broker should vote your shares and the broker indicates it does not have authority to vote such shares on its proxy. Although broker non-votes will be counted as present at the annual meeting for purposes of determining a quorum, they will be treated as shares not entitled to vote on the proposal.
If your shares are held in street name and you do not give voting instructions, the broker will only be entitled to vote your shares in its discretion with respect to the ratification of the appointment of our independent registered public accounting firm. Without voting instructions from you, the record holder will not be permitted to vote your shares with respect to the election of directors or the advisory vote on executive compensation. Your shares would therefore be considered broker non-votes with respect to these proposals and would have no effect on the proposal. Accordingly, it is important for you to instruct your broker how you wish to vote your shares.
Can I change my mind after I vote?
Yes, you may change your mind at any time before the polls close at the annual meeting, which will be at 8:30 a.m. CDT on May 14, 2020. If you hold your shares directly in record name, you can change your vote by:
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Submitting a revised proxy using the previously mentioned telephone or Internet voting systems by the deadlines described for each such method above;
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Sending a written revocation to our Secretary by mail to LSB Industries, Inc., 3503 NW 63rd Street, Suite 500, Oklahoma City, Oklahoma 73116; or
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Voting in person at the annual meeting.
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In the absence of a revocation, shares represented by the proxies will be voted at the annual meeting. Your attendance at the annual meeting will not automatically revoke your proxy. If you do not hold your shares directly, you should follow the instructions provided by your broker, bank or nominee to revoke your previously voted proxy.
What if I sign and return my proxy card but I do not include voting instructions?
If you properly complete and submit a proxy card, but do not indicate any contrary voting instructions, your shares will be voted as follows:
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“FOR” the election of the three nominees to our Board;
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“FOR” the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for 2020; and
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“FOR” the advisory vote to approve named executive officer compensation.
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If any other business comes before the stockholders for a vote at the annual meeting, your shares will be voted in accordance with the discretion of the holders of the proxy. The Board knows of no matters, other than those previously stated, to be presented for consideration at the annual meeting.
What does it mean if I receive more than one proxy card?
It means that you have multiple accounts with brokers and/or our transfer agent. Please vote all of these shares. We recommend that you contact your broker and/or our transfer agent to consolidate as many accounts as possible under the same name and address. Our transfer agent is Computershare Trust Company, N.A., 462 South 4th Street, Suite 1600, Louisville, KY 77845, (800) 736-3001 (U.S. and Canada) and (781) 575-3100 (outside U.S. and Canada).
Will my shares be voted if I do not provide my proxy?
If your shares are registered in your name, they will not be voted unless you submit your proxy or vote in person at the annual meeting. As discussed above, if your shares are held in street name and you do not give voting instructions, the broker will only be entitled to vote your shares in its discretion with respect to the ratification of the appointment of our independent registered public accounting firm.
Who will count the votes?
All votes will be tabulated by Mediant Communications, Inc., who will serve as the inspector of election for the annual meeting.
What is the deadline for submission of stockholder proposals for the 2021 annual meeting?
If you wish to submit proposals to be included in our proxy statement for our 2021 annual meeting, proposals must be received at our principal executive offices in writing not later than December 15, 2020 and should be addressed to Michael J. Foster, Secretary, LSB Industries, Inc., 3503 NW 63rd Street, Suite 500, Oklahoma City, Oklahoma 73116.
If you wish to present a proposal, but you fail to notify us by such deadline, you will not be entitled to present the proposal at the 2021 annual meeting.
For more information regarding stockholder proposals, please see “Stockholder Proposals” below.
Who is soliciting proxies?
We will pay for preparing, printing and mailing this Proxy Statement. Proxies may be solicited on our
behalf by our directors, officers or employees, without additional consideration, in person or by telephone, electronic transmission and facsimile transmission. We will reimburse banks, brokers and other custodians, nominees and fiduciaries for their out-of-pocket costs of sending the proxy materials to our beneficial stockholders.
Stockholder List
A list of stockholders entitled to vote at the annual meeting will be open for examination by any stockholder for any purpose relevant to the annual meeting during ordinary business hours commencing 10 days before the annual meeting. The list will be maintained at our principal executive offices located at 3503 NW 63rd Street, Suite 500, Oklahoma City, Oklahoma 73116.
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LSB Industries Proxy Statement
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Proposal 1—Election of Directors
General
Our Certificate of Incorporation and Bylaws provide for the division of the Board into three classes, each class consisting as nearly as possible of one-third of the whole. The term of office of one class of directors expires each year; with each class of directors elected for a term of three years and until the stockholders elect their qualified successors.
