Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14-11(c) or 240.14a.12
STEEL OF WEST VIRGINIA, INC.
(Name of Registrant as Specified in Its Charter)
STEEL OF WEST VIRGINIA, INC.
(Name of Persons Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0.11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0.11.:
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
April 22, 1996
Dear Stockholder:
It is our pleasure to invite you to the Annual Meeting of Stockholders
of Steel of West Virginia, Inc. to be held on Thursday, May 23, 1996 at 10:30
a.m. at the Radisson Hotel Huntington, 1001 3rd Avenue, Huntington, West
Virginia.
Whether or not you plan to attend, and regardless of the number of
shares you own, it is important that your shares be represented at the meeting.
You are accordingly urged to sign, date and return your proxy promptly in the
enclosed envelope, which requires no postage if mailed in the United States.
We sincerely hope you will be able to join us at the meeting. The
officers and directors of the Company look forward to seeing you at that time.
Sincerely,
Robert L. Bunting, Jr.
Chairman
STEEL OF WEST VIRGINIA, INC.
17th Street and 2nd Avenue
Huntington, West Virginia 25703
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 23, 1996
The Annual Meeting of Stockholders of Steel of West Virginia, Inc.
(the "Company") will be held at the Radisson Hotel Huntington, 1001 3rd Avenue,
Huntington, West Virginia on Thursday, May 23, 1996 at 10:30 a.m. for the
following purposes:
1. To elect Directors of the Company for the ensuing year.
2. To approve an amendment to the Steel of West Virginia, Inc. 1995
Non-Employee Director Stock Option Plan, to provide for the
awarding of shares of the Company's Common Stock in payment of a
portion of the compensation payable to certain outside Directors
for their services as Directors.
3. To ratify the reappointment of Ernst & Young LLP as independent
accountants for the Company.
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on April 12,
1996 as the record date for the determination of stockholders entitled to notice
and to vote at the meeting and any adjournments thereof.
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE
ENCLOSED PROXY WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
STEPHEN A. ALBERT
Secretary
April 22, 1996
STEEL OF WEST VIRGINIA, INC.
17th Street and 2nd Avenue
Huntington, West Virginia 25703
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 23, 1996
GENERAL INFORMATION
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Steel of West Virginia, Inc. (the "Company") to be used at the
Annual Meeting of Stockholders to be held at the Radisson Hotel Huntington, 1001
3rd Avenue, Huntington, West Virginia on Thursday, May 23, 1996, at 10:30 a.m.
and any adjournments thereof.
When the enclosed proxy is properly executed and returned, the shares
of Common Stock of the Company, par value $.01 per share (the "Common Stock"),
it represents will be voted at the meeting in accordance with any directions
noted thereon and, if no direction is indicated, the shares it represents will
be voted: (i) FOR the election of the nominees for Directors set forth below;
(ii) FOR the proposed amendment to the Steel of West Virginia, Inc. 1995 Non-
Employee Director Stock Option Plan (the "Directors' Plan"), which will provide
for the awarding of shares of Common Stock in payment of a portion of the
compensation payable to certain outside Directors for their services as
Directors; (iii) FOR the ratification of the reappointment of Ernst & Young LLP
as independent accountants for the Company; and (iv) in the discretion of the
holders of the proxy with respect to any other business that may properly come
before the meeting. Any stockholder signing and delivering a proxy may revoke
it at any time before it is voted by delivering to the Secretary of the Company
a written revocation or a duly executed proxy bearing a date later than the date
of the proxy being revoked. Any stockholder attending the meeting in person may
withdraw his or her proxy and vote his or her shares.
The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made only by mail; provided, however, that officers and
regular employees of the Company may solicit proxies personally or by telephone
or telegram. Such persons will not be specially compensated for such services.
The Company may reimburse brokers, banks, custodians, nominees and fiduciaries
holding stock in their names or in the names of their nominees for their
reasonable charges and expenses in forwarding proxies and proxy material to the
beneficial owners of such stock.
The approximate mailing date of this Proxy Statement and the
accompanying proxy is April 22, 1996.
VOTING RIGHTS
Only stockholders of record at the close of business on April 12,
1996, will be entitled to vote at the Annual Meeting of Stockholders. On that
date, there were 5,986,060 shares of Common Stock outstanding, the holders of
which are entitled to one vote per share on each matter to come before the
meeting. Voting rights are non-cumulative. A majority of the outstanding
shares will constitute a quorum at the meeting and abstentions and broker non-
votes are counted for purposes of determining the presence or absence of a
quorum for the transaction of business.
Directors are elected by plurality vote. The approval of the
amendment to the Directors' Plan and the ratification of the reappointment of
Ernst & Young LLP will require the affirmative vote of a majority of the Common
Stock voting on the proposal. Abstentions and broker non-votes will not be
counted in the election of directors or in determining whether such approval or
ratification has been given.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of April 12, 1996, the beneficial
ownership of Common Stock of each person known to the Company who owns more than
5% of the issued and outstanding Common Stock.
