<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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
TBC CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(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:
(4) Proposed maximum aggregate value of transaction:
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:
<PAGE> 2
[TBC LOGO]
4770 HICKORY HILL ROAD
MEMPHIS, TENNESSEE 38141
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
APRIL 28, 1994
To the Stockholders of TBC Corporation:
The Annual Meeting of Stockholders of TBC Corporation will be held at the
Adam's Mark Hotel, 939 Ridgelake Boulevard, Memphis, Tennessee, on Thursday,
April 28, 1994, at 9:30 a.m., Central Daylight Savings Time, for the purpose of
considering and voting upon:
(1) Election of three directors to serve for a term of three years.
(2) Approval of the appointment of Coopers & Lybrand as independent
public accountants of the Company for the year ending December 31,
1994.
(3) Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors of the Company has fixed the close of business on
March 11, 1994 as the record date for determination of stockholders entitled to
notice of and to vote at the Annual Meeting and any adjournment thereof. A list
of stockholders of record entitled to vote at the meeting will be available for
examination by any stockholder for any purpose germane to the Annual Meeting,
during normal business hours, for a period of 10 days prior to the Annual
Meeting, at the Company's offices at the address set forth above. The list will
also be available at the Annual Meeting.
It is important that your shares be represented at the meeting. For that
reason we ask that you please mark, date, sign and return the enclosed proxy in
the envelope provided. Giving the proxy will not affect your right to vote in
person if you attend the meeting.
By Order of the Board of Directors
Stanley A. Freedman, Secretary
Memphis, Tennessee
March 28, 1994
<PAGE> 3
[TBC LOGO]
4770 HICKORY HILL ROAD
MEMPHIS, TENNESSEE 38141
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished to stockholders of TBC Corporation, a
Delaware corporation (the "Company"), in connection with the solicitation by its
Board of Directors of proxies to be used at the Annual Meeting of Stockholders
to be held on April 28, 1994, and any adjournment thereof. The close of business
on March 11, 1994 has been fixed as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting of
Stockholders. The Company has one class of shares outstanding, namely Common
Stock, of which there were 28,345,714 shares outstanding at the close of
business on March 11, 1994. Each share entitles the holder thereof to one vote.
All properly executed proxies received by the Board of Directors pursuant
to this solicitation will be voted in accordance with the stockholder's
directions specified on the proxy. If no directions have been specified by
marking the appropriate squares on the accompanying proxy card, the shares will
be voted in accordance with the Board of Directors' recommendations. A
stockholder signing and returning the accompanying proxy has the power to revoke
it at any time prior to its exercise by giving notice to the Company in writing
or in open meeting, but without affecting any vote previously taken.
An affirmative vote of a majority of the shares present, in person or by
proxy, and entitled to vote is required for approval of all items being
submitted to the stockholders for their consideration. Abstentions and broker
non-votes will be included in the determination of the number of shares present
and voting, but will not count as affirmative votes at the meeting.
The costs of preparing, assembling and mailing this Proxy Statement and the
accompanying proxy are to be borne by the Company. The Company will, upon
request, reimburse banks, brokerage houses and other institutions for their
expenses in forwarding proxy materials to their principals. Directors, officers
and regular employees of the Company may solicit proxies personally from some
stockholders if proxies are not received promptly.
This Proxy Statement and the accompanying proxy were first mailed to
stockholders on or about March 28, 1994.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes. Two classes
are comprised of three directors and one class of four. One class of directors
is elected at each Annual Meeting of Stockholders for a term of three years. At
the 1994 Annual Meeting, stockholders will elect three directors who will hold
office until the 1997 Annual Meeting and until their successors are elected and
qualified.
The nominees of the Board of Directors are Marvin E. Bruce, Robert E.
Carroll, Jr., and Robert H. Dunlap, all of whom are presently directors and are
nominated to succeed themselves. The Company does not have a standing
nominations committee. It is the intention of the proxy agents named in the
accompanying proxy, unless directed otherwise, to vote each proxy for the
election of Messrs. Bruce, Carroll, and Dunlap. Should any of them be unable to
accept the office of director, an eventuality which is not anticipated, proxies
<PAGE> 4
may be voted with discretionary authority for a substitute nominee or nominees
designated by the Board of Directors.
Set forth below is certain information concerning each nominee for director
and each director whose term of office continues after the 1994 Annual Meeting.
NOMINEES TO BE ELECTED FOR A TERM EXPIRING IN 1997:
MARVIN E. BRUCE, 65, was elected Chairman of the Board of Directors in 1991
and has been a director of the Company since 1972 and Chief Executive Officer
since 1973. Mr. Bruce was the Company's President from 1972 until 1991. Mr.
Bruce is also a director of KRUG International Corp. and Union Planters
Corporation, a bank holding company.
ROBERT E. CARROLL, JR., 66, has been a director of the Company since 1970.
Mr. Carroll has been the President of Carroll's, Inc., a wholesale distributor
of tires and automotive accessories, since it was incorporated in 1960.
ROBERT H. DUNLAP, 64, has been a director of the Company since 1970. Mr.
Dunlap has been the Chairman of the Board of Dunlap & Kyle Co., Inc., a
wholesale distributor of tires and automotive accessories, since 1993. From 1960
until his election as Chairman of the Board, Mr. Dunlap served as President of
Dunlap & Kyle.
