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Filed by Registrant:
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Filed by a Party other than the Registrant:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a‑6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0‑11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0‑11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
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| 1) |
Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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4)
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Date Filed:
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NL Industries, Inc.
Three Lincoln Centre
5430 LBJ Freeway
Suite 1700
Dallas, Texas 75240-2620
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1.
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to elect the six director nominees named in the proxy statement to serve until the 2023 annual meeting of shareholders;
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2.
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to approve on a nonbinding advisory basis our named executive officer compensation; and
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3.
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to transact such other business as may properly come before the meeting or any adjournment or postponement thereof.
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| PROPOSAL 1:ELECTION OF DIRECTORS |
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the accompanying notice of the 2022 annual meeting of shareholders;
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this proxy statement;
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our 2021 Annual Report to Shareholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2021; and
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a proxy card or voting instruction form.
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| Q: |
What is the purpose of the annual meeting?
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At the annual meeting, shareholders will vote on the following, as described in this proxy statement:
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Proposal 1 – the election of the six director nominees named in this proxy statement; and
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Proposal 2 – the adoption of a nonbinding advisory resolution that approves the named executive officer compensation described in this proxy statement (Say-on-Pay).
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How does the board recommend that I vote?
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The board of directors recommends that you vote FOR:
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the election of each of the nominees for director named in this proxy statement; and
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the approval and adoption of proposal 2 (Say-on-Pay).
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The board of directors has set the close of business on March 22, 2022 as the record date for the determination of shareholders entitled to notice of and to vote at the meeting. Only holders of our common stock as of the close of
business on the record date are entitled to vote at the meeting. On the record date, 48,802,734 shares of our common stock were issued and outstanding. Each share of our common stock entitles its holder to one vote.
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| Q: |
Why did I receive a notice regarding the internet availability of proxy materials instead of paper copies of the proxy materials?
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Pursuant to the SEC notice and access rules we furnish proxy materials over the internet to both our shareholders of record and our shareholders who hold our common stock through a brokerage firm or other nominee. We believe that
taking advantage of these rules expedites our shareholders’ receipt of proxy materials, while also lowering the costs associated with conducting our annual meeting. You can find instructions on how to access and review the proxy
materials, and how to vote over the internet, on the notice of internet availability of proxy materials that you received. The notice also contains instructions on how you can receive a paper copy of this proxy statement, our 2021 Annual
Report to Shareholders and a voting instruction form or proxy card.
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If you hold shares of our common stock in your name in certificate form or electronically with our transfer agent, Computershare, and not through a brokerage firm or other nominee, you are a shareholder of record. As a shareholder of
record, you may:
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vote over the internet at www.aalvote.com/NL;
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vote by telephone using the voting procedures set forth on your proxy card;
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instruct the agents named on your proxy card how to vote your shares by completing, signing and mailing the proxy card in the envelope provided; or
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vote in person at the annual meeting.
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| Q: |
What are the consequences if I am a shareholder of record and I execute my proxy card but do not indicate how I would like my shares voted for one or more of the director nominees named in this proxy
statement or proposal 2 (Say-on-Pay)?
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If you are a shareholder of record the agents named on your proxy card will vote your shares on such uninstructed nominee or proposal as recommended by the board of directors in this proxy statement.
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| Q: |
How do I vote if my shares are held through a brokerage firm or other nominee?
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If you hold your shares through a brokerage firm or other nominee, you must follow the instructions on your notice of internet availability of proxy materials or on your voting instruction form, on how to vote your shares. In order to
ensure your brokerage firm or other nominee votes your shares in the manner you would like, you must provide voting instructions to your brokerage firm or other nominee by the deadline provided on
your notice of internet availability of proxy materials or voting instruction form.
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| Q: |
If I hold my shares through a brokerage firm or other nominee, how may I vote in person at the annual meeting?
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If you wish to vote in person at the annual meeting, you will need to follow the instructions on your notice of internet availability of proxy materials or voting instruction form on how to obtain the appropriate documents to vote in
person at the meeting.
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Who will count the votes?
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The board of directors has appointed Alliance Advisors to ascertain the number of shares represented, tabulate the vote and serve as inspector of election for the meeting.
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Yes. All proxy cards, ballots or voting instructions will be kept confidential in accordance with our by-laws.
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If you are a shareholder of record, you may change or revoke your proxy instructions in any of the following ways:
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delivering to Alliance Advisors a written revocation;
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submitting another proxy card bearing a later date;
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changing your vote on www.aalvote.com/NL;
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using the telephone voting procedures set forth on your proxy card; or
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voting in person at the annual meeting.
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How do I change or revoke my voting instructions if my shares are held through a brokerage firm or other nominee?
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If your shares are held through a brokerage firm or other nominee, you must follow the instructions from your brokerage firm or other nominee on how to change or revoke your voting instructions or how to vote in person at the annual
meeting.
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A quorum is the presence, in person or by proxy, of the holders of a majority of the outstanding shares of our common stock entitled to vote at the meeting.
