CENTRAL SECURITIES CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 13, 2002
NOTICE is hereby given that the Annual Meeting of Stockholders of Central
Securities Corporation will be held at The University Club, One West 54th
Street, 9th Floor, New York, New York on Wednesday, March 13, 2002 at 11 A.M.,
for the following purposes:
1. To elect a board of five directors;
2. To act upon a proposal to ratify the selection of KPMG LLP as
independent auditors for the Corporation for the ensuing year; and
3. To act upon such other matters as may properly come before the
meeting.
The Board of Directors has fixed the close of business on January 25, 2002
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting, and only stockholders of record on such date are
entitled to vote on these matters at the meeting or any adjournment thereof.
By order of the Board of Directors
MARLENE A. KRUMHOLZ
Secretary
New York, New York
February 5, 2002
A proxy is enclosed with this Notice and Proxy Statement. Please complete,
SIGN and promptly return your proxy in the enclosed envelope. This will assure a
quorum and save further solicitation costs.
PROXY STATEMENT
- ---------------
February 5, 2002
CENTRAL SECURITIES CORPORATION
375 PARK AVENUE
NEW YORK, NEW YORK 10152
(Tel. No. 212-688-3011)
This Proxy Statement and the enclosed proxy card are first being mailed to
stockholders on or about February 5, 2002 in connection with the solicitation of
proxies by the Board of Directors of Central Securities Corporation (the
"Corporation") for use at the Annual Meeting of Stockholders of the Corporation
to be held on March 13, 2002, or any adjournment thereof (the "Meeting").
Properly executed proxies received by the Corporation prior to the Meeting will
be voted in accordance with the specific voting instructions indicated on the
proxy. If no instructions are specified, the shares will be voted for the
nominees for director and in favor of proposal (2). Any proxy may be revoked at
any time before it is exercised at the Meeting by the delivery or mailing of
written notice to the Secretary of the Corporation, by executing and delivering
a later-dated proxy or by appearing and voting in person by ballot at the
Meeting.
The record date for stockholders entitled to vote at the Meeting is the
close of business on January 25, 2002. On that date, the Corporation had
outstanding 18,914,599 shares of Common Stock.
The holders of the Corporation's Common Stock shall be entitled to one
vote per share. The presence, in person or by proxy, of a majority of the issued
and outstanding stock of the Corporation shall constitute a quorum for the
transaction of business at the Meeting.
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, OF
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS,
AND OF EXECUTIVE OFFICERS
The following table sets forth information as of December 31, 2001
regarding the share ownership of each person who is known to the Corporation to
have been a beneficial owner of more than five percent of the Common Stock of
the Corporation, of each nominee for election to the Board of Directors of the
Corporation, and of all directors and executive officers as a group:
Name of Nominee to
the Board of Directors Amount and
or Name and Address Nature of Beneficial Percent
of Beneficial Owner Ownership(1) of Class(2)
- ---------------------- -------------------- -----------
Donald G. Calder* .................... 64,290(3)
Jay R. Inglis* ....................... 1,426
Christian A. Johnson
Endeavor Foundation(4) ............. 6,756,771 35.7
1060 Park Avenue
New York, New York 10028
Dudley D. Johnson* ................... 37,750(5)
Wilmot H. Kidd* ...................... 2,139,297(6)(8) 11.3
375 Park Avenue
New York, New York 10152
Mrs. Wilmot H. Kidd .................. 2,139,297(6)(8) 11.3
1060 Park Avenue
New York, New York 10028
C. Carter Walker, Jr.* ............... 465,445(7)(8) 2.5
All directors and officers
as a group ......................... 2,348,397(8) 12.4
- ----------
* Indicates nominee for election to the Board of Directors.
(1) Except as otherwise indicated, to the Corporation's knowledge the
beneficial owner had sole investment power and sole voting power with respect to
the shares shown opposite the name of such beneficial owner.
(2) As calculated on the basis of 18,914,599 shares of Common Stock
outstanding on December 31, 2001, Messrs. Calder, Inglis and Johnson each owned
less than 1% of the outstanding Common Stock.
