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KEYSTONE CONSOLIDATED INDUSTRIES, INC.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 9, 1996
To the Stockholders of
Keystone Consolidated Industries, Inc.:
The Annual Meeting of Stockholders (the "Annual Meeting") of Keystone
Consolidated Industries, Inc., a Delaware corporation ("Keystone" or the
"Company"), will be held on May 9, 1996, at 9:00 a.m. local time, at the offices
of the Company at 5430 LBJ Freeway, Suite 1740, Dallas, Texas, for the following
purposes:
(1) To elect two directors for a term of three years, and until
their successors are duly elected and qualified; and
(2) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 12, 1996 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting. A complete list of the stockholders entitled to
vote at the Annual Meeting will be made available for inspection by any
stockholder of record at the offices of Keystone during ordinary business hours
from April 22, 1996 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 accompanying Proxy Statement. Your
vote, whether given by proxy or in person at the Annual Meeting, will be held in
confidence by the Inspector of Election for the Annual Meeting in accordance
with the Company's bylaws.
By order of the Board of Directors,
Sandra K. Myers
Secretary
Dallas, Texas
April 15, 1996
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
PROXY STATEMENT
Annual Meeting of Stockholders
To be held on May 9, 1996
This Proxy Statement and the accompanying proxy card are being furnished to
the stockholders of Keystone Consolidated Industries, Inc., a Delaware
corporation ("Keystone" or the "Company"), in connection with the solicitation
of proxies by and on behalf of the Board of Directors of Keystone for use at the
1996 Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Thursday, May 9, 1996 at the Company's offices at 5430 LBJ Freeway, Suite 1740,
Dallas, Texas and at any adjournment or postponement thereof (the "Annual
Meeting"). Any stockholder executing a proxy has the power to revoke it at any
time before it is voted. A proxy may be revoked by either (i) filing with the
Inspector of Election a written revocation of the proxy; (ii) appearing at the
Annual Meeting and casting a vote contrary to that indicated on the proxy; or
(iii) submitting a duly executed proxy bearing a later date. Attendance at the
Annual Meeting alone, however, will not in itself constitute the revocation of a
proxy. This Proxy Statement and the accompanying proxy card are first being
mailed to stockholders on or about April 22, 1996. An annual report for the
year ended December 31, 1995 is enclosed herewith.
Only stockholders of record at the close of business on April 12, 1996 (the
"Record Date") will be entitled to vote at the Annual Meeting. As of the Record
Date, there were 5,687,424 shares of Keystone's common stock, $1.00 par value
per share ("Common Stock"), outstanding and entitled to vote. Each share of
Common Stock entitles the holder thereof to one vote 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 under such
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 plan, vote
such shares in accordance with such instructions.
Chemical Mellon Shareholder Services, L.L.C. (`Chemical''), the transfer
agent and registrar for the Common Stock, has been appointed by the Board of
Directors to receive proxies, tabulate the vote and serve as Inspector of
Election at the Annual Meeting. All proxies and ballots delivered to Chemical
shall be kept confidential by Chemical 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.
ELECTION OF DIRECTORS
Keystone's Certificate of Incorporation provides for the Board of Directors
to be divided into three classes. The bylaws of the Company provide that the
Board of Directors shall consist of not less than five and not more than nine
persons, as determined by the Board of Directors from time to time. The number
of directors is currently 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
for a term expiring at the annual meeting in 1999 and until their successors are
duly elected and qualified (except in cases where no successor is elected due to
a reduction in the size of the Board), or earlier resignation, removal from
office, death or incapacity. Neither shares as to which authority to vote on
the election of directors has been withheld nor broker nominee non-votes will be
counted as affirmative votes to elect director nominees to the Board of
Directors.
Both of the nominees set forth below have consented to serve if elected to
the Board of Directors. If any individual nominated for a directorship is not
available for election, which is not anticipated, votes will be cast by the
proxy holder for such substitute nominee as shall be designated by the Board of
Directors.
Harold C. Simmons and his affiliates hold approximately 68% of the
outstanding shares of Common Stock as of the Record Date and have indicated
their intention to vote such shares `For'' the election of both of the nominees
for director as set forth in this Proxy Statement. If such shares are
represented and voted as indicated at the Annual Meeting, a quorum will be
present and both nominees will be elected as directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE `FOR'' THE ELECTION OF THE
NOMINEES FOR DIRECTOR SET FORTH BELOW.
