KEYSTONE CONSOLIDATED INDUSTRIES, INC.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 16, 2000
To the Stockholders of
Keystone Consolidated Industries, Inc.:
The Annual Meeting of Stockholders (the "Annual Meeting") of Keystone
Consolidated Industries, Inc., a Delaware corporation ("Keystone" or the
"Company"), will be held on May 16, 2000, at 9:00 a.m., local time, at the
offices of the Company at 5430 LBJ Freeway, Suite 1740, Dallas, Texas, for the
following purposes:
(1) To elect one director for a term of two years, and until his successor is
duly elected and qualified; and
(2) To elect three directors each for a term of three years, and until their
successors are duly elected and qualified; and
(3) To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 22,
2000, as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting. A complete list of the stockholders entitled
to vote at the Annual Meeting will be made available for inspection by any
stockholder of record at the offices of Keystone during ordinary business hours
from April 14, 2000, through the time of the Annual Meeting for any purpose
germane to the Annual Meeting.
In order to ensure that you are represented at the meeting, please
complete the enclosed proxy card and return it promptly in the accompanying
postage-paid envelope. If you choose, you may still vote in person at the Annual
Meeting even though you previously signed your proxy. You may revoke your proxy
by following the procedures specified in the accompanying Proxy Statement. Your
vote, whether given by proxy or in person at the Annual Meeting, will be held in
confidence by the Inspector of Election for the Annual Meeting in accordance
with the Company's bylaws.
By order of the Board of Directors,
Sandra K. Myers
Secretary
Dallas, Texas
April 17, 2000
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
PROXY STATEMENT
Annual Meeting of Stockholders
To be held on May 16, 2000
This Proxy Statement and the accompanying proxy card are being
furnished to the stockholders of Keystone Consolidated Industries, Inc., a
Delaware corporation ("Keystone" or the "Company"), in connection with the
solicitation of proxies by and on behalf of the Board of Directors of Keystone
for use at the 2000 Annual Meeting of Stockholders to be held at 9:00 a.m.,
local time, on Tuesday, May 16, 2000, at the Company's offices at 5430 LBJ
Freeway, Suite 1740, Dallas, Texas and at any adjournment or postponement
thereof (the "Annual Meeting"). Any stockholder executing a proxy has the power
to revoke it at any time before it is voted. A proxy may be revoked by either
(i) filing with the Inspector of Election a written revocation of the proxy;
(ii) appearing at the Annual Meeting and casting a vote contrary to that
indicated on the proxy; or (iii) submitting a duly executed proxy bearing a
later date. Attendance at the Annual Meeting alone, however, will not in itself
constitute the revocation of a proxy. This Proxy Statement and the accompanying
proxy card are first being mailed to stockholders on or about April 17, 2000. An
annual report for the year ended December 31, 1999 is enclosed herewith.
Only stockholders of record at the close of business on March 22, 2000,
(the "Record Date") will be entitled to vote at the Annual Meeting. As of the
Record Date, there were 10,060,186 shares of Keystone's common stock, $1.00 par
value per share ("Common Stock"), outstanding and entitled to vote. Each share
of Common Stock entitles the holder thereof to one vote. The presence, in person
or by proxy, of the holders of a majority of the shares of Common Stock voting
as one class entitled to vote at the Annual Meeting is necessary to constitute a
quorum for the conduct of business at the Annual Meeting. Shares of stock that
are voted to abstain from any business coming before the Annual Meeting and
broker/nominee non-votes will be counted as being in attendance at the Annual
Meeting for purposes of determining whether a quorum is present.
Employees participating in the Keystone Consolidated Industries, Inc.
Deferred Incentive Plan, who are beneficial owners of Common Stock under such
plan, may use the enclosed voting instruction card to instruct the plan trustees
how to vote the shares held for such employees, and the trustees will, subject
to the terms of the plan, vote such shares in accordance with such instructions.
ChaseMellon Shareholder Services, L.L.C. ("Chase"), the transfer agent
and registrar for the Common Stock, has been appointed by the Board of Directors
to receive proxies, tabulate the vote and serve as Inspector of Election at the
Annual Meeting. All proxies and ballots delivered to Chase shall be kept
confidential by Chase in accordance with the Company's bylaws.
The cost of preparing, printing, assembling and mailing this Proxy
Statement and other material furnished to stockholders in connection with the
solicitation of proxies will be borne by Keystone. In addition to the
solicitation of proxies by use of the mail, officers, directors, and employees
of Keystone may solicit proxies by written communication, telephone or personal
calls for which such persons will receive no special compensation.
ELECTION OF DIRECTORS
Keystone's Restated Certificate of Incorporation provides for the Board
of Directors to be divided into three classes. The bylaws of the Company provide
that the Board of Directors shall consist of not less than five and not more
than nine persons, as determined by the Board of Directors from time to time.
The number of directors is currently eight.
The nominees receiving a plurality of the votes of the shares present
in person or represented at the Annual Meeting and entitled to vote will be
elected to the classes designated and until their successors are duly elected
and qualified (except in cases where no successor is elected due to a reduction
in the size of the Board), or earlier resignation, removal from office, death or
incapacity. Neither shares as to which authority to vote on the election of
directors has been withheld nor broker/nominee non-votes will be counted as
affirmative votes to elect director nominees to the Board of Directors.
All of the nominees set forth below have consented to serve if elected
to the Board of Directors. If any individual nominated for a directorship is not
available for election, which is not anticipated, votes will be cast by the
proxy holder for such substitute nominee as shall be designated by the Board of
Directors.
Harold C. Simmons and his affiliates hold approximately 50% of the
outstanding shares of Common Stock as of the Record Date and have indicated
their intention to vote such shares "For" the election of all of the nominees
for director as set forth in this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES FOR THE BOARD OF DIRECTORS SET FORTH BELOW.
