<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
COLD METAL PRODUCTS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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: ...........................................................
================================================================================
<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 24, 1997 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 13,
1997 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 Statements.
Kindly notify American Stock Transfer & Trust Company, 40 Wall Street, New York
10005 or by telephone at 212-936-5100, 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 1997
annual meeting of shareholders to be held on July 24, 1997 at 9:00 A.M. at
Mr. Anthony's Banquet Hall, 7440 South Avenue, Boardman, Ohio 44512. Only
shareholders of record on June 13, 1997 will be entitled to vote at the meeting.
On June 13, 1997, 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 23, 1997.
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, 1998.
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. R. Quintus
Anderson and Aarque Capital Corporation, a corporation controlled by
Mr. Anderson, together presently own 3,676,000 shares, approximately 51.3%, 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 1998 proxy material after the
1997 Annual Meeting, but no later than 5:00 p.m. Eastern Standard Time on May 1,
1998. 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
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<PAGE> 4
shareholders. Copies of all solicitation materials will be furnished to
brokerage houses, fiduciaries and 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 1997 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 66, has served as Chairman of the Board of
Directors of the Company since its incorporation in 1980. Mr. Anderson and
Aarque Capital Corporation, a corporation controlled by Mr. Anderson, together
own approximately 51.3% 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 65, 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 55, 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 49, 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-eight 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 65, 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
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<PAGE> 5
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 graduate of Ohio
Wesleyan University. Mr. Kronk was first elected a Director of the Company on
March 21, 1994.
Heidi A. Nauleau, age 40, 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 63, 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 52, 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 55, 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 1997 annual compensation. Sixty thousand shares of Common Stock are
reserved for issuance pursuant to 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.
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<PAGE> 6
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 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 options to purchase 5,000 shares of Common Stock at the exercise price
of $6.125 per share. On July 25, 1996, Messrs. Gott and Sullivan were granted
options to purchase 5,000 shares of Common Stock at the exercise price of $5.75
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, 1997,
the Audit Committee met twice; the Committee also met in June 1997.
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, 1997, the Human Resources Committee met once during
the fiscal year ended on March 31, 1997; the Committee also met in May 1997.
The Board of Directors held a total of four meetings during the fiscal year
ended March 31, 1997. 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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<PAGE> 7
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, 1997, March 31, 1996, and March 31, 1995 with respect to those
persons who were, at March 31, 1997, (i) the Chief Executive Officer and (ii)
five other executive officers of the Company who were the highest paid
(collectively, the Chief Executive Officer, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION:
ANNUAL COMPENSATION (1) STOCK OPTIONS ALL OTHER
---------------------------- AWARDED COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (#)(2) $(3)
- -------------------------------- ---- ------- ------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
James R. Harpster 1997 245,000 88,200 -- 32,625
President and Chief 1996 235,000 105,750 25,000 37,500
Executive Officer 1995 225,000 200,000 -- 67,700
Gordon A. Wilber 1997 185,000 66,600 -- 25,625
Executive Vice President 1996 177,000 79,650 18,750 25,000
and Chief Operating Officer 1995 170,000 140,000 -- 43,100
R. Quintus Anderson 1997 160,000 60,000 -- 18,500
Chairman of the Board 1996 150,000 75,000 50,000 21,000
of Directors 1995 135,000 150,000 -- 36,000
Jack Watson 1997 108,600 34,000 -- 16,400
Vice President, 1996 102,600 33,800 7,500 12,900
General Manager, Canada 1995 94,100 55,000 -- 11,500
Allen R. Morrow 1997 110,000 30,800 -- 14,000
Vice President and 1996 104,000 36,000 7,500 15,200
Chief Administrative Officer(4) 1995 100,000 45,000 -- 25,000
John E. Sloe 1997(4) 110,000 30,800 15,000 8,500(4)
Vice President and 1996 -- -- -- 5,000
Chief Financial Officer
</TABLE>
- ---------------
(1) 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 year ended March 31,
1996 and March 31, 1994, stock options were granted pursuant to the
Company's 1994 Incentive Program as amended. 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 (and a Canadian
counterpart), 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 (or applicable Canadian law and regulation) 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 or in the case of Mr. Watson, amounts payable to him under an
arrangement designed to provide substantially comparable treatment in
accordance with Canadian law. Amounts held in trust vest
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100% five years from the grant date contingent on continued employment or
the attainment of normal retirement age. Amounts payable to Mr. Watson are
determined in a manner designed to produce a comparable result.
