Notice of Annual Meeting of Stockholders
N O L A N D
NOLAND COMPANY
2700 Warwick Boulevard, Newport News, Virginia 23607
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held at 2:00 P.M. on April 20, 1994
Notice is hereby given that the Annual Meeting of Stockholders of
Noland Company, a Virginia corporation (the Corporation), will be
held, in accordance with the Bylaws of the Corporation, on
Wednesday, April 20, 1994, at 2:00 P.M. (Local Time) at the
principal office of the Corporation, 2700 Warwick Boulevard,
Newport News, Virginia, for the following purposes:
1. to elect five Directors to serve for the ensuing year;
2. to approve the 1993 Noland Company Restricted Stock Plan;
3. to appoint Coopers & Lybrand to audit the consolidated
financial statements of the Corporation for the year ending
December 31, 1994; and
4. to transact such other business as may properly come before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 15,
1994, will be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
James E. Sykes Jr.
Secretary
April 1, 1994
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO
THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND
IN ORDER THAT A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR
SIGNED PROXY, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL
AID THE CORPORATION IN AVOIDING THE EXPENSE OF ADDITIONAL PROXY
SOLICITATION. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING. ANY
PERSON GIVING A PROXY MAY REVOKE IT BEFORE IT IS VOTED BY
DELIVERING ANOTHER PROXY, OR WRITTEN NOTICE OF REVOCATION, TO THE
SECRETARY OF THE CORPORATION.
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NOLAND COMPANY
(a Virginia corporation)
2700 Warwick Boulevard
Newport News, Virginia 23607
PROXY STATEMENT
Annual Meeting of Stockholders to be
held at 2:00 P.M., April 20, 1994
Approximate date of mailing .... April 4, 1994
SOLICITATION AND REVOCATION OF PROXY
The proxy accompanying this statement is solicited by the Board
of Directors on behalf of the Corporation. All proxies in the
accompanying form which are properly executed by stockholders and
returned to the Secretary will be voted. Any proxy delivered
pursuant to this solicitation is revocable at the option of the
person executing the same at any time before it is exercised.
The cost of soliciting proxies, including the cost of preparing
and mailing the proxy materials, will be borne by the
Corporation. In addition to the use of the mails, proxies may be
solicited, personally or by telephone, by regular employees of
the Corporation.
A copy of the Corporation's Annual Report to stockholders for the
year ended December 31, 1993, which includes consolidated
financial statements, is furnished concurrently with this Proxy
Statement.
PURPOSES OF MEETING
The purposes of the Annual Meeting of Stockholders will be (1) to
elect five Directors to serve for the ensuing year; (2) to
approve the 1993 Noland Company Restricted Stock Plan; (3) to
appoint Coopers & Lybrand as independent auditors of the
Corporation for the ensuing year; and (4) to transact such other
business as may properly come before the meeting, or any
adjournment thereof.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of March 15, 1994, there were outstanding 3,700,876 shares of
Common Stock, the sole class of voting securities of the
Corporation. Holders of record at the close of business on that
date are entitled to one vote for each share.
The following are, to the knowledge of the Corporation,
beneficial owners as of March 15, 1994, of over five percent of
the Corporation's Common Stock:
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Title and
Name and Class of Amount and Nature Percent of
address Voting Security of Beneficial Ownership Class
Jane K. Noland, Lloyd U.
Noland III, Susan C. Noland
and Anne N. Edwards
individually and as trustees of
The L. U. Noland 1982 Trust and
Lloyd U. Noland Jr.
2700 Warwick Blvd. Common 2,069,297 (1) 55.91%
Newport News, Virginia 23607 Stock shares
Concord Investment Company
3061 Westwood Drive Common 483,350 13.06%
Las Vegas, NV 89109 Stock shares
(1) The trustees of The L. U. Noland 1982 Trust are Mr. Lloyd U. Noland Jr.'s
wife, Jane K. Noland, and his three children: Lloyd U. Noland III, Susan C.
