proxy.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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the Registrant x
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a Party other than the Registrant o
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appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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o |
Definitive
Additional Materials
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o |
Soliciting
Material Pursuant to §240.14a-12
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Celadon
Group, Inc.
(Name of
Registrant as Specified In Its Charter)
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Person(s) Filing Proxy Statement, if other than the Registrant)
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was paid previously. Identify the previous filing by registration
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Celadon
Group, Inc.
9503 East
33rd Street
One
Celadon Drive
Indianapolis,
Indiana 46235
NOTICE
AND PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE
HELD ON NOVEMBER 14, 2008
To Our
Stockholders:
You are cordially invited to attend the
2008 annual meeting of stockholders (the "Annual Meeting") of Celadon Group,
Inc., a Delaware corporation (the "Company"), to be held at our principal
executive offices, 9503 East 33rd Street, One Celadon Drive, Indianapolis,
Indiana, 46235 at 9 a.m. local time, on Friday, November 14, 2008, for the
following purposes:
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1. |
to
consider and act upon a proposal to elect five directors of the
Company; |
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2.
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to
consider and act upon a proposal to amend the Celadon Group, Inc. 2006
Omnibus Incentive Plan to increase by 1,000,000 the number of shares of
the Company's Common Stock reserved for issuance of stock grants, options,
and other equity awards to the Company's employees, directors, and
consultants, which would result in approximately 1,023,454 shares being
reserved for future awards following such increase;
and
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3.
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to
consider and act upon such other matters as may properly come before the
meeting and any adjournment
thereof.
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The foregoing matters are more fully
described in the accompanying proxy statement.
The Board of Directors has fixed the
close of business on September 16, 2008, as the record date for the
determination of stockholders entitled to receive notice of and to vote at the
Annual Meeting or any adjournment thereof. Shares of common stock may
be voted at the Annual Meeting only if the holder is present at the Annual
Meeting in person or by valid proxy. YOUR VOTE IS
IMPORTANT. TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU
ARE REQUESTED TO PROMPTLY DATE, SIGN, AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE. Returning your proxy now will not interfere
with your right to attend the Annual Meeting or to vote your shares personally
at the Annual Meeting, if you wish to do so. The prompt return of
your proxy may save us additional expenses of solicitation.
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By
order of the Board of Directors
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/s/
Kenneth Core
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Kenneth
Core
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Secretary
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Indianapolis,
Indiana
October
3, 2008
GENERAL
INFORMATION
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Voting
Rights
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Quorum
Requirement
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Required
Vote
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Right to Attend Annual Meeting;
Revocation of
Proxy
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Costs of
Solicitation
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Annual
Report
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How to Read this Proxy
Statement
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Electronic Access to Proxy
Statement and Annual
Report
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PROPOSAL
1 — ELECTION OF
DIRECTORS
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Nominees for
Directorships
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CORPORATE
GOVERNANCE
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The Board of
Directors
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Committees of the Board of
Directors
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Audit
Committee
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Audit Committee Report for Fiscal
2008
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Compensation
Committee
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Compensation Committee Report for
Fiscal
2008
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Compensation Committee Interlocks
and Insider
Participation
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Our Executive
Officers
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Code of Conduct and
Ethics
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Section 16(a) Beneficial
Ownership Reporting
Compliance
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EXECUTIVE
COMPENSATION
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Compensation Discussion and
Analysis
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Overview and Philosophy of
Compensation
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Elements of
Compensation
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Summary Compensation
Table
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All Other Compensation
Table
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Narrative to Summary Compensation
Table
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Grants of Plan-Based
Awards
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Narrative to Grants of Plan-Based
Awards
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Outstanding Equity Awards at
Fiscal
Year-End
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Option Exercises and Stock
Vested
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Director
Compensation
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Narrative to Director
Compensation
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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CERTAIN
RELATIONSHIPS AND RELATED
TRANSACTIONS
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INTEREST
OF CERTAIN PERSONS IN MATTERS TO BE ACTED
UPON
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RELATIONSHIP
WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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Principal Accounting Fees and
Services
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PROPOSAL
2 — AMENDMENT TO THE CELADON GROUP, INC. 2006 OMNIBUS INCENTIVE PLAN TO
INCREASE BY 1,000,000 THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR
ISSUANCE OF STOCK GRANTS, OPTIONS, AND OTHER EQUITY AWARDS TO THE
COMPANY'S EMPLOYEES, DIRECTORS, AND CONSULTANTS, WHICH WOULD RESULT IN
APPROXIMATELY 1,023,454 SHARES BEING RESERVED FOR FUTURE AWARDS FOLLOWING
SUCH INCREASE
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STOCKHOLDER
PROPOSALS
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OTHER
MATTERS
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9503 East
33rd
Street
One
Celadon Drive
Indianapolis,
Indiana 46235
PROXY
STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD NOVEMBER 14, 2008
GENERAL
INFORMATION
This
proxy statement ("Proxy Statement") is furnished in connection with the
solicitation of proxies by the Board of Directors of Celadon Group, Inc. (the
"Company") to be voted at the Annual Meeting of Stockholders of the Company (the
"Annual Meeting"), which will be held on Friday, November 14, 2008 beginning at
9 a.m. local time, at our principal executive offices located at 9503 East 33rd
Street, One Celadon Drive, Indianapolis, Indiana, 46235, and any adjournment
thereof. THE
ENCLOSED PROXY IS SOLICITED BY OUR BOARD OF DIRECTORS. Where
specific choices are not indicated, all proxies received pursuant to this
solicitation will be voted (i) FOR the election of the director nominees named
below, (ii) FOR the approval of the Amendment to the Celadon Group, Inc. 2006
Omnibus Incentive Plan to increase by 1,000,000 the number of shares of Common
Stock reserved for issuance of stock grants, options, and other equity awards to
the Company's employees, directors, and consultants, which would result in
approximately 1,023,454 shares being reserved for future awards following such
increase, and (iii) with respect to any other matters properly brought before
the Annual Meeting, in accordance with the judgment of the proxy
holders. We have not received notice of other matters that properly
may be presented for voting at the Annual Meeting.
This
Proxy Statement, the proxy card, and our Annual Report for the fiscal year ended
June 30, 2008, was first mailed on or about October 3, 2008 to stockholders of
record at the close of business on September 16, 2008 (the "Record
Date"). Except to
the extent it is incorporated by specific reference, the enclosed copy of our
2008 Annual Report is not incorporated into this proxy statement and is not to
be deemed a part of the proxy solicitation material.
The terms "Company," "we," "us," and
"our" refer to Celadon Group, Inc. and its subsidiaries.
Only stockholders of record at the
close of business on the Record Date ("Stockholders") are entitled to vote,
either in person or by valid proxy, at the Annual Meeting. As of the
close of business on the Record Date, there were issued and outstanding
21,698,585 shares of common stock, par value $.033 per share, entitled to cast
votes on all matters subject to a vote at the Annual Meeting. The
total number of issued and outstanding shares excludes approximately 1,319,897
shares of common stock underlying issued and outstanding stock options granted
under our incentive stock plans and other arrangements. Stockholders
are entitled to one vote for each share of common stock held of
record. Holders of unexercised options or other rights to acquire
common stock are not entitled to vote the underlying shares at the Annual
Meeting, but holders of restricted stock are entitled to vote such shares at the
Annual Meeting. We have no other class of stock
outstanding. Stockholders are not entitled to cumulative voting in
the election of directors.
In order to transact business at the
Annual Meeting, a quorum must be present. A quorum is present if the
holders of a majority of the total number of shares of common stock issued and
outstanding as of the Record Date are represented at the Annual Meeting in
person or by proxy. Shares that are entitled to vote but that are not
voted at the direction of the holder (called "abstentions") and shares that are
not voted by a broker or other record holder due to the absence of instructions
from the beneficial owner (called "broker non-votes") will be counted for the
purpose of determining whether a quorum is present.
Directors are elected by an affirmative
vote of a plurality of the votes cast by Stockholders entitled to vote and
represented in person or by proxy at the Annual Meeting, which means the
director nominees receiving the highest number of votes for their election will
be elected as directors. Approval of any other matter properly
submitted to Stockholders for action at the Annual Meeting requires the
affirmative vote of a majority of the votes cast by Stockholders entitled to
vote and represented in person or by proxy at the Annual Meeting, unless a
different vote is required by law or our certificate of incorporation or
bylaws. Abstentions and broker non-votes are not considered
affirmative votes and thus will have no effect on the election of directors by a
plurality vote, but will have the same effect as negative votes with respect to
the approval of any other matter submitted to Stockholders.
Returning
a proxy now will not interfere with a Stockholder's right to attend the Annual
Meeting or to vote his or her shares personally at the Annual Meeting, if he or
she wishes to do so. Stockholders who execute and return proxies may
revoke them at any time before they are exercised by giving written notice of
revocation to our Secretary at the address of our principal executive offices,
by executing a subsequent proxy and delivering it to our Secretary at such
address, or by attending the Annual Meeting and voting in person.
We will
bear the cost of solicitation of proxies, which we expect to be nominal and will
include reimbursements for the charges and expenses of brokerage firms and
others for forwarding solicitation materials to beneficial owners of our
outstanding common stock. Proxies will be solicited by mail and may
be solicited personally by directors, officers, or our regular employees, who
will not receive any additional compensation for any such services.
The
information included in this Proxy Statement should be reviewed in conjunction
with the Consolidated Financial Statements, Notes to Consolidated Financial
Statements, Reports of our Independent Registered Public Accounting Firm, and
other information included in our 2008 Annual Report to Stockholders that was
mailed on or about October 3, 2008, together with this Notice of Annual Meeting
and Proxy Statement, to all Stockholders of record as of the Record
Date.
This
Proxy Statement contains the proposals to be considered by Stockholders at the
Annual Meeting, as well as important information concerning, among other things,
our management and our Board of Directors; executive compensation; transactions
between us and our officers, directors, and affiliates; the stock ownership of
certain beneficial owners and management; the services provided to us by and
fees of KPMG, LLP ("KPMG"), our independent registered public accounting firm;
and instructions for stockholders who want to make proposals at the next Annual
Meeting of Stockholders. EACH STOCKHOLDER SHOULD READ THIS
INFORMATION BEFORE COMPLETING AND RETURNING THE ENCLOSED PROXY
CARD.
This
Proxy Statement and our 2008 Annual Report on Form 10-K may be viewed online at
www.celadontrucking.com. If you are a Stockholder, you can elect to
receive future annual reports and proxy statements electronically by marking the
appropriate box on your proxy form. If you choose this option and
remain a stockholder at such time, you will receive a proxy form prior to the
next Annual Meeting of Stockholders listing the website locations at which the
annual report and proxy statement can be found and your choice will remain in
effect until you notify us by mail that you wish to resume mail delivery of
these documents. If you hold our stock through a bank, broker, or
another holder of record, refer to the information provided by that entity for
instructions on how to elect this option. Opting for this option will
save us the time and expense of printing and mailing these materials to
you.
ELECTION
OF DIRECTORS
At the
Annual Meeting, Stockholders will elect five (5) directors to serve as the Board
of Directors until our Annual Meeting of Stockholders following our 2009 fiscal
year or until their successors are duly elected and qualified. Our
Board of Directors has nominated Stephen Russell, Anthony Heyworth, Catherine
Langham, Michael Miller, and Paul Will for election as
directors. Each of the nominees is presently serving as a
director. In the absence of contrary instructions, each proxy will be
voted for the election of all of the proposed directors.
If any of
the nominees named above become unable for any reason or unwilling for good
cause to serve as a director, the Board of Directors may designate a substitute
nominee. In that case, the proxy holders will vote for the substitute
nominee designated by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" EACH OF THE DIRECTOR NOMINEES.
Information
concerning the names, ages, positions with the Company, tenure as a director,
and business experience of nominees standing for election as directors at the
Annual Meeting is set forth below. All references to experience with
the Company include positions with our operating subsidiary, Celadon Trucking
Services, Inc., a New Jersey corporation. All executive officers are
elected annually by the Board of Directors.
Anthony Heyworth, 64, has been
one of our directors since 1999. He is a member of both the Audit and
Corporate Governance Committee and the Compensation and Nominating
Committee. Mr. Heyworth retired from KeyCorp in February 2001 as Vice
Chairman, Commercial Banking, KeyBank N.A. after a 36-year career with this
financial services company. He also served as Chairman, President,
and CEO of Keybank Central Indiana from 1991 to 2001. He joined the
former Central National Bank in 1965 and was Executive Vice President when the
bank merged with Society National Bank of Cleveland in 1986 and KeyBank in
1994.
Catherine Langham, 50, has served as a director
since July 25, 2007. She is a member of both the Audit and Corporate
Governance Committee and the Compensation and Nominating
Committee. Ms. Langham is President and Chief Executive Officer of
Langham Logistics, Inc. ("LLI"), a global freight management company
specializing in expedited transportation, warehousing, and distribution based in
Indianapolis, Indiana. Ms. Langham has been with LLI since its
inception over twenty years ago and brings over twenty years of experience in
the logistics industry. Ms. Langham serves as a member of the Regions
Bank Board of Advisors and since 2006, as a director of The Finish Line,
Inc. Ms. Langham was a director of Marsh Supermarket, Inc. from 1998
through September 2006, served as Chairperson of the Greater Indianapolis
Chamber of Commerce, and is the former Chairperson of the Indiana Board of the
National Association of Women Business Owners, Indiana Chapter, and of the Air
Forwarders Association.
Michael Miller, 63, has been
one of our directors since February 1992. Mr. Miller is the lead
outside director and a member of both the Audit and Corporate Governance
Committee and the Compensation and Nominating Committee. Mr. Miller
has been Chairman of the Board and CEO of Aarnel Funding Corporation, a venture
capital/real estate company, since 1974, a partner of Independence Realty, an
owner and manager of real estate properties, since 1989, and President and CEO
of Miller Investment Company, Inc., a private investment company, since
1990. Mr. Miller previously served as President, Secretary, Treasurer
and director of Morlex, Inc., a "blank check" shell company.
Paul Will, 42, has served as a
director and Vice Chairman of the Board since August 2007. He
continues to serve as our Executive Vice President, CFO, Assistant Secretary,
and Treasurer, positions that he has held since April 2004. He was
Executive Vice President, CFO, Assistant Secretary, and Treasurer from February
2004 to April 2004; Executive Vice President, CFO, Secretary, and Assistant
Treasurer from May 2002 to January 2004; Executive Vice President, CFO,
Assistant Secretary, and Assistant Treasurer from September 2001 to May 2002;
Vice President, CFO, Assistant Secretary, and Assistant Treasurer from December
2000 to September 2001; Vice President, CFO, and Secretary from December 1998 to
December 2000; Vice President, Secretary, and Controller from September 1996 to
December 1998; Vice President and Controller for Celadon Trucking Services, Inc.
from January 1996 to September 1996; and Controller from September 1993 to
January 1996. Mr. Will is a certified public accountant and formerly
served as Chairman of the American Trucking Associations' National Accounting
and Finance Council.
Pursuant
to Section 145 of the Delaware General Corporation Law, our certificate of
incorporation provides that we shall, to the full extent permitted by law,
indemnify all of our directors, officers, incorporators, employees, and agents
against liability for certain of their acts. Our certificate of
incorporation also provides that, with a number of exceptions, none of our
directors shall be liable to us for damages for breach of a fiduciary duty as a
director.
Meetings. Our
Board of Directors held four (4) meetings during the fiscal year ended June 30,
2008. No director attended less than 75% of the meetings of the Board
of Directors and each committee on which he or she served. In
addition, all directors are encouraged to attend the Annual
Meeting. All of our then-current directors attended the Annual
Meeting following our 2007 fiscal year.
Director
Independence. Our common stock is listed on the Nasdaq
National Market, and therefore it is subject to the listing standards, including
standards relating to corporate governance, embodied in applicable NASDAQ Stock
Market ("NASDAQ") listing standards. Pursuant to NASDAQ Rule
4350(c)(1), the Board of Directors has determined that the following directors
and nominees are "independent" under NASDAQ Rule 4200(a)(15): Michael Miller,
Anthony Heyworth, and Catherine Langham. In accordance with NASDAQ
Rule 4350(c)(2), in fiscal 2008, our independent directors held four regularly
scheduled meetings, referred to as "executive sessions," at which only the
independent directors were present. Our independent directors will
continue to meet in executive session at least twice each fiscal
year.
