-----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, OGbT4o4m9r/bF0PPeVCofI8+LzLmb6vL3zh/4Wt8K5zy2/4SxawAQvul9Gm+5gw5 cxh3vI5uci035FT47KcQxg== 0000055604-99-000006.txt : 19990517 0000055604-99-000006.hdr.sgml : 19990517 ACCESSION NUMBER: 0000055604-99-000006 CONFORMED SUBMISSION TYPE: DEFR14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19990514 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: DEFR14A SEC ACT: SEC FILE NUMBER: 001-03919 FILM NUMBER: 99622210 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 DEFR14A 1 KEYSTONE CONSOLIDATED DEF14A PROXY 1999 REVISED KEYSTONE CONSOLIDATED INDUSTRIES, INC. Three Lincoln Centre 5430 LBJ Freeway, Suite 1740 Dallas, Texas 75240 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To be held on May 6, 1999 To the Stockholders of Keystone Consolidated Industries, Inc.: The Annual Meeting of Stockholders (the "Annual Meeting") of Keystone Consolidated Industries, Inc., a Delaware corporation ("Keystone" or the "Company"), will be held on May 6, 1999, at 9:00 a.m., local time, at the offices of the Company at 5430 LBJ Freeway, Suite 1740, Dallas, Texas, for the following purposes: (1) To elect two directors each for a term of three years, and until their successors are duly elected and qualified; and (2) 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 March 24, 1999, 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 April 7, 1999, through the time of the Annual Meeting for any purpose germane to the Annual 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 accompanying Proxy Statement. Your vote, whether given by proxy or in person at the Annual 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 April 5, 1999 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 May 6, 1999 This Proxy Statement and the accompanying proxy card are being furnished to the stockholders of Keystone Consolidated Industries, Inc., a Delaware corporation ("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 1999 Annual Meeting of Stockholders to be held at 9:00 a.m., local time, on Thursday, May 6, 1999, at the Company's 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 April 16, 1999. An annual report for the year ended December 31, 1998 is enclosed herewith. Only stockholders of record at the close of business on March 24, 1999, (the "Record Date") will be entitled to vote at the Annual Meeting. As of the Record Date, there were 9,837,495 shares of Keystone's common stock, $1.00 par value per share ("Common Stock"), outstanding and entitled to vote. Each share of Common Stock entitles the holder thereof to one vote. The presence, in person or by proxy, of the holders of a majority of the shares of Common Stock voting as one class entitled to vote at the Annual Meeting is necessary to constitute a quorum for the conduct of business at the Annual Meeting. Shares of 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 or the DeSoto Stock Ownership Plus Plan, who are beneficial owners of Common Stock under such plans, may use the enclosed voting instruction card to instruct the plan trustees how to vote the shares held for such employees, and the trustees will, subject to the terms of the plan, vote such shares in accordance with such instructions. ChaseMellon Shareholder Services, L.L.C. ("Chase"), the transfer agent and registrar for the Common Stock, has been appointed 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 Chase shall be kept confidential by Chase 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 mail, 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. ELECTION OF DIRECTORS Keystone's Restated Certificate of Incorporation provides for the Board of Directors to be divided into three classes. The bylaws of the Company provide that 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 to the classes designated and 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 earlier resignation, removal from office, death or incapacity. Neither shares as to which authority to vote on the election of directors has been withheld nor broker/nominee non-votes will be counted as affirmative votes to elect director nominees to the Board of Directors. All of 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. Harold C. Simmons and his affiliates hold approximately 50.0% of the outstanding shares of Common Stock as of the Record Date and have indicated their intention to vote such shares "For" the election of all of the nominees for director as set forth in this Proxy Statement. