-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M4AyEZCB1n8auDVpwuoMTkOQ3tZXEwjNow6FHhBqI5JSiNhyXn2ADzBpXpbwoPp1 C/XZ0E31fyAVPoHAfvpPqA== 0000950131-97-003561.txt : 19970522 0000950131-97-003561.hdr.sgml : 19970522 ACCESSION NUMBER: 0000950131-97-003561 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970521 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INLAND STEEL INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000790528 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 363425828 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09117 FILM NUMBER: 97612299 BUSINESS ADDRESS: STREET 1: 30 W MONROE ST CITY: CHICAGO STATE: IL ZIP: 60603 BUSINESS PHONE: 3123460300 MAIL ADDRESS: STREET 1: 30 WEST MONROE STREET STREET 2: 16TH FLOOR CITY: CHICAGO STATE: IL ZIP: 60603 DEFA14A 1 ADDITIONAL INFORMATION SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2)) [_] Definitive Proxy Statement [X] Definitive Additional Materials [_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 INLAND STEEL INDUSTRIES INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [x] No fee required [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- Notes: The following letter and attachments were sent to LaSalle National Trust, N.A., as trustee of the Inland Steel Industries, Inc. Thrift Plan, and to its advisors, Oppenheimer Wolff & Donnelly and Duff & Phelps Capital Market Co. May 16, 1997 Mr. Jeffrey S. Schiedemeyer Assistant Vice President LaSalle National Trust, N.A. 135 South LaSalle Street Chicago, IL 60674-9135 Dear Jeffrey: Bob Darnall and I are looking forward to meeting with you next Wednesday, May 21. In addition to the material that I have already sent you, I thought you would be interested in having a copy of the attached documents. Specifically I am enclosing: . A copy of the recently issue report from Institutional Shareholder Services recommending that shareholders vote against the Greenway partners proposal to spin off Ryerson Tull now, . A copy of our press release of May 15, and . A copy of Jay Gratz's letter to Greenway Partners in response to yet another idea they proposed to him in a meeting on May 2. If there are any questions that I might be helpful in answering prior to our meeting next Wednesday, please feel free to contact me. Sincerely, M. Robert Weidner, III General Manager Communications & Stakeholder Relations cc: Robert J. Darnall [LETTERHEAD OF INSTITUTIONAL SHAREHOLDER SERVICES (SM)] - -------------------------------------------------------------------------------- Proxy Analysis: INLAND STEEL INDUSTRIES, INC. IAD (NYSE) Annual Meeting: May 28, 1997 Record Date: April 2, 1997 Security ID: 457472108 (CUSIP) 45747210 (CUSIP) 2462921 (SEDOL) 457470102 (CUSIP) - -------------------------------------------------------------------------------- MEETING AGENDA - -------------------------------------------------------------------------------- Item Code Proposals Mgt. Rec. ISS Rec. ================================================================================ [_]1 M0201 Elect Directors For FOR - -------------------------------------------------------------------------------- [_]2 M0101 Ratify Auditors For FOR - -------------------------------------------------------------------------------- Shareholder Proposal - -------------------------------------------------------------------------------- [_]3 S0810 Spin Off Metals Services Center Business Against AGAINST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Inland Steel Industries, Inc. * May 6, 1997 (C)1997, Institutional Peter Gleason, Senior Analyst Shareholder Services Phone: 301/718-2255 [LETTERHEAD OF INSTITUTIONAL SHAREHOLDER SERVICES] PAGE 2 - ------------------------------------------------------------------------------- FINANCIAL SUMMARY - ------------------------------------------------------------------------------- INCOME STATEMENT SUMMARY ($ in millions except per share data) - -------------------------------------------------------------------------------
1994 1995 1996 ACG* ---- ---- ---- ---- Net Sales $4,497.00 $4,781.50 $4,584.10 1.0% Net Income 107.40 146.80 45.70 -34.8% EPS (Primary) 1.81 2.69 0.75 -35.6% Dividends per share 0.00 0.20 0.20 NMF Calendar year-end $35.12 $25.12 $19.50** stock price Dividends paid since: 1995 - ------------------- * Annual Compound Growth ** Current Price Fiscal Year Ended: December 31 Source: Company Annual Report - ------------------------------------------------------------------------------- PERFORMANCE SUMMARY - ------------------------------------------------------------------------------- 1-Year 3-Year 5-Year ------ ------ ------ Total shareholder returns, company -20.3% -13.0% -2.6% Total shareholder returns, index 19.7% 22.3% 16.4% Total shareholder returns, peer group -12.8% -6.6% 6.6% - ------------------- Source: Company Proxy Statement - ------------------------------------------------------------------------------- BUSINESS: Distributor of value-added steel and related materials ACCOUNTANTS: Price Waterhouse LLP - ------------------------------------------------------------------------------- Inland Steel Industries, Inc. * May 6, 1997 /C/1997, Institutional Peter Gleason, Senior Analyst Shareholder Services Phone: 301/718-2255
