To the Stockholders of
Keystone Consolidated Industries, Inc.:
The Annual Meeting of Stockholders of Keystone Consolidated Industries,
Inc., a Delaware corporation ("Keystone" or the "Company"), will be held on
August 16, 1995, at 9:00 a.m. local time, at the Corporate Offices at 5430 LBJ
Freeway, Suite 1740, Dallas, Texas, for the following purposes:
(1) To amend and restate the Company's Certificate of Incorporation; and
(2) Assuming the Company's stockholders approve Item (1) above providing for
the classification of the Company's Board of Directors, to elect three
directors for terms of three years each, two directors for terms of two
years each, and two directors for terms of one year each, or, if Item (1)
above is not approved by the Company's stockholders, to elect seven
directors for terms of one year each and until their successors are duly
elected and qualified; and
(3) To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on July 10, 1995, as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting. A complete list of the stockholders entitled to
vote at the Annual Meeting will be made available for inspection by any
stockholder of record at the offices of Keystone during ordinary business hours
from July 17, 1995, through the time of the meeting for any purpose germane to
the meeting.
In order to ensure that you are represented at the meeting, please complete
the enclosed proxy card and return it promptly in the accompanying postage-paid
envelope. If you choose, you may still vote in person at the Annual Meeting
even though you previously signed your proxy. You may revoke your proxy by
following the procedures specified in the Proxy Statement. Your vote, whether
given by proxy or in person at the meeting, will be held in confidence by the
Inspector of Election for the Annual Meeting in accordance with the Company's
bylaws.
By order of the Board of Directors,
Sandra K. Myers
Secretary
Dallas, Texas
July 14, 1995
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
PROXY STATEMENT
Annual Meeting Of Stockholders
To be held on August 16, 1995
This Proxy Statement and the accompanying proxy card are being furnished to
the stockholders of Keystone Consolidated Industries, Inc. ("Keystone" or the
"Company") in connection with the solicitation of proxies by and on behalf of
the Board of Directors of Keystone for use at the 1995 Annual Meeting of
Stockholders to be held on Wednesday, August 16, 1995 at the Company's corporate
offices at 5430 LBJ Freeway, Suite 1740, Dallas, Texas, and at any adjournment
or postponement thereof (the "Annual Meeting"). Any stockholder executing a
proxy has the power to revoke it at any time before it is voted. A proxy may be
revoked by either (i) filing with the Inspector of Election a written revocation
of the proxy; (ii) appearing at the Annual Meeting and casting a vote contrary
to that indicated on the proxy; or (iii) submitting a duly executed proxy
bearing a later date. Attendance at the Annual Meeting alone, however, will not
in itself constitute the revocation of a proxy. This Proxy Statement and the
accompanying proxy card are first being mailed to stockholders on or about July
17, 1995. An annual report for the year ended December 31, 1994, has been
previously mailed to you.
Only stockholders of record at the close of business on July 10, 1995 (the
"Record Date") will be entitled to vote at the Annual Meeting. As of the Record
Date, there were 5,636,507 shares of Keystone's common stock, $1.00 par value
("Common Stock"), outstanding and entitled to vote. Each share is entitled to
one vote upon any proposal submitted for a vote at the Annual Meeting. The
presence, in person or by proxy, of the holders of a majority of the shares of
Common Stock entitled to vote at the Annual Meeting is necessary to constitute a
quorum for the conduct of business at the Annual Meeting. Shares of Common
Stock that are voted to abstain from any business coming before the Annual
Meeting and broker/nominee non-votes will be counted as being in attendance at
the Annual Meeting for purposes of determining whether a quorum is present.
Employees participating in the Keystone Consolidated Industries, Inc.
Deferred Incentive Plan, who are beneficial owners of Common Stock of the
Company under the plan, may use the enclosed card to instruct the plan trustees
how to vote the shares held for such employees, and the trustees will, subject
to the applicable plan, vote such shares in accordance with such instructions.
Mellon Securities Trust Company ("Mellon"), the transfer agent and
registrar for the Common Stock, has been appointed Inspector of Election for the
Annual Meeting by the Board of Directors to receive proxies, tabulate the vote
and serve as Inspector of Election at the Annual Meeting. All proxies and
ballots delivered to Mellon shall be kept confidential by Mellon in accordance
with the Company's bylaws.
The cost of preparing, printing, assembling and mailing this Proxy
Statement and other material furnished to stockholders in connection with the
solicitation of proxies will be borne by Keystone. In addition to the
solicitation of proxies by use of the mails, officers, directors, and employees
of Keystone may solicit proxies by written communication, telephone or personal
calls for which such persons will receive no special compensation.
AGENDA ITEM 1
APPROVAL OF AMENDMENTS TO AND
RESTATEMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION
General
The Board of Directors of the Company proposes to amend and restate the
Certificate of Incorporation of the Company in the form attached as Appendix A
hereto (the "Restated Certificate"). If approved by the affirmative vote of the
holders of shares representing two-thirds (66.67%) of the outstanding shares of
Common Stock of the Company, the Restated Certificate will become effective upon
its filing with the Secretary of State of the State of Delaware.
The Company was incorporated on May 18, 1955, and its Certificate of
Incorporation subsequently has been amended on several occasions. The proposed
Restated Certificate will incorporate into a single document the several
amendments made to the original Certificate of Incorporation, and will amend and
update certain provisions of the Certificate of Incorporation. Specifically,
the proposed Restated Certificate will (i) replace the purposes clause of the
Certificate of Incorporation with a simplified and more general statement of
such purposes; (ii) eliminate the right of stockholders to cumulate votes in the
election of directors; (iii) classify the Board of Directors into three classes
of directors with staggered three-year terms; (iv) reduce the requisite
stockholder vote required in connection with any sale, lease or exchange of all
of the property and assets of the Company and (v) reduce the requisite
stockholder vote to approve future amendments to the Restated Certificate.
In addition to effecting the amendments to the Certificate of Incorporation
noted above, the proposed Restated Certificate deletes ineffective and
unnecessary provisions and reflects only the current operative provisions of the
Company's Certificate of Incorporation. In that regard, the Restated
Certificate (a) updates the address of the Company's registered agent in Article
SECOND and (b) eliminates reference to the names and places of residence of the
original incorporators of the Company, which information is not required to be
in the Restated Certificate.
Change to Purposes Clause
The current purposes clause of the Certificate of Incorporation, which has
been in effect for many years, details numerous activities in which the Company
may legally engage. Under current Delaware law, this specific enumeration of
business functions is no longer necessary, and a brief statement of business
purpose suffices. The proposed amendment to the purposes clause contained in
Article THIRD of the Restated Certificate would not extend or restrict the
Company's current operations, but would generally permit any kind of corporate
activity as long as it is lawful.
Elimination of Cumulative Voting
Article FOURTH of the Company's Certificate of Incorporation presently
permits stockholders to cumulate votes in the election of directors.
Specifically, the third paragraph of Article FOURTH provides as follows:
At all elections of directors of the corporation, each holder of Common
Stock entitled to vote at such election shall be entitled to as many votes
as shall equal the number of his shares of Common Stock multiplied by the
number of directors to be elected, and he may cast all of such votes for a
single director or may distribute them among the number to be voted for, or
any two or more of them, as he may see fit. In respect of all other
matters as to which the vote or consent of stockholders of the corporation
shall be required to be taken, the holders of Common Stock shall be
entitled to one vote for each share of stock held by them.
Cumulative voting permits holders of shares of Common Stock to cast, for
any one or more nominees for the Board, a number of votes equal to the product
of the number of shares such stockholder owns and the number of nominees
proposed for election to the Board. Thus, by casting all of their votes for one
nominee, minority stockholders may succeed in electing one or more nominees to
the Board who would not otherwise have received sufficient votes to be elected.
