SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Ryerson Tull, Inc.
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(Name of Registrant as Specified In Its Charter)
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Notes:
[RYERSON TULL LOGO]
Neil S. Novich
Chairman, President and
Chief Executive Officer
March 12, 2001
Dear Stockholder:
Ryerson Tull, Inc. will hold its 2001 Annual Meeting of Stockholders on
Wednesday, April 18, 2001 at 9:00 a.m., Chicago time, at The Northern Trust
Company, 50 South LaSalle Street, Chicago, Illinois. I hope you will join us.
I look forward to seeing you on April 18. If you do not expect to attend
the meeting, please take a moment now to complete and return the enclosed
proxy card in the envelope provided. Whether in person or by proxy, your
participation in the annual meeting is important to us.
Cordially,
Neil S. Novich
Chairman, President and
Chief Executive Officer
2621 West 15th Place, Chicago, Illinois 60608
[Logo of Ryerson Tull]
2621 WEST 15th PLACE
CHICAGO, ILLINOIS 60608
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 18, 2001
To Stockholders:
We will hold the Annual Meeting of Stockholders of Ryerson Tull, Inc., a
Delaware corporation, at The Northern Trust Company, 50 South LaSalle Street,
Chicago, Illinois, on Wednesday, April 18, 2001 beginning at 9:00 a.m.,
Chicago time, for the purpose of:
1. Electing directors of the Company; and
2. Considering any other matter that may properly come before the meeting.
Holders of voting securities at the close of business on March 1, 2001 are
entitled to receive notice of and vote at the Annual Meeting.
This Notice of the Annual Meeting includes a Proxy Statement. Please sign,
date and return the enclosed proxy card in the accompanying envelope as soon
as possible whether or not you expect to attend the Annual Meeting.
The Company's 2000 Annual Report, which includes the Company's 2000
financial statements, accompanies this mailing. Additional copies are
available upon written request to the Ryerson Tull investor relations
department.
By order of the Board of Directors,
Joyce E. Mims
Vice President and
General Counsel
March 12, 2001
Chicago, Illinois
[Ryerson Tull Logo Appears Here]
2621 WEST 15th PLACE
CHICAGO, ILLINOIS 60608
PROXY STATEMENT
The Board of Directors of Ryerson Tull, Inc. solicits the enclosed proxy
for the 2001 Annual Meeting to be held on April 18, 2001.
Beginning on or about March 12, 2001, we will begin to solicit proxies by
mail. We also may solicit proxies through our directors, officers and regular
employees. We will pay all costs associated with this proxy solicitation,
including a fee of $7,500 plus out-of-pocket expenses for MacKenzie Partners
for its assistance. We will also reimburse brokers, banks and similar
organizations for reasonable charges and expenses they incur in obtaining
instructions from the beneficial owners of our common stock.
Our voting securities outstanding on March 1, 2001 consisted of 24,774,621
shares of common stock with one vote per share and 80,506 shares of Series A
$2.40 Cumulative Convertible Preferred Stock with one vote per share. All
voting securities vote together without regard to class on the matter expected
to be voted upon at the Annual Meeting.
On February 25, 1999, our majority-owned subsidiary became our wholly owned
subsidiary, then named Ryerson Tull, Inc., and each share of pre-merger
Ryerson Tull Class A common stock was converted into 0.61 shares of our common
stock. Pre-merger Ryerson Tull then merged with us and we changed our name to
"Ryerson Tull, Inc." These mergers are together referred to as the "RT
Merger."
If you sign, date and return the enclosed proxy by mail, your shares will
be voted as you direct. If you do not give any voting instructions, your
shares will be voted FOR the Board's nominees for director and in the
discretion of the proxies on any other matters that may come before the
meeting. You may revoke your proxy:
(1) by submitting a revocation letter dated subsequent to the proxy;
(2) by delivering a second signed proxy dated later than the first
signed proxy; or
(3) by attending the Annual Meeting and voting in person or by proxy.
If you are a participant in the Shareholder Investment Service's dividend
reinvestment program, shares credited to your account in that program will be
voted only if and in the same manner as you vote your stock held of record. If
you are not a stockholder of record, Computershare Investor Services, as
custodian, will vote your shares only as you instruct. If you are a
participant in the Ryerson Tull Savings Plan, shares credited to your account
will be voted as you direct, but any direction (or any revocation of a prior
direction) must be received by LaSalle National Bank, as Trustee for the
Savings Plan, by 5:00 p.m., Chicago time, on April 17, 2001. Shares in the
Savings Plan for which no direction is received by that time will be voted in
the same proportion as the shares in the Savings Plan for which directions are
timely received.
Proxies, consents, ballots and voting materials that identify the vote of
specific holders are confidential, except in a contested proxy or consent
solicitation or as otherwise required by law. They are returned to the
tabulator and are available to the inspectors of election to enable them to
certify the results of the vote. Computershare Investor Services will act as
the tabulator, and officers or employees of Computershare Investor Services
will serve as inspectors of election.
We welcome comments from holders of voting securities. Comments written on
or accompanying proxy cards will be provided to us without indication of the
vote of the holder of the voting securities unless the vote is included in the
comment or is necessary to understand the comment.
1
ELECTION OF DIRECTORS
Following the Annual Meeting, the Board will consist of eight directors.
All directors are elected by a plurality of the votes cast at the Annual
Meeting. The outcome of the election is not affected by holders of voting
securities who abstain from voting or withhold authority to vote in the
election, or by broker non-votes. If any nominee should become unavailable for
election, which we do not anticipate, proxies may be voted for the election of
another person or persons designated by the Board, unless the Board has taken
prior action to reduce its membership. The directors elected at the 2001
Annual Meeting will serve a one-year term, expiring at the 2002 Annual
Meeting, and until their successors are duly elected and qualified.
Nominees for Election
The nominees for election to the Board are described in brief biographies
below. The period of service as a director shown for Mr. James Henderson
includes the period during which he served as a director of our former
subsidiary Inland Steel Company. The Board held five meetings during 2000. All
incumbent directors attended at least 75% of the combined total number of
meetings of the Board and committees on which they served, except for Mr.
Crittenden, who attended at least 75% of the meetings of the Board but less
than 75% of the total number of meetings of the Board and committees on which
he served. All nominees for the 2001 Board are presently serving as directors.
Jameson A. Baxter
Director of pre-merger Ryerson Tull since January 1999
Director of Ryerson Tull since February 1999
[PHOTO] Mrs. Baxter, age 57, has been President of Baxter Associates,
Inc., a private management consulting and investment firm, since
1986. She also was Vice President and Principal of Regency Group,
Inc., an investment banking firm, from 1989 to 1992. She served as
Vice President of The First Boston Corporation, an investment
banking firm, from 1975 to 1986, and held various other positions
at The First Boston Corporation from 1965 to 1975. She is a member
of our Compensation and Nominating and Governance Committees. She
is a director of Banta Corporation and The Putnam Funds.
Richard G. Cline Director of pre-merger Ryerson Tull since 1996
Director of Ryerson Tull since February 1999
[PHOTO] Mr. Cline, age 66, is Chairman of Hawthorne Investors, Inc., a
private management advisory services and investment firm, which he
founded in 1996. He was Chairman of Hussmann International, Inc.,
a manufacturer and service provider of merchandising and
refrigeration systems for the commercial food industry, from
January 1998 until June 2000. He served as Chairman of the Board
and Chief Executive Officer of NICOR, Inc., a diversified holding
company with subsidiaries engaged in natural gas distribution and
containerized liner shipping, from 1986 to 1995, and as its
President and Chief Operating Officer from 1985 to 1988 and from
1990 to 1994. For the previous 22 years, he was an executive of
Jewel Companies, Inc., becoming Chairman, President and Chief
Executive Officer in 1984. He is a member of our Audit and
Nominating and Governance Committees. Mr. Cline also is a director
of Kmart Corporation and PepsiAmericas, Inc. and a trustee of
Northern Institutional Funds and Northern Funds, registered
investment companies managed by Northern Trust Investments, Inc.
He is a past chairman of the Federal Reserve Bank of Chicago.
