<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) Of The Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE HARPER GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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
[LOGO]
THE HARPER GROUP, INC.
260 TOWNSEND STREET
SAN FRANCISCO, CALIFORNIA 94107
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 13, 1997, 10:30 A.M.
TO THE STOCKHOLDERS:
Please be advised that the Annual Meeting of Stockholders of The Harper
Group, Inc. will be held at the office of the Company, 260 Townsend Street, San
Francisco, California, on Tuesday, May 13, 1997, at 10:30 a.m. for the following
purposes:
(1) To elect three Class III directors.
(2) To amend the Company's Certificate of Incorporation to change the
Company's name to "Circle International Group, Inc."
(3) To transact such other business as may properly come before the
meeting.
Only stockholders of record on the books of the Company as of 5:00 P.M.,
March 28, 1997, will be entitled to vote at the meeting and any adjournment
thereof. San Francisco, California April 1, 1997
By Order of the Board of Directors
/s/ ROBERT H. KENNIS
--------------------------------------
Robert H. Kennis
General Counsel and Secretary
STOCKHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE.
<PAGE> 3
THE HARPER GROUP, INC.
260 TOWNSEND STREET
SAN FRANCISCO, CALIFORNIA 94107
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of The Harper
Group, Inc. (the "Company") to be used at the Annual Meeting of Stockholders on
May 13, 1997, for the purposes set forth in the foregoing notice. This proxy
statement and the enclosed form of proxy were first sent to stockholders on or
about April 1, 1997.
If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented thereby are to be voted, the proxy will be voted as recommended by
the Board of Directors. Any stockholder signing a proxy in the form accompanying
this Proxy Statement has the power to revoke it prior to or at the Annual
Meeting. A proxy may be revoked by a writing delivered to the Secretary of the
Company stating that the proxy is revoked, by a subsequent proxy signed by the
person who signed the earlier proxy, or by attendance at the Annual Meeting and
voting in person.
VOTING SECURITIES
Only stockholders of record on the books of the Company as of 5:00 P.M.,
March 28, 1997, will be entitled to vote at the Annual Meeting.
As of the close of business on March 28, 1997, there were outstanding
15,960,968 shares of Common Stock of the Company, entitled to one vote per
share. The holders of a majority of the outstanding shares of the Common Stock
of the Company, present in person or by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting or any adjournment thereof.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether or
not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval of
any matter submitted to the stockholders for a vote. If a broker indicates on
the proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter.
ELECTION OF DIRECTORS
The Certificate of Incorporation and By-laws of the Company provide for a
Board of Directors consisting of not less than three members, divided into three
classes. The size of the Board of Directors may be determined subject to the
foregoing minimum from time to time by the Board of Directors of the Company.
The size of the Board of Directors has currently been established at seven.
Directors elected into a class at the annual meeting of stockholders in
each year serve three-year terms and until their successors have been duly
elected. Directors appointed by the Board of Directors of the Company to fill
vacancies or newly created directorships serve for the remainder of the term of
the class to which they are appointed. The Class III directors elected at the
Annual Meeting will serve until the 2000 Annual Meeting; Class II directors
elected at last year's Annual Meeting will serve until the 1999 Annual Meeting;
and Class I directors elected at the 1995 Annual Meeting will serve until the
1998 Annual Meeting.
The persons named below are the nominees to serve as Class III directors
until the 2000 Annual Meeting of Stockholders and until their successors have
been elected or until death, retirement, resignation or removal. The nominees
presently serve as Class III directors.
<PAGE> 4
In the absence of instructions to the contrary, shares represented by the
proxy will be voted and the proxies will vote for the election of such nominees
to the Board of Directors. If any of such nominees is unable or unwilling to be
a candidate for the office of director at the date of the Annual Meeting, or any
adjournment thereof, the proxies will vote for such substitute nominee as shall
be designated by the proxies. The management has no reason to believe that such
nominees will be unable or unwilling to serve if elected as directors. Set forth
below is certain information concerning the nominees which is based on data
furnished by them.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING PAST FIVE YEARS
AND SERVED AS
NOMINEES FOR DIRECTOR AGE OTHER INFORMATION DIRECTOR SINCE
- ------------------------- --- --------------------------------------------- --------------
<S> <C> <C> <C>
Ray C. Robinson, Jr. 76 Private businessman. Mr. Robinson served as 1971
Secretary of the Company from 1971 until
January 1986.
