SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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[ ] Definitive Additional Materials permitted by 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.
THREE LINCOLN CENTRE
5430 LBJ FREEWAY, SUITE 1700
DALLAS, TEXAS 75240-2697
March 31, 2003
To Our Stockholders:
You are cordially invited to attend the 2003 Annual Meeting of
Stockholders of CompX International Inc., which will be held on Monday, May 19,
2003, at 1:30 p.m., local time, at CompX's corporate offices 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,
/s/ David A. Bowers
David A. Bowers
President and Chief Executive Officer
COMPX INTERNATIONAL INC.
THREE LINCOLN CENTRE
5430 LBJ FREEWAY, SUITE 1700
DALLAS, TEXAS 75240-2697
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 19, 2003
To the Stockholders of CompX International Inc.:
NOTICE IS HEREBY GIVEN that the 2003 Annual Meeting of Stockholders
(the "Meeting") of CompX International Inc., a Delaware corporation ("CompX"),
will be held on Monday, May 19, 2003, at 1:30 p.m., local time, at CompX's
corporate offices at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas,
Texas for the following purposes:
(1) To elect seven directors to serve until the 2004 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 24,
2003 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,
/s/ A. Andrew R. Louis
A. Andrew R. Louis, Secretary
Dallas, Texas
March 31, 2003
COMPX INTERNATIONAL INC.
THREE LINCOLN CENTRE
5430 LBJ FREEWAY, SUITE 1700
DALLAS, TEXAS 75240-2697
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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 2003
Annual Meeting of Stockholders of CompX to be held on Monday, May 19, 2003 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, 2002 (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 9, 2003. CompX's
principal executive offices are located at Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240-2697.
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 24, 2003 (the "Record Date"). As of the Record Date, there
were 5,115,780 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 each director of CompX. The
accompanying proxy card or voting instruction form provides space for a
stockholder to withhold authority to vote for any 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. However,
since director nominees need only receive the vote of a plurality of the votes
represented and entitled to vote at the Meeting, a vote withheld from a
particular nominee will not affect the election of such nominee.
Except as applicable laws may otherwise provide, the approval of any
other matter that may properly come before the Meeting will require the
affirmative vote of a majority of the votes represented and entitled to vote at
the Meeting. Shares of CompX Common Stock that are voted to abstain from any
other business coming before the Meeting and broker/nominee non-votes will not
be counted as votes for or against any such other matter.
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 66.2% 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 7.3% of the outstanding shares of CompX Class A Common Stock as of
the Record Date (approximately 2.5% of the combined voting power of the CompX
Common Stock). Together Valcor and Valhi hold approximately 68.6% of the
combined voting power of the CompX Common Stock (approximately 95.5% 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 each 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.
Computershare Investor Services, L.L.C. or its successor
("Computershare"), 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 at the
Meeting by delivering to Computershare a written revocation of the proxy or 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 CompX Contributory Retirement Plan, as
amended (the "CompX 401(k) Plan"), who are beneficial owners of CompX Class A
Common Stock under such plan may use the enclosed voting instruction form to
instruct the plan trustee how to vote the shares held for such employees. The
trustee will, subject to the terms of the 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. CompX has retained Georgeson
Shareholder Communications, Inc. to aid in the distribution of this proxy
statement and related materials at a cost CompX estimates at $1,400. 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 one or more members as determined by the Board of Directors or the
stockholders. The Board of Directors has currently set the number of directors
at seven. The directors elected at the Meeting will hold office until the 2004
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 respective nominees for election as
directors of CompX for terms expiring at the 2004 Annual Meeting of Stockholders
have provided the following information.
Paul M. Bass, Jr., age 67, has been a director of CompX since 1997 and
is a member of CompX's 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 1998, 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 MACC Private Equities
Inc. Mr. Bass is currently serving as chairman of the board of trustees of the
Southwestern Medical Foundation.
David A. Bowers, age 65, has served as CompX's chief executive officer
since December 2002 and as CompX's president since June 2002. He has also served
as CompX's vice chairman of the board since December 2000 and as a director of
CompX since 1993. Mr. Bowers has continuously served in various executive
officer positions for CompX or its predecessors since prior to 1998. 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.
Keith R. Coogan, age 50, has served as a director of CompX and a member
of CompX's audit committee since December 2002. Mr. Coogan is chief executive
officer of Software Spectrum, Inc., a global business-to-business software
services provider that is currently a wholly owned subsidiary of Level 3
Communications, but from 1991 to June 2002 was a publicly traded corporation.
From 1990 to October 2002, he served in various other executive officer
positions of Software Spectrum, including vice president of finance and
operations and chief operating officer.
Edward J. Hardin, age 60, has served as a director of CompX since 1997
and is chairman of CompX's audit committee. Mr. Hardin also serves as a director
of Valhi. 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.
Ann Manix, age 50, has served as a director of CompX since June 1998
and is a member of CompX's audit committee and the MD&C Committee. Ms. Manix
also serves as a director of Valhi's majority owned subsidiary, NL Industries,
Inc. ("NL"), a titanium dioxide pigments company. Since prior to 1998, Ms. Manix
has served as a managing partner of Ducker Research Corporation, a privately
held industrial research firm.
Glenn R. Simmons, age 75, has served as chairman of the board of CompX
since October 2000 and director of CompX since 1993. From October 2000 to
December 2000, Mr. Simmons served as chief executive officer of CompX. From 1993
to 1998, Mr. Simmons also served as chairman of the board of CompX. Mr. Simmons
has been vice chairman of the board of Valhi and Contran since prior to 1998.
Mr. Simmons also serves as chairman of the board of Keystone and as a director
of NL and Titanium Metals Corporation ("TIMET"), a company engaged in the
titanium metals industry that is affiliated with Valhi. Mr. Simmons has been an
executive officer or director of various companies related to Contran since
1969. Mr. Simmons is the 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 52, has served as a director of CompX since 2000.
