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 14(a)-12
WHX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
/X / No fee required.
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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WHX CORPORATION
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 2, 2004
-----------------
To The Holders of Our Common Stock:
We invite you to attend our annual stockholders' meeting on Wednesday,
June 2, 2004 at The New York Marriott East Side, 525 Lexington Avenue, New York,
New York at 11:00 a.m. At the meeting, you will hear an update on our
operations, have a chance to meet some of our directors and executives, and will
act on the following matters:
1) To elect three (3) Class II directors to a three-year term;
2) To ratify the appointment of PricewaterhouseCoopers LLP as our
independent accountants for fiscal 2004; and
3) Any other matters that properly come before the meeting.
This booklet includes a formal notice of the meeting and the proxy
statement. The proxy statement tells you more about the agenda and procedures
for the meeting. It also describes how our Board of Directors operates and gives
personal information about our director nominees.
Only record holders of WHX Corporation's common stock at the close of
business on April 20, 2004 will be entitled to vote on the foregoing matters at
the annual meeting. Even if you only own a few shares of common stock, we want
your shares to be represented at the annual meeting. I urge you to complete,
sign, date and return your proxy card promptly in the enclosed envelope.
We have also provided you with the exact place and time of the meeting
if you wish to attend in person.
Sincerely yours,
STEVEN WOLOSKY
Secretary
Dated: New York, New York
April 29, 2004
WHX CORPORATION
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
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2004 PROXY STATEMENT
GENERAL INFORMATION
This proxy statement contains information related to the annual
meeting of stockholders (the "Meeting") of WHX Corporation ("WHX" or the
"Company") to be held on Wednesday, June 2, 2004, beginning at 11:00 a.m., at
The New York Marriott East Side, 525 Lexington Avenue, New York, New York, and
at any postponements or adjournments thereof.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Meeting, holders of WHX common stock will hear an update on the
Company's operations, have a chance to meet some of its directors and executives
and will act on the following matters:
1) To elect three (3) Class II directors to a three-year term;
2) To ratify the appointment of PricewaterhouseCoopers LLP as our
independent accountants for fiscal 2004; and
3) Any other matters that properly come before the meeting.
WHO MAY VOTE
Holders of the common stock of WHX Corporation, as recorded in our
stock register on April 20, 2004 (the "Record Date"), may vote at the meeting.
As of the Record Date, we had 5,485,856 shares of common stock, $.01 par value
("Common Stock") eligible to vote. All shares in this class have equal voting
rights of one vote per share.
We also had 2,573,926 shares of Series A Convertible Preferred Stock
("Series A Preferred Stock") and 2,949,000 shares of Series B Convertible
Preferred Stock ("Series B Preferred Stock," and together with the Series A
Preferred Stock, the "Preferred Stock") outstanding as of the Record Date.
Dividends on the Preferred Stock have not been paid since the dividend payment
of October 1, 2000. The holders of the Preferred Stock are eligible to elect up
to two directors to the Company's Board of Directors (the "Board") upon the
Company's failure to pay six quarterly dividends, whether or not consecutive.
The regularly scheduled dividend payment that was due April 1, 2002 was the
sixth dividend non-payment. Accordingly, the holders of Preferred Stock have the
right to elect up to two directors to our Board. The election of up to two
directors by the holders of the Preferred Stock may occur at the Meeting, but
will be by separate action of the holders of Preferred Stock. Subject to
requirements and procedures set forth in an Information Statement which is being
mailed separately to the holders of Preferred Stock, the holders of Preferred
Stock are not eligible to vote at this Meeting on the proposals described above.
ATTENDING IN PERSON
Only holders of Common Stock and Preferred Stock, their proxy holders
and our invited guests may attend the Meeting. If you wish to attend the Meeting
in person but you hold your shares through someone else, such as a stockbroker,
you must bring proof of your ownership and identification with a photo at the
Meeting. For example, you could bring an account statement showing that you
beneficially owned WHX Corporation shares as of April 20, 2004 as acceptable
proof of ownership.
INSTRUCTIONS FOR HOLDERS OF COMMON STOCK
HOW TO VOTE
You may vote in person at the Meeting or by proxy. We recommend that
you vote by proxy even if you plan to attend the Meeting. You can always change
your vote at the Meeting.
VOTING ELECTRONICALLY VIA THE INTERNET OR BY TELEPHONE
Holders of Common Stock whose shares are registered directly on the
books of the Company may vote either by telephone or via the Internet. Your
telephone or Internet vote authorizes the named proxies in the same manner as if
you had executed a proxy card and returned it by mail. Instructions for
registered stockholders interested in voting by telephone or via the Internet
are set forth on the enclosed proxy card. The telephone and Internet voting
procedures are designed to authenticate the stockholder's identity and to allow
stockholders to vote their shares and confirm that their instructions have been
properly recorded.
If your shares are registered in the name of a bank or brokerage firm,
you may be eligible to vote your shares electronically over the Internet or by
telephone. If your voting form does not reference Internet or telephone
information, please complete and return the paper form in the self-addressed,
postage paid envelope provided.
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HOW PROXIES WORK
Our Board is asking for your proxy. Giving us your proxy means you
authorize us to vote your shares at the Meeting in the manner you direct. You
may vote for all, some or none of our director nominees. You may also vote for
or against the other proposal or abstain from voting.
Proxies submitted by mail, telephone or Internet will be voted by the
individuals named on the proxy card in the manner you indicate. If you give us
your proxy but do not specify how you want your shares voted, they will be voted
in accordance with the Board recommendations, i.e. in favor of all our director
nominees and in favor of the ratification of the appointment of
PricewaterhouseCoopers LLP as our independent accountants.
You may receive more than one proxy or voting card depending on how
you hold your shares. If you hold shares through someone else, such as a
stockbroker, you may get materials from them asking how you want to vote. The
latest proxy card we receive from you will determine how we will vote your
shares.
REVOKING A PROXY
There are three ways to revoke your proxy. First, you may submit a new
proxy with a later date up until the existing proxy is voted. Secondly, you may
vote in person at the meeting. Lastly, you may notify the Company's corporate
secretary that your revoke your proxy that you revoke your proxy in writing at
110 East 59th Street, New York, New York 10022.
QUORUM
In order to act on the proposals described herein, we must have a
quorum of shares of Common Stock. This means at least a majority of the
outstanding shares of Common Stock eligible to vote must be represented at the
Meeting, either by proxy or in person. Shares that the Company owns are not
voted and do not count for this purpose.
VOTES NEEDED
The director nominees receiving a plurality of the votes cast during
the meeting will be elected to fill the seats of our Class II Directors. For
other proposals to be approved, the favorable vote of a majority of the shares
present and entitled to vote thereon is required. Votes that are withheld from
voting on a proposal will be excluded entirely and will have no effect in
determining the quorum. Broker non-votes count for quorum purposes and otherwise
have no impact on the election of directors or the ratification of auditors.
Broker non-votes occur when a broker returns a proxy but does not have the
authority to vote on a particular proposal. Abstentions
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count for quorum purposes and will have the same effect as an "against" vote for
all other proposals.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning ownership of the
Common Stock of WHX outstanding at April 20, 2004, by (i) each person known by
the Company to be the beneficial owner of more than five percent of its Common
Stock, (ii) each director, (iii) each of the executive officers named in the
summary compensation table and (iv) all directors and executive officers of the
Company as a group.
Shares Beneficially Percentage
Name and Address of Beneficial Owner (1) Owned(2) of Class(2)
- ---------------------------------------- -------- -----------
Private Management Group, Inc.(3)
20 Corporate Park, Suite 400
Irvine, CA 92606 .................................. 488,984 8.2%
Dimensional Fund Advisors Inc.(4)
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 .................... 382,738 7.0%
Mariner Investment Group, Inc.(5)
780 Third Avenue, 16th floor
New York, NY 10017 ................................ 279,480 5.1%
Gabelli Asset Management, Inc.(6)
One Corporate Center
Rye, New York 10580 ............................... 853,028 14.5%
Alliance Capital Management L.P.(7)
1290 Avenue of the Americas
New York, New York 10104 .......................... 387,366 7.1%
Dewey Square Investors Corporation (8)
One Financial Center
Boston, Massachusetts 02111 ....................... 288,806 5.3%
Neil D. Arnold ..................................... 92,327(9) 1.7%
Robert A. Davidow .................................. 60,595(10) 1.2%
William Goldsmith .................................. 31,996(11) *
Neale X. Trangucci ................................. 71,664(9) 1.3%
Marvin L. Olshan ................................... 36,995(12) *
Raymond S. Troubh .................................. 51,995(13) *
Stewart E. Tabin ................................... 71,663(9) 1.3%
Robert K. Hynes .................................... 38,653(14) *
Louis Klein, Jr .................................... 23,332(15) *
Garen W. Smith ..................................... 85,619(16) 1.5%
Howard Mileaf ...................................... 6,665(15) *
5
Daniel P. Murphy ................................... 72,296(17) 1.4%
All Directors and Executive Officers as a Group
(12 persons) ....................................... 651,113(18) 10.8%
- -------------------
* less than one percent.
(1) Each stockholder, director and executive officer has sole voting power and
sole dispositive power with respect to all shares beneficially owned by
him, unless otherwise indicated.
(2) Based upon shares of Common Stock outstanding at April 20, 2004 of
5,485,856 shares.
(3) Based upon a Schedule 13G/A filed in February, 2004, Private Management
Group, Inc. ("Private Management") beneficially holds 488,984 shares of
Common Stock. Private Management, a investment adviser registered under
Section 240.13d-1(b)(1)(ii)(E) of the Investment Advisers Act of 1940, as
amended (the "Investment Advisers Act") has voting authority over 488,984
shares of Common Stock as a result of acting as investment adviser to its
managed client accounts. The aggregate number of shares held includes
250,400 shares of the Company's Series A Preferred Stock and 274,800 shares
of the Company's Series B Preferred Stock, convertible into approximately
264,472 and 224,512 shares of Common Stock, respectively.
