ROUGE INDUSTRIES INC, DEF 14A, 2000-03-30

ROUGE INDUSTRIES INC
DEF 14A, 2000-03-30
STEEL WORKS, BLAST FURNACES & ROLLING MILLS (COKE OVENS)

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

Rouge Industries 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)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

- --------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:

- --------------------------------------------------------------------------------

(3) Filing party:

- --------------------------------------------------------------------------------

(4) Date filed:

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<PAGE> 2

ROUGE INDUSTRIES, INC.
3001 MILLER ROAD
P.O. BOX 1699
DEARBORN, MICHIGAN 48121-1699

------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

MAY 11, 2000
------------------

TO THE STOCKHOLDERS OF
ROUGE INDUSTRIES, INC.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Rouge Industries, Inc. (the "Company") will be held at the
Gate 2 Training Center, Rouge Steel Company, Dearborn, Michigan 48121, on
Thursday, May 11, 2000 at 10:00 A.M. for the following purposes:

1. To elect two (2) members of the Board of Directors to serve
until the 2003 annual meeting of stockholders or until their
successors have been duly elected and shall have qualified;

2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent public accountants for the fiscal year
ending December 31, 2000; and

3. To consider and act upon such other business as may properly
come before the Annual Meeting.

Only stockholders of record of each of the classes of the Company's common
stock at the close of business on March 13, 2000 will be entitled to vote at the
Annual Meeting.

PLEASE SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY, WHETHER OR NOT YOU PLAN
TO ATTEND THE ANNUAL MEETING, IN ORDER THAT YOUR SHARES MAY BE VOTED. A RETURN
ENVELOPE IS PROVIDED FOR YOUR CONVENIENCE.

By Order of the Board of Directors,

/s/ MARTIN SZYMANSKI SIG
MARTIN SZYMANSKI
Secretary

Dated: March 28, 2000
<PAGE> 3

ROUGE INDUSTRIES, INC.
3001 MILLER ROAD
P.O. BOX 1699
DEARBORN, MICHIGAN 48121-1699

------------------

ANNUAL MEETING OF STOCKHOLDERS

MAY 11, 2000
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------

This Proxy Statement is being mailed to the stockholders of ROUGE
INDUSTRIES, INC. (the "Company") on or about March 28, 2000 in connection with
the solicitation by the Board of Directors of the Company of proxies for use at
the 2000 Annual Meeting of Stockholders of the Company (the "Meeting") to be
held at the Gate 2 Training Center, Rouge Steel Company, Dearborn, Michigan
48121, on Thursday, May 11, 2000 at 10:00 A.M. The Meeting has been called for
the following purposes: (i) to elect two (2) Class III directors to serve as
directors until the 2003 annual meeting of stockholders; (ii) to ratify the
appointment of PricewaterhouseCoopers LLP as the Company's independent public
accountants for the fiscal year ending December 31, 2000; and (iii) to consider
and act upon such other business as may properly come before the Meeting.

PROXIES AND VOTING RIGHTS
- --------------------------------------------------------------------------------

The voting securities of the Company outstanding on March 13, 2000
consisted of 14,994,035 shares of class A common stock, par value $0.01 per
share (the "Class A Common Stock"), each entitling the holder thereof to one
vote per share, and 7,140,400 shares of class B common stock, par value $0.01
per share (the "Class B Common Stock"), each entitling the holder thereof to 2.5
votes per share. The Class A Common Stock and the Class B Common Stock together
are herein referred to as the "Common Stock." Only stockholders of record at the
close of business on March 13, 2000 (the "Record Date") are entitled to notice
of and to vote at the Meeting. There was no other class of voting securities of
the Company outstanding on the Record Date. A majority of the voting interest of
the outstanding shares of Common Stock entitled to vote is required to be
present in person or by proxy to constitute a quorum and permit the Meeting to
be held.

The enclosed proxy is being solicited by the Board of Directors of the
Company in order to provide every stockholder with an opportunity to vote on all
matters that properly come before the Meeting, whether or not the stockholder
attends in person. Shares cannot be voted at the Meeting unless the owner of
record is present to vote or is represented by a proxy. When the enclosed proxy
is properly signed, dated and returned, the shares represented by such proxy
will be voted by the persons named as proxies in accordance with the
stockholder's directions. Except as otherwise specified in the proxy, shares
will be voted for the election of the nominees for Class III director named
herein, for the ratification of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending December 31, 2000 and for any other
matter that may properly be brought before the Meeting in accordance with the
judgment of the person or persons voting the proxy. Any person who has signed
and returned a proxy may revoke it at any time before it is exercised by
submitting a subsequently executed proxy, by giving notice of revocation to the
Secretary of the Company or by voting in person at the Meeting. All classes of
Common Stock will vote together as a single class on all matters presented for
consideration at the Meeting. Directors are elected by a plurality, and
independent accountants by a majority, of the votes of the shares present in
person or represented by proxy and entitled to vote. Abstentions and broker
non-votes will not be counted in determining the number of shares voted for or
against any nominee for director, the approval of the
<PAGE> 4

selection of independent accountants or any other voting matter. They are,
however, counted in determining the presence of a quorum. Under the rules of the
New York Stock Exchange, Inc. ("NYSE"), brokers who hold shares in street name
for customers have the authority to vote on certain items when they have not
received instructions from beneficial owners. Brokers who do not receive
instructions will have authority to vote on all proposals described in this
Proxy Statement.

SECURITY OWNERSHIP
- --------------------------------------------------------------------------------

The following table sets forth, as of March 13, 2000, information
concerning ownership of the Common Stock outstanding by (i) each person known by
the Company to be the beneficial owner of more than five percent of the Common
Stock, (ii) each director and nominee for election as a director, (iii) each of
the five most highly compensated executive officers of the Company and (iv) all
directors and executive officers of the Company as a group. Unless otherwise
indicated, (a) each stockholder has sole voting power and sole dispositive power
with respect to the indicated shares and (b) the address of each such person is
c/o Rouge Industries, Inc., 3001 Miller Road, P.O. Box 1699, Dearborn, Michigan
48121-1699. On March 1, 2000, Worthington Industries, Inc. ("Worthington")
liquidated its entire stock holding in the Company to repay its 7 1/4%
Exchangeable Notes. Prior to March 1, 2000, Worthington had 5,577,600 shares of
Class A Common Stock and 422,000 shares of Class B Common Stock, representing
approximately 27.2% of the Company's Common Stock. As a result of Worthington's
stock liquidation, Worthington is no longer included on this table. For
additional information on Worthington's liquidation of the Company's Common
Stock, see "Certain Relationships and Related Party Transactions -- Worthington
Industries, Inc."

