-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, fsZox7yhgiWp5ABJqncwmqRVoG3loNCcoSwgHX3BFxtoNxbJRpwbtQcsPiagQL2h dKKde0IOIxmJWI/5rTMbBg== 0000055604-95-000010.txt : 199507100000055604-95-000010.hdr.sgml : 19950710 ACCESSION NUMBER: 0000055604-95-000010 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950816 FILED AS OF DATE: 19950707 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEYSTONE CONSOLIDATED INDUSTRIES INC CENTRAL INDEX KEY: 0000055604 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 370364250 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-03919 FILM NUMBER: 95552472 BUSINESS ADDRESS: STREET 1: 5430 LBJ FWY STE 1740 STREET 2: THREE LINCOLN CENTRE CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144580028 MAIL ADDRESS: STREET 1: 5430 LBJ FWY STE 1740 STREET 2: THREE LINCOLN CENTRE CITY: DALLAS STATE: TX ZIP: 75240 FORMER COMPANY: FORMER CONFORMED NAME: KEYSTONE STEEL & WIRE CO DATE OF NAME CHANGE: 19710506 PRE 14A 1 To the Stockholders of Keystone Consolidated Industries, Inc.: The Annual Meeting of Stockholders of Keystone Consolidated Industries, Inc., a Delaware corporation ("Keystone" or the "Company"), will be held on August 16, 1995, at 9:00 a.m. local time, at the Corporate Offices at 5430 LBJ Freeway, Suite 1740, Dallas, Texas, for the following purposes: (1) To amend and restate the Company's Certificate of Incorporation; and (2) Assuming the Company's stockholders approve Item (1) above providing for the classification of the Company's Board of Directors, to elect three directors for terms of three years each, two directors for terms of two years each, and two directors for terms of one year each, or, if Item (1) above is not approved by the Company's stockholders, to elect seven directors for terms of one year each and until their successors are duly elected and qualified; and (3) To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. The Board of Directors has fixed the close of business on July 10, 1995, as the record date for determining the stockholders entitled to notice of and to vote at the Annual Meeting. A complete list of the stockholders entitled to vote at the Annual Meeting will be made available for inspection by any stockholder of record at the offices of Keystone during ordinary business hours from July 17, 1995, through the time of the meeting for any purpose germane to the meeting. In order to ensure that you are represented at the meeting, please complete the enclosed proxy card and return it promptly in the accompanying postage-paid envelope. If you choose, you may still vote in person at the Annual Meeting even though you previously signed your proxy. You may revoke your proxy by following the procedures specified in the Proxy Statement. Your vote, whether given by proxy or in person at the meeting, will be held in confidence by the Inspector of Election for the Annual Meeting in accordance with the Company's bylaws. By order of the Board of Directors, Sandra K. Myers Secretary Dallas, Texas July 14, 1995 KEYSTONE CONSOLIDATED INDUSTRIES, INC. Three Lincoln Centre 5430 LBJ Freeway, Suite 1740 Dallas, Texas 75240 PROXY STATEMENT Annual Meeting Of Stockholders To be held on August 16, 1995 This Proxy Statement and the accompanying proxy card are being furnished to the stockholders of Keystone Consolidated Industries, Inc. ("Keystone" or the "Company") in connection with the solicitation of proxies by and on behalf of the Board of Directors of Keystone for use at the 1995 Annual Meeting of Stockholders to be held on Wednesday, August 16, 1995 at the Company's corporate offices at 5430 LBJ Freeway, Suite 1740, Dallas, Texas, and at any adjournment or postponement thereof (the "Annual Meeting"). Any stockholder executing a proxy has the power to revoke it at any time before it is voted. A proxy may be revoked by either (i) filing with the Inspector of Election a written revocation of the proxy; (ii) appearing at the Annual Meeting and casting a vote contrary to that indicated on the proxy; or (iii) submitting a duly executed proxy bearing a later date. Attendance at the Annual Meeting alone, however, will not in itself constitute the revocation of a proxy. This Proxy Statement and the accompanying proxy card are first being mailed to stockholders on or about July 17, 1995. An annual report for the year ended December 31, 1994, has been previously mailed to you. Only stockholders of record at the close of business on July 10, 1995 (the "Record Date") will be entitled to vote at the Annual Meeting. As of the Record Date, there were 5,636,507 shares of Keystone's common stock, $1.00 par value ("Common Stock"), outstanding and entitled to vote. Each share is entitled to one vote upon any proposal submitted for a vote at the Annual Meeting. The presence, in person or by proxy, of the holders of a majority of the shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum for the conduct of business at the Annual Meeting. Shares of Common Stock that are voted to abstain from any business coming before the Annual Meeting and broker/nominee non-votes will be counted as being in attendance at the Annual Meeting for purposes of determining whether a quorum is present. Employees participating in the Keystone Consolidated Industries, Inc. Deferred Incentive Plan, who are beneficial owners of Common Stock of the Company under the plan, may use the enclosed card to instruct the plan trustees how to vote the shares held for such employees, and the trustees will, subject to the applicable plan, vote such shares in accordance with such instructions. Mellon Securities Trust Company ("Mellon"), the transfer agent and registrar for the Common Stock, has been appointed Inspector of Election for the Annual Meeting by the Board of Directors to receive proxies, tabulate the vote and serve as Inspector of Election at the Annual Meeting. All proxies and ballots delivered to Mellon shall be kept confidential by Mellon in accordance with the Company's bylaws. The cost of preparing, printing, assembling and mailing this Proxy Statement and other material furnished to stockholders in connection with the solicitation of proxies will be borne by Keystone. In addition to the solicitation of proxies by use of the mails, officers, directors, and employees of Keystone may solicit proxies by written communication, telephone or personal calls for which such persons will receive no special compensation. AGENDA ITEM 1 APPROVAL OF AMENDMENTS TO AND RESTATEMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION General The Board of Directors of the Company proposes to amend and restate the Certificate of Incorporation of the Company in the form attached as Appendix A hereto (the "Restated Certificate"). If approved by the affirmative vote of the holders of shares representing two-thirds (66.67%) of the outstanding shares of Common Stock of the Company, the Restated Certificate will become effective upon its filing with the Secretary of State of the State of Delaware. The Company was incorporated on May 18, 1955, and its Certificate of Incorporation subsequently has been amended on several occasions. The proposed Restated Certificate will incorporate into a single document the several amendments made to the original Certificate of Incorporation, and will amend and update certain provisions of the Certificate of Incorporation. Specifically, the proposed Restated Certificate will (i) replace the purposes clause of the Certificate of Incorporation with a simplified and more general statement of such purposes; (ii) eliminate the right of stockholders to cumulate votes in the election of directors; (iii) classify the Board of Directors into three classes of directors with staggered three-year terms; (iv) reduce the requisite stockholder vote required in connection with any sale, lease or exchange of all of the property and assets of the Company and (v) reduce the requisite stockholder vote to approve future amendments to the Restated Certificate. In addition to effecting the amendments to the Certificate of Incorporation noted above, the proposed Restated Certificate deletes ineffective and unnecessary provisions and reflects only the current operative provisions of the Company's Certificate of Incorporation. In that regard, the Restated Certificate (a) updates the address of the Company's registered agent in Article SECOND and (b) eliminates reference to the names and places of residence of the original incorporators of the Company, which information is not required to be in the Restated Certificate. Change to Purposes Clause The current purposes clause of the Certificate of Incorporation, which has been in effect for many years, details numerous activities in which the Company may legally engage. Under current Delaware law, this specific enumeration of business functions is no longer necessary, and a brief statement of business purpose suffices. The proposed amendment to the purposes clause contained in Article THIRD of the Restated Certificate would not extend or restrict the Company's current operations, but would generally permit any kind of corporate activity as long as it is lawful. Elimination of Cumulative Voting Article FOURTH of the Company's Certificate of Incorporation presently permits stockholders to cumulate votes in the election of directors. Specifically, the third paragraph of Article FOURTH provides as follows: At all elections of directors of the corporation, each holder of Common Stock entitled to vote at such election shall be entitled to as many votes as shall equal the number of his shares of Common Stock multiplied by the number of directors to be elected, and he may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them, as he may see fit. In respect of all other matters as to which the vote or consent of stockholders of the corporation shall be required to be taken, the holders of Common Stock shall be entitled to one vote for each share of stock held by them. Cumulative voting permits holders of shares of Common Stock to cast, for any one or more nominees for the Board, a number of votes equal to the product of the number of shares such stockholder owns and the number of nominees proposed for election to the Board. Thus, by casting all of their votes for one nominee, minority stockholders may succeed in electing one or more nominees