SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
| |
Filed by Registrant: | ☒ |
Filed by a Party other than the Registrant: | ☐ |
Check the appropriate box:
☐
Preliminary Proxy Statement☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒Definitive Proxy Statement
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to § 240.14a-12 |
VALHI, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. |
☐ | Fee paid previously with preliminary materials. |
☐ | Fee computed on table |
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240‑2697
April 7, 2016
To Our Stockholders:
You are cordially invited to attend the 2016 Annual Meeting2023 annual meeting of Stockholdersstockholders of Valhi, Inc., which will be held on Thursday, May 26, 2016,25, 2023, at 10:00 a.m., local time, at our corporate offices at Three Lincoln Centre Conference Center, 5430 LBJ Freeway, Suite 1700,350, Dallas, Texas 75240-2697.75240-2620. The matters to be acted upon at the meeting are described in the attached notice of annual meeting of stockholders and proxy statement.
Whether or not you plan to attend the meeting, please cast your vote as instructed on your proxy card or notice of internet availability of proxy materials or, if you have requested a paper copy, on the proxy card or voting instruction form, as promptly as possible to ensure that your shares are represented and voted in accordance with your wishes. Your vote, whether given by proxy or in person at the meeting, will be held in confidence by the inspector of election as provided in our bylaws.
| Sincerely, Loretta J. Feehan Chair of the Board Michael S. Simmons Vice Chairman of the Board, President and Chief Executive Officer |
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240‑2697
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 26, 2016
To the Stockholders of Valhi, Inc.:
The 20162023 annual meeting of stockholders of Valhi, Inc. will be held on Thursday, May 26, 2016,25, 2023, at 10:00 a.m., local time, at our corporate offices at Three Lincoln Centre Conference Center, 5430 LBJ Freeway, Suite 1700,350, Dallas, Texas 75240-2697,75240-2620, for the following purposes:
1. | to elect the seven director nominees named in the proxy statement to serve until the |
2. |
to approve, on |
3. | to approve, on a nonbinding advisory basis, the preferred frequency for stockholders to consider approving executive compensation; and |
4. | to transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
The close of business on March 28, 2016,29, 2023, has been set as the record date for the meeting. Only holders of our common stock at the close of business on the record date are entitled to notice of and to vote at the meeting. A complete list of stockholders entitled to vote at the meeting will be available for examination during normal business hours by any of our stockholders, for purposes related to the meeting, for a period of ten days prior to the meeting at our corporate offices.
You are cordially invited to attend the meeting. Whether or not you plan to attend the meeting, please cast your vote as instructedby following the instructions on the proxy card or notice of internet availability of proxy materials or, if you have requested a paper copy, on the proxy card or voting instruction form, as promptly as possible to ensure that your shares are represented and voted in accordance with your wishes.
| By Order of the Board of Directors, Jane R. Grimm, Secretary |
Dallas, Texas
April 7, 2016
|
Important Notice Regarding the Availability of Proxy Materials for the Annual Stockholder Meeting to Be Held on May 25, 2023. The proxy statement and annual report to stockholders (including Valhi’s Annual Report on Form 10-K for |
TABLE OF CONTENTS
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| 7 | |
| 9 | |
| 9 | |
| 11 | |
| 13 | |
Controlled Company Status, Director Independence and Committees | | 13 |
2022 Meetings and Standing Committees of the Board of Directors | | 13 |
| 13 | |
| 13 | |
| 14 | |
| 14 | |
Leadership Structure of the Board of Directors and Independent Director Meetings | | 15 |
Stockholder Proposals and Director Nominations for the 2024 Annual Meeting of Stockholders | | 15 |
| 15 | |
| 16 | |
| 16 | |
| 16 | |
| 16 | |
| 16 | |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS AND OTHER INFORMATION | | 17 |
| 17 | |
| 19 | |
Summary of Cash and Certain Other Compensation of Executive Officers | | 20 |
| 21 | |
| 21 | |
| 21 | |
| 21 | |
| 21 | |
| 22 | |
| 22 | |
| 24 | |
Compensation Policies and Practices as They Relate to Risk Management | | 25 |
| 26 | |
| 26 | |
| 26 | |
| 26 | |
| 27 | |
| 28 | |
| 28 | |
| 30 | |
| 30 | |
| 32 | |
Guarantees Provided by Valhi to Affiliates and Related Items | | 32 |
| 32 | |
| 32 | |
| 33 | |
| 34 | |
| 34 | |
| 34 | |
| 35 | |
PROPOSAL 2: NONBINDING ADVISORY RESOLUTION ON NAMED EXECUTIVE OFFICER COMPENSATION | | 36 |
| 36 | |
| 36 | |
| 36 | |
| 36 | |
| 37 | |
| 37 |
-i-
-ii-
“BMI” means Basic Management, Inc., a land management company that is a subsidiary of Tremont.
“brokerage firm or other nominee
“broker/nominee non-vote
“Code” means the Internal Revenue Code of 1986, as amended.
“Computershare
“CompX
“Contran
“Dixie Rice
“EWI
“Family Trust
“independent directors
“ISA
“Kronos Worldwide
“LandWell
“LPC” means Louisiana Pigment Company, L.P., a partnership of which a wholly owned subsidiary of Kronos Worldwide and a subsidiary of Venator Materials PLC each owns 50%.
“named executive officer
“NL
“NLKW” means NLKW Holding, LLC, a wholly owned subsidiary of NL, which holds a significant equity interest in Kronos Worldwide.
“NYSE
“PCAOB” means the Public Company Accounting Oversight Board, a private sector, non-profit corporation that oversees auditors of U.S. public companies.
“PwC
“record date
“RPT Policy
“Say-on-Pay
“Say-When-on-Pay” means the third proposal in this proxy statement
“SEC
“Securities Exchange Act
“stockholder of record
“Tall Pines
“Tremont
“Valhi
,
-iii-
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240‑2697
PROXY STATEMENT
GENERAL INFORMATION
We are providing this proxy statement in connection with the solicitation of proxies by and on behalf of our board of directors for use at our 20162023 annual meeting of stockholders to be held on Thursday, May 26, 2016,25, 2023, and at any adjournment or postponement of the meeting. We are furnishing our proxy materials to holdersHolders of our common stock as of the close of business on March 28, 2016.29, 2023, are entitled to receive notice of and the right to vote at the annual meeting. We beganwill begin distributing a notice of internet availability of our proxy materials on or about April 7, 2016 to the holders of our common stock who hold their shares through a brokerage firm or other nominee (such as a banking institution, custodian, trustee or fiduciary) and not through our transfer agent, Computershare. We will begin mailing our 2016 annual meeting materials to the record holders of our common stock (shares held in the stockholder's name in certificate form or electronically with Computershare, our transfer agent, and not through a brokerage firm or other nominee) on or about April 19, 2016.11, 2023. Our mailedproxy materials include:
● | the accompanying notice of the |
● | this proxy statement; |
● | our |
a proxy card |
We are not incorporating the 20152022 annual report into this proxy statement, and you should not consider the annual report as proxy solicitation material. The accompanying notice of annual meeting of stockholders sets forth the time, place and purposes of the meeting. Our principal executive offices are located at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240‑2697.
Please refer to the Glossary of Terms on page iiiii for the definitions of certain terms used in this proxy statement.
Q:What is the purpose of the annual meeting?
A:At the annual meeting, stockholders will vote on the following, as described in this proxy statement:
Proposal 1 – the election of the seven director nominees named in this proxy statement; |
● | Proposal 2 – the |
● | Proposal 3 – the approval, on a nonbinding advisory basis, of the preferred frequency stockholders will consider approving executive compensation (Say-When-on-Pay). |
In addition, stockholders will vote on any other matter that may properly come before the meeting.
Q:How does the board recommend that I vote?
A:The board of directors recommends that you vote FOR:
the election of each of the nominees for director named in this proxy statement; |
the approval and adoption of proposal |
● | as set forth in proposal 3 (Say-When-on-Pay), the approval of an annual Say-on-Pay, as compared to every other year or every three years. |
Q:Who is allowed to vote at the annual meeting?
A: | The board of directors has set the close of business on March |
Q: | Why did I receive a notice regarding the internet availability of proxy materials instead of paper copies of the proxy materials? |
A: | Pursuant to the SEC notice and access rules |
Q: |
How do I vote if I am a stockholder of record? |
A: | If you hold shares of our common stock in your name in certificate form or electronically with our transfer agent, Computershare, and not through a brokerage firm or other nominee, you are a stockholder of record. As a stockholder of record, you may: |
● | vote over the internet at |
● | vote by telephone using the voting procedures set forth on your proxy card; |
● | instruct the agents named on your proxy card how to vote your shares by completing, signing and mailing the |
● | vote in person at the annual meeting. |
Q: | What are the consequences if I am a stockholder of record and I execute my proxy card but do not indicate how I would like my shares voted for one or more of the director nominees named in this proxy statement or proposal 2 (Say-on-Pay) or proposal |
A: | If you are a stockholder of record |
Q: | How do I vote if my shares are held through a brokerage firm or other nominee? |
A: | If you hold your shares |
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Brokerage firms or other nominees may not vote your shares on the election of a director nominee or proposal 2 or proposal 3 in the absence of your specific instructions as to how to vote. We encourage you to provide instructions to your brokerage firm or other nominee regarding the voting of your shares.shares. If you do not instruct your brokerage firm or other nominee how to vote with respect to the election of a director nominee or proposal 2 or proposal 3,, your brokerage firm or other nominee may not vote with respect to the election of such director nominee or on proposal 2 or on proposal 3 and your vote will be counted as a "broker/“broker/nominee non-vote." "” “Broker/nominee non-votes"non-votes” are non-votes by a brokerage firm or other nominee for shares held in a client'sclient’s account for which the brokerage firm or other nominee does not have discretionary authority to vote on a particular matter and has not received instructions from the client. How we treat broker/nominee non-votes is separately described in each of the answers below regarding what constitutes a quorum and the requisite votes necessary to elect a director nominee or approve proposal 2 or proposal 3.
Q: | If I hold my shares through a brokerage firm or other nominee, how may I vote in person at the annual meeting? |
A: | If you wish to vote in person at the annual meeting, you will need to follow the instructions on your notice of internet availability of proxy materials or voting instruction form on how to obtain the appropriate documents to vote in person at the meeting. |
Q: | Who will count the votes? |
A: | The board of directors has appointed |
Q: | Is my vote confidential? |
A: | Yes. All proxy cards, ballots or voting instructions |
Q: | How do I change or revoke my proxy instructions if I am a stockholder of record? |
A: | If you are a stockholder of record, you may change or revoke your proxy instructions in any of the following ways: |
● | delivering to |
● | submitting another proxy card bearing a later date; |
● | changing your vote on |
● | using the telephone voting procedures set forth on your proxy card; or |
● | voting in person at the annual meeting. |
Q: | How do I change or revoke my voting instructions if my shares are held through a brokerage firm or other nominee? |
A: | If your shares are held through a brokerage firm or other nominee, you must follow the instructions from your brokerage firm or other nominee on how to change or revoke your voting instructions or how to vote in person at the annual meeting. |
Q: | What constitutes a quorum? |
A: | A quorum is the presence, in person or by proxy, of the holders of a majority of the outstanding shares of our common stock entitled to vote at the meeting. |
Shares that are voted "abstain"“abstain” or "withheld"“withheld” are counted as present and entitled to vote and are, therefore, included for purposes of determining whether a quorum is present at the annual meeting.
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As already discussed in the previous answer regarding how to vote shares held through a brokerage firm or other nominee,, there are no proposals for the 2016 annual meeting that would allow a brokerage firm or nominee to vote uninstructed shares. If a brokerage firm or other nominee receives no instruction for the election of any director nominee and receives no instruction for proposal 2 and proposal 3, such uninstructed shares will be counted as not entitled to vote and are, therefore, not considered for purposes of determining whether a quorum is present at the annual meeting. If a brokerage firm or other nominee receives instructions on the election of anyat least one director nominee or on proposal 2 or proposal 3, such instructed shares will be counted as present and entitled to vote and are, therefore, included for purposes of determining whether a quorum is present at the annual meeting.
Dixie Rice directly held approximately 92.6%91.5% of the outstanding shares of our common stock as of the record date. VHCDixie Rice has indicated its intention to have its shares of our common stock represented at the meeting. If VHCDixie Rice attends the meeting in person or by proxy, the meeting will have a quorum present.
Q: | Assuming a quorum is present, what vote is required to elect a director nominee? |
A: | Under applicable state law and our governing documents, a plurality of affirmative votes of the holders of our outstanding shares of common stock represented and entitled to vote at the meeting is necessary to elect each director nominee. |
Dixie Rice has indicated its intention to have its shares of our common stock represented at the meeting and to vote such shares FOR the election of each of the director nominees named in this proxy statement. If VHCDixie Rice attends the meeting in person or by proxy and votes as indicated, the stockholders will elect all of the nominees named in this proxy statement to the board of directors.
Q: | Assuming a quorum is present, what vote is required to adopt and approve proposal |
A: |
The stockholder resolution contained in this proposal provides that the nonbinding affirmative vote of the holders of the majority of the outstanding shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter will be the requisite vote to adopt the resolution and approve the compensation of our named executive officers as such compensation is disclosed in this proxy statement. Abstentions will be counted as represented and entitled to vote and will therefore have the effect of a negative vote. Broker/nominee non-votes will not be counted as entitled to vote and will have no effect on this proposal. |
Dixie Rice has indicated its intention to have its shares of our common stock represented at the meeting and to vote such shares FOR this nonbinding advisory proposal. If VHCDixie Rice attends the meeting in person or by proxy and votes as indicated, the stockholders will, by a nonbinding advisory vote, approve this proposal.
Q: | Assuming a quorum is present, what vote is required to adopt and approve an annual frequency for proposal 3 (Say-When-on-Pay)? |
A: | Because there are multiple choices and this proposal is a nonbinding advisory vote, there is no minimum requisite vote under our certificate of incorporation, our bylaws or Delaware law to approve a certain frequency of future Say-on-Pay proposals. Accordingly, if you indicate that you approve one of the options other than abstain, we will deem that you consent that a plurality of the affirmative votes will determine the preferred frequency of future Say-on-Pay proposals, subject to the right of our board of directors to decide that it is in the best interests of us and our stockholders to hold a nonbinding advisory vote more or less frequently than the option our stockholders choose by a plurality of the affirmative votes. Since this proposal needs only receive the plurality of affirmative votes from the holders represented and entitled to vote at the meeting to approve the preferred frequency of future Say-on-Pay proposals, an abstention or a broker/nominee non-vote on this proposal will have no effect on the outcome of this proposal. |
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Dixie Rice has indicated its intention to have its shares of our common stock represented at the meeting and to vote such shares FOR an annual nonbinding advisory vote on our named executive officer compensation. If Dixie Rice attends the meeting in person or by proxy and votes as indicated, the stockholders will, by a nonbinding advisory vote, approve an annual nonbinding advisory vote on our named executive officer compensation.
Q: | Assuming a quorum is present, what vote is required to approve any other matter to come before the meeting? |
A: | Except as applicable laws may otherwise provide, the approval of any other matter that may properly come before the meeting will require the affirmative votes of the holders of the majority of the outstanding shares represented and entitled to vote at the meeting. Abstentions will be counted as represented and entitled to vote and will therefore have the effect of a negative vote. |
Q: | If I am a stockholder of record, how will the agents named on my proxy card vote on any other matter to come before the meeting? |
A: | If you are a stockholder of record and to the extent allowed by applicable law, the agents named on your proxy card will vote in their discretion on any other matter that may properly come before the meeting. |
Q: | Who will pay for the cost of soliciting the proxies? |
A: | We will pay all expenses related to the solicitation, including charges for preparing, printing, assembling and distributing all materials delivered to stockholders. In addition to the solicitation by mail, our directors, officers and regular employees may solicit proxies by telephone or in person for which such persons will receive no additional compensation. Upon request, we will reimburse brokerage firms or other nominees for their reasonable out-of-pocket expenses incurred in distributing proxy materials and voting |
Dixie Rice is the direct holder of approximately 92.6%91.5% of the outstanding shares of our common stock as of the record date. VHCDixie Rice has indicated its intention to have its shares of our common stock represented at the meeting and to vote such shares FOR the election of each of the director nominees named in this proxy statement and FOR proposalsproposal 2 and, 3.with respect to proposal 3, for approval of an annual Say-on-Pay (Say-When-on-Pay), as compared to every other year or every three years. If VHCDixie Rice attends the meeting in person or by proxy and votes as indicated, the meeting will have a quorum present and the stockholders will elect all of the nominees named in this proxy statement to the board of directors and will approve proposalsproposal 2 and, 3.with respect to proposal 3, approve an annual Say-on-Pay.