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[PHOTO] Gary L. Crittenden Director of Ryerson Tull since February 1999
Mr. Crittenden, age 47, has been Executive Vice President and
Chief Financial Officer of American Express Company, a travel and
financial services company, since June 2000. He was Senior Vice
President and Chief Financial Officer of Monsanto Company, a
worldwide manufacturer and seller of diversified lines of
agricultural products, nutrition and consumer products,
pharmaceuticals and other products, from 1998 through May 2000. At
Sears, Roebuck and Co., a multi-line retailer, he was Executive
Vice President and Chief Financial Officer from 1997 to 1998,
President of the Hardware Store division in 1997 and Executive
Vice President, Strategy and Business Development from 1996 to
1997. He was Senior Vice President and Chief Financial Officer of
Melville Corporation, a specialty retailer, from 1994 to 1996 and
Executive Vice President and Chief Financial Officer of Filene's
Basement, an off-price specialty chain of stores, from 1991 to
1994. He is a member of our Compensation and Nominating and
Governance Committees. Mr. Crittenden is also a director of The
TJX Companies, Inc. and Wilsons The Leather Experts Inc.
[PHOTO]
James A. Henderson Director of pre-merger Ryerson Tull since 1996
Director of Ryerson Tull since 1978
Mr. Henderson, age 66, was the Chairman and Chief Executive
Officer of Cummins Engine Company, Inc., a manufacturer of diesel
engines, prior to his retirement on December 31, 1999. Mr.
Henderson joined Cummins in 1964, was elected Executive Vice
President in 1971, Executive Vice President and Chief Operating
Officer in 1975, President and Chief Operating Officer in 1977,
President and Chief Executive Officer in 1994, and Chairman and
Chief Executive Officer in 1995. He is Chairman of our Nominating
and Governance Committee and a member of our Audit Committee.
Mr. Henderson is also a director of Championship Auto Racing
Teams, Inc., International Paper Co., Rohm and Haas Company and
SBC Communications Inc.
[PHOTO]
Gregory P. Josefowicz Director of Ryerson Tull since February 1999
Mr. Josefowicz, age 48, has been President, Chief Executive
Officer and a director of Borders Group, Inc., an operator of book
superstores and mall-based bookstores, since November 1999. He was
Chief Executive Officer of the Jewel-Osco division of American
Stores Company, which operates food and drug stores in the greater
Chicago, Illinois and Milwaukee, Wisconsin areas, from 1997 until
June 1999 when American Stores merged into Albertson's Inc., a
retail food-drug chain. At that time Mr. Josefowicz became
Albertson's Inc. President, Midwest Region. Mr. Josefowicz joined
Jewel-Osco in 1974, and was elected Senior Vice President of
Marketing and Advertising in 1993. He is Chairman of our Audit
Committee and a member of our Nominating and Governance Committee.
[PHOTO]
Neil S. Novich Director of pre-merger Ryerson Tull since 1994
Director of Ryerson Tull since February 1999
Neil S. Novich, age 46, has been our Chairman, President and Chief
Executive Officer since February 1999. Mr. Novich was President,
Chief Executive Officer and Chief Operating Officer of pre-merger
Ryerson Tull from 1994 to February 1999. He was our Senior Vice
President from January 1995 to May 1996. Prior to joining us in
1994, Mr. Novich led the Distribution and Logistics Practice at
Bain & Company, an international management consulting firm. Mr.
Novich is also a director of W.W. Grainger, Inc. and MetalSite,
Inc.
3
[PHOTO]
Jerry K. Pearlman Director of pre-merger Ryerson Tull since 1996
Director of Ryerson Tull since February 1999
Mr. Pearlman, age 61, was Chairman of Zenith Electronics
Corporation, a manufacturer of consumer electronics and cable
television products, prior to his retirement in November 1995. He
was also Chief Executive Officer of Zenith from 1983 through April
1995. He is Chairman of our Compensation Committee and a member of
our Nominating and Governance Committee. Mr. Pearlman is also a
director of Smurfit Stone Container Corporation and Nanophase
Technologies Corporation.
[PHOTO]
Ronald L. Thompson Director of pre-merger Ryerson Tull since 1996
Director of Ryerson Tull since February 1999
Mr. Thompson, age 51, has been the Chairman of the Board, Chief
Executive Officer and President of Midwest Stamping Co., a metal-
stamping and assembly firm serving principally the automotive
original equipment industry, since 1994. Prior to joining Midwest
Stamping, he was Chairman of the Board and President of The GR
Group, Inc., a diversified holding company with interests in
manufacturing and service activities, from 1980 to 1993. He is a
member of our Audit and Nominating and Governance Committees. Mr.
Thompson also is a director of Ralston Purina Company and the
Teachers Insurance and Annuity Association.
COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board include the Audit Committee, the
Compensation Committee, and the Nominating and Governance Committee. The
members of these committees, none of whom is an employee of Ryerson Tull or
any of its subsidiaries, are identified above.
Audit Committee--The Audit Committee appoints an independent auditing firm
to audit our financial books and records. The Audit Committee reviews the
proposed scope and results of the annual audit, the recommendations of the
independent auditors, and all non-audit services performed by the auditors. It
also approves the auditors' compensation and reviews the independence of and
all relationships with the independent auditor. The Audit Committee also
reviews management's discussion and analysis and the consolidated financial
statements of our annual report to stockholders and Form 10-K; reviews our
system of internal accounting and operating controls and the performance of
our internal auditors; and monitors compliance with our Code of Business
Conduct. The Audit Committee Report is included below. The Audit Committee
held four meetings in 2000.
Compensation Committee--The Compensation Committee makes recommendations to
the Board of Directors about the promotions and salaries of our officers and
the establishment or modification of executive compensation plans and
programs; and administers the Ryerson Tull Annual Incentive Plan, our
incentive stock plans and our pension and retirement plans and trusts. The
Report of the Compensation Committee of the Board of Directors Regarding
Executive Compensation is included below. The Compensation Committee held four
meetings in 2000.
Nominating and Governance Committee--The Nominating and Governance
Committee prepares and maintains a list of qualified candidates to fill
vacancies on the Board of Directors and recommends to the Board of Directors
candidates to fill any such vacancies; recommends to the Board a slate of
candidates for election as directors at the annual meeting; monitors corporate
governance issues; recommends to the Board policies and procedures for
effective corporate governance and assures compliance with adopted policies
and procedures; recommends to the Board a process for evaluating the Board and
oversees the process when it is adopted; recommends the compensation to be
paid to non-employee directors; and manages and controls the administration of
directors' compensation plans. The Nominating and Governance Committee held
three meetings in 2000.
4
The Nominating and Governance Committee will consider qualified candidates
recommended by the holders of voting securities as nominees for election at
the annual meeting. To be considered by the Committee as a nominee for
election at the 2002 Annual Meeting, the name of the candidate and a written
description of his or her qualifications must be received by the Secretary of
Ryerson Tull no sooner than November 12, 2001 and no later than December 12,
2001. Our By-laws provide a formal procedure, including an advance notice
requirement, for holders of voting securities who intend to nominate persons
for election as directors at the annual meeting.
COMPENSATION OF DIRECTORS
Our Directors' Compensation Plan provides that each director who is not an
employee of Ryerson Tull or any of our affiliates will receive an annual
retainer of $40,000. Normally, we will pay half of the retainer in shares of
our common stock and half in cash. However, directors may elect to receive all
or any part of the cash portion of their retainer in whole shares of common
stock.
We pay the cash portion of the retainer quarterly. If a director serves for
a fraction of a quarter, the cash portion for that quarter is prorated in
whole months. We pay the stock portion of the retainer as restricted stock
issued at the beginning of the director's term. Over the director's term, the
restricted stock vests in quarterly increments. Directors are also entitled to
any dividends that accrue on the restricted stock. In addition, non-employee
directors receive $1,000 for attending a special Board meeting and a special
committee meeting not held in conjunction with a regular or special Board
meeting. We do not pay fees to directors for attending other Board or
committee meetings. A non-employee director who serves as chairman of a
standing committee of the Board will receive an additional annual retainer of
$4,000.
The Directors' Compensation Plan allows directors to elect to defer payment
of all or any portion of the retainers and fees which will become due over the
course of the year. Directors must make this election prior to January 1 of
each year. However, if a director is appointed or elected during a calendar
year, that director may make a deferral election within 30 days after becoming
a director. We will distribute deferred amounts in a lump sum or in
installments of cash or whole shares of common stock, at the election of the
director made at the time of the deferral. Interest on cash deferrals will be
credited at the prime rate in effect from time to time at Bank One Corporation
(or its successor). Stock deferrals will be credited with dividends paid on
shares of common stock from time to time. We have reserved a total of 161,000
shares of common stock for issuance under the Directors' Compensation Plan,
subject to adjustment for certain corporate transactions affecting the number
or type of outstanding shares.
