<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
ACME METALS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
[ACME Metals Incorporated Logo]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF ACME METALS INCORPORATED:
Notice is hereby given that the 1997 Annual Meeting of Shareholders of Acme
Metals Incorporated, a Delaware corporation (the "Company"), will be held at The
Sutton Place Hotel, 21 East Bellevue Place, Chicago, Illinois 60611 on Thursday,
April 24, 1997, at 10:00 a.m., central time, for the purpose of considering and
voting on:
1. the election of four directors to serve for a three-year term;
2. the adoption of the Acme Metals Incorporated 1997 Non-Employee
Directors' Stock Option Plan;
3. the approval of the Amendment and Restatement of the Acme Metals
Incorporated 1994 Executive Incentive Compensation Plan;
4. the ratification of the appointment of Price Waterhouse LLP as
independent accountants for the Company for the fiscal year 1997;
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 3, 1997, 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 Annual Meeting, please complete the
proxy card enclosed and return it promptly in the accompanying postage prepaid
envelope. If you do attend the Annual Meeting and wish to vote in person, you
may withdraw your proxy at that time.
By order of the Board of Directors,
Edward Weber
Edward P. Weber, Jr.
Secretary
Riverdale, Illinois
March 26, 1997
IMPORTANT -- YOUR PROXY IS ENCLOSED IN
THE ENVELOPE CONTAINING THIS MATERIAL
13500 SOUTH PERRY AVENUE, RIVERDALE, ILLINOIS 60627-1182; PHONE (708) 849-2500
<PAGE> 3
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 24, 1997 (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 directors, 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 Morrow & Co., Inc. for certain
expenses incurred.
The Notice of Meeting, this proxy statement, form of proxy card and Annual
Report/Form 10-K for 1996 are being mailed on or about March 26, 1997 to each
shareholder of the Company at the 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 3, 1997 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 11,628,323 shares of
Common Stock outstanding and entitled to vote on all matters to be acted upon at
the meeting. Commencing May 21, 1996 the Common Stock began trading on the New
York Stock Exchange, Inc. Through May 20, 1996 the Common Stock was traded on
the NASDAQ -- National Market System.
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 four directorships to be filled. On other
matters, each shareholder is entitled to cast one vote for each share of Common
Stock held. The four 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 seeking
adoption of the Acme Metals Incorporated 1997 Non-Employee Directors' Stock
Option Plan, described herein, will require the affirmative vote of the majority
of the shares of Common Stock represented at the Annual Meeting. Approval of
Proposal No. 3 seeking adoption of the Amendment and Restatement of the Acme
Metals Incorporated 1994 Executive Incentive Compensation Plan, described
herein, will require the affirmative vote of the majority of the shares of
Common Stock represented at the Annual Meeting. Approval of Proposal No. 4
addressing ratification of the selection of independent accountants, described
herein, will also require the affirmative vote of the majority of the shares of
Common Stock represented at the Annual
<PAGE> 4
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 Annual 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, FOR the proposal to adopt the Acme Metals Incorporated 1997
Non-Employee Directors' Stock Option Plan, FOR the proposal to approve the
Amendment and Restatement of the Acme Metals Incorporated 1994 Executive
Incentive Compensation Plan and FOR ratification of the selection of Price
Waterhouse LLP as independent 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 1996 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 and 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. 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 eleven directors: four Class II directors whose terms
expire in 1997 (Messrs. Bennett, Davis, Laidlaw and LePage), four Class III
directors whose terms expire in 1998 (Messrs. Jordan, MacDonald, Marsden and
Sovey), and three Class I directors whose terms expire in 1999 (Messrs.
Rayfield, Sutherland and Wilson). The Board of Directors has fixed the number of
directors at eleven.
Should all directors be elected as proposed, the number and classes of
directors would be three Class I directors with terms expiring in 1999, four
Class II directors with terms expiring in 2000, 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 required by the Company's Restated
Certificate of Incorporation.
The four persons listed below as nominees to be elected as Class II
directors, will serve for the term indicated and until their respective
successors shall be elected and qualified. All of such nominees are currently
serving as directors of the Company. 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
2
<PAGE> 5
Messrs. 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.
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.
Pursuant to the terms of a 1993 labor agreement with the United
Steelworkers of America ("USWA"), the USWA has the right to designate a nominee
for consideration by the Nominating Committee and the Board of Directors for one
seat on the Board. The nominee is to be a prominent member of the business,
labor or academic community. The nominee shall not be or become, while serving
as a director, an officer, employee or director of the USWA. Subject to
complying with the same standards of conduct as every other Company director,
and subject to election by the shareholders, the USWA nominee will serve as a
director during the term of the 1993 labor agreement which terminates August 31,
1999. Mr. Buddy W. Davis was designated during 1996 by the USWA for
consideration by the Nominating Committee to be a director of the Company. The
Nominating Committee recommended Mr. Davis' election to the Board of Directors
and at its June 20, 1996 meeting the Board of Directors elected Mr. Davis as a
Class II director.
NOMINEES FOR ELECTION AS CLASS II DIRECTORS FOR A TERM EXPIRING IN 2000
[Stephen D. Bennett photo] STEPHEN D. BENNETT
Age: 48
Director since January 1993
Member: Executive and Finance Committees
President and Chief Executive Officer of the
Company since April 15, 1996; President and
Chief Operating Officer of the Company January
1, 1993 to April 15, 1996; Group Vice President
of the Company May 25, 1992 to December 31,
1992; Group Vice President of Acme Steel Company
(integrated steel producer) January 1992 to May
1992 and Vice President- Operations of Acme
Steel Company June 1990 to December 1991.
General Manager of Fairfield Works, USS Division
of USX Corporation (domestic integrated steel
producer) December 1987 to May 1990.
[Buddy W. Davis photo] BUDDY W. DAVIS
Age: 67
Director since June 1996
Member: Audit Review and Nominating Committees
District 34 Director of the United Steelworkers
of America, AFL-CIO-CLC from 1977 to 1993.
3
<PAGE> 6
NOMINEES FOR ELECTION AS CLASS II DIRECTORS FOR A TERM EXPIRING IN 2000 --
CONTINUED
ANDREW R. LAIDLAW
[Andrew R. Laidlaw photo] Age: 50
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.
[Frank A. LePage photo] FRANK A. LEPAGE
Age: 69
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 OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF FOUR (4) NOMINEES
AS CLASS II DIRECTORS OF THE COMPANY WHICH IS PRESENTED AS PROPOSAL NO. 1.
CLASS III DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1998
[Edward G. Jordan photo] EDWARD G. JORDAN
Age: 67
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.
[Reynold C. MacDonald photo] REYNOLD C. MACDONALD
Age: 78
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.
4
<PAGE> 7
CLASS III DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1998 --
CONTINUED
[Brian W. H. Marsden photo] BRIAN W. H. MARSDEN
Age: 65
Director since June 1986
Member: Executive (Chairman) and Finance
Committees
Chairman of the Board (non-employee) of the
Company since March 1, 1997; Chairman of the
Board of the Company since April 15, 1996;
Chairman of the Board and Chief Executive
Officer of the Company January 1, 1993 to April
15, 1996; Chairman of the Board, President and
Chief Executive Officer of the Company May 1992
to December 1992; President and Chief Executive
Officer of Acme Steel Company June 1986 to May
1992.
[William P. Sovey photo] WILLIAM P. SOVEY
Age: 63
Director since June 1991
Member: Compensation, Executive, Finance and
Nominating (Chairman) Committees
Vice Chairman of the Board 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.
