SCHEDULE 14A - INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
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 Pursuant to Section 240.14a-11(c) or Section
240.14a-12
-------------------------Landair Services, Inc.----------------------
(Name of Registrant as Specified in its Charter)
--------------------------Richard H. Roberts-------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(4) Date Filed:
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[Landair Services Logo]
April 8, 1997
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Landair Services, Inc.,
you are cordially invited to attend the Annual Meeting of Shareholders on
Tuesday, May 20, 1997, at 11:00 a.m., local time, at the General Morgan Inn &
Conference Center, 111 North Main Street, Greeneville, Tennessee.
In addition to the matters described in the accompanying Notice of Annual
Meeting and Proxy Statement, there will be a report on the progress of the
Company and an opportunity to ask questions of general interest to you as a
shareholder.
YOUR VOTE IS VERY 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, President
and Chief Executive Officer
[Landair Services Logo]
430 Airport Road
Greeneville, Tennessee 37745
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 20, 1997
---------------------------
To the Shareholders of Landair Services, Inc.
The Annual Meeting of Shareholders of Landair Services, Inc. (the "Company")
will be held on Tuesday, May 20, 1997, beginning at 11:00 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
proxy or 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 1998;
2. To consider and act 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 thereof.
Only shareholders of Common Stock of record at the close of business on March
17, 1997 are entitled to notice of and to vote at the Annual Meeting.
Shareholders are cordially invited to attend the meeting in person.
A copy of the Annual Report of the Company accompanies the Proxy Statement and
enclosed proxy and has been mailed to each shareholder of record as of March
17, 1997.
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 - ATLANTA, CORPORATE TRUST DEPARTMENT, ANNEX ROOM 225, 58 EDGEWOOD
AVENUE, ATLANTA, GEORGIA 30303 BY 9:00 A.M. ON TUESDAY, MAY 20, 1997. 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 8, 1997
LANDAIR SERVICES, INC.
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 Landair Services, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors for use at the Annual Meeting of Shareholders to be held on May 20,
1997, beginning at 11:00 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 8, 1997.
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 5,952,880 shares of common stock of the Company, $0.01 par value per
share (the "Common Stock") issued and outstanding at March 17, 1997. A
majority of such shares, present or represented by proxy, will constitute a
quorum. Shareholders are entitled to one vote for each share of Common Stock
held of record at the close of business on March 17, 1997.
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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 17, 1997, certain information with
respect to (a) the Common Stock "beneficially owned" (i) by each of the most
highly compensated executive officers; and (ii) by all directors, nominees and
executive officers, both individually and as a group. Except as otherwise
indicated, the shareholders listed in the table have sole voting and investment
powers with respect to the Common Stock owned by them.
==========================================================================================================
AGGREGATE NUMBER PERCENTAGE OF
OF COMMON SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP (2) OUTSTANDING (2)
- ---------------------------------------- ------------------------ ---------------
Bruce A. Campbell 55,800 (3) *
Edward W. Cook 19,830 (4) *
James A. Cronin, III 22,500 (5) *
Hon. Robert K. Gray 40,100 (5) *
Scott M. Niswonger 3,245,600 (6) 55%
Michael A. Roberts 45,680 (7) *
Richard H. Roberts 18,660 (8) *
All directors and executive officers
as a group (10 persons) 3,553,557 (9) 60%
==========================================================================================================
* Less than one percent
(1) The business address of each listed executive officer, director and nominee
is c/o Landair Services, Inc., 430 Airport Road, Greeneville, Tennessee
37745.
(2) For the purpose of determining "beneficial ownership", the rules of the
Securities and Exchange Commission (the SEC) 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 SEC rules also require that certain shares of
stock that a beneficial owner has the right to acquire within sixty days of
the date set forth above pursuant to the exercise of stock options are
deemed to be outstanding for the purpose of calculating the percentage
ownership of such owner, but are not deemed outstanding for the purpose of
calculating the percentage ownership of any other person.
(3) Includes 50,000 shares which are issuable pursuant to options which are
exercisable within sixty days of the date set forth above.
