<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. )
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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CHAMPIONSHIP AUTO RACING TEAMS, 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)(4) 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:
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<PAGE> 2
[LOGO]
CHAMPIONSHIP AUTO RACING TEAMS, INC.
755 WEST BIG BEAVER ROAD, SUITE 800
TROY, MICHIGAN 48084
To our Stockholders:
I am pleased to invite you to attend the annual meeting of stockholders of
Championship Auto Racing Teams, Inc. to be held on Tuesday, May 2, 2000 at 9:00
a.m. at the Townsend Hotel located at 100 Townsend Street, Birmingham, Michigan
48009.
Details regarding the business to be conducted at the meeting are more fully
described in the accompanying Notice of Annual Meeting and Proxy Statement.
Your vote is important. Whether or not you plan to attend the annual meeting, I
hope that you will vote as soon as possible. You may vote over the Internet, as
well as by telephone or by mailing a traditional proxy card. Voting over the
Internet, by phone or by written proxy will ensure your representation at the
annual meeting if you do not attend in person. Please review the instructions on
the proxy card regarding each of these voting options.
Thank you for your ongoing support of and continued interest in Championship
Auto Racing Teams, Inc.
Sincerely,
/s/ Andrew Craig
Andrew Craig
Chairman of the Board
Championship Auto Racing Teams, Inc.
March 17, 2000
<PAGE> 3
2000 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
Notice of Annual Meeting of Stockholders.........................................................1
Q:Why am I receiving these materials?...................................................2
Q:What information is contained in these materials?.....................................2
Q:What proposals will be voted on at the meeting?.......................................2
Q:What shares owned by me can be voted?.................................................2
Q:What is the difference between holding shares as a stockholder
of record and as a beneficial owner?.................................................2
Stockholder of Record..............................................................2
Beneficial Owner...................................................................2
Q:How can I vote my shares in person at the meeting?....................................2
Q:How can I vote my shares without attending the meeting?...............................3
Q:Can I vote by telephone or on the Internet if I am not a registered stockholder?......3
Q:Can I change my vote?.................................................................3
Q:How are votes counted?................................................................3
Q:What is the voting requirement to approve each of the proposals?......................3
Q:How will abstentions be treated?......................................................4
Q:How will broker non-votes be treated?.................................................4
Q:What does it mean if I receive more than one proxy or voting instruction card?........4
Q:Where can I find the voting results of the meeting?...................................4
STOCK OWNERSHIP..................................................................................5
Who are the largest owners of CART's stock?.............................................5
How much stock do CART's directors and executive officers own?..........................5
Section 16(a) Beneficial Ownership Reporting Compliance.................................7
BOARD STRUCTURE AND COMPENSATION.................................................................7
DIRECTOR COMPENSATION ARRANGEMENTS...............................................................8
PROPOSAL NO. 1 - ELECTION OF DIRECTORS...........................................................9
PROPOSAL NO. 2 - RATIFICATION OF INDEPENDENT ACCOUNTANTS........................................11
EXECUTIVE OFFICERS AND KEY EMPLOYEES............................................................12
Summary Compensation Table......................................................................15
Option Grants In Last Fiscal Year...............................................................16
Aggregate Option Exercises In Last Fiscal Year And Fiscal Year-End Option Values................17
REPORT OF THE COMPENSATION COMMITTEE............................................................17
STOCK PERFORMANCE GRAPH.........................................................................19
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................................................20
ADDITIONAL QUESTIONS AND INFORMATION REGARDING THE ANNUAL MEETING AND
STOCKHOLDER PROPOSALS.........................................................................22
Q:What happens if additional proposals are presented at the meeting?...................22
Q:What class of shares are entitled to be voted?.......................................22
Q:What is the quorum requirement for the meeting?......................................22
Q:Who will count the vote?.............................................................22
Q:Is my vote confidential?.............................................................22
Q:Who will bear the cost of soliciting votes for the meeting?..........................22
</TABLE>
ii
<PAGE> 5
CHAMPIONSHIP AUTO RACING TEAMS, INC.
755 WEST BIG BEAVER ROAD, SUITE 800
TROY, MICHIGAN 48084
(248) 362-8800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TIME 9:00 a.m. on Tuesday, May 2, 2000
PLACE Townsend Hotel
100 Townsend Street
Birmingham, Michigan 48009
ITEMS OF BUSINESS (1) To elect directors
(2) To ratify the appointment of
independent accountants
(3) To consider such other business as
may properly come before the
meeting
RECORD DATE You are entitled to vote if you were a
stockholder at the close of business on
Wednesday, March 15, 2000.
VOTING BY PROXY Please submit the proxy as soon as possible
so that your shares can be voted at the
meeting in accordance with your
instructions. You may submit your proxy (1)
over the Internet, (2) by telephone, or (3)
by mail. For specific instructions, please
refer to the Questions and Answers beginning
on page 2 of this proxy statement and the
instructions on the proxy card.
By Order of the Board of Directors
/s/ Andrew Craig
Andrew Craig
Chairman of the Board
This proxy statement and accompanying proxy card are being distributed
on or about March 28, 2000.
<PAGE> 6
Q: WHY AM I RECEIVING THESE MATERIALS?
A: The Board of Directors of Championship Auto Racing Teams, Inc. ("CART") is
providing these proxy materials for you in connection with CART's annual
meeting of stockholders which will take place on May 2, 2000. You are
invited to attend the meeting and are requested to vote on the proposals
described in this proxy statement.
Q: WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
A: The information included in this proxy statement relates to the proposals
to be voted on at the meeting, the voting process, the compensation of
directors and our most highly paid officers, and certain other required
information. Our 1999 Annual Report to Shareholders is also enclosed.
Q: WHAT PROPOSALS WILL BE VOTED ON AT THE MEETING?
A: There are two proposals scheduled to be voted on at the meeting:
o The election of directors
o The ratification of independent accountants
Q. WHAT SHARES OWNED BY ME CAN BE VOTED?
A: All shares owned by you as of March 15, 2000, the record date, may be voted
by you. These shares include those (1) held directly in your name as a
stockholder of record and (2) held for you as the beneficial owner through
a stockbroker, bank or other nominee.
Q. WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD
AND AS A BENEFICIAL OWNER?
A: Many CART stockholders hold their shares through a stockbroker, bank or
other nominee rather than directly in their own name. As summarized below,
there are some distinctions between shares held of record and those owned
beneficially.
STOCKHOLDER OF RECORD
If your shares are registered directly in your name with CART's Transfer
Agent, Norwest Bank, you are considered, with respect to those shares, the
stockholder of record and these proxy materials are being sent directly to
you by CART. As a stockholder of record, you have the right to grant your
voting proxy directly to CART or to vote in person at the meeting. CART has
enclosed a proxy card for your use.
BENEFICIAL OWNER
If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of the shares held in
street name and these proxy materials are being forwarded to you by your
broker or nominee who is considered, with respect to those shares, the
stockholder of record. As the beneficial owner, you have the right to
direct your broker on how to vote and are also invited to attend the
meeting. However, since you are not the stockholder of record, you may not
vote these shares in person at the meeting. Your broker or nominee has
enclosed a voting instruction card for your use.
Q: HOW CAN I VOTE MY SHARES IN PERSON AT THE MEETING?
A: Shares held directly in your name as the stockholder of record may be voted
in person at the annual meeting. If you choose to do so, please bring the
enclosed proxy card or proof of identification.