to the Board who would not otherwise have received sufficient votes to be elected. Subject to stockholder approval, the Board of Directors proposes to amend Article FOURTH by eliminating in its entirety the above-quoted third paragraph thereof. The Board believes that the benefit of allowing minority stockholders the possibility of electing a Board representative is outweighed by the burden and expense of administering cumulative voting and the risk that an individual may seek to be elected to the Board of Directors merely to represent the interest of a minority stockholder or minority stockholder group as opposed to the interests of all stockholders. Harold C. Simmons through his affiliates, may be deemed as of the Record Date to be the beneficial owner of approximately 67% of the outstanding shares of Common Stock, and currently may be deemed to have the voting power to elect a majority of the Company's directors and, if the proposal to eliminate cumulative voting is approved, will have the voting power to elect the entire Board of Directors of the Company. The proposal to eliminate cumulative voting is not in response to any effort by a minority stockholder or group of stockholders to obtain representation on the Board of Directors or to acquire greater influence in the management of the Company's business, nor is the Company aware of any such effort. Classified Board of Directors Under the existing provisions of the Company's Certificate of Incorporation and Bylaws, directors of the Company are elected annually for terms of one year. Subject to stockholder approval, the Board of Directors of the Company proposes to amend Article EIGHTH of the Certificate of Incorporation to provide for the classification of the Board of Directors into three classes of directors with staggered terms of office. Specifically, the Board of Directors proposes to add a new paragraph after the first paragraph of Article EIGHTH that would provide as follows: The board of directors shall be divided into three classes, designated Class I, Class II and Class III, as nearly equal in number as possible, and the term of office of directors of one class shall expire at each annual meeting of stockholders, and in all cases as to each director until his successor shall be elected and shall qualify (except in cases where no successor is elected due to a reduction in the size of the board) or until his earlier resignation, removal from office, death or incapacity. Additional directorships resulting from an increase in the number of directors shall be apportioned among the classes as equally as possible. Vacancies, including vacancies created by an increase in the size of the board of directors, shall be filled by the affirmative vote of a majority of the entire board of directors. The initial term of office of directors of Class I shall expire at the annual meeting of stockholders in 1996; that of Class II shall expire at the annual meeting of stockholders in 1997; and that of Class III shall expire at the annual meeting of stockholders in 1998; and in all cases as to each director until his successor shall be elected and shall qualify (except in cases where no successor is elected due to a reduction in the size of the board) or until his earlier resignation, removal from office, death or incapacity. At each annual meeting of stockholders, the number of directors equal to the number of directors of the class whose term expires at the time of such meeting (or, if less, the number of directors properly nominated and qualified for election) shall be elected to hold office until the third succeeding annual meeting of stockholders after their election. The proposed amendment to classify the board provides that the directors will be classified into three classes, as nearly equal in number as possible. To implement the classified board, the Class I, Class II and Class III directors would initially be elected at the 1995 Annual Meeting. The Board of Directors currently has seven members and, therefore, each class would initially consist of two or three directors. If the proposed amendment is adopted, Class I directors elected at the 1995 Annual Meeting will hold office until the 1996 annual meeting; Class II directors elected at the 1995 Annual Meeting will hold office until the 1997 annual meeting; and Class III directors elected at the 1995 Annual Meeting will hold office until the 1998 annual meeting; and, in each case, until their successors are duly elected and qualified (except in cases where no successor is elected due to a reduction in the size of the Board), or until earlier resignation, removal from office, death or incapacity. At each annual meeting commencing with the 1996 annual meeting, directors elected to succeed those in the class whose terms expire will be elected for three-year terms so that the terms of one class of directors will expire each year. Thus, after 1995, stockholders will elect only one-third (or, if one of the classes has one more or one less director, approximately one-third) of the directors at each annual meeting. Each director will serve until a successor is elected and qualified (except in cases where no successor is elected due to a reduction in the size of the Board), or until earlier resignation, removal from office, death or incapacity. Vacancies, including vacancies created by an increase in the size of the Board of Directors, shall be filled by the affirmative vote of a majority of the entire board. The Board of Directors presently has no plans, arrangements, commitments or understandings with respect to increasing or decreasing the size of the board or any class of directors. For information regarding the nominees for election to the Board of Directors at the 1995 Annual Meeting and the class of directors in which each director will initially serve if the proposed amendment to classify the board is adopted, see "Election of Directors". If the proposal to classify the board is not approved, all of the directors elected at the 1995 Annual Meeting will serve for a one-year term to expire at the 1996 annual meeting. The Board of Directors believes that dividing the directors into three classes is advantageous to the Company and its stockholders because by providing that directors will serve three-year terms rather than one-year terms, the likelihood of continuity and stability in leadership and the policies formulated by the board will be enhanced. While management has not experienced any problems with continuity or stability in the past, it wishes to ensure that this experience will continue and believes that the staggered election of directors will promote continuity because only one-third of the directors will be subject to election each year. The proposed amendment to classify the Board will significantly extend the time required to effect a change in control of the Board of Directors and may discourage hostile take-over bids for the Company. Without a classified Board, a change in control of the Board of Directors can be made by stockholders holding a majority of the Company's shares at a single annual meeting. If the Company implements a classified Board of Directors, it will take at least two annual meetings for a majority of stockholders to elect a majority of the Board and, accordingly, to effect a change in control of the Board of Directors, because only a minority of the directors will be elected at each annual meeting. Because of the additional time required to change control of the Board of Directors, the classified Board amendment will tend to perpetuate incumbent management. Since the amendment will increase the amount of time required for a take-over bidder to obtain control of the Company without the cooperation of the Board of Directors, even if the take-over bidder were to acquire a majority of the Company's outstanding stock, it will tend to discourage certain tender offers, perhaps including some tender offers which stockholders might feel would be in their best interests. A classified Board will also make it more difficult for the stockholders to change the composition of the Board of Directors, even if a majority of the stockholders disagree with the policies of the Board and believe that such a change would be desirable. Presently, any director or the entire Board may be removed, with or without cause, by holders of a majority of the shares then entitled to vote at an election of directors; provided, however, if less than the entire Board is to be removed, no director may be removed without cause if the votes cast against the removal would be sufficient to elect him if then cumulatively voted at an election of the entire Board. Delaware law provides that, unless the certificate of incorporation provides otherwise, directors serving on a classified board of directors may be removed only for cause. The Restated Certificate does not provide otherwise. Accordingly, if the Restated Certificate is approved by the stockholders, the Company's stockholders will not have the right to remove a director without cause during his term. Stockholders will continue to have the right to remove directors for cause by the affirmative vote of a majority of the outstanding shares. This proposal is not the result of any attempt to accumulate the Company's securities or to obtain control of the Company by means of a merger, tender offer, solicitation in opposition to management or otherwise, and the Company is not aware of any such effort. If the proposed amendment to classify the board is approved, the appropriate sections of the Company's Bylaws will be amended by the Board of Directors to conform to the amendment to the Certificate of Incorporation and any provisions of the Company's Bylaws inconsistent with such amendment will be amended as appropriate. Reduction of Stockholder Vote Necessary for Approval of Sale of Assets Article TENTH of the Company's Certificate of Incorporation currently requires that any sale, lease or exchange of all of the property or assets of the Company shall become effective only if authorized by the affirmative vote of the holders of at least two-thirds (66.67%) of the outstanding shares entitled to vote in respect thereof. The full text of Article TENTH is set forth below: TENTH. Any sale, lease or exchange of all of the property and assets, including