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LSB INDUSTRIES, INC.
16 SOUTH PENNSYLVANIA AVENUE
POST OFFICE BOX 754
OKLAHOMA CITY, OK 73101
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 18, 1994
To the Stockholders of
LSB INDUSTRIES, INC.
The Annual Meeting of the Stockholders of LSB Industries, Inc. (the
"Company") will take place at the Company's financial center located at 4000
Northwest 39th Expressway, Oklahoma City, Oklahoma, on Thursday, August 18,
1994, at 11:00 a.m. (CST), for the purpose of considering and acting upon the
following matters:
(1) The election of 3 nominees to the Board of Directors;
(2) The approval of the selection of independent auditors;
(3) Any other business which properly may come before the meeting or
any adjournment of the meeting.
The Board of Directors has fixed the close of business on July 13, 1994,
as the record date for the determination of holders of the voting common stock
and voting preferred stock of the Company entitled to receive notice of, and
to vote at, the Annual Meeting.
To ensure the presence of a quorum at the annual meeting, please sign
and promptly return the enclosed Proxy Card in the accompanying self-addressed
envelope, which requires no postage if mailed in the United States.
The Company previously distributed its 1993 Annual Report to
Stockholders.
By order of the Board of Directors
David M. Shear
Secretary
Oklahoma City, Oklahoma
July 18, 1994
LSB INDUSTRIES, INC.
16 SOUTH PENNSYLVANIA
POST OFFICE BOX 754
OKLAHOMA CITY, OK 73101
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 18, 1994
SOLICITATION OF PROXIES
SOLICITATION. This Proxy Statement is solicited on behalf of the Board of
Directors of LSB Industries, Inc. (the "Company") and is hereby furnished to
the stockholders of the Company to solicit their proxies for use at the Annual
Meeting of Stockholders to take place on Thursday, August 18, 1994, at 11:00
a.m. at the Company's financial center located at 4000 Northwest 39th
Expressway, Oklahoma City, Oklahoma 73112 (the "Annual Meeting"). The
Company may use the services of its directors, officers and employees to
solicit proxies personally or by telephone. The Company will bear all of the
costs of preparing, printing, assembling and mailing this Proxy Statement and
the Proxy Card and all of the costs of the solicitation of the proxies. The
Company has also retained the services of Kissel-Blake Inc. to aid in the
solicitation of proxies for a fee of $3,000, plus reasonable out-of-pocket
expenses incurred by them.
REIMBURSEMENT OF EXPENSES. The Company will reimburse any bank, broker-
dealer, or other custodian, nominee or fiduciary for its reasonable expenses
incurred in completing the mailing of proxy materials to the beneficial owners
of the Company's voting common stock and voting preferred stock.
REVOCATION OF PROXY. Any stockholder giving his or her proxy may revoke it at
any time before its exercise by notifying the Secretary of the Company, by
telegraph or in writing.
MAILING OF PROXY STATEMENT AND PROXY CARD. This Proxy Statement and the Proxy
Card is being first sent to Stockholders of the Company on or about July 18,
1994.
STOCKHOLDER PROPOSALS. In order for the Company to include a stockholder
proposal in the proxy materials for the Company's 1995 Annual Meeting of
Stockholders, a stockholder must deliver the proposal in writing to the
Secretary of the Company no later than March 20, 1995.
SECURITIES AND PRINCIPAL HOLDERS
RECORD DATE AND VOTING SECURITIES. Only the record holders of shares of the
voting common stock and voting preferred stock of the Company as of the close
of business on July 13, 1994 (the "Record Date"), will have the right to
receive notice of, and to vote at, the Annual Meeting. As of the close of
business on the Record Date, the Company had the following shares of voting
common stock and voting preferred stock issued and outstanding; (a) 13,580,191
shares of Common Stock (excluding 1,035,085 shares held in treasury); (b)
1,619 shares of Convertible Noncumulative Preferred Stock; and (c) 20,000
shares of Series B 12% Cumulative Convertible Preferred Stock. Each
stockholder of record, as of the Record Date, will have one vote for each
share of voting common stock and voting preferred stock of the Company (or
one-half of one vote for each fractional one-half share of the Convertible
Noncumulative Preferred Stock) that the stockholder owned as of the Record
Date. All shares of voting common stock and voting preferred stock will vote
together as a single class on all matters coming before the Annual Meeting,
and a majority of all of the outstanding shares of voting common stock and
voting preferred stock of the Company, represented as a single class, entitled
to notice of, and to vote at, the Annual Meeting, represented in person or by
proxy, will constitute a quorum for the meeting.
Pursuant to the General Corporation Law of the State of Delaware, only
votes cast "For" a matter constitute affirmative votes, except proxies in
which the stockholder fails to make a specification as to whether he votes
"For", "Against", "Abstains" or "Withholds" as to a particular matter shall be
considered as a vote "For" that matter. Votes will be tabulated by an
inspector of election appointed by the Company's Board of Directors. Votes in
which the stockholder specifies that he is "Withholding" or "Abstaining" from
voting are counted for quorum purposes. Abstentions and broker non-votes are
not considered as votes "For" a particular matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following
table shows the total number and percentage of the outstanding shares of the
Company's voting common stock and voting preferred stock beneficially owned as
of June 30, 1994, with respect to each person (including any "group" as used
in Section 13(d)(3) of the Securities Act of 1934, as amended) that the
Company knows to have beneficial ownership of more than five percent (5%) of
the Company's voting common stock and voting preferred stock. A person is
deemed to be the beneficial owner of voting shares of common stock of the
Company which he or she could acquire within sixty (60) days of June 30, 1994,
such as upon the exercise of options.
Because of the requirements of the Securities and Exchange Commission as
to the method of determining the amount of shares an individual or entity may
beneficially own, the amounts shown below for an individual or entity may
include shares also considered beneficially owned by others.
AMOUNTS
NAME AND ADDRESS TITLE OF SHARES PERCENT
OF OF BENEFICIALLY OF
BENEFICIAL OWNER CLASS OWNED(1) CLASS
- - ---------------- ------- -------------- -------
Jack E. Golsen and Common 4,037,445 (3)(5)(6) 27.9%
members of his family(2) Voting Preferred 20,000 (4)(6) 92.3%
- - --------------------------------
(1) The Company based the information with respect to beneficial
ownership on information furnished by the above-named individuals or entities
or contained in filings made with the Securities and Exchange Commission or
the Company's records.
(2) Includes Jack E. Golsen and the following members of his family:
wife, Sylvia H. Golsen; son, Barry H. Golsen (a director of the Company and
president of several subsidiaries of the Company); son, Steven J. Golsen
(executive officer of several subsidiaries of the Company), and daughter,
Linda F. Rappaport. The address of Jack E. Golsen, Sylvia H. Golsen, Barry H.