CLASS I DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1999
[Allan L. Rayfield photo] ALLAN L. RAYFIELD
Age: 61
Director since April 1996
Member: Audit Review, Compensation and
Nominating Committees
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.
[L. Frederick Sutherland L. FREDERICK SUTHERLAND
photo] Age: 45
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; Vice President of
Corporate Finance and Development of ARAMARK
Corporation August 1988 to February 1991.
5
<PAGE> 8
CLASS I DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1999 --
CONTINUED
[William R. Wilson photo] WILLIAM R. WILSON
Age: 69
Director since July 1992
Member: Audit Review, Compensation and
Nominating Committees
Retired Chairman of the Board and Chief
Executive Officer of Lukens Inc. (manufacture
and sale of plate steel and stainless steel
products) since December 1991; Chairman of the
Board 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.
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 29, 1996 there were eleven
Board of Directors' meetings, two of which were telephonic, two Audit Review
Committee meetings, two Compensation Committee meetings, three Finance Committee
meetings and three Nominating Committee meetings. The Executive Committee did
not meet during fiscal 1996. In the 1996 fiscal year the total combined
attendance for all Board and Committee meetings was 92%. 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 except for Allan L.
Rayfield who attended 67% of the combined number of meetings of the Board of
Directors and Committees on which he 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.
The Compensation Committee, which consists entirely of non-employee
directors, 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 directs the
administration of 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
6
<PAGE> 9
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 employees of the Company (non-employee
directors) are currently paid an annual directors' fee of $18,000, 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 insurance for all outside
directors while on the business of the Company. Those directors who are
employees of the Company do not receive additional compensation for their
service as directors. All directors are reimbursed for expenses incurred in
connection with 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. Pursuant to the 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 $38,000 in 1996. The contract with Mr. MacDonald
will terminate on May 31, 1997.
In 1992 the Company adopted the Acme Metals Incorporated Non-Employee
Directors Retirement Plan (the "Directors Retirement Plan"), which will be
terminated as of April 24, 1997. The Directors Retirement Plan provided for the
payment of certain benefits commencing at age 65 to directors who were not
employees of the Company who served on and then retired from the Board of
Directors. Four years of service as a non-employee director were required for a
director to be eligible to receive a minimum retirement benefit of 40% of the
annual retainer in effect at the date of retirement. The benefit increased 10%
for each additional year of service to a maximum of 100% of the annual retainer
in effect at the date of retirement. The termination of the Directors Retirement
Plan will result in it being frozen for former directors now receiving, or
eligible to receive at age 65, benefits thereunder. Directors who retired prior
to April 24, 1997 will continue receiving pension benefits for life. Current
active directors having four or more years of service as of April 24, 1997 will
have have the option of: (i) having their vested pension benefit percentage
multiplied times the current annual directors' retainer of $18,000 frozen as of
April 24, 1997 ("Vested Pension Benefit") and paid out annually for life
commencing at normal retirement age; or, (ii) having the amount of their Vested
Pension Benefit as of April 24, 1997 converted to shares of phantom stock on
April 24, 1997. The number of shares of phantom stock will be determined by
dividing the Vested Pension Benefit by the price of the Company's Common Stock
on April 24, 1997. If option (ii) is elected, a director will receive an annual
pension following his leaving the Board, commencing at normal retirement age and
during his lifetime, equal to the number of phantom shares in his account
multiplied by the price of the Company's Common Stock on the effective date of
the director's retirement from the Board. Pension benefits currently payable
pursuant to the Directors Retirement Plan and those payable following its
termination pursuant to the two options described above are unfunded and
non-qualified and will be paid out of current earnings. No benefits are or will
be payable to the spouse or dependents of a retired director.
7
<PAGE> 10
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
As of March 3, 1997, 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 PERCENT
OF COMMON STOCK OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) CLASS (2)
- ------------------------------------ ---------------------- ---------
<S> <C> <C>
Mackenzie Financial Corporation.............. 1,740,700(3) 14.96%
Suite 805
150 Bloor Street West
Toronto, Ontario M5S 3B5
Goodman & Company Ltd........................ 787,300(4) 6.77%
Scotia Plaza
40 King Street West
Toronto, Ontario M5H 4A9
General Accident Assurance Company........... 615,000(4) 5.29%
Two First Canadian Place
Suite 2600
Toronto, Ontario M5X 1J1
</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 based on the number of shares of
Company Common Stock outstanding as of March 3, 1997.
(3) The number of shares of Common Stock beneficially owned was determined by a
review of Amendment Number Two to the Schedule 13G filed with the Securities
and Exchange Commission on February 11, 1997 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
through conversations between representatives of the Company and
representatives of each respective beneficial owner.
8
<PAGE> 11
OTHER PRINCIPAL HOLDER OF VOTING SECURITIES
On March 3, 1997, 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 1,150,959 shares, or 9.9%, of the shares of Common Stock
then outstanding, a portion of which are included in the share ownership of
executive officers in the table of officers' and directors' beneficial ownership
of securities below. 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.
OFFICERS AND DIRECTORS
The following table sets forth as of March 3, 1997 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....................... 68,925(3) *
Buddy W. Davis........................... 0 *
Edward G. Jordan......................... 1,490 *
Andrew R. Laidlaw........................ 1,490 *
Frank A. LePage.......................... 2,990 *
Reynold C. MacDonald..................... 51,000 *
Brian W. H. Marsden...................... 191,391(4) 1.6%
Allan L. Rayfield........................ 1,000 *
Gerald J. Shope.......................... 23,633(5) *
William P. Sovey......................... 1,490 *
L. Frederick Sutherland.................. 2,000 *
Edward P. Weber, Jr...................... 50,613(6) *
Jerry F. Williams........................ 73,756(7) *
William R. Wilson........................ 2,490 *
All directors and executive officers as a
group, 16 persons...................... 489,548(3)(4)(5)(6)(7)(8) 4.1%
</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 50,400 shares which are not now owned but could be acquired by
exercise of vested stock options, 7,100 shares which are subject to
conditions of forfeiture and restrictions on sale, transfer or other
disposition, and 3,040 shares held by the trustee of the Company's Employee
Stock Ownership Plan ("ESOP") which are attributable to Mr. Bennett's
account.
9
<PAGE> 12
(4) Includes 120,800 shares which are not now owned but could be acquired by
exercise of vested stock options, 1,900 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 4,952 shares held by the trustee of the
ESOP which are attributable to Mr. Marsden's account.
(5) Includes 17,000 shares which are not now owned but could be acquired by
exercise of vested stock options, 300 shares which are subject to conditions
of forfeiture and restriction on sale, transfer or other disposition, 3,500
shares held by the trustee of the Company's Salaried Employees' Retirement
Savings Plan ("SERSP") which are attributable to Mr. Shope's account, and
2,638 shares held by the trustee of the ESOP which are attributable to Mr.
Shope's account.
(6) Includes 34,600 shares which are not now owned but could be acquired by
exercise of vested stock options, 4,200 shares which are subject to
conditions of forfeiture and restrictions on sale, transfer or other
disposition, 100 shares held by family members, and 3,531 shares held by the
trustee of the ESOP which are attributable to Mr. Weber's account.
(7) Includes 41,950 shares which are not now owned but could be acquired by
exercise of vested stock options, 4,320 shares which are subject to
conditions of forfeiture and restriction on sale, transfer or other
disposition, 13,486 shares held by the trustee of the SERSP which are
attributable to Mr. Williams' account, and 4,161 shares held by the trustee
of the ESOP which are attributable to Mr. Williams' account.
