RELIANCE STEEL & ALUMINUM CO, DEF 14A, 2000-04-18

RELIANCE STEEL & ALUMINUM CO
DEF 14A, 2000-04-18
METALS SERVICE CENTERS & OFFICES

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<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. 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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(3) Filing Party:

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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 17, 2000

------------------------

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 17,
2000, 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 five directors to serve for two years and until their
successors have been elected and qualified. The nominees for election to
the Board are Joe D. Crider, Thomas W. Gimbel, David H. Hannah, Gregg J.
Mollins and William I. Rumer.

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 14, 2000 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 invited to attend the Annual Meeting. This year, to make it
easier for you to vote, we are introducing Internet and telephone voting. The
instructions attached to your proxy card describe how to use these convenient
new services. Of course, if you prefer, you can vote by mail by completing your
proxy card and returning it 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 17, 2000
<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 17, 2000

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 17, 2000 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, telephone and electronically
via the Internet. In addition, 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 five 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 2000. If no contrary instructions are indicated on the
proxy, each proxy will be voted FOR the election of the five 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, 1999 accompanied by a letter to the shareholders from the
President and Chief Executive Officer, the Executive Vice President and Chief
Operating Officer and the Senior Vice President and Chief Financial Officer 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 17, 2000.

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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
29, 2000 a total of 27,767,301 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 14, 2000 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 five 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.

ALL REFERENCES TO NUMBER OF SHARES AND PER SHARE AMOUNTS HAVE BEEN
RETROACTIVELY ADJUSTED TO REFLECT THE SEPTEMBER 1999 3-FOR-2 COMMON STOCK SPLIT.

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<PAGE> 5

SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of February 29, 2000,
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>
AMOUNT AND NATURE PERCENTAGE OF
OF BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP(2) SHARES OWNED
--------------------------------------- ----------------- -------------
<S> <C> <C>
Georgina T. Gimbel, as Trustee of the Gimbel Family Trust... 3,748,451 13.50%
740 Chaucer Road
San Marino, CA 91108
Florence A. Neilan.......................................... 4,198,090 15.12%
2888 Bayshore Dr., Apt. A-12
Newport Beach, CA 92663
Franklin Resources, Inc..................................... 1,448,921(3) 5.22%
777 Mariners Island Blvd.
San Mateo, CA 94404
Joe D. Crider............................................... 99,676(4) *
400 A Mariposa
Sierra Madre, CA 91024
Thomas W. Gimbel............................................ 55,695(5) *
P.O. Box 50270
Pasadena, CA 91115
David H. Hannah............................................. 104,038(6) *
Douglas M. Hayes............................................ 10,125(7) *
2545 Roscomare Rd.
Los Angeles, CA 90077
Robert Henigson............................................. 334,000(8) 1.20%
P.O. Box 345
Deer Harbor, WA 98243
Karl H. Loring.............................................. 37,459(9) *
4460 Wilshire Boulevard, #602
Los Angeles, CA 90010
Gregg J. Mollins............................................ 94,351(10) *
William I. Rumer............................................ 814,813(11) 2.93%
515 Ocean Avenue, #602 So.
Santa Monica, CA 90402
Leslie A. Waite............................................. 63,531(12) *
1640 Lombardy Road
Pasadena, CA 91106
Karla R. McDowell........................................... 24,869(13) *
James P. MacBeth............................................ 38,896(14) *
William K. Sales, Jr........................................ 16,598(15) *
All directors and executive officers as a group (12
persons).................................................. 1,694,051(16) 6.06%
</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) A Schedule 13-G was filed on behalf of Franklin Resource, Inc., parent
holding company; Charles B. Johnson, principal shareholder of parent
holding company; Rupert H. Johnson, principal shareholder of

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<PAGE> 6

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, 1,394,800 shares are owned by Franklin Advisers,
Inc. and 54,121 are owned by Franklin Management, Inc.

(4) These shares are held by Mr. Crider as a Co-Trustee of the Crider Family
Trust, with his wife. Includes 7,875 shares issuable upon the exercise of
options held by Mr. Crider, with exercise prices from $18.04 to $18.83 per
share. Excludes 44,304 shares with respect to which Mr. Crider has a vested
right and shared voting power pursuant to the Company's Employee Stock
Ownership Plan ("ESOP").

