<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Sheffield Steel Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
______________________________________________________________
2) Aggregate number of securities to which transaction applies:
______________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was
determined):____________________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________________________
5) Total fee paid: ___________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing:
1) Amount previously paid: ______________________________________
2) Form, Schedule or Registration Statement No: 14A__________________
3) Filing Party: ________________________________________________
4) Date Filed: __________________________________________________
<PAGE>
July 31, 1998
Dear Stockholder,
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of Sheffield Steel Corporation (the "Company") to be held at 8:00 a.m. on
Thursday, September 3, 1998, at 220 North Jefferson, Sand Springs, Oklahoma.
At the Annual Meeting, six persons will be elected to the Board of Directors.
The Board of Directors recommends the approval of each of these persons. Such
other business will be transacted as may properly come before the Annual
Meeting.
The accompanying Notice of Annual Meeting of Stockholders and Proxy Statement
describe the matters that will be presented at the Annual Meeting.
We hope you will be able to attend the Annual Meeting. Whether you plan to
attend the Annual Meeting or not, it is important that your shares are
represented. Therefore, you are urged promptly to complete, sign, date and
return the enclosed proxy card in accordance with the instructions set forth on
the card, whether or not you plan to attend the Annual Meeting in person. This
will ensure your proper representation at the Annual Meeting.
Sincerely,
/s/ Robert W. Ackerman
ROBERT W. ACKERMAN
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
<PAGE>
SHEFFIELD STEEL CORPORATION
220 North Jefferson
Sand Springs, OK 74063
(918) 245-1335
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on September 3, 1998
To the Stockholders of Sheffield Steel Corporation:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Sheffield Steel
Corporation, a Delaware corporation (the "Company"), will be held on Thursday,
September 3, 1998 at 220 North Jefferson, Sand Springs, Oklahoma, at 8:00 a.m.
for the following purposes:
1. To elect six members to the Board of Directors to hold office until the
next annual meeting of Stockholders and until their successors are duly
elected and qualified.
2. To ratify the selection of KPMG Peat Marwick LLP as independent auditors
for the fiscal year ending April 30, 1999.
3. To transact such other business as may be properly brought before the
Annual Meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on July 7, 1998, as
the record date (the "Record Date") for the determination of Stockholders
entitled to notice of and to vote at the Annual Meeting and at any adjournments
thereof.
All Stockholders are cordially invited to attend the Annual Meeting in
person. Whether you plan to attend the Annual Meeting or not, you are requested
to complete, sign, date and return the enclosed proxy card as soon as possible
in accordance with the instructions on the proxy card. A pre-addressed, postage
prepaid return envelope is enclosed for your convenience. Holders of record of
the Common Stock as of the Record Date who do attend the Annual Meeting and wish
to vote in person may revoke their proxies.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Dale S. Okonow
DALE S. OKONOW
Vice President and Secretary
Sand Springs, Oklahoma
July 31, 1998
<PAGE>
SHEFFIELD STEEL CORPORATION
220 North Jefferson
SAND SPRINGS, OKLAHOMA
918-245-1335
_______________________________
PROXY STATEMENT
_______________________________
GENERAL INFORMATION
This Proxy Statement is being furnished to stockholders in connection with
the solicitation by the Board of Directors of Sheffield Steel Corporation, a
Delaware corporation (the "Company"), of proxies, in the accompanying form, to
be used at the Annual Meeting of Stockholders to be held at 220 North Jefferson,
Sand Springs, Oklahoma, on Thursday, September 3, 1998, at 8:00 a.m., and any
adjournments thereof (the "Meeting").
Where the Stockholder specifies a choice on the proxy as to how his or her
shares are to be voted on a particular matter, the shares will be voted
accordingly. If no choice is specified, the shares will be voted FOR the
election of the six nominees for director named herein. Any proxy given
pursuant to this solicitation may be revoked by the person giving it at any time
before its use by delivering to the Company a written notice of revocation or a
duly executed proxy bearing a later date. Any Stockholder who has executed a
proxy but is present and wishes to vote by ballot in person at the Meeting may
do so by revoking his or her proxy as described in the preceding sentence.
Shares represented by valid proxies in the form enclosed, received in time for
use at the Meeting and not revoked at or prior to the Meeting, will be voted at
the Meeting. The presence, in person or by proxy, of the holders of a majority
of the outstanding shares of the Company's common stock, par value $ .01 per
share ("Common Stock"), is necessary to constitute a quorum at the Meeting. No
approval rights exist for any action proposed to be taken at the Meeting.
