ACME METALS INC /DE/, DEF 14A, 1998-03-18

ACME METALS INC /DE/
DEF 14A, 1998-03-18
STEEL WORKS, BLAST FURNACES & ROLLING MILLS (COKE OVENS)

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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 Incorporated
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(Name of Registrant as Specified in Its Charter)
ACME Metals Incorporated
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(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:

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(2) Form, schedule or registration statement no.:

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(3) Filing party:

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(4) Date filed:

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<PAGE> 2

ACME Metals Incorp

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO THE SHAREHOLDERS OF ACME METALS INCORPORATED:

Notice is hereby given that the 1998 Annual Meeting of Shareholders of Acme
Metals Incorporated, a Delaware corporation (the "Company"), will be held at The
Regal Knickerbocker Hotel, 163 East Walton Place, Chicago, Illinois 60611 on
Thursday, April 23, 1998, at 10:00 a.m., central time, for the purpose of
considering and voting on:

1. the election of three directors to serve for a three-year term;

2. the ratification of the appointment of Price Waterhouse LLP as
independent accountants for the Company for the fiscal year 1998;

3. the transaction of such other business as may properly come before
the Annual Meeting.

The Board of Directors has determined that only shareholders of record at
the close of business on Monday, March 2, 1998, are entitled to notice of and to
vote at the Annual Meeting 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 25, 1998

IMPORTANT -- YOUR PROXY IS ENCLOSED IN
THE ENVELOPE CONTAINING THIS MATERIAL

13500 SOUTH PERRY AVENUE, RIVERDALE, ILLINOIS 60827-1182; PHONE (708) 849-2500
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ACME METALS INCORPORATED
13500 SOUTH PERRY AVENUE, RIVERDALE, ILLINOIS 60827-1182
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PROXY STATEMENT
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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 23, 1998 (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, facsimile 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 1997 are being mailed on or about March 25, 1998 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 2, 1998 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting. At the record date, there were 11,680,164 shares
of Common Stock outstanding and entitled to vote on all matters to be acted upon
at the Annual Meeting.

Under Delaware law and the Company's Restated Certificate of Incorporation,
for each share of Common Stock held, each shareholder is entitled to cast one
vote for each nominee for each of the three directorships to be filled. On other
matters, each shareholder is entitled to cast one vote for each share of Common
Stock held. The three nominees for director receiving the highest number of
votes cast will be elected whether or not any of them receive the vote of a
majority of the shares represented at the Annual Meeting. Approval of Proposal
No. 2 addressing ratification of the selection of independent accountants,
described herein, will require the affirmative vote of the majority of the
shares of Common Stock represented at the Annual 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.
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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 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 1997 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 twelve directors: four Class III directors whose terms
expire in 1998 (Messrs. Jordan, MacDonald, Marsden and Sovey), four Class I
directors whose terms expire in 1999 (Messrs. Lane, Rayfield, Sutherland and
Wilson) and four Class II directors whose terms expire in 2000 (Messrs. Bennett,
Davis, Laidlaw and LePage). Mr. Jordan is retiring from the Board of Directors
on April 23, 1998 after ten years of service thereon and the Board of Directors
has fixed the number of directors immediately following the Annual Meeting at
eleven.

Should all directors be elected as proposed, the number and classes of
directors would be four Class I directors with terms expiring in 1999, four
Class II directors with terms expiring in 2000, and three Class III directors
with terms expiring in 2001. 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 three persons listed below as nominees to be elected as Class III
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 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 of the Company 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.

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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 of Directors. 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. Mr. Davis was re-elected a director by the shareholders at
the Company's 1997 Annual Meeting.

