<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14A Information
PROXY STATEMENT
Pursuant to Section 14(A) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant: ACME METALS INCORPORATED
----------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-12
ACME METALS INCORPORATED
- ------------------------------------------------------------------------------
(Name of registrant as specified in its charter)
ACME METALS INCORPORATED
- ------------------------------------------------------------------------------
(Name of person(s) filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 9-11(c)(1)(ii),141-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
------------
- ------------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
---------------
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount previously paid:
---------------------------------------------------
2. Form, schedule or registration statement no.:
-----------------------------
3. Filing party:
--------------------------------------------------------------
4. Date filed:
----------------------------------------------------------------
<PAGE>
ACME METALS INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF ACME METALS INCORPORATED:
Notice is hereby given that the 1994 Annual Meeting of Shareholders of
Acme Metals Incorporated, a Delaware corporation, (the "Company") will be held
at Harris Trust and Savings Bank, 111 West Monroe, Chicago, Illinois 60690, on
Thursday, April 28, 1994, at 10:00 a.m., central time, for the purpose of
considering and voting on:
1. the election of three directors, each to serve for a term of three
years;
2. the ratification of the appointment of Price Waterhouse as independent
accountants for the Company for the fiscal year 1994;
3. the approval of the 1994 Stock Incentive Program;
4. the approval of the 1994 Executive Incentive Compensation Plan;
5. the transaction of such other business as may properly come before
the meeting.
The Board of Directors has determined that only shareholders of record at
the close of business on Monday, March 14, 1994, are entitled to notice of and
to vote at the Annual Meeting of Shareholders or any adjournment thereof.
Whether or not you plan to attend the meeting, please complete the proxy
card enclosed and return it promptly in the accompanying postage prepaid
envelope. If you do attend the meeting and wish to vote in person, you may
withdraw your proxy at that time.
/s/Edward P. Weber, Jr.
--------------------
Edward P. Weber, Jr.
Secretary
Riverdale, Illinois
March 29, 1994
IMPORTANT - YOUR PROXY IS ENCLOSED IN THE
ADDRESS WINDOW OF THE ENVELOPE CONTAINING THIS MATERIAL
13500 SOUTH PERRY AVENUE, RIVERDALE, ILLINOIS 60627-1182 PHONE 708 849-2500
<PAGE>
ACME METALS INCORPORATED
13500 S. PERRY AVENUE, RIVERDALE, ILLINOIS 60627-1182
___________
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Acme Metals Incorporated of the accompanying proxy
to be used at the Annual Meeting of Shareholders of Acme Metals Incorporated
and any adjournment thereof. In this proxy statement "Company" means Acme
Metals Incorporated and its predecessor company, "Board" means the Board of
Directors of the Company, "common stock" means the common stock of the
Company, "Annual Meeting" means the Annual Meeting of Shareholders.
The Annual Meeting will be held on Thursday, April 28, 1994, at the time
and place and for the purposes set forth in the accompanying Notice of Annual
Meeting. At the date of this proxy statement the only business which the
Board intends to present, or knows that others will present, is described in
this proxy statement.
The Board has fixed the close of business on March 14, 1994 as the
record date for the determination of shareholders entitled to notice and to
vote at the Annual Meeting. At the record date, there were 5,547,592 shares
of common stock, par value $1.00 per share, outstanding and entitled to vote
on all matters to be acted upon at the meeting.
Unless otherwise indicated, information furnished in this proxy
statement prior to May 25, 1992 is for Acme Steel Company and after May 25,
1992 for Acme Metals Incorporated. The Securities and Exchange Commission has
determined that for reporting purposes Acme Metals Incorporated is successor
to Acme Steel Company.
Under Delaware law and the Company's Restated Certificate of
Incorporation, for each share of common stock held, each shareholder is
entitled to cast one vote for each nominee for each of the three directorships
to be filled. On other matters, each shareholder is entitled to cast one vote
for each share of common stock held. The three nominees for director
receiving the highest number of votes cast will be elected whether or not any
of them receive the vote of a majority of the shares represented at the
meeting. Approval of Proposal No. 2 addressing ratification of the selection
of independent accountants and Proposals No. 3 and No. 4 addressing approval
of the 1994 Stock Incentive Program and the 1994 Executive Incentive
Compensation Plan, respectively, described herein will require the affirmative
vote of the majority of the shares of common stock represented at the meeting.
Representation in person or by proxy of a majority of the outstanding shares
entitled to vote is required for a quorum at the Annual Meeting. Abstentions
and "non-votes" are counted as present in determining whether the quorum
requirement is satisfied. Abstentions and "non-votes" have the same effect as
votes against proposals presented to shareholders other than election of
directors. A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner.
Shares of common stock represented by properly executed proxies, if such
proxies are received at or prior to the Annual Meeting, and not revoked, will
be voted at such meeting in accordance with any
<PAGE>
specifications thereon or, if no specifications are made, will be voted FOR
the election of the Board's nominees, FOR ratification of the selection of
Price Waterhouse as independent accountants, FOR adoption of the 1994 Stock
Incentive Program, and FOR adoption of the 1994 Executive Incentive
Compensation Plan. Any proxy may be revoked at any time before it is
exercised by receipt of a later dated proxy, or by receipt by the Secretary of
the Company of a written revocation, or by voting by ballot at the meeting.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone and by certain executive officers or regular employees of the
Company, none of whom will receive any compensation therefor in addition to
their regular remuneration. The Company will reimburse brokers and certain
other persons holding stock in their names or in the names of nominees for
their expenses in sending proxy material to principals and obtaining their
proxies.
The Company has retained Morrow & Co., Inc., 909 Third Avenue, New York,
New York, to aid in the solicitation of proxies from brokers, bank nominees
and other institutional owners, but not individual holders of record, by
personal interview, telephone, telegram or mail. The Company will pay Morrow
& Co., Inc. fees not to exceed $5,000.00 and will reimburse such organization
for certain expenses incurred by it.
In order to be considered for inclusion in the Company's proxy statement
and form of proxy for the 1995 Annual Meeting of Shareholders, any shareholder
proposal intended to be presented at that meeting must be received by the
Company at the address shown on the first page of this proxy statement on or
before November 30, 1994.
The Company's 1993 Annual Report/Form 10-K is being mailed to
shareholders on or before the date of mailing of this proxy statement. The
Annual Report/Form 10-K contains financial and other information about the
Company, but the Annual Report/Form 10-K is not incorporated in this proxy
statement and is not to be deemed a part of the proxy soliciting material.
SHAREHOLDERS WITH QUESTIONS CONCERNING ACME METALS AND ITS OPERATIONS
OR REQUESTING A COPY OF THE COMPANY'S FORM 10-K SHOULD DIRECT INQUIRIES TO
CHARLES A. NEKVASIL, DIRECTOR, PUBLIC AND INVESTOR RELATIONS, ACME METALS
INCORPORATED, PHONE 708-841-8383, EXT. 2266.
The Notice of Meeting, this proxy statement, form of proxy card and
Annual Report/Form 10-K for 1993 are being mailed on or about March 29, 1994
to each shareholder of the Company at such holder's address of record.
The Notice of Meeting, this proxy statement and a voting instruction
card are being mailed to eligible participants in the Company's Salaried
Employees Retirement Savings Plan, the Company's Employee Stock Ownership Plan
and the Alpha Tube Corporation Employees 401(k) Retirement Plan. Harris Trust
and Savings Bank, Trustee for the plans, as the shareholder of record of the
shares of common stock held in the plans, will vote the shares in accordance
with written instructions from the participants and where no instructions are
received, the Trustee will vote in accordance with the recommendations set
forth by the Board in this proxy statement.
2
<PAGE>
ELECTION OF DIRECTORS (PROPOSAL NO. 1)
The Restated Certificate of Incorporation of the Company provides that
the Board shall consist of not fewer than three nor more than fifteen
directors, as may be fixed by the Board from time to time. The directors are
divided into three classes, as nearly equal in number as possible, designated
Class I, Class II and Class III. At each Annual Meeting successors to the
class of directors whose term expires at that annual meeting are elected for a
three-year term. The Board has fixed the number of directors at eleven. Mr.
Eugene P. Berg has elected to retire as a director of the Company on April 28,
1994 and will not stand for re-election at this year's Annual Meeting. The
Board of Directors, following the Annual Meeting of Shareholders, will either
adjust the number of directors or elect a new director to fill the vacancy
resulting from Mr. Berg's retirement, all in accordance with the By-Laws of
the Company. Shareholders may only vote their shares for the number of
nominees named in this proxy statement.
The three persons listed below, as nominees to be elected as directors,
will serve for terms expiring at the 1997 Annual Meeting and until their
respective successors shall be elected and qualified. Each nominee has
consented to being named in this proxy statement and to serve if elected. In
the event of the inability of any one or more of the nominees to stand for
election, which is not anticipated, the Board has authorized Messrs. Brian W.
H. Marsden, Edward P. Weber, Jr. and Jerry F. Williams ("Proxies"), in the
exercise of their discretion, to nominate and vote for a substitute nominee or
nominees, or in lieu thereof, the Board may reduce the number of directors in
accordance with the By-Laws of the Company.
At the time of the Reorganization in 1992, the directors of Acme Steel
Company became directors of the Company. Each incumbent director's term of
office remained the same as it had been with Acme Steel Company. The term of
office indicated below includes the term of office with Acme Steel Company.
Information regarding the nominees and current directors is set forth
below. There are no marriage, blood or adopted relationships among the
individuals. Each current director has served continuously since he was first
elected.
NOMINEES FOR ELECTION AS CLASS II DIRECTORS FOR A TERM EXPIRING IN 1997
STEPHEN D. BENNETT
Age 45
Director since January 1993
President and Chief Operating Officer of Acme Metals
Incorporated since January 1, 1993 and Group Vice President
May 25, 1992 to December 31, 1992; Group Vice President of
[PHOTO] Acme Steel Company (integrated steel producer) January 1992
through May 1992 and Vice President-Operations June 1990
through December 1991; General Manager of Fairfield Works,
USS Division of USX Corporation (domestic integrated steel
producer) December 1987 to May 1990.
3
<PAGE>
NOMINEES FOR ELECTION AS CLASS II DIRECTORS FOR A TERM EXPIRING IN 1997-
CONTINUED
ANDREW R. LAIDLAW
Age 47
[PHOTO] Director since May 1987
Member: Audit Review (Chairman), Executive and Nominating
Committees
Chairman of the Executive or Partner at the firm of
Seyfarth, Shaw, Fairweather & Geraldson (law firm) since
1978.
FRANK A. LePAGE
[PHOTO] Age 66
Director since May 1987
Member: Compensation (Chairman), Finance and Nominating
Committees
Retired Director and Executive Vice President of The
Firestone Tire & Rubber Company (manufacturer of tires and
related products) since 1982. He is a director of
Parker-Hannifin Corporation.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES AS CLASS II
DIRECTORS OF THE COMPANY WHICH IS PRESENTED AS PROPOSAL NO. 1.
4
<PAGE>
CLASS I DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1996
C. J. GAUTHIER
[PHOTO] Age 72
Director since June 1986
Member: Audit Review, Compensation, Executive and
Nominating Committees
Retired Chairman, President and Chief Executive Officer of
NICOR Inc. (public utility holding company) since January
1986.
JULIEN L. McCALL
[PHOTO] Age 72
Director since June 1986
Member: Compensation, Finance and Nominating Committees
Retired Chairman of the Board and Chief Executive Officer of
National City Corporation (bank holding company) since May
1986. Chairman of the Board and Chief Executive Officer of
National City Corporation from December 1980 to May 1986.
He is a director of Brush Wellman Inc. and R B & W
Corporation.
WILLIAM R. WILSON
[PHOTO] Age 66
Director since July 1992
Member: Audit Review, Compensation and Nominating
Committees
Retired Chairman and Chief Executive Officer of Lukens Inc.
since December 1991. He is a director of Columbia Gas
System, Inc. and Provident Mutual Life Insurance Company.
5
<PAGE>
CLASS III DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1995
EDWARD G. JORDAN
[PHOTO] Age 64
Director since July 1988
Member: Audit Review, Finance (Chairman) and Nominating
Committees
President and Chief Executive Officer of The American
College (private, accredited, nontraditional college
specializing in financial services and insurance education)
1982 through 1987; he served as a consultant to its board of
trustees in 1988. Mr. Jordan is currently a private
investor. He is a director of The ARA Group, Inc. and The
Pittston Company.
REYNOLD C. MacDONALD
[PHOTO] Age 75
Director since June 1986
Member: Audit Review, Executive, Finance and Nominating
Committees
Retired Chairman of the Board of Acme Steel Company since
May 1992. Chairman of the Board of Acme Steel Company June
1986 to May 1992. He is a director of The ARA Group, Inc.
and Kaiser Steel Resources.
BRIAN W. H. MARSDEN
[PHOTO] Age 62
Director since June 1986
Member: Executive (Chairman) and Finance Committees
Chairman and Chief Executive Officer since January 1, 1993;
Chairman, President and Chief Executive Officer May 1992
through December 1992; President and Chief Executive Officer
of Acme Steel Company June 1986 to May 1992.
WILLIAM P. SOVEY
[PHOTO] Age 60
Director since June 1991
Member: Audit Review, Finance and Nominating (Chairman)
Committees
Vice Chairman and Chief Executive Officer of Newell Co.
(manufacturing and marketing company for high volume
hardware and housewares, office and industrial products)
since 1992; President and Chief Operating Officer of Newell
Co. 1986 to 1992.
6
<PAGE>
BOARD AND COMMITTEE MEETINGS
The Board has an Audit Review Committee, a Compensation Committee, an
Executive Committee, a Finance Committee and a Nominating Committee. During
the fiscal year ended 1993 there were eleven Board of Director meetings, two
Audit Review Committee meetings, three Compensation Committee meetings and
four Finance Committee meetings. The Executive Committee did not meet. In
the 1993 fiscal year each director, except Messrs. Gruss and McCall, was
present for at least 75% of the combined number of meetings of the Board and
Committees on which each director served. The members of the committees are
identified above. Mr. Gruss resigned effective March 27, 1993.
The Audit Review Committee is charged with the duties of recommending to
the Board the appointment of independent accountants; meeting periodically
with the independent accountants and internal auditors to review the adequacy
of internal controls and financial reporting; reviewing financial statements;
and reviewing, appraising, and reporting to the Board on accounting and
reporting practices, the internal control system and the audit effort by both
the independent accountants and internal auditors.
