<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT of 1934
(Amendment No. )
X Filed by the Registrant
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 14a-11(c) or 14a-12
REPUBLIC ENGINEERED STEELS, 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):
X No fees 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.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
REPUBLIC ENGINEERED STEELS, INC.
- -----------------------------------
[LOGO]
NOTICE OF 1997 ANNUAL
MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
<PAGE>
[LOGO]
To Our Stockholders:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders,
which will be held on Thursday, October 23, 1997, at 9:00 A.M., local time, in
the auditorium at Stark State College of Technology, 6200 Frank Avenue, N.W.,
Canton, Ohio 44702.
At the meeting, we will be reporting to you on your Company's current
operations and outlook, and stockholders will elect seven Class I directors. The
Board of Directors and management hope that many of you will be able to attend
the meeting in person.
The formal Notice of Annual Meeting and the Board of Directors' Proxy
Statement accompany this letter. It is important that your shares be represented
and voted at the meeting, regardless of the size of your holdings. Accordingly,
please mark, sign and date the enclosed proxy and return it promptly in the
enclosed envelope to ensure that your shares will be represented. Stockholders
who attend the Annual Meeting may, of course, withdraw their proxy should they
wish to vote in person.
Sincerely,
Russell W. Maier
Chairman of the Board,
Chief Executive Officer and President
September 25, 1997
<PAGE>
REPUBLIC ENGINEERED STEELS, INC.
410 OBERLIN ROAD, S.W.
MASSILLON, OHIO 44647
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 23, 1997
-------------------
To the Stockholders of
REPUBLIC ENGINEERED STEELS, INC.:
The Annual Meeting of Stockholders of Republic Engineered Steels, Inc., a
Delaware corporation (the "Company"), will be held on Thursday, October 23,
1997, at 9:00 A.M., local time, in the auditorium at Stark State College of
Technology, 6200 Frank Avenue N.W., Canton, Ohio 44702, for the following
purposes:
1. To elect seven Class I directors to serve until the 1999 Annual Meeting
of Stockholders or until their successors are duly elected and qualified.
2. To transact such other business as may properly be brought before the
meeting and any adjournments or postponements thereof.
Holders of record of common stock, par value $.01 per share, of the Company
at the close of business on September 15, 1997, will be entitled to notice of
and to vote on all matters presented at the meeting and at any adjournments or
postponements thereof.
By order of the Board of Directors
James D. Donohoe,
Secretary
September 25, 1997
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU
PLAN TO ATTEND, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE TO ENSURE THAT YOUR SHARES WILL BE
REPRESENTED. STOCKHOLDERS MAY NEVERTHELESS VOTE IN PERSON AT THE ANNUAL MEETING.
<PAGE>
REPUBLIC ENGINEERED STEELS, INC.
410 OBERLIN ROAD, S.W.
MASSILLON, OHIO 44647
PROXY STATEMENT
-------------------
Annual Meeting of Stockholders
October 23, 1997
-------------------
This Proxy Statement and the accompanying Notice of Annual Meeting of
Stockholders and form of proxy are being furnished to the holders of common
stock of Republic Engineered Steels, Inc. (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
1997 Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be
held in the auditorium at Stark State College of Technology, 6200 Frank Avenue
N.W., Canton, Ohio 44702, on Thursday, October 23, 1997, at 9:00 A.M., local
time, and at any adjournments or postponements thereof. These proxy materials
are being mailed on or about September 26, 1997 to holders of record on
September 15, 1997 of the Company's common stock, par value $.01 per share
("Common Stock").
A proxy may be revoked by a stockholder prior to its exercise in any of
three ways: by written notice to the Secretary of the Company; by submission of
another proxy bearing a later date; or by voting in person at the Annual
Meeting. Revocation by notice to the Secretary of the Company or by submission
of a later proxy will not affect a vote on any matter which is taken prior to
the receipt of the notice or later proxy by the Company. The mere presence at
the Annual Meeting of the stockholder executing the proxy will not revoke the
proxy. If not revoked, the proxy will be voted at the Annual Meeting in
accordance with the instructions indicated on the proxy by the stockholder or,
if no instructions are indicated, will be voted FOR the slate of directors
described herein and, as to any other item of business that may be brought
before the Annual Meeting, in accordance with the judgment of the person or
persons named in the proxy and voting on the matter.
The Company has adopted a policy of encouraging stockholder participation in
corporate governance by ensuring the confidentiality of stockholder votes. The
Company has designated an independent third party, National City Bank,
Cleveland, Ohio, which is the Company's transfer agent, to receive and to
tabulate stockholder proxy votes. The manner in which any stockholder votes on
any particular issue will be kept confidential and will not be disclosed to the
Company or any of its officers or employees except (i) where disclosure is
required by applicable law, (ii) where disclosure of a vote of a stockholder is
expressly requested by such stockholder or (iii) where the Company concludes in
good faith that a bona fide dispute exists as to the authenticity of one or more
proxies, ballots or votes or as to the accuracy of any tabulation of such
proxies, ballots or votes. Aggregate vote totals may be disclosed to the Company
from time to time and publicly announced at the Annual Meeting.
This solicitation is being made on behalf of the Board of Directors of the
Company. All expenses of the Company in connection with this solicitation will
be borne by the Company. In addition to solicitation by mail, proxies may be
solicited by directors, officers and other employees of the Company, by
telephone, in person or otherwise, without additional compensation. The Company
also will request that brokerage firms, nominees, custodians and fiduciaries
forward proxy materials to the beneficial owners of shares held of record by
such persons and will reimburse such persons and the Company's transfer agent
for reasonable out-of-pocket expenses incurred by them in forwarding such
materials.