Golsen and Linda F. Rappaport is 16 South Pennsylvania Avenue, Oklahoma City,
Oklahoma 73107; Steven J. Golsen's address is 7300 S.W. 44th, Oklahoma City,
Oklahoma 73179.
(3) Includes (a) the following shares that Jack E. Golsen ("J.
Golsen") has the sole voting and investment power: (i) 89,028 shares that he
owns of record, (ii) 165,000 shares that he has the right to acquire under a
non-qualified stock option, (iii) 4,000 shares that he has the right to
acquire upon conversion of a promissory note, (iv) 133,333 shares that he has
the right to acquire upon the conversion of 4,000 shares of the Company's
Series B 12% Cumulative Convertible Preferred Stock (the "Series B Preferred")
owned of record by him, and (v) 10,000 shares that he has the right to acquire
within the next sixty (60) days under the Company's stock option plans; (b)
1,293,984 shares owned of record by Sylvia H. Golsen, in which she and her
husband, J. Golsen, share voting and investment power; (c) 264,526 shares that
Barry H. Golsen ("B. Golsen") has the sole voting and investment power, 533
shares that he shares the voting and investment power with his wife that are
owned of record by his wife, and 14,000 shares that he has the right to
acquire within the next sixty (60) days under the Company's stock option
plans; (d) 225,897 shares that Steven J. Golsen ("S. Golsen") has the sole
voting and investment power and 14,000 shares that he has the right to acquire
within the next sixty (60) days under the Company's stock option plans; (e)
145,460 shares held in trust for the grandchildren of Jack E. and Sylvia H.
Golsen of which B. Golsen, S. Golsen and Linda F. Rappaport jointly or
individually, are trustees; (f) 82,552 shares owned of record by Linda F.
Rappaport, which Mrs. Rappaport has the sole voting and investment power, and
(g) 1,061,799 shares owned of record by Golsen Petroleum Corporation ("GPC)
and 533,333 shares that GPC has the right to acquire upon conversion of 16,000
shares of Series B Preferred owned of record by GPC. GPC is wholly-owned by
J. Golsen, Sylvia H. Golsen, B. Golsen, S. Golsen and Linda F. Rappaport, with
each owning twenty percent (20%) of the outstanding stock of GPC, and as a
result, GPC, J. Golsen, Sylvia H. Golsen, B. Golsen, S. Golsen, and Linda F.
Rappaport share the voting and investment power of the shares beneficially
owned by GPC. GPC's address is 16 South Pennsylvania Avenue, Oklahoma City,
Oklahoma 73107.
(4) Includes: (a) 4,000 shares of Series B Preferred owned of record
by J. Golsen, which he has the sole voting and investment power; and (b)
16,000 shares of Series B Preferred owned of record by GPC, in which GPC, J.
Golsen, Sylvia H. Golsen, B. Golsen, S. Golsen and Linda F. Rappaport share
the voting and investment power.
(5) Does not include 144,260 shares of common stock that Linda F.
Rappaport's husband owns of record and 14,000 shares which he has the right to
acquire within the next sixty (60) days under the Company's stock option
plans, all of which Linda F. Rappaport disclaims beneficial ownership.
(6) J. Golsen disclaims beneficial ownership of the shares that B.
Golsen, S. Golsen and Linda F. Rappaport each have the sole voting and
investment power over as noted in footnote (3) above. B. Golsen, S. Golsen
and Linda F. Rappaport disclaim beneficial ownership of the shares that J.
Golsen has the sole voting and investment power over as noted in footnotes (3)
and (4) and the shares owned of record by Sylvia H. Golsen.
SECURITY OWNERSHIP OF MANAGEMENT. The following table sets forth information
obtained from the directors of the Company and the directors and executive
officers of the Company as a group as to their beneficial ownership of the
Company's common stock and voting preferred stock as of June 30, 1994.
Because of the requirements of the Securities and Exchange Commission as
to the method of determining the amount of shares an individual or entity may
own beneficially, the amount shown below for an individual may include shares
also considered beneficially owned by others. Any shares of stock which a
person does not own, but which he or she has the right to acquire within sixty
(60) days of June 30, 1994 are deemed to be outstanding for the purpose of
computing the percentage of outstanding stock of the class owned by such
person but are not deemed to be outstanding for the purpose of computing the
percentage of the class owned by any other person.
AMOUNTS OF
SHARES
NAME OF TITLE OF BENEFICIALLY PERCENT OF
BENEFICIAL OWNER CLASS OWNED CLASS
- - ---------------- -------- ------------- -----------
Raymond B. Ackerman Common 5,680 (2) *
Robert C. Brown, M.D. Common 258,329 (3) 1.9%
Barry H. Golsen Common 2,019,651 (4) 14.9%
Voting Preferred 16,000 (4) 74.0%
Jack E. Golsen Common 3,290,477 (5) 23.9%
Voting Preferred 20,000 (5) 92.5%
David R. Goss Common 266,477 (6) 2.0%
Bernard G. Ille Common 130,000 (7) 1.0%
Jerome D. Shaffer,M.D. Common 140,374 (8) 1.0%
Tony M. Shelby Common 262,882 (9) 1.9%
C.L. Thurman Common 20,333 (10) *
Directors and Common 5,039,799 (11) 36.8%
Executive Officers Voting Preferred 20,000 (11) 92.5%
as a group(13
persons)
- - ---------------------------
* Less than 1%.
(1) The Company based the information with respect to beneficial
ownership on information furnished by each director or officer, contained in
filings made with the Securities and Exchange Commission, or contained in the
Company records.
(2) Mr. Ackerman has sole voting and investment power of these shares,
which shares are held in a trust in which Mr. Ackerman is both the settlor and
the trustee and in which he has the vested interest in both the corpus and
income.
(3) The amount shown includes 45,000 shares of common stock that Dr.
Brown may acquire pursuant to currently exercisable non-qualified stock
options granted to him by the Company. The shares with respect to which Dr.
Brown shares the voting and investment power consist of 142,516 shares owned
by Dr. Brown's wife, 50,727 shares owned by Robert C. Brown, M.D., Inc., a
corporation wholly-owned by Dr. Brown, and 20,086 shares held by the Robert C.
Brown M.D., Inc. Employee Profit Sharing Plan, of which Dr. Brown serves as
the trustee. The amount shown does not include 56,090 shares directly owned
by the children of Dr. Brown, all of which Dr. Brown disclaims beneficial
ownership.
(4) See footnotes (3), (4), and (6) of the table under "Security
Ownership of Certain Beneficial Owners and Management" of this Item for a
description of the amount and nature of the shares beneficially owned by B.
Golsen, including 14,000 shares B. Golsen has the right to acquire within
sixty (60) days.
