<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Huntco Inc.
-----------
(Name of Registrant as Specified In Its Charter)
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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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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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4) Date Filed:
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<PAGE> 2
HUNTCO INC.
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 12, 1996
To the Shareholders:
The Annual Meeting of Shareholders of Huntco Inc. (the "Company"),
a Missouri corporation, will be held at the St. Louis Marriott West,
located at 660 Maryville Centre Dr., St. Louis, Missouri 63141, on
Thursday, September 12, 1996, at 10:00 a.m., local time, for the
following purposes:
1. To elect two directors;
2. To consider and act upon a proposal to amend the Huntco Inc.
1993 Incentive Stock Plan (i) to increase the number of shares
of Class A Common Stock (the "Class A Shares") of the Company
authorized for issuance pursuant to awards which may be made
thereunder, from 750,000 to 900,000, and (ii) to limit the
maximum number of Class A Shares underlying stock options and
stock appreciation rights which may be awarded thereunder to any
participant in any one calendar year to a total of 60,000; and
3. To transact such other business as may properly come before the
meeting and all adjournments thereof.
The Board of Directors has fixed the close of business on July 15, 1996 as
the record date for the determination of the shareholders entitled to notice of,
and to vote at, the Annual Meeting and all adjournments thereof.
By order of the Board of Directors
ANTHONY J. VERKRUYSE
Vice President and Secretary
August 1, 1996
EVEN IF YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE MARK, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED RETURN
ENVELOPE, WHICH DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED STATES.
SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN
PERSON IF THEY DESIRE.
<PAGE> 3
HUNTCO INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited on behalf of the Board of Directors
of Huntco Inc. (the "Company") for use at the Annual Meeting of its
shareholders (the "Annual Meeting") to be held September 12, 1996 at
10:00 a.m. local time at the St. Louis Marriott West, located at 660
Maryville Centre Drive, St. Louis, Missouri 63141. If the proxy is
executed and returned to the Company, it nevertheless may be revoked at
any time before it is exercised either by written notice to the
Secretary of the Company or by attending the meeting and voting in
person. If no contrary instructions are indicated on the proxy, the
proxy will be voted FOR the election of the two nominees named herein as
directors and FOR the proposed amendment to the Huntco Inc. 1993
Incentive Stock Plan (the "1993 Plan") (i) to increase the number of
shares of Class A Common Stock, $.01 par value per share (the "Class A
Shares") authorized for issuance pursuant to awards which may be made
thereunder, from 750,000 to 900,000, and (ii) to limit the maximum
number of Class A Shares underlying options and stock appreciation
rights ("SARs") which may be awarded under the 1993 Plan to any
participant in any one calendar year to a total of 60,000 (the "1993
Plan Amendment"). If matters other than those mentioned herein properly
come before the Annual Meeting, the proxy will be voted by the persons
named therein in a manner which they consider to be in the best
interests of the Company.
The Company's principal executive offices are located at 14323 South
Outer Forty, Suite 600 N., Town & Country, Missouri 63017. This Proxy
Statement and the accompanying form of proxy are first being sent to
shareholders on or about August 1, 1996.
VOTING, VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
GENERAL
Only the holders of record of the Company's Class A Shares and of the
Company's Class B Common Stock, par value $.01 per share (the "Class B
Shares") (collectively the "Common Stock"), as of the close of business
on July 15, 1996, will be entitled to notice of, and to vote, either in
person or by proxy, at the Annual Meeting and all adjournments thereof.
At the close of business on July 15, 1996, 5,292,000 and 3,650,000 Class
A Shares and Class B Shares, respectively, were issued and outstanding.
Each Class A Share is entitled to one vote per share, and each Class B
Share is entitled to ten votes per share, on all matters to be submitted
to the vote of the shareholders. Therefore, the holders of Class A
Shares and the Class B Shares are entitled to 5,292,000 and 36,500,000
votes, respectively. The Board knows of no matters other than the
election of directors and the 1993 Plan Amendment to be presented for
consideration at the Annual Meeting. If any other matters properly come
before the Annual Meeting, the proxies solicited hereby will be voted on
such matters in accordance with the judgment of the persons voting such
proxies.
The Class A Shares and the Class B Shares will vote as a single class
with respect to Proposal 1, the election of directors, and Proposal 2,
the 1993 Plan Amendment. Huntco Acquisitions Holding, Inc.
("Acquisitions") and Huntco Farms, Inc. ("Farms"), the record holders
of all of the Class B Shares, have informed the Company that they
intend to vote for the Board's slate of director nominees and for
<PAGE> 4
the adoption of the 1993 Plan Amendment. A majority of the aggregate of
the outstanding Class A Shares and the Class B Shares which are present in
person or represented by proxy and entitled to vote will constitute a
quorum for the transaction of business at the Annual Meeting.
A brief description of abstentions and a vote to "withhold authority"
in the election of directors is necessary to describe the effect each
has on the proposals to be submitted for shareholder approval at the
Annual Meeting. The descriptions pertain to both the Class A Shares and
the Class B Shares. As a practical matter, however, the descriptions
are relevant to the Class A Shares only, because there is virtually no
circumstance under which either Acquisitions or Farms would withhold
authority from the proxies to vote for the Board of Directors' slate of
nominees or abstain from voting on the 1993 Plan Amendment.
Abstentions may be specified on the proposal to adopt the 1993 Plan
Amendment but not the election of directors. Shares represented by
proxies or ballots which are marked to "withhold authority" with respect
to the election of any one or more nominees for election as directors or
to abstain with respect to the vote on the 1993 Plan Amendment, will be
counted for purposes of determining the presence or absence of a quorum
for the transaction of business at the Annual Meeting.
The affirmative vote of a majority of the aggregate number of votes
represented by the Class A Shares and the Class B Shares which are
present in person or represented by proxy at the Annual Meeting is
required to elect directors. Because a director must receive a majority of the
votes cast to be elected (even if such director otherwise received a
plurality) proxies which are marked to "withhold authority" in the election of
directors have the same effect as a vote against such nominee or nominees.
The affirmative vote of a majority of the aggregate number of votes
represented by the Class A Shares and the Class B Shares which are
present in person or represented by proxy at the Annual Meeting is
required to adopt the 1993 Plan Amendment. The shares represented by an
abstention are outstanding, but because they are not voted for the
adoption of the 1993 Plan Amendment, an abstention has the practical
effect of a vote against the 1993 Plan Amendment.
HOLDINGS OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The table below indicates certain information as of July 15, 1996
regarding the beneficial ownership of the Class A Shares and the Class
B Shares by (i) each director of the Company, including the nominees for
election as directors, (ii) each executive officer named in the Summary
Compensation Table, including the Company's Chairman of the Board and
Chief Executive Officer, (iii) companies owned and controlled by the
Company's Chairman of the Board and Chief Executive Officer, and (iv)
all executive officers and directors of the Company as a group.
-2-
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER OF NUMBER PERCENT OF TOTAL<F1>
CLASS A OF CLASS B ---------------- PERCENT OF TOTAL
NAME SHARES SHARES CLASS A CLASS B VOTING POWER<F2>
---- ------ ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C>
B.D. Hunter<F3><F4> 15,000<F5> 3,650,000 <F6> 100.0% 87.3%
Huntco Acquisitions Holding, Inc.<F3><F4> - 3,145,000 - 86.2% 75.2%
Huntco Farms, Inc.<F3><F4> - 505,000 - 13.8% 12.1%
Robert J. Marischen<F4> 177,168<F7> - 3.3% - <F6>
Terry J. Heinz 169,764<F8> - 3.1% - <F6>
Donald E. Brandt 2,900<F9> - <F6> - <F6>
James J. Gavin, Jr. 23,000<F10> - <F6> - <F6>
Michael M. McCarthy 55,000<F11> - 1.0% - <F6>
All executive officers and 442,832<F13> 3,650,000 7.9% 100.0% 87.7%
directors as a group (6 persons)<F12>
<FN>
<F1> The percent of ownership of Class A Shares and Class B Shares has been
calculated in accordance with the rules promulgated by the Securities and
Exchange Commission (the "SEC"). The numerator is comprised of the
number of Class A Shares or Class B Shares, as appropriate, owned by the
individual or entity (and with respect to the Class A Shares, the number
of Class A Shares issuable upon exercise of stock options granted under
the 1993 Plan which are currently exercisable or which will become
exercisable within sixty days of July 15, 1996). The denominator is
comprised of the number of shares represented by all of the issued and
outstanding shares of that class (including, with respect to the Class
A Shares, the number of Class A Shares issuable upon exercise of stock
options granted under the 1993 Plan and which are immediately exercisable
(or will be exercisable within sixty days of July 15, 1996), awarded to
such individual, but excluding the number of Class A Shares issuable upon
exercise of options granted to any other individual).
<F2> The percent of total voting power has also been calculated in accordance
with the rules promulgated by the SEC. The numerator is comprised of the
number of votes appertaining to each share owned by the individual or
entity (plus the number of votes represented by Class A Shares issuable
upon exercise of stock options granted under the 1993 Plan which are
currently exercisable or which will become exercisable within sixty days
of July 15, 1996). The denominator is comprised of the number of votes
represented by all of the issued and outstanding shares of Common Stock
plus the number of votes represented by the Class A Shares issuable upon
exercise of stock options granted under the 1993 Plan and which are
immediately exercisable (or will be exercisable within sixty days of July
15, 1996) awarded to such individual, but excluding the votes represented
by Class A Shares issuable upon exercise of options granted to any other
individual.
<F3> Mr. B. D. Hunter, the Company's Chairman of the Board and Chief Executive
Officer, owns all of the outstanding preferred stock of Huntco
Enterprises, Inc. ("Huntco Enterprises"), which, in conjunction with the
shares of common stock over which he shares voting control as trustee of
various Trusts (as defined below), gives him substantially all of the
voting control of that entity. Huntco Enterprises is the ultimate parent
company of Farms and Acquisitions. Substantially all of the remaining
shares of Farms and Acquisitions are owned by other persons or trusts
with whom Mr. Hunter is affiliated. Therefore, Mr. Hunter has or shares
voting control with respect to substantially all of the Class B Shares
owned by Acquisitions and Farms. The business address of Mr. Hunter,
Farms and Acquisitions is 14323 S. Outer Forty, Suite 600 N., Town &
Country, Missouri 63017.
<F4> Mr. B. D. Hunter and Mr. Robert J. Marischen are co-trustees of certain
trusts created by Mr. Hunter for the benefit of his children (the
"Trusts"). Mr. Marischen and another individual are co-trustees of
certain trusts for the benefit of Mr. Hunter's grandchildren (the
"Grandchildren's Trusts"). The Trusts and the Grandchildren's Trusts own
all of the common stock of Huntco Enterprises. Under the terms of the
Trusts and the Grandchildren's Trusts, the co-trustees must approve the
voting and investment decisions with respect to shares held by the Trusts
and the Grandchildren's Trusts. Accordingly, Messrs. Hunter and
Marischen share voting and investment power over the 3,650,000 Class B
Shares owned by Farms and Acquisitions. Additionally, Mr. Hunter owns
all of the outstanding preferred stock of Huntco Enterprises which, in
-3-
<PAGE> 6
conjunction with the shares of common stock over which he shares voting
control as trustee of the Trusts, gives him substantially all of the
voting control of that entity. Mr. Marischen disclaims beneficial
ownership of the Class B Shares owned by Farms and Acquisitions, and
these Class B Shares are not reflected in the table herein as being
beneficially owned by Mr. Marischen.
