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]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
OLYMPIC STEEL, INC.
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(Name of Registrant as Specified In Its Charter)
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(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:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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[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 2003 Annual Meeting of Shareholders of Olympic
Steel, Inc. to be held at Olympic Steel, Inc., 5096 Richmond Road, Bedford
Heights, OH 44146, on Thursday, May 8, 2003, at 2:00 p.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. Your Board of
Directors unanimously recommends that you vote "FOR" each of the director
nominees 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 28, 2003
[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 MAY 8, 2003
The Annual Meeting of Shareholders of Olympic Steel, Inc., an Ohio corporation
(the Company) will be held on Thursday, May 8, 2003, at 2:00 p.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 2005;
2. 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 10, 2003, 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 28, 2003
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]
2003 ANNUAL MEETING
May 8, 2003
THE PROXY AND SOLICITATION
This Proxy Statement is being mailed on or about April 15, 2003, 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
2003 Annual Meeting of Shareholders to be held on Thursday, May 8, 2003 at 2:00
p.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 requires 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 2005, and
(2) 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. Unless otherwise indicated in the enclosed Proxy, they
intend to vote for the election of the Director nominees named herein.
VOTING SECURITIES
The Board of Directors has established the close of business on March 10,
2003, as the record date for determining shareholders entitled to notice of the
meeting and to vote. On that date, 9,644,006 shares of Common Stock were
outstanding and entitled to one vote on all matters properly brought before the
Annual Meeting.
1
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 2003 and the other class term expires in 2004.
The Board of Directors has nominated Michael D. Siegal, Thomas M. Forman,
and James B. Meathe to stand for reelection as Directors for a two-year term.
The two-year term will end upon the election of Directors at the 2005 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 2005
PRINCIPAL OCCUPATION,
PAST FIVE YEARS, DIRECTOR
NAME OF DIRECTOR AGE OTHER DIRECTORSHIPS SINCE
---------------- --- --------------------- --------
Michael D. Siegal 50 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 57 Business consultant and private investor. 1994
President, Jupiter Licensing since 2002 (a
licensing agency for corporate trademarks and
retail brands). From 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 46 President and Chief Operating Officer of Palmer & 2001
Cay, Inc. (an insurance and brokerage firm) since
January 2003. Managing Director and Chairman
Midwest Region of Marsh Inc. (a leading risk and
insurance services firm) from 1999 to 2002.
Previously, he served in several senior management
positions with Marsh Inc. He currently serves on
the board of Lake Forest College and Children's
Memorial Hospital (Chicago, IL).
2
DIRECTORS WHOSE TERMS EXPIRE IN 2004
PRINCIPAL OCCUPATION,
PAST FIVE YEARS, DIRECTOR
NAME OF DIRECTOR AGE OTHER DIRECTORSHIPS SINCE
---------------- --- --------------------- --------
David A. Wolfort 50 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 63 Private investor; also served for over five years 1987
as President of Solon Leasing Co. (a fleet vehicle
lessor).
Suren A. Hovsepian 63 Business Consultant. Vice President -- Automotive 1998
of the Company from 1997 to 1998. He served as
General Manager of Lafayette Steel, a subsidiary
of the Company, from its acquisition in 1995
through 1997. Prior to its acquisition, he was
President and Chief Executive Officer of Lafayette
Steel.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors of the Company held four meetings in 2002. 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 2002. 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 2002. 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. Each committee member is an "independent
director" as defined in 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 2002 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 disclosures and the letter required by Independent Standards Board
Standard No. 1 (Independence Discussions with Audit Committee) from
PricewaterhouseCoopers, LLP and discussed that firm's independence with
representatives of the firm.
3
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, 2002 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, and
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 2004 Annual Meeting may do so by providing written
notice to the Company in care of Marc H. Morgenstern, Secretary, no later than
December 30, 2003.
COMPENSATION OF DIRECTORS
During 2002, 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 meeting attended. No
additional compensation is to be paid for committee meeting 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
10, 2003, based upon information furnished to the Company.
NUMBER OF SHARES PERCENTAGE OF
NAMES OF BENEFICIAL OWNERS BENEFICIALLY OWNED OWNERSHIP
-------------------------- ------------------ -------------
Michael D. Siegal 1,587,666(1) 15.9%
5096 Richmond Road
Cleveland, OH 44146
Dimensional Fund Advisors 802,500(2) 8.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
David A. Wolfort 671,000(3) 6.7%
5096 Richmond Road
Cleveland, OH 44146
Fifth Third Bancorp/Fifth Third Bank 658,978(4) 6.6%
Fifth Third Center
Cincinnati, OH 45263
---------------
(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 56,666 shares issuable upon exercise of options exercisable within
sixty days of March 10, 2003.
(2) Based on Schedule 13G filed with the Securities and Exchange Commission on
or about February 13, 2003.
(3) 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 168,000 shares issuable upon exercise of options
exercisable within sixty days of March 10, 2003.
(4) Based on Schedule 13G filed with the Securities and Exchange Commission on
or about February 3, 2003.
