SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
Olympic Steel, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
[OLYMPIC STEEL LOGO]
Olympic Steel, Inc., 5096 Richmond Road, Bedford Heights, OH 44146
(216) 292-3800
To Our Shareholders:
You are invited to attend the 2002 Annual Meeting of Shareholders of Olympic
Steel, Inc. to be held at Olympic Steel, Inc., 5096 Richmond Road, Bedford
Heights, OH 44146, on Friday, April 26, 2002, at 10:00 a.m. local time. We are
pleased to enclose the notice of our Annual Meeting of Shareholders, together
with a Proxy Statement, a Proxy and an envelope for returning the Proxy.
You are hereby asked to approve the election of Directors, to adopt the Employee
Stock Purchase Plan, and approve amendments to the Company's stock option plan.
Your Board of Directors unanimously recommends that you vote "FOR" each proposal
stated in the Proxy.
Please carefully review the Proxy Statement and then complete and sign your
Proxy and return it promptly. If you attend the meeting and decide to vote in
person, you may withdraw your Proxy at the meeting.
Your time and attention to this letter and the accompanying Proxy Statement and
Proxy is appreciated.
Sincerely,
Michael D. Siegal
Chairman and Chief Executive Officer
March 29, 2002
[OLYMPIC STEEL LOGO]
Olympic Steel, Inc., 5096 Richmond Road, Bedford Heights, OH 44146
(216) 292-3800
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 2002
The Annual Meeting of Shareholders of Olympic Steel, Inc., an Ohio corporation
(the Company), will be held on Friday, April 26, 2002, at 10:00 a.m. local time,
at Olympic Steel, Inc., 5096 Richmond Road, Bedford Heights, OH 44146, for the
following purposes:
1. To elect three Directors for a term expiring in 2004;
2. To adopt the Employee Stock Purchase Plan;
3. To amend the Company's Stock Option Plan to increase by 350,000 the number of
shares available for issuance under the plan and extend the term of the plan
until 2009; and,
4. To transact such other business that is properly brought before the meeting.
Only holders of the Common Shares of record on the books of the Company at the
close of business on March 11, 2002, will be entitled to vote at the meeting.
Your vote is important. All shareholders are invited to attend the meeting in
person. However, to ensure your representation at the meeting, please mark, date
and sign your Proxy and return it promptly in the enclosed envelope. Any
shareholder attending the meeting may vote in person even if the shareholder
returned a Proxy.
By Order of the Board of Directors
Marc H. Morgenstern
Secretary
Cleveland, Ohio
March 29, 2002
THE ENCLOSED PROXY, WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY, CAN BE RETURNED IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
[OLYMPIC STEEL LOGO]
2002 ANNUAL MEETING
April 26, 2002
THE PROXY AND SOLICITATION
This Proxy Statement is being mailed on or about March 29, 2002, to the
shareholders of Olympic Steel, Inc. (the Company) in connection with the
solicitation by the Board of Directors of the enclosed form of Proxy for the
2002 Annual Meeting of Shareholders to be held on Friday, April 26, 2002 at
10:00 a.m. local time, at Olympic Steel, Inc., 5096 Richmond Road, Bedford
Heights, OH 44146. Pursuant to the Ohio General Corporation Law, any shareholder
signing and returning the enclosed Proxy has the power to revoke it by giving
notice of such revocation to the Company in writing or in the open meeting
before any vote with respect to the matters set forth therein is taken. The
representation in person or by Proxy of at least a majority of the outstanding
shares of Common Stock entitled to vote is necessary to provide a quorum at the
Annual Meeting. The election of Directors, the adoption of the Employee Stock
Purchase Plan, and the approval of the amendment to the Company's stock option
plan each require approval only by a plurality of the votes cast. As a result,
although abstentions and broker non-votes will not be counted in determining the
outcome of the vote, they will be counted in determining whether a quorum has
been achieved. The cost of soliciting the Proxy will be borne by the Company.
PURPOSES OF ANNUAL MEETING
The Annual Meeting has been called for the purposes of (1) electing three
Directors of the class whose two-year terms of office will expire in 2004, (2)
adopting the Employee Stock Purchase Plan, (3) amending the Company's stock
option plan to increase the number of shares available for issuance under the
plan and extending the term of the plan, and (4) transacting such other business
as may properly come before the meeting.
The two persons named in the enclosed Proxy have been selected by the Board
of Directors and will vote Common Shares represented by valid Board of
Directors' Proxies. They have indicated that, unless otherwise indicated in the
enclosed Proxy, they intend to vote for the election of the Director nominees
named herein and in favor of the proposals listed in Items 2 and 3 above.
VOTING SECURITIES
The Board of Directors has fixed the close of business on March 11, 2002,
as the record date for determining shareholders entitled to notice of the
meeting and to vote.
1
On that date, 9,631,100 shares of Common Stock were outstanding and entitled to
one vote on all matters properly brought before the Annual Meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors is divided into two classes of three Directors each,
whose members serve for a staggered two-year term. One class of Directors' term
expires in 2002 and the other class term expires in 2003.
The Board of Directors has nominated David A. Wolfort, Martin H. Elrad, and
Suren A. Hovsepian to stand for reelection as Directors for a two-year term. The
two-year term will end upon the election of Directors at the 2004 Annual Meeting
of Shareholders.
At the Annual Meeting, the shares of Common Stock represented by valid
Proxies, unless otherwise specified, will be voted to reelect the Directors.
Each individual nominated for election as a Director of the Company has agreed
to serve if elected. However, if any nominee becomes unable or unwilling to
serve if elected, the Proxies will be voted for the election of such other
person as may be recommended by the Board of Directors. The Board of Directors
has no reason to believe that the persons listed as nominees will be unable or
unwilling to serve.
The Board of Directors recommends that each shareholder vote "FOR" the
Board of Directors' nominees. Directors will be elected by a plurality of the
votes cast at the Annual Meeting.
NOMINEES FOR TERMS TO EXPIRE IN 2004
PRINCIPAL OCCUPATION,
PAST FIVE YEARS, DIRECTOR
NAME OF DIRECTOR AGE OTHER DIRECTORSHIPS SINCE
---------------- --- -------------------------------------------------- --------
David A. Wolfort 49 President since January 2001 and Chief Operating 1987
Officer of the Company since 1995. He served as
Vice President -- Commercial of the Company from
1987 to 1995. He is Chairman of the Metals Service
Center Institute (MSCI) Political Action
Committee, serves as Past Chairman of MSCI's
Government Affairs Committee, and a Regional Board
Member of the Northern Ohio Anti-Defamation
League.
Martin H. Elrad 62 Private investor; also served for over five years 1987
as President of Solon Leasing Co. (a fleet vehicle
lessor).
Suren A. Hovsepian 62 Business Consultant. Vice President -- Automotive 1998
of the Company from 1997 to 1998. Previously, he
served as General Manager of Lafayette Steel, a
subsidiary of the Company, since its acquisition
in 1995. Prior to its acquisition, he was
President and Chief Executive Officer of Lafayette
Steel.
2
DIRECTORS WHOSE TERMS EXPIRE IN 2003
PRINCIPAL OCCUPATION,
PAST FIVE YEARS, DIRECTOR
NAME OF DIRECTOR AGE OTHER DIRECTORSHIPS SINCE
---------------- --- -------------------------------------------------- --------
Michael D. Siegal 49 Chief Executive Officer of the Company since 1984, 1984
and Chairman of the Board since 1994. A member of
the Board of Directors of American National Bank
(Cleveland, Ohio). A member of the Board of the
Metals Service Center Institute (MSCI) and Vice
Chairman of the Development Corporation for
Israel.
