<PAGE> 1
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:
[ ] 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 240.14a-11(c) or 240.14a-12
Circle International Group, 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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<PAGE> 2
LOGO
CIRCLE INTERNATIONAL GROUP, INC.
260 TOWNSEND STREET
SAN FRANCISCO, CALIFORNIA 94107
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 11, 1999, 10:30 A.M.
TO OUR STOCKHOLDERS:
The Annual Meeting of Stockholders of Circle International Group, Inc. will
be held at the office of the Company, 260 Townsend Street, San Francisco,
California, on Tuesday, May 11, 1999, at 10:30 a.m. for the following purposes:
(1) To elect two Class II directors.
(2) To approve the adoption of the Employee Stock Purchase Plan.
(3) To transact such other business as may properly come before the
meeting.
Only stockholders of record as of 5:00 P.M., March 26, 1999, are entitled
to vote at the meeting and any adjournment thereof. A complete list of
shareholders of record as of the close of business on March 26, 1999 will be
available for inspection during normal business hours ten days before the Annual
Meeting at 260 Townsend Street, San Francisco, California.
YOUR VOTE IS IMPORTANT. STOCKHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE.
By Order of the Board of Directors
Robert H. Kennis
General Counsel and Secretary
San Francisco, California
April 1, 1999
<PAGE> 3
CIRCLE INTERNATIONAL GROUP, INC.
260 TOWNSEND STREET
SAN FRANCISCO, CALIFORNIA 94107
------------------------
PROXY STATEMENT
------------------------
The enclosed proxy is solicited by the Board of Directors of Circle
International Group, Inc. (the "Company") to be used at the Annual Meeting of
Stockholders on May 11, 1999, 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, 1999.
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 noted on the proxy. 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 of the Company as of 5:00 P.M., March 26, 1999,
will be entitled to vote at the Annual Meeting.
As of the close of business on March 26, 1999, there were outstanding
17,131,969 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 and
broker non-votes 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. With regard
to the election of directors, votes may be cast "For" or "Withhold Authority"
for each nominee; votes that are withheld will be excluded entirely from the
vote and will have no effect.
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 eight.
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 II directors elected at the
Annual Meeting will serve until the 2002 Annual Meeting; Class I directors
elected at the 1998 Annual Meeting will serve until the 2001 Annual Meeting; and
Class III directors elected at the 1997 Annual Meeting will serve until the 2000
Annual Meeting.
<PAGE> 4
The persons named below are the nominees to serve as Class II directors
until the 2002 Annual Meeting of Stockholders and until their successors have
been elected or until death, retirement, resignation or removal. The nominees
presently serve as Class II directors.
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 SERVED AS
NOMINEES FOR DIRECTOR AGE FIVE YEARS AND OTHER INFORMATION DIRECTOR SINCE
- --------------------- --- -------------------------------- --------------
<S> <C> <C> <C>
David I. Beatson 51 Chairman of the Board since January 1999 and 1998
President and Chief Executive Officer since
July 1998. From July 1994 to July 1998, Mr.
Beatson was President and Chief Executive
Officer of Emery Worldwide, a subsidiary of CNF
Transportation Inc. engaged in transportation
services. From 1991 until July 1998, Mr.
Beatson served in a variety of management
positions at Emery Worldwide.
Wesley J. Fastiff 66 President of Littler Mendelson, a law firm 1971
which was retained by the Company to perform
legal services in 1998.
</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 SERVED AS
CONTINUING DIRECTORS AGE FIVE YEARS AND OTHER INFORMATION DIRECTOR SINCE
- -------------------- --- -------------------------------- --------------
<S> <C> <C> <C>
Peter Gibert 56 Consultant to the Company and effective April 1992
1999 Managing Director and Part-Owner of two
51%-owned subsidiaries of the Company located
in Spain and Portugal, respectively. Mr. Gibert
served as President of the Company from May
1991 until July 1998 and as Chief Executive
Officer from May 1992 until July 1998.
Edwin J. Holman 52 From January 1999, President and Chief 1995
Operating Officer of Rich's, Lazarus and
Goldsmith's, a division of Federated Department
Stores. From 1996 to 1998, Chairman and Chief
Executive Officer of 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).
John M. Kaiser 59 Private businessman. From 1979 to 1988, Mr. 1993
Kaiser was President of Expeditors
International of Washington, Inc.
(international freight forwarder).