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Ownership of Valhi
. The following table and footnotes set forth as of the record date the beneficial ownership, as defined by regulations of the SEC, of our common stock held by each individual, entity or group known to us to own beneficially more than 5% of the outstanding shares of our common stock, each of our directors, each of the named executive
| | | | | |
| | Valhi Common Stock (1) |
| ||
| | Amount and Nature of | | Percent of |
|
Name of Beneficial Owner |
| Beneficial Ownership |
| Class (2) |
|
| | | | | |
5% Stockholders | |
| |
| |
| | | | | |
Harold C. Simmons Family Trust No. 2 |
| 25,862,190 | (3)(4) | 91.5 | % |
Lisa K. Simmons |
| 25,862,190 | (3)(4) | 91.5 | % |
| | | | | |
Directors and Named Executive Officers |
|
|
|
| |
| | | | | |
Thomas E. Barry |
| 7,732 | (5) | * | |
Loretta J. Feehan |
| 3,691 | (5) | * | |
Terri L. Herrington |
| 3,108 | (5) | * | |
Kevin B. Kramer | | 400 | (5) | * | |
W. Hayden McIlroy |
| 5,649 | (5)(6) | * | |
Michael S. Simmons | | -0- | (5) | -0- | |
Mary A. Tidlund |
| 3,441 | (5) | * | |
| | | | | |
Robert D. Graham |
| 2,182 | (5) | * | |
Andrew B. Nace |
| -0- | (5) | -0- | |
Courtney J. Riley |
| -0- | (5) | -0- | |
Amy A. Samford |
| 1,000 | (5) | * | |
| | | | | |
Current directors and executive officers as a group (17 persons) |
| 27,521 | (5) | * | |
Valhi Common Stock (1) | ||||||||||||
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class (2) | ||||||||||
5% Stockholders | ||||||||||||
Harold C. Simmons Family Trust No. 2; Lisa K. Simmons and Serena Simmons Connelly as co-trustees | 314,033,148 | (3 | )(4) | 92.6 | % | |||||||
Serena Simmons Connelly | 1,212 | (3 | ) | * | ||||||||
Directors and Named Executive Officers | ||||||||||||
Thomas E. Barry | 51,500 | (5 | ) | * | ||||||||
Norman S. Edelcup | 112,000 | (5 | ) | * | ||||||||
Loretta J. Feehan | 3,000 | (5 | ) | * | ||||||||
Elisabeth C. Fisher | -0- | (5 | ) | -0- | ||||||||
W. Hayden McIlroy | 36,500 | (5 | )(6) | * | ||||||||
Bobby D. O'Brien | 3,000 | (5 | ) | * | ||||||||
Mary A. Tidlund | -0- | (5 | ) | -0- | ||||||||
Steven L. Watson | 91,238 | (5 | ) | * | ||||||||
Robert D. Graham | -0- | (5 | ) | -0- | ||||||||
Kelly D. Luttmer | -0- | (5 | ) | -0- | ||||||||
Gregory M. Swalwell | 3,498 | (5 | ) | * | ||||||||
Directors and executive officers as a group (19 persons) | 300,736 | (5 | ) | * |
* | Less than 1%. |
(1) | Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 under the Securities Exchange Act, and is not necessarily indicative of beneficial ownership for any other purpose. Except as otherwise noted, the listed entities, individuals or group have sole investment power and sole voting power as to all shares set forth opposite their names. |
(2) | The percentages set forth above and in the following footnotes are based on |
(3) | The shares reported in this table for the Family Trust and Ms. Simmons consist of the 25,862,190 shares of our common stock held directly by Dixie Rice. See footnote 4 to this table, below. |
(4) | The following is a description of certain related entities or persons that may be deemed to beneficially own outstanding shares of our common stock. |
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A majority of Contran’s outstanding voting stock is held directly by Ms. Simmons and various family trusts established for the benefit of Ms. Simmons, Thomas C. Connelly (the husband of Ms. Simmons’ late sister) and their children and for which Ms. Simmons or Mr. Connelly, as applicable, serves as trustee (collectively, the “Other Trusts”). With respect to the Other Trusts for which Mr. Connelly serves as trustee, he is required pursuant to a stockholders agreement to vote the shares of Contran voting stock held in such trusts in the same manner as Ms. Simmons. Such voting rights of Ms. Simmons last through April 22, 2030 and are personal to Ms. Simmons. The remainder of Contran’s outstanding voting stock is held by the Family Trust, or is held directly by Lisa K.for which Tolleson Private Bank, a third party financial institution, serves as trustee (the “Trustee”). Ms. Simmons and Serena Simmons Connelly or entities related to them. As co-trusteescan appoint qualifying successor trustees of the Family Trust eachif the Trustee resigns or otherwise decides not to serve as trustee. The business address of Ms. Simmons and Ms. Connelly has the shared power to vote and direct the disposition of the shares of Contran stock held by the Family Trust and (and the Trustee) is 5550 Preston Road, Suite B, Dallas, Texas 75205.
Ms. Simmons and Ms. Connelly each has the power to vote and direct the disposition of the shares held directly by them and the entities related to them. Ms. Simmons and Ms. Connelly are sisters and also serveserves as the co-chairschair of the board of directors of Contran, and two other members of Contran management also serve on the board of directors of Contran.
Contran is the sole owner of 100% of our outstanding shares of non-voting preferred stock. Contran is also the holder of the sole membership interest of Dixie Rice and may be deemed to control Dixie Rice. Dixie Rice is the direct holder of 100% of the outstanding common stock of VHC and may be deemed to control VHC.
Ms. Simmons and Ms. Connelly directly hold, orthe Family Trust are related to the following person or entities thatValhi, which directly hold, the following percentagesholds 82.7% of the outstanding shares of NL common stock:
Ms. Simmons and Ms. Connellythe Family Trust are related to the following entities that directly hold the following percentages of the outstanding shares of Kronos Worldwide common stock:
| | | |
Valhi | 50.3 | % | |
NLKW | 30.5 | % | |
Contran | Less than | % |
By virtue of the stock ownership inof each of VHC,Kronos Worldwide, NL, Valhi, Dixie Rice and Contran, the role of Ms. Simmons and Ms. Connelly as co-trustees of the Family Trust, Ms. Simmons and Ms. Connelly being beneficiariesa beneficiary of the Family Trust, the direct holdings of Contran voting stock by each of Ms. Simmons, andthe voting rights conferred to Ms. Connelly and entities relatedSimmons by a stockholders agreement relating to them, and the positionsContran stock, Ms. Simmons’ position as co-chairschair of the Contran board, by eachand the Family Trust’s ownership of Ms. Simmons and Ms. Connelly,Contran voting stock, in each case as described above:
● | Ms. Simmons and |
● | Ms. Simmons, |
Ms. Simmons disclaims beneficial ownership of all shares of our common stock except to the extent of her pecuniary interest in such shares, if any.
(5) | Each of our directors or executive officers (and Mr. Graham, our former officer) disclaims beneficial ownership of any shares of our common stock, except to the extent he or she has a pecuniary interest in such shares, if any. |
(6) | A family partnership of which Mr. McIlroy is a general partner holds |
We understand that Contran and related entities or persons may consider acquiring or disposing of shares of our common stock through open market or privately negotiated transactions, depending upon future developments, including, but not limited to, the availability and alternative uses of funds, the performance of our common stock in the market, an assessment of our business and prospects, financial and stock market conditions and other factors deemed relevant by such entities. We may similarly consider acquisitions of shares of our common stock and acquisitions or dispositions of securities issued by related entities.
Ownership of Related Companies
. Some of our directors and executive officers own equity securities of certain companies related to us.Ownership of Kronos Worldwide and NL
. The following table and footnotes set forth the beneficial ownership, as of the record date, of the shares of Kronos Worldwide and NL common stock held by each of our directors, each of the named executive-7-
officers as a group. All information is taken from or based upon ownership filings made by such individuals or entitiespersons with the SEC or upon information provided by such individuals or entities.persons.
| | | | | | | | |
| | Kronos Worldwide Common Stock | | NL Common Stock | ||||
| | Amount and Nature | | Percent of | | Amount and Nature | | Percent of |
| | of Beneficial | | Class | | of Beneficial | | Class |
Name of Beneficial Owner | | Ownership (1) | | (1)(2) | | Ownership (1) | | (1)(3) |
| | | | | | | | |
Thomas E. Barry | | -0- | (4) | -0- |
| -0- | (4) | -0- |
Loretta J. Feehan | | 14,450 | (4) | * |
| 26,150 | (4) | * |
Terri L. Herrington | | -0- | (4) | -0- |
| -0- | (4) | -0- |
Kevin B. Kramer | | -0- | (4) | -0- | | -0- | (4) | -0- |
W. Hayden McIlroy | | -0- | (4) | -0- |
| -0- | (4) | -0- |
Michael S. Simmons | | -0- | (4) | -0- |
| -0- | (4) | -0- |
Mary A. Tidlund | | -0- | (4) | -0- |
| -0- | (4) | -0- |
| | | | | | | | |
Robert D. Graham | | 21,000 | (4) | * |
| 6,500 | (4) | * |
Andrew B. Nace | | 8,725 | (4) | * |
| -0- | (4) | -0- |
Courtney J. Riley | | -0- | (4) | -0- |
| -0- | (4) | -0- |
Amy A. Samford | | 2,000 | (4) | * |
| 2,000 | (4) | * |
| | | | | | | | |
Current directors and executive officers | | 26,675 | (4) | * |
| 29,150 | (4) | * |
Kronos Worldwide Common Stock | NL Common Stock | ||||||
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class (1)(2) | Amount and Nature of Beneficial Ownership (1) | Percent of Class (1)(3) | |||
Thomas E. Barry | -0- | (4) | -0- | -0- | (4) | -0- | |
Norman S. Edelcup | 10,000 | (4) | * | -0- | (4) | -0- | |
Loretta J. Feehan | 4,000 | (4) | * | 3,000 | (4) | * | |
Elisabeth C. Fisher | -0- | (4) | -0- | -0- | (4) | -0- | |
W. Hayden McIlroy | -0- | (4) | -0- | -0- | (4) | -0- | |
Bobby D. O'Brien | 18,082 | (4) | * | -0- | (4) | -0- | |
Mary A. Tidlund | -0- | (4) | -0- | -0- | (4) | -0- | |
Steven L. Watson | 667,881 | (4) | * | 20,500 | (4) | * | |
Robert D. Graham | -0- | (4) | -0- | 3,000 | (4) | * | |
Kelly D. Luttmer | -0- | (4) | -0- | -0- | (4) | -0- | |
Gregory M. Swalwell | -0- | (4) | -0- | -0- | (4) | -0- | |
Directors and executive officers as a group (19 persons) | 706,927 | (4) | * | 26,500 | (4) | * |
* | Less than 1%. |
(1) | Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 under the Securities Exchange Act, and is not necessarily indicative of beneficial ownership for any other purpose. Except as otherwise noted, the listed individuals or group have sole investment power and sole voting power as to all shares set forth opposite their names. |
(2) | The percentages are based on |
(3) | The percentages are based on |
(4) | Each of our directors or executive officers (and Mr. Graham, our former officer) disclaims beneficial ownership of any shares of Kronos Worldwide or NL common stock, except to the extent he or she has a pecuniary interest in such shares, if any. |
Ownership of CompX.
The following table and footnotes set forth the beneficial ownership, as of the record date, of the CompX class A common stock held by each of our directors, each of the named executiveCompX Class A Common Stock | |||
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class (1) | |
Thomas E. Barry | -0- | (2) | -0- |
Norman S. Edelcup | 13,000 | (2) | * |
Loretta J. Feehan | 2,000 | (2) | * |
Elisabeth C. Fisher | -0- | (2) | -0- |
W. Hayden McIlroy | -0- | (2) | -0- |
Bobby D. O'Brien | 2,300 | (2) | * |
Mary A. Tidlund | -0- | (2) | -0- |
Steven L. Watson | 17,000 | (2) | * |
Robert D. Graham | -0- | (2) | -0- |
Kelly D. Luttmer | 200 | (2) | * |
Gregory M. Swalwell | -0- | (2) | -0- |
Directors and executive officers as a group (19 persons) | 34,500 | (2) | * |
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| | | | |
| | CompX Class A Common Stock | ||
| | Amount and Nature of | | Percent of |
Name of Beneficial Owner |
| Beneficial Ownership (1) |
| Class (1) |
| |
| |
|
Thomas E. Barry |
| 7,750 | (2) | * |
Loretta J. Feehan |
| 9,750 | (2) | * |
Terri L. Herrington |
| 5,750 | (2) | * |
Kevin B. Kramer | | 3,511 | (2) | * |
W. Hayden McIlroy |
| -0- | (2) | -0- |
Michael S. Simmons | | -0- | (2) | -0- |
Mary A. Tidlund |
| 6,750 | (2) | * |
| | | | |
Robert D. Graham |
| 2,000 | (2) | * |
Andrew B. Nace |
| 1,807 | (2) | * |
Courtney J. Riley |
| -0- | (2) | -0- |
Amy A. Samford |
| 1,000 | (2) | * |
| | | | |
Current directors and executive officers as a group (17 persons) |
| 37,818 | (2) | * |
* | Less than 1%. |
(1) | Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 under the Securities Exchange Act, and is not necessarily indicative of beneficial ownership for any other purpose. Except as otherwise noted, the listed individuals or group have sole investment power and sole voting power as to all shares set forth opposite their names. The percentages are based on NL directly holds approximately 87.4% of the outstanding shares of CompX class A common stock. |
(2) | Each of our directors or executive officers (and Mr. Graham, our former officer) disclaims beneficial ownership of any shares of CompX class A |
ELECTION OF DIRECTORS
Our bylaws provide that the board of directors shall consist of one or more members as determined by our board of directors or stockholders. TheOur board of directors has currently set the number of directors at eight. The board of directorsseven and recommends the seven director nominees named in this proxy statement for election at our 20162023 annual stockholder meeting. If all the nominees are elected, the number of directors will be set at seven effective at the adjournment of the meeting. The directors elected at the meeting will hold office until our 20172024 annual stockholder meeting and until their successors are duly elected and qualified or their earlier removal or resignation.
All of the nominees are currently members of our board of directors whose terms will expire at the 20162023 annual meeting. Mr. Norman S. Edelcup, currently a member of the board of directors, is not standing for reelection as a director. All of the nominees have agreed to serve if elected. If any nominee is not available for election at the meeting, your shares will be voted FOR an alternate nominee to be selected by the board of directors, unless you withhold authority to vote for such unavailable nominee. The board of directors believes that all of its nominees will be available for election at the meeting and will serve if elected.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE FOLLOWING NOMINEES FOR DIRECTOR.
Nominees for Director
. All of our nominees have extensive senior management and policy-making experience or significant accounting experience. We believe all of our nominees are knowledgeable about our businesses. Each of our independent directors is financially literate. The board of directors considered each-9-
Thomas E. Barry, age 72,79, has served on our board of directors since 2000. Dr. Barry has held the position of professor of marketing in the Edwin L. Cox School of Business at Southern Methodist University since 1970.1970, with emeritus status beginning in 2017. He also served the university as vice president for executive affairs from 1995 to 2015. HeSince 2016, he has served as a director of CompX and a member of theits audit committee of CompX since March 2016.and management development and compensation committees. He is chairman of our audit committee and a member of our management development and compensation committee.
Dr. Barry has over 1522 years of experience on our board of directors, audit committee and management development and compensation committee. He also has senior executive, operating, corporate governance, finance and financial accounting oversight experience from a large, non-profit, private educational institution for which he currently serves and from a former publicly held corporation affiliated with us, which was publicly held at the time he served as one of its directors.