John M. Kaiser 57 Private investor and real estate developer. 1993
From 1979 to 1988, Mr. Kaiser was President
of Expeditors International of Washington,
Inc. (international freight forwarder).
John M. Lillie 60 Chairman of the Board of Directors of The 1997
Epic Team (bicycles and accessories). Mr.
Lillie was Chairman and Chief Executive
Officer of American President Companies,
Ltd., (transportation company) from 1992 to
1995, and was President and Chief Operating
Officer of American President Companies, Ltd.
from 1990 to 1991. Mr. Lillie is a director
of The Gap, Inc. (specialty retailer), Vons
Companies (supermarket chain), Walker
Interactive (software), and Consolidated
Freightways (transportation company).
</TABLE>
Set forth below is certain information concerning the other directors which
is based on data furnished by them.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING PAST FIVE YEARS
AND SERVED AS
CONTINUING DIRECTORS AGE OTHER INFORMATION DIRECTOR SINCE
- ------------------------- --- --------------------------------------------- --------------
<S> <C> <C> <C>
Peter Gibert 54 Chairman of the Board of Directors, President 1992
and Chief Executive Officer. From February
1984 to May 1991, Mr. Gibert was President
and Chief Executive Officer of Darrell J.
Sekin and Co. (international freight
forwarder).
Wesley J. Fastiff 64 President of Littler, Mendelson, Fastiff, 1971
Tichy & Mathiason, a law firm which was
retained by the Company to perform legal
services in 1996.
Edwin J. Holman 50 Chairman and Chief Executive Officer of 1995
Petries Retail, Inc. (operator of retail
stores). From 1993 to 1995, Mr. Holman was
President and Chief Operating Officer of
Woodward and Lothrop, Inc. (department stores
located in the Mid-Atlantic region). From
1981 to 1993, Mr. Holman was an officer of
Carter Hawley Hale Stores, Inc., most
recently Vice Chairman and Chief Operating
Officer.
Frank J. Wezniak 64 President and Chief Executive Officer of 1987
Karri Technology, Inc. (manufacturer of
information collection systems) since 1994.
From 1987 to 1992, Mr. Wezniak was President
of Computer Identics (manufacturer of bar
code and data collection information
systems).
</TABLE>
2
<PAGE> 5
FURTHER INFORMATION CONCERNING
THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
During 1996, the Board of Directors held six meetings. The Company has an
Audit Committee, a Human Resources, Compensation and Nominating Committee and a
Strategic Planning and Mergers and Acquisitions Committee.
The members of the Audit Committee are Frank J. Wezniak (Chairman), Ray C.
Robinson, Jr., Edwin J. Holman and Wesley J. Fastiff. Among the functions
performed by the Audit Committee are to make recommendations to the Board of
Directors with respect to the engagement or discharge of independent auditors,
to review with the independent auditors the plan and results of the auditing
engagement, to review the Company's auditing procedures and system of internal
accounting controls and to make inquiries into matters within the scope of its
functions. During 1996, the Audit Committee held six meetings.
The members of the Human Resources, Compensation and Nominating Committee
are Wesley J. Fastiff (Chairman), Ray C. Robinson, Jr., Frank J. Wezniak and
John M. Kaiser. Among the functions of the Human Resources, Compensation and
Nominating Committee are to propose nominees for membership on the Board of
Directors, review and make recommendations to the Board of Directors concerning
the compensation of the key management employees of the Company and to
administer the Company's stock option plans. During 1996, the Human Resources,
Compensation and Nominating Committee held six meetings.
The members of the Strategic Planning and Mergers and Acquisitions
Committee are Peter Gibert (Chairman), John M. Kaiser, Ray C. Robinson, Jr. and
Edwin J. Holman. Among the functions of the Strategic Planning and Mergers and
Acquisitions Committee are to review and make recommendations to the Board of
Directors concerning proposed or potential acquisitions, mergers, joint
ventures, or other business combinations, and to consult with management
regarding acquisition strategy. During 1996, this Committee held three meetings.
