SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
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[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Materials Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
CompX International Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[LOGO GOES HERE]
CompX International Inc.
16825 Northchase Drive, Suite 1200
Two Greenspoint Plaza
Houston, Texas 77060
March 30, 2000
To Our Stockholders:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of CompX International Inc., which will be held on Thursday, May 11, 2000, at
10:00 a.m., local time, at the corporate offices of Valhi, Inc. at Three Lincoln
Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas. The matters to be acted
upon at the meeting are described in the attached Notice of Annual Meeting of
Stockholders and Proxy Statement.
Whether or not you plan to attend the meeting, please complete, date, sign
and return the enclosed proxy card or voting instruction form in the
accompanying envelope as promptly as possible to ensure that your shares are
represented and voted in accordance with your wishes.
Sincerely,
Joseph S. Compofelice
Chairman of the Board,
President and
Chief Executive Officer
CompX International Inc.
16825 Northchase Drive, Suite 1200
Two Greenspoint Plaza
Houston, Texas 77060
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 11, 2000
To the Stockholders of CompX International Inc.:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders (the
"Meeting") of CompX International Inc., a Delaware corporation ("CompX"), will
be held on Thursday, May 11, 2000, at 10:00 a.m., local time, at the corporate
offices of Valhi, Inc. at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700,
Dallas, Texas for the following purposes:
(1) To elect seven directors to serve until the 2001 Annual Meeting of
Stockholders and until their successors are duly elected and qualified or
their earlier removal, resignation or death; and
(2) To transact such other business as may properly come before the Meeting or
any adjournment or postponement thereof.
The board of directors of CompX set the close of business on March 22, 2000
as the record date (the "Record Date") for the Meeting. Only holders of CompX's
class A common stock, par value $0.01 per share, and class B common stock, par
value $0.01 per share, at the close of business on the Record Date are entitled
to notice of, and to vote at, the Meeting. CompX's stock transfer books will not
be closed following the Record Date. A complete list of stockholders entitled to
vote at the Meeting will be available for examination during normal business
hours by any stockholder of CompX, for purposes related to the Meeting, for a
period of ten days prior to the Meeting at the place where CompX will hold the
Meeting.
You are cordially invited to attend the Meeting. Whether or not you plan to
attend the Meeting in person, please complete, date and sign the accompanying
proxy card or voting instruction form and return it promptly in the enclosed
envelope to ensure that your shares are represented and voted in accordance with
your wishes. You may revoke your proxy by following the procedures set forth in
the accompanying proxy statement. If you choose, you may still vote in person at
the Meeting even though you previously submitted your proxy.
By Order of the Board of Directors,
A. Andrew R. Louis, Secretary
Houston, Texas
March 30, 2000
CompX International Inc.
16825 Northchase Drive, Suite 1200
Two Greenspoint Plaza
Houston, Texas 77060
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PROXY STATEMENT
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GENERAL INFORMATION
This proxy statement and the accompanying proxy card or voting instruction
form are being furnished in connection with the solicitation of proxies by and
on behalf of the board of directors (the "Board of Directors") of CompX
International Inc., a Delaware corporation ("CompX"), for use at the 2000 Annual
Meeting of Stockholders of CompX to be held on Thursday, May 11, 2000 and at any
adjournment or postponement thereof (the "Meeting"). The accompanying Notice of
Annual Meeting of Stockholders (the "Notice") sets forth the time, place and
purposes of the Meeting. The Notice, this proxy statement, the accompanying
proxy card or voting instruction form and CompX's Annual Report to Stockholders,
which includes CompX's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (the "Annual Report"), are first being mailed to the holders
of CompX's class A common stock, par value $0.01 per share ("CompX Class A
Common Stock"), and CompX's class B common stock, par value $0.01 per share
("CompX Class B Common Stock" and collectively with the CompX Class A Common
Stock, the "CompX Common Stock"), on or about April 5, 2000. CompX's executive
offices are located at 16825 Northchase Drive, Suite 1200, Two Greenspoint
Plaza, Houston, Texas 77060.
QUORUM, VOTING RIGHTS AND PROXY SOLICITATION
The record date set by the Board of Directors for the determination of
stockholders entitled to notice of and to vote at the Meeting was the close of
business on March 22, 2000 (the "Record Date"). As of the Record Date, there
were 6,149,380 shares of CompX Class A Common Stock and 10,000,000 shares of
CompX Class B Common Stock issued and outstanding. Each share of CompX Class A
Common Stock entitles its holder to one vote on all matters to be acted on at
the Meeting. Each share of CompX Class B Common Stock entitles its holder to ten
votes with respect to the election of directors and one vote on all other
matters to be acted on at the Meeting. The presence, in person or by proxy, of
the holders of a majority of the votes of CompX Common Stock entitled to vote at
the Meeting, counted as a single class, is necessary to constitute a quorum for
the conduct of business at the Meeting. Shares of CompX Common Stock that are
voted to abstain from any business coming before the Meeting and broker/nominee
non-votes will be counted as being in attendance at the Meeting for purposes of
determining whether a quorum is present.
A plurality of the affirmative votes of the CompX Class A and Class B
Common Stock, voting together as a single class, represented and entitled to be
voted at the Meeting, is necessary to elect a director of CompX. The
accompanying proxy card or voting instruction form provides space for a
stockholder to withhold authority to vote for any or all of the nominees of the
Board of Directors. Neither shares as to which the 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.
Except as applicable laws may otherwise provide, any other matter that may
properly come before the Meeting will require the affirmative vote of a majority
of the votes cast at the Meeting for approval.
Unless otherwise specified, the agents designated in the proxy card or
voting instruction form will vote the shares represented by a proxy at the
Meeting "FOR" the election of the nominees for director of the Board of
Directors and, to the extent allowed by the federal securities laws, in the
discretion of the agents on any other matter that may properly come before the
Meeting.
Valcor, Inc. ("Valcor") directly holds 100% of the outstanding shares of
CompX Class B Common Stock as of the Record Date, which represents approximately
61.9% of the outstanding shares of CompX Class A and B Common Stock combined.
Valcor is a wholly owned subsidiary of Valhi, Inc. ("Valhi") and both are
affiliates of Contran Corporation ("Contran"). Valhi directly holds
approximately 6.1% of the outstanding shares of CompX Class A Common Stock as of
the Record Date (approximately 2.3% of the combined voting power of the CompX
Common Stock). Together Valcor and Valhi hold approximately 64.2% of the
combined voting power of the CompX Common Stock (approximately 94.6% for the
election of directors) as of the Record Date. Both Valhi and Contran are
diversified holding companies that Harold C. Simmons may be deemed to control.
Valcor and Valhi have indicated their intention to have their shares of
CompX Common Stock represented at the Meeting and voted "FOR" the election of
each of the nominees for director of the Board of Directors. If Valcor alone
attends the Meeting in person or by proxy and votes as indicated, the Meeting
will have a quorum present and the stockholders will elect all the nominees for
the Board of Directors.
Harris Trust and Savings Bank or its successor ("Harris"), the transfer
agent and registrar for CompX Class A and Class B Common Stock as of the Record
Date, has been appointed by the Board of Directors to ascertain the number of
shares represented, receive proxies and ballots, tabulate the vote and serve as
inspector of election at the Meeting.
Each holder of record of CompX Common Stock giving the proxy enclosed with
this proxy statement may revoke it at any time prior to the voting of such stock
at the Meeting by delivering to Harris a written revocation of the proxy,
delivering to Harris a duly executed proxy bearing a later date or by voting in
person at the Meeting. Attendance by a stockholder at the Meeting will not in
itself constitute the revocation of such stockholder's proxy.
Employees participating in the National Cabinet Lock, Inc. Contributory
Retirement Plan, as amended (the "NCL 401(k) Plan"), and The 401(k) Plan of The
Fort Lock Corporation who are beneficial owners of CompX Class A Common Stock
under such plans may use the enclosed voting instruction form to instruct the
respective plan trustee how to vote the shares held for such employees. Each
trustee will, subject to the terms of the respective plan, vote such shares in
accordance with such instructions.
