Max Labovitch

Harold Clark Simmons (born 1931, Golden, Wood County, Texas) is an American businessman whose banking expertise helped him develop the acquisition concept known as the leveraged buyout (LBO) to acquire various corporations. He is the owner of Contran Corporation and of Valhi, Inc., (a NYSE traded company about 90% controlled by Contran). As of 2006 he controlled 5 public companies traded on the New York Stock Exchange: NL Industries; Titanium Metals Corporation, the world's largest producer of titanium; Valhi, Inc., a multinational company with operations in the chemicals, component products, wastemanagement, and titanium metals industries; CompX International, manufacturer of ergonomic products, and Kronos Worldwide, leading producer and marketer of titanium dioxide. As of 2007 he has an estimated net worth of around $7.4 billion dollars.

Education and Early Life

Both of Simmons' parents were teachers who stressed the value of a good education. Simmons' father was a school superintendent, and his mother was an English teacher. Simmons has BA (1951) and MA (1952) degrees in agricultural economics from the University of Texas at Austin. Simmons hold a Phi Beta Kappa key.

Career

After completing graduate school in 1952, Simmons worked for the U.S. government as a bank examiner, then for a Dallas-based bank, Republic National Bank. In 1960, using $5,000 of his savings, and a $95,000 loan, he bought a small drugstore,University Pharmacy which he parlayed into a chain of 100 stores, which in 1973 he sold for more than $50 million, to Eckerd Corporation. This launched his career as an investor.

Simmons developed his "all debt and no equity" philosophy of capital managment from having observed banks as a bank examiner, realizing that "Small banks in Texas were casual about getting the maximum use of their funds. . . banks were the most highly leveraged thing I saw. They borrowed most of their money and really didn't need much equity except for purposes of public confidence." Understanding that banks could be bought entirely with borrowed money, Simmons theorized that he should "buy a bunch, because one bank could be used dto finance another. All debt and no equity."

Known as a formidable corporate raider, Simmons' acquired the nickname "The Ice Man" in the 1980's. Simmons is a "value investor" whose style has been to acquire control of publicly traded companies and to strategically enhance their operations. Simmons has "acquired and profitably disposed of significant equity positions in a number of companies including GAF Corporation, Sea-Land, Southwest Airlines, Muse Air, PSA, McDermott Intl., Georgia Gulf Corporation, Kerr Glass, Amalgamated Sugar Co., Medford Corp., Sybra, Inc., Valhi, Inc., and Lockheed Corporation.

Simmons conducted a widely publicized but ultimately unsuccesful takeover attempt on the Lockheed Corporation, after having gradully acquired almost 20 per cent of its stock. Lockheed was attractive to Simmons because one of its primary investors was CALPERS the pension fund of the state of California. At the time, the New York Times said, "Much of Mr. Simmons's interest in Lockheed is believed to stem from its pension plan, which is overfinanced by more than $1.4 billion. Analysts said he might want to liquidate the plan and pay out the excess funds to shareholders, including himself." Citing the "mismanagement" of its chairman, Daniel M. Tellep, Simmons stated a wish to replace its board with a slate of his own choosing, since he was the largest investor. His board nominations included former Texas Senator John Tower, the onetime chairman of the Armed Services Committee, and Adm. Elmo Zumwalt Jr., a former chief of Naval Operations. When Simmons had first begun accumulating Lockheed stock in early 1989 when deep Pentagon cuts to the Defense budget had driven down prices of military contractor stocks, analysts had not believed he would attempt the takeover, since he was also at the time pursuing control of Georgia Gulf.

In 1997 Simmons made a $5 million investment in T. Boone Pickens, Jr.'s first fund BP Capital Energy Commodity Fund; by 2005 this had grown to $150 million.

Capital Gains Tax Opposition & Activism

In 1964, Simmons set up a trust for his daughters, based on a single drugstore worth $33,000. By the 1990's Simmons had placed the bulk of his fortune, including homes, vehicles, a Falcon jet, and controlling stakes in two companies into two trusts to benefit his daughters and their descendants, to shield his assets from creditors, tax collectors, and their mother, his ex-wife. The trusts later were challenged by two of his daughters who brought suit against him in 1997 who accused him of using the trusts illegally for political purposes.

