SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
[X] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material Rule 14a-12
FORWARD AIR CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
----------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
----------------------------------------------------------------------
(3) Filing party:
----------------------------------------------------------------------
(4) Date filed:
- ---------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
[FORWARD AIR CORPORATION LOGO]
April 12, 2002
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Forward Air Corporation,
you are cordially invited to attend the Annual Meeting of Shareholders on
Monday, May 20, 2002, at 9:00 a.m., local time, at the General Morgan Inn &
Conference Center, 111 North Main Street, Greeneville, Tennessee.
YOUR VOTE IS IMPORTANT. Therefore, whether or not you plan to attend the meeting
in person, please complete, sign, date and return the enclosed proxy in the
envelope provided as promptly as possible. If you attend the meeting and desire
to vote in person, you may do so even though you have previously sent a proxy.
I hope you will be able to join us, and we look forward to seeing you in
Greeneville.
Sincerely yours,
/s/ SCOTT M. NISWONGER
---------------------------------
Scott M. Niswonger
Chairman of the Board
and Chief Executive Officer
FORWARD AIR CORPORATION
430 AIRPORT ROAD
GREENEVILLE, TENNESSEE 37745
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 2002
To the Shareholders of Forward Air Corporation:
The Annual Meeting of Shareholders of Forward Air Corporation (the "Company")
will be held on Monday, May 20, 2002, beginning at 9:00 a.m., local time, at the
General Morgan Inn & Conference Center, 111 North Main Street, Greeneville,
Tennessee.
Attendance at the Annual Meeting will be limited to shareholders, those holding
proxies from shareholders and representatives of the press and financial
community. If you wish to attend the meeting but your shares are held in the
name of a broker, trust, bank or other nominee, you should bring with you a
letter from the broker, trustee, bank or nominee confirming your beneficial
ownership of the shares.
The purposes of this meeting are:
1. To elect six members of the Board of Directors with terms
expiring at the next Annual Meeting of Shareholders in 2003;
2. To consider and vote upon a proposal to ratify the appointment of
Ernst & Young LLP as the independent auditors of the Company; and
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only shareholders of the $0.01 par value common stock of the Company of record
at the close of business on March 15, 2002 are entitled to notice of and to vote
at the Annual Meeting. Shareholders are cordially invited to attend the meeting
in person.
SHAREHOLDERS ARE URGED TO EXECUTE THE ENCLOSED PROXY AND RETURN IT PROMPTLY,
WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING. ANY PROXY NOT DELIVERED AT THE
MEETING SHOULD BE MAILED TO REACH THE COMPANY'S PROXY TABULATOR, SUNTRUST BANK,
STOCK TRANSFER DEPARTMENT, P.O. BOX 4625, ATLANTA, GEORGIA 30302 BY 9:00 A.M. ON
MAY 17, 2002. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.
By Order of the Board of Directors,
/s/ RICHARD H. ROBERTS
------------------------------------
Richard H. Roberts
Secretary
Greeneville, Tennessee
April 12, 2002
FORWARD AIR CORPORATION
430 AIRPORT ROAD
GREENEVILLE, TENNESSEE 37745
(423) 636-7000
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished to the shareholders of Forward Air Corporation
(the "Company") in connection with the solicitation of proxies by the Board of
Directors (the "Board") for use at the Annual Meeting of Shareholders to be held
on Monday, May 20, 2002, beginning at 9:00 a.m., local time, at the General
Morgan Inn & Conference Center, 111 North Main Street, Greeneville, Tennessee,
and any adjournment thereof, for the purposes set forth in the foregoing Notice
of Annual Meeting of Shareholders. This proxy material was first mailed to
shareholders on or about April 16, 2002.
If the enclosed form of proxy is executed and returned, it will be voted in
accordance with the instructions given, but may be revoked at any time insofar
as it has not been exercised by notifying the Secretary of the Company in
writing at the principal executive offices of the Company or by duly executing
and delivering a proxy bearing a later date. Each proxy will be voted FOR
Proposals 1 and 2 if no contrary instruction is indicated in the proxy, and in
the discretion of the proxies on any other matter which may properly come before
the shareholders at the Annual Meeting.
There were 21,735,908 shares of Common Stock issued and outstanding on March 15,
2002. A majority of such shares, present or represented by proxy, will
constitute a quorum. Abstentions and broker non-votes will be counted as present
for purposes of determining a quorum on all matters. Abstentions and broker
non-votes are not treated as votes for or against the Proposals presented to the
shareholders. Because directors are elected by a plurality of the votes cast,
abstentions are not considered in the election. A "broker non-vote" occurs when
a nominee holding shares for a beneficial owner votes on one proposal, but does
not vote on another proposal because the nominee does not have discretionary
voting power and has not received instructions from the beneficial owner.
Shareholders are entitled to one vote for each share of Common Stock held of
record at the close of business on March 15, 2002.
The cost of solicitation of proxies will be borne by the Company, including
expenses in connection with preparing, assembling and mailing this Proxy
Statement. Such solicitation will be made by mail, and also may be made by the
Company's executive officers or employees personally. The Company does not
anticipate paying any compensation to any other party for this solicitation of
proxies, but may reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to beneficial owners.