(5) Includes 7,875 shares issuable upon the exercise of options held by Mr.
Gimbel, with exercise prices from $18.58 to $18.83 per share and 750 shares
which are owned jointly with Mr. Gimbel's wife.

(6) Includes 28,500 shares issuable upon the exercise of options held by Mr.
Hannah, with exercise prices of $8.11 to $18.83 per share. All of the
shares are owned jointly with Mr. Hannah's wife. Excludes 12,390 shares
with respect to which Mr. Hannah has a vested right and shared voting power
pursuant to the Company's ESOP.

(7) Includes 7,875 shares issuable upon the exercise of options held by Mr.
Hayes, with exercise prices from $18.83 to $26.08 per share.

(8) Includes 7,875 shares issuable upon the exercise of options held by Mr.
Henigson, with exercise prices from $18.83 to $26.08 per share.

(9) These shares are held by Mr. Loring as Trustee of The Loring Family Trust.
Includes 6,375 shares issuable upon the exercise of options held by Mr.
Loring, with exercise prices from $18.83 to $26.08 per share.

(10) Includes 45,000 shares issuable upon the exercise of options held by Mr.
Mollins, with an exercise price of $8.11 to $18.83 per share. Excludes
4,706 shares with respect to which Mr. Mollins has a vested right and
shared voting power pursuant to the Company's ESOP.

(11) These shares are held by Mr. Rumer as Trustee of the Rumer Family Trust.
Includes 7,875 shares issuable upon the exercise of options held by Mr.
Rumer, with exercise prices from $18.83 to $26.08 per share. Excludes
shares held by Mr. Rumer's wife and adult children as to which he disclaims
beneficial ownership. Includes 1,500 shares held in Mr. Rumer's I.R.A.

(12) Includes 7,875 shares issuable upon the exercise of options held by Mr.
Waite, with exercise prices from $18.83 to $26.08 per share.

(13) Includes 15,938 shares issuable upon the exercise of options held by Ms.
McDowell, with exercise prices from $8.11 to $18.83 per share. Excludes
1,259 shares with respect to which Ms. McDowell has a vested right and
shared voting power pursuant to the Company's ESOP.

(14) Includes 16,219 shares issuable upon the exercise of options held by Mr.
MacBeth, with exercise prices from $8.11 to $24.67 per share. Excludes
4,215 shares with respect to which Mr. McBeth has a vested right and shared
voting power pursuant to the Company's ESOP.

(15) Includes 16,219 shares issuable upon the exercise of options held by Mr.
Sales, with exercise prices from $18.83 to $19.50 per share.

(16) See notes 4 through 15.

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<PAGE> 7

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 five 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 JOE D. CRIDER, THOMAS W. GIMBEL, DAVID
H. HANNAH, GREGG J. MOLLINS AND WILLIAM I. RUMER. 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 2000 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 1998, except for Mr. Gimbel, who was
appointed to the Board of Directors in January 1999. 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.

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.

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<PAGE> 8

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(1)................ 48 President; Chief Executive Officer; Director
Gregg J. Mollins(1)............... 45 Executive Vice President; Chief Operating Officer; Director
Karla R. McDowell................. 34 Senior Vice President; Chief Financial Officer
James P. MacBeth.................. 52 Vice President, Carbon Steel Operations
William K. Sales, Jr.............. 42 Vice President, Non-Ferrous Operations
Joe D. Crider(1).................. 70 Chairman of the Board; Director
Thomas W. Gimbel(1)............... 48 Director
Douglas M. Hayes(2)............... 55 Director
Robert Henigson(2)(3)(4).......... 74 Director
Karl H. Loring(2)(3)(4)........... 76 Director
William I. Rumer(1)(4)............ 73 Director
Leslie A. Waite(2)(3)(4).......... 54 Director
</TABLE>

- ---------------
(1) Term of office as a director expiring in 2000.

(2) Term of office as a director expiring in 2001.

(3) Member of the Audit Committee.

(4) Member of the Compensation and Stock Option Committee.

Nominees for Directors to be Elected in 2000 With Terms Ending in 2002

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.

THOMAS W. GIMBEL was appointed a director of the Company in January 1999.
Since 1984, Mr. Gimbel has been the President of Advanced Systems 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 1989 to 1990. From 1987 to 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

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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.