The Ryerson Tull Directors' 1999 Stock Option Plan provides that each non-
employee director at the close of each annual meeting will be awarded a stock
option having a value of $20,000 (based on the Black-Scholes option pricing
model) and an exercise price equal to the fair market value of our common
stock on the date of grant. Individuals who become non-employee directors
other than at an annual meeting are, at the time of their election or
appointment as a non-employee director, awarded stock options having a value
that is prorated to reflect a partial year's service. The options awarded
under the Directors' Stock Option Plan are 50% exercisable beginning the day
after the six-month anniversary of the grant date and 100% after the earlier
of the one-year anniversary of the grant date or the date of the next annual
meeting. They expire no later than 10 years after the date of grant. A total
of 300,000 shares of our common stock are reserved for issuance under the
Directors' Stock Option Plan.
We also pay the premiums on a business accident insurance policy insuring
each non-employee director for up to $500,000.
5
AUDITOR MATTERS
Audit Fees
The aggregate fees billed by PricewaterhouseCoopers LLP rendered for the
audit of our 2000 annual financial statements and for reviews of the financial
statements included in our Forms 10-Q for 2000 were $275,920.
Financial Information Systems Design and Implementation Fees
PricewaterhouseCoopers LLP did not bill any fees for the professional
services described in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X.
All Other Fees
The aggregate fees billed by PricewaterhouseCoopers LLP for services other
than those described in the two preceding paragraphs for 2000 were $2,073,997,
primarily for services rendered in connection with our reorganization and
implementation of the procurement function for the strategic sourcing project.
AUDIT COMMITTEE REPORT
The Audit Committee consists of four members of the Company's Board of
Directors. Each member is independent, as that term is defined in Section
303.01 of the New York Stock Exchange Listed Company Manual. The Board of
Directors adopted a written charter for the Audit Committee in April 2000, and
adopted a clarifying amendment in June 2000. That charter is included as
Appendix A to this proxy statement.
The Audit Committee holds four regularly scheduled meetings each year. The
Audit Committee reviews the Company's financial reporting process on behalf of
the Board of Directors. Management and the independent auditors have the
responsibility to plan and conduct audits, to determine whether the Company's
financial statements are complete and accurate, and to assess whether they are
in accordance with generally accepted accounting principles.
The Audit Committee has reviewed and discussed the audited financial
statements for the fiscal year ended December 31, 2000, with management and
with PricewaterhouseCoopers LLP, the independent auditors for the Company.
The Audit Committee has discussed with the independent auditors the matters
required to be discussed by SAS 61 (Codification of Statements on Auditing
Standards, AU (S)380).
The Audit Committee has received the written disclosures and the letter
from the independent accountants required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees), and has discussed with the independent
accountant the independent accountant's independence. In addition, the Audit
Committee has considered whether the independent accountant's provision of
services described above under the headings "Financial Information Systems
Design and Implementation Fees" and "All Other Fees" is compatible with
maintaining the independent accountants' independence.
Based on the review and discussions referred to above, and in reliance upon
the opinions, information, reports or statements presented to the Audit
Committee by Company management, its internal auditors and its independent
auditors, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.
This Audit Committee Report is not deemed "filed" with the Securities and
Exchange Commission.
Gregory P. Josefowicz, Chairman
Richard G. Cline
James A. Henderson
Ronald L. Thompson
6
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table presents, as of March 1, 2001, the shares of Ryerson
Tull common stock beneficially owned by each of our directors, each of the
other named executive officers and our directors and executive officers as a
group. Except as indicated otherwise, the beneficial owners have sole voting
and investment power for these securities. Our common stock includes preferred
stock purchase rights. No directors or executive officers beneficially owned
any Series A Preferred Stock.
Number of Shares or
Name and Address of Amount of Percent
Beneficial Owner Securities Owned(/1/) of Class
- ------------------- --------------------- --------
Directors(/2/)
Jameson A. Baxter....... 13,810 *
Richard G. Cline........ 12,514 *
Gary L. Crittenden...... 8,551 *
James A. Henderson...... 14,225 *
Gregory P. Josefowicz... 8,547 *
Neil S. Novich.......... 318,928(/3/) 1.3%
Jerry K. Pearlman....... 24,971 *
Ronald L. Thompson...... 17,835 *
Named Executive Officers
Jay M. Gratz............ 115,632(/4/) *
Gary J. Niederpruem..... 106,399(/5/) *
Thomas S. Cygan......... 51,041(/6/) *
Stephen E. Makarewicz... 77,431(/7/) *
All Directors and
Executive Officers as a
Group................... 938,826(/8/) 3.8%
- --------
(1) Includes shares credited to individual accounts in the Ryerson Tull
Savings Plan. Shares shown as "subject to option" are subject to stock
options exercisable on or prior to April 29, 2001.
(2) Includes, for each non-employee Director, 5,610 shares subject to option
and 290 shares payable or deferred under the Ryerson Tull Directors'
Compensation Plan which are subject to forfeiture.
(3) Includes 308,974 shares subject to option.
(4) Includes 97,665 shares subject to option and 5,012 shares held in trust
for family members.
(5) Includes 102,090 shares subject to option.
(6) Includes 48,240 shares subject to option and 435 shares held jointly.
(7) Includes 72,832 shares subject to option.
(8) Includes 786,410 shares subject to option, 1,067 shares held under
restricted stock awards, 435 shares held jointly, 5,012 shares held in
trust for family members and 250 shares held by the spouse of an executive
officer.
*Less than 1.0%
7
ADDITIONAL INFORMATION RELATING TO VOTING SECURITIES
The following table sets forth, as of December 31, 2000, the only holders
known to us to beneficially own more than 5% of our common stock.
Number of Shares
Name and Address of Beneficial or Amount of Percent
Owner Securities Owned of Class
------------------------------ ---------------- --------
The Baupost Group, L.L.C. 2,470,100(/1/) 9.97%
44 Brattle Street, 5th Floor
Cambridge, MA 02138
Dimensional Fund Advisors Inc. 1,311,155(/2/) 5.29%
1299 Ocean Avenue
Santa Monica, CA 90401
FMR Corp. 2,649,192(/3/) 10.69%
82 Devonshire Street
Boston, MA 02109
Alfred D. Kingsley 2,121,068(/4/) 8.56%
277 Park Avenue
New York, NY 10172
Merrill Lynch & Co., Inc. 2,471,141(/5/) 9.97%
250 Vesey Street
World Financial Center, North Tower
New York, NY 10381
Donald Smith & Co., Inc. 1,245,688(/6/) 5.03%
East 80 Route 4
Paramus, NJ 07652
- --------
(1) The Baupost Group, L.L.C., on behalf of itself, SAK Corporation and Seth
A. Klarman, reported sole voting and dispositive power as to 2,470,100
shares.
(2) Reported sole voting and dispositive power as to 1,311,155 shares.
(3) FMR Corp., on behalf of itself, Edward C. Johnson 3d and Abigail P.
Johnson, reported sole voting power as to 20,965 shares and sole
dispositive power as to 2,649,192 shares.
(4) Mr. Kingsley, on behalf of himself and for a group including Gary K.
Duberstein, Greenway Partners, L.P., Greentree Partners, L.P., Greenhouse
Partners, L.P., Greenhut, L.L.C., Greenbelt Corp., Greensea Offshore, L.P.
and Greenhut Overseas, L.L.C., reported sole voting and dispositive power
as to 210,358 shares and shared voting and dispositive power as to
1,910,710 shares.
(5) Merrill Lynch & Co., Inc., on behalf of Merrill Lynch Investment Managers,
reported shared voting and dispositive power as to 2,471,141 shares.
(6) Reported sole voting and dispositive power as to 1,245,688 shares.
Certain persons were also known to us to own beneficially more than 5% of
the outstanding shares of Series A $2.40 Cumulative Convertible Preferred
Stock. These shares vote together with our common stock, as a single class, on
each matter being submitted to holders of our voting securities, and none of
the owners of the Series A Preferred Stock own shares of Series A Preferred
Stock having more than 1% of the combined voting power of our outstanding
voting securities.
8
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS REGARDING EXECUTIVE COMPENSATION
Composition of the Committee
The Ryerson Tull Compensation Committee consists of independent non-
employee directors, none of whom is or has been an employee of the Company or
any of its subsidiaries. The Committee is comprised of Jerry K. Pearlman,
Chairman, Jameson A. Baxter and Gary L. Crittenden.
