<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 2000 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
APRIL 26, 2000
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 Wednesday,
April 26, 2000, 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 2000 Stock Option Plan.
(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, 2000 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
Memphis, Tennessee
March 27, 2000
<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 26, 2000, and any adjournment thereof. The close of business
on March 6, 2000 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
21,202,193 shares outstanding at the close of business on March 6, 2000.
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 27, 2000.
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 2000 Annual Meeting, stockholders will elect three directors
who will hold office until the 2003 Annual Meeting and until their successors
are elected and qualified.
The nominees of the Board of Directors are Marvin E. Bruce, Lawrence C.
Day, and Robert H. Dunlap, each of whom is presently a director and is nominated
to succeed himself. It is the intention of the proxy agents named in the
accompanying proxy, unless directed otherwise, to vote each proxy for the
election of Messrs. Bruce, Day, and Dunlap. Should any of them be unable to
accept the office of director, an eventuality
<PAGE> 4
which is not anticipated, proxies may be voted with discretionary authority for
a substitute nominee or nominees designated by the Board of Directors.
The Company's By-Laws require that a stockholder give advance written
notice, within the timeframes set forth in the By-Laws, of the stockholder's
intention to nominate an individual to serve as a director. Since the Company
did not receive such a notice from any stockholder, no individual who is not a
nominee of the Board of Directors or designated by the Board may be nominated
for election as a director at this Annual Meeting. See "Stockholder Nominations
and Other Matters."
Set forth below is certain information concerning each nominee for director
and each director whose term of office continues after the 2000 Annual Meeting.
NOMINEES TO BE ELECTED FOR A TERM EXPIRING IN 2003:
MARVIN E. BRUCE, 71, 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 1994.
LAWRENCE C. DAY, 50, has been a director of the Company since October 1998.
Mr. Day has served as President of the Company since October 1998 and as Chief
Executive Officer since October 1999. Mr. Day served as Chief Operating Officer
from April 1998, when he joined the Company, until his election as Chief
Executive Officer. Mr. Day was an Executive Vice President of the Company prior
to his election as President. From 1995 to 1998, Mr. Day was President and Chief
Executive Officer of Monro Muffler Brake, Inc. Prior to joining Monro in 1993,
Mr. Day was Vice President of Montgomery Ward's Auto Express Division. His
experience in the tire industry includes 13 years in a series of managerial
positions with the Firestone Tire & Rubber Company. Mr. Day is also a director
of Lund International Holdings, Inc.
ROBERT H. DUNLAP, 70, has been a director of the Company since 1970. Mr.
Dunlap has been the Chairman of the Board of Dunlap & Kyle Co., Inc., a
wholesale distributor of tires and automotive accessories, since 1993. From 1960
until his election as Chairman of the Board, Mr. Dunlap served as President of
Dunlap & Kyle.
DIRECTORS CONTINUING IN OFFICE UNTIL 2002:
RICHARD A. McSTAY, 63, has been a director of the Company since 1983. Mr.
McStay served as the President of Southern Capital Advisors, Inc., a division of
Morgan Asset Management and a registered investment advisor, from 1986 until his
retirement in February 1998. Mr. McStay was also a Managing Director of Morgan
Asset Management's parent company, Morgan Keegan & Company, Inc., a brokerage
and investment banking firm.
DONALD RATAJCZAK, Ph.D., 57, has been a director of the Company since
January 2000. Dr. Ratajczak has been a professor and the Director of the
Economic Forecasting Center at Georgia State University since 1973. He is also a
director of Ruby Tuesday, Inc. and Morgan Keegan, Inc. and Chairman of the Board
of Trustees of CIM High Yield Securities.
ROBERT R. SCHOEBERL, 64, has been a director of the Company since 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.
Mr. Schoeberl is also a director of Lund International Holdings, Inc. and Midas,
Inc.
DIRECTORS CONTINUING IN OFFICE UNTIL 2001:
CHARLES A. LEDSINGER, JR., 50, has been a director of the Company since
1996. Mr. Ledsinger has been the President and Chief Executive Officer of Choice
Hotels International, Inc. since August 1998. From April 1998 to August 1998,
Mr. Ledsinger served as President and Chief Operating Officer of St. Joe
Corporation. From May 1997 until March 1998, he was the Senior Vice President
and Chief Financial Officer at St. Joe Corporation. From June 1995 until April
1997, Mr. Ledsinger was the Senior Vice President and
2
<PAGE> 5
Chief Financial Officer of Harrah's Entertainment, Inc. Prior to 1995, he was
the Senior Vice President and Chief Financial Officer of the Promus Companies
Incorporated. Mr. Ledsinger is also a Director of Choice Hotels International,
Inc., FelCor Lodging Trust Incorporated and Friendly Ice Cream Corporation.
WILLIAM J. McCARTHY, 63, has been a director of the Company since January
2000. From 1997 until his retirement in 1998, Mr. McCarthy was Director of Mall
Store Marketing for Sears, Roebuck & Co. Mr. McCarthy was an Executive Vice
President of the advertising firm of Ogilvy & Mather from 1992 to 1997.
RAYMOND E. SCHULTZ, 66, has been a director of the Company since March
1998. From 1997 until his retirement in December 1998, Mr. Schultz was the
Chairman and Chief Executive Officer of Promus Hotel Corporation. From April
1995 until December 1997, Mr. Schultz served as President and Chief Executive
Officer of Promus. From 1993 to April 1995, he served as President and Chief
Executive Officer of the Hotel Division of the Promus Companies Incorporated,
and was the President and Chief Executive Officer of its Hampton Inn/Homewood
Suites Hotel Division from 1991 to 1993. Mr. Schultz is also a director of
Choice Hotels International, Inc. and Equity Inns, Inc.