1
<PAGE>
THE COMPANY
The Company was originally incorporated in Delaware on May 15, 1989, under
the name Bar Acquisition Co. The Company was formed to purchase substantially
all of the assets of the Bar Division of LTV Steel Company Inc. The Company
changed its name to Republic Engineered Steels, Inc. on July 7, 1989. Until the
initial public offering of its Common Stock in April 1995 (the "IPO"), the
Company had been virtually wholly-owned by its employees through an employee
stock ownership plan ("ESOP"). As of September 15, 1997, the ESOP held
approximately 56% of the outstanding shares of Common Stock of the Company. The
Company is a Delaware corporation and its principal executive offices are
located at 410 Oberlin Road, S.W., Massillon, Ohio 44647, and its telephone
number at that address is (330) 837-6000.
VOTING SECURITIES
GENERAL
On September 15, 1997 there were 19,706,578 shares of Common Stock
outstanding. Each outstanding share of Common Stock entitles the holder thereof
to one vote. Holders of record of Common Stock at the close of business on
September 15, 1997 are entitled to notice of and to vote at the Annual Meeting
and at any adjournments or postponements thereof.
The presence in person or by proxy at the Annual Meeting of the holders of a
majority of all outstanding shares of Common Stock constitutes a quorum.
Assuming the presence of a quorum at the Annual Meeting, directors will be
elected by the affirmative vote of a plurality of the shares present in person
or by proxy at the Annual Meeting and entitled to vote for the election of
directors.
An abstention with respect to the election of directors will be counted as
present for purposes of determining the existence of a quorum. Brokers who do
not receive a stockholder's instructions are entitled to vote on the election of
directors.
Holders of Common Stock may vote their shares of Common Stock by completing
the enclosed Proxy Card and mailing it in the enclosed postage pre-paid envelope
so that it is received by October 22, 1997, or by appearing at the Annual
Meeting in person.
ESOP SHARES
As of June 30, 1997, there were 11,041,675 shares of Common Stock
(approximately 56% of the outstanding shares of Common Stock) held by the ESOP
(the "ESOP Shares"). The committee administering the ESOP (the "ESOP
Administrative Committee") is required under the terms of the ESOP to solicit
instructions of participants in the ESOP on all matters requiring stockholder
approval and to direct the trustee of the ESOP (the "ESOP Trustee") to vote ESOP
shares in accordance with the instructions of the participants.
Pursuant to the terms of the ESOP, this Proxy Statement along with a letter
from the ESOP Administrative Committee is being sent to participants in the ESOP
requesting that ESOP participants instruct the ESOP Administrative Committee to
direct the ESOP Trustee to vote the ESOP Shares allocated to each ESOP
participant's account. ESOP Shares for which no voting instructions are received
(unvoted shares) and ESOP Shares which are held by the ESOP Trustee and not yet
allocated to ESOP participants' accounts (unallocated shares) will be voted in
the same proportion as the votes received from those ESOP participants who
submit instructions.
Notwithstanding such provisions, the ESOP Administrative Committee and the
ESOP Trustee must abide by the fiduciary obligations imposed by federal law.
Accordingly, although participants in the ESOP have the right to instruct the
ESOP Administrative Committee how to vote the shares of Common Stock allocated
to their accounts, the ESOP Administrative Committee and the ESOP Trustee each
has the continuing obligation, even after the receipt of such instructions, to
determine whether to follow such instructions based on its evaluation of the
facts and circumstances or to override the instructions of the ESOP participants
in certain very limited circumstances.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of June 30, 1997 by (a) each person that is the
beneficial owner of more than five percent of the Common Stock, (b) each
director and nominee for director of the Company, (c) the executives named in
the Summary Compensation Table under "Executive Compensation" and (d) all
directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP(1) SHARES OWNED CLASS
- ------------------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
State Street Bank and Trust Company(2)......................................... 11,041,675 56.0%
225 Franklin Street
Boston, MA 02110
Dimensional Fund Advisors Inc.(3).............................................. 1,477,600 7.5%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
U.S. Bancorp(4)................................................................ 1,102,400 5.6%
111 S.W. Fifth Avenue
Portland, OR 97204
Russell W. Maier(5)............................................................ 5,000 (7)
Stephen S. Higley(5)(9)........................................................ 12,255 (7)
James B. Riley(5)(10).......................................................... 24,276 (7)
Daniel A. Albert(6)............................................................ 2,145 (7)
Sam Camens(8).................................................................. 900 (7)
Carol A. Cartwright............................................................ -0- -0-
Robert J. Farling.............................................................. -0- -0-
Jeffrey K. Fernandez(6)........................................................ 2,289 (7)
Norman T. Graybill(6).......................................................... 2,745 (7)
Richard F. Celeste............................................................. 2,500 (7)
Wayne A. Hardy(6).............................................................. 2,306 (7)
Rudy Kogut(6).................................................................. 1,811 (7)
Douglas M. Lawson(6)........................................................... 1,907 (7)
Gary E. Lenhart(6)............................................................. 3,643 (7)
Martin Manley.................................................................. -0- -0-
Walter C. Meck................................................................. 2,000 (7)
William J. Williams............................................................ 1,500 (7)
Joseph F. Lapinsky(11)......................................................... 6,416 (7)
Harold V. Kelly(5)(12)......................................................... 12,829 (7)
All directors and executive officers of the Company as a group (22 persons).... 138,053 (7)
</TABLE>
- ------------
(1) The address of all persons other than State Street Bank and Trust Company,
Dimensional Fund Advisors, Inc. and U.S. Bancorp, is the address of the
Company, 410 Oberlin Road, S.W., Massillon, Ohio 44647.