(4) Dimensional Fund Advisors, Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act, furnishes
investment advice to four investment companies registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act")
and serves as investment manager to certain other commingled group trusts
and separate accounts. (These investment companies, trusts and accounts are
the "Dimensional Funds.") In its role as investment advisor or manager,
Dimensional possesses voting and/or investment power over 382,738 shares of
Common Stock as of December 31, 2002. The Dimensional Funds own all
securities reported in this statement, and Dimensional disclaims beneficial
ownership of such securities.
(5) Based upon a Schedule 13G filed in July 2003, Mariner Investment Group,
Inc. ("Mariner") beneficially holds 279,480 shares of Common Stock.
Mariner, an investment advisor registered under Section 203 of the
Investment Advisors Act, furnishes investment advice to several investment
companies exempt from the Investment Company Act, and serves as investment
manager to certain other separate accounts. (These investment companies and
accounts are the "Mariner Funds"). In its role as investment adviser or
manager, Mariner possesses voting and/or investment power over the 279,480
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shares of Common Stock held by the Mariner Funds, no one of which, to the
knowledge of Mariner, owns more than 5% of the class. Mariner disclaims
beneficial ownership of such securities.
(6) Based on a Schedule 13D/A filed in December 2002, as updated by Gabelli
Asset Management Co., Inc., Gabelli Funds, LLC, GAMCO Investors, Inc.,
Gabelli Securities, Inc., MJG Associates Inc. and Gabelli Advisors, Inc.
collectively beneficially hold 853,028 shares of Common Stock. This amount
includes 174,300 shares of Series A Preferred Stock and 287,600 shares of
Series B Preferred Stock convertible into approximately 184,096 and 234,969
shares of Common Stock, respectively, and 433,963 shares of Common Stock.
(7) Based on a Schedule 13G filed jointly in February 1999, Alliance Capital
Management, L.P., AXA, AXA Assurances I.A.R.D. Mutuelle ("AXAAIM"), AXA
Assurances Vie Mutuelle ("AXAAVM"), AXA Conseil Vie Assurance Mutuelle
("AXACVAM"), AXA Courtage Assurance Mutuelle ("AXACAM") and The Equitable
Companies, Inc. collectively beneficially hold 387,366 shares of Common
Stock. The address of AXA is 9 Place Vendome 75001 Paris, France. The
address of AXAAIM and AXAAVM is 21, rue de Chateaudun 75009 Paris, France.
The address of AXACVAM is 100-101 Terrasse Boieldieu 92042 Paris La
Defense, France. The address of AXACAM is 26, rue Louis le Grand 75002
Paris, France.
(8) Based on a Schedule 13G/A filed in January 1999, Dewey Square Investors
Corp. beneficially holds 288,806 shares of Common Stock. This amount
includes Common Stock issuable upon their conversion of Preferred Stock.
(9) Consists of shares of Common Stock issuable upon their exercise of options
within 60 days hereof.
(10) Includes 30,329 shares of Common Stock issuable upon his exercise of
options within 60 days hereof, and approximately 26,933 shares of Common
Stock issuable upon conversion of 25,500 shares of Series A Preferred
Stock.
(11) Includes 28,663 shares of Common Stock issuable upon his exercise of
options within 60 days hereof.
(12) Includes 30,329 shares of Common Stock issuable upon his exercise of
options within 60 days hereof.
(13) Includes 31,329 shares of Common Stock issuable upon his exercise of
options within 60 days hereof.
(14) Includes 34,998 shares of Common Stock issuable upon his exercise of
options within 60 days hereof.
(15) Includes 3,332 shares of Common Stock issuable upon his exercise of options
within 60 days hereof.
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(16) Includes 69,470 shares of Common Stock issuable upon his exercise of
options within 60 days hereof, and approximately 817 shares of Common Stock
issuable upon conversion of 1,000 shares of Series B Preferred Stock.
(17) Includes 73,295 shares of Common Stock issuable upon his exercise
of options within 60 days hereof.
(18) Includes 540,731 shares of Common Stock issuable upon their exercise of
options within 60 days hereof, approximately 26,933 shares of Common Stock
issuable upon conversion of 25,500 shares of Series A Preferred Stock held
by Robert A. Davidow and approximately 817 shares of Common Stock issuable
upon conversion of 1,000 shares of Series B Preferred Stock held by Garen
W. Smith.
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PROPOSAL NO. 1
ELECTION OF CLASS II DIRECTORS
The Company's Certificate of Incorporation and Bylaws provide for the
classification of the Board into three classes. The term of the current Class II
Directors expires at the Meeting and when their successors are duly elected and
shall have qualified. All nominees are currently Class II Directors of the
Company. 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 be
also voted for a substitute nominee selected by the Board.
Unless authority is specifically withheld, proxies will be voted for
the election of the nominees named below, to serve as Class II Directors of the
Company for a term of office to expire at the third succeeding Annual Meeting of
Stockholders and until their successors have been duly elected and qualified.
Class II Directors shall be elected by a plurality of the votes cast, in person
or by proxy, at the Meeting. The Class I and Class III Directors will continue
to serve their respective terms, with the three Class III Directors having a
term that will expire at the 2005 Annual Meeting of Stockholders of the Company
and the three Class I Directors having a term that will expire at the 2006
Annual Meeting of Stockholders of the Company.
The Company also has 2,573,926 shares of Series A Preferred Stock and
2,949,000 shares of Series B Preferred Stock outstanding. Dividends on the
Preferred Stock have not been paid since the dividend payment of October 1,
2000. The holders of the Preferred Stock are eligible to elect up to two
directors to the Board upon the Company's failure to pay six quarterly
dividends, whether or not consecutive. The regularly scheduled dividend payment
that was due April 1, 2002 was the sixth dividend non-payment. Accordingly, the
holders of Preferred Stock have the right to elect up to two directors to the
Board. The holders of the Preferred Stock are not eligible to vote on the
following three Class II nominees. Holders of Preferred Stock are only eligible
to vote to elect up to two directors nominated by holders of Preferred Stock, as
described in the Information Statement sent directly to holders of Preferred
Stock.
The Company's Certificate of Incorporation currently limits the
maximum size of the Board to ten directors. The Board presently has ten
directors on it, and assuming the election of the nominees, will continue to
have ten directors. If the holders of Preferred Stock elect the maximum of two
directors nominated by the holders of the Preferred Stock at the Meeting, then
two of the other ten directors will resign so that following the election of
such two directors by the holders of Preferred Stock, the Board will not have in
excess of ten directors.
The names of the nominees and certain information concerning them are
set forth:
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PRINCIPAL OCCUPATION FIRST YEAR
CLASS OF FOR THE PAST FIVE YEARS BECAME
NAME DIRECTOR AND CURRENT PUBLIC DIRECTORSHIPS AGE A DIRECTOR(1)
- ---- -------- -------------------------------- --- -------------
Marvin L. Olshan II DIRECTOR. Partner, Olshan Grundman Frome 76 1991
Rosenzweig & Wolosky LLP, from 1956 to
2002, and Of Counsel since 2002.
Garen W. Smith II DIRECTOR. Chairman of the Board of Handy & 61 2002
Harman ("H&H"), a subsidiary of the
Company, since 2003. Vice President,
Secretary and Treasurer of Abundance
Corp., a consulting company that provides
services to the Company, since 2002.
President and Chief Executive Officer of
Unimast Incorporated from 1991 to 2002.
Raymond S. Troubh II DIRECTOR. Financial Consultant for in 77 1992
excess of pst five years. Mr. Troubh is
also a director of Diamond Offshore
Drilling, Inc., Enron Corp., General
American Investors Company, Gentiva Health
Services, Inc. and Triarc Companies, Inc.,
a holding company. He is also a trustee of
the Petrie Stores Liquidating Trust.
10
The names of the Class I and Class III Directors, whose terms expire
at the 2005 and 2006 annual meeting of stockholders of the Company,
respectively, who are currently serving their terms, are set forth below:
PRINCIPAL OCCUPATION FIRST YEAR
CLASS OF FOR THE PAST FIVE YEARS BECAME
NAME DIRECTOR AND CURRENT PUBLIC DIRECTORSHIPS AGE A DIRECTOR(1)
- ---- -------- -------------------------------- --- -------------
William Goldsmith I DIRECTOR. Management and Marketing 85 1987
Consultant since 1984. Chairman of Nucon
Energy Corp. since 1997 and TMP, Inc. from
January 1991 to 1993. Chairman and Chief
Executive Officer of Overspin Golf Corp.
from 1993 to 1997. Chairman and Chief
Executive Officer of Fiber Fuel
International, Inc., from 1994 to 1997.
Life Trustee to Carnegie Mellon University
since 1980. Director of Skidaway Health
and Living Services Inc. since 2002.
Louis Klein Jr. I DIRECTOR. Trustee of Manville Personal 68 2002
Injury Settlement Trust since 1991.
Trustee of WT Mutual Fund and WT
Investment Trust I (Wilmington Trust)
since 1998.
Howard Mileaf I DIRECTOR. Consultant since 2001. Vice 67 2002
President and General Counsel of the
Company from 1993 to 2001. Director of
WebFinancial Corporation and Neuberger
Berman Mutual Funds.
Neale X. Trangucci I DIRECTOR AND CHIEF EXECUTIVE OFFICER. 47 2004
Chief Executive Officer of the Company
since February 1, 2004. General partner of
Stonehill Partners, L.P. for in excess of
past five years. Vice-President of WPN
Corp. from February 1990 until January
2004.
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Neil D. Arnold III DIRECTOR AND EXECUTIVE CHAIRMAN OF THE 55 1992
BOARd. Executive Chairman of the Board
since February 1, 2004. Officer of WPN
Corp., a financial consulting company,
from August 2001 until January 2004.
Private Investor from May 1999 until
August 2001. Group Finance Director of
Lucas Varity plc from December 1996 to May
1999, and Executive Vice President -
Corporate Development from September 1996
to December 1996.
Robert A. Davidow III DIRECTOR. Private investor since January 62 1992
1990. Director of Arden Group, Inc., a
supermarket holding company.
Stewart E. Tabin III DIRECTOR AND PRESIDENT. President of the 47 2004
Company since February 1, 2004. General
partner of Stonehill Partners, L.P. for in
excess of past five years. Vice-President
of WPN Corp. from February 1990 until
January 2004.
