SCHN 2018 Proxy Statement

Compensation Discussion and Analysis During 2018, the shareholders with whom we had discussions expressed their support for our Board, governance program, and engagement efforts. In addition, they also commended our responsiveness to shareholder concerns with respect to changes we have made to our executive compensation programs in recent years. How Executive Pay is Linked to Company Performance Our executive compensation program is aligned with our business strategy and with creating long-term shareholder value by paying for performance consistent with what our Compensation Committee views as an acceptable risk profile. The foundation of our compensation philosophy is to: • Promote creation of long-term shareholder value; • Recruit and retain qualified, high performing executive officers; • Motivate high levels of performance; and • Be competitive in the market for talent. Our executive compensation program emphasizes delivering compensation at a competitive market level which will allow executive officers who demonstrate consistent on-target performance over a multi-year period to earn compensation that is competitive and consistent with targeted performance levels of total compensation. When performance is above target over the long term, we believe the program will reward executives above the competitive median. Conversely, the program will provide less than the annual target compensation when performance does not meet expectations. Individual executive compensation may be above or below the annual target level, based on the Company’s performance; economic and market conditions; the individual’s performance, contribution to the organization, experience, expertise, and skills; and other relevant factors. Initiatives: Delivering Operational and Economic Benefits to Increase Long-Term Shareholder Value Initiative Fiscal 2018 Results Increase volumes • Delivered higher ferrous and nonferrous volumes through a combination of expanding supply channels and further diversifying sales, supported by positive market conditions • Ferrous volume target of 4.3 million tons achieved in fiscal 2018, one year ahead of the initial fiscal 2019 target Expand operating margins • AMR expanded operating margins through ferrous and nonferrous volume growth and the benefits from a continued focus on productivity and commercial initiatives, supported by positive market conditions • CSS significantly expanded its operating margins as a result of benefits from productivity improvements and higher steel prices Generate operating cash flow • Generated $160 million in operating cash flow through increased profitability and working capital management, enabling us to continue to invest in the Company, reduce debt by 26%, and return capital to our shareholders through our quarterly dividend and share repurchases Optimize operating platform • Continued to increase the efficiency of our processes in order to produce a quality product for customers on a cost-effective basis and to recover higher nonferrous volumes from the shredding process; and invested in additional processing technologies to increase throughput, lower processing costs, increase recovery rates, and create products with the metallic content sought by customers Notice of Annual Meeting of Shareholders and 2018 Proxy Statement | 33