<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
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
COLD METAL PRODUCTS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COLD METAL PRODUCTS, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
/ / 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:
Not Applicable
(2) Form, schedule or registration statement no.:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date filed:
Not Applicable
<PAGE> 2
COLD METAL PRODUCTS, INC.
8526 South Avenue
Youngstown, Ohio 44514
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Stockholders of Cold
Metal Products, Inc. will be held on Thursday, July 25, 1996 at 9:00 o'clock
a.m. at Mr. Anthony's Banquet Hall, 7440 South Avenue, Boardman, Ohio 44512, for
the following purposes:
1. To elect directors for a term of one year.
2. To consider, and if thought fit, to ratify of the appointment of
auditors.
3. To transact such other business as may properly come before the
meeting.
These items are more fully described in the Proxy Statement on the
following pages. All stockholders of record at the close of business on June 14,
1996 are entitled to vote at the meeting. Stockholders are reminded that shares
cannot be voted unless the enclosed Proxy Card is properly signed and returned
or other arrangements are made to have the shares represented at the Meeting.
HEIDI A. NAULEAU
Secretary
The Cold Metal Products, Inc. Annual Report, which includes financial
statements, is being mailed with this Notice of Meeting and Proxy Statement.
Kindly notify KeyCorp Shareholder Services, Inc., P.O. Box 6477, Cleveland, Ohio
44101-1477, or by telephone at (800) 542-7792, if you have not received it and a
copy will be sent to you.
<PAGE> 3
COLD METAL PRODUCTS, INC.
PROXY STATEMENT
GENERAL INFORMATION
The enclosed proxy is solicited on behalf of the Board of Directors of Cold
Metal Products, Inc., a New York corporation (the "Company") for use at the 1996
annual meeting of shareholders to be held on July 25, 1996 at 9:00 A.M. at Mr.
Anthony's Banquet Hall, 7440 South Avenue, Boardman, Ohio 44512. Only
shareholders of record on June 14, 1996 will be entitled to vote at the meeting.
On June 14, 1996, the Company had 7,162,250 shares of Common Stock issued and
outstanding.
The Company's principal executive offices are located at 8526 South Avenue,
Youngstown, Ohio 44514. This proxy statement and the accompanying formal proxy
are first being sent to shareholders on approximately June 25, 1996.
Any person giving a proxy in the form accompanying this proxy statement has
the power to revoke it at any time before it is exercised. It may be revoked by
filing with the Secretary of the Company an instrument of revocation or by
presentation at the meeting of a duly executed proxy bearing a later date. It
may also be revoked by attendance at the meeting and election to vote in person.
Persons acting pursuant to the proxy solicited by the Board of Directors
will vote shares represented thereby (i) for the election of James R. Harpster,
R. Quintus Anderson, Gordon A. Wilber, Heidi A. Nauleau, Wilbur J. Berner,
Claude F. Kronk, Robert D. Neary, Edwin H. Gott, Jr., and Peter B. Sullivan as
directors of the Company, and (ii) to ratify the appointment of Deloitte &
Touche LLP as independent auditors of the Company for the fiscal year ending
March 31, 1997.
QUORUM AND VOTING PROCEDURES
A quorum consists of the presence at the meeting, in person or by proxy, of
holders of 3,581,126 shares of Common Stock. New York's Business Corporation Law
provides that, a quorum being present, nominees for the office of director are
to be elected by a plurality of votes cast at the meeting. Abstentions and
broker non-votes are counted in determining the existence of a quorum but are
not counted as votes cast for the election of directors or for the proposals as
to which the stockholder abstained or the broker withheld authority. Aarque
Capital Corporation, a corporation controlled by R. Quintus Anderson, presently
owns 3,662,500 shares, approximately 51.1%, of the Company's Common Stock, which
will be voted for the election of the directors nominated, and the proposal to
ratify the appointment of Deloitte & Touche LLP.
