<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
[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
14-a6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AK STEEL HOLDING CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):
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5) Total fee paid:
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[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $
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================================================================================
<PAGE>
AK STEEL HOLDING CORPORATION RICHARD M. WARDROP, JR.
703 CURTIS STREET CHAIRMAN AND CHIEF
MIDDLETOWN, OHIO 45043-0001 EXECUTIVE OFFICER
April 7, 1997
To All AK Steel Holding Corporation Common Stockholders:
It is a pleasure to invite you to the 1997 Annual Meeting of Stockholders.
The meeting will be held at 10:00 a.m. on Thursday, May 15, 1997, at the Ritz-
Carlton Hotel, Kansas City, Missouri. Your continuing interest in our Company
is appreciated, and I hope that as many of you as possible will attend the
meeting.
Please read the enclosed Notice of Meeting and accompanying Proxy Statement
carefully. For those of you who cannot attend the meeting in person, I urge
you to participate by completing, signing, and returning your proxy in the
enclosed envelope. Your vote is important, and the management of AK Steel
appreciates your cooperation in directing proxies to vote at the meeting.
Attendance at the Annual Meeting will be limited to stockholders of record
as of the close of business on March 28, 1997, or their duly appointed
proxies, and to guests of management. If you or your appointed proxy plan to
attend in person, please complete, sign, detach and return the enclosed
Request for Admittance card.
I look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Richard M. Wardrop
Chairman and Chief Executive Officer
[LOGO] AK STEEL HOLDING CORPORATION
<PAGE>
AK STEEL HOLDING CORPORATION
703 CURTIS STREET
MIDDLETOWN, OHIO 45043
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
The 1997 Annual Meeting of Stockholders of AK Steel Holding Corporation (the
"Company") will be held in Pavillion I of the Ritz-Carlton Hotel, 401 Ward
Parkway, Kansas City, Missouri, on Thursday, May 15, 1997 at 10:00 a.m., for
the following purposes:
1. To elect nine directors of the Company; and
2. To transact such other business as properly may come before the
meeting.
The Board of Directors has fixed March 28, 1997 as the record date for the
determination of stockholders entitled to receive notice of and to vote at the
Annual Meeting.
By order of the Board of Directors,
John G. Hritz
Secretary
Middletown, Ohio
April 7, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE MARK, DATE AND
SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED BY
WRITTEN NOTICE TO THAT EFFECT, BY SUBMITTING A SUBSEQUENTLY DATED PROXY OR
BY ATTENDING THE ANNUAL MEETING AND VOTING IN PERSON.
<PAGE>
AK STEEL HOLDING CORPORATION
703 CURTIS STREET
MIDDLETOWN, OHIO 45043
----------------
PROXY STATEMENT
----------------
This Proxy Statement is being furnished in connection with the solicitation
by the Board of Directors of AK Steel Holding Corporation (the "Company") of
proxies to be voted at the Annual Meeting of Stockholders of the Company to be
held on May 15, 1997 and at any and all adjournments thereof.
At the meeting, holders of the Company's Common Stock will vote for the
election of nine directors. Each duly executed proxy received prior to the
meeting will be voted in accordance with the choices specified therein by the
stockholder. If no contrary direction is specified, the proxy will be voted
FOR the election as directors of the nine nominees listed in this Proxy
Statement. Stockholders who execute proxies may revoke them at any time before
they are voted by filing with the Company a written notice of revocation, by
delivering a duly executed proxy bearing a later date or by attending the
meeting and voting in person.
The Board of Directors has fixed the close of business on March 28, 1997 as
the record date for the determination of stockholders entitled to notice of
and to vote at the meeting. At that date, there were issued and outstanding
26,705,792 shares of Common Stock. Each holder of Common Stock is entitled to
one vote for each share held on all matters that come before the meeting.
ELECTION OF DIRECTORS
In accordance with the Company's By-laws, the Board of Directors has fixed
the number of directors at nine. If elected, each of the nominees listed below
will serve as a director of the Company for a term expiring on the date of the
1998 Annual Meeting of Stockholders and until his or her successor is duly
elected and qualifies. If any nominee is unable to serve, proxies may be voted
for another person designated by the Board of Directors. The Company has no
reason to believe that any nominee will be unable to serve.
INFORMATION CONCERNING NOMINEES FOR DIRECTORS
Set forth below is information with respect to each of the nine nominees for
election as directors. Each of the nominees is presently serving as a director
of the Company.
ALLEN BORN
Mr. Born, age 63, was elected a director of the Company on
March 2, 1995. He is Chairman and Chief Executive Officer of
Alumax Inc., having served in those positions since November
1993. For more than five years prior thereto he served as
Chairman and Chief Executive Officer of Amax Inc. Mr. Born
also is a director of Amax Gold Inc., Cypress-Amax Minerals
Company, the National Mining Association, the Aluminum
Association and the International Primary Aluminium Institute.
[PHOTO]
<PAGE>
JOHN A. GEORGES
Mr. Georges, age 66, a director of the Company since April 7,
1994, is a Senior Managing Director of Windward Capital
Partners LLP, a private investment partnership. He is the
retired Chairman and Chief Executive Officer of International
Paper Company, having served in that position from 1985 to
March 1996. He also is a director of International Paper
Company, Ryder System Inc. and Warner-Lambert Company. Mr.
Georges is a member of The Business Council and a member of
the Trilateral Commission. He is President of the University
of Illinois Foundation.
[PHOTO]
DR. BONNIE GUITON HILL
Dr. Hill, age 55, a director of the Company since April 7,
1994, is President and Chief Executive Officer of The Times
Mirror Foundation and a Vice President of The Times Mirror
Company, having been elected to those positions in February
1997. From July 1992 until January 1997, she was Dean of the
McIntire School of Commerce at the University of Virginia. She
served as Secretary of the State and Consumer Services Agency
for the State of California from April 1991 to June 1992. From
September 1990 to March 1991, Dr. Hill was the President and
Chief Executive Officer of Earth Conservation Corporation.
From April 1989 to September 1990, she served as Director of
the United States Office of Consumer Affairs and Special
Advisor to the President for Consumer Affairs, having
previously served as the Assistant Secretary of the United
States Department of Education and as Vice-Chair of the United
States Postal Rate Commission. She also is a director of
Niagara Mohawk Corporation, Hershey Foods Corporation,
Louisiana-Pacific Corporation, Crestar Financial Corporation
and NASD Regulation, Inc.
[PHOTO]
ROBERT H. JENKINS
Mr. Jenkins, age 54, has been a director of the Company since
January 24, 1996. He is President and Chief Executive Officer
of Sundstrand Corporation, having been named to that position
in September 1995. For more than five years prior thereto, Mr.
Jenkins was employed by Illinois Tool Works as its Executive
Vice President and in other senior management positions. Mr.
Jenkins also serves as a member of the boards of trustees of
the Manufacturers Alliance and the National Association of
Manufacturers.
[PHOTO]
LAWRENCE A. LESER
Mr. Leser, age 61, a director of the Company since May 17,
1995, is Chairman of The E.W. Scripps Company, having also
served as its Chief Executive Officer from July 1985 until May
1996. Mr. Leser also serves as a director of Union Central
Life Insurance Company, is a Trustee of Xavier University and
is a member of the National Advisory Board of The Chase
Manhattan Bank.