NOMINEES FOR BOARD OF DIRECTORS
The following biographical information has been provided by the
nominees for election to the Board of Directors of the Company for terms
expiring at the 2002 or the 2003 annual meeting of stockholders:
STEVEN L. WATSON Director since February 2000
Mr. Watson, age 49, has been a director of the Company since February
2000. He has been President and a director of Valhi, Inc. ("Valhi") and Contran
Corporation ("Contran"), a privately owned diversified holding company that may
be deemed to be the beneficial holder of approximately 47.3% of the outstanding
Common Stock as of the Record Date, since 1998. From prior to 1995 to 1998, he
served as vice president and secretary of Valhi and Contran. He is also a
director of CompX International Inc. ("CompX") and Titanium Metals Corporation,
another Valhi affiliate ("TIMET"). Mr. Watson served as an executive officer
and/or director of various companies related to Valhi and Contran since prior to
1995. Mr. Watson is a nominee for a term expiring in 2002.
THOMAS E. BARRY Director since 1989
Dr. Barry, age 56, is Vice President for Executive Affairs at Southern
Methodist University and has been a Professor of Marketing in the Edwin L. Cox
School of Business at Southern Methodist University since prior to 1995. Dr.
Barry is a nominee for a term expiring in 2003.
WILLIAM P. LYONS, JR. Director since 1996
Mr. Lyons, age 58, is Chairman of the Board of JVL Corp., now an investment
firm, but formerly a generic pharmaceutical manufacturer, since prior to 1995.
Mr. Lyons is also Managing Director of Madison Partners, LLC, an investment
firm. He is also a director of Checkpoint Systems, Inc. and Chairman of its
Executive Committee since February 1999. Mr. Lyons was Chairman of Holmes
Protection Group, Inc., an electronic security systems and monitoring company,
from 1995 until February 1998. Mr. Lyons is a nominee for a term expiring in
2003.
WILLIAM SPIER Director since 1996
Mr. Spier, age 65, is President and Chairman of Sutton Holding Corp., a
private investment firm, and has served in such capacity since prior to 1995.
Mr. Spier is Chairman of the Board of Empire Resources, Inc. and has served in
such capacity since September 1999. Mr. Spier was Chairman of DeSoto, Inc., a
company Keystone acquired in 1996, from prior to 1995 to 1996 and Chief
Executive Officer of DeSoto, Inc. from 1995 to 1996. He is a director of Empire
Resources, Inc., Moto Guzzi, Inc., and Soligen Technologies, Inc. Mr. Spier is a
nominee for a term expiring in 2003.
OTHER BOARD MEMBERS
The following biographical information has been provided by the
directors whose terms do not expire at the Annual Meeting:
PAUL M. BASS, JR. Director since 1989
Mr. Bass, age 64, is Vice Chairman of First Southwest Company, a privately
owned investment banking firm, and has served as a director since prior to 1995.
Mr. Bass is also a director of CompX; Chairman of MorAmerica Private Equities
Company; and director and Chairman of the Audit Committee of California Federal
Bank. Mr. Bass is currently serving as Chairman of Zale-Lipshy University
Hospital and as Chairman of the Board of Trustees of Southwestern Medical
Foundation. Mr. Bass' term as a director expires at the annual meeting in 2001.
DAVID E. CONNOR Director since 1992
Mr. Connor, age 74, is President of David E. Connor and Associates,
advisers to commerce and industry, in Peoria, Illinois and has served in such
capacity since prior to 1995. He is Chairman of the Board of First Bankers
Trustshares, Quincy, Illinois. He is also a director of Heartland Community
Health Clinic, Peoria, Illinois and Museum Trustees Association, Washington,
D.C. Mr. Connor's term as a director expires at the annual meeting in 2001.
GLENN R. SIMMONS Director since 1986
Mr. Simmons, age 72, is Chairman of the Board of Directors of Keystone and
has served in such capacity since prior to 1995. Mr. Simmons was Chief Executive
Officer of Keystone from prior to 1995 to February 1997. Mr. Simmons has served
as Vice Chairman of the Board of Directors of Contran since prior to 1995. Mr.
Simmons has been a director of Contran and an executive officer and/or director
of various companies related to Contran since prior to 1995. He is Vice Chairman
of the Board of Valhi and a director of NL Industries, Inc. ("NL"), Tremont
Corporation ("Tremont"), TIMET, and CompX, all of which companies may be deemed
to be affiliates of Keystone. Mr. Simmons' term as a director expires in 2002.
J. WALTER TUCKER, JR. Director since 1971
Mr. Tucker, age 74, is Vice Chairman of the Board of Directors of the
Company and has served in such capacity since prior to 1995. Mr. Tucker has
served as a Director, President, and Treasurer of Tucker & Branham, Inc., a
privately owned real estate, mortgage banking and insurance firm since prior to
1995. Mr. Tucker is also a director of Valhi. He has also been an executive
officer and/or director of various companies related to Valhi and Contran since
prior to 1995. Mr. Tucker's term as a director expires in 2002.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1999, the Board of Directors
met three times. All directors of the Company were present at more than 75% of
the meetings of the Board of Directors and the committees of the Board of
Directors on which they served.
The Executive Committee, which did not meet during 1999, exercises all
powers and authority of the Board of Directors in the management of the business
and affairs of the Company, to the extent permitted by Delaware law, when a
meeting of the Board of Directors is not possible. The members of the Executive
Committee are Messrs. Bass, Simmons, Spier and Tucker.
The Master Trust Committee, which did not meet during 1999, exercises the
powers, rights and responsibilities included under Articles 3 and 10 of the
Keystone Consolidated Industries, Inc. Master Retirement Trust. The members of
the Master Trust Committee are Messrs. Bass and Tucker.