PROPOSAL 1 - ELECTION OF DIRECTORS
Six directors will be elected at the meeting, each to hold office until the next
Annual Meeting of Shareholders and until a successor has been duly elected and
qualified. The number of director nominees has been reduced from seven to six
upon recommendation of the members of the Company's Nominating Committee and by
resolution of the Board of Directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION OF THE SIX NOMINEES NAMED BELOW. DULY EXECUTED PROXIES WILL BE
SO VOTED UNLESS RECORD HOLDERS SPECIFY A CONTRARY CHOICE ON THEIR PROXIES. If
for any reason a nominee is unable to serve as a director, it is intended that
the proxies solicited hereby will be voted for such substitute nominee as the
Board may propose. The Board has no reason to expect that the nominees will be
unable to serve and, therefore, at this time it does not have any substitute
nominees under consideration. Proxies cannot be voted for a greater number of
persons than the number named.
The nominees for election shall be elected by a plurality of the votes cast by
the shares of Common Stock entitled to vote at the Annual Meeting. Shareholders
have no right to vote cumulatively for directors. Each share shall have one vote
for each directorship to be filled on the Board of Directors.
DIRECTOR NOMINEES
The following persons are the nominees for election to serve as directors. All
nominees are presently directors of the Company. There are no family
relationships between any of the director nominees. Certain information relating
to the nominees, which has been furnished to the Company by the individuals
named, is set forth below.
BRUCE A. CAMPBELL Director since 1993
Greeneville, Tennessee Age 50
Mr. Campbell has served as Chief Operating Officer of the Company since April
1990, as director since April 1993 and as President since August 1998. Mr.
Campbell served as Executive Vice President of the Company from April 1990 until
August 1998. Prior to joining the Company, Mr. Campbell served as Vice President
of Ryder-Temperature Controlled Carriage in Nashville, Tennessee from September
1985 until December 1989. Mr. Campbell also serves as a director of Greene
County Bancshares.
ANDREW C. CLARKE Director since 2001
Greeneville, Tennessee Age 31
Mr. Clarke has served as Chief Financial Officer, Senior Vice President and
Treasurer of the Company since April 2001. From April 2000 to April 2001, he
served as Chief Financial Officer, Senior Vice President and director of LogTech
Corporation, a subsidiary of the Company that was formed to provide Internet and
technology services and support to the Company. From August 1998 to March 2000,
Mr. Clarke was an investment banker with Deutsche Banc Alex. Brown in the Global
Transportation Group. From June 1997 until September 1997, he worked in the high
yield group at Smith Barney Inc., and from August 1993 until June 1996 in the
mergers and acquisitions group at A.G. Edwards & Sons, Inc.
2
JAMES A. CRONIN, III Director since 1993
Aurora, Colorado Age 47
Mr. Cronin has been Chief Operating Officer and Chief Financial Officer at
deuxo, a software company, since September 2000. From June 1996 to February
2000, Mr. Cronin served as Chief Operating Officer, Executive Vice President,
Finance, of Ascent Entertainment Group, Inc. and as a director from June 1996
until March 2000. From June 1992 until June 1996, he was a private investor. Mr.
Cronin was a partner in Alfred Checchi Associates, a private investment firm in
Los Angeles, California, from September 1989 to June 1992. Mr. Cronin served as
President and Chief Executive Officer of Tiger International, Inc. and The
Flying Tiger Line from September 1987 to August 1989.
HON. ROBERT KEITH GRAY Director since 1993
Miami, Florida Age 76
Mr. Gray has been Chairman and Chief Executive Officer of Gray and Company II, a
public relations company, since November 1992. Since 1981, Mr. Gray has also
been Chairman of Gray Investment Companies and Powerhouse Leasing Corp. From
1991 to 1992, Mr. Gray was Chairman of Hill & Knowlton Public Affairs
Worldwide/USA and was its Chief Executive Officer from 1986 to 1991. Mr. Gray
has served in various government positions, including Special Assistant to the
Secretary of the Navy, Secretary of the Cabinet and Special Assistant to
President Eisenhower.
RAY A. MUNDY Director since 2000
St. Louis, Missouri Age 57
Dr. Mundy began serving as Director of the Center for Transportation Studies and
Barriger Endowed Professor of Transportation and Logistics at the University of
Missouri in January 2000. From January 1996 until December 1999, he was the
Taylor Distinguished Professor of Logistics and Transportation at the University
of Tennessee. Also while at the University of Tennessee, Dr. Mundy managed its
Transportation Management & Policies Studies program and was one of the
Directors of its Supply Chain Forum. Dr. Mundy also serves as a consultant to
both the public and private sectors and sits on Advisory Boards for Internet,
transportation and logistics companies.