Amount and
Nature of Percent
Name and Address Beneficial of
of Beneficial Owner Ownership Class(7)
- --------------------------------- ----------- --------
FMR Corp. 861,700(1) 14.21
82 Devonshire Street
Boston, Massachusetts 02109
Neuberger & Berman, L.P. 732,900(2) 12.08
605 Third Avenue
New York, NY 10158
Putnam Investments, Inc. 539,100(3) 8.89
One Post Office Square
Boston,Massachusetts 02109
Robert L. Bunting, Jr. 534,380(4) 8.81
c/o Steel of West Virginia, Inc.
17th Street and 2nd Avenue
Huntington, West Virginia 25703
Skyline Asset Management, L.P. 383,300(5) 6.32
311 South Wacker Drive
Chicago, Illinois 60606
Dimensional Fund Advisors, Inc. 358,600(6) 5.91
1299 Ocean Avenue
Santa Monica, California 90401
- --------------
(1) Fidelity Management & Research Company ("Fidelity"), 82 Devonshire Street,
Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR Corp. and an
investment adviser registered under Section 203 of the Investment Advisors
Act of 1940, is the beneficial owner of 663,000 shares (10.93%) of Common
Stock as a result of acting as investment advisor to several investment
companies registered under Section 8 of the Investment Company Act of 1940.
The ownership of one investment company, Fidelity Low-Priced Stock Fund,
amounted to 663,000 shares (10.93%) of Common Stock outstanding. Fidelity
Low-Priced Stock Fund has its principal business office at 82 Devonshire
Street, Boston, Massachusetts 02109. Edward C. Johnson 3d, FMR Corp.,
through its control of Fidelity, and the Funds each has sole power to
dispose of the 663,000 shares owned by the Funds. Neither FMR Corp. nor
Edward C. Johnson 3d, Chairman of FMR Corp., has the sole power to vote or
direct the voting of the shares owned directly by the Fidelity Funds, which
power resides with the Funds' Board of Trustees. Fidelity carries out the
voting of the shares under written guidelines established by the Funds'
Board of Trustees. Fidelity Management Trust Company, 82 Devonshire
Street, Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR Corp.
and a bank as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, is the beneficial owner of 198,700 shares (3.28%) of Common Stock as
a result of its serving as investment manager of the institutional
account(s). Edward C. Johnson 3d and FMR Corp. through its control of
Fidelity Management Trust Company, has sole voting and dispositive power
over 198,700 shares of Common Stock owned by the institutional account(s)
as reported above. Members of the Edward C. Johnson 3d family and trusts
for their benefit are the predominant owners of Class B shares of common
stock of FMR Corp., representing approximately 49% of the voting power of
FMR Corp. Mr. Johnson 3d owns 12.0% and Abigail P. Johnson owns 24.5% of
the aggregate outstanding voting stock of FMR Corp. Mr. Johnson 3d is
chairman of FMR Corp. and Abigail P. Johnson is a director of FMR Corp.
2
The Johnson family group and all other Class B shareholders have entered
into a shareholder's voting agreement under which all Class B shares will
be voted in accordance with the majority vote of Class B shares.
Accordingly, through their ownership of voting common stock and the
execution of the shareholder's voting agreement, members of the Johnson
family may be deemed, under the Investment Company Act of 1940 to form a
controlling group with respect to FMR Corp. The information set forth
herein is based on a Schedule 13G dated February 14, 1996 filed by FMR
Corp. with the Securities and Exchange Commission.
(2) Neuberger & Berman L.P. ("Neuberger") has (i) sole voting power with
respect to 462,100 shares of Common Stock, (ii) shared voting power with
Neuberger & Berman Management, Inc. with respect to 115,000 shares of
Common Stock, and (iii) shared dispositive power with respect to 732,900
shares of Common Stock. Neuberger and Neuberger & Berman Management Inc.
serve as sub-adviser and investment manager, respectively, of Neuberger &
Berman's various Funds which hold such shares in the ordinary course of
their business and not with the purpose nor with the effect of changing or
influencing the control of the issuer. The information set forth herein is
based on a Schedule 13G dated February 12, 1996 filed by Neuberger with the
Securities and Exchange Commission.
(3) Putnam Investments, Inc. ("Putnam") is a wholly-owned subsidiary of Marsh &
McLennan Companies, Inc. ("M&MC") and wholly owns two registered investment
advisers: Putnam Investment Management, Inc. and the Putnam Advisory
Company, Inc., which are deemed to be beneficial owners of the shares set
forth in the table above. Neither Putnam nor M&MC has any power to vote or
dispose of, or direct the voting or disposition of, any of the shares set
forth in the table above, which were acquired by the afore-named investment
advisors for investment purposes for advisory clients. The information set
forth herein is based on a Schedule 13G dated January 29, 1996 filed by
Putnam with the Securities and Exchange Commission, which filing should not
be deemed an admission of beneficial ownership.