The Board of Directors is making this proxy solicitation. CompX will pay
all expenses related to the solicitation, including charges for preparing,
printing, assembling and distributing all materials delivered to stockholders.
In addition to solicitation by mail, directors, officers and regular employees
of CompX may solicit proxies by telephone or in person for which such persons
will receive no additional compensation. Upon request, CompX will reimburse
banking institutions, brokerage firms, custodians, trustees, nominees and
fiduciaries for their reasonable out-of-pocket expenses incurred in distributing
proxy materials and voting instructions to the beneficial owners of CompX Class
A Common Stock that such entities hold of record.
ELECTION OF DIRECTORS
The bylaws of CompX provide that the Board of Directors shall consist of
not less than one and not more than fifteen persons, as determined from time to
time by the Board of Directors in its discretion. The Board of Directors has
currently set the number of directors at seven. The directors elected at the
Meeting will hold office until the 2001 Annual Meeting of Stockholders and until
their successors are duly elected and qualified or their earlier removal,
resignation or death.
All of the nominees are currently directors of CompX whose terms will
expire at the Meeting. All of the nominees have agreed to serve if elected. If
any nominee is not available for election at the Meeting, a proxy will be voted
"FOR" an alternate nominee to be selected by the Board of Directors, unless the
stockholder executing such proxy withholds authority to vote for such nominee.
The Board of Directors believes that all of its present nominees will be
available for election at the Meeting and will serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
FOLLOWING NOMINEES FOR DIRECTOR.
Nominees for Director. The following information has been provided by the
respective nominees for election as directors of CompX for terms expiring at the
2001 Annual Meeting of Stockholders.
Paul M. Bass, Jr., age 64, has been a director of CompX since 1997 and is a
member of the audit committee and chairman of CompX's management development and
compensation committee (the "MD&C Committee"). Mr. Bass also serves as a
director of Contran's less-than-majority-owned affiliate, Keystone Consolidated
Industries, Inc. ("Keystone"), a steel fabricated wire products, industrial wire
and carbon steel rod company. From prior to 1995, Mr. Bass has served as vice
chairman of First Southwest Company, a privately owned investment banking firm.
Mr. Bass is also chairman of the board of MorAmerica Private Equities Company
and a director and chairman of the audit committee of California Federal Bank.
Mr. Bass is currently serving as chairman of the board of Zale Lipshy University
Hospital and as chairman of the board of trustees of the Southwestern Medical
Foundation.
David A. Bowers, age 62, has served as CompX's vice president and president
of CompX Security Products since January 1999 and as a director of CompX since
1993. From 1993 through 1998, Mr. Bowers served as president of CompX and from
1993 to February 1998 he served as chief executive officer of CompX. Mr. Bowers
has been employed by CompX and its predecessors since 1960 in various sales,
marketing and executive positions, having been named president of CompX's
security products and related businesses in 1979. Mr. Bowers is a trustee and
chairman of the board of Monmouth College, Monmouth, Illinois.
Joseph S. Compofelice, age 50, has served as chief executive officer and
chairman of the board of CompX since February 1998, president of CompX since
January 1999 and director of CompX since December 1997. From December 1997 to
February 1998, he served as CompX's executive vice president. Mr. Compofelice
has also served since 1995 as a director of NL Industries, Inc. ("NL"), Valhi's
majority-owned titanium dioxide pigments subsidiary. He has served since prior
to 1995, except for a period during 1996, as a director of Titanium Metals
Corporation ("TIMET"), a company engaged in the titanium metals industry of
which Tremont Corporation ("Tremont") owns approximately 39%. From prior to 1995
to 1998, Mr. Compofelice served as vice president and chief financial officer of
Tremont, a company of which Valhi owns approximately 60% and that principally
owns interests in NL and TIMET. From prior to 1995 to 1998, Mr. Compofelice also
served as vice president and chief financial officer of NL and as executive vice
president of Valhi. From 1996 to 1998, he served as vice president and chief
financial officer of TIMET. Mr. Compofelice has served as an executive officer
or director of various companies related to Valhi and Contran since 1988.
Edward J. Hardin, age 57, has served as a director of CompX since 1997 and
is chairman of CompX's audit committee. Mr. Hardin has served as a director of
Valhi since February 2000. Mr. Hardin has been a partner of the law firm of
Rogers & Hardin LLP since its formation in 1976. Mr. Hardin serves as a director
of Westrup, Inc., a manufacturer of seed processing machinery, and as chairman
of the board of the Harvard Center for the Study of World Religions.
Ann Manix, age 47, has served as a director of CompX since June 1998 and is
a member of the MD&C Committee. Since prior to 1995, Ms. Manix has served as a
managing partner of Ducker Research Corporation, a privately held industrial
research firm.
Glenn R. Simmons, age 72, has served as a director of CompX since 1993.
From 1993 to 1998, Mr. Simmons served as chairman of the board of CompX. Mr.
Simmons has served as a director of Valhi or certain of Valhi's predecessors
since prior to 1995. Mr. Simmons has been vice chairman of the board of Valhi
and Contran since prior to 1995. Mr. Simmons also serves as a director of NL,
Tremont and TIMET and as chairman of the board of Keystone. Mr. Simmons has been
an executive officer or director of various companies related to Contran since
1969. Mr. Simmons is a brother of Harold C. Simmons. See footnote (4) to the
"Security Ownership-Ownership of CompX" table below for a description of certain
entities that Harold C. Simmons may be deemed to control, including, Contran,
Valhi and CompX.
Steven L. Watson, age 49, has served as a director of CompX since February
2000. Mr. Watson has been president and a director of Valhi and Contran since
1998. Mr. Watson also serves as a director of Keystone and TIMET. From prior to
1995 to 1998, Mr. Watson served as vice president and secretary of Valhi and
Contran. Mr. Watson also served as vice president and secretary of CompX from
1993 to 1997. Mr. Watson has served as an executive officer and/or director of
various companies related to Valhi and Contran since 1980.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings and took action by written
consent in lieu of a meeting on two occasions in 1999. Each of the directors
participated in at least 75% of all of the 1999 meetings of the Board of
Directors and its committees on which the director served.
The Board of Directors has established and delegated authority to the
following standing committees.
Audit Committee. The principal responsibilities of the audit committee are
to select CompX's independent auditors; to review with the independent auditors
the scope and results of the annual auditing engagement, the procedures for
internal auditing, the system of internal accounting controls and internal audit
results; and to direct and supervise special audit inquiries. The current
members of the audit committee are Edward J. Hardin (chairman) and Paul M. Bass,
Jr. The audit committee held three meetings in 1999.
Management Development and Compensation Committee. The principal
responsibilities of the MD&C Committee are to review and approve certain matters
involving executive compensation; to make recommendations to the Board of
Directors regarding certain compensation matters involving the chief executive
officer; to take action or to review and make recommendations to the Board of
Directors regarding CompX's employee benefit plans or programs; to administer
and grant awards under the CompX International Inc. 1997 Long-Term Incentive
Plan (the "1997 Plan"); to administer and grant certain awards under the CompX
International Inc. Variable Compensation Plan; and to review and administer such
other compensation matters as the Board of Directors may direct from time to
time. The current members of the MD&C Committee are Paul M. Bass, Jr. (chairman)
and Ann Manix. The MD&C Committee held two meetings in 1999 and took action by
written consent in lieu of a meeting on one occasion.
The Board of Directors does not have a nominating committee or any
committee performing a similar function. All matters that would be considered by
such a committee are acted upon by the full Board of Directors. The Board of
Directors will consider recommendations by stockholders of CompX with respect to
the election of directors if such recommendations are submitted in writing to
the secretary of CompX and received not later than December 31 of the year prior
to the next annual meeting of stockholders. Such recommendations should be
accompanied by a full statement of qualifications and confirmation of the
nominee's willingness to serve.
Members of the standing committees will be elected at the annual meeting of
the Board of Directors immediately following the Meeting. The Board of Directors
has previously established, and from time to time may establish, other
committees to assist it in the discharge of its responsibilities.