3
<PAGE>
(2) State Street Bank and Trust Company holds such stock as trustee for the
ESOP. The number of shares held by the ESOP Trust represents the number of
shares allocated to participants' accounts under the ESOP and unallocated
shares held by the ESOP Trust.
(3) Dimensional Fund Advisors Inc. ("DFAI"), a registered investment advisor,
is deemed to have beneficial ownership of 1,477,600 shares of Common Stock
as of December 31, 1996, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc. (the "Fund") or in series of DFA Investment
Trust Company (the "Trust"), each a registered open-end management
investment company, or the DFA Group Trust and DFA Participation Group
Trust, each an investment vehicle for qualified employee benefit plans. DFAI
disclaims beneficial ownership of all such shares. DFAI has sole investment
power over all of such shares. Persons who are officers of DFAI also serve
as officers of the Fund and Trust and in such capacities these persons have
voting power over 173,100 and 347,800 of such shares owned by the Fund and
Trust, respectively. DFAI has voting power over the remaining 956,700 of
such shares. The information in this footnote was obtained from Schedule
13-G filed with the Securities and Exchange Commission by DFAI for calendar
year 1996.
(4) Qualivest Capital Management, Inc., ("QCMI") a registered investment
advisor and wholly-owned subsidiary of United States National Bank of
Oregon, which is a wholly-owned subsidiary of U.S. Bancorp (the "Bank"), is
the beneficial owner of 555,700 of the shares held by the Bank as a result
of acting as investment advisor to The Qualivest Funds, a registered
investment company. The Trust Group of the Bank is the beneficial owner of
the remaining 546,700 shares held by the Bank. The Bank has sole voting
power over 1,068,400 of the 1,102,400 shares held by the Bank, sole
investment power over 496,000 of such shares and shared investment power
over 16,000 of such shares. The person's or entities entitled to exercise
voting and investment power over the remainder of the shares held by the
Bank is unknown to the Company. The information in this footnote was
obtained from Schedule 13-G filed with the Securities and Exchange
Commission by the Bank and QCMI for calendar year 1996.
(5) Does not include shares that may be issued under the Company's stock option
plan (the "1995 Stock Option Plan"). Options granted under the 1995 Stock
Option Plan are generally not exercisable until May 1998 and are therefore
not included in this chart.
(6) Represents the number of shares allocated to such person's account under
the ESOP.
(7) Less than 1%.
(8) Includes 700 shares of Common Stock held by Mr. Camens as custodian for his
grandchildren under the Uniform Gift to Minors Act. Mr. Camens disclaims
beneficial ownership of these shares.
(9) Includes 8,630 shares allocated to Mr. Higley's account under the ESOP.
(10) Includes 9,276 shares allocated to Mr. Riley's account under the ESOP.
(11) Includes 1,416 shares allocated to Mr. Lapinsky's account under the ESOP.
(12) Includes 7,329 shares allocated to Mr. Kelly's account under the ESOP.
4
<PAGE>
I. ELECTION OF DIRECTORS
In accordance with the Amended and Restated Certificate of Incorporation of
the Company (the "Charter") and the By-laws of the Company (the "By-laws"), the
Board of Directors has fixed the number of directors at thirteen directors,
divided into two classes, one of seven directors (Class I) and the other of six
directors (Class II). The term of office of each class is two years. The Charter
and By-laws also provide for the following qualifications for the Company's
directors:
<TABLE>
<S> <C>
GROUP A Four individuals designated by the United Steelworkers of America
DIRECTORS: AFL/CIO ("USWA"), one of whom is designated by the International
President of the USWA and three of whom are designated by USWA local
unions.
GROUP B DIRECTOR: One individual, the chief executive officer of the Company.
GROUP C Eight individuals, five of whom must be independent directors (not
DIRECTORS: affiliated with the Company or the USWA), selected by a nominating
committee (the "Nominating Committee") comprised of the Group A
Director designated by the International President of the USWA, the
Group B Director and three Group C Directors who are independent
directors.
In the event that the ESOP owns less than 25% of the outstanding
shares of Common Stock (i) the Group A Directors will be reduced to
two (both to be appointed by the International President of the USWA),
(ii) the Nominating Committee will consist solely of Group C
independent directors and (iii) the number of Group C Directors will
be increased to ten (10), of which seven (7) must be independent
directors.
</TABLE>
The term of all seven Class I directors expires at the 1997 Annual Meeting.
In accordance with the provisions of the Charter and the By-laws, the Board of
Directors has nominated Russell W. Maier, Carol A. Cartwright, Richard F.
Celeste, Robert J. Farling, Daniel A. Albert, Jeffrey K. Fernandez, and Norman
T. Graybill for election as Class I directors to hold office until the 1999
Annual Meeting of Stockholders, or until their respective successors are elected
and qualified or until their earlier death, resignation or removal. Each nominee
is currently a director except for Messrs. Farling, Albert, Fernandez and
Graybill. In the event that any person listed as a nominee becomes unavailable
as a candidate for election, it is intended that the shares represented by your
proxy will be voted for a substitute nominee, but the Board of Directors knows
of no reason to anticipate that this will occur.
Assuming the presence of a quorum at the Annual Meeting, the affirmative
vote of a plurality of the shares present in person or by proxy is required for
the election of directors. Shares represented by your proxy will be voted in
accordance with your direction as to the election as directors of the persons
listed below as nominees. In the absence of direction, the shares represented by
your proxy will be voted FOR the election of all such nominees.
Certain information with respect to the nominees and each of the continuing
directors is set forth below, including their director group qualification.