In August 1997, President Bill Clinton used a line-item veto to draw attention to the type of "special benefits" that investors such as Simmons employ to avoid paying capital gains taxes since the early 1980's. Simmons had formed the "Snake River Sugar Cooperative" of 2,000 beet farmers and classified it as a joint-venture, shared ownership co-op, to purchase his Amalgamated Sugar Company, for $260 million. At the time, Charles Schumer, serving as a House Representative from New York, wrote a letter to Clinton stating that the measure before him for consideration would benefit Simmons with a $104 million tax deferral. Simmons stated at the time that his tax deferral was only $80 million.

Political activism

1980s During the Ronald Reagan presidency, Simmons was a contributor to GOPAC, the political action committee originally founded by Newt Gingrich when he was Speaker of the U.S. House of Representatives. Simmons also contributed to the defense funds of Oliver North and John Poindexter, Reagan aides implicated in the Iran-Contra scandal.

1990s In 1993, Simmons was fined $19,000 by the Federal Election Commission for exceeding the legal limit of campaign contributions in 1989 and 1990 elections.

Between 1993 and 1997, Simmons and family members and Contran gave more than $315,000 to Republican candidates, according to FEC records.

When the Internal Revenue Service judged in 1996 that one of Simmons' two family trusts was used as his own property and therefore subject to tax law, two of Simmons' four daughters sued him, alleging that he had mismanaged the two trusts he had created for them, valued at that time at one billion dollars, that he had forced them to sign blank letters for political contribution purposes to use for whatever cause he saw fit, that he had contributed money in their names to causes and campaigns that they themselves opposed, and that he had pressured them into making "illegitimate" and "illegal" campaign contributions from the trusts he had established for them. After a publicly acrimonious Dallas probate court battle that lasted eight weeks, Judge Nikki DeShazo declared a mistrial. The suit was settled when Simmons agreed to give each of the two daughters $50 million, if they would reliquish all claim to his remaining wealth, which at that time was estimated to be at $1.2 billion. Simmons other two daughters remained the beneficiaries of his wealth. The FEC launched an investigation into the contributions to political campaigns that he had made in his daughters' names.

2004 presidential election During the 2004 presidential campaign Simmons made a $4 million donation to the controversial group Swift Vets and POWs for Truth, along with Houston homebuilder Bob Perry and Dallas oilman T. Boone Pickens. He also donated $100,000 to George W. Bush's January 2005 inaugural ball.

2008 presidential election Simmons, a longtime Republican donor, gave the maximum $2,300 contributions to Senator John McCain last year, as well as to former Governor Mitt Romney and to former Mayor Rudy Giuliani. He's listed as a bundler for the McCain campaign on McCain's website, which says he's raised between $50,000 and $100,000 for the Republican candidate. He's also contributed to Rep. Chet Edwards, a Texas Democrat. Simmons has given more than $500,000 to Texas governor Rick Perry, and more than $300,000 to Texas Lt. Governor David Dewhurst and Attorney General Greg Abbott.

In 2008 Simmons was listed as the sole donor to the American Issues Project, an independent political group with 501(c)4 tax status that created and bought airtime for ads about 2008 Democratic Presidential candidate Senator Barack Obama's ties to William Ayers, who had been a member of the Weather Underground. Obama's political platform had proposed changes in the capital gains tax codes that would affect investors such as Simmons. AIP's advertisements were rejected by only two news outlets on the grounds they appeared to be in violation of campaign finance laws; they were otherwise aired continually in Michigan, Ohio, Pennsylvania and Virginia at a cost of $2.8 million. A complaint against the American Issues Project was filed with the Federal Election Commission on October 10, 2008, by a campaign finance watchdog group, Democracy 21, which alleged that AIP conducted its operations illegally, since 501(c)4 groups must declare that their purpose is not to influence the outcome of elections.