good will and corporate franchises of this corporation, shall not become effective unless authorized by the affirmative vote of the holders of at least two-thirds of the outstanding shares entitled to vote at such meeting unless any class of shares is entitled to vote as a class in respect thereof, in which event such authorization shall require the affirmative vote of the holders of at least two-thirds of the outstanding shares or each class of shares entitled to vote as a class in respect thereof and of the total outstanding shares entitled to vote at such meeting. Subject to stockholder approval, the Board of Directors of the Company proposes to amend the Certificate of Incorporation to eliminate in its entirety Article TENTH, the result of which will be that the provisions of the General Corporation Law of the State of Delaware (the "Delaware GCL") will provide the stockholder vote requirement with respect to transactions of the type addressed by Article TENTH. Pursuant to Section 271 of the Delaware GCL, a corporation may sell, lease or exchange all or substantially all of its property and assets, including its goodwill and its corporate franchises, upon such terms and conditions as its Board of Directors deems expedient when and as authorized by a resolution adopted by the holders of a majority of the outstanding stock of the corporation entitled to vote thereon. The Board of Directors believes that it is in the best interest of the Company to eliminate Article TENTH from the Certificate of Incorporation based on its belief that it is inappropriate that a potential minority of stockholders have the right to thwart the will of a majority of stockholders with respect to a transaction of the type governed by Article TENTH. Harold C. Simmons through his affiliates may be deemed currently to beneficially own in excess of two- thirds of the outstanding shares of Common Stock and, accordingly, may be deemed to have the voting power to approve transactions of the type governed by Article TENTH without the necessity of securing the vote of any other stockholder. In the future, however, Mr. Simmons and his affiliates may not retain the current percentage of beneficial ownership of the Company's Common Stock. In such event, the Board of Directors is concerned that it may be difficult to secure the approval of two-thirds of the outstanding shares with respect to a transaction governed by Article TENTH, even though favored by a majority of the outstanding shares. Stockholder apathy could effectively prohibit the Company from pursuing a transaction that is otherwise desired by a majority of the Company's stockholders. One effect of this proposal, however, will be that Mr. Simmons and his affiliates will continue to retain the voting power to approve transactions of the type governed by Article TENTH without the necessity of securing the approval of other stockholders even if their combined beneficial ownership of the Common Stock falls below two-thirds (but remains in excess of 50% of the outstanding Common Stock). The Board of Directors has no present or contemplated plans to enter into any transaction which would require stockholder approval pursuant to Article TENTH. Nevertheless, the Board believes that this change is timely and in the best interest of the Corporation. Reduction of Stockholder Vote Necessary for Approval of Amendments to Certificate of Incorporation The second paragraph of Article TWELFTH of the Company's Certificate of Incorporation currently provides that amendments to the Certificate of Incorporation shall only be effective upon the affirmative approval of the holders of at least two-thirds (66.67%) of the outstanding shares entitled to vote with respect thereto. The text of the second paragraph of Article TWELFTH is as follows: No amendment to the certificate of incorporation of this corporation shall become effective without receiving at the meeting called to consider such amendment the affirmative vote of the holders of at least two-thirds of the outstanding shares entitled to vote at such meeting unless any class of shares is entitled to vote as a class in respect thereof, in which event the proposed amendment shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds of the outstanding shares of each class of stock entitled to vote as a class in respect thereof and of the total outstanding shares entitled to vote at such meeting. Subject to stockholder approval, the Board of Directors of the Company proposes to amend the Certificate of Incorporation to eliminate the second paragraph of Article TWELFTH (which, in the Restated Certificate will be renumbered as Article TENTH), the result of which will be that the provisions of the Delaware GCL applicable to the approval of amendments to certificates of incorporation shall govern the approval of such amendments. Pursuant to Section 242 of the Delaware GCL, amendments to a certificate of incorporation must be approved by a majority of the outstanding stock entitled to vote thereon and a majority of the outstanding stock of each class entitled to vote thereon as a class. As applied to the Company, Section 242 of the Delaware GCL would require a majority of the outstanding shares of the Common Stock to be voted in favor of an amendment to the Certificate of Incorporation as a condition to the adoption of such amendment. The Board of Directors believes that it is in the best interest of the Company to eliminate the second paragraph of Article TWELFTH from the Certificate of Incorporation based on its belief that it is inappropriate that a potential minority of stockholders have the right to thwart the will of a majority of stockholders with respect to an amendment to the Certificate of Incorporation. Mr. Simmons through his affiliates may be deemed to beneficially own in excess of two-thirds of the outstanding shares of Common Stock as of the Record Date and, accordingly, may be deemed to have the voting power to effect amendments to the Certificate of Incorporation without the necessity of securing the approval of any other stockholder. It is possible, however, that the percentage of beneficial ownership controlled by Mr. Simmons may change in the future, and it may be difficult to secure the approval of two-thirds of the outstanding shares with respect to a proposed amendment to the Certificate of Incorporation favored by a majority of the stockholders. In the long term, the Board believes the proposed reduction in the stockholder vote requirement for amending the Certificate of Incorporation would offer the Company greater flexibility in taking advantage of corporate law developments which may be in the best interest of the Company and its stockholders. One effect of this proposal, however, will be that Mr. Simmons and his affiliates will continue to retain the voting power to approve amendments to the Certificate of Incorporation without the necessity of securing the approval of other stockholders even if their combined beneficial ownership of the Common Stock falls below two-thirds (but remains in excess of 50% of the outstanding Common Stock). Vote Required for Adoption of Proposed Amendments Adoption of the proposed amendments to and the restatement of the Certificate of Incorporation effected in the form of the Restated Certificate requires the affirmative vote of the holders of two-thirds (66.67%) of the outstanding shares of Common Stock of the Company entitled to notice of, and to vote at, the Annual Meeting. Unless otherwise specified, the agents designated in the proxy will vote the shares covered thereby at the Annual Meeting "FOR" the approval of this proposal. Harold C. Simmons and his affiliates hold approximately 67% of the outstanding shares of the Common Stock as of the Record Date and have indicated their intention to vote such shares "FOR" the approval of this proposal. If such shares are so voted, approval of this proposal will be assured. THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THIS PROPOSAL AND DEEMS THIS PROPOSAL TO BE IN THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF. AGENDA ITEM 2 ELECTION OF DIRECTORS The terms of all directors expire at the Annual Meeting. As provided in the bylaws, the Board of Directors shall consist of not less than five and not more than nine persons, as determined by the Board of Directors from time to time. The number of directors is currently seven. The nominees receiving a plurality of the votes of the shares present in person or represented at the Annual Meeting and entitled to vote will be elected and will hold office until their successors are duly elected and qualified. All the nominees set forth below have consented to serve if elected to the Board of Directors. If any individual nominated for a directorship is not available for election, which is not anticipated, votes will be cast by the proxy holder for such substitute nominee as shall be designated by the Board of Directors. The persons designated as agents in the proxy, unless otherwise specified, will vote the shares covered thereby at the Annual Meeting "For" the nominees named below. The following biographical information has been provided by the nominees for election to the Board of Directors of the Company: THOMAS E. BARRY DIRECTOR SINCE 1989 Nominee for a term expiring at the annual meeting in 1997. Dr. Barry, 52, is Associate Dean for Academic Affairs and Professor of Marketing of the Edwin L. Cox School of Business, Southern Methodist University. PAUL M. BASS, JR. DIRECTOR SINCE 1989 Nominee for a term expiring at the annual meeting in 1998. Mr. Bass, 60, is Vice Chairman of First Southwest Company, an investment banking firm, and has served as a director since prior to 1990. Mr. Bass is also Chairman of Richman Gordman Half Price Stores, Inc., Chairman of MorAmerica Private Equities Company, director of First Madison Bank and Chairman of the Audit Committee, and director of Source Services, Inc. Mr. Bass is currently serving as a member of the Executive Committee of Zale-Lipshy University Hospital and as a trustee of the Southwestern Medical Foundation. DAVID E. CONNOR DIRECTOR SINCE 1992 Nominee for a term expiring at the annual meeting in 1998. Mr. Connor, 69, is President of David E. Connor and Associates, advisers to commerce and industry, in Peoria, Illinois and has served in