SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant (x)
Filed by a party other than the registrant ( )
Check the appropriate box:
( ) Preliminary proxy statement
(x ) Definitive proxy statement
( ) Definitive additional materials
( ) Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NL Industries, Inc.
(Name of Registrant as Specified in Its Charter)
NL Industries, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
(x ) $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act
Rule 14-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction: Not Applicable
( ) Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which for the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form of schedule and the date of its filing.
(1) Amount previously paid: Not Applicable
(2) Form, schedule or registration statement no.: Not Applicable
(3) Filing party: Not Applicable
(4) Date filed: Not Applicable
J. LANDIS MARTIN
President and Chief Executive Officer
(NL LOGO)
NL INDUSTRIES, INC.
16825 NORTHCHASE DRIVE, SUITE 1200
HOUSTON, TEXAS 77060
March 29, 1995
Dear Shareholder:
You are cordially invited to attend the 1995 Annual Meeting of Shareholders
of NL Industries, Inc., which will be held on Wednesday, May 3, 1995, at 10:30
a.m. (local time) at the Wyndham Greenspoint Hotel, 12400 Greenspoint Drive,
Houston, Texas. In addition to the matters to be acted upon at the meeting,
which are described in detail in the attached Notice of Annual Meeting of
Shareholders and Proxy Statement, we will report on the Company. I hope that
you will be able to attend.
Whether or not you plan to be at the meeting, please complete, date, sign
and return the proxy card or voting instruction form enclosed with this Proxy
Statement promptly so that your shares are represented at the Meeting and voted
in accordance with your wishes. Your vote, whether given by proxy or in person
at the Meeting, will be held in confidence by the Inspector of Election for the
meeting in accordance with NL's By-laws.
Sincerely,
/s/ J. Landis Martin
President and Chief Executive Officer
NL INDUSTRIES, INC.
P.O. Box 4272 (77210), 16825 Northchase Drive, Suite 1200, Houston, Texas 77060
Tel. (713) 423-3372, Fax (713) 423-3333
NL INDUSTRIES, INC.
16825 NORTHCHASE DRIVE, SUITE 1200
HOUSTON, TEXAS 77060
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 3, 1995
To the Shareholders of NL Industries, Inc.:
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Shareholders (the
"Annual Meeting") of NL Industries, Inc., a New Jersey corporation (the
"Company" or "NL"), will be held on Wednesday, May 3, 1995, at 10:30 a.m. (local
time) at the Wyndham Greenspoint Hotel, 12400 Greenspoint Drive, Houston, Texas,
for the following purposes:
1. To elect seven directors to serve until the 1996 Annual Meeting of
Shareholders and until their successors are duly elected and
qualified; and
2. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The Board of Directors of the Company set the close of business on March
15, 1995 as the record date (the "Record Date") for the determination of
shareholders entitled to notice of, and to vote at, the Annual Meeting. Only
holders of record of NL's common stock, $.125 par value per share ("Common
Stock"), at the close of business on the Record Date are entitled to notice of,
and to vote at, the Annual Meeting. The Company's stock transfer books will not
be closed following the Record Date.
You are cordially invited to attend the Annual Meeting. Whether or not you
expect to attend the Annual Meeting in person, please complete, sign, date and
mail the enclosed proxy card or voting instruction form promptly so that your
shares may be represented and voted at the Annual Meeting. You may revoke your
proxy by following the procedures set forth in the accompanying Proxy Statement.
If you choose, you may vote in person at the Annual Meeting even though you
previously submitted your proxy.
By order of the Board of Directors,
/s/ David B. Garten
Vice President, Secretary and General Counsel
Houston, Texas
March 29, 1995
NL INDUSTRIES, INC.
16825 NORTHCHASE DRIVE, SUITE 1200
HOUSTON, TEXAS 77060
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement and the accompanying proxy card or voting instruction
form are being furnished in connection with the solicitation of proxies by and
on behalf of the Board of Directors (the "Board") of NL Industries, Inc., a New
Jersey corporation (the "Company" or "NL"), for use at the Company's 1995 Annual
Meeting of Shareholders to be held at 10:30 a.m. (local time) on Wednesday, May
3, 1995, at the Wyndham Greenspoint Hotel, 12400 Greenspoint Drive, Houston,
Texas, and at any adjournment or postponement thereof (the "Annual Meeting").
This Proxy Statement and the accompanying proxy card or voting instruction form
were first mailed to the holders of the Company's common stock, $.125 par value
per share ("Common Stock"), on or about April 3, 1995.
PURPOSE OF ANNUAL MEETING
At the Annual Meeting, shareholders of the Company will consider and vote
upon (i) the election of seven directors to serve until the Company's 1996
Annual Meeting of Shareholders and until their successors are duly elected and
qualified, and (ii) such other business as may properly come before the Annual
Meeting. The Company is not aware of any business to come before the Annual
Meeting other than the election of directors.
QUORUM AND VOTING RIGHTS; PROXY SOLICITATION
The presence in person or by proxy of the holders of a majority of the
votes represented by the outstanding 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. Director nominees will be elected by a
plurality of the votes cast. Except as may be provided in the Company's Amended
and Restated Certificate of Incorporation (the "Certificate"), any other matter
that may be submitted to a shareholder vote would require the affirmative vote
of a majority of the votes cast at the Annual Meeting. Shares of Common Stock
that are voted to abstain from business coming before the Annual Meeting and
broker non-votes will be counted as being in attendance at the Annual Meeting
for purposes of determining whether a quorum is present, but will not be counted
for the purpose of determining whether matters coming before the Annual Meeting
have been approved. The accompanying proxy card provides space for a shareholder
to withhold voting for any or all nominees for the Board of Directors. Because
director nominees must receive a plurality of the votes cast at the Annual
Meeting, a vote withheld from a particular nominee will not affect the election
of that nominee.
The record date for determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting is the close of business on March 15, 1995
(the "Record Date"). As of the Record Date, there were issued and outstanding
51,052,443 shares of Common Stock, each of which is entitled to one vote on all
matters that come before the Annual Meeting. Valhi, Inc. ("Valhi") and Tremont
Corporation ("Tremont") held approximately 53% and 18%, respectively, of the
outstanding shares of the Common Stock as of the Record Date and have indicated
their intention to have their shares represented at the Annual Meeting. Both
Valhi and Tremont are affiliates of Contran Corporation ("Contran"). See
"Security Ownership" and "Election of Directors." If the shares of Common Stock
held by Valhi and Tremont together or the shares of Common Stock held by Valhi
alone are represented at the Annual Meeting, a quorum will be present.
All shares of Common Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated in such proxies. If no such instructions are
indicated, such shares will be voted (i) "FOR" the election of the seven
nominees for director and (ii) in the discretion of the proxy holders on any
other matter that may properly come before the Annual Meeting. Any holder of
Common Stock has the unconditional right to revoke his or her proxy at any time
prior to the voting thereof at the Annual Meeting by (i) filing with the
Company's Secretary written revocation of his or her proxy, (ii) giving a duly
executed proxy bearing a later date, or (iii) voting in person at the Annual
Meeting. Attendance by a shareholder at the Annual Meeting will not in itself
revoke his or her proxy.
This proxy solicitation is made by and on behalf of the Board.
Solicitation of proxies for use at the Annual Meeting may be made by mail,
telephone or in person, by directors, officers and regular employees of the
Company. Such persons will receive no additional compensation for any
solicitation activities. The Company will request banking institutions,
brokerage firms, custodians, trustees, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of Common Stock held of record
by such entities, and the Company will, upon the request of such record holders,
reimburse reasonable forwarding expenses. The costs of preparing, printing,
assembling and mailing the Proxy Statement, proxy card or voting instruction
form and all materials used in the solicitation of proxies from shareholders of
the Company, and all clerical and other expenses of such solicitation, will be
borne by the Company.
First Chicago Trust Company of New York ("First Chicago"), the transfer
agent and registrar for the Common Stock, has been appointed by the Board to
serve as inspector of election (the "Inspector of Election") to determine the
number of shares of Common Stock represented and voted at the Annual Meeting.
All proxies and ballots delivered to First Chicago shall be kept confidential by
First Chicago in accordance with the terms of the Company's By-laws.
ELECTION OF DIRECTORS
The Certificate provides for a Board of Directors consisting of not less
than seven and not more than seventeen persons, as such number is determined
from time to time by a majority of the entire Board. The Board has determined
that it shall consist of seven members.
At the Annual Meeting, holders of Common Stock will be asked to elect seven
director nominees to the Board, each to serve for a one year term ending at the
1996 Annual Meeting of Shareholders or until his successor shall have been
elected and qualified or until his earlier resignation or removal. All of the
nominees, other than Joseph S. Compofelice, are currently directors of the
Company. Michael A. Snetzer, whose term expires at the Annual Meeting, has
determined not to stand for election at the Annual Meeting. All nominees have
agreed to serve if elected.