Establishing the Compensation Philosophy and Targets
The Committee determines compensation of Company officers, including the
named executive officers. The Committee, in consultation with external
compensation consultants, has designed our executive compensation programs to
attract and retain outstanding individuals as officers and key employees by
rewarding these individuals based on personal performance and the financial
performance of Ryerson Tull and its business units. The design of the
compensation system also is intended to align the incentives of executive
officers with the interests of stockholders. The Committee intends to offer
total compensation opportunities competitive with those offered by comparable
companies. Based on survey materials prepared by the external consultants, the
Committee compares the Company's total compensation opportunity and actual
compensation to compensation programs of both metal service center companies
and a comparison group of select general distribution, industrial and service
companies of comparable sales, assets and number of employees. The Committee
utilizes the general distribution, industrial and service companies as its
primary comparison group because most metal service center companies are not
publicly owned and no metal service center company has revenues comparable to
the revenues of Ryerson Tull.
The Committee intends total compensation opportunity for our executive
officers to be equivalent to the median of total compensation for comparable
executive positions in the comparison group of general distribution,
industrial and service companies. The Committee establishes base salaries
generally at or below the median for base salaries for comparable positions in
the comparison group, sets short-term incentives, based on targeted
performance, at or above the median and long-term incentives at or below the
median for comparable positions for these incentives at the comparison group.
The Committee generally targets base compensation as one-half of the total
target compensation opportunity for executive officers and short- and long-
term incentive pay as the remaining half. Short-term and long-term incentive
compensation is variable, fluctuating from year to year primarily depending on
business unit and corporate performance.
Base Salary Determinations
The Committee reviews the base salary compensation of executive officers
annually, based on its review of comparable positions in the comparison group,
and then makes recommendations to the Board. Mr. Novich, as Chief Executive
Officer of Ryerson Tull, meets regularly with the Committee and with the non-
management directors. These meetings include an annual review by all of the
outside directors of the chief executive officer's financial, operating and
organizational goals and an evaluation of Mr. Novich's performance as it
relates to achievement of the prior year's goals. The results of that
evaluation are an important element in the compensation decisions made by the
Committee and the Board of Directors of the Company regarding Mr. Novich's
base salary and incentive compensation. In February 2000, Mr. Novich's base
salary was increased to $550,000 primarily to make it competitive with
salaries for the comparable position in the comparator group.
Short-Term Incentive Compensation
Short-term incentive compensation is payable as a cash bonus under the
Ryerson Tull, Inc. Annual Incentive Plan. This plan generally provides for
cash awards based on a specified AIP target
percentage of a participant's salary earnings and the extent to which
corporate and (or) business unit
9
performance standards are achieved for the year. The Committee has
historically used two performance measures, operating return on operating
assets and revenue growth, with the formula weighted to operating return on
operating assets.
In the first quarter 2000, the Committee established the AIP target
percentages for each executive officer. The Committee established that the
award to Mr. Novich would be based upon the 2000 return on operating assets
and revenue growth achieved by Ryerson Tull overall; to Mr. Gratz on a 50/50
split between the 2000 return on operating assets and revenue growth of the
Company and of our coil processing division, which reports to him; to Mr.
Niederpruem on a 25/75 split between the 2000 return on operating assets and
revenue growth achieved by Ryerson Tull and by business units comprising the
general line business, which report to him; and to Mr. Cygan and Mr.
Makarewicz on the 2000 return on operating assets and revenue growth achieved
by their respective business units. Due to Ryerson Tull's reorganization,
effective July 1 the Committee determined there would be two six-month
measuring periods for the award year.
In 2000, only two of Ryerson Tull's business units achieved each of the
threshold levels of return on operating assets and revenue growth established
for such units. Ryerson Tull did not achieve the targets established for it.
The amount shown in the "Bonus" column in the "Summary Compensation Table"
includes short-term incentives paid to the named executive officers under this
plan.
Long-Term Incentive Compensation
The Committee makes awards and grants under the Ryerson Tull 1999 Incentive
Stock Plan intended to provide executive officers not only with additional
incentives for outstanding individual performance but also with an opportunity
to acquire an ownership stake in Ryerson Tull and, as a result, more closely
align their interests with those of our stockholders. Grants and awards under
the plan may consist of stock options, stock appreciation rights, restricted
stock awards, and performance awards, or combinations of these. Under the
plan, stock options and stock appreciation rights are granted at the fair
market value of our common stock on the date of grant and are generally
exercisable for a period up to ten years.
The Committee established new stock awards in 2000 after review of a
compensation analysis for officer positions of the Company, based on a
comparative company survey of compensation practices at the comparison group
of select general distribution, industrial and service companies, and a
summary of executive compensation issues prepared by our outside executive
compensation consultants. These awards were intended to provide incentives to
improve stockholder value, to encourage executive retention and to remain
competitive in executive recruitment. The Committee granted option awards to
named executive officers totaling 231,500 shares during 2000 including the
following awards: Mr. Novich, 115,000 shares; Mr. Gratz, 44,000 shares; Mr.
Niederpruem, 44,000 shares; Mr. Cygan, 13,500 shares; and Mr. Makarewicz,
15,000 shares. The Committee made no restricted stock awards or performance
awards to named executive officers in 2000.
Tax Considerations
In 1993, Section 162(m) was added to the Internal Revenue Code, which
limits deductibility of certain compensation for named executive officers. The
Committee intends that our compensation plans generally satisfy the
requirements of Section 162(m) for maximum deductibility for federal income
tax purposes of payments made under such plans to named executive officers. In
the event the Committee determines that it is advisable to grant awards to
named executive officers that may not so qualify for deductibility, the
Committee reserves the right to make such awards, taking into consideration
the financial effects of such awards on the Company.
Jerry K. Pearlman, Chairman
Jameson A. Baxter
Gary L. Crittenden
10
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following chart compares the cumulative total stockholder return on our
common stock for the five-year period ended December 31, 2000, with the
cumulative total return of the Standard and Poor's Mid Cap 400 Index, and to a
peer group of metals distributors. Our performance prior to 1999 reflects an
additional line of business, steel manufacturing, which at the time
represented approximately half of our business. The peer group's performance
for the entire time period reflects primarily the metals distribution
business.
Because there is no nationally recognized industry index consisting of
metals distributors to be used as a peer group index, we constructed our own
peer group consisting of seven other public companies in the metals
distribution industry. The peer group includes A.M. Castle & Co., Friedman
Industries Incorporated, Huntco Inc., Metals USA, Inc., Olympic Steel, Inc.,
Reliance Steel & Aluminum Co. and Steel Technologies Inc. This comparison
assumes the investment of $100 on December 31, 1995 and the reinvestment of
dividends.
[GRAPH]
Ryerson Tull, Inc. S&P Midcap 400 Peer Group
- ------------------------------------------------------------------------
12/95 $100.00 $100.00 $100.00
12/96 80.34 119.2 139.99
12/97 69.44 157.65 147.02
12/98 69.05 180.4 101.38
12/99 80.38 206.96 112.31
12/00 34.67 243.18 86.10
11
The following chart compares the cumulative total stockholder return on
pre-merger and post-merger Ryerson Tull stock for the period from June, 1996,
following the pre-merger Ryerson Tull initial public offering, through
December 31, 2000, with the cumulative total return of the Standard and Poor's
Mid Cap 400 Index, and to the peer group of metals distributors. This
comparison assumes the investment of $100 on June 30, 1996 in the indices and
in pre-merger Ryerson Tull Class A common stock, the exchange of the Class A
stock for 0.61 shares of our common stock on February 25, 1999 and the
reinvestment of dividends.
[GRAPH]
Ryerson Tull, Inc. S&P Midcap 400 Peer Group
- ------------------------------------------------------------------------
6/96 $100.00 $100.00 $100.00
12/96 84.38 109.15 90.21
12/97 87.11 144.35 94.74
12/98 60.94 165.18 65.33
12/99 74.63 189.50 72.37
12/00 32.19 222.67 55.49
12
EXECUTIVE COMPENSATION
The following table presents the 1998, 1999 and 2000 compensation for Mr.