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, WE RECOMMEND THAT YOU ALSO
SUBMIT YOUR PROXY AS DESCRIBED BELOW SO THAT YOUR VOTE WILL BE COUNTED IF
YOU LATER DECIDE NOT TO ATTEND THE MEETING.
2
<PAGE> 7
Q: HOW CAN I VOTE MY SHARES WITHOUT ATTENDING THE MEETING?
A: Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may direct your vote without attending the
meeting. You may vote by granting a proxy or, for shares held in street
name, by submitting voting instructions to your broker or nominee. In most
instances, you will be able to do this over the Internet, by telephone or
mail. Please refer to the summary instructions below and those included on
your proxy card or, for shares held in street name, the voting instruction
card included by your broker or nominee.
BY INTERNET - If you have Internet access, you may submit your proxy from
any location in the world by following the "Vote by Internet" instructions
on the proxy card.
BY TELEPHONE - If you live in the United States or Canada, you may submit
your proxy by following the "Vote by Telephone" instructions on the proxy
card,
BY MAIL - You may do this by signing your proxy card or, for shares held in
street name, the voting instruction card included by your broker or nominee
and mailing it in the enclosed, postage prepaid and addressed envelope. If
you provide specific voting instructions, your shares will be voted as you
instruct. If you sign but do not provide instructions, your shares will be
voted as described below in "HOW ARE VOTES COUNTED?".
Q: CAN I VOTE BY TELEPHONE OR ON THE INTERNET IF I AM NOT A REGISTERED
STOCKHOLDER?
A: If your shares are held in "street name" by a broker or other nominee, you
should check the voting form used by that firm to determine whether you
will be able to vote by telephone or on the Internet.
Q: CAN I CHANGE MY VOTE?
A: You may change your proxy instructions at any time prior to the vote at the
annual meeting. For shares held directly in your name, you may accomplish
this by granting a new proxy or by attending the annual meeting and voting
in person. Attendance at the meeting will not cause your previously granted
proxy to be revoked unless you specifically so request. For shares held
beneficially by you, you may accomplish this by submitting new voting
instructions to your broker or nominee.
Q: HOW ARE VOTES COUNTED?
A: In the election of directors, you may vote "FOR" all of the nominees or
your vote may be "WITHHELD" with respect to one or more of the nominees.
For the other proposals, you may vote "FOR," "AGAINST" or "ABSTAIN." If you
"ABSTAIN," it has the same effect as a vote "AGAINST." If you sign your
proxy card or broker instruction card with no further instructions, your
shares will be voted in accordance with the recommendations of the Board.
Q: WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
A: In the election of directors, the 12 persons receiving the highest number
of "FOR" votes will be elected. The other proposal requires the affirmative
"FOR" vote of a majority of those shares present, in person or by proxy,
and entitled to vote. If you are the beneficial owner and do not provide
the stockholder of record with voting instructions, your shares may
constitute broker non-votes, as described in "HOW WILL BROKER NON-VOTES BE
TREATED?" on page 4. In tabulating the voting results for any particular
proposal, shares which constitute broker non-votes are not considered
entitled to vote.
3
<PAGE> 8
Q: HOW WILL ABSTENTIONS BE TREATED?
A: If you abstain from voting on one or more proposals, your shares will still
be included for purposes of determining whether a quorum is present.
Because directors are elected by a plurality of the votes, an abstention
will have no effect on the outcome of the vote and, therefore, is not
offered as a voting option for Proposal 1. If you abstain from voting on
the remaining proposals, your shares will be included in the number of
shares voting on the proposal and, consequently, your abstention will have
the same practical effects as a vote against the proposals.
Q: HOW WILL BROKER NON-VOTES BE TREATED?
A: Shares treated as broker non-votes on one or more proposals will be
included for purposes of calculating the presence of a quorum. Otherwise,
shares represented by broker non-votes will be treated as shares not
entitled to vote on a proposal. Consequently, broker non-votes will have
the following effects:
Proposal 1: Broker non-votes will have no effect on the election of
directors.
Proposal 2: Broker non-votes will not be counted in determining the number
of shares necessary for ratification of the appointment of the Company's
independent auditors and will, therefore, reduce the absolute number (but
not the percentage) of the affirmative votes required for approval of these
proposals.
Generally, broker non-votes occur when shares held by a broker for a
beneficial owner are not voted with respect to a particular proposal
because (1) the broker has not received voting instructions from the
beneficial owner and (2) the broker lacks discretionary voting power to
vote such shares.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY OR VOTING INSTRUCTION
CARD?
A: It means your shares are registered differently or are in more than one
account. Please provide voting instructions for all proxy and voting
instruction cards you receive.
Q: WHERE CAN I FIND THE VOTING RESULTS OF THE MEETING?
A: We will announce preliminary voting results at the meeting and publish
final results in our quarterly report on Form 10-Q for the second quarter
of 2000.
Additional Q&A information regarding the annual meeting and stockholder
proposals may be found on pages 22 and 23.
4
<PAGE> 9
STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF CART'S STOCK?
The following table shows the amount of CART common stock beneficially
owned by any person or group that is the beneficial owner of more than 5% of
CART's common stock as of March 15, 2000.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
AGGREGATE NUMBER PERCENT OF
OF SHARES SHARES
NAME AND ADDRESS BENEFICIALLY OWNED OUTSTANDING
---------------- ------------------ -----------
<S> <C> <C>
Lord, Abbett & Co. (1) 908,360 5.8%
90 Hudson Street
Jersey City, NJ 07302
Newman/Haas Racing 800,500 5.1%
500 Tower Parkway
Lincolnshire, IL 60069
PacWest Racing Group (2) 800,000 5.1%
4601 Methanol Lane
Indianapolis, IN 46268
- ---------------------------------------------------------------------------
</TABLE>
(1) We have received this information regarding share ownership from the
Schedule 13G that was filed with the SEC on February 2, 2000.
(2) These shares are also the subject of a Schedule 13G that was filed with the
SEC on February 1, 2000 by Bank of America Corporation.
HOW MUCH STOCK DO CART'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table shows the amount of common stock of CART
beneficially owned (unless otherwise indicated) by CART's directors, the
executive officers of CART named in the Summary Compensation Table below,
nominees, and the directors and executive officers of CART as a group. Except as
otherwise indicated, all information is as of March 15, 2000.
The number of shares beneficially owned by each director or executive
officer is determined under rules of the Securities and Exchange Commission, and
the information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares as to
which the individual has the sole or shared voting power or investment power and
also any shares which the individual has the right to acquire as of May 14, 2000
(60 days after the record date of March 15, 2000) through the exercise of stock
options or other rights. Unless otherwise indicated, each person has sole
investment and voting power (or shares such powers with his spouse) with respect
to the shares set forth in the following table.
