-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sl+rmTv+k/hOIqWBI/hZyJQGXj1Wu/Ra5hKJrsLGYt43aAtEt6CXMc7xoHem23Ab pzW48kqaL/SAiu0Rj2st0g== 0000891092-03-000142.txt : 20030205 0000891092-03-000142.hdr.sgml : 20030205 20030205094708 ACCESSION NUMBER: 0000891092-03-000142 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030312 FILED AS OF DATE: 20030205 EFFECTIVENESS DATE: 20030205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL SECURITIES CORP CENTRAL INDEX KEY: 0000018748 IRS NUMBER: 131875970 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 811-00179 FILM NUMBER: 03539590 BUSINESS ADDRESS: STREET 1: 375 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10152 BUSINESS PHONE: 2126883011 MAIL ADDRESS: STREET 1: 375 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10152 FORMER COMPANY: FORMER CONFORMED NAME: BUERGER LADET & RADINSKY INC DATE OF NAME CHANGE: 19671026 FORMER COMPANY: FORMER CONFORMED NAME: TRANS CENTRAL SECURITIES CORP DATE OF NAME CHANGE: 19700722 DEF 14A 1 e14138def_14a.txt NOTICE AND PROXY STATEMENT CENTRAL SECURITIES CORPORATION NOTICE OF ANNUAL MEETING OF STOCKHOLDERS March 12, 2003 NOTICE is hereby given that the Annual Meeting of Stockholders of Central Securities Corporation will be held at The University Club, One West 54th Street, 9th Floor, New York, New York on Wednesday, March 12, 2003 at 11 A.M., for the following purposes: 1. To elect a board of five directors; 2. To act upon a proposal to ratify the selection of KPMG LLP as independent auditors for the Corporation for the ensuing year; and 3. To act upon such other matters as may properly come before the meeting. The Board of Directors has fixed the close of business on January 24, 2003 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting, and only stockholders of record on such date are entitled to vote on these matters at the meeting or any adjournment thereof. By order of the Board of Directors MARLENE A. KRUMHOLZ Secretary New York, New York February 5, 2003 A proxy is enclosed with this Notice and Proxy Statement. Please complete, SIGN and promptly return your proxy in the enclosed envelope. This will assure a quorum and save further solicitation costs. PROXY STATEMENT - --------------- February 5, 2003 CENTRAL SECURITIES CORPORATION 375 PARK AVENUE NEW YORK, NEW YORK 10152 (Tel. No. 212-688-3011) This Proxy Statement and the enclosed proxy card are first being mailed to stockholders on or about February 5, 2003 in connection with the solicitation of proxies by the Board of Directors of Central Securities Corporation (the "Corporation") for use at the Annual Meeting of Stockholders of the Corporation to be held on March 12, 2003, or any adjournment thereof (the "Meeting"). Properly executed proxies received by the Corporation prior to the Meeting will be voted in accordance with the specific voting instructions indicated on the proxy. If no instructions are specified, the shares will be voted for the nominees for director and in favor of proposal (2). Any proxy may be revoked at any time before it is exercised at the Meeting by the delivery or mailing of written notice to the Secretary of the Corporation, by executing and delivering a later-dated proxy or by appearing and voting in person by ballot at the Meeting. The record date for stockholders entitled to vote at the Meeting is the close of business on January 24, 2003. On that date, the Corporation had outstanding 19,327,284 shares of Common Stock. The holders of the Corporation's Common Stock shall be entitled to one vote per share. The presence, in person or by proxy, of a majority of the issued and outstanding stock of the Corporation shall constitute a quorum for the transaction of business at the Meeting. SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, OF NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS, AND OF EXECUTIVE OFFICERS The following table sets forth information as of December 31, 2002 regarding the share ownership of each person who is known to the Corporation to have been a beneficial owner of more than five percent of the Common Stock of the Corporation, of each nominee for election to the Board of Directors of the Corporation, and of all directors and executive officers as a group: Name of Nominee to the Board of Directors Amount and or Name and Address Nature of Beneficial Percent of Beneficial Owner Ownership(1) of Class(2) - ---------------------- -------------------- ---------- Donald G. Calder* ....................... 64,289(3) Jay R. Inglis* .......................... 1,527 Christian A. Johnson Endeavor Foundation(4) ................ 6,793,146 35.1 1060 Park Avenue New York, New York 10128 Dudley D. Johnson* ...................... 