<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
OLYMPIC 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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
[OLYMPIC STEEL LOGO]
Olympic Steel, Inc., 5096 Richmond Road, Bedford Heights, OH 44146
(216) 292-3800
To Our Shareholders:
You are invited to attend the 2000 annual meeting of shareholders of Olympic
Steel, Inc. to be held at Olympic Steel, Inc., 5096 Richmond Road, Bedford
Heights, OH 44146, on Wednesday, April 26, 2000, at 2:00 p.m. local time. We are
pleased to enclose the notice of our annual meeting of shareholders, together
with a Proxy Statement, a Proxy and an envelope for returning the Proxy.
You are hereby asked to approve the election of Directors, to ratify the
appointment of auditors, and approve an amendment to the Company's stock option
plan increasing the number of shares authorized for issuance by 500,000 shares.
Your Board of Directors unanimously recommends that you vote "FOR" each proposal
stated in the Proxy.
Please carefully review the Proxy Statement and then complete and sign your
Proxy and return it promptly. If you attend the meeting and decide to vote in
person, you may withdraw your Proxy at the meeting.
Your time and attention to this letter and the accompanying Proxy Statement and
Proxy is appreciated.
Sincerely,
Michael D. Siegal
Chairman and Chief Executive Officer
March 31, 2000
<PAGE> 3
[OLYMPIC STEEL LOGO]
Olympic Steel, Inc., 5096 Richmond Road, Bedford Heights, OH 44146
(216) 292-3800
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 2000
The annual meeting of shareholders of Olympic Steel, Inc., an Ohio corporation
(the Company), will be held on Wednesday, April 26, 2000 at 2:00 p.m. local
time, at Olympic Steel, Inc., 5096 Richmond Road, Bedford Heights, OH 44146, for
the following purposes:
1. To elect three Directors for a term expiring in 2002;
2. To ratify the appointment of Arthur Andersen LLP as auditors of the Company
for 2000;
3. To amend the Company's stock option plan to increase the shares available for
issuance under the plan by an aggregate of 500,000 shares, to 950,000 shares;
and
4. To transact such other business that is properly brought before the meeting.
Only holders of the Common Shares of record on the books of the Company at the
close of business on March 6, 2000 will be entitled to vote at the meeting.
Your vote is important. All shareholders are invited to attend the meeting in
person. However, to ensure your representation at the meeting, please mark, date
and sign your Proxy and return it promptly in the enclosed envelope. Any
shareholder attending the meeting may vote in person even if the shareholder
returned a Proxy.
By Order of the Board of Directors
Marc H. Morgenstern
Secretary
Cleveland, Ohio
March 31, 2000
THE ENCLOSED PROXY, WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY, CAN BE RETURNED IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
[OLYMPIC STEEL LOGO]
2000 ANNUAL MEETING
April 26, 2000
THE PROXY AND SOLICITATION
This Proxy Statement is being mailed on or about March 31, 2000, to the
shareholders of Olympic Steel, Inc. (the Company) in connection with the
solicitation by the Board of Directors of the enclosed form of Proxy for the
2000 Annual Meeting of Shareholders to be held on Wednesday, April 26, 2000 at
2:00 p.m. local time, at Olympic Steel, Inc., 5096 Richmond Road, Bedford
Heights, OH 44146. Pursuant to the Ohio General Corporation Law, any shareholder
signing and returning the enclosed Proxy has the power to revoke it by giving
notice of such revocation to the Company in writing or in the open meeting
before any vote with respect to the matters set forth therein is taken. The
representation in person or by Proxy of at least a majority of the outstanding
shares of Common Stock entitled to vote is necessary to provide a quorum at the
Annual Meeting. The election of directors, the proposal to ratify the
appointment of auditors, and the approval of the amendment to the Company's
stock option plan each require approval only by a plurality of the votes cast.
As a result, although abstentions and broker non-votes will not be counted in
determining the outcome of the vote, they will be counted in determining whether
a quorum has been achieved. The cost of soliciting the Proxy will be borne by
the Company.
PURPOSES OF ANNUAL MEETING
The Annual Meeting has been called for the purposes of (1) electing three
(3) Directors of the class whose two-year terms of office will expire in 2002;
(2) ratifying the appointment of Arthur Andersen LLP as auditors of the Company
for 2000, (3) amending the Company's stock option plan to increase the number of
shares available for issuance under the plan, and (4) transacting such other
business as may properly come before the meeting.