EXECUTIVE OFFICERS
Set forth below is certain information relating to the current executive
officers of CompX. Each executive officer serves at the pleasure of the Board of
Directors. Biographical information with respect to Joseph S. Compofelice and
David A. Bowers is set forth under "Election of Directors-Nominees for
Director."
Name Age Position(s)
- ---------------------------- ----- ------------------------------------------------------------
Joseph S. Compofelice....... 50 Chairman of the Board, President and Chief Executive Officer
David A. Bowers............. 62 Vice President and President of CompX Security Products
Robert L. Janson............ 47 Vice President, Business Development and Marketing
John A. Miller.............. 51 Vice President, Chief Financial Officer and Treasurer
Ronald J. Simmons........... 61 Vice President and President of CompX Americas
Todd W. Strange............. 42 Vice President and Controller
Robert L. Janson has served as vice president, business development and
marketing of CompX since March 2000. From 1997 to March 2000, Mr. Janson served
as vice president of international business development for Accuride
International, Inc., a leading manufacturer of ball bearing drawer slides
serving multiple industries. From prior to 1995 to 1997, Mr. Janson served as
senior vice president, global marketing and product development for the Toro
Company, a manufacturer of irrigation products for commercial, retail and
agricultural markets.
John A. Miller has served as vice president, chief financial officer and
treasurer of CompX since January 1999. From 1995 to December 1998, Mr. Miller
served as principal in the Advanced Cost Management Competency Center of Arthur
Andersen LLP. Prior to 1995, he served as president and owner of Miller Newlin
Consulting, a management consulting firm.
Ronald J. Simmons has served as CompX's vice president and president of
CompX Americas since January 1999. From 1997 to 1998, Mr. Simmons served as a
vice president of CompX. He also has served as president of CompX's wholly owned
subsidiary, Waterloo Furniture Components Limited ("Waterloo"), since prior to
1995.
Todd W. Strange has served as vice president and controller of CompX since
December 1998. From 1997 to 1998, Mr. Strange served as chief financial officer
of Draper-Texmaco, Inc., a manufacturer of textile machinery. From 1995 to 1997,
he served as vice president of finance and treasurer of BPM Technology, Inc., a
manufacturer of office machinery that produced three dimensional models of
objects. Prior to 1995, Mr. Strange was corporate accounting manager for KEMET
Electronics Corporation, a manufacturer of electronic capacitors.
SECURITY OWNERSHIP
Ownership of CompX. The following table and footnotes set forth as of the
Record Date the beneficial ownership, as defined by regulations of the
Securities and Exchange Commission (the "Commission"), of CompX Class A and
Class B Common Stock held by each person or group of persons known to CompX to
own beneficially more than 5% of the outstanding shares of CompX Class A or
Class B Common Stock, each director of CompX, each executive officer of CompX
named in the Summary Compensation Table below (a "named executive officer") and
all directors and executive officers of CompX as a group. See footnote (4) below
for information concerning individuals and entities that may be deemed to own
indirectly and beneficially those shares of CompX Common Stock that Valcor and
Valhi directly hold. All information is taken from or based upon ownership
filings made by such persons with the Commission or upon information provided by
such persons.
CompX Class
A and Class
B Common
CompX Class A Common Stock CompX Class B Common Stock Stock
-------------------------------- ---------------------------- Combined
Amount and Nature of Percent Amount and Nature Percent of
Beneficial of Class of Beneficial Percent Class
Beneficial Owner Ownership (1) (1)(2) Ownership (1) of Class (1)(2)
- ---------------- -------------------- --------- ----------------- ---------- ----------
Valcor, Inc................... -0- (3)(4) -0- 10,000,000 (3)(4) 100% 61.9%
Valhi, Inc.................... 374,000 (3)(4) 6.1% -0- (3)(4) -0- 2.3%
------- ----- ---------- ---- -----
374,000 (4) 6.1% 10,000,000 (4) 100% 64.2%
T. Rowe Price Associates, Inc. 1,152,400 (5) 18.7% -0- -0- 7.1%
David L. Babson and Company
Incorporated............... 826,300 (6) 13.4% -0- -0- 5.1%
FMR Corp...................... 785,266 (7) 12.8% -0- -0- 4.9%
MassMutual Institutional Funds
- MassMutual Small Cap
Value Equity Fund.......... 446,300 (8) 7.3% -0- -0- 2.8%
Dalton, Greiner, Hartman,
Maher & Co................. 315,400 (9) 5.1% -0- -0- 2.0%
Paul M. Bass, Jr.............. 1,300 (4)(10) * -0- -0- *
David A. Bowers............... 36,220 (4)(10) * -0- -0- *
Joseph S. Compofelice......... 151,200 (10)(11) 2.4% -0- -0- *
Edward J. Hardin.............. 4,800 (10) * -0- -0- *
Ann Manix..................... 900 (10) * -0- -0- *
Glenn R. Simmons.............. 27,120 (4)(10) * -0- -0- *
Steven L. Watson.............. 5,000 (4)(10) * -0- -0- *
Ronald J. Simmons............. 19,320 (10) * -0- -0- *
John A. Miller................ 8,000 (10) * -0- -0- *
Todd W. Strange............... 3,000 (10) * -0- -0- *
All directors and executive
officers of CompX as a
group (11 persons) ........ 256,860 (4)(10)(11) 4.1% -0- -0- 1.6%
- ------------
* Less than 1%.
(1) Except as otherwise noted, the listed entities, individuals and group have
sole investment power and sole voting power as to all shares of CompX
Common Stock set forth opposite their names. The number of shares and
percentage of ownership of CompX Class A Common Stock for each person or
group assumes the exercise by such person or group (exclusive of others) of
stock options that such person or group may exercise within 60 days
subsequent to the Record Date.
(2) The percentages are based on 6,149,380 shares of CompX Class A Common Stock
outstanding as of the Record Date.
(3) The business address of Valcor and Valhi is Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240-2697.
(4) Valhi is the direct holder of 100% of the outstanding common stock of
Valcor. As a result, as of the Record Date, Valhi holds, directly and
indirectly through Valcor, approximately 64.2% of the combined voting power
of the CompX Common Stock (approximately 94.6% for the election of
directors). In certain instances, shares of CompX Class B Common Stock are
automatically convertible into shares of CompX Class A Common Stock.
ValhiGroup, Inc. ("VGI"), National City Lines, Inc. ("National") and
Contran are the direct holders of approximately 81.8%, 9.5% and 1.2%,
respectively, of the outstanding common stock of Valhi. National, NOA, Inc.
("NOA") and Dixie Holding Company ("Dixie Holding") are the direct holders
of approximately 73.3%, 11.4% and 15.3%, respectively, of the outstanding
common stock of VGI. Contran and NOA are the direct holders of
approximately 85.7% and 14.3%, respectively, of the outstanding common
stock of National. Contran and Southwest Louisiana Land Company, Inc.
("Southwest") are the direct holders of approximately 49.9% and 50.1%,
respectively, of the outstanding common stock of NOA. Dixie Rice
Agricultural Corporation, Inc. ("Dixie Rice") is the direct holder of 100%
of the outstanding common stock of Dixie Holding. Contran is the holder of
100% of the outstanding common stock of Dixie Rice and approximately 88.9%
of the outstanding common stock of Southwest. Substantially all of
Contran's outstanding voting stock is held either by trusts established for
the benefit of certain children and grandchildren of Harold C. Simmons (the
"Trusts"), of which Mr. Simmons is the sole trustee, or by Mr. Simmons
directly. As sole trustee of the Trusts, Mr. Simmons has the power to vote
and direct the disposition of the shares of Contran stock held by the
Trusts. Mr. Simmons, however, disclaims beneficial ownership of any Contran
shares that the Trusts hold.
Harold C. Simmons is the chairman of the board and chief executive officer
of Valcor, Valhi, VGI, National, NOA, Dixie Holding, Dixie Rice, Southwest
and Contran. By virtue of the holding of the offices, the stock ownership
and his service as trustee, all as described above, Mr. 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 the
shares of CompX Common Stock directly held by Valcor or Valhi. Mr. Simmons,
however, disclaims beneficial ownership of the shares of CompX Common Stock
beneficially owned, directly or indirectly, by any of such entities.