5
<PAGE>
NOMINEES FOR CLASS I DIRECTORS WHOSE TERMS EXPIRE
AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE GROUP QUALIFICATION SINCE
- ------------------------ --- ------------------------------------------ -----------
<S> <C> <C> <C>
Russell W. Maier........ 60 Group B Director 1989
Carol A. Cartwright..... 56 Group C Independent Director 1991
Richard F. Celeste...... 59 Group C Independent Director 1994
Robert J. Farling....... 60 Group C Independent Director --
Daniel A. Albert........ 48 Group A Director --
Jeffrey K. Fernandez.... 43 Group A Director --
Norman T. Graybill...... 55 Group A Director --
</TABLE>
CONTINUING (CLASS II) DIRECTORS WHOSE TERMS EXPIRE
AT THE 1998 ANNUAL MEETING OF STOCKHOLDERS:
<TABLE>
<CAPTION>
NAME AGE GROUP QUALIFICATION SINCE
- ------------------------ --- ------------------------------------------ -----------
<S> <C> <C> <C>
James B. Riley.......... 45 Group C Director 1989
Stephen S. Higley....... 53 Group C Director 1996
Sam Camens.............. 80 Group A Director (designated by the 1989
International President of the USWA)
Martin J. Manley........ 45 Group C Independent Director 1994
Walter C. Meck.......... 46 Group C Independent Director 1989
Gary E. Lenhart......... 46 Group C Director 1996
</TABLE>
The following are brief summaries of the business experience of the nominees
for election as directors of the Company and of the other directors whose terms
of office as directors will continue after the Annual Meeting, including, where
applicable, information as to the other directorships held by each of them.
NOMINEES FOR CLASS I DIRECTORS:
RUSSELL W. MAIER has been Chairman of the Board, President and Chief
Executive Officer of the Company since November 1989. Mr. Maier has been active
in the steel industry since February 1960. Mr. Maier is also a member of the
Board of Directors of United National Bank and Trust Company and Ohio Edison
Company.
CAROL A. CARTWRIGHT has been President of Kent State University since 1991.
From 1988 to 1991 she served as chief Academic Officer of the University of
California at Davis. Ms. Cartwright is also a member of the Board of Directors
of Ohio Edison Company, Key Corp and M.A. Hanna Company.
RICHARD F. CELESTE has been a partner in Celeste and Sabety, Ltd., a public
strategy consulting firm since January 1991. Mr. Celeste was the Governor of the
State of Ohio from 1982-1990. Mr. Celeste is also a member of the Board of
Directors of Navistar International Corporation and Health-South Corporation.
ROBERT J. FARLING has been Chairman, President and Chief Executive Officer
of Centerior Energy Corporation since 1992. Prior to that time he was President
and Chief Operating Officer of Centerior Energy Corporation since 1988. Mr.
Farling is also a member of the Board of Directors of National City Bank in
Cleveland, Ohio.
DANIEL A. ALBERT is a member of USWA Local 1869 and has been employed at the
Company's cold finished bar plant in Beaver Falls, Pennsylvania since 1967.
6
<PAGE>
JEFFREY K. FERNANDEZ is a member of USWA Local 2327 and has been employed at
the Company's speciality steels plant in Canton, Ohio since 1974.
NORMAN T. GRAYBILL is a member of USWA Local 1200 and has been employed at
the Company's steelmaking plant on Eighth Street in Canton, Ohio since 1964.
CLASS II DIRECTORS:
JAMES B. RILEY has been Executive Vice President and Chief Financial Officer
of the Company since November 1993. He was formerly Vice President and Chief
Financial Officer of the Company from 1989 to October 1993. Mr. Riley has been
active in the steel industry since 1975.
STEPHEN S. HIGLEY has been a corporate Vice President and President of the
Company's Cold Finished Bar Division since January, 1997. He was formerly a
corporate Vice President and President of the Company's Specialty Steels
Division from January 1995 to January, 1997. Prior to that time he was Vice
President - Commercial of the Company since November 1989. Mr. Higley has been
active in the steel industry since 1966.
SAM CAMENS is retired. Mr. Camens served as Assistant to the International
President of the USWA from 1981 until his retirement in 1987.
MARTIN J. MANLEY has been the Managing Director, KP Consulting of Kaiser
Permanente (Northern California Region) since October 1995. From July 1994 to
October 1995 he was an independent business consultant. From 1993 to July 1994
he served as the Assistant Secretary of Labor for the American Workplace in the
Clinton Administration. From 1991 to 1993, Mr. Manley was a partner in The
Waterman Group, a business consulting firm. From 1986 to 1991, Mr. Manley was a
Senior Manager for McKinsey & Company, Inc., a business consulting firm.
WALTER C. MECK has been the Chairman and Chief Executive Officer of H.H.
Fessler Knitting Co., Inc. since 1994. From 1990 to 1993, Mr. Meck was Executive
Vice President and Chief Operating Officer of Farrel & Co., an investment and
merchant banking firm. From 1986 to 1990, Mr. Meck was the Executive Vice
President - Finance and Chief Financial Officer of Mack Trucks, Inc., a major
manufacturer of trucks. Mr. Meck is also a director of Orix Credit Alliance
Receivables Corporation.
GARY E. LENHART has been a Plant Manager in the Company's Cold Finished Bar
Division since June, 1993. Currently, Mr. Lenhart is responsible for the
Company's cold finished bar plants in Massillon, Ohio and Willimantic,
Connecticut. He was formerly General Supervisor of the Company's cold finished
bar plant in Massillon, Ohio since November 1989. Mr. Lenhart has been active in
the steel industry since 1969.
There is no family relationship among any of the directors or executive
officers of the Company.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held seven meetings (exclusive of committee
meetings), during the 1997 fiscal year. The Board of Directors has established
four committees whose functions and current members are noted below. Each
current director attended 75% or more of the aggregate number of meetings of the
Board of Directors and committees on which he or she served which were held
during such period except for Dr. Cartwright who attended five of the seven
Board meetings and three of the four Audit Committee meetings held in fiscal
year 1997.
