<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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
J&L SPECIALTY STEEL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
* No fee required
<PAGE> 2
J&L SPECIALTY STEEL, INC.
One PPG Place
P.O. Box 3373
Pittsburgh, Pennsylvania 15230-3373
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
MAY 29, 1998
TO THE SHAREHOLDERS OF J&L SPECIALTY STEEL, INC.:
The Annual Meeting of Shareholders of J&L Specialty Steel, Inc. will be
held at the Pittsburgh Hilton and Towers, 600 Commonwealth Place, Pittsburgh,
Pennsylvania 15222 at 10:00 a.m. on Friday, May 29, 1998. The following matters
will be presented to the shareholders for their consideration and vote:
1. The election of five directors.
2. The ratification of the appointment of independent auditors for the year
ending December 31, 1998.
3. Other matters that may properly be brought before the shareholders at
the Annual Meeting.
The Board of Directors has fixed March 13, 1998 as the record date for
determining shareholders entitled to notice of and to vote at the Annual
Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. IF YOU DO ATTEND THE
MEETING, YOU MAY THEN WITHDRAW YOUR PROXY AND VOTE IN PERSON.
By order of the Board of
Directors,
Kirk F. Vincent
Executive Vice President
Finance and Administration and
Chief Financial Officer,
Secretary
Dated: March 27, 1998
<PAGE> 3
J&L SPECIALTY STEEL, INC.
One PPG Place
P.O. Box 3373
Pittsburgh, Pennsylvania 15230-3373
PROXY STATEMENT
This proxy statement and the accompanying proxy card are being mailed on or
before March 27, 1998 to the shareholders of J&L Specialty Steel, Inc. (the
"Company") in connection with the solicitation by the Board of Directors of the
Company of proxies to be voted at the Annual Meeting and at any adjournments
thereof. The Annual Meeting is scheduled to be held on Friday, May 29, 1998, at
10:00 a.m. at the Pittsburgh Hilton and Towers, 600 Commonwealth Place,
Pittsburgh, Pennsylvania 15222.
Only holders of Common Stock, $.01 par value, of the Company ("Common
Stock") of record as of March 13, 1998 will be entitled to vote at the Annual
Meeting or any adjournments thereof. No other class of common or preferred stock
has been issued by the Company. At the record date, there were 38,763,000 shares
of Common Stock outstanding. Each share is entitled to one vote on all matters
to be considered at the Annual Meeting. The presence, in person or by proxy, of
a majority of outstanding shares is necessary to constitute a quorum. You may
vote for all, some or none of the nominees for the Board of Directors. Only
affirmative votes are counted in the election of directors. The five nominees
receiving the highest number of votes cast at the Annual Meeting, a quorum being
present, will be elected as directors. Under the Company's Articles of
Incorporation, the shareholders do not have cumulative voting rights in the
election of directors. Under Pennsylvania law, the affirmative vote of a
majority of the votes cast at the Annual Meeting, a quorum being present, is
necessary for the ratification of the appointment of the independent auditors.
Abstentions and broker non-votes will have no effect on the vote concerning the
ratification of the appointment of the independent auditors.
In the event that at the date of the Annual Meeting any of the nominees for
director should for any reason not be available for election, the proxies hereby
solicited by the Board of Directors will be voted for the election of such
substituted nominees as shall be designated by the Board of Directors.
Please complete, sign and return the enclosed proxy card in the
postage-paid envelope whether or not you plan to attend the Annual Meeting. When
properly executed, the vote for your proxy will be cast in accordance with your
instructions. Where a choice is specified on the form of proxy, the shares will
be voted in accordance with the choice made therein. If no choice is made, the
shares will be voted in accordance with the recommendation of the Board of
Directors. Your vote is important and must reach our offices in time to be
properly counted. Please send it promptly. Your proxy may be revoked by
submission of a written notice to the Company's Secretary at any time before it
is voted at the meeting. You also have the power to change your vote in person
at the Annual Meeting.
<PAGE> 4
ELECTION OF DIRECTORS
Pursuant to the terms of the Company's Articles of Incorporation, the Board
of Directors is divided into three classes. Currently, five directors hold
office for a term expiring at the Annual Meeting of Shareholders to be held on
May 29, 1998, four directors hold office for a term expiring at the Annual
Meeting of Shareholders to be held in 1999 and four directors hold office for a
term expiring at the Annual Meeting of Shareholders to be held in 2000. The
members of each class hold office until their successors are duly elected and
qualified. At each annual meeting of shareholders of the Company, the successors
to the class of directors whose term expires at such meeting will be elected to
hold office for a term expiring at the annual meeting of shareholders held in
the third year following the year of their election.
Although the Articles of Incorporation permit a maximum number of fifteen
directors, the Company is proposing the election of only five directors at this
time, resulting in thirteen members on the Board of Directors. The Board of
Directors does not anticipate appointing any additional new directors to fill
the remaining two vacancies during the next year.
Pursuant to the July 1995 labor agreement between the Company and the
United Steelworkers of America, such union may recommend an individual to the
Company's Chief Executive Officer for election as a director of the Company. If
the Chief Executive Officer finds this person acceptable, the labor agreement
provides that the Chief Executive Officer shall recommend such person for
nomination. Mr. Sheehan was so nominated and was elected in 1997 for a term
expiring at the annual meeting of shareholders in the year 2000.
The Articles of Incorporation further require that whenever there is a
"Significant Shareholder," not less than two directors shall be "Disinterested
Directors." Usinor, a French corporation, currently owns a majority of the
Company's stock and is therefore a Significant Shareholder. The term
"Disinterested Director" means any director of the Company who is not (i)
directly or indirectly through one or more intermediaries in control of,
controlled by or under common control with a Significant Shareholder, or (ii) an
officer, director, employee or agent of a Significant Shareholder or its
affiliates. Mr. Kronk and Mr. Dietrich are the only nominees for director who
are considered Disinterested Directors.
The names of the nominees for director and the directors whose terms will
continue after the Annual Meeting, their principal occupations, the periods in
which their terms expire and certain other information relating to each is set
forth below.
NOMINEES FOR DIRECTOR
THE BOARD OF DIRECTORS HAS NOMINATED WILLIAM S. DIETRICH, II, JEAN DIDIER
DUJARDIN, CLAUDE F. KRONK, MICHEL LE PAGE AND GERARD MARTEL, FOR TERMS EXPIRING
AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD IN 2001, AND RECOMMENDS A VOTE
FOR THEIR ELECTION.