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENT OF
DIRECTORS, EXECUTIVE OFFICERS BENEFICIALLY TOTAL VOTING
AND 5% STOCKHOLDERS OWNED PERCENT(1) STOCK
----------------------------- ------------ ---------- ------------
<S> <C> <C> <C>
Carl L. Valdiserri(2)(3)(4)(6)......................... 7,370,415 33.3% 55.0%
First Pacific Advisors, Inc.(5)........................ 2,052,600 9.3 6.2
11400 West Olympic Boulevard, Suite 1200
Los Angeles, California 90064
Pioneering Management Corp. (5)........................ 1,392,900 6.3 4.2
60 State Street
Boston, Massachusetts 02109
Donald Smith & Co., Inc (5)............................ 1,103,700 5.0 3.4
East 80 Route 4, Suite 360
Paramus, New Jersey 07652
Brookhaven Capital Management (5)...................... 1,061,800 4.8 3.2
3000 Sandhill Road
Menlo Park, California 94025
Dimensional Fund Advisors, Inc. (5).................... 851,900 3.8 2.6
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Louis D. Camino (4)(6)................................. 196,078 * *
Gary P. Latendresse (4)(6)............................. 137,907 * *
Ronald J. Nock (4)(6).................................. 42,644 * *
William E. Hornberger (4)(6)........................... 88,282 * *
Dominick C. Fanello (7)................................ 4,180 * *
John E. Lobbia(7)...................................... 17,763 * *
Peter J. Pestillo(7)................................... 5,000 * *
Clayton P. Shannon (7)................................. 13,263 * *
All Directors and Executive Officers as a Group
(12 persons)(4)(6)(7)(8)............................. 7,909,615 35.5% 56.4%
</TABLE>

- -------------------------
* Less than one percent.

(1) Based on 22,134,435 total outstanding shares of Common Stock on March 13,
2000.

2
<PAGE> 5

(2) Mr. Valdiserri owns 7,140,400 shares of Class B Common Stock, which
constitutes 100% of the issued and outstanding shares of Class B Common
Stock, and 230,015 shares of Class A Common Stock. Under the Company's
Amended and Restated Certificate of Incorporation (the "Certificate"), the
Class A Common Stock and the Class B Common Stock are entitled to the same
rights and preferences, except with respect to voting power; the Class A
Common Stock is entitled to one vote per share and the Class B Common Stock
is entitled to 2.5 votes per share. Accordingly, Mr. Valdiserri has the
power to elect all the nominees for Class III director described herein as
well as the entire Board of Directors of the Company.

(3) The shares of Class B Common Stock are convertible into shares of Class A
Common Stock (i) at any time in the discretion of the holder of such shares
of Class B Common Stock or (ii) automatically upon the transfer of shares of
Class B Common Stock to other than certain permitted transferees. The
Certificate provides that upon death or permanent disability of Mr.
Valdiserri or voluntary retirement of Mr. Valdiserri as Chairman of the
Board of Directors of the Company, Mr. Valdiserri's shares of Class B Common
Stock will automatically be converted into an equal number of shares of
Class A Common Stock. The conversion rate is one share of Class A Common
Stock for each share of Class B Common Stock and is subject to adjustment in
certain circumstances. Accordingly, as adjusted to reflect the conversion of
such Class B Common Stock, Mr. Valdiserri owns beneficially (as that term is
defined in Rule 13d-3 of the Exchange Act) 7,370,415 shares of Class A
Common Stock, representing approximately 33% of the 22,134,435 as adjusted
shares of Class A Common Stock outstanding.

(4) The figures shown include shares of Class A Common Stock allocated to the
accounts of participants under the Rouge Steel Company Savings Plan for
Salaried Employees, as amended, (the "Savings Plan"). Shares of Class A
Common Stock acquired by the Trustee, Putnam Fiduciary Trust Company, for
purposes of the Savings Plan are allocated to the accounts of participants
as of the end of each month. Participants are entitled to provide
instructions as to the voting of the shares allocated to their accounts.
Shares credited to the accounts of participants who do not provide voting
instructions are voted proportionately in the same manner as the Trustee
votes the aggregate of all shares of Common Stock with respect to which the
Trustee has received voting instructions from participants.

(5) The information shown is derived from information set forth in the latest
statements filed with the Securities and Exchange Commission with respect to
ownership of Class A Common Stock. The percentage of Class A Common Stock
owned by First Pacific Advisors, Inc., Pioneering Management Corp., Donald
Smith & Co., Inc, Brookhaven Capital Management and Dimensional Fund
Advisors, Inc., is approximately 13.7%, 9.3%, 7.4%, 7.1% and 5.7%,
respectively.

(6) The shares indicated include 33,500, 31,000, 22,500 and 21,500 shares of
Class A Common Stock that may be acquired by Messrs. Camino, Latendresse,
Nock and Hornberger, respectively, upon exercise of stock options granted
under the Rouge Steel Company 1994 Stock Incentive Plan and the Rouge Steel
Company 1998 Stock Incentive Plan (together, the "Stock Incentive Plans").
Mr. Valdiserri did not receive any stock options under the Stock Incentive
Plans in 1997, 1998, 1999 or 2000.

(7) The shares indicated include 1,375, 5,375 and 4,875 shares of Class A Common
Stock that may be acquired by Messrs. Fanello, Lobbia and Shannon,
respectively, upon exercise of stock options granted under the Rouge Steel
Company Outside Director Equity Plan (the "ODEP"). Mr. Pestillo has
requested that he be excluded from participation in the ODEP and as a result
he has not received any stock options under the ODEP.

(8) All Directors and Executive Officers as a Group includes two officers of
Rouge Steel Company who are not officers of the Company. The Rouge Steel
Company officers are included on the Security Ownership table because they
exercise significant influence and authority over decisions affecting the
Company.

3
<PAGE> 6

PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------

ELECTION OF DIRECTORS

The Company's Amended and Restated Certificate of Incorporation (the
"Certificate") provides that the directors shall be divided into three classes:
Class I, Class II and Class III, each class to consist, as nearly as may be
possible, of one-third of the whole number of the Board of Directors. At each
annual meeting of stockholders, the directors elected to succeed those whose
terms are expiring shall be identified as being of the same class as the
directors whom they succeed and shall be elected for a term expiring at the time
of the third annual meeting of stockholders after their election, or until their
successors are duly elected and qualified. A director elected to fill a vacancy
is elected to the same class as the director he or she succeeds, and a director
elected to fill a newly created directorship holds office until the next
election of the class to which such director is elected.

Pursuant to the provisions of the Amended and Restated By-Laws of the
Company (the "By-Laws"), the number of directors constituting the board is not
less than six and not more than nine.

The current Class III directors are nominees for election this year for a
three-year term expiring at the 2003 annual meeting of stockholders. All of the
nominees and all of the continuing Class I and Class II directors have
previously been elected by the stockholders. Of the seven present directors,
three are officers of the Company. The Nominating Committee may decide to seek a
third Class I director and a third Class III director, but the Company does not
anticipate that these directors will be selected prior to the Meeting. If any
nominee shall be unable to serve, proxies may be voted for another person
designated by the Board of Directors. Management has no reason to believe that
any of the nominees will be unable or unwilling to serve as a director, if
elected. Should any nominee not be a candidate at the time of the Meeting (a
situation which is not now anticipated), proxies may be voted in favor of the
remaining nominees and may also be voted for a substitute nominee selected by
the Board of Directors.

To be eligible for election as directors, persons nominated other than by
the Board of Directors must be nominated in accordance with the procedures set
forth in the By-Laws. Those procedures require that written notice of the
nomination be received by the Secretary of the Company 90 days prior to the date
of the annual meeting of stockholders and contain certain information regarding
the person or persons to be nominated and the stockholder giving such notice.

Unless authority is specifically withheld, proxies will be voted for the
election of the nominees named below to serve as directors of the Company until
the 2003 annual meeting of stockholders of the Company or until their successors
shall be duly elected and qualified. Directors shall be elected by a plurality
of the votes cast, in person or by proxy, at the Meeting.

Set forth as follows is information with respect to each nominee and each
continuing director.