Subject to stockholder approval, the Board of Directors proposes to amend
Article FOURTH by eliminating in its entirety the above-quoted third paragraph
thereof. The Board believes that the benefit of allowing minority stockholders
the possibility of electing a Board representative is outweighed by the burden
and expense of administering cumulative voting and the risk that an individual
may seek to be elected to the Board of Directors merely to represent the
interest of a minority stockholder or minority stockholder group as opposed to
the interests of all stockholders.
Harold C. Simmons through his affiliates, may be deemed as of the Record
Date to be the beneficial owner of approximately 67% of the outstanding shares
of Common Stock, and currently may be deemed to have the voting power to elect a
majority of the Company's directors and, if the proposal to eliminate cumulative
voting is approved, will have the voting power to elect the entire Board of
Directors of the Company. The proposal to eliminate cumulative voting is not in
response to any effort by a minority stockholder or group of stockholders to
obtain representation on the Board of Directors or to acquire greater influence
in the management of the Company's business, nor is the Company aware of any
such effort.
Classified Board of Directors
Under the existing provisions of the Company's Certificate of Incorporation
and Bylaws, directors of the Company are elected annually for terms of one year.
Subject to stockholder approval, the Board of Directors of the Company proposes
to amend Article EIGHTH of the Certificate of Incorporation to provide for the
classification of the Board of Directors into three classes of directors with
staggered terms of office. Specifically, the Board of Directors proposes to add
a new paragraph after the first paragraph of Article EIGHTH that would provide
as follows:
The board of directors shall be divided into three classes, designated
Class I, Class II and Class III, as nearly equal in number as possible,
and the term of office of directors of one class shall expire at each
annual meeting of stockholders, and in all cases as to each director
until his successor shall be elected and shall qualify (except in cases
where no successor is elected due to a reduction in the size of the
board) or until his earlier resignation, removal from office, death or
incapacity. Additional directorships resulting from an increase in the
number of directors shall be apportioned among the classes as equally
as possible. Vacancies, including vacancies created by an increase in
the size of the board of directors, shall be filled by the affirmative
vote of a majority of the entire board of directors. The initial term
of office of directors of Class I shall expire at the annual meeting of
stockholders in 1996; that of Class II shall expire at the annual
meeting of stockholders in 1997; and that of Class III shall expire at
the annual meeting of stockholders in 1998; and in all cases as to each
director until his successor shall be elected and shall qualify (except
in cases where no successor is elected due to a reduction in the size
of the board) or until his earlier resignation, removal from office,
death or incapacity. At each annual meeting of stockholders, the
number of directors equal to the number of directors of the class whose
term expires at the time of such meeting (or, if less, the number of
directors properly nominated and qualified for election) shall be
elected to hold office until the third succeeding annual meeting of
stockholders after their election.
The proposed amendment to classify the board provides that the directors
will be classified into three classes, as nearly equal in number as possible.
To implement the classified board, the Class I, Class II and Class III directors
would initially be elected at the 1995 Annual Meeting. The Board of Directors
currently has seven members and, therefore, each class would initially consist
of two or three directors. If the proposed amendment is adopted, Class I
directors elected at the 1995 Annual Meeting will hold office until the 1996
annual meeting; Class II directors elected at the 1995 Annual Meeting will hold
office until the 1997 annual meeting; and Class III directors elected at the
1995 Annual Meeting will hold office until the 1998 annual meeting; and, in each
case, until their successors are duly elected and qualified (except in cases
where no successor is elected due to a reduction in the size of the Board), or
until earlier resignation, removal from office, death or incapacity. At each
annual meeting commencing with the 1996 annual meeting, directors elected to
succeed those in the class whose terms expire will be elected for three-year
terms so that the terms of one class of directors will expire each year. Thus,
after 1995, stockholders will elect only one-third (or, if one of the classes
has one more or one less director, approximately one-third) of the directors at
each annual meeting. Each director will serve until a successor is elected and
qualified (except in cases where no successor is elected due to a reduction in
the size of the Board), or until earlier resignation, removal from office, death
or incapacity. Vacancies, including vacancies created by an increase in the
size of the Board of Directors, shall be filled by the affirmative vote of a
majority of the entire board. The Board of Directors presently has no plans,
arrangements, commitments or understandings with respect to increasing or
decreasing the size of the board or any class of directors.
For information regarding the nominees for election to the Board of
Directors at the 1995 Annual Meeting and the class of directors in which each
director will initially serve if the proposed amendment to classify the board is
adopted, see "Election of Directors". If the proposal to classify the board is
not approved, all of the directors elected at the 1995 Annual Meeting will serve
for a one-year term to expire at the 1996 annual meeting.
The Board of Directors believes that dividing the directors into three
classes is advantageous to the Company and its stockholders because by providing
that directors will serve three-year terms rather than one-year terms, the
likelihood of continuity and stability in leadership and the policies formulated
by the board will be enhanced. While management has not experienced any
problems with continuity or stability in the past, it wishes to ensure that this
experience will continue and believes that the staggered election of directors
will promote continuity because only one-third of the directors will be subject
to election each year.
The proposed amendment to classify the Board will significantly extend the
time required to effect a change in control of the Board of Directors and may
discourage hostile take-over bids for the Company. Without a classified Board,
a change in control of the Board of Directors can be made by stockholders
holding a majority of the Company's shares at a single annual meeting. If the
Company implements a classified Board of Directors, it will take at least two
annual meetings for a majority of stockholders to elect a majority of the Board
and, accordingly, to effect a change in control of the Board of Directors,
because only a minority of the directors will be elected at each annual meeting.
Because of the additional time required to change control of the Board of
Directors, the classified Board amendment will tend to perpetuate incumbent
management. Since the amendment will increase the amount of time required for a
take-over bidder to obtain control of the Company without the cooperation of the
Board of Directors, even if the take-over bidder were to acquire a majority of
the Company's outstanding stock, it will tend to discourage certain tender
offers, perhaps including some tender offers which stockholders might feel would
be in their best interests. A classified Board will also make it more difficult
for the stockholders to change the composition of the Board of Directors, even
if a majority of the stockholders disagree with the policies of the Board and
believe that such a change would be desirable.
Presently, any director or the entire Board may be removed, with or without
cause, by holders of a majority of the shares then entitled to vote at an
election of directors; provided, however, if less than the entire Board is to be
removed, no director may be removed without cause if the votes cast against the
removal would be sufficient to elect him if then cumulatively voted at an
election of the entire Board. Delaware law provides that, unless the
certificate of incorporation provides otherwise, directors serving on a
classified board of directors may be removed only for cause. The Restated
Certificate does not provide otherwise. Accordingly, if the Restated
Certificate is approved by the stockholders, the Company's stockholders will not
have the right to remove a director without cause during his term.
Stockholders will continue to have the right to remove directors for cause by
the affirmative vote of a majority of the outstanding shares.
This proposal is not the result of any attempt to accumulate the Company's
securities or to obtain control of the Company by means of a merger, tender
offer, solicitation in opposition to management or otherwise, and the Company is
not aware of any such effort.
If the proposed amendment to classify the board is approved, the
appropriate sections of the Company's Bylaws will be amended by the Board of
Directors to conform to the amendment to the Certificate of Incorporation and
any provisions of the Company's Bylaws inconsistent with such amendment will be
amended as appropriate.
Reduction of Stockholder Vote Necessary for Approval of Sale of Assets
Article TENTH of the Company's Certificate of Incorporation currently
requires that any sale, lease or exchange of all of the property or assets of
the Company shall become effective only if authorized by the affirmative vote of
the holders of at least two-thirds (66.67%) of the outstanding shares entitled
to vote in respect thereof. The full text of Article TENTH is set forth below:
TENTH. Any sale, lease or exchange of all of the property and assets,
including good will and corporate franchises of this corporation, shall not
become effective unless authorized by the affirmative vote of the holders
of at least two-thirds of the outstanding shares entitled to vote at such
meeting unless any class of shares is entitled to vote as a class in
respect thereof, in which event such authorization shall require the
affirmative vote of the holders of at least two-thirds of the outstanding
shares or each class of shares entitled to vote as a class in respect
thereof and of the total outstanding shares entitled to vote at such
meeting.
