<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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
TBC CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[TBC LOGO]
4770 HICKORY HILL ROAD
MEMPHIS, TENNESSEE 38141
NOTICE OF 1995 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
APRIL 20, 1995
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 20, 1995, 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,
1995.
(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 1, 1995 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 20, 1995
<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 20, 1995, and any adjournment thereof. The close of business
on March 1, 1995 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. Each share entitles the holder thereof to one vote. The Company
has one class of shares outstanding, namely Common Stock, of which there were
25,081,847 shares outstanding at the close of business on March 1, 1995.
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. Both abstentions and
broker non-votes will be included in the determination of the number of shares
present for quorum purposes. Under Delaware law, however, abstentions have the
effect of a negative vote, but broker non-votes have no impact on the outcome of
a vote. With regard to the election of directors, votes may be cast in favor of
a nominee or authority to vote may be withheld with respect to any nominee.
Votes that are withheld with respect to any nominee have the effect of a
negative vote.
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 20, 1995.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, each
comprised of three directors. One class of directors is elected at each Annual
Meeting of Stockholders for a term of three years. At the 1995 Annual Meeting,
stockholders will elect three directors who will hold office until the 1998
Annual Meeting and until their successors are elected and qualified.
The nominees of the Board of Directors are Louis S. DiPasqua, Dwain W.
Higginbotham, and Nicholas F. Taubman, all of whom are presently directors and
are nominated to succeed themselves. It is the intention of the proxy agents
named in the accompanying proxy, unless directed otherwise, to vote each proxy
for the
<PAGE> 4
election of Messrs. DiPasqua, Higginbotham, and Taubman. Should any of them be
unable to accept the office of director, an eventuality which is not
anticipated, proxies 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 1995 Annual Meeting.
NOMINEES TO BE ELECTED FOR A TERM EXPIRING IN 1998:
LOUIS S. DiPASQUA, 60, has been a director of the Company since 1991. Mr.
DiPasqua has been the Company's President and Chief Executive Officer since July
1994. From 1991 when he joined the Company until 1994, Mr. DiPasqua served as
the Company's President and Chief Operating Officer. Prior to joining the
Company, Mr. DiPasqua was an executive with the Goodyear Tire & Rubber Company.
During his 28 years at Goodyear, Mr. DiPasqua held a variety of positions,
including Vice President of Replacement Tire Sales and Marketing, President and
Chief Executive Officer of Kelly Springfield Tire Company (a wholly-owned
subsidiary of Goodyear), and Chairman and Managing Director of Goodyear Great
Britain.
DWAIN W. HIGGINBOTHAM, 63, 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.
NICHOLAS F. TAUBMAN, 60, 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, 72, 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, 58, 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 advisor, 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.
ROBERT M. O'HARA, 68, 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. Prior to 1983, Mr. O'Hara was an
executive with The Mead Corporation, his last position being Senior Vice
President. Mr. O'Hara is also a director of Kerr Glass Manufacturing Corp.
DIRECTORS CONTINUING IN OFFICE UNTIL 1997:
MARVIN E. BRUCE, 66, has been a director of the Company since 1972 and has
served as Chairman of the Board of Directors since 1991. Mr. Bruce was the
Company's President from 1972 until 1991 and its Chief Executive Officer from
1973 until his retirement in July 1994. Mr. Bruce is also a director of KRUG
International Corp. and Union Planters Corporation, a bank holding company.
ROBERT E. CARROLL, JR., 67, 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, 65, 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
2
<PAGE> 5
accessories, since 1993. From 1960 until his election as Chairman of the Board,
Mr. Dunlap served as President of Dunlap & Kyle.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors of the Company has established four committees: an
Executive Committee, an Audit Committee, a Compensation Committee, and a
Nominating Committee.
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.
The Audit Committee (of which Mr. Taubman is chairman and Messrs.
Higginbotham and O'Hara 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
and any 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.
Bruce, 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 Nominating Committee was established by the Board in October 1994. The
Committee (of which Mr. Bruce is chairman and Messrs. McStay and O'Hara are
members) will recommend nominees for election as directors of the Company,
identify and recommend qualified candidates to fill vacancies on the Board, and
recommend directors for appointment to the various committees of the Board.
Since it was only recently established, the Nominating Committee did not make
recommendations to the Board with respect to nominees for election to the Board
at this Annual Meeting. It is expected that the Committee will consider nominees
recommended by stockholders, but no procedures to be followed by stockholders in
submitting recommendations have yet been adopted.