John M. Lillie 62 President of Sequoia Associates, LLC. (a 1997
private investment firm). From 1997 to 1998,
Mr. Lillie was Chairman of the Board of
Directors of The Epic Team (bicycles and
accessories). Mr. Lillie was Chairman and Chief
Executive Officer of American President
Companies, Ltd. (transportation company) from
1992 to 1995. Mr. Lillie is a director of The
Gap, Inc. (specialty retailer), Walker
Interactive (software), and Consolidated
Freightways (transportation company).
Ray C. Robinson, Jr. 78 Private businessman. Mr. Robinson served as 1971
Secretary of the Company from 1971 until
January 1986.
</TABLE>
2
<PAGE> 5
FURTHER INFORMATION CONCERNING
THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
During 1998, 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 currently are Edwin Holman (Chairman),
John M. Kaiser, John M. Lillie and Frank J. Wezniak. 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 1998, the Audit Committee held six meetings.
The members of the Human Resources, Compensation and Nominating Committee
currently are John M. Kaiser (Chairman), Wesley J. Fastiff, Ray C. Robinson,
Jr., and Frank J. Wezniak. 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 1998, the
Human Resources, Compensation and Nominating Committee held six meetings.
The members of the Strategic Planning and Mergers and Acquisitions
Committee are David I. Beatson (Chairman), Peter Gibert, Edwin Holman, John M.
Kaiser, John M. Lillie, Ray C. Robinson, Jr., and Wesley J. Fastiff. 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 1998, this Committee held one meeting.
COMPENSATION OF DIRECTORS
Directors are paid directors fees consisting of $13,000 per year and $750
for each Board meeting attended. Committee members who attend meetings of the
Audit Committee, Strategic Planning and Mergers and Acquisitions Committee or
Human Resources, Compensation and Nominating Committee receive an additional
$500 for each meeting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the Company retained the law firm of Littler Mendelson to
perform legal services for it. Mr. Fastiff, a director of the Company and a
member of the Human Resources, Compensation and Nominating Committee, serves as
president of Littler Mendelson.
3
<PAGE> 6
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The compensation paid to the Company's Chief Executive Officer and four
other most highly compensated executive officers for services in all capacities
to the Company and its subsidiaries during the last three fiscal years is set
forth below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION ------------------------
------------------------------------------ RESTRICTED SECURITIES ALL OTHER
OTHER ANNUAL STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS($) OPTIONS(#) ($)(2)
--------------------------- ---- --------- -------- ------------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David I. Beatson............. 1998(3) $221,505 $150,000 $158,750(4) $28,000 200,000 --
Chairman, President and
Chief Executive Officer
Peter Gibert................. 1998(3) $375,000 $100,000 $116,500(5) -- 18,750 $4,800
Former Chairman, President 1997 $375,000 $185,000 $122,850(5) -- 100,000 $4,750
and Chief Executive Officer 1996 $375,000 $150,000 $118,000(5) -- 60,000 $4,750
Janice Kerti................. 1998 $177,000 $ 80,000 -- -- 35,000 $4,800
Senior Vice President, 1997 $126,500 $ 50,000 -- -- -- $4,800
Chief Financial Officer 1996 $ 41,205 $ 20,000 -- -- 15,000 $4,800
and Treasurer
Kim E. Wertheimer............ 1998 $189,890 $ 80,000 $ 51,485(6) -- 15,000 $4,800
Vice President 1997 $168,500 $127,500 -- $31,356(7) 15,000 $4,750
1996 $168,500 $100,000 -- -- 15,000 $4,750
Robert H. Kennis............. 1998 $167,000 $ 80,000 -- 15,000 $4,800
Vice President, Secretary 1997 $155,000 $ 82,500 -- $ 9,360(7) 10,000 $4,750
and General Counsel 1996 $145,000 $ 70,000 -- -- 10,000 $4,750
</TABLE>
- ---------------
(1) While the named executive officers enjoy certain perquisites, for fiscal
years 1996, 1997 and 1998 these did not exceed the lesser of $50,000 or 10%
of each officer's salary and bonus.
(2) 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 employment.
(3) Mr. Beatson joined the Company and replaced Peter Gibert as Chief Executive
Officer in July 1998 and as Chairman of the Board of Directors in January
1999.
(4) Represents an incentive paid in January 1999 as an inducement to join to
Company in July 1998 and directors fees ($8,750).