(8) Includes 8,500 shares which are not now owned but could be acquired by
exercise of vested stock options, 300 shares which are subject to conditions
of forfeiture and restriction on sale, transfer or other disposition and a
total of 4,056 shares held by the trustee of the SERSP and a total of 2,424
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.
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") and the New York Stock Exchange. 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 1996.
10
<PAGE> 13
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 1994, 1995 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION AWARDS
----------------------------------- --------------------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (3) (#) ($) (4)
- --------------------------- ---- ------- ------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen D. Bennett......... 1996 345,800(1) 45,500 (2) 84,375 24,000 43,043
President and Chief 1995 275,000 82,500 (2) 45,938 10,000 39,325
Executive Officer 1994 250,000 112,500 37,650(5) 34,875 10,000 35,861
Brian W. H. Marsden........ 1996 281,300(1) 49,500 (2) 0 18,000 36,388
Chairman 1995 430,000 172,000 (2) 45,938 15,000 66,220
1994 400,000 240,000 (2) 0 15,000 64,300
Gerald J. Shope (6)........ 1996 122,600 12,000 (2) 0 6,000 14,806
Vice President- 1995 114,000 31,100 (2) 0 4,000 15,961
Human Resources 1994 96,000 36,000 (2) 0 2,500 15,290
Edward P. Weber, Jr........ 1996 158,500 16,100 19,462(7) 42,188 7,000 19,206
Vice President, 1995 153,000 45,900 (2) 45,938 5,000 21,879
General Counsel 1994 142,000 63,900 (2) 23,250 4,000 21,820
and Secretary
Jerry F. Williams.......... 1996 191,000 19,700 23,173(8) 42,188 7,000 23,177
Vice President- 1995 187,000 56,100 (2) 45,938 5,000 26,741
Finance and 1994 178,000 80,100 (2) 27,900 5,000 26,951
Administration and Chief
Financial Officer
</TABLE>
- ------------------------------
(1) Mr. Bennett assumed the position of Chief Executive Officer previously held
by Mr. Marsden on April 15, 1996 and adjustments to their salaries were made
as of that date.
(2) Except as indicated, the dollar value of perquisites and other personal
benefits for such executive officers was less than the established reporting
thresholds.
(3) Values of restricted stock awards granted during 1996 in the Summary
Compensation Table are based on $16.875, the closing price of the Company's
Common Stock, on June 20, 1996, the date of grant. The total number and
value of the aggregate restricted shares held at December 29, 1996, based on
$19.375, the average of the high and low prices of the Common Stock on the
New York Stock Exchange, as reported in The Wall Street Journal as of that
date, were as follows: Mr. Bennett, 6,400 shares, value $124,000; Mr.
Marsden, 1,900 shares, value $36,813; Mr. Shope, 300 shares, value
$5,812.50; Mr. Weber, 4,100 shares, value $79,438; and Mr. Williams, 4,220
shares, value $81,763. Dividends, if any are declared, are payable on
restricted shares.
The vesting schedule for stock awards granted on June 20, 1996 is 20% of
the shares granted on December 21, 1996, 1997, 1998, 1999 and 2000. The
total number of shares granted and the number of shares of each installment
follows: Mr. Bennett 5,000 shares granted in installments of 1,000 each;
Mr. Marsden, none; 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.
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
11
<PAGE> 14
shares of each installment follows: Mr. Bennett, 2,500 shares granted in
installments of 500 each; Mr. Marsden, 2,500 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.
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. Bennett, 1,500 shares granted in installments of 300 shares
each; Mr. Marsden, none; 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.
(4) Amounts in this column are Company contributions to the Company's Salaried
Employees' Retirement Savings Plan ("SERSP") and Employee Stock Ownership
Plan ("ESOP"), which are defined contribution plans, based on amounts earned
by such executive officers during 1996. The Company contributions to the
SERSP and ESOP for executive officers are based on the same percentages as
for all other eligible employees of the Company.
(5) The amount reported for Mr. Bennett includes $25,219 for country club fees
and dues and $12,431 for automobile expenses, each of which is in excess of
25% of the total perquisites and other personal benefits reported for Mr.
Bennett.
(6) Mr. Shope became an executive officer of the Company on April 1, 1995. From
January through March of 1995 and during 1994 he was an officer of a
subsidiary of the Company.
(7) The amount reported for Mr. Weber includes $19,462 for automobile expenses,
which is in excess of 25% of the total perquisites and other personal
benefits reported for Mr. Weber.
(8) The amount reported for Mr. Williams consists of $15,080 for automobile
expenses and $8,093 for country club fees and dues, each of which is in
excess of 25% of the total perquisites and other personal benefits reported
for Mr. Williams.
[This Space Intentionally Left Blank]
12
<PAGE> 15
STOCK OPTION GRANTS IN 1996
The following table sets forth certain information relating to options to
purchase Common Stock granted in the fiscal year 1996 to the five individuals
named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN 1996
---------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE GRANT DATE
GRANTED(2) FISCAL PER SHARE(4) EXPIRATION PRESENT VALUE
NAME (#) YEAR(3) ($/SH) DATE ($) (5)
---- ---------- ------------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
B. W. H. Marsden.................. 18,000 17.14% $16.625 1/26/06 95,067
S. D. Bennett..................... 12,000 11.43% $16.625 1/26/06 102,250
12,000 11.43% $ 18.75 4/15/06 115,286
G. J. Shope....................... 6,000 5.71% $16.625 1/26/06 51,125
E. P. Weber, Jr................... 7,000 6.67% $16.625 1/26/06 59,646
J. F. Williams.................... 7,000 6.67% $16.625 1/26/06 59,646
</TABLE>
- ------------------------------
(1) Stock Appreciation Rights were not granted during fiscal 1996.
(2) All options to Messrs. Marsden, Shope, Weber and Williams and 12,000 of the
options to Mr. Bennett were granted on January 26, 1996. One-half of the
options become exercisable on January 26, 1997 and one-half become
exercisable on January 26, 1998 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. 12,000 of the options
to Mr. Bennett were granted on April 15, 1996. One-half of the options
become exercisable on April 15, 1997 and one-half become exercisable on
April 15, 1998, subject to the same provisions with respect to acceleration
and termination as stated above.
(3) Based on 105,000 options granted to all employees during fiscal 1996.
(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,
until May 20, 1996 or the New York Stock Exchange since May 21, 1996, both
as reported in The Wall Street Journal for the date of grant.
(5) The estimated grant date present value reflected in the above table is
determined using the modified Black-Scholes model. The material assumptions
and adjustments incorporated in the modified Black-Scholes model in
estimating the value of the options reflected in the above table include the
following:
- An exercise price of the options of $16.625 and $18.75 for the options
granted on January 26, 1996 and April 15, 1996, respectively, equal to the
market value per share on the date of grant;
- A term to exercise of option of seven years;
- An interest rate of 6.0% which approximates the interest rate on a U.S.
Treasury security with a maturity rate of seven years;
- Volatility of 37.6% calculated using weekly stock prices for the ten-year
period prior to the grant dates;
- No dividends being paid on the Common Stock;
- Reduction of approximately 38% for Mr. Marsden to reflect a shortened
option term of no later than March 1, 1999 due to his retirement as an
employee of the Company on March 1, 1997.