William S. Dietrich, II, age 59, will be a new director of the Company. Mr.
Dietrich was President and Chief Executive Officer of Dietrich Industries, Inc.
from June 1967 until the end of 1997. Mr. Dietrich is a member of the Board of
Directors of Worthington Industries, Inc. and Carpenter Technology Corporation.
Jean Didier Dujardin, age 50, has been a director of the Company since
1995. Mr. Dujardin has been Chief Financial Officer of Ugine, a division of
Usinor, since December 1993. From 1987 until December 1993 Mr. Dujardin was
Chief Financial Officer of Ascometal, a wholly-owned subsidiary of Usinor.
2
<PAGE> 5
Claude F. Kronk, age 66, has been a director of the Company since its
inception in 1986. From 1986 until 1995, Mr. Kronk also served as President and
Chief Executive Officer of the Company. Mr. Kronk was appointed Vice Chairman
and Chief Executive Officer of the Company in August 1995 and served until his
retirement from the Company in January 1998. Mr. Kronk is also a director of
Cold Metal Products, Inc. and of the Triumph Group, Inc.
Michel Le Page, age 53, has been a director of the Company since June 1996.
Mr. Le Page has been Vice President, Marketing Stainless Steel Flat Products of
Ugine since 1989.
Gerard Martel, age 57, has been a director of the Company since June 1996.
Mr. Martel has been Executive Vice President of Ugine since July 1996. From 1988
through June 1996, Mr. Martel was Chairman and Chief Executive Officer of La
Meusienne, a wholly-owned subsidiary of Usinor.
CONTINUING DIRECTORS
TERMS EXPIRING AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD IN 1999
Guy R. Dolle, age 55, has been Chairman of the Board of Directors of the
Company since September 1997. Mr. Dolle has also been Chief Executive Officer of
Ugine since September 1997. From May 1995 through September 1997, Mr. Dolle
served as Executive Vice President of Strategy, Planning and International
Affairs of Usinor. From February 1993 through April 1995, Mr. Dolle was Chairman
and Chief Executive Officer of Unimetal, a division of Usinor which manufactures
carbon steel long products. From November 1987 through January 1993, Mr. Dolle
served as Vice President Operations of Sollac, the flat rolled carbon steel
division of Usinor.
Gerard Picard, age 51, has been a director of the Company since February
20, 1998. Mr. Picard has been President of Francosteel Corporation since January
1998. From January 1997 through August 1997, Mr. Picard served as Executive
Director-Commercial Department of Sollac. From November 1993 through December
1996, Mr. Picard was Deputy Managing Director of Arus, a Usinor sales joint
venture. Mr. Picard served as Director of Financial Services of Usinor from
January 1989 through October 1993.
Francis Mer, age 58, has been a director of the Company since June 1990.
Mr. Mer has been the Chairman and Chief Executive Officer of Usinor since 1987.
Usinor is one of the largest steel manufacturers in the world.
Eugene A. Salvadore, age 49, has been a director of the Company since June
1996. Effective January 1, 1998, Mr. Salvadore was named President and Chief
Executive Officer of the Company. Mr. Salvadore had been President and Chief
Operating Officer of the Company from July 1995 until December 1997. From April
1993 through June 1995, Mr. Salvadore served as Vice President-Operations. From
June 1992 through April 1993, Mr. Salvadore was General Manager-Operations of
the Company.
TERMS EXPIRING AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD IN 2000
Pierre F. de Ravel d'Esclapon, age 52, has been a director of the Company
or its predecessor since June 1990. Mr. de Ravel d'Esclapon has been a partner
in the law firm of LeBoeuf, Lamb, Greene & MacRae since March 1992.
3
<PAGE> 6
Robert Hudry, age 51, has been a director of the Company since June 1990.
Mr. Hudry has been Executive Vice President of Usinor since April 1995. From
1987 through March 1995, Mr. Hudry was Chief Financial Officer of Usinor. Mr.
Hudry was also Chairman and Chief Executive Officer of Unimetal, from January
1989 through December 1992.
Michel J. Longchampt, age 63, has been a director of the Company since June
1990. From 1976 until October 1997, Mr. Longchampt also served as President and
Chief Executive Officer of Francosteel Company, a steel distribution company and
an affiliate of Usinor. Mr. Longchampt served as Chairman and Chief Executive
Officer of Francosteel Company from October 1997 until his retirement on
December 31, 1997. Mr. Longchampt is also a director of The France Growth Fund,
a closed-end mutual fund.
John J. Sheehan, age 71, has been a director of the Company since June
1996. Prior to his retirement in 1996, Mr. Sheehan had been Legislative Director
and Assistant to the President of the United Steelworkers of America.
BOARD OF DIRECTORS AND DIRECTOR COMMITTEES
The business and affairs of the Company are managed under the direction of
the Board of Directors as provided by the By-Laws of the Company and the laws of
the Commonwealth of Pennsylvania. Although directors other than Messrs. Kronk
and Salvadore were not involved in the day-to-day operations of the business,
the Board of Directors was kept informed by meetings, reports and discussions
with senior operating management. The Board of Directors held four meetings in
1997. The Audit Committee met twice, and the Compensation Committee and the
Incentive-Based Compensation Committee each met once. Each director attended at
least 75% of the meetings of the Board of Directors and any committee of which
he is a member, with the exception of Messrs. Hudry and Martel.
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE. The directors have established an Audit Committee that, as
of December 31, 1997, consisted of Messrs. de Ravel d'Esclapon and Jennings R.
Lambeth. Mr. Lambeth is not standing for re-election to the Board of Directors.
The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public accountants
the plans and results of the audit engagement, approves professional services
provided by the independent public accountants, reviews the independence of the
independent public accountants, considers the range of audit and nonaudit fees
and reviews the adequacy of the Company's internal accounting controls.
COMPENSATION COMMITTEE. The directors have established a Compensation
Committee consisting of Messrs. de Ravel d'Esclapon, Dolle, Dujardin and Mer
which makes recommendations with respect to salaries and bonuses payable to the
Company's executive officers.
