<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Eagle USA Airfreight, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE> 2
[EAGLE USA AIRFREIGHT, INC. LOGO]
January 24, 2000
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Eagle USA Airfreight, Inc. (the "Company") to be held at 10:00 a.m. on Monday,
February 21, 2000, at the Corporate Headquarters of Eagle USA Airfreight, Inc.
(located near George Bush Intercontinental Airport), 15350 Vickery Drive,
Houston, Texas 77032.
At the meeting, you will be asked to consider and vote upon (1) the
election of seven directors; (2) a proposal to change the Company's name to EGL,
Inc.; (3) the approval of the appointment of the Company's independent
accountants; and (4) such other business as may properly come before the meeting
or any adjournment thereof.
We hope you will find it convenient to attend in person. Whether or not you
expect to attend, to assure representation at the meeting and the presence of a
quorum, please date, sign and promptly mail the enclosed proxy in the return
envelope provided.
A copy of the Company's 1999 Annual Report to Shareholders is also
enclosed.
Sincerely,
/s/ JAMES R. CRANE
---------------------------------
James R. Crane
President, Chief Executive
Officer and Chairman of the Board
<PAGE> 3
EAGLE USA AIRFREIGHT, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 21, 2000
To The Shareholders of Eagle USA Airfreight, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Eagle USA
Airfreight, Inc. (the "Company") will be held at the Corporate Headquarters of
Eagle USA Airfreight, Inc. (located near George Bush Intercontinental Airport),
15350 Vickery Drive, Houston, Texas 77032, on Monday, February 21, 2000, at
10:00 a.m. for the following purposes:
(1) to elect seven members to the Board of Directors for the ensuing
year;
(2) to consider and act on a proposal to approve an amendment to the
Company's Restated Articles of Incorporation to change the name of
the Company to "EGL, Inc.";
(3) to approve the appointment of PricewaterhouseCoopers LLP as
independent accountants of the Company for the fiscal year ending
September 30, 2000; and
(4) to transact such other business as may properly come before the
meeting.
The Company has fixed the close of business on December 30, 1999, as the
record date for determining shareholders entitled to notice of, and to vote at,
such meeting or any adjournment thereof.
You are cordially invited to attend the meeting in person. Even if you plan
to attend the meeting, you are requested to mark, sign, date and return the
accompanying proxy as soon as possible.
By Order of the Board of Directors
/s/ CAROLYN L. ARMOGIDA
----------------------------------
Carolyn L. Armogida
Secretary
January 24, 2000
15350 Vickery Drive
Houston, TX 77032
<PAGE> 4
EAGLE USA AIRFREIGHT, INC.
15350 VICKERY DRIVE
HOUSTON, TEXAS 77032
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Eagle USA Airfreight, Inc., a Texas
corporation (the "Company"), to be voted at the 2000 Annual Meeting of
Shareholders (the "Annual Meeting") to be held at the Corporate Headquarters of
Eagle USA Airfreight, Inc. (located near George Bush Intercontinental Airport),
15350 Vickery Drive, Houston, Texas 77032, on Monday, February 21, 2000, at
10:00 a.m., and any and all adjournments thereof.
This statement and the accompanying form of proxy are first being mailed to
shareholders on or about the week of January 24, 2000. In addition to the
solicitation of proxies by mail, regular officers and employees of the Company
may, without additional compensation, solicit the return of proxies by mail,
telephone, telegram or personal contact. The Company will pay the cost of
soliciting proxies in the accompanying form. The Company will reimburse brokers
or other persons holding stock in their names or in the names of their nominees
for their reasonable expenses in forwarding proxy material to beneficial owners
of stock.
VOTING SECURITIES
Shareholders of record as of December 30, 1999, the record date for
determining persons entitled to notice of, and to vote at, the Annual Meeting,
are entitled to vote on all matters at the Annual Meeting and at any
adjournments thereof. On that date, the issued and outstanding capital stock of
the Company consisted of 28,780,667 shares of Common Stock, par value $0.001 per
share (the "Common Stock"), each of which shares is entitled to one vote on each
matter submitted to a vote of shareholders. Cumulative voting is not allowed. No
other voting class of stock is outstanding. The holders of a majority of the
shares entitled to vote at the Annual Meeting, represented in person or by
proxy, constitute a quorum for the transaction of business at the Annual
Meeting.
All duly executed proxies received prior to the Annual Meeting will be
voted in accordance with the choices specified thereon and, in connection with
any other business that may properly come before the meeting, in the discretion
of the persons named in the proxy. As to any matter for which no choice has been
specified in the proxy, the shares represented thereby will be voted by the
persons named in the proxy, to the extent applicable, (1) for the election as a
director of each nominee listed herein; (2) for approval of an amendment to the
Restated Articles of Incorporation to change the Company's name to EGL, Inc.;
(3) for the appointment of PricewaterhouseCoopers LLP as independent accountants
of the Company for the fiscal year ending September 30, 2000; and (4) in the
discretion of the persons named in the proxy in connection with any other
business that may properly come before the meeting. A shareholder giving a proxy
may revoke it at any time before it is voted at the Annual Meeting by delivering
written notice to the Secretary of the Company or by delivering a properly
executed proxy bearing a later date. A shareholder who attends the Annual
Meeting may, if he or she wishes, vote by ballot at the Annual Meeting and that
vote will cancel any proxy previously given. Attendance at the Annual Meeting
will not in itself, however, constitute the revocation of a proxy.