13
<PAGE> 16
AGGREGATED OPTION EXERCISES IN 1996 AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning the exercise
of options in 1996 to purchase Common Stock by the five individuals named in the
Summary Compensation Table and the unexercised options to purchase Common Stock
held by such individuals at December 29, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
FISCAL YEAR END OPTION VALUE (1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT 12/29/96 AT 12/29/96 (2)
ACQUIRED ON VALUE ---------------------------- ----------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Brian W. H. Marsden........ 10,000 87,500 111,800 25,500 328,075 65,438
Stephen D. Bennett......... 0 N/A 44,400 29,000 116,138 51,125
Gerald J. Shope............ 1,000 9,250 14,000 8,000 24,325 20,750
Edward P. Weber, Jr........ 3,050 28,213 31,000 9,500 78,881 24,563
Jerry F. Williams.......... 3,800 39,188 38,450 9,500 97,769 24,563
</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, $19.375, minus the exercise price. Options
granted in 1989 and 1994 were not in-the-money at fiscal year end.
DEFINED BENEFIT PLAN
<TABLE>
<CAPTION>
AVERAGE ANNUAL EARNINGS
FOR THE 5 HIGHEST ESTIMATED ANNUAL PENSION PAYABLE
12-MONTH PERIODS DURING BASED ON YEARS OF SERVICE INDICATED
THE LAST 10 CONSECUTIVE ------------------------------------
12-MONTH PERIODS 15 YEARS 20 YEARS 25 YEARS
- ----------------------- ---------- ---------- ----------
<C> <C> <C> <C>
$100,000 13,404 21,279 29,154
$150,000 25,216 37,029 48,841
$200,000 37,029 52,779 68,529
$250,000 48,841 68,529 88,216
$300,000 60,654 84,279 107,904
$400,000 84,279 115,779 147,279
$500,000 107,904 147,279 186,654
$600,000 131,529 178,779 226,029
$700,000 155,154 210,279 265,404
$800,000 178,779 241,779 304,779
$900,000 202,404 273,279 344,154
</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 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.
14
<PAGE> 17
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 at his retirement as an employee of the Company on March 1,
1997. Pension benefits payable to Mr. Marsden in excess of the maximum amounts
permitted under the Code are and will continue to be provided under the
Supplemental Benefits Plan. Messrs. Shope and Williams have approximately 12
years and 17 years, respectively, of credited service. Any pension benefits to
Messrs. Shope and Williams in excess of the maximum amounts permitted under the
Code will be provided under the Supplemental Benefits Plan unless either one
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 $9,734.00 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 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
15
<PAGE> 18
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 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.
16
<PAGE> 19
PERFORMANCE GRAPH
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following Performance
Graph and the Report of the Compensation Committee of the Board of Directors of
Acme Metals Incorporated on Executive Compensation shall not be incorporated by
reference into any such filings.
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***
GRAPH
<TABLE>
<CAPTION>
DATE ACME METALS RUSSELL 2000 PEER GROUP
---- ----------- ------------ ----------
<S> <C> <C> <C>
December 1991.............................. $100.00 $100.00 $100.00
December 1992.............................. $ 99.18 $118.42 $ 91.92
December 1993.............................. $134.73 $140.79 $180.65
December 1994.............................. $135.20 $138.23 $183.12
December 1995.............................. $106.66 $177.54 $170.41
December 1996.............................. $145.03 $206.83 $179.13
</TABLE>
- ------------------------------
(1) During the second half of fiscal 1994, the Company issued a total of
5,975,000 shares of Common Stock, thereby more than doubling the number of
shares of Common Stock outstanding.
* Assumes $100 invested on December 31, 1991 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 for 1996 consists of the companies in the Value
Line Investment Survey -- Steel Group (integrated), and includes Bethlehem
Steel Corp., British Steel, Dofasco, Inc., Inland Steel Industries, Inc.,
LTV Corp., 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. From 1994 through 1995, Stelco Industries Inc.
was included in the Value Line Peer Group, and British Steel was not so
included.
17
<PAGE> 20
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 five independent non-employee members of the
Board of Directors who meet the definition of "non-employee director" as set
forth in Rule 16b-3 of the Securities Exchange Act of 1934, as amended. 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 29, 1996. 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 -- Within the first ninety days 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 six groups having varying ranges of
incentive compensation opportunities, and determines how incentive payments will
be calculated. The maximum incentive compensation opportunity for any individual
has been sixty percent, and will be increased to seventy-five percent, of his
base salary for the year in question upon adoption of proposed amendments to the
EIC. In 1996, the corporate performance criteria was Return on Equity, to be
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<PAGE> 21
divided equally between the legacy operations and the new caster operations of
the Company. The Return on Equity achieved by the legacy operations was between
the target and the minimum levels and by the new caster operations was below the
minimum level. Each executive officer earned the percentage for the legacy
operations' achievement 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. 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 certain other executive officers. The Committee has
determined that in order to (i) comply with new Internal Revenue Service
regulations governing the time period during which the Committee and the Board
of Directors must establish annual base salaries for the Chief Executive Officer
and the four other most highly compensated executives of the Company, (ii) raise
the target bonus opportunities for the Chief Executive Officer, other executive
officers of the Company and presidents of the Company's subsidiaries to reflect
competitive market values, (iii) add a category for Chief Operating Officer of
the Company, and (iv) expand the method for rating individual performance for
key employees of the Company for the purpose of adjusting EIC awards, the
Executive Incentive Compensation Plan should be amended. Those proposed
amendments are submitted to the shareholders of the Company in Proposal 3, set
forth later in this proxy statement.
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 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 1997,
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 established at $375,000 in April 1996 when he assumed that title.
In 1996, Stephen D. Bennett was granted options to purchase 12,000 shares
of Common Stock at $16.625 per share in January when he was President and Chief
Operating Officer and an additional
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<PAGE> 22
12,000 options at $18.75 in April upon assumption of the Chief Executive Officer
title. He was also granted 5,000 stock awards during 1996 at a grant price of
$16.875 per share.
LIMITATIONS ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
In 1993, the Internal Revenue Code (the "Code") was amended (I.R.C.
sec.162(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. sec.162(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.
The Company will continue to monitor the requirements of the Code and to
determine what actions should be taken by the Company in order to preserve the
tax deduction for executive compensation to the maximum extent, consistent with
the Company's continuing goals of providing the executives of the Company with
appropriate incentives and rewards for their performance.
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 1994 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, Allan L. Rayfield, William P. Sovey, L. Frederick Sutherland
and William R. Wilson.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In fiscal year 1996, the Company made purchases from ARAMARK Corporation
("ARAMARK") in the amount of $191,115 for food services; Messrs. Jordan and
MacDonald are directors and Mr. Sutherland is an executive officer of ARAMARK.
The Company paid $84,798 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, in no instance have the
amounts involved 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.
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<PAGE> 23
APPROVAL OF THE ADOPTION OF THE
ACME METALS INCORPORATED
1997 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(PROPOSAL NO. 2)
GENERAL
The Nominating Committee of the Board of Directors has adopted, subject to
shareholder approval, the 1997 Non-Employee Directors' Stock Option Plan (the
"Plan"). This Plan is intended to benefit the Company and its shareholders by
allowing those members of the Board of Directors of the Company who are not
employees of the Company or any of its subsidiaries to increase their financial
stake in the Company through ownership of Common Stock, thereby underscoring the
directors' mutual interest with shareholders in increasing the long-term value
of the Company's Common Stock.
The primary aspects of the Plan, the text of which is set forth in Appendix
A, are as follows.
PARTICIPATION
Participation in the Plan will be limited to current and future members of
the Board of Directors who are not employees of the Company or any of its
subsidiaries ("Non-Employee Directors"). Immediately following the election of
the four directors standing for re-election at the Annual Meeting, there will be
ten Non-Employee Directors.
