SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
(xx) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box:
( ) Preliminary Proxy Statement
(xx) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
Carolina Freight Corporation
(Name of Registrant as Specified In Its Charter)
Carolina Freight Corporation
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (Check the appropriate box):
(xx) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: *
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
( ) 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:
( ) Filing Fee of $ was previously paid on , 199 ,
the date the Preliminary Proxy Statement was filed.
<PAGE>
CAROLINA FREIGHT CORPORATION
NORTH CAROLINA HIGHWAY Pound150 EAST
POST OFFICE BOX 1000
CHERRYVILLE, NORTH CAROLINA 28021
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of Carolina Freight Corporation, which will be held
on Wednesday, May 4, 1994 at Club Carolina in Cherryville, North
Carolina commencing at 3:00 p.m. Your Board of Directors and
management look forward to greeting personally those
shareholders able to attend.
At the meeting, in addition to electing three directors,
your Board is asking shareholders to approve the 1994
Nonqualified Stock Option Plan. These proposals are fully set
forth in the accompanying proxy statement, which you are urged
to read thoroughly.
For the reasons set forth in the proxy statement, your
Board of Directors recommends a vote FOR each of the proposals.
It is important that your shares are represented and voted at
the meeting whether or not you plan to attend. Accordingly, you
are requested to sign, date and mail the enclosed proxy in the
envelope provided at your earliest convenience. Thank you for
your cooperation.
Sincerely,
(Signature of K. G. Younger)
K. G. YOUNGER
CHAIRMAN
March 23, 1994
<PAGE>
CAROLINA FREIGHT CORPORATION
NORTH CAROLINA HIGHWAY Pound150 EAST
POST OFFICE BOX 1000
CHERRYVILLE, NORTH CAROLINA 28021
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, MAY 4, 1994
TO THE SHAREHOLDERS:
You are hereby notified that the Annual Meeting of Shareholders of Carolina
Freight Corporation will be held Wednesday, May 4, 1994 at three o'clock p.m. at
Club Carolina in Cherryville, North Carolina to consider and take action with
respect to the following:
1. To elect three (3) Class I directors to three-year terms of office.
2. To consider and act upon the proposal to approve the 1994 Nonqualified
Stock Option Plan of Carolina Freight Corporation.
3. To consider such other business as may properly be brought before the
meeting.
The record of shareholders entitled to notice and to vote at the meeting
was taken as of the close of business on March 11, 1994.
You are invited to attend the meeting, but whether you expect to be present
or not, please mark, sign, date, and return the enclosed proxy in the enclosed
postage-paid envelope so that your shares will be represented at the meeting or
adjournment thereof.
By order of the Board of Directors.
JOHN B. YORKE
SECRETARY
March 23, 1994
<PAGE>
CAROLINA FREIGHT CORPORATION
NORTH CAROLINA HIGHWAY Pound150 EAST
POST OFFICE BOX 1000
CHERRYVILLE, NORTH CAROLINA 28021
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 4, 1994
GENERAL INFORMATION
This statement is furnished to shareholders in connection with the
solicitation by the Board of Directors of Carolina Freight Corporation (Company)
of proxies to be used at the Annual Meeting of Shareholders to be held
Wednesday, May 4, 1994 at three o'clock p.m. at Club Carolina in Cherryville,
North Carolina, or any adjournment thereof. The mailing address of the principal
executive offices of the Company is P. O. Box 1000, Cherryville, North Carolina
28021, and its telephone number is 704/435-6811.
This NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, PROXY STATEMENT, and form of
PROXY, together with a copy of the COMPANY'S 1993 ANNUAL REPORT TO SHAREHOLDERS,
are being mailed to shareholders on or about March 23, 1994. A copy of the
Company's Annual Report to the Securities and Exchange Commission on Form 10-K
for 1993, and when filed, the quarterly report on Form 10-Q for the first
quarter of 1994 may be obtained without charge by writing the Secretary of the
Company at the above address.
The enclosed Proxy may be revoked by the shareholder at any time before it
is voted. The shares represented by the Proxy, when properly executed, will be
voted in the manner directed therein by the shareholder, but if no direction is
made, the shares will be voted: (1) for the election of Lary R. Scott, J. M.
Carstarphen, and Charles L. Grace as Class I directors to serve three-year terms
of office; (2) for approval of the 1994 Nonqualified Stock Option Plan of the
Company; and (3) in the discretion of the Proxy Committee, upon such other
business as may properly come before the meeting.
The Proxy Committee consists of K. G. Younger (Chairman of the Board), Lary
R. Scott (Vice Chairman and Chief Executive Officer and Director), and Palmer E.
Huffstetler (President and Director).
The Company expects to solicit proxies primarily by mail. Proxies may also
be solicited personally and by telephone at a nominal cost by regular employees
of the Company. The anticipated expenses to the Company include the ordinary
ones in connection with preparing, assembling, and mailing the proxy material,
including charges and expenses of brokerage houses and other custodians,
nominees or fiduciaries for communicating with shareholders. In addition, the
Company has retained D. F. King & Co., Inc. to solicit proxies from brokers,
bank nominees and other institutional holders, and individual holders of record
at a fee of approximately $5,000 plus reimbursement for reasonable out-of-pocket
expenses. The total amount of such expenses will be paid by the Company.
Except as noted herein, only shareholders of Common Stock, par value $.50
per share (Common Stock) of the Company of record at the close of business on
March 11, 1994 (Record Date) are entitled to vote at the meeting. At that date
the Company had outstanding approximately 6,561,672 shares of Common Stock. Each
share of Common Stock entitles the holder to one vote.
The following are shareholders known to the Company to beneficially own (as
determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the Act)) more than 5% of the Company's outstanding Common
Stock as of December 31, 1993:
<TABLE>
<CAPTION>
NUMBER OF
NAME OF SHAREHOLDER SHARES HELD1 PERCENTAGE
<S> <C> <C>
David L. Babson & Company, Inc............................................ 382,2002 5.82%
One Memorial Drive
Cambridge, Massachusetts 02142-1300
Fisher Investments, Inc................................................... 373,8003 5.70%
301 Henrik Road
Woodside, CA 94062
Tweedy, Browne Company L.P................................................ 573,2154 8.74%
52 Vanderbilt Avenue
New York, New York 10017
</TABLE>
1
<PAGE>
1Information provided herein has been obtained from Schedules 13D or 13G, as
applicable, filed with the Securities and Exchange Commission.
2As set forth in Schedule 13G, David L. Babson & Company, Inc. has sole voting
power with respect to 331,400 shares, shared voting power with respect to
50,800 shares, and sole dispositive power with respect to all 382,200 shares.
3As set forth in Schedule 13G, Fisher Investments, Inc. has sole voting and
dispositive power with respect to all 373,800 shares.
4Includes shares beneficially held by TBK Partners, L.P. (TBK) and Vanderbilt
Partners, L.P. (Vanderbilt), as reported on Schedule 13D. As set forth in
Schedule 13D, of the shares reported, TBK has sole voting and dispositive power
with respect to 35,295 shares; Vanderbilt has sole voting and dispositive power
with respect to 15,000 shares; and Tweedy, Browne Company L.P. has sole voting
power with respect to 456,295 shares, no voting power with respect to 66,625
shares, and shared dispositive power with respect to 522,920 shares.
SECURITY OWNERSHIP OF EXECUTIVE OFFICERS AND DIRECTORS
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
(2)
TITLE (3)
(1) OF AMOUNT AND NATURE (4)
NAME CLASS OF BENEFICIAL OWNERSHIP5 % OF CLASS
<S> <C> <C> <C>
James D. Carlton Common 44,0536 *
J. M. Carstarphen Common 500 *
Charles L. Grace Common 1,000 *
Howard H. Haworth Common 250 *
Palmer E. Huffstetler Common 65,3777 1.0%
William M. R. Mapel Common 1,000 *
Dr. James G. Martin Common -0- *
Robert C. Rains Common 1,3008 *
D. Edmond Randolph Common 1,0009 *
Paul F. Richardson Common 1,000 *
Lary R. Scott Common 35,00010 *
K. G. Younger Common 43,474 *
All directors and
executive officers
(a total of eighteen
persons) as a group Common 216,30511 3.30%
</TABLE>
*Less than 1%
5The nature of the beneficial ownership for all shares is sole voting and
investment power.
6Includes 43,553 shares Mr. Carlton had the right to acquire within sixty days
under stock option plans of the Company.
7Includes 43,553 shares Mr. Huffstetler had the right to acquire within sixty
days under stock option plans of the Company.
8Includes 1,300 shares repriced for Mr. Rains under stock option plans of the
Company. However, none were exercisable within sixty days.
9Includes 1,000 shares repriced for Mr. Randolph under stock option plans of the
Company. However, none were exercisable within sixty days.
10Includes 35,000 shares granted to Mr. Scott under stock option plans of the
Company. However, none were exercisable within sixty days.
11Includes 145,106 shares the executive officers had the right to acquire within
sixty days under stock option plans of the Company.