STOCKHOLDER PROPOSALS
Stockholder proposals, including nominations for the office of director,
may be submitted for inclusion in the Company's 1997 proxy material after the
1996 Annual Meeting, but no later than 5:00 p.m. Eastern Standard Time on May 1,
1997. Proposals must be in writing and sent by registered, certified or express
mail to: Office of the Secretary, Cold Metal Products, Inc., 8526 South Avenue,
Youngstown, Ohio 44514. Facsimile or other forms of electronic submission will
not be accepted. Management will carefully consider all proposals and
suggestions from stockholders. When in Management's judgment adoption is clearly
in the best interest of the Company and can be accomplished without stockholder
approval, the proposal will be implemented without inclusion in the Company's
proxy material.
SOLICITATION
The Company will bear the entire cost of preparing, assembling, printing
and mailing this proxy statement, the accompanying form of proxy and any
additional material which may be furnished to shareholders. Copies of all
solicitation materials will be furnished to brokerage houses, fiduciaries and
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custodians to forward to beneficial owners of stock held in their names.
Solicitation of proxies will be made only by the use of the mail.
ELECTION OF DIRECTORS
At the Company's 1996 annual meeting of shareholders, it is intended that
the shares represented by the proxy solicited by the Board of Directors will be
voted, unless such authority is withheld, for the election of the nine nominees
for the office of director identified below. Each nominee is presently a
director of the Company. The Directors elected will serve for the ensuing fiscal
year and until their successors have been elected. Should any of the nominees
for the office of director named above be unable to accept nomination or
election, which is not anticipated, persons acting under the proxy will vote for
the election of such other persons as the Board of Directors of the Company may
recommend.
NOMINEES FOR DIRECTOR
R. Quintus Anderson, age 65, has served as Chairman of the Board of
Directors of the Company since its incorporation in 1980. Aarque Capital
Corporation, a corporation controlled by Mr. Anderson, owns approximately 51.1%
of the shares of Common Stock of the Company. Aarque Capital Corporation is one
of a group of privately-held corporations owned or controlled by Mr. Anderson,
known as The Aarque Companies, which are in businesses unrelated to the business
of the Company. Mr. Anderson holds a Bachelor of Engineering degree from
Princeton University and was granted a post-graduate fellowship at the Sloane
School of Industrial Management at the Massachusetts Institute of Technology.
Since his discharge as a lieutenant from the U.S. Navy in 1957, Mr. Anderson has
managed, operated and acquired businesses related principally to the metal
fabrication industry. Mr. Anderson is a trustee of Northwestern Mutual Life
Insurance Company and a director of Oneida Ltd.
Wilbur J. Berner, age 64, has served as a Director of the Company since
1980. Mr. Berner was the Treasurer of the Company from 1980 to 1994. On May 1,
1996 Mr. Berner retired from his positions as President of Aarque Management
Corporation, one of the Aarque Companies which provides management services to
other members of the group, and as Secretary and Treasurer of Aarque Capital
Corporation. He had also previously served as Vice President of Aarque Steel
Corporation. Prior to joining The Aarque Companies, Mr. Berner was Secretary and
Treasurer of Dahlstrom Corporation, a metal forming enterprise in Jamestown, New
York. He began his career as a staff auditor with Ernst & Young. Mr. Berner
holds a B.S. degree in accounting from the University of Buffalo.
Edwin H. Gott, Jr., age 54, is President and Chief Operating Officer of
Metaltech, a Pennsylvania Limited Partnership. Prior to his current position at
Metaltech, Mr. Gott had over 15 years of management experience with LTV Steel
Company, Inc. Mr. Gott also serves as Managing Partner for NexTech, an affiliate
of Metaltech. He is Chairman of the Board of Trustees for Sewickley Valley
Hospital and serves as a Director for Tin Plate Partners International. Mr. Gott
is a graduate of Lehigh University. He has served as a Director of the Company
since October 1994.
James R. Harpster, age 48, has served as President and Chief Executive
Officer of the Company since 1984, and has served as a Director since 1982.
Prior to assuming his current position, he was Vice President of Sales for the
Company since its incorporation. He has twenty-seven years' experience in the
steel industry, having begun his career in 1969 with Jones & Laughlin Steel
Corporation. During his career with Jones & Laughlin, Mr. Harpster held various
management positions in the areas of product quality and plant operations. He
graduated from Lehigh University in 1969 with a B.S. in Metallurgy and from the
University of Akron in 1975 with an MBA. He is a member and past president of
the Association of Cold-Rolled Strip Steel Producers and a member of the
Department of Commerce's Industry Sector Advisory Committee on Ferrous Ores and
Metals for Trade Policy Matters.