4
<PAGE> 7

NOMINEES FOR CLASS III DIRECTORS -- TERMS TO EXPIRE IN 2003

CONTINUING CLASS I DIRECTORS -- TERMS EXPIRE IN 2001

5
<PAGE> 8

CONTINUING CLASS II DIRECTORS -- TERMS EXPIRE IN 2002

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FIRST YEAR
FOR THE PAST FIVE YEARS BECAME A
NAME AND AGE AND CURRENT PUBLIC DIRECTORSHIPS DIRECTOR
- ---------------------------------- ----------------------------------------------------- ----------
<S> <C> <C>
Gary P. Latendresse (56).......... Mr. Latendresse has been Vice Chairman and Chief 1992
Financial Officer of the Company since July 1999.
From January 1998 until July 1999, he was Executive
Vice President and Chief Financial Officer of the
Company. He was Vice President and Chief Financial
Officer from 1992 to 1998 and Vice President, Finance
and Controller from 1987 until 1992. Mr. Latendresse
has held various financial positions with the Company
and Ford Motor Company and has 31 years of experience
in the steel manufacturing industry. Mr. Latendresse
is also the Treasurer and Assistant Secretary of the
Company.
Dominick C. Fanello (78).......... Mr. Fanello was the founder of Shiloh Corporation in 1996
1954 and has held various executive positions with
Shiloh Corporation and Shiloh Industries, Inc.
("Shiloh") for the past 46 years. Mr. Fanello
resigned his position as the Chief Executive Officer
and Chairman of the Board of Shiloh in 1995 and 1996,
respectively and continues as Vice Chairman. Mr.
Fanello has been a director of Shiloh since 1992 and
also serves as a director of Park National Bank
(Newark, Ohio).
John E. Lobbia (58)............... Mr. Lobbia was Chairman and Chief Executive Officer 1990
at DTE Energy Company from January 1996 until his
retirement in 1998. Mr. Lobbia served as Chairman and
Chief Executive Officer of Detroit Edison Company
from 1994 to 1996, as Chairman, President and Chief
Executive Officer from 1990 to 1994, and as President
and Chief Operating Officer from 1988 to 1990. Mr.
Lobbia has worked directly with many of the Detroit
area's industrial concerns and has, during his
career, had extensive experience with steel
manufacturing customers at DTE Energy. Mr. Lobbia
continues as a director of DTE Energy Company.
</TABLE>

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES.

MEETINGS AND COMMITTEES

The Board of Directors met or took action by unanimous written consent on
four occasions during the fiscal year ended December 31, 1999. There are five
committees of the Board of Directors: the Executive Committee, the Audit
Committee, the Compensation Committee, the Nominating Committee and the Employee
Indemnification Committee. The members of the Executive Committee are Carl L.
Valdiserri (Chairman), John E. Lobbia and Peter J. Pestillo. The Executive
Committee did not meet or take action by unanimous written consent during the
fiscal year ended December 31, 1999. The Executive Committee possesses and
exercises all the power and authority of the Board of Directors in the
management and direction of the business and affairs of the Company, except as
limited by law. The members of the Audit Committee are Clayton P.

6
<PAGE> 9

Shannon (Chairman), Dominick C. Fanello and John E. Lobbia. The Audit Committee
met on two occasions during the fiscal year ended December 31, 1999. The Audit
Committee annually recommends to the Board of Directors independent public
accountants to serve as auditors of the Company's books, records and accounts,
reviews the scope of the audits performed by such auditors and the audit reports
prepared by them and reviews related party transactions and certain other
matters. The members of the Compensation Committee are John E. Lobbia
(Chairman), Dominick C. Fanello and Peter J. Pestillo. The Compensation
Committee met or took action by unanimous written consent on four occasions
during the fiscal year ended December 31, 1999. The Compensation Committee
establishes general compensation policies and reviews and determines salaries
and incentive compensation for executive officers of the Company. The members of
the Nominating Committee are Carl L. Valdiserri (Chairman), Peter J. Pestillo
and Clayton P. Shannon. The Nominating Committee took action by unanimous
written consent on one occasion during the fiscal year ended December 31, 1999.
The Nominating Committee recommends nominees to the Board of Directors of the
Company. For information regarding the Nominating Committee's consideration of
nominees recommended to the Company's stockholders, see "-- Election of
Directors" above. The members of the Employee Indemnification Committee are Carl
L. Valdiserri (Chairman), Louis D. Camino and Gary P. Latendresse. The Employee
Indemnification Committee was not required to take any action during the fiscal
year ended December 31, 1999. The Employee Indemnification Committee determines
whether to indemnify employees of the Company (other than officers and directors
of the Company) against liabilities and claims arising out of employment with
the Company.

COMPENSATION OF DIRECTORS

General. Directors of the Company who are employees of the Company do not
receive any compensation for being directors. Each director of the Company who
is not an employee of the Company is entitled to receive (i) an annual
director's fee of $15,000, payable in quarterly installments, (ii) $1,000 for
attendance at each meeting of the Board of Directors, (iii) $500 for attendance
at each meeting of a standing committee of which he is a member, but not the
chairman, that is held in conjunction with any annual, regular or special
meeting of the Board of Directors and $1,000 for attendance at each such
committee meeting that is not held in conjunction with any annual, regular or
special meeting of the Board of Directors, and (iv) $1,000 for chairing each
meeting of a standing committee of which he is the chairman that is held in
conjunction with any annual, regular or special meeting of the Board of
Directors and $1,500 for chairing each such committee meeting that is not held
in conjunction with any annual, regular or special meeting of the Board of
Directors. Each director who is not an employee of the Company also is entitled
to be reimbursed for expenses incurred in connection with the business and
affairs of the Company. Mr. Pestillo has elected to waive any of the above
described fees and expense reimbursements in return for his services as
director.

Outside Director Equity Plan. The Company's Outside Director Equity Plan
("ODEP") provides for the granting of stock awards and stock options to Eligible
Directors. An "Eligible Director" is a member of the Board of Directors who is
not an employee of the Company, Rouge Steel Company or an affiliate of the
Company (an "Outside Director"), except that an Eligible Director who is an
employee of an entity that is an affiliate of the Company or Rouge Steel Company
("Rouge Steel") other than by virtue of the Company's control of such entity may
participate in the ODEP if such director is otherwise an Outside Director and
participates in no equity-based plan (other than the ODEP) of the Company or any
subsidiary thereof. The ODEP also provides, under certain circumstances, that
Eligible Directors may elect to receive all or a portion of their retainer in
the form of Class A Common Stock.