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 named in the compensation table included herein, and all the
Directors, Director nominees, and executive officers as a group as of March 10,
2003.
NUMBER OF SHARES PERCENTAGE OF
NAMES OF BENEFICIAL OWNERS BENEFICIALLY OWNED OWNERSHIP
-------------------------- ------------------ -------------
Michael D. Siegal 1,587,666(1) 15.9%
David A. Wolfort 671,000(2) 6.7%
Richard T. Marabito 36,333(3) *
Heber MacWilliams 29,966(4) *
Martin H. Elrad 26,000(4) *
Suren A. Hovsepian 21,000(4) *
Thomas M. Forman 19,650(4) *
James. B. Meathe 6,866(4) *
All Directors, Director nominees, and executive officers as
a group (9 persons) 2,415,934(5) 24.2%
---------------
* 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 56,666 shares issuable upon exercise of options exercisable within
sixty days of March 10, 2003.
(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 168,000 shares issuable upon exercise of options
exercisable within sixty days of March 10, 2003.
(3) Does not include 2,000 shares held in various trusts for the benefit of Mr.
Marabito's children. Mr. Marabito disclaims beneficial ownership of such
shares. Includes 30,833 shares issuable upon exercise of options exercisable
within sixty days of March 10, 2003.
(4) Includes shares issuable upon exercise of options exercisable within sixty
days of March 10, 2003, as follows: MacWilliams - 22,166, Elrad - 21,000,
Hovsepian - 16,000, Forman - 17,500, Meathe - 4,666.
(5) Includes 354,284 shares issuable upon exercise of options exercisable within
sixty days of March 10, 2003.
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 2002 and Form 5 and amendments thereto furnished to the
Company with respect to 2002, 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.
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, 2002, 2001,
and 2000 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, 2002 $400,000 $ 0 $5,500
Chairman of the Board and 2001 400,000 0 5,250
Chief Executive Officer 2000 400,000 0 8,650
David A. Wolfort, 2002 $385,000 $ 20,000 $5,500
President and 2001 383,558 20,000 5,250
Chief Operating Officer 2000 310,000 0 8,650
Richard T. Marabito 2002 $187,019 $ 0 $5,500
Chief Financial Officer 2001 175,000 0 5,250
2000 161,628 0 8,650
Heber MacWilliams 2002 $150,000 $105,000 $5,500
Chief Information Officer 2001 150,000 10,000 5,250
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 2002 with $5,500
under the 401(k) plan.
7
The following table sets forth information regarding individual grants of
stock options pursuant to the Company's Stock Option Plan during 2002 to each of
the Named Executive Officers.
INDIVIDUAL OPTION GRANTS
2002
% OF TOTAL OPTIONS
NUMBER OF SHARES GRANTED TO
COVERED BY EMPLOYEES IN EXERCISE PRICE EXPIRATION GRANT DATE
NAME OPTION GRANT FISCAL YEAR ($/SHARE)(1) DATE PRESENT VALUE(2)
---- ---------------- ------------------ -------------- ---------- ----------------
Michael D. Siegal 10,000 6.8% $5.28 4/26/12 $38,290
David A. Wolfort 10,000 6.8% $5.28 4/26/12 $38,290
Richard T. Marabito 10,000 6.8% $5.28 4/26/12 $38,290
Heber MacWilliams 5,000 3.4% $5.28 4/26/12 $19,145
---------------
(1) Stock Options were awarded with an exercise price equal to the fair market
value per share of the Common Stock on the grant date.
(2) In accordance with the rules of the United States Securities and Exchange
Commission, the Black-Scholes option pricing model was chosen to estimate
the grant date present value of the options set forth in this table. The
Company cannot predict or estimate the future price of the Company's Common
Stock, and neither the Black-Scholes model nor any other model can
accurately determine the value of an option. Accordingly, there is no
assurance that the value realized by an officer, if any, will be at or near
the value estimated in the Black-Scholes model. The Black-Scholes valuation
was determined using the following assumptions: an average volatility of
57.49%, no dividend yield, a risk-free interest rate of 5.13% and a
projected exercise period of 10 years.
The following table sets forth certain information concerning the number
and value of unexercised options held by each of the Named Executive Officers at
December 31, 2002.