The two persons named in the enclosed Proxy have been selected by the Board
of Directors and will vote Common Shares represented by valid Board of
Directors' Proxies. They have indicated that, unless otherwise indicated in the
enclosed Proxy, they intend to vote for the election of the director nominees
named herein and in favor of the proposals listed in Items 2 and 3 above.
1
<PAGE> 5
VOTING SECURITIES
The Board of Directors has fixed the close of business on March 6, 2000, as
the record date for determining shareholders entitled to notice of the meeting
and to vote. On that date, 9,971,100 shares of Common Stock were outstanding and
entitled to one vote on all matters properly brought before the Annual Meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors is divided into two classes of three directors each,
whose members serve for a staggered two-year term. One class of directors' term
expires in 2000 and the other class term expires in 2001.
The Board of Directors has nominated David A. Wolfort, Martin H. Elrad, and
Suren A. Hovsepian to stand for reelection as Directors for a two-year term. The
two-year term will end upon the election of Directors at the 2002 annual meeting
of shareholders. Mr. Wolfort was formerly a member of the class of directors
whose term expires in 2001, however he has been moved to the class of 2000 to
even the classes at three members each, following the resignation of R. Louis
Schneeberger as a director and Chief Financial Officer of the Company.
At the annual meeting, the shares of Common Stock represented by valid
Proxies, unless otherwise specified, will be voted to reelect the directors.
Each individual nominated for election as a Director of the Company has agreed
to serve if elected. However, if any nominee becomes unable or unwilling to
serve if elected, the Proxies will be voted for the election of such other
person as may be recommended by the Board of Directors. The Board of Directors
has no reason to believe that the persons listed as nominees will be unable or
unwilling to serve.
The Board of Directors recommends that each shareholder vote "FOR" the
Board of Directors' nominees. Directors will be elected by a plurality of the
votes cast at the annual meeting.
NOMINEES FOR TERMS TO EXPIRE IN 2002
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION,
PAST FIVE YEARS,
NAME OF DIRECTOR AGE OTHER DIRECTORSHIPS SINCE
---------------- --- --------------------- -----
<S> <C> <C> <C>
David A. Wolfort 47 Chief Operating Officer of the Company since 1995. 1987
He served as Vice President - Commercial of the
Company from 1987 to 1995. He is a trustee of Health
Hill Hospital for Children and a Regional Board
Member of the Northern Ohio Anti-Defamation League.
Martin H. Elrad 60 Private investor; also served for over five years as 1987
President of Solon Leasing Co. (a fleet vehicle
lessor).
Suren A. Hovsepian 60 Business Consultant. Vice President - Automotive of 1998
the Company from 1997 to 1998. Previously, he served
as General Manager of Lafayette Steel, a subsidiary
of the Company, since its acquisition in 1995. Prior
to its acquisition, he was President and Chief
Executive Officer of Lafayette Steel.
</TABLE>
2
<PAGE> 6
DIRECTORS WHOSE TERMS EXPIRE IN 2001
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION,
PAST FIVE YEARS,
NAME OF DIRECTOR AGE OTHER DIRECTORSHIPS SINCE
---------------- --- --------------------- -----
<S> <C> <C> <C>
Michael D. Siegal 47 President and Chief Executive Officer of the Company 1984
since 1984, and Chairman of the Board since 1994. A
member of the Board of Directors of American
National Bank (Cleveland, Ohio) and Cleveland
Lumberjacks (professional hockey team).
Thomas M. Forman 54 Co-founder and board member of HealthSync.com (a 1994
provider of an employer-paid health insurance
marketplace) since 1999. He served as Vice President
of Sealy Corporation (a manufacturer and distributor
of bedding) from 1994 to 1997. Prior thereto, he
served as Executive Vice President and a member of
the Board of Directors of Bridgestone/Firestone,
Inc. (a worldwide tire manufacturer and distributor)
for two years and held various senior management
positions for seven years prior thereto.
Betsy S. Atkins 43 Founder and board member of Ascend Communications 1998
Corp., a Lucent Technologies, Inc. subsidiary (a
supplier of wide area network products) since 1989.