Proxies indicating shareholder abstentions will be counted for purposes of
determining whether there is a quorum at the Annual Meeting, but will not be
voted on any matter and therefore will have the same effect as a vote against a
matter, except in the case of director elections, which are determined by a
plurality of votes cast, as to which those abstentions will have no effect.
Shares held by brokers or nominees for which instructions have not been received
from the beneficial owners or persons entitled to vote and for which the broker
or nominee does not have discretionary power to vote on a particular matter will
be counted for purposes of determining whether there is a quorum at the Annual
Meeting, but will not be voted on a particular matter for which the broker has
no discretionary power, and thus will be disregarded in the calculation of the
percentage of votes in favor of that matter (even though those shares may be
considered as entitled to vote or be voted on other matters). Votes cast by
proxy or in person at the Annual Meeting will be counted by the persons
appointed as election inspectors for the Annual Meeting.
1
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The table below sets forth information concerning (i) the only persons
known by the Company, based on statements filed by such persons pursuant to
Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to own beneficially in excess of 5% of the Common Stock as of
November 30, 1999 and (ii) the shares of Common Stock beneficially owned, as of
November 30, 1999, by each director, director nominee, the Chief Executive
Officer and the three other executive officers who were serving at the end of
the Company's last fiscal year and by all executive officers and directors
collectively. Except as indicated, each individual has sole voting power and
sole investment power over all shares listed opposite his name.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF OF STOCK(2)
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP (ROUNDED)
- --------------------------------------- -------------------- -----------
<S> <C> <C>
Directors and Executive Officers:
James R. Crane............................................ 11,710,217 40.5%
John C. McVaney(3)........................................ 3,000 --
Douglas A. Seckel(4)...................................... 151,464 --
Elijio V. Serrano(5)...................................... 97 --
Ronald E. Talley(6)....................................... 100,991 --
Frank J. Hevrdejs(7)...................................... 77,250 --
Neil E. Kelley(7)......................................... 60,000 --
Norwood W. Knight-Richardson(8)........................... 30,600 --
Rebecca A. McDonald(9).................................... -- --
William P. O'Connell(10).................................. 20,000 --
Executive Officers and Directors as a Group (9 persons)..... 12,153,619(11) 42.0%
T. Rowe Price Associates, Inc.(12).......................... 2,635,449 9.1%
</TABLE>
- ---------------
(1) The business address of each director and executive officer is c/o Eagle
USA Airfreight, Inc., 15350 Vickery Drive, Houston, Texas 77032.
(2) The table includes shares of Common Stock that can be acquired through the
exercise of options, warrants or convertible securities within 60 days. The
percent of the class owned by each person has been computed assuming the
exercise of all options, warrants and convertible securities deemed to be
beneficially owned by that person, and assuming that no options, warrants
or convertible securities held by any other person have been exercised.
(3) Includes 3,000 shares issuable upon the exercise of stock options within 60
days of November 30, 1999.
(4) Includes 15,000 shares issuable upon the exercise of stock options within
60 days of November 30, 1999.
(5) Mr. Serrano was hired as Chief Financial Officer in October 1999.
(6) Includes 100,991 shares issuable upon exercise of stock options within 60
days of November 30, 1999.
(7) Includes 45,000 shares issuable upon the exercise of stock options within
60 days of November 30, 1999. Includes 2,250 shares owned by Mr. Hevrdejs'
wife as to which he declines beneficial ownership.
(8) Includes 30,000 shares issuable upon exercise of stock options within 60
days of November 30, 1999.
(9) Ms. McDonald was appointed to the Board of Directors in April 1999.
(10) Includes 20,000 shares issuable upon the exercise of stock options within
60 days of November 30, 1999.
(11) Includes 258,991 shares issuable upon the exercise of stock options within
60 days of November 30, 1999.
(12) Based on a filing made with the SEC reflecting ownership of Common Stock as
of September 30, 1999. The address of T. Rowe Price Associates, Inc. is 100
East Pratt Street, Baltimore, Maryland 21202.
2
<PAGE> 6
PROPOSAL I
ELECTION OF DIRECTORS
The persons designated as proxies in the enclosed proxy card intend, unless
the proxy is marked with contrary instructions, to vote for the following
nominees as directors to serve until the 2001 Annual Meeting of Shareholders and
until their successors have been duly elected and qualified: Mr. James R. Crane;
Mr. Frank J. Hevrdejs; Mr. Neil E. Kelley; Dr. Norwood W. Knight-Richardson; Ms.
Rebecca A. McDonald; Mr. William P. O'Connell ; and Mr. Elijio V. Serrano. The
Board of Directors has no reason to believe that any nominee for election as a
director will not be a candidate or will be unable to serve, but if for any
reason one or more of these nominees is unavailable as a candidate or unable to
serve when election occurs, the persons designated as proxies in the enclosed
proxy card, in the absence of contrary instructions, will in their discretion
vote the proxies for the election of any of the other nominees or for a
substitute nominee or nominees, if any, selected by the Board of Directors. The
affirmative vote of a plurality of the votes cast at the Annual Meeting is
required for the election of each nominee for director.