In 1994, there were four meetings of the Board of Directors, the
Compensation Committee held five meetings, and the Audit Committee held two
meetings. The Executive Committee and the Nominating Committee did not meet in
1994. Each director, other than Mr. Carroll, attended at least 75% of the
meetings of the Board and of the committees on which he served.
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 expire
as the associated restricted stock vests. Each option entitles the director to
purchase a share of the Company's Common Stock at a price equal to its fair
market value on the date of grant. The options are not exercisable until one
year after the date of grant and unless the market price of the Company's Common
Stock has appreciated by a minimum amount calculated
3
<PAGE> 6
in accordance with a formula set forth in the 1989 Plan. 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, failure to be
re-elected, or a change in control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Three members of the Compensation Committee, Messrs. Dunlap, Freedman, and
McStay, served as members of the Compensation Committee throughout 1994. Mr.
Bruce, the Company's former Chief Executive Officer, became a member of the
Compensation Committee in August 1994, following his retirement as an employee
of the Company. Mr. Freedman also 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 1994,
purchases by Dunlap & Kyle Co., Inc. and Hesselbein Tire Co., Inc. from the
Company amounted to $49,172,000 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.
Pursuant to a three year agreement which will terminate December 31, 1997,
Mr. Bruce provides advisory and consulting services to the Company for an annual
retainer of $130,000.
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 1994 exceeded
either 5% of the Company's consolidated gross revenues 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
1994, purchases by Carroll's, Inc. from the Company totaled $85,847,000 and
purchases by distributors which operate under arrangements with, and may pay
compensation to, Carroll's, Inc. totaled $2,892,000.
Mr. Higginbotham is the President and sole owner of National Brands Tire
Co., Inc. During 1994, purchases by National Brands Tire Co., Inc. from the
Company totaled $767,000.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of
the Company's Chief Executive Officer, its former Chief Executive Officer, and
the Company's four most highly compensated executive officers other than its
current or former Chief Executive Officer for 1994, 1993, and 1992.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
--------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(a) AWARDS(b)(c) OPTIONS/SARS(d) COMPENSATION(e)
- --------------------------- ---- -------- -------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Louis S. DiPasqua.......... 1994 $359,172 $ -- $ -- -- $ 1,500
President and Chief 1993 303,180 -- -- 18,753 --
Executive Officer(f) 1992 288,744 76,532 25,510 -- --
Marvin E. Bruce............ 1994 291,667 -- -- -- --
Chairman and former 1993 500,000 -- -- 30,928 --
Chief Executive 1992 450,008 119,285 39,748 -- --
Officer(f)
Bob M. Hubbard............. 1994 179,196 -- -- -- 1,128
Senior Vice President 1993 170,664 -- -- 7,038 --
Purchasing and 1992 162,540 43,091 14,351 -- --
Engineering
Ronald E. McCollough....... 1994 162,252 -- -- -- 1,082
Senior Vice President 1993 154,524 -- -- 6,372 --
Operations 1992 147,168 39,012 12,997 -- --
Kenneth P. Dick............ 1994 140,472 -- -- -- 936
Senior Vice President 1993 133,788 -- -- 5,517 --
Sales 1992 127,416 36,908 12,287 -- --
Charles B. Quinn, Jr....... 1994 100,020 -- -- -- 667
Vice President 1993 95,256 -- -- 2,828 --
and Treasurer 1992 90,720 26,271 8,756 -- --
</TABLE>
- ---------------
(a) Represents cash portion of bonuses paid under the Company's Management
Incentive Compensation Plan ("Incentive Plan").
(b) Represents dollar value of the 1,582, 2,465, 890, 806, 762, and 543 shares
awarded for 1992, to Messrs. DiPasqua, Bruce, Hubbard, McCollough, Dick, and
Quinn, respectively, as the restricted stock portion of bonuses paid under
the Incentive Plan. 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, 1994, Mr. DiPasqua held 1,231 restricted shares having a
market value of $11,387; Mr. Bruce held 1,958 restricted shares having a
market value of $18,112; Mr. Hubbard held 706 restricted shares having a
market value of $6,531; Mr. McCollough held 639 restricted shares having a
market value of $5,911; and Mr. Dick held 711 restricted shares having a
market value of $6,577; and Mr. Quinn held 506 restricted shares having a
market value of $4,681. (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. No stock appreciation rights ("SARs")
were granted in 1992, 1993, or 1994.