<F5> Sole voting and investment power over 15,000 Class A Shares issuable upon
exercise of an option granted to Mr. Hunter under the 1993 Plan. Does
not include 45,000 Class A Shares underlying stock options granted under
the 1993 Plan which are not exercisable.
<F6> Less than 1%.
<F7> Sole voting and investment power over 176,757 Class A Shares which
includes 165,000 Class A Shares issuable upon exercise of options granted
to Mr. Marischen under the 1993 Plan. Does not include 45,000 Class A
Shares underlying stock options granted under the 1993 Plan which are not
exercisable. Shared voting and investment power over 411 Class A Shares
owned by Mr. Marischen's spouse. Mr. Marischen and two other Company
employees are co-trustees of a trust (the "401(k) Trust") established for
the purpose of holding and investing assets of the Huntco Inc. 401(k)
Retirement Savings Plan. The trustees make investment and voting
decisions with respect to the Class A Shares held by the 401(k) Trust.
Therefore, Mr. Marischen has shared voting and investment power over
24,071 Class A Shares owned by the 401(k) Trust. Mr. Marischen disclaims
beneficial ownership of the Class A Shares owned by the 401(k) Trust.
<F8> Sole voting and investment power over 169,764 Class A Shares which
includes 165,000 Class A Shares issuable upon exercise of options granted
to Mr. Heinz under the 1993 Plan. Does not include 45,000 Class A Shares
underlying stock options granted under the 1993 Plan which are not
exercisable.
<F9> Sole voting and investment power over 2,900 Class A Shares which includes
2,000 Class A Shares issuable upon exercise of an option granted to Mr.
Brandt under the 1993 Plan.
<F10>Sole voting and investment power over 23,000 Class A Shares which
includes 2,000 Class A Shares issuable upon exercise of an option
granted to Mr. Gavin under the 1993 Plan.
<F11>Sole voting and investment power over 9,000 Class A Shares which
includes 2,000 Class A Shares issuable upon exercise of an option
granted to Mr. McCarthy under the 1993 Plan. Mr. McCarthy disclaims
beneficial ownership of 46,000 Class A Shares owned by companies
affiliated with Mr. McCarthy.
<F12>Messrs. Hunter and Marischen have voting and investment control over all
of the Class B Shares owned by Acquisitions and Farms.
<F13>Includes 351,000 Class A Shares issuable upon exercise of options
granted to directors and executive officers under the 1993 Plan.
</TABLE>
The following table sets forth information as of July 15, 1996
regarding all persons known to be the beneficial owners of more than
five percent of the Company's Class A Shares who are not connected with
the Company otherwise than through ownership of the Class A Shares.
<TABLE>
<CAPTION>
Percent of
Number of Class A Shares
Name and Address Class A Shares Outstanding
- ---------------- -------------- -----------
<S> <C> <C>
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109 437,300<F1> 8.3%
The Crabbe Huson Special Fund, Inc.
121 SW Morrison, Suite 1400
Portland, Oregon 97204 509,600<F2> 9.6%
-4-
<PAGE> 7
<CAPTION>
Percent of
Number of Class A Shares
Name and Address Class A Shares Outstanding
- ---------------- -------------- -----------
<S> <C> <C>
The Crabbe Huson Group, Inc.
121 SW Morrison, Suite 1400
Portland, Oregon 97204 144,200<F3> 2.7%
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10020 409,300<F4> 7.7%
Weiss, Peck & Greer, L.L.C.
One New York Plaza
New York, NY 10004 496,350<F5> 9.4%
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258 565,000<F6> 10.7%
The Prudential Insurance Company of America
Prudential Plaza
Newark, New Jersey 07102-3777 400,200<F7> 7.6%
<FN>
<F1> The information in this footnote is provided pursuant to
Schedule 13G dated February 14, 1996 filed with the SEC. FMR
Corp. reports sole voting power over 113,200 Class A Shares and
sole investment power over 437,300 Class A Shares.
<F2> The information in this footnote is provided pursuant to
Schedule 13G dated February 13, 1996 and filed with the SEC by
The Crabbe Huson Special Fund, Inc., which reports that it is an
open-ended investment company registered under the Investment
Company Act of 1940, and by The Crabbe Huson Group, Inc., which
reports that it is an investment advisor registered under the
Investment Advisors Act of 1940 (the "Investment Advisors Act")
(the "Crabbe Huson Schedule 13G"). The number of Class A shares
of which The Crabbe Huson Special Fund, Inc. reports as being
beneficially owned by it represents 9.63% of the outstanding
Class A Shares. The Crabbe Huson Special Fund, Inc. reports
sole voting and investment power over all of the Class A Shares
reported as beneficially owned by it.
<F3> The information in this footnote is provided pursuant to The
Crabbe Huson Schedule 13G. The 144,200 Class A Shares The
Crabbe Huson Group, Inc. is deemed to beneficially own
represents 2.73% of the outstanding Class A Shares. The Crabbe
Huson Group, Inc. reports that it shares voting and investment
power over the Class A Shares with approximately eleven
investors for whom it serves as investment advisor.
<F4> The information in this footnote is provided pursuant to
Schedule 13G dated February 14, 1996 and filed with the SEC by
Lazard Freres & Co. LLC ("Lazard"), which reports that it is an
investment advisor registered under the Investment Advisors Act.
Lazard reports sole voting and investment power over the Class
A Shares reported as beneficially owned by it.
<F5> The information in this footnote is provided pursuant to
Schedule 13G dated February 12, 1996 and filed with the SEC by
Weiss, Peck & Greer, L.L.C. ("WP&G"), which reports that it is
a broker-dealer registered under the Securities Exchange Act of
1934 (the "Exchange Act") and an investment advisor registered
under the Investment Advisors Act. WP&G reports shared voting
and investment power over the Class A Shares reported in the
aforementioned Schedule 13G. The number of Class A Shares WP&G
reports that it holds for the discretionary accounts of certain
of its clients represents 9.38% of the issued and outstanding
Class A Shares. WP&G expressly disclaims beneficial ownership
of the Class A Shares reported in the aforementioned Schedule
13G.
<F6> The information in this footnote is provided pursuant to Amendment
No. 1 to Schedule 13G dated July 10, 1996 filed with the SEC by Mellon
Bank Corporation, which reports that it is a parent holding company
of its two subsidiaries, Mellon Bank N.A. and the Dreyfus Corporation,
an investment advisor registered under the Investment Advisors Act
-5-
<PAGE> 8
and both of which joined in the filing of the aforementioned
Schedule 13G with Mellon Bank Corporation. Mellon Bank
Corporation reports sole voting power over all 565,000 Class A
Shares, sole investment power over 43,000 Class A Shares and
shared investment power over 523,000 Class A Shares. Mellon Bank
N.A. reports sole voting power over 483,000 Class A Shares, sole
investment power over 33,000 Class A Shares and shared investment
power over 450,000 Class A Shares. The Dreyfus Corporation
reports sole voting power over 450,000 Class A Shares and shared
investment power over 450,000 Class A Shares.
<F7> The information in this footnote is provided pursuant to
Amendment No. 1 to Schedule 13G dated February 14, 1996 and
filed with the SEC by The Prudential Insurance Company of
America ("Prudential"), which reports that it is an insurance
company as defined under the Exchange Act, a registered broker-
dealer under the Exchange Act and an investment advisor
registered under the Investment Advisors Act. Prudential
reports sole voting and investment power over 157,700 Class A
Shares and shared voting and investment power over 242,500 Class
A Shares.
</TABLE>
PROPOSAL 1: ELECTION OF DIRECTORS
NOMINEES FOR DIRECTORS
The Company's Restated Articles of Incorporation and the Bylaws as
amended provide for a classified Board of Directors, with the Board
divided into three classes whose terms expire at different times. The
Company presently has six directors. Two members are to be elected to
the Board of Directors at the 1996 Annual Meeting, each to serve for a
term of three years. Both of the nominees comprising the Board of
Directors slate of nominees at the Annual Meeting, Messrs. B.D. Hunter
and Robert J. Marischen, are currently directors as well as executive
officers of the Company.
The persons named in the enclosed form of proxy intend to vote such
proxy for the election of Messrs. Hunter and Marischen as directors of
the Company, unless the shareholder indicates on the form of proxy that
the vote should be withheld or contrary directions are indicated. If
the proxy card is signed and returned without any direction given,
shares will be voted for the election of Messrs. Hunter and Marischen.
The Board of Directors has no reason to doubt the availability of either
of the nominees and both have indicated their willingness to serve if so
elected. If either or both the nominees shall decline or are unable to
serve, it is intended that, in the discretion of the Board of Directors,
either the size of the Board will be reduced or the proxies will vote
for a substitute nominee or nominees designated by the Board of
Directors.
<TABLE>
Information as of July 1, 1996 Regarding the Nominees for Directors
to be Elected in 1996 for Terms Ending in 1999
<CAPTION>
Name Age Present Term Business Experience
---- --- ------------ -------------------
Expires
-------
<S> <C> <C> <C>
B.D. Hunter<F1><F2> 66 1996 Chairman of the Board and Chief Executive Officer of
the Company since May 1993. Chairman of the Board of
Huntco Enterprises and of Acquisitions and Farms
since 1986. Director of Service Corporation
International, Cash America International, Inc.,
Celebrity, Inc., and Mark Twain Bancshares, Inc.
-6-
<PAGE> 9
<CAPTION>
Name Age Present Term Business Experience
---- --- ------------ -------------------
Expires
-------
<S> <C> <C> <C>
Robert J. Marischen<F1><F2> 43 1996 Vice Chairman of the Board and Chief Financial
Officer of the Company since May 1993. President,
Chief Executive Officer and Director of Huntco
Enterprises, Acquisitions and Farms since 1986 and
Director and Vice President of Huntco Steel, Inc.
("Huntco Steel") and Midwest Products, Inc. ("Midwest
Products"), both of which are indirect wholly-owned
subsidiaries of the Company, since 1986 and 1989,
respectively.
<CAPTION>
Information as of July 1, 1996 Regarding the Directors Who are Not Nominees
for Election and Whose Terms Continue Beyond 1996
Name Age Present Term Business Experience
---- --- ------------ -------------------
Expires
-------
<S> <C> <C> <C>
Donald E. Brandt<F3><F4> 41 1997 Director of the Company since May 1993. Senior Vice
President-Finance and Corporate Services of Union
Electric Company, a publicly held electric utility
company since July 1993; Senior Vice President-
Finance and Accounting of Union Electric Company for
the five year period prior thereto. Chairman of the
Board of St. Louis Equity Fund, Inc.; Trustee of
Maryville University; Director of St. Louis Regional
Housing Alliance and member of the Board of Governors
of Cardinal Glennon Children's Hospital.
Michael M. McCarthy<F3><F4> 57 1997 Director of the Company since May 1993. Chairman of
the Board and Chief Executive Officer of McCarthy
Building Companies, a large, privately-owned
commercial construction company, since 1977; Chairman
and Chief Executive Officer of McCarthy Brothers
Company since 1976. Director of Mark Twain
Bancshares, Inc.
James J. Gavin, Jr.<F1><F3><F4> 73 1998 Director of the Company since May 1993. Retired;
Vice Chairman and Director of Borg-Warner
Corporation, a publicly-held, diversified
manufacturing company, from 1985 until his retirement
in 1987; Senior Vice President of Finance of Borg-
Warner prior to 1985. Director of Service
Corporation International, BWIP International and
Trustee of Benchmark Funds.