40,444(5) Wilmot H. Kidd* ......................... 2,206,449(6)(8) 11.4 375 Park Avenue New York, New York 10152 Mrs. Wilmot H. Kidd ..................... 2,206,449(6)(8) 11.4 1060 Park Avenue New York, New York 10128 C. Carter Walker, Jr.* .................. 488,331(7)(8) 2.5 All directors and officers as a group ............................ 2,418,452(8) 12.5 - ---------- * Indicates nominee for election to the Board of Directors. (1) Except as otherwise indicated, to the Corporation's knowledge the beneficial owner had sole investment power and sole voting power with respect to the shares shown opposite the name of such beneficial owner. (2) As calculated on the basis of 19,337,284 shares of Common Stock outstanding on December 31, 2002, Messrs. Calder, Inglis and Johnson each owned less than 1% of the outstanding Common Stock. (3) Includes 13,263 shares of Common Stock owned by Mr. Calder's wife or held for the benefit of their children and 8,089 shares of Common Stock owned by the Donald Grant and Ann Martin Calder Foundation (the "Calder Foundation"). Mr. Calder is the President and Treasurer of the Calder Foundation. He disclaims beneficial ownership of all such shares. (4) Mrs. W. H. Kidd, whose husband is the President of the Corporation, is President and Trustee of the Christian A. Johnson Endeavor Foundation. (5) Includes 17,588 shares of Common Stock held in the Young & Franklin Inc. Retirement Income Trust of which Mr. Johnson is trustee and 1,142 shares of Common Stock held by the Disosway Foundation. Mr. Johnson is the Trustee of the Disosway Foundation. He disclaims beneficial ownership of all such shares. (Footnotes continued on following page) 2 (Footnotes continued from previous page) (6) An aggregate of 2,206,449 shares of Common Stock were included in the shares beneficially owned by each of Mr. and Mrs. Kidd. The shares set forth for each of Mr. Kidd and Mrs. Kidd include 365,258 shares of Common Stock owned by Mr. Kidd as to which Mr. and Mrs. Kidd had shared investment power and shared voting power and as to which Mrs. Kidd disclaims beneficial ownership; 842,678 shares of Common Stock owned by Mrs. Kidd or held in trusts for her benefit as to which Mr. and Mrs. Kidd had shared investment power and shared voting power and as to which Mr. Kidd disclaims beneficial ownership; and 972,588 shares of Common Stock owned by Mr. and Mrs. Kidd's children or held in trusts for their benefit or for the benefit of other family members as to which Mr. and Mrs. Kidd had shared investment power and shared voting power and as to which Mr. and Mrs. Kidd disclaim beneficial ownership. The shares set forth for each of Mr. and Mrs. Kidd also include 25,925 shares of Common Stock held in trust for the benefit of the children of Mr. C. Carter Walker, Jr. as to which Mr. Kidd had shared investment power and shared voting power and as to which Mr. and Mrs. Kidd disclaim beneficial ownership. (7) Includes 55,189 shares of Common Stock owned by Mr. Walker's wife or held in trusts for the benefit of their children as to which Mr. Walker had shared investment power and shared voting power, 25,925 shares of Common Stock held in trust for the benefit of his children as to which Mr. Walker had no voting or investment power, and 356,663 shares of Common Stock held in trust for the benefit of Mrs. Wilmot H. Kidd or her children as to which Mr. Walker had shared investment power and shared voting power. Mr. Walker disclaims beneficial ownership of all such shares. (8) An aggregate of 382,588 shares of Common Stock were included in the shares beneficially owned by each of Mr. Kidd, Mrs. Kidd, and Mr. Walker. The share ownership of Wilmot H. Kidd, President of the Corporation, is given above. No other executive officer of the Corporation owns, beneficially or otherwise, any shares of stock of the Corporation. VALUE OF BENEFICIAL SHARE OWNERSHIP BY DIRECTORS The dollar range of the value of equity securities of the Corporation beneficially owned by each director as of December 31, 2002 is as follows: Dollar Range of Independent Directors Share Ownership -------------------- -------------- Donald G. Calder Over $100,000 Jay R. Inglis $10,001 - $50,000 Dudley D. Johnson Over $100,000 C. Carter Walker, Jr. Over $100,000 Interested Director ------------------- Wilmot H. Kidd Over $100,000 3 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's directors, executive officers and persons who own more than ten percent of a registered class of the Corporation's equity securities to file with the Securities and Exchange Commission (the "SEC") initial reports of ownership and reports of changes