2
<PAGE>
ITEM 1: ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that its Board of Directors
shall be divided into three classes, such classes to be as nearly equal in
number as possible, and that each year the shareholders of its Common Stock
shall elect the members of one of the three classes to serve three-year terms of
office. The number of directors is currently fixed by the Articles of
Incorporation of the Company at eleven, divided into three classes with Classes
I and III each having four members and Class II having three members.
The current directors of the Company and the classes in which they serve
are as follows:
<TABLE>
<CAPTION>
CLASS I CLASS II CLASS III
<S> <C> <C>
J. M. Carstarphen Howard H. Haworth Palmer E. Huffstetler
Charles L. Grace Dr. James G. Martin William M. R. Mapel
Lary R. Scott K. G. Younger Paul F. Richardson
</TABLE>
As part of a reorganization by the Company in 1993, James D. Carlton and
John R. Mulvey resigned from the Board in June 1993. Therefore, currently there
are two vacancies on the Board of Directors. The term of office of each of the
Class I directors expires at the 1994 Annual Meeting of Shareholders; the term
of office of each of the Class II directors expires at the 1996 Annual Meeting
of Shareholders; and the term of office of each of the Class III directors
expires at the 1995 Annual Meeting of Shareholders or in each case until their
respective successors shall be duly elected and qualified to serve.
The Board of Directors has nominated Messrs. Carstarphen, Grace, and Scott
for election as directors of the Company to serve until the 1997 Annual Meeting
of Shareholders or until their respective successors shall be elected and
qualified. The Board of Directors has not determined whether the existing
vacancies will be filled or, if filled, who will fill them. Therefore, no
nominations to fill such vacancies have been made and the three directors who
shall be elected at the Annual Meeting, together with the six directors whose
terms expire in 1995 or 1996, will constitute the entire Board of Directors.
Proxies cannot be voted for more than three persons, the number of nominees
named in this proxy statement. It is intended that the persons named in the
accompanying proxy will vote to elect the three nominees for terms to expire in
1997, unless authority to so vote is withheld. Although management expects that
each of the nominees will be available for election, if a vacancy in the slate
of nominees is caused by death or other unexpected occurrence, it is intended
that shares represented by proxies in the accompanying form will be voted for
the election of a substitute nominee selected by the persons named in the proxy.
Pursuant to North Carolina law, directors shall be elected by a plurality of the
votes cast. Accordingly, abstentions and broker non-votes will not have the
effect of a negative vote with respect to the election of directors.
The following table sets forth with respect to incumbent members and Class
I nominees of the Board of Directors of the Company (i) his name, (ii) his age,
(iii) all positions and offices with the Company, (iv) his business experience,
including principal occupation, and (v) his directorships in other publicly held
companies, if any.
<TABLE>
<C> <S>
(Photo) J. M. CARSTARPHEN, 61, PRESIDENT AND CHAIRMAN OF THE BOARD OF STOWE-PHARR MILLS (textiles and
carpet). President, Belmont Land Investment Company and Strand Development Corporation (both of
which are real estate development firms); boards of directors of R. L. Stowe Mills, Inc.
(textiles), the Community Foundation of Gaston County, Inc., and Wachovia Bank and Trust
Company, Southern Region (banking); Liberty Mutual Advisory Board (insurance).
</TABLE>
<TABLE>
<S> <C>
Member: Audit Committee First became a Director: 1991
Compensation Committee
</TABLE>
3
<PAGE>
<TABLE>
<C> <S>
(Photo) CHARLES L. GRACE, 59, PRESIDENT, CUMMINS ATLANTIC, INC. (distributor of diesel engines). Serves
on boards of directors of First Union National Bank (North Carolina board), Mercy Health
Services (Mercy Hospital), and North Carolina Trucking Association, and is a member of North
Carolina Board of Advisors of Liberty Mutual Insurance Company; Chairman of the Board of
Trustees of Belmont Abbey College.
</TABLE>
<TABLE>
<S> <C>
Member: Audit Committee First became a Director: 1991
Compensation Committee
Nominating Committee
</TABLE>
<TABLE>
<C> <S>
(Photo) HOWARD H. HAWORTH, 59, PRESIDENT, THE HAWORTH GROUP AND THE HAWORTH FOUNDATION INC. Former Group
President, Masco Home Furnishings. Served as Secretary of Commerce for the State of North
Carolina, January 1985 until January 1987; Chairman of the Board, Drexel Heritage Furnishings,
Inc., 19831985, and President and Chief Executive Officer 19721983; director of First Union
Corporation (banking and financial services); Chairman Emeritus and member of North Carolina
State Board of Education; former Chairman and member of Guilford College Board of Trustees.
</TABLE>
<TABLE>
<S> <C>
Member: Audit Committee First became a Director: 1987
Compensation Committee
</TABLE>
<TABLE>
<C> <S>
(Photo) PALMER E. HUFFSTETLER, 56, PRESIDENT OF THE COMPANY. Elected Legal Counsel in 1964, Secretary in
1969, Executive Vice President in 1988 and President in 1993. Member of the North Carolina Bar
Association, American Bar Association, Transportation Lawyers Association; boards of directors
of North Carolina Trucking Association and South Carolina Trucking Association; member,
executive committee of American Trucking Associations.
</TABLE>
<TABLE>
<S> <C>
First became a Director: 1971
</TABLE>
<TABLE>
<C> <S>
(Photo) WILLIAM M. R. MAPEL, 62, RETIRED SENIOR VICE PRESIDENT/CHAIRMAN-POLICY COMMITTEE, NORTH AMERICAN
FINANCE GROUP, CITIBANK, N.A., NEW YORK (19861988). Previously Senior Vice President/Division
Executive of Citibank (19691985). Chairman of the Board of Mercantile & General Reinsurance
Company of America (insurance). Serves on boards of directors of Mercantile & General Life
Reassurance Company of America; Brundage, Story & Rose Investment Trust; Galey & Lord, Inc.
(textiles); Churchill Capital, Inc.; NSC Corporation (environmental services); and USLIFE Income
Fund, Inc.
</TABLE>
<TABLE>
<S> <C>
Member: Audit Committee First became a Director: 1989
(Chairman)
Compensation Committee
</TABLE>
4
<PAGE>
<TABLE>
<C> <S>
(Photo) DR. JAMES G. MARTIN, 58, CHAIRMAN OF THE RESEARCH DEVELOPMENT BOARD, JAMES G. CANNON RESEARCH
CENTER, CHARLOTTE-MECKLENBURG HOSPITAL AUTHORITY; director of J.A. Jones, Inc. (construction);
nominee for director of Duke Power Company (electric utility); former Governor of the State of
North Carolina (19851993); Member, United States House of Representatives (19731985); former
Associate Professor of Chemistry, Davidson College.
</TABLE>
<TABLE>
<S> <C>
Member: Audit Committee First Became a Director: 1993
</TABLE>
<TABLE>
<C> <S>
(Photo) PAUL F. RICHARDSON, 65, PRESIDENT, PAUL F. RICHARDSON ASSOCIATES, INC. (international maritime
consulting firm) since 1977. Seventeen years with Sea-Land Service, Inc., serving as President
from 1970 to 1976 and Vice Chairman from 1976 to 1977. Currently Vice President and Director of
the U.S. Coast Guard Foundation. Awarded the Meritorious Public Service Citation in 1981 by the
Secretary of the Navy for service on behalf of the United States Navy in the fields of public
relations and maritime education and cooperation. In 1993, Mr. Richardson received the Connie
Award from the Containerization and Intermodal Institute in recognition of his leadership in the
transportation industry and many contributions to the advancement of international intermodal
transportation.
</TABLE>
<TABLE>
<S> <C>
Member: Compensation Committee First became a Director: 1986
(Chairman)
Nominating Committee
</TABLE>
<TABLE>
<C> <S>
(Photo) LARY R. SCOTT, 57, VICE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF THE COMPANY. Mr.
Scott joined the Company in 1993 in his present capacity. For approximately two years prior to
joining the Company, Mr. Scott served as a transportation consultant. Prior to that time he was
President and Chief Executive Officer of Consolidated Freightways, Inc. Member of boards of
directors of Mayflower Group, Inc. (transportation) and The Clorox Company (household products).
</TABLE>
<TABLE>
<S> <C>
First became a Director: 1993
</TABLE>
<TABLE>
<C> <S>
(Photo) KENNETH G. YOUNGER, 68, CHAIRMAN OF THE BOARD OF THE COMPANY. Mr. Younger joined the Company in
1977 and retired from the Company in 1990 as Chief Executive Officer. Mr. Younger returned to
the Company in 1993 as Chairman and Chief Executive Officer and upon the election of Mr. Scott
as Chief Executive Officer, has continued to serve in the capacity of Chairman. Director of
First Union Corporation (banking and financial services); member of the Board of Trustees of
Duke University. James D. Carlton, President of Carolina Freight Carriers Corporation, is the
son-in-law of Mr. Younger.
</TABLE>
<TABLE>
<S> <C>
Member: Nominating Committee First became a Director: 1977
(Chairman)
</TABLE>
5
<PAGE>
Listed below are the current executive officers of the Company who do not
serve on the Board of Directors:
James D. Carlton, 45, serves as President of Carolina Freight Carriers
Corporation. He joined Carolina Freight Carriers in 1977 as Regional Manager,
was elected Vice President-Midwest Division in 1978, Vice President --
Operations in 1984, Senior Vice President -- Operations in 1985, Executive Vice
President-Operations in 1989, and President in 1993.
