<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>
KLLM Transport Services, Inc.
- --------------------------------------------------------------------------------
(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
KLLM TRANSPORT SERVICES, INC.
135 RIVERVIEW DRIVE
RICHLAND, MISSISSIPPI 39218
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD APRIL 29, 1999
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of KLLM
Transport Services, Inc., will be held in the Board Room, 4th Floor, Deposit
Guaranty Plaza, 210 East Capitol Street, Jackson, Mississippi, on Thursday,
April 29, 1999, at 10:00 a.m., Jackson time, for the purpose of considering and
acting upon the following matters:
1. Election of four directors to serve until the next annual meeting of
shareholders and until their successors are elected and qualified.
2. Ratification of the appointment of Ernst & Young LLP as independent
auditors for the fiscal year ending December 31, 1999.
3. Transaction of such other business as may properly come before the
meeting or any adjournments thereof.
The directors have fixed the close of business on March 18, 1999, as
the record date for the determination of shareholders entitled to receive notice
of and vote at the Annual Meeting.
The directors sincerely desire your presence at the meeting. However,
so that we may be sure your vote will be included, please sign and return the
enclosed proxy promptly. A self-addressed, postage-paid return envelope is
enclosed for your convenience.
By order of the Board of Directors.
/s/ JAMES LEON YOUNG
------------------------------------
JAMES LEON YOUNG, Secretary
Date: March 26, 1999
SHAREHOLDERS ARE URGED TO VOTE BY DATING, SIGNING AND RETURNING THE ENCLOSED
PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
<PAGE> 3
KLLM TRANSPORT SERVICES, INC.
135 RIVERVIEW DRIVE
RICHLAND, MISSISSIPPI 39218
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD APRIL 29, 1999
The following information is furnished in connection with the Annual
Meeting of Shareholders of KLLM Transport Services, Inc. (the "Company") to be
held on Thursday, April 29, 1999, at 10:00 a.m., Jackson time, in the Board
Room, 4th Floor, Deposit Guaranty Plaza, 210 East Capitol Street, Jackson,
Mississippi. A copy of the Company's annual report to shareholders for the
fiscal year ended January 1, 1999, accompanies this proxy statement. The annual
report is not to be considered part of the proxy solicitation materials.
Additional copies of the annual report, notice, proxy statement, and form of
proxy may be obtained from the Company's Secretary, P. O. Box 6098, Jackson,
Mississippi 39288.
The enclosed proxy is solicited by the Board of Directors of the
Company. The proxy may be revoked by a shareholder at any time before it is
voted by filing with the Company's Secretary a written revocation or a duly
executed proxy bearing a later date. The proxy may also be revoked by a
shareholder attending the meeting, withdrawing the proxy, and voting in person.
All expenses incurred in connection with the solicitation of proxies
will be paid by the Company. In addition to the solicitation of proxies by mail,
directors, officers, and regular employees of the Company may solicit proxies in
person or by telephone. The Company will, upon request, reimburse banks,
brokerage houses and other institutions, nominees, and fiduciaries for their
expenses in forwarding proxy material to their principals.
The approximate date of mailing this proxy statement and the enclosed
form of proxy is March 26, 1999. Shareholders of record at the close of business
on March 18, 1999, are eligible to vote at the Annual Meeting. As of the record
date, 4,142,525 shares of the Company's common stock were outstanding. Each is
entitled to one vote on each issue to be considered at the Annual Meeting.
Other than the election of directors, which requires a plurality of the
votes cast, each matter to be submitted to the shareholders requires the
affirmative vote of a majority of the votes cast at the meeting. For purposes of
determining the number of votes cast with respect to a particular matter, only
those cast "For" or "Against" are included. Abstentions and broker non-votes are
counted only for purposes of determining whether a quorum is present at the
meeting.
ELECTION OF DIRECTORS
The Company's bylaws provide that the number of directors shall be
fixed by resolution of the Board of Directors and that the number may not be
less than three nor more than twelve. Pursuant to the bylaws, the Board of
Directors has fixed the number of directors at four. Unless otherwise specified,
proxies will be voted FOR the election of the four nominees named below to serve
until the next annual meeting of shareholders and until their successors are
elected and qualified. If, at the time of the meeting, any of the nominees named
below is not available to serve as director (which is not anticipated), the
proxies will be voted for the election of such other person or persons as the
Board of Directors may designate. The directors recommend a vote FOR the four
nominees listed below. Nominees Jack Liles, James Leon Young, Walter P. Neely,
and Leland R. Speed are now directors of the Company.
