SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ X ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Materials Pursuant to Section 240.14a-11(c) or Section 240.14a-
12
CompX International Inc.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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pursuant to Exchange Act Rule 0-11 (Set forth amount on which the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
[Logo goes here]
CompX International Inc.
16825 Northchase Drive, Suite 1200
Two Greenspoint Plaza
Houston, Texas 77060
March 31, 1999
To Our Stockholders:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of CompX International Inc., which will be held on Friday, May 14, 1999, at
10:00 a.m., local time, at the corporate offices of Valhi, Inc. at Three Lincoln
Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas. The matters to be acted
upon at the meeting are described in the attached Notice of Annual Meeting of
Stockholders and Proxy Statement.
Whether or not you plan to attend the meeting, please complete, date, sign
and return the enclosed proxy card or voting instruction form in the
accompanying envelope as promptly as possible to ensure that your shares are
represented and voted in accordance with your wishes.
Sincerely,
Joseph S. Compofelice
Chairman of the Board, President and
Chief Executive Officer
CompX International Inc.
16825 Northchase Drive, Suite 1200
Two Greenspoint Plaza
Houston, Texas 77060
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 14, 1999
To the Stockholders of CompX International Inc.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Meeting") of CompX International Inc., a Delaware corporation (the "Company"),
will be held on Friday, May 14, 1999, at 10:00 a.m., local time, at the
corporate offices of Valhi, Inc. at Three Lincoln Centre, 5430 LBJ Freeway,
Suite 1700, Dallas, Texas for the following purposes:
(1) To elect seven directors to serve until the 2000 Annual Meeting of
Stockholders and until their successors are duly elected and qualified
or their earlier removal, resignation or death;
(2) To consider and vote upon the Company's Variable Compensation Plan;
and
(3) To transact such other business as may properly come before the
Meeting or any adjournment or postponement thereof.
The board of directors of the Company set the close of business on
March 17, 1999 as the record date (the "Record Date") for the Meeting. Only
holders of the Company's class A common stock, par value $0.01 per share, and
class B common stock, par value $0.01 per share, at the close of business on the
Record Date are entitled to notice of, and to vote at, the Meeting. The
Company's stock transfer books will not be closed following the Record Date. A
complete list of stockholders entitled to vote at the Meeting will be available
for examination during normal business hours by any stockholder of the Company,
for purposes related to the Meeting, for a period of ten days prior to the
Meeting at the place where the Company will hold the Meeting.
You are cordially invited to attend the Meeting. Whether or not you plan
to attend the Meeting in person, please complete, date and sign the accompanying
proxy card or voting instruction form and return it promptly in the enclosed
envelope to ensure that your shares are represented and voted in accordance with
your wishes. You may revoke your proxy by following the procedures set forth in
the accompanying proxy statement. If you choose, you may still vote in person at
the Meeting even though you previously submitted your proxy.
By Order of the Board of Directors,
A. Andrew R. Louis, Secretary
Houston, Texas
March 31, 1999
CompX International Inc.
16825 Northchase Drive, Suite 1200
Two Greenspoint Plaza
Houston, Texas 77060
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PROXY STATEMENT
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GENERAL INFORMATION
This proxy statement and the accompanying proxy card or voting instruction
form are being furnished in connection with the solicitation of proxies by and
on behalf of the board of directors (the "Board of Directors") of CompX
International Inc., a Delaware corporation ("CompX" or the "Company"), for use
at the 1999 Annual Meeting of Stockholders of the Company to be held on Friday,
May 14, 1999 and at any adjournment or postponement thereof (the "Meeting").
The accompanying Notice of Annual Meeting of Stockholders (the "Notice") sets
forth the time, place and purposes of the Meeting. The Notice, this proxy
statement, the accompanying proxy card or voting instruction form and CompX's
Annual Report to Stockholders, which includes CompX's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998 (the "Annual Report"), are first
being mailed to the holders of CompX's class A common stock, par value $0.01 per
share ("CompX Class A Common Stock"), and CompX's class B common stock, par
value $0.01 per share ("CompX Class B Common Stock" and collectively with the
CompX Class A Common Stock, the "CompX Common Stock"), on or about April 9,
1999. CompX's executive offices are located at 16825 Northchase Drive, Suite
1200, Two Greenspoint Plaza, Houston, Texas 77060.
QUORUM, VOTING RIGHTS AND PROXY SOLICITATION
The record date set by the Board of Directors for the determination of
stockholders entitled to notice of and to vote at the Meeting was the close of
business on March 17, 1999 (the "Record Date"). As of the Record Date, there
were 6,144,880 shares of CompX Class A Common Stock and 10,000,000 shares of
CompX Class B Common Stock issued and outstanding. Each share of CompX Class A
Common Stock entitles its holder to one vote on all matters to be acted on at
the Meeting. Each share of CompX Class B Common Stock entitles its holder to
ten votes with respect to the election of directors and one vote on all other
matters to be acted on at the Meeting. The presence, in person or by proxy, of
the holders of a majority of the votes of CompX Common Stock entitled to vote at
the Meeting, counted as a single class, is necessary to constitute a quorum for
the conduct of business at the Meeting. Shares of CompX Common Stock that are
voted to abstain from any business coming before the Meeting and broker/nominee
non-votes will be counted as being in attendance at the Meeting for purposes of
determining whether a quorum is present.
A plurality of the affirmative votes of the CompX Class A and Class B
Common Stock, voting together as a single class, represented and entitled to be
voted at the Meeting is necessary to elect a director of the Company. The
accompanying proxy card or voting instruction form provides space for a
stockholder to withhold authority to vote for any or all of the nominees of the
Board of Directors. Neither shares as to which the 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.
The affirmative vote of a majority of the votes of the CompX Class A and
Class B Common Stock, voting together as a single class, represented and
entitled to be voted at the Meeting is necessary to approve the CompX
Intentional Inc. Variable Compensation Plan (the "Plan"). Broker/nominee non-
votes will not be counted as represented and entitled to vote with regard to
approval of the Plan, and, therefore, will have no effect on its approval.
Abstentions will be counted and will have the same effect as a vote against
approval of the Plan.
Except as applicable laws may otherwise provide, any other matter that may
properly come before the Meeting will require the affirmative vote of a majority
of the votes cast at the Meeting.
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 nominees for director of the Board of
Directors, "FOR" approval of the Plan 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.
Valcor, Inc. ("Valcor") directly holds 100% of the outstanding shares of
CompX Class B Common Stock as of the Record Date, which represents 61.9% of the
outstanding shares of CompX Class A and B Common Stock combined. Valcor is a
wholly owned subsidiary of Valhi, Inc. ("Valhi") and both are affiliates of
Contran Corporation ("Contran"). Valhi directly holds 5.9% of the outstanding
shares of CompX Class A Common Stock as of the Record Date (2.3% of the combined
voting power of the CompX Common Stock). Together Valcor and Valhi hold 64.2%
of the combined voting power of the CompX Common Stock (94.6% for the election
of directors) as of the Record Date. Both Valhi and Contran are diversified
holding companies that Harold C. Simmons may be deemed to control.
Valcor and Valhi have indicated their intention to have their shares of
CompX Common Stock represented at the Meeting and voted "FOR" the election of
each of the nominees for director of the Board of Directors and "FOR" approval
of the Plan. If Valcor alone attends the Meeting in person or by proxy and
votes as indicated, the Meeting will have a quorum present and the stockholders
will elect all the nominees for the Board of Directors and approve the Plan.
Harris Trust and Savings Bank ("Harris"), the transfer agent and registrar
for CompX Class A and Class B Common Stock as of the Record Date, has been
appointed by the Board of Directors to ascertain the number of shares
represented, receive proxies and ballots, tabulate the vote and serve as
inspector of election at the Meeting.
Each holder of record of CompX Common Stock giving the proxy enclosed with
this proxy statement may revoke it at any time prior to the voting of such stock
at the Meeting by (i) delivering to Harris a written revocation of the proxy,
(ii) delivering to Harris a duly executed proxy bearing a later date or (iii) by
voting in person at the Meeting. Attendance by a stockholder at the Meeting
will not in itself constitute the revocation of such stockholder's proxy.
Employees participating in the National Cabinet Lock, Inc. Contributory
Retirement Plan, as amended (the "401(k) Plan"), who are beneficial owners of
CompX Class A Common Stock under the plan may use the enclosed voting
instruction form to instruct the plan trustee how to vote the shares held for
such employees. The trustee will, subject to the terms of the plan, vote such
shares in accordance with such instructions.
The Board of Directors is making this proxy solicitation. The Company will
pay all expenses related to the solicitation, including charges for preparing,
printing, assembling and distributing all materials delivered to stockholders.
In addition to solicitation by mail, directors, officers and regular employees
of the Company may solicit proxies by telephone or in person for which such
persons will receive no additional 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
CompX Class A Common Stock that such entities hold of record.
ELECTION OF DIRECTORS
(Proposal 1)
The bylaws of the Company provide that the Board of Directors shall consist
of not less than one and not more than fifteen persons, as determined from time
to time by the Board of Directors in its discretion. The Board of Directors has
currently set the number of directors at seven. The directors elected at the
Meeting will hold office until the 2000 Annual Meeting of Stockholders and until
their successors are duly elected and qualified or their earlier removal,
resignation or death.
All of the nominees are currently directors of the Company whose terms will
expire at the Meeting. All of the nominees have agreed to serve if elected. If
any nominee is not available for election at the Meeting, a proxy will be voted
"FOR" an alternate nominee to be selected by the Board of Directors, unless the
stockholder executing such proxy withholds authority to vote for such nominee.
The Board of Directors believes that all of its present nominees will be
available for election at the Meeting and will serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
FOR DIRECTOR SET FORTH BELOW.
Nominees for Director. The following information has been provided by the
respective nominees for election as directors of the Company for terms expiring
at the 2000 Annual Meeting of Stockholders.
Paul M. Bass, Jr., age 63, has been a director of the Company since 1997
and is a member of the audit committee and chairman of the Company's management
development and compensation committee (the "MD&C Committee"). Mr. Bass also
serves as a director of Contran's less-than-majority-owned affiliate, Keystone
Consolidated Industries, Inc. ("Keystone"), a steel fabricated wire products,
industrial wire and carbon steel rod company. From prior to 1994, Mr. Bass has
served as vice chairman of First Southwest Company, a privately owned investment
banking firm. Mr. Bass is also chairman of the board of MorAmerica Private
Equities Company, a director and chairman of the audit committee of California
Federal Bank and a director of Jayhawk Acceptance Corp. Mr. Bass is currently
serving as chairman of the board of Zale Lipshy University Hospital and as
chairman of the board of trustees of the Southwestern Medical Foundation.
David A. Bowers, age 61, has served as the Company's vice president and
president of CompX Security Products since January 1999 and as a director of the
Company since 1993. From 1993 through 1998, Mr. Bowers served as president and
chief executive officer of the Company. Mr. Bowers has been employed by the
Company and its predecessors since 1960 in various sales, marketing and
executive positions, having been named president of the Company's security
products and related segments in 1979. Mr. Bowers is a trustee and chairman of
the board of Monmouth College, Monmouth, Illinois.
Joseph S. Compofelice, age 49, has served as chief executive officer and
chairman of the board of the Company since February 1998, president of the
Company since January 1999 and director of the Company since December 1997.
From December 1997 to February 1998, he served as the Company's executive vice
president. Mr. Compofelice has also served since 1995 as a director of NL
Industries, Inc. ("NL"), Valhi's majority-owned titanium dioxide pigments
subsidiary. He has served since 1994, except for a period during 1996, as a
director of Titanium Metals Corporation ("TIMET"), a company engaged in the
titanium metals industry of which Tremont Corporation ("Tremont") owns
approximately 39%. From 1994 to 1998, Mr. Compofelice served as vice president
and chief financial officer of Tremont, a company of which Valhi owns
approximately 48% and that principally owns interests in NL and TIMET. From
1994 to 1998, Mr. Compofelice also served as vice president and chief financial
officer of NL and as executive vice president of Valhi. From 1996 to 1998, he
served as vice president and chief financial officer of TIMET. From prior to
1994 to 1994, Mr. Compofelice was the vice president and chief financial officer
of Baroid Corporation, a company engaged in the petroleum services industry that
Dresser Industries, Inc. acquired in 1994. Mr. Compofelice has served as an
executive officer or director of various companies related to Valhi and Contran
since 1988.