in ownership of Common Stock of the Corporation. Officers, directors and greater than ten percent beneficial owners are required by SEC regulation to furnish the Corporation with copies of all Section 16(a) forms they file. To the Corporation's knowledge, based solely on review of copies of such reports furnished to the Corporation and written representations that no other such reports were required, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with. VOTING PROCEDURES The election of directors requires the affirmative vote of a plurality of the shares of Common Stock present in person or represented by proxy at the Meeting and entitled to so vote. Shares of Common Stock represented by proxies which are marked "withhold authority" with respect to the election of any one or more nominees for election as director will not be voted with respect to the nominee or nominees so indicated. The ratification of the selection of independent auditors of the Corporation requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Meeting and entitled to so vote. Shares of Common Stock represented by proxies which are marked "abstain" with respect to this matter will be counted for the purpose of determining the number of shares present and entitled to vote, and shall therefore have the same effect as if the shares represented thereby were voted against such matter. Broker non-votes (where a nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner and such nominee does not possess or choose to exercise his discretionary authority with respect thereto) will be treated as present but not entitled to vote at the Meeting for the purpose of determining the number of votes needed with respect to each item to be voted upon, and shall therefore have no effect on such vote. PROPOSAL 1. ELECTION OF DIRECTORS The Board of Directors recommends the election of five directors to hold office until the next Annual Meeting of Stockholders and until their successors are elected and qualified. If any nominee for director is unable or declines to serve, for any reason not now foreseen, the discretionary authority provided in the proxy will be exercised to vote for a substitute. All the nominees have consented to become directors and all were elected at the last Annual Meeting of Stockholders. Duly authorized proxies for Common Stock will be voted for the election of Mr. Donald G. Calder, Mr. Jay R. Inglis, Mr. Dudley D. Johnson, Mr. Wilmot H. Kidd and Mr. C. Carter Walker, Jr. 4 The following table indicates the age, principal occupations during the last five years and positions (if any) with the Corporation, and the year each nominee was first elected to the Board of Directors:
Principal Occupations Director of (last five years) Corporation and Position (if any) Continuously Nominee Age with the Corporation Since ------- --- --------------------- ------------ Independent Directors: Donald G. Calder .......... 65 President, G. L. Ohrstrom & Co., Inc. (private 1982 investment firm); Director of Brown-Forman Corporation, Carlisle Companies Incorporated and Roper Industries, Inc. (manufacturing companies) Jay R. Inglis ............. 68 Executive Vice President, National Marine 1973 Underwriters (insurance management company) since 2001; Executive Vice President, Holt Corporation (insurance holding company) prior thereto Dudley D. Johnson ......... 63 President, Young & Franklin Inc. (private 1984 manufacturing company) C. Carter Walker, Jr. ..... 68 Private Investor 1974 Interested Director: Wilmot H. Kidd ............ 61 Investment and research - President, Central 1972 Securities Corporation
The address of each nominee is c/o Central Securities Corporation, 375 Park Avenue, New York, New York 10152. The Board of Directors had ten regular meetings in 2002. The Board of Directors has an Audit Committee consisting of Messrs. Calder, Inglis, Johnson and Walker. The members of the Audit Committee are independent as defined in Section 121(A) of the American Stock Exchange's listing standards. The Board of Directors does not have a Compensation Committee or a Nominating Committee. All directors attended at least 75% of the aggregate of all meetings of the Board of Directors and the committees on which they served. The Board of Directors amended the written charter for the Audit Committee (the "Charter") on January 29, 2003. A copy of the Charter is attached to this proxy statement as Exhibit A. Pursuant to the Charter, the Audit Committee assists the Board of Directors by overseeing the accounting and financial reporting processes of the Corporation and the audits of its financial statements. The Audit Committee met three times during 2002. REPORT OF THE AUDIT COMMITTEE The Audit Committee has reviewed the audited financial statements of the Corporation for the year ended December 31, 2002, and has met with management and KPMG LLP, the Corporation's independent auditors, to discuss the audited financial statements. 