Communications with the Board of
Directors. Our Board of Directors provides a process for
stockholders who wish to communicate with members of the Board of Directors,
including the independent directors, individually or as a group. If
you wish to communicate with the entire Board of Directors, you may send
correspondence to them addressed as follows: The Board of Directors, Celadon
Group, Inc., c/o Paul Will – Vice Chairman of the Board, 9503 East 33rd Street,
One Celadon Drive, Indianapolis, Indiana, 46235. Written
communications addressed in this manner will be copied and distributed to each
director at or prior to the next meeting of the Board of
Directors. If you wish to communicate with an individual director,
you may send correspondence to him or her addressed as follows: Name – Director,
Celadon Group, Inc., c/o Paul Will – Vice Chairman, 9503 East 33rd Street, One
Celadon Drive, Indianapolis, Indiana 46235. Written communications
received in this manner will not be opened, but rather delivered unopened to the
director to whom they are addressed at or prior to the next meeting of the Board
of Directors, following clearance through normal security
procedures.
The Board
of Directors has standing Audit and Corporate Governance, and Compensation and
Nominating Committees (the "Audit Committee" and the "Compensation Committee,"
respectively). The Board of Directors does not maintain any other
standing committees.
Functions, Meetings, and Composition
of the Audit Committee. The responsibilities of the Audit
Committee are set forth in the Audit Committee Report, which appears
below. The Audit Committee met seven times during fiscal
2008. Messrs. Heyworth and Miller and Ms. Langham served on the Audit
Committee, with Mr. Heyworth serving as the chairperson. Each member
of the Audit Committee satisfies the independence and audit committee membership
criteria set forth in NASDAQ Rule 4350(d)(2). Specifically, each
member of the Audit Committee:
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is
independent under NASDAQ Rule 4200(a)(15);
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meets
the criteria for independence set forth in Rule 10A-3(b)(1) under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act");
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has
not participated in the preparation of our financial statements or the
financial statements of any of our current subsidiaries at any time during
the past three years; and
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is
able to read and understand fundamental financial statements, including
our balance sheet, statement of operations, and statement of cash
flows.
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Audit Committee Financial
Expert. The Board of Directors has determined that at least
one "audit committee financial expert," as defined under Item 407(d)(5) of
Regulation S-K and NASDAQ Rule 4350(d)(2)(A), currently serves on the Audit
Committee. The Board of Directors has identified Mr. Heyworth as an
audit committee financial expert. Mr. Heyworth is "independent", as
independence for audit committee members is defined under applicable NASDAQ
rules.
Audit Committee
Charter. The Audit Committee has operated pursuant to a
written charter detailing its duties since June 12, 2000. In
August 2007, the charter of the Audit Committee was amended and restated to
comply with SEC Release Nos. 33-8732A and 34-54302A. The amendment
and restatement of the Audit Committee charter was not material in
nature. The charter, as amended and restated, is available on the
Company's website at www.celadontrucking.com.
Audit Committee
Report. In performing its duties, the Audit Committee, as
required by applicable Securities and Exchange Commission ("SEC") rules, issues
a report recommending to the Board of Directors that our audited financial
statements be included in the Annual Report on Form 10-K, and relating to
certain other matters, including the independence of our public accounting
firm. The fiscal 2008 Report of the Audit
Committee is set forth below.
The
Audit Committee Report shall not be deemed to be incorporated by reference into
any filing made by the Company under the Securities Act of 1933, as amended
("Securities Act") or the Exchange Act, notwithstanding any general statement
contained in any such filings incorporating this Proxy Statement by reference,
except to the extent we incorporate such report by specific
reference.
The
primary purpose of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities relating to the quality and integrity
of our financial reports and financial reporting processes and financial
reporting internal control systems. Management has primary
responsibility for our financial statements and the overall reporting process,
including maintenance of our internal control systems. We retain an
independent registered public accounting firm that is responsible for conducting
an independent audit of our financial statements, the effectiveness of
management's assessment of internal controls over financial reporting, and the
effectiveness of internal controls over financial reporting in accordance with
the standards of the Public Company Accounting Oversight Board (United States),
and issuing a report thereon.
In
performing its duties, the Audit Committee has reviewed and discussed our
financial statements, management's assessment of internal control over financial
reporting, and the effectiveness of internal control over financial reporting
with management and our independent registered public accounting firm and, in
issuing this report, has relied upon the responses and information provided to
the Audit Committee by management and the independent registered public
accounting firm.
For the
fiscal year ended June 30, 2008, the Audit Committee (1) reviewed and
discussed the audited financial statements, management's assessment of internal
control over financial reporting, and the effectiveness of internal control over
financial reporting with management and KPMG, our independent registered public
accounting firm for such fiscal year; (2) discussed with the independent
registered public accounting firm the matters required to be discussed by the
statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol.
1. AU section 380), as adopted by the Public Company Accounting Oversight Board
in Rule 3200T; (3) received and discussed with the independent registered public
accounting firm the written disclosures and the letter from such accounting firm
required by Independence Standards Board Standard No. 1, as amended
(Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees), as adopted by the Public Company Accounting Oversight Board
in Rule 3600T; and (4) discussed with the independent registered public
accounting firm its independence. The Audit
Committee
met with representatives of the independent registered public accounting firm
without management or other persons present on four occasions during fiscal
2008.
Based on
the foregoing reviews and meetings, the Audit Committee recommended to the Board
of Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended June 30, 2008, for filing with the
SEC.
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Audit
Committee
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Anthony
Heyworth, Chairman
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Michael
Miller
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Catherine
Langham
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Functions, Meetings, and Composition
of the Compensation Committee. The Compensation Committee
reviews all aspects of compensation of our executive officers, recommends for
the selection of the Board of Directors director nominees, and makes
recommendations on such matters to the full Board of Directors. The
Compensation Committee met four times during fiscal 2008. Messrs.
Miller and Heyworth and Ms. Langham served as the Compensation Committee in
fiscal 2008, with Mr. Miller serving as the chairperson.
Role of the Compensation
Committee. The Compensation Committee was formed in September
1993. The Compensation Committee is responsible for determining the
compensation program for our executive officers, including the CEO, Chief
Financial Officer ("CFO"), and our three other most highly compensated executive
officers whose total compensation was $100,000 or more for the fiscal year ended
June 30, 2008 (collectively, the "Named Executive Officers"). The
Compensation Committee is responsible for annually reviewing and approving
annual base salary compensation for the Named Executive Officers. The
Compensation Committee establishes and administers the bonus compensation
program, which is re-evaluated each fiscal year, pursuant to which certain of
our employees and executive officers may be eligible to receive
bonuses. The Compensation Committee administers the Celadon Group,
Inc. 2006 Omnibus Incentive Plan ("Incentive Plan") and, subject to the
provisions of the Incentive Plan, determines grants under the Incentive Plan for
all employees, including the Named Executive Officers. The
Compensation Committee also considers and if appropriate, recommends for
selection, nominees for the Board of Directors. Subject to certain
restrictions, when it deems appropriate, the Compensation Committee may form and
delegate to subcommittees the authority to undertake any of the foregoing
responsibilities.
Compensation Committee
Charter. In August 2007, the charter of the Compensation
Committee was amended and restated to comply with SEC Release Nos. 33-8732 and
34-54302. The amendment and restatement of the Compensation Committee
charter was not material in nature. A copy of the Compensation
Committee's current charter is available on our website at
www.celadontrucking.com.
Report of the Compensation
Committee. In performing its duties, the Compensation
Committee, as required by applicable rules and regulations promulgated by the
SEC, issues a report recommending to the Board of Directors that our
Compensation Discussion and Analysis be included in this Proxy
Statement. The Report of the Compensation Committee
follows.
The
Report of the Compensation Committee shall not be deemed to be incorporated by
reference into any filing made under the Securities Act or the Exchange Act,
notwithstanding any general statement contained in any such filings
incorporating this Proxy Statement by reference, except to the extent that we
incorporate such report by specific reference.
We have
reviewed and discussed the Compensation Discussion and Analysis contained in
this Proxy Statement with management. Based on that review and
discussion, we have recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this Proxy Statement for the year ended
June 30, 2008.
|
Compensation
Committee
|
|
Michael
Miller, Chairman
|
|
Anthony
Heyworth
|
|
Catherine
Langham
|
Messrs.
Miller and Heyworth and Ms. Langham served as the Compensation Committee in
fiscal 2008. During fiscal 2008, no Compensation Committee member was
an officer or employee for the Company. There were no interlocking
relationships between our directors and executive officers and the executive
officers and directors of any other entity that might affect the compensation of
our executive officers. For a description of other transactions
between us and other directors and executive officers, see "Certain
Relationships and Related Transactions" below.
Director Nomination
Process. Director nominees are selected by the Compensation
Committee. Our Board of Directors has adopted a policy of
re-nominating incumbent directors who continue to satisfy the criteria for Board
of Directors membership and whom the Compensation Committee believes continue to
make important contributions to the Board of Directors and who consent to
continue to serve on the Board of Directors.
The
Compensation Committee also will consider proposed director nominees recommended
by stockholders, provided that the following procedural requirements are
satisfied. Director nominee recommendations should be mailed via
certified mail, return receipt requested, and addressed to Director Nomination,
Celadon Group, Inc., c/o Paul Will - Vice Chairman, 9503 East 33rd Street, One
Celadon Drive, Indianapolis, Indiana, 46235. In order to be
considered, a stockholder recommendation must: (i) be received at least 120 days
prior to the anniversary of the mailing date of our proxy statement for the
prior year's annual meeting (by June 5, 2009 for director candidates to be
considered for nomination for election at the Annual Meeting of Stockholders
following the end of fiscal year 2009), however, if the date of such Annual
Meeting is more than thirty days before or after November 14, 2009, then the
deadline for submitting any director candidates for nomination for election at
such annual meeting will be a reasonable time before we begin to print or mail
such proxy materials; (ii) contain sufficient background information, such
as a resumé and references, to enable our Compensation Committee to make a
proper judgment regarding the proposed nominee's qualifications; (iii) be
accompanied by a signed consent of the proposed nominee to serve as a director,
if elected, and a representation that such proposed nominee qualifies as
"independent" under NASDAQ Rule 4200(a)(15) or, if the proposed nominee does not
qualify, a description of the reason(s) he or she is not "independent"; (iv)
state the name and address of the stockholder submitting the recommendation and
the number of shares of our common stock owned of record or beneficially by such
stockholder; and (v) if submitted by a beneficial stockholder, be accompanied by
evidence (such as a recent brokerage statement) that the person making the
recommendation beneficially owns shares of our common stock.
In
evaluating potential nominees, including potential nominees properly submitted
by stockholders, our Compensation Committee will review the person's judgment,
integrity, independence, experience, and knowledge of the industry in which we
operate or related industries, as well as such other factors the Compensation
Committee determines are relevant in light of our needs and the needs of our
Board of Directors.
With
regard to specific qualities and skills, our Board of Directors believes it
necessary that: (i) at least a majority of the members of the Board of Directors
qualify as "independent" under NASDAQ Rule 4200(a)(15); (ii) at least three
members of the Board of Directors satisfy the audit committee membership
criteria specified in NASDAQ Rule 4350(d)(2); and (iii) at least one member of
the Board of Directors, eligible to serve on the Audit Committee, have
sufficient knowledge, experience, and training concerning accounting and
financial matters so as to qualify as an "audit committee financial expert"
within the meaning of Item 407(d) of Regulation S-K.
Set forth
below is certain information regarding our current executive officers, with the
exception of our CEO, Mr. Stephen Russell, and Executive Vice President, CFO,
Assistant Secretary and Treasurer, Mr. Will. See "Nominees for
Directorships" above for information concerning the business experience of
Messrs. Stephen Russell and Will. All executive officers are elected
annually by the Board of Directors.
Chris Hines, 48, was appointed
to the position of President and Chief Operating Officer of the Company on July
25, 2007. Mr. Hines served on the Company's Board of Directors from
July 1, 2006, to July 25, 2007. Prior to his appointment to President
and Chief Operating Officer of the Company, beginning in June 2006, Mr. Hines
served as the President and Chief Operating Officer of Tripmaster Corp., an
onboard computer and asset management company primarily serving the trucking
industry. From 2004 to 2006, Mr. Hines was the President and Chief
Executive Officer of Atipical Holdings, Inc., a business focused on asset
management, equipment finance, and backroom productivity
solutions. From 2003 to 2004, Mr. Hines served as President of
Pegasus Transtech, a provider of imaging-based business process and workflow
solutions. In 2003, Mr. Hines served as Executive Vice President of
Terion, Inc., a provider of satellite equipment tracking hardware and
software. From 1986 to 2002, Mr. Hines served in various roles with
TIP North American, a G.E. Capital subsidiary offering trailer financing
services, including serving as President from 2000 to 2002. Mr. Hines
has served on the Truckload Carriers of America Board of Directors since
2001.
Kenneth Core, 58, has been our
Vice President and Secretary since January 2004. He was Vice
President of Risk Management from July 2000 to December 2003. He
served in various capacities at Builders Transport, Inc. and CRST, Inc. for over
twenty-eight years, most recently as Vice President of Risk Management prior to
joining the Company in July 2000. Mr. Core has served on the ATA
Litigation Center Board of Directors since 2005 and has served on the Board of
Directors of Polaris Captive Insurance Company since 2006.
Jonathan Russell, 37, has been
our Executive Vice President Logistics and President of TruckersB2B (a wholly
owned subsidiary of the Company) since August 8, 2006. He was President of
TruckersB2B from May 2003 to July 2006. He was Chief Operating Officer of
TruckersB2B from May 2002 to April 2003. He was Vice President of
Operations for TruckersB2B from May 2000 to April 2002. Prior to joining
TruckersB2B, Mr. Russell had been a Vice President in the Global Corporate
Investment Bank of Citigroup for six years. While at Citigroup, Mr. Russell was
responsible for the management of Citibank's New York Treasury non-dollar
fixed-income portfolio.
Our Board
of Directors has adopted a Code of Business Conduct and Ethics that applies to
all of our directors, officers, and employees. The Code of Business
Conduct and Ethics includes provisions applicable to our principal executive
officer, principal financial officer, and principal accounting officer or
controller, or persons performing similar functions, which constitute a "code of
ethics" within the meaning of Item 406(b) of Regulation S-K. In
fiscal 2007, the Board of Directors contemplated adopting certain amendments to
our Code of Business Conduct and Ethics but ultimately determined not to approve
any amendments. A copy of the Code of Business Conduct and Ethics is
available on our website at www.celadontrucking.com.
Under the
securities laws of the United States, our directors and executive officers and
any persons owning more than ten percent (10%) of our common stock are required
to report their ownership of common stock and any changes in that ownership, on
a timely basis, to the SEC. To our knowledge, based solely on a
review of materials provided to us, all such required reports were filed on a
timely basis in fiscal 2008. Copies of Section 16(a) forms that our
directors and officers file with the SEC are accessible through our website at
www.celadontrucking.com.
We
believe the quality, skills, and dedication of our executive officers are
critical factors affecting our long-term value and success. Our
philosophy of executive compensation is to provide overall compensation levels
that (i) attract and retain talented executives and motivate those executives to
achieve superior results, (ii) foster employee commitment, (iii) align
executives' interests with our corporate strategies, our business objectives,
and the long-term interests of our stockholders, and (iv) enhance executives'
incentives to increase our stock price and maximize stockholder
value. In addition, we strive to ensure that our compensation,
particularly salary compensation, is consistent with our constant focus on
controlling costs. In many instances we build our compensation
elements around long-term retention and development together with annual rewards
based on specific focus areas. To this end, we have sought to provide
competitive levels of compensation that integrate pay with our annual and
long-term performance goals and reward above-average corporate
performance.
The
Compensation Committee oversees all of our executive officer compensation
arrangements. The Compensation Committee has the specific
responsibility to (i) review and approve corporate goals and objectives
relevant to the compensation of our CEO, (ii) evaluate the performance of
our CEO in light of those goals and objectives, (iii) consider factors related
to our performance as a company, including accomplishment of our long-term
business and financial goals; and (iv) determine and approve the
compensation level of our CEO based upon such evaluation. The
Compensation Committee also has the responsibility to review annually the
compensation of our other executive officers and to determine whether such
compensation is reasonable under existing facts and circumstances. In
making such determinations, the Compensation Committee seeks to ensure that the
compensation of our executive officers aligns the executives' interests with the
interests of our stockholders. The Compensation Committee must also
review and approve all forms of incentive compensation, including annual cash
bonuses, stock option grants, restricted stock grants, and other forms of
incentive compensation granted to our executive officers. The
Compensation Committee takes into account the recommendations of our CEO in
reviewing and approving the overall compensation of the other executive
officers.
