<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:
[ ] 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 sec. 240.14a-11(c) or sec. 240.14a-12
Greyhound Lines, 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)(l) 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
GREYHOUND LINES, INC.
15110 N. DALLAS PARKWAY, SUITE 600
DALLAS, TEXAS 75248
(972) 789-7000
[GREYHOUND LINES, INC. LOGO]
---------------------
Dear Stockholder:
I hope you will join us for the Annual Meeting here in Dallas on May 20.
The attached proxy statement has all the details.
To help you get here, we're offering stockholders a free ride on Greyhound:
- If you come to the Annual Meeting on Greyhound, we will refund 50 percent
of the fare.
- If you come to the Annual Meeting, and if you also write a letter to me
about your trip, we will refund 100 percent of the fare.
My request: be a real customer. For fare and schedule information, call
1-800-231-2222. Go to the ticket counter and buy a ticket with cash or a credit
card. Don't ask our employees for preferential treatment.
The fine print: you must be eligible to vote at the 1997 Annual Meeting. If
you live a long way from Dallas and are short of time, you can fly to a nearby
city and ride Greyhound the final leg. And if you live in the Dallas-Fort Worth
area, take a trip before May 20, date and destination of your choice.
Meanwhile, to keep you informed about your company's progress, we post
every news release on our home page on the World Wide Web the day it is released
to the news media. Please visit us at www.greyhound.com. Now that we're using
this instant medium of communication, we will no longer publish quarterly
financial reports. If you need a printed copy of the quarterly earnings news
release, please send your request to our Investor Relations department.
Thanks for your support in our campaign to bring a new era of growth and
financial success for the nation's leading ground transportation company. I hope
to see you in Dallas on May 20.
Sincerely,
/s/ CRAIG LENTZSCH
-----------------------
CRAIG LENTZSCH
President and
Chief Executive Officer
<PAGE> 3
GREYHOUND LINES, INC.
15110 N. DALLAS PARKWAY, SUITE 600
DALLAS, TEXAS 75248
(972) 789-7000
[GREYHOUND LINES, INC. LOGO]
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1997
---------------------
Notice is hereby given that the Annual Meeting of Stockholders of Greyhound
Lines, Inc., a Delaware corporation (the "Company"), will be held on Tuesday,
May 20, 1997, at 10:00 a.m., CDT, at The Westin Hotel, Galleria Dallas, Galleria
III Room, 13340 Dallas Parkway, Dallas, Texas 75240, for the following purposes:
1. To elect three directors to serve as Class III directors for terms
expiring in 2000 or until their respective successors are elected and
qualified; and
2. To ratify the appointment of Arthur Andersen LLP as independent
public accountants for the Company for the fiscal year ending
December 31, 1997; and
3. To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on April 1, 1997 as
the record date for determining the stockholders entitled to notice of, and to
vote at, the meeting or any adjournment(s) thereof. A list of such stockholders
will be maintained at the office of the Secretary of the Company during the
ten-day period prior to the date of the meeting and will be available for
inspection by stockholders, for any purpose germane to the meeting, during
normal business hours of the Company.
You are cordially invited to attend the meeting. However, whether or not
you expect to attend the meeting in person, you are urged to sign, date and
return the enclosed proxy card in the accompanying envelope as soon as
practicable to ensure that your shares of stock may be represented and voted in
accordance with your wishes and to ensure the presence of a quorum at the
meeting. So that the Company may plan for the meeting, you are requested to mark
the space provided on the enclosed proxy card if you expect to attend the
meeting in person.
By Order of the Board of Directors,
/s/ MARK E. SOUTHERST
-----------------------------------
MARK E. SOUTHERST
Vice President and
General Counsel and Secretary
Dallas, Texas
April 16, 1997
<PAGE> 4
GREYHOUND LINES, INC.
15110 N. DALLAS PARKWAY, SUITE 600
DALLAS, TEXAS 75248
(972) 789-7000
[GREYHOUND LINES LOGO]
---------------------
PROXY STATEMENT
APRIL 16, 1997
---------------------
ANNUAL MEETING OF STOCKHOLDERS
---------------------
GENERAL INFORMATION
This Proxy Statement is being furnished by the Board of Directors (the
"Board of Directors") of Greyhound Lines, Inc., a Delaware corporation (the
"Company"), to the holders of common stock (the "Common Stock") of the Company
in connection with a solicitation of proxies for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Tuesday, May 20, 1997, at
10:00 a.m., CDT, at The Westin Hotel, Galleria Dallas, Galleria III Room, 13340
Dallas Parkway, Dallas, Texas 75240, or any adjournment(s) thereof.
A proxy delivered pursuant to this solicitation is revocable at the option
of the person giving the same at any time before it is exercised. A proxy may be
revoked, prior to its exercise, by (i) executing and delivering a later-dated
proxy card; or (ii) by delivering written notice of revocation of the proxy to
the Secretary of the Company before or at the Annual Meeting; or (iii) by
attending and voting at the Annual Meeting. Attendance at the Annual Meeting, in
and of itself, will not constitute a revocation of a proxy.
The shares represented by the enclosed proxy will be voted in accordance
with the stockholder's directions if the proxy is duly executed and returned on
or before the day of the Annual Meeting. If the enclosed proxy card is duly
executed and timely returned, but no directions are specified in the proxy, the
shares will be voted (i) FOR the election of the director nominees recommended
by the Board of Directors; (ii) FOR the ratification of the appointment of
Arthur Andersen LLP as independent public accountants for the Company for the
fiscal year ending December 31, 1997; and (iii) in accordance with the
discretion of the named attorneys-in-fact on other matters, if any, properly
brought before the Annual Meeting.
The expense of preparing, printing and mailing this Proxy Statement and of
soliciting the proxies sought hereby will be borne by the Company. In addition
to the use of the mails, officers, directors and regular employees of the
Company, none of whom will receive additional compensation therefor, may solicit
proxies in person or by telephone, facsimile or similar transmission. The
Company also will reimburse brokerage firms, banks, nominees, custodians and
fiduciaries for the cost of forwarding proxy materials to the beneficial owners
of the Common Stock as of the record date. The Company has retained Kissel-Blake
Inc. as its proxy solicitor for the Annual Meeting. Kissel-Blake Inc. will
receive a fee of $6,500 (plus reimbursement of out-of-pocket expenses) for its
services in the solicitation of proxies, including the solicitation of proxies
from brokerage firms, banks, nominees, custodians and fiduciaries. Your
cooperation in promptly signing and returning the enclosed proxy card will help
the Company avoid additional expense.
On April 1, 1997, the Company had 58,618,077 shares of Common Stock
outstanding, and there were no outstanding shares of any other class of stock.
Each share of Common Stock entitles the holder to one vote. Only stockholders of
record at the close of business on April 1, 1997 will be entitled to notice of,
and to vote at, the Annual Meeting.
This Proxy Statement and the enclosed proxy card are first being mailed to
stockholders on or about April 16, 1997.
