2nd Proxy War Seems Certain as Lockheed Rebuffs Simmons
Lockheed’s directors Friday rejected Texas investor Harold C. Simmons’ latest bid for seats on the company’s board, a move that ensures a second proxy war between the Simmons camp and Lockheed management for control of the aerospace firm.
Lockheed’s board voted unanimously to rebuff Simmons, who controls NL Industries, a Houston-based chemical company that owns 19.8% of Lockheed. The board was responding to a letter Tuesday from NL President J. Landis Martin requesting a binding vote by shareholders on whether three new directors should be added to the 14-member board: Simmons, Martin and retired Air Force Gen. Earl T. O’Laughlin.
Martin’s letter said NL would not proceed with plans for a proxy fight if Lockheed management allowed shareholders to decide whether the Simmons group should be allotted three seats. The vote would have taken place at Lockheed’s annual meeting April 2.
In a letter to Martin on Friday, Lockheed Chairman Daniel M. Tellep said: “We believe that Lockheed’s board should be comprised of individuals who will act on behalf of all shareholders.”
Responding to the rejection, Martin said NL would now proceed with a proxy campaign designed to persuade the owners of 51% of Lockheed’s stock to replace the Calabasas firm’s board with a full slate of NL-backed directors.
“I’m encouraged when a candidate for the board considers himself invincible,” Martin said. “We will see if he (Tellep) is invincible.”
Simmons and Martin have clashed with Lockheed management over corporate strategy.
At last year’s annual meeting, NL failed to win majority support, getting 37% of the vote after an expensive and bitter campaign. Simmons has asked a federal court to invalidate that vote, contending that Lockheed illegally obtained votes from its employee stock ownership plan.
Industry analysts say Simmons is even less likely to win a proxy struggle this year.
Also, Lockheed stock has been trading at about $40 per share, near its 52-week high. Lockheed stock closed at $40.25 Friday on the New York Stock Exchange, up 12.5 cents.
In addition, Lockheed earnings jumped to $335 million last year from $2 million in 1989, when it was burdened with sizable cost overruns on development contracts for the government.
“Tellep has all the cards,” said Howard Rubel, an analyst at the New York-based investment firm C. J. Lawrence. “He (Tellep) has done a solid job. Simmons may have been a catalyst for change at Lockheed, and some institutional investors wanted to apply pressure on Lockheed management last year. But the financial situation has improved. Simmons is not of much value to institutional investors anymore.”