Directors Whose Terms Continue Until 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 chairman of the
board of directors of Compass Aerospace Corporation, a private company with
publicly traded bonds, where he serves on the Compensation Committee. In
addition, Mr. Hayes is 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 to certain of his
former clients, other than the Company, 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 1977. Mr. Waite is a member of the Audit Committee and the
Compensation and Stock Option Committee. Mr. Waite serves as Chairman of the
Compensation and Stock Option Committee.

Executive Officers

In addition to Messrs. Hannah and Mollins, the following are executive
officers of the Company.

KARLA R. MCDOWELL became Senior Vice President and Chief Financial Officer
of the Company in February 2000. Ms. McDowell served as Vice President and Chief
Financial Officer of the Company from 1999 to 2000 and was Vice President and
Controller from 1995 to 1999. Ms. McDowell was Corporate Controller 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.

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 Reliance Steel Company 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.

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.

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<PAGE> 10

BOARD OF DIRECTORS

Members of the Board of Directors of the Company who are not employees are
paid $6,250 per quarter, plus $1,200 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 $1,000 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 1999, the Board of Directors met twelve
times. No person attended fewer than 85% 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, members of the
Company's internal audit department 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 1999, the Audit Committee met four 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 1999, 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 1999
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.

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<PAGE> 11

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, 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 to high-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. Hannah as Chief Executive Officer of
the Company as to other officers.

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 125% 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 1999, 1998 and 1997, the
officers with Corporate responsibilities of the Company had the option of having
this incentive compensation bonus payable 100% in cash.

With respect to stock options that may be granted, which are 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 1999 that an aggregate of 578,250
options be issued to key employees, of which 237,750 were issued to named
executive officers, which recommendations were approved and options granted by
the Board in March 1999 and May 1999.

9
<PAGE> 12

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
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 1997, 1998 and 1999 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 1999:

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(2)
------------------ ---- -------- -------- -------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
David H. Hannah.......... 1999 $355,000 $451,321 $302,068(3) 75,000 $9,547
President and Chief 1998 325,000 331,946 9,884
Executive Officer 1997 288,750 294,766 343,508(4) 7,029
Gregg J. Mollins......... 1999 $255,000 $324,238 75,000 $9,547
Executive Vice 1998 235,000 240,071 9,884
President and Chief 1997 210,000 214,375 $343,508(4) 6,208
Operating Officer
Karla R. McDowell........ 1999 $150,000 $153,300 $139,669(3) 30,000 $9,547
Senior Vice President 1998 100,000 77,083 8,711
and Chief Financial 1997 89,250 68,797 65,945(4) 4,413
Officer
James P. MacBeth......... 1999 $150,000 $153,300 28,875 $9,547
Vice President, 1998 120,000 105,700 9,000 9,661
Carbon Steel Operations 1997 93,000 52,200 4,500 7,851
William K. Sales, Jr. ... 1999 $150,000 $153,300 28,875 $4,800
Vice President, Non- 1998 140,000 108,092 4,800
Ferrous Operations(5) 1997 49,467 36,236 18,000 --
</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 is paid in Common Stock of the Company. For 1999, 1998 and
1997, 100% of the Key-Man Incentive Plan bonus was paid in cash except to
Messrs. MacBeth and Sales in 1997.

(2) 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.

(3) The 1999 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".

(4) The 1997 amount represents the difference between the exercise price and
fair market value at date of exercise of non-qualified stock options.

(5) Mr. Sales joined the company in September 1997.

10
<PAGE> 13

During the fiscal years ended December 31, 1999, 1998 and 1997,
non-qualified stock options for 237,750, 9,000 and 22,500 shares, respectively,
of the Company's Common Stock were granted to the executive officers named in
the previous table.

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, 1999, and the stock options held as of December 31, 1999.

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(#)(2) AT FY-END($)(1)
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
David H. Hannah.......... 16,500 $302,068 8,812/83,438 $135,088/$336,805
Gregg J. Mollins......... 0 0 25,312/83,438 $388,033/$336,805
Karla R. McDowell........ 8,438 $139,669 4,219/34,219 $ 64,677/$202,977
James P. MacBeth......... 0 0 7,875/39,000 $ 60,604/$159,225
William K. Sales, Jr..... 0 0 9,000/37,875 $ 35,460/$168,574
</TABLE>

- ---------------
(1) The value of the shares as of December 31, 1999 was based on the closing
price on the New York Stock Exchange for that date or at the date of
exercise.