such capacity since prior to 1990. He is a director of Cilcorp, Inc., Peoria, Illinois, and Chairman of the Board of First Midwest Bankshares, Quincy, Illinois. He is also director of Heartland Community Health Clinic, Peoria, Illinois, Museum Trustees of America, Washington, D.C.and a trustee of Bradley University, Peoria, Illinois. GLENN R. SIMMONS DIRECTOR SINCE 1986 Nominee for a term expiring at the annual meeting in 1996. Mr. Simmons, 67, is Chairman of the Board of Directors and Chief Executive Officer of Keystone and has served in such capacities since prior to 1990. Mr. Simmons has served as Vice Chairman of the Board of Directors of Contran Corporation ("Contran"), a diversified holding company, which may be deemed to be the beneficial holder of approximately 62% of the Common Stock, since prior to 1990. Mr. Simmons has been a director of Contran and an executive officer and/or director of various companies related to Contran since prior to 1990. He is Vice Chairman of the Board of Valhi, Inc. ("Valhi"), Vice Chairman of the Board of Valcor, Inc., and a director of NL Industries, Inc. ("NL") and Tremont Corporation ("Tremont"), all of which companies may be deemed to be affiliates of Keystone. DONALD A. SOMMER DIRECTOR SINCE 1962 Nominee for a term expiring at the annual meeting in 1998. Mr. Sommer, 67, served as a Vice President of the Company prior to his retirement in 1982. J. WALTER TUCKER, JR. DIRECTOR SINCE 1971 Nominee for a term expiring at the annual meeting in 1996. Mr. Tucker, 69, is Vice Chairman of the Board of Directors of the Company and has served in such capacity since prior to 1990. Mr. Tucker has served as a director, President, and Treasurer of Tucker & Branham, Inc., a real estate, mortgage banking and insurance firm since prior to 1990. Mr. Tucker is also a director of SunTrust Banks, Inc., Columbian Mutual Life Insurance Company and Valhi. RICHARD N. ULLMAN DIRECTOR SINCE 1992 Nominee for a term expiring at the annual meeting in 1997. Mr. Ullman, 61, is President of Federal Companies, a commercial warehouse and transportation company in Peoria, Illinois, and has served in such capacity since prior to 1990. He is a director of First of America Bank - Illinois, N.A. and Cilcorp, Inc., and is also serving as director of Children's Hospital of Illinois at St. Francis, director of St. Francis Medical Center, and a trustee of Bradley University, all located in Peoria. MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS During the fiscal year ending December 31, 1994, the Board of Directors met four times. All directors of the Company were present at more than 75% of the meetings of the Board of Directors and the committees of the Board of Directors on which they served. The Board of Directors has a standing Audit Committee and Compensation Committee. The Audit Committee, which met once during 1994, reviews and evaluates significant matters relating to the audit and internal controls of the Company, and reviews the scope and results of audit and non-audit assignments of the Company's independent accountants. The Audit Committee examines and recommends for approval the audited financial statements of the Company, and annually recommends to the Board of Directors the appointment of, and fees paid to, the independent accountants. Recommendations and actions of the Audit Committee are reported to the full Board of Directors. The members of the Audit Committee are Messrs. Bass, Connor and Ullman. The Compensation Committee, which met once during 1994, reviews and approves the amounts and forms of compensation paid to executive officers. The present members of the Compen- sation Committee are Messrs. Barry, Bass, and Sommer. The Board of Directors does not have a Nominating Committee. EXECUTIVE OFFICERS In addition to Glenn R. Simmons and J. Walter Tucker, Jr, the following are executive officers of Keystone: HAROLD M. CURDY, 48, is Vice President - Finance and Treasurer of the Company and has served in such capacities since prior to 1990. BERT E. DOWNING, JR., 39, is Corporate Controller of the Company and has served in such capacity since December 1993. From prior to 1990 to December 1993, Mr. Downing served as Senior Manager in the Dallas office of Ernst & Young, a public accounting firm. RALPH P. END, 57, has served as Vice President and General Counsel since 1991 and as the Corporate Counsel and Assistant Secretary of the Company since prior to 1990. BILL J. JOHNSON, 59, has served as President, Sherman Wire, Sherman, Texas, since February, 1995. Mr. Johnson served as Vice President & General Manager, Sherman Wire, since prior to 1990. JAMES H. KAUFFMAN, 51, has served as President, Keystone Steel & Wire, since 1991. Mr. Kauffman served as Vice President and Treasurer of Valhi and Contran and various companies related to Valhi and Contran since prior to 1990 to 1991. SANDRA K. MYERS, 52, is Corporate Secretary of the Company and Executive Secretary of Contran and has served in both capacities since prior to 1990. ROBERT W. SINGER, 58, is President and Chief Operating Officer of the Company and has served in that capacity since prior to 1990. He has served as Vice President of Valhi and Contran since prior to 1990. CERTAIN BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS As set forth under the caption "Security Ownership", Harold C. Simmons, through Contran and other entities, may be deemed to beneficially own approxi- mately 67% of the Common Stock and, therefore, may be deemed to control the Company. The Company and other entities that may be deemed to be controlled by or affiliated with Mr. Simmons sometimes engage in (a) intercorporate trans- actions such as guarantees, management and expense sharing arrangements, shared fee arrangements, joint ventures, partnerships, loans, options, advances of funds on open account, and sales, leases and exchanges of assets, including securities issued by both related and unrelated parties, and (b) common investment and acquisition strategies, business combinations, reorganizations, recapitalizations, securities repurchases, and purchases and sales (and other acquisitions and dispositions) of subsidiaries, divisions or other business units, which transactions have involved both related and unrelated parties and have included transactions which resulted in the acquisition by one related party of a publicly-held minority equity interest in another related party. No transactions of the type described above are planned or proposed with respect to the Company (except as otherwise set forth in this Proxy Statement), the Company continuously considers, reviews and evaluates, and understands that Contran and related entities consider, review and evaluate, such transactions. Depending on the business, tax and other objectives then relevant, it is possible that the Company might be a party to one or more of such transactions in the future. In connec-tion with these activities the Company may consider issuing additional equity securities or incurring additional indebtedness. The Company's acquisition activities have in the past and may in the future include participation in the acquisition or restructuring activities conducted by other companies that may be deemed to be controlled by Harold C. Simmons. It is the policy of the Company to engage in transactions with related parties on terms, in the opinion of the Company, no less favorable to the Company than could be obtained from unrelated parties. Glenn R. Simmons, J. Walter Tucker, Jr., and Sandra K. Myers are not salaried employees of the Company. The Company has contracted with Contran, on a fee basis payable in quarterly installments, to provide certain administrative and other services to the Company in addition to the services of Mr. Simmons and Ms. Myers, including consulting services of Contran executive officers. The fee incurred during 1994 was $640,000. The Company has contracted with Tucker & Branham, Inc. for the services of Mr. Tucker. The fees paid Tucker & Branham, Inc. during 1994 were $66,000. Certain of Keystone's property, liability and casualty insurance risks are partially insured or reinsured by a captive insurance subsidiary of Valhi. The premiums and claims paid in connection therewith were approximately $98,000 for the year ended December 31, 1994. Aircraft services were purchased from Valhi in the amount of $128,000 for the year ended December 31, 1994. In the opinion of management and the Board of Directors, the terms of the transactions described above were no less favorable to the Company than those that could have been obtained from an unrelated entity. CERTAIN LITIGATION Harold C. Simmons, Glenn R. Simmons and certain companies related to Keystone are parties to the litigation described below. In November 1991, a purported derivative complaint was filed in the Court of Chancery of the State of Delaware, New Castle County, (Alan Russell Kahn v. Tremont Corporation, et al., No. 12339), in connection with the purchase by Tremont of 7.8 million shares of NL Common Stock from Valhi (the "NL Stock Purchase"). In addition to Valhi, the complaint names as defendants Tremont and the members of Tremont's board of directors, including Glenn R. Simmons and Harold C. Simmons. The complaint alleges, among other things, that the NL Stock Purchase constitutes a waste of Tremont's assets and that Tremont's board of directors breached its fiduciary duties to Tremont's public stockholders and seeks, among other things, to rescind Tremont's consummation of the NL Stock Purchase and award damages to Tremont for injuries allegedly suffered as a result of the defendants' wrongful conduct. Glenn R. Simmons and Harold C. Simmons believe, and understand that the other defendants believe, that the action is without merit. Glenn R. Simmons and Harold C. Simmons have denied, and understand that the other defendants have denied, all allegations of wrongdoing and liability, and intend to defend this action vigorously. SECURITY OWNERSHIP As of the Record Date, the Company's nominees for directors, directors, the executive officers named in the Summary Compensation Table below, and the direc- tors and executive officers as a group, beneficially owned, as defined by the rules of the Securities and Exchange Commission, the shares of Common Stock shown in the following table.