John L. Fraley, Jr., 39, serves as Vice President of the Company. He joined
Carolina Freight Carriers Corporation in 1978 and was promoted to Vice
President-Customer Relations in 1985. He assumed his present position in January
1994.
James R. Hertwig, 42, serves as Vice President of the Company. He joined
the Company in January 1994. Prior to joining the Company he was President and
Chief Executive Officer of Conway Intermodal.
Shawn W. Poole, 35, serves as Treasurer and Chief Financial Officer and
Assistant Secretary of the Company. He joined the Company as Treasurer in
January 1990 and was elected to his present position in May 1993.
Robert C. Rains, 40, has served as President of The Complete Logistics
Company since 1988. Prior to that he served with G. I. Trucking Company as Vice
President of Operations.
D. Edmond Randolph, 58, serves as President of Cardinal Freight Carriers,
Inc. He joined Cardinal in May 1991 as President. Prior to joining Cardinal, Mr.
Randolph was Division Manager for National Freight Incorporated.
David D. Taggart, 50, serves as President of G. I. Trucking Company. Mr.
Taggart joined G. I. as Vice President of Operations in November 1988. He was
elected to his present position in May 1991.
J. Braxton Vick, 41, serves as Executive Vice President-Planning and
Development of the Company. Mr. Vick joined Carolina Freight Carriers
Corporation in 1974 and was elected Senior Vice President -- Corporate Services
of that company in 1987. He was elected Executive Vice President-Corporate
Services of the Company in 1991 and to his present position with the Company in
January 1994.
John B. Yorke, 39, serves as Vice President, Secretary and General Counsel
of the Company. He joined Carolina Freight Carriers Corporation in 1987 as
Assistant General Counsel. He was elected Secretary and Assistant General
Counsel of the Company in 1990 and was elected to his present position in
January 1993.
COMMITTEES OF THE BOARD
The Board of Directors met nine (9) times in 1993. The Company has standing
Audit, Nominating, and Compensation Committees elected by the Board of
Directors. Committee membership is indicated in the preceding biographical
section on directors.
The Audit Committee of the Company met twice during 1993. Functions
performed by this committee consist generally of recommending the audit firm to
be employed as independent auditors for the Company and consulting with
independent auditors for the purpose of reviewing the scope of the audit, their
audit report, and the adequacy of internal controls.
6
<PAGE>
The Nominating Committee functions consist of receiving and reviewing
nominations to the Board of Directors, recommending to the Board nominees to
fill Board vacancies, and recommending to the Board nominees for membership on
committees of the Board. It met two (2) times during 1993. The Nominating
Committee considers nominees recommended by shareholders. Such recommendations
will be considered if submitted in writing, accompanied by a description of the
proposed nominee's qualifications and other relevant biographical information.
Recommendations concerning nominees to Board service should be directed to John
B. Yorke, Secretary, Carolina Freight Corporation, Post Office Box 1000,
Cherryville, North Carolina 28021 and must be received not less than sixty (60)
days nor more than ninety (90) days prior to the date of the Annual Meeting for
which such nomination is to be considered.
The Compensation Committee met ten (10) times during 1993. This committee
approves the compensation for the officers of the Company. Other functions
performed include the approval of compensation plans for consideration by the
Board of Directors and the granting of stock options under the Company's stock
option plans.
COMPENSATION OF DIRECTORS
Directors who are not employees are paid an annual retainer of $12,000 each
for their service on the Board of Directors. In addition, each such director
receives $450 plus travel expenses for every board and committee meeting
attended, except for committee meetings held on the same day of a board or other
committee meeting, in which case the compensation rate is $100 for each
additional meeting. Directors may elect to defer all or a part of their
compensation. Directors who are employees of the Company receive no additional
compensation for board service except for being included for coverage under the
directors' fee continuation plan described below.
After three years of service with the Company, members of the Board of
Directors are covered by a fee continuation plan which provides for the payment
of $8,500 annually for a period of ten years upon retirement as director at age
60. Reduced benefits are available to directors who retire prior to age 60 but
not earlier than age 55. A director who dies before retirement and who has at
least three years of service with the Company will receive a continuation of
fees for a period of fifteen years. Amounts payable under this plan are
scheduled and vary based upon the age of the director. Benefits payable to
directors under this plan are subject to acceleration in the event a director's
service on the Board is involuntarily terminated following a change in control
of the Company. A change in control means one of a nature that would require
reporting under the Act by a person, as defined in the Act, other than the
Company, its subsidiaries, or an employee benefit plan sponsored by the Company
or one of its subsidiaries.
7
<PAGE>
COMPENSATION OF OFFICERS
The table below sets forth the compensation paid by the Company to the
three persons holding the office of chief executive officer at any time during
1993, and the four additional most highly compensated executive officers (other
than the chief executive officer), for services rendered in all capacities to
the Company and its subsidiaries during the fiscal year ended December 31, 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION (G) PAYOUTS
SECURITIES
(E) (F) UNDERLYING (H)
(A) (C) (D) OTHER ANNUAL RESTRICTED STOCK OPTIONS/ LTIP
NAME AND (B) SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS
PRINCIPAL POSITION12 YEAR ($) ($) ($) ($) (POUND) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Lary R. Scott 1993 $ 187,512 $ 0 $ 0 $ 0 35,000 $ 0
Vice Chairman & CEO13 1992 -- -- -- -- -- --
1991 -- -- -- -- -- --
K. G. Younger 1993 140,521 0 0 0 0 0
Chairman, & Retired 1992 -- -- -- -- -- --
CEO14 1991 -- -- -- -- -- --
Kenneth E. Mayhew, Jr., 1993 45,232 0 19,43515 0 0 0
Retired CEO16 1992 242,265 0 0 0 0 0
1991 237,694 0 0 0 0 0
Palmer E. Huffstetler 1993 180,362 0 0 0 27,000 0
President 1992 141,669 0 0 0 0 0
1991 138,996 0 0 0 0 0
James D. Carlton 1993 148,394 0 0 0 27,000 0
President-Carolina 1992 141,669 0 0 0 0 0
Freight Carriers18 1991 138,996 0 0 0 0 0
D. Edmond Randolph19 1993 109,000 252,201 0 0 1,000 0
President-Cardinal 1992 -- -- -- -- -- --
Freight18 1991 -- -- -- 0 -- --
Robert C. Rains19 1993 109,831 35,000 0 0 1,300 0
President-The Complete 1992 -- -- -- -- -- --
Logistics Company18 1991 -- -- -- -- -- --
<CAPTION>
(I)
(A) ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION12 ($)10
<S> <C>
Lary R. Scott $ 0
Vice Chairman & CEO13 --
--
K. G. Younger 8,719 15
Chairman, & Retired --
CEO14 --
Kenneth E. Mayhew, Jr., 1,080,761 17
Retired CEO16 29,278 15
--
Palmer E. Huffstetler 8,955 15
President 7,804 15
--
James D. Carlton 6,649 15
President-Carolina 5,833 15
Freight Carriers18 --
D. Edmond Randolph19 0
President-Cardinal --
Freight18 --
Robert C. Rains19 361 20
President-The Complete --
Logistics Company18 --
</TABLE>
12Reflects the capacities in the Company held by such individuals as of December
31, 1993.
13Mr. Scott was hired as Vice Chairman and Chief Executive Officer of the
Company effective March 22, 1993.
14In 1990 Mr. Younger retired as an employee of the Company, but remained a
director. In 1993, Mr. Younger returned to serve as Chairman as well as
interim Chief Executive Officer until Mr. Scott was hired as Chief Executive
Officer in March 1993. The compensation shown for 1993 does not include
payments made to Mr. Younger under the Supplemental Benefit Plan, described on
page 11.
15Amounts reflect the differential between interest accrued (or in the case of
Mr. Mayhew in 1993, interest paid) at higher-than-market rates under the
Company's deferred compensation plans and amount of interest that would have
accrued (or been paid) at market rates. The higher-than-market rates are only
paid if the service requirements in the plan are met.
16Mr. Mayhew served as Chief Executive Officer of the Company until January
1993, at which time he retired from the Company.
17Paid pursuant to a retirement agreement that was effective January 31, 1993.
Includes $616,000 payable in equal weekly installments of $4,000 through
January 8, 1996; $13,900 representing the value of his company car; and
$450,861 representing enhanced pension benefits calculated as though he were a
participant in the 1992 retirement incentive plan. Does not include amounts
paid or payable under the deferred compensation plans, the directors' fee
continuation plan, or other employee benefit plans. The agreement provided
that Mr. Mayhew would not compete with the Company for a period of one year.
18A wholly owned subsidiary of the Company.
19First became an executive officer of the Company in 1993.
8
<PAGE>
20Represents amounts contributed by The Complete Logistics Company as an
employer match under The Complete Leasing Concepts Employee Savings and Profit
Sharing Plan.