(3) Includes 12,455 shares of Common Stock owned by Mr. Calder's wife or
held for the benefit of their children and 8,089 shares of Common Stock owned by
the Donald Grant and Ann Martin Calder Foundation (the "Calder Foundation"). Mr.
Calder is the President and Treasurer of the Calder Foundation. He disclaims
beneficial ownership of all such shares.
(4) Mrs. W. H. Kidd, whose husband is the President of the Corporation, is
President and Trustee of the Christian A. Johnson Endeavor Foundation (the
"Foundation").
(5) Includes 16,416 shares of Common Stock held in the Young & Franklin
Inc. Retirement Income Trust of which Mr. Johnson is trustee and 1,066 shares of
Common Stock held by the Disosway Foundation. Mr. Johnson is the Trustee of the
Disosway Foundation. He disclaims beneficial ownership of all such shares.
(Footnotes continued on following page)
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(Footnotes continued from previous page)
(6) An aggregate of 2,139,297 shares of Common Stock were included in the
shares beneficially owned by each of Mr. and Mrs. Kidd. The shares set forth for
each of Mr. Kidd and Mrs. Kidd include 361,198 shares of Common Stock owned by
Mr. Kidd as to which Mr. and Mrs. Kidd had shared investment power and shared
voting power and as to which Mrs. Kidd disclaims beneficial ownership; 814,463
shares of Common Stock owned by Mrs. Kidd or held in trusts for her benefit as
to which Mr. and Mrs. Kidd had shared investment power and shared voting power
and as to which Mr. Kidd disclaims beneficial ownership; and 937,711 shares of
Common Stock owned by Mr. and Mrs. Kidd's children or held in trusts for their
benefit or for the benefit of other family members as to which Mr. and Mrs. Kidd
had shared investment power and shared voting power and as to which Mr. and Mrs.
Kidd disclaim beneficial ownership. The shares set forth for each of Mr. and
Mrs. Kidd also include 25,925 shares of Common Stock held in trust for the
benefit of the children of Mr. C. Carter Walker, Jr. as to which Mr. Kidd had
shared investment power and shared voting power and as to which Mr. and Mrs.
Kidd disclaim beneficial ownership.
(7) Includes 56,080 shares of Common Stock owned by Mr. Walker's wife or
held in trusts for the benefit of their children as to which Mr. Walker had
shared investment power and shared voting power, 25,925 shares of Common Stock
held in trust for the benefit of his children as to which Mr. Walker had no
voting or investment power, and 332,886 shares of Common Stock held in trust for
the benefit of Mrs. Wilmot H. Kidd or her children as to which Mr. Walker had
shared investment power and shared voting power. Mr. Walker disclaims beneficial
ownership of all such shares.
(8) An aggregate of 358,811 shares of Common Stock were included in the
shares beneficially owned by each of Mr. Kidd, Mrs. Kidd, and Mr. C. Carter
Walker, Jr.
The share ownership of Wilmot H. Kidd, President of the Corporation, is
given above. No other executive officer of the Corporation owns, beneficially or
otherwise, any shares of stock of the Corporation.
VALUE OF BENEFICIAL SHARE OWNERSHIP BY DIRECTORS
The dollar range of the value of equity securities of the Corporation
beneficially owned by each director as of December 31, 2001 is as follows:
Dollar Range of
Independent Directors Share Ownership
--------------------- ---------------
Donald G. Calder Over $100,000
Jay R. Inglis $10,001 - $50,000
Dudley D. Johnson Over $100,000
C. Carter Walker, Jr. Over $100,000
Interested Director
-------------------
Wilmot H. Kidd Over $100,000
3
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers and persons who own more than ten
percent of a registered class of the Corporation's equity securities to file
with the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of changes in ownership of Common Stock of the
Corporation. Officers, directors and greater than ten percent beneficial owners
are required by SEC regulation to furnish the Corporation with copies of all
Section 16(a) forms they file.
To the Corporation's knowledge, based solely on review of copies of such
reports furnished to the Corporation and written representations that no other
such reports were required, all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten percent beneficial owners were
complied with.