INCENTIVE-BASED COMPENSATION COMMITTEE. The directors have established an
Incentive-Based Compensation Committee which on December 31, 1997 consisted of
Messrs. de Ravel d'Esclapon and Lambeth. The Incentive-Based Compensation
Committee administers the Company's 1993 Stock Incentive Plan. Both members of
this Committee are outside directors and cannot participate in the 1993 Stock
Incentive Plan.
4
<PAGE> 7
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company or its affiliates is
paid an annual retainer of $7,500 and, in addition, $1,000 plus expenses for
each meeting of the Board of Directors such director attends. Such outside
directors will also be paid $300 ($500 for committee chairpersons), plus
expenses, for each committee meeting attended on a date which is not the date of
a Board meeting. Under the Company's 1993 Stock Incentive Plan, the Chairman of
the Board of Directors of the Company is also eligible to receive nonstatutory
stock options. Pursuant to an amendment to the Senior Management Incentive Plan
approved in 1997, persons who are outside directors of the Company as of the
last day of each calendar year shall be participants in such plan and may earn
up to 100% of their base annual retainer (currently $7,500) if the Company's
return on assets exceeds certain specified benchmarks.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and persons who own more than 10% of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Such
persons are required by Commission regulation to furnish the Company with copies
of all Section 16(a) forms they file. None of such persons failed to file any
required Section 16 reports on a timely basis in 1997. In making this
disclosure, the Company has relied solely on the written representations of its
directors and executive officers and copies of the reports that they have filed
with the Commission.
5
<PAGE> 8
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table shows the number of shares of Common Stock of the
Company reported to the Company as of February 17, 1998 to be beneficially owned
by (i) each person known by the Company to be the beneficial owner of more than
5% of the Company's Common Stock, (ii) each nominee for director and each
continuing director, (iii) the Chief Executive Officer and the four other most
highly compensated executive officers and (iv) all of such persons and the other
executive officers of the Company as a group:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK(1)
-------------------------
NUMBER PERCENT
OF SHARES OF CLASS
--------- --------
<S> <C> <C>
PRINCIPAL SHAREHOLDERS
KeyCorp................................................ 3,752,723 9.7%
127 Public Square
Cleveland, OH 44114-1306
Scudder, Stevens & Clark, Inc.......................... 3,658,000 9.5%
Two International Place
Boston, MA 02110-4103
Usinor (successor by merger to Ugine).................. 20,730,000 53.5%
Immeuble Pacific
13, cours Valmy
TSA 30003
F-92070 La Defense 7 Cedex France
NOMINEES, DIRECTORS AND NAMED EXECUTIVE OFFICERS
Guy R. Dolle........................................... 0 *
Pierre F. de Ravel d'Esclapon.......................... 1,000 *
William S. Dietrich, II................................ 5,000+ *
Jean Didier Dujardin................................... 0 *
Robert Hudry........................................... 0 *
Claude F. Kronk........................................ 140,800(2) *
Michel Le Page......................................... 0 *
Michel J. Longchampt................................... 0 *
Gerard Martel.......................................... 0 *
Francis Mer............................................ 0 *
Gerard Picard.......................................... 0 *
Eugene A. Salvadore(3)................................. 62,000(4) *
John J. Sheehan........................................ 0 *
Geoffrey S. Gibson..................................... 42,210(5) *
Kirk F. Vincent........................................ 45,544(5) *
John A. Wallace........................................ 30,500(6) *
All directors and executive officers as a group (twenty
persons) including those named above................... 406,386(7) *
</TABLE>
- ---------
* Less than 1 percent of the outstanding shares.
+ As of March 5, 1998.
6
<PAGE> 9
(1) Each person has sole voting and investment power with respect to the shares
listed, unless otherwise indicated.
(2) Includes 90,000 shares which Mr. Kronk has a right to acquire within 60 days
pursuant to options exercisable under the Company's 1993 Stock Incentive
Plan.
(3) Of such shares 2,000 are owned jointly by Mr. Salvadore and his wife.
(4) Includes 30,000 shares which may be acquired within 60 days pursuant to
options exercisable under the Company's 1993 Stock Incentive Plan and 30,000
shares of restricted stock issued under such plan for which restrictions
have not yet lapsed.
(5) Includes 26,666 shares which may be acquired within 60 days pursuant to
options exercisable under the Company's 1993 Stock Incentive Plan, and
includes 18,000 shares and 12,500 shares for Mr. Vincent and Mr. Gibson,
respectively, of restricted stock issued under such plan for which the
restrictions have not yet lapsed.
(6) Includes 17,000 shares which Mr. Wallace has a right to acquire within 60
days pursuant to options exercisable under the Company's 1993 Stock
Incentive Plan and 12,500 shares of restricted stock issued under such plan
for which the restrictions have not yet lapsed.
(7) Includes 248,664 shares which may be acquired within 60 days pursuant to
options exercisable under the Company's 1993 Stock Incentive Plan and 93,000
shares of restricted stock issued under such plan for which the restrictions
have not yet lapsed.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth, for calendar years 1995, 1996 and 1997, the
cash compensation paid to the Company's Vice Chairman and Chief Executive
Officer and to each of the four other most highly compensated executive officers
of the Company as of December 31, 1997, as well as certain other compensation
information relating to those years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
--------------------------------------
ANNUAL COMPENSATION RESTRICTED
-------------------------- OTHER ANNUAL STOCK SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION AWARDS(3)($) OPTIONS/ SARS(#)(4) COMPENSATION(5)
------------------ ---- ------ -------- ------------ ------------ ------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Claude F. Kronk 1997 $517,032 $ 0 $(2) $ 0 0 $38,595
Vice Chairman 1996 485,940 238,888 (2) 0 0 63,817
and Chief Executive 1995 467,256 533,000 (2) 0 50,000 62,379
Officer
Eugene A. Salvadore 1997 $233,580 $ 0 $(2) $286,875 0 $12,854
President and 1996 210,000 107,101 (2) 0 0 12,310
Chief Operating 1995 170,800 102,481 (2) 0 45,000 11,178
Officer
Kirk F. Vincent 1997 $190,068 $ 0 $ 0 $172,125 0 $11,950
Vice President- 1996 180,720 92,168 0 0 0 10,772
Finance and Law 1995 173,760 104,256 0 0 35,000 10,383
Geoffrey S. Gibson 1997 $169,656 $ 0 $(2) $119,531 0 $23,323
Vice President- 1996 160,200 81,702 (2) 0 0 23,221
Commercial 1995 154,080 92,448 (2) 0 35,000 22,578
John A. Wallace 1997 $131,472 $ 0 $ 0 $119,531 0 $19,710
Vice President- 1996 124,140 63,312 0 0 0 16,697
Operations 1995 116,022 59,669 0 0 30,000 15,374
</TABLE>
- ---------
(1) Represents amounts paid under the Company's Senior Management Incentive
Plan. Cash bonuses are paid following the end of each fiscal year, but
are included above in compensation for the year in which they were
earned.
