SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
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[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
....................Universal Stainless & Alloy Products, Inc..................
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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[X] No fee required
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 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:
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4) Date Filed:
Universal Stainless & Alloy Products, Inc.
600 Mayer Street
Bridgeville, Pennsylvania 15017
April 1, 1997
You are cordially invited to attend the 1997 Annual Meeting of Stockholders of
Universal Stainless & Alloy Products, Inc., to be held at 10:00 a.m., local
time, on Wednesday, May 21, 1997, at the Southpointe Golf Club, Canonsburg,
Pennsylvania 15317. The attached Notice of Annual Meeting and Proxy Statement
describe the matters to be acted upon at the Meeting. I urge you to review them
YOUR VOTE IS IMPORTANT. Whether or not you personally plan to attend the
Meeting, please take a few moments now to sign, date and return your proxy in
the enclosed postage-paid envelope. Regardless of the number of shares you own,
your presence by proxy is important to establish a quorum, and your vote is
important for proper corporate governance.
Thank you for your interest in Universal Stainless & Alloy Products, Inc.
/s/ Clarence M. McAninch
Clarence M. McAninch
President and Chief Executive Officer
Universal Stainless & Alloy Products, Inc.
600 Mayer Street
Bridgeville, Pennsylvania 15017
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Universal Stainless & Alloy Products, Inc., a Delaware corporation
(the "Company"), will be held on Wednesday, May 21, 1997, at 10:00 a.m., local
time, at the Southpointe Golf Club, Canonsburg, Pennsylvania 15317, for the
1) To elect six persons to the Board of Directors to hold office until the
1998 Annual Meeting of Stockholders;
2) To ratify the appointment by the Board of Directors of the firm of Price
Waterhouse LLP as independent auditors for the year ending December 31,
3) To transact such other business as may properly come before the Annual
Meeting and any adjournment or adjournments thereof.
Stockholders entitled to notice of and to vote at the Annual Meeting shall be
determined as of the close of business on March 27, 1997, the record date fixed
by the Board of Directors for such purpose. A list of persons who were
stockholders as of that time and date will be available at the Annual Meeting
and, during the ten days prior to the Annual Meeting, at the Company's principal
office. Those persons may vote in person or by proxy.
A Proxy Statement and form of proxy are enclosed herewith. The Annual Report to
the stockholders of the Company for the year ended December 31, 1996, including
financial statements, is enclosed, but is not part of the proxy solicitation
materials. If you are unable to attend the Annual Meeting in person, you are
urged to sign, date and return the enclosed proxy promptly in the enclosed
addressed envelope that requires no postage if mailed within the United States.
If you attend the Annual Meeting in person, you may revoke your proxy and vote
By Order of the Board of Directors,
/s/ Paul A. McGrath
Paul A. McGrath
Director Employee Relations, General Counsel, and Secretary
April 1, 1997
You are cordially invited to attend the Annual Meeting. If you do not expect to
attend, please fill in, sign and return the enclosed form of proxy in the
enclosed prepaid envelope as promptly as possible.
April 1, 1997
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
600 MAYER STREET
BRIDGEVILLE, PENNSYLVANIA 15017
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 21, 1997
This Proxy Statement and the accompanying form of proxy are being furnished in
connection with the solicitation, by the Board of Directors of Universal
Stainless & Alloy Products, Inc., a Delaware corporation (the "Company"), of
proxies to be voted at the Annual Meeting of stockholders to be held at the
Southpointe Golf Club, Canonsburg, Pennsylvania 15317, on May 21, 1997, at 10
a.m., local time, and at any adjournment or adjournments thereof (the "Annual
Meeting"). The close of business on March 27, 1997, has been fixed as the record
date for the determination of stockholders entitled to receive notice of and to
vote at the Annual Meeting. At the close of business on March 27, 1997, the
Company had outstanding 6,283,734 shares of Common Stock, $.001 par value per
share (the "Common Stock"), the holders of which are entitled to one vote per
The cost of solicitation of proxies in the accompanying form will be borne by
the Company, including expenses incurred in connection with the preparation and
mailing of the Proxy Statement. The solicitation will be by mail and may also be
made personally and by telephone by Directors, officers and employees of the
Company, without any compensation, other than their regular compensation as
Directors, officers or employees. Arrangements will be made with brokerage
houses, banks and other custodians, nominees and fiduciaries for the forwarding
of solicitation material to the beneficial owners of the Common Stock, and the
Company will reimburse them for reasonable out-of-pocket expenses incurred by
them in connection therewith.
It is proposed that at the Annual Meeting: (1) six members of the Board of
Directors be elected for the ensuing year, and (2) the reappointment by the
Board of Directors of the independent accountants of the Company for the year
ending December 31, 1997, be ratified.
The Company is not aware at this time of any other business to be acted upon at
the Annual Meeting. However, if any other business properly comes before the
Annual Meeting, it is the intention of the persons named in the enclosed form of
proxy to vote on those matters with their best judgment.
Proxies are solicited by the Board of Directors of the Company to provide every
stockholder an opportunity to vote on all matters scheduled to come before the
Annual Meeting, whether or not the stockholder attends the Annual Meeting in
person. The execution of a proxy will not affect a stockholder's right to attend
the Annual Meeting and vote in person. A stockholder who executes a proxy may
revoke it at any time before it is exercised by giving written notice to the
Secretary, by appearing at the Annual Meeting and so stating, or by submitting
another duly executed proxy bearing a later date. No appraisal rights exist for
any action proposed to be taken at the Annual Meeting.