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Assuming a quorum is present, what vote is required to elect a director nominee?
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A plurality of affirmative votes of the holders of our outstanding shares of common stock represented and entitled to vote at the meeting is necessary to elect each director nominee. You may indicate on your proxy card or in your
voting instructions that you desire to withhold authority to vote for any of the director nominees. Since director nominees need only receive a plurality of affirmative votes from the holders represented and entitled to vote at the
meeting to be elected, a vote withheld or a broker/nominee non-vote regarding a particular nominee will not affect the election of such director nominee.
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Assuming a quorum is present, what vote is required to adopt and approve proposal 2 (Say-on-Pay)?
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The shareholder resolution contained in this proposal provides that the nonbinding affirmative vote of the holders of the majority of the outstanding shares present in person or represented by proxy at the meeting and entitled to vote
on the subject matter will be the requisite vote to adopt the resolution and approve the compensation of our named executive officers as such compensation is disclosed in this proxy statement. Abstentions will be counted as represented
and entitled to vote and will therefore have the effect of a negative vote. Broker/nominee non-votes will not be counted as entitled to vote and will have no effect on this proposal.
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Assuming a quorum is present, what vote is required to approve any other matter to come before the meeting?
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Except as applicable laws may otherwise provide, the approval of any other matter that may properly come before the meeting will require the affirmative votes of the holders of the majority of the outstanding shares represented and
entitled to vote at the meeting. Abstentions will be counted as represented and entitled to vote and will therefore have the effect of a negative vote.
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If I am a shareholder of record, how will the agents named on my proxy card vote on any other matter to come before the meeting?
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If you are a shareholder of record and to the extent allowed by applicable law, the agents named on your proxy card will vote in their discretion on any other matter that may properly come before the meeting.
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We will pay all expenses related to the solicitation, including charges for preparing, printing, assembling and distributing all materials delivered to shareholders. In addition to the solicitation by mail, our directors, officers and
regular employees may solicit proxies by telephone or in person for which such persons will receive no additional compensation. Upon request, we will reimburse brokerage firms or other nominees for their reasonable out-of-pocket expenses
incurred in distributing proxy materials and voting instruction forms to the beneficial owners of our common stock that hold such stock in accounts with such entities.
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NL Common Stock (1)
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Name of Beneficial Owner
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Amount and Nature of
Beneficial Ownership
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Percent of
Class (2)
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5% Shareholders:
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Harold C. Simmons Family Trust No. 2
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40,389,531
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(3)(4)
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82.8%
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Lisa K. Simmons
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40,389,531
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(3)(4)
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82.8%
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Directors and Named Executive Officers
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Loretta J. Feehan
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23,650
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(5)
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*
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Robert D. Graham
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6,500
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(5)
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*
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John E. Harper
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20,650
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(5)
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*
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Meredith W. Mendes.
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17,150
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(5)
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*
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Cecil H. Moore, Jr.
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32,150
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(5)
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*
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Thomas P. Stafford
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17,150
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(5)
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*
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Patricia A. Kropp
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-0-
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(5)
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-0-
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Andrew B. Nace
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-0-
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(5)
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-0-
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John R. Powers, III
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-0-
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(5)
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-0-
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Courtney J. Riley
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-0-
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(5)
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-0-
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Amy A. Samford
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-0-
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(5)
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-0-
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Current directors and executive officers as a group (15 persons)
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118,250
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(5)
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*
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(1)
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Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 under the Securities Exchange Act and is not necessarily indicative of beneficial ownership for any
other purpose. Except as otherwise noted, the listed entities, individuals or group have sole investment power and sole voting power as to all shares set forth opposite their names. Except as noted in footnote 4 to this table, the
business address for each listed person or entity is Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2620.
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(2)
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The percentages set forth above and in the following footnotes are based on 48,802,734 shares of our common stock outstanding as of the record date.
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(3)
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The shares reported in this table for the Family Trust and Ms. Simmons consist of 40,389,531 shares held directly by the entities below. See footnote 4 to this table, below.
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NL Common Stock
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Direct Holder
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Shares
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Percent of
Class |
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Valhi
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40,387,531
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82.8%
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Kronos Worldwide.
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2,000
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*
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Total
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40,389,531
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82.8%
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(4)
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The following is a description of certain related entities or persons that may be deemed to beneficially own outstanding shares of our common stock.
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Valhi
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50.2%
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NLKW
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30.5%
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Contran
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Less than 1%
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Dixie Rice
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91.5%
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(a)
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We (including a wholly owned subsidiary of ours) and Kronos Worldwide own 1,197,746 shares and 143,743 shares, respectively, of Valhi common stock. Since we and Kronos Worldwide are
majority owned subsidiaries of Valhi, and pursuant to Delaware law, Valhi treats the shares of Valhi common stock that we and Kronos Worldwide own as treasury stock for voting purposes. Pursuant to Section 13(d)(4) of the Securities
Exchange Act, such shares are not deemed outstanding for the purposes of calculating the percentage ownership of the outstanding shares of Valhi common stock as of the record date in this proxy statement.