Subject to stockholder approval, the Board of Directors of the Company
proposes to amend the Certificate of Incorporation to eliminate in its entirety
Article TENTH, the result of which will be that the provisions of the General
Corporation Law of the State of Delaware (the "Delaware GCL") will provide the
stockholder vote requirement with respect to transactions of the type addressed
by Article TENTH. Pursuant to Section 271 of the Delaware GCL, a corporation
may sell, lease or exchange all or substantially all of its property and assets,
including its goodwill and its corporate franchises, upon such terms and
conditions as its Board of Directors deems expedient when and as authorized by a
resolution adopted by the holders of a majority of the outstanding stock of the
corporation entitled to vote thereon.
The Board of Directors believes that it is in the best interest of the
Company to eliminate Article TENTH from the Certificate of Incorporation based
on its belief that it is inappropriate that a potential minority of stockholders
have the right to thwart the will of a majority of stockholders with respect to
a transaction of the type governed by Article TENTH. Harold C. Simmons through
his affiliates may be deemed currently to beneficially own in excess of two-
thirds of the outstanding shares of Common Stock and, accordingly, may be deemed
to have the voting power to approve transactions of the type governed by Article
TENTH without the necessity of securing the vote of any other stockholder. In
the future, however, Mr. Simmons and his affiliates may not retain the current
percentage of beneficial ownership of the Company's Common Stock. In such event,
the Board of Directors is concerned that it may be difficult to secure the
approval of two-thirds of the outstanding shares with respect to a transaction
governed by Article TENTH, even though favored by a majority of the outstanding
shares. Stockholder apathy could effectively prohibit the Company from pursuing
a transaction that is otherwise desired by a majority of the Company's
stockholders.
One effect of this proposal, however, will be that Mr. Simmons and his
affiliates will continue to retain the voting power to approve transactions of
the type governed by Article TENTH without the necessity of securing the
approval of other stockholders even if their combined beneficial ownership of
the Common Stock falls below two-thirds (but remains in excess of 50% of the
outstanding Common Stock).
The Board of Directors has no present or contemplated plans to enter into
any transaction which would require stockholder approval pursuant to Article
TENTH. Nevertheless, the Board believes that this change is timely and in the
best interest of the Corporation.
Reduction of Stockholder Vote Necessary for Approval of Amendments to
Certificate of Incorporation
The second paragraph of Article TWELFTH of the Company's Certificate of
Incorporation currently provides that amendments to the Certificate of
Incorporation shall only be effective upon the affirmative approval of the
holders of at least two-thirds (66.67%) of the outstanding shares entitled to
vote with respect thereto. The text of the second paragraph of Article TWELFTH
is as follows:
No amendment to the certificate of incorporation of this corporation
shall become effective without receiving at the meeting called to consider
such amendment the affirmative vote of the holders of at least two-thirds
of the outstanding shares entitled to vote at such meeting unless any class
of shares is entitled to vote as a class in respect thereof, in which event
the proposed amendment shall be adopted upon receiving the affirmative vote
of the holders of at least two-thirds of the outstanding shares of each
class of stock entitled to vote as a class in respect thereof and of the
total outstanding shares entitled to vote at such meeting.
Subject to stockholder approval, the Board of Directors of the Company
proposes to amend the Certificate of Incorporation to eliminate the second
paragraph of Article TWELFTH (which, in the Restated Certificate will be
renumbered as Article TENTH), the result of which will be that the provisions of
the Delaware GCL applicable to the approval of amendments to certificates of
incorporation shall govern the approval of such amendments. Pursuant to Section
242 of the Delaware GCL, amendments to a certificate of incorporation must be
approved by a majority of the outstanding stock entitled to vote thereon and a
majority of the outstanding stock of each class entitled to vote thereon as a
class. As applied to the Company, Section 242 of the Delaware GCL would require
a majority of the outstanding shares of the Common Stock to be voted in favor of
an amendment to the Certificate of Incorporation as a condition to the adoption
of such amendment.
The Board of Directors believes that it is in the best interest of the
Company to eliminate the second paragraph of Article TWELFTH from the
Certificate of Incorporation based on its belief that it is inappropriate that a
potential minority of stockholders have the right to thwart the will of a
majority of stockholders with respect to an amendment to the Certificate of
Incorporation. Mr. Simmons through his affiliates may be deemed to beneficially
own in excess of two-thirds of the outstanding shares of Common Stock as of the
Record Date and, accordingly, may be deemed to have the voting power to effect
amendments to the Certificate of Incorporation without the necessity of securing
the approval of any other stockholder. It is possible, however, that the
percentage of beneficial ownership controlled by Mr. Simmons may change in the
future, and it may be difficult to secure the approval of two-thirds of the
outstanding shares with respect to a proposed amendment to the Certificate of
Incorporation favored by a majority of the stockholders. In the long term, the
Board believes the proposed reduction in the stockholder vote requirement for
amending the Certificate of Incorporation would offer the Company greater
flexibility in taking advantage of corporate law developments which may be in
the best interest of the Company and its stockholders.
One effect of this proposal, however, will be that Mr. Simmons and his
affiliates will continue to retain the voting power to approve amendments to the
Certificate of Incorporation without the necessity of securing the approval of
other stockholders even if their combined beneficial ownership of the Common
Stock falls below two-thirds (but remains in excess of 50% of the outstanding
Common Stock).
Vote Required for Adoption of Proposed Amendments
Adoption of the proposed amendments to and the restatement of the
Certificate of Incorporation effected in the form of the Restated Certificate
requires the affirmative vote of the holders of two-thirds (66.67%) of the
outstanding shares of Common Stock of the Company entitled to notice of, and to
vote at, the Annual Meeting. Unless otherwise specified, the agents designated
in the proxy will vote the shares covered thereby at the Annual Meeting "FOR"
the approval of this proposal. Harold C. Simmons and his affiliates hold
approximately 67% of the outstanding shares of the Common Stock as of the Record
Date and have indicated their intention to vote such shares "FOR" the approval
of this proposal. If such shares are so voted, approval of this proposal will
be assured.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THIS PROPOSAL AND DEEMS
THIS PROPOSAL TO BE IN THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
AGENDA ITEM 2
ELECTION OF DIRECTORS
The terms of all directors expire at the Annual Meeting. As provided in
the bylaws, the Board of Directors shall consist of not less than five and not
more than nine persons, as determined by the Board of Directors from time to
time. The number of directors is currently seven. The nominees receiving a
plurality of the votes of the shares present in person or represented at the
Annual Meeting and entitled to vote will be elected and will hold office until
their successors are duly elected and qualified. All the nominees set forth
below have consented to serve if elected to the Board of Directors. If any
individual nominated for a directorship is not available for election, which is
not anticipated, votes will be cast by the proxy holder for such substitute
nominee as shall be designated by the Board of Directors. The persons
designated as agents in the proxy, unless otherwise specified, will vote the
shares covered thereby at the Annual Meeting "For" the nominees named below.