The holders of a majority of the outstanding shares of Common Stock must be
present in person or by proxy at the Annual Meeting to constitute a quorum for
the purpose of transacting business at the Annual Meeting. The affirmative vote
of a plurality of the shares of Common Stock represented in person or by proxy
at the Annual Meeting is required for the election of Directors. All shares of
Common Stock represented by valid proxies received pursuant to this solicitation
and not revoked will be voted in accordance with the choices specified. If no
specification is made, signed proxies will be voted "FOR" the
election of the Director nominees listed below and approval of the other
proposal set forth in the Notice of Annual Meeting of the Stockholders of the
Since the proxy confers discretionary authority to vote upon other matters that
properly may come before the Annual Meeting, shares of Common Stock represented
by signed proxies returned to the Company will be voted in accordance with the
judgment of the person or person voting the proxies on any other matters that
properly may be brought before the Annual Meeting. If a stockholder wishes to
give a proxy to someone other than those designated on the proxy card, he or she
may do so by crossing out the names of the designated proxies and by then
inserting the name of other persons. The signed proxy card should be presented
at the Annual Meeting by the person(s) representing the stockholder.
Abstentions are counted in tabulations of the votes cast by stockholders on each
proposal (other than with regard to the election of Directors) and will have the
effect of a negative vote. Brokers who hold shares in street name for customers
have the authority to vote only on certain routine matters in the absence of
instruction from the beneficial owners. A broker non-vote occurs when the broker
does not have the authority to vote on a particular proposal. Under applicable
Delaware law, broker non-votes will not be counted for purposes of determining
whether any proposal (other than with regard to the election of Directors) has
With regard to the election of Directors, votes may be cast in favor or
withheld; votes that are withheld and broker non-votes will be excluded entirely
from the vote and will have no effect.
The date of this Proxy Statement is April 1, 1997, the approximate date on which
the Proxy Statement and form of proxy were first sent or given to the
A copy of the Company's Annual Report is being provided to each stockholder of
the Company along with this Proxy Statement. Additional copies of the Annual
Report or the Company's Annual Report on Form 10-K for the year ended December
31, 1996 may be obtained without charge by writing to Universal Stainless &
Alloy Products, Inc., 600 Mayer Street, Bridgeville, Pennsylvania 15017,
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of seven Directors, the
current term of each of whom will expire at the conclusion of the Annual
Meeting. The number of Directors that will serve on the Company's Board of
Directors will be reduced to six after the Annual Meeting.
Each nominee for Director, named below, has consented to being named as a
nominee and has agreed to serve as a Director if elected. If elected, each
Director will serve for a term of one year or until the next Annual Stockholders
Meeting. However, if any of the nominees are not available for election at the
time of the Annual Meeting, discretionary authority will be exercised to vote
for a substitute or substitutes, unless the Board of Directors chooses to reduce
the number of Directors. Management is not aware of any circumstances that would
render any nominee for Director named herein unavailable.
Other than Mr. Bowman, each nominee for Director who is currently serving on the
Company's Board of Directors was elected to his or her present term of office at
the 1996 Annual Meeting. Mr. Bowman was elected by the unanimous consent of the
members of the Board of Directors to fill the vacancy created by the increase in
the size of the Board of Directors in October 1996. Mr. DeCola has determined
not to stand for reelection as a member of the Board of Directors. Ms. Gadiesh,
who has served as a member of the Board of Directors since October 1994, has
decided not to stand for reelection because her international duties as Chairman
of the Board of Bain & Company demand all of her time and attention. Mr. Dunn,
who has not previously been a member of the Board of Directors is recommended
for election by the current Board members. The names and biographical summaries
of the persons who have been nominated to stand for election at the 1997 Annual
Meeting of stockholders appear below.
The Board of Directors recommends that you vote FOR the election of
Messrs. Bowman; Dunn; Keane; McAninch; Toledano; and Wise.
The following information with respect to each nominee and executive officer of
the Company has been furnished to the Company by such nominee or executive
officer. The ages of the nominees and executive officers are as of March 31,
Clarence M. McAninch, 61, has been President and Chief Executive Officer and a
Director of the Company since July 1994. From 1986 to 1990, Mr. McAninch served
as Executive Vice President of Reese Steel & Metal Supply Company. From 1990 to
1992, Mr. McAninch served as Vice President, Sales, of Cyclops Steel
Manufacturing. Mr. McAninch served as Vice President, Sales and Marketing, of
the Stainless and Alloy Products Division of Armco Inc. from 1992 to 1994.
Bradford C. Bowman, 48, has been Chief Operating Officer and a Director of the
Company since October 1996. Mr. Bowman served as President and Chief Executive
Officer of Sydney Steels from April 1995 to October 1996 and as an independent
consultant from September 1994 to April 1995. Prior to September 1994, Mr.
Bowman served in various management positions at Slater Steels, including
Executive Vice President and Chief Operating Officer.