Noland and Anne N. Edwards. The trust assets include 906,996 shares of Common
Stock of the Corporation and a majority of the outstanding voting stock of
Basic Construction Company, which, in turn, owns 893,967 shares of the
Corporation's Common Stock. Since the trustees have the sole power to vote and
to dispose of shares held in the L. U. Noland 1982 Trust, each trustee may be
deemed to have beneficial ownership of 1,800,963 shares of the Corporation's
Common Stock (including the shares owned by Basic Construction Company). The
trustees share the power to vote and direct the disposition of such shares.
Each trustee owns the following additional shares of the Corporation's Common
Stock, with sole power to vote and dispose of all of such shares except for
155,138 shares attributed to Jane K. Noland, but owned by her husband, Lloyd U.
Noland Jr.; 1,095 shares attributed to Anne N. Edwards, but owned by her
husband; and 2,190 shares attributed to Lloyd U. Noland III but owned by his
wife and one of his children:
Jane K. Noland 182,270
Lloyd U. Noland III 37,497
Susan C. Noland 26,736
Anne N. Edwards 21,831
All of such shares are included in the above table. As a group, the Noland
family may be deemed to be the owners of an aggregate of 2,069,297 shares or
55.91 percent of the outstanding Common Stock.
THE BOARD OF DIRECTORS AND ITS STANDING COMMITTEES
The Corporation is managed under the direction of the Board of Directors and
its Executive Committee, by the Chairman of the Board and other officers to
whom authority has been delegated.
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During 1993, the Board of Directors met four times and all members were
present at all meetings. On five occasions, the Board acted by written
consent. Members of the Board who are employees of the Corporation serve
without compensation. Mr. Goolsby and Mr. McElroy, as non-employee
Directors, received $11,000 each in 1993. Mr. Goolsby and Mr. McElroy
received a retainer of $7,500 and $500 for each Committee meeting attended.
The Board elected an Executive Committee consisting of Messrs. Noland III
and Henderson. When the Board is not in session, the Executive Committee
generally has the authority of the Board except that the Virginia Stock
Corporation Act prohibits certain actions by committees. During 1993, the
Executive Committee met ten times. All members were present at all
meetings.
The Board appointed an Executive Compensation Committee consisting of
Messrs. Goolsby and McElroy, with Mr. McElroy acting as chairman. The
Committee's primary functions are to make recommendations to the Board of
Directors concerning remuneration arrangements for executive officers and to
review and make recommendations concerning the administration of certain
benefit plans. During 1993, the Executive Compensation Committee met five
times. All members were present at all meetings.
The Board appointed an Audit Committee consisting of Messrs. Goolsby and
McElroy, with Mr. Goolsby acting as chairman. The Audit Committee functions
in an oversight capacity with respect to the Corporation's auditing,
accounting, reporting, and control functions and assists the entire Board in
fulfilling its fiduciary responsibilities with respect to these functions.
During 1993, the Audit Committee met two times. All members were present at
all meetings.
The Corporation does not have a nominating committee.
ELECTION OF DIRECTORS
It is intended that proxies in the accompanying form will be voted by the
persons named therein (unless authority is withheld) in favor of the
nominees named for Directors for the term of one year or until their
successors are elected and qualified. In case any of such nominees is
unexpectedly unable to serve, the Proxies will be voted for the election of
the others so named and may be voted for substitute nominees. The election
of each nominee for Director requires the affirmative vote of the holders of
a plurality of the shares of Common Stock cast in the election of Directors.
Votes that are withheld and shares held in street names ("Broker Shares")
that are not voted in the election of Directors will not be included in
determining the number of votes cast.
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NOMINEES FOR DIRECTOR
There are no family relationships among any of the nominees and any officer;
nor is there any arrangement or understanding between any nominee and any
other person pursuant to which the nominee was selected. Each of the
nominees for the office of Director is a member of the present Board of
Directors.