Mr. Watson has been chief executive officer of Valhi since August 2002 and
president and a director of Valhi and Contran since 1998. Mr. Watson also serves
as a director of Keystone, NL and TIMET. From prior 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 1998. 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 four meetings and took action by written
consent in lieu of a meeting on three occasions in 2002. Each of the directors
participated in at least 75% of all of the 2002 meetings of the Board of
Directors and its committees on which the director served at the time.
The Board of Directors has established and delegated authority to the
following two standing committees.
Audit Committee. The audit committee assists the Board of
Directors in fulfilling its oversight responsibilities relating to the
financial accounting and reporting practices of CompX. The audit
committee's primary responsibilities are to serve as an independent and
objective party to review CompX's auditing, accounting and financial
reporting processes. For further information on the role of the audit
committee, see "Independent Auditor Matters--Audit Committee Report."
The current members of the audit committee are Edward J. Hardin
(chairman), Paul M. Bass, Jr., Keith R. Coogan and Ann Manix. The audit
committee held seven meetings and took action by written consent in
lieu of a meeting on one occasion in 2002.
Management Development and Compensation Committee. The
principal responsibilities of the MD&C Committee are to review and
approve certain matters involving executive compensation; to take
action or to review and approve certain matters regarding CompX's
employee benefit plans or programs; to administer and grant awards
under the CompX International Inc. Long-Term Incentive Plan (the "1997
Plan"); to approve certain annual incentive compensation awards; and to
review and administer such other compensation matters as the Board of
Directors may direct from time to time. For further information on the
role of the MD&C Committee, see "Compensation Committee's Report On
Executive Compensation." 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 2002 and took action by written consent in lieu of a
meeting on four occasions.
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. See "Stockholder
Proposals for the 2004 Annual Meeting" for a description of the procedures for
stockholder nominations of directors.
The Board of Directors is expected to elect the members of the standing
committees at the Board of Directors annual meeting 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 Glenn R.
Simmons and David A. Bowers is set forth under "Election of Directors--Nominees
for Director."
Name Age Position(s)
- ---------------------------- ------ ----------------------------------------------------------------
Glenn R. Simmons............ 75 Chairman of the Board
David A. Bowers............. 65 Vice Chairman of the Board, President and Chief Executive Officer
Darryl R. Halbert........... 38 Vice President, Chief Financial Officer and Controller
Scott C. James.............. 37 Vice President
Darryl R. Halbert has served as CompX's chief financial officer since
December 2002 and as vice president and controller of CompX since August 2001.
From 1999 to 2001, Mr. Halbert served as chief operating officer, chief
financial officer and secretary of Image2Web, Inc., a subsidiary of Micrografx,
Inc. ("Micrografx"). From prior 1999, Mr. Halbert served various positions with
Micrografx, including vice president of finance, chief accounting officer and
corporate controller.
Scott C. James has served as vice president of CompX since May 2002 and
president of CompX Security Products Inc., a wholly owned subsidiary of CompX,
since August 2002. Since 1992, Mr. James has served in various sales, marketing
and executive positions with CompX's security products operations.
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 "SEC"), 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 current or former executive officer
of CompX named in the Summary Compensation Table below (a "named executive
officer") and all current 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 SEC 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. (3).............. -0- (4) -0- 10,000,000 (4) 100% 66.2%
Valhi, Inc. (3)............... 374,000 (4) 7.3% -0- (4) -0- 2.5%
---------- ------- ----------- ------- --------
374,000 (4) 7.3% 10,000,000 (4) 100% 68.6%
T. Rowe Price Associates, Inc. 929,600 (5) 18.2% -0- -0- 6.1%
Rutabaga Capital Management... 771,210 (6) 15.1% -0- -0- 5.1%
Salomon Smith Barney Holdings
Inc........................ 733,535 (7) 14.3% -0- -0- 4.9%
Dalton, Greiner, Hartman, Maher
& Co....................... 484,600 (8) 9.5% -0- -0- 3.2%
MassMutual Institutional Funds
- MassMutual Small Cap Value
Equity Fund................ 446,300 (9) 8.7% -0- -0- 3.0%
Royce & Associates, LLC....... 316,100 (10) 6.2% -0- -0- 2.1%
Paul M. Bass, Jr.............. 7,000 (4)(11) * -0- -0- *
David A. Bowers............... 82,000 (4)(11) 1.6% -0- -0- *
Keith R. Coogan............... -0- -0- -0- -0- -0-
Edward J. Hardin.............. 10,500 (4)(11) * -0- -0- *
Ann Manix..................... 6,000 (11) * -0- -0- *
Glenn R. Simmons.............. 63,000 (4)(11) 1.2% -0- -0- *
Steven L. Watson.............. 14,900 (4)(11) * -0- -0- *
Darryl R. Halbert............. 2,000 (11) * -0- -0- *
Scott C. James................ 19,653 (11) * -0- -0- *
Brent A. Hagenbuch............ -0- -0- -0- -0- -0-
Stuart M. Bitting............. -0- -0- -0- -0- -0-
Wouter J. Dammers............. -0- -0- -0- -0- -0-
All current directors and
executive officers of CompX
as a group (9 persons) .... 205,053 (4)(11) 3.9% -0- -0- 1.3%
- --------------------
* 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 Common Stock for each person or
group assumes the exercise by such person or group (exclusive of the
exercise by 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 5,115,780 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 68.6% of the combined voting
power of the CompX Common Stock (approximately 95.5% 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.
Valhi Group, Inc. ("VGI"), National City Lines, Inc. ("National") and
Contran are the direct holders of approximately 77.6%, 9.1% and 2.8%,
respectively, of the outstanding shares of common stock, par value
$0.01 per share, of Valhi ("Valhi Common Stock"). 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 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. 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 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
services 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.
Harold C. Simmons' spouse is the direct beneficial owner of 20,000
shares of CompX Class A Common Stock, or approximately 0.4% of the
outstanding CompX Class A Common Stock. Mr. Simmons may be deemed to
share indirect beneficial ownership of such shares. Mr. Simmons
disclaims all such beneficial ownership.
Edward J. Hardin is a director of Valhi and Glenn R. Simmons and Steven
L. Watson are directors and executive officers of Valhi and Contran.
Mr. Hardin disclaims beneficial ownership of any shares of CompX Common
Stock directly or indirectly held by Valhi or any of its subsidiaries.