The ODEP provides for the issuance of up to 100,000 shares of Class A
Common Stock. The shares of Class A Common Stock available under the ODEP are
offered and issued directly by the Company. No fees or commissions are charged
by the Company in connection with stock awards and stock options under the ODEP.
7
<PAGE> 10

Until February 1, 1999, as of the date of each annual meeting of
stockholders, under the terms of the ODEP, each Eligible Director was entitled
to receive an option to purchase shares of Class A Common Stock, pursuant to the
formula set forth below, unless such director was elected, appointed or
otherwise became an Eligible Director during the 60-day period prior to the
annual meeting of stockholders in any year, in which case such Eligible Director
did not receive any options with respect to that annual meeting of stockholders.
In addition, each Eligible Director receiving options with respect to an annual
meeting of stockholders had to continue to serve as a director of the Company
after such annual meeting of stockholders. The number of shares of Class A
Common Stock subject to an option was based on income before income taxes (as
reported in Rouge Steel's Consolidated Statement of Operations with certain
adjustments) that met certain targeted percentages of sales for the most
recently completed calendar year ("Annual Return on Sales") as follows:

<TABLE>
<CAPTION>
ANNUAL RETURN ON SALES NUMBER OF SHARES
- ---------------------- ----------------
<S> <C>
0 to 2.3% 0
2.3 to 4.6% 500
4.6 to 6.9% 1,000
6.9% and above 1,500
</TABLE>

As of February 1, 1999, the ODEP was amended to provide that on the date of
each annual meeting of stockholders, each Eligible Director will automatically
receive an option to purchase 1,000 shares of Class A Common Stock, provided
such Eligible Director continues to serve as a director of the Company after
such annual meeting of stockholders. In 1999, Messrs. Fanello, Lobbia and
Shannon were each granted options to purchase 1,000 shares of Class A Common
Stock. Except for the options described above, no options were granted under the
ODEP in 1999. At Mr. Pestillo's request, he has been excluded from participation
in the ODEP until further notice. As of March 28, 2000, Mr. Pestillo has not
requested that the Company include him in the ODEP.

Under the ODEP, 25% of the options granted are exercisable on the date the
options are granted, and assuming the director remains a member of the Board, an
additional 25% of the options become exercisable each succeeding December 31.
The exercise price may be paid, in whole or in part, (i) in cash; (ii) in whole
shares of Class A Common Stock, valued at their then Fair Market Value (as
defined in the ODEP); (iii) pursuant to an election prior to or coincidental
with such exercise to satisfy the exercise price through the withholding of
shares issuable upon exercise of the option and valued at their then Fair Market
Value; or (iv) by a combination of such methods of payment. The Company may
enter into any arrangement permitted under applicable laws (but only to the
extent permitted under Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) to facilitate the "cashless" exercise of any
option.

Generally, an option may be exercised by an Eligible Director during the
period that director remains a member of the Board of Directors and for a period
of five years following retirement. However, only those options exercisable at
the date of retirement may be exercised during the period following retirement
unless the Compensation Committee determines otherwise and in no event will the
options be exercisable more than ten years after the date of the grant. In the
event of the death of an Eligible Director, the options shall be exercisable
only within the 12 months next succeeding the date of death. However, only those
options exercisable at the date of the Eligible Director's death may be
exercised during the period following death unless the Compensation Committee
determines otherwise and in no event shall the options be exercisable more than
ten years after the date of grant.

The exercise price of each option is 100% of the Fair Market Value of the
Class A Common Stock subject to an option on the date the option is granted.

Prior to February 1, 1999, on the last day of the month immediately
following each calendar quarter, each Eligible Director was entitled to receive
a stock award under the ODEP. The number of

8
<PAGE> 11

shares of Class A Common Stock awarded were based on income before income taxes
(as reported in Rouge Steel's Consolidated Statement of Operations with certain
adjustments) that met certain targeted percentages of sales for the most
recently completed calendar quarter ("Quarterly Return on Sales") as follows:

<TABLE>
<CAPTION>
QUARTERLY RETURN ON SALES NUMBER OF SHARES
- ------------------------- ----------------
<S> <C>
0 to 2.3% 0
2.3 to 4.6% 83
4.6 to 6.9% 167
6.9% and above 250
</TABLE>

Effective February 1, 1999, the ODEP was amended to provide that as of each
April 30, July 31, October 31 and January 31 (each such date, a "Retainer
Payment Date") which occurs on or after April 30, 1999, each Eligible Director
shall automatically receive a stock award of the number of shares (rounded down
to the next whole share) of Class A Common Stock equivalent to the quotient of
(i) the quarterly retainer paid such Eligible Director for such Retainer Payment
Date divided by (ii) 100% of the Fair Market Value of the Class A Common Stock
as of such date. In 1999, Messrs. Fanello, Lobbia and Shannon were each awarded
1,548 shares of Class A Common Stock.

Furthermore, effective February 1, 1999, the Chief Executive Officer may,
in his sole discretion, grant shares of Class A Common Stock to any Eligible
Director who displays extraordinary performance for a particular period. The
time of and amount of such grant and the performance required for such grant is
determined in the sole discretion of the Chief Executive Officer; provided,
however, that the Chief Executive Officer may not grant more than 2,000 shares
to an Eligible Director pursuant to this provision during any calendar year.
Shares of Class A Common Stock so granted must be held by the grantee for a
period of six months following acquisition. Under the ODEP, in 1999, Messrs.
Lobbia and Shannon were each granted 1,000 shares of Class A Common Stock.

Commencing February 1, 1999, an Eligible Director may irrevocably elect
(the "Equity Election"), prior to each Retainer Payment Date, to receive all or
a portion of the amounts paid by the Company to such Eligible Director as an
annual retainer for services to be rendered as a member of the Board of
Directors during any fiscal year of the Company, in the form of Class A Common
Stock. If the retainer of an Eligible Director is increased subsequent to the
Equity Election, such election shall apply to the amount of such increase. On
the applicable Retainer Payment Date, the Eligible Director will receive a
number of shares of Class A Common Stock equal to (i) the portion of the
retainer specified in the Equity Election divided by (ii) the Fair Market Value
of the Class A Common Stock as of the Retainer Payment Date. Prior to February
1, 1999, such election had to be made at least six months prior to the Retainer
Payment Date.

In the event that payment of the option price is made by delivering shares
to the Company, the optionee generally will not recognize any gain with respect
to the exchanged shares, and special rules will apply in determining the basis
of the new shares received. In addition, the fair market value of the additional
shares received by the optionee will be taxable as ordinary income. In the event
that shares issuable upon exercise are withheld by the Company in payment of the
option price, the Fair Market Value of the additional shares received by the
optionee will be taxable as ordinary income.

The Board of Directors or the Compensation Committee may terminate,
suspend, modify or amend the ODEP at any time, provided that such amendment does
not impair the rights of an optionee or recipient with respect to any stock
award or stock option previously granted under the ODEP and that stockholder
approval is required to the extent that such stockholder approval is necessary
to comply with applicable provisions of Section 16 of the Exchange Act (or Rule
16b-3 thereunder) or any other requirement of applicable law or regulation.
Notwithstanding the foregoing, the provisions of the ODEP with respect to
eligibility for participation or the timing or amounts of grants of stock awards
or stock options may not be amended more than once every six months (other than
to comport with changes in the Internal Revenue Code of 1986, as amended (the
"Code"), or the Employee Retirement Income Security Act of 1974, as amended).
9
<PAGE> 12

EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------

SUMMARY COMPENSATION TABLE

The following table sets forth, for the fiscal years ended December 31,
1999, 1998 and 1997, each component of compensation paid or awarded to, or
earned by, the Chief Executive Officer (the "CEO") of the Company and each of
the four most highly compensated executive officers who were serving as
executive officers at the end of the last fiscal year, other than the CEO
(collectively referred to as the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION NUMBER OF
---------------------------------- SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS COMPENSATION(2)
------------------ ---- ------ -------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Carl L. Valdiserri........ 1999 $275,000 $ 0 -- -- $4,990
Chairman and Chief 1998 275,000 92,000 -- -- 6,844
Executive Officer 1997 275,000 88,000 -- -- 9,853
Louis D. Camino........... 1999 235,000 0 -- 10,000 4,251
President and Chief 1998 235,000 64,000 -- 6,000 6,698
Operating Officer 1997 235,000 60,000 -- 6,000 8,487
Gary P. Latendresse....... 1999 214,583 0 -- 12,000 3,752
Vice Chairman and 1998 200,000 56,000 -- 6,000 5,687
Chief Financial Officer 1997 177,500 56,000 -- 6,000 6,541
Ronald J. Nock............ 1999 160,000 0 5,045(3) 8,000 2,869
Senior Vice President, 1998 145,000 37,000 4,563(3) 4,000 4,110
Commercial and 1997 145,000 37,000 4,173(3) 4,000 5,214
Strategic Planning(4)
William E. Hornberger..... 1999 158,750 0 -- 8,000 2,826
Senior Vice President, 1998 145,000 33,000 -- 4,000 4,110
Corporate Relations 1997 145,000 33,000 -- 4,000 5,214
and External Affairs
</TABLE>

- -------------------------
(1) Amounts awarded pursuant to the Rouge Steel Company Incentive Compensation
Plan.