NOMINEES FOR DIRECTOR
The table below sets forth certain information regarding the nominees
for election to the Board of Directors:
<TABLE>
<CAPTION>
NAME AND POSITION AGE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE FOR THE
- ----------------- --- PAST FIVE YEARS AND TENURE WITH THE COMPANY
-------------------------------------------
<S> <C> <C>
Jack Liles 48 Employee of the Company since 1974; Chairman of the Board since March,
Chairman of the Board, 1999; President and Chief Executive Officer since July, 1998; Vice President-
President, and Sales and Marketing from 1996 to 1998; President-Rail Services from 1994
Chief Executive Officer to 1996; Vice President-Sales and Marketing-West from 1990 to 1994; Vice
President-Marketing from 1986 to 1990; Director since 1998.
</TABLE>
1
<PAGE> 4
<TABLE>
<CAPTION>
NAME AND POSITION AGE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE FOR THE
- ----------------- --- PAST FIVE YEARS AND TENURE WITH THE COMPANY
-------------------------------------------
<S> <C> <C>
James Leon Young 68 Attorney, Young, Williams, Henderson & Fuselier, P.A., Jackson, Mississippi;
Secretary and Director Director since 1965; Secretary since 1982.
Walter P. Neely 53 Professor, Else School of Management, Millsaps College, Jackson, Mississippi;
Director Private consultant; Trustee, Performance Funds Trust, New York, New York, since
1992; Director since 1986.
Leland R. Speed 66 President and Director of Congress Street Properties from 1984 to 1994;
Director Chairman and Director of Delta Industries, Inc. from 1979 to present; Trustee of
EastGroup Properties, Inc. from 1978 to present; Chairman of EastGroup Properties, Inc.
from 1993 to present; Chief Executive Officer of EastGroup Properties, Inc. from 1993
to 1997; Trustee of Eastover Corporation from 1975 to 1994; President of Eastover
Corporation from 1978 to 1994; Chairman and Director of Eastover Realty Corp. from 1987
to 1994; President and Director of EB, Inc. from 1993 to 1996; Director of Farm Fish,
Inc. from 1982 to present; Director of ChemFirst, Inc. from 1968 to present; President and
Director of LNH REIT, Inc. from 1991 to 1996; Trustee of First Continental Investors REIT
from 1987 to 1994; Director of Mississippi Valley Gas Co. from 1984 to present;
President, Chief Executive Officer and Director of Rockwood National Corp. from 1983 to
1994; Chairman of Parkway Properties, Inc. from 1993 to present; Chief Executive Officer
of Parkway Properties, Inc. 1993 to 1997; Director since 1995.
</TABLE>
STOCK OWNERSHIP
The following table indicates the beneficial ownership as of March 18,
1999, unless otherwise indicated below, of the Company's common stock by each
nominee and director, the CEO and the three most highly compensated executive
officers other than the CEO, by each person known by the Company to be the
beneficial owner of more than 5% of the Company's outstanding shares, and by all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------ -------------------- ----------------
<S> <C> <C>
William J. Liles, Jr. 626,163 (1) 15.1%
Marital Trust
Jack Liles 714,123 (2) 17.1%
Wynne Liles Appleton 689,504 (3) 16.6%
B. C. Lee, L.P. 400,000 (4) 9.1%
Benjamin Clinton Lee, III 400,000 (5) 9.1%
Ruth Ann Lee Lyles 400,000 (6) 9.1%
J. Tayloe Simmons, Esq. 550,000 (7) 12.6%
James Leon Young 14,251 (8) Less than 1%
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------ -------------------- ----------------
<S> <C> <C>
Walter P. Neely 6,015 (9) Less than 1%
Leland R. Speed 2,584 Less than 1%
John J. Ritchie 22,500 (10) Less than 1%
Nancy M. Sawyer 70,570 (11) 1.68%
Steven L. Dutro 26,987 (12) Less than 1%
Brinson Partners, Inc. 415,797 (13) 9.5%
UBS AG 415,797 (13) 9.5%
Dimensional Fund Advisors, Inc. 308,498 (14) 7.13%
Franklin Resources, Inc. 322,000 (15) 7.4%
Charles B. Johnson 322,000 (15) 7.4%
Rupert H. Johnson, Jr. 322,000 (15) 7.4%
Franklin Advisory Services, Inc. 322,000 (15) 7.4%
Gilder Gagnon Howe & Co. LLC 1,153,162 (16) 26.5%
Officers & Directors, as a Group (7 persons) 857,030 (17) 20.1%
</TABLE>
- --------------------------------------------------------------------------------
(1) Mr. William J. Liles, Jr. passed away on February 11, 1996. The address
for the Trust is 112 Meadowbrook North, Jackson, Mississippi 39211. Jack
Liles and Wynne Liles Appleton are Co-Trustees of the Trust.
(2) The address for Mr. Liles is P. O. Box 6098, Jackson, Mississippi
39288. 626,163 shares are owned by the William J. Liles, Jr. Marital Trust
of which Mr. Liles is Co-Trustee. 54,237 shares are owned by the William J.