------------------
(1) The Company and its subsidiaries were reorganized into a new holding company
structure ("Corporate Reorganization") on July 26, 1994. Prior to the Corporate
Reorganization, all directors of the Company who were directors at the time of
the Corporate Reorganization were directors of Wheeling-Pittsburgh Corporation.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES.
BOARD AND COMMITTEE INDEPENDENCE
Messrs. Olshan, Troubh, Goldsmith, Klein, Mileaf and Davidow, the
non-management members of the Board, are independent under the rules of the
Securities and Exchange Commission ("SEC"). Furthermore, the Board has
affirmatively concluded that all of its non-management members are "independent"
within the meaning of the rules of the New York Stock Exchange ("NYSE"). In
making its determination, the Board applied the categorical standard discussed
below. In addition, the Compensation and Nominating Committees of the Board (as
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such terms are defined herein) are comprised entirely of directors who are
independent under the rules of the NYSE, and the members of the Audit Committee
are independent under the rules of the NYSE and the SEC. The Board has
determined that each of its independent members has no material relationship
with the Company or any of its subsidiaries (either directly or as a current
partner, shareholder or officer of an organization that has a relationship with
the Company or any of its subsidiaries).
In determining whether a director has had a material relationship with us,
our Corporate Governance Guidelines (which are located on our website,
www.whxcorp.com) establish a categorical standard. As long as a director has no
material relationships with the Company or any of its subsidiaries (either
directly or as a partner, shareholder or officer of an organization that has a
relationship with the Company or any of its subsidiaries) other than those that
would be permitted under the categorical standard, a director will be considered
not to have a material relationship with the Company or any of its subsidiaries.
The categorical standard is that such director must have no material
relationship with the company (either directly or indirectly) that precludes
independence under the NYSE rules. In applying that standard, the Board's
philosophy is that a relationship (other than that of partner, shareholder or
officer) with an organization that has a relationship with the Company or any of
its subsidiaries that does not result in a possibility of additional economic
benefit to a director, directly or indirectly, from the Company or its
subsidiaries will not be considered to be a material relationship. In the event
of a relationship that is not addressed by the categorical standard or that does
not satisfy the categorical standard, the Board may, in its judgment, taking
into account all relevant facts and circumstances, deem that relationship not to
be material.
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BOARD MEETING AND ATTENDANCE; NON-MANAGEMENT DIRECTOR MEETINGS; STOCKHOLDER
COMMUNICATIONS
The Board met on five occasions and took action by unanimous written
consent on one occasion during the fiscal year ended December 31, 2003. No
incumbent director attended fewer than 75% of the aggregate of (1) the total
number of meetings of the Board (held during the period for which he has been a
director); and (2) the total number of meetings held by all committees of the
Board on which he served (during the periods that he served).
Each director is expected to make reasonable efforts to attend Board
meetings, meetings of committees of which such director is a member and the
Annual Meeting of Stockholders. One board member attended the 2003 Annual
Meeting of Stockholders.
The Company's non-management directors meet in regularly scheduled
executive sessions without management. Mr. Troubh has been appointed by the
non-management directors to serve as the lead director at such sessions.
Additionally, at least once a year, the independent directors meet in an
executive session. Stockholders and other interested persons may contact the
lead director or the non-management directors individually or as a group, by
writing to the presiding director or to such director(s) in care of the
Corporate Secretary, WHX Corporation, 110 East 59th Street, New York, NY 10022.
Any such communications will be promptly distributed by the Secretary to the
non-management directors and will be kept confidential and, at the sender's
request, shall be sent to such director(s) anonymously.
The Company has also adopted a procedure by which stockholders may send
communications as defined within Item 7(h) of Schedule 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") to one or more members of
the Board by writing to such director(s) or to the whole Board care of the
Corporate Secretary, WHX Corporation, 110 East 59th Street, New York, NY 10022.
Any such communications will be promptly distributed by the Secretary to such
individual director(s) or to all directors if addressed to the whole Board.
COMMITTEES AND COMMITTEE MEETINGS
There are five standing Committees of the Board: the Executive Committee,
the Audit Committee, the Compensation Committee, the Nominating/Corporate
Governance Committee and the Stock Option Committee (for the 1991 Incentive and
Nonqualified Stock Option Plan, the 2001 Stock Option Plan and the 2003
Incentive Stock Plan).
EXECUTIVE COMMITTEE. The members of the Executive Committee are Robert A.
Davidow, Marvin L. Olshan, Raymond S. Troubh and Neil D. Arnold. The Executive
Committee met on three occasions and took action by unanimous written consent on
five occasions during the fiscal year ended December 31, 2003. The Executive
Committee possesses and exercises all the power and authority of the Board in
the management and direction of the business and affairs of the Company except
14
as limited by law and except for the power to change the membership or to fill
vacancies on the Board or the Executive Committee.
AUDIT COMMITTEE. The Company has a separately-standing audit committee (the
"Audit Committee") established in accordance with Section 3(a)(58)(A) of the
Exchange Act. The members of the Audit Committee are Louis Klein Jr., Robert A.
Davidow and William Goldsmith. Each of Messrs. Klein, Davidow and Goldsmith are
non-employee members of the Board. After reviewing the qualifications of the
current members of the Audit Committee, and any relationships they may have with
the Company that might affect their independence from the Company, the Board has
determined that (1) all current Audit Committee members are "independent" as
that concept is defined in Section 10A of the Exchange Act, (2) all current
Audit Committee members are "independent" as that concept is defined in the
applicable rules of the NYSE, (3) all current Audit Committee members are
financially literate, and (4) Mr. Klein qualifies as an "audit committee
financial expert" under the applicable rules promulgated pursuant to the
Exchange Act. The Audit Committee operates under a written charter adopted by
the Board, a current copy of which is attached hereto as EXHIBIT A and is
available on the Company's website, WWW.WHXCORP.COM. The Audit Committee met on
five occasions during the fiscal year ended December 31, 2003 and took action by
unanimous consent on one occasion. The primary purpose of the Audit Committee is
to assist the Board in fulfilling its responsibility to oversee the Company's
financial reporting activities. The Audit Committee annually selects 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, reviews and monitors the Company's internal
accounting procedures and monitors compliance with the Company's Code of Ethics
Policy and Conflict of Interest Policy. A report from the Audit Committee is
also included in this Proxy Statement, see Audit Committee Report.
COMPENSATION COMMITTEE. The Company has a separately standing compensation
committee (the "Compensation Committee"). The Compensation Committee has a
charter, a current copy of which is available on the Company's website,
WWW.WHXCORP.COM. The members of the Compensation Committee are Robert A.
Davidow, William Goldsmith and Marvin L. Olshan, each of whom are considered
independent directors in accordance with the NYSE's listing standards. The
Compensation Committee met on one occasion and took action by unanimous written
consent on one occasion during the fiscal year ended December 31, 2003. The
Compensation Committee reviews compensation arrangements and personnel matters.
NOMINATING/CORPORATE GOVERNANCE COMMITTEE. The members of the
Nominating/Corporate Governance Committee (the "Nominating Committee") are
Raymond Troubh, Marvin L. Olshan and Robert A. Davidow, each of whom is
independent in accordance with the NYSE's listing standards. The Nominating
Committee took action by unanimous written consent on one occasion during the
fiscal year ended December 31, 2003. The Nominating Committee has a charter, a
15
current copy of which is available on the Company's website, WWW.WHXCORP.COM. No
shareholder proposals were received in fiscal 2003.
The Nominating Committee considers and makes recommendations to the Board
with respect to the size and composition of the Board and identifies potential
candidates to serve as directors, to the extent there are vacancies on the
Board. The Nominating Committee identifies candidates to the Board by
introduction from management, members of the Board, employees or other sources
and stockholders that satisfy the Company's policy regarding stockholder
recommended candidates. The Nominating Committee does not evaluate director
candidates recommended by stockholders differently than director candidates
recommended by other sources. Stockholders wishing to submit recommendations for
candidates to be considered for election at the 2005 Annual Meeting of
Stockholders should write to the Corporate Secretary, WHX Corporation, 110 East
59th Street, New York, NY 10022. Any such stockholder must meet and evidence the
minimum eligibility requirements specified in Exchange Act Rule 14a-8 and must
submit, within the same timeframe for submitting a stockholder proposal required
by Rule 14a-8: (1) evidence in accordance with Rule 14a-8 of compliance with the
stockholder eligibility requirements, (2) the written consent of the
candidate(s) for nomination as a director, (3) a resume or other written
statement of the qualifications of a candidate(s) for nomination as a director,
and (4) all information regarding the candidate(s) and the submitting
stockholder that would be required to be disclosed in a proxy statement filed
with the SEC if the candidate(s) were nominated for election to the Board,
including the number and class of all shares of each class of stock of the
Company owned of record and beneficially by each such persons, and the name and
address of the submitting stockholder(s).
The Nominating Committee identifies, investigates and recommends possible
directors to the Board with the goal of creating a balance of knowledge,
experience and diversity, to the extent there are vacancies on the Board. In
considering Board candidates, the Nominating Committee takes into consideration
the Company's Corporate Governance Guidelines, the Company's policy regarding
stockholder recommended director candidates, as set forth above, and all other
factors that it deems appropriate, including, but not limited to, the
individual's independence, character, education, experience, knowledge and
skills. The Nominating Committee will also consider: the extent of the
individual's experience in business, education or public service; his or her
ability to bring a desired range of skills, diverse perspectives and experience
to the Board; and whether the individual possesses high ethical standards, a
strong sense of professionalism and is capable of serving the interests of
stockholders. In addition to reviewing a candidate's background and
accomplishments, candidates for director nominees are reviewed in the context of
the current composition of the board and the evolving needs of the Company's
businesses. It is the Board's policy that at all times at least a majority of
its members meet the standards of independence promulgated by the NYSE and the
SEC and as set forth in the Company's Corporate Governance Guidelines.
Additionally, the Nominating Committee will consider the number of boards on
16
which the candidate already serves when assessing whether the candidate has the
appropriate time to devote to Board service.
Except as set forth above, the Nominating Committee does not currently have
a formal policy regarding the handling or consideration of director candidate
recommendations received from a stockholder, or a formal process for identifying
and evaluating nominees for directors (including nominees recommended by
stockholders). These issues will be considered by the Committee, which will then
make a recommendation to the Board.