Agreements as to Certain Directors and Committees
Board Representation and Standstill Agreement
On December 4, 2015, the Company entered into the Board Representation and Standstill Agreement (the “Board Representation and Standstill Agreement”), by and among the Company, LSB Funding LLC (“LSB Funding”), Security Benefit Corporation (“Security Benefit”), Todd Boehly, Jack E. Golsen (“J. Golsen”), Steven J. Golsen (“S. Golsen”), Barry H. Golsen (“B. Golsen”), Linda Golsen Rappaport (“L. Rappaport”), Golsen Family LLC, an Oklahoma limited liability company (“Family LLC”), SBL LLC, an Oklahoma limited liability company (“SBL LLC”), and Golsen Petroleum Corp., an Oklahoma corporation (“GPC,” and together with Messrs. J. Golsen, S. Golsen and B. Golsen, Ms. L. Rappaport, Family LLC, SBL LLC, each a “Golsen Holder” and, collectively, the “Golsen Holders”). On October 26, 2017 and October 18, 2018, the parties to the Board Representation and Standstill Agreement entered into amendments thereto (the “Amendments”). The Board Representation and Standstill Agreement and the Amendments are collectively the “Amended Board Representation and Standstill Agreement”.
LSB Funding Designees
Pursuant to the Amended Board Representation and Standstill Agreement and based upon the equity holdings of LSB Funding, the Company has agreed to permit LSB Funding, an affiliate of Security Benefit, to designate up to three nominees to the Board, at least one of which will meet the NYSE standards of independence. LSB Funding designated, and our Board appointed, Jonathan S. Bobb and Kanna Kitamura to the Board.
Golsen Designees
Under the Amended Board Representation and Standstill Agreement and based upon the Golsen Holders’ equity holdings, the Golsen Holders, collectively, have the right to designate two directors. Messrs. Jack E. Golsen and Barry H. Golsen are the current Golsen designees. Mr. J. Golsen, our Chairman Emeritus and the founder of the Company, will retire effective as of the date of the 2020 annual meeting. The Golsen Holders designated Steven L. Packebush as a director upon Mr. J. Golsen’s retirement, and our Board nominated Mr. Packebush as a director nominee for election at the 2020 Annual Meeting of Stockholders.
Other Governance Matters
Our Bylaws provide that the Board may change the total number of directors on our Board from time to time provided that the minimum number of directors is 3 and the maximum is 14. Currently there are 9 directors.
As discussed under “Corporate Governance — Nominating Committee,” our Nominating and Corporate Governance Committee (the “Nominating Committee”) reviews the composition of the Board as part of its assessment of the Board’s performance, and effectiveness. The Nominating Committee values certain characteristics in all Board members, including personal and professional integrity, reputation, outstanding professional achievement, and sound business judgment. The Nominating Committee evaluates each individual director in the context of the Board as a whole with the goal of recommending an effective group with a diversity of experience and skills that exercises sound business judgment in the interest of our business and our stockholders. Consistent with their responsibilities, members of the Nominating Committee have interviewed and evaluated each of the current nominees for director and has determined that each is highly qualified to serve as a member of our Board.
The following sets forth certain information regarding the director nominees and other directors whose term will continue after the annual meeting.
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LSB Industries Proxy Statement
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5
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Proposal 1 – Election of Directors
Nominees for the Class of Directors Whose Term will Expire in 2023
STEVEN L. PACKEBUSH
Age: 55
Director since: New Nominee
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Steven L. Packebush, age 55, is a new nominee director. If elected, his term will expire in 2023. Mr. Packebush is a founder and principal in Elevar Resources, LLC, a company providing advisory and consulting services and capital solutions for companies in the agriculture and energy markets. Prior to Elevar Resources, Mr. Packebush worked at Koch Industries, Inc. for over 30 years, retiring in March 2018. Until his retirement, he was the president of Koch Ag & Energy Solutions (“Koch Ag”). Under Mr. Packebush’s leadership, Koch Ag grew from a break-even business to one of the larger business units at Koch Industries and one of world’s largest fertilizer companies. Koch Ag manufactured, marketed, distributed, and traded more than 14 million tons of fertilizer products annually. Key to this growth was acquiring and integrating five nitrogen fertilizer production plants in North America and equity interest in three nitrogen plants in Trinidad and Tobago. In addition, significant capital and resources were invested in the North American plants to improve the environmental, health and safety, efficiencies, and reliability of these facilities. Also, a $1.3 billion plant expansion project located in Enid, Oklahoma was executed and a global fertilizer supply, trading, and distribution business was developed with commercial office locations in Europe, Asia, and Latin America. Mr. Packebush also oversaw the expansion of Koch Ag to include three additional start-up businesses. Koch Energy Services became one of the largest natural gas marketing companies in North America. Koch Methanol supplied methanol to global customers in the plywood, carpet, fuels, and plastics markets. Koch Agronomic Services became one of world’s largest enhanced-efficiency fertilizer producers and marketers. Prior to his time in Koch Ag, Mr. Packebush held various business development and commercial roles in Koch International, Koch Agriculture, and Koch Minerals.