(5) See footnotes (3), (4), and (6) of the table under "Security
Ownership of Certain Beneficial Owners and Management" of this Item for a
description of the amount and nature of the shares beneficially owned by J.
Golsen, including the 10,000 shares J. Golsen has the right to acquire within
sixty (60) days.
(6) The amount shown includes 5,000 shares that Mr. Goss has the right
to acquire within sixty (60) days pursuant to options granted under the
Company's Incentive Stock Option Plans ("ISOs"), all of Mr. Goss has the sole
voting and investment power. Mr. Goss shares voting and investment power
over 2,429 shares owned by Mr. Goss's wife, individually and/or as custodian
for Mr. Goss's children and has sole voting and investment power over the
balance of the shares.
(7) The amount includes 45,000 shares that Mr. Ille may purchase
pursuant to currently exercisable non-qualified stock options in which Mr.
Ille has the sole voting and investment power. The amount also includes
85,000 shares owned by Mr. Ille's wife, which Mr. Ille disclaims beneficial
ownership.
(8) Dr. Shaffer has the sole voting and investment power over these
shares, which includes 45,000 shares that Dr. Shaffer may purchase pursuant to
currently exercisable non-qualified stock options.
(9) Mr. Shelby has the sole voting and investment power over these
shares, which includes 5,000 shares that he has the right to acquire within
sixty (60) days pursuant to options granted under the Company's ISOs.
(10) Mr. Thurman has the sole voting and investment power over these
shares, which includes 5,000 shares that Mr. Thurman may purchase pursuant to
currently exercisable non-qualified stock options.
(11) The amount shown includes 429,380 shares of common stock that
officers and directors, or entities controlled by officers and directors of
the Company, have the right to acquire within sixty (60) days.
ELECTION OF DIRECTORS
GENERAL. The Board of Directors has nominated for reelection to the Board of
Directors three (3) directors, each to hold office for a term of three (3)
years and until their successors are duly elected. Barry H. Golsen, David R.
Goss and Jerome D. Shaffer, M.D., currently serve as directors of the Company.
If any of the nominees become unable or unwilling to accept the election or to
serve as a director (an event which the Board of Directors does not
anticipate), the persons or persons named in the proxy will vote for the
election of the person or persons recommended by the Board of Directors. The
proxies cannot be voted for a greater number of persons than the number of
nominees named above.
The Certificate of Incorporation and Bylaws of the Company provide for
the division of the Board of Directors into three (3) classes, each class
consisting as nearly as possible of one-third of the whole. The term of
office of one class of directors expires each year, with each class of
directors elected for a term of three (3) years and until the shareholders
elect their qualified successors. Barry H. Golsen, David R. Goss and Jerome
D. Shaffer, M.D., are presently serving as directors of the Company in the
class whose term is expiring as of the Annual Meeting.
The Company's Bylaws provide that the Board of Directors by resolution
from time to time may fix the number of directors that shall constitute the
whole Board of Directors. The Bylaws presently provide that the number of
Directors may consist of not less than three (3) nor more than nine (9). The
Board of Directors currently has set the number of directors at nine (9).
The Bylaws of the Company further provide that the only persons
nominated by or at the direction of: (i) the Board of Directors of the
Company, or (ii) any stockholder of the Company entitled to vote for the
election of the directors that complies with certain notice procedures, shall
be eligible for election as a director of the Company. Any stockholder
desiring to nominate any person as a director of the Company must give written
notice to the Secretary of the Company at the Company's principal executive
office not less than fifty (50) days prior to the date of the meeting of
stockholders to elect directors; except, if less than sixty (60) days' notice
or prior disclosure of the date of such meeting is given to the stockholders,
then written notice by the stockholder must be received by the Secretary of
the Company not later than the close of business on the tenth (10th) day
following the day on which such notice of the date of the meeting was mailed
or such public disclosure was made. In addition, if the stockholder proposes
to nominate any person, the stockholder's written notice to the Company must
provide all information relating to such person that the stockholder desires
to nominate that is required to be disclosed in solicitation of proxies
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended.
The following table sets forth the name, principal occupation, age, year
in which the individual first became a director and year in which the
director's term will expire for each nominee for election as a director at the
Annual Meeting and all other directors whose term will continue after the
Annual Meeting.
NAME AND FIRST BECAME
PRINCIPAL OCCUPATION A DIRECTOR TERM EXPIRES AGE
- - -------------------- ------------ ------------ ---
NOMINEES:
Barry H. Golsen (1) 1981 1997 43
Vice Chairman of the
Board of Directors of
the Company and President
of the Environmental Control
Business of the Company
David R. Goss (2) 1971 1997 53
Senior Vice President of
Operations of the Company
Jerome D. Shaffer, M.D.(3) 1969 1997 77
Investments
OTHER DIRECTORS:
Robert C. Brown, M.D.(4) 1969 1995 63
President of Northwest
Internal Medicine
Associates, Inc.
Jack E. Golsen (5) 1969 1995 65
President, Chief Executive
Officer and Chairman of
the Board of Directors of
the Company
C.L. Thurman (6) 1969 1995 75
Investments
Raymond B. Ackerman (7) 1993 1996 71
Chairman Emeritus of Ackerman
McQueen, Inc.
Bernard G. Ille (8) 1971 1996 67
Investments
Tony M. Shelby (9) 1971 1996 52
Senior Vice President of
Finance and Chief
Financial Officer of the
Company
- - ---------------------------
(1) Mr. B. Golsen was elected as Vice Chairman of the Board of Directors of
the Company at an April 15, 1994 meeting of the Board of Directors. For
more than five (5) years, Mr. Golsen has served as a director and the
President of the Company's Environmental Control Business.
(2) Mr. Goss, a certified public accountant, has served in substantially the
same capacity for the past five (5) years.
(3) Dr. Shaffer retired from the practice of medicine in 1987. Prior to
that time, Dr. Shaffer practiced medicine in Oklahoma City, Oklahoma,
for more than five (5) years.
(4) Dr. Brown has practiced medicine in Oklahoma City, Oklahoma, for more
than five (5) years.
(5) Mr. Jack E. Golsen, founder of the Company, has served in the same
capacity for the past five (5) years.
(6) Prior to his retirement from the Company in 1987, Mr. Thurman served as
President of the industrial supply operations of the Company's
Industrial Products Business for more than five (5) years.
(7) On November 11, 1993, Mr. Ackerman was elected as a director of the
Company by the Board of Directors to fill a newly created directorship
resulting from an increase in the authorized number of directors
approved by all of the stockholders having the right to vote as a single
class. From 1984 to 1992, Mr. Ackerman served as Chairman of the Board
of Ackerman McQueen, Inc., which is a public relations and advertising
firm, located in Oklahoma. Ackerman McQueen, Inc., is not a parent,
subsidiary or affiliate of the Company. On August 7, 1992, Mr. Ackerman
retired from Ackerman McQueen, Inc.