The affirmative vote of a majority of the shares present or represented and
entitled to vote at the Meeting is required to approve each proposal, including
the election of directors. With respect to the tabulation of votes on any
matter, abstentions are treated as votes against a proposal, while broker non-
votes have no effect on the vote.
The close of business on July 7, 1998 has been fixed as the record date (the
"Record Date") for determining the Stockholders entitled to notice of and to
vote at the Meeting. As of the close of business on July 7, 1998, the Company
had 3,570,125 shares of Common Stock outstanding and entitled to vote. Holders
of Common Stock are entitled to one vote per share on all matters to be voted on
by Stockholders.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company.
Solicitation of proxies by mail may be supplemented by telephone, telegram,
telex and personal solicitation by the directors, officers, or employees of the
Company. No additional compensation will be paid for such solicitation.
This Proxy Statement and the accompanying proxy are being mailed on or about
July 31, 1998 to all Stockholders entitled to notice of and to vote at the
Meeting.
The Company's Annual Report on Form 10-K for the fiscal year ended April 30,
1998 is being mailed to the Stockholders with this Proxy Statement, but does not
constitute a part hereof.
1
<PAGE>
SHARE OWNERSHIP
HMK Enterprises, Inc. ("HMK") currently owns approximately 90% of the issued
and outstanding shares of Common Stock. HMK is a Massachusetts-based privately-
owned holding company engaged in manufacturing and service businesses.
The following table sets forth certain information as of July 7, 1998
concerning the ownership of Common Stock by each Stockholder known by the
Company to be the beneficial owner of more than 5% of its outstanding shares of
Common Stock, each current member of the Board of Directors, each executive
officer named in the Summary Compensation Table herein, and all current
directors, nominees, and executive officers as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned (a)(b)
--------------------------------
Name and Address** Number Percent
------------------ ------ -------
<S> <C> <C>
Steven E. Karol 1,614,397 40.61% (c) (e)
HMK Enterprises, Inc.
800 South Street
Waltham, MA 02154
Jane M. Karol 1,614,364 40.61% (d) (e)
HMK Enterprises, Inc.
800 South Street
Waltham, MA 02154
Robert W. Ackerman 286,855 (f) 7.22%
Sheffield Steel Corporation
220 N. Jefferson
Sand Springs, OK 74063
John F. Lovingfoss 90,703 (g) 2.28%
Dale S. Okonow 73,828 (h) 1.86%
Stephen R. Johnson 25,313 (i) *
Alton W. Davis - *
Howard H. Stevenson - *
John D. Lefler - *
All current executive officers, 3,705,460 (j) 93.22%
directors, and nominees of the
Company as a group (9 persons)
</TABLE>
- --------------------------------------------------------------------------------
* Represents beneficial ownership of less than 1% of the Company's
outstanding shares of Common Stock.
** Addresses are given for beneficial owners of more than 5% of the
outstanding Common Stock only.
2
<PAGE>
(a) The number of shares of Common Stock issued and outstanding on July 7,
1998 was 3,570,125. The calculation of percentage ownership for each
listed beneficial owner is based upon the number of shares of Common
Stock issued and outstanding at July 7, 1998, plus shares of Common Stock
subject to options held by such person at July 7, 1998 and exercisable
within 60 days thereafter. The persons and entities named in the table
have sole voting and investment power with respect to all shares shown as
beneficially owned by them, except as otherwise noted.
(b) Beneficial ownership as reported in the table above has been determined
in accordance with Rule 13d-3 under the Exchange Act.
(c) Of the 1,614,397 shares of Common Stock beneficially owned by Mr. Karol,
11,272 shares or .33%, are owned of record by him. Mr. Karol also owns
74.7634 shares of the Class A common stock, $1.00 par value, of HMK (the
"HMK Class A Common Stock"), which shares constitute 50% of the issued
and outstanding shares of HMK Class A Common Stock. Of the 1,614,397
shares of Common Stock beneficially owned by Mr. Karol, 1,603,125 shares,
or 47.5%, are deemed to be beneficially owned by Mr. Karol by virtue of
his ownership of such shares of HMK Class A Common Stock.
(d) Of the 1,614,364 shares of Common Stock beneficially owned by Ms. Karol
11,239 shares, or .33%, are owned of record by her. Ms. Karol also owns
74.7634 shares of HMK Class A Common Stock, which shares constitute 50%
of the issued and outstanding shares of HMK Class A Common Stock. Of the
1,614,364 shares of Common Stock beneficially owned by Ms. Karol,
1,603,125 shares, or 47.5%, are deemed to be beneficially owned by Ms.
Karol by virtue of her ownership of such shares of HMK Class A Common
Stock.