STOCK OPTION GRANT
The Plan provides that each year, at the Annual Meeting of the Board of
Directors immediately following the Company's Annual Meeting of Shareholders,
each individual elected, re-elected or continuing as a Non-Employee Director
will automatically receive, in consideration for service as a director,
non-qualified stock options to purchase 2,000 shares of Common Stock. There are
150,000 shares of Common Stock reserved for issuance under the Plan. The
exercise price for options granted under the Plan will be 100% of the fair
market value of the Common Stock on the date of grant, which shall be the
average of the high and low price of the Common Stock on that date on the New
York Stock Exchange. The options will be exercisable in four equal installments,
commencing on the first anniversary of the date of grant and annually for the
next three years thereafter. The options will expire ten years after the date of
grant unless they become subject to earlier termination as described in
"Cessation of Service" below. The exercise price may be paid in cash, in shares
of Common Stock owned by the optionee valued at their fair market value on the
date of exercise, or by any combination of cash and such shares.
CESSATION OF SERVICE
Upon termination of service by reason of normal retirement pursuant to
Board policy or permanent disability, a Non-Employee Director's options will
continue to be exercisable for the earlier of four years after date of
termination or the expiration date of such options; the Nominating Committee of
the Board of Directors may accelerate the time during which such retired or
disabled director's options may be exercised. In the event of the death of a
Non-Employee Director, all of his or her outstanding options shall become
immediately exercisable and will continue to be exercisable by the deceased's
legal representative for the earlier of four years after date of death or the
expiration date of such options. In the event of termination of service for any
reason other than normal retirement pursuant to Board policy, permanent
disability or death, a director's options will be exercisable only to the extent
they were exercisable on the date of such termination and only for the earlier
of three months after such termination or the expiration date of such options.
FEDERAL INCOME TAX CONSEQUENCES
The following paragraph is intended to be a brief summary of the principal
federal income tax consequences of participation in the Plan to participants and
the Company. It is not intended to be tax
21
<PAGE> 24
advice to any participant. Participants should consult their own tax advisor as
to the federal, state and local tax consequences of participation in the Plan.
The grant of non-qualified stock options will not result in income to the
grantee nor a deduction for the Company. The exercise of a stock option will
result in ordinary income to the grantee and a deduction for the Company
measured by the difference between the option price and the fair market value of
the shares received at the time of exercise.
OTHER INFORMATION
The Plan will become effective on approval of the Company's shareholders,
and will terminate, for purposes of granting further options, on December 31,
2006, unless terminated earlier by the Nominating Committee of the Board of
Directors. As of April 24, 1997, the Acme Metals Incorporated Non-Employee
Directors Retirement Plan (the "Directors Retirement Plan") which has been in
effect since February 22, 1990, will be frozen for former or current
non-employee directors who are vested under the Directors Retirement Plan and
terminated for current non-employee directors of the Company who are not vested
under the Directors Retirement Plan. See discussion of the termination of the
Directors Retirement Plan under the heading "Directors' Compensation" on page 7
of this proxy statement.
Non-Employee directors are compensated for their services as directors. For
a description of such compensation see "Directors' Compensation" on page 7 of
this proxy statement.
The Plan may be amended by the Nominating Committee of the Board of
Directors, except for amendments which would (i) increase the number of shares
available for grant pursuant to the Plan or the number of options eligible to be
granted annually to each non-employee director or (ii) extend the maximum period
during which options may be granted under the Plan, both of which would require
shareholder approval.
APPROVAL REQUIRED
The affirmative vote of a majority of the votes cast by the holders of
shares of Common Stock represented at the Annual Meeting at which a quorum is
present is required for approval of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE ACME METALS
INCORPORATED 1997 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN WHICH IS PRESENTED
AS PROPOSAL NO. 2.
22
<PAGE> 25
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE
ACME METALS INCORPORATED
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
(PROPOSAL NO. 3)
GENERAL
The Compensation Committee of the Board of Directors has adopted, subject
to shareholder approval, the Amendment and Restatement of the Acme Metals
Incorporated 1994 Executive Incentive Compensation Plan (the "Compensation
Plan"), which provides for the grant of annual cash incentive compensation
payments to employee officers and key salaried employees of the Company and its
subsidiaries. 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 under the direction of the
Compensation Committee of the Board (the "Committee") consisting of persons who
are "non-employees directors" as defined in Rule 16b-3 under Section 16 of the
Securities Exchange Act of 1934, as amended, and/or "outside directors" as
defined in sec.162(m) of the Internal Revenue Code of 1986 and the regulations
promulgated thereunder (the "Code").
EFFECT OF AMENDMENTS TO THE COMPENSATION PLAN
The adoption of the Amendment and Restatement of the Compensation Plan will
effect the following changes:
1. Compliance with new regulations in the Code which permit the Committee
and the Board of Directors to establish the annual base salaries for the
Company's Chief Executive Officer and four other most highly compensated
executive officers within the first 90 days of the Company's fiscal
year;
2. An increase in the minimum, target and maximum bonus opportunities for
the Company's Chief Executive Officer, other executive officers, and
presidents of operating subsidiaries in order to reflect competitive
market values for such individuals as identified in a study of the
Company's peer group in the industry prepared by an independent
compensation consulting company;
3. The addition of a Chief Operating Officer category to the Compensation
Plan;
4. An expansion in the method for rating the individual performance of
non-executive officers for purposes of adjusting their awards pursuant
to the Compensation Plan; and
5. The inclusion of the definition of Non-Employee Directors as members of
the Committee, in order to comply with new Rule 16b-3 under Section 16
of the Securities Exchange Act of 1934, as amended.
PARTICIPANTS IN THE COMPENSATION PLAN
Participants in the Compensation Plan must be employees of the Company and
shall include the Chairman (if an employee), the Chief Executive Officer and the
Chief Operating Officer of the Company and such other employee officers and key
salaried employees of the Company and its subsidiaries as the Committee in its
sole discretion may designate. Approximately 80 employees are currently
participants in the Compensation Plan.
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<PAGE> 26
BENEFITS AVAILABLE UNDER THE COMPENSATION PLAN
Participants in the Compensation Plan for any fiscal year (other than the
Chairman, Chief Executive Officer and Chief Operating Officer) shall be
identified and assigned by the Committee to one of four incentive groups,
labeled as Group A, B, C and D. Prior to the end of the first fiscal quarter 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 of 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. During the first ninety days 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 in
like industries, the short-and long-term economic forecasts and such other
factors as the Committee shall consider relevant.
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 MAXIMUM TARGET MINIMUM
- --------- ------- ------ -------
<S> <C> <C> <C>
Chairman and/or Chief Executive Officer....... 75.0% 50.0% 25.0%
Chief Operating Officer....................... 60.0% 40.0% 20.0%
Group A....................................... 52.5% 35.0% 17.5%
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 any other individual employee whose compensation is required to be
reported to the Securities and Exchange Commission by reason of that employee
being among the four highest compensated executive officers other than the Chief
Executive Officer for a fiscal year (collectively, "Covered Employees"), the
regular salary for such participant established during the first ninety days of
the year in question and, for the remaining Group A, 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 Covered Employees, as a percentage of base salary,
may not exceed the maximum percentage specified above for such Covered Employee.
Such awards may, however, be reduced or eliminated for any such Covered Employee
in such manner or amount as the Committee in its sole discretion may determine.
Awards for any year for other participants in the Group A, B, C and 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, or may
be eliminated, 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
24
<PAGE> 27
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 Appendix
B to this Proxy Statement.
