<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
- --------------------------------------------------------------------------------
(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]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF ACME METALS INCORPORATED:
Notice is hereby given that the 1999 Annual Meeting of Shareholders of Acme
Metals Incorporated, a Delaware corporation (the "Company"), will be held at the
Wyndham Toledo Hotel, Two SeaGate/Summit Street, Toledo, Ohio 43604 on Thursday,
April 22, 1999, at 10:00 a.m., Eastern Daylight Saving Time, for the purpose of
considering and voting on:
1. the election of three directors to serve for a three-year term and
one director to serve for a two-year term;
2. the ratification of the appointment of PricewaterhouseCoopers LLP as
independent accountants for the Company for the fiscal year 1999; and
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 8, 1999 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,
/s/ Edward P. Weber, Jr.
------------------------
Edward P. Weber, Jr.
Secretary
Riverdale, Illinois
March 17, 1999
IMPORTANT -- YOUR PROXY IS ENCLOSED IN
THE ENVELOPE CONTAINING THIS MATERIAL
13500 SOUTH PERRY AVENUE, RIVERDALE, ILLINOIS 60827-1182; PHONE (708) 849-2500
<PAGE> 3
ACME METALS INCORPORATED
13500 SOUTH PERRY AVENUE, RIVERDALE, ILLINOIS 60827-1182
- --------------------------------------------------------------------------------
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 22, 1999 (the "Annual
Meeting") for the purposes set forth in the accompanying Notice of Meeting.
The cost of solicitation of proxies will be paid 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., 445 Park 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 Report
on Form 10-K for the fiscal year ended December 27, 1998 are being mailed on or
about March 22, 1999 to each shareholder of the Company at the holder's address
of record.
CHAPTER 11 FILING
On September 28, 1998, the Company and its principal direct and indirect
subsidiaries filed separate voluntary petitions for protection and
reorganization ("Reorganization") under Chapter 11 of Title 11 of the United
States Code in the United States Bankruptcy Court (the "Bankruptcy Court") for
the District of Delaware (the "Chapter 11 Filing"). These cases are being
jointly administered under Case Number 98-2179 pursuant to Rule 1015 (b) of the
Federal Rules of Bankruptcy Procedure. Bankruptcy petitions were filed in order
to give the Company an opportunity to reorganize its businesses while working to
restructure its indebtedness. The Company is in possession of its properties and
assets and continues to operate with its existing directors and officers as a
debtor-in-possession subject to the supervision of the Bankruptcy Court.
VOTING AT THE MEETING
The Board of Directors has fixed the close of business on March 8, 1999 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 11,664,571 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 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 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.
<PAGE> 4
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
PricewaterhouseCoopers 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 Report on Form 10-K for the fiscal year ended December 27,
1998 is being mailed to shareholders on or before the date of mailing of this
Proxy Statement. The Report on Form 10-K contains financial and other
information about the Company, but the Report on 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 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.
Shareholders may only vote their shares for the number of nominees named in this
Proxy Statement.
There are currently eleven directors: four Class I directors whose terms
expire in 1999 (Messrs. Lane, Rayfield, Sutherland and Wilson); four Class II
directors whose terms expire in 2000 (Messrs. Bennett, Davis, Laidlaw and
LePage) and three Class III directors whose terms expire in 2001 (Messrs.
MacDonald, Marsden and Sovey). The Board of Directors has previously 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 2002, four
Class II directors with terms expiring in 2000, and four Class III directors
with terms expiring in 2001.
The three persons listed below as nominees to be elected as Class I
directors and the one individual listed below as a nominee to be elected as a
Class III director will serve for the terms 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.
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.
2
<PAGE> 5
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.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS FOR A TERM EXPIRING IN 2002
[PHOTO] JOHN T. LANE
Age: 56
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.
[PHOTO] ALLAN L. RAYFIELD
Age: 63
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.
[PHOTO] L. FREDERICK SUTHERLAND
Age: 47
Director since January 1995
Member: Compensation, Finance (Chairman)
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.
