<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Acme Metals Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[ACME METALS INCORPORATED LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF ACME METALS INCORPORATED:
Notice is hereby given that the 1996 Annual Meeting of Shareholders of
Acme Metals Incorporated, a Delaware corporation (the "Company"), will be held
at The Sutton Place Hotel, 955 Bay Street, Toronto, Ontario, Canada M5S 2A2, on
Thursday, April 25, 1996, at 10:00 a.m., Eastern time, for the purpose of
considering and voting on:
1. the election of three directors to serve for a three-year term;
2. the ratification of the appointment of Price Waterhouse LLP as
independent accountants for the Company for the fiscal year
1996;
3. 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 4, 1996, 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 26, 1996
IMPORTANT -- YOUR PROXY IS ENCLOSED IN
THE ENVELOPE CONTAINING THIS MATERIAL
13500 SOUTH PERRY AVENUE, RIVERDALE, ILLINOIS 60627-1182; PHONE 708-849-2500
<PAGE>
ACME METALS INCORPORATED
13500 SOUTH PERRY AVENUE, RIVERDALE, ILLINOIS 60627-1182
------------------------
PROXY STATEMENT
------------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Acme Metals Incorporated, a Delaware
corporation (the "Company"), from holders of the Company's outstanding shares of
Common Stock, par value $1.00 per share (the "Common Stock"), for the Annual
Meeting of Shareholders of the Company to be held on April 25, 1996 (the "Annual
Meeting") for the purposes set forth in the accompanying Notice of 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
$5,500 and will reimburse such organization for certain expenses incurred by it.
The Notice of Meeting, this proxy statement, form of proxy card and Annual
Report/Form 10-K for 1995 are being mailed on or about March 26, 1996 to each
shareholder of the Company at such holder's address of record.
Unless otherwise indicated, information furnished in this proxy statement
prior to May 25, 1992 is for Acme Steel Company and after May 25, 1992 is for
Acme Metals Incorporated. The Securities and Exchange Commission has determined
that for reporting purposes Acme Metals Incorporated is the successor to Acme
Steel Company.
VOTING AT THE MEETING
The Board of Directors has fixed the close of business on March 4, 1996 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 11,584,877 shares of
Common Stock outstanding and entitled to vote on all matters to be acted upon at
the meeting.
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, 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 specifications thereon or, if no
specifications are made, will be voted FOR the election of the Board of
Directors' nominees and FOR ratification of the selection of Price Waterhouse
LLP as independent
<PAGE>
accountants. 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 Annual Meeting.
The Company's 1995 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.
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. Vanguard Fiduciary
Trust Company, 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 of Directors in this proxy statement.
ELECTION OF DIRECTORS (PROPOSAL NO. 1)
The Restated Certificate of Incorporation of the Company provides that the
Board of Directors shall consist of not fewer than three nor more than fifteen
directors, as may be fixed by the Board of Directors 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. Shareholders may only vote their shares for the number of
nominees named in this proxy statement.
There are currently twelve directors: five Class I directors whose terms
expire in 1996 (Messrs. Gauthier, McCall, Sutherland, Wilson and Dr.
O'Cleireacain), three Class II directors whose terms expire in 1997 (Messrs.
Bennett, Laidlaw and LePage), and four Class III directors whose terms expire in
1998 (Messrs. Jordan, MacDonald, Marsden and Sovey).
Messrs. Gauthier and McCall will retire at the Annual Meeting and Dr.
O'Cleireacain will not be standing for re-election. The Board of Directors and
the Company have greatly benefited from the counsel, guidance and experience of
Messrs. Gauthier and McCall and Dr. O'Cleireacain and are grateful for their
contributions. The Board of Directors has fixed the number of directors
following the Annual Meeting at ten.
Should all directors be elected as proposed, the number and classes of
directors would be three Class I directors with terms expiring in 1999, three
Class II directors with terms expiring in 1997, and four Class III directors
with terms expiring in 1998. This will balance the number of directors within
each class as equally as possible as is required in the By-Laws.
The three persons listed below as nominees to be elected as Class I
directors, will serve for the term indicated and until their respective
successors shall be elected and qualified. L. Frederick Sutherland and William
R. Wilson are currently serving as directors of the Company; Allan L. Rayfield
has been nominated by the Board of Directors to stand for election. 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 of Directors has authorized
Messrs. Stephen D. Bennett, 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 of Directors 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, if
applicable.
2
<PAGE>
Information regarding the nominees and other directors whose terms are not
expiring at the Annual Meeting is set forth below. There are no marriage, blood
or adopted relationships among the individuals. Each director has served
continuously since he was first elected.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS FOR A TERM EXPIRING IN 1999
[PHOTO] ALLAN L. RAYFIELD
Age: 60
Nominee for Director
Chief Executive Officer and Director of M/A Com, Inc.