AUDIT COMMITTEE: The Audit Committee of the Board of Directors (the "Audit
Committee") presently consists of, and has during the 1997 fiscal year consisted
of, Dr. Cartwright and Messrs. Meck (Chairman) and Williams. Each of the
foregoing is a director who is not employed by the Company or affiliated with
management. The Audit Committee is responsible for reviewing and helping to
ensure the integrity of the Company's financial statements. Among other matters,
the Audit Committee reviews the
7
<PAGE>
Company's internal accounting controls and financial statements and reviews with
the Company's independent accountants the scope of their audit, their report and
their recommendations. The Audit Committee held four meetings in fiscal year
1997.
COMPENSATION COMMITTEE: Since January 23, 1997 the Compensation Committee
of the Board of Directors (the "Compensation Committee") has consisted of
Messrs. Camens, Celeste, Lawson, Maier, Manley (Chairman) and Lenhart. From
October 26, 1995 to January 23, 1997 the Compensation Committee consisted of Mr.
John J. Richards (until his term of office expired on October 23, 1996) and
Messrs. Camens, Celeste, Maier, Manley (Chairman) and Lawson. The Compensation
Committee establishes the policies used in determining the compensation of all
executive officers of the Company. The Compensation Committee held two meetings
during the 1997 fiscal year. See "Compensation Committee Interlocks and Insider
Participation."
NOMINATING COMMITTEE: Since June 12, 1995 the Nominating Committee has
consisted of Messrs. Camens, Maier (Chairman), Manley, Meck and Williams.
The Nominating Committee of the Board of Directors, acting by unanimous
vote, designates the nominees for the Group C Directors. The Nominating
Committee must, in accordance with the provisions of the Charter and By-laws,
consist of the Group A Director nominated by the International President of the
USWA, the Group B Director and three Group C Directors who are independent
directors as long as the ESOP (and/or other benefit plan(s)) owns 25% or more of
the issued and outstanding shares of Common Stock.
The Nominating Committee held one meeting during the 1997 fiscal year. The
Nominating Committee also acted by unanimous written consent on August 28, 1997
to designate Dr. Cartwright and Messrs. Celeste and Farling as nominees for the
Group C directors in Class I standing for election at the 1997 Annual Meeting of
Stockholders.
OPTION ADMINISTRATIVE COMMITTEE: Since May 5, 1995 the committee of the
board of Directors that administers the Company's 1995 Stock Option Plan (the
"Option Administrative Committee") has consisted of Dr. Cartwright and Messrs.
Celeste, Manley, Meck and Williams. As required by the 1995 Stock Option Plan
all members of the Option Administrative Committee were Group C independent
directors.
The Option Administrative Committee did not meet or act in the 1997 fiscal
year.
COMPENSATION OF DIRECTORS
Each director who is not an officer or employee of the Company receives an
annual fee of $15,000, plus attendance fees of $1,500 for regular and special
meetings, $750 for committee meetings and $500 for telephonic board meetings,
and is reimbursed for his or her out-of-pocket expenses incurred in connection
with serving on the Board of Directors. Officers and other employees of the
Company who serve on the Board of Directors of the Company receive no additional
compensation for their services (other than reimbursement for their related
out-of-pocket expenses).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Maier, the President and Chief Executive Officer of the Company and the
Group B Director, serves on the Compensation Committee but does not participate
in deliberations concerning his compensation. Three other members of the
Compensation Committee who served during the 1997 fiscal year are employees of
the Company, namely Mr. Lawson, a Group A Director (designated by Union Local
3069) and Messrs. Lenhart and Richards, Group C Directors. The compensation of
Messrs. Lawson, Lenhart and Richards is not determined by the Compensation
Committee.
8
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and any persons who own more than ten
percent of the Company's Common Stock to file reports of initial ownership of
the Company's Common Stock and subsequent changes in that ownership with the
Securities and Exchange Commission and to furnish the Company with copies of all
forms they file pursuant to Section 16(a). Based solely upon a review of the
copies of the forms furnished to the Company, or written representations from
certain reporting persons that no Forms 5 were required, the Company believes
that during the 1997 fiscal year all Section 16(a) filing requirements were
complied with, except that two reports with respect to one transaction were
filed late by Mr. Celeste and the initial statement of beneficial ownership of
securities (Form 3) that is required to be filed upon becoming an officer or
director was filed late by Messrs. Kogut, Lapinsky, Thielens and Vaught.
9
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The Company's Charter requires that the Compensation Committee include at
least one Group A Qualified Director (a director nominated by either the USWA or
certain USWA locals) and two Group C Qualified Directors (directors who may, but
need not be, independent directors). The Compensation Committee is currently
composed of Sam Camens, Richard F. Celeste, Douglas M. Lawson, Russell W. Maier,
Martin J. Manley and Gary E. Lenhart. Mr. Maier is the President and Chief
Executive Officer of the Company (the "CEO") and the Group B Qualified Director.
Mr. Lawson is an employee of the Company and a Group A Qualified Director
designated by USWA Local 3069. Mr. Camens is not an employee of the Company and
is a Group A Qualified Director designated by the International President of the
USWA. Mr. Lenhart is an employee of the Company and a Group C Qualified
Director. Messrs. Celeste and Manley are independent Group C Qualified
Directors. Although Mr. Maier is a member of the Compensation Committee, he
abstains from deliberations regarding his compensation.