(2) In accordance with SEC rules, omitted to the extent that other annual
compensation does not exceed the lesser of $50,000 or 10% of the total
of such person's annual salary and bonus.
(3) Represents the closing market price on the New York Stock Exchange, on
the award date, of the number of shares of restricted stock awarded to
the named executive under the 1993 Stock Incentive Plan. The market
price does not take into account any diminution in value attributable
to the restrictions applicable to the shares awarded under the plan.
Except for Messrs. Salvadore and Vincent, the transfer restrictions on
33.3% of the restricted shares will lapse in each of the third, fourth
and fifth anniversaries of the date of grant. For Mr. Salvadore, the
transfer restrictions lapse on the third and fourth anniversaries of
the grant date for 20,000 and 10,000 shares of restricted stock,
respectively. For Mr. Vincent, the transfer restrictions lapse on the
second and third
8
<PAGE> 11
anniversaries of the grant date for 12,000 and 6,000 shares of
restricted stock, respectively. In addition, the transfer restrictions
on Messrs. Salvadore's and Vincent's restricted stock will lapse in the
event either of them is terminated without "good cause" or in the event
either of them terminates their employment for "good reason" under
their respective employment agreements. All restrictions may lapse
earlier in the event of death or disability, and certain of the
restrictions will lapse earlier if the Company's return on equity
exceeds the median return on equity of public-reporting corporations
having an SIC Code of 3312. Dividends accrue from the date of grant,
but are payable only when and if the restrictions related to such
shares lapse. The number of restricted shares of common stock held by
each named executive officer under the 1993 Stock Incentive Plan and
the closing market price of that number of shares on the New York Stock
Exchange on December 31, 1997 were: Mr. Kronk, 0 shares, $0; Mr.
Salvadore, 30,000 shares, $300,000; Mr. Vincent, 18,000 shares,
$180,000; Mr. Gibson, 12,500 shares, $125,000; and Mr. Wallace, 12,500
shares, $125,000.
(4) Represents the number of shares of the Company's Common Stock for which
options were granted under the Company's 1993 Stock Incentive Plan, in
some cases in conjunction with alternative stock appreciation rights.
(5) Consists of contributions made by the Company under its defined
contribution plan, 401(k) plan and supplemental salary received
pursuant to the Company's cafeteria plan. For 1997, the amounts paid
are as follows:
<TABLE>
<CAPTION>
COMPANY
DEFINED CONTRIBUTIONS
CONTRIBUTION CAFETERIA TO
PLAN PLAN 401(k)PLAN
---- ---- ----------
<S> <C> <C> <C>
Claude F. Kronk............................ $28,160 $ 9,823 $ 612
Eugene A. Salvadore........................ 8,104 0 4,750
Kirk F. Vincent............................ 7,200 0 4,750
Geoffrey S. Gibson......................... 15,350 3,223 4,750
John A. Wallace............................ 12,462 2,498 4,750
</TABLE>
OPTION VALUES. The table below sets forth, as to the persons named in the
Summary Compensation Table, information with respect to the number and value of
stock options and related alternative stock appreciation rights held as of
December 31, 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND 1997 YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
SECURITIES OPTIONS/SARS THE-MONEY OPTIONS/SARS
UNDERLYING AT 1997 YEAR-END(#)(1) AT 1997 YEAR-END($)(2)
OPTIONS/SARS VALUE --------------------------- ---------------------------
EXERCISED(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Claude F. Kronk......... 0 $0 90,000 0 $0 $0
Eugene A. Salvadore..... 0 0 30,000 60,000 0 0
Kirk F. Vincent......... 0 0 26,666 53,334 0 0
Geoffrey S. Gibson...... 0 0 26,666 53,334 0 0
John A. Wallace......... 0 0 17,000 34,000 0 0
</TABLE>
9
<PAGE> 12
- ---------
(1) All of the stock options are nonstatutory stock options granted under the
Company's 1993 Stock Incentive Plan. Alternative stock appreciation rights
were granted with certain of the options and are available in either stock
or cash at the discretion of the Incentive-Based Compensation Committee.
(2) The value of unexercised in-the-money stock options is the difference
between the aggregate fair market value of the shares covered by the stock
options and the aggregate exercise price. On December 31, 1997, none of the
stock options were in-the-money.
PENSION AND BENEFIT PLANS
DEFINED BENEFIT PLAN. The Company maintains a tax-qualified defined benefit
pension plan. Subject to certain maximum and minimum provisions, the plan
provides pension benefits to salaried employees based on the average of each
salaried employee's compensation over those 60 consecutive months of the
employee's participation in the plan which produced the highest average. The
benefit is calculated at the rate of 1.5% of this average compensation for each
of the employee's years of service and is reduced by 1.5% of the employee's
primary Social Security benefit for each of the employee's years of service (to
a maximum of 33 years).
The plan covers all salaried employees who have completed one year of
service and who were employed by the Company on or before December 31, 1986.
While the defined benefit plan has not been terminated, no additional benefits
have accrued after December 31, 1986. The benefits under the plan became vested
upon an employee's completion of five years of service. The compensation used to
calculate benefits received under the plan is the total remuneration paid to the
employee, including base salary, incentive awards and certain bonuses. Effective
January 1, 1987, the Company adopted a tax-qualified defined contribution
pension plan to replace the defined benefit plan for salaried employees.
