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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
LSB INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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 the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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LSB INDUSTRIES, INC.
16 SOUTH PENNSYLVANIA AVENUE
POST OFFICE BOX 754
OKLAHOMA CITY, OK 73101
FAX: (405) 235-5067
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 19, 2001
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, July 19, 2001,
at 11:30 a.m. (CDT), for the purpose of considering and acting upon the
following matters:
(1) The election of 4 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 May 31, 2001,
as the record date for the determination of holders of the 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 is distributing its 2000 Annual Report to Stockholders with
the enclosed proxy soliciting material.
By order of the Board of Directors
David M. Shear
Secretary
Oklahoma City, Oklahoma
June 20, 2001
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LSB INDUSTRIES, INC.
16 SOUTH PENNSYLVANIA
POST OFFICE BOX 754
OKLAHOMA CITY, OK 73101
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 19, 2001
SOLICITATION OF PROXIES
SOLICITATION. This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of LSB Industries, Inc. (the "Company")
of proxies to be voted at the Annual Meeting of Stockholders (the "Annual
Meeting") to take place on Thursday, July 19, 2001, at 11:30 a.m. at the
Company's financial center located at 4000 Northwest 39th Expressway, Oklahoma
City, Oklahoma 73112, and at any adjournment thereof. The Company may use the
services of its directors, officers, and employees to solicit proxies personally
or by telephone, without additional compensation therefore. 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 Georgeson Shareholder to
aid in the solicitation of proxies for a fee of $4,000.00, 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 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
facsimile or in writing.
MAILING OF PROXY STATEMENT AND PROXY CARD. This Proxy Statement and the Proxy
Card are being first sent to the stockholders of the Company on or about June
20, 2001.
STOCKHOLDER PROPOSALS. In order for the Company to include a stockholder
proposal in the proxy materials for the Company's 2002 Annual Meeting of
Stockholders, a stockholder must deliver the proposal in writing to the
Secretary of the Company no later than February 20, 2002.
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SECURITIES AND PRINCIPAL HOLDERS
RECORD DATE AND VOTING SECURITIES. Only the record holders of shares of the
Common Stock and Preferred Stock of the Company as of the close of business on
May 31, 2001 (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 Common Stock and voting Preferred Stock
issued and outstanding: (a) 11,896,419 shares of Common Stock (excluding
3,269,290 shares held in treasury); (b) 1,416.50 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 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 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 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. 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 the close of
business on May 31, 2001, 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 the record date.
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.
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Amounts
Name and Address Title of Shares Percent
of of Beneficially of
Beneficial Owner Class Owned(1) Class
- ---------------- ----- ------------ -------
Jack E. Golsen and Common 4,521,123(3)(5)(6) 34.5%
members of his family(2) Voting Preferred 20,000(4)(6) 92.7%
Kent C. McCarthy(7) Common 2,363,081(7) 17.7%
Riverside Capital
Advisors, Inc.(8) Common 1,467,397(8) 11.0%
James W. Sight(9) Common 680,540(9) 5.7%
Paul J. Denby(10) Common 648,480(10) 5.4%
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(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, Vice Chairman of the
Board of Directors, and President of the Climate Control Business 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; and Steven J. Golsen's
address is 7300 SW 44th Street, Oklahoma City, Oklahoma 73179.
(3) Includes (a) the following shares over which Jack E. Golsen ("J.
Golsen") has the sole voting and dispositive power:(i) 40,000 shares that he
owns of record, (ii) 4,000 shares that he has the right to acquire upon
conversion of a promissory note, (iii) 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 a trust, of which he is the sole trustee, (iv) 10,000 shares owned of
record by the MG Trust, of which he is the sole trustee, (v) 69,028 shares owned
of record by a trust, of which he is the sole trustee, and (vi) 206,000 shares
that he has the right to acquire within the next sixty (60) days under the
Company's stock option plans; (b) 643,290 shares owned of record by Sylvia H.
Golsen, and 394,415 shares owned of record by a trust, of which Sylvia H. Golsen
is the sole trustee, over which she and her husband, J. Golsen share voting and
dispositive power; (c) 246,616 shares over which Barry H. Golsen ("B. Golsen")
has the sole voting and dispositive power, 533 shares owned of record by B.
Golsen's wife, over which he shares the voting and dispositive power, and
167,000 shares that he has the right to acquire within the next sixty (60) days
under the Company's stock option plans; (d) 206,987 shares over which Steven J.
Golsen ("S. Golsen") has the sole voting and dispositive power and 125,000
shares that he has the right to acquire within the next sixty (60) days under
the Company's stock option plans; (e) 222,460 shares held in trust for the
grandchildren of J. Golsen and Sylvia H. Golsen of which
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B. Golsen, S. Golsen and Linda F. Rappaport ("L. Rappaport") jointly or
individually are trustees; (f) 82,552 shares owned of record by L. Rappaport,
over which L. Rappaport has the sole voting and dispositive power; (g) 1,336,799
shares owned of record by SBL Corporation ("SBL"), 39,177 shares that SBL has
the right to acquire upon conversion of 9,050 shares of the Company's non-voting
$3.25 Convertible Exchangeable Class C Preferred Stock, Series 2 (the "Series 2
Preferred"), and 400,000 shares that SBL has the right to acquire upon
conversion of 12,000 shares of Series B Preferred owned of record by SBL, and
(h) 60,600 shares owned of record by Golsen Petroleum Corporation ("GPC"), which
is a wholly-owned subsidiary of SBL, and 133,333 shares that GPC has the right
to acquire upon conversion of 4,000 shares of Series B Preferred owned of record
by GPC. SBL is wholly-owned by Sylvia H. Golsen (40% owner), B. Golsen (20%
owner), S. Golsen (20% owner), and L. Rappaport (20% owner) and, as a result,
SBL, J. Golsen, Sylvia H. Golsen, B. Golsen, S. Golsen, and L. Rappaport share
the voting and dispositive power of the shares beneficially owned by SBL. SBL'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
a trust, of which J. Golsen is the sole trustee, over which he has the sole
voting and dispositive power; (b) 12,000 shares of Series B Preferred owned of
record by SBL; and (c) 4,000 shares owned of record by SBL's wholly-owned
subsidiary, GPC, over which SBL, J. Golsen, Sylvia H. Golsen, B. Golsen, S.
Golsen, and L. Rappaport share the voting and dispositive power.
(5) Does not include 124,350 shares of Common Stock that L. Rappaport's
husband owns of record and 185,000 shares which he has the right to acquire
within the next sixty (60) days under the Company's stock option plans, all of
which L. Rappaport disclaims beneficial ownership. Does not include 234,520
shares of Common Stock owned of record by certain trusts for the benefit of B.
Golsen, S. Golsen, and L. Rappaport over which B. Golsen, S. Golsen and L.
Rappaport have no voting or dispositive power. Heidi Brown Shear, an officer of
the Company and the niece of J. Golsen, is the Trustee of each of these trusts.
(6) J. Golsen disclaims beneficial ownership of the shares that B.
