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SCHUFF INTERNATIONAL INC - DEF 14A - 20010417 - PROXY_STATEMENT
PROXY STATEMENT
This Proxy Statement contains information related to the 2001 Annual
Meeting of Stockholders to be held on May 21, 2001 at 10:00 a.m. local time, at
the Quincy Joist Company, 22253 West Southern Avenue, Buckeye, Arizona, or at
such other time and place to which the annual meeting may be adjourned or
postponed. THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY. The proxy materials relating to the annual meeting are first being
mailed to stockholders entitled to vote at the meeting on or about April 21,
2001.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Company's annual meeting, stockholders will act upon the matters
outlined in the accompanying notice of meeting, including the election of
directors and amendment of a stock option plan. In addition, the Company's
management will report on the Company's performance during fiscal 2000 and
respond to questions from stockholders.
WHO IS ENTITLED TO VOTE?
Only stockholders of record at the close of business on the record date,
April 12, 2001, are entitled to receive notice of the annual meeting and to vote
the shares of common stock that they held on that date at the meeting, or any
postponement or adjournment of the meeting. Each outstanding share entitles its
holder to cast one vote on each matter to be voted upon.
WHO CAN ATTEND THE MEETING?
All stockholders as of the record date, or their duly appointed proxies,
may attend the meeting, and each may be accompanied by one guest. Registration
and seating will begin at 9:00 a.m. Cameras, recording devices and other
electronic devices will not be permitted at the meeting.
Please note that if you hold your shares in "street name" (that is,
through a broker or other nominee), you will need to bring a copy of a brokerage
statement reflecting your stock ownership as of the record date and check in at
the registration desk at the meeting.
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WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the Company to conduct its business at the
annual meeting. As of the record date, 7,206,048 shares of common stock of the
Company were outstanding. Proxies received but marked as abstentions and broker
non-votes will be included in the calculation of the number of shares considered
to be present at the meeting.
HOW DO I VOTE?
You can vote on matters to come before the meeting in two ways:
1. You can attend the annual meeting and cast your vote in person; or
2. You can vote by completing, dating and signing the enclosed proxy
card and returning it in the enclosed postage-paid envelope. If you
do so, you will authorize the individuals named on the proxy card,
referred to as the proxies, to vote your shares according to your
instructions or, if you provide no instructions, according to the
recommendation of the Board of Directors.
WHAT IF I VOTE AND THEN CHANGE MY MIND?
You may revoke your proxy at any time before it is exercised by:
- filing with the Secretary of the Company a notice of
revocation; or
- sending in another duly executed proxy bearing a later date;
or
- attending the meeting and casting your vote in person.
Your last vote will be the vote that is counted.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named
as proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors. The Board's recommendations are set
forth together with a description of each item in this proxy statement. In
summary, the Board recommends a vote:
- for election of the nominated slate of directors (see Page 3); and
- for amendment to the Schuff Steel Company 1997 Stock Option Plan
(see Page 18).
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
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WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS - The six nominees who receive the most votes will
be elected to the Board of Directors. A properly executed proxy marked "WITHHOLD
AUTHORITY" with respect to the election of one or more directors will not be
voted with respect to the director or directors indicated, although it will be
counted for purposes of determining whether there is a quorum. A "broker
non-vote" (discussed below) also will have no effect on the outcome since only a
plurality of votes actually cast is required to elect a director.
OTHER ITEMS - For each other item, the affirmative vote of the holders of
a majority of the shares represented in person or by proxy and entitled to vote
on the item will be required for approval. A properly executed proxy marked
"ABSTAIN" with respect to any such matter will not be voted, although it will be
counted for purposes of determining whether there is a quorum. Accordingly, an
abstention will have the effect of a negative vote.
EFFECT OF BROKER NON-VOTES - If you hold your shares in "street name"
through a broker or other nominee, your broker or nominee may not be permitted
to exercise voting discretion with respect to some of the matters to be acted
upon. Thus, if you do not give your broker or nominee specific instructions,
your shares may not be voted on those matters and will not be counted in
determining the number of shares necessary for approval. Shares represented by
such "broker non-votes" will, however, be counted in determining whether there
is a quorum.
HOW MUCH DID THIS PROXY SOLICITATION COST?
The Company has retained Corporate Investor Communications, Inc. to assist
in the solicitation of proxies from stockholders at an estimated fee of $1,000,
plus reasonable expenses. (Note: This fee does not include the costs of printing
the proxy statements.) Some of the officers and other employees of the Company
also may solicit proxies by further mailing or personal conversations, or by
telephone, facsimile or other electronic means, although they will not receive
compensation for doing so other than their regular compensation. The Company
also will, upon request, reimburse brokers and other persons holding stock in
their names, or in the names of nominees, for their reasonable out-of-pocket
expenses for forwarding proxy materials to the beneficial owners of the common
stock and to obtain proxies.
BOARD OF DIRECTORS
This section gives biographical information about our directors and
describes their membership on Board committees, their attendance at meetings,
and their compensation.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Board of Directors proposes that each of the nominees described below
be elected to serve until the 2002 Annual Meeting of Stockholders or until his
successor shall have been duly elected and qualified or until his resignation or
removal, whichever first occurs. All of the director nominees, with the
exception of Mr. Hill, are currently serving as directors of the Company.
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Each of the nominees has consented to serve a one-year term. If any of
them should become unavailable to serve as a director, the Board may designate a
substitute nominee. In that case, the persons named as proxies will vote for the
substitute nominee designated by the Board.
The directors standing for election are:
DAVID A. SCHUFF, 70 DIRECTOR SINCE 1976
David A. Schuff has served as the Chairman of the Board of Directors
since the Company's inception and is a co-founder of the Company. Mr. Schuff
served as President and Chief Executive Officer of the Company from its
founding in 1976 to 1995. Mr. Schuff has been involved in the steel
fabrication and erection business in a number of capacities since 1958.
David A. Schuff is the father of Scott A. Schuff.
SCOTT A. SCHUFF, 42 DIRECTOR SINCE 1976
Scott A. Schuff is the President and Chief Executive Officer of the
Company and a co-founder of the Company. Mr. Schuff has served in numerous
capacities with the Company since its founding in 1976, and has been the
President and Chief Executive Officer since 1995. Scott A. Schuff is the son
of David A. Schuff.
EDWARD M. CARSON, 71 DIRECTOR SINCE 1997
Edward M. Carson was the Chairman of the Board of Directors and Chief
Executive Officer of First Interstate Bancorp, a bank holding company, from
1990 through June 1995. Mr. Carson currently is a director of Wells Fargo &
Co., Aztar Corporation, Castle & Cooke, Inc. and Terra Industries, Inc.