The Harold Simmons Foundation, Inc. (the "Foundation") directly holds
approximately 0.5% of the outstanding shares of Valhi common stock. The
Foundation is a tax-exempt foundation organized for charitable purposes.
Harold C. Simmons is the chairman of the board and chief executive officer
of the Foundation and may be deemed to control the Foundation. Mr. Simmons,
however, disclaims beneficial ownership of any shares of Valhi common stock
held by the Foundation.
The Contran Deferred Compensation Trust No. 2 (the "CDCT No. 2") directly
holds approximately 0.4% of the outstanding Valhi common stock. Boston Safe
Deposit and Trust Company serves as trustee of the CDCT No. 2. Contran
established the CDCT No. 2 as an irrevocable "rabbi trust" to assist
Contran in meeting certain deferred compensation obligations that it owes
to Harold C. Simmons. If the CDCT No. 2 assets are insufficient to satisfy
such obligations, Contran must satisfy the balance of such obligations.
Pursuant to the terms of the CDCT No. 2, Contran retains the power to vote
the shares held by the CDCT No. 2, retains dispositive power over such
shares and may be deemed the indirect beneficial owner of such shares. Mr.
Simmons, however, disclaims such beneficial ownership of the shares
beneficially owned, directly or indirectly, by the CDCT No. 2, except to
the extent of his interest as a beneficiary of the CDCT No. 2.
The Combined Master Retirement Trust (the "Master Trust") holds
approximately 0.1% of the outstanding shares of Valhi common stock. Valhi
established the Master Trust to permit the collective investment by master
trusts that maintain the assets of certain employee benefit plans Valhi and
related companies adopt. Harold C. Simmons is the sole trustee of the
Master Trust and a member of the trust investment committee for the Master
Trust. Paul M. Bass, Jr. is also a member of the trust investment committee
for the Master Trust. Valhi's board of directors select the trustee and
members of the trust investment committee for the Master Trust. Harold C.
Simmons and Glenn R. Simmons are members of Valhi's board of directors and
along with David A. Bowers and Steven L. Watson are participants in one or
more of the employee benefit plans that invest through the Master Trust.
Each of such persons disclaims beneficial ownership of the shares held by
the Master Trust, except to the extent of his individual vested beneficial
interest in the assets held by the Master Trust.
For purposes of calculating the percentage ownership of the outstanding
shares of Valhi common stock as of the Record Date, 1,186,200 shares of
Valhi common stock that a subsidiary of NL, Valhi's majority-owned titanium
dioxide pigments subsidiary, directly holds and 1,000,000 shares of Valhi
common stock that Valmont Insurance Company ("Valmont"), a wholly owned
subsidiary of Valhi, directly holds are excluded from the amount of Valhi
common stock outstanding. Pursuant to Delaware corporate law, Valhi treats
these excluded shares as treasury stock for voting purposes.
The business address of VGI, National, NOA, Dixie Holding, the Master
Trust, the Foundation and Contran is Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240-2697. The business address of
Dixie Rice is 600 Pasquiere Street, Gueydan, Louisiana 70542. The business
address of Southwest is 402 Canal Street, Houma, Louisiana 70360.
(5) Based on a Schedule 13G/A dated February 14, 2000 T. Rowe Price Associates,
Inc. ("T. Rowe Price") and the T. Rowe Price Small-Cap Stock Fund, Inc.
("T. Rowe Small-Cap Fund") filed with the Commission. These shares are
shares that various individuals and institutional investors own for which
T. Rowe Price is an investment advisor and of which T. Rowe Price has sole
voting power over 338,700 shares and over all of which T. Rowe Price has
sole dispositive power. T. Rowe Small-Cap Fund, an investment company
sponsored by T. Rowe Price, has sole voting power over 485,000 of these
shares. T. Rowe Price expressly disclaims that it is, in fact, the
beneficial owner of these securities. The address of T. Rowe Price and the
T. Rowe Small-Cap Fund is 100 E. Pratt Street, Baltimore, Maryland 21202.
(6) Based on a Schedule 13G/A dated February 1, 2000 David L. Babson and
Company Incorporated ("Babson") filed with the Commission. These shares are
shares that various investment counseling clients own for which Babson is
an investment advisor. The address of Babson is One Memorial Drive,
Cambridge, Massachusetts 02142-1300.
(7) Based on a Schedule 13G/A dated February 14, 2000 FMR Corp., Edward C.
Johnson, 3d and Abigail P. Johnson filed with the Commission. These shares
include (i) 567,566 shares various investment companies own for which
Fidelity Management & Research Company ("Fidelity"), a wholly owned
subsidiary of FMR Corp., is an investment advisor and over which Mr.
Johnson and FMR Corp., through its control of Fidelity, and the investment
companies have sole power to dispose; and (ii) 217,700 shares over which
Fidelity Management Trust Company, a wholly owned subsidiary of FMR Corp.,
serves as investment manager and over which Mr. Johnson and FMR Corp. have
sole voting and dispositive power. Along with Mr. Johnson, Abigail Johnson
may be deemed to be part of a controlling group with respect to FMR Corp.
and may be deemed to have the same voting and dispositive powers over these
shares as Mr. Johnson. The address of the FMR Corp. and Mr. Edward and Ms.
Abigail Johnson is 82 Devonshire Street, Boston, Massachusetts 02109.
(8) Based on a Schedule 13G/A dated February 7, 2000 MassMutual Institutional
Funds - MassMutual Small Cap Value Equity Fund ("MassMutual") filed with
the Commission. These shares are shares that the MassMutual Institutional
Funds own for which Massachusetts Mutual Life Insurance Company is an
investment advisor. The address of MassMutual is 1295 State Street,
Springfield, Massachusetts 01111.
(9) Based on a Schedule 13G dated February 10, 2000 Dalton, Greiner, Hartman,
Maher & Co. ("Dalton Greiner") filed with the Commission. The address of
Dalton Greiner is 1100 Fifth Avenue South, Suite 301, Naples, Florida
34102.
(10) The shares of CompX Class A Common Stock shown as beneficially owned by
such person include the following number of shares such person has the
right to acquire upon the exercise of stock options granted pursuant to the
1997 Plan that such person may exercise within 60 days subsequent to the
Record Date:
Shares of CompX Class A Common
Stock Issuable Upon the
Exercise of Stock Options
Name of Beneficial Owner On or Before May 21, 2000
----------------------------------------------------------------------- --------------------------
Paul M. Bass, Jr....................................................... 800
David A. Bowers........................................................ 13,000
Joseph S. Compofelice.................................................. 40,000
Edward J. Hardin....................................................... 800
Ann Manix.............................................................. 400
Glenn R. Simmons....................................................... 20,400
Steven L. Watson....................................................... 4,000
Ronald J. Simmons...................................................... 10,000
John A. Miller......................................................... 8,000
Todd W. Strange........................................................ 3,000
(11) The shares of CompX Class A Common Stock shown as beneficially owned by
Joseph S. Compofelice include 1,000 shares he jointly holds with his wife.
CompX understands that Contran and related entities may consider acquiring
or disposing of shares of CompX Common Stock through open-market or privately
negotiated transactions, depending upon future developments, including, but not
limited to, the availability and alternative uses of funds, the performance of
CompX Class A Common Stock in the market, an assessment of the business of and
prospects for CompX, financial and stock market conditions and other factors
deemed relevant by such entities. CompX may similarly consider acquisitions of
shares of CompX Class A Common Stock and acquisitions or dispositions of
securities issued by related entities.
CompX does not presently intend, and understands that Contran does not
presently intend, to engage in any transaction or series of transactions that
would result in the CompX Class A Common Stock becoming eligible for termination
of registration under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or ceasing to be traded on a national securities exchange.
Ownership of Valhi and its Parents. The following table and footnotes set
forth the beneficial ownership, as of the Record Date, of the common stock, par
value $0.01 per share, of Valhi ("Valhi Common Stock") held by each director of
CompX, each named executive officer and all directors and executive officers of
CompX as a group. Except as set forth below, no securities of CompX's parent
companies are beneficially owned by any director or executive officer of CompX.
