John E. Harper
About John E. Harper
John E. Harper, age 63, has served as an independent director of NL Industries since 2016. He is a licensed CPA and former CFO with deep audit and operating experience, including CFO roles at Dell Services (2009–2014) and Perot Systems (16 years pre-2009 acquisition by Dell), and nine years in Ernst & Young’s audit practice. He currently serves on NL’s Audit Committee and Management Development & Compensation Committee and is designated an “audit committee financial expert.” He also serves as a director and audit committee member at Kronos Worldwide (since prior to 2020).
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Dell Services (Dell Inc.) | Vice President & Chief Financial Officer | 2009–2014 | Senior finance leadership for IT services unit |
| Perot Systems Corporation | CFO (and prior finance roles) | ~1993–2009 | 16 years culminating as CFO before Dell acquisition |
| Ernst & Young LLP | Audit practice | ~9 years (pre-Perot) | Audited across technology, manufacturing, education, oil & gas |
| Rackspace Hosting, Inc. | Director; Audit Committee Chair; Compensation Committee member | 2015–2016 | Chaired audit; member of comp committee |
External Roles
| Organization | Role | Tenure | Committees |
|---|---|---|---|
| Kronos Worldwide, Inc. | Director; Audit Committee member | Since prior to 2020 (current) | Audit Committee |
Board Governance
- Independence: The board determined Harper is independent under NYSE standards and has no material relationship with NL other than serving as a director. He is designated an “audit committee financial expert.”
- Controlled company context: NL is a controlled company (Valhi owns ~82.7%). The board has chosen not to maintain independent nominations/governance committee structures or a formal compensation committee charter.
- Attendance: In 2024, the board met 4 times; Audit Committee met 7 times; Management Development & Compensation Committee (“MDCC”) met once. Each incumbent director attended all meetings of the board and their committees (100% attendance).
- Committee assignments (2024): Audit Committee (member); MDCC (member). Chairs: Audit—Cecil H. Moore, Jr.; MDCC—Cecil H. Moore, Jr.
| Committee | Role | Financial Expert | 2024 Meetings | Attendance |
|---|---|---|---|---|
| Audit | Member | Yes | 7 | 100% (incumbent directors attended all) |
| MDCC | Member | N/A | 1 | 100% (incumbent directors attended all) |
Fixed Compensation
- Structure (reference rates): Director retainers in 2023 were $40,000 for each director; audit chair or any member designated an “audit committee financial expert” $45,000 (only one paid if same person), other audit members $25,000, members of other committees $5,000; plus $1,000 per day meeting fees. Also, an annual $20,000 fully vested stock grant at the AGM (rounded to nearest 50 shares; max 10,000 shares). Stock ownership guideline: non‑employee directors must hold shares equal to at least 3× the base annual cash retainer and may not sell annual grant shares if post‑sale holdings fall below that threshold.
| Year | Component | Amount/Policy | Source |
|---|---|---|---|
| 2023 | Base director retainer | $40,000 | |
| 2023 | Audit chair or “financial expert” retainer | $45,000 (one such retainer if both roles) | |
| 2023 | Other audit committee member retainer | $25,000 | |
| 2023 | Other committee membership retainer | $5,000 | |
| 2023 | Meeting fees | $1,000 per day | |
| Ongoing | Equity grant at AGM | $20,000, fully vested on grant | |
| Ongoing | Director ownership guideline | ≥3× base cash retainer; sale restrictions to maintain threshold |
- 2024 actuals (NL Industries): Harper received $101,750 in cash retainers/meeting fees and a $19,921 stock award (2,850 shares granted 5/16/2024 at $6.99), total $121,671.
| 2024 NL Director Compensation | Fees Earned or Paid in Cash | Stock Awards | Total |
|---|---|---|---|
| John E. Harper | $101,750 | $19,921 (2,850 sh @ $6.99 on 5/16/2024; fully vested) | $121,671 |
- Affiliate board fees: In 2024 at Kronos Worldwide, Harper received $101,500 cash and $19,685 stock award (1,550 sh @ $12.70 on 5/15/2024), total $121,185.