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. Ledsinger, McStay, and Schultz 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, McStay, and
Schoeberl 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, stock
option, and supplemental retirement plans.
The Nominating Committee (of which Messrs. Bruce, McStay, and Schoeberl 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.
Stockholders wishing to recommend individuals for consideration by the Committee
may do so by contacting the Secretary of the Company at its principal executive
offices.
In 1999, there were five meetings of the Board of Directors, the
Compensation Committee held four meetings, the Audit Committee held two
meetings, and the Nominating Committee held no meetings. Each director 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 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
3
<PAGE> 6
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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The four current Compensation Committee members, Messrs. Bruce, Dunlap,
McStay, and Schoeberl, served as members throughout 1999.
Mr. Bruce was the Company's Chief Executive Officer until his 1994
retirement. As the Company's Chairman of the Board, Mr. Bruce continues to
participate in the Company's health insurance plan and is provided coverage
under the plan for himself and his wife at the same cost as if he were still an
employee of the Company.
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 1999,
purchases by Dunlap & Kyle Co., Inc. and Hesselbein Tire Co., Inc. from the
Company amounted to $50,876,000 in the aggregate.
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 1999,
1998, and 1997.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------- -----------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(A) COMPENSATION(B) AWARDS(C) OPTIONS/SARS(D) COMPENSATION(E)
- --------------------------- ---- -------- -------- ---------------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence C. Day............ 1999 $310,000 $170,872 $ 4,824 $115,000 48,696 $ 9,600(g)
President and Chief 1998 198,756 26,514 24,879(h) 128,125 95,000 --
Executive Officer(f)
Louis S. DiPasqua.......... 1999 $375,000 $223,425 -- -- 86,957 $35,027(j)
Retired Vice Chairman 1998 475,000 79,230 -- -- 62,140 4,000
and Chief Executive 1997 450,000 222,480 -- -- 71,744 4,000
Officer(i)
Ronald E. McCollough....... 1999 $199,050 $ 94,867 -- -- 30,002 $ 6,400
Executive Vice 1998 190,478 25,410 -- -- 21,596 4,000
President, Chief 1997 184,321 72,899 -- -- 25,185 4,000
Financial Officer, and
Treasurer
Barry D. Robbins........... 1999 $197,505 $ 94,131 -- -- 29,769 $ 6,400
Executive Vice 1998 188,100 25,093 $15,314 -- 21,327 4,000
President Sales 1997 182,025 71,991 44,904(k) -- 24,871 3,561
and Marketing
Larry D. Coley............. 1999 $118,125 $ 52,790 -- -- 9,333 $ 5,169
Vice President 1998 110,914 11,103 -- $ 74,063 6,522 3,351
and Corporate 1997 102,228 30,321 -- -- 7,606 2,868
Controller
</TABLE>
- ---------------
(a) Represents cash bonuses earned for each year pursuant to the Company's
Management Incentive Compensation Plan.
(b) Represents amounts paid to reimburse the named executive officer for
relocation expenses incurred by him in connection with his employment with
the Company and for the taxes payable with respect to such expense
reimbursement.
(c) Represents dollar value of restricted shares granted to the named
executive. Amounts shown are market values on the date of grant (without
reduction to take into account restrictions on the shares). In the case of
the 1999 award to Mr. Day, one-half of the restricted shares 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. At December 31, 1999, Mr. Day
held 8,333 restricted shares having a market value of $52,081 and Mr. Coley
held 5,000 restricted shares having a market value of $31,250. Since the
1999 award to Mr. Day was made in January 2000, the 20,000 restricted
shares subject to the award are not included in Mr. Day's restricted
shareholdings at December 31, 1999. The restricted shares described in this
footnote are the only restricted shares held by any executive officer named
in the table.
(d) Represents number of shares subject to options granted under the Company's
1989 Stock Incentive Plan. No stock appreciation rights ("SARs") were
granted in 1999, 1998, or 1997.
(e) Unless other indicated, represents the Company's matching contribution for
each of the named executive officers under the Company's 401(k) Savings
Plan.
(f) Mr. Day commenced employment with the Company in April 1998 and became
Chief Executive Officer in October 1999.
(g) Includes the Company's matching contribution of $6,400 to Mr. Day's account
under the Company's 401(k) Savings Plan and $3,200 representing Mr. Day's
allocable share of the Company's discretionary contribution to such Plan
for the benefit of eligible employees hired after January 1, 1997. See
"Retirement Benefits; Certain Retirement Matters."
5
<PAGE> 8
(h) The Company also incurred approximately $46,000 in expenses paid to third
party service companies for temporary living quarters, moving and storage,
fees and loss reimbursement on the sale of Mr. Day's prior residence, and
other miscellaneous items relating to Mr Day's relocation.
(i) Mr. DiPasqua retired on September 30, 1999.
(j) Includes the Company's matching contribution of $6,182 to Mr. DiPasqua's
account under the Company's 401(k) Savings Plan and $28,845 paid to Mr.
DiPasqua for unused vacation time accrued by him prior to his retirement.
(k) The Company also incurred approximately $170,000 in expenses paid to third
party service companies for temporary living quarters, moving and storage,
fees and loss reimbursement on the sale of Mr. Robbins' prior residence,
and other miscellaneous items relating to Mr. Robbins' relocation.
