AK Steel Holding (AKS)

Description of Awards

Options. Options granted under the Stock Plan are “Nonqualified Options,” i.e., options that do not qualify as “incentive stock options” within the meaning of Section 422 of the Code. Each option grant must be evidenced by a written agreement specifying the terms of such grant, including the number of shares covered, the exercise price, the first date the option may be exercised, any restriction on the transferability of shares obtained upon exercise of the option and the duration of the option. However, no option may be exercisable later than the tenth anniversary of the date of its grant. The purchase price for each share covered by an option is determined by the Committee at the date of grant but may not be less than 100% of the fair market value of the shares on the date of grant. Payment of the exercise price may be made with cash, with previously owned shares or by a combination of these methods. The Committee also may allow the cashless exercise of an option, or other means of exercise that the Committee determines to be consistent with the Stock Plan’s purpose and applicable law.

Restricted Stock. The Stock Plan authorizes the Committee to grant awards of restricted stock to individuals eligible to participate in the Stock Plan. Each award of restricted stock must be evidenced by a written agreement that specifies the period of restriction, the number of shares subject to the award and such other provisions as may be determined by the Committee. The restrictions with respect to shares of restricted stock will lapse under the schedules set forth in the Stock Plan and as summarized below.

Performance Shares. Beginning in 2005, if approved by stockholders, the Stock Plan authorizes the Committee to grant awards of Performance Shares to individuals eligible to participate in the Stock Plan. Each grant is expressed as a target number of shares of the Company’s common stock. The number of Performance Shares, if any, actually earned by and issued to the grantee under an award are based on the Company’s achievement over a three-year performance period (the “Performance Period”) of certain objectives with respect to specific performance categories established by the Committee for the Performance Period. Examples of such performance categories include: total shareholder return; earnings; earnings per share; net income; revenues; operating profit; safety and quality standards; growth rates; and other financial, accounting or quantitative criteria established by the Committee.

On January 20, 2005, the Committee approved, and the Board ratified, the grant of the Performance Share Awards for the Performance Period beginning January 1, 2005, contingent on stockholder approval of the

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amended and restated Stock Plan. The performance categories established by the Committee with respect to these awards are: (1) the Company’s total shareholder return (“TSR”), defined as appreciation in the price of the Company’s common stock plus reinvested dividends, if any, during the Performance Period relative to TSR during this same period of companies in the Standard & Poor’s 400 Midcap Index, and (2) the compounded annual growth rate (“CAGR”) of the price of the Company’s common stock over the Performance Period, using as the base the average closing price of the Company’s common stock for the last twenty trading days in December 2004. One half of the total target number of shares under the Performance Share award may be earned based on the relative TSR performance, and the other one half may be earned based on the CAGR performance. For the TSR and CAGR categories, performance levels have been set that will earn threshold, target and maximum payouts as follows:

If the threshold performance level is not achieved in a category as of the end of the Performance Period, then none of the target shares tied to that category would be earned or issued. If at least the threshold is achieved in the category, then shares will be earned and issued in an amount equal to the number of the award’s target shares tied to that category, multiplied by a percentage determined by a straight-line interpolation between the level of the Company’s actual performance in that category and the above-stated payout percentages. Specific information concerning the Performance Share Awards is set forth in the table under “New Plan Benefits” below.