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Ms. Simmons and the Family Trust (and the Trustee, in its capacity as trustee of the Family Trust) may be deemed to control each of Contran, Dixie Rice, Valhi, Kronos Worldwide, CompX and us; and
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Ms. Simmons, the Family Trust (and the Trustee, in its capacity as trustee of the Family Trust), Contran, Dixie Rice, Valhi and Kronos Worldwide and we may be deemed to possess indirect beneficial
ownership of shares of common stock directly held by such entities, including any shares of our common stock.
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(5)
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Each of our directors or executive officers disclaims beneficial ownership of any shares of our common stock, except to the extent he or she has a pecuniary interest in such shares, if
any.
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Kronos Worldwide Common Stock
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Valhi Common Stock
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Name of Beneficial Owner
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Amount and Nature
of Beneficial
Ownership (1)
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Percent of
Class
(1)(2)
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Amount and Nature
of Beneficial
Ownership (1)
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Percent of
Class
(1)(3)
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Loretta J. Feehan
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13,250
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(4)
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*
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3,291
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(4)
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*
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Robert D. Graham
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21,000
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(4)
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*
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2,182
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(4)
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*
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John E. Harper
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8,250
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(4)
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*
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-0-
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(4)
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-0-
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Meredith W. Mendes
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5,750
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(4)
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*
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-0-
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(4)
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-0-
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Cecil H. Moore, Jr.
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22,774
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(4)
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*
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-0-
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(4)
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-0-
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Thomas P. Stafford
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28,059
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(4)
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*
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-0-
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(4)
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-0-
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Patricia A. Kropp
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-0-
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(4)
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-0-
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-0-
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(4)
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-0-
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Andrew B. Nace
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8,725
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(4)
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*
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-0-
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(4)
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-0-
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John R. Powers, III
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-0-
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(4)
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-0-
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-0-
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(4)
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-0-
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Courtney J. Riley
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-0-
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(4)
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-0-
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-0-
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(4)
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-0-
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Amy A. Samford
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-0-
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(4)
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-0-
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-0-
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(4)
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-0-
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Current directors and executive officers as a group (15 persons)
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109,308
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(4)
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*
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7,973
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(4)
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*
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(1)
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Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 under the Securities Exchange Act and is not necessarily indicative of beneficial ownership for any
other purpose. Except as otherwise noted, the listed individuals or group have sole investment power and sole voting power as to all shares set forth opposite their names.
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(2)
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The percentages are based on 115,461,627 shares of Kronos Worldwide common stock outstanding as of the record date.
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(3)
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The percentages are based on 28,277,093 shares of Valhi common stock outstanding for voting purposes as of the record date. We (including a wholly owned subsidiary of ours) and Kronos Worldwide own
1,197,746 shares and 143,743 shares, respectively, of Valhi common stock. Since we and Kronos Worldwide are majority owned subsidiaries of Valhi and pursuant to Delaware law, Valhi treats the shares of Valhi common stock that we and
Kronos Worldwide own as treasury stock for voting purposes. Pursuant to Section 13(d)(4) of the Securities Exchange Act, such shares are not deemed outstanding for the purposes of calculating the percentage ownership of the outstanding
shares of Valhi common stock as of the record date in this proxy statement.
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(4)
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Each of our directors or executive officers disclaims beneficial ownership of any shares of Kronos Worldwide or Valhi common stock, except to the extent he or she has a pecuniary interest in such shares,
if any.
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CompX Class A Common Stock
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Name of Beneficial Owner
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Amount and Nature of
Beneficial Ownership (1) (2)
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Percent of
Class (1) (2)
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Loretta J. Feehan
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8,850
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(3)
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*
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Robert D. Graham
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2,000
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(3)
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*
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John E. Harper
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-0-
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(3)
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-0-
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Meredith W. Mendes
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-0-
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(3)
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-0-
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Cecil H. Moore, Jr.
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2,695
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(3)
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*
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Thomas P. Stafford
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-0-
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(3)
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-0-
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Patricia A. Kropp
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-0-
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(3)
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-0-
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Andrew B. Nace
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1,807
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(3)
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*
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John R. Powers, III
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-0-
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(3)
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-0-
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Courtney J. Riley
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-0-
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(3)
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-0-
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Amy A. Samford
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-0-
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(3)
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-0-
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Current directors and executive officers as a group (15 persons)
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15,852
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(3)
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*
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(1)
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Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 under the Securities Exchange Act and is not necessarily indicative of beneficial ownership for any
other purpose. Except as otherwise noted, the listed individuals or group have sole investment power and sole voting power as to all shares set forth opposite their names.
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(2)
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The percentages are based on 12,380,657 shares of CompX class A common stock outstanding as of the record date. We directly hold approximately 86.9% of the outstanding shares of CompX class A common
stock.
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(3)
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Each of our directors or executive officers disclaims beneficial ownership of any shares of CompX class A common stock, except to the extent he or she has a pecuniary interest in such shares, if any.
