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 15, 2001
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 15, 2001, 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 three years, and until his successor is
duly elected and qualified; and
(2) 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 23, 2001,
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
16, 2001, 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 13, 2001
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 15, 2001
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
2001 Annual Meeting of Stockholders to be held at 9:00 a.m., local time, on
Tuesday, May 15, 2001, 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 13, 2001. An annual report for the year
ended December 31, 2000 is enclosed herewith.
Only stockholders of record at the close of business on March 23, 2001,
(the "Record Date") will be entitled to vote at the Annual Meeting. As of the
Record Date, there were 10,061,969 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 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.
Mellon Investor Services LLC ("Mellon"), 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 Mellon shall be kept confidential
by Mellon 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.
Upon request, the Company will reimburse banking institutions, brokerage
firms, custodians, trustees, nominees and fiduciaries for their reasonable
out-of-pocket expenses incurred in distributing proxy materials and voting
instructions to the beneficial owners of Common Stock held of record by such
entities.
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 Board of Directors has currently set the number of directors at seven.
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. However,
since director nominees need only receive the vote of a plurality of the shares
represented at the Meeting and entitled to vote, a vote withheld from a
particular nominee will not affect the election of such nominee.
Except as applicable laws may otherwise provide, the approval of any other
matter that may properly come before the Meeting will require the affirmative
vote of a majority of the shares represented and entitled to vote at the
Meeting. Shares of Common Stock that are voted to abstain from any other
business coming before the Meeting and broker/nominee non-votes will not be
counted as votes for or against any such other matter.
Unless otherwise specified, the agents designated in the proxy card or
voting instruction form will vote the shares represented by a proxy at the
Meeting "FOR" the election of the nominee for director and, to the extent
allowed by the federal securities laws, in the discretion of the agents on any
other matter that may properly come before the Meeting.
The nominee set forth below has 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 the nominee for
director as set forth in this Proxy Statement. If such shares are represented
and voted as indicated at the Meeting, a quorum will be present and the nominee
for director will be elected as a director of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEE
FOR THE BOARD OF DIRECTORS SET FORTH BELOW.
NOMINEE FOR BOARD OF DIRECTORS
The following biographical information has been provided by the nominee
for election to the Board of Directors of the Company for a term expiring at the
2004 annual meeting of stockholders:
PAUL M. BASS, JR. Director since 1989
Mr. Bass, age 65, is Vice Chairman of First Southwest Company, a privately
owned investment banking firm, and has served in such capacity since prior to
1996. Mr. Bass is also a director of CompX International Inc. ("CompX"), an
affiliate of Keystone that manufactures ergonomic computer support systems,
precision ball bearing slides and security products; Chairman of MorAmerica
Private Equities Company; and director and Chairman of the Audit Committee of
California Federal Bank and Golden State Bancorp Inc. 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 is a nominee for
a term expiring in 2004.
OTHER BOARD MEMBERS
The following biographical information has been provided by the directors
whose terms do not expire at the Annual Meeting:
THOMAS E. BARRY Director since 1989
Dr. Barry, age 57, 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 1996. Dr.
Barry is also a director of Valhi, Inc. ("Valhi"), a publicly held diversified
holding company affiliated with Keystone. Dr. Barry's term as a director expires
in 2003.
GLENN R. SIMMONS Director since 1986
Mr. Simmons, age 73, is Chairman of the Board of Directors of Keystone and
has served in such capacity since prior to 1996. Mr. Simmons was Chief Executive
Officer of Keystone from prior to 1996 to February 1997. Since prior to 1996,
Mr. Simmons has served as Vice Chairman of the Board of Directors of 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. Mr. Simmons has been a director of Contran
and an executive officer and/or director of various companies related to Contran
since prior to 1996. He is Vice Chairman of the board of Valhi; a director of
CompX; a director of NL Industries, Inc. ("NL"), a titanium dioxide pigments
company; a director of Titanium Metals Corporation ("TIMET"), a company engaged
in the titanium metals industry of which Tremont Corporation ("Tremont") owns
approximately 39%; and a director of Tremont, Valhi's majority owned indirect
subsidiary that in addition to its holdings in TIMET owns approximately 20% of
NL and interests in land development entities. Valhi, CompX, NL, Tremont and
TIMET may be deemed to be affiliates of Keystone. Mr. Simmons' term as a
director expires in 2002.