5
<PAGE> 10
<TABLE>
- ---------------------------------------------------------------------------------------------------
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF SHARES
NAME BENEFICIAL OWNERSHIP (1) OUTSTANDING
---- ------------------------ -----------
<S> <C> <C>
Andrew H. Craig..................................... 1,800 Direct 2.5%
400,000 Vested Options
Gerald R. Forsythe.................................. 400,000 Indirect (3) 2.6%
Chip Ganassi........................................ 720,000 Indirect (4) 4.6%
Carl A. Haas........................................ 800,500 Indirect (5) 5.1%
James F. Hardymon................................... 15,000 Vested Options *
Bruce R. McCaw...................................... 800,000 Indirect (6) 5.1%
Don Ohlmeyer, Jr. (7)............................... 15,000 Vested Options *
U.E. Patrick........................................ 100 Direct 2.6%
398,000 Indirect (8)
7,585 Vested Options
Robert W. Rahal..................................... 620,000 Indirect (9) 4.0%
Derrick Walker...................................... 210,000 Indirect (10) 1.3%
Barry E. Green...................................... 103,500 Indirect (11) *
Bert C. Roberts, Jr. ............................... 5,000 Direct *
Frederick T. Tucker................................. 0
Randy K. Dzierzawski................................ 5,000 Direct 1.1%
170,000 Vested Options
Roger Bailey........................................ 1,000 Direct *
32,783 Vested Options
Timothy Mayer....................................... 3,333 Vested Options *
Victoria O'Connor................................... 3,333 Vested Options *
All current directors and executive officers as a 6,900 Direct 28.4%
group (16) persons............................... 3,949,500 Indirect
657,033 Vested Options
- -------------------------------------------------------------------- ------------------------------
</TABLE>
* Represents less than 1% of the Company's outstanding common stock.
(1) "Vested Options" are stock options which may be exercised as of May 14,
2000.
(2) Percentages are based upon 15,586,568 shares of common stock outstanding on
March 15, 2000.
(3) The shares are held of record by Forsythe Racing, Inc.
(4) The shares are held of record by Chip Ganassi Racing Teams, Inc.
6
<PAGE> 11
(5) The shares are held of record by Newman/Haas Racing.
(6) The shares are held of record by PacWest Racing Group.
(7) Mr. Ohlmeyer will not stand for re-election at this meeting.
(8) The shares are held of record by Patrick Racing, Inc.
(9) The shares are held of record by Team Rahal, Inc.
(10) The shares are held of record by Derrick Walker Racing, Inc.
(11) The shares are held of record by Team Green, Inc.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and holders of more than 10% of our common stock
to file with the Securities and Exchange Commission reports regarding their
ownership and changes in ownership of our stock. CART believes that during
fiscal 1999, its officers, directors and 10% stockholders complied with all
Section 16(a) filing requirements. In making this statement, CART has relied
upon the written representations of its directors and officers.
BOARD STRUCTURE AND COMPENSATION
Our Board has 10 directors and the following four committees: (1)
Executive, (2) Audit, (3) Compensation, and (4) Nominating. The membership
during fiscal 1999 and the function of each committee are described below.
During 1999, the Board held seven meetings and four telephonic meetings and took
one action in writing. Each director attended at least 75% of all Board and
applicable committee meetings, except Mr. Ohlmeyer. All directors served on the
Board for the entire fiscal 1999, except Mr. Ohlmeyer who was appointed to the
Board in January 1999.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
NAME OF DIRECTOR EXECUTIVE AUDIT COMPENSATION NOMINATING
- ---------------- --------- ----- ------------ ----------
<S> <C> <C> <C> <C>
Non-Employee Directors:
Gerald R. Forsythe.................... X
Chip Ganassi..........................
Carl A. Haas.......................... X
James F. Hardymon..................... X* X* X*
Bruce R. McCaw ...................... X
Don Ohlmeyer, Jr. (1)................. X X
U.E. Patrick.......................... X* X
Robert W. Rahal....................... X
Derrick Walker........................ X X
Employee Directors:
Andrew H. Craig ...................... X
Number of Meetings in Fiscal 1999 .... 5 5 6 2
- --------------------------------------------------------------------------------------
</TABLE>
X = Committee member; * = Chair
(1) Mr. Ohlmeyer will not stand for re-election at this meeting.
7
<PAGE> 12
THE EXECUTIVE COMMITTEE
The Executive Committee meets or takes written action when the Board is
not otherwise meeting. The responsibility of the Executive Committee is to work
with the Chief Executive Officer in analyzing issues that come before the
Executive Committee and making recommendations to the Board of Directors for its
approval.
THE AUDIT COMMITTEE
The Audit Committee reviews our auditing, accounting, financial
reporting and internal control functions and makes recommendations to the Board
for the selection of independent accountants. In discharging its duties, the
committee:
o reviews and approves the scope of the annual audit and the independent
accountant's fees;
o meets independently with our internal accounting staff, our
independent accountants and our senior management; and
o reviews the general scope of our accounting, financial reporting,
annual audit and internal audit program, matters relating to internal
control systems as well as the results of the annual audit.
THE COMPENSATION COMMITTEE
The Compensation Committee determines, approves and reports to the
Board on all elements of compensation for our elected executive officers and all
employees whose annual salary exceed $150,000.
THE NOMINATING COMMITTEE
The Nominating Committee proposes a slate of directors for election by
our stockholders at each annual meeting and candidates to fill any vacancies on
the Board. It is also responsible for approving management succession plans and
addressing Board organizational and governance issues.
DIRECTOR COMPENSATION ARRANGEMENTS
The following table provides information on CART's compensation and
reimbursement practices during 1999 for directors who are not CART officers and
who are not affiliated with teams participating in CART events (Messrs. Hardymon
and Ohlmeyer). CART employees and those directors who are affiliated with teams
participating in CART events do not receive any compensation for their Board
activities.
In addition to the cash compensation discussed below, members of the
Board of Directors who are not CART officers and who are not affiliated with
teams participating in CART events (Messrs. Hardymon and Ohlmeyer) received
options to purchase 10,000 shares of common stock when first elected and options
to purchase 5,000 shares upon each re-election.
<TABLE>
COMPENSATION TABLE
FOR 1999
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
Annual Director Retainer $ 0
Board Meeting Attendance Fees (per meeting) $1,000
Board Telephonic Meeting Fees (per meeting) $ 250
Committee Meeting Attendance Fees (per meeting) $ 250
Reimbursement for Expenses Attendant to Board Membership Yes
- -------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 13
PROPOSAL NO. 1
ELECTION OF DIRECTORS
There are 12 nominees for election to our Board this year. All of the
nominees have served as directors since the last annual meeting, except for
Barry Green, Bert C. Roberts, Jr., and Frederick T. Tucker, each of whom were
nominated by the Board of Directors for election at this meeting. Information
regarding the business experience of each nominee is provided below. All
directors are elected annually to serve until the next annual meeting and until
their respective successor is elected.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION TO THE BOARD
OF EACH OF THE FOLLOWING NOMINEES.
ANDREW H. CRAIG Mr. Craig was first elected President,
Director since December 1997 Chief Executive Officer and Chairman of
Age 51 the Board of CART in December 1997 and has
served as the President and Chief
Executive Officer of CART's operating
subsidiary since January 1994. From 1983
to 1994, Mr. Craig was employed by ISL
Marketing, AG, an international sports
marketing firm located in Switzerland. For
the four years prior to his employment
with CART, Mr. Craig served as deputy
chief executive officer and executive vice
president of ISL Marketing, AG. Mr. Craig
currently serves as a Vice President and
Director of the Automobile Competition
Committee for the United States FIA, Inc.
GERALD R. FORSYTHE Mr. Forsythe currently serves as President
Director since December 1997 of Forsythe Racing, Inc. and a director
Age 59 and President of Player's/Forsythe Racing
Team, Ltd. Since 1963, Mr. Forsythe has
been employed in various positions with
and currently serves as Chairman and Chief
Executive Officer of INDECK Power
Equipment Company, its subsidiaries and
affiliates. INDECK Power Equipment Company
is North America's largest emergency and
back-up steam generating source. The
company also designs and fabricates water
treatment equipment and rents generator
sets, chillers and compressors.
