SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
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[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Reunion Industries, Inc.
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Notes:
REUNION INDUSTRIES, INC.
11 Stanwix Street--Suite 1400
Pittsburgh, Pennsylvania 15222
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held May 15, 2001
----------------
Notice is hereby given that the Annual Meeting of the Stockholders of
Reunion Industries, Inc., a Delaware corporation ("Reunion Industries"), will
be held at Reunion Industries' offices, 11 Stanwix Street, Pittsburgh,
Pennsylvania 15222 on Tuesday, May 15, 2001, at 10:00 A.M. local time, for the
following purposes:
1. To elect a board of eight directors to serve until the next Annual
Meeting of stockholders or until their successors are elected;
2. To reserve an additional 600,000 shares of common stock, per value $.01
per share, (the "Common Stock"), of Reunion Industries for issuance
under the 1998 Stock Option Plan; and
3. To consider and act upon such other business as may properly be
presented to the meeting.
Your Board of Directors recommends that you vote for all director nominees
and for approval to reserve an additional 600,000 shares of Common Stock under
the 1998 Stock Option Plan. The Board is not aware of any other proposals for
the May 15, 2001 meeting.
A record of stockholders has been taken as of the close of business on April
2, 2001, and only those stockholders of record on that date will be entitled
to notice of and to vote at the meeting. A stockholders' list will be
available at, and may be inspected during, the meeting.
If you do not expect to be present at the meeting, please sign and date the
enclosed proxy and return it promptly in the enclosed envelope which has been
provided for your convenience.
By Order of the Board of Directors
/s/ Richard L. Evans
Richard L. Evans
Secretary
April 18, 2001
REUNION INDUSTRIES, INC.
PROXY STATEMENT
General
This proxy statement is being mailed to stockholders commencing on or about
April 23, 2001, in connection with the solicitation by the board of directors
of Reunion Industries, Inc., a Delaware corporation ("Reunion Industries" or
the "company"), of proxies to be voted at the Annual Meeting of Stockholders
to be held at Reunion Industries' offices, 11 Stanwix Street, Pittsburgh,
Pennsylvania 15222 on Tuesday, May 15, 2001, and at any adjournment thereof,
for the purposes set forth in the accompanying Notice. Proxies will be voted
in accordance with the directions specified thereon and otherwise in
accordance with the judgment of the persons designated as proxies. Any signed
proxy on which no direction is specified will be voted for the election of the
nominees named herein to the board of directors and for the increase in the
number of shares reserved for issuance under the 1998 Stock Option Plan. Any
proxy may be revoked at any time before its exercise by delivery to the
corporate secretary of a written revocation of the proxy or a duly executed
proxy bearing a later date.
Reunion Industries pays for the cost of soliciting proxies from
stockholders. Reunion Industries also reimburses brokerage firms and other
custodians, nominees, and fiduciaries for their reasonable out-of-pocket
expenses for sending proxy materials to stockholders and obtaining their
proxies.
As of April 2, 2001, the record date for the determination of stockholders
entitled to vote at the annual meeting, there were 15,235,624 outstanding
shares of common stock of Reunion Industries. Each share of common stock
entitles the holder to one vote on all matters presented at the annual
meeting.
PROPOSAL 1. ELECTION OF DIRECTORS
At the annual meeting, the stockholders of Reunion Industries will be asked
to vote for the election of eight directors to the board of directors of
Reunion Industries. The candidates proposed for election at the annual meeting
are Thomas N. Amonett, Charles E. Bradley, Sr., Kimball J. Bradley, Thomas L.
Cassidy, W.R. Clerihue, Joseph C. Lawyer, Franklin Myers, and John G. Poole.
If elected, these candidates would comprise the entire board of directors of
Reunion Industries, and would hold office until their successors are duly
elected and qualified at the next annual meeting of stockholders of Reunion
Industries or until they earlier die, resign or are removed from office in
accordance with applicable law. The persons listed as "Nominees" in the table
below comprise the entire board of directors of Reunion Industries as of the
date of this proxy statement.
Nominees
Each of the eight persons nominated for election at the annual meeting
currently is a director of Reunion Industries. Each of the nominees has
previously been elected by the stockholders. Mr. Charles Bradley is the father
of Mr. Kimball Bradley. Reunion Industries knows of no other family
relationships between any director, executive officer or nominee and any other
director, executive officer or nominee. There are no arrangements or
understandings between any nominee for director and any other person pursuant
to which such person was selected as a nominee.
Director
Name Principal Position with Reunion Industries Age Since
---- ------------------------------------------ --- --------
Thomas N.
Amonett(1)(2).......... Director 57 1992
Charles E. Bradley,
Sr..................... Director, Chairman & CEO 71 1995
Kimball J. Bradley...... Director, President & COO 35 2000
Thomas L. Cassidy(1).... Director 72 1995
W. R. Clerihue(1)(2).... Director 77 1996
Joseph C. Lawyer........ Director and Vice Chairman 55 2000
Franklin Myers(2)....... Director 48 1995(3)
John G. Poole........... Director 58 1996
1
------
(1) Member, Compensation Committee of the Board of Directors
(2) Member, Audit Committee of the Board of Directors
(3) Prior to his reappointment in October 1995, Mr. Myers was a Director of
Reunion Industries from July 1992 to June 1995.
Thomas N. Amonett has served as a director of Reunion Industries since July
1, 1992 and served as the President and Chief Executive Officer of Reunion
Industries from July 1, 1992 until October 26, 1995. Mr. Amonett also served
as the President of the Reunion Energy Company, then a wholly-owned subsidiary
of Reunion Industries in the oil and gas operating business, from July 1, 1992
until May 24, 1996. Mr. Amonett is President and Chief Executive Officer of
Champion Technologies, Inc., a manufacturer and distributor of specialty
chemicals and related services, primarily to the oil and gas industry. From
November 1998 to June 1999, Mr. Amonett was President, Chief Executive Officer
and a director of American Residential Services, Inc., a company providing
equipment and services relating to residential heating, ventilating, air
conditioning, plumbing, electrical and indoor air quality systems and
appliances. From July, 1996 until June, 1997, Mr. Amonett was Interim
President and Chief Executive Officer of Weatherford Enterra, Inc., an energy
services and manufacturing company. Prior to his affiliation with Reunion
Industries, he was engaged in the practice of law with Fulbright & Jaworski in
Houston, Texas, where he was of counsel for more than five years. Mr. Amonett
serves as a director of Petro Corp. Incorporated, a Houston-based oil and gas
company, and ITEQ, Inc., a provider of manufactured equipment, engineered
systems and services used in the processing, treatment, storage and movement
of gases and liquids.
Charles E. Bradley, Sr. became a director of Reunion Industries on June 20,
1995 and was appointed President and Chief Executive Officer of Reunion
Industries on October 26, 1995. He became Chairman effective March 16, 2000.