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Mr. Packebush currently serves on the EuroChem Group AG Board of Directors, Wichita State University Board of Trustees, Kansas State University Dean’s Agriculture Advisory Board, and The Fundamental Learning Center Board of Directors. Previously he served on the board of directors of Caribbean Nitrogen, Nitrogen 2000, KOCHPAC, and The Fertilizer Institute. He has also served on The Fertilizer Institute’s executive committee and Koch Industries’ Compliance and Ethics Executive Committees.
Mr. Packebush is a 1987 graduate of Kansas State University with a bachelor’s degree in agricultural economics. Mr. Packebush’s extensive industry and executive leadership experience, among other factors, led the Board to conclude that he should serve as a director.
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DIANA M. PENINGER
Age: 55
Director since: 2020
Committees:
Audit
Compensation
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Diana M. Peninger, age 55, was appointed in March, 2020 as a director whose term will expire at the annual stockholder meeting in May of 2020. Ms. Peninger is therefore up for re-election. Ms. Peninger founded and serves as CEO of Geneva Lake Partners LLC since 2017. Geneva Lake Partners is an advisory firm working with middle market private industrial companies to help them develop individual strategic plans, assess acquisitions, improve profitability and identify investment partners. Ms. Peninger spent 30 years in the chemical industry including three expat assignments in Frankfurt, Germany. In 2018, she served as interim CEO for Synata Bio a renewable clean fuels and chemicals technology company owned by True North Venture Partners. From 2007 through 2016, she held various roles within Celanese Corporation including, Vice President, Acetyl Intermediates, a $2.3B global commodity business portfolio, Vice President and General Manager, EVA Performance Polymer Business serving the medical, adhesives, solar and film industries and as Vice President General Manager for Nutrinova Specialty Food Ingredients business. As Director of Corporate Strategy and Business Development, she led the initiatives to establish manufacturing locations in low cost regions of China and the Middle East. From 2005 to 2007 while at Chemtura Corp., Ms. Peninger served as Vice President, Consumer Products and Vice President, PVC Additives businesses. She started her career in 1987 with Celanese Corporation in Pampa, Texas as a plant engineer before taking on progressively more responsibility including Director of Global Glass Fibers business and leading the integration of the recently acquired Clariant Emulsions business and the subsequent acquisition of the ICI/Vinamul Emulsions businesses resulting in a leading global industry emulsions position. In addition, she serves on the board of Rogers Group, Inc. chairs their compensation committee and is a member of their audit committee. Previously, she served as the Board Vice-Chair of the Committee of 200 which is a non-profit organization comprised of influential women CEO’s and senior business executives.
Ms. Peninger holds a B.S. in Chemical Engineering from South Dakota School of Mines and was honored in 2017 with the prestigious “Distinguished Alumni” award for achievement of excellence in their careers and their communities. She is a National Association of Corporate Directors (NACD) Board Leadership Fellow and serves on the University Advisory Board of the South Dakota School of Mines & Technology. Ms. Peninger’s extensive industry, executive and board leadership experience, among other factors, led the Board to conclude that she should serve as a director.