[PHOTO]
2
<PAGE>
ROBERT E. NORTHAM
Mr. Northam, age 66, has been a director of the Company since
April 7, 1994. He retired as Executive Vice President and
Chief Financial Officer of J.C. Penney Company, Inc. in
January 1996, having served in that position since February
1982. He also served in the office of the chairman of J.C.
Penney Company, Inc. from June 1992 until his retirement. Mr.
Northam also serves as a director of Best Products Company,
Inc.
[PHOTO]
CYRUS TANG
Mr. Tang, age 67, has been a director of the Company since
April 7, 1994. Since 1971, he has served as President and
Chief Executive Officer of Tang Industries, Inc., which,
together with its affiliates, operates various businesses,
including steel distribution and processing, metal stamping
and fabrication, ferrous and non-ferrous metal scrap trading
and processing, aluminum die casting, extrusions and
recycling, wood and steel office furniture manufacturing and
pharmaceuticals.
[PHOTO]
DR. JAMES A. THOMSON
Dr. Thomson, age 52, was elected a director of the Company on
March 18, 1996. He is the President and Chief Executive
Officer of The Rand Corporation, having served in that
capacity since August 1989. He also serves as a director of
Texas Biotechnology Corporation. Dr. Thomson is a member of
the Council on Foreign Relations in New York, the
International Institute for Strategic Studies in London, the
governing board of the Los Angeles World Affairs Council and
the Council of Economic Advisors to the Governor of
California.
[PHOTO]
RICHARD M. WARDROP, JR.
Mr. Wardrop, age 51, was elected Chairman of the Board of the
Company effective January 27, 1997. He has been a director
since March 2, 1995 and Chief Executive Officer since May 16,
1995. Mr. Wardrop also served as President of the Company from
April 7, 1994 until March 20, 1997. From June 1992 to April 7,
1994, Mr. Wardrop served as Vice President-Manufacturing of
the Company's predecessor, Armco Steel Company, L.P.
("ASCLP"). Prior to joining ASCLP, Mr. Wardrop served from
January 1992 to May 1992 as Corporate Vice President,
Engineering & Purchasing, of Washington Steel Corporation and
from July 1990 to December 1991 as a consultant to the
President of Quigley Company, Inc., a subsidiary of Pfizer,
Inc. and prior thereto as General Manager of U.S. Steel
Corporation's Mon Valley Works.
[PHOTO]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ELECTION OF EACH OF
THE FOREGOING NOMINEES.
3
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established an Audit and Finance Committee, a
Compensation Committee, a Public Affairs Committee and a Nominating and
Governance Committee.
The Audit and Finance Committee recommends to the Board of Directors the
firm of certified public accountants that will be appointed to serve as the
independent auditors of the Company's annual financial statements. The Audit
and Finance Committee also meets with representatives of that accounting firm
and the Company's internal audit staff to review the plan, scope and results
of the annual audit and the recommendations of the independent accountants
regarding the Company's internal accounting systems and controls. The current
members of the Audit and Finance Committee are Messrs. Georges (Chairperson),
Born, Northam and Tang.
The Compensation Committee makes recommendations to the Board of Directors
with regard to the Company's compensation and benefits policies and practices.
The Committee also reviews and makes recommendations to the Board of Directors
with respect to the compensation of the Company's principal executive officers
and administers the Company's Stock Incentive Plan. The current members of the
Compensation Committee are Messrs. Northam (Chairperson), Born and Leser and
Dr. Hill.
The Public Affairs Committee reviews and makes recommendations to the Board
of Directors regarding the Company's public affairs policies and practices,
including its policies with respect to environmental compliance, employee
safety and health and equal employment opportunities. The current members of
the Public Affairs Committee are Dr. Hill (Chairperson), Messrs. Georges and
Jenkins and Dr. Thomson.
The Nominating and Governance Committee reviews and makes recommendations to
the Board of Directors regarding the size, organization, membership
requirements, compensation and other practices and policies of the Board. The
current members of the Nominating and Governance Committee are Messrs. Leser
(Chairperson), Jenkins and Tang and Dr. Thomson.
ATTENDANCE AT MEETINGS
During 1996, there were six regular and four telephonic meetings of the
Board of Directors, six meetings of each of the Audit and Finance Committee
and the Compensation Committee and two meetings of each of the Public Affairs
Committee and the Nominating and Governance Committee. Each director attended
at least 75% of the meetings of the Board and of each committee of which he or
she was a member.
COMPENSATION OF DIRECTORS
During 1996, each director who is not an employee of the Company received an
annual fee of $25,000 for service on the Board of Directors. One-half of that
amount was paid in the form of shares of Common Stock of the Company valued at
market on the date of issuance and the balance was paid in cash (receipt of
which may have been deferred pursuant to a prior election) or, at the
director's option, in the form of additional shares of Common Stock. Each
director who chairs a committee of the Board of Directors received an
additional annual fee of $3,000 for such service. Non-employee directors also
were paid a fee of $1,200 for each Board meeting and each committee meeting
they attended and were reimbursed for their expenses incurred in attending
those meetings. An employee of the Company who serves as a director receives
no additional compensation for such service. Non-employee directors are
required to retire from the Board at age 70 but are entitled thereafter to an
annual retainer equal to the annual director's fee in effect at the time of
such retirement, provided that they remain available to the Chairman on a
consulting basis. Upon first being elected to the Board, each non-employee
director also is granted options under the Company's 1994 Stock Incentive Plan
to purchase a total of 5,000 shares of the Company's Common Stock at its then
prevailing market price. The options vest on the first anniversary of the date
of grant and may be exercised at any time thereafter until the tenth
anniversary of the grant date. Effective January 1, 1997, the annual fees for
service as a director and committee chair will be $30,000 and $3,600,
respectively, and the fee for attendance at a meeting of the Board of
Directors or committee will be $1,500.
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
Annual compensation paid to executive officers of the Company consists of
salary and cash bonus awards under the Company's Annual Management Incentive
Plan. Long-term compensation consists of restricted stock awards and stock
options under the Company's 1994 Stock Incentive Plan and payouts in the form
of cash and restricted stock under the Company's Long-Term Performance Plan.
The following table sets forth the cash compensation, as well as certain
other compensation, paid or accrued by the Company for each of the past three
years to the Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company (the "Named Executives") serving
as such at December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG-TERM COMPENSATION
---------------- -----------------------------------
AWARDS PAYOUTS
------------------------ ----------
ALL
RESTRICTED SECURITIES OTHER
NAME AND STOCK UNDERLYING LTIP COMPEN-
PRINCIPAL POSITION SALARY BONUS(4) AWARDS(5) STOCK OPTIONS PAYOUTS(6) SATION(7)
AT 12/31/96 YEAR ($) ($) ($) (# OF SHARES) ($) ($)
- ------------------ ---- ------- -------- ---------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas C.
Graham (1) 1996 762,500 776,606 2,114,189 50,000 1,200,000(8) 75,480
Chairman 1995 605,797 595,668 437,812 60,000 -- 60,085
1994 400,002 481,922 3,525,000 350,000 -- 38,875
Richard M.