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Name
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Age
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Position(s)
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Robert D. Graham
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66
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Vice Chairman of the Board
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Courtney J. Riley
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56
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Chief Executive Officer and President
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Andrew B. Nace
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57
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Executive Vice President
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Amy A. Samford
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47
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Senior Vice President and Chief Financial Officer
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Bryan A. Hanley
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41
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Vice President and Treasurer
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Patricia A. Kropp
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62
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Vice President, Employee Benefits
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John R. Powers, III
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49
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Vice President and General Counsel
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Bart W. Reichert
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51
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Vice President, Internal Audit
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Amy E. Ruf
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45
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Vice President and Controller
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Darci B. Scott
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47
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Vice President, Tax
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each member of our audit committee is independent, financially literate and has no material relationship with us other than serving as our director; and
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Cecil H. Moore, Jr., John E. Harper and Meredith W. Mendes are each an “audit committee financial expert.”
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to recommend to the board of directors whether or not to approve any proposed charge to us or any of our privately held subsidiaries pursuant to our ISA with Contran;
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to review certain matters regarding our defined benefit plans or programs;
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to review, approve, administer and grant awards under our equity compensation plan; and
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to review and administer such other compensation matters as the board of directors may direct from time to time.
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our board of directors has no specific minimum qualifications for director nominees;
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each nominee should possess the necessary business background, skills and expertise at the policy-making level and a willingness to devote the required time to the duties and responsibilities of
membership on the board of directors; and
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the board of directors believes that experience as our director is a valuable asset and that directors who have served on the board for an extended period of time are able to provide important insight
into our current and future operations.
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was an officer or employee of ours during 2021 or any prior year;
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had any related party relationships with us that requires disclosure under applicable SEC rules; or
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had any interlock relationships under applicable SEC rules.
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the annualized base salary of such employee at the beginning of the year;
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an estimate of the bonus Contran will pay or accrue for such employee (other than bonuses, if any, for specific matters) for the year, using as a reasonable approximation for such bonus the actual bonus
that Contran paid or accrued for such employee in the prior year; and
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Contran’s portion of the social security and medicare taxes on such base salary and an estimated overhead amount applied to the base salary for the cost of medical and life insurance benefits,
unemployment taxes, disability insurance, defined benefit and defined contribution plan benefits, professional education and licensing and costs of providing an office, equipment and supplies related to providing such services. For 2019
and 2020, an overhead factor of 25% was applied to the base salary to the employee to determine the estimated overhead amount. Beginning with the 2021 charge, the estimated overhead amount for each employee is determined using a
headcount-based methodology and is the same amount for each individual providing services under the ISA.
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the quality of the services Contran provides to us, including the quality of the services our executive officers provide to us;
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the comparison of the ISA charge and number of full-time equivalent employees reflected in the charge by department for the prior year and proposed for the current year;
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the comparison of the prior year and proposed current year charges by department and in total and such amounts as a percentage of Contran’s similarly calculated costs for its departments and in total for
those years;
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•
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the comparison of the prior year and proposed current year average hourly rate; and
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•
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the concurrence of our chief financial officer as to the reasonableness of the proposed charge.
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the cost to employ the personnel necessary to provide the quality of the services provided by Contran would exceed the proposed aggregate fee to be charged by Contran to us under our ISA with Contran; and
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the cost for such services would be no less favorable than could otherwise be obtained from an unrelated third party for comparable services.
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any ISA charge from Contran to any other publicly held parent or sister company, although such charge was separately reviewed by the management development and compensation committee of the applicable
company; and
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the compensation policies of Contran or the amount of time our named executive officers are expected to devote to us because:
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o
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each of our named executive officers provides services to multiple companies related to Contran, including Contran itself, and the percentage of time devoted to each company by our named executive
officers varies;
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o
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the fee we pay to Contran under our ISA with Contran each year does not represent all of Contran’s cost of employing each of our named executive officers;
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o
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Contran and these other companies related to Contran absorb the remaining amount of Contran’s cost of employing each of our named executive officers; and
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o
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the members of our management development and compensation committee consider the factors discussed above, applying their collective business judgment and experience, in determining whether to recommend
that the proposed ISA fee for each year be approved by the full board of directors.
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Thomas P. Stafford
Chairman of our Management Development and Compensation Committee
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Cecil H. Moore, Jr.