(2) Consists of employer contributions to the Rouge Steel Company Savings Plan
for Salaried Employees and life insurance premiums paid by the Company on
behalf of the Named Executive Officers.

(3) Includes reimbursement by the Company for certain taxes payable.

(4) Effective January 1, 2000.

10
<PAGE> 13

INDIVIDUAL OPTION GRANTS IN 1999

The Company adopted a stock incentive plan in 1998 (the "1998 Stock
Incentive Plan") under which key employees can be granted stock options, stock
appreciation rights, restricted stock and performance share awards. The
following table sets forth information with respect to all stock options granted
by the Compensation Committee to the Named Executive Officers during 1999 under
the 1998 Stock Incentive Plan.

OPTION GRANTS IN 1999

<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE OR
OPTIONS IN FISCAL BASE PRICE EXPIRATION GRANT DATE
EXECUTIVE GRANTED(1) YEAR PER SHARE DATE(2) VALUE(3)
--------- ---------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Carl L. Valdiserri.................. 0 0.0% $ -- -- $ --
Louis D. Camino..................... 10,000 5.4 8.75 01/01/09 38,399
Gary P. Latendresse................. 12,000 6.5 8.75 01/01/09 46,079
Ronald J. Nock...................... 8,000 4.3 8.75 01/01/09 30,719
William E. Hornberger............... 8,000 4.3 8.75 01/01/09 30,719
</TABLE>

- -------------------------
(1) Includes options which qualify as incentive stock options under Section 422
of the Code and options which do not so qualify.

(2) Outstanding options expire ten years after the date of grant, if not earlier
due to death, retirement, disability or termination of employment.

(3) Based on the Black-Scholes option pricing model, using the following
assumptions: (a) 7-year option term; (b) 4.74% risk-free interest rate; (c)
41.164% volatility; and (d) 1.3662% dividend yield. Actual gain, if any, is
dependent upon the actual performance of the shares of Class A Common Stock
underlying these options, and there is no assurance that the amounts shown
in this column will be achieved.

AGGREGATED OPTION EXERCISES IN 1999 AND YEAR-END OPTION VALUES

No option held by any Named Executive Officer was exercised during 1999.
The following table sets forth information with respect to each Named Executive
Officer's holdings of unexercised stock options at December 31, 1999.

OPTION EXERCISES IN 1999

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED ON VALUE ---------------------------- ----------------------------
EXECUTIVE EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carl L. Valdiserri..... $0 $0 0 0 $0 $0
Louis D. Camino........ 0 0 30,500 6,500 0 0
Gary P. Latendresse.... 0 0 27,500 7,500 0 0
Ronald J. Nock......... 0 0 20,000 5,000 0 0
William E.
Hornberger........... 0 0 19,000 5,000 0 0
</TABLE>

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee of the Company's Board of Directors (the
"Compensation Committee") has the responsibility to review and determine
compensation and benefits for all officers of the Company. It is also
responsible for the determination of executive compensation

11
<PAGE> 14

programs and the award of incentive payments and stock options under those
programs. In addition, the Compensation Committee reviews compensation and
benefit programs applying to all hourly and salaried employees. The Compensation
Committee consists of three directors, none of whom is or has been an employee
of the Company or is eligible to participate in the Company's executive
compensation programs other than the ODEP.

Philosophy. The Compensation Committee's policies on executive compensation
are designed to attract, retain and motivate executives by providing competitive
levels of compensation that integrate the Company's annual and long-term
performance goals, reward strong corporate performance and recognize individual
initiative and achievements to enhance stockholder value.

The Compensation Committee reviews, among other things, survey data
provided by independent, nationally recognized compensation consulting firms for
both the steel industry and general industry. In particular, the Compensation
Committee considers compensation data with respect to a peer group of steel
producers with annual revenues of up to $1.5 billion and a peer group comprised
of the members of the common stock peer group. See "-- Common Stock
Performance." In determining the common stock peer group for the Common Stock
Performance graph, the Compensation Committee approved management's selection of
companies with comparable products, markets, customers or revenues. The two
compensation peer groups provide the Compensation Committee with competitive
data on companies of comparable size and market.

The Compensation Committee targets total cash compensation at levels
generally comparable to the compensation peer groups. Executive compensation is
weighted heavily toward programs contingent upon the Company's financial
performance. The Compensation Committee also believes that stock ownership by
employees and stock-based compensation programs are beneficial in aligning the
interests of employees and stockholders.

Components of Executive Officer Compensation. Executive officer
compensation includes base salary, quarterly incentive cash compensation,
long-term stock-based compensation and a broad-based benefits program.

The base salaries of executive officers are targeted below the median of
the compensation peer groups of companies, subject to variation by individual
executive based on individual performance and scope of responsibility. Incentive
cash compensation provides a performance-sensitive compensation opportunity for
the Company's executives above the median of the peer groups. It is the
Compensation Committee's intent to set base compensation at levels so that when
the Company performs well, the incentive compensation payments would put Company
officers above the median level of cash compensation being paid to officers of
the compensation peer groups. Conversely, when the Company performs poorly,
total cash compensation would fall below the median compensation level.

A base salary adjustment was granted to Mr. Latendresse on his appointment
to Vice Chairman and Chief Financial Officer in July 1999. Base salary
adjustments were granted to certain other of the Named Executive Officers in
1999 based upon the Compensation Committee's consideration of the competitive
compensation data, the interval since the individual executive's last increase
and the individual executive's performance and scope of responsibility.

Incentive cash compensation is based upon measured financial results of the
Company. Under the Company's Incentive Compensation Plan (the "Incentive
Compensation Plan"), the amount set aside for awards each quarter is a
percentage of income before income taxes (as reported in Rouge Steel's
Consolidated Statement of Operations with certain adjustments). No incentive
compensation was paid in 1999 to any executive officer based on the Company's
financial performance.

The Company adopted the 1998 Stock Incentive Plan to link executive
compensation to the Company's Class A Common Stock share price and to increase
long-term retention of key employees. In 1999, the Compensation Committee
approved the grant of stock options under the

12
<PAGE> 15

1998 Stock Incentive Plan to key managers of the Company, including certain
Named Executive Officers. The awards were targeted at or about the middle of the
range of long-term incentive compensation paid to executive officers in the
compensation peer groups as determined by the Compensation Committee's review of
survey data. At Mr. Valdiserri's request, due to his significant equity holdings
in the Company, the Compensation Committee did not grant any options to Mr.
Valdiserri.