Mr. Bradley was a co-founder of Stanwich Partners, Inc. ("Stanwich Partners")
in 1982 and has served as its President since that time. Stanwich Partners is
a private investment company. Mr. Bradley was a director of Chatwins Group,
Inc. ("Chatwins Group") from 1986 until its merger with Reunion Industries on
March 16, 2000 and was Chairman of the Board of Chatwins Group from 1988 until
the merger. Mr. Bradley is Chairman and a director of Consumer Portfolio
Services, Inc. ("CPS"), engaged in the business of purchasing, selling and
servicing retail automobile installment sales contracts and Chairman, CEO and
a director of NAB Asset Corporation, engaged in mortgage and construction
lending. Mr. Bradley is currently the sole director and President of DeVlieg-
Bullard, Inc. ("DBI"), an inactive company, President, acting Chief Financial
Officer and a director of Sanitas, Inc., an inactive company, and President,
acting Chief Financial Officer and a director of Texon Energy Corporation, an
inactive company. Mr. Bradley was chairman of the board of directors of DBI
when, on July 15, 1999, it filed a voluntary petition in the United States
Bankruptcy Court for the Northern District of Ohio for reorganization under
Chapter 11 of the United States Bankruptcy Code. Mr. Bradley is the father of
Kimball J. Bradley.
Kimball J. Bradley became President and Chief Operating Officer of Reunion
Industries effective May 1, 2000. Mr. Bradley was Executive Vice President of
Operations of Reunion Industries following the Chatwins Group merger and was a
Senior Vice President of Chatwins Group from August 1998 until the merger and
a Vice President of Chatwins Group from January 1996 to August 1998. From
November 1995 until August 1998, Mr. Bradley was President of the Auto-Lok
division of Chatwins Group, having served as acting President of Auto-Lok
beginning in August 1995. Prior to assuming that position, Mr. Bradley managed
various special projects at Chatwins Group's corporate office beginning in
November 1993 and at Chatwins Group's CP Industries division from February
1993 to November 1993. Mr. Bradley was employed by Metalsource, a company
engaged in the steel service center business, from 1990 to 1993, completing
the executive training program and holding various sales and purchasing
positions. Mr. Bradley is the son of Charles E. Bradley, Sr.
Thomas L. Cassidy became a director of Reunion Industries on June 20, 1995.
Mr. Cassidy was a Managing Director of Trust Company of the West, an
investment management firm, from 1984 until his retirement in 1999. He is a
Partner of TCW Capital, an affiliate of Trust Company of the West. Mr. Cassidy
was a director of Chatwins Group from March 1993 to June 1997.
2
W. R. Clerihue became a director of Reunion Industries in December 1996. Mr.
Clerihue was Chairman of the Board of Directors of Spartech Corporation from
October 1991 to March 1999 and continues as a director.
Joseph C. Lawyer became Vice Chairman of Reunion Industries effective May 1,
2000. Mr. Lawyer was President and Chief Operating Officer of Reunion
Industries following the Chatwins Group merger and was President, Chief
Executive Officer and a director of Chatwins Group from 1988 until the merger.
Prior to purchasing CP Industries, Inc., the corporate predecessor of Chatwins
Group's CP Industries division, with Stanwich Partners in 1986, Mr. Lawyer was
General Manager of USX's Specialty Steel Products division, where he was
employed for over 17 years. Mr. Lawyer is a director of Respironics, Inc., a
company engaged in design, manufacture and sale of home and hospital
respiratory medical products.
Franklin Myers served as a director of Reunion Industries from July 1, 1992
until June 20, 1995, when he resigned contemporaneously with the sale of
1,450,000 shares of Reunion Industries' common stock by Parkdale Holdings
Corporation N.V. to Chatwins Group. Mr. Myers was reappointed as a director of
Reunion Industries on October 26, 1995. Mr. Myers is President of Cooper
Energy Services, Inc., a manufacturer of gas compression equipment, a
subsidiary of Cooper Cameron Corporation. From 1995 to 1999, Mr. Myers was
Senior Vice President, General Counsel and Secretary of Cooper Cameron
Corporation, an oil field manufacturing company. Prior thereto he was Senior
Vice President and General Counsel of Baker Hughes Incorporated, an
international oil field service and equipment company, for more than six
years. Mr. Myers is also a director of Metals USA, Inc., a steel distributor.
John G. Poole became a director of Reunion Industries on April 19, 1996. Mr.
Poole was a co-founder of Stanwich Partners with Charles E. Bradley, Sr. in
1982 and has served as Stanwich Partner's Vice President since that time. Mr.
Poole was a director of Chatwins Group from 1988 until the merger, and is also
a director of CPS and Sanitas, Inc.
The Board of Directors recommends a vote for all nominees for the board of
directors.
Board and Committee Activity
During 2000, the board held four regularly or specially scheduled meetings.
The compensation committee of the board held two meetings during 2000 and the
audit committee held five meetings. Mr. Amonett was absent from one board
meeting and one audit committee meeting. Mr. Clerihue was absent from one
board meeting, one compensation committee meeting and one audit committee
meeting. Each of the remaining directors attended all of the meetings of the
board and of each committee on which he served during his respective tenure in
2000. Mr. Kimball Bradley and Mr. Lawyer were elected to the board in March
2000.
Reunion Industries' operations are managed under the broad supervision and
direction of the board of directors, which has the ultimate responsibility for
the establishment and implementation of Reunion Industries' general operating
philosophy, objectives, goals and policies. Pursuant to delegated authority,
certain board functions may be discharged by one or more standing committees
of the board.
The compensation committee, comprised of Messrs. Amonett, Cassidy and
Clerihue (chairman), is responsible for the formulation and adoption of all
executive compensation, benefit and insurance programs, subject to full board
approval where legally required or in those instances where the underlying
benefit philosophy might be at variance with preexisting board policies. The
compensation committee also supervises the administration of all executive
compensation and benefit programs, including the establishment of any specific
criteria against which all annual performance based benefits are to be
measured.
The audit committee, comprised of Messrs. Amonett, Clerihue and Myers
(chairman), assists the board in assuring that the accounting and reporting
practices of Reunion Industries are in accordance with all applicable
requirements. The audit committee reviews with the auditors the scope of the
proposed audit work and meets with the auditors to discuss matters pertaining
to the audit and any other matter which the committee or the
3
auditors may wish to discuss. In addition, the audit committee would recommend
the appointment of new auditors to the board of directors if future
circumstances were to indicate that such action is desirable.
The board of directors does not maintain executive or nominating committees.
Stockholders who may wish to suggest individuals for possible future
consideration for board positions should direct recommendations to the board
of directors at Reunion Industries' principal offices.
Director Compensation
Directors not otherwise compensated by Reunion Industries receive annual
retainers of $18,000 for service on the board and $500 for each board or
committee meeting attended. Compensation paid to nonemployee directors during
2000 for service in all board capacities aggregated $100,000. Directors are
reimbursed for the actual cost of any travel expenses incurred. Additionally,
nonemployee directors of Reunion Industries are eligible for awards under the
1998 Stock Option Plan. During 2000, each of Messrs. Amonett, Cassidy,
Clerihue, Myers and Poole were granted options to purchase 10,000 shares of
common stock at $3.00 per share and options to purchase 9,000 shares of common
stock at $1.00 per share. All options were granted at 100% of the market price
at time of grant, and expire ten years after the date of grant. Options
granted to Messrs. Charles Bradley, Kimball Bradley and Lawyer are included in
"Management Information--Option Grants." Since the merger, Mr. Poole is
compensated as an employee of Reunion Industries at a base rate of $60,000 per
annum, and no longer is compensated as a nonemployee director of Reunion
Industries.
Key Person Insurance
As of June 29, 1994, Chatwins Group and Charles E. Bradley, Sr. agreed to a
split-dollar life insurance arrangement. Pursuant to this arrangement,
Chatwins Group agreed to maintain three universal type life policies on Mr.