(4) Of this amount, 233,710 shares are held in a trust for the benefit of Mr.
Bunting's wife, Nancy L. Bunting, and 237,557 shares are held in a trust
for the benefit of Mr. Bunting. Mr.and Mrs. Bunting are co-trustees of
each of said trusts. This amount includes 8,000 shares that Mr. Bunting
has the right to acquire through the exercise of options.
(5) Skyline Asset Management, L.P. ("Skyline") is investment adviser to certain
client accounts ("Accounts") over which Skyline exercises discretion.
Pursuant to Rule 13d-3(a), the 383,300 shares beneficially owned by the
Accounts, with respect to which Skyline has been delegated shared voting
power and shared dispositive power, are considered to be shares
beneficially owned by Skyline solely by reason of such designated powers.
The information set forth herein is based on a Schedule 13G dated February
13, 1996 filed by Skyline with the Securities and Exchange Commission,
which filing should not be deemed an admission of beneficial ownership.
(6) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of the shares set forth in
the table above, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business
trust, or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional
Fund Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares. The information set forth herein
is based on a Schedule 13G dated February 7, 1996 filed by Dimensional with
the Securities and Exchange Commission.
(7) Includes 79,500 shares deemed outstanding that may be acquired through the
exercise of options.
3
PROPOSAL 1. ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders, the entire Board of Directors,
consisting of five members, is to be elected. In the absence of instructions to
the contrary, the shares of Common Stock represented by a proxy delivered to the
Board of Directors will be voted FOR the five nominees named below. Each
nominee named below is presently serving as a Director of the Company and is
anticipated to be available for election and able to serve. However, if any
such nominee should decline or become unable to serve as a Director for any
reason, votes will be cast instead for a substitute nominee designated by the
Board of Directors or, if none is so designated, will be cast according to the
judgment in such matters of the person or persons voting the proxy.
The tables below and the paragraphs that follow present certain
information concerning the nominees for Director and the executive officers of
the Company. Each elected Director will serve until the next Annual Meeting of
Stockholders and until his or her successor has been elected and qualified.
Officers are elected by and serve at the discretion of the Board of Directors.
None of the Company's Directors or executive officers has any family
relationship with any other Director or executive officer.
Nominees for Directors
- ----------------------
Shares of
Common Stock
Years Beneficially
Positions with Owned as of Percent of
Name Age with Company Company April 12, 1996 Class(4)
- ----------------------- ---- ----------------- ------- ------------- -----------
Robert L. Bunting, Jr. 62 President, Chief 13 534,380(2) 8.81
Executive Officer
and Director
Stephen A. Albert 43 Director 9 2,000(3) *
Albert W. Eastburn(1) 67 Director 3 4,500(3) *
Daniel N. Pickens(1) 46 Director 3 3,000(3) *
Paul E. Thompson(1) 65 Director 2 2,000(3) *
All Directors and executive officers as a group . . . 582,160(2)(3) 9.60
________________________
* Less than one percent
(1) Members of the Compensation and Benefits Committee and the Audit Committee.
(2) Of this amount, 233,710 shares are held in a trust for the benefit of Mr.
Bunting's wife, Nancy L. Bunting, and 237,577 shares are held in a trust for
the benefit of Mr. Bunting. Mr. and Mrs. Bunting are co-trustees of each of
said trusts. This amount includes 8,000 shares that Mr. Bunting has the
right to acquire through the exercise of options.
(3) This amount includes 2,000 shares that may be acquired by each of Messrs.
Albert, Eastburn, Pickens and Thompson through the exercise of options.
(4) Includes 79,500 shares deemed outstanding that may be acquired through the
exercise of options.
4
Executive Officers who are not Directors
- ----------------------------------------
Shares of
Common Stock
Executive Beneficially
Positions and Offices with Officer Owned as of Percent
Name the Company Age Since April 12, 1996 of Class
- ----------------- --------------------------- --- ---------- -------------- --------
Timothy R. Duke Vice President, Treasurer 44 1988 23,140(1) *
and Chief Financial Officer
Larry E. Gue Vice President of Human 53 1988 10,140(2) *
Relations
T. Elton North President, Marshall Steel, 48 1993 3,000(3) *
Inc.
________________________
* Less than one percent.
(1) This amount includes 6,000 shares that may be acquired through the exercise
of options.
(2) This amount includes 3,000 shares that may be acquired through the exercise
of options.
(3) The amount consists of 3,000 shares that Mr. North may acquire through the
exercise of options. Mr. North filed a Form 5 with the Securities and
Exchange Commission on February 14, 1996, with regard to his sale of 500
shares of Common Stock in August, 1995.
Business Experience of Nominees and Executive Officers
- ------------------------------------------------------
Robert L. Bunting, Jr. has been Chairman of the Company, SWVA, Inc.
