##### 



(RUSSEL METALS LOGO) NOTICE AND MANAGEMENT PROXY
CIRCULAR FOR THE ANNUAL AND SPECIAL
MEETING OF SHAREHOLDERS OFRUSSEL METALS INC. To be held at theThe Toronto Board of Trade,1 First Canadian Place, 3rdFloorToronto, Ontario on Wednesday, April 27, 2005At 4:30 pm (Toronto Time) THIS BOOKLET CONTAINS IMPORTANT INFORMATION FOR SHAREHOLDERS




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##### 



TABLE OF CONTENTS PageNOTICE OF ANNUAL AND SPECIAL MEETING
    
    
    3MANAGEMENT PROXY CIRCULARVoting Information
    
    
    4Election of Directors
    
    
    5Executive Compensation
    
    
    7Equity Plans
    
    
    14Corporate Governance
    
    
    17Director Compensation
    
    
    23Directors and Officers Liability Insurance
    
    
    25Amendment to the Companys Share Option Plan
    
    
    25Auditors
    
    
    26Shareholder Proposals
    
    
    26Availability of Disclosure Documents
    
    
    27Certificate
    
    
    28Schedule A  Text of a Resolution to Approve an Amendment to the
Share Option Plan
    
    
    29Schedule B  Charter of the Board of Directors
    
    
    30Separate EnclosureFORM OF PROXY
    
    (Blue Paper)
 2




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##### 



(RUSSEL METALS LOGO) NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS  Date: Wednesday, April 27, 2005Time: 4:30 p.m. (Eastern Time)Place: The Toronto Board of Trade, 1 First Canadian Place,
3rd Floor,
Toronto, Ontario BUSINESS OF THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS:  1.
    To receive and consider the consolidated financial statements of the Company and its
subsidiaries for the year ended December 31, 2004 together with the report of the auditors thereon;2.
    To elect Directors;3.
    To appoint auditors and to authorize the Directors to fix their remuneration;4.
    To consider and if thought advisable, to approve, with or without variation, an ordinary
resolution approving an amendment to the Companys Share Option Plan to permit the grant of options
under such Plan, provided that the aggregate number of Common Shares reserved for issuance
under the Plan at any time shall not exceed 5% of the outstanding Common Shares of the
Company (on an undiluted basis), as described in the accompanying Management Proxy Circular;
and5.
    To transact such further or other business as may properly come before the meeting or any
postponement or adjournment thereof. IMPORTANT INFORMATION: If you are unable to be present personally at the meeting, please complete the enclosed
form of proxy and return it in the postage prepaid envelope provided. Proxies to be used at the
meeting must be deposited with the Company or with CIBC Mellon Trust Company not less than 24
hours preceding the meeting or any postponement or adjournment thereof. By Order of the Board,/s/ William M. OReillyWILLIAM M. OREILLY,SecretaryMississauga, OntarioMarch 1, 2005
 3




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##### 



RUSSEL METALS INC. MANAGEMENT PROXY CIRCULAR Information as at March 1, 2005, unless otherwise indicated This Management Proxy Circular is furnished in connection with the solicitation of
proxies by the Management of Russel Metals Inc.(the Company) for use at the annual and special
meeting (the Meeting) of shareholders of the Company, to be held on Wednesday, April 27, 2005, or
at any postponement or adjournment thereof. It is expected that the solicitation will be made
primarily by mail, but proxies may also be solicited personally or by telephone by officers,
employees and agents of the Company. The cost of the solicitation of proxies will be borne by the
Company. VOTING INFORMATION How do I Vote? Registered Shareholders Each registered shareholder is entitled to one vote for each common share registered in
his or her name as of the close of business on the record date. The record date has been set at
March 21, 2005. If you purchased Common Shares of the Company from a registered shareholder after
the record date, you may vote those shares at the Meeting by requesting CIBC Mellon Trust Company
to include your name on the list of shareholders eligible to vote at the Meeting. In that case, you
will have to provide properly endorsed share certificates or other documentation that establishes
your ownership. This request must be made at least ten days before the Meeting. If you are eligible
to vote and your shares are registered in your name, you can vote your shares in person at the
meeting or by proxy (explained below). Non-Registered Beneficial Shareholders If your shares are held in an account with a trust company, securities broker or other
financial institution (an Intermediary), you are considered to be a non-registered beneficial
shareholder. The Intermediary is the legal entity entitled to vote your shares for you, in the
manner that you direct them. Non-registered beneficial shareholders should not complete the blue
form of proxy being circulated by Management. Instead, you should follow the instructions that
your Intermediary delivered to you with this Circular. This form will provide the necessary
instructions to your Intermediary as to how you would like to vote your Common Shares at the
Meeting. If you plan on attending the Meeting in person, you will not be entitled to vote in
person unless the proper documentation is completed. You should contact your Intermediary well in
advance of the Meeting and follow its instructions if you want to vote in person. Voting By Proxy The Chairman and the President and Chief Executive Officer of the Company are the persons
designated in the enclosed form of proxy who will represent Management at the Meeting. You have
the right, as a shareholder, to appoint a different person to attend and to act for you on your
behalf at the Meeting. You may exercise this right by inserting in the space provided in the form
of proxy the name of the other person you would like to appoint as nominee. Your proxy, in order
to be used at the Meeting, must be deposited with the Company or with CIBC Mellon Trust Company
not less than 24 hours preceding the Meeting or any postponement or adjournment thereof. If there is a ballot called for at the Meeting, the shares represented by proxies in
favour of the persons named by Management on the enclosed form of proxy will be voted or withheld
from voting in accordance with the instructions specified by shareholders in the forms of proxy. 4




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##### 



If you have not specified in the form of proxy how to vote on a particular matter,
your proxyholder is entitled to vote your Common Shares as he or she sees fit. If your proxy form
does not specify how to vote on a particular matter and if you have authorized the Companys
Chairman or the President and Chief Executive Officer to act as your proxyholder, your Common
Shares will be voted in favour of the particular matter. What if there are amendments or other matters brought before the Meeting? The enclosed form of proxy confers discretionary authority upon the persons named therein
with respect to amendments to the matters identified in the notice of meeting or other matters
that may properly come before the Meeting.At the date of this Management Proxy Circular,
Management is not aware of any such amendments or other matters to come before the Meeting. What if I change my mind and want to revoke my proxy? If you change your mind and want to revoke your proxy, after you have delivered it to
CIBC Mellon Trust Company, you (or your attorney if one has been authorized; or if a corporation,
an officer thereof) may revoke it by completing another properly executed form of proxy or
instrument in writing, bearing a later date and delivering it to CIBC Mellon Trust Company or to
the registered office of the Company located at Suite 210, 1900 Minnesota Court, Mississauga,
Ontario L5N 3C9. You may also deposit your revocation with the Chairman of the meeting on the day
of the meeting or any postponement or adjournment thereof. VOTING SHARES AND PRINCIPAL HOLDERS THEREOF The authorized capital of the Company consists of: (i) an unlimited number of Common
Shares (Common Shares) without nominal or par value; (ii) an unlimited number of preferred
shares without nominal or par value designated as Class I preferred shares, issuable in series;
and (iii) an unlimited number of preferred shares without nominal or par value designated as Class
II preferred shares, issuable in series. As of March 1, 2005, there were 50,011,959 Common Shares outstanding. To the knowledge of the
Directors and officers of the Company, no person beneficially owns or exercises control or
direction over more than 10% of the Common Shares. ELECTION OF DIRECTORS The articles of the Company currently provide that the Board of Directors shall consist
of a minimum of seven and a maximum of 12 Directors and the by-laws make similar provision. The
Directors of the Company have fixed the number of Directors to be elected at the upcoming annual
and special meeting of shareholders at eight. Each person whose name appears below is proposed to
be elected as a Director of the Company to serve until the next annual meeting of shareholders or
until his or her successor is elected or appointed. If a poll is demanded, the shares represented
by proxies in favour of Management nominees will be voted in favour of the election of such
nominees unless a shareholder has specified in a form of proxy that the shareholders shares are to
be withheld from voting in the election of Directors. In the event that any vacancy occurs in the
slate of such nominees, proxies in favour of Management will be voted for another nominee in the
discretion of Management unless the shareholder has specified in the proxy that the shareholders
shares are to be withheld from voting in the election of Directors. 5




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##### 



Managements Nominees for Election as Directors of the Company  Name / Jurisdiction of
    
    
    
    
    
    Number of
    
    
    Number ofResidence / Position Held / Date
    
    
    
    
    
    Common
    
    
    Deferred ShareBecame a Director
    
    
    Principal Occupation and Biography
    
    
    Shares Held
    
    
    Units Held(6)Pierre
Brunet(1)(4)(5)Montreal,
Quebec, Canada Director
July 30, 2004
    
    
    Mr. Brunet is a consultant for National Bank
Financial Group (banking and investments). From 2002 to
2004 he was Chair of the Canadian Institute of Chartered
Accountants (CICA), from 2000 to 2002, he was Vice-Chair
of the CICA and from 1999 to 2000, Mr. Brunet was Co-Chair
and Co-Chief Executive Officer of National Bank Financial
Group.
    
    
    
    5,000
    
    
    
    
    602James
F. Dinning(1)(2)Calgary,
Alberta, Canada Director
February 17, 2003
    
    
    Mr. Dinning is Chairman of the Board of Western
Financial Group (insurance, investment and banking). From
1997 to 2005, Mr. Dinning was Executive Vice President of
TransAlta Corporation. Prior to 1997, Mr. Dinning held
several key positions during his 11 years as a member of
the Legislative Assembly in Alberta, including Provincial
Treasurer from 1992 to 1997.
    
    
    
    4,000
    
    
    
    
    1,194Carl R.
Fiora(1)(2) Middletown,
Ohio, U.S.A.Director May 11, 1994
    
    
    Mr. Fiora is a Corporate Director. Prior to retiring
on November 30, 1990, Mr. Fiora was the President and Chief
Executive Officer of Armco Steel Company L.P., a steel
manufacturing company.
    
    
    
    19,000
    
    
    
    
    1,194Anthony
F.
Griffiths(2)(3)(5)Toronto, Ontario, Canada Director;
Chairman of the Board May 14, 1997
    
    
    Mr. Griffiths is a Corporate Director. From 1993 to
present, Mr. Griffiths has been associated with various
companies acting as an independent consultant From 1985 to
1993 Mr. Griffiths served in several capacities at Mitel
Corporation, including Chief Executive Officer and
Chairman.
    