OPTIONS
Shown below is further information on new grants or repricings of stock
options pursuant to the Company's stock option plans during the fiscal year
ended December 31, 1993 to the named officers who are set forth in the Summary
Compensation Table above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
(B)
NUMBER OF
SECURITIES (C) (D)
UNDERLYING % OF TOTAL EXERCISE (H)
OPTIONS/SARS OPTIONS/SARS GRANTED OR GRANT DATE
(A) GRANTED21 TO EMPLOYEES IN BASE PRICE (E) PRESENT VALUE
NAME (POUND) FISCAL YEAR ($/SH) EXPIRATION DATE ($)22
<S> <C> <C> <C> <C> <C>
Lary R. Scott 35,000 11 14.125 3-22-03 191,800
Palmer E.
Huffstetler 27,000 8.6 14.50 2-12-03 147,960
D. Edmond Randolph 1,000 .3 14.50 2-12-03 5,480
Robert C. Rains 1,300 .4 14.50 2-12-03 7,124
James D. Carlton 27,000 8.6 14.50 2-12-03 147,960
</TABLE>
21This column includes new grants of options as well as options that were
repriced in 1993. All such options were granted or repriced on February 12,
1993, with the exception of Mr. Scott's that were granted on March 22, 1993.
Options remain outstanding for 10 years and become exercisable cumulatively in
annual installments so long as employment with the Company continues. Pursuant
to the terms of the 1984 Incentive Stock Option Plan (1984 Plan) and the 1988
Incentive Stock Option Plan (1988 Plan), during the first year an option is
outstanding it may not be exercised. Thereafter, the option shall be
exercisable in installments as follows: 30% of the number of shares after
commencement of the second year, 30% after the third year and 40% after the
fourth year. Under the terms of the 1989 Incentive Stock Option Plan (1989
Plan), options granted may be exercised at any time during the option term as
to any part of or all the shares granted. Options otherwise exercisable may be
exercised within the following periods of time when employment is terminated
for the indicated reason: three months following the optionee's termination of
employment, except when termination is for cause, and one year following the
death of the optionee. The nonvested portion of an employee's options shall be
considered forfeited upon termination of his or her employment with the
Company for whatever reason. All options and repriced options were granted
with an exercise price equal to the closing price on the New York Stock
Exchange -- Composite Transactions of the Company's common stock on February
12, 1993, and on March 22, 1993 for Mr. Scott.
22Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, an executive may realize
will depend on the excess of the stock price over the exercise price on the
date the option is exercised, so that there is no assurance the value realized
by an executive will be at or near the value estimated by the Black-Scholes
model. The estimated values under that model are based on the following
assumptions: exercise price is 100% of the fair market value at date of grant;
exercise term is ten years; no discounts have been taken for vesting or
restrictions; the risk free rate is 5.82% (based on the 10-year Treasury note
yield as of the date the options were issued); the volatility factor is .1671
(based on the preceding 12 months); and the dividend yield is 1.57% (based on
the preceding 12 months). At year end, the option price was substantially
above the then-current market price of the Company's common stock.
9
<PAGE>
The following table sets forth information regarding the number of
unexercised options held by the named executives at December 31, 1993.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
(D) (E)
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
(B) OPTIONS/SARS AT OPTIONS/SARS AT
SHARES ACQUIRED (C) FY-END (POUND) FY-END ($)
(A) ON EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (POUND) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Lary R. Scott 0 N/A 0/35,000 *
Palmer E. Huffstetler 0 N/A 43,552/10,448 *
James D. Carlton 0 N/A 43,552/10,448 *
D. Edmond Randolph 0 N/A 300/700 *
Robert C. Rains 0 N/A 390/910 *
</TABLE>
* The exercise prices for all options outstanding were higher than the market
value of the Company's Common Stock, as reported on the New York Stock Exchange,
at December 31, 1993.
EMPLOYMENT CONTRACTS
The Company entered into contracts of employment with Messrs. Scott and
Huffstetler during 1993 that expire on March 21, 1997 although each may be
extended, at the option of the Company, for an additional year. In the case of
Mr. Scott, the contract calls for annual compensation of not less than $250,000.
In the case of Mr. Huffstetler, the contract calls for annual compensation of
not less than $182,000. In each case, the contract provides for certain other
benefits and perquisites afforded all other officers of the Company, and in some
cases, afforded all other employees of the Company.
OFFICER SEVERANCE AGREEMENTS
The Company has entered into agreements with certain executives, including
Messrs. Carlton, Huffstetler and Scott, that provide for continued compensation
in the event of their termination of employment following a change in control of
the Company. Under the agreements, a change in control means one of a nature
that would require reporting under the Act by a person, as defined in the Act,
other than the Company, its subsidiaries, or an employee benefit plan sponsored
by the Company or one of its subsidiaries. Following a change in control, if the
officer is terminated for any reason other than for cause, disability,
retirement or death, or should the officer leave his employment for good reason,
as defined in the agreement, then the officer is entitled to receive a payment
in cash equal to 2.99 times his average W-2 earnings for the five-year period
which immediately precedes the year in which the termination occurs. Each
agreement expires December 31, 1994 but is automatically extended from year to
year unless the Company provides notice of its intent to terminate at least
ninety (90) days prior to January 1 of any succeeding year.
K. G. YOUNGER CONSULTING AGREEMENT
Mr. Younger retired from full-time employment with the Company in August
1990. At that time the Company entered into a consulting agreement with Mr.
Younger commencing on the date of his retirement and going forward at the
pleasure of the Board of Directors. The agreement provides that Mr. Younger will
act as a general advisor and consultant to the Company and render services
similar to those he provided prior to his retirement. It also provides that Mr.
Younger will not engage in any activity adverse to the interests of the Company
during the term of the agreement or within a period of five years thereafter.
The Company will compensate Mr. Younger during the term of the agreement at the
rate of $1 per year. In addition, during the time that he is not an employee of
the Company, Mr. Younger receives the compensation provided to directors who are
not employees. The Company also continues to provide Mr. Younger with health and
life insurance benefits as well as other benefits considered by the Board of
Directors appropriate for Mr. Younger to execute the duties and responsibilities
prescribed by the agreement. Under the provisions of the Supplemental Benefit
Plan (described elsewhere herein), Mr. Younger receives monthly
10
<PAGE>
payments from the Company of $2,837 which will continue for a period of 15 years
from the date of his retirement. This plan also provides a post-retirement death
benefit of $130,750 to Mr. Younger's beneficiary.
Mr. Younger returned to active employment in January 1993 and has received
a salary and the benefits to which employees of the Company are entitled since
that time. See the Summary Compensation Table included elsewhere herein.
SUPPLEMENTAL BENEFIT PLAN
The Supplemental Benefit Plan provides for a salary continuation benefit in
the event the participating officer dies before such officer's 65th birthday; a
supplemental retirement benefit payable upon early retirement, late retirement,
or disability; and a postretirement benefit payable upon the death of the
participating officer. Amounts payable under this plan are scheduled and are
based upon individual participant's age and rate of compensation. The
supplemental retirement benefit becomes fully vested in a participating officer
upon his attainment of age 65, upon his attainment of age 55 provided he has ten
or more years of service with the Company, upon his becoming disabled, or upon
his completion of 15 years of service with the Company. (The vesting schedule is
8 years for Mr. Scott and 5 years for Mr. Randolph). The term for payment of
benefits varies for each participant depending upon the participant's age and
length of service with the Company. The normal retirement benefit, generally, is
equal to 12% of base salary. Officers relinquished individual group life
insurance benefits equal, generally, to one and one-half times their base salary
to participate in the executive benefit plan. For the named executives the
benefit at the normal retirement date, which is payable monthly for a period of
15 years, is as follows: Lary R. Scott -- $2,500; Palmer E.
Huffstetler -- $2,000; James D. Carlton -- $1,763; D. Edmond Randolph -- $1,850;
and Robert C. Rains -- $1,100. Benefits payable to officers of the Company under
this plan are subject to accelerated payment in the event of a change in control
of the Company. A change in control means one of a nature that would require
reporting under the Act by a person, as defined in the Act, other than the
Company, its subsidiaries, or an employee benefit plan sponsored by the Company
or one of its subsidiaries. Life insurance has been purchased on the lives of
the participants, with the Company as owner and beneficiary, to indemnify the
Company upon the death of the covered employees for the cost of benefits paid.
The costs of the plans are being amortized over the lives of the participants.
On an after-tax basis, it is anticipated that there will be no cost to the
Company resulting from these plans, except for the cost of money invested in the
plans, which is not expected to be significant throughout the duration of the
program.
EMPLOYEES' PENSION PLAN
This is a defined benefit plan in which all officers of the Company are
participants. This plan also covers noncontractual employees of Carolina Freight
Carriers and Red Arrow Freight Lines, Inc., and all employees of other
wholly-owned subsidiaries of the Company. In addition, certain contractual
employees of Red Arrow have a deferred-vested interest in the plan. Under this
plan, at normal retirement age the amount of straight life-time pension is an
amount equal to nine-tenths percent of the participant's average pay multiplied
by his or her number of years of service (not to exceed 35 years of service)
plus an added amount based on the amount by which an employee's remuneration
exceeds the Social Security contribution and benefit base. The table below sets
forth estimated annual benefits payable upon retirement at normal retirement age
of 65 to persons in specified remuneration and years of service classifications.