Douglas M. Dunn, 54, has been Dean of the Graduate School of Industrial
Administration, Carnegie Mellon University, since July 1996. Prior to July 1996
Mr. Dunn was employed by AT&T for 26 years, most recently serving as Vice
President of Visual Communications and Multimedia Strategy. Mr. Dunn holds a
Ph.D. in Business Statistics from the University of Michigan and an MBA and BA
from the Georgia Institute of Technology. Mr. Dunn is a Board member of Fisk
University, the Greater Pittsburgh Chamber of Commerce, and the Boy Scouts of
America. He has also served as Board Chairman of Success by Six in Atlanta and
served on the Governor of Georgia's Commission of Effectiveness and Economy, and
served as Board Member of the Newark, NJ, Museum and the American Statistical
George F. Keane, 67, has been a Director of the Company since October 1994. Mr.
Keane has been Chairman of the Board of Trigen Energy Corporation, a public
company listed on the New York Stock Exchange ("Trigen"), since July 1996. Mr.
Keane was the founding Chief Executive Officer of the Common Fund and served in
that capacity from 1971 until 1993. Mr. Keane has been the President of
Endowment Advisers, Inc., since 1988. From 1993 to 1996, Mr. Keane served as
President Emeritus and Senior Investment Advisor of both the Common Fund and
Endowment Advisers, Inc. Mr. Keane currently serves on several other boards,
including as a director and Chairman of the Board of Trigen; Director, Global
Pharmaceutical Corporation, a publicly held pharmaceutical corporation ("Global
Pharmaceutical"); Director, United Water Works; Director, Bramwell Funds, Inc.,
since August 1994 and Trustee of Nicholas-Applegate Investment Trust since
Udi Toledano, 46, has been a Director of the Company since July 1994. Mr.
Toledano has been the President of Andromeda Enterprises, Inc., a private
investment company, since December 1993. Prior to that, he was the President of
CR Capital Inc., a private investment company, for more than five years. He has
been an advisor to public and private corporations, including manufacturers,
retailers and restaurants, none of which competes with the Company. Since April
1995, Mr. Toledano has served as a Director of Global Pharmaceutical. Mr.
Toledano also currently serves as Chairman of the Board of Directors of Alyn
Corporation, and advanced material supply producer, and HumaScan, Inc., a
medical device company, each of which is a public company listed on NASDAQ. Mr.
Toledano also served as the President of Pudgie's Chicken, Inc., a national fast
food chain. Pudgie's Chicken, Inc. filed a voluntary petition under Chapter 11
of the U. S. Bankruptcy Code in September of 1996.
D. Leonard Wise, 62, has been a Director of the Company since October 1994. Mr.
Wise served as the President and Chief Executive Officer of Carolina Steel
Corporation from October 1994 to March 1997. From 1988 to 1991, he served as a
Director, and from 1990 to 1991, as the Vice Chairman and subsequently as the
Chairman and CEO of a corporation now known as WHX Corp., a company listed on
the New York Stock Exchange. Mr. Wise has also served as the President and a
Director of Slater Industries, Inc., an international specialty steel and metals
producing company, listed on the Toronto Stock Exchange from 1986 to 1990.
Paul A. McGrath, 45, has been General Counsel and Director of Employee Relations
since January 1995 and was appointed Corporate Secretary in May 1996. Mr.
McGrath was employed by Westinghouse Electric Corporation for approximately 24
years in various management positions. Mr. McGrath is a member of the Bar in
Pennsylvania and Connecticut. Mr. McGrath is not a Director of the Company and
is not a nominee for election to the Company's Board of Directors at the Annual
Richard M. Ubinger, 37, has been Chief Financial Officer and Principal
Accounting Officer of the Company since August 1994, and was appointed Assistant
Secretary in November 1995 and Treasurer in May 1996. From 1981 to 1994, Mr.
Ubinger was employed by Price Waterhouse LLP in its audit department, and he
served in the capacity of Senior Manager for Price Waterhouse LLP from 1990 to
1994. Mr. Ubinger is a Certified Public Accountant. Mr. Ubinger is not a
Director of the Company and is not a nominee for election to the Company's Board
of Directors at the Annual Meeting.
Unless individual stockholders specify otherwise, each returned Proxy
will be voted "FOR" the election to the Board of Directors of the
Company of each of the six nominees named above.
The Board of Directors
The Board of Directors of the Company held five (5) meetings during the 1996
fiscal year. During the 1996 fiscal year, Ms. Gadiesh missed 75% of the meetings
of the Board of Directors. During the 1996 fiscal year, there were no meetings
of any of the Committees of the Board of Directors, except as noted below.
Committees of the Board of Directors
The standing Committees of the Board of Directors are the Audit Committee and
Compensation Committee. There is no standing nominating committee for Directors.
The Executive Committee was dissolved in 1996.
The Audit Committee currently consists of Mr. Keane as Chairman, and Messrs.