IT IS THE INTENTION OF THE AGENTS DESIGNATED IN THE ENCLOSED PROXY CARD TO
VOTE "FOR" THE ELECTION OF ALL SEVEN NOMINEES UNLESS AUTHORITY IS WITHHELD BY
THE SHAREHOLDER GRANTING THE PROXY. IF ANY NOMINEE BECOMES UNAVAILABLE TO SERVE
FOR ANY REASON, THE PROXY WILL BE VOTED FOR A SUBSTITUTE NOMINEE OR NOMINEES TO
BE SELECTED BY THE BOARD, UNLESS THE SHAREHOLDER WITHHOLDS AUTHORITY TO VOTE FOR
THE ELECTION OF DIRECTORS. VALHI AND TREMONT, WHICH HOLD APPROXIMATELY 53% AND
18%, RESPECTIVELY, OF THE OUTSTANDING COMMON STOCK, HAVE INFORMED THE COMPANY
THAT THEY INTEND TO VOTE THEIR SHARES IN FAVOR OF THE NOMINEES SET FORTH IN THIS
PROXY STATEMENT. VALHI'S AND TREMONT'S VOTES TOGETHER, OR VALHI'S VOTES ALONE,
ARE SUFFICIENT TO ELECT ALL SEVEN NOMINEES.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES IDENTIFIED
BELOW.
NOMINEES FOR DIRECTOR
The information provided below has been provided by the respective nominees
for election as directors for a term expiring at the 1996 Annual Meeting of
Shareholders of the Company. Except for Joseph S. Compofelice, each of the
following nominees for election as a director is currently a director of the
Company whose term expires at the Annual Meeting:
JOSEPH S. COMPOFELICE, 45, was elected Vice President and Chief Financial
Officer of the Company in 1994. Mr. Compofelice also was elected Executive Vice
President of Valhi and Vice President and Chief Financial Officer of Tremont, a
titanium metals producer, in 1994. From 1988 to 1993, Mr. Compofelice served as
Vice President of Baroid Corporation or its predecessor ("Baroid"), a company
engaged in the petroleum services industry which was acquired by Dresser
Industries, Inc. ("Dresser") in January 1994, and from 1990 to 1993 served as
Chief Financial Officer of Baroid. From 1988 to 1990, Mr. Compofelice served as
President of Shaffer, Inc. and Atlas Bradford Corporation, subsidiaries of
Baroid.
J. LANDIS MARTIN, 49, has been President and Chief Executive Officer of NL
since 1987, and a director of NL since 1986. He has been a director and Chief
Executive Officer of Tremont since prior to 1990 and has been Chairman of the
Board of Tremont since 1990. Except for a period in 1990, Mr. Martin has served
as President of Tremont since prior to 1990. From 1990 to 1994, Mr. Martin also
served as Chairman of the Board and Chief Executive Officer of Baroid. Mr.
Martin is a director of Dresser and a director of Apartment Investment and
Management Corporation, a real estate investment trust.
KENNETH R. PEAK, 49, has been a director of NL since 1989. Since 1990,
Mr. Peak has been President of Peak Enernomics, Inc., an energy industry
consulting firm. Mr. Peak serves as a director of Wolverine Exploration
Company, an oil and gas exploration company. He serves as Chairman of NL's
Audit Committee and Management Development and Compensation Committee and is a
member of NL's Nominations Committee.
GLENN R. SIMMONS, 67, has been a director of NL since 1986. Mr. Simmons is
Chairman of the Board, Chief Executive Officer and a director of Keystone
Consolidated Industries, Inc.("Keystone"), a steel rod, wire and wire products
company. Since prior to 1990, Mr. Simmons has been Vice Chairman of the Board
and a director of Valhi and Contran, a diversified holding company which
directly and through related entities holds approximately 91% of the outstanding
common stock of Valhi and a majority of the outstanding common stock of
Keystone. Mr. Simmons is also a director of Tremont and Vice Chairman of the
Board and a director of Valcor, Inc. ("Valcor"), a wholly-owned subsidiary of
Valhi engaged in the building and hardware products and fast food industries.
Mr. Simmons has been an executive officer and/or director of various companies
related to Contran since 1969. He is a brother of Harold C. Simmons.
HAROLD C. SIMMONS, 63, has been a director of NL since 1986 and Chairman of
the Board of NL since 1987. He has been Chairman of the Board, Chief Executive
Officer and a director of Valhi and Contran since prior to 1990 and has been
President of Valhi and Contran since July 1994. Mr. Simmons is also a director
of Tremont and Chairman of the Board, President, Chief Executive Officer and a
director of Valcor. He served as Tremont's Chairman of the Board from prior to
1989 to 1990. Mr. Simmons has been an executive officer and/or director of
various companies related to Contran since 1968. He is a brother of Glenn R.
Simmons.
LAWRENCE A. WIGDOR, 53, has been a director and Executive Vice President of
NL since 1992. Dr. Wigdor has been President and Chief Executive Officer of
Kronos, Inc. ("Kronos"), a wholly-owned subsidiary of NL, and Chairman of the
Board, President and Chief Executive Officer of Rheox, Inc. ("Rheox"), a wholly-
owned subsidiary of NL, since 1990. From 1989 to 1990, Dr. Wigdor was Chairman
of the Board of MEMC Electronic Materials, Inc., a producer of silicon wafers
for the semiconductor industry. From 1986 to 1990, he served as director,
President and Chief Executive Officer of Huls America, Inc. (formerly Nuodex,
Inc.), a worldwide producer of chemicals.
ELMO R. ZUMWALT, JR., 74, has been a director of NL since 1987. He is a
retired United States Navy Admiral and served as Chief of Naval Operations and a
member of the Joint Chiefs of Staff from 1970 to 1974. He has been President of
Admiral Zumwalt & Consultants, Inc., a Washington-based consulting firm, since
prior to 1990. Admiral Zumwalt is a director of Fleet Aerospace Corporation,
Fleet Aerospace Inc., and Dallas Semiconductor Corporation. He is also Chairman
of the International Consortium for Research on the Health Effects of Radiation,
Chairman of the Marrow Foundation and Chairman of the Ethics and Public Policy
Center. Admiral Zumwalt is a member of NL's Management Development and
Compensation Committee, Audit Committee and Nominations Committee.
For information concerning legal proceedings to which certain directors are
parties and other matters, see "Certain Litigation" and "Certain Relationships
and Transactions."
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board held three meetings and took action by written consent in lieu of
a meeting on five occasions in 1994. Each of the directors participated in more
than 75% of the total number of meetings of the Board and committees on which he
served that were held during 1994, and each of the directors executed all
written consents of the Board during the year.
The Board has established three standing committees, an Audit Committee, a
Management Development and Compensation Committee and a Nominations Committee,
all of which are composed entirely of individuals who are not employees of the
Company.
Audit Committee. The principal responsibilities of the Audit Committee are
to recommend to the Board the selection of the firm of independent auditors; to
review the plan and results of the independent audit engagement, the program for
internal auditing, the system of internal accounting controls and the internal
audit results; to review and approve the professional services provided by the
independent auditors; and to direct and supervise special audit inquiries. The
Committee held two meetings in 1994. Current members of the Audit Committee are
Mr. Peak, Chairman, and Admiral Zumwalt.
Management Development and Compensation Committee. The principal
responsibilities of the Management Development and Compensation Committee are to
establish policies and periodically review matters involving executive
compensation, to recommend certain changes in employee benefit programs, to
grant stock options or other stock-based compensation under the Company's
incentive plans and to serve as a counseling committee to the Chief Executive
Officer regarding matters of key personnel selection, organization strategies
and such other matters as the Board may from time to time direct. The
Management Development and Compensation Committee held one meeting in 1994. Its
current members are Mr. Peak, Chairman, Admiral Zumwalt and General Thomas P.
Stafford. Except for a period in 1986, General Stafford served as a director of
NL from 1984 to 1989. General Stafford currently serves as a director of
Tremont.
Nominations Committee. The principal responsibilities of the Nominations
Committee are to review and make recommendations to the Board regarding such
matters as the size and composition of the Board and criteria for director
nominations, director candidates, the term of office of directors, and such
other related matters as the Board may request from time to time. Current
members of the Nominations Committee are Mr. Snetzer, Chairman, Admiral Zumwalt
and Mr. Peak. The Nominations Committee held one meeting in 1994. The
Nominations Committee will consider recommendations by shareholders of the
Company with respect to nominees for election as director if such
recommendations are submitted in writing to the Secretary of the Company and
received not later than December 31 of the year prior to the next annual meeting
of shareholders. Such recommendations should be accompanied by a full statement
of qualifications and confirmation of the person's willingness to serve.