(e) Each of Steven E. Karol and Jane M. Karol own 74.7634 shares of HMK
Class A Common Stock, constituting 50% of the issued and outstanding
shares of HMK Class A Common Stock in the aggregate. HMK Class A Common
Stock is the only class of voting stock of HMK issued and outstanding.
For purposes of determining beneficial ownership of Common Stock as
reported in the preceding table, ownership of any class of non-voting
stock of HMK has not been included.
(f) Includes 253,105 shares which Mr. Ackerman may acquire upon the exercise
of options within 60 days after July 7, 1998.
(g) Includes 56,953 shares which Mr. Lovingfoss may acquire upon exercise of
options within 60 days after July 7, 1998.
(h) Includes 56,953 shares which Mr. Okonow may acquire upon exercise of
options within 60 days after July 7, 1998.
(i) Includes 25,313 shares which Mr. Johnson may acquire upon the exercise of
options within 60 days after July 7, 1998.
(j) Includes an aggregate of 392,344 shares which may be acquired upon the
exercise of options within 60 days after July 7, 1998.
3
<PAGE>
MANAGEMENT
DIRECTORS
- ---------
The Company's By-Laws provide for the Company's business to be managed by or
under the direction of the Board of Directors. Under the Company's By-Laws, the
number of directors is fixed from time to time by the Stockholders, and
directors serve in office until the next annual meeting of Stockholders and
until their successors have been elected and qualified.
Pursuant to the Company's By-Laws, the Stockholders voted on August 27, 1997
(i) to set the size of the Board of Directors at six members and (ii) to
nominate Messrs. Karol, Ackerman, Okonow, Stevenson, Lefler and Ms. Jane Karol
for election at the Meeting to the Board of Directors to serve until the next
annual meeting of Stockholders and until their respective successors have been
elected and qualified.
The names of the Company's current directors, nominees for director and
certain information about them are set forth below:
<TABLE>
<CAPTION>
Name Age Position with the Company
- ------------ ----- -------------------------
<S> <C> <C>
Robert W. Ackerman 59 President and Chief Executive
Steven E. Karol 45 Chairman of the Board
Dale S. Okonow 41 Vice President and Secretary
Jane M. Karol 36 Director
Howard H. Stevenson 57 Director
John D. Lefler 52 Director
</TABLE>
ROBERT W. ACKERMAN. Mr. Ackerman has been President and Chief Executive
Officer and a Director since 1992. From 1988 to 1992, Mr. Ackerman was the
President and Chief Executive Officer of Lincoln Pulp & Paper Co., Inc. From
1986 to 1988, Mr. Ackerman taught in the Advanced Management Program at the
Harvard University Graduate School of Business Administration. Mr. Ackerman
serves as a Director of Gulf States Steel, Inc. of Alabama ("Gulf States"), The
Baupost Fund, and Atlantic Investment Advisors, Inc.
STEVEN E. KAROL. Mr. Karol has been a Director of the Company since 1981 and
Chairman of the Board of Directors since 1983. Mr. Karol is also President and
Chief Executive Officer and Chairman of the Board of HMK Enterprises, Inc.
("HMK"), the parent company of Sheffield Steel Corporation. Mr. Karol also
serves as Chairman of the Board of Directors of Gulf States and is a Director of
Stocker and Yale. Mr. Karol is the brother of Jane M. Karol.
DALE S. OKONOW. Mr. Okonow has been Vice President and Secretary since 1988
and a Director since 1990. Prior to 1988, Mr. Okonow was an associate with the
law firm of Proskauer Rose Goetz & Mendelsohn in New York City. Mr. Okonow was
Vice President and General Counsel of HMK from 1988 to 1990 and has been a
Senior Vice President and Chief Financial Officer of HMK since 1990. Mr. Okonow
also serves as Vice-President, Secretary, and a Director of Gulf States.
JANE M. KAROL. Ms. Karol has been a Director since 1991. Ms. Karol is a
Director of HMK. Ms. Karol is also the sister of Steven E. Karol.
4
<PAGE>
HOWARD H. STEVENSON. Dr. Stevenson has been a Director since 1993. Since
1982, Dr. Stevenson has been Sarofim-Rock Professor of Business Administration
at the Harvard University Graduate School of Business Administration. He was
also a Senior Associate Dean and Director of Financial and Information Systems
for Harvard Business School from 1991 to 1994. Dr. Stevenson also serves as a
Director of the Boards of Camp Dresser & McKee, Landmark Communications, Gulf
States, the Baupost Fund, Bessemer Securities Corporation, African
Communications Group, Terry Hinge and Hardware, Quadra Capital Partners, LLC,
and Kaplan Senior Quarters.