Amounts presented in the pension table are based upon straight-life annuity
amounts, and remuneration, for purposes of the plan, includes all earnings from
the Company which are reportable on Form W-2 for federal income tax withholding
purposes, and such amounts of compensation deferred under the Company's Employee
Savings and Protection Plan. Such earnings for executive officers are those as
reported in the Salary Column of the Summary Compensation Table on page 8. The
number of credited years of service under the Pension Plan for the following
individuals is as indicated in parentheses immediately after their names: Mr.
Younger (15), Mr. Scott (1), Mr. Randolph (3), Mr. Rains (7)23 , Mr. Carlton
(17), and Mr. Huffstetler (29). The amounts shown are formula amounts but are
subject to certain limitations as provided in the plan as approved by the
Internal Revenue Service. The 1993 aggregate maximum annual pension which may be
paid under the plan and all other defined benefit plans of the Company taken
together are restricted to $115,641, adjusted annually for increases in the cost
of living, as required by the provisions of Section 415 of the Internal Revenue
Code of 1986, as amended (Code), which limits the maximum benefits payable from
the plans.
23The benefit for Mr. Rains is payable from the G.I. Trucking Company
Retirement Plan, which operates in substantially the same manner as the Carolina
Freight Corporation Employees' Pension Plan.
11
<PAGE>
BENEFIT ILLUSTRATIONS
CAROLINA FREIGHT CORPORATION EMPLOYEES' PENSION PLAN
<TABLE>
<CAPTION>
REMUNERATION
FINAL AVERAGE YEARS OF SERVICE
COMPENSATION 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$125,000 $ 26,848 $ 35,797 $ 44,746 $ 53,695 $ 62,645
$150,000 32,660 43,547 54,434 65,320 76,207
$175,000 38,473 51,297 64,121 76,945 89,770
$200,000 44,285 59,047 73,809 88,570 103,332
$225,000 50,098 66,797 83,496 100,195 116,895*
$250,000** 55,910 74,547 93,184 111,820 130,457*
$275,000** 61,723 82,297 102,871 123,445* 144,020*
$300,000** 67,535 90,047 112,559 135,070* 157,582*
$350,000** 79,160 105,547 131,934* 158,320* 184,707*
$400,000** 90,785 121,047* 151,309* 181,570* 211,832*
$450,000** 102,410 136,547* 170,684* 204,820* 238,957*
</TABLE>
* Exceeds 1993 maximum benefit of $115,641.
** Exceeds 1993 maximum salary of $235,840.
COMPARISON OF FIVE YEAR TOTAL RETURN*
AMONG CAROLINA FREIGHT CORPORATION,
S&P 500 INDEX AND DOW JONES TRANSPORTATION INDEX**
(Comparison Graph appears here--see appendix)
12
<PAGE>
COMMITTEE REPORT ON COMPENSATION OF EXECUTIVES
The Compensation Committee of the Board of Directors (the Committee) is
charged with the duty of establishing the total compensation of the Chief
Executive Officer and certain other officers of the Company. The Committee is
composed of five directors, none of whom is a current employee of the Company.
The Board has established a policy that the Committee shall consider such items
as it may deem appropriate including, but not limited to, the following:
a. experience, years of service with the Company, educational
background, and special expertise of the particular officer;
b. recent and historical operating results of the Company;
c. competitive conditions within the motor carrier industry together
with general economic conditions which may influence operating results in
either a positive or negative manner;
d. competitive conditions in the industry which may affect the
Company's ability to attract and retain executives who possess the skills,
talents, and abilities to lead the business enterprise; and
e. such other items as the Committee members shall, in their sole
discretion, determine to be appropriate. Compensation may be granted by the
Committee, in its discretion, in the form of salary, bonuses and certain
perquisites. In addition, the Committee is authorized to make grants of
stock options to corporate officers and other key employees from stock
option plans that have been previously approved by the Board of Directors
and the Shareholders of the Company.
The total compensation for officers of subsidiary companies of the Company,
including Messrs. Carlton, Randolph, and Rains, is established by the Chief
Executive Officer of the Company in consultation with members of the board of
directors of each respective subsidiary.
COMPENSATION PHILOSOPHY
The Company's compensation policies are designed to attract and retain
competent management. The Board's goal is to provide competitive salaries to its
executive officers and to give them performance incentives to motivate superior
performance on behalf of the Company and its shareholders. The Company has
structured its compensation program such that the individual named executives
share the risk with the Company's shareholders. Less emphasis is placed on base
compensation and a corresponding greater emphasis is placed on incentive
compensation. The Company has generally used two types of incentive
compensation: annual bonuses linked to specific performance goals, payable in
cash, and long-term compensation in the form of stock options. The Committee
believes that linking long-term compensation to the value of the Company's
common stock is especially effective because it aligns the interests of
management with those of the Company's shareholders.
The Company's compensation program is designed to enhance stockholder value
by linking a large part of the executive's compensation directly to performance.
The objective is to provide base salary for executives at or below the 50th
percentile for executives at similar companies, while providing an opportunity
to achieve total compensation (including base salary, annual bonus and long-term
incentives) at the 50th percentile or above for exceptional performance. The
primary components of the compensation program are base salary, an annual cash
bonus driven by performance against pre-established financial objectives and
other strategic goals, and a long-term opportunity to participate in increased
stockholder value through grants of stock options at market price.
INDEPENDENT CONSULTANTS
In 1993, the Company employed Arthur Andersen & Co. as an independent
consultant to advise the Committee on compensation matters. Arthur Andersen
personnel provided data and expertise on the subjects of base salaries,
short-term incentive (bonus) plans and long-term incentive (stock option) plans.
The consultants obtained a job description for certain of the executive
officers of the Company. Based on these descriptions, the consultants generated
information comparing these executives to persons holding similar positions at
comparable companies. This comparative group of companies was used to determine
the 50th percentile of compensation levels in the areas of base salary,
short-term incentive compensation, and long-term incentive compensation. This
group consisted of companies located throughout the United States, all of which
are involved in the
13
<PAGE>
surface transportation of freight and, in some cases, other service areas
similar to those provided by Company subsidiaries. Appropriate adjustments were
made to account for size differentials. This is not the same group of companies
that comprises the Dow Jones Transportation Index, which is the group used for
comparison on the performance chart shown on page 12.
BASE SALARY
Base salaries were reviewed by the Committee using competitive data
provided by the compensation consultants that considers industry and national
trends. Individual salaries were adjusted based on this information and in
consideration of the duties and responsibilities of the individual position. The
Committee recognizes that job responsibilities vary from company to company and
that the particular duties of each of the Company's officers must be taken into
consideration when making industry comparisons.
The salary of Mr. Scott was established in the employment agreement entered
into with him in 1993. The salaries of the other named executive officers were
modestly increased during 1993. Based upon information furnished by the
compensation consultants, the Committee believes that these salaries are
generally competitive with those of executives in somewhat comparable positions
with other trucking companies.
ANNUAL BONUS
In 1993 Mr. Carlton was covered by a short-term bonus plan that set fixed
bonus amounts to be paid if certain performance levels were achieved. No bonuses
were paid under the plan. The employment agreements of Messrs. Scott and
Huffstetler called for payment of bonuses in the discretion of the Committee,
but in no event less than 125% of the maximum bonus earned by any officer under
the Carolina Freight Carriers or Red Arrow Incentive Bonus Plans. No bonuses
were paid to either Mr. Scott or Mr. Huffstetler in 1993.
The 1994 short-term bonus plans call for bonuses to be paid to all salaried
personnel, including Messrs. Scott and Huffstetler, based on operating earnings
per share exclusive of changes in accounting principles and nonrecurring
charges. Bonuses are calculated as a percentage of base salary. Mr. Carlton will
participate in a similar plan in 1994 that is based on improvements in operating
earnings at Carolina Freight Carriers.
Mr. Randolph was covered by an incentive bonus plan covering all salaried
personnel at Cardinal. Cardinal's earnings before income taxes must exceed 4.5%
of gross sales. For earnings above the threshold, 25% were allocated to a bonus
pool in which Mr. Randolph participates at a set percentage. A similar bonus
structure is in place for 1994.
Mr. Rains received a discretionary bonus in 1993, as shown on the
compensation table, due to the extremely favorable operating results achieved at
Complete Logistics. For 1994, a bonus plan has been established under the terms
of which earnings before income taxes must exceed 4.5% of gross sales. For
earnings above the threshold, 25% are allocated to a bonus pool for salaried and
clerical personnel, including Mr. Rains.
LONG-TERM COMPENSATION
STOCK OPTION AWARDS/REPRICINGS
The Committee believes that options motivate key employees to act in the
best interests of stockholders. Stock options, under the Company's various stock
option plans, are the only long-term incentive the CEO and other named executive
officers receive.
Upon his employment in March 1993, and as part of his employment contract,
Mr. Scott was granted an option to purchase 35,000 shares pursuant to the 1988
Plan.
