DEF 14A of LSB Industries, Inc., Apr 12, 2024

DEF 14A of LSB Industries, Inc.

Filed Apr 12, 2024 · FY20230000950170-24-044048

Open on EDGAR

  1. The Board recommends a vote "FOR" each of the director nominees in Proposal No. 1

    The Board recommends a vote "FOR" each of the director nominees in Proposal No. 1 and a vote "FOR" each of Proposal Nos. 2, 3, and 4.

  2. Other Governance Matters

    Other Governance Matters Our Bylaws provide that the Board may change the total number of directors on our Board from time to time provided that the minimum number of directors is 3 and the maximum is 14. Currently there are 9 directors. As discussed under "Corporate Governance — Nominating and Corporate Governance Committee," our Nominating and Corporate Governance Committee (the "Nominating Committee") reviews the composition of the Board as part of its assessment of the Board’s performance, and effectiveness. The Nominating Committee values certain characteristics in all Board members, including personal and professional integrity, reputation, outstanding professional achievement, and sound business judgment. The Nominating Committee evaluates each individual director in the context of the Board as a whole with the goal of recommending an effective group with a diversity of experience and skills that exercises sound business judgment in the interest of our business and our stockholders. Consistent with their responsibilities, members of the Nominating Committee have interviewed and evaluated each of the current nominees for director and the Nominating Committee has determined that each is highly qualified to serve as a member of our Board. The following sets forth certain information regarding the director nominees and other directors whose term will continue after the Annual Meeting. Nominees for the Class of Directors Whose Term Will Expire in 2027

  3. Other Governance Matters

    | BARRY H. GOLSEN, J.D. | Barry H. Golsen, J.D., age 73, has been a director of the Company since 1981. His current term expires in 2024. Mr. Golsen is President of GOL Capital LLC. He served as the Vice-Chairman of the Board of the Company from 1993 until 2015. He also served as the Company’s President and Chief Executive Officer from January 2015 until September 2015 and as the Company’s President and Chief Operating Officer from 2004 to 2014. Mr. Golsen joined LSB Industries in 1978 and spearheaded the growth of LSB’s Climate Control Business with the development of innovative and climate-friendly products, a number of business startups, the acquisition of Climate Master, Inc. and its merger with LSB’s CHP Corporation. Under his leadership, LSB’s Climate Control Business attained substantial growth and leading U.S. market shares for its key products. Mr. Golsen attended Cornell University College of Engineering prior to earning both his B.A. and J.D. degrees from the University of Oklahoma. He was admitted to the Oklahoma Bar in 1978. Mr. Golsen is a past Director of the Oklahoma City Branch of the Federal Reserve Bank of Kansas City and served on the Board of Directors of Equity Bank for Savings N.A. His professional affiliations have included the Oklahoma Bar Association, the American Bar Association, the American Society of Heating, Refrigeration and Air-Conditioning Engineers, Young Presidents Organization and World Presidents Organization. Mr. Golsen is a National Association of Corporate Directors ("NACD") Board Leadership Fellow, the Gold Standard Director Credential. NACD Fellowship is a comprehensive and continuous program of study that empowers directors with the latest insight, intelligence and boardroom practices. Mr. Golsen’s extensive experience and his in-depth of knowledge and understanding of the businesses in which we operate, and his demonstrated leadership skills within the Company, among other factors, led the Board to conclude that he should serve as a director. Mr. Golsen is a Golsen designee under the terms of the Amended Board Representation and Standstill Agreement (see page 14). | | Age: 73 Director since: 1981 Committees: Audit Nominating and Corporate Governance | |

  4. Other Governance Matters

    | KANNA KITAMURA | Kanna Kitamura, age 51, has been a director of the Company since December 2018. Her current term expires in 2024. Ms. Kitamura is a Principal and Chief Talent Officer at Eldridge. Prior to joining Eldridge, Ms. Kitamura was a Vice President and Head of Legal Operations for Guggenheim Investments. She was a member of Guggenheim Partners’ Women’s Innovation and Inclusion Network, Secretary of the Pro Bono Committee, and acted as a mentor in its Veterans Transition Assistance Program. Previously, Kanna was a VP of Business Development and Director of Operations for a management consulting firm and was employed by the United Nations Development Programme in the Division of Public Affairs. Born in Tokyo, Japan, Kanna was raised in New York, received a B.S. from Georgetown University, and a J.D. from Brooklyn Law School. Ms. Kitamura’s extensive financial industry leadership and legal experience, among other factors, led the Board to determine that she should serve as a director. Ms. Kitamura is a TLB-LSB designee under the terms of the Amended Board Representation and Standstill Agreement (see page 14). | | Age: 51 Director since: 2018 Committees: Compensation Nominating and Corporate Governance | |