Claude F. Kronk, age 64, is Vice Chairman, Chief Executive Officer and a
Director of J & L Specialty Steel, Inc. Previously he was President and Chief
Executive Officer of J & L Specialty Steel, having held that office since its
incorporation in 1986. From 1957 until 1986, Mr. Kronk was employed by the
Specialty Steel Division of LTV Steel Company, serving as President of that
division from 1984 until 1986. Mr. Kronk is a
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<PAGE> 5
graduate of Ohio Wesleyan University. Mr. Kronk was first elected a Director of
the Company on March 21, 1994.
Heidi A. Nauleau, age 39, is Secretary of the Company and a Director,
having been elected to those positions in 1993. Mrs. Nauleau is Chairman of The
Aarque Companies, having been elected to that position in February 1996. Mrs.
Nauleau joined The Aarque Companies in 1981 as Assistant to the Chairman and was
appointed Vice President/Europe in 1984. From 1987 until 1992, she was manager
of a subsidiary of Aarque Steel Corporation. Prior to joining The Aarque
Companies in 1981, from 1979 until 1981, Mrs. Nauleau served as a research
associate for Berndtsen International Ltd. Mrs. Nauleau is the daughter of R.
Quintus Anderson. She is a graduate of the University of Pennsylvania.
Robert D. Neary, age 62, was Co-Chairman of Ernst & Young until his
retirement on September 30, 1993, having held that office since 1984. Mr. Neary
served Ernst & Young in various capacities since his admission to the
partnership in 1966, including service as Vice Chairman of Accounting and
Auditing from 1975 to 1984. Mr. Neary is a trustee of Armada Funds and a
director of Zurn Industries, Inc. Mr. Neary is a graduate of the University of
Michigan. He was first elected a Director of the Company on March 21, 1994.
Peter B. Sullivan, age 51, is President of PB Sullivan & Company, a
registered investment advisor and licensed securities broker based in Jamestown,
New York. Prior to founding his own company, Mr. Sullivan was Vice
President/Office Manager with Merrill Lynch, Pierce, Fenner and Smith, Inc.
where he worked for 17 years. Mr. Sullivan is also a Director of the Erie
Insurance Company of New York, a trustee of the YMCA of Jamestown and the
Randolph Children's Home, and serves on the Business Advisory Council of Miami
University, Oxford, Ohio as well as the State University of New York at Fredonia
College Foundation. He holds a Bachelor of Science degree in Economics and a
Masters in Business Management degree from Miami University. Mr. Sullivan has
served as a Director of the Company since October 1994.
Gordon A. Wilber, age 54, has served as Vice President since 1984, and
Executive Vice President of the Company since 1987. Mr. Wilber was appointed
Chief Operating Officer and was elected a Director in 1994. Prior to 1987, he
held the positions of Vice President of Operations, Manager of Operations and
Technical Director of the Company. Mr. Wilber began his career as a Research
Metallurgist at the Graham Laboratories of Jones & Laughlin in 1968. Following a
series of technical positions in the basic and specialty flat-rolled divisions
of Jones & Laughlin, he became Manager of Quality Control for Jones & Laughlin's
specialty strip plants in 1977. He has a Master's Degree in Metallurgical
Engineering from the University of Illinois and a Ph.D. from Rensselaer
Polytechnic Institute. He is a member of the Board of Directors and Vice
President of the Association of Cold Rolled Strip Steel Producers.
COMPENSATION OF DIRECTORS
Each of Messrs. Kronk, Neary, Gott, Sullivan and Berner are paid $10,000
annually for their services as Directors, including service on committees of the
Board of Directors, and $1,000 for each meeting of the Board of Directors or a
committee of the Board of Directors which he attends. Pursuant to a Non-Employee
Directors' Incentive Plan (the "Plan"), adopted by the Company and approved by
the Company's shareholders on March 3, 1994 and amended by the shareholders on
July 20, 1995, each director who is not a salaried employee of the Company may
elect to receive annual compensation in the form of cash or Common Stock and may
elect to defer receipt until a specified period after his or her resignation or
retirement or certain other events, such as a sale or merger of the Company.
