SCHEDULE 14A- Information required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
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Pioneer Railcorp
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(Name of Registrant as Specified in its Charter)
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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 or about May 7, 1999, 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 Tuesday, June 15, 1999,
commencing at 9:00 a.m. local time. The Company's Annual Report for 1998,
including financial statements, is also included herein.
The record date for stockholders entitled to vote at the Annual Meeting is April
30, 1999. As of April 30, 1999, the Company had issued and outstanding 4,610,697
shares of common stock, of which 4,610,697 are entitled to one vote per share.
The presence, in person or by proxy, of the holders of a majority of the total
number of shares entitled to vote constitutes a quorum for the transaction of
business at the meeting. Assuming that a quorum is present, the affirmative vote
of a majority of the shares of the Company present in person or represented by
proxy at the Meeting, and entitled to vote, is required for the election of
directors and for the ratification of McGladrey & Pullen, LLP as the independent
auditors of the Company for the fiscal year ending December 31, 1999.
Votes cast by proxy or in person at the meeting will be tabulated by an
appointed employee of the Company and will determine if a quorum is present.
Abstentions will be treated as shares that are present and entitled to vote for
purposes of determining the presence of a quorum, but as unvoted for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
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 19, 1999, 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 52, 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 of operational 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.
<PAGE>
Orvel L. Cox, age 56, Director, also serves as same for each of the Company's
subsidiaries and Superintendent of Transportation for same. Mr. Cox has 39 years
of active railroading experience with 31 of those years working for Class I
railroads. Mr. Cox has been a director and officer of Pioneer Railcorp since its
inception and has been involved in all phases of the development and growth of
the Company.
John S. Fulton, age 66, Director, was elected to the Board in 1993. Mr. Fulton
has 25 years experience in real estate development and industrial appraising.
Mr. Fulton holds a BS degree in Public Administration from Bradley University in
Peoria, Illinois.
J. Michael Carr, age 35, 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. 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.
Timothy F. Shea, age 50, owns RE/MAX Property Management and has been a real
estate property manager with RE/MAX since 1984. Mr. Shea has a BS-Business
Management from Bradley University, Peoria, 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 6 times in 1998, at which time
all directors were present.
Compensation of Directors
Directors of the Company were each compensated $2,000 in 1998 and received
reimbursement for out of pocket expenses.
Committees
The Audit Committee is the only standing committee of the Board of Directors.
The purpose of the Audit Committee is to recommend to the Board of Directors the
engagement of, and the fee to be paid to, the independent public accountants.
The Audit Committee also reviews with the independent accountants as deemed
necessary, the Corporation's accounting policies, conflict of interest policy,
internal control systems, and financial operations and reporting. The committee
met 3 times in 1998. Current members of this committee are Timothy F. Shea, John
S. Fulton, and Orvel L. Cox.
Security Ownership of Directors and Executive Officers
The following table sets forth information, as of March 19, 1999, regarding the
beneficial ownership of all directors and officers of the Company as a group.
These figures include shares of Common Stock that the executive officers have
the right to acquire within 60 days of March 19, 1999 pursuant to the exercise
of stock options and warrants.
Title of Class: Common Stock ($.001 par value)
Beneficial Percent
Name Of Beneficial Owner Ownership Of Class
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Guy L. Brenkman (2) .................. 3,493,395 39.09%
Orvel L. Cox (3) ..................... 198,520 2.22%
Daniel A. LaKemper (4) ............... 97,798 1.09%
John S. Fulton (5) ................... 42,200 .47%
J. Michael Carr (6) .................. 53,050 .59%
Kevin Williams (7) ................... 11,100 .12%
Tim Shea ............................. 5,000 .06%
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Directors and Executive
Officers as a Group: ............... 3,901,063 43.65%(1)
FOOTNOTES:
(1) Based on 8,936,396 shares of Common Stock and Equivalents outstanding as of
March 19, 1999.
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(2) Of the total number of shares shown as owned by Mr. Brenkman, 24,909 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, 17,986 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.
(3) Of the total number of shares shown as owned by Mr. Cox, 30,000 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, 1,880 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, 19,850 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, 948 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. 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 10,200 shares represent the number of shares Mr. Fulton
has the right to acquire within 60 days upon the exercise of Warrants.
(6) Of the total number of shares shown as owned by Mr. Carr, 53,050 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.
(7) Of the total number of shares shown as owned by Mr. Williams, 11,000 shares
represent the number of shares Mr. Williams has the right to acquire within
60 days upon the exercise of options granted under the Company's 1994 Stock
Option Plan, and 100 shares represent the number of shares Mr. Williams 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.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and any persons holding more than ten percent of
the Company's common stock to report their initial ownership of the Company's
common stock and any subsequent changes in that ownership to the Securities and
Exchange Commission and to provide copies of such reports to the Company. Based
upon the Company's review of the copies of such reports received by the Company
and written representations of its directors and executive officers, the Company
believes that during the year ended December 31, 1997, all Section 16(a) filing
requirements were satisfied with the following exceptions: Timothy Shea,
Director, failed to file 1997 Form 5 by the deadline date. The Company believes
that during the year ended December 31, 1998, all Section 16(a) filing
requirements were satisfied.
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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 1998 $486,494 ---- ---- $ 5,000 (a)
1997 $419,695 ---- ---- $ 4,750 (a)
1996 $350,098 ---- 80,000 $ 4,750 (a)
(a) - Registrant's contribution to the Company's defined contribution plan.
Option/SAR Grants in Last Fiscal Year
- ----------------------------------------------
None
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
- ----------------------------------------
Value of
Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs
Options/SARs at FY-End At FY-End
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized Unexercisable Unexercisable
- --------------------------------------------------------------------------------
Guy Brenkman-CEO 0 0 24,909/ 80,000 $0/$0
In December 1993, the Company entered into a five-year executive employment
contract with the Company's president, which was extended one year by the Board
of Directors on November 18, 1998 and will expire in December 1999. The
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
January 1, 1999, the president's base salary was $428,203. 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.
Although Mr. Brenkman is authorized by his contract to receive an increase in
compensation immediately upon the start of a new railroad, he has generally
declined these increases, until in his opinion, the railroad appears to be self
supporting and can absorb the cost of such raise. In several instances, Mr.
Brenkman has not taken a raise at all. A detailed list of these raises since
1993 is listed as follows:
Date Raise
Subsidiary Date Acquired Effective
------------- ---------------
Vandalia Railroad Company 10/07/94 10/07/94
Minnesota Central Railroad Co. 12/12/94 02/01/95
West Michigan Railroad Co. 07/11/95 No Raise Taken
Columbia & Northern Railway 02/21/96 No Raise Taken
Keokuk Junction Railway Co. 03/12/96 04/16/96
Rochelle Railroad Co 03/25/96 04/16/96
Shawnee Terminal Railway Co. 11/12/96 01/01/98
Michigan Southern Railroad 12/18/96 01/01/97
Pioneer Industrial Railway Co. 02/20/98 No Raise Taken
Directors of the Registrant each were compensated $2,000 in 1998.
<PAGE>
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 1999, 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 the years 1994-1998 and its general reputation for
adherence to professional auditing standards. The Board of Directors anticipates
that representatives of McGladrey & Pullen, LLP will be present at the Meeting,
will have the opportunity to make a statement if they desire, and will be
available to respond to appropriate questions.
The Board of Directors recommends a vote FOR this proposal.
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 2000 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
December 31, 1999.
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.
Pioneer Railcorp, May 7, 1999