Member of our Management Development and Compensation Committee
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Name and Principal Position
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Year
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Salary
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Stock Awards
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Total
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Robert D. Graham (2)
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2021
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$6,138,000
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(3)
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$ -0-
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$6,138,000
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Vice Chairman of the Board
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2020
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6,675,000
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(3)
|
-0-
|
6,675,000
|
|
|
2019
|
5,660,000
|
(3)
|
-0-
|
5,660,000
|
||
|
Courtney J. Riley (2)
|
2021
|
945,000
|
(3)
|
-0-
|
945,000
|
|
|
President and Chief Executive Officer
|
2020
|
871,000
|
(3)
|
-0-
|
871,000
|
|
|
2019
|
802,000
|
(3)
|
-0-
|
802,000
|
||
|
Andrew B. Nace
|
2021
|
1,770,000
|
(3)
|
-0-
|
1,770,000
|
|
|
Executive Vice President
|
2020
|
1,970,000
|
(3)
|
-0-
|
1,970,000
|
|
|
2019
|
1,953,000
|
(3)
|
-0-
|
1,953,000
|
||
|
Amy A. Samford (2)
|
2021
|
398,000
|
(3)
|
-0-
|
398,000
|
|
|
Senior Vice President and Chief Financial Officer
|
2020
|
464,000
|
(3)
|
-0-
|
464,000
|
|
|
2019
|
432,000
|
(3)
|
-0-
|
432,000
|
||
|
Patricia A. Kropp (2)
|
2021
|
419,000
|
(3)
|
-0-
|
419,000
|
|
|
Vice President, Employee Benefits
|
||||||
|
John R. Powers, III (2)
|
2021
|
566,000
|
(3)
|
-0-
|
566,000
|
|
|
Vice President and General Counsel
|
||||||
|
(1)
|
Certain non-applicable columns have been omitted from this table.
|
|
(2)
|
Ms. Riley became our chief executive officer on June 1, 2021; that position was held during the earlier portion of 2021 by Mr. Graham. Each of Ms. Kropp and Mr. Powers is one of our named executive
officers only for 2021.
|
|
(3)
|
The amounts shown in the 2021 Summary Compensation Table as salary for each named executive officer include the portion of the fees we, CompX and Kronos Worldwide paid to Contran pursuant to certain ISAs
with respect to the services such officer rendered to us, our subsidiaries and Kronos Worldwide. The ISA charges disclosed for Contran employees who perform executive officer services to us, our subsidiaries and Kronos Worldwide are
based on various factors described in the Compensation Discussion and Analysis section of this proxy statement. Our management development and compensation committee considers the factors described in the Compensation Discussion and
Analysis section of this proxy statement in determining whether to recommend that our board of directors approve the aggregate proposed ISA fee from Contran to us, exclusive of ISA charges from Contran to CompX or Kronos Worldwide. As
discussed in the Compensation Discussion and Analysis section of this proxy statement, our management development and compensation committee does not consider any ISA charge from Contran to any other publicly held subsidiary, parent or
sister company of ours, although such charge is separately reviewed by the management development and compensation committee of the applicable company. The components of salary shown in the 2021 Summary Compensation Table for each of
our named executive officers are as follows.
|
|
2019
|
2020
|
2021
|
||||||||||
|
Robert D. Graham
|
||||||||||||
|
ISA Fees:
|
||||||||||||
|
CompX
|
$
|
559,000
|
$
|
659,000
|
$
|
606,000
|
||||||
|
Kronos Worldwide
|
2,997,000
|
3,623,000
|
3,735,000
|
|||||||||
|
NL
|
2,104,000
|
2,393,000
|
1,797,000
|
|||||||||
|
$
|
5,660,000
|
$
|
6,675,000
|
$
|
6,138,000
|
|||||||
|
Courtney J. Riley
|
||||||||||||
|
ISA Fees:
|
||||||||||||
|
CompX
|
$
|
55,000
|
$
|
58,000
|
$
|
46,000
|
||||||
|
Kronos Worldwide
|
434,000
|
522,000
|
593,000
|
|||||||||
|
NL
|
313,000
|
291,000
|
306,000
|
|||||||||
|
$
|
802,000
|
$
|
871,000
|
$
|
945,000
|
|||||||
|
Andrew B. Nace
|
||||||||||||
|
ISA Fees:
|
||||||||||||
|
CompX
|
$
|
350,000
|
$
|
370,000
|
$
|
298,000
|
||||||
|
Kronos Worldwide
|
771,000
|
953,000
|
876,000
|
|||||||||
|
NL
|
832,000
|
647,000
|
596,000
|
|||||||||
|
$
|
1,953,000
|
$
|
1,970,000
|
$
|
1,770,000
|
|||||||
|
Amy A. Samford
|
||||||||||||
|
ISA Fees:
|
||||||||||||
|
CompX
|
$
|
284,000
|
$
|
287,000
|
$
|
194,000
|
||||||
|
Kronos Worldwide
|
35,000
|
40,000
|
58,000
|
|||||||||
|
NL
|
113,000
|
137,000
|
146,000
|
|||||||||
|
$
|
432,000
|
$
|
464,000
|
$
|
398,000
|
|||||||
|
Patricia A. Kropp
|
||||||||||||
|
ISA Fees:
|
||||||||||||
|
CompX
|
$
|
28,000
|
||||||||||
|
Kronos Worldwide
|
363,000
|
|||||||||||
|
NL
|
28,000
|
|||||||||||
|
$
|
419,000
|
|||||||||||
|
John R. Powers, III
|
||||||||||||
|
ISA Fees:
|
||||||||||||
|
CompX
|
$
|
33,000
|
||||||||||
|
Kronos Worldwide
|
150,000
|
|||||||||||
|
NL
|
383,000
|
|||||||||||
|
$
|
566,000
|
|||||||||||
|
2021 Director Retainers
|
|
|
Each director
|
$ 25,000
|
|
Chair of our board
|
$ 50,000
|
|
Chairman of our audit committee and any member of our audit committee whom the board identified as an “audit committee financial expert” (provided that if one person served in both capacities only one such retainer was paid)
|
$ 45,000
|
|
Other members of our audit committee
|
$ 25,000
|
|
Members of our other committees
|
$ 5,000
|
|
Name
|
Fees Earned or Paid in Cash (2)
|
Stock
Awards (3) |
All Other Compensation
|
Total
|
|
|
Loretta J. Feehan (4)
|
$ 82,000
|
$ 20,185
|
$ -0-
|
$102,185
|
|
|
John E. Harper (4)
|
77,000
|
20,185
|
-0-
|
97,185
|
|
|
Meredith W. Mendes (4)
|
76,000
|
20,185
|
-0-
|
96,185
|
|
|
Cecil H. Moore, Jr. (4)
|
82,000
|
20,185
|
-0-
|
102,185
|
|
|
Thomas P. Stafford (4)
|
62,000
|
20,185
|
15,000
|
(5)
|
97,185
|
|
(1)
|
Certain non-applicable columns have been omitted from this table.