(5) 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 $17,500, $19,000 and $17,500 in fiscal years 1998, 1997 and
1996, respectively).
(6) Represents partial forgiveness of loan as discussed under "Transactions with
the Company" and compensation for its tax impact.
(7) Represents payment for certain accrued and unused vacation hours pursuant to
a buy-down program offered to all employees possessing a certain amount of
vacation hours. The closing market price of these shares on the date of
grant was $26 per share. All such shares vested on June 15, 1998.
4
<PAGE> 7
OPTIONS GRANTED TO EXECUTIVE OFFICERS
The following table sets forth certain information regarding stock options
granted during 1998 to the executive officers named in the foregoing Summary
Compensation Table.
OPTION GRANTS
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(4)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR ($/SH)(2) DATE(3) 5%($) 10%($)
---- ---------- ------------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
David I. Beatson......... 200,000 35.2% $21.688(5) 2006 $2,035,132 $4,859,015
Peter Gibert............. 18,750 3.3% $16.375 2006 $ 146,594 $ 351,118
Janice Kerti............. 35,000 6.2% $26.625 2006 $ 444,929 $1,065,682
Kim E. Wertheimer........ 15,000 2.6% $16.375 2006 $ 117,275 $ 280,894
Robert H. Kennis......... 15,000 2.6% $ 27.50 2006 $ 196,950 $ 471,730
</TABLE>
- ---------------
(1) All option awards granted to the named executives in fiscal 1998 are
exercisable in annual increments of 25%, commencing one year from date of
grant, except for options granted to David I. Beatson to purchase an
aggregate of 200,000 shares which are exercisable in annual increments of
33% commencing a year after the date of 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 1998 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.
(5) Such options were repriced in August 1998; the original exercise price was
$28.00 per share.
Set forth below is certain information regarding the repricing of options
held by executive officers during the past ten years.
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
OPTION TERM
NUMBER OF MARKET PRICE OF EXERCISE PRICE REMAINING AT
OPTIONS/SARS STOCK AT TIME OF AT TIME OF NEW DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED(#) AMENDMENT($) AMENDMENT($) PRICE($) AMENDMENT
---- -------- ------------ ---------------- ----------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Martin R. Collins..... 12/14/93 10,000 $ 16.00 $22.00 $ 16.00 6.25 years
Robert H. Kennis...... 12/14/93 3,500 $ 16.00 $22.00 $ 16.00 6.25 years
Peter Gibert.......... 7/11/94 37,500 $ 13.25 $19.00 $ 16.00 4.75 years
David I. Beatson...... 8/24/98 200,000 $21.688 $28.00 $21.688 7.91 years
</TABLE>
5
<PAGE> 8
The following table sets forth certain information with respect to option
exercises during 1998 and stock options held by each of the Company's executive
officers as of December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END($)
SHARES --------------------- --------------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- -------------- ----------- --------------------- --------------------
<S> <C> <C> <C> <C>
David I. Beatson.......... -- -- 0/200,000 $0/$0
Peter Gibert.............. -- -- 117,500/98,750 $264,360/$172,954
Janice Kerti.............. -- -- 3,750/42,500 $4,688/$9,375
Kim E. Wertheimer......... -- -- 57,378/38,122 $264,519/$79,293
Robert H. Kennis.......... -- -- 46,627/31,873 $224,814/$20,937
</TABLE>
EMPLOYMENT AGREEMENTS
Incident to the hiring of David I. Beatson as President and Chief Executive
Officer, the Company and Mr. Beatson entered into an employment agreement for a
five-year term expiring June 30, 2003. The employment agreement provides for a
salary of $450,000 per year, subject to review on an annual basis by the Board
of Directors. The employment agreement also provides for a signing bonus
consisting of 1,000 shares of restricted stock and $150,000 in cash payable in
January 1999, and for market-priced stock option grants of 200,000 shares in
July 1998, and 50,000 shares in each of July 1999, 2000 and 2001. The employment
agreement provides for accelerated vesting of the options granted to Mr. Beatson
in the event of a change of control. Under the terms of his employment
agreement, Mr. Beatson received an incentive payment of $150,000 in respect of
1998. Incentive payments in future years will be based on the growth of the
Company's net revenue and earnings per share, subject to a minimum incentive of
$150,000 for work in 1999. In the event Mr. Beatson's employment is terminated
by the Company without cause, then Mr. Beatson would be entitled to receive a
severance payment equal to one year's base annual salary and an acceleration of
the vesting of outstanding stock options.