The Audit Committee, which met twice during 1999, reviews and evaluates
significant matters relating to the audit and internal controls of the Company,
and reviews the scope and results of audit and non-audit assignments of the
Company's independent accountants. The Audit Committee examines and recommends
for approval the audited financial statements of the Company, and annually
recommends to the Board of Directors the appointment of, and fees paid to, the
independent accountants. Recommendations and actions of the Audit Committee are
reported to the full Board of Directors. The members of the Audit Committee are
Messrs. Bass, Connor and Lyons.
The Compensation Committee, which met once during 1999, reviews and
approves the amounts and forms of compensation paid to executive officers. The
members of the Compensation Committee are Messrs. Barry, Bass and Lyons.
The Board of Directors does not have a Nominating Committee.
DIRECTOR'S COMPENSATION
Directors of Keystone receive an annual retainer of $15,000. Directors
also receive a fee of $750 per day for each Board of Directors meeting and/or
committee meeting attended. Directors are also reimbursed for reasonable
expenses incurred in attending Board of Directors and/or committee meetings.
Under the Keystone Consolidated Industries, Inc. 1992 Non-Employee Director
Stock Option Plan ("Director Plan"), which terminated May 1, 1997, non-employee
directors were granted an option to purchase 1,000 shares of Common Stock on the
third business day after the Company issued its press release summarizing the
Company's annual financial results for the prior fiscal year. The exercise price
of the options was equal to the last reported sale price of Common Stock on the
New York Stock Exchange Composite Tape on the date of grant. Options granted
pursuant to the Director Plan became exercisable one year after the date of
grant and expired on the fifth anniversary following the date of grant. The
Keystone Consolidated Industries, Inc. 1997 Long-Term Incentive Plan provides
for awards or grants of stock options, stock appreciation rights, restricted
stock, performance grants and other awards to key individuals, including
directors, performing services for the Company or its subsidiaries. Under the
1997 Long-Term Incentive Plan, directors are annually granted stock options
exercisable for 1,000 shares of Common Stock. These options have an exercise
price equal to the closing sales price of Common Stock on the date of grant,
have a term of ten years and fully vest on the first anniversary of the date of
grant. In addition to serving as directors, Messrs. Simmons and Tucker provide
consulting services to the Company. The Company pays Contran for the consulting
services provided by Mr. Simmons pursuant to the Intercorporate Services
Agreement between Contran and the Company (the "Intercorporate Services
Agreement"). The Company pays Tucker & Branham for the consulting services
provided by Mr. Tucker. See "Certain Business Relationships and Related
Transactions."
EXECUTIVE OFFICERS
In addition to Glenn R. Simmons as Chairman of the Board and J. Walter
Tucker, Jr. as Vice Chairman, the following are currently executive officers of
Keystone:
DAVID L. CHEEK, age 50, has served as President, Keystone Steel & Wire,
a division of the Company, since March 24, 2000. Mr. Cheek was vice president of
manufacturing, Keystone Steel & Wire, from March 1999 to March 2000. He was vice
president of operations, Atlantic Steel, Atlanta, Georgia from 1996 to 1999 and
held various other management positions at Atlantic Steel since prior to 1995.
HAROLD M. CURDY, age 52, has served as Vice President - Finance and
Treasurer of the Company since prior to 1995.
BERT E. DOWNING, JR., age 43, has served as Vice President and
Controller of the Company since March 2000 and as Corporate Controller since
prior to 1995.
RALPH P. END, age 62, has served as Vice President and General Counsel
of the Company since prior to 1995.
SANDRA K. MYERS, age 56, has served as Corporate Secretary of the
Company and as Executive Secretary of Contran since prior to 1995.
ROBERT W. SINGER, age 63, is President and Chief Executive Officer of
the Company and has served in such capacities since 1997. Mr. Singer served as
President and Chief Operating Officer since prior to 1995. He served as Vice
President of Valhi and Contran from prior to 1995 to 1998 and is a director of
Columbian Mutual Life Insurance Company.
EXECUTIVE COMPENSATION
The following table summarizes all compensation paid to the Company's
chief executive officer and to each of the Company's four most highly
compensated executive officers other than the chief executive officer who were
executive officers of the Company on December 31, 1999 (each a "named executive
officer") for services rendered in all capacities to the Company for the years
ended December 31, 1999, 1998 and 1997.