Toledano and Wise. The Audit Committee reviews, with the Company's independent
accountants, the scope and timing of their audit services and any other services
they are asked to perform, the independent accountants' report on the Company's
financial statements following completion of their audit, and the Company's
policies and procedures with respect to internal accounting and financial
controls. In addition, the Audit Committee makes annual recommendations to the
Board of Directors for the appointment of independent accountants for the
ensuing year. The Audit Committee held five meetings during the 1996 fiscal
The Compensation Committee currently consists of Mr. Toledano as Chairman, and
Messrs. Keane, McAninch and Wise. The Compensation Committee reviews and
recommends to the Board of Directors the compensation and benefits of all
officers of the Company, reviews general policy matters relating to compensation
and benefits of employees of the Company, and, along with the Board of
Directors, administers the Company's 1994 Stock Incentive Plan (the "1994
Plan"). The Compensation Committee held one meeting during the 1996 fiscal year.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Messrs. Toledano, Keane,
McAninch and Wise. Mr. McAninch is the President and Chief Executive Officer of
Members of the Board of Directors of the Company who are employed by the Company
presently receive no remuneration for acting as Directors. The Company
compensates its non-employee Directors at the rate of $10,000 per year, plus
$1,000 for each meeting of the Board of Directors attended. In addition, the
Company reimburses Directors for reasonable out-of-pocket expenses incurred by
them in connection with their attendance at Board of Directors and committee
meetings. All of
the Company's non-employee Directors, with the exception of Mr. Toledano, waived
their Directors' fees until the 1997 Annual Meeting of the Board of Directors.
Certain members of the Board of Directors of the Company are also eligible for
the grant of options under the 1994 Plan. During 1996, the Board of Directors
amended the 1994 Plan to reduce the number of shares underlying the options
granted annually to Directors who are not employees of the Company and do not
own in excess of 5% of outstanding Common Stock ("Eligible Directors").
Beginning with the 1997 Annual Meeting, Eligible Directors will be granted an
option to purchase 20,000 shares of Common Stock (rather than 30,000 shares of
Common Stock, to which Eligible Directors were entitled prior to the reduction)
on the first business day following each annual meeting of stockholders of the
Company. The per share exercise price will be equal to the fair market value of
a share of Common Stock on the date the option is granted. Options granted to
Eligible Directors will vest in three annual installments of 33%, 66% and 100%,
respectively, beginning on the grant date and on the two successive
anniversaries thereof. Options granted to Eligible Directors will expire 10
years from the option grant date. Currently, all the Directors who are not
employees of the Company are Eligible Directors.
If a non-employee Director ceases to serve as a Director of the Company, the
options that have been previously granted to that Director and that are vested
as of the date of such cessation may be exercised by the Director after the date
that Director ceases to be a Director of the Company. If a non-employee Director
dies while a Director of the Company, the options that have been previously
granted to that Director and that are vested as of the date of his or her death
may be exercised by the administrator of the Director's estate, or by the person
to whom those options are transferred by will or the laws of descent and
distribution. In no event, however, may any option be exercised after the
expiration date of such option. Messrs. Keane and Wise and Ms. Gadiesh have each
received grants of options to purchase 60,000 shares of Common Stock of the
Company since December 1994. 33,334 options which were granted to Ms. Gadiesh
have not vested and will therefore be forfeited at the time she is no longer a
Director of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of shares of Common Stock of the Company, as of March 15, 1997, by (i)
each stockholder known to the Company to be the beneficial owner of more than 5%
of the outstanding shares of Common Stock, (ii) each Director and officer of the
Company, and (iii) all Directors and officers as a group. Except as otherwise
indicated, the Company has been advised that each of the beneficial owners of
Common Stock listed below, based on information furnished by such owners, has
sole investment and voting power with respect to the shares of Common Stock
attributed to such owner below, subject to community property laws where
applicable. As of March 15, 1997, the Company had 6,283,734 shares of Common
Name Number of Shares Percent of Total
Bradford C. Bowman (2)(3) 0 *
Daniel J. DeCola, Sr. (2) 254,526 4.05%
Douglas M. Dunn (2)(3) 0 *
Futurtec, L.P. (4)(5) 330,430 5.26%
Orit Gadiesh (2)(6) 26,666 *
George F. Keane (2)(6)(7) 42,116 *
Clarence M. McAninch (2) 254,426 4.05%
Udi Toledano (2)(8) 274,728 4.37%
Richard M. Ubinger (2)(9) 6,350 *
Wellington Management Co., LLP (10)(11) 620,000 9.87%
D. Leonard Wise (2)(6) 27,666 *
All Officers and Directors as a Group 881,028 13.83%
* Less than 1%.
(1) For purposes of this table, a person or group of persons will be deemed
to be the "beneficial owner" of shares of Common Stock if that person or
group of persons has the right to acquire shares of Common Stock within
60 days after the date hereof. For purposes of calculating the
percentage of Common Stock held by each person named above, any shares
of Common Stock that such person has the right to acquire within 60 days
after the date hereof are deemed to be outstanding, but not for the
purposes of calculating the percentage of any other person.
(2) Address at c/o Universal Stainless & Alloy Products, Inc., 600 Mayer
Street, Bridgeville, Pennsylvania 15017. See "Certain Transactions".
(3) Neither directly nor indirectly beneficially owns any shares of Common
Stock of the Company.
(4) Address at c/o Futurtec Capital Corp., 111 Great Neck Road, Suite 301,
Great Neck, New York 11021.
(5) Futurtec Capital Corp., the general partner of Futurtec, L.P., exercises
sole voting and investment power over the shares of Common Stock of the
Company held by Futurtec, L.P.