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS SET FORTH BELOW. NOMINEES FOR BOARD OF DIRECTORS The following biographical information has been provided by the nominees for election to the Board of Directors of the Company for terms expiring at the 2002 annual meeting of stockholders: GLENN R. SIMMONS Director since 1986 Mr. Simmons, age 71, is Chairman of the Board of Directors of Keystone and has served in such capacity since prior to 1994. Mr. Simmons was Chief Executive Officer of Keystone from prior to 1994 to February 1997. Mr. Simmons has served as Vice Chairman of the Board of Directors of Contran Corporation ("Contran"), a privately owned diversified holding company that may be deemed to be the beneficial holder of approximately 47.0% of the outstanding Common Stock as of the Record Date, since prior to 1994. Mr. Simmons has been a director of Contran and an executive officer and/or director of various companies related to Contran since prior to 1994. He is Vice Chairman of the Board of Valhi, Inc. ("Valhi") and a director of NL Industries, Inc. ("NL"), Tremont Corporation ("Tremont"), Titanium Metals Corporation ("TIMET"), and CompX International Inc. ("CompX"), all of which companies may be deemed to be affiliates of Keystone. Mr. Simmons is a nominee for a term expiring at the annual meeting in 2002. J. WALTER TUCKER, JR. Director since 1971 Mr. Tucker, age 73, is Vice Chairman of the Board of Directors of the Company and has served in such capacity since prior to 1994. Mr. Tucker has served as a Director, President, and Treasurer of Tucker & Branham, Inc., a privately owned real estate, mortgage banking and insurance firm since prior to 1994. Mr. Tucker is also a director of Valhi. He has also been an executive officer and/or director of various companies related to Valhi and Contran since prior to 1994. Mr. Tucker is a nominee for a term expiring at the annual meeting in 2002. OTHER BOARD MEMBERS The following biographical information has been provided by the directors whose terms do not expire at the Annual Meeting: THOMAS E. BARRY Director since 1989 Dr. Barry, age 55, is Vice President for Executive Affairs at Southern Methodist University and has been a Professor of Marketing in the Edwin L. Cox School of Business at Southern Methodist University since prior to 1994. Dr. Barry's term as a director expires at the annual meeting in 2000. PAUL M. BASS, JR. Director since 1989 Mr. Bass, age 64, is Vice Chairman of First Southwest Company, a privately owned investment banking firm, and has served as a director since prior to 1994. Mr. Bass is also a director of CompX and Jayhawk Acceptance Corporation; Chairman of MorAmerica Private Equities Company; and director and Chairman of the Audit Committee of California Federal Bank. Mr. Bass is currently serving as Chairman of Zale-Lipshy University Hospital and as Chairman of the Board of Trustees of Southwestern Medical Foundation. Mr. Bass' term as a director expires at the annual meeting in 2001. DAVID E. CONNOR Director since 1992 Mr. Connor, age 73, 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 1994. He is Chairman of the Board of First Bankers Trustshares, Quincy, Illinois. He is also director of Heartland Community Health Clinic, Peoria, Illinois and Museum Trustees Association, Washington, D.C. Mr. Connor's term as a director expires at the annual meeting in 2001. WILLIAM P. LYONS, JR. Director since 1996 Mr. Lyons, age 57, is Chairman of the Board of JVL Corp., now an investment firm, but formerly a generic pharmaceutical manufacturer, since prior to 1994. Mr. Lyons is also Managing Director of Madison Partners, LLC, an investment firm. He is also a director of Checkpoint Systems, Inc. and Chairman of its Executive Committee since February 1999. Mr. Lyons was Chairman of Holmes Protection Group, Inc., an electronic security systems and monitoring company, from 1995 until February 1998. Mr. Lyons' term as a director expires at the annual meeting in 2000. WILLIAM SPIER Director since 1996 Mr. Spier, age 64, is President and Chairman of Sutton Holding Corp., a private investment firm, and has served in such capacity since prior to 1994. Mr. Spier is acting Chief Executive Officer of Integrated Technology USA, Inc. and has served in such capacity since November 1997. Mr. Spier is Chairman of the Board of Geotek Communications, Inc. since April 1998. Geotek Communications, Inc. filed for Chapter 11 protection under the Bankruptcy Code in June 1998. Mr. Spier was Chairman of DeSoto, Inc. from prior to 1994 to 1996, Chief Executive Officer of DeSoto, Inc. from prior to 1994 to 1994 and from 1995 to 1996. He is a director of Integrated Technology USA, Inc., Moto Guzzi, Inc., and Trident Rowan Group, Inc. Mr. Spier's term as a director expires at the annual meeting in 2000. MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS During the fiscal year ended December 31, 1998, the Board of Directors met six 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 Executive Committee, which did not meet during 1998, exercises all powers and authority of the Board of Directors in the management of the business and affairs of the Company, to the extent permitted by Delaware law, when a meeting of the Board of Directors is not possible. The members of the Executive Committee are Messrs. Bass, Simmons, Spier and Tucker. The Master Trust Committee, which