(2) Includes options where the option price exceeded the closing price for these
shares as of December 31, 1999.

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 945,000 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, 122,662 options were exercised at a price of $4.79 per share, with
51,975 of those options 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 1,687,500 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) 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

11
<PAGE> 14

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. During 1997,
options to purchase 42,750 shares of the Company's Common Stock were issued in
January at $12.67 per share and options to purchase 81,000 shares of the
Company's Common Stock were issued in September at $19.50 per share. Of these
options, 22,500 options were issued to named executive officers of the Company.
In March 1998, options to purchase 121,500 shares of the Company's Common Stock
were issued at $23.33 per share. In June 1998, options to purchase 31,500 shares
of the Company's Common Stock were issued at $24.67 per share. In October 1998,
options to purchase 136,500 shares of the Company's Common Stock were issued at
$19.87 per share. Of these options, 9,000 options were issued to named executive
officers of the Company. In March 1999, options to purchase 518,250 shares of
the Company's Common Stock were issued at $18.83 per share and options to
purchase 60,000 shares of the Company's Common Stock were issued in May at
$25.46 per share. Of these options, 237,750 options were issued to named
executive officers of the Company. In 1997, options to acquire 24,562 shares of
the Company's Common Stock were exercised at a price of $8.11 per share, none of
which were exercised by named executive officers. In 1998, options to acquire
64,875 shares of the Company's Common Stock were exercised at $8.11 per share,
none of which were exercised by named executive officers of the Company. In
1999, options to acquire 111,275 shares of the Company's Common Stock were
exercised at prices ranging from $8.11 to $19.50 per share, 24,938 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 300,000
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 acquire the Company's
Common Stock to non-employee directors. 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.
None of the stock options become exercisable until one year after the date of
the grant, unless specifically approved by the Board of Directors. In each of
the following four years, 25% of the options become exercisable on a cumulative
basis. In 1998, options to purchase 37,500 shares of the Company's Common Stock
were issued at $26.08 per share. In January 1999, options to purchase 7,500
shares of the Company's Common Stock were issued at $18.58 per share. In
February 1999, options to purchase 7,500 shares of the Company's Common Stock
were issued at $18.04 per share. In March 1999, options to purchase 105,000
shares of the Company's Common Stock were issued at $18.83 per share. With this
grant, 20% of the options were immediately exercisable and in each of the
following four years, 20% of the options become exercisable on a cumulative
basis, as specifically approved by the Board of Directors. No options were
exercisable during 1998. In 1999, options to acquire 1,500 shares of the
Company's Common Stock were exercised at a price of $18.83 per share.

401(k) Savings Plan

In 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 1997. The specified matching percentage, which was 50% in 1997, 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
contribution to this plan for the year ended December 31, 1997 was $742,000. The
Company's subsidiaries maintained 401(k) retirement plans or profit sharing
plans, of which 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.

12
<PAGE> 15

As of April 1, 1998, the Company 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 contributions to the Master Plan for the
years ended December 31, 1999 and 1998 were $2,596,000 and $2,965,000,
respectively. Other 401(k) and profit sharing plans exist as certain
subsidiaries had not yet combined their plans into the Master Plan as of
December 31, 1999.

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 collective bargaining units who
are members of such plans.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

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 401(k) Plan and ESOP. The SERP was amended in 1999 to provide for
a pre-retirement death benefit. A separate SERP exists for one of the companies
acquired during 1998, which provides post-retirement benefits to its employees.
The Company expenses were $1,007,000, $681,000 and $644,000 for the plans for
the years ended December 31, 1999, 1998 and 1997, 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>
David H. Hannah........................................ $213,936
Gregg J. Mollins....................................... $163,920
Karla R. McDowell...................................... $ 50,040
James P. MacBeth....................................... $ 72,864
William K. Sales, Jr................................... $ 88,236
</TABLE>

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
1999, 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
13
<PAGE> 16

assets. This bonus plan has been in effect for many years. In 1999, 19 out of 23
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. These subsidiary bonus plans are also reviewed
periodically by the executive officers of the Company.

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 1999, 1998 and 1997. 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.