AGGREGATED OPTION EXERCISES IN 2002
AND DECEMBER 31, 2002 VALUES
NUMBER OF SECURITIES
UNDERLYING OPTIONS AT YEAR VALUE OF IN-THE -MONEY
OPTIONS EXERCISED END OPTIONS AT YEAR END ($)(1)
----------------------------- --------------------------- ---------------------------
SHARES ACQUIRED IN VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------------ -------- ----------- ------------- ----------- -------------
Michael D. Siegal 0 0 41,666 26,667 $ 2,850 $ 5,700
David A. Wolfort 0 0 95,000 264,000 $76,270 $163,340
Richard T. Marabito 0 0 20,833 20,667 $ 2,280 $ 4,560
Heber MacWilliams 2,000 $5,940 14,833 10,667 0 $ 2,280
---------------
(1) These values are based on the spread between the respective exercise price
of outstanding stock options and the fair market value of the Company's
Common Stock at December 31, 2002 ($3.20). 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 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 an option to
purchase 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 pre-tax income and other
key operating metrics. 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. Pursuant to the provisions of the Company's Stock
Option Plan (the "Plan"), key employees of the Company, non-employee Directors
of the Company and consultants may be offered the opportunity to acquire shares
of
9
Common Stock by the grant of stock options including both incentive stock
options (ISO's), within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended, and nonqualified stock options. ISO's are not available to
consultants. The Plan authorizes up to 1,300,000 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, 2002, a total of 982,833 options were issued and
outstanding. Currently, 317,167 shares remain available for grant. The Plan will
terminate in January 2009; however, termination of the Plan will not affect
outstanding options. The Compensation Committee of the Board of Directors
administers the Plan. The Committee has broad discretion to set the terms and
conditions of the options, provided that no option may be exercisable more than
ten years after the date of grant. Currently, there are approximately 28
employees and outside directors eligible to participate in the Plan.
RELATED PARTY TRANSACTIONS
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 $1.5 million for the year ended December 31, 2002. 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,
full recourse promissory note payable to the Company due and payable on or
before January 1, 2006 bearing interest at 5.07% per annum. The note is
collateralized by a pledge of the underlying shares. At December 31, 2002, the
outstanding balance of principal and interest was $726,306.
Mr. Siegal and Mr. Wolfort are minority investors in a company that
provides online services to Olympic's employees with respect to their retirement
plan accounts.
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 2002, 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;
10
(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 2002 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 pretax income of
the Company. Under the provisions of the Incentive Plan, no bonuses were awarded
in 2002 to the principal executive officers; however, Messrs. Wolfort and
MacWilliams received contractual minimum bonuses. The Company considers stock
options to be another award of compensation. Stock options were granted to each
of the executive officers as included in the "Individual Option Grants 2002"
table.
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 pretax income
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 indices to peer groups from December 1997
through December 2002.
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 Indices and NASDAQ U.S. Index
From December 31, 1997 through December 31, 2002
[GRAPH]
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TOTAL RETURN
ANALYSIS 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
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OLYMPIC STEEL, INC. $100.00 $ 32.14 $ 30.52 $ 12.65 $ 16.39 $20.56
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NEW PEER GROUP(1) $100.00 $ 93.17 $113.97 $ 96.77 $ 96.64 $93.67
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OLD PEER GROUP(2) $100.00 $ 78.87 $103.21 $ 60.93 $ 79.31 $79.11
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NASDAQ COMPOSITE $100.00 $140.19 $265.61 $161.26 $127.31 $87.17
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(1) To better reflect the primary competition in the marketplace where Olympic
Steel, Inc. operates, the Company changed the peer group in 2002 to include
A.M. Castle & Co., Gibraltar Steel Corporation, Shiloh Industries, Inc.,
Steel Technologies Inc., Ryerson Tull, Inc., Reliance Steel Company, and
Worthington Industries, Inc.
(2) The companies included in the old peer group index are A.M. Castle & Co.,
Gibraltar Steel Corporation, Huntco Inc., Shiloh Industries, Inc., Steel
Technologies Inc., and Worthington Industries, Inc. Huntco filed for
bankruptcy and its shares are no longer traded.
12
INDEPENDENT AUDITORS
Aggregate fees billed for the audit of the Company's annual financial
statements and quarterly reviews of the financial statements in 2002 were $5,000
from Arthur Andersen LLP and $145,000 from PricewaterhouseCoopers LLP.
All non-audit aggregate fees billed for professional services rendered
during fiscal year 2002 relating to tax return reviews and other tax consulting
fees were $2,905 from Arthur Andersen and $3,500 from PricewaterhouseCoopers.
The Audit Committee has considered whether the provision of services for these
fees is compatible with maintaining the independent accountants' independence
and has determined that such services have not adversely affected the
independence of PricewaterhouseCoopers LLP.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the meeting with the opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.
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.
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 2004 Annual Meeting of Shareholders is
expected to be November 29, 2003.
13
ANNUAL REPORT
The Company's Annual Report for the year ended December 31, 2002, including
financial statements of the Company and the report thereon of
PricewaterhouseCoopers 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 28, 2003
14
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
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Continued 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.
PLEASE DATE, SIGN, AND RETURN IN THE ENCLOSED ENVELOPE-NO POSTAGE NECESSARY.
Dated: , 2003
----------------------------
------------------------------------------
------------------------------------------
Signature or Signatures
NOTE: Please sign exactly as name appears
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. 11608; PROOF OF 3-11-03
(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 MAY 8, 2003
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
At the Annual Meeting of Shareholders of OLYMPIC STEEL, INC. to be held on May
8, 2003, 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.
Michael D. Siegal Thomas M. Forman James B. Meathe
2. Any other matter that may properly come before this meeting.
(Continued and to be signed on reverse side)