John D. Lefler. Mr. Lefler has over 30 years of experience in the steel
industry and has been the President and Chief Executive Officer of Gulf States
since May 1993. Mr. Lefler has served Gulf States in various management
positions since 1986. Prior to joining Gulf States, he worked at USX for more
than 18 years in various management positions. Mr. Lefler serves as a Director
of Gulf States and First Alabama Bank.
COMMITTEES OF THE BOARD OF DIRECTORS
MEETING ATTENDANCE. During the fiscal year ended April 30, 1998 there were
four meetings of the Board of Directors. Each director, during the period he or
she was a director, attended at least 75% of the meetings of the Board of
Directors except Jane Karol who attended less than 75%. Each member of a
committee, during the period he or she was a committee member, attended at least
75% of the meetings of each committee on which they served. In addition, from
time to time, the members of the Board of Directors and its committees acted by
unanimous written consent pursuant to Delaware law.
AUDIT COMMITTEE. The Audit Committee, which met once during the 1998 fiscal
year, has two members, Mr. Okonow and Mr. Ackerman. The Audit Committee reviews
the engagement of the Company's independent accountants, reviews annual
financial statements, considers matters relating to accounting policy and
internal controls and reviews the scope of annual audits. The findings of this
committee are reviewed by the Board of Directors.
STOCK COMPENSATION COMMITTEE. The Stock Compensation Committee has three
members, Mr. Karol, Mr. Okonow and Mr. Ackerman. The Stock Compensation
Committee did not meet during fiscal 1998. The Stock Compensation Committee
administers the Company's 1993 Employee, Director and Consultant Stock Option
Plan. See "1993 Stock Option Plan".
COMPENSATION COMMITTEE. The Company does not have a standing Compensation
Committee. Recommendations concerning salaries and incentive compensation
(other than stock options) for employees of the Company (other than Mr.
Ackerman) are made by Mr. Ackerman and are reviewed by the Board of Directors.
Recommendations concerning Mr. Ackerman's salary and incentive compensation
(other than stock options) are made by Mr. Karol and are reviewed by the Board
of Directors.
NOMINATING COMMITTEE. The Company does not have a standing Nominating
Committee.
ELECTION AND COMPENSATION OF DIRECTORS
Approximately ninety percent of the outstanding shares of the Company's
Common Stock is currently owned by HMK, which is in turn 100% owned by members
of the Karol family. Consequently, certain members of the Karol family together
beneficially own substantially all of the outstanding shares of the Company's
common stock and are able to determine the outcome of all matters required to be
submitted to stockholders for approval, including the election of directors.
Giving effect to the exercise of all of the Company's exercisable options, HMK
owns approximately 81% of the outstanding shares of the Company's Common Stock.
See "Share Ownership."
5
<PAGE>
Dr. Stevenson and Mr. Lefler will receive an annual retainer of $4,000,
payable quarterly, and a meeting fee of $1,500 for each meeting of the Board of
Directors attended. The Company reimburses ordinary and necessary out-of-pocket
expenses incurred by any Director in connection with his or her services. In
addition, Directors of the Company are eligible to receive non-qualified stock
options under the Company's 1993 Employee, Director and Consultant Stock Option
Plan. As of April 30, 1998, no Director had been granted any stock options for
services as a Director of the Company.
EXECUTIVE OFFICERS
- ------------------
The names of, and certain information regarding, executive officers of the
Company who are not also directors, are set forth below. The executive officers
serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
Name Age Position with the Company
- ------------ ----- -------------------------
<S> <C> <C>
Alton W. Davis 49 Vice President-Operations
John F. Lovingfoss 60 Vice President-Sales and Marketing
Stephen R. Johnson 46 Vice President and Chief Financial Officer
</TABLE>
ALTON W. DAVIS. Mr. Davis has been Vice President-Operations since August
1996. From 1986 to 1996, he was Vice President and General Manager of
Ameristeel's Jacksonville, Florida location. Prior to that, he held various
management positions with both Bayou Steel and Chaparral Steel.
JOHN F. LOVINGFOSS. Mr. Lovingfoss has been Vice President-Sales and
Marketing since 1984. From 1958 to 1984, Mr. Lovingfoss held various positions
with the Company in sales, marketing, and management.
STEPHEN R. JOHNSON. Mr. Johnson has been Vice President and Chief Financial
Officer since February 1996. From 1977 to 1996, Mr. Johnson held various
positions with the Company including the position of Vice President-
Administration and Treasurer since 1991 and Vice President-MIS and Business
Planning since 1984.
