<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 MAY 26, 2000
---------------------
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, AmSouth
Plaza (formerly Deposit Guaranty Plaza), 210 East Capitol Street, Jackson,
Mississippi, on Friday, May 26, 2000, at 10:00 a.m., Jackson time, for the
purpose of considering and acting upon the following matters:
1. Election of five 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 29, 2000.
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 April 7, 2000, 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
Secretary
Date: May 1, 2000
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 MAY 26, 2000
The following information is furnished in connection with the Annual
Meeting of Shareholders of KLLM Transport Services, Inc. (the "Company") to be
held on Friday, May 26, 2000 at 10:00 a.m., Jackson time, in the Board Room, 4th
Floor, AmSouth Plaza (formerly Deposit Guaranty Plaza), 210 East Capitol Street,
Jackson, Mississippi. A copy of the Company's annual report to shareholders for
the fiscal year ended December 31, 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 May 1, 2000. Shareholders of record at the close of business on
April 7, 2000, are eligible to vote at the Annual Meeting. As of the record
date, 4,103,478 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 five. Unless otherwise specified, proxies will
be voted FOR the election of the five 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 (i) FOR the five
nominees listed below. Nominees Jack Liles, James Leon Young, Walter P. Neely,
Leland R. Speed and David L. Metzler are now directors of the Company.
1
<PAGE> 4
NOMINEES FOR DIRECTOR
The table below sets forth certain information regarding the nominees for
election to the Board of Directors:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE FOR THE
NAME AND POSITION AGE PAST FIVE YEARS AND TENURE WITH THE COMPANY
- ----------------- --- -------------------------------------------------
<S> <C> <C>
Jack Liles................................ 49 Employee of the Company since 1974; Chairman of the
Chairman of the Board, President, and Board since March, 1999; President and Chief
Chief Executive Officer Executive Officer since 1998; Vice
President -- Sales and Marketing from 1996 to 1998;
President -- Rail Services from 1994 to 1996; Vice
President -- Sales and Marketing -- West from 1990
to 1994; Vice President-Marketing from 1986 to 1990;
Director since 1998.
James Leon Young.......................... 69 Attorney, Young, Williams, Henderson & Fuselier,
Secretary and Director P.A., Jackson, Mississippi; Director since 1965;
Secretary since 1982.
Walter P. Neely........................... 55 Professor of Finance, Millsaps College, Jackson,
Director Mississippi; Private Consultant, Trustee,
Performance Funds Trust, New York, New York, since
1992; Director since 1986.
Leland R. Speed........................... 67 Chairman and Director of Delta Industries, Inc. from
Director 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; 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; Director of Mississippi
Valley Gas Co. from 1984 to present; Chairman of
Parkway Properties, Inc. from 1993 to present; Chief
Executive Officer of Parkway Properties, Inc. 1993
to 1997; Director since 1995.
David L. Metzler.......................... 56 Chairman and President of Carlisle Carrier Corp.,
Director Mechanicsburg, Pennsylvania since 1989; Director of
Raffles Insurance Ltd. since 1994; First Vice
President of Raffles Insurance Ltd. since 1998;
Member of the Executive Committee of Raffles
Insurance Ltd. since 1998; Member of the Long Range
Planning Committee of Raffles Insurance Ltd. since
1996; Member of the Finance Committee of Raffles
Insurance Ltd. since 1995; Director since February,
2000.