Bradley and his wife. Chatwins Group will be reimbursed for the premiums it
pays for such policies from either the death benefit of the policies or their
cash surrender value. Mr. Bradley agreed with Chatwins Group that if the
policy proceeds are insufficient to reimburse Chatwins Group for the full
amount of premiums paid, Mr. Bradley will pay the shortfall to Chatwins Group.
This arrangement was assumed by Reunion Industries in connection with the
merger. The annual premiums paid by the companies are included in the table of
"Executive Compensation."
As of October 24, 1994, Chatwins Group and Joseph C. Lawyer agreed to a
split-dollar life insurance arrangement. Pursuant to this arrangement,
Chatwins Group agreed to maintain a universal type life policy on Mr. Lawyer.
Chatwins Group will be reimbursed for the premiums it pays for such policy
from either the death benefit of the policy or its cash surrender value. Mr.
Lawyer agreed with Chatwins Group that if the policy proceeds are insufficient
to reimburse Chatwins Group for the full amount of premiums paid, Mr. Lawyer
will pay the shortfall to Chatwins Group. This arrangement was assumed by
Reunion Industries in connection with the merger. The annual premiums paid by
the companies are included in the table of "Executive Compensation."
As of December 12, 1995, Chatwins Group and John G. Poole agreed to a split-
dollar life insurance arrangement. Pursuant to this arrangement, Chatwins
Group agreed to maintain two universal type life policies on Mr. Poole.
Chatwins Group will be reimbursed for the premiums it pays for these policies
from either the death benefit of the policies or their cash surrender value.
Mr. Poole agreed with Chatwins Group that if the policy proceeds are
insufficient to reimburse Chatwins Group for the full amount of premiums paid,
Mr. Poole will pay the shortfall to Chatwins Group. This arrangement was
assumed by Reunion Industries in connection with the merger. The annual
premiums paid by the companies totaled $110,846 in 2000.
4
PROPOSAL 2. INCREASE IN SHARES
RESERVED FOR ISSUANCE UNDER 1998 STOCK OPTION PLAN
The 1998 Stock Option Plan was approved by Reunion Industries' stockholders
on August 4, 1998, and 600,000 shares of common stock were reserved for
issuance under the plan at that time.
In general, the plan provides additional incentives to selected key
employees, non-employee directors and consultants of Reunion Industries. The
purpose of the plan is to further the long-term stability and financial
success of Reunion Industries by retaining key employees, directors and
consultants who are able to contribute to the financial success of the
company. Moreover, the board of directors believes that offering the key
employees, directors and consultants of the company the opportunity to become
owners of capital stock of Reunion Industries will help to align further their
interests with those of Reunion Industries' stockholders generally. The board
of directors believes that reserving additional shares for future grants will
enable the company to continue to realize the benefits of these incentives for
key individuals.
As of April 2, 2001, there were options for 829,000 shares of common stock
outstanding under the plan and under two plans adopted by predecessors to the
company, the Buttes Gas & Oil Co. 1992 Nonqualified Stock Option Plan and the
Reunion Resources Company 1993 Incentive Stock Plan. As of April 2, 2001,
there were 40,000 additional shares of common stock reserved and available for
future option grants.
The board of directors recommends, and the stockholders are asked to
approve, reserving an additional 600,000 shares of common stock for future
grants of options under the 1998 Stock Option Plan. The additional 600,000
shares, together with the 869,000 shares already granted or available for
grant, would represent approximately 9% of the outstanding shares of Reunion
Industries if fully exercised.
The Board of Directors recommends a vote for approval to reserve an
additional 600,000 shares under the 1998 Stock Option Plan.
VOTE REQUIRED AND VOTING PROCEDURE
The eight nominees for election as directors at the 2001 Annual Meeting of
Stockholders who receive the greatest number of votes cast for election at the
Annual Meeting of Stockholders shall be the duly elected directors upon
completion of the vote tabulation at the meeting, provided a majority of the
outstanding shares as of the record date, April 2, 2001, are present in person
or by proxy at the meeting.
The increase in the number of shares reserved for issuance under the 1998
Stock Option Plan will be approved by the affirmative vote of a majority of
the votes cast at the 2001 Annual Meeting of Stockholders, provided a majority
of the outstanding shares as of the record date are present in person or by
proxy at the meeting.
Votes will be tabulated by Registrar and Transfer Company, the transfer
agent and registrar for Reunion Industries' common stock, and the results will
be certified by an election inspector who is required to resolve impartially
any interpretive questions as to the conduct of the vote. Under applicable
provisions of Reunion Industries' bylaws, any proxy containing an abstention
from voting or a broker nonvote will be sufficient to represent the shares at
the meeting for purposes of determining whether a quorum is present, but will
count neither as a vote for nor against any nominee with respect to whom the
holder has abstained from voting.
Management of Reunion Industries believes that all of the shares of common
stock to be voted by directors and executive officers and by KSB Acquisition
Corp., Hanna Investment Corporation and Stanwich Financial Services Corp.,
aggregating 11,098,512 shares as of April 2, 2001, or approximately 72.8% of
the issued and outstanding common stock (see "Ownership Information--Security
Ownership of Certain Beneficial Owners and Management"), will be voted in
favor of the election of each of the director nominees and in favor of the
increase in the number of shares reserved for issuance under the 1998 Stock
Option Plan.
5
MANAGEMENT INFORMATION
Executive Officers
The following individuals serve as our executive officers:
Name Age Position
---- --- --------
Charles E. Bradley,
Sr..................... 71 Director, Chairman and Chief Executive Officer
Joseph C. Lawyer........ 55 Director and Vice Chairman
Kimball J. Bradley...... 35 Director, President and Chief Operating Officer
Richard L. Evans........ 48 Executive Vice President of Administration and Secretary
John M. Froehlich....... 58 Executive Vice President of Finance and Chief Financial Officer
The business experience of Charles E. Bradley, Sr., Kimball J. Bradley and
Joseph C. Lawyer is described above in the section entitled "Election of
Directors--Nominees."
Richard L. Evans joined Reunion Industries as Executive Vice President and
Chief Financial Officer in October 1995. He was appointed Secretary of Reunion
Industries in December 1995. He became Executive Vice President of
Administration on March 16, 2000. Mr. Evans is also a Vice President of
Stanwich Financial Services Corp., which provides acquisition financing, makes
equity investments and makes structured settlement payments. From May 1993 to
September 1995, he was Controller of Terex Corporation, a capital goods
manufacturer. From October 1989 to May 1993, Mr. Evans was Controller of
Stanwich Partners.
John M. Froehlich became Executive Vice President of Finance and Chief
Financial Officer of Reunion Industries on March 16, 2000. He was a Vice
President of Chatwins Group from 1989 until the merger of Chatwins Group and
Reunion Industries on March 16, 2000 and its Chief Financial Officer and
Treasurer from 1988 until the merger.
6
Executive Compensation
Reunion Industries merged with Chatwins Group on March 16, 2000. This merger
is described below in the section "Other Information--Certain Relationships
and Related Transactions--Chatwins Group Merger".