Messrs. Glenn Simmons and Watson disclaim beneficial ownership of any
shares of CompX Common Stock directly or indirectly held by Contran,
Valhi or any of their subsidiaries.
The Harold Simmons Foundation, Inc. (the "Foundation") directly holds
approximately 1.3% 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 of the
Foundation and may be deemed to control the Foundation. Mr. Simmons,
however, disclaims beneficial ownership of any shares of Valhi Common
Stock the Foundation holds.
The Contran Deferred Compensation Trust No. 2 (the "CDCT No. 2")
directly holds approximately 0.4% of the outstanding shares of Valhi
Common Stock. U.S. Bank National Association 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 selects the trustee and members of the trust investment
committee for the Master Trust. Harold C. Simmons, Glenn R. Simmons and
Steven L. Watson are members of Valhi's board of directors and along
with David A. Bowers 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 the Master Trust
holds, except to the extent of his individual vested beneficial
interest, if any, in the assets the Master Trust holds.
Valmont Insurance Company ("Valmont"), NL and a subsidiary of NL
directly hold 1,000,000, 3,522,967 and 1,186,200 shares, respectively,
of Valhi Common Stock. Valmont is a wholly owned subsidiary of Valhi.
NL is a majority-owned subsidiary of Valhi. Pursuant to Delaware
corporate law, for purposes of calculating the percentage ownership of
the outstanding shares of Valhi Common Stock as of the Record Date,
Valhi treats the shares that Valmont, NL and NL's subsidiary directly
hold as treasury stock for voting purposes.
The business address of VGI, National, NOA, Dixie Holding, the
Foundation, the Master Trust 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 Amendment No. 5 to Schedule 13G dated February 14, 2003 T.
Rowe Price Associates, Inc. ("T. Rowe Price"), the T. Rowe Price
Small-Cap Stock Fund, Inc. ("T. Rowe Small-Cap Stock Fund") and the T.
Rowe Price Small-Cap Value Fund, Inc. ("T. Rowe Small-Cap Value Fund")
filed with the SEC. Various individuals and institutional investors for
which T. Rowe Price is an investment advisor own these shares. T. Rowe
Price has sole dispositive power over all of these shares and sole
voting power over 64,500 of these shares. T. Rowe Small-Cap Stock Fund,
an investment company sponsored by T. Rowe Price, has sole voting power
over 406,700 of these shares. T. Rowe Small-Cap Value Fund, an
investment company sponsored by T. Rowe Price, has sole voting power
over 416,800 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, the T. Rowe Small-Cap Stock Fund and the T. Rowe
Small-Cap Value Fund is 100 E. Pratt Street, Baltimore, Maryland 21202.
(6) Based on Amendment No. 2 to Schedule 13G dated February 19, 2003
Rutabaga Capital Management ("Rutabaga") filed with the SEC. Rutabaga
is an investment advisor that has sole dispositive power over all of
these shares, sole voting power over 711,210 of these shares and shared
voting power over 60,000 of these shares. The address of Rutabaga is 64
Broad Street, Boston, Massachusetts 02109.
(7) Based on Amendment No. 3 to Schedule 13G dated February 6, 2003 Smith
Barney Fund Management LLC ("SBFM"), Salomon Smith Barney Holdings Inc.
("SSB") and Citigroup Inc. ("Citigroup") filed with the SEC. Citigroup
is the sole stockholder of SSB and SSB is the sole stockholder of SBFM.
SBFM has shared voting and dispositive power over 703,060 of these
shares. SSB and Citigroup have shared voting and dispositive power over
all of these shares. The address of SBFM is 333 West 34th Street, New
York, New York 10001. The address of SSB is 388 Greenwich Street, New
York, New York 10013. The address of Citigroup is 399 Park Avenue, New
York, New York 10043.
(8) Based on Amendment No. 4 to Schedule 13G dated January 27, 2003 Dalton,
Greiner, Hartman, Maher & Co. ("Dalton Greiner") filed with the SEC.
Dalton Greiner has sole voting power over 476,058 of these shares and
sole dispositive power over all of these shares. The address of Dalton
Greiner is 1100 Fifth Avenue South, Suite 301, Naples, Florida 34102.
(9) Based on Amendment No. 1 to Schedule 13G dated February 7, 2000
MassMutual Institutional Funds - MassMutual Small Cap Value Equity Fund
("MassMutual") filed with the SEC. These shares represent 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.
(10) Based on a Schedule 13G dated February 4, 2003 Royce & Associates, LLC
("Royce") filed with the SEC. The address of Royce is 1414 Avenue of
the Americas, New York, New York 10019.
(11) 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 17, 2003
----------------------------------------------------------------------- -----------------------------
Paul M. Bass, Jr....................................................... 5,000
David A. Bowers........................................................ 58,000
Edward J. Hardin....................................................... 5,000
Ann Manix.............................................................. 4,000
Glenn R. Simmons....................................................... 54,000
Steven L. Watson....................................................... 12,400
Darryl R. Halbert...................................................... 2,000
Scott C. James......................................................... 18,600
CompX understands that Contran and related entities may acquire or
dispose 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.
Ownership of Valhi and its Parents. The following table and footnotes
set forth the beneficial ownership, as of the Record Date, of the Valhi Common
Stock held by each director of CompX, each named executive officer and all
current directors and executive officers of CompX as a group. All information is
taken from or based upon ownership filings made by such persons with the SEC 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......................................................... 500 (3) *
David A. Bowers.......................................................... -0- (3) -0-
Keith R. Coogan.......................................................... -0- -0-
Edward J. Hardin......................................................... 10,000 (3)(4) *
Ann Manix................................................................ -0- -0-
Glenn R. Simmons......................................................... 161,247 (3)(4)(5) *
Steven L. Watson......................................................... 180,546 (3)(4) *
Darryl R. Halbert........................................................ -0- -0-
Scott C. James........................................................... -0- -0-
Brent A. Hagenbuch....................................................... -0- -0-
Stuart M. Bitting........................................................ -0- -0-
Wouter J. Dammers........................................................ -0- -0-
All current directors and executive officers of CompX as a group
(9 persons)..................................................... 352,293 (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 the exercise
by 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 119,440,078 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,
1,000,000, 3,522,967 and 1,186,200 shares of Valhi Common Stock held by
Valmont, NL and a subsidiary of NL, respectively, are excluded from the
amount of Valhi Common Stock outstanding. Pursuant to Delaware
corporate law, Valhi treats these excluded shares held by these
majority owned subsidiaries 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 17, 2003
--------------------------------------------------------------------------- ----------------------------
Edward J. Hardin.......................................................... 6,000
Glenn R. Simmons.......................................................... 148,000
Steven L. Watson.......................................................... 163,300
(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 2002, 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 at 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's directors who received
director fees during 2002 were Paul M. Bass, Jr., Keith R. Coogan, Edward J.
