Simmons to Offer His Own Slate for Lockheed’s Board

Harold C. Simmons, the Texas financier who has been challenging the management of Lockheed Corp., disclosed plans Wednesday to nominate his own slate of candidates for the aerospace firm’s board of directors.

In a filing with the Securities and Exchange Commission, Simmons said he will submit a rival slate of candidates at Lockheed’s annual shareholder meeting March 29. Simmons, who controls about 18.9% of Lockheed, said he will ask Lockheed shareholders to reject the 15-member slate endorsed by Lockheed management in favor of a rival group that he plans to name. To comply with Lockheed’s corporate bylaws, Simmons must identify his candidates by Monday.

Calabasas, Calif.-based Lockheed had no comment on Simmons’ filing, said Ron Meder, a company spokesman. However, Meder said Lockheed recently prepared for such a board challenge by retaining Kekst & Co., a New York-based communications consultant. “In the event there is proxy contest at the meeting, (Kekst & Co.’s) expertise would be beneficial to us,” Meder said.

Lockheed stock closed Thursday at $36 on the New York Stock Exchange, up $1.25.

The Simmons announcement is the latest in a series of maneuvers and confrontations involving Lockheed and Simmons, chairman of the Dallas-based Valhi Inc., a holding company with subsidiaries involved in the production of chemicals, petroleum and forest products. At stake is control of the nation’s eighth largest defense contractor.

The dispute erupted shortly after a Jan. 31 meeting between Simmons and Lockheed Chairman Daniel M. Tellep. Simmons demanded six seats on Lockheed’s board, which consists of 15 directors, and asked the company’s management to eliminate a “poison pill” takeover defense that was erected after Simmons began buying shares last year. Tellep refused to promise Simmons the seats and rejected proposals for eliminating the anti-takeover measures.

Three days later, Simmons said he might seek control of Lockheed’s board of directors by mounting a challenge at the company’s annual meeting. Lockheed responded last week, surprising much of the financial world by scheduling the annual meeting for March 29. In recent years, Lockheed has held its annual meeting in May.

The scheduling forced Simmons’ hand because Lockheed shareholders are required to make any board nominations within 10 days of the public announcement of a meeting date.

Instead of methodically planning a board slate and a strategy for winning shareholder support in May, Simmons will now have to scramble to prepare for a March meeting, industry analysts said.

“Lockheed moved up the date to force Simmons to act immediately,” said Howard Mager, an analyst at New York-based Donaldson, Lufkin & Jenrette. “They forced him (Simmons) to move.”

However, Michael Snetzer, president of Simmons-controlled Valhi, said Simmons would select a board slate within the required time. A subsidiary of Valhi holds the 18.9% stake, the largest single block of Lockheed shares. Snetzer said Simmons decided to field a slate because he could not get a voice on the Lockheed board.

“We own almost 20% of the stock in (Lockheed) and we think its appropriate to have representation,” he said. “We’re unhappy with the fact that we’ve been denied representation.”

Lockheed spokesman Meder repeated a statement that Lockheed Chairman Tellep made Feb. 2 after Simmons indicated that he might launch a proxy fight for shareholders’ votes to oust board members.

Tellep’s statement said in part that Simmons offered no plans or proposals for Lockheed and “provided no basis whatsoever for us to determine his intentions with respect to the company or whether his interests would be consistent with those of Lockheed and its other shareholders.”

In recent months, Simmons steadily has increased his holdings in Lockheed, developer of the Stealth fighter plane, from 6.25% last fall to 18.9% two weeks ago.

Lockheed produces some of the nation’s most advanced weapons systems. However, like all arms makers, it is trying to deal with declining sales and tougher contracting terms imposed by the Pentagon. Some analysts say investors will be searching for a new vision for financial growth from Simmons and Lockheed executives in the wake of declining East-West tensions and the prospect of smaller defense budgets.

“I want to hear what Simmons has to say,” said Howard Rubel, an analyst at C. J. Lawrence. “If he wants credibility, he will have to come to the street and preach his gospel. It’s incumbent on both sides to articulate strategy and a fallback strategy as to how Lockheed can become a better company over the next two to five years.”