Liles, Jr. Family Trust in which Mr. Liles has an indirect pecuniary
interest. 824 shares are owned by Mr. Liles' wife. 3,590 shares are owned
by trusts set up for the benefit of Mr. Liles' two sons of which Mr. Liles
is the Trustee. 20,000 shares are unissued but are subject to an obligation
to purchase under the Amended and Restated 1996 Stock Purchase Plan on or
before August 7, 2001. 5,000 shares are unissued but are subject to an
option that is exercisable at any time prior to July 22, 2003.
(3) The address for Mrs. Appleton is 1503 Scott Avenue, Winnetka, Illinois
60093. 54,237 shares are owned by the William J. Liles, Jr. Family Trust in
which Mrs. Appleton has an indirect pecuniary interest. 626,163 shares are
owned by the William J. Liles, Jr. Marital Trust of which Mrs. Appleton is
Co-Trustee. 3,590 shares are owned by trusts set up for the benefit of Mrs.
Appleton's two daughters of which Mrs. Appleton is the Trustee. 1,290
shares are owned by Mrs. Appleton's husband.
(4) Ownership is as of October 27, 1998. Mr. Benjamin C. Lee, Jr. passed
away on August 31, 1998. The current address for the Limited Partnership is
c/o J. Tayloe Simmons, Jr., Esq., Managing General Partner, 501 South State
Street, Jackson, Mississippi 39201. Sole voting power and sole dispositive
power are claimed as to all shares. On July 3, 1998, the Limited
Partnership was organized with Mr. Benjamin C. Lee, Jr., Mr. Benjamin
Clinton Lee, III and Mrs. Ruth Ann Lee Lyles, as General Partners. Mr.
Benjamin C. Lee, Jr. contributed to the Limited Partnership, among
3
<PAGE> 6
other things, 400,000 shares of the Company's common stock. Mr. Benjamin C.
Lee, Jr.'s equity interest in the Limited Partnership is now owned by his
Estate, the Estate of Benjamin C. Lee, Jr., represented by J. Tayloe
Simmons, Jr., Esq., Executor. Mr. Simmons has replaced Mr. Benjamin C. Lee,
Jr. as a General Partner of the Limited Partnership.
(5) Ownership is as of October 27, 1998. The address for Mr. Lee is 109
Lakepointe, Madison, Mississippi 39110. Shared voting power and shared
dispositive power are claimed as to all shares. See Footnote 4 for further
information.
(6) Ownership is as of October 27, 1998. The address for Mrs. Lyles is 1085
Cemetery Lane, Aspen Colorado 81611. Shared voting power and shared
dispositive power are claimed as to all shares. See Footnote 4 for further
information.
(7) Ownership is as of October 27, 1998. The address for Mr. Simmons is 501
South State Street, Jackson, Mississippi 39201. Sole voting power and sole
dispositive power are claimed as to 150,000 shares. Shared voting power and
shared dispositive power are claimed as to 400,000 shares. On July 3, 1998,
B. C. Lee, L.P. was organized with Mr. Benjamin C. Lee, Jr., Mr. Benjamin
Clinton Lee, III and Mrs. Ruth Ann Lee Lyles, as General Partners. Mr.
Benjamin C. Lee, Jr. contributed to the Limited Partnership, among other
things, 400,000 shares of the Company's common stock. Mr. Benjamin C. Lee,
Jr. passed away on August 31, 1998. Mr. Benjamin C. Lee, Jr.'s equity
interest in the Limited Partnership is now owned by his Estate, the Estate
of Benjamin C. Lee, Jr., represented by Mr. Simmons. Mr. Simmons has
replaced Mr. Benjamin C. Lee, Jr. as a General Partner of the Limited
Partnership. The Estate of Benjamin C. Lee, Jr. also owns an additional
150,000 shares of the Company's common stock which was owned by Mr.
Benjamin C. Lee, Jr. at the time of his death. Mr. Simmons is the Executor
of the Estate of Benjamin C. Lee, Jr., and exercises sole voting and
dispositive power over the 150,000 shares.
(8) 5,000 shares are jointly owned with Mr. Young's wife.
(9) 2,499 shares are jointly owned with Dr. Neely's wife.
(10) 2,500 shares are unissued but are subject to an option that is
exercisable at any time prior to March 31, 2006. 20,000 shares are unissued
but are subject to an obligation to purchase under the Amended and Restated
1996 Stock Purchase Plan on or before August 7, 2001.
(11) 50,000 shares are unissued but are subject to an obligation to
purchase under the Amended and Restated 1996 Stock Purchase Plan on or
before August 7, 2001. 20,000 shares are owned jointly with her husband.
(12) 3,167 shares are unissued but are subject to options that are
exercisable at any time prior to March 19, 2002. 20,000 shares are unissued
but are subject to an obligation to purchase under the Amended and Restated
1996 Stock Purchase Plan on or before August 7, 2001.
(13) Ownership is as of December 31, 1998. Shared voting and shared
dispositive power are claimed as to all shares. The address for Brinson
Partners, Inc. is 209 South LaSalle, Chicago, Illinois 60604-1295. The
address for UBS AG is Bahnhofstrasse 45 8021, Zurich, Switzerland.