Thomas M. Forman 56 Business consultant and private investor. From 1994
1999 to 2000, he served as Chief Administrative
Officer, General Counsel, and co-founder of
HealthSync (a provider of an employer-paid health
insurance marketplace). He served as Vice
President of Sealy Corporation (a manufacturer and
distributor of bedding) from 1994 to 1997.
James B. Meathe 45 Managing Director and Chairman Midwest Region of 2001
Marsh Inc. (a leading risk and insurance services
firm) since 1999. Previously served in several
senior management positions in Marsh Inc. He
currently serves on the Operating Committee of
Marsh USA Inc. and on the board of Lake Forest
College and Children's Memorial Hospital (Chicago,
IL).
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors of the Company held four meetings in 2001. The Board
of Directors has an Audit Committee, a Compensation Committee, and a Nominating
Committee, each of which consists of Messrs. Elrad, Forman, and Meathe. The
Audit Committee held two meetings and the Compensation and Nominating Committees
each held one meeting in 2001. The Committees receive their authority and
assignments from the Board of Directors and report to the Board of Directors.
All of the current Directors attended all of the required Board and
applicable committee meetings held during 2001. In addition to holding regular
committee meetings, the Board members also reviewed and considered matters and
documents and communicated with each other wholly apart from the meetings.
Several actions were taken by unanimous written consent.
Audit Committee. The committee is chaired by Mr. Meathe, operates pursuant
to a written charter and is responsible for monitoring and overseeing the
Company's internal controls and financial reporting processes, as well as the
independent audit of the Company's consolidated financial statements by the
Company's independent auditors, Arthur Andersen LLP. Each committee member is an
"independent director" as defined in Rule 4200(a)(15) of the National
Association of Securities Dealers, Inc. listing standards. As part of fulfilling
its responsibilities, the Audit Committee reviewed and discussed the audited
consolidated financial statements for 2001 with management and discussed those
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees) with the Company's independent auditors.
The Audit Committee received the written
3
disclosures and the letter required by Independent Standards Board Standard No.
1 (Independence Discussions with Audit Committee) from Arthur Andersen LLP, and
discussed that firm's independence with representatives of the firm.
Based upon the Audit Committee's review of the audited consolidated
financial statements and its discussions with management and the Company's
independent auditors, the Audit Committee recommended that the Board of
Directors include the audited consolidated financial statements for the fiscal
year ended December 31, 2001 in the Company's Annual Report on form 10-K filed
with the Securities and Exchange Commission.
James B. Meathe, Chairman
Martin H. Elrad
Thomas M. Forman
Compensation Committee. This committee is chaired by Mr. Forman, reviews
and approves the Company's executive compensation policy, makes recommendations
concerning the Company's employee benefit policies, and has authority to
administer the Company's Stock Option Plan.
Nominating Committee. This committee is chaired by Mr. Elrad, functions to
advise and make recommendations to the Board concerning the selection of
candidates as nominees for Directors, including those individuals recommended by
shareholders. Shareholders wishing to suggest nominees for election to the Board
at the 2003 Annual Meeting may do so by providing written notice to the Company
in care of Marc H. Morgenstern, Secretary, no later than December 30, 2002.
COMPENSATION OF DIRECTORS
During 2001, each Director who is not an employee of the Company received a
Director's fee in the amount of $3,500 per meeting and reimbursement for out-of-
pocket expenses incurred in connection with attending such meetings. Directors
also receive $1,000 for each special Board or Committee meetings attended. No
additional compensation is to be paid for committee meetings held on the same
day as Board meetings. Upon appointment to the Board, each outside Director is
entitled to a stock option grant of 10,000 shares. Each outside Director shall
also be entitled to an annual stock option grant of up to 2,500 shares, based on
overall Company performance. Directors who are also employees of the Company
receive no additional remuneration for serving as Directors.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth each person or entity who has beneficial
ownership of 5% or more of the outstanding Common Shares of the Company on March
11, 2002, based upon information furnished to the Company.
NUMBER OF SHARES PERCENTAGE OF
NAMES OF BENEFICIAL OWNERS BENEFICIALLY OWNED OWNERSHIP
-------------------------- ------------------ -------------
Michael D. Siegal 1,572,666(1) 16.0%
5096 Richmond Road
Cleveland, OH 44146
Fifth Third Bancorp/Fifth Third Bank 830,357(2) 8.4%
Fifth Third Center
Cincinnati, OH 45263
Dimensional Fund Advisors 807,000(3) 8.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
David A. Wolfort 598,000(4) 6.1%
5096 Richmond Road
Cleveland, OH 44146
---------------
(1) Does not include 51,000 shares held in various trusts for the benefit of Mr.
Siegal's children. Mr. Siegal disclaims beneficial ownership of such shares.
Includes 41,666 shares issuable upon exercise of options exercisable within
sixty days of March 11, 2002.
(2) Based on Schedule 13G filed with the Securities and Exchange Commission on
or about February 12, 2002.
(3) Based on Schedule 13G filed with the Securities and Exchange Commission on
or about January 30, 2002.
(4) Does not include 113,000 shares held in various trusts for the benefit of
Mr. Wolfort's children. Mr. Wolfort disclaims beneficial ownership of such
shares. Includes 95,000 shares issuable upon exercise of options exercisable
within sixty days of March 11, 2002.
5
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the amount of the Company's Shares of Common
Stock beneficially owned by the Company's Directors, Director nominees, each of
the officers in the compensation table included herein, and all the Directors,
Director nominees, and executive officers as a group as of March 11, 2002.
NUMBER OF SHARES PERCENTAGE OF
NAMES OF BENEFICIAL OWNERS BENEFICIALLY OWNED OWNERSHIP
-------------------------- ------------------ -------------
Michael D. Siegal 1,572,666(1) 16.0%
David A. Wolfort 598,000(2) 6.1%
Martin H. Elrad 24,000(3) *
Richard T. Marabito 23,833(4) *
Heber MacWilliams 22,633(3) *
Suren A. Hovsepian 19,000(3) *
Thomas M. Forman 17,650(3) *
James. B. Meathe 2,000(3) *
All Directors, Director nominees, and
executive officers as a group (8 persons) 2,279,782(5) 23.1%
---------------
* Less than 1%.
(1) Does not include 51,000 shares held in various trusts for the benefit of Mr.
Siegal's children. Mr. Siegal disclaims beneficial ownership of such shares.
Includes 41,666 shares issuable upon exercise of options exercisable within
sixty days of March 11, 2002.
(2) Does not include 113,000 shares held in various trusts for the benefit of
Mr. Wolfort's children. Mr. Wolfort disclaims beneficial ownership of such
shares. Includes 95,000 shares issuable upon exercise of options exercisable
within sixty days of March 11, 2002.
(3) Includes shares issuable upon exercise of options exercisable within sixty
days of March 11, 2002, as follows: Elrad -- 19,000, MacWilliams -- 16,833,
Hovsepian -- 14,000, Forman -- 15,500, Meathe -- 2,000.
(4) Does not include 2,000 shares held is various trust for the benefit of Mr.
Marabito's children. Mr. Marabito disclaims beneficial ownership of such
shares. Includes 20,833 shares issuable upon exercise of options exercisable
within sixty days of March 11, 2002.
(5) Includes 224,832 shares issuable upon exercise of options exercisable within
sixty days of March 11, 2002.