(microwave manufacturer) November 1993 to December 1994;
President, Chief Operating Officer and Director of M/A
Com, Inc. March 1991 to November 1993; Chairman of the
Board and Chief Executive Officer of International
Telecharge Inc. (telecommunications operator service
company) April 1990 to March 1991. He is a director of
Parker Hannifin Corporation.
[PHOTO] L. FREDERICK SUTHERLAND
Age: 44
Director since January 1995
Member: Compensation, Finance and Nominating Committees
President of Uniform Services Group of ARAMARK
Corporation (diversified services management company)
April 1, 1993 to present; Senior Vice President, Finance
of ARAMARK Corporation February 1991 to April 1993 and
Vice President of Corporate Finance and Development of
ARAMARK Corporation August 1988 to February 1991.
[PHOTO] WILLIAM R. WILSON
Age: 68
Director since July 1992
Member: Audit Review, Compensation and Nominating
Committees
Retired Chairman and Chief Executive Officer of Lukens
Inc. (manufacture and sale of plate steel and stainless
steel products) since December 1991; Chairman and Chief
Executive Officer of Lukens Inc. April 1981 to December
1991. He is a director of Columbia Gas System, Inc. and
Provident Mutual Life Insurance Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THREE (3) NOMINEES
AS CLASS I DIRECTORS OF THE COMPANY WHICH IS PRESENTED AS PROPOSAL NO. 1.
3
<PAGE>
CLASS II DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1997
[PHOTO] STEPHEN D. BENNETT
Age: 47
Director since January 1993
Member: Executive and Finance Committees
President and Chief Operating Officer of the Company
since January 1, 1993 and Group Vice President of the
Company May 25, 1992 to December 31, 1992; Group Vice
President of Acme Steel Company January 1992 to May 1992
and Vice President-Operations June 1990 to December 1991;
General Manager of Fairfield Works, USS Division of USX
Corporation (domestic integrated steel producer) December
1987 to May 1990.
[PHOTO] ANDREW R. LAIDLAW
Age: 49
Director since May 1987
Member: Audit Review (Chairman), Executive and Nominating
Committees
Chairman of the Executive Committee or Partner at the
firm of Seyfarth, Shaw, Fairweather & Geraldson (law
firm) since 1978.
[PHOTO] FRANK A. LEPAGE
Age: 68
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.
CLASS III DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1998
[PHOTO] EDWARD G. JORDAN
Age: 66
Director since July 1988
Member: Audit Review, Finance (Chairman) and Nominating
Committees
Private Investor 1989 to present; Consultant to the Board
of Trustees of The American College (private, accredited,
nontraditional college specializing in financial services
and insurance education) during 1988 and President and
Chief Executive Officer of The American College 1982 to
1987. He is a director of ARAMARK Corporation.
4
<PAGE>
CLASS III DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1998 --
CONTINUED
[PHOTO] REYNOLD C. MACDONALD
Age: 77
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 ARAMARK
Corporation and Kaiser Ventures Inc.
[PHOTO] BRIAN W. H. MARSDEN
Age: 64
Director since June 1986
Member: Executive (Chairman) and Finance Committees
Chairman and Chief Executive Officer of the Company since
January 1, 1993; Chairman, President and Chief Executive
Officer of the Company May 25, 1992 to December 31, 1992;
President and Chief Executive Officer of Acme Steel
Company June 1986 to May 1992.
[PHOTO] WILLIAM P. SOVEY
Age: 62
Director since June 1991
Member: Compensation, Executive, 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. He is a director of Teco Energy,
Inc.
BOARD OF DIRECTORS' AND COMMITTEE MEETINGS
The Board of Directors has an Audit Review Committee, a Compensation
Committee, an Executive Committee, a Finance Committee and a Nominating
Committee. During the fiscal year ended December 31, 1995 there were nine Board
of Directors meetings, two Audit Review Committee meetings, two Compensation
Committee meetings, three Finance Committee meetings and four Nominating
Committee meetings. The Executive Committee did not meet. In the 1995 fiscal
year each director was present for at least 75% of the combined number of
meetings of the Board of Directors and Committees on which each director served.
The members of the Committees are identified above.
COMMITTEES
The Audit Review Committee is charged with the duties of recommending to the
Board of Directors 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 of Directors
on accounting and reporting practices, the internal control system and the audit
effort by both the independent accountants and internal auditors.
5
<PAGE>
The Compensation Committee reviews and makes recommendations to the Board of
Directors 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 of
Directors with reference to the conduct of the business and affairs of the
Company in the interim between meetings of the Board of Directors.