VOTING PROCEDURES
The election of directors requires the affirmative vote of a plurality of
the shares of Common Stock present in person or represented by proxy at the
Meeting and entitled to so vote. Shares of Common Stock represented by proxies
which are marked "withhold authority" with respect to the election of any one or
more nominees for election as director will not be voted with respect to the
nominee or nominees so indicated. The ratification of the selection of
independent auditors of the Corporation requires the affirmative vote of a
majority of the shares of Common Stock present in person or represented by proxy
at the Meeting and entitled to so vote. Shares of Common Stock represented by
proxies which are marked "abstain" with respect to this matter will be counted
for the purpose of determining the number of shares present and entitled to
vote, and shall therefore have the same effect as if the shares represented
thereby were voted against such matter. Broker non-votes (where a nominee
holding shares for a beneficial owner has not received voting instructions from
the beneficial owner and such nominee does not possess or choose to exercise his
discretionary authority with respect thereto) will be treated as present but not
entitled to vote at the Meeting for the purpose of determining the number of
votes needed with respect to each item to be voted upon, and shall therefore
have no effect on such vote.
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors recommends the election of five directors to hold
office until the next Annual Meeting of Stockholders and until their successors
are elected and qualified. If any nominee for director is unable or declines to
serve, for any reason not now foreseen, the discretionary authority provided in
the proxy will be exercised to vote for a substitute. All the nominees have
consented to become directors and all were elected at the last Annual Meeting of
Stockholders.
Duly authorized proxies for Common Stock will be voted for the election of
Mr. Donald G. Calder, Mr. Jay R. Inglis, Mr. Dudley D. Johnson, Mr. Wilmot H.
Kidd and Mr. C. Carter Walker, Jr.
4
The following table indicates the age, principal occupations during the
last five years and positions (if any) with the Corporation, and the year each
nominee was first elected to the Board of Directors:
Principal Occupations Director of
(last five years) Corporation
and Position (if any) Continuously
Nominee Age with the Corporation Since
------- --- --------------------- ------------
Independent Directors:
Donald G. Calder ......... 64 President, G. L. Ohrstrom & Co., Inc. (private 1982
investment firm); Director of Brown-Forman
Corporation, Carlisle Companies Incorporated
and Roper Industries, Inc. (manufacturing
companies)
Jay R. Inglis ............ 67 Executive Vice President, National Marine Underwriters 1973
(insurance management company) since 2001;
Executive Vice President, Holt Corporation
(insurance holding company) prior thereto
Dudley D. Johnson ........ 62 President, Young & Franklin Inc. (private 1984
manufacturing company)
C. Carter Walker, Jr. .... 67 Private Investor 1974
Interested Director:
Wilmot H. Kidd ........... 60 Investment and research - President, Central Securities 1972
Corporation
The address of each nominee is c/o Central Securities Corporation, 375
Park Avenue, New York, New York 10152.
The Board of Directors had ten regular meetings in 2001. The Board of
Directors has an Audit Committee consisting of Messrs. Calder, Inglis, Johnson
and Walker. The members of the Audit Committee are independent as defined in
Section 121(A) of the American Stock Exchange's listing standards. The Board of
Directors does not have a Compensation Committee or a Nominating Committee. All
directors attended at least 75% of the aggregate of all meetings of the Board of
Directors and the committees on which they served.
The Board of Directors has adopted a written charter for the Audit
Committee (the "Charter"). Pursuant to the Charter, the Audit Committee assists
the Board of Directors by providing oversight on matters pertaining to the
accounting, financial reporting, internal control and audit activities of the
Corporation including: recommending to the Board of Directors the selection of
independent auditors; reviewing with management the Corporation's year-end
audited financial statements; reviewing the scope and results of the annual
audit with the independent auditors; and providing oversight on matters
pertaining to the independence and performance of the independent auditors. The
Audit Committee met three times during 2001.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed the audited financial statements of the
Corporation for the year ended December 31, 2001, and has met with management
and KPMG LLP, the Corporation's independent auditors, to discuss the audited
financial statements.
5
The Audit Committee received from KPMG LLP written disclosures regarding
their independence and the letter required by Independence Standards Board
Standard No. 1, and has discussed with KPMG LLP their independence. In
connection with its review, the Audit Committee has also discussed with KPMG LLP
the matters required to be discussed by Statement of Auditing Standards No. 61.