<TABLE>
<S> <C>
NOMINEES FOR ELECTION AS CLASS III DIRECTORS FOR A TERM EXPIRING IN 2001
Reynold C. MacDonald photo REYNOLD C. MACDONALD
Age: 79
Director since June 1986
Member: 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.
Brian W. H. Marsden photo
BRIAN W. H. MARSDEN
Age: 66
Director since June 1986
Member: Audit Review, Executive and Nominating 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.
</TABLE>

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<TABLE>
<S> <C>
NOMINEES FOR ELECTION AS CLASS III DIRECTORS FOR A TERM EXPIRING IN 2001 --
CONTINUED
William P. Sovey photo
WILLIAM P. SOVEY
Age: 64
Director since June 1991
Member: Compensation, Executive and Nominating (Chairman)
Committees
Chairman of the Board of Newell Co. (manufacturing and
marketing company for high volume hardware and housewares,
office and industrial products) since January 1, 1998; Vice
Chairman of the Board and Chief Executive Officer of Newell
Co. 1992 through 1997; President and Chief Operating Officer
of Newell Co. 1986 to 1992. He is a director of Teco Energy,
Inc.
</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE (3)
NOMINEES AS CLASS III DIRECTORS OF THE COMPANY WHICH IS PRESENTED AS PROPOSAL
NO. 1.

<TABLE>
<S> <C>
CLASS I DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1999
John T. Lane photo JOHN T. LANE
Age: 55
Director since April 1997
Member: Compensation, Finance and Nominating Committees
Organizational Consultant; Managing Director and Head of
U.S. Private Banking of J. P. Morgan & Co. (investment
banking firm) from 1990 to 1994; other senior positions at
J. P. Morgan & Co. from 1973 to 1990.
Allan L. Rayfield photo
ALLAN L. RAYFIELD
Age: 62
Director since April 1996
Member: Compensation, Finance 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
and Arch Communications Group, Inc.
</TABLE>

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<TABLE>
<S> <C>
CLASS I DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1999 --
CONTINUED
L. FREDERICK SUTHERLAND
L. Frederick Sutherland photo Age: 46
Director since January 1995
Member: Compensation, Finance and Nominating Committees
Executive Vice President and Chief Financial Officer of
ARAMARK Corporation (diversified services management
company) since May 1997; President of Uniform Services Group
of ARAMARK Corporation April 1, 1993 to May 1997; 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.

WILLIAM R. WILSON
William R. Wilson photo Age: 70
Director since July 1992
Member: Audit Review, Compensation and Nominating Committees
Retired Chairman of the Board and Chief Executive Officer of
Lukens Inc. (manufacturer and seller 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 Energy
Group.

CLASS II DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 2000
STEPHEN D. BENNETT
Stephen D. Bennett photo Age: 49
Director since January 1993
Member: Executive (Chairman), Finance and Nominating (ex
officio) Committees
President and Chief Executive Officer of the Company since
April 15, 1996; President and Chief Operating Officer of the
Company January 1993 to April 15, 1996; Group Vice President
of the Company May 1992 to December 1992; Group Vice
President of Acme Steel Company 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.
</TABLE>

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<TABLE>
<S> <C>
CLASS II DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 2000 --
CONTINUED

Buddy W. Davis photo
BUDDY W. DAVIS
Age: 68
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.
Andrew R. Laidlaw photo
ANDREW R. LAIDLAW
Age: 51
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: 70
Director since May 1987
Member: Audit Review, Compensation (Chairman), and
Nominating Committees
Retired Director and Executive Vice President of The
Firestone Tire & Rubber Company (manufacturer of tires and
related products) since 1982.
</TABLE>

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 28, 1997 there were ten Board
of Directors' meetings, two Audit Review Committee meetings, two Compensation
Committee meetings, one Executive Committee meeting, five Finance Committee
meetings and one Nominating Committee meeting. Each director was present for at
least 75% of the combined number of meetings of the Board of Directors and
Committees on which each director served. The members of the Committees are
identified above.

COMMITTEES

The Audit Review Committee is charged with the duties of recommending to
the Board of Directors the appointment of independent accountants, meeting
periodically with the independent accountants and internal auditors to review
the adequacy of internal controls and financial reporting, reviewing financial
statements, and reviewing, appraising, and reporting to the Board of Directors
on accounting and reporting practices, the internal control system and the audit
effort by both the independent accountants and internal auditors.