Beneficial ownership of all shares is disclaimed.
(14) 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
Ownership is as of December 31, 1998. Beneficial ownership of all shares is
disclaimed. Sole voting power is claimed as to 308,498 shares and sole
dispositive power is claimed as to 308,498 shares.
(15) The address for Franklin Resources, Inc., Charles B. Johnson, and
Rupert H. Johnson, Jr. is 777 Mariners Island Boulevard, San Mateo,
California 94404. The address for Franklin Advisory Services, Inc. is One
Parker Plaza, Sixteenth Floor, Ft. Lee, New Jersey 07024. Sole voting power
and sole dispositive power are claimed by Franklin Advisory Services, Inc.
as to all shares. Franklin Resources, Inc. is the parent holding company,
Charles B. Johnson and Rupert H. Johnson, Jr. are principal shareholders of
the parent holding company, and Franklin Advisory Services, Inc. is the
investment advisor. Franklin Resources, Inc., Charles B. Johnson, Rupert H.
Johnson, Jr. and Franklin Advisory Services, Inc. disclaim any economic
interest or beneficial ownership in any of the shares. Ownership is as of
December 31, 1998.
4
<PAGE> 7
(16) The address for Gilder Gagnon Howe & Co. LLC is 1775 Broadway, 26th
Floor, New York, New York 10019. Sole voting power is claimed as to 12,875
shares and shared dispositive power is claimed as to 1,153,162 shares.
Shares reported include 779,055 shares held in customer accounts over which
members and/or employees of Gilder Gagnon Howe & Co. LLC have discretionary
authority to dispose of or direct the disposition of the shares, 361,232
shares held in accounts owned by the members of Gilder Gagnon Howe & Co.
LLC and their families, and 12,875 shares held in the account of the Profit
Sharing Plan of Gilder Gagnon Howe & Co. LLC. Ownership is as of December
31, 1998.
(17) 10,667 shares are unissued but are subject to options exercisable at
various times. 110,000 shares are unissued but are subject to obligations
to purchase under the Amended and Restated 1996 Stock Purchase Plan on or
before August 7, 2001.
MANAGEMENT
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE FOR THE
NAME, POSITION AND TENURE WITH THE COMPANY AGE PAST FIVE YEARS
- ------------------------------------------ --- -----------------------------------------------------
<S> <C> <C>
Jack Liles 48 See table under Election of Directors
Chairman of the Board, President,
and Chief Executive Officer
James Leon Young 68 See table under Election of Directors.
Secretary and Director
Steven L. Dutro 43 Employee of the Company since 1986; Chief Financial Officer
Chief Financial Officer since 1998; Acting Chief Financial Officer from 1997 to 1998;
Vice-President of Finance, Profitability and Planning from 1995
to 1997; Vice-President of Finance from 1994 to 1995; Director
of Finance from 1993 to 1994; Controller from 1986 to 1992.
Nancy M. Sawyer 54 Employee of the Company since 1995; Executive Vice
Executive Vice President President and Chief Operating Officer since December, 1998;
and Chief Operating Officer President of Vernon Sawyer operations from 1995 to December,
1998; Vice President of Operations of Vernon Sawyer, Inc.
from 1964 to 1995; Secretary-Treasurer of Vernon Sawyer, Inc.
from 1986 to 1995.
John J. Ritchie 49 Employee of the Company and Senior Vice President- Sales and
Senior Vice President Marketing since 1996; Vice President of Marketing of Central
Sales and Marketing Transport from 1995 to 1996; Vice President of Marketing of
Dawes Transport from May, 1995 to July, 1995; Vice President of
Marketing of Overnite Transportation from 1989 to 1995.
</TABLE>
The executive officers have no particular terms of office. They each serve at
the discretion of the Board of Directors.
5
<PAGE> 8
CERTAIN TRANSACTIONS
In the following three paragraphs, the "Company" includes the Company's
subsidiaries.
On January 1, 1978, the Company entered into a ground lease with Mr.
Lee (now deceased) and Mr. Liles (now deceased), for part of the real property
on which the Company's Richland, Mississippi, terminal and corporate
headquarters are located. In 1986, this lease was renegotiated to include
contiguous property acquired by Mr. Lee and Mr. Liles, with the lease term
commencing January 31, 1986, and expiring January 31, 2006 ("the 1986 Lease").
The monthly rental payments for the term of the 1986 Lease are $3,000. In the
opinion of the disinterested members of the Board of Directors, the rental
payments under the lease were on terms no less favorable to the Company than
those available from unrelated third parties. During the year ended January 1,
1999, total lease payments were $36,000.