    
    
    87,000
    
    
    
    
    1,194Robbert
Hartog(1)(3)
Perkinsfield, Ontario, Canada Director
May 14, 1997
    
    
    Mr. Hartog is President of Robhar Investments Ltd., a
private investment company.
    
    
    
    92,850
    
    
    
    
    1,194Lise
Lachapelle(3)(4)
Montreal, Quebec, Canada Director May
15, 1996
    
    
    Ms. Lachapelle is a Corporate Director. She was the
President and Chief Executive Officer of the Canadian Pulp
and Paper Association from September 1994 to December 2001.
Prior to September 1994, she was President of Strategico
Inc. for one year and a consultant with Strategico for
Three years.
    
    
    
    5,000
    
    
    
    
    1,194John W.
Robinson(3)(4)
Greensboro, North Carolina, U.S.A. Director
May 11, 1995
    
    
    Mr. Robinson is a Corporate Director. He was
President and Chief Executive Officer of SMP Steel Corp.
(steel distribution) until his retirement in December,
1998.
    
    
    
    41,000
    
    
    
    
    1,194Edward M. Siegel, Jr.Westport, Connecticut, U.S.A. Director; President and
Chief Executive Officer May 6,
1998
    
    
    Mr. Siegel is an Executive Officer of the Company. In
February 1987, Mr. Siegel joined Russel Metals Inc. as a
Vice President with responsibility for the export of prime
and secondary materials from Canadian steel mills and for
the import of semi-finished material to Canadian mills.
Over the succeeding 13 years, Mr. Siegel assumed various
responsibilities, eventually becoming President and Chief
Executive Officer of Russel Metals Inc. in 1997. In 1985,
Mr. Siegel joined Duferco Inc. as a Vice President, with
responsibility for sterling a tubular products operation
and for augmenting Dufercos Trading of steel products
worldwide. Mr. Siegels career in the metals industry began
in 1965 when he joined The Titan Industrial Corporation, a
steel Trading company based in New York. As Senior Vice
President, his primary responsibility was for the tubular
products division.
    
    
    
    800,000
    
    
    
    
    n/a
   (1)
    
    Member of the Audit Committee(2)
    
    Member of the Nominating and Corporate Governance Committee(3)
    
    Member of the Management Resources and Compensation Committee(4)
    
    Member of the Environmental Management and Health
& Safety Committee 6




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##### 



(5)
    
    Mr. Griffiths is a Director of Brazilian Resources Inc. which was issued a temporary
cease trading order by the Ontario Securities
Commission on June 10, 2001 relating to management and insiders. This order was rescinded on
July 30, 2001. Mr. Griffiths was
formerly a Director of Confederation Life Insurance Company at the time it was placed into
liquidation (1994) and Consumers
Packaging Inc. at the time it was placed into liquidation under the protection of the CCAA
(2001). Messrs. Brunet and Griffiths were
directors of Slater Steel Inc., which operated under the protection of the CCAA in an orderly
wind-down (2003). Mr. Griffiths was
formerly a Director of Consumers Packaging Inc. during the protection period under the CCAA
(2001) and cease trade orders were
issued against management and insiders due to failure to file financial statements.(6)
    
    See Deferred Share Unit Plan on page 15 of this circular. Share Ownership of Directors In February 2004, the Company adopted a policy requiring each Director of the Company to
beneficially own not fewer than 10,000 Common Shares or deferred share units or a combination
thereof. Any Director who does not meet this minimum requirement at the date of his or her first
election or re-election to the Board of Directors following implementation of this policy is
required to achieve this ownership level within three years from the date of such first election or
re-election. As of the date hereof, the nominees for election as Directors of the Company at the
upcoming annual and special meeting of shareholders beneficially own or control an aggregate of
1,053,850 Common Shares. In addition, such nominees hold an aggregate of 7,766 deferred share units
under the Companys Deferred Share Unit Plan for Directors, which is described on page 15 of this
circular. Committees of the Board of Directors The Company is required to have an Audit Committee of the Board of Directors. Other
committees of the Board are the Management Resources and Compensation Committee, the Nominating
and Corporate Governance Committee and the Environmental Management and Health & Safety Committee.
The members of each committee are identified in the table, Managements Nominees for Election as
Directors of Company, on page 6. Information relating to the composition and mandate of these
committees is described under Report on Executive Compensation following this paragraph and
Statement of Corporate Governance Practices, commencing on page 18 of this circular. REPORT ON EXECUTIVE COMPENSATION Composition of the Management Resources and Compensation Committee The Companys Management Resources and Compensation Committee is comprised of four
unrelated members of the Board of Directors, L. Lachapelle (Chair of the Committee), A. F.
Griffiths, R. Hartog and J. W. Robinson. It is the responsibility of the Committee to review the
compensation policies and levels for the Companys executive officers, to ensure that such
compensation is competitive and reasonably related to individual and corporate performance, and to
make recommendations to the Board of Directors with respect to such matters. The Committee meets
as required, but not less frequently than annually. The Management Resources and Compensation
Committee met four times during 2004. Report of the Management Resources and Compensation Committee with Respect to
Executive Compensation The Companys executive compensation policies and practices are designed to provide a
competitive level of total compensation, to recognize and reward superior performance by
individual executives and to foster a common perspective between the Companys executive officers
and its shareholders. The key components for executive officer compensation are base salary,
short-term incentives in the form of cash bonus opportunities (expressed as a variable percentage
of base salary which increases with the level of basic earnings per share of the Company), and
long-term incentives 7




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##### 



in the form of stock options. Pay for performance is an important underlying principle of the
Companys executive compensation philosophy, with the result that variable compensation (in the
form of cash bonuses and stock options) can represent a substantial proportion of total
compensation in a successful year. The Committee uses various information sources, including independent consultants, to monitor
the competitive position of the Companys salaries, bonus plans and stock-based incentives, and to
assess the effectiveness of the Companys incentive plans in contributing to corporate
performance. The Committee uses comparative data to ensure the ability of the Company to attract,
retain and motivate key executives. The comparative group includes large autonomous industrial
companies in Canada and the United States and other companies operating in the metals industry in
North America. The Companys executive compensation policies provide for base salaries which are competitive
with similar positions in the comparator group. Individual levels, which are reviewed annually or
in some cases, bi-annually, may vary from this objective, depending upon the particular experience
and other qualifications of the individual, sustained performance level, length of service and
other relevant factors. The Committee has established a Management Incentive Compensation Plan for executive
officers, which ties annual cash bonuses to profit sharing based on audited annual basic earnings
per share of the Company over a minimum threshold. Annual incentive bonuses are paid in February
following the year in which they are earned. Executive performance is motivated in part by linking total compensation with long-term share
performance through the use of stock options. Options granted to executives under the Companys
share option plan become immediately exercisable with respect to 20% of the optioned Common Shares
and exercisable as to an additional 20% following each of the first, second, third and fourth
anniversaries of the date of grant. The options have an exercise price not less than the
prevailing market price at the date of the grant and a term of 10 years. The amount and terms of
outstanding options are among the factors which are considered by the Committee in making
recommendations to the Board with respect to the grant of additional options. The annual salary of the Chief Executive Officer for 2004 was US $500,000, unchanged from
2003. The salary is considered by the Committee to be appropriate based on the Chief Executive
Officers performance, and performance and compensation data relevant to the comparator group. In
addition, the Committee believes that this salary is commensurate with the considerable industry
experience and knowledge and management abilities of the Chief Executive Officer. A bonus of
US$3,070,000 was paid to Mr. Siegel as Chief Executive Officer in 2005 for the 2004 fiscal year.
This amount was determined in accordance with the Companys Management Incentive Compensation Plan
for executive officers, is directly related to the Companys reported basic earnings per share for
the year and reflects the Companys record earnings per share. In addition, Mr. Siegel was granted
options to purchase 350,000 Common Shares in 2004. Submitted on behalf of the Management Resources and Compensation Committee: A. F. GriffithsR. HartogL. Lachapelle (Chair)J. W. Robinson
 8




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##### 



Performance Graph The following graph shows a comparison over the five year period ended December 31,
2004 of the value of $100.00 originally invested in Common Shares and the S&P/TSX Composite
Index and in each case assuming reinvestment of cash dividends paid. (PERFORMANCE GRAPH) Dec-1999
    
    
    
    Dec-2000
    
    
    
    Dec-2001
    
    
    
    Dec-2002
   
    
    
    Dec-2003

    
    
    
    
    Dec-2004S&P/TSX Composite Index
    
    
    $
    100.00
    
    
    
    $
    107.41
    
    
    
    $
    93.91
    
    
    
    $
    82.23
    
    
    
    $
    104.20
    
    
    
    $
    119.29Russel Metals Common Shares
    
    
    $
    100.00
    
    
    
    $
    78.71
    
    
    
    $
    103.67
    
    
    
    $
    153.86
    
    
    
    $
    277.88
    
    
    
    $
    512.26
 9




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Summary Compensation Table The following table provides a summary of compensation earned during each of the last three
fiscal years by the Chief Executive Officer and the other named executive officers of the Company
as required by applicable securities legislation.  Annual CompensationLong-TermCompensationSecurities UnderOther Annual
    
    
    Options
    
    
    All OtherName and Principal Position
    
    
    Year
    
    
    Salary
    
    
    Bonus
    
    
    Compensation(1)
    
    

Granted(2)
    
    
    Compensation(3)Edward M. Siegel, Jr.(4)
President and Chief Executive
Officer
    
    
    2004
2003
2002
    
    $$$
    500,000
500,000
450,000
    
    $$$
    3,070,000
625,000
843,750
    
    $$$
    (123,755)
20,682
21,505
    
    
    350,000
300,000
225,000
    
    $$$
    18,191
18,391
20,988Brian R. Hedges
Executive Vice President and 
Chief Financial Officer
    
    
    2004
2003
2002
    
    $$$
    405,000
390,000
350,000
    
    $$$
    1,436,760
292,500
393,750
    
    
    


    
    
    175,000
125,000
75,000
    
    $$$
    10,153
10,153
10,011Marion E. Britton 
Vice President, Chief
Accounting Officer and
Assistant Secretary
    
    
    2004
2003
2002
    
    $$$
    189,686
175,000
158,039
    
    $$$
    694,041
113,750
179,375
    
    
    