Loretta J. Feehan,
ageMs. Feehan has twonine years of experience as a director of us, CompX, Kronos Worldwide and NL. She also has over 3845 years of financial and tax accounting and auditing experience, certain years of which were as a partner of one the largest international accounting firms.
Terri L. Herrington, age 59,67, has served on our board of directors since March2018. Ms. Herrington is a private investor. She retired from International Paper Company, a worldwide producer of fiber-based packaging, pulp and paper, at the end of 2016. Ms. Fisher is currently a private investorHerrington worked for International Paper for nine years, including as their vice president finance beginning in 2011, and retired from Deloitte & Touche LLP in 2013 after 11 yearsbefore that as a partner in their Houston office in which she served in various capacities with the public accounting firm. Among other positions, she servedconsumer packaging vice president finance and strategy and as partner in charge of their Mid-America region real estate practice, served on their real estate services executive committee and was a technical resource to numerous national clients with respect to environmental accounting and auditing issues.vice president internal audit. Prior to joining Deloitte & Touche,International Paper, Ms. FisherHerrington spent 22over 25 years with Arthur Andersen LLP, including 9 yearsBP p.l.c. (and the former Amoco Corporation), a global producer of oil and gas, where she held a variety of finance and commercial positions, lastly as a partner.their global Director of Audit for Finance and Financial Control. Since 2018, Ms. Fisher's clients included companies in the real estate, construction, hospitality and leisure, manufacturing and waste management industries, and she has extensive experience with public company regulatory requirements. Ms. FisherHerrington has served as a director and on the audit committee of CompX since March 2016.CompX. She is a member of our audit committee.
Ms. FisherHerrington has over 33five years of experience on the boards of directors and audit committees of Valhi and CompX. She also has senior executive, operating, corporate governance, finance, and financial and auditingaccounting oversight experience certain years offrom two publicly-traded companies for which were as a partner of one the largest international accounting firms.
Kevin B. Kramer, age 58,63, has served on our boardas senior vice president, chief commercial and marketing officer for Allegheny Technologies, Incorporated, a publicly traded global manufacturer of directorsspecialty materials and components supplying the aerospace, defense, energy, medical, consumer electronics and automotive industries, since 2014, as our president since November 20152014. Prior to joining Allegheny Technologies, Mr. Kramer worked for Stoneridge, Inc. where he was president—Stoneridge wiring division and our chief financial officer since 2002. He served as our executive vice president from 20142012 to November 2015,2014. Earlier experience includes serving as our vice presidentpresident—growth initiatives and president—wheel and transportation products for Alcoa, Inc. from 1996 to 2014 and our treasurer from 2002 to 2005. He currently serves as vice chairman of the board, president and chief executive officer of Kronos Worldwide, executive vice president of NL and CompX and president and chief financial officer of Contran. From 20092004 to 2012 and serving in various roles for Goodyear Tire and Rubber Company from 1983 to 2004. Since 2022, Mr. O'Brien served as chief executive officer of TIMET and its president from prior to 2011 to 2012. Additionally, Mr. O'BrienKramer has served as a director and on the audit committee of CompX since 2013,CompX. He is a directormember of Kronos Worldwide since 2014our audit committee.
Mr. Kramer has one year of experience on the boards of directors and a directoraudit committees of Contran since November 2015. Mr. O'Brien has served in financialValhi and accounting positions (including officer positions) with various companies related to us and Contran since 1988.
W. Hayden McIlroy
, ageMr. McIlroy has over 1219 years of experience on our board of directors, audit committee and management development and compensation committee. He also has senior executive, operating, corporate governance, finance and financial accounting oversight experience from a privately held bank and other privately held entities for which he formerly served.
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Michael S. Simmons, age 51, has served as our vice chairman of the board and chief executive officer since January 2023, and on our board of directors and as our president since May 2022. He previously served as our senior vice president, finance from 2021 to 2022 and as our vice president and chief accounting officer from 2019 to 2021. He currently serves as vice chairman of the board of Kronos Worldwide, NL and CompX and as president and chief executive officer of Contran. He has served as a director of CompX since May 2022 and as a director of Kronos Worldwide, NL and Contran since January 2023. Mr. Simmons has served in various accounting and financial positions (including officer positions) in various companies related to us and Contran since 2018. From 1994 to 2018, Mr. Simmons was employed by PwC, most recently as a managing director.
Mr. Simmons has extensive experience with our business. He also has senior executive, operating, corporate governance, finance, financial accounting and auditing experience with us, from one of the largest independent international public accounting firms, and from other publicly and privately held entities related to us for which he currently serves or formerly served.
Mary A. Tidlund, age 59,66, has served on our board of directors since March 2016, and she previously served on our board of directors from May 2014 to May 2015. Ms. Tidlund hasis a private investor. From 1998 to 2017, she served as the president of The Mary A. Tidlund Charitable Foundation, a charitable organization that designsdesigned and fundsfunded sustainable development projects around the world, since she founded it in 1998.world. From 1989 to 1995, she served as president and chief executive officer of Williston Wildcatters Oil Corporation, a former publicly traded oil exploration and service company. Ms. Tidlund has served as a director and on the audit committee of CompX since March 2016. She is a member of our audit committee.
Ms. Tidlund has one yeareight years of experience as a directoron our board of us. Ms. Tidlunddirectors and audit committee, and six years of experience on the board of directors and audit committee of CompX. She also has senior executive, operating, corporate governance, finance and financial accounting oversight experience from a publicly traded oil exploration and service company for which she formerly served.
Set forth below is certain information relating to our executive officers. Each executive officer serves at the pleasure of the board of directors. Biographical information with respect to Bobby D. O'Brien and Steven L. WatsonMichael S. Simmons is set forth under the Nominees for Director subsection above.
| | | | |
Name | Age | Position(s) | ||
| | | ||
Michael S. Simmons | 51 | | Vice Chairman of the Board, President and Chief Executive Officer | |
Kristin B. McCoy | 50 | | Executive Vice President, Tax | |
Andrew B. Nace | 58 | | Executive Vice President and | |
Courtney J. Riley | | 57 | | Executive Vice President |
Amy Allbach Samford | 48 | | Executive Vice President and Chief | |
John A. Sunny | | 60 | | Executive Vice President and Chief |
Bryan A. Hanley | ||||
42 | | Senior Vice President and | ||
Patty S. Brinda | | |||
60 | | Vice President and | ||
Jane R. Grimm | ||||
52 | | |||
Vice President and | ||||
Bart W. Reichert | 52 | | Vice President, | |
Darci B. Scott | 48 | | Vice President, Tax - Financial Reporting |
Kristin B. McCoyhas served as our executive vice president, tax since 2014May 2022. She previously served as our senior vice president, tax from 2021 to 2022 and as our chief legal officer since November 2015. He served as our as vice president, tax from 20032020 to 2014. He2021. She currently serves as NL's vice chairman of the board, chief executive officer and president. He currently serves as Kronos Worldwide's executive vice president, global tax of Kronos Worldwide and as executive vice president, and chief legal officertax of Contran. Additionally, Mr. GrahamMs. McCoy has served as a director of NL since 2014. Mr. Graham has servedin various tax accounting positions with various companies related to us and Contran since 2002.
Andrew B. Nace has served as our executive vice president since 20142017 and as our chief tax officer since November 2015. She served as our vice president from 2005 to 2014, as our global tax director from 2011 to November 2015 and as our tax director from 1998 to 2011. She currently serves as executive vice president and global tax director of CompX, Kronos Worldwide and NL. She currently serves as Contran's executive vice president and chief tax officer. Ms. Luttmer has served in tax accounting positions (including officer positions) with various companies related to us and Contran since 1989.
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Courtney J. Riley has served as our executive vice president business planning and strategic initiatives since 2013. He currently servesMay 2022. She previously served as our executive vice president, chief financial officerenvironmental affairs from 2017 to 2022 and controller of CompX. Mr. Brown has served in accounting and financial positions (including officer positions) with various companies related to us and Contran since 2003.
Amy Allbach Samford has served as our executive vice president since May 2022 and as our chief financial officer since 2021. She previously served as our senior vice president from 2021 to 2022 and as our vice president and treasurer since 2005. Hecontroller from 2016 to 2021. She currently serves as executive vice president and treasurerchief financial officer of NL, CompX and Contran and as executive vice president of Kronos Worldwide and NL. Mr. St. WrbaWorldwide. Ms. Samford has served in treasuryvarious accounting and financial positions (including officer positions) within various companies related to us and Contran since 2004.
John A. Sunny
has served as our executive vice president
Bryan A. Hanley has served as our senior vice president since May 2022 and as our treasurer since 2017. He previously served as our vice president from 2017 to 2022. He currently serves as senior vice president and treasurer of CompX, Kronos Worldwide and NL and as Contran’s vice president and treasurer. From 2013 to 2017, Mr. Hanley served as assistant treasurer and director, investor relations of Pier 1 Imports, Inc., a retailer specializing in home furnishings and decor, and also served as its assistant treasurer from 2010 to 2013.
Patty S. Brinda has served as our vice president and controller since 2021. She currently serves as vice president and controller of Contran. She has served in various accounting and financial positions in various companies related to us and Contran since 1989, including serving as vice president and controller of NL from 2019 to 2021.
Jane R. Grimm has served as our vice president and secretary since 2019. She currently serves as vice president, general counsel and secretary of CompX. Ms. Grimm has served in legal positions (including officer positions) with various companies related to us and Contran since 2010.
Bart W. Reichert has served as our vice president, internal audit since 2021. He has also served as vice president, internal audit for CompX, Kronos Worldwide and NL since 2021. From 1994 to 2021, Mr. Reichert was employed by PwC, most recently as a managing director.
Darci B. Scott has served as our vice president, tax - financial reporting since 2020. She currently serves as vice president, tax of NL and CompX. Ms. Scott has served in various tax accounting positions with various companies related to us and Contran since 2006.
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Controlled Company Status, Director Independence and Committees
. Because of2022 Meetings and Standing Committees of the Board of Directors
. The board of directors heldThe board of directors has established and delegated authority to two standing committees, which are described below. The board of directors is expected to elect the members of the standing committees at the board of directors annual meeting immediately following the annual stockholder meeting. The board of directors has previously established, and from time to time may establish, other committees to assist it in the discharge of its responsibilities.
Audit Committee
. Our audit committee assists with the board of● | each member of our audit committee is independent, financially literate and has no material relationship with us other than serving as our director; and |
Ms. |
No member of our audit committee serves on more than three public company audit committees. For further information on the role of our audit committee, see the Audit Committee Report in this proxy statement. The current members of our audit committee are Thomas E. Barry (chairman), Elisabeth C. Fisher,Terri L. Herrington, Kevin B. Kramer, W. Hayden McIlroy and Mary A. Tidlund. Our audit committee held eightsix meetings in 2015. Mr. Edelcup, who is not standing for reelection as a director, was previously a member of our audit committee until March 2016.
Management Development and Compensation Committee
. The principal responsibilities of our management development and compensation committee are:● | to recommend to the board of directors whether or not to approve any proposed charge to us or any of our privately held subsidiaries pursuant to an ISA with a related party; |
● | to review, approve, administer and grant awards under our |
● | to review and administer such other compensation matters as the board of directors may direct from time to time. |
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As discussed above, the board of directors has determined that each member of our management development and compensation committee is independent by applying the NYSE director independence standards (without additional categorical standards). The management development and compensation committee may delegate to its members or our officers any or all of its authority as it may choose subject to certain limitations of Delaware law on what duties directors may delegate. The committee has not exercised this right of delegation. With respect to the role of our executive officers in determining or recommending the amount or form of executive compensation, see the Compensation Discussion and Analysis section of this proxy statement. With respect to director cash compensation, our executive officers make recommendations on such compensation directly to our board of directors for its consideration without involving the management development and compensation committee. The current members of our management development and compensation committee are Norman S. EdelcupThomas E. Barry (chairman) and Thomas E. Barry.W. Hayden McIlroy. Our management development and compensation committee held one meeting and took action by written consent on one occasion in 2015. Mr. Edelcup is not standing for reelection as a director. It is our expectation that following the meeting, one or more of our independent directors will be appointed to serve on our management development and compensation committee with Dr. Barry.
Risk Oversight
. Our board of directors oversees the actions we take in managing our material risks. Our management is responsible for our day-to-day management of risk. TheOur audit committee oversees risks associated with financial and accounting matters, including our financial reporting and internal control systems. The committee annually receives management's reportsmanagement’s report and assessmentsassessment on among other things, the risk of fraud, certain material business risks and a ranking of such material business risks and our insurance program. The audit committee also periodically receives reports from our independent registered public accounting firm regarding, among other things, financial risks and the risk of fraud. In addition, the audit committee has responsibility for facilitating the board’s process of oversight of our overall risk management approach, and in that regard the committee annually receives management’s report on identification and assessment of our material business risks and management’s approach for providing periodic updates to the board and applicable committees.
Our management development and compensation committee receives management'smanagement’s assessments on the likelihood that our compensation policies and practices could have a material adverse effect on us, as more fully described in the Compensation Policies and Practices as They Relate to Risk Management section of this proxy statement.
The audit committee and management development and compensation committee report to the board of directors about their meetings. We believe the leadership structure of the board of directors is appropriate for our risk oversight.
Identifying and Evaluating Director Nominees
. Historically, our management has recommended director nominees to the board of directors. As stated in our corporate governance guidelines:● | our board of directors has no specific minimum qualifications for director nominees; |
● | each nominee should possess the necessary business background, skills and expertise at the policy-making level and a willingness to devote the required time to the duties and responsibilities of membership on the board of directors; and |
● | the board of directors believes that experience as our director is a valuable asset and that directors who have served on the board for an extended period of time are able to provide important insight into our current and future operations. |
In identifying, evaluating and determining our director nominees, the board of directors follows such corporate governance guidelines. The board also considers the nominee'snominee’s ability to satisfy the need, if any, for required expertise on the board of directors or one of its committees. While we do not have any policy regarding the diversity of our nominees, the board does consider diversity in the background, skills and expertise at the policy making level of our director nominees, and as a result our board believes our director nominees possess a diverse range of senior management experience that aids the board in fulfilling its responsibilities. The board of directors believes its procedures for identifying and evaluating director nominees are appropriate for a controlled company under the NYSE corporate governance standards.
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Leadership Structure of the Board of Directors and Independent Director Meetings. Steven L. WatsonLoretta J. Feehan serves as our chair of the board (non-executive), and Michael S. Simmons serves as our vice chairman of the board, president and chief executive officer.Pursuant to our corporate governance guidelines, our independent directors are entitled to meet on a regular basis throughout the year, and will meet at least once annually, without the participation of our other directors who are not independent. While we do not have a lead independent director, the chairman of our audit committee presides at all of the meetings of our independent directors. The board of directors believes our current leadership structure is appropriate for a controlled company under the NYSE corporate governance standards. The board of directors believes our leadership structure is appropriate because the board recognizes that whileguidelines. While there is no single organizational structure that is ideal in all circumstances, the board of directors believes that having one individualdifferent individuals serve as our chairmanchair of the board (non-executive) and as our chief executive officer reflects the established working relationship between him and our other executive officersfor these positions regarding our businesses and provides an appropriate breadth of experience and perspective that effectively facilitates the formulation of our long-term strategic direction and business plans. In addition, the board of directors believes that since Steven L. Watson and our other executive officers are employeesMs. Feehan is a representative of Contran, their respectiveher service in their capacitiesas our chair of the board (non-executive) is beneficial in providing strategic leadership for us since there is a commonality of interest that is closely aligned in building long-term stockholder value for all of our stockholders. We have in the past, and may in the future, have a leadership structure in which the same individual serves as our chairman of the board and as our chief executive officer. In 2015,those instances, the individual has been, or would be expected to be, an employee or representative of Contran.
Pursuant to our corporate governance guidelines, our non-management directors (who are not executive officers of Valhi) are entitled to meet on a regular basis throughout the year, and will meet at least once annually, without management participation. Our independent directors also meet at least once annually, without the participation of our other directors who are not independent. We are not required to have a lead independent director under the NYSE corporate governance standards. While we do not have a lead independent director, the chairman of our audit committee presides at all of the meetings of our non-management and independent directors. In 2022, we complied with the NYSE requirements for meetings of our independent and non-management directors.