Our
compensation program for senior executive officers has three major elements:
base salary, annual cash bonus, and equity compensation. Our
compensation program also consists of providing our senior executive officers
with specified perquisites and with employee benefits that are generally
available to all of our employees.
The
Compensation Committee has the responsibility to make and approve changes in the
total compensation of our executive officers, including the mix of compensation
elements. In making decisions regarding an executive's total
compensation, the Compensation Committee considers whether the total
compensation is (i) fair and reasonable to us, (ii) internally appropriate
based upon our culture and the compensation of our other employees, and (iii)
within a reasonable range of the compensation afforded by other
opportunities. The Compensation Committee also bases its decisions
regarding compensation upon its assessment of the executive's leadership,
individual performance, years of experience, skill set, level of commitment and
responsibility required in the position, contributions to our financial success,
the creation of stockholder value, and current and past
compensation. In determining the mix of compensation elements, the
Compensation Committee considers the effect of each element in relation to total
compensation. Consistent with our culture of cost control and our
desire to reward high levels of performance, the Compensation Committee has
attempted to weight overall compensation toward incentive cash and equity-based
compensation. The Compensation Committee specifically considers
whether each particular element provides an appropriate incentive and reward for
performance that sustains and enhances long-term stockholder
value. The Compensation Committee also considers the tax consequences
associated with each element of compensation, including whether the
deductibility of compensation is expected to be limited under
Section
162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). In
determining whether to increase or decrease an element of compensation, we have
historically relied upon the business experience of the Compensation Committee,
Compensation Committee's general understanding of compensation levels of public
companies and the historical compensation levels of the executive officers, and
with respect to executives other than the CEO, we consider the recommendations
of the CEO. We generally do not rely on rigid formulas or short-term
changes in business performance when setting compensation.
Fiscal
2008 Compensation Program
The
following summarizes the compensation elements for fiscal 2008 that we use to
attract, motivate, and retain our Named Executive Officers. We made
all such decisions in the context of a difficult operating economic environment
and rising fuel costs.
Base
Salary
We pay
base salaries at levels that reward executive officers for ongoing performance
and that enable us to attract, motivate, and retain highly qualified
executives. Base pay is a critical element of our compensation
program because it provides our executive officers with
stability. Compensation stability allows our executives to focus
their attention and efforts on creating stockholder value and on our other
business objectives. In determining base salaries, we consider the
executive's current salary and the executive's qualifications and experience,
including, but not limited to, the executive's length of service with our
company, the executive's industry knowledge, and the quality and effectiveness
of the executive's leadership, scope of responsibilities, past performance, and
future potential of providing value to our stockholders. In fiscal
2008, we did not formally benchmark salary or total executive compensation
against the executive compensation of any single company or group of
companies. Historically, the Compensation Committee has, from time to
time, considered the form and level of compensation disclosed by other publicly
traded truckload carriers, certain other transportation companies, and companies
of similar size and market capitalization. We set our base salaries
at a level that allows us to pay a portion of an executive officer's total
compensation in the form of incentive compensation, including annual cash
bonuses, long-term incentives, and perquisites. We believe this mix
of compensation helps us incentivize our executives to maximize stockholder
value in the long run. We consider adjustments to base salaries
annually to reflect the foregoing factors but do not apply a specific weighting
to such factors.
Base Salary of Our
CEO. For fiscal 2008, the salary of our Chairman and CEO,
Stephen Russell, was established pursuant to an employment agreement dated
January 21, 1994, as amended and extended by its terms thereafter, which
provides Mr. Stephen Russell with a base salary equal to $521,000 adjusted
annually on January 21st for increases in the Consumer Price
Index. Mr. Stephen Russell's fiscal 2008 salary was
$648,618.
Base Salary of Our Other Named
Executive Officers. In reviewing and making decisions with
respect to the base salaries of executive officers (other than our CEO) for
fiscal 2008, the Compensation Committee reviewed and considered: (i)
compensation information disclosed by similarly-sized publicly held truckload
carriers; (ii) our financial and operating performance, as well as the role of
and contribution of the particular executive with respect to such performance;
and (iii) the particular executive's contributions to us unrelated to our
financial performance. The Compensation Committee believes that the
annual salaries of the Named Executive Officers are reasonable compared to
similarly situated executives of other comparable companies, including trucking
and transportation companies and other comparable companies from a variety of
industries. In fiscal 2008, Messrs. Will, Hines, Jonathan Russell,
and Core had base salaries of $250,000, $250,000, $200,000, and $127,400,
respectively.
Annual
Cash Bonus Program
Pursuant
to our cash bonus program, the Compensation Committee annually determines
bonuses for the Named Executive Officers following the finalization of the
financial statements. The Compensation Committee may consider Company
and individual performance components when making bonus
determinations. For fiscal 2008, the Compensation Committee
established an earnings per share bonus target for the CEO and our other Named
Executive Officers. The bonus amounts were subject to adjustment up
or
down
based on a range of our performance between 85% and 140% of the earnings
target. At the time of adoption, the Compensation Committee believed
that the performance targets represented aggressive, yet achievable,
goals. By late 2007, the Compensation Committee believed that soaring
fuel prices and weakening demand would render the original targets
unachievable.
As
expected following our first fiscal quarter, we did not achieve the earnings per
share target established for fiscal 2008 under the cash bonus program. The
Compensation Committee considered the reasons for the shortfall, which were
attributable in material part to record fuel prices, currency exchange rates,
and a slower economy. The Compensation Committee also considered
performance compared with peers, the growth of logistics operations, and certain
internal management accomplishments. The Compensation Committee
believed that management had limited our downside performance to the best of its
ability and also had successfully integrated a new
president. Accordingly, the Compensation Committee granted a
discretionary bonus of $320,000, $200,000, $180,000, $135,000, and $15,000 to
Messrs. Stephen Russell, Will, Hines, Jonathan Russell, and Core,
respectively. The variation among the amounts awarded as bonus
compensation to our Named Executive Officers is attributable to the variation in
responsibility and contribution from each Named Executive Officer with respect
to corporate performance.
Equity
Compensation
Historically,
we have sought to align the long-term interests of executive officers and
stockholders through the use of stock-based compensation, including stock
options, stock appreciation rights, and restricted stock grants. The
Compensation Committee views stock based compensation as an important part of
overall executive compensation because of the emphasis on increasing stockholder
value and promoting a long-term financial interest in our company.
In fiscal
2008, the Compensation Committee made equity awards and entered arrangements as
follows:
|
·
|
In
July 2007, 100,000 stock options were granted to Mr. Hines upon his
acceptance of employment with us.
|
|
·
|
In
October 2007, the Compensation Committee awarded stock options of 308,284,
147,206, 40,000 (after the surrender of 108,000 shares as described
below), 25,000, and 10,000 to Messrs. Stephen Russell, Will, Hines,
Jonathan Russell, and Core, respectively, in accordance with our Incentive
Plan.
|
|
·
|
In
April 2008, we entered an arrangement whereby Mr. Hines exchanged 108,000
stock options for 32,000 shares of restricted stock. The
exchange of restricted stock for stock options by Mr. Hines was intended
by the Compensation Committee to better align Mr. Hines' compensation with
changes in stockholder value over which he had some
influence. Shortly following the initial grant of stock options
to Mr. Hines at the inception of his employment, our stock price decreased
significantly primarily related (in the committee's opinion) to economic
events. Because of Mr. Hines' relatively short tenure with us,
he had not had time to accumulate significant holdings in our stock, and
with our stock value significantly decreased, Mr. Hines was not exposed to
downside risk of outstanding shares and also experienced less incentive
because of the significant disparity between the stock price and the
exercise price. Accordingly, we engaged in the exchange, which
we believe resulted in better incentive to Mr. Hines with no increase in
compensation expense to us because the accrued value of the restricted
stock was lower than the accrued value of options
forfeited.
|
Other
Compensation
We
provide our Named Executive Officers with certain other benefits that we believe
are reasonable, competitive, and consistent with our overall executive
compensation program. We believe that these benefits allow our
executives to work more efficiently. The costs of these benefits
constitute only a small percentage of each executive's total
compensation. In setting the amount of these benefits, the
Compensation Committee considers each executive's position and scope of
responsibilities and all other elements comprising the
executive's
compensation. In fiscal 2008, we provided additional compensation to
our Named Executive Officers of (i) company automobiles for each of Messrs.
Stephen Russell, Will, Hines, and Jonathan Russell; (ii) term life insurance for
each of Messrs. Stephen Russell and Will; (iii) disability insurance for each of
Messrs. Stephen Russell, Will, Hines, Jonathan Russell, and Core; and (iv)
premiums and reimbursements under an executive health and disability benefit
program for each of Messrs. Stephen Russell and Will. See "Summary Compensation
Table" below in the "All Other Compensation" column for the aggregate dollar
amount of all perquisites provided to each of our Named Executive
Officers.
During
the first quarter of fiscal 2007, Messrs. Core and Jonathan Russell, as SAR
grantees, each entered into an alternative fixed compensation arrangement with
us whereby each of Messrs. Core and Jonathan Russell agreed to forfeit all
future rights with respect to compensation from existing SAR grants in exchange
for a guaranteed quarterly payment for the remainder of the underlying SAR
term. This alternative arrangement is subject to continued service to
us. These fixed payments are accrued and paid quarterly from July 1,
2006 to March 31, 2009 for SAR grantees; however, Messrs. Core and Jonathan
Russell will each receive their last payment on October 1,
2008. During fiscal year 2008, Mr. Core received $98,250 pursuant to
this alternative arrangement. Mr. Core also received $10,244 on July
1, 2008 and will receive the last payment, $10,244, on October 1,
2008. During fiscal year 2008, Mr. Jonathan Russell received $68,292
pursuant to this alternative arrangement. Mr. Russell also received
$17,073 on July 1, 2008 and will receive the last payment, $17,073, on October
1, 2008.
Employee
Benefits
In fiscal
2008, our Named Executive Officers participated in our employee benefit plans,
including our medical, dental, and group life insurance plans, in each case on
the same basis as our other employees. Additionally, in fiscal 2008,
we contributed to the 401(k) Plan accounts and Excess Benefit Plan of our Named
Executive Officers, which amount is included in "All Other Compensation" in the
"Summary Compensation Table" below. The Excess Benefit Plan allows
management or other highly compensated employees an opportunity to defer
compensation on a pre-tax basis in excess of qualified retirement plan
limits.
Employment
Agreements
We have entered into an employment
agreement with Mr. Stephen Russell, our Chairman and CEO, and a separation
agreement with Mr. Will, our Vice Chairman, Executive Vice President, CFO,
Assistant Secretary, and Treasurer, each as described below. The
agreements with Messrs. Stephen Russell and Will reflect the fact that a
significant portion of their total compensation may, at any point in time,
consist of unvested stock options or restricted stock holdings and that some
measure of protection against a possible, but unpredictable, action of successor
corporations is desirable for both the executives and the
Company. These agreements also reduce the risk that alignment between
the interests of Messrs. Stephen Russell and Will will be decoupled from our
stockholders' interests by a change-in-control event. The payout
provisions under these agreements were established based on prevailing market
practice.
The
employment agreement of Mr. Stephen Russell provides that upon the occurrence of
a change in control (as defined in the employment agreement) Mr. Stephen Russell
may be entitled to receive certain payments and benefits from
us. Specifically, if (i) at any time within two years of a change in
control or within 180 days prior to a change in control, Mr. Stephen Russell's
employment is terminated by us without cause or by Mr. Stephen Russell for
cause or (ii) at any time during the ninety day period immediately following the
date which is six months after the change in control Mr. Stephen Russell
terminates his employment for any reason, Mr. Stephen Russell shall be entitled
to receive from us (1) a lump sum payment in an amount equal to three times his
base salary and three times the highest annual bonus paid to him within three
years prior to the change in control; (2) any accrued benefits; (3) a pro-rata
portion of the bonus for the fiscal year in which the change in control occurs;
(4) continued medical and dental benefits for himself and eligible dependents
for thirty-six months; (5) outplacement services for one year; and (6) upon the
occurrence of the change in control, full and immediate vesting of all stock
options and equity awards. The agreement also provides that
Mr. Stephen Russell is entitled to receive a gross-up payment on any
payments made to him that are subject to the excise tax imposed by Section 4999
of the Code; provided, however, that if the total payments made to Mr. Stephen
Russell do not exceed 110% of the greatest amount that could be paid to him,
such that the receipt of payments
would not
give rise to any excise tax, then no gross-up payment will be made and the
payments made to Mr. Stephen Russell, in the aggregate, will be reduced to an
amount that would result in no excise tax being triggered. The
employment agreement also includes a two-year non-compete covenant commencing on
termination of employment.
Mr. Will
is party to a separation agreement with us whereby we have the right at any
time, with or without prior written notice, to terminate his employment or
obtain his resignation. The agreement provides that in the event of
termination of employment, Mr. Will will be entitled to receive from us: (i) one
year's salary less normal withholding; (ii) a pro-rata bonus payment equal to
the then current bonus formula for the time employed in the then current fiscal
year up to the date of termination in that fiscal year less normal withholdings;
(iii) a lump sum payment equal to twelve months of COBRA premiums for the group
medical and dental plans; and (iv) a lump sum payment equal to twelve months car
allowance. In addition, in such event, Mr. Will will be entitled to
exercise any vested or unvested stock options he then has in accordance with the
terms of the Celadon Group, Inc. 1994 Stock Option Plan, as amended and restated
thereafter, for a period of one year from the termination of his
employment.
Currently, we do not have any other
employment contracts, severance agreements, change in control agreements, or
other arrangements with any of our other Named Executive Officers that provide
for payment or benefit to a Named Executive Officer at, following, or in
connection with a change in control, a change in a Named Executive Officer's
responsibilities, or a Named Executive Officer's termination of employment,
including registration, severance, retirement, or constructive
termination. The Compensation Committee, however, has requested that
we enter into employment and noncompetition agreements with Messrs. Will, Hines,
and Jonathan Russell. We expect to enter into these agreements during
fiscal 2009.
Fiscal
2009 Compensation Program
In May
2008 the Compensation Committee undertook a substantial review and evaluation of
our compensation program for senior executive officers. The four
officers included in the review were Messrs. Stephen Russell, Will, Hines, and
Jonathan Russell. The Compensation Committee determined that
compensation decisions for years after fiscal 2008 (other than equity grants,
which would be retained by the Compensation Committee) for all other personnel
would be under the primary discretion of our CEO, subject to Compensation
Committee approval.
In
conducting its evaluation, the Compensation Committee relied upon its own
investigation and experience and also engaged our outside securities counsel to
assist with the process. The Compensation Committee's goals for the
evaluation included the following:
·
|
Obtaining
comparisons of the compensation programs utilized by trucking competitors
and by similarly sized companies generally.
|
|
|
·
|
Establishing
an overall compensation program that reflects competitive target
compensation levels for our senior executive officers that can be achieved
with strong performance of our company.
|
|
|
·
|
Designing
a compensation program intended to better align senior executive incentive
compensation substantially with factors that correlate to increases in
stockholder value, while also exposing senior executive officers to the
risk of downside stock performance.
|
|
|
·
|
Consolidating
the normal executive officer review and compensation process into a
comprehensive annual process following the close of each fiscal year,
rather than separating decisions regarding salary, bonus, and equity
compensation.
|
|
|
·
|
Balancing
the use of equity incentives against the dilution to stockholders in a
manner that reflects customary share usage and fair value
transfer.
|
|
|
·
|
Adopting
a program that is relatively easier to understand, administer, and account
for.
|
In
conducting its evaluation, the Compensation Committee reviewed a range of
information, including, but not limited to, the following items: (i) publicly
disclosed compensation information contained in the proxy statements of six
primarily asset-based truckload carriers, including Knight Transportation, Inc.,
Covenant Transportation Group, Inc., Heartland Express, Inc., Marten Transport,
Ltd., USA Truck, Inc., and P.A.M. Transportation Services, Inc.; (ii) summary
compensation data for public companies across all industries with revenues of
$500 million or less, together with a regression analysis to estimate the
compensation of such companies with total revenue approximating $500 million (as
reflected under the regression analysis, the "All-Industry Group"); (iii) a
confidential survey of larger, high performing companies that was used as a
guide for bonus targets, equity compensation vesting, and relative compensation
levels among executives, rather than as a guide for absolute pay levels of our
executives; and (iv) our historical compensation levels and contractual
commitments. After reviewing the information and discussing the
proposed program with the CEO, the Compensation Committee adopted our Senior
Executive Officer Compensation Program (the "Program") in August
2008.
The
Program consists of three major elements: base salary, annual cash bonus linked
to specific factors, and equity compensation. The Compensation
Committee decided not to adopt an LTIP or similar long-term incentive plan
either in addition to, or as a substitute for, equity compensation.