6
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Act of 1934, as amended, requires the
Company's officers and Directors, and persons who own greater than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership to
the SEC. Officers, Directors and more than 10% shareholders are required by the
SEC to furnish to the Company copies of all Section 16(a) reports they file.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Company during 2001 and Form 5 and amendments thereto furnished to the
Company with respect to 2001, or a written representation from the reporting
person that no Form 5 is required, all filings required to be made by the
Company's officers, Directors and greater than 10% shareholders were timely made
with the exception of one late filing of Form 4 by Mr. Marabito for November
2001 purchase of common stock.
EXECUTIVE OFFICERS' COMPENSATION
The following table sets forth certain information with respect to the
compensation paid by the Company during the years ended December 31, 2001, 2000,
and 1999 to the Chief Executive Officer and each of the other executive officers
(the "Named Executive Officers") of the Company:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
NAME AND ----------------------- ALL OTHER
PRINCIPAL POSITION(S) YEAR SALARY BONUS COMPENSATION(1)
--------------------- ---- -------- -------- ---------------
Michael D. Siegal, 2001 $400,000 $ 0 $5,250
Chairman of the Board and 2000 400,000 0 8,650
Chief Executive Officer 1999 425,000 118,300 9,800
David A. Wolfort, 2001 $383,558 $ 20,000 $5,250
President and 2000 310,000 0 8,650
Chief Operating Officer 1999 310,000 94,640 9,800
Richard T. Marabito(2)
Chief Financial Officer and 2001 $175,000 $ 0 $5,250
Treasurer 2000 161,628 0 8,650
Heber MacWilliams(2) 2001 $150,000 $ 10,000 $5,250
Vice President -- MIS 2000 125,154 15,000 8,379
---------------
(1) "All Other Compensation" includes (i) contributions to the Company's 401(k)
plan to match pre-tax elective deferral contributions and (ii) amounts paid
under the Company's discretionary profit-sharing plan. Messrs. Siegal,
Wolfort, Marabito, and MacWilliams each were credited in 2001 with $5,250
under the 401(k) plan.
(2) Pursuant to SEC rules, no information regarding compensation for years prior
to appointment as Named Executive Officer required.
7
The following table sets forth information regarding individual grants of
stock options pursuant to the Company's Stock Option Plan during 2001 to each of
the Named Executive Officers.
INDIVIDUAL OPTION GRANTS
2001
% OF
NUMBER OF TOTAL OPTIONS
SHARES COVERED GRANTED TO GRANT DATE
BY OPTION EMPLOYEES IN EXERCISE PRICE EXPIRATION PRESENT
NAME GRANT FISCAL YEAR ($/SHARE)(1) DATE VALUE(2)
---- -------------- ------------- -------------- ---------- -------------
Michael D. Siegal 15,000 3.0% $2.63 4/30/11 $ 27,660
David A. Wolfort 300,000 59.8% $1.97 1/01/11 $412,200
13,000 2.6% $2.63 4/30/11 $ 23,972
Richard T. Marabito 12,000 2.4% $2.63 4/30/11 $ 22,128
Heber MacWilliams 6,000 1.2% $2.63 4/30/11 $ 11,064
---------------
(1) Stock Options were awarded with an exercise price equal to the fair market
value per share of the Common Stock on the grant date.
(2) In accordance with the rules of the United States Securities and Exchange
Commission, the Black-Scholes option pricing model was chosen to estimate
the grant date present value of the options set forth in this table. The
Company cannot predict or estimate the future price of the Company's Common
Stock, and neither the Black-Scholes model nor any other model can
accurately determine the value of an option. Accordingly, there is no
assurance that the value realized by an officer, if any, will be at or near
the value estimated in the Black-Scholes model. The Black-Scholes valuation
was determined using the following assumptions: an average volatility of
53.7%, no dividend yield, a risk-free interest rate of 5.25%, and a
projected exercise period of 10 years.
During 2001, there were no Stock Option exercises by any of the Named
Executive Officers. The following table sets forth certain information
concerning the number and value of unexercised options held by each of the Named
Executive Officers at December 31, 2001.
DECEMBER 31, 2001
OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF IN-THE-MONEY OPTIONS
OPTIONS AT YEAR END AT YEAR END ($)(3)
-------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------------- ----------- -------------
Michael D. Siegal 22,222 36,111 0 0
David A. Wolfort 18,667 330,333 0 $174,000
Richard T. Marabito 12,000 19,500 0 0
Heber MacWilliams 11,000 11,500 0 0
---------------
(3) These values are based on the negative spread between the respective
exercise price of outstanding stock options and the fair market value of the
Company's Common Stock at December 31, 2001 ($2.55). These amounts may not
represent amounts actually realized by the Named Executive Officers.
8
Retention Agreements. The Company has executed Management Retention
Agreements (the "Retention Agreements") with Messrs. Siegal, Wolfort, and
Marabito. Under the Agreements, which do not become operative unless there is a
Change-in-Control of the Company (as defined in the Retention Agreements), the
Company agrees to continue the employment of the manager for a one-year period
(the "Contract Period") following the Change-in-Control in the same position
with the same duties and responsibilities and at the same compensation level as
existed prior to the Change-in-Control. If during the Contract Period the
manager's employment is terminated without cause, or the manager terminates his
employment for "good reason," the manager shall receive a lump-sum severance
payment (the "Severance Amount") of an amount equal to the average of the
manager's salary over the last three years, together with continuation of
insurance coverage for one year. The Contract Period for Messrs. Siegal and
Wolfort is two years and their Severance Amount equals 2.99 times the average of
the last three years' compensation. Each of the Retention Agreements contains a
non-competition prohibition for one year post-employment (two years in the cases
of Messrs. Siegal and Wolfort).
Wolfort Employment Agreement. Mr. Wolfort serves as President and Chief
Operating Officer of the Company pursuant to an employment agreement, effective
January 1, 2001, and terminating December 31, 2005. Under the Agreement, Mr.
Wolfort receives a Base Salary of $385,000, subject to possible increases as
determined by the Compensation Committee of the Board. Bonus compensation will
be determined by the Committee under the Senior Management Compensation Program,
subject to a minimum annual bonus of $20,000. Under the Agreement, Mr. Wolfort
was granted a ten (10) year option to purchase up to 300,000 shares at $1.97 per
share, the fair market value of the Company's Common Stock on the date of grant.
The option vests in annual installments of 20%, commencing January 1, 2002. If
the Company terminates Mr. Wolfort's employment without "cause" during the
employment term, he shall continue to receive his compensation under the
Agreement for a period ending on the earlier of (i) December 31, 2005 or (ii)
the second anniversary of his termination of employment. The employment
agreement contains a one year non-competition prohibition.
EMPLOYEE BENEFIT PLANS
Incentive Bonus Plans. Each of the Executive Officers participated in the
Senior Management Compensation Program which focuses on return on assets (ROA)
and growth in tonnage. ROA is calculated by dividing consolidated net income by
average monthly total assets. Net income and total assets can be adjusted by the
Committee for certain start-up costs or extraordinary items. Under the program,
each of the Executive Officers can be granted stock options based on the
Company's performance. The determination of the stock option grants is made by
the Compensation Committee. The Committee believes that this program further
aligns the interests of management and shareholders and will provide long-term
incentive for maximizing shareholder value.
Stock Option Plan. See description of plan under Proposal 3 herein.
9
RELATED TRANSACTIONS
AND COMPENSATION COMMITTEE INTERLOCKS
A corporation owned by family members of Mr. Siegal since 1978 handled a
portion of the freight activity for the Company's Cleveland operation. Payments
to this entity approximated $1.3 million for the year ended December 31, 2001. A
partnership owned by family members of Mr. Siegal since 1956 have owned one of
the Cleveland warehouses and leases it to the Company at an annual rental of
$195,300. The lease expires in 2010.