WILLIAM SPIER Director since 1996
Mr. Spier, age 66, is President and Chairman of Sutton Holding Corp., a
private investment firm, and has served in such capacity since prior to 1996.
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 1996 to 1996 and Chief
Executive Officer of DeSoto, Inc. from prior to 1996 to 1996. He is a director
of Empire Resources, Inc., and Centerpoint Corporation. Mr. Spier's term as a
director expires in 2003.
J. WALTER TUCKER, JR. Director since 1971
Mr. Tucker, age 75, is Vice Chairman of the Board of Directors of the
Company and has served in such capacity since prior to 1996. 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
1996. 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 1996. Mr. Tucker's term as a director expires in 2002.
STEVEN L. WATSON Director since 2000
Mr. Watson, age 50, has been President and a director of Valhi and Contran
since 1998. From prior to 1996 to 1998, he served as vice president and
secretary of Valhi and Contran. He is also a director of CompX, NL, Tremont, and
TIMET. Mr. Watson served as an executive officer and/or director of various
companies related to Valhi and Contran since prior to 1996. Mr. Watson's term as
a director expires in 2002.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 2000, the Board of Directors met
four 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 2000, 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 (chairman), Simmons, Spier and Tucker.
The Master Trust Committee, which did not meet during 2000, 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 2000, 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 principal responsibilities of the Audit
Committee are to serve as an independent and objective party to review the
Company's auditing, accounting and financial reporting processes. The
responsibilities of the Audit Committee are more specifically set forth in the
Audit Committee Charter attached as Exhibit A to this proxy statement. For
further information on the role of the Audit Committee, see "Independent Auditor
Matters--Audit Committee Report." The current members of the Audit Committee are
Messrs. Bass (chairman), David E. Connor (who is not standing for re-election as
a director) and Spier.
The Compensation Committee, which met once during 2000, reviews and
approves the amounts and forms of compensation paid to executive officers. The
members of the Compensation Committee are Messrs. Barry (chairman) and Bass.
The Board of Directors does not have a Nominating Committee.
It is anticipated that the members of the standing committees will be
elected at the annual meeting of the Board of Directors immediately following
the 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.
DIRECTOR'S COMPENSATION
Directors of Keystone receive an annual retainer of $15,000, a fee of $750
per day for each Board of Directors meeting and/or committee meeting attended,
and reimbursement 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 51, has served as President, Keystone Steel & Wire, a
division of the Company, since March, 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 1996.
HAROLD M. CURDY, age 53, has served as Vice President - Finance and
Treasurer of the Company since prior to 1996.
BERT E. DOWNING, JR., age 44, has served as Vice President and Corporate
Controller of the Company since March 2000 and as Corporate Controller since
prior to 1996.
SANDRA K. MYERS, age 57, has served as Corporate Secretary of the Company
and as Executive Secretary of Contran since prior to 1996.