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

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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 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
60827-1182. 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

During fiscal 1997, directors who were not also employees of the Company
were 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 was
held on the same day. The Chairmen of the Audit Review, Compensation, Finance
and Nominating Committees were 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 a Consulting 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 was paid an
annual fee of $50,000 in addition to any payments to which he was entitled as a
non-employee director of the Company. Under the terms of the contract, he was
furnished with an office, secretarial and certain other business office services
which amounted to approximately $12,720 in 1997. The contract with Mr. MacDonald
terminated on May 31, 1997.

Mr. Marsden entered into a Retainer Agreement with the Company effective
March 1, 1997 pursuant to which he agreed to serve as Chairman of the Board of
the Company until April 23, 1998 for an annual retainer of $100,000. The
Retainer Agreement has been renewed for an additional one year period through
April 22, 1999, upon the same terms and conditions contained in the original
agreement. In addition to the annual retainer, Mr. Marsden is provided the use
of an office and office services at the Company's headquarters, continued
participation in the Company's automobile reimbursement program and key person
physical examination program, and reimbursement of country club dues and tax
preparation fees. The amounts paid for such perquisites amounted to
approximately $38,240 in fiscal 1997.

In 1992 the Company adopted the Acme Metals Incorporated Non-Employee
Directors Retirement Plan (the "Directors Retirement Plan"), which was
terminated as of April 24, 1997. The Directors Retirement

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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 resulted in it being frozen for former directors
then 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. Active directors as of April 24, 1997 who had four or more years of
service had 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 was determined by dividing
the Vested Pension Benefit by the price of the Company's Common Stock on April
24, 1997. If option (ii) was elected, a director will receive an annual pension
following his retirement from 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.

Concurrent with the termination of the Directors Retirement Plan, the Board
of Directors recommended and the shareholders of the Company approved at the
April 24, 1997 Annual Meeting, the adoption of the Acme Metals Incorporated 1997
Non-Employee Directors' Stock Option Plan (the "Directors' Stock Option Plan").
Pursuant to the Directors' Stock Option Plan, which is administered by the
Nominating Committee of the Board of Directors, each non-employee member of the
Board of Directors is each year granted 2,000 non-qualified options to purchase
shares of Common Stock at the Annual Meeting of the Board of Directors which
immediately follows the Company's Annual Meeting of Shareholders. The options
are granted at 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
New York Stock Exchange, as reported in The Wall Street Journal on the date of
grant. The options become exercisable in four equal installments, commencing on
the first anniversary of the date of grant and annually thereafter, unless the
vesting schedule is accelerated to become fully exercisable upon death,
retirement, or disability. The options expire ten years from the date of grant,
subject to earlier termination as set forth in the Directors' Stock Option Plan
should a director leave the Board for a reason other than death, retirement or
disability. Pursuant to the Directors' Stock Option Plan, Messrs. Davis, Jordan,
Laidlaw, Lane, LePage, MacDonald, Marsden, Rayfield, Sovey, Sutherland and
Wilson were each granted 2,000 options at an exercise price of $13.75 on April
24, 1997.

[REST OF PAGE INTENTIONALLY LEFT BLANK]

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SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

CERTAIN BENEFICIAL OWNERS

As of March 2, 1998, 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) 14.9%
Suite 805
150 Bloor Street West
Toronto, Ontario M5S 3B5
Dimensional Fund Advisors, Inc.............................. 944,914(4) 8.1%
1299 Ocean Avenue
Santa Monica, CA 90401
Goodman & Company Ltd....................................... 728,000(5) 6.2%
Scotia Plaza
40 King Street West
Toronto, Ontario M5H 4A9
</TABLE>

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(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 2, 1998.

(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 ("Mackenzie") has sole voting and
dispositive power for all of the shares reported, and through
correspondence between a representative of the Company and a representative
of Mackenzie in March 1998, in which the representative of Mackenzie stated
that "various accounts managed by Mackenzie in the aggregate own 1,740,700
shares of Common Stock representing approximately 14.9% of the outstanding
shares of Common Stock. Mackenzie acquired the shares in the ordinary
course of business and not with the purpose or effect of changing or
influencing control of Acme Metals Incorporated."