Edward J. Hardin, age 56, has served as a director of the Company since
1997 and is chairman of the Company's audit committee. Mr. Hardin has been a
partner of the law firm of Rogers & Hardin LLP since its formation in 1976. Mr.
Hardin serves as a director of Westrup, Inc., a manufacturer of seed processing
machinery, and as chairman of the board of the Harvard Center for the Study of
World Religions.
Ann Manix, age 46, has served as a director of the Company since June 1998
and is a member of the MD&C Committee. Since 1994, Ms. Manix has served as a
managing partner of Ducker Research Corporation, a privately held industrial
research firm. Ms. Manix is on the board of General Housewares Corporation, a
manufacturer and marketer of consumer durable goods such as cookware, cutlery
and kitchen/household tools and precision cutting tools.
Glenn R. Simmons, age 71, has served as director of the Company since 1993.
From 1993 to 1998, Mr. Simmons served as chairman of the board of the Company.
Mr. Simmons has served as a director of Valhi or certain of Valhi's predecessors
since prior to 1994. Mr. Simmons has been vice chairman of the board of Valhi
and Contran since prior to 1994. Mr. Simmons also serves as a director of NL,
Tremont and TIMET and as chairman of the board of Keystone. Mr. Simmons has
been an executive officer or director of various companies related to Contran
since 1969. Mr. Simmons is the brother of Harold C. Simmons. See footnote (4)
to the "Security Ownership--Ownership of CompX" table below for a description of
certain entities that Harold C. Simmons may be deemed to control, including,
Contran, Valhi and CompX.
Robert W. Singer, age 62, has served as a director of the Company since
1993. Mr. Singer has served as president and chief operating officer of
Keystone since prior to 1994 to 1997 and as chief executive officer and
president of Keystone since 1997. Mr. Singer served as vice president of Valhi
and Contran since prior to 1994 to 1998. Mr. Singer has served as an executive
officer or director of various companies related to Valhi and Contran since
1982.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings and took action by written
consent in lieu of meetings on six occasions in 1998. Each of the directors
participated in at least 75% of all of the 1998 meetings of the Board of
Directors and its committees on which the director served.
The Board of Directors has established and delegated authority to the
following standing committees.
Audit Committee. The principal responsibilities of the audit committee are
to review the selection of the Company's independent auditors and to make its
recommendations with respect to such selection to the Board of Directors; to
review with the independent auditors the scope and results of the annual
auditing engagement, the procedures for internal auditing, the system of
internal accounting controls and internal audit results; and to direct and
supervise special audit inquiries. The current members of the audit committee
are Edward J. Hardin (chairman) and Paul M. Bass, Jr. The audit committee held
two meetings in 1998.
Management Development and Compensation Committee. The principal
responsibilities of the MD&C Committee are to review and approve certain matters
involving executive compensation; to make recommendations to the Board of
Directors regarding compensation matters involving the chief executive officer;
to take action or to review and make recommendations to the Board of Directors
regarding the Company's employee benefit plans or programs; to administer and
grant awards under the CompX International Inc. 1997 Long-Term Incentive Plan
(the "1997 Plan"); to administer and grant certain awards under the Plan,
subject to stockholder approval of the Plan; and to review and administer such
other compensation matters as the Board of Directors may direct from time to
time. The current members of the MD&C Committee are Paul M. Bass, Jr.
(chairman) and Ann Manix. The MD&C Committee held one meeting 1998.
The Board of Directors does not have a nominating committee or any
committee performing a similar function. All matters that would be considered
by such a committee are acted upon by the full Board of Directors. The Board of
Directors will consider recommendations by stockholders of the Company with
respect to the election of directors if such recommendations are submitted in
writing to the secretary of the Company and received not later than December 31
of the year prior to the next annual meeting of stockholders. Such
recommendations should be accompanied by a full statement of qualifications and
confirmation of the nominee's willingness to serve.
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.
EXECUTIVE OFFICERS
Set forth below is certain information relating to the current executive
officers of CompX. Each executive officer serves at the pleasure of the Board
of Directors. Biographical information with respect to Joseph S. Compofelice
and David A. Bowers is set forth under "Election of Directors--Nominees for
Director."
<TABLE>
<CAPTION>
Name Age Position(s)
- -------------------- --- --------------------------------------------------
<S> <C> <C>
Joseph S. Compofelice. 49 Chairman of the Board, President and Chief
Executive Officer
David A. Bowers....... 61 Vice President and President of CompX Security
Products
David A. Carter....... 44 Vice President of Business Development
John A. Miller........ 50 Vice President, Chief Financial Officer and
Treasurer
Ronald J. Simmons..... 60 Vice President and President of Waterloo Furniture
Components Limited
Todd W. Strange....... 41 Vice President and Controller
</TABLE>
David A. Carter has served as vice president of business development of the
Company since December 1998. From 1995 to 1998, Mr. Carter served as vice
president--sales & marketing of the Company's wholly owned subsidiary, Waterloo
Furniture Components Limited ("Waterloo"). From 1991 to 1995, Mr. Carter served
as director of marketing for Waterloo.
John A. Miller has served as vice president, chief financial officer and
treasurer of the Company since January 1999. From 1995 to December 1998, Mr.
Miller served as principal in the Advanced Cost Management Competency Center of
Arthur Andersen LLP. Prior to 1995, he served as president and owner of Miller
Newlin Consulting, a management consulting firm.
Ronald J. Simmons has served as the Company's vice president and president
of Waterloo since January 1999. From 1997 to 1998, Mr. Simmons served as a vice
president of the Company. He also has served as president of Waterloo since
prior to 1994.
Todd W. Strange has served as vice president and controller of the Company
since December 1998. From 1997 to 1998, Mr. Strange served as chief financial
officer of Draper-Texmaco, Inc., a manufacturer of textile machinery. From 1995
to 1997, he served as vice president of finance and treasurer of BPM Technology,
Inc., a manufacturer of office machinery that produced three dimensional models
of objects. Prior to 1995, Mr. Strange was corporate accounting manager for
KEMET Electronics Corporation, a manufacturer of electronic capacitors.
SECURITY OWNERSHIP
Ownership of CompX. The following table and footnotes set forth as of the
Record Date the beneficial ownership, as defined by regulations of the
Securities and Exchange Commission (the "Commission"), of CompX Class A or Class
B Common Stock held by (i) each person or group of persons known to CompX to own
beneficially more than 5% of the outstanding shares of CompX Class A or Class B
Common Stock, (ii) each director of CompX, (iii) each executive officer of CompX
named in the Summary Compensation Table below (a "named executive officer") and
(iv) all directors and executive officers of CompX as a group. See footnote (4)
below for information concerning individuals and entities that may be deemed to
own indirectly and beneficially those shares of CompX Common Stock that Valcor
and Valhi directly hold. All information is taken from or based upon ownership
filings made by such persons with the Commission or upon information provided by
such persons.
<TABLE>
<CAPTION>
CompX Class A Common Stock CompX Class B Common Stock
---------------------------- --------------------------
Percent
Amount and Nature of Amount and Nature Percent
of Beneficial Class of Beneficial of
Beneficial Owner Ownership (1) (1)(2) Ownership (1) Class
- ---------------------- ------------------- ------- ------------------ -------
<S> <C> <C> <C> <C>
Valcor, Inc........... -0- (3)(4) -0- 10,000,000 (3)(4) 100%
Valhi, Inc............ 364,000 (3)(4) 5.9% -0- (3)(4) -0-
--------- ------ ---------- ------
364,000 (4) 5.9% 10,000,000 (4) 100%
T. Rowe Price
Associates, Inc. .... 1,009,800 (5) 16.4% -0- -0-
FMR Corp.............. 798,834 (6) 13.0% -0- -0-
Scudder Kemper
Investments, Inc. ... 488,100 (7) 7.9% -0- -0-
Eagle Asset
Management, Inc. .... 437,400 (8) 7.1% -0- -0-
David L. Babson and
Company
Incorporated ........ 390,200 (9) 6.4% -0- -0-
MassMutual
Institutional Funds
- MassMutual Small
Cap Value Equity
Fund ................ 377,000 (10) 6.1% -0- -0-
Paul M. Bass, Jr...... 200 (4)(11) * -0- -0-
David A. Bowers....... 28,220 (4)(12) * -0- -0-
Joseph S.
Compofelice ......... 131,200 (13) 2.1% -0- -0-
Edward J. Hardin...... 3,700 (14) * -0- -0-
Ann Manix............. -0- -0- -0- -0-
Glenn R. Simmons...... 26,220 (4)(15) * -0- -0-
Robert W. Singer...... 19,220 (4)(16) * -0- -0-
Ronald J. Simmons..... 20,720 (17) * -0- -0-
All directors and
executive officers
of CompX as a group
(11 persons) ....... 230,880 (4)(11) 3.7% -0- -0-
(12)(13)
(14)(15)
(16)(17)
(18)
</TABLE>
<TABLE>
<CAPTION>
CompX Class A and Class B Common Stock
Beneficial Owner Combined Percent of Class (1)(2)
- -------------------------------------- --------------------------------------
<S> <C>
Valcor, Inc............................ 61.9%
Valhi, Inc............................. 2.3%
----
64.2%
T. Rowe Price Associates, Inc.......... 6.3%
FMR Corp............................... 4.9%
Scudder Kemper Investments, Inc........ 3.0%
Eagle Asset Management, Inc............ 2.7%
David L. Babson and Company
Incorporated ......................... 2.4%
MassMutual Institutional Funds -
MassMutual Small Cap Value Equity
Fund ................................. 2.3%
Paul M. Bass, Jr....................... *
David A. Bowers........................ *
Joseph S. Compofelice.................. *
Edward J. Hardin....................... *
Ann Manix.............................. -0-
Glenn R. Simmons....................... *
Robert W. Singer....................... *
Ronald J. Simmons...................... *
All directors and executive officers
of CompX as a group (11 persons) .... 1.4%
</TABLE>
- ----------
* Less than 1%.
(1) Except as otherwise noted, the listed entities, individuals and group have
sole investment power and sole voting power as to all shares of CompX
Common Stock set forth opposite their names. The number of shares and
percentage of ownership of CompX Class A Common Stock for each person or
group assumes the exercise by such person or group (exclusive of others) of
stock options that such person or group may exercise within 60 days
subsequent to the Record Date.
(2) The percentages are based on 6,144,880 shares of CompX Class A Common Stock
outstanding as of the Record Date.
(3) The business address of Valcor and Valhi is Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240-2697.
(4) Valhi is the direct holder of 100% of the outstanding common stock of
Valcor. As a result, as of the Record Date, Valhi holds, directly and in
indirectly through Valcor, 64.2% of the combined voting power of the CompX
Common Stock (94.6% for the election of directors). In certain instances,
shares of CompX Class B Common Stock are automatically convertible into
shares of CompX Class A Common Stock.
Valhi Group, Inc. ("VGI"), National City Lines, Inc. ("National") and
Contran are the direct holders of 81.9%, 9.5% and 0.9%, respectively, of
the outstanding common stock of Valhi. National, NOA, Inc. ("NOA") and
Dixie Holding Company ("Dixie Holding") are the direct holders of
approximately 73.3%, 11.4% and 15.3%, respectively, of the outstanding
common stock of VGI. Contran and NOA are the direct holders of
approximately 85.7% and 14.3%, respectively, of the outstanding common
stock of National. Contran and Southwest Louisiana Land Company, Inc.