met once during 1998, exercises the powers, rights and responsibilities included under Articles 3 and 10 of the Keystone Consolidated Industries, Inc. Master Retirement Trust. The members of the Master Trust Committee are Messrs. Bass and Tucker. The Audit Committee, which met twice during 1998, 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 Lyons. The Compensation Committee, which met twice during 1998, reviews and approves the amounts and forms of compensation paid to executive officers. The members of the Compensation Committee are Messrs. Barry and Bass. The Board of Directors does not have a Nominating Committee. DIRECTOR'S COMPENSATION Directors of Keystone 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 attended. Directors are also reimbursed for reasonable expenses incurred in attending Board of Directors and/or committee meetings. Under the Keystone Consolidated Industries, Inc. 1992 Non-Employee Director Stock Option Plan ("Director Plan"), which terminated May 1, 1997, non-employee directors were granted an option to purchase 1,000 shares of Common Stock on the third business day after the Company issued its press release summarizing the Company's annual financial results for the prior fiscal year. The exercise price of the options was 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 became exercisable one year after the date of grant and expired on the fifth anniversary following the date of grant. The Keystone Consolidated Industries, Inc. 1997 Long-Term Incentive Plan provides for awards or grants of stock options, stock appreciation rights, restricted stock, performance grants and other awards to key individuals, including directors, performing services for the Company or its subsidiaries. Mr. Glenn R. Simmons' services are made available to the Company pursuant to the Intercorporate Services Agreement. In addition to being a director, Mr. Tucker provides certain consulting services to the Company for which the Company pays a company related to Mr. Tucker. See "Certain Business Relationships and Related Transactions." In February 1999, the Board approved an increase in the compensation paid to non-employee directors, increasing the annual retainer to $15,000 and the meeting attendance fee to $750 per day for each Board of Directors meeting and/or committee meeting. Additionally, the Compensation Committee approved in February 1999, under the 1997 Long-Term Incentive Plan, the grant to such directors of annual stock options exercisable for 1,000 shares of Common Stock. These options will have an exercise price equal to the closing sales price of Common Stock on the date of grant, have a term of ten years and fully vest on the first anniversary of the date of grant. EXECUTIVE OFFICERS In addition to Glenn R. Simmons as Chairman of the Board and J. Walter Tucker, Jr. as Vice Chairman, the following are currently executive officers of Keystone: HAROLD M. CURDY, age 51, has served as Vice President - Finance and Treasurer of the Company since prior to 1994. BERT E. DOWNING, JR., age 42, has served as Corporate Controller of the Company since prior to 1994. RALPH P. END, age 61, has served as Vice President and General Counsel of the Company since prior to 1994. THOMAS J. GLAISTER, age 49, has served as President, Keystone Steel & Wire, a division of the Company, since 1997. Mr. Glaister was General Manager, Logistics of Lukens, Inc. prior to joining Keystone Steel & Wire. He held various management positions at Lukens from prior to 1994 to 1997. BILL J. JOHNSON, age 62, has served as President of Sherman Wire, a division of DeSoto, Inc., since 1995. Mr. Johnson served as Vice President & General Manager, Sherman Wire, since prior to 1994. SANDRA K. MYERS, age 55, has served as Corporate Secretary of the Company and as Executive Secretary of Contran since prior to 1994. ROBERT W. SINGER, age 62, is President and Chief Executive Officer of the Company and has served in such capacities since 1997. Mr. Singer served as President and Chief Operating Officer since prior to 1994. He served as Vice President of Valhi and Contran since prior to 1994 to 1998 and is a director of CompX and Columbian Mutual Life Insurance Company. 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 (each a "named executive officer") for services rendered in all capacities to the Company for the years ended December 31, 1998, 1997 and 1996. Summary Compensation Table
Long-Term Compensation Awards All Other Name and Annual Compensation Securities Underlying Compensation Principal Position Year Salary ($) Bonus($) Optons (#) ($)(1) Glenn R. Simmons (2) 1998 146,153 - - - Chairman of the Board 1997 126,923 200,000 - - 1996 126,923 250,000 125,000 - Harold M. Curdy 1998 180,000 70,000 - 19,571 Vice President - 1997 150,000 85,000 10,000 11,882 Finance & Treasurer 1996 140,000 175,000 25,000 7,260 Ralph P. End 1998 125,000 50,000 - 10,478 Vice President & 1997 97,000 65,000 - 5,451 General Counsel 1996 95,000 47,000 15,000 6,195 Thomas J. Glaister (3) 1998 190,000 - - 19,785 President 1997 171,636 112,500 20,000 - Keystone Steel & Wire Robert W. Singer (4) 1998 275,000 175,000 - 74,033 President and 1997 185,000 350,000 40,000 62,943 Chief Executive Officer 1996 170,000 200,000 - 7,260