Pursuant to the Plan, Messrs. Gott and Sullivan have elected to defer receipt of
their 1996 annual compensation. Sixty thousand shares of Common Stock are
reserved for issuance pursuant to deferral elections under the Plan. Directors
who are salaried employees or officers of the Company, including the Chairman of
the Board of Directors and the Secretary of the Company, receive no separate
compensation for their service as Directors, but are reimbursed for expenses
incurred in connection with attendance at meetings.
In addition, under the Plan, all directors of the Company who are not
salaried employees are granted, in connection with the beginning of their
initial term, an option to purchase 10,000 shares of Common Stock. These options
are granted at the fair market value on the date of the grant which is presently
fixed by the Plan as July 1 following initial appointment or election and are
exercisable after three years or upon certain specified events, such as a sale
or merger of the Company. Pursuant to the provisions of the Plan, on
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March 21, 1994, Messrs. Berner, Kronk and Neary were each granted options to
purchase 10,000 shares of Common Stock at $10.00 per share, and, on July 1,
1995, Messrs. Gott and Sullivan received options to purchase 10,000 shares of
Common Stock at the exercise price of $6.875 per share. One hundred thousand
shares of Common Stock are reserved for option grants under the Plan.
Additionally, pursuant to the Plan, non-employee directors are eligible for
awards of options, in addition to options grantable at the beginning of their
terms, grantable in the discretion of a committee of directors not eligible to
receive options under the Plan and exercisable at no less than the fair market
value of the stock on the date of the grant no less than six months from the
date of the grant. On July 20, 1995, each of Messrs. Berner, Kronk and Neary was
granted an option to purchase 5,000 shares of Common Stock at the exercise price
of $6.125 per share.
BOARD MEETINGS AND COMMITTEES
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of the Company consists of nine directors, each of
whom is elected to serve a term of one year.
The Company's Board of Directors has an Audit Committee, consisting of
Messrs. Neary (chair), Sullivan and Berner. The Audit Committee makes
recommendations to the Board of Directors regarding selection and employment of
the Company's independent accountants and, working with the Company's internal
accounting staff and independent accountants, monitors and reviews the Company's
accounting and control procedures. During the fiscal year ended March 31, 1996,
the Audit Committee met once.
The Company's Board of Directors also has a Human Resources Committee,
which performs the functions of a compensation committee. The Human Resources
Committee presently consists of Messrs. Kronk (Chair), Gott and Sullivan, each
of whom is an outside director. In addition, Mr. Anderson, Chairman of the Board
of Directors and an officer of the Company, serves the committee in an
ex-officio, non-voting capacity. Mr. Sullivan was appointed to the Human
Resources Committee in July 1995. The Human Resources Committee is responsible
for considering and making recommendations to the Board of Directors on the
annual compensation of all officers of the Company, including salary, bonus,
stock options and stock appreciation rights and other awards to be made under
the Company's existing compensation plans. With respect to compensation for the
fiscal year ended March 31, 1996, the Human Resources Committee met two times
during the fiscal year ended on March 31, 1996; the Committee also met in May
1996.
The Board of Directors held a total of four meetings during the fiscal year
ended March 31, 1996. During the fiscal year, each incumbent director attended
at least seventy-five percent (75%) of the meetings of the Board of Directors
and all meetings of the Committees of the Board of Directors that were held
during the periods for which each such director served on the Board of Directors
or on a Committee. The Company has no standing Nominating Committee.