AMOUNT AND NATURE OF PERCENT OF NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS (2) Thomas E. Barry (5) 3,100 - Paul M. Bass, Jr. (3)(5) 5,500 - David E. Connor (5) 3,500 - Harold M. Curdy (5) 16,406 - Bill J. Johnson (5) 4,970 - James H. Kauffman (5) 11,683 - Glenn R. Simmons (4)(5) 55,100 - Robert W. Singer (5) 37,875 - Donald A. Sommer (5) (6) 31,964 - J. Walter Tucker, Jr. (6) 153,450 2.7% Richard N. Ullman (5) 3,500 - All directors and executive officers as a group (14 persons)(4) 335,892 6.0% ________
(1) All beneficial ownership is sole and direct except as otherwise set forth herein. Information as to the beneficial ownership of Common Stock has either been furnished to the Company by or on behalf of the indicated persons or is taken from reports on file with the Securities and Exchange Commission. (2) Percentage omitted if less than 1%. (3) Includes 2,500 shares of Common Stock held in discretionary accounts by First Southwest Company, a licensed broker-dealer, on behalf of certain of its clients, as to which Mr. Bass has voting and dispositive authority. Mr. Bass serves as Senior Director of First Southwest Company. As a result of the foregoing, Mr. Bass may be deemed to be the beneficial owner of such shares. However, Mr. Bass disclaims all such beneficial ownership. (4) Glenn R. Simmons is the brother of Harold C. Simmons. See footnote (1) to the "Security Ownership of Certain Beneficial Owners" table. (5) Includes shares that such person or group could acquire upon the exercise of options exercisable within 60 days of the Record Date by Messrs. Barry, Bass, Connor, Sommer, and Ullman for the purchase of 3,000 shares each, and named executive officers, Messrs. Curdy, Johnson, Kauffman, Simmons and Singer, for the purchase of 2,000, 1,420, 8,000, 14,000, and 4,000 shares, respectively, and the directors and executive officers as a group for the purchase of 46,220 shares under the Company's stock option plans. (6) Donald A. Sommer is a first cousin to the spouse of J. Walter Tucker, Jr. The following table sets forth the stockholders known to the Company to be the beneficial owner of more than 5% of the Common Stock outstanding as of the Record Date. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS Harold C. Simmons 3,783,483(1)(2) 67.1% 5430 LBJ Freeway, Suite 1700 Dallas, Texas 75240 The Killen Group 317,500 5.6% 1189 Lancaster Avenue Berwyn, Pennsylvania 19312 _______
(1) The shares of Common Stock shown as beneficially owned by Harold C. Simmons includes 3,166,933, 326,050, 250,000 and 30,000 shares of Common Stock held by Contran, NL, The Harold Simmons Foundation, Inc. (the "Foundation") and The Combined Master Retirement Trust (the "Master Trust"), respectively. Contran and NL directly hold approximately 56.2% and 5.8%, respectively, of the outstanding Common Stock. Valhi and Tremont are the holders of approximately 53.0% and 17.8%, respectively, of the outstanding common stock of NL. Contran holds, directly or indirectly through related entities, approximately 91.0% and 44.2% of the outstanding common stock of Valhi and Tremont, respectively. Substantially all of Contran's outstanding voting stock is held by trusts established for the benefit of Harold C. Simmons' children and grandchildren (together, the "Trusts"), of which Mr. Simmons is the sole trustee. As sole trustee of each of the Trusts, Mr. Simmons has the power to vote and direct the disposition of the shares of Contran stock held by each of the Trusts; however, Mr. Simmons disclaims beneficial ownership thereof. Harold C. Simmons is Chairman of the Board, President and Chief Executive Officer of Valhi and Contran and Chairman of the Board and Chief Executive Officer of certain related entities through which Contran may be deemed to control Valhi. Additionally, he is Chairman of the Board of NL and is a director of Tremont. The Master Trust holds approximately 0.5% of the outstanding shares of Common Stock. The Master Trust is a trust formed by Valhi to permit the collective investment by trusts that maintain the assets of certain employee benefit plans adopted by Valhi and related companies, including Keystone. Harold C. Simmons is sole trustee of the Master Trust and sole member of the Trust Investment Committee for the Master Trust. The trustee and members of the Trust Investment Committee for the Master Trust are selected by Valhi's board of directors. Harold C. Simmons and Glenn R. Simmons are members of Valhi's board of directors and are both participants in one or more of the employee benefit plans that invest through the Master Trust; however, both such persons disclaim beneficial ownership of the shares of Common Stock held by the Master Trust, except to the extent of their respective vested beneficial interests therein. The Foundation holds approximately 4.4% of the outstanding shares of Common Stock. The Foundation is a tax-exempt foundation organized and existing exclusively for charitable purposes. Harold C. Simmons is Chairman of the Board and Chief Executive Officer of the Foundation. By virtue of the relationships described above, Harold C. Simmons may be deemed to control such entities and Mr. Simmons and such entities may be deemed to possess indirect beneficial ownership of certain shares of Common Stock held by such entities. However, Mr. Simmons disclaims such beneficial ownership of the shares of Common Stock beneficially owned, directly or indirectly, by such entities. Certain information contained in this footnote is based on information provided to the Company by Valhi, Contran and certain of their affiliates. (2) The shares of Common Stock shown as beneficially owned by Harold C. Simmons also includes 10,500 shares of Common Stock held by Mr. Simmons' wife, with respect to all of which Mr. Simmons disclaims beneficial ownership. SECTION 16(A) COMPLIANCE Section 16(a) of the Exchange Act requires Keystone's executive officers, directors and persons who own more than 10% of a registered class of Keystone's equity securities to file reports of ownership with the Commission, the New York Stock Exchange, and Keystone. Based solely on the review of the copies of such reports filed with the Commission, Keystone believes that for 1994 its executive officers, directors and 10% stockholders complied with all applicable filing requirements under Section 16(a). DIRECTOR'S COMPENSATION Directors of Keystone who are not salaried employees of the Company receive an annual retainer of $12,000. Such directors also receive a fee of $450 per day for each Board of Directors meeting and/or committee meeting requiring attendance in person. Directors are also reimbursed for reasonable expenses incurred in attending Board of Directors and/or committee meetings. On May 5, 1992 the shareholders approved the Keystone Consolidated Industries, Inc. 1992 Non-Employee Director Stock Option Plan ("Director Plan"), which provides that each non-employee director will be granted an option to purchase 1,000 shares of Common Stock on the third business day after the Company issues its press release summarizing the Company's annual financial results for the prior fiscal year. The exercise price of the options will be equal to the last reported sale price of Common Stock on the New York Stock Exchange Composite Tape on the date of grant. Options granted pursuant to the Director Plan become exercisable one year after the date of grant and expire on the fifth anniversary following the date of grant. EXECUTIVE COMPENSATION The following table summarizes all compensation paid to the Company's chief executive officer and to each of the Company's four most highly compensated executive officers other than the chief executive officer for services rendered in all capacities to the Company for the years ended December 31, 1994, 1993, and 1992. SUMMARY COMPENSATION TABLE
Annual Compensation Name and Principal Position Year Salary ($) Bonus ($) Glenn R. Simmons (3) 1994 175,000 - Chief Executive Officer 1993 149,596 - 1992 136,135 - Harold M. Curdy 1994 132,000 125,000 Vice President - Finance 1993 125,000 56,250 & Treasurer 1992 125,000 67,500 Bill J. Johnson 1994 96,560 70,500 President 1993 93,404 20,976 Sherman Wire Division 1992 98,708 40,495 James H. Kauffman 1994 167,693 54,600 President 1993 159,996 - Keystone Steel & Wire Division 1992 155,767 84,960 Robert W. Singer 1994 225,000 150,000 President 1993 200,000 150,000 1992 200,000 150,000 Long-Term Compensation Awards Restricted Securities Stock Underlying All Other Awards Options Compensation Name and Principal Position ($)(1) (#) ($)(2) Glenn R. Simmons (3) - - - Chief Executive Officer - 12,500 - - 15,000 - Harold M. Curdy - - 6,690 Vice President - Finance 19,475 5,000 8,362 & Treasurer - - 8,728 Bill J. Johnson - 2,100 6,642 President 21,525 2,500 6,695 Sherman Wire Division - - 6,533 James H. Kauffman - - 6,690 President 24,600 5,000 8,994 Keystone Steel & Wire Division - - 8,728 Robert W. Singer - - 6,690 President 25,625 10,000 8,994 - - 8,728