3
<PAGE> 6
NOMINEE FOR ELECTION AS A CLASS III DIRECTOR FOR A TERM EXPIRING IN 2001
[PHOTO] WILLIAM R. WILSON
Age: 71
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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE (3)
NOMINEES AS CLASS I DIRECTORS OF THE COMPANY AND FOR THE ELECTION OF THE ONE (1)
NOMINEE AS A CLASS III DIRECTOR OF THE COMPANY WHICH IS PRESENTED AS PROPOSAL
NO. 1.
CLASS II DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 2000
[PHOTO] STEPHEN D. BENNETT
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.
4
<PAGE> 7
CLASS II DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 2000 - CONTINUED
[PHOTO] BUDDY W. DAVIS
Age: 69
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.
[PHOTO] ANDREW R. LAIDLAW
Age: 52
Director since May 1987
Member: Audit Review (Chairman), Executive
and Nominating Committees
Chairman of the Executive Committee or
Partner at the firm of Seyfarth, Shaw,
Fairweather & Geraldson (law firm) since
1978.
[PHOTO] FRANK A. LEPAGE
Age: 71
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.
CLASS III DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 2001
[PHOTO] REYNOLD C. MACDONALD
Age: 80
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 Kaiser
Ventures Inc.
5
<PAGE> 8
CLASS III DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 2001 - CONTINUED
[PHOTO] BRIAN W. H. MARSDEN
Age: 67
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.
[PHOTO] WILLIAM P. SOVEY
Age: 65
Director since June 1991
Member: Compensation, Finance, 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 Newell Co. and Teco Energy,
Inc.
(Rest of page intentionally left blank.)
6
<PAGE> 9
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 27, 1998 there were twelve
Board of Directors' meetings, two Audit Review Committee meetings, four
Compensation Committee meetings, four Finance Committee meetings and one
Nominating Committee meeting. The Executive Committee did not meet during 1998.
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 in their biographical descriptions 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 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 1998, directors who were not also employees of the Company
were entitled to 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. Any payments for
fees for Board of Directors' and Committee Meetings and quarterly payments of
the annual retainer which remained uncollected by directors on September 28,
1998, the date of the Chapter 11 Filing, are pre-petition obligations of the
Company which the Company is prohibited from paying.
7
<PAGE> 10
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 was renewed for an additional one year period, and is
currently in effect 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 or accrued for such
perquisites amounted to approximately $32,832 in fiscal 1998.
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 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. Under the terms of the
Directors Retirement Plan, directors who retired prior to April 24, 1997 are
entitled to receive 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
is entitled to 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. Payments under the Directors Retirement Plan, and those payable
following its termination pursuant to the two options described above, have been
suspended since the Chapter 11 Filing. The status of the Directors Retirement
Plan and future payments from it are uncertain as a result of the Chapter 11
Filing.
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
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, Laidlaw, Lane, LePage, MacDonald, Marsden, Rayfield,
Sovey, Sutherland and Wilson were each granted 2,000 options at an exercise
price of $9.00 on April 23, 1998.
8
<PAGE> 11
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
As of March 8, 1999, the following entity was known to the Company to be
the beneficial owner 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................ 1,276,800(3) 10.9%
Suite 805
150 Bloor Street West
Toronto, Ontario M5S 3B5
</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 8, 1999.
(3) The number of shares of Common Stock beneficially owned was determined
through correspondence between a representative of the Company and a
representative of Mackenzie Financial Corporation ("MacKenzie") in March
1999, in which the representative of Mackenzie stated that "various accounts
managed by Mackenzie in the aggregate own 1,276,800 shares of Common Stock
representing approximately 10.9% 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."
