<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 to see you in Dallas at our Annual Meeting on May 15, 1998, and
again this year we are offering a "free ride" for stockholders.
Here's how it works:
- Ride Greyhound to Dallas for the Annual Meeting and we will refund 50
percent of the price of your ticket.
- Ride Greyhound to Dallas for the Annual Meeting and write a letter to me
about your trip and we will refund 100 percent of the price of your
ticket.
We offered this free trip last year for the first time and were delighted
when 17 stockholders from several states took us up on it. This year, we hope
the number will grow.
The fine print: you must be eligible to vote at the 1998 Annual Meeting.
And, once again, I ask that you take the trip as a regular customer, and tell me
the straight story in your letter. For fare and schedule information, call
1(800)231-2222.
The meeting this year will be at the Majestic Theatre in downtown Dallas,
only a few blocks from our terminal. If you give us your itinerary in advance,
we will arrange transportation for you from the terminal to the meeting. Please
contact us by telephone at (972)789-7201 or by fax at (972)789-7234. We have
also arranged a special rate at the Hampton Inn, 1015 Elm Street, which is four
blocks north of our terminal. For reservations, call (214) 742-5678 no later
than May 4 and ask for the special Greyhound rate. For parking, we suggest the
Elm Street Garage, across the intersection diagonally from the theater, at 2000
Elm Street.
I hope to see you on May 15. Meanwhile, thanks for your support for our
work in building a strong national transportation company.
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 15, 1998
---------------------
Notice is hereby given that the Annual Meeting of Stockholders of Greyhound
Lines, Inc., a Delaware corporation (the "Company"), will be held on Friday, May
15, 1998, at 10:00 a.m., local time, at the Majestic Theatre, 1925 Elm Street,
Dallas, Texas 75201 for the following purposes:
1. To elect three directors to serve as Class I directors for terms
expiring in 2001 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, 1998; and
3. To approve the Greyhound Lines, Inc. 1998 Directors' Stock Incentive
Plan; and
4. To consider a proposal to elect the entire Board of Directors every
year; and
5. 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 March 23, 1998 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 1, 1998
<PAGE> 4
GREYHOUND LINES, INC.
15110 N. DALLAS PARKWAY, SUITE 600
DALLAS, TEXAS 75248
(972) 789-7000
'[GREYHOUND LINES, INC. LOGO]'
---------------------
PROXY STATEMENT
APRIL 1, 1998
---------------------
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") and 8 1/2%
Convertible Exchangeable Preferred Stock (the "Preferred 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 Friday, May 15, 1998, at 10:00
a.m., local time, at the Majestic Theatre, 1925 Elm Street, Dallas, Texas 75201
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, 1998; (iii) FOR the approval of the Greyhound
Lines, Inc. 1998 Directors' Stock Incentive Plan; (iv) AGAINST a proposal to
elect the entire Board of Directors every year; and (v) 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 and Preferred 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 $7,500 (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 March 23, 1998, the Company had 59,764,528 shares of Common Stock
outstanding and 2,400,000 shares of Preferred Stock outstanding. As of March 23,
1998, there were no outstanding shares of any other class of capital stock of
the Company. Each share of Common Stock entitles the holder to one vote. Each
share of Preferred Stock entitles the holder to one vote. The holders of Common
Stock and the holders of Preferred Stock will vote together as a single class.
Only stockholders of record at the close of business on March 23, 1998 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 1, 1998.
<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 and Preferred Stock as of March 13, 1998 (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 or Preferred Stock, by directors
of the Company, by the Named Executive Officers (see "EXECUTIVE COMPENSATION --
Compensation") and by all the directors, Named Executive Officers and other
executive officers of the Company as a group, and the percentage of the
outstanding shares of Common Stock and Preferred 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>
AMOUNT OF AMOUNT OF PERCENT
NAME AND ADDRESS COMMON STOCK PERCENT PREFERRED STOCK PERCENT OF VOTING
OF BENEFICIAL OWNER BENEFICIALLY OWNED(A) OF CLASS BENEFICIALLY OWNED OF CLASS SECURITIES(B)
------------------- --------------------- -------- ------------------ -------- -------------
<S> <C> <C> <C> <C> <C>
Snyder Capital Management, L.P............. 12,399,665 19.7% 639,800 26.7% 15.7%
350 California Street Suite 1460 San
Francisco, California 94104(c)
</TABLE>
<TABLE>
<CAPTION>
AMOUNT OF AMOUNT OF PERCENT
COMMON STOCK PERCENT PREFERRED STOCK PERCENT OF VOTING
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(A)(D) OF CLASS BENEFICIALLY OWNED OF CLASS SECURITIES
------------------------ ------------------------ -------- ------------------ -------- ----------
<S> <C> <C> <C> <C> <C>
Directors and Named Executive Officers:
Thomas G. Plaskett....................... 142,333 * 0 *
Richard J. Caley......................... 78,035 * 0 *
Linda Chavez............................. 11,634 * 0 *
Craig R. Lentzsch........................ 997,837 1.6% 1,000 * 1.6%
A. A. Meitz.............................. 9,667 * 0 *
Frank L. Nageotte........................ 14,999 * 0 *
Alfred E. Osborne, Jr.................... 40,666 * 0 *
Stephen M. Peck.......................... 62,511 * 0 *
Ernest P. Werlin......................... 16,111 * 0 *
Jack W. Haugsland........................ 369,333 * 0 *
J. Floyd Holland......................... 238,929 0
Stuart N. Robinson....................... 63,850 0
Mark E. Southerst........................ 112,349 * 0 *
All directors, Named Executive Officers and
other executive officers of the Company
as a group (17 persons).................. 2,605,455 4.2% 1,000 * 4.2%
</TABLE>
- ---------------
* Less than 1%.