The following biographical information has been provided by the nominees for
election to the Board of Directors of the Company:
THOMAS E. BARRY DIRECTOR SINCE 1989
Nominee for a term expiring at the annual meeting in 1997. Dr. Barry, 52,
is Associate Dean for Academic Affairs and Professor of Marketing of the Edwin
L. Cox School of Business, Southern Methodist University.
PAUL M. BASS, JR. DIRECTOR SINCE 1989
Nominee for a term expiring at the annual meeting in 1998. Mr. Bass, 60,
is Vice Chairman of First Southwest Company, an investment banking firm, and has
served as a director since prior to 1990. Mr. Bass is also Chairman of Richman
Gordman Half Price Stores, Inc., Chairman of MorAmerica Private Equities
Company, director of First Madison Bank and Chairman of the Audit Committee, and
director of Source Services, Inc. Mr. Bass is currently serving as a member of
the Executive Committee of Zale-Lipshy University Hospital and as a trustee of
the Southwestern Medical Foundation.
DAVID E. CONNOR DIRECTOR SINCE 1992
Nominee for a term expiring at the annual meeting in 1998. Mr. Connor, 69,
is President of David E. Connor and Associates, advisers to commerce and
industry, in Peoria, Illinois and has served in such capacity since prior to
1990. He is a director of Cilcorp, Inc., Peoria, Illinois, and Chairman of the
Board of First Midwest Bankshares, Quincy, Illinois. He is also director of
Heartland Community Health Clinic, Peoria, Illinois, Museum Trustees of America,
Washington, D.C.and a trustee of Bradley University, Peoria, Illinois.
GLENN R. SIMMONS DIRECTOR SINCE 1986
Nominee for a term expiring at the annual meeting in 1996. Mr. Simmons,
67, is Chairman of the Board of Directors and Chief Executive Officer of
Keystone and has served in such capacities since prior to 1990. Mr. Simmons has
served as Vice Chairman of the Board of Directors of Contran Corporation
("Contran"), a diversified holding company, which may be deemed to be the
beneficial holder of approximately 62% of the Common Stock, since prior to 1990.
Mr. Simmons has been a director of Contran and an executive officer and/or
director of various companies related to Contran since prior to 1990. He is
Vice Chairman of the Board of Valhi, Inc. ("Valhi"), Vice Chairman of the Board
of Valcor, Inc., and a director of NL Industries, Inc. ("NL") and Tremont
Corporation ("Tremont"), all of which companies may be deemed to be affiliates
of Keystone.
DONALD A. SOMMER DIRECTOR SINCE 1962
Nominee for a term expiring at the annual meeting in 1998. Mr. Sommer, 67,
served as a Vice President of the Company prior to his retirement in 1982.
J. WALTER TUCKER, JR. DIRECTOR SINCE 1971
Nominee for a term expiring at the annual meeting in 1996. Mr. Tucker, 69,
is Vice Chairman of the Board of Directors of the Company and has served in such
capacity since prior to 1990. Mr. Tucker has served as a director, President,
and Treasurer of Tucker & Branham, Inc., a real estate, mortgage banking and
insurance firm since prior to 1990. Mr. Tucker is also a director of SunTrust
Banks, Inc., Columbian Mutual Life Insurance Company and Valhi.
RICHARD N. ULLMAN DIRECTOR SINCE 1992
Nominee for a term expiring at the annual meeting in 1997. Mr. Ullman, 61,
is President of Federal Companies, a commercial warehouse and transportation
company in Peoria, Illinois, and has served in such capacity since prior to
1990. He is a director of First of America Bank - Illinois, N.A. and Cilcorp,
Inc., and is also serving as director of Children's Hospital of Illinois at St.
Francis, director of St. Francis Medical Center, and a trustee of Bradley
University, all located in Peoria.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ending December 31, 1994, the Board of Directors met
four times. All directors of the Company were present at more than 75% of the
meetings of the Board of Directors and the committees of the Board of Directors
on which they served.
The Board of Directors has a standing Audit Committee and Compensation
Committee. The Audit Committee, which met once during 1994, reviews and
evaluates significant matters relating to the audit and internal controls of the
Company, and reviews the scope and results of audit and non-audit assignments of
the Company's independent accountants. The Audit Committee examines and
recommends for approval the audited financial statements of the Company, and
annually recommends to the Board of Directors the appointment of, and fees paid
to, the independent accountants. Recommendations and actions of the Audit
Committee are reported to the full Board of Directors. The members of the Audit
Committee are Messrs. Bass, Connor and Ullman. The Compensation Committee,
which met once during 1994, reviews and approves the amounts and forms of
compensation paid to executive officers. The present members of the Compen-
sation Committee are Messrs. Barry, Bass, and Sommer.
The Board of Directors does not have a Nominating Committee.
EXECUTIVE OFFICERS
In addition to Glenn R. Simmons and J. Walter Tucker, Jr, the following are
executive officers of Keystone:
HAROLD M. CURDY, 48, is Vice President - Finance and Treasurer of the
Company and has served in such capacities since prior to 1990.
BERT E. DOWNING, JR., 39, is Corporate Controller of the Company and has
served in such capacity since December 1993. From prior to 1990 to December
1993, Mr. Downing served as Senior Manager in the Dallas office of Ernst &
Young, a public accounting firm.
RALPH P. END, 57, has served as Vice President and General Counsel since
1991 and as the Corporate Counsel and Assistant Secretary of the Company since
prior to 1990.
BILL J. JOHNSON, 59, has served as President, Sherman Wire, Sherman, Texas,
since February, 1995. Mr. Johnson served as Vice President & General Manager,
Sherman Wire, since prior to 1990.
JAMES H. KAUFFMAN, 51, has served as President, Keystone Steel & Wire,
since 1991. Mr. Kauffman served as Vice President and Treasurer of Valhi and
Contran and various companies related to Valhi and Contran since prior to 1990
to 1991.
SANDRA K. MYERS, 52, is Corporate Secretary of the Company and Executive
Secretary of Contran and has served in both capacities since prior to 1990.
ROBERT W. SINGER, 58, is President and Chief Operating Officer of the
Company and has served in that capacity since prior to 1990. He has served as
Vice President of Valhi and Contran since prior to 1990.
CERTAIN BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
As set forth under the caption "Security Ownership", Harold C. Simmons,
through Contran and other entities, may be deemed to beneficially own approxi-
mately 67% of the Common Stock and, therefore, may be deemed to control the
Company. The Company and other entities that may be deemed to be controlled by
or affiliated with Mr. Simmons sometimes engage in (a) intercorporate trans-
actions 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 which resulted in the acquisition by one related
party of a publicly-held minority equity interest in another related party. No
transactions of the type described above are planned or proposed with respect to
the Company (except as otherwise set forth in this Proxy Statement), the Company
continuously considers, reviews and evaluates, and understands that Contran and
related entities consider, review and evaluate, such transactions. Depending on
the business, tax and other objectives then relevant, it is possible that the
Company might be a party to one or more of such transactions in the future. In
connec-tion with these activities the Company may consider issuing additional
equity securities or incurring additional indebtedness. The Company's
acquisition activities have in the past and may in the future include
participation in the acquisition or restructuring activities conducted by other
companies that may be deemed to be controlled by Harold C. Simmons. It is the
policy of the Company to engage in transactions with related parties on terms,
in the opinion of the Company, no less favorable to the Company than could be
obtained from unrelated parties.
Glenn R. Simmons, J. Walter Tucker, Jr., and Sandra K. Myers are not
salaried employees of the Company. The Company has contracted with Contran, on
a fee basis payable in quarterly installments, to provide certain administrative
and other services to the Company in addition to the services of Mr. Simmons and
Ms. Myers, including consulting services of Contran executive officers. The fee
incurred during 1994 was $640,000. The Company has contracted with Tucker &
Branham, Inc. for the services of Mr. Tucker. The fees paid Tucker & Branham,
Inc. during 1994 were $66,000.
Certain of Keystone's property, liability and casualty insurance risks are
partially insured or reinsured by a captive insurance subsidiary of Valhi. The
premiums and claims paid in connection therewith were approximately $98,000 for
the year ended December 31, 1994.
Aircraft services were purchased from Valhi in the amount of $128,000 for
the year ended December 31, 1994.