All information has been taken from or based upon ownership filings made by such
persons with the Commission or upon information provided by such persons.
Valhi Common Stock
---------------------------------------
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership (1) Class (1)(2)
- ------------------------ ------------------------ ------------
Paul M. Bass, Jr......................................................... 1,000 (3) *
David A. Bowers.......................................................... 5,000 (3)(4) *
Joseph S. Compofelice.................................................... -0- *
Edward J. Hardin......................................................... -0- -0-
Ann Manix................................................................ -0- -0-
Glenn R. Simmons......................................................... 423,183 (3)(4)(5) *
Steven L. Watson......................................................... 328,635 (3)(4) *
Ronald J. Simmons........................................................ 7,000 (4) *
John A. Miller........................................................... -0- -0-
Todd W. Strange.......................................................... -0- -0-
All directors and executive officers of CompX as a group (11 persons).... 764,818 (3)(4)(5) *
- --------------------
* Less than 1%.
(1) Except as otherwise noted, the listed individuals and group have sole
investment power and sole voting power as to all shares of Valhi Common
Stock set forth opposite their names. The number of shares and percentage
of ownership of Valhi Common Stock for each person or group assumes the
exercise by such person or group (exclusive of others) of stock options
that such person or group may exercise within 60 days subsequent to the
Record Date.
(2) The percentages are based on 114,628,514 shares of Valhi Common Stock
outstanding as of the Record Date. For purposes of calculating the
outstanding shares of Valhi Common Stock as of the Record Date, 1,186,200
shares of Valhi Common Stock held by a subsidiary of NL and 1,000,000
shares of Valhi Common Stock held by Valmont are excluded from the amount
of Valhi Common Stock outstanding. Pursuant to Delaware corporate law,
Valhi treats these excluded shares as treasury stock for voting purposes.
(3) Excludes certain shares that such individual may be deemed to indirectly
and beneficially own as to which such individual disclaims beneficial
ownership. See footnote (4) to the "Ownership of CompX" table.
(4) The shares of Valhi Common Stock shown as beneficially owned by such person
include the following number of shares such person has the right to acquire
upon the exercise of stock options Valhi granted pursuant to its stock
option plans that such person may exercise within 60 days subsequent to the
Record Date:
Shares of Valhi Common Stock
Issuable Upon the Exercise
of Stock Options
Name of Beneficial Owner On or Before May 21, 2000
-------------------------------------------------------------------------- ----------------------------
David A. Bowers........................................................... 5,000
Glenn R. Simmons.......................................................... 420,000
Steven L. Watson.......................................................... 310,000
Ronald J. Simmons......................................................... 7,000
(5) The shares of Valhi Common Stock shown as beneficially owned by Glenn R.
Simmons include 800 shares his wife holds in her retirement account, with
respect to which shares he disclaims beneficial ownership.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS AND OTHER INFORMATION
Compensation of Directors. During 1999, directors of CompX who were not
also employees of CompX received an annual retainer of $15,000 paid in quarterly
installments, plus a fee of $1,000 per day for attendance at meetings and as a
daily rate ($125 per hour) for other services rendered on behalf of the Board of
Directors and/or committees thereof. In addition, directors who were members of
the audit committee or MD&C Committee received an annual retainer of $1,000,
paid in quarterly installments, for each committee on which they served. CompX
also reimbursed its nonemployee directors for reasonable expenses incurred in
attending meetings and in the performance of other services rendered on behalf
of the Board of Directors and/or its committees. CompX paid director fees during
1999 to Paul M. Bass, Jr., Edward J. Hardin, Ann Manix, Glenn R. Simmons and a
former director, Robert W. Singer.
In February 1999, the MD&C Committee, upon the recommendation of the Board
of Directors, approved under the 1997 Plan annual grants to CompX's nonemployee
directors. Each annual grant consists of a grant at each annual meeting of
CompX's stockholders of 500 shares of CompX Class A Common Stock and stock
options exercisable for 2,000 shares of CompX Class A Common Stock, which
options will have an exercise price equal to the closing sales price of CompX
Class A Common Stock on the date of grant, have a term of 10 years and vest 20%
over the first five anniversaries of the date of grant.
CompX and Valhi are parties to an intercorporate services agreement (the
"Valhi ISA") pursuant to which Valhi provided certain services to CompX during
1999, including services that Steven L. Watson rendered to CompX. See "Certain
Relationships and Transactions-Intercorporate Services Agreements."
Summary of Cash and Certain Other Compensation of Executive Officers. The
Summary Compensation Table set forth below provides information concerning
annual and long-term compensation paid or accrued by CompX and its subsidiaries
for services rendered to CompX and its subsidiaries during 1999, 1998 and 1997
by CompX's chief executive officer and each of the four other most highly
compensated individuals who were executive officers of CompX at December 31,
1999.
SUMMARY COMPENSATION TABLE
Long Term
Compensation (1)
----------------
Awards
----------------
Annual Compensation (2) Shares
Name and -------------------------- Underlying All Other
Principal Position Year Salary Bonus Options (#) Compensation
- ----------------------------------- ----- -------- ------------ ---------------- --------------
Joseph S. Compofelice (3).......... 1999 $500,000 $ -0- -0- $ 22,348 (5)
Chairman of the Board, President 1998 500,000 1,980,000 (4) 100,000 20,000 (5)
and Chief Executive Officer 1997 -0- -0- -0- -0-
John A. Miller (6)................. 1999 200,000 50,000 (6) 40,000 -0-
Vice President, Chief Financial
Officer and Treasurer
David A. Bowers.................... 1999 160,000 120,000 15,000 22,348 (5)
Vice President and President of 1998 160,000 400,056 (4) 25,000 20,000 (5)
CompX Security Products 1997 147,000 125,000 -0- 20,500 (5)
Ronald J. Simmons (7).............. 1999 147,937 56,987 20,000 3,378 (9)
Vice President and President of 1998 125,514 449,231 (8) 15,000 3,383 (9)
CompX Americas 1997 117,753 86,667 -0- 3,618 (9)
Todd W. Strange (10)............... 1999 99,840 15,000 15,000 -0-
Vice President and Controller 1998 16,640 5,000 -0- -0-
- --------------------
(1) No shares of restricted stock were granted to the named executive officers
nor payouts made to the named executive officers pursuant to long-term
incentive plans during the last three years. Therefore, the columns for
such compensation have been omitted.
(2) Other annual compensation for each of the named executive officers included
perquisites, which perquisites were less than the level required for
reporting pursuant to Commission rules. Therefore, the column for other
annual compensation has been omitted.
(3) Mr. Compofelice became an executive officer of CompX in December 1997.
(4) Each of these named executive officer's 1998 bonus amount includes CompX's
dollar amount valuation of shares of CompX Class A Common Stock that CompX
awarded each of these named executive officers in February 1998 as a bonus
subject to the consummation of CompX's initial public offering of CompX
Class A Common Stock (the "IPO Bonus Share Awards"). Pursuant to Messrs.
Compofelice's and Bowers' elections under section 83(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), CompX valued these IPO Bonus
Share Awards for purposes of the compensation table above based on the
shares' fair market value at the time of the award taking into account
their illiquidity at the time of the award. In March 1998, pursuant to the
IPO Bonus Share Awards, CompX issued to Messrs. Compofelice and Bowers
100,000 and 16,220 shares of CompX Class A Common Stock, respectively.
(5) All other compensation for 1999, 1998 and 1997 for Messrs. Compofelice and
Bowers consisted of CompX's matching contributions to their accounts under
the NCL 401(k) Plan and CompX's contributions to their account under the
National Cabinet Lock, Inc. Capital Accumulation Pension Plan, a defined
contribution plan (the "CAPP Plan"), as follows:
Employer's
NCL 401(k) Plan Employer's
Matching CAPP Plan
Named Executive Officer Year Contributions Contributions Total
--------------------------------------------------- ------ --------------- ------------- -------
Joseph S. Compofelice............................... 1999 $7,530 $ 14,818 $ 22,348
1998 6,111 13,889 20,000
1997 -0- -0- -0-
David A. Bowers..................................... 1999 $7,530 14,818 22,348
1998 6,111 13,889 20,000
1997 5,740 14,760 20,500
(6) Mr. Miller became an employee and executive officer of CompX as of January
1, 1999 and received a $50,000 sign-on bonus.