    
    
    35,000
15,000
15,000
    
    $$$
    1,168
1,218
9,851Maureen A. Kelly 
Vice President, Information 
Systems
    
    
    2004
2003
2002
    
    $$$
    227,691
212,669
207,309
    
    $$$
    561,705
60,486
85,977
    
    
    n/a
n/a
n/a
    
    
    25,000
15,000
10,000
    
    $$$
    10,642
6,784
4,851David J. Halcrow
Vice President, Purchasing and 
Inventory Management
    
    
    2004
2003
2002
    
    $$$
    122,833
112,583
107,308
    
    $$$
    531,705
60,486
85,977
    
    
    


    
    
    15,000
15,000
15,000
    
    $$$
    12,224
10,772
10,747
   (1)
    
    The value of perquisites for each of Mr. Siegel, Mr. Hedges, Ms. Britton and Mr. Halcrow
is less than the lesser of $50,000 and 10% of
the named executive officers total annual salary and bonus, and accordingly they are not
reflected in this table. The amounts shown for
Mr. Siegel represent tax equalization payments made to Mr. Siegel. In 2004, Mr. Siegel
reimbursed the Company for foreign tax credits
utilized in the year.(2)
    
    The numbers shown indicate the number of Common Shares in respect of which options were
granted to the named executive officer
during the year in question.(3)
    
    The amounts shown represent the Companys contributions to the 401K Plan for Mr. Siegel; a
registered retirement savings plan and
the Value Sharing Plan for each of Ms. Kelly and Mr. Halcrow; and the Group Term Life Insurance
Plan for each of the named
executive officers. Group Term Life and Value Sharing Plan benefits are available to all
employees. The amounts for Mr. Siegel,
Mr. Hedges and Ms. Britton in this column have been restated for 2002 and 2003 as the Company s
contributions to Group Term Life
Insurance Plans were not included in previous years.(4)
    
    Compensation for Mr. Siegel is paid in U.S. dollars and thus is reported in U.S. dollars. All
other amounts shown in this table are in
Canadian dollars. 10




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##### 



Options Granted During 2004 The following table sets out options granted by the Company to the named executive
officers during 2004 to purchase Common Shares of the Company.  % of Total
    
    
    
    
    
    
    
    
    Market ValueCommon Shares
    
    
    
    Options Granted
    
    
    
    Exercise or
    
    
    
    of Common
    
    
    
    ExpirationUnder Options
    
    
    
    to Employees in
    
    
    
    Base Price Per
    
    
    
    Shares on the
    
    
    
    DateName
    
    
    Granted
    
    
    
    2004
    
    
    
    Common Share
    
    
    
    Date of Grant
    
    
    
    M/D/YrEdward M. Siegel, Jr.
    
    
    
    350,000
    
    
    
    
    48.61
    %
    
    
    $
    9.15
    
    
    
    $
    9.15
    
    
    
    
    02/18/2014Brian R. Hedges
    
    
    
    175,000
    
    
    
    
    24.30
    %
    
    
    $
    9.15
    
    
    
    $
    9.15
    
    
    
    
    02/18/2014Marion E. Britton
    
    
    
    35,000
    
    
    
    
    4.86
    %
    
    
    $
    9.15
    
    
    
    $
    9.15
    
    
    
    
    02/18/2014Maureen A. Kelly
    
    
    
    25,000
    
    
    
    
    3.47
    %
    
    
    $
    9.15
    
    
    
    $
    9.15
    
    
    
    
    02/18/2014David J. Halcrow
    
    
    
    15,000
    
    
    
    
    2.08
    %
    
    
    $
    9.15
    
    
    
    $
    9.15
    
    
    
    
    02/18/2014
 All of the above options are immediately exercisable with respect to 20% of the optioned
Common Shares and are exercisable as to an additional 20% following each of the first, second,
third and fourth anniversaries of the date of grant. Aggregate Stock Option Exercises During 2004 and Value of Options at December 31, 2004 The following table sets out certain information with respect to Common Shares under
option to the named executive officers as at December 31, 2004.  Value of UnexercisedOptions Exercised
    
    
    
    Unexercised Options at
    
    
    
    In-The-Money Options atDuring 2004
    
    
    
    December 31, 2004
    
    
    

December
31,
2004(1)Securities
    
    
    
    AggregateAcquired on
    
    
    
    ValueName
    
    
    Exercise
    
    
    
    Realized
    
    
    
    Exercisable
    
    
    
    Unexercisable
    
    
    
    Exercisable
    
    
    
    UnexercisableEdward M. Siegel, Jr.
    
    
    
    260,000
    
    
    
    $
    1,583,250
    
    
    
    
    
    
    
    
    
    600,000
    
    
    
    
    
    
    
    
    $
    5,314,500Brian R. Hedges
    
    
    
    105,000
    
    
    
    $
    600,750
    
    
    
    
    
    
    
    
    
    265,000
    
    
    
    
    
    
    
    
    $
    2,264,000Marion E. Britton
    
    
    
    24,000
    
    
    
    $
    145,590
    
    
    
    
    7,000
    
    
    
    
    45,500
    
    
    
    $
    44,450
    
    
    
    $
    372,250Maureen A. Kelly
    
    
    
    52,500
    
    
    
    $
    390,950
    
    
    
    
    5,000
    
    
    
    
    35,000
    
    
    
    $
    31,750
    
    
    
    $
    291,700David J. Halcrow
    
    
    
    9,000
    
    
    
    $
    59,790
    
    
    
    
    3,000
    
    
    
    
    27,000
    
    
    
    $
    19,050
    
    
    
    $
    239,400
    Indebtedness of Directors, Senior Officers and Named Executive Officers Under Securities Purchase Programs No current or former Director, executive officer, employee, proposed nominee for
election as a Director or any associate of any such Director or officer or proposed nominee had
any indebtedness to, or guaranteed or supported by, the Company or any of its subsidiaries as at
December 31, 2004. Defined Benefit Pension Plans The Company provides retirement benefits in the form of pensions from the Companys
registered pension plans or participation in a Registered Retirement Savings Plan. The Companys
contributions on behalf of Ms. Kelly and Mr. Halcrow to a Registered Retirement Savings Plan are
included in the Compensation Table located on page 10. 11




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##### 



Mr. Siegel participates in the Companys Defined Contribution Plan covering the U.S.
employees of its affiliated group of companies. The Company makes contributions based on a
percentage of Mr. Siegels compensation and contributions up to a maximum each year. The maximum
for 2004 was US $8,200 and is reflected in the Compensation Table located on page 10. All
contributions are vested immediately. Mr. Hedges and Ms. Britton participate in a defined benefit final average formula plan which
will provide an annual pension equal to 1.3% of pensionable earnings up to the Canada Pension Plan
maximum pensionable earnings level and 2% of pensionable earnings above such level based on the
highest consecutive 60 months pensionable earnings, for each year of credited service subject to
the maximum allowed. The normal form of benefit payable at age 65 is a life annuity guaranteed for
120 months or a joint and survivor pension equal to 60% of the individuals pension entitlement.
The credited years of service for Mr. Hedges and Ms. Britton to December 31, 2004 are 10.5 and 20
years, respectively. The defined benefit pension entitlements referred to above are, in each case, subject to the
maximum allowed under a registered plan under the Income Tax Act for each year of credited
service. The limit for 2004 was $1,833. There are no offsets to the benefits from any of the
foregoing plans. The following table illustrates the annual pension payable from the defined
benefit plan for various periods of service, assuming retirement at age 65 and annual remuneration
at the maximum. Years of Service10
    
    15
    
    
    20
    
    
    25
    
    
    30
    
    
    35$18,330
    
    $
    27,490
    
    
    $
    36,660
    
    
    $
    45,830
    
    
    $
    55,000
    
    
    $
    64,160
 Mr. Hedges has entered into a supplementary retiring allowance agreement with the Company,
particulars of which are set out below under the heading Employment, Retiring Allowance and Change
of Control Agreements. Based upon current salary levels and Canada Pension Plan benefits, the
estimated annual benefit payable upon retirement at normal retirement age to Mr. Hedges under the
Companys registered pension plans referred to above and the supplementary retiring allowance
agreement discussed below is $224,230. The following table describes the 2004 service cost, accrued obligation at December 31, 2004,
and the accrued Annual Pension Benefits payable at age 60 for each of Mr. Hedges and Ms. Britton.
The amounts disclosed are estimates based on assumptions, and represent contractual entitlements
that may change over time. The method used to determine these estimated amounts may not be
identical to methods used by other issuers and, as a result, the figures may not be comparable. Executive Pension Value Disclosure(1)  Accrued Obligation at
    
    
    
    Accrued Annual Pension BenefitsName
    
    
    2004 Service Cost(3)
    
    
    
    December 31, 2004(4)
    
    
    
    Payable at Age 60(5)Brian R. Hedges(2) Defined Benefit Plan
    
    
    $
    21,000
    
    
    
    $
    228,000
    
    
    
    $
    19,000 SERP
    
    
    $
    45,000
    
    
    
    $
    762,000
    
    
    
    $
    65,000$
    66,000
    
    
    
    $
    990,000
    
    
    
    $
    84,000TotalMarion E. Britton(2) Defined Benefit Plan
    
    
    $
    20,000
    
    
    
    $
    415,000
    
    
    
    $
    37,000
   (1)
    
    Pension benefits reflected in this table are fully vested as at the valuation date.(2)
    
    Amounts shown include pension benefits under the Russel Metals Registered Pension Plan (RPP)
and for Mr. Hedges for benefits
under his Supplemental Retirement Allowance Agreement (SERP). 12




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##### 



(3)
    
    Service cost is the value of the projected benefits earned for years of pensionable
service accrued during 2004. The value has been
determined using the same actuarial assumptions as those used to determine the year-end pension
plan obligations disclosed in Note 13
of the 2004 consolidated financial statements.(4)
    
    Accrued obligations are the actuarial value of projected obligations for service to December
31, 2004. The value has been determined using the same actuarial assumptions as those used to determine the year-end pension plan
liabilities disclosed in Note 13 of the 2004
consolidated financial statements.(5)
    