Wardrop, Jr.
(2)
President
and Chief 1996 546,875 556,992 1,209,375 80,000 862,500 33,586
Executive 1995 443,480 436,065 415,312 60,000 -- 27,264
Officer 1994 307,503 370,480 705,000 150,000 -- 20,538
Mark G. Essig
Executive
Vice Presi- 1996 307,500 303,410 342,656 22,000 315,000 16,319
dent, 1995 286,668 281,875 207,656 30,000 -- 15,222
Commercial 1994 248,754 242,222 470,000 100,000 -- 16,227
Richard E.
Newsted (3)
Senior Vice
President, 1996 236,669 233,522 322,500 21,000 250,000 14,758
Chief Finan- 1995 219,501 215,831 138,437 20,000 -- 13,882
cial Officer 1994 81,818 79,670 238,000 40,000 -- 5,140
James F.
Walsh
Vice Presi- 1996 197,337 194,712 201,563 12,500 210,000 10,634
dent, 1995 129,000 126,843 176,375 24,000 -- 6,999
Manufacturing 1994 107,511 73,281 94,000 20,000 -- 335
</TABLE>
- --------
(1) Mr. Graham served as Chairman until his retirement from the Board of
Directors on January 27, 1997.
(2) Mr. Wardrop served as President and Chief Executive Officer throughout
1996. He was elected to the additional office of Chairman upon Mr.
Graham's retirement from the Board of Directors on January 27, 1997 and
ceased to serve as President on March 20, 1997 upon the election to that
office of Mr. James L. Wareham.
(3) Mr. Newsted joined the Company on August 15, 1994.
(4) All amounts shown in this column represent bonuses earned under the
Company's Annual Management Incentive Plan.
(5) The dollar value of each restricted stock award indicated in this column
is based on the average price of the Company's Common Stock on the date of
the award. The amounts shown do not include the value of restricted stock
awards representing a portion of the payouts under the Company's Long-Term
Performance Plan. All awards shown in this column, other than those to Mr.
Graham, were granted pursuant to the Company's 1994 Stock Incentive Plan.
The amount shown for Mr. Graham for 1996 represents the dollar value of a
restricted stock award of 50,000 shares that was granted in 1996 pursuant
to the 1994 Stock Incentive Plan as well as 2,622 restricted stock units
paid as dividends on restricted stock units that were granted in 1994. The
amount shown for Mr. Graham for 1995 represents the dollar value of a
restricted
--------
Footnotes continue on following page.
5
<PAGE>
stock award of 15,000 shares that was granted pursuant to the 1994 Stock
Incentive Plan as well as 673 restricted stock units paid as dividends on
restricted stock units that were granted in 1994. The amount shown for Mr.
Graham for 1994 represents a grant of 150,000 restricted stock units that
is more fully described under the caption "Agreements with Principal
Officers" on page 9 of this Proxy Statement. The aggregate number of shares
of restricted stock (and, in the case of Mr. Graham, restricted stock
units) held by the Named Executives at December 31, 1996 and the dollar
value thereof (based on the closing price of the Company's Common Stock on
December 31, 1996) were as follows: for Mr. Graham--218,295, $8,649,939;
for Mr. Wardrop--67,500, $2,674,688; for Mr. Essig--31,000, $1,228,375; for
Mr. Newsted--19,000, $752,875; and for Mr. Walsh--14,000, $554,750.
Restricted stock units and restricted stock awards granted to Mr. Graham
vested on January 26, 1997. Dividends are paid on shares of restricted
stock and restricted stock units to the extent declared and paid on the
Company's Common Stock.
(6) The amounts shown in this column represent payouts under the Company's
Long-Term Performance Plan for the performance period ended December 31,
1996. Except with respect to Mr. Graham, one half of the amount shown for
each Named Executive was paid in cash (receipt of which may have been
deferred pursuant to a prior election by such Named Executive) and the
balance in the form of an award of shares of restricted stock valued on
the basis of the market price of the Company's Common Stock on the date of
the approval of the share issuance by the Compensation Committee. Those
shares are in addition to shares underlying restricted stock awards
granted in 1996 pursuant to the 1994 Stock Incentive Plan but are subject
to all of the terms and conditions of that plan and vest with respect to
20% of the shares on each of the first through fifth anniversaries of the
award.
(7) The amounts shown in this column for 1996 were derived as follows: (i) for
Mr. Graham, $37,355 was attributed to him for imputed income arising out
of a Company-provided life insurance plan and $38,125 represents the
Company's matching contribution for his account to the Company's thrift
plan; (ii) for Mr. Wardrop, $6,042 was attributed to him for imputed
income arising out of a Company-provided life insurance plan, $27,344
represents the Company's matching contributions for his account to the
Company's thrift plan and $200 was paid to him pursuant to a Company-
provided medical plan; (iii) for Mr. Essig, $744 was attributed to him for
imputed income arising out of a Company-provided life insurance plan,
$15,375 represents the Company's matching contributions for his account to
the Company's thrift plan and $200 was paid to him pursuant to a Company-
provided medical plan; (iv) for Mr. Newsted, $558 was attributed to him
for income arising out of a Company-provided life insurance plan and
$14,200 represents the Company's matching contribution for his account to
the Company's thrift plan; (v) for Mr. Walsh, $707 was attributed to him
for imputed income arising out of a Company-provided life insurance plan,
$60 was paid to him pursuant to a Company-provided medical plan, and
$9,867 represents the Company's matching contribution for his account to
the Company's thrift plan. All premiums for Company-provided life
insurance are paid by the Company. Income is imputed to an employee equal
in amount to the portion of the premium applicable to coverage exceeding
$50,000.
(8) Pursuant to the terms of the Company's Long-Term Performance Plan, Mr.
Graham received an additional payment of $1,200,000 (equal to his payout
for the performance period ended December 31, 1996) upon his retirement in
January 1997, in lieu of any future payouts to which he might otherwise
have been entitled in respect of performance periods that commenced prior
to his retirement but were scheduled to end subsequent thereto.
STOCK OPTIONS
Pursuant to its 1994 Stock Incentive Plan, the Company grants to its key
employees, including its executive officers, options to purchase shares of its
Common Stock. The plan does not provide for, and the Company does not grant,
stock appreciation rights.
6
<PAGE>
The following table sets forth information with respect to stock options
granted to the Named Executives in 1996:
STOCK OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL
TOTAL EXERCISE RATES OF STOCK
OPTIONS OPTIONS PRICE PRICE APPRECIATION
GRANTED GRANTED TO PER FOR OPTION TERM(2)
(# OF EMPLOYEES SHARE EXPIRATION -------------------
NAME SHARES) IN 1996 ($)(1) DATE 5% ($) 10% ($)
- ---- ------- ---------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
T.C. Graham......... 50,000 13.9 40.3125 5/15/06 1,267,608 3,212,382
R.M. Wardrop, Jr.... 80,000 22.3 40.3125 5/15/06 2,028,172 5,139,809
M.G. Essig.......... 22,000 6.1 40.3125 5/15/06 557,746 1,413,446
R.E. Newsted........ 21,000 5.9 40.3125 5/15/06 532,395 1,349,199
J.F. Walsh.......... 12,500 3.5 40.3125 5/15/06 316,901 803,093
</TABLE>
- --------
(1) All options provide for an exercise price equal to the fair market value
of the underlying shares as of the date of grant.
