SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2)
[x] Definitive Information Statement
WHX CORPORATION
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(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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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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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
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WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
To Our Holders of Preferred 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 have the
right to elect up to two directors to our Board of Directors.
This booklet includes a formal notice of the annual meeting and the
information statement. The information statement tells you more about the agenda
and procedures for the annual meeting. It also describes how our Board of
Directors operates.
Only preferred stockholders of record at the close of business on
April 20, 2004 will be entitled to vote at the annual meeting for the election
of the two directors referenced above. 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
May 4, 2004
WHX CORPORATION
110 East 59th Street
New York, New York 10022
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INFORMATION STATEMENT
GENERAL INFORMATION
This information statement is being furnished by WHX Corporation, a
Delaware corporation ("WHX" or the "Company"), in connection with the meeting of
the holders of its Series A Convertible Preferred Stock ("Series A Preferred
Stock") and Series B Convertible Preferred Stock ("Series B Preferred Stock,"
and together with Series A Preferred Stock, "Preferred Stock") 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 (the "Meeting").
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
ABOUT THE MEETING
DESCRIPTION OF THE PREFERRED STOCK VOTING RIGHTS
The Certificates of Designation for each of the Series A Preferred
Stock and the Series B Preferred Stock (the "Certificates of Designation")
provide for voting rights upon the occurrence of certain events. Each of the
Certificates of Designation provide that upon the Company's failure to declare
and pay six quarterly dividends, whether or not consecutive, the number of
directors of the Company shall be increased by two and the holders of
outstanding shares of the Series A Preferred Stock and the Series B Preferred
Stock, voting together as a class, shall be entitled to elect such additional
directors. The holders of the Series A Preferred Stock shall be entitled to vote
and elect directors as provided in its Certificate of Designation until the full
dividends accumulated on all outstanding shares of the Series A Preferred Stock
have been declared and paid or set apart for payment and the holders of the
Series B Preferred Stock shall be entitled to vote and elect directors as
provided in its Certificate of Designation until the full dividends accumulated
on all outstanding shares of the Series B Preferred Stock have been declared and
paid or set apart for payment.
Pursuant to Section 4(d) of each of the Certificates of Designation,
directors properly and validly elected at the Meeting to the Board of Directors
of the Company by the Holders of Preferred Stock shall serve until the earlier
of (i) the next annual meeting of the stockholders of the Company and the
election (by the holders of the Preferred Stock) and qualification of their
respective successors and (ii) the date upon which all dividends in default on
the shares of the Preferred Stock shall have been paid in full.
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All shares of Preferred Stock have equal voting rights of one vote
per share. Dividends on the Preferred Stock have not been paid since the
dividend payment of October 1, 2000, and 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 of Directors. In connection with such right, the Board of
Directors of the Company has called this Meeting of the holders of the shares of
the Preferred Stock.
WHAT IS THE PURPOSE OF THE MEETING?
The Meeting is the Company's Annual Meeting of its Stockholders.
Holders of Preferred Stock shall be eligible to elect up to two directors to the
Board of Directors of the Company, as described herein. In addition, holders of
common stock of the Company shall be eligible to act on certain proposals
subject to the requirements and procedures set forth in a Notice of Annual
Meeting of Stockholders and Proxy Statement which is being mailed separately to
the holders of the Company's common stock.
WHO MAY VOTE?
Holders of Preferred Stock, as recorded in the Company's stock
register on April 20, 2004 (the "Record Date"), may vote at the meeting with
respect to the election of the two directors described above. As of this date,
there were 2,573,926 shares of Series A Preferred Stock outstanding and
2,949,000 shares of Series B Preferred Stock outstanding.
NOMINATIONS
Nominees for election of directors by the holders of Preferred Stock
may be made at or before the Meeting, in person or by proxy. The Board of
Directors of the WHX does not take any position with respect to the election of
any potential Preferred Stock nominees for election as directors, is not
soliciting any proxies in connection with the election of directors by the
holders of Preferred Stock at the Meeting and does not make any recommendation
"For" or "Against" the election of any Preferred Stock nominee.
Applicable rules of the Securities and Exchange Commission (the
"SEC") require that, if proxies are solicited from the holders of Preferred
Stock in support of or in opposition to the election of any nominee to the Board
of Directors of the Company, the person soliciting such holders must provide
them with a proxy statement containing certain prescribed information, including
information concerning the nominees. The Company assumes no responsibility for
the accuracy or completeness of any information contained in any proxy material
furnished to any holder of Preferred Stock concerning the election of any
director.