|
|
(2)
|
Represents cash retainers and meeting fees the director earned for director services he or she provided to us in 2021.
|
|
(3)
|
Represents the value of 2,750 shares of our common stock we granted to each of these directors on May 20, 2021. For the purposes of this table, we valued these stock awards at the $7.34 closing price per
share of such shares on their date of grant, consistent with the requirements of Financial Accounting Standards Board Accounting Standards Codification Topic 718.
|
|
(4)
|
In addition to the fees disclosed, in 2021 Ms. Feehan received compensation from CompX and Kronos Worldwide, and Ms. Mendes, Gen. Stafford (ret.) and Messrs. Harper and Moore also received compensation
from Kronos Worldwide, for their director services provided to each of such corporations, as applicable. For 2021, they each earned the following for these director services:
|
|
Name
|
Fees Earned or Paid in Cash (a)
|
Stock
Awards (b) |
Total
|
|||
|
Loretta J. Feehan
|
||||||
|
CompX Director Services
|
$80,000
|
$20,475
|
$ 100,475
|
|||
|
Kronos Worldwide Director Services
|
82,000
|
19,992
|
101,992
|
|||
|
$162,000
|
$40,467
|
$ 202,467
|
||||
|
John E. Harper
|
||||||
|
Kronos Worldwide Director Services
|
$77,000
|
$19,992
|
$ 96,992
|
|||
|
Meredith W. Mendes.
|
||||||
|
Kronos Worldwide Director Services
|
$77,000
|
$19,992
|
$ 96,992
|
|||
|
Cecil H. Moore, Jr.
|
||||||
|
Kronos Worldwide Director Services
|
$82,000
|
$19,992
|
$101,992
|
|||
|
Thomas P. Stafford
|
||||||
|
Kronos Worldwide Director Services
|
$62,000
|
$19,992
|
$81,992
|
|
(a)
|
Represents cash retainers and meeting fees earned for 2021 director services.
|
|
(b)
|
For the purposes of this table, the stock awards comprised the following number of shares and were valued at the following closing price per share of such shares on their date of grant, consistent with the
requirements of Financial Accounting Standards Board Accounting Standards Codification Topic 718:
|
|
Common Stock
|
Shares Granted
|
Date of Grant
|
Closing Price on Date of Grant
|
Dollar Value of Stock Award
|
|
CompX Class A Common Stock
|
900
|
05/26/21
|
$22.75
|
$20,475
|
|
Kronos Worldwide Common Stock
|
1,200
|
05/19/21
|
16.66
|
19,992
|
|
(5)
|
Gen. Stafford (ret.) receives an annual lifetime benefit payment of $15,000 as a result of his service on our board of directors prior to 1987.