5 The Audit Committee received from KPMG LLP written disclosures regarding their independence and the letter required by Independence Standards Board Standard No. 1, and has discussed with KPMG LLP their independence. In connection with its review, the Audit Committee has also discussed with KPMG LLP the matters required to be discussed by Statement of Auditing Standards No. 61. Based on its review and discussions with management and KPMG LLP, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Corporation's Annual Report to Stockholders for the year ended December 31, 2002. Members of the Audit Committee: Donald G. Calder Jay R. Inglis Dudley D. Johnson C. Carter Walker, Jr. EXECUTIVE OFFICERS OF THE CORPORATION The executive officers of the Corporation are Mr. Wilmot H. Kidd, President, Mr. Charles N. Edgerton, Vice President and Treasurer, and Ms. Marlene A. Krumholz, Secretary. Information concerning Mr. Kidd is given above under "Election of Directors." Mr. Edgerton, 58, was elected Vice President in 1989 and has been Treasurer since 1985. Ms. Krumholz, 39, joined the Corporation in November 2000 and was elected Secretary effective January 1, 2001. Ms. Krumholz was Senior Manager, PricewaterhouseCoopers LLP (public accounting) prior thereto. Executive officers serve as such until the election of their successors. COMPENSATION The table below sets forth for all directors and for each of the three highest-paid executive officers the aggregate compensation received from the Corporation for 2002 for services in all capacities: Pension or Retirement Benefits Accrued Name of Person, Aggregate as Part of Position Compensation Expenses(1) - --------------- ------------ ---------------- Donald G. Calder Director .............................. $ 23,000 Jay R. Inglis Director .............................. 25,000 Dudley D. Johnson Director .............................. 25,000 C. Carter Walker, Jr. Director .............................. 24,500 Wilmot H. Kidd President and Director(2) ............. 700,000 $30,000 6 Pension or Retirement Benefits Accrued Name of Person, Aggregate as Part of Position Compensation Expenses(1) - --------------- ------------ ---------------- Charles N. Edgerton Vice President and Treasurer .......... $240,000(3) $30,000 Marlene A. Krumholz Secretary ............................. 159,000(3) 23,850 - ---------- (1)Represents contributions to the Corporation's Profit Sharing Plan. (2)All remuneration received by Mr. Kidd was in his capacity as President of the Corporation. (3)Includes compensation of $25,000 and $24,000 accrued in 2002 for Mr. Edgerton and Ms. Krumholz, respectively, deferred until January, 2003. Each director who is not an officer is paid an annual retainer of $12,000, a fee of $1,000 for each Board of Directors meeting attended in person, and $500 for participating in a Board of Directors meeting by telephone. Each member of the Audit Committee is paid $1,000 for each Audit Committee meeting attended. Directors are reimbursed for their out-of-pocket expenses incurred in attending meetings. Profit Sharing Plan Generally, all salaried employees of the Corporation are eligible to participate in the Profit Sharing Plan. The Plan provides for contributions by the Corporation from its profits of up to 25% of an employee's compensation. The vested contributions credited to an employee's account are payable at normal (age 65), early, or disability retirement, death or other termination of employment and may be paid in various forms, including a lump sum cash payment or a monthly annuity. For the year ended 2002, the Corporation contributed 15% of employee compensation to the Plan, subject to Internal Revenue Code limitations. With the exception of Ms. Krumholz, the officers referred to above are fully vested in all contributions to the Plan. Corporate contributions on behalf of Ms. Krumholz vest on January 1, 2004. Employees may withdraw the amounts of any voluntary contributions made prior to 1991 and may, under certain conditions, withdraw or borrow against vested Corporation contributions. Under the Plan, each employee is permitted to invest the assets in his account in the capital stock of one or more regulated investment companies from a selection provided from time to time by the Plan Administrator. Such regulated investment companies include, among others, U.S. Treasury funds; short-term, government