Our bylaws provide that the board of directors shall consist of one or more members as determined by our board of directors or stockholders. Our board of directors has
currently set the number of directors at seven and recommends the seven director nominees named in this proxy statement for election at our 2021 annual stockholder meeting. The directors elected at the meeting will hold office until our 2022
annual stockholder meeting and until their successors are duly elected and qualified or their earlier removal or resignation.
All of the director nominees are currently members of our board of directors whose terms will expire at the 2021 annual meeting, except for Scott C. James. David A. Bowers,
currently a member of the board of directors, is not standing for reelection as a director. All of the nominees have agreed to serve if elected. If any nominee is not available for election at the meeting, your shares will be voted FOR an
alternate nominee to be selected by the board of directors, unless you withhold authority to vote for such unavailable nominee. The board of directors believes that all of its nominees will be available for election at the meeting and will
serve if elected.
Dr. Barry has five years of experience on our board of directors and over 20 years of experience on Valhi’s board of directors, audit committee and management development and
compensation committee. He also has senior executive, operating, corporate governance, finance and financial accounting oversight experience from a large, non-profit, private educational institution and from a former publicly held corporation
affiliated with us, which was publicly held at the time he served as one of its directors.
Ms. Feehan has seven years of experience as a director of us, Kronos Worldwide, NL and Valhi. She also has over 43 years of financial and tax accounting and auditing
experience, certain years of which were as a partner of one the largest international accounting firms.
Mr. Graham has extensive experience with our businesses. He also has senior executive, operating, corporate governance, finance and financial accounting oversight experience
from other publicly and privately held entities related to us for which he currently serves or formerly served.
Ms. Herrington has three years of experience on the boards of directors and audit committees of CompX and Valhi. She also has senior executive, operating, corporate
governance, finance, and financial accounting oversight experience from two publicly-traded companies for which she formerly served.
Mr. James has over 28 years of experience serving CompX, in which he developed general management, senior executive, corporate governance, finance and financial accounting
oversight experience.
Ms. Manix has over 22 years of experience on our board of directors and audit committee and 19 years of experience on our management development and compensation committee.
She has senior executive, operating, corporate governance, finance and financial accounting oversight experience from other publicly and privately held entities for which she formerly served.
Ms. Tidlund has four years of experience on our board of directors and audit committee, and six years of experience on the board of directors and audit committee of Valhi.
She also has senior executive, operating, corporate governance, finance and financial accounting oversight experience from a publicly traded oil exploration and service company for which she formerly served.
Set forth below is certain information relating to our executive officers. Each executive officer serves at the pleasure of the board of directors. Biographical information
with respect to Robert D. Graham and Scott C. James is set forth under the Nominees for Director subsection above.
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Robert D. Graham
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65
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Vice Chairman of the Board
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Scott C. James
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55
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President and Chief Executive Officer
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Andrew B. Nace
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56
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Executive Vice President
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Steven S. Eaton
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62
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Vice President, Internal Control over Financial Reporting
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Jane R. Grimm
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50
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Vice President and Secretary
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Bryan A. Hanley
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40
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Vice President and Treasurer
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Amy E. Ruf
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44
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Vice President and Controller
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Amy Allbach Samford
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46
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Vice President and Chief Financial Officer
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Darci B. Scott
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46
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Vice President, Tax
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Andrew B. Nace has served as our executive vice president since 2017, and previously served as our vice president from 2013 to 2017. He currently serves as
executive vice president of Kronos Worldwide and NL, as executive vice president and general counsel of Valhi, and as executive vice president, general counsel and secretary of Contran. Mr. Nace has served in legal positions (including officer
positions) with various companies related to us and Contran since 2003.
Steven S. Eaton has served as our vice president, internal control over financial reporting since 2015. He currently serves as vice
president, internal control over financial reporting for Kronos Worldwide, NL and Valhi. Mr. Eaton has served in internal audit positions (including officer positions) with various companies related to us and Contran since 2006.
Jane R. Grimm has served as our vice president and secretary since 2017. She currently serves as vice president and secretary of
Valhi. Ms. Grimm has served in legal positions (including officer positions) with various companies related to us and Contran since 2010.
Bryan A. Hanley has served as our vice president and treasurer since 2017. He currently serves as vice president and treasurer of
Contran, Valhi, Kronos Worldwide and NL. From 2013 to 2017, Mr. Hanley served as assistant treasurer and director, investor relations of Pier 1 Imports, Inc., a retailer specializing in home furnishings and decor, and also served as its
assistant treasurer from 2010 to 2013.
Amy E. Ruf has served as our vice president and controller since 2019. She has served in various accounting and financial positions in various companies
related to us and Contran since 2004.
Amy Allbach Samford has served as our vice president and chief financial officer since 2019. She currently serves as vice president and chief financial
officer of NL, and as vice president and controller of Valhi and Contran. Ms. Samford has served in various accounting and financial positions (including officer positions) in various companies related to us and Contran since 2006.
Darci B. Scott has served as our vice president, tax since June 2020. She currently serves as vice president, tax – financial reporting of Valhi and as
vice president, tax of NL. Ms. Scott has served in various tax accounting positions with various companies related to us and Contran since 2006.