(8) Mr. Ille served as President and Chief Executive Officer of First Life
Assurance Company ("First Life") from May, 1988, through March 31, 1994,
when he retired from First Life and from that position. In 1991, First
Life was placed in conservatorship under the Oklahoma Department of
Insurance and was sold on March 31, 1994. For more than five (5) years
prior to that time, Mr. Ille also served as President of United Founders
Life Insurance Company. Mr. Ille also serves as a director of Landmark
Land Company Inc. ("Landmark") and served as a director of Landmark's
wholly-owned savings and loan subsidiary. Such savings and loan
subsidiary was placed in receivership in 1991 by the Federal Deposit
Insurance Corporation while Mr. Ille served as a director. First Life
was a subsidiary of Landmark until such was placed in conservatorship.
(9) Mr. Shelby, a certified public accountant, has served in substantially
the same capacity for more than five (5) years.
Approval of each nominee for election to the Board of Directors will
require the affirmative vote of a plurality of the votes cash by the holders
of the voting securities of the Company, voting together as one class.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE THREE
(3) NOMINEES AS DIRECTORS OF THE COMPANY.
FAMILY RELATIONSHIPS. Jack E. Golsen is the father of Barry H. Golsen and the
brother-in-law of Robert C. Brown, M.D. Robert C. Brown, M.D. is the uncle of
Barry H. Golsen.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS. The Company has an
Executive Salary Review Committee and an Audit Committee. The Company does
not have a nominating committee. The Board of Directors nominates the
nominees for election as directors of the Company.
The Company's Executive Salary Review Committee has the authority to set
the compensation of all officers of the Company. The present members of the
Executive Salary Review Committee are Robert C. Brown, M.D., Bernard G. Ille,
and Jerome D. Shaffer, M.D. Jack E. Golsen was a member of the Executive
Salary Review Committee until January, 1993. During 1993, the Executive
Salary Review Committee had one (1) meeting.
The Audit Committee's functions include: (a) recommending a public
accounting firm for appointment by the Board of Directors for the purpose of
conducting the annual audit of the Company; (b) reviewing the recommendations
of the auditors regarding internal controls and procedures; (c) reviewing from
time to time the Company's general policies and procedures with respect to
auditing, accounting, and the application of financial resources; (d)
reviewing all other matters and making special inquires and investigations
referred to it by the Board of Directors; and (e) making other recommendations
to the Board of Directors as the Committee may deem appropriate. The members
of the Audit Committee are Bernard G. Ille (Chairman) Jerome D. Shaffer, M.D.,
and Robert C. Brown, M.D. The Audit Committee held two (2) meetings during
1993.
The Board of Directors of the Company held seven (7) meetings in 1993.
During 1993 no director attended fewer than seventy-five percent (75%) of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by all committees (other than the Stock Option
Committee) of the Board of Directors on which he served.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. Based solely on a review
of copies of the Forms 3,4 and 5 and amendments thereto furnished to the
Company with respect to 1993, or written representations that no such reports
were required to be filed with the Securities and Exchange Commission, the
Company believes that during 1993 all directors and officers of the Company
and beneficial owners of more than ten percent (10%) of any class of equity
securities of the Company registered pursuant to Section 12 of the Exchange
Act filed their required Forms 3, 4 or 5, as required by Section 16 (a) of the
Exchange Act on a timely basis, except that during 1993 each of Sylvia H.
Golsen and Raymond B. Ackerman filed late their respective Forms 3 relating to
when Mrs. Golsen became the beneficial owner of more than 10% of the Company's
common stock and when Mr. Ackerman was elected as a director of the Company;
C.L. Thurman timely filed one Form 5 representing one late Form 4 relating to
the exercise of three stock options; and, Michael D. Tepper timely filed on
Form 5 representing one late Form 4 relating to three different transactions
on the same day.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. A subsidiary of the Company,
Hercules Energy Mfg. Corporation ("Hercules"), leases land and a building in
Oklahoma City, Oklahoma from Mac Venture, Ltd. ("Mac Venture"), a limited
partnership. GPC serves as the general partner of Mac Venture. The limited
partners of Mac Venture include GPC and the three children of Jack E. Golsen.
See "Security Ownership of Certain Beneficial Owners and Management", above,
for a discussion of the stock ownership of GPC. The land leased by Hercules
from Mac Venture consists of a total of 341,000 square feet, with 44,000
square feet in the building. Hercules leases the property from Mac Venture
for $7,500 per month under a triple net lease which began as of January 1,
1982, and expires on December 31, 1998. Also, at January 1, 1991, GPC owed
Hercules approximately $62,000 for purchases of oilfield equipment in prior
years. Beginning in 1991, the balance of $62,000 was payable at the rate of
$1,000 per month, and at March 31, 1994, $51,000 was owing by GPC to Hercules.
At January 1, 1992, there were outstanding loans and advances to Tony M.
Shelby of $105,000. $5,000 of such loans and advances were non-interest
bearing. $100,000 of such loans and advances was subject to interest at an
annual rate of 7.0%. During 1993, Mr. Shelby sold to the Company 9,782 shares
of the Company's common stock at market value at that time and used the
proceeds in payment of such loan plus accrued interest. The market value of
the shares transferred on the date transferred was $11.25 per share (aggregate
$110,000).
Prior to 1993 Equity Bank for Savings, F.A. ("Equity"), a wholly owned
subsidiary of the Company until sold in May, 1994, made a loan to Douglas
Barton which loan bears an annual rate of interest equal to the Citibank,
N.A.'s prime rate plus 1.5%. As of June 30, 1993, Mr. Barton owed Equity the
sum of $358,158 on this loan. This loan was secured by Mr. Barton's home in
Carmel, California and 155,000 shares of Landmark Land Company common stock.
This loan was paid in full in January 1994. The loan made by Equity to Mr.
Barton was made in Equity's ordinary course of business and made on
substantially the same terms, including interest rate and collateral, as those
prevailing at the time for comparable transactions with other persons. Mr.
Barton is the son of Gerald G. Barton, who the Company believed owned more
than five percent of the Company's common stock from January 1, 1992 until
March 1993, when he ceased, to the Company's knowledge, being an owner of
record of more than five percent of any class of the Company's voting
securities.
Northwest Internal Medicine Associates, ("Northwest") a division of
Plaza Medical Group., P.C., has an agreement with the Company to perform
medical examinations of the management and supervisory personnel of the
Company and its subsidiaries. Under such agreement, Northwest is paid $4,000
per month to perform all such examinations. Dr. Robert C. Brown (a director
of the Company) is a co-owner of Plaza Medical Group., P.C.