DIRECTORS CONTINUING IN OFFICE UNTIL 1995:
LOUIS S. DiPASQUA, 59, has been President and Chief Operating Officer and a
director of the Company since 1991. From 1989 until joining the Company, Mr.
DiPasqua was Vice President, Replacement Tire Sales and Marketing for the
Goodyear Tire & Rubber Company and prior to that was President and Chief
Executive Officer of Kelly Springfield Tire Company, a wholly-owned subsidiary
of Goodyear. From 1984 to 1988, Mr. DiPasqua was Chairman and Managing Director
of Goodyear Great Britain.
DWAIN W. HIGGINBOTHAM, 62, has been a director of the Company since 1970.
Mr. Higginbotham has been the President of National Brands Tire Co., Inc., which
operates retail tire sales and service stores, since it was incorporated in
1956.
CHARLES D. SOLOMONSON, 63, has been a director of the Company since 1987.
From 1981 until 1987, Mr. Solomonson was Executive Vice President and Chief
Financial and Administrative Officer of the former Holiday Corporation, which
owned and operated hotels worldwide. Mr. Solomonson also served as a member of
Holiday Corporation's Board of Directors and Executive Committee from 1980 until
1986.
NICHOLAS F. TAUBMAN, 59, has been a director of the Company since 1971. Mr.
Taubman has been the Chairman of the Board of Advance Stores Company, Inc.,
which operates retail automotive parts and accessories stores, since 1985. From
1969 until his election as Chairman of the Board, Mr. Taubman served as
President of Advance Stores Company.
DIRECTORS CONTINUING IN OFFICE UNTIL 1996:
STANLEY A. FREEDMAN, 71, has been Secretary of the Company since 1977 and a
director since 1983. Since 1989 Mr. Freedman has been a member of the law firm
of Thompson, Hine and Flory. From 1961 until 1989, Mr. Freedman was a member of
the law firm of Smith & Schnacke.
RICHARD A. McSTAY, 57, has been a director of the Company since 1983. Mr.
McStay has been the President of Southern Capital Advisors, Inc., a division of
Morgan Asset Management and a registered investment adviser, since 1986. Mr.
McStay is also a Managing Director of Morgan Asset Management's parent company,
Morgan, Keegan & Company, Inc., a brokerage and investment banking firm
headquartered in Memphis, Tennessee, and has been affiliated with Morgan, Keegan
since 1974. Mr. McStay is also a director of Envoy Corporation.
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<PAGE> 5
ROBERT M. O'HARA, 67, has been a director of the Company since 1983. Mr.
O'Hara has been the Chairman and Chief Executive Officer of Falcon Management, a
management consulting firm, since 1983. Mr. O'Hara was Senior Vice President of
The Mead Corporation from 1981 to 1983 and Corporate Group Vice President from
1974 to 1981. Mr. O'Hara is also a director of Kerr Glass Manufacturing Corp.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
There were four meetings of the Board of Directors in 1993. The
Compensation Committee held four meetings, the Audit Committee held two
meetings, and the Executive Committee held no meetings in 1993. Each director
attended at least 75% of the meetings of the Board and of the committees on
which he served.
The Audit Committee (of which Mr. Taubman is chairman and Messrs.
Higginbotham, O'Hara, and Solomonson are members) recommends annually the
appointment of the independent public accountants for the Company. The Committee
meets with the independent public accountants and appropriate management
personnel to review the scope and results of the annual audit of the Company's
financial statements. The Committee also reviews the recommendations of the
independent public accountants in regard to the Company's accounting practices,
policies, procedures and overall internal controls. The Committee also reviews
the Company's procedures for assuring compliance with the Company's policy on
standards of business conduct and the Company's policy against insider trading.
The Compensation Committee (of which Mr. Freedman is chairman and Messrs.
Dunlap and McStay are members) fixes the compensation of officers of the Company
elected by the Board, establishes policies and guidelines in regard to employee
compensation in general, and administers the Company's compensation plans, stock
option plans, and Executive Supplemental Retirement Plan.
The Executive Committee (of which Mr. Bruce is chairman and Messrs.
Carroll, DiPasqua, Dunlap and Taubman are members) is empowered between meetings
of the Board to exercise the full authority of the Board except as to matters
not delegable to a committee under the Delaware General Corporation Law and as
to matters that have been delegated to other committees of the Board.
Non-employee members of the Board of Directors receive $15,000 per year,
payable quarterly, for services as directors, plus $750 ($375 in the case of
telephonic meetings lasting one hour or less) for attendance at each meeting of
the Board or a committee of the Board of which they are members. A director may
elect to defer receipt of all or a portion of fees payable for service on the
Board and any committees of the Board. Interest is accrued on deferred amounts,
and payment of deferred amounts commences after the director ceases to be a
director.