DENNIS DECONCINI, 63 DIRECTOR SINCE 1997
Dennis DeConcini is a former United States Senator for Arizona and
currently is a partner of Parry, Romani, and DeConcini, P.C., a consulting
firm based in Washington, D.C., and is a partner of DeConcini McDonald Yetwin
& Lacy, P.C., a law firm with offices in Tucson and Phoenix, Arizona, and in
Washington, D.C. Mr. DeConcini is a director of Natrol, Inc., Global Health
Science and Laxax, Inc. Mr. DeConcini also served, by appointment of the
President of the United States, on the Board of Directors of the Federal Home
Loan Mortgage Corporation (Freddie Mac), a federally chartered mortgage
finance corporation until May, 2000.
H. WILSON SUNDT, 68 DIRECTOR SINCE 1999
H. Wilson Sundt was the Chairman of the Board of Directors of The Sundt
Companies, Inc. from January 1999 through December 1999. Mr. Sundt was
Chairman of the Board of Directors and Chief Executive Officer of Sundt
Corp., a privately held general construction contracting firm, from 1976 to
December 1998, and served as its President from 1979 through 1983. Mr. Sundt
also serves as a director of Unisource Energy Corporation. Mr. Sundt has
been active in the construction industry since 1957.
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MICHAEL R. HILL, 47 NEW DIRECTOR NOMINEE
Michael R. Hill has served as the Vice President and Chief Financial
Officer of the Company since September 30, 2000. Prior to September 30, 2000,
Mr. Hill was associated with Motor Coach Industries International, the leading
designer, manufacturer, and marketer of inter-city motor coaches and related
replacement parts in North America since 1977. Mr. Hill received his B.B.A.
degree from Eastern New Mexico University and attended post graduate school at
Kellogg School of Business, Northwestern University.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF EACH OF THE
DIRECTOR NOMINEES.
HOW ARE NON-EMPLOYEE DIRECTORS COMPENSATED?
ANNUAL FEE: Each non-employee director receives a retainer based on an
annualized rate of $20,000. Non-employee directors may elect to receive all or
part of their retainer either in shares of the Company's common stock or cash.
MEETING FEES: Each non-employee director receives a fee of:
- $1,000 for attendance at each Board meeting; and
- $700 for attendance at each Board committee meeting not held at the
same time as a Board meeting.
OPTIONS. Under the 1998 Director Compensation Plan, each non-employee director
receives an automatic grant of 500 shares of common stock and a non-qualified
option to purchase an additional 500 shares of common stock each year as of the
third business day following the public release of the Company's fiscal year-end
earnings information. For fiscal 2000, Messrs. Carson, DeConcini and Sundt
received grants of stock and options to purchase stock under this plan. These
annual option grants immediately vest and become exercisable, permitting the
holder to purchase shares at their fair market value on the date of grant, which
was $3.375 in the case of options granted in 2000. Unless earlier terminated,
forfeited or surrendered pursuant to the plan, each option granted will expire
on the tenth anniversary date of the grant.
EXPENSES: Each non-employee director is also reimbursed for reasonable travel
expenses incurred in connection with attendance at each Board and Board
committee meeting.
ARE EMPLOYEES OF THE COMPANY PAID ADDITIONAL COMPENSATION FOR SERVICE AS A
DIRECTOR?
No. We do, however, reimburse them for travel and other related expenses.
HOW OFTEN DID THE BOARD MEET DURING FISCAL 2000?
The Board of Directors met four (4) times during fiscal 2000. Attendance by
directors at the meetings of the Board and Board committees on which they served
was 92%.
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WHAT COMMITTEES HAS THE BOARD ESTABLISHED?
The Board of Directors has standing Compensation and Audit Committees. The
Company does not maintain a standing nominating committee or other committee
performing similar functions. The function of nominating directors is carried
out by the entire Board of Directors. Our Bylaws, however, provide a procedure
for you to recommend candidates for director at an annual meeting. For more
information, see Page 22 under "Stockholder Proposals and Nominations."
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Name Compensation Committee Audit Committee
Edward M. Carson X X
Dennis DeConcini X X
H. Wilson Sundt X X
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COMPENSATION COMMITTEE. The Compensation Committee of the Board of Directors
reviews all aspects of compensation of executive officers of the Company, makes
recommendations on such matters to the full Board of Directors, and administers
the Company's 1997 Stock Option Plan and 1999 Employee Stock Purchase Plan. In
fiscal 2000, the Compensation Committee met three (3) times.
AUDIT COMMITTEE. The Audit Committee makes recommendations to the Board
concerning the selection and retention of outside auditors for the Company,
reviews the financial statements of the Company, oversees the establishment and
implementation of such systems of internal accounting and auditing control as it
deems appropriate, and considers such other matters in relation to the external
audit of the financial affairs of the Company as may be necessary or appropriate
in order to facilitate accurate and timely financial reporting. The Audit
Committee also reviews certain proposals for major transactions. In fiscal 2000,
the Audit Committee met three (3) times.
REPORT OF THE AUDIT COMMITTEE
The audit functions of the Audit Committee are focused on three areas:
- The adequacy of our internal controls and financial reporting
process and the reliability of our financial statements;
- The independence and performance of our independent auditors; and
- Our compliance with legal and regulatory requirements.
The Audit Committee meets with management periodically to consider the adequacy
of our internal controls and the objectivity of our financial reporting. The
Audit Committee discusses these matters with our independent auditors and with
our appropriate financial management.
The Audit Committee meets privately with the independent auditors, who have
unrestricted access to the Audit Committee.
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The Audit Committee also recommends to the Board of Directors the appointment of
the independent auditors and periodically reviews their performance and
independence from management.
In addition, the Audit Committee reviews our financing plans and reports
recommendations to the full Board for approval and to authorize action.
The Board of Directors has determined that none of the Directors serving on the
Audit Committee has a relationship to us that may interfere with their
independence from us and our management. As a result, each Director who serves
on the Audit Committee is "independent" as required by American Stock Exchange
listing standards.
Our Board of Directors has adopted a written charter setting out the audit
related functions the Audit Committee is to perform. A copy of that charter is
attached to this proxy statement as Annex II.
Management has primary responsibility for our financial statements and the
overall reporting process, including our system of internal controls.
The independent auditors audit the annual financial statements prepared by
management, express an opinion as to whether those financial statements fairly
present our financial position, results of operations and cash flows in
conformity with generally accepted accounting principles, and discuss with the
Audit Committee any issues they believe should be raised.
This year, the Audit Committee reviewed our financial statements and met with
both our management and Ernst & Young LLP, our independent auditors, to discuss
the financial statements. Management has represented to the Audit Committee that
the financial statements were prepared in accordance with generally accepted
accounting principles.
The Audit Committee has received from and discussed with Ernst & Young LLP the
written disclosure and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). These items
related to that firm's independence from us. We also discussed with Ernst &
Young LLP any matter required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
Based on these reviews and discussions, the Audit Committee recommends to the
Board of Directors that our audited financial statements be included in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2000.
Dennis DeConcini
Edward M. Carson
H. Wilson Sundt
As Members of the Audit Committee
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EXECUTIVE OFFICERS AND COMPENSATION
This section contains biographies of all of our executive officers and charts
that show the amount of compensation earned by our Chief Executive Officer and
by our four other most highly paid executive officers. It also contains the
report of the Compensation Committee explaining the compensation philosophy for
the Company's most highly paid officers.