Based on its review and discussions with management and KPMG LLP, the
Audit Committee recommended to the Board of Directors that the audited financial
statements be included in the Corporation's Annual Report to Stockholders for
the year ended December 31, 2001.
Members of the Audit Committee:
Jay R. Inglis, Chairman
Donald G. Calder
Dudley D. Johnson
C. Carter Walker, Jr.
EXECUTIVE OFFICERS OF THE CORPORATION
The executive officers of the Corporation are Mr. Wilmot H. Kidd,
President, Mr. Charles N. Edgerton, Vice President and Treasurer, and Ms.
Marlene A. Krumholz, Secretary. Information concerning Mr. Kidd is given above
under "Election of Directors." Mr. Edgerton, 57, was elected Vice President in
1989 and has been Treasurer since 1985. Marlene A. Krumholz, 38, joined the
Corporation in November 2000 and was elected Secretary effective January 1,
2001. Ms. Krumholz was Senior Manager, PricewaterhouseCoopers LLP (public
accounting) from October 1997 to November 2000, and prior thereto was Vice
President, Fund Administration, Evergreen Investment Services (investment
management). Executive officers serve as such until the election of their
successors.
COMPENSATION
The table below sets forth for all directors and for each of the three
highest-paid executive officers the aggregate compensation received from the
Corporation for 2001 for services in all capacities:
Pension or
Retirement
Benefits Accrued
Name of Person, Aggregate as Part of
Position Compensation Expenses(1)
- --------------- ------------ ----------------
Donald G. Calder
Director ............................. $ 24,500
Jay R. Inglis
Director ............................. 23,000
Dudley D. Johnson
Director ............................. 24,000
C. Carter Walker, Jr.
Director ............................. 24,500
Wilmot H. Kidd
President and Director(2) ............ 850,000 $25,500
6
Pension or
Retirement
Benefits Accrued
Name of Person, Aggregate as Part of
Position Compensation Expenses(1)
- --------------- ------------ ----------------
Charles N. Edgerton
Vice President and Treasurer ......... 235,000(3) 25,500
Marlene A. Krumholz
Secretary ............................ 145,000(3) 21,750
- ----------
(1) Represents contributions to the Corporation's Profit Sharing Plan.
(2) All remuneration received by Mr. Kidd was in his capacity as President
of the Corporation.
(3) Includes compensation of $25,000 and $15,000 accrued in 2001 for Mr.
Edgerton and Ms. Krumholz, respectively, deferred until January, 2002.
Each director who is not an officer is paid an annual retainer of $12,000,
a fee of $1,000 for each Board of Directors meeting attended in person, and $500
for participating in a Board of Directors meeting by telephone. Each member of
the Audit Committee is paid $1,000 for each Audit Committee meeting attended.
Directors are reimbursed for their out-of-pocket expenses incurred in attending
meetings.
Profit Sharing Plan
Generally, all salaried employees of the Corporation are eligible to
participate in the Profit Sharing Plan. The Plan provides for contributions by
the Corporation from its profits of up to 15% of an employee's compensation. The
vested contributions credited to an employee's account are payable at normal
(age 65), early, or disability retirement, death or other termination of
employment and may be paid in various forms, including a lump sum cash payment
or a monthly annuity. With the exception of Ms. Krumholz, the officers referred
to above are fully vested in all contributions to the Plan. Corporate
contributions on behalf of Ms. Krumholz vest on January 1, 2004.
Employees may withdraw the amounts of any voluntary contributions made
prior to 1991 and may, under certain conditions, withdraw or borrow against
vested Corporation contributions. Under the Plan, each employee is permitted to
invest the assets in his account in the capital stock of one or more regulated
investment companies from a selection provided from time to time by the Plan
Administrator. Such regulated investment companies include, among others, U.S.
Treasury funds; short-term, global government and international bond funds; and
general and specialized stock funds.
AUDIT FEES
The aggregate fees billed to the Corporation by KPMG LLP for the
performance of the audit and the review of the Corporation's financial
statements during 2001 were $32,000.