Controlled Company Status, Director Independence and Committees. Because of NL’s ownership of 86.7% of the
outstanding shares of our class A common stock, we are considered a controlled company under the corporate governance standards of the NYSE American. Pursuant to the corporate governance standards, a controlled company may choose not to have a
majority of independent directors, independent compensation or nominations committees or charters for these committees. We have decided not to have an independent nominations committee. Our board of directors believes that the full board of
directors best represents the interests of all of our stockholders and that it is appropriate for all matters that would otherwise be considered by a nominations or risk oversight committee to be considered and acted upon by the full board of
directors. Applying the NYSE American director independence standards without any additional categorical standards, the board of directors has determined that Thomas E. Barry, Terri L. Herrington, Ann Manix and Mary A. Tidlund are independent
and have no material relationship with us that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. While the members of our management development and compensation committee currently
satisfy the independence requirements of the NYSE American, we have chosen not to satisfy all of the NYSE American corporate governance standards for a compensation committee and not to have a charter for our management development and
compensation committee.
2020 Meetings and Standing Committees of the Board of Directors. The board of directors held four meetings and
took action by written consent on two occasions in 2020. Each of our incumbent directors attended all of the board meetings and meetings of the committees on which he or she served that were held while he or she was in office during 2020. It
is expected that each director nominee will attend our annual meeting of stockholders, which is held immediately before the annual meeting of the board of directors. All of our directors who were elected at our 2020 annual stockholder meeting
attended such meeting.
The board of directors has established and delegated authority to two standing committees, which are described below. The board of directors is expected to elect the members
of the standing committees at the board of directors annual meeting immediately following the annual stockholder meeting. The board of directors from time to time may establish other committees to assist it in the discharge of its
responsibilities.
Audit Committee. Our audit committee assists with the board of directors’ oversight responsibilities relating to
our financial accounting and reporting processes and auditing processes. The purpose, authority, resources and responsibilities of our audit committee are more specifically set forth in its charter. Applying the requirements of the NYSE
American corporate governance standards (without additional categorical standards) and SEC regulations, as applicable, the board of directors has previously determined that:
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each member of our audit committee is independent, financially literate and has no material relationship with us other than serving as our director; and
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Ms. Terri L. Herrington is an “audit committee financial expert.”
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No member of our audit committee serves on more than three public company audit committees. For further information on the role of our audit committee, see the Audit
Committee Report in this proxy statement. The current members of our audit committee are Thomas E. Barry (chairman), Terri L. Herrington, Ann Manix and Mary A. Tidlund. Our audit committee held five meetings in 2020.
Management Development and Compensation Committee. The principal responsibilities of our management development
and compensation committee are:
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to recommend to the board of directors whether or not to approve any proposed charge to us or any of our privately held subsidiaries pursuant to our ISA with Contran;
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to review, approve and administer certain matters regarding our employee benefit plans or programs, including annual incentive compensation awards;
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to review, approve, administer and grant awards under our equity compensation plan; and
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to review and administer such other compensation matters as the board of directors may direct from time to time.
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As discussed above, the board of directors has determined that each member of our management development and compensation committee is independent by applying the NYSE
American director independence standards (without additional categorical standards). The management development and compensation committee may delegate to its members or our officers any or all of its authority as it may choose subject to
certain limitations of Delaware law on what duties directors may delegate. The committee has not exercised this right of delegation. With respect to the role of our executive officers in determining or recommending the amount or form of
executive compensation, see the Compensation Discussion and Analysis section of this proxy statement. With respect to director cash compensation, our executive officers make recommendations on such compensation directly to our board of
directors for its consideration without involving the management development and compensation committee. The current members of our management development and compensation committee are Ann Manix (chair) and Thomas E. Barry. Our management
development and compensation committee held one meeting in 2020.
Risk Oversight. Our board of directors oversees the actions we take in managing our material risks. Our
management is responsible for our day-to-day management of risk. The board’s oversight of our material risks is undertaken through, among other things, various reports and assessments that management presents to the board and the related board
discussions. The board has delegated some of its primary risk oversight to our audit committee and management development and compensation committee. Our audit committee annually receives management’s reports and assessments on, among other
things, the risk of fraud, certain material business risks and a ranking of such material business risks and our insurance program. The audit committee also receives reports from our independent registered public accounting firm regarding,
among other things, financial risks and the risk of fraud. Our management development and compensation committee receives management’s assessments on the likelihood that our compensation policies and practices could have a material adverse
effect on us, as more fully described in the Compensation Policies and Practices as They Relate to Risk Management section of this proxy statement. The audit committee and management development and compensation committee report to the board
of directors about their meetings. We believe the leadership structure of the board of directors is appropriate for our risk oversight.
Identifying and Evaluating Director Nominees. Historically, our management has recommended director nominees to
the board of directors. As stated in our corporate governance guidelines:
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our board of directors has no specific minimum qualifications for director nominees;
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each nominee should possess the necessary business background, skills and expertise at the policy-making level and a willingness to devote the required time to the duties and responsibilities of
membership on the board of directors; and
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the board of directors believes that experience as our director is a valuable asset and that directors who have served on the board for an extended period of time are able to provide important insight
into our current and future operations.
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In identifying, evaluating and determining our director nominees, the board of directors follows such corporate governance guidelines. The board also considers the nominee’s ability to satisfy
the need, if any, for required expertise on the board of directors or one of its committees. While we do not have any policy regarding the diversity of our nominees, the board does consider diversity in the background, skills and expertise at
the policy making level of our director nominees, and as a result our board believes our director nominees do possess a diverse range of senior management experience that aids the board in fulfilling its responsibilities. The board of
directors believes its procedures for identifying and evaluating director nominees are appropriate for a controlled company under the NYSE American corporate governance standards.