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LSB Industries Proxy Statement
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Proposal 1 – Election of Directors
LYNN F. WHITE
Age: 67
Director since: 2015
Committees:
Audit
Compensation (Chair)
Nominating and
Corporate Governance
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Lynn F. White, age 67, has been a director since 2015. His current term expires in 2020. Mr. White founded and has served as the Managing Director of Twemlow Group LLC since 2013, and previously from 2008 until 2009. Twemlow Group LLC is a consulting firm that provides strategic, organizational and product development counsel to agriculturally related businesses. Mr. White also has been a director of Anuvia Plant Nutrients since January 12, 2016. From 2009 to 2013, Mr. White served as Vice President, Corporate Development of CF Industries Holdings, Inc. (NYSE: CF). While at CF Industries, he was responsible for external growth initiatives, including M&A and organic efforts, new product development and strategy, and led the integration of the $4.6 billion acquisition of Terra, Inc. While at CF Industries he served as non-executive Chairman or Vice-Chairman of GrowHow UK Limited, the leading British nitrogen fertilizer producer and as a director of KEYTRADE AG, a major Swiss based fertilizer trading firm. Prior to that, he was the President of John Deere Agri Services, Inc., a subsidiary of Deere & Co. (NYSE:DE), where he was responsible for leading a new global business unit created to pursue growth opportunities in technology-based services for industries linked to agriculture. Mr. White was also Vice President of Global AgServices of Deere, where he was responsible for identifying, testing and developing new services for agriculture and food. Prior to that, he was Senior Vice President, Corporate Development of IMC Global Inc. (n/k/a The Mosaic Company), a producer of crop nutrients and salt, and served in various executive positions, including General Manager of the Food Ingredients Division, Director of the Flame Retardants & Fluids Business and Europe, Middle East, Africa Agricultural Chemicals Area Director of FMC Corporation (NYSE:FMC), a global producer of chemicals and machinery. Mr. White currently serves as Vice Chair of the Dean’s Advisory Council for the College of Agriculture, Food and Environmental Sciences at California Polytechnic State University, as a director of the Charlestowne Neighborhood Association (SC), and until 2014 served as a Trustee of the Barrington Hills (IL) Police Pension Fund.
Mr. White holds a B.A. in History (Highest Honors) from California Polytechnic State University, San Luis Obispo and an M.B.A. in Finance and Multinational Enterprise from the Wharton Graduate School of Business at the University of Pennsylvania. Mr. White is a National Association of Corporate Directors (NACD) Board Leadership Fellow, demonstrating his commitment to the highest standards of boardroom excellence. The NACD Fellowship is a comprehensive and continuous program of study that empowers directors with the latest insights, intelligence, and leading boardroom practices. Mr. White’s extensive leadership experience in the agricultural and chemical industries, strategic development and public company governance, among other factors, led the Board to conclude that he should serve as a director.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE THREE NOMINEES AS
DIRECTORS OF THE COMPANY
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LSB Industries Proxy Statement
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7
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Proposal 1 – Election of Directors
Continuing Directors
The following six directors will continue in office until the expiration of their respective terms and until their successors have been elected and qualified.
MARK T. BEHRMAN
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Mark T. Behrman, age 57, has been a director of the Company since December 2018. His current term expires in 2022. Mr. Behrman was appointed as the Company’s President and Chief Executive Officer and as a member to its Board of Directors in December 2018. Prior to his appointment as Chief Executive Officer, he served as the Company’s Executive Vice President and Chief Financial Officer since June 2015 and as its Senior Vice President of Corporate Development beginning in March 2014. In addition to his experience at the Company, he has over 30 years of financial and investment banking experience, including merger and acquisition advisory and capital market transactions.
Mr. Behrman is currently the Lead Independent Director of Panhandle Oil and Gas Inc. (NYSE: PHX) and the Chairman of its Audit Committee. He previously served as a director of Noble International Ltd (NASDAQ: NOBL) from 1998-2007, Oakmont Acquisition Corporation (AMEX: OMAC) from 2005-2007 and Robocam Systems International, Inc. (NASDAQ: RIMS) from 1998-2000.
Mr. Behrman holds a Master of Business Administration in Finance from Hofstra University and a Bachelor of Science in Accounting from Binghamton University.
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Age: 57
Director since: 2018
Committees:
none
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JONATHAN S. BOBB
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Jonathan S. Bobb, age 44, has been a director of the Company since 2015. His current term expires in 2022. Mr. Bobb is a Director on the investment team at Eldridge Industries. In this role, he is responsible for originating, executing and overseeing investments in operating companies and assets across a range of industries. Mr. Bobb previously served in a similar capacity at Guggenheim Partners. Prior to joining Guggenheim, Mr. Bobb was a senior member of the investment banking division at Goldman Sachs & Co. from 2007 to 2013. His previous business experience includes investment banking positions with J.P. Morgan and Deutsche Bank and financial planning roles at Gap Inc. Mr. Bobb received a B.A. in Economics from Stanford University and an M.B.A. from the University of Michigan.