Golsen, S. Golsen, and L. Rappaport each have the sole voting and investment
power over as noted in footnote (3) above. B. Golsen, S. Golsen, and L.
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. Sylvia H. Golsen disclaims
beneficial ownership of the shares that J. Golsen has the sole voting and
dispositive power over as noted in footnotes (3) and (4) above.
(7) Kent C. McCarthy, manager of Jayhawk Capital Management, L.L.C.
("Jayhawk"), a Delaware limited liability company and investment advisor, is
deemed to beneficially own 2,363,081 shares of the Company's Common Stock (which
includes 1,451,081 shares of Common Stock receivable upon conversion of 335,200
shares of Series 2 Preferred). This number of shares includes the shares Mr.
McCarthy personally owns, as well as the shares he controls as manager of
Jayhawk. As manager of Jayhawk, Mr. McCarthy has sole voting and dispositive
power over the Common Stock beneficially owned by Jayhawk. Jayhawk is deemed to
have beneficial ownership of 1,994,116
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shares of the Company's Common Stock (which includes 1,083,116 shares of Common
Stock receivable upon conversion of 250,200 shares of Series 2 Preferred), all
of which shares are held in portfolios of Jayhawk Institutional Partners, L.P.,
("Jayhawk Institutional") a Delaware limited partnership (1,344,766 shares of
Common Stock including 433,766 shares of Common Stock receivable upon conversion
of 100,200 shares of Series 2 Preferred) and Jayhawk Investments, L.P.,
("Jayhawk Investments") a Delaware limited partnership (649,350 shares of Common
Stock receivable upon conversion of 150,000 shares of Series 2 Preferred).
Jayhawk is the general partner of Jayhawk Institutional and Jayhawk Investments
and, as such, has sole voting and dispositive power over these shares. Mr.
McCarthy disclaims beneficial ownership of all such shares other than his
personal holdings. Mr. McCarthy's address is 8201 Mission Road, Suite 110,
Prairie Village, Kansas 66208.
(8) Riverside Capital Advisors, Inc. ("Riverside") advised the Company
that it owns 341,255 shares of Series 2 Preferred that is convertible into
1,467,397 shares of Common Stock. Riverside further advised the Company that it
has voting and dispositive power over such shares as a result of Riverside
having full discretionary investment authority over customers' accounts to which
it provides investment services. The address of Riverside is 1650 Southeast 17th
Street Causeway, Fort Lauderdale, Florida 33316.
(9) James W. Sight has sole voting and dispositive power over 680,540
shares of Common Stock (which includes 145,485 shares of Common Stock receivable
upon conversion of 33,677 shares of Series 2 Preferred). Mr. Sight's address is
8500 College Boulevard, Overland Park, Kansas 66210.
(10) Paul J. Denby advised the Company that he has voting and
dispositive power over 648,480 shares of Common Stock (which includes 103,680
shares of Common Stock receivable upon conversion of 24,000 shares of Series 2
Preferred). This number of shares includes 20,184 shares beneficially owned by
Mr. Denby's spouse over which Mr. Denby shares voting and dispositive power. Mr.
Denby's address is 4613 Redwood Court, Irving, Texas 75038.
SECURITY OWNERSHIP OF MANAGEMENT. The following table sets forth the number and
percentage of shares of Company Common Stock and voting Preferred Stock owned by
the directors, nominees for director, the named executive officers listed on
page 16, and all directors and executive officers as a group, as of May 31,
2001:
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
May 31, 2001, 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.
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Amounts of Shares
Name of Title of Beneficially Percent of
Beneficial Owner Class Owned(1) Class
- ---------------- -------- ----------------- ----------
Raymond B. Ackerman Common 46,000(2) *
Robert C. Brown, M.D. Common 248,329(3) 2.1%
Charles A. Burtch Common 15,000(4) *
Gerald J. Gagner Common 33,000(5) *
Barry H. Golsen Common 2,606,518(6) 20.6%
Voting Preferred 16,000(6) 74.2%
Jack E. Golsen Common 3,469,975(7) 27.1%
Voting Preferred 20,000(7) 92.7%
David R. Goss Common 255,625(8) 2.1%
Bernard G. Ille Common 100,000(9) *
Donald W. Munson Common 31,432(10) *
Horace G. Rhodes Common 35,000(11) *
Jerome D. Shaffer, M.D. Common 144,363(12) 1.2%
Tony M. Shelby Common 325,879(13) 2.7%
Directors and Common 5,671,389(14) 41.2%
Executive Officers Voting Preferred 20,000 92.7%
as a group (14 persons)
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* 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's records.
(2) This amount includes the following shares over which Mr. Ackerman
shares voting and dispositive power: (i) 2,000 shares held by Mr. Ackerman's
trust, and (ii) 4,000 shares held by the trust of Mr. Ackerman's wife. The
remaining 40,000 shares of Common Stock included herein are shares that Mr.
Ackerman may acquire pursuant to currently exercisable non-qualified stock
options granted to him by the Company.
(3) The amount shown includes 40,000 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 dispositive power, consist of 122,516 shares owned by Dr.
Brown's wife, 15,000 shares held jointly by Dr. Brown and his wife, 50,727
shares owned by Robert C. Brown, M.D., Inc., a
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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 50,380 shares owned directly, or
through trusts, by the children of Dr. Brown, all of which Dr. Brown disclaims
beneficial ownership.
(4) Mr. Burtch has sole voting and dispositive power over these shares,
which may be acquired by Mr. Burtch pursuant to currently exercisable
non-qualified stock options granted to him by the Company.
(5) Mr. Gagner has sole voting and dispositive power over these shares,
which include 30,000 shares that may be acquired by Mr. Gagner pursuant to
currently exercisable non-qualified stock options granted to him by the Company.
(6) See footnotes (3), (4), and (6) of the table under "Security
Ownership of Certain Beneficial Owners" for a description of the amount and
nature of the shares beneficially owned by B. Golsen, including shares he has
the right to acquire within sixty (60) days.
(7) See footnotes (3), (4), and (6) of the table under "Security
Ownership of Certain Beneficial Owners" for a description of the amount and
nature of the shares beneficially owned by J. Golsen, including the shares he
has the right to acquire within sixty (60) days.
(8) The amount shown includes 133,000 shares that Mr. Goss has the
right to acquire within sixty (60) days pursuant to options granted under the
Company's stock option plans. Mr. Goss has the sole voting and dispositive power
over these shares.
(9) The amount includes (i) 40,000 shares that Mr. Ille may purchase
pursuant to currently exercisable non-qualified stock options, over which Mr.
Ille has the sole voting and dispositive power, and (ii) 50,000 shares owned of
record by Mr. Ille's wife.
(10) This amount includes (i) 432 shares of Common Stock that Mr.
Munson has the right to acquire upon conversion of 100 shares of non-voting
Series 2 Preferred that he beneficially owns, and (ii) 30,000 shares that Mr.
Munson may purchase pursuant to currently exercisable non-qualified stock
options, over which Mr. Munson has the sole voting and dispositive power.