Mr. Wolfort purchased 300,000 shares of the Company's Common Stock from
treasury on February 22, 2001. The shares were purchased pursuant to a 5-year
note payable to the Company due and payable on or before January 1, 2006 bearing
interest at 5.07% per annum. The note is secured by a pledge of the underlying
shares. At December 31, 2001, the outstanding balance of principal and interest
was $704,253.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
setting and administering the policies that govern the base salaries, bonuses
and other compensation matters of the executive officers of the Company. The
Committee consists entirely of non-employee Directors of the Company. The
Committee meets once annually to review the compensation program for the
executive officers of the Company. This report documents the basis of
compensation for 2001, with regard to the Company's Chief Executive Officer and
other executive officers.
Compensation Policy. The executive compensation policy of the Company is
based on the following philosophy: (i) the need to retain and, as necessary,
attract highly qualified executives with a compensation plan that is competitive
with both public and privately held steel and steel-related companies; (ii)
emphasizing variable, performance-based compensation tied to the overall
profitability of the Company; (iii) creating a system that would not be overly
complicated or conflict with the bonus system used at the senior manager level;
and (iv) devising a compensation program that appropriately aligns the interests
of executive officers with those of the Company's shareholders in increasing
shareholder value.
Base Salaries. The annual base salary of the executive officers is based
upon an evaluation of their significant contributions as individuals and as a
team, as subjectively determined by the Compensation Committee. The Committee
reviewed the cash compensation of numerous senior executives in positions in
other steel and steel-related companies to determine the range of the base
salaries. Base salaries for 2001 were reviewed and approved by the Compensation
Committee, and the amounts paid are included in the Summary Compensation Table.
Incentive Compensation. A significant portion of the executive officers'
compensation is incentive bonus-based and tied to the overall return on assets
of the Company. Under the provisions of the Inventive Plan, no bonuses were
awarded in 2001 to the three principal executive officers. The Company considers
stock options to be another
10
award of compensation. Stock options were granted to each of the executive
officers as included in the "Individual Option Grants 2001" table. The 2001
bonus compensation was determined by the provisions of the Incentive Bonus Plan
described under the section "Employee Benefit Plans."
Chief Executive Officer Compensation. The Chief Executive Officer
participates in the same compensation plan provided to the other executive
officers of the Company. The base salary for the Chief Executive Officer,
Michael D. Siegal, was based upon the Compensation Committee's subjective
evaluation of his performance, considering his years of experience,
contributions and accomplishments, and his commitment to increasing shareholder
value. The Compensation Committee also considered the base compensation packages
of other chief executive officers for comparable companies. Consistent with the
philosophy of the Incentive Bonus Compensation Plan, the overall return on
assets of the Company is a primary variable in determining the total
compensation paid to the Chief Executive Officer. Mr. Siegal owns a significant
number of shares of the Company, which provides additional long-term incentive
for maximizing shareholder value.
Thomas M. Forman, Chairman
Martin H. Elrad
James. B. Meathe
11
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's Common Shares against the cumulative total return of the
NASDAQ U.S. composite index and an index to a peer group from December 1996
through December 2001.
The stock price performance graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference and shall not otherwise
be deemed filed under such Acts.
COMPARISON OF CUMULATIVE TOTAL RETURNS
Olympic Steel, Inc., Peer Group Index and NASDAQ U.S. Index
From December 31, 1996 through December 31, 2001
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON 12/29/96)
[PERFORMANCE CHART]
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
---------------------------------------------------------------------------------------------
Olympic Steel, Inc. $100.00 $ 61.33 $ 19.71 $ 18.72 $ 7.76 $ 10.05
---------------------------------------------------------------------------------------------
Peer Group Index(1) $100.00 $ 96.71 $ 76.28 $ 99.81 $ 58.93 $ 76.70
---------------------------------------------------------------------------------------------
Nasdaq U.S. Index $100.00 $122.71 $172.03 $325.93 $197.88 $156.22
---------------
(1) The companies selected to form the peer group index are A.M. Castle & Co.,
Gibraltar Steel Corporation, Huntco Inc., Shiloh Industries, Inc., Steel
Technologies Inc., and Worthington Industries, Inc
12
PROPOSAL TWO
ADOPTION OF OLYMPIC STEEL, INC.
EMPLOYEE STOCK PURCHASE PLAN
The Company is asking its shareholders to approve the adoption of the
Olympic Steel, Inc. Employee Stock Purchase Plan (the "Plan"). An employee stock
purchase plan is a form of stock based compensation. The Plan provides employees
with a systematic long-term investment opportunity to own employer stock. When
shareholder value increases, the wealth of the people who help produce
shareholder value increases. The Company has designed the Plan to be broad-based
among its employees. The Plan extends the Company's benefit package to employees
at a relatively low cost. The Plan will increase employee awareness of Olympic's
stock performance at all levels. The Plan also provides employees with potential
tax savings and attractive investment opportunities. The Company receives a
continuing source of equity and an attractive incentive to help attract and
retain key employees. If approved, the Plan is expected to take effect on July
1, 2002.
DESCRIPTION OF PLAN
The following description of the Plan is not complete and is qualified by
reference to the full text of the Olympic Steel, Inc. Employee Stock Purchase
Plan (a copy of which is attached as Appendix A to this Proxy Statement).
A maximum of 1,000,000 shares of Olympic stock may be issued under the
Plan. The number of shares issued or reserved pursuant to the Plan (or pursuant
to outstanding awards) is subject to adjustment on account of stock splits,
stock dividends and other dilutive changes in the shares of Olympic stock. The
shares may consist of unissued shares, treasury shares or shares purchased on
the open market.
Administration. The Plan will be administered by the Compensation
Committee of the Board of Directors (the "Committee"). The Committee will have
the authority to make rules and regulations for the administration of the Plan
and its interpretations, and decisions with regard to the Plan, rules and
regulations will be final and binding on all parties.
Eligibility. Each employee of Olympic Steel, Inc. or one of its
incorporated subsidiaries who has been employed for at least one year and who is
customarily scheduled to work 20 hours or more each week, will be eligible to
participate in the Plan, except for those employees already owning 5% or more of
the Olympic's common stock.
Participation in the Plan. Eligible employees may participate in Plan by
electing to participate in a given offering period pursuant to procedures set
forth by the Committee. A participant's participation in the Plan will continue
until the participant makes a new election, or withdraws from an offering period
or from the plan.
Payroll Deductions. Payroll deductions will be made from the compensation
paid to each participant for each offering period as elected by the participant.
The
13
Committee will set forth withholding dollar and percentage limits at the
beginning of each calendar year.
Purchase of Stock. On each grant date, each participant will be granted
options to purchase stock under the Plan. A participant can be granted up to
$25,000 worth of options each calendar year. On the last trading day of each
month during an offering period (each, a "purchase date"), the Company will
apply the funds in each participant's account to purchase shares. Prior to
granting the option, the Committee shall set forth the applicable purchase
discount, ranging from 0% to 15%. Also prior to the grant, the Committee shall
designate the use of the price at the date of grant, the price at the exercise
date or the better of the price at the date of grant or date of exercise. As
soon as practical after each purchase date, the number of shares purchased by
each participant will be held for benefit of the participant by a reputable
brokerage house designated by the Committee.
Termination of Participation in the Plan. The Committee will determine the
terms and conditions under which a participant may withdraw from an offering
period or from the Plan. Participation in the Plan will be terminated upon the
termination of a participant's employment for any reason. Upon a termination of
a participant's employment during an offering period, all payroll deductions
credited to such participant's plan account will used to purchase shares on the
next purchase date.