Leadership Structure of the Board of Directors and Independent Director Meetings. Loretta J. Feehan serves as our
chair of the board (non-executive). Our chief executive officer, Scott C. James, does not currently serve on our board but is a director nominee named in this proxy statement for election at our 2021 annual stockholder meeting. The board of
directors believes our current leadership structure is appropriate for a controlled company under the NYSE American corporate governance standards. While there is no single organizational structure that is ideal in all circumstances, the board
of directors believes that having different individuals serve as our chair of the board (non-executive) and as our chief executive officer reflects the established working relationship for these positions regarding our business and provides an
appropriate breadth of experience and perspective that effectively facilitates the formulation of our long-term strategic direction and business plans. In addition, the board of directors believes that since Ms. Feehan is a representative of
Contran, her service as our chair of the board (non-executive) is beneficial in providing strategic leadership for us since there is a commonality of interest that is closely aligned in building long-term stockholder value for all of our
stockholders. We have in the past, and may in the future, have a leadership structure in which the same individual serves as our chairman of the board and as our chief executive officer. In those instances, the individual has been, or would be
expected to be, an employee or representative of Contran (or one of Contran’s subsidiaries, including us).
Pursuant to our corporate governance guidelines, our independent directors are entitled to meet on a regular basis throughout the year, and will meet at least once annually,
without the participation of our other directors who are not independent. While we do not have a lead independent director, the chairman of our audit committee presides at all of the meetings of our independent directors. Our non-management
directors (who are not executive officers of CompX) also meet at regularly scheduled meetings without management participation, with the chairman of our audit committee also presiding at such meetings. In 2020, we complied with the NYSE
American requirements for meetings of our non-management and independent directors.
Stockholder Proposals and Director Nominations for the 2022 Annual Meeting of Stockholders. Stockholders may
submit proposals on matters appropriate for stockholder action at our annual stockholder meetings, consistent with rules adopted by the SEC. We must receive such proposals not later than December 14, 2021 to be considered for inclusion in the
proxy statement and form of proxy card relating to our annual meeting of stockholders in 2022. Our 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 in our records, the number of shares of our common stock the stockholder holds and any material interest the stockholder has in the proposal.
The board of directors will consider the director nominee recommendations of our stockholders in accordance with the process discussed above. Our 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 director if elected.
For proposals or director nominations to be brought at the 2022 annual meeting of stockholders but not included in the proxy statement for such meeting, our bylaws require
that the proposal or nomination must be delivered or mailed to our principal executive offices in most cases no later than March 1, 2022. Proposals and nominations should be addressed to our corporate secretary at CompX International Inc.,
Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2620.
Communications with Directors. Stockholders and other interested parties who wish to communicate with the board of
directors or its non-management or independent directors may do so through the following procedures. Such communications not involving complaints or concerns regarding accounting, internal accounting controls and auditing matters related to us
may be sent to the attention of our corporate secretary at CompX International Inc., Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2620. Provided that any such communication relates to our business or affairs and is
within the function of our board of directors or its committees, and does not relate to insignificant or inappropriate matters, such communication, or a summary of such communication, will be forwarded to the chairman of our audit committee,
who also serves as the presiding director of our non-management and independent director meetings.
Complaints or concerns regarding accounting, internal accounting controls and auditing matters, which may be made anonymously, should be sent to the attention of our general
counsel with a copy to our chief financial officer at the same address as our corporate secretary. These complaints or concerns will be forwarded to the chairman of our audit committee. We will investigate and keep these complaints or
concerns confidential and anonymous, to the extent feasible, subject to applicable law. Information contained in such a complaint or concern may be summarized, abstracted and aggregated for purposes of analysis and investigation.
Compensation Committee Interlocks and Insider Participation. During 2020, Ann Manix and Thomas E. Barry served on
the management development and compensation committee. No member of the committee:
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was an officer or employee of ours during 2020 or any prior year;
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had any related party relationships with us that requires disclosure under applicable SEC rules; or
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had any interlock relationships under applicable SEC rules.
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For 2020, no executive officer of ours had any interlock relationships within the scope of the intent of applicable SEC rules. However, during 2020 Robert D. Graham was an executive officer of
ours and on the board of directors of Contran when concurrently also serving as one of our directors.
Code of Business Conduct and Ethics. We have adopted a code of business conduct and ethics. The code applies to
all of our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller. Only the board of directors may amend the code. Only our audit committee or
other committee of the board of directors with specifically delegated authority may grant a waiver of this code. We will disclose amendments to or waivers of the code as required by law and the applicable rules of the NYSE American.
Corporate Governance Guidelines. We have adopted corporate governance guidelines to assist the board of directors
in exercising its responsibilities. Among other things, the corporate governance guidelines provide for director qualifications, for independence standards and responsibilities, for approval procedures for ISAs and that our audit committee
chairman preside at all meetings of the independent directors.
Availability of Corporate Governance Documents. A copy of each of our audit committee charter, code of business conduct and ethics and
corporate governance guidelines is available on our website at www.compxinternational.com under the governance section.
Employee, Officer and Director Hedging. We have not adopted any policies or practices regarding hedging of our equity securities by our
employees (including officers) or directors. However, our employees (including officers) and directors must comply with our insider trading policy, which applies to hedging transactions involving our securities as it does to transactions in
our securities generally.