(11) Mr. Rhodes has sole voting and dispositive power over these
shares, which include 30,000 shares that may be acquired by Mr. Rhodes pursuant
to currently exercisable non-qualified stock options granted to him by the
Company.
(12) Dr. Shaffer has the sole voting and dispositive power over these
shares, which include 40,000 shares that Dr. Shaffer may purchase pursuant to
currently exercisable non-qualified stock options and 4,329 shares that Dr.
Shaffer has the right to acquire upon conversion of 1,000 shares of Series 2
Preferred owned by Dr. Shaffer. This amount also includes 10,000 shares owned by
Dr. Shaffer's wife.
(13) Mr. Shelby has the sole voting and dispositive power over these
shares, which include 133,000 shares that Mr. Shelby has the right to
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acquire within sixty (60) days pursuant to options granted under the Company's
stock option plans and 15,151 shares that Mr. Shelby has the right to acquire
upon conversion of 3,500 shares of Series 2 Preferred owned by Mr. Shelby.
(14) The amount shown includes 1,140,000 shares of Common Stock that
executive officers, directors, or entities controlled by executive 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 election to the Board of
Directors four (4) nominees. The nominees, Jack E. Golsen, Horace G. Rhodes,
Robert C. Brown, M.D., and Charles A. Burtch are presently serving as directors
of the Company. Messrs. Golsen, Rhodes, Brown, and Burtch are to be elected in
the class whose term expires in 2004 and until their successors are duly
elected. 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 person or persons named in the proxy as the proxies 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 By-laws 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.
Jack E. Golsen, Horace G. Rhodes, Robert C. Brown, M.D., and Charles A. Burtch
are presently serving as directors of the Company in the class whose term is
expiring as of the Annual Meeting.
The Company's By-laws 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 By-laws presently provide that the number of directors
may consist of not less than three (3) nor more than twelve (12).
The By-laws of the Company further provide that 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
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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.
SERIES 2 PREFERRED.
The Company has issued and outstanding 623,550 shares of its $3.25 Convertible
Exchangeable Class C Preferred Stock, Series 2 ("Series 2 Preferred"). The
holders of the Series 2 Preferred do not have any voting rights except as set
forth below or as otherwise required by law. Pursuant to the terms of the Series
2 Preferred, whenever dividends in the Series 2 Preferred shall be in arrears
and unpaid, whether or not declared, in an amount equal to at least six
quarterly dividends (whether or not consecutive): (i) the number of directors of
the Company's Board of Directors shall be increased by two upon the written
request of the record holders of 10% in number of the shares of the Series 2
Preferred; (ii) the holders of the Series 2 Preferred (voting separately as a
class) will have the exclusive right to vote for and elect the two additional
directors of the Company at a special meeting of the holders of the Series 2
Preferred; (iii) if the meeting is not called by the Company within thirty (30)
days of the notice, or within thirty-five (35) days after mailing the same to
the Company, then the record holders of 10% of the Series 2 Preferred may
designate one of their number to call the meeting of Series 2 Preferred; (iv)
notwithstanding the above, no special meeting shall be called during a period
within ninety (90) days immediately preceding the date fixed for the Company's
next annual meeting of stockholders; and (v) the term of the two directors
elected by the Series 2 Preferred shall terminate when all cumulative and unpaid
dividends on the Series 2 Preferred have been paid.
As of the date of this proxy statement, no written notice has been received by
the Company by record holders of 10% of the Series 2 Preferred to call a special
meeting of the Series 2 Preferred to elect the two additional directors. As a
result, no Series 2 Preferred director is serving, or has been nominated to
serve, as a member of the Board of Directors as of the date of this proxy
statement.
The following sets forth the name, principal occupation, business experience,
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.
NOMINEES:
ROBERT C. BROWN, M.D., 70 years old, first became a director in 1969. His term
will expire in 2004. Dr. Brown has practiced medicine for many years and is Vice
President and Treasurer of Plaza Medical Group, P.C. Dr. Brown is a graduate of
Tufts University and received his medical degree from Tufts University.
CHARLES A. BURTCH, 66 years old, first became a director in 1999. His term will
expire in 2004. Mr. Burtch was formerly Executive Vice-President and West
Division Manager of BankAmerica, where he managed BankAmerica's asset-based
lending division for the western third of the United States.
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Mr. Burtch worked in the finance field for more than thirty-five (35) years. He
is a graduate of Arizona State University.
JACK E. GOLSEN, 72 years old, first became a director in 1969. His term will
expire in 2004. Mr. Golsen, founder of the Company, is Chairman of the Board and
President of the Company and has served in that capacity since the inception of
the Company in 1969. During 1996, Mr. Golsen was inducted into the Oklahoma
Commerce and Industry Hall of Honor as one of Oklahoma's leading industrialists.
Mr. Golsen has a degree from the University of New Mexico in Biochemistry.
HORACE G. RHODES, 73 years old, first became a director in 1996. His term will
expire in 2004. Mr. Rhodes is the Chairman of the law firm of Kerr, Irvine,
Rhodes & Ables P.C. and has served in such capacity and has practiced law for a
period in excess of five (5) years. Since 1972, Mr. Rhodes has served as
Executive Vice President and General Counsel for the Association of Oklahoma
Life Insurance Companies and since 1982 has served as Executive Vice President
and General Counsel for the Oklahoma Life and Health Insurance Guaranty
Association. Mr. Rhodes received his undergraduate and law degrees from the
University of Oklahoma.
OTHER DIRECTORS:
RAYMOND B. ACKERMAN, 78 years old, first became a director in 1993. His term
will expire in 2002. From 1952 until his retirement in 1992, Mr. Ackerman served
as Chairman of the Board and President of Ackerman, McQueen, Inc., the largest
advertising and public relations firm headquartered in Oklahoma. He currently
serves as Chairman Emeritus of the company. Mr. Ackerman is a Rear Admiral
(Ret.) in the United States Naval Reserve. Mr. Ackerman is a graduate of
Oklahoma City University, and in 1996, was awarded an honorary doctorate from
the school. He was elected to the Oklahoma Hall of Fame in 1993.
BARRY H. GOLSEN, 50 years old, first became a director in 1981. His term will
expire in 2003. Mr. Golsen, J.D., has served as Vice Chairman of the Board of
the Company since August 1994, and for more than five (5) years has been the
President of the Company's Climate Control Business. Mr. Golsen has both his
undergraduate and law degrees from the University of Oklahoma.
DAVID R. GOSS, 60 years old, first became a director in 1971. His term will
expire in 2003. Mr. Goss, a certified public accountant, is Senior Vice
President - Operations of the Company and has served in substantially the same
capacity for a period in excess of five (5) years. Mr. Goss is a graduate of
Rutgers University.
BERNARD G. ILLE, 74 years old, first became a director in 1971. His term will
expire in 2002. Mr. Ille served as President and Chief Executive Officer of
First Life Assurance Company from May, 1988, until it was acquired by another
company in March 1994. For more than five (5) years prior to joining First Life,
Mr. Ille served as President of United Founders Life Insurance Company. Mr. Ille
is a director of Landmark Land Company, Inc., which was parent company of First
Life. Mr. Ille is also a director for Quail Creek Bank, N.A. Mr. Ille is
currently a private investor. He is a graduate of the University of Oklahoma.