EXECUTIVE BENEFIT PLAN. The Company also maintains an unfunded Executive
Benefit Plan which provides supplemental retirement benefits in addition to
those payable under the Company's tax-qualified retirement plans for certain
executives selected for participation by the Board of Directors. For
participants who were in the plan prior to May 1, 1992, and who terminate
employment after February 1, 1998, the benefit is the greater of: (a) a monthly
amount calculated at the rate of 1.65% of the participant's highest average
monthly compensation (including bonus), as defined under the defined benefit
retirement plan, except that compensation is measured over 36 as opposed to 60
consecutive months, multiplied by years of service to a maximum of 30, plus 3%
of average monthly compensation (including bonus) multiplied by years of service
in excess of 30 or (b) a monthly amount calculated at 45% of the participant's
average monthly compensation (including bonus), plus 3% of average monthly
compensation (including bonus) for each year of service after the later to occur
of the participant's sixtieth birthday or the participant's completion of ten
years of service. Notwithstanding the foregoing, for participants who terminate
employment after February 1, 1998, the benefit accrued for years of service
after the earlier to occur of participant's sixtieth birthday or participant's
completion of thirty years of service is limited to 21% of average monthly
compensation. Benefits under the plan vest after completion of five years of
participation in the plan and are reduced by (i) the employee's primary Social
Security benefit, (ii) the employee's benefits, expressed as a joint and 50%
survivor's annuity for married employees and as a single life annuity for single
employees, under the Company's other tax-qualified retirement plans and (iii) in
certain cases, any such benefits from plans of any prior employers. For
10
<PAGE> 13
participants commencing participation in the plan on and after May 1, 1992 and
who terminate employment after February 1, 1998, the benefit calculation is the
same as described above, except that the monthly benefit is calculated at the
rate of 1.65% of the participant's average monthly compensation multiplied by
years of the participant's credited service; payments that begin after the
participant reaches age 60 but prior to age 65 are subject to a reduction by
1/24th of 1% for each month by which the payment begins prior to age 65 (subject
to a 2.5% maximum). As of December 31, 1997, fourteen current and former
employees or their surviving spouses participate in the Executive Benefit Plan,
including Messrs. Kronk, Salvadore, Vincent, Gibson and Wallace. All named
executive officers are considered pre-May 1, 1992 participants with the
exception of Mr. Wallace. In 1997 the Board of Directors of the Company approved
certain amendments to the Executive Benefit Plan, including, for participants
retiring after February 1, 1998, an increase (reflected above) of the monthly
accrual rate from 1.5% to 1.65% of highest average monthly compensation.
The tables below show the approximate total annual retirement benefits
payable under the Executive Benefit Plan before (i) reductions for primary
Social Security payments, (ii) payments under the defined benefit plan and the
defined contribution plan and (iii) in certain cases, any such benefits from
plans of any prior employers. The first table shows estimated benefits projected
for named executive officers who are plan participants and who participated in
the plan prior to May 1, 1992, while the second table shows estimated benefits
projected for such participants joining the plan on or after May 1, 1992, in
each case assuming retirement at age 65.
NAMED EXECUTIVE OFFICER PARTICIPANTS IN PLAN PRIOR TO MAY 1, 1992
<TABLE>
<CAPTION>
HIGHEST YEARS OF SERVICE
THIRTY-SIX --------------------------------------------------------------------------
MONTH AVERAGE 10 15 20 25 30 35 40
COMPENSATION(1) -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 $ 45,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 75,000
200,000 90,000 120,000 120,000 120,000 120,000 120,000 150,000
300,000 135,000 180,000 180,000 180,000 180,000 180,000 225,000
400,000 180,000 240,000 240,000 240,000 240,000 240,000 300,000
600,000 270,000 360,000 360,000 360,000 360,000 360,000 450,000
800,000 360,000 480,000 480,000 480,000 480,000 480,000 600,000
1,000,000 450,000 600,000 600,000 600,000 600,000 600,000 750,000
</TABLE>
NAMED EXECUTIVE OFFICER PARTICIPANTS IN PLAN ON OR AFTER MAY 1, 1992
<TABLE>
<CAPTION>
HIGHEST YEARS OF SERVICE
THIRTY-SIX --------------------------------------------------------------------------
MONTH AVERAGE
COMPENSATION(1) 10 15 20 25 30 35 40
-------------- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 $ 15,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500 $ 60,000
200,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000
300,000 45,000 67,500 90,000 112,500 135,000 157,000 180,000
</TABLE>
- ---------
(1) Highest thirty-six month average compensation is the average compensation
("Salary" and "Bonus" in the Summary Compensation Table) for the highest
consecutive thirty-six month period of employment.
11
<PAGE> 14
At the end of 1997, Messrs. Gibson, Kronk, Salvadore, Vincent and Wallace
had been credited with 31, 40, 26, 18 and 23 years of service, respectively,
under the Executive Benefit Plan. Should Messrs. Gibson, Salvadore, Vincent or
Wallace retire at age 60, their estimated annual benefits would be $242,210,
$835,290, $308,779 and $113,753, respectively, assuming an annual 4% increase in
their base salaries until such age and assuming receipt of the maximum possible
percentage of annual bonus in the relevant years. Mr. Kronk's retirement
benefit, as required by his employment contract, was paid in a lump sum payment
of $3,448,973 on February 6, 1998.
EMPLOYMENT AGREEMENTS
Mr. Kronk was employed pursuant to an employment agreement with the Company
dated April 28, 1986, as amended. Mr. Kronk retired in January 1998. Mr. Kronk's
1997 base salary and annual bonus formula were determined by the Board of
Directors at their meeting in December 1996.
Mr. Salvadore entered into an employment agreement dated September 28, 1995
which contained the terms of his employment in 1997. His employment agreement
provided for his employment at specific monthly base salary levels and
participation in the Senior Management Incentive Plan at a minimum level.
Mr. Salvadore entered a new five-year employment agreement effective
January 1, 1998. The employment agreement provides that Mr. Salvadore's
employment is automatically extended for additional successive one year periods
unless terminated by either party upon 60 days notice prior to each renewal
date. Mr. Salvadore's base salary will be reviewed annually by the Board of
Directors but is guaranteed to be at least equal to the previous year's level.