NOMINEES
The following sets forth information concerning the seven nominees for
election as directors at the Annual Meeting, including information as to each
nominee's age as of November 30, 1999, position with the Company and business
experience during the past five years.
James R. Crane, age 45, has served as President and a director of the
Company since he founded the Company in March 1984. Prior to the organization of
the Company, Mr. Crane had been employed by other air freight forwarders. Mr.
Crane has a total of 17 years experience in the transportation industry. Mr.
Crane is also a director of HCC Insurance Holdings, Inc. and Source One Spares,
Inc.
Frank J. Hevrdejs, age 54, has served as a director since December 1995.
Mr. Hevrdejs is a co-founder and a principal of The Sterling Group, Inc., a
private financial organization engaged in the acquisition and ownership of
operating businesses since 1982. He has served as President of The Sterling
Group from 1982 to 1989 and from 1994 to the present. Since 1989, he has served
as Chairman of First Sterling Ventures Corp. Mr. Hevrdejs also serves as a
director for Mail-Well, Inc., Sterling Chemical, Inc., Chase Bank of Texas,
N.A., Fibreglass Holdings, Inc. and Enduro Holdings, Inc.
Neil E. Kelley, age 40, has served as a director since September 1995. Mr.
Kelley is the Chairman and Chief Executive Officer of Avista Energy, Inc., a
national energy trading and marketing company. Previously, Mr. Kelley was the
Vice Chairman and a senior partner of the Vitol Group of Companies, an
international oil supply, trading and refining company, where he has served as
an Executive Director from 1990 to 1998. Mr. Kelley is also an outside director
of Quantum Energy Technologies, an energy technology development company based
in Cambridge, Massachusetts.
Norwood W. Knight-Richardson, age 52, has served as a director since May
1998. Dr. Knight-Richardson has served as the Medical Director of and a
practicing physician for CareMark Behavioral Health Services, a private
behavioral health services company, since August 1998. He has served as the
President and Chief Medical Officer of Continuum Healthcare Services, Inc. from
December 1997 to August 1998 and the Practicing Physician and Director of
University Behavioral Health Services from 1996 to December 1997. Dr.
Knight-Richardson was the Founder, President and Chief Executive Officer of the
Richardson Clinics from 1992 to 1996. Before that time, Dr. Knight-Richardson
held several positions including that of Vice President in the International
Division of Bank of America. Dr. Knight-Richardson has also held faculty
positions at several medical schools and is currently clinical associate
professor at Baylor College of Medicine in Houston, Texas as well as Division
Chief of Corporate Psychiatry and Adjunct Professor of Oregon Health Services
University.
Rebecca A. McDonald, age 47, was elected a director in 1999. Ms. McDonald
has been Chairman and Chief Executive Officer of Enron Asia, Pacific, Africa and
China since July 1999. From February 1999 to July 1999, she served as Executive
Managing Director of Enron International. She was President and CEO of Amoco
Energy Development Company from 1994 to 1999. Before joining Amoco, Ms. McDonald
was
3
<PAGE> 7
President of Tenneco Energy Services from 1991 to 1993 and was Vice President
for Strategic Planning for Tenneco Gas Company during 1991. She is a member of
the advisory boards of the Natural Gas Association of Houston and the New York
Mercantile Exchange Natural Gas Futures. Ms. McDonald is a director of the
Natural Gas Council and a founding member of the Mercosur Council. She also
serves as an outside director for Granite Construction, Inc.
William P. O'Connell, age 60, has served as a director since May 1995. Mr.
O'Connell has served as the President and Chief Executive Officer of AIM, Inc.,
a materials handling systems and equipment company, since 1988. He served as
President and Chief Executive Officer of Westweld Supply, Inc. from 1990 to
1995. Mr. O'Connell also serves as a director of AIM, Inc. and the Parnell
Group, Inc.
Elijio V. Serrano, age 42, joined the Company as Chief Financial Officer in
October 1999. From 1998 to 1999, he served as Vice President and General Manager
for a Geco-Prakla business unit at Schlumberger Limited, an international
oilfield services company. From 1992 to 1998, Mr. Serrano served as controller
for various Schlumberger business units. During 1982 to 1992, he served in
various financial management positions within the Schlumberger organization.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Directors not employed by the Company or any of its subsidiaries ("Outside
Directors") receive an annual retainer of $10,000. For Ms. McDonald, who was not
a director for the full fiscal year, this amount was pro rated to $7,500.