9
<PAGE> 12
OTHER PRINCIPAL HOLDER OF VOTING SECURITIES
On March 8, 1999, Vanguard Fiduciary Trust Company, Trustee for the
Company's Salaried Employees' Retirement Savings Plan and the Alpha Tube
Corporation Employees' 401(k) Retirement Plan, held 779,944 shares, or 6.7%, 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 8, 1999 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>
Stephen D. Bennett ............................ 105,037(3) *
Buddy W. Davis ................................ 700 *
Robert W. Dyke ................................ 33,890(4) *
James N. Howell ............................... 7,756(5) *
Andrew R. Laidlaw ............................. 12,490 *
John T. Lane .................................. 1,000 *
Frank A. LePage ............................... 4,990 *
Reynold C. MacDonald .......................... 55,000 *
Brian W. H. Marsden ........................... 210,839(6) 1.8%
Allan L. Rayfield ............................. 2,000 *
William P. Sovey .............................. 1,490 *
L. Frederick Sutherland ....................... 2,000 *
Edward P. Weber, Jr ........................... 55,994(7) *
Jerry F. Williams ............................. 79,035(8) *
William R. Wilson ............................. 26,990 *
All directors and executive officers as a
group, 18 persons............................ 653,598(3)(4)(5)(6)(7)(8)(9) 5.6%
</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 79,400 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 restrictions on sale, transfer or other
disposition, and 3,532 shares held by the trustee of the Company's Salaried
Employees' Stock Ownership Plan ("SERSP") which are attributable to Mr.
Bennett's account.
10
<PAGE> 13
(4) Includes 27,350 shares which are not now owned but could be acquired by
exercise of vested stock options, 600 shares which are subject to
conditions of forfeiture and restrictions on sales, transfer or other
disposition, and 5,621 shares held by the trustee of the SERSP which are
attributable to Mr. Dyke's account.
(5) Includes 1,250 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 restriction on sale, transfer or other
disposition, and 256 shares held by the trustee of the SERSP which are
attributable to Mr. Howell's account.
(6) Includes 121,150 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.
(7) Includes 37,650 shares which are not now owned but could be acquired by
exercise of vested stock options, 1,500 shares which are subject to
conditions of forfeiture and restrictions on sale, transfer or other
disposition, 50 shares held by family members, and 3,762 shares held by the
trustee of the SERSP which are attributable to Mr. Weber's account.
(8) Includes 43,800 shares which are not now owned but could be acquired by
exercise of vested stock options, 1,500 shares which are subject to
conditions of forfeiture and restriction on sale, transfer or other
disposition, and 17,236 shares held by the trustee of the SERSP which are
attributable to Mr. Williams' account.
(9) Includes 36,100 shares which are not now owned but could be acquired by
exercise of vested stock options and a total of 12,540 shares held by the
trustee of the SERSP which are attributable to the accounts of three
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"). 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 1998 with three exceptions: Mr. Marsden was one month late filing
a Form reporting the acquisition of shares of Company Common Stock; Messrs. Dyke
and Shope were one month and three months late, respectively, filing Forms
reporting the disposition of shares of Company Common Stock.
11
<PAGE> 14
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 during 1998 for services in all capacities in
the fiscal years 1996, 1997 and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
----------------------------------------- ------------------------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($) ($) (2) (#) ($)(3)
--------------------------- ---- ------- ------- ------------ -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen D. Bennett ....................... 1998 445,000 0 (4) 0 20,000 27,661
President and Chief 1997 405,000 133,875(5) (4) 12,688 24,000 26,180
Executive Officer 1996 345,800 45,500 (4) 84,375 24,000 43,043
Robert W. Dyke(6) 1998 204,000 57,108 (4) 0 8,000 17,258
Senior Vice President-Fabricating 1997 177,340 69,828 (4) 1,813 7,000 12,311
1996 155,000 35,895 19,994(6) 16,875 6,000 20,998
James N. Howell(7) ....................... 1998 210,000 0 58,205(7) 0 8,000 14,438
Senior Vice President - 1997 70,000 43,688(7) 16,131(7) 19,625 15,000 0
Steel Making 1996 -- -- -- -- -- --
Edward P. Weber, Jr....................... 1998 180,000 30,812 (4) 0 5,000 14,162
Vice President, 1997 170,000 66,938(5) 18,714(8) 1,813 7,000 12,412
General Counsel 1996 158,500 16,100 19,462(8) 42,188 7,000 19,206
and Secretary
Jerry F. Williams ........................ 1998 207,500 36,804 (4) 0 5,000 16,366
Vice President- 1997 203,000 66,938(5) (4) 1,813 7,000 14,814
Finance and 1996 191,000 19,700 23,173(9) 42,188 7,000 23,177
Administration and Chief
Financial Officer
</TABLE>
- -----------------
(1) Except as otherwise footnoted, amounts in this column are for cash
bonuses paid pursuant to the Company's 1994 Executive Incentive
Compensation Plan, as amended and restated.
