<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 CORPORATION LOGO)
4770 HICKORY HILL ROAD
MEMPHIS, TENNESSEE 38141
NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
APRIL 25, 1996
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 25, 1996, at 9:30 a.m., Central Daylight Savings Time, for the purpose of
considering and voting upon:
(1) Election of four 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,
1996.
(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 6, 1996 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 26, 1996
<PAGE> 3
(TBC CORPORATION 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 25, 1996, and any adjournment thereof. The close of business
on March 6, 1996 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
23,783,834 shares outstanding at the close of business on March 6, 1996.
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 26, 1996.
ELECTION OF DIRECTORS
The authorized number of directors of the Company is currently fixed at
nine. The Board of Directors is divided into three classes, with one class of
directors being elected at each Annual Meeting of Stockholders for a term of
three years. At the 1996 Annual Meeting, stockholders will elect four directors
who will hold office until the 1999 Annual Meeting and until their successors
are elected and qualified.
The nominees of the Board of Directors are Stanley A. Freedman, Richard A.
McStay, Robert M. O'Hara, and Robert R. Schoeberl, 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 election of Messrs. Freedman, McStay, O'Hara, and Schoeberl.
Should
<PAGE> 4
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 1996 Annual Meeting.
NOMINEES TO BE ELECTED FOR A TERM EXPIRING IN 1999:
STANLEY A. FREEDMAN, 73, 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 & Flory P.L.L. From 1961 until 1989, Mr. Freedman was a member
of the law firm of Smith & Schnacke.
RICHARD A. McSTAY, 59, 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, 69, 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.
ROBERT R. SCHOEBERL, 60, has been a director of the Company since April
1995. Prior to his retirement in 1994, Mr. Schoeberl was an executive with
Montgomery Ward & Company. During his 39 years at Montgomery Ward, Mr. Schoeberl
held a number of positions, his last being Executive Vice President for Home and
Auto.
DIRECTORS CONTINUING IN OFFICE UNTIL 1998:
LOUIS S. DiPASQUA, 61, 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 division of
Goodyear), and Chairman and Managing Director of Goodyear Great Britain.
DWAIN W. HIGGINBOTHAM, 64, 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.
Another director, Nicholas F. Taubman, whose term would have continued
until 1998, resigned on March 19, 1996.
DIRECTORS CONTINUING IN OFFICE UNTIL 1997:
MARVIN E. BRUCE, 67, 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., 68, 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.
2
<PAGE> 5
ROBERT H. DUNLAP, 66, 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.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors of the Company has established standing audit,
compensation, and nominating committees.
The Audit Committee (of which Messrs. Higginbotham, O'Hara, and Schoeberl
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 Messrs. Bruce, Dunlap, Freedman, 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 (of which Messrs. Bruce, McStay, and O'Hara are
members) recommends nominees for election as directors of the Company,
identifies and recommends qualified candidates to fill vacancies on the Board,
and recommends directors for appointment to the various committees of the Board.
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 1995, there were seven meetings of the Board of Directors, the
Compensation Committee held four meetings, the Audit Committee held two
meetings, and the Nominating Committee held two meetings. 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 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.
3
<PAGE> 6
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The four members of the Compensation Committee, Messrs. Bruce, Dunlap,
Freedman, and McStay, served as members of the Compensation Committee throughout
1995. Mr. Bruce was the Company's Chief Executive Officer until his 1994
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 1995,
purchases by Dunlap & Kyle Co., Inc. and Hesselbein Tire Co., Inc. from the
Company amounted to $47,074,000 in the aggregate. Thompson Hine & Flory P.L.L.,
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 1995 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
1995, purchases by Carroll's, Inc. from the Company totaled $79,699,000 and
purchases by distributors which operate under arrangements with, and may pay
compensation to, Carroll's, Inc. totaled $2,139,000.