Performance Compensation
- Equity is granted as a fixed‑value, time‑vested stock award at the annual meeting; no performance metrics, options, or PSU/TSR structures are disclosed for director compensation.
| Performance Metric | Definition/Target | Weight | Outcome/Impact on Pay |
|---|---|---|---|
| None disclosed for director equity grants | Fixed‑value, fully vested stock on grant date | N/A | N/A (no performance linkage) |
Other Directorships & Interlocks
- Current public company: Director and Audit Committee member at Kronos Worldwide (affiliate within the Valhi/Contran controlled group).
- Compensation Committee Interlocks: The proxy states there were no interlocks or related‑party relationships requiring disclosure for MDCC members (Harper included) under SEC rules in 2024.
- Controlled group context: NL is ~82.7% owned by Valhi; the Simmons family entities and related trusts can be deemed to control NL, Kronos Worldwide, CompX, and Valhi, creating structural interrelationships across boards and transactions.
Expertise & Qualifications
- Designations/skills: “Audit committee financial expert”; licensed certified public accountant; extensive CFO experience (Dell Services, Perot Systems); audit background at EY; governance experience at Rackspace (audit chair).
- Domain exposure: Technology and IT services operations and finance; multi‑industry audit exposure (technology, manufacturing, education, oil & gas).
Equity Ownership
| Security | Beneficial Ownership (shares) | Percent of Class | Notes |
|---|---|---|---|
| NL Industries Common Stock | 29,550 | <1% (“*” in proxy) | Address and methodology per proxy footnotes |
| Kronos Worldwide Common Stock | 13,450 | <1% (“*” in proxy) | Directors disclaim beneficial ownership except to pecuniary interest |
| Valhi Common Stock | 0 | 0% | — |
| CompX Class A Common Stock | 0 | 0% | — |
- Director stock ownership guideline: Non‑employee directors may not sell annual grant shares unless, immediately after sale, their holdings equal at least 3× the base annual cash retainer. Compliance status is not specifically disclosed for individual directors.
- Hedging/pledging: NL has not adopted a separate anti‑hedging policy; employees and directors must follow the insider trading policy (filed as 10‑K Exhibit 19.1). No specific pledging prohibitions are disclosed in the proxy.
Governance Assessment
Strengths and positive signals
- Independent director; designated audit committee financial expert; deep CFO and audit background.
- 100% attendance at board and committee meetings in 2024; active on both Audit and MDCC.
- Transparent director pay structure with modest, fixed‑value equity grants and clear stock ownership guideline.
Structural risks and potential red flags to monitor
- Controlled company exemptions: NL opts out of certain NYSE governance structures (no independent nominations/governance committee; no formal comp committee charter), concentrating governance in the full board—heightened oversight reliance on independent directors like Harper.
- Extensive related‑party ecosystem: Intercorporate Services Agreements (ISAs), risk management program, and tax sharing arrangements with Contran/Valhi/Kronos; independent directors approve ISA charges (NL paid $5.3m in 2024; expects $5.7m in 2025), requiring vigilant audit/MDCC oversight to mitigate conflicts.
- Cross‑board role: Harper also serves on Kronos Worldwide’s audit committee within the same controlled group—while not an SEC “interlock,” overlapping governance across affiliates can present perceived conflicts if interests diverge.
- Hedging policy gap: NL has not adopted a standalone anti‑hedging policy for employees/directors—less aligned with prevailing large‑cap governance practices. [RED FLAG]
Trend in director pay mix (signal)
- Year over year, Harper’s NL cash fees increased ($92,000 in 2023 to $101,750 in 2024) while equity value remained approximately flat ($20,000), modestly shifting mix toward cash; equity remains a small, fixed component.
Overall: Harper brings strong financial oversight credentials and has maintained full attendance and independence designations. The controlled company framework and extensive related‑party arrangements elevate the importance of his audit/MDCC roles and rigorous application of NL’s related‑party transaction policy.