The Compensation Committee reviews and makes recommendations to the
Board regarding all salaries and benefits relating to officers of the Company
and its subsidiaries and certain highly compensated employees, reviews and
makes recommendations regarding the Company's benefit plans, and administers
certain benefit plans.
The Executive Committee may exercise all of the powers of the Board with
reference to the conduct of the business and affairs of the Company in the
interim between meetings of the Board.
The Finance Committee reviews and makes recommendations to the Board
with respect to allocation of resources for capital expenditures, dividend
policy, capitalization of the Company, major debt and equity financing
transactions, financial aspects of major acquisitions or dispositions of
businesses or assets by the Company and investment policies of pension funds
established for the benefit of employees of the Company and its subsidiaries.
The Nominating Committee reviews and makes recommendations to the Board
regarding criteria for membership on the Board, the number of members of the
Board, reviews nominees for membership to the Board, makes recommendations to
the Board with respect to the Company's policies on the level of compensation
of Board members and the retention and retirement of directors who are not
officers of the Company. Shareholders desiring to recommend nominees for
consideration by the Nominating Committee should submit, together with
appropriate biographical information, a statement of the nominee's
qualifications and consent to the Secretary of the Company, 13500 South Perry
Avenue, Riverdale, Illinois 60627-1182. Such information must be received by
the Secretary of the Company not less than 120 days prior to the Annual
Meeting of Shareholders.
DIRECTORS COMPENSATION
Mr. MacDonald entered into an agreement with the Company effective June
1, 1992 to provide consulting services for a three-year period. Mr. MacDonald
is paid an annual fee of $50,000 in addition to any payments to which he may
be entitled as a non-employee director of the Company. Under the terms of the
contract, he is furnished with an office, secretarial and certain other
business office services which amounted to approximately $37,000 in 1993.
Directors who are not also officers of the Company are currently paid an
annual director's fee of $18,000 and a fee of $1,000 for attending a meeting
of the Board and a fee of $1,000 for attending
7
<PAGE>
a meeting of a committee of the Board, whether or not more than one meeting is
held on the same day. The Chairmen of the Audit Review, Compensation, Finance
and Nominating Committees are paid an additional annual fee of $2,000. The
Company provides accidental death and dismemberment insurance for all outside
directors while on the business of the Company. All Directors are reimbursed
for expenses incurred in connection with Board and committee meetings.
In addition to the remuneration above, the Company paid fees not
material in amount for services rendered by certain outside directors outside
the scope of normal Board and committee meetings.
In 1992 the Company adopted the Acme Metals Incorporated Non-Employee
Directors Retirement Plan (the "Directors Retirement Plan") which provides for
benefits to directors who are not employees of the Company and who retire from
the Board after attaining 65 years of age. Four years of service as a
non-employee director is required to be eligible for a minimum retirement
benefit of 40% of the annual retainer in effect at the date of retirement.
The benefit increases 10% for each additional year of service to a maximum of
100% of the annual retainer in effect at the date of retirement. The
Directors Retirement Plan is an unfunded non-qualified plan and all benefits
will be paid out of current earnings. No benefits are payable to the spouse
or dependents of a retired director.
EXECUTIVE OFFICERS OF THE COMPANY
The following is a listing of the executive officers of the Company as
of March 14, 1994. Service with Acme Steel Company is considered as service
with the Company. All positions are with the Company.
<TABLE>
<CAPTION>
NAME AGE OFFICES HELD/BUSINESS EXPERIENCE DATES HELD
- ----------------------- ---- ------------------------------------ ----------
<S> <C> <C> <C>
Brian W. H. Marsden 62 Chairman and Chief Executive Officer January 1993 to present
Chairman, President and Chief Executive Officer May 1992 to December 1992
President and Chief Executive Officer June 1986 to May 1992
Stephen D. Bennett 45 President and Chief Operating Officer January 1993 to present
Group Vice President January 1992 to December 1992
Vice President-Operations June 1990 to December 1991
Richard J. Stefan 57 Vice President-Employee Relations June 1986 to present
Edward P. Weber, Jr. 56 Vice President, General Counsel and Secretary June 1986 to present
Jerry F. Williams 54 Vice President-Finance and Administration and Treasurer May 1991 to present
Vice President-Finance and Administration June 1986 to May 1991
</TABLE>
8
<PAGE>
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
As of February 11, 1994, the following entities were known to the Company
to be the beneficial owners of more than 5% of common stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES PER CENT
NAME AND ADDRESS OF OF COMMON STOCK OF
BENEFICIAL OWNER BENEFICIALLY OWNED (1) CLASS (2)
- -------------------------------- ---------------------- ------------
<S> <C> <C>
Dimensional Fund Advisors, Inc. 393,514 (3) 6.7
1299 Ocean Avenue
Santa Monica, CA 90401
Brinson Holdings, Inc. 365,800 (4) 6.3
209 South LaSalle Street
Chicago, IL 60604-1295
___________
<FN>
(1) As used in this section, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act of 1934
as consisting of sole or shared voting power (including the power to vote
or direct the vote) and/or sole or shared investment power (including the
power to dispose or direct the disposition) with respect to the security
through any contract, arrangement, understanding, relationship or
otherwise. Unless otherwise indicated, beneficial ownership consists of
sole voting and investment power.
(2) The shares owned by each person or entity, or by the group, and the shares
included in the total number of shares outstanding have been adjusted and
the per cent owned has been computed in accordance with Rule 13d-3(d)(1)
under the Securities Exchange Act.
(3) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 393,514 shares of common
stock as of December 31, 1993 by reason of its sole or shared voting power
and sole dispositive power over such shares. All of the shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of The DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and the DFA Participating
Group Trust, investment vehicles for qualified employee benefit plans, all
of which Dimensional Fund Advisors Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
(4) The number of shares of common stock beneficially owned was determined by a
review of Schedule 13G furnished to the Company which states that Brinson
Holdings, Inc. beneficially owns the shares solely through its ownership of
Brinson Partners, Inc., which owns 178,630 shares, which in turn owns
Brinson Trust Company, which owns 187,170 shares. Brinson Partners, Inc.
and Brinson Trust Company have sole voting power and sole dispositive power
with respect to the shares owned by them.
</TABLE>
9
<PAGE>
OFFICERS AND DIRECTORS
The following table sets forth as of February 11, 1994 information with
respect to beneficial ownership of the Company's common stock by all directors
and nominees, each of the executive officers named in "Executive Compensation"
below, all directors and executive officers as a group, and per cent of class.
<TABLE>
<CAPTION>
PER CENT
NAME OF AMOUNT AND NATURE OF OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS(2)
----------------- -------------------------- ----------
<S> <C> <C>
Stephen D. Bennett 28,445 (3) *
Eugene P. Berg 435 *
C. J. Gauthier 173 *
Edward G. Jordan 1,000 *
Andrew R. Laidlaw 1,000 *
Frank A. LePage 2,500 *
Reynold C. MacDonald 66,301 (4) 1.1
Brian W. H. Marsden 141,702 (5) 2.4
Julien L. McCall 1,000 *
William P. Sovey 0 *
Richard J. Stefan 37,723 (6) *
Edward P. Weber, Jr. 30,727 (7) *
Jerry F. Williams 55,817 (8) *
William R. Wilson 1,000 *
All directors and executive 367,823 (3)(4)(5)(6)(7)(8) 6.3
officers as a group, 14 persons
* Less than 1% of class
<FN>
_________________
(1) As used in this section, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act of
1934 as consisting of sole or shared voting power (including the power
to vote or direct the vote) and/or sole or shared investment power
(including the power to dispose or direct the disposition) with respect
to the security through any contract, arrangement, understanding,
relationship or otherwise. Unless otherwise indicated, beneficial
ownership consists of sole voting and investment power.
(2) The shares owned by each person or entity, or by the group, and the
shares included in the total number of shares outstanding have been
adjusted and the per cent owned has been computed in accordance with
Rule 13d-3(d)(1) under the Securities and Exchange Act.
(3) Includes 15,900 shares which are not now owned but could be acquired by
exercise of stock options, 6,900 shares which are subject to conditions
of forfeiture and restrictions on sale, transfer or other disposition,
and 1,984 shares held by the trustee of the Company's Employee Stock
Ownership Plan ("ESOP") which are attributable to Mr. Bennett's account.
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
(4) Includes 16,301 shares held in a trust to which Mr. MacDonald disclaims
beneficial ownership except to the extent of his pecuniary interest
therein.
(5) Includes 79,300 shares which are not now owned but could be acquired by
exercise of stock options, 4,100 shares which are subject to conditions
of forfeiture and restrictions on sale, transfer or other disposition,
2,500 shares owned by a family member to which Mr. Marsden disclaims
beneficial ownership, and 3,922 shares held by the trustee of the ESOP
which are attributable to Mr. Marsden's account.
(6) Includes 21,550 shares which are not now owned but could be acquired by
exercise of stock options, 1,600 shares which are subject to conditions
of forfeiture and restrictions on sale, transfer or other disposition,
1,865 shares held by the trustee of the Company's Salaried Employees
Retirement Savings Plan (SERSP) which are attributable to Mr. Stefan's
account and 2,483 shares held by the trustee of the ESOP which are
attributable to Mr. Stefan's account.
(7) Includes 21,650 shares which are not now owned but could be acquired by
exercise of stock options, 2,750 shares which are subject to conditions
of forfeiture and restrictions on sale, transfer or other disposition,
100 shares held by family members, and 2,552 shares held by the trustee
of the ESOP which are attributable to Mr. Weber's account.
(8) Includes 27,250 shares which are not now owned but could be acquired by
exercise of stock options, 3,390 shares which are subject to conditions
of forfeiture and restriction on sale, transfer or other disposition,
12,282 shares held by the trustee of the SERSP which are attributable to
Mr. Williams' account, and 3,161 shares held by the trustee of the ESOP
which are attributable to Mr. Williams' account.
</TABLE>
OTHER PRINCIPAL HOLDER OF VOTING SECURITIES
On March 14, 1994, Harris Trust and Savings Bank, Trustee for the
Company's Salaried Employees Retirement Savings Plan, the Company's Employee
Stock Ownership Plan, and the Alpha Tube Corporation Employees 401(k)
Retirement Plan, held 905,697 shares, or 16.3%, of common stock then
outstanding. Shares held by the Trustee on account of each of the
participating employees will be voted by the Trustee in accordance with
written instructions from the participants and where no instructions are
received, the Trustee will vote in accordance with the recommendations set
forth by the Board in this proxy statement. In addition, on March 14, 1994
Harris Trust and Savings Bank, as Trustee under the Company's Pension and
Retirement Plans Trust ("Trust"), held 207,092 shares, or 3.7%, of common
stock then outstanding. Under the terms of the Trust, absent direction from
the Company, the Trustee is authorized to exercise voting rights as it deems
proper.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission ("SEC"). Officers, directors and greater than ten percent
shareowners are required by SEC regulation to furnish the Company with copies
of all Forms 3, 4 and 5 filed.
Based solely on the Company's review of the copies of such forms it has
received and written 1representations from certain reporting persons that they
were not required to file Forms 5 for specified fiscal years, the Company
believes that all its officers, directors, and greater than ten percent
beneficial
11
<PAGE>
owners complied with all filing requirements applicable to them with respect
to transactions during fiscal 1993 except that Mr. Stefan was late in filing a
Form 4 report.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the
compensation of the Company's Chief Executive Officer and each of the four
other most highly compensated executive officers for services in all
capacities in the fiscal years 1991, 1992, and 1993.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
----------------------
Annual Compensation Awards
--------------------------- ---------------------------------
Name Other Securi- All
and Annual Restricted ties Un- Other
Principal Compen- Stock derlying Compen-
Position Year Salary Bonus sation(1) Award(s)(3)(5) Options sation(1)(4)
-------------- ----- -------- -------- --------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Brian W. H. 1993 $380,000 $228,000 $ 34,500 15,000 $44,650
Marsden 1992 $360,000 - 0 - - 0 - 10,000 $68,264
Chairman and 1991 $320,000 $ 64,300 $ 150,000 32,500
Chief
Executive
Officer
Stephen D. 1993 $210,000 $ 94,500 $32,812(2) $ 25,875 10,000 $24,675
Bennett 1992 $160,000 - 0 - $107,250 7,000 $25,900
President and 1991 $135,000 $ 25,000 24,000 7,400
Chief
Operating
Officer
Richard J. 1993 $135,000 $ 60,800 $ 17,250 4,000 $15,862
Stefan 1992 $129,000 - 0 - $ 7,375 4,000 $20,636
Vice 1991 $122,000 $ 18,400 $ 30,000 6,500
President-
Employee
Relations
Edward P. 1993 $136,000 $ 61,200 $ 17,250 4,000 $15,980
Weber, Jr. 1992 $130,000 - 0 - $18,972(2) $ 11,062 4,000 $20,776
Vice 1991 $122,000 $ 18,400 $ 30,000 6,500
President,
General
Counsel and
Secretary
Jerry F. 1993 $170,000 $ 76,500 $ 20,700 5,000 $19,975
Williams 1992 $160,000 - 0 - $16,448(2) $ 14,750 5,000 $25,564
Vice 1991 $150,000 $ 22,600 $ 37,800 8,200
President-
Finance and
Administration
<FN>
(1) In accordance with transitional provisions applicable to the Securities
and Exchange Commission's recently expanded rules on executive
compensation disclosure in proxy statements, amounts of Other Annual
Compensation and All Other Compensation have not been included for fiscal
year 1991.
</TABLE>
12
<PAGE>
<TABLE>
<S><C>
<FN>
(2) The dollar value of perquisites and other personal benefits for executive
officers other than Mr. Bennett was less than the established reporting
thresholds. The amount reported for Mr. Bennett includes $20,499 for
country club initiation fees and dues which is in excess of 25% of the
total perquisites and other personal benefits reported for Mr. Bennett.
Includes $13,336 and $12,876 for Messrs. Weber and Williams, respectively,
for automobile expense. These amounts are in excess of 25% of the total
perquisite and other personal benefits reported for the named executive
officers.