As a
general guide for total compensation, the Compensation Committee relied most
heavily on the compensation data for the All-Industry Group. The
Compensation Committee believed that the All-Industry Group was more reflective
of the competitive environment for senior executive talent in our
location. Moreover, the Compensation Committee wanted to design a
compensation program that would be attractive to talented executives regardless
of industry. The following table sets forth the targeted range of
compensation under the Program, assuming 100% achievement of the annual cash
bonus target.
Expected
Compensation for fiscal year 2009
|
Name
and Principal Position
|
Salary
|
Annual
Bonus Target(1)
|
Annual
Grant of Equity
Compensation(2)
|
Total
Compensation(1)
(2)
|
Stephen
Russell,
Chairman
and CEO
|
$700,000
|
$455,000
|
$779,889
|
$1,934,889
|
Paul
Will,
Vice
Chairman,
Executive
Vice
President,
CFO,
Assistant
Secretary, and
Treasurer
|
$300,000
|
$195,000
|
$289,676
|
$784,676
|
Chris
Hines,
President
and COO
|
$275,000
|
$180,000
|
$267,394
|
$722,394
|
Jonathan
Russell,
Executive
Vice President Logistics
and
President B2B Truckers
|
$225,000
|
$146,000
|
$231,736
|
$602,736
|
(1)
|
Assumes
one hundred percent (100%) achievement of target.
|
(2)
|
Values
stock options at the grant date Black-Scholes valuation and restricted
stock grants at the closing stock price on the grant
date.
|
A discussion of each element of
compensation included in the Program follows.
Base
Salary
As
previously discussed, the base salary of the CEO has been established under an
employment contract since 1994, subject to annual increases in accordance with
the consumer price index. Based on its evaluation, the Compensation
Committee determined that our CEO's salary was likely somewhat less than the
median salary of the All-Industry Group, taking into consideration the time
period since the study. The Compensation Committee considered our
CEO's long tenure, the change of presidents in fiscal 2008, and various other
factors and increased Mr. Russell's salary to $700,000, effective September 1,
2008. This was approximately $15,000 higher than the CPI adjustment
expected under his contract and became effective approximately four months
earlier that the contractual adjustment.
For our
other Named Executive Officers, the Compensation Committee determined that their
base salaries were significantly lower than the median level of the All-Industry
Group and significantly lower (as a percentage of the CEO's salary) than the
committee believed was warranted. Accordingly, the committee adopted
a three-year goal of raising the salaries of Messrs. Will, Hines, and Jonathan
Russell. As the first step toward this goal, the Compensation Committee
approved an annual base salary increase from $250,000 to $300,000 for Mr.
Will, from $250,000 to $275,000 for Mr. Hines, and from $200,000 to $225,000 for
Mr. Jonathan Russell, each effective September 1, 2008.
Annual
Cash Bonus
As part
of its evaluation, the Compensation Committee reviewed the incentive targets
used by other companies, many of which related to various measures of financial
returns and earnings per share. The Compensation Committee also
reviewed and discussed, with input from the CEO, various non-financial measures
that were important to our overall performance. The Compensation
Committee also reviewed information from investment banking sources concerning
the correlation between certain financial measures and increases in stockholder
value. Following this review, the Compensation Committee adopted a
bonus program based on a combination of financial and non-financial targets that
the Compensation Committee expects to provide an incentive to the executives to
manage multiple aspects of our business, regardless of whether the operating
environment makes achievement of one aspect difficult. The annual
cash bonus criteria and related reasons are as follows:
·
|
Return on Invested
Capital/Weighted Average Cost of Capital. The
Compensation Committee believes that stockholder value is more likely to
increase if our return on invested capital exceeds our weighted average
cost of capital over time. For fiscal 2008, our return on
invested capital is estimated to have been below our weighted average cost
of capital. Accordingly, the Compensation Committee intends to
adopt incentive targets for this criterion that move toward weighted
average cost of capital over time. This criterion encourages
management to deploy capital efficiently and return excess capital to the
stockholders. It also balances incentives based purely on
growth.
|
|
|
·
|
Earnings per
share. Earnings per share growth also correlates with
stockholder value, and the Compensation Committee believes that truckload
carriers are judged by many investors based on increases in earnings per
share.
|
|
|
·
|
Safety. We
have a strong record of safety, which has been ingrained in our
culture. Safety impacts our driver recruiting, retention, and
turnover, our insurance, physical damage and workers' compensation costs,
and our customer service. Because this is an important aspect
of our business and a somewhat controllable factor, the Compensation
Committee believes this is an important bonus
criterion.
|
|
|
·
|
Discretionary. The
discretionary criterion affords the Compensation Committee the flexibility
to reward our senior executive officers for contributions that may not be
captured in the other criteria. It also permits the recognition
of unique contributions. This can be important in times of
difficult operating conditions, when superior management may
mitigate
|
|
risks. The
size of the discretionary bonus, however, is limited to one-fourth of the
overall bonus target.
|
For
fiscal 2009, the Compensation Committee adopted the following target bonus
amounts for each of the officers listed below:
Name
and Position
|
Target
Bonus as a
Percentage
of Salary
|
Target
Bonus in
Dollars
|
Stephen
Russell,
Chairman
and CEO
|
65%
|
$455,000
|
|
|
|
Paul
Will,
Vice
Chairman, Executive Vice President,
CFO,
Treasurer, and Assistant Secretary
|
65%
|
$195,000
|
|
|
|
Chris
Hines,
President
and COO
|
65%
|
$180,000
|
|
|
|
Jonathan
Russell,
Executive
Vice President of Logistics and
President
Truckers B2B
|
65%
|
$146,000
|
The
Compensation Committee established the following criteria for attainment of the
fiscal year 2009 cash bonus:
Bonus
Criteria
|
Percentage
of Bonus
|
|
|
Return
on Invested Capital Target
|
30%
|
|
|
Earnings
Per Share Target
|
30%
|
|
|
Safety
Target
|
15%
|
|
|
Discretionary
Amount
|
25%
|
In
general, the Compensation Committee expects the target bonus amount to be in a
range of 50% to 70% of base salary for each Named Executive Officer, with the
CEO being the highest. For 2009, Named Executive Officers (other than
the CEO) were awarded at 65% of base salary because their salaries were not
fully adjusted to the median level of the All-Industry Group. For
each criterion other than the discretionary amount, the recipients may earn
between 0% and 200% of the portion of the Target Bonus Amount attributable to
that criterion, depending on the level of performance. The
Compensation Committee believes that the earnings per share target range and the
return on invested capital target range adopted for fiscal 2009 each represent
reasonable stretch goals, in that achieving 100% of the target will requires
exceeding the Company's results for fiscal 2008 and its internal budget for
2009. These goals were higher than they otherwise might have been
because of the use of 100% restricted stock grants in the equity portion of
incentive compensation.
Equity
Compensation
The
Compensation Committee believes that the equity compensation component of senior
executive compensation should be meaningfully aligned with increasing
stockholder value, while also exposing the holder to the risk of downward stock
prices and volatility. Over time, the committee expects to grant
equity compensation using a target mix of approximately 70% stock options and
30% restricted stock, which is expected to translate into approximately one-half
of the grant date value represented by each of stock options
and
restricted stock (considering stock options at their Black-Scholes value upon
issuance and restricted stock at the closing stock price on the date of
issuance).
Other
aspects of the equity compensation program include the following:
·
|
A
target run rate of equity grants equivalent to 1% to 2% of outstanding
shares granted per year, with a fair value (considering stock options at
their Black-Scholes value upon issuance and restricted stock at the
closing stock price on the date of issuance) equal to approximately 1% of
market capitalization annually.
|
|
|
·
|
A
target grant date value equal to approximately 1.0 to 1.5x base salary,
with the CEO having the highest multiple of salary.
|
|
|
·
|
Time
vesting of restricted stock over three years.
|
|
|
·
|
A
two-year holding requirement for all shares obtained upon exercise of
options and all vested shares of restricted stock, less any shares
required for exercise prices and taxes (the resulting number being
referred to as "Net Shares").
|
The
Compensation Committee considered various alternatives, including the use of
performance targets for restricted stock vesting. The Compensation
Committee determined, however, that the combination of restricted stock (which
provides upside potential and downside exposure) and stock options (which have
value only if the stock price increases) accomplishes much the same effect
without the accounting complexity of performance vesting stock.
For 2009,
the Compensation Committee made an exception to its expected use of a mix of
stock options and restricted stock, and granted 100% restricted
stock. The exception was related to the number of shares remaining
under the Company's Incentive Plan. The plan lacked sufficient shares
to grant options and restricted stock at the target equity compensation
level. The Company is requesting an increase in the number of shares
reserved for the Incentive Plan at the Annual Meeting. In part
because of the use of 100% restricted stock grants, the Compensation Committee
granted equity compensation at the lower end of the expected range in terms of
multiple of salary for each of the senior executive officers.
On August
25, 2008, after meetings of the Compensation Committee on August 6 and August
22, 2008, the Compensation Committee made restricted stock awards of 65,592,
24,363, 22,489, 19,490, and 3,500 to Messrs. Stephen Russell, Will, Hines,
Jonathan Russell, and Core, respectively. The restricted stock awards
vest one-third on each of the first three anniversaries of the grant date,
conditioned on continued employment. The Net Shares must be held for
a minimum of two years after vesting.
The
following table sets forth information concerning the total compensation for
fiscal 2008 awarded to, earned by, or paid to our Named Executive
Officers.
Name
and
Principal
Position
|
Year
|
Salary(1)
($)
|
Bonus(2)
($)
|
Stock
Awards(3)
($)
|
Option
Awards(5)
($)
|
Non-Equity
Incentive
Plan
Compensation(6)
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation(7)
($)
|
Total
($)
|
Stephen
Russell,
Chairman
and
CEO
|
2008
2007
|
638,258
651,403
|
320,000
150,000
|
249,185
249,185
|
321,618
337,648
|
---
---
|
---
---
|
46,234
47,551
|
1,575,295
1,435,787
|
Paul
Will,
Vice
Chairman,
Executive
Vice
President,
CFO,
Assistant
Secretary,
and
Treasurer
|
2008
2007
|
248,000
229,325
|
200,000
100,000
|
97,631
97,631
|
23,760
77,007
|
---
---
|
---
---
|
17,214
9,369
|
586,604
513,332
|
Chris
Hines,
President
and
COO(8)
|
2008
2007
|
239,883
---
|
180,000
---
|
34,831(4)
---
|
23,879
---
|
---
---
|
---
---
|
66,988
---
|
545,581
---
|
Jonathan
Russell,
Executive
Vice
President
Logistics
and
President
TruckersB2B(8)
|
2008
2007
|
207,142
---
|
135,000
---
|
23,743
---
|
40,980
---
|
68,292
---
|
---
---
|
12,180
---
|
487,337
---
|
Kenneth
Core,
Vice
President and
Secretary
|
2008
2007
|
125,092
122,400
|
15,000
15,000
|
10,999
11,011
|
18,998
13,209
|
98,250
182,476
|
---
---
|
4,206
2,962
|
272,545
347,058
|
(1)
|
Salary
earned for Named Executive Officers may differ from annualized salary
approved due to timing of pay periods.
|
(2)
|
See "Executive
Compensation – Compensation Discussion and Analysis – Elements of
Compensation – Fiscal 2008 Compensation Program – Annual Cash Bonus
Program" for a description of the fiscal 2008 bonus
amounts.
|
(3)
|
This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to the 2008 and 2007 fiscal years for the
fair value of stock awards granted to each Named Executive
Officer, in accordance with SFAS 123R. Pursuant to SEC
rules, the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. For additional
information on the valuation assumptions with respect to the 2008 grants,
refer to note 7 of our consolidated financial statements as provided in
the Form 10-K for the fiscal year ended June 30, 2008, as filed with the
SEC on August 28, 2008. For information on the valuation
assumptions with respect to grants made prior to fiscal 2008, refer to the
notes of our financial statements as provided in the Form 10-K for the
respective year-end. See the Grants of
Plan-Based Awards table for information on awards made in fiscal
2008. These amounts reflect our accounting expense for these
awards and do not correspond to the actual value that will be recognized
by the Named Executive Officers.
|
(4)
|
On
April 30, 2008, Mr. Hines entered an agreement with the Company whereby
Mr. Hines forfeited 108,000 stock options in exchange for a restricted
stock award of 32,000 shares. See "Executive
Compensation – Compensation Discussion and Analysis – Elements of
Compensation – Fiscal 2008 Compensation Program – Equity Compensation" for
additional information regarding this exchange.
|
(5)
|
This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to the 2008 and 2007 fiscal years for the
fair value of stock options granted to each Named Executive
Officer, in accordance with SFAS 123R. Pursuant to SEC
rules, the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. For additional
information on the valuation assumptions with respect to the 2008 grants,
refer to note 7 of our consolidated financial statements as provided in
the Form 10-K for the fiscal year-ended June
30,
|
|
2008,
as filed with the SEC on August 28, 2008. For information on the
valuation assumptions with respect to grants made prior to 2008, refer to
the notes of our financial statements as provided in the Form 10-K for the
respective year-end. See the Grants of
Plan-Based Awards table for information on awards made in fiscal
2008. These amounts reflect our accounting expense for these
awards, and do not correspond to the actual value that will be recognized
by the Named Executive Officers.
|
(6)
|
This
column represents the dollar amount recognized for financial statement
reporting in accordance with an alternative fixed compensation arrangement
entered between the Company and each of Messrs. Core and Jonathan Russell
during the first quarter of fiscal 2007. See "Executive
Compensation – Compensation Discussion and Analysis – Elements of
Compensation – Fiscal 2008 Compensation Program – Other Compensation" for
a complete description of these arrangements.
|
(7)
|
See
the All Other Compensation Table for additional
information.
|
(8)
|
The
executive officer was not a Named Executive Officer during fiscal
2007.
|
The following table describes each
component of the "All Other Compensation" column in the Summary Compensation
Table.
Name
and
Principal
Position
|
Year
|
Perquisites
and
Other
Personal
Benefits
($)
|
Insurance
Premiums
($)
|
Company
Contributions
to
Excess
Plan and
401(k)
Plans
($)
|
Severance
Payments/
Accruals
($)
|
Total
($)
|
Stephen
Russell,
Chairman
and CEO
|
2008
|
18,375
|
21,640(1)
|
6,219
|
---
|
46,234
|
Paul
Will,
Vice
Chairman,
Executive
Vice
President,
CFO,
Assistant
Secretary,
and
Treasurer
|
2008
|
6,900
|
4,196
|
6,118
|
---
|
17,214
|
Chris
Hines,
President
and COO
|
2008
|
13,125
|
1,508
|
2,355
|
50,000(2)
|
66,988
|
Jonathan
Russell,
Executive
Vice
President
Logistics
and
President
TruckersB2B
|
2008
|
8,322
|
1,824
|
2,034
|
---
|
12,180
|
Kenneth
Core,
Vice
President and
Secretary
|
2008
|
---
|
1,230
|
2,976
|
---
|
4,206
|
(1)
|
This
amount represents: (i) an insurance premium payment of $19,420 for a
$2,000,000 term life insurance policy, (ii) $2,010 in long-term disability
premium payments, and (iii) $210 in execu-care medical premium
payments.
|
(2)
|
This
amount represents a relocation allowance given to Mr.
Hines.
|
See "Executive Compensation –
Compensation Discussion and Analysis" for a complete description of our
compensation plans pursuant to which the amounts listed under the Summary
Compensation Table were paid or awarded and the criteria for such award or
payment.