Mr. Bobb serves as an LSB Funding designee under the Amended Board Representation and Standstill Agreement. Mr. Bobb’s extensive investment and executive leadership experience, among other factors, led the Board to conclude that he should serve as a director.
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Age: 44
Director since: 2015
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Committees:
Compensation
Audit
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BARRY H. GOLSEN, J.D.
Age: 69
Director since: 1981
Committees:
None
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Barry H. Golsen, J.D., age 69, has been a director of the Company since 1981. His current term expires in 2021. Mr. B. Golsen is President of GOL Capital LLC. He served as the Vice-Chairman of the Board of the Company from 1993 until 2015. Previously he served as the Company’s President and Chief Executive Officer from January 2015 until September 2015 and as the Company’s President and Chief Operating Officer from 2004 to 2014.
Mr. B. Golsen joined the Company in 1978 as a product manager at International Environmental Corporation (“IEC”). He became Executive Vice President of IEC in 1979 and IEC’s President in 1980. Mr. B. Golsen spearheaded the growth of the Company’s Climate Control Business with a number of business startups as well as the acquisition of Climate Master, Inc. (and its merger with CHP Corporation and subsequent move to Oklahoma City). Under his leadership, the Company’s Climate Control Business attained leading shares of the U.S. markets for water source and geothermal heat pumps and hydronic fan coils. Mr. B. Golsen attended Cornell University College of Engineering prior to earning both his B.A. and J.D. degrees from the University of Oklahoma. He was admitted to the Oklahoma Bar in 1978. Mr. B. Golsen is a past Director of the Oklahoma City Branch of the Federal Reserve Bank of Kansas City. Mr. B. Golsen served on the Board of Directors of Equity Bank for Savings N.A., and on many of the bank’s committees. His professional affiliations have included the Oklahoma Bar Association, the American Bar Association, the American Society of Heating, Refrigeration and Air-Conditioning Engineers, Young Presidents Organization and World Presidents Organization. Mr. B. Golsen is a National Association of Corporate Directors (NACD) Board Leadership Fellow, the Gold Standard Director Credential. NACD Fellowship is a comprehensive and continuous program of study that empowers directors with the latest insight intelligence, and boardroom practices.
Mr. B. Golsen serves as a Golsen Designee under the Amended Board Representation and Standstill Agreement. Mr. B. Golsen’s extensive experience and his in-depth of knowledge and understanding of the businesses in which we operate, and his demonstrated leadership skills within the Company, among other factors, led the Board to conclude that he should serve as a director.
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LSB Industries Proxy Statement
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Proposal 1 – Election of Directors
KANNA KITAMURA
Age: 47
Director since: 2018
Committees:
Compensation
Nominating and
Corporate Governance
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Kanna Kitamura, age 47, has been a director of the Company since December, 2018. Her current term expires in 2021. Ms. Kitamura is a Senior Director and Chief Talent Officer at Eldridge Industries. Prior to joining Eldridge, Ms. Kitamura was a Vice President and Head of Legal Operations for Guggenheim Investments. She was a member of Guggenheim Partners’ Women’s Innovation and Inclusion Network, Secretary of the Pro Bono Committee, and acted as a mentor in its Veterans Transition Assistance Program. Prior to joining Guggenheim Partners, Ms. Kitamura was a VP of Business Development and Director of Operations for a management consulting firm and was employed by the United Nations Development Programme in the Division of Public Affairs. Ms. Kitamura serves on the Advisory Board of the NYC Kids Project, a non-profit organization based in New York. Ms. Kitamura is a certified Special Olympics Equestrian Coach and volunteers with various wildlife and conservation groups.
Ms. Kitamura serves as a LSB Funding designee under the Amended Board Representation and Standstill Agreement. Ms. Kitamura’s extensive financial industry leadership and legal experience, among other factors, led the Board to determine that she should serve as a director.