(3) Values of restricted stock awards are based on the closing price on the
date of grant; $17.25 for January 26, 1993, $14.75 for January 22, 1992,
$18.50 for June 12, 1992, and $12.00 for January 25, 1991.
The vesting schedule for stock awards granted on January 26, 1993 is 20%
of the shares granted on July 27, 1993, 1994, 1995, 1996 and 1997. The
total number of shares granted and the number of shares of each
installment follows: Mr. Marsden, 2,000 shares granted in installments of
400 shares each; Mr. Bennett, 1,500 shares granted in installments of 300
shares each; Mr. Stefan, 1,000 shares granted in installments of 200
shares each; Mr. Weber, 1,000 shares granted in installments of 200 shares
each; Mr. Williams, 1,200 shares granted in installments of 240 shares
each. Dividends are payable on the unvested portion of this stock award.
The vesting schedule for stock awards granted on January 22, 1992 is 20%
of the shares granted on July 23 of 1992, 1993, 1994, 1995 and 1996. The
total number of shares granted and the number of shares of each
installment follows: Mr. Marsden, none; Mr. Bennett, 1,000 shares granted
in installments of 200 shares each; Mr. Stefan, 500 shares granted in
installments of 100 shares each; Mr. Weber, 750 shares granted in
installments of 150 shares each; Mr. Williams, 1,000 shares granted in
installments of 200 shares each. Dividends are payable on the unvested
portion of the stock award.
The vesting schedule for the stock award granted to Mr. Bennett on June
12, 1992 is 1,000 shares on December 13, 1992 through 1996 for a total
grant of 5,000 shares.
The vesting schedule for stock awards granted on January 25, 1991 is 20%
of the shares granted on January 25 of 1991, 1992, 1993, 1994 and 1995.
The total number of shares granted and the number of shares of each
installment follows: Mr. Marsden, 12,500 shares granted in installments
of 2,500 shares each; Mr. Bennett, 2,000 shares granted in installments of
400 shares each; Mr. Stefan, 2,500 shares granted in installments of 500
shares each; Mr. Weber, 2,500 shares granted in installments of 500 shares
each; Mr. Williams, 3,150 shares granted in installments of 630 shares
each. Dividends are payable on the unvested portion of the stock award.
(4) Amounts in this column are Company contributions to the SERSP and ESOP,
which are defined contribution plans.
(5) The total number and value of the aggregate unearned restricted stock
holdings at December 26, 1993 were as follows: Mr. Marsden, 4,100 shares,
value $71,750; Mr. Bennett, 5,400 shares, value $94,500; Mr. Stefan, 1,600
shares, value $28,000; Mr. Weber, 1,750 shares, value $30,625; Mr.
Williams, 2,190 shares, value $38,325.
</TABLE>
13
<PAGE>
STOCK OPTION GRANTS IN 1993
The following table sets forth certain information relating to options
to purchase common stock granted in the fiscal year 1993 to the five
individuals named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year (1)
Potential Realizable Value at Assumed
Annual Rate of Stock Price Appreciation
Individual Grants in 1993 for Option Term(5)
---------------------------------------------------------- -----------------------------------------
Number of Per Cent of
Securities Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted(2) Fiscal Year(3) Per Share(4) Date 5% 10%
- ---------------------- ------------ -------------- ------------ ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
All Shareholders(6) $ 48,858,267 $123,816,441
B. W. H. Marsden 15,000 16.9% $14.50 5/27/03 $ 136,785 $ 346,639
S. D. Bennett 10,000 11.3% $14.50 5/27/03 $ 91,190 $ 231,093
R. J. Stefan 4,000 4.5% $14.50 5/27/03 $ 36,476 $ 92,437
E. P. Weber 4,000 4.5% $14.50 5/27/03 $ 36,476 $ 92,437
J. F. Williams 5,000 5.6% $14.50 5/27/03 $ 45,595 $ 115,546
Named Executive Officers' Gains as 0.709% 0.709%
a % of All Shareholders' Gains(7)
<FN>
(1) Stock Appreciation Rights were not granted during 1993.
(2) All options were granted on May 27, 1993. One-half of the options
become exercisable on May 27, 1994 and one-half become exercisable on
May 27, 1995 unless the vesting schedule is accelerated to become fully
exercisable upon death, retirement, disability or a change in control as
defined in the Grant of Stock Option agreement. The options were granted
for a term of 10 years, subject to earlier termination in certain events
related to termination of employment.
(3) Based on 88,500 options granted to all employees.
(4) Exercise price is the market value per share on the date of grant,
determined by calculating the average of the high and low prices of the
common stock on the NASDAQ Over-the-Counter Markets, National Market
Issues, as reported in THE WALL STREET JOURNAL for the date of grant.
(5) Total dollar gains based on the assumed annual rates of appreciation
shown here and calculated on 5,372,505 outstanding shares - the number
of shares outstanding on the date of grant. The dollar amounts in these
columns are the result of calculations at the 5% and 10% rates set by
the Securities and Exchange Commission ("SEC") and are NOT intended to
forecast future appreciation of the common stock. As an alternative to
the assumed potential realizable values stated in the
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
5% and 10% Columns, SEC rules would permit stating the present value of
such options at the date of grant. Methods of computing present value
suggested by different authorities can produce significantly different
results. Moreover, since stock options granted by the Company are not
transferrable, there is no objective criteria by which any computation
of present value can be verified. Consequently, the Company does not
believe there is a reliable method of computing the present value of
such stock options.
(6) All Shareholders is shown for comparison purposes only. The potential
realizable value illustrates the gains all shareholders could realize
assuming a hypothetical ten-year option granted at $14.50 per share on
May 27, 1993 if the share price of the common stock increases at the
assumed annual rates shown in the table. There can be NO assurance
that the common stock will perform at the assumed annual rates shown in
the table. The Company will neither make nor endorse any predictions as
to future stock performance.
(7) This analysis illustrates the proportion of executive officers' gains as
a per cent of all shareholders' gains under the above assumptions.
</TABLE>
AGGREGATED OPTION EXERCISES IN 1993 AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning the
exercise of options in 1993 to purchase common stock by the five individuals
named in the Summary Compensation Table and the unexercised options to
purchase common stock held by such individuals at December 26, 1993.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
FISCAL YEAR END OPTION VALUE(1)
NUMBER OF SECURITIES VALUE OF UNEXCERCISED IN-
NUMBER OF UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
SHARES OPTIONS AT 12/26/93 12/26/93(2)
ACQUIRED ON VALUE ---------------------- ------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------- ---------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Brian W. H. Marsden - 0 - N/A 79,300 20,000 $205,588 $39,375
Stephen D. Bennett - 0 - N/A 15,900 13,500 $ 26,363 $26,250
Richard J. Stefan - 0 - N/A 21,550 6,000 $ 50,544 $10,500
Edward P. Weber, Jr. - 0 - N/A 21,650 6,000 $ 50,544 $10,500
Jerry F. Williams - 0 - N/A 27,250 7,500 $ 63,344 $13,125
<FN>
(1) No SAR's have been granted by the Company.
(2) Calculated on the basis of the fair market value of the underlying
securities at fiscal year end, $17.125, minus the exercise price.
Options granted in 1988, 1989 and 1992 were not in-the-money at fiscal
year end.
</TABLE>
15
<PAGE>
DEFINED BENEFIT PLAN
<TABLE>
<CAPTION>
AVERAGE ANNUAL
EARNINGS FOR THE 5
HIGHEST 12-MONTH
PERIODS DURING THE
LAST 10 CONSECUTIVE ESTIMATED ANNUAL PENSION PAYABLE
12-MONTH PERIODS BASED ON YEARS OF SERVICE INDICATED
- ------------------- ----------------------------------------------
15 YEARS 20 YEARS 25 YEARS 30 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
$100,000 14,387 22,262 30,137 38,012
$150,000 26,199 38,012 49,824 61,637
$200,000 38,012 53,762 69,512 85,262
$250,000 49,824 69,512 89,199 108,887
$300,000 61,637 85,262 108,887 132,512
$350,000 73,449 101,012 128,574 156,137
$400,000 85,262 116,762 148,262 179,762
$450,000 97,074 132,512 167,949 203,387
$500,000 108,887 148,262 187,637 227,102
</TABLE>
The Company's Salaried Employees' Past Service Pension Plan (the "Past
Service Plan") provides for benefits based on years of credited service with
Acme Steel Company through December 31, 1981 and average annual earnings for
the 5 highest 12-month periods during the 10 consecutive 12-month periods
preceding retirement. The Company and Mr. Marsden are parties to the Deferred
Compensation Agreement which entitles Mr. Marsden to a supplemental pension
benefit equivalent to ten years of additional credited service under the Past
Service Plan unless (i) his employment with the Company is terminated for
"Cause" (as defined in the Deferred Compensation Agreement) or (ii) he engages
in "competitive activity" (as defined in the Deferred Compensation Agreement)
for the period and under the circumstances provided in such agreement.
Corporate funds, rather than pension trust assets, will be used for payment of
these supplemental benefits to Mr. Marsden and any pension benefits payable in
excess of the maximum amount permitted under the Code. Mr. Marsden was deemed
to have approximately 15 years of credited service as of December 31, 1981,
Mr. Williams has approximately 17 years of credited service, and Mr. Stefan
has approximately 22 years of credited service. Messrs. Bennett and Weber
joined the Company after December 31, 1981 and therefore do not participate in
the Past Service Plan.
The preceding table is based upon retirement at age 65, a pension
payable for the life of the retiree only, and a social security offset of
$8,798.40 per year. Different benefits under the Past Service Plan may be
payable for persons whose employment terminates prior to age 65. For purposes
of the table, average annual earnings include salaries and bonuses paid or
deferred during the twelve-month period.
The Past Service Plan provides for a transition pension for salaried
employees and certain executive officers who were employed on December 31,
1981 if the benefit attributable to contributions by the Company after
December 31, 1981 under the Company's Salaried Employees' Retirement Savings
16
<PAGE>
Plan (the "SERSP ") is less than the benefit which would be attributable under
the Past Service Plan to continuous service between January 1, 1982 and the
earlier of December 31, 1991 and termination of employment. The amount
attributable to such Company contributions is contributions to the SERSP in
excess of 6 1/2 percent of the participant's earnings for each calendar
quarter (which, in the case of executive officers, are the same for purposes
of the SERSP as for purposes of the Past Service Plan) of continuous service
from January 1, 1982 until the earlier of December 31, 1991 and termination of
employment, together with amounts which would have been earned had such
contributions been invested and reinvested in the Diversified Investment Fund
provided for in the SERSP. Future performance of the Diversified Investment
Fund and the earnings of participants during the 10 years preceding retirement
will determine whether or not any transition pension will be payable.
Unless a participant becomes entitled to a transition pension as
described in the preceding paragraph, years of credited service after December
31, 1981 will have no effect on any estimated annual pension payable pursuant
to the Past Service Plan.
CHANGE IN CONTROL ARRANGEMENTS
On May 25, 1992, the Board adopted the Key Executive Severance Pay Plan
(the "Plan") from Acme Steel Company and designated the executive officers of
the Company and certain other individuals as participants. A participant
may be entitled to severance benefits under this Plan if there is a
termination of his employment without cause at any time within three years
after a Change in Control of the Company (as defined in the Plan). In
addition, following a Change in Control a participant may elect to terminate
his employment without loss of severance benefits in certain specified
contingencies, including termination of the participant's position as an
officer or director; a good faith determination by the participant that as a
result of the Change in Control, he is unable to carry out the authorities,
powers, functions or duties attached to his position; a significant adverse
change in his position, duties or compensation; the failure of a successor to
assume the Company's obligations under the Plan; excessive travel requirements
or the substantial relocation of his place of work; or, the reorganization,
dissolution, liquidation, consolidation or merger of the Company or the sale
of a significant portion of its assets.
Under the Plan, a Change in Control is deemed to have occurred if (i)
the Company is merged or reorganized into or with, or sells all or
substantially all of its assets to, another company in a transaction in which
former shareholders of the Company own less than 75 per cent of the
outstanding securities of the surviving or acquiring company after the
transaction, (ii) a filing is made with the Securities and Exchange Commission
disclosing the beneficial ownership by any person or group of 25 per cent or
more of the voting power of the Company, (iii) during any period of two
consecutive years individuals who were directors at the beginning of such
period cease to constitute a majority of the Board without the approval of
two-thirds of the remaining Board members, (iv) the shareholders of the
Company approve a plan or proposal for the liquidation or dissolution of the
Company, or (v) any other event, or events, which the Board shall determine to
be a Change in Control.
A participant who is terminated with rights to severance compensation
under this Plan will be entitled to receive in respect of the "Severance
Period" (as defined in the Plan), in lieu of further salary payments to the
participant, the following: (i) a sum equal to (a) three times the
participant's highest annual aggregate base salary in effect at any time
within five years prior to the date the "Notice of Termination of Employment"
(as defined in the Plan) is given, plus (b) an amount equal to the average
compensation paid in the two calendar years prior to the date said Notice is
given to the participant under the EIC Plan, or any successor plan (provided,
however, the participant may elect to receive said sums in thirty-six (36)
equal monthly payments, including interest, after the date of said Notice);
(ii) for a period of thirty-six (36) months following the date of "Termination
of Employment" (as defined in the
17
<PAGE>
Plan), or until a participant's death, if earlier, life, health and accident
insurance benefits and other executive benefits the participant was receiving
immediately prior to the date of Termination of Employment; (iii) all benefits
to which the participant is entitled as a participant under the Salaried
Employees' Past Service Pension Plan, the Salaried Employees Retirement
Savings Plan or other plan or agreement relating to retirement benefits; and,
(iv) all legal fees and expenses incurred by a participant, if any, as a
result of such Termination of Employment or enforcing any right or benefit
under the Plan. A letter of credit has been obtained by the Company for the
purpose of securing the payment of such legal fees and expenses.
The net amount payable to any participant under the Plan, taking into
account payments under Other Plans, (as defined in the Plan) as appropriate,
may not exceed 2.99 times the participant's "base amount" (as defined in
Section 280G of the Code), which, generally, is the average of the
participant's taxable annual income received from the Company during the
five-year period preceding the Change in Control, to avoid the special tax
rules applicable to "excess parachute payments" under federal income tax
legislation enacted in 1984.