<PAGE> 5
OUTSTANDING VOTING SECURITIES OF THE COMPANY
AND PRINCIPAL HOLDERS THEREOF
The following table sets forth the ownership of the outstanding shares of
Common Stock as of February 28, 1997 (except as otherwise noted below), held by
persons believed by the Company to beneficially own more than 5% of the
outstanding shares of the Common Stock, by directors of the Company, by the
Named Executive Officers (see "EXECUTIVE COMPENSATION -- Compensation") and by
all the directors, Named Executive Officers and executive officers of the
Company as a group, and the percentage of the outstanding shares of Common Stock
represented thereby. Except as otherwise noted below, each of the directors,
Named Executive Officers, executive officers and 5% stockholders has sole voting
and investment power with respect to all shares beneficially owned by them.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
<S> <C> <C>
Snyder Capital Management, Inc. ........................... 8,747,001 15.0%
350 California Street
Suite 1460
San Francisco, California 94104(a)
</TABLE>
<TABLE>
<CAPTION>
AMOUNT PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------------ ------------------ --------
<S> <C> <C>
Named Executive Officers and Directors(b):
Thomas G. Plaskett......................................... 110,666 *
Richard J. Caley........................................... 62,023 *
Linda Chavez............................................... 3,333 *
Craig R. Lentzsch.......................................... 739,109 1.3%
A. A. Meitz................................................ 3,333 *
Frank L. Nageotte.......................................... 17,776 *
Alfred E. Osborne, Jr...................................... 23,661 *
Stephen M. Peck............................................ 58,066 *
Ernest P. Werlin........................................... 6,666 *
Jack W. Haugsland.......................................... 183,333 *
Steven L. Korby............................................ 145,000 *
Bradley T. Harslem(c)...................................... 140,000 *
J. Floyd Holland........................................... 174,879 *
All directors, Named Executive Officers and other executive
officers of the Company as a group (26 persons)(b)....... 2,195,884 3.6%
</TABLE>
- ---------------
* Less than 1%.
(a) The information is as of February 28, 1997, based on information reported to
the Company by Snyder Capital Management, Inc. As of that date, Snyder
Capital Management, Inc. reported that it had shared power to vote 526,262
shares, no voting power for 816,697 shares and shared power to dispose of
526,262 shares.
2
<PAGE> 6
(b) The following table sets forth, as of February 28, 1997, the details of
Common Stock deemed beneficially owned by each of the directors and Named
Executive Officers of the Company and by all directors, Named Executive
Officers and executive officers of the Company as a group:
<TABLE>
<CAPTION>
COMMON COMMON
STOCK STOCK
BENEFICIALLY OPTIONS
OWNED EXERCISABLE TOTAL
------------ ----------- ---------
<S> <C> <C> <C>
Thomas G. Plaskett................................ -- 110,666 110,666
Richard J. Caley.................................. 5,000 57,023 62,023
Linda Chavez...................................... -- 3,333 3,333
Craig R. Lentzsch................................. 57,109 682,000 739,109
A. A. Meitz....................................... -- 3,333 3,333
Frank L. Nageotte(1).............................. 10,000 7,776 17,776
Alfred E. Osborne, Jr.(1)......................... 6,328 17,333 23,661
Stephen M. Peck................................... 51,400 6,666 58,066
Ernest P. Werlin.................................. -- 6,666 6,666
Jack W. Haugsland................................. 20,000 163,333 183,333
Steven L. Korby................................... -- 145,000 145,000
Bradley T. Harslem................................ 12,500 127,500 140,000
J. Floyd Holland(2)............................... 4,229 170,650 174,879
All directors, Named Executive Officers and other
executive officers of the Company as a group (26
persons)........................................ 176,155 2,019,729 2,195,884
</TABLE>
- ---------------
(1) Beneficial ownership of shares is disclaimed by the following named persons
in the amounts indicated: Mr. Nageotte -- 10,000 shares; Dr.
Osborne -- 3,164 shares.
(2) The named person disclaims beneficial ownership of 2,120 shares currently
held by the Greyhound Lines 401(k) trust.
(c) Mr. Harslem resigned as the Company's Senior Vice President -- Information
Services and Chief Information Officer effective December 31, 1996.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of three
directors to serve as Class III directors for terms expiring in 2000 or until
their respective successors are elected and qualified.
It is intended that the attorneys-in-fact named in the proxy card will vote
FOR the election of the three director nominees listed below, unless
instructions to the contrary are given therein. The three nominees have
indicated that they are able and willing to serve as directors. However, if some
unexpected occurrence should require the substitution of some other person or
persons for any one or more of the nominees, it is intended that the
attorneys-in-fact will vote FOR such substitute nominees as the Board of
Directors may designate.
The following sets forth the names, ages and principal occupations of, and
other directorships held by, the nominees for director to be elected pursuant to
Proposal No. 1:
NOMINEES FOR ELECTION AS CLASS III DIRECTORS, WHOSE TERMS WILL EXPIRE IN 2000:
Richard J. Caley (age 70) was appointed a director of the Company on
October 31, 1991. From 1978 to 1982, Mr. Caley served as President of Wilson
Sporting Goods Co., a division of PepsiCo Inc. From 1971 to 1978, Mr. Caley
served as President of the PepsiCo Transportation Division and Chairman of the
Board and Chief Executive Officer of North American Van Lines. Mr. Caley retired
in 1982, although from May 15,
3
<PAGE> 7
1989 to November 15, 1989, Mr. Caley served as President, Chief Operating
Officer and a director of HEM Pharmaceuticals.
Linda Chavez (age 49) was elected to the Board of Directors on November 21,
1995. Ms. Chavez has been President of the Center For Equal Opportunity since
1995. Ms. Chavez, a political commentator, writes a syndicated newspaper column
and has contributed articles to the USA Today, Wall Street Journal, The New
Republic and the Washington Post. Ms. Chavez has appeared on The McLaughlin
Group and NewsHour with Jim Lehrer. From 1988 to 1995, Ms. Chavez was a Senior
Fellow at the Manhattan Institute for Policy Research. In 1985, Ms. Chavez was
appointed Director of the Office of Public Liaison for the White House and from
1983 to 1985 was Director of the U.S. Commission on Civil Rights.
A. A. Meitz (age 59) was elected to the Board of Directors on November 21,
1995. Mr. Meitz is a retired Senior Vice President of Booz Allen & Hamilton,
where he was employed from 1965 to 1994. From 1981 to 1983, Mr. Meitz served as
a member of that firm's board of directors. Mr. Meitz also serves as a director
of Banctec, Inc., Associated Materials Corporation, and Northern Trust Bank of
Texas. He is a member of the Executive Board of the Cox School of Business at
Southern Methodist University. Mr. Meitz was also the Chairman of the Texas
Senate Advisory Committee on Business, Technology and Education from 1984 to
1985.