Directors who are also employees of the Company receive no payment for serving
as directors. All directors are reimbursed for travel and lodging expenses of
attending meetings. Under the Company's Nonemployee Director Stock Option Plan
(the "Nonemployee Stock Option Plan"), each current Outside Director was granted
options to purchase 30,000 (as adjusted for the two-for-one stock split,
effective August 1, 1996, and the three-for-two stock split, effective August
30, 1999) shares of Common Stock, generally on the date that person first became
an Outside Director of the Company. The Nonemployee Stock Option Plan currently
provides that each additional Outside Director will also be automatically
granted nonqualified options to purchase 30,000 shares of Common Stock upon
joining the board. In addition, the Nonemployee Stock Option Plan currently
provides that each Outside Director serving on the day after the date of the
annual meeting of shareholders will automatically be granted options to purchase
an additional 7,500 shares of Common Stock, subject to the availability for
issuance of those shares under the Nonemployee Director Plan. The Company plans
to amend the Nonemployee Stock Option Plan to provide that the initial grants to
Outside Directors will consist of nonqualified options to purchase 10,000 shares
of Common Stock and the yearly grants to Outside Directors will consist of
nonqualified options to purchase 2,500 shares of Common Stock. Options under
this plan become exercisable on the day before the annual meeting of
shareholders following the date of grant. During the fiscal year ended September
30, 1999, options to purchase 7,500 shares were granted to each of Messrs.
O'Connell, Kelley, Hevrdejs and Knight-Richardson at an exercise price per share
of $19.21. During the fiscal year ended September 30, 1999, options to purchase
30,000 shares were granted to Ms. McDonald at an exercise price per share of
$23.75.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company held five meetings during the fiscal
year ended September 30, 1999, and transacted business on four occasions during
the fiscal year by unanimous written consent.
The Board of Directors has an Audit Committee which consists of Messrs.
O'Connell, Kelley, Hevrdejs and Dr. Knight-Richardson. The function of the Audit
Committee is to meet with the internal financial staff of the Company and the
independent public accountants engaged by the Company to review (i) the scope
and findings of the annual audit, (ii) quarterly financial statements, (iii)
accounting policies and procedures and the Company's financial reporting and
(iv) the internal controls employed by the Company. The Audit Committee also
recommends to the Board of Directors the independent public accountants to be
selected to audit the Company's annual financial statements and reviews the fees
charged for audits and for any nonaudit engagements. The Committee's findings
and recommendations are reported to management and the Board of Directors for
appropriate action. The Audit Committee met on two occasions during fiscal 1999.
4
<PAGE> 8
The Board of Directors has a Compensation Committee which consists of
Messrs. O'Connell, Kelley, Hevrdejs and Dr. Knight-Richardson whose function is
to consider and act upon management's recommendations to the Board of Directors
on salaries, bonuses and other forms of compensation for the Company's executive
officers and certain other key employees. The Compensation Committee has been
appointed by the Board of Directors to administer the Company's stock option
plans. The Compensation Committee did not meet during fiscal 1999 but acted by
unanimous written consent during December 1999.
The Board of Directors has a Nominating Committee which consists of Messrs.
Kelley, Hevrdejs and Dr. Knight-Richardson. The Nominating Committee met on two
occasions during fiscal 1999. The functions performed by the Nominating
Committee are to make non-binding recommendations with respect to the nomination
of directors to serve on the Board of Directors of the Company for the Board's
final determination and approval, and any other duties that may be assigned by
the Board from time to time. Shareholders of the Company who wish to nominate
persons for election to the Board of Directors must comply with the provisions
of the Bylaws that are described more fully under "Shareholder Proposals for
Next Annual Meeting."
During the fiscal year ended September 30, 1999, each director attended at
least 75% of the aggregate of the total number of Board of Directors' meetings
and of meetings of committees of the Board of Directors on which that director
served.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company's executive
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, file reports of ownership and changes of
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater than 10% shareholders are required by SEC regulation to
furnish the Company with copies of all such forms they file.
Based solely on its review of the copies of such forms received by the
Company and on written representations by the Company's officers and directors
regarding their compliance with the filing requirements, the Company believes
that during the fiscal year ended September 30, 1999, all reports required by
Section 16(a) to be filed by its directors, officers and greater than 10%
beneficial owners were filed on a timely basis.
5
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the annual and long-term compensation for
the Company's Chief Executive Officer and its other three executive officers
with annual salary and bonus in excess of $100,000 (collectively, the "Named
Executives"), as well as the total compensation paid to each Named Executive,
for the Company's fiscal years ended September 30, 1999, 1998 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------- ------------
NAME AND FISCAL OTHER ANNUAL STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#) COMPENSATION($)(2)
- ------------------ ------ --------- -------- ------------------ ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
James R. Crane......... 1999 $521,066 $341,748 -- -- $ 7,500
President, Chief 1998 521,066 235,518 -- -- 9,459
Executive Officer and 1997 521,066 407,976 -- -- 16,494
Chairman of the
Board of Directors
Ronald E. Talley....... 1999 200,000 262,915 -- -- 7,500
Chief Operating 1998 182,000 128,978 -- 75,000 7,500
Officer(3)
John C. McVaney........ 1999 200,000 162,915 -- -- 7,500
Executive Vice 1998 182,000 94,736 -- 90,000 7,500
President(3)
Douglas A. Seckel...... 1999 125,000 162,915 -- -- 7,500
Treasurer(4) 1998 125,000 67,915 -- 75,000 7,500
1997 125,000 113,106 -- -- 7,500
</TABLE>
- ---------------
(1) For fiscal years 1997, 1998 and 1999, the Named Executives did not receive
any annual compensation not properly categorized as salary or bonus, except
for certain perquisites and other personal benefits which are not shown
because the aggregate amount of such compensation, if any, for each Named
Executive during each of those fiscal years did not exceed the lesser of
$50,000 or 10% of total salary and bonus reported for that Named Executive.