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DONALD W. MUNSON, 68 years old, first became a director in 1997. His term will
expire in 2002. Mr. Munson is a resident of England. From January 1988, until
his retirement in August 1992, Mr. Munson served as President and Chief
Operating Officer of Lennox Industries. Prior to his election as President and
Chief Operating Officer of Lennox Industries, Mr. Munson served as Executive
Vice President of Lennox Industries' Division Operations, President of Lennox
Canada and Managing Director of Lennox Industries' European Operations. Prior to
joining Lennox Industries, Mr. Munson served in various capacities with the
Howden Group, a company located in Scotland, and The Trane Company, including
serving as the managing director of various companies within the Howden Group
and Vice President Europe for The Trane Company. Mr. Munson is currently an
international distributor for the Ducane Company, and is serving as a member of
the Board of Directors of Multi Clima SA, a French manufacturer of air
conditioning - heating equipment, which the Company has an option to acquire.
Mr. Munson has degrees in mechanical engineering and business administration
from the University of Minnesota.
JEROME D. SHAFFER, M.D., 84 years old, first became a director in 1969. His term
will expire in 2003. Dr. Shaffer, a director of the Company since its inception,
is currently a private investor through JDS Consulting. He practiced medicine
for many years until his retirement in 1987. Dr. Shaffer received his Bachelor's
and Master's degrees from Penn State College and his medical degree from
Jefferson Medical College.
TONY M. SHELBY, 59 years old, first became a director in 1971. His term will
expire in 2002. Mr. Shelby, a certified public accountant, is Senior Vice
President and Chief Financial Officer of the Company, a position he has held for
a period in excess of five (5) years. Prior to becoming Senior Vice President
and Chief Financial Officer of the Company, Mr. Shelby served as Chief Financial
Officer of a subsidiary of the Company and was with the accounting firm of
Arthur Young & Co., a predecessor to Ernst & Young, L.L.P. Mr. Shelby is a
graduate of Oklahoma City University.
- ----------
Approval of each nominee for election to the Board of Directors will require the
affirmative vote of a plurality of the votes cast by the holders of the voting
securities of the Company, voting together as one class.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION
OF THE FOUR (4) 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.
CERTAIN 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. During 2000, the Executive Salary Review Committee
had two (2) meetings.
The Company has an Audit Committee. During 2000 and until May, 2001, the Audit
Committee was comprised of Messrs. Bernard G. Ille, Horace G. Rhodes, Jerome D.
Shaffer, M.D., Charles A. Burtch, and Robert C. Brown, M.D. Although the
Company's Common Stock and $3.25 Convertible Exchangeable Class C Preferred
Stock are traded on the Over-the-Counter Bulletin Board, the Company has decided
to use the standard adopted by Section 121(A) of the American Stock Exchange's
("AMEX") listing standard, as amended, to determine the independence of the
members of the Audit Committee. As a result, Dr. Brown is no longer a member of
the Audit Committee, and effective June 1, 2001, the Audit Committee is
comprised of Messrs. Bernard G. Ille, Horace G. Rhodes, Jerome D. Shaffer, M.D.
and Charles A. Burtch, all of whom are independent pursuant to Section 121(A) of
the AMEX's listing guide. The Audit Committee oversees internal controls, audits
and compliance programs and recommends the Company's independent auditor and
oversees their activities. The Audit Committee held six meetings in 2000. The
Board has approved a written charter which governs the Audit Committee. A copy
of this charter is included in Appendix A.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Company's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process, including the system of internal
controls. In this context, the Audit Committee has met and held discussions with
management and the independent auditors. Management represented to the Audit
Committee that the Company's financial statements were prepared in accordance
with generally accepted accounting principles, and the Audit Committee has
reviewed and discussed the audited financial statements with management and the
independent auditors.
The Audit Committee discussed with the independent auditors matters required to
be discussed by Statement on Auditing Standards No. 61 (Communication With Audit
Committees) and has discussed with the independent auditors the auditors'
independence from the Company and its management. In concluding that the
auditors are independent, the Audit Committee considered, among other factors,
whether the nonaudit services
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provided by Ernst & Young, LLP were compatible with their independence. The
Audit Committee discussed with the Company's independent auditors the overall
scope and plans for the audit. The Audit Committee meets with the independent
auditors, with and without management present, to discuss the results of their
examinations, the evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board subsequently
approved the recommendation) that the audited financial statements be included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2000, for filing with the Securities and Exchange Commission. The Audit
Committee and the Board have also reappointed the Company's independent auditors
for 2001, subject to shareholder ratification.
Submitted by:
Bernard G. Ille (Chairman)
Jerome D. Shaffer
Horace G. Rhodes
Charles A. Burtch
Ernst & Young LLP Fees
For service rendered in 2000 by Ernst & Young LLP, our independent auditors, the
Company incurred the following fees:
Audit Fees (for the audit of the
2000 financial statements) - $405,000
All Other Fees (consisting primarily of tax
return preparation and filing services) - $ 48,900
The Board of Directors of the Company held five (5) meetings in 2000. During
2000, no incumbent 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 of the Board of Directors on
which he served.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Based solely on a
review of copies of the Forms 3, 4 and 5 and amendments thereto furnished to the
Company with respect to 2000, or written representations that no such reports
were required to be filed with the Securities and Exchange Commission, the
Company believes that during 2000 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
Securities Exchange Act of 1934, as amended, on a timely basis, except Mr. Ille
filed one Form 4 inadvertently late to report two transactions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. A subsidiary of the Company,
Hercules Energy Mfg. Corporation ("Hercules"), leased land and a building in
Oklahoma City, Oklahoma from Mac Venture, Ltd. ("Mac Venture"), a limited
partnership. GPC (a wholly owned subsidiary of SBL) serves as the general
partner of Mac Venture. The limited partners of Mac Venture
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include GPC and the three children of Jack E. Golsen. See "Security Ownership of
Certain Beneficial Owners" and "Security Ownership of Management" above for a
discussion of the stock ownership of SBL. The warehouse and shop space leased by
Hercules from Mac Venture consists of a total of 30,000 square feet. Hercules
leased the property from Mac Venture for $3,750 per month under a triple net
lease extension which began as of January 1, 2000, on a month-to-month
basis.
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. In 2000, Northwest was paid $2,000 a month on a month-to-month
basis to perform all such examinations. Dr. Robert C. Brown (a director of the
Company) is Vice President and Treasurer 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, 1994. 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. The unpaid balance of these notes at
March 31, 2001, was $400,000.