EMPLOYMENT CONTRACTS
The Company has employment agreements with Messrs. Day, McCollough, and
Robbins. The agreement with Mr. Day expires September 30, 2002, and the
agreements with Messrs. McCollough and Robbins expire October 31, 2000. Pursuant
to the agreements, Messrs. Day, McCollough, and Robbins currently receive annual
base salaries of $400,000, $199,050, and $206,393, 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. Day, and
for a six-month period in the cases of Messrs. McCollough and Robbins. 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 employment agreements of Messrs. Day,
McCollough, and Robbins provide that the terminated executive will continue to
receive his monthly salary, plus a monthly payment equal to one-twelfth of the
average annual amount of any incentive awards made to him during the preceding
two fiscal years of the Company, for the longer of (a) the remaining term of the
agreement or (b) a two-year period in the case of Mr. Day, or a one-year period
in the cases of Messrs. McCollough and Robbins.
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.
Mr. Day's employment agreement provides that the Company is entitled to
terminate his employment without cause. In that event, the Company is obligated
to continue to pay Mr. Day his monthly salary, plus a monthly payment equal to
one-twelfth of the average annual amount of any incentive awards made to him
during the preceding two fiscal years of the Company, for the longer of the
remaining term of the agreement or eighteen months.
The employment agreement of Mr. Day provides that he is entitled to
participate in the Company's Executive Retirement Plan, and the agreements of
Messrs. McCollough and Robbins 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, 1999 to each of the Company's executive officers named in the
table. No stock appreciation rights ("SARs") were granted in 1999.
The table shows, among other things, hypothetical potential gains from
stock options granted in 1999. 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.
6
<PAGE> 9
For example, in the case of the stock options granted on January 10, 1999, if
the Company's Common Stock achieves a 5% annual growth rate, its price would
increase by 63% from $7.50 (the closing price of the Company's Common Stock on
the date when the options were granted) to $12.22 at the end of the ten year
option term. If the Company's Common Stock achieves a 10% annual growth rate,
its price would increase by 159% from $7.50 to $19.45 during the same period.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS(A) OPTION TERM
- ---------------------------------------------------------------------------------- ---------------------------
NO. OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED 1999 SHARE DATE 5% 10%
- ---- ------------ ------------ --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence C. Day............. 48,696 10% $7.50 01/10/09 $229,845 $ 581,917
Louis S. DiPasqua........... 86,957 18 7.50 01/10/09 410,437 1,039,136
Ronald E. McCollough........ 30,002 6 7.50 01/10/09 141,609 358,524
Barry D. Robbins............ 29,769 6 7.50 01/10/09 140,510 355,740
Larry D. Coley.............. 9,333 2 7.50 01/10/09 44,052 111,529
</TABLE>
- ---------------
(a) In general, options granted in 1999 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 the date of grant
and for an additional one-third of the underlying Common Stock on each of
the second and third anniversaries of the date of grant.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth, for each of the named executive officers,
aggregated information concerning stock option exercises during 1999 and the
number and value of outstanding stock options at December 31, 1999. No stock
appreciation rights were exercised or outstanding at December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES ACQUIRED VALUE OPTIONS IN-THE-MONEY OPTIONS
ON EXERCISE REALIZED(A) AT DECEMBER 31, 1999 AT DECEMBER 31, 1999(B)
--------------- ----------- --------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence C. Day.......... -0- -0- 31,667 112,029 -0- -0-
Louis S. DiPasqua........ -0- -0- 344,640 -0- $23,850 -0-
Ronald E. McCollough..... 12,388 $28,276 46,948 56,410 -0- -0-
Barry D. Robbins......... -0- -0- 27,310 58,798 -0- -0-
Larry D. Coley........... 2,839 6,657 16,845 16,217 -0- -0-
</TABLE>
- ---------------
(a) Represents the market value of the shares on the date of exercise, less the
aggregate exercise price.
(b) Represents the market value of the stock options on December 31, 1999, less
the aggregate exercise price.
RETIREMENT BENEFITS; CERTAIN RETIREMENT MATTERS
The Company has a noncontributory, tax-qualified, defined benefit
retirement plan (the "Retirement Plan") for eligible employees hired prior to
January 1, 1997, and the Company periodically elects to make a discretionary
contribution to its 401(k) Savings Plan (the "401(k) Plan") for the benefit of
eligible employees hired after January 1, 1997. In addition, the Company
maintains two unfunded supplemental
7
<PAGE> 10
retirement plans (the "Supplemental Plans"), in which employees designated by
the Compensation Committee of the Board of Directors may participate. One of the
Supplemental Plans is designed to provide additional retirement benefits to
designated employees who also participate in the Retirement Plan. The other
Supplemental Plan is designed to provide additional retirement benefits to
designated employees who are not eligible to participate in the Retirement Plan,
but who are eligible to participate in the Company's discretionary contribution
under the 401(k) Plan. Benefits under the Retirement Plan and both Supplemental
Plans and the Company's discretionary 401(k) Plan contribution are forfeited if
a participant's employment with the Company is terminated for any reason before
the participant has five years of service.
In the columns captioned "Group 1," the following table shows the estimated
aggregate annual retirement benefits payable to participants in both the
Retirement Plan and its companion Supplemental Plan. The columns captioned
"Group 2" show the estimated aggregate annual retirement benefits payable to
participants in the second Supplemental Plan and include the value of assumed
annual discretionary 401(k) Plan contributions made by the Company on behalf of
these participants. Amounts shown are annual benefits, payable as a straight
life annuity beginning at normal retirement (age 65), at selected compensation
levels after various years of service, and are not subject to reduction for
Social Security benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------------
15 YRS. 20 YRS. 25 YRS. OR MORE
------------------- ------------------- -------------------
REMUNERATION GROUP 1 GROUP 2 GROUP 1 GROUP 2 GROUP 1 GROUP 2
- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000........................... $ 36,000 $ 24,000 $ 48,000 $ 32,000 $ 60,000 $ 40,000
200,000........................... 72,000 48,000 96,000 64,000 120,000 80,000
300,000........................... 108,000 72,000 144,000 96,000 180,000 120,000
400,000........................... 144,000 96,000 192,000 128,000 240,000 160,000
500,000........................... 180,000 120,000 240,000 160,000 300,000 200,000
600,000........................... 216,000 144,000 288,000 192,000 360,000 240,000
</TABLE>
For those executives participating in a 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 each executive officer named in the Summary Compensation Table who
participates in a Supplemental Plan, covered compensation includes amounts
listed as salary, bonus, and restricted stock awards (if any) in the Summary
Compensation Table.