In February 1993 the Committee made the decision to reprice substantially
all the options that were then outstanding under the various stock option plans
of the Company. The option price was well above the then-current market price of
the Company's common stock. The options were originally intended to be an
incentive to employees to perform at a level that would improve the Company's
results and thereby increase its market value. The Committee determined that the
disparity between the option price and the market price was so large as to
negate the incentive or make it illusory at best. Approximately 90 employees
were affected by the repricing including Messrs. Rains and Randolph.
14
<PAGE>
The following table indicates options that have been repriced during the
last ten years that were held by any executive officer of the Company.
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
(C)
NUMBER OF
SECURITIES (D) (E)
UNDERLYING MARKET PRICE EXERCISE
OPTIONS/SARS OF STOCK AT PRICE (F)
REPRICED OR TIME OF AT TIME OF NEW
(A) (B) AMENDED REPRICING OR REPRICING OR EXERCISE
NAME DATE (POUND) AMENDMENT ($) AMENDMENT ($) PRICE ($)
(G) LENGTH
OF
ORIGINAL
OPTION TERM
REMAINING
AT DATE OF
REPRICING
OR
AMENDMENT
<S> <C> <C> <C> <C> <C> <C>
Palmer E. Huffstetler 07-06-90 15,000 $19.625 $22.875 $19.625 9 years
President 07-06-90 7,000 19.625 23.50 19.625 8 years
07-06-90 1,000 19.625 28.25 19.625 5.5 years
07-06-90 1,000 19.625 35.625 19.625 6.5 years
John B. Yorke 07-06-90 500 19.625 25.875 19.625 8.25 years
Vice President, 07-06-90 500 19.625 37.125 19.625 6.5 years
Secretary and 02-12-93 5,000 14.50 17.875 14.50 7 years
General Counsel 02-12-93 500 14.50 19.625 14.50 7.5 years
02-12-93 500 14.50 19.625 14.50 7.5 years
Shawn W. Poole
Treasurer & CFO 02-12-93 4,500 14.50 17.25 14.50 7 years
J. Braxton Vick 07-06-90 8,000 19.625 22.875 19.625 9 years
Executive Vice President -- 07-06-90 5,000 19.625 23.50 19.625 8 years
Planning & Development 07-06-90 1,000 19.625 35.625 19.625 6.5 years
07-06-90 500 19.625 20.25 19.625 7.5 years
D. Edmond Randolph
President --
Cardinal Freight 02-12-93 1,000 14.50 16.375 14.50 8.5 years
Robert C. Rains 07-06-90 500 19.625 34.375 19.625 7 years
President -- 07-06-90 500 19.625 25.875 19.625 8.5 years
The Complete 02-12-93 300 14.50 18.625 14.50 .5 years
Logistics Company 02-12-93 500 14.50 19.625 14.50 7.5 years
02-12-93 500 14.50 19.625 14.50 7.5 years
James D. Carlton 07-06-90 1,500 19.625 28.25 19.625 2 years
President -- 07-06-90 1,000 19.625 35.625 19.625 3 years
Carolina Freight 07-06-90 7,000 19.625 23.50 19.625 4.5 years
Carriers Corporation 07-06-90 15,000 19.625 22.875 19.625 4.5 years
David D. Taggart 07-06-90 700 19.625 25.375 19.625 5 years
President -- 07-06-90 4,000 19.625 22.875 19.625 5.5 years
G.I. Trucking Company 02-12-90 700 14.50 19.625 14.50 6.5 years
02-12-93 4,000 14.50 19.625 14.50 6.5 years
John L. Fraley, Jr. 07-06-90 1,000 19.625 28.25 19.625 2 years
Vice President -- 07-06-90 1,000 19.625 35.625 19.625 3 years
07-06-90 3,000 19.625 23.50 19.625 4.5 years
07-06-90 6,000 19.625 22.875 19.625 4.5 years
02-12-93 500 14.50 18.625 14.50 .5 years
02-12-93 3,000 14.50 19.625 14.50 6.5 years
02-12-93 6,000 14.50 19.625 14.50 6.5 years
02-12-93 2,000 14.50 19.625 14.50 6.5 years
</TABLE>
15
<PAGE>
ADDITIONAL BENEFITS
The Company provides a Supplemental Benefit Plan (described herein) for its
officers and certain other key employees which is designed to retain the
services of such persons on a long-term basis. In addition, certain executive
officers and other key employees who were in such positions at the inception of
either the 1986 deferred compensation plan or the 1990 deferred compensation
plan may participate in such plan or plans. Executive officers and all other
nonunion employees also participate in either the Carolina Freight Corporation
Employees Pension Plan or a similar plan maintained by a subsidiary company.
Executive officers, along with all other employees, may participate in either
the Carolina Freight Corporation Employee Savings and Protection Plan (a 401(k)
plan) or in a similar plan offered by a subsidiary company. Executive officers,
along with all other eligible employees participate in group health, disability,
and life insurance plans.
COMPENSATION COMMITTEE
Paul F. Richardson, Chairman
William M. R. Mapel
Charles L. Grace
J. M. Carstarphen
Howard H. Haworth
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Charles L. Grace, a member of the Company's Board of Directors and member
of the Compensation Committee, is the President of Cummins Atlantic, Inc. In
1980, the Company made the decision to specify one engine for use in all line
tractors purchased in 1980 and thereafter. Cummins engines were specified to the
various tractor manufacturers such as Ford, Freightliner, International, and
White, from which the Company purchases tractors. Cummins Atlantic, Inc. is the
distributor for Cummins diesel engines, parts, and service for the three-state
area of North Carolina, South Carolina, and Virginia. Cummins Atlantic, Inc.
receives indirect sales compensation from Cummins Engine Company for technical
support of the Company's account. The Company also regularly purchases Cummins
engine parts from area dealers which have purchased the parts from Cummins
Atlantic, Inc. If problems occur during the warranty period, Cummins Atlantic,
Inc. performs the warranty work and is reimbursed for such work from Cummins
Engine Company. In addition the Company, from time to time, uses the services of
Cummins Atlantic, Inc. for repair work not covered by warranty, and in 1993 the
Company paid $104,351 to Cummins Atlantic, Inc. for such work.
16
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors intends to select the firm of Arthur Andersen & Co.
as independent public accountants to examine the books of the Company for the
current year, to report on the financial position and earnings of the Company,
and to perform such other appropriate accounting and related services as may be
required by the Board of Directors. Representatives of Arthur Andersen & Co.
will be present at the meeting to respond to appropriate questions and to make
any statement they deem appropriate.
The financial statements of the Company and the report of its independent
auditors thereon, together with certain supplementary financial information and
management's discussion and analysis of financial condition and results of
operation, are included in the Company's 1993 Annual Report to Shareholders.
SHAREHOLDER PROPOSALS
Shareholders of the Company who desire to present a proposal for action at
the 1995 Annual Meeting of Shareholders must present such proposal no later than
November 18, 1994. Proposals may be directed to John B. Yorke, Vice President,
Secretary and General Counsel, Carolina Freight Corporation, P. O. Box 1000,
Cherryville, North Carolina 28021.
ITEM 2: APPROVAL OF THE 1994 NONQUALIFIED STOCK OPTION PLAN
On February 15, 1994, there were 97,088 shares of Common Stock available
for future grants under the existing stock option plans of the Company. The
Compensation Committee determined that it would be desirable to have an
additional 200,000 shares of the Company's Common Stock available for the future
granting of options to officers and key employees of the Company and its
subsidiaries. Therefore, upon recommendation of the Compensation Committee, the
Board of Directors has adopted the 1994 Nonqualified Stock Option Plan of
Carolina Freight Corporation and Subsidiaries (the Plan), which is subject to
approval by shareholders of the Company. A copy of the Plan is attached hereto
as Exhibit A and incorporated herein by reference. The following summary is
qualified in its entirety by reference to such Plan. If approved by the
shareholders, the effective date of the Plan will be May 4, 1994 and the Plan
will terminate as of May 3, 2004. No options have yet been granted under the
Plan.
The Plan initially will be administered by the Compensation Committee. The
number of shares to be reserved for issuance under the Plan is 200,000 and may
not be increased without shareholder approval, except for adjustment to protect
against dilution in the event of changes in the capitalization of the Company.
All options granted pursuant to the Plan will be nonqualified options. The
selection of recipients and the amount and other terms of options to be granted
under the Plan will be made by the Compensation Committee from time to time in
accordance with the provisions of the Plan. The option price of the shares for
each option granted under the Plan will be not less than the fair market value
of the Common Stock at the time the option is granted. For purposes of the Plan,
fair market value shall be the closing price of the Common Stock on the date of
grant. The term of options granted shall not exceed ten years, and the options
are not transferable except by will or through the laws of inheritance. Options
shall be exercised during an optionee's lifetime only by such optionee. Options
granted under the Plan shall vest in 25% increments annually beginning the date
that is one year following the date of grant of the option. Upon termination of
employment for any reason, any nonvested portion of an option shall be
forfeited. No option may be exercised prior to two years from the date of grant
of such option, and no option shall be exercisable more than ten years from the
date of grant.