SCOTT M. NISWONGER Director since 1981
Greeneville, Tennessee Age 54
Mr. Niswonger is a co-founder of the Company, has served as a director since its
founding in October 1981 and as Chairman of the Board and Chief Executive
Officer since February 1988. Mr. Niswonger served as President of the Company
from October 1981 until August 1998. Mr. Niswonger also serves as Chairman of
the Board and Chief Executive Officer of Landair Corporation and as a director
of People's Community Bank.
3
BOARD OF DIRECTORS AND COMMITTEES
During the last year, the Board held four meetings. The Board has an Executive
Committee, an Audit Committee, a Compensation Committee and a Nominating
Committee. These committees do not have a formal meeting schedule, but are
required to meet at least once each year.
Current members of the Executive Committee are Bruce A. Campbell, Andrew C.
Clarke, Scott M. Niswonger and Richard H. Roberts. The Executive Committee is
authorized to act on behalf of and to carry out the functions of the Board to
the extent permitted by law and the Bylaws of the Company.
The Audit Committee is composed of three independent directors: James A. Cronin,
III, Robert Keith Gray and Ray A. Mundy. The Audit Committee recommends
engagement of the independent auditors, considers the fee arrangement and scope
of the audit, reviews the financial statements and the independent auditors'
report, considers comments made by the independent auditors with respect to the
Company's internal control structure, and reviews internal accounting procedures
and controls with the Company's financial and accounting staff. The Audit
Committee is governed by a written charter approved by the Board. The Audit
Committee held three meetings during 2001.
Current members of the Compensation Committee are James A. Cronin, III, Robert
Keith Gray and Scott M. Niswonger. The Compensation Committee is responsible for
determining the overall compensation levels of certain of the Company's
executive officers and administering the Company's employee stock option plan
and other employee benefit plans. The Compensation Committee held three meetings
during 2001.
Current members of the Nominating Committee are Bruce A. Campbell, James A.
Cronin, III and Scott M. Niswonger. The Nominating Committee is responsible for
establishing the criteria for and reviewing the qualifications of individuals
for election as members of the Board. When a vacancy on the Board occurs or is
anticipated, the Committee presents its recommendation of a replacement director
to the Board. The Committee also makes recommendations as to exercise of the
Board of Director's authority to determine the number of its members, within the
limits provided by the Bylaws of the Company. Shareholders wishing to
communicate with the Nominating Committee concerning potential director
candidates may do so by corresponding with the Secretary of the Company and
including the name and biographical data of the individual being suggested. The
Nominating Committee held one meeting during 2001.
All directors hold office at the pleasure of the shareholders. All of the
incumbent directors attended at least 75% of the total number of meetings of the
Board and committees on which they served during 2001.
COMPENSATION OF DIRECTORS
Employee directors of the Company do not receive additional compensation for
serving as members of the Board of Directors or on any committee thereof. In
lieu of an annual retainer, non-employee directors are paid a fee of $1,500 for
each Board meeting and $1,500 for each committee meeting attended, together with
reasonable traveling expenses. No additional fee is paid for committee meetings
held on the same day as Board meetings.
The Company's Non-Employee Director Stock Option Plan (the "Director Plan")
provides that on the first business day following each Annual Meeting of
Shareholders each non-employee director is automatically granted an option for
the purchase of 7,500 shares of Common Stock at an exercise price equal to the
closing
4
sales price of the Common Stock on the date of grant. On May 22, 2001, each
non-employee director was granted 7,500 options at an exercise price of $38.13
per share.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Scott M. Niswonger and Richard H. Roberts serve as directors and executive
officers of Landair Corporation. In addition, Scott M. Niswonger beneficially
owned approximately 19% of the Company and 57% of Landair Corporation as of
March 15, 2002. In connection with the 1998 spin-off of Landair Corporation by
the Company, the Company and Landair Corporation entered into various
agreements, including a Transition Services Agreement.
During 2001, the Company and Landair Corporation continued to provide various
services to each other under the Transition Services Agreement. The Company
charged Landair Corporation approximately $662,000 and Landair Corporation
charged the Company approximately $104,000 in 2001. Effective December 31, 2001,
the only remaining services the Company provides to Landair Corporation are
legal, general administration and limited data storage and access to data
related to information technology services provided to Landair Corporation prior
to the most recent amendment to the Transition Services Agreement. Landair
Corporation continues to provide the Company with insurance and claims services.
The Company or Landair Corporation, as recipients of the services, may terminate
any such services at any time on thirty days irrevocable written notice, and the
Company or Landair Corporation, as providers of the services, may terminate any
of the services on three months irrevocable notice.
During 2001, the Company and Landair Corporation routinely engaged in
transactions where Landair Corporation hauled deferred air freight shipments for
the Company which were in excess of the Company's scheduled capacity. The cost
of these shipments to the Company was approximately $1.7 million during 2001.
The Company chartered an aircraft on an as-needed hourly basis from Sky Night,
L.L.C. in 2001. Sky Night, L.L.C. is owned by Scott M. Niswonger. The total air
charter expense paid in 2001 was $269,000 and the Company paid salaries and
benefits of $104,000 for two pilots of Sky Night, L.L.C.