Mr. Hurley was Vice President-Manager of Operations, Select Branch/Complexes
until 1990. Mr. Goolsby, Mr. Henderson, Mr. McElroy and Mr. Noland III have
served in the respective positions shown for more than five years.
Shares of
Common Stock
First Beneficially Percent
Name, Age, Position Became Owned on of
and Directorships Director March 15, 1994 Class(1)
Allen C. Goolsby - Age 54 1989 200 -
Partner, Hunton & Williams
(Attorneys); Director of
CSX Trade Receivables Corp.
Arthur P. Henderson Jr. - Age 50 1983 229 -
Vice President-Finance
Donald G. Hurley - Age 61 1989 215 -
Vice President-Marketing
John L. McElroy Jr. - Age 63 1990 1,500 -
Chairman of the Board, Wheat,
First Securities, Inc. (2);
Director of Piper Jaffray, Inc.
Lloyd U. Noland III - Age 50 1979 1,838,460(3) 49.68%
Chairman of the Board and
President; Director of Central
Fidelity Banks, Inc.
All officers and directors of 1,841,583 49.76%
the Corporation as a group (12) shares
(1) Less than .2 percent except as indicated.
(2) Wheat, First Securities, Inc. maintains a primary market in the
Corporation's Common Stock and, from time to time, holds Noland
Company shares in its trading account. As of March 15, 1994, the
trading account was short 344 shares.
(3) See Voting Securities and Principal Holders Thereof on page 1.
Except as described on page 2 with respect to shares held by the Noland
family, each Director and Officer has the sole power to vote the shares of
common stock attributed to him in this table.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table presents information relating to total compensation of
the Chief Executive Officer and the four next most highly compensated
executive officers of the Corporation who earned more than $100,000 for the
fiscal years ended December 31, 1993, 1992 and 1991. No executive officer,
other than Mr. Noland, earned more than $100,000 for 1993, 1992 or 1991.
SUMMARY COMPENSATION TABLE
Annual Compensation
All Other
Name and Salary Bonus Compensation (1)
Principal Position Year $ $ $
Lloyd U. Noland III 1993 $ 73,630 $ 26,500 $1,017
Chief Executive
Officer 1992 $ 71,900 $ 23,600 $ 862
1991 $ 71,900 $ 23,550 $ -
(1) Profit sharing allocation
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RETIREMENT BENEFITS
Payments by the Corporation to the Improved Retirement Plan for Employees
of Noland Company (the Plan), are made based on recommendations by the
Plan's actuary. The Plan is a defined benefit "Career Average" plan.
Annual retirement benefits are computed by adding, for each year of
credited service, the sum of 1.333 percent of compensation (up to "Covered
Compensation") and 1.933 percent of compensation over "Covered
Compensation." Covered Compensation is generally the average of the Social
Security wage bases over a working career.
The amounts shown below do not include Social Security benefits and are not
subject to any reductions on account of such benefits.
Estimated annual benefits (assuming continued employment to age 65 on a
life-only annuity basis) accrued to date and payable at age 65 to Lloyd U.
Noland III, are $45,032.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee consists of Messrs. McElroy and
Goolsby. Mr. Goolsby is a member of the law firm Hunton & Williams, which
has provided legal services to the Corporation for many years.
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
The executive compensation policy of the Corporation traditionally has
provided for base compensation and cash bonus awards, in each case at
relatively modest levels. The purpose of the cash bonus awards has been to
link more closely the individual's compensation to the performance of the
Corporation as a whole and to reward those individuals who make the
greatest contribution to the Corporation's successes.
Executive compensation traditionally has been considered by the entire
Board of Directors. In 1993 the Board of Directors established an
Executive Compensation Committee (the Committee) consisting of Messrs.