</TABLE>
2
<PAGE> 5
STOCK OWNERSHIP
The following table indicates the beneficial ownership as of April 7, 2000,
unless otherwise indicated below, of the Company's common stock by each nominee
and director, the CEO and the two 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) 15.3%
Marital Trust
Jack Liles................................................ 699,644(2) 17.0%
Wynne Liles Appleton...................................... 689,354(3) 16.8%
B. C. Lee, L.P............................................ 400,000(4) 9.75%
Benjamin Clinton Lee, III................................. 400,000(5) 9.75%
Ruth Ann Lee Lyles........................................ 400,000(6) 9.75%
J. Tayloe Simmons, Jr., Esq............................... 400,000(7) 9.75%
James Leon Young.......................................... 18,450(8) Less than 1%
Walter P. Neely........................................... 10,346(9) Less than 1%
Leland R. Speed........................................... 5,783 Less than 1%
David L. Metzler.......................................... 300 Less than 1%
Nancy M. Sawyer........................................... 24,764(10) Less than 1%
Steven L. Dutro........................................... 9,885(11) Less than 1%
Brinson Partners, Inc..................................... 374,131(12) 9.1%
UBS AG.................................................... 374,131(12) 9.1%
Dimensional Fund Advisors, Inc............................ 316,098(13) 7.70%
Franklin Resources, Inc................................... 295,900(14) 7.2%
Charles B. Johnson........................................ 295,900(14) 7.2%
Rupert H. Johnson, Jr..................................... 295,900(14) 7.2%
Franklin Advisory Services, LLC........................... 295,900(14) 7.2%
Robert E. Low............................................. 544,750(15) 13.3%
Officers & Directors, as a Group (7 persons).............. 769,172(16) 18.6%
</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. 61 shares are unissued but are subject to an option that is
exercisable at any time prior to June 30, 2007. 460 shares are unissued but
are subject to an option that is exercisable at any time prior to February
15, 2003. 10,000 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-
3
<PAGE> 6
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) 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 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 replaced
Mr. Benjamin C. Lee, Jr. as a General Partner of the Limited Partnership.
(5) 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) 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) The address for Mr. Simmons is 501 South State Street, Jackson, Mississippi
39201. Shared voting power and shared dispositive power are claimed as to
all 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 replaced Mr. Benjamin C. Lee, Jr. as a General Partner
of the Limited Partnership.
(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) 2,166 shares are unissued but are subject to an option that is exercisable
at any time prior to February 15, 2008. 1,958 shares are unissued but are
subject to an option that is exercisable at any time prior to June 30,
2007. 19,500 shares are owned jointly with her husband. 570 shares are
owned by her husband.
(11) 5,000 shares are jointly owned with Mr. Dutro's wife. 3,167 shares are
unissued but are subject to options that are exercisable at any time prior
to March 19, 2002. 1,603 shares are unissued but are subject to an option
that is exercisable at any time prior to February 15, 2008. 115 shares are
unissued but are subject to an option that is exercisable at any time prior
to June 30, 2007.
(12) Ownership is as of December 31, 1999. Sole 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.
(13) 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401. Ownership is
as of December 31, 1999. Beneficial ownership of all shares is disclaimed.
Sole voting power and sole dispositive power are claimed as to all shares.
(14) 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, LLC is One Parker Plaza,
Sixteenth Floor, Ft. Lee, New Jersey 07024. Sole voting power and sole
dispositive power are claimed by Franklin Advisory Services, LLC 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, LLC is the investment
advisor. Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson,
Jr. and Franklin Advisory Services, LLC disclaim any economic interest or
beneficial ownership in any of the shares. Ownership is as of December 31,
1999.
(15) Based on Schedule 13D filed April 6, 2000, Mr. Low, Richard D. Hoedl and C.
Stephen Wutke comprise a group under Section 13d of the Securities Exchange
Act of 1934, as amended. Includes 539,600 shares to which Mr. Low claims
sole voting and sole dispositive power, 4,150 shares as to which Mr. Hoedl
claims sole voting and sole dispositive power and 1,000 shares as to which
Mr. Wutke claims
4
<PAGE> 7
sole voting and sole dispositive power. The address for Mr. Low is 2740
North Mayfair, Springfield, Missouri 65803.
(16) 19,530 shares are unissued but are subject to options exercisable at
various times.
MANAGEMENT
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
NAME, POSITION AND TENURE WITH THE COMPANY AGE FOR THE PAST FIVE YEARS
- ------------------------------------------ --- --------------------------------------------
<S> <C> <C>
Jack Liles................................ 49 See table under Election of Directors .
Chairman of the Board, President, and
Chief Executive Officer
James Leon Young.......................... 69 See table under Election of Directors.
Secretary and Director
Steven L. Dutro........................... 44 Employee of the Company since 1986; Senior Vice-
Senior Vice-President and Chief President since 1999; Chief Financial Officer since
Financial Officer 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........................... 55 Employee of the Company since 1995; Senior Vice-
Senior Vice-President and Chief President since 1999, Chief Operating Officer since
Operating Officer 1998; 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.
</TABLE>
The executive officers have no particular terms of office. They each serve at
the discretion of the Board of Directors.
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 December 31, 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 December
31, 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.