5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the "beneficial ownership," as that term is
defined in the rules of the Securities and Exchange Commission (the
"Commission") of the Common Stock of (i) each director and director nominee;
(ii) the Chief Executive Officer and the four other highest paid executive
officers of the Company (the "Named Executive Officers"); (iii) all directors
and executive officers as a group; and (iv) each other person known to be a
"beneficial owner" of more than five percent of any class of capital stock of
the Company based on information available to the Company on March 15, 2002.
Except as otherwise indicated, the shareholders listed in the table are deemed
to have sole voting and investment powers with respect to the Common Stock owned
by them on such date.
Percentage of
Aggregate Number of Common Shares
Name and Address of Beneficial Owner(1) Shares(2) Outstanding(2)
--------------------------------------- ------------------- --------------
Bruce A. Campbell................................ 320,980(3) 1.48%
Andrew C. Clarke................................. 12,831(4) *
James A. Cronin, III ............................ 160,200(5) *
Hon. Robert Keith Gray........................... 162,800(5) *
Ray A. Mundy..................................... 4,415(6) *
Scott M. Niswonger............................... 4,165,600(7) 19.16
Richard H. Roberts............................... 145,625(8) *
Michael A. Roberts............................... 195,848(9) *
Glenn A. Adelaar................................. 2,776(10) *
Franklin Resources, Inc. ........................ 1,813,156(11) 8.34
Mellon Financial Corporation..................... 1,584,516(12) 7.29
T. Rowe Price Associates, Inc. .................. 1,579,900(13) 7.27
All directors and executive officers as a
group (13 persons)............................. 5,299,489(14) 24.38%
* Less than one percent.
(1) The business address of each listed executive officer and director is c/o
Forward Air Corporation, 430 Airport Road, Greeneville, Tennessee 37745.
(2) For the purpose of determining "beneficial ownership," the rules of the
Commission require that every person who has or shares the power to vote
or dispose of shares of stock be reported as a "beneficial owner" of all
shares as to which such power exists. As a consequence, many persons may
be deemed to be the "beneficial owners" of the same securities. The
Commission rules also require that certain shares of stock that a
beneficial owner has the right to acquire from the exercise of stock
options within 60 days of the date set forth are deemed to be outstanding
for the purpose of calculating the percentage of ownership of such owner,
but are not deemed outstanding for the purpose of calculating the
percentage of ownership of any other person.
(3) Includes 210,736 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above.
(4) Includes 12,500 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above.
(5) Includes 127,500 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above.
(6) Includes 3,750 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above.
(7) Includes 300 shares held by Mr. Niswonger as custodian for his grandson
and 300 shares which are held by Mr. Niswonger's spouse as custodian for
one of her children.
(8) Includes 75,625 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above.
(9) Includes 98,750 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above and 3,555 shares
held by Mr. Roberts' spouse.
6
(10) Includes 2,500 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above.
(11) Franklin Resources, Inc. ("FRI"), One Franklin Parkway, San Mateo,
California 94403, reported in a Schedule 13G filed with the Commission
that as of December 31, 2001, FRI and certain of its subsidiaries and
affiliates beneficially owned the shares. Franklin Advisers, Inc., an
investment adviser subsidiary of FRI, had sole voting and dispositive
power over 1,378,750 shares and shared voting and dispositive power over
none of the shares. Franklin Private Client Group, Inc. had no sole or
shared power to vote the shares, no shared power to dispose of the shares
and sole power to dispose of 434,406 of the shares.
(12) Mellon Financial Corporation ("MFC"), One Mellon Center, Pittsburgh,
Pennsylvania 15258, reported in a Schedule 13G filed with the Commission
that as of December 31, 2001, it had beneficial ownership of the shares.
MFC had sole voting power over 1,293,466 shares, shared voting power over
282,150 shares, sole dispositive power over 1,289,316 shares and shared
dispositive power over 283,550 shares.
(13) T. Rowe Price Associates, Inc. ("Price Associates"), 100 E. Pratt Street,
Baltimore, Maryland 21201, reported in a Schedule 13G filed with the
Commission that as of December 31, 2001, these securities are owned by
various individual and institutional investors for which Price Associates
serves as investment adviser with power to direct investments and/or sole
power to vote the securities. For purposes of the reporting requirements
of the Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(14) Includes 727,144 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above.
7
COMPENSATION OF EXECUTIVE OFFICERS IN 2001
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation paid or to be
paid by the Company to the Named Executive Officers for the years shown in all
capacities in which they served.