(1) All other compensation for the last three years (or such shorter period if the named executive officer was not an executive officer for the entire three years) for each of the following named executive officers consisted of (i) the Company's matching contributions pursuant to the Company's 401(k) Plan; and (ii) accruals to unfunded reserve accounts attributable to certain limits under the Code with respect to the 401(k) Plan and Keystone's pension plan, which amounts are payable upon the named executive officer's retirement, the termination of his employment with the Company or to his beneficiaries upon his death; as follows:
Unfunded Reserve Account Accruals Interest Account Accruals Accruals Employer's Related to 401(k) Above 120% Named 401(k) and Pension Plan of the AFR Executive Officer Year Contribution(a) Limitations Rate (b) Total Harold M. Curdy 1998 $8,000 $11,285 $286 $19,571 1997 5,451 6,431 0 11,882 1996 7,260 0 0 7,260 Ralph P. End 1998 8,000 2,478 0 10,478 1997 5,451 0 0 5,451 1996 6,195 0 0 6,195 Thomas J. Glaister 1998 8,000 11,785 0 19,785 Robert W. Singer 1998 8,000 63,475 2,558 74,033 1997 5,451 57,492 0 62,943 1996 7,260 0 0 7,260
(a) The Company's matching contributions to the 401(k) plan are made in Common Stock. Common Stock was valued at $8.125/share, $12.00/share, and $8.25/share for 1998, 1997 and 1996, respectively. (b) Effective as of January 1, 1998, the agreements providing for these unfunded reserve accounts, were amended to provide that the balance of such accounts would accrue interest at an annual rate in effect from time to time equal to two percent above the base rate on corporate loans. Pursuant to the rules of the Commission, the amounts shown represent the portion of the interest accruals to the unfunded reserve accounts that exceeds 120% of the applicable federal long-term rate as prescribed by the Code (the "AFR Rate"). The AFR Rate used for such computations was the AFR Rate in effect on December 31, 1998, the date the interest accruals for 1998 were credited to the unfunded reserve accounts. (2) Mr. Simmons 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" below. Keystone, however, paid Mr. Simmons' reported bonuses in 1997 and 1996. (3) Mr. Glaister was first appointed an executive officer of the Company in January 1997. (4) The amounts shown in the table as compensation for Mr. Singer exclude the amount Contran credited to Keystone for Mr. Singer's services rendered to Valhi pursuant to intercorporate services agreements with Contran, which amounts were $65,000 and $55,000 for 1997 and 1996, respectively. No stock options were granted to the executive officers during 1998. The following table provides information, with respect to the named executive officers, concerning the value of unexercised stock options held as of December 31, 1998. In 1998, no named executive officer exercised any stock options. Aggregated Options/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of Securities Value of Unexercised Underlying Unexercised In-the-Money Options/SARs Options/SARs at December 31, 1998(#) at December 31, 1998 ($)(1) Name Exercisable Unexercisable Exercisable Unexercisable Glenn R. Simmons 110,833 41,667 0 0 Harold M. Curdy 25,000 15,000 0 0 Ralph P. End 11,500 5,000 0 0 Thomas J. Glaister 6,667 13,333 0 0 Robert W. Singer 23,333 26,667 0 0
(1) The values shown in the table are based on the $8.125 per share closing price of the Common Stock on December 31, 1998, as reported by the New York Stock Exchange Composite Tape, less the exercise price of the options. Pension Plan Keystone maintains a qualified, noncontributory defined benefit plan which provides defined retirement benefits to various groups of eligible employees including executive officers. Normal retirement age under the Company's pension plan is age 65. The defined benefit for salaried employees, including officers, 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 Summary Compensation Table, assuming continued employment with the Company until normal retirement age at current salary levels are: Harold M. Curdy, $50,649; Ralph P. End, $32,026; Thomas J. Glaister, $33,920; and Robert W. Singer, $28,056. Glenn R. Simmons does not participate in the Keystone Pension Plan. SECURITY OWNERSHIP OF MANAGEMENT As of March 24, 1999, the Company's nominees for directors, directors, the executive officers named in the Summary Compensation Table above, and the direc- tors and executive officers as a group, beneficially owned, as defined by the rules of the Securities and Exchange Commission (the "Commission"), the shares of Common Stock shown in the following table.