ROBERT W. SINGER, age 64, 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 1996. He served as Vice
President of Valhi and Contran from prior to 1996 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, 2000 (each a "named executive officer")
for services rendered in all capacities to the Company for the years ended
December 31, 2000, 1999, and 1998.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation
Other Awards
Annual Securities All Other
Name and Compensation Underlying Compensation
Principal Position Year Salary ($) Bonus ($) ($)(1) Options (#) ($)(2)
- ------------------ ---- ---------- --------- --------------------- ----------- -------------
David L. Cheek (3)(4) 2000 173,269 -0- 235,280 27,000 3,400
President
Keystone Steel & Wire
Harold M. Curdy 2000 190,000 -0- -0- -0- 10,155
Vice President - Finance & 1999 198,925 50,000 -0- 20,000 19,352
Treasurer 1998 182,549 70,000 -0- -0- 19,571
Bert E. Downing, Jr. 2000 170,000 -0- -0- 15,000 4,758
Vice President and 1999 151,093 -0- -0- 10,000 9,147
Corporate Controller 1998 107,099 50,000 -0- -0- 8,000
Ralph P. End (5) 2000 180,531 35,000 -0- 10,000 8,461
Former Vice President and 1999 146,618 -0- -0- 10,000 12,182
General Counsel 1998 127,499 50,000 -0- -0- 10,478
Robert W. Singer 2000 300,000 - 0- -0- 25,000 28,267
President and 1999 297,579 -0- -0- 75,000 61,348
Chief Executive Officer 1998 277,549 175,000 -0- -0- 74,033
(1) An amount for other annual compensation is disclosed only if the amount for
other annual compensation exceeds the level required for reporting pursuant
to Securities and Exchange Commission rules.
(2) 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 Above
Employer's Related to 401(k) 120% of the
Named 401(k) and Pension Plan AFR Rate
------------
Executive Officer Year Contribution (a) Limitations (b) Total
David L. Cheek 2000 $3,400 $-0- $-0- $3,400
Harold M. Curdy 2000 3,400 5,488 1,267 10,155
1999 8,000 10,945 407 19,352
1998 8,000 11,285 286 19,571
Bert E. Downing, Jr. 2000 3,400 1,311 47 4,758
1999 8,000 1,147 -0- 9,147
1998 8,000 -0- -0- 8,000
Ralph P. End 2000 3,400 4,783 278 8,461
1999 8,000 4,127 55 12,182
1998 8,000 2,478 -0- 10,478
Robert W. Singer 2000 3,400 17,136 7,731 28,267
1999 8,000 50,538 2,810 61,348
1998 8,000 63,475 2,558 74,033
(a) The Company's matching contribution to the 401(k) plan for 2000
was made in cash. The Company's matching contributions to the
401(k) plan for 1999 and 1998 were made in Common Stock valued at
$5.9375/share and $8.125/share for 1999 and 1998, respectively.
(b) The balance of these unfunded reserve accounts accrues interest
at an annual rate in effect from time to time equal to two
percent above the base rate on corporate loans. Pursuant to the
rules of the Securities and Exchange Commission, the amounts
shown represent the portion of the interest accruals to the
unfunded reserve accounts that exceeds 120% of the applicable
federal long-term rate as prescribed by the Code (the "AFR
Rate"). The AFR Rate used for such computations was the AFR Rate
in effect on December 31, 2000, December 31, 1999, and December
31, 1998, the date the interest accruals for 2000, 1999 and 1998,
respectively, were credited to the unfunded reserve accounts.
(3) Mr. Cheek became an executive officer of Keystone as of March 24, 2000.
(4) Mr. Cheek's other annual compensation consists of certain relocation
expenses the Company paid on his behalf, which includes an amount to pay
his related income taxes on Keystone's payment of certain of his relocation
expenses.
(5) Mr. End retired on January 1, 2001.
The following table sets forth certain information for the fiscal year
ended December 31, 2000, with respect to stock options granted to the named
executive officers. No stock appreciation rights were granted and no options
have been granted at an option price below fair market value on the date of
grant.