CONTINUING DIRECTORS
The following sets forth the names, ages and principal occupations of, and
other directorships held by, the serving directors whose terms of office will
continue after the Annual Meeting:
CLASS I DIRECTORS, WHOSE TERMS WILL EXPIRE IN 1998:
Craig R. Lentzsch (age 48) was elected to the Board of Directors on August
26, 1994. Effective November 15, 1994, Mr. Lentzsch became President and Chief
Executive Officer of the Company. Mr. Lentzsch also served as Chief Financial
Officer of the Company from November 22, 1994 to April 10, 1995. Mr. Lentzsch
previously served as Executive Vice President and Chief Financial Officer of
Motor Coach Industries International, Inc., where he had been employed from 1992
to 1994; as President and Chief Executive Officer of Continental Asset Services,
Inc. from 1991 to 1992; as a private consultant to, and investor in, Storehouse,
Inc. from 1983 to 1991 and Communication Partners, Ltd. from 1989 to 1991; as
Vice Chairman, Executive Vice President and a director of the Company from March
1987 to December 1989; and as Co-founder and President of BusLease, Inc. from
1980 to 1989. Mr. Lentzsch also serves as a director of Hastings Entertainment,
Inc. and Enginetech, Inc.
Frank L. Nageotte (age 70) was elected to the Board of Directors on
February 27, 1995. Mr. Nageotte was a director of Motor Coach Industries
International, Inc. from 1993 to 1995 and of Greyhound Lines, Inc. from 1987 to
1990 and currently serves as a director of Citizens Auto Stages. From 1982 to
1987, Mr. Nageotte served as President and Chief Operating Officer of The
Greyhound Corporation, where he was Chief Executive Officer of the Company's
predecessor from 1978 to 1982. Mr. Nageotte worked for the Company's predecessor
for 40 years.
Thomas G. Plaskett (age 53) was elected to the Board of Directors on May
10, 1994. From August 9, 1994 to November 14, 1994, Mr. Plaskett served as
Interim President and Chief Executive Officer of the Company, and from October
19, 1994 to November 22, 1994, served as Acting Chief Financial Officer of the
Company. On February 27, 1995, Mr. Plaskett was elected as the Company's
Chairman of the Board. Since 1991, Mr. Plaskett has served as managing director
of Fox Run Capital Associates, a privately held advisory firm. On September 16,
1996, Mr. Plaskett was elected Chairman of the Board of Neostar Retail Group,
which filed for bankruptcy in September 1996 and is in the process of being
liquidated. Previously, Mr. Plaskett served as President and Chief Executive
Officer of Pan Am Corporation from 1988 to 1991; and as President and Chief
Executive Officer of Continental Airlines from 1986 to 1987. Mr. Plaskett also
serves as a director of Tandy Corporation, Neostar Retail Group, Probex
Corporation and Smart and Final, Inc.
4
<PAGE> 8
CLASS II DIRECTORS, WHOSE TERMS WILL EXPIRE IN 1999:
Alfred E. Osborne, Jr. (age 52) was elected to the Board of Directors on
May 10, 1994. Since 1987, Dr. Osborne has served as Director of the Harold Price
Center for Entrepreneurial Studies and Associate Professor of Business Economics
at the John E. Anderson Graduate School of Management at the University of
California at Los Angeles. Dr. Osborne formerly served as Director of the MBA
Program, Assistant Dean and Associate Dean at UCLA. Dr. Osborne is also an
independent general partner of Technology Funding Venture Partners V, a trustee
of the Sierra Trust Funds and a director of Nordstrom, Inc., SEDA Specialty
Packaging Corporation, The Times Mirror Company and United States Filter
Corporation.
Stephen M. Peck (age 62) was elected to the Board of Directors on May 31,
1995. Mr. Peck is currently a money manager at Gilder, Gagnon, Howe & Co. From
March 1989 to December 1994, Mr. Peck was a General Partner of SMP Associates,
L.P., an investment partnership. Formerly, he was a Managing and Special Partner
of Weiss, Peck & Greer and participated in its founding in 1970. From 1986 to
mid-1988 he served as Chief Investment Officer and a director of Reliance
Insurance Company. From May 1985 to January 1988, Mr. Peck served as a director
of Tiger International. He was elected a Governor of the New York Stock
Exchange, Inc. in 1969, served as Vice Chairman of the Board of Governors from
May 1971 to July 1972, and served as Chairman of its Surveillance Committee from
December 1974 to May 1978. Mr. Peck served as a member of the Audit Committee of
the City of New York from February 1979 to February 1981. Mr. Peck is currently
Chairman of the Board of Trustees of the Mount Sinai Hospital and School of
Medicine, a member of the Board of Trustees of the Manhattan Institute for
Policy Research, and a member of the Board of the Jewish Theological Seminary of
America.
Ernest P. Werlin (age 52) was elected to the Board of Directors on May 31,
1995. Mr. Werlin is currently President of High View Capital. He also served as
Co-Chairman of the Board of Jamesway Corporation from 1995 to November 1996.
From 1992 to March 1995, Mr. Werlin was employed by Steinhardt Management. From
April 1990 to 1992, Mr. Werlin was a private investor. From January 1989 to
April 1990, Mr. Werlin was Managing Director of Stamford Capital. From August
1988 to December 1988, Mr. Werlin was an Associate Managing Director of Bear,
Stearns & Company. He was employed by Morgan Stanley & Company from April 1980
to May 1988 as the Chairman of the Fixed Income New Product Development
Committee and as Managing Director, Manager of Corporate Bond Trading desk and
Special Situations. From April 1978 to April 1980, Mr. Werlin served as
Co-Manager of the Corporate Bond Department of Donaldson, Lufkin & Jenrette. He
also served as Senior Administrator to the President of Lehman Brothers from
June 1976 to April 1978. Additionally, from July 1991 to June 1992, Mr. Werlin
was a director of Todd Shipyards.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The following discussion of meetings of the Board of Directors or the
committees thereof relates solely to meetings occurring during the period from
January 1, 1996 through December 31, 1996.
The Company has the following standing committees of the Board of
Directors, whose present members are identified below:
Messrs. Plaskett (Chairperson), Lentzsch and Nageotte currently serve as
members of the Executive Committee. During the fiscal year ended December 31,
1996, this committee met once. The Executive Committee possesses the powers and
discharges the duties of the Board of Directors during interim periods between
meetings of the full Board of Directors.
Dr. Osborne (Chairperson), Ms. Chavez and Mr. Werlin currently serve as
members of the Audit Committee. During the fiscal year ended December 31, 1996,
this committee met eight times. The Audit Committee is responsible for
determining that appropriate procedures exist and are observed relating to
financial reporting and disclosure and that required accounting practices,
policies and procedures and internal control systems are established and adhered
to in the preparation of the Company's financial reports and financial
disclosures. The Audit Committee also is responsible for recommending the
engagement of the independent public accountants to the Board of Directors.
5
<PAGE> 9
Messrs. Caley (Chairperson), Meitz and Peck currently serve as members of
the Compensation and Organization Committee. During the fiscal year ended
December 31, 1996, this committee met five times. The Compensation and
Organization Committee is responsible for reviewing all compensation-related
matters, including the compensation of the executive officers of the Company.
The Compensation and Organization Committee is authorized to retain a
compensation consultant to advise it on compensation arrangements for the senior
management of the Company.
Messrs. Lentzsch (Chairperson), Caley and Plaskett currently serve as
members of the Committee on Directors. The Committee on Directors met once
during the fiscal year ended December 31, 1996. The Committee on Directors is
responsible for nominating candidates to serve as directors of the Company and
reviewing director compensation and performance.