INSTITUTIONAL SHAREHOLDER SERVICES PAGE 3 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CORPORATE GOVERNANCE PROFILE - -------------------------------------------------------------------------------- GOVERNANCE PROVISIONS ================================================================================ Blank check preferred stock (Charter) Confidential voting policy and independent inspectors of election D&O liability protection for acts made in good faith (Charter, April 22, 1987) No shareholder right to call special meetings (Charter) Poison pill with sunset provision greater than two years (Adopted: Nov. 25, 1987) Unequal voting rights Director term limits that provide for mandatory retirement at age (70) ================================================================================ GOVERNANCE MILESTONES ================================================================================ Adopted policy requiring directors be paid 31% in stock Elimination of nonemployee director pension plan Adoption of officer stock ownership requirements Annual evaluation of CEO performance conducted by unaffiliated, independent directors Assigned committee of independent directors to recommend corporate governance policies and to monitor compliance ================================================================================ SEVERANCE AGREEMENTS ================================================================================ Change-in-control provisions in executive stock option or other compensation plans Golden parachute severance agreements triggered by termination of employment following a change in control Pension parachutes, which provides accelerated pension benefits, triggered by a change in control - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Inland Steel Industries, Inc. - May 6, 1997 /c/1997, Institutional Shareholder Services Peter Gleason, Senior Analyst Phone: 301/718-2255
INSTITUTIONAL SHAREHOLDER SERVICES PAGE 4 - -------------------------------------------------------------------------------- ================================================================================ STATE STATUTES: Delaware ================================================================================ Labor contract provision Three-year freezeout provision - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Inland Steel Industries, Inc. - May 6, 1997 /c/1997, Institutional Shareholder Services Peter Gleason, Senior Analyst Phone: 301/718-2255
INSTITUTIONAL SHAREHOLDER SERVICES PAGE 5 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DIRECTOR PROFILES - --------------------------------------------------------------------------------
Name Classification Term Dir. No Ends Since Stock ================================================================================ A. Robert Abboud IO 1998 1974 Robert J. Darnall I 1998 1983 James A. Henderson IO 1998 1978 Robert B. McKersie IO 1998 1994 Leo F. Mullin IO 1998 1996 Jean-Pierre Rosso IO 1998 1995 Joshua I. Smith IO 1998 1991 Nancy H. Teeters IO 1998 1991 Arnold R. Weber IO 1998 1985
- -------------------------------------------------------------------------------- Classified board: No CEO as chairman: Yes Current nominees: 9 Retired CEO on board: No - -------------------------------------------------------------------------------- Inland Steel Industries, Inc. .May 6, 1997 (C)1997, Institutional Shareholder Services Peter Glesson, Senior Analyst Phone: 301/718-2255
INSTITUTIONAL SHAREHOLDER SERVICES PAGE 6 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- COMPOSITION OF COMMITTEES - --------------------------------------------------------------------------------
Audit Type Compensation Type Nominating Type - -------------------------------------------------------------------------------- A. Robert Abboud IO Jean-Pierre Rosso IO Jean-Pierre Rosso IO James A. IO Joshua I. Smith IO Joshua I. Smith IO Henderson Robert B. IO Arnold R. Weber IO Arnold R. Weber IO McKersie Leo F. Mullin IO Nancy H. Teeters IO
- -------------------------------------------------------------------------------- Committee Name Assigned by Company: Audit: Audit Committee Compensation: Compensation Committee Nominating: Nominating and Governance Committee
- ----------------------------------------------------------------------------------------- Inland Steel Industries, Inc. - May 6, 1997 (C)1997, Institutional Shareholder Services Peter Gleason, Senior Analyst Phone: 301/718-2255
INSTITUTIONAL SHAREHOLDER SERVICES PAGE 7 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CAPITAL STRUCTURE - -------------------------------------------------------------------------------- Capital Structure - --------------------------------------------------------------------------------
Type of Shares Votes per Authorized Shares Share Shares Outstanding Series E ESOP Convertible 1.25 15,000,000 3,047,038 preferred stock Series A $2.40 Cumulative 1.00 15,000,000 94,202 preferred stock 10.23% Subordinated Voting stock 30.604 votes $100,000,000 per $1,000 principal amount Common stock 1.00 100,000,000 48,909,052
- -------------------------------------------------------------------------------- Ownership Information - -------------------------------------------------------------------------------- Beneficial Owner Total Voting Power Officers & Directors 1.42% Institutions 64.95% - ------------------- Sources: Proxy Statement, CDA Investment Technologies - -------------------------------------------------------------------------------- Note: The company has four types of voting securities: common stock, Series A Cumulative Convertible Preferred Stock, Series E ESOP Convertible preferred stock, and a 10.23 percent subordinated voting note. Each share of common stock and Series A preferred stock entitles its holder to one vote. Each share of ESOP preferred stock entitles the holder to 1.25 votes, and each $1,000 of principal amount of 10.23 percent subordinated voting note entitles its holder to 30.604 votes. [_] Item 1: Elect Directors This proposal seeks election of nine directors to serve one-year terms. Leo Mullin is a new director nominee. The full board comprises one insider and eight independent outsiders. The Audit Committee comprises five independent outsiders. The Compensation and Nominating & Governance committees each comprise three independent outsiders. We support the - -------------------------------------------------------------------------------- Inland Steel Industries, Inc. - May 6, 1997 Peter