(e) Represents the Company's matching contribution for each of the named
executive officers under the Company's 401(k) Savings Plan, which was
established in 1994.
(f) Mr. DiPasqua was elected Chief Executive Officer upon Mr. Bruce's
retirement, effective July 1, 1994.
5
<PAGE> 8
EMPLOYMENT CONTRACTS
The Company has employment agreements with Messrs. DiPasqua, Hubbard,
McCollough, and Dick. The agreement with Mr. DiPasqua expires January 31, 1998,
and the agreements with Messrs. Hubbard, McCollough, and Dick expire October 31,
1997. Pursuant to the agreements, Messrs. DiPasqua, Hubbard, McCollough, and
Dick currently receive annual base salaries of $418,008, $187,260, $169,548, and
$146,796, respectively, which are subject to such increases as may be authorized
by the Board of Directors. Each may also elect to defer payment of all or any
part of his compensation.
In the event the employee dies or becomes disabled, payment of his annual
base salary will continue for a twelve-month period, in the case of Mr.
DiPasqua, and for a six-month period in the cases of Messrs. Hubbard,
McCollough, and Dick. In the event that employment is terminated within certain
specified periods after a change in control of the Company, other than as a
result of death or disability, the terminated executive will continue to receive
his salary for the longer of (a) the remaining term of the agreement or (b) a
two-year period in the case of Mr. DiPasqua, or a one-year period in the cases
of Messrs. Hubbard, McCollough, and Dick. In addition, an executive terminated
after a change in control of the Company 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. DiPasqua, and for a period of six months in the cases
of Messrs. Hubbard, McCollough, and Dick.
Under the agreements, a "change in control" means any change that would be
required to be disclosed under federal proxy rules and includes an acquisition
of 30% or more of the Company's Common Stock, a change in the composition of a
majority of the Board of Directors, a merger or consolidation in which the
Company is not the surviving entity, and a sale of substantially all of the
Company's assets.
The employment agreement with Mr. DiPasqua provides for certain additional
supplemental retirement benefits, and the agreements of Messrs. Hubbard,
McCollough, and Dick provide that the executive is entitled to participate in
the Company's Executive Supplemental Retirement Plan. See "Retirement Benefits."
OPTION/SAR GRANTS TABLE
No options to purchase shares of the Company's Common Stock or stock
appreciation rights were granted during the year ended December 31, 1994 to any
of the Company's executive officers.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
During the year ended December 31, 1994, none of the executive officers
named in the Summary Compensation Table exercised any stock options or stock
appreciation rights with respect to the Company's Common Stock.
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, 1994.
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, 1994 AT DECEMBER 31, 1994(a)
----------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Louis S. DiPasqua........................... 51,501 39,937 $ 176,403 $ 57,197
Marvin E. Bruce............................. 30,515 30,921 82,372 --
Bob M. Hubbard.............................. 27,831 4,692 89,603 --
Ronald E. McCollough........................ 25,964 4,248 83,198 --
Kenneth P. Dick............................. 62,311 3,678 375,587 --
Charles B. Quinn, Jr........................ 10,733 1,885 34,103 --
</TABLE>
- ---------------
(a) Represents the market value of the stock options and SARs on December 31,
1994, less the aggregate exercise price.
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<PAGE> 9
RETIREMENT BENEFITS
The Company has a noncontributory, tax-qualified, defined benefit
retirement plan (the "Retirement Plan") for employees, including officers. In
addition, the Company maintains an unfunded Executive Supplemental Retirement
Plan (the "Supplemental Plan"), in which employees designated by the
Compensation Committee of the Board of Directors may participate.
The following table shows the estimated aggregate annual retirement
benefits payable at normal retirement (age 65) under the Retirement Plan and the
Supplemental Plan at selected compensation levels after various years of
service. Amounts shown are straight life annuity amounts and are not subject to
reduction for Social Security benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------
REMUNERATION 15 YRS. 20 YRS. OR MORE
----------------------------------------------------------- -------- ---------------
<S> <C> <C>
$100,000................................................... $ 45,000 $ 60,000
200,000................................................... 90,000 120,000
300,000................................................... 135,000 180,000
400,000................................................... 180,000 240,000
500,000................................................... 225,000 300,000
</TABLE>
For those executives participating in both the Retirement Plan and the
Supplemental Plan, aggregate retirement benefits are payable based upon, and the
"Remuneration" column in the Pension Plan Table refers to, the executive's
average annual compensation for the three highest consecutive years during the
last ten years of employment with the Company. Compensation 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. In the case of any executive officer named in
the Summary Compensation Table who participates in the Plans, covered
compensation includes amounts listed as salary, bonus, and restricted stock
awards in the Summary Compensation Table.