Bonus opportunities of up to 100% of his base salary are achievable, depending
on the Company's return on assets. The agreement provides for a series of grants
of restricted stock, including 30,000 shares of restricted stock issued pursuant
to approval of the Incentive-Based Compensation Committee on December 4, 1997
and subject to the restrictions described earlier in this proxy. If his
employment is terminated by the Company without cause, Mr. Salvadore will
receive a severance payment equal to three years base salary, plus a bonus for
each year based on the average of his highest two bonus payments in the five
years immediately prior to such termination. In the event of such termination,
Mr. Salvadore will also be entitled to up to 70,000 additional shares of
restricted stock, which under his employment agreement are anticipated to be
issued in future years. A covenant not to compete for three years is provided in
the event Mr. Salvadore terminates employment and the Company has not materially
breached the agreement or Mr. Salvadore's employment is terminated by the
Company for cause. If the Company does not renew the agreement after the initial
term or any one year extension period, Mr. Salvadore may elect to receive the
severance payment if he agrees to be bound by such three year covenant not to
compete.
Mr. Vincent also entered into a three-year employment agreement dated as of
January 1, 1998. His salary will be reviewed by the Board of Directors annually
but is guaranteed to be at least equal to the previous year's level. Bonus
opportunities of up to 80% of his base salary are achievable, depending on the
Company's return on assets. The agreement provides for a series of grants of
restricted stock, including 18,000 shares issued pursuant to approval of the
Incentive-Based Compensation Committee on December 4, 1997 and subject to the
restrictions described earlier in this proxy. If his employment is terminated by
the Company without cause, Mr. Vincent will receive a severance payment equal to
two years base salary, plus a bonus for each year based on the average of his
highest two bonus payments in the five years immediately prior to such
termination. In the event of such termination, Mr. Vincent will also be entitled
to up to 18,000 additional shares of restricted stock which under his employment
agreement are anticipated to be issued in future years.
12
<PAGE> 15
A limited covenant not to compete for two years is provided in the event Mr.
Vincent terminates employment and the Company has not materially breached the
agreement or Mr. Vincent's employment is terminated by the Company for cause.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return on
the Company's Common Stock against the cumulative total return of the Standard &
Poor's Composite-500 Stock Index and the Media General Financial Services
Industry Group 312-Iron and Steel Furnaces, Mills and Foundries (measured in
accordance with the rules of the Securities and Exchange Commission) for the
period November 30, 1993 to December 31, 1997(1). This graph assumes a $100
investment on December 15, 1993, and assumes a reinvestment of dividends. In
accordance with the rules of the Securities and Exchange Commission, this
presentation shall not be incorporated by reference into any of the Company's
Registration Statements under the Securities Act of 1933.
<TABLE>
<CAPTION>
Media General Financial
J&L Services Industry Group 312 -
Measurement Period Specialty Iron and Steel Furnaces, S&P 500
(Fiscal Year Covered) Steel, Inc. Mills and Foundries Index
<S> <C> <C> <C>
11/30/93 100.00 100.00 100.00
12/31/93 116.07 113.33 101.21
12/31/94 143.25 109.35 102.55
12/31/95 139.34 107.35 141.09
12/31/96 86.65 102.25 173.48
12/31/97 78.70 96.17 231.36
</TABLE>
- ---------
(1) Indices are not available on a daily basis; therefore, the graph begins
on November 30, 1993 for such indices, although the Company began as a
public company on December 15, 1993 (indicated on the Performance
Graph). The December 15, 1993 date shown on the graph only relates to
the Company's stock, as the other indices are not computed on a daily
basis and the Company has no knowledge of what such indices would have
been on such date. The Company's performance is based on its December
15, 1993 initial offering price of $14.00 per share compared to its
close on December 31, 1997 at $10.00 per share.
13
<PAGE> 16
REPORT ON EXECUTIVE COMPENSATION
The composition and principal duties of the Compensation Committee and the
Incentive-Based Compensation Committee are described earlier in this Proxy
Statement. The Incentive-Based Compensation Committee makes the compensation
determinations with regard to stock options, stock appreciation rights,
restricted stock and other matters under the 1993 Stock Incentive Plan. The
Compensation Committee makes recommendations concerning most other executive
compensation decisions, which are then acted upon directly by the Board of
Directors. Therefore, this report is submitted over the names of the
Compensation Committee and, for purposes of long-term compensation only, the
Incentive-Based Compensation Committee.
The following is the executive officer compensation philosophy and
structure and the application of such philosophy regarding the compensation of
the Vice Chairman and Chief Executive Officer and the other executive officers
during 1997. In accordance with the rules of the Securities and Exchange
Commission, this report shall not be incorporated by reference into any of the
Company's Registration Statements under the Securities Act of 1933.
EXECUTIVE COMPENSATION PHILOSOPHY
The compensation policy of the Company is to tie a substantial portion of
the compensation of each executive officer directly to the performance of the
Company. In addition to receiving a base salary, the amount of which is reviewed
annually, each executive officer is eligible for an annual incentive bonus based
on the annual performance of the Company as reflected by the Company's operating
income and return on net operating assets. Furthermore, the 1993 Stock Incentive
Plan, in which all of the executive officers participate, ties executive
compensation to the long-term performance of the Company as reflected by the
price of the Company's stock through stock options, stock appreciation rights
and restricted stock. In 1996, an independent national compensation consultant
analyzed the financial performance and executive compensation of a peer group of
thirteen metals companies, including the Company's competitors, over a four year
period. The group of companies compared in this survey is not the same as the
industry group compared to the Company on the performance graph on page 13.
Based on the impressive financial performance of the Company during the period
analyzed, a compensation target of the 75th percentile of such peer group was
established for total direct compensation (base salary, annual bonus, stock
options, stock appreciation rights and restricted stock). By structuring all
elements of total direct compensation except base salary so that they are tied
to the Company's stock price or return on assets, the compensation target of the
75th percentile may only be reached if the financial performance of the Company,
over a number of years, is outstanding.
BASE SALARY
Base salaries are set at levels sufficient to retain talented and dedicated
executive officers. To accomplish this, the Company's general policy is to
compare its base salary levels with salaries of competitors and companies in
similar industries. The 1996 independent compensation consultant analysis
discussed above found executive base salaries to be below the 50th percentile of
the peer group. A general target for base salaries was established at the 50th
percentile of the peer group, although this target is to be achieved over
several years. The Company, in determining base compensation of individual
executive officers, also considers, on a subjective basis and without regard to
any set formula, individual and departmental performance, inflation and the
amount of compensation received in the previous year. The increase in executive
base salaries
14
<PAGE> 17
in 1997 from 1996 was primarily based on the above subjective performance
evaluations and inflation. Mr. Salvadore's compensation in 1997 was established
by his employment agreement entered into in 1995. The base salaries of the
executive officers are believed to be reasonable when compared to the base
salaries of executives employed by the Company's competitors and similar
industrial companies.
