By Mike Boyer
The Cincinnati Enquirer

Two former top executives of AK Steel, replaced in a September management shakeup, could receive up to $63 million in severance, but the Middletown steel maker wants to reduce or restructure the obligation.

The company, which is cutting nearly 500 salaried jobs after losing nearly $1 billion over the last two years, disclosed Friday that former chairman and CEO Richard M. Wardrop Jr., could be entitled to up to $10 million in cash severance and $41.7 million under the company's supplemental retirement plan.

Former President John G. Hritz, who resigned Sept. 18 with Wardrop, is entitled to up to $2.4 million in cash severance and $8.9 million in the retirement plan, the company said in its quarterly filing with federal regulators.

The company said it has paid Wardrop, named CEO in 1995 and chairman two years later, $650,000 and Hritz, named president earlier this year, $250,000.

Given the company's "financial performance during the last two years, its current financial condition and prevailing steel industry conditions," the board of directors has decided not to pay the rest for now, the company's filing said.

AK Steel said it is evaluating its obligations to both executives and expects to open negotiations to "reduce, defer and/or restructure" the unpaid balances.

Independent steel analyst Charles Bradford in New York City said the board probably wants to resolve the severance issue quickly because it needs to negotiate concessions with its unions to survive.

"They've got to ask the unions for some pretty big changes," he said.

Since naming former chief financial officer James Wainscott as president and CEO, the company has sought to rebuild relationships with its unions, government officials and environmental groups.

In reporting a $277.5 million third-quarter loss last month, Wainscott said the company was cutting costs, including 200 salaried jobs in Middletown, selling non-core assets and trying to boost steel sales in an effort to generate $200 million in operating profit next year.

AK Steel's shares, which have slumped in the wake of continuing losses and a weak steel market, closed Friday at $2.73, down 7 cents.

Bradford said his experience has been that steel industry severance packages typically are three times the executive's annual salary and bonus.

Last year Wardrop's salary and bonus was about $3.9 million. Hritz, who became president in January, received $850,000 in salary and bonus.

Corporate compensation expert Graef Crystal said, "It's pretty unusual to try to renegotiate a compensation once its been agreed to. Why would any executive agree to renegotiation?'' he said.

Bradford said AK Steel's success in renegotiating will "probably hinge on how good Wardrop's lawyer was in negotiating the compensation contract.'' He said the issue could end up in a law suit.

Wardrop did not return a call for comment Friday and Hritz could not be reached for comment.

Email mboyer@enquirer.com