The Board has previously established, and from time to time may establish,
other committees to assist it in discharging its responsibilities.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information relating to the current executive
officers of the Company. Biographical information with respect to Messrs.
Simmons, Martin and Compofelice and Dr. Wigdor is set forth above under
"Election of Directors."
NAME AGE POSITION(S)
Harold C. Simmons . . . 63 Chairman of the Board
J. Landis Martin . . . 49 President and Chief
Executive Officer
Dr. Lawrence A. Wigdor 53 Executive Vice President;
President and Chief
Executive Officer of
Kronos; and Chairman of the
Board, President and Chief
Executive Officer of Rheox.
Joseph S. Compofelice . 45 Vice President and Chief
Financial Officer
Susan E. Alderton . . . 43
Vice President and
Treasurer
David B. Garten . . . . 43 Vice President, General
Counsel and Secretary
Dennis G. Newkirk . . . 44 Vice President and
Controller
SUSAN E. ALDERTON has been Vice President and Treasurer of the Company
since prior to 1990. Ms. Alderton has been a director of Tremont since 1990 and
was Vice President-Finance of Tremont from 1990 until 1992, and served as its
Treasurer from prior to 1990 to 1992 and as a Vice President from prior to 1990
until 1990.
DAVID B. GARTEN has been Vice President, General Counsel and Secretary of
the Company since 1990. From 1990 to 1993, Mr. Garten served as Vice President
and General Counsel of Tremont and since 1990 has served as Assistant Secretary
of Tremont. Until he joined the Company in 1990, Mr. Garten was a partner in
the national law firm of Kirkland & Ellis.
DENNIS G. NEWKIRK has been Vice President and Controller of the Company
since prior to 1990. Before joining the Company in 1989, Mr. Newkirk was
Assistant Controller of Valhi.
SECURITY OWNERSHIP
Ownership of NL Common Stock. The following table and accompanying notes
set forth as of the Record Date the beneficial ownership, as defined by
regulations of the Securities and Exchange Commission (the "Commission"), of
Common Stock held by (a) each person or group of persons known by NL to
beneficially own more than 5% of the outstanding shares of Common Stock, (b)
each director or nominee for director of NL, (c) each executive officer of NL
listed on the Summary Compensation Table below, and (d) all executive officers
and directors of NL as a group. See note (3) below for information concerning
individuals and entities which may be deemed to indirectly beneficially own
those shares of Common Stock directly beneficially held by Valhi and Tremont, as
reported in the table below. No securities of NL's subsidiaries are
beneficially owned by any director, nominee for director, or officer of NL.
Information concerning ownership of equity securities of NL's parent companies
is contained in note (3) below and the table following the caption "Ownership of
Valhi and Tremont Common Stock" below. All information is taken from or based
upon ownership filings made by such persons with the Commission or information
provided by such persons to NL.
<TABLE>
<CAPTION>
NL Common Stock
Name of Amount and Natue of Percent
Beneficial Owner Beneficial Ownership(1) of Class(2)
<S> <C> <C>
Valhi, Inc. 27,056,810(3) 53.0%
Three Lincoln Centre
5430 LBJ Freeway
Suite 1700
Dallas, TX 75240
Tremont Corporation 9,064,780(3) 17.8%
1999 Broadway
Suite 4300
Denver, CO 80202
Joseph S. Compofelice 22,881(4) --
J. Landis Martin 630,987(5) 1.2%
Kenneth R. Peak 4,825(6) --
Glenn R. Simmons 20,800(3)(7) --
Harold C. Simmons 21,275(3)(8) --
Michael A. Snetzer 16,000(3) --
Dr. Lawrence A. Wigdor 329,063(9) --
Admiral Elmo R. Zumwalt, Jr. 3,100(10) --
David B. Garten 162,336(11) --
Dennis G. Newkirk 109,613(12) --
All directors and executive officers
of the Company as a group
(11 persons) 1,412,801(3)(4)(5)(6)(7) 2.8%
(8)(9)(10)(11)
(12)(13)
</TABLE>
(1) All beneficial ownership is sole and direct unless otherwise noted.
(2) No percent of class is shown for holdings of less than 1%.
(3) Valhi Group, Inc. ("VGI"), National City Lines, Inc. ("National") and
Contran are the holders of approximately 75.2%, 10.1% and 5.7%,
respectively, of the outstanding Valhi Common Stock (as defined below).
VGI, National and Contran hold approximately 35.5%, 4.8% and 3.1%,
respectively, of the outstanding Tremont Common Stock (as defined below).
National, NOA, Inc. ("NOA") and Dixie Holding Company ("Dixie Holding") are
the holders of approximately 73.3%, 11.4% and 15.3%, respectively, of the
outstanding common stock of VGI. Contran and NOA are the holders of
approximately 85.7% and 14.3%, respectively, of the outstanding common
stock of National. Contran and Southwest Louisiana Land Company, Inc.
("Southwest") are the holders of approximately 49.9% and 50.1%,
respectively, of the outstanding common stock of NOA. Dixie Rice
Agricultural Corporation, Inc. ("Dixie Rice") is the holder of 100% of the
outstanding common stock of Dixie Holding. Contran is the holder of
approximately 88.7% and 54.3% of the outstanding common stock of Southwest
and Dixie Rice, respectively. Substantially, all of Contran's outstanding
voting stock is held by trusts established for the benefit of Harold C.
Simmons' children and grandchildren (the "Trusts"), of which Harold C.
Simmons is the sole trustee. As sole trustee of the Trusts, Harold C.
Simmons has the power to vote and direct the disposition of the shares of
Contran common stock held by the Trusts. However, Mr. Simmons disclaims
beneficial ownership thereof. The Combined Master Retirement Trust (the
"Master Trust") holds approximately .1% of the outstanding shares of Valhi
Common Stock and approximately .1% of the outstanding Tremont 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. 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, Glenn R. Simmons and Michael A. Snetzer are
members of Valhi's Board of Directors and are participants in one or more
of the employee benefit plans which invest through the Master Trust.
However, each such person disclaims beneficial ownership of the shares of
Valhi Common Stock and Tremont Common Stock held by the Master Trust,
except to the extent of his individual vested beneficial interest in the
assets held by the Master Trust.
Harold C. Simmons is Chairman of the Board of NL and Chairman of the Board,
President and Chief Executive Officer of Contran, Dixie Holding, NOA,
National, VGI and Valhi, is Chairman of the Board and Chief Executive
Officer of Dixie Rice and Southwest, and a director of Tremont. By virtue
of the stock ownership described above and the holding of such offices, Mr.
Simmons may be deemed to control Contran, Southwest, Dixie Rice, Dixie
Holding, NOA, National, VGI, Valhi, Tremont and NL, and Mr. Simmons, VGI,
National, NOA, Dixie Rice, Dixie Holding, Southwest and Contran may be
deemed to possess indirect beneficial ownership of the Common Stock
directly beneficially owned by Valhi and Tremont and the shares of Valhi
Common Stock and Tremont Common Stock held by Contran and its subsidiaries.
However, Mr. Simmons disclaims beneficial ownership of the shares of Common
Stock, Valhi Common Stock and Tremont Common Stock beneficially owned,
directly and indirectly, by such entities.
(4) The shares of Common Stock shown as beneficially owned include 1,881 shares
credited to Mr. Compofelice's account under the Savings Plan for Employees
of NL Industries, Inc. (the "Savings Plan").
(5) The shares of Common Stock shown as beneficially owned include (i) 582,288
shares of Common Stock which J. Landis Martin has the right to acquire by
exercise of options within 60 days of the Record Date under the 1989 Long
Term Performance Incentive Plan of NL Industries, Inc. (the "Incentive
Plan") or predecessor plans, and (ii) 8,034 shares credited to Mr. Martin's
account under the Savings Plan.
(6) The shares of Common Stock shown as beneficially owned includes (i) 3,000
shares of Common Stock which Kenneth R. Peak has the right to acquire by
exercise of options within 60 days of the Record Date pursuant to the NL
Industries, Inc. 1992 Non-Employee Director Stock Option Plan (the
"Director Plan"), and (ii) 21 shares of Common Stock held by Mr. Peak's
wife with respect to which Mr. Peak disclaims beneficial ownership.
(7) Includes 1,000 shares of Common Stock held by Glenn R. Simmons' wife with
respect to which beneficial ownership is disclaimed by Mr. Simmons.
(8) Includes 21,275 shares of Common Stock held by Harold C. Simmons' wife with
respect to which beneficial ownership is disclaimed by Mr. Simmons.