In 1983, LSB Chemical Corp. ("LSB Chemical"), a subsidiary of the
Company, acquired all of the outstanding stock of El Dorado Chemical Company
("EDC") from its then four stockholders ("Ex-Stockholders"). A substantial
portion of the purchase price consisted of an earnout based primarily on the
annual after-tax earnings of EDC for a ten-year period. During 1989, two of
the Ex-Stockholders received LSB Chemical promissory notes for a portion of
their earnout, in lieu of cash, totaling approximately $896,000, payable
$496,000 in January, 1990, and $400,000 in May, 1995. LSB Chemical agreed to
a buyout of the balance of the earnout from the four Ex-Stockholders for an
aggregate purchase amount of $1,231,000. LSB Chemical purchased for cash the
earnout from two of the Ex-Stockholders and issued multi-year promissory notes
totaling $676,000 to the other two Ex-Stockholders. Jack E. Golsen guaranteed
LSB Chemical's payment obligation under the promissory notes, which is
$400,000 at June 30, 1994.
At the request of a lender to the Company and several of its
subsidiaries, during the first half of 1992, Jack E. Golsen guaranteed the
repayment of a term loan in the original principal amount of $2,000,000 made
by such lender to several subsidiaries of the Company. This loan was repaid
by the Company in May, 1993.
In December 1993, the Company's Board of Directors authorized the
Company to loan funds to certain executive officers of the Company and certain
subsidiaries who incurred unanticipated alternative minimum tax liability as a
result of the exercise of the Company's incentive stock options during 1993.
Pursuant to such authorization, the Company has made loans to the following
executive officers of the Company in the following amounts for the purpose of
assisting in the payment of alternative minimum tax liability arising from the
exercise of the Company's incentive stock options: Jack E. Golsen - $290,000;
Barry H. Golsen - $270,000; David R. Goss - $461,000; Tony M. Shelby -
$400,000; David M. Shear - $56,500; Jim D. Jones - $185,000; and Michael
Tepper - $66,427. Each loan is payable on demand at an annual interest rate
equal to New York Prime plus 1% and is secured by shares of the Company's
common stock acquired by the respective executive officers upon the exercises
of such options. The Company also made loans for the same purposes and on the
same terms as described above to Steven J. Golsen, President of one of the
company's subsidiaries, in the amount of $270,000 and Claude L. Rappaport,
President of one of the Company's subsidiaries, in the amount of $270,000.
Steven J. Golsen and Claude L. Rappaport are also the son and son-in-law,
respectively, of Jack E. Golsen, the President and Chairman of the Board of
the Company. In June, 1994, (i) David R. Goss paid $61,000 against the
principal and interest due under his note, resulting in the unpaid principal
balance due under Mr. Goss' note being reduced to $407,632 as of June 30,
1994; (ii) Tony M. Shelby paid $65,000 against the principal and interest due
under his note, resulting in the principal balance due under Mr. Shelby's note
being reduced to $339,969 as of June 30, 1994; and, (iii) Jim D. Jones paid
$66,874 against the principal and interest due under his note, resulting in
the unpaid principal balance due under Mr. Jones' note being reduced to
$120,000 as of June 30, 1994. As of June 30, 1994, no payments have been made
against any of the other notes.
EXECUTIVE COMPENSATION
AND OTHER INFORMATION
EXECUTIVE COMPENSATION.
The following table shows the aggregate cash compensation which the
Company and its subsidiaries paid or accrued to the Chief Executive Officer
and each of the other four (4) most highly-paid executive officers of the
Company (which includes the individual who serves as Vice Chairman of the
Board of Directors and President of the Company's Environmental Control
Business and who performs key policy making functions for the Company). The
table includes cash distributed for services rendered during 1993, plus any
cash distributed during 1993 for services rendered in a prior year, less any
amount relating to those services previously included in the cash compensation
table for a prior year. The table also includes bonuses earned by the named
executive officers during 1993, but not paid until June 1994.
SUMMARY COMPENSATION TABLE
--------------------------
LONG-TERM
COMPEN-
SATION
ANNUAL COMPENSATION AWARDS
------------------- ------
OTHER ALL
ANNUAL SECURITIES OTHER
COMPEN- UNDERLYING COMPEN-
NAME AND SALARY BONUS SATION STOCK SATION
POSITION YEAR ($) ($) ($)(2) OPTIONS ($)
- - -------------- ----- ------- ------- ------ ------- ----------
Jack E. Golsen 1993 379,615 150,000 - - 100,000(4)
Chairman of the 1992 359,395 160,000(1) - 50,000 -
Board and Chief 1991 353,779 - - - -
Executive Officer
Barry H. Golsen 1993 165,000 90,000 - - 100,000(4)
Vice Chairman of 1992 168,671 100,000(1) - 10,000 -
the Board and 1991 165,000 25,000 - - -
President of the
Environmental
Control Business
David R. Goss 1993 142,000 90,000 - - 100,000(4)
Senior Vice 1992 145,099 100,000(1) - 10,000 -
President - 1991 142,000 25,000 - - 17,000(3)
Operations
Tony M. Shelby 1993 142,000 90,000 - - 100,000(4)
Senior Vice 1992 144,975 100,000(1) - 10,000
President/Chief 1991 142,000 25,000 - - 20,000(3)
Financial Officer
David M. Shear 1993 111,846 40,000 - - -
Vice President/ 1992 98,032 50,000(1) - 25,000 -
General Council 1991 86,688 15,000 - - -
- - --------------------------
(1) Includes the following amounts paid in 1992 as bonuses for 1991:
Jack E. Golsen - $60,000; Barry H. Golsen - $40,000; David R. Goss - $40,000;
Tony M. Shelby - $40,000; and David M. Shear - $30,000.
(2) Does not include perquisites and other personal benefits,
securities or property for the named executive officer in any year if the
aggregate amount of such compensation for such year does not exceed the lesser
of either $50,000 or 10% of the total of annual salary and bonus reported for
the named executive officer for such year.
(3) In 1991, the Company paid to Messrs. Goss and Shelby an additional
bonus of $17,000 and $20,000, respectively, which they returned to the Company
in payment of a debt each owed to the Company.
(4) This amount represents a one-time fee paid in June, 1994, to
officers of the Company who served as directors of Equity Bank for Savings,
F.A. ("Equity Bank"), for services rendered as a member of the Board of
Directors of Equity Bank, during the period that Equity Bank was a wholly
owned subsidiary of the Company from its acquisition in 1988 through the date
that the Company sold all of the outstanding stock of Equity Bank in May,
1994. The Company does not believe it is practical to attempt to allocate
portions of such payment by year, and, as a result, has allocated the full
amount of such payment to 1993.
OPTION GRANTS IN 1993.
No stock options were granted by the Company to any named executive
officer in 1993.
Aggregated Option Exercises in 1993 and Fiscal Year End Option Values.