THE EXECUTIVE OFFICERS
The following are biographies of each of the Company's current
executive officers, except for SCOTT A. SCHUFF, DAVID A. SCHUFF AND MICHAEL
R. HILL, whose biographies are included above AT PAGES 4 AND 5 under
"Election of Directors (Proposal No. 1)."
GLEN S. DAVIS, 47.... PRESIDENT OF ADDISON STEEL, INC. Addison Steel, Inc.
was acquired by the Company in June 1998. Mr. Davis
entered into an employment agreement with the Company
in connection with the acquisition. Mr. Davis has
been President of Addison Steel since July 1973.
SAIED MAHDAVI, 40.... PRESIDENT OF QUINCY JOIST COMPANY. Quincy Joist
Company was acquired by the Company in June 1998.
Mr. Mahdavi entered into an employment agreement
with the Company in connection with the
acquisition. Mr. Mahdavi has been President of
Quincy Joist since January 1990.
TED F. ROSSIN, 56.... PRESIDENT OF BANNISTER STEEL, INC. Bannister Steel,
Inc. was acquired by the Company in October 1998.
Mr. Rossin entered into an employment agreement in
connection with the acquisition. Mr. Rossin has been
President of Bannister Steel since June 1996. From
January 1994 to June 1996, Mr. Rossin was Vice
President and General Manager of Bannister Steel.
CHRIS G. SUPAN, 51... PRESIDENT OF SIX INDUSTRIES, INC. Mr. Supan became an
employee of Six Industries, Inc. in May 1999 and was
named President of Six Industries, Inc. in September
2000. Mr. Supan has entered into an employment
agreement with the Company. Prior to May 1999, Mr.
Supan was Director of Procurement and Contracts for
Fluor Daniel, Inc., by whom he was employed since
1974.
C. GENE TAGUE, 64.... PRESIDENT OF SCHUFF STEEL COMPANY. Mr. Tague has
served as a Schuff employee and management consultant
since 1976 and was named Executive Vice President and
Chief Operating Officer of Schuff Steel Company in
March, 2000. The position of President was created
with his appointment.
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SUMMARY COMPENSATION TABLE
The table below sets forth information concerning the annual and long-term
compensation for services rendered in all capacities to the Company during the
three fiscal years ended December 31, 2000, of those persons who were, at
December 31, 2000, (i) the Company's Chief Executive Officer and (ii) the four
other most highly compensated executive officers of the Company (collectively,
the "Named Executive Officers").
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LONG-TERM COMPENSATION AWARDS
ANNUAL COMPENSATION AWARDS PAYOUTS
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NAME AND PRINCIPAL YEAR SALARY BONUS OTHER ANNUAL RESTRICTED SECURITIES LTIP ALL
POSITION ($) ($) (1) COMPENSATION STOCK UNDERLYING PAYOUTS OTHER
($) (2) AWARD(S) OPTIONS/ ($) COMPENSATION
($) SAR'S ($) (3)
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Scott A. Schuff 2000 $416,016 $334,574 $5,802 -- -- -- $2,625
President & Chief 1999 $416,016 $228,647 $6,552 -- -- -- $2,500
Executive Officer 1998 $296,412 $186,850 $4,940 -- -- -- $2,259
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Saied Mahdavi 2000 $300,000 $237,427 $5,139 -- 268,000 -- $2,625
President, 1999 $305,769 $184,395 $4,331 -- 100,000 -- $2,500
Quincy Joist Co. 1998(4) $158,000 $80,682 -- -- 20,000 -- --
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Glen S. Davis 2000 $300,000 $192,162 $5,537 -- 228,000 -- $2,625
President, 1999 $305,769 $182,894 $3,908 -- 132,000 -- $2,500
Addison Steel, Inc. 1998(4) $154,230 $93,928 -- -- 20,000 -- --
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Ted F. Rossin 2000 $240,000 $145,235 -- -- 46,400 -- $2,625
President, 1999 $240,000 $182,235 $1,634 -- 5,333 -- $16,000
Bannister Steel, Inc. 1998(4) $55,385 $32,854 $340 -- 9,000 -- --
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David A. Schuff 2000 $340,873 $45,000 $3,786 -- -- -- --
Chairman of 1999 $303,822 -- $5,224 -- -- -- --
The Board 1998 $296,412 $30,000 $4,861 -- -- -- --
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(1) Includes bonus amounts earned and paid in the applicable fiscal year and
paid or to be paid in the following fiscal year. Excludes bonuses paid in
the applicable fiscal year but earned in the preceding fiscal year.
(2) The aggregate amount of perquisites and other personal benefits,
securities or property, given to each Named Executive Officer was less
than either $50,000 or 10% of the total annual salary and bonus for that
executive during each of these years.
(3) The amounts shown in this column represent the dollar value of
contributions made by the Company to the Company's 401(k) retirement
savings plan for the benefit of the Named Executive Officers or, in the
case of Mr. Rossin, to Bannister Steel's profit sharing plan.
(4) Amounts only include compensation earned after the Company's acquisition
of Quincy Joist Company, Addison Steel, Inc. and Bannister Steel, Inc.
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OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning grants of stock
options to the Named Executive Officers during the fiscal year ended December
31, 2000. The Company does not maintain an option or other stock based plan that
provides for the grant of stock appreciation rights ("SARs").
INDIVIDUAL GRANTS
NUMBER OF PERCENT OF TOTAL POTENTIAL REALIZABLE
NAME SECURITIES OPTIONS / SAR'S EXERCISE EXPIRATION VALUE AT ASSUMED ANNUAL
UNDERLYING GRANTED TO PRICE DATE RATE OF STOCK
OPTIONS/SAR'S EMPLOYEES IN (PER APPRECIATION FOR OPTION
GRANTED FISCAL YEAR SHARE) TERM (1)
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5% 10%
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Scott A. Schuff (2) -- -- -- -- -- --
Saied Mahdavi 268,000 26.1% $3.375 03/06/10 $568,835 $1,441,540
Glen S. Davis 228,000 22.3% $3.375 03/06/10 $483,934 $1,226,385
Ted F. Rossin 46,400 4.5% $3.375 03/06/10 $ 98,485 $ 249,580
David A. Schuff (2) -- -- -- -- -- --
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(1) In accordance with Securities and Exchange Commission rules, the figures
in the first row of the "5%" and "10%" columns of this table for Messrs.
Mahdavi, Davis and Rossin assume compounded annual stock price
appreciation of 5% and 10%, respectively, based on a stock price of
$3.375 per share on March 6, 2000, which was the fair market value per
share of the Common Stock on the date of grant.