  5. Other Governance Matters

    | RICHARD W. ROEDEL | Richard W. Roedel, age 74 has been a director of the Company since 2015. His current term expires in 2024. Mr. Roedel serves as the non-executive chairman of LSB. He also is the chairman of the LSB Audit and Nominating and Corporate Governance committees and is a member of the Compensation and Talent Management Committee. Mr. Roedel also serves as a director of BrightView Holdings, Inc., Clarivate Plc and Luna Innovations Incorporated. Mr. Roedel is the Interim Executive Chairman and Interim President of Luna Innovations. He chairs the Audit Committees of BrightView and Clarivate and the Risk Committee of Clarivate. Mr. Roedel served on the board of Six Flags Entertainment from 2010 until he retired from the board in 2021 and IHS Markit from 2005 until he retired in 2020. Mr. Roedel was non-executive chairman of Six Flags at his retirement in addition to chairman of their Nominating and Governance Committee and a member of its Audit Committee. At IHS Markit, Mr. Roedel served as chairman of the Risk Committee and member of its Audit Committee. Mr. Roedel served on the board of Lorillard, Inc. until 2015 when it was acquired by Reynolds American Inc. During his years on the board Mr. Roedel served as chairman of the Audit Committee, a member of the Nominating and Governance Committee and lead independent director. Mr. Roedel served on the board of Sealy Corporation in several capacities, including chairman of it Audit Committee, until 2013 when Sealy was acquired by Tempur-Pedic International Inc. Mr. Roedel served on the Board of Directors of BrightPoint, Inc in several capacities until 2012, when it was acquired by Ingram Micro Inc., including chairman of its Audit Committee, chairman of its Compensation Committee and member of its Nominating and Governance Committee. Mr. Roedel served on the Board of Directors of Broadview Holdings, Inc. and was chairman of its Audit Committee and a member of its Compensation Committees until 2012, following the approval of its financial restructuring plan by the United States Bankruptcy Court, which resulted in a change to its ownership structure. Mr. Roedel served on the Board of Directors of Dade Behring Holdings, Inc. and was chairman of its Audit Committee until 2007 when Dade was acquired by Siemens AG. Mr. Roedel served on the board of Take-Two Interactive Software, Inc. until 2005, initially as chairman of its Audit and Governance Committees, later becoming chairman and chief executive officer. During his career, Mr. Roedel has been chairman of numerous audit, compensation, governance and special committees. Mr. Roedel was previously a member of the National Association of Corporate Directors (NACD) Risk Oversight Advisory Council. Mr. Roedel was appointed to a three-year term, ending in 2017, on the Standing Advisory Group of the Public Company Accounting Oversight Board (PCAOB). Until 2000 Mr. Roedel was employed by BDO Seidman LLP, having been managing partner of its Chicago and New York Metropolitan area offices and later chairman and CEO. Mr. Roedel is a graduate of The Ohio State University and a CPA. Mr. Roedel’s extensive experience in finance, accounting, risk management, and public company governance led the Board to conclude that he should serve as a director. | | Age: 74 Director since: 2015 Committees: Audit (Chair) Compensation Nominating and Corporate Governance (Chair) | |

  6. Other Governance Matters

    | THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE THREE NOMINEES AS DIRECTORS OF THE COMPANY |

  7. Other Governance Matters

    Continuing Directors The following six directors will continue in office until the expiration of their respective terms and until their successors have been elected and qualified.

  8. Other Governance Matters

    | MARK T. BEHRMAN | Mark T. Behrman, age 61, has served as President, CEO and board member of the Company since 2018. His term expires in 2025. Prior to that, Mr. Behrman served as Executive Vice President, Chief Financial Officer from June 2015 through December 2018. Mr. Behrman joined LSB in 2014 as Senior Vice President of Corporate Development. Prior to joining LSB, Mr. Behrman was Managing Director, Head of Investment Banking and Head of the Industrial and Energy Practices of Sterne Agee, Inc., from 2007 to 2014. Mr. Behrman has over 35 years of operational, financial, executive management, and investment banking experience. Mr. Behrman is currently Non-Executive Chairman of the Board of PHX Minerals, Inc. and has served on that board since 2017. He is also a member of its Audit and Compensation Committees. Mr. Behrman has also been a Director of The Fertilizer Institute since 2019. Mr. Behrman previously has served on the board of directors of the following publicly held companies: Noble International Ltd., (a supplier to the automotive industry) from 1998 to 2007, where he also served as Audit Committee Chairman from 1998 to 2003; Oakmont Acquisition Corporation (a special purpose acquisition corporation), from 2005 to 2007 and; Robocom Systems International (a developer and marketer of advanced warehouse management software solutions), from 1998 to 2000. Mr. Behrman holds an MBA in Finance from Hofstra University and a Bachelor of Science in Accounting, Minor in Finance from Binghamton University. | | | | | Age: 61 Director since: 2018 Committees: None | |

  9. Other Governance Matters

    | JONATHAN S. BOBB | Jonathan S. Bobb, age 48, has been a director of the Company since 2015. His term expires in 2025. Mr. Bobb is a Senior Director on the investment team at Eldridge Industries. In this role, he is responsible for originating, executing and overseeing investments across a range of industries. Mr. Bobb previously served in a similar capacity at Guggenheim Partners. Prior to joining Guggenheim, Mr. Bobb was in the investment banking division at Goldman Sachs & Co. from 2007 to 2013. His previous business experience includes investment banking positions with J.P. Morgan and Deutsche Bank and financial planning roles at Gap Inc. Mr. Bobb serves as a TLB-LSB Designee under the terms of the Amended Board Representation and Standstill Agreement. Mr. Bobb received a B.A. in Economics from Stanford University and an M.B.A. from the University of Michigan. | | | | | Age: 48 Director since: 2015 Committees: Audit Compensation | |

  10. Other Governance Matters

    | STEVEN L. PACKEBUSH | Steven L. Packebush, age 59, has been a director of the Company since 2020. His term expires in 2026. Mr. Packebush is a founder and partner in Elevar Partners, LLC, a company providing advisory and consulting services and capital solutions for companies in the agriculture and energy markets. Prior to Elevar Partners, Mr. Packebush worked at Koch Industries, Inc. for over 30 years, retiring in March 2018. Until his retirement, he was the president of Koch Ag & Energy Solutions ("Koch Ag"). Under Mr. Packebush’s leadership, Koch Ag grew from a break-even business to one of the larger business units at Koch Industries and one of world’s largest fertilizer companies. Koch Ag manufactured, marketed, distributed, and traded more than 14 million tons of fertilizer products annually. Key to this growth was acquiring and integrating five nitrogen fertilizer production plants in North America and equity interest in three nitrogen plants in Trinidad and Tobago. In addition, significant capital and resources were invested in the North American plants to improve the environmental, health and safety, efficiencies, and reliability of these facilities. Also, a $1.3 billion plant expansion project located in Enid, Oklahoma was executed, and a global fertilizer supply, trading, and distribution business was developed with commercial office locations in Europe, Asia, and Latin America. Mr. Packebush also oversaw the expansion of Koch Ag to include three additional start-up businesses: Koch Energy Services became one of the largest natural gas marketing companies in North America; Koch Methanol supplied methanol to global customers in the plywood, carpet, fuels, and plastics markets; and Koch Agronomic Services became one of world’s largest enhanced-efficiency fertilizer producers and marketers. Prior to his time at Koch Ag, Mr. Packebush held various business development and commercial roles in Koch International, Koch Agriculture, and Koch Minerals. Mr. Packebush serves as a Golsen Designee under the terms of the Amended Board Representation and Standstill Agreement. Mr. Packebush currently serves on the PHX Minerals, Inc. Board of Directors, Kansas State University Dean’s Agriculture Advisory Board, and the Wichita Metropolitan YMCA and YMCA360 Board of Directors. Previously he served on the board of directors of Monolith Materials Inc., EuroChem Group AG, Caribbean Nitrogen, Nitrogen 2000, KOCHPAC, and The Fertilizer Institute. He has also served on The Fertilizer Institute’s executive committee and Koch Industries’ Compliance and Ethics Executive Committees. Mr. Packebush is a 1987 graduate of Kansas State University with a bachelor’s degree in agricultural economics. | | Age: 59 Director since: 2020 Committees: Audit Nominating and Corporate Governance | |