(2) For fiscal year 1997, all other compensation consists of premiums of $6,610
paid by the Company under a life insurance policy and premiums of $2,384
under a disability insurance policy for Mr. Crane and contributions of
$7,500 by the Company under its 401(k) Profit Sharing Plan for Messrs. Crane
and Seckel. For fiscal year 1998, all other compensation consists of
premiums of $1,959 paid by the Company under a disability insurance policy
for Mr. Crane and contributions of $7,500 by the Company under its 401(k)
Profit Sharing Plan for each Named Executive. For fiscal year 1999, all
other compensation consists of contributions of $7,500 by the Company under
its 401(k) Profit Sharing Plan for each Named Executive.
(3) Messrs. Talley and McVaney were named executive officers in fiscal 1998.
Information for fiscal 1997 is omitted.
(4) Mr. Seckel served as Chief Financial Officer from April 1989 to October
1999.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
No options were granted during fiscal 1999 to any of the Named Executives.
6
<PAGE> 10
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the exercise of
stock options and the unexercised options to purchase the Common Stock held by
the Named Executives at September 30, 1999:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES VALUE FISCAL YEAR-END FISCAL YEAR-END($)(2)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James R. Crane......... -- -- -- -- -- --
Douglas A. Seckel...... -- -- 15,000 60,000 $ 157,800 $ 631,200
Ronald E. Talley....... 10,000 $255,450 96,491 73,500 $2,349,193 $ 806,970
John C. McVaney........ -- -- 53,400 107,400 $ 799,374 $1,375,704
</TABLE>
- ---------------
(1) Value realized is calculated based on the difference between the option
exercise price and the closing market price of the Company's Common Stock on
the date of exercise, multiplied by the number of shares underlying the
options exercised.
(2) Value of unexercised in-the-money options is calculated based upon the
difference between the option price and the closing market price of the
Company's Common Stock at fiscal year-end, multiplied by the number of
shares underlying the options. The closing market price of the Company's
Common Stock, as reported on the NASDAQ Stock Market on September 30, 1999,
was $29.94.
CERTAIN TRANSACTIONS
James R. Crane, the Company's Chairman of the Board, holds interests in two
entities (one of which is 50% owned and one of which is wholly owned by Mr.
Crane) that lease passenger aircraft to the Company. From time to time,
employees of the Company utilize these aircraft in connection with travel
associated with the Company's business, for which the Company makes payments to
those entities. Those payments were approximately $695,000 during the fiscal
year ended September 30, 1999.
In August 1999, Mr. Crane paid the Company approximately $64,000 as
reimbursement for its out-of-pocket expenses incurred in connection with a
proposed public offering by Mr. Crane that was ultimately abandoned.
The Company has entered into a tax indemnification agreement with Messrs.
Crane, Seckel and two former officers and directors which provides for, among
other things, the indemnification of those shareholders for any losses or
liabilities with respect to any additional taxes (including interest, penalties
and legal fees) resulting from the Company's operations during the period it was
an S Corporation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
The Company's executive compensation programs are designed to attract and
retain highly qualified executives and to motivate them to maximize shareholder
returns by achieving both short- and long-term strategic Company goals. The
programs link each executive's compensation directly to individual and Company
performance. A significant portion of each executive's total compensation is
variable and dependent upon the attainment of strategic and financial goals,
individual performance objectives, and the appreciation in value of the Common
Stock.
There are three basic components to the Company's performance-based
compensation system: base pay; annual incentive bonus; and long-term
equity-based incentive compensation. Each component is addressed in the context
of individual and Company performance and competitive conditions. In determining
competitive compensation levels, the Company analyzes data that includes
information regarding the general freight forwarding industry as well as other
transportation companies. A comparison of the Company's financial performance
with that of the companies and indices shown in the Performance Graph is only
one of the many factors considered by the Committee to determine executive
compensation.
7
<PAGE> 11
Actual individual awards and changes in remuneration to the individual
executives are determined by the Committee. The Chief Executive Officer works
with the Committee in the design of the plans and makes recommendations to the
Committee regarding the salaries and bonuses of Company employees that report
directly to him. Grants or awards of stock, including stock options, are
individually determined and administered by the Committee.
Following the completion of the Company's initial public offering, the
Compensation Committee in fiscal 1996 restructured the compensation arrangements
with the Company's executive officers by adjusting the base salary for each
executive officer to a level generally comparable to that of other companies in
the freight industry and implementing the Five-Year Executive Incentive Plan
pursuant to which each executive officer is eligible to receive an annual cash
bonus as described in more detail below. In fiscal 1999, awards to executive
officers as a group reflected (i) the Company's record revenues and earnings,
(ii) continued progress toward strategic goals such as continued market
expansion and enhancements to the Company's management information systems,
(iii) the performance of the Company's Common Stock and (iv) changes in the
Company's operating margin.