NOMINEES FOR DIRECTOR
The following biographical information has been provided by the nominees
for election to the Board of Directors of the Company for terms expiring at the
1999 annual meeting of stockholders:
GLENN R. SIMMONS Director since 1986
Mr. Simmons, age 68, is Chairman of the Board of Directors and Chief
Executive Officer of Keystone and has served in such capacities since prior to
1991. Mr. Simmons has served as Vice Chairman of the Board of Directors of
Contran Corporation ("Contran"), a privately owned diversified holding company
that may be deemed to be the beneficial holder of approximately 63% of the
Common Stock, since prior to 1991. Mr. Simmons has been a director of Contran
and an executive officer and/or director of various companies related to Contran
since prior to 1991. 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.
J. WALTER TUCKER, JR. Director since 1971
Mr. Tucker, age 70, is Vice Chairman of the Board of Directors of the
Company and has served in such capacity since prior to 1991. Mr. Tucker has
served as a director, President, and Treasurer of Tucker & Branham, Inc., a
privately owned real estate, mortgage banking and insurance firm since prior to
1991. Mr. Tucker is also a director of SunTrust Banks, Inc., Columbian Mutual
Life Insurance Company and Valhi. He has also been an executive officer and/or
director of various companies related to Valhi and Contran since 1982. Mr.
Tucker's spouse is a first cousin of Donald A. Sommer, a director of the
Company.
OTHER BOARD MEMBERS
The following biographical information has been provided by the directors
whose terms do not expire at the Annual Meeting:
THOMAS E. BARRY Director since 1989
Dr. Barry, age 52, is Vice President for Executive Affairs at Southern
Methodist University and has been a Professor of Marketing in the Edwin L. Cox
School of Business at Southern Methodist University since prior to 1991. Dr.
Barry's term as a director expires at the annual meeting in 1997.
PAUL M. BASS, JR. Director since 1989
Mr. Bass, age 60, is Vice Chairman of First Southwest Company, a privately
owned investment banking firm, and has served as a director since prior to 1991.
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 Chairman of the Board of Trustees of Southwestern
Medical Foundation. Mr. Bass' term as a director expires at the annual meeting
in 1998.
DAVID E. CONNOR Director since 1992
Mr. Connor, age 70, 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 1991. 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. Mr. Connor's term as a director expires at the
annual meeting in 1998.
DONALD A. SOMMER Director since 1962
Mr. Sommer, age 67, served as a Vice President of the Company prior to his
retirement in 1982. Mr. Sommer is a first cousin to the spouse of J. Walter
Tucker, Jr., a director of the Company. Mr. Sommer's term as a director expires
at the annual meeting in 1998.
RICHARD N. ULLMAN Director since 1992
Mr. Ullman, age 61, is President of Federal Companies, a privately held
commercial warehouse and transportation company in Peoria, Illinois, and has
served in such capacity since prior to 1991. 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. Mr.
Ullman's term as a director expires at the annual meeting in 1997.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ending December 31, 1995, 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 three times during 1995, 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 1995, reviews and approves the amounts and forms of
compensation paid to executive officers. The members of the Compensation
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
currently executive officers of Keystone:
HAROLD M. CURDY, age 48, is Vice President - Finance and Treasurer of the
Company and has served in such capacities since prior to 1991.
BERT E. DOWNING, JR., age 39, is Corporate Controller of the Company and
has served in such capacity since December 1993. From prior to 1991 to December
1993, Mr. Downing served as Senior Manager in the Dallas office of Ernst &
Young, a public accounting firm.
RALPH P. END, age 58, has served as Vice President and General Counsel
since 1991 and as the Corporate Counsel and Assistant Secretary of the Company
since prior to 1991.
BILL J. JOHNSON, age 59, has served as President, Sherman Wire, a division
of the Company, since February 1995. Mr. Johnson served as Vice President &
General Manager, Sherman Wire, since prior to 1991.