(2) The amounts shown in these columns represent the potential appreciation in
the value of the options over their stated term of ten years, based upon
assumed compounded rates of appreciation of 5% per year (equivalent to
162.89%) and 10% per year (equivalent to 259.37%), respectively. Those
amounts are not intended as forecasts of future appreciation, which is
dependent upon the actual increase, if any, in the market price of the
shares underlying the options, and there is no assurance that the amounts
of appreciation shown in these columns will be realized.
The following table provides information as to options exercised by each of
the Named Executives in 1996 and the value of options held by them at year
end:
AGGREGATE OPTION EXERCISES IN 1996 AND
OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
NUMBER OPTIONS AT IN-THE-MONEY OPTIONS AT
OF SHARES DECEMBER 31, 1996 DECEMBER 31, 1996($)(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T.C. Graham............. 350,000 5,318,588 -- 110,000 -- 708,750
R.M. Wardrop, Jr........ -- -- 70,000 170,000 1,036,250 1,272,500
M.G. Essig.............. 33,333 543,261 10,000 75,333 118,125 769,578
R.E. Newsted............ -- -- 33,334 47,666 338,756 287,492
J.F. Walsh.............. -- -- 14,688 35,165 187,514 268,312
</TABLE>
- --------
(1) Calculated on the basis of the difference between the option exercise
price and the closing price of the Company's Common Stock on the New York
Stock Exchange on December 31, 1996 ($39.625 per share).
LONG-TERM INCENTIVE AWARDS
In 1995, the Company adopted a Long-Term Performance Plan that is designed
to increase management's focus on the Company's longer term performance
relative to that of a group of six other steel producers--Bethlehem Steel
Corporation, Inland Steel Company, Inc., LTV Steel Company, Inc., National
Steel Corporation, Nucor Corporation and the U.S. Steel Group of USX
Corporation--and to further enhance the Company's ability to retain the
services of its key executives.
Long-term performance is measured on the basis of what the Company deems to
be a critical indicator of profitability in the steel industry--operating
profit per ton of steel shipped--which, for purposes of the plan, is assessed
both cumulatively and annually over a performance period of three years, with
a new performance period commencing annually. The initial three-year
performance period will end December 31, 1997. In addition, upon inception of
the plan, the Board of Directors also provided for a one-time transitional
two-year performance period that ended December 31, 1996. Payouts in respect
of that transitional two-year performance period are shown in the Summary
Compensation Table on page 5.
7
<PAGE>
Payouts under the plan are made shortly following the expiration of the
applicable performance period. No payout is made unless (i) the Company
reports net income for the last year of the performance period and (ii) the
Company's operating profit per ton ranks at least in the upper 50% of the
competitor group either on a cumulative basis over the entire performance
period or during the last year of the performance period. The payout to each
participating executive is determined by multiplying his annual base salary as
of the end of the performance period by an award percentage. A target
percentage for each executive is established at or shortly following the
beginning of the performance period, subject to the approval of the
Compensation Committee. The actual award percentage may be higher or lower
than the target percentage, depending upon the Company's performance relative
to that of the competitor group during the performance period, and currently
ranges from a threshold of 15% of the target percentage to a maximum of 200%
of the target percentage. An executive would be entitled to the maximum payout
only if the Company's performance ranks first among the competitor group both
on a cumulative basis over the entire performance period and during the last
year thereof. No payment is made to an executive who has voluntarily resigned
or been discharged for cause prior to the expiration of the performance
period. Upon retirement, an executive is entitled under the Plan to receive,
in lieu of any amounts to which he otherwise might have been entitled in
respect of performance periods that commenced prior to his retirement but are
scheduled to expire subsequent thereto, a payment equal to his payout for the
performance period last ended prior to the date of his retirement. Up to 50%
of an executive's payout may be made in the form of an award of shares of
restricted stock, which vests with respect to 20% of the shares on each of the
first through fifth anniversaries of the award date.
The following table sets forth information with respect to potential payouts
to the Named Executives pursuant to awards granted to them in 1996 under the
Company's Long-Term Performance Plan:
LONG-TERM PERFORMANCE PLAN AWARDS IN 1996
<TABLE>
<CAPTION>
NUMBER OF ESTIMATED FUTURE
SHARES, PERFORMANCE PAYOUTS(3)
UNITS OR PERIOD UNTIL -------------------------
OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS(1) PAYOUT(2) ($) ($) ($)
- ---- --------- --------------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
T.C. Graham................. 75 1/1/96-12/31/98 (2) (2) (2)
R.M. Wardrop, Jr............ 75 1/1/96-12/31/98 64,688 431,250 862,500
M.G. Essig.................. 50 1/1/96-12/31/98 23,625 157,500 315,000
R.E. Newsted................ 50 1/1/96-12/31/98 18,750 125,000 250,000
J.F. Walsh.................. 50 1/1/96-12/31/98 15,750 105,000 210,000
</TABLE>
- --------
(1) The number set forth in this column for each Named Executive is the target
percentage specified by the Compensation Committee.
(2) Pursuant to the terms of the plan, upon Mr. Graham's retirement in January
1997, he received a lump-sum payment of $1,200,000 (equal to his payout
for the performance period ended December 31, 1996) in lieu of any amounts
to which he otherwise might have been entitled in respect of performance
periods that commenced prior to his retirement but were scheduled to end
subsequent thereto.
(3) For purposes of estimating each Named Executive's future payout, the
applicable percentage has been multiplied against the Named Executive's
annual base salary as of December 31, 1996. A Named Executive's ultimate
payout will be determined by multiplying the applicable award percentage
against his actual base salary at December 31, 1998, which may not be the
same as that in effect at December 31, 1996.
In addition to grants of the awards set forth in the foregoing table, the
Compensation Committee in 1996 approved modifications to awards granted in
1995 to the Company's key executive officers, including the Named Executives,
for the two-year performance period ending December 31, 1996 and the three-
year performance period ending December 31, 1997. The modifications, which
were based on the recommendations of an independent compensation consultant in
light of prevailing levels of executive compensation among the
8
<PAGE>
Company's principal competitors, were made to assure that payouts under the
plan for those periods would more appropriately compensate the participants
for their contributions to the Company's consistent outperformance of its
principal competitors during those periods. For each of Messrs. Graham and
Wardrop, the target was increased from 40% to 75%, for Mr. Essig the target
was increased from 30% to 50% and for each of Messrs. Newsted and Walsh, the
target was increased from 25% to 50%. In addition, for each of the Named
Executives the maximum potential payout was increased from 150% of the target
to 200% of the target.
