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News From USWA: Letter to AK Steel Investors Details Environmental, Management Problems for Middletown Steelmaker.

Business Editors

MIDDLETOWN, Ohio--(BUSINESS WIRE)--July 10, 2001

News From USWA: AK Steel (NYSE:AKS) faces potentially huge liabilities as a result of environmental practices at the company's Middletown, Ohio and Butler, Pennsylvania plants, according to a letter sent to AK Steel shareholders by the United Steelworkers of America (USWA) last week.

The letter also points out that AK management has refused to accept responsibility for these environmental problems and that Forbes magazine recently named AK's CEO, Richard Wardrop, among the nation's most over-valued CEOs.

The Government is seeking civil penalties from AK Steel under the Clean Water Act and the Clean Air Act. Under the statute, the court is authorized to impose civil penalties of up to $25,000 for each day of violation before January 31, 1997, and $27,500 for each day thereafter.

The complaint asserts that AK Steel violated these laws at various times from 1993 to the present. Ohio will also seek civil penalties of up to $25,000 per violation of clean air statutes and up to $10,000 per day per violation of clean water and hazardous waste statutes.

AK Steel faces up to $100 million in fines and proposed pollution control equipment, and even if the company closes half of the Middletown plant as Wardrop has threatened, the fines would still need to be paid.

The letter also points out that AK Steel's Wardrop ranked fifth-worst in a study conducted by Forbes magazine that compared the total compensation of 278 individual CEOs to their company's growth rate over the last five years.

According to the April 26, 2001 issue of Forbes, the $22,919,000 Wardrop received in compensation for the last five years averaged out to $8,161,833 for each percentage point of negative growth for AK Steel. This was the result of averaging the company's earnings, income and share price growth (loss) and dividing by the CEO's total compensation.
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Publication:Business Wire
Date:Jul 10, 2001
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