    Accrued Annual Pension Benefits are based on early retirement provisions as at age 60
(retirement age assumed for determining 2004 Service Cost and Accrued Obligation at December 31, 2004), current compensation levels and years
of pensionable service for each of
the named executive officers. Employment, Retiring
Allowance and Change of Control Agreements CEO Employment Agreement In August of 1997, the Company entered into an employment agreement with Mr. Siegel
which provided for his employment as President and Chief Executive Officer of the Company
effective August 12, 1997. The agreement provided for compensation with respect to Mr. Siegels
annual base salary, bonus entitlement (expressed as a variable percentage of his base salary which
increases with the level of basic earnings per share of the Company) and grant of options to
acquire Common Shares. Mr. Siegels salary, bonus and stock options awarded for 2004 are disclosed
in the compensation table for named executive officers. Pursuant to the agreement, Mr. Siegel is
entitled to be compensated for the difference in effective income tax rates in Canada and the
United States. Mr. Siegel is entitled to benefits similar to those enjoyed by the Companys other
executive officers pursuant to the Companys normal benefit plans, practices and policies. Mr.
Siegels employment agreement provides for severance pay equal to two times his annual salary,
plus amounts estimated to be payable pursuant to any profit sharing, incentive compensation or
bonus program, in the event that his employment is terminated without just cause. In 2000, a subsidiary of the Company signed an agreement with Mr. Siegel to fund a Split
Dollar Whole Life Insurance Policy. The agreement requires the subsidiary to pay up to US $200,000
per year for approximately 13 years to fund a Whole Life Insurance Policy for US $6.5 million. The
premiums paid by the subsidiary will be reimbursed from the insurance proceeds or from the excess
cash surrender value commencing when the Whole Life Insurance Policy has been fully funded. CFO Supplementary Retiring Allowance Agreement The Company has entered into a supplementary retiring allowance agreement with Mr.
Hedges. Under such agreement he becomes entitled to a maximum annual pension at age 65 equal to the
product obtained by multiplying 3% by the number of years of service to a maximum of 20, including
periods of permanent disability, by his highest annual salary averaged over 3 years less the annual
amount of his pension under the Companys registered pension plans, and less the amount of the
Canada Pension Plan pension benefit payable on the date of retirement. If Mr. Hedges ceases to be
employed by the Company prior to age 65 and he elects to accelerate the payment of his
supplementary pension, the annual amount to which he will be entitled will be reduced by one-half
of 1% for each calendar month prior to the first month in which he would be 65 years of age. On the
death of Mr. Hedges following retirement, his surviving spouse would become entitled to a pension
of up to two-thirds of his supplementary pension. If there is no surviving spouse, a lump sum is
payable to a named beneficiary in the amount of 60 times the monthly pension benefit, less any
amount paid to Mr. Hedges during his lifetime pursuant to the supplementary retiring allowance
agreement. The agreement also provides for payment in the event of death and for payments in the
event of termination of employment without just cause following a change of control of the Company.
The Company has agreed to make payments to a separate trust, of the amounts, actuarially
determined, necessary to fund the future service obligations arising after January 1, 2003 under
the supplementary 13




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##### 



retiring allowance agreement. In 2004, the Company paid an aggregate of $204,434 to the trust in
respect of future service obligations which arose during 2003 and 2004. CEO and CFO Change of Control Agreements The Company has entered into change of control employment agreements with Messrs. Siegel
and Hedges providing for the continued employment of Mr. Siegel for two years and Mr. Hedges for
three years following a change of control and for severance payments in certain circumstances in
the event of the termination of their employment within such period. Such circumstances include
termination of employment (other than for just cause, disability or retirement) or termination of
employment of the executive officer for good reason. A change of control includes the acquisition of effective control of the Company by a
person or group of persons acting in concert and a determination by the Directors of the Company
that a change of control has occurred or is about to occur. For such purpose, any person or group
holding securities of the Company which entitle such holder or holders to cast more than 25% of
the votes attaching to all shares in the capital of the Company which may be cast to elect
Directors of the Company shall be deemed to be in a position to exercise effective control of the
Company. A change of control will also have occurred if incumbent Directors cease to constitute a
majority of the Board of Directors of the Company. For this purpose an incumbent Director is any
member of the Board of Directors of the Company who was a Director of the Company immediately
prior to the event which gave rise to the change of control, and any successor to an incumbent
Director who was recommended or elected or appointed to succeed an incumbent Director by the
affirmative vote of a majority of the incumbent Directors. Upon termination in the foregoing
circumstances, Mr. Siegel is entitled to receive a lump sum payment of two, and Mr. Hedges is
entitled to receive a lump sum payment of three, times their then current salary, including
amounts estimated to be payable pursuant to any profit sharing, incentive compensation or bonus
program. Messrs. Siegel and Hedges are also entitled to receive an amount on account of the value
of all options or other rights to acquire shares of the Company held by them or to which they
would have been entitled, an amount on account of pension benefits to which they would have been
entitled and certain other benefits. EQUITY PLANS The Company has established a Share Option Plan for employees and officers of the
Company, a Deferred Share Unit Plan for non-executive Directors of the Company and a Share
Purchase Plan for employees, all of which are designed to encourage eligible employees, officers
and non-executive Directors of the Company to align their interests directly to those of
shareholders and allow the Company to maintain competitive compensation programs that enable it to
attract and retain employees. The material terms of the Share Option Plan, Deferred Share Unit
Plan and Share Purchase Plan are described below. Share Option Plan Employees and officers of the Company are eligible to receive share options.
Approximately 64 employees of the Company currently hold share options pursuant to the Share
Option Plan (representing approximately 3% of the Companys employees). Non-executive Directors
became members of a Deferred Share Unit Plan effective April 2004 and no longer receive options
under the Share Option Plan. Six non-executive Directors currently hold an aggregate of 121,333
options granted prior to 2004. 14




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##### 



Subject to the requirements of the Share Option Plan, the Board of Directors has the
authority to select those employees and officers to whom share options are granted and the number
of share options granted to each individual. Options vest in accordance with terms determined by
the Board, but generally options granted are immediately exercisable as to 20% of the optioned
Common Shares and are exercisable as to an additional 20% following each of the first, second,
third and fourth anniversaries of the date of the grant. The options granted pursuant to the Share
Option Plan are not transferable and have a maximum term of ten years. The exercise price of Options is not less than the Market Price, which is the closing price
of a Common Share on the Toronto Stock Exchange on the Business Day immediately preceding such
date. In the event that the Common Shares did not trade on the Business Day immediately preceding
such date, the Market Price on the date of the grant shall be the average of the bid and ask
prices of a Common Share at the close of trading on the Business Day immediately preceding such
date. The Board of Directors may amend the Plan from time to time. Shareholder approval is required
when it is contemplated to increase the total number of Common Shares reserved for Options under
the Plan; decrease the Option Price of any options granted under the Plan or modify the provisions
of the Plan relating to eligibility if the modifications would have the potential of broadening
increased insider participation. Options may be granted in respect of authorized and unissued Common Shares provided that the
aggregate number of Common Shares reserved for issuance under the Share Option Plan, subject to
adjustment or increase of such number pursuant to the provisions of the Share Option Plan, shall
not exceed 5% of the outstanding Common Shares (on an undiluted basis). The total number of Common
Shares to be optioned to any Optionee under the Share Option Plan together with any Common Shares
reserved for issuance under options or warrants for services and other share compensation
arrangements to such Optionee shall not exceed 5% of the issued and outstanding Common Shares at
the date of the grant of the Option. On termination of employment, unvested share options are forfeited and vested share options
may be exercised for a period of 30 days following termination, subject to the discretion of the
Board of Directors to extend such period to not later than the original expiry date of the options
and the fourth anniversary of termination of employment. Upon death of an eligible person, all
options that vest in accordance with the terms of the Share Option Plan may be exercised by the
deceased participants legal personal representative for a period of eighteen months following
death. A total of 888,500 share options were granted during 2004, of which 288,500 options were
granted to employees and 600,000 options were granted to named executive officers. Overall,
1,657,516 options are currently outstanding, of which 548,683 are held by employees who are not
named executive officers or Directors. Shareholders are being asked at the Meeting to consider a proposal to amend the Share Option
Plan. Details of the Share Option Plan amendment can be found on page 25 of this circular under
the heading Amendment to the Companys Share Option Plan. Deferred Share Unit Plan In light of evolving practices, the Management Resources and Compensation Committee of
the Company reviewed the share option component of Director compensation against alternative
approaches to equity-based compensation, such as deferred share units. In April 2004, the Board of
Directors adopted a Deferred Share Unit Plan for its Directors to replace the grant of share
options to non-executive Directors. Two evaluations were used in determining deferred share unit
(DSU) compensation levels. The first was arrived at by calculating the average annual value of
gains made in 15




---



##### 



the last five years by non-executive Directors should they exercise their stock options. The
second was based on studies made of Board compensation in Canada. Sources include Corporate Board
Governance and Director Compensation in Canada (2003)by Korn/Ferry International, as well as
Canadian Board Trends and Practices at Leading Canadian Companiesby Spencer Stuart. A DSU is a unit equivalent in value to one common share of the Company, based on the average
of the daily average of the high and low Board lot trading prices of the Companys Common Shares
on the Toronto Stock Exchange (the Market Price) for the last five trading days immediately
prior to the date on which the value of the DSU is determined. DSUs are allocated on the last day
of March, June, September and December in each year. The number of DSUs credited quarterly to
each Directors account is determined by dividing $5,000 by the Market Price at the quarterly
payment date, subject to proration, if necessary, according to the number of days a person was a
Director of the Company during the calendar quarter. A Director may contribute all or a portion of
his/her annual Board retainer or annual chair retainer by providing the required notice to the
Company in accordance with the Plan. DSUs are redeemable only when a Director leaves the Board, thereby providing an ongoing
equity stake in the Company throughout the Directors service to the Company. The Company will
make a cash payment to a Director upon redemption, the value of which is determined by multiplying
the number of DSUs in the Directors account on the redemption date by the Market Price on such
redemption date. Applicable income tax and other withholdings, as required by law, will be
deducted. Share Purchase Plan The Company has a Share Purchase Plan (the Value Sharing Plan) to provide employees
with an opportunity to purchase Common Shares of the Company, furthering participants alignment
with the interests of shareholders and allowing them to share in the financial success to which
they contribute. New employees can join the Value Sharing Plan on the first day of the month
following the completion of three months of employment. Employees may contribute between a minimum
of 1% and a maximum of 5% of their base pay through payroll deductions. Under the Value Sharing
Plan, the Company contributes one-third of an employees contributions to acquire Common Shares of
the Company. No Company contributions are made in respect of additional or lump sum employee
contributions. The Value Sharing Plan is currently available to all employees in Canada and the
United States. In Canada, the Value Sharing Plan is administered by Sunlife Canada and in the United States
it is administered by Lasalle National Bank. These institutions administer the Value Sharing Plan
independently of the Company. Shares are purchased in the market on behalf of participants at
current market prices bi-weekly in Canada and at the beginning and middle of each month in the
United States and are distributed to participants accounts thereafter. An employee may withdraw
his/her employee contribution at any time, but if the employer contribution is withdrawn, he/she
may not re-enter the Value Sharing Plan for six months. 16