The executive officers participate in a broad-based benefits program
including a pension plan, health care coverage, life insurance, disability
benefits and a tax-deferred savings plan.

Performance of the CEO. The Compensation Committee's review of the
compensation of the CEO, Carl L. Valdiserri, considered data presented by the
Company's compensation consultants regarding the base salary, total cash
compensation and total direct compensation of chief executive officers of the
compensation peer groups and in the general industry. The data indicate that the
base salary of Mr. Valdiserri is significantly below the median of the chief
executive officers of the compensation peer groups and general industry. In
consideration that Mr. Valdiserri desires that his salary remain modest in
relation to competitive levels due to his significant equity holdings in the
Company, and in recognition that Mr. Valdiserri's base salary has not been
increased since 1995, the Compensation Committee continued its support of a
charitable fund in the name of Mr. Valdiserri to serve as an appropriate means
for public recognition of the Company and Mr. Valdiserri's personal interests in
providing college scholarships for the dependents of the Company's employees.
Consistent with the Company's philosophy that the CEO's total compensation
should be heavily dependent upon the Company's financial performance, a
significant portion of Mr. Valdiserri's total compensation is targeted to
incentive compensation. Mr. Valdiserri received no incentive compensation in
1999 due to the Company's financial performance.

Deductibility of Compensation. The Internal Revenue Service, under Section
162(m) of the Code, will generally deny the deduction of compensation paid to
certain executives to the extent such compensation exceeds $1 million, subject
to an exception for compensation that meets certain "performance-based"
requirements. Whether the Section 162(m) limitation with respect to an executive
will be exceeded and whether the Company's deductions for compensation paid in
excess of the $1 million cap will be denied will depend upon the resolution of
various factual and legal issues that cannot be resolved at this time. As to
options granted under the Stock Incentive Plans, the Company intends to comply
with the rules governing the Section 162(m) limitation so that compensation
attributable to such options will not be subject to limitation under such rules.
As to other compensation, it is not expected that compensation to executives of
the Company will exceed the Section 162(m) limitation in the foreseeable future
and no officer of the Company received compensation in 1999 which resulted,
under Section 162(m), in the non-deductibility of such compensation to the
Company. If, however, any compensation would be expected to exceed the Section
162(m) limitation, the Company will consider taking action to structure any such
compensation in a manner to cause such compensation to be exempt from the
Section 162(m) limitation.

COMPENSATION COMMITTEE

John E. Lobbia, Chairman
Dominick C. Fanello
Peter J. Pestillo

13
<PAGE> 16

COMMON STOCK PERFORMANCE

The following graph compares the cumulative return from investing $100 at
December 31, 1994, in the Company's Class A Common Stock, the S&P 500 index of
companies, the S&P Steel Index and a peer group of integrated steel companies
selected by management and comprised of LTV Corporation, National Steel
Corporation, AK Steel Holding Corporation, Weirton Steel Corporation and WHX
Corporation, with dividends assumed to be reinvested when received.

PERFORMANCE COMPARISON
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
DEC 31 DEC 31 DEC 31 DEC 31 DEC 31
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Rouge Industries............................... 82.57 73.41 42.69 31.11 28.39
S&P 500........................................ 134.35 161.57 211.60 267.96 320.22
Peer Group..................................... 85.42 78.19 79.53 72.81 70.96
S&P Steel Index................................ 91.74 80.77 80.70 68.55 73.49
</TABLE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the year ended December 31, 1999, Carl L. Valdiserri, Chairman and
Chief Executive Officer of the Company, attended Compensation Committee meetings
to present management recommendations and answer questions with respect to
executive performance and compensation. No other member of the Board of
Directors who is also an officer or employee of the Company participated in any
such meetings.

EMPLOYEE BENEFIT PLANS

Pension Plan. The table below sets forth the estimated qualified annual
retirement benefits (contributory and noncontributory) under the Salaried
Retirement Plan payable on a straight life

14
<PAGE> 17

annuity basis to the Named Executive Officers who meet the credited service
requirement for retirement at age 65. Normal retirement benefits are not subject
to deduction for Social Security benefits.

The formula used to calculate noncontributory benefits under the qualified
pension plan considers the participant's non-contributory service and a flat
benefit rate associated with that level of service. The formula used to
determine contributory retirement benefits under the qualified pension plan
considers (i) the participant's final average pay, which is defined as the
highest average monthly salary of any five consecutive December 31 dates of the
last ten years that the participant was making contributions and (ii) the
participant's contributory service. Average monthly salary is the base monthly
salary prior to giving effect to any salary reduction pursuant to the Company's
tax-efficient savings plan, and does not include bonuses or any other forms of
supplemental compensation. To be eligible to receive a contributory benefit,
participants must contribute at the rate of 1 1/2% of base salary for each
credited year of service. At December 31, 1999, Messrs. Valdiserri, Camino,
Latendresse and Hornberger had ten credited years of service, and Mr. Nock had
17.4 credited years of service under the qualified pension plan.

Select members of management as determined by the Compensation Committee,
including Messrs. Valdiserri, Camino and Latendresse, participate in the
non-qualified Benefit Restoration Plan, in which salary in excess of the Code
compensation limit is used in a formula similar to that which determines
qualified plan contributory retirement benefits. At December 31, 1999, Messrs.
Valdiserri and Camino had ten credited years of service. Mr. Latendresse had
33.9 credited years of service under the Benefit Restoration Plan, but his
benefit under this plan is offset by Ford Motor Company General Retirement Plan
benefits. The Pension Plan Table below may be utilized to estimate this benefit.

PENSION PLAN TABLE

<TABLE>
<CAPTION>
CREDITED YEARS OF SERVICE
AVERAGE YEARLY ------------------------------------------------------------------------------
COMPENSATION 5 10 15 20 25 30 35
- -------------- ------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000............. $ 4,000 $ 7,500 $ 11,500 $ 15,500 $ 19,500 $ 23,000 $ 27,000
100,000............. 8,500 17,000 25,500 34,500 43,000 51,500 60,000
150,000............. 13,000 26,500 39,500 53,000 66,500 80,000 93,000
200,000............. 17,500 35,500 53,500 72,000 90,000 108,000 126,000
250,000............. 22,000 45,000 68,000 90,500 113,500 136,500 159,500
300,000............. 26,500 54,000 82,000 109,500 137,000 164,500 192,500
350,000............. 31,000 63,500 96,000 128,500 160,500 193,000 225,500
400,000............. 35,500 73,000 110,000 147,000 184,000 221,500 258,500
</TABLE>

Select members of management as determined by the Compensation Committee,
including the Named Executive Officers, participate in the non-qualified
Supplemental Executive Retirement Plan ("SERP"), in which a benefit is based on
a formula similar to that which determines contributory retirement benefits,
except that the benefit is based on the average annual bonuses paid under the
Incentive Compensation Plan for the highest five years of the ten years prior to
retirement. For purposes of the SERP, at December 31, 1999, Messrs. Valdiserri
and Camino had ten credited years of service and Messrs. Latendresse, Hornberger
and Nock had 33.9, 27.0 and 17.4 credited years of service, respectively. The
Pension Plan Table above may be utilized to estimate this benefit.