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EXECUTIVE COMPENSATION
The table below sets forth information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended March 31, 1996, March 31, 1995, and March 31, 1994 with respect to those
persons who were, at March 31, 1996, (i) the Chief Executive Officer and (ii)
the other four most highly compensated executive officers of the Company
(collectively, with the Chief Executive Officer, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
------------ LONG-TERM
OTHER ANNUAL COMPENSATION: ALL OTHER
NAME AND SALARY BONUS COMPENSATION STOCK OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR $ $ $(1) AWARDED(#)(2) $(3)
- - ---------------------------- ---- ------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
James R. Harpster 1996 235,000 105,750 -- 25,000 37,500
President and Chief 1995 225,000 200,000 -- -- 67,700
Executive Officer 1994 168,750 150,000 -- 50,000 58,100
Gordon A. Wilber 1996 177,000 79,650 -- 18,750 25,000
Executive Vice President 1995 170,000 140,000 -- -- 43,100
and Chief Operating Officer 1994 125,850 97,500 -- 37,500 21,292
R. Quintus Anderson 1996 150,000 75,000 -- 50,000 21,000
Chairman of the 1995 135,000 150,000 -- -- 36,000
Board of Directors 1994 110,000 155,000 40,150(4) -- 30,375
Robert R. Albert 1996 106,000 31,500 -- 7,500 19,300
Vice President 1995 102,000 20,000 -- -- 43,100
- - -- Commercial 1994 97,500 15,000 -- 15,000 34,875
Allen R. Morrow 1996 104,000 36,000 -- 7,500 15,200
Vice President, 1995 100,000 75,000 -- -- 25,000
Chief Financial Officer 1994 91,000 56,750 -- 15,000 21,550
and Treasurer (5)
</TABLE>
- - ---------------
(1) Unless otherwise indicated, no Named Executive Officer received a perquisite
or other personal benefit in excess of the lesser of $50,000 or 10% of such
individual's salary plus annual bonus.
(2) There were no restricted stock awards or long-term incentive plan payouts
for any of the fiscal years identified. In the fiscal years ended March 31,
1996 and March 31, 1994, stock options were granted pursuant to the 1994
Incentive Program. The options awarded become exercisable over periods with
respect to each option as determined by the Board of Directors at a price no
less that the market value of the Company's Common Stock on the date of the
grant. The options expire ten years after the date of the grant. No stock
options were granted pursuant to the Company's 1994 Incentive Program in the
fiscal year ended March 31, 1995.
(3) Consists of (i) Company contributions under its 401(k) Plan, pursuant to
which the Company matches amounts of compensation which an employee elects
to defer under the Plan, up to the lesser of 5% of the employee's salary or
the maximum amount allowed under the Internal Revenue Code and (ii) amounts
deposited in trust pursuant to the Company's Special Incentive Compensation
Plan, a deferred compensation arrangement for key employees pursuant to
which deposits are made into a trust as determined by the Company's Board of
Directors. Amounts held in trust vest 100% five years from the grant date
contingent on continued employment or the attainment of normal retirement
age.
(4) Premiums for life insurance paid during the fiscal year ended March 31,
1994. The Company ceased paying premiums on this policy as of March 21,
1994, the date of the Company's initial public offering.
(5) On April 1, 1996, Mr. Morrow was appointed Chief Administrative Officer of
the Company. Throughout the fiscal year ended March 31, 1996, he served as
Chief Financial Officer.
DEFINED BENEFIT PENSION PLAN
Salaried employees of the Company are eligible to participate in a funded,
non-contributory defined benefit pension plan maintained by the Company. The
following table shows the estimated, approximate annual pension payable upon
normal retirement (at or after age 65 or after 30 or more years of service) in
1996 under the pension plan to an employee with the indicated years of service
and final average
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compensation, before reductions for social security and pension payments by
predecessor employer, Jones & Laughlin.
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE --------------------------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- - ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$100,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500
125,000 28,125 37,500 46,875 56,250 65,625
150,000 33,750 45,000 56,250 67,500 78,750
175,000 39,375 52,500 65,625 78,750 91,875
200,000 45,000 60,000 75,000 90,000 105,000
225,000 50,625 67,500 84,375 101,250 118,125
250,000 56,250 75,000 93,750 112,500 131,250
275,000 61,875 82,500 103,125 123,750 144,375
300,000 67,500 90,000 112,500 135,000 157,500
</TABLE>
"Final average compensation" is averaged over the five years that are
within the final ten years of employment that produce the highest amount. The
compensation of employees used to compute the pension described above is total
compensation, exclusive of reimbursed travel and relocation expenses,
Company-paid insurance (whether or not taxable) and benefits under the Company's
Special Incentive Compensation Plan, until actually distributed or made
available, but including any salary reduction contributions made by the employee
to the Company's 401(k) Plan. Under the Internal Revenue Code, for taxable years
after 1988, pensionable earnings are limited to $200,000 per year, adjusted each
year after 1989 to reflect inflation. Thus, the limits for years 1989-1993 were
$200,000, $209,200, $222,220, $228,860 and $235,840, respectively. Beginning in
1994 and continuing through 1996, pensionable earnings are limited to a flat
$150,000.