Messrs. McCollough and Robbins participate in both the Retirement Plan and
its companion Supplemental Plan. For purposes of the Plans, Mr. McCollough has
26 years of service, and Mr. Robbins has three years of service. Because he was
hired after January 1, 1997, Mr. Day participates in the second Supplemental
Plan, and he is eligible to participate in any discretionary contributions the
Company makes to the 401(k) Plan. For purposes of his retirement benefits, Mr.
Day has three years of credited service. Pursuant to his employment agreement
with the Company, Mr. Day will be credited with 1.6 years of service for the
twelve month period ending March 31, 2003 and for each full twelve month period
of his employment thereafter, up to a maximum of 25 years of service.
Mr. Coley 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. Coley's covered
compensation includes amounts shown as salary, bonus, and restricted stock (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 1999,
Mr. Coley's estimated annual benefit under the Retirement Plan at normal
retirement age is $78,494, when stated as a straight life annuity amount.
8
<PAGE> 11
Under the terms of his employment agreement, Mr. DiPasqua received lump sum
supplemental benefits of $2,485,716 upon his retirement from the Company in
September 1999, in addition to $350,423 in lump sum retirement benefits under
the Retirement Plan.
REPORT OF THE COMPENSATION COMMITTEE
To the Stockholders of TBC Corporation:
The Compensation Committee is providing this report to you to explain the
Committee's responsibilities, the Company's compensation policies and practices
with respect its executives, and the 1999 compensation of the Company's Chief
Executive Officer.
Louis S. DiPasqua, who had been the Company's Chief Executive Officer since
1994, retired on September 30, 1999, and Lawrence C. Day, the Company's
President and Chief Operating Officer, was elected its Chief Executive Officer,
effective October 1, 1999. The discussion below provides information concerning
both Mr. DiPasqua and Mr. Day.
Authority of the 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 Company's compensation and stock option plans other than its
Retirement Plan and its 401(k) Savings Plan. In the case of the Company's
executive officers, grants of stock options and restricted shares are made by
the Company's Board of Directors, after considering any recommendations from the
Committee.
Executive Compensation Policies and Implementation. The Company's current
executive compensation policies are based upon the recommendations made by
independent consultants William M. Mercer, Incorporated ("Mercer") in their
comprehensive executive compensation study (the "Mercer Study") which was
approved by the Compensation Committee in 1996. As set forth in the Mercer
Study, the Company's pay philosophy is that the compensation of the Company's
executives and key employees should be designed to promote achievement of the
Company's business, financial, and stockholder return objectives; to align the
interests of the Company's executives and key employees with those of
stockholders; to provide pay that is externally competitive and internally
equitable, which will allow TBC to attract, retain, and motivate the executives
and key employees necessary to accomplish its business objectives; and to reward
exceptional performance.
To achieve this pay philosophy, the Mercer Study provided that direct
compensation (salary, annual incentives, and long term incentives) should be
targeted at or about the market median when all aspects of performance are at
target levels; that the Committee should have the ability to pay in excess of
median levels when personal performance exceeds targeted levels; that all
executives and key employees should have both a short term and a long term stake
in the Company's financial performance, as well as its stockholder performance;
and that higher paid executives and employees should have a greater percentage
of their total direct compensation delivered through incentive, stock-based and
long term pay, as opposed to salary.
The Committee has implemented the Company's pay philosophy by establishing
compensation packages for the Company's executive officers which have annual
salary, bonuses dependent upon Company performance, and long term, stock-based
incentives as their key components. In addition, the Company's executive
officers receive health, accident, and life insurance, retirement, and other
personal benefits typically offered to executives by other public corporations.
Employment Agreements and Salary. Historically, the Company has entered
into employment agreements with its senior executive officers. The Company had
an employment agreement with Mr. DiPasqua which expired when he retired, and the
Company currently has employment agreements with Messrs. Day, McCollough, and
Robbins. Mr. Day's employment agreement, which was amended and restated when he
became Chief Executive Officer, expires on September 30, 2002.
9
<PAGE> 12
The employment agreements in place with the Company's executives fix their
minimum annual salaries, subject to increase by the Compensation Committee. The
Committee's practice has been to review the salaries provided for in the
employment agreements of 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.
Effective January 1, 1999, the Compensation Committee increased Mr.
DiPasqua's salary from $475,000 to $500,000, and it remained at that level until
his retirement. Also effective January 1, 1999, the Committee increased the
salary of Mr. Day, who was then serving as President and Chief Operating
Officer, from $265,000 to $280,000.
When Mr. Day became Chief Executive Officer on October 1, 1999, the
Compensation Committee approved an increase in his salary to $400,000 in view of
his new and increased responsibilities.
Incentive Plan Awards. As a result of the Mercer Study, the Compensation
Committee adopted a new Management Incentive Compensation Plan (the "Incentive
Plan") for the Company's executive officers and key employees. Participants in
the Incentive Plan are designated annually. Under the Incentive Plan, the
Committee establishes levels to which participants are assigned and a targeted
incentive award (stated as a percentage of base salary) applicable to each
level. The targeted incentive awards set by the Committee range from 50% of base
salary (in the case of the Chief Executive Officer) to 5% of base salary.