On October 17, 1997, Prime Financial Corporation ("Prime"), a subsidiary of the
Company, borrowed from SBL Corporation ("SBL"), a corporation wholly owned by
the spouse and children of Jack E. Golsen, Chairman of the Board and President
of the Company, the principal amount of $3,000,000 (the "Prime Loan") on an
unsecured basis and payable on demand, with interest payable monthly in arrears
at a variable interest rate equal to the Wall Street Journal Prime Rate plus 2%
per annum. The purpose of the loan was to assist the Company by providing
additional liquidity. During 2000, $700,000 in principal and $221,000 in
interest was paid on this Prime Loan, and as of March 31, 2001, the unpaid
principal balance on the Prime Loan was $1,750,000. In April, 2000, at the
request of Prime and the Company, SBL agreed to modify the demand note to make
such a term note with a maturity date no earlier than April 1, 2001, except
under limited circumstances. In March 2001, this term note was amended to extend
the maturity to April, 2002.
In order to make the Prime Loan to Prime, SBL and certain of its affiliates
borrowed the $3,000,000 from a bank (collectively, "SBL Borrowings"), and as
part of the collateral pledged by SBL to the bank in connection with such loan,
SBL pledged, among other things, its note from Prime. In order to obtain SBL's
agreement as provided above, and for other reasons, effective April 21, 2000, a
subsidiary of the Company guaranteed on a limited basis the obligations of SBL
and its affiliates relating to the unpaid principal amount due to the bank in
connection with the SBL Borrowings, and, in order to secure its obligations
under the guarantees, it pledged to the bank 1,973,461 shares of the Company's
Common Stock that
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it holds as treasury stock. Under the limited guaranty, the Company's
subsidiary's liability is limited to the value, from time to time, of the Common
Stock of the Company pledged to secure obligations under its guarantees to the
bank relating to the SBL Borrowings. As of May 31, 2001, the outstanding
principal balance due to the bank from SBL as a result of such loan was
$1,750,000. The Company has been advised that SBL is willing to negotiate an
exchange of the unpaid balance due to SBL in connection with the loan for voting
equity securities of the Company. If an exchange is negotiated, the bank would,
as a condition to the exchange, be required to return Prime's Note and the
shares pledged by the Company. As of the date of this proxy statement, the
parties have not begun these negotiations. There are no assurances that the
Company will be successful in negotiating an exchange of the Company's voting
equity securities for the unpaid amount of the loan due SBL.
The Company has made a decision to attempt to dispose of its non-core assets.
The non-core assets include certain small fractional oil properties owned by the
Company. A committee of outside directors (Messrs. Bernard G. Ille and Horace G.
Rhodes) was established to attempt to sell the Company's oil properties. In
connection with this proposed transaction, the Company received two bids, one of
which was from GPC to purchase the Company's oil properties for $350,000, plus
the assumption of liabilities associated with the assets. Although the Committee
believes that GPC's offer is superior to the other bid, it is presently
considering and reviewing all aspects of GPC's offer and the other bid. GPC, a
subsidiary of SBL, is owned, directly and indirectly, by Jack E. Golsen's
immediate family, including Barry H. Golsen.
EXECUTIVE COMPENSATION
AND OTHER INFORMATION
EXECUTIVE COMPENSATION. The following table shows the aggregate cash
compensation which the Company and its subsidiaries paid or accrued to the Chief
Executive Officer and each of the other four (4) most highly-paid executive
officers of the Company (which includes the Vice Chairman of the Board who also
serves as President of the Company's Climate Control Business). The table
includes cash distributed for services rendered during 2000, plus any cash
distributed during 2000 for services rendered in a prior year, less any amount
relating to those services previously included in the cash compensation table
for a prior year.
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SUMMARY COMPENSATION TABLE
Long-term
Compen-
sation
Annual Compensation Awards
--------------------------- ----------
Securities
Underlying
Name and Salary Bonus Stock
Position Year ($) ($)(1) Options
- --------- ------ ------ ------ ----------
Jack E. Golsen, 2000 477,400 -- --
Chairman of 1999 477,400 -- 265,000
the Board, 1998 477,400 -- --
President and
Chief Executive Officer
Barry H. Golsen, 2000 226,600 -- --
Vice Chairman of 1999 226,600 100,000 155,000
the Board of 1998 226,600 -- --
Directors and
President of the
Climate Control
Business
David R. Goss, 2000 190,500 -- --
Senior Vice 1999 190,500 -- 100,000
President - 1998 190,500 -- --
Operations
Tony M. Shelby, 2000 190,500 -- --
Senior Vice 1999 190,500 -- 100,000
President/Chief 1998 190,500 -- --
Financial Officer
David M. Shear, 2000 165,000 -- --
Vice President/ 1999 165,000 -- 100,000
General Counsel 1998 165,000 -- --
(1) Bonuses are for services rendered for the prior fiscal year. No
bonuses were paid to the above-named executive officers for 1998, 1999 or 2000
performance, except for a compensation adjustment paid in 2000 to Barry H.
Golsen due to the 1999 stand-alone profitability and performance of the Climate
Control Businesses which report to him. Bonuses have not been determined for
2000 performance.
(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 $50,000 or 10% of the total of annual salary and bonus reported for the named
executive officer for such year.
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OPTION GRANTS IN 2000. There were no individual grants of stock options made to
any of the named executive officers in the above Summary Compensation Table
during the last fiscal year.
AGGREGATED OPTION EXERCISES IN 2000 AND FISCAL YEAR END OPTION VALUES. The
following table sets forth information concerning the number and value of
unexercised options held by each of the named executive officers during the last
fiscal year and the year-end value of unexercised options. None of these
executive officers exercised options during the year ended December 31, 2000.
Number of Value
Securities of Unexercised
Underlying In-the-Money
Unexercised Options at
Options at Fiscal Year End
FY End(#)(1) ($)(1)(2)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
---- ------------- -------------
Jack E. Golsen 153,000/ 60,699/
212,000(3) 242,794
Barry H. Golsen 136,000/ 34,297/
124,000(4) 137,188
David R. Goss 106,000/ 23,740/
80,000(5) 94,960
Tony M. Shelby 106,000/ 23,740/
80,000(5) 94,960
David M. Shear 97,000/ 23,740/
80,000(5) 94,960
(1) The incentive stock options granted under the Company's stock
option 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.
(2) The values are based on the difference between the price of the
Company's Common Stock on the Over-the-Counter Bulletin Board at the close of
trading on December 31, 2000 of $2.437 per share and the exercise price of such
option. The actual value realized by a named executive officer on the exercise
of these options depends on the market value of the Company's Common Stock on
the date of exercise.
(3) The amounts shown include a non-qualified stock option covering
176,500 shares of Common Stock of which 35,300 shares were exercisable at
December 31, 2000.
(4) The amounts shown include a non-qualified stock option covering
55,000 shares of Common Stock of which 11,000 shares were exercisable at
December 31, 2000.
(5) The amounts shown include a non-qualified stock option covering
35,000 shares of Common Stock of which 7,000 shares were exercisable at December
31, 2000.
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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 (with certain limited
exceptions) 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 1998, 1999, and 2000 fiscal years
pursuant to the 401(k) Plan by the named executive officers of the Company.
