Notice of Annual Meeting of Stockholders Page 1
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 10:00 A.M. on April 24, 1996
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 24, 1996, at 10:00 A.M. (Local Time) at the
principal office of the Corporation, 2700 Warwick Boulevard,
Newport News, Virginia, for the following purposes:
1. to elect six Directors to serve for the ensuing year;
2. to appoint Coopers & Lybrand L.L.P. to audit the consolidated
financial statements of the Corporation for the year ending
December 31, 1996; and
3. 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,
1996, 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 4, 1996
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.
<PAGE>
Proxy Statement Page 2
NOLAND COMPANY
(a Virginia corporation)
2700 Warwick Boulevard
Newport News, Virginia 23607
Proxy Statement
Annual Meeting of Stockholders to be
held at 10:00 A.M., April 24, 1996
Approximate date of mailing .... April 4, 1996
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, 1995, 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 six Directors to serve for the ensuing year; (2) to
appoint Coopers & Lybrand L.L.P. as independent auditors of the
Corporation for the ensuing year; and (3) 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, 1996, 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, 1996, of over five percent of
the Corporation's Common Stock:
Proxy Statement Page 3
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 2,073,297(1) 56.02%
Newport News, Virginia 23607 Stock shares
Henley Management Company, successor
by merger to Concord Investment Co. Common 465,050 12.60%
555 Skokie Blvd, Suite 555 Stock shares
Northbrook, Illinois 60062
(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 41,497
Susan C. Noland 26,736
Anne N. Edwards 21,831
Lloyd U. Noland III also has voting power only over 4,000 shares of restricted
stock. 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 2,073,297
shares or 56.02 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.
At the July 26, 1995 meeting of the Board, the number of Directors was
increased to six. Mr. Thomas N. Allen was elected to serve as the new Director.
Mr. Allen will stand for election at the April 24, 1996 stockholders'
<PAGE>
Proxy Statement Page 4
meeting.
During 1995, the Board of Directors met five times. All members were present
at all meetings, except Mr. Goolsby and Mr. McElroy, who missed one meeting
each. On six occasions, the Board acted by written consent. Members of the
Board who are employees of the Corporation serve without compensation. Non-
employee Directors received a quarterly retainer of $1,875 and $500 for each
Committee meeting attended.
The Board elected an Executive Committee consisting of Messrs. Noland III,
Henderson and Wimbush. 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 1995,
the Executive Committee met five times. All members were present at each
meeting.
The Board appointed an Executive Compensation Committee consisting of
Messrs. Allen, 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 1995, the Executive Compensation Committee met two
times. All members were present at each meeting.
The Board appointed an Audit Committee consisting of Messrs. Allen, 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 1995, 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.
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.
<PAGE>
Directorships Page 5
Mr. Allen, 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, 1996 Class(1)
Thomas N. Allen - Age 57 1995 500 -
Chairman, East Coast Oil Corp.
(Retail Gasoline/Convenience Stores);
Director of Sterile Concepts
Holdings, Inc.
Allen C. Goolsby - Age 56 1989 700 -
Partner, Hunton & Williams
(Attorneys); Director of
First Colony Corporation.
Arthur P. Henderson Jr. - Age 52 1983 2,229 -
Vice President-Finance
John L. McElroy Jr. - Age 65 1990 1,500 -
Chairman Emeritus of the Board,
Wheat First Butcher Singer, Inc.(2)
(Investment Bankers);
Director of Piper Jaffray, Inc.
Lloyd U. Noland III - Age 52 1979 1,842,460(3) 49.78%
Chairman of the Board and
President; Director of Central
Fidelity Banks, Inc.
Frank A. Wimbush - Age 50 1995 2,000 -
Senior Vice President - Marketing
and Branch Operations since March
1995. Previously Vice President-
Sales and Marketing for All-Phase
Electric Supply Company from 1988
through 1994.
All officers and directors of 1,849,389 49.97%
the Corporation as a group (12) shares
(1) Less than .2 percent except as indicated.
(2) Wheat First Butcher Singer 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, 1996, the
trading account was holding 112 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.
<PAGE>
Page 6
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, 1995, 1994 and 1993. There were only three
executive officers, other than Mr. Noland, who earned more than $100,000 for
1995, 1994 or 1993.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
Restricted Stock All Other
Name and Salary Bonus Awards(2) Compensation(1)
Principal Position Year $ $ $ $
Lloyd U. Noland III 1995 $115,140 $ 55,000 $36,000 $ 2,931
Chief Executive
Officer 1994 $ 95,772 $ 55,000 $38,000 $ 2,377
1993 $ 73,630 $ 26,500 - $ 1,017
Charles A. Harvey 1995 $ 83,805 $ 35,500 $18,000 $ 2,035
Vice President -
Corporate Data 1994 $ 79,457 $ 35,500 $19,000 $ 1,969
1993 $ 69,112 $ 24,000 - $ 880
Arthur P. Henderson Jr. 1995 $ 81,130 $ 41,000 $18,000 $ 1,963
Vice President -
Finance 1994 $ 73,812 $ 41,000 $19,000 $ 1,828
1993 $ 67,150 $ 26,000 - $ 886
Frank A. Wimbush 1995 $120,968 $ 41,700 $36,000 $ 3,743
Sr. Vice President -
Marketing and Branch
Operations
(1) Profit sharing allocation
(2) Restricted stock awards valued at market price on December 31, 1995
of $18 per share ($19 per share in 1994). Shares issued in 1995 to
Lloyd U. Noland III, Charles A. Harvey, Arthur P. Henderson Jr. and
Frank A. Wimbush were 2,000; 1,000; 1,000; and 2,000, respectively.