Base Pay. Base pay is designed to be competitive with salary levels for
comparable executive positions at other freight forwarding service companies and
the Compensation Committee reviews such comparable salary information as one
factor to be considered in determining the base pay for the Company's executive
officers. Other factors the Compensation Committee considers in determining base
pay for each of the executive officers are that officer's responsibilities,
experience, leadership, potential future contribution, and demonstrated
individual performance (measured against strategic management objectives such as
maintaining customer satisfaction, strengthening market share, expanding the
markets for the Company's services, enhancement of the Company's management
information systems and the attainment of certain financial objectives). The
types and relative importance of specific financial and other business
objectives vary among the Company's executives depending on their positions and
the particular operations and functions for which they are responsible. The
Company's philosophy and practice is to place a significant emphasis on the
incentive components of compensation.
Annual Incentive Bonus. To establish baseline criteria for use in
calculating the amount of cash bonuses paid to executive officers, the Company
established a Five-Year Executive Incentive Plan in which each executive officer
of the Company participates. Pursuant to this Plan, each executive officer of
the Company is eligible to receive an annual cash bonus, the "target" level of
which is set with reference to the Company-wide managers' bonus program and
competitive conditions. These target levels are intended to motivate the
Company's executives by providing bonus payments for the achievement of
financial and operational goals within the Company's business plan. An executive
receives a percentage of his target bonus, depending primarily upon the extent
to which that executive has achieved the specific sales and operating goals for
that executive that have been set by the Committee and the Board and included in
the Five-Year Executive Incentive Plan. Although the Five-Year Executive
Incentive Plan provides the Committee with specific criteria for use in
determining bonuses, bonuses may exceed the target amount if the Company's
performance in the judgment of the Committee exceeds the goals set forth in that
Plan. Furthermore, the Committee may in its discretion consider business
achievements and other criteria not set forth in the Five-Year Executive
Incentive Plan in determining the final amount of the annual bonus to be paid to
each executive officer. Based solely on the criteria set forth in the Five-Year
Executive Incentive Plan, each of Messrs. Crane, McVaney, Seckel and Talley
would have received 95% of their respective maximum "target" amounts. However,
in determining the final amount of the annual bonuses paid, the Committee, at
the suggestion of Mr. Crane, adjusted those amounts by reducing the amount paid
to Mr. Crane by $100,000 and increasing the amount paid to Mr. Talley by the
same amount to reward Mr. Talley for his performance during the fiscal year.
Long-Term Equity-Based Compensation. Long-term equity-based compensation is
tied directly to shareholder return. Under the Company's Long-Term Incentive
Plan, long-term incentive compensation consists of stock options, which
generally vest in 20% increments in each of the five years following the date of
the grant, although vesting can be accelerated if deemed appropriate by the
Committee. The exercise price of stock options granted is equal to the fair
market value of the Common Stock on the date of grant; accordingly, executives
receiving stock options are rewarded only if the market price of the Common
Stock appreciates.
8
<PAGE> 12
Stock options are thus designed to align the interests of the Company's
executives with those of its shareholders by encouraging executives to enhance
the value of the Company and, hence, the price of the Common Stock and each
shareholder's return.
In determining whether to grant executive officers stock options under the
Plan, the Compensation Committee considers factors, including that executive's
current ownership stake in the Company, the degree to which increasing that
ownership stake would provide the executive with additional incentives for
future performance, the likelihood that the grant of those options would
encourage the executive to remain with the Company, prior option grants
(including the size of previous grants and the number of options held) and the
value of the executive's service to the Company. No options were granted to the
Named Executives during fiscal 1999 because the Committee believed that the
common stock and stock options held by them effectively addressed the foregoing
factors.
Compensation of the Chief Executive Officer. In reviewing Mr. Crane's
performance, the Committee focused primarily on the Company's performance in
fiscal year 1999, including a 43% sales increase, a 7.6% operating margin and a
35% growth in earnings. The Committee compared these performance measures
against the goals under the Five-Year Executive Incentive Plan of 25% annual
sales increases and a 10% operating margin. Under the Five-Year Executive
Incentive Plan, Mr. Crane's fiscal 1999 incentive multiple of 1.08%, when
applied to Fiscal 1999 operating income of $44,450,000 (which is net of the
effect of acquisitions), would have allowed for a maximum incentive bonus of
$480,060. The Committee, however, took into account the 7.6% operating margin in
deciding to award Mr. Crane $326,748, which constituted 68% of such maximum
amount. Mr. Crane also received $15,000 under the Company's profit sharing plan,
which was the maximum amount granted under that plan to any senior executive of
the Company during fiscal 1999.
Mr. Crane's position as the founder of and a major shareholder in the
Company provides an effective long-term performance incentive tied directly to
shareholder return. Accordingly, he received no stock option awards.
Executive compensation is an evolving field. The Compensation Committee
monitors trends in this area, as well as changes in law, regulation and
accounting practices, that may affect either its compensation practices or its
philosophy. Accordingly, the Committee reserves the right to alter its approach
in response to changing conditions.
THE COMPENSATION COMMITTEE
William P. O'Connell
Neil E. Kelley
Frank J. Hevrdejs
Norwood W. Knight-Richardson
SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
limits (to $1 million per covered executive) the deductibility for federal
income tax purposes of annual compensation paid to a company's chief executive
officer and each of its other four most highly compensated executive officers.