-7-
<PAGE> 10
<CAPTION>
Name Age Present Term Business Experience
---- --- ------------ -------------------
Expires
-------
<S> <C> <C> <C>
Terry J. Heinz<F2> 45 1998 President, Chief Operating Officer and Director of
the Company since May 1993. Director, President and
Chief Executive Officer of Huntco Steel since 1987.
<FN>
- ---------------------------------------
<F1> Member of Executive Committee
<F2> Member of Stock Option Committee
<F3> Member of Audit Committee
<F4> Member of Compensation Committee
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The business of the Company is under the general management of the
Board of Directors (the "Board") as provided by the laws of Missouri,
the state of incorporation. The Board of Directors held four meetings
during the fiscal year ended April 30, 1996 ("Fiscal 1996"). It is
anticipated that in future years the Board will continue to meet at
least quarterly.
Standing committees of the Board of Directors include the
Executive Committee, the Audit Committee, the Compensation Committee and
the Stock Option Committee. Between Board meetings, Board
responsibilities are delegated to the Executive Committee, comprised of
three Board members. The Executive Committee did not hold any formal
meetings during Fiscal 1996 but acted by unanimous written consent on
five occasions during that period.
The Audit Committee is comprised entirely of all of the Company's
outside directors. The function of the Audit Committee is to: (i)
assist in the selection of independent auditors; (ii) direct and
supervise investigations into matters relating to audit functions; (iii)
review with independent auditors the plans and results of the audit
engagement; (iv) review the degree of independence of the auditors; (v)
consider the range of audit and non-audit fees; and (vi) review the
adequacy of the Company's system of internal accounting controls.
During Fiscal 1996, the Audit Committee held two meetings.
The Compensation Committee, comprised entirely of all of the
Company's outside directors, is responsible for reviewing and approving
salaries and annual incentive compensation for the executive officers
and certain other officers and employees of the Company. During Fiscal
1996, the Compensation Committee met three times.
The Stock Option Committee was formed in Fiscal 1996 and is
comprised of all of the Company's inside directors. The Stock Option
Committee administered the 1993 Plan during Fiscal 1996, which included
the grant of non-qualified stock options to the Company's non-employee
directors. During Fiscal 1996, the Stock Option Committee met one time.
The Compensation Committee was previously responsible for those duties
for which the Stock Option Committee was responsible during Fiscal 1996.
The entire Board of Directors serves in the capacity of a
nominating committee. The Board will accept recommendations for
nominations as directors from shareholders. Shareholders wishing to
propose such nominees for consideration should write to Mr. B.D. Hunter,
the Company's Chairman of the Board and Chief Executive Officer, at the
principal executive office of the Company.
-8-
<PAGE> 11
During Fiscal 1996, all of the directors, including the two
incumbent directors comprising the Board of Directors slate of nominees
for election at the Annual Meeting, attended 100% of the aggregate of
the meetings of the Board of Directors and the committees of the Board
on which each served.
DIRECTORS' FEES
Messrs. Hunter, Marischen and Heinz, as employees of the Company,
receive neither retainers nor fees for attendance at Board or Board
committee meetings. Messrs. Brandt, Gavin and McCarthy each receives
$1,000 for every Board meeting they attend and $500 each for attendance
at every meeting of those committees of the Board on which they serve.
In addition, Mr. Gavin is paid $2,500 quarterly for serving on the
Executive Committee.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Acquisitions and Farms have expressed their intent to vote for
Proposal 1, the election of the Board of Directors' slate of nominees.
The Board recommends that the holders of the Class A Shares also vote
"FOR" the Board's slate of nominees.
REPORT OF THE COMPENSATION AND STOCK
OPTION COMMITTEES ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by
the Compensation and Stock Option Committees of the Board of Directors.
The Compensation Committee is a committee of outside directors, chaired
by Mr. Michael M. McCarthy. Other members of the Compensation Committee
are Mr. Donald E. Brandt and Mr. James J. Gavin, Jr. The Compensation
Committee is responsible for reviewing and approving salaries and annual
incentive compensation of the Company's executive officers.
The Stock Option Committee is a committee of inside directors,
chaired by Mr. B.D. Hunter, the Company's Chairman of the Board and
Chief Executive Officer. The other members of the Stock Option
Committee are Messrs. Robert J. Marischen, the Company's Vice Chairman
and Chief Financial Officer and Terry J. Heinz, the Company's President
and Chief Operating Officer. The Stock Option Committee administers the
1993 Plan, including the review and grant of stock options and other
stock-based compensation to the Company's executive officers and
directors. The Compensation and Stock Option Committees together have
the ultimate responsibility for aligning the Company's compensation
programs with its business strategy and for assuring shareholders that
pay delivery programs are effective, responsible and competitive when
compared to similarly situated organizations. This report documents the
basis upon which compensation decisions were made for Fiscal 1996 with
respect to Mr. B.D. Hunter, as the Company's Chief Executive Officer and
to its only other executive officers, Messrs. Marischen and Heinz.
COMPENSATION PHILOSOPHY AND OBJECTIVES OF EXECUTIVE COMPENSATION
PROGRAMS
It is the philosophy of the Company and the Compensation and Stock
Option Committees that all compensation programs should provide a direct
link between the performance of the Company and the compensation of its
executive officers. Consistent with this philosophy, all of the
executive officer compensation and benefit plans have been designed to
attract, motivate, reward and retain the broad-based management talent
required to achieve corporate objectives and increase shareholder value.
-9-
<PAGE> 12
Toward this end, the Company has designed and implemented a compensation
program for Messrs. Hunter, Marischen and Heinz which, in addition to
base salary, focuses strongly on annual incentive compensation with
bonus awards tied closely to the attainment of specified financial
targets, as well as stock-based compensation, since this form of
compensation provides the clearest link to enhanced shareholder value.
The Company's executive compensation program is designed to provide the
Compensation Committee and the Stock Option Committee with the
flexibility to emphasize one component of the total compensation package
over another as circumstances demand. Further, the Compensation
Committee has the flexibility to revise the annual bonus component
during any fiscal year to ensure that the incentive aspect of the
Company's compensation system is preserved.
The compensation program designed and approved for Messrs. Hunter,
Marischen and Heinz and the decisions made with respect to their Fiscal
1996 remuneration are further detailed in the sections which follow.
BASE SALARIES
The Compensation Committee does not attempt to adhere to
predefined specific quantitative or qualitative criteria in establishing
base salary amounts, nor are certain criteria deemed more important or
given more weight than other factors. In setting base salaries for
Fiscal 1996, the Compensation Committee considered objective factors
such as the growth in assets under the management of the Company's
executive officers, as well as increases in net sales, income from
operations and net income expected to be achieved by the Company. The
Compensation Committee recognized that these results would be due
largely to the significant contributions of Messrs. Hunter, Marischen
and Heinz. However, the base salary decided upon by the Compensation
Committee was not keyed or tied to any specific measure of the Company's
financial performance. Another objective factor considered was the
compensation to be paid to the Company's non-executive officers for the
upcoming year. The Compensation Committee also considered subjective
factors, such as those executive officers' respective job
responsibilities and the Compensation Committee's perception regarding
their importance to the Company and its operations. Base salaries for
Fiscal 1996 for Messrs. Hunter, Marischen and Heinz were approved by the
Compensation Committee and the amounts paid are included in the Summary
Compensation Table herein.
ANNUAL INCENTIVE COMPENSATION
A significant portion of Messrs. Hunter's, Marischen's and Heinz's
total compensation is at risk through annual incentive opportunities
that are linked to key financial objectives of the Company. The goal of
this policy is to focus the Company's executive officers on the
attainment of certain financial objectives that the Compensation
Committee believes are significant determinants of share price over
time. In addition, the Compensation Committee can grant performance
awards at its discretion, which are not tied to specific objective
financial criteria, in order to ensure the overall equity of the
Company's compensation program in the event that circumstances justify
such awards.
During the fourth quarter of fiscal 1995 and in connection with
planning for executive compensation for the then upcoming fiscal year,
the Company entered into bonus agreements with Messrs. Marischen and
Heinz for Fiscal 1996 (the "1996 Bonus Agreements"). Under the 1996
Bonus Agreements, Messrs. Marischen and Heinz were entitled to receive
an additional percentage of their respective base salaries if net sales
and pretax income before accrual for the 1996 Bonus Agreements equalled or
-10-
<PAGE> 13
exceeded specified levels. The targets originally established pursuant to
the 1996 Bonus Agreements are referred to hereafter as the 1996 Performance
Bonus Targets.
The 1996 Performance Bonus Targets were established based upon the
recommendation and judgment of Mr. Hunter, in consultation with the
Compensation Committee, as well as upon a review of the Company's
internal budgets and Mr. Hunter's and the Compensation Committee's
subjective evaluation of the Company's prospects for future growth.
It became apparent during the second quarter of Fiscal 1996 that
due to factors affecting the steel industry in general and other
circumstances related to the start-up of certain of the Company's
capital improvements projects, the pretax income component of the 1996
Performance Bonus Targets would not be achieved. However, Mr. Hunter
and the Compensation Committee believed that but for his own efforts and
those of Messrs. Marischen and Heinz, a larger decline in pretax income
would have been sustained.
In December 1995, the Compensation Committee met to consider
amending the 1996 Bonus Agreements. Mr. Hunter and the Compensation
Committee concluded that the 1996 Performance Targets should be changed
to another basis of measurement which would: (i) continue to foster the
stated objective of the Company's annual incentive compensation program
which is to link performance to executive compensation; (ii) focus on
the Company's financial performance for the second half of Fiscal 1996;
and (iii) provide an incentive and goal for the executive officers
which, if attained, would make the remainder of the year more
successful, thereby providing a solid base and foundation on which the
Company could build going into Fiscal 1997.
The Compensation Committee approved amendments to the 1996 Bonus
Agreements which the Company and Messrs. Marischen and Heinz executed,
which provided that each would receive up to an additional 30% of their
Fiscal 1996 base salaries if net income for the six month period ended
April 30, 1996 exceeded a specified level. This goal was selected
because if it were achieved, the Company would report positive net
income for Fiscal 1996 despite the difficulties the Company had
experienced during the first half of the year.
The net income goal for the second half of Fiscal 1996 was
achieved so that Messrs. Marischen and Heinz received $75,000 and
$73,500, respectively, pursuant to the 1996 Bonus Agreements as amended.
The amounts each of Messrs. Marischen and Heinz were paid in salary and
bonus during Fiscal 1996 was approximately 7% less than that which they
had been paid during the previous fiscal year. The amount each earned
under their 1996 Bonus Agreements as amended were paid to them in May
1996 and are included in the Summary Compensation Table herein.
LONG TERM INCENTIVE COMPENSATION
Under the Huntco Inc. 1993 Incentive Stock Plan (the "1993 Plan"),
the Stock Option Committee, which administers the 1993 Plan, may award
non-qualified stock options to purchase Class A Shares, incentive stock
options to purchase Class A Shares, restricted Class A Shares and stock
appreciation rights. All grants of benefits under the 1993 Plan are at
the complete discretion of the Stock Option Committee, which may award
them based on whatever subjective or objective criteria it deems
appropriate.