Option Grants in 2000
Potential Realizable
Number % of Total Value at Assumed Annual
of Options Rates of Stock Price
Securities Granted to Exercise Appreciation for
Underlying Employees or Base Option Term
------------------
Options in Fiscal Price Expiration ($)
---
Name Granted (1) Year ($/Share) Date
- ---- ----------- ----- --------- -- -------
5% 10%
----- -----
David L. Cheek 7,000 5 5.125 2/02/10 22,562 57,176
David L. Cheek 20,000 15 5.4375 3/13/10 68,392 173,319
Bert E. Downing, Jr. 15,000 11 5.50 2/22/10 51,884 131,484
Ralph P. End 10,000 7 5.50 2/22/10 34,589 87,656
Robert W. Singer 25,000 18 5.50 2/22/10 86,473 219,140
(1) Options vest 33-1/3%, 66-2/3%, and 100% on the first, second, and third
anniversary of the date of grant, respectively.
The following table provides information, with respect to the named
executive officers, concerning the value of unexercised stock options held as of
December 31, 2000. In 2000, no named executive officer exercised any stock
options.
Aggregated Options/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at December 31, 2000(#) at December 31, 2000 ($)(1)
------------------------------------ ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
David L. Cheek 5,000 37,000 0 0
Harold M. Curdy 46,667 13,333 0 0
Bert E. Downing, Jr. 20,333 21,667 0 0
Ralph P. End 19,833 16,667 0 0
Robert W. Singer 75,000 75,000 0 0
(1) The values shown in the table are based on the $1.375 per share closing
price of the Common Stock on December 31, 2000, 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: David L. Cheek, $32,179; Harold M. Curdy, $52,070;
Bert E. Downing, Jr., $52,908; and Robert W. Singer, $28,183.
SECURITY OWNERSHIP OF MANAGEMENT
As of March 23, 2001, the Company's 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) 10,000 -
Paul M. Bass, Jr. (3)(4) 15,000 -
David L. Cheek (5) 19,001 -
Harold M. Curdy (5) 65,745 -
Bert E. Downing, Jr. (5) 30,674 -
Glenn R. Simmons (4)(5)(6) 246,400 2.5
Robert W. Singer (5) 174,919 1.7
William Spier (3) 387,262 3.9
J. Walter Tucker, Jr. (3)(4) 160,450 1.6
Steven L. Watson (3)(4) 3,250 -
All directors and current executive officers as a 1,134,967 10.8
group (11 persons) (3)(4)(5)(6)(7)
- ---------
(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, Spier, Tucker and Watson for the purchase of 8,000, 8,000, 8,000,
7,000 and 1,000 shares, respectively, pursuant to the Keystone Consolidated
Industries, Inc. 1992 Non-Employee Director Stock Option Plan and the 1997
Long-Term Incentive Plan.
(4) 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.
(5) Includes shares that such person could acquire upon the exercise of options
exercisable within 60 days of the Record Date by Messrs. Cheek, Curdy,
Downing, Simmons, and Singer for the purchase of 19,001, 53,333, 28,667,
154,500, and 108,333 shares, respectively, pursuant to the Company's
various stock option plans.
(6) Glenn R. Simmons is a brother of Harold C. Simmons. See footnote (1) to the
"Security Ownership of Certain Beneficial Owners" table.
(7) 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 18,666 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) 682,263 6.8
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 60.2% and 20.4%, 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 94.1%
and 80.2% of the outstanding common stock of Valhi and Tremont,
respectively. Substantially all of Contran's outstanding voting stock is
held 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. 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 Valhi, 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, J. Walter Tucker, Jr. and Steven L. Watson 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. Each of such persons, however,
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 682,263 shares of
Common Stock as of December 31, 2000, all of which shares are held in
portfolios for which Dimensional serves as investment advisor and
investment manager. Dimensional possesses both sole 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 2000 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, 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 (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 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, 2000, filed on March 30, 2001. The fee
incurred during 2000 was $750,000. 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 2000 were
$87,000.