CHIP GANASSI Since 1987, Mr. Ganassi has served as
Director since December 1997 President and owner of Chip Ganassi Racing
Age 41 Teams, Inc., which won the CART
Championship in 1996, 1997, 1998 and 1999.
Mr. Ganassi currently holds executive
positions with Chicago Motor Speedway, a
racing facility; and Tessa One
Incorporated, a holding company.
BARRY E. GREEN Mr. Green is the President and sole
Nominee shareholder of Team Green, Inc., a
Age 47 corporation he formed in 1994 and located
in Indianapolis, Indiana, which is
involved in motor racing and related
activities. In Team Green's initial CART
season in 1995, it won the Indianapolis
500 and the CART season championship. More
recently, Team Green finished second and
third in the 1999 CART season
championship. During his career in
championship motor racing, Mr. Green has
accumulated two CART championship titles
(1990 and 1995), two Indianapolis 500
victories (1992 and 1995), 32 wins and
28 CART poles.
9
<PAGE> 14
CARL A. HAAS Since 1960, Mr. Haas has served as Chief
Director since December 1997 Executive Officer of Carl A. Haas Auto
Age 70 Imports, a company specializing in the
distribution of race cars and parts. Since
1982, Mr. Haas has also served as the
Managing Partner of Newman Haas Racing.
Since 1992, he has served as President of
Carl A. Haas Racing Teams, Ltd. and, since
1996, as the Managing Member of Texaco
Grand Prix of Houston, LLC. Both Carl A.
Haas Racing Teams, Ltd. and Texaco Grand
Prix of Houston, LLC are race promotion
organizations. In addition, Mr. Haas also
holds positions with various companies,
including, but not limited to, Carl A.
Haas Enterprises, Inc., Team Haas USA
Ltd., Road America, SCCA Pro Racing, Inc.
and Milwaukee Mile, Inc., all of which are
racing related businesses.
JAMES F. HARDYMON Mr. Hardymon retired as Chairman and chief
Director since April 1998 executive officer of Textron, Inc. in
Age 65 January 1999. Textron, Inc. is a public
company, supplying aerospace and
industrial components. He joined Textron
in 1989 as President and chief operating
officer, became chief executive officer in
1992, assumed the additional title of
Chairman in 1993 and relinquished the
title of President in 1994. Prior to
joining Textron, Mr. Hardymon was
President, chief operating officer and a
director of Emerson Electric Co., a global
manufacturer of electrical and electronic
products and systems. Mr. Hardymon is a
director of Air Products and Chemicals,
Inc., Fleet Boston Corporation, Schneider
Electric SA, Lexmark International and
Circuit City Stores, Inc.
BRUCE R. MCCAW Mr. McCaw currently serves as the
Director since December 1997 president of RaceSport Management Company,
Age 53 which he founded in 1993, PacWest Racing
Group, LLC and PacWest Lights, each of
which is involved in various types of auto
racing. Mr. McCaw was a founder and
director of McCaw Cellular Communications
(now AT&T Wireless), as well as director
and originator of Claircom Communications
(AT&T's air-to-ground telephone network).
Mr. McCaw is also involved in various
other ventures in the areas of
communications, real estate and aviation
and holds a variety of positions in
entities involved in these businesses.
U.E. PATRICK Mr. Patrick was a founding member of CART
Director since December 1997 in November 1978 and served as its first
Age 71 President and Chief Executive Officer. Mr.
Patrick has been involved in racing since
1967 and has been a car owner since 1970,
with three Indianapolis 500 wins and the
CART World Series Championship in 1989.
Mr. Patrick currently serves as President
of Patrick Racing, Inc. He holds the
position of Chairman of the Board of
Patrick Exploration, Inc., an oil and gas
exploration company, and is an investor in
several businesses.
ROBERT W. RAHAL Mr. Rahal is the co-owner of Team Rahal,
Director since December 1997 Inc. He has an accomplished career as a
Age 46 CART competitor, winning the PPG CART
World Series title three times in his
15-year CART career. Additionally, Mr.
Rahal won the Indianapolis 500 in 1986.
Mr. Rahal also owns Honda, Toyota, Lexus
and Mercedes-Benz dealerships in
Pennsylvania. He is a member of the Board
of Directors of The Huntington National
Bank.
10
<PAGE> 15
BERT C. ROBERTS, JR. Mr. Roberts has been nominated by the
Nominee Board of Directors for election at this
Age 57 meeting to fill the vacancy to be created
by the retirement of Don Ohlmeyer, Jr. Mr.
Roberts is the Chairman of MCI WorldCom,
Inc., one of the world's largest
communications companies. He was named
Chairman and CEO of MCI in 1992, after
serving as President and Chief Operating
Officer since 1985. Additionally, Mr.
Roberts serves on the Boards of Directors
of Valence Technology, Inc., Telefonica de
Espana, News Corporation Limited, CAPCURE
and Johns Hopkins University.
FREDERICK T. TUCKER Mr. Tucker has been nominated by the Board
Nominee of Directors for election at this meeting
Age 59 to fill the vacancy to be created by the
expansion of the Board. Mr. Tucker is
President, Semiconductor Products Sector,
and Executive Vice President and Deputy to
the Chief Executive Office of Motorola,
Inc. After joining Motorola in 1965, Mr.
Tucker served in a number of senior
management positions, including President
and General Manager of the Automotive,
Component, Computer and Energy Sector.
Prior to that, Mr. Tucker served as
Executive Vice President and General
Manager of the Automotive and Industrial
Electronics Group and Corporate Vice
President and General manager of
Motorola's Bipolar Analog IC Division in
Arizona, a manufacturer of semiconductor
products. Mr. Tucker has served as a
trustee of Rochester Institute of
Technology since 1986.
DERRICK WALKER Mr. Walker is currently the President and
Director since December 1997 owner of Derrick Walker Racing, Inc.,
Age 54 which was formed in 1990. In 1988, he
joined Al Holbert's Porsche Indy car
project and assumed control of the program
upon the death of Al Holbert. From 1980 to
1988, he was responsible for Penske
Racing, Inc.'s Indy car program.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Directors has appointed Deloitte &
Touche LLP as CART's independent accountants to audit CART's consolidated
financial statements for the year ended December 31, 2000. During 1999, Deloitte
& Touche LLP, served as CART's independent accountants and provided certain tax
and consulting services. Representatives of Deloitte & Touche LLP are expected
to attend the meeting where they will be available to respond to questions and,
if they desire, to make a statement.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS CART'S INDEPENDENT ACCOUNTANTS FOR 2000.
If the appointment is not ratified, our Board will select other independent
accountants.
11
<PAGE> 16
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table provides information regarding each of CART's
executive officers and certain key employers. Messrs. Craig, Dzierzawski, Bailey
and Mayer and Ms. O'Connor have entered into employment agreements pursuant to
which they hold their current positions. All other officers are elected by the
Board of Directors to serve one year terms.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Andrew H. Craig (1) 51 President, Chief Executive Officer
and Chairman of the Board
Randy K. Dzierzawski 37 Executive Vice President and Chief
Financial Officer
Jonathan T. Frank 34 President of CART Licensed Products
Vicki O'Connor 54 President of Pro-Motion Agency, Ltd.