Amount and Nature of Beneficial Ownership(1) Shares of Percent Name of Common of Beneficial Owner Stock Class (2) Thomas E. Barry (3) 5,167 - Paul M. Bass, Jr. (3)(4)(5) 12,167 - David E. Connor (3) 7,167 - Harold M. Curdy (6) 41,602 - Ralph P. End (6) 16,202 - Thomas J. Glaister (6) 15,517 - William P. Lyons, Jr. (3) 35,062 - Glenn R. Simmons (5)(6)(7) 162,433 1.7 Robert W. Singer (6) 83,605 - William Spier (3) 357,929 3.6 J. Walter Tucker, Jr. (3)(5) 155,117 1.6 All directors and executive 935,073 9.3 officers as a group (14 persons) (3)(4)(5)(6)(7)(8) _________
(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 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, Lyons, Spier and Tucker for the purchase of 4,667, 4,667, 4,667, 2,667, 2,667, and 1,667 shares, respectively, pursuant to the Keystone Consolidated Industries, Inc. 1992 Non-Employee Director Stock Option Plan and the 1997 Long-Term Incentive Plan. (4) 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 Vice Chairman 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. (5) Excludes certain shares that such individual may be deemed to indirectly and beneficially own as to which such individual disclaims beneficial ownership. See footnote (1) to the "Security Ownership of Certain Beneficial Owners" table. (6) Includes shares that such person could acquire upon the exercise of options exercisable within 60 days of the Record Date by Messrs. Curdy, End, Glaister, Simmons, and Singer for the purchase of 28,333, 11,500, 13,333, 110,833 and 36,667 shares, respectively, pursuant to the Company's various stock option plans. (7) Glenn R. Simmons is a brother of Harold C. Simmons. See footnote (1) to the "Security Ownership of Certain Beneficial Owners" table. (8) In addition to the foregoing, the shares of Common Stock shown as beneficially owned by the directors and executive officers of Keystone as a group include 29,267 shares that the remaining executive officers of Keystone have the right to acquire upon the exercise within 60 days subsequent to the Record Date of stock options granted pursuant to the Company's stock option plan. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table sets forth the stockholders known to the Company to be the beneficial owners of more than 5% of the Common Stock outstanding as of the Record Date.