-11-
<PAGE> 14
During Fiscal 1996 the Stock Option Committee was comprised of the
Company's three executive officers. However, each of these executives
was a "disinterested person" within the meaning of Rule 16b-3(c)(2)
promulgated under the Securities Exchange Act of 1934, as amended,
because none of them had been awarded stock options or any other
benefits under the 1993 Plan during the one year preceding the beginning
of their service on the Stock Option Committee.
The Stock Option Committee did not award any benefits to the
Company's executive officers under the 1993 Plan during Fiscal 1996.
Part of the reason was based on the Stock Option Committee's desire to
preserve the "disinterested" status of each of its members for
securities laws purposes. The Stock Option Committee also believed that
the non-qualified stock options to purchase 210,000 Class A Shares
previously awarded to each of Messrs. Marischen and Heinz and the non-
qualified stock options to purchase 60,000 Class A Shares previously
granted to Mr. Hunter will continue to serve as a long-term incentive,
and additional grants were not necessary at that time.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The determination of the compensation paid by the Company during
Fiscal 1996 to Mr. Hunter, its Chairman of the Board and Chief Executive
Officer, is based on the same pay-for-performance philosophy which is
applied to the determination of the compensation paid to the Company's
other executive officers. Mr. Hunter's base salary of $275,000 was
based on the Compensation Committee's subjective evaluation of his
performance as Chief Executive Officer of the Company since its initial
public offering in June of 1993 and its subjective perception of his
years of experience, his leadership, his general executive and
managerial abilities and responsibilities and his vision with respect to
the continued growth and expansion of the Company and his commitment to
increase shareholder value. None of the factors used to evaluate Mr.
Hunter or to determine his base salary was given any more weight than
any other factor.
Although Mr. Hunter is not a party to a written employment
contract or bonus agreement, his compensation arrangement as approved by
the Compensation Committee included eligibility for annual incentive pay
on the same terms and conditions as that contractually provided to
Messrs. Marischen and Heinz under the above-described 1996 Bonus
Agreements as amended. Accordingly, he was awarded $82,500 as his
performance bonus which was due to net income for the second half of
Fiscal 1996 exceeding the specified level. Mr. Hunter did not receive
any awards under the 1993 Plan during Fiscal 1996.
The bases and rationale applied by the Compensation Committee in
determining base salary and annual incentive compensation and by the
Stock Option Committee in determining long-term incentive compensation
for Mr. Hunter was identical to that used by the Compensation and Stock
Option Committees, respectively, in determining Messrs. Marischen's and
Heinz's compensation described herein.
LIMITATIONS OF TAX DEDUCTIONS FOR EXECUTIVE COMPENSATION
The Internal Revenue Code, and the regulations promulgated
thereunder, limit the tax deduction the Company may recognize for
compensation paid to the executive officers whose compensation is
listed in this Proxy Statement, to $1.0 million per person, per
year. This deduction limit does not apply to compensation that
complies with applicable provisions of such regulations. Income
attributable to the exercise of the non-qualified stock options
that have been granted to date pursuant to the 1993 Plan is
-12-
<PAGE> 15
not included in the compensation subject to the $1.0 million per person,
per year limit. Because the Compensation Committee did not expect the
remaining compensation to be paid to such persons (determined without
regard to the exercise of such non-qualified stock options granted to them)
to exceed $1.0 million per person, per year in Fiscal 1996, the
Compensation Committee did not take any action prior to or during Fiscal
1996 to comply with the aforementioned regulations in order that the
deduction limit would not apply. The same conclusion has been reached with
respect to the current fiscal year except that the submission to the
Company's shareholders for their approval of the 1993 Plan Amendment is due
in part to comply with the aforementioned regulations pertaining to the
deductibility of executive compensation. The Compensation and Stock Option
Committees will continue to evaluate the other components of the Company's
executive compensation program and will take the necessary actions with
respect to such regulations if it is deemed appropriate to do so in the
future.
Compensation Committee: Stock Option Committee:
Michael M. McCarthy, Chairman B.D. Hunter, Chairman
Donald E. Brandt Robert J. Marischen
James J. Gavin, Jr. Terry J. Heinz
-13-
<PAGE> 16
EXECUTIVE COMPENSATION
The following tables provide compensation information and
information about the amount and value of employee stock options held by
the only three executive officers of the Company.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term
Compensation
Awards
--------------------------------------------------------
Name and Securities Underlying All Other
Principal Position Year Salary ($)<F1> Bonus ($) Options/SARs (#)<F2> Compensation ($)<F3>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
B.D. Hunter 1996 $275,000 $ 82,500 - $1,500
Chairman and Chief 1995 $250,000 $142,667 60,000 $1,308
Executive Officer 1994 $208,654<F4> - - -
Robert J. Marischen 1996 $250,000 $ 75,000 - $6,115
Vice Chairman and 1995 $225,000 $128,401 60,000 $6,083
Chief Financial Officer 1994 $205,000<F4> $ 55,000 150,000 $10,594
Terry J. Heinz 1996 $245,000 $ 73,500 - $4,584
President and Chief 1995 $220,000 $125,547 60,000 $3,884
Operating Officer 1994 $200,000 $ 55,000 150,000 $7,797
<FN>
<F1> Amounts shown include cash compensation earned and received as
well as compensation earned but deferred at the election of the
executive officer.
<F2> This column represents grants made under the 1993 Plan.
-13-
<PAGE> 17
<F3> Includes matching contributions by the Company during Fiscal 1996
to the accounts of the following individuals under the Huntco Inc.
401(k) Retirement Savings Plan, which is a defined contribution plan, as
follows: Mr. Hunter, $1,500; Mr. Marischen, $1,500; and Mr. Heinz,
$1,500. Includes premiums on life insurance in Fiscal 1996 as follows:
Mr. Hunter, none; Mr. Marischen, $4,615; and Mr. Heinz, $3,084.
<F4> Until June 28, 1993 when it was terminated, Huntco Steel and
Midwest were parties to a management agreement with Acquisitions. Under
the agreement, Acquisitions provided certain accounting, tax, financial,
managerial, secretarial and administrative services to Huntco Steel and
Midwest through, among others, Mr. Marischen. Huntco Steel and Midwest
paid Acquisitions management fees of $100,000 and $20,000 respectively
for the first two months of Fiscal 1994. Also, as part of the
management services provided by Acquisitions, Messrs. Hunter and
Marischen served as officers and directors of both Huntco Steel and
Midwest. Mr. Hunter chose not to accept any salary or bonus for
services rendered by Acquisitions to Huntco Steel or Midwest pursuant to
the management agreement as in effect until June 28, 1993. The $208,654
paid Mr. Hunter represents payments made by the Company to Mr. Hunter
from June 29, 1993 through the end of Fiscal 1994, at the rate of
$250,000 per year. Of the $205,000 base salary Mr. Marischen received
for Fiscal 1994, approximately $34,167 was paid by Acquisitions out of
the management fee it received from Huntco Steel and Midwest through
June 28, 1993 and approximately $170,833 was paid by the Company
pursuant to his employment contract with the Company for the period from
June 29, 1993 through the end of Fiscal 1994.
</TABLE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options/SARs at FY-End (#) Options/SARs at FY-End ($)<F1>
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------------- -------------------------
<S> <C> <C>
B. D. Hunter 15,000/45,000 <F2>
Robert J. Marischen 165,000/45,000 $93,750/<F3>
Terry J. Heinz 165,000/45,000 $93,750/<F3>
<FN>
<F1> Represents the difference between (a) the closing price on the New
York Stock Exchange on April 30, 1996 of the Class A Shares and (b) the
exercise price of the employee stock options awarded to the named
executive officer, which difference is multiplied by the number of
options owned by the named executive officer.
<F2> None of Mr. Hunter's employee stock options are in-the-money.
<F3> None of the employee stock options awarded to Messrs. Marischen
or Heinz which are unexercisable are in-the-money.
</TABLE>
CERTAIN CONTRACTS
Both Messrs. Marischen and Heinz are parties to employment
agreements with the Company (the "Employment Agreements"). Except for
the base salaries to be paid to each thereunder (Mr. Marischen being
contractually entitled to receive a base salary of not less than
$265,000 in the fiscal year ended April 30, 1997 ("Fiscal 1997") and
Mr. Heinz being contractually entitled to receive a base salary of not
less than $260,000 in Fiscal 1997), the Employment Agreements are
identical. Both Employment Agreements have automatic one-year renewals
effective each April 30 (the "Renewal Term"), unless notice is given by
either party thereto that such Employment Agreement is not to be renewed
or unless the Employment Agreement has been terminated by the respective
parties thereto or upon the occurrence of certain events specified in
the Employment Agreements.
Both Messrs. Marischen and Heinz are entitled to severance
payments under the Employment Agreements upon termination of their
employment. If the Company notifies either employee that the
Employment Agreements will not be renewed at the expiration of
any then current Renewal Term, the employee would be entitled to
annual compensation payments for one year from the date of termination.
-14-
<PAGE> 18
If the employee is terminated due to incapacity, in addition to those
benefits that are provided by retirement and benefit programs specifically
adopted and approved by the Company for the employee that are earned and
vested at the date of termination, the employee shall be entitled to
receive his base salary compensation for the six months following such
termination. If the Company terminates the employee "without cause" (as
that term is provided in the Employment Agreements) prior to the expiration
of any then current Renewal Term, then in addition to those benefits that
are provided by retirement and benefit plans and programs specifically
adopted and approved by the Company for employees that are earned and
vested at the date of termination, the employee shall be entitled to his
annual compensation payments for one year from the date of termination.
The Employment Agreements also provide for severance payments of
one year's base salary in the event that the employee voluntarily
terminates his employment within 12 months following a "change of
control" as defined in the Employment Agreements.
In addition to the 1996 Bonus Agreements (and amendments thereto)
to which both Messrs. Marischen and Heinz were parties during Fiscal
1996 (which are described with more particularity under "Report of the
Compensation and Stock Option Committees on Executive Compensation" and
which description is incorporated in this section of the Proxy Statement
by reference), the Board has adopted a resolution providing for the
payment of bonuses to Messrs. Marischen and Heinz for the year ended
April 30, 1997 (the "1997 Bonus Arrangements").
Under the 1997 Bonus Arrangements, the annual incentive bonuses
Messrs. Marischen and Heinz will be entitled to earn will be paid
quarterly, and will be based on the Company's quarterly, year-to-date
and full year earnings per share. If earnings per share equals or
exceeds certain specified targets, they each will earn an additional
specified percentage of their respective annual base salaries for Fiscal
1997 (the "Fiscal 1997 Base Salaries") with the bonus percentage
increasing if respectively higher earnings per share targets are met.
The maximum annual incentive bonuses that could be paid to Messrs.
Marischen and Heinz under the 1997 Bonus Arrangements equals 120% of
their respective 1997 Base Salaries.
The Company has agreed to reimburse Messrs. Marischen and Heinz
for federal and state income taxes payable by them on the first $400,000
of taxable income recognized by each of them upon the exercise of
options granted to them in May 1993 pursuant to the 1993 Plan. Neither
Messrs. Marischen nor Heinz has exercised any of such options;
therefore, no tax reimbursement has yet been made to them by the
Company.
In addition to medical and dental coverage to which all employees
are entitled, the Company provides Messrs. Marischen and Heinz with
supplemental health insurance pursuant to which the Company reimburses
them for amounts they incur under the applicable insurance policies
until the deductible limits or after policy limits are reached. Both
Messrs. Marischen and Heinz also receive Company-paid long-term
disability coverage and life insurance coverage under which death
benefits are to be paid to the beneficiaries designated by each, use of
a Company automobile and a Company-paid country club membership.