(4) Includes 1,000 shares held by Mr. Cook's spouse and 17,500 shares which are
issuable pursuant to options which are exercisable within sixty days of the
date set forth above.
(5) Includes 22,500 shares which are issuable pursuant to options which are
exercisable within sixty days of the date set forth above.
(6) 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.
(7) Includes 1,185 shares held by Mr. Roberts' spouse and 21,110 shares which
are issuable pursuant to options which are exercisable within sixty days of
the date set forth above.
(8) Includes 17,500 shares which are issuable pursuant to options which are
exercisable within sixty days of the date set forth above.
(9) Includes 247,920 shares which are issuable pursuant to options which are
exercisable within sixty days of the date set forth above.
2
Based on information provided to the Company, in addition to Mr. Niswonger, the
Company believes the following table sets forth the beneficial owners of five
percent or more of the outstanding Common Stock at December 31, 1996.
=================================================================================================================
AMOUNT AND NATURE PERCENTAGE OF COMMON STOCK
OF OUTSTANDING AT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP DECEMBER 31, 1996
- -------------------------------------- -------------------- --------------------------
Merrill Lynch & Co., Inc. (1) 630,800 10.60%
Nicholas Company, Inc. (2) 307,700 5.17
Wellington Management Company, LLP (3) 545,820 9.17
Wells Fargo Bank, N.A. (4) 388,500 6.53
=================================================================================================================
(1) According to the Schedule 13G dated February 7, 1997 jointly filed with the
SEC by Merrill Lynch & Co., Inc. ("ML&Co.") and Merrill Lynch Group, Inc.
("ML Group"), each located at World Financial Center, North Tower, 250
Vesey Street, New York, New York 10281, and Princeton Services, Inc.
("PSI"), Fund Asset Management, L.P. ("FAM") and Merrill Lynch Special
Value Fund, Inc. ("the Fund"), each located at 800 Scudders Mill Road,
Plainsboro, New Jersey 08536, neither entity had sole voting power over the
shares, each had shared voting power over 630,800 shares, neither had sole
dispositive power over the shares and each had shared dispositive power
over 630,800 shares. Each of ML&Co., its wholly owned subsidiary, ML
Group, and PSI, disclaimed beneficial ownership of the shares. PSI, a
wholly owned subsidiary of ML Group, is the general partner of FAM and
Merrill Lynch Asset Management, L.P. (b/b/a Merrill Lynch Asset Management
("MLAM")). MLAM and FAM, both investment advisers registered under Section
203 of the Investment Advisers Act of 1940, may be deemed to be beneficial
owners of certain of the shares by virtue of acting as investment advisers
to one or more investment companies registered under Section 8 of the
Investment Company Act of 1940 and/or to one or more private accounts. The
Fund, as a registered investment company advised by FAM, was a beneficial
owner of certain of the shares.
(2) According to the Schedule 13G dated January 31, 1997 jointly filed with the
SEC by Nicholas Company, Inc. ("NCI") and Albert O. Nicholas, 700 North
Water Street, Milwaukee, Wisconsin 53202, one or more of NCI's advisory
clients was the legal owner of the shares. Pursuant to investment advisory
agreements with its clients, NCI had the authority to direct their
investments, and consequently to authorize disposition of the shares. By
virtue of being president, a director and majority shareholder of NCI, Mr.
Nicholas exercised sole dispositive power over the shares, and, therefore,
may be deemed to have had indirect beneficial ownership over the shares;
however, Mr. Nicholas disclaimed such beneficial ownership. As to such
shares, NCI had no sole or shared voting power, sole dispositive power over
307,700 shares and no shared dispositive power.
(3) According to the Schedule 13G dated January 24, 1997 filed with the SEC by
Wellington Management Company, LLP ("WMC"), 75 State Street, Boston,
Massachusetts 02109, WMC, in its capacity as investment adviser,
beneficially owned shares which were held of record by clients of WMC. As
to such shares, WMC had, through its wholly owned subsidiary, Wellington
Trust Company, NA, no sole power to vote or direct any shares, shared power
to vote or direct 362,300 shares, no power to dispose of or to direct
disposition of any shares and shared power to dispose of or direct
disposition of 545,820 shares.