During the fiscal year ended December 31, 1996, the Board of Directors met,
telephonically or in person, six times. No member of the Board of Directors
attended less than 75% of the total number of meetings held by the Board of
Directors and the committees on which the director served.
The Board of Directors' intent is to modify committee assignments and
chairpersonships periodically.
STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES
The Bylaws of the Company provide that any stockholder of record who is
entitled to vote for the election of directors at a meeting called for that
purpose may nominate persons for election to the Board of Directors subject to
the following notice requirements:
A stockholder desiring to nominate a person for election to the Board of
Directors must send a written notice to the Secretary of the Company setting
forth (i) as to each person who the stockholder proposes to nominate, all
information required to be disclosed in solicitations of proxies for election of
directors, or as otherwise required, pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (ii) as to the stockholder giving the notice, (A) the name
and address of such stockholder as it appears on the Company's books, and (B)
the class and number of shares of the Company that are owned of record and
beneficially by such stockholder; and (iii) as to the beneficial owner, if any,
on whose behalf the nomination is made, (A) the name and address of that person,
and (B) the class and number of shares of the Company that are owned
beneficially by such person.
Pursuant to the Company's Bylaws, to be timely, notice of persons to be
nominated by a stockholder as a director at an annual or a special meeting of
the Board of Directors must be delivered to or mailed and received at the
principal executive offices of the Company (i) in the case of an annual meeting,
not more than 90 days nor less than 60 days before the first anniversary of the
preceding year's meeting (any time from February 20, 1998, to and including
March 20, 1998 with respect to the 1998 annual meeting), or (ii) in the event
that the date of the annual meeting is changed by more than 30 days from such
anniversary date and in the case of a special meeting, notice must be received
not later than the close of business on the tenth day following the earlier of
the day on which notice of the date of the meeting was made or on which public
disclosure of the meeting date was made. The obligation of stockholders to
comply with the foregoing Bylaw provision is in addition to the requirements of
the proxy rules if the stockholder intends to solicit proxies in favor of the
election of the nominee(s).
PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company's financial statements for the fiscal year ended December 31,
1996 have been audited by Arthur Andersen LLP, independent public accountants. A
representative of Arthur Andersen LLP will be available at the Annual Meeting to
make an appropriate statement, if desired, and will be available to respond to
appropriate questions from stockholders.
6
<PAGE> 10
The Board of Directors has appointed Arthur Andersen LLP as independent
public accountants to examine the Company's financial statements for the fiscal
year ending December 31, 1997, effective upon ratification by the stockholders
of such appointment. Unless otherwise directed, the Proxy will be voted FOR the
ratification of this appointment.
Although stockholder ratification is not required for the selection of
Arthur Andersen LLP, since the Board of Directors has the responsibility for the
selection of the Company's independent auditors, the Board of Directors is
submitting the selection for ratification with a view towards soliciting the
stockholders' opinion thereon, which may be taken into consideration in future
deliberations. Moreover, such ratification will not obligate the Company to
continue the services of such firm. If the appointment is not ratified, the
Board must then determine whether to appoint other auditors before the end of
the current fiscal year, and in such case, stockholders' opinions would be taken
into consideration.
BOARD RECOMMENDATION
The Board of Directors unanimously recommends a vote FOR the ratification
of the appointment of Arthur Andersen LLP as independent public accountants of
the Company for the fiscal year ending December 31, 1997.
EXECUTIVE COMPENSATION
COMPENSATION
The following table sets forth all compensation, including bonuses,
restricted stock and stock option awards and other payments, paid or accrued by
the Company during each of the fiscal years ended December 31, 1996, 1995 and
1994, to or for the Chief Executive Officer of the Company, and the four other
most highly compensated executive officers of the Company (the Chief Executive
Officer and such other officers collectively being the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------
----------------------------------------- AWARDS
OTHER -----------------------
ANNUAL RESTRICTED SECURITIES ALL OTHER
COMPEN- STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) SATION($)(3) AWARD($) OPTIONS(#) SATION($)(4)
--------------------------- ---- ------------ ----------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Craig R. Lentzsch(5) 1996 350,013 112,228 86,603 55,163 100,000 86,169
President and Chief 1995 350,000 175,000 -- 0 440,000 79,836
Executive Officer and Director 1994 45,096 0 -- 0 400,000 350,000
Jack W. Haugsland(6) 1996 225,008 79,029 -- 36,775 60,000 55,393
Executive Vice President 1995 141,490 64,000 -- 0 400,000 154,815
and Chief Operating Officer 1994 0 0 -- 0 0 0
Steven L. Korby(7) 1996 212,408 55,723 -- 0 50,000 55,062
Executive Vice President and 1995 160,373 54,009 -- 0 350,000 110,090
Chief Financial Officer 1994 0 0 -- 0 0 0
Bradley T. Harslem(8) 1996 187,257 61,242 -- 33,098 35,000 32,989
Former Senior Vice President -- 1995 170,750 52,630 -- 0 202,500 34,653
Information Services and Chief 1994 141,831 0 -- 0 55,000 1,642
Information Officer
J. Floyd Holland 1996 155,956 36,735 -- 0 30,000 50,310
Senior Vice President -- 1995 145,000 43,500 19,293 0 158,000 60,140
Operations 1994 131,968 0 14,460 0 30,000 4,390
</TABLE>
- ---------------
(1) Represents annual salary, including compensation deferred by the Named
Executive Officer pursuant to the Company's 401(k) and non-qualified savings
plans.
7
<PAGE> 11
(2) Represents annual bonus earned by the Named Executive Officer for the
relevant fiscal year.
(3) In 1996, for Mr. Lentzsch, $50,000 is for reimbursement of the loss on the
sale of Mr. Lentzsch's personal residence in connection with his relocation
to Dallas, Texas after joining the Company in 1994. With respect to Mr.
Holland, $12,000, in 1995 and 1994, consisted of a car allowance and $6,303,
in 1995, consisted of supplemental long-term disability insurance premiums
paid by the Company.
(4) For 1996, includes $81,789, $49,892, $47,669, $24,263 and $41,375 in accrued
benefits under the Company's Supplemental Executive Retirement Plan; $0,
$1,688, $0, $6,408 and $2,179 in Company contributions to the 401(k) and
non-qualified savings plans; and $4,380, $3,813, $7,393, $2,319 and $6,756
in term life insurance premiums paid by the Company for Messrs. Lentzsch,
Haugsland, Korby, Harslem and Holland, respectively.
(5) Mr. Lentzsch became President and Chief Executive Officer effective November
15, 1994.
(6) Mr. Haugsland became Executive Vice President and Chief Operating Officer on
May 15, 1995.
(7) Mr. Korby became Executive Vice President and Chief Financial Officer on
April 13, 1995.
(8) Mr. Harslem resigned as the Company's Senior Vice President -- Information
Services and Chief Information Officer effective December 31, 1996.