6
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table includes, for the fiscal year ended
1998, individual compensation information for: (i) the Company's Chief Executive
Officer (the "CEO") and (ii) each of the other most highly compensated persons
who were serving as executive officers of the Company (other than the CEO) at
the end of fiscal 1998 whose salary and bonus earned during fiscal 1998 exceeded
$100,000 (collectively, the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation
Fiscal -------------------------------------- Awards
Name and Principal Position Year(a) Salary Bonus Other # Options
- ------------------------------------ --------------- --------------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Steven E. Karol 1998 $303,000 $ 47,000 - -
Chairman of the Board 1997 250,000 70,000 - -
Robert W. Ackerman 1998 275,000 107,000 - -
President and CEO 1997 275,000 10,000 - -
Dale S. Okonow 1998 175,000 - - -
Vice President and Secretary 1997 175,000 - - -
Alton W. Davis 1998 175,000 68,000 - -
Vice President-Operations 1997 127,000 10,000 $46,000(1) -
John F. Lovingfoss 1998 161,000 63,000 - -
Vice President-Sales 1997 150,000 10,000 - -
Stephen R. Johnson 1998 150,000 58,000 - -
Vice President and 1997 150,000 10,000 - -
Chief Financial Officer
</TABLE>
- --------------------------------------------------------------------------------
(a) Pursuant to the Instructions to Item 402(b) of Regulation S-K, information
with respect to fiscal years prior to fiscal 1998 has not been included.
(1) Represents moving and related expenses for Mr. Davis
OPTION GRANTS IN LAST FISCAL YEAR
None of the named executive officers were granted stock options during the
fiscal year ended April 30, 1998.
7
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
During the fiscal year ended April 30, 1998 none of the named executive
officers exercised stock options. The following table provides information
regarding the number of exercisable stock options as of April 30, 1998 and the
values of "in-the-money" options, which values represent the positive spread
between the exercise price of any such option and the fiscal year-end value of
the Company's Common Stock.
<TABLE>
<CAPTION>
Number of Securities Value of the
Underlying Unexercised in-the-
Unexercised Options Money Options at
at Fiscal Year End Fiscal Year End
--------------------------------- ---------------------------------
Exercisable Unexercisable Exercisable (1) Unexercisable
----------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Steven E. Karol - - - -
Robert W. Ackerman 253,105.000 - $5,872,981 -
Dale S. Okonow 56,953.125 - $1,321,421 -
Alton W. Davis - 25,000.000 - $252,232
John F. Lovingfoss 56,953.125 - $1,321,421 -
Stephen R. Johnson 25,312.500 10,000.000 $ 587,298 $100,893
</TABLE>
(1) The value of unexercised in-the-money options at fiscal year end assumes a
fair market value for the Company's Common Stock of $30.31, as determined
by the performance-based formula prescribed in the non-qualified and
incentive agreements entered into pursuant to the 1993 Stock Option Plan.
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
The following is a report of the Board of Directors regarding actions taken
with respect to executive compensation during the fiscal year ended April 30,
1998. Compensation policies and annual compensation applicable to the Company's
executive officers are the responsibility of and established by the Board of
Directors. Recommendations concerning salaries and incentive compensation (other
than stock options) for employees of the Company (other than Mr. Ackerman) are
made by Mr. Ackerman and are reviewed by the Board of Directors. The Board of
Directors' overall policy regarding compensation of the Company's executive
officers is to provide salary levels and compensation incentives that attract
and retain qualified individuals in key positions; that recognize individual
performance and the Company's performance; and that support the Company's
overall strategic plan. The principal components of executive compensation are
salary, bonus and stock options.
Base Salary. Base salary levels for the Company's executive officers,
including the Chief Executive Officer, is based on the expertise and
responsibility that the position requires; management experience; subjective
judgment of the Board of Directors as to the value of the executive's past
contribution and potential future contribution to the profitability of the
business; and consideration of the compensation of competing companies.
Bonuses. The Company has an Executive Bonus Plan designed to recognize
individual performance and the Company's performance.
Stock Options. The Board believes that stock ownership by executive officers
is important to insure that executives have a continuing stake in the long term
success of the Company. On September 15, 1993, the Board of Directors adopted
the 1993 Employee, Director and Consultant Stock Option Plan (the "Stock Option
Plan").