QUORUM
In order to proceed with the election of directors by the holders of
Preferred Stock at the Meeting, there must be a quorum of the holders of
Preferred Stock. This means at least a majority of the outstanding shares of
Preferred Stock as a single class 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. If there is not a quorum of the holders
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of Preferred Stock, no action may be conducted at the Meeting by the holders of
Preferred Stock, and the Company will have no requirement to call an additional
special meeting. The next opportunity for the holders of Preferred Stock to
elect directors will be at the Company's 2005 Annual Meeting of Stockholders or
as provided in the respective Certificates of Designation.
MEETING
The Meeting will be conducted by a representative of the Company in
accordance with such rules and procedures as the Company shall determine in its
sole discretion. The Chairman of the Board of Directors of the Company, or his
designee, may adjourn the Meeting at his discretion.
VOTES NEEDED
The two director nominees receiving a plurality of the votes cast
during the meeting by the holders of Preferred Stock will be elected to the
board of directors. Broker non-votes count for quorum purposes and otherwise
have no impact in the election of directors. Broker non-votes occur when a
broker returns a proxy but does not have the authority to vote on a particular
proposal.
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 an identification with a
photo at the Meeting. For example, you could bring an account statement showing
that you beneficially owned WHX Preferred Stock as of April 20, 2004 as
acceptable proof of ownership.
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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....................................... 63,928(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........................................... 6,853(17) *
Daniel P. Murphy........................................ 76,276(18) 1.4%
All Directors and Executive Officers as a Group
(12 persons) ........................................... 651,300(19) 10.8%
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* less than one percent.
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(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 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
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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.
(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 3,332 shares of Common Stock issuable upon his exercise of
options within 60 days hereof, approximately 105 shares of Common
Stock issuable upon conversion of 100 shares of Series A Preferred
Stock and approximately 82 shares of Common Stock issuable upon
conversion of 100 shares of Series B Preferred Stock.
(18) Includes 73,295 shares of Common Stock issuable upon his exercise of
options within 60 days hereof.
(19) Includes (i) 540,731 shares of Common Stock issuable upon their
exercise of options within 60 days hereof, (ii) approximately 26,933
shares of Common Stock issuable upon conversion of 25,500 shares of
Series A Preferred Stock held by Robert A. Davidow; (ii)
approximately 105 shares of Common Stock issuable upon conversion of
100 shares of Series A Preferred Stock held by Howard Mileaf; (iii)
approximately 817 shares of Common Stock issuable upon conversion of
1,000 shares of Series B Preferred Stock held by Garen W. Smith; and
(iv) approximately 82 shares of Common Stock issuable upon
conversion of 100 shares of Series B Preferred Stock held by Howard
Mileaf.
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The following table sets forth information concerning ownership of
the Preferred Stock of WHX Corporation outstanding at April 20, 2004, by (i)
each person known by the Company to be the beneficial owner of more than five
percent of the outstanding Series A Preferred Stock and Series B Preferred Stock
voting together as a class, (ii) each director known by the Company to hold
Preferred Stock, (iii) each of the executive officers named in the summary
compensation table known by the Company to hold Preferred Stock and (iv) by all
directors and executive officers of the Company as a group.
NAME AND ADDRESS OF PREFERRED SHARES PERCENTAGE
BENEFICIAL OWNER(1) BENEFICIALLY OWNED(2) OF CLASS(3)
- ------------------- --------------------- -----------
Private Management Group, Inc.(4)
20 Corporate Park, Suite 400
Irvine, CA 92606....................... 525,200 9.5%
Gabelli Asset Management, Inc.(5)
One Corporate Center,
Rye, New York 10580................... 461,900 8.4%
Robert A. Davidow...................... 25,500(6) *
Garen W. Smith......................... 1,000(7) *
Howard Mileaf.......................... 200(8) *
All Directors and Executive Officers as
a Group (3 persons).................... 26,700(9) *
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* less than one percent.
(1) Each preferred 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) Directors and executive offers that are named in the summary
compensation table which are not listed above, to the Company's
knowledge, do not beneficially own any shares of Preferred Stock.
(3) Based upon the shares of Series A Preferred Stock outstanding at
April 14, 2003 of 2,573,926 shares and the Series B Preferred Stock
outstanding at April 14, 2003 of 2,949,000 shares for a total of
5,522,926 shares of preferred stock outstanding.