In the opinion of management and the Board of Directors, the terms of the
transactions described above were no less favorable to the Company than those
that could have been obtained from an unrelated entity.
CERTAIN LITIGATION
Harold C. Simmons, Glenn R. Simmons and certain companies related to
Keystone are parties to the litigation described below.
In November 1991, a purported derivative complaint was filed in the Court
of Chancery of the State of Delaware, New Castle County, (Alan Russell Kahn v.
Tremont Corporation, et al., No. 12339), in connection with the purchase by
Tremont of 7.8 million shares of NL Common Stock from Valhi (the "NL Stock
Purchase"). In addition to Valhi, the complaint names as defendants Tremont and
the members of Tremont's board of directors, including Glenn R. Simmons and
Harold C. Simmons. The complaint alleges, among other things, that the NL Stock
Purchase constitutes a waste of Tremont's assets and that Tremont's board of
directors breached its fiduciary duties to Tremont's public stockholders and
seeks, among other things, to rescind Tremont's consummation of the NL Stock
Purchase and award damages to Tremont for injuries allegedly suffered as a
result of the defendants' wrongful conduct. Glenn R. Simmons and Harold C.
Simmons believe, and understand that the other defendants believe, that the
action is without merit. Glenn R. Simmons and Harold C. Simmons have denied,
and understand that the other defendants have denied, all allegations of
wrongdoing and liability, and intend to defend this action vigorously.
SECURITY OWNERSHIP
As of the Record Date, the Company's nominees for directors, directors, the
executive officers named in the Summary Compensation Table below, and the direc-
tors and executive officers as a group, beneficially owned, as defined by the
rules of the Securities and Exchange Commission, the shares of Common Stock
shown in the following table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS (2)
<S> <C> <S>
Thomas E. Barry (5) 3,100 -
Paul M. Bass, Jr. (3)(5) 5,500 -
David E. Connor (5) 3,500 -
Harold M. Curdy (5) 16,406 -
Bill J. Johnson (5) 4,970 -
James H. Kauffman (5) 11,683 -
Glenn R. Simmons (4)(5) 55,100 -
Robert W. Singer (5) 37,875 -
Donald A. Sommer (5) (6) 31,964 -
J. Walter Tucker, Jr. (6) 153,450 2.7%
Richard N. Ullman (5) 3,500 -
All directors and executive officers as a group
(14 persons)(4) 335,892 6.0%
________
</TABLE>
(1) All beneficial ownership is sole and direct except as otherwise set forth
herein. Information as to the beneficial ownership of Common Stock has
either been furnished to the Company by or on behalf of the indicated
persons or is taken from reports on file with the Securities and Exchange
Commission.
(2) Percentage omitted if less than 1%.
(3) Includes 2,500 shares of Common Stock held in discretionary accounts by
First Southwest Company, a licensed broker-dealer, on behalf of certain of
its clients, as to which Mr. Bass has voting and dispositive authority.
Mr. Bass serves as Senior Director of First Southwest Company. As a result
of the foregoing, Mr. Bass may be deemed to be the beneficial owner of such
shares. However, Mr. Bass disclaims all such beneficial ownership.
(4) Glenn R. Simmons is the brother of Harold C. Simmons. See footnote (1) to
the "Security Ownership of Certain Beneficial Owners" table.
(5) Includes shares that such person or group could acquire upon the exercise
of options exercisable within 60 days of the Record Date by Messrs. Barry,
Bass, Connor, Sommer, and Ullman for the purchase of 3,000 shares each, and
named executive officers, Messrs. Curdy, Johnson, Kauffman, Simmons and
Singer, for the purchase of 2,000, 1,420, 8,000, 14,000, and 4,000 shares,
respectively, and the directors and executive officers as a group for the
purchase of 46,220 shares under the Company's stock option plans.
(6) Donald A. Sommer is a first cousin to the spouse of J. Walter Tucker, Jr.
The following table sets forth the stockholders known to the Company to be
the beneficial owner of more than 5% of the Common Stock outstanding as of the
Record Date.
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
<S> <C> <C>
Harold C. Simmons 3,783,483(1)(2) 67.1%
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240
The Killen Group 317,500 5.6%
1189 Lancaster Avenue
Berwyn, Pennsylvania 19312
_______
</TABLE>
(1) The shares of Common Stock shown as beneficially owned by Harold C. Simmons
includes 3,166,933, 326,050, 250,000 and 30,000 shares of Common Stock held
by Contran, NL, The Harold Simmons Foundation, Inc. (the "Foundation") and
The Combined Master Retirement Trust (the "Master Trust"), respectively.
Contran and NL directly hold approximately 56.2% and 5.8%, respectively, of
the outstanding Common Stock. Valhi and Tremont are the holders of
approximately 53.0% and 17.8%, respectively, of the outstanding common
stock of NL. Contran holds, directly or indirectly through related
entities, approximately 91.0% and 44.2% of the outstanding common stock of
Valhi and Tremont, respectively. Substantially all of Contran's
outstanding voting stock is held by trusts established for the benefit of
Harold C. Simmons' children and grandchildren (together, the "Trusts"), of
which Mr. Simmons is the sole trustee. As sole trustee of each of the
Trusts, Mr. Simmons has the power to vote and direct the disposition of the
shares of Contran stock held by each of the Trusts; however, Mr. Simmons
disclaims beneficial ownership thereof.
Harold C. Simmons is Chairman of the Board, President and Chief Executive
Officer of Valhi and Contran and Chairman of the Board and Chief Executive
Officer of certain related entities through which Contran may be deemed to
control Valhi. Additionally, he is Chairman of the Board of NL and is a
director of Tremont.
The Master Trust holds approximately 0.5% of the outstanding shares of
Common Stock. The Master Trust is a trust formed by Valhi to permit the
collective investment by trusts that maintain the assets of certain
employee benefit plans adopted by Valhi and related companies, including
Keystone. Harold C. Simmons is sole trustee of the Master Trust and sole
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 Valhi's board of directors. Harold C. Simmons and Glenn R.
Simmons are members of Valhi's board of directors and are both participants
in one or more of the employee benefit plans that invest through the Master
Trust; however, both such persons disclaim beneficial ownership of the
shares of Common Stock held by the Master Trust, except to the extent of
their respective vested beneficial interests therein.
The Foundation holds approximately 4.4% of the outstanding shares of Common
Stock. The Foundation is a tax-exempt foundation organized and existing
exclusively for charitable purposes. Harold C. Simmons is Chairman of the
Board and Chief Executive Officer of the Foundation.
By virtue of the relationships described above, Harold C. Simmons may be
deemed to control such entities and Mr. Simmons and such entities may be
deemed to possess indirect beneficial ownership of certain shares of Common
Stock held by such entities. However, Mr. Simmons disclaims such
beneficial ownership of the shares of Common Stock beneficially owned,
directly or indirectly, by such entities.
Certain information contained in this footnote is based on information
provided to the Company by Valhi, Contran and certain of their affiliates.
(2) The shares of Common Stock shown as beneficially owned by Harold C. Simmons
also includes 10,500 shares of Common Stock held by Mr. Simmons' wife, with
respect to all of which Mr. Simmons disclaims beneficial ownership.
SECTION 16(A) COMPLIANCE
Section 16(a) of the Exchange Act requires Keystone's executive officers,
directors and persons who own more than 10% of a registered class of Keystone's
equity securities to file reports of ownership with the Commission, the New York
Stock Exchange, and Keystone. Based solely on the review of the copies of such
reports filed with the Commission, Keystone believes that for 1994 its executive
officers, directors and 10% stockholders complied with all applicable filing
requirements under Section 16(a).