(2) Neither Scott A. Schuff nor David A. Schuff participated in the Company's
1997 Stock Option Plan in 2000.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth information concerning the value of each
Named Executive Officer's unexercised options at December 31, 2000. None of the
Named Executive Officers exercised any stock options in 2000 and the Company
does not maintain an option or other stock based plan that provides for the
grant of SARs.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
NAME SHARES VALUE OPTIONS/SAR'S OPTIONS/SAR'S
ACQUIRED REALIZED AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
ON ---------------------------------------------------------------
EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
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Scott A. Schuff -- -- -- -- -- --
Saied Mahdavi -- -- 28,000 360,000 -- --
Glen S. Davis -- -- 34,400 345,600 -- --
Ted F. Rossin -- -- 4,667 56,066 -- --
David A. Schuff -- -- -- -- -- --
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(1) Options are considered "in the money" if the fair market value of the
underlying securities exceeds the exercise price of the options. None of
the unexercised options were in the money at December 31, 2000. The
stock's closing price as reported by the American Stock Exchange was
$2.625 on December 31, 2000. Mr. Mahdavi has 20,000 stock options
exercisable at $14.50, 100,000 stock options exercisable at $7.125 and
268,000 stock options exercisable at $ 3.375. Mr. Davis has 20,000 stock
options exercisable at $14.50, 132,000 stock options exercisable at
$7.125, and 228,000 stock options exercisable at $ 3.375. Mr. Rossin has
9,000 stock options exercisable at $5.063, 5,333 stock options exercisable
at $7.125 and 46,400 stock options exercisable at $ 3.375.
EMPLOYMENT AGREEMENTS
In connection with the Company's acquisitions of Addison Steel, Inc.,
Quincy Joist Company and Bannister Steel, Inc., we have entered into employment
agreements with Glen S. Davis to serve as President of Addison Steel, Inc.,
Saied Mahdavi to serve as President of Quincy Joist Company, and Ted F. Rossin
to serve as President of Bannister Steel, Inc. The agreements provide for an
initial five year term extending through June 4, 2003 in the case of Messrs.
Davis and Mahdavi, and October 15, 2003 in Mr. Rossin's case, and successive
one-year renewal terms, unless earlier terminated. Each agreement includes
restrictions and non-competition covenants in effect during the term of the
agreement and for a period of 12 months after termination of employment.
Messrs. Davis and Mahdavi each receive a minimum base salary of $300,000
per year, and Mr. Rossin receives a minimum base salary of $240,000, all subject
to adjustment by the Board of Directors based upon each executive's performance
and duties. All these employment agreements also incorporate a value sharing
bonus and incentive stock option plan designed to serve as a retention device
and an incentive for creating significant stockholder value. In furtherance of
these objectives, the Company pays Messrs. Davis, Mahdavi and Rossin an annual
bonus equal to a percentage of the income before taxes (as calculated under the
agreements) of Addison Steel, in the case of Mr. Davis, Quincy Joist, in the
case of Mr. Mahdavi (in both cases subject to a minimum of $100,000) and
Bannister Steel in the case of Mr. Rossin, subject to a minimum of $135,000.
Furthermore, the executives will receive incentive stock options if in any year
income before taxes (as calculated under the agreements) of Addison Steel, in
the case of Mr. Davis, Quincy Joist, in the case of Mr. Mahdavi, and Bannister
Steel in the case of Mr. Rossin, exceeds $5.5 million, $5.5 million and $3.0
million, respectively. Each executive also participates in incentive, health,
and other fringe benefit programs as enjoyed by other officers of the Company.
Under their employment agreements, Messrs. Davis, Mahdavi and Rossin may
receive certain severance benefits if they are terminated without cause.
Generally, the severance benefits consist of their minimum base salary and
minimum bonus over the twelve month period following such termination. All three
executives are also subject to termination for cause, death or disability.
Upon a change of control, as described in the agreements, Messrs. Davis
and Mahdavi are entitled to terminate their employment agreements. In that
event, Messrs. Davis and Mahdavi are entitled to receive severance pay equal to
(1) their minimum base salary, (2) the amount of any unpaid annual bonus earned,
and (3) any benefits due to them through the effective date of termination. Upon
termination due to a change of control, Messrs. Davis and Mahdavi are also no
longer subject to the non-competition provisions contained in their agreements.
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On September 1, 2000, the Company entered into an employment agreement
with Chris G. Supan to serve as President of Six Industries, Inc. The agreement
includes restrictions and non-competitive convenants in effect during the term
of the agreement and for a period of twelve (12) months after termination of
employment. Mr. Supan receives a minimum base salary of $150,000, subject to
adjustment by the Board of Directors based upon his performance and duties. The
employment agreement also incorporates a minimum annual bonus of $30,000 and an
annual grant of an incentive stock option to acquire a minimum of 5,000 shares
of common stock. The executive also participates in incentive, health and other
fringe benefit programs as enjoyed by other Officers of the Company. Under his
employment agreement, Mr. Supan may receive certain severance benefits if he is
terminated without cause. Generally, the severance benefits consist of his
minimum base salary and annual bonus over the twelve-month period following such
termination. The executive is also subject to termination for cause, death or
disability.
THERE ARE NO OTHER EMPLOYMENT OR SEVERANCE AGREEMENTS BETWEEN THE COMPANY
AND ANY OF THE NAMED EXECUTIVE OFFICERS.
CHANGE OF CONTROL ARRANGEMENTS
If the Company sells all or substantially all of its assets, or merges
with or into another corporation, stock options outstanding under the Company's
1997 Stock Option Plan are required to be assumed or equivalent options are
required to be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Company's Board of
Directors determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the option holder will have the right to
exercise his or her option, including shares as to which such option would not
otherwise be exercisable. If the Board makes options fully exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Board must notify the option holder that the option is fully exercisable for a
period of 30 days from the date of such notice and the option will terminate
upon the expiration of such period, but not later than the expiration of the
term of the option.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The following Report of the Compensation Committee does not constitute
soliciting material and should not be deemed filed or incorporated by reference
into any other Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
this Report.
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for fiscal 2000.
WHAT IS THE COMPANY'S PHILOSOPHY OF EXECUTIVE OFFICER COMPENSATION?
The Company's compensation program for executive officers consists of three key
elements:
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- a base salary,
- a performance-based annual bonus, and
- long-term incentives in the form of stock option grants.
The Compensation Committee believes that this three-part approach best
serves the interests of the Company and its stockholders. As described more
fully below, each element of the Company's executive compensation program has a
somewhat different purpose.
The three-part approach enables the Company to meet the requirements of
the competitive environment in which the Company operates while ensuring that
executive officers are compensated in a way that advances both the short- and
long-term interests of the stockholders. Under this approach, compensation for
these officers was ultimately based upon:
- the Committee's assessment of the executive officers' performance,
- the continuing demand for superior executive talent,
- the Company's overall performance, and
- the Company's future objectives and challenges.
The Company's philosophy is to pay base salaries to executives that reward
these executives for ongoing performance throughout the year and that enable the
Company to attract, motivate and retain highly qualified executives. The annual
bonus program is designed to reward executives for performance and is based
primarily on the Company's financial results. Stock option grants give
executives an opportunity to obtain equity in the Company and, because options
result in minimal or no rewards if the Company's stock price does not appreciate
but provide substantial rewards to executives if the Company's stock price
appreciates, also provide an incentive for outstanding performance in the long
term. The Board believes that this mix of short- and long-term compensation
components provides a balanced approach that enables the Company to attract and
retain experienced executives, rewards such executives for their individual and
collective contribution to the profitability of the Company, and ensures that
the incentives of the Company's executives are aligned with the best interests
of its stockholders.
