Notice of Annual Meeting of Stockholders Page 1
N O L A N D
NOLAND COMPANY
80 29th Street, Newport News, Virginia 23607
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held at 10:00 A.M. on April 23, 1997
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 23, 1997, at 10:00 A.M. (Local Time) at the
principal office of the Corporation, 80 29th Street, 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, 1997; 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 14,
1997, 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 3, 1997
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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Proxy Statement Page 2
NOLAND COMPANY
(a Virginia corporation)
80 29th Street
Newport News, Virginia 23607
Proxy Statement
Annual Meeting of Stockholders to be
held at 10:00 A.M., April 23, 1997
Approximate date of mailing .... April 4, 1997
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, 1996, 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 14, 1997, 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 14, 1997, of over five percent of
the Corporation's Common Stock:
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Proxy Statement Page 3
Title and
Name and Class of Amount and Nature % 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.
80 29th Street Common 2,075,297(1) 56.08%
Newport News, Virginia 23607 Stock shares
Henley Management Company, successor
by merger to Concord Investment Co.
555 Skokie Blvd, Suite 555 Common 472,750
Northbrook, Illinois 60062 Stock shares 12.77%
Franklin Resources, Inc.
Charles B. Johnson
Rupert H. Johnson, Jr.
777 Mariners Island Blvd. Common 202,175
San Mateo, California 94404 Stock shares 5.46%
Marvin C. Schwartz
c/o Neuberger & Berman
605 Third Avenue Common 194,899
New York, New York 10158 Stock shares 5.26%
(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 43,497
Susan C. Noland 26,736
Anne N. Edwards 21,831
Lloyd U. Noland III also has voting power only over 6,000 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 2,075,297
shares or 56.08 percent of the outstanding Common Stock.
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Proxy Statement Page 4
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of the forms required by Section 16(a) of the
Securities Exchange Act of 1934, as amended, that have been received by the
Corporation, the Corporation believes there has been compliance with all
filing requirements applicable to its officers, directors and beneficial
owners of greater than ten percent of the Corporations 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.
In 1996, each Director attended at least 75% of the aggregate of (i) the
total number of meetings of the Board of Directors held during 1996 and (ii)
the total number of meetings of all Board committees on which the Director
served.
During 1996, the Board of Directors met four times. On five 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 1996,
the Executive Committee met seven times.
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 1996, the Executive Compensation Committee met one
time.
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 1996, the Audit Committee met two times.
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.
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Directorships Page 5
Votes that are withheld and shares held in street name ("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.
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 14, 1997 Class(1)
Thomas N. Allen - Age 58 1995 500 -
Chairman, East Coast Oil Corp.
(Retail Gasoline/Convenience Stores)
Allen C. Goolsby - Age 57 1989 700 -
Partner, Hunton & Williams
(Attorneys)
Arthur P. Henderson Jr. - Age 53 1983 3,229 -
Vice President-Finance
John L. McElroy Jr. - Age 66 1990 1,500 -
Chairman Emeritus of the Board,
Wheat First Butcher Singer, Inc.(2)
(Investment Bankers)
Lloyd U. Noland III - Age 53 1979 1,844,460(3) 49.84
Chairman of the Board and
President; Director of Central
Fidelity Banks, Inc.
Frank A. Wimbush - Age 51 1995 4,000 -
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 1,858,339 50.21%
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 14, 1997, the
trading account was holding 62 shares.
(3) See Voting Securities and Principal Holders Thereof on page 1.
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Page 6
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.
CERTAIN TRANSACTIONS
Effective November 1, 1996, the Company entered into a ten-year agreement to
lease an existing office building for its corporate headquarters. The
building is owned by Basic Construction Company (see Voting Securities and
Principal Holders Thereof). Under the terms of the lease, the Company will
pay an annual rental fee of approximately $260,000 per year. The Company
will bear the direct costs of utilities and real estate taxes. The terms of
the lease were based on an evaluation by an independent real estate firm.
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, 1996, 1995 and 1994. There were only three
executive officers, other than Mr. Noland, who earned more than $100,000 for
1996, 1995 and 1994.
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 1996 $135,280 $ 46,000 $46,000 $ 3,116
Chief Executive
Officer 1995 $115,140 $ 55,000 $36,000 $ 2,931
1994 $ 95,772 $ 55,000 $38,000 $ 2,377
Charles A. Harvey 1996 $ 80,716 $ 32,500 $23,000 $ 1,843
Vice President -
Corporate Data 1995 $ 83,805 $ 35,500 $18,000 $ 2,035
1994 $ 79,457 $ 35,500 $19,000 $ 1,969
Arthur P. Henderson Jr. 1996 $ 81,136 $ 38,000 $23,000 $ 1,860
Vice President -
Finance 1995 $ 81,130 $ 41,000 $18,000 $ 1,963
1994 $ 73,812 $ 41,000 $19,000 $ 1,828
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Directorships Page 7
Frank A. Wimbush 1996 $150,136 $ 34,000 $46,000 $ 3,458
Sr. Vice President -
Marketing and Branch 1995 $120,968 $ 41,700 $36,000 $ 3,743
Operations
(1) Profit sharing allocation
(2) Restricted stock awards valued at market price of $23 per share, $18 per
share and $19 per share on December 31, 1996, 1995 and 1994,
respectively. Shares issued in 1996 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.