1993 STOCK OPTION PLAN
The Stock Option Plan provides for the grant of incentive stock options to
key employees of the Company and non-qualified stock options to key employees,
directors and consultants of the Company. A total of 580,000 shares of Common
Stock, which would represent approximately 15.3% of the Company's Common Stock
on a fully diluted basis, have been reserved for issuance under the Stock Option
Plan upon the exercise of options. At April 30, 1998, there were 456,000 options
outstanding. The options granted on December 15, 1993 to the named executive
officers are incentive stock options and non-qualified stock options and vested
on April 30, 1996. The options granted during the year ended April 30, 1997 to
the named executive officers are incentive and non-qualified and vest on
April 30, 1999. The Stock Option Plan is administered by the Board of Directors.
There were no stock options exercised during fiscal 1998.
8
<PAGE>
Executive Incentive Plan
Each of the named executive officers, excluding Messrs. Karol and Okonow, is
eligible to receive bonus compensation under the Company's Executive Bonus Plan
(the "Incentive Plan"). The Incentive Plan provides that (i) in the event that
actual pre-tax profit for any fiscal year equals or exceeds budgeted pre-tax
profit for such year, participants in the Incentive Plan will be paid a bonus
ranging from 30% to 50% of such participant's base salary and (ii) in the event
that actual pre-tax profit for any fiscal year does not meet budgeted pre-tax
profit for such year, by less than 20%, the Company's Board of Directors may, at
its discretion, (A) establish a bonus pool of up to 20% of the total base pay of
all participants in the Incentive Plan and (B) award bonus payments from such
bonus pool, if any, to participants in the Incentive Plan. Such bonus payments,
if any, are to be based upon (x) the individual performance of such participant,
(y) the performance of such participant's department and (z) such participant's
contribution to the Company's overall performance. Bonuses, if any, are required
to be paid within 90 days after the Company's fiscal year end.
PENSION PLAN
The Company maintains a retirement plan that is an Internal Revenue Code (the
"Code") qualified defined benefit pension plan (the "Pension Plan"). At normal
retirement date (age 65 or completion of 30 years of service), a participant is
paid a pension equal to the sum of: (a) the product of the participant's years
of plan service from September 1, 1981 through December 31, 1984 and 1.25% of
his average monthly compensation (up to $12,500), determined over the
participant's highest five consecutive years; and (b) the product of the
participant's years of plan service after January 1, 1985, and .9% of his
average monthly compensation (up to $12,500) as defined above. The normal form
of pension is a lifetime annuity with a 50% survivor pension for any surviving
spouse. Optional forms of payment are available and are actuarially equivalent
to a lifetime annuity without surviving spouse benefits. The Pension Plan also
provides for early retirement benefits on an actuarially reduced basis for
participants who reach age 55 with at least 10 years of service. Vested
retirement benefits are available for participants who are terminated with at
least five years of plan service. Although the pension is reduced to the extent
of any profit sharing retirement annuity provided by discretionary contributions
under the Sheffield Steel Corporation Thrift and Profit Sharing Plan (the
"Profit Sharing Plan") no such discretionary contributions have been made to the
Profit Sharing Plan.
Years of service for purposes of the Pension Plan with respect to the named
executive officers are as follows: Mr. Ackerman, 5 years; Mr. Lovingfoss, 39
years; Mr. Johnson, 20 years, and Mr. Davis, 1 year. Messrs. Karol and Okonow
are excluded from the Pension Plan.
The following table shows the projected annual pension benefits payable at
the normal retirement age of 65:
<TABLE>
<CAPTION>
Annual Normal Pension Benefits for Years of Service Shown
Annual -----------------------------------------------------------
Base Salary 15 20 25 30 35
- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$100,000 $13,500 $18,000 $22,500 $27,000 $31,500
125,000 16,875 22,500 28,125 33,750 39,375
150,000 and above 20,250 27,000 33,750 40,500 47,250
</TABLE>
9
<PAGE>
Thrift and Profit Sharing Plan
The Company's Profit Sharing Plan is a Code-qualified defined contribution
plan which permits its employees to elect "after-tax" payroll deductions between
4% and 14% of compensation. The Profit Sharing Plan also provides for
additional discretionary contributions by the Company, which would be allocated
according to compensation ratios and, to the extent permitted by the Internal
Revenue Code, according to compensation in excess of the FICA taxable wage base.
Discretionary Company contributions are forfeited by terminated employees with
less than five years of service. Discretionary contributions would offset
pensions under the Pension Plan described above, but no discretionary Company
contributions have been made to the Profit Sharing Plan.