Hardin, Ann Manix, Glenn R. Simmons and Steven L. Watson.
CompX's nonemployee directors also receive an annual grant of 500
shares of CompX Class A Common Stock and stock options exercisable for 2,000
shares of CompX Class A Common Stock on the day of the annual meeting of
stockholders. The stock options have an exercise price equal to the closing
sales price of CompX Class A Common Stock on the date of grant, a term of 10
years and vest 20% over each of the first five anniversaries of the date of
grant. CompX's directors who received annual stock and stock option grants on
May 14, 2002 were Paul M. Bass, Jr., Edward J. Hardin, Ann Manix, Glenn R.
Simmons and Steven L. Watson.
CompX and Contran are parties to an intercorporate services agreement
(the "Contran ISA") pursuant to which Contran provided certain services to CompX
during 2002, including services that Steven L. Watson rendered to CompX. See
"Certain Relationships and Transactions--Intercorporate Services Agreement and
Rent."
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 2002, 2001 and 2000
by CompX's chief executive officer, each of CompX's two other most highly
compensated executive officers whose total salary and bonus in 2002 exceeded
$100,000 and were executive officers on December 31, 2002 and three former
executive officers whose total salary in 2002 exceeded $100,000 and who were
executive officers during a part of 2002.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation (1)
----------------
Awards
Annual Compensation Shares ----------------
------------------------------------------------------ Shares
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation (2) Options (#) Compensation
- -------------------------- ------ ------------- -------------- ------------------ ------------------ --------------
David A. Bowers........... 2002 $ 258,750 $ 80,000 $ -0- -0- $ 21,281 (3)
Vice Chairman of the Board, 2001 248,079 25,000 -0- 30,000 16,668 (3)
President and Chief 2000 200,044 60,000 -0- 25,000 22,894 (3)
Executive Officer
Darryl R. Halbert (4)..... 2002 136,930 60,000 -0- -0- 5,335 (3)
Vice President, Chief 2001 40,868 20,000 -0- 10,000 -0-
Financial Officer and
Controller
Scott C. James (5)........ 2002 151,175 60,000 -0- -0- 21,187 (3)
Vice President
Brent A. Hagenbuch (6).... 2002 197,048 -0- -0- -0- 131,395 (3)
Former President and Chief 2001 288,500 100,000 -0- 50,000 -0-
Executive Officer
Stuart M. Bitting (7)..... 2002 155,728 -0- -0- -0- 126,111 (3)
Former Vice President, 2001 180,024 50,000 -0- 25,000 -0-
Chief Financial Officer
And Treasurer
Wouter J. Dammers (8)..... 2002 185,373 (8) 11,636 (8) 63,136 (8)(9) -0- 173 (8)(10)
Former Vice President 2001 150,407 (8) -0- (8) 134,447 (8)(9) 20,000 146 (8)(10)
2000 134,454 (8) 34,139 (8) 46,566 (8)(9) -0- 151 (8)(10)
- --------------------
(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) An amount for other annual compensation is disclosed only if the amount
for other annual compensation exceeds the level required for reporting
pursuant to SEC rules.
(3) All other compensation for 2002, 2001, and 2000 for Messrs. Bowers,
Halbert, James, Hagenbuch and Bitting consisted of CompX's matching
contributions to certain of their accounts under the CompX 401(k) Plan,
CompX's contributions to certain of their accounts under the CompX
Capital Accumulation Pension Plan, a defined contribution plan (the
"CAP Plan"), and for 2002 for Messrs. Hagenbuch and Bitting certain
severance payments relating to their resignations, as follows:
Employer's
CompX 401(k) Employer's
Plan Matching CAP Plan Severance
Named Executive Officer Year Contributions Contributions Payment Total
---------------------------------- ----- -------------- ------------- ------------ ---------------
David A. Bowers.................... 2002 $ 8,889 $ 12,392 $ -0- $ 21,281
2001 7,194 9,474 -0- 16,668
2000 7,053 15,841 -0- 22,894
Darryl R. Halbert.................. 2002 2,644 2,691 -0- 5,335
2001 -0- -0- -0- -0-
Scott C. James..................... 2002 8,795 12,392 -0- 21,187
Brent A. Hagenbuch................. 2002 -0- -0- 131,395 (a) 131,395
2001 -0- -0- -0- -0-
Stuart M. Bitting.................. 2002 -0- -0- 126,111 (b) 126,111
2001 -0- -0- -0- -0-
(a) Pursuant to an Agreement and General Release dated June 18,
2002, Mr. Hagenbuch agreed to a general release of CompX,
among other things, and CompX agreed to continue his
employment until December 27, 2002 unless he terminated his
employment earlier. If Mr. Hagenbuch terminated his employment
prior to December 27, 2002, CompX agreed to pay him a lump sum
severance of his unpaid salary as if he had been employed
through December 27, 2002. On July 5, 2002, Mr. Hagenbuch
terminated his employment with CompX and subsequently received
a lump-sum severance of $125,395. In addition to the
severance, CompX paid $6,000 on his behalf to an outplacement
service. This description of Mr. Hagenbuch's Agreement and
General Release is qualified in its entirety by the actual
terms of the agreement CompX filed as Exhibit 10.12 to its
Annual Report on Form 10-K for the Year Ended December 31,
2002.