Amendment and Termination. The Board may amend, alter or discontinue the
Plan at any time; provided, however, that no amendment, alteration or
discontinuation will be made to an option which, without a participant's
consent, would impair any of such participant's rights and obligations. The
Company will obtain shareholder approval of any amendment, alteration or
discontinuation of the plan only to the extent necessary to comply with the
requirements of Section 423 of the Code.
The Plan will terminate upon the earlier of (i) the termination of the Plan
by the Board or (ii) ten years after the initial adoption of the Plan.
Withholding. The Company reserves the right to withhold from payroll
deductions, shares or cash distributed to a participant any amounts that are
required by law to be withheld.
Tax Consequences of Participation in the Plan. The following discussion of
the federal income tax consequences relating to the employee stock purchase plan
is based on present federal tax laws and regulations and does not purport to be
a complete description of the federal income tax laws. Participants may also be
subject to certain state and local taxes which are not described below.
The Plan is intended to qualify as an "employee stock purchase plan" under
Section 423 of the Code. The employee stock purchase plan is subject to
stockholder approval, as required by Section 423. Payroll deductions made under
the employee stock purchase plan will be included in a participant's taxable
income but, under the Code, no taxable income is generally recognized by a
participant either as of the grant date or as of the purchase date. Depending
upon the length of time the acquired shares are held by the participant, the
federal income tax consequences will vary. If the shares are held for a period
of two years or more from the grant date and for at least one year
14
from the purchase date (the "Required Period"), and are sold at a price in
excess of the purchase price paid by the participant for the shares, the gain on
the sale of the shares will be taxed as ordinary income to the participant to
the extent of the lesser of (i) the amount by which the fair market value of the
shares on the grant date exceeded the purchase price or (ii) the amount by which
the fair market value of the shares at the time of their sale exceeded the
purchase price. Any portion of the gain not taxed as ordinary income will be
treated as long-term capital gain. If the shares are held for the Required
Period and are sold at a price less than the purchase price paid by the
participant for the shares, the loss on the sale will be treated as a long-term
capital loss to the participant. The Company will not be entitled to any
deduction for federal income tax purposes for shares held for the Required
Period that are subsequently sold by the participant, whether at a gain or loss.
If a participant disposes of shares within the Required Period (a
"Disqualifying Disposition"), the participant will recognize ordinary income in
an amount equal to the difference between the purchase price paid by the
participant for the shares and the fair market value of the shares on the
purchase date, and the Company will be entitled to a corresponding deduction for
federal income tax purposes. In addition, if a participant makes a Disqualifying
Disposition at a price in excess of the purchase price paid by the participant
for the shares, the participant will recognize a capital gain in an amount equal
to the difference between the selling price of the shares and the fair market
value of the shares on the purchase date. Alternatively, if a participant makes
a Disqualifying Disposition at a price less than the fair market value of the
shares on the purchase date, the participant will recognize a capital loss in an
amount equal to the difference between the fair market value of the shares on
the purchase date and the selling price of the shares. The Company will not
receive a deduction for federal income tax purposes with respect to any capital
gain recognized by a participant who makes a Disqualifying Disposition.
Other Information. As of December 31, 2001, approximately 825 employees of
the Company and its incorporated subsidiaries would have been eligible for
participation in the Plan. Because the benefits conveyed under the Plan are
contingent upon, among other things, the amount of contributions participating
employees make on a voluntary basis, it is not possible to predict what benefits
eligible employees will receive under the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE APPROVAL OF THE PLAN.
PROPOSAL THREE
ADOPTION OF AMENDMENT TO THE STOCK OPTION PLAN
The Company's Stock Option Plan (the "Plan") authorizes up to 950,000
shares of Common Stock of the Company (the "Shares") to be issued pursuant to
the exercise of options under the Plan. As of December 31, 2001, a total of
885,833 options were issued and outstanding. Currently, 64,167 Shares remain
available for grant. It is proposed to increase the number of Shares authorized
for issuance under the Plan by
15
an additional 350,000 Shares. This amendment to the Plan was approved by the
Board of Directors on February 2, 2002, subject to shareholder approval. If
approved, the total number of Shares authorized for issuance would be 1,300,000
Shares, less any Shares issued to date.
Purpose and Eligibility. The purpose of the Plan is to provide employees,
outside directors and consultants of the Company and the Company's subsidiaries
(collectively, the "Participants") with greater long-term performance incentives
to further the interests of the Company and its shareholders. An employee who is
largely responsible for the management and growth of the business of the Company
or any subsidiary of the Company is eligible to participate in the Plan. In
addition, a consultant, other than an employee of the Company, or an outside
director whose performance of services to the Company is important to the
successful operation of the Company or any subsidiary is eligible to participate
in the Plan. Currently, there are approximately 25 employees and 4 outside
directors eligible to participate in the Plan.
Option Price. The option price for nonqualified options is as determined
by the Board of Directors or the Compensation Committee, as the case may be, in
its exclusive discretion. The option price for incentive stock options ("ISO's")
is determined by the Board of Directors or the Compensation Committee, but may
not be less than 100% of the fair market value of a Share on the date the ISO is
granted (unless the ISO is granted to an employee who owns, directly or through
attribution, stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any subsidiary (a "10% Attribution
Shareholder") in which case the option price may not be less than 110% of the
fair market value). The Plan defines "fair market value" as the mean of the
highest and lowest selling price of the Shares on the date of grant on the
Nasdaq National Market.
Term and Exercise. The expiration of the Plan is currently January 5,
2004, however, Options granted under the Plan prior to its termination expire in
accordance with their terms. Subject to shareholder approval, the Board of
Directors extended the Plan's term for five years. Generally, the terms of the
Options will be determined by the Board of Directors or the Compensation
Committee, but may not exceed ten years from the date of grant. Incentive Stock
Options granted to a 10% Attribution Shareholder may not exceed a term of 5
years and Options granted to outside directors have a term of 10 years. In the
event a Participant no longer renders services to the Company (whether as an
employee, consultant or director) for any reason, options that are not yet
exercisable will terminate, and options that are exercisable on the date of
termination must be exercised within 3 months of the date of termination (or one
year in the case of death or disability).
Federal Income Tax Consequences of the Plan. The grant of an ISO will have
no immediate tax consequences to the Company or the Participant. If a
Participant has remained an employee of the Company or a subsidiary of the
Company from the date of grant until at least the day three months before the
date of exercise (one year before the date of exercise in the case of an
employee who is disabled), the Participant will recognize no income tax and the
Company will not be entitled to any tax deduction at the time of exercise of an
ISO. However, the amount by which the fair market value of
16
the acquired Shares at the time of exercise exceeds the exercise price will be
an adjustment to alternative minimum taxable income for purposes of the
alternative minimum tax. If a Participant exercises an ISO more than three
months after terminating employment (one year in the case of death or
disability), the exercise of the option will be treated in the same manner as
the exercise of a non-qualified stock option.
If a Participant holds the Shares received upon exercise of an ISO for at
least two years after the date of grant and for at least one year from the date
of exercise, gain or loss on the subsequent sale of the Shares will be a
long-term capital gain or loss. If a Participant disposes of Shares acquired
upon exercise of an ISO before these holding periods are satisfied, a
Participant will recognize compensation income equal to the lesser of: (i) the
excess of the fair market value of the Shares on the exercise date over the
exercise price, or (ii) the excess of the amount realized on disposition over
the exercise price. The amount received in excess of the fair market value on
the exercise date generally will be taxable as a short-term capital gain.