The Finance Committee reviews and makes recommendations to the Board of
Directors 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 of
Directors regarding criteria for membership on the Board of Directors, the
number of members of the Board of Directors, reviews nominees for membership to
the Board of Directors, makes recommendations to the Board of Directors with
respect to the Company's policies on the level of compensation of members of the
Board of Directors 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
Directors who are not also officers of the Company are currently paid an
annual directors' fee of $18,000 and a fee of $1,000 for attending a meeting of
the Board of Directors and a fee of $1,000 for attending a meeting of a
committee of the Board of Directors, 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 of Directors' 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 of Directors' and Committee meetings.
Mr. MacDonald entered into an agreement with the Company effective June 1,
1992 to provide consulting services for a three-year period through May 31,
1995; this agreement was renewed for an additional two-year period, through May
31, 1997, upon the same terms and conditions contained in the original
agreement. 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 $40,000
in 1995.
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 of Directors 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.
6
<PAGE>
Under the Company's Non-Employee Directors' Stock Compensation Plan (the
"Stock Compensation Plan") adopted January 27, 1995 and administered by the
Nominating Committee of the Board of Directors, 50% of the annual retainer
payable to non-employee directors for 1995 was paid in shares of the Company's
Common Stock. In accordance with the terms of and the formula in the Stock
Compensation Plan, each non-employee director of the Company received 490 shares
of Common Stock on January 27, 1995. Non-employee directors are entitled to
dividends, as and if declared, and have full voting rights on the shares issued
under the Stock Compensation Plan. No shares under the Stock Compensation Plan
may be assigned, sold, transferred, pledged or otherwise encumbered for a period
of two years after the issue date (including any stock dividend), unless a
non-employee director ceases to serve on the Board of Directors by reason of
death, disability or retirement, in which case the restrictions cease
immediately. On October 24, 1995, the Nominating Committee recommended to the
Board of Directors, and the Board of Directors approved, the termination of the
Stock Compensation Plan.
[This Space Intentionally Left Blank]
7
<PAGE>
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
As of March 4, 1996, the following entities were known to the Company to be
the beneficial owners of more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (1) CLASS (2)
- ------------------------------------------------------------- -------------------- ------------
<S> <C> <C>
Mackenzie Financial Corporation ............................. 1,702,700(3) 14.7%
Suite 805
150 Bloor Street West
Toronto, Ontario M5S 3B5
Goodman & Company Ltd. ...................................... 788,100(4) 6.8%
Scotia Plaza
40 King Street West
Toronto, Ontario M5H 4A9
</TABLE>
- ------------------------
(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 percent owned has been computed in accordance with Rule 13d-3(d)(1)
under the Securities Exchange Act of 1934.
(3) The number of shares of Common Stock beneficially owned was determined by a
review of Amendment Number One to the Schedule 13G filed with the Securities
and Exchange Commission which states that Mackenzie Financial Corporation
has sole voting and dispositive power for all of the shares reported.
(4) The number of shares of Common Stock beneficially owned was determined by a
review of a Schedule 13D filed with the Securities and Exchange Commission
which states that Goodman & Company Ltd. has sole voting and dispositive
power for all of the shares reported.
8
<PAGE>
OFFICERS AND DIRECTORS
The following table sets forth as of March 4, 1996 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, and all directors and executive officers as a group.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS (2)
- ----------------------------------------------------- ------------------------------ -----
<S> <C> <C>
Stephen D. Bennett................................... 48,341(3) *
C. J. Gauthier....................................... 2,663 *
Edward G. Jordan..................................... 1,490 *
Andrew R. Laidlaw.................................... 1,490 *
Frank A. LePage...................................... 2,990 *
Reynold C. MacDonald................................. 51,000 *
Brian W. H. Marsden.................................. 167,518(4) 1.4%
Julien L. McCall..................................... 1,490 *
Carol O'Cleireacain.................................. 1,040 *
Allan L. Rayfield.................................... 0 *
Gerald J. Shope...................................... 18,669(5) *
William P. Sovey..................................... 1,490 *
Richard J. Stefan.................................... 42,605(6) *
L. Frederick Sutherland.............................. 1,000 *
Edward P. Weber, Jr.................................. 40,821(7) *
Jerry F. Williams.................................... 66,494(8) *
William R. Wilson.................................... 1,490 *
All directors and executive officers as a group, 19
persons............................................. 458,346(3)(4)(5)(6)(7)(8)(9) 3.9%
</TABLE>
- ------------------------
* Less than 1% of class
(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 percent owned has been computed in accordance with Rule 13d-3(d)(1)
under the Securities and Exchange Act of 1934.