Chairman of the Board of Amplitude Software, now a
Critical Path Co., (applications for the Internet)
since 1996. Prior thereto, she was the President of
NCI (a functional food company). A member of the
Boards of Directors of Polycom, Paradyne, and
Selectica.
</TABLE>
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors of the Company held four meetings in 1999. The Board
of Directors has an Audit Committee, a Compensation Committee, and a Nominating
Committee, each of which consists of Ms. Atkins, and Messrs. Elrad and Forman.
The Audit Committee held two meetings and the Compensation and Nominating
Committees each held one meeting in 1999. The Committees receive their authority
and assignments from the Board of Directors and report to the Board of
Directors.
All of the current Directors attended at least 75% of the required Board
and applicable committee meetings held during 1999. In addition to holding
regular committee meetings, the Board members also reviewed and considered
matters and documents and communicated with each other wholly apart from the
meetings. Several actions were taken by unanimous written consent.
The Audit Committee, which is chaired by Ms. Atkins, recommends the
engagement of the Company's independent auditors and is primarily responsible
for approving the services performed by the Company's independent auditors. The
Committee also reviews and evaluates the Company's accounting principles and its
system of internal accounting controls.
The Compensation Committee, which is chaired by Mr. Forman, reviews and
approves the Company's executive compensation policy, makes recommendations
concerning the Company's employee benefit policies, and has authority to
administer the Company's Stock Option Plan.
3
<PAGE> 7
The Nominating Committee, which is chaired by Mr. Elrad, functions to
advise and make recommendations to the Board concerning the selection of
candidates as nominees for directors, including those individuals recommended by
shareholders. Shareholders wishing to suggest nominees for election to the Board
at the 2001 annual meeting may do so by providing written notice to the Company
in care of Marc H. Morgenstern, Secretary, no later than December 30, 2000.
COMPENSATION OF DIRECTORS
During 1999, each Director who is not an employee of the Company received a
director's fee in the amount of $3,500 per meeting, with a minimum fee of
$14,000 per annum, and reimbursement for out-of-pocket expenses incurred in
connection with attending such meetings. Directors shall also receive $1,000 for
each special Board or Committee meetings attended, including telephonic
meetings. No additional compensation is to be paid for committee meetings held
on the same day as Board meetings. Upon appointment to the Board, each outside
Director is entitled to a stock option grant of 10,000 shares. Each outside
Director shall also be entitled to an annual stock option grant of up to 2,500
shares, based on overall company performance. Directors who are also employees
of the Company receive no additional remuneration for serving as Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth each person or entity who has beneficial
ownership of 5% or more of the outstanding Common Shares of the Company on March
6, 2000, based upon information furnished to the Company.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAMES OF BENEFICIAL OWNERS BENEFICIALLY OWNED OWNERSHIP
-------------------------- ------------------ -------------
<S> <C> <C>
Michael D. Siegal 1,488,778(1) 14.9%
5096 Richmond Road
Cleveland, OH 44146
J. & W. Seligman & Co., Inc. 921,000(2) 9.2%
100 Park Avenue - 8th Floor
New York, NY 10006
Dimensional Fund Advisors 819,500(3) 8.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
- ---------------
(1) Does not include 51,000 shares held in various trusts for the benefit of Mr.
Siegal's children. Mr. Siegal disclaims beneficial ownership of such shares.
Includes 7,778 shares issuable upon exercise of options exercisable within
sixty days of March 6, 2000.
(2) Based on Schedule 13G filed with the Securities and Exchange Commission on
or about February 10, 2000.
(3) Based on Schedule 13G filed with the Securities and Exchange Commission on
or about February 11, 2000.
4
<PAGE> 8
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the amount of the Company's Shares of Common
Stock beneficially owned by the Company's Directors, each of the officers in the
compensation table included herein, and all the directors and executive officers
as a group as of March 6, 2000.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAMES OF BENEFICIAL OWNERS BENEFICIALLY OWNED OWNERSHIP
- -------------------------- ------------------ -------------
<S> <C> <C>
Michael D. Siegal 1,488,778(1) 14.9%
R. Louis Schneeberger 266,767(2) 2.7%
David A. Wolfort 209,667(3) 2.1%
Martin H. Elrad 18,667(4) *
Thomas M. Forman 13,717(5) *
Betsy S. Atkins 12,667(6) *
Suren A. Hovsepian 10,667(7) *
All directors and executive officers as a group 2,036,262(8) 20.3%
(9 persons)
</TABLE>
- ---------------
* Less than 1%.