(2) The total number and value of the aggregate restricted shares held at
December 27, 1998, based on $0.315, the average of the high and low prices
of the Common Stock as of that date, were as follows: Mr. Bennett, 9,500
shares, value $2,992.50; Mr. Dyke, 600 shares, value $189.00; Mr. Howell,
3,100 shares, value $ 976.50; Mr. Weber, 5,000 shares, value $1,575.00; and
Mr. Williams, 5,000 shares, value $1,575.00. Dividends, if any are
declared, are payable on restricted shares.
The vesting schedule for stock awards granted on September 1, 1997 is
20% of the shares granted on March 2, 1998, 1999, 2000 and 2001. A total of
2,000 shares were granted to Mr. Howell in five 400 share installments.
Messrs. Bennett, Dyke, Weber and Williams were not granted stock awards on
that date.
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. Dyke 100 shares; Mr. Howell, none, Mr. Weber, 100
shares; and Mr. Williams, 100 shares.
12
<PAGE> 15
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. Dyke 1,000 shares granted in installments of 200 each; Mr.
Howell, none; Mr. Weber 2,500 shares granted in installments of 500 each;
and Mr. Williams 2,500 shares granted in installments of 500 each.
(3) 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) until the date of the Chapter 11
Filing, where the annual compensation of the individual exceeds the IRS
statutory limit for 1998 of $160,000, to the Company's Deferred
Compensation Plan ("DCP"), based on amounts earned by such executive
officers during 1998. 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. The ESOP was merged into the SERSP
effective March 1, 1999 and no further contributions will be made to the
ESOP by the Company.
(4) Except as indicated, the dollar value of perquisites and other
personal benefits for such executive officers was less than the
established reporting thresholds.
(5) This amount represents the dollar value of stock awards granted to
this executive officer on January 28, 1998 at $9.5625, the average of the
high and low prices of the Company's Common Stock on the New York Stock
Exchange on that date, as reported in The Wall Street Journal, in lieu of a
cash bonus for 1997. The vesting schedule was 50% of the shares granted on
the date of grant and 50% of the shares on January 28, 1999.
(6) Mr. Dyke has been President of Acme Packaging Corporation, a
subsidiary of the Company, 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 1996 and a portion of his compensation and benefits reported
for 1997 were paid by Acme Packaging Corporation. 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.
(7) Mr. Howell became an executive officer of the Company on February 1,
1998. From September 1, 1997 through January 1998 he was an officer of Acme
Steel Company, a subsidiary of the Company. His compensation and benefits
reported for 1997 and a portion of his compensation and benefits reported
for 1998 were paid by Acme Steel Company. The amount reported for Mr.
Howell under Bonus in 1997 includes a $15,000 sign-on bonus paid to him in
September 1997 when he joined the Company and the dollar value of stock
awards granted to him on January 28, 1998 at $9.5625, the average of the
high and low prices of the Company's Common Stock on the New York Stock
Exchange on that date, as reported in The Wall Street Journal, in lieu of a
cash bonus for 1997. The vesting schedule was 50% of the shares granted on
the date of grant and 50% of the shares on January 28, 1999. The amount
reported for Mr. Howell under Other Annual Compensation in 1997 includes
$11,268 for relocation expenses and $4,863 for automobile expenses, each of
which is in excess of 25% of the total perquisites and other personal
benefits reported for Mr. Howell in 1997; the amount in 1998 includes
$41,055 for relocation expenses and $17,151 for automobile expenses, each
of which is in excess of 25% of the total perquisites and other personal
benefits reported for Mr. Howell in 1998.
(8) 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.
(9) The amount reported for Mr. Williams consists of $15,080 for
automobile expenses and $8,093 for country club fees and dues, each of
which is in excess of 25% of the total perquisites and other personal
benefits reported for Mr. Williams in 1996.