Name and Address of Percent Beneficial Owner Common of Stock (#) Class Harold C. Simmons (1)(2) 4,915,073 50.0 5430 LBJ Freeway, Suite 1700 Dallas, Texas 75240 Dimensional Fund Advisors Inc. (3) 594,373 6.0 1299 Ocean Avenue, 11th Floor Santa Monica, California 90401
____ (1) The shares of Common Stock shown as beneficially owned by Harold C. Simmons includes 3,972,159, 326,364, 326,050, 250,000, and 30,000 shares of Common Stock held by Contran, Valhi, NL, The Harold Simmons Foundation, Inc. (the "Foundation"), and The Combined Master Retirement Trust (the "Master Trust"), respectively. Contran, Valhi and NL directly hold approximately 40.4%, 3.3%, and 3.3%, respectively, of the outstanding Common Stock. Valhi and Tremont are the holders of approximately 58.1% and 19.7%, respectively, of the outstanding common stock of NL. Contran and parties related to Contran hold, directly or indirectly, approximately 92.7% and 53.3% of the outstanding common stock of Valhi and Tremont, respectively. Substantially all of Contran's outstanding voting stock is held either by trusts established for the benefit of certain of Harold C. Simmons' children and grandchildren (together, the "Trusts"), of which Mr. Simmons is the sole trustee, or by Mr. Simmons directly. 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 except for those shares that he holds directly. Harold C. Simmons is Chairman of the Board and Chief Executive Officer of Contran, and of certain other 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 Foundation holds approximately 2.5% 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 holding of the offices, the stock ownership and his service as trustee as described above, Harold C. Simmons may be deemed to control certain of such entities and Mr. Simmons and certain of such entities may be deemed to possess indirect beneficial ownership of certain shares of Common Stock directly held by certain of such other entities. However, Mr. Simmons disclaims such beneficial ownership of the shares of Common Stock beneficially owned, directly or indirectly, by any of such entities. The Master Trust holds approximately 0.3% 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 a 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. Paul M. Bass, Jr. and J. Walter Tucker, Jr. are also members of the Trust Investment Committee for the Master Trust. Harold C. Simmons, Glenn R. Simmons and J. Walter Tucker, Jr. are members of Valhi's board of directors. Messrs. Harold and Glenn Simmons 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 information contained in this footnote is based on information provided to the Company by Valhi, Contran and certain of their affiliates as of the Record Date. (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. (3) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment advisor, may be deemed to have beneficial ownership of 594,373 shares of Common Stock as of December 31, 1998, all of which shares are held in portfolios for which Dimensional serves as investment advisor and investment manager. Dimensional possesses both voting and investment power over the Common Stock owned by such portfolios. Dimensional disclaims beneficial ownership of such securities. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, 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 1998 its executive officers, directors and 10% stockholders complied with all applicable filing requirements under Section 16(a). CERTAIN BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS As set forth under the caption "Security Ownership of Certain Beneficial Owners," Harold C. Simmons, through Contran and other entities, may be deemed to beneficially own approximately 50.0% of the outstanding Common Stock as of the Record Date 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 transactions 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 that resulted in the acquisition by one related party of a publicly-held minority equity interest in another related party. The Company continuously considers, reviews and evaluates and understands that Contran and related entities consider, review and evaluate transactions of the type described above. 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 connection 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. No specific procedures are in place that govern the treatment of transactions among the Company and its related entities, although such entities may implement specific procedures as appropriate for particular transactions. In addition, under applicable principles of law, in the absence of stockholder ratification or approval by directors who may be deemed disinterested, transactions involving contracts among companies under common control must be fair to all companies involved. Furthermore, directors and officers owe fiduciary duties of good faith and fair dealing to all stockholders of the companies for which they serve. 