The Company has 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 such insurance 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
David M. Shear $ N/A
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,
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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 2000, the Company compensated eight non-management
directors in the amount of $4,500 each for their services. The non-management
directors of the Company also received $500 for every meeting of the Board of
Directors attended during 2000. The following members of the Audit Committee,
consisting of Messrs. Rhodes, Ille, Brown (who resigned as a member of the Audit
Committee effective May 31, 2001), and Shaffer, received an additional $20,000
each for their services in 2000. In 2000, Mr. Burtch was paid $16,000 for
serving on the Audit Committee during part of 1999 and $20,000 for his service
on the Audit Committee in 2000. During 1997, the Board of Directors established
a special committee of the Board of Directors for European business development
(the "European Operations Committee") and elected Mr. Munson as a member of that
committee. During 2000, Mr. Munson was paid approximately $37,300 for his
services on the European Operations Committee.
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. The Company did not grant
options under the Outside Director Plan in April, 1998, 1999, and 2000.
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EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS.
(a) TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS. The Company has
entered into severance agreements with Jack E. Golsen, Barry H. Golsen, Tony M.
Shelby, David R. Goss, David M. Shear, and certain other 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.
Except for the severance agreement with Jack E. Golsen, 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
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or one hundred eighty days (180) (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
in control. The definition of "Cause" contained in the severance agreement with
Jack E. Golsen means termination because of: (a) the conviction of Mr. Golsen of
a felony involving moral turpitude after all appeals have been completed; or (b)
if due to Mr. Golsen's serious, willful, gross misconduct or willful, gross
neglect of his duties has resulted in material damages to the Company and its
subsidiaries, taken as a whole, provided that (i) no action or failure to act by
Mr. Golsen will constitute a reason for termination if he believed, in good
faith, that such action or failure to act was in the Company's or its
subsidiaries' best interest, and (ii) failure of Mr. Golsen to perform his
duties hereunder due to disability shall not be considered willful, gross
misconduct or willful, gross negligence of his duties for any purpose.
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.
Except for the severance agreement with Jack E. Golsen, 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 annual 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.
The severance agreement with Jack E. Golsen is effective for a period of three
(3) years from the date of the severance agreement; except that, commencing on
the date one (1) year after the date of such severance agreement and on each
annual anniversary thereafter, the term of such severance agreement shall be
automatically extended so as to terminate three (3) years from such renewal
date, unless the Company gives notice otherwise at least one (1) year prior to
the renewal date.
(b) EMPLOYMENT AGREEMENT. In March 1996, the Company entered into an employment
agreement with Jack E. Golsen. The employment agreement requires the Company to
employ Jack E. Golsen as an executive officer of the Company for an initial term
of three (3) years and provides for two (2) automatic renewals of three (3)
years each unless terminated by either party by the giving of written notice at
least one (1) year prior to the end of the initial or first renewal period,
whichever is applicable. Under
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the terms of such employment agreement, Mr. Golsen shall (i) be paid (a) an
annual base salary at his 1995 base rate, as adjusted from time to time by the
Compensation Committee, but such shall never be adjusted to an amount less than
Mr. Golsen's 1995 base salary, (b) an annual bonus in an amount as determined by
the Compensation Committee, and (ii) receive from the Company certain other
fringe benefits. The employment agreement provides that Mr. Golsen's employment
may not be terminated, except (i) upon conviction of a felony involving moral
turpitude after all appeals have been exhausted, (ii) Mr. Golsen's serious,
willful, gross misconduct or willful, gross negligence of duties resulting in
material damage to the Company and its subsidiaries, taken as a whole, unless
Mr. Golsen believed, in good faith, that such action or failure to act was in
the Company's or its subsidiaries' best interest, and (iii) Mr. Golsen's death;
provided, however, no such termination under (i) or (ii) above may occur unless
and until the Company has delivered to Mr. Golsen a resolution duly adopted by
an affirmative vote of three-fourths of the entire membership of the Board of
Directors at a meeting called for such purpose after reasonable notice given to
Mr. Golsen finding, in good faith, that Mr. Golsen violated (i) or (ii) above.
If Mr. Golsen's employment is terminated in breach of this Agreement, then he
shall, in addition to his other rights and remedies, receive and the Company
shall (i) pay to Mr. Golsen in a lump sum cash payment, on the date of
termination, a sum equal to the amount of Mr. Golsen's annual base salary at the
time of such termination and the amount of the last bonus paid to Mr. Golsen
prior to such termination times (a) the number of years remaining under the
employment agreement or (b) four (4) if such termination occurs during the last
twelve (12) months of the initial period or the first renewal period, and (ii)
provide to Mr. Golsen all of the fringe benefits that the Company was obligated
to provide during his employment under the employment agreement for the
remainder of the term of the employment agreement, or, if terminated at any time
during the last twelve (12) months of the initial period or first renewal
period, then during the remainder of the term and the next renewal period.
If there is a change in control (as defined in the severance agreement between
Mr. Golsen and the Company) and within twenty-four (24) months after such change
in control Mr. Golsen is terminated, other than for Cause (as defined in the
severance agreement), then in such event, the severance agreement between Mr.
Golsen and the Company shall be controlling.
In the event Mr. Golsen becomes disabled and is not able to perform his duties
under the employment agreement as a result thereof for a period of twelve (12)
consecutive months within any two (2) year period, the Company shall pay Mr.
Golsen his full salary for the remainder of the term of the employment agreement
and thereafter sixty percent (60%) of such salary until Mr. Golsen's
death.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Company's
Executive Salary Review 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. 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. See "Certain Relationships and
Related Transactions" for additional compensation paid to Dr. Brown.
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See "Compensation of Directors" for information concerning compensation paid and
options granted to non-employee directors of the Company during 2000 for
services rendered as directors 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. See "Certain Committees and Meetings of the Board of
Directors." The Committee is responsible for reviewing and approving the
compensation paid to executive officers of the Company.
COMPENSATION POLICY FOR EXECUTIVE OFFICERS. Although the Committee has not
established specific quantitative 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 any increase or decreases to such executive officers' 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; (iii) to create a
performance-oriented environment that rewards performance with respect to
financial and operational goals of the Company; and, (iv) motivate executives to
protect the interests of the Company in all situations. 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
recommendations. 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 objectives set forth above. With
respect to bonus compensation, such recommendation by the President - 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 compensation, the Committee
takes into account the fact that Mr. Golsen continues the strategy of expanding
the Company through internal growth, acquisitions, redeployment of assets and
personnel, the complexity of issues required to be dealt with, and development
of international markets. Due to operating losses sustained by the Company in
1998, 1999, and 2000, there were no
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increases in Mr. Golsen's annual salary for 1998, 1999, or 2000. In March, 1996,
the Company entered into an employment agreement with Mr. Golsen, which
employment agreement set Mr. Golsen's salary at his 1995 base rate, as adjusted
from time to time by the Committee. See "Executive Compensation and Other
Information - Employment Contracts and Termination of Employment and Change in
Control Arrangements".