14
<PAGE> 17

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 five year period from December 31, 1994, adjusted for the
September 1999 and June 1997 3:2 stock splits, through December 31, 1999. The
comparison of total return assumes that a fixed investment of $100 was invested
on December 31, 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, 1999. 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 FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG RELIANCE STEEL & ALUMINUM CO., THE S&P 500 INDEX,
THE RUSSELL 2000 INDEX AND A PEER GROUP
PERFORMANCE GRAPH

<TABLE>
<CAPTION>
RELIANCE STEEL &
ALUMINUM CO. PEER GROUP S & P 500 RUSSELL 2000
---------------- ---------- --------- ------------
<S> <C> <C> <C> <C>
12/94 100 100 100 100
12/95 165 113 138 127
12/96 282 162 169 155
12/97 362 144 283 204
12/98 338 101 290 191
12/99 434 106 351 188
</TABLE>

<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
--------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Reliance Steel & Aluminum Co. 100 165 282 362 338 434
Peer Group 100 113 162 144 101 106
S&P 500 100 138 169 283 290 351
Russell 2000 100 127 155 204 191 188
</TABLE>

- ---------------
* $100 invested on December 31, 1994 in stock -- including reinvestment of
dividends. Fiscal year ending December 31.

15
<PAGE> 18

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.

16
<PAGE> 19

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, 1999, 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 fifty years. The Board of Directors has selected Ernst & Young LLP to serve
in that capacity again for 2000. 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.

SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING

Shareholder proposals intended to be presented at the 2001 Annual Meeting
and included in the Company's proxy materials relating to such meeting must be
received not later than December 20, 2000. 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 17, 2000

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 17, 2000

The undersigned hereby instructs Union Bank of California N.A. to appoint David
H. Hannah and Gregg J. Mollins, and each of them, his true and lawful agents and
proxies with full power of substitution in each, to represent the undersigned at
the Annual Meeting of Shareholders of RELIANCE STEEL & ALUMINUM CO. to be held
at 10:00 a.m. on Wednesday, May 17, 2000 at the Ritz Carlton Huntington Hotel,
1401 South Oak Knoll Avenue, Pasadena, California 91106, and at any adjournments
thereof, on all matters coming before said meeting.

1. Election of Directors, Nominees:

01. Joe D. Crider, 02. Thomas W. Gimbel,

03. David H. Hannah, 04. Gregg J. Mollins,

05. William I. Rumer

2. Approval of Ernst & Young LLP as independent auditors.

3. In their discretion on such other matters as may properly come before the
meeting.

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.

(Change of address/comments)

- ------------------------------------

(If you have written in the above space, please mark
the corresponding box on the reverse side of this card.)

P
R
O
X
Y

SEE REVERSE
SIDE

sFold and Detach Heres

- ------------------------------------------------------------------------

Please mark your votes as in this example. 1592
x
- ------------------------------------------------------------------------

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

1. For, except vote withheld from the following nominee(s):

- ----------------------------------------------

2. Approval of Ernst & Young LLP as independent auditors.

3. In their discretion on such other matters as may properly come before the
meeting.

Change of Address on Reverse Side.

SIGNATURE(S) DATE
<PAGE> 21

NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.

- ------------------------------------------------------------------------

sFold and Detach Heres

PROXY VOTING INSTRUCTION CARD

Your vote is important. Casting your vote in one of the three ways described on
this instruction card votes the common shares indicated above of Reliance Steel
& Aluminum Co. that you are entitled to vote.

Please consider the issues discussed in the proxy statement and cast your vote
by:

- - Accessing the World Wide Web site http://www.eproxyvote.com/rs1 to vote via
the Internet.

- - Using a touch-tone telephone to vote by phone toll free from the U.S. or
Canada. Simply dial 1-877-779-8683 and follow the instructions. When you
are finished voting, your vote will be confirmed and the call will end.

- - Completing, dating, signing and mailing the proxy card in the postage-paid
envelope included with the proxy statement or sending it to Reliance Steel
& Aluminum Co., c/o First Chicago Trust Company, a division of EquiServe,
P.O. Box 8670, Edison, New Jersey 08818-9161.

You can vote by phone or via the Internet anytime prior to May 16, 2000. You
will need the control number printed at the top of this instruction card to vote
by phone or via the Internet. If you do so, you do not need to mail in your
proxy card.