COMPENSATION OF EX
ECUTIVE OFFICERS AND DIRECTORS
AND OTHER INFORMATION
Compensation Discussion and Analysis. This compensation discussion and analysis describes the key principles and
factors underlying our executive compensation policies for our named executive officers. In 2020, we employed one of our named executive officers. Contran employed and directly compensated our five other named executive officers who provided
their services to us in 2020 under our ISA with Contran.
As defined in the Glossary of Terms at the beginning of this proxy statement, the phrase “named executive officers” refers to the five persons whose compensation is summarized
in the 2020 Summary Compensation Table in this proxy statement. Such phrase is not intended to refer, and does not refer, to all of our executive officers.
Nonbinding Advisory Stockholder Vote on Executive Officer Compensation. For the 2020 annual meeting of stockholders, we submitted a
nonbinding advisory proposal recommending the stockholders adopt a resolution approving the compensation of our named executive officers as disclosed in the 2020 proxy statement. At the annual meeting, the resolution received the affirmative
vote of 93.5% of the eligible votes. We considered the favorable result and determined not to make any material changes to our compensation practices.
Compensation of our Named Executive Officer Employed by Us. We have one named executive officer employed by us. Scott C. James is
our president and chief executive officer and was an executive officer and employed by us for all of the last three years.
Overview. Prior to 2018, we decided to forgo long-term compensation (other than defined contribution plans that are generally available on a non-discriminatory basis to all employees) and implemented a compensation program that is primarily cash-based, with minimal perquisites, if any. Our objectives for the primarily
cash-based compensation program as it relates to our senior officers, including Mr. James, are to:
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have a total individual compensation package that is easy to understand;
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encourage them to maximize long-term stockholder value; and
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achieve a balanced compensation package that would attract and retain highly qualified senior officers and appropriately reflect each such officer’s individual performance, contributions and general
market value.
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In furtherance of our objectives and in an effort to separate annual operating planning from annual incentive compensation, we implemented discretionary incentive bonuses for our senior
officers. As a result, annual compensation for Mr. James primarily consists of a base salary and a discretionary incentive bonus.
We do not base Mr. James’ compensation on any specific measure of, or formula based upon, our financial performance, although we do consider our financial performance as one
factor in determining his compensation. We determine the amount of each component of such compensation solely in our collective business judgment and experience, without performing any independent market research. We have not entered into any
written employment agreements with Mr. James.
Base Salary. We have established Mr. James’ annual base salary based on his responsibility and experience. We pay this portion of his
compensation to provide Mr. James with a reliable amount of compensation for the year, subject to his continued at-will employment and satisfactory performance for his services at the level of his responsibilities. Robert D. Graham, who is our
vice chairman of the board, conducts an annual internal review of Mr. James’ salary level and makes a recommendation on the salary to our management development and compensation committee. The committee reviews the recommendation and may take
such action, including modifications to the recommendation, as it deems appropriate. The recommendation of Mr. Graham and the determinations of our management development and compensation committee are based on our evaluations of the past year
annual base-salary amounts with adjustments made as a result of our past and expected future financial performance, inflation, past and potential future individual performance and contributions or alternative career opportunities that might be
available to Mr. James, without performing any independent market research.
In determining increases in Mr. James’ base salary for each of the last three years, we did not use any specific measure of, or formula based upon, our financial performance,
although we did consider our financial performance as one factor in determining such increases. There is no specific weighting of factors in determining the increases. Mr. James’ base salary is disclosed in his salary column in the 2020
Summary Compensation Table in this proxy statement for each of the last three years.
Annual Incentive Bonus. We pay a discretionary incentive bonus annually in cash to Mr. James
to motivate him to achieve higher levels of performance in attaining our corporate goals and reward him for such performance. We determine the amount of any such incentive bonus on a year-end discretionary evaluation of Mr. James’
responsibility, performance, attitude and potential. The amount of the incentive bonus is also influenced by the amount of his base salary and prior year incentive bonus, as well as our financial performance. We based our award of incentive
bonuses for Mr. James primarily upon the recommendation of Mr. Graham and upon the determinations of our management development and compensation committee, which may take such action, including modifications to the recommendation, as it deems
appropriate.
In determining Mr. James’ bonus for each of the last three years, we did not use any specific overall performance measures or any specific measure of, or formula based upon,
our financial performance, although we did consider our financial performance as one factor in determining such bonuses. Additionally, there is no specific weighting of factors considered in the determination of the annual incentive bonus. We
approved discretionary incentive bonuses for Mr. James in the last three years as a percentage of his base salary as follows.
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Discretionary Incentive Bonuses as a
Percentage of Base Salary
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Scott C. James
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129%
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116%
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110%
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These bonuses were approved by our management development and compensation committee in the first quarter of the following year, and such bonuses were paid in such following year for performance in the
reported year.
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The 2020 discretionary incentive bonus for Mr. James recognized, among other things, strong operational management during the COVID-19 pandemic. The 2019 discretionary incentive bonus for Mr.
James recognized, among other things, the continuation of our higher sales in 2019 in both of our segments as compared to 2018 and our continued strong operating performance. The 2018 discretionary incentive bonus for Mr. James recognized,
among other things, our higher sales and operating income in 2018 in both of our segments as compared to 2017, and Mr. James’ greater level of experience as chief executive officer. These discretionary incentive bonuses are disclosed in the
bonus column in the 2020 Summary Compensation Table in this proxy statement.