5
<PAGE> 8
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 December 31, 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. Speed
(Chairman), Mr. Young and Mr. Metzler.
The Compensation Committee reviews the compensation for the officers of the
Company. The Compensation Committee did not meet in the year ended December 31,
1999. The functions of the Compensation Committee were performed by the full
Board of Directors during 1999 after Mr. C. Tom Clowe, Jr. (former Chairman of
the Committee) ceased to be a director.
The Company does not have a nominating committee.
During the year ended December 31, 1999, the Board of Directors met on
seven occasions.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid by the Company and its
subsidiaries to the Company's Chief Executive Officer and to the Company's two
most highly compensated executive officers other than the Chief Executive
Officer who were serving as executive officers at the end of the year ended
December 31, 1999, for services rendered in all capacities to the Company and
its subsidiaries during the fiscal years ended December 31, 1999, January 1,
1999, January 2, 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
----------------
ANNUAL COMPENSATION LTIP ALL
------------------------- PAY- OTHER
SALARY BONUS OPTIONS OUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($) ($)
- --------------------------- ---- -------- ------- ------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Jack Liles.................................................. 1999 $160,000 -- -- $6,400(1)
Chairman of the Board, 1998 127,916 -- 26,380 4,567
President and CEO 1997 101,250 $30,974 183 4,050
Nancy M. Sawyer............................................. 1999 $140,000 -- -- $5,600(1)
Senior Vice President 1998 110,000 -- 6,498 4,400
and Chief Operating Officer 1997 110,000 $79,518 5,875 4,400
Steven L. Dutro............................................. 1999 $142,500 -- -- $5,700(1)
Senior Vice President and 1998 116,666 -- 4,810 4,667
Chief Financial Officer 1997 95,153 $54,362 345 3,806
</TABLE>
- ---------------
(1) Comprised of matching contributions by the Company to the officer's 401(k)
Retirement Plan Account.
The Company has no employment agreements with its executive officers.
Effective December 30, 1999, Mr. Liles entered into a Change In Control
Agreement with KLLM, Inc., the wholly owned subsidiary of the Company. The term
of the Change In Control Agreement began December 30, 1999 and continues until
December 30, 2000. If Mr. Liles' employment with KLLM, Inc. is terminated within
twelve months after a "change in control" due to (i) Mr. Liles' termination by
KLLM, Inc. without "cause" or (ii) Mr. Liles' resignation for "good reason,"
then KLLM, Inc. will pay to Mr. Liles a bonus equal to but not less than 200% of
his gross annual salary as of December 30, 1999, in cash, less applicable
withholding taxes. The bonus shall be due and payable on the date Mr. Liles'
employment is
6
<PAGE> 9
terminated as described above. Mr. Dutro and Ms. Sawyer entered into Change In
Control Agreements identical to Mr. Liles' Change In Control Agreement.
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
1999, Dr. Neely, Mr. Young and Mr. Speed received $12,500 worth of common stock
for their services as directors, which included their services at all quarterly
and special Board meetings. In 1999, Mr. C. Tom Clowe, Jr. received $4,167 worth
of common stock for his service as a director during the first and second
quarters of 1999. The Company's standard arrangement is to pay directors who are
not also full-time employees of the Company $750 worth of common stock for each
committee meeting attended as members and $1,000 worth of common stock for each
committee meeting attended as chairman. In 1999, Dr. Neely, Mr. Young and Mr.
Speed received common stock worth $2,000, $1,500 and $1,500, respectively, for
their services at committee meetings attended.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The full Board of Directors (performing the functions of the Compensation
Committee during 1999) approved 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 Board determined that the salary of
Jack Liles as Chairman of the Board, President and Chief Executive Officer would
be $160,000 per year. The Compensation Committee generally provides incentives
to executive officers through a bonus program which is linked to profit
performance. Salaries are based on comparable salaries for similar positions in
the industry.
Jack Liles
James Leon Young
Walter P. Neely
Leland R. Speed
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The functions of the Compensation Committee were performed by the full
Board of Directors (Mr. Liles, Mr. Young, Dr. Neely and Mr. Speed) during 1999
after Mr. C. Tom Clowe, Jr. (former Chairman of the Committee) ceased to be a
director. Mr. Liles is currently serving as Chairman of the Board, President and
Chief Executive Officer. Mr. Liles has served as Chairman of the Board since
March, 1999, and as President and Chief Executive Officer since 1998. 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 December 31, 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
No grants of Stock Options were made by the Company and its subsidiaries
during the year ended December 31, 1999.