401(K) RETIREMENT PLAN
The Company also sponsors a plan which permits eligible employees of the
Company to defer compensation to the extent permitted by Section 401(k) of the
Code (the "Retirement Plan"). The Retirement Plan permits, but does not require,
discretionary Company contributions. The Company made contributions of
approximately $89,000 to the Joliet Facility's 401K plan for the year ended
April 30, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of the end of fiscal 1998, HMK owed an aggregate of $2.7 million to the
Company. Of that amount, $2.2 million was related to certain tax attributes
allocated to the Company pursuant to a Tax Sharing Agreement with HMK. Under
that agreement, the receivable will be realized by reducing the future income
taxes otherwise payable by the Company to HMK. The remaining $0.5 million
relates to the Company's advance of funds to HMK to secure a letter of credit
needed for the insurance program of the Company's Joliet facility.
In September 1992, certain of the Company's officers, directors and members
of the Karol family purchased an aggregate of 5% of the issued and outstanding
shares of the Company's Common Stock in exchange for an aggregate of $250,000
cash and $1,000,000 in non-recourse promissory notes secured by pledges of such
stock. The non-recourse promissory notes evidencing each such shareholders'
indebtedness bear simple interest at an annual rate of 7.61% and become due on
February 1, 2007 or on such earlier date upon the occurrence of certain events
as stated in the notes. During the year ended April 30, 1997, the Company
signed an agreement to repurchase 50,625 shares of the Company's common stock
from two former officers of the Company. As a result of this transaction,
$300,000 of the promissory notes plus interest of $93,000 was satisfied and the
Company recorded a note payable in the amount of $662,000 to the former
shareholders. The note payable accrues simple interest at 6.02% and is being
repaid in five annual installments which began December 12, 1997.
Each of Robert W. Ackerman, President and Chief Executive Officer and a
Director of the Company and John F. Lovingfoss, Vice President-Sales and
Marketing of the Company, purchased 33,750 shares of the Company's Common Stock
in exchange for $50,000 in cash and a non-recourse promissory note with an
original principal balance of $200,000. The aggregate amount of indebtedness
owed to the Company by each of such individuals as of April 30, 1998 is $285,816
($200,000 principal amount and $85,816 of accrued interest). The largest amount
of indebtedness outstanding during fiscal 1998 for each of Messrs. Ackerman and
Lovingfoss was $285,816.
10
<PAGE>
Mr. Dale S. Okonow, Vice President, Secretary and a Director of the Company
purchased 17,125 shares of the Company's Common Stock in exchange for $25,000
in cash and a non-recourse promissory note with an original principal balance of
$100,000. The aggregate amount of indebtedness owed to the Company by Mr. Okonow
as of April 30, 1998 is $142,908 ($100,000 principal amount and $42,908 of
accrued interest). The largest amount of indebtedness outstanding during fiscal
1998 for Mr. Okonow was $142,908.
Each of Jane M. Karol, a Director of the Company and Joan L. Karol, mother of
each of Jane M. Karol and Steven E. Karol, Directors of the Company, purchased
11,239 shares of the Company's Common Stock in exchange for $16,665 in cash and
a non-recourse promissory note with an original principal balance of $66,660.
The aggregate amount of indebtedness owed to the Company by each of such
individuals as of April 30, 1998 is $95,263 ($66,660 principal amount and
$28,603 of accrued interest). The largest amount of indebtedness outstanding
during fiscal 1998 for each of Jane M. Karol and Joan L. Karol was $95,263.
Steven E. Karol, Chairman of the Board of Directors of the Company, purchased
11,272 shares of the Company's Common Stock in exchange for $16,670 in cash and
a non-recourse promissory note with an original principal balance of $66,680.
The aggregate amount of indebtedness owed to the Company by Mr. Karol as of
April 30, 1998 is $95,289 ($66,680 principal amount and $28,609 of accrued
interest). The largest amount of indebtedness outstanding during fiscal 1998
for Mr. Karol was $95,289.
11
<PAGE>
ELECTION OF DIRECTORS
NOTICE ITEM 1
Under the Company's By-Laws, the number of directors is fixed from time to
time by the Stockholders, and directors serve in office until the next annual
meeting of Stockholders and until their successors have been elected and
qualified.
Pursuant to the Company's By-Laws, the Board of Directors on August 27, 1997
voted to nominate Messrs. Karol, Ackerman, Okonow, Stevenson, Lefler, and Ms.
Jane Karol for election at the Meeting to serve until the next annual meeting of
Stockholders and until their respective successors have been elected and
qualified.
* * * * * * * * * *
Unless authority to vote for any of the nominees named above is withheld, the
shares represented by the enclosed proxy will be voted FOR the election as
directors of such nominees. In the event that any nominee shall become unable
or unwilling to serve, the shares represented by the enclosed proxy will be
voted for the election of such other person as the Board of Directors may
recommend in his place. The Board has no reason to believe that any nominee
will be unable or unwilling to serve.