On December 31, 1991, Messrs. Liles and Lee granted the Company an
option to purchase the land covered by the 1986 Lease for $390,257 when that
lease expires in 2006. In the opinion of the disinterested members of the Board
of Directors, the option to purchase the land covered by the 1986 Lease was on
terms no less favorable to the Company than those available from unrelated third
parties.
James Leon Young, who is a director of the Company, is a shareholder
and officer in the Jackson, Mississippi, law firm of Young, Williams, Henderson
& Fuselier, P.A., general counsel to the Company. During the year ended January
1, 1999, the Company paid Young, Williams, Henderson & Fuselier, P.A., fees in
payment of services rendered in connection with litigation, corporate and other
matters. No retainer fees were paid. The total of all such fees did not exceed
five percent of that firm's gross revenues for its last full fiscal year.
COMMITTEES AND MEETING DATA
The standing Audit Committee of the Board of Directors consists of Dr.
Neely (Chairman), Mr. Young and Mr. Speed. The Audit Committee recommends
auditors for the Company, oversees the Company's accounting functions and is the
Board's liaison with the Company's independent auditors. The Audit Committee met
two times in the year ended January 1, 1999, and meets at least once annually to
review the reports of the Company's independent auditors and to review the
Company's internal accounting procedures.
The Compensation Committee of the Board of Directors consists of
Mr. Young, Mr. Speed and Mr. Clowe (Chairman). Mr. Clowe will no longer be
serving as a Director of the Company, so he will be replaced as Chairman of the
Compensation Committee. The Compensation Committee reviews the compensation for
the officers of the Company. The Compensation Committee met three times in the
year ended January 1, 1999.
The Company does not have a nominating committee.
During the year ended January 1, 1999, the Board of Directors met on
six occasions. Each director attended 100% of the aggregate of the total number
of meetings of the Board of Directors and the total number of meetings held by
all committees of the Board on which he served, except that Mr. Speed was absent
from one Board meeting.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid by the Company and
its subsidiaries to the Company's Chief Executive Officer, to the Company's
three most highly compensated executive officers other than the Chief Executive
Officer who were serving as executive officers at the end of the year ended
January 1, 1999, and to two others who were not serving as executive officers at
the end of the year ended January 1, 1999, for services rendered in all
capacities to the Company and its subsidiaries during the fiscal years ended
January 1, 1999, January 2, 1998, and January 3, 1997:
6
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
- ------------------------------------------------------------------------------------------------------------------------------------
AWARDS
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND OTHER RESTRICTED LTIP ALL
PRINCIPAL YEAR SALARY BONUS ANNUAL STOCK OPTIONS PAY- OTHER
POSITION ($) ($) COMPEN- AWARDS (#) OUTS COMPEN-
SATION ($) ($) SATION
($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jack Liles 1998 $127,916 --- 26,380 $4,567(1)
Chairman of the Board, 1997 101,250 $ 30,974 183 4,050
President and CEO 1996 100,000 4,097 --- 3,167
- ------------------------------------------------------------------------------------------------------------------------------------
Steven K. Bevilaqua 1998 $225,000 --- --- --- ---
President and CEO 1997 225,000 $124,325 --- 5,757 $9,348(3)
1996 225,000 33,817 $18,192(2) --- 6,348
- ------------------------------------------------------------------------------------------------------------------------------------
Benjamin C. Lee, Jr. 1998 $100,000 --- $3,500(1)
Chairman of the Board 1997 139,000 $110,424 8,080(4)
1996 117,000 --- 7,200
- ------------------------------------------------------------------------------------------------------------------------------------
John J. Ritchie 1998 $150,000 --- 4,856
Senior Vice President 1997 150,000 $ 59,417 308
Sales and Marketing 1996 112,500 3,769 5,000
- ------------------------------------------------------------------------------------------------------------------------------------
Nancy M. Sawyer 1998 $110,000 --- 6,498 $4,400(1)
Executive Vice 1997 110,000 $ 79,518 5,875 4,400
President and Chief 1996 106,667 71,890 --- 4,267
Operating Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Steven L. Dutro 1998 $116,666 --- 4,810 $4,667(1)
Chief Financial 1997 95,153 $ 54,362 345 3,806
Officer 1996 88,965 7,753 --- 3,559
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Comprised of matching contributions by the Company to the officer's
401(K) Retirement Plan Account.
(2) Effective 1995, Mr. Bevilaqua assumed the position of President and
CEO. As an inducement to accept the position, Mr. Bevilaqua was paid
for his relocation, plus reimbursement for projected income taxes
associated therewith in the amount of $18,192.00 in 1996 in addition
to the amount paid in 1995. Mr. Bevilaqua resigned as President and
Chief Executive Officer in July, 1998.
(3) Comprised of $9,000.00 of matching contributions by the Company to Mr.
Bevilaqua's 401(K) Retirement Plan Account and $348.00 in insurance
premiums paid by the Company with respect to term life insurance for
Mr. Bevilaqua's benefit.