The following table sets forth
information concerning each grant of an award made to our Named Executive
Officers during fiscal 2008.
|
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards
|
All
Other
Stock
Awards:
|
All
Other
Option
Awards:
|
|
|
Name
and
Principal
Position
|
Grant
Date
|
Threshold
($)
|
Target(1)
($)
|
Maximum
($)
|
Number
of
Shares
of
Stock
or
Units
(#)
|
Number
of
Securities
Underlying
Options
(#)
|
Exercise
or
Base
Price
of
Option
Awards(3)
($/Sh)
|
Grant
Date Fair
Value
of Stock
and
Option
Awards(4)
($)
|
Stephen
Russell,
Chairman
and
CEO
|
10/26/07
|
---
|
---
|
---
|
---
|
308,284
|
8.67
|
1,103,656
|
Paul
Will,
Vice
Chairman,
Executive
Vice
President,
CFO,
Assistant
Secretary,
and
Treasurer
|
10/26/07
|
---
|
---
|
---
|
---
|
147,206
|
8.67
|
526,997
|
Chris
Hines,
President
and
COO
|
10/26/07
4/30/08
|
---
---
|
---
---
|
---
---
|
---
32,000(2)
|
40,000
---
|
8.67
---
|
143,200
329,280
|
Jonathan
Russell,
Executive
Vice
President
Logistics
and
President
TruckersB2B
|
7/28/06
10/26/07
|
---
---
|
34,146
---
|
---
---
|
---
---
|
---
25,000
|
---
8.67
|
---
89,500
|
Kenneth
Core,
Vice
President
and
Secretary
|
7/28/06
10/26/07
|
---
---
|
20,488
---
|
---
---
|
---
---
|
---
10,000
|
---
8.67
|
---
35,800
|
(1)
|
This
column represents, as of June 30, 2008, the payments due to the executive
officer with respect to the alternative fixed compensation arrangement
entered between the Company and the executive officer. See
"Executive Compensation – Compensation Discussion and Analysis – Elements
of Compensation – Fiscal 2008 Compensation Program – Other Compensation"
for a complete description of these arrangements.
|
(2)
|
On
April 30, 2008, Mr. Hines entered an agreement with the Company whereby
Mr. Hines forfeited 108,000 stock options in exchange for a restricted
stock award of 32,000 shares. See "Executive
Compensation – Compensation Discussion and Analysis – Elements of
Compensation – Fiscal 2008 Compensation Program – Equity Compensation" for
additional information regarding this exchange.
|
(3)
|
This
column represents the exercise price for the stock awards granted, which
was the closing price of our stock on the grant date.
|
(4)
|
This
column represents the grant date fair value of the equity awards under
SFAS 123R granted to the Named Executive Officers during fiscal
2008. The fair value was calculated using the Black Scholes
value of our common stock on the grant date. The fair value of
the equity awards is accounted for in accordance with SFAS
123R. For additional information on the valuation assumptions,
refer to note 7 of our consolidated financial statements in the Form 10-K
for the year-ended June 30, 2008, as filed with the SEC on August 28,
2008. These amounts reflect our accounting expense and do not
correspond to the actual value that will be recognized by the Named
Executive Officers.
|
See "Executive Compensation –
Compensation Discussion and Analysis" for a complete description of the equity
grants made during fiscal year 2008.
The following table sets forth
information concerning all stock option grants and stock awards held by our
Named Executive Officers as of June 30, 2008. All stock option grants
and equity incentive plan awards are in shares of our common stock.
|
|
Option
Awards
|
Stock
Awards
|
Name
and
Principal
Position
|
Grant
Date
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Equity
incentive plan
awards:
number of
unearned
shares, units
or
other rights that have
not
vested
(#)
|
Equity
incentive
plan
awards:
market
or payout
value
of unearned
shares,
units or
other
rights that
have
not vested
($)
|
Stephen
Russell,
Chairman
and CEO
|
10/28/04
|
---
|
---
|
---
|
---
|
19,687(1)
|
26,577
|
1/12/06
|
141,750
|
141,750(2)
|
12.81
|
1/12/16
|
---
|
---
|
1/12/06
|
---
|
---
|
---
|
---
|
27,000(2)
|
269,730
|
10/26/07
|
---
|
308,284(3)
|
8.67
|
10/26/17
|
---
|
---
|
Paul
Will,
Vice
Chairman,
Executive
Vice
President,
CFO,
Assistant
Secretary,
and
Treasurer
|
10/28/04
|
---
|
---
|
---
|
---
|
14,062(1)
|
18,984
|
1/12/06
|
42,525
|
42,525(2)
|
12.81
|
1/12/16
|
---
|
---
|
1/12/06
|
---
|
---
|
---
|
---
|
8,100(2)
|
80,919
|
10/26/07
|
---
|
147,206(3)
|
8.67
|
10/26/17
|
---
|
---
|
Chris
Hines,
President
and COO
|
10/26/07
|
---
|
40,000(3)
|
8.67
|
10/26/17
|
---
|
---
|
4/30/08
|
---
|
---
|
---
|
---
|
32,000(4)
|
319,680
|
Jonathan
Russell,
Executive
Vice
President
Logistics
and
President
TruckersB2B
|
2/2/01
|
52,500
|
---
|
1.83
|
2/2/11
|
---
|
---
|
10/28/04
|
---
|
---
|
---
|
---
|
5,625(5)
|
56,194
|
1/12/06
|
9,450
|
9,450(2)
|
12.81
|
1/12/16
|
---
|
---
|
1/12/06
|
---
|
---
|
---
|
---
|
1,800(2)
|
17,982
|
1/31/07
|
---
|
---
|
---
|
---
|
5,250(6)
|
52,448
|
10/26/07
|
---
|
25,000(3)
|
8.67
|
10/26/17
|
---
|
---
|
Kenneth
Core,
Vice
President and
Secretary
|
6/26/00
|
4,500
|
---
|
6.22
|
6/26/10
|
---
|
---
|
9/7/01
|
2,250
|
---
|
1.71
|
9/7/11
|
---
|
---
|
10/1/01
|
2,250
|
---
|
1.71
|
10/1/11
|
---
|
---
|
1/12/06
|
4,725
|
4,725(2)
|
12.81
|
1/12/16
|
---
|
---
|
1/12/06
|
---
|
---
|
---
|
---
|
900(2)
|
8,991
|
1/31/07
|
---
|
---
|
---
|
---
|
2,250(6)
|
22,477
|
10/26/07
|
---
|
10,000(3)
|
8.67
|
10/26/17
|
---
|
---
|
(1)
|
This
amount represents unexercised SARs granted to the Named Executive
Officer. The grant vests over a four year period (25% vested on
10/28/05, 25% vested on 10/28/06, 25% vested on 10/28/07, and 25% vests on
10/28/08).
|
(2)
|
This
amount represents unexercised options and unvested restricted stock,
respectively, granted to the Named Executive Officer. The
options and restricted stock, respectively, vest over a four year period
(25% vested on 1/12/07, 25% vested on 1/12/08, 25% vests on 1/12/09, and
25% vests on 1/12/10).
|
(3)
|
This
amount represents unexercised options granted to the Named Executive
Officer. The options vest over a four year period (25% vested
on 10/26/08, 25% vests on 10/26/09, 25% vests on 10/26/10, and 25% vests
on 10/26/11).
|
(4)
|
This
amount represents unvested restricted stock granted to the Named Executive
Officer. On April 30, 2008, Mr. Hines entered an agreement with
the Company whereby Mr. Hines forfeited 108,000 stock options in exchange
for an unvested restricted stock award of 32,000 shares. The
grant vests over a five year period (20% vested on 8/8/08, 20% vests on
8/8/09, 20% vests on 8/8/10, 20% vests on 8/8/11 and 20% vests on 8/8/12).
See "Executive
Compensation – Compensation Discussion and Analysis – Elements of
Compensation – Fiscal 2008 Compensation Program – Equity Compensation" for
additional information regarding this exchange.
|
(5)
|
This
amount represents unvested restricted stock granted to the Named Executive
Officer. The grant vests over a four year period (25% vested on
10/28/05, 25% vested on 10/28/06, 25% vests on 10/28/07 and 25% vests on
10/28/08).
|
(6)
|
This
amount represents unvested restricted stock granted to the Named Executive
Officer. The grant vests over a four year period (25% vested on
1/31/08, 25% vests on 1/31/09, 25% vests on 1/31/10 and 25% vests on
1/31/11).
|
The following table sets forth
information concerning the vesting of certain option and stock awards in fiscal
2008 for our Named Executive Officers.
|
Option
Awards
|
Stock
Awards(1)
|
Name
and
Principal
Position
|
Number
of Shares
Acquired
on Exercise
(#)
|
Value
Realized on
Exercise
($)
|
Number
of Shares
Acquired
on
Vesting
(#)
|
Value
Realized on
Vesting
($)
|
Stephen
Russell,
Chairman
and CEO
|
185,625(2)
|
1,509,994
|
27,563
|
228,150
|
Paul
Will,
Executive
Vice
President,
CFO,
Assistant
Secretary,
and
Treasurer
|
---
|
---
|
12,487
|
102,866
|
Chris
Hines,
President
and COO
|
---
|
---
|
680
|
10,010
|
Jonathan
Russell,
Executive
Vice
President
Logistics
and
President
TruckersB2B
|
---
|
---
|
8,275
|
73,024
|
Kenneth
Core,
Vice
President and
Secretary
|
4,500(2)
|
58,725
|
1,200
|
10,935
|
(1)
|
The
Named Executive Officer acquired shares when a portion of the relevant
stock award vested in fiscal 2008.
|
(2)
|
Exercise
detail.
|
Name
and
Principal
Position
|
Exercise
Date
|
Grant
Date
|
Number
of
Options
Exercised
|
Number
of Shares
Acquired
on
Vesting
|
Grant
Price
($)
|
Market
Price on
Exercise
Date
($)
|
Stephen
Russell,
Chairman
and CEO
|
7/11/07
9/26/07
10/30/07
1/7/08
1/12/08
|
8/1/97
4/4/02
10/30/03
4/4/02
1/12/06
|
28,125
100,000
---
57,500
---
|
---
---
14,063
---
13,500
|
5.33
2.85
5.42
2.85
12.81
|
16.61
12.03
8.16
7.77
8.40
|
Paul
Will,
Executive
Vice President,
CFO,
Assistant Secretary,
and
Treasurer
|
10/30/07
1/12/08
|
10/30/03
1/12/06
|
---
---
|
8,437
4,050
|
5.42
12.81
|
8.16
8.40
|
Chris
Hines, President and
COO
|
8/3/07
|
1/31/07
|
---
|
680
|
16.79
|
14.72
|
Jonathan
Russell, Executive
Vice
President Logistics
and
President TruckersB2B
|
10/28/07
1/12/08
1/31/08
|
10/28/04
1/12/06
1/31/07
|
---
---
---
|
5,625
900
1,750
|
8.64
12.81
16.75
|
8.67
8.40
9.54
|
Kenneth
Core,
Vice
President and
Secretary
|
8/3/07
1/12/08
1/31/08
|
11/30/00
1/12/06
1/31/07
|
4,500
---
---
|
---
450
750
|
1.67
12.81
16.75
|
13.05
8.40
9.54
|
The following table sets forth
information concerning the compensation of our non-employee directors for fiscal
2008.
Name
|
Fees
Earned or Paid in Cash(1)
($)
|
Stock
Awards(2)
($)
|
Option
Awards(6)(7)
($)
|
Total
($)
|
Anthony
Heyworth
|
37,500
|
65,000(3)
|
22,430
|
124,930
|
Catherine
Langham
|
26,250
|
65,000(4)
|
---
|
91,250
|
Michael
Miller
|
42,500
|
65,000(5)
|
22,430
|
129,930
|
(1)
|
This
column represents the amount of cash compensation earned in fiscal 2008
for Board of Directors and committee service.
|
(2)
|
This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to the 2008 fiscal year for the fair value
of stock awards granted to each non-employee director in 2008, in
accordance with SFAS 123R. Fair value is calculated using the
closing price of our stock on the date of grant. Pursuant to
SEC rules, the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. For additional
information on the valuation assumptions with respect to the 2008 grants,
refer to note 7 of our consolidated financial statements as provided in
the Form 10-K for the fiscal year-ended June 30, 2008, as filed with the
SEC on August 28, 2008. For information on the valuation assumptions
with respect to grants made prior to 2008, refer to the notes of our
financial statements as provided in the Form 10-K for the respective
year-end. These amounts reflect our accounting expense for
these awards, and do not correspond to the actual value that will be
recognized by the Named Executive Officer.
|
(3)
|
On
November 9, 2007, Mr. Heyworth received 9,142 shares of our common stock,
determined by dividing the current year's director compensation subject to
payment in common stock, by the closing market price of our common stock
on the date of grant, or $7.11 per share. These shares are
subject to certain holding and other restrictions.
|
(4)
|
On
November 9, 2007, Ms. Langham received 9,142 shares of our common stock,
determined by dividing the current year's director compensation subject to
payment in common stock, by the closing market price of our common stock
on the date of grant, or $7.11 per share. These shares are
subject to certain holding and other restrictions.
|
(5)
|
On
November 9, 2007, Mr. Miller received 9,142 shares of our common stock,
determined by dividing the current year's director compensation subject to
payment in common stock, by the closing market price of our common stock
on the date of grant, or $7.11 per share. These shares are
subject to certain holding and other restrictions.
|
(6)
|
This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to the 2008 fiscal year for the fair value
of stock awards granted to each director in accordance with SFAS
123R. Pursuant to SEC rules, the amounts shown exclude the
impact of estimated forfeitures related to service-based vesting
conditions. For additional information on the valuation
assumptions with respect to the 2008 grants, refer to note 7 of our
consolidated financial statements as provided in the Form 10-K for the
fiscal year-ended June 30, 2008, as filed with the SEC on August 28,
2008. For information on the valuation assumptions with respect to
grants made prior to 2008, refer to the notes of our financial statements
as provided in the Form 10-K for the respective year-end. These
amounts reflect our accounting expense for these awards, and do not
correspond to the actual value that will be recognized by the Named
Executive Officer.
|
(7)
|
As
of June 30, 2008, each of Messrs. Heyworth and Miller had 16,875
outstanding option awards under the Incentive Plan, with grant date fair
values of $69,437, and Ms. Langham had no outstanding option
awards. These amounts exclude outstanding options under the
1994 Plan as these amounts have been calculated in accordance with SFAS
123R. As of June 30, 2008, under the Incentive Plan and the
1994 Plan: (i) Mr. Heyworth had 51,188 outstanding option awards; (ii) Mr.
Miller had 26,438 outstanding option awards; and (iii) Ms. Langham had no
outstanding option awards.
|
The target compensation for the year
ending with the 2008 Annual Meeting was approximately $100,000 per non-employee
director, plus fees for committee service. On August 22, 2008, we
adopted a new compensation program (the "Non-Employee Director Compensation
Program") for our three non-employee directors, Messrs. Miller and Heyworth and
Ms. Langham, effective at the next annual meeting of
stockholders. Under the Non-Employee Director Compensation Program,
target annual compensation will be approximately $110,000 per director, plus
fees for committee service. For fiscal 2009, cash compensation under
the Non-Employee Director Compensation Program will be $45,000, plus $2,500 for
serving on a committee, $2,500 for serving as a committee chair, and $5,000 for
serving as lead director. There are no meeting fees. In
addition, we established equity compensation of approximately $65,000,
consisting of number of shares of restricted stock equal to $65,000 divided by
the closing stock price on the date of the grant (rounded to the nearest
share). Under the Non-Employee Director Compensation Program, our
non-employee directors will receive restricted stock awards in the amount of
9,142 shares of the Company's common stock on the date of the Annual
Meeting. The restricted stock awards will vest entirely on the date
of the 2009 Annual Meeting of Stockholders of the Company. The shares
must be held for a minimum of two years following the vesting date so long as
the recipient remains a director.
The following table sets forth, as of
August 28, 2008, the number and percentage of outstanding shares of our common
stock beneficially owned by (i) each person known by us to beneficially own more
than five percent (5%) of the outstanding shares of the common stock; (ii) each
of our Named Executive Officers, (iii) each of our directors, and (iv) all of
our directors and executive officers as a group. Share numbers and
other information for FMR LLC ("FMR"), Royce & Associates, LLC ("Royce"),
Thompson, Siegel & Walmsely, Inc. ("Thompson"), and Wellington Management
Company, LLP ("Wellington"), included in the following table and notes are
solely based upon Schedules 13G and 13G/A filed by FMR, Royce, Thompson, and
Wellington with the SEC on February 14, 2008, March 6, 2008, February 14, 2008,
and February 14, 2008, respectively. We had issued and outstanding
21,871,660 shares of common stock as of August 28, 2008.
