SEC Filings

DEF 14A
RELIANCE STEEL & ALUMINUM CO filed this Form DEF 14A on 04/18/2000
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CASH SALARIES AND INCENTIVE COMPENSATION PROGRAMS
 
     To meet the above objectives, the program has both cash and equity elements
which consist of base salary, an annual cash (and stock) incentive bonus and
stock options. In determining executive compensation, the Compensation and Stock
Option Committee evaluates both the total compensation package and its
individual elements. As part of its review, the Committee considers compensation
data publicly available with respect to the Company's key competitors. When
competitive data is used, the Committee gives primary consideration to the
companies in its peer group.
 
     Generally, the base compensation is set in the mid to high-range for
comparable companies, and the cash and stock incentive bonus is used to
compensate employees for their performance. It is expected that total
compensation will vary annually based on Company and individual performance and
individual contributions to the Company and its performance. The Compensation
and Stock Option Committee and the management of the Company believe that
compensation should be based both on short-term and long-term measurements and
be directly tied to Company performance. The Compensation and Stock Option
Committee applied the same standards to Mr. Hannah as Chief Executive Officer of
the Company as to other officers.
 
     Under the Company's Key-Man Incentive Plan, the cash portion of the annual
bonus is designed to provide a short-term (one-year) incentive to officers based
on an evaluation of their individual contribution to the Company's financial
performance for the year. Officers and division managers are eligible for
incentive payments. Incentive awards are made after the prior fiscal year's
results are known. Generally, the aggregate of all awards made as an annual
bonus may not exceed that amount which is equal to 20% of the amount by which
the Company's net income for that year exceeds the rate of return on a one-year
Treasury bill multiplied by the Company's net worth at the beginning of the
year. No awards are made unless the Company's net income for that year exceeds
the average rate of return on a one-year Treasury bill (considered as a
risk-free rate of return) multiplied by the Company's net worth. Upon
recommendation of the Compensation and Stock Option Committee, the Board
approves all officer incentive payments. Officers of the subsidiaries are not
currently eligible to participate in the Key-Man Incentive Plan, but are
eligible to participate in other plans that this Committee does not administer.
These plans are based on each subsidiary's financial performance for the year.
 
     The formula used to distribute the Incentive Pool among the key personnel
is reviewed annually to reflect better the individuals' respective contributions
to the operational profitability of the Company. The Company's officers are
awarded points based on their individual performance, as determined appropriate
by the Committee. Participating Division Managers are ranked according to four
criteria (size of the division, measured in sales dollars; profitability of the
division, in dollars; pretax return on sales percentage; and pretax return on
division assets percentage) and awarded points based on their rankings. The
Incentive Pool is then allocated to all participants based on their respective
number of points.
 
     The maximum incentive bonus for division managers is 40% of base
compensation. The maximum incentive bonus for the Company's officers ranges from
40% to 125% of base compensation. This incentive compensation bonus is payable
75% in cash and 25% in the Company's Common Stock, which is restricted for two
years and is considered a long-term incentive. For 1999, 1998 and 1997, the
officers with Corporate responsibilities of the Company had the option of having
this incentive compensation bonus payable 100% in cash.
 
     With respect to stock options that may be granted, which are considered
long-term incentives, the Compensation and Stock Option Committee has its scope
and authority defined for it by the Stock Option Plan which it administers. The
Committee has complete authority to interpret the Plan and make all decisions
with respect to how it functions. The Committee recommends to whom and in what
number, and with what terms and conditions, options should be granted but the
Board must authorize the issuance of the options.
 
     The Committee recommended to the Board in 1999 that an aggregate of 578,250
options be issued to key employees, of which 237,750 were issued to named
executive officers, which recommendations were approved and options granted by
the Board in March 1999 and May 1999.
 
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