DIRECTOR'S COMPENSATION
Directors of Keystone who are not salaried employees of the Company receive
an annual retainer of $12,000. Such directors also receive a fee of $450 per
day for each Board of Directors meeting and/or committee meeting requiring
attendance in person. Directors are also reimbursed for reasonable expenses
incurred in attending Board of Directors and/or committee meetings. On May 5,
1992 the shareholders approved the Keystone Consolidated Industries, Inc. 1992
Non-Employee Director Stock Option Plan ("Director Plan"), which provides that
each non-employee director will be granted an option to purchase 1,000 shares of
Common Stock on the third business day after the Company issues its press
release summarizing the Company's annual financial results for the prior fiscal
year. The exercise price of the options will be equal to the last reported sale
price of Common Stock on the New York Stock Exchange Composite Tape on the date
of grant. Options granted pursuant to the Director Plan become exercisable one
year after the date of grant and expire on the fifth anniversary following the
date of grant.
EXECUTIVE COMPENSATION
The following table summarizes all compensation paid to the Company's chief
executive officer and to each of the Company's four most highly compensated
executive officers other than the chief executive officer for services rendered
in all capacities to the Company for the years ended December 31, 1994, 1993,
and 1992.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
Name and Principal Position Year Salary ($) Bonus ($)
<S> <C> <C> <C>
Glenn R. Simmons (3) 1994 175,000 -
Chief Executive Officer 1993 149,596 -
1992 136,135 -
Harold M. Curdy 1994 132,000 125,000
Vice President - Finance 1993 125,000 56,250
& Treasurer 1992 125,000 67,500
Bill J. Johnson 1994 96,560 70,500
President 1993 93,404 20,976
Sherman Wire Division 1992 98,708 40,495
James H. Kauffman 1994 167,693 54,600
President 1993 159,996 -
Keystone Steel & Wire Division 1992 155,767 84,960
Robert W. Singer 1994 225,000 150,000
President 1993 200,000 150,000
1992 200,000 150,000
<CAPTION>
Long-Term
Compensation
Awards
Restricted Securities
Stock Underlying All Other
Awards Options Compensation
Name and Principal Position ($)(1) (#) ($)(2)
<S> <C> <C> <C>
Glenn R. Simmons (3) - - -
Chief Executive Officer - 12,500 -
- 15,000 -
Harold M. Curdy - - 6,690
Vice President - Finance 19,475 5,000 8,362
& Treasurer - - 8,728
Bill J. Johnson - 2,100 6,642
President 21,525 2,500 6,695
Sherman Wire Division - - 6,533
James H. Kauffman - - 6,690
President 24,600 5,000 8,994
Keystone Steel & Wire Division - - 8,728
Robert W. Singer - - 6,690
President 25,625 10,000 8,994
- - 8,728
</TABLE>
(1) The dollar value of the reported grants of restricted Keystone Common Stock
is based on the last reported sales price per share on the date of grant of
Keystone Common Stock as reported by the New York Stock Exchange Composite
Tape.
The total number of shares of restricted Keystone Common Stock awarded in
the last three fiscal years to each named executive officer and the
aggregate number and value of each named executive officer's holdings of
restricted Keystone Common Stock as of December 31, 1994 (at which time the
market value was $13.625 per share based on the last reported sales price
per share of Valhi Common Stock as reported by the New York Stock Exchange
Composite Tape) were as follows:
<TABLE>
<CAPTION>
Total Number of Non-Vested Value of
Shares of Restricted Shares of Non-Vested Restricted
Keystone Common Restricted Keystone Common
Stock Awarded in Keystone Common Stock as of
Name of the Last Three Stock as of December 31, 1994
Executive Officer Fiscal Years December 31, 1994
<S> <C> <C> <C>
Glenn R. Simmons - - $ -
Harold M. Curdy 1,900 1,100 14,988
Bill J. Johnson 2,100 1,200 16,350
James H. Kauffman 2,400 1,400 19,075
Robert W. Singer 2,500 1,500 20,438
</TABLE>
The reported shares of restricted Keystone Common Stock vest at a rate of
40% after six months from the date of award, 30% after eighteen months from
the date of the award and 30% after thirty months from the date of the
award.
(2) Amounts contributed by the Company to the 401(k) Plan.
(3) Glenn R. Simmons, Chairman of the Board and Chief Executive Officer of the
Company, is not a salaried employee of the Company. The reported salary
represents an allocation of his time devoted to Keystone business under the
Intercorporate Services Agreement. See "Certain Business Relationships and
Related Transactions" above.
The following tables set forth certain information at December 31, 1994 and
for the fiscal year then ended with respect to stock options and stock
appreciation rights granted to and exercised by the individuals named in the
Summary Compensation Table above. No options have been granted at an option
price below fair market value on the date of grant.
<TABLE>
OPTION GRANTS IN 1994
<CAPTION>
Number % of Total
of Options
Securities Granted to Exercise
Underlying Employees or Base
Options in Fiscal Price
Name Granted* Year ($/Share)
<S> <C> <C> <C>
Bill J. Johnson 2,100 43% 10.25
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for Option
Name Expiration Term ($)
Date 5% 10%
<S> <C> <C> <C>
Bill J. Johnson 01/13/04 13,537 34,305
</TABLE>
* Options were granted on January 13, 1994 and vest 20%, 40%, 60% and 100% on
the first, second, third, and fourth anniversary of the date of grant,
respectively.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value
Shares Acquired Realized
Name on Exercise (#) ($)
<S> <C> <C>
Glenn R. Simmons 22,500 41,587
Harold M. Curdy 7,500 16,675
Bill Johnson - -
James H. Kauffman - -
Robert W. Singer 30,000 66,699
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at FY-End (#) at FY-End ($) (2)
Name Exercisable Unexercisable (1) Exercisable Unexercisable
<S> <C> <C> <C> <C>
Glenn R. Simmons 8,500 19,000 16,778 55,635
Harold M. Curdy 1,000 4,000 4,875 19,500
Bill J. Johnson 500 4,100 2,438 16,838
James H. Kauffman 7,000 8,000 4,875 19,500
Robert W. Singer 2,000 8,000 9,750 39,000
</TABLE>
(1) Options vest 20%, 40%, 60% and 100% on the first, second, third, and fourth
anniversary of the date of grant, respectively.
(2) The values shown in the table are based on the $13.625 per share closing
price of the Company's Common Stock on December 31, 1994 as reported by the
New York Stock Exchange Composite Tape, less the exercise price of the
options.
COMPENSATION AND INTERLOCKS AND INSIDER PARTICIPATION
The present members of the Compensation Committee are Messrs. Barry, Bass,
and Sommer. Mr. Sommer served as Vice President of the Company prior to his
retirement in 1982.
COMPENSATION COMMITTEE REPORT
During 1994, matters regarding compensation of executives were administered
by the Compensation Committee (the "Committee"). The Committee is comprised of
directors who are neither officers nor employees of the Company or its
subsidiaries and who are not eligible to participate in any of the employee
benefit plans administered by it. The Committee adopts compensation policies
and is responsible for approving all compensation of executives paid by the
Company.
It is the Company's policy that employee compensation, including
compensation to executives, be at a level which allows the Company to attract,
retain, motivate and reward individuals of training, experience, and ability who
can lead the Company in accomplishing its goals. It is also the Committee's
policy that compensation programs maintain a strong risk/reward ratio, with a
large component of cash compensation being tied to the Company's financial
results, creating a performance-oriented environment that rewards employees for
achieving pre-set financial performance levels.
During 1994, the Company's compensation program with respect to its
executives consisted of three components: base salary, incentive bonus, and
stock option/restricted stock incentive awards.
BASE SALARY
The Committee reviews, in consultation with the Chief Executive Officer
("CEO"), base salaries for executives other than the CEO at least annually. The
Committee approves, with any modifications it deems appropriate, the CEO's
recommendations for base salary levels. Base salary levels are determined
primarily on industry and peer group data and past and potential future
individual performance. Over a period of years, base salaries are designed to
be below the median annual cash compensation for comparable executives, but when
combined with the other components of compensation create a competitive or above
median total compensation package.