(4) Mr. Sloe was first employed by the Company as of April 1, 1996. A deposit in
trust for his account pursuant to the Company's Special Incentive
Compensation Plan was made immediately before the commencement of his
employment. Prior to April 1996, Mr. Morrow served as Chief Financial
Officer of the Company.
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
1997 under the pension plan to an employee with the indicated years of service
and final average compensation, before reductions for social security and
pension payments by predecessor employer, Jones & Laughlin.
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL 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, profit
sharing and similar distributions, over time, 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 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 were limited to a flat $150,000; as of
January 1997, the limit was increased to $160,000.
The estimated years of service credited to each of the Named Executive
Officers is as follows: James R. Harpster, 28; Gordon A. Wilber, 28; Allen R.
Morrow, 21; and John E. Sloe, 1. 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 are responsible for
establishing and reviewing the compensation programs for key management,
including executive officers of the Company. These programs include
establishment of base salary, 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.
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<PAGE> 9
The Board of Directors has appointed Mr. Claude F. Kronk as Chairman of the
Human Resource Committee and Messrs. Edwin H. Gott, Jr. and Peter B. Sullivan as
members of the Committee. Each member of the Committee has one vote. Mr. R.
Quintus Anderson, Chairman of the Board, serves as an ex-officio, non-voting,
member.
The Committee's responsibilities are:
- Development of the compensation practices and philosophies for key
management and executive officers of Company.
- Annual evaluation of the performance of the key management and executive
officers of the Company.
- Approval of changes in the base compensation of key management and
executive officers of the Company.
- A plan for management succession.
COMPENSATION POLICIES AND PRACTICES
Compensation of the Company's key management and executive officers is
comprised of of a base salary, an annual cash bonus, and a deferred compensation
award. The Company's compensation philosophy reflects the Committee's standard
that remuneration should be tied closely to the performance of the Company and
therefore a meaningful component of executive compensation is based on the
annual profitability of the Company.
The objective of the Human Resource Committee is to provide management with
adequate flexibility to operate the business by designing a compensation
structure which will attract and retain key management. This philosophy assures
shareholders of a strong management team.
Base Salary. Base executive salaries are adjusted annually. Salary
recommendations for key employees are submitted to the Committee for review not
less than annually. The Committee carefully considers the Company's historical,
current, and forecasted performance of the Company, as well as each individual
executive's contributions to the Company. Comparative data from companies of
similar size and performance are used to establish the appropriateness of base
salaries.
Annual Cash Bonus. Bonus opportunity for key management and executive
officers is based on a percentage of base salary and adjusted according to the
profitability of the Company. Bonuses are awarded and paid following the end of
a fiscal year. The Company accrues bonus amounts based on the prospective annual
plan and adjusts the accrual according to actual results throughout the year.
Deferred Compensation Plan. Deferred compensation awards are made annually
and are also closely tied to the performance of the Company. Deferred awards are
paid to an individual executive's investment account over which the executive
has sole responsibility to direct investment decisions and strategy. Awards and
accumulated earnings are paid five years from the date of the award. If an
individual leaves the Company for reasons other than retirement prior to payment
of the award, it is forfeited. The deferred awards are accrued and adjusted in
the same manner as the annual cash bonus. The award is not taxable to the
employee until it is paid.
Stock Option Programs. The 1994 Incentive Program, which was adopted by
shareholders January 27, 1994, and amended with shareholder 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. Only full time employees who are officers or are in key
managerial positions are eligible for awards under the plan. To date, only stock
options have been awarded. The purpose of the options is to encourage strong
management through ownership of the common stock of the Company.
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<PAGE> 10
The Human Resources Committee and/or the Board of Directors have the
authority and discretion to grant awards under this program. It is not intended
or implied that awards under this program will be granted annually.