Profit Sharing Plans for Hourly and Salaried Employees. Under the Profit
Sharing Plan for Hourly Employees and the Profit Sharing Plan for Salaried
Employees, the Company is obligated to make payments to eligible employees, with
respect to each calendar quarter, of a portion of income before income taxes (as
reported in Rouge Steel's Consolidated Statement of Operations with certain
adjustments) that meets certain targeted percentages of sales. The Company made
no payments under these plans with respect to 1999, due to Rouge Steel's
financial performance.

15
<PAGE> 18

Savings Plan for Salaried Employees. Under the Rouge Steel Company Savings
Plan for Salaried Employees, eligible salaried employees may make voluntary
pre-tax contributions not to exceed 15% of the employee's base salary and
after-tax contributions not to exceed 10% of the employee's base salary. Among
the investment alternatives available to employees since February 1995 is the
investment of all or a portion of their accounts in Class A Common Stock. The
Company is obligated to match the employee's contributions up to 10% of the
employee's base salary. The Company matches employee contributions in an amount
ranging from 0% to 100% (depending on Rouge Steel's level of income before
income taxes as a percentage of sales (as used in the profit sharing plans)
during an applicable quarter) of the employee's pre- and after-tax contributions
during the applicable month. Since 1995, the Company's matching contributions
have been made in Class A Common Stock.

Incentive Compensation Plan. Under the Incentive Compensation Plan, the
officers and employee-directors and certain other salaried employees of Rouge
Steel are eligible to receive quarterly incentive compensation payments for
contributing to the success of the Company. Upon the recommendation of the CEO
of the Company, at the end of each quarter, the Compensation Committee will
determine the maximum total amount of all such awards to be made for the
quarter, will act on the recommendation made by the CEO regarding officer
awards, and will determine the CEO's award. The amount set aside each quarter is
a percentage of Rouge Steel's income before income taxes (as reported in Rouge
Steel's Consolidated Statement of Operations with certain adjustments). The
Company made no payments under this plan with respect to 1999, due to Rouge
Steel's financial performance.

Stock Incentive Plan. Under the 1994 Stock Incentive Plan and the 1998
Stock Incentive Plan, a maximum of 400,000 shares and 500,000 shares,
respectively, of Class A Common Stock has been authorized for the granting of
qualified incentive stock options ("ISOs"), nonqualified stock options ("NQSOs"
and together with ISOs, "Options"), stock appreciation rights ("SARs"),
restricted stock awards ("RSAs") and performance share awards ("PSAs"). The
shares of Class A Common Stock available under the Stock Incentive Plans are
offered and issued directly by the Company. No fees or commissions will be
charged by the Company in connection with the awards. In no event may any
employee receive Options, SARs, RSAs, PSAs or any combination thereof for more
than 50,000 shares of Class A Common Stock over the life of the Stock Incentive
Plan. As of December 31, 1999, Options totaling 323,425 shares were outstanding
pursuant to the 1994 Stock Incentive Plan. As of December 31, 1999, Options
totaling 165,050 shares were outstanding pursuant to the 1998 Stock Incentive
Plan. The purposes of the Stock Incentive Plans are to align the interests of
certain officers of the Company and employees of Rouge Steel with those of
stockholders by rewarding long-term growth and profitability of the Company and
to attract and retain individuals of experience and ability. All officers and
employee-directors and certain other employees of the Company or its
subsidiaries are eligible to participate under the Stock Incentive Plans, as
deemed appropriate by the Compensation Committee.

SEPARATION BENEFITS

The Company does not have employment contracts with its executive officers.
Certain salaried employees of Rouge Steel, including the Named Executive
Officers, are eligible to participate in the Rouge Steel's Salaried Income
Security Plan (the "SISP"). Under the SISP, eligible salaried employees are
entitled to receive basic and supplemental benefits in the event of certain
terminations of employment with Rouge Steel. In the event of such a termination,
eligible salaried employees who have at least one full year of service are
entitled to receive up to 12 months of base salary paid over up to 22 months
depending on years of service at termination. Upon exhaustion of basic benefits
under the SISP, eligible employees with more than 15 years of service are
entitled to receive supplemental benefits equal to 50% of base salary plus 1%
for each full year of service over 15 years. These supplemental benefits
continue until reemployment, refusal to accept work,

16
<PAGE> 19

retirement or death. For purposes of basic and supplemental benefits under the
SISP, base salary is the highest base salary received during the 12 months
immediately preceding termination.

Certain Rouge Steel executives, including Messrs. Latendresse, Nock and
Hornberger, have entered into agreements that were unanimously approved by the
outside members of the Board of Directors. These agreements provide severance
benefits upon a defined change in control event coupled with employment
termination under certain circumstances. Upon the occurrence of a defined
termination, executives with such an agreement are eligible for a lump sum
payment equal to two times base salary and target bonus, welfare benefits
(excluding stock and disability plan benefits), outplacement services not to
exceed 15% of base pay, the accelerated vesting of non-vested stock options and
additional benefits under the Supplemental Executive Retirement Plan and the
Benefit Restoration Plan. These benefits are offset by benefits payable under
the previous paragraph.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------

RELATED PARTY TRANSACTIONS

The Company believes that the transactions discussed below, as well as the
terms of any future transactions and agreements (including renewals of any
existing agreements) between the Company and its affiliates, are and will be at
least as favorable to the Company as could be obtained from unaffiliated
parties. The Board of Directors of the Company will be advised in advance of any
such proposed transaction or agreement and will utilize such procedures in
evaluating the terms and provisions of such proposed transaction or agreement as
are appropriate in light of the fiduciary duties of the directors under the
Delaware General Corporation Law. In addition, the Company has established an
Audit Committee, which consists of three independent directors. One of the
responsibilities of the Audit Committee is to review related party transactions.
See "Proposal No. 1 -- Election of Directors -- Meetings and Committees."

THE AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

On November 14, 1996, the Company, Carl L. Valdiserri and Worthington
entered into an amended and restated stockholders agreement (the "Amended and
Restated Stockholders Agreement"). On March 1, 2000, the Amended and Restated
Stockholders Agreement terminated with respect to Worthington as Worthington
liquidated its entire ownership position in the Company (see "-- Worthington
Industries, Inc." below). Set forth below is a description of the provisions of
the Amended and Restated Stockholder Agreement that remain operative in light of
the termination with respect to Worthington.

Under the Amended and Restated Stockholders Agreement, Carl L. Valdiserri
retains four demand registration rights in certain circumstances with respect to
his shares of Class A Common Stock. The demand registration rights described
above are exercisable at any time. In addition, Mr. Valdiserri and/or his
permitted transferees have unlimited demand registration rights on Forms S-2 and
S-3. Mr. Valdiserri and/or his permitted transferees also have unlimited
piggyback registration rights. The Company has agreed to pay any expenses
(except all applicable underwriting discounts and commissions) incurred in
connection with a registration requested under the Amended and Restated
Stockholders Agreement, except that, with respect to the demand registration
rights, reimbursement is required only where the expected purchase price of the
registrable securities exceeds $5 million and, in the case of registration on
Form S-2 or S-3, only holders of 5% or more of the Company's Common Stock shall
be reimbursed.

The Amended and Restated Stockholders Agreement terminates (a) upon the
consent of each of the parties; (b) upon the sale of all or substantially all of
the assets of the Company and the distribution of the proceeds thereof to the
stockholders at such time; (c) as to any share of

17
<PAGE> 20

Common Stock, when such share is transferred other than to permitted
transferees; (d) as to any party, when such party ceases to hold any Common
Stock (or any legal or beneficial interest therein); or (e) on February 28,
2004, provided that certain expense and indemnification provisions survive.