Summary Compensation Table
Long-Term
Compensation
Awards All Other
Name and Annual Compensation Securities Underlying Compensation
- -------------------- ----------------------
Principal Position Year Salary ($) Bonus ($) Options (#) ($)(1)
- ------------------- ---- ---------- --------- ----------- ------------
Harold M. Curdy 1999 198,925 50,000 20,000 19,352
Vice President - Finance & 1998 182,549 70,000 -0- 19,571
Treasurer 1997 150,000 85,000 10,000 11,882
Bert E. Downing, Jr. 1999 151,093 -0- 10,000 9,147
Vice President and 1998 107,099 50,000 -0- 8,000
Controller 1997 84,000 80,000 -0- 5,901
Ralph P. End 1999 146,618 -0- 10,000 12,182
Vice President and 1998 127,499 50,000 -0- 10,478
General Counsel 1997 97,000 65,000 -0- 5,501
Thomas J. Glaister (2) 1999 208,926 -0- 40,000 12,736
Former President 1998 190,000 -0- -0- 19,785
Keystone Steel & Wire 1997 171,636 112,500 20,000 -0-
Robert W. Singer (3) 1999 297,579 -0- 75,000 61,348
President and 1998 277,549 175,000 -0- 74,033
Chief Executive Officer 1997 185,000 350,000 40,000 62,943
(1) All other compensation for the last three years for each of the
following named executive officers consisted of (i) the Company's
matching contributions pursuant to the Company's 401(k) Plan; and (ii)
accruals to unfunded reserve accounts attributable to certain limits
under the Code with respect to the 401(k) Plan and Keystone's pension
plan, which amounts are payable upon the named executive officer's
retirement, the termination of his employment with the Company or to
his beneficiaries upon his death; as follows:
Unfunded Reserve Account Accruals
Interest
Account Accruals Accruals
Employer's Related to 401(k) Above 120%
Named 401(k) and Pension Plan of the AFR
Executive Officer Year Contribution (a) Limitations Rate (b) Total
- ----------------- ---- ---------------- ------------ --------- -----
Harold M. Curdy 1999 $ 8,000 $10,945 $407 $19,352
1998 8,000 11,285 286 19,571
1997 5,451 6,431 n/a 11,882
Bert E. Downing, Jr. 1999 8,000 1,147 -0- 9,147
1998 8,000 -0- -0- 8,000
1997 5,901 -0- n/a 5,901
Ralph P. End 1999 8,000 4,127 55 12,182
1998 8,000 2,478 -0- 10,478
1997 5,501 -0- n/a 5,501
Thomas J. Glaister 1999 8,000 4,476 260 12,736
1998 8,000 11,785 -0- 19,785
Robert W. Singer 1999 8,000 50,538 2,810 61,348
1998 8,000 63,475 2,558 74,033
1997 5,451 57,492 n/a 62,943
(a) The Company's matching contributions to the 401(k) plan are made
in Common Stock. Common Stock was valued at $5.9375/share,
$8.125/share, and $12.00/share, for 1999, 1998, and 1997,
respectively.
(b) Effective as of January 1, 1998, the agreements providing for
these unfunded reserve accounts, were amended to provide that the
balance of such accounts would accrue interest at an annual rate
in effect from time to time equal to two percent above the base
rate on corporate loans. Pursuant to the rules of the Securities
and Exchange Commission, the amounts shown represent the portion
of the interest accruals to the unfunded reserve accounts that
exceeds 120% of the applicable federal long-term rate as
prescribed by the Code (the "AFR Rate"). The AFR Rate used for
such computations was the AFR Rate in effect on December 31, 1999,
and December 31, 1998, the date the interest accruals for 1999 and
1998, respectively, were credited to the unfunded reserve
accounts.
(2) Mr. Glaister resigned March 24, 2000.
(3) The amounts shown in the table as compensation for Mr. Singer exclude
the amount Contran credited to Keystone for Mr. Singer's services
rendered to Valhi pursuant to the Intercorporate Services Agreement
with Contran, which amount was $65,000 for 1997.
The following table sets forth certain information for the fiscal year
ended December 31, 1999, with respect to stock options granted to the named
executive officers. No stock appreciation rights were granted and no options
have been granted at an option price below fair market value on the date of
grant.
Option Grants in 1999
Potential Realizable
Number % of Total Value at Assumed Annual
of Options Rates of Stock Price
Securities Granted to Exercise Appreciation for
Underlying Employees or Base Option Term ($)
Options in Fiscal Price Expiration
Name Granted (1) Year ($/Share) Date 5% 10%
- ---- ----------- ---------- --------- ---------- ------- -------
Harold M. Curdy .... 20,000 6 9.1875 1/06/09 115,559 292,850
Bert E. Downing, Jr 10,000 3 9.1875 1/06/09 57,780 146,425
Ralph P. End ....... 10,000 3 9.1875 1/06/09 57,780 146,425
Thomas J. Glaister . 40,000 12 9.1875 1/06/09 231,119 585,700
Robert W. Singer ... 75,000 22 9.1875 1/06/09 433,348 1,098,188
(1) Options vest 33-1/3%, 66-2/3%, and 100% on the first, second, and third
anniversary of the date of grant, respectively.
The following table provides information, with respect to the named
executive officers, concerning the value of unexercised stock options held as of
December 31, 1999. In 1999, no named executive officer exercised any stock
options.
Aggregated Options/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at December 31, 1999(#) at December 31, 1999 ($)(1)
------------------------------------ ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
Harold M. Curdy 36,667 23,333 0 0
Bert E. Downing, Jr. 17,000 10,000 0 0
Ralph P. End 16,500 10,000 0 0
Thomas J. Glaister 13,333 46,667 0 0
Robert W. Singer 36,667 88,333 0 0
(1) The values shown in the table are based on the $5.9375 per share
closing price of the Common Stock on December 31, 1999, as reported by
the New York Stock Exchange Composite Tape, less the exercise price of
the options.
Pension Plan
Keystone maintains a qualified, noncontributory defined benefit plan
which provides defined retirement benefits to various groups of eligible
employees including executive officers. Normal retirement age under the
Company's pension plan is age 65. The defined benefit for salaried employees,
including officers, is based on a straight life annuity. An individual's monthly
benefit is the sum of the following: (a) for credited service prior to January
1, 1981, the amount determined by his or her average monthly cash compensation
for the five years of his or her highest earnings prior to January 1, 1981,
multiplied by 1.1%, multiplied by the years of credited service, plus (b) for
each year of service between 1980 and 1989, the amount determined by the sum of
1.2% multiplied by his or her average monthly cash compensation that year up to
the social security wage base and 1.75% multiplied by his or her average monthly
cash compensation that year in excess of the social security wage base, plus (c)
for each year subsequent to 1989, the amount determined by 1.2% multiplied by
his or her average monthly cash compensation that year, but not less than $14.00
per month.
The estimated annual benefits payable upon retirement at normal
retirement age for each of the salaried employees named in the Summary
Compensation Table, assuming continued employment with the Company until normal
retirement age at current salary levels are: Harold M. Curdy, $52,159; Bert E.