(4) According to the Schedule 13G dated February 14, 1997 filed with the SEC by
Wells Fargo Bank, National Association ("WFB"), 464 California Street, San
Francisco, California 94163, WFB had sole voting power over 379,000 shares,
shared voting power over 4,000 shares, no sole dispositive power and shared
dispositive power over 388,500 shares. The shares reported were held in
trust accounts for the economic benefit of the beneficiaries of those
accounts.
3
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 current members of the Board. Accordingly, proxies
may only be voted for six nominees. 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 of Directors of the Company may propose. The Board of Directors 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 of
nominees 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, but rather each
shareholder shall have one vote for each director for each share of Common
Stock held by such shareholder.
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 directors 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 45
Mr. Campbell has been Executive Vice President and Chief Operating Officer of
the Company since April 1990 and a director of the Company since April 1993.
Prior to joining the Company in 1990, Mr. Campbell served as Vice President of
Ryder-Temperature Controlled Carriage in Nashville, Tennessee from September
1985 until December 1989.
EDWARD W. COOK Director since 1994
Greeneville, Tennessee Age 38
Mr. Cook joined the Company as Chief Financial Officer, Senior Vice President
and director in September 1994. Since May 1995, he has also served as
Treasurer. Prior to joining the Company, Mr. Cook was employed by Ernst &
Young LLP for eleven years, most recently as a senior manager in the Nashville,
Tennessee office. During the period March 1986 through
4
February 1988, Mr. Cook served as Controller and Assistant Secretary of
Ryder-Temperature Controlled Carriage in Nashville, Tennessee.
JAMES A. CRONIN, III Director since 1993
Aurora, Colorado Age 42
Mr. Cronin has been Chief Operating Officer and Executive Vice President,
Finance of Ascent Entertainment Group, Inc., and a director of On Command
Corp., both entertainment companies, since June 1996. 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.
THE HON. ROBERT K. GRAY Director since 1993
Miami, Florida Age 71
Mr. Gray is Chairman and Chief Executive Officer of Gray and Company II, a
public relations company, a position he has held since November 1992. From
1981 to the present, 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.
SCOTT M. NISWONGER Director since 1981
Greeneville, Tennessee Age 49
Mr. Niswonger is a co-founder of the Company and has served as a director and
as President of the Company since its founding in 1981, and Chairman of the
Board and Chief Executive Officer since February 1988. Mr. Niswonger also
serves as a director of the Regional Advisory Board of First Tennessee Bank
National Association.
RICHARD H. ROBERTS Director since 1995
Greeneville, Tennessee Age 42
Mr. Roberts has served as Senior Vice President and General Counsel of the
Company since July 1994, and as Secretary and director of the Company since May
1995. Prior to joining the Company, Mr. Roberts was a partner with the Baker,
Worthington, Crossley & Stansberry law firm from January 1991, and an associate
of the firm from June 1985. Mr. Roberts has also served as a director of
Miller Industries, Inc. since April 1994.
5
BOARD OF DIRECTORS AND COMMITTEES
During the last fiscal year, the Board of Directors held four meetings. The
Board of Directors maintains 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 Messrs. Campbell, Cook,
Niswonger and 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.
Current members of the Audit Committee are Messrs. Cronin and Gray. 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 held three meetings during fiscal 1996.
Current members of the Compensation Committee are Messrs. Cronin, Gray and
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 one meeting during fiscal 1996.
Current members of the Nominating Committee are Messrs. Campbell, Cronin and
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'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 fiscal 1996.
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 of Directors and committees on which they served during fiscal 1996.
COMPENSATION OF DIRECTORS
Employee directors of the Company do not receive additional compensation for
Board or committee service. 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
6
traveling expenses. No additional fee is paid for committee meetings held on
the same day as Board meetings.