- - ---------------------------------------------------------------------
The following table sets forth information concerning each exercise of
stock options by each of the named executive officers during the last fiscal
year and the year-end value of unexercised options:
NUMBER OF VALUE
SECURITIES OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT FY END
FY END (#)(3) ($) (3) (4)
------------- -------------
SHARES
ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE
NAME (#)(1) ($) (2) UNEXERCISABLE UNEXERCISABLE
- - -------------- ----------- ----------- ------------- -------------
Jack E. Golsen 35,800 $ 290,201 175,000/ (5) $1,238,750/
30,000 189,360
Barry H. Golsen 39,170 339,372 14,000/ 111,475/
6,000 37,872
David R. Goss 184,500 1,654,687 5,000/ 38,375/
6,000 39,750
Tony M. Shelby 196,650 1,777,706 5,000/ 38,375/
6,000 39,750
David M. Shear 8,000 75,250 8,000/ 58,250/
15,000 99,375
___________________________________
(1) Each number represents the number of shares received by the named
individual upon exercise.
(2) The values set forth in this column represent the difference
between the market value of the Company's common stock on the date the
particular option was exercised and the exercise price of such option.
(3) The options granted under the Company's Plans become exercisable
20% after one year from date of grant, an additional 20% after two years, an
additional 30% after three years, and the remaining 30% after four years.
(4) The values are based on the price of the Company's common stock on
the American Stock Exchange at the close of trading on December 31, 1993 of
$9.75 per share. The actual value realized by a named executive on the
exercise of these options depends on the market value of the Company's common
stock on the date of exercise.
(5) The amount shown includes 165,000 non-qualified stock options
which are currently exercisable.
OTHER PLANS. The Board of Directors has adopted an LSB Industries, Inc.
Employee Savings Plan (the "401(k) Plan") for the employees (including
executive officers) of the Company and its subsidiaries, excluding certain
(but not all) employees covered under union agreements. The 401(k) Plan is an
employee contribution plan, and the Company and its subsidiaries make no
contributions to the 401(k) Plan. The amount that an employee may contribute
to the 401(k) Plan equals a certain percentage of the employee's compensation,
with the percentage based on the employee's income and certain other criteria
as required under Section 401(k) of the Internal Revenue Code. The Company or
subsidiary deducts the amounts contributed to the 401(k) Plan from the
employee's compensation each pay period, in accordance with the employee's
instructions, and pays the amount into the 401(k) Plan for the employee's
benefit. The Summary Compensation Table set forth above includes any amount
contributed and deferred during the 1993 fiscal year pursuant to the 401(k)
Plan by the named executive officers of the Company.
In 1981, the Company adopted a death benefit plan for certain key
employees. Under the plan, the designated beneficiary of an employee covered
by the plan will receive a monthly benefit for a period of ten (10) years if
the employee dies while in the employment of the Company or a wholly-owned
subsidiary of the Company. The agreement with each employee provides, in
addition to being subject to other terms and conditions set forth in the
agreement, that the Company may terminate the agreement as to any employee at
anytime prior to the employee's death. The Company has purchased life
insurance on the life of each employee covered under the plan to provide, in
large part, a source of funds for the Company's obligations under the Plan.
The Company also will fund a portion of the benefits by investing the proceeds
of a policy received by the Company upon the employee's death. The Company is
the owner and sole beneficiary of the insurance policy, with the proceeds
payable to the Company upon the death of the employee. The following table
sets forth the amounts of annual benefits payable to the designated
beneficiary or beneficiaries of the executive officers named in the Summary
Compensation Table set forth above under the above-described death benefits
plan.
AMOUNT OF
NAME OF INDIVIDUAL ANNUAL PAYMENT
------------------ --------------
Jack E. Golsen $175,000
Barry H. Golsen $ 30,000
David R. Goss $ 35,000
Tony M. Shelby $ 35,000
In addition to the above-described plans, during 1991 the Company
entered into a non-qualified arrangement with certain key employees of the
Company and its subsidiaries to provide compensation to such individuals in
the event that they are employed by the Company or a subsidiary of the Company
at age 65. Under the plan, the employee will be eligible to receive for the
life of such employee, a designated benefit as set forth in the plan. In
addition, if prior to attaining the age 65 the employee dies while in the
employment of the Company or a subsidiary of the Company, the designated
beneficiary of the employee will receive a monthly benefit for a period of ten
(10) years. The agreement with each employee provides, in addition to being
subject to other terms and conditions set forth in the agreement, that the
Company may terminate the agreement as to any employee at any time prior to
the employee's death. The Company has purchased insurance on the life of each
employee covered under the plan where the Company is the owner and sole
beneficiary of the insurance policy, with the proceeds payable to the Company
to provide a source of funds for the Company's obligations under the plan.
The Company may also fund a portion of the benefits by investing the proceeds
of such insurance policies. Under the terms of the plan, if the employee
becomes disabled while in the employment of the company or a wholly-owned
subsidiary of the Company, the employee may request the Company to cash-in any
life insurance on the life of such employee purchased to fund the Company's
obligations under the plan. Jack E. Golsen does not participate in the plan.
The following table sets forth the amounts of annual benefits payable to the
executive officers named in the Summary Compensation Table set forth above
under such retirement plan.
AMOUNT OF
NAME OF INDIVIDUAL ANNUAL PAYMENT
------------------ --------------
Barry H. Golsen $17,480
David R. Goss $17,403
Tony M. Shelby $15,605
David M. Shear $17,822
COMPENSATION OF DIRECTORS. In 1993, the Company compensated each non-
management director of the Company (with the exception of Raymond B. Ackerman,
since he was not elected a director until November, 1993) for his services in
the amount of $4,500. The non-management directors of the Company also
received $500 for every meeting of the Board of Directors attended during
1993. Each member of the Audit Committee, consisting of Messrs. Ille, Brown
and Shaffer, also received an additional $20,000 for their services in 1993.
In addition, the Company paid C.L. Thurman $20,000 as compensation for his
services as Chairperson of the Special Projects Committee of the Board of
Directors for 1993.
In September 1993, the Company adopted the 1993 Non-Employee Director
Stock Option Plan (the "Outside Director Plan"). The Outside Director Plan
authorizes the grant of non-qualified stock options to each member of the
Company's Board of Directors who is not an officer or employee of the Company
or its subsidiaries. The maximum shares for which options may be issued under
the Outside Director Plan will be 150,000 shares (subject to adjustment as
provided in the Outside Director Plan). The Company shall automatically grant
to each outside director an option to acquire 5,000 shares of the Company's
common stock on April 30 following the end of each of the Company's fiscal
years in which the Company realizes net income of $9.2 million or more for
such fiscal year. The exercise price for an option granted under the Outside
Director Plan shall be the fair market value of the shares of common stock at
the time the option is granted. Each option granted under the Outside
Director Plan, to the extent not exercised, shall terminate upon the earlier
of the termination of the outside director as a member of the Company's Board
of Directors or the fifth anniversary of the date such option was granted. On
April 30, 1994, the Company automatically granted to each non-management
director of the Company (Messrs Ackerman, Thurman, and Ille and Drs. Brown and
Shaffer) an option to purchase 5,000 shares of the Company's common stock
pursuant to the Outside Directors Plan at $9.00 per share.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS. In 1989 and
1991, the Company entered into severance agreements with Jack E. Golsen, Barry
H. Golsen, Tony M. Shelby, David R. Goss, David M. Shear and certain other
executive officers of the Company and subsidiaries of the Company.