(Kool Toyota Atlantic Series)
Roger Bailey 58 President of American Racing Series,
Inc. (Dayton Indy Lights Series)
Timothy A. Mayer 34 Senior Vice President of Racing
Operations of CART, Inc.
Patrick R. Leahy 48 Senior Vice President of
Marketing/Public Relations of CART,
Inc.
J. Kirk Russell 56 Vice President of Competition and
Chief Steward of CART, Inc.
Dennis Swan 53 Vice President of Logistics of CART,
Inc.
Keith Allo 34 Vice President of Broadcasting of
CART, Inc.
Rena Shanaman 48 Vice President of Client Relations
of CART, Inc.
Ron Richards 48 Vice President of Communications of
CART, Inc.
Thomas L. Carter 44 Vice President of Finance and
Administration of CART, Inc.
Jeff H. Horton 39 Vice President of Electronic Systems
of CART, Inc.
Michael J. Mills 49 Secretary and General Counsel
</TABLE>
- ----------
(1) See Mr. Craig's biography on page 9.
12
<PAGE> 17
Randy K. Dzierzawski was first elected Executive Vice President and
Chief Financial Officer of the Company in December 1997 and has served as
Executive Vice President and Chief Financial Officer of CART, Inc. since October
1996. From December 1990 until his appointment as Executive Vice President of
the CART, Inc. in 1996, Mr. Dzierzawski served in various positions with CART,
Inc., including Director of Administration, Treasurer, Vice President and Senior
Vice President. From 1988 to 1990, Mr. Dzierzawski served as a Senior Analyst in
the Financial and Reporting Division of General Motors Corporation and as the
president of his own financial consulting company. Prior to 1988, Mr.
Dzierzawski, a certified public accountant, was employed by Arthur Andersen and
Company as a Senior Tax Consultant.
Jonathan T. Frank was first named President of CART Licensed Products
in January, 1999. From 1996 to 1998, Mr. Frank served as Vice President, Sales
and Marketing for CART Licensed Products. From 1994 to 1996, Mr. Frank served in
various positions at Grey Advertising. From 1991 to 1994, Mr. Frank served as an
account executive with Time Warner Sports Merchandising, where he helped develop
the licensing programs for the National Hockey League and World Cup USA `94.
From 1988 to 1989, Mr. Frank served as a director of Major League Baseball,
where he planned and implemented the first ever world-wide minor league
licensing program.
Vicki O'Connor is the founder, and has served as President, of
Pro-Motion Agency, Ltd., which has administered the Atlantic Championship Series
since 1985. From 1983 through 1984, Pro-Motion also organized the Pro Sports
2000 Series.
Roger Bailey has served as President of American Racing Series, Inc.
since 1989. American Racing Series, Inc. operates the Dayton Indy Lights
Championship Series. Prior to joining American Racing Series, Mr. Bailey served
in various capacities in motor sports.
Timothy A. Mayer was named Senior Vice President of Racing Operations
of CART, Inc. in December, 1998. Previously he was President of G3
Communications, Inc., a motorsports consulting and operations firm. G3 helped
organize the Rio400 in Brazil. Mr. Mayer was General Manager of G3 in 1998, and
assisted with logistics for other international events. Mr. Mayer was also the
Executive Producer for SBT Brazilian Television's coverage of the FedEx
Championship Series, Indy Lights and the Kool Toyota Atlantic Series. Mr. Mayer
has produced the television coverage for Brazilian television of these series
from 1993 to 1998. Previously Mr. Mayer was in charge of Special Projects for
Fittipaldi USA, and Sports World Communications.
Patrick R. Leahy was named Senior Vice President of Marketing/Public
Relations of CART, Inc. in December 1999. From 1972 until his appointment as
Senior Vice President of Marketing of CART, Inc. in 1999, Mr. Leahy served in
various positions with Target Stores Inc., including Manager, Corporate
Marketing of Target Stores Inc., where he helped develop the marketing of
four-time CART Champion, Target/Chip Ganassi Racing Team, and the inaugural
Target Grand Prix of Chicago. Mr. Leahy managed Target's credit marketing and
Community Relations initiatives.
J. Kirk Russell was first appointed Chief Steward of CART, Inc. in
January, 2000. Since November 1996, Mr. Russell has served as Vice President of
Competition of CART, Inc. and had served as Vice President of Operations of
CART, Inc. from November 1994 to November 1996. Mr. Russell joined CART on a
full-time basis in 1980 as director of operations and technical director. In
1986, Mr. Russell received the Championship Drivers Association's highest honor,
the "Carl Horton Safety Award." In addition, Mr. Russell has served on the Board
of Directors of the Automobile Competition Committee of the United States since
1988.
Dennis Swan was first named Vice President of Logistics of CART, Inc.
in November 1994. Prior to joining CART, Mr. Swan spent two years as test team
manager for the Honda engine program at Rahal-Hogan Racing. From 1989 to 1992,
Mr. Swan served as test team manager and then team manager for Truesports. Mr.
Swan has been involved in racing since 1964, and has worked with drivers such as
Al Unser, Jr., Danny Sullivan and Raul Boesel.
Keith Allo was first named Vice President of Broadcasting for CART,
Inc. in June 1997. Prior to his employment with CART, Mr. Allo was an executive
for PASS Sports beginning in 1994. While with PASS Sports, Mr. Allo served as
executive producer of programming for the Detroit Redwings, Pistons, Tigers and
Lions, and the University of Michigan and Michigan State University. From 1988
to 1993, Mr. Allo worked as a producer and director for SportsChannel Florida
and the University of Florida Athletic Association, as well as producing
programs for Jefferson Pilot Teleproductions and Host Creative.
13
<PAGE> 18
Rena Shanaman was first named Vice President of Client Relations for
CART, Inc. in July 1996 after serving as the General Manager of CART's inaugural
U.S. 500 on a contractual basis. Ms. Shanaman has been involved in motorsports
for more than 16 years, including the Detroit Grand Prix, Molson Indy Vancouver
and the Arrivederci, Mario tour for racing legend Mario Andretti.
Ron Richards was first named Vice President of Communications of CART,
Inc. in November 1996. From 1989 to 1996, Mr. Richards worked for Miller Brewing
Company in several positions including manager and director of employee
communications, including the management of all sports marketing public
relations. From 1982 to 1984 and from 1987 to 1989, Mr. Richards worked with the
Sports Car Club of America as both director of marketing and public relations
manager. During this time, he also served as the motorsports public relations
manager for Coors-sponsored racing programs.
Thomas L. Carter was first named Vice President of Finance and
Administration of CART, Inc. in March, 1998 after serving as Director of Finance
since February 1997. From 1995 to 1996, Mr. Carter was employed by Rehman
Robinson as a senior tax manager. From 1990 to 1995, Mr. Carter was employed by
Deloitte & Touche as a senior tax consultant. From 1973 to 1989, Mr. Carter
worked in various positions with the Michigan Department of Treasury. Mr. Carter
is a certified public accountant.
Jeff H. Horton was first named Vice President of Electronic Systems of
CART, Inc. in June 1998. Mr. Horton has been involved in the CART family for
more than 13 years. While at General Motors in the Motorsports group, Mr. Horton
served as both a project engineer and program manager for the American Racing
Series, Buick Indy V6, and Chevrolet Indy V8 programs. Prior to joining CART,
Mr. Horton was also involved with the Mercedes CART program as a project
engineer and Manager of Engine Electronics for the Dayton Indy Lights Series.