and international bond funds; and general and specialized stock funds. AUDIT FEES The aggregate fees billed to the Corporation by KPMG LLP for the performance of the audit and the review of the Corporation's financial statements during 2002 were $32,000. ALL OTHER FEES The aggregate fees billed to the Corporation by KPMG LLP for all non-audit services, including fees for tax-related services, during 2002 were $13,000. Such non-audit services did not include any financial information systems design and implementation services. The Audit Committee considered whether the 7 provision of non-audit services by KPMG LLP is compatible with maintaining KPMG LLP's independence with respect to the Corporation. PROPOSAL 2. RATIFICATION OF INDEPENDENT AUDITORS Stockholders are invited to ratify the selection of KPMG LLP as independent auditors of the Corporation for the year 2003. KPMG LLP has no direct or material indirect financial interest in the Corporation other than its employment in such capacity. At a meeting held January 29, 2003, a majority of the directors who were not "interested persons" (as defined under the Investment Company Act of 1940) selected KPMG LLP to act as auditors for the Corporation during 2003. A representative of KPMG LLP is not expected to be present at the Meeting. The Board of Directors recommends a vote FOR this selection. OTHER MATTERS The Board of Directors knows of no other matters which may properly be, and are likely to be, brought before the Meeting. However, if any proper matters are brought before the Meeting, the persons named in the enclosed form of proxy will have discretionary authority to vote thereon according to their best judgment. 2004 STOCKHOLDER PROPOSALS Any stockholder proposals for inclusion in the Corporation's proxy statement for the 2004 Annual Meeting of Stockholders pursuant to Rule 14a-8 of the Securities and Exchange Act of 1934 ("14a-8 proposals") must be received by the Corporation at its office at New York, New York prior to October 8, 2003. Pursuant to Rule 14a-4 of the Securities and Exchange Act of 1934, the Corporation has discretionary voting authority with respect to any non-Rule 14a-8 proposals for the 2004 Annual Meeting of Stockholders that are not received by the Corporation prior to December 22, 2003. MISCELLANEOUS The Corporation will pay all costs of soliciting proxies in the accompanying form. Solicitation will be made by mail, and officers and regular employees of the Corporation may also solicit proxies by telephone or personal interview. The Corporation will request brokers, banks and nominees who hold stock in their names to furnish this proxy material to the beneficial owners thereof and to solicit proxies from them, and will reimburse such brokers, banks and nominees for their out-of-pocket and reasonable clerical expenses in connection therewith. A copy of the Annual Report including financial statements for the year ended December 31, 2002 is enclosed. Please date, sign and return the enclosed proxy at your earliest convenience. No postage is required for mailing in the United States. 8 EXHIBIT A CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF CENTRAL SECURITIES CORPORATION AUTHORITY AND PURPOSE By resolution adopted December 17, 1973, the Board of Directors of Central Securities Corporation (the "Corporation") created an Audit Committee of the Board of Directors (the "Audit Committee"). The purpose of the Audit Committee is to oversee the accounting and financial reporting processes of the Corporation and the audits of its financial statements. The Corporation's management is responsible for the preparation of the Corporation's financial statements and for maintaining appropriate accounting and financial reporting principles and policies as well as internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent auditors are responsible for auditing the Corporation's financial statements. The Corporation's management and independent auditors have more time, knowledge and detailed information on the Corporation than do the members of the Audit Committee. Therefore, in carrying out its oversight responsibilities, the Audit Committee is not providing any special assurance as to the Corporation's financial statements nor any professional certification as to the independent auditors' work. The members of the Audit Committee shall be entitled to rely upon the integrity of the individuals and organizations within and outside the Corporation from whom it receives information and the accuracy of the information provided to them by such individuals or organizations absent actual knowledge to the contrary. The Audit Committee shall have the authority to engage independent counsel and other advisers, as it deems necessary or appropriate. The Corporation shall provide appropriate funding, as determined by the Audit Committee, for payment of compensation to any adviser employed by the Audit Committee. The following affirms and sets forth in detail the membership requirements, structure and responsibilities of the Audit Committee. MEMBERSHIP REQUIREMENTS 1. The Audit Committee shall be elected by the Board of Directors and shall be comprised solely of independent directors, and each member of the Audit Committee shall be free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment as an Audit Committee member. 