Novich and the Company's other four most highly compensated executive
officers. The compensation listed in the table includes compensation paid by
us, pre-merger Ryerson Tull and other subsidiaries.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
-------------------------- ---------------------
Awards Payouts
------------ --------
Other Securities
Annual Underlying
Compen- Stock LTIP All Other
Name and Principal Position Year Salary Bonus sation Options(/1/) Payouts Compensation(/2/)
- --------------------------- ---- -------- -------- -------- ------------ -------- -----------------
Neil S. Novich 2000 $554,661 $ 0 $ 0 115,000 $ 0 $39,092
Chairman, Director, President and 1999 492,300 320,400 0 113,500 0 34.387
Chief Executive Officer 1998 441,472 146,900 0 150,000 0 33,858
Jay M. Gratz 2000 $406,576 $ 0 $ 0 44,000 $ 0 $16,262
Executive Vice President and 1999 371,741 203,000 0 43,500 0 17,563
Chief Financial Officer 1998 329,834 417,000 0 80,000 272,560 168,274(/3/)
Gary J. Niederpruem 2000 $325,695 $ 0 $ 0 44,000 $ 0 $13,020
Executive Vice President 1999 276,262 124,500 0 43,500 0 12,820
1998 227,857 79,100 119,968(/4/) 30,000 1,969 9,443
Thomas S. Cygan 2000 $219,741 $ 14,950 $177,527(/4/) 13,500 $ 0 $ 8,305
President, Ryerson Tull North 1999 184,538 77,500 0 13,500 0 8,567
1998 168,865 52,000 0 18,000 0 6,997
Stephen E. Makarewicz 2000 $222,831 $ 9,801 $ 0 15,000 $ 0 $ 8,908
President, Ryerson Tull South 1999 203,217 84,800 0 15,000 0 9,573
1998 194,786 86,000 0 27,000 0 8,083
- --------
(1) Awards consist of options to purchase our common stock. Awards to Mr.
Novich, Mr. Makarewicz, Mr. Niederpruem and Mr. Cygan prior to the RT
Merger consisted of options to purchase pre-merger Ryerson Tull Class A
common stock. At the effective time of the RT Merger, each outstanding
option to purchase shares of pre-merger Ryerson Tull Class A common stock
was replaced by an option to purchase 0.61 shares of our common stock.
(2) Amounts represent the value of vested and unvested employer contributions
and allocations to defined contribution plans of Ryerson Tull and its
subsidiaries.
(3) Amount includes $150,000 for agreeing not to become an employee of, or
provide consulting or other services to, certain competitors prior to
November 6, 2000.
(4) Represents reimbursement of relocation expenses and related tax gross-up.
13
Individual Option Grants in 2000
The following table presents information with respect to (a) individual
grants of options that were made during the last fiscal year to the named
executive officers and (b) the present value of such options on the grant
date.
Number of Percent of
Securities Total Options
Underlying Granted to Grant Date
Options Employees in Exercise Expiration Present
Name Granted(/1/) Fiscal Year Price(/2/) Date Value(/3/)
- ---- ------------ ------------- ---------- ---------- ----------
Neil S. Novich.......... 115,000 25.5% $19.5625 01/12/10 $992,450
Jay M. Gratz............ 44,000 9.8% 19.5625 01/12/10 379,720
Gary J. Niederpruem..... 44,000 9.8% 19.5625 01/12/10 379,720
Thomas S. Cygan......... 13,500 3.0% 19.5625 01/12/10 116,505
Stephen E. Makarewicz... 15,000 3.3% 19.5625 01/12/10 129,450
- --------
(1) Awards consisted of options to purchase common stock that are
transferable, with the advance written consent of the Compensation
Committee, (a) to a spouse or descendants or (b) to a trust for the
benefit of the optionee, his or her spouse or descendants. See "--
Employment and Change in Control Agreements" for option provisions
regarding any change in control of the Company.
(2) The exercise price is equal to the average of the high and low price of
our common stock on the New York Stock Exchange Composite Transactions on
the date of grant. The exercise price may be paid by delivery of already-
owned shares, and an optionee may elect to have Ryerson Tull withhold
shares of stock (or accept already-owned shares) to satisfy minimum tax
withholding obligations with respect to option exercises or payments.
(3) In accordance with Securities and Exchange Commission rules, the Black-
Scholes option pricing model was chosen to estimate the grant date present
value of the options granted under the incentive stock plans during 2000.
The use of this pricing model should not be construed as an endorsement of
the model's accuracy at valuing options. For purposes of calculating the
value of the options as of the grant date, the following assumptions were
made: the option term is 10 years, the volatility of our common stock is
43.51% (calculated using monthly stock prices of a comparable peer group
for the five-year period prior to the grant date), the ten-year risk-free
interest rate is 6.70% for grants, the annualized dividend yield is 1%,
and the expected term is 5 years. The value of the options granted in 2000
depends upon the actual performance of our common stock during the
applicable period; the actual value, if any, that an option grantee will
realize upon exercise of an option will depend on the excess of the market
value of our common stock over the exercise price on the date the option
is exercised.
Aggregated Option Exercises and Year End Option Values
The following table presents the value realized upon option exercises
during 2000, the number of shares underlying the options held at the end of
2000 by the named executive officers and the value of their holdings based on
the closing price on December 31, 2000 for our common stock.
Shares Number of Shares Underlying Value of Unexercised In-
Acquired Unexercised Options at The-Money Options at Fiscal
on Value Fiscal Year-End Year-End
Name Exercise Realized (Exercisable/Unexercisable) (Exercisable/Unexercisable)
- ---- -------- -------- --------------------------- ---------------------------
Neil S. Novich.......... -- -- 202,239/221,240 $0/0
Jay M. Gratz............ -- -- 123,355/98,145(/1/) 0/0(/1/)
Gary J. Niederpruem..... -- -- 66,741/79,184 0/0
Thomas S. Cygan......... -- -- 35,571/26,169 0/0
Stephen E. Makarewicz... -- -- 57,346/30,486 0/0
- --------
(1) See "--Employment and Change in Control Agreements" for information
concerning the value of these options under Mr. Gratz's change in control
agreement.
14
Pension Benefits
The following table shows the maximum annual pension benefits payable on a
straight life annuity basis to employees in various earnings classifications
upon retirement at age 65 under our pension plans. In general, benefits for
salaried employees are based on two factors: (1) years of benefit service, and
(2) average monthly earnings, based on the highest 36 months of earnings
during the participant's last ten years of service prior to the freeze date of
the pension benefit, except for employees eligible for the transition rules
relating to age and service. For this purpose, earnings generally consist of
salary plus bonus as reported in the Summary Compensation Table. All benefit
amounts shown in this table are subject to offset based upon Social Security
earnings.
Pension Plan Table
Average Annual Earnings Annual Pension Benefits for Years of Service Shown
for the Applicable --------------------------------------------------------------
Years-of-Service Period 5 Years 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
- ----------------------- -------- -------- -------- -------- -------- -------- --------
$ 200,000.............. $ 17,000 $ 51,000 $ 68,000 $ 85,000 $102,000 $119,000 $136,000
400,000.............. 34,000 102,000 136,000 170,000 204,000 238,000 272,000
600,000.............. 51,000 153,000 204,000 255,000 306,000 357,000 408,000
800,000.............. 68,000 204,000 272,000 340,000 408,000 476,000 544,000
1,000,000.............. 85,000 255,000 340,000 425,000 510,000 595,000 680,000
1,200,000.............. 102,000 306,000 408,000 510,000 612,000 714,000 816,000
As of March 1, 2001, the named executive officers were credited with the
following years of service: Neil S. Novich--3 years; Jay M. Gratz--25 years;
Gary J. Niederpruem--27 years; Thomas S. Cygan--35 years and Stephen E.
Makarewicz--17 years. Pension benefits for Mr. Gratz, Mr. Niederpruem, Mr.
Cygan and Mr. Makarewicz, whose age and service met certain transition
criteria adopted in connection with the freeze of the Ryerson Tull Pension
Plan, effective December 31, 1997, will continue to accrue pension benefits
until the earlier of December 31, 2002 or their date of retirement. At that
date, their pension benefit will be frozen. Until then, they are subject to
limits on certain company-paid contributions to employees' accounts under the
Ryerson Tull Savings Plan.
Certain pension benefits in excess of the limitations imposed by the
Internal Revenue Code of 1986 will be paid by Ryerson Tull under unfunded non-
contributory supplemental retirement plans. For any officer or employee who is
age 55 or older with at least five years of service and annual compensation in
excess of $170,000, these plans generally permit us to satisfy obligations to
pay benefits upon retirement at age 65 by (a) purchasing annuities (and paying
a tax gross-up to the officer or employee) or (b) paying a lump sum amount at
the time of retirement. No annuities were established for named executive
officers in 2000.