(4) Comprised of $5,560.00 of matching contributions by the Company to
Mr. Lee's 401(K) Retirement Plan Account and $2,520.00 in insurance
premiums paid by the Company with respect to term life insurance for
Mr. Lee's benefit. Mr. Lee passed away on August 31, 1998.
The Company has no employment agreements with its executive officers.
7
<PAGE> 10
DIRECTOR COMPENSATION
Directors who are also full-time employees of the Company receive no
additional compensation for their services as directors. Non-employee directors
are now compensated with common stock of the Company pursuant to the KLLM
Transport Services, Inc. 1998 Non-Employee Director Stock Compensation Plan. In
1998, Dr. Neely, Mr. Young, Mr. Clowe and Mr. Speed received $12,500.00 worth of
common stock for their services as directors, which included their services at
all quarterly and special Board meetings. The Company's standard arrangement is
to pay directors who are not also full-time employees of the Company $750.00
worth of common stock for each committee meeting attended as members and
$1,000.00 worth of common stock for each committee meeting attended as chairman.
In 1998, Dr. Neely, Mr. Young, Mr. Speed and Mr. Clowe received common stock
worth $2,000.00, $3,000.00, $3,000.00, and $2,000.00, respectively, for their
services at committee meetings attended.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee recommended increases in the salaries of
some of the officers based on length of service, level of responsibility, and
the particular performance of the officers in question. The Committee determined
that the salary of Jack Liles as President and Chief Executive Officer would be
$160,000.00 per year. The Compensation Committee provides incentives to
executive officers through a bonus program which is linked to profit
performance. Salaries are based on: (a) comparable salaries for similar
positions in the industry; and (b) a bi-annual survey of similarly sized
companies with sources such as the National Association of Finance Council, the
Geographic Reference Report, and reports from the American Trucking Association.
The Compensation Committee targets executive compensation at the middle point of
compensation paid by comparable companies.
There was no objection nor modification by the Board of Directors of
the Committee's recommendations.
James Leon Young,
Leland R. Speed
C. Tom Clowe, Jr., Chairman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended January 1, 1999, the Compensation
Committee of the Board of Directors consisted of Mr. Clowe (Chairman), Mr. Speed
and Mr. Young. Mr. Young is currently serving as Secretary and has served in
such capacity since 1982. Additionally, Mr. Young is a shareholder and officer
in the law firm of Young, Williams, Henderson & Fuselier, P.A., which acts as
general counsel to the Company. During the year ended January 1, 1999, the
Company paid Young, Williams, Henderson & Fuselier, P.A. fees in payment of
services rendered in connection with litigation, corporate and other matters. No
retainer fees were paid. The total of all such fees did not exceed five percent
of that firm's gross revenues for its last full fiscal year.
STOCK OPTION PLAN
The following table sets forth (a) all individual grants of Stock
Options made by the Company and its subsidiaries during the year ended January
1, 1999, to each of the executive officers named in the Summary Compensation
Table above, (b) the ratio that the number of options granted to each individual
bears to the total number of options granted to all employees of the Company and
its subsidiaries, (c) the exercise price and expiration date of such options,
and (d) estimated potential realizable values with respect to each grant of
options based on assumed appreciation rates of 5% (compounded annually) and 10%
(compounded annually):
8
<PAGE> 11
OPTIONS/SAR GRANTS
IN FISCAL YEAR ENDED JANUARY 1, 1999
<TABLE>
<CAPTION>
====================================================================================================================================
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
INDIVIDUAL GRANTS OF STOCK PRICE APPRECIATION
FOR OPTION TERMS
- ------------------------------------------------------------------------------------------------------------------------------------
% of Total Exercise or Expiration 5% ($) 10% ($)
Options/SARs Base Price Date
Name Options/SARs Granted to ($/Share)
Granted (#) Employees in
Fiscal Year
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jack Liles 25,000 26.3% $13.35 7/22/2003 $ 71,925 $154,893
Chairman of the Board, 1,380 1.5% $13.20 2/15/2003 3,926 8,454
President and CEO
- ------------------------------------------------------------------------------------------------------------------------------------
Steven K. Bevilaqua 21,167 22.3% $12.00 2/15/2008 $140,040 $344,924
President and CEO
- ------------------------------------------------------------------------------------------------------------------------------------
Benjamin C. Lee, Jr. 18,800 19.8% $13.20 2/15/2003 $136,818 $336,988
Chairman of the Board
- ------------------------------------------------------------------------------------------------------------------------------------
John J. Ritchie 4,856 5.1% $12.00 2/15/2008 $ 32,127 $ 79,130
Senior Vice President
Sales and Marketing
- ------------------------------------------------------------------------------------------------------------------------------------
Nancy M. Sawyer 6,498 6.8% $12.00 2/15/2008 $ 42,990 $105,887