("SWVA") and Marshall Steel, Inc. ("Marshall"), the Company's wholly-owned
subsidiaries, since April 1993, President, Chief Executive Officer and a
Director of the Company since December 1986 and President, Chief Executive
Officer and a director of SWVA since its organization in 1982. Mr. Bunting was
Works Manager of the Company's mini-mill before it was owned by SWVA. Before
becoming President of the mini-mill, Mr. Bunting held various positions in the
steel industry over a period of 27 years. Mr. Bunting received a bachelor of
metallurgical engineering from Cornell University in 1955.
Stephen A. Albert has been a Director of the Company since December 1986.
Since January 15, 1996, Mr. Albert has been a member of the law firm of Sierchio
& Albert, P.C., counsel to the Company. Prior thereto, Mr. Albert was, since
February 1989, special counsel to the law firm of Proskauer Rose Goetz &
Mendelsohn LLP, counsel to the Company until January 1996, and prior thereto,
Mr. Albert was a member of the law firms of Feit & Ahrens and Feit & Shor, which
were counsel to the Company until January 1989. Mr. Albert has been engaged in
the practice of law in New York City since 1977.
Albert W. Eastburn has been a Director of the Company since April 1993.
Mr. Eastburn was President and Chief Operating Officer of the Steel Group of
Lukens, Inc., a leading specialized manufacturer of steel plate and stainless
steel products ("Lukens"), from November 1988 until his retirement in 1991.
Prior thereto, Mr. Eastburn held various positions at Lukens which he joined in
1955.
Daniel N. Pickens has been a Director of the Company since April 1993. Mr.
Pickens has been a Senior Vice President in the Corporate Finance Department of
Wheat First Securities, Inc. ("Wheat First") since 1989. Prior thereto, Mr.
Pickens held various positions at Wheat First, which he joined in 1981. Before
joining Wheat First, Mr. Pickens practiced as an attorney in Philadelphia,
Pennsylvania.
5
Paul E. Thompson has been a Director since January 1994. From 1986 until
his retirement in 1992, Mr. Thompson was a Sub-District Director, District 23,
of the United Steel Workers of America ("USWA"). Prior thereto, Mr. Thompson
was a Staff Representative, District 23, of the USWA.
Timothy R. Duke has been Vice President, Treasurer and Chief Financial
Officer of the Company since March 1988 and was the Controller from June 1987
until March 1988. Mr. Duke was formerly the Manager - Operations Accounting at
Joy Manufacturing Company, and served in various other positions at Joy
Manufacturing Company from 1979 until he joined the Company. Mr. Duke is a
certified public accountant, a certified management accountant and has more than
20 years of experience in industry. He received a bachelor of science degree in
business from Pennsylvania State University and a masters of business
administration from Duquesne University.
Larry E. Gue has been Vice President of Human Relations of SWVA, Inc. since
March 1988 and has been Manager of Personnel and Public Relations of SWVA since
its organization in 1982. Mr. Gue began working at the Company's mini-mill in
1971 as part of the maintenance team. At that time, Mr. Gue was actively
involved in, and later became a leader of, the United Steel Workers of America
(Local 37), the union which represents the Company's work force.
T. Elton North has been President of Marshall since its organization in
April 1993. From June 1992 until April 1993, Mr. North was Division Manager for
the Memphis, Tennessee division of Marshall Steel Inc., a wholly-owned
subsidiary of Marshall Steel Ltd, a Canadian steel company. This division was
sold to the Company. Mr. North served as branch manager of Marshall Steel Ltd.
from June 1991 to June 1992. Prior thereto, Mr. North served as marketing
manager of Marshall Steel Ltd. for approximately six years.
Meetings of the Board of Directors and Committees
- -------------------------------------------------
During the year ended December 31, 1995, the Board of Directors held nine
meetings. During that period no Director attended fewer than 75% of the
aggregate of (i) the total number of meetings of the Board of Directors held
during the period for which he was a Director and (ii) the total number of
meetings held by all Committees of the Board of Directors on which he served
during the period that he served on such Committees.
The Company's Board of Directors has a Compensation and Benefits Committee
and an Audit Committee, both of which are comprised of Directors who are not
officers or employees of the Company. The Board of Directors does not have a
standing nominating committee. The Compensation and Benefits Committee (the
"Compensation Committee") reviews employee compensation and benefits, and the
Audit Committee reviews the scope of the independent audit, the appropriateness
of the accounting policies, the adequacy of internal controls, the Company's
year-end financial statements and such other matters relating to the Company's
financial affairs as its members deem appropriate. During 1995, the
Compensation and Benefits Committee held three meetings and the Audit Committee
held one meeting.
Executive Compensation
- ----------------------
The following summary compensation table sets forth individual compensation
information for the Chief Executive Officer and each of the Company's executive
officers whose aggregate compensation exceeded $100,000 during the years ended
December 31, 1993, 1994 and 1995.