Messrs. Hubbard, McCollough, and Dick participate in both the Retirement
Plan and the Supplemental Plan. For purposes of the Plans, Mr. Hubbard has 33
years of credited service, Mr. McCollough has 21 years of credited service, and
Mr. Dick has 23 years of credited service.
Mr. Quinn participates only in the Retirement Plan. Benefits under the
Retirement Plan are payable based upon years of credited service and average
annual compensation for the five highest consecutive years in the last ten years
of employment. For purposes of the Retirement Plan, Mr. Quinn's covered
compensation includes amounts shown as salary and bonus for him in the Summary
Compensation Table, and he currently has 14 years of credited service under the
Plan. Based upon his covered compensation for 1994, Mr. Quinn's estimated annual
benefit under the Retirement Plan at normal retirement age is $43,500, when
stated as a straight life annuity amount.
Mr. DiPasqua participates in the Retirement Plan (under which he currently
has four years of credited service) and also is entitled to supplemental
retirement benefits pursuant to the terms of his employment agreement. Under the
agreement, Mr. DiPasqua may elect to receive supplemental retirement benefits in
either of two ways: (i) in an amount which compensates him for reductions in his
benefits under the Retirement Plan due to the exclusion of certain compensation
from the definition of covered compensation for purposes of the Plan and to
limitations on the amount of his annual benefits and covered compensation that
are imposed on tax-qualified retirement plans by the Internal Revenue Code; or
(ii) as if he were a participant in the Supplemental Plan. Under either option,
Mr. DiPasqua's benefits are to be calculated assuming that he has earned an
additional 28 years and seven 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.
Currently, Mr. DiPasqua's supplemental retirement benefits would be greater
if he elects to receive supplemental benefits as if he were a participant in the
Supplemental Plan. If he did so, the Pension Plan
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<PAGE> 10
Table illustrates the estimated aggregate annual retirement benefits payable to
Mr. DiPasqua under the Retirement Plan and as supplemental benefits, before
reduction for retirement benefits from his former employer.
Under the terms of his employment agreement, Mr. Bruce received lump sum
supplemental retirement benefits of $2,270,300 upon his retirement from the
Company effective July 1994, in addition to $1,522,300 in lump sum retirement
benefits under the Retirement Plan.
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.
The Compensation Committee believes that 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. 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.
Historically, the Company has entered into employment agreements with its
most senior executive officers which fix their minimum annual salaries, subject
to increase by the Compensation Committee. The Compensation Committee's practice
is to review the salaries provided for in these agreements, as well as the
salaries of the Company's other officers, once a year. The recommendations of
the Company's Chief Executive or Chief Operating Officer as to the salaries of
the Company's officers (other than himself) are solicited and discussed in
connection with this annual salary review.
During 1994, Marvin E. Bruce, who had been the Company's Chief Executive
Officer for over 21 years, retired and Louis S. DiPasqua, the Company's
President and Chief Operating Officer, became its Chief Executive Officer. In
1993, Mr. Bruce's minimum annual salary as Chief Executive Officer was fixed at
$500,000 pursuant to the terms of his employment agreement with the Company. At
Mr. Bruce's suggestion, given the likelihood of his retirement in 1994, his
annual salary was not increased for 1994, but remained at the level set in his
employment agreement.
Currently, the Company has employment agreements with Messrs. DiPasqua,
Hubbard, McCollough, and Dick. In January 1994, the Committee reviewed the
minimum salaries set forth in these agreements. At that time, Mr. DiPasqua, who
was then the Company's Chief Operating Officer, recommended that a 5% salary
increase be granted to Messrs. Hubbard, McCollough, Dick, and Quinn. In making
his recommendation, Mr. DiPasqua considered the results of several current
national and regional compensation surveys. Based upon Mr. DiPasqua's
recommendation, the Committee increased the salary of each of these executive
officers by 5%, effective January 1, 1994. The Committee also decided to
increase Mr. DiPasqua's salary by 5%, from $303,180 to $318,340.