(3) Includes 34,400 shares which are not now owned but could be acquired by
exercise of stock options, 4,700 shares which are subject to conditions of
forfeiture and restrictions on sale, transfer or other disposition, and
2,704 shares held by the trustee of the Company's Employee Stock Ownership
Plan ("ESOP") which are attributable to Mr. Bennett's account.
(4) Includes 96,800 shares which are not now owned but could be acquired by
exercise of stock options, 2,800 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 4,629 shares held by the trustee of the ESOP which are
attributable to Mr. Marsden's account.
(5) Includes 11,750 shares which are not now owned but could be acquired by
exercise of stock options, 200 shares which are subject to conditions of
forfeiture and restrictions on sale, transfer
9
<PAGE>
or other disposition, 2,290 shares held by the trustee of the ESOP which are
attributable to Mr. Shope's account and 4,301 shares held by the trustee of
the Company's Salaried Employees' Retirement Savings Plan ("SERSP") which
are attributable to Mr. Shope's account.
(6) Includes 31,550 shares which are not now owned but could be acquired by
exercise of stock options. Mr. Stefan retired from the Company on March 31,
1995.
(7) Includes 29,650 shares which are not now owned but could be acquired by
exercise of stock options, 3,150 shares which are subject to conditions of
forfeiture and restrictions on sale, transfer or other disposition, 100
shares held by family members, and 3,171 shares held by the trustee of the
ESOP which are attributable to Mr. Weber's account.
(8) Includes 37,250 shares which are not now owned but could be acquired by
exercise of stock options, 3,400 shares which are subject to conditions of
forfeiture and restriction on sale, transfer or other disposition, 13,063
shares held by the trustee of the SERSP which are attributable to Mr.
Williams' account, and 3,782 shares held by the trustee of the ESOP which
are attributable to Mr. Williams' account.
(9) Includes 750 shares which are not now owned but could be acquired by
exercise of stock options, 400 shares which are subject to conditions of
forfeiture and restriction on sale, transfer or other disposition and a
total of 3,929 shares held by the trustee of the SERSP and a total of 1,876
shares held by the trustee of the ESOP which are attributable to the
accounts of two executive officers who are not named in "Executive
Compensation" below.
OTHER PRINCIPAL HOLDER OF VOTING SECURITIES
On March 4, 1996, Vanguard Fiduciary Trust Company, 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 1,119,454 shares, or 9.7%, 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 of Directors
in this proxy statement.
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 regulations 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 representations from certain reporting persons that they
were not required to file Forms 4 or 5 for specified fiscal years, the Company
believes that all its officers, directors, and greater than ten percent
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during fiscal 1995.
10
<PAGE>
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 1993, 1994 and 1995. The information for Mr. Stefan, who retired from the
Company on March 31, 1995, is included because he would have been in the group
of four other most highly compensated executive officers had he served for the
entire fiscal year 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------
AWARDS
ANNUAL COMPENSATION --------------------------------------
------------------------------ RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)(2) (#) ($)(3)
- ---------------------------------------- ---- ------- ------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Brian W. H. Marsden .................... 1995 430,000 172,000 (1) 45,938 15,000 66,220
Chairman and Chief Executive Officer 1994 400,000 240,000 (1) 0 15,000 64,300
1993 380,000 228,000 (1) 34,500 15,000 44,650
Stephen D. Bennett ..................... 1995 275,000 82,500 (1) 45,938 10,000 39,325
President and Chief Operating Officer 1994 250,000 112,500 37,650(4) 34,875 10,000 35,861
1993 210,000 94,500 32,812 25,875 10,000 24,675
Gerald J. Shope (5) .................... 1995 114,000 31,100 (1) 0 4,000 15,961
Vice President-Human Resources 1994 103,000 38,600 (1) 0 2,500 15,290
1993 96,000 36,000 (1) 8,063 2,500 14,630
Richard J. Stefan (6) .................. 1995 35,250 10,600 (1) 0 0 3,548
Vice President-Employee Relations 1994 141,000 63,500 (1) 0 4,000 21,680
1993 135,000 60,800 (1) 17,250 4,000 15,862
Edward P. Weber, Jr. ................... 1995 153,000 45,900 (1) 45,938 5,000 21,879
Vice President, General Counsel and 1994 142,000 63,900 (1) 23,250 4,000 21,820
Secretary 1993 136,000 61,200 (1) 17,250 4,000 15,980
Jerry F. Williams ...................... 1995 187,000 56,100 (1) 45,938 5,000 26,741
Vice President-Finance and 1994 178,000 80,100 (1) 27,900 5,000 26,951
Administration and Chief Financial 1993 170,000 76,500 (1) 20,700 5,000 19,975
Officer
</TABLE>
- ------------------------
(1) The dollar value of perquisites and other personal benefits for such
executive officers was less than the established reporting thresholds.