The affirmative vote of a majority of the shares present or represented and
entitled to vote at the Meeting is required to elect each nominee as a director.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MESSRS. KAROL, ACKERMAN,
OKONOW, STEVENSON, AND LEFLER, AND MS. KAROL AS DIRECTORS, AND PROXIES SOLICITED
BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED
OTHERWISE ON THE PROXY.
APPROVAL OF SELECTION OF AUDITORS
NOTICE ITEM 2
The Company's Board of Directors has selected KPMG Peat Marwick LLP to
conduct the annual audit of the financial statements of the Company for the
fiscal year ending April 30, 1999. KPMG Peat Marwick LLP has no financial
interest, direct or indirect, in the Company, and does not have any connection
with the Company except in its professional capacity as an independent auditor.
A representative of KPMG Peat Marwick LLP may be present at the meeting, will
have the opportunity to make a statement, and will be available to respond to
appropriate questions.
* * * * * * * * * *
Unless authority to vote for the ratification of KPMG Peat Marwick LLP as the
Company's independent auditors is withheld, the shares represented by the
enclosed proxy will be voted FOR ratification. In the event that the selection
is not ratified, the Board of Directors will reconsider the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE SELECTION
OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
APRIL 30, 1999. PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF
UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
12
<PAGE>
NOTICE ITEM 3
The Board of Directors knows of no other business which will be presented to
the Meeting. If any other business is properly brought before the Meeting, it
is intended that proxies in the enclosed form will be voted in respect thereof
in accordance with the judgment of the persons voting the proxies.
Stockholder Proposals
To be considered for presentation at the Annual Meeting of Stockholders to be
held in 1999, Stockholder proposals must be received, marked for the attention
of: Vice President and Secretary, Sheffield Steel Corporation, P. O. Box 218,
Sand Springs, Oklahoma 74063, not earlier than January 1, 1999 and not later
than April 30, 1999.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO FILL
OUT, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE.
By order of the Board of Directors:
/s/ Dale S. Okonow
DALE S. OKONOW
Vice President and Secretary
July 31, 1998
13
<PAGE>
DETACH HERE
- --------------------------------------------------------------------------------
PROXY
SHEFFIELD STEEL CORPORATION
22 NORTH JEFFERSON
SAND SPRINGS, OKLAHOMA 74063
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, SEPTEMBER 3, 1998
The undersigned hereby appoints Robert W. Ackerman and Dale S. Okonow, and
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them of either of them, to represent and to vote as
designated below all the shares of capital stock of Sheffield Steel
Corporation (the "Company"), held of record by the undersigned on July 7, 1998
at the Annual Meeting of Stockholders to be held on Thursday, September 3,
1998, at the offices of the Company, located at 220 North Jefferson, Sand
Springs, Oklahoma 74063, and any adjournment or adjournments thereof (the
"Annual Meeting").
If you do not plan attend the meeting, please complete, sign and date the proxy
and return it without delay in the enclosed postage-prepaid envelope. If you do
attend the meeting in person, you may withdraw the proxy and vote personally on
each matter brought before the meeting.
- ------------- -------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ------------- -------------
<PAGE>
DETACH HERE
- --------------------------------------------------------------------------------
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3
IF NO SPECIFIC DIRECTION IS MADE.
1. ELECTION OF DIRECTORS
---------------------
To elect as Directors of the Company the following six individuals:
Nominees: Robert W. Ackerman, Jane M. Karol, Steven F. Karol,
John D. Lefler, Dale S. Okonow, Howard H. Stevenson
FOR WITHHELD
[ ] ALL [ ] FROM ALL
NOMINEES NOMINEES
[ ]
---------------------------------------
For all nominees except as noted above
2. APPROVAL OF SELECTION OF AUDITORS
--------------------------------- FOR AGAINST ABSTAIN
To ratify as independent auditors, [ ] [ ] [ ]
KPMG Peat Marwick, LLP for the
fiscal year ending April 30, 1999.
3. GENERAL
------- FOR AGAINST ABSTAIN
In their discretion, the proxies are [ ] [ ] [ ]
authorized to vote upon such other
business as may properly come before
the meeting or any adjournments
thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as your name(s) appear(s) hereon. All holders must sign.
When signing in a fiduciary capacity, please indicate full title as such. If
a corporation or partnership, please sign in full corporate or partnership
name by authorized person.
Signature: Date:
------------------------------------- -------------------------
Signature: Date:
------------------------------------- -------------------------