The Board's decisions concerning the specific 2000 compensation elements
for individual executive officers, including the Chief Executive Officer, were
made within this broad framework and in light of each executive officer's level
of responsibility, performance, current salary and prior-year bonus and other
compensation awards. As noted below, in most cases the Board's specific
decisions involving 2000 executive officer compensation were ultimately based
upon the Board's judgment regarding the individual executive officer's
performance, potential future contributions, and whether each payment or award
would provide an appropriate reward and incentive for such officer to sustain
and enhance the Company's long-term performance.
In addition to the foregoing, the base salary, annual bonus, incentive
stock options, and other related compensation for Messrs. Davis, Mahdavi, and
Rossin were primarily established through negotiations with the executives at
the time the Company acquired Addison Steel, Quincy Joist and Bannister Steel in
fiscal 1998, and is set forth in the executives' respective employment
agreements with the Company as described above. The levels of compensation for
Messrs. Davis, Mahdavi and Rossin resulted from the Compensation Committee's
consideration of various factors, including the Committee's understanding of
competitive compensation for similarly situated executives in the Company's
industry and the advice of the compensation and benefits personnel at Ernst &
Young LLP.
13
HOW DO WE DETERMINE BASE SALARY FOR MESSRS. SCHUFF AND SCHUFF?
The Board typically establishes each executive's base salary at a level
that is designed to reflect that executive's position and responsibility within
the Company, to attract and retain highly qualified executives, and to be
competitive with similarly situated executives at steel services companies of
similar size and revenue levels. The Board also takes into account, among other
things, the individual executive's experience and performance during the past
year.
HOW ARE ANNUAL BONUSES DETERMINED FOR MESSRS. SCHUFF AND SCHUFF?
Bonuses typically are paid based upon the Board's judgment regarding the
significance of the individual executive officer's contributions during a given
year and the overall financial performance of the Company. The Company's bonus
plan generally makes such bonuses substantially contingent upon the Company's
achievement of certain objective performance goals related to revenue and net
income, although the plan does not preclude discretionary bonuses based upon
other factors, such as individual achievement.
HOW IS COMPENSATION USED TO FOCUS MANAGEMENT ON LONG-TERM VALUE CREATION?
In February 1997, the Company adopted the Schuff Steel Company 1997 Stock
Option Plan to provide key employees selected by the Board an opportunity to
obtain an equity stake in the Company. Stock options are primarily designed to
provide such employees with strong incentives for superior long-term
performance. The exercisability of options is therefore conditioned upon the
employee's continued employment by the Company for periods of time specified by
the Board when these options are granted. Unexercised options are forfeited if
the employee leaves the Company prior to the time such options vest or, if
vested upon termination, if the employee fails to exercise them prior to the end
of a stated period following termination. In making option awards, the Board
reviews the level of awards granted to executives at other comparable companies,
the awards granted to other employees within the Company and the individual
employee's specific position at the Company and role in helping the Company to
achieve its goals. No options were granted to David A. Schuff, the Chairman of
the Board of Directors, or Scott A. Schuff, the Company's President and Chief
Executive Officer, in 2000 due to the substantial equity interests in the
Company already held by them. See "Security Ownership of Principal Stockholders
and Management."
DO EXECUTIVES RECEIVE ANY OTHER BENEFITS?
Certain executives also participate in various other benefit plans,
including medical plans and a 401(k) plan, which are generally available to all
employees of the Company.
HOW IS THE COMPANY'S CHIEF EXECUTIVE OFFICER COMPENSATED?
In 2000, the President, Chief Executive Officer and co-founder of the
Company, Scott A. Schuff, received a base salary of $416,016 and a bonus of
$334,574. Mr. Schuff's salary and bonus were determined based on his
extraordinary contributions to the Company, the historical operating performance
of the Company, the relation between Mr. Schuff's contributions and the
Company's growth, and Mr. Schuff's continuing contributions in his role as
President and Chief Executive Officer.
The Board believes that the success of the Company continues to depend to a
great extent upon the efforts of Mr. Schuff.
14
HOW IS THE COMPANY ADDRESSING INTERNAL REVENUE CODE LIMITS ON DEDUCTIBILITY OF
COMPENSATION?
Section 162(m) of the Internal Revenue Code, adopted as part of the
Revenue Reconciliation Act of 1993, generally limits to $1 million the deduction
that can be claimed by any publicly-held corporation for compensation paid to
any "covered employee" in any taxable year beginning after December 31, 1993.
The term "covered employee" for this purpose is defined generally as the chief
executive officer and the six other highest-paid employees of the corporation.
In 2000, the Company did not pay compensation to any executive that was subject
to Section 162(m).
Dennis DeConcini
Edward M. Carson
H. Wilson Sundt
As Members of the Compensation Committee
STOCK PRICE PERFORMANCE GRAPH
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of (i) the
Company's common stock, (ii) the Standard & Poor's Small Cap 600 Stock Index
("S&P 600") and (iii) a peer group index selected by the Company (the "Peer
Group"), from July 7, 1997 (the date of the Company's initial public offering)
through December 31, 2000 (the end of the Company's fiscal year). The Peer Group
was selected by the Company on an industry basis and includes:
- Ameron International Corporation - Foster Wheeler Corporation - Gulf Island Fabrication, Inc.
- Granite Construction Incorporated - Fletcher Challenge Limited - Stone & Webster Incorporated
- Northwest Pipe Company - Pitt-Des Moines, Inc. - Jacobs Engineering Group Inc.
- Meadow Valley Corporation - Fluor Corporation - Simpson Manufacturing Co., Inc.
- Chicago Bridge & Iron Co. N.V.
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The graph assumes that $100 was invested on July 7, 1997 in the Company's common
stock and in each of the comparison indices, and assumes that all dividends paid
were reinvested. The comparisons in the graph are required by the Securities and
Exchange Commission and are not intended to forecast or be indicative of
possible future performance of the Company's common stock.
15
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
SCHUFF STEEL COMPANY, THE S&P 600 AND THE PEER GROUP
[LINE GRAPH]
TOTAL
RETURN
ANALYSIS 07/07/97 12/31/97 12/31/98 12/31/99 12/31/00
----------------------------------------------------------------------------------------------------------------
Schuff Steel $ 100.00 $ 135.94 $ 68.75 $ 50.00 $ 32.75
Peer Group $ 100.00 $ 80.29 $ 110.10 $ 99.62 $ 129.72
S&P 600 $ 100.00 $ 112.57 $ 110.21 $ 137.56 $ 152.72
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of its
common stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Officers, directors and greater than
10% stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely upon a review of the
copies of such forms furnished to the Company, or written representations that
no Forms 5 were required, the Company believes that during the Company's
preceding fiscal year all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with.