From 1996 to 1998, Mr. Horton was employed by American Racing Series as the
manager of engine electronics for the Dayton Indy Lights Program. In 1996, Mr.
Horton was project engineer Oldsmobile Aurora IRL Program through GM
Motorsports. From 1994 to 1996, Mr. Horton was employed by Ilmor Engineering, as
project engineer Mercedes CART program. From 1986 to 1994, Mr. Horton was
employed by GM Motorsports as program manager Chevy Indy V8 program.
Michael J. Mills was appointed general corporate counsel and corporate
secretary to CART in 1990. From 1978 to 1989, Mr. Mills served as CART's
associate counsel. In addition to his positions with CART, Mr. Mills currently
serves in an "of counsel" position with the law firm of Monaghan, LoPrete,
McDonald, Yakima & Grenke. From 1989 to 1996, Mr. Mills was the managing partner
of Tripp and Mills. Prior to that time, he was a partner with Frasco, Hackett &
Mills. Mr. Mills' law practice focuses on corporate and pension law, business
and commercial transactions, labor/management relations and general litigation.
14
<PAGE> 19
EXECUTIVE COMPENSATION
The following table discloses compensation received by CART's Chief
Executive Officer and its four other most highly paid executive officers for the
fiscal year ending December 31, 1999 as well as their compensation for the
fiscal years ending December 31, 1998 and 1997.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL LONG TERM COMPENSATION
COMPENSATION AWARDS
----------------------------- -------------------------------
SECURITIES
UNDERLYING
OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) SARS (#) COMPENSATION ($)
- --------------------------- ---- ---------- --------- ---------------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Andrew H. Craig, 1999 $550,000 $200,000 (1) 0 $9,236 (2)
President and CEO 1998 517,308 200,000 600,000 6,308
1997 439,465 160,000 0 5,912
Randy K. Dzierzawski, 1999 $249,904 $100,000 (1) 0 $2,608 (2)
Executive Vice President 1998 232,692 100,000 300,000 2,632
1997 199,412 35,000 0 2,375
Roger Bailey (3) 1999 $240,000 $ 83,108 (1) 10,000 $3,016 (2)
President of American 1998 193,846 120,000 0 1,788
Racing Series
Timothy Mayer (4) 1999 $200,885 $ 7,000 (1) 10,000 $6,314 (2)
Senior Vice President 1998 18,462 0 0 0
of Racing Operations
Victoria O'Connor (5) 1999 $180,000 $ 4,037 (1) 10,000 $7,814 (2)
President of Pro-Motion 1998 131,571 22,958 0 677
Agency, Inc.
</TABLE>
(1) The aggregate amount of perquisite compensation to be reported herein
is less than the lesser of $50,000 or 10% of the total annual salary
and bonus reported for the named executive officer. No other annual
compensation was paid or payable to the named executive officers in the
years indicated.
(2) Includes the payment of term life insurance premiums on behalf of the
named executive officer, as follows: Mr. Craig - $276; Mr. Dzierzawski
- $108; Mr. Bailey - $516; Mr. Mayer - $96; and Ms. O'Connor - $276;
and contributions to defined benefit plans on behalf of the named
officers as follows: Mr. Craig - $2,500; Mr. Dzierzawski - $2,500; Mr.
Bailey - $2,500; Ms. O'Connor - $2,500. Also includes $3,000 paid on
behalf of Mr. Craig for financial consulting services and $3,460 paid
for life insurance premiums on behalf of Mr. Craig.
(3) Mr. Bailey became an executive officer of CART upon CART's acquisition
of American Racing Series in March 1998. Therefore, the salary
information is only provided from the date of such acquisition.
(4) Mr. Mayer was hired in December 1998.
(5) Ms. O'Connor became an officer of CART upon CART's acquisition of
Pro-Motion Agency, Inc. in April 1998. Salary information is only
provided from the date of such acquisition.
15
<PAGE> 20
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in 1999 to
each of the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED (1) FISCAL YEAR (2) ($/SHARE) DATE VALUE ($)(3)
---- ----------- --------------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Andrew H. Craig -- -- -- -- --
Randy K. Dzierzawski -- -- -- -- --
Roger Bailey 10,000 10% 27.50 3/6/04 99,400
Timothy Mayer 10,000 10% 27.50 3/6/04 99,400
Victoria O'Connor 10,000 10% 27.50 3/6/04 99,400
</TABLE>
- ----------
(1) The options granted in 1999 are exercisable 33% after the first year,
66% after the second year and 100% after the third year.
(2) CART granted options representing 100,250 shares to employees in 1999.
(3) CART used a Black-Scholes model of option valuation to determine grant
date present value. CART does not advocate or necessarily agree that
the Black-Scholes model can properly determine the value of an option.
Calculations for the named officers are based on a ten-year option
term. Other assumptions used for the valuations are: interest rate of
5%; annual dividend yield of 0%; and volatility of 30%.
16
<PAGE> 21
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in 1999 by
each of the named executive officers and the values of each of such officer's
unexercised options at December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT MONEY OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END (1)
---------------------------- ---------------------------
NUMBER OF
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew H. Craig 0 $ 0 200,000 400,000 $1,437,500 $2,875,000
Randy K. Dzierzawski 30,000 507,675 70,000 200,000 503,125 1,437,500
Roger Bailey 0 0 29,450 10,000 211,672 0
Timothy Mayer 0 0 0 10,000 0 0
Victoria O'Connor 0 0 0 10,000 0 0
</TABLE>
- ----------
(1) The value of unexercised options is based upon the difference between
the exercise price and the average of the high and low market prices on
December 31, 1999 of $23.1875.
REPORT OF THE COMPENSATION COMMITTEE
CART's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Compensation Committee").
The Compensation Committee, which is comprised of non-employee directors, is
responsible for approving and reporting to the Board on all elements of
compensation for elected corporate officers. The Compensation Committee has
furnished the following report on executive compensation.
The following Report of the Compensation Committee does not constitute
soliciting material and should not be deemed filed or incorporated by reference
into any other CART filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that CART specifically incorporates
this report.
The Compensation Committee of the Board of Directors has furnished the
following report on Executive Compensation for the Year Ended December 31, 1999.
WHAT IS CART'S PHILOSOPHY OF EXECUTIVE COMPENSATION?
CART's Compensation Program consists of three key elements:
o Base Salary;
o Performance-Based Annual Bonus; and
o Periodic Grants of Stock Options.
The Compensation Committee believes that this three part approach best
serves the interests of CART and its stockholders. It enables CART to meet the
requirements of the highly competitive environment in which CART operates, while
insuring that executive officers are compensated in a way that advances both the
short and long-term interests of the stockholders. The variable annual bonus and
stock options relate to an evaluation of the contribution made by the officer of
CART to his performance, and with respect to the stock options, long-term
remuneration related directly to the stock appreciation realized by all CART
stockholders.
17
<PAGE> 22
BASE SALARY. Base salaries of CART's executive officers, as well as
changes in such salaries take into account such factors as competitive industry
salaries; a subjective assessment of the nature of the position; the
contribution and experience of the officer; negotiated terms of any applicable
employment contracts; and the length of the officer's service. Salaries of all
employees earning in excess of $150,000 per annum are reviewed and approved by
the Compensation Committee.