In the case of the Company's executive officers, incentive awards are
payable based upon performance measures established by the Committee for each
participant. The Committee approves a threshold, target, and maximum performance
objective for each performance measure. No payment with respect to a performance
measure is made if performance is below the threshold performance objective
established for that performance measure. If the target performance objective is
reached, the participant is entitled to receive 100% of the incentive award
attributable to that performance measure. If the maximum performance objective
is reached, the participant receives 200% of the award attributable to that
performance measure. If the maximum performance objectives for all performance
measures are reached, a participant will receive an incentive award equal to
200% of his or her targeted award.
Under the Incentive Plan, no participant may receive more than 200% of his
or her targeted incentive award. 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. Awards are
payable in cash.
All of the Company's executive officers participated in the Incentive Plan
in 1999. In accordance with the recommendations of the Mercer Study, the
Committee established a targeted incentive award for Mr. DiPasqua of 50% of his
base salary if the target objectives for all performance measures were achieved.
Mr. Day's targeted incentive award was set at 45% during the period prior to
when he became Chief Executive Officer, the targeted incentive awards of Messrs.
McCollough and Robbins were set at 40% of base salary, and Mr. Coley's targeted
incentive award was set at 37.5% of base salary. When Mr. Day was promoted to
Chief Executive Officer on October 1, 1999, Mr. Day's targeted incentive award,
as a percentage of salary, was increased to 50% for the balance of the year.
For 1999, the Committee established net sales and adjusted earnings before
tax as performance measures applicable to Messrs. DiPasqua, Day, McCollough,
Robbins, and Coley. Based upon the Company's results, Mr. DiPasqua earned an
award under the Incentive Plan for 1999 which was equal to $223,425, and Mr.
Day's incentive award for 1999 was $170,872.
Stock Options. The Mercer Study also recommended that the Company
implement an annual grant of options, with the number of shares granted to each
employee being based upon a formula using a percentage of base salary on the
date of grant and the Black-Scholes value of a hypothetical option on the last
day of the month preceding the date of grant. The percentage of base salary
varies from 15% to, in the case of the Company's Chief Executive Officer, 75%.
10
<PAGE> 13
In accordance with the Mercer Study and the Compensation Committee's
recommendation, the Company's Board of Directors granted stock options to the
Company's executive officers, including the five named executive officers, in
January 1999. The grants were made under the Company's 1989 Stock Incentive
Plan, and the number of shares subject to each option was determined using the
formula set forth in the Mercer Study. Based upon that formula, Mr. DiPasqua
received an option to purchase 86,957 shares of the Company's Common Stock at
$7.50 per share (which was the closing price of the Company's Common Stock on
the date of grant). Mr. Day received an option to purchase 48,696 shares at
$7.50 per share. When Mr. Day became Chief Executive Officer, no additional
options were granted to him.
Restricted Share Award to Mr. Day. In January 2000, the Compensation
Committee discussed Mr. Day's performance as Chief Executive Officer during the
last three months of 1999 and decided to recommend that the Company's Board of
Directors award Mr. Day 20,000 shares of the Company's Common Stock in
recognition of that performance. The Board approved a grant of 20,000 shares to
Mr. Day on January 5, 2000. The award was made under the 1989 Stock Incentive
Plan, and the shares are subject to forfeiture if Mr. Day leaves the Company
prior to the dates fixed by the Committee for their vesting. One-half of the
shares vest one year after the date of the award, and the balance vest on the
second anniversary of the date of the award.
Section 162(m) Limitations. Because of Section 162(m) of the Internal
Revenue Code (which limits the Company's ability to deduct compensation in
excess of $1.0 million paid to certain executive officers), the Incentive Plan
contains provisions which require the Company to delay the payment of any
portion of an incentive award which would not be deductible by the Company due
to Section 162(m). The Incentive Plan requires that the Company pay any such
delayed portion as promptly as possible after the Committee determines that the
payment would then be deductible. Until it is paid, any portion so delayed bears
interest at a rate per annum based upon the Standard & Poor's Corporate and
Government Bond Yield Index.
Given the Company's current compensation levels, except as indicated in the
preceding paragraph, 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).
THE COMPENSATION COMMITTEE
Robert R. Schoeberl, Chairman
Marvin E. Bruce
Robert H. Dunlap
Richard A. McStay
11
<PAGE> 14
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, 1999, 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, 1994 in the
Company's Common Stock and in each of the two indexes and that dividends were
reinvested.