Each severance agreement provides (among other things) that if, within
twenty-four (24) months after the occurrence of a change in control (as
defined) of the Company, the Company terminates the officer's employment other
than for cause (as defined) or the officer terminates his employment for good
reason (as defined) the Company must pay the officer an amount equal to 2.9
times the officer's base amount (as defined). The phrase "base amount" means
the average annual gross compensation paid by the Company to the officer and
includable in the officer's gross income during the period consisting of the
most recent five (5) year period immediately preceding the change in control.
If the officer has been employed by the Company for less than 5 years, the
base amount is calculated with respect to the most recent number of taxable
years ending before the change in control that the officer worked for the
Company.
The severance agreements provide that a "change in control" means a
change in control of the Company of a nature that would require the filing of
a Form 8-K with the Securities and Exchange Commission and, in any event,
would mean when: (1) any individual, firm, corporation, entity or group (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) becomes the beneficial owner, directly or indirectly, of thirty
percent (30%) or more of the combined voting power of the Company's
outstanding voting securities having the right to vote for the election of
directors, except acquisitions by: (a) any person, firm, corporation, entity
or group which, as of the date of the severance agreement, has that ownership,
or (b) Jack E. Golsen, his wife; his children and the spouses of his children;
his estate; executor or administrator of any estate, guardian or custodian for
Jack E. Golsen, his wife, his children, or the spouses of his children, any
corporation, trust, partnership or other entity of which Jack E. Golsen, his
wife, children, or the spouses of his children own at least eighty percent
(80%) of the outstanding beneficial voting or equity interests, directly or
indirectly, either by any one or more of the above-described persons, entities
or estates; and certain affiliates and associates of any of the above-
described persons, entities or estates; (2) individuals who, as of the date of
the severance agreement, constitute the Board of Directors of the Company (the
"Incumbent Board") and who cease for any reason to constitute a majority of
the Board of Directors except that any person becoming a director subsequent
to the date of the severance agreement, whose election or nomination for
election is approved by a majority of the Incumbent Board (with certain
limited exceptions), will constitute a member of the Incumbent Board; or (3)
the sale by the Company of all or substantially all of its assets.
The termination of an officer's employment with the Company "for cause"
means termination because of: (a) the mental or physical disability from
performing the officer's duties for a period of one hundred twenty (120)
consecutive days or one hundred eighty days (even though not consecutive)
within a three hundred sixty (360) day period; (b) the conviction of a felony;
(c) the embezzlement by the officer of Company assets resulting in substantial
personal enrichment of the officer at the expense of the Company; or (d) the
willful failure (when not mentally or physically disabled) to follow a direct
written order from the Company's Board of Directors within the reasonable
scope of the officer's duties performed during the sixty (60) day period prior
to the change of control.
The termination of an officer's employment with the Company for "good
reason" means termination because of (a) the assignment to the officer of
duties inconsistent with the officer's position, authority, duties or
responsibilities during the sixty (60) day period immediately preceding the
change in control of the Company or any other action which results in the
diminishment of those duties, position, authority, or responsibilities; (b)
the relocation of the officer; (c) any purported termination by the Company of
the officer's employment with the Company otherwise than as permitted by the
severance agreement; or (d) in the event of a change in control of the
Company, the failure of the successor or parent company to agree, in form and
substance satisfactory to the officer, to assume (as to a successor) or
guarantee (as to a parent) the severance agreement as if no change in control
had occurred.
Each severance agreement runs until the earlier of: (a) three years
after the date of the severance agreement, or (b) the officer's normal
retirement date from the Company. However, beginning on the first anniversary
of the severance agreement and on each anniversary thereafter, the term of the
severance agreement automatically extends for an additional one-year period,
unless the Company gives notice otherwise at least sixty (60) days prior to
the anniversary date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Company's
Executive Salary Review Committee (the "Committee") has the authority to set
the compensation of all officers of the Company. This Committee generally
considers and approves the recommendations of the President for all officers
of the Company except the President. The Committee sets the compensation of
the President and Chief Executive Officer of the Company, taking into account
the factors noted below under the "Report of Executive Salary Review
Committee. The members of the Executive Salary Review Committee are the
following non-management directors: Robert C. Brown, M.D., Jerome D. Shaffer,
M.D., and Bernard G. Ille. During 1993, the Executive Salary Review Committee
had one meeting.
See "Compensation of Directors" for information concerning compensation
paid and options granted to non-employee directors of the Company during 1993
for services as a director to the Company.
REPORT OF EXECUTIVE SALARY REVIEW COMMITTEE.
The following report by the Executive Salary Review Committee required
by the rules of the Securities and Exchange Commission to be included in this
Proxy Statement shall not be considered incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934
(collectively, the "Acts"), except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
to be soliciting material or to be filed under such Acts.
General.
The Executive Salary Review Committee ("Committee") is presently
comprised of three (3) directors of the Company, who are not current or former
employees of the Company. Jack E. Golsen served as a member of the Committee
until January, 1993. See "Compensation Committee Interlocks and Insider
Participation in Compensation Decisions". The Committee is responsible for
reviewing and approving the compensation paid to executive officers of the
Company, including the President-Chief Executive Officer.
Compensation Policy for Executive Officers.
Although the Committee has not established specific compensation
policies for executive officers of the Company, including the President-Chief
Executive Officer, the Committee reviews each executive officer's performance
on behalf of the Company during the last preceding year in establishing the
executive officer's bonus for such year, if any, and compensation for the next
year. The guiding principle of the Committee is based on the following
objectives: (i) to attract and retain qualified executives in a highly
competitive environment who will play significant roles in achieving the
Company's goals; (ii) to reward executives for strategic management and the
long-term enhancement of shareholder value; and , (iii) to create a
performance-oriented environment that rewards performance with respect to
financial and operational goals of the Company. The key elements of the
Company's executive compensation program have consisted of a base salary,
bonus and stock options.
As to the compensation (salary and bonus) paid or payable to executive
officers, other than the President-Chief Executive Officer, the President-
Chief Executive Officer makes a recommendation to the Committee. The
Committee considers such recommendation and generally approves the
recommendation. The President-Chief Executive Officer's recommendation with
respect to base salary and the Committee's approval or disapproval of such
recommendation is primarily based on the three objectives set forth above.