SANDRA K. MYERS, age 52, is Corporate Secretary of the Company and
Executive Secretary of Contran and has served in both capacities since prior to
1991.
ROBERT W. SINGER, age 59, is President and Chief Operating Officer of the
Company and has served in that capacity since prior to 1991. He has served as
Vice President of Valhi and Contran since prior to 1991.
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
approximately 68% 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
transactions such as guarantees, management and expense sharing arrangements,
shared fee arrangements, joint ventures, partnerships, loans, options, advances
of funds on open account, and sales, leases and exchanges of assets, including
securities issued by both related and unrelated parties, and (b) common
investment and acquisition strategies, business combinations, reorganizations,
recapitalizations, securities repurchases and purchases and sales (and other
acquisitions and dispositions) of subsidiaries, divisions or other business
units, which transactions have involved both related and unrelated parties and
have included transactions that resulted in the acquisition by one related party
of a publicly-held minority equity interest in another related party. The
Company continuously considers, reviews and evaluates and understands that
Contran and related entities consider, review and evaluate transactions of the
type described above. Depending on the business, tax and other objectives then
relevant, it is possible that the Company might be a party to one or more of
such transactions in the future. In connection with these activities, the
Company may consider issuing additional equity securities or incurring
additional indebtedness. The Company's acquisition activities have in the past
and may in the future include participation in the acquisition or restructuring
activities conducted by other companies that may be deemed to be controlled by
Harold C. Simmons. It is the policy of the Company to engage in transactions
with related parties on terms, in the opinion of the Company, no less favorable
to the Company than could be obtained from unrelated parties.
No specific procedures are in place that govern the treatment of
transactions among the Company and its related entities, although such entities
may implement specific procedures as appropriate for particular transactions.
In addition, under applicable principles of law, in the absence of stockholder
ratification or approval by directors who may be deemed disinterested,
transactions involving contracts among companies under common control must be
fair to all companies involved. Furthermore, directors and officers owe
fiduciary duties of good faith and fair dealing to all stockholders of the
companies for which they serve.
Glenn R. Simmons, J. Walter Tucker, Jr., and Sandra K. Myers are not
salaried employees of the Company. The Company has contracted with Contran, on
a fee basis payable in quarterly installments, to provide certain administrative
and other services to the Company in addition to the services of Mr. Simmons and
Ms. Myers, including consulting services of Contran executive officers pursuant
to the Intercorporate Services Agreement between Contran and the Company, a copy
of which is included as Exhibit 10.1 in the Company's Annual Report on Form 10-K
filed on March 29, 1996 (the "Intercorporate Services Agreement"). The fee
incurred during 1995 was $500,000. The Company compensates Tucker & Branham,
Inc. for certain consulting services of Mr. Tucker on an hourly basis as his
services are requested. The fees paid Tucker & Branham, Inc. during 1995 were
$50,000.
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 $39,000 for
the year ended December 31, 1995.
Aircraft services were purchased from Valhi in the amount of $150,000 for
the year ended December 31, 1995.
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 named as defendants Tremont and
the members of Tremont's board of directors, including Glenn R. Simmons and
Harold C. Simmons. The complaint alleged, among other things, that the NL Stock
Purchase constituted a waste of Tremont's assets and that Tremont's board of
directors had breached its fiduciary duties to Tremont's public stockholders. A
trial on this matter was held in June 1995 and in March 1996 the court issued
its opinion ruling in favor of the defendants and concluded that the NL Stock
Purchase did not constitute an overreaching by Valhi, that Tremont's purchase
price in the NL Stock Purchase was fair and that in all other respects the NL
Stock Purchase was fair to Tremont. The plaintiff's time for appeal has not yet
expired.