(1) The dollar value of the reported grants of restricted Keystone Common Stock is based on the last reported sales price per share on the date of grant of Keystone Common Stock as reported by the New York Stock Exchange Composite Tape. The total number of shares of restricted Keystone Common Stock awarded in the last three fiscal years to each named executive officer and the aggregate number and value of each named executive officer's holdings of restricted Keystone Common Stock as of December 31, 1994 (at which time the market value was $13.625 per share based on the last reported sales price per share of Valhi Common Stock as reported by the New York Stock Exchange Composite Tape) were as follows:
Total Number of Non-Vested Value of Shares of Restricted Shares of Non-Vested Restricted Keystone Common Restricted Keystone Common Stock Awarded in Keystone Common Stock as of Name of the Last Three Stock as of December 31, 1994 Executive Officer Fiscal Years December 31, 1994 Glenn R. Simmons - - $ - Harold M. Curdy 1,900 1,100 14,988 Bill J. Johnson 2,100 1,200 16,350 James H. Kauffman 2,400 1,400 19,075 Robert W. Singer 2,500 1,500 20,438
The reported shares of restricted Keystone Common Stock vest at a rate of 40% after six months from the date of award, 30% after eighteen months from the date of the award and 30% after thirty months from the date of the award. (2) Amounts contributed by the Company to the 401(k) Plan. (3) Glenn R. Simmons, Chairman of the Board and Chief Executive Officer of the Company, is not a salaried employee of the Company. The reported salary represents an allocation of his time devoted to Keystone business under the Intercorporate Services Agreement. See "Certain Business Relationships and Related Transactions" above. The following tables set forth certain information at December 31, 1994 and for the fiscal year then ended with respect to stock options and stock appreciation rights granted to and exercised by the individuals named in the Summary Compensation Table above. No options have been granted at an option price below fair market value on the date of grant. OPTION GRANTS IN 1994
Number % of Total of Options Securities Granted to Exercise Underlying Employees or Base Options in Fiscal Price Name Granted* Year ($/Share) Bill J. Johnson 2,100 43% 10.25 Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Name Expiration Term ($) Date 5% 10% Bill J. Johnson 01/13/04 13,537 34,305
* Options were granted on January 13, 1994 and vest 20%, 40%, 60% and 100% on the first, second, third, and fourth anniversary of the date of grant, respectively. AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Value Shares Acquired Realized Name on Exercise (#) ($) Glenn R. Simmons 22,500 41,587 Harold M. Curdy 7,500 16,675 Bill Johnson - - James H. Kauffman - - Robert W. Singer 30,000 66,699 Number of Securities Value of Unexercised Underlying Unexercised In-the-Money Options/SARs Options/SARs at FY-End (#) at FY-End ($) (2) Name Exercisable Unexercisable (1) Exercisable Unexercisable Glenn R. Simmons 8,500 19,000 16,778 55,635 Harold M. Curdy 1,000 4,000 4,875 19,500 Bill J. Johnson 500 4,100 2,438 16,838 James H. Kauffman 7,000 8,000 4,875 19,500 Robert W. Singer 2,000 8,000 9,750 39,000
(1) Options vest 20%, 40%, 60% and 100% on the first, second, third, and fourth anniversary of the date of grant, respectively. (2) The values shown in the table are based on the $13.625 per share closing price of the Company's Common Stock on December 31, 1994 as reported by the New York Stock Exchange Composite Tape, less the exercise price of the options. COMPENSATION AND INTERLOCKS AND INSIDER PARTICIPATION The present members of the Compensation Committee are Messrs. Barry, Bass, and Sommer. Mr. Sommer served as Vice President of the Company prior to his retirement in 1982. COMPENSATION COMMITTEE REPORT During 1994, matters regarding compensation of executives were administered by the Compensation Committee (the "Committee"). The Committee is comprised of directors who are neither officers nor employees of the Company or its subsidiaries and who are not eligible to participate in any of the employee benefit plans administered by it. The Committee adopts compensation policies and is responsible for approving all compensation of executives paid by the Company. It is the Company's policy that employee compensation, including compensation to executives, be at a level which allows the Company to attract, retain, motivate and reward individuals of training, experience, and ability who can lead the Company in accomplishing its goals. It is also the Committee's policy that compensation programs maintain a strong risk/reward ratio, with a large component of cash compensation being tied to the Company's financial results, creating a performance-oriented environment that rewards employees for achieving pre-set financial performance levels. During 1994, the Company's compensation program with respect to its executives consisted of three components: base salary, incentive bonus, and stock option/restricted stock incentive awards. BASE SALARY The Committee reviews, in consultation with the Chief Executive Officer ("CEO"), base salaries for executives other than the CEO at least annually. The Committee approves, with any modifications it deems appropriate, the CEO's recommendations for base salary levels. Base salary levels are determined primarily on industry and peer group data and past and potential future individual performance. Over a period of years, base salaries are designed to be below the median annual cash compensation for comparable executives, but when combined with the other components of compensation create a competitive or above median total compensation package. INCENTIVE BONUS PROGRAM Awards under the Company's incentive bonus program represent a significant portion of an executive's potential annual cash compensation and are awarded at the discretion of the Committee on recommendation of the CEO based on the actual performance of the Company and the individual performance of the executive. The incentive bonus program is also structured so that a portion of an executive's total compensation is subject to the actual performance of the Company measured against the Company's business plan. STOCK OPTIONS/RESTRICTED STOCK An integral part of the Company's total compensation program is non-cash incentive awards in the form of stock options, stock appreciation rights (SARs) and restricted stock granted to executives. Stock option grants, in particular, are considered an essential element of the Company's total compensation package for the executives. The Committee believes that stock options, SARs and restrictive stock awards provide an earnings opportunity based on the Company's success measured by Common Stock performance. Additionally, awards establish an ownership perspective and encourage the retention of executives. Incentive stock options are granted at a price not less than 100% of the fair market value of such stock on the date of grant. The exercise price of all options and the length of period during which the options may be exercised are determined by the Compensation Committee. COMPENSATION OF CEO The services of the CEO were provided pursuant to the terms of the Intercorporate Services Agreement with Contran Corporation ("Contran ISA"). The Board of Directors considered and approved the terms of the Contran ISA, pursuant to which the services of Glenn R. Simmons, the Company's Chief Executive Officer, were provided. The CEO is not a salaried employee of the Company and does not participate in the Company's incentive bonus program. The foregoing report is submitted by the members of the Compensation Committee of the Board of Directors. Dr. Thomas E. Barry Paul M. Bass Donald A. Sommer, Chairman PERFORMANCE GRAPH The following graph reflects a comparison of the cumulative total return of the Company's Common Stock from December 31, 1989 through December 31, 1994 with the Standard & Poor's 500 Composite Index and the Standard & Poor's Steel Index. The comparison for each of the periods assumes that the value of the investment in the Company's Common Stock and each index was $100 on December 31, 1989 and that all dividends were reinvested. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN AMONG KEYSTONE CONSOLIDATED INDUSTRIES, INC., S&P500, AND S&P STEEL INDEX (Performance graph goes here. See below for data points.)