6
Summary Compensation Table
All Other
Name and Principal Position Year Salary Bonus Compensation
- ---------------------------------------- ------ ----------- ----------- ---------------
Robert L. Bunting, Jr., President, Chief 1993 $225,000 $ 4,947 $13,707(2)
Executive Officer and Director 1994 225,000 121,537 9,957(2)
1995 225,000 150,750(1) 9,957(2)
Timothy R. Duke, Vice President, 1993 $120,000 $ 4,947 $14,333(3)
Treasurer and Chief Financial Officer 1994 120,000 69,375 18,371(3)
1995 139,167 77,679(1) 9,570(3)
Larry E. Gue, Vice President 1993 $120,000 $4,947 $6,403(4)
of Human Relations 1994 120,000 67,126 6,403(4)
1995 120,000 35,470 6,403(4)
T. Elton North, President 1993 $ 54,808 $ 12,600 $3,247(5)
Marshall Steel, Inc. 1994 75,000 47,099 9,690(5)
1995 75,000 50,876(1) 6,915(5)
________________________
(1) Does not include the following discretionary bonuses recognized in 1995
results of operations but paid in January 1996; $112,500 to Robert L.
Bunting, Jr.; $78,400 to Timothy R. Duke; and $45,000 to T. Elton North.
(2) Consists of $11,250, $7,500 and $7,500 contribution to a defined
contribution plan and $2,457 of costs of group-term life insurance coverage
provided by the Company for 1993, 1994 and 1995 respectively.
(3) Consists (for 1993, 1994 and 1995, respectively) of a $6,000, $6,000 and a
$6,708 contribution to a defined contribution plan, $143, $143 and $186 of
costs of group-term life insurance coverage provided by the Company, and
$8,190, $12,228 and $2,676 paid in connection with the Company's
scholarship program, which is available to all employees, pursuant to which
the Company pays a portion of the cost of post-high school education for
employees' dependents.
(4) Consists of a $6,000 contribution to a defined contribution plan and $403
of costs of group-term life insurance coverage provided by the Company.
(5) Consists of $2,188, $3,750 and $3,750 contributions to a defined
contribution plan, $1,020, $5,850 and $3,075 for personal use of a company
vehicle, and $40, $90 and $90 of costs of group-term life insurance
coverage provided by the Company for 1993, 1994 and 1995 respectively.
The Company entered into a five-year employment agreement with Mr. Bunting
on January 1, 1992. Mr. Bunting's base salary is $225,000 per year, subject to
increase each year by the Board of Directors, which may also, in its discretion,
pay bonuses to Mr. Bunting and other employees. Mr. Bunting's employment
agreement contains a non-competition restriction for a period of one year
following termination of the agreement. The agreement provides that the Company
will purchase Mr. Bunting's and his family's shares of Common Stock of the
Company upon his death, but only out of the proceeds of a $7 million key man
life insurance policy covering Mr. Bunting which the Company has purchased and
of which the Company is the beneficiary. The employment agreement also provides
that Mr. Bunting will participate in the Company's retirement plan.
The following tables present certain additional information concerning
stock options granted to the named executive officers during 1995.
7
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
- -------------------------------------------------------------------
Potential Realizable Value at
% of Total Assumed Annual Rates of Stock
Options Price Appreciation for
Granted to Exercise or Option Term (1)
-------------------
Options Employees in Base Price Expiration
Name Granted (#)(2) Fiscal Year (per share)(3) Date 5% 10%
- --------------------- --------------- ------------ -------------- ---- ------- ------
Robert L. Bunting, Jr. 8,000 11.2 $11.625 4/1/05 $151,488 $241,216
Timothy R. Duke 6,000 8.4 $11.625 4/1/05 $113,616 $180,912
Larry E. Gue 3,000 4.2 $11.625 4/1/05 $ 56,808 $ 90,456
T. Elton North 3,000 4.2 $11.625 4/1/05 $ 56,808 $ 90,456
_____________________
(1) The amounts shown under these columns are the result of calculations at 5%
and 10% rates over the ten year term of the options as required by the
Securities and Exchange Commission and are not intended to forecast future
appreciation of the stock price of the Company's Common Stock. The actual
value, if any, an executive officer may realize will depend on the excess
of the stock price over the exercise price on the date the option is
exercised.
(2) These options were granted as of April 1, 1995 in connection with the
Company's 1995 Employee Stock Option Plan, and each option became
exercisable on April 1, 1996.
(3) The exercise price for these options is equal to the market price of the
Company's Common Stock on April 1, 1995.
AGGREGATED FISCAL YEAR-END OPTION VALUES
Value of Unexercised In-the-
Number of Securities Money
Underlying Unexercised Options at December 31,
Options ----------------------------
at December 31, 1995(#) 1995($)(1)
----------------------------- -----------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---------------- ----------- ------------- ----------- -------------
Robert L. Bunting, Jr. 0 8,000 --- ---
Timothy R. Duke 0 6,000 --- ---
Larry E. Gue 0 3,000 --- ---
T. Elton North 0 3,000 --- ---
_____________________
(1) None of the options are "in-the-money".