Mr. Higginbotham is the President and sole owner of National Brands Tire
Co., Inc. During 1995, purchases by National Brands Tire Co., Inc. from the
Company totaled $582,000.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of
the Company's Chief Executive Officer and the Company's four most highly
compensated executive officers other than its Chief Executive Officer for 1995,
1994, and 1993.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS(A)
----------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(B) OPTIONS/SARS(C) COMPENSATION(D)
- --------------------------------------- ---- ------------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Louis S. DiPasqua...................... 1995 $ 418,008 32,361 $1,500
President and Chief Executive 1994 359,172 -- 1,500
Officer(e) 1993 303,180 18,753 --
Bob M. Hubbard......................... 1995 187,260 9,665 1,500
Senior Vice President Purchasing and 1994 179,196 -- 1,128
Engineering 1993 170,664 7,038 --
Ronald E. McCollough................... 1995 169,548 8,751 1,500
Senior Vice President Operations 1994 162,252 -- 1,082
1993 154,524 6,372 --
Kenneth P. Dick........................ 1995 146,796 7,577 1,468
Senior Vice President Sales 1994 140,472 -- 936
1993 133,788 5,517 --
Charles B. Quinn, Jr................... 1995 104,520 5,395 1,045
Vice President and Treasurer 1994 100,020 -- 667
1993 95,256 2,828 --
</TABLE>
- ---------------
(a) At December 31, 1995, Mr. DiPasqua held 528 restricted shares having a
market value of $4,554; Mr. Hubbard held 296 restricted shares having a
market value of $2,553; Mr. McCollough held 268 restricted shares having a
market value of $2,312; Mr. Dick held 254 restricted shares having a market
value of $2,191; and Mr. Quinn held 181 restricted shares having a market
value of $1,561. All such restricted shares were awarded for 1992 under the
Company's management incentive compensation plan then in effect and vested
in February 1996. (Market values provided reflect no reduction in value for
restrictions on the shares.)
(b) No bonuses were awarded for 1995, 1994 or 1993 under the Company's
management incentive compensation plans.
(c) 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 1995, 1994, or 1993.
(d) 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.
(e) Mr. DiPasqua was elected Chief Executive Officer in July 1994.
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.
5
<PAGE> 8
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 by the Company
or the employee 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
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, 1995 to each of the Company's executive officers named in the
table. No stock appreciation rights ("SARs") were granted in 1995.
The table shows, among other things, hypothetical potential gains from
stock options granted in 1995. 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 1995, if the Company's Common Stock achieves a 5% annual growth
rate, its price would increase by 63% from $9.6875 (the closing price of the
Company's Common Stock on July 20, 1995, when the options were granted) to
$15.78 at the end of the ten year option term, and the Company's stockholders
would gain $144,903,000 in aggregate market value. If the Company's Common Stock
achieves a 10% annual growth rate, its price would increase by 159% from $9.6875
to $25.13 during the same period, and the Company's stockholders would gain
$367,282,000 in aggregate market value.
