Pioneer Railcorp
1318 S. Johanson Road
Peoria, Illinois 61607
309-697-1400
Proxy Statement
This Proxy Statement and the accompanying proxy will be sent to stockholders of
Pioneer Railcorp on our about May 28, 1996, in connection with the solicitation
by the Board of Directors of proxies to be used at the Annual Meeting of
Stockholders of the Company to be held at Pioneer Railcorp's corporate office,
1318 S. Johanson Road, Peoria, Illinois 61607, on Wednesday, June 26, 1996,
commencing at 9:00 a.m. local time. The Company's Annual Report for 1995,
including financial statements, is also included herein.
The record date for stockholders entitled to vote at the Annual Meeting is April
30, 1996. As of April 30, 1996, the Company had issued and outstanding 4,515,973
shares of common stock, of which 4,515,973 were entitled to one vote per share.
It is the Company's policy that all proxies, ballots, and voting tabulations
that identify shareholders will be kept confidential, except where disclosure
may be required by applicable law, where shareholders write comments on their
proxy cards, or where disclosure is expressly requested by a shareholder.
The Proxy
Any person giving a proxy has the power to revoke it at any time before it is
voted, upon written notice to J. Michael Carr, Chief Financial Officer of the
Company.
Any proxy cards returned without specification will be voted as to each proposal
in accordance with the recommendations of the Board of Directors.
The Company will bear the costs of solicitation of proxies. Following the
mailing of proxy soliciting material, proxies may be solicited by directors,
officers and regular employees of the Company in person or by telephone or fax.
The Company will also reimburse persons holding stock for others in their names
or in those of their nominees for their reasonable expenses in sending proxy
material to their principals and obtaining their proxies.
Beneficial Ownership of Stock
There are no shareholders, as of March 26, 1996, known by the Company to be
beneficial owners of more than 5% of its outstanding common stock other than
Company directors and officers.
Nominees for Election as Directors
Guy L. Brenkman, age 48, Chairman of the Board of Directors and President of
Pioneer Railcorp and its subsidiaries was the incorporator of the Company and
has been a member of the Board of Directors and President of the Company since
its formation. Mr. Brenkman's past business experience includes real estate
sales and management, securities sales, and seven years outside railroad
industry experience before managing the day to day railroad operations of
Pioneer in 1988. Mr. Brenkman, acting as agent of the Issuer conducted the
public offering of Pioneer Railcorp, which raised its initial capital, and
secondary capital for expansions.
Orvel L. Cox, age 53, Director, also serves as same for each of the Company's
subsidiaries and Superintendent Car Department for same. Mr. Cox has 36 years of
active railroading experience, with 31 of those years working for Class I
railroads. Mr. Cox has been a director and/or officer of Pioneer since it's
inception and has been involved in all phases of the development and growth of
the Company.
John P. Wolk, age 46, Director and Treasurer for Pioneer, was elected to the
Board in 1991. Mr. Wolk is Director of Distribution for Kimball International
(NASDAQ symbol "KBALB") and previously spent seventeen years with Peabody Coal
Company, most recently as Vice President-Treasurer & Controller. Mr. Wolk holds
an MBA-Finance from St. Louis University and a BS-Business Administration from
the University of Missouri.
<PAGE>
John S. Fulton, age 62, Director, was elected to the Board in 1993. For the past
sixteen (16) years, Mr. Fulton has been in the real estate business
concentrating in retail sales, real estate development and appraising. Mr.
Fulton presently works as a Sales Agent for Purple Reality. Mr. Fulton's
previous positions include Industrial Appraising (6 years) with Cole, Layer
Trumble of Dayton, Ohio, and 5 years with Pepsi-Cola. Mr. Fulton holds a BS
degree in Public Administration from Bradley University in Peoria, Illinois.
J. Michael Carr, age 32, Assistant Treasurer, also serves as Treasurer for each
of the Company's subsidiaries and Chief Financial Officer for same. Mr. Carr has
been employed by the Company since March 1993 and was elected to the board in
1995. Before joining the Company, Mr. Carr worked in public accounting and
banking for seven years, most recently as Controller for United Federal Bank.
Mr. Carr is a CPA and holds a BS-Accounting from Illinois State University,
Normal, Illinois.
General Information Relating to the Board of Directors
The Board of Directors of the Corporation consists of five members, each elected
for a term of one year. The board met a total of 3 times in 1995, at which time
all directors were present.
Compensation of Directors
Directors of the Company were compensated $1,000 in 1995 and receive
reimbursement for out of pocket expenses. No compensation was paid to directors
prior to 1995 in excess of $200.
Committees
The Audit Committee is the only standing committee of the Board of Directors.
The purpose of the Audit Committee is to recommend to the Board of Directors the
engagement of, and the fee to be paid to, the independent public accountants.
The Audit Committee also reviews with the independent accountants as deemed
necessary, the Corporation's accounting policies, conflict of interest policy,
internal control systems and financial operations and reporting. The committee
met once in 1995 and current members of this committee are John P. Wolk, John S.
