SCHN 2017 Proxy Statement

Compensation Discussion and Analysis Performance Objectives . The Committee approved performance objectives for fiscal 2017 based, in part, on an active dialogue with the CEO regarding strategic objectives and performance targets. Metrics are tied to our strategic and business plans and to annual budgets reviewed by the full Board. Short-term management objectives, such as cost savings and productivity improvements, are designed to achieve specific goals that are expected to drive long-term shareholder value. Metrics and targets are analyzed and tested for reasonableness prior to Committee approval at the beginning of the performance period. The Committee actively evaluates the appropriateness and rigor of the financial measures used in incentive plans and the degree of difficulty in achieving specific performance targets. As part of this evaluation, the Committee compares prior year metrics and results and also considers market and business conditions when the targets are established. The Committee believes that consideration of these factors is needed to ensure that targets are aligned with the desired degree of difficulty. The following flowchart provides an overview of the Committee’s process in setting performance goals. Develop Plan Design & Metrics Develop Targets Apply Rigor Align Metrics with Company Goals • Tie to strategic plan and to creation of long- term shareholder value • Select short-term metrics that are key to achievement of longer- term goals • Link long-term metrics to increased shareholder value over performance period • Avoid duplication Link Pay and Performance • Provide appropriate incentives and stretch goals without excessive risk-taking • Review operating plans and forecasts • Compare prior year metrics and results • Consider peer, market and other external data Test and Review • Stress test targets • Assess appropriate degree of difficulty • Consider competitive landscape, market conditions, and realistic scenarios • Review and iterate Setting Performance Goals Competitive Market Overview . While the Committee does not believe that it is appropriate to establish compensation levels based solely on benchmarking, it believes that information regarding pay practices at peer companies is useful in two respects. First, the Committee recognizes that our compensation practices must be competitive in order to recruit and retain talented executives, and reviewing market pay practices provides a framework for assessing competitiveness. Second, marketplace information is one of the many factors that the Committee considers in assessing the reasonableness of compensation. Although the Committee considers compensation levels for executive officers of other companies, it does not mechanically apply the data but rather engages in a rigorous quantitative and qualitative review and weighing of the competitive information with other Company and individual performance factors, such as our specific business strategy, financial situation, specific duties and responsibilities, and performance, in making its compensation determinations. There are few, if any, direct public market peers of an equivalent size. Accordingly, determining market comparisons requires a review of companies in auto and metals recycling and in steel manufacturing, as well as companies in the closely-related mining and raw materials businesses, and in broader industrial and financial markets from which we attract executive talent. In addition, as we interface with customers around the world, we seek specialized and top caliber executive officers from the broad national and international business executive pools. Proxy data from relevant companies, as well as input from both the Company’s and the Committee’s compensation consultants, are utilized. Total compensation is periodically compared to the competitive market in setting compensation for executive officers. Based on the feedback we received from our shareholder outreach following the 2015 annual meeting, the Committee elected to adjust its peer group for fiscal 2016 to reflect current market capitalization and revenue parameters and to 38 | Notice of Annual Meeting of Shareholders and 2017 Proxy Statement