COMPENSATION OF DIRECTORS
Directors are paid directors fees consisting of $13,000 per year and $750
for each Board meeting attended. Directors who attend meetings of the Audit
Committee, Strategic Planning and Mergers and Acquisitions Committee or Human
Resources, Compensation and Nominating Committee receive an additional $500 for
each meeting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Company retained the law firm of Littler, Mendelson,
Fastiff, Tichy & Mathiason to perform legal services for it. Mr. Fastiff, a
director of the Company and a member of the Human Resources, Compensation and
Nominating Committee, serves as president of Littler, Mendelson, Fastiff, Tichy
& Mathiason.
3
<PAGE> 6
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The compensation paid to the Company's Chief Executive Officer and four
other most highly compensated executive officers for services in all capacities
to the Company and its subsidiaries during the last three fiscal years is set
forth below.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -------------------------
----------------------------------------- RESTRICTED SECURITIES ALL OTHER
OTHER ANNUAL STOCK UNDERLYING COMPENSA-
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS($)(2) OPTIONS(#) TION($)(3)
- -------------------------------------- ---- --------- -------- ------------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Peter Gibert 1996 $ 375,000 $150,000 $118,000(4) -- 60,000 $4,750
Chairman, President and 1995 $ 240,000 $ 43,000 $113,000(4) -- -- $3,400
Chief Executive Officer 1994 $ 240,000 $150,000 $ 18,500(4) $581,046 37,500(5) $4,700
Steven D. Leonard 1996 $ 225,000 $100,000 $198,000(6) -- 125,000 --
Senior Vice President
Robert J. Diaz 1996 $ 210,000 $ 75,000 $ 61,600(7) -- $4,750
Senior Vice President, 1995 $ 210,000 $ 69,000 $ 97,600(8) -- -- $2,900
Chief Financial Officer 1994 $ 17,500 $ 45,000 -- -- 50,000 --
and Treasurer
Kim E. Wertheimer 1996 $ 168,500 $100,000 -- -- 15,000 $4,750
Vice President 1995 $ 166,000 $100,000 -- -- 15,000 $4,900
1994 $ 122,000 $ 75,000 -- -- 30,000 $3,100
Martin R. Collins 1996 $ 150,000 $ 40,000 -- -- $4,500
Vice President 1995 $ 150,000 $ 55,000 -- -- 15,000 $3,200
1994 $ 150,000 $ 50,000 -- -- 5,000 $4,700
</TABLE>
- ---------------
(1) While the named executive officers enjoy certain perquisites, for fiscal
years 1994, 1995 and 1996 these did not exceed the lesser of $50,000 or 10%
of each officer's salary and bonus.
(2) The fair market value of these shares on the grant date was $17.75 per
share. The fair market value on the grant date, however, is not necessarily
indicative of the restricted stock's real value, which is impossible to
determine until the vesting date; it is at this point that executives
recognize income on the stock and must pay taxes on it. As of the end of
fiscal 1996, the aggregate restricted stock holdings for the named executive
consisted of 16,368 shares worth $388,740 at the then-current fair market
value (as represented by the closing price of the Company's Common Stock on
December 31, 1996), without giving effect to the diminution of value
attributable to the restrictions on such stock. Dividends are paid on the
restricted shares to the extent payable on the Company's Common Stock
generally. All shares granted to Mr. Gibert vested on January 1, 1997.
(3) The amounts shown consist of Company contributions under the Company's
Profit Saving Plan which has been qualified under sections 401 and 501 of
the Internal Revenue Code of 1986, as amended, and covers employees who
voluntarily enroll in the Plan the quarter after completing six months of
continuous service with the Company.
(4) Represents partial forgiveness of loan as discussed under "Transactions with
the Company" and compensation for its tax impact, as well as directors fees
(consisting of $19,000, 19,000 and $18,500 in fiscal years 1996, 1995 and
1994).