(4) The number of shares of Common Stock owned was determined by a review of the
Schedule 13G filed February 9, 1998 by Dimensional Fund Advisors, Inc., and
a cover letter to the Company which states that "Dimensional Fund Advisors,
Inc. ("Dimensional"), a registered investment advisor, is deemed to have
beneficial ownership of 944,914 shares of Company Common Stock as of
December 31, 1997, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business
trust, or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee

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benefit plans, all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares."

(5) The number of shares of Common Stock beneficially owned was determined by a
review of the Schedule 13D filed with the Securities and Exchange Commission
on April 13, 1995 which states that Goodman & Company Ltd. has sole voting
and dispositive power for all of the shares reported and through a
conversation between a representative of the Company and a representative of
Goodman & Company Ltd. in March 1998.

OTHER PRINCIPAL HOLDER OF VOTING SECURITIES

On March 2, 1998, 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 1,050,432 shares, or 8.9%, 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 2, 1998 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................................ 96,041(3) *
Buddy W. Davis.................................... -0- *
Robert W. Dyke.................................... 35,733(4) *
Edward G. Jordan.................................. 1,490 *
Andrew R. Laidlaw................................. 4,490 *
John T. Lane...................................... 1,000 *
Frank A. LePage................................... 4,990 *
Reynold C. MacDonald.............................. 55,000 *
Brian W. H. Marsden............................... 195,339(5) 1.7%
Allan L. Rayfield................................. 2,000 *
Gerald J. Shope................................... 32,416(6) *
William P. Sovey.................................. 1,490 *
L. Frederick Sutherland........................... 2,000 *
Edward P. Weber, Jr............................... 59,560(7) *
Jerry F. Williams................................. 82,291(8) *
William R. Wilson................................. 6,990 *
All directors and executive officers
as a group, 19 persons.......................... 604,480(3)(4)(5)(6)(7)(8)(9) 5.0%
</TABLE>

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

* Less than 1% of class

10
<PAGE> 13

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.

(3) Includes 67,400 shares which are not now owned but could be acquired by
exercise of vested stock options, 11,300 shares which are subject to
conditions of forfeiture and restrictions on sale, transfer or other
disposition, and 3,336 shares held by the trustee of the Company's Employee
Stock Ownership Plan ("ESOP") which are attributable to Mr. Bennett's
account.

(4) Includes 27,950 shares which are not now owned but could be acquired by
exercise of vested stock options, 1,200 shares which are subject to
conditions of forfeiture and restrictions on sales, transfer or other
disposition, 2,163 shares held by the trustee of the Company's Salaried
Employees' Retirement Savings Plan ("SERSP") which are attributable to Mr.
Dyke's account, and 3,546 shares held by the trustees of the ESOP which are
attributable to Mr. Dyke's account.

(5) Includes 130,650 shares which are not now owned but could be acquired by
exercise of vested stock options and 2,500 shares owned by a family member
as to which shares Mr. Marsden disclaims beneficial ownership.

(6) Includes 22,000 shares which are not now owned but could be acquired by
exercise of vested stock options, 2,500 shares which are subject to
conditions of forfeiture and restriction on sale, transfer or other
disposition, 3,157 shares held by the trustee of the SERSP which are
attributable to Mr. Shope's account, and 2,829 shares held by the trustee of
the ESOP which are attributable to Mr. Shope's account.

(7) Includes 38,850 shares which are not now owned but could be acquired by
exercise of vested stock options, 6,200 shares which are subject to
conditions of forfeiture and restrictions on sale, transfer or other
disposition, 50 shares held by family members, and 3,778 shares held by the
trustee of the ESOP which are attributable to Mr. Weber's account.