Tall Pines Insurance Company "(Tall Pines"), Valmont Insurance Company
("Valmont"), and EWI RE, Inc. ("EWI") provide for or broker certain of the
Company's insurance policies. Tall Pines is a wholly owned captive insurance
company of Tremont. Valmont is a wholly owned captive insurance company of
Valhi. Parties related to Contran own all of the outstanding common stock of
EWI. Through December 31, 2000, a son-in-law of Harold C. Simmons managed the
operations of EWI. Subsequent to December 31, 2000, such son-in-law provides
advisory services to EWI as requested by EWI. Consistent with insurance industry
practices, Tall Pines, Valmont and EWI receive commissions from the insurance
and reinsurance underwriters for the policies that they provide or broker.
During 2000, the Company and its subsidiaries paid approximately $2.0 million
for policies provided or brokered by Tall Pines, 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 Tall
Pines, Valmont and EWI. In the Company's opinion, the amounts that the Company
and its subsidiaries 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 Tall Pines,
Valmont, and EWI will continue in 2001.
Dallas Compressor Company, a wholly-owned subsidiary of Contran, sells
compressors and related services to Keystone. During 1998, 1999 and 2000
Keystone purchased products and services from Dallas Compressor Company in the
amount of $26,000, $170,000 and $67,000, respectively.
Aircraft services were purchased from Valhi in the amount of $111,000 for
the year ended December 31, 2000.
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 2000, 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 2000, 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.
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 2000, 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, 1995 through December 31, 2000, 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, 1995 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
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Keystone $100 $72 $104 $71 $52 $12
S&P 500 $100 $123 $164 $211 $255 $232
S&P Iron & Steel $100 $89 $91 $79 $87 $54
INDEPENDENT AUDITOR MATTERS
Independent Auditors. The firm of PricewaterhouseCoopers LLP served as
Keystone's independent auditors for the year ended December 31, 2000, has been
appointed to review Keystone's quarterly unaudited consolidated financial
statements to be included in its Quarterly Reports on Form 10-Q for the first
three quarters of 2001 and is expected to be considered for appointment to audit
Keystone's annual consolidated financial statements for the year ending December
31, 2001. 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.
Audit Committee Report. The audit committee of the Board of Directors is
composed of three directors, all of whom are independent within the meaning of
New York Stock Exchange listing standards. The audit committee operates under a
written charter the Board of Directors adopted. A copy of the charter is
attached as Exhibit A to this proxy statement. Keystone's management is
responsible for preparing Keystone's consolidated financial statements in
accordance with accounting principles generally accepted in the United States.
Keystone's independent auditors are responsible for auditing Keystone's
consolidated financial statements in accordance with auditing standards
generally accepted in the United States. The audit committee serves as an
independent and objective party to review Keystone's auditing, accounting and
financial reporting processes.
The audit committee has reviewed and discussed Keystone's audited
consolidated financial statements for the year ended December 31, 2000 with
Keystone's management and independent auditors. The audit committee discussed
with the independent auditors the matters required by Statement on Auditing
Standards No. 61 (Communication with Audit Committees), received written
disclosures from the independent auditors required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees) and
discussed with the independent auditors their independence. The audit committee
also considered whether the independent auditors' provision of non-audit
services to Keystone and its subsidiaries is compatible with such auditors'
independence. Additionally, the audit committee discussed with Keystone's
management and the independent auditors such other matters as the committee
deemed appropriate. Based on the audit committee's review of Keystone's audited
consolidated financial statements and the audit committee's discussions with
Keystone's management and independent auditors, the audit committee recommended
to the Board of Directors that Keystone's audited consolidated financial
statements for the year ended December 31, 2000 be included in Keystone's Annual
Report on Form 10-K for the year ended December 31, 2000, which has been filed
with the Securities and Exchange Commission.
Paul M. Bass, Jr., Chairman
David E. Connor
William Spier
Audit and Other Fees. The following table shows the aggregate fees
PricewaterhouseCoopers LLP has billed or is expected to bill to Keystone and its
subsidiaries for services rendered for 2000.