Defined Contribution Plans. We pay discretionary annual contributions to the CompX Capital Accumulation Plan, a profit sharing defined
contribution plan, and The Employee 401(k) Retirement Plan, a 401(k) defined contribution plan. Participants of these plans are employees of certain of our operations. In March of each year, upon the recommendation of our chief executive
officer and the approval of our management development and compensation committee, we contributed for the plan year that ended on December 31 of the prior year, subject to certain limitations under the respective plans and the U.S. Internal
Revenue Code of 1986, as amended:
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to the CompX Capital Accumulation Profit Sharing Plan, for each of the last three plan years, 7.25% of that year’s profit before taxes of the designated operations group (which for 2020 was our combined
security products and marine components segments, and for 2019 and 2018 was our security products segment combined with our Livorsi business unit from our marine components segment), subject to certain adjustments; and
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to our 401(k) plan for each of the last three plan years, a matching contribution of 100% of the participants’ contributions, up to 6% of their eligible earnings (with such matching contribution being
fully discretionary in 2020, and in 2019 and 2018 being partially determined by a formula pool and partially discretionary);
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Mr. James received such contributions for each of the last three years. These contributions are included in his all other compensation column in the 2020 Summary Compensation
Table in this proxy statement.
Compensation of our Named Executive Officers Employed by Contran. For each of the last three years, certain of our named executive officers were
employed by Contran and provided their services to us pursuant to our ISA with Contran. Our named executive officers who provided services to us pursuant to our ISA with Contran are as follows:
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Robert D. Graham
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Vice Chairman of the Board
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Andrew B. Nace
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Executive Vice President
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Amy A. Samford
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Vice President and Chief Financial Officer
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Amy E. Ruf
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Vice President and Controller
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The nature of the duties of each of our named executive officers who are employees of Contran is consistent with the duties normally associated with the officer titles and
positions such officer holds with us.
Intercorporate Services Agreement with Contran. We pay Contran a fee for services provided pursuant to our ISA with
Contran, which fee was approved by our independent directors after receiving the recommendation of our management development and compensation committee and the concurrence of our chief financial officer. Such services provided under this ISA
included the services of our named executive officers employed by Contran, and as a result a portion of the aggregate ISA fee we pay to Contran is paid with respect to services provided to us by such named executive officers. The nature of the
duties of each of our executive officers who are employees of Contran is consistent with the duties normally associated with the officer titles and positions such officer holds with us.
The charge under this ISA reimburses Contran for its cost of employing the personnel who provide the services by allocating such cost to us based on the
estimated percentage of time such personnel were expected to devote to us over the year. The amount of the fee we paid for each year under this ISA for a person who provided services to us represents, in management’s view, the reasonable
equivalent of “compensation” for such services. See the Intercorporate Services Agreements part of the Certain Relationships and Transactions section of this proxy statement for the aggregate amount we paid to Contran in 2020 under this ISA.
Under the various ISAs among Contran and its subsidiaries and affiliates, we shared the cost of the employment of our executive officers employed by Contran with Contran and certain of its other publicly and privately held subsidiaries. For
our named executive officers employed by Contran, the portion of the annual charge we paid for each of the last three years to Contran under this ISA attributable to each of their services, as applicable, is set forth in the 2020 Summary
Compensation Table in this proxy statement. As discussed further below, the amount charged under the ISA is based upon Contran’s cost of employing or engaging the personnel who provide the services to us (including the services of our named
executive officers employed by Contran) by allocating such cost to us based on the estimated percentage of time such personnel were expected to devote to us over the year. The amount charged under the ISA is not dependent upon our financial
performance.
We believe the cost of the services received under our ISA with Contran, after considering the quality of the services received, is fair to us and is no less favorable to us
than we could otherwise obtain from an unrelated third party for comparable services, based solely on our collective business judgment and experience without performing any independent market research.
In the early part of each year, Contran’s management, including certain of our executive officers, estimates the percentage of time that each Contran employee, including
certain of our named executive officers, is expected to devote in the upcoming year to Contran and its subsidiaries and affiliates, including us. Contran’s management then allocates Contran’s cost of employing each of its employees among
Contran and its various subsidiaries based on such estimated percentages. Contran’s aggregate cost of employing each of its employees comprises:
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the annualized base salary of such employee at the beginning of the year;
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an estimate of the bonus Contran will pay or accrue for such employee (other than bonuses, if any, for specific matters) for the year, using as a reasonable approximation for such bonus the actual bonus
that Contran paid or accrued for such employee in the prior year; and
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Contran’s portion of the social security and medicare taxes on such base salary and an estimated overhead factor (25% for each of 2020, 2019 and 2018) applied to the base salary for the cost of medical
and life insurance benefits, unemployment taxes, disability insurance, defined benefit and defined contribution plan benefits, professional education and licensing and costs of providing an office, equipment and supplies related to
providing such services.
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Contran’s senior management subsequently made such adjustments to the details of the proposed ISA charge as they deemed necessary for accuracy, overall reasonableness and fairness to us.
