WWW.EXFILE.COM, INC. -- 14077 -- SCHNITZER STEEL INDUSTRIES, INC. -- EXHIBIT 10.1 TO FORM 8-K


    
    

    
      

        
          	  	SCHNITZER
                  STEEL INDUSTRIES,
                  INC. 
	
                	
                  3200
                    NW Yeon
                    Avenue

                  Phone
                    (503)
                    224-9900 

                	
                  P.O.
                    Box
                    10047
Fax
                  (503)
                  321-2649 	Portland,
                  Oregon 97296-0047 


        

      

       

    

    Exhibit
      10.1

     

    
      	
               

            	
              January
                6,
                2006

            


    

    Gregory
      (Greg) J. Witherspoon

    PO
      Box 10047

    Portland,
      OR 97296

     

    Dear
      Greg:

     

    This
      letter serves to outline those areas
      related to your transfer from a temporary employee to a regular full-time
      employee with Schnitzer Steel Industries, Inc. (“Company”) effective January 9,
      2006 (“Effective Date”):

     

    
      	
              Position:

               

            	
              Chief
                Financial Officer for Schnitzer
                Steel Industries, Inc.

               

            
	
              Compensation:

               

            	
              Your
                salary will be $450,000 per annum
                on the Effective Date

            
	
              Reporting
                To:

               

            	
              John
                D. Carter, President and Chief
                Executive Officer

              Schnitzer
                Steel Industries,
                Inc.

               

            
	
              Seniority
                Date:

            	
              You
                will be granted Company seniority
                based on your hire date as a temporary employee as of August 23,
                2005
                (“Seniority Date”). Further, your status as an employee will become that
                of a Regular, Full-Time employee, as defined by the Company’s Human
                Resources Policy Manual, on the Effective Date.

               

            
	
              Bonus
                Eligibility:

               

            	
              You
                are eligible for participation in
                the Company’s Economic Value Added (EVA®) bonus program as of
                the Effective Date. Your EVA target is 65% of your EVA earnings (that
                accrue beginning with the Effective Date), which is then adjusted
                by the
                EVA center multiple that you will be assigned. You will participate
                100%
                in the “SSI without Joint Ventures” EVA Center. Bonus amounts, as
                formulated, are payable following the Company’s fiscal year-end on August
                31st, and are based on Company performance and are not
                guaranteed.

               

            
	
              Performance
                and Salary
                Review:

            	
              Normally,
                performance appraisals are
                conducted during the second calendar quarter of each year (usually
                in
                April or May). Salary reviews are normally conducted in June of each
                year.
                Increases, if any, depend upon individual performance and company
                financial considerations and are not automatic in nature. You will
                be
                eligible to participate in the June 2006 salary review.

               

            
	
              Auto
                Allowance:

            	
              You
                will be granted Auto Allowance,
                Level C, Oregon, which is currently at $700 per month. You will also
                receive a Company gas card. The auto allowance and gas card are pursuant
                to Human Resources Policy #640, and are considered taxable income
                to
                employees.

               

            
	
              Relocation:

            	
              The
                Company will provide a relocation
                package to include packing, insurance, shipment, storage and unpacking
                for
                your household goods at the final destination for you and your immediate
                family (those living at the same residence). Please understand that
                some
                portion of this relocation package will likely be taxable to you
                and you
                should consult your personal tax advisor for more
                information.

               

            


    

     

    
    

     

    
    

    
      	
              Gregory
                J. Witherspoon

            	
              Page
                2

            


    

     

     

     

     

    
      	
              Long-Term
                Incentive
                Program

            	
              You
                will be eligible for participation
                in the Schnitzer Steel Industries, Inc. Long-Term Incentive Program
                (“LTIP”) at a level commensurate with your position as a member of the
                executive team. Final details on this program will be confirmed following
                approval of the recent plan amendments by the Company’s shareholders at
                the annual meeting in January, 2006. Actual award levels under the
                LTIP
                are subject to approval by the Compensation Committee of the Board
                of
                Directors.

               

            
	
              Benefits
                Effective:

               

               

               

               

               

            	
              The
                effective date of your benefits will
                be determined by the waiting periods, if any, contained in each of
                the
                plans for which you are eligible. Other benefits are effective per
                plans
                and coverages as currently exist or as modified in the future for
                the
                salary group of which you are a part. The Company reserves the right
                to
                amend, alter or eliminate coverages. In addition to benefits under
                the
                Schnitzer self-insured health plan, coverage will also be provided
                under
                the Executive medical reimbursement plan. 

               

              Based
                on your Seniority Date, you will
                be eligible to enroll into the health and welfare medical plans on
                the
                Effective Date.

               

            
	
              Paid
                Time Off
                (“PTO”)

            	
              PTO
                will
                accrue on an accelerated schedule. You will begin accruing PTO at
                the four
                (4) year rate of 6.16 hours per pay period or 160 hours per year.
                Your
                accrual rate will remain the same until at such time in the future
                you
                become eligible for the next highest accrual level, which is currently
                at
                9 years of service. PTO guidelines are provided under Human Resources
                Policy #525.

               

            


    

     

    Upon
      your acceptance of this letter and
      commencement of your full time employment your employment as interim Chief
      Financial Officer under the letter dated August 31, 2005 shall terminate and
      the
      terms of your employment shall be governed by this letter.

     

    The
      foregoing does not constitute a contract
      since the Company is an "at-will" employer. "At-will" means that employment
      and
      compensation can be terminated, with or without cause and with or without
      notice, at any time, at the option of the Company or yourself. This offer is
      made contingent on your successfully passing a drug screen provided by the
      Company.

     

    Greg,
      we all join in congratulating you on
      your position with the Company and wish you a continuing successful
      career.

     

    
      	
              Sincerely,

            	
              Accepted,

            


    

     

    
      	
              /S/
                John D. Carter

            	
              /S/
                Gregory J.
                Witherspoon

            


    

     

    
      	
              John
                D. Carter

            	
              Gregory
                J.
                Witherspoon

            
	
              President
                and Chief Executive
                Officer

            	
              Employee

            	
               

            


    

     

    cc:
      Employee File