Mr. Hunter is not a party to a written employment contract or
bonus agreement. However, his compensation arrangement, including
eligibility for a performance bonus and medical, dental and supplemental
health insurance coverage, is identical to that contractually provided
to Messrs. Marischen and Heinz. The Company intends to pay Mr. Hunter
an annual base salary for the year ended April 30, 1997, of $291,500.
-15-
<PAGE> 19
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Brandt,
Gavin and McCarthy, each of whom is a non-employee director. The
members of the Stock Option Committee are Messrs. Hunter, Marischen and
Heinz, each of whom serves as a director and executive officer of the
Company. The Stock Option Committee did not award any benefits under
the 1993 Plan to the Company's executive officers during Fiscal 1996.
In addition, Mr. Hunter serves as a director and Mr. Marischen
serves as a director and executive officer of various affiliates of the
Company. Both Messrs. Marischen and Heinz serve as directors and
executive officers of Huntco Steel, a subsidiary of the Company.
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total shareholder return to
the cumulative total return of the S&P Industrials index and to a peer
group index. The comparison of total return assumes that a fixed
investment of $100 was invested on June 29, 1993 (the effective date of
the Company's Initial Public Offering) in the Company's Class A Shares
and in each of the foregoing indices and further assumes the
reinvestment of dividends. The information on the graph covers the
period from June 29, 1993 through the end of Fiscal 1996, which
concluded on April 30, 1996. Since there is no nationally recognized
industry index consisting of intermediate steel processors to be used as
a peer group index, the Company constructed its own peer group. This
peer group is comprised of two companies which represent the only other
public companies in the intermediate steel processing industry with a
stock performance history dating back to June 29, 1993, namely Steel
Technologies Inc. and Worthington Industries, Inc. Although certain
other companies in the industry have completed initial public offerings
since June 29, 1993, it will be five years before these companies can be
used for comparative stock performance purposes. The returns of each
member of the peer group are weighted according to each member's stock
market capitalization as of the beginning of the period measured. The
stock price performance shown on the graph below is not necessarily
indicative of future price performance.
[GRAPH]
<TABLE>
<CAPTION>
June 29, 1993 April 30, 1994 April 30, 1995 April 30, 1996
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Huntco Inc. 100.00 112.12 103.12 105.26
S&P Industrials 100.00 101.92 118.96 150.84
Peer Group 100.00 91.74 92.14 100.30
</TABLE>
-16-
<PAGE> 20
PROPOSAL 2:
AMENDMENT OF THE HUNTCO INC. 1993 INCENTIVE STOCK PLAN
BACKGROUND
On May 18, 1993, in preparation for the Company's contemplated initial
public offering of the Class A Shares (the "IPO"), the Board of Directors of
the Company and its only two shareholders at that date, Acquisitions and
Farms, approved the 1993 Plan. The maximum number of Class A Shares
available for issuance under the 1993 Plan is 750,000.
The stated purpose of the 1993 Plan is to aid in maintaining and
developing strong management capable of assuring the future success of the
Company. The 1993 Plan is designed to secure for the Company and its
shareholders the benefits of the incentive inherent in the ownership of Class
A Shares by those employees who are largely responsible for its future
growth and financial success. It is also designed to afford those
persons the opportunity to obtain or increase a proprietary interest in
the Company through the ownership of Class A Shares on a favorable
basis, and, thereby, to have an opportunity to share in the Company's
success. All directors and theoretically all employees of the Company
and its subsidiaries are eligible to be granted awards under the 1993
Plan; it is likely, however, that salaried employees of the Company and
its subsidiaries will be the only class of employees who will be the
recipients of awards under the 1993 Plan as proposed to be amended by
Proposal 2.
The Board of Directors has proposed that the 1993 Plan Amendment be
submitted to the Company's shareholders for their consideration and approval.
The 1993 Plan Amendment is the proposal to amend the 1993 Plan (i) to
increase the number of Class A Shares authorized for issuance pursuant
to awards which may be made thereunder, from 750,000 to 900,000, and
(ii) to limit the maximum number of Class A Shares underlying options
and SARs which may be awarded to any participant in the Plan
("Participant" or "Participants") in any one calendar year to a total of
60,000, as described in more detail below. Approval of the 1993 Plan
Amendment requires the affirmative vote of a majority of the aggregate
number of votes represented by the Class A Shares and the Class B
Shares, voting as a single class, which are present in person or
represented by proxy at the Annual Meeting.
Attached to this Proxy Statement as Appendix A is a copy of the 1993
Plan as amended and restated to date by the Board of Directors (but which
will not become effective until August 15, 1996 as explained in more detail
below) as further proposed to be amended pursuant to the approval of the
1993 Plan Amendment.
THE PROPOSED 1993 PLAN AMENDMENT
Purpose of Proposed Increase in Authorized Shares
In adhering to the purpose of the 1993 Plan, the Company has awarded
non-qualified stock options to purchase 747,500 Class A Shares to its
directors and officers, and to the key managerial and supervisory
employees of its operating subsidiaries, Huntco Steel and Midwest
Products. Given the small number of Class A Shares remaining available
for awards under the 1993 Plan and the Board's desire to continue its
use as a vehicle to compensate non-employee directors and to compensate
and motivate employees, the Board believes the 1993 Plan should be
amended to make an additional 150,000 Class A Shares available to serve
as the basis of future awards thereunder.
-17-
<PAGE> 21
The following sets forth certain information regarding non-qualified
stock options to purchase Class A Shares granted to all directors of the
Company (three of whom are also executive officers) individually.
<TABLE>
1993 INCENTIVE STOCK PLAN
<CAPTION>
Number of
Class A Shares Stock Options Exercise Market
Issuable Upon Exercisable as Price Per Price Per
Exercise of of July 15, Date Class A Class A
Grant Date Stock Options 1996 Exercisable Share Share<F1>
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
B.D. Hunter 03/02/95 60,000 15,000 <F2> $21.50 $16.75
Robert J. Marischen 05/18/93 150,000 150,000 immed. $17.00 $16.75
03/02/95 60,000 15,000 <F2> $21.50 $16.75
Terry J. Heinz 05/18/93 150,000 150,000 immed. $17.00 $16.75
03/02/95 60,000 15,000 <F2> $21.50 $16.75
Donald E. Brandt 05/18/93 2,000 2,000 immed. $17.00 $16.75
04/04/96 3,000 -- <F3> $19.50 $16.75
James J. Gavin, Jr. 05/18/93 2,000 2,000 immed. $17.00 $16.75
04/04/96 3,000 -- <F3> $19.50 $16.75
Michael McCarthy 05/18/93 2,000 2,000 immed. $17.00 $16.75
04/04/96 3,000 -- <F3> $19.50 $16.75
<FN>
<F1> Represents the per share closing price of the Class A Shares on the
New York Stock Exchange on July 15, 1996.
<F2> These options become exercisable in increments of 25% per year on
March 2, 1996, March 2, 1997, March 2, 1998 and March 2, 1999.
<F3> These options become exercisable in increments of 25% per year on
April 4, 1997, April 4, 1998, April 4, 1999 and April 4, 2000.
</TABLE>
The Company has outstanding to 38 non-executive officers and
employees, non-qualified stock options to purchase 250,500 Class A
Shares at exercise prices ranging from $17.00 per share to $29.00 per
share, based on the fair market value of the Class A Shares on the date
of grant. Such non-qualified stock options become exercisable in
increments and expire at various times based on the date they were
granted, as is the case with the non-qualified stock options awarded to
the individuals listed in the table above.
It is expected that if the 1993 Plan Amendment is approved by the
Company's shareholders, each of the individuals listed in the table
above, as well as the Company's non-executive officers and employees,
may receive additional awards under the 1993 Plan. Because the timing
and the amount of the awards will be at the discretion of the
administrator, the specifics of future awards cannot be determined at
this time.
-18-
<PAGE> 22
Purpose of Proposed Limitation on Annual Awards
Section 162(m) ("Section 162(m)") of the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder (the
"Section 162(m) Rules"), limit the tax deduction publicly held companies
may recognize for compensation paid to their executive officers whose
compensation is listed in their proxy statements to $1.0 million per
person, per year. The deduction limit does not apply to performance-
based compensation that meets the applicable provisions of the Section
162(m) Rules. Compensation attributable to a stock option or stock
appreciation right is deemed to be performance based if the plan under
which the option or SAR is granted states the maximum number of shares
with respect to which options or SARs may be granted during a specified
period to any employee. The awards of such stock options and SARs must
be made by a committee composed entirely of "outside directors", as that
term is used in the Section 162(m) Rules, and the amount of compensation
the employee could receive is based solely on an increase in the value
of the stock after the date of the award.
Income attributable to the exercise of non-qualified stock options
granted to the Company's executive officers to date are not subject to
the deduction limitation imposed by Section 162(m) due to a provision in
the Section 162(m) Rules which "grandfathered" income attributable to
awards made under stock option plans which were in existence prior to a
company becoming publicly held. The 1993 Plan was in existence prior to
the Company's initial public offering. However, Section 162(m) provides
that the "grandfather" period expires upon the occurrence of certain
events including a "material modification" of a plan. The 1993 Plan
Amendment would increase the number of Class A Shares authorized for
issuance pursuant to awards which may be made thereunder and is deemed,
under the Section 162(m) Rules, to constitute a material modification.
Accordingly, without complying with the Section 162(m) Rules, income in
excess of $1.0 million earned by the Company's executive officers whose
compensation is disclosed in its proxy statements, which income is
attributable to the exercise of non-qualified stock options or SARs
awarded under the 1993 Plan after the increase in the number of Class A
Shares authorized for issuance thereunder will not be deductible by the
Company.
Due to the small number of Class A Shares being added to the 1993 Plan
and therefore available for awards thereunder, coupled with the salaries
and bonuses paid to the Company's executive officers which do not even
approach $1,000,000 per year, it currently appears unlikely that the
Company could be adversely affected if it did not seek to comply with
Section 162(m) with respect to non-qualified stock options and SARs that
may be awarded under the 1993 Plan. However, the Board believes that
because the cost of compliance is minimal compared with the cost that
could conceivably be incurred due to the loss of a potential deduction,
it is appropriate to seek to comply with Section 162(m) and the Section
162(m) Rules.
The Board believes it is proper to satisfy the performance based
aspect of the Section 162(m) Rules with respect to stock options and
SARs by establishing a total of 60,000 Class A Shares as the maximum
number underlying stock options and SARs which may be awarded to any
Participant in the 1993 Plan in any one year because that is the largest
number of shares underlying stock options granted to date to any one
Participant in the 1993 Plan in any one year (except for the grants made
in connection with the initial public offering). The Board does not
contemplate needing to make any award in excess of that amount to
motivate an executive officer and awarding any more than that to any one
individual would not leave the Company a sufficient number of Class A
Shares to make other awards under the 1993 Plan to motivate and award
other key employees.
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RECOMMENDATION OF THE BOARD OF DIRECTORS
The holders of the Class B Shares have informed the Board of their
collective intent to vote in favor of Proposal 2, the 1993 Plan
Amendment. The Board recommends that the holders of the Class A Shares
also vote "FOR" the 1993 Plan Amendment (i) to increase the number of
Class A Shares which may be issued pursuant to awards made under the
1993 Plan from 750,000 to 900,000, and (ii) to limit the maximum number
of Class A Shares underlying options or SARs which may be awarded to any
Participant in the 1993 Plan in any one calendar year to a total of
60,000.