All options previously granted under the Company's Incentive Plan qualify for an
exemption from the application of Section 162(m) of the Code, thereby preserving
the deductibility for federal income tax purposes of compensation that may be
attributable to the exercise of such options.
9
<PAGE> 13
EMPLOYMENT ARRANGEMENTS
During the fiscal year ended September 30, 1999, the Company was a party to
employment agreements with each of the Named Executives. The following chart
shows the annual salaries that the Named Executives will be paid by the Company
pursuant to those agreements.
<TABLE>
<CAPTION>
NAME AND POSITION ANNUAL SALARY
- ----------------- -------------
<S> <C>
James R. Crane.............................................. $521,066
President, Chairman and Chief Executive Officer
Douglas A. Seckel........................................... $125,000
Treasurer and Director
Ronald E. Talley............................................ $200,000
Chief Operating Officer
John C. McVaney............................................. $200,000
Executive Vice President
</TABLE>
In addition to the base salaries set forth above, the Company expects,
subject to certain conditions, to pay the executive an annual cash bonus
pursuant to the terms of the Five-Year Executive Incentive Plan. The fiscal 2000
cash incentive under such plan, assuming all goals are met, is 0.97% of
operating income for Mr. Crane and 0.32% of operating income for Mr. Seckel, Mr.
Talley and Mr. McVaney, provided that the amount of the bonus under this plan
will not exceed the executive's base salary. Each of the above employment
agreements provides that it continues in effect until terminated by either the
Company or the executive pursuant to its terms. Both the Company and the
executive have the right to terminate the agreement upon advance written notice
specified in such agreement, and the Company has the right to terminate the
agreement for cause immediately upon notice of such termination. Each agreement
includes a covenant of the executive not to compete with the Company during the
term of the agreement and for a period specified in such agreement following its
termination. The employment agreements for Messrs. Crane, Seckel, Talley and
McVaney continue in effect for fiscal 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the fiscal year ended September 30, 1999, the Compensation Committee of
the Board of Directors was comprised of Messrs. O'Connell, Kelley, Hevrdejs and
Dr. Knight-Richardson.
PERFORMANCE GRAPH
The following graph presents a comparison of the yearly percentage change
in the cumulative total return on the Common Stock over the period from November
30, 1995, the date of the Company's initial public offering, to September 30,
1999, with the cumulative total return of the S&P 500 Index and of the Dow Jones
Air Freight/Couriers Index of publicly traded companies over the same period.
The Dow Jones Air Freight/ Couriers Index consists of the following companies:
Air Express International Corporation, Airborne Freight Corporation, Atlas Air,
Inc., Expeditors International of Washington, Inc., FDX Corporation and the
Pittston BAX Group (a tracking stock of the Pittston Company). The graph assumes
that $100 was invested on December 1, 1995 in the Common Stock at its initial
public offering price of $5.50 per share (as adjusted for subsequent two-for-one
and three-for-two stock splits) and in each of the other two indices and the
reinvestment of all dividends, if any.
The graph is presented in accordance with SEC requirements. Shareholders
are cautioned against drawing any conclusions from the data contained therein,
as past results are not necessarily indicative of future financial performance.
10
<PAGE> 14
COMPARISON OF 46 MONTH CUMULATIVE TOTAL RETURN*
AMONG EAGLE USA AIRFREIGHT, INC., THE S&P 500 INDEX
Graph AND THE DOW JONES AIR FREIGHT/COURIERS INDEX
<TABLE>
<CAPTION>
EAGLE USA DOW JONES AIR
AIREFREIGHT, INC. S & P 500 FREIGHT/COURIERS
----------------- --------- ----------------
<S> <C> <C> <C>
12/1/95 100.00 100.00 100.00
9/96 315.00 115.00 103.00
9/97 406.00 162.00 194.00
9/98 170.00 176.00 111.00
9/99 544.00 225.00 185.00
</TABLE>
* $100 invested on 12/01/95 in stock or index
(including reinvestment of dividends).
Fiscal year ended September 30.
11
<PAGE> 15
PROPOSAL 2
The Board of Directors has unanimously approved a proposal to amend the
Company's Second Amended and Restated Articles of Incorporation to change the
Company's name to "EGL, Inc." The proposed amendment would replace Article I of
the Second Amended and Restated Articles of Incorporation with the following:
"The name of the corporation is EGL, Inc."
The Company was incorporated in 1984 with the name Eagle USA Air Freight,
Inc. In recognition of the Company's expanding international business
activities, the Board of Directors believes that the name Eagle USA Airfreight,
Inc. is no longer appropriate and accordingly has proposed to change the
Company's name to "EGL, Inc." In October 1999, the Company announced that it had
changed the name under which it does business worldwide to "EGL Eagle Global
Logistics."
Adoption of the proposed amendment to the Second Amended and Restated
Articles of Incorporation will require the affirmative vote of the holders of at
least a majority of the outstanding shares of Common Stock entitled to vote at
the meeting. Abstentions and broker non-votes will have the same effect as no
votes with respect to this proposal. The persons named on the accompanying proxy
will vote in accordance with the choice specified thereon, or, if no choice is
properly indicated, in favor of the adoption of the proposed amendment to the
Second Amended and Restated Articles of Incorporation.