CEO Compensation. Within the parameters of compensation practices
established by the Human Resource Committee. Mr. James R. Harpster, CEO of the
Company is compensated with a base salary, an annual cash bonus and is a
participant in the deferred compensation plan. Mr. Harpster's compensation, like
that of the other key executives, is closely tied to the profitability of the
Company. The Human Resource Committee believes Mr. Harpster's ownership of a
significant number of shares of the Company's stock, aligns his goals closely
with that of the Company.
Claude F. Kronk, Chairman
Edwin H. Gott, Jr.
Peter B. Sullivan
R. Quintus Anderson ex officio
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.
<TABLE>
<CAPTION>
COLD METAL
MEASUREMENT PERIOD PRODUCTS, S & P MIDCAP
(FISCAL YEAR COVERED) INC. 400 PEER GROUP
<S> <C> <C> <C>
MAR 22, 1994 100 100 100
MAR 31, 1994 95 95 90
MAR 31, 1995 73 103 72
MAR 31, 1996 54 133 81
MAR 31, 1997 51 147 88
</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, 1997 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).......................... 3,676,000 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
John E. Sloe(5).................................... 1,000 *
Heidi A. Nauleau (2)(6)............................ 200 *
Wilbur J. Berner (7)............................... 10,000 .1
Claude F. Kronk (7)................................ 2,000 *
Robert D. Neary (7)................................ 5,000 .1
Edwin H. Gott, Jr. (7)............................. 13,000 .2
Peter B. Sullivan (7).............................. 1,500 *
All Directors and Executive Officers as a group (12
persons)(3)...................................... 4,153,450 58.0
</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
Named Executive Officers have presently exercisable options to purchase the
following numbers of shares of the Company's Common Stock at the exercise
price of $10 per share: Mr. Harpster -- 30,000; Mr. Wilber -- 22,500;
Mr. Morrow -- 7,500.
(5) Is an Executive Officer of the Company.
(6) Excludes shares owned by Aarque Capital Corporation or R. Quintus Anderson.
Mrs. Nauleau is the daughter of Mr. Anderson. She disclaims beneficial
ownership of shares owned by Aarque Capital Corporation or Mr.Anderson
(7) Is a Director of the Company.
* Less than 0.1%
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, 1998 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, 1997 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.
9
<PAGE> 12
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
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
COLD METAL PRODUCTS, INC.
JULY 24, 1997
Please Detach and Mail in the Envelope Provided
A [X] Please mark your
votes as indicated
in this example
<TABLE>
The Board of Directors recommends a vote FOR the nominees and FOR Proposal 2.
<S> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] Nominees: James R. Harpster 2. Ratification of appointment of [ ] [ ] [ ]
Directors R. Oulrus Anderson Independent Accountants.
Gordon A. Wilbur
For, except vote withheld from Heidi A. Nauleau
the following nominee(s) Wilbur J. Berner
Claude F. Kronk
Robert D. Neary
- ------------------------------ Edwin H. Gott Jr. Change of [ ]
Peter B. Sullivan Address/comments
and note at left
I plan to [ ] I do not plan [ ]
attend the to attend the
meeting meeting
</TABLE>
SIGNATURE(S) ____________________________________________ DATE ___________, 1997
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
<PAGE> 14
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
COLD METAL PRODUCTS, INC.
PROXY FOR 1997 ANNUAL MEETING OF STOCKHOLDERS-JULY 24, 1997
The undersigned stockholder of Cold Metal Products, Inc. (the "Company") hereby
revokes all previous proxies and appoints James R. Harpster, John E. Sloe and
Heidi A. Nauleau or any one of them who acts, with full power of substitution,
Proxies and Attorneys-in-Fact, on behalf of and in the name of the undersigned,
to vote and otherwise represent all of the shares registered in the name of the
undersigned at the 1997 Annual Meeting of Stockholders of the Company to be
held on July 24, 1997, at Mr. Anthony's Banquet Hall, 7440 South Avenue,
Boardman, Ohio 44512 or any adjournment thereof, with the same effect as if the
undersigned were present and voting such shares, on the following matters and
in the following manner:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