Goolsby and McElroy. The Committee was charged with the responsibility of
making an initial determination regarding any changes in executive
compensation policy and making recommendations to the Board of Directors
with respect to compensation of the Corporation's executive officers. The
Committee addressed executive compensation for 1993 and, in addition, spent
significant time on an in-depth review of the executive compensation
program.
Base compensation for executive officers for 1993 included small increases
from such compensation for 1992 reflecting the modest improvement in the
Corporation's operations. In determining 1993 cash bonuses for executives,
the Committee considered the Corporation's performance for the year,
focusing particularly on revenues, profit before LIFO inventory
adjustments and income taxes, return on equity and the executive's
performance for the year, including the executive's contribution to the
overall performance of the Corporation.
Mr. Noland's annual base compensation for 1993 initially was fixed at
$71,900. The Committee made an interim increase in that compensation to
$75,360 effective July 1, 1993. For 1993 Mr. Noland was awarded a cash
bonus of $26,500, reflecting a general improvement in the Corporation's
operations and prospects and Mr. Noland's achievement of certain personal
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performance goals, including significant improvements in inventory control
and reduction of the level of uncollectible accounts. The Committee
concluded that Mr. Noland has initiated significant changes in staffing and
operations during 1993 that help to position the Corporation to succeed in
an increasingly competitive environment for wholesalers.
The Committee has taken an in-depth look at the Corporation's compensation
practices for its executive officers, retaining Towers Perrin as an outside
consultant to review past practices and propose possible modifications.
The Committee concluded that the Corporation's level of existing
compensation is below the average levels paid by the great majority of
other companies, including companies of comparable size and companies in
the same or similar businesses. The Committee has proposed a core policy
of providing competitive overall compensation for executive officers,
including base salaries and short and long-term incentives. The Committee
believes that the close link between the Corporation's business and the
cyclical building and construction industry make it prudent for the
Corporation to maintain a conservative approach to base compensation, while
at the same time providing competitive total pay opportunities to its
executive officers through long and short-term incentives. The Committee
concluded that total compensation must be tied more closely to performance,
both corporate and individual. It also concluded that the financial
incentives for the executive officers should be related to the
shareholders' interests by providing these executives with an interest in
the Corporation's common stock.
With these premises, the Committee has recommended increases in executive
officers' base compensation to be phased in over the next several years, as
well as modifications of the Corporation's bonus plan to provide
opportunities for increased bonuses for those executives who make
significant contributions to the Corporation's success. In addition, the
Committee has proposed the 1993 Noland Company Restricted Stock Plan and
the Board of Directors has approved the plan subject to shareholder
approval at the April 1994 meeting. That Plan provides for annual grants
to certain of the Corporation's executive officers of up to an aggregate of
10,000 shares of the Corporation's common stock each year. The executive's
interest in any shares would be contingent on continued employment with the
Corporation. Shares awarded will begin vesting three years from the date
of the grant and become fully vested after seven years from the grant date.
Because none of the Corporation's executive officers receives annual
compensation in excess of $1 million, the Corporation has not taken any
position with respect to the cap on tax deductibility of compensation in
excess of that amount established under the Omnibus Budget Reconciliation
Act of 1993.
John L. McElroy Jr., Chairman
Allen C. Goolsby
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Comparison of Five Year Cumulative Total Return Among Noland Company,
NASDAQ Market Value Index and Hughes Supply, Inc.
(Assumes $100 Invested on January 1, 1989 and dividends reinvested fiscal
year ending December 31, 1993)
A performance graph appears here. The following chart is the information
presented in the graph.
Data points are as follows:
1988 1989 1990 1991 1992 1993
Noland Company $100 $102.79 $ 56.27 $ 62.54 $ 74.81 $ 80.92
Hughes Supply, Inc. 100 106.90 65.20 63.76 88.15 120.65
NASDAQ Market Index 100 112.89 91.57 117.56 118.71 142.40
The return for Hughes Supply, Inc. has been adjusted to reflect differences
in market capitalization.