In addition to the fees described above, pursuant to the Company's 1989
Stock Incentive Plan (the "1989 Plan"), each non-employee director is
automatically granted, on the date of each Annual Meeting of Stockholders,
restricted stock having a market value of $5,000 on the date of grant. The
non-employee director may vote the stock and receive dividends, if declared and
paid, but may not dispose of the stock until the expiration of a defined
restriction period or the earlier lapse of restrictions. Each share of
restricted stock is accompanied by four nonqualified stock options, which are
exercisable only under certain conditions and expire as the associated
restricted stock vests. If the options are exercised, the associated shares of
restricted stock are forfeited. The restricted shares are also forfeited to the
Company if the non-employee director ceases to be a director of the Company
prior to the end of the restriction period for reasons other than death,
retirement, disability or failure to be re-elected. If the non-employee director
ceases to be a director for any of the above-stated reasons or a Change in
Control (as defined in the 1989 Plan) of the Company occurs, all restrictions
lapse.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The three current members of the Compensation Committee, Messrs. Dunlap,
Freedman, and McStay, served as members of the Compensation Committee throughout
1993. None of the three Committee members is a present or former employee of the
Company, and Messrs. Dunlap and McStay are not now and have never
3
<PAGE> 6
been officers of the Company. Mr. Freedman serves as Secretary of the Company,
but receives no additional compensation for his services as such.
Mr. Dunlap is the Chairman of the Board and sole owner of Dunlap & Kyle
Co., Inc., one of the Company's distributors, and owns a controlling interest in
another of the Company's distributors, Hesselbein Tire Co., Inc. In 1993,
purchases by Dunlap & Kyle Co., Inc. and Hesselbein Tire Co., Inc. from the
Company amounted to $50,342,000 in the aggregate. Thompson, Hine and Flory, the
law firm of which Mr. Freedman is a member, serves as legal counsel to the
Company. Southern Capital Advisors, Inc., which Mr. McStay serves as President,
performs money management services for the Company's Retirement Plan.
CERTAIN TRANSACTIONS
In addition to Mr. Dunlap, two other members of the Board of Directors of
the Company are executive officers or more than 10% equity owners of
distributors of the Company whose purchases from the Company in 1993 exceeded
either 5% of the Company's consolidated gross revenues in 1993 or 5% of the
distributor's consolidated gross revenues during its last fiscal year.
Mr. Carroll is the President and principal owner of Carroll's, Inc. During
1993, purchases by Carroll's, Inc. from the Company totaled $88,978,000 and
purchases by distributors which operate under arrangements with, and may pay
compensation to, Carroll's, Inc. totaled $3,539,000.
Mr. Higginbotham is the President and sole owner of National Brands Tire
Co., Inc. During 1993, purchases by National Brands Tire Co., Inc. from the
Company totaled $1,023,000.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of
the Company's Chief Executive Officer and the Company's four most highly
compensated executive officers other than the Chief Executive Officer for 1993,
1992, and 1991.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
--------------------- STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(A) AWARDS(B)(C) OPTIONS/SARS(D)
- ---------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Marvin E. Bruce............. 1993 $500,000 $ -- $ -- 30,928
Chairman and Chief 1992 450,008 119,285 39,748 --
Executive Officer 1991 431,256 28,399 9,465 45,762
Louis S. DiPasqua........... 1993 303,180 -- -- 18,753
President and Chief 1992 288,744 76,532 25,510 --
Operating Officer 1991 240,625 15,847 198,405 72,685
Bob M. Hubbard.............. 1993 170,664 -- -- 7,038
Senior Vice President 1992 162,540 43,091 14,351 --
Purchasing and Engineering 1991 154,800 10,201 3,390 11,805
Ronald E. McCollough........ 1993 154,524 -- -- 6,372
Senior Vice President 1992 147,168 39,012 12,997 --
Operations 1991 140,160 9,231 3,075 11,452
Kenneth P. Dick............. 1993 133,788 -- -- 5,517
Senior Vice President 1992 127,416 36,908 12,287 --
Sales 1991 121,344 18,324 6,090 9,253
</TABLE>
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<PAGE> 7
(a) Represents cash portion of bonuses paid under the Company's Management
Incentive Compensation Plan ("Incentive Plan") or at the discretion of the
Compensation Committee of the Board of Directors.
(b) Represents dollar value of the 2,465, 1,582, 890, 806, and 762 shares
awarded for 1992, and 947, 528, 339, 307, and 609 shares awarded for 1991,
to Messrs. Bruce, DiPasqua, Hubbard, McCollough, and Dick, respectively, as
the restricted stock portion of bonuses paid under the Incentive Plan or at
the discretion of the Compensation Committee. Also includes for 1991, in the
case of Mr. DiPasqua, the dollar value of 33,750 restricted shares granted
to him when he joined the Company. Amounts shown are market values on the
date of grant (without reduction to take into account restrictions on the
shares). One-third of the restricted stock vests each year, beginning on the
first anniversary of the date of grant. Individuals holding restricted
shares receive dividends on them, if declared and paid, to the same extent
as other stockholders.
(c) At December 31, 1993, Mr. Bruce held 3,096 restricted shares having a market
value of $38,313; Mr. DiPasqua held 13,184 restricted shares having a market
value of $163,152; Mr. Hubbard held 1,116 restricted shares having a market
value of $13,811; Mr. McCollough held 1,010 restricted shares having a
market value of $12,499; and Mr. Dick held 1,168 restricted shares having a
market value of $14,454. (Market values provided reflect no reduction in
value for restrictions on the shares.)
(d) Represents number of shares subject to options granted under the Company's
1989 Stock Incentive Plan in accordance with the regular biennial program
adopted by the Compensation Committee. Also includes for 1991, in the case
of Mr. DiPasqua, 45,000 shares subject to options granted to him when he
joined the Company. No stock appreciation rights ("SARs") were granted in
1993, 1992, or 1991.