The grant of a non-qualified stock option will have no immediate tax
consequence to the Company or to a Participant. A Participant will recognize
compensation income, subject to withholding for federal, state and local income
taxes and employment taxes, at the time of exercise of a non-qualified stock
option in an amount equal to the difference between the exercise price and the
fair market value on the exercise date of the acquired Shares. The Company will
be entitled to a deduction in the same taxable year and in the same amount as a
Participant recognizes compensation income as a result of the exercise of a
non-qualified stock option, provided that the Company satisfies applicable
withholding requirements.
The market value of a Share as of March 12, 2002 was $4.05.
The amendments to increase the number of Shares authorized for issuance
under the Plan and extend the term must be approved by a plurality of the votes
cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE APPROVAL OF THE AMENDMENTS OF THE PLAN.
OTHER MATTERS
The Board of Directors of the Company is not aware that any matter other
than those listed in the Notice of Meeting is to be presented for action at the
meeting. If any of the Board's nominees is unavailable for election as a
Director or any other matter should properly come before the meeting, it is
intended that votes will be cast pursuant to the Proxy in respect thereto in
accordance with the best judgment of the person or persons acting as proxies.
17
PROXY SOLICITATION
The Company will bear the expense of preparing, printing and mailing this
Proxy Statement. In addition to solicitation by mail, officers and regular
employees of the Company may solicit by telephone the return of Proxies. The
Company will request brokers, banks and other custodians, nominees and
fiduciaries to send Proxy material to beneficial owners and will, upon request,
reimburse them for their expenses.
SHAREHOLDERS' PROPOSALS
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for the 2003 Annual Meeting of Shareholders is
expected to be November 29, 2002.
ANNUAL REPORT
The Company's Annual Report for the year ended December 31, 2001, including
financial statements of the Company and the report thereon of Arthur Andersen
LLP, is being mailed to shareholders with this Notice of the Annual Meeting and
Proxy Statement.
Marc H. Morgenstern
Secretary
By Order of the Board of Directors
March 29, 2002
18
APPENDIX A
OLYMPIC STEEL, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The purpose of this Plan is to provide employees of Olympic
Steel, Inc. (the "Company") and its incorporated subsidiaries with an
opportunity to purchase shares of Common Stock, as defined below, through
accumulated payroll deductions. It is the intention of the Company that
this Plan qualify as an "Employee Stock Purchase Plan" under Section 423
of the Internal Revenue Code (the "Code"). Accordingly, the provisions of
this Plan shall be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.
2. DEFINITIONS.
(a) "BOARD" means the Board of Directors of Olympic Steel, Inc.
(b) "CODE" means the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" means Olympic Steel, Inc. Common Stock (no par value per
share).
(d) "COMPANY" means Olympic Steel, Inc. and its incorporated subsidiaries.
(e) "COMMITTEE" means the Compensation Committee of the Board.
(f) "ELIGIBLE EMPLOYEE" means an Employee who is eligible to participate in
the Plan pursuant to Section 3 hereof.
(g) "EMPLOYEE" means an individual who is employed the Company or one of
its incorporated subsidiaries. For purposes of this Plan, the
employment relationship shall be treated as continuing intact while the
employee is on a leave of absence approved by the Company.
(h) "ENROLLMENT DATE" means the first Trading Day of each Offering Period,
except that:
(i) if an individual is not an Eligible Employee on the first Trading
Day of the Offering Period, either because he or she is not an
Employee on that date or because he or she does not satisfy all
other eligibility criteria described in Section 3, such
individual's Enrollment Date means the first Trading Day of the
next Offering Period; and
(ii) if an individual is an Eligible Employee on the first Trading Day
of an Offering Period and either (A) initially elects not to
participate and later in the Offering Period elects to
participate, or (B) initially elects to participate but later
ceases participation during an Offering Period, and then
recommences participation, the Eligible Employee's Enrollment Date
shall be the first day of the Offering Period following the
Offering Period during which he commences or recommences
participation.
(i) "EXERCISE DATE" means the last Trading Day of each Offering Period.
A-1
(j) "FAIR MARKET VALUE" means, as of any date, the closing sales price for
such Common Stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system for the last Trading Day on or before
the date of such determination, as reported by such source the Board
deems reliable.
(k) "OFFERING PERIOD" means the period, not to exceed 27 months, during
which an option granted pursuant to this Plan may be exercised. The
Committee shall establish the Offering Period(s).
(l) "PARENT" means a "parent corporation" as defined in Section 424(e) of
the Code.
(m) "PARTICIPANT" means an Employee who elects to participate in the Plan
pursuant to Section 5 hereof.
(n) "PARTICIPATING EMPLOYER" means Olympic Steel, Inc. or any of its
incorporated subsidiaries.
(o) "PLAN" means this Olympic Steel, Inc. Stock Purchase Plan.
(p) "PURCHASE PRICE" means the applicable option price (as determined by
the Committee on the date of grant), less the applicable discount (as
determined by the Committee on the date of grant). In no event may the
applicable discount exceed 15%.
(q) "RESERVES" means the number of shares of Common Stock covered by each
option under this Plan that have not yet been exercised and the number
of shares of Common Stock that have been made available under this Plan
but not yet placed under option.
(r) "SUBSIDIARY" means a "subsidiary corporation" as defined in Section
424(f) of the Code. Collectively the Subsidiary corporations are
referred to as the Subsidiaries (the "Subsidiaries").
(s) "TRADING DAY" means a day on which the NASDAQ is open for trading.
3. ELIGIBILITY.
(a) Except as provided below, each employee on a given Enrollment Date is
eligible to participate in this Plan.
(b) The following are ineligible to participate in the Plan:
(i) An Employee who has been employed for less than one year by the
Company or a Subsidiary;
(ii) An Employee who, despite having been employed for more than one
calendar year by the Company or a Subsidiary, is customarily
scheduled to work less than 20 hours per week;
(iii) An Employee holding capital stock or options to own capital stock
of the Company equaling five percent (5%) or more of the total
combined voting power or value of all classes of the capital
stock of the Company;
A-2
(iv) An Employee whose rights to purchase stock under all employee
stock purchase plans of the Company and any of its Subsidiaries
accrues at a rate that exceeds twenty five thousand dollars
($25,000) worth of stock (determined based on the fair market
value of the shares at the time such option is granted) for each
calendar year in which such option is outstanding at any time.
(c) Upon a Participant's ineligibility to participate in the Plan under
Sec. 3(b)(ii), all payroll deductions accumulated while the Participant
was eligible in the then current Offering Period shall be applied
toward the purchase of shares of Common Stock as provided in Section 8
hereof, and no further payroll deductions shall be made and no further
shares of Common Stock shall be purchased for the Participant unless
and until he or she again becomes eligible to participate in the Plan.
4. OFFERING PERIODS. This Plan shall be implemented through a series of
consecutive Offering Periods. The Committee shall have the power to change
the duration of Offering Periods, including the commencement dates
thereof.
5. PARTICIPATION.
(a) An eligible Employee may participate in the Plan by completing a
participation agreement and an enrollment form authorizing payroll
deductions and by filing such participation agreement and enrollment
form with the Company's Corporate Human Resource Department prior to
the applicable Enrollment Date. The participation agreement, enrollment
form and other forms related to participation in the Plan shall be in
the form prescribed by the Committee and may include electronic forms,
in the sole discretion of the Committee.