To protect both the Company and any participant, if the severance
compensation under the Plan, either alone or together with other payments to a
participant, would constitute "excess parachute payments", as defined in
Section 280G of the Code, such severance compensation payment would be reduced
to the largest amount as would result in no portion of such payments being
disallowed as deductions to the Company under Section 280G of the Code and no
portion of such payments subjecting a participant to the excise tax imposed by
Section 4999 of the Code. The determination of such reductions will be made,
in good faith, by the Company's independent accountants and will be
conclusively binding upon the Company and such participant.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the Compensation Committee of the Board of
Directors to provide the shareholders with an understanding of the Company's
executive compensation program.
THE COMMITTEE
The Committee is composed of six independent non-employee members of the
Board. It is the Committee's responsibility to develop and review the total
compensation paid to all executive officers of the Company and its
subsidiaries. Annually, it receives recommendations from management and
reviews those recommendations with professional outside compensation
consultants prior to recommending compensation programs and levels to the full
Board. The Committee held 3 meetings in 1993. No Committee members have
interlocking relationships as defined by the Securities and Exchange
Commission.
COMPENSATION POLICIES AND OBJECTIVES
The Company's compensation philosophy is to reward its key executives in
line with median levels for similar positions in comparable metals or
manufacturing industries, with individual base salaries reflecting their scope
of responsibilities, impact on Company performance, experience, and
proficiency in their position. As such, the Committee's principal objective
in developing compensation opportunities is to support this philosophy and the
Company's objective of increasing shareholder returns. To achieve these
goals, the Committee believes it necessary:
18
<PAGE>
- To attract, develop, retain and reward those executives who
complement the Company's shareholder interest objective in
accordance with the Company's compensation philosophy.
- To provide short-term incentive bonus opportunities based on
corporate performance measures evaluated from the annual business
plan proactively approved by the Board, the Committee recommends to
the Board which performance criteria (e.g., ROE, ROI, cash flow,
operating or sales performance measures, safety or quality
performances, etc.), which may change from year to year, shall be
used to assess performance and threshold, target and maximum bonus
levels are assigned.
- To provide long-term incentive opportunities in the form of options
and awards of shares of common stock via a plan which was approved
by the shareholders in 1986 and which is designed to align the
interests of the executives with those of the shareholders.
COMPENSATION PROGRAM COMPONENTS
The particular elements of the compensation program for executive
officers are outlined below.
BASE SALARY -- Base salary opportunities are principally established at the
median level of salaries in a peer group of public corporations wherein the
Company competes for talent. Annual salary adjustments are recommended by the
Committee to the Board based on the individual's performance against annual
objectives, the individual's position within the assigned salary range, the
Company's financial results, and peer group increase projections.
ANNUAL INCENTIVE COMPENSATION -- Prior to the beginning of each year, the
Committee adopts, subject to ratification by the Board, the Executive
Incentive Compensation Plan ("EIC") objectives for that year, designates the
participants to one of five groups having varying ranges of incentive
compensation opportunities, and determines how incentive payments will be
calculated. The maximum incentive compensation opportunity for any individual
is sixty percent of his base salary for the year in question. In 1993, the
corporate performance criteria was Return on Equity. The maximum Return on
Equity level was achieved and each executive officer earned the maximum EIC
payment for the group to which the executive was assigned. Payments in future
years will be dependent upon the Company achieving, or exceeding, the
performance criteria established in those years.
LONG-TERM INCENTIVE COMPENSATION -- The Company's 1986 Stock Incentive
Program (the "Program") is designed to furnish long-term incentives to
executive officers and other key corporate employees to improve corporate
profits and shareholder value by providing such persons opportunities to
acquire shares of common stock pursuant to the grant of stock awards, stock
options, stock appreciation rights and/or to receive monetary payments upon
terms and conditions adopted by the Committee and ratified by the Board.
Stock awards are generally granted with an earnout period of 5 years in
installments of twenty per cent per year in amounts determined by the
Committee. The Committee believes this approach to long-term opportunities
fosters shareholder value over the long term, since the realization of
increased benefit to the executive is based solely on stock price
appreciation. Stock options are granted for a term of 10 years, currently
vest over a two-year period (one-half each year), and are granted with an
exercise price equal to the market price on the date of grant as defined in
the Program. Stock appreciation rights may be granted in connection with
grants of stock options ("Companion Option"). Generally stock appreciation
rights relate to the same number of shares of common stock covered by the
Companion
19
<PAGE>
Option and are subject to the same conditions relating to the Companion
Option, except for such additional limitations as may be required by the
Program or by the Board. The Committee recommends to the Board those
individuals who will participate annually and the Committee may amend or
discontinue the Program at any time, subject to ratification by the Board.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Chairman and Chief Executive Officer's compensation is also reviewed
annually and is compared to other chief executive officers of public
corporations, similar in size and character to the Company, by an independent,
professional consulting firm. In determining the Chief Executive Officer's
salary adjustment in 1993, the Committee took into account the Company's
financial performance as compared to other similarly situated companies, his
individual contributions and increased responsibilities. The Committee is
also influenced by the CEO's experience within the steel industry, his
representation of the Company within the industry, and his stature within
industry organizations. The Committee believes that it is important to
compensate the CEO at an appropriate level within the salary range of his
peers in similar businesses of equivalent size and complexity. The Chief
Executive's annual base salary was increased to $380,000 in 1993, from
$360,000 in 1992.
In 1993 the Chief Executive Officer was granted options to purchase
15,000 shares of common stock at $14.50 per share and in 1992 was granted
options to purchase 10,000 shares of common stock at $18.75 per share.
LIMITATIONS ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
In 1993, the Internal Revenue Code was amended (I.R.C. Section162(m)) to
impose a new limitation, beginning in 1994, on a corporation's ability to deduct
compensation in excess of $1,000,000 paid to the Chief Executive Officer and the
four other most highly compensated executive officers of the Company ("Covered
Executives"). Generally, amounts paid to Covered Executives in excess of the
$1,000,000 limitation are not deductible by the Company, unless such
compensation qualifies under I.R.C. Section162(m) and the regulations proposed
thereunder, as performance-based compensation. In order to be qualified as
performance-based compensation under I.R.C Section162(m), among other
requirements, the compensation plans must be approved by the Company's
shareholders.
The Committee has amended the Company's executive compensation plans in
a manner which it believes will qualify certain components of its executive
compensation program (1994 Executive Incentive Compensation Plan and 1994
Stock Incentive Program) as performance-based compensation and these are being
submitted to the shareholders for approval at this year's Annual Meeting of
Shareholders.
SUMMARY
The Committee believes that the total executive compensation program of
the Company is competitive with compensation programs provided by other
corporations with which the Company competes. Further, the annual EIC Plan and
long-term Program are directly linked to both the annual financial and
operational results of the Company as well as the toward the long-term growth
of shareholders' value of the Company's shareholders.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
FRANK A. LEPAGE, CHAIRMAN, EUGENE P. BERG, C. J. GAUTHIER, JULIEN L. MCCALL,
WILLIAM R. WILSON.
20
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1993 the Compensation Committee of the Board was comprised
of the following non-employee directors: C. J. Gauthier, Andrew R. Laidlaw,
Julien L. McCall, Frank A. LePage (Chairman), William R. Wilson.
Mr. Laidlaw is a partner in the law firm of Seyfarth, Shaw, Fairweather
& Geraldson which provided $101,973 in legal services to the Company. Mr.
Laidlaw resigned as a member of the Compensation Committee effective January
27, 1994. Mr. LePage is a director of Parker-Hannifin Corporation to which a
subsidiary of the Company sold tubing in the amount of $1,800,692. Mr. Wilson
is a director of Columbia Gas System, Inc. from which the Company made
purchases of $79,906 for natural gas.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In the fiscal year 1993, the Company and its subsidiaries made sales to
and purchases from corporations (including subsidiaries), certain executive
officers and directors of which are also directors of the Company, as follows:
Messrs. MacDonald and Jordan are directors of The ARA Group, Inc. from which
the Company made purchases of $167,527 for food services; Mr. Laidlaw is a
partner in the law firm of Seyfarth, Shaw, Fairweather and Geraldson to which
for the Company paid $101,973 for professional services on behalf of the
Company; Mr. LePage is a director of Parker-Hannifin Corporation to which the
Company made sales of $1,800,692 for tubing; Mr. Wilson is a director of
Columbia Gas System, Inc. from which the Company made purchases of $76,906 for
natural gas. There were also sales to one other company which did not
exceed $60,000. All transactions were in the ordinary course of business, at
competitive prices and terms and at arm's length. In the opinion of
management, the amounts involved have, in no case, been material in relation
to the business of the Company or, to the knowledge and belief of management
of the Company, to the business of the other organizations or to the
individuals concerned.
21
<PAGE>
PERFORMANCE GRAPH
The performance graph below provides an indicator of the cumulative
total shareholder returns for the Company for a five-year period (December 31,
1988 through December 31, 1993) as compared with the cumulative total return
of the Russell 2000 Index of companies and a group of peer companies.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
ACME METALS INCORPORATED, RUSSELL 2000** AND
VALUE LINE PEER GROUP***
The Performance Graph is being filed under Form SE in paper format.
* Assumes $100 invested on December 31, 1988 in common stock, Russell
2000, and Value Line Peer Group of companies and assumes the
reinvestment of dividends on a quarterly basis.
** The Russell 2000 Index consists of 2,000 companies with a range of
capitalization comparable to the Company.
*** The Value Line Peer Group is a group of integrated steel companies
selected from the Value Line Investment Survey - Steel Group
(integrated), and consists of Armco, Inc., Bethlehem Steel Company,
Dofasco, Inc., Inland Steel Industries, Inc., Stelco, Inc. and
Wheeling-Pittsburgh Corporation. These companies are engaged in
substantially the same industry as and subject to the same market
influences as the Company.
22
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 2)
The Board, acting upon the recommendation of its Audit Review Committee,
on November 22, 1993, appointed Price Waterhouse as independent accountants
for the Company for the fiscal year ending December 25, 1994.
The appointment of Price Waterhouse as independent accountants for the
Company for the fiscal year 1994 is conditioned upon the ratification of such
appointment at the Annual Meeting. In the event such appointment is not so
approved, the Board will reconsider its selection of independent accountants.
A representative of Price Waterhouse will be present at the meeting and
available to respond to questions and will have an opportunity to make a
statement if he so desires.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
PRICE WATERHOUSE AS INDEPENDENT ACCOUNTANTS WHICH IS PRESENTED AS PROPOSAL
NO. 2.
1994 STOCK INCENTIVE PROGRAM
(PROPOSAL NO. 3)
GENERAL
The Compensation Committee of the Board of Directors has, subject to
shareholder approval, adopted the Acme Metals Incorporated 1994 Stock
Incentive Program (the "Stock Incentive Program"), which provides for the
grant of stock-based incentives to officers and key employees of the Company.
The Stock Incentive Program shall, subject to shareholder approval, become
effective April 28, 1994. The purpose of the Stock Incentive Program is to
attract and retain outstanding individuals as officers and employees of the
Company and to furnish incentives to such persons to increase profits. An
aggregate of 550,000 shares of common stock are reserved for issuance under
the Stock Incentive Program, subject to adjustment under certain
circumstances. Such shares may be originally issued shares, treasury shares
or a combination thereof. The number of shares permitted to be issued as
Stock Awards (as described below) is limited to 150,000. No benefit shall be
granted pursuant to the Stock Incentive Program more than ten years after the
date of stockholder approval thereof. On March 14, 1994, the average of the
high and low prices of the common stock as reported on the NASDAQ
Over-the-Counter National Markets Issues was $24.625.
ADMINISTRATION
The Stock Incentive Program shall be administered by the Compensation
Committee of the Board (the "Committee"), or any successor thereof consisting
of at least three directors who are "disinterested persons" as defined in Rule
16b-3 ("Rule 16b-3") as promulgated under the Securities Exchange Act of 1934
(the "Exchange Act") and/or "outside directors" under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
PARTICIPANTS IN THE PROGRAM
Participants in the Stock Incentive Program shall include such officers
and key employees of the Company as the Committee in its sole discretion may
designate. The Committee will consider such factors as it deems pertinent in
selecting participants from time to time and in determining the type and
23
<PAGE>
amount of their benefits. The maximum number of Stock Options (as described
below) and/or Appreciation Rights (as described below) which may be awarded to
any individual in any three-year period during the term of the Stock Incentive
Program shall not exceed 75,000 shares and/or rights. It is currently
anticipated that approximately 55 employees may initially be eligible to be
considered for participation in the Stock Incentive Program.
BENEFITS AVAILABLE UNDER THE PROGRAM
Benefits may be granted under the Stock Incentive Program in any one or
a combination of (i) stock options, (ii) stock appreciation rights or (iii)
stock awards. In addition, shares of restricted stock may be granted if a
Restricted Stock Purchase Plan is subsequently adopted by the Committee under
the Stock Incentive Program.
Options to purchase common stock ("Stock Options") may be granted to
participants from time to time under the Stock Incentive Program. The
Committee shall specify whether any option is an incentive stock option
described in Code Section 422. Options that are not incentive stock options are
referred to as nonstatutory options. All stock options shall have an exercise
price not less than the market value of the common stock on the date of grant,
and none shall be exercisable more than ten years after the date of grant.
Payment for shares received upon exercise of a Stock Option may be made in
cash, by the transfer to the Company of shares of common stock having a value
equal to the exercise price or by a combination of such methods.
The Committee may from time to time authorize the grant of stock
appreciation rights ("Appreciation Rights") in connection with the grant of
any nonstatutory option under the Stock Incentive Program. An Appreciation
Right shall be a right of the option holder, exercisable by surrender of the
related option, to receive from the Company at the time of exercise an amount
determined by the Committee and expressed as a percentage (not exceeding 100%)
of the difference between the market value of the related common stock and the
option exercise price. Appreciation Rights shall be exercisable only when the
related Stock Option is exercisable. Exercise of a Stock Option shall result
in the immediate surrender of any related Appreciation Right. Upon exercise,
an Appreciation Right may be paid by the Company in cash, in shares of common
stock or in a combination thereof.
The Committee may from time to time grant participants the right to
receive from the Company a specified number of shares of common stock, without
payment of monetary consideration by the participant ("Stock Awards"). Any
such grant may be accompanied by a cash award payable at such times and in
such amounts (not exceeding 100% of the compensation income recognized by the
participant for tax purposes by reason of such grant) as the Committee shall
determine. During any period of forfeiture Participants will be treated as
the owner of such shares of common stock and entitled, among other rights, to
voting rights and all dividends declared with respect to such common stock.