("Southwest") are the direct holders of approximately 49.9% and 50.1%,
respectively, of the outstanding common stock of NOA. Dixie Rice
Agricultural Corporation, Inc. ("Dixie Rice") is the direct holder of 100%
of the outstanding common stock of Dixie Holding. Contran is the holder of
approximately 88.8% and 66.3% of the outstanding common stock of Southwest
and Dixie Rice, respectively. Substantially all of Contran's outstanding
voting stock is held either by trusts established for the benefit of
certain children and grandchildren of Harold C. Simmons (the "Trusts"), of
which Mr. Simmons is the sole trustee, or by Mr. Simmons directly. As sole
trustee of the Trusts, Mr. Simmons has the power to vote and direct the
disposition of the shares of Contran stock held by the Trusts. Mr.
Simmons, however, disclaims beneficial ownership of such Contran shares,
except for those he holds directly.
Harold C. Simmons is the chairman of the board and chief executive officer
of Valcor, Valhi, VGI, National, NOA, Dixie Holding, Dixie Rice, Southwest
and Contran. By virtue of the holding of the offices, the stock ownership
and his service as trustee, all as described above, Mr. 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 CompX Common Stock directly held by Valcor and Valhi.
Mr. Simmons, however, disclaims beneficial ownership of the shares of CompX
Common Stock beneficially owned, directly or indirectly, by any of such
entities.
The Harold Simmons Foundation, Inc. (the "Foundation") directly holds
approximately 0.5% of the outstanding shares of Valhi common stock. The
Foundation is a tax-exempt foundation organized for charitable purposes.
Harold C. Simmons is the chairman of the board and chief executive officer
of the Foundation and may be deemed to control the Foundation. Mr.
Simmons, however, disclaims beneficial ownership of any shares of Valhi
common stock held by the Foundation.
The Contran Deferred Compensation Trust No. 2 (the "CDCT No. 2") directly
holds approximately 0.2% of the outstanding Valhi common stock. Boston
Safe Deposit and Trust Company serves as trustee of the CDCT No. 2 (the
"Trustee"). Contran established the CDCT No. 2 as an irrevocable "rabbi
trust" to assist Contran in meeting certain deferred compensation
obligations that it owes to Harold C. Simmons. If the CDCT No. 2 assets
are insufficient to satisfy such obligations, Contran must satisfy the
balance of such obligations. Pursuant to the terms of the CDCT No. 2,
Contran (i) retains the power to vote the shares held by the CDCT No. 2,
(ii) retains dispositive power over such shares and (iii) may be deemed the
indirect beneficial owner of such shares. However, Mr. Simmons disclaims
such beneficial ownership of the shares beneficially owned, directly or
indirectly, by the CDCT No. 2, except to the extent of his interest as a
beneficiary of the CDCT No. 2.
The Combined Master Retirement Trust (the "Master Trust") holds
approximately 0.1% of the outstanding shares of Valhi common stock. The
Master Trust was formed to permit the collective investment by trusts that
maintain the assets of certain employee benefit plans adopted by Valhi and
related companies. Harold C. Simmons is the sole trustee of the Master
Trust and a member of the trust investment committee for the Master Trust.
Paul M. Bass, Jr. is also a member of the trust investment committee for
the Master Trust. The trustee and members of the trust investment
committee for the Master Trust are selected by the Valhi's board of
directors. Harold C. Simmons and Glenn R. Simmons are members of Valhi's
board of directors and along with Robert W. Singer and David A. Bowers are
participants in one or more of the employee benefit plans that invest
through the Master Trust. Each of such persons disclaims beneficial
ownership of the shares held by the Master Trust, except to the extent of
his individual vested beneficial interest in the assets held by the Master
Trust.
For purposes of calculating the percentage ownership of the outstanding
shares of Valhi common stock as of the Record Date, 1,186,200 shares of
Valhi common stock that NL, Valhi's majority-owned titanium dioxide
pigments subsidiary, directly holds and 1,000,000 shares of Valhi common
stock that Valmont Insurance Company ("Valmont"), a wholly owned subsidiary
of Valhi, directly holds are excluded from the amount of Valhi common stock
outstanding. Pursuant to Delaware corporate law, Valhi treats these
excluded shares as treasury stock for voting purposes.
(5) Based on a Schedule 13G/A dated March 11, 1999 filed by T. Rowe Price
Associates, Inc. ("T. Rowe Price") and the T. Rowe Price Small-Cap Stock
Fund, Inc. ("T. Rowe Small-Cap Fund") with the Commission. These shares
comprise shares that various accounts own for which T. Rowe Price is an
investment advisor, of which T. Rowe Price has sole voting power over
321,600 shares and over all of which T. Rowe Price has sole dispositive
power. T. Rowe Small-Cap Fund, an investment company sponsored by T. Rowe
Price, has sole voting power over 410,000 of these shares. T. Rowe Price
disclaims that it is, in fact, the beneficial owner of these securities
over which it has sole dispositive power. The address of T. Rowe Price and
the T. Rowe Small-Cap Fund is 100 E. Pratt Street, Baltimore, Maryland
21202.
(6) Based on a Schedule 13G/A dated March 10, 1999 filed by FMR Corp., Edward
C. Johnson, 3d and Abigail P. Johnson with the Commission. These shares
include (i) 535,934 shares various investment companies own for which
Fidelity Management & Research Company ("Fidelity"), a wholly owned
subsidiary of FMR Corp., is an investment advisor and over which Mr.
Johnson and FMR Corp., through its control of Fidelity, and the investment
companies have sole power to dispose; (ii) 252,900 shares over which
Fidelity Management Trust Company, a wholly owned subsidiary of FMR Corp.,
serves as investment manager and over which Mr. Johnson and FMR Corp. have
sole voting and dispositive power; and (iii) 10,000 shares various
investment companies and other clients own for which Fidelity International
Limited is an investment advisor and over which Fidelity International
Limited has sole voting and dispositive power. Along with Mr. Johnson,
Abigail Johnson may be deemed to be part of a controlling group with
respect to FMR Corp. and Mr. Johnson may be deemed to control Fidelity
International Limited. The address of the FMR Corp., Mr. Edward and Ms.
Abigail Johnson is 82 Devonshire Street, Boston, Massachusetts 02109.
(7) Based on a Schedule 13G dated February 12, 1999 filed by Scudder Kemper
Investments, Inc. ("Scudder") with the Commission. These shares comprise
shares that various accounts own for which Scudder is an investment
advisor, of which Scudder has sole voting power over 299,200 shares, shared
voting power over 7,700 shares and over all of which Scudder has sole
dispositive power. The address of Scudder is 345 Park Avenue, New York,
New York 10154.
(8) Based on a Schedule 13G dated January 29, 1999 filed by Eagle Asset
Management, Inc. ("Eagle") with the Commission. These shares comprise
shares that various accounts own for which Eagle is an investment advisor
and comprise all shares over which Eagle has sole voting and dispositive
power. The address of Eagle is 880 Carillon Parkway, St. Petersburg,
Florida 33716.
(9) Based on a Schedule 13G dated February 4, 1999 filed by David L. Babson and
Company Incorporated ("Babson") with the Commission. These shares comprise
shares that various accounts own for which Babson is an investment advisor
and comprise all shares over which Babson has sole voting and dispositive
power. The address of Babson is One Memorial Drive, Cambridge,
Massachusetts 02142-1300.
(10) Based on a Schedule 13G dated February 8, 1999 filed by MassMutual
Institutional Funds - MassMutual Small Cap Value Equity Fund ("MassMutual")
with the Commission. These shares comprise shares that the MassMutual
Institutional Funds own for which Massachusetts Mutual Life Insurance
Company is an investment advisor and comprise all shares over which
MassMutual has sole voting and dispositive power. The address of MassMutual
is 1295 State Street, Springfield, Massachusetts 01111.
(11) The shares of CompX Class A Common Stock Paul M. Bass Jr. beneficially owns
are shares he has the right to acquire upon the exercise of stock options
the Company granted pursuant to the 1997 Plan that he may exercise within
60 days subsequent to the Record Date.
(12) The shares of CompX Class A Common Stock David A. Bowers beneficially owns
include 5,000 shares he has the right to acquire upon the exercise of stock
options the Company granted pursuant to the 1997 Plan that he may exercise
within 60 days subsequent to the Record Date.
(13) The shares of CompX Class A Common Stock Joseph S. Compofelice beneficially
owns include 20,000 shares he has the right to acquire upon the exercise of
stock options the Company granted pursuant to the 1997 Plan that he may
exercise within 60 days subsequent to the Record Date. In addition,
included in the amount he beneficially owns are 1,000 shares he jointly
holds with his wife.
(14) The shares of CompX Class A Common Stock Edward J. Hardin beneficially owns
include 200 shares he has the right to acquire upon the exercise of stock
options the Company granted pursuant to the 1997 Plan that he may exercise
within 60 days subsequent to the Record Date.
(15) The shares of CompX Class A Common Stock Glenn R. Simmons beneficially owns
include 10,000 shares he has the right to acquire upon the exercise of
stock options the Company granted pursuant to the 1997 Plan that he may
exercise within 60 days subsequent to the Record Date.
(16) The shares of CompX Class A Common Stock Robert W. Singer beneficially owns
include 3,000 shares he has the right to acquire upon the exercise of stock
options the Company granted pursuant to the 1997 Plan that he may exercise
within 60 days subsequent to the Record Date.
(17) The shares of CompX Class A Common Stock Ronald J. Simmons beneficially
owns include 3,000 shares he has the right to acquire upon the exercise of
stock options the Company granted pursuant to the 1997 Plan that he may
exercise within 60 days subsequent to the Record Date.
(18) In addition to the foregoing, the shares of CompX Class A Common Stock the
remaining executive officers of CompX beneficially own include 1,300 shares
they have the right to acquire upon the exercise of stock options the
Company granted pursuant to the 1997 Plan that they may exercise within 60
days subsequent to the Record Date.
The Company understands that Contran and related entities may consider
acquiring or disposing of shares of CompX Common Stock through open-market or
privately negotiated transactions, depending upon future developments,
including, but not limited to, the availability and alternative uses of funds,
the performance of CompX Class A Common Stock in the market, an assessment of
the business of and prospects for the Company, financial and stock market
conditions and other factors deemed relevant by such entities. The Company may
similarly consider acquisitions of shares of CompX Class A Common Stock and
acquisitions or dispositions of securities issued by related entities.
The Company does not presently intend, and understands that Contran does
not presently intend, to engage in any transaction or series of transactions
that would result in the CompX Class A Common Stock becoming eligible for
termination of registration under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or ceasing to be traded on a national securities
exchange.
Ownership of Valhi and its Parents. The following table and footnotes set
forth the beneficial ownership, as of the Record Date, of the common stock, par
value $0.01 per share, of Valhi ("Valhi Common Stock") held by (i) each director
of CompX, (ii) each named executive officer and (iii) all directors and
executive officers of CompX as a group. Except as set forth below, no
securities of CompX's parent companies are beneficially owned by any director or
executive officer of CompX. All information has been taken from or based upon
ownership filings made by such persons with the Commission or upon information
provided by such persons.
<TABLE>
<CAPTION>
Valhi Common Stock
--------------------------------------
Percent of
Amount and Nature of Class
Name of Beneficial Owner Beneficial Ownership (1) (1)(2)
- ------------------------ --------------------------- ----------
<S> <C> <C>
Paul M. Bass, Jr....................... 1,000 (3) *
David A. Bowers........................ 15,000 (3)(4) *
Joseph S. Compofelice.................. 50,000 (5) *
Edward J. Hardin....................... -0- -0-
Ann Manix.............................. -0- -0-
Glenn R. Simmons....................... 425,833 (3)(6) *
Robert W. Singer....................... 500 (3) *
Ronald J. Simmons...................... 11,000 (7) *
All directors and executive
officers of CompX as a group
(11 persons) ........................ 504,333 (3)(4)(5) *
(6)(7)(8)
</TABLE>
- ----------
* Less than 1%.