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 pursuant to the Intercorporate Services Agreement between Contran and the Company, a copy of which is included as Exhibit 10.1 in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998, filed on March 30, 1999 (the "Intercorporate Services Agreement"). The fee incurred during 1998 was $639,000. The Company compensates Tucker & Branham, Inc. for certain consulting services of Mr. Tucker on an hourly basis as his services are requested. The fees paid Tucker & Branham, Inc. during 1998 were $77,000. NL Insurance Ltd. of Vermont ("NL Insurance"), Valmont Insurance Company ("Valmont"), and EWI RE, Inc. ("EWI") arrange for or broker certain of the Company's insurance policies. NL Insurance is a wholly owned captive insurance company of Tremont. Valmont is a wholly owned captive insurance company of Valhi. Parties related to Contran own 90% of the outstanding common stock of EWI, and a son-in-law of Harold C. Simmons manages the operations of EWI. Consistent with insurance industry practices, NL Insurance, Valmont and EWI receive commissions from the insurance and reinsurance underwriters for the policies that they arrange or broker. During 1998, the Company paid approximately $1.2 million for policies arranged or brokered by NL Insurance, Valmont and/or EWI. These amounts principally included payments for reinsurance and insurance premiums paid to unrelated third parties, but also included commissions paid to NL Insurance, Valmont and EWI. In the Company's opinion, the amounts that the Company paid for these insurance policies are reasonable and similar to those it could have obtained through unrelated insurance companies and/or brokers. The Company expects that these relationships with NL Insurance, Valmont, and EWI will continue in 1999. Aircraft services were purchased from Valhi in the amount of $160,000 for the year ended December 31, 1998. 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. REPORT ON EXECUTIVE COMPENSATION Compensation Committee Report During 1998, 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 except the 1997 Long-Term Incentive Plan. 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 significant 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. It is the Company's policy to structure compensation arrangements to be deductible for federal income tax purposes under applicable provisions of the Internal Revenue Code. During 1998, the Company's compensation program with respect to its executives consisted of three components: base salary, incentive bonus, including deferred compensation, and stock option awards. Base Salary The Committee reviews, in consultation with the Chief Executive Officer ("CEO"), base salaries for executives at least annually. The Committee approves, with any modifications it deems appropriate, the CEO's recommendations for base salary levels. Base salaries for all salaried employees, including executive officers of the Company, have been established on a position-by- position basis. Annual internal reviews of salary levels are conducted by the Company's management in an attempt to rank base salary and job value of each position. The ranges of salaries for comparable positions considered by management were based upon management's general business knowledge and no specific survey, study or other analytical process was utilized to determine such ranges. Additionally, no specific companies' or groups of companies' compensation were compared with that of the Company, nor was an attempt made to identify or otherwise quantify the compensation paid by the companies that served as a basis for such individuals' general business knowledge. Base salary levels are generally not increased except in instances of (i) promotions, (ii) increases in responsibility or (iii) unwarranted discrepancies between job value and the corresponding base salary. The Company considers general base salary increases from time to time when competitive factors so warrant. 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. Annual performance reviews are an important factor in determining management's recommendation which is primarily based on each individual's performance and, to a lesser extent, on the Company's overall performance. No specific financial or budget tests were applied in the measurement of individual performance. The executive's performance is typically measured by the ability the executive demonstrates in performing, in a timely and cost efficient manner, the functions of the executive's position. The Company's overall performance is typically measured by the Company's historical financial results. No specific overall performance measures were used and there is no specific relationship between overall Company performance and an executive's incentive bonus. 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. The Compensation Committee also considered the number of stock options already outstanding in granting new stock options. The foregoing report is submitted by the members of the Compensation Committee of the Board of Directors. Dr. Thomas E. Barry, Chairman Paul M. Bass, Jr. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No member of the Compensation Committee is or has been an officer or employee of the Company or any of its subsidiaries. In 1998, no executive officer of the Company served on the compensation committee or as a director of another entity, one of whose executive officers served on the Company's Compensation Committee or Board of Directors. PERFORMANCE GRAPH The following graph reflects a comparison of the cumulative total return of the Common Stock from December 31, 1993 through December 31, 1998, with the Standard & Poor's 500 Composite Index and the Standard & Poor's Iron & Steel Index. The comparison for each of the periods assumes that the value of the investment in the Common Stock and each index was $100 on December 31, 1993 and that all dividends were reinvested. Comparison of Five Year Cumulative Total Shareholder Return Among Keystone Consolidated Industries, Inc., S&P 500, and S&P Iron & Steel Index [Performance graph goes here]
1993 1994 1995 1996 1997 1998 Keystone $100 $133 $112 $80 $117 $79 S&P 500 $100 $101 $139 $171 $229 $294 S&P Iron & $100 $97 $90 $81 $82 $71 Steel