ANNUAL BONUS. Annual bonuses for officers, other than Mr. Craig and Mr.
Dzierzawski are based upon the recommendation of the Chief Executive Officer and
are reviewed and approved by the Compensation Committee. Bonuses are based on a
number of factors, including achieving CART's financial and operational goals
and overall performance by the officer.
STOCK OPTIONS. The Compensation Committee's policy with respect to
Stock Options is to grant options reflecting the participant's position and
ability to influence CART's overall performance. The Stock Option Plan is
intended to provide participants with an increased incentive to make
contributions to the long-term performance and growth of CART, to attract and
retain qualified employees. CART's approach has been to grant options to a
significant number of its employees at all levels in order to align all
employees with the shareholders in seeking shareholder value.
HOW IS CART'S CHIEF EXECUTIVE OFFICER COMPENSATED?
As the Chief Executive Officer, Mr. Craig is compensated pursuant to an
Employment Agreement entered into in 1997. The Agreement terminates in December
2000 and provides for an annual base salary of $550,000 for 1999 and $600,000
for 2000. In addition, Mr. Craig is entitled to receive annual bonuses as
determined by the Board of Directors. The Board of Directors has done its own
analysis, and has employed compensation consultants to provide guidance in
establishing performance criteria to provide incentives for Mr. Craig and to
align his compensation with CART's goals and objectives. During 1999, the
Compensation Committee met on several occasions to discuss the establishment of
bonus criteria, and after consultation with the Board of Directors determined
that Mr. Craig's bonus for the year ended December 31, 1999 would be $200,000.
The bonus was based upon CART's performance in gross revenues, net income, race
team participation, and television ratings. No specific quantitative measures or
performance criteria have been adopted. However, the Committee gave greater
emphasis to gross revenues and net income. We anticipate that more specific
criteria will be established in 2000 based upon subjective factors established
by the Committee with the assistance of compensation consultants.
Mr. Craig was granted options in 1998 to purchase 600,000 shares of
CART's stock at the initial public offering price. These options vest equally
over the three years of his Employment Agreement.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. The Committee intends to
comply with the requirements of Section 162(m) of the Internal Revenue Code with
respect to the stock options granted to employees in order to avoid losing the
tax deduction for compensation in excess of $1-million paid to one or more of
the executive officers named in the summary of compensation table.
Compensation Committee:
U. E. Patrick, Chairman
Gerald Forsythe
Carl A. Haas
Derrick Walker
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Board's Compensation Committee is or has
been an officer or employee of CART or any of its subsidiaries during the last
10 years.
18
<PAGE> 23
STOCK PERFORMANCE GRAPH
The graph below shows the cumulative total shareholder return from the
date of CART's initial public offering assuming the investment of $100 on March
10, 1998 in each of CART's common stock, the S&P 500 Index and the Company's
peer group. For purposes of this stock performance graph, CART has selected all
of the auto racing industry public companies as its peer group. The peer group
is comprised of Dover Downs Entertainment, International Speedway Corporation,
and Speedway Motorsports, Inc.
[PERFORMANCE GRAPH]
Assumes that the value of the investment in CART stock and each index
was $100 at March 10, 1998 and that all dividends were reinvested.
<TABLE>
PLOT POINTS
<CAPTION>
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
CART 100.00 155.92 121.06
S&P 500 100.00 118.62 143.58
Peer Group 100.00 120.17 143.25
</TABLE>
19
<PAGE> 24
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CART has entered into, and the Company will continue to enter into,
transactions with entities that are affiliated with the Company's directors and
with affiliates of its race teams. Race teams that participate in the CART
Championship receive purse distributions on a per race basis and from the year
end point fund which amounts have been paid based solely upon their performance
in specific races. In addition, royalty distributions are made from CART with
respect to a sharing arrangement on royalties received in connection with the
use of the teams property rights. The following tables provides information with
respect to payments made during 1999 by CART to race teams that are affiliated
with directors of CART:
<TABLE>
<CAPTION>
RACE TEAM/AFFILIATED DIRECTOR PURSE DISTRIBUTIONS ROYALTY DISTRIBUTIONS
- ----------------------------- ------------------- ---------------------
<S> <C> <C>
PacWest Racing Group/Bruce R. McCaw $ 575,000 $79,000
Patrick Racing, Inc./U.E. Patrick 1,936,000 26,000
Forsythe Racing, Inc./Gerald R. Forsythe 1,432,000 25,000
Team Rahal, Inc./Robert W. Rahal 1,062,000 77,000
Derrick Walker Racing, Inc./Derrick Walker 682,000 15,000
Newman/Haas Racing/Carl A. Haas 1,501,000 85,000
Chip Ganassi Racing Teams, Inc./Chip Ganassi 2,496,000 71,000
Team Green/Barry Green 2,541,000 79,000
</TABLE>
Carl A. Haas, a director of the Company and a race team owner and 5%
stockholder, is a principal owner of Carl Haas Racing Teams, Ltd. and Texaco
Houston Grand Prix L.L.C., each of which have entered into Promoter Agreements
with respect to CART Championship races at the Wisconsin State Park Speedway in
West Allis, Wisconsin and at a temporary road course in Houston, Texas. Pursuant
to the terms thereof, a CART Championship race will be held in West Allis
through 2001, and in Houston through 2003. The sanction fees payable to CART
under these agreements are similar to those paid by independent race promoters.
Pursuant to the two existing Promoter Agreements, entities affiliated with Mr.
Haas have paid or will pay sanction fees to CART in the aggregate amount of $2.8
million, $3.4 million, $4.1 million, $2.7 million and $2.7 million in 1999,
2000, 2001, 2002 and 2003, respectively. In addition, CART paid a total of
$200,000 in sales costs to each of these entities during 1999.
In March 1998, CART purchased all of the stock of American Racing
Series, Inc. and certain assets of BP Automotive, Inc. for a total purchase
price of $10.0 million and options to purchase 100,000 shares of stock, with an
exercise price of $16.00 per share. ARS, the organizer of the PPG Dayton Indy
Lights Championship, was controlled by U.E. Patrick, a director, and Roger
Bailey, who became an executive officer of CART upon consummation of the ARS
acquisition. In connection with the ARS and BP acquisitions, during 1998 Mr.
Patrick and members of his family received $4,813,725 and options to purchase
70,550 shares. Mr. Bailey received $2,009,804 and options to purchase 29,450
shares.
Chip Ganassi, a director of the Company and a race team owner is a
principal owner of Ganassi Group, LLC which has entered into a Promoter
Agreement with respect to a CART Championship race in Cicero (Chicago),
Illinois. Pursuant to the terms thereof, a Championship race was held in 1999
and will be held through 2003 and Ganassi Group, LLC has paid or will pay
sanction fees to CART of $1.8 million for 1999, $1.8 million for 2000, $1.9
million for 2001, $2.0 million for 2002 and $2.1 million for 2003. In addition,
CART paid a total of $200,000 in sales costs to Ganassi Group, LLC during 1999.