---



##### 



EQUITY PLAN INFORMATION The following table outlines certain information relating to the securities authorized
for issuance under the Companys equity plans as at December 31, 2004. The Share Option Plan was
approved by shareholders. The Company has prepared a proposal to amend the Share Option Plan.
Details of this amendment can be found on page 25 of this circular under the heading Amendment to
the Companys Share Option Plan.  Number of Securities RemainingNumber of Securities to be
    
    
    
    Weighted-Average
    
    
    
    Available for Future Issuance UnderIssued Upon Exercise of
    
    
    
    Exercise Price of
    
    
    
    Equity Plans (Excluding SecuritiesOutstanding Options
    
    
    
    Outstanding Options
    
    
    
    Reflected in Column (A))Plan Category
    
    
    (A)
    
    
    
    (B)
    
    
    
    (C)Share Option Plan(1)
    
    
    1,793,816
    
    
    
    $
    6.52
    
    
    
    48,900
   (1)
    
    The material features of the Share Option Plan are described on page 14 under the heading
Equity Plans  Share Option Plan CORPORATE GOVERNANCE The Company and its Board of Directors remain committed to corporate governance
practices that are appropriate for the Company and its business, while at the same time satisfying
all regulatory requirements. This section describes a number of the Companys governance
practices. Board of Directors Meetings Held and Attendance of Directors A list of the meetings of the Board and its committees held in 2004 is included below,
with the attendance record of each Director. Number
of Board and Committee Meetings Held Board of Directors
    
    
    10Audit Committee
    
    
    5Management Resources and Compensation
Committee
    
    
    4Nominating and Corporate Governance
Committee
    
    
    3Environmental Management and Health &
Safety Committee
    
    
    1
 Summary of Attendance of Directors  Attendance at Board of
    
    
    Attendance at CommitteeName of Director
    
    
    Directors Meetings
    
    
    MeetingsP. Brunet(1)
    
    
    1 of 1
    
    
    J. F. Dinning
    
    
    8 of 10
    
    
    8 of 8C. R. Fiora
    
    
    8 of 10
    
    
    8 of 8A. F. Griffiths
    
    
    10 of 10
    
    
    7 of 7R. Hartog
    
    
    10 of 10
    
    
    9 of 9L. Lachapelle
    
    
    8 of 10
    
    
    5 of 5J. W. Robinson
    
    
    9 of 10
    
    
    5 of 5E. M. Siegel, Jr.(2)
    
    
    10 of 10
    
    
    
   (1)
    
    Mr. Brunet became a Director on July 30, 2004 and a member of the Audit Committee and the
Environmental Management and
Health & Safety Committee on October 26, 2004.(2)
    
    Mr. Siegel is not a member of any of the Companys Board committees. 17




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##### 



Statement of Corporate Governance Practices The Toronto Stock Exchange (the TSX) requires that the Company disclose on an annual
basis, its approach to corporate governance with specific reference to the TSX Guidelines on
Corporate Governance (the TSX Guidelines). It is expected that the Canadian Securities
Regulators will introduce National Policy 58-201 and National Instrument 58-101 (the CSA
Governance Requirements), which will replace the TSX Guidelines. The disclosure set out below
reflects both the TSX Guidelines and the CSA Governance Requirements, in the form they were
released for comment. Disclosure Requirement
    

    Practices of Russel Metals Inc.Independence of the Board
    
    More than a majority of the members of the Companys Board of
Directors are independent Directors. The only Director who is not
independent is Mr. Siegel, the Companys President and Chief
Executive Officer.Each of the independent Directors is also an unrelated Director
for purposes of the TSX Guidelines.Other Board Positions
held by the Companys
Directors
    
    The Directors listed below also sit on the Boards of the public
company issuers indicated opposite their names:P. Brunet
    
    Transcontinental Inc. and Metro Inc.J.F.Dinning
    
    Finning International
Inc., JED Oil Inc., Liquor Store Income Fund, Oncolytics
Biotech Inc., Parkland Income Fund, Shaw Communications Inc.
and Western Financial GroupC.R. Fiora
    
    First Financial Bancorp.A.F. Griffiths
    
    Alliance Atlantis
Communications Inc., Binscarth PVC Ventures Inc., Counsel
Corporation, Fairfax Financial Holdings Limited, Hub
International Limited, IMI International Medical Innovations
Inc., Jaguar Mining Inc., Lindsey Morden Group Inc., Leitch
Technology Corp., Northbridge Financial Corporation, Odyssey
Re Holdings Corp. and Vitran CorporationR.Hartog
    
    Fairfax Financial Holdings Ltd., Lindsey Morden
Group, Inc., Northbridge Financial
Holdings Limited and Odyssey Re Holdings Corp.L. Lachapelle
    
    Industrielle-Alliance, Abitibi Consolidated Inc., BNP-Paribas
(Canada), INNERGEX Power Income Trust and Mirabaud Canada Inc.In Camera Meetings
    
    The independent Directors meet in camera at least twice annually.
Last year there were two such in camera sessions.Independent Chairman
    
    Mr. Griffiths is the Chairman of the Board and is an independent
Director.
 18




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##### 



Disclosure Requirement
    

    Practices of Russel Metals Inc.Board Mandate
    
    The mandate of the Board of Directors is included as Schedule B to
this circular and is located on page 30.Under the mandate, the Board of Directors has explicitly assumed
stewardship responsibility for the Company as well responsibility
for the matters specifically set out in the TSX Guidelines.The mandate provides that the Board of Directors shall review and
approve the strategic direction and annual business plan of the
Company and its capital expenditure budget. In addition, it
approves acquisitions and all capital expenditures in excess of
$1.0 million. It also reviews and approves changes in business
focus, corporate financings and debt issues.Size of Board
    
    The Companys articles require it to have a minimum of seven and a
maximum of 12 Directors. The Board believes that a Board with a
number of Directors within this range will allow it to operate
effectively. The number of Directors to be elected at the upcoming
annual and special meeting of shareholders is set at eight. The size
and composition of the Board brings to the Company a balance of
industry and operational expertise as well as backgrounds in other
areas that the Board believes are of benefit to the Company.Board Committees
    
    The following is a list of the Companys Board committees:
    
    Audit Committee
    
    Nominating and Corporate Governance Committee
    
    Management Resources and Compensation Committee
    
    Environmental Management and Health & Safety CommitteePosition descriptions for
    
    The Board has approved position descriptions for:the
Board and eachCommittee
    
    
    
    the Chairman of the Board
    
    the Chairman of each Committee of the Board.Position Descriptions
    
    The Board is satisfied that the functions and
respective
responsibilities of the Board and Management are clearly understood
and supported by all participants in the Companys governance
process.The Board expects Management to keep it apprised of all material
risks facing the Company and to provide it with regular reports on
the Companys activities and on any external developments that are
likely to affect the Company. The Board of Directors also expects
Management to advise it of any events which have or are likely to
have an effect on the Company. The interaction between the Board of
Directors and Management challenges Management to proactively manage
the cyclical nature of the business to ensure the maximizing of
shareholder value.
 19




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##### 



Disclosure Requirement
    

    Practices of Russel Metals Inc.Orientation Program
    
    New Directors have joined the Board of Directors in each of the last
two years. In each case, Management provided the new Directors with
background and information about the Company to assist the Director
in becoming conversant with the Companys business and priorities.
The Nominating and Corporate Governance Committee is in the process
of considering the need for a more formal approach to Director
orientation.Ongoing Education
Program
    
    Management makes arrangements for presentations to the Board of
Directors as appropriate in order to keep Directors up to date with
the issues facing the Company. The Nominating and Corporate
Governance Committee is in the process of considering the need for
a more formal approach to Director education.Culture of Ethical
Business Conduct
    
    The Board has approved and adopted a Code of Conduct and a Code
of Ethics, both of which apply to all the Companys Directors, officers
and employees. Both of these codes can be found on the Companys
website at www.russelmetals.com (see About Russel Metals).Monitoring Compliance
with Code of Conduct and
Code of Ethics
    
    The Board has adopted a requirement for regular reports on
compliance with the Code of Conduct and Code of Ethics.Conflict of Interest
    
    The Company has no contracts or other arrangements in place in
which any of its Directors or officers has a material interest and
does not anticipate entering into any such arrangement. If any such
arrangement were to arise, it would first be considered by the
Audit Committee and approved by the Board of Directors (in each
case, without the participation of the Director who had the
material interest in question).Audit Committee
    
    The mandate for the Audit Committee includes responsibility for
reviewing the Companys quarterly and annual financial statements
and managements discussion and analysis of financial conditions
and results of operations and for monitoring the Companys internal
control procedures. The Audit Committee meets regularly with the
Companys external auditors without Management being present. All
members are independent Directors. Additional information with
respect to the Audit Committee, including its mandate, can be found
in the Companys annual information form.Nominating and
    
    The Nominating and Corporate Governance Committee is a fully
independent committee of the Board.Corporate
GovernanceCommittee
    
    It is responsible for:
    
    developing and recommending governance guidelines for the
Company (and periodic review of those guidelines);
    
    identifying individuals qualified to become members of the Board;
and
    
    recommending Director nominees to be put before the shareholders
at each annual meeting.
 20




---



##### 



Disclosure Requirement
    
    Practices of Russel Metals Inc.The Nominating and Corporate Governance Committee and its
Chairman are appointed annually by the Board. As part of each
meeting, Committee members meet without any member of management
present. The Committee has the authority to retain and compensate
any consultants and advisors it considers necessary to fulfill its
mandate.Nomination of
New Directors
    