Downing, Jr., $52,694; Ralph P. End, $32,926; and Robert W. Singer, $28,276.
Thomas J. Glaister resigned March 24, 2000.
SECURITY OWNERSHIP OF MANAGEMENT
As of March 22, 2000, the Company's nominees for directors, directors,
the executive officers named in the Summary Compensation Table above, and the
directors and executive officers as a group, beneficially owned, as defined by
the rules of the Securities and Exchange Commission, the shares of Common Stock
shown in the following table.
Amount and Nature of Beneficial Ownership(1)
Shares of Percent
Name of Common of
Beneficial Owner Stock Class (2)
- ---------------- ------ ---------
Thomas E. Barry (3) ............................. 8,333 -
Paul M. Bass, Jr. (3)(4)(5) ..................... 13,833 -
David E. Connor (3) ............................. 8,833 -
Harold M. Curdy (6) ............................. 59,079 -
Bert E. Downing, Jr. (6) ........................ 23,910 -
Ralph P. End (6) ................................ 25,683 -
Thomas J. Glaister (6)(7) ....................... 42,609 -
William P. Lyons, Jr. (3) ....................... 37,728 -
Glenn R. Simmons (5)(6)(8) ...................... 235,400 2.3
Robert W. Singer (6) ............................ 141,586 -
William Spier (3) ............................... 374,595 3.7
J. Walter Tucker, Jr. (3)(5) .................... 157,783 1.6
Steven L. Watson (5) ............................ 2,250 -
All directors and current executive officers as a 1,157,055 11.1
group (14 persons) (3)(4)(5)(6)(7)(8)(9)
- ---------
(1) All beneficial ownership is sole and direct except as otherwise set
forth herein. Information as to the beneficial ownership of Common
Stock has either been furnished to the Company by or on behalf of the
indicated persons or is taken from reports on file with the Securities
and Exchange Commission.
(2) Percentage omitted if less than 1%.
(3) Includes shares that such person or group could acquire upon the
exercise of options exercisable within 60 days of the Record Date by
Messrs. Barry, Bass, Connor, Lyons, Spier and Tucker for the purchase
of 6,333, 6,333, 6,333, 5,333, 5,333, and 4,333 shares, respectively,
pursuant to the Keystone Consolidated Industries, Inc. 1992
Non-Employee Director Stock Option Plan and the 1997 Long-Term
Incentive Plan.
(4) Includes 2,500 shares of Common Stock held in discretionary accounts by
First Southwest Company, a licensed broker-dealer, on behalf of certain
of its clients, as to which Mr. Bass has voting and dispositive
authority. Mr. Bass serves as Vice Chairman of First Southwest Company.
As a result of the foregoing, Mr. Bass may be deemed to be the
beneficial owner of such shares. However, Mr. Bass disclaims all such
beneficial ownership.
(5) Excludes certain shares that such individual may be deemed to
indirectly and beneficially own as to which such individual disclaims
beneficial ownership. See footnote (1) to the "Security Ownership of
Certain Beneficial Owners" table.
(6) Includes shares that such person could acquire upon the exercise of
options exercisable within 60 days of the Record Date by Messrs. Curdy,
Downing, End, Glaister, Simmons, and Singer for the purchase of 46,667,
20,333, 19,833, 33,333, 153,500, and 75,000 shares, respectively,
pursuant to the Company's various stock option plans.
(7) Thomas J. Glaister resigned March 24, 2000.
(8) Glenn R. Simmons is a brother of Harold C. Simmons. See footnote (1) to
the "Security Ownership of Certain Beneficial Owners" table.
(9) In addition to the foregoing, the shares of Common Stock shown as
beneficially owned by the directors and executive officers of Keystone
as a group include 20,333 shares that the remaining executive officers
of Keystone have the right to acquire upon the exercise within 60 days
subsequent to the Record Date of stock options granted pursuant to the
Company's stock option plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the stockholders known to the Company to
be the beneficial owners of more than 5% of the Common Stock outstanding as of
the Record Date.
Percent
Name and Address of Common of
Beneficial Owner Stock (#) Class
Harold C. Simmons (1)(2) 4,990,473 49.6
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240
Dimensional Fund Advisors Inc. (3) 662,263 6.6
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
- -------
(1) The shares of Common Stock shown as beneficially owned by Harold C.
Simmons includes 4,109,159, 326,364, 326,050, 188,400, and 30,000
shares of Common Stock held by Contran, Valhi, NL, The Harold Simmons
Foundation, Inc. (the "Foundation"), and The Combined Master Retirement
Trust (the "Master Trust"), respectively.
Contran, Valhi and NL directly hold approximately 40.8%, 3.2%, and
3.2%, respectively, of the outstanding Common Stock. Valhi and Tremont
are the holders of approximately 59.5% and 20.2%, respectively, of the
outstanding common stock of NL. Mr. Simmons and persons or entities
that may be deemed to be affiliated with him hold, directly or
indirectly, approximately 93.6% and 71.6% of the outstanding common
stock of Valhi and Tremont, respectively. Substantially all of
Contran's outstanding voting stock is held either by trusts established
for the benefit of certain of Harold C. Simmons' children and
grandchildren (together, the "Trusts"), of which Mr. Simmons is the
sole trustee, or by Mr. Simmons directly. As sole trustee of each of
the Trusts, Mr. Simmons has the power to vote and direct the
disposition of the shares of Contran stock held by each of the Trusts;
however, Mr. Simmons disclaims beneficial ownership of all shares of
Contran stock that the Trusts hold.
Harold C. Simmons is Chairman of the Board and Chief Executive Officer
of Contran, and of certain other related entities through which Contran
may be deemed to control Valhi, Tremont and NL. Additionally, he is
Chairman of the Board of NL and is a director of Tremont.