Environmental Management

• NL Industries, originally named National Lead Industries, Inc. has been involved in numerous lawsuits brought by the U.S. Department of Justice to force the company to pay funds into the Superfund to clean up contaminated sites at various sites around the country such as Granite City, Illinois, and Depew, New York.

• Simmons is also the proponent of a controversial plan to store nuclear waste in Andrews County, which is in far West Texas. which his radioactive waste management company, Waste Control Specialists, would administer. Waste Control Management holds a license for permanenet disposal of uranium mining waste and for storage of low-level waste from medical radiology labs, nuclear power plants and other operations. In May 2008 The Texas Commission on Environmental Quality voted to grant the company a related license for permanenet disposal of radioactive byproduct material, much of it from uranium industry by-products, including a former federal nuclear weapons plant in Ohio. The Texas Sierra Club opposed the site and asked a state district judge to overturn the commission's position, citing the commission's own language in respect to groundwater contamination possible from the proposal. A 30-day period for public comment was then opened.

Philanthropy

• In 1973, amid numerous legal entanglements involving his businesses, Simmons was a significant contributor to the Dallas Civic Opera.

• The Harold Simmons Foundation is the philanthropic arm of the Simmons financial empire. Two of Simmons' daughters, Serena Simmons Connolly and Lisa Simmons Epstein, are its administrators. The foundation supports the causes of immigration rights, campaign reform, prison reform, handgun control, and reproductive rights. The contributions to the presidential bids of Hillary Clinton and Barack Obama made by Serena Connolly were privately made, not funded by the foundation.

• Simmons donated money to help fund the Hobby-Eberly Telescope Dark Energy Experiment at the University of Texas. He has previously given to UT athletic programs and the McCombs School of Business. By 2005, total donations from his family and foundation to the UT Southwestern Medical Center at Dallas exceeded $70 million.

• In 2006, Harold Simmons made a grant to the Young America's Foundation to establish the Harold Simmons Lecture Series, which enabled former U.S. Senator Zell Miller to tour college campuses during the 2006-2007 school year to promote "his message in defense of America from foreign and domestic threats to our freedom."

• In 2007, Oprah Winfrey announced that Harold and Annette Simmons, her neighbors in Montecito, California, had contributed $5 million to her Oprah Winfrey Leadership Academy for Girls in South Africa.

• In 2007, Harold and Annette Simmons announced a landmark $20 million gift to Southern Methodist University to provide an endowment for the university's School of Education and Human Development. The gift allocated $10 million for construction of a new facility, to be named the Annette Caldwell Simmons Building; $5 million for graduate student fellowships; and $5 million for faculty support and an endowed deanship.

• In 2008 the Harold Simmons Foundation made a donation of $5 million to the Dallas Zoo, the largest single private contribution in the zoo's 120 year history.

• Annette and Harold Simmons have been underwriters for 28 consecutive years to the Dallas Crystal Charity Ball Fashion Show and Luncheon. The Crystal Charity Ball has distributed more than $82 million to children's charities since 1953.

• The Harold Simmons Foundation is a major donor of over $500,000. to the Dallas Women's Fundation which commissioned a study of women's economic security in the 12-county Dallas-Arlington-Fort Worth metropolitan area.

• The Harold Simmons Foundation issued a $50 million challenge grant to the Parkland Foundation, to aid in fundraising to build a new public hospital, one of the largest private gifts for a public hospital campaign in the nation.