In its corporate governance role, the Nominating Committee also develops
and recommends corporate governance principles for the Company; makes
recommendations to the Board in support of such principles; takes a leadership
role in the shaping of the corporate governance of the Company; and oversees the
evaluation of the Board and management.
STOCK OPTION COMMITTEE. The members of the Stock Option Committee are
Raymond S. Troubh and Robert A. Davidow. The Stock Option Committee administers
the granting of stock options under the 1991 Incentive and Nonqualified Stock
Option Plan (the "1991 Plan"), the 2001 Stock Option Plan (the "2001 Plan") and
the 2003 Incentive Stock Plan (the "2003 Plan"). The Stock Option Committee took
action by unanimous written consent on three occasions during the fiscal year
ended December 31, 2003.
BOARD COMPENSATION
Directors of the Company who are not employees of the Company or its
subsidiaries are entitled to receive compensation for serving as directors in
the amount of $40,000 per annum, $1,000 per Board meeting, $800 per Committee
meeting attended in person, $500 per telephonic meeting (other than the Stock
Option Committee and the Audit Committee), and $1,000 per day of consultation
and other services provided other than at meetings of the Board or Committees
thereof, at the request of the Chairman of the Board. Committee Chairmen also
receive an additional annual fee of $1,800 (other than the Stock Option
Committee and the Audit Committee). Each Audit Committee member receives a
payment of $20,000 per year, and the chairman of the Audit Committee receives a
payment of $25,000 per year. Directors of the Company (other than the Chairman
of the Board or directors who are employees of the Company or its subsidiaries)
also received options to purchase 25,000 shares of Common Stock on December 1,
1997 and receive options to purchase 5,000 shares of Common Stock per annum on
the date of each annual meeting of stockholders up to a maximum of 40,000 shares
of Common Stock pursuant to the Company's 1997 Directors Stock Option Plan (the
"1997 Plan"). On June 30, 2003, each of Messrs. Troubh, Klein, Goldsmith,
Olshan, Davidow and Mileaf received 10,000 shares of restricted stock and Mr.
Smith received 20,000 shares of restricted stock. All directors of the Company
permitted to participate in the 1997 Plan, except for Messrs. Klein and Mileaf,
have received the maximum number of shares permitted to be issued thereunder.
17
Pursuant to a management agreement effective as of January 3, 1991, as
amended, which was initially approved by a majority of the Company's
disinterested directors, and was terminated on January 31, 2004 (the "Management
Agreement"), WPN Corp. ("WPN"), of which Ronald LaBow, the former Chairman of
the Board of the Company, is the sole stockholder and an officer and director,
provided financial, management, advisory and consulting services to the Company,
subject to the supervision and control of the Company's disinterested directors.
Messrs. Trangucci, Tabin and Arnold were also officers of WPN until January
2004. WPN received a monthly fee of $520,833.33 from January through October of
2003, and $400,000 for each of November and December of 2003. WPN Corp. also
received certain benefits from financial intermediaries with which it transacts
business on behalf of the Company in the form of research materials and
services, which were used by WPN on behalf of the Company and in connection with
its other activities. For the fiscal year 2003, the amount of such reimbursement
was approximately $75,000. The Company believed that the cost of obtaining the
type and quality of services rendered by WPN under the Management Agreement was
no less favorable than that at which the Company could have obtained such
services from unaffiliated entities. See "Executive Compensation -- Management
Agreement with WPN."
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent (10%) of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. In addition, under Section
16(a), trusts for which a reporting person is a trustee and a beneficiary (or
for which a member of his immediate family is a beneficiary) may have a separate
reporting obligation with regard to ownership of the Common Stock and other
equity securities of the Company. Such reporting persons are required by rules
of the SEC to furnish the Company with copies of all Section 16(a) reports they
file. Based solely upon a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers,
directors and greater than ten percent (10%) beneficial stockholders, the
Company believes that during the year ended December 31, 2003, all persons
subject to the reporting requirements of Section 16(a) filed the required
reports on a timely basis.
CODE OF CONDUCT AND ETHICS
The Company has adopted a written Code of Conduct and Ethics that applies
to the Company's principal executive officer, principal financial officer,
principal account officer or controller or people performing similar functions.
The Code of Conduct and Ethics is available on the Company's website,
WWW.WHXCORP.COM, and available in print to any stockholder who requests it.
18
CORPORATE GOVERNANCE GUIDELINES
The Company has adopted Corporate Governance Guidelines which are available
on the Company's website, WWW.WHXCORP.COM, and are available in print to any
shareholder that requests them.
MANAGEMENT
EXECUTIVE OFFICERS OF THE COMPANY
The following table contains the names, positions and ages of the executive
officers of the Company who are not directors.
PRINCIPAL OCCUPATION FOR THE PAST
NAME FIVE YEARS AND CURRENT PUBLIC DIRECTORSHIPS AGE
- ---- ------------------------------------------- ---
Robert K. Hynes CHIEF FINANCIAL OFFICER. Chief Financial Officer 49
since January 2003. Vice President--Finance from June
2001 through January 2003. Vice President of H&H
since March 2000. Director of Audit and Financial
Standards of H&H from April 1995 through March 2000.
Daniel P. Murphy PRESIDENT, H&H. President of H&H since February 2003. 43
Vice President of H&H Engineered Materials Group from
January 2002 through February 2003. President of
Olympic Manufacturing Group, Inc. from February 1994
through December 2001.
19
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth, for the fiscal years
indicated, all compensation awarded to, paid to or earned by the following type
of executive officers for the fiscal years ended December 31, 2001, 2002 and
2003: (i) individuals who served as, or acted in the capacity of, the Company's
principal executive officer for the fiscal year ended December 31, 2003 (Mr.
LeBlanc served as the Company's Principal Executive Officer through March 2003,
when he resigned from his positions with the Company; at such time Mr. Arnold
acted as the Company's Principal Executive Officer); (ii) the Company's other
most highly compensated executive officers, which together with the Principal
Executive Officer are the most highly compensated officers of the Company whose
salary and bonus exceeded $100,000 with respect to the fiscal year ended
December 31, 2003 and who were employed at the end of fiscal year 2003; and
(iii) up to two additional individuals for whom disclosure would have been
provided but for the fact that the individual was not serving as an executive
officer of the Company at the end of fiscal year 2003. Please note that the
executive officers identified in (i), (ii) and (iii) above are collectively
referred to as the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
Long Term
Name and Principal Position Annual Compensation Compensation
--------------------------- ------------------- ------------
Other Annual Securities All Other
Salary Bonus Compensation Underlying Compensation
Year ($) ($)(1) ($)(2) Options (#) ($)(3)
---- --- ------ ------ ----------- ------
Neil D. Arnold (4) 2003 -- -- -- 45,000 500,000(9)
Principal Executive Officer, 2002 -- -- -- 0 500,000(9)
Executive Chairman of the Board 2001 -- -- -- 53,333 221,500(9)
Robert D. LeBlanc(5) 2003 105,769 -- -- -- 2,155,642(6)(7)
Executive Vice President 2002 500,000 -- -- 17,500 3,045(6)
(Principal Executive Officer) 2001 460,000 -- -- 53,333 2,771(6)
Robert K. Hynes(8) 2003 249,846 75,000 -- 20,000 785(6)
Chief Financial Officer 2002 219,961 75,000 -- 7,500 755(6)
2001 174,277 15,000 -- 16,666 716(6)
Daniel Murphy 2003 337,307 125,000 -- 100,000 1,323(6)
President of H&H 2002 249,935 110,000 -- 5,000 149(6)
2001 233,160 8,000 -- 3,333 --
- ---------------------------
(1) Mr. Hynes was granted a bonus by the Company in each of 2004, 2003 and 2002
for services performed in the prior year. Mr. Murphy was granted a bonus in
2004 for services performed in the prior year. All bonus amounts have been
20
attributed to the year in which the services were performed.
(2) Excludes perquisites and other personal benefits unless the aggregate
amount of such compensation exceeds the lesser of either $50,000 or 10% of
the total of annual salary and bonus reported for such Named Executive
Officer.
(3) Amounts shown, unless otherwise noted, reflect employer contributions to
pension plans.
(4) Mr. Arnold was Vice-Chairman of the Board until February 1, 2004, at which
point he was appointed Executive Chairman of the Board. (5) Mr. LeBlanc
resigned from his positions with the Company effective March 14, 2003.
(6) Represents insurance premiums paid by the Company.
(7) Includes a severance payment of $1,316,667 upon Mr. LeBlanc's termination
and a payout of his SERP (as defined herein) of $835,717.
(8) Mr. Hynes' employment as an officer of the Company commenced June 2001.
Prior to such time, he was an employee of H&H.
(9) Mr. Arnold did not receive any direct compensation from the Company. Such
amount was received from WPN as payment for Mr. Arnold's services as an
officer of WPN. Mr. Arnold joined WPN as an officer in August 2001.
OPTION GRANTS TABLE. The following table sets forth certain information
regarding stock option grants made to each of the Named Executive Officers
during the fiscal year ended December 31, 2003.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
----------------- -----------
Number of Securities Percent of
Underlying Options Total Options
Granted (1) Granted to Exercise
Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
- ---- --- ----------- ------ ---- ----- ------
Neil D. Arnold................... 45,000 11.8% $ 2.48 6/20/13 $ 70,185 $177,862
Robert D. LeBlanc................ -- -- -- -- -- --
Robert K. Hynes.................. 20,000 5.2 2.48 6/20/13 31,193 79,050
Daniel Murphy.................... 80,000 21.0 3.15 2/12/13 158,481 401,623
20,000 5.2 2.48 6/20/13 31,193 79,050
- -------------------
(1) All options were granted under the Company's 2001 Stock Option Plan on
September 10, 2002. 33.33% of such options vested upon the grant date,
33.33% vested on the first anniversary of the grant date and 33.34% vested
on the second anniversary of the grant date.
21
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officers as of December
31, 2003.