Executive Vice President
and Chief Operating Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Steven L. Dutro 4,810 5.1% $12.00 2/15/2008 $ 31,823 $ 78,381
Chief Financial
Officer
====================================================================================================================================
</TABLE>
The following table sets forth (a) the number of shares received and
the aggregate dollar value realized in connection with each exercise of
outstanding stock options during the year ended January 1, 1999, by each of the
executive officers named in the Summary Compensation Table above; (b) the total
number and value of all outstanding unexercised options (separately identifying
exercisable and unexercisable options) held by such executive officers as of
January 1, 1999; and (c) the aggregate dollar value of all such unexercised
options that are in-the-money (i.e., when the fair market value of the common
stock that is subject to the option exceeds the exercise price of the option):
9
<PAGE> 12
AGGREGATED OPTION/SAR EXERCISES
IN FISCAL YEAR ENDED JANUARY 1, 1999
AND FISCAL YEAR-ENDED OPTION/SAR VALUES (1)
<TABLE>
<CAPTION>
====================================================================================================================================
Value of
Number of Unexercised
Name Shares Acquired Value Unexercised In-the-Money
on Exercise Realized Options/SARs at FY- Options/SARs
(#) ($) End (#) Exercisable/ at FY-End($)
Unexercisable (2) Exercisable/
Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jack Liles 9,000 $0
Chairman of the Board, 21,563 $0
President and CEO
- ------------------------------------------------------------------------------------------------------------------------------------
Steven K. Bevilaqua 0 $0
President and CEO 0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
Benjamin C. Lee, Jr. 0 $0
Chairman of the Board 0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
John J. Ritchie 1,250 $0
Senior Vice President 7,664 $0
Sales and Marketing
- ------------------------------------------------------------------------------------------------------------------------------------
Nancy M. Sawyer 0 $0
Executive Vice President 12,373 $0
and Chief Operating Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Steven L. Dutro 3,167 $0
Chief Financial 5,155 $0
Officer
====================================================================================================================================
</TABLE>
(1) Not included in this table are options granted pursuant to the Company's
Employee Stock Purchase Plan which are made available to all employees on an
equal basis. For a detailed discussion of the extent of the executive officers'
participation in the plan, see the discussion under the heading "Employee Stock
Purchase Plan".
(2) The number listed represents the number of shares of the Company's common
stock subject to all of the options held by the named officer.
EMPLOYEE STOCK PURCHASE PLAN ("ESPP")
The Company has in place its Employee Stock Purchase Plan ("ESPP")
pursuant to Section 423 of the Internal Revenue Code. The ESPP covers an
aggregate of 133,333 shares of the Company's common stock. 70,077 shares are
currently available for purchase under the ESPP. The purpose of the ESPP is to
promote employee ownership in the Company. The Company believes that employees
who participate in the ESPP will have a closer identification with the Company
by virtue of their ability as stockholders to participate in the Company's
growth and earnings. The ESPP is also designed to provide motivation for
participating employees to remain in the employ of the Company and to give a
greater effort on behalf of it.
The Company's Board of Directors acts as Administrator of the ESPP. The
Board does not receive any compensation from the ESPP. The Board of Directors
may, in its sole discretion, amend or terminate the ESPP, except that a
termination shall not affect any option granted under the ESPP and no amendment
may be made to the ESPP without approval of the stockholders if the amendment
would require the sale of more than 133,333 shares under the ESPP. Unless
earlier terminated, the ESPP will terminate when all 133,333 shares reserved for
the ESPP are sold.
10
<PAGE> 13
The ESPP permits eligible employees to purchase common stock in cash or
through payroll deductions that cannot exceed 20% of the employee's regular base
salary. Participants may purchase between 10 and 300 shares each year pursuant
to the ESPP, and if the number of shares subscribed for exceeds the number of
shares available in the ESPP, the purchase will be made pro rata. There are
restrictions on purchase of shares by owners of five percent of the voting stock
of the Company and holders of options to purchase stock of the Company outside
the ESPP. The purchase price for the stock is not less than 85% of its fair
market value at the beginning of the offering period and is set by the Board of
Directors or a committee thereof. Employees of the Company on October 1 of the
year in which an offering is made who are customarily employed by the Company
for at least 20 hours per week on a regular basis are eligible to participate in
the ESPP.
During 1998, no executive officers listed in the Summary Compensation
Table participated in the ESPP.
During 1998, 7 employees purchased 211 shares at $12.375 per share.
113 employees currently have outstanding subscriptions to purchase 10,766 shares
at $8.25 per share.