Long-Term
Compensation
Annual Compensation Awards
-------------------------------- ------------
Number of
Securities All Other
Other Annual Underlying Compensation
Name and Principal Positions Year Salary Bonus Compensation Options (1)
- ------------------------------- ---- -------- -------- ------------ ------------ ------------
Scott M. Niswonger(2) 2001 $156,989 $ -- $ -- -- $ 7,132
Chairman and 2000 151,602 60,558 -- -- 11,625
Chief Executive Officer 1999 148,593 100,000 -- -- 6,435
Bruce A. Campbell 2001 $250,000 $ -- $ -- -- $10,747
President and 2000 225,000 87,750 -- -- 11,500
Chief Operating Officer 1999 200,000 200,000 -- 300,000 11,040
Andrew C. Clarke(3) 2001 $133,267 $ -- $ -- 60,000 $ 2,325
Chief Financial Officer, 2000 96,492 10,000 -- -- 837
Senior Vice President and
Treasurer
Michael A. Roberts 2001 $130,196 $ -- $ -- 15,000 $10,063
Senior Vice President, 2000 125,928 20,351 -- 15,000 10,974
Marketing 1999 119,621 50,000 -- 45,000 10,847
Glenn A. Adelaar(4) 2001 $152,455 $ -- $ -- 15,000 $ 1,750
Chief Information Officer and 2000 89,241 -- -- -- 548
Vice President, Information
Systems
Forward Air, Inc.
(1) Includes car allowance and employer matching portion of 401(k)
contributions.
(2) Mr. Niswonger also receives compensation from Landair Corporation.
(3) Mr. Clarke joined the Company in April 2000.
(4) Mr. Adelaar joined the Company in May 2000.
8
2001 OPTION GRANTS, AGGREGATED OPTION EXERCISES AND OPTION VALUES
During 2001, the Company awarded stock options to three of the Named Executive
Officers as set forth in the following table. The Company has not granted and
does not have any Stock Appreciation Rights outstanding.
OPTION GRANTS IN LAST YEAR
Individual Grants Potential
---------------------------------------------------- Realizable Value
Percent of at Assumed Annual
Total Rates of Stock
Number of Options Price Appreciation
Securities Granted to Exercise For Option
Underlying Employees or Term(1)
Options in Base Price Expiration ------------------------
Name Granted Last Year ($/Share) Date 5% 10%
---- ---------- ---------- ---------- ---------- ---------- ----------
Andrew C. Clarke 50,000 9.25% $34.75 02/12/11 $1,784,985 $3,871,468
10,000 1.85 23.80 10/16/11 216,836 486,251
Michael A. Roberts 5,000 0.92 34.75 02/12/11 178,498 387,147
Glenn A. Adelaar 10,000 1.85 34.75 02/12/11 356,997 774,294
5,000 0.92 23.80 10/16/11 108,418 243,125
(1) We recommend caution in interpreting the financial significance of these
figures. They are calculated by multiplying the number of options granted
by the difference between a future hypothetical stock price and the option
exercise price and are shown pursuant to rules of the Commission. They
assume the value of Common Stock appreciates 5% or 10% each year,
compounded annually, for ten years (the life of each option). They are not
intended to forecast possible future appreciation, if any, of such stock
price or to establish a present value of options. Also, if appreciation
does occur at the 5% or 10% per year rate, the amounts shown would not be
realized by the recipients until the year 2011. Depending on inflation
rates, these amounts may be worth significantly less in 2011, in real
terms, than their value today.
AGGREGATED OPTION EXERCISES IN LAST YEAR
AND YEAR-END OPTION VALUES
The following table sets forth the year-end aggregated option exercises and the
year-end value of unexercised options held by two of the Named Executive
Officers.
Option Exercises Number of
In Last Year Securities Underlying Value of Unexercised
------------------------ Unexercised Options Held In-The-Money Options
Shares at Year-End at Year-End(2)
Acquired Value --------------------------- ---------------------------
Name(1) on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------- ----------- ---------- ----------- ------------- ----------- -------------
Bruce A. Campbell 82,653 $2,758,533 151,735 150,000 $4,240,633 $4,150,500
Michael A. Roberts 30,282 684,373 82,500 38,750 2,337,863 677,588
(1) At December 31, 2001, Mr. Niswonger has not been granted any options for
the purchase of Common Stock.
(2) Represents the closing price for the Common Stock on December 31, 2001 of
$33.92 less the exercise price for all outstanding exercisable and
unexercisable options for which the exercise price is less than the
December 31, 2001 closing price. Exercisable options have been held at
least one year from the date of grant.
9
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Company has an employment agreement with Bruce A. Campbell, the Company's
President and Chief Operating Officer. Mr. Campbell's base salary is subject to
annual review by the Board, if applicable. Upon certain circumstances, upon
early involuntary termination of Mr. Campbell's employment with the Company, the
Company may be obligated to pay Mr. Campbell an amount equal to any then
remaining payments under the agreement, including bonus incentives and health
insurance payments, and all outstanding stock options shall become fully vested
and exercisable. In addition to his base salary, Mr. Campbell was granted in
1999 an option to purchase 300,000 shares of Common Stock at $6.25 per share. No
stock options were granted to Mr. Campbell in 2000 or 2001. Mr. Campbell is
eligible for participation in the Company's cash incentive and other benefit
plans. Mr. Campbell is also bound by the terms of a non-competition agreement
entered into in connection with the employment agreement.