(1) Does not include 51,000 shares held in various trusts for the benefit of Mr.
Siegal's children. Mr. Siegal disclaims beneficial ownership of such shares.
Includes 7,778 shares issuable upon exercise of options exercisable within
sixty days of March 6, 2000.
(2) Includes 100 shares held by spouse. Does not include 34,000 shares held in
various trusts for the benefit of Mr. Schneeberger's children. Mr.
Schneeberger disclaims beneficial ownership of such shares. Includes 6,667
shares issuable upon exercise of options exercisable within sixty days of
March 6, 2000.
(3) Does not include 98,000 shares held in various trusts for the benefit of Mr.
Wolfort's children. Mr. Wolfort disclaims beneficial ownership of such
shares. Includes 6,667 shares issuable upon exercise of options exercisable
within sixty days of March 6, 2000.
(4) Includes 13,667 shares issuable upon exercise of options exercisable within
sixty days of March 6, 2000.
(5) Includes 11,567 shares issuable upon exercise of options exercisable within
sixty days of March 6, 2000.
(6) Includes 2,667 shares issuable upon exercise of options exercisable within
sixty days of March 6, 2000.
(7) Includes 10,667 shares issuable upon exercise of options exercisable within
sixty days of March 6, 2000.
(8) Includes 72,112 shares issuable upon exercise of options exercisable within
sixty days of March 6, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Act of 1934, as amended, requires the
Company's officers and directors, and persons who own greater than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership to
the SEC. Officers, directors and more than 10% shareholders are required by the
SEC to furnish to the Company copies of all Section 16(a) reports they file.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Company during
5
<PAGE> 9
1999 and Form 5 and amendments thereto furnished to the Company with respect to
1999, or a written representation from the reporting person that no Form 5 is
required, all filings required to be made by the Company's officers, directors
and greater than 10% shareholders were timely made.
EXECUTIVE OFFICERS' COMPENSATION
The following table sets forth certain information with respect to the
compensation paid by the Company during the years ended December 31, 1999, 1998,
and 1997 to the Chief Executive Officer, each of the other executive officers
(the "Named Executive Officers"), and other top management of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
NAME AND ------------------- ALL OTHER
PRINCIPAL POSITION(S) YEAR SALARY BONUS COMPENSATION(1)
- --------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Michael D. Siegal, 1999 $425,000 $118,300 $ 9,800
Chairman of the Board, President 1998 421,793 108,240 11,400
and Chief Executive Officer 1997 412,923 237,130 11,150
R. Louis Schneeberger, 1999 $310,000 $ 94,640 $ 9,800
Chief Financial Officer(2) 1998 301,775 108,240 11,400
1997 294,945 237,130 11,150
David A. Wolfort, 1999 $310,000 $ 94,640 $ 9,800
Chief Operating Officer 1998 301,775 108,240 11,400
1997 294,945 237,130 11,150
</TABLE>
- ---------------
(1) "All Other Compensation" includes (i) contributions to the Company's 401(k)
plan to match pre-tax elective deferral contributions and (ii) amounts paid
under the Company's discretionary profit-sharing plan. Messrs. Siegal,
Schneeberger, and Wolfort each were credited in 1999 with $5,000 and $4,800
under the 401(k) plan and profit-sharing plan, respectively.
(2) R. Louis Schneeberger resigned as Chief Financial Officer effective March
31, 2000.
The following table sets forth information regarding individual grants of
stock options pursuant to the Company's Stock Option Plan during 1999 to each of
the Named Executive Officers.