<TABLE>
<CAPTION>
S&P AUTO PARTS &
TBC CORPORATION S&P SMALL CAP EQUIPMENT
--------------- ------------- ----------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 93.00 130.00 124.00
1996 81.00 158.00 139.00
1997 103.00 198.00 174.00
1998 77.00 195.00 196.00
1999 68.00 220.00 151.00
</TABLE>
12
<PAGE> 15
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth information as of December 31, 1999 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, 1999) 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,
INCLUDING OPTION
SHARES, BENEFICIALLY
OWNED AS OF PERCENT
NAME DECEMBER 31, 1999 OF CLASS(A)
---- ------------------------ -----------
<S> <C> <C>
Marvin E. Bruce............................................. 1,634,612(b) 7.7%
Larry D. Coley.............................................. 34,251(c) (d)
Lawrence C. Day............................................. 66,800(e) (d)
Louis S. DiPasqua........................................... 380,500(f) 1.8
Robert H. Dunlap and Dunlap & Kyle Co., Inc................. 36,881(g) (d)
Charles A. Ledsinger, Jr.................................... 2,555(h) (d)
William J. McCarthy......................................... -0- -0-
Ronald E. McCollough........................................ 78,267(i) (d)
Richard A. McStay........................................... 13,921(g) (d)
Donald Ratajczak............................................ 5,000 (d)
Barry D. Robbins............................................ 39,267(j) (d)
Robert R. Schoeberl......................................... 11,031(g) (d)
Raymond E. Schultz.......................................... 11,243(k) (d)
Directors and Executive Officers as a Group (13 persons).... 2,314,328(l) 10.7
FMR Corp.................................................... 2,072,500(m) 9.8
Dimensional Fund Advisors Inc............................... 1,800,180(n) 8.5
T. Rowe Price Associates, Inc............................... 1,718,200(o) 8.1
UBS AG...................................................... 1,466,619(p) 6.9
Kestrel Investment Management Corporation................... 1,224,900(q) 5.8
</TABLE>
- ---------------
(a) Percentages are calculated based upon the number of shares of Common Stock
outstanding on December 31, 1999 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 30,928 shares subject to outstanding options. Also includes 2,498
restricted shares granted to Mr. Bruce as a non-employee director. Shares
subject to tandem options related to these restricted shares are not
included because they were not exercisable on December 31, 1999 or within
60 days
13
<PAGE> 16
thereafter. Mr. Bruce's mailing address is: TBC Corporation, 4770 Hickory
Hill Road, Memphis, Tennessee 38141.
(c) Includes 24,666 shares subject to outstanding options and 5,000 restricted
shares.
(d) Represents less than one percent of the outstanding shares of Common Stock
of the Company.
(e) Includes 8,333 restricted shares and 45,000 shares subject to outstanding
options.
(f) Includes 344,640 shares subject to outstanding options.
(g) Includes 2,498 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, 1999 or within 60 days thereafter).
(h) Includes 2,340 restricted shares previously granted to Mr. Ledsinger (but
not the shares subject to related tandem options which were not exercisable
on December 31, 1999 or within 60 days thereafter).
(i) Includes 58,926 shares subject to outstanding options.
(j) Represents shares subject to outstanding options.
(k) Includes 1,243 restricted shares previously granted to Mr. Schultz (but not
shares subject to related tandem options which were not exercisable on
December 31, 1999 or within 60 days thereafter).
(l) Includes 543,427 shares subject to outstanding options and 26,908
restricted shares.
(m) As of December 31, 1999, Fidelity Low-Priced Stock Fund (the "Fidelity
Fund") owned 2,072,500 shares of the Company's Common Stock. FMR Corp.'s
wholly-owned subsidiary, Fidelity Management & Research Company ("Fidelity
Management"), acts as investment adviser to the Fidelity Fund with respect
to these shares. Fidelity Management votes the shares under written
guidelines established by the Fidelity Fund's Board of Trustees, which has
sole power to vote or to direct the voting of the shares. FMR Corp.,
Fidelity Management, the Fidelity Fund, and FMR's controlling shareholders
(collectively, "Fidelity") together have the sole power to dispose or to
direct the disposition of these shares. Fidelity's address is 82 Devonshire
Street, Boston, Massachusetts 02109.
(n) Dimensional Fund Advisors Inc. ("Dimensional"), furnishes investment advice
to four registered investment companies and serves as investment manager to
certain other investment vehicles, including commingled group trusts. As of
December 31, 1999, these investment companies and investment vehicles
(collectively, the "Portfolios") owned 1,800,180 shares of the Company's
Common Stock. As the investment adviser and investment manager to the
Portfolios, Dimensional possessed sole power to vote or direct the voting
and to dispose or direct the disposition of these shares. For purposes of
the reporting requirements of federal securities laws, Dimensional is
deemed to be beneficial owner of these shares; however, Dimensional
expressly disclaims beneficial ownership. Dimensional's address is 1299
Ocean Avenue, Santa Monica, California 90401.
(o) These shares are owned by various individual and institutional investors,
including the T. Rowe Price Small-Cap Value Fund, Inc. (the "Price Fund"),
which owned 1,400,000 shares. T. Rowe Price Associates, Inc. ("Price
Associates") serves as an investment adviser with respect to these and
other shares. The Price Fund had sole power to vote or to direct the voting
of the 1,400,000 shares and Price Associates had sole power to dispose or
to direct the disposition of these shares, as well as an additional 318,200
shares. Price Associates had sole power to vote or to direct the voting of
258,200 shares of the Company's Common Stock. For purposes of the reporting
requirements of federal securities laws, Price Associates is deemed to be a
beneficial owner of these shares; however, Price Associates expressly
disclaims beneficial ownership. The business address of the two companies
is 100 E. Pratt Street, Baltimore, Maryland 21202.
(p) UBS AG, a Swiss bank, and its indirect wholly-owned subsidiary, Brinson
Partners, Inc. (collectively "UBS") have sole voting power and shared
dispositive power with respect to these shares which are owned by accounts
managed on a discretionary basis by UBS. UBS disclaims beneficial ownership
of these shares. The business address of UBS AG is Bahnhofstrasse 45, 8021
Zurich, Switzerland, and the business address of Brinson Partners, Inc. is
209 S. LaSalle Street, Chicago, Illinois 60604.
14
<PAGE> 17
(q) As of December 31, 1999, Kestrel Investment Management Corporation, a
registered investment adviser, and its two shareholders (collectively,
"Kestrel") had sole power to dispose or to direct the disposition of
1,224,900 shares and sole power to vote or to direct the voting of
1,042,000 of these shares. The shares are owned by certain persons in which
Kestrel Investment Management Corporation also holds an ownership interest.