Upon the occurrence of a Change in Control or Potential Change in Control (as
such terms are described below) under the Company's Amended and Restated Stock
Option and Incentive Plan (the "1992 Stock Option Plan"), all outstanding
options and any stock appreciation rights that have been outstanding for at
least six months will become fully exercisable and vested, and certain
restrictions applicable to the benefits available under any other award under
the 1992 Stock Option Plan will lapse, unless otherwise determined by the
Compensation Committee (the "Committee") of the Board of Directors. Unless
otherwise determined by the Committee at or after grant but prior to the
occurrence of any Change in Control, the value of all vested options and other
awards granted under the 1992 Stock Option Plan will be cashed out at the Change
in Control Price upon the occurrence of a Change in Control or Potential Change
in Control. Options and other awards granted to executive officers, directors
and other persons who are subject to Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), will only be cashed out if they have
been held for at least six months and, unless otherwise determined by the
Committee, the Change in Control or Potential Change in Control was outside the
control of the holder of the option or other award.
Under the 1992 Stock Option Plan, a Change in Control is defined to include (i)
any Change in Control that would be required to be reported in response to any
form or report to the Commission, or any stock exchange on which the Company's
shares are listed; (ii) the acquisition by any person (other than the Company, a
subsidiary of the Company or any employee benefit plan of the Company or any of
its subsidiaries) of beneficial ownership of securities of the Company
representing 20% or more of the combined voting power of the Company; or (iii) a
change in the Board of Directors of the Company if, as a result of such change,
the persons who were the members of the Board of Directors two years prior to
such change cease to constitute at least a majority of the members of the Board
of Directors. Persons who were elected by or on the recommendation or approval
of at least three-quarters of the members of the Board of Directors who were in
office at the beginning of such period are deemed to have been in office during
such two year period for purposes of this provision. A Change in Control is also
deemed to occur if a majority of the members of the Committee in office prior to
the happening of any event determines in its sole discretion that as a result of
such event there has been a Change in Control. A Potential Change in Control is
deemed to occur upon (i) the approval by shareholders of any agreement which, if
consummated, would result in a Change in Control, or (ii) the acquisition by any
person (other than the Company, a subsidiary of the Company or any employee
benefit plan of the Company or any of its subsidiaries) of beneficial ownership
of securities of the Company representing five percent or more of the combined
voting power of the Company's securities and the adoption by the Committee of a
resolution to the effect that a Potential Change in Control of the Company has
occurred. The Change in Control Price is defined as the highest price per share
paid for the Common Stock in any transaction reported on The Nasdaq Stock Market
or any other exchange or market that is the principal trading market for the
Common Stock or any other bona fide transaction related to such Change in
Control or
10
Potential Change in Control at any time during the 60 day period prior to the
Change in Control or Potential Change in Control. In the case of incentive stock
options and stock appreciation rights related thereto, the Change in Control
Price is determined based solely on transactions reported for the date on which
the cash-out or the exercise of the stock appreciation right occurs.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2001, the Committee was comprised of two non-employee directors, James A.
Cronin, III, and Robert Keith Gray, and Scott M. Niswonger. Mr. Niswonger also
served on the Compensation Committee of Landair Corporation. See "Certain
Relationships and Related Transactions."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's general compensation policies on executive officer compensation
are administered by the Committee; however, the Committee submits its
determinations to the full Board for its comments and concurrence. A majority of
members of the Committee were non-employee directors during 2001. It is the
responsibility of the Committee to determine whether the executive compensation
policies are reasonable and appropriate to meet their stated objectives and
effectively serve the best interests of the Company and its shareholders.
The three components of executive officer compensation are base salary, annual
bonus incentive awards and stock option grants, except for the Chief Executive
Officer whose compensation includes only base salary and annual bonus incentive
awards. In addition to the Committee's determinations on base salary and bonus
incentive awards, the Committee acting solely through its non-employee directors
administers the Company's Restated Employee Stock Purchase Plan and two stock
option and incentive plans and determines the options to be granted to executive
officers.
The Company believes that its executive compensation policy should be reviewed
annually and should be reviewed in light of the Company's financial performance,
its annual budget, its position within its industry sector and the compensation
policies of similar companies in its business sector. The Committee believes
that in addition to corporate performance, it is appropriate to consider, in
setting and reviewing executive compensation, the level of experience and the
responsibilities of each executive as well as the personal contributions a
particular individual may make to the success of the corporate enterprise. Such
qualitative factors are taken into account in considering levels of
compensation. No relative weight is assigned to these qualitative factors, which
are applied subjectively by the Committee.
The Company has an employee cash incentive plan (the "Cash Incentive Plan"),
which provides for annual cash incentive payments to employees based on the
Company's results of operations. The goals of the Cash Incentive Plan are
established based on operating plans for the year, and amounts payable under the
Cash Incentive Plan are determined based on the results of the Company's
operations. The amount of the cash incentives paid under the Cash Incentive Plan
are determined annually by the Board.
In order to be able to increase the equity incentives available to executive
officers and other key employees, and to continue to be able to offer new
options, the number of authorized shares issuable under the 1992 Stock Option
Plan is 3,000,000 shares of Common Stock. The Company's 1999 Stock Option and
Incentive Plan provides for issuance of up to 1,500,000 shares of Common Stock,
and 541,000 stock options were granted under the Plan in 2001.