Fulton, and Orvel L. Cox.
Security Ownership of Directors and Executive Officers
The following table sets forth information, as of March 26, 1996, the beneficial
ownership of all directors and officers of the Company as a group. These figures
include shares of Common Stock that the executive officers have the right to
acquire within 60 days of March 26, 1996 pursuant to the exercise of stock
options and warrants.
Title of Class: Common Stock ($.001 par value)
Beneficial Percent
Name Of Beneficial Owner Ownership Of Class
------------------------ ---------- --------
Guy L. Brenkman (2.) ...................... 3,478,858 37.4%
Orvel L. Cox (3.) ......................... 234,806 2.5%
Daniel A. LaKemper (4.) ................... 144,054 1.6%
John P. Wolk (5.) ......................... 144,000 1.6%
John S. Fulton (6) ........................ 42,000 .5%
J. Michael Carr (7) ....................... 67,716 .7%
--------- -----
Directors and Executive
Officers as a Group: ...................... 4,111,434 44.3%(1)
========= =====
FOOTNOTES:
(1) Based on 9,303,657 shares of Common Stock and Equivalents outstanding as of
March 25, 1996.
(2) Of the total number of shares shown as owned by Mr. Brenkman, 60,606 shares
represent the number of shares Mr. Brenkman has the right to acquire within
60 days upon the exercise of options granted under the Company's 1994 Stock
Option Plan, and 1,740,800 shares represent the number of shares Mr.
Brenkman has the right to acquire within 60 days through the exercise of
Warrants. Mr. Brenkman owns all shares in joint tenancy with his wife. In
addition 7,052 shares are held by Mr. Brenkman under the Pioneer Railcorp
Retirement Savings Plan and 2,340 shares are held by Mr. Brenkman's wife,
in which he disclaims beneficial ownership.
<PAGE>
(3) Of the total number of shares shown as owned by Mr. Cox, 66,666 shares
represent the number of shares Mr. Cox has the right to acquire within 60
days upon the exercise of options granted under the Company's 1994 Stock
Option Plan, and 101,770 shares represent the number of shares Mr. Cox has
the right to acquire within 60 days through the exercise of Warrants. In
addition 1,500 shares are held by Mr. Cox under the Pioneer Railcorp
Retirement Savings Plan. Mr. Cox's shares are owned in joint tenancy with
his wife. Mr. Cox and his wife own one Preferred Share in the Mississippi
Central Railroad Co.
(4) Of the total number of shares shown as owned by Mr. LaKemper, 66,666 shares
represent the number of shares Mr. LaKemper has the right to acquire within
60 days upon the exercise of options granted under the Company's 1994 Stock
Option Plan, and 40,000 shares represent the number of shares Mr. LaKemper
has the right to acquire within 60 days through the exercise of Warrants.
In addition 388 shares are held by Mr. LaKemper under the Pioneer Railcorp
Retirement Savings Plan. Mr. LaKemper's shares are owned in joint tenancy
with his wife.
(5) Of the total number of shares shown as owned by Mr. Wolk, 22,000 shares
represent the number of shares Mr. Wolk has the right to acquire within 60
days upon the exercise of options granted under the Company's 1994 Stock
Option Plan, and 61,000 shares represent the number of shares Mr. Wolk has
the right to acquire within 60 days upon the exercise of Warrants. Mr. Wolk
has 60,000 shares held in joint tenancy with his wife. Mr. Wolk and his
wife jointly own ten Preferred Shares of the Alabama Railroad Co.
(6) Of the total number of shares shown as owned by Mr. Fulton, 22,000 shares
represent the number of shares Mr. Fulton has the right to acquire within
60 days upon the exercise of options granted under the Company's 1994 Stock
Option Plan, and 10,000 shares represent the number of shares Mr. Fulton
has the right to acquire within 60 days upon the exercise of Warrants.
(7) Of the total number of shares shown as owned by Mr. Carr, 66,666 shares
represent the number of shares Mr. Carr has the right to acquire within 60
days upon the exercise of options granted under the Company's 1994 Stock
Option Plan, and 1,000 shares represent the number of shares Mr. Carr has
the right to acquire within 60 days through the exercise of Warrants.
There are no shareholders known by the Registrant to be beneficial owners of
more than 5% of its outstanding common stock other than Mr. Brenkman.
Compensation of the Chief Executive Officer
Summary Compensation Table
- ------------------------------------
Annual
Compensation Long Term Compensation
---------------- --------------------------------------
Restricted
Name & Stock Other
Position Year Salary Award Options/SARs Compensation
- -------- ---- -------- --------- ------------ -------------
Guy L. Brenkman, CEO 1995 $310,546 ---- 37,000 $4,500 (a)
1994 $227,609 ---- 150,000 $4,500 (a)
1993 $206,925 $125,000
(a) - Registrant's contribution to the Company's defined contribution plan.