Gleason, Senior Analyst /c/ 1997, Institutional Shareholder Services Phone: 301/718-2255 [LETTERHEAD OF INSTITUTIONAL SHAREHOLDER SERVICES] - -------------------------------------------------------------------------------- independent nature of the key board committees, which include no insiders or affiliated outsiders. We recommend a vote FOR the directors. [_] Item 2: Ratify Auditors The board recommends that Price Waterhouse LLP be approved as the company's independent accounting firm for the coming year. Note that the auditors' report contained in t he annual report is unqualified, meaning that in the opinion of the auditor, the company's financial statements are fairly presented in accordance with generally accepted accounting principles. We recommend a vote FOR the auditors. Shareholder Proposal [_] Item 3: Spin Off Metals Services Center Business Greenway Partners LP, one of the company's largest shareholders, has submitted this nonbinding proposal requesting that Inland distribute all of the stock of Ryerson Tull that Inland holds to Inland shareholders through a tax-free spin-off. The proponent believes that "Inland took a step in the right direction when it established Ryerson Tull as a separately traded company. But the crucial step to unlock shareholder value remains undone." Greenway indicates that the until the separation of the two companies is complete, Inland will remain undervalued in the market. Greenway has also suggested that Inland's board should actively seek a merger partner to capitalize on what it believes is a "desirable" trend towards consolidation in the steel industry. ISS spoke with Al Kingsley and Gary Duberstein of Greenway, who indicated that management's actions to date have been very beneficial to the company and that they believe Ryerson Tull is far ahead of any other steel products distributor in the industry. However, they believe that because of Ryerson Tull's small public flost and Inland's continued ownership of more than 87 percent of Ryerson Tull's small public float and Inland's continued ownership of more than 87 percent of Ryerson Tull's economic interest and 96 percent of its voting power, the market is not recognizing the value of the company as a stand-alone entity. Mr. Kingsley indicated that the Ryerson Tull's limited liquidity is hindering the Company's ability to make acquisitions in the market and attract institutional investors. By spinning off the division. Greenway believes the market will be - -------------------------------------------------------------------------------- Inland Steel Industries, Inc. May 8, 1997, 1997, Institutional Shareholder Peter Gleason, Senior Analyst Services/Phone: 301/718-2285 INSTITUTIONAL SHAREHOLDER SERVICES Page 9 - ------------------------------------------------------------------------------- able to fairly value both companies and that Ryerson Tull will have additional common stock to fund future acquisitions. Greenway refers to numerous companies including AT&T Corp., Pacific Telesis Group, and Sears, Roebuck & Co. that have had initial public offerings of less than 20 percent of one of their operating subsidiaries and later followed the offering with a spin-off of the remaining equity interest of the subsidiaries. The proponent argues that spin-offs allow management to focus attention on the respective businesses and allow investors and analysts to value the separate businesses more efficiently. Greenway believes that Inland should follow the lead of the companies that have had successful spin-offs by spinning off Ryerson Tull. ISS spoke with Inland representative Robert Darnell, CEO; Charles Salowitz, associate general counsel and secretary; and M. Robert Weidner III, general manager of communications and stakeholder relations. The three representatives indicated their understanding of Greenway's position, but also that management has evaluated numerous strategies for improving shareholder value at Inland over the past year. The company began a strategic reassessment of Inland more than a year ago and considers the reassessment an ongoing process. Mr. Darnell indicated that a significant portion of each board meeting is devoted to the company's strategic options and that the public offering of Ryerson Tull was the result of that strategic planning. Management maintains that the public offering achieved many of the same results as a spin-off, including independent access to capital markets, improved management focus on the individual business unit, and enhanced investor ability to evaluate Ryerson Tull. Management also indicated that it is not opposed to a spin-off, but believes that spinning off Ryerson Tull immediately would diminish the company's financial flexibility. Inland began a deleveraging strategy in late 1992 which reduced fixed obligations by retiring high-cost debt and eliminated certain restrictive debt provisions. Part of that strategy was the public offering of Ryerson Tull, the proceeds of which allowed the company to reduce long-term debt by more than $700 million and lowered interest costs by approximately $70 million annually. The recapitalization of the company and the public offering of Ryerson Tull was designed to allow management to maintain a significant economic interest in the subsidiary and to control the voting power. According to Mr. Darnell, that structure will qualify the company for tax consolidation, which will allow it to save significantly on its income taxes. Ryerson Tull's net income is credited against Inland's net operating loss carryforward and alternative minimum tax credit. Inland currently has more than $800 million in net operating loss carryforward and alternative minimum tax credits that would be foregone if Ryerson Tull was spun-off. The ownership structure maintained by Inland will also preserve the tax-free spin-off option for Ryerson Tull in the future.