(b) Pursuant to an Agreement and General Release dated July 16,
2002, Mr. Bitting agreed that his employment with CompX would
terminate no later than July 31, 2002 and to a general release
of CompX, among other things. In return, CompX agreed, among
other things, to pay Mr. Bitting, upon certain conditions
being satisfied, a lump-sum severance of $126,111 and to pay
for his health benefits through January 31, 2003. Shortly
after Mr. Bitting's resignation, he received his lump-sum
severance. This description of Mr. Bitting's Agreement and
General Release is qualified in its entirety by the actual
terms of the agreement CompX filed as Exhibit 10.13 to its
Annual Report on Form 10-K for the Year Ended December 31,
2002.
(4) Mr. Halbert became an executive officer of CompX as of August 20, 2001.
Effective January 1, 2003, Mr. Halbert became an employee of Contran
and now provides executive officer services to CompX pursuant to the
2003 Contran ISA.
(5) Mr. James became an executive officer of CompX as of August 31, 2002.
(6) Mr. Hagenbuch became an executive officer of CompX as of January 1,
2001 and resigned as an executive officer as of May 22, 2002.
(7) Mr. Bitting became an executive officer of CompX on March 19, 2001 and
resigned as an executive officer on July 31, 2002.
(8) Mr. Dammers became the managing director of CompX's Dutch subsidiary,
Thomas Regout Holding B.V. ("Thomas Regout"), on September 20, 1999, an
executive officer of CompX on May 11, 2000 and ceased to serve as an
executive officer of CompX on August 31, 2002. Thomas Regout paid Mr.
Dammers his base salary, cash bonus and contributions to his retirement
plan in euros for 2002 and Dutch guilders for 2001 and 2000. CompX
reports these amounts in the table above in U.S. dollars based on the
average exchange rates for 2002, 2001 and 2000 of (euro) 0.945 per
US$1.00, NLG 2.46 per US$1.00 and NLG 2.38 per US$1.00, respectively.
(9) Mr. Dammers' other annual compensation includes the following amounts
Thomas Regout paid for the benefit of Mr. Dammers.
Supplemental
Pension
Supplemental Insurance
Sickness Premium
and Paid by
Automobile Disability Thomas Relocation
Named Executive Officer Year Expenses (a) Insurance Regout (b) Expenses Total
--------------------------- ------- ------------ --------- ---------- ---------- -------
Wouter J. Dammers 2002 $ 23,091 $ 14,310 $ 25,735 $ -0- $ 63,136
2001 18,089 11,252 23,805 81,301 134,447
2000 15,796 10,224 20,546 -0- 46,566
(a) Thomas Regout provides Mr. Dammers with an automobile that he
may use for his private purposes. The amount disclosed is the
total amount Thomas Regout pays for this automobile in the
respective year and includes both business and private use for
the automobile.
(b) Thomas Regout pays two-thirds of the premium of Mr. Dammers'
supplemental pension insurance. Mr. Dammers pays the balance
of the premium. The amount disclosed is the portion of the
premium Thomas Regout paid in the respective year. See
"--Dammers Employment Agreement" for a description of Mr.
Dammers' benefits under this supplemental pension insurance.
(10) These amounts represent Thomas Regout's contribution to the account of
Wouter J. Dammers under its Employees Premium Savings Schedule.
No Grants of Stock Options or Stock Appreciation Rights. Except for
annual grants to each of its nonemployee directors of stock options exercisable
for 2,000 shares of CompX Class A Common Stock, CompX did not grant any stock
options or stock appreciation rights ("SARs") under the 1997 Plan during 2002.
Stock Option Exercises and Holdings. The following table provides
information, with respect to the named executive officers, concerning the amount
the named executive officers realized in 2002 upon the exercise of stock options
exercisable for CompX Class A Common Stock and the value of unexercised stock
options exercisable for CompX Class A Common Stock the named executive officers
held as of December 31, 2002. CompX has not granted any SARs.
AGGREGATE STOCK OPTION EXERCISES IN 2002 AND
DECEMBER 31, 2002 OPTION VALUES
Number of Shares
Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money Options
Acquired on December 31, 2002 (#) at December 31, 2002 (1)
Exercise Value ----------------------------- ---------------------------
Name (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------- ----------- ---------------- ------------- -------------- ------------- --------------
David A. Bowers -0- $ -0- 45,000 50,000 -0- -0-
Darryl R. Halbert -0- -0- 2,000 8,000 -0- -0-
Scott C. James -0- -0- 15,000 23,000 -0- -0-
Brent A. Hagenbuch 10,000 19,400 (2) -0- -0- -0- -0-
Stuart M. Bitting -0- -0- -0- -0- -0- -0-
Wouter J. Dammers -0- -0- -0- 30,000 -0- -0-
- --------------------
(1) The aggregate amount is based on the difference between the exercise
price of the individual stock options and the $8.37 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, 2002.
(2) The amount realized is based on the difference between the last
reported sales price per share of CompX Class A Common Stock on the
date of exercise and the exercise price per share.
Dammers Employment Agreement. Pursuant to an employment agreement dated
August 30, 1999 between CompX and Wouter J. Dammers, CompX's Dutch subsidiary,
Thomas Regout, employed Mr. Dammers as its managing director. The agreement
provided Mr. Dammers a minimum gross annual salary of (euro) 145,210, including
a holiday allowance, and participation in CompX's bonus system and the 1997
Plan. The agreement required CompX to pay two-thirds of the premiums for Mr.
Dammers' supplemental pension insurance. Under the agreement, Thomas Regout
provided Mr. Dammers with an automobile with a value of approximately (euro)
45,378 that he could use for his private purposes, supplemental sickness or
disability insurance payments and certain other benefits. Mr. Dammers agreed to
protect CompX's confidential information. The agreement entitles Thomas Regout
to any patents arising from inventions that Mr. Dammers developed while employed
with Thomas Regout and for a period of one year after his termination. Effective
April 1, 2003, the Thomas Regout supervisory board and Mr. Dammers mutually
agreed to terminate his employment relationship. Thomas Regout agreed to pay Mr.