Financial Information
Systems Design and
Audit Fees (1) Implementation Fees All Other Fees
-------------- ------------------- --------------
$206,568 $ - 0 - $95,274
(1) Includes (a) fees for the audit of Keystone's consolidated financial
statements for the year ended December 31, 2000, (b) fees for reviews of
the unaudited quarterly financial statements appearing in Keystone's Forms
10-Q for each of the first three quarters of 2000 and (c) the estimated
out-of-pocket costs PricewaterhouseCoopers LLP incurred in such audits and
reviews. Keystone reimburses PricewaterhouseCoopers LLP for such
out-of-pocket costs.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual meetings, subject to regulations adopted by the
Securities and Exchange Commission. The Company presently intends to call the
next annual meeting during May 2002. For such proposals to be considered for
inclusion in the Proxy Statement and form of proxy relating to the 2002 annual
meeting, they must be received by the Company not later than December 14, 2001.
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 13, 2001
A copy of Keystone's 2000 Form 10-K Annual Report, as filed with the
Securities and Exchange Commission, is included in Keystone's 2000 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.
Exhibit A
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
AUDIT COMMITTEE CHARTER
June 8, 2000
----------------
ARTICLE I.
PURPOSE
The audit committee assists the board of directors in fulfilling its
oversight responsibilities relating to the financial accounting and reporting
practices of the corporation. The audit committee's primary responsibilities are
to serve as an independent and objective party to review the corporation's
auditing, accounting and financial reporting processes. The audit committee will
primarily fulfill these responsibilities by carrying out the activities
enumerated in Article V of this charter.
ARTICLE II.
RELATIONSHIP WITH THE OUTSIDE AUDITORS
The corporation's outside auditors are ultimately responsible to the board
of directors and the audit committee. The board of directors, acting through the
audit committee, has the ultimate authority and responsibility to select,
evaluate and replace the outside auditors.
Management is responsible for preparing the corporation's financial
statements. The corporation's outside auditors are responsible for auditing the
financial statements. The activities of the audit committee are in no way
designed to supersede or alter these traditional responsibilities.
The corporation's outside auditors and management have more available time
and information about the corporation than does the audit committee.
Accordingly, the audit committee's role does not provide any special assurances
with regard to the corporation's financial statements, nor does it involve a
professional evaluation of the quality of the audits performed by the outside
auditors.
ARTICLE III.
COMPOSITION
The audit committee shall be comprised of three or more directors as
determined by the board. The board of directors shall also designate a
chairperson of the audit committee. Each member of the audit committee shall be
independent of management of the corporation and shall have no relationship that
might, in the business judgment of the board of directors, interfere with the
exercise of his or her independent judgment. The members of the audit committee
shall satisfy at all times the requirements for audit committee membership of
any exchange on which the corporation's securities are listed or of any
applicable law. The board of directors shall determine, in its business
judgment, whether the members of the audit committee satisfy all such
requirements.
ARTICLE IV.
MEETINGS
The audit committee shall meet regularly and as circumstances dictate.
Regular meetings of the audit committee may be held without notice at such time
and at such place as shall from time to time be determined by the chairperson of
the audit committee, the president or the secretary of the corporation. Special
meetings of the audit committee may be called by or at the request of any member
of the audit committee, any of the corporation's executive officers, the
secretary or the outside auditors, in each case on at least twenty-four hours
notice to each member.
If the board of directors, management or the outside auditors desire to
discuss matters in private, the audit committee shall meet in private with such
person or group.
A majority of the audit committee members shall constitute a quorum for the
transaction of the audit committee's business. Unless otherwise required by
applicable law, the corporation's charter or bylaws or the board of directors,
the audit committee shall act upon the vote or consent of a majority of its
members at a duly called meeting at which a quorum is present. Any action of the
audit committee may be taken by a written instrument signed by all of the
members of the audit committee. Meetings of the audit committee may be held at
such place or places as the audit committee shall determine or as may be
specified or fixed in the respective notices or waivers of a meetings. Members
of the audit committee may participate in audit committee proceedings by means
of conference telephone or similar communications equipment by means of which
all persons participating in the proceedings can hear each other, and such
participation shall constitute presence in person at such proceedings.