Stockholder Proposals and Director Nominations for the 20172024 Annual Meeting of Stockholders
The board of directors will consider the director nominee recommendations of our stockholders in accordance with the process discussed above.our bylaws and SEC rules. Our bylaws require that a nomination set forth the name and address of the nominating stockholder, a representation that the stockholder will be a stockholder of record entitled to vote at the annual stockholder meeting and intends to appear in person or by proxy at the meeting to nominate the nominee, a description of all arrangements or understandings between the stockholder and the nominee (or other persons pursuant to which the nomination is to be made), such other information regarding the nominee as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC and the consent of the nominee to serve as a director if elected.
For proposals or director nominations and for proposals to be brought at the 20172024 annual meeting of stockholders but not included in the proxy statement for such meeting, our bylaws require that the proposal or nomination must be delivered or mailed to our principal executive offices in most cases no later than February 21, 2017.20, 2024. In order for stockholders to give timely notice of nominations for directors for inclusion on a universal proxy card in connection with the 2024 annual meeting, notice must be submitted by the deadline for nominations under the advance notice provisions of our bylaws (that is, in most cases no later than February 20, 2024) and must include both the information required by our bylaws and by Rule 14a-19(b)(2) and Rule 14a-19(b)(3) under the Securities Exchange Act. Proposals and nominations should be addressed to our corporate secretary at Valhi, Inc., Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240‑2697.
Communications with Directors
. Stockholders and other interested parties who wish to communicate with the board of directors or its non-management or independent directors may do so through the following procedures. Such communications not involving complaints or concerns regarding accounting, internal accounting controls and auditing matters related to us may be sent to the attention of our corporate secretary at Valhi, Inc., Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas-15-
Complaints or concerns regarding accounting, internal accounting controls and auditing matters, which may be made anonymously, should be sent to the attention of our general counsel with a copy to our chief financial officer at the same address as our corporate secretary. These complaints or concerns will be forwarded to the chairman of our audit committee. We will investigate and keep these complaints or concerns confidential and anonymous, to the extent feasible, subject to applicable law. Information contained in such a complaint or concern may be summarized, abstracted and aggregated for purposes of analysis and investigation.
Compensation Committee Interlocks and Insider Participation
.● | was an officer or employee of ours during |
● | had any related party relationships with us that requires disclosure under applicable SEC rules; or |
● | had any interlock relationships under applicable SEC rules. |
For 2015,2022, no executive officer of ours had any interlock relationships within the scope of the intent of applicable SEC rules. However, at certain times in 2015 each of Steven L. Watson, William J. Lindquist (formerly an executive officer of ours) and Bobbyduring 2022 Robert D. O'BrienGraham was an executive officer of ours and on the board of directors of Contran when concurrently also serving as one of our directors.
Code of Business Conduct and Ethics
. We have adopted a code of business conduct and ethics. The code applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller. Only the board of directors may amend the code. Only our audit committee or other committee of the board of directors with specifically delegated authority may grant a waiver of this code. WeCorporate Governance Guidelines
. We have adopted corporate governance guidelines to assist the board of directors in exercising its responsibilities. Among other things, the corporate governance guidelines provide for director qualifications, for independence standards and responsibilities, for approval procedures for ISAs and that our audit committee chairman preside at all meetings of the non-management or independent directors.Availability of Corporate Governance Documents
. A copy of each of our audit committee charter, code of business conduct and ethics and corporate governance guidelines is available on our website at www.valhi.net under the corporate governance section.Employee, Officer and Director Hedging. We have not adopted any policies or practices regarding hedging of our equity securities by our employees (including officers) or directors. However, our employees (including officers) and directors must comply with our insider trading policy, which applies to hedging transactions involving our securities as it does to transactions in our securities generally.
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Compensation Discussion and Analysis
. This compensation discussion and analysis describes the key principles and factors underlying our executive compensation policies for our named executive officers. In each of the last three years, all of our named executive officers were employed by Contran and provided their services to us pursuant to our ISA with Contran. Such individuals also provided services to CompX, Kronos Worldwide and NL underAs defined in the Glossary of Terms at the beginning of this proxy statement, the phrase "named“named executive officers"officers” refers to the five persons whose compensation is summarized in the 20152022 Summary Compensation Table in this proxy statement. Such phrase is not intended to refer, and does not refer, to all of our executive officers.
Nonbinding Advisory Stockholder Vote on Executive Officer Compensation
. For theIntercorporate Services Agreements
. We pay Contran a fee for services provided by Contran to us pursuant to our ISA with Contran, which fee was approved by our independent directors after receiving the recommendation of our management development and compensation committee and the concurrence of our chief financial officer. Such services provided under this ISA included the services of our named executive officers, all of which as noted above were employed by Contran, and as a result a portion of the aggregate ISA fee we paid to Contran was paid for services provided to us by our named executive officers. The nature of the duties of each of our named executive officers is consistent with the duties normally associated with the officer titles and positions such officer holds with us. Pursuant toThe charges under these ISAs reimburse Contran for its cost of employing the personnel who provide the services by allocating such cost to us based on the estimated percentage of time such personnel were expected to devote to us over the year. The amount of the fee we paid for each year under these ISAs for a person who provided services to us represents, in management'smanagement’s view, the reasonable equivalent of "compensation"“compensation” for such services. See the Intercorporate Services Agreements part of the Certain Relationships and Transactions section of this proxy statement for the aggregate amount we paid to Contran in 20152022 under these ISAs. Under the various ISAs among Contran and its subsidiaries and affiliates, we share the cost of the employment of our named executive officers with Contran and certain of its publicly and privately held subsidiaries. For our named executive officers, the portion of the annual charge we paid for each of the last three years to Contran, as applicable, under these ISAs attributable to each of their services is set forth in footnote 2 to the 20152022 Summary Compensation Table in this proxy statement. As discussed further below, the amounts charged under the ISAs are dependent upon Contran'sContran’s cost of employing or engaging the personnel who provide the services to us (including the services of our named executive officers) by allocating such cost to us based on the estimated percentage of time such personnel were expected to devote to us over the year. The amount charged under the ISAs is not dependent upon our financial performance.
We believe the cost of the services received under our ISA with Contran, after considering the quality of the services received, is fair to us and is no less favorable to us than we could otherwise obtain from an unrelated third party for comparable services, based solely on our collective business judgment and experience without performing any independent market research.
In the early part of each year, Contran'sContran’s management, including certain of our named executive officers, estimates the percentage of time that each Contran employee, including our named executive officers, is expected to devote in the upcoming year to Contran and its subsidiaries and affiliates, including us. Contran'sContran’s management then
-17-
allocates Contran'sContran’s cost of employing each of its employees among Contran and its various subsidiaries and affiliates based on such estimated percentages. Contran'sContran’s aggregate cost of employing each of its employees comprises:
● | the annualized base salary of such employee at the beginning of the year; |
● | an estimate of the bonus Contran will pay or accrue for such employee (other than bonuses, if any, for specific matters) for the year, using as a reasonable approximation for such bonus the actual bonus that Contran paid or accrued for such employee in the prior year; and |
Contran’s portion of the social security and medicare taxes on such base salary and an estimated overhead |
Contran’s senior management subsequently mademake such adjustments to the details of the proposed ISA charge as they deemeddeem necessary for accuracy, overall reasonableness and fairness to us.
In the first quarter of each year reported in the 2022 Summary Compensation Table, the proposed charge for that year under our ISA with Contran was presented to our management development and compensation committee, and the committee considered whether to recommend that our board of directors approve the ISA charge. Among other things during such presentation, the committee was informed of:
● | the quality of the services Contran provides to us, including the quality of the services our executive officers provide to us; |
the comparison of the ISA charge and number of full-time equivalent employees reflected in the charge by department for the prior year and proposed for the current year; |
● | the comparison of the prior year and proposed current year charges by department and in total and such amounts as a percentage of |
● | the comparison of the prior year and proposed current year average hourly rate; and |
● | the concurrence of our chief financial officer as to the reasonableness of the proposed charge. |
In determining whether to recommend that the board of directors approve the proposed ISA fee to be charged to us, the management development and compensation committee considers the three elements of Contran'sContran’s cost of employing the personnel who provide services to us, as discussed above, including the cost of employing our named executive officers, in the aggregate and not individually. After considering the information contained in such presentations, and following further discussion and review, our management development and compensation committee recommended that our board of directors approve the proposed ISA fee after concluding, based on their collective business judgment and experience without performing any independent market research, that:
● | the cost to employ the personnel necessary to provide the quality of the services provided by Contran would exceed the proposed aggregate fee to be charged by Contran to us under our ISA with Contran; and |
● | the cost for such services would be no less favorable than could otherwise be obtained from an unrelated third party for comparable |
-18-
In reaching its recommendation, our management development and compensation committee did not review:
● | any ISA charge from Contran to any other publicly held parent or sister company, although such charge was separately reviewed by the management development and compensation committee of the applicable company; and |
● | the compensation policies of Contran or the amount of time our named executive officers are expected to devote to us because: |
o | each of our named executive officers provides services to |
o | the fee we pay to Contran under our ISA with Contran each year does not represent all of |
o | Contran and these other companies related to Contran absorb the remaining amount of |
o | the members of our management development and compensation committee consider the |
Based on the recommendation of our management development and compensation committee, as well as the concurrence of our chief financial officer, our independent directors approved the proposed annual ISA charge effective January 1, 2015, with our other directors abstaining.
For financial reporting and income tax purposes, the ISA fee is expensed as incurred on a quarterly basis. Contran has implemented a limitSection 162(m) of the Code generally disallows an income tax deduction to publicly held companies for compensation over $1.0 million onpaid to the company’s chief executive officer, chief financial officer and three other most highly compensated executive officers. To the extent any individual'sindividual’s charge to a publicly held company under the ISA (plus any other amounts required by tax regulations) is in order to enhanceexcess of $1.0 million, the deductibility by the company of the charge for income tax purposes would be limited under Section 162(m) of the Internal Revenue Code of 1986,, if such section were to be deemed applicable. Section 162(m) generally disallows aapplicable as it relates to the ISA. However, Contran has agreed to absorb the impact of any such income tax deduction to publicly held companies for non-performance based compensation overdisallowance resulting from such totals in excess of $1.0 million. In each of 2020, 2021 and 2022, the $1.0 million paid to the company's chief executive officerlimit was exceeded by Valhi for certain individuals, and four other most highly compensated executive officers.
No Director Fees includingor Equity-Based Compensation.
Prior to 2013,2020, we decided to foregoforgo the grant of any equity compensation other than annual awards of stock to our directors, as discussed above. We also do not have any security ownership requirements or guidelines for our management, oralthough we do have stock ownership guidelines for our non-employee directors. We do not currently anticipate any equity-based compensation will be granted in 2016,2023, other than the annual grants of stock to our directors.
Compensation Committee Report.
The management development and compensation committee has reviewed with management the Compensation Discussion and Analysis section in this proxy statement. Based on theThe members of our Management Developmentmanagement development and Compensation Committeecompensation committee submit the foregoing report as of February 25, 2016.
Thomas E. Barry Chairman of our Management Development and Compensation Committee | | W. Hayden McIlroy Member of our Management Development and Compensation Committee |
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Summary of Cash and Certain Other Compensation of Executive Officers. The 20152022 Summary Compensation Table below provides information concerning compensation we and our subsidiaries paid or accrued for services rendered during the last three years by a former executive officer who served as our only chief executive officer during 2022, our chief financial officer, and each of the three other most highly compensated individuals (based on ISA charges to us and our subsidiaries) who were our executive officers at December 31, 2015.2022. All of our named executive officers were employees of Contran for the last threetheir years reported in this table and provided their services to us and our subsidiaries pursuant to our ISA with Contran. For a discussion of this ISA, see the Intercorporate Services Agreements part of the Certain Relationships and Transactions section of this proxy statement.
2022 SUMMARY COMPENSATION TABLE
(1)Name and Principal Position | Year | Salary | Stock Awards | Total | ||
Steven L. Watson | 2015 | $2,600,900 | (2) | $44,610 | (3) | $2,645,510 |
Chairman of the Board and Chief | 2014 | 2,519,100 | (2) | 46,985 | (3) | 2,566,085 |
Executive Officer | 2013 | 2,649,900 | (2) | 58,210 | (3) | 2,708,110 |
Bobby D. O'Brien | 2015 | 2,091,800 | (2) | 33,570 | (3) | 2,125,370 |
President and Chief Financial | 2014 | 1,921,700 | (2) | 34,175 | (3) | 1,955,875 |
Officer | 2013 | 1,232,600 | (2) | -0- | 1,232,600 | |
Robert D. Graham | 2015 | 2,073,700 | (2) | 11,040 | (3) | 2,084,740 |
Executive Vice President and Chief Legal Officer | 2014 | 1,967,050 | (2) | 12,810 | (3) | 1,979,860 |
2013 | 2,229,200 | (2) | -0- | 2,229,200 | ||
Gregory M. Swalwell | 2015 | 1,806,200 | (2) | -0- | 1,806,200 | |
Executive Vice President, Controller and | 2014 | 1,626,900 | (2) | -0- | 1,626,900 | |
Chief Accounting Officer | 2013 | 1,346,300 | (2) | -0- | 1,346,300 | |
Kelly D. Luttmer | 2015 | 1,709,700 | (2) | -0- | 1,709,700 | |
Executive Vice President and Chief Tax Officer | 2014 | 1,585,700 | (2) | -0- | 1,585,700 | |
2013 | 1,298,100 | (2) | -0- | 1,298,100 |
| | | | | | | | | | | |
| | | | | | | Stock | | | | |
Name and Principal Position |
| Year |
| Salary |
| Awards |
| Total | |||
| | | | | | | | | | | |
Michael S. Simmons (2) |
| 2022 | | $ | 1,041,000 | (3) | $ | -0- | | $ | 1,041,000 |
Vice Chairman of the Board, President and |
| | |
| | |
| | |
| |
Chief Executive Officer |
| | |
| | |
| | |
| |
| | | | | | | | | | | |
Andrew B. Nace |
| 2022 | |
| 1,124,000 | (3) |
| -0- | |
| 1,124,000 |
Executive Vice President and General Counsel |
| 2021 | |
| 2,851,000 | (3) |
| -0- | |
| 2,851,000 |
|
| 2020 | |
| 3,098,000 | (3) |
| -0- | |
| 3,098,000 |
| | | | | | | | | | | |
Courtney J. Riley |
| 2022 | |
| 1,282,000 | (3) |
| -0- | |
| 1,282,000 |
Executive Vice President |
| 2021 | |
| 1,135,000 | (3) |
| -0- | |
| 1,135,000 |
|
| 2020 | |
| 1,081,000 | (3) |
| -0- | |
| 1,081,000 |
| | | | | | | | | | | |
Amy A. Samford (2) |
| 2022 | |
| 973,000 | (3) |
| -0- | |
| 973,000 |
Executive Vice President and Chief Financial Officer |
| 2021 | |
| 608,000 | (3) |
| -0- | |
| 608,000 |
| | | | | | | | | | | |
Robert D. Graham (2) |
| 2022 | | | 8,977,000 | (3) | | -0- | | | 8,977,000 |
Former Vice Chairman of the Board, President and |
| 2021 | |
| 7,430,000 | (3) |
| -0- | |
| 7,430,000 |
Chief Executive Officer |
| 2020 | |
| 8,080,000 | (3) |
| -0- | |
| 8,080,000 |
(1) | Certain non-applicable columns have been omitted from this table. |
(2) | Mr. Simmons was elected as our vice chairman of the board, president and chief executive officer as of January 1, 2023; on December 31, 2022 he was our president, and he is one of our named executive officers only for 2022. Ms. Samford is one of our named executive officers only for 2021 and 2022. Mr. Graham retired as our vice chairman of the board and chief executive officer effective December 31, 2022. |
(3) | The amounts shown in the |
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Compensation Table for each of our named executive officers are as follows.