(1) Except as otherwise noted, the listed individuals and group have sole
investment power and sole voting power as to all shares of Valhi Common
Stock set forth opposite their names. The number of shares and percentage
of ownership of Valhi Common Stock for each person or group assumes the
exercise by such person or group (exclusive of others) of stock options
that such person or group may exercise within 60 days subsequent to the
Record Date.
(2) The percentages are based on 114,497,014 shares of Valhi Common Stock
outstanding as of the Record Date. For purposes of calculating the
outstanding shares of Valhi Common Stock as of the Record Date, 1,186,200
shares of Valhi Common Stock held by NL and 1,000,000 shares of Valhi
Common Stock held by Valmont are excluded from the amount of Valhi Common
Stock outstanding. Pursuant to Delaware corporate law, Valhi treats these
excluded shares as treasury stock for voting purposes.
(3) Excludes certain shares that such individual may be deemed to indirectly
and beneficially own as to which such individual disclaims beneficial
ownership. See footnote (4) to the "Ownership of CompX" table.
(4) The shares of Valhi Common Stock David A. Bowers beneficially owns are
shares he has the right to acquire upon the exercise of stock options Valhi
granted pursuant to its stock option plans that he may exercise within 60
days subsequent to the Record Date.
(5) The shares of Valhi Common Stock Joseph S. Compofelice beneficially owns
include 40,000 shares he has the right to acquire upon the exercise of
stock options Valhi granted pursuant to its stock option plans that he may
exercise within 60 days subsequent to the Record Date. In addition,
included in the amount he beneficially owns are 10,000 shares he jointly
holds with his wife.
(6) The shares of Valhi Common Stock Glenn R. Simmons beneficially owns include
410,000 shares he has the right to acquire upon the exercise of stock
options Valhi granted pursuant to its stock option plans that he may
exercise within 60 days subsequent to the Record Date. Also included in
the amount he beneficially owns are 4,383 shares he holds in his individual
retirement account. In addition, included in the amount he beneficially
owns are 3,000 shares his wife holds and 800 shares his wife's retirement
account holds, with respect to all of which he disclaims beneficial
ownership.
(7) The shares of Valhi Common Stock Ronald J. Simmons beneficially owns are
shares he has the right to acquire upon the exercise of stock options Valhi
granted pursuant to its stock option plans that he may exercise within 60
days subsequent to the Record Date.
(8) In addition to the foregoing, the shares of Valhi Common Stock the
remaining executive officers of CompX beneficially own include 1,000 shares
they have the right to acquire upon the exercise of stock options Valhi
granted pursuant to its stock option plans that they may exercise within 60
days subsequent to the Record Date.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
AND OTHER INFORMATION
Compensation of Directors. During 1998, directors of CompX who were not
also employees of the Company received an annual retainer of $12,000 paid in
quarterly installments, plus a fee of $750 per day for attendance at meetings
and as a daily rate for other services rendered on behalf of the Board of
Directors and/or committees thereof. In addition, directors who were members of
the audit committee or MD&C Committee received an annual retainer of $1,000,
paid in quarterly installments, for each committee on which they served. The
Company also reimbursed its nonemployee directors for reasonable expenses
incurred in attending meetings and in the performance of other services rendered
on behalf of the Board of Directors and/or its committees. The Company paid
director fees during 1998 to Paul M. Bass, Jr., Edward J. Hardin, Ann Manix,
Glenn R. Simmons and Robert W. Singer (together, the "Nonemployee Directors").
On March 5, 1998, the Company granted each of Paul M. Bass, Jr. and Edward
J. Hardin stock options exercisable for 1,000 shares of CompX Class A Common
Stock, which stock options have an exercise price per share equal to the initial
price to the public of $20.00 per share of CompX's initial public offering of
CompX Class A Common Stock on March 6, 1998, have a term of 10 years and vest
20% over the first five anniversaries of the date of grant.
In February 1999, the Board and the MD&C Committee approved increases in
the compensation the Company will pay to its Nonemployee Directors for 1999.
For 1999, each director will receive an annual retainer of $15,000 paid in
quarterly installments, plus a fee of $1,000 per day for attendance at meetings
and as a daily rate for other services rendered on behalf of the Board of
Directors and/or committees thereof. In addition, directors who were members of
the audit committee or MD&C Committee will receive an annual retainer of $1,000,
paid in quarterly installments, for each committee on which they served. The
Company will also reimburse its Nonemployee Directors for reasonable expenses
incurred in attending meetings and in the performance of other services rendered
on behalf of the Board of Directors and/or its committees. The MD&C Committee,
upon the recommendation of the Board of Directors, also approved in February
1999 under the 1997 Plan annual grants at each annual meeting of CompX's
stockholders of 500 shares of CompX Class A Common Stock and stock options
exercisable for 2,000 shares of CompX Class A Common Stock, which options will
have an exercise price equal to the closing sales price of CompX Class A Common
Stock on the date of grant, have a term of 10 years and vest 20% over the first
five anniversaries of the date of grant.
CompX and Valhi are parties to an intercorporate services agreement (the
"Valhi ISA") pursuant to which Valhi provided certain services to CompX during
1998, including services that Glenn R. Simmons rendered to CompX. See "Certain
Relationships and Transactions--Intercorporate Services Agreements."
Summary of Cash and Certain Other Compensation of Executive Officers. The
Summary Compensation Table set forth below provides information concerning
annual and long-term compensation paid or accrued by CompX and its subsidiaries
for services rendered to CompX and its subsidiaries during 1998 and 1997 by
CompX's chief executive officer and each of the two other most highly
compensated individuals who were executive officers of CompX at December 31,
1998 and earned more than $100,000 in salary and bonus in 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compen-
sation (1)
----------
Awards
----------
Shares
Annual Compensation (2) Underlying
Name and ------------------------- Options All Other
Principal Position Year Salary Bonus (#) Compensation
- ------------------------- ---- ------------ ----------- ---------- ------------
<S> <C> <C> <C>
Joseph S. Compofelice (3).1998 $500,000 $1,980,000(4) 100,000 $20,000(5)
Chairman of the Board, 1997 -0- -0- -0- -0-(5)
President and Chief
Executive Officer
David A. Bowers...........1998 160,000 400,056(4) 25,000 20,000(5)
Vice President and 1997 147,000 125,000 -0- 20,500(5)
President of CompX
Security Products
Ronald J. Simmons (6).....1998 125,514 449,231(7) 15,000 3,383(8)
Vice President and 1997 117,753 86,667 -0- 3,618(8)
President of Waterloo
Furniture Components
Limited
</TABLE>
- ----------
(1) No shares of restricted stock were granted to the named executive officers
nor payouts made to the named executive officers pursuant to long-term
incentive plans during the last two years. Therefore, the columns for such
compensation have been omitted.
(2) Other annual compensation for each of the named executive officers included
perquisites, which perquisites were less than the level required for
reporting. Therefore, the column for other annual compensation has been
omitted.
(3) Mr. Compofelice became an executive officer of the Company in December
1997.
(4) Each of these named executive officer's 1998 bonus amount includes the
Company's dollar amount valuation of shares of CompX Class A Common Stock
that the Company awarded each of these named executive officers in February
1998 as a bonus subject to the consummation of CompX's initial public
offering of CompX Class A Common Stock (the "IPO Bonus Share Awards").
Pursuant to Messrs. Compofelice's and Bowers' elections under section 83(b)
of the Internal Revenue Code of 1986, as amended (the "Code"), the Company
valued these IPO Bonus Share Awards for purposes of the compensation table
above based on the shares' fair market value at the time of the award
taking into account their illiquidity at the time of the award. In
March 1998, pursuant to the IPO Bonus Share Awards, the Company issued to
Messrs. Compofelice and Bowers 100,000 and 16,220 shares of CompX Class A
Common Stock, respectively.
(5) All other compensation for 1998 and 1997 for Messrs. Compofelice and Bowers
consisted of (i) the Company's matching contributions pursuant to the
401(k) Plan and (ii) the Company's contributions pursuant to the National
Cabinet Lock, Inc. Capital Accumulation Pension Plan, a defined
contribution plan (the "CAPP Plan"), as follows:
Employer's
401(k) Plan Employer's
Named Executive Matching CAPP Plan
Officer Year Contributions Contributions Total
-------------------------- ------ ------------- ------------- --------
Joseph S. Compofelice..... 1998 $ 6,111 $ 13,889 $ 20,000
1997 -0- -0- -0-
David A. Bowers........... 1998 $ 6,111 13,889 20,000
1997 5,740 14,760 20,500
(6) Waterloo paid Ronald J. Simmons his base salary, cash bonus and
contributions to his retirement plan in Canadian dollars. The Company
reports these amounts in the table above in U.S. dollars based on the
average exchange rates for 1997 and 1998 of CN$1.382 per US$1.00 and
CN$1.478 per US$1.00, respectively, for the relevant year of compensation.
(7) Mr. Simmons' 1998 bonus amount includes a dollar amount for Mr. Simmons'
IPO Bonus Share Award. The Company valued Mr. Simmons' IPO Bonus Share
Award for purposes of the compensation table above at the CompX Class A
Common Stock initial public offering price of $20.00 per share. In
March 1998, pursuant to Mr. Simmons' IPO Bonus Share Award, the Company
issued to Mr. Simmons 16,220 shares of CompX Class A Common Stock.
(8) These amounts represent Waterloo's contribution to the account of Ronald J.
Simmons under The Salaried Employee Pension Plan of Waterloo Furniture
Components Limited.
Grants of Stock Options. The following table provides information, with
respect to the named executive officers, concerning the grant of stock options
under the 1997 Plan during 1998. The Company has not granted any stock
appreciation rights ("SARs").
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------
Number of Percent of Exercise
Shares of Total Options or
Underlying Granted to Base
Options Employees Price Expiration
Name Granted (#) in 1998 (2) Per Share Date
- ---------------------------- ------------ ------------- --------- -----------
<S> <C> <C> <C> <C>
Joseph S. Compofelice........ 100,000(3) 37.31% $20.00(3) 03/05/08
David A. Bowers.............. 25,000(3) 9.33% $20.00(3) 03/05/08
Ronald J. Simmons............ 15,000(3) 5.60% $20.00(3) 03/05/08
All stockholders' gain (5)... n/a n/a n/a n/a
</TABLE>
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
for Option Term (1)
-----------------------------------------
Name 5% 10%
- ------------------------------ -------------------- --------------------
<S> <C> <C>
Joseph S. Compofelice......... $1,258,000(4) $3,187,000(4)
David A. Bowers............... 314,500(4) 796,750(4)
Ronald J. Simmons............. 188,700(4) 478,050(4)
All stockholders' gain (5).... 77 MM(5) 196 MM(5)
</TABLE>
- ----------
(1) Pursuant to the rules of the Commission, the amounts under these columns
reflect calculations at assumed 5% and 10% appreciation rates and,
therefore, are not intended to forecast future appreciation, if any, of
CompX Class A Common Stock. The potential realizable value to the
optionees was computed as the difference between the appreciated value, at
the expiration dates of the stock options, of the CompX Class A Common
Stock obtainable upon exercise of such stock options over the aggregate
exercise price of such stock options.
The amount of gain to the optionees is dependent on the amount of increase
in the price of CompX Class A Common Stock, which would benefit all
stockholders proportionately. These potentially realizable values are
based solely on arbitrarily assumed rates of appreciation required by
applicable Commission regulations. Actual gains, if any, on stock option
exercises are dependent on the future performance of CompX Class A Common
Stock, overall market conditions and the timing of the exercise thereof by
each respective optionee. There can be no assurance that the amounts
reflected in the table will be achieved.
(2) This percentage is calculated based on the aggregate number of stock
options that CompX granted to its employees in 1998 and excludes stock
options granted to employees of Valhi and other nonemployees of CompX.