Dammers a severance package of 18 months of base pay and continue certain
benefits for six months. Dutch law governs these agreements.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides summary information required by SEC rules
as of December 31, 2002 with respect to CompX's equity compensation plans under
which CompX's equity securities may be issued to employees or nonemployees (such
as directors, consultants, advisers, vendors, customers, suppliers and lenders)
in exchange for consideration in the form of goods or services. The 1997 Plan,
which has been approved by CompX's stockholders, is the only such CompX equity
compensation plan.
Column (A) Column (B) Column (C)
-------------------------- ---------------------------- ------------------------
Number of Securities
Remaining Available for
Future Issuance Under
Number of Securities to be Weighted-Average Exercise Equity Compensation Plans
Issued Upon Exercise of Price of Outstanding (Excluding Securities
Outstanding Options, Options, Reflected in
Plan Category Warrants and Rights Warrants and Rights Column (A))
- --------------------------- --------------------------- --------------------------- -----------------------
Equity compensation plans
approved by security
holders.................... 764,000 $17.01 496,320
Equity compensation plans
not approved by security
holders.................... -0- -0- -0-
Total...................... 764,000 $17.01 496,320
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (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 SEC, the New York Stock Exchange, Inc. and CompX.
Based solely on the review of the copies of such forms and representations by
certain reporting persons, CompX believes that for 2002 its executive officers,
directors and 10% stockholders complied with all applicable filing requirements
under Section 16(a).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2002, the MD&C Committee deliberated on certain 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.
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 approves
certain compensation policies and practices related to CompX's executive
officers and other employees, including stock-based compensation. See "Meetings
and Committees of the Board of Directors - Management Development and
Compensation Committee."
CompX's executive compensation system generally consists of two primary
components: salary and a discretionary incentive compensation award. 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
Annual base salaries for executive officers of CompX have been
established on a position-by-position basis. The chief executive officer has the
responsibility to conduct annual internal reviews of executive officer salary
levels in an attempt to rank salary and job value to each position. The chief
executive officer then makes recommendations on salaries, other than his own, to
the MD&C Committee. The chairman of the board makes recommendations on the chief
executive officer's salary to the MD&C Committee. The MD&C Committee reviews the
recommendations regarding changes in salaries for executive officers. The MD&C
Committee may take such action, including modifications to the recommendations,
as it deems appropriate. The determinations of the MD&C Committee may be based
on a variety of factors, including a subjective evaluation of past and potential
future individual performance and contributions and alternative career
opportunities that might be available to the executives. The MD&C Committee 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, responsibilities,
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.
In February 2002, the MD&C Committee approved executive officer salary
increases for 2002, including the then chief executive officer, and four other
executive officers. In May 2002, the chief executive officer resigned and in
July 2002 the chief financial officer resigned. In August 2002, the MD&C
committee increased the annual salary of two executive officers other than the
chief executive officer. In each case, the MD&C Committee approved the annual
base salary of the executive officer based on the recommendation of either the
chairman of the board or the then current chief executive officer.
The MD&C Committee based its actions regarding 2002 salaries primarily
upon the chairman of the board's recommendation regarding the chief executive
officer, the chief executive officer's recommendations regarding the other
executive officers and the MD&C Committee members' general business knowledge.
In 2002, no specific survey or study was utilized to make salary determinations.
The chief executive officer's 2002 annual salary was not based on any specific
measure of CompX's performance.
Annual Incentive Compensation
In August 2002, the MD&C Committee determined that the amount of any
annual incentive compensation to be paid to CompX's executive officers,
including the chief executive officer, would be awarded on a year-end
discretionary evaluation of each such officer's performance, attitude and
potential, rather than achieved operating income. Accordingly, the MD&C
Committee awarded 2002 incentive compensation to CompX's executive officers
based on a discretionary evaluation of each such officer's performance, attitude
and potential. The MD&C Committee based its actions regarding 2002 incentive
compensation primarily upon the chairman of the board's recommendation regarding
the chief executive officer, the chief executive officer's recommendations
regarding the other executive officers and the MD&C Committee members' general
business knowledge. No specific overall performance measures were utilized and
there is no specific relationship between overall performance measures and an
executive's incentive compensation. Additionally, there is no specific weighing
of factors considered in the determination of incentive compensation paid to
executive officers.
The 2002 discretionary bonuses the named executive officers received
are disclosed in the bonus column in the Summary Compensation Table set forth
above.
Defined Contribution Plans
The MD&C Committee also reviews and approves CompX's discretionary
annual contributions to the CAP Plan, a profit sharing defined contribution
plan, and the CompX 401(k) Plan. Participants of these plans are employees of
certain of CompX's domestic operations. Under the CAP Plan for the 2002 plan
year, the MD&C Committee approved a contribution of 7.25% of 2002 earnings
before taxes of CompX's National and Timberline divisions and similar
contributions for other participants, subject to certain limitations under the
Internal Revenue Code of 1986, as amended (the "Code"). Under the CompX 401(k)
Plan for the 2002 plan year, the MD&C Committee approved matching contributions
based on each participant's business unit that ranged between 27% to 100% of the
such employee's contribution, subject to certain limitations under the CompX
401(k) Plan and the Code. Certain of the named executive officers received such
contributions, which are disclosed in the all other compensation column in the
Summary Compensation Table set forth above. For the 2002 plan year, the MD&C
committee approved contributions to the CAP Plan and the CompX 401(k) Plan in an
aggregate amount of approximately $1.2 million, subject to certain limitations
of the Code and the respective plans.
Tax Code Limitation on Executive Compensation Deductions
In 1993, Congress amended the 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 following members of the MD&C Committee submit the foregoing
report:
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 SEC the CompX Class A Common Stock under
Section 12 of the Exchange Act) and ending December 31, 2002. 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. The graph shows the value at December 31,
2002 assuming an original investment of $100 and reinvestment of cash dividends
and other distributions to stockholders.
Comparison of Cumulative Return Among CompX International Inc.