INCENTIVE BONUS PROGRAM
Awards under the Company's incentive bonus program represent a significant
portion of an executive's potential annual cash compensation and are awarded at
the discretion of the Committee on recommendation of the CEO based on the actual
performance of the Company and the individual performance of the executive. The
incentive bonus program is also structured so that a portion of an executive's
total compensation is subject to the actual performance of the Company measured
against the Company's business plan.
STOCK OPTIONS/RESTRICTED STOCK
An integral part of the Company's total compensation program is non-cash
incentive awards in the form of stock options, stock appreciation rights (SARs)
and restricted stock granted to executives. Stock option grants, in particular,
are considered an essential element of the Company's total compensation package
for the executives. The Committee believes that stock options, SARs and
restrictive stock awards provide an earnings opportunity based on the Company's
success measured by Common Stock performance. Additionally, awards establish an
ownership perspective and encourage the retention of executives. Incentive
stock options are granted at a price not less than 100% of the fair market value
of such stock on the date of grant. The exercise price of all options and the
length of period during which the options may be exercised are determined by the
Compensation Committee.
COMPENSATION OF CEO
The services of the CEO were provided pursuant to the terms of the
Intercorporate Services Agreement with Contran Corporation ("Contran ISA"). The
Board of Directors considered and approved the terms of the Contran ISA,
pursuant to which the services of Glenn R. Simmons, the Company's Chief
Executive Officer, were provided. The CEO is not a salaried employee of the
Company and does not participate in the Company's incentive bonus program.
The foregoing report is submitted by the members of the Compensation
Committee of the Board of Directors.
Dr. Thomas E. Barry
Paul M. Bass
Donald A. Sommer, Chairman
PERFORMANCE GRAPH
The following graph reflects a comparison of the cumulative total return of
the Company's Common Stock from December 31, 1989 through December 31, 1994 with
the Standard & Poor's 500 Composite Index and the Standard & Poor's Steel Index.
The comparison for each of the periods assumes that the value of the investment
in the Company's Common Stock and each index was $100 on December 31, 1989 and
that all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN AMONG
KEYSTONE CONSOLIDATED INDUSTRIES, INC., S&P500, AND S&P STEEL INDEX
(Performance graph goes here. See below for data points.)
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Keystone $100 $73 $72 $67 $69 $92
S&P 500 $100 $97 $126 $136 $150 $152
S&P Steel $100 $82 $99 $128 $166 $160
</TABLE>
PENSION PLAN
Keystone maintains several qualified, noncontributory defined benefit plans
which provide defined retirement benefits to eligible employees including
executive officers. Under the plans covering salaried employees, including
officers, the defined benefit for an individual is based on a straight life
annuity. An individual's monthly benefit is the sum of the following: (a) for
credited service prior to January 1, 1981, the amount determined by his or her
average monthly cash compensation for the five years of his or her highest
earnings prior to January 1, 1981, multiplied by 1.1%, multiplied by the years
of credited service, plus (b) for each year of service between 1980 and 1989,
the amount determined by the sum of 1.2% multiplied by his or her average
monthly cash compensation that year up to the social security wage base and
1.75% multiplied by his or her average monthly cash compensation that year in
excess of the social security wage base, plus (c) for each year subsequent to
1989, the amount determined by 1.2% multiplied by his or her average monthly
cash compensation that year, but not less than $14.00 per month.
The estimated annual benefits payable upon retirement at normal retirement
age for each of the salaried employees named in the Cash Compensation Table,
assuming continued employment with the Company until normal retirement age at
current salary levels are: Harold M. Curdy, $44,980; Bill J. Johnson, $27,252;
James H. Kauffman, $34,666; and Robert W. Singer, $27,405. Glenn R. Simmons
does not participate in the Keystone Pension Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand, independent public accountants, have audited the
Company's financial statements and are currently expected to be retained to
audit the financial statements for 1995. Representatives of Coopers & Lybrand
will be present at the Annual Meeting and will have an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual meetings, subject to regulations adopted by the
Securities and Exchange Commission. The Company presently intends to call the
next annual meeting during May 1996. For such proposals to be considered for
inclusion in the Proxy Statement and form of proxy relating to the 1995 Annual
Meeting, they must be received by the Company not later than December 1, 1995.
Such proposals should be addressed to Secretary, Keystone Consolidated
Industries, Inc., Three Lincoln Centre, 5430 LBJ Freeway, Suite 1740, Dallas,
Texas 75240.
OTHER MATTERS
Management does not intend to present, and has no information as of the
date of preparation of this Proxy Statement that others will present, any
business at the Annual Meeting other than business pertaining to matters set
forth in the Notice of Annual Meeting of Stockholders and this Proxy Statement.
However, if other matters requiring the vote of the stockholders properly come
before the meeting, it is the intention of the persons named in the enclosed
form of proxy to vote the proxies held by them in accordance with their best
judgment on such matters.
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
July 14, 1995
A COPY OF KEYSTONE'S 1994 FORM 10-K ANNUAL REPORT, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, IS INCLUDED IN KEYSTONE'S 1994 ANNUAL REPORT
TO SHAREHOLDERS AND DISTRIBUTED TO STOCKHOLDERS HEREWITH. ADDITIONAL COPIES ARE
AVAILABLE WITHOUT CHARGE BY WRITING TO SECRETARY, KEYSTONE CONSOLIDATED
INDUSTRIES, INC., 5430 LBJ FREEWAY, SUITE 1740, DALLAS, TEXAS 75240.
APPENDIX A
Whereas, that the present name of the Corporation is Keystone Consolidated
Industries, Inc. The Corporation was originally incorporated under the name
Keysteel, Inc. and its original certificate of incorporation was filed with the
Secretary of State of the State of Delaware on May 18, 1955.
Whereas, that by written consent of the entire Board of Directors of said
Corporation, pursuant to Section 141(f) of the General Corporation Law of the
State of Delaware (the "GCL"), resolutions were duly adopted setting forth a
proposed restated certificate of incorporation of said Corporation (the
"Restated Certificate of Incorporation"), which Restated Certificate of
Incorporation reflected certain amendments to the certificate of incorporation
of the Corporation, declaring said Restated Certificate of Incorporation and the
amendments reflected therein to be advisable and approving its submission to the
stockholders of the Corporation for consideration thereof.
Whereas, that thereafter, pursuant to resolution of its Board of Directors,
an Annual Meeting of the stockholders of the Corporation was duly called and
held, upon notice in accordance with Section 222 of the GCL, at which meeting
more than two-thirds of the outstanding shares entitled to vote at such meeting
were voted in favor of the Restated Certificate of Incorporation.
Whereas, that this Restated Certificate of Incorporation amends and
restates the certificate of incorporation of the Corporation, as the same
heretofore has been amended, supplemented and/or restated (the "Certificate of
Incorporation"), and has been duly adopted in accordance with Sections 242 and
245 of the GCL.
Whereas, that the text of the Certificate of Incorporation is hereby
restated and integrated and further amended to read in its entirety as follows:
RESTATED CERTIFICATE OF INCORPORATION
OF
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
FIRST. The name of the corporation is KEYSTONE CONSOLIDATED INDUSTRIES,
INC.
SECOND. The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD. The nature of the business or purpose to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH. The total number of shares of all classes of stock which the
corporation shall have authority to issue is twelve million five hundred
thousand (12,500,000), of which twelve million (12,000,000) shares are Common
Stock of the par value of One Dollar ($1.00) each and five hundred thousand
(500,000) shares are Preferred Stock without par value.