(5) Consists of options held by Mr. Gibert to purchase 37,500 shares which were
granted in 1991 and repriced during 1994.
(6) Represents a relocation allowance and compensation for its tax impact.
(7) Represents partial forgiveness of loan as discussed under "Transactions with
the Company" and compensation for its tax impact.
(8) Represents partial forgiveness of loan as discussed under "Transactions with
the Company" and compensation for its tax impact ($45,600) and relocation
expenses reimbursed by the Company ($52,000).
4
<PAGE> 7
OPTIONS GRANTED TO EXECUTIVE OFFICERS
The following table sets forth certain information regarding stock options
granted during 1996 to the executive officers named in the foregoing Summary
Compensation Table.
OPTION GRANTS
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED ANNUAL
---------------------------------------------------------------- RATES OF STOCK PRICE
NUMBER OF PERCENT OF TOTAL APPRECIATION FOR OPTION
SECURITIES OPTIONS GRANTED EXERCISE OR TERM(4)
UNDERLYING OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR ($/SH)(2) DATE(3) 5%($) 10%($)
- --------------------- ------------------ ---------------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Peter Gibert......... 60,000 14.2% $ 17.31 2004 $415,512 $ 831,024
Steven D. Leonard.... 125,000 29.6% $ 17.75 2004 $887,500 $1,775,000
Robert J. Diaz....... -- -- -- -- -- --
Kim E. Wertheimer.... 15,000 3.7% $ 22.15 2004 $136,500 $ 273,000
Martin R. Collins.... -- -- -- -- -- --
</TABLE>
- ---------------
(1) Options granted to Mr. Wertheimer to purchase an aggregate of 15,000 shares
are exercisable in annual increments of 25%, commencing one year from date
of grant. Options granted to Mr. Leonard to purchase an aggregate of 125,000
shares are exercisable in annual increments of 33 1/3%, commencing one year
from date of grant. Options granted to Mr. Gibert to purchase an aggregate
of 60,000 shares are exercisable in annual increments of 50%, commencing one
year from the date of grant. Other than options awarded to Mr. Gibert and
Mr. Leonard, all outstanding options granted to employees are exercisable in
annual increments of 25%, commencing one year from the date of the grant.
Under the terms of the Company's stock option plans, the Human Resources,
Compensation and Nominating Committee retains discretion, subject to plan
limits, to modify the terms of outstanding options.
(2) All options were granted at fair market value at date of grant.
(3) All options granted in fiscal 1996 were granted for a term of eight years.
(4) Realizable values are reported net of the option exercise price. The dollar
amounts under these columns are the result of calculations at the 5% and 10%
rates (determined from the price at the date of grant, not the stock's
current market value) set by the Securities and Exchange Commission and
therefore are not intended to forecast possible future appreciation, if any,
of the Company's stock price. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock as
well as the optionholder's continued employment through the vesting period.
The potential realizable value calculation assumes that the optionholder
waits until the end of the option term to exercise the option.
There were no option exercises during 1996 by any of the executive officers
listed. The following table sets forth certain information with respect to stock
options held by each of the listed executive officers as of December 31, 1996.
YEAR-END OPTION VALUE TABLE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END($)
--------------------- --------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
------------------------------------- --------------------- --------------------
<S> <C> <C>
Peter Gibert......................... 37,500/60,000 $290,625/$386,220
Steven D. Leonard.................... 0/125,000 $0/$750,000
Robert J. Diaz....................... 25,000/25,000 $243,750/$243,750
Kim E. Wertheimer.................... 20,875/44,625 $191,388/$269,663
Martin R. Collins.................... 21,250/28,750 $180,938/$231,563
</TABLE>
5
<PAGE> 8
EMPLOYMENT AGREEMENTS
The Company has an amended employment agreement with Peter Gibert, expiring
in December 31, 1997, pursuant to which Mr. Gibert is employed as the Company's
President and Chief Executive Officer. Under the terms of this agreement, Mr.