6
<PAGE> 9
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(A) VALUE AT ASSUMED
- ---------------------------------------------------------------------------------- ANNUAL RATES OF STOCK
NO. OF % OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS/SARS FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS/SARS EMPLOYEES IN PRICE PER EXPIRATION ---------------------
NAME GRANTED 1995 SHARE DATE 5% 10%
- ---------------------------- ------------ ------------ --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Louis S. DiPasqua........... 32,361 27% $9.6875 7/19/05 $197,159 $499,735
Bob M. Hubbard.............. 9,665 8 9.6875 7/19/05 58,884 149,252
Ronald E. McCollough........ 8,751 7 9.6875 7/19/05 53,315 135,137
Kenneth P. Dick............. 7,577 6 9.6875 7/19/05 46,163 117,008
Charles B. Quinn, Jr........ 5,395 5 9.6875 7/19/05 32,869 83,312
</TABLE>
- ---------------
(a) In general, options granted in 1995 are not exercisable for the first
twelve months following the date of grant. Options vest in equal annual
installments over the next three years, becoming exercisable for one-third
of the underlying Common Stock on the first anniversary of 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 VALUE TABLE
The following table sets forth, for each of the named executive officers,
aggregated information concerning all exercises of stock options or stock
appreciation rights with respect to the Company's Common Stock during 1995 and
the number and value of outstanding stock options and SARs at December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
NO. OF OPTIONS/SARS
SHARES AT DECEMBER 31, 1995 AT DECEMBER 31, 1995(A)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(B) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Louis S. DiPasqua........... -- -- 66,768 57,031 $ 175,894 $12,278
Bob M. Hubbard.............. -- -- 30,177 12,011 73,675 --
Ronald E. McCollough........ -- -- 28,088 10,875 68,298 --
Kenneth P. Dick............. 25,000 $ 235,375 39,150 9,416 164,917 --
Charles B. Quinn, Jr........ -- -- 11,676 6,337 27,984 --
</TABLE>
- ---------------
(a) Represents the market value of the stock options and SARs on December 31,
1995, less the aggregate exercise price.
(b) Represents the market value on the date of exercise, less the aggregate
exercise price.
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.
7
<PAGE> 10
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 (if any) 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 34
years of credited service, Mr. McCollough has 22 years of credited service, and
Mr. Dick has 24 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 (if any) for him in the
Summary Compensation Table, and he currently has 15 years of credited service
under the Plan. Based upon his covered compensation for 1995, Mr. Quinn's
estimated annual benefit under the Retirement Plan at normal retirement age is
$45,300, when stated as a straight life annuity amount.
Mr. DiPasqua participates in the Retirement Plan (under which he currently
has five 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 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.
8
<PAGE> 11
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 the various compensation plans
of the Company and the 1989 Stock Incentive Plan (the "1989 Plan"). From time to
time, the Compensation Committee has employed the services of The Wyatt Company
("Wyatt"), 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
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 Company currently has an
employment agreement with Mr. DiPasqua, its Chief Executive Officer, as well as
with Messrs. Hubbard, McCollough, and Dick. In 1995, at the recommendation of
the Compensation Committee, the Board of Directors of the Company approved a
three year extension of Mr. DiPasqua's employment agreement, which was to expire
on January 31, 1995. Mr. DiPasqua's minimum annual salary was not affected by
the extension.
The Compensation Committee's practice is to review the salaries provided
for in the employment agreements with its senior executive officers, as well as
the salaries of the Company's other officers, once a year. The recommendations
of the Company's Chief Executive Officer as to the salaries of the Company's
officers (other than himself) are solicited and discussed in connection with
this annual salary review.
In January 1995, the Committee reviewed the minimum salaries of the
Company's officers. At that time, Mr. DiPasqua recommended that a 4.5% salary
increase be granted to Messrs. Hubbard, McCollough, Dick, and Quinn. In making
his recommendation, Mr. DiPasqua considered survey results published by the Mid-
South Compensation Association, Wyatt, and the Centre Group. Based upon Mr.
DiPasqua's recommendation, the Committee increased the salary of each of these
executive officers by 4.5%, effective January 1, 1995. The Committee also
decided to increase Mr. DiPasqua's salary by 4.5%, to $418,008.
Traditionally, the Company has not tied salary levels to corporate
performance, and relies instead on incentive plans to relate compensation to
performance.
After Mr. DiPasqua became Chief Executive Officer in July 1994, the
Compensation Committee asked Wyatt to provide a report to the Committee
concerning the compensation of the Company's executive officers, the last such
report having been done by Wyatt in 1989. In its report, Wyatt recommended that
the Company's existing bonus plan (which was adopted in 1983) be reviewed and
updated to ensure that it was providing the necessary annual incentives. The
Committee commissioned Wyatt to undertake this matter and, effective January 1,
1995, acting on Wyatt's recommendation, the Committee adopted a new bonus plan,
the 1995 Management Incentive Compensation Plan (the "Incentive Plan"), to
replace the Company's then existing plan.