(9) The shares of Common Stock shown as beneficially owned include (i) 256,000
shares of Common Stock which Dr. Lawrence A. Wigdor has the right to
acquire by exercise of options within 60 days of the Record Date under the
Incentive Plan, (ii) 3,563 shares credited to Dr. Wigdor's account under
the Savings Plan, and (iii) 20,000 shares of restricted Common Stock issued
under the Incentive Plan with respect to which Dr. Wigdor has voting power
and the right to receive dividends.
(10) The shares of Common Stock shown as beneficially owned include 3,000 shares
of Common Stock which Admiral Elmo R. Zumwalt, Jr. has the right to acquire
by exercise of options within 60 days of the Record Date pursuant to the
Director Plan.
(11) The shares of Common Stock shown as beneficially owned include (i) 121,000
shares of Common Stock which David B. Garten has the right to acquire by
exercise of options within 60 days of the Record Date under the Incentive
Plan, (ii) 11,336 shares credited to Mr. Garten's account under the Savings
Plan, and (iii) 10,000 shares of restricted Common Stock issued under the
Incentive Plan with respect to which Mr. Garten has voting power and the
right to receive dividends.
(12) The shares of Common Stock shown as beneficially owned include (i) 69,000
shares of Common Stock which Dennis G. Newkirk has the right to acquire by
exercise of options within 60 days of the Record Date under the Incentive
Plan, (ii) 9,613 shares credited to Mr. Newkirk's account under the Savings
Plan, and (iii) 10,000 shares of restricted Common Stock issued under the
Incentive Plan with respect to which Mr. Newkirk has voting power and the
right to receive dividends.
(13) In addition to the foregoing, the shares of Common Stock shown as
beneficially owned by the directors and executive officers as a group
include (i) 51,733 shares of Common Stock which the remaining executive
officer of the Company has the right to acquire by exercise of options
within 60 days of the Record Date under the Incentive Plan or predecessor
plans, (ii) 9,289 shares credited to such executive's account under the
Savings Plan, and (iii) 10,000 shares of restricted Common Stock issued
under the Incentive Plan with respect to which such executive has voting
power and the right to receive dividends.
Securities Exchange Act Reports. Section 16 of the Securities Exchange Act
of 1934, as amended, requires the Company's executive officers, directors, and
persons who own beneficially more than 10% of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the Commission, the New York Stock Exchange, the Pacific Stock
Exchange and the Company. Based solely on a review of copies of the Section 16
reports furnished to the Company and written representations by certain
reporting persons, the Company believes that during the fiscal year ended
December 31, 1994, all of the Company's executive officers, directors and
greater than 10% beneficial owners filed required reports on a timely basis.
Ownership of Valhi and Tremont Common Stock. The following table and
accompanying notes set forth as of the Record Date (i) the beneficial ownership,
as defined above, of the common stock, $.01 par value per share, of Valhi
("Valhi Common Stock") held by (a) each director or nominee for director of NL,
(b) each executive officer of NL listed in the Summary Compensation Table below,
and (c) all executive officers and directors of NL as a group, and (ii) the
beneficial ownership, as defined above, of the common stock, $1.00 par value per
share, of Tremont ("Tremont Common Stock") held by (a) each director or nominee
for director of NL, and (b) each executive officer of NL listed in the Summary
Compensation Table below, and (c) all executive officers and directors of NL as
a group. See note (3) to the table following the caption "Ownership of NL
Common Stock" above, for information concerning individuals and entities who may
be deemed to indirectly beneficially own those shares of Common Stock directly
beneficially held by Tremont and Valhi. Except as described in note (3) above
and the table below and the accompanying notes, no equity securities of NL's
parent companies are beneficially owned by any director, nominee for director or
executive officer of NL. All information is taken from or based upon ownership
filings made by such persons with the Commission or information provided by such
persons to NL.
<TABLE>
<CAPTION>
Tremont Common Stock Valhi Common Stock
Amount and Amount and
Nature of Nature of
Name of Beneficial Percent Beneficial Percent
Beneficial Owner Ownership(1) of Class(2) Ownership(1) of Class(2)
<S> <C> <C> <C> <C>
Joseph S. Compofelice -0- -- 3,400(9) --
J. Landis Martin 133,338(3) 1.8% 320,000(10) --
Kenneth R. Peak -0- -- -0- --
Glenn R. Simmons -0- -- 523,833(4)(10)(11) --
Harold C. Simmons 2,347(4)(5) -- 700,383(4)(10)(12) --
Michael A. Snetzer 10,669(4)(6) -- 666,535(4)(10)(13) --
Dr. Lawrence A. Wigdor -0- -- -0- --
Admiral Elmo R. Zumwalt, Jr. -0- -- -0- --
David B. Garten 6,900(7) -- -0- --
Dennis G. Newkirk 60 -- 22,000(10) --
All directors and executive
officers of the Company
as a group (11 persons) 162,133(3)(4)(5) 2.2% 2,236,151(4)(9)(10) 2.0%
(6)(7)(8) (11)(12)(13)
</TABLE>
(1) All beneficial ownership is sole and direct unless otherwise noted.
(2) No percent of class is shown for holdings of less than 1%. For purposes of
calculating the percent of class owned 36,167 shares (.5%) and 30,490
shares (.4%) of Tremont Common Stock held by NL and a wholly- owned
subsidiary of Valhi, respectively, are included in the amount of Tremont
Common Stock outstanding, and 1,186,200 shares (1.0%) of Valhi Common Stock
held by NL and 1,000,000 shares (.8%) of Valhi Common Stock held by the
same wholly-owned subsidiary of Valhi are excluded from the amount of Valhi
Common Stock outstanding.
(3) The shares of Tremont Common Stock shown as beneficially owned by J. Landis
Martin include 33,172 shares of Tremont Common Stock which Mr. Martin has
the right to acquire by exercise of options within 60 days of the Record
Date under the 1988 Long Term Performance Incentive Plan of Tremont (the
"Tremont Incentive Plan"), and 510 shares held by the trustee for the
benefit of Mr. Martin under the Savings Plan. Such shares include 2,300
shares held by Mr. Martin's wife and 1,900 shares held by the Martin
Children's Trust No. II for which Mr. Martin is the sole trustee, with
respect to all of which beneficial ownership is disclaimed by Mr. Martin.
(4) See note (3) to the table following "Ownership of NL Common Stock" above.
(5) The shares of Tremont Common Stock shown as beneficially owned by Harold C.
Simmons constitute shares held by Mr. Simmons' wife with respect to which
beneficial ownership is disclaimed by Mr. Simmons.
(6) The shares of Tremont Common Stock shown as beneficially owned by Michael
A. Snetzer include 350 shares held by Mr. Snetzer as custodian for his son,
with respect to which beneficial ownership is disclaimed by Mr. Snetzer.
(7) The shares of Tremont Common Stock shown as beneficially owned by David B.
Garten include 6,400 shares which Mr. Garten has the right to acquire by
exercise of options within 60 days of the Record Date under the Tremont
Incentive Plan.
(8) In addition to the foregoing, the shares of Tremont Common Stock shown as
beneficially owned by the directors and executive officers as a group
include 8,562 shares which the remaining executive officer of the Company
has the right to acquire by exercise of options within 60 days of the
Record Date under the Tremont Incentive Plan, 11 shares held for the
benefit of such executive under the Savings Plan (as defined above) and 216
shares of restricted stock with respect to which such executive has the
power to vote and the right to receive dividends.
(9) The shares of Valhi Common Stock shown are held by Mr. Compofelice and his
wife as joint tenants.
(10) Includes shares of Valhi Common Stock registered in such person's name
which are restricted and the vested beneficial interests in shares of Valhi
Common Stock held as of December 31, 1994 by a Valhi employee stock
ownership plan. Also included are shares that such person or group could
acquire upon the exercise of stock options within 60 days of the Record
Date. During such 60-day period, options for 620,000 shares of Valhi
Common Stock are exercisable by Harold C. Simmons, options for 510,000
shares of Valhi Common Stock are exercisable by Michael A. Snetzer, options
for 440,000 shares of Valhi Common Stock are exercisable by Glenn R.
Simmons, options for 300,000 shares of Valhi Common Stock are exercisable
by J. Landis Martin, and options for 20,000 shares of Valhi Common Stock
are exercisable by Dennis G. Newkirk, all of which shares are included in
the amount outstanding for purposes of calculating the percent of class
owned by such persons.
(11) Includes 1,000 shares of Valhi Common Stock held by Glenn R. Simmons' wife
in trust for the benefit of their daughter and 800 shares held in a
retirement account for Mr. Simmons' wife, with respect to all of which
beneficial ownership is disclaimed by Mr. Simmons.
(12) Includes 77,000 shares of Valhi Common Stock held by Harold C. Simmons'
wife, with respect to which beneficial ownership is disclaimed by Mr.
Simmons.
(13) Includes 11,500 shares of Valhi Common Stock held in an account for Mr.