Number of Securities
Underlying Unexercised
Options at 2003 Value of Unexercised In-the-
Year-End(#) Money Options at 2003 Fiscal
Fiscal Year-End ($)(1)
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------------- -------------------------
Neil D. Arnold .................................... 92,334 / 30,000 $2,850 / $5,700
Robert D. LeBlanc.................................. -- /-- -- /--
Robert K. Hynes.................................... 34,998 / 15,835 $3,116 / $3,459
Daniel Murphy...................................... 46,628 / 68,371 $2,488 / $3,162
- -------------------
(1) On December 31, 2003 the last reported sales price of the Common Stock as
reported on the NYSE Composite Tape was $2.67.
22
LONG-TERM INCENTIVE AND PENSION PLANS. Other than as described below, the
Company does not have any long-term incentive or defined benefit pension plans.
In January 1999, H&H amended and restated its Long Term Incentive Plan
("LTIP"), in which the final cycle had been terminated on December 31, 1998. The
current LTIP is a performance-based plan pursuant to which executives of H&H
earn the right to receive awards based on the achievement of pre-established
financial performance and other goals. The amended LTIP established overlapping
cycles with each cycle encompassing five fiscal years, commencing on January 1,
1999. LTIP participants are selected by H&H's Chief Executive Officer and the
Compensation Committee of the Board of the Company. Messrs. LeBlanc and Murphy
are the only Named Executive Officers who are participants in the Amended and
Restated LTIP.
H&H maintains the Supplemental Executive Retirement Plan ("SERP") to
provide executive officers the amount of reduction in their formula pension
benefits under the WHX Pension Plan on account of the limitation on pay under
Section 401(a)(17) of the Internal Revenue Code ("IRC") and the limitation on
benefits under Section 415 of the IRC. The SERP also applies the WHX Pension
Plan formula to the Career Average Pay generally after including 100 percent of
the bonus amounts received. Amounts received under the SERP are not subject to
Cost of Living increases.
The following table shows the projected Annual Retirement Benefits, payable
on the basis of ten years of certain payments and thereafter for life, to each
of the individuals listed in the Summary Compensation Table at age 65 assuming
continuation of employment until age 65. The amounts shown under Salary reflect
the current rate of salary as plan compensation for Messrs. Hynes and Murphy of
$250,000 and $350,000, respectively, and includes the benefits payable under
both the WHX Pension Plan and the SERP. The amount of benefits shown under Bonus
would be payable under the SERP and assumes continuation of the amount of Bonus
received on average over the prior 3 fiscal years.
EXECUTIVE PENSION BENEFITS
NORMAL RETIREMENT ANNUAL RETIREMENT BENEFITS FROM:
NAME DATE (NRD) SERVICE AT NRD SALARY BONUS TOTAL
- ---- ---------- -------------- ------ ----- -----
R. K. Hynes Sept. 1, 2019 30 yrs. 1 mos. $111,141 $29,030 $140,171
D.P. Murphy May 1, 2026 24 yrs. 4 mos. $165,339 $39,419 $204,758
DEFERRED COMPENSATION AGREEMENTS. Except as described in the next section
titled "Employment Agreements", with respect to the employment agreements of
Messrs. LeBlanc, Hynes, Smith, Murphy, Trangucci, Tabin and Arnold, no plan or
23
arrangement exists which results in compensation to a Named Executive Officer in
excess of $100,000 upon such officer's future termination of employment or upon
a change-of-control.
EMPLOYMENT AGREEMENTS. Mr. Robert D. LeBlanc became Executive Vice
President of the Company pursuant to a three-year employment agreement dated as
of April 7, 1998, which was automatically extended for successive two-year
periods unless earlier terminated pursuant to the provisions of such agreement.
The agreement provided for an annual salary to Mr. LeBlanc of no less than
$500,000 and an annual bonus to be awarded at the Company's sole discretion. Mr.
LeBlanc was not granted a bonus in 2003 for services performed in 2002. Mr.
LeBlanc resigned from his positions with the Company effective March 14, 2003.
In connection with such resignation, Mr. LeBlanc received a payment of
$1,316,667 as required pursuant to the terms of his employment agreement, as
well as $835,717 pursuant to the SERP.
Mr. Robert K. Hynes became Vice President-Finance of the Company pursuant
to a one-year employment agreement dated July 1, 2001, which has been and will
continue to be automatically extended for successive one-year periods unless
earlier terminated pursuant to the provisions of such agreement. Mr. Hynes was
promoted to Chief Financial Officer in January 2003. The agreement provides for
an annual salary to Mr. Hynes of no less than $200,000 and an annual bonus to be
awarded at the Company's sole discretion. Mr. Hynes was granted bonuses of
$75,000 in each of 2004 and 2003 for services performed in the prior year. In
the event that his employment is terminated by the Company other than with
cause, Mr. Hynes will receive a payment of one year's base salary at the highest
rate in effect for the twelve preceding months plus bonus plan and compensation
accrued.
Mr. Garen W. Smith became a consultant of the Company pursuant to a
one-year consulting agreement between the Company and Abundance Corporation
("Abundance"), of which Mr. Smith is an officer and an employee, dated February
12, 2003, which will be automatically extended for successive one-year periods
unless earlier terminated pursuant to the provisions of such agreement. The
agreement provides for an annual payment of $200,000. In the event that the
agreement is terminated by the Company other than with cause, Abundance will
receive the remainder of the annual payment.
Mr. Daniel Murphy has been the President of H&H since February 2003. On
February 11, 2004, Mr. Murphy entered into a two-year employment agreement with
H&H, which has been and will be automatically extended for successive two-year
periods unless earlier terminated pursuant to the provisions of such agreement.
The agreement provides for an annual salary of no less than $350,000 and an
annual bonus to be awarded at H&H's sole discretion, as ratified by the Board of
the Company. Mr. Murphy was granted bonuses of $125,000, $110,000 and $8,000 in
2004, 2003 and 2002 for services performed in 2003, 2002 and 2001, respectively.
In the event that either (i) the agreement is terminated by the Company other
than with cause, or (ii) he elects termination following a material diminution
in his position or a change in control of the Company, Mr. Murphy will receive a
24
payment of two years' base salary at the base salary in effect at the time of
termination.
Mr. Neale X. Trangucci became Chief Executive Officer of the Company
pursuant to a two-year employment agreement dated February 1, 2004, which will
be automatically extended for successive two-year periods unless earlier
terminated pursuant to the provisions of such agreement. The agreement provides
for an annual salary of no less than $550,000 and an annual bonus to be awarded
at the Company's sole discretion. In the event that either (i) the agreement is
terminated by the Company other than with cause, or (ii) he elects termination
following a material diminution in his position or a change in control of the
Company, Mr. Trangucci will receive a payment of twice the base salary in effect
at the time of termination.
Mr. Stewart E. Tabin became President of the Company pursuant to a two-year
employment agreement dated February 1, 2004, which will be automatically
extended for successive two-year periods unless earlier terminated pursuant to
the provisions of such agreement. The agreement provides for an annual salary of
no less than $500,000 and an annual bonus to be awarded at the Company's sole
discretion. In the event that either (i) the agreement is terminated by the
Company other than with cause, or (ii) he elects termination following a
material diminution in his position or a change in control of the Company, Mr.
Tabin will receive a payment of twice the base salary in effect at the time of
termination.
Mr. Neil Arnold became Executive Chairman of the Company pursuant to a
two-year employment agreement dated February 1, 2004, which will be
automatically extended for successive two-year periods unless earlier terminated
pursuant to the provisions of such agreement. The agreement provides for an
annual salary of no less than $450,000 and an annual bonus to be awarded at the
Company's sole discretion. In the event that either (i) the agreement is
terminated by the Company other than with cause, or (ii) he elects termination
following a material diminution in his position or a change in control of the
Company, Mr. Arnold will receive a payment of twice the base salary in effect at
the time of termination.
REPORT ON REPRICING OF OPTIONS. None of the stock options granted under any
of the Company's plans were repriced in the fiscal year ended 2003.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. Messrs.
Davidow, Goldsmith and Olshan each served as a member of the Compensation
Committee of the Board during the fiscal year ended December 31, 2003. Mr.
Olshan is Of Counsel to Olshan Grundman Frome Rosenzweig & Wolosky LLP, which
the Company has retained as its outside general counsel since January 1991. See
Certain Relationships and Related Transactions. The fees paid such firm by the
Company do not exceed 5% of such firm's gross revenues for the fiscal year ended
December 31, 2003.
25
MANAGEMENT AGREEMENT WITH WPN CORP. Pursuant to the Management Agreement
which agreement was initially approved by a majority of the Company's
disinterested directors and was terminated on January 31, 2004, WPN, of which
Ronald LaBow, the Chairman of the Board, is the sole stockholder and an officer
and director, provided financial, management, advisory and consulting services
to the Company, subject to the supervision and control of the disinterested
directors. Messrs. Trangucci, Tabin and Arnold were also officers of WPN until
January 2004. Such services included, among others, identification, evaluation
and negotiation of acquisitions, responsibility for financing matters, review of
annual and quarterly budgets, supervision and administration, as appropriate, of
all the Company's accounting and financial functions and review and supervision
of the Company's reporting obligations under Federal and state securities laws.
For each of the fiscal years 2003, 2002 and 2001, WPN received a monthly fee of
$520,833.33, with the exception of the months of November and December 2003,
during which the monthly fee was $400,000. All options held by WPN to acquire
Common Stock were cancelled as of January 12, 2004. The Company provided
indemnification for WPN's employees, officers and directors against any
liability, obligation or loss resulting from their actions pursuant to the
Management Agreement. WPN also receives certain benefits from financial
intermediaries which it transacts business with on behalf of the Company in the
form of research materials and services, which are used by WPN on behalf of the
Company and in connection with its other activities. For the fiscal year 2003,
the amount of such reimbursement was approximately $75,000. WPN has not derived
any other income and has not received reimbursement of any of its expenses
(other than health benefits and standard directors' fees) from the Company in
connection with the performance of services described above. The Company
believed that the cost of obtaining the type and quality of services rendered by
WPN under the Management Agreement was no less favorable than the cost at which
the Company would have been able to obtain from unaffiliated entities.
AUDIT COMMITTEE REPORT
The Board appoints an Audit Committee each year to review the Company's
financial matters. The members of the Audit Committee are Louis Klein Jr.,
Robert A. Davidow and William Goldsmith. Each member of the Company's audit
committee meets the independence requirements set by the SEC and the NYSE.