- ---------------------------------------------------------------------------------------------- Inland Steel Industries, Inc. .May 6, 1997 /c/1997, Institutional Shareholder Services Peter Gleason, Senior Analyst Phone: 301/718-2255
INSTITUTIONAL SHAREHOLDER SERVICES Page 10 - ------------------------------------------------------------------------------- To counter those concerns, Greenway recently announced a proposal to management that it distribute Ryerson "letter stock" in a dividend to Inland shareholders, which would trade similar to the letter stock at USX Corp.'s Marathon Oil Group, Delphi Group, or U.S. Steel. Greenway maintains that the letter stock distribution could be an interim step to a full spin-off and would preserve the tax loss carryforward. It would also augment Ryerson Tull's financial strength by enhancing total shareholder value and providing greater flexibility. Greenway argues that the issuance of the letter stock will allow Ryerson Tull additional equity to become an active participant in the consolidations which will occur in the fragmented metals service center industry. Further, Greenway believes Ryerson Tull's proposed strategy of entering into strategic acquisitions will be hampered by its limited public float unless the company is either spun off or Inland distributes Ryerson letter stock. Greenway indicates that because its proposal is precatory in nature, supporting it would only send a message to management to consider a spin-off or the use of letter stock in a dividend. The idea is to send a message to management to take some action to enhance the value of Inland through the use of either of the two options Greenway has proposed. Management contends that the board continually addresses its strategic options and considered the effects of a spin-off as recently as January 1997 at the board's annual two-day strategy meeting. Mr. Darnell indicated that the board is focused on increasing shareholder value and that several of the company's directors are officers at companies that have carried out spin-offs, which allows them the insight to understand all of the implications. Right now, the board believes it is not clear that a spin-off would create significant shareholder value given the company's current tax savings and financial flexibility. Mr. Darnell stated that the board "has considered a spin, and will continue to consider a spin, but it is not in shareholders' best interests at this time." Management also believes that its strategic evaluation of the company will help it in assessing opportunities arising from any consolidation in the steel industry. While Greenway has proposed that management seek a merger partner, the company's recent disclosures that it was in discussions with U.S. Steel Group last year indicate that it is moving in that direction. Although the discussions were not successful, we believe management and the board are evaluating all of the company's options with regard to enhancing shareholder value. We also believe management has made significant strides in improving Inland's performance over the past two years. The recapitalization process has improved the company's balance sheet, and the capital investments made have strategically positioned the company to further improve performance in the future. Greenway's proposal to spin-off Ryerson Tull has its merits, and it is clear that management also believes Greenway's proposal has some strategic benefits. As with Greenway's spin-off proposals at other companies, the problem at Inland is timing. Given the fact that the board is constantly reviewing the company's
- ---------------------------------------------------------------------------------------------- Inland Steel Industries, Inc. . May 6, 1997 (C)1997, Institutional Shareholder Services Peter Gleason, Senior Analyst Phone: 301/718-2255
[LETTERHEAD OF INSTITUTIONAL SHAREHOLDER SERVICES] PAGE 11 - -------------------------------------------------------------------------------- strategic options, is open to taking action when appropriate, and has been strategically improving the operations of the company, we believe management is in a better position to determine the timing of its actions than is Greenway. Further, we believe management has already heard the message that Greenway is hoping shareholders will send them by supporting this proposal. We recommend a vote AGAINST Item 3. ------------------- Inland Steel Industries, Inc. 30 West Monroe Street Chicago, Illinois 60608 (312) 346-0300 Company Solicitor: Mackenzie Partners, Inc. (212) 929-5300 Shareholder Proposal Deadline: December 7, 1997 This proxy analysis has not been submitted to, or received approval from, the Securities and Exchange Commission. While ISS exercised due care in compiling this analysis, we make no warranty, express or implied, regarding the accuracy, completeness, or usefulness of this information and assume no liability with respect to the consequences of relying on this information for investment or other purposes. - -------------------------------------------------------------------------------- Inland Steel Industries, Inc. * May 6, 1997 (C)1997, Institutional Peter Gleason, Senior Analyst Services Phone: 301/718-2255 -----END PRIVACY-ENHANCED MESSAGE-----