(7) Waterloo paid Ronald J. Simmons his base salary, cash bonus and
contributions to his retirement plan in Canadian dollars. CompX reports
these amounts in the table above in U.S. dollars based on the average
exchange rates for 1999, 1998 and 1997 of CN$1.480 per US$1.00, CN$1.478
per US$1.00 and CN$1.382 per US$1.00, respectively.
(8) Mr. Simmons' 1998 bonus amount includes a dollar amount for Mr. Simmons'
IPO Bonus Share Award. CompX valued Mr. Simmons' IPO Bonus Share Award for
purposes of the compensation table above at the CompX Class A Common Stock
initial public offering price of $20.00 per share. In March 1998, pursuant
to Mr. Simmons' IPO Bonus Share Award, CompX issued to Mr. Simmons 16,220
shares of CompX Class A Common Stock.
(9) These amounts represent Waterloo's contribution to the account of Ronald J.
Simmons under The Salaried Employee Pension Plan of Waterloo Furniture
Components Limited.
(10) Mr. Strange became an executive officer of CompX as of December 15, 1998.
Grants of Stock Options. The following table provides information, with
respect to the named executive officers, concerning the grant of stock options
under the 1997 Plan during 1999. CompX has not granted any stock appreciation
rights ("SARs").
OPTION GRANTS IN 1999
Individual Grants
------------------------------------------------------
Potential Realizable Value at
Number of Percent of Assumed Annual Rates of
Shares of Total Options Stock Price Appreciation
Underlying Granted to Exercise or for Option Term (1)
Options Employees Base Price Expiraion ------------------------------
Name Granted (#) in 1999 Per Share Date 5% 10%
- ------------------------- ------------ ----------- ----------- ---------- ------------ -------------
Joseph S. Compofelice.... -0- 0.00% n/a n/a n/a n/a
John A. Miller........... 40,000 (2) 16.46% $20.00 (2) 01/25/09 $ 503,200 (3) $ 1,274,800 (3)
David A. Bowers.......... 15,000 (2) 6.17% $17.94 (2) 02/17/09 169,200 (4) 428,850 (4)
Ronald J. Simmons........ 20,000 (2) 8.23% $17.94 (2) 02/17/09 225,600 (4) 571,800 (4)
Todd W. Strange.......... 15,000 (2) 6.17% $20.00 (2) 01/25/09 188,700 (3) 478,050 (3)
All stockholders' gain (5) n/a n/a n/a n/a 109MM (5) 225MM (5)
- -----------
(1) Pursuant to the rules of the Commission, the amounts under these columns
reflect calculations at assumed 5% and 10% appreciation rates and,
therefore, are not intended to forecast future appreciation, if any, of
CompX Class A Common Stock. The potential realizable value to the optionees
was computed as the difference between the appreciated value, at the
expiration dates of the stock options, of the CompX Class A Common Stock
obtainable upon exercise of such stock options over the aggregate exercise
price of such stock options.
The amount of gain to the optionees is dependent on the amount of increase
in the price of CompX Class A Common Stock, which would benefit all
stockholders proportionately. These potentially realizable values are based
solely on arbitrarily assumed rates of appreciation required by applicable
Commission regulations. Actual gains, if any, on stock option exercises are
dependent on the future performance of CompX Class A Common Stock, overall
market conditions and the timing of the exercise thereof by each respective
optionee. There can be no assurance that the amounts reflected in the table
will be achieved.
(2) This stock option is exercisable for shares of CompX Class A Common Stock
and becomes exercisable at a rate of 20% on each of the first five
anniversary dates of the date of grant. The exercise price for this stock
option can be paid in already owned shares of CompX Class A Common Stock,
provided such tendered shares were held by the optionee for at least six
months.
(3) The appreciated value per share on January 25, 2009, based on the $20.00
per share market value of a share of CompX Class A Common Stock on January
25, 1999, would be $32.58 and $51.87 at the hypothetical 5% and 10% rates,
respectively.
(4) The appreciated value per share on February 17, 2009, based on the $17.94
per share market value of a share of CompX Class A Common Stock on February
17, 1999, would be $29.22 and $46.53 at the hypothetical 5% and 10% rates,
respectively.
(5) The $109,053,000 and $225,194,000 amounts shown represent the cumulative
increase in value stockholders would receive on all outstanding shares of
CompX Class A Common Stock over a ten-year period at the hypothetical 5%
and 10% appreciation rates, respectively, based on the $17.94 per share
market value of the 6,148,580 shares of CompX Class A Common Stock
outstanding on the close of business February 17, 1999 and the reinvestment
of cash dividends paid at a rate equal to CompX's cash dividend payments
initiated on December 31, 1999 of $0.125 per share per calendar quarter.
Stock Option Exercises and Holdings. The following table provides
information, with respect to the named executive officers, concerning the amount
the named executive officer realized in 1999 upon the exercise of stock options
for Valhi Common Stock and the value of unexercised stock options exercisable
for CompX Class A Common Stock or Valhi Common Stock held as of December 31,
1999. Neither CompX nor Valhi has granted any SARs.
AGGREGATE STOCK OPTION EXERCISES IN 1999 AND
DECEMBER 31, 1999 OPTION VALUES
Number of Shares
Shares Underlying Value of Unexercised
Acquired Unexercised Options at In-the-Money Options
on December 31, 1999 (#) at December 31, 1999 (1)
Exercise Value -------------------------- ---------------------------
Name (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- -------- ---------- ----------- ------------- ----------- -------------
Joseph S. Compofelice
CompX Stock Options..... -0- $ -0- 20,000 80,000 $ -0- $ -0-
Valhi Stock Options..... -0- -0- 50,000 -0- 173,000 -0-
---- ---- ------ ------ ------- ----
-0- -0- 70,000 80,000 173,000 -0-
John A. Miller
CompX Stock Options..... -0- -0- -0- 40,000 -0- -0-
David A. Bowers
CompX Stock Options..... 0 0 5,000 35,000 -0- 6,525
Valhi Stock Options..... 10,000 49,075 (2) -0- 5,000 -0- 12,500
------ ------ ----- ------ ---- ------
10,000 49,075 5,000 40,000 -0- 19,025
Ronald J. Simmons
CompX Stock Options..... 0 0 3,000 32,000 -0- 8,700
Valhi Stock Options..... 8,000 53,840 (2) 5,000 2,000 -0- 5,000
----- ------ ----- ------ ---- ------
8,000 53,840 8,000 34,000 -0- 13,700
Todd W. Strange
CompX Stock Options..... -0- -0- -0- 15,000 -0- -0-
- --------------
(1) The aggregate amount is based on the difference between the exercise price
of the individual stock options and, as applicable, the $10.50 per share
closing sales price of Valhi Common Stock and the $18.375 per share closing
sales price of the CompX Class A Common Stock as reported on the New York
Stock Exchange Composite Tape on December 31, 1999.
(2) The amount realized is based on the difference between the last reported
sales price per share of Valhi Common Stock as reported on the New York
Stock Exchange Composite Tape on the date of exercise and the exercise
price per share.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires CompX's executive officers,
directors and persons who own more than 10% of a registered class of CompX's
equity securities to file reports of ownership with the Commission, the New York
Stock Exchange, Inc. and CompX. Based solely on the review of the copies of such
forms and written representations by certain reporting persons, CompX believes
that for 1999 its executive officers, directors and 10% stockholders complied
with all applicable filing requirements under Section 16(a).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, the MD&C Committee deliberated on CompX executive officer
compensation. The MD&C Committee is currently comprised of Paul M. Bass, Jr.
(chairman) and Ann Manix, both nonemployee directors of CompX.
In 1999 no CompX executive officer deliberated on the compensation of
executive officers of another entity (as a member of the other entity's
compensation committee, board of directors or otherwise), one of whose executive
officers deliberated on the compensation of CompX's executive officers (as a
member of the MD&C Committee, the Board of Directors or otherwise).