(6) Includes 26,666 shares of Common Stock that have vested under options
granted pursuant to the Company's policy described under the caption,
"Management--Stock Incentive Plan".
(7) Includes 15,000 shares of Common Stock are owned by the Keane Family
Trust, a living trust, of which Mr. Keane and his wife are sole
trustees, and the survivor of them is the beneficiary. Also includes 450
shares of Common Stock owned by Mr. Keane's wife and held through a
Keogh plan, with respect to which shares Mr. Keane disclaims beneficial
(8) Includes shares of Common Stock of the Company owned by Mr. Toledano's
wife and a certain trust for the benefit of their minor children.
Excludes an aggregate of 30,702 shares of Common Stock owned by certain
other members of Mr. Toledano's family, with respect to which shares Mr.
Toledano disclaims beneficial ownership. See "Certain Transactions".
(9) Includes 2,500 shares of Common Stock that have vested as of January 10,
1997, under options granted pursuant to the Company's policy described
under the caption, "Management--Stock Incentive Plan".
(10) Beneficial ownership information is based on the Schedule 13G filed by
Wellington Management Co., LLP, dated February 14, 1997.
(11) Address at 75 State Street, Boston, Massachusetts 02109.
Battle Fowler LLP. Gerald A. Eppner, Esq., a partner in Battle Fowler LLP, legal
counsel to the Company, may be deemed to have an indirect beneficial interest in
the shares of Common Stock of the Company owned by Rajah Corp., which as of
December 31, 1996 owned greater than 5% of the outstanding shares of Common
Stock and was therefore a principal stockholder of the Company. During 1996, the
Company paid legal fees and disbursements amounting to approximately $148,747 to
Battle Fowler LLP for legal services rendered to the Company.
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning compensation
paid or accrued by the Company and its subsidiaries, to or on behalf of the
Company's Chief Executive Officer and each of the four most highly compensated
executive officers of the Company (hereinafter referred to as the named
executive officers) for the fiscal year ended December 31, 1996:
SUMMARY COMPENSATION TABLE (1)
Other Annual Awards All Other
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#) Compensation
- -------------------------------------- ---------- ------------- ------------- ----------------------------------------------------
(1) As to the columns omitted, the answer is none.
(2) The amounts represent reimbursement for the payment of taxes Messrs.
McAninch and DeCola related to life insurance policies in the amount of
$2.0 million in which the beneficiaries are their respective spouses.
The dollar value of perquisites paid to each of the named executive
officers does not exceed the lesser of $50,000 or 10% of the total of
annual salary and bonus reported for the named executive officer.
(3) For 1996 and 1995, represents (i) contributions to the Company's 401(k)
retirement plan of $960 for Messrs. McAninch, DeCola and Ubinger,
respectively; (ii) value of life insurance premiums paid by the Company
for term life insurance of $14,255 for Mr. McAninch and $3,555 for Mr.
DeCola. For 1994, represents the value of life insurance premiums paid
by the Company for term life insurance of $16,210 for Mr. McAninch and
$4,690 for Mr. DeCola.
(4) Mr. Bowman joined the Company as Chief Operating Officer on October 15,
1996 at an annual salary of $175,000.
(5) Mr. Ubinger's annual compensation in 1994 was less than $100,000 and has
The following table contains information concerning the grant of stock options
for the fiscal year ended December 31, 1996 to the named executive officers:
Clarence M. McAninch 1996 184,517 50,000 7,110 15,215
President and CEO 1995 168,080 18,000 4,761 15,215
1994 58,154 5,414 16,210
Bradford C. Bowman 1996 (4) 29,364 10,000 40,000
Chief Operating Officer 1995
Daniel J. DeCola, Sr. 1996 134,001 1,773 4,515
Vice President, Operations 1995 128,153 13,400 1,187 4,515
1994 46,385 1,566 4,690
Richard M. Ubinger 1996 87,402 35,000
Chief Financial Officer, 1995 81,058 26,000 20,000 960
Principal Accounting Officer, 1994 (5)
Assistant Secretary, and
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants % of Total
to Employees in Exercise or
Options Fiscal Year (2) Base Price Grant Date
Name Granted (1) Per Share (3) Expiration Date Present Value (4)
- --------------------------------------------------- ------------------ --------------- ------------------ -------------------
(1) Options granted under the 1994 Plan during fiscal 1996. Options are
granted at fair market value at date of grant exercisable in a series of
three (3) equal and successive annual installments over the optionee's
period of service with
the Company, measured from the grant date, with The first installment
exercisable one year from the grant date. Each option has a maximum term
of 10 years, subject to earlier termination in the event of the
optionee's termination of employment with the Company.
(2) A total of 40,000 options were granted to employees, including executive
officers, for the fiscal year ended December 31, 1996.
(3) The exercise price may be paid in cash, in shares of Common Stock valued
at fair market value on the exercise date or in a combination of cash
and stock. The Compensation Committee (the "Committee") may permit
payment of all or part of applicable withholding taxes due upon exercise
of the option by withholding of shares, valued at the fair market value
of the Company's Common Stock on the date of exercise, otherwise
issuable upon exercise of the option. The Committee may also grant
options in exchange for the cancellation of options previously granted
and the purchase price of shares subject to such new options, which will
be as determined by the Committee, and may be lower than the exercise
price of the canceled options.