SECURITY OWNERSHIP
As of December 31, 1995, the Company's nominees for directors, directors,
the executive officers named in the Summary Compensation Table below, and the
directors and executive officers as a group, beneficially owned, as defined by
the rules of the Securities and Exchange Commission (the "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> <C>
Thomas E. Barry (5) 4,100 -
Paul M. Bass, Jr. (3)(5) 6,500 -
David E. Connor (5) 4,500 -
Harold M. Curdy (5) 16,501 -
Ralph P. End (5) 3,414 -
James H. Kauffman (5)(6) 16,216 -
Glenn R. Simmons (4)(5) 63,600 -
Robert W. Singer (5) 28,770 -
Donald A. Sommer (5) 32,964 -
J. Walter Tucker, Jr. 153,450 2.7%
Richard N. Ullman (5) 4,500 -
All directors and executive officers
as a group (14 persons)(3)(4)(5) 348,554 6.1%
</TABLE>
[FN]
(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 Vice Chairman of First Southwest Company. As a result
of the foregoing, Mr. Bass may be deemed to be the beneficial owner of such
shares. However, Mr. Bass disclaims all such beneficial ownership.
(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 4,000 shares each, and
named executive officers, Messrs. Curdy, End, Kauffman, Simmons and Singer,
for the purchase of 3,000, 900, 12,000, 22,500, and 6,000 shares,
respectively, and the directors and executive officers as a group for the
purchase of 68,740 shares under the Company's stock option plans.
(6) James H. Kauffman resigned March 20, 1996.
The following table sets forth the stockholders known to the Company to be
the beneficial owners of more than 5% of the Common Stock outstanding as of the
Record Date.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- - ----------------- -------------------- --------
<S> <C> <C>
Harold C. Simmons 3,854,133(1)(2) 67.8%
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240
The Killen Group 324,825 5.7%
1189 Lancaster Avenue
Berwyn, Pennsylvania 19312
</TABLE>
[FN]
(1) The shares of Common Stock shown as beneficially owned by Harold C. Simmons
includes 3,122,033, 326,050, 250,000, 115,550 and 30,000 shares of Common
Stock held by Contran, NL, The Harold Simmons Foundation, Inc. (the
"Foundation"), The Contran Deferred Compensation Trust No. 2 (the "Deferred
Compensation Trust") and The Combined Master Retirement Trust (the "Master
Trust"), respectively.
Contran and NL directly hold approximately 54.9% and 5.7%, respectively, of
the outstanding Common Stock. Valhi and Tremont are the holders of
approximately 53.9% and 17.7%, respectively, of the outstanding common
stock of NL. Contran holds, directly or indirectly through related
entities, approximately 91.4% and 43.2% 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.
The Deferred Compensation Trust holds approximately 2.0% of the outstanding
shares of Common Stock. NationsBank of Texas serves as trustee of the
Deferred Compensation Trust (the "Trustee"). Contran established the
Deferred Compensation Trust as an irrevocable "rabbi trust" to assist
Contran in meeting certain deferred compensation obligations that it owes
to Harold C. Simmons. If the Deferred Compensation Trust assets are
insufficient to satisfy such obligations, Contran must satisfy the balance
of such obligations. Pursuant to the terms of the Deferred Compensation
Trust, Contran (i) retains the power to vote the shares held by the
Deferred Compensation Trust, (ii) shares dispositive power over such shares
with the Trustee and (iii) may be deemed the indirect beneficial owner of
such shares.
By virtue of the holding of such offices, the stock ownership as described
above and his service as trustee as 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 Securities Exchange Act of 1934, as amended, requires
Keystone's executive officers, directors and persons who own more than 10% of a
registered class of Keystone's equity securities to file reports of ownership
with the 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 1995 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 $450 per
day for each Board of Directors meeting and/or committee meeting requiring
attendance in person. Directors are also reimbursed for reasonable expenses
incurred in attending Board of Directors and/or committee meetings. On May 5,
1992, the shareholders approved the Keystone Consolidated Industries, Inc. 1992
Non-Employee Director Stock Option Plan ("Director Plan"), which provides that
each non-employee director will be granted an option to purchase 1,000 shares of
Common Stock on the third business day after the Company issues its press
release summarizing the Company's annual financial results for the prior fiscal
year. The exercise price of the options will be equal to the last reported sale
price of Common Stock on the New York Stock Exchange Composite Tape on the date
of grant. Options granted pursuant to the Director Plan become exercisable one
year after the date of grant and expire on the fifth anniversary following the
date of grant. Mr. Simmons' services are made available to the Company pursuant
to the Intercorporate Services Agreement. In addition to director services, Mr.
Tucker provides certain consulting services to the Company for which the Company
pays a company related to Mr. Tucker. See "Certain Business Relationships and
Related Transactions."