Title
of Class
|
Name
and Address of Beneficial Owner(1)
|
Amount
and
Nature
of Beneficial Ownership
(2)
|
Percent
of
Class(2)
|
Common
Stock
|
Stephen
Russell
|
1,296,982(3)
|
5.87%
|
Common
Stock
|
Paul
Will
|
330,827(4)
|
1.51%
|
Common
Stock
|
Chris
Hines
|
71,529(5)
|
*
|
Common
Stock
|
Jonathan
Russell
|
131,676(6)
|
*
|
Common
Stock
|
Kenneth
Core
|
38,025(7)
|
*
|
Common
Stock
|
Michael
Miller
|
64,175(8)
|
*
|
Common
Stock
|
Anthony
Heyworth
|
67,550(9)
|
*
|
Common
Stock
|
Catherine
Langham
|
9,142(10)
|
*
|
Common
Stock
|
FMR
LLC
|
2,376,315(11)
|
10.86%
|
Common
Stock
|
Royce
& Associates, LLC
|
2,191,500(12)
|
10.02%
|
Common
Stock
|
Thompson,
Siegel & Walmsley, Inc.
|
1,198,193(13)
|
5.48%
|
Common
Stock
|
Wellington
Management Company, LLP
|
3,319,680(14)(15)
|
15.18%
|
Common
Stock
|
All
directors and Named Executive
Officers
as a group (8 persons)
|
2,009,906
|
9.00%
|
*
|
Represents
beneficial ownership of not more than 1% of the outstanding common
stock.
|
(1)
|
The
address of each Named Executive Officer and other directors is 9503 East
33rd Street, One Celadon Drive, Indianapolis, Indiana
46235. The address of FMR is 82 Devonshire Street, Boston,
Massachusetts 02109. The address of Royce is 1414 Avenue of the
Americas, New York, New York 10019. The address of Thompson is
6806 Paragon Place, Suite 300, Richmond, Virginia 23230. The
address of Wellington is 75 State Street, Boston, Massachusetts
02109.
|
(2)
|
Beneficial
ownership is calculated in accordance with the rules of the
SEC. A person is deemed to have "beneficial ownership" of any
security that he or she has a right to acquire within sixty days following
August 28, 2008. Shares of common stock underlying stock
options that are currently exercisable or will be exercisable within sixty
days following August 28, 2008 are deemed to be outstanding for purposes
of computing the percentage ownership of the person holding such options
and the percentage ownership of all executive officers and directors as a
group, but are not deemed outstanding for purposes of
computing
|
|
the
percentage ownership of any other person or entity. As a
result, the denominator used in calculating beneficial ownership
percentages among our stockholders and management may
differ. As of August 28, 2008, the number of shares of common
stock underlying stock options currently exercisable or that will become
exercisable within sixty days following August 28, 2008 were held by the
following individuals: Mr. Stephen Russell – 218,821; Mr. Will
– 79,327; Mr. Hines – 10,000; Mr. Jonathan Russell – 68,199; Mr. Core –
16,225; Mr. Miller – 26,438; and Mr. Heyworth - 51,188
shares.
|
(3)
|
Includes:
(a) 1,036,161 shares held directly by Mr. Stephen Russell; (b) 218,821
shares covered by stock options granted to Mr. Stephen Russell that are
currently exercisable or that will become exercisable within sixty days;
and (c) 42,000 shares held by Mr. Stephen Russell's spouse, which Mr.
Stephen Russell disclaims beneficial ownership of for purposes of Section
16 or for any other purpose.
|
(4)
|
Includes:
(a) 251,500 shares held directly by Mr. Will; and (b) 79,327 shares
covered by stock options granted to Mr. Will that are currently
exercisable or that will become exercisable within sixty
days.
|
(5)
|
Includes:
(a) 61,529 shares held directly by Mr. Hines; and (b) 10,000 shares
covered by stock options granted to Mr. Hines that are currently
exercisable or that will become exercisable within sixty
days.
|
(6)
|
Includes:
(a) 56,590 shares held directly by Mr. Jonathan Russell; (b) 4,000 shares
held jointly by Mr. Jonathan Russell and his spouse; (c) 68,199 shares
covered by stock options granted to Mr. Jonathan Russell that are
currently exercisable or that will become exercisable within sixty days;
and (d) 2,887 shares held by Mr. Jonathan Russell's son, which Mr.
Jonathan Russell disclaims beneficial ownership of for purposes of Section
16 or for any other purpose.
|
(7)
|
Includes:
(a) 21,800 shares held directly by Mr. Core; and (b) 16,225 shares covered
by stock options granted to Mr. Core that are currently exercisable or
that will become exercisable within sixty days.
|
(8)
|
Includes:
(a) 37,737 shares held directly by Mr. Miller; and (b) 26,438 shares
covered by stock options granted to Mr. Miller that are currently
exercisable or that will become exercisable within sixty
days.
|
(9)
|
Includes:
(a) 16,362 shares held directly by Mr. Heyworth; and (b) 51,188 shares
covered by stock options granted to Mr. Heyworth that are currently
exercisable or that will become exercisable within sixty
days.
|
(10)
|
Represents
9,142 shares held directly by Ms. Langham.
|
(11) |
Represents 2,376,315 shares beneficially owned by FMR over which it
has sole dispositive power.
|
(12)
|
Represents
2,191,500 shares beneficially owned by Royce over which it has sole voting
and dispositive power.
|
(13)
|
Includes:
(a) 997,218 shares beneficially owned by Thompson over which it has sole
voting power, and (b) 200,975 shares beneficially owned by Thompson over
which it has shared voting power.
|
(14)
|
Aggregate
amount beneficially owned as reported in Item 9 of the Schedule 13G/A
filed by Wellington on February 14, 2008.
|
(15)
|
As
reported in Item 9 of the Schedule 13G/A filed by Wellington on February
14, 2008, the amount beneficially owned by Wellington includes: (a)
886,680 shares beneficially owned by Wellington over which it has shared
voting power, and (b) 3,265,480 shares beneficially owned by Wellington
over which it has shared dispositive
power.
|
Our Audit
Committee has established procedures relating to the review, approval, or
ratification of any transaction, or any proposed transaction, in which we were
or are to be a participant and the amount involved exceeds $120,000, and in
which any "related person" (as that term is defined in Instruction 1 to Item
402(a) of Regulation S-K) had or will have a direct or indirect material
interest ("Interested Transactions"). Upon review of the material
facts of all Interested Transactions, the Audit Committee will either approve or
disapprove the Interested Transactions, subject to certain exceptions, by taking
into account, among other factors it deems appropriate, whether the terms are
arms'-length and the extent of the related person's interest in the
transaction. No director may participate in any discussion or
approval of an Interested Transaction for which he is a related
party. If an Interested Transaction will be ongoing, the Audit
Committee may establish guidelines for our management to follow in its ongoing
dealings with the related party and then at least annually must review and
assess ongoing relationships with the related party. Although not
evidenced in writing, we feel these policies and procedures best serve the
Company and therefore we follow them closely. Each year our directors
and officers are asked to disclose any Interested Transaction and are reminded
that Interested Transactions should be brought to the Audit Committee's
attention prior to consummation so any such transactions or relationships may be
reviewed. The following Interested Transaction was subject to such
review, approval, or ratification:
During
fiscal 2007, we reviewed and approved a transaction in which we were a
participant, the amount involved exceeded $120,000, and an individual who is
considered a related person under Item 404(a) of Regulation S-K had a direct
material interest. Since August 2007, the Company has used rent-free,
an approximately nine acre parcel of land located on Interstate 37 near
Indianapolis, Indiana, to evaluate the prospects for operating a used-equipment
business to dispose of a portion of its own tractors and trailers in the
ordinary course of business. The Company intends to continue the
equipment sales business and found the location to be favorable. The
land was owned by Will LLC, an Indiana Limited Liability Company owned and
managed by Mrs. Will, the wife of Paul Will, the Company's Vice Chairman of the
Board, Executive Vice President, Chief Financial Officer, Treasurer, and
Assistant Secretary ("Will LLC"). On June 20, 2008, the Company
purchased the parcel from Will LLC at a cost of $97,500 per acre, or a total of
$821,222. Prior to entry into the purchase agreement with us, Will
LLC had received written offers to purchase the parcel from independent third
parties at prices of $95,000 and $100,000 per acre,
respectively. Mrs. Will, as the sole member of Will LLC, had a
financial interest in the transaction equal to the total purchase
price. The transaction was reviewed and approved in advance by our
Audit Committee of the Board of Directors.
Other
than as set forth herein, we are not aware of any substantial interest, direct
or indirect, by way of beneficial ownership of securities or otherwise, of any
person who has been our director or executive officer at any time since the
beginning of the Company's last fiscal year or any proposed nominee for election
as a director, or any associate of any of the foregoing, in any matter to be
acted upon at the Annual Meeting, other than the election of
directors. All of the Company's employees, directors, and consultants
(as such terms are defined in the Incentive Plan) are eligible to receive equity
awards pursuant to the Incentive Plan. See "Executive Compensation –
Compensation Discussion and Analysis" above and "Proposal 2 Amendment to the
Celadon Group, Inc. 2006 Omnibus Incentive Plan" below for a complete
description of our Incentive Plan and the proposal to amend it.
We engaged KPMG as our independent
registered public accounting firm during fiscal 2008 and expect to continue to
engage KPMG for fiscal 2009. A representative of KPMG is expected to
be present at the Annual Meeting and to be available to respond to appropriate
questions, and such representative will have an opportunity to make a statement
at the Annual Meeting if he or she desires to do so.
KPMG billed us the following amounts
for services provided in the following categories during the fiscal years ended
June 30, 2008 and 2007.
|
|
Fiscal
2008
|
|
|
Fiscal
2007
|
|
Audit Fees(1)
|
|
$ |
295,000 |
|
|
$ |
310,000 |
|
Audit-Related Fees(2)
|
|
|
0 |
|
|
|
0 |
|
Tax Fees(3)
|
|
|
0 |
|
|
|
0 |
|
All Other Fees(4)
|
|
|
0 |
|
|
|
0 |
|
Total
|
|
$ |
295,000 |
|
|
$ |
310,000 |
|
(1)
|
"Audit
Fees" represents the aggregate fees billed for professional services
rendered by KPMG for the audit of our annual financial statements and
audit of internal controls and review of financial statements included in
our quarterly reports on Form 10-Q, and services that are normally
provided by an independent registered public accounting firm in connection
with statutory or regulatory filings or engagements for that fiscal
year.
|
(2)
|
"Audit-Related
Fees" represents aggregate fees billed, other than Audit Fees, for
assurance and related services by the principal independent registered
public accounting firm that are reasonably related to the performance of
the audit or review of our financial statements and internal control over
financial reporting. We were not billed any Audit-Related Fees
in fiscal 2008 or fiscal 2007.
|
(3)
|
"Tax
Fees" represents the aggregate fees billed for professional services
rendered by KPMG for tax compliance, tax advice, and tax
planning. We were not billed any Tax Fees in fiscal 2008 or
fiscal 2007.
|
(4)
|
All
Other Fees represent the aggregate fees billed for products and services
provided by KPMG, other than Audit Fees, Audit-Related Fees, and Tax
Fees. We were not billed for any Other Fees in fiscal 2008 or
fiscal 2007.
|
The Audit
Committee maintains a policy pursuant to which it pre-approves all audit
services and permitted non-audit services to be performed by the independent
registered public accounting firm in order to assure that the provision of such
services is compatible with maintaining the firm's
independence. Under this policy, the Audit Committee pre-approves
specific types of categories of engagements constituting audit, audit-related,
tax, or other permissible non-audit services to be provided by the independent
registered public accounting firm. Pre-approval of an engagement for
a specific type or category of services generally is provided for up to one year
and typically is subject to a budget comprised of a range of anticipated fee
amounts for the engagement. Management and the independent registered
public accounting firm are required to periodically report to the Audit
Committee regarding the extent of services provided by the firm in accordance
with the annual pre-approval, and the fees for the services performed to
date. If management believes that a new service, or the expansion of
a current service, provided by the independent registered public accounting firm
is necessary or desirable then such new or expanded services are presented to
the Audit Committee for its review and approval prior to the engagement of the
independent registered public accounting firm to render such
services. No audit-related, tax, or other non-audit services were
approved by our Audit Committee pursuant to the de minimus exception to the
pre-approval requirement under Rule 2-01(c)(7)(i)(C)
of Regulation S-X during the fiscal year ended June 30, 2008.
AMENDMENT
TO THE
CELADON
GROUP, INC. 2006 OMNIBUS INCENTIVE PLAN
At the
Annual Meeting, our Stockholders are being asked to approve a proposed amendment
(the "Amendment") to the Celadon Group, Inc. 2006 Omnibus Incentive Plan (the
"Incentive Plan") to increase the number of shares of Common Stock reserved for
issuance thereunder by 1,000,000 shares, which would result in approximately
1,023,454 shares being reserved for future awards following such
increase. Upon the recommendation of the Compensation Committee, the
Board of Directors has approved the Amendment and has directed that it be
submitted for stockholder approval at the Annual Meeting.
On
October 27, 2005, our Board of Directors approved the Incentive Plan subject to
the approval of our stockholders, which approval was granted on January 12,
2006. Unless otherwise defined herein, capitalized terms used herein
have the meanings given such terms in the Incentive Plan.
The
purposes of the Incentive Plan are to: (i) provide our employees with an
opportunity to purchase Common Stock in a manner that reinforces our performance
goals and provides an incentive to continue employment with us and work toward
our long-term growth, development, and financial success; (ii) attract,
motivate, and retain qualified executive officers by providing them with
long-term incentives and reward such employees by the issuance of equity grants
so that these directors and employees will contribute to and participate in our
long-term performance; and (iii) align our executives' and stockholders' short-
and long-term interests by creating a strong and direct link between executive
pay and stockholder return. In furtherance of these purposes, the
Incentive Plan authorizes the grant of stock options and restricted stock,
subject to applicable law, to the Company's employees, directors, and
consultants.
When
originally adopted, there were 750,000 shares available under the Incentive
Plan. The Board of Directors declared 3-for-2 stock splits on all
shares of our outstanding common stock effective February 15, 2006 and June 15,
2006. The Incentive Plan provides for adjustment in the number of
shares available for issuance upon such events. Giving effect to the
appropriate adjustments, an aggregate 1,687,500 shares of stock were originally
reserved for issuance under the Incentive Plan. Of these shares, as of August
28, 2008, we had made award grants covering 1,664,046 shares, net of all shares
that have been cancelled or forfeited. This left only 23,454 shares
remaining for future Awards, subject to adjustment for forfeitures and any
applicable adjustment events. On August 22, 2008, upon the
recommendation of the Compensation Committee, the Board of Directors adopted an
amendment to the Incentive Plan to increase by 1,000,000 the number of shares of
the Company's Common Stock reserved for issuance of stock grants, options, and
other equity awards to the Company's employees, directors, and consultants,
which would result in approximately 1,023,454 shares being reserved for future
awards following such increase, subject to approval by our Stockholders at the
Annual Meeting.
The
number of shares available for future Awards excludes 1,319,897 shares issuable
upon exercise of currently outstanding stock options under the Incentive Plan
and our prior stock option plan, the Celadon Group, Inc. 1994 Stock Option Plan,
as amended and restated (the "1994 Plan"). No additional awards may
be made under the 1994 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE
CELADON GROUP, INC. 2006 OMNIBUS INCENTIVE PLAN TO INCREASE BY
1,000,000 THE NUMBER OF SHARES OF COMMON STOCK
RESERVED FOR ISSUANCE OF STOCK GRANTS, OPTIONS, AND OTHER EQUITY AWARDS TO THE
COMPANY'S EMPLOYEES, DIRECTORS, AND CONSULTANTS, WHICH WOULD RESULT IN
APPROXIMATELY 1,023,454 SHARES BEING RESERVED FOR FUTURE AWARDS FOLLOWING SUCH
INCREASE.
The Board
of Directors believes that our success in executing our strategy is largely due
to the efforts of our hard-working employees and that our future success will
depend on our ability to continue to attract and retain high caliber employees.
The Board of Directors believes that equity-based grants to employees are a
highly effective recruiting and retention tool that allows our employees to
share in the ownership of our Company and contribute to our revenue and earnings
growth by aligning the long-term interests of our management and employees with
those of our stockholders.
The
Compensation Committee, which administers the Incentive Plan, believes that the
increase in the number of shares of Common Stock available for issuance under
the Incentive Plan is necessary for us to continue to offer our employees and
directors an effective and competitive equity incentive program. The
Compensation Committee believes that if additional shares are not available for
stock grants, we would be required to discontinue or significantly curtail our
current equity incentive program, which could have an adverse impact on our
ability to attract and retain employees and directors.
Description
of the Incentive Plan
On
January 12, 2006, our stockholders approved the Incentive Plan, which replaced
the 1994 Plan. If approved by our Stockholders at the Annual Meeting,
the Amendment will be effective as of November 14, 2008, its approval
date. The principal provisions of the Incentive Plan, as amended by
the Amendment, are summarized below. This summary is qualified in its
entirety by reference to the text of the Incentive Plan. You are
urged to read the actual text of the Celadon Group, Inc. 2006 Omnibus Incentive
Plan, as filed with the SEC on December 19, 2005, as part of our Proxy
Statement, in its entirety.