The Committee is authorized to adopt a Restricted Stock Purchase Plan
providing for the transfer of shares of common stock to participants in the
Stock Incentive Program at prices below the current market value of such
shares at the time of transfer. Any such transfer shall be made in
consideration for services to the Company and only on terms which subject the
participant's interest in such shares to a "substantial risk of forfeiture" as
provided under Section 83 of the Internal Revenue Code.
Any grant of benefits under the Stock Incentive Program may also be
subject to any other provisions the Committee deems appropriate, including
without limitation, vesting and forfeiture provisions (including the lapse or
acceleration thereof), restrictions on resale or other disposition and
conditions appropriate to comply with securities laws and stock exchange
requirements. Benefits granted
24
<PAGE>
under, and the total number of shares reserved for issuance under, the Stock
Incentive Program shall be adjusted for certain events (such as a stock split
or combination), and the Committee may authorize the issuance or assumption of
benefits in connection with certain Company transactions.
The foregoing description is qualified in its entirety by reference to
the complete terms of the Stock Incentive Program, a copy of which is attached
as Exhibit A to this Proxy Statement.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended to be a brief summary of the
principal federal income tax consequences of participation in the Stock
Incentive Program to participants and the Company. It is not intended to be
tax advice to any participant. Participants should consult their own tax
advisor as to the federal, state and local tax consequences of participation
in the Stock Incentive Program.
The discussion assumes any participant who receives stock under the
Stock Incentive Program subject to any restriction or vesting (including a
limitation under the short-swing profit rules of Section 16(b)) that
constitutes a "substantial risk of forfeiture" within the meaning of Code
Section 83, files a timely Section 83(b) election with the Internal Revenue
Service (within 30 days of the date on which he becomes entitled to receive
such stock).
NONSTATUTORY STOCK OPTIONS. A participant will recognize no income or
gain (and the Company will be entitled to no deduction) on the receipt of a
non-statutory option (i.e., an option that does not qualify as an incentive
stock option) under the Stock Incentive Program. When the participant
exercises the option, he will recognize ordinary compensation income equal to
the spread between the fair market value of the stock received (generally
determined on the date of exercise) and the exercise price of the option. The
Company should generally be entitled to a deduction in computing its income
equal to the amount of compensation income recognized by the participant.
If the participant later sells the stock, any gain or loss should
generally be capital gain or loss (long-term or short-term depending on the
participant's holding period for the stock). The Company will not be entitled
to any further deduction when the participant sells the stock.
INCENTIVE STOCK OPTIONS. A participant will recognize no income or
gain (and the Company will be entitled to no deduction) on the receipt or
exercise of an incentive stock option under the program. However the spread
between the fair market value of the stock received (generally determined on
the date of exercise) and the exercise price of the option will be a
preference item for purposes of the alternative minimum tax.
Provided the participant holds the stock received on exercise more than
one year from the date of exercise of the option and two years from the date
of grant of the option (the "required holding periods"), the participant will
recognize long-term capital gain or loss on the sale of the stock equal to the
difference between the sales price and the exercise price of the option. In
such case, the Company will not be entitled to any deduction with respect to
the participant's exercise of option or sale of the stock received on
exercise.
If the participant sells the stock prior to the expiration of the
required holding periods, he will generally recognize ordinary compensation
income (at the time of such sale) equal to the lesser of (i) the excess of the
fair market value of the stock received (generally measured on the date of
exercise) over the exercise price, or (ii) the excess of the sales proceeds
over the exercise price. Any additional gain or loss will be capital gain or
loss (long-term or short-term depending on the participant's holding period
25
<PAGE>
for the stock). In such case, the Company will generally be entitled to a
deduction (at the time of such sale) equal to the amount of compensation
income recognized by the participant.
STOCK APPRECIATION RIGHTS. A participant will recognize no income or
gain (and the Company will be entitled to no deduction) on the receipt of an
Appreciation Right under the program. When the participant exercises the
right, he will recognize ordinary compensation income equal to any cash
received plus the fair market value of any stock received (generally
determined on the date of exercise). The Company should generally be entitled
to a deduction in computing its income equal to the amount of compensation
income recognized by the participant.
STOCK AWARDS. A participant who receives a Stock Award will recognize
ordinary compensation income equal to the fair market value of the stock
received (generally determined on the date such stock is received). Subject
to the limitations of Code Section 162(m) as discussed below, the Company
should generally be entitled to a deduction in computing its income equal to
the amount of compensation income recognized by the participant.
RESTRICTED STOCK PURCHASE PLAN. If the Committee adopts a restricted
stock purchase plan under the Stock Incentive Program, a participant who
purchases stock will recognize ordinary compensation income equal to the
excess, if any, of the fair market value of the stock purchased (generally
determined on the date such stock is purchased) over the purchase price paid
for such stock. Subject to the limitations of Code Section 162(m) as discussed
below, the Company should generally be entitled to a deduction in computing
its income equal to the amount of compensation income recognized by the
participant.
NEW CODE SECTION 162(m). New Code Section 162(m) (adopted in August 1993)
generally provides, with certain exceptions, a publicly held company may not
deduct compensation paid to a "covered executive" in excess of $1 million per
year. (Such compensation remains taxable to the recipient as ordinary
compensation income notwithstanding that the company may receive no deduction.)
For this purpose, "covered executive" means the company's chief executive
officer as of the end of the taxable year and the company's other four highest
compensated executives, employed by the company on the last day of the year,
whose compensation is required to be disclosed to shareholders in the company's
annual proxy statement.
There is an exception to Code Section 162(m)'s $1 million deduction
limitation for certain performance-based compensation. In general, performance-
based compensation is compensation based on a pre-established objective
performance formula which meets certain outside director and shareholder
approval requirements.
The Company believes the non-statutory options, incentive stock options,
and stock appreciation rights under the Stock Incentive Program will qualify
as performance-based compensation. However, there are a number of ambiguities
under Code Section 162(m) and recently released proposed Treasury regulations
interpreting its provisions which have not been resolved. As a result, there
can be no assurances the Internal Revenue Service will agree with the
Company's interpretations.
APPROVAL REQUIRED
The affirmative vote of a majority of the votes cast by the holders of
the shares of common stock represented at the meeting is required for approval
of the Stock Incentive Program. Such approval is required for the Stock
Incentive Program to be qualified under Rule 16b-3, which will exempt certain
grants of benefits under the program from the liability provisions of Section
16(b) of the Exchange Act.
26
<PAGE>
Shareholder approval is also a condition to the performance-based compensation
exception to Code Section 162(m) as described above.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE STOCK INCENTIVE PROGRAM
WHICH IS PRESENTED AS PROPOSAL NO. 3.
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
(PROPOSAL NO. 4)
GENERAL
The Compensation Committee of the Board of Directors has adopted,
subject to shareholder approval, the Acme Metals Incorporated 1994 Executive
Incentive Compensation Plan (the "Compensation Plan"), which provides for the
grant of annual cash incentive compensation payments to officers and key
salaried employees of the Company. The purpose of the Compensation Plan is to
award officers and key salaried employees who contribute in a substantial
manner to the achievement of objectives and goals established by the Board
which contribute to the success of the Company, and to provide an incentive to
such persons to continue to contribute their best efforts to promote the
success of the Company.
ADMINISTRATION
The Compensation Plan shall be administered by the Compensation
Committee of the Board (the "Committee") consisting of persons who are
"disinterested persons" as defined in Rule 16b-3 and/or "outside directors" as
defined in Code Section 162(m).
PARTICIPANTS IN THE PLAN
Participants in the Compensation Plan shall include the Chief Executive
Officer of the Company and such other officers and key salaried employees as
the Committee in its sole discretion may designate. It is currently
anticipated that approximately 80 employees may initially be eligible to be
considered for participation in the Compensation Plan.
BENEFITS AVAILABLE UNDER THE PLAN
Participants in the Compensation Plan for any fiscal year (other than
the Chief Executive Officer) shall be identified and assigned by the Committee
to one of four incentive groups, labeled as Groups A, B, C and D. Prior to
the beginning of each fiscal year, the Committee shall, for such year,
determine whether the computation of incentive payments under the Compensation
Plan for the year shall be based upon one or more or the following measures of
Company performance (the "Performance Measures"): (i) the net after-tax
earnings for the year; (ii) the return on average equity for the year; (iii)
the increase in shareholder value experienced during the year; (iv) the cash
flow during the year; (v) the return on average investment for the year; or
(vi) a combination of any of the foregoing. Prior to the beginning of each
fiscal year, the Committee shall, for such year, determine the minimum, target
and maximum performance goals to be achieved by the Company in respect of the
Performance Measure(s) selected by the Committee for such year. In
establishing the annual goals, the Committee shall take into consideration the
Company's profit plan objectives for the year, the Company's long-term
strategic plan, the Company's historical performance, the projected and
historical performance of selected companies
27
<PAGE>
in like industries, the short- and long-term economic forecasts and such other
factors as the Committee shall consider relevant.
Increase in shareholder value for a year shall be determined according
to a formula, determined by the Committee prior to the year in question,
utilizing one or more of the following factors, either standing alone or as
compared to competitors or other entities: (i) net after-tax earnings per share,
calculated in accordance with generally accepted accounting principles; (ii)
trading price of the common stock coupled with dividends paid; (iii) book value
per share, calculated in accordance with generally accepted accounting
principles; and (iv) other factors, which could include market share, decrease
in leverage, or improvements in productivity, calculated pursuant to an
objective formula.
An incentive compensation fund shall be established for each participant
at the end of each fiscal year, the amount of which shall be calculated by
multiplying the participant's base salary by the appropriate percentage
specified below, which will depend upon whether the minimum, target, or
maximum performance goal for the selected Performance Measure(s) was achieved
by the Company during the year:
<TABLE>
<CAPTION>
INCENTIVE GROUP MAXIMUM TARGET MINIMUM
- ----------------------------- ------- ------ -------
<S> <C> <C> <C>
Chief Executive Officer 60.0% 40.0% 20.0%
Group A 45.0% 30.0% 15.0%
Group B 37.5% 25.0% 12.5%
Group C 30.0% 20.0% 10.0%
Group D 22.5% 15.0% 7.5%
</TABLE>
Base salary under the Compensation Plan shall mean, for the Chief Executive
Officer and Group A participants, the regular salary in effect for such
participant prior to the first day of the year in question and, for the Group
B, C and D participants, the regular salary actually paid to such participant
during the year in question. If the Company's results for a year fall between
the minimum performance goal and maximum performance goal for the applicable
Performance Measure(s), the percentages specified above shall be adjusted by
linear interpolation, based upon the differences between the actual results
and the maximum, target and minimum goals.
Awards for any year to participants in the Chief Executive Officer and
Group A designations, as a percentage of base salary, may not exceed the
maximum percentage specified above for such group. Such awards may, however,
be reduced or eliminated for any such individual participant in such manner or
amount as the Committee in its sole discretion may determine. Awards for any
year for participants in the Group B, Group C and Group D designations may be
adjusted up or down by the Committee by as much as 25% of the amount otherwise
calculated as described above for such participant, based upon a personal
performance determination made by management as to such participant's
performance during the year.
Awards under the Compensation Plan may, at the Committee's discretion,
be transferred to an account of the participant under the Deferred
Compensation Plan of the Company. The Compensation
28
<PAGE>
Plan also provides for certain adjustments to be made in the event a
participant ceases to be an employee during a year or a participant is
promoted, demoted or otherwise changes employment status.
The foregoing description is qualified in its entirety by reference to
the complete terms of the Compensation Plan, a copy of which is attached as
Exhibit B to this Proxy Statement.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended to be a brief summary of the
principal federal income tax consequences of participation in the Compensation
Plan to participants and the Company. It is not intended to be tax advice to
any participant. Participants should consult their own tax advisor as to the
federal, state and local tax consequences of participation in the Program.
A participant who receives incentive compensation under the Compensation
Plan will recognize ordinary compensation income equal to the amount of such
incentive compensation. Subject to the limitations of Code Section 162(m) as
discussed below, the Company should generally be entitled to a deduction in
computing its income equal to the amount of compensation income recognized by
the participant. This assumes that no amounts payable under the Compensation
Plan are deferred in connection with the Company's Deferred Compensation Plan.
New Code Section 162(m) (adopted in August 1993) generally provides, with
certain exceptions, a publicly held company may not deduct compensation paid
to a "covered executive" in excess of $1 million per year. (Such compensation
remains taxable to the recipient as ordinary compensation income
notwithstanding that the Company may receive no deduction.) For this purpose,
"covered executive" means the company's chief executive officer as of the end
of the taxable year and the Company's four highest compensated executives,
employed by the company on the last day of the year, whose compensation is
required to be disclosed to shareholders in the company's annual proxy
statement.
There is an exception to Code Section 162(m)'s $1 million deduction
limitation for certain performance-based compensation. In general,
performance-based compensation is compensation based on a pre-established
objective performance formula which meets certain outside director and
shareholder approval requirements.
The Company believes that incentive payments under the Compensation Plan
with respect to the Company's Chief Executive Officer and Group A participants
will qualify as performance-based compensation. However, there are a number
of ambiguities under Code Section 162(m) and recently released proposed Treasury
regulations interpreting its provisions which have not been resolved. As a
result, there can be no assurances the Internal Revenue Service will agree
with the Company's interpretations.
APPROVAL REQUIRED
The affirmative vote of a majority of the votes cast by the holders of
the shares of common stock represented at the meeting is required for approval
of the Compensation Plan. Shareholder approval is a condition to the
performance-based compensation exception to Code Section 162(m) as described
above.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE COMPENSATION PLAN WHICH
IS PRESENTED AS PROPOSAL NO. 4.
29
<PAGE>
The solicitation of proxies in the form which accompanies this proxy
statement is made on behalf of the Board of the Company. Proxies in such form
will confer discretionary authority with respect to any other matters which
may properly be brought before the meeting.
The Annual Meeting of Shareholders will be held for the transaction of
business described above and for the transaction of such other business as may
properly come before the meeting. At the date of this proxy statement, the
only business which management intends to present, or knows that others will
present, is that described in this proxy statement. If other matters properly
come before the meeting, the Proxies, in their discretion, are authorized to
vote upon such other business as may properly come before the meeting.