INDEPENDENT PUBLIC ACCOUNTANTS PricewaterhouseCoopers LLP, independent public accountants, have audited the Company's financial statements and are currently expected to be retained to audit the financial statements for 1999. Representatives of PricewaterhouseCoopers LLP will be present at the Annual Meeting. They 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 Commission. The Company presently intends to call the next annual meeting during May 2000. For such proposals to be considered for inclusion in the Proxy Statement and form of proxy relating to the 2000 annual meeting, they must be received by the Company not later than December 18, 1999. 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. April 5, 1999 A copy of Keystone's 1998 Form 10-K Annual Report, as filed with the Commission, is included in Keystone's 1998 Annual Report to Stockholders distributed to stockholders with this Proxy Statement. Additional copies are available without charge by writing to: Secretary, Keystone Consolidated Industries, Inc., 5430 LBJ Freeway, Suite 1740, Dallas, Texas 75240. VOTING INSTRUCTIONS KEYSTONE CONSOLIDATED INDUSTRIES, INC. 5430 LBJ Freeway, Suite 1740 Dallas, Texas 75240 SOLICITED BY THE BOARD OF DIRECTORS for Annual Meeting of Stockholders Thursday, May 6, 1999 The undersigned, being participants in the Keystone Consolidated Industries, Inc. Deferred Incentive Plan or the DeSoto Stock Ownership Plus Plan, having received the Notice of Annual Meeting and Proxy Statement dated April 5, 1999, and Annual Report to Stockholders, hereby instructs the trustee, to vote, as specified below, all the shares of common stock of KEYSTONE CONSOLIDATED INDUSTRIES, INC., a Delaware corporation (the "Company"), held of record by the trustee for the account of the undersigned and entitled to vote on the record date, March 24, 1999, at the Annual Meeting of Stockholders to be held on May 6, 1999, and all adjournments or postponements thereof, as directed and, in their discretion, on all other matters which may properly come before the Annual Meeting or any adjournments or postponements 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 or the DeSoto Stock Ownership Plus Plan, as applicable, as follows: Election of Directors NOMINEES: Glenn R. Simmons and J. Walter Tucker, Jr. each for a term of three years. (Instruction: To withhold authority for any single nominee, write that nominee's name in the space provided below) _____________________________________________________ FOR all nominees WITHHOLD AUTHORITY listed to the right to vote for all nominees (except as marked to listed to the right the contrary) [ ] [ ] ___________________________________ Signature Date: _______________________, 1999 PLEASE SIGN, DATE, AND RETURN THE CARD PROMPTLY USING THE ENCLOSED ENVELOPE. PROXY KEYSTONE CONSOLIDATED INDUSTRIES, INC. 5430 LBJ Freeway, Suite 1740 Dallas, Texas 75240 SOLICITED BY THE BOARD OF DIRECTORS for Annual Meeting of Stockholders Thursday, May 6, 1999 The undersigned, having received the Notice of Annual Meeting and Proxy Statement dated April 5, 1999, and Annual Report to Stockholders, hereby appoints Ralph P. End and Sandra K. Myers, or either of them, proxies, with full power of substitution to vote, as specified in this proxy, all the shares of capital stock of KEYSTONE CONSOLIDATED INDUSTRIES, INC., a Delaware corporation (the "Company"), held of record by the undersigned and entitled to vote on the record date, March 24, 1999, at the Annual Meeting of Stockholders to be held at 5430 LBJ Freeway, Suite 1740, Dallas, TX 75240 at 9:00 a.m. local time on May 6, 1999, and all adjournments or postponements thereof, as directed and, in their discretion, on all other matters which may properly come before the Annual Meeting or any adjournments or postponements 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. The undersigned hereby acknowledges receipt of the accompanying Proxy Statement and Annual Report to Stockholders, and hereby revokes any proxy or proxies heretofore given by the undersigned relating to the Annual Meeting. (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 stockholder. If no direction is made, this Proxy will be voted "For" all nominees for election as Directors. Election of Directors NOMINEES: Glenn R. Simmons and J. Walter Tucker, Jr. each for a term of three years. (Instruction: To withhold authority for any single nominee, write that nominee's name in the space provided below) _____________________________________________________ FOR all nominees WITHHOLD AUTHORITY listed to the right to vote for all nominees (except as marked to listed to the right the contrary) [ ] [ ] Please mark, date and sign exactly as your name appears on this proxy card. When shares are held jointly, both holders should sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If the holder is a corporation or partnership, the full corporate or partnership name should be signed by a duly authorized officer. ___________________________________ Signature ___________________________________ Signature, if shares held jointly Date: _______________________, 1999 THIS PROXY MAY BE REVOKED AS SET FORTH IN THE KEYSTONE CONSOLIDATED INDUSTRIES, INC. PROXY STATEMENT THAT ACCOMPANIED THIS PROXY. -----END PRIVACY-ENHANCED MESSAGE-----