(3) This stock option is exercisable for shares of CompX Class A Common Stock
and becomes exercisable at a rate of 20% on each of the first five
anniversary dates of the date of grant. CompX granted this stock option on
March 5, 1998 with an exercise price per share equal to the initial price
to the public of $20.00 per share of CompX's initial public offering of
CompX Class A Common Stock on March 6, 1998. The exercise price for this
stock option can be paid in already owned shares of CompX Class A Common
Stock, provided such tendered shares were held by the optionee for six
months.
(4) The appreciated value per share on March 5, 2008, based on the $20.00 per
share market value of a share of CompX Class A Common Stock on March 5,
1998, would be $32.58 and $51.87 at the hypothetical 5% and 10% rates,
respectively.
(5) The $77,303,000 and $195,837,000 amounts shown represent the cumulative
increase in value stockholders would receive on all outstanding shares of
CompX Class A Common Stock over a ten-year period at the hypothetical
5% and 10% appreciation rates, respectively, based on the $20.00 per share
market value of the 6,144,880 shares of CompX Class A Common Stock
outstanding on the close of business March 6, 1998.
Stock Option Exercises and Holdings. The following table provides
information, with respect to the named executive officers, concerning the amount
the named executive officer realized in 1998 upon the exercise of stock options
for Valhi Common Stock and the value of unexercised stock options exercisable
for CompX Class A Common Stock or Valhi Common Stock held as of December 31,
1998. Neither the Company nor Valhi has granted any SARs.
AGGREGATE STOCK OPTION EXERCISES IN 1998 AND
DECEMBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
Shares
Acquired on Value
Name Exercise (#) Realized
- ---------------------------------------- --------------- --------------------
<S> <C> <C>
Joseph S. Compofelice
CompX Stock Options (2) 0 $ 0
Valhi Stock Options (3) 0 0
--------------- --------------
0 0
David A. Bowers
CompX Stock Options (2) 0 0
Valhi Stock Options (3) 47,000 223,550 (4)
--------------- --------------
47,000 223,550
Ronald J. Simmons
CompX Stock Options (2) 0 0
Valhi Stock Options (3) 15,000 52,320 (4)
--------------- --------------
15,000 52,320
</TABLE>
<TABLE>
<CAPTION>
Number of Shares
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
December 31, 1998 (#) at December 31, 1998 (1)
------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Joseph S. Compofelice
CompX Stock Options (2) 0 100,000 $ 0 $ 637,500
Valhi Stock Options (3) 40,000 10,000 173,400 43,350
----------- ------------- ----------- -------------
40,000 110,000 173,400 680,850
David A. Bowers
CompX Stock Options (2) 0 25,000 0 159,375
Valhi Stock Options (3) 10,000 15,000 0 57,825
----------- ------------- ----------- -------------
10,000 40,000 0 217,200
Ronald J. Simmons
CompX Stock Options (2) 0 15,000 0 95,625
Valhi Stock Options (3) 9,000 6,000 16,960 23,130
----------- ------------- ----------- -------------
9,000 21,000 16,960 118,755
</TABLE>
- ----------
(1) The aggregate amount is based on the difference between the exercise price
of the individual stock options and, as applicable, the $11.375 per share
closing sales price of Valhi Common Stock and the $26.375 per share closing
sales price of the CompX Class A Common Stock as reported on the New York
Stock Exchange Composite Tape on December 31, 1998.
(2) Represents stock options exercised or exercisable for shares of CompX Class
A Common Stock.
(3) Represents stock options exercised or exercisable for shares of Valhi
Common Stock.
(4) The amount realized is based on the difference between the last reported
sales price per share of Valhi Common Stock as reported on the New York
Stock Exchange Composite Tape on the date of exercise and the exercise
price per share.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires CompX's executive officers,
directors and persons who own more than 10% of a registered class of CompX's
equity securities to file reports of ownership with the Commission, the New York
Stock Exchange, Inc. and CompX. Based solely on the review of the copies of
such forms and written representations by certain reporting persons received,
CompX believes that for 1998 its executive officers, directors and 10%
stockholders complied with all applicable filing requirements under Section
16(a).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the Board of Directors, including Joseph S. Compofelice
(CompX's chief executive officer) and David A. Bowers, and the MD&C Committee
deliberated on CompX executive officer compensation. The MD&C Committee is
currently comprised of Paul M. Bass, Jr. (chairman) and Ann Manix, both
nonemployee directors of CompX. Of those persons who deliberated on CompX
executive officer compensation at any time in 1998, only Glenn R. Simmons,
Joseph S. Compofelice or David A. Bowers were executive officers of CompX or any
of its subsidiaries at the time of any such deliberations.
Other than Glenn R. Simmons, in 1998 no CompX executive officer deliberated
on the compensation of executive officers of another entity (as a member of the
other entity's compensation committee, board of directors or otherwise), one of
whose executive officers deliberated on the compensation of CompX's executive
officers (as member of the MD&C Committee, the Board of Directors or otherwise).
In 1998, Mr. Glenn R. Simmons deliberated on compensation for executive officers
for both Keystone, including Robert W. Singer, and CompX.
The Company engaged and paid to Rogers & Hardin, LLP, a law firm of which
the Company's director Edward J. Hardin is a partner, $340,560 in fees for
services Rogers & Hardin LLP rendered to the Company in 1998 in connection with
the Company's initial public offering, the Company's acquisition of Fort Lock
Corporation and Timberline Lock, Ltd. and general corporate matters. The
Company expects to continue its relationship with Rogers & Hardin LLP in 1999.
REPORT ON EXECUTIVE COMPENSATION
During 1998, the Company's chairman of the board, the Board of Directors
and the MD&C Committee administered matters regarding compensation of the
Company's executive officers. This report is submitted by such individuals in
their respective capacities, as set forth below. The Company's MD&C Committee
consists of individuals who are neither officers nor employees of the Company or
its subsidiaries.
The Company's compensation system with respect to its executive officers,
including the chief executive officer, consists of three primary components:
base salary, annual variable cash compensation pursuant to the Company's
variable compensation plan, and the grant of stock-based compensation such as
performance awards, stock options and similar awards pursuant to the 1997 Plan.
Through the use of salary and annual variable cash compensation, the
Company seeks to achieve a balanced compensation package that will attract and
retain high quality key executives, appropriately reflect each such executive
officer's individual performance, contributions and general market value, and
provide further incentives to such officers to maximize annual operating
performance and long-term shareholder value. It is also the Company's policy
that a significant portion of any incentive compensation paid be related to the
performance of the Company's equity securities and have a commonality of
interest with the stockholders of the Company, which objectives are generally
met through the periodic grant of stock options, since the amount realized from
stock options depends entirely on the appreciation of the stock into which the
options are exercisable. Therefore, unless the price of the Company's equity
securities increases over the term of a stock option, an employee will receive
no compensation from the option.
1998 Compensation Determinations Prior to the Company's Initial Public Offering
Prior to the Company's initial public offering, the chairman of the board
at the time, Glenn R. Simmons, determined the base salaries of those executive
officers employed by the Company. Concurrently with the Company hiring Mr.
Compofelice as its chairman of the board and chief executive officer in February
1998, Mr. Simmons determined Mr. Compofelice's base salary. Subsequent to the
Company's initial public offering, the Company did not make any adjustments to
executive officer base salaries in 1998.
In February 1998, the Board of Directors granted under the 1997 Plan
certain performance grants of Common Stock that were subject to the consummation
of the Company's initial public offering. Pursuant to such performance grants
and upon the consummation of the Company's initial public offering, Mr. Joseph
S. Compofelice received 100,000 shares of CompX Class A Common Stock and Messrs.
David A. Bowers, Glenn R. Simmons, Ronald J. Simmons and Robert W. Singer each
received 16,220 shares of CompX Class A Common Stock. The Board of Directors
considered the performance grants as one-time bonuses that would reward the
recipients for prior contributions to the Company and/or the success of the
Company's initial public offering.
In March 1998, upon the recommendation of Mr. Compofelice, the Board of
Directors granted nonqualified stock options to its executive officers and
others under the 1997 Plan. The stock option grants were subject to, among
other things, the consummation of the Company's initial public offering, vested
20% on each of the first five anniversaries of their date of grant and had terms
of 10 years. The exercise price for these stock options was the price to the
public in the Company's initial public offering. Other than these stock option
grants, the Company did not grant any other stock-based compensation awards to
its executive officers in 1998.
1998 Variable Cash Compensation
Awards under the Company's variable compensation plan constitute a
significant portion of an executive's potential annual cash compensation
(between 0% and 150% of base salary for the chief executive officer and certain
executive officers). Awards are based primarily on the Company, or the
employee's principal business unit, achieving annual predetermined operating
income goals. The Company's management makes recommendations to the Board of
Directors regarding the operating income plan for the year after reviewing
market conditions and the Company's operations, competitive position, marketing
opportunities and strategies for maximizing financial performance. The Board of
Directors approves this recommendation with modifications it deems appropriate.
Based on the 1998 business plan, the Board of Directors set the Company's and
its business units' operating income goals at three levels that are designed to
help focus the Company's executives on achieving superior annual operating
results in light of existing conditions: a threshold level, which is the minimum
operating income level for any award to be made under the variable compensation
plan (the "Minimum Level"), a target level (the "Target Level") and a maximum
level (the "Maximum Level"). The variable compensation plan, in combination
with base salary, is designed to pay executive officers and other eligible
participants annual cash compensation below competitive compensation levels if
the Minimum Level is not achieved. The Company did not make any other bonus
awards to executive officers outside of the variable compensation plan in 1998.
Pursuant to the variable compensation plan, if operating income is below
the Minimum Level, no variable compensation is paid. If the Minimum Level is
met, executive officers are eligible to receive variable compensation payments
that in 1998 ranged between 20% and 50% of base salary, depending on the
executive. If the Target Level is reached, the range of variable compensation
payments is higher, and in 1998 ranged between 30% and 100% of base salary,
depending on the executive. If the Maximum Level is reached or exceeded,
executives are eligible to receive the highest variable compensation payments,
and in 1998 the range of payments for which executives were eligible was between
40% and 150% of base salary, depending on the executive. In view of the
achievement of operating income during 1998 between the Target Level and the
Maximum Level, in 1998 the MD&C Committee approved Target Level payments under
the variable compensation plan to the executive officers, including the chief
executive officer.
1998 Executive Officer Services Provided by Valhi
In 1998, Valhi provided through certain of its employees or employees of
its affiliates, certain executive officer functions pursuant to the Valhi ISA.
The Board of Directors, with Messrs. Compofelice, Simmons and Singer abstaining,
considered and approved the terms of the Valhi ISA, pursuant to which Valhi and
its affiliates provided the services of Bobby D. O'Brien, the Company's chief
financial officer until December 1998, among others. The amount of the fee paid
by the Company under the Valhi ISA with respect to executive officer services
represents, in the view of the Board of Directors, the reasonable equivalent of
"compensation" for such services. The Board of Directors approval of the
portion of the fee paid by the Company under the Valhi ISA for executive officer
services was based on the general business knowledge of the members of the Board
of Directors and no specific survey, study or other analytical process was
utilized in such approval.
1999 Employee Base Salaries
The Company's policy for 1999 is that the MD&C Committee will review any
recommendations of the chief executive officer regarding changes in base
salaries for executive officers other than himself. Reviews regarding changes
in the base salaries of executive officers will occur no more frequently than
annually. When recommendations regarding changes in base salary levels are made
by the chief executive officer, the MD&C Committee may take such actions,
including any modifications to the recommendation, as it deems appropriate. If
the MD&C Committee decides a change in the base salary of the chief executive
officer is warranted, the MD&C Committee will make the recommendation to the
Board of Directors and the Board of Directors may take such actions, including
any modifications to the recommendation, as it deems appropriate. In each case,
the determinations of the MD&C Committee and the Board of Directors may be based
primarily on a subjective evaluation of past and potential future individual
performance and contributions and alternative opportunities that might be
available to the executives in question. The MD&C Committee may also review
compensation data from companies employing executives in positions similar to
those whose salaries were being reviewed as well as market conditions for
executives in general with similar skills, background and performance levels,
both inside and outside of the furniture components industry (such companies may
include companies contained in the peer group index plotted on the Performance
Graph following this report), and other companies with similar financial and
business characteristics as the Company, or where the executive in question has
similar responsibilities.