(8) Includes 45,750 shares which are not now owned but could be acquired by
exercise of vested stock options, 6,240 shares which are subject to
conditions of forfeiture and restriction on sale, transfer or other
disposition, 13,469 shares held by the trustee of the SERSP which are
attributable to Mr. Williams' account, and 4,453 shares held by the trustee
of the ESOP which are attributable to Mr. Williams' account.

(9) Includes 13,600 shares which are not now owned but could be acquired by
exercise of vested stock options, 5,100 shares which are subject to
conditions of forfeiture and restriction on sale, transfer or other
disposition, a total of 5,869 shares held by the trustee of the SERSP and a
total of 3,265 shares held by the trustee of the ESOP which are attributable
to the accounts of three executive officers who are not named in "Executive
Compensation" below.

11
<PAGE> 14

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
filed on behalf of officers or directors or received from them 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 1997.

[REST OF PAGE INTENTIONALLY LEFT BLANK]

12
<PAGE> 15

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 1995, 1996 and 1997.

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................ 1997 405,000 -0- (2) 12,688 24,000 26,180
President and Chief 1996 345,800 45,500 (2) 84,375 24,000 43,043
Executive Officer 1995 275,000 82,500 (2) 45,938 10,000 39,325
Brian W. H. Marsden(1)............ 1997 34,670 -0- 38,240(1) 0 2,000 3,813
Chairman 1996 281,300 49,500 (2) 0 18,000 36,388
1995 430,000 172,000 (2) 45,938 15,000 66,220
Robert W. Dyke(5)................. 1997 177,340 69,828 (2) 1,813 7,000 12,311
Senior Vice President-Fabricating 1996 155,000 35,895 19,994(5) 16,875 6,000 20,998
1995 150,000 54,000 (2) 18,375 4,000 22,440
Gerald J. Shope(6)................ 1997 130,010 -0- 13,870(6) 3,625 4,000 9,488
Vice President-Human Resources 1996 122,600 12,000 (2) 0 6,000 14,806
1995 114,000 31,100 (2) 0 4,000 15,961
Edward P. Weber, Jr............... 1997 170,000 -0- 18,714(7) 1,813 7,000 12,412
Vice President, 1996 158,500 16,100 19,462(7) 42,188 7,000 19,206
General Counsel and Secretary 1995 153,000 45,900 (2) 45,938 5,000 21,879
Jerry F. Williams................. 1997 203,000 -0- (2) 1,813 7,000 14,814
Vice President-Finance and 1996 191,000 19,700 23,173(8) 42,188 7,000 23,177
Administration and Chief 1995 187,000 56,100 (2) 45,938 5,000 26,741
Financial Officer
</TABLE>

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

(1) Mr. Marsden retired as an employee of the Company on March 1, 1997. Had he
continued to serve until the end of fiscal 1997, he would have been among
the four most highly compensated officers of the Company other than the
Chief Executive Officer. Disclosure for Mr. Marsden is required pursuant to
Item 402(a)(3) of Regulation S-K and Item 8 of Rule 14a-101 under Section
14 of the Securities Exchange Act of 1934. During 1997, he was provided
with automobile reimbursement expenses of $15,735 and tax preparation fees
of $20,325, each of which is in excess of 25% of the total perquisites and
other personal benefits reported for Mr. Marsden in 1997.

(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 1997 in the Summary
Compensation Table are based on $18.125, the average of the high and low
prices of the Company's Common Stock on the New York

13
<PAGE> 16

Stock Exchange on January 24, 1997, the date of grant, as reported in The
Wall Street Journal. The total number and value of the aggregate restricted
shares held at December 28, 1997, based on $8.875, 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, 4,300 shares, value $38,163; Mr. Dyke, 1,200 shares, value
$10,650; Mr. Shope, none; Mr. Weber, 2,700 shares, value $23,963; and Mr.
Williams, 2,740 shares, value $24,318. Dividends, if any are declared, are
payable on restricted shares.