In the first quarter of each year, the proposed charge for that year under our ISA with Contran was presented to our management development and compensation committee, and the
committee considered whether to recommend that our board of directors approve the ISA charge. Among other things during such presentation, the committee was informed of:
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the quality of the services Contran provides to us, including the quality of the services certain of our executive officers provide to us;
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the comparison of the ISA charge and number of full-time equivalent employees reflected in the charge by department for the prior year and proposed for the current year;
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the comparison of the prior year and proposed current year charges by department and in total and such amounts as a percentage of Contran’s similarly calculated costs for its departments and in total
for those years;
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•
|
the comparison of the prior year and proposed current year average hourly rate; and
|
|
•
|
the concurrence of our chief financial officer as to the reasonableness of the proposed charge.
|
In determining whether to recommend that the board of directors approve the proposed ISA fee to be charged to us, the management development and compensation committee
considers the three elements of Contran’s cost of employing the personnel who provide services to us, as discussed above, including the cost of employing certain of our named executive officers, in the aggregate and not individually. After
considering the information contained in such presentations, and following further discussion and review, our management development and compensation committee recommended that our board of directors approve the proposed ISA fee after
concluding, based on their collective business judgment and experience without performing any independent market research, that:
|
•
|
the cost to employ the additional personnel necessary to provide the quality of the services provided by Contran would exceed the proposed aggregate fee to be charged by Contran to us under our ISA with
Contran; and
|
|
•
|
the cost for such services would be no less favorable than could otherwise be obtained from an unrelated third party for comparable services.
|
In reaching its recommendation, our management development and compensation committee did not review:
|
•
|
any ISA charge from Contran to any other publicly held parent or sister company, although such charge was separately reviewed by the management development and compensation committee of the applicable
company; and
|
|
•
|
the compensation policies of Contran or the amount of time our named executive officers employed by Contran are expected to devote to us because:
|
|
o
|
each of our named executive officers employed by Contran provides services to many companies related to Contran, including Contran itself, and the percentage of time devoted to each company by such
named executive officers varies;
|
|
o
|
the fee we pay to Contran under our ISA with Contran each year does not represent all of Contran’s cost of employing each of such named executive officers;
|
|
o
|
Contran and these other companies related to Contran absorb the remaining amount of Contran’s cost of employing each of such named executive officers; and
|
|
o
|
the members of our management development and compensation committee consider the factors discussed above, applying their collective business judgment and experience, in determining whether to recommend
that the proposed ISA fee for each year be approved by the full board of directors.
|
Based on the recommendation of our management development and compensation committee as well as the concurrence of our chief financial officer, our independent directors
approved the proposed annual ISA charge effective January 1, 2020, with our other directors abstaining.
For financial reporting and income tax purposes, the ISA fee is expensed as incurred on a quarterly basis. Section 162(m) of the Code generally disallows an income tax
deduction to publicly held companies for compensation over $1.0 million paid to the company’s chief executive officer, chief financial officer and three other most highly compensated executive officers. To the extent any individual’s charge to
a publicly held company under the ISA was in excess of $1.0 million, the deductibility by the company of the charge for income tax purposes would be limited under Section 162(m), if such section were to be deemed applicable as it relates to the
ISA. In 2018, 2019 and 2020 the ISA did not include, and in 2021 the ISA will not include, charges in excess of $1.0 million for any individual. In the event the fee we would pay to Contran under our ISA with Contran were ever to include the
services for any individual with an ISA charge in excess of $1.0 million, Contran has agreed to absorb the impact of any such income tax deduction disallowance.
No Director Fees or Equity-Based Compensation for Executive Officers. Our executive officers, including our named executive officers,
are not eligible to receive cash or equity-based compensation for their service on our board of directors. For the years reflected in the 2020 Summary Compensation Table, we did not pay any compensation to Mr. Graham for his service as one of
our directors.
Prior to 2018, we decided to forgo the grant of any equity compensation other than annual awards of stock to our directors, as discussed above. We also do not have any
security ownership requirements or guidelines for our management, although we do have stock ownership guidelines for our non-employee directors. We do not currently anticipate any equity-based compensation will be granted in 2021, other than
the annual grants of stock to our directors who are not employees of Contran or one of its subsidiaries or affiliates.
Compensation Committee Report. The management development and compensation committee has reviewed with management
the Compensation Discussion and Analysis section in this proxy statement. Based on the committee’s review and a discussion with management, the committee recommended to the board of directors that our compensation discussion and analysis be
included in this proxy statement.
The members of our management development and compensation committee submit the foregoing report as of March 3, 2021.
|
Ann Manix
Chair of our Management Development and
Compensation Committee
|
Thomas E. Barry
Member of our Management Development and
Compensation Committee
|
Summary of Cash and Certain Other Compensation of Executive Officers. The 2020 Summary
Compensation Table below provides information concerning compensation we and our subsidiaries paid or accrued for services rendered during the last three years by our chief executive officer, our chief financial officer, and each of the three
other most highly compensated individuals (in certain instances, based on ISA charges to us) who were our executive officers at December 31, 2020. Messrs. Graham and Nace and Mses. Ruf and Samford were employees of Contran for their years
reported in this table and provided their services to us and our subsidiaries pursuant to our ISA with Contran. For a discussion of this ISA, see the Intercorporate Services Agreements part of the Certain Relationships and Transactions section
of this proxy statement.