ALL OTHER FEES
The aggregate fees billed to the Corporation by KPMG LLP for all non-audit
services, including fees for tax-related services, during 2001 were $13,000.
Such non-audit services did not include any financial information systems design
and implementation services. The Audit Committee considered whether the
7
provision of non-audit services by KPMG LLP is compatible with maintaining KPMG
LLP's independence with respect to the Corporation.
PROPOSAL 2. RATIFICATION OF INDEPENDENT AUDITORS
Stockholders are invited to ratify the selection of KPMG LLP as
independent auditors of the Corporation for the year 2002. KPMG LLP has no
direct or material indirect financial interest in the Corporation other than its
employment in such capacity.
At a meeting held January 30, 2002, a majority of the directors who were
not "interested persons" (as defined under the Investment Company Act of 1940)
selected KPMG LLP to act as auditors for the Corporation during 2002. A
representative of KPMG LLP is not expected to be present at the Meeting.
The Board of Directors recommends a vote FOR this selection.
OTHER MATTERS
The Board of Directors knows of no other matters which may properly be,
and are likely to be, brought before the Meeting. However, if any proper matters
are brought before the Meeting, the persons named in the enclosed form of proxy
will have discretionary authority to vote thereon according to their best
judgment.
2003 STOCKHOLDER PROPOSALS
Any stockholder proposals for inclusion in the Corporation's proxy
statement for the 2003 Annual Meeting of Stockholders pursuant to Rule 14a-8 of
the Securities and Exchange Act of 1934 ("14a-8 proposals") must be received by
the Corporation at its office at New York, New York prior to October 9, 2002.
Pursuant to Rule 14a-4 of the Securities and Exchange Act of 1934, the
Corporation has discretionary voting authority with respect to any non-Rule
14a-8 proposals for the 2003 Annual Meeting of Stockholders that are not
received by the Corporation prior to December 23, 2002.
MISCELLANEOUS
The Corporation will pay all costs of soliciting proxies in the
accompanying form. Solicitation will be made by mail, and officers and regular
employees of the Corporation may also solicit proxies by telephone or personal
interview. The Corporation will request brokers, banks and nominees who hold
stock in their names to furnish this proxy material to the beneficial owners
thereof and to solicit proxies from them, and will reimburse such brokers, banks
and nominees for their out-of-pocket and reasonable clerical expenses in
connection therewith.
A copy of the Annual Report including financial statements for the year
ended December 31, 2001 is enclosed.
Please date, sign and return the enclosed proxy at your earliest
convenience. No postage is required for mailing in the United States.
8
CENTRAL SECURITIES CORPORATION
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting March 13, 2002
P The undersigned hereby appoints WILMOT H. KIDD and MARLENE A. KRUMHOLZ, and
R each of them, as attorneys with power of substitution, to represent the
O undersigned at the annual meeting of stockholders of Central Securities
X Corporation to be held at The University Club, One West 54th Street, 9th
Y floor, New York, New York on March 13, 2002, at 11:00 o'clock A.M., and at
any adjournment thereof, on all matters which may properly come before the
meeting.
Election of Directors:
Nominees to be elected by Common Stock:
Donald G. Calder, Jay R. Inglis,
Dudley D. Johnson, Wilmot H. Kidd
and C. Carter Walker, Jr.
- --------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
(Continued on reverse side)
|X| Please mark your 1224
votes as in this
example.
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 election of directors and FOR Proposal 2.
FOR WITHHELD FOR AGAINST ABSTAIN
1. ELECTION OF |_| |_| 2. APPROVAL OF |_| |_| |_|
DIRECTORS. KPMG LLP
(see reverse) as independent
auditors for
2002.
3. In their discretion, upon such other
matters as may properly come before the
meeting or any adjournments thereof.
For, except vote withheld from the following nominee(s):
________________________________________________________
This Proxy Must Be Signed
Exactly as Name Appears Hereon
Joint owners should each sign. Executors,
administrators, trustees, etc., should
give full title as such. If the signer is
a corporation, please sign full corporate
name by duly authorized officer.
__________________________________________
______________________________________2002
SIGNATURE(S) DATE