Class A Common Stock,
the Russell 2000 Index and a Self-Selected Peer Group Index
[PERFORMANCE GRAPH GOES HERE]
December 31,
March 6 -----------------------------------------------------------------
1998 1998 1999 2000 2001 2002
------------ ----------- ------------ ------------ ------------ --------
CompX International Inc........ $100 $132 $ 93 $ 46 $ 70 $48
Russell 2000 Index............. 100 92 111 108 111 88
Self-Selected Peer Group Index.
100 70 64 68 73 68
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, 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 (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 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 owe fiduciary duties of
good faith and fair dealing to all stockholders of the companies for which they
serve.
Intercorporate Services Agreement and Rent. Under the Contran ISA,
Contran renders or provides for certain management, financial, legal, tax and
administrative services to CompX on a fee basis. Such fees are based upon
estimates of time devoted to the affairs of CompX by the individual providers of
such services and Contran's costs for providing such services. CompX paid
Contran fees of approximately $1.66 million for services rendered under the
Contran ISA in 2002. The Contran 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. In addition, CompX paid Valhi approximately $86,000 in rent for 2002
for use of a portion of Valhi's corporate office space as CompX's principal
offices.
Insurance Matters. Tall Pines Insurance Company ("Tall Pines"), Valmont
and EWI RE, Inc. ("EWI") provide for or broker certain of CompX's insurance
policies. Tall Pines is an indirect wholly owned captive insurance company of
Valhi. Valmont is a wholly owned captive insurance company of Valhi. Parties
related to Harold C. Simmons own all of the outstanding shares of EWI. Through
December 31, 2000, a son-in-law of Harold C. Simmons managed the operations of
EWI. Subsequent to December 31, 2000, pursuant to an amended agreement that may
be terminated upon 90 days written notice by either party, this son-in-law
provides advisory services to EWI as requested by EWI, for which the son-in-law
is paid $11,875 per month and receives certain benefits under EWI's benefit
plans. Since March 2003, such son-in-law also serves as EWI's chairman of the
board.
Consistent with insurance industry practices, Tall Pines, Valmont and
EWI receive commissions from insurance and reinsurance underwriters for the
policies that they provide or broker. During 2002, CompX and its subsidiaries
paid approximately $1.1 million for policies provided or brokered by Tall Pines,
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 Tall Pines, 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 Tall
Pines, Valmont and EWI will continue in 2003.
Law Firm Relationship. Contran and its affiliates, including CompX,
engaged and paid in 2002 to Rogers & Hardin, LLP, a law firm of which CompX's
director Edward J. Hardin is a partner, in the aggregate approximately $275,000
in fees for services Rogers & Hardin LLP rendered to such entities. The
aggregate amount paid includes approximately $1,400 in fees that CompX paid in
2002 to Rogers & Hardin, LLP for services rendered to CompX. CompX presently
expects, and understands that Contran and its other affiliates presently expect,
to continue their relationship with Rogers & Hardin LLP in 2003.
INDEPENDENT AUDITOR MATTERS
Independent Auditors. The firm of PricewaterhouseCoopers LLP ("PwC")
served as CompX's independent auditors for the year ended December 31, 2002.
CompX's audit committee has appointed PwC to review CompX's quarterly unaudited
consolidated financial statements to be included in its Quarterly Reports on
Form 10-Q for the first three quarters of 2003. CompX expects PwC will be
considered for appointment to audit CompX's annual consolidated financial
statements for the year ending December 31, 2003. Representatives of PwC are not
expected to attend the Meeting.
Audit Committee Report. The audit committee of the Board of Directors
is composed of four directors, all of whom are independent within the meaning of
New York Stock Exchange current listing standards. The audit committee operates
under a written charter the Board of Directors adopted, a copy of which was
attached as Exhibit A to CompX's proxy statement for its 2001 annual meeting of
stockholders. CompX's management is responsible for preparing CompX's
consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America. CompX's independent auditors
are responsible for auditing CompX's consolidated financial statements in
accordance with auditing standards generally accepted in the United States of
America. The audit committee serves as an independent and objective party to
review CompX's auditing, accounting and financial reporting processes.
The audit committee has reviewed and discussed CompX's audited
consolidated financial statements for the year ended December 31, 2002 with
CompX's management and independent auditors. The audit committee discussed with
the independent auditors the matters required by Statement on Auditing Standards
("SAS") No. 61 (Communication with Audit Committees) and SAS No. 90 (Audit
Committee Communications), received written disclosures from the independent
auditors required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and discussed with the independent auditors
their independence. The audit committee also considered whether the independent
auditors' provision of non-audit services to CompX and its subsidiaries is
compatible with such auditors' independence. Additionally, the audit committee
discussed with CompX's management and the independent auditors such other
matters as the committee deemed appropriate. Based on the audit committee's
review of CompX's audited consolidated financial statements and the audit
committee's discussions with CompX's management and independent auditors, the
audit committee recommended to the Board of Directors that CompX's audited
consolidated financial statements for the year ended December 31, 2002 be
included in CompX's Annual Report on Form 10-K for the year ended December 31,
2002, which has been filed with the SEC.
Edward J. Hardin Keith R. Coogan
Chairman of the Audit Committee Member of the Audit Committee
Paul M. Bass, Jr. Ann Manix
Member of the Audit Committee Member of the Audit Committee
Fees Paid to PwC. The SEC recently adopted new disclosure rules
applicable to the independent auditor fee information effective May 6, 2003
pursuant to the Sarbanes-Oxley Act of 2002. CompX has decided to provide
disclosure in accordance with certain of these rules in advance of the effective
date. The following table shows the aggregate fees PwC has billed or is expected
to bill to CompX and its subsidiaries for services rendered for 2001 and 2002.
Type of Fees 2001 2002
- ------------------------------------- ----------- --------
Audit Fees (1)....................... $216,443 $273,086
Audit-Related Fees (2)............... 87,377 53,192
Tax Fees (3)......................... 21,591 54,632
All Other Fees (4)................... -0- 10,680
-------- --------
Total................................ $325,411 $391,590
======= =======
- --------------------
(1) Fees for the following services:
(a) audits of CompX's consolidated year-end financials statements
for each year;
(b) reviews of the unaudited quarterly financial statements
appearing in CompX's Forms 10-Q for each of the first three
quarters of each year;
(c) normally provided statutory or regulatory filings or
engagements for each year; and
(d) the estimated out-of-pocket costs PwC incurred in providing
all of such services for which CompX reimburses PwC.