1989 1990 1991 1992 1993 1994 Keystone $100 $73 $72 $67 $69 $92 S&P 500 $100 $97 $126 $136 $150 $152 S&P Steel $100 $82 $99 $128 $166 $160
PENSION PLAN Keystone maintains several qualified, noncontributory defined benefit plans which provide defined retirement benefits to eligible employees including executive officers. Under the plans covering salaried employees, including officers, the defined benefit for an individual is based on a straight life annuity. An individual's monthly benefit is the sum of the following: (a) for credited service prior to January 1, 1981, the amount determined by his or her average monthly cash compensation for the five years of his or her highest earnings prior to January 1, 1981, multiplied by 1.1%, multiplied by the years of credited service, plus (b) for each year of service between 1980 and 1989, the amount determined by the sum of 1.2% multiplied by his or her average monthly cash compensation that year up to the social security wage base and 1.75% multiplied by his or her average monthly cash compensation that year in excess of the social security wage base, plus (c) for each year subsequent to 1989, the amount determined by 1.2% multiplied by his or her average monthly cash compensation that year, but not less than $14.00 per month. The estimated annual benefits payable upon retirement at normal retirement age for each of the salaried employees named in the Cash Compensation Table, assuming continued employment with the Company until normal retirement age at current salary levels are: Harold M. Curdy, $44,980; Bill J. Johnson, $27,252; James H. Kauffman, $34,666; and Robert W. Singer, $27,405. Glenn R. Simmons does not participate in the Keystone Pension Plan. INDEPENDENT PUBLIC ACCOUNTANTS Coopers & Lybrand, independent public accountants, have audited the Company's financial statements and are currently expected to be retained to audit the financial statements for 1995. Representatives of Coopers & Lybrand will be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. STOCKHOLDER PROPOSALS Stockholders may submit proposals on matters appropriate for stockholder action at the Company's annual meetings, subject to regulations adopted by the Securities and Exchange Commission. The Company presently intends to call the next annual meeting during May 1996. For such proposals to be considered for inclusion in the Proxy Statement and form of proxy relating to the 1995 Annual Meeting, they must be received by the Company not later than December 1, 1995. Such proposals should be addressed to Secretary, Keystone Consolidated Industries, Inc., Three Lincoln Centre, 5430 LBJ Freeway, Suite 1740, Dallas, Texas 75240. OTHER MATTERS Management does not intend to present, and has no information as of the date of preparation of this Proxy Statement that others will present, any business at the Annual Meeting other than business pertaining to matters set forth in the Notice of Annual Meeting of Stockholders and this Proxy Statement. However, if other matters requiring the vote of the stockholders properly come before the meeting, it is the intention of the persons named in the enclosed form of proxy to vote the proxies held by them in accordance with their best judgment on such matters. KEYSTONE CONSOLIDATED INDUSTRIES, INC. July 14, 1995 A COPY OF KEYSTONE'S 1994 FORM 10-K ANNUAL REPORT, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS INCLUDED IN KEYSTONE'S 1994 ANNUAL REPORT TO SHAREHOLDERS AND DISTRIBUTED TO STOCKHOLDERS HEREWITH. ADDITIONAL COPIES ARE AVAILABLE WITHOUT CHARGE BY WRITING TO SECRETARY, KEYSTONE CONSOLIDATED INDUSTRIES, INC., 5430 LBJ FREEWAY, SUITE 1740, DALLAS, TEXAS 75240. APPENDIX A Whereas, that the present name of the Corporation is Keystone Consolidated Industries, Inc. The Corporation was originally incorporated under the name Keysteel, Inc. and its original certificate of incorporation was filed with the Secretary of State of the State of Delaware on May 18, 1955. Whereas, that by written consent of the entire Board of Directors of said Corporation, pursuant to Section 141(f) of the General Corporation Law of the State of Delaware (the "GCL"), resolutions were duly adopted setting forth a proposed restated certificate of incorporation of said Corporation (the "Restated Certificate of Incorporation"), which Restated Certificate of Incorporation reflected certain amendments to the certificate of incorporation of the Corporation, declaring said Restated Certificate of Incorporation and the amendments reflected therein to be advisable and approving its submission to the stockholders of the Corporation for consideration thereof. Whereas, that thereafter, pursuant to resolution of its Board of Directors, an Annual Meeting of the stockholders of the Corporation was duly called and held, upon notice in accordance with Section 222 of the GCL, at which meeting more than two-thirds of the outstanding shares entitled to vote at such meeting were voted in favor of the Restated Certificate of Incorporation. Whereas, that this Restated Certificate of Incorporation amends and restates the certificate of incorporation of the Corporation, as the same heretofore has been amended, supplemented and/or restated (the "Certificate of Incorporation"), and has been duly adopted in accordance with Sections 242 and 245 of the GCL. Whereas, that the text of the Certificate of Incorporation is hereby restated and integrated and further amended to read in its entirety as follows: RESTATED CERTIFICATE OF INCORPORATION OF KEYSTONE CONSOLIDATED INDUSTRIES, INC. FIRST. The name of the corporation is KEYSTONE CONSOLIDATED INDUSTRIES, INC. SECOND. The address of the corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD. The nature of the business or purpose to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH. The total number of shares of all classes of stock which the corporation shall have authority to issue is twelve million five hundred thousand (12,500,000), of which twelve million (12,000,000) shares are Common Stock of the par value of One Dollar ($1.00) each and five hundred thousand (500,000) shares are Preferred Stock without par value. The Preferred Stock shall be issued in one or more series. The Board of Directors is hereby expressly authorized to issue the shares of Preferred Stock in such series and to fix from time to time before issuance the number of shares to be included in any series and the designation, relative rights, preferences and limitations of all shares of such series. The authority of the Board of Directors with respect to each series shall include, without limitation thereto, the determination of any or all of the following and the shares of each series may vary from the shares of any other series in the following respects: (a) The number of shares constituting such series and the designation thereof to distinguish the shares of such series from the shares of all other series; (b) The annual dividend rate on the shares of that series and whether such dividends shall be cumulative and, if cumulative, the date from which dividends shall accumulate; (c) The redemption price or prices for the particular series, if redeemable, and the terms and conditions of such redemption; (d) The preference, if any, of shares of such series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the corporation; (e) The voting rights, if any, in addition to the voting rights prescribed by law and the terms of exercise of such voting rights; (f) The right, if any, of shares of such series to be converted into shares of any other series or class and the terms and conditions of such conversion; and (g) any other relative rights, preferences and limitations of that series. No holder of stock of the corporation shall have any preemptive or other right whatever, as such holder, to subscribe for or purchase or to have offered to him for subscription or purchase any additional shares of stock of any class, character or description which may be issued or sold by the corporation, or obligations