(a) Includes: (i) shares of restricted Common Stock; and (ii) shares of Common
Stock issuable under options, warrants or other rights currently
exercisable or exercisable within 60 days of March 13, 1998; and (iii)
shares of Common Stock issuable upon the conversion of Preferred Stock. The
Preferred Stock is convertible at any time into shares of Common Stock,
presently at a rate of 5.128 shares of Common Stock per share of Preferred
Stock.
(b) Calculated based on the holders of Common Stock and Preferred Stock voting
together as a single class with each holder of Common Stock having one vote
per share and each holder of Preferred Stock having one vote per share.
Does not give effect to the conversion of the Preferred Stock.
(c) The information is as of December 31, 1997 and is based on a Schedule 13G
filed with the Securities and Exchange Commission ("SEC") on February 19,
1998 on behalf of Snyder Capital Management, L.P., Snyder Capital
Management, Inc. and Alan Barry Snyder (collectively "Snyder") and
subsequent discussions with Snyder representatives. As of that date, with
respect to Common Stock held, Snyder reported that it had sole voting power
with respect to 526,262 shares, shared voting power with respect to
8,043,467 shares, sole dispositive power with respect to 526,262 shares and
shared dispositive power with respect to 8,762,404 shares. In addition,
Snyder reported that it held 639,800 shares of Preferred Stock
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<PAGE> 6
(presently convertible into 3,281,025 shares of Common Stock) and that,
with respect to the Preferred Stock, it had sole voting power with respect
to 30,100 shares, shared voting power with respect to 568,900 shares, sole
dispositive power with respect to 30,100 shares and shared dispositive
power with respect to 609,700 shares.
(d) The following table sets forth, as of March 13, 1998 (except as otherwise
noted below), 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 other executive officers of the
Company as a group:
<TABLE>
<CAPTION>
COMMON
STOCK COMMON TOTAL
BENEFICIALLY STOCK COMMON
OWNED(1) EQUIVALENTS(2) STOCK
------------ -------------- ---------
<S> <C> <C> <C>
Thomas G. Plaskett...................................... 3,000 139,333 142,333
Richard J. Caley........................................ 5,000 73,035 78,035
Linda Chavez............................................ 4,967 6,667 11,634
Craig R. Lentzsch(3).................................... 97,709 900,128 997,837
A. A. Meitz............................................. 3,000 6,667 9,667
Frank L. Nageotte....................................... 1,666 13,333 14,999
Alfred E. Osborne, Jr.(4)............................... 12,999 27,667 40,666
Stephen M. Peck......................................... 51,400 11,111 62,511
Ernest P. Werlin........................................ 5,000 11,111 16,111
Jack W. Haugsland....................................... 46,000 323,333 369,333
J. Floyd Holland(5)..................................... 16,929 222,000 238,929
Stuart N. Robinson(4)(6)................................ 7,600 56,250 63,850
Mark E. Southerst(5).................................... 11,599 100,750 112,349
All directors, Named Executive Officers and other
executive officers of the Company as a group (17
persons).............................................. 289,570 2,315,885 2,605,455
</TABLE>
- ---------------
(1) Includes shares of restricted Common Stock.
(2) Includes: (i) shares of Common Stock issuable under options, warrants or
other rights currently exercisable or exercisable within 60 days of March
13, 1998; and (ii) shares of Common Stock issuable upon the conversion of
Preferred Stock.
(3) Includes: (i) options currently exercisable or exercisable within 60 days of
March 13, 1998 for 895,000 shares of Common Stock; and (ii) 5,128 shares of
Common Stock issuable upon the conversion of 1,000 shares of Preferred Stock
held by Mr. Lentzsch.
(4) Beneficial ownership of shares currently held indirectly is disclaimed by
the following named persons in the amounts indicated: Dr. Osborne -- 6,835
shares; Mr. Robinson -- 600 shares.