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 December 31, 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 December 31,
1999; and (c) the aggregate dollar value of all such unexercised
7
<PAGE> 10
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):
AGGREGATED OPTION/SAR EXERCISES
IN FISCAL YEAR ENDED DECEMBER 31, 1999
AND FISCAL YEAR-ENDED OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT
OPTIONS/SARS AT FY- FY-END ($)
END(#)EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE(2) UNEXERCISABLE
- ---- ------------------- --------------------
<S> <C> <C>
Jack Liles................................................ 10,061 $0
Chairman of the Board, 16,502 $0
President and CEO
Nancy M. Sawyer........................................... 1,958 $0
Senior Vice President and 10,415 $0
Chief Operating Officer
Steven L. Dutro........................................... 3,282 $0
Senior Vice President and 5,040 $0
Chief Financial 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. 69,917 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.
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
8
<PAGE> 11
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 1999, no executive officers listed in the Summary Compensation Table
participated in the ESPP.
During 1999, 4 employees purchased 210 shares at $8.25 per share. 428
employees currently have outstanding subscriptions to purchase 9,334 shares at
$7.50 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:
<TABLE>
<CAPTION>
NASDAQ COMPOSITE (US NASDAQ TRUCKING & KLLM TRANSPORT SERVICES,
ONLY) TRANSPORTATION INC.
-------------------- ----------------- ------------------------
<S> <C> <C> <C>
1994 100.0 100.0 100.0
1995 141.4 116.6 71.5
1996 174.0 128.7 63.8
1997 213.1 165.4 86.8
1998 300.3 148.8 50.2
1999 542.6 158.9 32.3
</TABLE>
- ---------------
(1) Assumes $100.00 invested on December 31, 1994 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
December 31, 1999, all Section 16(a) filing requirements applicable to its
directors and executive officers were complied with, except that a Form 4
transaction for Mr. James Sorrels was reported on Form 5 and a Form 4
transaction for Mrs. Wynne Liles Appleton was reported on Form 5.
9
<PAGE> 12
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 29, 2000. 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
December 31, 2000, to be included in the Company's proxy materials for the 2001
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 2000 meeting.
Shareholders who wish to present any business at the 2001 Annual Meeting
are required to notify the Corporate Secretary of their intent no later than
March 16, 2001. 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 March 16, 2001. The Company retains discretion to vote
proxies it receives with respect to proposals received on or prior to March 16,
2001, 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.
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.
10
<PAGE> 13
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, all the shares of
Common Stock of KLLM Transport Services, Inc. (the "Company"), held of record
by the undersigned on April 7, 2000, at the Annual Meeting of Stockholders of
KLLM Transport Services, Inc., to be held on Friday, May 26, 2000, in the 4th
Floor Board Room at AmSouth Plaza (formerly Deposit Guaranty Plaza): 210 East
Capitol Street, Jackson, MS 39201 at 10:00 A.M. and at any adjournments
thereof, with all powers the undersigned would possess if personally present.
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.
(Continued and to be signed on reverse side.)
<PAGE> 14
KLLM TRANSPORT SERVICES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER, USING DARK PEN ONLY: [ ]
<TABLE>
<S> <C> <C>
1. Election of Directors For Withhold For All 2. Ratification of the For Against Abstain
Nominations All All (Except) selection of Ernst & Young [ ] [ ] [ ]
01 Jack Liles 02 David L. Metzler [ ] [ ] [ ] as the Company's
03 Walter P. Neely 04 Leland R. Speed independent auditors
05 James L. Young
- ----------------------------------------
(Write nomination(s) excepted above)
THIS SPACE RESERVED FOR ADDRESSING
(key lines do not print)
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
THIS SPACE RESERVED FOR ADDRESSING proxies may vote for any person for
(key lines do not print) director in their discretion.
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)
---------------------------------------------
(Date)
</TABLE>
Sign your name exactly as it appears on the label. When signing as an attorney,
executor administrator, trustee, or guardian, please state 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. When shares are held jointly, both stockholders must sign
this proxy.
- ------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