AGREEMENTS WITH PRINCIPAL OFFICERS
On April 4, 1994, concurrently with the consummation of the initial public
offering of the Company's Common Stock, the Company and Mr. Graham entered
into an employment agreement with a one-year term, renewable automatically for
successive one-year terms unless either party were to give to the other 90
days' advance notice of non-renewal. The agreement provided for a minimum
annual base salary of $450,000 and entitled Mr. Graham to receive bonuses
under the Company's Annual Management Incentive Plan and to participate in
various other compensation and benefit plans of the Company. Pursuant to this
agreement, Mr. Graham was granted options under the Company's 1994 Stock
Incentive Plan to purchase a total of 350,000 shares of Common Stock at the
initial public offering price of $23.50. The options became exercisable on
April 4, 1995 (one year after the date of grant) and, to the extent not
previously exercised, will expire on January 31, 2000 (the third anniversary
of Mr. Graham's retirement as an employee of the Company). The Company also
granted to Mr. Graham 150,000 restricted stock units, all of which vested upon
his 70th birthday (January 26, 1997), shortly after which he received cash in
an amount equal to the aggregate fair market value of the shares of Common
Stock underlying the units. Dividends on the underlying shares between the
grant and vesting dates were accumulated, reinvested for Mr. Graham's account
on a pre-tax basis and paid to him in February 1997. The agreement was amended
on May 16, 1995 to provide coverage to Mr. Graham under the Company's
supplemental retirement plan for which he had previously been ineligible and
to credit him with additional years of service for purposes of that plan
contingent upon his remaining actively involved in the Company's management
until his 70th birthday. Upon his retirement, Mr. Graham began receiving
pension benefits, as more fully described below under "Pension Plans."
Each of the Company's elected officers and certain other key managers is
covered by an agreement that provides for severance payments and certain other
benefits in the event (a "Triggering Event") of a diminution of the covered
employee's salary or responsibility or a termination of the employee's
employment other than for cause (as defined in the agreements). The agreements
generally provide that upon the occurrence of a Triggering Event, an elected
officer (including each of Messrs. Wardrop, Essig, Newsted and Walsh) would be
entitled to (i) a lump sum severance payment equal to the salary to which that
officer would otherwise have been entitled for a period (the "severance
payment period") of 36 months (if the Triggering Event occurs within 24 months
following the occurrence of a Change in Control, as defined in the agreements)
or 24 months (in the case of a Triggering Event occurring other than within 24
months after a Change in Control); (ii) a lump sum payment under the Company's
Annual Management Incentive Plan of a sum equal to the aggregate annual
bonuses to which the officer would have been entitled for the applicable
severance payment period based upon the bonus actually received by the
employee under that plan for the year preceding the Triggering Event; (iii)
the immediate vesting and lapse of all restrictions on shares that were the
subject of restricted stock awards to the employee under the Company's 1994
Stock Incentive Plan; (iv) the right, for a period of three years following
the Triggering Event, to exercise any stock options that were outstanding at
the date of the Triggering Event; and (v) continuing coverage under the
Company's benefit plans (including life, health and other insurance benefits)
for the duration of the applicable severance payment period. For a limited
number of executive officers and all key managers other than executive
officers, the applicable severance period is 18 months, whether or not the
Triggering Event is preceded by a Change in Control. In November 1996, the
agreements with certain Senior Executive officers (including the Named
Executives currently in office) were amended to provide that, upon either (i)
an involuntary termination of employment other than for cause (whether or not
preceded by a Change in Control) or (ii) a voluntary termination of employment
for good reason (as defined in the agreements) within 24 months following a
Change in Control, the officer would be entitled to a further lump sum payment
equal to
9
<PAGE>
(and in lieu of) all amounts to which that officer would otherwise have been
entitled under the Company's supplemental retirement plan (described below
under "Pension Plans"), such payment to be calculated as if he had become
fully vested under the plan and had retired at age 60 (or his then actual age,
if higher). If the Triggering Event is preceded by a Change in Control and any
portion of the required payments to an elected officer becomes subject to the
federal excise tax on so-called "parachute payments," the agreement with that
officer provides for "gross-up" so that the net amount retained by the
officer, after deduction of the excise tax and any applicable taxes on the
"gross-up" payment, is not reduced as a consequence of such excise tax.
PENSION PLANS
The Company's executive officers are eligible for retirement benefits under
several plans: (i) a qualified defined benefit plan (the "Defined Benefit
Plan") that covers salaried employees whose employment by the Company began on
or before December 31, 1991 and provides benefits based on the employee's
final average earnings, (ii) a qualified cash balance plan (the "Cash Balance
Plan") that covers salaried employees whose employment by the Company began on
or after January 1, 1992 and accumulates credits based on the employee's
length of service and compensation throughout the period of service, and (iii)
a supplemental retirement plan (the "Supplemental Plan") that provides a "make
up" of qualified plan benefits that may be denied to participants because of
limitations imposed by the Internal Revenue Code of 1986, as amended, as well
as supplemental benefits for employees with a minimum of ten years of service,
including at least five years of service as a member of key management,
subject to a limit on the total benefits that may be paid to a covered
participant equal to the lesser of (i) 75% of the participant's highest annual
base salary during a defined period preceding retirement or (ii) 45% of the
participant's average "covered compensation" (consisting of base salary,
bonuses under the Annual Management Incentive Plan and payouts under the Long-
Term Performance Plan) during that period.
ESTIMATED ANNUAL PENSION BENEFITS
Each of the Named Executives, and all but three of the Company's other
executive officers, commenced employment subsequent to January 1, 1992 and,
therefore, each is covered only under the Cash Balance Plan and the
Supplemental Plan. The following table sets forth the estimated combined
annual retirement benefits (calculated on a straight line annuity basis) that
may become payable to a covered participant in the higher compensation
classifications, including the Named Executives, under the Cash Balance Plan
and the Supplemental Plan, assuming satisfaction of the requisite service
requirements at the time of retirement:
<TABLE>
<CAPTION>
ESTIMATED MAXIMUM BENEFIT ESTIMATED MAXIMUM BENEFIT
BASED ON BASED ON
AVERAGE BASE SALARY AVERAGE COVERED COMPENSATION
----------------------------- ----------------------------------------
AVERAGE AVERAGE
BASE ESTIMATED COVERED ESTIMATED
SALARY ($) BENEFIT ($) COMPENSATION ($) BENEFIT ($)
---------- ----------- ---------------- -----------
<S> <C> <C> <C>
200,000 150,000 600,000 270,000
300,000 225,000 800,000 360,000
400,000 300,000 1,000,000 450,000
500,000 375,000 1,200,000 540,000
600,000 450,000 1,400,000 630,000
700,000 525,000 1,600,000 720,000
800,000 600,000 1,800,000 810,000
900,000 675,000 2,000,000 900,000
1,000,000 750,000 2,200,000 990,000
</TABLE>
It is anticipated that, so long as annual bonuses under the Management
Incentive Plan and payouts under the Long-Term Performance Plan continue to
represent the principal contributants to the covered compensation of the
Company's executive officers, benefits to those officers, including the Named
Executives, will be limited to 75% of his highest annual base salary during
the period of his employment. The following table sets forth, as of
10
<PAGE>
December 31, 1996, the number of years of creditable service and the
applicable covered compensation and base salary for pension benefit
calculation purposes for each of the Named Executives:
<TABLE>
<CAPTION>
YEARS OF COVERED BASE
NAME SERVICE COMPENSATION ($) SALARY ($)
---- -------- ---------------- ----------
<S> <C> <C> <C>
T.C. Graham........................... --(1) 1,607,498 800,000
R.M. Wardrop, Jr. .................... 4.5 1,174,632 575,000
M.G. Essig............................ 4.4 661,810 315,000
R.E. Newsted.......................... 2.3 554,531 250,000
J.F. Walsh............................ 3.9 346,228 210,000
</TABLE>
--------
(1) Mr. Graham retired in January 1997, and, pursuant to the terms of
his employment agreement (described on page 9) was credited with
requisite years of service for purposes of the Supplemental Plan.