  11. Other Governance Matters

    | DIANA M. PENINGER | Diana M. Peninger, age 59, has been a director of the Company since 2020. Her term expires in 2026. Since 2021, Ms. Peninger, is the President and CEO of Reproductive Solutions, a medical device company located in Dallas, TX. She founded and serves as CEO of Geneva Lake Partners LLC since 2017 which is an advisory firm that works with middle market private industrial companies to help them develop strategic plans to accelerate their growth. She serves on the board of Rogers Group, Inc. since July 2017, chairs the compensation committee and is a member of the audit committee. She served four years as the Board Vice-Chair of the Committee of 200 which is a non-profit organization of the world’s most successful women CEO’s and senior business executives. Ms. Peninger spent 30 years in the chemical industry including three expat assignments in Frankfurt, Germany. In 2018, she served as interim CEO for Synata Bio a renewable clean fuels and chemicals technology company owned by True North Venture Partners. From 2007 through 2016, she held various roles within Celanese Corporation including, Vice President, Acetyl Intermediates, EVA Performance Polymers and Vice President General Manager for Nutrinova Specialty Food Ingredients business. Prior to this, as Director of Corporate Strategy and Business Development, she lead the business development initiatives to establish manufacturing locations in low cost regions of China and Middle East. From 2005 to 2007 while at Chemtura Corp., Ms. Peninger served as Vice President, Consumer Products and Vice President, PVC Additives businesses. She started her career in 1987 with Celanese Corporation in Pampa, Texas as a plant operations engineer before taking on progressively more responsibility including Director of Global Glass Fibers business and leading the integration several large acquisitions resulting in a leading $800M global industry emulsions position. Ms. Peninger holds a B.S. in Chemical Engineering from South Dakota School of Mines and was honored in 2017 with the prestigious "Distinguished Alumni" award for achievement of excellence in their careers and their communities. She is a National Association of Corporate Directors (NACD) Board Leadership Fellow, serves on the NACD North Texas Board and serves on the University Advisory Board for her alma mater. | | Age: 59 Director since: 2020 Committees: Audit Compensation | |

  12. Other Governance Matters

    | RICHARD S. SANDERS, JR | Richard S. Sanders, Jr., age 67, has been a director of the Company since 2014. His term expires in 2025. Mr. Sanders served as our Interim Executive Vice President, Chemical Manufacturing from September 2015 until August 2016. Mr. Sanders has been a nitrogen fertilizer manufacturing consultant since January 2011 through Circle S. Consulting LLC, of which he is the sole owner. Previously, Mr. Sanders served as Vice President of Manufacturing of Terra Industries Inc. from 2003 until the acquisition of Terra Industries by CF Industries Holdings, Inc. in April 2010. On completion of the transaction, he worked on the integration of manufacturing operations, and as Vice President of Environmental Health and Safety, Engineering and Procurement. At Terra Industries Inc., Mr. Sanders was responsible for Terra’s six manufacturing facilities’ overall operations including production operations, environmental health and safety, project engineering, and technical services. He was also responsible for Terra’s capital investment program of approximately $250 million per year, including major expansion projects. Mr. Sanders was Plant Manager of Terra’s Verdigris, Oklahoma nitrogen manufacturing complex for nine years prior to his role as Vice President of Manufacturing. Prior to Terra, Mr. Sanders served as Plant Manager at the Beaumont Methanol Corporation’s 800,000 GPD methanol manufacturing facility and in management and engineering positions for Agrico Chemical Company. Mr. Sanders served as a Non-Executive Director of Open Joint Stock Company Mineral and Chemical Company EuroChem during 2013. Mr. Sanders received a Bachelor of Science degree in Chemical Engineering from Louisiana State University in 1980. | | | | | Age: 67 Director since: 2014 Committees: Audit Nominating and Corporate Governance | |