(2) Values of restricted stock awards in the Summary Compensation Table are
based on the closing price on the date of grant. The total number and value
of the aggregate restricted shares at December 31, 1995, based on $14.375,
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 on that date, were as follows: Mr. Marsden, 2,800 shares,
value $40,250.00; Mr. Bennett, 4,700 shares, value $67,562.50; Mr. Shope,
200 shares, value $2,875.00; Mr. Weber, 3,150 shares, value $45,281.25; and
Mr. Williams, 3,400 shares, value $48,875.00. Dividends are payable on
restricted shares.
The vesting schedule for stock awards granted on January 27, 1995 is 20% of
the shares granted on July 28, 1995, 1996, 1997, 1998 and 1999. The total
number of shares granted and the number of shares of each installment
follows: Mr. Marsden, 2,500 granted in installments of 500 each; Mr.
Bennett, 2,500 shares granted in installments of 500 each; Mr. Shope, none;
Mr. Weber, 2,500 shares granted in installments of 500 each; Mr. Williams
2,500 shares granted in installments of 500 each.
11
<PAGE>
The vesting schedule for stock awards granted on January 29, 1994 is 20% of
the shares granted on July 30, 1994, 1995, 1996, 1997 and 1998. The total
number of shares granted and the number of shares of each installment
follows: Mr. Marsden, none; Mr. Bennett, 1,500 shares granted in
installments of 300 shares each; Mr. Shope, none; Mr. Weber, 1,000 shares
granted in installments of 200 shares each; Mr. Williams, 1,200 shares
granted in installments of 240 shares each.
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. Shope, none; Mr. Weber, 1,000 shares granted in installments of 200
shares each; Mr. Williams, 1,200 shares granted in installments of 240
shares each.
The vesting schedule for the stock awards granted to Mr. Shope on February
12, 1993 is 100 shares on each August 13th from 1993 through 1997 for a
total grant of 500 shares.
(3) Amounts in this column are Company contributions to the SERSP and ESOP,
which are defined contribution plans, based on amounts earned by such
executive officers during 1995.
(4) The amount reported for Mr. Bennett includes $25,219 for country club fees
and dues which is in excess of 25% of the total perquisites and other
personal benefits reported for Mr. Bennett and $12,431 for automobile
expenses.
(5) Mr. Shope became an executive officer of the Company on April 1, 1995. From
January through March of 1995 and during 1994 and 1993 he was an officer of
a subsidiary of the Company.
(6) Mr. Stefan retired from the Company on March 31, 1995. The stock awards
granted to him on July 27, 1993 became fully vested on the date of his
retirement pursuant to the terms of the Company's 1986 Stock Incentive
Program.
12
<PAGE>
STOCK OPTION GRANTS IN 1995
The following table sets forth certain information relating to options to
purchase Common Stock granted in the fiscal year 1995 to the six individuals
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR (1)
INDIVIDUAL GRANTS IN 1995
---------------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE
SECURITIES PERCENT OF AT ASSUMED ANNUAL RATE OF
UNDERLYING TOTAL OPTIONS EXERCISE OR STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED TO BASE PRICE OPTION TERM (5)
GRANTED (2) EMPLOYEES IN PER SHARE (4) EXPIRATION ----------------------------
NAME (#) FISCAL YEAR (3) ($/SH) DATE 5% ($) 10% ($)
- ---------------------------- ------------- --------------- ------------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
All Shareholders (6)........ 125,612,739 318,327,344
B. W. H. Marsden............ 15,000 13.82% $ 17.25 5/25/05 162,726 412,381
S. D. Bennett............... 10,000 9.22% $ 17.25 5/25/05 108,484 274,921
G. J. Shope................. 4,000 3.69% $ 17.25 5/25/05 43,394 109,968
R. J. Stefan................ 0 N/A N/A N/A N/A N/A
E. P. Weber, Jr............. 5,000 4.61% $ 17.25 5/25/05 54,242 137,460
J. F. Williams.............. 5,000 4.61% $ 17.25 5/25/05 54,242 137,460
Named Executive Officers'
Gains as a % of All
Shareholders' Gains (7).... .337% .337%
</TABLE>
- --------------------------
(1) Stock Appreciation Rights were not granted during fiscal 1995.
(2) All options were granted on May 25, 1995. One-half of the options become
exercisable on May 25, 1996 and one-half become exercisable on May 25, 1997
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 ten years,
subject to earlier termination in certain events related to termination of
employment.