The estimated years of service credited to each of the Named Executive
Officers is as follows: James R. Harpster, 27; Gordon A. Wilber, 27; Allen R.
Morrow, 20; and Robert R. Albert, 9. R. Quintus Anderson does not participate in
the Pension Plan.
HUMAN RESOURCES COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
STATEMENT OF EXECUTIVE COMPENSATION
The Human Resource Committee and the Board of Directors have the
responsibility of reviewing the compensation programs which affect executive
officers and key management of the Company. These programs include base
compensation, cash bonus awards and deferred compensation awards.
The Committee is currently composed of three Directors who are not officers
or employees of the Company and one non-voting, ex-officio Director who is an
officer of the Company. The Board of Directors has appointed Mr. Claude F. Kronk
as Chairman and Messrs. Edwin H. Gott and Peter B. Sullivan as members of the
Committee. Each of the three Committee members has one vote. The Board has also
appointed Mr. R. Quintus Anderson, Chairman of the Board, to serve on the
Committee as a non-voting, ex-officio member.
Among Committee's responsibilities are:
- Endorsement of the compensation philosophy for all executive officers and
key management employees of the Company.
- Annual evaluation of the roles and performance of the Company's key
executive officers and approval of changes in base compensation for the
officers.
- Review recommendations from the Company's Chairman and President related
to base compensation, cash bonuses, and deferred compensation and similar
matters for other executive officers and key management of the Company.
- Review the Company's management succession plans.
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<PAGE> 9
COMPENSATION POLICIES AND PRACTICES
Compensation of the Company's executives consists of a base salary, an
annual cash bonus, and a deferred compensation award. The Company's compensation
philosophy reflects the Committee's belief that remuneration should be closely
tied to the performance of the Company and, therefore, a meaningful component of
executive compensation should correlate to the profitability of the Company.
The objectives of the Human Resource Committee are to equip management with
adequate tools to operate the business, to provide a compensation structure
which will attract and retain key executives, and to provide the shareholders of
the Company with a strong management team.
Base Salary. Base executive salaries are generally adjusted annually. The
salary recommendations for key employees are presented to the Committee not less
than annually by the Chairman and President of the Company. Review of base
salary recommendations compels the Committee to carefully consider historical,
current, and forecasted performance of the Company as well as each individual
executive's contributions to the Company. Comparative data from similar
companies is used to establish the appropriateness of base salaries.
Annual Cash Bonus. The bonus opportunity for participants is based on a
percentage of base salary and adjusted depending on the level of profitability
achieved. Annual cash bonuses are awarded and paid following the end of a fiscal
year and are tied to the performance of the Company. The Company accrues bonus
amounts based on a prospective annual plan and adjusts the accrual according to
goal achievement throughout the year.
Deferred Compensation Plan. Deferred compensation awards are made annually
and are also closely tied to the performance of the Company. Deferred
compensation awards are paid into an investment account for each key executive
who is given the opportunity to direct investment strategy on an individual
basis. Awards and accumulated earnings are paid after 5 years. If an individual
leaves the Company for reasons other than retirement prior to payment of the
award, the account is forfeited. Deferred compensation amounts are accrued and
adjusted during each year in the same manner as the annual cash bonus. The
deferred compensation is not taxable income to the employee or a tax expense to
the Company until it is paid.
Stock Option Programs. The 1994 Incentive Program, which was adopted by
shareholders January 27, 1994, and amended with shareholders approval July 20,
1995, provides for grants of various incentive awards, including stock options,
stock appreciation rights, restricted stock awards, performance awards, and
incentive shares as well as other types of awards. Only full time employees who
are officers or are in key managerial positions are eligible for awards under
the Program.
To date, only stock options have been granted under the Program. The
purpose of the options is to maintain and develop strong management through
ownership of the common stock of the Company.
The Board of Directors and/or the Human Resources Committee have the
authority and discretion to grant various awards under the Program. However, it
is not intended or implied that awards under this Program will be granted on an
annual basis.