Snetzer's son of which Mr. Snetzer is a custodian, with respect to which
beneficial ownership is disclaimed by Mr. Snetzer.
The Company understands that Valhi, Tremont and related entities may
consider acquiring or disposing of shares of Common Stock through open-market or
privately-negotiated transactions depending upon future developments, including,
but not limited to, the availability and alternative uses of funds, the
performance of the Common Stock in the market, an assessment of the business of
and prospects for the Company, financial and stock market conditions and other
factors. The Company does not presently intend, and understands that neither
Valhi nor Tremont presently intends, to engage in any transaction or series of
transactions which would result in the Common Stock becoming eligible for
termination of registration under the Securities Exchange Act of 1934, as
amended, or ceasing to be traded on a national securities exchange.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
AND OTHER INFORMATION
COMPENSATION OF DIRECTORS
During 1994, fees were paid to each director who was not an employee of the
Company or a subsidiary of the Company. Fees consist of an annual retainer of
$15,000, payable in quarterly installments, plus an attendance fee of $750 for
each meeting of the Board or a committee at which the director is present. Such
directors also receive a fee of $750 per day for each day spent on NL business
at the request of the Board or the Chairman of the Board, other than the day of
Board or committee meetings. Directors are reimbursed for reasonable expenses
incurred in attending Board of Directors and committee meetings. If any
director who is not an officer or employee of NL or any subsidiary or affiliate
of NL dies while in active service, his designated beneficiary or estate will be
entitled to receive a life insurance benefit equal to the annual retainer then
in effect. Directors receiving fees for serving on the Board of Directors in
1994 were Messrs. Peak, G. Simmons, H. Simmons, and Snetzer and Admiral Zumwalt.
See "Certain Relationships and Transactions."
In 1994, each of Admiral Zumwalt and Mr. Peak was granted an option
pursuant to the Director Plan (as defined above) to purchase 1,000 shares of
Common Stock at an exercise price of $8.875 per share, representing the last
reported sales price of Common Stock on the New York Stock Exchange Composite
Tape on the date of grant. Options granted under the Director Plan become
exercisable one year after the date of grant and expire on the fifth anniversary
following the date of grant.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION OF EXECUTIVE OFFICERS
The Summary Compensation Table set forth below provides certain summary
information concerning annual and long-term compensation paid or accrued by the
Company to or on behalf of its Chief Executive Officer and each of its other
four most highly compensated executive officers during 1994, for services
rendered during the years ended December 31, 1994, 1993 and 1992.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation (1) Compensation (1)
Awards
Restricted Securities
Name and Year Salary Bonus (2) Stock Underlying All Other
Principal Position Awards Options Compensation
($) ($) (6)($) (#) (7)($)
<S> <C> <C> <C> <C> <C> <C>
J. Landis Martin 1994 400,000 600,000 -0- 195,000 9,000
President and Chief 1993 400,000 -0- -0- 120,000 25,144
Executive Officer 1992 400,000 400,000 -0- 70,000 71,237
(3)
Dr. Lawrence A. 1994 450,000 675,000 532,500 100,000 12,357
Wigdor 1993 450,000 -0- -0- 90,000 44,490
Executive Vice 1992 450,000 675,000 -0- 50,000 104,740
President
Joseph S. 1994 166,856 250,300 -0- 125,000 9,950
Compofelice 1993 -- -- -- -- --
Vice President and 1992 -- -- -- -- --
Chief Financial
Officer (4)
David B. Garten 1994 175,008 262,500 266,250 45,000 9,889
Vice President, 1993 175,008
-0- -0- 45,000 3,563
Secretary and 1992 175,008 262,500 -0- 20,000 34,135
General Counsel (5)
Dennis G. Newkirk 1994 150,000 123,000 266,250 45,000 9,760
Vice President and 1993 150,000 -0- -0- 45,000 760
Controller 1992 150,000 116,300 -0- 20,000 18,252
</TABLE>
(1) No payouts under any long-term incentive plans were made during 1994, 1993
or 1992, and no other annual compensation payments were made in 1994, 1993
or 1992. Therefore, columns for such compensation have been omitted.
(2) Amounts paid pursuant to the NL Industries, Inc. Share in Performance
Incentive Plan (the "Variable Compensation Plan"). See "Compensation
Committee Report on Executive Compensation" below.
(3) During 1994, 1993 and 1992, Mr. Martin also served as an executive officer
of Tremont. During these years he also served as an executive officer of
Baroid until Baroid was acquired by Dresser in January 1994. Mr. Martin is
expected to continue to serve as an executive officer of NL and Tremont in
1995 and to be compensated directly by NL and Tremont, respectively, for
services as an executive officer of each such company. Mr. Martin is
expected to continue to devote approximately one-half of his working time
to his duties as President and Chief Executive Officer of NL. See "Certain
Relationships and Transactions."
(4) Mr. Compofelice commenced employment as an executive officer of NL and
Tremont in February 1994 and as an executive officer of Valhi in July 1994.
He was compensated directly by NL and Tremont for services to such
companies in 1994. NL expects to be reimbursed by Valhi for Valhi's
portion of Mr. Compofelice's salary earned for services attributable to
Valhi. Amounts paid in 1994 by NL to Mr. Compofelice that are expected to
be reimbursed by Valhi are included in the table above. Mr. Compofelice is
expected to continue to serve as an executive officer of NL, Tremont and
Valhi in 1995, and to be compensated directly by NL and Tremont,
respectively, for services as an executive officer of each such company.
NL expects that Valhi will reimburse NL for Valhi's portion of Mr.
Compofelice's salary for services attributable to Valhi in 1995. Mr.
Compofelice is expected to continue to devote approximately one-half of his
working time to his duties as Vice President and Chief Financial Officer of
NL. See "Certain Relationships and Transactions."
(5) During 1992 and until June 1993, Mr. Garten served as an executive officer
of Tremont. During such periods, Mr. Garten was compensated directly by
NL, and Tremont reimbursed NL for Tremont's portion of Mr. Garten's salary
earned for services attributable to Tremont. Amounts paid to Mr. Garten in
1993 and 1992 by NL that were reimbursed by Tremont are included in the
table above. See "Certain Relationships and Transactions."
(6) In 1994, pursuant to the terms of the Incentive Plan, the Committee awarded
to the following named executive officers the number of shares of
restricted Common Stock set forth below opposite each such executive's
name. Such shares of restricted Common Stock vest in three equal tranches
six, twelve and twenty-four months, respectively, from the date of grant.
The aggregate number and the value of the restricted shares of Common Stock
held by each such executive officer as of December 31, 1994, is also set
forth below. Such value is based on the last New York Stock Exchange
Composite Tape reported sale price per share of Common Stock as of December
31, 1994.
<TABLE>
<CAPTION>
As of December 31, 1994
Total Value of
Total Award Vested Unvested Unvested Shares
<S> <C> <C> <C> <C>
Dr. Lawrence A. Wigdor 60,000 20,000 40,000 $505,000
David B. Garten 30,000 10,000 20,000 $252,500
Dennis G. Newkirk 30,000 10,000 20,000 $252,500
</TABLE>
In the event the Company pays dividends on its outstanding unrestricted
shares of Common Stock, the holders of restricted Common Stock also would
be entitled to receive such dividends.
(7) For 1994 represents (i) a contribution by the Company of $9,000 to the
account of each named executive officer under the Savings Plan, and (ii)
$3,357, $950, $889 and $760 of term life insurance premiums paid by the
Company for the benefit of Dr. Wigdor and Messrs. Compofelice, Garten and
Newkirk, respectively. For 1993 represents (i) the amount accrued by the
Company in unfunded accounts for the benefit of the named executive
officers under the Supplemental Executive Retirement Plan for Executives
and Officers of NL Industries, Inc. (the "SERP") and/or (ii) the amount of
term life insurance premiums paid by the Company for the benefit of the
named executive officers. For 1992 represents (i) the amount of
contributions by the Company to the account of each named executive
officer under the Savings Plan, (ii) the amount accrued by the Company in
such unfunded accounts for the benefit of the named executive officers
under the SERP, and/or (iii) the amount of term life insurance premiums
paid by the Company for the benefit of each named executive officer.
See "Certain Relationships and Transactions."