13
<PAGE> 16
STOCK OPTION GRANTS IN 1998
The following table sets forth certain information relating to options to
purchase Common Stock granted in fiscal year 1998 to the five individuals named
in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN 1998
---------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE OR APPRECIATION
OPTIONS EMPLOYEES IN BASE PRICE FOR OPTION TERM
GRANTED(2) FISCAL PER SHARE(4) EXPIRATION ---------------------------
NAME (#) YEAR(3) ($/SH) DATE 5% ($) 10% ($)
---- ---------- ------------- ----------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen D. Bennett ........ 20,000 25.8% $ 8.00 5/28/08 100,623 254,999
Robert W. Dyke ............ 8,000 10.3% $ 8.00 5/28/08 40,249 102,000
James N. Howell ........... 8,000 10.3% $ 8.00 5/28/08 40,249 102,000
Edward P. Weber, Jr ....... 5,000 6.5% $ 8.00 5/28/08 25,156 63,750
Jerry F. Williams ......... 5,000 6.5% $ 8.00 5/28/08 25,156 63,750
</TABLE>
--------------------
(1) Stock Appreciation Rights were not granted during fiscal 1998.
(2) All options to Messrs. Bennett, Dyke, Howell, Weber and Williams were
granted on May 28, 1998. One fourth of the options become exercisable on
each of May 28, 1999, 2000, 2001 and 2002 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.
(3) Based on 77,500 options granted to all employees during fiscal
1998. In addition, 20,000 options were granted to non-employee directors on
April 23, 1998.
(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 date of grant.
(5) These potential realizable values are based on assumed rates of
appreciation required by applicable regulations of the Securities and
Exchange Commission and are not intended to forecast future appreciation of
the Common Stock.
14
<PAGE> 17
AGGREGATED OPTION EXERCISES IN 1998 AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning the exercise
of options in 1998 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 27, 1998.
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 12/27/98 AT 12/27/98(2)
ACQUIRED ON VALUE ---------------------------- ---------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- ---------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen D. Bennett ........... 0 N/A 79,400 38,000 0 0
Robert W. Dyke ............... 0 N/A 27,350 13,250 0 0
James N. Howell .............. 0 N/A 1,250 21,750 0 0
Edward P. Weber, Jr .......... 0 N/A 37,650 10,250 0 0
Jerry F. Williams ............ 0 N/A 43,800 10,250 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, $0.3125, minus the exercise price. No options
were in-the-money at fiscal year end.
DEFINED BENEFIT PLAN
<TABLE>
<CAPTION>
AVERAGE ANNUAL EARNINGS ESTIMATED ANNUAL PENSION PAYABLE
FOR THE 5 HIGHEST ($)
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>
$ 100,000 12,634 20,509 28,384
$ 150,000 24,447 36,259 48,072
$ 200,000 36,259 52,009 67,759
$ 250,000 48,072 67,759 87,447
$ 300,000 59,884 83,509 107,134
$ 400,000 83,509 115,009 146,509
$ 500,000 107,234 146,509 185,884
$ 600,000 130,759 178,009 225,259
$ 700,000 154,384 209,509 264,634
$ 800,000 178,009 241,009 304,009
$ 900,000 201,634 272,509 343,384
</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. Payments under the Supplemental Benefits Plan have been suspended
since September 28, 1998, the date on which the Company filed for protection
under Chapter 11 of the United States Bankruptcy Code (the "Chapter 11 Filing").
15
<PAGE> 18
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 entitled Mr. Marsden to a supplemental pension benefit equivalent to ten
years of additional credited service under the Consolidated Plan. Corporate
funds, rather than pension trust assets, have been 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 were provided under the
Supplemental Benefits Plan until the date of the Chapter 11 Filing. Mr. Williams
has approximately 18 years of credited service. Any pension benefits to Mr.
Williams in excess of the maximum amounts permitted under the Code would be
provided under the Supplemental Benefits Plan unless he experiences a "Discharge
for Cause" (as defined in the Supplemental Benefits Plan). Messrs. Bennett,
Dyke, Howell and Weber joined the Company after December 31, 1981 and therefore
do not participate in the Consolidated Plan. The status of the Supplemental
Benefits Plan and future payments from it are uncertain as a result of the
Chapter 11 Filing.