In the event of a change in control (as defined in the applicable plan),
all benefits accrued under the pension plan and the supplemental plans will
become fully and irrevocably vested and distributable to participants as
provided by the terms of those plans. If, within three years following a
change in control, there is a termination of the Ryerson Tull Pension Plan, or
a substantial reduction in accruals under the Ryerson Tull Pension Plan,
assets will first be used to provide retiree medical benefits and then will be
applied to increase retirement benefits to affected participants on a pro rata
basis. Special rules also apply if, after a change in control, the Ryerson
Tull Pension Plan is merged with another plan or if assets are transferred
from the Ryerson Tull Pension Plan to another plan. This distribution would
occur within three years of a change in control, and, within this three-year
period, there are limitations on amendments to the Ryerson Tull Pension Plan.
We provide pension benefits to eligible salaried employees of our
subsidiary, J. M. Tull, under a separate benefit schedule. In 2000 the Tull
benefit schedule was made subject to a benefit freeze similar to the one
described above. The maximum annual pension benefits payable under this
schedule are
15
approximately 3% higher than those shown in the above table for comparable
earnings and service. The Tull benefit schedule does not cover any executive
officers, but Mr. Makarewicz is credited with 12 years of service under the
Ryerson Tull Pension Plan according to the Tull benefit schedule and has a
lump sum benefit accrued as his Tull benefit.
Employment and Change in Control Agreements
Under our incentive stock plans, upon the occurrence of a change in control
event, (i) the value of all outstanding stock options, stock appreciation
rights and restricted stock awards (whether or not then fully exercisable or
vested) will be cashed out at specified prices as of the date of the change in
control, except that (a) certain stock options or stock appreciation rights
outstanding for less than six months will not be cashed out until six months
after the grant date and (b) restricted stock awards may immediately vest; and
(ii) all outstanding performance awards will be cashed out in the amounts and
manner determined by the Compensation Committee.
We have entered into change in control agreements with each of the named
executive officers, the present terms of which expire on December 31, 2001,
but which are automatically extended for additional one-year periods
thereafter, unless we give notice prior to June 30 that we do not wish to
extend such agreements for another year or unless a change in control (as
defined below) or other limited events occur. We have not given such notice of
nonrenewal to date.
For purposes of the agreements, a "change in control" shall generally be
deemed to occur if:
(1) any person becomes the owner of 40% or more of the combined voting
power of our then-outstanding securities;
(2) during any two-year period, the majority of the Board changes
without the approval of two-thirds of the directors who either were
directors at the beginning of the period or whose election was previously
so approved;
(3) holders of our voting securities approve a merger or consolidation
with another company in which our voting securities, in combination with
voting securities held by any trustee or fiduciary under any employee
benefit plan, do not continue to represent at least 60% of the combined
voting power of the voting securities of the surviving entity;
(4) holders of our voting securities approve a complete liquidation or
an agreement for the sale or disposition of all or substantially all of our
assets; or
(5) there occurs, with respect to a "Related Company," (a) a sale or
disposition of securities representing 50% or more of the combined voting
power of the Related Company's securities, (b) a merger or consolidation of
a Related Company with a person in which a majority-owned direct or
indirect subsidiary of Ryerson Tull does not own at least 50% or more of
the combined voting power of the surviving entity, or (c) the sale or
disposition of all or substantially all of the assets of a Related Company
to a person other than Ryerson Tull or a majority-owned subsidiary of
Ryerson Tull.
A "Related Company" is an executive's employer, a direct or indirect parent
of the employer or a subsidiary of the employer that is also a significant
subsidiary of Ryerson Tull within the meaning of Rule 405 under the Securities
Act of 1933.
These agreements generally provide that if an executive resigns from
employment within the period ending 24 months after the month in which a
change in control occurs, either (1) other than for cause or other than as a
consequence of death, disability or retirement or (2) for reasons relating to
a diminution of responsibilities, compensation or benefits or a significant
relocation of the executive's principal place of business ("Good Reason"), he
or she will receive:
. a lump sum payment (the "Severance Payment") equal to three times (two
times in the case of Mr. Cygan and Mr. Makarewicz) the sum of (1) the
current annual base salary plus (2) the
16
average annual incentive bonus paid for the five years preceding
resignation from employment, excluding any years in which the bonus was
zero;
. cash in lieu of any allocations, unpaid awards or rights under our
annual or other incentive compensation plans;
. cash equal to the value of outstanding stock options granted under our
stock option plans at specified prices;
. vesting of outstanding performance awards that would have been earned
for the year in which the change in control occurs had the applicable
performance targets been satisfied for that year;
. life, disability, accident and health insurance as provided in our
insurance programs for a period of 36 months (24 months in the case of
Mr. Cygan and Mr. Makarewicz) after resignation from employment;
. cash in lieu of three years (two years in the case of Mr. Cygan and Mr.
Makarewicz) of additional accrued benefits under our pension plan; and
. legal fees and expenses incurred as a result of such resignation.
The agreements do not limit or reduce any benefits that the executive may be
entitled to receive pursuant to any other agreement upon a change in control.
The agreements provide that the executive will be paid an additional amount
which, after payment of all taxes thereon, is equal to any excise tax imposed.
While this provision will preserve the severance agreement benefits for the
executives, we will not be entitled to a federal income tax deduction for this
excise tax payment.
The agreements also provide benefits if the executive resigns from
employment with Ryerson Tull for a reason other than cause coincident with or
prior to a change in control and within twelve months after the occurrence of a
"potential change in control" if a change in control or certain other limited
events occur coincident with or within six months after his or her resignation.
A "potential change in control" generally occurs if:
. we enter into an agreement, the consummation of which would result in
the occurrence of a change in control;
. any person (including Ryerson Tull) publicly announces an intention to
take or to consider taking actions that, if consummated, would
constitute a change in control;
. any person who is or becomes the owner of 9.5% or more of the combined
voting power of our then-outstanding securities increases beneficial
ownership of such securities by 5% or more over the percentage so owned
on the date of the agreements; or
. the Board adopts a resolution that a potential change in control has
occurred for purposes of the agreements.
Ispat International's acquisition of Inland Steel Company constituted a
change in control under the change in control agreements with respect to
Ryerson Tull and ISC but not with respect to pre-merger Ryerson Tull. After
that acquisition, Ryerson Tull and Mr. Gratz entered into amendments to Mr.
Gratz's change in control agreement. Under the amended agreement he continues
to be entitled to legal fees and payments with respect to any excise taxes in
accordance with the original agreements.
We have instituted a practice of requiring non-compete and non-solicitation
agreements from executive officers, including each of the named executive
officers, that provide for a post-termination non-compete and non-solicitation
period and salary and benefit continuation if the executive is discharged
without cause or resigns for "good reason."
These agreements also generally provide that if an executive's termination
occurs, either (1) other than for cause or other than as a consequence of
death, disability or retirement or (2) for Good Reason
17
(including the failure to provide bonus opportunities or stock awards based on
historical practice in the case of Mr. Novich), he will receive his salary,
bonus and benefits in effect as of his termination date. The bonus shall be
two (three in the case of Mr. Novich) payments of the average annual amount of
the award paid to him for the three years immediately preceding that in which
the termination date occurs (excluding any years in which the bonus was zero
in the case of Mr. Novich). Twenty-four (thirty-six in the case of Mr. Novich)
months of additional age and service credit will be provided for determining
an executive's supplemental pension benefits using the methodology described
in his change in control agreement except that any lump sum payment will be
made twenty-four (thirty-six in the case of Mr. Novich) months after the
executive's termination date and only if he has not violated the
confidentiality, nonsolicitation and noncompetition provisions of his
employment agreement.
Mr. Novich's agreement further provides that all existing unvested options
as of his termination date would become vested and he would be afforded a 36-
month extension (but not beyond the original termination date of the option)
from his termination date to exercise any remaining unexercised options that
had not expired before his termination date. The agreement also provides Mr.
Novich with certain opportunities to exercise his options in a cashless
exchange, indemnification, financial services counseling, and executive
outplacement and office services following his termination.