The primary purpose of the Audit Committee is to assist the Board in
fulfilling its responsibility to oversee the Company's financial reporting
activities. The Audit Committee meets with the Company's independent accountants
and reviews the scope of their audit, report and recommendations. The Audit
Committee also recommends to the Board the selection of the Company's
independent accountants. The Audit Committee met five times during fiscal 2003.
The Audit Committee members reviewed and discussed the audited financial
statements for the fiscal year ending December 31, 2003 with management. The
Audit Committee also discussed all the matters required to be discussed by
Statement of Auditing Standard No. 61 with the Company's independent auditors,
26
PricewaterhouseCoopers LLP. The Audit Committee received the written disclosures
and the letter from PricewaterhouseCoopers LLP as required by Independence
Standards Board Standard No. 1 and has discussed the independence of
PricewaterhouseCoopers LLP with representatives of such firm.
Based on their review and the discussions described above, the Audit
Committee recommended to the Board that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K filed with
the SEC.
AUDIT COMMITTEE
Louis Klein, Jr., Chairman
Robert A. Davidow
William Goldsmith
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee determines the cash and other incentive
compensation, if any, to be paid to the Company's executive officers and key
employees. Messrs. Davidow, Olshan and Goldsmith serve as members of the
Compensation Committee. The Stock Option Committee is responsible for the
administration and award of stock options under the 1991 Incentive and
Nonqualified Stock Option Plan, the 2001 Stock Option Plan and the 2003
Incentive Stock Plan. Messrs. Davidow and Troubh serve as members of the Stock
Option Committee. Both Messrs. Davidow and Troubh are non-employee directors of
the Company, as defined under Rule 16b-3 of the Exchange Act, as amended. Mr.
Davidow serves as Chairman of the Compensation Committee. The Compensation
Committee met one time during the fiscal year ended December 31, 2003.
COMPENSATION PHILOSOPHY
The Compensation Committee's executive compensation philosophy is to base
management's pay, in part, on achievement of the Company's annual and long-term
performance goals, to provide competitive levels of compensation, to recognize
individual initiative, achievement and length of service to the Company, and to
assist the Company in attracting and retaining qualified management. The
Compensation Committee also believes that the potential for equity ownership by
management is beneficial in aligning management and stockholders' interests in
the enhancement of stockholder value. The Company has not established a policy
with regard to Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code").
27
SALARIES
Base salaries for the Company's executive officers are determined initially
by evaluating the responsibilities of the position held and the experience of
the individual, and by reference to the competitive marketplace for management
talent, including a comparison of base salaries for comparable positions at
other comparable companies. Base salary compensation of executive officers is
reviewed annually by the Compensation Committee, and recommendations of the
Compensation Committee in that regard are acted upon by the Board. Annual salary
adjustments are determined by evaluating the competitive marketplace; the
performance of the Company which includes in descending level of importance,
operating income of the Company and cash management, production efficiency and
quality of products; the performance of the executive; the length of the
executive's service to the Company and any increased responsibilities assumed by
the executive. The Company places itself around the medium levels in determining
salaries compared to the other comparable holding companies of similar
businesses.
INCENTIVE COMPENSATION
H&H MANAGEMENT INCENTIVE PLAN
H&H, a wholly-owned subsidiary of the Company, maintains a Management
Incentive Plan ("MIP") which is an annual incentive program that rewards
selected officers and key employees each year based on their contributions to
the profits of H&H.
Participants in the MIP are designated by the Chief Executive Officer of
H&H and ratified by the Compensation Committee of the Board at the beginning of
each fiscal year. Awards granted under the MIP are approved by the Board of
Directors of H&H. Daniel Murphy was the only Named Executive Officer to receive
an award under the MIP in 2003.
OTHER INCENTIVE COMPENSATION
The Company from time to time considers the payment of discretionary
bonuses to its executive officers. Bonuses would be determined based, first,
upon the level of achievement by the Company of its strategic and operating
goals and, second, upon the level of personal achievement by participants. The
achievement of goals by the Company includes, among other things, the
performance of the Company as measured by return on assets and the operating
income of the Company, production efficiency and quality of products. The
achievement of personal goals includes the actual performance of the unit of the
Company for which the executive officer has responsibility as compared to the
planned performance thereof, the level of cost savings achieved by such
executive officer, other individual contributions, the ability to manage and
motivate employees and the achievement of assigned projects. Bonuses are
determined annually after the close of each fiscal year. Despite achievement of
personal goals, bonuses may not be given based upon the performance of the
Company as a whole.
28
Mr. LeBlanc, the Company's former Principal Executive Officer, was
President and Chief Executive Officer of H&H and Executive Vice President of the
Company until March 2003 with an annual base salary of $500,000. As described in
the Employment Agreements section above, Mr. LeBlanc's annual base salary was
determined by contract. In determining such amount, the Board had considered the
responsibilities performed by Mr. LeBlanc as Executive Vice President of the
Company, Mr. LeBlanc's responsibilities as President and Chief Executive Officer
of H&H, the performance of Mr. LeBlanc in managing and directing the
Company's operations, the efforts by Mr. LeBlanc in assisting the Company to
improve its capital base and financial condition, a competitive assessment of
survey data of other industrial companies as it relates to the Company's
performance versus other industrial companies, and the evaluation of the other
factors described in "Salaries" above. The Compensation Committee did not grant
Mr. LeBlanc a bonus for his services in 2003. Mr. LeBlanc resigned from his
positions with the Company effective March 14, 2003. In connection with such
resignation, Mr. LeBlanc received a payment pursuant to the terms of his
employment contract.
Upon Mr. LeBlanc's resignation, Mr. Arnold assumed the responsibilities as
the Company's Principal Executive Officer. Mr. Arnold did not receive any direct
compensation from the Company, but was paid by WPN for his services as an
officer of WPN on behalf of the Company. In 2003, Mr. Arnold was paid $500,000
by WPN.
STOCK OPTION AND OTHER PLANS
The Company awarded 165,000 options to the Named Executive Officers in
2003. It is the philosophy of the Stock Option Committee that stock options
should be awarded to employees of the Company to promote long-term interests
between such employees and the Company's stockholders through an equity interest
in the Company and assist in the retention of such employees. The Stock Option
Committee also considered the amount and terms of options previously granted to
executive officers. The Stock Option Committee believes the potential for equity
ownership by management is beneficial in aligning management's and stockholders'
interest in the enhancement of stockholder value. Participation in restricted
stock, profit sharing and incentive plans is offered, pursuant to their terms,
to provide incentive to executive officers to contribute to corporate growth and
profitability.
COMPENSATION COMMITTEE
Robert A. Davidow, Chairman
William Goldsmith
Marvin L. Olshan
29
COMMON STOCK PERFORMANCE: The following graph compares, for each of the
fiscal years indicated, the yearly percentage change in the Company's cumulative
total stockholder return on the Company's Common Stock with the cumulative total
return of a) the Standard and Poor's Index, a broad equity market index and b)
Metal Fabricating Industry Group Index.
[PERFORMANCE GRAPH]
12/31/1998 12/31/1999 12/29/2000 12/31/2001 12/31/2002 12/31/2003
---------- ---------- ---------- ---------- ---------- ----------
WHX
CORPORATION 100.00 89.44 7.45 15.30 8.12 8.84
METALS
FABRICATION
INDEX 100.00 123.18 123.18 118.59 78.99 138.92
S&P 500 INDEX 100.00 121.04 121.04 96.95 75.52 97.18
30
There can be no assurance that the Common Stock's performance will continue
with the same or similar trends depicted in the graph above.
31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Marvin L. Olshan, a director of the Company, is a retired partner of Olshan
Grundman Frome Rosenzweig & Wolosky LLP ("OGFR&W") who retains the title of Of
Counsel. The Company has retained OGFR&W as its outside general counsel since
January 1991. The fees paid such firm by the Company do not exceed 5% of such
firm's gross revenues for the fiscal year ended December 31, 2003.
Neil D. Arnold, a director of the Company, joined WPN Corp. as an officer
in August 2001. WPN Corp. is wholly-owned by Ronald LaBow, who was the former
Chairman of the Board and was party to a management agreement with the Company
until January 31, 2004. Mr. Arnold was paid $500,000 by WPN for his services in
2003.
Garen W. Smith owns 49% of Abundance Corp., which has a consulting
agreement with the Company. Abundance Corp. is paid $200,000 per annum under the
terms of the consulting agreement.
MANAGEMENT AGREEMENT
Pursuant to the Management Agreement, which was initially approved by a
majority of the Company's disinterested directors and was terminated on January
31, 2004, WPN, of which Ronald LaBow, the Company's former Chairman, is the sole
stockholder and an officer and a director, provided the Company with financial,
management, advisory and consulting services to the Company, subject to the
supervision and control of the disinterested directors. Messrs. Trangucci, Tabin
and Arnold were also officers of WPN until January 2004. The Company believed
that the cost of obtaining the type and quality of services rendered by WPN
under the Management Agreement was no less favorable than the cost at which the
Company could have obtained such services from unaffiliated entities. See
"Executive Compensation-Management Agreement with WPN Corp."
32
PROPOSAL NO. 2
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of PricewaterhouseCoopers LLP has been selected as the
independent public accountants for the Company for the fiscal year ending
December 31, 2004. Although the selection of accountants does not require
ratification, the Audit Committee 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 Audit Committee will
consider the appointment of other independent public accountants. A
representative of that firm, which served as the Company's independent public
accountants for the fiscal year ended December 31, 2003, is expected to be
present at the Meeting and, if he so desires, will have the opportunity to make
a statement, and in any event will be available to respond to appropriate
questions.
THE FOLLOWING FEES WERE BILLED BY PRICEWATERHOUSECOOPERS LLP TO THE COMPANY
FOR SERVICES PERFORMED ON BEHALF OF THE COMPANY (EXCLUDING WHEELING-PITTSBURGH
CORPORATION AND ITS SUBSIDIARIES (THE "WPC GROUP")):
AUDIT FEES: The aggregate fees for professional services rendered by
PricewaterhouseCoopers LLP for the audit of the Company's annual financial
statements for the fiscal years ended December 31, 2003 and the reviews of the
financial statements included in the Company's Form 10-Qs for such fiscal year
were approximately $590,000 (including expenses), of which $375,000 was billed
in fiscal 2003. During fiscal 2003, PricewaterhouseCoopers LLP billed the
Company for additional fees of $40,000 (including expenses) relating to the
audit of the Company's annual financial statements for the fiscal year ended
December 31, 2002.