CEO Compensation. Following the guidelines for the Company established by
the Human Resource Committee, Mr. James R. Harpster is compensated with a base
salary, an annual cash bonus, and as a participant in the deferred compensation
plan. Mr. Harpster's compensation, as with the other key management of the
Company, is tied closely to the Company's performance.
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<PAGE> 10
Mr. Harpster continues to provide strong motivating leadership for the
Company. His influence upon the performance and direction of the Company is a
key to its success. The Committee believes that Mr. Harpster's base salary and
bonus opportunity provide adequate incentive to maintain his dedication to the
operation of the business.
Mr. Harpster owns a substantial number of shares of the Company and
therefore, the Committee believes his interests are closely aligned with those
of the Company's shareholders.
Claude F. Kronk, Chairman
Edwin H. Gott, Jr.
Peter B. Sullivan
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Stock with the Standard & Poor's MidCap 400 Index and a
composite peer group of the following intermediate processors of flat rolled
steel: Gibraltar Steel Corporation, Huntco Inc., Olympic Steel, Shiloh
Industries, Inc., and Steel Technologies, Inc. The comparison assumes an initial
investment of $100 and reinvestment of dividends and commences on March 22,
1994, the first day of trading of the Company's Common Stock following its
initial public offering.
COMPARISON OF CUMULATIVE TOTAL RETURN
ASSUMES INITIAL INVESTMENT OF $100 AND REINVESTMENT OF DIVIDENDS
<TABLE>
<CAPTION>
Cold Metal
Measurement Period Products, S & P MidCap
(Fiscal Year Covered) Inc. 400 Peer Group
<S> <C> <C> <C>
MAR 22, 1994 100.00 100.00 100.00
MAR 31, 1994 95.00 95.37 89.77
MAR 31, 1995 72.50 103.40 71.75
MAR 31, 1996 53.75 132.86 80.99
</TABLE>
8
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND CERTAIN BUSINESS RELATIONSHIPS
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of May 31, 1996 by (i) each
Director, (ii) each Named Executive Officer, (iii) each person known by the
Company to be the beneficial owner of more than 5% of the outstanding Common
Stock and (iv) all Directors and Executive Officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
-------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
--------------------------------------------------- --------- -------
<S> <C> <C>
R. Quintus Anderson(2)(3).......................... 3,674,000 51.3
James R. Harpster(2)(4)............................ 210,050 2.9
Gordon A. Wilber(2)(4)............................. 156,800 2.2
Allen R. Morrow(4)(5).............................. 77,900 1.1
Robert R. Albert(4)(5)............................. 50 *
Heidi A. Nauleau(2)(6)............................. 200 *
Wilbur J. Berner(7)................................ 10,000 0.1
Claude F. Kronk(7)................................. 2,000 *
Robert D. Neary(7)................................. 5,000 0.1
Edwin H. Gott, Jr.(7).............................. 9,000 0.1
Peter B. Sullivan (7).............................. 1,500 *
All Directors and Executive Officers
as a group (9 persons)(3)........................ 4,146,500 57.9
</TABLE>
- - ---------------
(1) The named shareholders have sole voting and investment power with respect to
all shares shown as being beneficially owned by them, except as otherwise
indicated.
(2) Is a Director and an Executive Officer of the Company.
(3) Includes 3,662,500 shares of Common Stock owned of record by Aarque Capital
Corporation, which was founded and is controlled by R. Quintus Anderson. Mr.
Anderson is able to direct all decisions regarding investment and voting of
the shares of the Company's Common Stock owned by Aarque Capital
Corporation. The address of Mr. Anderson and Aarque Capital Corporation is
111 West Second Street, Jamestown, New York 14702.
(4) Pursuant to grants under the Company's 1994 Incentive Program, the following
executive officers have presently exerciseable options to purchase the
following numbers of shares of the Company's Common Stock at the exercise
price of $10 per share: Mr. Harpster -- 20,000; Mr. Wilber -- 15,000; Mr.
Albert -- 7,500; and Mr. Morrow -- 7,500.
(5) Is an Executive Officer of the Company.
(6) Excludes shares owned by Aarque Capital Corporation. Mrs. Nauleau is the
daughter of R. Quintus Anderson. She disclaims beneficial ownership of
shares owned by Aarque Capital Corporation
(7) Is a Director of the Company.