2020 SUMMARY COMPENSATION TABLE (1)
Name and Principal Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert D. Graham
|
2020
|
$659,000
|
(3)
|
$ -0-
|
$ -0-
|
|
$ -0-
|
|
$ 659,000
|
|
Vice Chairman of the
|
2019
|
559,000
|
(3)
|
-0-
|
-0-
|
|
-0-
|
|
559,000
|
|
Board
|
2018
|
409,000
|
(3)
|
-0-
|
-0-
|
|
-0-
|
|
409,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott C. James
|
2020
|
499,358
|
|
550,000
|
-0-
|
|
32,832
|
(4)
|
1,082,190
|
|
President and Chief
|
2019
|
473,846
|
|
550,000
|
-0-
|
|
40,519
|
(4)
|
1,064,365
|
|
Executive Officer
|
2018
|
424,327
|
|
550,000
|
-0-
|
|
40,238
|
(4)
|
1,014,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew B. Nace
|
2020
|
370,000
|
(3)
|
-0-
|
-0-
|
|
-0-
|
|
370,000
|
|
Executive Vice President
|
2019
|
350,000
|
(3)
|
-0-
|
-0-
|
|
-0-
|
|
350,000
|
|
|
2018
|
306,000
|
(3)
|
-0-
|
-0-
|
|
-0-
|
|
306,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Amy A. Samford (2)
|
2020
|
287,000
|
(3)
|
-0-
|
-0-
|
|
-0-
|
|
287,000
|
|
Vice President and Chief
|
2019
|
284,000
|
(3)
|
-0-
|
-0-
|
|
-0-
|
|
284,000
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amy E. Ruf (2)
|
2020
|
286,000
|
(3)
|
-0-
|
-0-
|
|
-0-
|
|
286,000
|
|
Vice President and
Controller
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Certain non-applicable columns have been omitted from this table.
|
|
(2)
|
Ms. Samford was elected as our vice president and chief financial officer effective as of June 1, 2019 and is a named executive officer only for 2019 and 2020. Ms. Ruf is one of
our named executive officers only for 2020.
|
|
(3)
|
The amounts shown in the table as salary compensation for Messrs. Graham and Nace and Mses. Ruf and Samford represent the portion of the fees we paid to Contran pursuant to the ISA attributable to the
services each of these officers rendered to us. The ISA charges disclosed for Contran employees who perform executive officer services for us and our subsidiaries are based on various factors described in the Compensation
Discussion and Analysis section of this proxy statement. Our management development and compensation committee considers the factors described in the Compensation Discussion and Analysis section of this proxy statement in
determining whether to recommend that our board of directors approve the aggregate proposed ISA fee with Contran. As discussed in the Compensation Discussion and Analysis section of this proxy statement, our management development
and compensation committee does not consider any ISA charge from Contran to any other publicly held parent or sister company of ours, although such charge is separately reviewed by the management development and compensation
committee of the applicable company. As an employee of Contran, Mr. Graham is not eligible to receive cash or stock compensation for service as one of our directors.
|
|
(4)
|
All other compensation for Mr. James for each of the last three years consisted of our matching contributions to his account under our 401(k) Plan and our contributions to his account under the CompX
Capital Accumulation Plan, a defined contribution plan, as follows:
|
|
|
Employer’s 401(k) Plan Matching
|
Employer’s
Capital Accumulation Plan
|
|
|
|
|
|
|
|
2020
|
$17,100
|
$15,732
|
$32,832
|
|
2019
|
16,800
|
23,719
|
40,519
|
|
2018
|
16,500
|
23,738
|
40,238
|
See the discussion of our retirement plan contributions in the Compensation Discussion and Analysis section of this proxy statement.
No Grants of Plan-Based Awards. During 2020, no named executive officer received any plan-based
awards from us or our subsidiaries.
No Outstanding Equity Awards at December 31, 2020. At December 31, 2020, none of our named executive officers held
outstanding stock options to purchase shares of our class A common stock (or common stock of our parent companies), or held any equity incentive awards for such shares.
No Option Exercises or Stock Vested. During 2020, no named executive officer exercised any stock options or held any
stock subject to vesting restrictions.
Pension Benefits. We do not have any defined benefit pension plans in which our named executive
officers participate.
Nonqualified Deferred Compensation. We do not owe any nonqualified deferred compensation to our named executive
officers.
Pay Ratio Disclosure. SEC rules require annual disclosure of the ratio of a registrant’s median employee’s annual
total compensation to the total annual compensation of its chief executive officer. For 2020, the total annual compensation (as disclosed in the 2020 Summary Compensation Table) of Scott C. James, our chief executive officer, is $1,082,190;
the reasonable estimate of the median of the annual total compensation of all of our employees except our chief executive officer, calculated in a manner consistent with Item 402(u) of Regulation S-K, is $53,904; and the ratio of such two
amounts is 20 to 1.
For purposes of this disclosure, our “median employee” was estimated using a simple random sample statistical sampling technique, pursuant to which we and each of our consolidated subsidiaries
selected every seventh employee listed on their first payroll register for the month of October 2020. Based on such random sample of our employees, and using the 2020 base salary (or equivalent for hourly employees) for each employee in such
random sample as reflected in our payroll records, the median employee was estimated by determining the employee in such random sample who had the median 2020 base salary (or equivalent for hourly employees). Base salary (or equivalent)
amounts were annualized for any employee who had less than a full year of service during 2020.