1999 Variable Cash Compensation
In February, the Board of Directors formalized the variable compensation
plan with the adoption, subject to stockholder approval, of the CompX
International Inc. Variable Compensation Plan. See the Proposal to Approve the
CompX International Inc. Variable Compensation Plan (Proposal 2) for a
description of the Plan. Pursuant to the Plan, and subject to stockholder
approval, the MD&C Committee set the Minimum, Target and Maximum operating
income performance levels under the Plan based on the Company's 1999 business
plan that the Board of Directors approved. For 1999, the variable compensation
plan, in combination with base salary, is designed to pay executive officers and
other eligible participants annual cash compensation below competitive
compensation levels if the Minimum Level is not achieved.
Apart from the variable compensation plan, the MD&C Committee may award
other bonuses as the MD&C Committee deems appropriate from time to time under
its general authority or under a separate discretionary plan.
1999 Stock-Based Compensation
The 1997 Plan supports the goal of maximizing long-term shareholder value
by providing for stock-based compensation, the value of which is directly
related to increases in shareholder value. Stock option grants, in particular,
are considered a significant element of the Company's total compensation package
for the chief executive officer and the other executive officers of the Company.
The MD&C Committee believes that compensation linked to stock price performance
helps focus the executives' attention on management of the Company from the
shareholders' perspective.
Tax Code Limitation on Executive Compensation Deductions
In 1993, Congress amended the Internal Revenue Code to impose a $1.0
million deduction limit on compensation paid to the chief executive officer and
the four other most highly compensated executive officers of public companies,
subject to certain transition rules and exceptions for compensation received
pursuant to non-discretionary performance-based plans approved by such company's
shareholders. It is the Company's general policy to structure the performance-
based portion of the compensation of its executive officers in a manner that
permits the Company to deduct fully such compensation.
The foregoing report is submitted by the following individuals in the
capacities indicated:
Paul M. Bass, Jr. Edward J. Hardin Robert W. Singer
Director and chairman of Director Director
the MD&C Committee
David A. Bowers Ann Manix
Director and Vice Director and member of
President and President the MD&C Committee
of CompX Security
Products
Joseph S. Compofelice Glenn R. Simmons
Chairman of the Board, Director
President and Chief
Executive Officer
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total stockholder return on CompX Class A Common Stock against the
cumulative total return of the Russell 2000 Stock Index and a self-selected peer
group of companies index for the period commencing March 6, 1998 (the date upon
which the Commission first registered the CompX Class A Common Stock under
Section 12 of the Exchange Act) and ending December 31, 1998. The self-selected
peer group index is comprised of Bush Industries, Inc., Herman Miller, Inc., HON
Industries Inc., Interface, Inc., Knape & Vogt Manufacturing Company, Knoll,
Inc., Leggett & Platt, Incorporated and Steelcase Inc. The graph shows the
value at December 31, 1998 assuming an original investment of $100 and
reinvestment of cash dividends and other distributions to stockholders.
Comparison of Cumulative Return Among CompX International Inc.,
the Russell 2000 Index and a Self-Selected Peer Group Index
[PERFORMANCE GRAPH GOES HERE]
<TABLE>
<CAPTION>
March 6, 1998 December 31, 1998
------------------ -----------------
<S> <C> <C>
CompX International Inc................. $100 $132
Russell 2000 Index...................... 100 92
Self-Selected Peer Group Index.......... 100 71
</TABLE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Relationships with Related Parties. As set forth under the caption
"Security Ownership," Harold C. Simmons, through Contran, 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 upon 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 Mr. 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.
Intercorporate Services Agreements. Under the Valhi ISA, Valhi renders or
provides for certain management, financial and administrative services to the
Company on a fee basis. Such fees are based upon estimates of time devoted to
the affairs of the Company by individual Valhi employees and the salaries of
such persons. The Company paid Valhi fees of $310,000 for services rendered
under the Valhi ISA in 1998. In addition, Valhi charged the Company for the
out-of-pocket costs incurred in rendering such services. The Valhi ISA
automatically extends on a quarter-to-quarter basis, subject to termination by
either party pursuant to written notice 30 days prior to a quarter-end, and may
be amended by mutual agreement.
Under the ISA between the Company and NL (the "NL ISA"), NL makes available
to CompX certain occupancy and related office services for CompX's offices in
Houston, Texas on a fee basis. Such fees are based upon estimates of NL's costs
of providing such services to CompX. The Company paid NL fees of $43,750 for
such services rendered in 1998. In addition, NL charged the Company for the
out-of-pocket costs incurred in rendering such services. The NL ISA
automatically extends on a quarter-to-quarter basis, subject to termination by
either party pursuant to written notice 30 days prior to a quarter-end, and may
be amended by mutual agreement.
Loans and Advances with Related Companies. On December 12, 1997, the
Company paid a $50 million dividend to Valcor in the form of a demand note (the
"Valcor Note"). The Valcor Note was unsecured and bore interest at a fixed rate
of 6% per annum. On February 26, 1998, the Company entered into a new $100
million revolving bank credit facility and utilized borrowings under the
facility to repay fully the Valcor Note.
From time to time the Company may make advances to and borrow from Valcor,
Valhi and other related parties pursuant to term or demand loans. It is
anticipated that such loans and advances will principally be made for cash
management purposes.
Insurance Brokerage Commissions. NL Insurance Ltd. of Vermont ("NL
Insurance"), Valmont and EWI RE, Inc. ("EWI") arrange 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 arrange or broker. During 1998, the Company and its
subsidiaries paid approximately $237,000 for policies arranged 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 and its subsidiaries paid for these
insurance policies are reasonable and similar to those they 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 1999.
Tax Agreement for Periods Prior to the Company's Initial Public Offering.
Prior to the Company's initial public offering of CompX Class A Common Stock,
the Company, Valcor and Valhi were members of Contran's consolidated United
States federal income tax group (the "Contran Tax Group"). The policy for
intercompany allocation of federal income taxes provided that subsidiaries
included in the Contran Tax Group provide for federal and certain state income
taxes on a separate company basis. Accordingly, CompX made payments to, or
received payments from, Valcor in the amount they would have paid to or received
from the Internal Revenue Service had they not been members of the Contran Tax
Group. The separate company provisions and payments were computed using the tax
elections made by Contran. The Company and Valcor entered into a tax sharing
agreement (the "Tax Sharing Agreement") that provides for the allocation of tax
liabilities and tax payments as described above. For all periods prior to the
Company's initial public offering of CompX Class A Common Stock in March 1998,
the Company was a member of the Contran Tax Group. The Company is jointly and
severally liable for the federal income tax of Contran and the other companies
included in the Contran Tax Group for all periods in which the Company was
included in the Contran Tax Group. Valcor and Valhi have agreed, however, to
indemnify the Company for any liability for income taxes of the Contran Tax
Group in excess of the Company's tax liability computed in accordance with the
Tax Sharing Agreement. Upon consummation of the Company's initial public
offering, for federal tax purposes the Company became a separate United States
taxpayer and is no longer a member of the Contran Tax Group.
PROPOSAL TO APPROVE THE COMPX INTERNATIONAL INC.
VARIABLE COMPENSATION PLAN
(Proposal 2)
The Board of Director seeks the approval of the Company's stockholders of
the CompX International Inc. Variable Compensation Plan. The Board of Directors
adopted the Plan in February 1999 subject to stockholder approval. The text of
the Plan is attached as Appendix A. The description of the Plan in this proxy
statement is qualified in its entirety by reference to the complete text of the
Plan in Appendix A.
General
The Board of Directors believes short term incentive compensation is an
important element of compensation in order to attract and retain high quality
executives, officers and employees and provide further incentives to such
executives and employees to maximize the Company's annual financial performance
and thereby increase stockholder value. To this end, the Board of Directors
adopted the Plan to provide an annual incentive to all participants in the Plan.
The Plan rewards employees based on business unit annual performance. The Board
of Directors submits the Plan to the Company's stockholders for approval in
accordance with certain legal requirements that, if complied with, would allow
the Company to deduct fully compensation paid under the Plan.
AN AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES OF THE COMPX CLASS A AND
CLASS B COMMON STOCK PRESENT AND VOTING AS A SINGLE CLASS AT THE MEETING IS
NECESSARY FOR APPROVAL OF THE PLAN. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" APPROVAL OF THE COMPX INTERNATIONAL INC. VARIABLE COMPENSATION PLAN.
Summary Description of the Plan
Participation and Administration. The Company's management selects from
among the Company's employees those who shall participate in the Plan and the
award group in which each such participant shall be included. The MD&C
Committee or such other committee as is designated by the Board from time to
time (the "Committee"), however, determines participation by the Company's
executive officers. Approximately 82 employees, including the Company's chief
executive officer and other executive officers, currently participate in the
Plan. Any employee, other than certain executive officers, may be selected as a
participant in the Plan at any time during the year. Certain executive officers
may be designated as participants under the Plan only during the first 90 days
of each fiscal year ("Certain Executive Officers"). These Certain Executive
Officers are executive officers who would be entitled to receive an award under
the Plan and if the award did not qualify as performance based compensation
under the Code the award would prevent the Company from fully deducting the
compensation paid to such executive officer. The Committee administers the Plan
and consists of two or more members who meet the requirements of Section 162(m)
of the Code.
Determination of Variable Compensation Awards. Prior to the 90th day of
the current fiscal year, the Board of Directors shall approve the annual
operating plan for the Company and each of its business units for such year.
Based on such approved annual operating plan, the Committee shall establish
financial performance goals at three levels, the minimum, target and maximum
performance levels for the Company and each of its business units. The
Committee, in its discretion, establishes the applicable objective financial
performance criteria for determining Company and business unit performance
levels. For 1999 (subject to stockholder approval of the Plan), the Committee
used operating income as the measure to determine financial performance for
variable compensation. During the first 90-day period of each year, the
Committee also sets the performance percentage applicable to each business unit
performance level that could be achieved under the Plan by the participants
under the Plan. In the event that the achieved performance by a business unit
is below the minimum business unit performance level for such year, no payments
shall be made to those participants under the Plan whose variable compensation
award is based solely on such business unit's performance. The chief executive
officer, with respect to Plan participants other than the executive officers,
and the Committee, with respect to executive officers other than Certain
Executive Officers, may approve payments of special awards to participants
designated by the chief executive officer or the Committee, respectively.
Within 90 days of the end of each fiscal year, the Committee determines and
approves the performance level achieved by each of the Company's business units
for such ended fiscal year. Such levels are then used in determining the
corresponding performance percentage and award for each Plan participant. Each
participant's award under the Plan is determined by multiplying the applicable
performance percentage times such participant's base salary. The Committee
approves payment of the variable compensation awards in the aggregate to all
participants and to each of the executive officers including the chief executive
officer. Except in the case of death or total disability, a participant must be
employed by the Company on the date the Committee approves the awards for the
completed fiscal year in order for such participant to receive an award under
the Plan for such year. No participant may receive payments under the Plan in
excess of $3 million annually nor, without the consent of the Committee, receive
payments under the Plan that the Company cannot fully deduct under the Code.
The amounts that any participant in the Plan, including the chief executive
officer and other executive officers, will receive under the Plan is not
determinable in advance prior to the completion of the Company's fiscal year and
the determination by the Committee of the actual performance level the Company
and/or applicable business units achieved for such year.
The Plan is essentially what the Company used to determine variable
compensation that it paid to certain of its employees in 1998. The Company paid
an aggregate of approximately $1.4 million in variable compensation to its
employees in 1998 under procedures similar to that of the Plan, approximately
$0.8 million of which went to the Company's executive officers. For more
information regarding the variable compensation amounts paid in 1998 to the
named executive officers see the bonus column of the Summary Compensation Table
above. See also the "Report on Executive Compensation."