(4) Represents grant date valuation computed under the Black-Scholes option
pricing model adapted for use in valuing stock options. The actual
value, if any, that may be realized will depend on the excess of the
stock price over the exercise price on the date the option is exercised,
so there can be no assurance that the value realized will be at or near
the value estimated by the Black-Scholes model. Grant date values were
determined based in part on the following assumptions: risk-free rate of
return of 6%, no dividend yield, time of exercise of 5 years, and
annualized volatility of 60% (based on historical stock prices since
December 14, 1994, the date of the Company's initial public offering.)
Bradford C. Bowman 40,000 100% $ 8.25 10/15/06 $ 188,387
Fiscal Year End Option Values1
Number of Securities Underlying Value of Unexercised In-the-Money Options
Unexercised Options at December 31, 1996 at December 31, 19962
Name Exercisable/Unexercisable Exercisable/Unexercisable
1. No options were exercised in 1996.
2. Represents (i) the number of shares of Common Stock underlying options
(including options the exercise price of which was more than the market
value of the underlying securities) multiplied by (ii) the market price at
December 31, 1996 of $8.75 minus the exercise price.
In 1994, each of Clarence M. McAninch and Daniel J. DeCola, Sr., entered into a
four-year employment agreement with the Company for the position of President
and Chief Executive Officer, in the case of Mr. McAninch, and Vice President,
Operations, in the case of Mr. DeCola. Mr. McAninch's and Mr. DeCola's
employment agreements provide for a base annual salary of $180,000 and $134,000,
respectively, which may be increased annually at the discretion of the Board of
Directors, as well as a customary benefits package. At the Company's option, the
term of each of Messrs. McAninch's and DeCola's employment agreement may be
extended for one additional year. Each of the employment agreements provides
that the Company cannot terminate the employment of Messrs. McAninch and DeCola,
respectively, without cause prior to August 15, 1997. In the event the Company
were to terminate the respective employment agreements without cause prior to
August 15, 1997, Messrs. McAninch and DeCola would be entitled to bring an
arbitration proceeding against the Company for damages, and if either were
terminated without cause after that date, Messrs. McAninch and DeCola,
respectively, would be entitled to receive his base salary for the remainder of
the term of his employment agreement. Each of the employment agreements of
Messrs. McAninch and DeCola prohibits either employee from (i) competing with
the Company for one year following his termination of employment with the
Company and (ii) disclosing confidential information or trade secrets in any
unauthorized manner. The Company has purchased key man life insurance policies,
of which the Company is the sole beneficiary, on the lives of each of Messrs.
McAninch and DeCola, providing $2.0 million in coverage, respectively.
On October 15, 1996, Bradford C. Bowman accepted employment with the Company for
the position of Chief Operating Officer. Mr. Bowman's employment contract
provides for an annual base salary of $175,000, the grant of 40,000 stock
options at the time of employment, 20,000 stock options on the first anniversary
date of his employment contract, a customary benefits package and a relocation
allowance. Mr. Bowman was granted a life insurance policy in an amount equal to
his annual base salary. In addition, Mr. Bowman may be entitled to an annual
bonus determinable at the discretion of the Compensation Committee. In the event
the Company were to terminate Mr. Bowman's employment without cause prior to
October 15, 1997, Mr. Bowman would be entitled to one year salary plus any
unpaid bonus earned up to the time of termination plus standard medical benefits
for one year.
Stock Disposition Agreements
On July 28, 1994, the Company entered into individual Management Stock
Disposition Agreements (collectively referred to as "MSDA") with both Clarence
M. McAninch, President and Chief Executive Officer of the Company, and Daniel J.
DeCola, Sr., Vice President, Operations of the Company (the "Managers"), all in
connection with the merger of a predecessor company into the Company. The MSDAs
grant to the Company the option to purchase certain shares of Common Stock owned
by the Managers upon cessation of employment of either or both of Messrs.
McAninch or DeCola. The MSDAs provide, among other things, that upon the
termination of employment prior to July 1997 of either Messrs. McAninch or
DeCola, the Company has the right to purchase from the Manager whose employment
is so terminated up to 60% of the shares of Common Stock held by that person if
his employment is terminated during the first year of the respective agreement,
40% during the second year of the respective agreement, and 20% during the third
year of the respective agreement, in each case at the original purchase price of
$.007 per share paid by that person. As of December 31, 1996, the maximum number
of shares of Common Stock subject to repurchase under the MSDA was 122,400
shares of Common Stock for each of Messrs. McAninch and DeCola in the aggregate.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed of Messrs. Toledano (Chairman), Keane, McAninch, and Wise, all of which
are Directors of the Company. The Committee is responsible for the establishment
and oversight of the Company's executive compensation programs. The following
report of the Committee discusses generally the Company's executive compensation
objectives and policies and their relationship to the Company's performance in
Executive Compensation Philosophy and Objectives
The Company's executive compensation programs are designed to attract, retain
and motivate highly effective executives and to reward sustained corporate and
individual performance with an appropriate base annual salary and incentive
compensation. The Company seeks to increase management ownership of the Company
and to link executive compensation with stockholder value, achievement of
business objectives and corporate profitability. Each year, the Committee
conducts a review of the Company's executive compensation programs for
appropriateness and competitiveness.