EMPLOYMENT CONTRACTS
Craig R. Lentzsch. Mr. Lentzsch's terms of employment are governed by an
employment contract that continues until November 14, 1997, subject to automatic
successive one-year renewals unless and until terminated. The contract provides
for an annual base salary to Mr. Lentzsch, currently $350,000, subject to annual
review and adjustment. Mr. Lentzsch is entitled to receive an annual bonus in
accordance with the Company's management incentive plan ("MIP") as in effect
from time to time. Upon commencement of his employment contract, Mr. Lentzsch
was granted options to purchase 400,000 shares of Common Stock which vest
periodically between October 18, 1995 and October 18, 1997. If the Company
terminates or does not renew Mr. Lentzsch's employment contract without good
cause (as defined) or Mr. Lentzsch resigns for good reason (as defined), the
Company must pay Mr. Lentzsch a lump sum payment equal to two times the sum of:
(i) an amount equal to his then-current, annualized base salary, and (ii) the
greater of: (x) the applicable incentive bonus, or (y) $100,000. In addition,
the options granted to Mr. Lentzsch, as described above, that would have vested
on the anniversary immediately following such termination, would automatically
vest. Additionally, Mr. Lentzsch's employment contract provides that if there is
a change of control (as defined) and within two years thereafter, Mr. Lentzsch's
employment contract is terminated, or not renewed, for any reason other than
cause, death, disability or retirement, or if he resigns for good reason, (i)
Mr. Lentzsch would be entitled to receive twice his then-current base salary
plus twice all incentive compensation paid to him during the 12 months preceding
the change of control plus continued employee benefits, subject to a "gross up"
should any portion of his severance benefits be construed to be an "excess
parachute payment" under the federal tax code, and (ii) all options granted in
November 1994 become immediately vested and exercisable on that date. Mr.
Lentzsch also participates in the Company's Supplemental Executive Retirement
Plan ("SERP"), and has received past service credit, for vesting purposes only,
related to his former employment with the Company, its affiliates and
predecessors. Additionally, Mr. Lentzsch is entitled to participate in the
Company's 401(k) plan, medical plan (with waiver of pre-existing conditions),
and other applicable benefit plans and is entitled to estate, tax and financial
planning assistance and a car allowance.
Jack W. Haugsland. Mr. Haugsland's terms of employment are governed by an
employment contract that continues until May 14, 1997. Thereafter, the term of
Mr. Haugsland's employment contract will automatically renew for an initial
renewal period of two years; thereafter, the contract will renew annually unless
and until terminated. Mr. Haugsland is entitled to receive an annual base
salary, currently $225,000, subject to annual review and adjustment. Mr.
Haugsland is also entitled to receive an annual bonus in accordance with the
Company's MIP as in effect from time to time. Upon commencement of his
employment contract, Mr. Haugsland was granted options to purchase 300,000
shares of Common Stock which vest periodically between May 14, 1996 and May 14,
1998. If the Company terminates or does not renew Mr. Haugsland's
8
<PAGE> 12
employment contract without good cause (as defined) or Mr. Haugsland resigns for
good reason (as defined) prior to May 14, 1999, the Company must pay Mr.
Haugsland a lump sum payment equal to two times the sum of his then-current
annualized salary plus the greater of: (i) his bonus for the current year, or
(ii) $51,000; after May 14, 1999, he would be entitled to receive one and
one-half times his annual salary plus bonus. In the event of a change of control
(as defined), a termination or non-renewal without good cause or a resignation
for good reason, all stock options granted pursuant to the contract would become
immediately vested and exercisable. If Mr. Haugsland's employment with the
Company is terminated due to a change of control occurring on or prior to May
14, 1999, Mr. Haugsland would be entitled to receive two times his then-current
annualized salary plus incentive bonus, as well as continued employee benefits.
If a change of control occurs thereafter, Mr. Haugsland would be entitled to
receive one and one-half times his then-current annualized salary plus incentive
bonus, as well as continued employee benefits. Mr. Haugsland also participates
in the Company's SERP, with vesting based on past service credit, and is
entitled to participate in the Company's medical and benefit plans and receives
estate, tax and financial planning assistance, a car allowance and country club
dues reimbursement.
Steven L. Korby. Mr. Korby's terms of employment are governed by an
employment contract that continues until March 30, 1999. Thereafter, the
contract will renew annually unless and until terminated. Mr. Korby is entitled
to receive an annual base salary, currently $212,400, subject to annual review
and adjustment. Mr. Korby is also entitled to receive an annual bonus in
accordance with the Company's MIP as in effect from time to time. Upon
commencement of his employment contract, Mr. Korby was granted options to
purchase 300,000 shares of Common Stock which vest periodically between April
30, 1996 and April 30, 1998. If the Company terminates or does not renew Mr.
Korby's employment contract without good cause (as defined) or Mr. Korby resigns
for good reason (as defined) prior to March 30, 1999, the Company must pay Mr.
Korby a lump sum payment equal to two times the sum of his then-current
annualized salary plus the greater of: (i) his bonus for the current year, or
(ii) $48,000; after March 30, 1999, he would be entitled to receive one and
one-half times his then-current annualized salary plus bonus. In the event of a
change of control (as defined), a termination or non-renewal without good cause
or a resignation for good reason, all stock options granted pursuant to the
contract would become immediately vested and exercisable. If Mr. Korby's
employment with the Company is terminated due to a change of control occurring
on or prior to March 30, 1999, Mr. Korby would be entitled to receive two times
his then current annualized salary plus incentive bonus, as well as continued
employee benefits. If a change of control occurs thereafter, Mr. Korby would be
entitled to receive one and one-half times his then-current annualized salary
plus incentive bonus, as well as continued employee benefits. Mr. Korby also
participates in the Company's SERP and is entitled to participate in the
Company's medical and benefit plans and receives estate, tax and financial
planning assistance and a car allowance.
SEVERANCE ARRANGEMENTS
By Company policy, executive officers of the Company, not otherwise subject
to an employment contract or other written severance arrangement, are entitled
to severance pay in the event that employment is terminated for lack of duties
or rearrangement of duties, including force reduction-related terminations. The
severance pay eligibility ranges from 3 to 6 months of the executive officer's
annual base salary on the date of termination, varying with the job grade of the
executive. In order to receive any benefit greater than one week's salary, the
executive officer must execute a release of claims.
DIRECTORS' COMPENSATION
Directors of the Company are entitled to reimbursement of their reasonable
out-of-pocket expenses in connection with their travel to and attendance at
meetings of the Board of Directors or committees thereof. In addition, each
director of the Company who is not also an officer or employee of the Company
(an "Outside Director") receives an annual retainer of $25,000 (other than the
Chairman of the Board, who receives an annual retainer of $45,000) and a fee of
$1,000 for each meeting of the Board of Directors at which such director is
present (or $500 in the case of a telephonic meeting). Each Outside Director who
is a member of a committee of the Board of Directors also receives a fee of $750
(other than the Chairperson of the committee,
9
<PAGE> 13
who receives a fee of $1,000) for each meeting of such committee at which the
director is present. Prior to the Annual Meeting, the Company anticipates
adopting a new plan whereby Outside Directors will be entitled to defer receipt
of all or a portion of their annual retainer fees.