|
|
•
|
we do not grant equity awards to our employees, officers or other persons who provide services to us under the ISAs with Contran, which mitigates taking excessive or inappropriate risk for short-term gain
that might be rewarded by equity compensation;
|
|
•
|
certain senior employees of CompX and Kronos Worldwide are eligible to receive incentive bonus payments that are determined on a discretionary basis and do not guarantee the employee a particular level of
bonus based on the achievement of a specified performance or financial target, which also mitigates taking excessive or inappropriate risk for short-term gain;
|
|
•
|
certain key employees of CompX and Kronos Worldwide are eligible to receive bonuses determined in part on the achievement of specified performance or financial targets based on the respective business
plan for the year (with respect to CompX) or on the achievement of specified performance or financial targets (with respect to Kronos Worldwide), but the chance of such employees undertaking actions with excessive or inappropriate risk
for short-term gain in order to achieve such bonuses is mitigated because:
|
|
o
|
the senior officers employed by CompX or Kronos Worldwide who are responsible for setting the specified performance or financial targets or establishing and executing such business plan are not eligible
to receive such bonuses based on the business plan, but instead are only eligible for the discretionary-based bonuses described above; and
|
|
o
|
there exist ceilings for our other CompX and Kronos Worldwide key employee bonuses (which are not a significant part of their compensation) regardless of the actual level of our financial performance
achieved;
|
|
•
|
our officers and other persons who provide services to us under our ISAs with Contran do not receive compensation from us directly and are employed by Contran, one of our parent corporations, which aligns
such officers and persons with the long-term interests of our shareholders;
|
|
•
|
since we are a controlled company, as previously discussed, management has a strong incentive to understand and perform in the long-term interests of our shareholders; and
|
|
•
|
our experience is that our employees are appropriately motivated by our compensation policies and practices to achieve profits and other business objectives in compliance with our oversight of material
short and long-term risks.
|
|
•
|
Risk management program – a program pursuant to which Contran and certain of its subsidiaries and related entities, including us, as a group purchase insurance coverage and risk management services, with
the costs thereof apportioned among the participating companies; and
|
|
•
|
Tax sharing agreement – our tax sharing agreement with Valhi, pursuant to which cash payments for income taxes are periodically paid by us to Valhi or received by us from Valhi, as applicable (such tax
sharing agreement being appropriate, given that we and our qualifying subsidiaries are members of the consolidated U.S. federal income tax return, and certain state and local jurisdiction income tax returns, of which Contran is the
parent company).
|
|
•
|
intercorporate transactions, such as guarantees, management, expense and insurance sharing arrangements, tax sharing agreements, 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
|
|
•
|
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 an equity interest in another
related party.
|
|
Recipient of Services from Contran under an ISA
|
Fees Paid to Contran under the ISAs in 2021
|
Fees Expected to be Paid to Contran under the ISAs in 2022
|
||||||
|
(In millions)
|
||||||||
|
NL Industries, Inc.
|
$
|
5.8
|
$
|
5.7
|
||||
|
Kronos Worldwide, Inc.
|
24.0
|
24.4
|
||||||
|
CompX International Inc.
|
3.4
|
3.4
|
||||||
|
Total
|
$
|
33.2
|
$
|
33.5
|
||||
|
•
|
the premiums for the insurance policies are set by the underwriters for the insurance or reinsurance carriers bearing the risk, which in almost all cases are third parties (and where Tall Pines retains
risk, the premiums are based on quotes provided by third parties), without any markup by Tall Pines or the combined risk management program;
|
|
•
|
the method by which the insurance premiums are allocated among the companies participating in the risk management program is generally the same as the basis used by the insurance or reinsurance carriers
to establish the premiums for such insurance/reinsurance (i.e. the dominant premium factor, which is the factor that has the greatest impact on the premium, such as revenues, payroll or employee
headcount);
|
|
•
|
the commissions received by Tall Pines from the reinsurance underwriters and the fees assessed by Tall Pines for certain policies it underwrites are in amounts equal to the commissions or fees which would be received by third-party
underwriters;
|
|
•
|
the insurance coverages provided to us by the risk management program are sufficient and adequate for our purposes; and
|
|
•
|
the benefits of our participation in the risk management program include, among others, (a) greater spread of risk among the companies participating in the risk management program provides us with the ability to obtain broader
coverage, with strong/solvent underwriters, at a reduced cost as compared to the coverage and cost that would be available if we were to purchase insurance on a stand-alone basis, (b) the ability to obtain centralized premium and claims
reporting, and (c) the ability to have access to experienced risk management personnel, including in the areas of loss controls and claims processing.
|
|
•
|
the tax sharing agreement is consistent with accounting principles generally accepted in the United States of America, and consistent with applicable law and regulations; and
|
|
•
|
our income tax accounts are included in the scope of the annual audit of our consolidated financial statements performed by PwC, and PwC makes periodic reports to the committee regarding income tax
matters related to us.
|
|
Cecil H. Moore, Jr.
Chairman of our Audit Committee
|
John E. Harper
Member of our Audit Committee
|
|
|
Meredith W. Mendes
Member of our Audit Committee
|
Thomas P. Stafford
Member of our Audit Committee
|
|
|
•
|
review our quarterly unaudited condensed consolidated financial statements to be included in our Quarterly Reports on Form 10-Q for the second and third quarters of 2022 and the first quarter of 2023; and
|
|
•
|
audit our annual consolidated financial statements and (if required) internal control over financial reporting for the year ending December 31, 2022.