1993 PLAN AMENDMENTS ADOPTED BY THE BOARD OF DIRECTORS
On May 30, 1996, the SEC adopted amendments to the short-swing profit
liability rules promulgated under Section 16 of the Exchange Act
("Section 16"). Section 16(b) imposes liability on directors and
executive officers of public companies who engage in certain
transactions in the securities of those companies within any six month
period, unless such transactions are exempt from such liability. A
significant number of the amendments (the "New Rules") relate to new
alternatives for exempting from Section 16(b) liability transactions
typically associated with stock based compensation plans such as the
1993 Plan. Under the New Rules, stock based compensation plans will no
longer be required to contain certain provisions relating to awards made
to executive officers and directors so long as the transactions effected
in connection with such plans satisfy one of the conditions for
exemption under the New Rules. The Board concluded that the elimination
from the 1993 Plan of provisions no longer required would simplify the
1993 Plan and provide flexibility in its administration.
Accordingly, in July 1996, the Board approved amendments to the 1993
Plan to eliminate: (i) the requirement that it be administered by
"disinterested persons," (ii) automatic grants of non-qualified stock
options upon the election or appointment of new non-employee directors,
(iii) the restrictions on the transferability of options or SARs granted
thereunder, (iv) the requirement that no stock option or SAR be
exercisable for at least six months from the date of grant, (v) the
requirement that restricted Class A Shares awarded under the 1993 Plan
not lapse for at least six months from the date of the award, (vi) the
restriction that SARs be exercised by a Section 16 reporting person only
during the window period specified therein, and (vii) the restrictions
pertaining to the use of Class A Shares to pay the awardee's withholding
tax obligation which arises upon an optionee's exercise of a non-
qualified stock option or the lapsing of restrictions on restricted
Class A Shares awarded under the 1993 Plan. It is contemplated that the
aforementioned amendments adopted by the Board will become effective
concurrently with the effectiveness of the New Rules on August 15, 1996.
The Board of Directors does not believe that shareholder approval is
required for any of the amendments it adopted. Such amendments will
become and remain effective until otherwise amended as provided in the
1993 Plan even if the 1993 Plan Amendment is not approved by the
Company's shareholders.
DESCRIPTION OF THE 1993 PLAN UPON EFFECTIVENESS OF AMENDMENTS ADOPTED BY
THE BOARD OF DIRECTORS
Administration of the 1993 Plan
Under the 1993 Plan and as designated by the Board of Directors from
time to time, the full Board of Directors or a committee of two or
more directors appointed by the Board may act as the administrator
of the 1993 Plan (the "Administrator"). Future awards and other
transactions involving Class A Shares issued under the 1993 Plan
shall be approved by either the full Board of Directors or
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the aforementioned committee. If a committee administers the Plan,
the directors appointed to it may be, but will not be required to be,
"non-employee directors" as that term is defined under the New Rules.
The Administrator will continue to have discretionary authority with
respect to administering the 1993 Plan, including (i) the selection of
employees and directors of the Company and its subsidiaries who shall be
Participants in the 1993 Plan, (ii) determination of the number of and
type of Benefits (as defined below) to be awarded to each such
Participant in accordance with the 1993 Plan, (iii) establishment of the
timing, pricing and other terms and conditions of the grants or awards
to such Participants (which need not be uniform with respect to the
various Participants or with respect to different grants to the same
Participant), (iv) establishment of appropriate rules relating to the
1993 Plan, (v) delegation of some or all of its authority under the 1993
Plan and (vi) taking of all such steps and the making of all such
determinations in connection with the 1993 Plan and the Benefits to be
granted pursuant to the 1993 Plan as it deems necessary or advisable.
In making such awards, the Administrator may take into account the
nature of the services rendered by a Participant and the capacity of the
Participant to contribute to the success of the Company and other
factors the Administrator deems relevant. If the 1993 Plan Amendment is
adopted by the Company's shareholders, the maximum number of Class A
Shares which can be issued under the 1993 Plan will be increased by
150,000 Class A Shares from 750,000 to 900,000 (subject to adjustments
in certain events as described below). All of the Class A Shares may be
authorized and unissued shares or treasury shares.
Four types of Benefits may be granted under the Incentive Stock Plan:
Incentive Stock Options to purchase Class A Shares, Non-qualified Stock
Options to purchase Class A Shares, Stock Appreciation Rights and
Restricted Class A Shares, all as described below. The Administrator
may make the award of any Benefit subject to any provisions as it deems
appropriate including, without limitation, (i) provisions for the
purchase of Class A Shares under Options (as defined below) in
installments, (ii) provisions for the payment of the purchase price of
Class A Shares under Options by delivery of Class A Shares, (iii)
restrictions on resale or other disposition, (iv) provisions for
compliance with federal or state securities laws and stock exchange
requirements, (v) understandings or conditions regarding Participants'
employment, (vi) provisions for making the grant of Benefits conditional
upon an election by a Participant to defer payment of a portion of his
salary, (vii) provisions for giving a Participant a choice between two
Benefits or a combination of Benefits and (viii) provisions for awarding
Benefits in any combination or combinations. If the 1993 Plan Amendment
is adopted, the maximum number of Class A Shares underlying options or
SARs which may be awarded to any participant in the 1993 Plan in any one
calendar year will be a total of 60,000.
Stock Options
Two types of stock options (the "Options") may be awarded by the
Administrator under the 1993 Plan: Incentive Stock Options and Non-
qualified Stock Options. An Incentive Stock Option entitles the
Participant to purchase Class A Shares at an option price, determined by
the Administrator, of not less than (i) the fair market value of the
Class A Shares on the date of the grant, or (ii) 110% of the fair market
value of the Class A Shares on the date of the grant if the Participant
owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or a subsidiary. A Non-qualified
Stock Option entitles the Participant to purchase Class A Shares at an
option price, determined by the Administrator, of not less than 50% of
the fair market value of the Class A Shares on the date of the grant.
Each Option will be evidenced by an Option agreement containing
such terms and conditions consistent with the 1993 Plan that are
approved by the Administrator. Option agreements may provide
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<PAGE> 25
for the exercise of Options in whole or in part from time to time during
the term of the Option, or in such installments and at such times as the
Administrator may determine. Options granted under the 1993 Plan are
non-transferable and non-assignable by the Participant other than by will
or by the laws of descent and distribution and are exercisable during his
lifetime only by him. No Option may be exercised after the expiration of
its term. The Option exercise price is payable in full upon exercise of an
Option. No Participant shall have any of the rights or privileges of a
shareholder of the Company with respect to Class A Shares issuable upon
exercise of an Option until certificates representing such Class A
Shares have been issued and delivered to the Participant.
Several additional conditions apply to the award of Incentive Stock
Options. The aggregate fair market value, determined as of the date of
the grant, of the Class A Shares covered by an Incentive Stock Option
granted to any Participant that become exercisable for the first time in
any calendar year shall not exceed $100,000 (or any other maximum
applicable to Incentive Stock Options as may be in effect from time to
time under the Internal Revenue Code of 1986, as amended). The maximum
term of an Option shall be 10 years from the date it was granted except
that the maximum term of an Incentive Stock Option granted to a person
who owns more than 10% of the total combined voting power of all classes
of the stock of the Company shall be five years. No Incentive Stock
Option shall be awarded after the day preceding the tenth anniversary of
the effective date of the 1993 Plan.
Restricted Class A Shares
The Administrator may award Restricted Class A Shares to any
Participant in the 1993 Plan. Each Participant who is awarded
Restricted Class A Shares must enter into an agreement containing such
terms and conditions, including any consideration to be paid by a
Participant for the Restricted Class A Shares (which consideration may
be solely prior services of the Participant), as are permitted by the
1993 Plan and as may be approved by the Administrator. Restricted Class
A Shares awarded to a Participant may not be transferred or encumbered
during a restricted period beginning on the date of the award and ending
on such later date designated by the Administrator at the time of the
award and set forth in the agreement. The Restricted Class A Shares may
be forfeited upon the occurrence of certain events, such as voluntary
termination of employment, as specified in the agreement. The
Participant is entitled to delivery of the certificate for the
Restricted Class A Shares only upon expiration of the restricted period.
During the restricted period, the Participant will have most of the
rights and privileges of a holder of Class A Shares, including the right
to receive dividends and the right to vote the Restricted Class A
Shares.
Stock Appreciation Rights
The Administrator may grant SARs to any Participant in the 1993 Plan.
If the Administrator determines to grant SARs, one or more Participants may
be granted the right, exercisable upon such terms and conditions as the
Administrator may establish at the time of the Option grant or at any time
thereafter, to surrender all or part of an unexercised Option under the
1993 Plan in exchange for a distribution from the Company of all or any
portion of an amount equal to the difference between (i) the fair market
value (at date of surrender) of the number of Class A Shares in which the
Participant is at the time vested under the surrendered Option, and (ii)
the aggregate option price payable for such vested Class A Shares. No
surrender of an Option shall be effective unless it is approved by the
Administrator. If the surrender is so approved, then the distribution to
which the Participant shall accordingly become entitled may be made in
Class A Shares valued at fair market value at date of surrender, in cash,
or partly in shares and partly in cash, as the Administrator shall in its
sole direction determine. If the surrender of an Option is rejected by
the Administrator, then the Participant shall retain whatever rights the
Participant had under the surrendered Option (or surrendered portion
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<PAGE> 26
thereof) on the date of surrender and may exercise such rights at any
time prior to the later of (i) the receipt of the rejection notice, or
(ii) the last day on which the Option is otherwise exercisable in
accordance with the terms of the Option agreement; however, in the case
of an Incentive Stock Option, in no event may such rights be exercised
at any time after ten years (or five years in the case of a 10%
shareholder) after the date of the Option grant.
Amendment; Termination
The 1993 Plan will terminate on May 18, 2003, unless sooner terminated
by the Board of Directors. The Board of Directors may terminate or
amend the 1993 Plan at any time or from time to time without shareholder
approval, including amendments that enlarge the type and value of
benefits available under the 1993 Plan. However, the Board of Directors
may not, without shareholder approval, increase the maximum number of
Class A Shares that may be issued under the 1993 Plan (except for
appropriate adjustments as stated below), and may not make amendments
required to be approved by shareholders pursuant to federal income tax
or securities laws. The Board of Directors may not alter or impair any
Benefit previously granted under the 1993 Plan without the consent of
the person to whom the Benefit was granted.
If any change is made in the Class A Shares of the Company by reason
of any merger, consolidation, reorganization, recapitalization, stock
dividend, split up, combination of shares, exchange of shares, change in
corporate structure or otherwise, the Administrator shall make
appropriate adjustments to the kind and maximum number of shares subject
to the 1993 Plan and the kind and number of shares and price per share
of stock subject to each outstanding Benefit. Any increase in the Class
A Shares or the right to acquire Class A Shares received by Participants
with respect to any Benefit shall be subject to the same restrictions
applicable to Restricted Shares or shares obtained upon the exercise of
an Option or a Stock Appreciation Right, whichever are applicable. No
fractional shares shall be issued under the 1993 Plan on account of any
such adjustment, and rights to shares shall be limited after such an
adjustment to the lower full share.