INDIVIDUAL OPTION GRANTS
1999
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF SHARES OPTIONS GRANTED
COVERED BY TO EMPLOYEES EXERCISE PRICE EXPIRATION GRANT DATE
NAME OPTION GRANT IN FISCAL YEAR ($/SHARE)(1) DATE PRESENT VALUE(2)
- ---- ---------------- --------------- -------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Michael D. Siegal 23,333 13.2% $8.75 4/23/09 $138,185
R. Louis Schneeberger 20,000 11.3% $8.75 4/23/09 $118,446
David A. Wolfort 20,000 11.3% $8.75 4/23/09 $118,446
</TABLE>
During 1999, there were no Stock Option exercises by any of the Named Executive
Officers.
- ---------------
(1) Stock Options were awarded with an exercise price equal to the fair market
value per share of the Common Stock on the grant date.
6
<PAGE> 10
(2) In accordance with the rules of the United States Securities and Exchange
Commission, the Black-Scholes option pricing model was chosen to estimate
the grant date present value of the options set forth in this table. The
Company cannot predict or estimate the future price of the Company's Common
Stock, and neither the Black-Scholes model nor any other model can
accurately determine the value of an option. Accordingly, there is no
assurance that the value realized by an officer, if any, will be at or near
the value estimated in the Black-Scholes model. The Black-Scholes valuation
was determined using the following assumptions: an average volatility of
50.5%, no dividend yield, a risk-free interest rate of 5.3%, and a projected
exercise period of 9.8 years.
During 1999, there were no Stock Option exercises by any of the Named
Executive Officers.
The following table sets forth certain information concerning the number
and value of unexercised options held by each of the Named Executive Officers at
December 31, 1999.
DECEMBER 31, 1999
OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF IN-THE-MONEY
OPTIONS AT YEAR END OPTIONS AT YEAR END($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael D. Siegal 0 23,000 0 0
R. Louis Schneeberger 0 20,000 0 0
David A. Wolfort 0 20,000 0 0
</TABLE>
- ---------------
(1) These values are based on the negative spread between the respective
exercise price of outstanding stock options and the fair market value of the
Company's Common Stock at December 31, 1999 ($4.75). These amounts may not
represent amounts actually realized by the Named Executive Officers.
EMPLOYEE BENEFIT PLANS
Incentive Bonus Plans. Each of the Executive Officers participated in the
Senior Management Compensation Program which focuses on return on assets (ROA)
and growth in tonnage. ROA is calculated by dividing consolidated net income by
average monthly total assets. Net income and total assets can be adjusted by the
Committee for certain start-up costs or extraordinary items. Under the program,
each of the Executive Officers can be granted stock options based on the
Company's performance. The determination of the stock option grants is made by
the Compensation Committee. The Committee believes that this program further
aligns the interests of management and shareholders and will provide long-term
incentive for maximizing shareholder value.
Stock Option Plan. The Stock Option Plan was adopted by the Board of
Directors and approved by the shareholders of the Company in January 1994.
Pursuant to the provisions of the Option Plan, key employees of the Company,
non-employee directors of the Company and consultants may be offered the
opportunity to acquire shares of Common Stock by the grant of stock options
including both incentive stock options (ISOs), within the meaning of Section 422
of the Internal Revenue Code of
7
<PAGE> 11
1986, as amended, and nonqualified stock options. ISOs are not available to
consultants. A total of 450,000 shares of Common Stock have been reserved for
options under the Option Plan of which 306,833 options remain outstanding as of
December 31, 1999. The Company proposes to increase the number of authorized
shares available under the Option Plan. See Proposal Three below. The Option
Plan will terminate in January 2004; however, termination of the Option Plan
will not affect outstanding options. The Compensation Committee of the Board of
Directors administers the Option Plan. The Committee has broad discretion to set
the terms and conditions of the options, provided that no option may be
exercisable more than ten years after the date of grant.
RELATED TRANSACTIONS
AND COMPENSATION COMMITTEE INTERLOCKS
A partnership owned by family members of Mr. Siegal owns one of the
Cleveland facilities and leases it to the Company on a triple-net basis at an
annual rent of $195,300. The lease expires in June 2000, subject to two ten-year
renewal options. A corporation owned by family members of Mr. Siegal provides
freight services to the Company. Payments to this entity were approximately $1.2
million in 1999. The Company believes these transactions are on terms no less
favorable to the Company than could be obtained from unrelated parties.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
setting and administering the policies that govern the base salaries, bonuses
and other compensation matters of the executive officers of the Company. The
Committee consists entirely of non-employee directors of the Company. The
Committee meets twice annually to review the compensation program for the
executive officers of the Company. This report documents the basis of
compensation for 1999, with regard to the Company's Chief Executive Officer and
other executive officers.