Director Compensation. Our directors who are not employees of Contran or one of its subsidiaries or affiliates
(including us) are eligible to receive compensation for service as directors. The table below reflects the annual rates of their retainers for 2020.
|
|
|
|
|
|
|
|
|
|
|
Each director
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
Chair of the board
|
|
$
|
50,000
|
|
|
|
|
|
|
|
|
Chairman of our audit committee and any member of our audit committee whom the board identified as an “audit committee financial expert” (provided that if one person served in both capacities only one such retainer was paid)
|
|
$
|
45,000
|
|
|
|
|
|
|
|
|
Other members of our audit committee
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
Members of our other committees
|
|
$
|
5,000
|
|
Additionally, our eligible directors receive a fee of $1,000 per day for attendance at meetings of the board of directors or its committees and an hourly rate (not to exceed
$1,000 per day) for other services rendered on behalf of our board of directors or its committees. If an eligible director dies while serving on our board of directors, his or her designated beneficiary or estate will be entitled to receive a
death benefit equal to the annual retainer then in effect. We reimburse our directors for reasonable expenses incurred in attending meetings and in the performance of other services rendered on behalf of our board of directors or its
committees.
As preapproved by our management development and compensation committee, on the day of each of our annual stockholder meetings, each of our eligible
directors elected on that day receives a grant of shares of our common stock under our 2012 Director Stock Plan, with the number of shares received by each eligible director equal in value to $20,000 (rounded up or down to the nearest 50
shares), based on the closing price of a share of our common stock on the date of grant, but not more than 10,000 shares. These shares are fully vested and tradable immediately on their date of grant, other than restrictions under applicable
securities laws.
In 2019, we amended our corporate governance guidelines to add stock ownership guidelines for our non-employee directors (that is, directors who are not
employed by us or one of our affiliates). Subject to a phase in period, non-employee directors are required to hold a number of shares of our common stock, including shares owned by their immediate family members residing in the same
household, having a value of at least three times our base annual cash retainer for service as a director. Prior to meeting the minimum threshold, shares of our common stock acquired as part of the annual stock awards grant to non-employee
directors may not be sold.
The following table provides information with respect to compensation each of our eligible directors earned for their 2020 director services provided to us.
2020 DIRECTOR COMPENSATION (1)
|
|
|
Fees Earned or Paid in Cash (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas E. Barry
|
|
$
|
80,000
|
|
|
$
|
19,737
|
|
|
$
|
99,737
|
|
|
David A. Bowers
|
|
|
30,000
|
|
|
|
19,737
|
|
|
|
49,737
|
|
|
Loretta J. Feehan
|
|
|
80,000
|
|
|
|
19,737
|
|
|
|
99,737
|
|
|
Terri L. Herrington
|
|
|
75,000
|
|
|
|
19,737
|
|
|
|
94,737
|
|
|
Ann Manix
|
|
|
60,000
|
|
|
|
19,737
|
|
|
|
79,737
|
|
|
Mary A. Tidlund
|
|
|
55,000
|
|
|
|
19,737
|
|
|
|
74,737
|
|
|
(1)
|
Certain non-applicable columns have been omitted from this table.
|
|
(2)
|
Represents cash retainers and meeting fees the director earned for director services he or she provided to us in 2020.
|
|
(3)
|
Represents the value of 1,350 shares of our class A common stock we granted to each of the eligible directors on May 27, 2020. For the purposes of this table, we valued these stock
awards at the $14.62 closing price per share of such shares on their date of grant, consistent with the requirements of Financial Accounting Standards Board Accounting Standards Codification Topic 718.
|
Compensation Policies and Practices as They Relate to Risk Management. We believe that the risks
arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on us. In reaching this conclusion, we considered the following:
|
•
|
we do not grant equity awards to our employees, officers or other persons who provide services to us under our ISA with Contran, which mitigates taking excessive or inappropriate risk for short-term
gain that might be rewarded by equity compensation;
|
|
•
|
our executive officers employed by us are eligible to receive incentive bonus payments that are determined on a discretionary basis and do not guarantee an executive officer a particular level of bonus
based on the achievement of a specified performance or financial target, which also mitigates taking excessive or inappropriate risk for short-term gain;
|
|
•
|
our other key employees are eligible to receive bonuses based on the achievement of a specified performance or financial target based on our business plan for the year, but the chance of such employees
undertaking actions with excessive or inappropriate risk for short-term gain in order to achieve such bonuses is mitigated because:
|
|
o
|
our executive officers, who are responsible for establishing and executing such business plan, are not eligible to receive bonuses based on the business plan, but instead are only eligible for the
discretionary-based bonuses described above; and
|
|
o
|
there exist ceilings for our other key employee bonuses (which are not a significant part of their compensation) regardless of the actual level of our financial performance achieved;
|
|
•
|
our officers and other persons who provide services to us under our ISA with Contran do not receive compensation from us directly and are employed by Contran, one of our parent corporations, which
aligns such officers and persons with the long-term interests of our stockholders;
|
|
•
|
since we are a controlled company, as previously discussed, management has a strong incentive to understand and perform in the long-term interests of our stockholders; and
|
|
•
|
our experience is that our employees are appropriately motivated by our compensation policies and practices to achieve profits and other business objectives in compliance with our oversight of material
short and long-term risks.
|
For a discussion of our compensation policies and practices for our executive officers, please see the Compensation Discussion and Analysis section of this proxy statement.
Compensation Consultants. Neither our board of directors, management development and compensation committee nor management has engaged
any compensation consultants.
SECTION 16(a) BENEFICIAL OWNERSHIP REP
ORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our executive officers, directors and persons who own more than 10% of a registered class of our equity securities to
file reports of ownership with the SEC, the NYSE American and us. Based solely on the review of the copies of such forms and representations by certain reporting persons, we believe that for 2020 our executive officers, directors and 10%
stockholders complied with all applicable filing requirements under section 16(a).