(3) Based on 108,500 options granted to all employees during fiscal 1995.
(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 11,578,884 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 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 $17.25 per share on May
25, 1995 if the share price of the Common Stock increases at the assumed
annual rates shown in the table. There can be NO assurance that the Common
Stock will perform at the assumed annual rates shown in the table. The
Company will neither make nor endorse any predictions as to future stock
performance.
(7) This analysis illustrates the proportion of named executive officers' gains
as a percent of all shareholders' gains under the above assumptions.
13
<PAGE>
AGGREGATED OPTION EXERCISES IN 1995 AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning the exercise
of options in 1995 to purchase Common Stock by the six individuals named in the
Summary Compensation Table and the unexercised options to purchase Common Stock
held by such individuals at December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
FISCAL YEAR END OPTION VALUE (1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
OPTIONS AT 12/31/95 12/31/95 (2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ----------------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Brian W. H. Marsden................ 0 N/A 106,800 22,500 86,406.25 0
Stephen D. Bennett................. 0 N/A 34,400 15,000 6,012.50 0
Gerald J. Shope.................... 0 N/A 11,750 5,250 6,000.00 0
Richard J. Stefan.................. 0 N/A 31,550 0 23,581.25 0
Edward P. Weber, Jr................ 0 N/A 29,650 7,000 23,581.25 0
Jerry F. Williams.................. 0 N/A 37,250 7,500 29,462.50 0
</TABLE>
- ------------------------
(1) No Stock Appreciation Rights have been granted by the Company.
(2) Calculated on the basis of the fair market value of the underlying
securities at fiscal year end, $14.375, minus the exercise price. Options
granted in 1987, 1988, 1989, 1990, 1992, 1993, 1994 and 1995 were not
in-the-money at fiscal year end.
DEFINED BENEFIT PLAN
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION
AVERAGE ANNUAL EARNINGS PAYABLE
FOR THE 5 HIGHEST BASED ON YEARS OF SERVICE
12-MONTH PERIODS DURING INDICATED
THE LAST 10 CONSECUTIVE -------------------------------
12-MONTH PERIODS 15 YEARS 20 YEARS 25 YEARS
- ----------------------- --------- --------- ---------
<S> <C> <C> <C>
$100,000 13,805 21,680 29,555
$150,000 25,618 37,430 49,243
$200,000 37,430 53,180 68,930
$250,000 49,243 68,930 88,618
$300,000 61,055 84,680 108,305
$400,000 84,680 116,180 147,680
$500,000 108,305 147,680 187,055
$600,000 131,930 179,180 226,430
$700,000 155,555 210,680 265,805
$800,000 179,180 242,180 305,180
$900,000 202,805 273,680 344,555
</TABLE>
Since May 29, 1986 Acme Steel Company has maintained the "Consolidated
Pension Plan for Acme Steel Company Salaried Employees and Riverdale Plant
Hourly Employees" (the "Consolidated Plan"). Effective July 31, 1994, the Acme
Metals Incorporated Salaried Employees' Past Service Pension Plan, the plan
which provided benefits to certain employees of the Company, including certain
executive officers, was merged into the Consolidated Plan, which became the
"Consolidated Pension Plan for Acme Salaried and Hourly Employees." Effective
January 1, 1994, the Company adopted the Acme Metals Incorporated Supplemental
Benefits Plan (the "Supplemental Benefits Plan") to pay
14
<PAGE>
benefits to employees of the Company, which would be payable under the
Consolidated Plan, except for the limits imposed under the Internal Revenue Code
of 1986 (the "Code"). The Supplemental Benefits Plan is a non-qualified plan for
purposes of ERISA and is unfunded.
The Consolidated Plan provides benefits based on years of credited service
with the Company (including prior service with Acme Steel Company) through
December 31, 1981 and average annual earnings for the five highest twelve-month
periods during the ten consecutive twelve-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 Consolidated 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 that 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 and Mr. Shope have
approximately 17 years and 12 years, respectively, of credited service. Mr.
Stefan had 22 years of credited service at his retirement on March 31, 1995.