The Company also has an employment agreement with Kim Wertheimer, expiring
upon twelve months notice. Under the terms of this agreement, Mr. Wertheimer is
entitled to a minimum salary of $14,000 per month. 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.
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 Kennis and Janice Kerti to
provide for continuation of their salaries for up to 12 months in the event of
termination of employment without cause.
TRANSACTIONS WITH THE COMPANY
Effective approximately April 1, 1999, the Company will sell a 49% interest
in its two subsidiaries in Spain and Portugal ("the subsidiaries") to Peter
Gibert, who relocated to Barcelona, Spain and will be appointed as Managing
Director of both subsidiaries effective April 1999. In view of Mr. Gibert's
experience in the industry and his over thirty-year track record, the Company
concluded that Mr. Gibert's leadership for the two subsidiaries could
substantially improve the growth and profitability of its operations in Spain
and Portugal.
The Company's outside advisors determined the methodology for determining
the value of the subsidiaries, which was deemed to be fair by a third-party
valuation expert (the "valuation methodology"). The agreed purchase price is
US$1,280,000, paid one-third at closing, and the balance to be paid in equal
installments
6
<PAGE> 9
eighteen and thirty-six months following closing. The two installment payments
are evidenced by a Promissory Note bearing interest at six percent (6%) and
secured by a pledge of Mr. Gibert's interest in the subsidiaries. Before the
close of the transaction, the Company will declare dividends from the
subsidiaries totaling approximately US$2,184,000.
In addition, the agreement provides Mr. Gibert with the right at his option
to require the Company to purchase his interest in the subsidiaries at a price
based on the same valuation methodology. After December 31, 2005 (or earlier
under certain circumstances), the Company has the right to require Mr. Gibert to
sell his entire interest in the subsidiaries at a price based on the valuation
methodology.
In connection with Mr. Gibert stepping down as Chief Executive Officer and
relocating to Spain, Mr. Gibert entered into a Consulting Agreement with the
Company pursuant to which he agreed to provide sales, marketing, strategic
planning, acquisition, training and other assistance as reasonably requested by
the Company wherever the Company has operations, other than in the United
States, Spain and Portugal. The agreement provides for annual compensation in
the first year equalling $375,000 and annual compensation in the second and
third years equalling $275,000. The agreement, which has a three year term
commencing January 1, 1999, also prohibits Mr. Gibert, directly or indirectly,
from competing against the Company during the term of the agreement, plus six
months.
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, 1998,
unpaid principal and accrued interest on the Note aggregated $187,658.
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. 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 1998,
$50,000 due under the Note was forgiven.
On May 15, 1997, Kim Wertheimer executed a Promissory Note in the principal
amount of $100,000 bearing interest at 6% per annum. The note provides that
payment not be due as long as Mr. Wertheimer is employed by the Company, and
that commencing May 1998, 20% of the outstanding balance will 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.
Wertheimer's employment is terminated under certain circumstances. During 1998,
$26,000 due under the note was forgiven. As of December 31, 1998, the unpaid
principal and accrued interest on the note aggregated $82,766.
Additionally, on October 1, 1997 the Company advanced $75,000 to Robert
Kennis evidenced by a Promissory Note bearing interest at 7% per annum. The note
provides for payment of principal and interest in four equal annual
installments. As of December 31, 1998, the unpaid principal and accrued interest
on the note aggregated $59,125.
On December 21, 1998, the Company advanced $300,000 to David I. Beatson
evidenced by a Promissory Note bearing interest at 6% per annum. The primary
purpose of the advance was to assist Mr. Beatson in meeting certain tax
liabilities arising from the compelled early distribution of employment benefits
incident to his resignation from his previous employment. The note provides for
payment of principal and interest in four equal annual installments commencing
on March 31, 2000. The note provides the Company with certain off-set and
deduction rights in the event payment is not made when due. As of December 31,
1998, the unpaid principal and accrued interest on the note aggregated $300,537.
Additionally, on October 1, 1998 the Company advanced $150,000 to Cynthia
Stoddard in connection with her relocation to the San Francisco Bay Area in
order to join the Company as Chief Information Officer.