Only three of the Company's executive officers commenced employment with the
Company prior to January 1, 1992. Those officers are covered under the Defined
Benefit Plan and the Supplemental Plan. The following table sets forth, as of
December 31, 1996, the estimated combined annual retirement benefits
(calculated on a straight line annuity basis and before a required deduction
of a portion of applicable Social Security benefits) that may become payable
to a covered participant in the higher compensation classifications under the
Defined Benefit Plan and the Supplemental Plan:
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
COVERED -----------------------------------------------------------------
COMPENSATION 15 20 30 40
------------ -------- -------- -------- ----------
<S> <C> <C> <C> <C>
$ 500,000 $225,000 $225,000 $236,250 $ 315,000
$ 600,000 $270,000 $270,000 $283,500 $ 378,000
$ 700,000 $315,000 $315,000 $330,750 $ 441,000
$ 800,000 $360,000 $360,000 $378,000 $ 504,000
$ 900,000 $405,000 $405,000 $425,250 $ 567,000
$1,000,000 $450,000 $450,000 $472,500 $ 630,000
$1,100,000 $495,000 $495,000 $519,750 $ 693,000
$1,200,000 $540,000 $540,000 $576,000 $ 756,000
$1,300,000 $585,000 $585,000 $614,250 $ 819,000
$1,400,000 $630,000 $630,000 $661,500 $ 882,000
$1,500,000 $675,000 $675,000 $708,750 $ 945,000
$1,600,000 $720,000 $720,000 $756,000 $1,008,000
</TABLE>
To the extent that a covered participant's covered compensation substantially
exceeds his base salary, annual benefits will be limited to 75% of his highest
annual base salary during the period of his employment and, therefore, will be
less than the amounts shown in the foregoing table.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
The functions of the Compensation Committee (the "Committee") are to review
and recommend to the Board of Directors the compensation of the Company's
executive officers, to review the duties and responsibilities of those
officers, to review the Company's overall compensation and personnel policies,
to administer the Company's 1994 Stock Incentive Plan, Long-Term Performance
Plan and certain other employee benefit plans, and to review and make
recommendations to the Board of Directors with respect to the Company's
incentive compensation plans, pension and savings plans and employee
retirement policies, benefits and plans. With respect to the Company's
executive compensation arrangements, the Committee's goal is to establish a
compensation program that strengthens the commonality of interest between
management and the Company's stockholders, links compensation with Company
performance and enables the Company to attract and retain executives of high
caliber and ability.
11
<PAGE>
EXECUTIVE OFFICER COMPENSATION COMPONENTS
The key elements of the Company's executive officer compensation program are
base salary, bonus awards under the Annual Management Incentive Plan and long-
term incentives consisting of awards under the Long- Term Performance Plan and
awards of stock options and restricted stock under the 1994 Stock Incentive
Plan. Each of these elements is addressed separately below.
BASE SALARY
Salary levels are assigned to positions within competitive standards based
on job responsibilities and a review of the salary levels for comparable
positions at other major corporations, as disclosed in compensation surveys
conducted by independent consulting firms. Corporations for which compensation
data are included in these surveys include the five largest publicly owned
integrated steel companies in the United States, as well as other industrial
companies with operations of comparable size and scope to those of the
Company.
Increases in base salary for an executive officer are based on individual
performance, Company performance and market compensation trends. The Committee
does not rely on any specific formula nor does it assign specific weights to
the various factors used in determining base salaries. Strong individual
performance and strong Company performance would generally result in above-
average increases. Below-market increases or no increases would generally
occur in years when individual performance and Company performance are below
expectations.
Each of the Named Executives received an increase in base salary during 1996
which was based upon competitive reviews made by an independent compensation
consultant, individual contributions made by the Named Executives and the
Company's continuing strong financial performance.
ANNUAL MANAGEMENT INCENTIVE PLAN
The Company's Annual Management Incentive Plan is designed to motivate
executive officers to focus on both financial and non-financial goals that
directly impact shareholders. A bonus award under the plan is expressed as a
percentage of base salary that, depending upon the extent to which prescribed
targets are achieved or exceeded, may vary from approximately 50% of an
executive's base salary at target levels to as much as 125% of base salary for
the Chairman, President and Chief Executive Officer or 100% of base salary in
the case of any other executive officer. If the minimum specified target is
not achieved, no bonus is payable.
Because the Company's performance for 1996 substantially exceeded each of
the financial and non-financial targets, bonus awards for 1996 as a percentage
of base salary were approximately 102% for each of Messrs. Graham and Wardrop
and approximately 99% for each of the other Named Executives.
LONG-TERM PERFORMANCE PLAN
The Company's Long-Term Performance Plan, adopted in 1995 and amended in
1996, is designed to increase management's focus on the Company's performance
relative to that of its principal competitors over a multi-year period and to
further enhance the Company's ability to retain the services of its key
executives.
Comparative performance--expressed in terms of operating profit per ton of
steel shipped--is measured both cumulatively and annually over a performance
period of three years, with a new performance period commencing annually. The
initial three-year performance period will end December 31, 1997. In addition,
upon inception of the plan, provision was made for a one-time transitional
two-year performance period that ended December 31, 1996.
No payout is made unless (i) the Company reports net income in the last year
of the performance period and (ii) the Company's operating profit per ton
ranks at least in the upper 50% of the competitor group either on a cumulative
basis over the entire period or during the last year of the period. The payout
to each participating
12
<PAGE>
executive is determined by multiplying his annual base salary as of the end of
the applicable performance period by an award percentage. A target percentage
for each executive is established with the approval of the Committee (based on
the recommendation of an independent compensation consultant) at or shortly
following the beginning of the performance period. The actual award percentage
to be applied at the end of the performance period may be higher or lower than
the target percentage, depending upon the Company's performance relative to
that of the competitor group during the performance period, and currently
ranges from a threshold level of 15% of the target percentage to a maximum of
200% of the target percentage. An executive is entitled to the maximum payout
only if the Company's performance ranks first among the competitor group both
on a cumulative basis over the entire period and during the last year of the
period.
In 1996, in addition to approving the recommended target percentage awards
for the three-year performance period beginning January 1, 1996, the Committee
approved modifications to Long-Term Performance Plan awards granted in 1995 to
participants in the plan, including the Named Executives. The modifications
consisted of increases in the target percentages and the maximum payout
(expressed as a percentage of the target percentage) from those established at
the inception of the plan in 1995 to more closely correspond to those
established for the new three-year performance period that began in 1996. The
modifications, which were based on the recommendations of an independent
compensation consultant in light of current levels of executive compensation
among the Company's principal competitors, were made to assure that payouts
under the plan for the performance periods that began in 1995 would more
appropriately compensate the participants for the contributions to the
Company's consistently increasing outperformance of its principal competitors
since the beginning of those periods. In addition, the plan was amended to
provide that up to 50% of a participant's payout in any year may be made in
the form of shares of restricted stock, with the recipient's rights to those
shares vesting at the rate of 20% annually on the first through fifth
anniversaries of the payout date.