16
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth, as of March 31, 2001, the number and
percentage of outstanding shares of common stock beneficially owned by each
person known by the Company to beneficially own more than 5% of such stock, by
each director and Named Executive Officer of the Company, and by all directors
and executive officers of the Company as a group.
SHARES SHARES SUBJECT TO
BENEFICIALLY UNEXERCISED PERCENTAGE
NAME & ADDRESS OF BENEFICIAL OWNER (1) OWNED OPTIONS (3) OWNED
--------------------------------------------------------------------------------------------------------------------------
David A. Schuff and Nancy A. Schuff (2),(4) 2,553,000 -- 35.4%
Scott A. Schuff and Teryl H. Schuff (2),(5) 2,469,200 -- 34.3%
Dimensional Fund Advisors
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 418,800 -- 5.8%
Glen S. Davis (2) 125,785 106,400 1.7%
Saied Mahdavi (2) 104,895 101,600 1.5%
Ted F. Rossin (2) 20,014 15,014 *
Edward M. Carson (2) 19,861 9,500 *
H. Wilson Sundt (2) 19,000 8,500 *
Dennis DeConcini (2) 16,437 9,500 *
All Directors and Executive Officers as a group (11 persons) 5,328,192 250,514 74.0%
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* Represents less than 1% of the Company's outstanding common stock.
(1) This information regarding beneficial ownership of the Company's common
stock by certain beneficial owners and management of the Company is as of
March 31, 2001. A person is deemed to be the beneficial owner of
securities that can be acquired within 60 days from the date set forth
above through the exercise of any option, warrant, or right. Shares of
common stock subject to options, warrants, or rights that are currently
exercisable or exercisable within 60 days are deemed outstanding for the
purpose of computing the percentage of the person holding such options,
warrants, or rights, but are not deemed outstanding for computing the
percentage of any other person. The amounts and percentages are based upon
7,208,355 shares of common stock outstanding as of March 31, 2001. The
persons named in the table, to the Company's knowledge, have sole voting
and sole dispositive power with respect to all shares of common stock
shown as beneficially owned by them, subject to community property laws
where applicable and the information contained in the footnotes hereunder.
(2) The address of each of the listed stockholders is 1841 West Buchanan
Street, Phoenix, Arizona 85009.
(3) The number of Shares Beneficially Owned include Shares Subject to
Unexercised Options which are exercisable on March 31, 2001, or within 60
days thereafter.
(4) 2,053,000 of these shares are owned by the Schuff Family Trust Under Trust
Agreement dated June 28, 1983, as amended, and 500,000 of these shares are
owned by the Schuff Irrevocable Trust Under Trust Agreement Dated December
31, 1996. David A. Schuff and Nancy A. Schuff, husband and wife, are
co-trustees of each of the trusts and exercise voting and investment power
over such shares.
(5) 2,269,200 of these shares are owned by the Scott A. Schuff Family Trust
Under Trust Agreement dated March 12, 1992, as amended, and 200,000 of
these shares are owned by the Scott A. Schuff Irrevocable Trust Under
Trust Agreement dated December 31, 1996, as amended. Scott A. Schuff and
Teryl Hall Schuff, husband and wife, are co-trustees of each of these
trusts and exercise voting and investment power over such shares.
17
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Since its inception, the Company has maintained business relationships and
engaged in certain transactions with the affiliated companies and parties
described below. Since the closing of its initial public offering in July 1997,
all transactions between the Company and its affiliated entities, executive
officers, directors, or significant stockholders are approved by a majority of
the non-employee directors of the Company. The Company also believes these
transactions are on terms that will be no less favorable to the Company than the
Company could obtain from non-affiliated parties.
The Company leases some of its fabrication and office facilities from 19th
Avenue/Buchanan Limited Partnership, an Arizona limited partnership (the "Schuff
Partnership"). The general and limited partners of the Schuff Partnership are
David A. Schuff, Scott A. Schuff, and certain of their family members. David A.
Schuff is a co-founder and the Chairman of the Board of Directors of the
Company, and Scott A. Schuff is a Director and the President and Chief Executive
Officer of the Company. David A. Schuff and Scott A. Schuff presently are the
beneficial owners of approximately 69.7% of the issued and outstanding common
stock of the Company. See "Security Ownership of Principal Stockholders and
Management."
The Company has three leases with the Schuff Partnership for its principal
fabrication and office facilities, the property and equipment acquired in the
1997 acquisition of B&K Steel, and additional office facilities adjacent to the
Company's principal office and shop facilities. Each lease has a 20 year term
and is subject to increases every five years commencing in 2002 pursuant to a
Consumer Price Index formula. The Company's annual rental payments for the three
leases were $1.1 million in 2000, and each year thereafter during the remaining
terms of the leases.
AMENDMENT TO
SCHUFF STEEL COMPANY 1997 STOCK OPTION PLAN
(PROPOSAL NO. 2)
The Board of Directors has approved an amendment to the Schuff Steel
Company 1997 Stock Option Plan increasing the number of options thereunder,
subject to approval by the stockholders of the Company. We have summarized below
the key provisions of the plan. Because it is a summary, it may not contain all
the information that is important to you.
WHAT IS THE PURPOSE OF THE PLAN?
Options granted under the 1997 Plan may be either Incentive Stock Options
("ISOs") (which are qualified under Section 422 of the Internal Revenue Code of
1986) or non-qualified stock options.
The 1997 Plan provides that the option price will be equal to 100% of the
fair market value (as defined in the 1997 Plan) of one share of common stock on
the date the option is granted. In addition, the 1997 Plan also provides that
the option will not be exercisable for a period more than 10 years following the
date of grant, or 5 years in the case of a grant of an ISO to an individual who
is a ten percent (10%) shareholder on the date of grant. The 1997 Plan also
provides that the options will become exercisable as
18
provided by the Committee, except that no option is exercisable until 5 years
after the date of grant unless the Company completed an initial public offering
of its common stock before the end of the 5-year period.
Under the current 1997 Plan, options granted to an employee will terminate
immediately and no longer be exercisable if the employee's employment with the
Company ceases for any reason other than death or disability, except that, in
its discretion, the Committee may extend the exercise date. If an employee's
employment is terminated as a result of his death or disability, all options
that were exercisable on the date of his termination will remain exercisable for
one year after the death or disability, or until the option's expiration date,
whichever occurs first.
WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN?
Officers, directors and key employees of the Company or certain companies
that do business with the Company, as designated by the Committee, are eligible
to participate in the 1997 Plan. Only employees of the Company, however, may be
granted ISOs under the 1997 Plan.
HOW IS THE PLAN ADMINISTERED?
The 1997 Plan may be administered by either the Board or a committee
appointed by the Board. The Board, or the committee if appointed, has exclusive
authority to administer the 1997 Plan consistent with its provisions, including
the power to determine eligibility, or the number, price, vesting period or
timing of awards granted under the 1997 Plan.
WHAT ARE THE AMENDMENTS TO THE PLAN?
This summary of the material features of the 1997 Stock Option Plan ("1997
Plan") and amendments to the 1997 Plan is not complete and should be read with
the full proposed text of the Amendment to the Plan that is included at the end
of this Proxy Statement as Annex I.