The following table reflects all forms of compensation for services to
Reunion Industries or Chatwins Group by our executive officers for the last
three completed fiscal years.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Shares
------------------------------ Underlying
Name and Other Annual Stock All Other
PrincipalPosition Year Salary Bonus(1) Compensation Options Compensation
----------------- ---- -------- -------- ------------ ------------ ------------
Charles E. Bradley,
Sr. ................... 2000 $337,518 $ 0 $ 0 45,000 $355,375(2)
Chairman and Chief 1999 250,000 0 0 0 344,688(2)
Executive Officer 1998 250,000 0 0 75,000 345,991(2)
Joseph C. Lawyer........ 2000 370,552 0 0 50,173(3)
Vice Chairman 1999 410,166 0 0 45,0000 50,173(3)
1998 427,316 65,000 0 0 75,363(3)
Kimball J. Bradley...... 2000 291,988 150,000 0 45,000 13,000(4)
President and Chief 1999 200,000 240,000 0 0 13,000(4)
Operating Officer 1998 141,661 25,000 0 0 9,208(4)
Richard L. Evans........
Executive Vice
President of 2000 147,755 50,000 0 19,000 3,553(5)
Administration and 1999 175,000 30,000 0 0 1,452(5)
Secretary 1998 165,000 15,000 0 20,000 1,408(5)
John M. Froehlich.......
Executive Vice
President of Finance 2000 164,267 50,000 0 39,000 12,928(6)
and Chief Financial 1999 158,765 50,000 0 0 12,938(6)
Officer 1998 145,184 50,000 0 0 12,210(6)
------
(1) Amounts shown for bonuses are amounts earned for the period shown,
although such bonuses are generally paid in the subsequent year.
(2) Includes premiums paid by Reunion Industries and Chatwins Group for life
insurance for the benefit of Mr. Bradley of $355,375 in 2000, $344,688 in
1999 and $345,991 in 1998.
(3) Includes 401(k) matching payments of $5,000, $5,000 and $4,950 in 2000,
1999 and 1998, respectively; premiums paid by Chatwins Group for life
insurance for the benefit of Mr. Lawyer of $37,173 in 2000, $37,173 in
1999 and $62,413 in 1998, respectively; and payments under the Chatwins
Group, Inc. Money Purchase Pension Plan of $8,000 in each of 2000, 1999
and 1998.
(4) Includes 401(k) matching payments of $5,000, $5,000 and $2,125 in 2000,
1999 and 1998, respectively; and payments under the Chatwins Group, Inc.
Money Purchase Pension Plan of $8,000, $8,000 and, $7,083 in 2000, 1999
and 1998, respectively.
(5) Includes 401(k) matching payments of $3,553, $1,452 and $1,408 in 2000,
1999 and 1998.
(6) Includes 401(k) matching payments of $4,928, $5,000 and $4,950 in 2000,
1999 and 1998, respectively; and payments under the Chatwins Group, Inc.
Money Purchase Plan of $8,000, $7,938 and $7,260 in 2000, 1999 and 1998,
respectively.
7
Option Grants
The following table sets forth information with respect to the options to
purchase shares of common stock granted under all stock option plans to the
named executive officers in the year ended December 31, 2000.
Option Grants in Last Fiscal Year
Potential
Realizable
Value At
Assumed
Annual Rates of
Number of Percent of Stock Price
Securities Total Options Appreciation
Underlying Granted to Exercise or for Option Term
Options Employees in Base Price Expiration ---------------
Name Granted Fiscal Year ($/Share) Date 5%($) 20%($)
---- ---------- ------------- ----------- ---------- ------- -------
Charles E. Bradley,
Sr..................... 25,000(1) 3.8% $3.00 3/16/2010 $47,166 194,533
Charles E. Bradley,
Sr..................... 20,000(2) 3.0% $1.00 6/14/2010 12,579 51,874
Joseph C. Lawyer........ 25,000(1) 3.8% $3.00 3/16/2010 47,166 194,533
Joseph C. Lawyer........ 20,000(2) 3.0% $1.00 6/14/2010 12,579 51,874
Kimball J. Bradley...... 25,000(1) 3.8% $3.30 3/16/2005 13,221 120,789
Kimball J. Bradley...... 20,000(2) 3.0% $1.10 6/14/2005 3,527 32,210
Richard L. Evans........ 10,000(1) 1.5% $3.00 3/16/2010 18,866 77,813
Richard L. Evans........ 9,000(2) 1.4% $1.00 6/14/2010 5,660 23,345
John M. Froehlich....... 20,000(1) 3.0% $3.00 3/16/2010 37,734 155,625
John M. Froehlich....... 19,000(2) 2.9% $1.00 6/14/2010 11,951 49,282
------
(1) Exercisable 1/3 currently, 1/3 March 16, 2001 and 1/3 March 16, 2002.
(2) Exercisable 1/3 currently, 1/3 June 14, 2001 and 1/3 June 14, 2002.
Option Exercises and Year-End Values
The following table sets forth information with respect to the exercise of
options during the year ended December 31, 2000, and the unexercised options
to purchase shares of common stock granted under all stock option plans to the
named executive officers and held by them at December 31, 2000:
Aggregated Option Exercised in Last Fiscal Year and Fiscal Year-End Option
Values
Number of Securities Value of Unexercised
Number of Underlying Unexercised Options In-the-Money Options
Shares at December 31, 2000 at December 31, 2000 (1)
Acquired on Value ----------------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- --------------- ---------------- ----------- -------------
Charles E. Bradley,
Sr..................... 0 $ 0 56,401 63,599 $2,500 $5,000
Joseph C. Lawyer........ 0 0 15,001 29,999 2,500 5,000
Kimball J. Bradley...... 0 0 15,001 29,999 1,833 3,667
Richard L. Evans........ 0 0 66,334 12,666 1,125 2,250
John M. Froehlich....... 0 0 13,001 25,999 2,375 4,750
------
(1) The closing sales price of the common stock on the American Stock Exchange
on December 31, 2000 was $1.375.
8
Compensation Committee Report
The compensation committee of the board of directors has furnished the
following report on executive compensation for 2000:
The board of directors pursues a philosophy of seeking to improve Reunion
Industries' performance and to maximize shareholder value by, among other
things, relating executive compensation and stock-based benefits to Reunion
Industries' performance. In general, executive financial rewards may be
segregated into the following significant components: base compensation,
bonus, and stock option and other benefit plans.
Base compensation for senior executives is intended to be competitive with
that paid on comparably situated companies, but with a reasonable degree of
financial security and flexibility afforded to those individuals who are
regarded by the board of directors as acceptably discharging the levels and
types of responsibility implicit in the various senior executive positions.
While the committee's principal concern is with establishing compensation
programs and setting executive compensation at levels which are somewhat
reflective of those prevailing for similar executive positions, no
comparability studies were conducted for executive salaries to be paid in
2000.
Under the supervision of the compensation committee, annual bonuses reflect
a policy of requiring a specified level of company performance for the year
before any bonuses are earned by senior executives, with bonuses for achieving
higher levels of performance directly related to the level achieved. In
setting performance criteria, the committee will consider the total
compensation payable or potentially available to the chief executive and other
executives officers. While the development of any business necessarily
involves numerous factors, the board's primary emphasis will be on encouraging
management to increase Reunion Industries' net assets and cash flow, and in
certain instances, rationalization of certain company businesses or assets.
The compensation committee did not participate in the determination of
compensation for Chatwins Group employees prior to the merger.