The Foundation holds approximately 1.9% of the outstanding shares of
Common Stock. The Foundation is a tax-exempt foundation organized and
existing exclusively for charitable purposes. Harold C. Simmons is
Chairman of the Board and Chief Executive Officer of the Foundation.
By virtue of the holding of the offices, the stock ownership and his
service as trustee as described above, Harold C. Simmons may be deemed
to control certain of such entities and Mr. Simmons and certain of such
entities may be deemed to possess indirect beneficial ownership of
certain shares of Common Stock directly held by certain of such other
entities. However, Mr. Simmons disclaims such beneficial ownership of
the shares of Common Stock beneficially owned, directly or indirectly,
by any of such entities.
The Master Trust holds approximately 0.3% of the outstanding shares of
Common Stock. Valhi established the Master Trust as a trust to permit
the collective investment by master trusts that maintain the assets of
certain employee benefit plans Valhi and related companies, including
Keystone, adopt. Harold C. Simmons is sole trustee of the Master Trust
and a member of the trust investment committee for the Master Trust.
Valhi's board of directors select the trustee and members of the trust
investment committee for the Master Trust. Paul M. Bass, Jr. and J.
Walter Tucker, Jr. are also members of the trust investment committee
for the Master Trust. Harold C. Simmons, Glenn R. Simmons and J. Walter
Tucker, Jr. are members of Valhi's board of directors. Messrs. Harold
and Glenn Simmons and Steven L. Watson are participants in one or more
of the employee benefit plans that invest through the Master Trust;
however, each of such persons disclaims beneficial ownership of the
shares of Common Stock held by the Master Trust, except to the extent
of his respective vested beneficial interests therein.
The information contained in this footnote is based on information
provided to the Company by Valhi, Contran and certain of their
affiliates as of the Record Date.
(2) The shares of Common Stock shown as beneficially owned by Harold C.
Simmons also includes 10,500 shares of Common Stock held by Mr.
Simmons' wife, with respect to all of which Mr. Simmons disclaims
beneficial ownership.
(3) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, may be deemed to have beneficial ownership of 662,263 shares
of Common Stock as of December 31, 1999, all of which shares are held
in portfolios for which Dimensional serves as investment advisor and
investment manager. Dimensional possesses both voting and investment
power over the Common Stock owned by such portfolios. Dimensional
disclaims beneficial ownership of such securities.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires Keystone's executive officers, directors and persons who own more than
10% of a registered class of Keystone's equity securities to file reports of
ownership with the Securities and Exchange Commission, the New York Stock
Exchange and Keystone. Based solely on the review of the copies of such reports
filed with the Securities and Exchange Commission, Keystone believes that for
1999 its executive officers, directors and 10% stockholders complied with all
applicable filing requirements under Section 16(a).
CERTAIN BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
As set forth under the caption "Security Ownership of Certain
Beneficial Owners," Harold C. Simmons, through Contran and other entities, may
be deemed to beneficially own approximately 50% of the outstanding Common Stock
as of the Record Date and, therefore, may be deemed to control the Company. The
Company and other entities that may be deemed to be controlled by or affiliated
with Mr. Simmons sometimes engage in (a) intercorporate transactions such as
guarantees, management and expense sharing arrangements, shared fee
arrangements, 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 (b) 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 a publicly-held minority equity interest in another related party. The
Company continuously considers, reviews and evaluates and understands that
Contran and related entities consider, review and evaluate transactions of the
type described above. Depending on the business, tax and other objectives then
relevant, it is possible that the Company might be a party to one or more of
such transactions in the future. In connection with these activities, the
Company may consider issuing additional equity securities or incurring
additional indebtedness. The Company's acquisition activities have in the past
and may in the future include participation in the acquisition or restructuring
activities conducted by other companies that may be deemed to be controlled by
Harold C. Simmons. It is the policy of the Company to engage in transactions
with related parties on terms, in the opinion of the Company, no less favorable
to the Company than could be obtained from unrelated parties.
No specific procedures are in place that govern the treatment of
transactions among the Company and its related entities, although such entities
may implement specific procedures as appropriate for particular transactions. In
addition, under applicable principles of law, in the absence of stockholder
ratification or approval by directors who may be deemed disinterested,
transactions involving contracts among companies under common control must be
fair to all companies involved. Furthermore, directors and officers owe
fiduciary duties of good faith and fair dealing to all stockholders of the
companies for which they serve.
Glenn R. Simmons, J. Walter Tucker, Jr., and Sandra K. Myers are not
salaried employees of the Company. The Company has contracted with Contran, on a
fee basis payable in quarterly installments, to provide certain administrative
and other services to the Company in addition to the services of Mr. Simmons and
Ms. Myers, including consulting services of Contran executive officers pursuant
to the Intercorporate Services Agreement between Contran and the Company, a copy
of which is included as Exhibit 10.1 in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, filed on March 30, 2000. The fee
incurred during 1999 was $656,000. The Company compensates Tucker & Branham,
Inc. for certain consulting services of Mr. Tucker on an hourly basis as his
services are requested. The fees paid Tucker & Branham, Inc. during 1999 were
$66,000.
