LSB to Implement Strategic, Operational and Corporate Governance Enhancements
As a result of the Strategic Committee’s report, the Company’s Board of Directors has determined the following:
Business Strategy and Operations
The programs initiated by the LSB’s management team several years ago, including the expansion of the El Dorado facility, plant reliability enhancements in the Chemical Business and the implementation of the operational excellence activities in the Climate Control business are progressing and are expected to improve the Company's business and operational performance. These programs were initiated to enhance shareholder value and provide the Company with strategic flexibility. In support of these objectives, the Board has taken the following actions:
The Committee will be comprised of Webster L. “Lance” Benham (Chairman),
Performance Metrics: LSB will implement key operating performance metrics related to the reliability of the Company’s chemical plants and to LEAN initiatives that management has undertaken in the Climate Control business. This will provide the Board with better visibility on the effectiveness of these initiatives.
Analysis of Margin Enhancement in Climate Control Business: LSB will engage the services of an independent consultant to review the operations of the Climate Control business with a specific focus on driving higher margins. The purpose of this review is to assess the efficiency of all manufacturing processes and to identify opportunities for leveraging technology and incorporating industry best practices.
Corporate Governance Structure
Corporate Governance Guidelines: A comprehensive review and
update of LSB’s Corporate Governance Guidelines and committee charters
is in process by the Nominating and Governance Committee, with the
assistance of outside counsel. Recommendations for governance
enhancements will be brought to the Board for discussion at the
Further Strengthening the Management Team: Over the past two years, the Company has made several key management hires to improve the performance of both the Climate Control and Chemical Businesses. To further that, the Board has directed management to undertake a review of the overall organizational structure of the Company and provide the Board with recommendations for further deepening the senior leadership team.
Related Party Transactions
The Board directed that the Compensation Committee of the Board conduct the annual performance review for all members of the Golsen family, noting that the Compensation Committee already conducts a review for the CEO.
Other Governance Practices Deemed Appropriate for Review
Executive Compensation Structure: The Company will revise its compensation structure by adopting a pay-for-performance incentive compensation plan that will ensure that executive compensation is directly linked to both short-term company performance as well as long-term value creation for shareholders. The new compensation plan will include specific performance metrics for the Company’s senior management team and stock ownership requirements for the senior management team and all directors. The revised compensation structure will be in place by the end of 2015 and will apply to 2016 executive compensation.
Shareholder Rights Plan: The Board has elected to review the
current Shareholder Rights Plan that is in effect to determine whether
that plan should stay in effect until its expiration in 2019, whether it
should be terminated, or whether an alternative plan should be presented
to the Board for implementation. The Board will conduct its review over
the next several months and come to a determination at its
LSB is a manufacturing and marketing company. LSB’s principal business activities consist of the manufacture and sale of chemical products for the agricultural, mining and industrial markets; and, the manufacture and sale of commercial and residential climate control products, such as water source and geothermal heat pumps, hydronic fan coils, modular geothermal and other chillers and large custom air handlers.
This press release includes certain forward-looking statements within
the meaning of the Private Securities Litigation Act of 1995. These
forward-looking statements generally are identifiable by use of the
words “believe,” “expects,” “intends,” “anticipates,” “plans to,”
“should,” “estimates,” “projects” or similar expressions, including,
without limitation, benefits of the strategic initiatives we have
implemented; initiatives and corporate governance enhancements
recommended will better position us to deliver value for shareholders
and enhance the execution of our strategic growth initiatives; programs
initiated are expected to improve business and operational performance;
performance of operation of oversight committee; and revisions to
executive compensation structure. Actual results may differ materially
from the forward-looking statements, including, without limitation,
general economic conditions; increased competitive pressures; labor
conditions; loss of significant customers or customers’ failure to abide
by conditional terms; legislative or regulatory changes which could
negatively affect the implementation of corporate governance
enhancements; and the various factors described in the “Special Note
Regarding Forward-Looking Statements” and “Risk Factors” contained in
our most recent 10-K for the year ended
LSB Industries, Inc.
Mark Behrman, 405-235-4546
Chief Financial Officer
The Equity Group Inc.
Fred Buonocore, 212-836-9607
Linda Latman, 212-836-9609