STOCK OPTION GRANTS
The following table provides information with respect to the individual
grants to the executive officers named in the Summary Compensation Table set
forth above under the Incentive Plan (as defined above) during fiscal year 1994.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Number of Percent of Value at Assumed
Securities Total Options Rates of Stock
Underlying Granted to Exercise or Appreciation for
Options Granted Employees Base Price Expiration Option Term (5)
Name (#)(1) in Fiscal Year ($/Share) Date
5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
J. Landis Martin 65,000 29% 8.6875(2) 2/16/04 354,900 900,250
65,000 9.6875(3) 289,900 835,250
65,000 10.6875(4) 224,900 770,250
Lawrence A. Wigdor 33,334 14.9% 8.6875(2) 2/16/04 182,004 461,676
33,333 9.6875(3) 148,671 428,342
33,333 10.6875(4) 115,338 395,008
Joseph S. Compofelice 125,000 18.6% 8.6875(2) 2/16/04 682,500 1,731,250
David B. Garten 15,000 6.7% 8.6875(2) 2/16/04 81,900 207,750
15,000 9.6875(3) 66,900 192,750
15,000 10.6875(4) 51,900 177,750
Dennis G. Newkirk 15,000 6.7% 8.6875(2) 2/16/04 81,900 207,750
15,000 9.6875(3) 66,900 192,750
15,000 10.6875(4) 51,900 177,750
</TABLE>
(1) Grants of options to purchase shares of Common Stock ("Options") under the
Incentive Plan vest over five years from February 16, 1994, the date of
grant, at a rate of 40% on the second anniversary of the date of grant, and
20% on each of the next three succeeding anniversary dates. The Options
expire on the tenth anniversary date of the date of grant.
(2) Exercise price is equal to the mean of the high and low prices of the
Common Stock on the New York Stock Exchange Composite Tape (the "NYSE mean
price") on the date of grant.
(3) Exercise price is equal to the NYSE mean price on the date of grant plus
$1.00.
(4) Exercise price is equal to the NYSE mean price on the date of grant plus
$2.00.
(5) Pursuant to the rules of the Commission, these amounts reflect the
calculations at assumed 5% and 10% appreciation rates. Such calculations
are not intended to forecast future appreciation, if any, and do not
necessarily reflect the actual value, if any, that may be realized. The
actual value of such Options, if any, would be realized only upon the
exercise of such Options and depends upon the future performance of the
Common Stock. No assurance can be made that the amounts reflected in these
columns will be achieved. The potential realizable value was computed as
the difference between the appreciated value (at the end of the ten-year
term of the Options) of the Common Stock into which the listed Options are
exercisable and the aggregate exercise price of such Options. The
appreciated value per share at the end of the ten-year term would be $14.15
and $22.53 at the assumed 5% and 10% rates, respectively.
STOCK OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the executive
officers named in the Summary Compensation Table, as set forth above, concerning
the exercise of options during the last fiscal year and the value of unexercised
options held as of December 31, 1994. Except for the exercise of options to
purchase 10,000 shares by Mr. Martin, no such executive officer exercised or
realized any value with respect to any options during 1994. No SARs have been
granted under the Incentive Plan.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1994 AND 12/31/94 OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Acquired on Options at 12/31/94(#) at 12/31/94 ($)
Name Exercise (#) Value Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
J. Landis Martin 10,000 15,000 440,288/517,000 569,625/1,846,938
Lawrence A. Wigdor -0- -0- 170,000/270,000 130,000/1,031,876
Joseph S. Compofelice -0- -0- 0/125,000 0/492,188
David B. Garten -0- -0- 84,000/121,000 30,500/471,063
Dennis G. Newkirk -0- -0- 47,000/108,000 32,500/471,563
</TABLE>
PENSION PLAN
The Retirement Plan of NL Industries, Inc. for its U.S. employees (the
"Pension Plan") provides lifetime retirement benefits to eligible employees. In
the case of salaried employees, an employee who is at least 21 years of age
becomes eligible to participate in the Pension Plan if he or she has completed
at least five months of service (as defined in the Pension Plan) in a specified
twelve-month period. Annually the Board establishes, in its discretion, the
amount of an employee's annual pension benefit for the year based primarily on
the employee's total annual base salary and bonus paid pursuant to the Variable
Compensation Plan for that year and the Company's financial performance in
relationship to its annual operating plan for the previous year. To the extent
that the minimum, target, or maximum level of operating income performance is
achieved, the employee earns an annual benefit equal to 1%, 2% or 3%,
respectively, of such employee's total base salary and bonus. (See
"Compensation Committee Report on Executive Compensation - Variable Compensation
Plan" below.) Such pension benefits are payable upon retirement and attainment
of ages specified in the Pension Plan. The Pension Plan covers each executive
officer named in the Summary Compensation Table set forth above. No amounts
were paid or distributed to any of the named executive officers in 1994. The
estimated accrued annual benefits payable upon retirement at normal retirement
age for Messrs. Martin, Wigdor, Compofelice, Garten and Newkirk are $43,507,
$23,004, $1,341, $18,396 and $20,931, respectively.
EMPLOYMENT AGREEMENTS
In December 1991, Mr. Martin entered into an executive severance agreement
which provides that Mr. Martin may be terminated at any time by action of the
Board of Directors. The executive severance agreement also provides that the
following payments shall be made to Mr. Martin in the event Mr. Martin is
terminated by the Company without cause (as defined in the agreement) or Mr.
Martin terminates his employment with the Company for good reason (as defined in
the agreement): (i) the greater of two times Mr. Martin's annual base salary
plus target bonus (which shall not be less than the amount of his annual salary)
or Mr. Martin's actual salary and bonus for the two years prior to termination;
(ii) accrued salary and bonus through the date of termination; (iii) an amount
in cash or Common Stock equal to the fair market value of outstanding stock
options granted to Mr. Martin in excess of the exercise price and unvested
restricted stock grants; (iv) an amount equal to unvested Company contributions
together with an amount equal to the Company's matching contributions to Mr.
Martin's account under the Savings Plan for a period of two years; (v) an amount
equal to the vested and unvested portions of Mr. Martin's account under the
SERP; and certain other benefits. This agreement is automatically extended for
one-year terms commencing each January 1, unless the Company and Mr. Martin
agree otherwise in writing.
In connection with Mr. Compofelice's employment with the Company in
February 1994, the Committee (as defined below) approved the terms of an
executive severance agreement with Mr. Compofelice on terms substantially
similar to those in the agreement between the Company and Mr. Martin described
above.
In March 1995, the Committee approved the terms of an executive severance
agreement with Dr. Wigdor on terms substantially similar to those in the
agreement between the Company and Mr. Martin described above. The severance
agreement replaces Dr. Wigdor's employment agreement with the Company which has
expired.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Management Development and Compensation Committee (the
"Committee") consists of individuals 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 the Committee administers.
The Committee reviews and recommends executive officer compensation
policies and practices. The Committee is responsible for reviewing and
approving all compensation actions, including stock-based compensation,
involving the Company's executive officers. However, in connection with the
Chief Executive Officer, compensation other than stock- based compensation is
approved by the Board of Directors after recommendation by the Committee.
The Company's compensation system with respect to its executive officers,
including the CEO, consists of three primary components: base salary, annual
variable compensation pursuant to the Variable Compensation Plan and the grant
of stock options, restricted stock, and stock appreciation rights pursuant to
the Incentive Plan. Through the use of the foregoing components, the Committee
seeks to achieve a balanced compensation package that will attract and retain
high quality key executives, appropriately reflect each such executive officer's
individual performance and contributions, and provide further incentives to
such officers to maximize annual operating performance and long-term shareholder
value.
The Committee intends to continue to study the new $1 million cap on
deductible executive compensation promulgated by the Revenue Reconciliation Act
of 1993 to determine the effect of such cap on the Company's current
compensation and employee benefit plans and whether any recommendations should
be proposed to the Board in connection with such deductibility cap.
BASE SALARIES
The Committee reviews recommendations of the CEO regarding base salaries
for executive officers. Such reviews occur no more frequently than annually.
The annual base salaries of the executive officers, including the CEO, were not
increased in 1994 and remained at 1992 or earlier levels in view of, among other
things, the Company's overall earnings and stock market performance. When
recommendations regarding changes in base salary levels are made by the CEO, the
Committee reviews them and may take such actions, including any modifications,
as it deems appropriate. These recommendations are based primarily on past and
potential future individual performance and contributions and also on data
regarding companies employing executives in positions similar to those whose
salaries are being reviewed, both inside and outside of the chemicals industry
(which may include companies contained in the peer group index plotted on the
Performance Graph following this report), and other companies with similar
financial and business characteristics as the Company, or where the executive in
question has similar responsibilities.
VARIABLE COMPENSATION PLAN
Awards under the Variable Compensation Plan constitute a significant
portion of an executive's potential annual cash compensation (between 0% and
150% of base salary for the CEO and the executive officers). Awards are based
primarily on achieving annual pre-determined operating income goals and
secondarily, with respect to certain of the executive officers, on individual
performance. The Company's management makes recommendations to the Board
regarding the operating income plan for the year after reviewing market
conditions and the Company's operations, competitive position, marketing
opportunities, and strategies for maximizing financial performance. The Board
approves this recommendation with any modifications it deems appropriate. Based
on the operating income plan for the year, the Committee sets the Company's
operating income goals at three levels which are designed to help focus the
executives' attention on achieving superior annual operating results in light of
existing conditions: a threshold level, which is the minimum operating income
level for any award to be made under the Variable Compensation Plan (the
"Minimum Level"), a target level (the "Target Level"), and a maximum level (the
"Maximum Level").