Bonuses, if any, are paid to executive officers in arrears for performance
during the previous fiscal year. The Committee considers the payment of bonuses
to be consistent with the goals set forth above. Due to the Company's
performance in 1997, 1998, and 1999, no bonuses were paid for 1997, 1998, or
1999 performance to the executive officers of the Company, including Jack E.
Golsen, except for a compensation adjustment paid in 2000 to Barry H. Golsen due
to the 1999 stand-alone profitability and performance of the Climate Control
Businesses which report to him (see Summary Compensation Table contained in this
Proxy Statement). Bonuses have not been determined for 2000 performance.
The Company has had a practice of granting stock options to the President-Chief
Executive Officer and other executive officers of the Company. This practice is
founded on the belief that stock options offer executive officers a valuable
incentive to achieve increased profitability of the Company in order to enhance
shareholder value. 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 objectives.
MEMBERS OF THE COMMITTEE:
Bernard G. Ille, Chairman
Robert C. Brown, M.D.
Jerome D. Shaffer, M.D.
FIVE YEAR TOTAL SHAREHOLDER RETURN GRAPH. The following table compares the
yearly percentage change in the cumulative total shareholder return assuming
reinvestment of dividends, if any, of (i) the Company, (ii) a composite index
("Peer Group") comprised of a peer group of entities from two distinct
industries which represent the Company's two primary lines of business (Chemical
and Climate Control), and (iii) the American Stock Exchange Market Value Index
("AMEX MVI)". The table set forth below covers the period from year-end 1995
through year-end 2000.
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[STOCK PERFORMANCE GRAPH]
FISCAL YEAR ENDING
------------------
12/29/1995 12/29/1996 12/31/1997 12/31/1998 12/31/1999 12/29/2000
---------- ---------- ---------- ---------- ---------- ----------
LSB INDUSTRIES, INC. 100.00 104.07 95.28 78.13 33.26 57.66
PEER GROUP 100.00 110.95 120.94 119.15 120.45 114.84
AMEX MVI 100.00 105.52 126.97 125.25 156.15 154.23
Assumes $100 invested at year-end 1995 in the Company, the Peer Group,
and the AMEX MVI.
The Peer Group was developed for the Company by Media General Financial Services
and is comprised of certain companies that have Standard Industrial
Classification ("SIC") codes which the Company believes correspond to the
Company's primary lines of business. The companies which comprise the Peer Group
are listed on Exhibit "B" to this Proxy Statement. The Peer Group is comprised
of (a) chemical companies having SIC codes 112 (agricultural chemicals) and 113
(specialty chemicals); and (b) climate control companies having SIC code 634
(general building materials), and is provided for comparison to the Company's
two primary lines of business, Chemical and Climate Control. The AMEX MVI line
is provided because the Company believes that those companies listed in the AMEX
most closely resemble the size and composition of the Company. The Company has
been advised that the cumulative total return of each component company in the
Peer Group has been weighted according to the respective company's stock market
capitalization. In light of the Company's unique industry diversification and
current market capitalization, the Company believes that the Peer Group and AMEX
MVI are appropriate for comparison to the Company.
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The above Five-Year Total 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 RECOMMENDS A VOTE "FOR" THE APPROVAL AND RATIFICATION OF
THE REAPPOINTMENT OF ERNST & YOUNG LLP. The Board of Directors, based on the
recommendation of the Audit Committee, has recommended, subject to ratification
by the shareholders, the firm of Ernst & Young LLP, certified public
accountants, ("Ernst & Young") as the Company's auditors for 2001, 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. See "Election of Directors - Certain Committees and Meetings of the
Board of Directors".
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.
OTHER MATTERS
As of the date of this Proxy Statement, 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 By-laws 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.
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A copy of the Company's Form 10-K, as filed with the Securities and Exchange
Commission, is available upon request. Requests should be made to the director,
corporate communications, at the corporate offices in Oklahoma City.
LSB INDUSTRIES, INC.
BY ORDER OF
THE BOARD OF DIRECTORS
DAVID M. SHEAR
SECRETARY
DATE: JUNE 20, 2001
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EXHIBIT "A"
AUDIT COMMITTEE CHARTER
Organization
This charter governs the operations of the Audit Committee (the "Committee").
The Committee shall review and reassess the charter at least annually and obtain
the approval of the Board of Directors. The Committee shall be appointed by the
Board of Directors and shall include at least three independent directors.
Members of the Committee shall be considered independent if they have no
relationship that may interfere with the exercise of their independence from
management and the Company. All Committee members shall be financially literate,
[or shall become financially literate within a reasonable period of time after
appointment to the Committee,] and at least one member shall have accounting or
related financial management expertise.
Statement of Policy
The Committee shall provide assistance to the Board of Directors in fulfilling
their oversight responsibility to the shareholders, potential shareholders, the
investment community, and others relating to the Company's financial statements
and the financial reporting process, the systems of internal accounting and
financial controls, the internal audit function, the annual independent audit of
the Company's financial statements, and the legal compliance and ethics programs
as established by management and the Board of Directors. In so doing, it is the
responsibility of the Committee to maintain free and open communication between
the Committee, independent auditors, the internal auditors and management of the
Company. In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities, and personnel of the Company and the power to retain
outside counsel, or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the Committee is to oversee the Company's
financial reporting process on behalf of the Board of Directors and report the
results of their activities to the Board of Directors. The primary
responsibility for the Company's financial reporting lies with management,
overseen by the Board of Directors. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible for
auditing those financial statements. The Committee in carrying out its
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. The Committee
should take the appropriate actions to set the overall corporate "tone" for
quality financial reporting, sound business risk practices, and ethical
behavior.
The following shall be the principal recurring processes of the Committee in
carrying out its oversight responsibilities. The processes
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are set forth as a guide with the understanding that the Committee may
supplement them as appropriate.
o The Committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the Board of Directors and the Committee, as
representatives of the Company's shareholders. The Committee shall have
the ultimate authority and responsibility to evaluate and, where
appropriate, recommend the replacement of the independent auditors. The
Committee shall discuss with the auditors their independence from
management and the Company including the matters in the written
disclosures required by the Independence Standards Board and shall
consider the compatibility of nonaudit services with the auditors'
independence. Annually, the Committee shall review and recommend to the
Board of Directors the selection of the Company's independent auditors,
subject to shareholders' approval.
o The Committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits including the adequacy of staffing and compensation. Also, the
Committee shall discuss with management, the internal auditors, and the
independent auditors the adequacy and effectiveness of the accounting
and financial controls, including the Company's system to monitor and
manage business risk, and legal and ethical compliance programs.