(b) Payroll deductions for a Participant will begin on the first payroll
following the Enrollment Date, or as soon as administratively
practical, and will end on the last payroll in the Offering Period to
which such authorization is applicable, unless sooner terminated by the
Participant or by action of the Committee as provided in this Plan.
6. PAYROLL DEDUCTIONS.
(a) At the time a Participant files his or her enrollment form, he or she
shall elect to have payroll deductions made on each pay during the
Offering Period in an amount not to exceed limits prescribed by the
Committee.
(b) All payroll deductions made for a Participant shall be credited to his
or her account under this Plan. A participant shall not make any
additional payments (other than through payroll deductions) into such
account.
(c) Except as provided in Section 17 hereof, a participant may increase or
decrease the rate of his or her future payroll deductions by completing
and filing with the Company's Corporate Human Resources Department a
new enrollment form authorizing a change in payroll deduction rate. The
change in such rate shall be effective as soon thereafter as
administratively practical and subject to Corporate guidelines
established by the Committee. A
A-3
Participant's enrollment form shall remain in effective for successive
payroll periods unless a new enrollment form is completed and delivered
to the Company's Corporate Human Resource Department or unless the
Participant becomes ineligible to participate in the Plan.
(d) Notwithstanding anything to the contrary contained herein, to the
extent necessary to comply with Code Section 423(b)(8) and Section 3(b)
hereof, a Participant's payroll deduction rate may be decreased to zero
percent (0%) at any time during an Offering Period. A participant's
discontinuance of participation shall remain in effect for successive
payroll periods unless future participation would not cause a
compliance problem with Code Section 423(b)(8) and Section 3 hereof.
(e) At the time the option is exercised, in whole or in part, or at the
time some or all of the shares of Common Stock issued under this Plan
are disposed of, the Participant must make adequate provision for the
Company's federal, state, or other tax withholding obligations, if any,
that arise upon the exercise of the option or upon the disposition of
the shares of Common Stock. At any time, the Company may, but shall not
be obligated to, withhold from the Participant's compensation the
amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to
the Company any tax deductions or benefits attributable to sale or
early disposition of the shares of Common Stock by the Employee. An
Employee selling shares prior to meeting the holding period
requirements of Code Section 423(a) is required to report such
disposition to the Company and is required to remit all applicable
withholding taxes related to that disposition. The Company is in no way
liable for any withholding taxes, interest or penalties resulting from
the Employee's failure to notify the Company.
7. GRANT OF OPTION. On each Enrollment Date, each Employee shall be granted
options to purchase Common Stock of the Company, as of each Exercise Date
during the Offering Period. The amount of shares to be granted shall be
established by the Committee prior to the granting of the options. At that
time, the Committee shall also establish the Purchase Price. The Committee
may, for future Offering Periods, increase or decrease, in its absolute
discretion, the maximum number of shares of Common Stock an Employee may
purchase during each Offering Period. Exercise of the option shall occur
as provided in Section 8 hereof. All options vest immediately and shall
expire on the last day of the Offering Period.
8. EXERCISE OF OPTION. Each Participant's option for the purchase of shares
of Common Stock shall be exercised automatically on each Exercise Date,
and the maximum number of shares of Common Stock (not including fractional
shares) under the option shall be purchased for such Participant at the
applicable Purchase Price as may be purchased with the accumulated payroll
deductions in his or her account, subject to the limitations set forth in
Sections 3(b), 7 and 11 hereof, and net of any required withholding
amounts required by law. A
A-4
Participant purchasing shares by exercising an option is not required to
obtain approval of the Company's Chief Financial Officer prior to the
exercise; however, a Participant having material insider information is
required to obtain the approval of the Company's Chief Financial Officer
prior to disposing of any shares. During a Participant's lifetime, a
Participant's option to purchase shares of Common Stock hereunder is
exercisable only by him or her.
9. TERMINATION OF EMPLOYMENT. Upon a Participant's ceasing to be an Employee
due to termination of employment with the Company or one of its
Subsidiaries, all payroll deductions accumulated while an Employee in the
then current Offering Period shall be applied toward the purchase of
shares of Common Stock as provided in Section 8 above. As soon as
administratively practical, any remaining cash amounts held by the
Employer on behalf of the Employee will be refunded.
10. INTEREST. No interest shall accrue on the payroll deductions of a
Participant in this Plan.
11. COMMON STOCK. Subject to adjustment upon changes in the capitalization of
the Company as provided in Section 17 hereof, the maximum number of shares
of Common Stock that shall be made available for sale under this Plan is one
million (1,000,000) shares. The shares of Common Stock that may be offered
under the Plan may be unissued stock, treasury stock or stock purchased by
the Company on the open market.
12. ADMINISTRATION. The Committee shall administer the Plan on behalf of the
Company. The Committee shall have full and exclusive discretionary authority
to construe, interpret and apply the terms of this Plan, to determine
eligibility and to adjudicate all disputed claims filed under this Plan.
Every finding, decision and determination made by the Committee shall, to
the full extent permitted by law, shall be final and binding upon all other
parties.
13. DESIGNATION OF BENEFICIARY.
(a) In the form and manner prescribed by the Committee, a Participant may
designate a beneficiary to receive any shares of Common Stock, and cash
from the Participant's account, may change such designation of
beneficiary at any time in the form and manner prescribed by the
Committee.
(b) If the Participant dies and no beneficiary has been validly designated
under this Plan or the designated beneficiary predeceases the
Participant, the Participant's beneficiary shall be the Participant's
surviving spouse or, if none, the Participant's surviving children, in
equal shares per stirpes or, if none, the Participant's estate.
(c) The designation of beneficiary and any changes thereto shall be filed
with the Company's Corporate Human Resource Department.
14. TRANSFERABILITY. Neither payroll deductions credited to a Participant's
account nor any rights with regard to the exercise of an option or to
receive shares of Common Stock under this Plan may be assigned, transferred,
pledged or
A-5
otherwise disposed of in any way (other than by will, the laws of descent
and distribution or as provided in Section 13 hereof) by the Participant.
Any such attempt at assignment, transfer, pledge or other disposition shall
be without effect.
15. USE OF FUNDS. The Company may use all payroll deductions received or held by
the Company under this Plan for any corporate purpose, and the Company shall
not be obligated to segregate such payroll deductions.
16. ACCOUNTS. Individual accounts shall be maintained for each participant in
this Plan. The shares of Common Stock held in each account shall be
maintained by a reputable brokerage house designated by the Committee.
17. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, LIQUIDATION, MERGER
OR ASSET SALE.
(a) Subject to any required action by the shareholders of the Company, the
Reserves, the maximum number of shares of Common Stock each Participant
may purchase each Offering Period (pursuant to Section 7 hereof), as
well as the price per share of Common Stock and the number of shares of
Common Stock covered under by each option under this Plan that has not
yet been exercised may be adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of
shares of Common Stock effected without receipt of consideration by the
Company. Such adjustment shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of
shares of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common
Stock subject to an option.
(b) In the event of the proposed dissolution or liquidation of the Company,
the Offering Period then in progress shall be shortened by setting a
new Exercise Date (the "New Exercise Date") and shall terminate
immediately prior to the consummation of such proposed dissolution or
liquidation, unless otherwise provided by the Committee. The New
Exercise Date shall occur before the date of the Company's proposed
dissolution or liquidation. The Committee shall notify each Participant
in writing, at least ten (10) business days prior to the New Exercise
Date, that the Exercise Date for the Participant's option has been
changed to the New Exercise Date and that the Participant's option
shall be exercised automatically on the New Exercise Date. Upon the
Committee notifying each Participant of a change in the Exercise Date,
an Employee may not elect to increase his or her payroll deduction
pursuant to Section 6 hereof.