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, Frank A. Wimbush, Charles A. Harvey and Arthur P. Henderson
Jr. are $62,309, $45,956, $49,057, and $47,868, respectively.
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
The Executive Compensation Committee (the Committee) is 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.
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Directorships Page 8
Following an in-depth look in 1993 at the Corporation's compensation
practices for its executive officers, 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 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 Corporation
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 Corporation 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 10,000
shares of the Corporation's common stock in the aggregate 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 1996 reflected the third and
final year of implementation of the Committee's recommendations regarding
salaries. In determining executive cash bonuses for 1996, 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 did not assign a specific value to each factor. The
Committee noted the increase in per share earnings and reacted favorably to
the initiatives taken in 1996 to improve the Corporation's financial
performance. The Committee was concerned about the absence of an increase
in gross revenues for the year.
Mr. Noland's base compensation for 1996 was fixed at $135,000, a 16.4
percent increase over his base compensation as of the end of 1995. The
substantial percentage increase reflects the implementation of the last
phase of the Committee's compensation plan. For 1996 Mr. Noland was awarded
a cash bonus of $46,000, in recognition of 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.
His 1996 bonus is less than the bonus for the preceding year, reflecting
the fact that gross revenues did not increase for the year. As a result,
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Directorships Page 9
profits before LIFO inventory adjustments, extra compensation and income
taxes did not reach the targeted level. In establishing the 1996 bonus,
the Committee did not assign a specific value to any one factor.
Overall, the Committee believes that its 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
Corporation's performance.
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
Thomas N. Allen
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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, 1992)
A performance graph appears here. the following chart is the information
presented in the graph.
Data points are as follows:
1991 1992 1993 1994 1995 1996
Noland Company $100 $119.62 $129.39 $153.66 $149.60 $194.30
Hughes Supply, Inc. $100 $138.26 $189.23 $180.07 $279.21 $432.90
NASDAQ Market Index $100 $100.98 $121.13 $127.17 $164.96 $204.98
The return for Hughes Supply, Inc. has been adjusted to reflect differences in
market capitalization.
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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 1997. 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-nine 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 1996 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, 1996, 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, 80 29th Street,
Newport News, Virginia 23607.
PROPOSALS FOR 1998 ANNUAL MEETING
Any stockholder desiring to make a proposal to be acted upon at the 1998 annual
meeting of stockholders must present such proposal to the Corporation at its
principal office in Newport News, Virginia, not later than December 5, 1997, 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, 1997.
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, 1997
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Proxy Card Page 12
(Side 1)
PROXY
NOLAND COMPANY
80 29th Street
Newport News, VA 23607
Annual Meeting of Stockholders April 23, 1997
This Proxy solicited on behalf of the Board of Directors
The undersigned hereby appoints L. U. Noland III and A. P. Henderson Jr. or
either of them, Proxies, with full power of substitution in each to vote all
shares of the capital stock of Noland Company held of record by the undersigned
on March 14, 1997, at the Annual Meeting of Stockholders to be held on April 23,
1997, or at any adjournment thereof:
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked below to to vote for all nominees
the contrary) listed below
Thomas N. Allen, Allen C. Goolsby, Arthur P. Henderson Jr., John L. McElroy Jr.,
Lloyd U. Noland III, Frank A. Wimbush (Instruction: To withhold authority to
vote for any individual nominee(s) write that nominee's name(s) in the space
provided below).
2. PROPOSAL TO APPROVE THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. as the
independent public accountants of the Corporation.
FOR AGAINST ABSTAIN
3. Vote upon such other business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder.
If no specification is made, this proxy will be voted for items 1 and 2.
(continued)
Please date and sign on reverse
- -------------------------------------------------------------------------------
(Side 2)
Continued from other side
Dated: ,1997
Signature
Signature if held jointly
(Stockholder's signature should conform exactly to the
name printed hereon. When shares are held by joint
tenants, both should sign. When signing as Attorney,
Executor, Administrator, Trustee or Guardian, please
give full title as such. If a corporation, please sign
in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership
name by authorized person).
Please mark, sign, date and return the proxy card promptly
using the enclosed envelope.