The board of directors believes that properly designed and administered
long-term, stock-based incentives for senior executives closely align the
executives' economic interest with those of stockholders and provide a direct
and continuing focus upon the goal of constantly striving to maximize
stockholder value. The compensation committee intends, with any necessary
concurrence of the board of directors, to continue to consider alternate forms
of stock-based incentives designed to achieve the maximum possible performance
based benefit to all senior executives at the least possible cost and the
greatest attainable economic efficiency to Reunion Industries, with such
benefits designed as nearly as practicable to directly align the economic
interests of professional managers with those of Reunion Industries'
stockholders.
Pursuant to applicable rules of the Securities and Exchange Commission, as
of April 2, 2001, members of the compensation committee are deemed to own
beneficially an aggregate of 131,244 shares, or less than 1% of Reunion
Industries' outstanding common stock. See "Ownership Information--Security
Ownership of Certain Beneficial Owners and Management".
The Compensation Committee
W.R. Clerihue, Chairman
Thomas N. Amonett
Thomas L. Cassidy
9
OWNERSHIP INFORMATION
Security Ownership of Certain Beneficial Owners and Management
Reunion Industries has 15,235,624 shares of common stock outstanding as of
April 2, 2001. The following table sets forth information regarding the
beneficial ownership of our common stock by (i) each stockholder known to us
to own 5% or more of our common stock, (ii) each director of Reunion
Industries, (iii) each of the chief executive officer and the other named
executives, and (iv) all current directors and executive officers as a group.
Except as set forth in the footnotes to the following table, each stockholder
has sole dispositive and voting power with respect to the shares of our common
stock shown as owned by him.
% of
Shares Outstanding
Beneficial Owner Owned Shares
---------------- ---------- -----------
The Bradley Family Limited Partnership........ 4,506,827 29.6%
Charles E. Bradley, Sr. ...................... 7,503,397(1)(2)(3) 49.0%
Kimball J. Bradley............................ 5,340,284(1)(4) 35.0%
John G. Poole and the Poole Family Limited
Partnership.................................. 2,179,755(5) 14.3%
Stanwich Financial Services Corp. ............ 1,651,697 10.8%
KSB Acquisition Corp. ........................ 968,685 6.4%
Thomas N. Amonett............................. 58,667(6) 0.4%
Thomas L. Cassidy............................. 42,910(6) 0.3%
W.R. Clerihue................................. 29,667(6) 0.2%
Joseph C. Lawyer.............................. 623,556(7) 4.1%
Franklin Myers................................ 44,667(6) 0.3%
Richard L. Evans.............................. 90,667(8) 0.6%
John M. Froehlich............................. 29,641(9) 0.2%
All Officers and Directors as a group (10
individuals)................................. 11,436,384(10) 73.4%
------
(1) Includes 4,506,827 shares of common stock beneficially owned by The
Bradley Family Limited Partnership. The Bradley Family Limited
Partnership was established by Charles E. Bradley, Sr. in May 1998 for
estate planning purposes and Charles E. Bradley, Sr. owns 1% as general
partner and 27% as a limited partner. The Bradley Family Limited
Partnership has designated Mr. Kimball J. Bradley to vote these shares on
its behalf. Pursuant to Rule 13d-3, Mr. Charles E. Bradley, Sr. may be
deemed to be the beneficial owner of these shares with dispositive power
with respect thereto, and Mr. Kimball J. Bradley may be deemed to be the
beneficial owner of these shares with voting power with respect thereto.
(2) Includes 1,651,697 shares owned by Stanwich Financial Services Corp. Mr.
Bradley owns 100% of the parent company of Stanwich Financial Services
Corp., and may be deemed to be the beneficial owner of these shares.
Includes 968,685 shares owned by KSB Acquisition Corp. and 232,783 shares
owned by Hanna Investment Corporation. Mr. Bradley is the controlling
stockholder of the parent company of these companies and may be deemed to
be the beneficial owner of these shares.
(3) Includes currently exercisable options to purchase 78,534 shares of
common stock.
(4) Includes currently exercisable options to purchase 23,334 shares of
common stock.
(5) Includes 1,446,604 shares owned by the John Grier Poole Family Limited
Partnership established by Mr. Poole in 1995 for estate planning
purposes, and of which Mr. Poole owns 1% and is the sole general partner.
Pursuant to Rule 13d-3, Mr. Poole may be deemed to be the beneficial
owner of these shares, with sole voting and dispositive power with
respect thereto. Also includes 134,854 shares as to which Mr. Poole has
voting rights, but not dispositive rights. Pursuant to Rule 13d-3, Mr.
Poole may be deemed to be the beneficial owner of these shares, with sole
voting rights with respect thereto. Also includes currently exercisable
options to purchase 24,667 shares of common stock.
(6) Includes currently exercisable options to purchase 24,667 shares of
common stock.
10
(7) Includes 3,567 shares beneficially owned by Mr. Lawyer's wife. Mr. Lawyer
may be deemed to be the beneficial owner of these shares. Includes
currently exercisable options to purchase 23,334 shares of common stock.
(8) Includes currently exercisable options to purchase 69,667 shares of
common stock.
(9) Includes currently exercisable options to purchase 19,668 shares of
common stock.
(10) Includes currently exercisable options to purchase an aggregate of
337,872 shares of common stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Reunion Industries' directors and officers and persons who own beneficially
more than 10% of the common stock of Reunion Industries to file with the
Securities and Exchange Commission and the American Stock Exchange initial
reports of beneficial ownership and reports of changes in beneficial ownership
of the common stock of Reunion Industries. Directors, officers and persons
owning more than 10% of the common stock of Reunion Industries are required to
furnish Reunion Industries with copies of all such reports. Based solely on
Reunion Industries' review of the copies of such forms it has received and
representations from certain persons that they were not required to file
reports on Form 5 for 2000, Reunion Industries believes that all its officers,
directors and greater than 10% beneficial owners complied with all filing
requirements applicable to them with respect to transactions during 2000.
11
INFORMATION
Common Stock Performance Graph
The following graph illustrates the yearly percentage change in the
cumulative total stockholder return on Reunion Industries' common stock,
compared with the cumulative total return on the American Stock Exchange
Composite Index and the Industrial Equipment and Components Index published by
Media General Financial Services, Inc.:
[GRAPH]
Five Year Total Return (1)
Fiscal Year Ending
-----------------------------------------
Company 1995 1996 1997 1998 1999 2000
------- ------ ------ ------ ------ ------ ------
Reunion Industries, Inc............. 100.00 80.00 103.75 55.00 34.06 27.50
American Stock Exchange Composite
Index(2)........................... 100.00 105.52 126.97 125.25 156.15 154.23
Industrial Equipment and Components
Index(2)........................... 100.02 118.51 167.18 151.96 163.55 170.01
------
(1) Tabular data assumes that the value of the investment in Reunion
Industries' common stock and each index was $100 at January 1, 1996 and
that all dividends, if any, were reinvested.
(2) Index provided by Media General Financial Services, Inc.
12
Certain Relationships and Related Transactions
Chatwins Group Merger
At December 31, 1999, Chatwins Group owned 1,450,000 shares, or
approximately 37%, of Reunion Industries' common stock. On March 16, 2000,
Reunion Industries completed a merger with Chatwins Group. The merger was
approved by Reunion Industries' Board of Directors in July 1999 and by its
stockholders in December 1999, subject to certain conditions, including the
completion of a refinancing that would retire certain debt and provide
adequate working capital after the merger. Reunion Industries entered into
credit facilities with Bank of America and others simultaneously with the
merger.