Pursuant to the Plan, and subject to stockholder approval, the MD&C
Committee in 1999 set the minimum, target and maximum operating income
performance levels under the Plan based on the Company's 1999 business plan that
the Board of Directors approved. If the Company achieves the 1999 minimum level
operating performance, executive officers are eligible to receive variable
compensation payments that range between 20% and 50% of base salary, depending
on the executive. If the Company achieves the 1999 target performance level,
executive officers are eligible to receive variable compensation payments that
range between 30% and 100% of base salary, depending on the executive. If the
Company achieves the 1999 maximum performance level, executive officers are
eligible to receive variable compensation payments that range between 40% and
150% of base salary, depending on the executive.
Certain Executive Officers. The Plan, as adopted in February 1999,
includes various limitations required by section 162(m) of the Code applicable
only to Certain Executive Officers. For example, the salary used to determine
awards of Certain Executive Officers is the actual regular salaries at the rate
in effect prior to the 90th day of the applicable fiscal year. Furthermore, the
applicable business unit performance percentages and performance levels with
respect to Certain Executive Officers may not be changed after the first 90 days
of the fiscal year. Finally, no discretionary awards or bonuses may be paid to
such officers under the Plan. However, the Committee or the Board of Directors
may approve awards or bonuses under their general authority or under any other
discretionary plan.
In the event the Committee determines, on the advice of tax counsel, that
section 162(m) of the Code will not adversely affect the deductibility for
federal income tax purposes of any amount paid to Certain Executive Officers if
the limitations set forth in the Plan with respect to Certain Executive Officers
are disregarded, then the Committee in its discretion may disregard such
limitations.
Amendments. The Committee, in its sole discretion, without notice, at any
time and from time to time, may modify or amend, in whole or in part, any or all
of the provisions of the Plan, or suspend or terminate it entirely.
Rights of Participants and Nontransferability. Nothing in the Plan shall
interfere with or limit in any way the right of the Company to terminate or
change a participant's employment at any time, nor confer upon any participant,
any right to continue in the employ of the Company for any period of time or to
continue such participant's present or any other rate of compensation. No
participant in a previous fiscal year, or other employee at any time, shall have
a right to be selected for participation in the Plan in a current or future
year. No right or interest of any participant in the Plan shall be assignable
or transferable, or subject to any lien, directly, by operation of law or
otherwise, including execution, levy, garnishment, attachment, pledge and
bankruptcy.
Effective Date. Subject to stockholder approval, the Plan is effective as
of January 1, 1999.
OTHER MATTERS
The Board of Directors knows of no other business that will be presented
for consideration at the Meeting. If any other matters properly come before the
Meeting, the persons designated as agents in the enclosed proxy card or voting
instruction form will vote on such matters in accordance with their best
judgment.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP served as the Company's primary
independent public accountants for the year ended December 31, 1998 and is
expected to be considered for appointment as such for the year ended December
31, 1999. Representatives of PricewaterhouseCoopers LLP are not expected to
attend the Meeting.
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING IN 2000
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual stockholder meetings, consistent with rules
adopted by the Commission. Such proposals must be received by the Company not
later than December 11, 1999 to be considered for inclusion in the proxy
statement and form of proxy relating to the Annual Meeting of Stockholders in
2000. For proposals to be brought at the 2000 Annual Meeting of Stockholders
but not included in the proxy statement for such meeting, the Company's bylaws
require that the proposal must be delivered to or mailed and received at the
principal executive offices of the Company no later than ten days following the
date on which notice of the date of the annual meeting was mailed or public
disclosure of the date of the meeting was made. Any such proposals should be
addressed to: Corporate Secretary, CompX International Inc., Three Lincoln
Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697.
1998 ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, as filed with the Commission, is included as part of
the annual report mailed to the Company's stockholders with this proxy
statement. Copies of such annual report may be obtained without charge by
writing: Corporate Secretary, CompX International Inc., Three Lincoln Centre,
5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697.
COMPX INTERNATIONAL INC.
Dallas, Texas
March 31, 1999
APPENDIX A
CompX International Inc.
Variable Compensation Plan
- -------------------------------------------------------------------------------
ARTICLE I.
GENERAL
Section 1.1. Purpose of the Plan. The purpose of the Plan is to attract
and retain high quality executives, officers and employees and provide further
incentives to such executives and employees to maximize the Company's annual
financial performance and thereby increase stockholder value.
Section 1.2. Definitions. Whenever used in this Plan, the following terms
shall have the meanings set forth below unless otherwise expressly provided.
(a) "Annual Operating Plan" shall have the meaning given such term in
Section 4.3.
(b) "Award Group" means one or more groups the Committee or the
Company's management, as applicable, establish pursuant to the Plan and to
which the Committee or the Company's management, as applicable, may
delegate Participants from time to time.
(c) "Base Salary" means:
(i) with respect to Participants other than Certain Executive
Officers, the regular salary actually paid during a Plan Year to a
Participant while participating in the Plan, including any salary
reduction contributions made to the Company's 401(k) Plan or other
deferred compensation plans, but excluding any Variable Compensation
Awards under the Plan and any other bonuses, incentive pay or special
awards; and
(ii) with respect to Certain Executive Officers, the Certain
Executive Officer's actual regular salary at the rate in effect prior
to the ninetieth (90th) day of the Plan Year and not after the date
the Company Performance Levels are established, including any salary
reduction contributions made to the Company's 401(k) Plan or other
deferred compensation plans, but excluding any Variable Compensation
Awards under the Plan and any other bonuses, incentive pay or special
awards.
(d) "Board" means the board of directors of CompX International Inc.
(e) "Certain Executive Officer" means for each Plan Year, each
Executive Officer on the ninetieth day of the Plan Year whose Base Salary
and Award Group would entitle the Executive Officer, upon the Company
achieving the Maximum Company Performance Level for such Award Group, to
receive a Variable Compensation Award that if the award did not qualify as
performance based compensation under the Code would prevent the Company
from fully deducting the compensation paid to such Executive Officer in
such Plan Year pursuant to section 162(m) of the Code.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the Management Development and Compensation
Committee of the Board or such other committee as may be designated from
time to time by the Board, which shall consist of two or more members who
meet the requirements of section 162(m) of the Code. The members of the
Committee shall be appointed by the Board, and any vacancy on the Committee
shall be filled by the Board.
(h) "Company" means CompX International Inc. and its direct or
indirect subsidiaries.
(i) "Company Performance Level" means with respect to each Award
Group the Minimum Company Performance Level, Target Company Performance
Level or Maximum Company Performance Level (each as described in
Section 4.3 below) achieved or to be achieved by the Company or applicable
Company business unit for the applicable Plan Year.
(j) "Employee" means an employee of the Company.
(k) "Executive Officer" shall mean an "executive officer" as set
forth in rule 3b-7 promulgated under the Securities Exchange Act of 1934.
(l) "401(k) Plan" means an employee welfare plan of the Company
qualified under the provisions and regulations of section 401(k) of the
Code.
(m) "Maximum Company Performance Level" shall have the meaning given
such term in Section 4.3.
(n) "Minimum Company Performance Level" shall have the meaning given
such term in Section 4.3.
(o) "Participant" means an Employee, including an Executive Officer,
the Committee or the Company's management, as applicable, selects or
designates pursuant to the Plan for participation in the Plan for a
specified Plan Year.
(p) "Performance Percentage" means with respect to an Award Group the
percentage the Committee assigns to the Award Group at each different
Company Performance Level for the Award Group.
(q) "Plan Year" means the Company's fiscal year.
(r) "Target Company Performance Level" shall have the meaning given
such term in Section 4.3.
(s) "Total and Permanent Disability" shall have the meaning given
such term in the retirement programs of the Company.
(t) "Retirement" shall have the meaning given such term in the
retirement programs of the Company.
(u) "Variable Compensation Award" with respect to any Participant for
any Plan Year means an amount to be paid by the Company to such Participant
under the terms of the Plan equal to the product of (A) the applicable
Performance Percentage for such Participant for such Plan Year, times (B)
the Base Salary of such Participant for such Plan Year.
Section 1.3. Gender and Number. Except when otherwise indicated by the
context, words in the masculine gender, when used in the Plan, shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.
ARTICLE II.
ADMINISTRATION OF THE PLAN
Section 2.1. Administration.
(a) The Committee shall administer the Plan. Except with respect to
the Committee's administrative authority regarding Executive Officers, the
Committee may delegate its day-to-day administrative authority regarding
the Plan to the chief executive officer. The chief executive officer may
in turn re-delegate from time to time said administrative authority to such
officers and employees of the Company as he or she deems appropriate. The
Company's management shall assist and provide such recommendations to the
Committee as the Committee may request from time to time in connection with
the administration of the Plan.
(b) Subject to the limitations of the Plan, the Committee shall, in
addition to other powers and duties the Plan gives the Committee elsewhere
in the Plan: (i) designate and approve Performance Percentages applicable
in determining Variable Compensation Awards for payment to Participants in
such forms and amounts as it shall determine from time to time, (ii) impose
such limitations, restrictions and conditions upon such Variable
Compensation Awards as it shall deem appropriate, (iii) interpret the Plan
and adopt, amend and rescind administrative guidelines relating to the
Plan, (iv) correct any defects or omissions or reconcile any
inconsistencies in the Plan, the Performance Percentages or in any Variable
Compensation Award granted hereunder and (v) make all other necessary
determinations and take all other actions necessary or advisable for the
implementation and administration of the Plan. The Committee's
determinations on matters within its authority shall be conclusive and
binding.
(c) All expenses associated with the Plan shall be borne by the
Company subject to such allocation to its subsidiaries and business units
as it deems appropriate.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
Section 3.1. Eligibility and Participation. Subject to the limitations of
the Plan, the Committee shall determine the Executive Officers to be selected as
Participants under the Plan and the Award Groups in which each such Executive
Officer shall be included. Except for Executive Officers, the Company's
management shall determine the Employees to be selected as Participants under
the Plan and the Award Group in which each such Participant shall be included.
Any Employee, except Certain Executive Officers, may be designated and selected
as a Participant in the Plan at any time during a Plan Year, including after the
ninetieth (90th) day of such Plan Year.
ARTICLE IV.
VARIABLE COMPENSATION AWARDS
Section 4.1. Designation of Variable Compensation Awards. The Company's
management shall approve, or in case of Executive Officers recommend to the
Committee, the Performance Percentage and the corresponding Variable
Compensation Award to be paid to each Participant in accordance with the terms
of the Plan for the immediately preceding Plan Year. Within the first ninety
(90) days after the end of each Plan Year, the Committee shall review such
recommendations, make any adjustment it deems appropriate in accordance with the
terms of the Plan, and approve the grant and payment of the corresponding
Variable Compensation Awards in the aggregate and to the Executive Officers.
Section 4.2. Establishment of Performance Percentages. Management of the
Company shall assist and provide to the Committee management's recommendations
regarding the Performance Percentages applicable to each Company Performance
Level for each Award Group. No later than the ninetieth (90th) day of each Plan
Year, the Committee shall review such recommendations, make any adjustments it
deems appropriate in accordance with the terms of the Plan, and approve the
Performance Percentages for all Award Groups. In the event the Committee takes
no action prior to the ninetieth (90th) day of such Plan Year to change, amend
or rescind the Performance Percentages in effect for the immediately preceding
Plan Year, the Performance Percentages for such Plan Year shall be deemed to be
the Performance Percentages for the Award Group or similar Award Group in the
immediately preceding Plan Year.