8
<PAGE> 11
When Mr. DiPasqua was elected to the position of Chief Executive Officer in
July 1994, the Compensation Committee approved an increase in his minimum salary
to $400,000 in view of his new and increased responsibilities.
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.
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. Under the terms of the Plan, no
individual may be awarded more than his or her proportionate share of the amount
available for distribution, based upon the percentage his or her salary
represents of the aggregate salaries of Plan participants in the same category,
and the Compensation Committee may award an individual less than his or her
proportionate share if the Committee chooses to do so.
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 1994, the performance levels required by the Incentive Plan were not
met. As a result, no payments to the Company's current Chief Executive Officer,
its former Chief Executive Officer, or any other executive officer were made for
1994 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 any 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 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 base 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 to award options under the 1989 Plan.
Under this biennial program, stock options are awarded in odd-numbered
years. As a result, no options were awarded to any executive officer in 1994.
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,
9
<PAGE> 12
including its Chief Executive Officer, effectively tie executive compensation to
the Company's performance and stockholder value.
Given the Company's current compensation levels, the Committee has not
discussed the establishment of any policy with respect to qualifying
compensation paid to its executive officers for deductibility under Section
162(m) of the Internal Revenue Code (which limits the Company's ability to
deduct compensation in excess of $1 million paid to certain executive officers).
THE COMPENSATION COMMITTEE
Stanley A. Freedman, Chairman
Marvin E. Bruce*
Robert H. Dunlap
Richard A. McStay
* Mr. Bruce was appointed to the Compensation Committee following his
retirement. He was not a member of the Committee at any time when the
compensation decisions discussed in the above Report were made.
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, 1994, with the
cumulative total return of the Standard & Poor's SmallCap 600 Index, 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, 1989 in the Company's Common
Stock and in each of the three indexes and that dividends were reinvested.
During 1994, the Company's Common Stock was selected for inclusion in the
Standard & Poor's SmallCap 600 Index. Because the Company's Common Stock is
included in this Index, the Company will use it for comparison purposes in the
future instead of the Standard & Poor's 500 Composite Stock Price Index.
<TABLE>
<CAPTION>
S&P Auto
Measurement Period TBC Corpo- Parts--After S&P SmallCap
(Fiscal Year Covered) ration Market 600 S&P 500
<S> <C> <C> <C> <C>
1989 100 100 100 100
1990 96 74 76 97
1991 160 135 113 126
1992 275 170 137 136
1993 216 198 163 150
1994 162 172 155 152
</TABLE>
10
<PAGE> 13
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth information as of December 31, 1994 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, 1994) 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, 1994 OF CLASS(a)
------------------------------------------------------ ------------------------ -----------
<S> <C> <C>
Marvin E. Bruce....................................... 1,941,470(b) 7.4%
Robert E. Carroll, Jr. and Carroll's, Inc.
Profit Sharing Plan and Trust....................... 40,537(c)(d) (e)
Kenneth P. Dick....................................... 64,942(f) (e)
Louis S. DiPasqua..................................... 102,628(g) (e)
Robert H. Dunlap and Dunlap & Kyle Co., Inc........... 361,575(h) 1.4
Stanley A. Freedman................................... 17,756(d) (e)
Dwain W. Higginbotham................................. 11,837(d) (e)
Bob M. Hubbard........................................ 31,530(i) (e)
Ronald E. McCollough.................................. 41,438(j) (e)
Richard A. McStay..................................... 5,890(d) (e)
Robert M. O'Hara...................................... 20,194(d) (e)
Charles B. Quinn, Jr.................................. 12,267(k) (e)
Nicholas F. Taubman................................... 2,569(d) (e)
Directors and Executive Officers as a Group
(14 persons)........................................ 2,663,095(l) 10.0
Nicholas Company, Inc................................. 2,239,136(m) 8.5
First Pacific Advisors, Inc........................... 2,346,600(n) 8.9
Quest Advisory Corp. and Quest Management Company..... 1,429,422(o) 5.4
</TABLE>
- ---------------
<TABLE>
<S> <C>
(a) Percentages are calculated based upon the number of shares of Common Stock outstanding
on December 31, 1994, 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 40,817 shares subject to outstanding options and 1,958 restricted shares. Mr.
Bruce's mailing address is: TBC Corporation, 4770 Hickory Hill Road, Memphis, Tennessee
38141.
(c) Includes 37,968 shares held by Carroll's, Inc. Profit Sharing Plan and Trust as to which
Mr. Carroll disclaims beneficial ownership.