The address of Kestrel is 411 Borel Avenue, San Mateo, California 94402.
The information set forth above concerning Fidelity, Dimensional, Price
Associates, the Price Fund, UBS, and Kestrel is based upon filings made by them
with the Securities and Exchange Commission. Each has represented that the
shares of the Company's Common Stock which it 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 on a timely basis with respect to its fiscal year ended December 31, 1999.
APPROVAL OF THE 2000 STOCK OPTION PLAN
At the meeting, stockholders will vote on approval of the Company's 2000
Stock Option Plan (the "Plan"). The Plan, which was adopted by the Board of
Directors on March 20, 2000, will become effective if approved by the
affirmative vote of the holders of a majority of the shares of Common Stock
represented at the meeting, in person or by proxy, and entitled to vote on the
proposal. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PLAN.
The Board believes that adoption of the Plan will enable the Company to
attract, retain and motivate officers and other key employees who bear major
responsibility for the growth and development of the Company. The Company's
ability to grant incentive stock options under the Company's 1989 Stock
Incentive Plan has expired, and there are less than 140,000 shares of Common
Stock available for grants of nonqualified stock options and restricted stock
awards under that plan.
A description of the essential features of the Plan appears below. Any
stockholder desiring a copy of the full text of the Plan may obtain it by
submitting a written request to: TBC Corporation, 4770 Hickory Hill Road,
Memphis, Tennessee, 38141, Attention: Secretary.
GENERAL INFORMATION
The Plan will be administered by a committee (the "Committee") of three or
more directors of the Company. The Company presently contemplates that the
Compensation Committee of the Board of Directors will act as the Committee for
purposes of the Plan. If any Committee member is not a "non-employee director"
within the meaning of Rule 16b-3 promulgated under the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), then the Board will be responsible
for the grant of options to any "officer" for purposes of Section 16 of the
Exchange Act and for administering the Plan with respect to any such options.
The Plan authorizes the Committee to grant options which qualify as
incentive stock options under the Internal Revenue Code of 1986, as amended the
("Code"), and nonqualified stock options. Options may be granted to officers and
other key employees of the Company and its subsidiaries. No more than 2,000,000
shares of the Company's Common Stock may be issued pursuant to options granted
under the Plan, and no
15
<PAGE> 18
individual may be granted options for more than 100,000 shares in the aggregate
in any fiscal year of the Company. The shares that may be issued upon the
exercise of options may be authorized and unissued shares or treasury shares. If
there is a stock split, stock dividend or other relevant change affecting the
Company's shares of Common Stock, the Committee is directed to make appropriate
adjustments in the kind and number of shares issuable under the Plan and subject
to outstanding options and the option price.
The term of an option granted under the Plan may not exceed ten years from
the date of grant. The option price per share may not be less than the fair
market value of a share of the Company's Common Stock on the date of grant. The
Plan does not permit any repricing of options without approval of the Company's
stockholders.
The option price is payable in cash, by delivery of shares of the Company
already-owned by the optionee (or by attesting to the ownership of such shares),
or by any combination of these methods of payment. If an optionee uses
already-owned shares to pay the option price, the shares so used must have been
held by the optionee for at least six months. The Plan permits the use of shares
otherwise issuable upon the exercise of a nonqualified option to pay applicable
withholding taxes due upon the exercise, subject to such guidelines as the
Committee may from time to time adopt.
The Committee may provide that an option is exercisable at any time during
its term, or only with respect to a stated number of shares over staggered
periods, or only upon achievement of specified conditions. In the event of death
or termination of employment for reasons other than death (including disability
and retirement), the Committee may provide for exercise of the option for a
period of time after death or termination of employment, but in any case not to
exceed the remaining term of the option. In all other instances an option may be
exercised only if the optionee is employed by the Company, or a subsidiary of
the Company, at the time of exercise of the option. Upon a change of control of
the Company (as defined in the Plan), the Committee may accelerate the exercise
date of any outstanding options, provide for the purchase by the Company of any
outstanding options, make adjustments to any outstanding options, or cause any
surviving or acquiring company to assume any outstanding options.
RELOAD OPTIONS
Options granted under the Plan may contain a "reload" feature. If an option
has a reload feature, whenever the optionee exercises the option, the optionee
will automatically be granted a new option, called a Reload Option, for a number
of shares equal to the number of shares delivered by the optionee to pay the
option exercise price of the original option and to pay any tax withholding
payments associated with the exercise of the original option. The option
exercise price for the Reload Option will be the fair market value of a share of
the Company's Common Stock on the date of exercise of the original option and
the Reload Option will have the same expiration date as the original option. The
Reload Option becomes exercisable on the first anniversary of the date of
exercise of the original option. No Reload Option may be granted to any person
who is not an employee of the Company or any of its subsidiaries at the time of
exercise of the original option.
FEDERAL INCOME TAX CONSEQUENCES
The grant of an incentive stock option or a nonqualified stock option does
not result in income for the optionee or a deduction for the Company. The
exercise of a nonqualified stock option results in ordinary income for the
optionee and a deduction for the Company measured by the difference between the
option price and the fair market value of the shares received at the time of
exercise. Income tax withholding by the Company is required.
Except to the extent of any alternative minimum tax, the exercise of an
incentive stock option does not result in income for the optionee. If the
optionee (i) does not dispose of the shares within two years after the date of
grant of the option and one year after the date of its exercise (the "holding
periods") and (ii) exercises the option while employed by the Company or a
subsidiary or within three months after termination of employment, the optionee
is eligible for favorable tax consequences. If these requirements are met and
cash is used to pay the exercise price, the basis of the shares upon later
disposition is the option exercise price and any gain upon disposition is taxed
to the optionee as long-term capital gain. The excess of the fair market value
of
16
<PAGE> 19
the option shares on the exercise date over the option exercise price of an
incentive stock option is a positive adjustment to be taken into account in
calculating any alternative minimum tax.