(2) Fees for employee benefit plan audits.
(3) Fees for tax compliance, tax advice and tax planning services.
(4) Fees for all services not described in the other categories. CompX did
not pay any fees for financial information systems design or
implementation of such systems. For 2002, the disclosed fees include
consulting and software services.
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
reasonable judgment.
STOCKHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for
stockholder action at CompX's annual stockholder meetings, consistent with rules
adopted by the SEC. CompX must receive such proposals not later than December
10, 2003 to be considered for inclusion in the proxy statement and form of proxy
card relating to the Annual Meeting of Stockholders in 2004. CompX's bylaws
require that the proposal must set forth a brief description of the proposal,
the name and address of the proposing stockholder as they appear on CompX's
books, the number of shares of CompX Common Stock the stockholder holds and any
material interest the stockholder has in the proposal.
Since CompX does not have a standing nominating committee of its Board
of Directors, the Board of Directors will consider the director nominee
recommendations of CompX stockholders. CompX's bylaws require that a nomination
set forth the name and address of the nominating stockholder, a representation
that the stockholder will be a stockholder of record entitled to vote at the
annual stockholder meeting and intends to appear in person or by proxy at the
meeting to nominate the nominee, a description of all arrangements or
understandings between the stockholder and the nominee (or other persons
pursuant to which the nomination is to be made), such other information
regarding the nominee as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the SEC and the consent of the nominee to
serve as a CompX director if elected.
For proposals or director nominations to be brought at the 2004 Annual
Meeting of Stockholders but not included in the proxy statement for such
meeting, CompX's bylaws require that the proposal or nomination must be
delivered or mailed to the principal executive offices of CompX no later than
forty-five days prior to the earlier of the date (as if in the current year) on
which notice of the date of the last annual meeting was mailed or public
disclosure of the date of the meeting was made. Proposals and nominations should
be addressed to: Corporate Secretary, CompX International Inc., Three Lincoln
Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697. 2002 ANNUAL
REPORT ON FORM 10-K
A copy of CompX's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002, as filed with the SEC, is included as part of the annual
report mailed to CompX's stockholders with this proxy statement.
ADDITIONAL COPIES
Pursuant to an SEC rule concerning the delivery of annual reports and
proxy statements, a single set of these reports may be sent to any household at
which two or more stockholders reside if they appear to be members of the same
family. Each stockholder continues to receive a separate proxy card. This
procedure, referred to as householding, reduces the volume of duplicate
information stockholders receive and reduces mailing and printing expenses. A
number of brokerage firms have instituted householding. Certain beneficial
stockholders who share a single address may have received a notice that only one
annual report and proxy statement would be sent to that address unless a
stockholder at that address gave contrary instructions. If, at any time, a
stockholder who holds shares through a broker no longer wishes to participate in
householding and would prefer to receive a separate proxy statement and related
materials, or if such stockholder currently receives multiple copies of the
proxy statement and related materials at his or her address and would like to
request householding of CompX communications, the stockholder should notify his
or her broker. Additionally, CompX will promptly deliver a separate copy of
CompX's 2002 annual report or this proxy statement to any stockholder at a
shared address to which a single copy of such documents was delivered, upon the
written or oral request of the stockholder.
To obtain copies of CompX's 2002 annual report or this proxy statement
without charge, please mail your request to A. Andrew R. Louis, Corporate
Secretary, at CompX International Inc., Three Lincoln Centre, 5430 LBJ Freeway,
Suite 1700, Dallas, Texas 75240-2697, or call him at 972.233.1700.
COMPX INTERNATIONAL INC.
Dallas, Texas
March 31, 2003
COMPX INTERNATIONAL INC.
THREE LINCOLN CENTRE
5430 LBJ FREEWAY, SUITE 1700
DALLAS, TEXAS 75240-2697
- ------------------------------------------------------------------------------
Proxy - 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 19, 2003
The undersigned hereby appoints David A. Bowers, Darryl R. Halbert 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 2003
Annual Meeting of Stockholders (the "Meeting") of CompX International Inc., a
Delaware corporation ("CompX"), to be held at CompX's corporate offices at Three
Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas on Monday, May 19,
2003, at 1:30 p.m. (local time), and at any adjournment or postponement of the
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 card.
THIS PROXY MAY BE REVOKED AS SET FORTH IN THE COMPX PROXY
STATEMENT THAT ACCOMPANIED THIS PROXY CARD.
The proxies, if this card is properly executed, will vote in the manner directed
on this card. If no direction is made, the proxies will vote "FOR" all nominees
named on the reverse side of this card for election as directors 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 CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
SEE REVERSE SIDE.
CompX International Inc.
[Name]
[Address]
[ ] Mark this box with an X if you have made changes to your name or address
details above.
- -------------------------------------------------------------------------------
Annual Meeting Proxy Card
- -------------------------------------------------------------------------------
A. Election of Directors
1. The board of directors recommends a vote FOR the listed nominees.
For Withhold
01 Paul M. Bass, Jr. [ ] [ ]
02 David A. Bowers [ ] [ ]
03 Keith R. Coogan [ ] [ ]
04 Edward J. Hardin [ ] [ ]
05 Ann Manix [ ] [ ]
06 Glenn R. Simmons [ ] [ ]
07 Steven L. Watson [ ] [ ]
B. Other Matters
The board of directors recommends a vote FOR the following proposal.
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
C. Authorized Signatures - Sign Here - This section must be completed for
your instructions to be executed.
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. Each signatory hereby revokes all
proxies heretofore given to vote at said Meeting and any adjournment or
postponement thereof.
Signature 1 - Signature 2 - Date (mm/dd/yyyy)
Please keep signature Please keep signature
within box within box
[ ] [ ] [ ][ ]/[ ][ ]/[ ][ ][ ][ ]
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