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 $10,468.00 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.
CHANGE IN CONTROL ARRANGEMENTS
The Company had a Key Executive Severance Pay Plan (the "Original Severance
Plan") in place from January 22, 1987 until February 23, 1999. The Original
Severance Plan covered designated executive officers of the Company and its
subsidiaries and provided certain benefits if a designated officer's employment
with the Company was terminated within three years after a "Change in Control"
of the Company (as defined in the Original Severance Plan). The Original
Severance Plan was terminated by order of the Bankruptcy Court on February 23,
1999 and replaced in its entirety by a section of the severance component of the
Company's Key Employee Retention Plan, which was approved by the Bankruptcy
Court on February 23, 1999 (the "New Plan").
The Change in Control section of the severance component of the New Plan
(the "Change in Control Plan") will provide lump sum severance payments to
designated participants whose employment with the Company is terminated
involuntarily and without "Cause" (as defined in the New Plan) as a consequence
of the Chapter 11 Reorganization process or as a result of a Change in Control
(as defined in the New Plan). In addition, following a Change in Control a
designated participant may elect to terminate his or her employment without loss
of severance
16
<PAGE> 19
benefits in certain specified contingencies, including termination of the
participant's position as an officer or director; a significant adverse change
in the participant's position, duties or compensation; a good faith
determination by the participant that as a result of the Change in Control he or
she is unable to carry out the authorities, powers, functions or duties attached
to his or her position; or excessive travel requirements or the substantial
relocation of the participant's place of work (such events being deemed to be
"Constructive Termination"). Any amounts paid to participants pursuant to the
retention payment component of the New Plan will be deducted from the amounts
payable pursuant to the Change in Control Plan.
Under the New Plan, a Change in Control is deemed to have occurred if at any
time from February 23, 1999 until one year following the date upon which the
Bankruptcy Court approves an order confirming a Plan of Reorganization (as
defined in the New Plan), (i) there occurs a consolidation, dissolution,
liquidation, merger, sale, lease, exchange or other transfer of all or a
significant portion of the Company's business and/or assets, or there occurs a
Reorganization of the Company in which the Company is not the surviving entity
or pursuant to which debt is exchanged for voting securities of the Company
resulting in the holders of the Company's voting securities immediately prior to
the Reorganization holding less than 75% of the outstanding voting securities of
the surviving or acquiring entity; (ii) the Company sells, leases, exchanges or
transfers all or substantially all of its business and/or assets to another
entity less than 75% of whose outstanding voting securities are owned by the
holders of the Company's voting securities immediately prior to such transfer;
(iii) the Company's shareholders approve a plan for the liquidation or
dissolution of the Company; (iv) a filing is made with the Securities and
Exchange Commission disclosing the beneficial ownership by any person or group
of 51% or more of the voting power of the Company; (v) 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 of the Company
without the approval of two-thirds of the directors still in office who were
directors at the start of such two-year period; (vi) prior to a confirmation of
a Plan of Reorganization, an event or events, occur which the Board of
Directors, with the consent of the Official Committee of Unsecured Creditors of
the Company or the approval of the Bankruptcy Court, determines to be a Change
in Control; (vii) after the confirmation of a Plan of Reorganization, an event
or events occur which the Board of Directors determines to be a Change in
Control.
Participants covered by the New Plan are divided into three groups. All of
the individuals named in the Summary Compensation Table are in Group I. In the
event of the involuntary termination or Constructive Termination of their
employment pursuant to the terms of a Change in Control, they will be entitled
to receive a sum equal to one and one-half times the sum of (i) their base
salary as of the date of their termination, plus (ii) an amount equal to the
average of the compensation paid to them pursuant to the Company's Executive
Incentive Compensation Plan or the New Plan, whichever is applicable, for the
two years prior to termination. In addition, such individuals will be paid an
amount to cover premiums for hospitalization, medical and accident insurance
premiums for a period of eighteen months. For a period of eighteen months
following termination, such individuals will be entitled to receive all benefits
to which they are presently entitled as participants under the Company's
Salaried Employees' Retirement Savings Plan, the Consolidated Plan or other
severance compensation, deferred compensation, disability and/or retirement
plans.