EMPLOYMENT CONTRACTS
The Company has employment agreements with Messrs. Bruce, DiPasqua,
Hubbard, McCollough, and Dick. The agreement with Mr. Bruce expires on the
earlier of the date of his retirement or July 31, 1994, the agreement with Mr.
DiPasqua expires January 31, 1995, and the agreements with Messrs. Hubbard,
McCollough, and Dick expire October 31, 1994. Pursuant to the agreements,
Messrs. Bruce, DiPasqua, Hubbard, McCollough, and Dick currently receive annual
salaries of $500,000, $318,336, $179,196, $162,252, and $140,472, respectively,
which are subject to such increases as may be authorized by the Board of
Directors. Messrs. DiPasqua, Hubbard, McCollough and Dick may elect to defer
payment of all or any part of their compensation.
In the event the employee dies or becomes disabled, payment of his annual
salary will continue until July 31, 1994 in the case of Mr. Bruce, and for a
six-month period in the cases of Messrs. DiPasqua, Hubbard, McCollough, and
Dick. In the event that employment is terminated within certain specified
periods after a Change in Control (as defined in the agreements) of the Company,
other than as a result of death or disability, the terminated executive will
continue to receive his salary and any deferred compensation for the longer of
(a) the remaining term of the agreement or (b) a three-year period in the case
of Mr. Bruce, or a one-year period in the cases of Messrs. DiPasqua, Hubbard,
McCollough, and Dick. In addition, an executive terminated after a Change in
Control is entitled to receive a monthly payment equal to one-twelfth of the
average annual amount of any awards made to him during the preceding two fiscal
years under any incentive compensation plan of the Company. This monthly payment
would continue for a period of twelve months in the case of Mr. Bruce, and for a
period of six months in the cases of Messrs. DiPasqua, Hubbard, McCollough, and
Dick. Further, an executive terminated after a Change in Control would be
entitled to exercise within 90 days after the termination of employment any
options held under Company stock option plans. Each employment agreement also
provides that the executive is entitled to participate in the Company's
Executive Supplemental Retirement Plan, and the agreements with Messrs. Bruce
and DiPasqua provide for certain additional supplemental retirement benefits.
See "Retirement Benefits."
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OPTION/SAR GRANTS
The following table sets forth information concerning options to purchase
shares of the Company's Common Stock which were granted during the year ended
December 31, 1993 to each of the Company's executive officers named in the
table. No stock appreciation rights ("SARs") were granted in 1993.
The table shows, among other things, hypothetical potential gains from
stock options granted in 1993. These hypothetical gains are based entirely on
assumed annual growth rates of 5% and 10% in the price of the Company's Common
Stock over the ten year life of the options. The assumed rates of growth were
selected by the Securities and Exchange Commission for illustrative purposes
only and are not intended to predict future stock prices, which will depend upon
market conditions and the Company's future performance and prospects.
Based upon the number of shares of the Company's Common Stock outstanding
at the end of 1993, if the Company's Common Stock achieves a 5% annual growth
rate, its price would increase by 63% from $12.125 (the closing price of the
Company's Common Stock on July 22, 1993, when the options were granted) to
$19.75 at the end of the ten year option term, and the Company's stockholders
would gain $216,375,000 in aggregate market value. If the Company's Common Stock
achieves a 10% annual growth rate, its price would increase by 159% from $12.125
to $31.45 during the same period, and the Company's stockholders would gain
$548,386,000 in aggregate market value.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS(A) OPTION TERM
- -------------------------------------------------------------------------------------------------------
NO. OF SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO PRICE EXPIRATION
NAME GRANTED EMPLOYEES IN 1993 PER SHARE DATE 5% 10%
- ----------------------------------------- ----------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Marvin E. Bruce......... 30,928 29% $12.125 7/21/03 $235,826 $597,684
Louis S. DiPasqua....... 18,753 18 12.125 7/21/03 142,992 362,402
Bob M. Hubbard.......... 7,038 7 12.125 7/21/03 53,665 136,009
Ronald E. McCollough.... 6,372 6 12.125 7/21/03 48,587 123,139
Kenneth P. Dick......... 5,517 5 12.125 7/21/03 42,067 106,616
</TABLE>
- ---------------
(a) In general, options granted in 1993 are not exercisable for the first twelve
months following the date of grant. Options vest in equal annual
installments, becoming exercisable for one-third of the underlying Common
Stock on the first anniversary of the date of grant and for an additional
one-third of the underlying Common Stock on each of the second and third
anniversaries of the date of grant.
OPTION/SAR EXERCISES AND YEAR-END VALUES
During the year ended December 31, 1993, none of the five executive
officers named in the Summary Compensation Table exercised any stock options or
stock appreciation rights with respect to the Company's Common Stock.
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<PAGE> 9
The following table sets forth aggregated information concerning the number
and value of outstanding stock options and SARs with respect to the Company's
Common Stock held by each of the named executive officers at December 31, 1993.
FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT DECEMBER 31, 1993 AT DECEMBER 31, 1993(A)
----------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------ ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Marvin E. Bruce..................... 15,254 46,182 $ 88,855 $ 96,587
Louis S. DiPasqua................... 34,334 57,104 224,896 240,533
Bob M. Hubbard...................... 21,550 10,973 146,322 24,681
Ronald E. McCollough................ 20,022 10,190 135,458 23,833
Kenneth P. Dick..................... 57,387 8,602 546,592 19,349
</TABLE>
- ---------------
(a) Represents the market value of the stock options and SARs on December 31,
1993, less the aggregate exercise price.
RETIREMENT BENEFITS
The Company has a non-contributory, defined benefit Retirement Plan (the
"Retirement Plan") for officers and other employees. The following table shows
the estimated maximum annual retirement benefits payable at normal retirement
(age 65) under the Retirement Plan at selected compensation levels after various
years of service. Amounts shown are straight life annuity amounts before
reduction for Social Security benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------
REMUNERATION 15 YRS. 20 YRS. 25 YRS. 30 YRS. 35 YRS.
- ------------------------------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000............................ $ 26,250 $ 35,000 $ 41,250 $ 47,500 $ 53,750
200,000............................ 52,500 70,000 82,500 95,000 107,500
300,000............................ 78,750 105,000 123,750 142,500 161,250
400,000............................ 105,000 140,000 165,000 190,000 215,000
500,000............................ 131,250 175,000 206,250 237,500 268,750
550,000............................ 144,375 192,500 226,875 261,250 295,625
</TABLE>
A participant's remuneration covered by the Retirement Plan is his or her
average annual compensation for the five highest consecutive years during the
participant's last ten years of employment with the Company. In the case of the
executive officers identified in the Summary Compensation Table, covered
compensation includes amounts listed as salary and bonus, but does not include
any amounts deferred pursuant to their employment agreements. The credited years
of service under the Retirement Plan for each officer named in the Summary
Compensation Table are as follows: Bruce -- 21; DiPasqua -- 3; Hubbard -- 32;
McCollough -- 20; and Dick -- 22.
Provisions of the Internal Revenue Code limit the amount of annual benefits
that may be paid to any participant under the Retirement Plan and the amount of
annual covered compensation of any participant for purposes of the Retirement
Plan. The discussion set forth above does not reflect these limitations.
Each of the Company's executive officers named in the Summary Compensation
Table also participates in the Company's unfunded Executive Supplemental
Retirement Plan (the "Supplemental Plan"). In general, the Supplemental Plan
provides supplemental pension benefits to offset the Internal Revenue Code
limitations described above and to ensure that participants who are at least 65
years old and have completed at least 20 credited years of service receive total
annual retirement benefits under the Retirement Plan and the
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<PAGE> 10
Supplemental Plan which are not less than 60% of the average of the three
highest consecutive calendar years of the participant's compensation within the
last ten completed calendar years during which the participant received any
compensation. Supplemental benefits are reduced if the participant does not meet
the age and years of service thresholds.
Compensation covered by the Supplemental Plan includes all salary,
incentive compensation, deferred compensation, grants of restricted stock, and
grants of stock options to the extent that fair market value on the date of
grant exceeds the option price.
The employment agreements of Messrs. Bruce and DiPasqua provide
supplemental retirement benefits which each may elect to receive in lieu of
benefits under the Supplemental Plan. Under the agreements, each is entitled to
supplemental retirement benefits in an amount equal to the difference between
the benefits he would have received under the Retirement Plan had certain
assumptions been made and the benefits actually payable to him under the
Retirement Plan.
Both employment agreements require benefits to be calculated under the
assumption that Internal Revenue Code limitations had not been enacted and that
compensation covered by the Retirement Plan includes salary, deferred
compensation and amounts paid under incentive compensation or other compensation
plans. Mr. DiPasqua's benefits also are to be calculated assuming that he has
earned an additional 28 years and 7 months of credited service under the
Retirement Plan, and his supplemental benefits are to be reduced by the amount
of his retirement benefits from his former employer. In the case of Mr. Bruce,
benefits are also to be calculated assuming that he has 25 years of credited
service and that his average monthly compensation for purposes of the Retirement
Plan is equal to the greater of his average monthly covered compensation (as
described above) during the years specified in the Retirement Plan or his
average monthly covered compensation during the last full fiscal year that he
was employed as Chief Executive Officer.
REPORT OF THE COMPENSATION COMMITTEE
Pursuant to resolutions adopted by the Company's Board of Directors, the
Compensation Committee of the Board of Directors has all the power and authority
of the Board of Directors to fix the compensation of executive officers of the
Company and to determine compensation guidelines for the entire Company. In
addition, the Compensation Committee administers various compensation plans of
the Company, including the Management Incentive Compensation Plan (the
"Incentive Plan") and the 1989 Stock Incentive Plan (the "1989 Plan"). From time
to time, the Compensation Committee has employed the services of The Wyatt
Company, a compensation and actuarial consulting firm, for advice in matters of
executive compensation.
In the view of the Compensation Committee, the compensation opportunities
available to the Company's executive officers are an integral part of the
Company's ability to attract, motivate, and retain executive officers upon whose
judgment, initiative, and efforts the growth and success of the Company are
largely dependent. As in previous years, the Compensation Committee's policy
with respect to executive compensation continues to be to provide executive
officers with a total compensation package which is externally competitive and
internally equitable and the components of which encourage and reward
performance that directly and positively impacts the Company's growth and
success.