* Less than 0.1%
9
<PAGE> 12
RATIFICATION OF AUDITORS
The Board of Directors of the Company has appointed the firm of Deloitte &
Touche LLP ("Deloitte & Touche"), independent accountants, to be the Company's
auditors for the fiscal year ended March 31, 1997 and recommends to stockholders
that they vote for ratification of the appointment. Deloitte & Touche has served
in this capacity for the fiscal year ended March 31, 1996 and for each fiscal
year of the Company since its incorporation in 1980. A representative of
Deloitte & Touche will be present at the meeting and will have an opportunity to
make a statement and be available to respond to appropriate questions.
The appointment of auditors is approved annually by the Board of Directors.
Ratification of the appointment of Deloitte & Touche by stockholders is not
required by law. However, as a matter of policy, the appointment of Deloitte &
Touche is submitted to the stockholders for ratification. The decision of the
Board of Directors is based upon recommendation of the Audit Committee which
approves in advance the audit scope, types of non-audited services, and the
estimated fees for the coming year.
OTHER BUSINESS
The Board of Directors is not aware of any matters, other than (i) the
election of directors and (ii) the ratification of the appointment of
independent auditors, to come before the annual meeting. If any matter not
mentioned in this proxy statement is properly brought before the meeting, the
persons named in the proxy solicited by the Board of Directors will have
discretionary authority to vote all proxies with respect thereto in accordance
with their judgment.
By Order of the Board of Directors
HEIDI A. NAULEAU
Secretary
10
<PAGE> 13
SHAREHOLDERS' PROXY
COLD METAL PRODUCTS, INC.
8526 SOUTH AVENUE
YOUNGSTOWN, OHIO 44514
P
The undersigned hereby appoints James R. Harpster, John E. Sloe
R and Heidi A. Nauleau, or one of them who acts, the proxy or proxies
of the undersigned, with full power of substitution, to vote all of
O the shares of stock of Cold Metal Products, Inc. which the
undersigned is entitled to vote at the Annual Meeting of
X Shareholders of the Company to be held on Thursday, July 25, 1996,
at 9:00 A.M. at Mr. Anthony's Banquet Hall, 7440 South Avenue,
Y Boardman, Ohio 44512, and any adjournments thereof, on the election
of directors, the ratification of the selection of independent
auditors and such other business as may properly come before the
meeting.
<TABLE>
<S> <C>
Election of Directors, Nominees: (change of address)
R. Quintus Anderson, Wilbur J. Berner, Edwin H. Gott, ________________________________________
________________________________________
James R. Harpster, Claude F. Kronk, Heidi A. Nauleau, ________________________________________
________________________________________
Robert D. Neary, Peter B. Sullivan and Gordon A. Wilber. (If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
</TABLE>
THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS AS
MAY BE GIVEN ON THE REVERSE SIDE OF THIS PROXY CARD. IT IS UNDERSTOOD,
HOWEVER, THAT THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS
AND RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS UNLESS CONTRARY
INSTRUCTIONS ARE SPECIFIED. THE SPACES FOR YOUR VOTES AND SIGNATURE ARE
SET FORTH ON THE REVERSE SIDE. PLEASE VOTE, SIGN AND RETURN PROMPTLY.
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS
-------------
| SEE REVERSE |
| SIDE |
-------------
<PAGE> 14
<TABLE>
<S> <C> <C>
X PLEASE MARK YOUR SHARES IN YOUR NAME
VOTE AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. Ratification of se- / / / / / /
Directors lection of inde-
(see reverse) pendent auditors
(please mark appro-
priate box.)
For, except vote withheld from the following nominee(s):
_______________________________________________________
Change
of / / THE BOARD OF DIRECTORS RECOMMENDS
Address A VOTE "FOR" ITEMS 1 AND 2
Attend / /
Meeting In their discretion, the proxies are authorized
to vote upon such other business as may properly
come before the meeting.
SIGNATURE(S) _____________________________________________________________ DATE _________
SIGNATURE(S) _____________________________________________________________ DATE _________
NOTE: Please sign exactly as name appears on left. Joint owners should each sign.
Trustees, Executors, etc. should indicate capacity in which they are signing.
</TABLE>