8
Directors' Compensation
- -----------------------
Pursuant to the Directors' Plan, which is administered by the Compensation
Committee, on April 1 of each year each Director (currently Messrs. Albert,
Eastburn, Pickens and Thompson) who is not an active employee of the Company
receives a grant of options to purchase 2,000 shares of Common Stock. All such
options are exercisable at the fair market value (determined in accordance with
the provisions of the Directors' Plan) at the date of grant, commencing on the
first anniversary of that date, and expire ten years after that date.
The purposes of the Directors' Plan are to enable the Company to attract,
retain, and motivate the non-employee directors of the Company and to create a
long-term mutuality of interest between such non-employee directors and the
stockholders of the Company by granting options. The Directors' Plan authorizes
the issuance of up to 70,000 shares of Common Stock upon the exercise of non-
qualified stock options granted to non-employee Directors of the Company. A
non-employee Director is a Director who is not an active employee of the Company
and/or designated subsidiaries, including any Director who is an officer of the
Company but who is receiving no compensation as an employee from the Company or
any designated subsidiary. In general, if options are for any reason cancelled,
or expire or terminate unexercised, the shares covered by such options shall
again be available for the grant of options. No options may be granted after
five years from April 1, 1995. Shares purchased pursuant to the exercise of
options may be paid for at the time of exercise as follows: (i) in cash; (ii) by
delivery of unencumbered shares of Common Stock held for at least six months; or
(iii) a combination of cash and unencumbered shares of Common Stock.
Options granted under the Directors' Plan are subject to restrictions on
transfer and exercise. No option granted under the Directors' Plan may be
exercised prior to the time period for exercisability, subject to acceleration
in the event of a Change of Control of the Company (as defined in the Directors'
Plan). No option may be transferred, assigned, pledged or hypothecated in any
way except by will or under applicable laws of descent and distribution.
Options that are exercisable upon a participant's termination of directorship
for any reason other than for Cause (as defined in the Directors' Plan) remain
exercisable following such termination until expiration of the option; options
that are exercisable upon a participant's termination of directorship for Cause
terminate immediately. Options that are not exercisable at the time of a
participant's termination of directorship will automatically be canceled upon
such termination.
The Directors' Plan provides that appropriate adjustments will be made in the
number and kind of securities receivable upon the exercise of options in the
event of a stock split, stock dividend, merger, consolidation or reorganization.
The Directors' Plan also provides that all outstanding options will terminate
effective upon the consummation of a merger, consolidation, liquidation or
dissolution in which the Company is not the surviving entity, subject to the
right of participants to exercise all outstanding options prior to the effective
date of the merger, consolidation, liquidation or dissolution.
In 1995, each of Messrs. Albert, Eastburn, Pickens and Thompson received
options to purchase 2,000 shares of Common Stock at a price of $11 5/8 per
share.
The non-employee Directors (other than Mr. Albert) also receive cash
compensation for services as a Director, consisting of an annual retainer in the
amount of $6,000 plus $1,000 for each committee on which he serves. Each such
Director also receives a fee of $1,000 for each meeting of the Board of
Directors, the Compensation Committee and the Audit Committee that he attends.
Under this arrangement, during 1995 Messrs. Eastburn, Pickens and Thompson
received $21,000, $17,000 and $18,000, respectively. If the stockholders
approve the proposed amendment to the Directors' Plan as described below,
beginning with 1996 these Directors (and any non-employee Directors that may
hereafter become members of the Board) will receive $11,000 of such compensation
in cash, and the balance will be paid by an award of shares of the Company's
Common Stock.
9
Compensation Committee Report
Compensation Policies
- ---------------------
The Compensation Committee of the Board of Directors is comprised of
Directors who are not officers or employees of the Company. The Compensation
Committee is responsible for reviewing and making recommendations to the Board
of Directors regarding the compensation and benefits of the Company's
management. The Committee's philosophy is that the Company's goals are more
likely to be achieved if management is encouraged to work together as a team and
if final compensation is tied to the Company's and the individual's performance
during the year, based on such Company factors as the change in operating income
from the prior year, the Company's achievement of budgeted earnings objectives,
and the Company's results of operations in light of economic conditions in the
industry and the general economy, and such personal factors as the individual's
supervision of or performance in his or her particular business unit, and his or
her supervision of significant corporate projects. Prior to 1995, this
philosophy had been implemented through the use of discretionary bonuses in
which each person included in the bonus award, including the Company's Chief
Executive Officer, received the same fixed percentage of salary as a bonus.
Beginning with 1995, incentive compensation was awarded to management personnel
to the extent that the Company achieved certain corporate goals, and the
particular individual achieved certain personal goals.
Fiscal 1995 Compensation
- ------------------------
In 1995, the base compensation of the Company' Chief Executive Officer,
Robert L. Bunting, Jr., was $225,000, as established pursuant to the employment
agreement between the Company and Mr. Bunting described above under "Executive
Compensation". With respect to 1995, discretionary bonuses were awarded to
management personnel, including the Company's Chief Executive Officer, as
described above under "Executive Compensation", based on the Company having
achieved a certain level of performance. These discretionary bonuses, when
added to base salaries, were determined by the Committee to be in accord with
the Company's philosophy described above.