COMPENSATION PHILOSOPHY
The purpose of the Company's executive compensation plan is to attract and
retain quality executive officers. The Company's compensation philosophy is to
reward the individual and team efforts of executive officers who increase the
long term value of the Company in a manner consistent with ownership by
employees and public investors. As a result, the Company's executive
compensation plan seeks to reward increases in the value of the Company's Common
Stock, insure competitiveness with industrial companies of similar size and
complexity and reinforce the Company's commitment to employee ownership and
participation. Specifically, this purpose and philosophy are implemented through
a total compensation program that includes a short-term direct compensation
package and a long-term incentive compensation package. The short-term direct
compensation package for executive officers (except the CEO) currently consists
of a base salary, participation in various employee benefit plans in which the
Company's employees generally participate (including a profit sharing plan) and
a severance benefit program in the event the executive officer is terminated
without cause. The long-term incentive compensation package consists of
participation in the ESOP (except the CEO) and the 1995 Stock Option Plan.
COMPENSATION OF EXECUTIVE OFFICERS GENERALLY
Annually, the Board of Directors evaluates the Company's performance under
the stewardship of the executive officers and considers whether an increase in
the executive officers' base salary is warranted pursuant to any salary "merit
budget" (performance based) program adopted by the Company. The Compensation
Committee is responsible for making recommendations to the Board of Directors
regarding the level of each executive officer's base salary and the nature and
criteria of such incentive programs. In the past, such programs have generally
been comparable to those provided by the Company to other of its employees.
In making such recommendations, the Compensation Committee considers the
individual executive's performance, seniority and longevity in light of the
compensation provided to the other executives and the overall financial
condition of the Company. The base salary of executive officers was not
increased during fiscal year 1997. The Company does not currently pay bonuses to
any of its executive officers.
Under the Company's severance benefit program, executive officers, other
than the CEO, with two or more years of service as an executive officer who are
terminated without cause will be provided continued salary and benefits for a
period of one year from the date employment is terminated. Executive officers
with less than two years of service as an executive officer who are terminated
without cause will be provided continued salary and benefits for a period
ranging from one-half month to six months depending upon age and years of
service. If the terminated executive is re-employed within the severance period,
the severance payments would be reduced by any salary received from the new
employer.
10
<PAGE>
The Compensation Committee continually reviews the Company's existing
compensation structure for executives to ensure that the Company is offering
competitive compensation packages that will enable it to attract and retain
quality executives.
CEO COMPENSATION
Mr. Maier's compensation is established pursuant to an employment agreement
(the "CEO Agreement") entered into in November 1989 for an initial five-year
term which ended in 1994. The CEO Agreement provides that, commencing in
November 1992 and on each anniversary date of the CEO Agreement thereafter, the
term of the CEO Agreement shall automatically extend one year (so that the
remaining term shall be three years) unless the Board of Directors elects, prior
to the anniversary date of such agreement, not to extend such agreement. In
effect, the Company may terminate the CEO Agreement, other than for cause, upon
three years' prior notice. Mr. Maier's base salary was not increased in fiscal
year 1997 and totaled $536,000. Mr. Maier is not eligible to participate in the
ESOP. Mr. Maier was granted options to purchase the Company's Common Stock under
the 1995 Stock Option Plan. See "Long Term Incentive Plans". See also "Options
Outstanding as of June 30, 1997."
The CEO Agreement provides that the Board of Directors will from time to
time evaluate the Company's progress and attainment under the direction of Mr.
Maier and annually consider increasing his base salary pursuant to any salary
"merit budget" (performance based) program adopted by the Company. The
Compensation Committee is responsible for making recommendations to the Board of
Directors regarding the nature and criteria of such programs. In the past, such
programs have generally been comparable to those provided by the Company to
other of its employees.
LONG TERM INCENTIVE PLANS
The Company maintains two long term incentive plans in which executive
officers of the Company participate: (i) the ESOP and (ii) the 1995 Stock Option
Plan.
ESOP. The Company maintains the ESOP for the benefit of its salaried and
hourly employees and enables them to share in the growth of the Company. The
ESOP is a stock bonus plan, designed to be invested primarily in Common Stock of
the Company and qualified under section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"). On a quarterly basis, the Company makes a
contribution to the ESOP equal to a specified percentage of the cash
compensation received by the ESOP participants in the quarter. That amount is
used by the ESOP to repay loans from the Company, which repayment enables the
ESOP to allocate shares of Common Stock of the Company to participants. Each
ESOP participant is 100% vested at all times in shares allocated to his or her
account in the ESOP. Mr. Maier, as the CEO and President of the Company, is not
eligible to participate in the ESOP.
1995 STOCK OPTION PLAN. The 1995 Stock Option Plan was adopted primarily to
provide long-term incentives and rewards to executive officers and senior
managers. Options granted under the 1995 Stock Option Plan are designed to
continue the link between executive compensation and increases in stockholder
equity, to provide incentives to executive officers tied to growth of the share
price over time and to encourage continued employment with the Company. Options
granted under the 1995 Stock Option Plan generally are not exercisable for a
period of three years until April 1998. There were no options granted in fiscal
year 1997.
POLICY REGARDING SECTION 162(M) OF THE INTERNAL REVENUE CODE
With certain exceptions, Section 162(m) of the Code limits the Company's
deduction of compensation paid to certain executive officers to $1 million for
each executive for a taxable year (including any deductions otherwise allowable
with respect to the exercise of an Option). If Options are granted pursuant to
the 1995 Stock Option Plan before the Company's 1999 annual meeting and the 1995
Stock Option Plan is not terminated or modified prior to such time, the Company
believes that such Options should qualify for a special transition rule which
exempts from such limitation compensation paid pursuant to a plan that
11
<PAGE>
was in existence before a corporation went public. In any event, given that the
Options granted under the 1995 Stock Option Plan generally are not exercisable
for a period of three years from the date of the IPO, no executive officer
received compensation in excess of $1 million for the Company's 1997 fiscal year
and, therefore, the deduction limitation of Section 162(m) should not apply to
the Company for such fiscal year.