CompX and its affiliates engaged and paid to Rogers & Hardin LLP, a law
firm of which CompX's director Edward J. Hardin is a partner, approximately
$75,000 in fees for services Rogers & Hardin LLP rendered to CompX and its
affiliates in 1999. CompX expects that it and its affiliates will continue their
relationships with Rogers & Hardin LLP in 2000.
COMPENSATION COMMITTEE'S REPORT ON EXECUTIVE COMPENSATION
The MD&C Committee consists of individuals who are neither officers nor
employees of CompX or its subsidiaries. The MD&C Committee reviews and
recommends compensation policies and practices related to CompX's executive
officers and other employees, including stock-based compensation. However, any
action in connection with the salary of the chief executive officer is reviewed
and approved by the Board of Directors after a recommendation by the MD&C
Committee. See "Meetings and Committees of the Board of Directors - Management
Development and Compensation Committee."
CompX's executive compensation system generally consists of three primary
components: salary, annual variable compensation and stock-based compensation,
including stock options, restricted stock and/or stock appreciation rights.
Through the use of the foregoing, the MD&C Committee seeks to achieve a balanced
compensation package that will attract and retain high quality key executives,
appropriately reflect each such executive officer's individual performance,
contributions, and general market value, and provide further incentives to the
executive officers to maximize annual operating performance and long-term
stockholder value.
Annual Salaries
Base salaries for executive officers of CompX have been established on a
position-by-position basis. The chief executive officer conducts annual internal
reviews of executive officer salary levels other than his own in an attempt to
rank salary and job value to each position. The chief executive officer then
makes recommendations on salaries to the MD&C Committee. The MD&C Committee
reviews the chief executive officer's recommendations regarding changes in
salaries for executive officers other than himself. When recommendations
regarding changes in salary levels are made by the chief executive officer, the
MD&C Committee may take such actions, including any modifications to the
recommendation, as it deems appropriate. If the MD&C Committee decides a change
in the salary of the chief executive officer is warranted, the MD&C Committee
will make the recommendation to the Board of Directors and the Board of
Directors may take such actions, including any modifications to the
recommendation, as it deems appropriate. In each case the determinations of the
MD&C Committee and the Board of Directors, as applicable, may be based primarily
on a subjective evaluation of past and potential future individual performance
and contributions and alternative opportunities that might be available to the
executives in question. The MD&C Committee or the Board of Directors, as
applicable, may also review compensation data from companies employing
executives in positions similar to those whose salaries were being reviewed as
well as market conditions for executives in general with similar skills,
background and performance levels, both inside and outside of CompX's businesses
(such companies may include companies contained in the peer group index plotted
on the Performance Graph following this report), and other companies with
similar financial and business characteristics as CompX, or where the executive
in question has similar responsibilities.
The MD&C Committee based its actions regarding executive officer 1999
salaries primarily upon the chief executive officer's recommendations with
regard to all executive officers other than himself and its general business
knowledge. In 1999, no specific survey or study was utilized to make salary
determinations. The MD&C Committee approved a 1999 salary increase for Mr.
Ronald J. Simmons from $123,300 annually to $150,000 annually due to an increase
in his responsibilities. No action was taken with respect to the 1999 salaries
of any of the other executive officers of CompX.
Annual Variable Compensation
Awards under the variable compensation plan constitute a significant
portion of an executive's potential annual cash compensation (between 0% and
150% of salary for the chief executive officer and certain executive officers).
Awards are based on CompX and/or business units of CompX achieving annual
predetermined operating income goals. CompX's management makes recommendations
to the Board of Directors regarding the operating income plan for the year after
reviewing market conditions and CompX's operations, competitive position,
marketing opportunities, and strategies for maximizing financial performance.
The Board of Directors approves this recommendation with modifications it deems
appropriate. Based on the business plan for the year, the MD&C Committee sets
CompX's and its business units' operating income goals at three levels that are
designed to help focus CompX's executives on achieving superior annual operating
results in light of existing conditions: a threshold level, which is the minimum
operating income level for any award to be made under the variable compensation
plan (the "Minimum Level"), a target level (the "Target Level") and a maximum
level (the "Maximum Level"). The variable compensation plan, in combination with
salary, is designed to result in executive officers and other eligible
participants receiving annual cash compensation below competitive compensation
levels if the Minimum Level is not achieved.
Pursuant to the variable compensation plan, if operating income is below
the Minimum Level, no variable compensation is paid. If the Minimum Level is
met, executive officers are eligible to receive variable compensation payments
that in 1999 ranged between 20% and 50% of salary, depending on the executive.
If the Target Level is reached, the range of variable compensation payments is
higher, and in 1999 ranged between 30% and 100% of salary, depending on the
executive. If the Maximum Level is reached or exceeded, executives are eligible
to receive the highest variable compensation payments, and in 1999 the range of
payments for which executives were eligible was between 40% and 150% of salary,
depending on the executive.
As a result of CompX achieving 1999 operating income below the Minimum
Level, in the first quarter of 2000 the MD&C Committee awarded no variable
compensation to the chief executive officer and the chief financial officer. The
1999 variable compensation of each of the other executive officers, however, was
partially based on a respective business unit of CompX that achieved operating
income above one of the unit's operating income goals. Accordingly, in the first
quarter of 2000 the MD&C Committee awarded a variable compensation award to each
such executive officer based on the achieved operating income goal of the unit
to which such executive officer's variable compensation was partially based. The
1999 awards under the variable compensation plan to the named executive officers
are set forth in the bonus column in the Summary Compensation Table set forth
above.
Apart from the variable compensation plan, the MD&C Committee may award
other bonuses outside of the variable compensation plan as the MD&C Committee
deems appropriate from time to time under its general authority or under a
separate discretionary plan. The MD&C Committee did not award such other bonuses
to executive officers, including the chief executive officer, in 1999.
Stock-Based Compensation
The 1997 Plan supports the goal of maximizing long-term stockholder value
by providing for stock-based compensation, the value of which is directly
related to increases in stockholder value. Stock option grants, in particular,
are considered a significant element of CompX's total compensation package for
the chief executive officer and the other executive officers of CompX. The MD&C
Committee believes that compensation linked to stock price performance helps
focus the executives' attention on management of CompX from the stockholders'
perspective.
Stock option grants are intended to provide incentives to increase
stockholder value in the future and to reward past performance by the executive.
In 1999, the MD&C Committee reviewed recommendations by the chief executive
officer regarding stock option grants to executive officers other than the chief
executive officer. The MD&C Committee granted stock options to executive
officers, other than the chief executive officer, based on the chief executive
officer's recommendations. The chief executive officer based his recommendations
on a subjective evaluation regarding each executive's performance and
responsibilities. In 1999, the chief executive officer included in his
recommendations regarding the number of options to be granted to each executive
officer, other than the chief executive officer, the amount and terms of options
already held by such officers. The MD&C Committee did not grant the chief
executive officer any stock options in 1999. Stock options granted to executive
officers in 1999 are reported in the Option Grants in 1999 table set forth
above.
To help assure a focus on long-term creation of stockholder value, in 1999
the MD&C Committee granted stock options with a term of ten years that vest 20%
on each of the first five anniversaries of the stock option's date of grant.
Although permitted under the 1997 Plan, the MD&C Committee in 1999 did not grant
any restricted stock, stock appreciation rights or other equity-based awards.
Tax Code Limitation on Executive Compensation Deductions
In 1993, Congress amended the Internal Revenue Code to impose a $1.0
million deduction limit on compensation paid to the chief executive officer and
the four other most highly compensated executive officers of public companies,
subject to certain transition rules and exceptions for compensation received
pursuant to non-discretionary performance-based plans approved by such company's
shareholders. It is CompX's general policy to structure the performance-based
portion of the compensation of its executive officers in a manner that permits
CompX to deduct fully such compensation.