The Preferred Stock shall be issued in one or more series. The Board of
Directors is hereby expressly authorized to issue the shares of Preferred Stock
in such series and to fix from time to time before issuance the number of shares
to be included in any series and the designation, relative rights, preferences
and limitations of all shares of such series. The authority of the Board of
Directors with respect to each series shall include, without limitation thereto,
the determination of any or all of the following and the shares of each series
may vary from the shares of any other series in the following respects:
(a) The number of shares constituting such series and the designation
thereof to distinguish the shares of such series from the shares of all
other series;
(b) The annual dividend rate on the shares of that series and whether such
dividends shall be cumulative and, if cumulative, the date from which
dividends shall accumulate;
(c) The redemption price or prices for the particular series, if
redeemable, and the terms and conditions of such redemption;
(d) The preference, if any, of shares of such series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
corporation;
(e) The voting rights, if any, in addition to the voting rights prescribed
by law and the terms of exercise of such voting rights;
(f) The right, if any, of shares of such series to be converted into shares
of any other series or class and the terms and conditions of such
conversion; and
(g) any other relative rights, preferences and limitations of that series.
No holder of stock of the corporation shall have any preemptive or other
right whatever, as such holder, to subscribe for or purchase or to have offered
to him for subscription or purchase any additional shares of stock of any class,
character or description which may be issued or sold by the corporation, or
obligations of any kind which may be issued or sold by the corporation and which
shall be convertible into stock of any class of the corporation, or to which
there shall be attached or appertain any warrant or warrants or other instrument
or instruments that shall confer upon the holder of such obligation the right to
subscribe for, or to purchase or receive from the corporation any shares of
capital stock of any class of the corporation, whether now or hereafter
authorized.
FIFTH. The minimum amount of capital with which the corporation will
commence business is One Thousand Dollars ($1,000.00).
SIXTH. The corporation is to have perpetual existence.
SEVENTH. The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
EIGHTH. The number of directors of the corporation shall be fixed by the
by-laws, subject to the provisions of this certificate of incorporation and to
the provisions of the laws of the State of Delaware.
The board of directors shall be divided into three classes, designated
Class I, Class II and Class III, as nearly equal in number as possible, and the
term of office of directors of one class shall expire at each annual meeting of
stockholders, and in all cases as to each director until his successor shall be
elected and shall qualify (except in cases where no successor is elected due to
a reduction in the size of the board) or until his earlier resignation, removal
from office, death or incapacity. Additional directorships resulting from an
increase in the number of directors shall be apportioned among the classes as
equally as possible. Vacancies, including vacancies created by an increase in
the size of the board of directors, shall be filled by the affirmative vote of a
majority of the entire board of directors. The initial term of office of
directors of Class I shall expire at the annual meeting of stockholders in 1996;
that of Class II shall expire at the annual meeting of stockholders in 1997; and
that of Class III shall expire at the annual meeting of stockholders in 1998;
and in all cases as to each director until his successor shall be elected and
shall qualify (except in cases where no successor is elected due to a reduction
in the size of the board) or until his earlier resignation, removal from office
, death or incapacity. At each annual meeting of stockholders, the number of
directors equal to the number of directors of the class whose term expires at
the time of such meeting (or, if less, the number of directors properly
nominated and qualified for election) shall be elected to hold office until the
third succeeding annual meeting of stockholders after their election.
In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized:
To make, alter, amend or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real and
personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
By resolution passed by the majority of the whole board, to designate one
or more committees, each committee to consist of two or more of the
directors of the corporations, which, to the extent provided in the
resolution or in the by-laws of the corporation, shall have and may
exercise the powers of the board of directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors.
NINTH. Meetings of the stockholders may be held outside of the State of
Delaware, if the by-laws so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.
TENTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ELEVENTH. A director of the corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this provision to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the corporation shall not adversely affect any right or protection of a
director of the corporation existing at the time of such repeal or modification.
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
SOLICITED BY THE BOARD OF DIRECTORS
for Annual Meeting of Stockholders
Wednesday, August 16, 1995
The undersigned, being participants in the Keystone Consolidated
Industries, Inc. Deferred Incentive Plan ("Plan"), having received Notice of
Annual Meeting and Proxy Statement dated July 14, 1995 and Annual Report to
Stockholders, hereby instructs the trustee of the Plan, to vote, as specified,
all the shares of common stock of KEYSTONE CONSOLIDATED INDUSTRIES, INC., a
Delaware corporation (the "Company"), held of record by the trustee of the Plan
for the account of the undersigned on the record date, July 10, 1995, at the
Annual Meeting of Stockholders to be held on August 16, 1995, and all
adjournments thereof, as directed and, in their discretion, on all other matters
which may properly come before the Annual Meeting or any adjournments thereof.
(Continued, and to be marked, dated and signed, on the other side)
******
(Back Side)
Please vote all shares allocated to my account in the Keystone Consolidated
Industries, Inc. Deferred Incentive Plan as follows:
1. Restatement of Company's Articles of Incorporation
2. Election of Directors (Instruction: To withhold authority to vote for any
individual nominee, write that nominee's name on the space provided below.)
a. Assuming Item (1) above is approved, to elect
Three directors for terms of three years each - Nominees: Paul M. Bass,
David E. Connor, and Donald A. Sommer.
Two directors for terms of two years each - Nominees: Thomas E. Barry
and Richard N. Ullman.
Two directors for terms of one year each - Nominees: Glenn R. Simmons
and J. Walter Tucker, Jr.
b. Assuming Item (1) above is not approved, to elect seven directors for
terms of one year each. Nominees: Thomas E. Barry, Paul M. Bass, Jr.,
David E. Connor, Glenn R. Simmons, Donald A. Sommer, J. Walter Tucker,
Jr., and Richard N. Ullman.
Dated: _________________, 1995
________________________________
(Signature)
Please sign, date, and return this card promptly using the enclosed envelope.
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
SOLICITED BY THE BOARD OF DIRECTORS
for Annual Meeting of Stockholders
Wednesday, August 16, 1995
The undersigned, having received Notice of Annual Meeting and Proxy
Statement dated July 14, 1995 and Annual Report to Stockholders, hereby appoints
Ralph P. End and Sandra K. Myers, or either of the, proxies, with full power of
substitution to vote, as specified in this proxy, all the shares of common stock
of KEYSTONE CONSOLIDATED INDUSTRIES, INC., a Delaware corporation (the
"Company"), held of record by the undersigned on the record date, July 10, 1995,
at the Annual Meeting of Stockholders to be held on August 16, 1995, and all
adjournments thereof, as directed and, in their discretion, on all other matters
which may properly come before the Annual Meeting or any adjournments thereof.
The undersigned directs said proxies to vote as specified upon the items shown
on the reverse side, which are referred to in the Notice of Annual Meeting and
set forth in the Proxy Statement.
(Continued, and to be marked, dated and signed, on the other side)
******
(Back Side)
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this Proxy will be voted
for proposals 1 and 2.
1. Restatement of Company's Articles of Incorporation
2. Election of Directors (Instruction: To withhold authority to vote for any
individual nominee, write that nominee's name on the space provided below.)
a. Assuming Item (1) above is approved, to elect
Three directors for terms of three years each - Nominees: Paul M. Bass,
David E. Connor, and Donald A. Sommer.
Two directors for terms of two years each - Nominees: Thomas E. Barry
and Richard N. Ullman.
Two directors for terms of one year each - Nominees: Glenn R. Simmons
and J. Walter Tucker, Jr.
b. Assuming Item (1) above is not approved, to elect seven directors for
terms of one year each. Nominees: Thomas E. Barry, Paul M. Bass, Jr.,
David E. Connor, Glenn R. Simmons, Donald A. Sommer, J. Walter Tucker,
Jr., and Richard N. Ullman.
Dated: _________________, 1995
________________________________
(Signature)
Please sign, date, and return this card promptly using the enclosed envelope.