The
Incentive Plan authorizes the grant of Performance Awards, stock options, stock
appreciation rights, Stock Awards, Restricted Stock Unit Awards, performance
units, any form established by the Compensation Committee pursuant to
Section 4.2(j) of the Incentive Plan, or a combination
thereof. Each Award is subject to the terms, conditions,
restrictions, and limitations of the Incentive Plan and the Award Notice for
such Award. Under the Incentive Plan, Awards made under a particular
Article of the Incentive Plan need not be uniform and Awards under two or more
Articles of the Incentive Plan may be combined into a single Award
Notice. Any combination of Awards may be granted at one time and on
more than one occasion to the same Participant.
Each of
our Named Executive Officers is eligible to participate in our Incentive
Plan. We use our Incentive Plan to, among other things, (i) provide
annual incentives to executive officers in a manner designed to reinforce our
performance goals, (ii) attract, motivate, and retain qualified executive
officers by providing them with long-term incentives, and (iii) align our
executives' and stockholders' short- and long-term interests by creating a
strong and direct link between executive pay and stockholder
return.
The
Incentive Plan allows the Compensation Committee to link compensation to
performance over a period of time by granting awards that have multiple-year
vesting schedules. Awards with multiple-year vesting schedules, such
as restricted stock grants, provide balance to the other elements of our
compensation program that otherwise link compensation to the Company's
short-term performance. Awards with multiple-year vesting schedules
create incentive for executive officers to increase stockholder value over an
extended period of time because the value received from such awards is based
upon the growth of the stock price. Such awards also incentivize
executives to remain with us over an extended period of time. Thus,
we believe our Incentive Plan is an effective way of aligning the interests of
our executive officers with those of our stockholders. A description
of the awards that may be made pursuant to our Incentive Plan
follows. Such descriptions are qualified in their entirety by
reference to the text of the Incentive Plan.
Stock
Options. Pursuant to the Incentive Plan, the Compensation
Committee may grant awards in the form of stock options to purchase shares of
common stock, which stock options may be non-qualified or incentive stock
options for federal income tax purposes. Stock options granted under
the Incentive Plan vest and become exercisable at such times and upon such terms
and conditions as may be determined by the Compensation
Committee. Any stock option granted in the form of an incentive stock
option must satisfy the
A stock
option may be exercised by paying the exercise price in cash or its equivalent
and/or, to the extent permitted by the Compensation Committee and applicable
law, shares of common stock, a combination of cash and shares of common stock,
or through the delivery of irrevocable instruments to a broker to sell the
shares obtained upon the exercise of the stock option and to deliver to us an
amount equal to the exercise price.
Stock Appreciation
Rights. The Compensation Committee may grant awards in the
form of stock appreciation rights, either in tandem with a stock option ("Tandem
SARs") or independent of a stock option ("Freestanding SARs"). The
exercise price of a stock appreciation right is an amount determined by the
Compensation Committee, but in no event is such amount less than 100% of the
fair market value of a share of common stock on the date that the stock
appreciation right was granted or, in the case of a Tandem SAR, the exercise
price of the related stock option.
A Tandem
SAR may be granted either at the time of grant of the related stock option or at
any time thereafter during the term of the related stock option. A
Tandem SAR is exercisable to the extent its related stock option is
exercisable. Each Tandem SAR will entitle the holder of such stock
appreciation right to surrender the related stock option and to receive an
amount equal to (i) the excess of (A) the fair market value on the exercise date
of one share of common stock over (B) the stock option exercise price per share
of common stock, times (ii) the number of shares of common stock covered by the
stock option which is surrendered. Upon the exercise of a stock
option as to some or all of the shares of common stock covered by such stock
option, the related Tandem SAR is automatically canceled to the extent of the
number of shares of common stock covered by the exercise of the stock
option.
Each
Freestanding SAR will entitle the holder of such stock appreciation right upon
exercise to an amount equal to (i) the excess of (A) the fair market value on
the exercise date of one share of common stock over (B) the exercise price,
times (ii) the number of shares of common stock covered by the Freestanding SAR
and as to which the stock appreciation right is exercised.
The type
(Tandem SAR or Freestanding SAR), exercise price, vesting, and other terms of
each stock appreciation right is set forth in the award notice for such stock
appreciation rights. Payment of stock appreciation rights may be made
in shares of common stock or in cash, or partly in shares of common stock and
partly in cash, as determined by the Compensation Committee.
Other Stock-Based
Awards. The Compensation Committee may grant awards in the
form of stock awards (for either unrestricted or restricted shares of common
stock), restricted stock unit awards, and other awards that are valued in whole
or in part by reference to, or are otherwise based on the fair market value of,
common stock. Such other stock-based awards are in such form, and
dependent on such conditions, as the Compensation Committee determines,
including, without limitation, the right to receive, or vest with respect to,
one or more shares of common stock (or the equivalent cash value of such shares
of common stock) upon the completion of a specified period of service, the
occurrence of an event, and/or the attainment of performance
objectives. In addition, the Compensation Committee may choose, at
the time of grant of a stock-based award, or any time thereafter up to the time
of the payment of such award, to include as part of such award an entitlement to
receive dividends or dividend equivalents on the shares of common stock
underlying such award, subject to such terms, conditions, restrictions, and/or
limitations, if any, as the Compensation Committee may establish. The
restrictions, conditions, and other terms of each stock-based award are set
forth in the award notice for such award.
Performance
Units. The Compensation Committee may grant awards in the form
of performance units, which are units valued by reference to designated criteria
established by the Compensation Committee other than common
stock. Performance units are in such form, and dependent on such
conditions, as the Compensation Committee determines, including, without
limitation, the right to receive a designated payment upon the completion of a
specified period of service, the occurrence of an event, and/or the attainment
of performance objectives. The form, applicable conditions, and other
terms of each performance unit are set forth in the award notice for such
performance unit.
Performance
Awards. Performance awards are designed to reward executive
officers for their contributions to our financial and operating performance and
are based primarily upon our financial results and certain operating statistics
that the Compensation Committee identifies each year as being important to our
success. Performance awards are awards structured to qualify as
deductible "performance-based" compensation for purposes of Section 162(m)
of the Code. Performance awards may take the form of cash, stock
awards, restricted stock unit awards, or performance units that are conditioned
upon the satisfaction of enumerated performance criteria during a stated
performance period, which awards, in addition to satisfying the requirements
otherwise applicable to that type of award generally, also satisfy the
requirements of performance awards under the Incentive Plan.
Performance
awards must be based upon one or more of the following performance criteria:
(a) revenues (including, without limitation, measures such as revenue per
mile (loaded or total) or revenue per tractor), (b) net revenues, (c) fuel
surcharges, (d) accounts receivable collection or days sales outstanding,
(e) cost reductions and savings (or limits on cost increases), (f) safety and
claims (including, without limitation, measures such as accidents per million
miles and number of significant accidents), (g) operating income, (h)
operating ratio, (i) income before taxes, (j) net income, (k) earnings
before interest and taxes (EBIT), (l) earnings before interest, taxes,
depreciation, and amortization (EBITDA), (m) adjusted net income,
(n) earnings per share, (o) adjusted earnings per share,
(p) stock price, (q) working capital measures, (r) return on
assets, (s) return on revenues, (t) debt-to-equity or
debt-to-capitalization (in each case with or without lease adjustment), (u)
productivity and efficiency measures (including, without limitation, measures
such as driver turnover, trailer to tractor ratio, and tractor to non-driver
ratio), (v) cash position, (w) return on stockholders' equity,
(x) return on invested capital, (y) cash flow measures (including,
without limitation, free cash flow), (z) market share,
(aa) stockholder return, (bb) economic value added, or
(cc) completion of acquisitions (either with or without specified
size). In addition, the Compensation Committee may establish, as an
additional performance measure, the attainment by a participant of one or more
personal objectives and/or goals that the Compensation Committee deems
appropriate, including, but not limited to, implementation of Company policies,
negotiation of significant corporate transactions, development of long-term
business goals or strategic plans, or the exercise of specific areas of
managerial responsibility. The performance goals set by the
Compensation Committee may be expressed on an absolute and/or relative basis,
and may include comparisons with our past performance (including the performance
of one or more of our divisions) and/or the current or past performance of other
peer group companies or indices.
For each
performance period, the Compensation Committee designates, in its sole
discretion, within the initial period allowed under Section 162(m) of the
Code which persons are eligible for performance awards for such period, the
length of the performance period, the types of performance awards to be issued,
the performance criteria to be used to establish performance goals, the kind or
level of performance goals, and other relevant matters.
After the
close of each performance period, the Compensation Committee determines whether
the performance goals for the cycle have been achieved. In
determining the actual award to be paid to a participant, the Compensation
Committee has the authority to reduce or eliminate any performance award earned
by the participant, based upon any objective or subjective criteria it deems
appropriate. The award notice for each performance award sets forth
or makes reference to the performance period, performance criteria, performance
goals, performance formula, performance pool, and other terms applicable to such
performance award.
Administration
The
Incentive Plan is administered by the Compensation Committee, or such other
committee as may be designated by the Board of Directors, which consists of at
least two individuals who are intended to qualify both as "non-employee
directors" within the meaning of Rule 16b-3 under the Exchange Act, and as
"outside directors" within the meaning of the definition of such term as
contained in Section 1.162-27(e)(3) of the Treasury Regulations, or any
successor definition adopted under Section 162(m) of the Code.
The
Compensation Committee may allocate all or any portion of its responsibilities
and powers under the Incentive Plan to any one or more of its members, the
Company's CEO, or other senior members of management as the Compensation
Committee deems appropriate; however, only the Compensation Committee, or
another committee consisting of two or more individuals who qualify both as
"non-employee directors" and as "outside directors," may select and grant Awards
to Participants who are subject to Section 16 of the Exchange Act or are
Covered Employees. The Compensation Committee may revoke any such
allocation or delegation at any time for any reason with or without prior
notice.
The
Compensation Committee has broad authority in its administration of the
Incentive Plan, including, but not limited to, the authority to interpret the
Incentive Plan; to establish rules and regulations for the operation and
administration of the Plan; to select the persons to receive Awards; to
determine the form, size, terms, conditions, limitations, and restrictions of
Awards, including, without limitation, terms regarding vesting, exercisability,
assignability, expiration and the effect of certain events, such as a change of
control in the Company or the Participant's death, disability, retirement or
termination as a result of breach of agreement; to create additional forms of
Awards consistent with the terms of the Incentive Plan; to allow for the
deferral of Awards; and to take all other action it deems necessary or advisable
to administer the Incentive Plan.
To
facilitate the granting of Awards to Participants who are employed or retained
outside of the United States, the Compensation Committee is authorized to modify
and amend the terms and conditions of an Award to accommodate differences in
local law, policy, or custom.
Shares
Available and Maximum Awards
There
were originally 1,687,500 shares of Common Stock reserved for issuance pursuant
to the Incentive Plan. Of these shares, as of August 28, 2008, we had
made award grants covering 1,664,046 shares, net of all shares that have been
cancelled or forfeited. This left only 23,454 shares remaining for
future Awards, subject to adjustment for forfeitures and any applicable
adjustment events. On August 22, 2008, upon the recommendation of the
Compensation Committee, the Board of Directors adopted an amendment to the
Incentive Plan to increase by 1,000,000 the number of shares of the Company's
Common Stock reserved for issuance of stock grants, options, and other equity
awards to the Company's employees, directors, and consultants, which would
result in approximately 1,023,454 shares being reserved for future awards
following such increase, subject to approval by our Stockholders at the Annual
Meeting.
Any
shares subject to outstanding option or restricted stock grants are counted
against the shares reserved and available for issuance as one share for every
share subject thereto. As of August 28, 2008, we had 1,319,897
shares issuable upon exercise of currently outstanding stock options under the
Incentive Plan and the 1994 Plan. If an option expires or is
terminated without having been exercised in full, or if a restricted stock grant
is forfeited, the unexercised or forfeited shares will become available for
future grant under the Incentive Plan. The total number of shares
reserved and available for issuance under the Incentive Plan is automatically
adjusted, without further action by the Board of Directors or stockholders, to
reflect stock dividends, stock splits, reverse stock splits, subdivisions,
reorganizations, reclassifications, or any similar recapitalizations that affect
or modify the number of shares of outstanding Common Stock.
Of the
maximum number of shares of Common Stock available under the Incentive Plan, no
more than one-half of such maximum number of shares of Common Stock may be used
for Awards other than stock options or stock appreciation rights. The
number of shares of Common Stock available under the Incentive Plan shall be
adjusted to reflect the occurrence of certain events described under "Proposal 2
Amendment to the Celadon Group, Inc. 2006 Omnibus Incentive Plan – Description
of the Incentive Plan — Adjustments Upon
Certain
Events" below. Any shares of Common Stock related to Awards that
terminate by expiration, forfeiture, cancellation, or otherwise without the
issuance of such shares, are settled in cash in lieu of Common Stock, or are
exchanged with the Compensation Committee's permission for Awards not involving
Common Stock, shall be available again for grant under the Plan. The
shares of Common Stock available for issuance under the Incentive Plan may be
authorized and unissued shares or treasury shares, including shares purchased in
open market or private transactions.
The
maximum Award granted or payable to any one Participant under the Plan for a
calendar year, adjusted for the February 15, 2006 and June 15, 2006 3-for-2
stock splits, is 337,500 shares of Common Stock, subject to the
Compensation Committee's authority to adjust Awards upon certain events
described under "Proposal 2 Amendment to the Celadon Group, Inc. 2006 Omnibus
Incentive Plan – Description of the Incentive Plan — Adjustments Upon Certain
Events" below, or, in the event the Award is paid in cash,
$2,000,000.
Payment
Terms
Awards
may be paid in cash, shares of Common Stock, a combination of cash and shares of
Common Stock, or in any other permissible form, as the Compensation Committee
determines. Payment of Awards may include such terms, conditions,
restrictions and/or limitations, if any, as the Compensation Committee deems
appropriate, including, in the case of Awards paid in shares of Common Stock,
restrictions on transfer of such shares and provisions regarding the forfeiture
of such shares under certain circumstances.
At the
discretion of the Compensation Committee, a Participant may defer payment of any
Award, salary, bonus compensation, Company Board of Directors compensation,
dividend or dividend equivalent, or any portion thereof. If permitted
by the Compensation Committee, any such deferral shall be accomplished by the
delivery of a written, irrevocable election by the Participant prior to the time
established by the Compensation Committee for such purpose, on a form provided
by the Company. Further, any deferral must be made in accordance with
administrative guidelines established by the Compensation Committee to ensure
that such deferrals comply with all applicable requirements of the
Code. Such deferred items may be paid in a lump sum or installments,
or credited with interest (at a rate determined by the Compensation Committee)
or deemed invested by the Company, as determined by the Compensation Committee,
and, with respect to those deferred Awards denominated in the form of Common
Stock, credited with dividends or dividend equivalents.
The
Company will be entitled to deduct from any payment to a Participant under the
Incentive Plan the amount of all applicable income and employment taxes required
by law to be withheld with respect to such payment or may require the
Participant to pay to the Company such tax prior to and as a condition of the
making of such payment. Subject to certain limitations, the
Compensation Committee may allow a Participant to pay the amount of taxes
required by law to be withheld from an Award by withholding any shares of Common
Stock to be paid under such Award or by permitting the Participant to deliver to
the Company shares of Common Stock having a Fair Market Value equal to the
amount of such taxes.
Adjustments
Upon Certain Events
In the
event that there is, with respect to the Company, a stock dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off, combination,
or transaction or exchange of Common Stock or other corporate exchange, or any
distribution to stockholders of Common Stock or other property or securities
(other than regular cash dividends), or any transaction similar to the foregoing
or other transaction that results in a change to the Company's capital
structure, then the Compensation Committee shall make substitutions and/or
adjustments to the maximum number of shares available for issuance under the
Plan, the maximum Award payable, the number of shares to be issued pursuant
outstanding Awards, the option prices, exercise prices or purchase prices of
outstanding Awards and/or any other affected terms of an Award or the Plan as
the Compensation Committee, in its sole discretion, deems equitable or
appropriate. Unless the Compensation Committee determines otherwise, in no event
shall an Award that is intended to qualify as "performance-based compensation"
for purposes of Section 162(m) of the Code be adjusted to the extent such
adjustment would cause such Award to fail to qualify as "performance-based
compensation" under Section 162(m) of the Code.