Compensation Committee
----------------------
Albert W. Eastburn
Daniel N. Pickens
Paul E. Thompson
10
Performance Graph
- -----------------
Below is a graph comparing the cumulative total stockholder return on the
Company's Common Stock for the last five years with the cumulative total return
of companies included in the S&P 500 Stock Index and an index of peer companies
selected by the Company. The graph assumes (i) investment of $100 on December
31, 1990 in the Company's Common Stock, the S&P 500 Index and common stock of
the peer group and (ii) the reinvestment of all dividends. The peer group
consists of Commercial Metals Co., Lukens, Inc., New Jersey Steel Corp., Nucor
Corp. and Roanoke Electric Steel Corp.
[GRAPH]
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Peer Group 100 125.6 132.9 113.1 112.6 109.1
SWVA 100 85.7 314.3 485.7 419.0 352.4
S&P 100 130.4 140.3 154.5 156.5 215.3
Certain Transactions
- --------------------
Stephen A. Albert, a Director of the Company, is a member of Sierchio &
Albert, P.C., counsel to the Company.
11
PROPOSAL 2. APPROVAL OF AMENDMENT TO THE STEEL OF WEST VIRGINIA, INC. 1995 NON-
EMPLOYEE DIRECTOR STOCK OPTION PLAN
On January 24, 1996, the Compensation Committee adopted, subject to
stockholder approval, an amendment to the Directors' Plan. If the amendment is
approved by the stockholders, $11,000 of the compensation (excluding stock
options) payable for a given year to non-employee Directors who are compensated
for their services as such will be paid in cash, and the balance of such
compensation will be paid by an award of shares of the Company's Common Stock.
The award would be paid on December 15 of each year, with the number of shares
to be awarded to be determined by dividing the Director's compensation for the
year, less $11,000, by the fair market value of the Common Stock (determined in
accordance with the provisions of the Directors' Plan) on that date (with the
Director receiving cash in lieu of fractional shares). Upon the awarding of the
Common Stock a Director will realize taxable income and the Company will realize
a deduction in an amount equal to the fair market value of the Common Stock at
the time of grant. Upon a subsequent sale of the Common Stock by the Director,
the Director will recognize short-term or long-term capital gain or loss
depending upon his or her holding period for the Common Stock. If the proposed
amendment to the Directors' Plan had been in effect in 1995, the non-employee
Directors as a group would have received (excluding stock options) for their
services as Directors cash compensation of $33,000, and 2,329 shares of Common
Stock.
As of April 1, 1996, all directors who are not executive officers of the
Company had been granted options for an aggregate of 16,000 shares (4,000 shares
each), 50% of which vested on April 1, 1996, and have an exercise price of
$11 3/8 per share, and 50% of which will vest on April 1, 1997, and have an
exercise price of $9 per share. All of the options are for a period of ten
years from the date of grant.
On April 15, 1996, the closing sale price for the Common Stock on the
National Association of Securities Dealers National Market was $9 1/4.
If the proposed amendment is not approved, Directors' compensation will
continue to be paid in cash. The Board believes that the proposed method of
compensation provides additional incentives to enhance the value of the
Company's Common Stock. In the absence of instructions to the contrary, the
shares of Common Stock represented by a proxy delivered to the Board of
Directors will be voted FOR the approval of the amendment to the Directors'
Plan.
PROPOSAL 3. SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors recommends the ratification by the stockholders of the
reappointment by the Board of Directors of Ernst & Young LLP as the Company's
independent accountants for the fiscal year ending December 31, 1996. In the
absence of instructions to the contrary, the shares of Common Stock represented
by a proxy delivered to the Board of Directors will be voted FOR the
ratification of the reappointment of Ernst & Young LLP. A representative of
Ernst & Young LLP is expected to be present at the Annual Meeting and will be
available to respond to appropriate questions and make such statements as he or
she may desire.
STOCKHOLDER PROPOSALS
It is contemplated that the Company's 1997 Annual Meeting of Stockholders
will be held on or about May 22, 1997. Stockholders of the Company who intend
to submit proposals at the next Annual Meeting of Stockholders must submit such
proposals to the Company no later than January 29, 1997. Stockholder proposals
should be submitted to Steel of West Virginia, Inc., P.O. Box 2547, Huntington,
West Virginia 25726, Attention: Timothy R. Duke, Vice President, Treasurer and
Chief Financial Officer.
12
ANNUAL REPORT
The Company's Annual Report for the year ended December 31, 1995, including
financial statements, is being mailed together with this Proxy Statement to the
Company's stockholders of record at the close of business on April 12, 1996.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS SOLICITED
BY THIS PROXY STATEMENT A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1995, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. A WRITTEN REQUEST FOR A COPY OF SUCH ANNUAL REPORT ON FORM 10-K
SHOULD BE DIRECTED TO STEEL OF WEST VIRGINIA, INC., P.O. BOX 2547, HUNTINGTON,
WEST VIRGINIA 25726, ATTENTION: TIMOTHY R. DUKE, VICE PRESIDENT, TREASURER AND
CHIEF FINANCIAL OFFICER.