Litigation Involving Simmons

• Drugstore Liquor Sales Class Action Suit:In 1971, a class action suit against Simmons' Ward Cut-Rate Drug Company was filed in Fort Worth, Texas federal district court by a group of liquor store owners. The suit alleged that Simmons was selling liquor in his drugstores with illegally obtained permits and was in violation of Texas statutes for the sale of liquor, including the sale of alcohol to minors. At the time, the sale of alcohol in Simmons' drugstore, under the auspices of Wards Liquors, Inc. accounted for 25% of the drug company's gross profits. Earlier in the year, Simmons made a speech before the Dallas Pess Club, declaring that the organized efforts of the package store "lobby" might result in a legislative effort to block alcohol sales in drugstores. Simmons also said that the legislators themselves were unaware that in 1969 they had changed the law to require that liquor be sold in separate buildings from drugstores. Simmons' newspaper ads of that time read, "Don't let the 'Dallas liquor lobby' legislate an end to low prices!" Simmon led a petition drive supporting a change in the law, H.B. 1720. An Executive for the Texas Council for Liquor Control, Vernon Gatlin, remarked to a Dallas reporter that Simmons, to influence the outcome of legislation, "he has engaged in a campaign of deceptive propaganda."

• Federal Fraud Indictment:In 1974, a federal grand jury in Chicago returned a 15-count indictment accusing Simmons and his legal advisor at Contran Corp.John Brunson of siphoing away funds of National Bankers Life Insurance Company of Dallas, of borrowing money in Houston to gain control of the Fidelity General Insurance Company of Chicago, selling off its securities to pay of debts, of essentially gaining control of the insurance company by paying for it with its own assets. Other defendants in the case were Simmons' brother Glenn Simmons, Harry Stuth, Robert Wall, and Wallace Jay.

• SEC investigation of collateralization of Dallas City pensions: As a result of the investigation associated with this case, the Securities and Exchange Commission filed a complaint against the investment adviser for the Dallas Employee Retirement Fund, for refusing to produce his records of a $6.3 million loan from pension funds he made to Harold Simmons, in exchange for warrant to purchase 20,000 shares of stock in Contran. At that time, the Dallas pension fund was valued at $14 million dollars.(See also, Investment Advisers Act of 1940.) In an affidavit signed by the SEC examiner, the SEC maintained that on five occasions the examination of the investment adviser's records for the Dallas Employee Retirement Fund was thwarted. An earlier inquiry had revealed that the Dallas city auditor Lynn Crossley and the Dallas City Manager, George Schrader, both owned stock in Simmons' Contran. Crossley maintained that the pension-fund loan to Contran had nothing to do with his stock ownership, since he had purchased it after the loan, that he had "waited purposefully" to buy it. Also under scrutiny was Simmons' act of using restricted stock as collateral in seeking financial backing.

• Contran Corporation Shareholder Class Action Suit: In the spring of 1974, shareholders of Simmons' Contran Corporation filed suit against Simmons and his brother Glenn, alleging that they decreased Contran's book value by excesses in "borrowing, mismanagement, and diversions." A federal judge, Robert M. Hill, enjoined the Simmons brothers and Simmons' wife from using a plane owned by Simmons and leased to Contran at an exorbitant rate, and from otherwise "wasting" Contran's assets, such as paying himself unreported #$500,000 bonus in fiscal year 1973.

• Dolph Brisco investigations:In March 1974, Simmons was subpoenaed along with many other Dallas wealthy citizens, to give a deposition in a suit brought by Frances Farenthold pertaining to the solicitation and expenditure of campaign funds by Texas Governor Dolph Briscoe.

• In April 1990, Simmons filed a lawsuit on behalf of NL Industries that challenged the legality of the proxy contest he lost in his bid to acquire control of Lockheed Corporation, maintaining that the incumbent directors of Lockheed illegally engineered the proxy vote.

Personal Life

On February 25, 1961, Harold Simmons married Sandra Katherleen Saliba in Fort Smith, Arkansas.

Simmons' second wife Annette is a friend of television host and entertainment mogul Oprah Winfrey. In October 2004, Mrs. Simmons was featured on the Oprah! television show, giving a tour of Simmons' boyhood town, Golden, Texas, during its sweet potato festival. In another episode, "Annette's Tea Party," Mrs. Simmons entertainment style was a feature.

Further reading

• John J. Nance – Golden Boy: The Harold Simmons Story, ISBN 1571687475

External links

• Forbes 400 list, Forbes magazine
• Zoominfo
• SEC info
• Contran Corporation
• Valhi, Inc