Because the Company's operating profit per ton substantially exceeded that
of all other companies in the competitor group during 1995 and 1996, each of
the participating executives (including each of the Named Executives) received
the maximum payout in respect of the performance period that ended December
31, 1996 (which ranged from 100% of base salary at December 31, 1996 in the
case of Messrs. Essig, Newsted and Walsh to 150% of base salary at December
31, 1996 in the case of Messrs. Graham and Wardrop).
STOCK INCENTIVE PLAN
Grants of stock options and restricted stock awards under the Company's 1994
Stock Incentive Plan are designed to link executive compensation to
appreciation in the market price of the Company's Common Stock and to
encourage executives to remain in the employ of the Company. Grants of options
and restricted stock awards were made during 1996 to each of the executives
named in the Summary Compensation Table based upon the recommendations of an
independent compensation consultant. These grants are reflected in the Summary
Compensation Table.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
During 1996 Mr. Wardrop's annual base salary was increased from $500,000 to
$575,000. He also received an annual bonus of $556,992 for 1996 pursuant to
the Company's Annual Management Incentive Plan based solely upon corporate
performance for the year. In addition, pursuant to the 1994 Stock Incentive
Plan, during 1996 Mr. Wardrop was granted options with respect to 80,000
shares and restricted stock awards with respect to 30,000 shares. He also
received an award under the Long-Term Performance Plan providing a target
opportunity equal to 75% of his base salary as of the end of a three-year
performance period beginning January 1, 1996 and, as previously noted, his
target percentage and maximum payout percentage for the performance periods
that began in 1995 were increased. Each of these compensation components was
based upon the recommendation of an independent compensation consultant as
well as the Committee's recognition of Mr. Wardrop's individual contribution
to the Company's exceptional performance during 1995 and 1996, including his
significant efforts in respect of the development of the Company's planned
Rockport Works finishing facility, which is currently under construction.
13
<PAGE>
POLICY WITH RESPECT TO DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code generally limits to $1,000,000
per covered executive the deductibility for federal income tax purposes of the
annual compensation paid to a company's chief executive officer and each of
its other four most highly compensated executive officers. Under the
provisions of Section 162(m), there may be excluded from the $1,000,000 limit
compensation that is determined on the basis of certain performance goals
under plans that meet certain specific criteria. Compensation attributable to
the exercise of options granted under the 1994 Stock Incentive Plan is
excluded from the $1,000,000 limit as a consequence of certain amendments to
that plan that were approved by stockholders in 1996. Bonuses paid under the
Annual Management Incentive Plan will continue to be excluded from the
$1,000,000 limit under applicable transition rules until the Annual Meeting of
Stockholders to be held in 1998. Thereafter, bonuses under that plan will be
eligible for exclusion from the $1,000,000 limit if certain modifications are
made to that plan and it is submitted to and approved by stockholders at the
1998 Annual Meeting. The Committee is currently reviewing the operation of the
Company's Annual Management Incentive Plan and its Long-Term Performance Plan
in light of the provisions of Section 162(m), to ascertain the extent to
which, if at all, the deductibility of compensation under those plans may be
limited, taking into account all relevant factors, including the effects of
compensation deferral agreements between the Company and its principal
executive officers.
The Compensation Committee
Robert E. Northam, Chairman
Allen Born
Dr. Bonnie Guiton Hill
Lawrence A. Leser
COMPENSATION COMMITTEE INTERLOCKS
The members of the Compensation Committee are not employees of the Company
and do not participate in any of the Company's management compensation
programs. No member of the Committee is an executive officer of a company of
which an executive officer of the Company serves as a director. During 1996,
Mr. Graham, the Chairman of the Company until January 27, 1997, was a director
and member of the compensation committee of International Paper Company, of
which Mr. Georges, a director of the Company, was Chairman and Chief Executive
Officer until his retirement on March 31, 1996.
14
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Company's Common Stock for the period from March 30, 1994 (the day on which the
Company's shares were first publicly traded) through December 31, 1996 with the
cumulative total return for the same period of (i) the Standard & Poor's 500
Stock Index and (ii) a peer group consisting of the five largest publicly owned
integrated steel companies in the United States (Bethlehem Steel Corporation,
Inland Steel Industries, Inc., LTV Corporation, National Steel Corporation and
the U.S. Steel Group of USX Corporation). These comparisons assume an
investment of $100 at the commencement of the period and reinvestment of
dividends. With respect to companies in the peer group, the returns of each
company have been weighted to reflect its stock market capitalization relative
to that of the other companies in the group.
CUMULATIVE TOTAL RETURNS
MARCH 30, 1994 THROUGH DECEMBER 31, 1996
(VALUE OF $100 INVESTED ON MARCH 30, 1994)
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG THE COMPANY, PEER GROUP, AND S&P 500.
<CAPTION>
Measurement period
March 30, 1994 through December 31, 1996
THE PEER
COMPANY GROUP S & P 500
--------- --------- ---------
<S> <C> <C> <C>
Measurement PT -
03/30/94 $ 100.00 $ 100.00 $ 100.00
FYE 12/31/94 $ 130.85 $ 100.88 $ 106.99
FYE 12/31/95 $ 146.43 $ 82.74 $ 143.99
FYE 12/31/96 $ 172.30 $ 71.35 $ 177.12
</TABLE>
15
<PAGE>
STOCK OWNERSHIP
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth as of March 28, 1997 information with respect
to the beneficial ownership of the Company's Common Stock by (i) each Named
Executive of the Company, (ii) each current director and each nominee for
election as a director and (iii) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OWNED OUTSTANDING
BENEFICIALLY(1) SHARES
--------------- -------------
<S> <C> <C>
Allen Born.................................. 6,227 *
Mark G. Essig............................... 75,598 *
John A. Georges............................. 6,758 *
Thomas C. Graham............................ 249,796 *
Dr. Bonnie Guiton Hill...................... 878 *
Robert H. Jenkins........................... 5,513 *
Lawrence A. Leser........................... 5,564 *
Richard E. Newsted.......................... 63,794 *
Robert E. Northam........................... 5,878 *
Cyrus Tang.................................. 16,758 *
Dr. James A Thomson......................... 5,263 *
James F. Walsh.............................. 42,121 *
Richard M. Wardrop, Jr...................... 254,931 *
All directors and executive officers as
a group (21 persons)....................... 870,633 3.3%
</TABLE>
- --------
*Less than 1%.
(1) Includes shares subject to stock options exercisable within 60 days.