EXECUTIVE COMPENSATION
The following table summarizes all compensation paid to the Company's chief
executive officer and to each of the Company's four most highly compensated
executive officers other than the chief executive officer for services rendered
in all capacities to the Company for the years ended December 31, 1995, 1994,
and 1993.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
--------------------------
Name and Principal Position
- - ---------------------------
Year Salary ($) Bonus ($)
---- ---------- ---------
<S> <C> <C> <C>
Glenn R. Simmons (3) 1995 123,077 -
Chief Executive Officer 1994 175,000 -
1993 149,596 -
Harold M. Curdy 1995 132,000 60,000
Vice President - Finance & Treasurer 1994 132,000 125,000
1993 125,000 56,250
Ralph P. End 1995 93,000 30,000
Vice President & 1994 93,000 35,000
General Counsel 1993 90,000 30,000
James H. Kauffman 1995 174,000 -
President 1994 167,693 54,600
Keystone Steel & Wire 1993 159,996 -
Robert W. Singer (4) 1995 170,000 62,500
President 1994 225,000 150,000
1993 200,000 150,000
</TABLE>
<TABLE>
<CAPTION>
Long-Term
Compensation
-----------------------
Awards
-----------------------
Restricted Securities
Stock Underlying All Other
Awards Options Compensation
Name and ($)(1) (#) ($)(2)
- - -------- ---------- ----------- ------------
Principal Position
- - ------------------
<S> <C> <C> <C>
Glenn R. Simmons (3) - - -
Chief Executive Officer - - -
- 12,500 -
Harold M. Curdy - - 7,425
Vice President - Finance & - - 6,690
Treasurer 19,475 5,000 8,362
Ralph P. End - - 6,559
Vice President & - - 5,762
General Counsel 10,250 1,500 5,353
James H. Kauffman - - 7,425
President - - 6,690
Keystone Steel & Wire 24,600 5,000 8,994
Robert W. Singer (4) - - 7,425
President - - 6,690
25,625 10,000 8,994
</TABLE>
[FN]
(1) The dollar value of the reported grants of restricted Common Stock is based
on the last reported sales price per share on the date of grant of Common
Stock as reported by the New York Stock Exchange Composite Tape. The
reported shares of restricted 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.
Dividends on all shares of restricted Common Stock are paid at the same
time and at the same rate as dividends on unrestricted Common Stock, if
declared.
The total number of shares of restricted Common Stock awarded to each named
executive officer and the aggregate number and value of each named
executive officer's holdings of restricted Common Stock as of December 31,
1995 (at which time the market value was $11.50 per share based on the last
reported sales price per share of Common Stock as reported by the New York
Stock Exchange Composite Tape) were as follows:
<TABLE>
<CAPTION>
Non-Vested Value of Non-
Shares of Vested Restricted
Restricted Common Common Stock
Stock as of as of
Name of Executive Officer December 31, 1995 December 31, 1995
- - ------------------------- ------------------- ------------------
<S> <C> <C>
Glenn R. Simmons - $ -
Harold M. Curdy 550 6,325
Ralph P. End 300 3,450
James H. Kauffman 700 8,050
Robert W. Singer 750 8,625
</TABLE>
[FN]
(2) Amounts contributed by the Company to the Company's 401(k) Plan for the
benefit of such executive officer.
(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.
(4) The amounts shown in the table as compensation for Mr. Singer represent the
full amount paid by Keystone for services rendered to Keystone during 1995,
less the portion of such compensation that is either credited or reimbursed
to Keystone for services Mr. Singer rendered to Valhi pursuant to the
Contran/Keystone Intercorporate Services Agreement. Mr. Singer's Keystone
compensation excludes $55,000 as salary and $62,500 as bonus for services
rendered by Mr. Singer to Valhi during 1995.
The following table sets forth certain information with respect to the
individuals named in the Summary Compensation Table above concerning unexercised
stock options at December 31, 1995. No stock options or stock appreciation
rights were exercised during 1995.