Section 4.3. Company Performance Levels. Prior to the ninetieth (90th)
day of a Plan Year, the Company's management shall make recommendations to the
Board regarding the annual operating plan for the Company and each of the
Company's business units for such Plan Year (the "Annual Operating Plan"). The
Board shall approve the Annual Operating Plan with any modifications it deems
appropriate. Based on the approved Annual Operating Plan for such Plan Year,
the Committee shall establish the financial performance goals for the Company
and its applicable business units at the following three levels, which shall be
designed to help focus the Participants' attention on achieving superior annual
financial performance results in light of existing conditions: a threshold
level, which is the minimum financial performance income level for any award to
be made under the Plan (the "Minimum Company Performance Level"), a target
financial performance income level (the "Target Company Performance Level") and
a maximum financial performance level (the "Maximum Company Performance Level").
The Committee shall in its discretion establish the applicable objective Company
financial performance criteria for determining Company Performance Levels.
Section 4.4. Determination of Performance Percentages. Performance
Percentages for all Award Groups shall be based upon the Performance Percentage
assigned by the Committee for such Participant's Award Group with respect to
each achieved Company Performance Level for such Plan Year. In the event that
the Company Performance Level achieved is below the Minimum Company Performance
Level, the Variable Compensation Award for all Participants subject solely to
such Company Performance Level shall be 0%. The Performance Percentages with
respect to each Award Group for any Plan Year may be set or changed by the
Committee during the first ninety (90) days of such Plan Year.
Section 4.5. Adjustment of Company Performance Levels. Except with
respect to Certain Executive Officers as provided in Article VI, if during any
Plan Year external or internal changes or other unanticipated business
conditions have materially affected the appropriateness of the Company
Performance Levels, the Committee may, in its sole discretion, determine
appropriate increases or decreases to the Company Performance Levels for such
Plan Year.
Participants shall not be entitled to any Variable Compensation Award under
the Plan unless the Company achieves at the corresponding Company Performance
Level. Except as provided in Article VI, however, the chief executive officer,
in the case of Participants other than Executive Officers, and the Committee, in
the case of Executive Officers other than Certain Executive Officers, may
approve payment of special awards to designated Participants.
Section 4.6. Determination of Company Performance Level Achieved and
Payment of Variable Compensation Awards. Within ninety (90) days after the end
of each Plan Year, the Company's management shall report to the Committee the
Company Performance Level achieved by the Company and each applicable business
unit for such Plan Year. The Committee shall review such report and certify in
writing or set forth in a resolution of the Committee the Company Performance
Level achieved by the Company and each applicable Company business unit for such
Plan Year. Such achieved Company Performance Level shall be used in determining
the corresponding Performance Percentage and Variable Compensation Award for
such Plan Year as provided in Sections 4.1 and 4.4. The Committee shall approve
the grant and payment of the corresponding Variable Compensation Awards to
Participants pursuant to terms of the Plan. Payment of Variable Compensation
Awards shall be made following certification by the Committee of the Company
Performance Level achieved for such Plan Year and shall be paid in cash. Except
as provided in Article V, Participants must be employed by the Company on the
date the Committee certifies the Company Performance Level achieved for such
Plan Year to receive the approved award for such Plan Year.
Section 4.7. Limitation on Payments. The amount payable to a Participant
pursuant to this Plan with respect to any Plan Year shall not exceed $3 million.
Without the written consent of the Committee, the Company shall not pay any
amount to a Participant pursuant to this Plan with respect to any Plan Year
unless the Company can fully deduct such amount pursuant to section 162(m) of
the Code.
ARTICLE V.
TERMINATION OF EMPLOYMENT
Section 5.1. Termination of Employment Due to Death, Disability,
Retirement, Or Transfer To Affiliate Not Included In Plan. In the event a
Participant's employment with the Company is terminated by reason of death,
Total and Permanent Disability, Retirement or a Participant is transferred to an
affiliate that does not participate in the Plan, the Participant's Variable
Compensation Award shall be based on (i) the Participant's actual Base Salary
paid through the date of termination or transfer and (ii) the applicable
Performance Percentage. The Variable Compensation Award shall be paid in
accordance with Article IV.
Section 5.2. Termination For Any Other Reason. Except for terminations
listed in Section 5.1, in the event a Participant's employment is terminated for
any other reason including voluntary and involuntary termination prior to
certification by the Committee of the Company Performance Level achieved for
such Plan Year, the Participant shall not be entitled to a Variable Compensation
Award with respect to such Plan Year. However, the chief executive officer, in
his sole discretion, may approve the payment to such Participant of a Variable
Compensation Award under the Plan with respect to such Plan Year, except that in
the case of Executive Officers the chief executive officer may make such
recommendation to the Committee, which shall have sole discretion to approve
such award.
ARTICLE VI.
CERTAIN EXECUTIVE OFFICERS
Section 6.1. Applicability Of Article VI. The provisions of this
Article VI shall apply only to Certain Executive Officers. In the event of any
inconsistencies between this Article VI and the other Plan provisions, the
provisions of this Article VI shall control.
Section 6.2. Performance Levels and Award Group Determinations. Prior to
ninety (90) days after the beginning of the Plan Year, the Committee shall
determine the Certain Executive Officers to be selected as Participants under
the Plan and the Award Groups in which each such Certain Executive Officer shall
be included.
Section 6.3. No Mid-Year Change In Award Percentages. Variable
Compensation Awards for Certain Executive Officers shall be based solely on the
Performance Percentage for the applicable Award Group as set by the Committee
during the first ninety (90) days of the Plan Year.
Section 6.4. No Adjustments Of Performance Goals. Once established,
Company Performance Levels shall not be changed after the first ninety (90) days
of the Plan Year with respect to Certain Executive Officers. Certain Executive
Officers shall not receive any Variable Compensation Award under this Plan when
the Company or the applicable Company business unit fails to achieve at least
the applicable Minimum Company Performance Level.
Section 6.5. Discretionary Adjustments. The Committee retains the
discretion to eliminate or decrease the amount of the Variable Compensation
Award otherwise payable to a Certain Executive Officer.
Section 6.6. Possible Modification. If, on advice of the Company's tax
counsel, the Committee determines that Code section 162(m) and the regulations
thereunder (or similar successor section and regulations) will not adversely
affect the deductibility for federal income tax purposes of any amount paid to a
Certain Executive Officer under the Plan by disregarding one or more of the
limitations regarding Certain Executive Officers in this Plan, then the
Committee may, in its sole discretion, disregard such limitations.
Section 6.7. No Discretionary Awards or Bonuses. No discretionary awards
or bonuses shall be paid to Certain Executive Officers pursuant to this Plan.
However, nothing in this Plan shall be construed as limiting the right of the
Committee or the Board to make any other award or bonus under their general
authority or under any other plan.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.1. Nontransferability. No right or interest of any Participant
in the Plan shall be assignable or transferable, or subject to any lien,
directly, by operation of law or otherwise, including execution, levy,
garnishment, attachment, pledge and bankruptcy.
Section 7.2. Tax Withholding. The Company shall have the right to deduct
from all awards or payments under this Plan, any foreign, federal, state or
local taxes required by law to be withheld with respect to such payments.
Section 7.3. Amendments. The Committee, in its sole discretion, without
notice, at any time and from time to time, may modify or amend, in whole or in
part, any or all of the provisions of this Plan, or suspend or terminate it
entirely.
Section 7.4. Indemnification. Each person who is or shall have been a
member of the Committee or the Board or who is or shall have been an Employee of
the Company acting on behalf of the Committee shall be indemnified and held
harmless by the Company against and from any loss, cost, liability or expense,
including without limitation, fees and expenses of legal counsel, that may have
been imposed upon or reasonably incurred by him in connection with or resulting
from any claim, action, suit or proceeding to which he may be a party or in
which he may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of any
judgment in any such action, suit or proceeding against him, provided he shall
give the Company an opportunity, at its own expense, to handle and defend the
same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such person may be entitled under the Company's
certificate of incorporation or bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify him or hold him harmless.
Section 7.5. Beneficiary Designation. Each Participant under the Plan may
name, from time to time, any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his death before he received any or all of such benefit. Each
designation will revoke all prior designations by the same Participant, shall be
in a form prescribed by the Company, and will be effective only when filed by
the Participant in writing with the Company during his lifetime. In the absence
of any such designation, or if the designated beneficiary is no longer living,
benefits shall be paid to the surviving member(s) of the following classes of
beneficiaries, with preference for classes in the order listed below:
(a) Participant's spouse (unless the parties were divorced or legally
separated by court decree);
(b) Participant's children (including children by adoption);
(c) Participant's parents (including parents by adoption); and
(d) Participant's executor or administrator.
If a class has more than one member, benefit payments shall be made in
equal shares among members of the class.
Section 7.6. Rights of Participants. Nothing in this Plan shall interfere
with or limit in any way the right of the Company to terminate or change a
Participant's employment at any time, nor confer upon any Participant, any right
to continue in the employ of the Company for any period of time or to continue
his present or any other rate of compensation. No Participant in a previous
Plan Year, or other employee at any time, shall have a right to be selected for
participation in a current or future Plan Year.
Section 7.7. Governing Law. The Plan shall be construed in accordance
with and governed by the laws of the state of Texas.
Section 7.8. Effective Date. The Plan shall be deemed effective as of
January 1, 1999.
EXECUTED to evidence this CompX International Inc. Variable Compensation
Plan adopted by the Board on February 17, 1999 to be effective as of January 1,
1999 and approved by the Company's stockholders on , .
------ -- ----
CompX International Inc.
By:
--------------------------------
A. Andrew R. Louis, Secretary
CompX International Inc.
16825 Northchase Drive, Suite 1200
Two Greenspoint Plaza
Houston, Texas 77060
PROXY
COMPX INTERNATIONAL INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF COMPX INTERNATIONAL INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1999
The undersigned hereby appoints Joseph S. Compofelice, John A. Miller and
A. Andrew R. Louis, and each of them, proxy and attorney-in-fact for the
undersigned, with full power of substitution, to vote on behalf of the
undersigned at the 1999 Annual Meeting of Stockholders (the "Meeting") of CompX
International Inc., a Delaware corporation ("CompX"), to be held at the offices
of Valhi, Inc. at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas,
Texas on Friday, May 14, 1999, at 10:00 a.m. (local time), and at any
adjournment or postponement of said Meeting, all of the shares of class A and
class B common stock, par value $0.01 per share, of CompX standing in the name
of the undersigned or that the undersigned may be entitled to vote on the
proposals set forth, and in the manner directed, on the reverse side.
THIS PROXY MAY BE REVOKED AS SET FORTH IN THE COMPX PROXY STATEMENT THAT
ACCOMPANIED THIS PROXY.
This proxy, if properly executed, will be voted in the manner directed on
the reverse side. If no direction is made, this proxy will be voted "FOR" all
nominees for election as directors named in proposal 1, "FOR" approval of the
CompX International Inc. Variable Compensation Plan as described in proposal 2
and, to the extent allowed by the federal securities laws, in the discretion of
the proxies as to all other matters that may properly come before the meeting
and any adjournment or postponement thereof.
PLEASE SIGN, DATE AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
SEE REVERSE SIDE.
COMPX INTERNATIONAL INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
1. Election of Seven Directors
Nominees: Paul M. Bass, Jr., David A. Bowers, Joseph S. Compofelice, Edward
J. Hardin, Ann Manix, Glenn R. Simmons and Robert W. Singer.
[ ] FOR all nominees
[ ] WITHHOLD AUTHORITY to vote for all nominees
[ ] FOR all nominees (except as marked)
------------------------------------------------------------------------
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided above.)
2. Approval of the CompX International Inc. Variable Compensation Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting and any adjournment or
postponement thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Address Change [ ]
(Instruction: Make necessary corrections to the mailing label.)
SIGNATURE(S) DATE
----------------------------- -----------------------
SIGNATURE(S) DATE
----------------------------- -----------------------
NOTE: Please sign exactly as the name that appears on this card. Joint owners
should each sign. When signing other than in an individual capacity,
please fully describe such capacity. The undersigned hereby revokes all
proxies heretofore given to vote at said Meeting and any adjournment or
postponement thereof.