Pension benefits payable to Mr. Stefan in excess of the maximum amounts
permitted under the Code are and will continue to be provided under the
Supplemental Benefits Plan. Any pension benefits to Mr. Williams and Mr. Shope
in excess of the maximum amounts permitted under the Code will be provided under
the Supplemental Benefits Plan unless either experiences a "Discharge for Cause"
(as defined in the Supplemental Benefits Plan). Messrs. Bennett and Weber joined
the Company after December 31, 1981 and therefore do not participate in the
Consolidated 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 $9,352.00 per
year. Different benefits under the Consolidated 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 Consolidated Plan provides a transition pension for salaried employees,
including certain executive officers, who were employed on December 31, 1981, if
the benefit attributable to certain contributions by the Company after December
31, 1981 under the Company's Salaried Employees' Retirement Savings Plan (the
"SERSP") is less than the benefit under the Consolidated Plan, which would be
attributable to continuous service between January 1, 1982 and the earlier of
December 31, 1991 or termination of employment. The amount attributable to such
Company contributions from 1982 through 1988 is all Company contributions in
excess of 6 1/2 percent of the participant's earnings and from 1989 through 1991
is all Company contributions, for each calendar quarter of continuous service,
together with amounts which would have been earned had such contributions been
invested and reinvested in the SERSP in the (i) Diversified Investment Fund from
January 1, 1982 through August 31, 1995, and (ii) Vanguard Asset Allocation Fund
commencing September 1, 1995. In the case of executive officers, earnings are
the same for purposes of the SERSP as for purposes of the Consolidated Plan.
Future performance of the Vanguard Asset Allocation Fund, annuity interest
rates, and the earnings of participants during the ten years preceding
retirement will determine whether or not any transition pension will be payable.
Unless a participant becomes entitled to a transition pension, years of credited
service after December 31, 1981 will have no effect on any estimated annual
pension payable pursuant to the Consolidated Plan.
CHANGE IN CONTROL ARRANGEMENTS
On May 25, 1992, the Board of Directors adopted the Key Executive Severance
Pay Plan (the "Severance 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 the Severance Plan if
there is a termination of his employment without cause at any time within
15
<PAGE>
three years after a Change in Control of the Company (as defined in the
Severance 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 Severance 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 Severance 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 seventy-five percent 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 twenty-five
percent 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 of Directors without the
approval of two-thirds of the remaining members of the Board of Directors, (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 of Directors shall determine to be a Change in Control.
A participant who is terminated with rights to severance compensation under
the Severance Plan will be entitled to receive in respect of the "Severance
Period" (as defined in the Severance 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 Severance 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 Company's Executive Incentive Compensation
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 Severance
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 Severance
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 Severance Plan, taking
into account payments under Other Plans, (as defined in the Severance 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 Severance 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
16
<PAGE>
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 of Directors. 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 of Directors.
The Committee held two meetings during the fiscal year ended December 31, 1995.
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:
- 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 of Directors, the Committee recommends to the Board
of Directors which performance criteria (e.g., return on equity, return on
investment, 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 1994 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 of Directors 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 of Directors, 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 1995, the
corporate performance criteria was Return on Equity. The target Return on Equity
level was achieved and each executive officer earned the target EIC payment for
the group to which the executive was assigned. Payments in future years will be
dependent upon
17
<PAGE>
the Company achieving, or exceeding, the performance criteria established in
those years. The Committee, subject to ratification by the Board of Directors,
reserves the right to amend, suspend or terminate, in whole or in part, any or
all provisions of the Plan, provided the same does not result in an increase in
the awards made to the Chief Executive Officer or other executive officers.
LONG-TERM INCENTIVE COMPENSATION -- The Company's 1994 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 of Directors.
Stock awards are generally granted with an earnout period of five years in
installments of twenty percent 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 ten 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 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 of Directors. The
Committee recommends to the Board of Directors those individuals who will
participate annually and the Committee may amend or discontinue the Program at
any time, subject to ratification by the Board of Directors.
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 1995, 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 Chief Executive Officer'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 Chief Executive Officer 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 $430,000 in 1995, from
$400,000 in 1994.
In 1995 the Chief Executive Officer was granted options to purchase 15,000
shares of Common Stock at $17.25 per share and in 1994 was granted options to
purchase 15,000 shares of Common Stock at $23.875 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.
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.
18
<PAGE>
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 Executive Incentive
Compensation Plan and long-term 1994 Stock Incentive Program are directly linked
to both the annual financial and operational results of the Company as well 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, C. J. GAUTHIER, JULIEN L. MCCALL, WILLIAM P. SOVEY, L.
FREDERICK SUTHERLAND AND WILLIAM R. WILSON.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the fiscal year 1995, the Company made purchases from ARAMARK Corporation
("ARAMARK") in the amount of $183,259 for food services; Messrs. Jordan and
MacDonald are directors and Mr. Sutherland is an executive officer of ARAMARK.
The Company paid $188,950 for professional services to Seyfarth, Shaw,
Fairweather and Geraldson, a law firm of which Mr. Laidlaw is a partner. These
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.