To complete the merger, Reunion Industries issued 9,499,994 shares of common
stock to holders of Chatwins Group's common stock. Cash was paid in lieu of
issuing fractional shares. The 1,450,000 shares of Reunion Industries' common
stock previously owned by Chatwins Group were retired in the merger. As a
result of the merger, the Chatwins Group stockholders owned approximately 79%
of Reunion Industries' common stock. The merger agreement also provides that
up to an additional 500,000 shares of Reunion Industries common stock will be
issued to the former Chatwins Group stockholders if the former Chatwins Group
businesses and the acquired Kingway business achieve specified performance
levels in 2000. Final determination of the number of shares to be issued will
be made by the board of directors at its meeting scheduled on May 15, 2001.
Charles E. Bradley, Sr. was the Chairman and a director of Chatwins Group
and the beneficial owner of approximately 47% of the outstanding common stock
of Chatwins Group. Kimball J. Bradley was Senior Vice President of Chatwins
Group and the beneficial owner of approximately 8% of the outstanding stock of
Chatwins Group. John G. Poole was a director of Chatwins Group and the
beneficial owner of approximately 15% of the outstanding common stock of
Chatwins Group.
Kingway Acquisition
Reunion Industries also acquired Stanwich Acquisition Corp. ("SAC," d/b/a
Kingway Material Handling Company, "Kingway") on March 16, 2000. Kingway
manufactures gravity flow storage racks and computer-assisted picking systems,
primarily for warehouse material handling applications. Mr. C. Bradley, Mr. K.
Bradley and Richard L. Evans were officers and directors of Kingway and owned
42.5%, 42.5% and 15%, respectively, of Kingway's common stock. Reunion
Industries paid $100,000 for the Kingway common stock and issued 5,000 shares
of Series B 15% preferred stock in exchange for Kingway's 15% preferred stock
held by Stanwich Financial Services Corp.
Conversion of Preferred Stock
On June 14, 2000, Reunion Industries' board of directors approved the
exchange of its Series A and Series B preferred stocks for 3,245,515 shares of
common stock at an exchange price of $5.00 per share. The closing price of the
common stock was $1.00 on that date. The Series A and Series B preferred
stocks were issued in connection with the March 16, 2000 merger with Chatwins
Group and acquisition of Kingway, and had an aggregate liquidation value of
$16.2 million.
As a result of the conversion and related transactions, Stanwich Financial
Services Corp. received 1,393,750 shares of common stock, KSB Acquisition
Corp. received 968,685 shares, Hanna Investment Corporation received 289,450
shares, Mr. Poole received 573,630 shares, and Mr. Evans and another
individual received 10,000 shares each. Mr. C. Bradley is the president, sole
director and controlling stockholder of Stanwich Financial Services Corp., KSB
Acquisition Corp. and Hanna Investment Corporation.
Naptech Acquisition
On January 17, 2001, Reunion Industries acquired the common stock of NPS
Acquisition Corp. ("NPSAC") from Mr. C. Bradley for $10,000. NPSAC was formed
by Mr. C. Bradley to acquire and hold
13
NAPTech Pressure Systems ("NAPTech"). NAPTech is based in Clearfield, Utah and
manufactures seamless steel pressure vessels, an existing Reunion Industries
product line.
Other Affiliate Transactions
The Parties and Relationships
Stanwich Partners, Inc. ("Stanwich Partners") is engaged in consulting
services in the field of financial planning and reporting. Mr. C. Bradley and
Mr. Poole are the principals of Stanwich Partners.
Stanwich Financial Services Corp. ("SFSC") is a privately held corporation
primarily engaged in the business of providing acquisition financing, equity
investing and making structured settlement payments. Mr. C. Bradley owns 100%
of the parent company of SFSC. Mr. Evans is an officer of SFSC.
CPS Leasing, Inc. ("CPSL") is a subsidiary of Consumer Portfolio Services,
Inc. ("CPS"). Mr. C. Bradley and Mr. Poole are directors and stockholders of
CPS. Charles E. Bradley Jr., Mr. C. Bradley's son, is President of CPS. CPSL is
primarily engaged in machinery and equipment lease financing.
Butler Air, Inc. ("Butler") is a wholly owned subsidiary of Stanwich Aviation
Company, Inc. ("Stanwich Aviation"). Butler provides charter flight services.
Mr. C. Bradley is a director of Butler and the owner of 65% of Stanwich
Aviation.
The Transactions and Balances
Stanwich Partners Consulting Agreement--Reunion Industries, and Chatwins
Group prior to the merger, have maintained various consulting agreements with
Stanwich Partners under which $300,000 was recorded as expense during 2000. The
consulting agreement expires on March 31, 2003 unless terminated by Stanwich
Partners with 30 days' notice. Annual payments are permitted on this agreement
as long as the Company meets an interest coverage ratio of at least 1.5 to 1
for the prior four full fiscal quarters. All amounts owed to Stanwich Partners
from the Company have been paid including $20,000 prepaid as of December 31,
2000.
Stanwich Partners Sublease--The Company subleases from Stanwich Partners
approximately 1,500 square feet of office space in Stamford, Connecticut for
administrative purposes. During 2000, the Company paid Stanwich Partners
approximately $33,000 under this sublease. The Company believes that the terms
of this sublease are comparable to those available from third parties.
SFSC Revolving Credit Facility--In November 1997, SFSC provided SAC with a
revolving credit facility. At the time of the Chatwins Group merger and
acquisition of Kingway, SFSC was paid $1,116,000 including interest under this
loan from refinancing proceeds. The Company assumed the remaining balance.
During 2000, $571,000 of interest was paid to SFSC, including $137,000 by SAC
prior to the merger and including $75,000 prepaid at December 31, 2000. The
balance outstanding under this facility at December 31, 2000 was $2,998,000.
This indebtedness is subordinated to Reunion Industries' indebtedness to Bank
of America.
SFSC Note--Reunion Industries owes SFSC $1,017,000 under a note, which bears
interest at 11%. This note was assigned to SFSC in September 2000 by Mr. C.
Bradley, who acquired it in 1996 from the former owner of a business in
connection with Reunion Industries' acquisition of that business. During 2000,
Reunion Industries paid interest of $84,000 to Mr. C. Bradley and $28,000 to
SFSC. This note is subordinated to Reunion Industries' indebtedness to Bank of
America.
SFSC Note Receivable--In August 1999, pre-merger Reunion Industries loaned
$310,000 to SFSC. The loan was scheduled to be repaid in December 1999 with
interest at 15%. In December 1999, the Company agreed to extend the maturity to
March 2000 and loaned an additional $40,000 to SFSC also with interest at 15%
which was repaid in March 2000. The remaining balance including accrued and
unpaid interest due from SFSC at December 31, 2000 is $372,000.
14
SFSC Collateral Fee--At the time of the merger and essential to the closing
of the Bank of America refinancing, SFSC provided side collateral in the form
of CPS debt and common stock to support the borrowings under the Bank of
America credit facility. Under this arrangement, SFSC is to receive a 5%
collateral fee for as long as the collateral is in place. Such collateral was
in place from the time of the merger and remains in place. During 2000, the
Reunion Industries recorded interest expense of $224,000 related to this
arrangement.