2013 | 2014 | 2015 | ||||
Steven L. Watson | ||||||
ISA Fees: | ||||||
CompX | $ 115,400 | $ 109,400 | $ 122,300 | |||
Kronos Worldwide | 992,400 | 940,700 | 917,000 | |||
NL | 639,300 | 606,100 | 672,400 | |||
Valhi | 784,800 | 743,900 | 764,200 | |||
Director Fees Earned or Paid in Cash: | ||||||
CompX | 30,000 | 29,000 | 30,000 | |||
Kronos Worldwide | 30,000 | 30,000 | 31,000 | |||
NL | 29,000 | 30,000 | 30,000 | |||
Valhi | 29,000 | 30,000 | 34,000 | |||
$ 2,649,900 | $ 2,519,100 | $2,600,900 | ||||
Robert D. Graham | ||||||
ISA Fees: | ||||||
CompX | $ 77,400 | $ 79,000 | $ 85,500 | |||
Kronos Worldwide | 851,400 | 379,200 | 393,400 | |||
NL | 959,800 | 979,500 | 974,800 | |||
Valhi | 340,600 | 505,600 | 590,000 | |||
Director Fees Earned or Paid in Cash: | ||||||
NL | -0- | 23,750 | (a) | 30,000 | ||
$ 2,229,200 | $ 1,967,050 | $2,073,700 | ||||
Bobby D. O'Brien | ||||||
ISA Fees: | ||||||
CompX | $ 92,200 | $141,300 | $ 161,900 | |||
Kronos Worldwide | 92,200 | 602,800 | 647,600 | |||
NL | 239,700 | 292,000 | 334,600 | |||
Valhi | 793,000 | 810,100 | 852,700 | |||
Director Fees Earned or Paid in Cash: | ||||||
CompX | 15,500 | (a) | 29,000 | 30,000 | ||
Kronos Worldwide | -0- | 22,750 | (a) | 31,000 | ||
Valhi | -0- | 23,750 | (a) | 34,000 | ||
$ 1,232,600 | $ 1,921,700 | $2,091,800 | ||||
Gregory M. Swalwell | ||||||
ISA Fees: | ||||||
CompX | $ 52,600 | $ 63,800 | $ 70,600 | |||
Kronos Worldwide | 420,800 | 446,600 | 493,800 | |||
NL | 452,200 | 510,400 | 564,400 | |||
Valhi | 420,700 | 606,100 | 677,400 | |||
$ 1,346,300 | $ 1,626,900 | $1,806,200 | ||||
Kelly D. Luttmer | ||||||
ISA Fees: | ||||||
CompX | $ 92,700 | $106,200 | $ 58,700 | |||
Kronos Worldwide | 695,400 | 729,800 | 807,200 | |||
NL | 266,600 | 305,200 | 337,500 | |||
Valhi | 243,400 | 444,500 | 506,300 | |||
$1,298,100 | $ 1,585,700 | $1,709,700 |
Shares of Common Stock | Date of Grant | Closing Price on Date of Grant | Grant Date Value of Shares of Common Stock | |
Steven L. Watson | ||||
1,000 shares of CompX class A common stock | May 27, 2015 | $11.50 | $11,500 | |
1,000 shares of Kronos Worldwide common stock | May 20, 2015 | $12.56 | 12,560 | |
1,500 shares of NL common stock | May 21, 2015 | $7.36 | 11,040 | |
1,500 shares of Valhi common stock | May 28, 2015 | $6.34 | 9,510 | |
$44,610 | ||||
1,000 shares of CompX class A common stock | May 28, 2014 | $10.95 | $10,950 | |
1,000 shares of Kronos Worldwide common stock | May 21, 2014 | $14.72 | 14,720 | |
1,500 shares of NL common stock | May 22, 2014 | $8.54 | 12,810 | |
1,500 shares of Valhi common stock | May 29, 2014 | $5.67 | 8,505 | |
$46,985 | ||||
1,000 shares of CompX class A common stock | May 29, 2013 | $12.48 | $12,480 | |
1,000 shares of Kronos Worldwide common stock | May 8, 2013 | $17.68 | 17,680 | |
1,000 shares of NL common stock | May 15, 2013 | $11.88 | 11,880 | |
1,000 shares of Valhi common stock | May 30, 2013 | $16.17 | 16,170 | |
$58,210 | ||||
Robert D. Graham | ||||
1,500 shares of NL common stock | May 21, 2015 | $7.36 | $11,040 | |
1,500 shares of NL common stock | May 22, 2014 | $8.54 | $12,810 | |
Bobby D. O'Brien | ||||
1,000 shares of CompX class A common stock | May 27, 2015 | $11.50 | $11,500 | |
1,000 shares of Kronos Worldwide common stock | May 20, 2015 | $12.56 | 12,560 | |
1,500 shares of Valhi common stock | May 28, 2015 | $6.34 | 9,510 | |
$33,570 | ||||
1,000 shares of CompX class A common stock | May 28, 2014 | $10.95 | 10,950 | |
1,000 shares of Kronos Worldwide common stock | May 21, 2014 | $14.72 | 14,720 | |
1,500 shares of Valhi common stock | May 29, 2014 | $5.67 | 8,505 | |
$34,175 |
| | | | | | | | | |
|
| 2020 |
| 2021 |
| 2022 | |||
Michael S. Simmons | |
|
| |
|
| |
|
|
ISA Fees: | |
|
| |
|
| |
|
|
CompX | | | | | | | | $ | 229,000 |
Kronos Worldwide | |
| | |
| | |
| 369,000 |
NL | |
| | |
| | |
| 65,000 |
Valhi | |
| | |
| | |
| 378,000 |
| | | | | | | | $ | 1,041,000 |
Andrew B. Nace | |
|
| |
|
| |
|
|
ISA Fees: | |
|
| |
|
| |
|
|
CompX | | $ | 370,000 | | $ | 298,000 | | $ | 116,000 |
Kronos Worldwide | |
| 953,000 | |
| 876,000 | |
| 349,000 |
NL | |
| 647,000 | |
| 596,000 | |
| 233,000 |
Valhi | |
| 1,128,000 | |
| 1,081,000 | |
| 426,000 |
| | $ | 3,098,000 | | $ | 2,851,000 | | $ | 1,124,000 |
Courtney J. Riley | |
|
| |
|
| |
|
|
ISA Fees: | |
|
| |
|
| |
|
|
CompX | | $ | 58,000 | | $ | 46,000 | | $ | 56,000 |
Kronos Worldwide | |
| 522,000 | |
| 593,000 | |
| 661,000 |
NL | |
| 291,000 | |
| 306,000 | |
| 360,000 |
Valhi | |
| 210,000 | |
| 190,000 | |
| 205,000 |
| | $ | 1,081,000 | | $ | 1,135,000 | | $ | 1,282,000 |
Amy A. Samford | |
|
| |
|
| |
|
|
ISA Fees: | |
|
| |
|
| |
|
|
CompX | | | | | $ | 194,000 | | $ | 292,000 |
Kronos Worldwide | | | | |
| 58,000 | |
| 180,000 |
NL | | | | |
| 146,000 | |
| 225,000 |
Valhi | | | | |
| 210,000 | |
| 276,000 |
| | | | | $ | 608,000 | | $ | 973,000 |
Robert D. Graham |
| |
|
| |
|
| |
|
ISA Fees: |
| |
|
| |
|
| |
|
CompX | | $ | 659,000 | | $ | 606,000 | | $ | 719,000 |
Kronos Worldwide | |
| 3,623,000 | |
| 3,735,000 | |
| 4,570,000 |
NL | |
| 2,393,000 | |
| 1,797,000 | |
| 1,670,000 |
Valhi | |
| 1,405,000 | |
| 1,292,000 | |
| 2,018,000 |
| | $ | 8,080,000 | | $ | 7,430,000 | | $ | 8,977,000 |
No Grants of each corporation. No otherPlan-Based Awards. During 2022, no named executive officer received any plan-based awards from us or our subsidiaries in 2015.
Name | Grant Date | Date of Approval (2) | All Other Stock Awards: Number of Shares of Stock or Units (#) (2) | Grant Date Fair Value of Stock and Option Awards (2) |
Steven L. Watson | ||||
CompX Class A common stock (3) | 05/27/15 | 05/30/12 | 1,000 | $ 11,500 |
Kronos Worldwide common stock (4) | 05/20/15 | 05/10/12 | 1,000 | 12,560 |
NL common stock (5) | 05/21/15 | 05/16/12 | 1,500 | 11,040 |
Valhi common stock (6) | 05/28/15 | 05/31/12 | 1,500 | 9,510 |
$44,610 | ||||
Robert D. Graham | ||||
NL common stock (5) | 05/21/15 | 05/16/12 | 1,500 | $ 11,040 |
Bobby D. O'Brien | ||||
CompX Class A common stock (3) | 05/27/15 | 05/30/12 | 1,000 | $ 11,500 |
Kronos Worldwide common stock (4) | 05/20/15 | 05/10/12 | 1,000 | 12,560 |
Valhi common stock (6) | 05/28/15 | 05/31/12 | 1,500 | 9,510 |
$33,570 |
No Outstanding Equity Awards at December 31, 2015
No Option Exercises or Stock Vested
. DuringPension Benefits
. We do not have any defined benefit pension plans in which our named executive officers participate.Nonqualified Deferred Compensation
. We do not owe any nonqualified deferred compensation to our named executive officers.-21-
Pay Ratio Disclosure. SEC rules require annual disclosure of the ratio of a registrant’s median employee’s annual total compensation to the total annual compensation of its chief executive officer. For 2022, the total annual compensation (as disclosed in the 2022 Summary Compensation Table) of Robert D. Graham, our former executive officer who served as our chief executive officer during all of 2022, is $8,977,000; the reasonable estimate of the median of the annual total compensation of all of our employees except our chief executive officer, calculated in a manner consistent with Item 402(u) of Regulation S-K, is $79,221; and the ratio of such two amounts is 113 to 1.
For purposes of this disclosure, our “median employee” was estimated using a simple random sample statistical sampling technique, pursuant to which we and each of our consolidated subsidiaries worldwide selected every seventh employee listed on their first payroll register for the month of October 2020. Based on such random sample of our employees, and using the 2020 base salary (or equivalent for hourly employees) for each employee in such random sample as reflected in our payroll records, the median employee was estimated by determining the employee in such random sample who had the median 2020 base salary (or equivalent for hourly employees). Base salary (or equivalent) amounts were annualized for any employee who had less than a full year of service during 2020. In determining the median employee, we used the applicable average exchange rates for the month of October 2020. There has been no change in our employee population or employee compensation arrangements since that median employee was identified that we believe would significantly impact our pay ratio disclosure. For providing the median employee’s annual total compensation in U.S. dollars, we used the applicable average exchange rate for all of 2022.
Director Compensation. Our directors who are entitlednot employees of Contran or one of its subsidiaries or affiliates are eligible to receive compensation for their services as directors. The table below reflects the annual rates of their retainers for 2015.
| | | |
| | 2022 Director | |
|
| Retainers | |
| | | |
Each director | | $ | 40,000 |
| | | |
Chair of the board | | $ | 50,000 |
| | | |
Chairman of our audit committee and any member of our audit committee whom the board identified as an “audit committee financial expert” (provided that if one person served in both capacities only one such retainer was paid) | | $ | 45,000 |
| | | |
Other members of our audit committee | | $ | 25,000 |
| | | |
Members of our other committees | | $ | 5,000 |
* | |
Effective July 1, |
Additionally, our eligible directors receive a fee of $1,000 per day for attendance at meetings of the board of directors or its committees and an hourly rate (not to exceed $1,000 per day) for other services rendered on behalf of our board of directors or its committees. If a non-employee director who was first elected to our board prior to 2022 dies while serving on our board of directors, his or her designated beneficiary or estate will be entitled to receive a death benefit equal to the annual retainer then in effect. We reimburse our directors for reasonable expenses incurred in attending meetings and in the performance of other services rendered on behalf of our board of directors or its committees.
As preapproved by our management development and compensation committee, on the day of each of our annual stockholder meetings, each of our eligible directors elected on that day received a grant of shares of our common stock under our 2022 Non-Employee Director Stock Plan, with the number of shares received by each eligible director equal in value to $20,000 (rounded up or down to the nearest 50 shares), based on the closing price of a share of our common stock on the date of grant, but not more than 5,000 shares. These shares are fully vested and tradable immediately on their date of grant, other than restrictions under applicable securities laws. Our corporate governance guidelines include stock ownership guidelines for our non-employee directors (that is, directors who are not employed by us or one of our affiliates), which provide that non-employee directors may not sell shares of our common stock acquired as part of the annual stock grants unless, immediately after any such sale, they will hold a number of shares of
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our common stock (including shares owned by their immediate family members residing in the same household) having a value of at least three times our base annual cash retainer for service as a director.
The following table provides information with respect to compensation certaineach of our eligible directors earned for their 20152022 director services provided to us.
2022 DIRECTOR COMPENSATION
(1)
| | | | | | | | | | | | |
| | Fees Earned or |
| | |
| All Other |
| | | ||
Name |
| Paid in Cash (2) |
| Stock Awards (3) |
| Compensation |
| Total | ||||
| | | | | | | | | | | | |
Thomas E. Barry (4) | | $ | 88,500 | | $ | 19,636 | | $ | -0- | | $ | 108,136 |
Loretta J. Feehan (4) | |
| 88,500 | |
| 19,636 | |
| -0- | |
| 108,136 |
Terri L. Herrington (4) | |
| 83,500 | |
| 19,636 | |
| -0- | |
| 103,136 |
Kevin B. Kramer (4)(5) | | | 35,500 | | | 19,636 | | | -0- | | | 55,136 |
W. Hayden McIlroy | |
| 68,500 | |
| 19,636 | |
| -0- | |
| 88,136 |
Mary A. Tidlund (4) | |
| 63,500 | |
| 19,636 | |
| -0- | |
| 83,136 |
Name | Fees Earned or Paid in Cash (2) | Stock Awards (3) | All Other Compensation | Total | ||||
Thomas E. Barry | $62,000 | $9,510 | $ -0- | $71,510 | ||||
Norman S. Edelcup (4) | 78,500 | 9,510 | -0- | 88,010 | ||||
Loretta J. Feehan (4) | 37,000 | 9,510 | -0- | 46,510 | ||||
William J. Lindquist (5) | 20,750 | 9,510 | 978,200 | (6) | 1,008,460 | |||
W. Hayden McIlroy | 57,000 | 9,510 | -0- | 66,510 | ||||
Mary A. Tidlund (5) | 14,500 | -0- | -0- | 14,500 |
(1) | Certain non-applicable columns have been omitted from this table. |
(2) | Represents cash retainers and meeting fees the director earned for director services he or she provided to us in |
(3) | Represents the value of |
(4) | In addition to the fees disclosed, in |
| | | | | | | | | | |||
| | Fees Earned |
| | |
| | | ||||
| | or Paid in | | Stock | | | | |||||
Name | Fees Earned or Paid in Cash (a) | Stock Awards (b) | Total |
| Cash (a) |
| Awards (b) |
| Total | |||
Norman S. Edelcup. | ||||||||||||
Thomas E. Barry |
| |
|
| |
|
| |
| |||
CompX Director Services | $74,500 | $11,500 | $ 86,000 | | $ | 88,500 | | $ | 19,638 | | $ | 108,138 |
Loretta J. Feehan. | ||||||||||||
| | | | | | | | | | |||
Terri L. Herrington | |
|
| |
|
| |
|
| |||
CompX Director Services | | $ | 83,500 | | $ | 19,638 | | $ | 103,138 | |||
| | | | | | | | | | |||
Kevin B. Kramer (c) | |
|
| |
|
| |
|
| |||
CompX Director Services | | $ | 36,500 | | $ | 19,638 | | $ | 56,138 | |||
| | | | | | | | | | |||
Mary A. Tidlund | |
|
| |
|
| |
|
| |||
CompX Director Services | | $ | 63,500 | | $ | 19,638 | | $ | 83,138 | |||
| | | | | | | | | | |||
Loretta J. Feehan | |
|
| |
|
| |
|
| |||
CompX Director Services | $32,000 | $11,500 | $ 43,500 | | $ | 88,500 | | $ | 19,638 | | $ | 108,138 |
Kronos Worldwide Director Services | 34,000 | 12,560 | 46,560 | |
| 89,500 | |
| 19,776 | |
| 109,276 |
NL Director Services | 33,000 | 11,040 | 44,040 | |
| 90,500 | |
| 20,050 | |
| 110,550 |
$99,000 | $35,100 | $134,100 | ||||||||||
| | $ | 268,500 | | $ | 59,464 | | $ | 327,964 |
(a) | Represents retainers and meeting fees earned for |
(b) | For the purposes of this table, the stock award comprised the following number of shares and were valued at the following closing price per share of such shares on their date of grant, consistent with the requirements of Financial Accounting Standards Board Accounting Standards Codification Topic 718: |
Common Stock | Shares Granted | Date of Grant | Closing Price on Date of Grant | Dollar Value of Stock Award |
CompX Class A Common Stock | 1,000 | 05/27/15 | $11.50 | $11,500 |
Kronos Worldwide Common Stock | 1,000 | 05/20/15 | $12.56 | $12,560 |
NL Common Stock | 1,500 | 05/21/15 | $7.36 | $11,040 |
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| | | | | | | | | | |
|
| |
| |
| Closing Price |
| Dollar Value | ||
| | Shares | | | | on Date of | | of Stock | ||
Common Stock |
| Granted |
| Date of Grant |
| Grant |
| Award | ||
CompX Class A Common Stock | | 900 | | 05/25/22 | | $ | 21.82 | | $ | 19,638 |
Kronos Worldwide Common Stock | | 1,200 | | 05/18/22 | | $ | 16.48 | | $ | 19,776 |
NL Common Stock |
| 2,500 |
| 05/19/22 | | $ | 8.02 | | $ | 20,050 |
(c) | Kevin B. Kramer became a CompX director in May 2022. |
(5) |
Pay Versus Performance. The Pay Versus Performance Table below summarizes compensation values previously reported in the Summary Compensation Table of our proxy statements and other information, as required by SEC rules. We did not use any specific financial performance measures to link executive compensation of our named executive officers to company performance for 2022; see the discussion in the Compensation Discussion and Analysis section of this proxy statement. As used in this section (including the charts below), “NEOs” means the persons designated in our proxy statement as our named executive officers for the applicable year, and “PEO” means our principal executive officer.