The foregoing report is submitted by the following individuals in the
capacities indicated:
Paul M. Bass, Jr. Ann Manix
Chairman of the MD&C Committee Member of the MD&C Committee
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total stockholder return on CompX Class A Common Stock against the
cumulative total return of the Russell 2000 Stock Index and a self-selected peer
group of companies index for the period commencing March 6, 1998 (the date upon
which CompX first registered with the Commission the CompX Class A Common Stock
under Section 12 of the Exchange Act) and ending December 31, 1999. The
self-selected peer group index is comprised of Bush Industries, Inc., Herman
Miller, Inc., HON Industries Inc., Interface, Inc., Knape & Vogt Manufacturing
Company, Leggett & Platt, Incorporated and Steelcase Inc. Knoll, Inc. is no
longer in the peer group as a result of its equity securities no longer being
publicly traded. The graph shows the value at December 31, 1999 assuming an
original investment of $100 and reinvestment of cash dividends and other
distributions to stockholders.
Comparison of Cumulative Return Among CompX International Inc.,
the Russell 2000 Index and a Self-Selected Peer Group Index
[PERFORMANCE GRAPH GOES HERE]
March 6, December 31, December 31,
1998 1998 1999
-------- ------------- ------------
CompX International Inc................................ $100 $132 $93
Russell 2000 Index..................................... 100 91 109
Self-Selected Peer Group Index......................... 100 70 63
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Relationships with Related Parties. As set forth under the caption
"Security Ownership," Harold C. Simmons, through Contran, may be deemed to
control CompX. CompX 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. CompX
continuously considers, reviews and evaluates and understands that Contran and
related entities consider, review and evaluate transactions of the type
described above. Depending upon the business, tax and other objectives then
relevant, it is possible that CompX might be a party to one or more of such
transactions in the future. In connection with these activities CompX may
consider issuing additional equity securities or incurring additional
indebtedness. CompX's acquisition activities may in the future include
participation in the acquisition or restructuring activities conducted by other
companies that may be deemed to be controlled by Mr. Simmons. It is the policy
of CompX to engage in transactions with related parties on terms, in the opinion
of CompX, no less favorable to CompX than could be obtained from unrelated
parties.
No specific procedures are in place that govern the treatment of
transactions among CompX 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.
Intercorporate Services Agreements. Under the Valhi ISA, Valhi renders or
provides for certain management, financial and administrative services to CompX
on a fee basis. Such fees are based upon estimates of time devoted to the
affairs of CompX by individual Valhi employees and the salaries of such persons.
CompX paid Valhi fees of $324,000 for services rendered under the Valhi ISA in
1999. In addition, Valhi charged CompX for the out-of-pocket costs incurred in
rendering such services. The Valhi ISA automatically extends on a
quarter-to-quarter basis, subject to termination by either party pursuant to
written notice 30 days prior to a quarter-end, and may be amended by mutual
agreement.
Under the ISA between CompX and NL (the "NL ISA"), NL makes available to
CompX on a fee basis certain accounting and internal auditing services and
occupancy and related office services for CompX's offices in Houston, Texas.
Such fees are based upon estimates of NL's costs of providing such services to
CompX. CompX paid NL fees of $173,000 for such services rendered in 1999. In
addition, NL charged CompX for the out-of-pocket costs incurred in rendering
such services. The NL ISA automatically extends on a quarter-to-quarter basis,
subject to termination by either party pursuant to written notice 30 days prior
to a quarter-end, and may be amended by mutual agreement.
Insurance Brokerage Commissions. NL Insurance Ltd. of Vermont ("NL
Insurance"), Valmont and EWI RE, Inc. ("EWI") provide or broker certain of
CompX'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 provide or broker. During 1999, CompX and its subsidiaries
paid approximately $431,000 for policies provided 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 CompX's opinion, the
amounts that CompX and its subsidiaries paid for these insurance policies are
reasonable and similar to those they could have obtained through unrelated
insurance companies and/or brokers. CompX expects that these relationships with
NL Insurance, Valmont and EWI will continue in 2000.
OTHER MATTERS
The Board of Directors knows of no other business that will be presented
for consideration at the Meeting. If any other matters properly come before the
Meeting, the persons designated as agents in the enclosed proxy card or voting
instruction form will vote on such matters in accordance with their best
judgment.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP served as CompX's primary
independent public accountants for the year ended December 31, 1999. CompX's
audit committee has appointed PricewaterhouseCoopers LLP as CompX's primary
independent public accountants for the year ending December 31, 2000.
Representatives of PricewaterhouseCoopers LLP are not expected to attend the
Meeting.
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING IN 2001
Stockholders may submit proposals on matters appropriate for stockholder
action at CompX's annual stockholder meetings, consistent with rules adopted by
the Commission. Such proposals must be received by CompX not later than December
6, 2000 to be considered for inclusion in the proxy statement and form of proxy
relating to the Annual Meeting of Stockholders in 2001. For proposals to be
brought at the 2001 Annual Meeting of Stockholders but not included in the proxy
statement for such meeting, CompX's bylaws require that the proposal must be
delivered to or mailed and received at the principal executive offices of CompX
no later than ten days following the date on which notice of the date of the
annual meeting was mailed or public disclosure of the date of the meeting was
made. Any such proposals should be addressed to: Corporate Secretary, CompX
International Inc., Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas,
Texas 75240-2697.
1999 ANNUAL REPORT ON FORM 10-K
A copy of CompX's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, as filed with the Commission, is included as part of the
annual report mailed to CompX's stockholders with this proxy statement. Copies
of such annual report may be obtained without charge by writing: Corporate
Secretary, CompX International Inc., Three Lincoln Centre, 5430 LBJ Freeway,
Suite 1700, Dallas, Texas 75240-2697.
COMPX INTERNATIONAL INC.
Houston, Texas
March 30, 2000
CompX International Inc.
16825 Northchase Drive, Suite 1200
Two Greenspoint Plaza
Houston, Texas 77060
COMPX INTERNATIONAL INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF COMPX INTERNATIONAL INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 2000
The undersigned hereby appoints Joseph S. Compofelice, John A. Miller
and A. Andrew R. Louis, and each of them, proxy and attorney-in-fact for the
undersigned, with full power of substitution, to vote on behalf of the
undersigned at the 2000 Annual Meeting of Stockholders (the "Meeting") of CompX
International Inc., a Delaware corporation ("CompX"), to be held at the offices
of Valhi, Inc. at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas,
Texas on Thursday, May 11, 2000, at 10:00 a.m. (local time), and at any
adjournment or postponement of said Meeting, all of the shares of class A and
class B common stock, par value $0.01 per share, of CompX standing in the name
of the undersigned or that the undersigned may be entitled to vote on the
proposals set forth, and in the manner directed, on this proxy.
THIS PROXY MAY BE REVOKED AS SET FORTH IN THE COMPX PROXY
STATEMENT THAT ACCOMPANIED THIS PROXY.
This proxy, if properly executed, will be voted in the manner directed
on this proxy. If no direction is made, this proxy will be voted "FOR" all
nominees for election as directors named in proposal 1 and, to the extent
allowed by the federal securities laws, in the discretion of the proxies as to
all other matters that may properly come before the Meeting and any adjournment
or postponement thereof.
PLEASE SIGN, DATE AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
SEE REVERSE SIDE.
COMPX INTERNATIONAL INC.
PLEASE MARK YOUR VOTE IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
1. Election of Seven Directors
Nominees: Paul M. Bass, Jr., David A. Bowers, Joseph S.
Compofelice, Edward J. Hardin, Ann Manix, Glenn R.
Simmons and Steven L. Watson.
[ ].....FOR all nominees
[ ].....WITHHOLD AUTHORITY to vote for all nominees
[ ].....FOR all nominees (except as marked)
----------------------------------------------------------------------
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided above.)
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting and any adjournment or
postponement thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Address Change [ ]
(Instruction: Make necessary corrections to the mailing label.)
SIGNATURE(S) DATE
---------------------------------- ------------------
SIGNATURE(S) DATE
---------------------------------- ------------------
NOTE: Please sign exactly as the name that appears on this card. Joint
owners should each sign. When signing other than in an individual
capacity, please fully describe such capacity. The undersigned
hereby revokes all proxies heretofore given to vote at said
Meeting and any adjournment or postponement thereof.