Each of the non-employee directors of the Company was granted upon the
effectiveness of the Company's initial public offering options to purchase
15,000 shares of the Common Stock pursuant to a non-qualified option agreement
at an exercise price equal to the then applicable fair market value ($14.00 per
share). In May 1995, at the Chairman's request, the Board of Directors
approved, subject to appropriate shareholder approval obtained at the May 1996
Annual Meeting, adoption of a Non-Employee Director Stock Option Plan which
provided that the existing non-employee directors receive an option for the
purchase of 7,500 shares at an exercise price equal to the closing sales price
of the Common Stock on May 16, 1995 ($13.625 per share). Thereafter, the Plan
provides that on the first business day following each annual meeting of
shareholders (beginning with the May 1996 Annual Meeting) each non-employee
director be granted an option for the purchase of 7,500 shares of Common Stock
at an exercise price equal to the closing sales price of the Common Stock on
the date of grant. Accordingly, on May 22, 1996, each non-employee director
received an option to purchase 7,500 shares at an exercise price of $15.00 per
share. Each individual who subsequently becomes a non-employee director shall
automatically be granted an option to purchase 7,500 shares of Common Stock on
the first business day after becoming a director.
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND OTHERS
During fiscal 1996, Gray and Company II was paid fees by the Company of
approximately $17,500 for public relations services. Mr. Gray is Chairman and
Chief Executive Officer of Gray and Company II and serves on the Company's
Audit and Compensation Committees. The Company leased its truckload operations
facility in Greeneville, Tennessee from Greeneville Properties, Inc., which was
owned by Mr. Niswonger. The total net amount of rent paid to Greeneville
Properties, Inc. in fiscal 1996 was $60,000. The Company paid $120,000 in
fiscal 1996 in aircraft leasing fees to Sky Night, L.L.C., which was owned by
Mr. Niswonger. The Company and its subsidiaries had no further transactions in
which any director or executive officer, or any member of the immediate family
of any director or executive officer, had a material direct interest reportable
under applicable rules of the SEC.
7
COMPENSATION OF EXECUTIVE OFFICERS IN FISCAL 1996
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation paid or to be
paid by the Company to the Chief Executive Officer and the three other highest
paid executive officers of the Company (the "Named Executive Officers") for the
years shown in all capacities in which they served.
================================================================================================================
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- --------------
OTHER NUMBER OF
ANNUAL SECURITIES ALL OTHER
FISCAL COMPEN- UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION OPTIONS SATION (1)
- --------------------------- -------- -------- ------- --------- -------------- ------------
Scott M. Niswonger 1996 $268,781 $ -0- $ -0- -0- $ 16,061
Chairman, President and 1995 262,080 -0- -0- -0- 16,768
Chief Executive Officer 1994 256,947 -0- -0- -0- 15,473
Bruce A. Campbell 1996 146,521 -0- -0- 20,000 7,356
Executive Vice President and 1995 142,315 -0- -0- -0- 5,302
Chief Operating Officer 1994 136,474 -0- -0- -0- 3,504
Edward W. Cook (2) 1996 103,753 -0- -0- 10,000 8,919
Chief Financial Officer and 1995 100,750 -0- -0- -0- 6,359
Senior Vice President 1994 33,333 -0- -0- 30,000 2,050
Michael A. Roberts 1996 107,831 -0- -0- 10,000 10,004
Senior Vice President, FAF 1995 105,000 -0- -0- -0- 6,496
Sales and Marketing 1994 105,000 -0- -0- -0- 3,204
================================================================================================================
(1) Includes personal use of company vehicles and employer matching portion of
401(k) contributions.
(2) Edward W. Cook joined the Company as Chief Financial Officer, Senior Vice
President and director on September 1, 1994.
8
FISCAL 1996 OPTION GRANTS, AGGREGATED OPTION EXERCISES AND OPTION VALUES
Options or stock appreciation rights granted during the last fiscal year to the
Named Executive Officers are set forth in the following table.
OPTION GRANTS IN LAST FISCAL YEAR
=======================================================================================================================
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
- -----------------------------------------------------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE OR
OPTIONS IN FISCAL BASE PRICE EXPIRATION
NAME (1) GRANTED YEAR ($/SHARE) DATE 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
Bruce A. Campbell 20,000 7.03% $14.375 01/31/06 $180,805 $458,199
Edward W. Cook 10,000 3.51 14.375 01/31/06 90,402 229,100
Michael A. Roberts 10,000 3.51 14.375 01/31/06 90,402 229,100
=======================================================================================================================
(1) Mr. Niswonger has not been granted any options for the purchase of Common
Stock.
