Harold C. Simmons named a 15-member rival slate for the Lockheed Corp. board of directors Friday, including a number of former defense officials apparently selected to disarm any potential criticism that Simmons' proxy battle for Lockheed would damage U.S. national security.
The nominees include former Texas Sen. John G. Tower, who once was chairman of the Senate Armed Services Committee; former Air Force Secretary Hans M. Mark; retired Adm. Elmo Zumwalt, formerly chief of naval operations, and a retired chief of the Air Force Logistics Command, Gen. Earl T. O'Laughlin.
In addition, Simmons, a Texas businessman who has acquired an 18.9% stake in Lockheed over the past year, disclosed in a Securities and Exchange Commission filing that he plans to spend $6 million in his effort to unseat the Calabasas-based aerospace firm's current board.
NL Industries, the Simmons-controlled firm that holds the Lockheed shares, will bear the expense, but NL would attempt to recoup the money from Lockheed if the proxy battle is successful, the filing said. Lockheed officials declined to comment Friday.
Until Friday, securities analysts had believed that Simmons had little chance to gain control of Lockheed. Since he started to acquire Lockheed shares last year, Simmons has lost more than $45 million.
But analysts said Friday that the Texas billionaire investor had increased his credibility in the coming battle by selecting a slate of surprising breadth. The proxy battle will be decided at the Lockheed annual shareholders meeting on March 29.
The Simmons slate also includes Fred H. Bartlit Jr., a senior partner in the Chicago law firm of Kirkland & Ellis; Richard J. Boushka, a Wichita, Kan., real estate and oil investor; Norman Brinker, chief executive of the Chili's restaurant chain; Daniel R. Fischel, a University of Chicago law professor; J. Landis Martin, president of NL Industries; Zoltan Merszei, a retired vice chairman of Occidental Petroleum; M. Lamar Muse, former president of Muse Airlines; Michael Snetzer, president of Valhi, another of Simmons' companies; Raymond Troubh, senior adviser at the Salomon Bros. investment firm, and Robert C. Wilson, former chief executive of Memorex. Simmons himself is also a nominee for the board.
Lockheed insiders and a Lockheed employee stock ownership plan hold about 19.3% of the firm's 63.3 million shares, meaning that Lockheed management and Simmons are at a virtual standoff in their battle for control of the company. Of the roughly 60% of Lockheed shares held by neither Simmons nor Lockheed insiders, more than half is held by institutions and investment firms.
Simmons has hired the proxy solicitation firm of D. J. King & Co. to lobby for his slate by means of personal meetings with shareholders and by telephone and telegram contacts, according to the SEC filing. Simmons and other NL offIcials were not available for comment Friday.
The Simmons choices for the board were "without question selected to defuse the contention that only Lockheed's current board would be best for Lockheed," said Howard Rubel, an aerospace analyst for the C. J. Lawrence investment firm in New York.
Simmons will undoubtedly play on Lockheed's weaknesses, which include poor stock price performance over the past five years and a number of ailing programs, such as the money-losing contracts to build the Navy P-7A patrol aircraft and the wings for the C-17 cargo jet.
But many institutional investors are reluctant to vote against management. A portfolio manager at Wilshire Associates, a pension fund management firm in Los Angeles that owns Lockheed shares, said its normal policy in such proxy battles is "quite conservative" and usually favors management.