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RICHARD W. ROEDEL
Age: 70
Director since: 2015
Committees:
Audit (Chair)
Compensation
Nominating and
Corporate Governance (Chair)
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Richard W. Roedel, age 70, has been a director of the Company since 2015. His current term expires in 2021. Mr. Roedel has served as a director of IHS Markit, Inc. (NYSE:INFO) since 2004, Six Flags Entertainment Corporation (NYSE:SIX) since 2010, Luna Innovations Incorporated (NASDAQ: LUNA) since 2005, and BrightView Holdings, Inc. (NYSE: BV) since 2015. Mr. Roedel serves as a member of the audit committee of Six Flags Entertainment Corporation and IHS Market and as the Chairman of IHS Markit’s Risk Committee. Mr. Roedel serves as the Chairman of the audit committee of BrightView. Mr. Roedel also serves as the Non-Executive Chairman of the Board of Luna Innovations. As a director of public companies, Mr. Roedel has served as lead independent director and as the chairman of several governance, compensation, and special committees. From 1985 through 2000, Mr. Roedel was employed by the accounting firm BDO Seidman LLP, the United States member firm of BDO International, as an Audit Partner. He was promoted in 1990 to Managing Partner in Chicago, then to Managing Partner in New York in 1994, and finally, in 1999, to Chairman and Chief Executive. Mr. Roedel joined the Board of Directors of Take-Two Interactive Software, Inc., a publisher of video games, in 2002, and served in various capacities with that company until 2005, including Chairman and Chief Executive Officer. Mr. Roedel served on the Boards of Directors of BrightPoint, Inc. from 2002 to 2012 and Sealy Corporation (NYSE:ZZ) from 2006 to 2013. He also served as a director and chairman of the audit committees of Lorillard, Inc. (NYSE:LO) until 2015, Dade Behring Holdings, Inc. (NYSE:DADE) until 2007 and Broadview Network Holdings, Inc., a private company, until 2012. Mr. Roedel is a member of the National Association of Corporate Directors Risk Oversight Advisory Council. In 2014 Mr. Roedel was appointed to the Public Accounting Oversight Board’s Standing Advisory Group for a three-year term ending in 2017. Until 2016, Mr. Roedel was a director of the Association of Audit Committee Members, Inc., a non-profit association of audit committee members dedicated to strengthening audit committees by developing best practices. Mr. Roedel holds a B.S. in Accounting and Economics from The Ohio State University and he is a certified public accountant.
Mr. Roedel’s extensive experience in finance, accounting, risk management, and public company governance led the Board to conclude that he should serve as a director.
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LSB Industries Proxy Statement
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9
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Proposal 1 – Election of Directors
RICHARD S. SANDERS, JR.
Age: 63
Director since: 2014
Committees:
Audit
Compensation
Nominating and
Corporate Governance
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Richard S. Sanders, Jr., age 63, has been a director of the Company since 2014. His current term expires in 2022. Mr. Sanders served as our Interim Executive Vice President, Chemical Manufacturing from September 2015 until August 2016. Mr. Sanders has been a nitrogen fertilizer manufacturing consultant since January 2011 through Circle S. Consulting LLC, of which he is the sole owner. Previously, Mr. Sanders served as Vice President of Manufacturing of Terra Industries Inc. from 2003 until the acquisition of Terra Industries by CF Industries Holdings, Inc. in April 2010. On completion of the transaction, he worked on the integration of manufacturing operations, and as Vice President of Environmental Health and Safety, Engineering and Procurement. At Terra Industries Inc., Mr. Sanders was responsible for Terra’s six manufacturing facilities’ overall operations including production operations, environmental health and safety, project engineering, and technical services. He was also responsible for Terra’s capital investment program of approximately $250 million per year, including major expansion projects. Mr. Sanders was Plant Manager of Terra’s Verdigris, Oklahoma nitrogen manufacturing complex for nine years prior to his role as Vice President of Manufacturing. Prior to Terra, Mr. Sanders served as Plant Manager at the Beaumont Methanol Corporation’s 800,000 GPD methanol manufacturing facility and in management and engineering positions for Agrico Chemical Company. Mr. Sanders served as a Non-Executive Director of Open Joint Stock Company Mineral and Chemical Company EuroChem during 2013. Mr. Sanders received a Bachelor of Science degree in Chemical Engineering from Louisiana State University in 1980.
Mr. Sanders’ extensive experience in the chemical industry, his depth of knowledge and understanding of the chemical manufacturing facilities that we operate, and his demonstrated leadership skills throughout his career, among other factors, led the Board to conclude that he should serve as a director.
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10
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LSB Industries Proxy Statement
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Proposal 2—Ratification of The Appointment of
Ernst & Young LLP as the Independent
Registered Public Accounting Firm for 2020
The Audit Committee has appointed the firm of Ernst & Young LLP (“E&Y”) as its independent registered public accounting firm for 2020. E&Y has served as our auditors for more than five years, including the fiscal year most recently completed. If the stockholders do not ratify the appointment of E&Y, the Audit Committee will reconsider the appointment and may or may not
consider the appointment of another independent registered public accounting firm for the Company for 2020 or future years.