Termination
and Amendment
The
Compensation Committee may suspend or terminate the Incentive Plan at any time
for any reason with or without prior notice. In addition, the
Compensation Committee may, from time to time for any reason and with or without
prior notice, amend the Incentive Plan in any manner, but may not, without
stockholder approval, adopt any amendment which would require the vote of the
stockholders of the Company if such approval is necessary or deemed advisable
with respect to tax, securities, or other applicable laws or regulations,
including, but not limited to, the listing requirements of the stock exchanges
or quotation systems on which the securities of the Company are
listed. No amendment may materially and adversely affect any of the
rights of such Participant under any Award theretofore granted to such
Participant under the Plan.
Tax
Status of Incentive Plan Awards
No person
connected with the Incentive Plan in any capacity, including, but not limited
to, the Company and its directors, officers, agents, and employees, makes any
representation, commitment, or guaranty that any tax treatment, including, but
not limited to, federal, state, and local income, estate, and gift tax
treatment, will be applicable with respect to the tax treatment of any Award,
any amounts deferred under the Incentive Plan, or paid to or for the benefit of
a Participant under the Incentive Plan, or that such tax treatment will apply to
or be available to a Participant on account of participation in the Incentive
Plan.
Securities
Act Registration
The
registration with the SEC on Form S-8 of the shares of Common Stock issuable
under the Incentive Plan will be post-effectively amended on Form S-8 as soon as
practicable, subject to the Stockholders' approval of the
Amendment.
Eligible
Participants
Participants
in the Incentive Plan will be selected by the Compensation Committee from the
employees, directors, and consultants of the Company. As of August
28, 2008, approximately 3,875 employees and three non-employee directors were
eligible to participate in the Incentive Plan. The Incentive Plan
also permits the granting of equity awards to eligible
consultants. The number of active engagements with consultants varies
from time to time and the Compensation Committee has not historically made
grants to these individuals under the Incentive Plan. As of August
28, 2008, there were no eligible consultants the Compensation Committee would
likely consider for the grant of awards.
The
selection of those persons within a particular class who will receive Awards is
entirely within the discretion of the Compensation Committee. Only
employees, however, are eligible to receive "incentive stock options" within the
meaning of § 422 of the Code. The Compensation Committee has not
determined how many persons are likely to participate in the Incentive Plan over
time. The Compensation Committee intends, however, to grant most
Awards to those persons who are in a position to have a significant direct
impact on the growth, profitability, and success of the Company, which would
include a portion of the Participants in the Incentive Plan.
Plan
Benefits
The
following table sets forth certain information regarding grants of equity awards
made under the Incentive Plan during fiscal year 2008 and as of August 28, 2008
for fiscal year 2009, to: (i) each of the Named Executive Officers;
(ii) all current executive officers of the Company as a group; (iii) all
current directors who are not executive officers as a group; and (iv) all
employees, including all current officers who are not executive officers, as a
group. Future awards, if any, that will be made to eligible
participants under the Incentive Plan are subject to the discretion of the
Compensation Committee. Accordingly, future grants under the
Incentive Plan are not determinable.
Plan
Benefits
Celadon Group, Inc.
2006 Omnibus Incentive Plan
|
|
Fiscal
Year 2008
|
Fiscal Year 2009(4)
|
Name
and
Principal
Position
|
Dollar Value(1)
|
Number
of
Equity
Awards
|
Dollar Value(5)
|
Number
of
Equity
Awards
|
Stephen
Russell,
Chairman
and CEO
|
$1,103,656
|
308,284
|
$779,889
|
65,592
|
Paul
Will,
Vice
Chairman, Executive
Vice
President, CFO, Assistant
Secretary,
and Treasurer
|
$526,997
|
147,206
|
$289,676
|
24,363
|
Chris
Hines, President and
COO
|
$472,480
(2)
|
72,000(3)
|
$267,394
|
22,489
|
Jonathan
Russell, Executive
Vice
President Logistics and
President
TruckersB2B
|
$89,500
|
25,000
|
$231,736
|
19,490
|
Kenneth
Core,
Vice
President and Secretary
|
$35,800
|
10,000
|
$41,615
|
3,500
|
Executive
Group
|
$2,228,433
|
562,490
|
$1,610,310
|
135,434
|
Non-Executive
Director Group
|
$195,000
|
44,860
|
-
|
-
|
Employee
Group
|
$366,968
|
100,500
|
$1,030,268
|
86,650
|
(1)
|
Represents
the grant date fair value of the stock awards under SFAS 123R granted to
the Named Executive Officers during fiscal 2008. The fair value
was calculated using the closing price of our common stock on the grant
date. The fair value of the stock awards are accounted for in
accordance with SFAS 123R. For additional information on the
valuation assumptions, refer to note 7 of our consolidated financial
statements in the Form 10-K for the year-ended June 30, 2008, as filed
with the SEC on August 28, 2008. These amounts reflect our
accounting expense and do not correspond to the actual value that will be
recognized by the Named Executive Officers.
|
(2)
|
All
equity awards in the fiscal year 2008 Dollar Value column represent stock
options except for equity awards to Mr. Hines, which include 40,000 stock
options valued at $143,200 and 32,000 shares of restricted stock valued at
$329,280.
|
(3)
|
Comprised
of 40,000 stock options and 32,000 shares of restricted stock held by Mr.
Hines.
|
(4)
|
Represents
the fiscal year 2009 grants that were granted as of August 25, 2008, all
of which were restricted stock.
|
(5)
|
Represents
the Dollar Value at August 25, 2008 Closing
Price.
|
Additional
Information Regarding Stock Options, Warrants, and Rights
Common
Stock underlies any grant made by the Compensation Committee of awards in the
form of stock options, warrants, or rights. The Compensation
Committee, in its discretion, selects the persons to whom options or restricted
stock will be granted, the time or times at which such options or restricted
stock will be granted, and the number of shares subject to each such
grant. For this reason, it is not possible to determine the benefits
or amounts that will be received by any particular officer or employee, or group
of officers or employees, in the future. The Incentive Plan provides,
however, that the aggregate Fair Market Value (determined at the time the option
was granted) of the Common Stock with respect to which incentive stock options
are exercisable for the first time by a Participant during any calendar year
shall not exceed $100,000 (or such other limit as may be required by Section 422
of the Code).
Federal
Income Tax Consequences of the Issuance and Exercise of Stock
Options
The
following is only a summary of the effect of federal income taxation upon us and
the participants under the Incentive Plan. It does not purport to be complete
and does not discuss all of the tax consequences of a participant's death or the
provisions of the income tax laws of any state, municipality, or foreign country
in which the participants may reside.
Incentive Stock
Options. A Participant is not treated as receiving taxable
income upon either the grant of an Incentive Stock Option (an "ISO") or upon the
exercise of an ISO. However, the difference between the exercise
price and the fair market value on the date of exercise is an item of tax
preference at the time of exercise in determining liability for the alternative
minimum tax, assuming that the Common Stock is either transferable or is not
subject to a substantial risk of forfeiture under section 83 of the
Code. If at the time of exercise, the Common Stock is both
nontransferable and is subject to a substantial risk of forfeiture, the
difference between the exercise price and the fair market value of the Common
Stock (determined at the time the Common Stock becomes either transferable or
not subject to a substantial risk of forfeiture) will be a tax preference item
in the year in which the Common Stock becomes either transferable or not subject
to a substantial risk of forfeiture.
If Common
Stock acquired by the exercise of an ISO is not sold or otherwise disposed of
within two years from the date of its grant and is held for at least one year
after the date such Common Stock is transferred to the Participant upon
exercise, any gain or loss resulting from its disposition is treated as
long-term capital gain or loss. If such Common Stock is disposed of
before the expiration of the above-mentioned holding periods, a "disqualifying
disposition" occurs. If a disqualifying disposition occurs, the
Participant realizes ordinary income in the year of the disposition in an amount
equal to the difference between the fair market value of the Common Stock on the
date of exercise and the exercise price, or the selling price of the Common
Stock and the exercise price, whichever is less. The balance of the
Participant's gain on a disqualifying disposition, if any, is taxed as capital
gain.
We are
not entitled to any tax deduction as a result of the grant or exercise of an
ISO, or on a later disposition of the Common Stock received, except that in the
event of a disqualifying disposition, we are entitled to a deduction equal to
the amount of ordinary income realized by the Participant.
Non-Qualified Stock
Options. A Participant does not recognize any taxable income
upon the grant of a Non-Qualified Stock Option (a "NSO"), and we are not
entitled to a tax deduction by reason of such grant. Upon exercise of
a NSO, the Participant recognizes ordinary income generally measured by the
excess of the then fair market value of the shares over the exercise price, and
we are entitled to a corresponding tax deduction. Upon a disposition
of shares acquired upon exercise of a NSO by the Participant, any difference
between the sale price and the exercise price, to the extent not recognized as
ordinary income as provided above, is treated as long-term or short-term capital
gain or loss, depending on the holding period. Such subsequent
disposition by the Participant has no tax consequence to us.
Equity
Compensation Plan Information
The
following table provides certain information, as of June 30, 2008, with respect
to our compensation plans under which shares of Common Stock are authorized for
issuance. The number of shares of Common Stock reflected in column
(a) of the following table is comprised of 1,333,505 shares subject to
outstanding options, warrants, and rights granted under the Incentive Plan and
the 1994 Plan. The number of shares of Common Stock reflected in
column (c) of the following table is comprised entirely of shares available for
future grant under the Incentive Plan as of June 30, 2008, and neither takes
into account the restricted stock grants that were granted on August 25, 2008
(as such grants were not made as of the most recently completed fiscal year), as
described below, nor includes the additional shares reserved for issuance
thereunder contemplated by the Amendment. Shares of Common Stock
underlying outstanding options granted under the Incentive Plan that are
terminated or expire unexercised will be available for future
grant.
|
Number
of securities to
be
issued upon exercise
of
outstanding options,
warrants,
and rights
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Weighted
average
exercise
price of
outstanding
options,
warrants,
and rights
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Number
of securities
remaining
eligible for future
issuance
under equity
compensation
plans
(excluding
securities
reflected
in column (a))
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Plan
Category
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(a)
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(b)
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(c)
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Equity
Compensation
Plans
Approved by
Security
Holders
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1,333,505
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$9.90
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245,538
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Equity
Compensation
Plans
Not Approved by
Security
Holders
|
—
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—
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—
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Total
|
1,333,505
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$9.90
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245,538
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On August
25, 2008 we made restricted stock grants under the Incentive Plan covering
222,084 shares of Common Stock. As of August 28, 2008, there were
1,319,897 shares issuable upon exercise of outstanding stock options and 23,454
shares available for future grant.
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE CELADON GROUP, INC. 2006 OMNIBUS INCENTIVE PLAN TO
INCREASE BY 1,000,000 THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE
OF STOCK GRANTS, OPTIONS, AND OTHER EQUITY AWARDS TO THE COMPANY'S EMPLOYEES,
DIRECTORS, AND CONSULTANTS, WHICH WOULD RESULT IN APPROXIMATELY 1,023,454 SHARES
BEING RESERVED FOR FUTURE AWARDS FOLLOWING SUCH INCREASE.
To be
eligible for inclusion in our proxy materials relating to the Annual Meeting of
Stockholders following our 2009 fiscal year, stockholder proposals intended to
be presented at that meeting must be received by us in writing on or before June
5, 2009. However, if the date such Annual Meeting of Stockholders is
more than thirty days before or after November 14, 2009, then the deadline for
submitting any stockholder proposal for inclusion in the proxy materials
relating to such Annual Meeting of Stockholders will be a reasonable time before
we begin to print or mail such proxy materials. The inclusion of any
such stockholder proposals in such proxy materials will be subject to the
requirements of the proxy rules adopted under the Exchange Act, including Rule
14a-8.
We must
receive in writing any stockholder proposals intended to be considered at the
Annual Meeting of Stockholders following our 2009 fiscal year, but not included
in our proxy materials relating to that meeting, by August 19,
2009. However, if the date of such Annual Meeting of Stockholders is
more than thirty days before or after November 14, 2009, then the deadline for
submitting any such Stockholder proposal will be a reasonable time before we
mail the proxy materials relating to such meeting. Pursuant to
Exchange Act Rule 14a-4(c)(1), the proxy holders designated by an executed proxy
in the form accompanying our 2009 Proxy Statement will have discretionary
authority to vote on any stockholder proposal that is not received on or prior
to the deadline described above.
Written
copies of all stockholder proposals should be sent to our principal executive
offices at 9503 East 33rd Street, One Celadon Drive, Indianapolis, Indiana,
46235 to the attention of Paul Will, our Vice Chairman. Stockholder
proposals must comply with the rules and regulations of the SEC.
See "Corporate Governance –
Committees of the Board of Directors and Director Nominations – Compensation and
Nominating Committee – Director Nomination Process" for information regarding
how stockholders can recommend director candidates for consideration by the
Compensation and Nominating Committee.
The Board
of Directors does not intend to present at the Annual Meeting any matters other
than those described herein and does not presently know of any matters that will
be presented by other parties. If any other matters are properly
brought before the Annual Meeting or any adjournment thereof, the proxy holders
named in the accompanying form of proxy will have discretionary authority to
vote proxies on such matters in accordance with their judgment, unless the
person executing any such proxy indicates that such authority is
withheld.
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Celadon
Group, Inc.
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/s/
Kenneth Core
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Kenneth
Core
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Secretary
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C/O
AMERICAN STOCK TRANSFER
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VOTE
BY INTERNET - www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before
the cut-off date or meeting date. Have your proxy card in hand when you
access the web site and follow the instructions to obtain your records and
to create an electronic voting instruction form.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If
you would like to reduce the costs incurred by our company in mailing
proxy materials, you can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via e-mail or the Internet.
To sign up for electronic delivery, please follow the instructions above
to vote using the Internet and, when prompted, indicate that you agree to
receive or access proxy materials electronically in future
years.
VOTE
BY PHONE - 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you call and then follow the
instructions.
Mark,
sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Vote Processing, c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717.
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TO VOTE,
MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: T
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CLDON1
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KEEP
THIS PORTION FOR YOUR RECORDS.
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DETACH
AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED.
CELADON
GROUP, INC.
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For
All
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Withhold
All
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For
All Except
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To
withhold authority to vote for any individual nominee(s), mark “For All
Except” and write the number(s) of the nominee(s) on the line
below.
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Vote
on Directors
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|
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£
|
£
|
£
|
|
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1.
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Election
of Directors.
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Nominees:
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1) Stephen
Russell
2) Anthony
Heyworth
3) Catherine
Langham
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04) Michael
Miller
05) Paul
Will
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Vote
on Proposals
|
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For
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Against
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Abstain
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2.
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Proposal
to approve the Amendment to the Celadon Group, Inc. 2006 Omnibus Incentive
Plan to increase the number of shares of Common Stock reserved for
issuance of stock grants, options, and other equity awards to the
Company's Employees, Directors, and Consultants.
|
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£
|
£
|
£
|
|
|
|
|
|
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3.
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In
their discretion, the proxies are authorized to vote upon each other
matter that may properly come before the meeting or any adjournments
thereof.
|
|
£
|
£
|
£
|
This
Proxy, when properly executed and returned, will be voted in the manner directed
above. If no direction is made, this Proxy will be voted FOR all nominees and
FOR the proposal to approve the Amendment.
THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PLEASE
MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
IN THE USA.
For
address changes and/or comments, please check this box and write them on
the back where indicated.
|
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£
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|
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(NOTE:
Please sign exactly as your name(s) appear(s) hereon. All holders must
sign. When signing as attorney, executor, administrator, or other
fiduciary, please give full title as such. Joint owners should each sign
personally. If a corporation, please sign in full corporate name, by
authorized officer. If a partnership, please sign in partnership name by
authorized person.)
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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Signature
(Joint Owners)
|
Date
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Indianapolis,
Indiana 46235-4207
ANNUAL
MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS
The
undersigned hereby appoints Stephen Russell, Michael Miller, and Paul Will and
each of them with full power of substitution, proxies of the undersigned, to
vote all shares of Common Stock of Celadon Group, Inc. (the "Company") that the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company to be held on November 14, 2008 at 9:00
a.m., local time at the Company's corporate headquarters located at One Celadon
Drive, Indianapolis, Indiana, 46235, and at any adjournment or postponement
thereof.
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR THE APPROVAL OF THE
AMENDMENT TO THE CELADON GROUP, INC. 2006 OMNIBUS INCENTIVE PLAN IN PROPOSAL 2
THAT WILL INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE OF
STOCK GRANTS, OPTIONS, AND OTHER EQUITY AWARDS TO THE COMPANY'S EMPLOYEES,
DIRECTORS, AND CONSULTANTS.
|
Address
Changes/Comments:
|
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(If you
noted any Address Changes/Comments above, please mark corresponding box on the
reverse side.)
SEE
REVERSE
SIDE
|
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
|
SEE
REVERSE
SIDE
|