The stock awards granted on January 24, 1997 vested in their entirety on
July 25, 1997. The total number of shares granted is as follows: Mr.
Bennett 700 shares; Mr. Marsden, none; Mr. Dyke 100 shares; Mr. Shope, 200
shares; Mr. Weber, 100 shares; and Mr. Williams, 100 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
are as follows: Mr. Bennett, 5,000 shares granted in installments of 1,000
each; Mr. Marsden, none; Mr. Dyke 1,000 shares granted in installments of
200 each; Mr. Shope, none; Mr. Weber 2,500 shares granted in installments
of 500 each; and 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 shares of each installment are
as follows: Mr. Bennett, 2,500 shares granted in installments of 500 each;
Mr. Marsden, 2,500 granted in installments of 500 each (the earn-out of the
1997, 1998 and 1999 installments were accelerated to March 1, 1997 in
accordance with the terms of the 1994 Stock Incentive Program upon Mr.
Marsden's retirement as an employee of the Company); Mr. Dyke, 1,000
granted in installments of 200 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.

(4) Amounts in this column are Company contributions to the Company's (i)
Salaried Employees' Retirement Savings Plan ("SERSP"), (ii) Employee Stock
Ownership Plan ("ESOP"), and, (iii) where the annual compensation of the
individual exceeds the IRS statutory limit for 1997 of $160,000, to the
Company's Deferred Compensation Plan ("DCP"), based on amounts earned by
such executive officers during 1997. The Company contributions to the
SERSP, ESOP and DCP for executive officers are based on the same
percentages as for all other eligible employees of the Company.

(5) Mr. Dyke has been President of Acme Packaging Corporation since 1992, became
Group Vice President of the Company on September 1, 1997 and Senior Vice
President-Fabricating of the Company on February 1, 1998. The amounts of
compensation and benefits reported for 1995, 1996 and a portion of 1997
were paid by Acme Packaging Corporation, a subsidiary of the Company. The
amount reported for Mr. Dyke under Other Annual Compensation in 1996
includes $14,709 for automobile expenses and $5,285 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. Dyke in 1996.

(6) Mr. Shope became an executive officer of the Company on April 1, 1995. From
January through March of 1995 he was an officer of Acme Steel Company, a
subsidiary of the Company, and a portion of the compensation and benefits
reported for 1995 was paid by Acme Steel Company. The amount reported for
Mr. Shope under Other Annual Compensation in 1997 is for automobile
expenses.

(7) The amounts reported for Mr. Weber include $14,964 and $19,462 for
automobile expenses in 1997 and 1996, respectively, each of which is in
excess of 25% of the total perquisites and other personal benefits reported
for Mr. Weber for such years.

(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 in 1996.

14
<PAGE> 17

STOCK OPTION GRANTS IN 1997

The following table sets forth certain information relating to options to
purchase Common Stock granted in fiscal year 1997 to the six individuals named
in the Summary Compensation Table.

OPTION GRANTS IN LAST FISCAL YEAR(1)

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN 1997
----------------------------------------------------------------------
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>
Stephen D. Bennett............... 24,000 22.86% $15.0625 5/22/07 186,277
Brian W. H. Marsden.............. 2,000 N/A $ 13.75 4/24/07 14,078
Robert W. Dyke................... 7,000 6.67% $15.0625 5/22/07 54,331
Gerald J. Shope.................. 4,000 3.81% $15.0625 5/22/07 31,046
Edward P. Weber, Jr.............. 7,000 6.67% $15.0625 5/22/07 54,331
Jerry F. Williams................ 7,000 6.67% $15.0625 5/22/07 54,331
</TABLE>

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

(1) Stock Appreciation Rights were not granted during fiscal 1997.

(2) All options to Messrs. Bennett, Dyke, Shope, Weber and Williams were granted
on May 22, 1997. One fourth of the options become exercisable on each of May
22, 1998, 1999, 2000 and 2001 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 upon certain
events related to termination of employment. The options to Mr. Marsden were
granted pursuant to the Company's Directors' Stock Option Plan after Mr.
Marsden had retired as an employee of the Company. One fourth of the options
become exercisable on each of April 24, 1998, 1999, 2000 and 2001 unless the
vesting schedule is accelerated 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
upon certain events related to termination of employment.