The aggregate fees for professional services rendered by
PricewaterhouseCoopers LLP for the audit of the Company's annual financial
statements for the fiscal year ended December 31, 2002 and the reviews of the
financial statements included in the Company's Forms 10-Q for such fiscal year
were approximately $566,000 (including expenses), of which $282,000 was billed
in fiscal 2002. During fiscal 2002, PricewaterhouseCoopers LLP billed the
Company for additional fees of $60,000 (including expenses) relating to the
audit of the Company's annual financial statements for the fiscal year ended
December 31, 2001.
AUDIT-RELATED FEES: The aggregate fees billed by PricewaterhouseCoopers LLP
for audit-related services for the years ended December 31, 2003 and December
31, 2002 were approximately $88,000 and $97,000, respectively. Audit related
fees consist principally of fees for audits of financial statements of certain
employee benefit plans and due diligence related to divestitures in 2002.
33
TAX FEES: The aggregate fees for professional services rendered by
PricewaterhouseCoopers LLP for tax compliance, tax advice and tax planning for
the combined fiscal years ended December 31, 2003 and December 31, 2002 were
$27,000 and $145,000, respectively.
ALL OTHER FEES: No other fees were incurred or billed by
PricewaterhouseCoopers LLP during the years ended December 31, 2003 and December
31, 2002.
The Audit Committee's pre-approval policies and procedures consist of
pre-approving all auditing services and non-auditing services provided to the
Company by the independent auditors, either at the beginning of each year or
prior to the commencement of such services. The Audit Committee has approved the
services described under Audit Related Fees, Tax Fees and All Other Fees herein.
The Audit Committee has considered whether the provision by
PricewaterhouseCoopers LLP of the services covered by the fees other than the
audit fees is compatible with maintaining PricewaterhouseCoopers LLP's
independence and believes that it is compatible.
THE FOLLOWING FEES WERE BILLED BY PRICEWATERHOUSECOOPERS LLP TO THE WPC GROUP
FOR SERVICES PERFORMED ON BEHALF OF THE WPC GROUP:
AUDIT FEES: The aggregate fees for professional services rendered by
PricewaterhouseCoopers LLP for the audit of the WPC Group's annual financial
statements for the period ended December 31, 2003 and the fiscal year ended
December 31, 2002, were approximately $88,000 and $300,000 (including expenses),
respectively, of which $88,000 and $205,000 were billed in 2003 and 2002,
respectively. Wheeling-Pittsburgh Corporation and its subsidiaries were
unconsolidated subsidiaries of the Company.
AUDIT-RELATED FEES: The aggregate fees billed by PricewaterhouseCoopers LLP
for audit-related services for the period ended December 31, 2003 and the fiscal
year ended December 31, 2002 were approximately $37,000 and $69,000,
respectively. These fees are for audits of certain employee benefit plans.
TAX FEES: There were no tax services rendered in 2003 or 2002.
ALL OTHER FEES: The aggregate fees billed for services rendered by
PricewaterhouseCoopers LLP, other than the services referred to above, for the
period ended December 31, 2003 and the fiscal year ended December 31, 2002 were
approximately $37,000 and $2,000,000, respectively, for services performed on
behalf of the WPC Group primarily for advice and assistance relating to the WPC
Group's bankruptcy proceedings and related regulatory filings.
34
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE SELECTION OF THE
INDEPENDENT PUBLIC ACCOUNTANTS.
35
SOLICITATION STATEMENT
The Company will bear all expenses in connection with the solicitation of
proxies. In addition to the use of the mails, solicitations may be made by the
Company's regular employees by telephone, telegraph or personal contact, without
additional compensation. The Company has retained Innisfree M&A, Inc. to assist
the Company in the solicitation of proxies for a fee of $7,500 plus expenses.
The Company will, upon their request, reimburse brokerage houses and persons
holding shares of Common Stock in the names of the Company's nominees for their
reasonable expenses in sending solicited material 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 January 7, 2005. Stockholders wishing to nominate directors or
bring a proposal before the 2005 annual meeting of stockholders (but not include
it in the Company's proxy material) must provide written notice of such
nomination or proposal to the attention of the corporate secretary, no later
than March 22, 2005.
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.
ANNUAL REPORT
The Company is concurrently sending all of its stockholders of record as of
April 20, 2004 a copy of its Annual Report on Form 10-K for the fiscal year
ended December 31, 2003. Such report contains the Company's certified
consolidated financial statements for the fiscal year ended December 31, 2003,
including those of the Company's subsidiaries.
By Order of the Company,
STEVEN WOLOSKY, Secretary
36
Dated: New York, New York
April 29, 2004
THE COMPANY WILL FURNISH A FREE COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2003 (WITHOUT EXHIBITS) TO ALL OF ITS
STOCKHOLDERS OF RECORD AS OF APRIL 20, 2004 WHO WILL MAKE A WRITTEN REQUEST TO
MR. STEVEN WOLOSKY, SECRETARY, WHX CORPORATION, 110 EAST 59TH STREET, NEW YORK,
NEW YORK 10022.
37
AUDIT COMMITTEE CHARTER
OF
WHX CORPORATION
January, 2004
------------------------------------------
PURPOSE OF THE AUDIT COMMITTEE
The Audit Committee (the "Committee") is a committee of the Board of Directors
(the "Board") of WHX Corporation (the "Company") established for the purpose of
overseeing the accounting and financial reporting processes of the Company and
audits of its financial statements.
The purposes of the Committee shall be to assist the Board in fulfilling its
oversight responsibilities to the stockholders, potential stockholders, the
investment community, and others, with respect to: (i) the integrity of the
Company's financial statements; (ii) the Company's compliance with legal and
regulatory requirements; (iii) the independent auditors' qualifications and
independence; and (iv) the performance of the Company's internal audit function
and independent auditors.
The Committee shall serve as an independent and objective party to oversee the
Company's financial reporting process and internal control system. In so doing,
the Committee shall maintain free and open communication among the Committee,
the independent auditors, and the management of the Company. In discharging its
oversight role, the Committee is empowered to investigate any matter brought to
its attention with full access to all books, records, facilities and personnel
of the Company and to engage, determine funding for, and obtain advice and
assistance from independent counsel and other advisors as the Committee deems
necessary to carry out its duties. The Company shall also provide funding for
ordinary administrative expenses of the Committee that the Committee deems
necessary or appropriate in carrying out its duties.
COMPOSITION AND MEMBERSHIP REQUIREMENTS
The Board shall appoint the Committee and shall designate its Chairman. The
Committee shall consist of at least three independent directors, each of whom
shall satisfy the independence requirements of the New York Stock Exchange
("NYSE"), the Securities and Exchange Commission (the "SEC"), and applicable
law, including the Sarbanes-Oxley Act of 2002 and the regulations thereunder
(the "Act"). Each appointed director shall be independent of the management of
the Company, both directly and indirectly, and free from any relationship that,
A-1
in the opinion of the Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee. In particular, the members
will not have any compensatory relationship with, or receive any form of
compensation from, the Company other than as a director or Board committee
member, accept any consulting, advisory or other compensatory fee from the
Company or be an affiliated person of the Company or any subsidiary of the
Company.
The Committee members shall be financially literate and have the knowledge and
experience required to fulfill their responsibilities, as specified in the NYSE
requirements. At least one member of the Committee shall have past employment
experience in finance or accounting, requisite professional certification in
accounting, or any other comparable experience or background which results in
that individual's financial sophistication, including being or having been a
chief executive officer, a chief financial officer or other senior officer with
financial oversight responsibilities. The Committee members shall satisfy all
other requirements of the NYSE, the SEC and the Act.
COMMITTEE MEETINGS
1. COMMITTEE MEETINGS. The Committee shall meet as a committee at least
quarterly, or more frequently as circumstances require, either in person or by
telephone conference call. The Committee shall maintain minutes of meetings and
report regularly to the Board on significant results of the foregoing
activities.
2. MEETINGS WITH INDEPENDENT AUDITORS. The Committee shall meet with the
independent auditors at least four times during each year and at such other
times that the Chairman may deem necessary or appropriate for any reason,
including at the request of the independent auditors.
3. SEPARATE MEETINGS. The Committee should meet periodically in executive
session with management, the independent auditors and the internal auditors
separately.
COMMITTEE RESPONSIBILITIES AND DUTIES
The following shall be the principal recurring processes of the Committee in
carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate:
1. REVIEW AND OVERSIGHT PROCEDURES.
a. Review of Charter. The Committee shall review and reassess the
adequacy of this Charter at least annually, propose changes to this Charter to
the Board for its approval as necessary, and have this Charter published at
least every three (3) years in accordance with SEC regulations.
b. REVIEW OF FILINGS, FINANCIAL STATEMENTS AND OTHER DISCLOSURES.
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(i) The Committee shall review with management (including the
principal accounting officers of the Company) and the independent auditors,
prior to filing, the filings required to be made by the Company with the SEC on
an annual and quarterly basis, as well as any other required interim reports,
filings or documents that contain financial information about the Company. The
Committee shall specifically review the results of the quarterly and annual
audits of the Company's consolidated financial statements prior to the filing
thereof, including the Company's disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations," any appropriate
matters regarding the clarity of the disclosures in such financial statements,
accounting principles, practices and judgments and the independent auditors'
opinion as to the quality thereof, and any other matters required to be
communicated to the Committee by the independent auditors under generally
accepted auditing standards. The Committee shall cause the independent auditors
to conduct quarterly reviews in accordance with appropriate auditing standards
prior to each filing of the Company's Form 10-Q.