By order of the Board.
/s/ Edward P. Weber, Jr.
Edward P. Weber, Jr.
Secretary
Dated: March 29, 1994
30
<PAGE>
ADMISSION
If you plan to attend the meeting and are a shareholder of record, please
check your proxy card in the space provided for that purpose. We will not be
issuing admission cards, but checking the box will pre-register you for the
meeting. If you plan to attend the meeting and your shares are held in the
name of a broker or other nominee, please bring a proxy or letter from them to
the meeting to confirm your ownership of shares.
LOCATION
Harris Trust and Savings Bank is located at 111 West Monroe, Chicago, Illinois
between Clark and LaSalle. The telephone number of the main bank is
312-461-2121.
- Enter the bank at the 115 South LaSalle entrance.
- Take the escalators to the 3rd floor.
- Take an elevator (located to the right of the escalator) to the 8th
floor Auditorium.
Public parking is available at a garage at Wells and Monroe Street, one block
west of the bank.
<PAGE>
Exhibit A
ACME METALS INCORPORATED
1994 STOCK INCENTIVE PROGRAM
1. PURPOSE
The purpose of the Acme Metals Incorporated 1994 Stock Incentive Program
(the "Program") is to attract and retain outstanding individuals as
officers and employees of Acme Metals Incorporated and its subsidiaries
(the "Company") and to furnish incentives to such persons to increase
profits by providing such persons opportunities to acquire shares of the
Company's common stock, $1 par value ("Common Stock"), or to receive
monetary payments, or both, on advantageous terms as herein provided.
2. DEFINITIONS
As used in the Program,
(a) The term "Appreciation Right" means a right granted pursuant to
Paragraph 8 of the Program.
(b) The term "Disinterested Persons" means persons who are
"disinterested persons" as that term is defined in Rule 16b-3,
under Section 16 of the Securities Exchange Act of 1934, as
amended; and/or, as "outside directors" under Section 162(m) of
the Code and Regulations promulgated thereunder.
(c) The term "Board" means those members of the Board of Directors of
the Company who are Disinterested Persons.
(d) The term "Code" means the Internal Revenue Code of 1986, as it may
be amended from time to time.
(e) The term "Committee" means the Compensation Committee of the
Board, or any successor thereof, consisting of at least three
persons, all of whom are directors of the Company and all of whom
are Disinterested Persons selected by the Board to administer the
Program and serving at the pleasure of the Board.
(f) The term "Date of Grant" means that date specified by the
Committee on which a grant of a Stock Option or Appreciation Right
or a grant of a Stock Award shall become effective (which date
shall not be earlier than the date on which the Committee takes
action with respect thereto).
(g) "Employee" shall mean any person, including an officer, who is
employed by the Company on a full-time basis and is compensated
for such employment by a regular salary.
(h) With respect to the grant of Stock Options and Appreciation
Rights, "Market Value per Share" means as to each share the
average of the high and low prices of the Common Stock on that
date (or, if there are no sales on that date, on the last
preceding date on which there was a reported sale) on the NASDAQ
Over-the-Counter Markets, National Market Issues, or The New York
Stock Exchange Composite Transactions, as reported
A-1
<PAGE>
in THE WALL STREET JOURNAL (corrected for reporting errors),
whichever is applicable upon such date.
(i) The term "Participant" means an Employee to whom a Benefit has
been granted or awarded.
(j) The term "Optionee" means the optionee named in an agreement
evidencing an outstanding Stock Option.
(k) The term "Option Right" means the right to purchase one share of
Common Stock upon exercise of a Stock Option granted pursuant to
Paragraph 7 of the Program.
(l) The term "Spread" means the excess of the Market Value Per Share
of Common Stock on the date when an Appreciation Right is
exercised or deemed to be exercised over the option price provided
for in the related Option Right.
(m) The term "Stock Award" means an award of shares of Common Stock
(and accompanying cash award, if any) granted pursuant to
Paragraph 9 of the Program as to which any condition imposed
thereon has not been fulfilled or any limitation or restriction
imposed thereon has not lapsed.
(n) The term "Stock Option" means an option to purchase Common Stock
granted pursuant to Paragraph 7 of the Program.
(o) The term "Benefit" means the granting of an Appreciation Right,
Option Right, Stock Option, Stock Award, Restricted Stock or other
opportunities to acquire shares of Common Stock, or to receive
monetary payments, or both, on advantageous terms under the
Program.
(p) The term "Subsidiary" means any corporation or other legal entity,
domestic or foreign, more than 50% of the voting securities of
which is owned or controlled, directly or indirectly, by the
Company.
(q) The term "Restricted Stock" means an award of shares of Common
Stock granted pursuant to Paragraph 10 of the Program.
(r) The term "Year" means the fiscal year of the Company.
3. ADMINISTRATION
The Program shall be administered by the Committee; and the actions of
the Committee taken pursuant to the Program shall be subject to
ratification by the Board. No director eligible to receive Benefits
shall vote upon the granting of Benefits to himself.
The maximum number of Stock Options and/or Appreciation Rights which may
be awarded to any individual Participant in any three (3) year period
during the term of the Program, shall not exceed 75,000 options and/or
rights.
A-2
<PAGE>
4. PARTICIPANTS
Participants in the Program consist of such officers or key employees of
the Company as the Committee in its sole discretion may designate from
time to time to receive Benefits hereunder. The Committee's designation
of a Participant in any year shall not require the Committee to
designate such persons to receive a Benefit in any other year, or, if so
designated, to receive the same type or amount of Benefit as in any
other year, or as may be received by any other Participant in any year.
The Committee shall consider such factors as it deems pertinent in
selecting Participants and in determining the type and amount of their
respective Benefits, including without limitation (i) the financial
condition of the Company; (ii) anticipated profits for the current or
future years; (iii) contributions of Participants to the profitability
and development of the Company; (iv) the adequacy of the other
compensation of Participants.
5. TYPE OF BENEFITS
Benefits under the Program may be granted in any one or a combination of
(a) Stock Options, (b) Appreciation Rights, (c) Stock Awards and (d)
Restricted Stock, all as described below at Paragraphs 6-10 hereof.
6. SHARES RESERVED UNDER THE PROGRAM
There is hereby reserved for issuance under the Program an aggregate of
550,000 shares of Common Stock, subject to adjustment in accordance with
the provisions of Paragraph 16 hereof. Such shares may be shares of
original issuance or treasury shares or a combination thereof. The
number of shares issued hereunder as Stock Awards or Restricted Stock
shall not exceed 150,000, subject to adjustment in accordance with any
adjustment pursuant to Paragraph 16 hereof. If there is a lapse,
expiration, termination or cancellation of any Stock Option (otherwise
than upon the exercise of an Appreciation Right) or Appreciation Right
prior to the exercise thereof, or if shares are issued as a Stock Award
or Restricted Stock and thereafter are reacquired by the Company
pursuant to rights reserved upon issuance thereof, (other than in
connection with the satisfaction of a withholding obligation), such
shares may again be used for new Benefits authorized under the Program.
Shares covered by any Stock Option surrendered upon the exercise of an
Appreciation Right shall not be available for the granting of further
Benefits.
7. STOCK OPTIONS
The Committee may, from time to time and upon such terms and conditions
as it may determine, authorize the granting to Participants of options
to purchase shares of Common Stock. Each such grant may utilize any or
all of the authorizations, and shall be subject to all of the
limitations, contained in the following provisions:
(a) Each grant shall specify the number of shares of Common Stock to
which it pertains;
(b) Each grant shall specify an option price per share not less than
the Market Value Per Share on the Date of Grant;
(c) Each grant shall specify that the option price shall be payable at
the time of exercise (i) in cash or by check acceptable to the
Company, (ii) by the transfer to the Company of shares of Common
Stock having a value at the time of exercise equal to the total
option price, or (iii) by a combination of such methods of
payment;
A-3
<PAGE>
(d) Successive grants may be made to the same Participant whether or
not any Stock Options previously granted to such Participant
remain unexercised;
(e) Each grant shall specify the period or periods of continuous
employment by the Optionee with the Company which is necessary
before a Stock Option or any installment thereof will become
exercisable;
(f) Stock Options granted under the Program may be either (i) options
which are incentive stock options ("ISOs") under Section 422 of
the Code; (ii) options which do not qualify as incentive stock
options under Section 422 of the Code ("nonstatutory options"); or
(iii) a combination of ISOs and nonstatutory options;
(g) No Stock Option shall be exercisable more than ten years from the
Date of Grant;
(h) Each grant of Stock Options shall be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to
the Optionee and containing such terms and provisions, consistent
with the Program and the provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, as the Committee may
approve;
(i) In addition to any requirement set forth in the Code to assure
that ISOs qualify as incentive stock options under Section 422,
ISOs granted hereunder shall be subject to the following terms and
conditions;
(1) If an Optionee owns more than 10% of the total combined
voting power of all classes of outstanding shares of stock
of the Company or any of its subsidiaries or parent
Companies (within the meaning of Section 424(e) and 424(f)
of the Code), then as ISO granted under the Program to such
Optionee shall, by its terms, fix the exercise price to be
at least 110% of the Market Value Per Share on the Date of
Grant of the ISO and such ISO shall terminate (become
non-exercisable) upon the expiration of five years from the
Date of Grant of such ISO;
(2) With respect to each Optionee, a grant will not qualify as
an ISO to the extent, as a result of such grant, the
aggregate fair market value of the Common Stock (determined
on the Date of Grant of each ISO) subject to one or more
ISOs first exercisable in any calendar year shall exceed
$100,000.
8. APPRECIATION RIGHTS
The Committee may authorize the grant of Appreciation Rights in
connection with any nonstatutory option granted hereunder. An
Appreciation Right shall be a right of the Optionee, exercisable by
surrender of the related Option Right, to receive from the Company an
amount which shall be determined by the Committee and shall be expressed
as a percentage of the Spread (not exceeding 100%) at the time of
exercise. Each such grant may utilize any or all of the authorizations
and shall be subject to all of the limitations contained in the
following provisions:
(a) Any grant may (i) when granted specify that the amount payable on
exercise of an Appreciation Right may be paid by the Company in
cash, in shares of Common Stock, or in any combination thereof, or
(ii) may either grant to the Optionee or retain in the Committee
the right to elect among those alternatives subsequent to the Date
of Grant;
A-4
<PAGE>
(b) Any grant may specify that the amount payable on exercise of an
Appreciation Right (valuing shares of Common Stock for this
purpose at their Market Value Per Share at the date of exercise)
may not exceed a maximum specified by the Committee at the Date of
Grant;
(c) Appreciation Rights may be exercised from time to time commencing
on the third business day following the release for publication,
in at least one of the ways specified in Rule 16b-3 under Section
16 of the Securities Exchange Act of 1934, of quarterly or annual
summary statements of sales and earnings of the Company and ending
on the twelfth business day thereafter. Notwithstanding the
foregoing, no Appreciation Right may be exercised during the first
six months of its term, except that this limitation shall not
apply in the event death or disability of the Optionee occurs
prior to the expiration of the six-month period. In addition, no
Appreciation Right may be exercised except at a time when the
related Option Right is exercisable;
(d) Each grant shall specify that the Committee may from time to time
amend, suspend or terminate the Appreciation Rights covered
thereby (provided that, in the case of an amendment, the amended
Appreciation Rights shall conform to the provisions of the
Program) and shall not increase the amount of such grant;
(e) In the event the grant of an Appreciation Right grants to the
Optionee the right to elect to receive cash in whole or in part in
settlement of the Appreciation Right, the Committee shall retain
sole discretion to approve such election, which approval or
disapproval may be given at any time after the Optionee's election
to which it relates;
(f) Each grant of an Appreciation Right shall be evidenced by a
notification executed on behalf of the Company by an officer and
delivered to the Optionee, which notification shall describe such
Appreciation Right, identifying the related Option Right, state
that such Appreciation Right is subject to all the terms and
conditions of the Program, and contain such other terms and
provisions, consistent with the Program, as the Committee may
approve.
9. STOCK AWARDS
The Committee may from time to time and upon such terms and conditions
as it may determine, authorize the granting to participants of Stock
Awards. A Stock Award shall be a right of the Participant to receive
from the Company a number of shares of Common Stock of the Company
specified by the Committee, without monetary consideration. Each grant
may utilize any or all of the authorizations, and shall be subject to
all of the limitations contained in the following provisions:
(a) Each such grant shall specify the number of shares of Common Stock
to which it relates;
(b) Each such grant shall be subject to such conditions, limitations,
restrictions and other matters and shall be subject to forfeiture
or lapse in such circumstances as the Committee may prescribe;
(c) Each such grant shall specify the time or times at which the
Common Stock covered by such grant shall be delivered to the
Participant;
A-5
<PAGE>
(d) Any such grant may be accompanied by a cash award payable at such
times and in such amount (not exceeding 100% of the compensation
income recognized by the participant by reason of such grant for
federal, state and local income tax purposes) as the Committee by
determine;
(e) Each such grant shall specify that the Committee may at any time
amend, suspend or terminate the Stock Award (and accompanying cash
award, if any) covered thereby, provided that, in the case of an
amendment, the amended Stock Award (and accompanying cash award,
if any) shall conform to the provisions of the Program;
(f) Each grant of Stock Awards (and accompanying cash awards, if any)
shall be evidenced by a notification executed on behalf of the
Company by any officer and delivered to and accepted by the
Participant, which notification shall describe the Stock Award
(and accompanying cash award, if any), state that the same is
subject to all of the terms and conditions of the Program, and
contain such other terms and provisions, consistent with the
Program, as the Committee may approve:
(g) For purposes of determining the value of any Stock Awards granted
hereunder, the value of such Stock Awards shall be based on the
average of the high and low prices on the date or dates on which
the Common Stock is delivered to the Participants pursuant to the
terms of their respective agreements relating to the Stock Awards
or, if there are no sales on that date, the last preceding date on
which there was a reported sale on the NASDAQ Over-the-Counter
Markets, national market Issues, or The New York Stock Exchange
Composite Transactions, as reported in THE WALL STREET JOURNAL
(corrected for reporting errors), whichever is applicable upon
such date.
