Simmons Launches New Proxy Battle for Lockheed Seats
In rival proxy statements formally launching their campaigns for control of Lockheed Corp., Lockheed management and a competing faction led by Texas investor Harold C. Simmons accused each other of lacking the skills to efficiently lead the giant aerospace firm.
The Calabasas-based firm’s management, in proxy materials mailed to shareholders Thursday, sought to contrast its performance with that of Simmons-controlled NL Industries, a Houston-based chemical firm that owns 19.8% of Lockheed stock.
NL, which sought shareholder support in a failed 1990 bid to take control of Lockheed, is again attempting to get holders of a majority of Lockheed’s stock to support its rival slate of board nominees--this time at an April 2 annual meeting. Simmons’ group took some of the credit for Lockheed’s financial resurgence in the last year.
“We believe you should compare Mr. Simmons’ own operating track record with Lockheed’s during 1990 and ask what value he has delivered to stockholders in companies that he controls,” Lockheed’s proxy statement says. “Net income at NL Industries dropped by 47% in 1990 compared with 1989.”
The management statement says Lockheed’s earnings “increased sharply to $335 million in 1990.” The company had earnings of only $2 million in 1989, when it was burdened with costly overruns on Defense Department development contracts.
“The value of your (Lockheed stock) has risen to a 52-week high of $42.50 per share on Feb. 7, 1991,” the Lockheed statement says, “reflecting, in our view, our strong operating financial performance (and) the recent demonstration in Operation Desert Storm of the critical contribution of Lockheed products to national security.” Lockheed made the F-117 stealth fighters that appear to have performed flawlessly in the Gulf.
Said Lockheed spokesman Bob Slayman: “We believe our 1990 results speak for itself.”
Simmons said he is leading a second proxy fight to replace the aerospace firm’s board because Lockheed needs to further improve its strategic direction.
In proxy materials also released Thursday, Simmons said he and his rival slate of board nominees would focus on developing Lockheed’s defense and space industries. He contended that Lockheed management lacks financial discipline.
That message is a repeat of NL Industries’ 1990 campaign appeal. Referring to the costly and sometimes bitter 1990 campaign, NL said it “lit a much-needed fire under Lockheed management, a fire that catalyzed some positive changes at Lockheed.”
NL Industries President J. Landis Martin said Lockheed improved its earnings partly because the Simmons faction urged the company to operate more efficiently.
“Many of the accomplishments of Lockheed during the past year are the direct result of suggestions made by us,” Martin said Thursday. “The pressure we imposed on them for a better return on assets prompted them to focus on cost cutting.”
The new proxy fight was ensured Feb. 15 when Lockheed’s directors rejected Simmons’ latest bid for seats on the board.
The board was responding to a letter from 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.
NL’s proxy gives Lockheed shareholders two ways to express support for Simmons: They can vote in a full slate of Simmons nominees to the board or support an advisory measure urging Lockheed to add Simmons, Martin and O’Laughlin to the board.