<PAGE> 22

RELIANCE STEEL & ALUMINUM CO.

Proxy Solicited on Behalf of the Board of Directors of the Company for Annual
Meeting of Shareholders on May 17, 2000

The undersigned hereby constitutes and appoints David H. Hannah and Gregg J.
Mollins, and each of them, his true and lawful agents and proxies with full
power of substitution in each, to represent the undersigned at the Annual
Meeting of Shareholders of RELIANCE STEEL & ALUMINUM CO. to be held at 10:00
a.m. on Wednesday, May 17, 2000 at the Ritz Carlton Huntington Hotel, 1401 South
Oak Knoll Avenue, Pasadena, California 91106, and at any adjournments thereof,
on all matters coming before said meeting.

1. Election of Directors, Nominees:

01. Joe D. Crider, 02. Thomas W. Gimbel,

03. David H. Hannah, 04. Gregg J. Mollins,

05. William I. Rumer

2. Approval of Ernst & Young LLP as independent auditors.

3. In their discretion on such other matters as may properly come before the
meeting.

(Change of address/comments)

- ------------------------------------

(If you have written in the above space, please mark the corresponding box on
the reverse side of this card.)

P
R
O
X
Y

SEE REVERSE SIDE

sFold and Detach Heres

- ------------------------------------------------------------------------
- ------------------------------------------------------------------------

Please mark your
votes as in this
example. 3364

x
- ------------------------------------------------------------------------

FOR WITHHELD FOR AGAINST ABSTAIN

1. For, except vote withheld from the following nominee(s):

- -----------------------------------------------

2. Approval of Ernst & Young LLP as independent auditors.

3. In their discretion on such other matters as may properly come before the
meeting.

Change of Address on Reverse Side.

SIGNATURE(S) DATE

<PAGE> 23

NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.

- ------------------------------------------------------------------------

sFold and Detach Heres

PROXY VOTING INSTRUCTION CARD

Please consider the issues discussed in the proxy statement and cast your vote
by:

- - Accessing the World Wide Web site http://www.eproxyvote.com/rs to vote via
the Internet.

You can vote by phone or via the Internet anytime prior to May 17, 2000. You
will need the control number printed at the top of this instruction card to vote
by phone or via the Internet. If you do so, you do not need to mail in your
proxy card.
<PAGE> 24

- ------------------------------------------------------------------------

RELIANCE STEEL & ALUMINUM CO.

Proxy Solicited on Behalf of the Board of Directors of the Company for Annual
Meeting of Shareholders on May 17, 2000

The undersigned hereby instructs Fidelity Management Trust Company to appoint
David H. Hannah and Gregg J. Mollins, and each of them, his true and lawful
agents and proxies with full power of substitution in each, to represent the
undersigned at the Annual Meeting of Shareholders of RELIANCE STEEL & ALUMINUM
CO. to be held at 10:00 a.m. on Wednesday, May 17, 2000 at the Ritz Carlton
Huntington Hotel, 1401 South Oak Knoll Avenue, Pasadena, California 91106, and
at any adjournments thereof, on all matters coming before said meeting.

1. Election of Directors, Nominees:

01. Joe D. Crider, 02. Thomas W. Gimbel,

03. David H. Hannah, 04. Gregg J. Mollins,

05. William I. Rumer

2. Approval of Ernst & Young LLP as independent auditors.

3. In their discretion on such other matters as may properly come before the
meeting.

(Change of address/comments)

- ------------------------------------

(If you have written in the above space, please mark the corresponding box on
the reverse side of this card.)

P
R
O
X
Y

SEE REVERSE SIDE

sFold and Detach Heres

- ------------------------------------------------------------------------

Please mark your votes as in this example. 4386
x
- ------------------------------------------------------------------------

FOR WITHHELD FOR AGAINST ABSTAIN

1. For, except vote withheld from the following nominee(s):

- -----------------------------------------------

2. Approval of Ernst & Young LLP as independent auditors.

<PAGE> 25

3. In their discretion on 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 hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.

- ------------------------------------------------------------------------

sFold and Detach Heres

PROXY VOTING INSTRUCTION CARD

Please consider the issues discussed in the proxy statement and cast your vote
by:

- - Accessing the World Wide Web site http://www.eproxyvote.com/rs2 to vote via
the Internet.