of any kind which may be issued or sold by the corporation and which shall be convertible into stock of any class of the corporation, or to which there shall be attached or appertain any warrant or warrants or other instrument or instruments that shall confer upon the holder of such obligation the right to subscribe for, or to purchase or receive from the corporation any shares of capital stock of any class of the corporation, whether now or hereafter authorized. FIFTH. The minimum amount of capital with which the corporation will commence business is One Thousand Dollars ($1,000.00). SIXTH. The corporation is to have perpetual existence. SEVENTH. The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. EIGHTH. The number of directors of the corporation shall be fixed by the by-laws, subject to the provisions of this certificate of incorporation and to the provisions of the laws of the State of Delaware. The board of directors shall be divided into three classes, designated Class I, Class II and Class III, as nearly equal in number as possible, and the term of office of directors of one class shall expire at each annual meeting of stockholders, and in all cases as to each director until his successor shall be elected and shall qualify (except in cases where no successor is elected due to a reduction in the size of the board) or until his earlier resignation, removal from office, death or incapacity. Additional directorships resulting from an increase in the number of directors shall be apportioned among the classes as equally as possible. Vacancies, including vacancies created by an increase in the size of the board of directors, shall be filled by the affirmative vote of a majority of the entire board of directors. The initial term of office of directors of Class I shall expire at the annual meeting of stockholders in 1996; that of Class II shall expire at the annual meeting of stockholders in 1997; and that of Class III shall expire at the annual meeting of stockholders in 1998; and in all cases as to each director until his successor shall be elected and shall qualify (except in cases where no successor is elected due to a reduction in the size of the board) or until his earlier resignation, removal from office , death or incapacity. At each annual meeting of stockholders, the number of directors equal to the number of directors of the class whose term expires at the time of such meeting (or, if less, the number of directors properly nominated and qualified for election) shall be elected to hold office until the third succeeding annual meeting of stockholders after their election. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter, amend or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By resolution passed by the majority of the whole board, to designate one or more committees, each committee to consist of two or more of the directors of the corporations, which, to the extent provided in the resolution or in the by-laws of the corporation, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. NINTH. Meetings of the stockholders may be held outside of the State of Delaware, if the by-laws so provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside of the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. TENTH. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. ELEVENTH. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation Law is amended after approval by the stockholders of this provision to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. Any repeal or modification of the foregoing paragraph by the stockholders of the corporation shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification. KEYSTONE CONSOLIDATED INDUSTRIES, INC. 5430 LBJ Freeway, Suite 1740 Dallas, Texas 75240 SOLICITED BY THE BOARD OF DIRECTORS for Annual Meeting of Stockholders Wednesday, August 16, 1995 The undersigned, being participants in the Keystone Consolidated Industries, Inc. Deferred Incentive Plan ("Plan"), having received Notice of Annual Meeting and Proxy Statement dated July 14, 1995 and Annual Report to Stockholders, hereby instructs the trustee of the Plan, to vote, as specified, all the shares of common stock of KEYSTONE CONSOLIDATED INDUSTRIES, INC., a Delaware corporation (the "Company"), held of record by the trustee of the Plan for the account of the undersigned on the record date, July 10, 1995, at the Annual Meeting of Stockholders to be held on August 16, 1995, and all adjournments thereof, as directed and, in their discretion, on all other matters which may properly come before the Annual Meeting or any adjournments thereof. (Continued, and to be marked, dated and signed, on the other side) ****** (Back Side) Please vote all shares allocated to my account in the Keystone Consolidated Industries, Inc. Deferred Incentive Plan as follows: 1. Restatement of Company's Articles of Incorporation 2. Election of Directors (Instruction: To withhold authority to vote for any individual nominee, write that nominee's name on the space provided below.) a. Assuming Item (1) above is approved, to elect Three directors for terms of three years each - Nominees: Paul M. Bass, David E. Connor, and Donald A. Sommer. Two directors for terms of two years each - Nominees: Thomas E. Barry and Richard N. Ullman. Two directors for terms of one year each - Nominees: Glenn R. Simmons and J. Walter Tucker, Jr. b. Assuming Item (1) above is not approved, to elect seven directors for terms of one year each. Nominees: Thomas E. Barry, Paul M. Bass, Jr., David E. Connor, Glenn R. Simmons, Donald A. Sommer, J. Walter Tucker, Jr., and Richard N. Ullman. Dated: _________________, 1995 ________________________________ (Signature) Please sign, date, and return this card promptly using the enclosed envelope. KEYSTONE CONSOLIDATED INDUSTRIES, INC. 5430 LBJ Freeway, Suite 1740 Dallas, Texas 75240 SOLICITED BY THE BOARD OF DIRECTORS for Annual Meeting of Stockholders Wednesday, August 16, 1995 The undersigned, having received Notice of Annual Meeting and Proxy Statement dated July 14, 1995 and Annual Report to Stockholders, hereby appoints Ralph P. End and Sandra K. Myers, or either of the, proxies, with full power of substitution to vote, as specified in this proxy, all the shares of common stock of KEYSTONE CONSOLIDATED INDUSTRIES, INC., a Delaware corporation (the "Company"), held of record by the undersigned on the record date, July 10, 1995, at the Annual Meeting of Stockholders to be held on August 16, 1995, and all adjournments thereof, as directed and, in their discretion, on all other matters which may properly come before the Annual Meeting or any adjournments thereof. The undersigned directs said proxies to vote as specified upon the items shown on the reverse side, which are referred to in the Notice of Annual Meeting and set forth in the Proxy Statement. (Continued, and to be marked, dated and signed, on the other side) ****** (Back Side) This Proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this Proxy will be voted for proposals 1 and 2. 1. Restatement of Company's Articles of Incorporation 2. Election of Directors (Instruction: To withhold authority to vote for any individual nominee, write that nominee's name on the space provided below.) a. Assuming Item (1) above is approved, to elect Three directors for terms of three years each - Nominees: Paul M. Bass, David E. Connor, and Donald A. Sommer. Two directors for terms of two years each - Nominees: Thomas E. Barry and Richard N. Ullman. Two directors for terms of one year each - Nominees: Glenn R. Simmons and J. Walter Tucker, Jr. b. Assuming Item (1) above is not approved, to elect seven directors for terms of one year each. Nominees: Thomas E. Barry, Paul M. Bass, Jr., David E. Connor, Glenn R. Simmons, Donald A. Sommer, J. Walter Tucker, Jr., and Richard N. Ullman. Dated: _________________, 1995 ________________________________ (Signature) Please sign, date, and return this card promptly using the enclosed envelope. -----END PRIVACY-ENHANCED MESSAGE-----