Outside Directors are entitled to stock option grants under the Company's
1995 Directors' Stock Incentive Plan. Each Outside Director elected or
re-elected at the Company's annual meeting of stockholders is automatically
granted options to purchase 20,000 shares of Common Stock. Outside Directors
appointed to fill a vacancy on the Board of Directors during the course of a
term receive a pro rata grant of the 20,000 shares. The exercise price of all
option grants is the fair market value thereof on the date of grant. Each option
lapses and ceases to be exercisable upon the earliest of: (i) 10 years from the
date of grant, (ii) 6 months after the Outside Director ceases to be a director
because of death or disability, (iii) immediately if the Outside Director is
removed from office for cause by action of the stockholders of the Company in
accordance with the Bylaws of the Company and the General Corporation Law of the
State of Delaware or if the Outside Director voluntarily terminates service on
the Board of Directors without the consent of the Company, (iv) 5 years after
the date on which the Outside Director terminates service (other than for death,
disability, for cause or without consent) if, at the time of termination, the
Outside Director has served at least a three-year term of office, or (v) 30 days
after the date on which the Outside Director terminates service (other than
death, disability, for cause or without consent) if, at the time of termination,
the Outside Director has not served at least a three-year term of office.
Notwithstanding the foregoing, all options that have not previously been
exercised nor lapsed and ceased to be exercisable, will vest and become
exercisable upon the occurrence of any change in control.
STOCK OPTION PLANS
The following table reflects all options granted to the Named Executive
Officers of the Company during the fiscal year ended December 31, 1996 under the
Company's stock option and incentive plans. Additionally, the present value of
the options at the grant date is provided. The present value is calculated using
the Black-Scholes model, which is a mathematical formula widely used to value
stock options. This formula considers a number of factors, including the stock's
volatility, dividend rate, term and vesting of the option and interest rates to
estimate the option's present value. The stock option's ultimate value,
regardless of its estimated value, will be dependent on the market value of the
Common Stock at a future date when the stock option becomes exercisable and is
exercised. This market value will depend on the efforts of the Company to
increase the profitability of the Company for all stockholders. The Company's
insider trading policy restricts and limits the exercise of stock options and
thus may also affect the ultimate value realized by an option grantee.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------
% OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS GRANT EMPLOYEES EXERCISE EXPIRATION PRESENT
NAME GRANTED(#)(1) DATE IN FISCAL YEAR PRICE ($/SH) DATE VALUE(2)
---- ------------- ------- -------------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Craig R. Lentzsch...... 100,000 3/12/96 7.74 3.625 3/12/03 150,000
Jack W. Haugsland...... 60,000 3/12/96 4.64 3.625 3/12/03 90,000
Steven L. Korby........ 50,000 3/12/96 3.87 3.625 3/12/03 75,000
Bradley T. Harslem..... 35,000 3/12/96 2.71 3.625 3/12/03 52,500
J. Floyd Holland....... 30,000 3/12/96 2.32 3.625 3/12/03 45,000
</TABLE>
- ---------------
(1) Twenty-five percent of the options granted are exercisable on and after
March 12, 1997, 25% will become exercisable on and after March 12, 1998, 25%
will become exercisable on and after March 12, 1999, and 25% will become
exercisable on and after March 12, 2000.
(2) Assumptions used in calculating grant date present value under the
Black-Scholes model include stock price volatility at the grant date of 35%,
risk-free rate of return at the grant date of 6.0%, annual dividend
10
<PAGE> 14
yield of $0, an option term, reflecting risk of forfeiture, of five years
from the grant date and a stock price at the grant date of $3.625.
The following table reflects information with respect to option exercises
by the Named Executive Officers during the fiscal year ended December 31, 1996,
and information with respect to the unexercised options to purchase the
Company's Common Stock granted under the Company's stock option and incentive
plans to the Named Executive Officers and held by them at December 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FY-END(#) FY-END($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Craig R. Lentzsch.... 0 0 476,000 464,000 1,112,090 965,010
Jack W. Haugsland.... 0 0 145,000 315,000 261,405 472,965
Steven L. Korby...... 0 0 132,500 267,500 246,953 423,358
Bradley T. Harslem... 0 0 92,750 199,750 107,274 223,411
J. Floyd Holland..... 0 0 149,950 149,550 104,159 186,885
</TABLE>
- ---------------
(1) Computed based upon the difference between $4.25 per share, the fair market
value at December 31, 1996, and the exercise price per share for the
options.
LONG-TERM INCENTIVE PLANS
The Company does not maintain any long-term incentive plan under which
awards were granted or paid during 1996.
COMPENSATION AND ORGANIZATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Organization Committee (the "Compensation Committee")
of the Board of Directors currently consists of Messrs. Caley, Meitz and Peck.
See "Committees and Meetings of the Board of Directors." There were no
interlocks on the part of any members of the Compensation and Organization
Committee in 1996, and none of the members is a former or current officer,
employee or consultant of the Company, except that for one meeting of the
Compensation Committee in 1996, Mr. Plaskett served as temporary Chairperson due
to the illness of the regular Chairperson of the Compensation Committee. From
August, 1994 to November, 1994, Mr. Plaskett served as Interim President and
Chief Executive Officer of the Company.
REPORT OF THE COMPENSATION COMMITTEE
The members of the Compensation Committee of the Board of Directors,
composed entirely of non-employee directors, have the duty to review the
compensation levels and performance of executive officers, including the Named
Executive Officers, to establish, approve and monitor the Company's compensation
programs and policies and to review officer candidates and consider officer
succession and related matters. In addition, the Compensation Committee oversees
or administers the Company's Management Incentive Plans (the "MIPs") and the
Company's stock option and incentive plans. The Compensation Committee
formulates and maintains continuous oversight of all aspects of compensation for
the executive officers.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company's executive compensation program consists of three main
components:
- - Base Salary. Executive officers' salaries are subject to annual review and
adjustment based on a standardized performance review process. This review
process is generally completed after each year during
11
<PAGE> 15
the first quarter of the next year and salary adjustments, if any, are
generally implemented at the end of the first quarter.
- - Performance-Based Incentive Payments. Executive officers have the potential to
receive annual incentive payments under the Company's MIPs, based on the
Company's financial performance relative to specific objectives established
for the fiscal year. The Compensation Committee establishes these performance
targets. The Company must meet or exceed these minimum financial performance
objectives in order for the payments to be made.
- - Long-Term Stock Options and Awards. Executive officers also have an
opportunity to receive equity-based compensation, in the form of stock options
to purchase the Company's Common Stock or other stock-related awards, linked
to the long-term performance of the Company.
The Compensation Committee's underlying compensation philosophy is that a
substantial portion of the annual compensation of each executive officer must
relate to, and be contingent upon, the financial performance of the Company, as
well as the individual contribution of each executive officer. As a result, much
of each executive officer's annual compensation is "at risk." Incentive payments
under the Company's MIPs are designed to motivate executive officers to meet or
exceed short-term (measured on a one-year or less period) financial performance
targets. As the Company continues its financial turnaround and attempts to
establish long-term profitability, the Compensation Committee believes it is
critical for the Company to meet short-term performance targets. Additionally,
the Company's compensation policies are also designed to provide significant
long-term, equity-based incentives to ensure that executive officers are
motivated over the long-term to respond to the Company's business challenges and
opportunities. This is designed to align employees' interests with those of the
Company's stockholders. Finally, also underlying the Compensation Committee's
philosophy is the desire to recruit and retain a solid management team and
develop future talent from within the organization.