2. The members of the Audit Committee shall meet the independence and experience requirements of the exchange on which the Corporation's stock is listed and rules and regulations of the Securities and Exchange Commission ("SEC"), in each case as in effect. Members of the Audit Committee may not, other than in their capacity as members of the Audit Committee, the Board of Directors of the Corporation, or any other committee of the Board of Directors, accept any consulting, advisory, or other A-1 compensatory fee from the Corporation or be an "interested person" of the Corporation (as defined in Section 2(a)(19) of the Investment Company Act of 1940). STRUCTURE 1. The number of directors comprising the Audit Committee shall be no fewer than three, such number to be determined from time to time by the Board of Directors. 2. Unless a Chair is elected by the full Board of Directors, the members of the Audit Committee may designate a Chair by majority vote. 3. The Audit Committee shall meet formally at least four times each year or more frequently as circumstances may dictate, and it shall meet privately (without members of management present) with the independent auditors at its discretion to discuss any matters that the Audit Committee or the independent auditors believe should be discussed. RESPONSIBILITIES Independent Auditors The Audit Committee shall recommend annually the independent auditors to be selected by the Board of Directors subject to ratification by the vote of the stockholders of the Corporation. The Audit Committee shall be directly responsible for compensation and oversight of the work of the independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting). The independent auditors are ultimately accountable to the Audit Committee and the Board of Directors as representatives of the stockholders of the Corporation. In carrying out these responsibilities, the Audit Committee shall: 1. Pre-approve all audit and permitted non-audit services that the independent auditors provide to the Corporation. This pre-approval requirement may be waived with respect to the provision of non-audit services in the limited circumstances defined in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934. The Audit Committee may delegate to one or more designated members of the Audit Committee the authority to grant the pre-approvals required above. The decision of any member to whom authority is delegated under this paragraph to pre-approve an activity shall be presented to the full Audit Committee at its next scheduled meeting. 2. Receive annually from the independent auditors a formal written statement delineating all relationships between the auditors and the Corporation in accordance with Independence Standards Board Standard 1. 3. Actively engage in a dialogue with the independent auditors regarding any disclosed relationship or services performed by the independent auditors that might impact the objectivity and independence of the auditors and take, or recommend that the full Board of Directors take, appropriate action to oversee and satisfy itself annually of the independence of the independent auditors. 4. Receive annually from the independent auditors an engagement letter and review the fees and other compensation to be paid to the independent auditors. A-2 5. Review and discuss with the independent auditors the proposed scope, staffing, reliance upon management and general audit approach of the year-end audit. 6. Communicate to the independent auditors that they are ultimately accountable to the Audit Committee and the Board of Directors as the representatives of the stockholders of the Corporation. Financial Reporting It shall be the responsibility of the Audit Committee to assist the Board of Directors by providing oversight on matters pertaining to the accounting, financial reporting, internal control and audit activities of the Corporation. In carrying out these responsibilities, the Audit Committee shall: 1. Review and discuss with management and the independent auditors, following the conclusion of the year-end audit, the audited financial statements to be included in the Corporation's annual report to stockholders under Section 30(e) of the Investment Company Act of 1940 and Rule 30d-1 thereunder, including discussion of certain matters required to be communicated to audit committees in accordance with AICPA Statement of Auditing Standards No. 61 ("SAS 61"). 