----------------
The following table shows the amounts that would have been paid to all
individuals serving as the Company's Chief Executive Officer during fiscal 1996
and the Company's four most highly compensated officers other than the Chief
Executive Officer who were serving as executive officers at the end of fiscal
1996, and the named groups if the Amendment and Restatement of the Compensation
Plan had been in effect for fiscal 1996. The amounts shown below would have
appeared in the Summary Compensation Table on page 11 in lieu of "Bonus"
payments. The dollar values shown are provided for purposes of illustration
only, as required by the rules of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
NAME AND POSITION INCENTIVE COMPENSATION AWARD ($)
- ----------------- --------------------------------
<S> <C>
Stephen D. Bennett............................... 45,500
President and Chief Executive Officer
Brian W. H. Marsden.............................. 49,500
Chairman
Gerald J. Shope.................................. 14,033
Vice President-Human Resources
Edward P. Weber, Jr.............................. 18,834
Vice President, General Counsel and Secretary
Jerry F. Williams................................ 23,021
Vice President-Finance and Administration and
Chief Financial Officer
All current Executive Officers as a Group
(including the persons named above)............ 170,000
All current Directors, not Executive Officers, as
a group (not eligible)......................... 0
All Employees, not Executive Officers, as a
group.......................................... 988,600
</TABLE>
25
<PAGE> 28
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 Compensation
Plan.
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 sec.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.
Code sec.162(m) generally provides that, 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 the Company may
receive no deduction.)
There is an exception to Code sec.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 other Covered
Executives will qualify as performance-based compensation. However, there are a
number of ambiguities under Code sec.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.
AMENDMENT TO THE COMPENSATION PLAN
The Compensation Plan may be amended, suspended or terminated by the
Committee, subject to ratification by the Board of Directors. However, any
amendment which would increase the maximum award available to the Chief
Executive Officer or one of the four most highly compensated executive officers
of the Company other than the Chief Executive Officer will require approval by a
majority vote of the shareholders of the Company.
APPROVAL REQUIRED
The affirmative vote of a majority of the votes cast by the holders of
shares of Common Stock represented at the Annual Meeting at which a quorum is
present is required for approval of the Amendment and Restatement of the
Compensation Plan. Shareholder approval is a condition to the performance-based
compensation exception to Code sec.162(m) as described above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT AND
RESTATEMENT OF THE ACME METALS INCORPORATED 1994 EXECUTIVE INCENTIVE
COMPENSATION PLAN WHICH IS PRESENTED AS PROPOSAL NO. 3.
26
<PAGE> 29
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 4)
The Board of Directors, acting upon the recommendation of its Audit Review
Committee, on October 24, 1996 appointed Price Waterhouse LLP as independent
accountants for the Company for the fiscal year ending December 28, 1997.
The appointment of Price Waterhouse LLP as independent accountants for the
Company for the fiscal year 1997 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
Annual 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. 4.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy statement
and form of proxy for the 1998 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 26, 1997.
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 others will present, is
described in this proxy statement. If other matters properly come before the
Annual Meeting, the Proxies, in their discretion, are authorized to vote upon
such other business as may properly come before the Annual Meeting.
By order of the Board of Directors,
Edward Weber
Edward P. Weber, Jr.
Secretary
Dated: March 26, 1997
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 JOEL L. HAWTHORNE, DIRECTOR, INVESTOR AND PUBLIC RELATIONS, ACME
METALS INCORPORATED, PHONE 708-841-8383, EXT. 2266.
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[This Page Intentionally Left Blank]
<PAGE> 31
APPENDIX A
ACME METALS INCORPORATED
1997 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. PURPOSES.
The Acme Metals Incorporated 1997 Non-Employee Directors' Stock Option Plan
(the "Plan") is established to attract, retain and compensate highly qualified
individuals who are not employees of Acme Metals Incorporated (the "Company") or
any of the Company's subsidiaries or affiliates for service as members of the
Board of Directors of Acme Metals Incorporated ("Non-Employee Directors") and to
provide them with an ownership interest in the Company's Common Stock, par value
$1.00 per share ("Common Stock"). The Plan will be beneficial to the Company and
its shareholders by allowing these Non-Employee Directors to have a personal
financial stake in the Company through an ownership interest in the Company's
Common Stock, in addition to underscoring their common interest with
shareholders in increasing the value of the Company's Common Stock over the long
term.
2. EFFECTIVE DATE.
The Plan shall be effective as of the date it is adopted by the Board of
Directors of the Company, subject to the approval of the Plan by the holders of
at least a majority of the outstanding shares of Company Common Stock present,
or represented and entitled to vote at the Company's 1997 Annual Meeting of
Shareholders. Grants of options may be made under the Plan on and after its
effective date, subject to shareholder approval of the Plan as provided above.
In the event such approval is not obtained, any options granted under the Plan
shall be null and void.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Nominating Committee of the Board of
Directors (the "Committee"). Subject to provisions of the Plan, the Committee
shall be authorized to interpret the Plan, to establish, amend and rescind any
rules and regulations relating to the Plan, and to make all other determinations
necessary or advisable for the administration of the plan provided; however,
that the Committee shall have no discretion with respect to the eligibility or
selection of Non-Employee Directors to receive options under the Plan, the
number of shares of Common Stock subject to any such options or the Plan, or the
purchase price thereunder, and provided further, that the Committee shall not
have the authority to take any action or make any determination that would
materially increase the benefits accruing to participants under the Plan. The
Committee's interpretation of the Plan, and all actions taken and determinations
made by the Committee pursuant to the powers vested in it hereunder, shall be
conclusive and binding upon all parties concerned including the Company, its
shareholders and persons granted options under the Plan. The Chief Executive
Officer or the Secretary of the Company shall be authorized to implement the
Plan in accordance with its terms and to use or cause to be taken such actions
of a ministerial nature as shall be necessary to effectuate the intent and
purposes thereof.
4. PARTICIPATION IN THE PLAN.
All active members of the Company's Board of Directors who are not as of
the date of any option grant employees of the Company or any of its subsidiaries
or affiliates shall be eligible to participate in the Plan.
5. NON-QUALIFIED STOCK OPTIONS.
Only non-qualified stock options ("Options") may be granted under this
Plan.
A-1
<PAGE> 32
6. TERMS, CONDITIONS AND FORM OF OPTIONS.
(a) OPTION GRANT DATES. Options to purchase 2,000 shares of Common Stock
(as adjusted pursuant to Section 8) shall be automatically granted on
an annual basis to each eligible Non-Employee Director each year at the
Annual Meeting of the Board of Directors which immediately follows the
Company's Annual Meeting of Shareholders.
(b) EXERCISE PRICE. The exercise price per share of Common Stock for which
each Option is exercisable shall be 100% of the fair market value per
share of the Common Stock on the date the Option is granted, which
shall be the average of the high and low price 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 New York
Stock Exchange, or other principal securities exchange on which the
Company's Common Stock is listed, as reported in The Wall Street
Journal (corrected for reporting errors), whichever is applicable upon
such date.
(c) EXERCISABILITY AND TERM OF OPTIONS. Each Option granted under the Plan
shall become exercisable in four equal installments, commencing on the
first anniversary of the date of grant and annually thereafter. Each
Option granted under the Plan shall expire ten years from the date of
grant, and shall be subject to earlier termination as hereinafter
provided.