Pay Versus Performance Table
| | | | | | | | | | | | | | |
(a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) |
| | | | | | | | | | Value of Initial Fixed $100 | | | ||
| | | | | | Average | | | | Investment Based on: | | | ||
| | | | | | Summary | | Average | | | | Peer | | |
| | Summary | | | | Compensation | | Compensation | | Valhi | | Group | | |
| | Compensation | | Compensation | | Table Total | | Actually Paid | | Total | | Total | | Net |
| | Table Total | | Actually Paid | | for Non-PEO | | to Non-PEO | | Shareholder | | Shareholder | | Income |
| | for PEO (1) | | to PEO (1)(2) | | NEOs (3) | | NEOs (2)(3) | | Return (4) | | Return (4) | | ($ in |
Year |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| millions) |
2022 | | 8,977,000 | | 8,977,000 | | 1,105,000 | | 1,105,000 | | 34 | | 97 | | 90.2 |
2021 | | 7,430,000 | | 7,430,000 | | 1,601,000 | | 1,601,000 | | 44 | | 106 | | 197.7 |
2020 | | 8,080,000 | | 8,080,000 | | 2,039,400 | | 2,039,400 | | 23 | | 101 | | 89.0 |
2019 | | 6,852,000 | | 6,852,000 | | 2,425,800 | | 2,425,800 | | 32 | | 91 | | 78.2 |
2018 | | 5,770,000 | | 5,770,000 | | 2,838,500 | | 2,838,500 | | 32 | | 73 | | 301.0 |
(1) The only PEO for each year reflected in the table is Robert D. Graham, who retired as a Valhi officer and director effective December 31, 2022.
(2) For purposes of this table, the term “compensation actually paid” is the total compensation reported in the Summary Compensation Table in our proxy statement, adjusted (if applicable) as required by SEC rules; no such adjustments are applicable for the officers and years reported in this table. See the footnotes to our Summary Compensation Table in the applicable year’s proxy statement for a discussion of what we report for compensation for our named executive officers who are Contran employees and perform services to us and our subsidiaries pursuant to the ISA.
(3) The non-PEO NEOs for each year were as follows:
2022: Michael S. Simmons, Andrew B. Nace, Courtney J. Riley, Amy A. Samford
2021: Andrew B. Nace, Courtney J. Riley, Amy A. Samford, John A. Sunny, James W. Brown
2020: James W. Brown, Andrew B. Nace, Courtney J. Riley, John A. Sunny, Kelly D. Luttmer
2019: Kelly D. Luttmer, Andrew B. Nace, Courtney J. Riley, James W. Brown, Gregory M. Swalwell
2018: Gregory M. Swalwell, Kelly D. Luttmer, Andrew B. Nace, Courtney J. Riley
(4) Total shareholder return (TSR) amounts show the value at December 31 of each year, assuming an original investment of $100 at December 31, 2017 and reinvestment of cash dividends and other distributions to stockholders. For the peer group TSR, the peer group is the same as in our performance graph in Part II, Item 5 of our annual report on Form 10-K for the fiscal year ended December 31, 2022: the S&P 500 Industrial Conglomerates Index.
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The following chart shows the relationship between the amounts in column (c) and in column (e) of the Pay Versus Performance Table, and the total shareholder return (TSR) amounts in columns (f) and (g) of the Pay Versus Performance Table. It also shows the relationship between our TSR and the peer group TSR.
The following chart shows the relationship between the amounts in column (c) and in column (e) of the Pay Versus Performance Table, and our net income as shown in column (h) of the Pay Versus Performance Table.
Compensation Policies and Practices as They Relate to Risk Management. We believe that the risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on us. In reaching this conclusion, we considered the following:
we do not grant equity awards to our employees, officers or other persons who provide services to us under the ISA between Contran and us, which mitigates taking excessive or inappropriate risk for short-term gain that might be rewarded by equity compensation; |
● | certain senior employees of CompX and Kronos Worldwide are eligible to receive incentive bonus payments that are determined on a discretionary basis and do not guarantee the employee a particular level of bonus based on the achievement of a specified performance or financial target, which also mitigates taking excessive or inappropriate risk for short-term gain; |
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● | certain key employees of CompX and Kronos Worldwide are eligible to receive bonuses determined in part on the achievement of specified performance or financial targets based on the respective business plan for the year (with respect to CompX) or on the achievement of specified performance or financial targets (with respect to Kronos Worldwide), but the chance of such employees undertaking actions with excessive or inappropriate risk for short-term gain in order to achieve such bonuses is mitigated because: |
o | the senior officers employed by CompX or Kronos Worldwide who are responsible for setting the specified performance or financial targets or establishing and executing such business plan are not eligible to receive such bonuses based on the business plan, but instead are only eligible for the discretionary-based bonuses described above; and |
o | there exist ceilings for our other CompX and Kronos Worldwide key employee bonuses (which are not a significant part of their compensation) regardless of the actual level of our financial performance |
● | our officers and other persons who provide services to us under the ISAs do not receive compensation from us directly and are employed by Contran, one of our parent corporations, which aligns such officers and persons with the long-term interests of our stockholders; |
● | since we are a controlled company, as previously discussed, management has a strong incentive to understand and perform in the long-term interests of our stockholders; and |
● | our experience is that our employees are appropriately motivated by our compensation policies and practices to achieve profits and other business objectives in compliance with our oversight of material short and long-term risks. |
For a discussion of our compensation policies and practices for our executive officers, please see the Compensation Discussion and Analysis section of this proxy statement.
Compensation Consultants
. Neither our board of directors, management development and compensation committee nor management has engaged any compensation consultants.Section 16(a) of the Securities Exchange Act requires our executive officers, directors and persons who own more than 10% of a registered class of our equity securities to file reports of ownership with the SEC, the NYSE and us. Based solely on the review of the copies of such forms and representations by certain reporting persons, we believe that for 20152022 our executive officers, directors and 10% shareholdersstockholders complied with all applicable filing requirements under section 16(a), except as previously disclosed in last year's proxy statement and except for a late Form 4 filed by Mr. W. Hayden McElroy. In 2016, Ms. Tidlund, due to an inadvertence of our staff, filed her Form 3 late.
Related Party Transaction Policy
. From time to time, we engage in transactions with affiliated companies.-26-
During 2022, our audit committee reviewed adopted and ratifiedapproved the following ordinary course of business related party transactions to which we are a party in accordance with the terms of such RPT Policy:
● | Risk |
● | Tax |
● | Cash |
Guarantees and related |
Each of these ordinary course of business related party transactions, and the actions taken by the audit committee in fulfilling its duties and responsibilities under the RPT Policy, are more fully described below. Our audit committee was not required to approve and ratify the fee we paid to Contran in 20152022 under our intercorporate services agreement with Contran because such intercorporate services fee is approved by all of the
Relationships with Related Parties
. As set forth under the Security Ownership section of this proxy statement, Lisa K. Simmons and● | intercorporate transactions, such as guarantees, management, expense and insurance sharing arrangements, tax sharing agreements, joint ventures, partnerships, loans, options, advances of funds on open account and sales, leases and exchanges of assets, including securities issued by both related and unrelated parties; and |
● | common investment and acquisition strategies, business combinations, reorganizations, recapitalizations, securities repurchases and purchases and sales (and other acquisitions and dispositions) of subsidiaries, divisions or other business units, which transactions have involved both related and unrelated parties and have included transactions that resulted in the acquisition by one related party of an equity interest in another related party. |
We periodically consider, review and evaluate and understand that Contran and related entities periodically consider, review and evaluate such transactions. Depending upon the business, tax and other objectives then relevant and restrictions under indentures and other agreements, it is possible that we might be a party to one or more of such transactions in the future. In connection with these activities, we may consider issuing additional equity securities or incurring additional indebtedness. Our acquisition activities have in the past and may in the future include participation in acquisition or restructuring activities conducted by other companies that may be deemed to be related to Ms. Simmons and Ms. Connelly.
Certain directors or executive officers of CompX, Contran, Kronos Worldwide or NL also serve as our directors or executive officers. Such relationships may lead to possible conflicts of interest. These possible conflicts of interest may arise under circumstances in which such companies may have adverse interests. In such an event, we implement such procedures as are appropriate for the particular transaction and as are consistent with the provisions of the RPT Policy.
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Intercorporate Services Agreements. As discussed elsewhere in this proxy statement, we and certain related companies have entered into ISAs. Under the ISAs, employees of one company provide certain services, including executive officer services, to the other company on an annual fixed fee basis. The services rendered under the ISAs may include executive, management, financial, internal audit, accounting, tax, legal, insurance, insurance claims management, risk management, real estate management, environmental management, risk management, treasury, human resources, technical, consulting, administrative, office, occupancy and other services as required from time to time in the ordinary course of the recipient'srecipient’s business. The fees paid pursuant to the ISAs are generally based upon an estimated percentage of the time devoted by employees of the provider of the services to the business of the recipient and the employer'semployer’s cost related to such employees, which includes the expense for the employees'employees’ compensation and an overhead component that takes into account other employment related costs. Generally, each of the ISAs renews on a quarterly basis, subject to termination by either party pursuant to a written notice delivered 30 days prior to the start of the next quarter. Because of the number of companies related to Contran and us, we believe we benefit from cost savings and economies of scale gained by not having certain management, financial, legal, tax, real estate and administrative staffs duplicated at each company, thus allowing certain individuals to provide services to multiple companies. With respect to a publicly held company that is a party to an ISA, the ISA and the related aggregate annual charge are approved by the independent directors of the company after receiving the recommendation from the company'scompany’s management development and compensation committee as well as the concurrence of the chief financial officer. See the Intercorporate Services Agreements part of the Compensation Discussion and Analysis section in this proxy statement for a more detailed discussion on the procedures and considerations taken by our independent directors in approving the aggregate 20152022 ISA fees charged by Contran to us and our privately held subsidiaries.
The following table sets forth the fees paid by us and our subsidiaries to Contran in 20152022 and the amounts anticipated to be paid to Contran in 20162023 for services Contran provided us or our subsidiaries under the various ISAs, including the services of all of our named executive officers.officers, as applicable. The amounts indicated below for us include amounts paid by certain of our wholly-ownedwholly owned subsidiaries. Such fees for 2015 include an aggregate of $395,600 paid to Contran with respect to the services provided by the son of a former affiliate of ours.
Recipient of Services from Contran under an ISA | Fees Paid to Contran under the ISA in 2015 (1) | Fees Expected to be Paid to Contran under the ISA in 2016 (1) | ||
(In millions) | ||||
Valhi, Inc. | $12.5 | $12.0 | ||
CompX International Inc. | 3.0 | 3.1 | ||
Kronos Worldwide, Inc. | 13.4 | 15.2 | ||
NL Industries, Inc. | 6.9 | 6.2 | ||
Total | $ 35.8 | $ 36.5 |
| | | | | | |
|
| |
| Fees Expected to | ||
| | Fees Paid to | | be Paid to | ||
| | Contran under | | Contran under | ||
Recipient of Services from Contran under an ISA |
| the ISAs in 2022 |
| the ISAs in 2023 | ||
| | (In millions) | ||||
| | | | | | |
Valhi, Inc. | | $ | 7.7 | | $ | 7.0 |
CompX International Inc. | |
| 3.4 | |
| 3.1 |
Kronos Worldwide, Inc. | |
| 24.4 | |
| 22.6 |
NL Industries, Inc. | |
| 5.7 | |
| 5.1 |
Total | | $ | 41.2 | | $ | 37.8 |
Risk Management Program
. We and Contran participate in a combined risk management program. Pursuant to the program, Contran and certain of its subsidiaries and related entities, including us and certain of our subsidiaries and related entities, as a group purchase insuranceTall Pines is a captive insurance company wholly owned by us. EWI is a reinsurance brokerageus that underwrites certain insurance policies to Contran and risk management company wholly owned by NL.certain of its subsidiaries and related entities, including us. Tall Pines purchases reinsurance from highly rated (as determined by A.M. Best or other internationally recognized ratings agency) third-party insurance carriers for substantially all of the risks it underwrites. Consistent with insurance industry practices, Tall Pines receives commissions from reinsurance underwriters and/or assesses fees for certain of the policies that it underwrites. Insurance policies that are not underwritten by Tall Pines are purchased from third-party insurance carriers with an A.M. Best Company rating of generally at least an "A-"“A-” (excellent) for substantially all of the risks it underwrites. Consistent with insurance industry practices, Tall Pines and EWI receive commissions from insurance and reinsurance underwriters and/or assess fees for the policies that they provide or broker.
With respect to certain of such jointly owned insurance policies, it is possible that unusually large losses incurred by one or more insureds during a given policy period could leave the other participating companies without adequate coverage under that policy for the balance of the policy period. As a result, and in the event that the available coverage under a particular policy would become exhausted by one or more claims, Contran and certain of its subsidiaries or related companies,and affiliates, including us, have entered into a loss sharing agreement under which any uninsured loss isarising because the available coverage had been exhausted by one or more claims will be shared ratably by those companies who haveentities that had submitted claims under the relevant policy. We believe the benefits in the form of reduced premiums and
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broader coverage associated with the group coverage for such policies justify the risksrisk associated with the potential for any uninsured loss.
Following NL’s sale of EWI’s insurance and risk management business to a third party in November 2019, the third-party brokerage and risk management company that purchased the business became the broker for Contran’s and our insurance policies and Tall Pines’ reinsurance policies and provides risk management services for Contran and its subsidiaries, including us. Accordingly, Contran and its subsidiaries and affiliates participating in the combined risk management program continue to have access to the experienced risk management personnel formerly with EWI, including in the areas of loss controls and claims management.