7
<PAGE> 10
The advance is evidenced by a Promissory Note bearing interest at 5.54%. The
note provides that 25% of balance will be forgiven annually until the entire
amount of the note is forgiven. The balance outstanding under the note will be
accelerated and immediately due if Ms. Stoddard's employment is terminated under
certain circumstances. As of December 31, 1998 the unpaid principal and accrued
interest on the note aggregated $151,765.
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 also relates 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 will be the policy of this 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 and bonus for 1998 were based on his rights
under his amended employment agreement with the Company as then in effect.
Mr. Beatson's base salary and bonus for 1998 were based on his rights under
the employment agreement which he signed upon joining the Company in July 1998.
The Committee participated in the development of the employment agreement after
reviewing the terms of the proposed employment arrangement as against the
compensation packages which are paid to chief executive officers of other
similarly situated companies, including the compensation package provided to Mr.
Beatson by his previous employer.
8
<PAGE> 11
At its meeting on August 24, 1998, the Committee determined that options to
purchase an aggregate of 200,000 shares of Common Stock which had been granted
to Mr. Beatson upon his hiring in July 1998 should be amended to reduce the
exercise price from $28.00 per share to $21.688 per share. This action reflected
the Committee's judgment that the sharp decline in the price of the Company's
Common Stock in the six weeks after Mr. Beatson joined the Company substantially
undermined the incentive structure which the Company had negotiated with Mr.
Beatson and reflected in his employment agreement.
The perquisites and other benefits received by Mr. Beatson that are
reported in the Summary Compensation Table are generally provided pursuant to
his Employment Agreement.
March 1, 1999
Human Resources, Compensation and
Nominating Committee
John M. Kaiser, Chairman
Wesley J. Fastiff
Ray C. Robinson, Jr.
Frank J. Wezniak
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 consisting of the
Company, Expeditors International of Washington, Inc., Fritz Companies, Inc.,
Air Express International Corporation, Airborne Freight Corporation and Pittston
Burlington Group.
<TABLE>
<CAPTION>
CIRCLE INTERNATIONAL GROUP
INC. PEER GROUP NASDAQ COMPOSITE INDEX
-------------------------- ---------- ----------------------
<S> <C> <C> <C>
'12/31/93' 100 100 100
'12/31/94' 89 110 98
'12/31/95' 101 157 138
'12/31/96' 137 120 170
'12/31/97' 134 198 209
'12/31/98' 121 182 293
</TABLE>
9
<PAGE> 12
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, 1999.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY
OWNED AS OF
FEBRUARY 28, 1999
--------------------------
NUMBER OF
NAME SHARES PERCENT
---- --------- -------
<S> <C> <C>
David I. Beatson(1)........................................ 3,400(2) --
Peter Gibert(1)............................................ 1,148,868(3)(4)(13) 6.7%
Ray C. Robinson, Jr(1)..................................... 1,702,997(5)(7) 9.9%
Wesley J. Fastiff.......................................... 90,433(6)(7) 0.5%
Frank J. Wezniak........................................... 18,685(7) 0.1%
Edwin J. Holman............................................ 19,500(8) 0.1%
John M. Kaiser............................................. 35,000(7) 0.2%
John M. Lillie............................................. 12,500(9) --
Janice Kerti............................................... 3,750(10) --
Kim E. Wertheimer.......................................... 126,291(11) 0.7%
Cynthia A. Stoddard........................................ -- --
Robert H. Kennis........................................... 50,075(12)(13) 0.3%
All directors and officers as a group (12 persons)......... 3,211,499 18.7%
Westport Asset Management, Inc.(1)......................... 2,028,387 11.8%
Royce and Associates(1).................................... 1,155,999 6.7%
First Union Corporation(1)................................. 884,300 5.2%
</TABLE>
- ---------------
(1) The address of David I. Beatson and Ray C. Robinson, Jr. is 260 Townsend
Street, San Francisco, California 94107. The address of Peter Gibert is
Circle Espana, c/Atlantic, 111-2 Planta (Z.A.L.), Zona De Actividades
Logisticas, Puerto De Barcelona, E-08040 Barcelona, Spain. With the
exception of Ray C. Robinson, Jr., and Peter Gibert, 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, Royce and Associates,
whose address is 1414 Avenue of the Americas, New York, New York 10019, and
First Union Corporation, whose address is 301 South Tryon, Charlotte, North
Carolina 28288.
(2) Consists of 1,000 shares of restricted stock and 2,400 shares of stock held
by David I. Beatson and Diana L. Beatson as co-trustees of a revocable
trust for the benefit of David I. Beatson, his wife and their descendants.