(4) Based on a Schedule 13G/A filed in February 2004, Private Management
beneficially holds 250,400 shares of Series A Preferred Stock and
274,800 shares of Series B Preferred Stock.
(5) 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 174,300 shares
of Series A Preferred Stock and 287,600 shares of Series B Preferred
Stock.
(6) Consists of 25,500 shares of Series A Preferred Stock. (7) Consists
of 1,000 shares of Series B Preferred Stock.
(8) Consists of 100 shares of Series A Preferred Stock and 100 shares of
Series B Preferred Stock.
(9) Consists of 25,500 shares of Series A Preferred Stock held by Mr.
Davidow, 1000 shares of Series B Preferred Stock held by Mr. Smith
and 100 shares of Series A Preferred Stock and 100 shares of Series
B Preferred Stock held by Mr. Mileaf.
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DIRECTORS
The Company's Certificate of Incorporation and Bylaws provide for
the classification of the Board of Directors into three classes. The four Class
I Directors have a term that expires at the 2006 Annual Meeting of Stockholders
of the Company, the three Class III Directors have a term that expires at the
2005 Annual Meeting of Stockholders, and the three Class II Directors, which are
nominated for election at the Company's 2004 Annual Meeting of Stockholders of
the Company, in the event they are elected, will have a term that expires at the
2007 Annual Meeting of Stockholders of the Company.
The names of the directors and certain information concerning them
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)
- ---- -------- -------------------------------- --- -------------
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 excess of 77 1992
past 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.
-8-
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 Consultant 85 1987
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 Injury 68 2002
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 President 67 2002
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. Chief 47 2004
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 BOARD. 55 1992
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 1990. 62 1992
Director of Arden Group, Inc., a supermarket
holding company.
Stewart E. Tabin III DIRECTOR AND PRESIDENT. President of the Company 47 2004
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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(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.
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
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
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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.
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.
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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 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 which 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
Information 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.
-12-
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
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. Subject to the rights of holders of any series of
Preferred Stock, 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.
-13-
Additionally, the Nominating Committee will consider the number of boards on
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.
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,
-14-
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.
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.
-15-
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 43
2003. 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.
-16-
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 attributed to the year in which the services were performed.
-17-
(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 $835,717.
(8) Mr. Hynes' employment as an officer of the Company commenced June 2001.
Prior to such time, he was an employee of H&H.
(9) Mr. Arnold did not receive any direct compensation from the Company. Such
amount was received from WPN as payment for Mr. Arnold's services as an
officer of WPN. Mr. Arnold joined WPN as an officer in August 2001.
OPTION GRANTS TABLE. The following table sets forth certain information
regarding stock option grants made to each of the Named Executive Officers
during the fiscal year ended December 31, 2003.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
----------------- -----------
PERCENT OF
NUMBER OF SECURITIES TOTAL OPTIONS
UNDERLYING OPTIONS GRANTED TO EXERCISE
GRANTED (1) EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/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.
-18-
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 VALUE OF UNEXERCISED IN-THE-
OPTIONS AT 2003 FISCAL MONEY OPTIONS AT 2003 FISCAL
YEAR-END(#) YEAR-END ($)(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
Neil D. Arnold .............. 92,327 / 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.
-19-
EQUITY COMPENSATION PLAN SUMMARY
The following table sets forth information as of December 31, 2003 regarding the
number of shares of Common Stock issued and available for issuance under the
Company's existing equity compensation plans:
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDER
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE EQUITY COMPENSATION
ISSUED UPON EXERCISE OF EXERCISE PRICE OF PLANS (EXCLUDING
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS IN COLUMN (A))
- -------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
Equity compensation plans
approved by security holders 1,560,999 $14.60 789,554
Equity compensation plans not
approved by security holders 0 0 0
Total 1,560,999 $14.60 789,554
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
-20-
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 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
-21-
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 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
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.
-22-
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.
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.
-23-
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,
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
-24-
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").
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.
-25-
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.
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.
-26-
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
-27-
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
There can be no assurance that the Common Stock's performance will
continue with the same or similar trends depicted in the graph above.
-28-
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."
-29-
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.
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.
-30-
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.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE SELECTION OF THE
INDEPENDENT PUBLIC ACCOUNTANTS.
-31-
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 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
Dated: New York, New York
May 4, 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.
-32-