NL Insurance Ltd. of Vermont ("NL Insurance"), Valmont Insurance
Company ("Valmont"), and EWI RE, Inc. ("EWI") provide for or broker certain of
the Company's insurance policies. NL Insurance is a wholly owned captive
insurance company of Tremont. Valmont is a wholly owned captive insurance
company of Valhi. Parties related to Contran own 90% of the outstanding common
stock of EWI, and a son-in-law of Harold C. Simmons manages the operations of
EWI. Consistent with insurance industry practices, NL Insurance, Valmont and EWI
receive commissions from the insurance and reinsurance underwriters for the
policies that they provide or broker. During 1999, the Company paid
approximately $2.7 million for policies provided or brokered by NL Insurance,
Valmont and/or EWI. These amounts principally included payments for reinsurance
and insurance premiums paid to unrelated third parties, but also included
commissions paid to NL Insurance, Valmont and EWI. In the Company's opinion, the
amounts that the Company paid for these insurance policies are reasonable and
similar to those it could have obtained through unrelated insurance companies
and/or brokers. The Company expects that these relationships with NL Insurance,
Valmont, and EWI will continue in 2000.
Aircraft services were purchased from Valhi in the amount of $175,000
for the year ended December 31, 1999.
In the opinion of management and the Board of Directors, the terms of
the transactions described above were no less favorable to the Company than
those that could have been obtained from an unrelated entity.
REPORT ON EXECUTIVE COMPENSATION
Compensation Committee Report
During 1999, matters regarding compensation of executives were
administered by the Compensation Committee (the "Committee"). The Committee is
comprised of directors who are neither officers nor employees of the Company or
its subsidiaries. The Committee adopts compensation policies and is responsible
for approving all compensation of executives paid by the Company.
It is the Company's policy that employee compensation, including
compensation to executives, be at a level which allows the Company to attract,
retain, motivate and reward individuals of training, experience, and ability who
can lead the Company in accomplishing its goals. It is also the Committee's
policy that compensation programs maintain a strong risk/reward ratio, with a
significant component of cash compensation being tied to the Company's financial
results, creating a performance-oriented environment that rewards employees for
achieving pre-set financial performance levels. It is the Company's policy to
structure compensation arrangements to be deductible for federal income tax
purposes under applicable provisions of the Internal Revenue Code.
During 1999, the Company's compensation program with respect to its
executives consisted of three components: base salary, incentive bonus,
including deferred compensation, and stock option awards.
Base Salary
The Committee reviews, in consultation with the Chief Executive Officer
("CEO"), base salaries for executives at least annually. The Committee approves,
with any modifications it deems appropriate, the CEO's recommendations for base
salary levels. Base salaries for all salaried employees, including executive
officers of the Company, have been established on a position-by-position basis.
Annual internal reviews of salary levels are conducted by the Company's
management in an attempt to rank base salary and job value of each position. The
ranges of salaries for comparable positions considered by management were based
upon management's general business knowledge and no specific survey, study or
other analytical process was utilized to determine such ranges. Additionally, no
specific companies' or groups of companies' compensation were compared with that
of the Company, nor was an attempt made to identify or otherwise quantify the
compensation paid by the companies that served as a basis for such individuals'
general business knowledge. Base salary levels are generally not increased
except in instances of (i) promotions, (ii) increases in responsibility or (iii)
unwarranted discrepancies between job value and the corresponding base salary.
The Company considers general base salary increases from time to time when
competitive factors so warrant. Over a period of years, base salaries are
designed to be below the median annual cash compensation for comparable
executives, but when combined with the other components of compensation create a
competitive or above median total compensation package.
Incentive Bonus Program
Awards under the Company's incentive bonus program represent a
significant portion of an executive's potential annual cash compensation and are
awarded at the discretion of the Committee on recommendation of the CEO. Annual
performance reviews are an important factor in determining management's
recommendation which is primarily based on each individual's performance and, to
a lesser extent, on the Company's overall performance. No specific financial or
budget tests were applied in the measurement of individual performance. The
executive's performance is typically measured by the ability the executive
demonstrates in performing, in a timely and cost efficient manner, the functions
of the executive's position. The Company's overall performance is typically
measured by the Company's historical financial results. No specific overall
performance measures were used and there is no specific relationship between
overall Company performance and an executive's incentive bonus.
Stock Options/Restricted Stock
An integral part of the Company's total compensation program is
non-cash incentive awards in the form of stock options, stock appreciation
rights and restricted stock granted to executives. Stock option grants, in
particular, are considered an essential element of the Company's total
compensation package for the executives. The Committee believes that stock
options, stock appreciation rights and restrictive stock awards provide an
earnings opportunity based on the Company's success measured by Common Stock
performance. Additionally, awards establish an ownership perspective and
encourage the retention of executives. Incentive stock options are granted at a
price not less than 100% of the fair market value of such stock on the date of
grant. The exercise price of all options and the length of period during which
the options may be exercised are determined by the Compensation Committee. The
Compensation Committee also considered the number of stock options already
outstanding in granting new stock options.
The foregoing report is submitted by the members of the Compensation
Committee of the Board of Directors.
Dr. Thomas E. Barry, Chairman
Paul M. Bass, Jr.
William P. Lyons
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is or has been an officer or
employee of the Company or any of its subsidiaries. In 1999, no executive
officer of the Company served on the compensation committee or as a director of
another entity, one of whose executive officers served on the Company's
Compensation Committee or Board of Directors.
PERFORMANCE GRAPH
The following graph reflects a comparison of the cumulative total
return of the Common Stock from December 31, 1994 through December 31, 1999,
with the Standard & Poor's 500 Composite Index and the Standard & Poor's Iron &
Steel Index. The comparison for each of the periods assumes that the value of
the investment in the Common Stock and each index was $100 on December 31, 1994
and that all dividends were reinvested.