|
|
Entity (1)
|
Audit
Fees (2)
|
Audit
Related
Fees (3)
|
Tax
Fees (4)
|
All Other
Fees
|
Total
|
|||||||||||||||
|
(in thousands)
|
||||||||||||||||||||
|
NL and Subsidiaries
|
||||||||||||||||||||
|
2020
|
$
|
695
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
695
|
||||||||||
|
2021
|
697
|
-0-
|
-0-
|
-0-
|
697
|
|||||||||||||||
|
Kronos Worldwide and Subsidiaries (5)
|
||||||||||||||||||||
|
2020
|
3,938
|
27
|
8
|
-0-
|
3,973
|
|||||||||||||||
|
2021
|
4,071
|
41
|
6
|
-0-
|
4,118
|
|||||||||||||||
|
CompX and Subsidiaries
|
||||||||||||||||||||
|
2020
|
946
|
-0-
|
-0-
|
-0-
|
946
|
|||||||||||||||
|
2021
|
991
|
-0-
|
-0-
|
-0-
|
991
|
|||||||||||||||
|
Total
|
||||||||||||||||||||
|
2020
|
5,579
|
27
|
8
|
-0-
|
5,614
|
|||||||||||||||
|
2021
|
5,759
|
41
|
6
|
-0-
|
5,806
|
|||||||||||||||
|
(1)
|
Fees are reported without duplication.
|
|
(2)
|
Fees for the following services:
|
| (a) |
audits of consolidated year-end financial statements for each year and, as applicable, of internal control over financial reporting;
|
| (b) |
reviews of the unaudited quarterly financial statements appearing in Forms 10-Q for each of the first three quarters of each year;
|
| (c) |
consents and/or assistance with registration statements filed with the SEC;
|
| (d) |
normally provided statutory or regulatory filings or engagements for each year; and
|
| (e) |
the estimated out-of-pocket costs PwC incurred in providing all of such services, for which PwC is reimbursed.
|
|
(3)
|
Fees for assurance and related services reasonably related to the audit or review of financial statements for each year. These services included accounting consultations and attest services concerning
financial accounting and reporting standards and advice concerning internal control over financial reporting, as applicable.
|
|
(4)
|
Permitted fees for tax compliance, tax advice and tax planning services.
|
|
(5)
|
We account for our interest in Kronos Worldwide by the equity method.
|
|
•
|
the committee must specifically preapprove, among other things, the engagement of our independent registered public accounting firm for audits and quarterly reviews of our financial statements, services
associated with certain regulatory filings, including the filing of registration statements with the SEC, and services associated with potential business acquisitions and dispositions involving us; and
|
|
•
|
for certain categories of other permitted services provided by our independent registered public accounting firm, the committee may preapprove limits on the aggregate fees in any calendar year without
specific approval of the service.
|
|
•
|
audit-related services, such as certain consultations regarding accounting treatments or interpretations and assistance in responding to certain SEC comment letters;
|
|
•
|
audit-related services, such as certain other consultations regarding accounting treatments or interpretations, employee benefit plan audits, due diligence and control reviews;
|
|
•
|
tax services, such as tax compliance and consulting, transfer pricing, customs and duties and expatriate tax services; and
|
|
•
|
assistance with corporate governance matters and filing documents in foreign jurisdictions not involving the practice of law.
|
|
•
|
you no longer wish to participate in householding and would prefer to receive a separate notice of internet availability of proxy materials; or
|
|
•
|
you receive multiple copies of the notice of internet availability of proxy materials at your address and would like to request householding of our communications.
|
|
|
|
|
PLEASE MARK YOUR VOTE IN BLUE
OR BLACK INK AS SHOWN HERE ☒
|
|
FOR
|
WITHHOLD
|
FOR
|
WITHHOLD
|
||
|
01 – Loretta J. Feehan
|
☐
|
☐
|
04 – Meredith W. Mendes
|
☐
|
☐
|
|
02 – Robert D. Graham
|
☐
|
☐
|
05 – Cecil H. Moore, Jr.
|
☐
|
☐
|
|
03 – John E. Harper
|
☐
|
☐
|
06 - Thomas P. Stafford
|
☐
|
☐
|
|
2. Nonbinding advisory vote approving executive compensation.
|
FOR
☐
|
AGAINST
☐
|
ABSTAIN
☐
|
3. In their discretion, the proxies are authorized to vote upon such other business as many properly come before the meeting and any adjournment or postponement thereof.
|
|
I plan on attending the meeting ☐
|
|
|
Please sign exactly as your name(s) appear(s) hereon. Where there is more than one holder, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by an authorized officer. If a partnership, please sign in partnership name by an authorized person.
|
|
|
Signature of Stockholder Date
|
|
|
Signature of Stockholder Date
|
|
CONTROL NUMBER
|
||
|
CONTROL NUMBER
|
||
|
(
|
||||
|
INTERNET
Vote Your Proxy on the Internet: Go to
www.AALvote.com/NL
Have your proxy card
available when you access the above
website. Follow the prompts to vote your shares.
|
TELEPHONE
Vote Your Proxy by Phone: Call 1 (866) 804-9616
Use any touch-tone telephone to vote your proxy.
Have your proxy card available when you call.
Follow the voting instructions to vote your shares.
|
MAIL
Vote Your Proxy by Mail:
Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided.
|