In establishing base salaries, benefit plans and cash and equity-based
incentive plans for its executive officers, the Compensation Committee uses the
services of a compensation consulting firm. During 1996, at the request of the
Compensation Committee, the consulting firm completed a comprehensive review of
the Company's compensation and benefit programs. The Company's programs were
compared to the underlying philosophy of the Compensation Committee, as well as
to compensation data compiled from 436 non-financial companies. From the data
compiled, all elements of the Company's compensation programs were reviewed,
including base salaries, benefits and perquisites, annual bonuses and long-term
compensation. The Compensation Committee also reviewed the overall "mix" of
compensation to determine if the Company's programs were consistent with
compensation trends (that is, that an appropriate balance of short-term and
long-term compensation was being maintained). While the Compensation Committee
has compared the Company's programs to these other compensation programs, there
is no specific "peer group" of companies that the Company rigidly judges itself
by. Rather, companies that are in the business of transporting passengers and
freight, companies in the service industry and companies that have successfully
undergone a financial restructuring, have from time to time been used for
comparison. Additionally, the Compensation Committee also takes into
consideration other factors, including the Company's limited financial
resources, when establishing the Company's programs. Generally, the Compensation
Committee endeavors to pay competitive salaries and benefits. Based on its
review, the Compensation Committee believes that the Company's compensation
programs continue to be below the average when compared to the programs of other
companies.
At the start of each fiscal year, the Compensation Committee establishes
annual financial goals under the MIPs for the Company. In 1996, the Compensation
Committee based the financial targets on the Company's earnings before interest,
taxes, depreciation and amortization ("EBITDA"). Each executive officer,
including the CEO, is assigned a target award, which is a percentage of his or
her annual base salary. The target awards range from 10% to 55% of the base
salary. The target award is the same for each executive officer having the same
salary grade level in the Company, although the Compensation Committee reserves
the right to reduce a payout to a Named Executive Officer based on an evaluation
of individual performance. Under the MIPs in effect in 1996, the percentage of
the target award that each executive officer could have received varied from 0%
to 200% of the target award, depending upon the percentage of the Company's
EBITDA goal attained.
12
<PAGE> 16
During 1996, the Compensation Committee also adopted a special one-time MIP for
the fourth quarter of the year. This MIP was designed to focus management on
achieving a profitable fourth quarter for the first time since 1992.
The long-term, performance-based compensation of executive officers
generally takes the form of option grants or restricted stock awards under the
Company's stock option and incentive plans. The Compensation Committee also has
the discretion to make other stock-related awards, such as stock appreciation
rights and performance units. During 1996, the Compensation Committee made no
awards other than stock option grants and restricted stock awards. In making
such awards, the Compensation Committee generally takes into account: (i) each
executive's responsibilities and relative position in the Company, as well as a
subjective evaluation of each executive officer's performance during the prior
and current fiscal year; (ii) the long-term, equity-based compensation plans
established by other companies; (iii) awards made to each executive and the
executive officers as a group in prior years and their holdings of Company
stock; and (iv) the limited availability of Company shares reserved for these
programs.
As a matter of policy, the Compensation Committee establishes "step"
vesting provisions where stock options become exercisable, in general, over a
three- or four-year period. All stock option grants are made at the fair market
value of the stock on the date of grant. Options granted to executives generally
expire in five to ten years, depending upon the term of vesting. Restricted
stock awards also have step vesting and have generally been designed to create
an incentive for the executive to remain employed with the Company.
The Compensation Committee's policy is to consider the tax deductibility of
compensation expenses when designing and administering compensation plans. The
Omnibus Budget Reconciliation Act of 1993, as reflected in regulations under
Section 162(m) of the Internal Revenue Code, places a limit on the amount of
compensation in excess of $1 million that may be paid to the CEO and the four
other most highly compensated executive officers. The Compensation Committee
continuously monitors its plans to determine the tax deductibility implications
of Section 162(m). It is the intent of the Compensation Committee to design
plans that comply with Section 162(m), as long as such design does not hamper
the Company's compensation practices. The Company's MIPs and stock option and
incentive plans have been designed to meet the requirements of Section 162(m).
COMPANY PERFORMANCE AND CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee reviewed the Company's 1996 financial
performance relative to the established annual EBITDA goal and determined that
the Company met the minimum performance target established for 1996.
Additionally, the Company posted a profit during the fourth quarter, thus
triggering a payout under the special MIP. The Compensation Committee determined
that overall the Company achieved 83% of the established EBITDA target. In
total, incentive payments under both MIPs amounted to a payout equal to 58% of
the target percentage established for each participant. The total payout was
made up of a 33% target award under the annual MIP and a 25% target award under
the special fourth quarter MIP.
During 1996, the Company's President and Chief Executive Officer, Craig R.
Lentzsch, was paid an annual base salary of $350,000, based on the terms of his
employment contract. No adjustment to Mr. Lentzsch's base salary was made during
the year. In lieu of a salary increase, Mr. Lentzsch was awarded 15,000 shares
of restricted stock. At the time of grant, the stock had a fair market value,
net of consideration to be paid by Mr. Lentzsch, of $55,163. This award was made
in recognition of the substantial improvement of the Company's performance
during 1995 versus 1994. Essentially, this compensation is "at risk" and its
ultimate value is dependent upon future Company performance. Vesting of the
restricted stock will occur over a three-year period. The Compensation Committee
opted to use a stock award, rather than a salary increase, so as to link Mr.
Lentzsch's compensation to improvements of the Company's financial position. For
1996, Mr. Lentzsch earned a bonus of $112,228, the amount determined to be due
under the Company's MIPs and commensurate with the Company's financial
performance versus the established performance goals. During 1996, the
Compensation Committee approved stock option grants to executive officers. Mr.
Lentzsch received a 100,000-share grant. This grant compares with grants made
during 1994 and 1995 of 400,000 and 440,000 shares, respectively. Overall, the
terms of Mr. Lentzsch's employment and compensation reflect the
13
<PAGE> 17
Compensation Committee's philosophy of creating short term "at risk" incentive
pay, as well as long-term incentives through the use of material stock option
grants.
Compensation and Organization
Committee:
Richard J. Caley
A. A. Meitz
Stephen M. Peck
Thomas G. Plaskett
14
<PAGE> 18
STOCK PRICE PERFORMANCE
The following graph depicts the Company's stock price performance relative
to the performance of the Standard & Poor 500 Composite Index and the Standard &
Poor Transportation Index.
<TABLE>
<CAPTION>
S&P
Measurement Period Greyhound Lines, S&P 500 Transportation
(Fiscal Year Covered) Inc. Composite Index Index
<S> <C> <C> <C>
12/92 100.00 100.00 100.00
12/93 90.20 119.76 123.98
12/94 18.14 130.61 109.41
12/95 33.82 189.91 157.50
12/96 33.33 243.30 185.71
</TABLE>
The graph above assumes an investment of $100 in the Company's Common
Stock, the Standard & Poor 500 Composite Index and the Standard & Poor
Transportation Index on December 31, 1992, and assumes a reinvestment of all
dividends. The Company has not paid cash dividends on its Common Stock. Note
that the Company's Common Stock price performance on the graph above is not
necessarily indicative of future stock price performance.