  13. Other Governance Matters

    | LYNN F. WHITE | Lynn F. White, age 71, has been a director of the Company since 2015. His term expires in 2026. Mr. White founded and has served as the Managing Director of Twemlow Group LLC since 2013, and previously from 2008 until 2009. Twemlow Group LLC is a consulting firm that provides strategic, organizational and product development counsel to agriculturally related businesses. From January to June 2023, Mr. White served as interim President and CEO of Anuvia Plant Nutrients, Inc. where he had served as a director since February 2021 and previously from January 2016 to November 2019. From 2009 to 2013, Mr. White served as Vice President, Corporate Development of CF Industries Holdings, Inc. (NYSE: CF). While at CF Industries, he was responsible for external growth initiatives, including M&A and organic efforts, new product development and strategy, and led the integration of the $4.6 billion acquisition of Terra Industries, Inc. While at CF Industries he served as non-executive Chairman or Vice-Chairman of GrowHow UK Limited, the leading British nitrogen fertilizer producer and as a director of KEYTRADE AG, a major Swiss based fertilizer trading firm. Prior to that, he was the President of John Deere Agri Services, Inc., a subsidiary of Deere & Co. (NYSE:DE), where he was responsible for leading a new global business unit created to pursue growth opportunities in technology-based services for industries linked to agriculture. Mr. White was also Vice President of Global AgServices of Deere, where he was responsible for identifying, testing, and developing new services for agriculture and food. Prior to that, he was Senior Vice President, Corporate Development of IMC Global Inc. (n/k/a The Mosaic Company), a producer of crop nutrients and salt, and served in various executive positions, including General Manager of the Food Ingredients Division, Director of the Flame Retardants & Fluids Business and Europe, Middle East, Africa Agricultural Chemicals Area Director of FMC Corporation (NYSE:FMC), a global producer of chemicals and machinery. Mr. White also served as Vice Chair of the Dean’s Advisory Council for the College of Agriculture, Food and Environmental Sciences at California Polytechnic State University through 2023. Through 2021 he was president and director of the Charlestowne Neighborhood Association (SC), and until 2014 served as a Trustee of the Barrington Hills (IL) Police Pension Fund. Mr. White is also a former director and President of the International Food and Agribusiness Management Association. Mr. White holds a B.A. in History (Highest Honors) from California Polytechnic State University, San Luis Obispo and an M.B.A. in Finance and Multinational Enterprise from the Wharton Graduate School of Business at the University of Pennsylvania. | | Age: 71 Director since: 2015 Committees: Audit Compensation (Chair) | |

  14. Other Governance Matters

    | Proposal 2 | | Approval of the Amended and Restated Section 382 Rights Agreement |

  15. Other Governance Matters

    We are asking our stockholders to approve and adopt the Amended and Restated Section 382 Rights Agreement, dated as of August 22, 2023 (the "Amended Rights Agreement"), which amended and restated the Section 382 Rights Agreement, dated as of July 6, 2020 (the "Original Rights Agreement"), by and between the Company and Computershare Trust Company, N.A., a federally charted trust company, as rights agent. The Amended Rights Agreement provides that the Rights (as defined in the Amended Rights Agreement) will no longer be exercisable if the Company’s stockholders do not approve the Amended Rights Agreement at the Annual Meeting. The Amended Rights Agreement is substantially similar to the Original Rights Agreement except that it extends the Final Expiration Date (as defined in the Original Rights Agreement) from July 6, 2023 to August 22, 2026. A summary of the Amended Rights Agreement appears below and is qualified by the full text of the Amended Rights Agreement attached as Appendix A - page 74 to this Proxy Statement.

  16. Compensation Committee Interlocks and Insider Participation

    | JOHN P. BURNS | Mr. Burns, age 60, became the Company’s Executive Vice President, Manufacturing of the Company in February 2020. He brings 30 years of operating experience in petroleum refining and chemical manufacturing industries including 8 years of experience in the nitrogen-based fertilizers and industrial feedstocks sector. His leadership roles include Reliability Engineering Manager, Area Operations Manager, Engineering and Maintenance Manager, Director of Operations Excellence and Vice President of Operations leading multiple facilities. In these roles, he has improved performance in the key operating categories of safety, environmental stewardship, production performance and cost, and product quality. He has demonstrated skills and capability in process safety excellence, leadership development and coaching, competitive benchmarking, dynamic work design, lean process implementation and digital innovation. John graduated from Texas A&M University, College Station, TX with a BS in Engineering Technology and Texas A&M University, Corpus Christi, TX with an MBA. | | DAMIEN J. RENWICK | Mr. Renwick, age 47, became the Company’s Executive Vice President and Chief Commercial Officer in January 2021. Mr. Renwick has more than 17 years of experience in the chemical industry, most recently with Houston-based Cyanco where he was President of Cyanco International and held the additional position of Chief Commercial Officer. Prior to this, Mr. Renwick was with Perth, Australia-based Wesfarmers Limited, one of Australia’s largest listed companies. There he held various positions of increasing responsibility in the Chemicals, Energy and Fertilizers division, including Director and General Manager of Australian Gold Reagents, and Commercial Manager, Ammonium Nitrate. Mr. Renwick has led and executed multiple significant commercial transactions to underpin large-scale capital investment projects, led large improvements in operating and safety performance of product on plants and been deeply involved in numerous capital growth projects and acquisition and divestment transactions and evaluations. He began his career with Arthur Andersen in its consulting division. Mr. Renwick holds a Bachelor of Engineering (Honors) and a Bachelor of Commerce from the University of Western Australia. |

  17. Corporate Governance

    | ✓ | Independent Compensation Committee oversees all aspects of executive compensation to assess potential impact on business risk (including human resource risk); | | ✓ | Compensation Committee retains an independent compensation consultant; | | ✓ | Incentive Compensation Recoupment Policy applies to incentive-based compensation; | | ✓ | NEOs are subject to mandatory Management Stock Ownership Guidelines; | | ✓ | Directors and officers are subject to an insider trading and anti-hedging and pledging policy; | | ✓ | Double trigger change in control provisions, requiring both a change in control and a qualifying termination of the executive’s employment, are embedded in employment contracts and long-term incentive plans; and | | ✓ | Stockholders have an annual "say on pay" vote. |