Gibert is guaranteed a minimum salary of $31,250 per month subject to future
increases in the discretion of the Board of Directors. The employment agreement
provides for a bonus which is determined as follows: if the Company's earnings
per share ("EPS") for the calendar year are less than an 11% increase over the
preceding year, any bonus paid is subject to the discretion of the Board of
Directors; if the EPS increase over the preceding year is between 11% and 15%,
then Mr. Gibert is entitled to a minimum bonus of 20% of his base salary; if the
EPS increase is 16% to 20% over the preceding year the minimum bonus will be 40%
of base salary; if the EPS increase over the preceding year is 21% or more, then
the minimum bonus shall be 50% of base salary. The agreement with Mr. Gibert
provides for severance pay equal to twelve months base salary in the event that
either the agreement expires at the end of its term and Mr. Gibert's employment
with the Company is not continued or Mr. Gibert's employment is terminated for a
reason other than for cause.
The Company also has an employment agreement with Kim Wertheimer, expiring
in November 1997. Under the terms of this agreement, Mr. Wertheimer is entitled
to a minimum salary of $14,000 per month and a bonus equal to the greater of (i)
$45,000 or (ii) .25 of 1% of the Company's income from operations if the
Company's income from operations is at least 110% of the previous year's. The
agreement with Mr. Wertheimer provides for an annual grant of options to
purchase 15,000 shares of Common Stock for three years, the payment of moving
expenses up to $20,000 and a $100,000 loan for relocation expenses to be
forgiven over five years as long as Mr. Wertheimer remains an employee of the
Company. This loan has not been advanced to date.
The agreement with Mr. Wertheimer also provides for the continuation of his
salary for up to 12 months in the event of termination of employment without
cause. The Company also has commitments to Robert Diaz and Robert Kennis to
provide for continuation of their salaries for up to 12 months in the event of
termination of employment without cause.
The Company also executed an agreement with Martin Collins. Mr. Collins,
who initially joined the Company in 1970 and served in various executive
capacities including Chief Financial Officer and Senior Vice President, retired
in January 1997. The Company has agreed to provide its standard medical
insurance coverage to Mr. Collins through December 2002, and effective after
January 1, 1997, accelerated the vesting of then unexercisable options to
purchase 28,750 shares of Common Stock. Mr. Collins continues to provide
consulting services to the Company for a fee based on the amount of time devoted
on behalf of the Company.
TRANSACTIONS WITH THE COMPANY
In February 1989, Peter Gibert executed a Promissory Note (the "Note") in
the principal amount of $717,944 in favor of Darrell J. Sekin & Co. ("Sekin").
The Note provided bi-monthly payments of principal and interest (accruing
annually at 9.25%) and a maturity date of February 15, 1994. Payments under the
Note terminated in May 1991 when the Company acquired all of the outstanding
shares of Sekin. In June 1993, the Company agreed to defer the payments of
principal and interest until the termination of the employment agreement between
Mr. Gibert and the Company which is described above. Additionally, the interest
rate on the Note was reduced to 5% effective June 1993. As of December 31, 1996,
unpaid principal and accrued interest on the Note aggregated $262,560.
In August 1994, the Company agreed to forgive annually $50,000 of the
amount due under the Note on the condition that Mr. Gibert is an employee of the
Company and the Company has been profitable in the previous twelve months. The
interest rate on the Note was increased to 5.7% effective August 1994. The
entire balance owed under the Note will be forgiven in the event Mr. Gibert's
employment with the Company is terminated, unless such termination is with cause
in which case the entire balance becomes due and owing. During 1996, $50,000 due
under the Note was forgiven.
6
<PAGE> 9
In connection with Robert Diaz joining the Company in December 1994 and
relocating from Denver, Colorado the Company loaned Mr. Diaz $120,000 at an
annual interest rate of 6%. The loan is evidenced by a promissory note, which
provides that payment shall not be due as long as Mr. Diaz is employed with the
Company, and that commencing April 1995, $25,000 shall be forgiven annually
until the entire amount of the note is forgiven. The balance outstanding under
the note is accelerated and immediately due if Mr. Diaz' employment is
terminated under certain circumstances. As of December 31, 1996, the unpaid
principal and accrued interest on the note aggregated $72,449.
Similarly, in connection with Steven D. Leonard joining the Company in
April 1996 and relocating to the San Francisco Bay Area, the Company loaned Mr.