VOTING REQUIREMENTS
With regard to Proposal No. 1, the election of directors, votes may be cast
for or votes may be withheld from a nominee. Directors will be elected by
plurality vote. Therefore, votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may not be specified with
respect to the election of directors and, under Delaware law, broker non-votes
(i.e., the failure of a broker to vote on a non-discretionary matter in absence
of instructions from the beneficial owner of the Common Stock) will have no
effect on the outcome of the election of directors.
With regard to Proposal No. 2, the ratification of the appointment of
Arthur Andersen LLP as the Company's independent public accountants, votes may
be cast for or against this proposal, or stockholders may abstain from voting.
Approval of this proposal requires the affirmative votes of at least a majority
of the shares of Common Stock voted at the meeting. Therefore, abstentions will
have the effect of votes against the approval of this proposal and, under
Delaware law, broker non-votes will have no effect on the outcome.
If no directions are specified in any duly signed and dated proxy card
received by the Company, the shares represented by that proxy card will be
counted as present for quorum purposes and will be voted by the named
attorneys-in-fact (i) FOR the election of the directors recommended by the Board
of Directors; (ii) FOR the ratification of the appointment of Arthur Andersen
LLP as independent public accountants for fiscal year 1997; and (iii) in
accordance with the discretion of the named attorneys-in-fact on other matters,
if any, properly brought before the Annual Meeting.
15
<PAGE> 19
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 10% of the
Company's Common Stock, to file with the Securities and Exchange Commission (the
"SEC") and the American Stock Exchange, Inc. reports of ownership and changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than 10% stockholders of the Company are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports they
file.
Based solely on a review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that, during the fiscal year ended December 31, 1996, all
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
OTHER MATTERS
Frederick F. Richards has been engaged by the Company as an independent
management consultant on an at-will basis since November 1994, supplying
consulting services to the Company on a variety of operational and technology
issues. Mr. Richards received $180,000 for these services in 1996 from the
Company. Mr. Richards is the son-in-law of A. A. Meitz, a director of the
Company since November 21, 1995.
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, it is the intention of the attorneys-in-fact named in the
accompanying proxy card to vote in accordance with their judgment on such
matters.
STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the Company's proxy statement
relating to the 1998 Annual Meeting of Stockholders of the Company must be
received by no later than December 17, 1997 at the Company's principal executive
offices, 15110 N. Dallas Parkway, Suite 600, Dallas, Texas 75248, directed to
the attention of the Secretary. Stockholders of the Company who intend to
nominate candidates for election as a director or to bring business before the
meeting must also comply with the applicable procedures set forth in the
Company's Bylaws (See "ELECTION OF DIRECTORS -- Stockholder Nomination of
Director Candidates"). The Company will furnish copies of such Bylaw provisions
upon written request to the Secretary of the Company at the aforementioned
address.
AVAILABILITY OF FORM 10-K
The Company will provide to any stockholder, without charge, upon written
request of such stockholder, a copy of the Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, as filed with the SEC. Such requests should
be addressed to Investor Relations, Greyhound Lines, Inc., P.O. Box 660606,
Dallas, Texas 75266-0606.
The foregoing notice and proxy statement is sent by order of the Board of
Directors.
/s/ MARK E. SOUTHERST
-----------------------------
Mark E. Southerst
Vice President and
General Counsel and Secretary
April 16, 1997
16
<PAGE> 20
PROXY
GREYHOUND LINES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Thomas G. Plaskett, Craig R. Lentzsch and Mark E. Southerst, or any of
them, with power of substitution to each, are hereby authorized to represent
the undersigned at the Annual Meeting of Stockholders of Greyhound Lines, Inc.
to be held at The Westin Hotel, Galleria Dallas, Galleria III Room, 13340
Dallas Parkway, Dallas, Texas 75240, on Tuesday, May 20, 1997, at 10:00 a.m.,
local time, and to vote the number of shares which the undersigned would be
entitled to vote if personally present on all matters properly coming before
the Annual Meeting or any adjournment thereof. The attorneys-in-fact are
authorized to vote in their discretion upon such other business as may properly
come before the Annual Meeting and any and all adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE DIRECTOR NOMINEES AND THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
ACCOUNTANTS. THIS PROXY WILL BE VOTED AS YOU DIRECT; IN THE ABSENCE OF SUCH
DIRECTION, IT WILL BE VOTED "FOR" EACH OF THE FOREGOING PROPOSALS.
(Continued on reverse side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
ADMISSION TICKET
GREYHOUND LINES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 20, 1997
10:00 A.M.
THE WESTIN HOTEL
GALLERIA DALLAS
GALLERIA III ROOM
13340 DALLAS PARKWAY
DALLAS, TEXAS 75240
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 21
<TABLE>
<CAPTION>
<S> <C>
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS, SIGN AND PLEASE MARK [X]
DATE THIS CARD IN THE SPACE BELOW. NO BOXES NEED TO BE CHECKED. YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
(1) ELECTION OF DIRECTORS Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE INDIVIDUAL NOMINEES,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
FOR VOTE WITHHELD Richard J. Caley, Linda Chavez, A.A. Meitz
ALL FROM ALL NOMINEES
NOMINEES LISTED TO THE RIGHT. I PLAN TO ATTEND THE MEETING [ ]
[ ] [ ]
(2) RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP
AS INDEPENDENT ACCOUNTANTS FOR FISCAL YEAR 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
DATED , 1997
-------------------------------------------------------
------------------------------------------------------------------
Signature
------------------------------------------------------------------
Signature
Please sign your name as it appears hereon. Joint owners should each sign.
Executors, administrators, trustees, etc., should give full title as such.
If the signer is a corporation, please sign full corporate name by duly
authorized officer. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
FROM D/FW AIRPORT:
o North Exit from airport
o Exit I-635 East
o Exit Dallas Parkway North/Tollway South, Exit 22D
o Stay to the right for Dallas Parkway North exit
o Pass Inwood South (1st light)
[MAP] o Left onto Dallas Parkway (2nd light)
o Turn right at second traffic light into Galleria complex
o Follow signs to hotel
FROM LOVE FIELD AIRPORT:
o Turn left (east) onto Mockingbird Lane
o Stay in left lane
o Take Dallas Tollway North and exit Galleria/
Dallas Parkway
o Turn right into Galleria complex
o Follow signs to hotel
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE AND RETURN WITH YOUR PROXY CARD
IF YOU ARE RECEIVING MULTIPLE COPIES OF YOUR ANNUAL REPORTS
[ ] MULTIPLE COPIES OF STOCKHOLDER
REPORTS ARE BEING RECEIVED AT THIS
ADDRESS. PLEASE DISCONTINUE THESE
MAILINGS TO THIS ACCOUNT. (NOTE: AT
LEAST ONE STOCKHOLDER REPORT MUST
BE MAILED.)
IF YOU NEED INSTRUCTIONS ON HOW TO
TRANSFER YOUR STOCK OR CHANGE YOUR
ADDRESS, PLEASE CALL OUR TRANSFER
AGENT, CHASEMELLON SHAREHOLDER
SERVICES, L.L.C. AT 1-800-288-9541.
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