The Variable Compensation Plan, in combination with base salary, is
designed to result in executive officers and other eligible participants
receiving annual cash compensation below competitive compensation levels if the
Minimum Level is not achieved. The Company achieved the Minimum Level under the
Variable Compensation Plan in 1990, the Target Level in 1991, the Maximum Level
in 1992, and the Maximum Level in 1994. The Company failed to achieve the
Minimum Level in 1993.
Pursuant to the Variable Compensation Plan, if operating income is below
the Minimum Level, no variable compensation is paid except at the discretion of
the Committee. If the Minimum Level is met, executive officers are eligible to
receive variable compensation payments that in 1994 ranged between 17% and 50%
of base salary, depending on the executive. If the Target Level is reached, the
range of variable compensation payments is higher, and in 1994 ranged between
27% and 100% of base salary, depending on the executive. If the Maximum Level
is reached or exceeded, executives are eligible to receive the highest variable
compensation payments, and in 1994 the range of payments for which executive
were eligible was between 42% and 150% of base salary, depending on the
executive. The Committee has the authority to award other bonuses if the
Company's operating income falls between the Minimum, Target and Maximum Levels,
and to award other bonuses as the Committee deems appropriate from time to time.
With respect to 1994, in view of the Company's achievement of operating income
above the Maximum Level, the Committee or the Board, as appropriate, approved
Maximum Level payments under the Variable Compensation Plan to the executive
officers, including the CEO. The awards made for 1994 together with the awards
for 1993 and 1992 to the CEO and the four other highest paid executive officers
under the Variable Compensation Plan are reported in the bonus column in the
Summary Compensation Table set forth above.
In addition, target levels for operating income performance are utilized by
the Committee and the Board, as applicable, for determining the contributions,
if any, by the Company to the accounts of eligible participants, including the
CEO and the executive officers, under the Savings Plan, the Pension Plan, and
the SERP. See "Pension Plan" above.
STOCK-BASED COMPENSATION
The Incentive Plan further supports the goal of the Committee to maximize
long-term shareholder value by providing for stock-based compensation, the value
of which is directly related to increases in shareholder value. Stock option
grants, in particular, are considered an essential and significant element of
the Company's total compensation package for the CEO and the other executive
officers of the Company. The Committee believes that compensation linked to
stock price performance helps focus the executives' attention on management of
the Company from the shareholders' perspective.
Option grants are intended to provide incentives to increase shareholder
value in the future and to reward past performance by the executive. Annually,
the Committee reviews recommendations by the CEO regarding option grants to
executive officers other than the CEO. Options are granted to executive
officers, including the CEO, in the Committee's discretion based on a subjective
evaluation regarding each executive's performance and responsibilities. In 1994
the Committee did not base its determination regarding the number of options
granted to each executive officer, including the CEO, on the amount and terms of
options already held by such officers. Grants made in 1994 are reported in the
Option Grants in Last Fiscal Year Table set forth above.
To help assure a focus on long-term creation of shareholder value, the
Committee grants ten year options, which vest 40%, 60%, 80% and 100% on the
second, third, fourth and fifth anniversary dates of the date of grant,
respectively. In addition, to further provide incentives for increasing
shareholder value, in 1994 the Committee determined that options to certain
company officers, including executive officers, would be granted in three
exercise price tranches. One-third of the options granted to such individuals
in 1994 are exercisable at the fair market value of the Common Stock on the date
of grant. The remaining two-thirds of the options are exercisable at levels
that are above the market price on the date of grant.
In 1994, the Committee approved grants of restricted stock to four of the
Company's executive officers based on the Committee's subjective evaluation of
the contributions made and to be made by each such officer. The shares of
restricted stock granted vest in three equal tranches six, twelve and twenty-
four months, respectively, from the date of grant. See the Summary Compensation
Table above. Although permitted under the Incentive Plan, the Committee did not
make or recommend any grants of stock appreciation rights or equity-based awards
other than options and restricted stock in 1994.
To encourage growth in shareholder value, the Committee believes that
executives who are in a position to make a substantial contribution to the long-
term success of the Company should have a significant stake in its ongoing
success. In 1993, the Committee established the following voluntary goals for
minimum Common Stock ownership for executive officers to encourage executives to
build their Common Stock ownership. Executives are encouraged to achieve these
ownership goals over the next three to five years. The table also shows the
year-end market value of the actual share ownership (excluding unexercised
options and shares of restricted Common Stock as to which restrictions have not
lapsed) as a multiple of 1994 base salary.
<TABLE>
<CAPTION>
Year-End Market Value of Share
Ownership as a Multiple of Base Salary
Actual Goal
<S> <C> <C>
President and Chief Executive Officer 1.5X 4X
Executive Vice President .9X 3X
Vice Presidents: Chief Financial Officer 1.5X 3X
Controller 1.7X 2X
General Counsel 1.5X 2X
Treasurer 1.7X 2X
</TABLE>
The foregoing report on executive compensation has been furnished by the
Company's Management Development and Compensation Committee of the Board of
Directors.
Mr. Kenneth R. Peak (Chairman)
General Thomas P. Stafford
Admiral Elmo R. Zumwalt, Jr.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return on the Common Stock against the cumulative
total return of the S & P Composite 500 Stock Index and the S & P Chemicals
Index for the period commencing December 31, 1989 and ending December 31, 1994.
The graph shows the value at December 31 of each year assuming an original
investment of $100 and reinvestment of dividends and other distributions to
shareholders.
(INSERT GRAPH)
(See APPENDIX A for a description of a line graph plotting the points set
forth below which compare the yearly change in the cumulative total shareholder
return on the Common Stock against the cumulative return of the S&P indices
described below.)
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
NL Industries, Inc. $100 $43.01 $45.07 $21.80 $21.21 $59.53
S & P 500 $100 $96.89 $126.41 $136.05 $149.76 $151.69
S & P Chemicals Index $100 $84.91 $110.73 $120.64 $134.92 $156.19
</TABLE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
RELATIONSHIPS WITH RELATED PARTIES
As set forth under the caption "Security Ownership," Harold C. Simmons,
through Valhi and Tremont, may be deemed to control NL. 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 which resulted in the acquisition by one related party of a
publicly-held minority equity interest in another related party. While 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
from time to time considers, reviews and evaluates, and understands that
Contran, Valhi and related entities consider, review and evaluate, such
transactions. Depending upon the business, tax and other objectives then
relevant, including, without limitation restrictions under certain indentures
and other agreements of the Company, it is possible that the Company might be a
party to one or more such transactions in the future. 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.
Harold C. Simmons, Glenn R. Simmons and Michael A. Snetzer, each a director
of NL, are also directors of Valhi. Each of the foregoing persons and Mr.
Martin and Ms. Alderton are directors of Tremont. Mr. Martin, the Company's
President and Chief Executive Officer, and Mr. Compofelice, the Company's Vice
President and Chief Financial Officer since February 1994, served as executive
officers of Tremont for all or a portion of 1994. In addition, Mr. Compofelice
commenced serving as an executive officer of Valhi in July 1994 and Mr. Garten
has served since 1990 as assistant secretary of Tremont. Mr. Martin expects to
continue to serve in 1995 as an executive officer of Tremont and Mr. Compofelice
expects to continue to serve in 1995 as an executive officer of Tremont and
Valhi. Until the January 1994 acquisition of Baroid by Dresser, Mr. Martin
served as an executive officer of Baroid. Such management interrelationships
and the existing intercorporate relationships may lead to possible conflicts of
interest. These possible conflicts may arise from the duties of loyalty owed by
persons acting as corporate fiduciaries of two or more companies under
circumstances where such companies may have adverse interests. Mr. Compofelice
devotes approximately one half of his working time to NL and the remainder of
his working time to Tremont and Valhi. Mr. Martin devotes approximately one-
half of his working time to NL and the remainder of his working time to Tremont.
See "Certain Contractual Relationships and Transactions" below.
Although no specific procedures are in place that govern the treatment of
transactions among the Company, Valhi, Tremont and related entities, the boards
of directors of the Company, Valhi and Tremont include one or more members who
are not officers or directors of any other entity that may be deemed to be
related to the Company. Additionally, under applicable principles of law, in
the absence of shareholder ratification or approval by directors of the Company
who may be deemed disinterested, transactions involving contracts among the
Company and any other companies under common control with the Company must be
fair to all companies involved. Furthermore, each director and officer of the
Company owes fiduciary duties of good faith and fair dealing with respect to all
shareholders of the company or companies for which they serve.