    There are currently no plans to recruit new Directors. However, as
and when new Directors have been required from time to time, the
Nominating and Corporate Governance Committee has determined the
skill set of a potential Director that it believed would best suit
the Company in the circumstances and developed, for consideration
by the Board, profiles of individuals whose background and skills
would complement those of the existing Directors.Independence of the
    
    The Board has a fully independent Management Resources and
Compensation Committee, the responsibilities of which include:Management
Resourcesand
CompensationCommittee
    
    
    
    
    
    reviewing and making recommendations to the Board (without the
participation of the CEO) concerning compensation of the
Companys CEO;
    
    
    reviewing and making
recommendations to the Board of Directors
concerning compensation of other executive officers and
Directors, incentive-based plans and equity-based plans;
    
    
    approving and monitoring share ownership policies; and
    
    
    reviewing compensation
disclosure in public documents, including
the Committees annual report on executive compensation for
inclusion in the Companys information circular in accordance
with applicable rules and regulations.Operation of theManagement
Resources
    
    The Management Resources and Compensation Committee considers
matters within its mandate and makes recommendations to the
full Board.and CompensationCommittee
    
    The Management Resources and Compensation Compensation
Committee and its Chairman are appointed annually by the Board. As
part of each meeting, Committee members meet without any member of
Management present. The Committee has the authority to retain and
compensate any consultants and advisors it considers necessary. The
Committee has consulted with an independent compensation consultant
to assist in the discharge of its mandate.Determining Director and
Officer Compensation
    
    The Management Resources Compensation Committee recommends
the compensation for the Chief Executive Officer to the Board and
reviews compensation policies and levels for the Companys other
executive officers to ensure that their compensation is competitive
and reasonably related to personal and corporate performance. It
uses various information sources, including independent
consultants, to monitor the competitive position of the Companys
salaries, bonus
 21




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##### 



Disclosure Requirement
    
    Practices of Russel Metals Inc.plans and stock-based incentives and to assess the
effectiveness of the Companys incentive plans in contributing to
corporate performance. The Company determines Director compensation
with reference to Board compensation of comparably sized Canadian
companies. See Compensation of Directors on page 23 of this
circular.Environmental
Management and
Health & Safety
Committee
    
    The mandate of the Environmental Management and Health & Safety
Committee is to monitor and evaluate and, where necessary, to make
recommendations to the Board for the purposes of ensuring that the
Company conducts its activities in a manner which complies with
applicable environmental and occupational health and safety laws
and which minimizes adverse impact to the natural environment and
to the communities in which the Company resides, and operates in a
manner that respects the health and safety of its employees.Assessment
    
    Each Director completes a questionnaire each year assessing the
performance of the Board of Directors and each of the committees.
The questionnaires are submitted to the Secretary (who is a partner
with Davies Ward Phillips & Vineberg LLP and not a member of
Management) who in turn discusses the issues raised by the Directors
in their responses with the Chairman and the Board of Directors. The
Nominating and Corporate Governance Committee is considering a
process of assessing the performance of individual Directors.Outside Advisors
    
    Each committee of the Board is entitled to engage outside advisors at
the Companys expense in connection with its mandate. Directors may
engage advisors at the Companys expense for other purposes with
the concurrence of the chair of the Nominating and Corporate
Governance Committee.
 22




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##### 



COMPENSATION OF DIRECTORS Cash Compensation The Directors of the Company are compensated partly in cash and partly in deferred share
units. During the financial year ended December 31, 2004, the Company paid an aggregate of
$390,766 in cash compensation to Directors. These fees, payable only to Directors who are not
full-time employees of the Company, represent an annual retainer of $22,000 per Director and a
$1,500 attendance fee per meeting of the Board or any committee thereof. The Chair of each
committee of the Board of Directors is entitled to an additional $5,000 per annum for acting as
such. Each non-executive Director normally resident in the U.S. is entitled to receive a travel
fee of Cdn $1,500 for each meeting attended in Canada. U.S. Directors are paid the U.S. equivalent of the retainers and fees noted above. The
Company reimburses expenses incurred by non-executive Directors while attending the Companys
Board and committee meetings. The annual compensation package for Directors is reviewed on an
annual basis by the Management Resources and Compensation Committee. The following table sets out the total cash compensation paid to non-executive Directors on
an individual basis on account of Board and committee retainers and meeting fees during the
financial year ended December 31, 2004: Regular Board Fees
    
    
    
    Committee PayName of Director
    
    
    Retainer
    
    
    
    Meeting Fees
    
    
    
    Member
    
    
    
    Chair
    
    
    
    Travel Fee
    
    
    
    TotalP. Brunet
    
    
    $
    9,266
    
    
    
    $
    1,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    10,766J. F. Dinning
    
    
    $
    22,000
    
    
    
    $
    12,000
    
    
    
    $
    12,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    46,000C. R. Fiora
    
    
    $
    22,000
    
    
    
    $
    12,000
    
    
    
    $
    13,500
    
    
    
    
    
    
    
    
    $
    4,500
    
    
    
    $
    52,000A.
F. Griffiths(1)
    
    
    $
    100,000
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    100,000R. Hartog
    
    
    $
    22,000
    
    
    
    $
    15,000
    
    
    
    $
    13,500
    
    
    
    $
    5,000
    
    
    
    
    
    
    
    
    $
    55,500L. Lachapelle
    
    
    $
    22,000
    
    
    
    $
    12,000
    
    
    
    $
    7,500
    
    
    
    $
    5,000
    
    
    
    
    
    
    
    
    $
    46,500J. W. Robinson
    
    
    $
    22,000
    
    
    
    $
    13,500
    
    
    
    $
    7,500
    
    
    
    $
    5,000
    
    
    
    $
    4,500
    
    
    
    $
    52,500
   (1)
    
    Mr. Griffiths is paid annual cash compensation in the amount of $100,000. This amount
represents compensation for acting as Chairman of the Board, Chairman of the Nominating and
Corporate Governance Committee and a member of the Management Resources and Compensation
Committee and is inclusive of all fees for attending Board and committee meetings during the
year. 23




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Deferred Share Unit Plan The number of deferred share units credited to each non-executive Directors account
during 2004 is reflected in the table Managements Nominees for Election as Directors of the
Company located on page 6 of this circular. The value of each account as at December 31, 2004 is
shown in the following table: Value of Deferred Share Units as atName of Non-executive Director
    
    
    December 31, 2004(1)P. Brunet
    
    
    $
    9,330J. F. Dinning
    
    
    $
    18,505C. R. Fiora
    
    
    $
    18,505A. F. Griffiths
    
    
    $
    18,505R. Hartog
    
    
    $
    18,505L. Lachapelle
    
    
    $
    18,505J. W. Robinson
    
    
    $
    18,505
   (1)
    
    Based on the closing price of $15.50 of the Companys Common Shares on the Toronto
Stock Exchange. Share Options Non-executive Directors became members of a Deferred Share Unit Plan effective April
2004 and no longer receive share options. There are currently 104,666 share options exercisable
and 16,667 share options that are unexercisable by non-executive Directors. All such options will
be completely vested by the end of April, 2005. If not exercised before the expiry date, these
options begin to expire commencing in May 2005 and ending April 2013. The following table sets out the number of share options currently outstanding for each
non-executive Director as at the date of this circular: Name of Non-executive Director
    
    
    Number of Share Options OutstandingP. Brunet
    
    
    
    J. F. Dinning
    
    
    
    11,000C. R. Fiora
    
    
    
    57,000A. F. Griffiths
    
    
    
    30,000R. Hartog
    
    
    
    3,333L. Lachapelle
    
    
    
    4,000J. W. Robinson
    
    
    
    16,000
 24




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##### 



DIRECTORS AND OFFICERS LIABILITY INSURANCE In December 2004, the Company renewed, for the benefit of the Company, its subsidiaries
and their Directors and officers and their respective spouses, insurance against liability incurred
by the Directors or officers in their capacity as Directors or officers of the Company or any
subsidiary. The total amount of insurance is $105 million and, subject to the deductible portion
referred to below, up to the full-face amount of the policies is payable, regardless of the number
of Directors and officers involved. The premium for the current policy year to December 1, 2005 is
$435,300. The policies do not specify that a part of the premium is paid in respect of either
Directors as a group or officers as a group. The policies provide a limit of $105 million per
occurrence and in the aggregate. Each Director and officer of the Company is covered to the extent
of the face amount of the policies. However, in no event will the policies pay out, in the
aggregate, more than $105 million during their annual term. The policies provide for deductibles as
follows: (i) with respect to the Directors and officers, there is no deductible applicable; and
(ii) with respect to reimbursement of the Company, there is a deductible of $100,000 per
occurrence, except, in respect of securities claims where the deductible is $250,000 per
occurrence. AMENDMENT TO THE COMPANYS SHARE OPTION PLAN The Company has maintained the Share Option Plan (the Plan) for many years. Under the
Plan, officers and full-time employees of the Company and its subsidiaries selected by the Board of
Directors may purchase unissued Common Shares of the Company at a price equal to the prevailing
market price at the date of the grant of the option. Details of this Plan can be found on pages 14
and 15 of this circular. In May of 1995, the Plan was amended to comply with the revised policies of the Toronto Stock
Exchange and the maximum number of shares issuable under the Plan was fixed at 4,500,000, (which
represented approximately 9% of the issued and outstanding Common Shares at the time of such
amendment) unless further approval of the shareholders is obtained. The 4,500,000 shares
originally reserved for issuance under the Plan also represents approximately 9% of the Companys
issued and outstanding Common Shares at the date of this circular. During the last ten years,
4,439,100 options to purchase Common Shares, net of expired and forfeited options, were granted
under the Plan. Share options have been exercised and Common Shares issued for 2,781,584 of such
Common Shares, which number represents approximately 5% of the current issued and outstanding
Common Shares of the Company. Options to purchase 1,657,516 Common Shares remain outstanding under
the Plan, which number represents approximately 3% of the current issued and outstanding Common
Shares of the Company. The number of Common Shares presently available for current and future
option grants to employees and officers of the Company is 60,900. Shareholders are being asked at the meeting to consider, and if thought advisable, to pass a
resolution approving an amendment to the Plan to permit the grant of options under the Plan
provided that the aggregate number of Common Shares reserved for issuance under the Plan at any
time shall not exceed 5% of the outstanding Common Shares (on an undiluted basis). There are
currently 50,011,959 Common Shares outstanding. If the proposed amendment is approved, the
aggregate maximum number of Common Shares which would be reserved for issuance under the Plan at
any time, based on the number of Common Shares outstanding at the date of this circular would be
2,500,598. An aggregate of 1,718,416 Common Shares are currently reserved under the Plan. Pursuant
to the proposed amendment, the Plan will be automatically replenished on the exercise or
cancellation of outstanding options. The text of the proposed resolution is set forth in Schedule
A to this proxy circular. 25