Comparison of Five Year Cumulative Total Shareholder Return Among
Keystone Consolidated Industries, Inc., S&P 500, and S&P Iron & Steel Index
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
Keystone ....... $100 $ 84 $ 61 $ 88 $ 60 $ 44
S&P 500 ........ $100 $138 $169 $226 $290 $351
S&P Iron & Steel $100 $ 93 $ 83 $ 84 $ 73 $ 80
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP, independent public accountants, have
audited the Company's financial statements for 1999 and are currently expected
to be retained to audit the financial statements for 2000. Representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting. They will have
an opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals on matters appropriate for
stockholder action at the Company's annual meetings, subject to regulations
adopted by the Commission. The Company presently intends to call the next annual
meeting during May 2001. For such proposals to be considered for inclusion in
the Proxy Statement and form of proxy relating to the 2001 annual meeting, they
must be received by the Company not later than December 16, 2000. Such proposals
should be addressed to: Secretary, Keystone Consolidated Industries, Inc., Three
Lincoln Centre, 5430 LBJ Freeway, Suite 1740, Dallas, Texas 75240.
OTHER MATTERS
Management does not intend to present, and has no information as of the
date of preparation of this Proxy Statement that others will present, any
business at the Annual Meeting other than business pertaining to matters set
forth in the Notice of Annual Meeting of Stockholders and this Proxy Statement.
However, if other matters requiring the vote of the stockholders properly come
before the meeting, it is the intention of the persons named in the enclosed
form of proxy to vote the proxies held by them in accordance with their best
judgment on such matters.
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
April 17, 2000
A copy of Keystone's 1999 Form 10-K Annual Report, as filed with the
Securities and Exchange Commission, is included in Keystone's 1999 Annual Report
to Stockholders distributed to stockholders with this Proxy Statement.
Additional copies are available without charge by writing to: Secretary,
Keystone Consolidated Industries, Inc., 5430 LBJ Freeway, Suite 1740, Dallas,
Texas 75240.
VOTING INSTRUCTIONS
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
SOLICITED BY THE BOARD OF DIRECTORS
for Annual Meeting of Stockholders
Tuesday, May 16, 2000
The undersigned, being participants in the Keystone Consolidated
Industries, Inc. Deferred Incentive Plan, having received the Notice of Annual
Meeting and Proxy Statement dated April 17, 2000, and Annual Report to
Stockholders, hereby instructs the trustee, to vote, as specified below, all the
shares of common stock of KEYSTONE CONSOLIDATED INDUSTRIES, INC., a Delaware
corporation (the "Company"), held of record by the trustee for the account of
the undersigned and entitled to vote on the record date, March 22, 2000, at the
Annual Meeting of Stockholders to be held on May 16, 2000, and all adjournments
or postponements thereof, as directed and, in their discretion, on all other
matters which may properly come before the Annual Meeting or any adjournments or
postponements thereof.
(Continued, and to be marked, dated and signed, on the other side)
************
(Back Side)
Please vote all shares allocated to my account in the Keystone Consolidated
Industries, Inc. Deferred Incentive as follows:
Election of Director for a NOMINEE: Steven L. Watson
Two-Year Term
For Withhold
[ ] [ ]
Election of Directors for NOMINEES: Dr. Thomas E. Barry, William P. Lyons
a Three-Year Term and William Spier each for a term of three years.
(Instruction: To withhold authority for any
single nominee, write that nominee's name in the
space provided below)
--------------------------------------------------
FOR all nominees WITHHOLD AUTHORITY
listed to the right to vote for all nominees
(except as marked to listed to the right
the contrary)
[ ] [ ]
-----------------------------------
Signature
Date: _______________________, 2000
PLEASE SIGN, DATE, AND RETURN THE CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
PROXY
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
SOLICITED BY THE BOARD OF DIRECTORS
for Annual Meeting of Stockholders
Tuesday, May 16, 2000
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement dated April 17, 2000, and Annual Report to Stockholders, hereby
appoints Ralph P. End and Sandra K. Myers, or either of them, proxies, with full
power of substitution to vote, as specified in this proxy, all the shares of
capital stock of KEYSTONE CONSOLIDATED INDUSTRIES, INC., a Delaware corporation
(the "Company"), held of record by the undersigned and entitled to vote on the
record date, March 22, 2000, at the Annual Meeting of Stockholders to be held at
5430 LBJ Freeway, Suite 1740, Dallas, TX 75240 at 9:00 a.m. local time on May
16, 2000, and all adjournments or postponements thereof, as directed and, in
their discretion, on all other matters which may properly come before the Annual
Meeting or any adjournments or postponements thereof. The undersigned directs
said proxies to vote as specified upon the items shown on the reverse side,
which are referred to in the Notice of Annual Meeting and set forth in the Proxy
Statement. The undersigned hereby acknowledges receipt of the accompanying Proxy
Statement and Annual Report to Stockholders, and hereby revokes any proxy or
proxies heretofore given by the undersigned relating to the Annual Meeting.
(Continued, and to be marked, dated and signed, on the other side)
(Back Side)
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted "For" all nominees for election as Directors.
Election of Director for a NOMINEE: Steven L. Watson
Two-Year Term
For Withhold
[ ] [ ]
Election of Directors for NOMINEES: Dr. Thomas E. Barry, William P. Lyons
a Three-Year Term and William Spier for a term of three years.
(Instruction: To withhold authority for any single
nominee, write that nominee's name in the space
provided below)
-----------------------------------------------------
FOR all nominees WITHHOLD AUTHORITY
listed to the right to vote for all nominees
(except as marked to listed to the right
the contrary)
[ ] [ ]
Please mark, date and sign exactly as your name appears on this proxy card. When
shares are held jointly, both holders should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
the holder is a corporation or partnership, the full corporate or partnership
name should be signed by a duly authorized officer.
-----------------------------------
Signature
-----------------------------------
Signature, if shares held jointly
Date: __________________, 2000
THIS PROXY MAY BE REVOKED AS SET FORTH IN THE KEYSTONE CONSOLIDATED
INDUSTRIES, INC. PROXY STATEMENT THAT ACCOMPANIED THIS PROXY.