THE COMPENSATION COMMITTEE
<TABLE>
<S> <C>
MARTIN J. MANLEY
(CH) DOUGLAS M. LAWSON
SAM CAMENS GARY E. LENHART
RICHARD F. CELESTE RUSSELL W. MAIER
</TABLE>
12
<PAGE>
COMPENSATION TABLES AND OTHER INFORMATION
The following tables set forth information with respect to the Chief
Executive Officer and the four other most highly compensated executive officers
of the Company for the three fiscal years ended June 30, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------
OTHER ANNUAL ALL OTHER
COMPEN- COMPEN-
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY SATION(1) SATION(2)
- ------------------------------------------ ------------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
Russell W. Maier.......................... 1997 $ 536,000 $ 97,856 13,600
President and Chief 1996 551,622(3) 91,667 12,750
Executive Officer 1995 490,000 88,720 12,743
James B. Riley............................ 1997 253,000 -0 - 10,000
Executive Vice President and 1996 253,000 -0 - 11,533
Chief Financial Officer 1995 235,000 -0 - 16,978
Stephen S. Higley......................... 1997 227,000 29,753 11,650
Vice President and President - 1996 227,000 24,016 14,267
Cold Finished Bar Division 1995 206,000 -0 - 20,353
Harold V. Kelly........................... 1997 217,000 38,081 15,932
Executive Vice President and 1996 217,000 32,278 18,116
General Counsel 1995 205,000 27,124 22,499
Joseph F. Lapinksy(4)..................... 1997 180,522 42,942 11,304
Vice President and President -
Hot Rolled Bar Division
</TABLE>
- ------------
(1) Other Annual Compensation for Mr. Maier in 1997, 1996 and 1995,
respectively, includes $26,853, $29,011, and $30,967 of supplemental salary
available to purchase benefits under a cafeteria plan, $59,215, $60,573, and
$56,946 for contribution to a trust providing for the difference between the
amount needed to fund an agreed upon retirement benefit and the maximum
amount that may be contributed to the Company's Defined Contribution Pension
Plan under the Code and $11,788, $2,083, and $807 for other perquisites.
Other Annual Compensation for Mr. Higley in 1997 and 1996, respectively
includes $13,203 and $13,200 of supplemental salary available to purchase
benefits under a cafeteria plan, $9,989 and $9,522 for contributions to a
trust providing for the difference between the amount needed to fund an
agreed upon retirement benefit and the maximum amount that may be
contributed to the Company's Defined Contribution Pension Plan under the
Code and $6,561 and $1,294 for other perquisites.
Other Annual Compensation for Mr. Kelly in 1997, 1996 and 1995,
respectively, includes $18,777, $17,788 and $17,326 of supplemental salary
available to purchase benefits under a cafeteria plan, $10,926, $10,374 and
$8,751 for contributions to a trust providing for the difference between the
amount needed to fund an agreed upon retirement benefit and the maximum
amount that may be contributed to the Company's Defined Contribution Pension
Plan under the Code and $8,378, $4,216 and $1,047 for other perquisites.
Other Annual Compensation for Mr. Lapinsky in 1997 includes $4,619 of
supplemental salary available to purchase benefits under a cafeteria plan,
$274 for contributions to a trust providing for the difference between the
amount needed to fund an agreed upon retirement benefit and the maximum
amount that may be contributed to the Company's Defined Contribution Pension
Plan under the Code and $38,049 for other prequisites consisting primarily
of relocation allowance.
13
<PAGE>
(2) All Other Compensation reflects amounts contributed by the Company to the
Company's Defined Contribution Pension Plan and the ESOP allocation for the
named individuals except for Mr. Maier who does not participate in the ESOP.
(3) Includes $15,622 of salary earned in fiscal year 1995 but paid in fiscal
year 1996.
(4) Mr. Lapinsky became a named executive officer in fiscal year 1997 and thus
annual compensation information for Mr. Lapinsky in fiscal years 1996 and
1995 is not reported.
EMPLOYMENT AGREEMENTS
Only Mr. Maier is employed pursuant to an employment agreement. See
discussion above under "CEO Compensation" in the Compensation Committee Report.
EMPLOYEE COMMON STOCK OWNERSHIP PLAN
The Company maintains the ESOP for the benefit of substantially all of its
salaried and hourly employees. The ESOP is a stock bonus plan, designed to be
invested in Common Stock and intended to be qualified under section 401(a) of
the Code.
On a quarterly basis, the Company makes a contribution to the ESOP to
reflect certain percentages of cash compensation received by the ESOP
participants in the quarter. The ESOP Trustee in turn utilizes the entire
contribution to pay to the Company principal and interest on the loans made in
1989 by the Company to the ESOP (the "ESOP Loans," consisting of the loans in
the original principal amount of $190.0 million and $30.0 million,
respectively). The $190 million ESOP loan was repaid during fiscal year 1997. At
June 30, 1997 the unpaid balance on the remaining ESOP loan was $17.1 million.
The percentage of cash compensation utilized for fiscal 1997 was 18% (subject to
limitations imposed by the Code) and will continue at that rate until the
remaining ESOP loan is repaid. Common stock is allocated to each participant's
account on an annual basis.