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##### 



The Board believes that the approval of this amendment is in the best interests of the
Company and unanimously recommends that shareholders vote in favour of the resolution. The shares
represented by proxies in favour of Management nominees will be voted in favour of the resolution
approving the amendment to the Plan, unless a shareholder has specified in his or her proxy that
his or her shares are to be voted against the resolution. AUDITORS Appointment Management proposes to nominate Deloitte & Touche LLP (D&T) as auditors of the Company
to hold office until the next annual meeting of shareholders. D&T have been auditors of the Company
for over 46 years. In the event a ballot is demanded, the shares represented by proxies in favour
of Management nominees will be voted in favour of the appointment of D&T as auditors of the
Company, unless a shareholder has specified in a proxy that his or her shares are to be withheld
from voting in the appointment of auditors. To be effective, the resolution to appoint D&T as
auditors of the Company and to authorize the Directors to fix their remuneration, must be passed by
a majority of the votes cast at the annual and special meeting in person or by proxy by
shareholders entitled to vote thereon. Audit Fees The fees charged by D&T for audit services for the year ended December 31, 2004 were
$978,000 (2003: $772,000). Audit-Related Fees The fees charged by D&T for the year ended December 31, 2004 for offering documents were
$534,000 (2003: $141,000); for the review of the Sarbanes-Oxley work prepared by the Company were
$138,000 (2003: nil); and for the audits of employee benefit plans were $46,000 (2003: $44,000). Tax Fees The fees charged by D&T for U.S. tax compliance and planning work for the fiscal year
ended December 31, 2004 were $213,000 (2003: $270,000). Independence of Auditors D&T and the Audit Committee of the Company have considered all relationships between D&T
and its related entities and the Company and its related entities in light of the independence
standards issued by the Independence Standards Board and have determined that the non-audit
services provided by D&T to the Company are compatible with maintaining D&Ts independence. SHAREHOLDER PROPOSALS A shareholder who will be entitled to vote at the 2006 annual meeting of shareholders of
the Company and who intends to raise a proposal at such meeting, must deliver the proposal to the
Company not later than December 5, 2005. 26




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##### 



AVAILABILITY OF DISCLOSURE DOCUMENTS The Company will provide to any shareholder, upon request to its Secretary, a copy of: (i)
     its most recent Annual Information Form together with any document or pertinent
pages of any document incorporated therein by reference; (ii)    its audited comparative consolidated financial statements and managements
discussion and analysis for its last financial year together with the auditors report
thereon; (iii)    its Management Proxy Circular for its last annual meeting of shareholders; and (iv)   
      any material change reports (other than confidential reports) which have been filed
with the various securities regulatory authorities. These documents are accessible from the Companys web site located at www.russelmetals.com.
Additional information relating to the Company may be obtained from SEDAR at www.sedar.com. 27




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##### 



CERTIFICATE The contents and the sending of this Management Proxy Circular have been approved by the
Board of Directors of the Company. DATED the 1st day of March, 2005. By Order of the Board,/s/ William M. OReillyWilliamM. OReilly,Secretary
 28




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##### 



SCHEDULE A Text of a Resolution to
Approve an 
Amendment to the Share Option Plan WHEREAS it is proposed that the Russel Metals Inc. Share Option Plan (the Plan) be
amended to permit the number of Share Options to be outstanding at any time to equal 5% of the
outstanding Common Shares of the Company; BE IT RESOLVED THAT:  1.
    Article 3 of the Plan is hereby amended as follows:  (a)
    by deleting the number 4,500,000 on line 4 and substituting in its place the words,
5% of
the outstanding;(b)
    by inserting on line 4, after the word Shares the words, (on an undiluted basis); and  2.
    any Director or officer of the Company be and he or she is hereby authorized, for and in the
name of and on behalf of the Company to execute, under the corporate seal of the Company or
otherwise, and deliver all such documents and instruments and to do all such other acts and
things as may be considered necessary or desirable in order to amend the Plan and otherwise
carry out the provisions of this resolution. 29




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##### 



SCHEDULE B CHARTER OF THE BOARD OF DIRECTORS
OF RUSSEL METALS INC. GENERAL  1.
    Purpose and Responsibility of the Board By approving this Charter, the Board explicitly assumes responsibility for the
stewardship of Russel Metals Inc. and its business. This stewardship function includes
responsibility for the matters set out in this Charter, which form part of the Boards statutory
responsibility to manage or supervise the management of Russels business and affairs.  2.
    Review of Charter The Board shall review and assess the adequacy of this Charter annually and at such
other times as it considers appropriate and shall make such changes as it considers necessary or
appropriate.  3.
    Definitions and Interpretation  3.1
    Definitions  In this Mandate:  (a)
    Russel means Russel Metals Inc.;(b)
    Board means the board of directors of Russel;(c)
    CEO means Russels chief executive officer;(d)
    Chair means the chair of the Board;(e)
    Charter means this charter, as amended from time to time;(f)
    Director means a member of the Board; and(g)
    Stock Exchanges means, at any time, the Toronto Stock Exchange and any other
stock exchange on which any securities of Russel are listed for trading at the applicable time.3.2
    Interpretation This Charter is subject to and shall be interpreted in a manner consistent with Russels
articles, by-laws, the Canada Business Corporations Act(the
CBCA), and any other applicable
legislation. CONSTITUTION OF THE BOARD  4.
    Election and Removal of Directors  4.1
    Number of Directors The Board shall consist of such number of Directors as the Board may determine from time
to time, within the range set out in Russels articles of incorporation at such time.  4.2
    Election of Directors Directors shall be elected by the shareholders annually for a one year term, but if
Directors are not elected at any annual meeting, the incumbent directors shall continue in office
until their successors are elected. 30




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##### 



4.3
    Vacancies The Board may appoint a member to fill a vacancy which occurs in the Board between annual
elections of Directors, to the extent permitted by the CBCA.  4.4
    Ceasing to Be a Director  A Director will cease to hold office upon:  (a)
    delivering a resignation in writing to Russel;(b)
    being removed from office by an ordinary resolution of the shareholders;(c)
    his or her death; or(d)
    becoming disqualified from acting as a Director.4.5
    Deemed Resignation A Director shall submit his or her resignation to Russel (which resignation may or may not be
accepted) if that director changes his or her principal occupation.  5.
    Criteria for Directors  5.1
    Qualifications of Directors Every Director shall be an individual who is at least 18 years of age, has not been
determined by a court to be of unsound mind and does not have the status of bankrupt.  5.2
    Residency At least 25% of the Directors shall be resident Canadians.  5.3
    Independence of Directors  (a)
    At least one-third of the Directors shall not be officers or employees of Russel or
any of its affiliates.(b)
    At least a majority of the Directors shall be independent for the purposes of all
applicable regulatory and stock exchange requirements (such requirements and recommendations
described in Schedule A to this Mandate).5.4
    Share Ownership Subject as hereinafter provided, each Director shall beneficially own, directly or indirectly,
not fewer than 10,000 Common Shares or deferred share units or combination thereof. Any Director
who does not meet this minimum requirement at the date of his or her first election or re-election
to the Board following February 18, 2004 is required to achieve such ownership level within three
years of such first election or re-election.  5.5
    Other Criteria The Board may establish other criteria for Directors as contemplated in this Charter.  6.
    Board Chair  6.1
    Board to Appoint Chair The Chair shall be an independent Director. 31




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##### 



6.2 Chair to Be Appointed Annually The Board shall appoint the Chair annually at the first meeting of the Board after a meeting
of the members at which Directors are elected. If the Board does not so appoint a Chair, the
Director who is then serving as Chair shall continue as Chair until his or her successor is
appointed.  7.
    Remuneration of Directors and Retaining Advisors 7.1 Remuneration Members of the Board and the Chair shall receive such remuneration for their service on the
Board as the Board may determine from time to time, in consultation with the Management Resources
and Compensation Committee of the Board. 7.2 Retaining and Compensating Advisors Each Director shall have the authority to retain outside counsel and any other external
advisors from time to time as appropriate with the approval of the chair of the Nominating and
Corporate Governance Committee. MEETINGS OF THE BOARD  8.
    Meetings of the Board 8.1 Time and Place of Meetings Meetings of the Board shall be called and held in the manner and at the location contemplated
in Russels by-laws. 8.2 Frequency of Board Meetings Subject to Russels by-laws, the Board shall meet at least four times per year on a
quarterly basis. 8.3 Quorum In order to transact business at a meeting of the Board:  (a)
    at least a majority of Directors then in office shall be present; and(b)
    at least 25% of the Directors present must be resident Canadians (or, if this is
not the
case, a resident Canadian Director who is unable to be present and whose presence at the
meeting would have resulted in the required number of resident Canadian Directors being
present, must approve the business transacted at the meeting, whether in writing, by phone
or otherwise). 8.4 Secretary of the Meeting The Chair shall designate from time to time a person who may, but need not, be a member
of the Board, to be Secretary of any meeting of the Board. 8.5 Right to Vote Each member of the Board shall have the right to vote on matters that come before the Board. 8.6 Invitees The Board may invite any of Russels officers, employees, advisors or consultants or any
other person to attend meetings of the Board to assist in the discussion and examination of the
matters under consideration by the Board. 32