Compensation Policy. The executive compensation policy of the Company is
based on the following philosophy: (i) the need to retain and, as necessary,
attract highly qualified executives with a compensation plan that is competitive
with both public and privately held steel and steel-related companies; (ii)
emphasizing variable, performance-based compensation tied to the overall
profitability of the Company; (iii) creating a system that would not be overly
complicated or conflict with the bonus system used at the general manager level;
and (iv) devising a compensation program that appropriately aligns the interests
of executive officers with those of the Company's shareholders in increasing
shareholder value.
Base Salaries. The annual base salary of the executive officers is based
upon an evaluation of their significant contributions as individuals and as a
team, as subjectively determined by the Compensation Committee. The Committee
reviewed the cash compensation of numerous senior executives in positions in
other steel and steel-related
8
<PAGE> 12
companies to determine the range of the base salaries. Base salaries for 1999
were reviewed and approved by the Compensation Committee, and the amounts paid
are included in the Summary Compensation Table.
Incentive Compensation. A significant portion of the executive officers'
compensation is incentive bonus-based and tied to the overall profitability of
the Company. The 1999 bonus compensation was determined by the provisions of the
Incentive Bonus Plan described under the section "Employee Benefit Plans."
Chief Executive Officer Compensation. The Chief Executive Officer
participates in the same compensation plan provided to the other executive
officers of the Company. The base salary for the Chief Executive Officer,
Michael D. Siegal, was based upon the Compensation Committee's subjective
evaluation of his performance, considering his years of experience,
contributions and accomplishments, and his commitment to increasing shareholder
value. The Compensation Committee also considered the base compensation packages
of other chief executive officers for comparable companies. Consistent with the
philosophy of the Incentive Bonus Compensation Plan, the overall profitability
of the Company is a primary variable in determining the total compensation paid
to the Chief Executive Officer. Mr. Siegal owns a significant number of shares
of the Company, which provides additional long-term incentive for maximizing
shareholder value.
Thomas M. Forman, Chairman
Martin H. Elrad
Betsy S. Atkins
9
<PAGE> 13
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's Common Shares against the cumulative total return of the
NASDAQ U.S. composite index and an index to a peer group from December 1994
through December 1999.
The stock price performance graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference and shall not otherwise
be deemed filed under such Acts.
COMPARISON OF CUMULATIVE TOTAL RETURNS
Olympic Steel, Inc., Peer Group Index and NASDAQ U.S. Index
From December 30, 1994 through December 31, 1999
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON 12/30/94)
<TABLE>
<S> <C> <C>
Olympic Steel, Inc. Peer Group Index1
12/31/94 100 100
12/31/95 83.33 127.39
12/31/96 241.67 140.75
12/31/97 148.21 136.13
12/31/98 47.62 107.36
12/31/98 45.24 140.49
<S> <C>
Nasdaq U.S. Index
12/31/94 100
12/31/95 141.4
12/31/96 173.93
12/31/97 213.43
12/31/98 299.22
12/31/98 566.91
</TABLE>
- ---------------
(1) The companies selected to form the peer group index are A.M. Castle & Co.,
Gibraltar Steel Corporation, Huntco Inc., Shiloh Industries, Inc., Steel
Technologies Inc., and Worthington Industries, Inc.
10
<PAGE> 14
PROPOSAL TWO
INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected Arthur Andersen LLP as auditors for 2000. The Board of Directors
requests the ratification of the appointment of Arthur Andersen LLP by the
shareholders at the annual meeting. The Board of Directors recommends that each
shareholder vote "FOR" ratification of Arthur Andersen LLP as auditors for 2000.
Arthur Andersen LLP has audited the Company's financial statements for each
year since 1987. Representatives of Arthur Andersen LLP are expected to be
present at the meeting with the opportunity to make a statement if they desire
to do so, and are expected to be available to respond to appropriate questions.