(3) Excludes 92,159 shares (0.5%) 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.
(4) Includes 132,500 (0.8%) shares issuable upon exercise of outstanding
options exercisable within 60 days of February 28, 1999.
(5) Includes 1,687,997 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.
(6) 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.
(7) Includes 15,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1999.
(8) Consists of 17,500 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1999.
10
<PAGE> 13
(9) Consists of 10,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1999 and 2,500 shares held by
John M. Lillie and Daryl L. Lillie as co-trustees of a revocable trust for
the benefit of John M. Lillie, his wife and their descendents.
(10) Consists of 3,750 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1999.
(11) Includes 58,003 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1999 and 1,206 shares of stock
as explained in footnote (7) to the Summary Compensation Table.
(12) Includes 49,127 shares issuable upon exercise of outstanding options
exercisable within 60 days of February 28, 1999 and 364 shares of stock as
explained in footnote (7) to the Summary Compensation Table.
(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.
ADOPTION OF
THE EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has adopted an Employee Stock Purchase Plan (the
"Plan"), subject to the approval of a majority of the shares of the Company's
Common Stock which are present in person or by proxy and entitled to vote at the
Annual Meeting.
PURPOSE
The purpose of the Plan is to provide a means for eligible employees of the
Company and its participating subsidiaries, including those subsidiaries doing
business outside the United States, to increase their ownership of Common Stock,
thereby aligning their interests with those of the Company's stockholders. The
Plan is intended to qualify as an employee stock purchase plan under Section 423
of the Internal Revenue Code of 1986, as amended.
ELIGIBILITY TO PARTICIPATE
Most employees of the Company and of any participating subsidiaries of the
Company will be eligible to elect to participate in the Plan. However, an
employee will not be eligible if he or she has the right to acquire five percent
or more of the voting stock of the Company or of any subsidiary of the Company.
Also, if determined by the Committee (see below) on a uniform basis, an employee
will not be eligible if he or she normally is scheduled to work less than or
equal to twenty hours per week or five months per calendar year. Approximately
1,500 employees in the United States currently meet the Plan's eligibility
requirements. However, no employees currently are participating in the Plan,
pending approval of the Plan by stockholders. Assuming that the Plan is approved
at the Annual Meeting, it is expected that eligible employees will be offered
the opportunity to join the Plan shortly thereafter.
ADMINISTRATION, AMENDMENT AND TERMINATION
The Plan is administered by the Human Resources, Nominating and
Compensation Committee (the "Committee") of the Board of Directors of the
Company. The members of the Committee serve at the discretion of the Board.
Subject to the terms of the Plan, the Committee has all discretion and
authority necessary or appropriate to control and manage the operation and
administration of the Plan, including the power to designate the subsidiaries of
the Company which will be permitted to participate in the Plan and to establish
a waiting period (not to exceed two years) before new employees may become
eligible for the Plan. The Committee may make whatever rules, interpretations,
and computations, and take any other actions to administer the Plan that it
considers appropriate to promote the Company's best interests, and to ensure
that the Plan remains
11
<PAGE> 14
qualified under Section 423 of the Internal Revenue Code. The Committee may
delegate one or more of its functions to any one of its members or to any other
person.
The Company's Board of Directors, in its sole discretion, may amend or
terminate the Plan at any time and for any reason.
NUMBER OF SHARES OF COMMON STOCK AVAILABLE UNDER THE PLAN
A maximum of 250,000 shares of Common Stock are available for issuance
pursuant to the Plan. Shares sold under the Plan may be newly issued shares or
treasury shares. In the event of any stock split or other change in the capital
structure of the Company, the Committee will make such adjustments, if any, as
it deems appropriate in the number, kind and purchase price of the shares
available for purchase under the Plan.
ENROLLMENT AND CONTRIBUTIONS
Eligible employees voluntarily elect whether or not to enroll in the Plan.
Employees join for an enrollment period of six months, unless otherwise
determined by the Committee. Employees who have joined the Plan automatically
are re-enrolled for additional rolling six month periods; provided, however,
that an employee may cancel his or her enrollment at any time (subject to Plan
rules).