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##### 



9.
    In Camera Sessions 9.1 In Camera Sessions of Non-Management Directors At the conclusion of each meeting of the Board, the non-management Directors shall meet
without any member of management being present (including any Director who is a member of
management). 9.2 In Camera Sessions of Independent Directors To the extent that non-management Directors include Directors who are not independent
Directors as contemplated in this Charter, the independent Directors shall meet at the conclusion
of each meeting of the Board with only independent Directors present. DELEGATION OF DUTIES AND RESPONSIBILITIES OF THE BOARD  10.
    Delegation and Reliance 10.1 Delegation to Committees The Board may establish and delegate to committees of the Board any duties and
responsibilities of the Board which the Board is not prohibited by law from delegating. However,
no committee of the Board shall have the authority to make decisions which bind Russel, except to
the extent that such authority has been specifically delegated to such committee by the Board. 10.2 Requirement for Certain Committees The Board shall establish and maintain the following committees of the Board, each having
mandates that incorporate all applicable legal and Stock Exchange listing requirements and with
such recommendations of relevant securities regulatory authorities and Stock Exchanges as the
Board may consider appropriate:  (a)
    Audit Committee;(b)
    Nominating and Corporate Governance Committee; and(c)
    Management Resources and Compensation Committee. 10.3 Composition of Committees The Board will appoint and maintain in office, members of each of its committees such that
the composition of each such committee is in compliance with listing requirements of the Stock
Exchanges and with such recommendations of relevant securities regulatory authorities and Stock
Exchanges as the Board may consider appropriate and shall require the Nominating and Corporate
Governance Committee to make recommendations to it with respect to such matters. 10.4 Review of Charters On an annual basis, the Board will review the recommendations of the Nominating and Corporate
Governance Committee with respect to the charters of each committee of the Board. The Board will
approve those changes to the charters that it determines are appropriate. 10.5 Delegation to Management Subject to Russels articles and by-laws, the Board may designate the offices of Russel,
appoint officers, specify their duties and delegate to them powers to manage the business and
affairs of Russel, except to the extent that such delegation is prohibited under the CBCA or
limited by the articles or by-laws of Russel or by any resolution of the Board or policy of
Russel. 33




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##### 



10.6 Limitations on Management Authority  (a)
    Management shall exercise its authority in accordance with the following documents
approved by the Board:  (i)
    strategic plan;(ii)
    annual business plan;(iii)
    capital expenditure budget.  (b)
    Management may not take the following actions without the approval of the
Board:  (i)
    expenditures in excess of $1 million;(ii)
    change in business focus;(iii)
    issuance of securities;(iv)
    borrowing outside of the ordinary course of business. 10.7 Reliance on Management The Board is entitled to rely in good faith on the information and advice provided to it by
Russels management. 10.8 Reliance on Others The Board is entitled to rely in good faith on information and advice provided to it by
advisors, consultants and such other persons as the Board considers appropriate. 10.9 Oversight The Board retains responsibility for oversight of any matters delegated to any committee
of the Board or to management. DUTIES AND RESPONSIBILITIES  11.
    Duties of Individual Directors 11.1 Fiduciary Duty and Duty of Care In exercising his or her powers and discharging his or her responsibilities, a Director
shall:  (a)
    act honestly and in good faith with a view to the best interests of the corporation; and(b)
    exercise the care, diligence and skill that a reasonably prudent person would
exercise in comparable circumstances. 11.2 Compliance with CBCA and Constating Documents A Director shall comply with the OBCA and the regulations to the OBCA as well as with Russels
articles and by-laws. 11.3 Compliance with Russels Policies A Director shall comply with all policies of Russel applicable to members of the Board as
approved by the Board.  12.
    Responsibilities of Directors 12.1 Responsibilities set out in Charter A Director shall review and participate in the work of the Board necessary in order for the
Board to discharge the duties and responsibilities set out in accordance with the Charter. 34




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##### 



12.2 Orientation and Education A Director shall participate in the orientation and continuing education programs developed
by Russel for the Directors. 12.3 Meeting Preparation and Attendance In connection with each meeting of the Board and each meeting of a committee of the Board of
which the Director is a member, a Director shall:  (a)
    Review thoroughly the material provided to the Director by management in connection
with the meeting, provided that such review is practicable in view of the time at which
such
material was delivered to the Director.(b)
    Attend each meeting in person to the extent practicable (unless the meeting is
scheduled
to be held by phone or video-conference). 12.4 Assessment A Director shall participate in such processes as may be established by the Board for
assessing the Board, its committees and individual Directors. 12.5 Other Responsibilities A Director shall perform such other functions as may be delegated to that Director by the
Board or any committee of the Board from time to time.  13.
    Board Responsibility for Specific Matters 13.1 Responsibility for Specific Matters The Board explicitly assumes responsibility for the matters set out below, recognizing that
these matters represent in part responsibilities reflected in requirements and recommendations
adopted by applicable securities regulators and the Stock Exchanges and do not limit the Boards
overall stewardship responsibility or its responsibility to manage or supervise the management of
Russels business and affairs. 13.2 Delegation to Committees Whether or not specific reference is made to committees of the Board in connection with any of
the matters referred to below, the Board may direct any committee of the Board to consider such
matters and to report and make recommendations to the Board with respect to these matters.  14.
    Corporate Governance Generally 14.1 Governance Practices and Principles The Board shall be responsible for Russels approach to corporate governance. 14.2 Governance Principles  (a)
    Governance Principles. The Board shall review and approve, if appropriate, a set of
governance principles and guidelines appropriate for Russel (the
Governance
Principles).(b)
    Amendments. The Board shall review the Governance Principles at least annually and
shall adopt such changes to the Governance Principles as it considers necessary or
desirable from time to time. 35




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##### 



14.3 Governance Disclosure  (a)
    Approval of Disclosure. The Board shall approve disclosure about Russels
governance practices in any document before it is delivered to Russels shareholders or filed with
securities regulators or with the Stock Exchanges.(b)
    Determination that Differences Are Appropriate. If Russels governance practices
differ
from those recommended by Canadian securities regulators or the Stock Exchanges, the
Board shall consider these differences and why the Board considers them to be
appropriate. 14.4 Delegation to Nominating and Corporate Governance Committee The Board may direct the Nominating and Corporate Governance Committee to consider the
matters contemplated in this Section 14 and to report and make recommendations to the Board with
respect to these matters.  15.
    Responsibilities Relating to Management 15.1 Integrity of Management The Board shall, to the extent feasible, satisfy itself:  (a)
    as to the integrity of the CEO and other senior officers; and(b)
    that the CEO and other senior officers create a culture of integrity throughout the
organization. 15.2 Succession Planning The Board shall be responsible for succession planning, including appointing, training and
monitoring senior management. 15.3 Executive Compensation Policy The Board shall receive recommendations of the Management Resources and Compensation
Committee and make such determinations as it considers appropriate with respect to:  (a)
    CEOs compensation level (without the participation of the CEO);(b)
    non-CEO officer compensation;(c)
    director compensation;(d)
    incentive-compensation plans; and(e)
    equity-based plans.  16.
    Oversight of the Operation of the Business 16.1 Risk Management Taking into account the reports of management and such other persons as the Board may consider
appropriate, the Board shall identify the principal risks of Russels business and satisfy itself
as to the implementation of appropriate systems to manage these risks. 16.2 Strategic Planning Process The Board shall adopt a strategic planning process and shall approve, on at least an
annual basis, a strategic plan which takes into account, among other things, the opportunities and
risks of Russels business. 36




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##### 



16.3 Internal Control and Management Information Systems The Board shall review the reports of management and the Audit Committee concerning the
integrity of Russels internal control and management information systems. Where appropriate, the
Board shall require management (overseen by the Audit Committee) to implement changes to such
systems to ensure integrity of such systems. 16.4 Communications Policy and Feedback Process  (a)
    The Board shall review and, if determined appropriate, approve a communication
policy for Russel for communicating with shareholders, the investment community, the media,
governments and their agencies, employees and the general public. The Board shall
consider, among other things, the recommendations of management and the Nominating
and Corporate Governance Committee with respect to this policy.(b)
    The Board shall establish a process pursuant to which the Board can receive
feedback from securityholders. 16.5 Financial Statements  (a)
    The Board shall receive regular reports from the Audit Committee with respect to
the integrity of Russels financial reporting system and its compliance with all regulatory
requirements relating to financial reporting.(b)
    The Board shall review the recommendation of the Audit Committee with respect to
the annual financial statements of Russel to be delivered to shareholders. If appropriate, the
Board shall approve such financial statements. 16.6 Capital Management The Board shall receive regular reports from management on the structure and management of
Russels capital. 16.7 Pension Plan Matters The Board shall receive and review reports from management and from the Management Resources
and Compensation Committee covering administration, investment performance, funding, financial
impact, actuarial reports and other pension plan related matters. 16.8 Code of Business Conduct and Ethics The Board will review and approve a Code of Business Conduct and Ethics for Russel. In
adopting this code, the Board will consider the recommendations of the Nominating and Corporate
Governance Committee concerning its compliance with applicable legal and Stock Exchange listing
requirements and with such recommendations of relevant securities regulatory authorities and Stock
Exchanges as the Board may consider appropriate. 16.9 Compliance and Disclosure The Board will direct the Nominating and Corporate Governance Committee to monitor compliance
with the Code of Business Conduct and Ethics and recommend disclosures with respect thereto. The
Board will consider any report of the Nominating and Corporate Governance Committee concerning
these matters, and will approve, if determined appropriate, the disclosure of the Code of Business
Conduct and Ethics and of any waiver granted to a director or senior officer of Russel from
complying with the Code of Business Conduct and Ethics. 37




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17.
    Nomination of Directors 17.1 Nomination and Appointment of Directors  (a)
    The Board shall nominate individuals for election as directors by the shareholders
and shall require the Nominating and Corporate Governance Committee to
make
recommendations to it with respect to such nominations.(b)
    The Board shall adopt a process recommended to it by the Nominating and Corporate
Governance Committee pursuant to which the Board shall:  (i)
    consider what competencies and skills the Board, as a whole, should possess; and(ii)
    assess what competencies and skills each existing Director possesses.  18.
    Board Effectiveness 18.1 Position Descriptions The Board shall review and, if determined appropriate, approve the recommendations of the
Nominating and Corporate Governance Committee concerning formal position descriptions for:  (a)
    the Chair of the Board, the Lead Director (if any) and for the Chair of each
committee of the Board, and(b)
    the CEO. 18.2 Director Orientation and Continuing Education The Board shall review and, if determined appropriate, approve the recommendations of the
Nominating and Corporate Governance Committee concerning:  (a)
    a comprehensive orientation program for new Directors; and(b)
    a continuing education program for all Directors.18.3
    Board, Committee and Director Assessments The Board shall review and, if determined appropriate, adopt a process recommended by the
Nominating and Corporate Governance Committee for assessing the performance and effectiveness of
the Board as a whole, the committees of the Board and the contributions of individual Directors on
an annual basis. 18.4 Annual Assessment of the Board Each year, the Board shall assess its performance and effectiveness in accordance with the
process established by the Nominating and Corporate Governance Committee. 38