This proxy when properly executed will be voted in the manner directed herein. If no
direction is made, this proxy will be voted FOR the election of all nominees listed in Item
1, and FOR Items 2 and 3.
FOR WITHHELD FOR AGAINST ABSTAIN
-------- -------- 2. Approval of Ernst & -------- -------- --------
Young LLP as
Independent auditors.
1. -------- -------- -------- -------- --------
For, except vote withheld 3. In their discretion on -------- -------- --------
from the following nominee(s): such other matters as
may properly come
______________________________ before the meeting. -------- -------- --------
Change of Address --------
on Reverse Side.
--------
SIGNATURE(S) __________________________ DATE __________
NOTE: Please sign exactly as name appears herein. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give full
title as such.
</TABLE>
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[RELIANCE STEEL & ALUMINUM CO. GRAPH]