Employees contribute to the Plan through payroll deductions. Participating
employees generally may contribute up to 15% of their eligible compensation
through after-tax payroll deductions. From time to time, the Committee may
establish a lower maximum permitted contribution percentage or change the
definition of eligible compensation. An employee may increase or decrease his or
her contribution percentage as of each successive enrollment period (subject to
Plan rules).
PURCHASE OF SHARES
On the last business day of each six-month enrollment period, each
participating employee's payroll deductions are used to purchase shares of
Common Stock for the employee. The price of the shares purchased will be 85% of
the lower of (1) the average of the stock's market value on the three
consecutive trading days ending with the first day of the six-month enrollment
period, or (2) the average of the stock's market value on the three consecutive
trading days ending with the last day of the enrollment period. However, if the
average is lower than the stock's market value on the first day or last day of
the enrollment period, the stock's market value on the applicable day shall
govern. Market value under the Plan means the closing price of the Common Stock
on the NASDAQ National Market System for the day in question. With respect to
future enrollment periods, the Committee may alter the purchase price formula to
increase (but not decrease) the price of shares purchased under the Plan.
TERMINATION OF PARTICIPATION
Participation in the Plan terminates when a participating employee's
employment with the Company ceases for any reason, the employee withdraws from
the Plan, or the Plan is terminated or amended such that the employee no longer
is eligible to participate.
TAX ASPECTS
Based on management's understanding of current federal income tax laws, the
United States tax consequences of the purchase of shares of common stock under
the Plan are as follows.
An employee will not have taxable income when the shares of common stock
are purchased for him or her, but the employee generally will have taxable
income when the employee sells or otherwise disposes of stock purchased through
the Plan.
For shares which are not disposed of until more than 24 months after the
enrollment date under which the shares were purchased (the "24-month holding
period"), gain up to the amount of the discount (if any) from the market price
of the stock on the enrollment date (or re-enrollment date) is taxed as ordinary
income.
12
<PAGE> 15
Any additional gain above that amount is taxed at long-term capital gain rates.
If, after the 24-month holding period, the employee sells the stock for less
than the purchase price, the difference is a long-term capital loss. Shares sold
within the 24-month holding period are taxed at ordinary income rates on the
amount of discount received from the stock's market price on the purchase date.
Any additional gain (or loss) is taxed to the stockholder as long-term or
short-term capital gain (or loss). The purchase date begins the holding period
for determining whether the gain (or loss) is short-term or long-term.
The Company will receive a deduction for federal income tax purposes for
the ordinary income an employee must recognize when he or she disposes of stock
purchased under the Plan within the 24-month holding period. The Company will
not receive such a deduction for shares disposed of after the 24-month holding
period.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR APPROVAL OF THIS PROPOSAL.
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, 1998 to March 25, 1999, all filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were complied
with, except that David I. Beatson filed late Form 4s regarding the acquisition
of a total of 2,450 shares of stock that were not timely reported.
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.
STOCKHOLDER PROPOSALS
If any stockholder intends to present a proposal for action at the
Company's 1999 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, 1999. Proposals should
be addressed to the Company at 260 Townsend Street, San Francisco, California
94107, Attention: Corporate Secretary.
The attached proxy card grants the proxy holders discretionary authority to
vote on any matter raised at the Annual Meeting. If a stockholder intends to
submit a proposal at the Company's annual meeting in 2000, which proposal is not
intended to be included in the Company's proxy statement and form of proxy
relating to that meeting, the stockholder should give appropriate notice no
later than February 15, 2000. If such a stockholder fails to submit the proposal
by such date, the Company will not be required to provide any
13
<PAGE> 16
information about the nature of the proposal in its proxy statement and the
proxy holders will be allowed to use their discretionary voting authority if the
proposal is raised at the Company's annual meeting in 2000.
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
Robert H. Kennis,
Secretary
Dated: April 1, 1999.
14
<PAGE> 17
CIRCLE INTERNATIONAL GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 11, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints DAVID I. BEATSON 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 CIRCLE
INTERNATIONAL GROUP, INC. to be held at the office of the Company at 260
Townsend Street, San Francisco, California, on May 11, 1999, 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 two Class II Directors for a three year term.
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for the
contrary below) nominees listed below
(INSTRUCTION: To withhold authority to vote for any nominee, strike a line
through the nominee's name below)
David I. Beatson and Wesley J. Fastiff
(2) To approve the adoption of the Employee Stock Purchase Plan.
[ ] 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> 18
(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: _______________________, 1999
____________________________________
____________________________________
(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.