Federal Tax Consequences
A Participant will not realize any income, nor will the Company be
entitled to a deduction, at the time an Incentive Stock Option is
granted. If a Participant does not dispose of the Class A Shares
acquired on the exercise of an Incentive Stock Option within one year
after the transfer of such shares to him and within two years from the
date the Incentive Stock Option was granted to him, for federal income
tax purposes: (a) the Participant will not recognize any income at the
time of exercise of his Incentive Stock Option; (b) the amount by which
the fair market value (determined without regard to short-swing profit
restrictions) of the Class A Shares at the time of exercise exceeds the
exercise price is an item of tax preference subject to the alternative
minimum tax on individuals; and (c) the difference between the Incentive
Stock Option price and the amount realized upon sale of the Class A
Shares of the Participant will be treated as long-term capital gain or
loss. The Company will not be entitled to a deduction upon the exercise
of an Incentive Stock Option.
Except in the case of a disposition following the death of a
Participant and certain other very limited exceptions, if the Class A
Shares acquired pursuant to an Incentive Stock Option are not held for
the minimum periods described above, the excess of the fair market value
of the Class A Shares at the time of exercise over the amount paid for
the Class A Shares generally will be taxed as ordinary income to the
Participant in the year of disposition. The Company is entitled to a
deduction for federal income tax purposes at the time and in the amount
in which income is taxed to the Participant as ordinary income by reason
of the sale of stock acquired upon the exercise of an Incentive Stock
Option.
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A Participant will not realize any income at the time a Non-qualified
Stock Option or a SAR is granted, nor will the Company be entitled to a
deduction at that time. Upon exercise of a Non-qualified Stock Option
or a SAR, the Participant will recognize ordinary income (a) in the case
of an exercise of a Non-qualified Stock Option (whether the Non-
qualified Stock Option price is paid in cash or by the surrender of
previously owned Class A Shares), in an amount equal to the difference
between the option price and the fair market value of the Class A Shares
to which the Non-qualified Stock Option pertains, and (b) in the case of
an exercise of a SAR, in an amount equal to the sum of the fair market
value of the Class A Shares and any cash received on the exercise. In
the event that a Participant cannot sell shares acquired on exercise of
a Non-qualified Stock Option or SAR without incurring liability under
Section 16(b) of the Exchange Act, the taxable event described above
will be delayed until six months after acquisition of the Class A
Shares, or the first day on which the sale of such property no longer
subjects the person to suit under Section 16(b) of the Exchange Act,
whichever is earlier. The Company will be entitled to a tax deduction
in an amount equal to the amount of ordinary income realized by the
Participant.
A Participant generally will not recognize income for federal income
tax purposes at the time Restricted Class A Shares are awarded to him.
An amount equal to the fair market value of Restricted Class A Shares at
the time the restrictions lapse less the cost of the Class A Shares, if
any, generally is includible in gross income of the Participant for the
year in which the restrictions lapse. Gain or loss realized upon
disposition of Restricted Class A Shares after the restrictions lapse
will be taxed as capital gain or loss. A Participant's basis in the
Class A Shares is equal to the cost of the Class A Shares, if any, plus
the amount includible in the gross income of the Participant when the
restrictions lapse.
A Participant may elect to include in his gross income the fair market
value of the Restricted Class A Shares on the date of its acquisition;
provided such an election is made within 30 days of such acquisition.
The Company is entitled to a deduction at the time and in the amount
income is included in the gross income of the Participant. Dividends
received by the Participant on Restricted Class A Shares during the
Restricted Period are taxed to the Participant as compensation and are
deductible by the Company. However, if the Participant elects to have
the value of the Restricted Class A Shares includible in his gross
income before the end of the restricted period, dividends on such Class
A Shares after the taxable event will not be deductible by the Company.
If a Participant forfeits previously taxed Restricted Class A Shares,
the Company is required to include in income the deductions it claimed
with respect to such Restricted Class A Shares.
CERTAIN TRANSACTIONS
The Company is a party to two lease agreements with Farms. Under one
agreement, the Company leases space for its executive offices located in
Town & Country, Missouri, in an office building owned by Farms. During
Fiscal 1996, lease payments paid by the Company to Farms under this
lease were $22,800. The Company also leases a ranch facility owned by
Farms which the Company uses primarily for the entertainment of
customers. During Fiscal 1996, the Company paid Farms $60,000 in lease
payments relating to its use of the property in Colorado. It
anticipates making the same amount in payments under the aforementioned
leases during the current fiscal year.
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INDEPENDENT ACCOUNTANTS
The Company is presently utilizing the services of Price Waterhouse
LLP, independent accountants, who have been the Company's and its
predecessors independent accountants since 1986, and who will serve as
the Company's independent accountants for the fiscal year ending April
30, 1997. Representatives of Price Waterhouse will be present at the
Annual Meeting and will have an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at the 1997 Annual
Meeting must be received by the Company at its principal executive
offices no later than April 3, 1997, in order to be considered for
inclusion in the proxy materials.
OTHER MATTERS
As stated elsewhere herein, the Board of Directors knows of no other
matters to be presented for consideration at the meeting by the Board of
Directors or by shareholders who have requested inclusion of proposals
in the Proxy Statement. If any other matter shall properly come before
the meeting, the persons named in the accompanying form of proxy intend
to vote on such matters in accordance with their judgment.
The expense of preparing, printing and mailing proxy materials
to the holders of the Company's Class A Shares will be borne by the
Company. In addition, proxies may be solicited personally or by
telephone or telefax by officers or employees of the Company, none of
whom will receive additional compensation therefor. The Company will
also reimburse brokerage houses and other nominees for their reasonable
expenses in forwarding proxy materials to beneficial owners of the Class
A Shares.
August 1, 1996
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APPENDIX A
HUNTCO INC.
1993 INCENTIVE STOCK PLAN
(AS AMENDED AND RESTATED IN 1996)
1. PURPOSE.
The Huntco Inc. Incentive Stock Plan (the "Plan") is intended to
secure for Huntco Inc. (the "Company") and its shareholders the benefits
of the incentive inherent in common stock ownership by the employees of
the Company and its subsidiaries, who are largely responsible for the
future growth and continued financial success of the Company; and to
afford such persons the opportunity to obtain or increase a proprietary
interest in the Company on a favorable basis.
2. ADMINISTRATION.
The Plan shall be administered by a committee of two or more
directors, which the Board of Directors shall appoint as Administrator
of the Plan or by the full Board of Directors.
Subject to the provisions of the Plan, the Administrator shall have
exclusive authority to interpret and administer the Plan, to select
persons eligible to participate in the Plan, to grant Incentive Stock
Options, Non-Qualified Stock Options, Restricted Shares and Stock
Appreciation Rights ("SARs") in accordance with the Plan, to establish
the timing, pricing, amount and other terms and conditions of such
grants (which need not be uniform with respect to the various
participants (the "Participant" or "Participants") or with respect to
different grants to the same Participant), to establish appropriate
rules relating to the Plan, to delegate some or all of its authority
under the Plan and to take all such steps and make all such
determinations in connection with the Plan and the Incentive Stock
Options, the Non-Qualified Stock Options, the Restricted Shares and the
SARs granted pursuant to this Plan as it may deem necessary or
advisable.
3. ELIGIBILITY.
The Administrator shall from time to time determine and designate the
employees and directors of the Company and its subsidiaries who shall be
Participants in the Plan; and the number of Incentive Stock Options,
Non-Qualified Stock Options, Restricted Shares and SARs to be awarded to
each such Participant. In making any such award, the Administrator may
take into account the nature of services rendered by a Participant, the
capacity of the Participant to contribute to the success of the Company,
and other factors that the Administrator may consider relevant.
4. TYPES OF BENEFITS.
Benefits under the Plan may be granted in any one or any combination
of (a) Incentive Stock Options; (b) Non-Qualified Stock Options; (c)
SARs; and (d) Restricted Shares, as described in the Plan ("Benefits").
The Administrator may: (a) make the grant of Benefits conditional
upon an election by a Participant to defer payment of a portion
of his salary; (b) give a Participant a choice between two
Benefits or combinations of Benefits; (c) award Benefits in
the alternative so that acceptance of or exercise of one
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Benefit cancels the right of a Participant to another; and (d) award
Benefits in any combination or combinations and subject to any condition or
conditions consistent with the terms of the Plan that the Administrator in
its sole discretion may determine.
5. SHARES SUBJECT TO PLAN.
Subject to the provisions of Section 9 (relating to adjustment for
changes in capital stock), the maximum number of shares that may be
issued under this Plan shall not exceed in the aggregate 900,000 shares
of the Company's Class A Common Stock having a par value of $.01 per
share (the "Class A Shares"). Such Class A Shares may be unissued Class
A Shares, or issued Class A Shares that have been reacquired. If any
Incentive Stock Options or Non-Qualified Stock Options granted under the
Plan shall for any reason terminate or expire, or be surrendered without
having been exercised in full, the Class A Shares not purchased under
such options shall be available again for option or grant under the
Plan. If Restricted Shares are issued pursuant hereto and are later
reacquired by the Company pursuant to rights reserved on issuance, the
Class A Shares subject to or reserved for any Benefit may again be used
in connection with the grant of any of the Benefits described in this
Plan; provided that in no event may the number of Class A Shares issued
under this Plan exceed 900,000, subject to adjustment as described in
Section 9.
6. STOCK OPTIONS.
The Administrator from time to time may grant options ("Options") to
Participants to purchase Class A Shares from the Company, provided,
however, that the number of Class A Shares underlying Options and SARs
(as provided in Section 7 hereof) which may be awarded to any
Participant in any calendar year shall not exceed a total of 60,000. An
Option may be granted in the form of an "Incentive Stock Option," which
is intended to qualify as an incentive stock option within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or in the form of a "Non-Qualified Stock Option," which is not
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code. Each Option agreement (the "Option Agreement")
between the Company and a Participant shall be in such form and shall
contain such provisions as the Administrator from time to time shall deem
appropriate. Option Agreements need not be identical, but each Option
Agreement shall include the substance of all of the provisions set forth in
subsections (a) through (c) below:
(a) The purchase price shall be payable in full in cash upon exercise
of the Option. In lieu of cash a Participant may, to the extent
permitted by and subject to the conditions contained in the terms of the
Option Agreement, make payment in whole or in part by tendering Class A
Shares valued at fair market value on the date of exercise, or in the
form of any other property or note permitted by the Option Agreement.
(b) The Administrator in its discretion may provide in any Option
Agreement that the Option shall be exercisable in full at any time or
from time to time during the term of the Option, or may provide for the
exercise of the Option in such installments and at such times during the
term of the Option as the Administrator may determine.
(c) The maximum term of an Option shall be ten years from the date
it was granted, except that the maximum term of an Incentive Stock
Option granted to a person who owns more than ten percent (10%) of the
total combined voting power of all classes of the stock of the Company
shall be five years.
(d) The purchase price of the Class A Shares covered by each
Incentive Stock Option shall be not less than 100% of the fair market
value of the stock subject to the Option at the time the Option is
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granted (110% if the recipient owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company,
or a Subsidiary); and the purchase price of any other Option granted to
a person who is subject to Section 16 of the 1934 Act shall not be less
than 50% of the fair market value of the Class A Shares subject to the
Option at the time such Option is granted.
(e) An Incentive Stock Option (i) shall not be transferable by the
individual to whom granted except by will or by the laws of descent and
distribution; and (ii) may be exercised during the individual's lifetime
only by such individual.