The net amount payable to any participant under the Change in Control Plan,
taking into account payments under Other Plans, (as defined in the New 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.
To protect both the Company and any participant, if the severance
compensation under the Change in Control 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.
17
<PAGE> 20
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***
[GRAPH]
<TABLE>
<CAPTION>
ACME METALS (1) RUSSELL 2000 PEER GROUP
DATE ACME METALS RUSSELL 2000 PEER GROUP
---- ----------- ------------ ----------
<S> <C> <C> <C>
December 1993....................... $100.00 $100.00 $100.00
December 1994....................... $100.34 $ 98.18 $103.15
December 1995....................... $ 79.17 $126.10 $ 97.06
December 1996....................... $107.64 $146.90 $103.68
December 1997....................... $ 54.86 $179.75 $ 93.14
December 1998....................... $ 1.67 $175.18 $ 78.92
</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, 1993 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 Integrated Steel Peer Group for 1998 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., USX-U.S. Steel
Group, in addition to Acme Metals Incorporated. 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.
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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, each of whom meets 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 four
meetings during the fiscal year ended December 27, 1998. No Committee members
have interlocking relationships as defined by the Securities and Exchange
Commission.
COMPENSATION POLICIES AND OBJECTIVES
The Company's overall 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 maximizing enterprise value.
As a result of the Chapter 11 Filings by the Company and its principal
subsidiaries on September 28, 1998, the Committee has recognized the need to
adopt, and the Bankruptcy Court has approved, a Key Employee Retention Plan,
("Retention Plan") which is designed to encourage key employees to remain with
the Company throughout the Chapter 11 Reorganization proceedings. The continued
employment of these individuals is critical to the Company's ability to
successfully achieve the Reorganization of the Company.
To achieve these goals, the Committee has implemented the following
compensation program during the Reorganization period pursuant to the Retention
Plan.
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 Component ("EIC") -- Within the first
ninety days of each year, the Committee adopts, subject to ratification by the
Board of Directors, the performance based EIC component, objectives for that
year, designates the participants to one of five groups having varying ranges of
EIC opportunities, and determines how EIC payments will be calculated. The
maximum EIC opportunity for any individual, if maximum targets were to be met or
exceeded, is seventy-five percent of his base salary for the year in question.
In 1998, 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 1998 Profit Plan objectives for return on equity/return on
investment to earn the minimum EIC payment. EIC 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 and Bankruptcy Court approval, reserves the right to amend, suspend
or terminate, in whole or
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in part, any or all provisions of the EIC component of the Retention Plan,
provided the same does not result in an increase in the awards made to the Chief
Executive Officer or certain other executive officers.
Retention Payment Component ("Retention Payment") -- This part of the
Retention Plan would provide a lump sum payment, equal to a percentage of annual
salary, to an employee who remains with the Company throughout and beyond the
Reorganization process. The Retention Payment component has four levels of
participation based upon an individual's responsibilities within the Company.
The applicable Retention Payment would accrue monthly during each year, or
partial year, until a Plan of Reorganization is confirmed by the Court. At the
time the Plan of Reorganization is confirmed, one-half of the accrued Retention
Payment would be paid to each respective employee; the balance (one-half) would
be paid to such employee one year following the Court's confirmation of the Plan
of Reorganization, in each case only if the employee remains with the Company
through that date.
The maximum Retention Payment opportunity for any individual is thirty
percent (30%) of his base salary of any year in question. The entire accrued
Retention Payment for a participant will be paid in the event a participant's
business unit is sold or in the event the Chapter 11 Reorganization proceedings
are converted to Chapter 11 or Chapter 7 liquidation proceedings.