(d) TERMINATION OF SERVICE. In the event of the termination of service on
the Board of Directors of the Company by the holder of any Option,
other than by reason of mandatory retirement, permanent disability or
death as set forth in paragraph (e) hereof, the then outstanding
Options of such holder shall be exercisable only to the extent that
they were exercisable on the date of such termination and shall expire
three months after such termination, or on their stated expiration
date, whichever occurs first.
(e) RETIREMENT, DISABILITY OR DEATH. In the event of termination of service
by reason of mandatory retirement pursuant to Board policy or permanent
disability of the holder of any Option, each of the then outstanding
Options of such holder will continue to become exercisable in
accordance with Section 6(c) above, but the holder shall be entitled to
exercise such Options, including any portions thereof that become
exercisable after such termination, within four years of such
termination, but in no event after the expiration date of the Option.
In the event of the death of the holder of any Option, each of the then
outstanding Options of such holder shall become immediately exercisable
in full, and shall be exercisable by the holder's legal representative
at any time within a period of four years after death, but in no event
after the expiration date of the Option. In case of termination of
service by reason of permanent disability or mandatory retirement
pursuant to Board policy of a holder who holds an Option not
immediately exercisable in full, the Committee may in its sole
discretion, accelerate the time at which such Option may be exercised.
(f) PAYMENT. The Option price shall be paid in cash or by the surrender of
shares of Common Stock of the Company, valued at their fair market
value on the date of exercise, or by any combination of cash and such
shares.
7. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
The shares that may be purchased pursuant to Options under the Plan shall
not exceed an aggregate of 150,000 shares of Company Common Stock (as adjusted
pursuant to Section 8). Any shares subject to an Option grant which for any
reason expires or is terminated unexercised as to such shares shall again be
available for issuance under the Plan.
8. DILUTION AND OTHER ADJUSTMENT.
In the event of any change in the outstanding shares of Company Common
Stock by reason of any stock split, stock dividend, merger, consolidation,
combination or exchange of shares or other similar corporate change, such
equitable adjustments shall be made in the Plan and the grants thereunder,
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<PAGE> 33
including the exercise price of outstanding Options, as the Committee determines
are necessary or appropriate, including, if necessary, any adjustments in the
maximum number of shares referred to in Section 7 of the Plan. Such adjustment
shall be conclusive and binding for all purposes of the Plan.
9. MISCELLANEOUS PROVISIONS.
(a) RIGHTS AS STOCKHOLDER. A participant under the Plan shall have no
rights as a holder of Company Common Stock with respect to Option
grants hereunder, unless and until certificates for shares of such
Common Stock are issued to the participant.
(b) ASSIGNMENT OR TRANSFER. Options granted under the Plan shall be
transferable by a participant only to the extent they are transferred
(i) without value and (ii) to family members of the participant, inter
vivos grantor trusts where the participant and/or the participant's
family members or charitable institutions are beneficiaries, or
directly to a charitable institution designated by the participant.
Such transfers will only be permitted to the extent they comply with
the provisions of Rule 16b-3 under of Section 16 of the Securities
Exchange Act of 1934, as amended, and the regulations thereunder, as
then in effect.
(c) AGREEMENTS. All Options granted under the Plan shall be evidenced by
agreements in such form and containing such terms and conditions (not
inconsistent with the Plan) as the Committee shall adopt.
(d) COMPLIANCE WITH LEGAL REGULATIONS. During the term of the Plan and the
term of any Options granted under the Plan, the Company shall at all
times reserve and keep available such number of Common Stock shares as
may be issuable under the Plan, and shall seek to obtain from any
regulatory body having jurisdiction any requisite authority required in
the opinion of counsel for the Company in order to grant Options to
purchase shares of Company Common Stock or to issue such Common Stock
pursuant thereto. If in the opinion of counsel for the Company the
transfer, issue or sale of any shares of its Common Stock under the
Plan shall not be lawful for any reason, including the inability of the
Company to obtain from any regulatory body having jurisdiction
authority deemed by such counsel to be necessary to effect such
transfer, issuance or sale, the Company shall not be obligated to
transfer, issue or sell any such shares of Common Stock. In any event,
the Company shall not be obligated to transfer, issue or sell any
shares of Common Stock to any participant unless a registration
statement which complies with the provisions of the Securities Act of
1933, as amended (the "Securities Act"), is in effect at the time with
respect to such shares of Common Stock or other appropriate action has
been taken under and pursuant to the terms and provisions of the
Securities Act or the Company receives evidence satisfactory to the
Committee that the transfer, issuance or sale of such shares of Common
Stock, in the absence of an effective registration statement or other
appropriate action, would not constitute a violation of the terms and
provisions of the Securities Act. The Company's obligation to issue
shares of Common Stock upon the exercise of any Option granted under
the Plan shall in any case be subject to the Company being satisfied
that the shares of Common Stock purchased are being purchased for
investment and not with a view to the distribution thereof, if at the
time of such exercise a resale of such shares of Common Stock would
otherwise violate the Securities Act in the absence of an effective
registration Statement relating to such shares.
(e) COSTS AND EXPENSES. The costs and expenses of administering the Plan
shall be borne by the Company and not charged to any Option or to any
Non-Employee Director receiving an Option.
10. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENTS. The Committee may from time to time amend the Plan in whole
or in part; provided, that no such action shall adversely affect any
rights or obligations with respect to any Options theretofore granted
under the Plan.
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<PAGE> 34
Unless the holders of at least a majority of the outstanding shares of
Company Common Stock present, or represented, and entitled to vote at a
Meeting of Shareholders shall have first approved thereof, no amendment
of the Plan shall be effective which would (i) increase the maximum
number of shares of Common Stock referred to in Section 7 of the Plan or
the number of shares of Common Stock subject to Options that may be
granted pursuant to Section 6(a) of the Plan to any one Non-Employee
Director or (ii) extend the maximum period during which Options may be
granted under the Plan.
(b) TERMINATION. The Committee may terminate the Plan (but not any Options
theretofore granted under the Plan) at any time. The Plan (but not any
Options theretofore granted under the Plan) shall in any event
terminate on, and no Options shall be granted after, December 31, 2006.
11. COMPLIANCE WITH SEC REGULATIONS.
It is the Company's intent that the Plan comply in all respects with Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any related regulations. If any provision of this Plan is later found
not to be in compliance with such Rule and regulations, the provision shall be
deemed null and void. All grants and exercises of Options under this Plan shall
be executed in accordance with the requirements of Section 16 of the Exchange
Act and the regulations promulgated thereunder.
12. GOVERNING LAW.
The validity and construction of the Plan and any agreements entered unto
thereunder shall be governed the laws of the State of Delaware.
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<PAGE> 35
APPENDIX B
ACME METALS INCORPORATED
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
AMENDMENT AND RESTATEMENT
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) 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 Covered Employees and Incentive Group
A Participants, the regular salary, exclusive of bonuses, incentive
pay, overtime pay, special awards or awards made under the Plan, as
established during the first ninety (90) days 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 Non-Employee Directors.
(3) "Company" shall mean Acme Metals Incorporated, a Delaware corporation,
and its wholly-owned subsidiaries.
(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, unusual or other items, determined in accordance with
generally accepted accounting principles.
(5) "Covered Employees" shall mean and shall include the Chief Executive
Officer and any other individual Employee whose compensation is
required to be reported to the Securities and Exchange Commission by
reason of that Employee being among the four (4) highest compensated
executive officers other than the Chief Executive Officer for the Year.
(6) "Committee" shall mean the Compensation Committee of the Board of
Directors of the Company consisting of members who are Non-Employee
Directors.
(7) "Non-Employee Directors" shall mean directors who are "non-employee
directors" as the term is defined in Rule 16b-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.