The Company's compensation philosophy is to compensate its executive officers at
market-competitive levels for achieving planned performance. Market comparisons
include general industry norms, metals companies, and a select group of
capital-intensive companies that are approximately the same size as the Company.
More emphasis is placed on general industry than the steel industry norms. The
comparative market group is a representative sample of organizations used in the
performance graph below, but is not identical due to limitations on available
Compensation Program Components
Consistent with the Company's executive compensation objectives, the Company's
compensation for its senior management, including Clarence M. McAninch, the
Company's Chief Executive Officer, consists of three components: an annual base
salary, annual incentive awards and long-term incentive awards. During the year
ended December 31, 1996, and currently, the Company's compensation of its senior
executives consisted of cash bonuses, tied to executive performance, position
level and/or continuing employment, and ownership of the Company's Common Stock.
The Company encourages stock ownership to create in management a true ownership
point of view and further to align executive and stockholder interests.
Executive officers have received, or are currently eligible to receive, stock
option awards based on their individual performances.
Annual Base Salary. Base salaries for executive officers are determined with
reference to a salary range for each position. Salary ranges are determined by
evaluating a particular employee's position and comparing it with what are
believed to be representative prevailing norms for similar positions in
similarly sized companies. Within this salary range, an executive's initial
salary level is determined largely through Committee judgment, based on the
experience of its members. Salaries are set at a level to attract, retain and
motivate superior executives. The Committee determines annual salary adjustments
based on the Company's performance, the individual executive's contribution to
that performance, prevailing industry norms and the Committee members' knowledge
and experience. Other than Messrs. McAninch, Bowman, Ubinger and DeCola, no
officer or employee of the Company is receiving, or is entitled to receive,
annual base compensation in excess of $100,000.
Annual Incentive Awards. The executive officers are eligible to receive an
annual bonus that is intended to provide additional compensation for significant
and outstanding achievement during the past year. Messrs. McAninch, Bowman, and
DeCola may be eligible for a performance-based annual bonus, in each case up to
a maximum amount that equals the executive's base annual salary.
Long-term Incentive Awards. Long-term incentive compensation is provided by the
grant of options to purchase shares of Common Stock of the Company under the
1994 Plan. In considering the awards, the Committee takes into account such
factors as prevailing norms for the ratio of options outstanding to total shares
outstanding, the effect on maximizing long-term stockholder value, and vesting
and expiration dates of each executive's outstanding options
Section 162(m) of the Internal Revenue Code of 1986, as amended ("the Code")
limits the annual deduction that a publicly-held corporation may take for
certain types of compensation paid or accrued with respect to certain executives
to $1 million per year per executive, for taxable years beginning after December
31, 1993. The Compensation Committee has determined that it is unlikely that the
Compensation Committee would require the Company to pay any amounts in 1997 that
would result in the loss of a federal income tax deduction under Section 162(m)
of the Code, and accordingly, has not recommended that any special actions be
taken or plans or programs be revised at this time in light of such tax law
The Compensation Committee
Udi Toledano (Chairman)
George F. Keane
Clarence M. McAninch
D. Leonard Wise
Performance Measurement Comparison*
Because the Common Stock is registered under Section 12 of the Exchange Act, the
rules and regulations of the Securities and Exchange Commission (the "SEC")
require the presentation of a line graph comparing the yearly percentage change
in the Company's cumulative stockholder return to (i) the cumulative total
return of a broad market equity index and (ii) the cumulative return of either a
published industry index or a self-constructed group of peer issuers that the
Company believes is relevant to a comparative understanding of its performance.
The peer group selected by the Company includes the following companies:
Allegheny Teledyne Inc. (the successor by merger to Allegheny Ludlum Corp.),
Carpenter Technology Corp., J&L Specialty Steel, Inc., Republic Engineered
Steels, Inc., Armco Inc., and The Timken Company (collectively, the "Peer
* The material in this report is not "solicitation material," is not deemed
filed with the SEC, and is not incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended (the "Securities Act"), or
the Exchange Act of 1934, as amended (the "Exchange Act"), whether made before
or after the date hereof and irrespective of any general incorporation language
in any filing.
The Peer Group consists of a number of publicly-traded companies that have some
similarity to the Company. In particular, the Peer Group companies are all
involved in the distribution and/or manufacture of specialty metal products in
the United States, and each Peer Group company has a division or unit that
competes with the Company. The operating results of members of the Peer Group
are generally readily available to the public.
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
Performance graph (the "Graph"), compares five (5) year
cumulative total returns among the Company, the Peer group index
("Peer") and the NASDAQ index ("NASDAQ"). The Graph assumes $100
invested on December 14, 1994 with dividends reinvested. 1994:
the Company 109.09; Peer 105.94; NASDAQ 100.09. 1995: the Company
128.79; Peer 115.29; NASDAQ 129.83. 1996: the Company 106.06;
Peer 105.21; NASDAQ 161.33.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has selected
Price Waterhouse LLP as the Company's independent accountants for the year
ending December 31, 1997, and has directed that the selection of the independent
accountants be submitted for ratification by the stockholders at the Annual
Price Waterhouse LLP has served as the Company's independent accountants since
July 1994. No consultations on accounting or reporting matters were made with
Price Waterhouse LLP prior to their engagement, nor was Price Waterhouse LLP
retained subject to their opinion on any accounting or reporting matter.