In the event an optionee's employment terminates by reason of death,
retirement (as defined in the Plan), permanent and total disability (as
determined generally pursuant to the long-term disability plan applicable to
such optionee), or under such other circumstances as may be determined by the
Compensation Committee, the vested portion of such optionee's options shall be
exercisable for a period of one year thereafter. In the event of termination of
an optionee's employment for any other reason, all of such optionee's options
shall terminate, and shall no longer be exercisable, as of the date of
termination of employment.
The Plan provides that upon certain mergers or other reorganizations to
which the Company or any subsidiary is a party that involves an exchange or
conversion or other adjustment of the Common Stock, each optionee shall be
entitled upon the exercise of his options to receive the number and class of
securities or other property to which
17
<PAGE>
such optionee would have been entitled in the reorganization if such optionee
had exercised his option prior to such reorganization.
The Plan also provides that options granted thereunder will become
immediately exercisable in full (subject to any appropriate adjustments in the
number of shares subject to the option and the option price), regardless of
their terms, upon the occurrence of certain events relating to a change in
control of the Company. Such events include (i) the adoption of a plan of merger
or consolidation of the Company with any other corporation as result of which
the holders of the voting capital stock of the Company as a group would receive
less than 50% of the voting capital stock of the surviving or resulting
corporation, (ii) the approval by the Board of Directors of the Company of an
agreement providing for the sale or transfer (other than as security for
obligations of the Company) of substantially all the assets of the Company, or
(iii) in the absence of a prior expression of approval by the Board of Directors
of the Company, the acquisition of more than 20% of the Company's voting capital
stock by any person within the meaning of Section 13(d)(3) of the Act. Such
options shall remain exercisable for the remaining term of such option.
Payment in full of the option price for options exercised by an optionee
must be made at the time of exercise of the option. The option price may be paid
(i) in cash or by certified check, (ii) by a broker-dealer to whom the optionee
has submitted an exercise notice, (iii) by delivery of shares of Common Stock
already owned by, and in the possession of, the optionee, (iv) by surrender of
options then exercisable by the optionee valued at the excess of the aggregate
fair market value of the Common Stock subject to such options on the date of
exercise over the aggregate option exercise price of such Common Stock; (v) by
having the Company withhold such number of shares of Common Stock otherwise
issuable upon exercise of such option having an aggregate fair market value on
the date of exercise equal to the exercise price of the option; (vi) by such
other method as the Compensation Committee shall allow, or (vii) any combination
thereof in the discretion of the Compensation Committee. Payment of the option
price by delivery of shares of Common Stock would result in the transaction
being treated under the Code as a Section 1036 exchange with the participant
receiving a carry-over basis in the new shares and gain or loss being deferred
until the disposition of the new shares, provided that the applicable holding
period requirements are met with respect to the shares of Common Stock
surrendered upon exercise of the options.
Except as otherwise indicated below, the Board of Directors may terminate,
suspend or amend the Plan at any time as deemed advisable. However, the Plan is
intended to meet the requirements of Rule 16b-3 under the Act, which requires
shareholder approval for certain material amendments. Furthermore, the Board of
Directors cannot amend the Plan to (i) increase the number of shares that may be
issued pursuant to options under the Plan, or (ii) permit the grant of options
to the members of the committee administering the Plan. Finally, in no event
shall the Board of Directors or the Compensation Committee authorize an
adjustment in the exercise price of, or the number of shares subject to, an
outstanding option under the Plan.
For federal income tax purposes, the grant of non-qualified options under
the Plan will not result in any income being taxed to the optionee at the time
of the grant or in any tax deduction for the Company at such time. At the time a
non-qualified option is exercised under the Plan, the optionee will be treated
as having received ordinary income equal to the excess of the fair market value
of the shares of Common Stock acquired as of the date of exercise over the
option price paid. The Company will be allowed a deduction for federal income
tax purposes equal to the amount of ordinary income attributable to the optionee
upon exercise. The optionee's holding period for the shares of Common Stock
acquired will commence on the date of exercise, and the tax basis of the shares
will be the greater of their fair market value at the time of exercise or the
option price.
As of March 18, 1994, the closing sales price of the Common Stock as
reported on the New York Stock Exchange was $11 1/4.
The affirmative vote of the holders of a majority of the Common Stock
present in person or by proxy and entitled to vote at the meeting is required to
approve Item 2. Therefore, abstentions from voting will have the effect of a
negative vote with respect to this matter, but broker non-votes will not.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ITEM 2.
18
<PAGE>
SECTION 16. DISCLOSURE
Section 16(a) of the Act requires the Company's directors and certain of
its officers, and persons who own more than 10 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 and the New York Stock
Exchange. Officers, directors, and greater-than-ten-percent shareholders are
required by 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 1993 all filing
requirements applicable to its officers, directors, and greater-than-ten-percent
beneficial owners were complied with on a timely basis except that Dr. James G.
Martin, a director, filed his initial report on Form 3 late and Michael N. Beam,
an executive officer at the time, filed initial reports on Form 3 for three (3)
family trusts late.
OTHER MATTERS
The Board of Directors is not aware of any other matters that may come
before the meeting and it does not intend to bring any business before the
meeting other than that stated in the Notice of Meeting. However, if any matters
other than those stated in said Notice should properly come before the meeting,
it is the intention of the persons named in the enclosed proxy to vote such
proxy in accordance with their best judgment.
Whether you plan to attend the meeting or not, you are respectfully urged
to sign, date, and return the enclosed proxy, which will, of course, be returned
to you at the meeting if you are present and so request.
John B. Yorke
Vice President, Secretary
and General Counsel
March 23, 1994
19
<PAGE>
EXHIBIT A
CAROLINA FREIGHT CORPORATION AND SUBSIDIARIES
1994 NONQUALIFIED STOCK OPTION PLAN
1. PURPOSE. This 1994 Nonqualified Stock Option Plan (the Plan) is
intended to advance the interests of Carolina Freight Corporation (the Company),
its subsidiaries and its shareholders by providing certain key employees an
added sense of proprietorship and personal involvement in the development and
financial success of the Company and to encourage such employees to remain with
and devote their best efforts to the Company. It is also intended that options
issued pursuant to the Plan (the Options) shall satisfy the requirements of Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act).
2. ADMINISTRATION. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the Committee) except that
no member of the Committee may exercise discretion with respect to, or
participate in, the administration of the Plan if, at any time during the
twelve-month period prior to any exercise or participation, he or she has been
granted or awarded stock, restricted stock, stock options, stock appreciation
rights or any other derivative security of the Company or an affiliate thereof
under this Plan or any similar plan of the Company, except as permitted in Rule
16b-3(c)(2)(i)(A) through (D) under the Exchange Act. Members of the Committee
shall be subject to any additional restrictions necessary to satisfy the
requirements for disinterested administration of the Plan as set forth in Rule
16b-3, as it may be amended from time to time. Subject to the express provisions
of the Plan, the Committee may interpret the Plan, prescribe, amend and rescind
rules and regulations relating to it, determine the terms and provisions of
awards under the Plan (which need not be identical) and make such other
determinations as it deems necessary or advisable for the administration of the
Plan. The decisions of the Committee under the Plan shall be conclusive and
binding. No member of the Board of Directors of the Company or the Committee
shall be liable for any action taken, or determination made, hereunder in good
faith.
3. ELIGIBILITY. Options to purchase shares of Company stock shall be made
available under this Plan to those employees who are designated by the Committee
from time to time as key employees of the Company or its subsidiaries.
4. STOCK SUBJECT TO OPTION. As of the effective date hereof, there shall
be authorized and reserved for issuance upon the exercise of Options granted
under the Plan such number of shares of the Company's common stock as is
determined from time to time in the discretion of the Committee, provided that
no more than 200,000 shares of such stock shall be subject to the Plan subject
to adjustment as provided in Section 8 below. If any Option granted under the
Plan shall expire or terminate for any reason, without having been exercised in
full, the unpurchased shares covered by the Option shall be added to the shares
otherwise available for issuance upon the exercise of Options unless the Plan
shall then be terminated. Shares subject to option may consist of authorized but
unissued shares of the Company.