11
The Company also has adopted a Restated Employee Stock Purchase Plan under which
all executive officers are entitled to participate unless they own five percent
or more of the total outstanding Common Stock.
The Committee's philosophy with respect to the compensation of the Company's
Chief Executive Officer is essentially the same as its philosophy with respect
to other executive officers. Because the Chief Executive Officer owns 19% of the
Common Stock, however, his personal net worth is more closely related to the
performance of the Common Stock than other executive officers. The Committee has
not awarded stock options to the Chief Executive Officer.
Section 162(m) of the Internal Revenue Code of 1986, as amended and any
successor thereto, was enacted as part of the 1993 Omnibus Budget Reconciliation
Act and generally disallows a corporate deduction for compensation over
$1,000,000 paid to the Company's Chief Executive Officer or any other of the
four most highly compensated officers. The Committee continues to analyze the
potential impact of this limitation. Under the regulations and the transition
rules, executive compensation pursuant to the 1992 Stock Option Plan and the
1999 Stock Option and Incentive Plan is expected to qualify as "performance
based" compensation and therefore be excluded from the $1,000,000 limit. Other
forms of compensation provided by the Company, however, are not excluded from
the limit. The Committee currently anticipates that substantially all
compensation to be paid in future years will be deductible under Section 162(m)
because of the spread between present levels of executive officer compensation
and the limit under the regulation. In any event, the Committee believes that
performance based compensation is desirable and can be structured in a manner to
qualify as performance based compensation under Section 162(m).
Scott M. Niswonger
James A. Cronin, III
Robert Keith Gray
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the Committee reviewed
the audited financial statements in the Annual Report with management including
a discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgments as to the
quality, not just the acceptability, of the Company's accounting principles and
such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors' independence from management and the
Company including the matters in the written disclosures required by the
Independence Standards Board and considered the compatibility of non-audit
services with the auditors' independence.
The Committee discussed with the Company's independent auditors the overall
scope and plans for their audits. The Committee meets with the independent
auditors, with and without management present, to discuss the results of their
audits, their evaluations of the Company's internal controls, and the overall
quality of the Company's financial reporting. The Committee held three meetings
during 2001.
12
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors, and the Board has approved, that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2001 for filing with the Securities and Exchange
Commission. The Committee and the Board have also recommended, subject to
shareholder approval, the selection of the Company's independent auditors.
James A. Cronin, III
Robert Keith Gray
Ray A. Mundy
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's cumulative
shareholder return on its Common Stock with The Nasdaq Trucking and
Transportation Stocks Index and The Nasdaq Stock Market Index commencing
December 31, 1996 and ending December 31, 2001. The graph assumes a base
investment of $100 made on December 31, 1996 and the respective returns assume
reinvestment of all dividends, including the Company's distribution to
shareholders of Landair Corporation common stock effected on September 23, 1998.
For the purposes of this graph, the Landair Corporation common stock
distribution is treated as a nontaxable cash dividend that would have been
converted to additional Common Stock at the close of business on September 23,
1998. The comparisons in this graph are required by the Commission and,
therefore, are not intended to forecast or be necessarily indicative of any
future return on the Common Stock.
[PERFORMANCE GRAPH]
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-------- -------- -------- -------- -------- --------
Forward Air Corporation $100 $243 $258 $1,193 $1,539 $1,399
Nasdaq Trucking and Transportation Stocks Index 100 128 116 110 100 119
Nasdaq Stock Market Index 100 122 173 321 193 153
13
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board, acting upon the recommendation of the Audit Committee, has appointed
the independent public accounting firm of Ernst & Young LLP to serve as the
Company's independent auditors for 2002. As in the past, the Board has
determined that it would be desirable to request ratification of its appointment
by the shareholders of the Company. If the shareholders do not ratify the
appointment of Ernst & Young LLP, the appointment of independent public
accountants will be reconsidered by the Board. A representative of Ernst & Young
LLP is not expected to be present at the Annual Meeting, and thus, is not
expected to make a statement or be available to respond to appropriate
questions.
This Proposal will be approved if the votes cast in favor of the Proposal exceed
the votes cast against it. Unless otherwise directed therein, the proxies
solicited hereby will be voted for approval of Ernst & Young LLP. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF APPOINTMENT OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR 2002.
AUDIT FEES
Ernst & Young LLP has billed the Company $169,750, in the aggregate, for
professional services rendered by Ernst & Young LLP for the audit of the
Company's annual financial statements for the fiscal year ended December 31,
2001 and the reviews of the interim financial statements included in the
Company's Quarterly Reports on Form 10-Q filed during the fiscal year ended
December 31, 2001. Additional audit-related fees billed for the period were
$14,100.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage Ernst & Young LLP to provide advice to the Company
regarding financial information systems design and implementation during the
fiscal year ended December 31, 2001.