  18. Executive Compensation Program Risk Management

    Executive Compensation Program Risk Management We endeavor to mitigate executive compensation risk through appropriate oversight of our executive compensation program, through our executive compensation plan design (as outlined below) and through our corporate governance policies. We also seek to motivate certain behaviors that encourage appropriate risk-taking to drive performance in accordance with our risk profile. As part of its risk management role, the Compensation Committee: Actively engages with senior Company leaders to understand the connection between our executive compensation program and business strategy; • Determines compensation plan design, the selection of peer groups, the elements of compensation and program participation, in order to assess potential impact on business risk (including human resource risk); • Retains an independent compensation consultant to provide independent advice on market data, plan design and current good corporate governance practices; • Oversees a robust process to assess performance; and • Considers the implications of the potential risks associated with the Company’s compensation policies and practices. Our executive compensation program is designed to provide competitive levels of reward that are responsive to Company and individual performance but do not incentivize risk taking that is reasonably likely to have a material adverse effect on the Company. In reaching the conclusion that our executive compensation program does not create risks that are reasonably likely to have a material adverse effect on us, the Compensation Committee examined the various elements of our executive compensation program and our risk mitigation controls. In particular, numerous factors were considered, including: • Absence of significant short-term incentives that would reasonably be considered as motivating high-risk investments or other conduct that is not consistent with the long-term goals of the Company; • Provision of a mix of short-term and long-term compensation; • Type of equity awards granted to employees and level of equity and equity award holdings; and • Historical emphasis on long-term growth and profitability, over short-term gains. Specific corporate governance policies related to compensation risk management include: • Recoupment Policy. In 2023, we updated our Executive Compensation (Recoupment Policy) to comply with SEC and NYSE listing rules. The Recoupment Policy requires, subject to limited exceptions, current and former executive officers of the Company to return erroneously awarded incentive-based compensation in the event the Company is required to restate its financial statements due to material noncompliance with financial reporting requirements under federal securities laws; • Mandatory Stock Ownership Guidelines. Our NEOs are subject to our mandatory Management Stock Ownership Guidelines of five times salary for the President & CEO and three times salary for our other NEOs (as described in further detail below); and • Insider Trading and Pledging and Hedging Policies. Our Insider Trading Policy and Policy Regarding Pledging and Hedging of Company Securities govern the trading of Company securities by insiders and prohibit directors and officers from entering into derivative or similar transactions with respect to their securities of the Company, holding their securities in a margin account or pledging their securities as collateral for loans, because such arrangements could reduce the risk of equity ownership by directors and officers and negate the alignment of interests of directors and officers with those of stockholders. These policies are available for review at:

  19. https://investors.lsbindustries.com/corporate-governance-highlights

    https://investors.lsbindustries.com/corporate-governance-highlights The three elements of total direct compensation for our NEOs are: (i) base salary, (ii) short-term incentive awards and (iii) long-term incentive awards. Unlike base salary, which is fixed annually, short-term and long-term incentive awards each represent variable, at risk, compensation. These three elements are balanced such that a portion of each NEO’s compensation is contingent on performance over both the short and longer-term. The Compensation Committee has adopted and implemented core principles that form the framework for our executive compensation program. We believe that the Company’s executive compensation program clearly aligns executive compensation opportunities with our Company’s long-term strategic plan and provide accountability for long-term results. Compensation Philosophy – How Executive Pay is Linked to Company Performance Our executive compensation program is designed to incentivize and motivate our executive officers to lead and manage our business well over the long-term, to drive performance improvements, and to increase stockholder value. It is also designed to enable us to compete effectively with other companies in attracting, motivating and retaining talented executives. The incentive compensation elements of our program are designed to align closely the financial interests of our executives with those of our stockholders. We believe the portion of compensation that is at-risk and tied to organization-wide performance metrics should increase as the level of responsibility increases. Because of the inherent risk in chemical operations, we place a high priority on our leaders to create, maintain and reinforce a strong safety culture. Because of the environmental risks in our business, we place a high priority on managing our operations responsibly and sustainably. We regularly assess how our executive compensation program compares to companies with a similar profile to ours. Our objective is to deliver compensation at a competitive market level that will enable executive officers who demonstrate consistent performance over a multi-year period to earn compensation that is competitive and consistent with or above targeted total compensation. Conversely, the program is designed to pay less than the annual target compensation when performance does not meet expectations. Individual executive compensation may be above or below the annual targeted compensation level, based on our performance; economic and market conditions; the individual’s performance, contribution to the organization, experience, expertise, and skills; and other relevant factors. Please see our Compensation Framework below for further information on this topic. Compensation Framework In accordance with our compensation philosophy, the salary and benefits for NEOs provide the secure fixed compensation component that the Compensation Committee feels is necessary to attract and retain key executive talent. The combination of annual and long-term incentives is designed to motivate the execution of our business strategy in a manner that creates stockholder value while retaining executive talent and aligning our executives' interests with those of our stockholders. The combination of the fixed and at-risk compensation components provides our executives with a competitive compensation package that is designed to meet our needs and the expectations of our stockholders. Our 2023 compensation elements include:

  20. https://investors.lsbindustries.com/corporate-governance-highlights

    | Compensation Element | Performance Period | Performance Measures | Purpose of Compensation Element | | Base Salary | • Not applicable | • Pay aligned with scope of responsibilities and experience | • Provides competitive fixed pay | | Performance Annual Incentive Award (Short-Term Incentive) | • 1 year | • Environmental, Health & Safety • Financial and operational performance measures | • Promotes achievement of shorter-term performance goals | | Equity Grants (Long-Term Incentive) | • 3 years | Depending on form of grant: • Time-based (vesting ratably over 3 years) • Relative stock-based performance metrics | • Aligns NEOs’ and stock-holders’ interests • Retains talent with long-term wealth accumulation opportunities • Ties compensation to a longer-term performance goal, in the case of PSUs | | Perquisites and Other Benefits | • Not applicable | • Not applicable | • Allows the Company to remain competitive among its peers to attract and retain key talent |