10. RESTRICTED STOCK PURCHASE PLAN
The Committee is authorized to adopt a Restricted Stock Purchase Plan
(the "Plan") providing for the transfer of shares of Common Stock to
officers and other key employees of the Company at prices below the then
current fair market value of such shares in consideration for their
services to the Company and on terms and conditions which subject the
Participant's interests in such shares to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code. Shares
transferred pursuant to such restricted stock purchase plan shall be
subject to such other restrictions, limitations and conditions as may be
required by said Plan or as the Committee believes to be appropriate,
including, without limitation, restrictions on the sale or other
disposition of such Common Stock and rights of the Company to reacquire
such Common Stock upon termination of the Participant's employment
within specified periods.
11. LIMITATION ON TRANSFERABILITY
No Stock Option, Appreciation Right or share of Common Stock subject to
forfeiture or other restriction of the kind described in Paragraph 9(b)
or in any Restricted Stock Purchase Plan adopted hereafter shall be
transferable otherwise than by will or the laws of descent and
distribution, and any such Benefit shall be exercisable during the
lifetime of the Participant to whom such Benefit has been granted only
by the Participant or by the Participant's guardian or legal
representative, and after such Participant's death shall be exercisable
only by the Participant's legal representative.
A-6
<PAGE>
12. OTHER PROVISIONS
The award of any Benefit under the Program may also be subject to other
provisions (whether or not applicable to the Benefit awarded to any
other Participant) as the Committee determines appropriate, including,
without limitation, restrictions on resale or other disposition, such
provisions as may be appropriate to comply with federal and state
securities laws and stock exchange requirements, and understandings or
conditions as to the Participant's employment in addition to those
specifically provided for under the Program.
13. MANNER OF ACTION BY THE COMPANY
The Secretary of the Company (or such other officer as the Chief
Executive Officer of the Company may from time to time designate) shall
supervise the maintenance of records for all Participants in the
Program. Any determination of such officer, if approved by the Board,
shall be binding and conclusive for all purposes.
14. WITHHOLDING OF TAXES
The Company shall deduct from any payment, or otherwise collect from the
Participant, any taxes required to be withheld by federal, state or
local governments in connection with any Benefit. The Participant may
elect, subject to approval by the Committee, to have shares withheld by
the Company in satisfaction of such taxes. With respect to Participants
subject to Section 16(b) of the Securities Exchange Act of 1934, an
election to have shares withheld must be irrevocably made at least six
months prior to the date that such taxes are determined with respect to
any such Benefit or be made or become effective during any ten-day
period beginning on the third business day after and ending on the
twelfth business day after a release for publication, in at least one of
the manners specified in Rule 16b-3 under Section 16 of the Securities
Exchange Act of 1934, of quarterly or annual sales and earnings of the
Company, if such period coincides with or is prior to the time that such
taxes are determined; provided, however, that no such election may be
made with respect to withholding occurring within six months of the Date
of Grant of the relevant Benefit. The number of shares to be withheld
shall be calculated by reference to the Market Value per share of the
Common Stock determined in accordance with Paragraph 2(g) on the date
that such taxes are determined. The Company shall give the person
entitled to receive a Benefit notice of the withholding obligation
attributable to any amount payable or shares deliverable under the
Program as far in advance as reasonably practicable, and the Company may
defer making payment of delivery if any such tax may be pending unless
and until indemnified to its satisfaction.
15. TENURE
A Participant's right, if any, to continue to serve the Company as an
officer or employee shall not be enlarged or otherwise affected by the
establishment of the Program or his designation as a Participant.
16. ADJUSTMENT PROVISIONS
(a) If the Company shall at any time change the number of issued
shares of Common Stock without new consideration to the Company
(such as by stock dividends, stock splits or stock combinations),
the total number of shares reserved for issuance under the Program
and the number of shares covered by each outstanding Benefit shall
be adjusted so that
A-7
<PAGE>
the aggregate consideration payable to the Company and the value
of each such Benefit shall not be changed. Benefits may also
contain provisions for their continuation or for other equitable
adjustments after changes in the Common Stock resulting from
reorganization, sale, merger, consolidation or similar occurrence.
(b) Notwithstanding any other provision of the Program, and without
affecting the number of shares reserved or available hereunder,
the Committee may authorize the issuance or assumption of Benefits
in connection with any merger, consolidation, acquisition of
property or stock, or reorganization upon such terms and
conditions as it may deem appropriate.
17. AMENDMENT AND TERMINATION OF BENEFITS AND THE PROGRAM
(a) The Committee may terminate the Program at any time and may amend
the Program at any time or from time to time without obtaining any
approval from the Company's stockholders; except that the Program
may not be amended without the approval of the Company's
stockholders to (i) materially increase the aggregate number of
shares issuable under the Program (excepting adjustments pursuant
to Section 16 hereof); (ii) change the class of individuals
eligible to receive Benefits; or (iii) materially increase the
Benefits accruing to Participants under the Program. No benefit
shall be granted pursuant to the Program more than 10 years after
the date of ratification and approval of the Program by the
stockholders of the Company.
(b) The Committee may, with concurrence of the affected Optionee,
amend or cancel any agreement evidencing Stock Options granted
under this Program. In the event of cancellation, the Committee
may authorize the granting of new Stock Options (which may or may
not cover the same number of shares which had been the subject of
the prior agreement) in such manner, at such option price, and
subject to the same terms, conditions and discretions, as under
the Program would have been applicable had the cancelled Stock
Options not been granted.
(c) In case of termination of employment by reason of death,
disability or retirement under a retirement plan of the Company of
a Participant who holds a Stock Option or Appreciation Right not
immediately exercisable in full, or any Stock Award or Restricted
Stock as to which any condition, limitation, restriction or
substantial risk of forfeiture has not lapsed, the Committee may,
in its sole discretion, accelerate the time at which such Stock
Option or Appreciation Right may be exercised or the time at which
such condition, limitation, restriction or substantial risk of
forfeiture will lapse.
18. EFFECTIVE DATE
The Program shall, subject to prior approval of the stockholders of the
Company, become effective on April 28, 1994.
A-8
<PAGE>
Exhibit B
ACME METALS INCORPORATED
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
ARTICLE I
PURPOSE
The Acme Metals Incorporated 1994 Executive Incentive Compensation Plan
(the "Plan") is designed to (i) provide for awards to officers and key
salaried employees of the Company who, individually or as members of a group,
contribute in a substantial manner to the achievement of objectives and goals
established by the Board of Directors which contribute to the success of the
Company, thus providing a means for their participation in such success; and,
(ii) to afford an incentive to such persons to continue to contribute their
best efforts to promote the success of the Company.
ARTICLE II
DEFINITIONS
The following words and phrases shall have the meaning set forth below
whenever used herein:
1) "Base Salary" shall mean, for the Chief Executive Officer and
Incentive Group A, the regular salary, exclusive of bonuses,
incentive pay, overtime pay, special awards or awards made under
the Plan, as established prior to the first day of the Year in
question; and, for all other employees, the regular salary,
exclusive of bonuses, incentive pay, overtime pay, special awards
or awards made under the Plan, for the period of each Year during
which an Employee has been designated as a Participant.
2) "Board of Directors" or "Board" shall mean those members of the
Board of Directors of the Company who are Disinterested Persons.
3) "Company" shall mean Acme Metals Incorporated, a Delaware
corporation.
4) "Cash Flow" shall mean cash flow as defined in FASB 95, other than
cash receipts and payments from financing activities, for the Year
in question, excluding however, credits and debits in such Year
which are extraordinary items, determined in accordance with
generally accepted accounting principles.
5) "Committee" shall mean the Compensation Committee of the Board of
Directors of the Company consisting of members who are
Disinterested Persons.
6) "Disinterested Persons" shall mean persons who are "disinterested
persons" as the term is defined in Rule 16 b-3 under Section 16 of
the Securities Exchange Act of 1934, as amended; and/or, are
"outside directors" as defined in Section 162(m) of the Internal
Revenue Code of 1986 and Regulations promulgated thereunder.
7) "Employee" shall mean any person, including an officer, who is
employed by the Company on a full-time basis and is compensated
for such employment by a regular salary.
B-1
<PAGE>
8) "Increase in Shareholder Value" shall mean a formula, determined
by the Committee prior to the Year in question, utilizing one or
more of the following factors, either standing alone or as
compared to competitors or other classes of entities:
i) Net After Tax Earnings per share, in accordance with
generally accepted accounting principles;
ii) trading price of the Company's stock coupled with dividends
paid;
iii) book value per share, in accordance with generally accepted
accounting principles; and
iv) other factors could include market share, decrease in
leverage, or improvements in productivity pursuant to an
objective formula.
9) "Net After Tax Earnings" shall mean the consolidated net income of
the Company for the Year in question as set forth in its financial
statements before any accrual pursuant to the Plan with respect to
such Year, and excluding gains and charges in such Year which are
extraordinary items, determined in accordance with generally
accepted accounting principles.
10) "Participant" shall mean an Employee of the Company described in
Article III.
11) "Return on Equity" shall mean the percentage obtained by dividing
a) the Net After Tax Earnings of the Company for the Year in
question BY
b) the average shareholders' equity amount for the Year in
question (the average shareholders' equity amount shall be
determined in accordance with generally accepted accounting
principles, consistently applied); PROVIDED, HOWEVER, that
the Committee may adjust said average equity amount for such
items and/or transactions in such Year which are
extraordinary items, determined in accordance with generally
accepted accounting principles.
12) "Return on Investment" shall mean Net After Tax Earnings divided
by Net Operating Assets reduced by Intangible Assets, as appearing
on the Company's audited financial statements for the Year in
question.
13) "Year" shall mean the fiscal Year of the Company.
ARTICLE III
PARTICIPANTS
A. Prior to the first day of the Year in question, the Committee shall
designate which of the Employees the Committee has assigned to the Incentive
Groups identified as Chief Executive Officer and Group A in Paragraph D of
Article IV, who shall be Plan Participants for the Year in question. Not
later than January 31 of each Year, the Committee shall designate all other
Employees who shall be Plan Participants for that Year and shall assign each
Participant to one of the other incentive groups (i.e., B,
B-2
<PAGE>
C or D) designated in Paragraph D of Article IV. The Committee shall cause
these determinations, as well as information regarding the various factors to
be taken into account in determining awards hereunder, to be communicated to
each Participant.
B. A person may become a Participant contemporaneously with becoming an
Employee if the Employee is so designated by the Committee; or, by the Chief
Executive Officer of the Company and such designation is ratified by the
Committee, provided, however, that a new Chief Executive Officer of the
Company and a new Employee in Incentive Group A may only be designated a Plan
Participant for the balance of the Year, on a pro-rated basis, in which they
are first so designated.
C. Contemporaneously with the promotion, demotion or reassignment of a
Participant in Incentive Group B, C or D, the Committee or the Chief Executive
Officer of the Company may make one or more of the following changes: (i)
change the incentive group to which the Committee had heretofore assigned said
Participant, provided, however, that said Participant does not become the
Chief Executive Officer or a Participant in Incentive Group A; or (ii)
terminate an Employee's participation in the Plan for the remainder of the
Year without otherwise affecting the employment status of such Employee.
D. Contemporaneous with the demotion or reassignment of the Chief
Executive Officer of the Company or a participant in Incentive Group A, the
Committee may (i) change the incentive group to which the Committee had
heretofore assigned said Participants, or (ii) terminate an Employee's
participation in the Plan for the remainder of the Year without otherwise
affecting the employment status of such Employee.
ARTICLE IV
COMPUTATION OF INCENTIVE PAYMENTS
A. GENERAL: Prior to the beginning of the Year in question, the
Committee shall, for such Year, determine whether the computation of incentive
payments under the Plan for the Year shall be based upon (as such terms are
defined herein): (a) Net After Tax Earnings; (b) Return on Equity; (c) Return
on Investment; (d) Increase in Shareholder Value; (e) Cash Flow; or (f) A
combination of any of the foregoing items.
B. ANNUAL CORPORATE GOALS: Prior to the beginning of the Year in
question, the Committee shall, for such Year, determine the minimum, target
and maximum performance goals to be achieved by the Company during such Year
for the purposes of this Plan. Such goals shall be established as follows:
1) NET AFTER TAX EARNINGS: For any Year, in which Net After
Tax Earnings is utilized, the Committee shall determine the
minimum, target and maximum goals for Net After Tax Earnings
to be applicable in respect of that Year.
2) RETURN ON EQUITY: For any Year in which Return on Equity
is utilized, the Committee shall determine the minimum,
target and maximum Return on Equity percentages (hereinafter
respectively called "Minimum Return on Equity Percentage",
"Target Return on Equity Percentage" and "Maximum Return on
Equity Percentage"), to be applicable in respect of that
Year.
B-3
<PAGE>
3) INCREASE IN SHAREHOLDER VALUE: For any Year in which
Increase in Shareholder Value is utilized, the Committee
shall determine the minimum, target and maximum Increase in
Shareholder Value percentages (hereinafter respectively
called "Minimum Increase in Shareholder Value Percentage",
"Target Increase in Shareholder Value Percentage" and
"Maximum Increase in Shareholder Value Percentage") to be
applicable in respect of that Year.
4) RETURN ON INVESTMENT: For any Year in which Return on
Investment is utilized, the Committee shall determine the
minimum, target and maximum Return on Investment percentages
(hereinafter respectively called "Minimum Return on
Investment Percentage," "Target Return on Investment
Percentage" and "Maximum Return on Investment Percentage,"
to be applicable in respect of that Year.
5) CASH FLOW: For any Year in which Cash Flow is utilized,
the Committee shall determine the minimum, target and
maximum Cash Flow goals to be applicable in respect of that
Year.
C. FACTORS IN ESTABLISHING CORPORATE GOALS: In establishing the
annual corporate goals for each Year, the Committee shall take into
consideration the Company's Profit Plan objectives for such Year, the
Company's Long Term Strategic Plan, the Company's historical performance, the
projected performance of selected companies in like industries, the historical
performance of selected companies in like industries, the average performance
of selected companies in like industries in recent years, the short-term and
long-term economic forecasts for the Year in question and future Years and
such other factors as the Committee shall consider relevant to its
determinations for the Year, or Years, in question.