OTHER BUSINESS
The Board of Directors does not know of any other business to be presented to
the meeting and does not intend to bring any other matters before the meeting.
However, if any other matters properly come before the meeting or any
adjournments thereof, it is intended that the persons named in the accompanying
proxy will vote thereon according to their best judgment in the interests of the
Company.
By Order of the Board of Directors
Stephen A. Albert
Secretary
April 22, 1996
STOCKHOLDERS ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES. YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION
WILL BE APPRECIATED.
13
Amendment No. 1 to Steel of West Virginia, Inc.
1995 Non-Employee Director Stock Option Plan
WHEREAS, the Committee deems it to be in the best interests of the
Company to amend the Steel of West Virginia, Inc. 1995 Non-Employee Director
Stock Option Plan ( the "Plan") (subject to obtaining the approval of the
stockholders of the Company) to provide for the awarding of Shares in payment
of a portion of the compensation payable to certain Eligible Directors, the
Plan is hereby amended as set forth below (subject to obtaining the approval
of the stockholders of the Company) (capitalized terms not otherwise defined
herein have the meanings ascribed thereto in the Plan).
1. Article I is hereby amended by inserting the phrase "and
awarding shares of Common Stock to certain directors in payment of a portion
of the compensation payable to them for their services as directors" at the
end of said Article.
2. Article IV, Section A is hereby amended by inserting the
phrase "and the awards provided for in Article XVI" after the phrase "take
all such steps in connection with the Plan and the Options."
3. Article IV, Section C is hereby amended by inserting the
phrase "or any award of Shares pursuant to Article XVI" at the end of the
first sentence of said Section, and by inserting the phrase "or Shares
awarded" after the phrase "with regard to Options granted" in the last
sentence of said Section.
4. Article V, Section B of the Plan is hereby amended by
inserting the phrase "pursuant to the exercise of Options" after the phrase
"issued under the Plan".
5. Article V, Section C is hereby amended by inserting the phrase
"and other awards" after the phrase "the existence of this Plan and the
Options granted" in the first sentence of such Section.
6. A new Article XVI is hereby added to the Plan, as follows:
"XVI. Award of Shares.
Commencing in 1996, $11,000 of the compensation
(excluding Options) payable for a given year to Eligible Directors who are
compensated for their services as directors will be paid in cash, and the
balance of such compensation shall be paid by an award of Shares. The award
shall be paid on December 15 of each year, with the number of Shares to be
awarded to be determined by dividing such compensation for such director for
the year, less $11,000, by the Fair Market Value of the Common Stock on
December 15 (with the director to receive cash in lieu of fractional shares).
A certificate or certificates for the Shares awarded shall be delivered to or
upon the order of such director, and shall bear such legend or legends as the
Committee, in its sole discretion, determines to be necessary or appropriate
to prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act or to
implement the provisions of any agreements between the Company and the
director with respect to such Shares. A director shall have no rights as a
stockholder with respect to any Shares covered by such an award until such
director shall have become the holder of record of such Shares."
This Amendment No. 1 shall become effective as of January 24, 1996,
subject to its approval by the stockholders of the Company in accordance with
Rule 16b-3 under the Act at the 1996 Annual Meeting of the Stockholders of
the Company. If this Amendment is not so approved it shall be null and void
and of no force or effect.
STEEL OF WEST VIRGINIA, INC.
17th Street and 2nd Avenue
Huntington, West Virginia 25703
PROXY
Solicited by the Board of Directors
for the Annual Meeting of Stockholders on
May 23, 1996
The undersigned hereby appoints Robert L. Bunting, Jr. and Stephen A.
Albert or either of them, with full power of substitution, as proxies and
hereby authorizes them to represent and to vote, as designated below, all
shares of Common Stock of Steel of West Virginia, Inc. held of record by
the undersigned at the close of business on April 12, 1996 at the Annual
Meeting of Stockholders to be held on May 23, 1996 and any adjournments
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2 and 3.
The Board of Directors recommends a vote FOR each of the proposals
below.
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed (except [ ] WITHHOLD AUTHORITY to vote
as marked to the contrary below) for all nominees listed below
Robert L. Bunting, Jr., Albert W. Eastburn, Daniel N. Pickens,
Paul E. Thompson, Stephen A. Albert
(INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list above.)
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE STEEL OF WEST VIRGINIA, INC.
1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE REAPPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
ACCOUNTANTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS
THEREOF.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY. WHEN SHARES ARE
HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY THE
PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN
IN PARTNERSHIP NAME BY AN AUTHORIZED PERSON.
PLEASE RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
_______________________________
Signature
_______________________________
Signature if held jointly