20
<PAGE> 25
In addition to the payments described above, CART receives
revenues from its race teams, including those affiliated with CART
directors, for entry fees, equipment leases and other payments based
solely on participation in CART events. During 1999, race teams
affiliated with CART directors made such payments to CART as follows:
<TABLE>
<CAPTION>
<S> <C>
PacWest Racing Group/Bruce R. McCaw* $254,000
Patrick Racing, Inc./U.E. Patrick 75,000
Forsythe Racing, Inc./Gerald R. Forsythe* 382,000
Team Rahal, Inc./Robert W. Rahal 75,000
Derrick Walker Racing, Inc./Derrick Walker 100,000
Newman/Haas Racing/Carl A. Haas 164,000
Chip Ganassi Racing Teams, Inc./Chip Ganassi 75,000
Team Green/Barry Green 211,000
</TABLE>
- ----------
* Includes engine lease, rebuilds and wheels payments related to entries in the
Indy Lights Series.
With the exception of Messrs. Craig, Hardymon and Ohlmeyer, each of the
current directors is affiliated with entities engaged in various levels of
business activity with CART. These and other transactions with officers,
directors, employees, principal stockholders or affiliates have been or will be
(1) made in the ordinary course of business, (2) on substantially the same terms
as those prevailing at the time for comparable transactions with unrelated
persons, and (3) such that did not or do not involve more than normal levels of
risk or present other unfavorable features. In order to avoid conflicts of
interest, directors of CART who are affiliated with an entity that is entering
into a transaction with CART will not vote on any matter related to such
transaction, and may, in certain circumstances, refrain from participating in
any discussions related to such transaction.
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ADDITIONAL QUESTIONS AND INFORMATION REGARDING
THE ANNUAL MEETING AND STOCKHOLDER PROPOSALS
Q: WHAT HAPPENS IF ADDITIONAL PROPOSALS ARE PRESENTED AT THE MEETING?
A: Other than the 2 proposals described in this proxy statement, we do not
expect any matters to be presented for a vote at the annual meeting. If you
grant a proxy, the persons named as proxy holders, Andrew H. Craig and
Randy K. Dzierzawski, will have the discretion to vote your shares on any
additional matters properly presented for a vote at the meeting. If for any
unforeseen reason any of our nominees is not available as a candidate for
director, the persons named as proxy holders will vote your proxy for such
other candidate or candidates as may be nominated by the Board of
Directors.
Q: WHAT CLASS OF SHARES ARE ENTITLED TO BE VOTED?
A: Each share of our common stock outstanding as of the close of business on
March 15, 2000, the record date, is entitled to one vote at the annual
meeting. On the record date, we had approximately 15,586,568 shares of
common stock issued and outstanding, held of record by 367 holders.
Q: WHAT IS THE QUORUM REQUIREMENT FOR THE MEETING?
A: The quorum requirement for holding the meeting and transacting business is
a majority of the outstanding shares entitled to be voted. The shares may
be present in person or represented by proxy at the meeting. Both
abstentions and broker non-votes are counted as present for the purpose of
determining the presence of a quorum.
Q: WHO WILL COUNT THE VOTE?
A: A representative of Norwest Bank, CART's transfer agent, will tabulate the
votes and act as the inspector of election.
Q: IS MY VOTE CONFIDENTIAL?
A: Proxy instructions, ballots and voting tabulations that identify individual
stockholders are handled in a manner that protects your voting privacy.
Your vote will not be disclosed either within CART or to third parties
except (1) as necessary to meet applicable legal requirements, (2) to allow
for the tabulation of votes and certification of the vote, or (3) to
facilitate a successful proxy solicitation by our Board. Occasionally,
stockholders provide written comments on their proxy card which are then
forwarded to CART management.
Q: WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE MEETING?
A: CART will pay the entire cost of preparing, assembling, printing, mailing
and distributing these proxy materials, except that certain expenses for
Internet access will be incurred by you if you choose to access the proxy
materials and/or vote over the Internet. In addition to the mailing of
these proxy materials, the solicitation of proxies or votes may be made in
person, by telephone or by electronic communication by our directors,
officers, and employees, who will not receive any additional compensation
for such solicitation activities. We will reimburse brokerage houses and
other custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses for forwarding proxy and solicitation materials to
stockholders.
Q: MAY I PROPOSE ACTIONS FOR CONSIDERATION AT NEXT YEAR'S ANNUAL MEETING OF
STOCKHOLDERS OR NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS?
A: You may submit proposals for consideration at future stockholder meetings,
including director nominations.
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<PAGE> 27
STOCKHOLDER PROPOSALS: In order for a stockholder proposal to be considered
for inclusion in CART's proxy statement for next year's annual meeting, the
written proposal must be received by CART no later than January 2, 2001.
Such proposals also will need to comply with Securities and Exchange
Commission regulations regarding the inclusion of stockholder proposals in
company sponsored proxy materials. Similarly, in order for a stockholder
proposal to be raised from the floor during next year's annual meeting,
written notice must be received by CART no later than March 3, 2001 and
shall contain such information as required under our Bylaws.
NOMINATION OF DIRECTORS: Any stockholder of record may nominate persons for
election to the Board of Directors by providing written notification to
CART's secretary, in accordance with the Bylaws. Nominations for persons to
be elected at the meeting of stockholders in 2001 must be received by
January 31, 2001, and must include information concerning the proposed
nominee as required by the Bylaws, and such person's written consent.
COPY OF BYLAW PROVISIONS: You may contact the CART Corporate Secretary at
our Company headquarters for a copy of the relevant Bylaw provisions
regarding the requirements for making stockholder proposals and nominating
director candidates.
By Order of the Board of Directors
/s/ Andrew Craig
Andrew Craig
Chairman of the Board
March 17, 2000
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<PAGE> 28
CHAMPIONSHIP AUTO RACING TEAMS, INC.
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 2, 2000
9:00 a.m.
TOWNSEND HOTEL
100 TOWNSEND STREET
BIRMINGHAM, MICHIGAN 48009
- --------------------------------------------------------------------------------
CHAMPIONSHIP AUTO RACING TEAMS, INC.
755 WEST BIG BEAVER ROAD, SUITE 200
TROY, MICHIGAN 48084 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON MAY 2, 2000.
The shares of stock you hold in your account will be voted as you specify below.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
By signing the proxy, you revoke all prior proxies and appoint Andrew H. Craig
and Randy K. Dzierzawski, and each of them, with full power of substitution, to
vote your shares on the matters shown on the reverse side and any other matters
which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
<PAGE> 29
--------------------
COMPANY #
CONTROL #
--------------------
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
- - Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 12:00 p.m. on May 1, 2000.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
- - Follow the simple instructions the Voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/mph/ - QUICK *** EASY *** IMMEDIATE
- - Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00
p.m. on May 1, 2000.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Championship Auto Racing Teams, Inc.,
c/o Shareowner Services(TM), P.O. Box 64873, St. Paul, MN 55164-0837.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
Please detach here
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. Elections of directors: 01 Andrew H. Craig 07 Bruce R. McCaw
02 Gerald R. Forsythe 08 U.E. Patrick
03 Chip Ganassi 09 Robert W. Rahal
04 Barry E. Green 10 Bert C. Roberts, Jr.
05 Carl A. Haas 11 Frederick T. Tucker
06 James F. Hardymon 12 Derrick Walker
[_] Vote FOR [_] Vote WITHHELD
all nominees from all nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. To ratify the appointment of Deloitte & Touche LLP as the independent
accountants of the year ended December 31, 2000.
[_] For [_] Against [_] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
---
Address Change? Mark Box [_]
Indicate changes below: Date
--------------------------
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Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full
name or corporation and title of
authorized officer signing the
proxy.