ALL OTHER FEES
Ernst & Young LLP has billed the Company $180,595, in the aggregate, for
services rendered by Ernst & Young LLP for all services (other than those
covered above under "Audit Fees" and "Financial Information Systems Design and
Implementation Fees") during the fiscal year ended December 31, 2001.
OTHER MATTERS
The Board of Directors knows of no other matters that may come before the
meeting; however, if any other matters should properly come before the meeting
or any adjournment thereof, it is the intention of the persons named in the
proxy to vote the proxy in accordance with their best judgment.
14
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act and the disclosure requirements of Item 405 of
Regulation S-K require the directors and executive officers of the Company, and
any persons holding more than ten percent of any class of equity securities of
the Company, to report their ownership of such equity securities and any
subsequent changes in that ownership to the Commission, The Nasdaq Stock Market
and the Company. Based solely on a review of the written statements and copies
of such reports furnished to the Company by its executive officers and
directors, the Company believes that during 2001 all Section 16(a) filing
requirements applicable to its executive officers, directors and shareholders
were timely satisfied.
DEADLINE FOR SUBMISSION TO SHAREHOLDERS OF PROPOSALS TO BE PRESENTED AT THE 2002
ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented for action at the 2003 Annual Meeting of
Shareholders by any shareholder of the Company must be received by the Secretary
of the Company not later than December 1, 2002 in order for such proposal to be
considered for inclusion in the Company's Proxy Statement and proxy relating to
its 2003 Annual Meeting of Shareholders. Nothing in this paragraph shall be
deemed to require the Company to include any shareholder proposal which does not
meet all the requirements for such inclusion established by the Commission at
the time in effect.
For other shareholder proposals to be timely (but not considered for inclusion
in the Proxy Statement for the 2003 Annual Meeting of Shareholders), a
shareholder's notice must be received by the Secretary of the Company not later
than March 1, 2003 and the proposal and the shareholder must comply with
Regulation 14A under the Exchange Act. In the event that a shareholder proposal
intended to be presented for action at the next Annual Meeting is not received
prior to March 1, 2003, proxies solicited by the Board of Directors in
connection with the Annual Meeting will be permitted to use their discretionary
voting authority with respect to the proposal, whether or not the proposal is
discussed in the Proxy Statement for the Annual Meeting.
MISCELLANEOUS
It is important that proxies be returned promptly to avoid unnecessary expense.
Therefore, shareholders who do not expect to attend in person are urged,
regardless of the number of shares of Common Stock owned, to date, sign and
return the enclosed proxy promptly.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2001 IS INCLUDED WITHIN THE ANNUAL REPORT PROVIDED WITH THIS PROXY
STATEMENT. SUCH ANNUAL REPORT DOES NOT CONSTITUTE A PART OF THE PROXY
SOLICITATION MATERIAL. COPIES OF EXHIBITS FILED WITH THE FORM 10-K ARE AVAILABLE
UPON WRITTEN REQUEST. REQUESTS SHOULD BE MADE IN WRITING TO SHAREHOLDER
SERVICES, FORWARD AIR CORPORATION, P.O. BOX 1058, GREENEVILLE, TENNESSEE
37744-1058.
By Order of the Board of Directors
Richard H. Roberts
Secretary
Greeneville, Tennessee
April 12, 2002
15
PROXY
FORWARD AIR CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF FORWARD AIR CORPORATION
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement, hereby appoints Scott M. Niswonger, Bruce A. Campbell and Andrew C.
Clarke and each of them, proxies with full power of substitution, for and in the
name of the undersigned, to vote all shares of common stock of Forward Air
Corporation owned of record by the undersigned on all matters which may come
before the 2002 Annual Meeting of Shareholders to be held at the General Morgan
Inn & Conference Center, 111 North Main Street, Greeneville, Tennessee, on May
20, 2002, at 9:00 a.m., local time, and any adjournments thereof, unless
otherwise specified herein. The proxies, in their discretion, are further
authorized to vote for the election of a person to the Board of Directors if any
nominee named herein becomes unable to serve or for good cause will not serve,
are further authorized to vote on matters which the Board of Directors does not
know a reasonable time before making the proxy solicitation will be presented at
the meeting, and are further authorized to vote on other matters which may
properly come before the 2002 Annual Meeting and any adjournments thereof.
1. Election of Directors
[ ] FOR all the nominees listed below (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY (ABSTAIN) to vote for all nominees listed
below
Bruce A. Campbell; Andrew C. Clarke; James A. Cronin, III; Hon. Robert Keith
Gray; Ray A. Mundy; and Scott M. Niswonger
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
2. Ratification of the appointment of Ernst & Young LLP as independent
auditors
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
(see reverse side)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" ALL OF THE
DIRECTOR NOMINEES AND "FOR" PROPOSAL 2.
Do you plan to attend the
Annual Meeting?
[ ] Yes [ ] No
PLEASE SIGN AND DATE BELOW AND
RETURN PROMPTLY.
Please sign exactly as name
appears hereon. Joint Owners
should each sign. When signing
as attorney, executor,
administrator, trustee or
guardian, please give full
title as such.
------------------------------
------------------------------
Signature(s) Date