(3) Based on 105,000 options granted to all employees during fiscal 1997. In
addition, 22,000 options were granted to non-employee directors during
fiscal 1997.

(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 New York Stock Exchange 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 $13.75 and $15.0625 for the options
granted on April 24, 1997 and May 22, 1997, respectively, equal to the
market value per share on the date of grant;

- A term to exercise of option of seven years;

15
<PAGE> 18

- An interest rate of 5.75%, which approximates the interest rate on a
U.S. Treasury security with a maturity rate of seven years;

- Volatility of 42.0% calculated using weekly stock prices for the
ten-year period prior to the grant dates;

- No dividends being paid on the Common Stock.

AGGREGATED OPTION EXERCISES IN 1997 AND FISCAL YEAR END OPTION VALUES

The following table sets forth certain information concerning the exercise
of options in 1997 to purchase Common Stock by the six individuals named in the
Summary Compensation Table and the unexercised options to purchase Common Stock
held by such individuals at December 28, 1997.

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
OPTIONS AT 12/28/97 AT 12/28/97(2)
SHARES --------------------------- ---------------------------
ACQUIRED ON VALUE
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen D. Bennett....... 0 N/A 61,400 36,000 0 0
Brian W. H. Marsden...... 0 N/A 130,650 2,000 0 0
Robert W. Dyke........... 0 N/A 24,950 10,000 0 0
Gerald J. Shope.......... 0 N/A 19,000 7,000 0 0
Edward P. Weber, Jr...... 0 N/A 35,350 10,500 0 0
Jerry F. Williams........ 0 N/A 42,250 10,500 0 0
</TABLE>

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

(1) No Stock Appreciation Rights have been granted by the Company.

(2) Calculated on the basis of the fair market value of the underlying
securities at fiscal year end, $8.875, minus the exercise price. No options
were 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
- ----------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$100,000........................................... 12,765 20,640 28,515
$150,000........................................... 24,578.... 36,390 48,203
$200,000........................................... 36,390.... 52,140 67,890
$250,000........................................... 48,203.... 67,890 87,578
$300,000........................................... 60,015.... 83,640 107,265
$400,000........................................... 83,640.... 115,140 146,640
$500,000........................................... 107,265... 146,640 186,015
$600,000........................................... 130,890... 178,140 225,390
$700,000........................................... 154,515... 209,640 264,765
$800,000........................................... 178,140... 241,140 304,140
$900,000........................................... 201,765... 272,640 343,515
</TABLE>

16
<PAGE> 19

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.

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 a 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, are 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, Dyke 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 $10,343.00 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 six and one-half 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.

17
<PAGE> 20

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 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 Internal Revenue Service Code of 1986, as amended
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.

18
<PAGE> 21

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.

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 return 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***

<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) ACME METALS RUSSELL 2000 PEER GROUP
<S> <C> <C> <C>
12/92 100 100 100
12/93 135.85 118.89 194.77
12/94 136.32 116.72 200.99
12/95 107.55 149.92 189.55
12/96 146.23 174.65 201.83
12/97 74.53 213.70 182.62
</TABLE>

ACME METALS(1) RUSSELL 2000 PEER GROUP

<TABLE>
<CAPTION>
DATE ACME METALS RUSSELL 2000 PEER GROUP
---- ----------- ------------ ----------
<S> <C> <C> <C>
December 1992............................... $100.00 $100.00 $100.00
December 1993............................... $135.85 $118.89 $194.77
December 1994............................... $136.32 $116.72 $200.99
December 1995............................... $107.55 $149.92 $189.55
December 1996............................... $146.23 $174.65 $201.83
December 1997............................... $ 74.53 $213.70 $182.62
</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.