Leonard $250,000 at an annual interest rate of 6.6%. The loan is evidenced by a
promissory note which provides for equal annual payments of $60,321 over five
years commencing September 1997. The balance outstanding under the note is
accelerated and immediately due if Mr. Leonard's employment is terminated. As of
December 31, 1996 the unpaid principal and accrued interest aggregated $254,385.
HUMAN RESOURCES, COMPENSATION AND NOMINATING COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Human Resources, Compensation and Nominating Committee (the
"Committee") of the Board of Directors is composed entirely of independent
directors, none of whom is an officer or employee of the Company or any of its
subsidiaries. The Committee is responsible for establishing the Company's
compensation policies, administering the Company's stock option plans, and
reviewing the Company's salary, profit sharing and incentive arrangements
generally. In addition, the Committee reviews the compensation levels of the
executive officers of the Company, including the Chief Executive Officer, and
evaluates their performance. The Committee reviews with the Board the
significant aspects of compensation for the executive officers of the Company.
In discharging our responsibilities as members of the Human Resources,
Compensation and Nominating Committee, our objective is to establish policies
which will enhance the long-term performance and growth of the Company, enable
the Company to attract and retain outstanding executives and employees, and
provide meaningful incentives without subjecting the Company to excessive costs.
The Company has historically relied principally on cash payments in the form of
salary and incentive payments to motivate its key executives and managers, and
additionally on employee stock options.
The compensation policy of the Company, which is endorsed by the Committee,
is that a substantial portion of the annual compensation of each officer should
relate to and be contingent upon the performance of the Company, as well as the
individual contribution of each officer. As a result, a substantial portion of
each executive officer's compensation is "at risk" in the form of incentive
compensation, which is awarded based on performance of the individual and the
Company (or the appropriate business unit managed by the executive officer) for
the year in question. The determination of incentive compensation is based on a
qualitative evaluation of the individual's contribution to the Company's
performance, and is also tied to meeting or exceeding the previous year's
financial results.
Amendments to Section 162(m) of the Internal Revenue Code have eliminated
the deductibility of most compensation over a million dollars in any given year.
The Committee believes that it is highly unlikely that any of the Company's
executive officers would be eligible at any time in the foreseeable future to
receive compensation of more than a million dollars. However, the Committee
believes that it is important to retain the flexibility to maximize the
Company's tax deductions. Accordingly, it is the policy of the Committee to
consider the impact, if any, of Section 162(m) on the Company and to document as
necessary specific performance goals and take all other reasonable steps in
order to seek to preserve the Company's tax deductions.
Peter Gibert's base salary for 1996 was based on his rights under his
amended employment agreement with the Company (the "Employment Agreement")
described in the Company's proxy statement under the caption "Employment
Agreements."
7
<PAGE> 10
Under the terms of this agreement, Mr. Gibert's base salary is established
at $31,250 per month through December 31, 1997. Mr. Gibert's bonus plan is as
follows: if the Company's earnings per share ("EPS") for the calendar year are
less than an 11% increase over the preceding year, any bonus paid is subject to
the discretion of the Board of Directors; if the EPS increase over the preceding
year is between 11% and 15%, then Mr. Gibert is entitled to a minimum bonus of
20% of his base salary; if the EPS increase is 16% to 20% over the preceding
year the minimum bonus will be 40% of base salary; if the EPS increase over the
preceding year is 21% or more, then the minimum bonus shall be 50% of base
salary. For 1996, Mr. Gibert's total bonus was $150,000. This amount consists of
Mr. Gibert's minimum entitlement of $75,000 under the Employment Agreement for
achieving a 15% EPS increase over the preceding year, and an equal amount
awarded by the Committee in the exercise of its discretion in recognition of Mr.
Gibert's performance in 1996.
The perquisites and other benefits received by Mr. Gibert that are reported
in the Summary Compensation Table are generally provided pursuant to his
Employment Agreement.
March 3, 1997
Human Resources, Compensation and
Nominating Committee
Wesley J. Fastiff, Chairman
John M. Kaiser
Ray C. Robinson, Jr.