The Company's executive officers and other management employees designated
by the Compensation Committee are eligible to participate in the Incentive Plan,
which provides the opportunity to earn annual
9
<PAGE> 12
bonuses, the amount of which varies based upon the level of achievement of
targeted objectives. In any event, awards are payable under the Incentive Plan
only to the extent that the Company's consolidated net income before taxes for
the year, after taking into account the aggregate amount of awards under the
Plan for the year, exceeds the Company's consolidated net income before taxes
for the prior year, as adjusted to take into account any interest expense
incurred in connection with stock repurchases during that year. Awards are
subject to reduction or cancellation by the Committee on the basis of a
participant's individual performance or in the event of conduct by a participant
detrimental to the Company. Bonuses under the Incentive Plan are payable in cash
or, at the election of the participant, in whole or in part, in the form of
restricted shares of Common Stock of the Company to be issued pursuant to the
1989 Plan. If a participant elects to take his or her bonus in restricted
shares, the participant receives an additional award of restricted shares equal
to one-half of the amount so elected.
For the Company's five most highly compensated executive officers,
potential bonuses for 1995 were based upon targeted objectives relating to net
operating income, replacement tire market share, and non-tire product revenues.
In the case of the Company's Chief Executive Officer, Mr. DiPasqua was eligible
to receive a 1995 bonus of between 15% and 75% of his base salary based upon the
degree to which targeted objectives were met or exceeded. Since minimum targeted
objectives 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
1995 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.
Long term, stock-based incentives are 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 Wyatt, 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.
In 1995, 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. DiPasqua, application of the formula
resulted in his receiving an option to purchase 32,361 shares of the Company's
Common Stock at their fair market value on the date of grant, namely $313,500
(which equals 75% of his 1995 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.
10
<PAGE> 13
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
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, 1995, with the
cumulative total return of the Standard & Poor's SmallCap 600 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, 1990 in the
Company's Common Stock and in each of the two indexes and that dividends were
reinvested.
[GRAPH]
<TABLE>
<CAPTION>
S&P Auto
Measurement Period S&P SmallCap Parts - After
(Fiscal Year Covered) TBC Corporation 600 Market
<S> <C> <C> <C>
1990 100 100 100
1991 167 148 183
1992 286 180 231
1993 225 214 268
1994 168 203 234
1995 157 264 289
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth information as of December 31, 1995 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.
11
<PAGE> 14
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, 1995) 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 PERCENT
BENEFICIALLY OWNED AS OF OF CLASS
NAME DECEMBER 31, 1995 (A)
- --------------------------------------------------------------- ------------------------ -----------
<S> <C> <C>
Marvin E. Bruce................................................ 1,948,131(b) 8.2%
Robert E. Carroll, Jr. and Carroll's, Inc. Profit Sharing Plan
and Trust.................................................... 41,013(c)(d) (e)
Kenneth P. Dick................................................ 40,521(f) (e)
Louis S. DiPasqua.............................................. 113,596(g) (e)
Robert H. Dunlap and Dunlap & Kyle Co., Inc.................... 34,326(h) (e)
Stanley A. Freedman............................................ 18,232(d) (e)
Dwain W. Higginbotham.......................................... 12,313(d) (e)
Bob M. Hubbard................................................. 32,924(i) (e)
Ronald E. McCollough........................................... 43,562(j) (e)
Richard A. McStay.............................................. 6,366(d) (e)
Robert M. O'Hara............................................... 20,670(d) (e)
Charles B. Quinn, Jr........................................... 13,210(k) (e)
Robert R. Schoeberl............................................ 4,476(l) (e)
Directors and Executive Officers as a Group (14 persons)....... 2,338,615(m) 9.7
Pioneering Management Corporation.............................. 1,921,700(n) 8.1
Quest Advisory Corp. and
Quest Management Company..................................... 1,809,322(o) 7.6
State of Wisconsin Investment Board............................ 1,220,000(p) 5.1
</TABLE>
- ---------------
(a) Percentages are calculated based upon the number of shares of Common Stock
outstanding on December 31, 1995, 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 47,002 shares subject to outstanding options. Also includes 1,297
restricted shares, 476 of which were granted to Mr. Bruce as a non-employee
director. Shares subject to tandem options related to the 476 restricted
shares are not included because they were not exercisable on December 31,
1995 or within 60 days thereafter. 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.