  21. Compensation Peer Group

    Compensation Peer Group LSB benchmarks NEO compensation levels using a peer group of companies (the "Compensation Peer Group"). The Compensation Committee annually commissions its independent compensation consultant to review the criteria and composition of the peer group. The Compensation Peer Group utilized in making the compensation decisions for 2023 was comprised of the following companies: Advansix Inc. American Vanguard Corporation Balchem Corporation Compass Minerals International, Inc. CSW Industrials, Inc. CVR Partners, LP Ecovyst, Inc. Hawkins, Inc. Haynes International, Inc. Ingevity Corporation Intrepid Potash, Inc. Livent Corp. Orion Engineered Carbons S.A. Quaker Chemical Corporation Overall, the Committee uses a number of factors when determining the compensation for each executive, including a broad range of market data, corporate performance, executive performance, competitive labor conditions, among others. The Compensation Committee, in consultation with its compensation consultant, evaluates the composition of the Compensation Peer Group by evaluating, among other things, the industry or business models, annual revenues, market capitalization, and geographic locations of potential Compensation Peer Group companies, as well as those companies that are perceived competitors for talent. After reviewing the Compensation Peer Group, the Compensation Committee, in consultation with its compensation consultant, determined to add Compass Minerals International, Inc. and Orion Engineered Carbons S.A., remove Chase Corporation and otherwise retain the peer group of companies that was in effect for 2022 for purposes of 2023 compensation-related decisions based on the annual revenue and market capitalization of the Company.

  22. Setting Executive Compensation

    Setting Executive Compensation The Compensation Committee annually sets cash and non-cash executive compensation to reward the NEOs for achievement of, and to motivate the NEOs to achieve, near-term and long-term business objectives. The Compensation Committee also reviews the compensation information of our Compensation Peer Group companies. As described in more detail below, in 2023, the Compensation Committee engaged Compensation Strategies as its independent compensation consultants to assist the Compensation Committee in conducting its review of our executive compensation program. The information provided by the independent compensation consultant is used to determine how our executive compensation program compares to those of our Compensation Peer Group and the market generally, as further described below. In setting compensation, the Compensation Committee also considers the allocation between cash and non-cash compensation amounts, and near-term and long-term compensation, but does not have a specific formula or required allocation between such compensation types. In each case, such allocation is considered as part of the overall compensation determination. During 2023, the Compensation Committee compared the CEO’s total compensation to the total compensation of our other NEOs. However, the Compensation Committee has not established a target ratio between total compensation of the CEO and the median total compensation level for the next lower tier of management. The Compensation Committee also considers internal pay equity among the NEOs and in relation to the next lower tier of management and average compensation of all employees to maintain compensation levels that are consistent with the individual contributions and responsibilities of those NEOs. The Compensation Committee does not consider amounts payable under severance agreements when setting the annual compensation of the NEOs.

  23. Short-Term (Annual) Incentive Plan

    Short-Term (Annual) Incentive Plan NEOs participate in the Company’s Short-Term Incentive Plan (the "STI Plan"), our annual performance bonus plan. The STI Plan provides the opportunity for annual cash payments tied directly to the achievement of key pre-established financial and operational goals. The Compensation Committee sets goals derived from our strategic plan that are designed to align the interests of our NEOs with the interests of our stockholders. Our STI Plan is a key element in supporting our pay-for-performance philosophy. Each NEO’s annual incentive opportunity is determined by performance in up to three categories, with an emphasis on key operating and financial metrics: (1) Environmental, Health & Safety performance; (2) Company Adjusted EBITDA; and (3) Ammonia Production Rates. Annual incentive targets are set as a percentage of salary, with actual payouts based on a performance multiplier dependent on the achievement of predetermined annual goals. The annual incentive targets for Messrs. Behrman, Burns, and Foster and Ms. Maguire were established in their respective employment agreements. Mr. Renwick’s payout target was established upon his beginning employment with the Company. At the end of each year, the Compensation Committee determines the actual achievement of each performance goal. The Compensation Committee and the Board have the ability to apply informed judgment to adjust outcomes based on market, operational and other realities that may not have been contemplated in the scorecard formula. In 2023, the Compensation Committee exercised its judgment and adjusted the STI by applying a multiplier between 1.1 and 1.2 to the bonus amounts earned based on the achievement of the annual goals described above and below.

  24. Short-Term (Annual) Incentive Plan

    | Category | Performance Metric | | Environmental, Health & Safety performance | Achieve Total Recordable Injury Rate (TRIR) company-wide Achieve Process Safety Tier I Incidents (PSI) company-wide Achieve Reportable Environmental Events company-wide | | LSB Corporate Financial Performance | Achieve Adjusted EBITDA at budget | | Production Rates | Achieve NH3 production at budget |

  25. Short-Term (Annual) Incentive Plan

    | NEO | 2023 Salary | Target Annual Incentive (% of Salary) | Safety & Environmental Performance | | Adjusted EBITDA | | NH3 Production | | Overall Multiplier | Overall Payout (% of Target) | 2023 STI Plan Payout | | | | | Weight | Weighted Payout (1) | Weight | Weighted Payout (2) | Weight | Weighted Payout (3) | | | | | Mark T. Behrman | $725,000 | 110% | 25% | 42% | 50% | 0% | 25% | 21% | 120% | 76% | $603,000 | | Cheryl A. Maguire | $425,000 | 75% | 25% | 42% | 50% | 0% | 25% | 21% | 120% | 76% | $241,000 | | Michael J. Foster | $422,000 | 70% | 25% | 42% | 50% | 0% | 25% | 21% | 120% | 76% | $223,000 | | John P. Burns | $379,000 | 70% | 25% | 42% | 50% | 0% | 25% | 21% | 110% | 69% | $184,000 | | Damien J. Renwick | $379,000 | 70% | 25% | 42% | 50% | 0% | 25% | 21% | 120% | 76% | $200,000 |

  26. Short-Term (Annual) Incentive Plan

    (1) The achievement during 2023 for Safety and Environmental performance was 167% resulting in a 42% payout for this portion of the annual bonus. (2) The achievement during 2023 for Adjusted EBITDA performance was 0% which resulted in no payout for this portion of the annual bonus. (3) The achievement during 2023 for ammonia production performance was 86% resulting in a 21% payout for this portion of the annual bonus.