With respect to bonus compensation, such recommendation by the President and
Chief Executive Officer and approval is closely tied to the individual's
performance and the Company's financial performance .
Jack E. Golsen has been President and Chief Executive Officer of the
Company since its formation in 1969. In setting Mr. Golsen's salary and
bonus, the Committee takes into account shareholder value, which he helped
create, and the fact that Mr. Golsen initiated and continues to spearhead the
strategy of expanding and diversifying the Company through internal growth,
acquisitions, redeployment of assets and personnel and development of
international markets. Due to losses sustained by the Company in 1990 and
1991, increases in Mr. Golsen's annual salary for 1991 and 1992 were nominal.
Mr. Golsen received bonuses for 1991 of $60,000, 1992 of $100,000 and 1993 of
$150,000 as a result of the substantial improvement by the Company in each of
1991, 1992, and 1993 over the previous year due, in part, to the efforts of
Mr. Golsen, which bonuses the Committee considers to be consistent with the
goals set forth above.
Further, in June, 1994, the Committee granted a one time fee to each of
Barry H. Golsen, Jack E. Golsen, David R. Goss, Jim D. Jones, and Tony M.
Shelby, executive officers of the Company, of $100,000 for their non-
compensated services as directors of Equity Bank for Savings, F.A. ("Equity
Bank") from the time of Equity Bank's acquisition by the Company in March,
1988, until Equity Bank was sold by the Company in May, 1994. The Committee
considered that their service as directors of Equity Bank were important
factors in the growth of Equity Bank from 1988, to May, 1994, and their
contribution assisted the Company in selling Equity Bank for approximately $92
million.
The Company has had a practice of granting options to the President-
Chief Executive Officer and other executive officers. There are no specific
factors used to determine the number of options granted or to the timing of
such grants; however, certain criteria are considered such as length of
service, level of responsibility, and the achievement of the Company's
earnings objective.
MEMBERS OF THE COMMITTEE:
-------------------------
Bernard G. Ille. Chairman
Robert C. Brown, M.D.
Jerome D. Shaffer, M.D.
FIVE YEAR TOTAL SHAREHOLDER RETURN GRAPH.
Due to the constraints of the EDGAR system, the performance graph (in a
line graph format) has been omitted. The following table has been provided to
take its place in the EDGAR filing. The table compares the yearly percentage
change in the cumulative total shareholder return of (i) the Company, (ii) the
American Stock Exchange Market Value Index ("AMEX MVI") and (iii) a Composite
Index ("Composite Index") comprised of a peer group of entities from three
distinct industries which represent the Company's three primary lines of
business: Chemical, Environmental Control and Financial. The Graph set forth
below covers the period from year end 1988 through year end 1993.
FISCAL YEAR ENDING
1988 1989 1990 1991 1992 1993
LSB IND., INC. 100 127.27 90.91 90.91 500.00 713.30
PEER GROUP 100 118.01 108.30 150.08 162.85 186.40
BROAD MARKET 100 127.52 108.14 133.19 135.02 160.41
Assumes $100 invested at year-end 1988 in the Company, the
AMEX MVI and the Composite Index.
The Composite Index was developed for the Company by Media General
Financial Services and is comprised of certain companies having a Standard
Industrial Classification ("SIC") code which the Company believes corresponds
to the Company's three primary lines of business: (a) chemical companies
having SIC codes 102 (sulfuric and nitrate) and 103 (specialty chemicals) (the
companies with these SIC codes have been combined as the peer group for the
Company's Chemical Business); (b) environmental control companies having SIC
code 059 (plumbing, heating, and air conditioning) as the peer group for the
Company's Environmental Control Business; and (c) financial institutions
having an SIC code 540 (savings and loan) as the peer group for the Company's
Financial Services Business. The companies which comprise the Composite Index
are listed on Exhibit "A" to this Proxy Statement. Each of the three lines of
business is weighted equally in the composite Index. The Company has been
advised that the cumulative total return of each component company has been
weighted according to the respective company's stock market capitalization.
In light of the Company's unique industry diversification, the Company
believes that the Composite Index represents an appropriate peer group
comparison to the Company.
The above Five-Year Shareholder Return Graph shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934 (collectively, the "Acts"), except to the
extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed to be soliciting material or to
be filed under such Acts.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, based on the recommendation of the Audit
Committee, has reappointed the firm of Ernst & Young, certified public
accountants, as the Company's auditors for 1994, subject to the approval and
ratification by the stockholders. Ernst & Young (or its predecessor, Arthur
Young & Company) has served as the Company's auditors for a period in excess
of five (5) years, including the fiscal year most recently completed.
In line with past practices, it is expected that one or more
representatives of Ernst & Young will attend the Annual Meeting and will be
available to respond to appropriate questions or make a statement should they
desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL AND
RATIFICATION OF THE REAPPOINTMENT OF ERNST & YOUNG
OTHER MATTERS
The Board of Directors knows of no other matters which may come before
the Annual Meeting. If any other business properly comes before the meeting,
the persons named in the proxy will vote with respect to that matter in
accordance with their best judgment.
Pursuant to the Bylaws of the Company, only such business shall be
conducted at the Annual Meeting as shall have been brought before the meeting
(i) by or at the direction of the Board of Directors of the Company, or (ii)
by any stockholder of the company who is entitled to vote at the Annual
Meeting and who complies with the following notice requirements. No business
may be properly brought before the Annual Meeting by a stockholder unless the
stockholder gives written notice to the Secretary of the Company of the
business to be presented at the Annual Meeting not less than fifty (50) days
prior to the date of the Annual Meeting (or in the event that less than sixty
(60) days notice, or public disclosure of the date of the Annual Meeting, is
given or made to stockholders, written notice by the stockholder must be
received by the Secretary of the Company not later than the close of business
on the tenth (10th) day following the day on which notice of the date of the
meeting was mailed or public disclosure was made). The written notice must
set forth: (i) a brief description of the business desired to be presented
before the annual meeting and reasons for conducting such business at the
meeting; (ii) the name and address, as they appear on the Company's books, of
the stockholder proposing such business, (iii) the class and number of shares
of the Company's voting stock beneficially owned by such stockholder, and (iv)
any material interest of such stockholder in such business.
LSB INDUSTRIES, INC.
BY ORDER OF
THE BOARD OF DIRECTORS
DAVID M. SHEAR
SECRETARY
DATE: JULY 18, 1994
EXHIBIT "A"
AHMANSON, H.F. & CO FIDELITY FEDERAL BANCORP
AIRGAS INC FIRST CITIZENS FIN CP
ALCIDE CP FIRST FED OF ALABAMA
AMERIANA BANCORP FIRST FED S&L E HARTFORD
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