5. TERMS AND CONDITIONS OF OPTIONS. Options granted under this Plan shall
be subject to the following terms and conditions, and such other terms and
conditions not inconsistent with the Plan as the Committee shall determine to be
appropriate.
a. NUMBER OF SHARES. Each Option shall specify the number of shares that
may be purchased upon exercise of the Option, subject to adjustment as
provided in Section 8 below, except that the number of shares in respective
Options extended any one employee shall not exceed 50,000 shares of Company
stock.
b. EXERCISE PRICE. The exercise price shall be the fair market value of
the stock subject to the Option as of the date of grant. Fair market value
for purposes of this paragraph shall be the closing price of the Company
stock on the day of the grant of the Option.
c. RIGHT TO EXERCISE AND TERM. Any Option granted under this Plan shall be
exercisable in accordance with the following terms and conditions:
i. An Option granted hereunder shall not be exercisable prior to the
day which is two years after the date of the grant of the Option
(except that in the event of the death or permanent disability of the
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<PAGE>
person receiving such Option, this condition shall be deemed
automatically waived.) The Option granted to any employee under this
Plan shall vest according to the following schedule:
<TABLE>
<CAPTION>
YEARS AFTER DATE OF GRANT PERCENT VESTED
<S> <C>
less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
</TABLE>
The nonvested portion of an employee's Options shall be considered
forfeited upon termination of his or her employment with the Company
for whatever reason. No Option granted hereunder shall be exercisable
more than ten years from the date that the Option is granted.
ii. In the event the employment of an employee then holding
Options hereunder shall terminate by reason of death, retirement (as
defined below), permanent and total disability (as determined by the
long-term disability plan applicable to such employee), or under such
other circumstances as may be determined by the Committee, the vested
portion of said Options shall be exercisable by the former employee or
his or her successor in interest only during the period of one year
immediately following said termination of employment. Retirement for
the purposes of this paragraph is limited to the voluntary termination
of employment occurring at or after the employee either attains age 65
or attains age 55 with fifteen years of service. In the event of
termination of employment under circumstances other than as stated
above, all Options then held shall terminate, and shall no longer be
exercisable, as of the date of termination of employment.
d. TERMS OF EXERCISE. Any Option granted under the Plan may be exercised
by the employee, by a legatee or legatees of such Option under the
employee's last will, or by his or her executors, personal representatives
or distributees (the Optionee), (i) by delivering to the Secretary of the
Company written notice of the number of shares of common stock with respect
to which the Option is being exercised, or (ii) by delivering such notice
to a broker-dealer with a copy to the Secretary of the Company. The
purchase price of common stock upon exercise of any Option shall be paid in
full (i) in cash or certified check by the Optionee, (ii) by a
broker-dealer to whom the Optionee has submitted an exercise notice
consisting of a fully endorsed Option, (iii) in common stock valued at its
fair market value on the date of exercise, (iv) by agreeing to surrender
Options then exercisable by the Optionee valued at the excess of the
aggregate fair market value of the common stock subject to such Options on
the date of exercise over the aggregate option exercise price of such
common stock, (v) by directing the Company to withhold such number of
shares of common stock otherwise issuable upon exercise of such Option
having an aggregate fair market value on the date of exercise equal to the
exercise price of the Option, or (vi) by such other medium of payment as
the Committee, in its discretion, shall authorize, or by any combination of
(i), (ii), (iii), (iv), (v) and (vi), at the discretion of the Committee.
In the case of payment pursuant to (ii), (iii), (iv), (v) or (vi) above,
the employee's election must be made on or prior to the date of exercise of
the Option and must be irrevocable. The Company shall issue, in the name of
the employee, stock certificates representing the total number of shares of
common stock issuable pursuant to the exercise of any Option as soon as
reasonably practicable after such exercise.
e. WITHHOLDING TAXES. Upon the exercise of an Option, the Committee shall
have the right to require the Optionee to remit to the Company in any such
manner or combination of manners as it determines in its sole discretion,
an amount sufficient to satisfy all federal, state and local withholding
tax requirements prior to the delivery by the Company of any certificate
for shares of Common Stock.
6. TRANSFERABILITY LIMITED. No Option granted under the Plan shall be
transferable by the employee other than by will, or, if he or she dies
intestate, by the laws of descent and distribution of the state of his domicile
at the time of his death. During the Optionee's lifetime, the Option shall be
exercised only by the Optionee.
7. TERMINATION OR AMENDMENT OF PLAN. The Board of Directors of the Company
expressly retains the right to at any time terminate, suspend, or amend the
Plan, in any respect and as the Board of Directors deems advisable under
circumstances then prevailing, provided, however, that no amendment hereto shall
expand the number of shares of Company stock subject to the Plan, nor permit the
grant of Options to members of the Committee. The
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<PAGE>
Board of Directors shall submit any amendments to the shareholders of the
Company for approval to the extent necessary to maintain compliance with the
requirements of Rule 16b-3 of the Exchange Act.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; ACCELERATION OF EXERCISE
RIGHTS. The total amount of shares on which Options may be granted under the
Plan and option rights (both as to the number of shares and the option exercise
price per share) shall be appropriately adjusted for any increase or decrease in
the number of outstanding shares of common stock of the Company resulting from
payment of a stock dividend on the common stock, a subdivision or combination of
shares of the common stock or from a reclassification of the common stock, and
(in accordance with the provisions contained in the next following paragraph) in
the event of a merger or consolidation.
After any merger of one or more corporations into the Company or any
subsidiary, any merger of the Company or any subsidiary into another
corporation, any consolidation of the Company or any subsidiary and one or more
other corporations, or any other corporate reorganization of any form involving
the Company or any subsidiary as a party thereto, which corporate reorganization
involves any exchange, conversion, adjustment or other modification of the
outstanding shares of common stock of the Company, each employee holding Options
at the time of such corporate reorganization shall, at no additional cost, be
entitled, upon any exercise of his or her Option, to receive, in lieu of the
number of shares as to which such Option shall then be so exercised, the number
and class of shares of stock or other securities or such other property to which
such employee would have been entitled to pursuant to the terms of the agreement
of merger or consolidation if at the time of such merger or consolidation such
optionee had been a holder of record of a number of shares of common stock of
the Company equal to the number of shares which then remain exercisable under
such Option. Comparable rights shall accrue to such employee in the event of
successive mergers or consolidations of the character described above.
The adjustments and the manner of application of the foregoing provisions
shall be determined by the Committee in its sole discretion. Any such adjustment
may provide for the elimination of any fractional share that might otherwise
become subject to an Option.
9. CHANGE IN CONTROL. In the event of (i) the adoption of a plan of merger
or consolidation of the Company with any other corporation as a result of which
the holders of the voting capital stock of the Company as a group would receive
less than 50% of the voting capital stock of the surviving or resulting
corporation, (ii) the approval by the Board of Directors of the Company of an
agreement providing for the sale or transfer (other than as security for
obligations of the Company) of substantially all the assets of the Company, or
(iii) in the absence of a prior expression of approval by the Board of Directors
of the Company, the acquisition of more than 20% of the Company's voting capital
stock by any person within the meaning of Section 13(d)(3) of the Exchange Act;
then any Option granted hereunder shall become immediately exercisable in full,
subject to any appropriate adjustments in the number of shares subject to the
Option and the option exercise price per share, and shall remain exercisable for
the remaining term of such Option, regardless of whether such Option has been
outstanding for six months or of any provision contained in the individually
executed Nonqualified Stock Option Agreement with respect thereto requiring that
the Option or any portion thereof be outstanding for a minimum amount of time
prior to exercise, subject to all of the terms hereof and the Option Agreement
with respect thereto not inconsistent with this paragraph.
10. RESTRICTIONS ON OPTION REPRICING. Except as set forth in Sections 8 or
9 hereof, in no event shall the Board of Directors or the Committee authorize
any adjustment in the exercise or purchase price of or the number of shares
subject to an outstanding Option under this Plan, whether by cancellation of an
outstanding Option and a subsequent regranting of an Option, by amendment or
substitution of outstanding Option or by other means.
11. APPLICABLE LAW. This stock option plan is adopted by the Company in
the State of North Carolina and is to be construed and interpreted in accordance
with the laws of North Carolina.
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CAROLINA FREIGHT CORPORATION
PROXY
Post Office Box 1000
Cherryville, North Carolina 28021
The undersigned hereby appoints K. G. Younger, Lary R. Scott, and Palmer E.
Huffstetler, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of common stock of Carolina Freight Corporation held on record by the
undersigned on March 11, 1994, at the annual meeting of shareholders to be held
May 4, 1994 or any adjournment thereof, as follows:
<TABLE>
<S> <C> <C>
(1) Election of Directors [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
</TABLE>
J. R. Carstarphen Charles L. Grace Lary R. Scott
(INSTRUCTION: to withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list above.)
(2) Approval of the 1994 Nonqualified Stock Option Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF J. M. CARSTARPHEN, CHARLES L. GRACE, AND LARY R. SCOTT
AS CLASS I DIRECTORS, FOR APPROVAL OF THE 1994 NONQUALIFIED STOCK OPTION PLAN
AND, IN THE DISCRETION OF THE PROXY COMMITTEE, UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
Please sign exactly as name appears below.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
Signature
Signature if held jointly
DATED: , 1994 PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY
CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
**************************************************************************
APPENDIX
On the Dear Shareholder page the signature of K. G. Younger appears where
noted.
On Pages 3 through 5 next to each nominee's name is corresponding
photo of that nominee, where indicated.
On Page 12 the Comparison Graph appears where noted. The plot points are
as listed below:
1988 1989 1990 1991 1992 1993
CFC Stock Value 100.00 76.65 53.63 83.24 61.31 53.62
S&P 500 Stock Value 100.00 131.47 127.17 165.84 177.81 195.43
Dow Jones Transportation
Value 100.00 121.44 93.84 140.01 149.42 181.69
*Assumes $100 initially invested on December 31, 1988 and the reinvestment
of all dividends during the periods indicated for each of Carolina Freight
Common Stock, S&P 500 Index, and Dow Jones Transportation Index
**Fiscal year ending December 31