WORTHINGTON INDUSTRIES, INC.

The DECS. On March 1, 2000, pursuant to the terms of the 7 1/4%
Exchangeable Notes due March 1, 2000 (the "DECS") of Worthington, Worthington
delivered to the holders of the DECS 5,999,600 shares of Class A Common Stock,
representing its entire equity position in the Company. The Company had
registered the 5,999,600 shares of Class A Common Stock related to the DECS. The
Company did not receive any of the proceeds from the sale of the DECS or
delivery thereunder of shares of Class A Common Stock.

Worthington Steel Purchase Agreement. In connection with the acquisition of
the Company from Ford Motor Company in 1989, the Company entered into a steel
purchase contract (the "Worthington Agreement") with Worthington. The
Worthington Agreement terminates on December 15, 2003. The purchase price of the
products supplied under the Worthington Agreement is set at a slight discount
from the competitive market price for the same products with comparable quality
and terms and the contract is subject to the Company's ability to deliver
products on a timely basis which meet Worthington's specifications and are of
acceptable quality. The Company and Worthington have agreed to this pricing
arrangement to reflect Worthington's volume of purchases, product mix and
certain other accommodations made by Worthington with respect to the Company's
production scheduling requirements. Pursuant to the Worthington Agreement, the
Company had sales to Worthington of approximately $19.5 million during 1999.

Worthington Joint Ventures. The Company has entered into a joint venture
with Worthington with respect to Spartan Steel Coating, L.L.C. ("Spartan
Steel"), a hot dip galvanizing facility that coats light gauge steel products to
make them corrosion resistant. As of December 31, 1999, the Company had invested
approximately $52.1 million in the Spartan Steel facility which was placed into
service in mid-1998. As of December 31, 1999, the Company had also invested $6.5
million for an 11% interest in TWB Company, L.L.C., a facility that produces
laser welded blanks.

18
<PAGE> 21

PROPOSAL NO. 2 -- INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------

The accounting firm of PricewaterhouseCoopers LLP has been selected by the
Board of Directors as the independent public accountants for the Company for the
fiscal year ending December 31, 2000. Although the selection of accountants does
not require ratification, the Board of Directors has directed that the
appointment of PricewaterhouseCoopers LLP be submitted to stockholders for
ratification due to the significance of their appointment by the Company. If
stockholders do not ratify the appointment of PricewaterhouseCoopers LLP, the
Board of Directors will consider the appointment of other certified public
accountants. A representative of PricewaterhouseCoopers LLP, which served as the
Company's independent public accountants for the fiscal year ended December 31,
1999, is expected to be present at the Meeting and, if he or she so desires,
will have the opportunity to make a statement, and in any event will be
available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF PROPOSAL NO. 2.

SOLICITATION STATEMENT
- --------------------------------------------------------------------------------

All expenses in connection with the solicitation of proxies will be borne
by the Company. In addition to the use of the mails, solicitations may be made
by regular employees of the Company or its affiliates, by telephone or personal
contact, without additional compensation. The Company will, upon request,
reimburse brokerage houses and persons holding shares of Common Stock in the
names of their nominees for their reasonable expenses in sending solicitation
materials to their principals.

STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------

In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next annual meeting of stockholders of the
Company, stockholder proposals for such meeting must be submitted to the Company
no later than December 14, 2000. Proxies solicited on behalf of the Board of
Directors for the next annual meeting of stockholders will confer discretionary
authority to vote with respect to any other matter properly submitted by a
stockholder for action at the next annual meeting of stockholders if the Company
does not, on or before February 24, 2001, receive written notice addressed to
the Secretary of the Company from such stockholder with respect to such other
matter.

OTHER MATTERS
- --------------------------------------------------------------------------------

So far as now known, there is no business other than that described above
to be presented for action by the stockholders at the Meeting, but it is
intended that the proxies will be voted upon any other matters and proposals
that may legally come before the Meeting or any adjournment thereof, in
accordance with the discretion of the persons named therein.

19
<PAGE> 22

ANNUAL REPORT
- --------------------------------------------------------------------------------

All stockholders of record as of March 13, 2000 have been sent, or are
concurrently herewith being sent, a copy of the Company's Annual Report to
Shareholders for the fiscal year ended December 31, 1999. Such report contains
certified consolidated financial statements of the Company and its subsidiaries
for the fiscal year ended December 31, 1999. THE COMPANY WILL FURNISH, WITHOUT
CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1999 (WITHOUT EXHIBITS) (AS FILED WITH THE SEC) TO STOCKHOLDERS OF
RECORD ON THE RECORD DATE WHO MAKE WRITTEN REQUEST THEREFOR TO INVESTOR
RELATIONS, ROUGE INDUSTRIES, INC., 3001 MILLER ROAD, P.O. BOX 1699, DEARBORN,
MICHIGAN 48121-1699.

By Order of the Company,

/s/ MARTIN SZYMANSKI SIG
MARTIN SZYMANSKI
Secretary

Dated: March 28, 2000

20
<PAGE> 23

PROXY ROUGE INDUSTRIES, INC.
3001 MILLER ROAD
P.O. BOX 1699
DEARBORN, MICHIGAN 48121-1699

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ROUGE INDUSTRIES,
INC.

Phyllis J. Holmes and Michael C. Tuomey and each of them, with full power of
substitution, are hereby appointed the proxies of, and authorized to represent,
the undersigned and to vote all of the shares of common stock of Rouge
Industries, Inc. entitled to be voted by the undersigned as of March 13, 2000 as
directed below and, in their discretion, on all other matters which may properly
come before the Annual Meeting of Stockholders (the "Meeting") to be held at the
Gate 2 Training Center, Rouge Steel Company, Dearborn, Michigan 48121, on
Thursday, May 11, 2000 at 10:00 a.m. and at any adjournment thereof as if the
undersigned were present and voting at the Meeting.

Whether or not you expect to attend the Meeting, you are urged to execute and
return this proxy, which you may revoke at any time prior to its use.

IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, SUCH
SHARES WILL BE VOTED FOR ALL ITEMS.

Item 1 -- Election of the following nominees for Class III Directors: Carl L.
Valdiserri and Clayton P. Shannon.
<TABLE>
<C> <S> <C>
[ ] FOR all nominees [ ]
with exceptions listed

<C> <C>
[ ] WITHHOLD AUTHORITY
FOR ALL NOMINEES
</TABLE>

Withhold for the following nominee(s) only (To withhold authority to vote for
any nominee, write that nominee's name in the space below.)

Item 2 -- Ratification of appointment of PricewaterhouseCoopers LLP as
independent public accountants for the year ending December 31, 2000.

[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 24

Please date and sign this proxy exactly as your name appears below and return it
promptly in the postage-paid return envelope. When shares are held by joint
tenants, both should sign. If a corporation, please sign the full corporate name
by an authorized officer. If a partnership, please sign the partnership name by
an authorized person.

The undersigned hereby acknowledge(s) receipt of Rouge Industries, Inc. Annual
Report to Shareholders and of the notice of the Annual Meeting of Stockholders
and Proxy Statement relating to the Meeting.

Date:

--------------------------------,
2000

--------------------------------
Signature

PLEASE MARK, SIGN AND DATE THIS PROXY PROMPTLY AND MAIL IT IN THE ENCLOSED
ENVELOPE. TO BE VALID, THIS PROXY MUST BE SIGNED AND DATED.