In lieu of payments under his change in control agreement, Mr. Gratz's
employment agreement was amended to provide that Mr. Gratz would resign as
Vice President and Chief Financial Officer of Inland Steel Industries, Inc. on
November 30, 1998 and become employed by pre-merger Ryerson Tull. This
amendment provides that Mr. Gratz will be entitled to a change in control
agreement from pre-merger Ryerson Tull but would not be entitled to severance
benefits under his existing agreement upon resignation from employment with
Ryerson Tull. Pursuant to his amended change in control agreement, Mr. Gratz
is entitled (1) to receive cash equal to the change in control price of
$29.625 per share less the exercise price in lieu of shares of our common
stock issuable upon exercise of options previously awarded to him ($579,312 in
the aggregate) at any time on or before November 6, 2001 (but not beyond the
original term of any such option), and he exercised this right in 2001; (2)
upon resignation from his employment, to receive life, disability, accident
and health insurance benefits and other employee fringe benefits; (3) upon the
earlier of the date of his resignation or January 1, 2001, to receive a lump
sum payment of all non-qualified retirement benefits, calculated as if he had
an additional three years of accrued benefits and as if payments were then to
start immediately without actuarial reduction ($2,860,582); and (4) to receive
a retention bonus of $250,000 on January 1, 2000. Mr. Gratz received $150,000
for agreeing not to become an employee of, or provide consulting or other
services to, certain competitors prior to November 6, 2000.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders which are intended to be included in our proxy
statement for the 2002 Annual Meeting pursuant to SEC Rule 14a-8 must be
received by us no later than November 12, 2001, and must otherwise comply with
that rule to be included in the Company's proxy materials for that meeting.
A stockholder that intends to present business at the 2002 Annual Meeting
other than pursuant to Rule 14a-8 must comply with the requirements set forth
in our By-laws. Among other things, to bring business before an annual
meeting, a stockholder must give written notice thereof, complying with the
By-laws, to the Secretary of Ryerson Tull not less than 90 days and not more
than 120 days in advance of the day corresponding to the date of mailing the
proxy materials for the prior year's annual meeting of stockholders.
Therefore, because we anticipate mailing our proxy statement on March 12,
2001, we must receive notice of a stockholder proposal submitted other than
pursuant to Rule 14a-8 no sooner than November 12, 2001, and no later than
December 12, 2001.
18
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those set forth in the Notice of the Annual Meeting.
However, if any other matters do come before the meeting, it is intended that
the holders of the proxies will vote thereon in their discretion.
By order of the Board of Directors,
Joyce E. Mims
Vice President and
General Counsel
March 12, 2001
Chicago, Illinois
- -------------------------------------------------------------------------------
Each stockholder, whether or not you expect to be present in person at the
Annual Meeting, is requested to SIGN, DATE AND RETURN THE ENCLOSED PROXY in
the accompanying envelope as promptly as possible.
19
Appendix A
Ryerson Tull, Inc.
Audit Committee Charter
I. Purpose
The primary functions of the Audit Committee are to assist the Board of
Directors in fulfilling its oversight responsibilities by:
. Reviewing the integrity of the Company's systems of internal controls,
financial reporting, and compliance with the Code of Business Conduct as
established by management and the Board of Directors;
. Reviewing the independence and performance of the Company's independent
outside auditors and internal auditing department; and
. Providing a channel for communication among the independent auditor, the
internal audit department, management and the Board of Directors.
In so doing, it is the policy of the Audit Committee to maintain free and
open means of communication among the directors, the independent auditors, the
internal auditors, and the financial management of the Company.
II. Membership Requirements
The Audit Committee, comprised of three or more independent directors as
determined by the Board of Directors, shall meet the New York Stock Exchange
requirements for membership on audit committees of listed companies.
Directors ineligible for Audit Committee membership are directors who are
(1) employees of the Company or its affiliates, (2) family members of persons
who are or were employees of the Company or its affiliates during the last
three years, (3) employed as executives of another corporation at which any of
the Company's executives serve on that corporation's compensation committee,
or (4) not independent because of a direct or indirect business relationship
with the Company that the Board of Directors has determined impairs the
director's independence.
The members of the Committee will be elected by the Board at the annual
organizational meeting of the Board and serve until their successors are duly
elected and qualified. The Board of Directors shall have the power at any time
to change the membership of the Audit Committee and to fill vacancies in it,
subject to such new member(s) satisfying the qualification requirements of the
New York Stock Exchange. Unless otherwise provided in the resolution
designating a committee, a majority of all the members of the Committee will
select its chairman. Except as expressly provided in this charter or the By-
Laws of the Company, the Audit Committee shall fix its own rules of procedure.
III. Meetings
The Audit Committee will meet as frequently as circumstances dictate but at
least four times annually. The Audit Committee chairman will prepare and/or
approve an agenda for each meeting. As part of its goal to maintain free and
open communication, the Committee will meet in separate executive sessions at
least annually with management, the director of internal auditing, and the
independent auditor and as a committee to provide a forum to discuss any
matters that the Committee or any of these groups believe should be discussed
privately.
A-1
IV. Responsibilities and Duties
In carrying out its responsibilities, the Audit Committee will:
. Review and reassess the adequacy of its charter at least annually or
sooner if determined appropriate.
. Submit the charter to the Board of Directors for its approval annually
and submit proposed revisions to the charter when changes are
recommended. Have the charter disclosed as required by the Securities
and Exchange Commission and the New York Stock Exchange, as applicable.
. Review the performance of the independent auditor and annually recommend
to the Board of Directors the appointment of the independent auditor for
the Board's approval. Recommend discharge of the independent auditor
when circumstances warrant. The independent auditor is and remains
ultimately accountable to the Audit Committee and the Board of
Directors; the Audit Committee and the Board of Directors have the
ultimate authority and responsibility to select, evaluate and, when
appropriate, replace the independent auditor.
. Approve the fee arrangements of the Company's independent auditor in
connection with audit services.
. Ensure that the independent auditor submits on a periodic basis to the
Audit Committee a formal written statement delineating all
relationships, including any non-audit-related significant compensation,
between the independent auditor and the Company, and engage in a
dialogue with the independent auditor with respect to any disclosed
relationships or services that may impact the objectivity or
independence of the independent auditor.
. Review with the Board of Directors the statement from the independent
auditor of any relationships between the independent auditor and the
Company or any other relationships that may adversely impact the
independence of the independent auditor so that the Board can satisfy
itself as to the auditor's independence. Recommend the Board take
appropriate actions in response to the independent auditor's report to
satisfy itself of the independent auditor's independence.
. Review the proposed audit scope, audit and review procedures to be
utilized, and general audit approach of the annual external audit
examination and the results and recommendations of the independent
auditor on completion of such examination.
. Prior to filing, review with management and the independent auditor the
annual audited consolidated financial statements of the Company,
including the quality of the financial statement disclosures, accounting
principles applied and significant judgments affecting the financial
statements, including any matters required by Statement on Auditing
Standard No. 61 ("SAS No. 61") identified during the independent
auditor's review.
. Review with management the management discussion and analysis of
financial condition and results of operations section of the Company's
annual report to stockholders and its annual report on Form 10-K.
. On a quarterly basis, review with management and the independent auditor
any matters required by SAS No. 61 identified during the independent
auditor reviews of the Company's quarterly financial information. For
purposes of this matter, the audit committee chairman can represent the
entire committee.
. As required by the Securities and Exchange Commission, annually prepare
for inclusion in the Company's annual proxy statement a report from the
audit committee stating (A) that the Committee has (1) reviewed and
discussed the audited financial statements with management; (2)
discussed with the independent auditor the matters required by SAS
No. 61, and (3) received certain disclosures from the independent
auditor regarding the independent auditor's independence as required by
Independence Standards Board No. 1 and discussed with the independent
auditor the independent auditor's independence; (B) whether,
A-2
based on such reviews and discussions, the Audit Committee recommended
to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K; and (C) that the
Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independent auditor's
independence.
. Review and concur in the appointment, reassignment or dismissal of the
director of internal audit.
. Review the internal audit function of the Company, including the
independence and authority of the internal auditor; the reporting
relationships among the internal auditor, financial management and the
Audit Committee; the internal audit reporting obligations; and
performance compared to the annual audit plan. Approve the proposed
scope of the Annual and Five-Year Internal Audit Programs.
. Review with management, the independent auditor and the director of
internal audit the integrity of the Company's financial reporting
processes and system of internal controls, significant findings and
recommendations together with management's responses and actions related
to these reports, the cooperation received from management during their
audits, and the nature of any disagreements with management.
. Review, with the Company's legal counsel and management, compliance with
policies relating to the Company's Code of Business Conduct, conflicts
of interest, sensitive payments and similar matters affecting the
financial reporting process or the financial statements of the Company.