During 2015, Contran (and a wholly owned subsidiary2022, we paid approximately $25.2 million under the combined risk management program, of Contran) paid Tall Pines and EWIwhich approximately $24.3 million in the aggregate approximately $5.4 million. In addition, during 2015 we,was paid by CompX, NL and Kronos Worldwide and NL(including approximately $6.2 million paid Tall Pines and EWI in the aggregate approximately $17.4 million.by LPC). These amounts principally represent paymentspremiums and fees for insurance, premiums, including premiums or fees paid tofor policies underwritten by Tall Pines and commissions or fees paid to EWI.Pines. These amounts also include paymentsreimbursements to insurers or reinsurers through EWI for the reimbursement of claims within our applicable deductible or retention ranges that such insurers and reinsurers paid to third parties on our behalf, as well as amounts for claims and risk management services and various other third-party fees and expenses incurred by the program. We expect that these relationships with Contran will continue in 2016.
In both June and November 2015,2022, our management made a presentation to our audit committee regarding our participation in the combined risk management program. Among other things during such presentation, the committee was informed of the following (in addition to the matters described above):
● | the premiums for |
● | the method by which the insurance premiums are allocated among the companies participating in the risk management program is generally the same as the basis used by the insurance or reinsurance carriers to establish the premiums for such insurance/reinsurance (i.e. the dominant premium factor, which is the factor that has the greatest impact on the premium, such as revenues, payroll or employee headcount); |
the commissions received by Tall Pines |
● | the insurance coverages provided to us by the risk management program are sufficient and adequate for our purposes; and |
● | the benefits |
As part of such presentations, our chief financial officer, after consultation with other members of our management, advised the committee of hisher belief that our participation in the risk management program, including the allocation of its costs among us and the other entities participating in the risk management program, is fair and reasonable to us, and is on terms no less favorable than we could otherwise obtain from unrelated parties, andparties. She then provided the committee with hisher recommendation that the committee approve,reapprove, adopt and ratify our participation in the risk management program in all respects.
After considering the information contained in the presentations, including the recommendation of our chief financial officer, and following further discussion and review by the audit committee, our audit committee determined that our participation in the risk management program is fair and reasonable to us and is on terms no less favorable than
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we could otherwise obtain from unrelated parties, in each case based on the collective business judgment and experience of members of the committee, and the committee approved,reapproved, adopted and ratified our participation in the risk management program in all respects.
During 2015,2022, the audit committees of CompX, Kronos Worldwide and NL approved and ratified their participation in the risk management program in accordance with the terms of their own RPT Policies.
Tax Matters
. We and our qualifying subsidiaries are members of the consolidated U.S. federal tax return of which Contran is the parent company, which we refer to as theUnder applicable law, we, as well as every other member of the Contran Tax Group, are each jointly and severally liable for the aggregate federal income tax liability of Contran and the other companies included in the group for all periods in which we are included in the group. Under our tax sharing agreement, Contran has agreed to indemnify us for any liability for income taxes of the Contran Tax Group in excess of our tax liability previously computed and paid by us in accordance with the tax sharing agreement.
Under certain circumstances, tax regulations could require Contran to treat items differently than we would have treated them on a stand-alone basis. In such instances, accounting principles generally accepted in the United States of America require us to conform to Contran'sContran’s tax elections. For 2015,2022, pursuant to our tax sharing agreement we made net cash payments for income taxes to Contran of approximately $2.5$17.5 million.
In June 2015,March 2022, our management made a presentation to our audit committee regarding our tax sharing agreement with Contran. Among other things during such presentation, the committee was informed of the following (in addition to the matters described above):
● | the tax sharing agreement is consistent with accounting principles generally accepted in the United States of America, and consistent with applicable law and regulations; and |
● | our income tax accounts are included in the scope of the annual audit of our consolidated financial statements performed by PwC, and PwC makes periodic reports to the committee regarding income tax matters related to us. |
As part of such presentation, our chief financial officer and our chiefthen-serving senior vice president, tax officer advised the committee of their belief that the terms of the tax sharing agreement are consistent with the terms of applicable law and regulations, and are fair and reasonable to us, and are on terms no less favorable than would be present if we were not a party to the tax sharing agreement, and provided the committee with their recommendation that the committee approve, adopt and ratify the tax sharing agreement in all respects.
After considering the information contained in the presentations, including the recommendation of our chief financial officer and our chiefsenior vice president, tax, officer, and following further discussion and review by the audit committee, our audit committee determined that the terms of the tax sharing agreement are fair and reasonable to us and on terms no less favorable than would be present if we were not a party to the tax sharing agreement, in each case based on the collective business judgment and experience of members of the committee, and the committee approved, adopted and ratified the tax sharing agreement in all respects.
Related Party Loans for Cash Management Purposes
. From time to time, loans and advances are made between us and various related parties pursuant to term and demand notes. These loans and advances are entered into principally for cash management purposes pursuant to our cash management program. When we loan funds to related-30-
parties, we are generally able to earn a higher rate of return on the loan than we would earn if the funds were invested in other instruments and.instruments. While certain of such loans may be of a lesser credit quality than cash equivalent instruments otherwise available to us, we believe that we have evaluated the credit risks involved, and that those risks are reasonable and reflected in the terms of the applicable loans. When we have outstanding indebtedness, we may still decide to enter into a loan to a related party either because the interest rate on the loan to the related party is at a higher rate of return as compared to the interest rate we are paying on our outstanding indebtedness, or the funds we would be loaning to the related party would not otherwise be used to pay down the outstanding indebtedness (such as, for example, in the case when the outstanding indebtedness has a maturity longer than the maturity of the loan to the related party). When we borrow from related parties, we are generally able to pay a lower rate of interest than we would pay if we borrowed from unrelated parties.
During 2022, we had an unsecured revolving credit facilitypromissory note with Contran that, as amended, provides for borrowings fromwhereby Contran ofagreed to loan us up to $325 million. The facility, as amended, bears$225 million, bearing interest at prime plus 1% (4.50%(8.5% at December 31, 2015)2022), payable quarterly, with all principal and isunpaid interest due on demand, but in any event no earlier than December 31, 2017.2023. At December 31, 2022, the unsecured revolving promissory note with Contran was amended, per prior general authorization from our audit committee, to reduce the borrowing limit to $175 million and extend the demand period to no earlier than December 31, 2024. The facilityagreement contains no financial covenants or other financial restrictions. We pay an unused commitment fee quarterly to Contran on the available balance (except during periods during which Contran would be a net borrower from us). The amount of any outstanding loansLoans made from Contran at any time under the facility isagreement are solely at the discretionContran’s discretion. During 2022, Contran made aggregate loans to Valhi of Contran. The$0.1 million, Valhi repaid an aggregate of $51.6 million, and the largest amount of principal outstanding under this facility during 2015the loan was $263.8$172.9 million. In 2015,At December 31, 2022, the outstanding balance of such loan from Contran was $121.4 million. During 2022, we paid an aggregate of $10.3$9.2 million of interest and unused commitment fees to Contran under this facility. We expect this relationship with Contran will continue in 2016.
In June 2015,March 2022, our management made a presentation to our audit committee regarding our loan from Contran. Among other things during such presentation, the committee was informed of the following (in addition to the matters described above):
we currently have no third party credit facility in place, and previous attempts by us to obtain a credit facility from a third party in the recent past on terms reasonably acceptable to us have been unsuccessful (and in any event the third-party credit facility would have been on a secured basis); |
one of |
the interest rate we are currently paying on outstanding borrowings under our loan from Contran, while higher than the interest rate Contran is currently paying under its third-party revolving credit facility, is reasonable as compared to such Contran third-party interest rate, given among other things consideration of |
As part of such presentation, our chief financial officer, after consultation with our treasurer and other members of our management, advised the committee of hisher belief that the terms of our loan from Contran are fair and reasonable to us, and are on terms no less favorable than we could otherwise obtain from unrelated parties, and provided the committee with hisher recommendation that the committee approve, adopt and ratify our loan from Contran, as most recently amended, in all respects.
After considering the information contained in the presentation, including the recommendation of our chief financial officer, and following further discussion and review by the audit committee, our audit committee determined that the terms of our loan from Contran are fair and reasonable to us, and are on terms no less favorable than we could otherwise obtain from unrelated parties, in each case based on the collective business judgment and experience of members of the committee, and the committee approved, adopted and ratified our loan from Contran in all respects.
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IT Data RecoveryServices Program. WeContran and ContranKronos Worldwide participate in a combined information technology data recoveryservices program that Contran provides from aoff-site centers for primary data recovery center that it established. Pursuant to the program, Contranprocessing and certain of its subsidiaries and related entities, including us, as a group share information technology data recovery services.failover. The program apportions itsprogram’s costs are apportioned among the participatingthese companies. Kronos Worldwide WCS and EWI paid Contran $144,000, $116,000 and $38,000, respectively,$0.3 million for such services in 2015.2022. We expect these relationshipsthat the relationship between Kronos Worldwide and Contran with Contranrespect to this matter will continue in 2016.
Guarantees Provided by Valhi to Affiliates and Related Items
. From time to time, we and our subsidiaries may provide guarantees and/or pledge collateral with respect to indebtedness or other obligations of Contran and its affiliates. At December 31,In June 2015,March 2022, our management made a presentation to our audit committee regarding the pledge of Kronos Worldwide shares for the benefit of Contran. Among other things during such presentation, the committee was informed of the following (in addition to the matters described above):
in connection with our pledge of the Kronos Worldwide shares, Contran has indemnified us from any loss we might suffer as a result of providing the pledge; and |
● | the benefits to us of pledging such shares of Kronos Worldwide common stock include, among other things, the fact that we currently have a |
As part of the presentation, our chief financial officer, after consultation with other members of our management, advised the committee of hisher belief that the terms of the pledge of our shares of Kronos Worldwide common stock as collateral under Contran'sContran’s third-party revolving bank credit facility (including the fee we receive for such pledge) is fair and reasonable to us, and is on terms no less favorable than we could otherwise obtain from unrelated parties, and provided the committee with hisher recommendation that the committee approve, adopt and ratify such pledge in all respects.
After considering the information contained in the presentation, including the recommendation of our chief financial officer, and following further discussion and review by the audit committee, our audit committee determined that the terms of the pledge of our shares of Kronos Worldwide common stock as collateral under Contran'sContran’s third-party revolving bank credit facility (including the fee we receive for such pledge) is fair and reasonable to us, and is on terms no less favorable than we could otherwise obtain from unrelated parties, in each case based on the collective business judgment and experience of members of the committee, and the committee approved, adopted and ratified such pledge in all respects.
Office Sublease. Under the terms of a sublease agreement between Contran and Kronos Worldwide, Kronos Worldwide leases a portion of Contran’s Dallas, Texas office for use by Kronos Worldwide and certain of its North American operations. In 2022, Kronos Worldwide paid Contran $0.5 million for rent and related ancillary services under the sublease. The amounts paid by Kronos Worldwide under the sublease are based on Contran’s costs without markup. We expect that this relationship will continue in 2023. During 2022, the audit committee of Kronos Worldwide approved and ratified the sublease in accordance with the terms of its own related party transaction policy.
Repurchase of Shares by CompX from Contran. On June 1, 2022, CompX purchased from Contran the 5,900 shares of Class A common stock of CompX that Contran had owned for many years. CompX paid Contran an aggregate cash purchase price of $129,446 for the shares, with the per-share purchase price calculated as the average closing price of the stock for the ten days immediately preceding the date of the purchase. During 2022, the independent directors of CompX approved the purchase in accordance with the terms of its own related party transaction policy.
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Our audit committee of the board of directors is composed of threefive directors and operates under a written charter adopted by the board of directors. All members of our audit committee meet the independence standards established by the board of directors and the NYSE and promulgated by the SEC under the Sarbanes-Oxley Act of 2002. One member of our audit committee meets the audit committee financial expert requirements under the applicable SEC rules. The audit committee charter is available on our website at www.valhi.net under the corporate governance section, and our audit committee reviews the adequacy of and compliance with such charter annually.
Our management is responsible for, among other things, preparing our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, or "GAAP,"“GAAP,” establishing and maintaining internal control over financial reporting (as defined in Securities Exchange Act Rule 13a-15(f)) and evaluating the effectiveness of such internal control over financial reporting. Our independent registered public accounting firm is responsible for auditing our consolidated financial statements in accordance with the standards of the PCAOB and for expressing an opinion on the conformity of the financial statements with GAAP. Our independent registered public accounting firm is also responsible for auditing our internal control over financial reporting in accordance with such standards and for expressing an opinion on our internal control over financial reporting.
Our audit committee assists the board of directors in fulfilling its responsibility to oversee management'smanagement’s implementation of our financial reporting process and the audits of our consolidated financial statements and our internal control over financial reporting. Our audit committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. As part of fulfilling this responsibility, our audit committee engages in an annual evaluation of, among other things, the firm'sfirm’s qualifications, competence, integrity, expertise, performance, independence and communications with the committee (including these factors as they relate specifically to the firm'sfirm’s lead audit engagement partner), and whether the current firm should be retained for the upcoming year'syear’s audit. Our audit committee discusses with our independent registered public accounting firm the overall scope and plans for the audits they will perform, and the committee meets with the firm throughout the year, both with and without management being present, to monitor the firm'sfirm’s execution of and results obtained from their audits. Our audit committee performs other activities throughout the year, in accordance with the responsibilities of the audit committee specified in the audit committee charter, including the oversight of the performance of internal audit and the approval or ratification of certain related party transactions in accordance with the terms of our RPT Policy, as discussed above in the Certain Relationships and Transactions section in this proxy statement.
In its oversight role, our audit committee reviewed and discussed our audited consolidated financial statements and our internal control over financial reporting with management and with PwC, our independent registered public accounting firm for 2015.2022. Management and PwC indicated that our consolidated financial statements as of and for the year ended December 31, 20152022 were fairly stated in accordance with GAAP and that our internal control over financial reporting was effective as of December 31, 2015.2022. Our audit committee discussed with PwC and management the significant accounting policies used and significant estimates made by management in the preparation of our audited consolidated financial statements, and the overall quality of management'smanagement’s financial reporting process. Our audit committee and PwC also discussed any issues deemed significant by PwC or the committee, including the matters required to be discussed pursuant to the standards of the PCAOB, the rules of the SEC and other applicable regulations. PwC has provided to our audit committee written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent registered public accounting firm'sfirm’s communications with the audit committee concerning independence, and our audit committee discussed with PwC the firm'sfirm’s independence. Our audit committee also concluded that PwC'sPwC’s provision of other permitted non-audit services to us and our related entities is compatible with PwC'sPwC’s independence.
Based upon the foregoing considerations, our audit committee recommended to the board of directors that our audited consolidated financial statements be included in our 20152022 Annual Report on Form 10-K for filing with the SEC.
The members of our audit committee of the board of directors respectfully submit the foregoing report as of March 11, 2016.
Thomas E. Barry Chairman of our Audit Committee | | W. Hayden McIlroy Member of our Audit Committee |
| | |
Terri L. Herrington Member of our Audit Committee | | Mary A. Tidlund Member of our Audit Committee |
| | |
Kevin B. Kramer Member of our Audit Committee | |
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Independent Registered Public Accounting Firm
. PwC served as our independent registered public accounting firm for the year ended December 31,● | review our quarterly unaudited condensed consolidated financial statements to be included in our Quarterly Reports on Form 10-Q for the second and third quarters of |
● | audit our annual consolidated financial statements and (if required) internal control over financial reporting for the year ending December 31, |
Representatives of PwC are not expected to attend our 20162023 annual stockholder meeting.