ARTICLE VI.
SPECIFIC ACTIVITIES
Subject to Article II and without otherwise limiting the audit committee's
authority, the audit committee shall carry out the following specific
activities.
Section 5.1. Review of Documents and Reports
(a) Review and reassess this charter at least annually.
(b) Review the corporation's Annual Reports on Form 10-K, including
the corporation's year end financial statements, before its
release. Consider whether the information contained in the Annual
Reports on Form 10-K is adequate and consistent with the members'
knowledge about the corporation and its operations. If determined
to be appropriate, recommend that the audited financial
statements be included in the Annual Report on Form 10-K.
Section 5.2. Outside Auditors
(a) Select the outside auditors, considering independence and
effectiveness and approve the fees and other compensation to be
paid to the outside auditors.
(b) The audit committee shall receive the written disclosures
required by generally accepted auditing standards. On an annual
basis, the audit committee shall require the outside auditors to
provide the audit committee with a written statement delineating
all relationships between the outside auditors and the
corporation. The audit committee shall actively engage in a
dialogue with the outside auditors with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the outside auditors. The audit committee shall
recommend that the board of directors take appropriate action in
response to the outside auditors' report to satisfy itself of the
outside auditors' independence.
(c) Prior to the annual audit, review with management and the outside
auditors the scope and approach of the annual audit.
(d) After the annual audit, review with management and the outside
auditors their report on the results of the annual audit.
(e) Ensure that the outside auditors inform the audit committee of
any fraud, illegal acts or deficiencies in internal control of
which they become aware and communicate certain required matters
to the audit committee.
(f) Review with the outside auditors their performance and recommend
to the board of directors any proposed discharge of the outside
auditors when circumstances warrant.
(g) Direct and supervise special audit inquiries by the outside
auditors as the board of directors or the audit committee may
request.
Section 5.3. Financial Reporting Processes
(a) Review significant accounting and reporting issues, including
recent professional and regulatory pronouncements or proposed
pronouncements, and understand their impact on the corporation's
financial statements.
Section 5.4. Process Improvement
(a) Ensure that significant findings and recommendations made by the
outside auditors are received and discussed on a timely basis
with the audit committee and management.
(b) Review any significant disagreement among management and the
outside auditors in connection with the execution of the annual
audit or the preparation of the financial statements.
Section 5.5. Reporting Responsibilities
(a) Regularly update the board of directors about audit committee
activities and make appropriate recommendations.
ARTICLE VI.
MISCELLANEOUS
The audit committee may perform any other activities consistent with this
charter, the corporation's charter and bylaws and governing law, as the audit
committee or the board deems necessary or appropriate.
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 15, 2001
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 13, 2001, 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 23, 2001, at the
Annual Meeting of Stockholders to be held on May 15, 2001, 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: Paul M. Bass, Jr.
Three-Year Term
For Withhold
[ ] [ ]
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Meeting or any adjournment or postponement
thereof.
-----------------------------------
Signature
Date: _______________________, 2001
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 15, 2001
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement dated April 13, 2001, and Annual Report to Stockholders, hereby
appoints Bert E. Downing, Jr. 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 23, 2001, 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 15, 2001, 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" the nominee for election as Director.
Election of Director for a NOMINEE: Paul M. Bass, Jr.
Three-Year Term
For Withhold
[ ] [ ]
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Meeting or any adjournment or postponement
thereof.
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: _______________________, 2001
THIS PROXY MAY BE REVOKED AS SET
FORTH IN THE KEYSTONE CONSOLIDATED
INDUSTRIES, INC. PROXY STATEMENT
THAT ACCOMPANIED THIS PROXY.