(d) Includes 1,482 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 were not exercisable
at December 31, 1995 or within 60 days thereafter).
(e) Represents less than one percent of the outstanding shares of Common Stock
of the Company.
(f) Includes 39,150 shares subject to outstanding options and 254 restricted
shares.
(g) Includes 77,736 shares subject to outstanding options and 528 restricted
shares.
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<PAGE> 15
(h) Includes 1,726 restricted shares previously granted to Mr. Dunlap as a
non-employee director (but not the shares subject to related tandem options
which were not exercisable on December 31, 1995 or within 60 days
thereafter).
(i) Includes 30,177 shares subject to outstanding options and 296 restricted
shares.
(j) Includes 28,088 shares subject to outstanding options and 268 restricted
shares.
(k) Includes 11,676 shares subject to outstanding options and 181 restricted
shares.
(l) Includes 476 restricted shares previously granted to Mr. Schoeberl as a
non-employee director (but not the shares subject to related tandem options
which were not exercisable on December 31, 1995 or within 60 days
thereafter).
(m) Includes 241,922 shares subject to outstanding options and 12,587
restricted shares.
(n) According to a Schedule 13G, dated January 26, 1996 and filed with the
Securities and Exchange Commission, as of December 31, 1995, Pioneering
Management Corporation had sole power to vote or to direct the voting of
1,921,700 shares of the Company's Common Stock, sole power to dispose or to
direct the disposition of 51,500 shares of the Company's Common Stock, and
shared power to dispose or to direct the disposition of 1,870,200 shares of
the Company's Common Stock. The mailing address of Pioneering Management
Corporation, which is a registered investment adviser, is 60 State Street,
Boston, Massachusetts 02109.
(o) According to a Schedule 13G, dated February 14, 1996 and filed with the
Securities and Exchange Commission, as of December 31, 1995, 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,
1,790,522 shares and 18,800 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.
(p) According to a Schedule 13G, dated February 6, 1996 and filed with the
Securities and Exchange Commission, as of December 31, 1995, the State of
Wisconsin Investment Board, a governmental agency which manages public
pension funds, had sole power to vote or to direct the voting of and sole
power to dispose or to direct the disposition of, 1,220,000 shares of the
Company's Common Stock. The mailing address of the State of Wisconsin
Investment Board is P.O. Box 7842, Madison, Wisconsin 53707.
Pioneering Management Corporation, Quest Advisory Corp., Quest Management
Company, Charles M. Royce, and the State of Wisconsin Investment Board 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 purpose 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, 1995, except that Mr.
Hubbard made one late filing.
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<PAGE> 16
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 1996, 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 twenty 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 1997 Annual Meeting of Stockholders must be
received by the Company, at 4770 Hickory Hill Road, Memphis, Tennessee 38141,
Attention: Secretary, on or before November 23, 1996, in order to be eligible
for such inclusion.
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<PAGE> 17
APPENDIX A
PROXY
TBC CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 25, 1996
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 25, 1996, 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.
Stanley A. Freedman Richard A. McStay Robert M. O'Hara Robert R. Schoeberl
2. Approval of the appointment of Coopers & Lybrand as independent public
accountants of the Company for the year ending December 31, 1996.
/ / 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
1996 Annual Meeting of Stockholders and the Annual Report to Stockholders for
the year ended December 31, 1995.
Dated , 1996
-------------------
-------------------------------
-------------------------------
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.