Kingway Services Agreement--Similar to Auto-Lok, Chatwins Group's storage
rack and materials handling systems business prior to the merger, Kingway
produced industrial and commercial storage racks and materials handling
systems. In 1997, Kingway and Auto-Lok entered into a services agreement
pursuant to which Kingway would utilize Auto-Lok's surplus capacity in
exchange for fees approximately equal to Auto-Lok's costs of providing the
surplus capacity. The integration of Kingway's business into Auto-Lok's
facility took place primarily during the second quarter of 1998. During 2000,
in the period prior to the merger and acquisition of Kingway, costs totaling
$1,256,000 were charged to Kingway under this agreement.
NAPTech Services Agreement--In August 1998, CP Industries ("CPI"), the
pressure vessel division of pre-merger Chatwins Group, and NPSAC entered into
a services agreement pursuant to which CPI would provide certain
administrative services to NAPTech for cash fees approximately equal to the
cost of providing such services. During 2000, net of non-cash services
provided by NPSAC, costs, net of non-cash services provided by NPSAC, totaling
$1,363,000 were charged to NPSAC under this agreement. At December 31, 2000,
receivables totaling $2,356,000 were due from NPSAC.
CPS Leasing, Inc.--Reunion Industries, and Chatwins Group prior to the
merger, entered into various operating lease agreements with CPSL. During
2000, lease payments totaling $866,000 were paid to CPSL. At December 31,
2000, the Company has future minimum rental commitments under noncancellable
operating leases with CPSL totaling $4,023,000.
Butler Air--Reunion Industries, and Chatwins Group prior to the merger,
entered into arrangements for flying services with Butler. Butler provides
charter flight services for certain business travel by Reunion Industries'
officers and employees at rates which the Company believes are comparable to
those available from third parties. The Company pays a monthly fee of $5,000
which was credited against services used.
Cash Surrender Value of Life Insurance Policies--The Company pays the
premiums on life insurance policies covering Mr. C. Bradley, Mr. Poole and Mr.
Joseph C. Lawyer, the Company's vice chairman and a director. Pursuant to
these arrangements, the Company will be reimbursed for the premiums it pays
for such policies from either the death benefit of the policies or their cash
surrender value. The covered individuals have agreed with the Company that if
the policy proceeds are insufficient to reimburse the Company for the full
amount of the premiums paid, they will cover the shortfall. As of December 31,
2000, premiums paid by the Company in excess of the cash surrender values of
the policies totaled $1,222,000.
15
Accountants
PricewaterhouseCoopers LLP was selected by the audit committee of the board
of directors to audit Reunion Industries' financial statements for the fiscal
year ending December 31, 2000. Representatives of PricewaterhouseCoopers are
expected to be present at the Annual Meeting of Stockholders on May 15, 2001
to respond to appropriate questions and to make a statement if they desire to
do so.
Audit Fees
Aggregate fees billed by PricewaterhouseCoopers LLP for audit and quarterly
review services during 2000 were $230,000.
All Other Fees
Additional fees totaling $94,000 were billed by PricewaterhouseCoopers
during 2000 for tax services in connection with the sale of the Company's
Irish subsidiary, consulting services in connection with an arbitration
hearing and for services in connection with benefit plan audits. There were no
fees for financial information systems design and implementation services. The
audit committee considers PricewaterhouseCoopers LLP's provision of services
detailed herein to be compatible with maintaining that firm's independence
from the company.
Audit Committee Report
The audit committee of the board of directors has furnished the following
report on its activities during 2000:
The audit committee consists of three of Reunion Industries' outside
directors. The board of directors and the audit committee believe that the
audit committee's membership satisfies the American Stock Exchange rules
concerning audit committee membership, including the requirements that members
be independent and have financial sophistication. The Board of Directors has
adopted a formal written audit committee charter and the audit committee
performs a review and reassessment of the adequacy of the charter on an annual
basis.
In accordance with its written charter (set forth in Appendix A to this
proxy statement), the audit committee assists the board of directors in
fulfilling its oversight responsibilities by reviewing the financial
information that will be provided to the stockholders and others, the systems
of internal controls, and all audit processes.
In discharging its oversight responsibilities regarding the audit process,
the audit committee:
. reviewed and discussed the audited financial statements with management;
. discussed with the independent accountants the material required to be
discussed by Statement on Auditing Standards No. 61, as may be amended
or modified; and
. reviewed the written disclosures and the letter from the independent
accountants required by the Independence Standards Board's Standard No.
1, as may be modified or supplemented, and discussed with the
independent accountants any relationships that may impact their
objectivity and independence.
Based upon the review and discussions referred to above, the audit committee
recommended to the board of directors that the audited financial statements be
included in the company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, as filed with the Securities and Exchange Commission.
Members of the Audit Committee
Franklin Myers, Chairman
Thomas N. Amonett
W.R. Clerihue
16
Limitation on Incorporation by Reference
Notwithstanding any reference in prior or future filings of Reunion
Industries with the Securities and Exchange Commission which purports to
incorporate this proxy statement by reference into another filing, such
incorporation shall not include any material included herein under the
captions "Management Information--Compensation Committee Report", "Other
Information--Common Stock Performance Graph" or "Other Information--Audit
Committee Report".
Other Matters
The Annual Report to Stockholders covering the year ended December 31, 2000
has been mailed with this proxy statement to each stockholder entitled to vote
at the Annual Meeting. Copies of Reunion Industries' Annual Report on Form 10-
K (excluding exhibits) for the fiscal year ended December 31, 2000, as filed
with the Securities and Exchange Commission, will be furnished upon written
request to stockholders who have not previously received a copy from Reunion
Industries. In addition, Reunion Industries will furnish any exhibit to its
Annual Report on Form 10-K upon written request and upon payment of a fee
limited to Reunion Industries' reasonable expenses in furnishing such exhibit.
Written requests may be directed to Richard L. Evans, Secretary, Reunion
Industries, Inc., 11 Stanwix Street, Suite 1400, Pittsburgh, Pennsylvania
15222.
Deadline for Stockholder Proposals
Although it has not yet determined a date for its 2002 annual meeting of
stockholders, Reunion Industries intends to hold the meeting in early to mid
2002. Reunion Industries will inform stockholders of the date of the 2002
annual meeting in a future periodic report to be filed with the Securities and
Exchange Commission. Proposals of stockholders of Reunion Industries intended
to be presented at the 2002 annual meeting of stockholders must be received by
the Secretary of Reunion Industries at 11 Stanwix Street, Pittsburgh,
Pennsylvania 15222 a reasonable time before Reunion Industries begins to print
and mail its proxy materials. If such proposals are in compliance with all of
the requirements of Rule 14a-8 under the Exchange Act, they will be included
in the proxy statement and set forth on the form of proxy issued for the next
annual meeting of stockholders.
If a stockholder intends to present a proposal at the 2002 annual meeting of
stockholders without seeking to include the proposal in Reunion Industries'
proxy statement, management proxies will be entitled to use the discretionary
voting authority that will be contained in the proxies for the 2002 annual
meeting of stockholders to vote on the stockholder's proposal at the 2002
annual meeting of stockholders.
The cost of soliciting proxies in the accompanying form will be borne by
Reunion Industries.