Aggregated Options/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at FY-End (#) at FY-End ($)(2)
-------------------------- ------------------------
Name Exercisable Unexercisable (1) Exercisable Unexercisable
- - ---- ----------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Glenn R. Simmons 14,000 13,500 13,750 20,625
Harold M. Curdy 2,000 3,000 5,500 8,250
Ralph P. End 600 900 1,650 2,475
James H. Kauffman 12,000 3,000 5,500 8,250
Robert W. Singer 4,000 6,000 11,000 16,500
</TABLE>
[FN]
(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 $11.50 per share closing
price of the Common Stock on December 31, 1995 as reported by the New York
Stock Exchange Composite Tape, less the exercise price of the options.
REPORT ON EXECUTIVE COMPENSATION
Compensation Committee Report
During 1995, 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
significant component of cash compensation being tied to the Company's financial
results, creating a performance-oriented environment that rewards employees for
achieving pre-set financial performance levels. It is the Company's policy to
structure all compensation arrangements to be deductible for federal income tax
purposes under applicable provisions of the Internal Revenue Code.
During 1995, 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 salaries for all salaried
employees, including executive officers of the Company, have been established on
a position-by-position basis. Annual internal reviews of salary levels are
conducted by the Company's management in an attempt to rank base salary and job
value of each position. The ranges of salaries for comparable positions
considered by management were based upon management's general business knowledge
and no specific survey, study or other analytical process was utilized to
determine such ranges. Additionally, no specific companies' or groups of
companies' compensation were compared with that of the Company, nor was an
attempt made to identify or otherwise quantify the compensation paid by the
companies that served as a basis for such individuals' general business
knowledge. Base salary levels are generally not increased except in instances
of (i) promotions, (ii) increases in responsibility or (iii) unwarranted
discrepancies between job value and the corresponding base salary. The Company
considers general base salary increases from time to time when competitive
factors so warrant. Over a period of years, base salaries are designed to be
below the median annual cash compensation for comparable executives, but when
combined with the other components of compensation create a competitive or above
median total compensation package.
Incentive Bonus Program
Awards under the Company's incentive bonus program represent a significant
portion of an executive's potential annual cash compensation and are awarded at
the discretion of the Committee on recommendation of the CEO. Annual
performance reviews are an important factor in determining management's
recommendation through the CEO which is primarily based on each individual's
performance and, to a lesser extent, on the Company's overall performance. No
specific financial or budget tests were applied in the measurement of individual
performance. The executive's performance is typically measured by the ability
the executive demonstrates in performing, in a timely and cost efficient manner,
the functions of the executive's position. The Company's overall performance is
typically measured by the Company's historical financial results. No specific
overall performance measures were used and there is no specific relationship
between overall Company performance and an executive's incentive bonus.
Stock Options/Restricted Stock
An integral part of the Company's total compensation program is non-cash
incentive awards in the form of stock options, stock appreciation rights
("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. The Compensation
Committee also considered the number of stock options already outstanding in
granting new stock options. No stock options or SARs have been granted to any
executive based on 1995 performance.
Compensation of CEO
The services of the CEO were provided pursuant to the terms of the
Intercorporate Services Agreement. The Board of Directors considered and
approved the terms of the Intercorporate Services Agreement, 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
Compensation Committee Interlocks and Insider Participation
Except for Mr. Sommer who retired as Vice President of the Company in 1982,
no member of the Compensation Committee is or has been an officer or employee of
the Company or any of its subsidiaries. In 1995, no executive officer of the
Company served on the compensation committee or as a director of another entity,
one of whose executive officers served on the Company's Compensation Committee
or Board of Directors.