PROPOSAL THREE
ADOPTION OF AMENDMENT TO THE STOCK OPTION PLAN
The Company's Stock Option Plan (the "Plan") initially authorized up to
450,000 shares of Common Stock of the Company (the "Shares") to be issued
pursuant to the exercise of Options under the Plan. As of December 31, 1999, a
total of 314,833 Options had been granted and Options exercised resulted in the
issuance of 8,000 Shares. Currently, 135,167 Shares remain available for grant.
It is proposed to increase the number of Shares authorized for issuance under
the Plan by an additional 500,000 Shares. This amendment to the Plan was
approved by the Board of Directors on February 3, 2000, subject to shareholder
approval. If approved, the total number of Shares authorized for issuance would
be 950,000 Shares, less any Shares issued to date.
Purpose and Eligibility. In January, 1994, approval was obtained from the
shareholders to implement the Plan. The purpose of the Plan is to provide
employees, outside directors and consultants of the Company and the Company's
subsidiaries (collectively, the "Participants") with greater long-term
performance incentives to further the interests of the Company and its
shareholders. An employee who is largely responsible for the management and
growth of the business of the Company or any subsidiary of the Company is
eligible to participate in the Plan. In addition, a consultant, other than an
employee of the Company, or an outside director whose performance of services to
the Company is important to the successful operation of the Company or any
subsidiary is eligible to participate in the Plan. Currently, there are
approximately 25 employees and 4 outside directors eligible to participate in
the Plan.
Option Price. The option price for nonqualified options is as determined
by the Board of Directors or the Compensation Committee, as the case may be, in
its exclusive discretion. The option price for incentive stock options ("ISO's")
is determined by the Board of Directors or the Compensation Committee, but may
not be less than 100% of the fair market value of a Share on the date the ISO is
granted (unless the ISO is granted to an employee who owns, directly or through
attribution, stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any subsidiary (a "10% Attribution
Shareholder") in which case the
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<PAGE> 15
option price may not be less than 110% of the fair market value). The Plan
defines "fair market value" as the mean of the highest and lowest selling price
of the Shares on the date of grant on the NASDAQ National Market.
Term and Exercise. Options may be granted under the Plan until January 5,
2004, however, Options granted under the Plan may extend beyond January 5, 2004
in accordance with their terms. Generally, the terms of the Options will be
determined by the Board of Directors or the Compensation Committee, but may not
exceed ten years from the date of grant. Incentive Stock Options granted to a
10% Attribution Shareholder may not exceed a term of 5 years and Options granted
to outside directors have a term of 10 years. In the event a Participant no
longer renders services to the Company (whether as an employee, consultant or
director) for any reason, options that are not yet exercisable will terminate,
and options that are exercisable on the date of termination must be exercised
within 3 months of the date of termination (or one year in the case of death or
disability).
Federal Income Tax Consequences of the Plan. The grant of an ISO will
have no immediate tax consequences to the Company or the Participant. If a
Participant has remained an employee of the Company or a subsidiary of the
Company from the date of grant until at least the day three months before the
date of exercise (one year before the date of exercise in the case of an
employee who is disabled), the Participant will recognize no income tax and the
Company will not be entitled to any tax deduction at the time of exercise of an
ISO. However, the amount by which the fair market value of the acquired Shares
at the time of exercise exceeds the exercise price will be an adjustment to
alternative minimum taxable income for purposes of the alternative minimum tax.
If a Participant exercises an ISO more than three months after terminating
employment (one year in the case of death or disability), the exercise of the
option will be treated in the same manner as the exercise of a non-qualified
stock option.
If a Participant holds the Shares received upon exercise of an ISO for at
least two years after the date of grant and for at least one year from the date
of exercise, gain or loss on the subsequent sale of the Shares will be a
long-term capital gain or loss. If a Participant disposes of Shares acquired
upon exercise of an ISO before these holding periods are satisfied, a
Participant will recognize compensation income equal to the lesser of: (i) the
excess of the fair market value of the Shares on the exercise date over the
exercise price, or (ii) the excess of the amount realized on disposition over
the exercise price. The amount received in excess of the fair market value on
the exercise date generally will be taxable as a short-term capital gain.