  27. Long-Term (Equity) Incentive Plan

    Long-Term (Equity) Incentive Plan We award long-term performance equity awards to our NEOs under the terms of the 2016 Long Term Incentive Plan, as amended and restated March 4, 2021 (the "2016 LTIP") that was approved by stockholders at the 2021 Annual Meeting of stockholders. The Compensation Committee, with the input of its independent compensation consultant, designed the 2016 LTIP to align NEO compensation with stockholders’ interests and to serve as a retention tool. The Compensation Committee believes the 2016 LTIP allows us to continue to motivate our NEOs through the grant of equity-based awards and will also increase the Compensation Committee’s flexibility to grant different types of equity, equity-based, and cash awards in the future. The Compensation Committee evaluates each NEO’s performance on an annual basis and grants equity awards, and, for each NEO, determines the allocation between time-based grants and performance-based grants. Both the time-based and the performance-based awards generally vest over a three-year period. Time-based awards, in the form of restricted stock units, vest one-third on each of the first three anniversaries of the date of grant. Performance-based awards, in the form of performance-based restricted stock units, vest at the end of the three-year performance measurement period. We believe both award types link the value of payments to the long-term results of the Company. The 2023 grants for each of our NEOs included performance-based and time-based restricted stock units. The performance metric for the 2023 performance-based grants was total shareholder return (TSR) relative to a peer group measured annually over a three-year performance period. The peer group utilized for relative TSR ranking included the following companies: The Andersons, Advansix, American Vanguard, CF Industries, Chemtrade Logistics, Compass Minerals, Ecovyst, ICL Group, Intrepid Potash, Methanex, Mosaic, Nutrien, OCI, CVR and Yara International. The Compensation Committee determined that this performance metric was a good measure of overall Company performance. For performance on the relative TSR metric that is above the threshold, vesting will result in a range of 50%-200% of the target vesting.

  28. Use of Compensation Consultants

    Use of Compensation Consultants The Compensation Committee has the sole authority to hire and terminate its independent compensation consultant, approve its compensation, determine the nature and scope of its services, and evaluate its performance. In 2023, the Compensation Committee engaged Compensation Strategies as its compensation consultant to provide information to the Compensation Committee to assist it in making determinations regarding our executive compensation program for our NEOs and non-employee directors. In August and November 2023, Compensation Strategies provided the Compensation Committee with, among other things, a competitive pay analysis comparing the compensation of our executive officers against peer group compensation statistics, 2024 program design advice, an independent review of 2024 compensation proposals developed by management, comparative analysis of non-employee director compensation, including compensation for the regular and special committees of the Board, review of trends and regulatory developments, and assistance with peer group review. A representative from Compensation Strategies attended the January, March, May, August, and November meetings of the Compensation Committee during 2023. Compensation Strategies did not perform any other services for the Company or its management other than those described above. Compensation Strategies provides information and data to the Compensation Committee from its surveys, proprietary databases and other sources, which the Compensation Committee utilizes along with information provided by management and obtained from other sources. In making its decisions, the Compensation Committee reviews such information and data provided to it by Compensation Strategies and management and also draws on the knowledge and experience of its members as well as the expertise and information from within the Company, including from the Company’s human resources, legal, and finance groups. The Compensation Committee considers executive and non-employee director compensation matters at its quarterly meetings and at special meetings as needed based on our annual compensation schedule. In connection with its engagement of Compensation Strategies, the Compensation Committee considered various factors bearing upon Compensation Strategies’ independence including, but not limited to, the amount of fees received by Compensation Strategies from the Company as a percentage of Compensation Strategies’ total revenue, Compensation Strategies’ policies and procedures designed to prevent conflicts of interest, and the existence of any business or personal relationship that could impact Compensations Strategies’ independence. After reviewing these and other factors, the Compensation Committee determined that Compensation Strategies is independent and that its engagement did not present any conflicts of interest. In 2023, we paid Compensation Strategies for the services it provided to the Compensation Committee. Employment Agreements The Compensation Committee believes that executive employment agreements are an integral component of our competitive executive compensation program. Our employment agreements are an important risk management tool that creates continuity in severance and other benefits upon certain termination events. Messrs. Behrman, Burns and Foster and Ms. Maguire are each a party to an executive employment agreement in the Company’s standard form, which was implemented in 2018. Mr. Renwick is not party to an employment or severance agreement with the Company.

  29. Mark T. Behrman

    Mark T. Behrman 2018 Behrman Agreement—On December 30, 2018, we entered into an employment agreement with Mr. Behrman. The employment agreement provides in part that Mr. Behrman will: • Serve as our President and CEO for an initial term of one-year, with automatic one-year extensions until terminated by either party in accordance with the 2018 Behrman employment agreement; • Receive an annual base salary of at least $650,000; and • Be eligible to receive an annual cash performance bonus equal to between 0% and 200% of his base salary, with a target of at least 100% of base salary, depending on the Company’s achievement of performance criteria, as determined by the Compensation Committee. Following his termination of employment, Mr. Behrman will be subject to non-competition and non-solicitation restrictions for a period of 24 months. For information regarding the provisions of the agreement related to change in control and severance payments, please see "Potential Payments Upon Termination or Change in Control" on page 59.

  30. John P. Burns

    John P. Burns 2019 Burns Agreement—On December 20, 2019, we entered into an employment agreement with Mr. Burns. The agreement provides that Mr. Burns will: • Serve as our Executive Vice President —Manufacturing for an initial term expiring on December 30, 2020, with automatic one-year extensions until terminated by either party in accordance with the 2019 Burns Agreement; Be eligible to receive an annual cash performance bonus equal to between 0% and 100% of his base salary, with a target of at least 50% of base salary, depending on the Company’s achievement of performance criteria, as determined by the Compensation Committee. Following his termination of employment, Mr. Burns will be subject to non-competition and non-solicitation restrictions for a period of 24 months. For information regarding the provisions of the agreement related to change in control and severance payments, please see "Potential Payments Upon Termination or Change in Control" on page 59.