[This Space Intentionally Left Blank]
19
<PAGE>
PERFORMANCE GRAPH
The performance graph below provides an indicator of the cumulative total
shareholder returns for the Company for a five-year period 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***
[CHART]
<TABLE>
<CAPTION>
RUSSELL
DATE ACME METALS 2000 PEER GROUP
- ----------------------------------------------------- ------------ ----------- -----------
<S> <C> <C> <C>
December 1990........................................ $ 100.00 $ 100.00 $ 100.00
December 1991........................................ $ 99.07 $ 146.05 $ 103.67
December 1992........................................ $ 98.26 $ 172.96 $ 97.81
December 1993........................................ $ 133.49 $ 205.64 $ 194.08
December 1994........................................ $ 133.95 $ 201.89 $ 173.95
December 1995........................................ $ 105.68 $ 259.31 $ 144.43
</TABLE>
- ------------------------
(1) During the second half of fiscal 1994, the Company issued a total of
5,975,000 shares of Common Stock in private placements, thereby more than
doubling the number of shares of Common Stock outstanding.
* Assumes $100 invested on December 31, 1990 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 consists of the companies in the Value Line
Investment Survey - Steel Group (integrated), and includes Bethlehem Steel
Corp., Dofasco, Inc., Inland Steel Industries, Inc., LTV Corp., Stelco
Industries Inc., USX-U.S. Steel Group and WHX Corp. These companies are
engaged in substantially the same industry and are subject to the same
market influences as the Company. There have been no changes in the
companies included in the Value Line Peer Group from 1994.
20
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 2)
The Board of Directors, acting upon the recommendation of its Audit Review
Committee, on October 24, 1995 appointed Price Waterhouse LLP as independent
accountants for the Company for the fiscal year ending December 29, 1996.
The appointment of Price Waterhouse LLP as independent accountants for the
Company for the fiscal year 1996 is conditioned upon the ratification of such
appointment at the Annual Meeting. In the event such appointment is not so
approved, the Board of Directors will reconsider its selection of independent
accountants. A representative of Price Waterhouse LLP 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 OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS WHICH IS PRESENTED AS
PROPOSAL NO. 2.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy statement and
form of proxy for the 1997 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 25, 1996.
OTHER BUSINESS
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 of Directors.
/s/ EDWARD P. WEBER, JR.
--------------------------------------
Edward P. Weber, Jr.
SECRETARY
Dated: March 26, 1996
SHAREHOLDERS WITH QUESTIONS CONCERNING ACME METALS INCORPORATED AND ITS
OPERATIONS OR REQUESTING A COPY OF THE COMPANY'S FORM 10-K SHOULD DIRECT
INQUIRIES TO C. MARK HUSSEY, DIRECTOR, INVESTOR AND PUBLIC RELATIONS, ACME
METALS INCORPORATED, PHONE 708-841-8383, EXT. 2266.
21
<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 AND PARKING
The Sutton Place Hotel is located at 955 Bay Street, Toronto, Ontario,
Canada. The telephone number of the Hotel is 416-924-9221. The meeting will be
held in The Royal Sutton Ballrooms A and B on the lobby floor of the Hotel. The
Hotel has an attached garage and vouchers will be provided to those attending
the meeting who park in the garage.
<PAGE>
ACME METALS INCORPORATED
13500 S. Perry Avenue
Riverdale, Illinois 60627-1182
P
R THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O
X The undersigned acknowledges receipt of the accompanying Notice of Meeting
Y and 1996 Proxy Statement and hereby appoints Stephen D. Bennett, 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 Sutton Place
Hotel, 955 Bay Street, Toronto, Ontario, Canada M5S 2A2 on Thursday, April
25, 1996, at 10:00 a.m., eastern 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.
<TABLE>
<CAPTION>
<S> <C>
Comments: (such as change of address)
Election of Directors (see reverse side) ----------------------------------
Nominees:
Class I Directors
- ----------------- ----------------------------------
Allan L. Rayfield
L. Frederick Sutherland
William R. Wilson ----------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
</TABLE>
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 SEE REVERSE
BOARD OF DIRECTORS' RECOMMENDATIONS (SEE ACCOMPANYING SIDE
PROXY STATEMENT). THE PROXIES CANNOT VOTE YOUR SHARES
UNLESS YOU SIGN AND RETURN THIS CARD.
- ------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
4908
Please mark your
/X/ votes as in this
example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND FOR PROPOSAL 2.
- ------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF DIRECTORS AND FOR
PROPOSAL 2.
- ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. Approval of independent / / / / / / 3. In the discretion of the Proxies named
Directors accountants herein, upon such other matters as may
(see reverse) properly come before the meeting.
For, except vote withheld from the following nominee(s):
- -------------------------------------------------------
/ / Change of / / I plan to attend
address/ the Annual Meeting of
comments Shareholders
on reverse
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
</TABLE>
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