D. INCENTIVE COMPENSATION PAYMENT LEVELS: Until modified by action
of the Committee, the incentive group designations and the maximum, target and
minimum Incentive Compensation Payment Levels applicable to the several
incentive groups shall be as follows:
<TABLE>
<CAPTION>
INCENTIVE GROUP MAXIMUM TARGET MINIMUM
--------------- ------- ------ -------
<S> <C> <C> <C>
Chief Executive Officer 60.0% 40.0% 20.0%
Group A 45.0% 30.0% 15.0%
Group B 37.5% 25.0% 12.5%
Group C 30.0% 20.0% 10.0%
Group D 22.5% 15.0% 7.5%
</TABLE>
E. CORPORATE PERFORMANCE INCENTIVE FUND: A Corporate Performance
Incentive Compensation Fund shall be established for each Participant, the
amount of which shall be the result obtained by multiplying such Participant's
Base Salary by a percentage which is derived from the Group Incentive
Compensation Payment Level applicable to such Participant for the Year in
question. Examples of the computations of the applicable incentive payment
levels to any individual Participant under the Plan are subject to the
following conditions and limitations.
B-4
<PAGE>
1) CHIEF EXECUTIVE OFFICER AND INCENTIVE GROUP A.
Awards to Participants in the Chief Executive Office
and Incentive Group A designations, as a percentage of Base
Salary, may not exceed the maximum Incentive Compensation
Payment Level specified in Paragraph D of Article IV above;
provided however, such awards may be reduced or eliminated
for any such individual Participant in such manner or amount
as the Committee in its sole discretion may determine.
2) INCENTIVE GROUP B, C AND D PARTICIPANTS.
Incentive Compensation Payment Level awards to
Participants in Incentive Groups B, C and D may be adjusted
as follows:
i) A personal performance determination shall be made by
management as to each such Participant's performance
during the Year in question on a scale of 1 through 3.
The criteria for each of the three ratings are
described in Appendix 2 attached hereto.
ii) The amount of incentive compensation, computed in
accordance with Paragraphs D and E of Article IV
hereof, awarded to such Participant who receives a
rating of 3 may be reduced by amounts up to 25%.
iii) The amount of incentive compensation, computed in
accordance with paragraphs D and E of Article IV
hereof, awarded to such Participant who receives a
rating of 1 may be increased by amounts up to 25%.
iv) The amount of incentive compensation, computed in
accordance with Paragraphs D and E of Article IV
hereof, awarded to such Participant who receives a
rating of 2 may not be increased or decreased.
ARTICLE V
PAYMENT, DEFERRAL, PRO-RATION AND FORFEITURE OF AWARDS
A. Promptly after the individual Participant's Incentive Compensation
Payment Level awards for the Year in question shall have been determined, such
awards shall be reviewed by the Committee, and, if the Committee shall approve
the same, the Company shall cause such awards to be distributed to each
respective Participant.
The Committee may, in is discretion, cause to be transferred all or any
part of a Participant's Incentive Compensation Payment Level award to his
Deferred Compensation Account under the Deferred Compensation Plan of the
Company, and, to the extent not so transferred, the award of a Participant
shall be distributed to him. All amounts transferred to Deferred Compensation
Accounts shall be held, invested, reinvested and distributed as provided in
the Deferred Compensation Plan of the Company.
B. If, during a Year, a Participant's participation in the Plan shall
be terminated as provided in Paragraph C of Article V hereof, such person's
award for that Year shall be pro-rated based upon that portion of the Year
during which he was a Participant.
B-5
<PAGE>
C. If, during a Year, a Participant ceases to be an Employee by reason
of illness or injury, death, retirement, or leave of absence having the
approval of management, his award shall be computed on the basis of Base
Salary for that portion of the Year in which he was an Employee. Payment of
such award shall be made pursuant to the terms of paragraph A of Article V.
D. If the employment of a Participant ceases by reason of resignation
or dismissal (whether or not for cause) no award for such Year shall be made
to such Participant.
E. If, prior to the time an award is granted, the Committee determines
that a Participant has intentionally committed an act materially inimical to
the interests of the Company, the Committee may direct that the award of such
Participant be reduced to zero or such other amount as the Committee in its
sole discretion deems appropriate.
F. No award shall be paid to the Chief Executive Officer or a
Participant in Incentive Group A unless the Committee certifies that the goals
and other material terms have been satisfied.
ARTICLE VI
GENERAL
Neither the establishment of this Plan nor the selection of any employee
as a Participant shall give any Participant any right to be retained in the
employ of the Company, or a subsidiary thereof; no Participant or Employee and
no person claiming under or through a Participant or Employee shall have any
vested right or interest in the Plan or in the funds determined to be payable
thereunder; and, there shall be no obligation upon the Committee to designate
any Employee as a Participant. The Committee may adjust, and from time to
time change, such rules and policies as it deems appropriate for the
administration of the Plan and may give to the participants such notice
relative thereto, or statement thereof, as it deems desirable. No member of
the Committee who is also an Employee shall vote as to any action taken by the
Committee (i) with respect to awards to be made to him under the Plan or (ii)
with respect to his designation as a Participant.
ARTICLE VII
AMENDMENTS AND TERMINATION
The Committee, subject to ratification by the Board of Directors, may
from time to time amend, suspend or terminate, in whole or in part, any or all
of the provisions of this Plan; provided, however, with respect to the Chief
Executive Officer of the Company and Employees in Incentive Group A, any such
action shall not cause or result in an increase in the amount of any award to
said Participants.
Anything in this Plan to the contrary notwithstanding, the Committee,
subject to ratification by the Board of Directors, shall have the right, if in
the sole judgment of the Committee, economic conditions or any other factors
affecting the Company, one or more subsidiaries, one or more divisions, or the
businesses of any of them, so warrant, to reduce or eliminate the amount of
the Incentive Compensation Payment Level award to any Participant, or the
amount of all awards to all Participants, in the case of any such award prior
to the time of payment of said awards pursuant to Article V of this Plan.
B-6
<PAGE>
APPENDIX I
TO
ACME METALS INCORPORATED
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
The following computations shall serve as examples of the application of
the Plan to any individual Participant:
1) If the Company's actual results for the Year in question equals
the minimum performance goal(s)(*) level established by the
Committee for such Year, the percentage to be applied against the
Participant's Base Salary shall be equal to the minimum Incentive
Compensation Payment Level (expressed as a percentage of Base
Salary) for the Participant's Incentive Group under Paragraph D of
Article IV of the Plan for such Year.
2) If the Company's actual results for the Year in question is less
than the minimum performance goal(s) established by the Committee
for such Year, the percentage applied against the Participant's
Base Salary shall be equal to zero for such Year.
3) If the Company's actual results for the Year in question is
greater than the minimum but less than the target goal(s), or is
greater than the target but less than the maximum goal(s)
established by the Committee for such Year, the percentage to be
applied against the Participant's Base Salary for such Year shall
be determined by interpolation based on the differences, as the
case may be, between the minimum and target, or between the target
and maximum goal(s) as applied to the Incentive Compensation Payment
Level for the Participant's Incentive Group for such Year under
Paragraph D of Article IV of the Plan.
Thus, for example:
EXAMPLE X: If a Participant is assigned to Incentive Group C,
minimum, target and maximum Net After Tax Earnings goal(s) for the
Year in question are $2.0 million, $4.0 million and $6.0 million,
respectively, actual Net After Tax Earnings for such Year is $3.0
million and the Participant's Base Salary is $40,000 for such
Year, his Performance Incentive Compensation Fund for such Year
would be $6,000, determined as follows:
1) APPLICABLE PERCENTAGE.
a) The difference between target and minimum goals for
Net After Tax Earnings are:
$4.0 million - $2.0 million = $2.0 million
____________________
*Performance goals for each Year may be based upon (i) Net After
Earnings, (ii) Return on Equity, (iii) Increase in Shareholder Value, (iv)
Return on Investment, (v) Cash Flow, or (vi) a combination of any of the
foregoing.
B-7
<PAGE>
b) The difference between actual Net After Tax Earnings
and minimum Net After Tax Earnings is:
$3.0 million - $2.0 million = $1.0 million
c) the proportion of (b) = $1.0 million = 50.0%
---- ------------
(a) $2.0 million
d) The difference between the percentage of Base Salary
allocable to a Participant in Incentive Group C for
target and minimum Net After Tax Earnings (under
Paragraph D of Article IV of the Plan is:
20.0% - 10.0% = 10.0%
e) The percentage of Base Salary to be allocated to a
Participant in Incentive Group C, based on actual Net
After Tax Earnings of $3.0 million:
For achieving minimum Net After Tax Earnings = 10.0%
Plus: (c) x (d) [50% x 10%] = 5.0%
--------
Applicable percentage: 15.0%
2) BASE SALARY: $40,000.00
3) PARTICIPANT'S PERFORMANCE INCENTIVE COMPENSATION FUND:
$40,000.00 x 15.0% = $6,000.00
EXAMPLE Y: Same as Example X, except actual Net After Tax
Earnings for the Year in question is $5.0 million. The
Participant's Performance Incentive Compensation Fund would
be $10,000, determined as follows:
1) APPLICABLE PERCENTAGE.
a) The difference between maximum and target Net
After Tax Earnings is:
$6.0 million - $4.0 million = $2.0 million
b) The difference between actual Net After Tax
Earnings and target Net After Tax Earnings is:
$5.0 million - $4.0 million = $1.0 million
c) The proportion of (b) = $1.0 million = 50.0%
---- ------------
(a) $2.0 million
B-8
<PAGE>
d) The difference between percentage of Base Salary
allocable to a Participant in Incentive Group C
at a maximum and at target Net After Tax
Earnings is:
30% - 20% = 10.0%
e) The percentage of Base Salary to be allocated to
a Participant in Incentive Group C based on
actual Net After Tax Earnings of $5.0 million:
For achieving target Net After Tax Earnings: 20.0%
Plus: (c) x (d), or 50.0% x 10.0% 5.0%
------
Applicable percentage 25.0%
2) BASE SALARY: $40,000
3) CORPORATE PERFORMANCE INCENTIVE COMPENSATION FUND:
$40,000 x 25.0% = $10,000.00
4) If the Company's actual results for the Year in
question equals or exceeds the maximum goal(s)
established by the Committee for such Year, the
percentage to be applied against the Participant's
Base Salary shall be equal to the maximum Incentive
Compensation Payment Level for the Participant's
Incentive Group for such Year.
B-9
<PAGE>
APPENDIX 2
INTEROFFICE
CORRESPONDENCE Copy to:
Date: November 18, 1993
To:
From:
Subject:
Reference:
As you are aware, the extent of an individual's EIC payment is dependent upon
an evaluation of his or her personal performance. The letter received by 1993
participants contained the following statement: "... the amount you are
eligible to receive may be adjusted based on your personal performance."
All personal ratings must be approved by the Chairman and Chief Executive
Officer and each of us is expected to recommend a rating for those
participants in our organizations. The following performance criteria should
be used in developing your recommendations:
OUTSTANDING
(Rating 1) Employee is performing all requirements of the responsibility
areas in a highly exceptional manner. Has accomplished all
of personal annual objectives. Performance exceeds the
desired level of performance in all responsibility areas by a
wide margin. Would be unrealistic to expect better
performance in responsibility areas.
EFFECTIVE
(Rating 2) Employee is performing most or all requirements of the
responsibility areas. Has accomplished most of personal
annual objectives. Performance on work requirements is at an
acceptable level, but certain requirements are performed
above that level and occasionally exceptionally well.
Improved performance can be expected in some areas.
MARGINAL
(Rating 3) Employee is performing some or most of the requirements of
the responsibility areas, but is not performing all key
requirements. Has not satisfied any significant personal
annual objectives. Performance meets desired level of
performance for few of the key responsibility areas and
improved performance is expected.
By way of explanation, participants who achieve Rating 1 shall have their
awards increased by up to 25%. Participants who achieve Rating 2 shall be
considered "full incentive" and shall receive payments in keeping with the
formula for their Group. Finally, participants who achieve Rating 3 shall
have their awards decreased by up to 25%.
B-10
<PAGE>
Recommendations for a participant to receive a Rating 1 or Rating 3 must be
thoroughly documented. Recommendations and necessary supporting documentation
should be returned to my attention prior to December 15. If you have a
question or wish to discuss your ratings, please call me.
Any recommended deletions or additions to the EIC participation list should
also be submitted at this time, with full documentation and justifications.
Please call me before submitting your recommendations.
B-11
<PAGE>
APPENDIX
Photos appearing on Page 3 through 6 are pictures of directors.
<PAGE>
X Please mark your 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 Directors and FOR Proposals 2, 3 and 4.
The Board of Directors recommends a vote FOR Election of Directors and FOR
Proposals 2, 3 and 4.
1. Election of Directors (see reverse)
FOR WITHHELD
For, except vote withheld from the following nominee(s):
- ------------------------
2. Approval of independent accountants
FOR AGAINST ABSTAIN
3. Approval of 1994 Stock Incentive Program
FOR AGAINST ABSTAIN
4. Approval of 1994 Executive Incentive Compensation Plan
FOR AGAINST ABSTAIN
5. In the discretion of the Proxies named herein, upon such other
matters as may properly come before the meeting.
Change of address/comments on reverse
I plan to attend the Annual Meeting of Shareholders
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.
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
- -----------------------
- -----------------------
SIGNATURE(S) DATE
ACME METALS INCORPORATED
13500 S. Perry Avenue
Riverdale, Illinois 60627-1182
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned acknowledges receipt of the accompanying Notice of Meeting and
1994 Proxy Statement and hereby appoints Brian W. H. Marsden, Edward P. Weber,
Jr. and Jerry F. Williams, and each of them, Proxies, with power of
substitution, to vote on behalf of the undersigned at the Annual Meeting of
Shareholders of Acme Metals Incorporated to be held at the Harris Trust and
Savings Bank, 111 West Monroe Street, Chicago, Illinois 60690 on Thursday, April
28, 1994, at 10:00 a.m., central time, and at any adjournment or postponements
thereof with the same force and effect as the undersigned might or could do if
personally present thereat.
PROXY
Election of Directors (see reverse side)
Nominees:
Stephen D. Bennett
Andrew R. Laidlaw
Frank A. LePage
Comments: (such as change of address)
- -----------------------
- -----------------------
- -----------------------
(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 Director's recommendations (see accompanying
Proxy Statement). The Proxies cannot vote your shares unless you sign and
return this card.
SEE REVERSE SIDE