If the amendment is adopted, the Company intends to change its Nasdaq
trading symbol to "EAGL." Shareholders will not be required to exchange
outstanding stock certificates for new certificates.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE NAME CHANGE TO EGL, INC.
PROPOSAL 3
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed, and recommends the approval of the
appointment of, PricewaterhouseCoopers LLP, who have been the Company's auditors
since 1991, as independent accountants for the fiscal year ending September 30,
2000. Representatives of PricewaterhouseCoopers LLP are expected to be present
at the Annual Meeting and will be given the opportunity to make a statement, if
they desire to do so, and to respond to appropriate questions.
Unless shareholders specify otherwise in the proxy, proxies solicited by
the Board of Directors will be voted by the persons named in the proxy at the
Annual Meeting to ratify the selection of PricewaterhouseCoopers LLP as the
Company's auditors for 2000. The affirmative vote of a majority of the shares
entitled to vote and represented in person or by proxy at the Annual Meeting
will be required for ratification.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP.
OTHER BUSINESS
As of the date of this proxy, the Board of Directors is not informed of any
other matters, other than those above, that may be brought before the meeting.
The persons named in the enclosed form of proxy or their substitutes will vote
with respect to any such matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Rule 14a-8 under the Exchange Act addresses when a company must include a
shareholder's proposal in its proxy statement and identify the proposal in its
form of proxy when the company holds an annual or special meeting of
shareholders. Under Rule 14a-8, proposals that shareholders intend to have
included in the Company's proxy statement and form of proxy for the 2001 Annual
Meeting of Shareholders must be received by the Company no later than September
25, 2000. However, if the date of the 2001 Annual Meeting of Shareholders
changes by more than 30 days from the date of the 2000 Annual Meeting of
Shareholders, the
12
<PAGE> 16
deadline is a reasonable time before the Company begins to print and mail its
proxy materials, which deadline will be set forth in a Quarterly Report on Form
10-Q or will otherwise be communicated to shareholders. Shareholder proposals
must also be otherwise eligible for inclusion.
If a shareholder desires to bring a matter before an annual or special
meeting and the proposal is submitted outside the process of Rule 14a-8, the
shareholder must follow the procedures set forth in the Company's Bylaws. The
Company's Bylaws provide generally that shareholders who wish to nominate
directors or to bring business before a shareholders' meeting must notify the
Company and provide certain pertinent information at least 80 days before the
meeting date (or within 10 days after public announcement pursuant to the Bylaws
of the meeting date, if the meeting date has not been publicly announced at
least 90 days in advance). If the date of the 2001 Annual Meeting of
Shareholders is the same as the date of the 2000 Annual Meeting of Shareholders,
shareholders who wish to nominate directors or to bring business before the 2001
Annual Meeting of Shareholders must notify the Company no later than December 3,
2000.
By Order of the Board of Directors
/s/ CAROLYN L. ARMOGIDA
----------------------------------
Carolyn L. Armogida,
Secretary
Dated: January 24, 2000
Houston, Texas
13
<PAGE> 17
- --------------------------------------------------------------------------------
EAGLE USA AIRFREIGHT, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
FEBRUARY 21, 2000
The undersigned hereby appoints James R. Crane and Douglas A. Seckel,
jointly and severally, proxies, with full power of substitution and with
discretionary authority, to vote all shares of Common Stock which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of Eagle
USA Airfreight, Inc. (the "Company") to be held on Monday, February 21, 2000, at
the Corporate Headquarters of Eagle USA Airfreight, Inc. (located near George
Bush Intercontinental Airport), 15350 Vickery Drive, Houston, Texas 77032, at
10:00 a.m., or at any adjournment thereof, hereby revoking any proxy heretofore
given.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IN THE ABSENCE OF SPECIFIC DIRECTIONS TO THE CONTRARY, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF EACH OF THE DIRECTORS NAMED BELOW, FOR THE APPROVAL OF THE
COMPANY'S NAME CHANGE TO "EGL, INC." AND FOR THE APPROVAL OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S ACCOUNTANTS FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 2000.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF, AND PROXY
STATEMENT FOR, THE AFORESAID ANNUAL MEETING.
1. Election of directors -- Nominees:
James R. Crane; Frank J. Hevrdejs; Neil E. Kelley; Norwood W.
Knight-Richardson; Rebecca A. McDonald; William P. O'Connell; and Elijio V.
Serrano as directors, except as indicated below.
[ ] FOR [ ] WITHHELD
[ ] FOR, except vote withheld from the following nominee(s):
----------------------------------------------------------------
2. Approval of an amendment to the Company's Second Amended and Restated
Articles of Incorporation to change the name of the Company to "EGL, Inc.":
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. Approval of the appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending September 30, 2000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. With discretionary authority as to such other matters as may properly come
before the meeting.
Date: ------------------ , 2000
-------------------------------
(Signature)
-------------------------------
(Signature)
Sign exactly as name appears
hereon.
(Joint owners should each sign.
When signing as attorney,
executor, officer,
administrator, trustee, or
guardian, please give full
title as such.)
PLEASE SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY, USING
THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