(f) The aggregate fair market value (as determined by the
Administrator as of the time an Incentive Stock Option is granted) of
the Class A Shares covered by an Incentive Stock Option awarded a
Participant under the Plan (or any plan of a parent corporation or
Subsidiary) that becomes exercisable for the first time during any
calendar year shall not exceed One Hundred Thousand Dollars
($100,000.00) or such other maximum applicable to Incentive Stock
Options as may be in effect from time to time under the Code.
(g) No Incentive Stock Option shall be awarded after the day
preceding the tenth anniversary of the effective date of the Plan.
(h) No person entitled to exercise any Option granted under the Plan
shall have any of the rights or privileges of a shareholder of the
Company with respect to the Class A Shares issuable upon exercise of
such Option until certificates representing such Class A Shares shall
have been issued and delivered to such person.
(i) An Incentive Stock Option may be granted only to a person who is
an employee of the Company at the time of the grant.
7. STOCK APPRECIATION RIGHTS (SARs).
(a) If and only if the Administrator determines in its discretion to
grant SARs in accordance with this Section, one or more Participants may
be granted the right, exercisable upon such terms and conditions as the
Administrator may establish at the time of the Option grant or at any
time thereafter, to surrender all or part of an unexercised Option under
the Plan in exchange for a distribution from the Company of all or any
portion of an amount equal to the difference between (i) the fair market
value (at date of surrender) of the number of Class A Shares in which
the optionee is at the time vested under the surrendered Option, and
(ii) the aggregate option price payable for such vested Class A Shares.
The number of Class A Shares underlying Options and SARs which may be
awarded to any Participant in any calendar year shall not exceed a total
of 60,000.
(b) No surrender of an Option pursuant to this Section shall be
effective unless it is approved by the Administrator. If the surrender
is so approved, then the distribution to which the optionee shall
accordingly become entitled under this Section may be made in Class A
Shares valued at fair market value at date of surrender, in cash, or
partly in Class A Shares and partly in cash, as the Administrator shall
in its sole discretion determine.
(c) If the surrender of an Option is rejected by the Administrator,
then the optionee shall retain whatever rights the optionee had under the
surrendered Option (or surrendered portion thereof) on the date of surrender
and may exercise such rights at any time prior to the later of (i) the
receipt of the rejection notice, or (ii) the last day on which the Option is
otherwise exercisable in accordance with the terms of the Option Agreement;
however, in the case of an Incentive Stock Option, in no event may such
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rights be exercised at any time after ten years (or five years in the case
of a 10% Shareholder) after the date of the Option grant.
(d) The following additional provisions shall be applicable to any
Incentive Stock Option that is to be surrendered pursuant to the
provisions of Section 7(a) above:
(i) The Incentive Stock Option may be surrendered only to the
extent it is at the time eligible for exercise in compliance with the
provisions of this Plan.
(ii) The right to surrender the Incentive Stock Option may only
be transferred or assigned in connection with a transfer or assignment
of the Incentive Stock Option in compliance with the limitations of
Section 6.
(iii) The Incentive Stock Option may be surrendered only when
the fair market value of the Class A Shares subject to the surrendered
option exceeds the aggregate option price payable for such Class A
Shares.
(iv) The Incentive Stock Option may not be surrendered at any
time after the expiration or termination of the option term.
8. RESTRICTED SHARES.
A Restricted Share consists of a Class A Share that is subject to
certain restrictions on the disposition of such share and rights of the
Company to reacquire the share upon specified terms upon the occurrence
of certain events during a specified period, as determined by the
Administrator. Each Participant who is awarded Restricted Shares shall
enter into an agreement with the Company in a form specified by the
Administrator agreeing to the terms and conditions of the award and such
other matters consistent with the Plan as the Administrator in its sole
discretion shall determine.
Restricted Shares may not be sold, transferred, pledged or otherwise
encumbered during a Restricted Period. A Restricted Period shall
commence on the date of the award and end at such later date as the
Administrator may designate at the time of the award. A Participant
shall have the entire beneficial ownership and most of the rights and
privileges of a shareholder with respect to Restricted Shares awarded to
him, including the right to receive dividends and the right to vote such
Restricted Shares.
The Administrator in its sole discretion from time to time may
establish the terms and conditions under which Restricted Shares shall
be forfeited by the Participant during the Restricted Period.
Notwithstanding anything in this Section to the contrary, the
Administrator may make an award of "phantom stock credits" to any
Participant which shall serve as a basis for an award of Restricted
Shares at a later point in time.
The Participant shall not be entitled to delivery of the certificate
representing Class A Shares until the expiration of the Restricted
Period applicable to such Restricted Shares.
9. ADJUSTMENT UPON CHANGES IN STOCK.
If any change is made in the Class A Shares by reason of any
merger, consolidation, reorganization, recapitalization, stock
dividend, split up, combination of shares, exchange of shares,
change in corporate structure, or otherwise, appropriate
adjustments shall be made by the Administrator to the kind and
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<PAGE> 33
maximum number of shares subject to the Plan and the kind and number
of shares and price per share of stock subject to each outstanding
Benefit. Any increase in the shares, or the right to acquire shares,
as the result of such an adjustment shall be subject to the same terms
and conditions that apply to the Benefit for which such increase was
received. No fractional Class A Shares shall be issued under the Plan
on account of any such adjustment, and rights to shares always shall
be limited after such an adjustment to the lower full share.
10. AMENDMENT OF THE PLAN.
The Board of Directors of the Company may at any time amend the Plan,
provided that the Board may not, without approval (within twelve months
before or after the date of such change) of such number of the
stockholders as may be required by federal income tax or federal
securities laws for any particular amendment: (a) increase the maximum
number of Class A Shares in the aggregate which may be issued under the
Plan, except as may be permitted under the adjustment provisions of
Section 9, or (b) adopt any other amendment for which shareholder
approval is required by federal income tax or federal securities laws.
The Board of Directors may not alter or impair any Benefit previously
granted under the Plan without the consent of the person to whom the
Benefit was granted.
11. TERMINATION OF THE PLAN.
The Plan shall terminate on May 18, 2003 provided, however, that the
Board of Directors may terminate or suspend the Plan at any time. No
Benefit shall be awarded after termination of the Plan.
Rights and obligations under a Benefit awarded while the Plan is in
effect shall not be altered or impaired by termination or suspension of
the Plan except by consent of the person to whom the Benefit was
awarded.
12. WITHHOLDING TAX.
The Company shall have the right to withhold with respect to any
distribution made to Participants under the Plan any taxes required by
law to be withheld because of such distribution (the "Tax
Requirements"). The Administrator may require or permit a Participant
to satisfy any Tax Requirements with Company stock.
13. RULES OF CONSTRUCTION.
The terms of the Plan shall be construed in accordance with the laws
of the State of Missouri, provided that the terms of the Plan as they
relate to Incentive Stock Options shall be construed first in accordance
with the meaning under and in a manner that will result in the Plan
satisfying the requirements of the provisions of the Code governing
incentive stock options.
14. COMPLIANCE WITH 1934 ACT.
With respect to persons subject to Section 16 of the 1934 Act,
transactions under this Plan are intended to comply with all applicable
provisions of Rule 16b-3 or its successors under the 1934 Act. To the
extent any action by the Administrator fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed
advisable by the Administrator.
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<PAGE> 34
15. EFFECTIVE DATE.
The Plan became effective as of the date it was adopted by the Board
of Directors and shareholders of the Company on May 18, 1993. This
amended and restated Plan was adopted by the Board of Directors of the
Company as of July 31, 1996 and shall become effective on August 15,
1996; provided, however, that the increase in the number of Class A
Shares covered by the Plan as set forth in Section 5 hereof, and the
limitation in the number of Class A Shares underlying Options and SARs
which may be awarded to any Participant in any calendar year as set
forth in Sections 6 and 7 hereof, shall be subject to approval by the
holders of a majority of the outstanding voting stock of the Company
within twelve months of the adoption of the amended and restated Plan by
the Board of Directors.
16. ADOPTION.
The undersigned hereby certifies that this amended and restated plan
was duly adopted by the Board of Directors of the Company as of the 31st
day of July, 1996.
HUNTCO INC.
By: /s/Anthony J. Verkruyse
Title: Vice President and Secretary
Date: July 31, 1996
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<PAGE> 35
HUNTCO INC.
August 1, 1996
Dear Shareholder:
The Annual Meeting of Shareholders of Huntco Inc. will be held at the St.
Louis Marriott West, located at 660 Maryville Centre Dr., St. Louis, Missouri
63141, at 10:00 a.m., local time, on Thursday, September 12, 1996. At the
meeting, shareholders will elect two directors and act upon a proposal to amend
the Huntco Inc. 1993 Incentive Stock Plan as more particularly described in the
enclosed proxy materials.
It is important that your shares are represented at this meeting. Whether
or not you plan to attend the meeting, please review the enclosed proxy
materials, complete the attached proxy form below, and return it promptly in
the envelope provided.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
3. In their discretion, the proxies are authorized to vote upon any other
business which may properly come before the meeting and all adjournments
thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder(s). If no direction is
made, this proxy will be voted FOR the election of the nominees listed
and FOR Proposal 2.
The undersigned hereby revokes all proxies heretofore given by the
undersigned for said meeting. This proxy may be revoked prior to its exercise.
Dated: ---------------------------------------------------
----------------------------------------------------------
Signature
----------------------------------------------------------
Signature
Note: Please sign exactly as your name or names appear
hereon. When signing as Attorney, Executor, Trustee,
Guardian or Officer of a Corporation, please give title as
such. For Joint Accounts, all named holders should sign.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD
IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE> 36
- --------------------------------------------------------------------------------
HUNTCO INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS ON SEPTEMBER 12, 1996
The undersigned hereby appoints B. D. HUNTER, ROBERT J. MARISCHEN and TERRY
J. HEINZ, and each of them, with power of substitution, as proxies of the
undersigned, to attend the Annual Meeting of Shareholders of Huntco Inc. (the
"Company"), to be held at the St. Louis Marriott West, located at 660
Maryville Centre Drive, St. Louis, Missouri 63141 on Thursday, September 12,
1996, at 10:00 a.m. local time, and all adjournments thereof, and to vote, as
indicated below, the shares of Class A Common Stock of the Company which the
undersigned is entitled to vote with all the powers the undersigned would
possess if present at the meeting.
1. Election of Directors / / FOR all nominees listed / / WITHHOLD AUTHORITY to
below (except as marked vote for all nominees
to the contrary below) listed below
B. D. Hunter and Robert J. Marischen
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
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2. Amendment of the Huntco Inc. 1993 Incentive Stock Plan (i) to increase the
number of shares of Class A Common Stock of the Company authorized for
issuance pursuant to awards which may be made thereunder, from 750,000 to
900,000, and (ii) to limit the maximum number of shares of Class A Common
Stock underlying stock options and stock appreciation rights which may be
awarded thereunder to any participant in any one calendar year to a total of
60,000.
FOR / / AGAINST / / ABSTAIN / /
PLEASE DATE AND SIGN ON THE REVERSE SIDE AND MAIL PROMPTLY
IN THE ENCLOSED ENVELOPE.
<PAGE> 37
APPENDIX
Page 16 of the printed proxy statement contains a Stock Price Performance
Graph. The information contained in the graph is depicted in the table that
immediately follows the graph.