(c) In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into
another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a parent
or subsidiary of the successor
A-6
corporation. In the event that the successor corporation refuses to
assume or substitute for the option, the Offering Period then in
progress shall be shortened by setting a New Exercise Date and the
Offering Period then in progress shall end on the New Exercise Date.
The New Exercise Date shall occur before the date of the Company's
proposed sale or merger. The Committee shall notify each Participant in
writing, at least ten (10) business days prior to the New Exercise
Date, that the Exercise Date for the Participant's option has been
changed to the New Exercise Date and that the Participant's option
shall be exercised automatically on the New Exercise Date. Upon the
Committee notifying each Participant of a change in the Exercise Date,
an Employee may not elect to increase his or her payroll deduction
pursuant to Section 6 hereof.
18. AMENDMENT OR TERMINATION.
(a) The Board may at any time and for any reason terminate or amend this
Plan. Except as provided in Section 17 hereof, no such termination may
affect options previously granted, provided that an Offering Period may
be terminated by the Board on any Exercise Date if the Board determines
that the termination of the Offering Period or this Plan is in the best
interests of the Company and its shareholders. Except as provided in
Section 17 hereof and in this Section 18, no amendment may make any
change in any option theretofore granted that adversely affects the
rights of any Participant. To the extent necessary to comply with Code
Section 423 (or any successor rule or provision or any other applicable
law, regulation or stock exchange rule), the Company shall obtain
shareholder approval in such a manner and to such a degree as is
required.
(b) Without shareholder consent and without regard to whether any
Participant's rights may be considered to have been adversely affected,
the Committee may change the Offering Periods, limit the frequency
and/or number of changes in the amount withheld during an Offering
period, permit payroll withholding in excess of the amount designated
by a Participant in order to adjust for delays or mistakes in the
Company's processing of properly completed withholding elections,
adjust the Purchase Price, establish reasonable waiting and adjustment
periods and/or accounting and crediting procedures to ensure that
amounts applied toward the purchase of shares of Common Stock for each
Participant properly correspond with amounts withheld from the
Participant's Compensation, and establish such other limitations or
procedures as the Committee determines in its sole discretion advisable
that are consistent with this Plan.
(c) In the event the Committee determines that the ongoing operation of
this Plan may result in unfavorable financial accounting consequences,
the Committee may, in its discretion and, to the extent necessary or
desirable, modify
A-7
or amend this Plan to reduce or eliminate such accounting consequences
including, but not limited to:
(i) altering the Purchase Price for any Offering Period including an
Offering Period underway a the time of the change in Purchase
Price;
(ii) shortening any Offering Period so that Offering Period ends on a
new Exercise Date, including an Offering Period underway at the
time of the Committee action; and
(iii) allocating shares of Common Stock.
Such modifications or amendments shall not require shareholder approval
or the consent of any Plan Participants.
19. NOTICES. All notices or other communications by a Participant to the Company
under or in connection with this Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or
by the person, designated by the Company for the receipt thereof.
20. CONDITIONS UPON ISSUANCE OF SHARES. Shares of Common Stock shall not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares of Common Stock pursuant thereto shall
comply with all applicable provisions of law including, without limitation,
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange or system upon which the shares of Common
Stock may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance. As a condition to
the exercise of an option, the Company may require the person exercising
such option to represent and warrant at the time of any such exercise that
the shares of Common Stock are being purchased only for investment and
without any present intention to sell or distribute shares of Common Stock
if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned applicable provisions of law.
21. RIGHT TO TERMINATE EMPLOYMENT. The Plan does not confer upon any Employee
any right to be continued in the employ of a Participating Employer, the
Company or any of its Subsidiaries, or to interfere in any way with the
right of a Participant Employer, the Company or its Subsidiaries to
terminate his or her employment at any time, nor shall it interfere in any
way with the Employee's right to terminate his or her employment.
22. REQUIRED GOVERNMENT APPROVALS. The Plan, and all options granted under and
other rights inherent in the Plan, are subject to shareholder approval and
to receipt by the Company of all necessary approvals or consents of
governmental agencies that the Company, in its sole discretion, shall deem
necessary or advisable. Notwithstanding any other provisions of the Plan,
all options granted under the Plan and all other rights inherent in the Plan
are subject to such termination and/or modification as may be required or
advisable in order to obtain
A-8
any such approval or consent or that, as a result of the consequences
attaching to any such approval or consent, may be required or advisable in
the judgment of the Company's Committee in order to avoid adverse impact on
the Company's overall wage and salary policy.
23. EXPENSES. Expenses of administering the Plan shall be borne by the Company.
All costs related to the purchase of shares by exercising an option, the
maintenance of the Participant's account or costs related to the
Participant's sale of shares acquired under the Plan will be borne by the
Participant. The Company and Participant shall bear the cost of withholding
and employment taxes as required by law.
24. GOVERNING LAW; VENUE; LIMITATIONS PERIOD. The law of the State of Ohio will
govern all matters relating to this Plan except to the extent it is
superseded by the laws of the United States. Any such legal action or
proceeding may be initiated only in Cuyahoga County, Ohio.
25. TERM OF PLAN. This Plan shall become effective on July 1, 2002, and shall
continue in effect until July 1, 2012, unless sooner terminated under
Section 18 hereof.
A-9
Olympic Steel, Inc.
c/o Corporate Trust Services
Mail Drop 10AT66--4129
38 Fountain Square Plaza
Cincinnati, OH 45202
----------------------------------
Name Appears
----------------------------------
fold and detach here
--------------------------------------------------------------------------------
(Continue from other side)
You are encouraged to specify your choices by marking the appropriate boxes, but
you need not mark any boxes if you wish to vote in accordance with the Board of
Directors' recommendations. The Proxies cannot vote your shares unless you sign
and return this Card. Unless otherwise specified above, this proxy will be voted
FOR the election as Directors of the nominees noted on the reverse side, FOR the
adoption of the Employee Stock Purchase Plan, and FOR amending the Company's
stock option plan to increase the number of available shares and extend the
term.
PLEASE DATE, SIGN, AND RETURN IN THE ENCLOSED ENVELOPE-NO POSTAGE NECESSARY.
Dated: ________________________, 2002
---------------------
-------------------------------------
Name Appears
-------------------------------------
Signature or Signatures
--------------------- NOTE: Please sign exactly as name
appears hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
R.S. Rowe & Company, Inc.; Job No. 10548; Proof of 3-20-02
[PHONE] (781) 849-9700; (212) 926-2444; (800) 324-6202; FAX No. (781) 849-9740
EMAIL Address: rsrowe@interserv.com
pm6\5th-3rd\olympic-prx
Regardless of whether you plan to attend the Annual Meeting
of Shareholders, you can be sure your shares are
represented at the meeting by promptly returning
your proxy in the enclosed envelope.
OLYMPIC STEEL, INC.
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 26, 2002
This Proxy is Solicited by the Board of Directors
At the Annual Meeting of Shareholders of OLYMPIC STEEL, INC. to be held on April
26, 2002, and at any adjournment, MICHAEL D. SIEGAL and DAVID A. WOLFORT, and
each of them, with full power of substitution and resubstitution, are hereby
authorized to represent me and vote all my shares on the following matters:
1. Election of three Directors.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below). to vote for all nominees listed below.
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name listed below.
David A. Wolfort Martin H. Elrad Suren A. Hovsepian
2. Adoption of the Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Amend the stock option plan to increase the available shares and extend the term.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Any other matter that may properly come before this meeting.
(Continued and to be signed on reverse side)