The persons designated as proxies to vote shares at the meeting intend to
exercise their judgment in voting such shares on other matters that may
properly come before the meeting. Management does not expect that any matters
other than those referred to in this proxy statement will be presented for
action at the meeting.
By Order of the Board of Directors
/s/ Richard L. Evans
RICHARD L. EVANS
Secretary
April 18, 2001
17
APPENDIX A
AUDIT COMMITTEE CHARTER
One committee of the board of directors will be known as the audit
committee. Only independent directors will serve on the audit committee. An
independent director is free of any relationship that could influence his or
her judgment as a committee member. An independent director may not be
associated with a major vendor to, or customer of, the company. When there is
some doubt about independence, as when a member of the committee has a short-
term consulting contract with a major customer, the director should recuse
himself from any decisions that might be influenced by that relationship.
The primary function of the audit committee is to assist the board in
fulfilling its oversight responsibilities by reviewing the financial
information that will be provided to the stockholders and others, the systems
of internal controls management and the board of directors have established,
and all audit processes.
General responsibilities
1. The audit committee provides open avenues of communication between the
independent accountant and the board of directors.
2. The audit committee must report committee actions to the full board of
directors and may make appropriate recommendations.
3. The audit committee has the power to conduct or authorize investigations
into matters within the committee's scope of responsibilities. The committee
is authorized to retain independent counsel, accountants or others it needs to
assist it in an investigation.
4. The committee will meet at least four times each year; more frequently as
circumstances require. The audit committee chairman has the power to call a
committee meeting whenever he or she thinks there is a need. An audit
committee member should not vote on any matter in which he or she is not
independent. The committee may ask members of management or others to attend
the meeting and is authorized to receive all pertinent information from
management.
5. The committee will do whatever else the law, the rules of the American
Stock Exchange, the company's charter or bylaws or the board of directors
require.
Responsibilities for engaging independent accountants
1. The audit committee will select the independent accountants for company
audits. The committee's selection is subject to approval by the full board of
directors. The audit committee also will review and set any fees paid to the
independent accountants and review and approve dismissal of the independent
accountants. The independent accountant's ultimate accountability will be to
the board of directors and the audit committee, as representatives of the
stockholders, and these stockholder representatives will have ultimate
authority and responsibility to select, evaluate, and, where appropriate,
replace the independent accountant.
2. The audit committee will confirm and assure the independence of the
independent accountant, including a review of management consulting services
provided by the independent accountant and the fees paid for them. The audit
committee will receive from the independent accountants a formal written
statement delineating all relationships between such accounting firm and the
company, consistent with Independence Standards Board Standard 1, and the
audit committee will actively engage in a dialogue with the independent
accountant with respect to any disclosed relationships or services that may
impact the objectivity and independence of such accounting firm and for
taking, or recommending that the full board of directors take, appropriate
action to oversee the independence of the independent accountant.
A-1
3. The audit committee will ascertain that the independent accountant views
the board of directors as its client, that it will be available to the full
board of directors at least annually and that it will provide the committee
with a timely analysis of significant financial reporting issues.
4. The audit committee will consider, in consultation with the independent
accountant, the audit scope and procedural plans made by the independent
accountant.
5. The audit committee will listen to management and the primary independent
auditor if either thinks there might be a need to engage additional auditors.
The audit committee will decide whether to engage an additional firm, and, if
so, which one.
Responsibilities for reviewing the annual external audit and reviewing annual
and quarterly financial statements
1. The audit committee will ask management and the independent accountant
about significant risks and exposures and will assess management's steps to
minimize them.
2. The audit committee will review the following with the independent
accountant:
1. The adequacy of the company's internal controls, including
computerized information system controls and security.
2. Any significant findings and recommendations made by the independent
accountant, together with management's responses to them.
3. Shortly after the annual examination is completed, the audit committee
will review the following with management and the independent accountant:
1. The company's annual financial statements and related footnotes.
2. The independent accountant's audit of and report on the financial
statements.
3. The auditor's qualitative judgments about the appropriateness, not
just the acceptability, of accounting principles and financial disclosures
and how aggressive (or conservative) the accounting principles and
underlying estimates are.
4. Any serious difficulties or disputes with management encountered
during the course of the audit.
5. Anything else about the audit procedures or findings that Generally
Accepted Auditing Standards require the auditors to discuss with the
committee.
4. The audit committee will review annual reports and other SEC filings and
other published documents containing the company's financial statements and
will consider whether the information in the filings is consistent with the
information in the financial statements.
5. The audit committee will prepare a report for inclusion in the annual
proxy statement that describes the committee's composition and responsibilities
and how the responsibilities were fulfilled.
6. The audit committee will review the interim financial reports with
management and the independent accountant before those interim reports are
released to the public or filed with the SEC or other regulators.
Periodic responsibilities
1. Review and update the committee's charter annually.
2. Review legal and regulatory matters that may have a material effect on the
organization's financial statements, compliance policies and programs and
reports from regulators.
A-2
3. Meet with the independent accountant and management in separate executive
sessions to discuss any matters the committee or these groups believe should be
discussed privately with the audit committee.
4. Review policies and procedures covering officers' expense accounts and
perquisites, including their use of corporate assets, and consider the results
of any review of those areas by the independent accountant.
A-3
REVOCABLE PROXY
REUNION INDUSTRIES, INC.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD MAY 15, 2001
The undersigned stockholder of Reunion Industries, Inc. (the "Company") hereby
appoints Charlie F. Bradley, Sr., Kimball J. Bradley, or John G. Poole, or any
of them, attorneys and proxies of the undersigned; each with full power of
substitution, to vote on behalf of the undersigned at the Annual Meeting of
Stockholders of the Company to be held at the Company's offices, 11 Stanwix
Street, Pittsburgh, Pennsylvania 15222, on Tuesday, May 15, 2001.
Please be sure to sign and date this Proxy in the box below.
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Date
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Stockholder sign above
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Co-holder (if any) sign above
FOR ALL
1. The election as directors (except as FOR WITHHOLD EXCEPT
indicated below) of all nominees. [_] [_] [_]
THOMAS N. AMONETT W.R. CLERIHUE
CHARLES E. BRADLEY, SR. JOSEPH C. LAWYER
KIMBALL J. BRADLEY FRANKLIN MYERS
THOMAS L. CASSIDY JOHN G. POOLE
INSTRUCTIONS: to withhold authority to vote for any individual nominee, mark
"For all Except" and write that nominee's name in the space provided below.
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FOR ALL
2. The reservation of an additional FOR WITHHOLD EXCEPT
600,000 shares of Reunion Industries [_] [_] [_]
Common Stock for issuance under the
1998 Stock Option Plan.
3. In their discretion, upon such other [_] [_] [_]
matters as may properly come before
the meeting, hereby revoking any
proxy or proxies heretofore given by
the undersigned.
Please check box if you plan to attend the Annual Meeting. [_]
The Board of Directors recommends a vote FOR each of the proposals set forth
above; if no specification is made, the shares will be voted FOR such proposals.
The above signed hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished herewith.
Signatures should agree with name or names printed hereon. If stock is held in
the name of more than one person, EACH joint owner should sign. Executors,
administrators, trustees, guardians and attorneys should indicate the capacity
in which they sign. Attorneys should submit powers of attorney.
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Detach above card, sign, date and mail in postage paid envelope provided.
REUNION INDUSTRIES, INC.
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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