Further, the Committee shall meet separately with the internal auditors
and the independent auditors, with and without management present, to
discuss the results of their examinations.
o The Committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the Committee shall
discuss the results of the quarterly review and any other matters
required to be communicated to the Committee by the independent
auditors under generally accepted auditing standards. The chair of the
Committee may represent the entire Committee for the purposes of this
review.
o The Committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report
on Form 10-K (or the annual report to shareholders if distributed prior
to the filing of Form 10-K), including their judgment about the
quality, not just acceptability, of accounting principles, the
reasonableness of significant judgments, and the clarity of the
disclosures in the financial statements. Also, the Committee shall
discuss the results of the annual audit and any other matters required
to be communicated to the Committee by the independent auditors under
generally accepted auditing standards.
o Investigate any matter brought to its attention within the scope of its
duties and make such special inquiries as are specifically referred to
it by the Board of Directors with power to direct the Company's
in-house counsel to investigate any matter or to retain
29
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outside counsel for this purpose if, in the Committee's judgement, that
is appropriate.
o If required by regulation or law, review the Company's disclosure in
the Proxy statement for its annual meeting of shareholders that
describes that the Committee has satisfied its responsibilities under
this Charter for the prior year. In addition, include a copy of this
Charter in the Annual Report to Shareholders or the Proxy statement at
least triennially or the year after any significant amendment to the
Charter.
In addition to the items set forth above, the Committee may in its
discretion:
o Authorize the independent public accountants to perform such
supplemental review or audits as the Committee may deem desirable.
o Review from time to time the program management establishes to monitor
compliance with the Code of Conduct.
o Meet regularly with the Company's general counsel, and outside counsel
when appropriate, to discuss legal matters that may have a significant
impact on the Company's financial statements.
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33
EXHIBIT "B"
AAON INC LANCER CORP
ACETO CORP LESCO INC
AGRIUM INC LUBRIZOL CORP
ALCIDE CORP MACDERMID INC
AMCOL INTERNATIONAL CORP MACE SECURITY INTERNAT
AMERICAN PACIFIC CORP MARK SOLUTIONS INC
AMERICAN STANDARD COS MARTIN INDUSTRIES INC
AMERICAN VANGUARD CORP MARTIN MARIETTA MATERIAL
AMERON INTERNAT CORP MESTEK INC
ARCH CHEMICALS INC METHANEX CORPORATION
ARMSTRONG HOLDINGS INC MINERALS TECHNOLOGIES
BALCHEM CORP MINING SERVICES INTERNAT
BERGER HOLDINGS INC LTD MISSISSIPPI CHEMICAL CP
BRADY CORPORATION CL A NCH CORP
BUTLER MANUFACTURING CO NCI BUILDING SYSTEMS INC
CABOT CORP NORTHERN TECHNOLOGY
CALGON CARBON CORP OIL-DRI CORP OF AMERICA
CAMBREX CORP OM GROUP INC
CARBO CERAMICS INC OMNOVA SOLUTIONS INC
CERADYNE INC OWENS-CORNING
CFC INTERNATIONAL INC PACER TECHNOLOGY
CHEMFIRST INC PAMECO CORP
COLONIAL COMMERCIAL CORP PENFORD CORP
CONTINENTAL MATERIALS CP PHOSPHATE RESOURCE PTNRS
COORSTEK INCORPORATED POLYDEX PHARMACEUTICALS
COPENE PETRO DO NORDEST PROLONG INTERNAT CORP
CORIMON SA ADS QUAKER CHEMICAL CORP
CROMPTON CORPORATION RHODIA ADS
CYANOTECH CORP RONSON CORP
CYTEC INDUSTRIES INC RPM INC
DAL-TILE INTERNAT INC SCOTTS CO CL A
DANAHER CORP SHERWIN-WILLIAMS CO
DETREX CORPORATION SOCIEDAD QUIMICA CHILE
DREW INDUSTRIES INC SOCIEDAD QUIMICA Y MINER
ECO SOIL SYSTEMS INC SURMODICS INCSYNTHETECH INC
ELCOR CORP SYNTHETEC INC.
EPL TECHNOLOGIES INC TAT TECHNOL LTD
ETHYL CORP TECUMSEH PRODUCTS CL A
FERRO CORP TECUMSEH PRODUCTS CL B
FLAMEMASTER CORP TEMTEX INDUSTRIES INC
GREAT LAKES CHEMICAL CP TERRA NITROGEN CO LP
GRIFFON CORP TRAMFORD INTERNAT LTD
H.B. FULLER CO U.S. AGGREGATES INC
HAUSER INC (CO) U.S. HOME & GARDEN INC
HIGH PLAINS CORP U.S. LIME & MINERALS INC.
IMC GLOBAL INC UNITED DOMINION IND
INTERNACIONAL DE CERAMIC USG CORP
INTERNAT ALUMINUM CORP VALHI INC
INTERNAT FLAVORS & FRAG VALSPAR CORP
INTERNAT SPECIALTY PRODS VERDANT BRANDS INC
JILIN CHEMICAL INDUSTRL VULCAN MATERIALS CO
KEVCO INC W.R. GRACE & CO
KMG CHEMICALS INC WD-40 CO
KYZEN CORP CL A YORK INTERNAT CORP
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LSB INDUSTRIES, INC. PROXY THIS PROXY IS
16 SOUTH PENNSYLVANIA FOR THE ANNUAL MEETING SOLICITED BY THE
POST OFFICE BOX 754 OF SHAREHOLDERS BOARD OF DIRECTORS
OKLAHOMA CITY, OKLAHOMA 73101 OF LSB INDUSTRIES, INC.
The undersigned hereby appoints Jack E. Golsen and Tony M. Shelby, and
each of them, the undersigned's proxy, with full power of substitution, to
attend the annual meeting of the shareholders of LSB Industries, Inc., (the
"Company") on Thursday July 19, 2001, at 11:30 a.m., Central Daylight Time, at
the Company's financial center located at 4000 Northwest 39th Expressway,
Oklahoma City, Oklahoma 73112 and at any adjournment of that meeting and to
vote the undersigned's shares of the Common Stock, Convertible Noncumulative
Preferred Stock, and 12% Series B Cumulative Convertible Preferred Stock as
designated below.
(1) Election of Directors
[ ] FOR ALL NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY BELOW)
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW
(Instruction: To withhold authority for an individual nominee, strike through the nominee's name below.)
Robert C. Brown, M.D. Charles A. Burtch Jack E. Golsen Horace G. Rhodes
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL NOMINEES.
(2) Approval and ratification of Selection of Independent Auditors
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS ITEM.
(3) In their discretion, the Proxies are authorized to vote upon such other business as may properly come
before the meeting.
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The persons named above will vote the shares of stock represented by
this Proxy Card in accordance with the specifications made in Items 1 and 2. If
the undersigned makes no specification, the persons named above will vote the
shares "FOR" Items 1 and 2.
Please sign exactly as your name appears below, date and return this Proxy Card
promptly, using the self-addressed, prepaid envelope enclosed for your
convenience. Please correct your address before returning this Proxy Card.
Persons signing in a fiduciary capacity should indicate that fact and give their
full title. If a corporation, please sign in the full corporate name by the
president or other authorized officer. If joint tenants, both persons should
sign.
---------------------
Date
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Name of Shareholder (Please Print)
--------------------------------------------------
New Address (Street, City, State)
--------------------------------------------------
Signature and Title
--------------------------------------------------
Signature and Title
--------------------------------------------------
Signature and Title