Amendments to the 1997 Plan, which the Board has adopted and for which the
Company is seeking stockholder approval, will increase the number of shares of
stock available for issuance under the 1997 Plan.
WHY ARE THE AMENDMENTS TO THE PLAN NECESSARY?
The increase in the number of shares of stock available under the 1997
Plan is necessary because in 1998, the Company entered into several employment
agreements with new employees as a result of its acquisition of certain
entities. These employment agreements include provisions for the grant of stock
options to the new employees based upon achievement of certain performance
criteria.
WHAT ARE THE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER THE PLAN?
Under the current 1997 Plan, up to 2,300,000 shares of existing common
stock may be available for grants of options. Under the amended 1997 Plan, up to
2,800,000 shares of common stock may be available. Shares subject to an award
that expires unexercised, is forfeited or terminated, or settled in
19
cash instead of common stock, and shares tendered to pay for the exercise of an
option, will thereafter again be available for grant under the 1997 Plan.
WHAT ARE THE NEW PLAN BENEFITS?
Because the plan is discretionary and based upon the Company's financial
performance, it is not possible to determine or to estimate the benefits or
amounts that will be received in the future by individual employees or groups of
employees under the plan.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE AVAILABLE AWARDS UNDER
THE PLAN?
The following is a brief description of the federal income tax
consequences generally arising with respect to options granted under the 1997
Plan.
Incentive Stock Options
An ISO is a stock option that satisfies the requirements specified in
Section 422 of the Code. Under the Code, ISOs may only be granted to employees.
In order for an option to qualify as an ISO, the price payable to exercise the
option must equal or exceed the fair market value of the stock at the date of
the grant, the option must lapse no later than 10 years from the date of the
grant, and the stock subject to ISOs that are first exercisable by an employee
in any calendar year must not have a value of more than $100,000 as of the date
of grant. Certain other requirements must also be met.
An optionee will not be treated as receiving taxable income upon either
the grant of an ISO or upon the exercise of an ISO. However, the difference
between the exercise price and the fair market value on the date of exercise
will be an item of tax preference at the time of exercise in determining
liability for the alternative minimum tax, assuming that the common stock is
either transferable or is not subject to a substantial risk of forfeiture under
Section 83 of the Code. If at the time of exercise, the common stock is both
nontransferable and is subject to a substantial risk of forfeiture, the
difference between the exercise price and the fair market value of the common
stock (determined at the time the common stock becomes either transferable or
not subject to a substantial risk of forfeiture) is a tax preference item in the
year in which the common stock becomes either transferable or not subject to a
substantial risk of forfeiture.
If common stock acquired by the exercise of an ISO is not sold or
otherwise disposed of within two years from the date of its grant and is held
for at least one year after the date such common stock is transferred to the
optionee, any gain or loss resulting from its disposition will be treated as
long-term capital gain or loss. If such common stock is disposed of before the
expiration of the above-mentioned holding periods, a "disqualifying disposition"
will occur. If a disqualifying disposition occurs, the optionee will realize
ordinary income in the year of the disposition in an amount equal to the
difference between the fair market value of the common stock on the date of
exercise and the exercise price, or the selling price of the common stock and
the exercise price, whichever is less. The balance of the optionee's gain on a
disqualifying disposition, if any, will be taxed as capital gain.
20
In the event an optionee exercises an ISO using common stock acquired by a
previous exercise of an ISO, unless the stock exchange occurs after the required
holding periods, such exchange shall be deemed a disqualifying disposition of
the stock exchanged.
The Company will not be entitled to any tax deduction as a result of the
grant or exercise of an ISO, or on a later disposition of the common stock
received, except that in the event of a disqualifying disposition, the Company
will be entitled to a deduction equal to the amount of ordinary income realized
by the optionee.
Non-Qualified Stock Options
An NQSO is any stock option other than an Incentive Stock Option. Such
options are referred to as "non-qualified" because they do not meet the
requirements of, and are not eligible for the favorable tax treatment provided
by, Section 422 of the Code.
No taxable income will be realized by an optionee upon the grant of an
NQSO, nor is the Company entitled to a tax deduction by reason of such grant.
Upon the exercise of an NQSO, the optionee will realize ordinary income in an
amount equal to the excess of the fair market value of the common stock on the
date of exercise over the exercise price and the Company will be entitled to a
corresponding tax deduction.
Upon a subsequent sale or other disposition of common stock acquired
through exercise of an NQSO, the optionee will realize capital gain or loss to
the extent of any intervening appreciation or depreciation. Such a resale by the
optionee will have no tax consequence to the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE SCHUFF STEEL COMPANY 1997 STOCK OPTION PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
The principal independent public accounting firm we used during 2000 was Ernst &
Young LLP. The following reflects various fees paid to Ernst & Young during
2000:
AUDIT FEES
The aggregate fees paid to Ernst & Young for professional services rendered for
the audit of our annual financial statements for 2000 and for reviews of the
financial statements included in our Quarterly Reports on Form 10-Q for 2000
were $227,500.
AUDIT RELATED FEES
The aggregate fees paid to Ernst & Young for professional services rendered for
the audits of the Company's employee benefit plans and other accounting research
services for 2000 were $53,000.
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ALL OTHER FEES
The aggregate fees paid to Ernst & Young, other than the services described
above under "Audit Fees" and "Audit Related Fees" for 2000 were $339,000. The
Audit Committee has considered and determined that the provision of non-audit
services is compatible with maintaining Ernst & Young's independence from us.
We have retained Ernst & Young as our principal accounting firm in 2001. Ernst &
Young representatives will attend the annual meeting, have an opportunity to
make a statement and be available to answer questions.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Stockholder proposals for the 2002 Annual Meeting must be received at the
principal executive offices of the Company by January 21, 2002, to be considered
for inclusion in the Company's proxy materials relating to such meeting.
Under our Bylaws, if you wish to nominate directors or bring other
business before the stockholders at the 2002 Annual Meeting of Stockholders:
- You must be a stockholder of record at the time of giving notice and
be entitled to vote at the meeting of stockholders to which the
notice relates.
- You must notify the Secretary in writing no later than January 21,
2002, which is 120 days prior to the anniversary date of this annual
meeting.
- Your notice must contain the specific information required in our
Bylaws.
A nomination or other proposal will be disregarded if it does not comply
with the above procedure and any additional requirements set forth in our
Bylaws. Please note that these requirements relate only to the matters you wish
to bring before your fellow stockholders at an annual meeting. They are separate
from the SEC's requirements to have your proposal included in our proxy
statement.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors does not
intend to present at the annual meeting any matters other than those described
herein and does not presently know of any matters that will be presented by
other parties. If any other matter is properly brought before the meeting for
action by stockholders, proxies in the enclosed form returned to the Company
will be voted in accordance with the recommendation of the Board of Directors
or, in the absence of such a recommendation, in accordance with the judgment of
the proxy holder.