Option/SAR Grants in Last Fiscal Year
- ----------------------------------------------
% of Total
Options Granted
to Employees
Options in the Fiscal Exercise Expiration
Name Granted Year Price Date
- ---------- ------- -------------- ----------- ----------
Guy L. Brenkman - CEO ...... 20,000 8% $ 3.92 6/16/00
Guy L. Brenkman - CEO ....... 17,000 7% $ 4.40 7/5/00
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
- ---------------------------------------------------
Number
of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End At FY-End
Shares Acquired Value Exercisable/ Exercisable/
On Exercise Realized Unexercisable Unexercisable
--------------- -------- ------------- ---------------
Guy Brenkman-CEO 0 0 167,000/0 $202,500/0
In December 1993, the Company entered into a five-year executive employment
contract with the Company's president. The five-year agreement provides for a
base salary with annual inflation adjustments based upon the Consumer Price
Index. Should the Company acquire or form additional railroads, the base salary
will increase $25,000 for the acquisition of railroads of 125 miles or less, and
$50,000 for railroads over 125 miles. At December 31, 1995, the president's base
salary was $271,625. Should the president's employment be terminated, the
contract requires a lump sum payment equal to three years of his then current
salary. Should the president retire, he is entitled to a lump sum payment of one
year's salary.
Director's of the Registrant each were compensated $1,000 in 1995.
Proposal 1 - Ratification of Appointment of Independent Public Accountants
The Board of Directors, upon recommendation of its Audit Committee, has
appointed McGladrey & Pullen, LLP, Certified Public Accountants and Consultants,
as independent public accountants of the Company with respect to its operations
for the year 1996, subject to ratification by the holders of common stock of the
Company. In taking this action, the members of the Board and the Audit Committee
considered carefully McGladrey's performance for the Company with respect to
services performed in 1995 and 1994, and its general reputation for adherence to
professional auditing standards.
The Board of Directors recommends a vote FOR this proposal.
Proposal 2 - By the Company, approval of Stock Option Plan
At the Company's Board of Directors meeting on May 28, 1996, the directors voted
for a resolution authorizing the adoption of the Stock Option Plan described
below in this proxy statement, and directed that the Company submit the plan to
the stockholders at the June 26, 1996 annual shareholder meeting.
The Board of Directors unanimously recommends a vote FOR the adoption of the
following resolution, which will be presented at the June 26, 1996 at the annual
shareholder meeting:
BE IT RESOLVED by the shareholders of Pioneer Railcorp, that the Option Plan
approved by the Board of Directors on May 26, 1996 shall be deemed to be
effective as of June 26, 1996.
The Board of Directors believe that the proposed Stock Option Plan is a key
element in achieving the Company's continued financial and operational success.
This plan has been designed to reward and motivate executives, managers, and
employees to work as a team to achieve our corporate goal of maximizing
shareholder return. A summary of the Stock Option Plan follows:
Stock Option Plan Summary:
June 26, 1996
<PAGE>
In as much as Pioneer stockholders stand to be rewarded with higher share prices
as the Company's management team grows and expands the Company, and stock
investment advisors look favorably on such plans; and the board believes that a
stock option plan is desirable method of compensation for officers, directors
and key employees, in that it will assist in the recruitment and retention of
qualified individuals, and fairly compensates the management team based upon
their performance; the Board of Directors hereby approves and recommends to the
shareholders a plan providing for the issuance of the following options:
Options shall be issued to the following groups:
Guy Brenkman, CEO ............................................. 80,000
Executive Group ............................................... 80,000
Non-Executive Director Group .................................. 25,000
Employee Group ................................................ 222,000
Total .................................................... 407,000
Exercise Price: The exercise price shall be equal to the market price of the
stock on the date of grant. In the case of a 10% or more owner, the exercise
price will be equal to 110% of the market price of the stock on the date of
grant if the options are to be considered incentive stock options under Internal
Revenue Service regulations.
Exercise Period: The options will be fully vested and exercisable as of July 1,
2001. The vesting and exercise date of the options will be accelerated to the
10th consecutive business day that the stock trades at a price at least $4.50
greater than the price of the stock at the close of business on June 26, 1996.
Vested options may be exercised, in whole or in part, within 10 years from date
of grant.
Option shares shall survive only if the option holder's employment remains
active with the Company until the options vest, unless the option holder dies
prior thereto, in which case the holder's estate shall receive a pro-rata number
of shares, based upon the time the employee worked under the plan. Any vested,
unexercised options owned by a holder at death shall become property of the
Holder's estate.
Stockholder Proposals
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission. In order for a stockholder proposal for the 1996 Annual Meeting of
Stockholders to be eligible for inclusion in the Corporation's Proxy Statement
and form of proxy, it must be received by the Corporate Secretary no later than
January 24, 1997.
Other Matters
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than as set forth above. However, if any other matters come
before the Meeting, the proxies received pursuant to this solicitation will be
voted thereon in accordance with the judgment of the person or persons acting
under the proxies.
/s/ Pioneer Railcorp
Pioneer Railcorp
May 28, 1996