2. Review and discuss reports from the independent auditor regarding (i) all critical accounting policies and practices used; (ii) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management of the Corporation, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditors; and (iii) other material written communications between the independent auditors and management of the Corporation. 3. Discuss and consider the independent auditors' judgments about the quality and appropriateness of the Corporation's accounting principles as applied in its financial reporting in accordance with SAS 61. 4. Discuss with management and the independent auditors significant issues regarding the Corporation's internal controls, including any significant findings prepared by the independent auditors with respect thereto. 5. Inquire into any changes in the Corporation's accounting principles and practices and the effect of any changes in accounting standards that may materially affect the Corporation's financial reporting practices. 6. Advise the Board of Directors whether, based on these reviews and discussions and its assessment of the independent auditors' independence, the Audit Committee recommends that the audited financial statements be included in the Corporation's annual report to stockholders under Section 30(e) of the Investment Company Act of 1940 and Rule 30d-1 thereunder. Other Duties In addition to the foregoing responsibilities, the Audit Committee shall: 1. Prepare annually a report to stockholders to be included in the Corporation's proxy statement as required by the SEC. A-3 2. Review and reassess the adequacy of this Charter at least annually, make recommendations to the Board of Directors, as conditions dictate, to update this Charter, and direct that this Charter be included as an exhibit to the Corporation's proxy statement at least every three years in accordance with SEC regulations. 3. Perform any other activities consistent with this Charter, the Corporation's by-laws, and governing law as the Audit Committee or the Board of Directors deems necessary or appropriate, including causing an investigation to be made into any matter brought to the attention of the Audit Committee within the scope of its duties. - -------------------------------------------------------------------------------- CENTRAL SECURITIES CORPORATION Proxy Solicited on Behalf of the Board of Directors of the Company for Annual Meeting March 12, 2003 P The undersigned hereby appoints WILMOT H. KIDD and MARLENE A. KRUMHOLZ, R and each of them, as attorneys with power of substitution, to represent O the undersigned at the annual meeting of stockholders of Central X Securities Corporation to be held at The University Club, One West 54th Y Street, 9th Floor, New York, New York on March 12, 2003, at 11:00 o'clock A.M., and at any adjournment thereof, on all matters which may properly come before the meeting. Election of Directors: Nominees to be elected by Common Stock: Donald G. Calder, Jay R. Inglis, Dudley D. Johnson, Wilmot H. Kidd and C. Carter Walker, Jr. ------------------------------------------------- PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. ------------------------------------------------- (Continued on reverse side) - -------------------------------------------------------------------------------- | [X] Please mark your | 1224 votes as in this ---- example. This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted FOR election of directors and FOR Proposal 2. 1. Election of FOR WITHHELD Directors. (see [ ] [ ] reverse) For, except vote withheld from the following nominee(s): ________________________________________________________ 2. APPROVAL OF KPMG LLP FOR AGAINST ABSTAIN as independent [ ] [ ] [ ] auditors for 2003. 3. In their discretion, upon such other matters as may properly come before the meeting or any adjournments thereof. This Proxy Must Be Signed Exactly as Name Appears Hereon Joint owners should each sign. Executors, administrators, trustees, etc., should give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer. ________________________________________ 2003 ________________________________________ SIGNATURE(S) DATE -----END PRIVACY-ENHANCED MESSAGE-----