ANNUAL BONUS
Annual incentive bonus awards are paid to the executive officers in
accordance with the terms of the Senior Management Incentive Plan (the "SMI
Plan"). The SMI Plan places executive officer compensation directly "at risk"
based on the return on net operating assets of the Company. The maximum amount
of each executive officer's potential 1997 incentive bonus under the SMI Plan
was 60% of such executive's base salary, except for the Vice Chairman and Chief
Executive Officer whose maximum incentive bonus was approximately 114% of his
base salary.
The Compensation Committee recommends to the Board of Directors which
executives should participate in the SMI Plan and at what participation level.
For 1997, participation level changes in the SMI Plan were determined directly
by the Board of Directors upon the recommendation of the Compensation Committee.
In determining the participation level of each executive officer, the
responsibilities of such officer and the ability of such officer to increase the
profitability of the Company are considered on a subjective basis. Different
participation levels provide for different bonuses as a percent of base salary.
Under the SMI Plan, the participant's exact bonus percentage within the range
set by his participation level is based on a mathematical calculation based on
the Company's operating income as a percent of net operating assets for that
year. One-third of the potential bonus (for participants other than the Vice
Chairman and Chief Executive Officer) may be adjusted based on an evaluation of
whether subjectively determined annual corporate-wide goals and departmental
goals were met. In 1997, no annual incentive bonuses were earned under the SMI
Plan. Effective January 1, 1998, the Board of Directors of the Company approved
certain amendments to the SMI Plan to equitably adjust the return on asset
targets to account for the significant increase in capital assets of the
Company; the maximum possible bonus percentages were not changed.
LONG-TERM COMPENSATION: 1993 STOCK INCENTIVE PLAN
Long-term incentive compensation is provided to the executive officers
through the Company's 1993 Stock Incentive Plan (the "1993 Plan"). Stock
options, stock appreciation rights and restricted stock provide an effective
incentive for the recipients to create shareholder value over the long term
since such equity securities become more valuable as the price of the stock
appreciates. Pursuant to such plan, stock options and shares of restricted stock
are awarded by the Incentive-Based Compensation Committee based upon the
Committee's subjective judgment concerning the responsibilities of the
individual, the nature and value to the Company of his or her services, his or
her present and/or potential contribution to the success of the Company and any
other factors as such committee deems relevant including the 1996 compensation
study and related total compensation targets discussed above. In 1997, awards of
restricted stock were made based on these factors to all of the named executive
officers, except Mr. Kronk. The restriction on the transfer of such shares
lapses as noted in the Summary Compensation Table.
In order to more clearly align the interest of the executive officers with
the interest of the shareholders of the Company, increased ownership of the
Company's stock by these individuals was desired. Therefore, in March 1997,
stock ownership goals for executive officers were established by the Board of
Directors of the
15
<PAGE> 18
Company as follows: Chief Executive Officer--three times base salary; Chief
Operating Officer/Senior Vice Presidents--two times base salary; and other Vice
Presidents--one time base salary. To help meet such guidelines, the Board of
Directors and the shareholders of the Company approved the amendment and
restatement of the 1993 Plan to permit the issuance of restricted stock under
such plan to employees. The amendment did not increase the total number of
shares available for issuance under such plan.
COMPENSATION OF THE VICE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Mr. Kronk's 1997 base salary of $517,032 was determined at the December
1996 Board of Directors meeting based upon the above factors, and the total
compensation of chief executive officers at the Company's competitors and
comparable industrial companies. Mr. Kronk was employed pursuant to an
Employment Agreement dated April 28, 1986, as amended.
Mr. Kronk received no annual incentive bonus in 1997 because his annual
bonus is based solely on the return on net operating assets of the Company. No
stock options or other incentive compensation were awarded to Mr. Kronk in 1997,
and Mr. Kronk retired in January 1998.
The Compensation Committee continues to study the $1 million compensation
deduction cap under Section 162(m) of the Internal Revenue Code. For 1997, Mr.
Kronk's compensation did not result in his salary exceeding such $1 million cap;
therefore such statutory provision was only of theoretical importance. The
Compensation Committee may decide whether to take the necessary steps to conform
its compensation to comply should such cap have a substantial impact in future
years.
As to all matters in the report:
Guy R. Dolle
Pierre F. de Ravel d'Esclapon
Jean Didier Dujardin
Francis Mer
As to long-term compensation matters only:
Pierre F. de Ravel d'Esclapon
Jennings R. Lambeth
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH UGINE AND USINOR
HISTORY OF OWNERSHIP OF COMPANY. In June 1990, the Company was acquired
(the "1990 Acquisition") by Ugine, the second largest stainless steel
manufacturer in the world. As a result of the initial public offering of Common
Stock of the Company in December 1993, Ugine sold certain of its shares in the
Company, but retained ownership of a slight majority of the issued and
outstanding shares of common stock of the Company. Usinor, in turn, owned a
majority of the capital stock of Ugine until December 11, 1995 when it purchased
all of the remaining shares of Ugine and merged Ugine into Usinor. Usinor
thereby became owner of record of a majority of the shares of the Company. Ugine
continues to operate under the name Ugine although it is no longer a separately
incorporated subsidiary. Usinor is one of the largest steel manufacturers in the
world.
16
<PAGE> 19
RESEARCH AND TECHNOLOGY AGREEMENT. The Company entered into a Technology
Agreement dated as of October 1, 1993 with Ugine. The Technology Agreement has a
ten-year term and will provide the Company with a broad spectrum of patents,
know-how and future research and development services concerning the
manufacturing and processing of flat rolled stainless steel including, under
certain circumstances, any commercially viable thin strip casting technology
developed by Ugine. Ongoing fees to be paid to Ugine for research and
development services are $5 million for 1997 and each year thereafter for the
remaining term of the Technology Agreement. The Technology Agreement provides
for a substantial reduction in these fees, and in certain cases a refund of part
of these fees, if Ugine cannot transfer its thin strip casting technology to the
Company. Upon the merger of Ugine into Usinor in December 1995, Usinor assumed
the Technology Agreement.