Performance Graph
The following graph reflects a comparison of the cumulative total return of
the Common Stock from December 31, 1990 through December 31, 1995 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 Common Stock and each index was $100 on December 31, 1990 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]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Keystone $100 $ 99 $ 92 $ 94 $125 $106
S&P 500 $100 $130 $140 $155 $157 $215
S&P Steel $100 $121 $156 $204 $196 $180
</TABLE>
Pension Plan
Keystone maintains several qualified, noncontributory defined benefit plans
which provide defined retirement benefits to eligible employees including
executive officers. Normal retirement age under the Company's pension plans is
age 65. 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% multi-
plied 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, $46,786; Ralph P. End, $27,937; and
Robert W. Singer, $27,401. Glenn R. Simmons does not participate in the
Keystone Pension Plan and James H. Kauffman resigned March 20, 1996.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand, L.L.P., independent public accountants, have audited the
Company's financial statements and are currently expected to be retained to
audit the financial statements for 1996. Representatives of Coopers & Lybrand,
L.L.P. will be present at the Annual Meeting. They will have an opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual meetings, subject to regulations adopted by the
Commission. The Company presently intends to call the next annual meeting
during May 1997. For such proposals to be considered for inclusion in the Proxy
Statement and form of proxy relating to the 1997 annual meeting, they must be
received by the Company not later than December 24, 1996. Such proposals should
be addressed to: Secretary, Keystone Consolidated Industries, Inc., Three
Lincoln Centre, 5430 LBJ Freeway, Suite 1740, Dallas, Texas 75240.
OTHER MATTERS
Management does not intend to present, and has no information as of the
date of preparation of this Proxy Statement that others will present, any
business at the Annual Meeting other than business pertaining to matters set
forth in the Notice of Annual Meeting of Stockholders and this Proxy Statement.
However, if other matters requiring the vote of the stockholders properly come
before the meeting, it is the intention of the persons named in the enclosed
form of proxy to vote the proxies held by them in accordance with their best
judgment on such matters.
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
April 15, 1996
A copy of Keystone's 1995 Form 10-K Annual Report, as filed with the
Commission, is included in Keystone's 1995 Annual Report to Shareholders
distributed to stockholders with this Proxy Statement. Additional copies are
available without charge by writing to: Secretary, Keystone Consolidated
Industries, Inc., 5430 LBJ Freeway, Suite 1740, Dallas, Texas 75240.
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
SOLICITED BY THE BOARD OF DIRECTORS
for Annual Meeting of Stockholders
Thursday, May 9, 1996
The undersigned, being participants in the Keystone Consolidated
Industries, Inc. Deferred Incentive Plan ("Plan"), having received Notice of
Annual Meeting and Proxy Statement dated April 15, 1996 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, April 12, 1996, at the
Annual Meeting of Stockholders to be held on May 9, 1996, 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:
Election of Two Directors NOMINEES: Glenn R. Simmons and
J. Walter Tucker, Jr.
(Instruction: To withhold authority for any single
nominee, write that nominees name in the space
provided below)
FOR all nominees WITHHOLD AUTHORITY
listed to the right to vote for all nominees
(except as marked to listed to the right
the contrary)
[ ] [ ]
Signature
Date: , 1996
-----------------------
THIS PROXY MAY BE REVOKED AS SET FORTH IN THE KEYSTONE CONSOLIDATED INDUSTRIES,
INC. PROXY STATEMENT THAT ACCOMPANIED THIS PROXY.
PROXY
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
SOLICITED BY THE BOARD OF DIRECTORS
for Annual Meeting of Stockholders
Thursday, May 9, 1996
The undersigned, having received Notice of Annual Meeting and Proxy
Statement dated April 15, 1996 and Annual Report to Stockholders, hereby
appoints Ralph P. End and Sandra K. Myers, or either of them, proxies, with full
power of substitution to vote, as specified in this proxy, all the shares of
common stock of KEYSTONE CONSOLIDATED INDUSTRIES, INC., a Delaware corporation
(the "Company"), held of record by the undersigned on the record date, April 12,
1996, at the Annual Meeting of Stockholders to be held on May 9, 1996, 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" all nominees for election as Directors.
Election of Two Directors NOMINEES: Glenn R. Simmons and
J. Walter Tucker, Jr.
(Instruction: To withhold authority for any single
nominee, write that nominees name in the space
provided below)
FOR all nominees WITHHOLD AUTHORITY
listed to the right to vote for all nominees
(except as marked to listed to the right
the contrary)
[ ] [ ]
Please mark, date and sign exactly as your name appears on this proxy card.
When shares are held jointly, both holders should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If the holder is a corporation or partnership, the full corporate or
partnership name should be signed by a duly authorized officer.
Signature
Signature, if shares held jointly
Date: , 1996
-----------------------
THIS PROXY MAY BE REVOKED AS SET FORTH IN THE KEYSTONE CONSOLIDATED INDUSTRIES,