The key components of the compensation packages of the Company's executive
officers are annual salary, bonuses dependent upon Company performance, and long
term, stock-based incentives. In addition, the Company's executive officers also
receive health, accident, and life insurance, retirement, and other personal
benefits typically offered to executives by major corporations.
The minimum annual salary of each of the five most highly compensated
executive officers of the Company, including the Chief Executive Officer, is
fixed pursuant to his employment agreement with the Company, subject to
increases by the Compensation Committee. Each year, the Chief Executive Officer
or Chief Operating Officer of the Company makes recommendations as to salary
adjustments for the other executive officers of the Company. For the year 1993,
the Chief Executive Officer recommended salary increases of 5% for all other
executive officers of the Company. The Chief Executive Officer's recommendation
was supported by surveys conducted by the Mid-South Compensation Association,
the American
8
<PAGE> 11
Compensation Association, Hewitt Associates, William H. Mercer, Inc., and The
Wyatt Company. Those surveys projected 1993 salary increases ranging from 4.8%
to 5.3% for exempt employees or, in several cases, for officers and executives.
The Committee concluded that the recommendation of the Chief Executive Officer
to grant a 5% salary increase for 1993 to each of the other executive officers
was not out of line, and accordingly adopted the recommendation. The Committee
increased the salary of the Chief Executive Officer, which had not been adjusted
for the prior two years, from $450,000 to $500,000.
Traditionally, the Company has not tied salary levels to corporate
performance, and relies instead on its Incentive Plan to relate compensation to
performance.
The Company's executive officers and certain other management employees
participate in the Incentive Plan, which provides annual bonuses based upon
specified increases in the net operating income, as defined in the Plan, of the
Company as a whole or, in the case of participants whose responsibilities extend
primarily to a particular area of the Company's business, of that portion of the
Company's business. For incentive compensation to be available under the Plan,
net operating income for the year for all or the relevant portion of the
Company's business must not only equal or exceed the net operating income for
the prior year, but must also exceed by 10% or more a weighted average of the
net operating income for the three preceding years. The amount available for
distribution in respect of any year is determined by multiplying the aggregate
salaries of each category of Plan participants for the year by the percentage
increase in net operating income for that year over the weighted average net
operating income for the preceding three years applicable to that category. No
individual may be awarded more than his or her proportionate share, based upon
the percentage his or her salary represents of the aggregate salaries of Plan
participants in the same category. Actual awards are determined by the
Compensation Committee, after taking into account the recommendations of the
Chief Executive Officer and such other matters as the Committee considers
appropriate.
The Incentive Plan further provides that 75% of the amount of each
participant's bonus shall be paid in cash (subject to certain maximum caps) and
the balance of the amount is to be paid by a grant of restricted shares, subject
to the provisions of the 1989 Plan. The restricted shares vest over a period of
three years beginning on the first anniversary of their date of grant and are
forfeited if the participant leaves the Company prior to their vesting.
In 1992, the Company achieved the best financial results in its history.
1993 represented the second best year in the history of the Company; however,
the Company's net operating income for 1993 was less than its 1992 net operating
income and exceeded the weighted average of the net operating income for the
three preceding years by less than 10%. Because the performance levels required
by the Incentive Plan were not met, no payments to the Company's Chief Executive
Officer or any other executive officer were made for 1993 under the Incentive
Plan.
The Compensation Committee believes that the Company should encourage its
executive officers to invest in and increase their ownership of the Company's
Common Stock. Executive officers who also have a significant investment in the
Company as stockholders have a major incentive to build stockholder value, and
their long term interests are more closely aligned with those of the Company's
stockholders.
In addition to the restricted shares that executive officers receive in
payment of part of their annual bonus, long term, stock-based incentives are
also provided to the Company's executive officers through the grant of stock
options under the 1989 Plan. Such options typically expire in ten years and are
granted at the fair market value of the Company's Common Stock on the date of
grant. Based upon the 1989 recommendations of The Wyatt Company, the
Compensation Committee grants stock options to executive officers of the Company
under a regular biennial program which generally provides that options will be
granted to each executive officer for that number of shares which has a fair
market value on the date of grant equal to a specified percentage of his annual
salary (50% for those with salaries between $100,000 and $200,000, 66% for those
with salaries between $200,000 and $300,000, and 75% for those with salaries
exceeding $300,000). The Committee does not consider the amounts of stock
options and restricted stock outstanding or previously granted in deciding
whether to award options under the 1989 Plan.
9
<PAGE> 12
In 1993, stock options were awarded under this biennial program to each of
the Company's five most highly compensated executive officers, including the
Chief Executive Officer, in accordance with the formula described in the
preceding paragraph. In the case of Mr. Bruce, application of the formula
resulted in his receiving an option to purchase 30,928 shares of the Company's
Common Stock at their fair market value on the date of grant, namely, $375,000
(which equals 75% of his 1993 annual salary).
Through the use of annual bonuses based upon Company performance and
restricted stock and stock option grants which will become more valuable if the
value of the Company's Common Stock increases, the Compensation Committee
believes that its compensation policies for the Company's executive officers,
including its Chief Executive Officer, effectively tie executive compensation to
the Company's performance and stockholder value.