PURCHASES FROM AND SALES TO AFFILIATED COMPANIES. In the ordinary course of
its business, the Company purchases stainless steel from and sells stainless
steel to Ugine and certain affiliates of Usinor. In 1997, the Company made no
material purchases from Usinor or its affiliates, including Ugine. In 1997,
there were no sales to Ugine but there were $48.3 million of sales to its
related parties. Included in such sales, are sales to a principal customer of
the Company in which a Usinor affiliate owns almost 50% of the voting stock. The
Company believes that the terms of such purchases and sales are no less
favorable than the Company could obtain in transactions with unrelated parties
purchasing or selling a similar volume of products.
INSURANCE. The Company currently participates in some of the Usinor
insurance programs for Usinor's United States subsidiaries. The Company is also
covered under certain other insurance policies maintained by Usinor,
underwritten on Usinor and its affiliates as a group. The Company believes that
the total premium it pays for its insurance coverage as described above is no
less favorable than that which it could otherwise obtain.
AFFILIATED DIRECTORS. Guy R. Dolle, Jean Didier Dujardin, Robert Hudry,
Michel Le Page, Michel J. Longchampt, Gerard Martel, Francis Mer and Gerard
Picard are directors of the Company and are also directors or executive officers
of Usinor or its affiliates, including Ugine. See "Election of Directors".
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Arthur Andersen LLP as independent
auditors to audit the financial statements of the Company and its subsidiaries
for 1998. Although the appointment of independent auditors is not required to be
submitted to a vote of the shareholders, the Board believes that the
shareholders should participate in this decision through the ratification
process. Unless otherwise directed, proxies will be voted for the ratification
of the appointment of Arthur Andersen LLP as the Company's independent auditors
for 1998. Representatives of Arthur Andersen LLP are expected to be present at
the meeting to respond to appropriate questions and will have an opportunity to
make a statement if they desire to do so. Arthur Anderson LLP has served as the
independent auditors of the Company since 1990.
OTHER MATTERS
The Company knows of no other matters to be presented for action at the
Annual Meeting. However, if any other matters should properly come before the
meeting, it is intended that votes will be cast pursuant to the proxy in
accordance with the best judgment of the persons acting as proxies.
17
<PAGE> 20
The Company will pay the expense in connection with the printing,
assembling and mailing of the notice of meeting, this proxy statement and the
accompanying form of proxy to the holders of Common Stock of the Company. In
addition to the use of the mails, proxies may be solicited by directors,
officers or employees of the Company personally or by telephone, telex or
facsimile. The Company may request persons holding stock in their names, or in
the names of their nominees, to send proxy material to and obtain proxies from
their principals, and will reimburse such persons for their reasonable expenses
in so doing.
ANNUAL REPORT
Consolidated financial statements of the Company are included in its Annual
Report to Shareholders for fiscal year 1997, which is being mailed with this
Proxy Statement. Financial statements are also on file with the Securities and
Exchange Commission, Washington, D.C. and the New York Stock Exchange.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the annual meeting of
shareholders to be held in May or June of 1999 must be received by the Secretary
of the Company at the address of its executive offices no later than November
30, 1998 for inclusion in the proxy statement for that meeting. Any such
proposal must comply with Rule 14a-8 and Regulation 14A of the rules of the
Securities and Exchange Commission.
The By-Laws of the Company provide that notice of any shareholder
nominations for election of directors must be received by the Secretary of the
Company at least 120 days prior to the anniversary date of the immediately
preceding annual meeting or, with respect to a special meeting of shareholders,
prior to the tenth day following the date notice of such meeting is first given
to the shareholders. All shareholder nominations for election of directors to be
elected at the 1999 annual meeting must therefore be submitted to the Secretary
of the Company at the address of its executive offices prior to January 29,
1999, together with certain information regarding the nominee and certain
information regarding the nominating shareholder. Any shareholder may obtain a
copy of the applicable By-Laws from the Secretary of the Company upon written
request.
By order of the Board of Directors,
Kirk F. Vincent
Executive Vice President,
Finance and Administration and
Chief Financial Officer, Secretary
March 27, 1998
18
<PAGE> 21
J&L SPECIALTY STEEL, INC.
ONE PPG PLACE
18TH FLOOR
BOX 3373
PITTSBURGH, PA 15230-3373
SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS - MAY 29, 1998, 10:00 A.M.
Eugene A. Salvadore and Kirk F. Vincent, and each of them acting
individually, are hereby appointed as proxies with full power of substitution,
to vote the shares of the shareholder(s) named on the reverse side hereof at the
Annual Meeting of Shareholders of J&L Specialty Steel, Inc. to be held at The
Pittsburgh Hilton and Towers, 600 Commonwealth Place, Pittsburgh, Pennsylvania,
on May 29, 1998, at 10:00 a.m. and at any adjournment thereof, as directed
hereon, and in his discretion to vote and act upon any other matters as may
properly come before the Annual Meeting.
The undersigned shareholder hereby also revokes all previous proxies for
the Annual Meeting, acknowledges receipt of the Annual Report to shareholders
and the Notice of Annual Meeting and Proxy Statement, dated March 27, 1998 and
hereby ratifies all that the said proxies may do by virtue hereof.
(Continued on Reverse Side)
FOLD AND DETACH HERE
<PAGE> 22
Please mark
your votes as [ X ]
indicated in
this example
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS NOMINEES for Term Expiring at the Annual Meeting 2. Ratification of the appointment of
of Shareholders in 2001: Arthur Andersen LLP as independent
FOR all nominees WITHHOLD WILLIAM S. DIETRICH, II, JEAN DIDIER DUJARDIN, auditors for the fiscal year ending
listed to the AUTHORITY CLAUDE F. KRONK, MICHEL LE PAGE AND GERARD December 31, 1998.
right (except to vote for MARTEL.
as noted to all nominees FOR AGAINST ABSTAIN
the contrary) listed to (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR
the right ANY INDIVIDUAL NOMINEE OR NOMINEES, WRITE THAT [ ] [ ] [ ]
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
[ ] [ ]
------------------------------------------------
------------------------------------------------
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON ANY OTHER BUSINESS THAT MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF. AT THE PRESENT TIME, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE MEETING.
Please sign exactly as your name(s) appear(s) to the
left, if shares are held jointly, each holder should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your
full title as such.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Signature(s) Signature(s) Dated , 1998
----------------------------- ------------------------ --------
</TABLE>
FOLD AND DETACH HERE