CERTAIN CONTRACTUAL RELATIONSHIPS AND TRANSACTIONS
Intercorporate Services Agreements. The Company and Contran are parties to
an intercorporate services agreement (the "Contran ISA") whereby Contran makes
available to the Company the services of Harold C. Simmons to consult and assist
in the development and implementation of the Company's strategic plans and
objectives. The services do not include major corporate acquisitions,
divestitures and other special projects outside the scope of the Company's
business as it has been conducted in the past. NL paid Contran approximately
$380,000 in 1994 for services pursuant to the Contran ISA and expects to pay
approximately the same amount in 1995 for such services. The Contran ISA is
subject to termination or renewal by mutual agreement and may be terminated by
either party pursuant to a written notice delivered 30 days prior to a quarter-
end. The Company will continue to pay directors' fees and expenses separately
to Harold C. Simmons. See "Compensation of Directors and Executive Officers and
Other Information" above.
The Company and Valhi are parties to an intercorporate services agreement
(the "Valhi ISA") whereby Valhi renders certain management, financial and
administrative services to the Company. The Company paid fees of approximately
$200,000 to Valhi for services pursuant to the Valhi ISA during 1994 and expects
to pay approximately the same amount for services in 1995. The Valhi ISA is
subject to termination or renewal by mutual agreement and may be terminated by
either party pursuant to a written notice delivered 30 days prior to a quarter-
end. In addition, the Company makes available to Valhi the services of Joseph
S. Compofelice and expects to be reimbursed by Valhi for the portion of Mr.
Compofelice's salary attributable to services provided to Valhi.
Tremont Registration Rights Agreement. In connection with the December 1991
purchase by Tremont of 7.8 million shares of Common Stock from Valhi, the
Company entered into a Registration Rights Agreement pursuant to which Tremont
received certain registration rights with respect to the purchased shares.
Unless all registration rights are exercised earlier, such agreement expires in
December 2001.
Valhi Stock Options. Certain employees of the Company hold options to
purchase Valhi Common Stock under the terms of Valhi's stock option plan. At
December 31, 1994, Messrs. Martin, Compofelice and Newkirk and one other
employee held options to purchase 300,000, 50,000, 20,000 and 45,000 shares,
respectively, of Valhi Common Stock at exercise prices ranging from $5.00 to
$15.00 per share. With respect to all such employees except Mr. Compofelice,
the Company has agreed to pay Valhi the aggregate difference between the option
price and the market value of Valhi's Common Stock on the exercise date if such
options are exercised.
Insurance Sharing Agreement. An indirect insurance subsidiary of Tremont has
assumed the obligations of the issuer of certain reinsurance contracts that
relate to primary insurance policies issued by a third-party insurance company
in favor of Tremont and the Company. The Company and the Tremont insurance
subsidiary are parties to an insurance sharing agreement with respect to such
reinsurance contracts (the "Insurance Sharing Agreement"). Under the terms of
the Insurance Sharing Agreement, the Company is to reimburse the Tremont
insurance subsidiary with respect to certain loss payments and reserves
established by such Tremont subsidiary that (a) arise out of claims against the
Company and its subsidiaries (the "NL Liabilities"), and (b) are subject to
payment by such Tremont subsidiary under its reinsurance contracts with the
third-party insurance company. Also pursuant to the Insurance Sharing
Agreement, the Tremont insurance subsidiary is to credit the Company with
respect to certain underwriting profits or recoveries that such Tremont
subsidiary receives from independent reinsurers that relate to the NL
Liabilities. As of December 31, 1994, the Company had current accounts payable
to such Tremont subsidiary of approximately $4.8 million with respect to such
Agreement.
CERTAIN LITIGATION
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 Tremont's agreement
to purchase 7.8 million shares of Common Stock from Valhi. In addition to
Tremont, the complaint names as defendants Valhi and the members of the Board of
Directors of Tremont, including Messrs. Martin, Glenn Simmons, Harold Simmons
and Snetzer and Ms. Alderton. The complaint alleges, among other things, that
Tremont's purchase of the Company shares constituted a waste of Tremont's assets
and that the Tremont Board of Directors breached its fiduciary duties to
Tremont's public stockholders and seeks, among other things, to rescind
Tremont's consummation of the purchase of the Company shares and award damages
to Tremont for injuries allegedly suffered as a result of the defendants'
alleged wrongful conduct. It is the Company's understanding that Tremont
believes, and understands that the other defendants believe, that the action is
without merit. The Company understands that Tremont has and the other
defendants have denied all allegations of wrongdoing and liability, and intend
to vigorously defend this action. The trial in this matter is scheduled to
begin in May 1995.
INDEPENDENT ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P. served as independent auditors of the
Company for the year ended December 31, 1994, and is expected to be considered
for appointment to serve for the year ended December 31, 1995. Representatives
of Coopers & Lybrand L.L.P. are expected to attend 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.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
In order to be included in the Company's 1996 proxy statement and form of
proxy, shareholder proposals for the 1996 annual meeting of shareholders must be
received at the principal executive offices of the Company, 16825 Northchase
Drive, Suite 1200, Houston, Texas 77060, Attention: Mr. David B. Garten,
Secretary, not later than December 15, 1995. All such proposals shall be
treated in accordance with applicable rules administered by the Commission.
1994 ANNUAL REPORT ON FORM 10-K
A copy of the Company's 1994 Annual Report on Form 10-K, as filed with the
Commission, is included as part of the Annual Report to Shareholders mailed to
the shareholders with this Proxy Statement. An additional copy of such Form 10-
K may be obtained without charge by writing: Investor Relations Department, NL
Industries, Inc., 16825 Northchase Drive, Suite 1200, Houston, Texas 77060.
OTHER MATTERS
The Board does not know of any business except as described above which may
be presented for consideration at the Annual Meeting. If any business not
described in this Proxy Statement should properly come before the Annual
Meeting, the persons designated as agents in the enclosed proxy card or voting
instruction form will vote on those matters in accordance with their best
judgment.
Houston, Texas NL INDUSTRIES, INC.
March 29, 1995
APPENDIX A
page 20 -- a line graph plotting the points shown in the chart on page 20
which compares the yearly change in the cumulative total
shareholder return on the Common Stock against the cumulative
total return of the S & P Composite 500 Stock Index and S & P
Chemical Index for the period commencing December 31, 1989 and
ending December 31, 1994.
/X/ PLEASE MARK YOUR 9 8 5 7
VOTES AS IN THIS
EXAMPLE.
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BELOW BY
THE SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR ALL NOMINEES NAMED IN PROPOSAL 1 SET FORTH BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1 SET FORTH BELOW.
1. ELECTION OF SEVEN DIRECTORS
<TABLE>
<S> <C> <C> <C>
FOR / / WITHHOLD / / Nominees: Joseph S. Compofelice, 2. In their discretion, the
(except as indicated authority to J. Landis Martin, Kenneth R. proxies are authorized to
below) vote for all Peak, Glenn R. Simmons, Harold vote upon such other
nominees C. Simmons, Lawrence A. Wigdor, business as may properly
and Admiral Elmo R. Zumwalt, Jr. come before the Annual
Meeting and any postponement
thereof.
</TABLE>
Please sign exactly as name appears on this card. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign full corporate
name and sign authorized officer's name and title. If a partnership, please
sign in partnership name and sign authorized person's name and title.
The undersigned shareholder hereby revokes all proxies heretofore given by the
undersigned to vote at the Annual Meeting or any adjournments or postponements
thereof.
SIGNATURE(S) DATE
NL INDUSTRIES, INC.
16825 NORTHCHASE DR., SUITE 1200
HOUSTON, TEXAS 77060
FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 3, 1995
The undersigned hereby appoints David B. Garten, Lourdes T. Hernandez and Dennis
G. Newkirk and each of them, the proxy and attorney-in-fact for the undersigned,
with full power of substitution in each, to represent the undersigned and to
vote on behalf of the undersigned at the Annual Meeting of Shareholders of NL
Industries, Inc. to be held on May 3, 1995, and at any adjournment or
postponement of such meeting, all shares of Common Stock of NL Industries, Inc.
standing in the name of the undersigned or which the undersigned may be entitled
to vote on the matters described on the reverse side.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NL INDUSTRIES,
INC.
You are encouraged to specify your voting choices by marking the appropriate
boxes on the reverse side of this card but you need not mark any boxes if you
wish to vote in accordance with the Board of Directors' recommendations. The
above-named proxies cannot vote your shares unless you sign, date and promptly
return this card. Please use the enclosed return envelope. This proxy may be
revoked by a proxy accepted at a later date or otherwise as set forth in the NL
Proxy Statement which accompanied this proxy card.
SEE REVERSE SIDE