16
<PAGE>
OTHER BENEFICIAL OWNERS
The following table sets forth information with respect to each person known
by the Company to own beneficially more than five percent (5%) of the
outstanding Common Stock of the Company:
<TABLE>
<CAPTION>
NAME AND PERCENTAGE
ADDRESS OF
OF BENEFICIAL SHARES OWNED OUTSTANDING
OWNER BENEFICIALLY SHARES
------------- ------------ -----------
<S> <C> <C>
The Equitable Companies Incorporated (1)....... 1,831,565 6.9%
787 Seventh Avenue
New York, New York 10019
FMR Corp. (2).................................. 2,706,300 10.3%
82 Devonshire Street
Boston, Massachusetts 02109
Kawasaki Steel Corporation..................... 4,255,319 16.1%
(including subsidiaries)
Hibiya, Kokusai Building
2-3 Uchisaiwaicho, 2-Chome
Chiyoda-Ku, Tokyo 100 Japan
Neuberger & Berman, LLC (3).................... 1,566,200 6.0%
605 Third Avenue
New York, New York 10158
Vanguard/Windsor Fund, Inc. (4)................ 2,604,400 9.9%
P.O. Box 2600
Valley Forge, Pennsylvania 19482
Wellington Management Company (5).............. 3,239,523 12.1%
75 State Street
Boston, Massachusetts 02109
</TABLE>
- --------
(1) Based on information set forth in a statement on Schedule 13G, dated
February 12, 1997, The Equitable Companies Incorporated, a holding company
for subsidiaries that include an insurance company, broker-dealers
registered under the Securities Exchange Act of 1934 and investment
advisers registered under the Investment Advisers Act of 1940, has shared
or sole power to dispose or direct the disposition of an aggregate of
1,831,565 shares owned by various of those subsidiaries.
(2) Based on information set forth in a statement on Schedule 13G, dated
February 14, 1997, FMR Corp., a holding company for subsidiaries that
include investment advisers registered under the Investment Advisers Act
of 1940, has sole power to dispose or to direct the disposition of an
aggregate of 2,706,300 shares. Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR Corp., is the beneficial
owner of all of those shares as a consequence of its acting as investment
adviser to several investment companies registered under the Investment
Company Act of 1940.
(3) Based on information set forth in a statement on Schedule 13G, dated
February 6, 1997, Neuberger & Berman, LLC, a broker-dealer registered
under the Securities Exchange Act of 1934 and an investment adviser
registered under the Investment Advisers Act of 1940, has shared power to
dispose or direct the disposition of an aggregate of 1,566,200 shares held
by or for the account of various clients for whom it serves as an
investment adviser, with sole or shared power to vote an aggregate of
1,285,900 of those shares.
(4) Based on information set forth in a statement on Schedule 13G, dated
February 7, 1997, Vanguard/Windsor Fund, Inc., an investment company
registered under the Investment Company Act of 1940, has sole power to
vote and shared power to dispose or direct the disposition of an aggregate
of 2,604,400 shares.
(5) Based on information set forth in a statement on Schedule 13G, dated
January 24, 1997, Wellington Management Company, an investment adviser
registered under the Investment Advisers Act of 1940, has shared power to
dispose or direct the disposition of an aggregate of 3,239,523 shares
owned by various clients for whom it serves as an investment adviser.
17
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons
who own beneficially more than ten percent of a registered class of the
Company's equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors
and greater-than-ten-percent beneficial owners are required by Rule 16a-3(e)
under the Exchange Act to furnish the Company with copies of all reports that
they file pursuant to Section 16(a).
To the Company's knowledge, based solely upon a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to the
Company's officers, directors and greater-than-ten-percent beneficial owners
were complied with during the fiscal year ended December 31, 1996.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
In the ordinary course of business, an affiliate of Tang Industries, Inc.,
of which Cyrus Tang, a director of the Company, is President and Chief
Executive Officer, sells steel scrap to, and purchases finished steel from,
the Company on arms'-length terms. During 1996, these sales and purchases
aggregated $0.6 million and $21.8 million, respectively.
OTHER MATTERS
Any proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be submitted in writing, addressed to the
Secretary of the Company at its principal executive offices, and received by
the Company by December 8, 1997, in order to be considered for inclusion in
the proxy statement and form of proxy for that meeting.
The Company's audited financial statements as of and for the year ended
December 31, 1996, together with the report thereon of Deloitte & Touche LLP,
independent public accountants, are included in the Company's Annual Report on
Form 10-K under the Securities Exchange Act of 1934. A copy of the 1996 Annual
Report on Form 10-K, together with the Company's 1996 Summary Annual Report to
Stockholders, is being furnished to stockholders together with this Proxy
Statement.
The Board of Directors has selected Deloitte & Touche LLP as the Company's
independent accountants for the current fiscal year. Representatives of
Deloitte & Touche LLP are expected to be present at the Annual Meeting and
will have the opportunity to comment on the Company's financial statements if
they so desire and to respond to appropriate questions.
This Proxy Statement and the accompanying form of proxy will initially be
mailed to stockholders on or about April 7, 1997 together with copies of the
1996 Annual Report on Form 10-K and 1996 Summary Annual Report to
Stockholders. In addition, the Company is requesting banks, brokers and other
custodians, nominees and fiduciaries to forward these proxy materials and the
accompanying reports to the beneficial owners of shares of the Company's
Common Stock held by them of record and will reimburse them for their
reasonable out-of-pocket expenses for doing so. The Company has retained
Georgeson & Company Inc. to assist in the solicitation of proxies for a fee
estimated to be $7,000 plus out-of-pocket expenses. Solicitation of proxies
also may be made by officers and employees of the Company. The cost of
soliciting proxies will be borne by the Company.
18
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The Board of Directors does not know of any matters to be presented at the
meeting other than those set forth in the accompanying Notice of Meeting.
However, if any other matters properly come before the meeting, it is intended
that the holders of proxies will vote thereon in their discretion.
By order of the Board of Directors
John G. Hritz
Secretary
Middletown, Ohio
April 7, 1997
19
<PAGE>
AK STEEL HOLDING CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1997
P R O X Y
- - - - -
The undersigned stockholder of AK Steel Holding Corporation (the
"Company") hereby appoints Richard M. Wardrop, Jr., Richard E. Newsted and John
G. Hritz, and each of them, as attorneys and proxies of the undersigned, with
full power of substitution, to vote all shares of Common Stock of the Company
owned by the undersigned at the Annual Meeting of Stockholders of the Company to
be held on May 15, 1997 and at any adjournments thereof, in accordance with the
directions indicated herein.
(Continued and to be dated and signed on the reverse side.)
AK STEEL HOLDING CORPORATION
P.O. BOX 11224
NEW YORK, N.Y. 10203-0224
<PAGE>
[ ]
1. To elect nine directors: FOR all nominees
listed below [ ]
WITHHOLD AUTHORITY to vote
for all nominees listed below [ ]
*EXCEPTIONS [ ]
Nominees: Allen Born, John A. Georges, Dr. Bonnie Guiton Hill, Robert H.
Jenkins, Lawrence A. Leser, Robert E. Northam, Cyrus Tang, Dr. James A. Thomson
and Richard M. Wardrop, Jr.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
*Exceptions
---------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES NAMED. IF NO INDICATION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THOSE NOMINEES.
And to transact such other business as may properly come before the meeting or
any adjournments thereof.
Change of Address or
Comments Mark Here [ ]
The form must be signed by the person in whose
name the relevant Certificate is registered on
the books of the Company. In the case of a
Corporation the Form should be executed by a
duly authorized Officer or Attorney.
DATE
SIGNATURE
VOTERS MUST BE INDICATED
(X) IN BLACK OR BLUE INK. [ ]
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