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APPROVAL OF 1993 NOLAND COMPANY RESTRICTED STOCK PLAN
At the annual meeting, the Board of Directors will offer a resolution to
approve adoption of the 1993 Noland Company Restricted Stock Plan (the
Plan). The Board approved the Plan, subject to shareholder approval, at
its February 24, 1994 meeting. The Plan covers in the aggregate 50,000
shares of the Corporation's common stock (the Restricted Stock) and
provides for annual grants to a select group of senior executives
(approximately six individuals) of up to an aggregate of 10,000 shares of
Restricted Stock each year. All awards will be discretionary with the
Executive Compensation Committee and will be determined from year to year.
The executive's interest in any shares of Restricted Stock will be
contingent on continued employment. Shares of Restricted Stock awarded
will begin vesting three years from the date of grant and become fully
vested after seven years from the grant date. The purpose of the Plan is
to put the Corporation's common stock in the hands of selected senior
executives who, over time, should influence or be given the opportunity to
influence the Corporation's performance.
The closing price of a share of the Corporation's common stock on March 15,
1994, was $18.25. It is not possible at this time to predict the number of
shares of Restricted Stock that will be awarded to any of the participants
in the Plan if the Plan is approved.
The approval of the Plan requires the affirmative vote of the holders of a
majority of the shares of common stock present or represented by executed
and delivered proxies at the meeting. Abstentions and Broker Shares voted
as to any matter at the meeting will be included in determining the number
of votes present or represented at the meeting. Broker Shares that are not
voted on any matter at the meeting will not be included in determining the
number of shares present or represented at the meeting.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors will offer a resolution to reappoint Coopers &
Lybrand as independent accountants of the Corporation for the year 1994.
Coopers & Lybrand, a nationally known firm of independent certified public
accountants, has audited the Corporation's financial statements for the
past twenty-six years. The Corporation has been advised by Coopers &
Lybrand that neither that firm nor any of its partners has any direct
financial interest or material indirect financial interest in the
Corporation other than as public accountants and auditors. Coopers &
Lybrand will be represented at the stockholders' meeting. The firm's
representative will be available to respond to appropriate questions from
stockholders and will have an opportunity to make a statement, if desired.
ANNUAL REPORT TO STOCKHOLDERS
The Noland Company 1993 Annual Report to stockholders, portions of which
are incorporated by reference into the annual report on Form 10-K for the
year ended December 31, 1993, as filed with the Securities and Exchange
Commission, accompanies this proxy statement. Stockholders may obtain,
without charge, a copy of the Corporation's Form 10-K by forwarding a
written request to R. L. Welborn, Assistant Vice President - Finance,
Noland Company, 2700 Warwick Blvd., Newport News, Virginia 23607.
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PROPOSALS FOR 1995 ANNUAL MEETING
Any stockholder desiring to make a proposal to be acted upon at the 1995
annual meeting of stockholders must present such proposal to the
Corporation at its principal office in Newport News, Virginia, not later
than December 8, 1994, in order for it to be considered for inclusion in
the Corporation's Proxy Statement.
GENERAL
Unless contrary instructions are indicated on the proxy, all shares of
Common Stock represented by valid proxies received pursuant to this
solicitation (and not revoked before they are voted) will be voted FOR the
election of the nominees for Director named herein, FOR the approval of the
1993 Noland Company Restricted Stock Plan and FOR the proposal to approve
the appointment of Coopers & Lybrand as independent public accountants for
the year ended December 31, 1994.
The Board of Directors knows of no business other than that set forth above
to be transacted at the meeting, but if other matters requiring the vote of
the stockholders arise, the persons designated as proxies will vote the
shares of Common Stock represented by the proxies in accordance with their
judgment on such matters. If a stockholder specifies a different choice on
the proxy, his or her shares of Common Stock will be voted in accordance
with the specification so made.
By order of the Board of Directors,
James E. Sykes Jr.
Secretary
Newport News, Virginia
April 1, 1994