19
<PAGE> 22

* Assumes $100 invested on December 31, 1992 in Common Stock, the Russell 2000
Index, and the 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 1997 consists of the companies in the Value
Line Investment Survey -- Steel Group (integrated), and includes AK Steel
Holdings, Bethlehem Steel Corp., British Steel, Dofasco, Inc., Inland Steel
Industries, Inc., LTV Corp. and USX-U.S. Steel Group. 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; from 1992 through 1996 WHX Corp. (now known as Weirton Steel)
was included in the Value Line Peer Group and AK Steel Holdings was not so
included.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

This report is submitted by the Compensation Committee of the Board of
Directors to provide the shareholders with an understanding of the Company's
executive compensation program.

THE COMMITTEE

The Committee is composed of six independent non-employee members of the
Board of Directors 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 28, 1997. 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 contained in the annual business plan 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 individual 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.

20
<PAGE> 23

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
is seventy-five percent of his base salary for the year in question. In 1997,
the corporate performance criteria was divided between return on equity and
return on investment criteria, subject to achievement of a subsidiary's and/or
the Company's 1997 Profit Plan objectives for return on equity/return on
investment to earn the minimum EIC payment. 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.

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
and ratified by the Board of Directors. 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, commencing with
grants made in 1997 vest in equal parts over a four-year period, 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 in 1997, the Committee
took into account the Company's financial performance as compared to other
similarly situated companies, his individual contributions and 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 $405,000 for
fiscal 1997.

21
<PAGE> 24

In 1997, the Chief Executive Officer was granted options to purchase 24,000
shares of Common Stock at $15.0625 per share. He was also granted 700 stock
awards during 1997 at a grant price of $18.125 per share; these stock awards had
a one time earn-out six months after the date of grant as did the stock awards
for the Company's and its subsidiaries' other key officers.

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 as
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, John T. Lane, Allan L. Rayfield, William P. Sovey, L.
Frederick Sutherland and William R. Wilson.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In fiscal year 1997, the Company made purchases from ARAMARK Corporation
("ARAMARK") in the amount of $187,010 for food services; Messrs. Jordan and
MacDonald are directors and Mr. Sutherland is an executive officer of ARAMARK.
The Company paid $82,811 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.

22
<PAGE> 25

RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 2)

The Board of Directors, acting upon the recommendation of its Audit Review
Committee, on October 20, 1997 appointed Price Waterhouse LLP as independent
accountants for the Company for the fiscal year ending December 27, 1998.

The appointment of Price Waterhouse LLP as independent accountants for the
Company for the fiscal year 1998 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. 2.

STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING

In order to be considered for inclusion in the Company's Proxy Statement
and form of proxy for the 1999 Annual Meeting of Shareholders, any shareholder
proposal intended to be presented at that meeting must be received by the
Company at the address shown on the first page of this Proxy Statement on or
before November 25, 1998.

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 25, 1998

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.

23
<PAGE> 26

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 Regal Knickerbocker Hotel is located at 163 East Walton Place, Chicago,
Illinois 60611. The telephone number of the Hotel is (312) 751-8100. The meeting
will be held in the East Tower on the 14th Floor of the Hotel.

24
<PAGE> 27
ACME METALS INCORPORATED
13500 SOUTH PERRY AVENUE
RIVERDALE, ILLINOIS 60827-1182

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned acknowledges receipt of the accompanying Notice of Meeting and
1998 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 Regal Knickerbocker Hotel, 163 East Walton
Place, Chicago, Illinois 60611 on Thursday, April 23, 1998, 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 III Directors ________________________________________
Reynold C. MacDonald
Brian W. H. Marsden ________________________________________
William P. Sovey
________________________________________

(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> 28

/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 Proposal 2.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF
DIRECTORS AND FOR PROPOSAL 2.

<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C>
1. Election of Directors / / / /

For, except vote withheld from the following
nominee(s):
- ---------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>

2. Approval of independent / / / / / /
accountants

3. In the discretion of the Proxies
named herein, upon such other
matters as may properly come
before the meeting.
</TABLE>

Change of address/

I plan to attend the Annual Meeting of Shareholders.

comments on reverse

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

The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.

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

- --------------------------------------------------------------------------
Signature(s) Date

FOLD AND DETACH HERE