LSB Industries Inc. and its large shareholder, Starboard Value LP, have reached agreement on board membership and company direction.
LSB said April 27 that it has elected Louis Massimo, Andrew Mittag, Richard Roedel, Ms. Marran Ogilvie and Lynn White to its board of directors. These five new independent directors, as well as incumbent directors Richard Sanders and Barry Golsen, will stand for re-election to LSB’s board at the company’s 2015 annual meeting of stockholders. Massimo and Mittag will fill the vacancies created by the resignations, effective today, of Gail Lapidus and Robert Henry.
If re-elected by LSB’s stockholders at the 2015 meeting, Ogilvie, Roedel, Sanders, Golsen and White will have terms expiring at the 2018 annual meeting and Massimo and Mittag will join the class of directors with terms expiring at the 2017 annual meeting. With these appointments, the LSB board will expand to 13 directors, 11 of whom are independent and 9 of whom were appointed in the last 24 months.
“We are pleased to have reached this agreement with Starboard on the composition of the board,” said Barry Golsen, LSB CEO. “On behalf of the entire Board, I would like to thank Gail Lapidus and Robert Henry for their dedicated service and contributions to the Board and LSB. We look forward to working with the new independent directors.”
“We remain committed to enhancing stockholder value, and we believe the improvements we are making to increase capacity and upgrade facilities will position LSB for enhanced growth and profitability,” added Golsen. “We are therefore pleased to announce our intention, once our El Dorado facility expansion projects have been completed and brought online in 2016, to the extent market conditions allow and subject to board approval, to separate the company’s Chemicals business from its Climate Control business and to explore an MLP structure for the Chemicals business.”
In connection with today’s announcement, LSB has entered into an agreement with Starboard, which beneficially owns approximately 7.6 percent of the company’s outstanding shares. Under the agreement, Starboard has agreed, among other things, not to solicit proxies or participate in any “withhold” campaign in connection with the 2015 annual meeting and to vote its shares in support of all of the company’s director nominees. Starboard has also agreed to vote all of its shares in accordance with the board’s recommendation with respect to the company’s say-on-pay proposal, subject to the recommendation of Institutional Shareholder Services.
In addition, the responsibilities of the Strategic Committee of the board, which was formed in June 2014, will be expanded to include an evaluation of company’s corporate governance and management structure, related party transactions and any other governance practices of the company deemed appropriate by the Strategic Committee. The Strategic Committee will make recommendations to the board based on its findings, and the company intends to announce the board’s decisions with respect to these recommendations concurrent with its second quarter 2015 earnings release.
The company also agreed to form an independent board committee to oversee the company’s previously announced executive search for a president of the Chemicals business; this committee will consist of Daniel Greenwell, Sanders, Mittag and White. As previously announced the company is working with executive search firm Spencer Stuart to assist in the search.
The company also announced that Greenwell was elected lead independent director.
Jeff Smith, CEO of Starboard, stated, “We are pleased that we have been able to continue to work constructively with LSB to reach this agreement, and we look forward to meaningful