Each ESOP participant is 100% vested at all times in shares allocated to his
or her account. Participants have pass-through voting rights with respect to
Common Stock allocated to their accounts. Pursuant to the terms of the ESOP,
because the IPO created an established market for the Common Stock, Common Stock
is now distributed to ESOP participants upon their termination of service with
the Company for any reason or to ESOP participants who are active Company
employees upon attaining the age of 70 1/2. In addition, an ESOP participant who
is at least 55 years old with at least 10 years of participation in the ESOP and
who seeks diversification can elect to receive a partial distribution of his or
her allocated shares of up to 25% over the first five years and a total
additional amount up to 25% thereafter.
OPTIONS OUTSTANDING AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS
NAME AT FISCAL YEAR END(1)
- --------------------------------------------------- ---------------------
<S> <C>
Russell W. Maier................................... 540,000
James B. Riley..................................... 120,000
Harold V. Kelly.................................... 96,000
Stephen S. Higley.................................. 109,200
Joseph F. Lapinsky................................. -0-
</TABLE>
- ------------
(1) Options are generally not exercisable prior to May 1998. Based on the market
price of the Company's common stock at June 30, 1997, none of the options is
in-the-money.
14
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of an investment in
the Company's Common Stock since it began to be publicly traded on April 28,
1995 with that of the total return of the Standard and Poor's S&P 500 Composite
Stock Price Index (the "S&P 500 Index") and an index of peer companies selected
by the Company. The peer group consists of Birmingham Steel Corporation, Inland
Steel Industries, Inc., Kentucky Electric Steel, Inc., Quanex Corporation and
The Timken Company. The peer group previously included Bliss and Laughlin
Industries, Inc. which was merged into Bar Technologies, Inc. during fiscal year
1996. The performance graph excludes Bliss and Laughlin Industries, Inc. for all
periods reflected. The graph assumes the value of the investment in the
Company's Common Stock and each index was $100 on April 28, 1995 and that all
dividends were reinvested. There can be no assurance that future stock
performance will correlate with past stock performance.
COMPARISON OF 26 MONTH CUMULATIVE TOTAL RETURN*
Among Republic Engineered Steels, Inc., The S&P 500 Index
and a Peer Group
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
REPUBLIC ENGINEERED STEELS INC. PEER GROUP S&P 500
<S> <C> <C> <C>
4/28/1995 100 100 100
6/95 97 113 106
6/96 44 90 134
6/97 16 134 181
</TABLE>
*$100 invested on 04/28/96 in stock or index--including reinvestment of
dividends. Fiscal year ending June 30.
15
<PAGE>
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP as the Company's
independent auditors to conduct the audit of the Company's books and records for
the fiscal year ended June 30, 1997. KPMG Peat Marwick LLP also served as the
Company's independent auditors for the previous fiscal year. Representatives of
KPMG Peat Marwick LLP are expected to be present at the Annual Meeting to
respond to questions and to make a statement should they so desire.
OTHER MATTERS
At the date of this Proxy Statement, the Company has no knowledge of any
business other than that described above that will be presented at the Annual
Meeting. If any other business should come before the Annual Meeting, it is
intended that the persons named in the enclosed proxy will have discretionary
authority to vote the shares which they represent.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 1998 ANNUAL MEETING
In accordance with rules promulgated by the Securities and Exchange
Commission, any stockholder who wishes to submit a proposal for inclusion in the
proxy material to be distributed by the Company in connection with the 1998
Annual Meeting must do so by no later than May 28, 1998.
REPORTS
The Company has furnished to each person whose proxy is being solicited and
to each ESOP participant a copy of the Company's 1997 Annual Report which
includes its Form 10-K (without exhibits) for the fiscal year ended June 30,
1997, as filed with the Securities and Exchange Commission, including the
financial statements and schedules thereto. Requests for additional copies of
the Company's 1997 Annual Report should be directed in writing to the corporate
Secretary at the address below.
By order of the Board of Directors
James D. Donohoe
Secretary
Republic Engineered Steels, Inc.
410 Oberlin Road, S.W.
Massillon, Ohio 44647
September 25, 1997
16
<PAGE>
REPUBLIC ENGINEERED STEELS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS--OCTOBER 23, 1997 AT 9:00 A.M.
The undersigned stockholder of Republic Engineered Steels, Inc. (the
"Company") hereby appoints Harold V. Kelly and James D. Donohoe, and
each of them, as attorneys and proxies, each with power of substitution
and revocation, to represent the undersigned at the Annual Meeting of
Stockholders of the Company to be held on October 23, 1997, and at any
adjournments or postponements thereof, with authority to vote all shares
of Common Stock of the Company held or owned by the undersigned
P
on September 15, 1997 in accordance with the directions indicated
herein.
Item 1. ELECTION OF DIRECTORS:
R
/ / FOR all nominees listed below (except as marked to the
contrary below)
/ / WITTHOLD AUTHORITY to vote for all nominees listed below
O
Nominees for Directors:
X
Russell W. Maier, Carol A. Cartwright, Richard F. Celeste, Robert J.
Farling, Daniel A. Albert, Jeffrey K. Fernandez, and
Norman T. Graybill
(Instruction: To withhold authority to vote for any individual nominee
named above, strike a line through that nominee's name)
Y
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE
NOMINEES
Item 2. In their discretion, the proxies are authorized to vote upon
such other business as may properly be presented at the meeting
or any adjournments or postponements thereof.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. UNLESS OTHERWISE SPECIFIED, THIS PROXY
WILL BE VOTED FOR ITEM 1 AND PURSUANT TO ITEM 2.
Dated _____________________, 1997
_________________________________
(Signature)
_________________________________
(Signature if held jointly)
(Please date and sign exactly as
name appears hereon. When signing
as attorney, administrator,
trustee, custodian or guardian,
give full title as such. Where
more than one owner, all should
sign. Proxies executed by a
partnership or corporation should
be signed in the full partnership
or corporate name by a partner or
authorized officer.)