THE COMPENSATION COMMITTEE
Stanley A. Freedman, Chairman
Robert H. Dunlap
Richard A. McStay
THE COMPANY'S CUMULATIVE TOTAL RETURN TO STOCKHOLDERS
The graph which follows compares the Company's cumulative total return to
stockholders for the five year period ended December 31, 1993, with the
cumulative total return of the Standard & Poor's 500 Composite Stock Price Index
and the Standard & Poor's Auto Parts After Market Stock Price Index for such
five year period. The graph assumes that $100 was invested on December 31, 1988
in the Company's Common Stock and in each of the two indexes and that dividends
were reinvested.
<TABLE>
<CAPTION>
S&P Auto
Measurement Period TBC Corpo- Parts-After
(Fiscal Year Covered) ration S&P 500 Market
<S> <C> <C> <C>
1988 100 100 100
1989 149 132 107
1990 143 128 79
1991 238 166 145
1992 409 179 182
1993 321 197 212
</TABLE>
10
<PAGE> 13
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth information as of December 31, 1993 with
respect to the number of shares of Common Stock of the Company beneficially
owned by each director of the Company, each executive officer of the Company
named in the Summary Compensation Table, all directors and executive officers of
the Company as a group, and each other person known by the Company to be the
beneficial owner of 5% or more of the Company's outstanding shares.
For purposes of this table, a person is considered to beneficially own any
shares if the person, directly or indirectly, has (or has the right to acquire
within 60 days after December 31, 1993) sole or shared power (i) to vote or to
direct the voting of such shares or (ii) to dispose or to direct the disposition
of such shares. In the case of shares listed as being beneficially owned by an
individual and a corporation, the individual may be deemed to share beneficial
ownership of such shares, which are held of record by the corporation, because
of the individual's relationship with the corporation. In the case of shares
listed as being beneficially owned only by an individual, voting power and
investment power are exercised solely by the named individual or are shared by
such individual and his spouse or children. Individuals holding restricted
shares may vote them and receive dividends, but may not dispose of the
restricted shares until the applicable restriction period expires.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
OWNED AS OF PERCENT
NAME DECEMBER 31, 1993 OF CLASS(A)
----------------------------------------------- ------------------------ -----------
<S> <C> <C>
Marvin E. Bruce................................ 2,216,407(b) 7.8%
Robert E. Carroll, Jr. and Carroll's, Inc.
Profit Sharing Plan and Trust................ 40,149(c)(d) (e)
Kenneth P. Dick................................ 60,018(f) (e)
Louis S. DiPasqua.............................. 87,361(g) (e)
Robert H. Dunlap and Dunlap & Kyle Co., Inc.... 408,751(d) 1.4
Stanley A. Freedman............................ 17,368(d) (e)
Dwain W. Higginbotham.......................... 11,449(d) (e)
Bob M. Hubbard................................. 25,249(h) (e)
Ronald E. McCollough........................... 35,496(i) (e)
Richard A. McStay.............................. 5,502(d) (e)
Robert M. O'Hara............................... 19,806(d) (e)
Charles D. Solomonson.......................... 7,243(d) (e)
Nicholas F. Taubman, Advance Stores
Company, Inc. and Adstock, Inc............... 1,256,236(d) 4.4
Directors and Executive Officers as a Group
(15 persons)................................. 4,207,216(j) 14.7
Nicholas Company, Inc.......................... 3,007,561(k) 10.6
First Pacific Advisors, Inc.................... 2,041,500(l) 7.2
</TABLE>
- ---------------
<TABLE>
<S> <C>
(a) Percentages are calculated based upon the number of shares of Common Stock outstanding
on December 31, 1993, plus the number of shares subject to outstanding options held by
the named individual or group, as the case may be, and exercisable within 60 days
thereafter.
(b) Includes 15,254 shares subject to outstanding options and 3,096 restricted shares. Mr.
Bruce's mailing address is: TBC Corporation, 4770 Hickory Hill Road, Memphis, Tennessee
38141.
</TABLE>
11
<PAGE> 14
<TABLE>
<S> <C>
(c) Includes 37,968 shares held by Carroll's, Inc. Profit Sharing Plan and Trust as to
which Mr. Carroll disclaims beneficial ownership.
(d) Includes 469 restricted shares granted in 1992 and 305 shares granted in 1993 (but not
the shares subject to the options granted in tandem with these restricted shares, since
the options are not presently exercisable). Also includes, in the case of Mr. Dunlap,
6,684 shares subject to presently exercisable options granted in tandem with prior
grants of restricted shares (which restricted shares are not included because they will
be forfeited if the related options are exercised).
(e) Represents less than one percent of the outstanding shares of Common Stock of the
Company.
(f) Includes 57,387 shares subject to outstanding options and 1,168 restricted shares.
(g) Includes 51,501 shares subject to outstanding options and 13,184 restricted shares.
(h) Includes 21,550 shares subject to outstanding options and 1,116 restricted shares.
(i) Includes 20,022 shares subject to outstanding options and 1,010 restricted shares.
(j) Includes 185,863 shares subject to outstanding options and 27,283 restricted shares.