The grant of a non-qualified stock option will have no immediate tax
consequence to the Company or to a Participant. A Participant will recognize
compensation income, subject to withholding for federal, state and local income
taxes and employment taxes, at the time of exercise of a non-qualified stock
option in an amount equal to the difference between the exercise price and the
fair market value on the exercise date of the acquired Shares. The Company will
be entitled to a deduction in the same taxable year and in the same amount as a
Participant recognizes compensation income as a
12
<PAGE> 16
result of the exercise of a non-qualified stock option, provided that the
Company satisfies applicable withholding requirements.
The market value of the Shares as of March 6, 2000 is $4.125.
The amendment to increase the number of Shares authorized for issuance
under the Plan must be approved by a plurality of the votes cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
OF THE PLAN.
OTHER MATTERS
The Board of Directors of the Company is not aware that any matter other
than those listed in the Notice of Meeting is to be presented for action at the
meeting. If any of the Board's nominees is unavailable for election as a
Director or any other matter should properly come before the meeting, it is
intended that votes will be cast pursuant to the Proxy in respect thereto in
accordance with the best judgment of the person or persons acting as proxies.
PROXY SOLICITATION
The Company will bear the expense of preparing, printing and mailing this
Proxy Statement. In addition to solicitation by mail, officers and regular
employees of the Company may solicit by telephone the return of Proxies. The
Company will request brokers, banks and other custodians, nominees and
fiduciaries to send Proxy material to beneficial owners and will, upon request,
reimburse them for their expenses.
SHAREHOLDERS' PROPOSALS
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for the 2001 Annual Meeting of Shareholders is
expected to be November 30, 2000.
ANNUAL REPORT
The Company's Annual Report for the year ended December 31, 1999, including
financial statements of the Company and the report thereon of Arthur Andersen
LLP, is being mailed to shareholders with this Notice of the Annual Meeting and
Proxy Statement.
MARC H. MORGENSTERN
Secretary
By Order of the Board of Directors
March 31, 2000
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<PAGE> 17
P R O X Y
OLYMPIC STEEL, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
At the Annual Meeting of Shareholders of the Company to be held on April
26, 2000, and at any adjournment, Michael D. Siegal and David A. Wolfort, or
either one of them, is hereby authorized to represent me and to vote my shares
on the following:
(Continued, and to be marked, signed and dated on the reverse side)
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FOLD AND DETACH HERE
<PAGE> 18
X Please mark
your vote
as indicated
in this
example.
<TABLE>
<CAPTION>
FOR
ALL NOMINEES WITHHELD
LISTED (EXCEPT AUTHORITY
AS OTHERWISE FOR ALL
NOTED) NOMINEES FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ]
<S> <C>
1. Election of Directors: 2. Ratification of the appointment of
Term expiring in 2002: Arthur Andersen LLP as auditors.
(INSTRUCTIONS: To withhold authority to
vote for a nominee, mark through the nominee's name. 3. To amend the Company's stock option
David A. Wolfort plan to increase the Shares
Martin H. Elrad available for issuance
Suren A. Hovsepian under the plan by an aggregate of
500,000 Shares, to 950,000 Shares.
4. In accordance with their best
judgment, upon any other matters
which may properly come before
the meeting.
SHARES REPRESENTED BY PROPERLY EXECUTED PROXIES WILL BE
VOTED AS SPECIFIED. UNLESS OTHERWISE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AS SET
FORTH IN ITEM 1 AND FOR THE PROPOSALS IDENTIFIED IN ITEM
2 AND 3 ABOVE.
Signed this ________________ day of _____________ , 2000
________________________________________________________
________________________________________________________
PLEASE GIVE TITLE WHEN SIGNING AS EXECUTOR,
ADMINISTRATOR, TRUSTEE, ATTORNEY OR OTHER
REPRESENTATIVE. IF SHARES ARE REGISTERED IN THE NAMES OF
JOINT TENANTS OR TRUSTEES, EACH JOINT TENANT OR TRUSTEE
SHOULD SIGN.
PLEASE DATE AND SIGN EXACTLY AS THE NAMES APPEAR ON THE
FACE OF THE PROXY AND RETURN BY MAILING PROMPTLY IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE.
"PLEASE MARK INSIDE BOXES SO THAT DATA THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS.
PROCESSING EQUIPMENT WILL RECORD YOUR VOTE" PLEASE COMPLETE, SIGN AND RETURN PROMPTLY.
</TABLE>
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FOLD AND DETACH HERE