The following table sets forth the fiscal year-end aggregated option exercises
by the Named Executive Officers and the fiscal year-end value of unexercised
options held by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
=======================================================================================================================
OPTION EXERCISES
IN FISCAL YEAR-END
-------------------------- NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END (2)
ACQUIRED VALUE -------------------------- ---------------------------
NAME (1) ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ----------- -------- ----------- -------------- ----------- -------------
Bruce A. Campbell -0- $ -0- 36,600 38,100 $115,500 $73,500
Edward W. Cook -0- -0- 15,000 25,000 -0- -0-
Michael A. Roberts -0- -0- 13,150 22,775 36,750 52,500
=======================================================================================================================
(1) 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, 1996 of
$10.00 less the exercise price for all outstanding exercisable and
unexercisable options for which the exercise price is less than the
December 31, 1996 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 Edward W. Cook, pursuant to which
Mr. Cook is to serve as the Company's Senior Vice President and Chief Financial
Officer until December 31, 1997, at a base salary of $100,000 per annum,
subject to increases approved by the Company's Board of Directors. If the
employment of Mr. Cook is terminated by the Company without cause at any time
prior to December 31, 1997, Mr. Cook will continue to receive his base salary
through such date. In the event that a Change in Control (as defined in the
Company's Stock Option and Incentive Plan) occurs with respect to the Company
prior to December 31, 1997, Mr. Cook will receive a one-time payment equal to
his then current annual base salary. Pursuant to the Employment Agreement, Mr.
Cook has agreed not to engage in certain activities in competition with the
Company for a period of one year following termination of his employment.
Upon the occurrence of a Change in Control or Potential Change in Control under
the Company's Stock Option and Incentive 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 the restrictions applicable to
the benefits available under any other award under the Stock Option and
Incentive 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 Stock Option and Incentive 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 and Exchange Act
of 1934, as amended, 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 Stock Option and Incentive 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 SEC, 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 twenty percent 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
10
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 National 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 Potential Change in Control at any time during the sixty 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 fiscal 1996, the Compensation Committee of the Company was comprised of
two non-employee directors, Messrs. Cronin and Gray, and Mr. Niswonger. There
were no Compensation Committee interlocks. See "Transactions with Directors,
Executive Officers and Others".
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's general compensation policies on executive officer compensation
are administered by the Compensation Committee (the "Committee") of the Board
of Directors; however, the Committee submits its determinations to the full
Board for its comments and concurrence. A majority of members of the Committee
are non-employee directors. It is the responsibility of the Committee to
determine whether the executive compensation policies are reasonable and
appropriate, 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 awards and stock option grants, except for the Chief Executive Officer
whose compensation includes only base salary and annual bonus awards. In
addition to the Committee's determinations on base salary and bonus awards, the
Committee administers the Company's Employee Stock Purchase Plan and Stock
Option and Incentive Plan 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
11
into account in considering levels of compensation. No relative weight is
assigned to these qualitative factors, which are applied subjectively by the
Committee. The base compensation of the Named Executive Officers increased by
3% in 1996.
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 Committee recommended, in February 1995, that the Board of
Directors increase the number of authorized shares issuable under the Stock
Option and Incentive Plan from 600,000 shares to 1,000,000 shares of Common
Stock, and this increase was approved by shareholders at the 1995 Annual
Meeting of Shareholders. No stock options were granted in 1995 and 284,500
stock options were granted in fiscal 1996. In July 1995, the Company adopted
the Restated Employee Stock Purchase Plan, which received shareholder approval
at the 1996 Annual Meeting of Shareholders. All executive officers, other than
the Chief Executive Officer, are entitled to participate in the Restated
Employee Stock Purchase Plan.
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
approximately 55% 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 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
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).
James A. Cronin, III
Robert K. Gray
Scott M. Niswonger
12
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's cumulative
shareholder return on its Common Stock with The Nasdaq Stock Market Index and
the Nasdaq Trucking and Transportation Stocks Index commencing November 16,
1993 (the initial trading date of the Common Stock) and ending December 31,
1996. The graph assumes a base investment of $100 made on November 16, 1993 and
the respective returns assume reinvestment of dividends paid.