22
SCHUFF STEEL COMPANY
Scott A. Schuff
President and Chief Executive
Officer
April 17, 2001
ANNEX I
AMENDMENT
TO THE
SCHUFF STEEL COMPANY
1997 STOCK OPTION PLAN
Effective February 5, 1997, the Board of Directors of Schuff Steel Company
(the "Company") approved the adoption of the Schuff Steel Company 1997 Stock
Option Plan (the "Plan"). The Plan has subsequently been amended on two
occasions. By this Third Amendment, the Company desires to amend the Plan to
increase the maximum number of shares of the Company's Common Stock available
for sale under the Plan from 2,300,000 shares to 2,800,000 shares.
1. This Third Amendment shall amend only those Sections specified in
this Amendment and those Sections not amended remain in effect.
2. Section 5 of the Plan regarding Shares Subject to the Plan is
amended as follows: "2,300,000" is hereby replaced with 2,800,000.
3. This Third Amendment shall be effective at such time as it has been
approved by the stockholders of the Company, at a meeting thereof,
by a vote sufficient to meet the requirements of Section 422(b)(1)
of the Code.
The Company has caused this Third Amendment to the Plan to be signed by its duly
authorized officer this ______ day of ______________________, 2001.
SCHUFF STEEL COMPANY
By:_______________________________
Its:______________________________
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ANNEX II
SCHUFF STEEL COMPANY
AUDIT COMMITTEE CHARTER
COMMITTEE The Board of Directors of Schuff Steel Company has
established a standing committee of the Board of
Directors to be known as the "Audit Committee".
OBJECTIVES The purpose of the Committee is to oversee this
Corporation's auditing, accounting and control
functions, and to provide additional assurances
concerning the integrity of the financial information
provided to the Board and disseminated to shareholders.
SCOPE OF ACTIVITIES To the full extent permitted by applicable law, the
Committee shall:
a) Meet with this Corporation's independent auditors
at least semi-annually and review the scope of the
annual audit (inclusions and exclusions), address
any questions as to the choice of generally
acceptable accounting principles to be applied and
any other matters relating to the auditors'
relationship with this Corporation;
b) Advise the Board as to the independent auditors'
performance, including the scope and adequacy of
the independent auditors' audit;
c) Review the non-attest services provided by the
independent auditors on an annual basis;
d) Recommend to the Board whether the auditors should
be retained by this Corporation for the ensuing
year;
e) Review this Corporation's annual financial
statements, including the footnotes, and discuss
such statements with the independent auditors
prior to the release of this Corporation's annual
report and this Corporation's Form 10-K filings
with the Securities and Exchange Commission;
f) Receive and consider the independent auditors'
comments and suggestions as to internal controls
and procedures, adequacy of staff, and other
matters, and to make such recommendations to the
Board as they deem necessary or appropriate;
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25
g) Review internal accounting procedures and controls
with this Corporation's financial and accounting
staff;
h) Review any significant accounting adjustments or
write-offs with financial management;
i) Review the impact on this Corporation's financial
statements of proposed changes in generally
accepted accounting principles;
j) Review and approve the annual internal audit plan;
k) Review the activities and recommendations of this
Corporation's internal auditors;
l) Review this Corporation's system of controlling
regulated costs;
m) Supervise the activities of the responsible person
in determining compliance with this Corporation's
Code of Conduct, including a review of the annual
questionnaire and a summary of responses to the
questionnaire;
n) Review transactions with this Corporation by any
officer who is a 5% or greater shareholder;
o) Review with legal counsel significant litigation
matters affecting the Corporation; and
p) Meet privately with the independent auditors to
discuss their opinions on various matters
including quality of financial and accounting
staff.
COMPOSITION The Committee shall be composed of at least three
directors. No committee member shall be a full-time
employee of this Corporation. One of the members so
appointed shall be designated by the Board as the
Chairperson of the Committee. Members of the
Committee may be removed by the Board for any reason
at any time.
TERM The Board of Directors shall appoint the members of the
Committee to serve for one year, or until their
successors have been duly designated.
MEETINGS The Committee shall hold regular meetings at least 2
times per year on such days as it shall determine.
Other meetings of the Committee shall be held at the
request of the Chairperson of the Committee or other
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26
Committee members. Minutes shall be regularly kept
of Committee proceedings, by a person appointed by
the Committee to do so.
ATTENDANCE Such corporate officers and other employees of this
Corporation as the Committee may regularly, or from time
to time, designate shall attend the meetings.
OUTSIDE ATTENDANCE The Committee is authorized to engage or employ such
outside professional or other services as in its
discretion may be required to fulfill its
responsibilities.
PROCEDURE The Committee may adopt rules for its meetings and
activities. In the absence of any such rules,
Committee actions shall be governed by this
Corporation's Bylaws and applicable law. In all
cases, a quorum of the Committee shall be a majority
of the persons then serving as members of the
Committee.
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27
SCHUFF STEEL COMPANY
ANNUAL MEETING OF STOCKHOLDERS -- MAY 21, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Scott A. Schuff and Michael R. Hill, and
each of them, proxies, with full power of substitution, acting unanimously and
voting or if only one is present and voting then that one, to vote the shares of
stock of Schuff Steel Company which the undersigned is entitled to vote, at the
Annual Meeting of Stockholders to be held at Quincy Joist Company, 22253 West
Southern Avenue, Buckeye, Arizona, on Monday May 21, 2001, at 10:00 a.m. local
time, and at any adjournment or adjournments thereof, with all the powers the
undersigned would possess if present.
IF YOU RETURN YOUR PROPERLY EXECUTED PROXY, WE WILL VOTE YOUR SHARES AS
YOU DIRECT. IF YOU DO NOT SPECIFY ON YOUR PROXY CARD HOW YOU WANT TO VOTE YOUR
SHARES, WE WILL VOTE THEM FOR PROPOSALS 1 AND 2 AND IN THE DISCRETION OF THE
PROXIES ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENTS THEREOF.
PLEASE MARK, SIGN AND DATE THE REVERSE SIDE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
FOR all WITHHOLD authority
nominees listed to vote for
at right all nominees
(except as listed below
marked to the
contrary below)
1. ELECTION OF NOMINEES:
DIRECTORS: [ ] [ ] 01 David A. Schuff
02 Scott A. Schuff
03 Edward M. Carson
04 Dennis DeConcini
05 H. Wilson Sundt
06 Michael R. Hill
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THAT NOMINEE'S NAME AT RIGHT.
FOR AGAINST ABSTAIN
2. APPROVAL OF AMENDMENT TO SCHUFF STEEL
COMPANY 1997 STOCK OPTION PLAN:
[ ] [ ] [ ]
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3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ALL OTHER
MATTERS THAT PROPERLY MAY BE PRESENTED AT THE MEETING.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
such shares at said meeting or at any adjournment thereof.
Signature of Stockholder: _______________________________ Date:_____________,
2001
Please sign EXACTLY as your name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title as
such. If more than one trustee, all should sign. If shares are held jointly,
both owners must sign.
Address Change? Mark Box [ ] Indicate change to the right.
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