Consistent with past practices, it is expected that one or more representatives of E&Y will attend the annual meeting and will be available to respond to appropriate questions or make a statement should they desire to do so.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2020.
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Proposal 3—Advisory Vote to Approve Named Executive Officer Compensation
We are asking our stockholders to approve the following advisory resolution related to the compensation of the Company’s named executive officers commonly known as a “say-on-pay” proposal:
RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, and the compensation tables, and the related narrative discussion in this Proxy Statement.
Our stockholders’ opinions are important to us and we hold this advisory vote annually in order to get a better understanding of their views on the compensation of our named executive officers and its alignment with stockholder interests. The Board and the Compensation Committee, which is composed of independent directors, will review and take into account the outcome of this vote when considering future executive compensation decisions.
Stockholders are encouraged to read the Compensation Discussion and Analysis, the accompanying compensation tables, and the narrative disclosure related to executive compensation disclosure in this Proxy Statement, which provide information about our compensation policies and the compensation of our named executive officers. Stockholders should note that, because the advisory vote on executive compensation occurs well after the beginning of the compensation year, and because the different elements of our executive compensation programs are designed to operate in an integrated manner and to complement one another, it may not be appropriate or feasible to change our executive compensation programs in consideration of any one year’s advisory vote on executive compensation by the time of the following year’s annual meeting of stockholders.
The Board intends to hold this vote annually, and the next advisory vote to approve named executive officer compensation will occur in 2021.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE RESOLUTION TO APPROVE THE COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION.
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LSB Industries Proxy Statement
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11
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Corporate Governance
Corporate Governance Highlights
The Board is committed to continually improving its corporate governance processes, practices and procedures. Our governance policies and structures are designed to promote the Board’s thoughtful oversight of the Company’s business decisions and ensure intelligent risk-taking, with the goal of furthering our long-term strategic goal of becoming a best in class chemical producer. Highlights include:
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An increasingly diverse Board with the appropriate mix of skills, experience and perspective. With the appointment of Diana Peninger, 22% of our directors are women;
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The appointment of a non-Executive Chairman of the Board;
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A portion of all executives’ annual compensation tied to the achievement of safety metrics, reflecting the importance of our employees and their safety to the Company;
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With the pending retirement of Mr. J. Golsen from the Board, seven of our nine directors will be independent under NYSE listing standards, with the non-independent directors consisting of Mr. Behrman, and Mr. B. Golsen. While such directors are not deemed to be independent, we believe their interests are aligned with the Company’s as a result of their significant ownership interest in the Company;
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All Board committees are fully independent;
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Policy limiting the number of public company boards on which directors may serve;
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Minimum share ownership guidelines for Directors and requirements for Executive Officers;
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Anti-Hedging of Company Securities Policy; and
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Stockholder ratification of the selection of external audit firm.
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Meetings of the Board
Our Board held 7 meetings in 2019. All directors, for the period of time they served on the Board in 2019, attended 100% of the combined total of the meetings held by the Board and the meetings held by all committees of the Board on which each director served.
Board Leadership Structure
In December 2018, Mr. Roedel was named Chairman of the Board, and Mr. Behrman became the Chief Executive Officer. The responsibilities of the Chairman of the Board generally include:
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Chairing all meetings of the Board;
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Assisting the Board and management in providing leadership and developing overall corporate strategy; and
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Building consensus in the development of the Company’s overall strategic plan.
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•
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Serving as a liaison between management, and the directors; and
|
|
•
|
Overseeing the Board’s stockholder communications policies.
|
Committees of the Board of Directors and Committee Charters
The Board has three separately-designated active standing committees: a Nominating and Corporate Governance Committee, an Audit Committee, and a Compensation Committee. The Board has adopted written charters for each of these committees. The Board has determined that all members of these committees are independent directors and satisfy the Securities and Exchange Commission (“SEC”) and NYSE requirements for independence. A current copy of the charters of the aforementioned committees along with our corporate governance guidelines are available on our website at www.lsbindustries.com and are also available from the Company upon request to the Secretary. The following sets forth the current members of each committee and current Board class expiration year:
Name
|
Class
|
Audit
|
Nominating
and
Corporate
Governance
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack E. Golsen (1)
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Diana M. Peninger (2)
|
|
2020
|
|
|
X
|
|
|
|
|
|
X
|
|
Lynn F. White
|
|
2020
|
|
|
X
|
|
|
X
|
|
|
Chair
|
|
Barry H. Golsen
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
Richard W. Roedel
|
|
2021
|
|
|
Chair
|
|
|
Chair
|
|
|
X
|
|
Kanna Kitamura
|
|
2021
|
|
|
|
|
|
X
|
|
|
X
|
|
Mark T. Behrman
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Jonathan S. Bobb
|
|
2022
|
|
|
X
|
|
|
|
|
|
X
|
|
Richard Sanders, Jr.