- -------------------------------------------------------------------------------------------------------------------------------
Nov. 16, 1993 Dec. 25, 1993 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1996
- -------------------------------------------------------------------------------------------------------------------------------
Landair Services, Inc. $100.00 $132.14 $110.71 $ 94.64 $ 71.43
- -------------------------------------------------------------------------------------------------------------------------------
Nasdaq Trucking and Transporation Stocks Index $100.00 $ 98.23 $ 98.48 $139.26 $171.31
- -------------------------------------------------------------------------------------------------------------------------------
Nasdaq Stock Market Index $100.00 $ 98.32 $ 91.68 $106.91 $117.98
- -------------------------------------------------------------------------------------------------------------------------------
13
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, 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 fiscal 1997. 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 expected to be present at the Annual Meeting, will have
the opportunity to make a statement if he or she so desires and will be
available to respond to appropriate questions.
A majority of the votes of all shares present, represented and entitled to vote
is necessary for approval of this proposal. THE BOARD OF DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE FOR RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITORS FOR THE COMPANY FOR FISCAL 1997. UNLESS OTHERWISE
DIRECTED THEREIN, THE PROXIES SOLICITED HEREBY WILL BE VOTED FOR APPROVAL OF
ERNST & YOUNG LLP.
OTHER MATTERS
The Board of Directors of the Company 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.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 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 SEC, The
Nasdaq National 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 fiscal 1996
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
1998 ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented for action at the 1998 Annual Meeting of
Shareholders by any shareholder of the Company must be received by the
Secretary of the Company not later than December 10, 1997 in order for such
proposal to be considered for inclusion in the Company's Proxy Statement and
proxy relating to its 1998 Annual Meeting of Shareholders. Nothing in this
14
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 SEC at the time in effect.
Holders of shares of Common Stock desiring to have proposals submitted for
consideration at future meetings of the shareholders should consult the
applicable rules and regulations of the SEC with respect to such proposals,
including the permissible number and length of proposals and other matters
governed by such rules and regulations.
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will be voted
in accordance with the instructions set forth on the back side of the proxy
card. Abstentions and "non-votes" will be counted for the purpose of
determining a quorum. Abstentions and non-votes are treated as votes against
the proposals presented to the shareholders other than the election of
directors. Because directors are elected by a plurality of the votes cast,
abstentions are not considered in the election. A "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.
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 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 FISCAL YEAR ENDED
DECEMBER 31, 1996 IS INCLUDED WITHIN THE ANNUAL REPORT PROVIDED WITH THIS PROXY
STATEMENT. COPIES OF EXHIBITS FILED WITH THE FORM 10-K ARE AVAILABLE UPON
WRITTEN REQUEST AND UPON PAYMENT OF CHARGES APPROXIMATING THE COMPANY'S COST.
REQUESTS SHOULD BE MADE IN WRITING TO RICHARD H. ROBERTS, SECRETARY, LANDAIR
SERVICES, INC., P.O. BOX 1058, GREENEVILLE, TENNESSEE 37744-1058.
By Order of the Board of Directors,
Richard H. Roberts
Secretary
Greeneville, Tennessee
April 8, 1997
15
Appendix A
PROXY
LANDAIR SERVICES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF LANDAIR SERVICES, INC.
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement, hereby appoints Scott M. Niswonger, Bruce A. Campbell and Richard H.
Roberts 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 Landair
Services, Inc. owned of record by the undersigned on all matters which may come
before the 1997 Annual Meeting of Shareholders to be held at the General Morgan
Inn & Conference Center, 111 North Main Street, Greeneville, Tennessee, on May
20, 1997, at 11:00 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 1997 Annual Meeting and any adjournments thereof.
1. Election of Directors
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary below) nominees listed below
Bruce A. Campbell; Edward W. Cook; James A. Cronin, III; Hon. Robert K. Gray;
Scott M. Niswonger and Richard H. Roberts
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 DIRECTOR' 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.
------------------------------
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Signature(s) Date