(ii) The Company's consolidated financial statements are the
responsibility of management. The external auditors are responsible for planning
and conducting the audits to determine whether the financial statements present
fairly in all material respects the financial position of the Company. The
Committee is responsible for reviewing: (a) major issues regarding accounting
principles and financial statement presentations, including any significant
changes in the Company's selection or application of accounting principles, and
major issues as to the adequacy of the Company's internal controls and any
special audit steps adopted in light of material control deficiencies; (b)
analyses prepared by management and/or the independent auditors setting forth
significant financial reporting issues and judgments made in connection with the
preparation of the financial statements, including analyses of the effects of
alternative GAAP methods on the financial statements; (c) the effect of
regulatory and accounting initiatives, as well as off-balance sheet structures,
on the financial statements of the Company; and (d) the type and presentation of
information to be included in earnings press releases (paying particular
attention to any use of "pro forma," or "adjusted" non-GAAP, information), as
well as review of any financial information and earnings guidance provided to
analysts and rating agencies.
(iii) The Committee shall review analyses and significant
findings by the independent auditors with respect to financial reporting issues
and judgments made in connection therewith, including (a) analyses of the
effects of alternative generally accepted auditing standards, (b) any material
difficulties or problems with any audit work, (c) any restrictions on the scope
of the independent auditors' activities or access to requested information, (d)
any significant disagreements with management and the independent auditors and
any accounting adjustments noted or proposed by the independent auditors, but
not accepted by management, (e) any communications between the independent
auditing team and the firm's national office respecting auditing or accounting
issues that are otherwise required to be disclosed to the Committee by the
independent auditors, (f) any management or internal control letter issues
raised, or proposed to be raised, by the independent auditors to the Company,
and (g) any major issue as to the adequacy of the Company's internal controls
A-3
and specific audit steps adopted in light of material control deficiencies.
c. REVIEW OF RISK ASSESSMENT AND RISK MANAGEMENT. The Committee shall
review the Company's policies with respect to risk assessment and risk
management. This review should include a discussion of the Company's major
financial risk exposures and the steps management has taken to monitor and
control such exposures.
d. COMMITTEE OVERSIGHT OF INTERNAL AUDIT. The Committee shall ensure
that the Company has an internal audit function to provide management and the
Committee with ongoing assessments. The Committee shall review and concur in the
appointment, replacement or dismissal of the head of the Company's internal
auditing department. The Committee shall also review the responsibilities,
budget and staffing of the Company's internal audit function.
e. ANNUAL PERFORMANCE EVALUATION. The Committee shall perform an
annual self-evaluation of the Committee's performance.
2. INDEPENDENT AUDITORS.
a. COMMITTEE OVERSIGHT OF INDEPENDENT AUDITORS. The Committee shall
have the sole authority regarding, and shall be directly responsible for, the
appointment, compensation, oversight, termination and replacement of, as well as
funding for, the independent auditors for the purpose of preparing or issuing an
audit report or related work, or any non-audit work, subject, if applicable, to
stockholder ratification. The independent auditors shall report directly to the
Committee, and are ultimately accountable to the Committee and the Board.
b. INDEPENDENT AUDITORS' INDEPENDENCE. The Committee shall annually
request from the independent auditors, a formal written statement
delineating all relationships between the independent auditors and the Company,
including fees paid by the Company to the independent auditors, in accordance
with the SEC, the NYSE and the Act's requirements; actively engage in a dialogue
with the independent auditors regarding all relationships between the
independent auditors and management of the Company that in the Committee's
judgment (or the independent auditors' judgment) may reasonably be thought to
bear on the independence of the independent auditors; and take appropriate
action in response to the independent auditor's report to satisfy itself of the
independent auditors' independence.
c. PRE-APPROVAL OF INDEPENDENT AUDITORS' FEES. The Committee shall
pre-approve all auditing services and non-auditing services
provided to the Company by the independent auditors. Such approval may be given
at the beginning of each year up to a pre-established amount to be determined by
the Committee. Any permitted non-audit services not included in the pre-approved
category shall be approved prior to the commencement of any such services.
d. INDEPENDENT AUDITORS' REPORT ON PRACTICES. The independent auditors
A-4
shall report promptly to the Committee (a) all critical accounting policies and
practices to be used; (b) all alternative treatments of financial information,
ramifications of such treatment, and the treatment preferred by the accounting
firm; and (c) all material written communications between the independent
auditors' firm and Company management. The independent auditors shall also
report on generally accepted accounting principles adopted by the accounting
profession, the Company's compliance therewith, and the effect of unusual or
extraordinary transactions. The independent auditors must discuss their
judgments about the quality and content of the Company's accounting principles
with the Committee.
e. QUALITY CONTROL OF INDEPENDENT AUDITORS. On an annual basis, the
Committee shall obtain a report from the independent auditors
describing (i) the independent auditors' internal quality-control procedures,
and (ii) any material issues raised by the most recent internal quality-control
review, or peer review, of the firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding five years,
respecting one or more independent audits carried out by such firm, and any
steps taken to deal with any such issues. The Committee shall then present its
conclusions with respect to the independent auditors to the full Board.
f. ROTATION OF INDEPENDENT AUDITORS. The Committee shall annually (i)
assess the qualifications, performance and independence of the
independent auditors and the lead (or coordinating) audit partner (or other
audit partner having primary responsibility for the audit); (ii) take any
actions necessary to ensure the rotations not less than every five (5) years of
the audit partner; and (iii) consider whether, in order to ensure continuing
auditor independence, the independent accounting firm should be rotated on a
regular basis. The Committee shall then present its conclusions with respect to
the independent auditors to the full Board.
g. HIRING POLICIES. The Committee shall establish clear hiring
policies for the Company's hiring of employees or former employees of
the independent auditors, after consultation with management.
h. AUDIT PROBLEMS. The Committee shall review with the independent
auditors any audit problem or difficulties encountered during the
course of their work and management's response.
3. LEGAL COMPLIANCE.
a. REVIEW OF DISCLOSURES BY OFFICERS. The Committee shall review
disclosures made by the Company's principal executive officer(s) and principal
financial officer(s) regarding compliance with their certification obligations
under the Act, including the Company's disclosure controls and procedures and
internal controls for financial reporting.
b. FRAUD. The Committee shall discuss with management and the independent
auditors any fraud disclosed to the Committee, whether or not material, that
involves management or other employees who have a significant role in the
Company's internal controls.
A-5
c. RELATED PARTY TRANSACTIONS. The Committee shall be responsible for
reviewing and approving all related party transactions involving the Company and
any director, executive officer, other employee, or family member.
4. OTHER COMMITTEE ACTIVITIES.
a. EARNINGS PRESS RELEASES. The Committee shall discuss earnings press
releases, as well as financial information and earnings guidance provided to
analysis and rating agencies.
b. COMPLAINT PROCEDURES. The Committee shall establish procedures for
the receipt, retention and treatment of complaints received by the Company
regarding the Company's accounting, internal accounting controls and auditing
matters and for the confidential, anonymous submissions by employees of the
Company of concerns relating to questionable accounting or auditing matters.
c. COMMITTEE REPORTS. The Committee shall prepare reports to
stockholders as required by the SEC 's proxy rules to be included in the
Company's annual proxy statement, or, if the Company does not file a proxy
statement, in the Company's Annual Report filed on Form 10-K with the SEC.
d. OTHER. The Committee shall have the power and authority
to perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the Board deems
necessary or appropriate.
LIMITATION
Nothing in this Charter is intended to alter in any way the standard of conduct
required of any of the directors of the Company under the Delaware General
Corporation Law, as amended, and this Charter does not impose, nor shall it be
interpreted to impose, any duty on any director greater than, or in addition to,
the duties or standards established by the Delaware General Corporation Law or
applicable requirements of federal law or the NYSE.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
WHX CORPORATION
PROXY -- ANNUAL MEETING OF STOCKHOLDERS
JUNE 2, 2004
The undersigned, a stockholder of WHX Corporation, a Delaware corporation
(the "Company"), does hereby appoint Neale X. Trangucci, Stewart E. Tabin and
Neil D. Arnold, and each of them, the true and lawful attorneys and proxies with
full power of substitution, for and in the name, place and stead of the
undersigned, to vote all of the shares of Common Stock of the Company which the
undersigned would be entitled to vote if personally present at the 2004 Annual
Meeting of Stockholders of the Company to be held at the New York Marriott East
Side located at 525 Lexington Avenue, New York, New York, on June 2, 2004, at
11:00 a.m., Local Time, or at any adjournment or postponements thereof.
The undersigned hereby revokes any proxy or proxies heretofore given and
acknowledges receipt of a copy of the Notice of Annual Meeting and Proxy
Statement, both dated April 29, 2004, and a copy of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2003.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREIN GIVEN. UNLESS
OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT THE CLASS II DIRECTORS
AND TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS.
YOUR VOTE IS IMPORTANT. PLEASE VOTE IMMEDIATELY.
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VOTE-BY-INTERNET VOTE-BY-TELEPHONE
Log on to the Internet and go to Call toll-free
http://www.eproxyvote.com/whx 1-877-PRX-VOTE (1-877-779-8683)
- --------------------------------------------------------------------------------
IF YOU VOTE OVER THE INTERNET OR BY TELEPHONE, PLEASE DO NOT MAIL YOUR CARD.
1. To elect the following Class II directors: (01) Marvin L. Olshan, (02)
Garen W. Smith and (03) Raymond S. Troubh, to serve as directors until the
2007 Annual Meeting of Stockholders of the Company and in each case until
their successors have been duly elected and qualified.
FOR ALL NOMINEES WITHHELD FROM ALL NOMINEES
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- -----------------------------------------------------------
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEES(S), PRINT NAME ABOVE
2. To ratify the appointment of PricewaterhouseCoopers LLP as the independent
public accountants of the Company for the fiscal year ending December 31,
2004.
FOR AGAINST ABSTAIN
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3. DISCRETIONARY AUTHORITY: To vote with discretionary authority with respect
to all other matters that may come before the Meeting.
Note: Your signature should appear the same as your name appears hereon. In
signing as attorney, executor, administrator, trustee or guardian, please
indicate the capacity in which signing. When signing as joint tenants, all
parties in the joint tenancy must sign. When a proxy is given by a corporation,
it should be signed by an authorized officer and the corporate seal affixed. No
postage is required if mailed in the United States.
Signature: Date:
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Signature: Date:
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MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
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A-2
