SCHN 2017 Proxy Statement

Compensation Discussion and Analysis Overview This Compensation Discussion and Analysis provides a detailed description of our executive compensation philosophy and programs, the decisions that the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) have made under those programs, and the factors considered in those decisions. This Compensation Discussion and Analysis focuses on the compensation of our NEOs for fiscal 2017 disclosed in the tables below. The NEOs are listed below. Name Title Tamara L. Lundgren President and Chief Executive Officer (“CEO”) Richard D. Peach Senior Vice President, Chief Financial Officer and Chief of Corporate Operations (“CFO”) Michael R. Henderson Senior Vice President and Co-President, Auto and Metals Recycling and Cascade Steel and Scrap Steven G. Heiskell Senior Vice President and Co-President, Auto and Metals Recycling Peter B. Saba Senior Vice President, General Counsel and Corporate Secretary Shareholder Outreach In 2017, we continued a process that began three years ago and pro-actively reached out to investors holding nearly 70% of our outstanding shares. Since 2015 we have had discussions, either by phone or in person, with shareholders representing more than half of our outstanding shares. This year’s discussions involved both the Chair of the Compensation Committee and either the Chairman of the Board of Directors or our Lead Independent Director, and the input received was very helpful as the Committee considered potential changes to the executive compensation plans for fiscal 2018. Continuing a trend that began last year, this year there was a decrease in the number of investors requesting a meeting which we attribute primarily to the Company’s improved performance and satisfaction with the changes made in response to the shareholder input received during the previous two years, including the significant changes made to our executive compensation program beginning in fiscal 2016 and the improved readability and transparency of our proxy statement beginning with the proxy for fiscal 2015. A primary purpose of the outreach is to listen to shareholder views on executive compensation. Investors expressed a variety of views and we value the insights gained from these discussions. We found them to be helpful as we considered compensation policies affecting our executive officers. Shareholder Engagement Cycle TRANSPARENT BALANCED THOUGHTFUL RESPONSIVE Before Annual Meeting After Annual Meeting ANNUAL MEETING OF SHAREHOLDERS During Shareholder Voting - Preview plans for governance and compensation issues/ actions. - Request feedback. - Reflect on results from annual meeting vote. - Discuss potential actions in response to results and new governance and compensation topics of interest for the upcoming year. - Follow up on previous conversations and discuss final Board decisions and reasoning. - Review vote proposals and solicit support for Board recommendations. Notice of Annual Meeting of Shareholders and 2017 Proxy Statement | 31