  31. Michael J. Foster

    Michael J. Foster 2018 Foster Agreement—On December 30, 2018, we entered into an employment agreement with Mr. Foster. The agreement provides in part that Mr. Foster will: • Serve as our Executive Vice President, General Counsel and Secretary for an initial term of one-year, with automatic one-year extensions until terminated by either party in accordance with the 2018 Foster Agreement; • Receive an annual base salary of at least $390,000; and • Be eligible to receive an annual cash performance bonus equal to between 0% and 140% of his base salary, with a target of at least 70% of base salary, depending on the Company’s achievement of certain performance criteria, as determined by the Compensation Committee. Following his termination of employment, Mr. Foster will be subject to non-competition and non-solicitation restrictions for a period of 24 months. For information regarding the provisions of the agreement related to change in control and severance payments, please see "Potential Payments Upon Termination or Change in Control" on page 59.

  32. Cheryl A. Maguire

    Cheryl A. Maguire 2018 Maguire Agreement—On December 30, 2018, we entered into an employment agreement with Ms. Maguire. The agreement provides in part that Ms. Maguire will: • Serve as our Senior Vice President and Chief Financial Officer (Ms. Maguire was since promoted to Executive Vice President and Chief Financial Officer) for an initial term of one-year, with automatic one-year extensions until terminated by either party in accordance with the 2018 Maguire Agreement; • Receive an annual base salary of at least $370,000; and • Be eligible to receive an annual cash performance bonus equal to between 0% and 120% of her base salary, with a target of at least 60% of base salary, depending on the Company’s achievement of performance criteria, as determined by the Compensation Committee. Following her termination of employment, Ms. Maguire will be subject to non-competition and non-solicitation restrictions for a period of 24 months. For information regarding the provisions of the agreement related to change in control and severance payments, please see "Potential Payments Upon Termination or Change in Control" on page 59. Management Stock Ownership Guidelines Beginning in April 2017, the Compensation Committee approved stock ownership guidelines that are intended to further align the interests of our NEOs with the interests of our stockholders by requiring the NEOs to hold significant levels of Company stock. In keeping with our overall compensation philosophy, we believe that the equity ownership levels that they are required to maintain are high enough to appropriately incentivize our NEOs’ commitment to long-term value creation. The Compensation Committee evaluates the Stock Ownership Guidelines at least annually. The terms of our Management Stock Ownership Guidelines are set out below:

  33. Cheryl A. Maguire

    | | Chief Executive Officer | 5x base salary | | Target Ownership Amount(1) | Chief Financial Officer | 3x base salary | | | Other NEOs(1) | 3x base salary | | Shares Counted Towards Ownership | • Shares owned outright or held in trust • Time-based vesting restricted stock units • The target number of any performance shares or units | | | Compliance Period | • The later of April 26, 2022 or 5 years from hire/promotion into covered role | | | Tracking Achievement | • Measure compliance on December 31 each year using 90-trading day average stock price • Notify participants and Compensation Committee of compliance/progress towards meeting guidelines | | | Controls | • Once the guideline is met, participants are expected to maintain share ownership pursuant to the guideline thereafter • Should a participant who previously met the guideline subsequently fall below the guideline for any reason, they will be required to meet the guideline within 2 years | |

  34. Cheryl A. Maguire

    | Name and Principal Position | Year | Salary $ | Bonus $ | Stock Awards(1) $ | Non-Equity Incentive Plan Compensation(2) $ | All Other Compensation(3) $ | Total $ | | Mark T. Behrman | 2023 | $725,000 | $— | $3,146,428 | $603,000 | $13,405 | $4,487,833 | | President and Chief | 2022 | $676,000 | $— | $2,089,578 | $926,120 | $12,815 | $3,704,513 | | Executive Officer | 2021 | $650,000 | $250,000 | $1,787,997 | $786,500 | $7,800 | $3,482,297 | | Cheryl A. Maguire | 2023 | $425,000 | $— | $568,923 | $241,000 | $1,052 | $1,235,975 | | Executive Vice President | 2022 | $384,800 | $— | $432,449 | $369,000 | $— | $1,186,249 | | and Chief Financial Officer | 2021 | $370,000 | $100,000 | $369,999 | $313,390 | $— | $1,153,389 | | Michael J. Foster | 2023 | $422,000 | $— | $563,583 | $223,000 | $7,800 | $1,216,383 | | Executive Vice President, | 2022 | $405,600 | $— | $456,273 | $389,000 | $7,800 | $1,258,673 | | General Counsel and Secretary | 2021 | $390,000 | $100,000 | $389,999 | $330,330 | $7,800 | $1,218,129 | | John P. Burns | 2023 | $379,000 | $— | $379,304 | $184,000 | $1,540 | $943,844 | | Executive Vice | 2022 | $364,000 | $— | $306,448 | $349,000 | $— | $1,019,448 | | President - Manufacturing | 2021 | $350,000 | $— | $262,998 | $222,338 | $— | $835,336 | | Damien J. Renwick | 2023 | $379,000 | $— | $379,304 | $200,000 | $8,939 | $967,243 | | Executive Vice President | 2022 | $330,000 | $— | $281,496 | $345,500 | $8,379 | $965,375 | | and Chief Commercial Officer | 2021 | $288,462 | $— | $150,002 | $200,000 | $67,868 | $706,332 |

  35. Most Important Financial Performance Measures

    | Name(1) | Fees Earned or Paid in Cash(2) | Stock Awards(2)(3) | All Other Compensation | Total | | Jonathan S. Bobb | $192,500 | $— | $— | $192,500 | | Barry H. Golsen | $190,000 | $— | $— | $190,000 | | Kanna Kitamura | $187,500 | $— | $— | $187,500 | | Steven L. Packebush | $85,000 | $105,001 | $— | $190,001 | | Diana M. Peninger | $87,500 | $105,001 | $— | $192,501 | | Richard W. Roedel(4) | $152,500 | $105,001 | $— | $257,501 | | Richard S. Sanders | $85,000 | $105,001 | $— | $190,001 | | Lynn F. White | $95,000 | $105,001 | $— | $200,001 |