Stockholder ratification of the selection of Price Waterhouse LLP as the
Company's independent accountants is not required by the Company's By-laws or
otherwise. However, the Board of Directors is submitting the selection of Price
Waterhouse LLP to the stockholders for ratification as a matter of what it
considers to be good corporate practice. If the stockholders fail
to ratify the selection, the Board of Directors will consider whether or not to
retain that firm. Even if the selection is ratified, the Board of Directors, in
its discretion, may direct the appointment of a different independent accounting
firm at any time during the year if the Board of Directors determines that such
a change would be in the best interests of the Company and its stockholders.
Representatives of Price Waterhouse LLP are expected to be present at the Annual
Meeting to respond to stockholder questions and will have an opportunity to
address the meeting if they so desire.
The Board of Directors recommends that stockholders vote FOR the approval of
Price Waterhouse LLP as independent accountants of the Company.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires certain officers of the Company and
its Directors, and persons who beneficially own more than 10% of any registered
class of the Company's equity securities, to file reports of ownership in such
securities and changes in ownership with the SEC, the NASDAQ Stock Market, and
Based solely upon the Company's review of the reports and representations
provided to it by persons required to file reports under Section 16(a), the
Company believes that during 1996, all of the Section 16(a) filing requirements
applicable to the Company's reporting officers, Directors and greater than 10%
beneficial owners were properly and timely satisfied except that Mr. Ubinger
inadvertently reported one transaction late.
The eligibility of stockholders to submit proposals, the proper subjects of
stockholder proposals and the form of stockholder proposals are regulated by
Rule 14a-8 under Section 14 of the Exchange Act. In accordance with the
regulations issued by the SEC, stockholder proposals intended for presentation
at the 1998 Annual Meeting of stockholders must be received by the Company at
600 Mayer Street, Bridgeville, Pennsylvania 15017, no later than December 15,
1997, if such proposals are to be considered for inclusion in the Company's
proxy statement and form of proxy relating to the 1998 Annual Meeting of
stockholders. Each proposal submitted should include the full and correct name
and address of the stockholder(s) making the proposal, the number of shares
beneficially owned and the date of their acquisition. If beneficial ownership is
claimed, proof thereof should also be submitted with the proposal. The
stockholder or his or her representative must appear in person at the Annual
Meeting and must present the proposal, unless he or she can show good reason for
not doing so.
The Board of Directors and management know of no matters to be presented at the
Annual Meeting other than those set forth in this Proxy Statement. However, if
any other business is properly brought before the meeting or any adjournment
thereof, the proxy holders will vote in regard thereto in accordance with their
best judgment, insofar as such proxies are not limited to the contrary.
By Order of the Board of Directors,
/s/ Paul A. McGrath
Paul A. McGrath
Director Employee Relations, General Counsel and Secretary
April 1, 1997
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON MAY 21, 1997
The undersigned hereby appoints Clarence M. McAninch and Bradford C.
Bowman, and each of them, with full power of substitution, proxies to vote all
shares of common stock, $.001 par value, of Universal Stainless & Alloy
Products, Inc., a Delaware corporation (the "Company"), for which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Southpointe Golf Club, Canonsburg, Pennsylvania 15317,
on May 21, 1997, at 10:00 a.m., local time, and at any and all adjournments or
(Continued and to be signed on reverse side.)
- ---------- Please mark your
X votes as in this
- ---------- example
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS VOTES
"FOR" EACH OF THE FOLLOWING:
FOR WITHHELD Nominees: Bradford C. Bowman
1. Election of Directors. / / / / Douglas M. Dunn
George F. Keane
Clarence M. McAninch
D. Leonard Wise
For, except vote withheld for the following nominee(s):
2. Approval of Price Waterhouse L.L.P. as Independent Auditors.
FOR AGAINST ABSTAIN
/ / / / / /
3. OTHER MATTERS: / / / / / /
Discretionary authority is hereby granted with respect to such other
matters as may properly come before the meeting or any adjournment or
The shares represented by this Proxy will be voted in the manner directed and,
if no instructions to the contrary are indicated, will be voted FOR the election
of the named nominees and approval of the proposals set forth in the Notice of
the Annual Meeting of Stockholders.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished herewith.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE. YOU MAY REVOKE THIS PROXY AT ANY TIME BY FORWARDING TO THE COMPANY A
SUBSEQUENTLY DATED PROXY RECEIVED BY THE COMPANY PRIOR TO THE TAKING OF A VOTE
ON THE MATTERS HEREIN.
SIGNATURE (title, if any) DATE , 1997
SIGNATURE (if held jointly) DATE , 1997
Note: Please print and sign your name exactly as it appears hereon. When
signing as attorney, agent, executor, administrator, trustee, guardian
or corporate officer, please give full title as such. Each joint owner
should sign the Proxy. If a corporation, please sign as full corporate
name by president or authorized officer. If a partnership, please sign
in partnership name by authorized person.
Clarence M. McAninch 0/0 $ 0/0
Bradford C. Bowman 0/40,000 $ 0/20,000.00
Daniel J. DeCola, Sr. 0/0 $ 0/0
Richard M. Ubinger 6,250/13,750 $ 0/0