|
|
2022
|
|
|
X
|
|
|
X
|
|
|
|
|
|
(1)
|
Retiring at 2020 annual meeting.
|
|
(2)
|
Nominee for election at 2020 annual meeting.
|
Nominating and Corporate Governance Committee
The Nominating Committee consists entirely of independent directors who were appointed by the Board to serve until their successors are appointed and qualified. The Board has determined that each member of the Nominating Committee is independent in accordance with the listing standards of the NYSE. During 2019, the Nominating Committee held 4 meetings.
The Nominating Committee is primarily responsible for:
|
•
|
Developing and recommending to the Board, appropriate corporate governance principles and practices and assisting the Board in implementing those practices; and
|
|
•
|
Developing criteria for, and identifying individuals qualified to become, members of the Board and recommending to the Board nominees for election at the annual meetings of stockholders or for appointment to fill vacancies.
|
The Nominating Committee periodically assesses the skills and experience needed for the Board to properly direct the business and affairs of the Company. The Nominating Committee seeks Board candidates possessing the following qualities:
|
•
|
Diverse mix of skills, qualifications and experience, including business leadership, financial expertise, corporate governance, chemical expertise, and legal and risk management;
|
|
•
|
Proven leadership, sound judgment, integrity and a commitment to the success of the Company; and
|
|
•
|
Independence, financial literacy, personal and professional accomplishments and experience considering the needs of the Company.
|
The Nominating Committee evaluates the skills, qualifications, experience and expertise of candidates to determine director nominees. For incumbent directors, the factors also include past performance on the Board and contributions to their respective committees.
The Nominating Committee is also responsible for:
|
•
|
Advising the Board about the appropriate composition of the Board and its committees, including recommendations related to the Board’s leadership structure and the designation of individuals to serve as Chairman of the Board and Lead Director (if any); and
|
|
•
|
Leading the evaluation of the Board through an annual review of the performance of the Board and its committees.
|
The Nominating Committee considers the qualifications of director candidates recommended by stockholders and evaluates each of them using the same criteria the Nominating Committee uses for
incumbent or other candidates identified by the Nominating Committee. Director candidate recommendations by stockholders must be made in compliance with the procedures set forth in our Bylaws by notice in writing delivered or mailed by first class U.S. mail, postage prepaid, to the Chairman of the Nominating and Corporate Governance Committee, in care of the Secretary of the Company, 3503 NW 63rd Street, Suite 500, Oklahoma City, Oklahoma 73116. Please indicate “Nominating Committee” on the envelope.
Audit Committee
The Audit Committee assists the Board in (i) overseeing the accounting, reporting, and financial practices of the Company and its subsidiaries, and (ii) preparing the report required by the SEC to be included in the Company’s annual proxy.
In carrying out these purposes, the Audit Committee, among other things, is responsible for:
|
•
|
Providing an open means of communication among the independent auditors, financial and senior management, the internal auditors and the Board;
|
|
•
|
Appointing, evaluating and approving the appointment, compensation, retention and oversight of the independent registered public accounting firm;
|
|
•
|
Approving in advance all auditing services and permitted non-audit services to be provided by the independent auditor;
|
|
•
|
Annually considering the qualifications, independence and performance of the independent registered public accounting firm;
|
|
•
|
Reviewing recommendations of the independent registered public accounting firm concerning our accounting principles, internal controls and accounting procedures and practices;
|
|
•
|
Providing oversight of the internal audit function;
|
|
•
|
Reviewing and approving the scope of the annual audit;
|
|
•
|
Reviewing and discussing with management and the independent registered public accounting firm the annual audited and quarterly unaudited financial statements;
|
|
•
|
Reviewing legal matters and the Company’s compliance programs and other systems in place designed to ensure that the Company’s financial statements, reports and other financial information satisfy applicable legal, regulatory or NYSE requirements; and
|
|
•
|
Performing such other duties as set forth in the Audit Committee Charter.
|
During 2019, the Audit Committee held 8 meetings.