Frank J. Wezniak
8
<PAGE> 11
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on its Common Stock with the cumulative
total return of the NASDAQ Market Index and a peer group index consisting of the
Company, Expeditors International of Washington, Inc., Fritz Companies, Inc.,
Air Express International Corporation and Airborne Freight Corporation.
Performance graphs for previous years had also included Intertrans Corporation,
which merged into the Fritz Companies, Inc. in 1996. The performance graph shown
below is not necessarily indicative of future performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
MEASUREMENT PERIOD THE HARPER NASDAQ MARKET
(FISCAL YEAR COVERED) GROUP, INC. INDEX PEER GROUP
<S> <C> <C> <C>
12/31/91 100 100 100
12/31/92 73 116 105
12/31/93 81 134 116
12/31/94 72 131 140
12/31/95 82 185 200
12/31/96 111 227 182
</TABLE>
*All returns reflect reinvestment of dividends.
9
<PAGE> 12
PROPOSAL TO APPROVE THE CHANGE OF
THE COMPANY'S NAME TO "CIRCLE INTERNATIONAL GROUP, INC."
The Board of Directors has adopted, subject to the required favorable vote
of the stockholders, an amendment to the Certificate of Incorporation of the
Company which would change the name of the Company from "The Harper Group, Inc."
to "Circle International Group, Inc." The Board believes that this change is
advisable so that the name of the Company will be consistent with the name under
which the Company primarily operates globally, "Circle International." This
name, which is protected by trademark registration in the United States and many
other countries, is the brand name with which the Company's customers, employees
and suppliers associate its global services. Management believes that the
recognition in the industry given to the "Circle International" name will be
enhanced, and existing confusion eliminated, by changing the name of the Company
to one consistent with its global operations.
Approval of the proposed amendment requires the affirmative votes of the
holders of a majority of the outstanding Common Stock. Once stockholder approval
has been obtained, the change in the Company's name will be effective upon the
filing of a certificate of amendment with the Secretary of State of the State of
Delaware. The Board of Directors recommends a vote FOR this proposal.
OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table indicates, as to each named director and each named
executive officer, and as to all directors and executive officers as a group,
the number of shares and percentage of the Company's Common Stock beneficially
owned as of February 28, 1997.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY OWNED
AS OF FEBRUARY 28, 1997
----------------------------------
NAME NUMBER OF SHARES PERCENT
---------------------------------------------- ---------------- -------
<S> <C> <C>
Peter Gibert(1)............................... 1,084,153(2)(3)(13) 6.8%
Ray C. Robinson, Jr.(1)....................... 1,707,947(4)(6) 10.7%
Wesley J. Fastiff............................. 80,433(5)(6) 0.5%
Edwin J. Holman............................... 8,000(7) --
Frank J. Wezniak.............................. 8,685(6) --
John M. Kaiser................................ 25,000(8) --
John M. Lillie................................ 2,500 --
Steven D. Leonard............................. 42,500(9) --
Robert J. Diaz................................ 25,000(10) --
Kim E. Wertheimer............................. 87,582(11) 0.5%
Martin R. Collins............................. -- --
Robert H. Kennis.............................. 18,949(12)(13) --
All directors and officers as a group (12
persons).................................... 3,090,749 19.3%
John H. Robinson(1)........................... 1,028,037 6.4%
Westport Asset Management, Inc.(1)............ 1,461,250 9.1%
Franklin Resources, Inc.(1)................... 1,707,200 10.7%
</TABLE>
- ---------------
(1) The address of Ray C. Robinson, Jr., Peter Gibert and John H. Robinson is
260 Townsend Street, San Francisco, California 94107. With the exception of
Ray C. Robinson, Jr., Peter Gibert and John H. Robinson, the only
stockholders who are known by the Company to own beneficially more than 5%
of the Company's Common Stock are Westport Asset Management, Inc., whose
address is 253 Riverside Avenue, Westport, Connecticut 06880 and Franklin
Resources, Inc., whose address is 777 Mariners Island Blvd., San Mateo, CA
94403. John H. Robinson and Ray C. Robinson, Jr. are brothers.
(2) Excludes 92,159 shares (0.6%) held by Jeffrey L. Oerke, as trustee of an
irrevocable trust for the benefit of the children of Peter Gibert and their
descendants. As to such excluded shares, Mr. Gibert disclaims any
beneficial interest.