Severance Payment Component ("Severance Payment") -- In those
circumstances which dictate certain employees be terminated involuntarily as a
consequence of the Reorganization process or in connection with a Change in
Control of the Company, these employees would receive a lump sum Severance
Payment to provide adequate financial security to the employees and their
families while they secure new employment. The Severance Payment component has
three levels of payment which are correlated with the amount of time it would
reasonably take a participant to locate new employment comparable to his or her
prior position with the Company. The Severance Payment component will remain in
effect for one year following the confirmation of a Plan of Reorganization.
The maximum Severance Payment authorized for any individual pursuant to the
Severance Payment component would be an amount equal to one and one-half times
the sum of (i) an individual's base salary as of the date of involuntary
termination plus (ii) an amount equal to the average annual EIC paid to the
individual for the two years prior to involuntary termination. Severance
Payments would also include a separate amount to cover premiums for continuation
of medical insurance for a maximum of eighteen months. In addition, individuals
would be entitled to receive all benefits to which they are presently entitled
as participants under the Company's Salaried Employee's Retirement Savings Plan,
the Consolidated Plan or other severance compensation, deferred compensation,
disability and/or retirement plans.
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 1998, 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
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 $445,000 for
fiscal 1998.
In 1998 the Chief Executive Officer was granted options to purchase 20,000
shares of Common Stock at $8.00 per share. He was also granted 14,000 stock
awards during 1998 at a grant price of $9.5625 per share; these stock awards
earned out in two installments, one-half on the date of grant and one-half on
the first anniversary of the date of grant, as did the stock awards granted to
the Company's other key officers in 1998.
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<PAGE> 23
LIMITATIONS ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
In 1993, the Internal Revenue Code (the "Code") was amended (I.R.C.
Section 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. Section 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
in similar circumstances and with which the Company competes. Further, the Key
Employee Retention Plan is directly linked to both the annual financial and
operational results of the Company, and the Company's ability to retain key
personnel throughout the Chapter 11 Reorganization process in order to enable
the Company to complete the Chapter 11 Reorganization process in the shortest
feasible time.
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 1998, the Company made payments to ARAMARK Corporation
("ARAMARK") in the amount of $86,769 for food and uniform services; Mr.
MacDonald was until February, 1999 a director and Mr. Sutherland is an executive
officer of ARAMARK. The Company paid $56,669 for professional services 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> 24
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 2)
The Board of Directors, acting upon the recommendation of its Audit Review
Committee, on November 19, 1998 appointed PricewaterhouseCoopers LLP as
independent accountants for the Company for the fiscal year ending December 26,
1999.
The appointment of PricewaterhouseCoopers LLP as independent accountants
for the Company for the fiscal year 1999 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 PricewaterhouseCoopers 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 PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS WHICH IS PRESENTED AS
PROPOSAL NO. 2.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
In order to be considered for inclusion in the Company's Proxy Statement
and form of proxy for the 2000 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 22, 1999.
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,
/s/ Edward P. Weber, Jr.
------------------------
Edward P. Weber, Jr.
Secretary
Dated: March 17, 1999
SHAREHOLDERS WITH QUESTIONS CONCERNING ACME METALS INCORPORATED AND ITS
OPERATIONS OR REQUESTING A COPY OF THE COMPANY'S REPORT ON 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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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 Wyndham Toledo Hotel is located at Two SeaGate/Summit Street,
Toledo Ohio 43604. The telephone number of the Hotel is (419) 241-1411.
The meeting will be held in Salon B located on the main level of the
Hotel.
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<PAGE> 26
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
1999 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 Wyndham Toledo Hotel, Two SeaGate/Summit Street,
Toledo, Ohio 43604 on Thursday, April 22, 1999, at 10:00 a.m. Eastern Daylight
Saving 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.
Election of Directors Comments:
(see reverse side) (such as change of address)
Nominees:
Class I Directors --------------------------------
John T. Lane
Allan L. Rayfield --------------------------------
L. Frederick Sutherland
--------------------------------
Class III Director
William R. Wilson --------------------------------
(If you have written in the
above space, please mark the
corresponding box on the reverse
side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF 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> 27
[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.
FOR WITHHELD
1. Election of Directors [ ] [ ]
For, except vote withheld from the following nominee(s):
- ---------------------------------------------
FOR AGAINST ABSTAIN
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.
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