Fees Paid to PricewaterhouseCoopers LLP
Entity (1) | Audit Fees (2) | Audit Related Fees (3) | Tax Fees (4) | All Other Fees | Total | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Valhi and Subsidiaries | ||||||||||||||||||||
2014 | $ | 1,010 | $ | -0- | $ | -0- | $ | -0- | $ | 1,010 | ||||||||||
2015 | 937 | -0- | -0- | -0- | 937 | |||||||||||||||
NL and Subsidiaries | ||||||||||||||||||||
2014 | $ | 471 | $ | -0- | $ | -0- | $ | -0- | $ | 471 | ||||||||||
2015 | 482 | -0- | -0- | -0- | 482 | |||||||||||||||
Kronos Worldwide and Subsidiaries | ||||||||||||||||||||
2014 | $ | 2,727 | $ | 42 | $ | 18 | $ | -0- | $ | 2,787 | ||||||||||
2015 | 2,544 | 140 | 8 | -0- | 2,692 | |||||||||||||||
CompX and Subsidiaries | ||||||||||||||||||||
2014 | $ | 1,115 | $ | -0- | $ | -0- | $ | -0- | $ | 1,115 | ||||||||||
2015 | 781 | -0- | -0- | -0- | 781 | |||||||||||||||
Total | ||||||||||||||||||||
2014 �� | $ | 5,323 | $ | 42 | $ | 18 | $ | -0- | $ | 5,383 | ||||||||||
2015 | 4,744 | 140 | 8 | -0- | 4,892 |
| | | | | | | | | | | |
| | | | | Audit | | | | | | |
| | Audit | | Related | | Tax | | All Other | | | |
Entity (1) |
| Fees (2) |
| Fees (3) |
| Fees (4) |
| Fees |
| Total | |
|
| (in thousands) | |||||||||
Valhi and Subsidiaries |
| |
|
|
|
|
|
|
|
|
|
2021 | | $ | 968 |
| -0- |
| -0- |
| -0- |
| 968 |
2022 | |
| 971 |
| -0- |
| -0- |
| -0- |
| 971 |
| | | | | | | | | | | |
NL and Subsidiaries | |
|
|
|
|
|
|
|
|
|
|
2021 | | $ | 698 |
| -0- |
| -0- |
| -0- |
| 698 |
2022 | |
| 725 |
| -0- |
| -0- |
| -0- |
| 725 |
| | | | | | | | | | | |
Kronos Worldwide and Subsidiaries | |
|
|
|
|
|
|
|
|
|
|
2021 | | $ | 4,138 |
| 22 |
| 6 |
| -0- |
| 4,166 |
2022 | |
| 4,102 |
| 15 |
| 8 |
| -0- |
| 4,125 |
| | | | | | | | | | | |
CompX and Subsidiaries | |
|
|
|
|
|
|
|
|
|
|
2021 | | $ | 994 |
| -0- |
| -0- |
| -0- |
| 994 |
2022 | |
| 1,026 |
| -0- |
| -0- |
| -0- |
| 1,026 |
| | | | | | | | | | | |
Total | |
|
|
|
|
|
|
|
|
|
|
2021 | | $ | 6,798 |
| 22 |
| 6 |
| -0- |
| 6,826 |
2022 | |
| 6,824 |
| 15 |
| 8 |
| -0- |
| 6,847 |
(1) | Fees are reported without duplication. |
(2) | Fees for the following services: |
(a) | audits of consolidated year-end financial statements for each year and, as applicable, of internal control over financial reporting; |
(b) | reviews of the unaudited quarterly financial statements appearing in Forms 10-Q for each of the first three quarters of each year; |
(c) | consents and/or assistance with registration statements filed with the SEC; |
(d) | normally provided statutory or regulatory filings or engagements for each year; and |
(e) | the estimated out-of-pocket costs PwC incurred in providing all of such services, for which PwC is reimbursed. |
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(3) | Fees for assurance and related services reasonably related to the audit or review of financial statements for each year. These services included accounting consultations and attest services concerning financial accounting and reporting standards and advice concerning internal control over financial reporting, as applicable. |
(4) | Permitted fees for tax compliance, tax advice and tax planning services. |
Preapproval Policies and Procedures
. For the purpose of maintaining the independence of our independent registered public accounting firm, our audit committee has adopted policies and procedures for the preapproval of audit and other permitted services the firm provides to us or any of our subsidiaries other than our publicly held subsidiaries and their respective subsidiaries. We may not engage the firm to render any audit or other permitted service unless the service is approved in advance by our audit committee pursuant to the● | the committee must specifically preapprove, among other things, the engagement of our independent registered public accounting firm for audits and quarterly reviews of our financial statements, services associated with certain regulatory filings, including the filing of registration statements with the SEC, and services associated with potential business acquisitions and dispositions involving us; and |
● | for certain categories of other permitted services provided by our independent registered public accounting firm, the committee may preapprove limits on the aggregate fees in any calendar year without specific approval of the service. |
These other permitted services include:
● | audit-related services, such as certain consultations regarding accounting treatments or interpretations and assistance in responding to certain SEC comment letters; |
● | audit-related services, such as certain other consultations regarding accounting treatments or interpretations, employee benefit plan audits, due diligence and control reviews; |
● | tax services, such as tax compliance and consulting, transfer pricing, customs and duties and expatriate tax services; and |
● | assistance with corporate governance matters and filing documents in foreign jurisdictions not involving the practice of law. |
The policy also lists certain services for which the independent auditor is always prohibited from providing us under applicable requirements of the SEC or the PCAOB.
Pursuant to the policy, our audit committee has delegated preapproval authority to the chairman of the committee or his designee to approve any fees in excess of the annual preapproved limits for these categories of other permitted services provided by our independent registered public accounting firm. The chairman must report any action taken pursuant to this delegated authority at the next meeting of the committee.
For 2015,2022, our audit committee preapproved all of PwC'sPwC’s services provided to us or any of our subsidiaries, other than our publicly held subsidiaries and their subsidiaries, in compliance with our preapproval policy without the use of the SEC's SEC’s de minimis exception to such preapproval requirement.
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NONBINDING ADVISORY RESOLUTION ON NAMED EXECUTIVE OFFICER COMPENSATION
Background
. Pursuant to Section 14A of the Securities Exchange Act, a publicly held company is required to submit to its stockholders a nonbinding advisory vote to approve the compensation of its named executive officers, commonly known as aSay-on-Pay Proposal
. This proposal affords our stockholders the opportunity to submit a nonbinding advisory vote on our named executive officer compensation.RESOLVED
, that, by the affirmative vote of the holders of the majority of the outstanding shares present in person or represented by proxy at theEffect of the Proposal
. The Say-on-Pay proposal is nonbinding and advisory. OurVote Required
.Dixie Rice has indicated its intention to have its shares of our common stock represented at the meeting and to vote such shares FOR the Say-on-Pay proposal and adoption of the resolution that approves the compensation of our named executive officers as described in this proxy statement. If VHCDixie Rice attends the meeting in person or by proxy and votes as indicated, the meeting will have a quorum present and the stockholders will adopt the resolution and approve the nonbinding advisory Say-on-Pay proposal.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE SAY-ON-PAY PROPOSAL AS SET FORTH IN THE NONBINDING ADVISORY RESOLUTION APPROVING OUR NAMED EXECUTIVE OFFICER COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT.
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PROPOSAL 3
NONBINDING ADVISORY PREFERRED FREQUENCY FOR STOCKHOLDERS TO CONSIDER APPROVING EXECUTIVE COMPENSATION
Background of this Proposal.Section 14A of the Securities Exchange Act also requires a publicly held company to hold, no less frequently than every six years, a nonbinding advisory stockholder vote with respect to the preferred frequency of the vote on subsequent Say-on-Pay proposals. Publicly held companies must give stockholders the choice of whether to cast a nonbinding advisory vote on the Say-on-Pay proposal every year, every other year or every third year, which we refer to as the “Say-When-on-Pay” proposal. Our last Say-When-on-Pay proposal was in 2017, when our stockholders approved an annual Say-on-Pay. SEC rules require that:
● | our stockholders also have the option to abstain from making a choice; and |
● | we disclose in the next periodic report we file with the SEC, our decision in light of the nonbinding advisory vote on the Say-When-on-Pay proposal how frequently we will include in our proxy materials a Say-on-Pay proposal. |
Say-When-on-Pay Proposal. This proposal affords our stockholders the opportunity to submit a nonbinding advisory vote on how often we should include a Say-on-Pay proposal in our proxy materials for future annual stockholder meetings (or special stockholder meetings for which we must include executive compensation information in the proxy statement for that meeting). Under this proposal, stockholders may vote to have the Say-on-Pay proposal every year, every other year or every third year or abstain from voting. Stockholders are not voting to approve or disapprove the recommendation of our board of directors that we hold an annual vote on the Say-on-Pay proposal. We believe that giving our stockholders the right to cast an advisory vote every year on our executive compensation is a good corporate governance practice.
Effect of the Proposal. This Say-When-on-Pay proposal is nonbinding and advisory. Our board of directors may decide that it is in the best interests of us and our stockholders to hold a nonbinding advisory vote on the Say-on-Pay proposal more or less frequently than the option our stockholders choose by a plurality of the affirmative votes. We currently plan to follow the nonbinding advisory vote of our stockholders on this proposal.
Vote Required. Because there are multiple choices and this proposal is a nonbinding advisory vote, there is no minimum requisite vote to approve a certain frequency of future Say-on-Pay proposals. Accordingly, if you indicate on the proxy card that you approve one of the options other than abstain, we will deem that you consent that a plurality of the affirmative votes will determine, on a nonbinding advisory basis, the frequency of future Say-on-Pay proposals preferred by our stockholders. Since this proposal needs only receive the plurality of affirmative votes from the holders represented and entitled to vote at the meeting, an abstention or a broker/nominee non-vote on this proposal will have no effect on its outcome.
Dixie Rice has indicated its intention to have its shares of our common stock represented at the meeting and to vote such shares FOR the approval of an annual Say-on-Pay proposal. If Dixie Rice attends the meeting in person or by proxy and votes as indicated, the meeting will have a quorum present and the stockholders will, on a nonbinding advisory basis, approve an annual Say-on-Pay.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE OPTION OF “1 YEAR” (AS OPPOSED TO TWO YEARS OR THREE YEARS) AS THE PREFERRED FREQUENCY WITH WHICH STOCKHOLDERS ARE PROVIDED A NONBINDING ADVISORY VOTE ON OUR NAMED EXECUTIVE OFFICER COMPENSATION AS DISCLOSED PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC.
OTHER MATTERS
The board of directors knows of no other business that will be presented for consideration at the annual meeting. If any other matters properly come before the meeting, the persons designated as agents in the enclosed proxy card will vote on such matters in their discretion.
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A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 20152022 is included as part of the annual report furnishedmade available to our stockholders with this proxy statement and may also be accessed on our website at www.valhi.net.
Stockholders who share an address and hold shares through a brokerage firm or other nominee may receive only one copy of the notice of internet availability of proxy materials. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses. A number of brokerage firms have instituted householding. You should notify your brokerage firm or other nominee if:
● | you no longer wish to participate in householding and would prefer to receive a separate notice of internet availability of proxy materials; or |
● | you receive multiple copies of the notice of internet availability of proxy materials at your address and would like to request householding of our communications. |
REQUEST COPIES OF THE 20152022 ANNUAL REPORT AND THIS PROXY STATEMENT
To obtain copies of our 20152022 Annual Report to Stockholders or this proxy statement without charge, please mail your request to the attention of A. AndrewJane R. Louis, corporateGrimm, corporate secretary, at Valhi, Inc., Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697,75240-2620, or call himher at 972.233.1700.
| 6, 2022 |
| VALHI, INC. Dallas, Texas April 5, 2023 |
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VALHI, INC.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240‑269775240-2620
Valhi, Inc. encourages you to take advantage of new and convenient ways by which you can vote your shares. You can vote your shares electronically through the internet or by telephone. This eliminates the need to return this proxy card.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF VALHI, INC.
The undersigned hereby appoints Gregory M. Swalwell, Andrew B. NaceMichael S. Simmons, Jane R. Grimm and Amy A. Andrew R. Louis,Samford, and each of them, proxy for the undersigned, with full power of substitution, to vote on behalf of the undersigned at the 20162023 Annual Meeting of Stockholders (the "Meeting"“Meeting”) of Valhi, Inc., a Delaware corporation ("Valhi"(“Valhi”), to be held at Valhi's corporate offices at Three Lincoln Centre Conference Center, 5430 LBJ Freeway, Suite 1700,350, Dallas, Texas 75240-269775240-2620 on Thursday, May 26, 2016,25, 2023, at 10:00 a.m. (local time), and at any adjournment or postponement of the Meeting, all of the shares of common stock, par value $0.01 per share, of Valhi standing in the name of the undersigned or that the undersigned may be entitled to vote on the proposals set forth, and in the manner directed, on this proxy card.
THIS PROXY AUTHORIZATION MAY BE REVOKED AS SET FORTH IN THE PROXY STATEMENT THAT ACCOMPANIED THIS PROXY CARD.
The agents named on this proxy card, if this card is properly executed, will vote in the manner directed on this card.
If this card is properly executed but no direction is given with respect to the election of one or more nominees named on the reverse side of this card or proposal 2 or proposal 3, the agents will vote "FOR"“FOR” each such nominee for election as a director, and "FOR" proposals“FOR” proposal 2 and “1 YEAR” for proposal 3. To the extent allowed by applicable law, the agents will vote in their discretion on any other matter that may properly come before the Meeting and any adjournment or postponement thereof.
PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE TITLE BAR.
Important Notice Regarding the Availability of Proxy instructions submitted byMaterials for the Internet or telephone must be received by 12:01 a.m., Central Time,
Annual Stockholder Meeting to Be Held on May 26, 2016.25, 2023.
The proxy statement and annual report to stockholders (including Valhi’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2022) are available at
http://www.viewproxy.com/Valhi/2023.
| Please mark your |
The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2 and 1 YEAR for proposal 3.
| | | | | ||
1. Director Nominees: | | | | |||
01. Thomas E. Barry | ☐ FOR | ☐ WITHHOLD | 2. Nonbinding advisory vote approving named executive officer compensation. | |||
02. Loretta J. Feehan | ☐ FOR | ☐ WITHHOLD | ☐ FOR ☐ AGAINST ☐ ABSTAIN | |||
03. Terri L. Herrington 04. Kevin B. Kramer 05. W. Hayden Mcllroy 06. Michael S. Simmons | ☐ FOR ☐ FOR ☐ FOR ☐ FOR | ☐ WITHHOLD ☐ WITHHOLD ☐ WITHHOLD ☐ WITHHOLD | 3.Nonbinding advisory vote on the ☐ 1 YEAR ☐ 2 YEARS ☐ 3 YEARS ☐ ABSTAIN | |||
07. Mary A. Tidlund | ☐ FOR | ☐ WITHHOLD | 4.In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Meeting and any adjournment or postponement thereof. | |||||||||||||||||||||||||
WILL ATTEND THE MEETING ☐ | ||||||||||||||||||||||||||||
| | | Date, 2023 | |||||||||||||||||||||||||
| | | | |||||||||||||||||||||||||
| | | Signature | |||||||||||||||||||||||||
DO NOT PRINT IN THIS AREA (Shareholder Name & Address Data) | | |||||||||||||||||||||||||||
| | | Signature |
For | Against | Abstain | For | Against | Abstain | ||||
2. | Second Amendment and Restatement of Certificate of Incorporation. | ☐ | ☐ | ☐ | 3. | Nonbinding advisory vote approving named executive officer compensation. | ☐ | ☐ | ☐ |
For | Against | Abstain | |||||||
4. | In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Meeting and any adjournment or postponement thereof. | ☐ | ☐ | ☐ |
Note: Please sign exactly as the name that appears on this card. Joint owners should each sign. When signing other than in an individual capacity, please fully describe such capacity. Each signatory hereby revokes all proxies heretofore given to vote at said Meeting and any adjournment or postponement thereof.
.
Change of Address CONTROL NUMBER FOLD AND DETACH HERE AND READ THE REVERSE SIDE. CONTROL NUMBER PROXY VOTING INSTRUCTIONS Please have your 11-digit control number ready when voting by Internet or Telephone. ( INTERNET Vote Your Proxy on the Internet: Go to Have your proxy card available when you access the above website. Follow the prompts to vote your shares. TELEPHONE Vote Your Proxy by Phone: Call 1 (866) 804-9616 Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. MAIL Vote Your Proxy by Mail: Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. - Please print new address below.CAuthorized Signatures — This section must be completed for your vote to be counted. — Date and Sign BelowNOTE: Please sign exactly as the name that appears on this card. Joint owners should each sign. When signing other than in an individual capacity, please fully describe such capacity. Each signatory hereby revokes all proxies heretofore given to vote at said Meeting and any adjournment or postponement thereof.Date (mm/dd/yyyy) – Please print date below.new address belowSignature 1 – Please keep signature within the box.Signature 2 – Please keep signature within the box. / /
www.AALvote.com/VHI