10
<PAGE> 13
(3) Includes 67,500 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1997.
(4) Consists of 1,702,947 shares held by Ray C. Robinson, Jr. and Craig Howard
Robinson as co-trustees of a revocable trust for the benefit of Ray C.
Robinson, Jr., his wife, and their descendants.
(5) Includes 75,433 shares held by Wesley J. Fastiff and Bonnie B. Fastiff as
co-trustees of a revocable trust for the benefit of Wesley J. Fastiff, his
wife and their descendants.
(6) Includes 5,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1997.
(7) Consists of 8,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1997.
(8) Includes 11,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1997.
(9) Consists of 42,500 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1997.
(10) Consists of 25,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1997.
(11) Includes 22,500 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1997.
(12) Includes 18,250 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1997.
(13) Includes shares contributed into the officer's account under the Company's
Section 401(k) Plan which were previously held by the Company's profit
sharing plan.
SECTION 16(A) INFORMATION
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
January 1, 1996 to December 31, 1996 all filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were complied
with.
AUDITORS
Deloitte & Touche LLP, independent certified public accountants, serves as
the Company's principal accountants. Representatives of Deloitte & Touche LLP
will be present at the Annual Meeting with the opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions.
OTHER MATTERS
As of the date of this Proxy Statement, there are no other matters which
management intends to present or has reason to believe others will present to
the meeting. If other matters properly come before the meeting, those who act as
proxies will vote in accordance with their judgment.
11
<PAGE> 14
STOCKHOLDER PROPOSALS
If any stockholder intends to present a proposal for action at the
Company's 1998 Annual Meeting and wishes to have such proposal set forth in
management's proxy statement, such stockholder must forward the proposal to the
Company so that it is received on or before December 2, 1998. Proposals should
be addressed to the Company at 260 Townsend Street, San Francisco, California
94107, Attention: Corporate Secretary.
COST OF SOLICITATION
All expenses in connection with the solicitation of this proxy, including
the charges of brokerage houses and other custodians, nominees or fiduciaries
for forwarding documents to stockholders, will be paid by the Company.
By Order of the Board of Directors
/s/ ROBERT H. KENNIS
---------------------------
Robert H. Kennis, Secretary
Dated: April 1, 1997.
12
<PAGE> 15
THE HARPER GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 13, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints PETER GIBERT and ROBERT H. KENNIS, or either
of them, each with power of substitution, as proxies of the undersigned, to
attend the Annual Meeting of Stockholders of THE HARPER GROUP, INC. to be held
at the office of the Company at 260 Townsend Street, San Francisco, California,
on May 13, 1997, at 10:30 A.M., and any adjournment thereof, and to vote the
number of shares the undersigned would be entitled to vote if personally present
on the following:
(1) The election of three Class III Directors for a three year term.
<TABLE>
<S> <C>
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for the nominees listed below
</TABLE>
(INSTRUCTION: To withhold authority to vote for any nominee, strike a line
through the nominee's name below)
Ray C. Robinson, Jr., John M. Kaiser and John M. Lillie
(2) To amend the Company's Certificate of Incorporation to change the Company's
name to "Circle International Group, Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion, upon any and all such other matters as may properly
come before the meeting or any adjournment thereof.
(Continued, and to be signed, on reverse side)
<PAGE> 16
(Continued from other side)
This proxy will be voted as directed. In the absence of contrary directions,
this proxy will be voted FOR the election of the directors listed above and FOR
Proposal 2.
Dated: ____________, 1997
-------------------------
-------------------------
(Signature)
The signature should
correspond exactly with
the name appearing on the
certificate evidencing
your Common Stock. If
more than one name
appears, all should sign.
Joint owners should each
sign personally.
STOCKHOLDERS ARE URGED TO MARK, DATE, SIGN AND RETURN THIS PROXY
PROMPTLY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