PERFORMANCE GRAPH
The following line graph compares cumulative five-year shareholder
returns (1) among the Company's Common Stock, the University of Chicago's Center
for Research in Securities Prices ("CRSP") Total Return Index for The NASDAQ
Stock Market, and the CRSP NASDAQ Trucking & Transportation Stocks Index:
11
<PAGE> 14
TOTAL RETURN FOR THE YEAR
<TABLE>
<CAPTION>
INDEX 1993 1994 1995 1996 1997 1998
- ----- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NASDAQ
COMPOSITE (US
ONLY) 100.0 97.7 138.2 170.0 208.7 292.9
NASDAQ TRUCKING
& TRANSPORTATION 100.0 90.7 105.7 116.7 149.5 133.1
KLLM TRANSPORT
SERVICES, INC. 100.0 103.1 73.7 65.8 89.5 51.8
</TABLE>
(1) Assumes $100.00 invested on December 31, 1993, and reinvestment of all
dividends.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. Such persons are also required to furnish the Company with copies
of all forms they file under this regulation. To the Company's knowledge, based
solely on a review of the copies of such reports furnished to the Company and
representations that no other reports were required, for the fiscal year ended
January 1, 1999, all Section 16(a) filing requirements applicable to its
directors and executive officers were complied with, except that the Form 3
holdings for Mr. A. K. Northrop were reported on Form 5, and a Form 4
transaction for Mr. Daniel M. Thomas, Jr. was reported on Form 5.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Ernst & Young LLP independent public accountants, to act as auditors
for the fiscal year ending December 31, 1999. Ernst & Young LLP have audited the
accounts of the Company since 1986. Representatives of Ernst & Young LLP are
expected to be present at the annual meeting and will have an opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions. Neither Ernst & Young LLP nor any of its partners has any
direct or indirect financial interest in the Company.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company no later than
November 27, 1999, to be included in the Company's proxy materials for the 2000
Annual Meeting. Shareholder proposals should be addressed to: KLLM Transport
Services, Inc., Post Office Box 6098, Jackson, Mississippi 39288, Attention
Secretary. No shareholder proposals were received for inclusion in the proxy
materials for the 1999 meeting.
Shareholders who wish to present any business at the 2000 Annual
Meeting are required to notify the Corporate Secretary of their intent no later
than February 9, 2000. This requirement does not apply to the deadline for
submitting shareholder proposals for inclusion in the proxy materials (see
above), nor does it apply to questions a shareholder may wish to ask at the
meeting.
The Company retains discretion to vote proxies it receives with respect
to proposals received after February 9, 2000. The Company retains discretion to
vote proxies it receives with respect to proposals received on or prior to
February 9, 2000, provided (i) the Company includes in its proxy statement
advice on the nature of the proposal and how it intends to exercise its voting
discretion, and (ii) the proponent does not issue a proxy statement.
12
<PAGE> 15
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the meeting. However, if any other matters are properly brought before
the meeting, the proxies named in the enclosed proxy will vote in accordance
with their best judgment on such matters.
13
<PAGE> 16
Appendix A
KLLM TRANSPORT SERVICES, INC.
THIS PROXY IS BEING SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS.
The undersigned hereby appoints Jack Liles and Steven L. Dutro, or either of
them, as proxies with the power to appoint their substitutes and hereby
authorizes them to represent and vote, as designated below, all the shares of
Common Stock of KLLM Transport Services, Inc. (the "Company"), held of record by
the undersigned on March 18, 1999, at the Annual Meeting of Stockholders of KLLM
Transport Services, Inc., to be held on Thursday, April 29, 1999, and at any
adjournments thereof, with all powers the undersigned would possess if
personally present.
1. Election of Directors. (Check only one box below. TO WITHHOLD AUTHORITY
FOR ANY INDIVIDUAL NOMINEE, STRIKE THROUGH THE NAME OF THE NOMINEE.)
[ ] To vote for all the nominees listed below:
Jack Liles; Walter P. Neely; Leland R. Speed; James Leon Young
or
[ ] To withhold authority to vote for all nominees listed above.
2. Ratification of the selection of Ernst & Young LLP as the Company's
independent auditors (check only one box below).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournments
thereof. If a nominee for director is unable to serve or, for good cause,
will not serve as director, the proxies may vote for any person for
director in their discretion.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES
LISTED AND FOR THE PROPOSALS SOLICITED. THE UNDERSIGNED HEREBY REVOKES ANY PROXY
HERETOFORE GIVEN BY THE UNDERSIGNED TO VOTE AT THE ANNUAL MEETING. THIS PROXY
MAY BE REVOKED PRIOR TO ITS EXERCISE, EITHER IN PERSON OR IN WRITING.
----------------------------------
Signature (Seal)
----------------------------------
Signature if held jointly (Seal)
, 1999
-----------------------------
(Date)
1. Sign your name exactly as
it appears on the label.
2. When signing as attorney,
executor, administrator,
trustee, or guardian, please
state full title as such.
3. If a corporation, please sign
in full corporate name by
president or other authorized
officer.
4. If a partnership, please sign
in partnership name by
authorized person.
5. When shares are held jointly,
both stockholders must sign
this proxy.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
POSTAGE-PAID ENVELOPE.