Recipients have the right to receive dividends and vote the
restricted shares.
<PAGE>
Directorships Page 7
EMPLOYMENT AND SEVERANCE ARRANGEMENT
The Corporation has agreed that if Mr. Wimbush's employment is terminated
by the Corporation for any reason other than neglect of duty, malfeasance,
breach of integrity or criminal wrongdoing, he will receive a severance
payment equal to the amount of one year's then-current base salary.
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, Charles A. Harvey and Arthur P. Henderson Jr. are $66,296,
$49,683, and $48,293, respectively. Mr. Wimbush has not met the minimum
service requirement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee consists of Messrs. Allen, Goolsby and
McElroy. 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
In 1993 the Board of Directors established an Executive Compensation
Committee (the Committee) which 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.
Following its creation, the committee spent significant reviewing the
executive compensation program.
The Committee took 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 executive
compensation was 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 proposed, and the Board of
Directors approved, a policy of providing competitive overall compensation
for executive officers, including base salaries and short and long-term
incentives. The Committee concluded 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
<PAGE>
Directorships Page 8
incentives. The Committee determined 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' interest by providing these executives with
an interest in the Corporation's common stock.
With these premises, the Committee recommended, and the Company adopted,
increases in executive officers' base compensation to be phased in over
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 proposed, and the Company adopted, the 1993 Noland Company
Restricted Stock Plan. That Plan provides for annual grants to certain of
the Corporation's executive officers not to exceed in the aggregate
10,000 shares of the Corporation's common stock in any year. The
executive's interest in any shares is contingent on continued employment
with the Corporation. Shares awarded begin vesting three years from the
date of the grant and become fully vested after seven years from the grant
date.
Base compensation for executive officers in 1995 reflected the second year
of implementation of the Committee's recommendations. In determining
executive cash bonuses for 1995, the Committee took into consideration the
Corporation's policy of maintaining conservative levels of base
compensation with appropriate rewards for excellent performance to be
effected through the bonus plan. In making the bonus awards, the Committee
focused primarily on revenues, profits before LIFO inventory adjustments,
extra compensation and income taxes, and the executive's performance for
the year against previously established targets. The Committee reacted
favorably to the many initiatives taken in 1995 to position the Company for
greater growth. The committee did not assign a specific value to each
factor.
Mr. Noland's base compensation for 1995 was fixed at $115,140, a 21 percent
increase over his base compensation as of the end of 1994. The substantial
percentage increase reflects the implementation of the Committee's new
compensation plan. For 1995 Mr. Noland was awarded a cash bonus of $55,000,
(which also was the amount of Mr. Noland's 1994 bonus) reflecting Mr.
Noland's achievement of a number of performance goals established by the
Committee at the beginning of the year, including targeted improvements in
personnel and operations. More specifically, the Committee took into
account that, through Mr. Noland's leadership, in 1995 the Company put a
new marketing team in place and adopted a comprehensive business plan. The
Committee did recognize that profit before LIFO adjustments, extra
compensation and income taxes was essentially unchanged from 1994. The
Committee did not assign a specific value to each factor.
Overall, the Committee believes that its recent compensation plan has
provided significant new incentives to the executive officers to improve
performance and shareholder return. Further, the Committee believes that
the new incentives will continue to help produce significant improvement in
the Company's performance.
Because none of the Corporation's executive officers receives annual
compensation in excess of $1 million, the Corporation has not taken any
<PAGE>
Directorships Page 9
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
Thomas N. Allen
<PAGE>
Directorships Page 10
Comparison of Five Year Cumulative Total Return Among Noland Company,
NASDAQ Market Value Index and Hughes Supply, Inc.
(Assumes $100 Invested on January 1, 1991)
A performance graph appears here. The following chart is the information
presented in the graph.
Data points are as follows:
1990 1991 1992 1993 1994 1995
Noland Company $100 $111.14 $132.95 $143.80 $170.78 $166.27
Hughes Supply, Inc. $100 $ 97.80 $135.22 $185.07 $176.11 $273.07
NASDAQ Market Index $100 $128.38 $129.64 $155.50 $163.26 $211.77
The return for Hughes Supply, Inc. has been adjusted to reflect differences
in market capitalization.
<PAGE>
Page 11
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors will offer a resolution to reappoint Coopers &
Lybrand L.L.P. as independent accountants of the Corporation for the year
1996. Coopers & Lybrand L.L.P., a nationally known firm of independent
certified public accountants, has audited the Corporation's financial
statements for the past twenty-eight years. The Corporation has been
advised by Coopers & Lybrand L.L.P. 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 L.L.P. 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 1995 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, 1995, 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.
PROPOSALS FOR 1997 ANNUAL MEETING
Any stockholder desiring to make a proposal to be acted upon at the 1997
annual meeting of stockholders must present such proposal to the
Corporation at its principal office in Newport News, Virginia, not later
than December 6, 1996, 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, and FOR the proposal to
approve the appointment of Coopers & Lybrand L.L.P. as independent public
accountants for the year ended December 31, 1996.
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 4, 1996