Review, with the Company's legal counsel, any legal matter that could
have a significant impact on the Company's financial statements.
. Review with management and legal counsel the system in place to assess
whether the Company's financial statements, reports, and other financial
information which are required to be both disseminated to the public and
filed with governmental organizations satisfy legal requirements of the
Securities and Exchange Commission and the New York Stock Exchange.
. Annually, review policies, procedures and audit results covering
directors' and officers' expense accounts and perquisites.
. Have the authority to investigate any matter brought to its attention
within the scope of its duties. The Audit Committee has direct access to
the independent auditors as well as anyone in the Company and is
empowered to retain, at the Company's expense, outside counsel,
accountants, or other consultants or experts it deems necessary to
assist in the performance of its duties.
. Report to the Board of Directors on the results of its activities.
. Perform any other action necessary to comply with the regulations of the
Securities and Exchange Commission and the New York Stock Exchange.
The Audit Committee does not plan or conduct audits nor does it determine
whether the Company's financial statements are complete and accurate or
whether they are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditors. The
Audit Committee's recommendation that the financial statements be included in
the Company's Annual Report is therefore not a representation that the
financial statements are presented fairly in accordance with generally
accepted accounting principles or that the audit complied with generally
accepted auditing standards.
The Audit Committee has the authority to conduct investigations; it reviews
compliance with laws and regulations; and it facilitates discussion among the
directors, the independent auditors, the internal auditors and management.
Management is responsible for resolving investigations, for assuring
compliance with laws and regulations and for resolving disagreements.
A-3
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
-------------------------------
RYERSON TULL, INC.
2001
PROXY PROXY
Ryerson Tull, Inc.
Confidential Voting Directions
Solicited on Behalf of the Board of Directors
As a Participant in the Ryerson Tull Savings Plan, I hereby direct LaSalle
National Bank, as Trustee of the ESOP Trust which forms a part of such plan, to
vote all shares of common stock of Ryerson Tull, Inc. that are credited to my
account in the ESOP Trust as of March 1, 2001 at the Annual Meeting of
Stockholders of the Company to be held April 18, 2001 and at any adjournment
thereof. Unless otherwise specified, all shares allocated to the undersigned's
Plan account will be voted FOR the election of directors, and in the discretion
of the Trustee or its proxies upon any and all other matters that may properly
come before such annual meeting or any adjournment thereof. The Trustee shall
vote all shares allocated to participants' Plan accounts for which properly
completed confidential voting directions are not received prior to 5:00 p.m.,
Chicago time, on April 17, 2001 and all unallocated shares held in the ESOP
Trust in the same proportion as the shares with respect to which properly
completed confidential voting directions have been timely received from
participants in the ESOP Trust.
(Please complete on other side)
[ ]
RYERSON TULL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. (0)
The Board of Directors Recommends a Vote FOR Item 1.
1.Election of Directors.
01-Jameson A. Baxter, 02-Richard G. Cline, 03-Gary L. Crittenden, 04-James A.
Henderson, 05-Gregory P. Josefowicz, 06-Neil S. Novich, 07-Jerry K. Pearlman,
08-Ronald L. Thompson
-----------------
Nominee Exception
For All
For Withheld Except
0 0 0
2. In the discretion of the proxies to vote upon any and all other matters
which may properly come before such annual meeting or any adjournment
there-of.
Dated: ______________________________________________________________, 2001
Signature ______________________________________________________________________
Please date, sign and return promptly.
INSTRUCTIONS TO PLAN PARTICIPANTS
Please date and sign your name (exactly as it appears on the accompanying
Confidential Voting Directions) in the space provided and return the
Confidential Voting Directions in the enclosed postage-paid envelope to direct
LaSalle National Bank, as Trustee of the ESOP Trust, to vote your shares in
the Plan.
All shares of the Company's common stock allocated to your account in the
Ryerson Tull Savings Plan, whether vested or unvested, will be voted by
LaSalle National Bank, Chicago, Illinois, as the ESOP Trustee, according to
your directions. IF THE CONFIDENTIAL VOTING DIRECTIONS ARE RETURNED SIGNED
WITH NO VOTING DIRECTIONS MARKED, YOU WILL BE DEEMED TO HAVE DIRECTED THE ESOP
TRUSTEE TO VOTE ALL SHARES ALLOCATED TO YOUR ACCOUNT IN THE MANNER SPECIFIED
IN BOLDFACE TYPE ON THE FRONT OF THE CONFIDENTIAL VOTING DIRECTION. THE ESOP
TRUSTEE SHALL VOTE ALL SHARES ALLOCATED TO PARTICIPANTS' ACCOUNTS FOR WHICH
PROPERLY COMPLETED CONFIDENTIAL VOTING DIRECTIONS ARE NOT RECEIVED PRIOR TO
5:00 P.M., CHICAGO TIME, ON APRIL 17, 2001 AND ALL UNALLOCATED SHARES HELD IN
THE ESOP TRUST, IN THE SAME PROPORTION AS THE SHARES WITH RESPECT TO WHICH
PROPERLY COMPLETED CONFIDENTIAL VOTING DIRECTIONS HAVE BEEN TIMELY RECEIVED
FROM PARTICIPANTS IN THE ESOP TRUST.
PLEASE DATE, SIGN AND RETURN THE CONFIDENTIAL VOTING DIRECTIONS PROMPTLY,
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, SO THAT YOUR SHARES
WILL BE VOTED IN THE MANNER YOU DESIRE. YOU MAY REVOKE YOUR VOTING DIRECTIONS
AT ANY TIME PRIOR TO 5:00 P.M., CHICAGO TIME, ON APRIL 17, 2001.
If, in addition to being a Participant with an account in the ESOP Trust,
you were a stockholder of the Company on March 1, 2001, you will receive a
separate Proxy and Proxy Statement from the Company. You are requested to
sign, date and return that Proxy in the postage-paid envelope provided. Legal
requirements provide for the separate solicitation of Participants with an
account in the ESOP Trust who are also stockholders of the Company.
Dear Stockholder:
Enclosed are your Proxy and Proxy Statement for the 2001 Annual Meeting of
Stockholders of Ryerson Tull, Inc. Voting with respect to any common stock
held by you of record in certificate form, any common stock credited to your
account under the Shareholder Investment Service, and any Series A $2.40
Cumulative Convertible Preferred Stock held by you of record is consolidated
on the enclosed Proxy.
If, in addition to being a stockholder of the Company on March 1, 2001, you
are a participant with accounts in the ESOP Trust, you also will receive
Confidential Voting Directions and Instructions to Plan Participants from the
Company asking you to sign, date and return the Confidential Voting Directions
in the postage-paid envelope provided with such Directions.
PLEASE VOTE BY SIGNING, DATING AND RETURNING YOUR PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU DECIDE TO ATTEND THE
MEETING, TO ENSURE THAT YOUR VOTE IS REPRESENTED.
PROXY PROXY
Ryerson Tull, Inc.
Proxy Solicited on Behalf of The Board of Directors
The undersigned hereby appoints Neil S. Novich, Jay M. Gratz and Joyce E.
Mims, and each of them, as attorneys and proxies (with full power of
substitution in each) to vote all common stock of the Company that the
undersigned is entitled to vote (including any common stock credited to the
account of the undersigned under the Company's Shareholder Investment Service)
and all Series A $2.40 Cumulative Convertible Preferred Stock that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held April 18, 2001 and at any adjournment thereof. Unless
otherwise specified, this proxy will be voted FOR the election of directors,
and in the discretion of the proxies on any and all other matters that may
properly come before such Annual Meeting or any adjournment thereof.
(Please complete on other side)
[ ]
RYERSON TULL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. (0)
The Board of Directors Recommends a Vote FOR Item 1.
1. Election of Directors.
01-Jameson A. Baxter, 02-Richard G. Cline, 03-Gary L. Crittenden, 04-James A.
Henderson, 05-Gregory P. Josefowicz, 06-Neil S. Novich, 07-Jerry K. Pearlman,
08-Ronald L. Thompson
-----------------
Nominee Exception
For All
For Withheld Except
0 0 0
2. In the discretion of the proxies to vote upon any and all other matters
which may properly come before such annual meeting or any adjournment
there-of.
Dated: _____________________________________________________________ , 2001
Signature(s)____________________________________________________________________
- --------------------------------------------------------------------------------
Please sign as name appears hereon. Joint owners should each sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. Date and return promptly.