(k) According to a Schedule 13G Report, dated February 8, 1994 and filed with the
Securities and Exchange Commission, as of December 31, 1993, Nicholas Company, Inc., a
registered investment adviser, had sole power to dispose or to direct the disposition
of 3,007,561 shares of the Company's Common Stock; Nicholas Fund, Inc., an affiliated
registered open-end management investment company for which Nicholas Company, Inc.
acted as investment adviser, had sole power to vote or to direct the voting of
1,536,975 of such shares; and Albert O. Nicholas, the president and director of the two
companies and the majority shareholder of Nicholas Company, Inc., may be deemed to be
the indirect beneficial owner of the reported shares by virtue of his relationship with
the two companies (although Mr. Nicholas disclaims such beneficial ownership). The
business address of the two companies and Mr. Nicholas is 700 North Water Street,
Milwaukee, Wisconsin 53202.
(l) According to a Schedule 13G Report, dated February 9, 1994 and filed with the
Securities and Exchange Commission, as of December 31, 1993, First Pacific Advisors,
Inc. ("First Pacific"), a registered investment adviser, had shared power to dispose or
to direct the disposition of 2,041,500 shares of the Company's Common Stock and shared
power to vote or to direct the voting of 1,713,400 of such shares. The business address
of First Pacific is Suite 1200, 11400 West Olympic Boulevard, Los Angeles, California
90064.
</TABLE>
Nicholas Company, Inc., Nicholas Fund, Inc., Albert O. Nicholas, and First
Pacific each has represented that the shares of the Company's Common Stock which
it or he is deemed to beneficially own were acquired in the ordinary course of
business and were not acquired for the purpose of and do not have the effect of
changing or influencing the control of the Company and were not acquired in
connection with or as a participant in any transaction having such purposes or
effect.
Federal securities laws require the Company's directors and officers and
persons who own more than 10% of the outstanding shares of Common Stock of the
Company to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and to furnish the Company with copies of all
such reports. Based solely upon the Company's review of the copies of these
reports received by it and written representations that no other reports were
required to be filed, the Company believes that, except for the forms reporting
the July 1993 grant of stock options to the Company's officers pursuant to the
1989 Stock Incentive Plan (which were filed late), all filing requirements
applicable to its directors, officers, and greater than 10% stockholders were
met with respect to its fiscal year ended December 31, 1993.
12
<PAGE> 15
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
At the recommendation of the Audit Committee of the Board of Directors,
Coopers & Lybrand has been appointed as independent public accountants for the
Company for 1994, subject to approval by stockholders. The Board of Directors
recommends a vote "FOR" approval of such appointment.
Coopers & Lybrand has served as the Company's independent accountants for
more than ten years. It is anticipated that a representative of Coopers &
Lybrand will be present at the Annual Meeting of Stockholders to respond to
appropriate questions and to make a statement if the representative so desires.
OTHER MATTERS
The Board of Directors does not know of any other matter which may be
brought before the meeting, but it is intended that, as to any such other
matter, a vote may be cast pursuant to the accompanying proxy in accordance with
the judgment of the person or persons voting the same.
STOCKHOLDER PROPOSALS
A proposal by a stockholder intended for inclusion in the Company's proxy
statement and form of proxy for the 1995 Annual Meeting of Stockholders must be
received by the Company, at 4770 Hickory Hill Road, Memphis, Tennessee 38141,
Attention: Secretary, on or before November 28, 1994, in order to be eligible
for such inclusion.
13
<PAGE> 16
<TABLE>
PROXY
TBC CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 28, 1994
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned holder(s) of Common Stock of TBC Corporation, a Delaware corporation (the "Company"), hereby appoint(s) Marvin
E. Bruce, Louis S. DiPasqua, and Stanley A. Freedman, and each or any of them, attorneys and proxies of the undersigned, with power
of substitution, to vote all of the Common Stock which the undersigned is (are) entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the Adam's Mark Hotel, 939 Ridgelake Boulevard, Memphis, Tennessee, on Thursday, April
28, 1994, at 9:30 a.m., Central Daylight Savings Time, and at any adjournment thereof, as follows:
1. Election of Directors.
<S> <C> <C>
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to
(except as marked to the contrary below) vote for all nominees listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME BELOW.
Marvin E. Bruce Robert E. Carroll, Jr. Robert H. Dunlap
2. Approval of the appointment of Coopers & Lybrand as independent public accountants of the Company for the year ending December
31, 1994.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the attorneys and proxies are authorized to vote upon such other matters as may properly come before the
meeting or any adjournment thereof.
<S> <C>
/ / GRANT AUTHORITY / / WITHHOLD AUTHORITY
to vote to vote
(Continued and to be signed on reverse side)
(Continued from other side)
A VOTE FOR PROPOSALS 1 AND 2 AND GRANTING THE PROXIES DISCRETIONARY AUTHORITY IS RECOMMENDED BY THE BOARD OF DIRECTORS OF THE
COMPANY. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION
IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND AT THE DISCRETION OF THE PROXIES UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
The undersigned acknowledges receipt of the Notice & Proxy Statement for the 1994 Annual Meeting of Stockholders and the Annual
Report to Stockholders for the year ended December 31, 1993.
Dated , 1994
-------------------
------------------------------
------------------------------
Signature(s)
Stockholders should date this
proxy and sign here exactly as
name appears at left. If stock
is held jointly, both owners
should sign this proxy.
Executors, administrators,
trustees, guardians and others
signing in a representative
capacity should indicate the
capacity in which they sign.
</TABLE>