If the optionee disposes of the shares acquired upon the exercise of an
incentive stock option prior to the expiration of the holding periods, the
optionee recognizes ordinary income and the Company is entitled to a deduction
equal to the lesser of (i) the fair market value of the shares on the exercise
date minus the option price, or (ii) the amount realized on disposition minus
the option price. Any gain in excess of the ordinary income portion is taxable
as short-term capital gain.
ADMINISTRATION
Subject to the provisions of the Plan, the Committee has the authority to
select the employees to whom it will grant options, the number of options to be
granted and the number of shares covered thereby, and to set the terms and
conditions of options. The Committee also has authority to interpret the Plan,
to adopt, amend and rescind rules applicable to the Plan and to options granted
under the Plan, and to approve and make all determinations relating to the
implementation and administration of the Plan.
The Board may terminate or amend the Plan as it deems advisable. Unless
stockholders approve, however, no amendment may increase the maximum number of
shares subject to the Plan, permit the granting of options at a price less than
the fair market value of a share on the date of grant, materially modify the
requirements as to eligibility for participation in the Plan, or permit the
repricing of any outstanding options. No action taken by the Board or the
Committee may adversely affect the existing rights of the holders of outstanding
options.
ELIGIBILITY AND PARTICIPATION; RECENT SHARE PRICE
All key employees of the Company and its subsidiaries are eligible for
grants of options under the Plan. The Company estimates that approximately 75 of
its current employees, including all of its executive officers, would be
eligible for the grants under the Plan.
On March 6, 2000, the closing price of the Company's Common Stock on the
NASDAQ National Market System was $5.00 per share.
TERM OF PLAN; OUTSTANDING OPTIONS
The Board adopted the Plan on March 20, 2000, subject to stockholder
approval. If the Plan is not approved at the Annual Meeting of Stockholders, the
Plan terminates. If approved by the stockholders, the Plan continues in effect
until terminated by the Board, provided that no incentive stock options may be
granted under the Plan on or after the tenth anniversary of the date of adoption
of the Plan by the Board. No options have been granted under the Plan.
STOCKHOLDER NOMINATIONS AND OTHER MATTERS
Pursuant to the Company's By-Laws, at any annual or special meeting of
stockholders, only such business may be conducted as has been specified in the
notice of the meeting or brought before the meeting by or at the direction of
the Board of Directors, or by a stockholder who has given timely written notice
to the Company's Secretary of the stockholder's intention to bring such business
before the meeting. The By-Laws also provide that a person will be eligible for
election as a director only if he or she is nominated by or at the direction of
the Board of Directors, its Nominating Committee, or a stockholder who has given
timely written notice to the Secretary of the Company of the stockholder's
intention to nominate the individual for election as a director.
To be timely, notice must be delivered to or mailed and received at the
principal executive offices of the Company not less than 75 days nor more than
90 days prior to the meeting (or, if less than 90 days' notice or prior public
disclosure of the date of the meeting is given, such notice must be given no
later than the close of business on the 15th day following the date of mailing
of the notice of meeting or the date such public disclosure was made, whichever
is first).
17
<PAGE> 20
A stockholder's notice of intention to bring any matter before a meeting
must contain a brief description of the business desired to be brought and
certain information concerning the stockholder. Notice of intention to nominate
any individual to serve as a director must contain certain information about the
proposed nominee and about the stockholder who intends to make the nomination.
The specific requirements of the notices are set forth in Article II, Section 7
of the By-Laws, a copy of which will be provided to any stockholder upon
request.
Since no notices were received from stockholders relating to any business
or nominee to be brought before this year's Annual Meeting of Stockholders, only
those nominees of the Board of Directors described in this Proxy Statement or
otherwise nominated by or at the direction of the Board of Directors will be
eligible for election as directors at this Annual Meeting. In addition, the only
items of business which will be brought before the meeting will be such other
business, if any, as the Board may hereafter direct. At the date of the mailing
of this Proxy Statement, the Board of Directors knows of no other business that
will 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.
2001 ANNUAL MEETING INFORMATION
The 2001 Annual Meeting of Stockholders will be held on Wednesday, April
25, 2001. Under the rules of the Securities and Exchange Commission, in order to
be included in the Company's proxy statement and form of proxy for the 2001
Annual Meeting of Stockholders, stockholder proposals must be received by the
Company, at 4770 Hickory Hill Road, Memphis, Tennessee 38141, Attention:
Secretary, on or before November 27, 2000. In addition, in accordance with
Article II, Section 7 of the Company's By-Laws, stockholders wishing to bring
any matter before the 2001 Annual Meeting of Stockholders or to nominate any
individual for election as a director at the 2001 Annual Meeting, must give
written notice thereof to the Company during the period between January 26 and
February 9, 2001 in order to be eligible for consideration at the 2001 Annual
Meeting. See "Stockholder Nominations and Other Matters."
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<PAGE> 21
PROXY
TBC CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 26, 2000
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 and Lawrence C.
Day, and each or either 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 Wednesday, April 26, 2000, 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.
Marvin E. Bruce Lawrence C. Day Robert H. Dunlap
2. Approval of the TBC Corporation 2000 Stock Option Plan.
[ ] 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
2000 Annual Meeting of Stockholders and the Annual Report to Stockholders for
the year ended December 31, 1999.
Dated , 2000
------------------------
-------------------------------
-------------------------------
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.