</TABLE>
11
<PAGE> 14
<TABLE>
<S> <C>
(d) Includes 1,162 restricted shares previously granted to the named non-employee director
(but not the shares subject to the options granted in tandem with these restricted
shares, since the options are not presently exercisable).
(e) Represents less than one percent of the outstanding shares of Common Stock of the
Company.
(f) Includes 62,311 shares subject to outstanding options and 711 restricted shares.
(g) Includes 66,768 shares subject to outstanding options and 1,231 restricted shares.
(h) Includes 1,650 restricted shares previously granted to Mr. Dunlap as a non-employee
director (but not the shares subject to related tandem options which are not presently
exercisable). Also includes 1,176 shares subject to presently exercisable options
granted to Mr. Dunlap 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).
(i) Includes 27,831 shares subject to outstanding options and 706 restricted shares.
(j) Includes 25,964 shares subject to outstanding options and 639 restricted shares.
(k) Includes 10,733 shares subject to outstanding options and 506 restricted shares.
(l) Includes 242,880 shares subject to outstanding options and 14,791 restricted shares.
(m) According to a Schedule 13G Report, dated February 6, 1995 and filed with the Securities
and Exchange Commission, as of December 31, 1994, Nicholas Company, Inc., a registered
investment adviser, had sole power to dispose or to direct the disposition of 2,239,136
shares of the Company's Common Stock; and Albert O. Nicholas, the president, a director,
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 Nicholas
Company, Inc. (although Mr. Nicholas disclaims such beneficial ownership). The business
address of Nicholas Company, Inc. and Mr. Nicholas is 700 North Water Street, Milwaukee,
Wisconsin 53202.
(n) According to a Schedule 13G Report, dated February 13, 1995 and filed with the
Securities and Exchange Commission, as of December 31, 1994, First Pacific Advisors,
Inc. ("First Pacific"), a registered investment adviser, had shared power to dispose or
to direct the disposition of 2,346,600 shares of the Company's Common Stock and shared
power to vote or to direct the voting of 1,972,500 of such shares. The business address
of First Pacific is Suite 1200, 11400 West Olympic Boulevard, Los Angeles, California
90064.
(o) According to a Schedule 13G Report, dated January 25, 1995 and filed with the Securities
and Exchange Commission, as of December 31, 1994, Quest Advisory Corp. and Quest
Management Company had sole power to vote or to direct the voting of, and sole power to
dispose or to direct the disposition of, 1,410,422 shares and 19,000 shares,
respectively, of the Company's Common Stock, and Charles M. Royce may be deemed to
beneficially own such shares because he may be deemed to be a controlling person of
these two entities (although Mr. Royce disclaims such beneficial ownership). Quest
Advisory Corp. and Quest Management Company are registered investment advisers. The
business address of the two companies and Mr. Royce is 1414 Avenue of the Americas, New
York, New York 10019.
</TABLE>
Nicholas Company, Inc., Albert O. Nicholas, First Pacific, Quest Advisory
Corp., Quest Management Company, and Charles M. Royce 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 all filing requirements
applicable to its directors, officers, and greater than 10% stockholders were
met with respect to its fiscal year ended December 31, 1994.
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 1995, 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
or business, 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 1996 Annual Meeting of Stockholders must be
received by the Company, at 4770 Hickory Hill Road, Memphis, Tennessee 38141,
Attention: Secretary, on or before November 21, 1995, in order to be eligible
for such inclusion.
13
<PAGE> 16
Appendix A
PROXY
TBC CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 20, 1995
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 20, 1995, at 9:30
a.m., Central Daylight Savings Time, and at any adjournment thereof, as follows:
1. Election of Directors.
<TABLE>
<S> <C> <C>
/ /FOR all nominees listed below / /WITHHOLD AUTHORITY to
(except as marked to the contrary below) vote for all nominees listed below
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME BELOW.
Louis S. DiPasqua Dwain W. Higginbotham Nicholas F. Taubman
2. Approval of the appointment of Coopers & Lybrand as independent public
accountants of the Company for the year ending December 31, 1995.
/ /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.
<TABLE>
<S> <C>
/ /GRANT AUTHORITY / /WITHHOLD AUTHORITY
to vote to vote
</TABLE>
(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
1995 Annual Meeting of Stockholders and the Annual Report to Stockholders for
the year ended December 31, 1994.
Dated , 1995
-------------------
------------------------------
------------------------------
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.