(8) "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.
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<PAGE> 36
(9) "Increase in Shareholder Value" shall mean a formula, determined by the
Committee utilizing one or more of the following factors, either
standing alone or as compared to competitors or other classes of
entities:
(a) Net After Tax Earnings per share;
(b) trading price of the Company's stock coupled with dividends paid;
(c) book value per share, in accordance with generally accepted
accounting principles; and
(d) any other factors which in the judgment of the Committee would
reflect an increase in shareholder value which could include market
share, decrease in leverage, or improvements in productivity
pursuant to an objective formula.
(10) "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, unusual or other items, determined in accordance with
generally accepted accounting principles.
(11) "Participant" shall mean an Employee of the Company described in
Article III.
(12) "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, unusual or other items,
determined in accordance with generally accepted accounting
principles.
(13) "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.
(14) "Year" shall mean the fiscal Year of the Company.
ARTICLE III
PARTICIPANTS
A. Within the first ninety (90) days of the Year in question, the Committee
shall designate those Employees who shall be Plan Participants for that Year and
shall assign each Participant to one of the Plan's incentive groups (i.e.,
Chairman, Chief Executive Officer, Chief Operating Officer, A, B, 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 also 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.
C. Contemporaneously with the promotion, demotion or reassignment of a
Participant in any Incentive Group, the Committee, if the Participant is the
Chairman or the Chief Executive Officer, or the Committee or the Chief Executive
Officer of the Company, in all other cases, may make one or more of the
following changes: (i) change the incentive group to which the Committee or the
Chief Executive Officer, as the case may be, had heretofore assigned said
Participant; or (ii) terminate an
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<PAGE> 37
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 end of the first fiscal quarter 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: During the first ninety (90) days 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 to be applicable in respect of that Year.
(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
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 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.
(6) COMBINATION: For any Year in which a combination of two or more of any
of the foregoing items (1) through (5) are utilized, the Committee
shall determine the "items" to be applicable, the relative weighting
and the minimum, target and maximum goals of such combined items 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.
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<PAGE> 38
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>
Chairman and/or Chief Executive Officer....... 75.0% 50.0% 25.0%
Chief Operating Officer....................... 60.0% 40.0% 20.0%
Group A....................................... 52.5% 35.0% 17.5%
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.
(1) COVERED EMPLOYEE PARTICIPANTS.
Awards to Covered Employee Participants, 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) ALL OTHER PARTICIPANTS.
Incentive Compensation Payment Level awards to all other Participants
(i.e., Group A Participants who are not Covered Employees and
Participants in Incentive Groups B, C and D) may be adjusted as follows:
(a) 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 5. The criteria for each of the five ratings
are described in Appendix 2 attached hereto.
(b) 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%.
(c) 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 be increased by amounts up to 15%.
(d) 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 not be increased or decreased.
(e) 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 4 may be reduced by amounts up to 25%.
(f) 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 5 may be eliminated.
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<PAGE> 39
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 its 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
commence or 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.
C. If, during a Year, a Participant ceases to be an Employee by reason of
illness or injury, death, retirement, or leave of absence, other than medical,
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 a Covered Employee Participant 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.
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 Covered Employee
Participants any such action shall not cause or result in an award to said
Covered Employee Participants to exceed the maximum Incentive Compensation
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<PAGE> 40
Payment level specified in Paragraph D of Article IV hereof unless first
approved by the affirmative vote of a majority of the shareholders voting
thereon.
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> 41
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 equal 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 are 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 are greater
than the minimum but less than the target goal(s), or are 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.
Then, if actual Net After Tax Earnings for such Year are $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
(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%
- ---------------
*Performance goals for each Year may be based upon (i) Net After Tax 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.
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<PAGE> 42
(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 are $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
(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 equal or
exceed 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.
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<PAGE> 43
APPENDIX 2
INTEROFFICE
CORRESPONDENCE
Copy to:
Date:
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 1996
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 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
surpassed all personal annual objectives. Performance
exceeds the desired level of performance in all
responsibility areas. Would be unrealistic to expect
better performance in responsibility areas.
ABOVE AVERAGE
(Rating 2) Employee is performing all requirements of the
responsibility areas. Has accomplished all of personal
annual objectives. Performance on all work requirements
is at the desired level, and certain requirements are
performed above that level and occasionally
exceptionally well. Improved performance can still be
expected in a few areas.
EFFECTIVE
(Rating 3) Employee is performing most requirements of the
responsibility areas. Has accomplished most of the
personal annual objectives. Performance on work
requirements is acceptable. Improved performance can be
expected in some areas.
MARGINAL
(Rating 4) Employee is performing some of the requirements of the
responsibility areas, but is not performing all key
requirements. Has satisfied some significant personal
annual objectives. Performance meets minimum level of
performance for the key responsibility areas. Improved
performance is expected in most areas.
INEFFECTIVE
(Rating 5) Employee is performing few of the requirements of the
responsibility areas. Has not achieved any personal
annual objectives. Performance is below the desired
level of performance for some key responsibility areas.
Improvement is expected in all areas.
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<PAGE> 44
By way of explanation, participants who achieve Rating 1 shall have their awards
increased by up to 25%. Participants who achieve Rating 2 shall have their
awards increased by up to 15%. Participants who achieve Rating 3 shall be
considered "full incentive" and shall receive payments in keeping with the
formula for their Group. Participants who achieve Rating 4 shall have their
awards decreased by up to 25%. Finally, Participants who achieve Rating 5 shall
have their awards eliminated.
Recommendations for Participant ratings 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.
ADMISSION
If you plan to attend the Annual 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
Annual Meeting. If you plan to attend the Annual 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 Annual Meeting to confirm your ownership of shares.
LOCATION
The Sutton Place Hotel is located at 21 East Bellevue Place, Chicago,
Illinois, at the corner of Rush and Bellevue Streets. The telephone number of
the Hotel is (312) 266-2100. The meeting will be held in Room 302 on the third
level of the Hotel.
B-10
<PAGE> 45
ACME METALS INCORPORATED
13500 SOUTH 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
1997 Proxy Statement and hereby appoints 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, 21 East Bellevue Place,
Chicago, Illinois 60611 on Thursday, April 24, 1997, 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.
<TABLE>
<S> <C>
Election of Directors (see reverse side) Comments: (such as change of address)
Nominees:
Class II Directors ________________________________________
Stephen D. Bennett
Buddy W. Davis ________________________________________
Andrew R. Laidlaw
Frank A. LePage ________________________________________
(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 BOARD OF DIRECTORS' RECOMMENDATIONS (SEE ACCOMPANYING PROXY
STATEMENT). THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN
THIS CARD.
SEE REVERSE SIDE
FOLD AND DETACH HERE
<PAGE> 46
/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.
<TABLE>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
1. Election of / / / / 2. Adoption of the Acme Metals / / / / / /
Directors Incorporated 1997 Non-Employee
Directors' Stock Option Plan
FOR AGAINST ABSTAIN
For, except vote withheld from the following 3. Approval of the Amendment and
nominee(s): Restatement of the Acme Metals / / / / / /
Incorporated 1994 Executive
Compensation Plan
- ---------------------------------------------
FOR AGAINST ABSTAIN
4. Approval of independent / / / / / /
accountants
5. In the discretion of the Proxies
named herein, upon such other
matters as may properly come
before the meeting.
/ / Change of address/ / / I plan to attend the
comments on reverse 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.
--------------------------------------------------------------------------
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Signature(s) Date
</TABLE>
FOLD AND DETACH HERE