(5) Beneficial ownership of shares currently held by the Greyhound Lines 401(k)
trust is disclaimed by the following named persons in the amounts indicated:
Mr. Holland -- 2,120 shares; Mr. Southerst -- 1,499 shares.
(6) Information is as of January 1, 1998.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of three
directors to serve as Class I directors for terms expiring in 2001 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
3
<PAGE> 7
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 I DIRECTORS, WHOSE TERMS WILL EXPIRE IN 2001:
Craig R. Lentzsch (age 49) 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., Enginetech, Inc., the Intermodal Transportation Institute and the Great
American Station Foundation and is a director and a member of the Executive
Committee of the American Bus Association.
Frank L. Nageotte (age 71) 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 the Company 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 1987. Mr. Nageotte worked for the Company's predecessor for 40
years.
Thomas G. Plaskett (age 54) 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 of Directors. Since 1991, Mr. Plaskett has served as
managing director of Fox Run Capital Associates, a privately-held advisory firm.
In September 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, Probex Corporation, Legend
Airlines, Inc. and Smart and Final, Inc.
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 II DIRECTORS, WHOSE TERMS WILL EXPIRE IN 1999:
Alfred E. Osborne, Jr. (age 53) 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., The Times Mirror
Company and United States Filter Corporation.
4
<PAGE> 8
Stephen M. Peck (age 63) 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 53) 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 May 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.
CLASS III DIRECTORS, WHOSE TERMS WILL EXPIRE IN 2000:
Richard J. Caley (age 71) 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, 1989 to November 15, 1989, Mr. Caley served as
President, Chief Operating Officer and a director of HEM Pharmaceuticals.
Linda Chavez (age 50) 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. Ms. Chavez is
also a director of ABM Industries.
A. A. Meitz (age 60) 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 Dallas Symphony Association
and is its Past Chairman. Mr. Meitz was also the Chairman of the Texas Senate
Advisory Committee on Business, Technology and Education from 1984 to 1985. Mr.
Meitz is the father-in-law of Frederick F. Richards, III, Senior Vice President
and Chief Information Officer of the Company.
5
<PAGE> 9
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, 1997 through December 31, 1997.
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,
1997, 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, 1997,
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 is also responsible for reviewing information
technology policies and practices, including year 2000 issues. The Audit
Committee also recommends the engagement of the independent public accountants
to the Board of Directors.
Messrs. Caley (Chairperson), Meitz and Peck currently serve as members of
the Compensation and Organization Committee (the "Compensation Committee").
During the fiscal year ended December 31, 1997, this committee met six times.
The Compensation Committee is responsible for reviewing all compensation-related
matters, including the compensation of the executive officers of the Company.
The Compensation Committee is authorized to retain a compensation consultant to
advise it on compensation arrangements for the senior management of the Company.
Messrs. Caley (Chairperson) and Peck currently serve as members of the
Option Committee. During the fiscal year ended December 31, 1997, this committee
met once. The Option Committee, composed entirely of "non-employee directors" as
defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended, is
responsible for making all stock incentive awards and grants under the Company's
stock option and incentive plans and for administering such plans.
Messrs. Plaskett (Chairperson), Caley and Lentzsch currently serve as
members of the Committee on Directors. The Committee on Directors met twice
during the fiscal year ended December 31, 1997. The Committee on Directors is
responsible for nominating candidates to serve as directors of the Company,
addressing and keeping abreast of corporate governance issues and reviewing
director compensation and evaluating board performance.
During the fiscal year ended December 31, 1997, the Board of Directors met,
in person, telephonically or by unanimous written consent, seven times. During
1997, one director was absent from one Board of Directors meeting and four other
directors were absent from one meeting of a committee on which he or she served;
thus, 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.
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
6
<PAGE> 10
a director if elected); and (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 15, 1999, to and including
March 17, 1999 with respect to the 1999 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).
BOARD OF DIRECTORS GOVERNANCE PRINCIPLES
Effective May 31, 1995, the Board of Directors unanimously adopted a Policy
Framework for Significant Corporate Governance Issues (the "Framework") to
assist the Board of Directors in fulfilling its fiduciary responsibilities to
all of the stockholders of the Company.
Among the key features of the Framework are the following:
- The Board of Directors believes that a majority of the Board of Directors
should consist of outside directors. At present, Mr. Lentzsch, President
and Chief Executive Officer, is the only inside director.
- There are periodic meetings of outside directors only, at least twice
annually, led by a director appointed by the outside directors.
Currently, the Board of Directors is chaired by Mr. Plaskett who is an
outside director and he leads the meetings of the outside directors.
Additionally, at each regularly scheduled meeting, directors meet in
executive session, outside the presence of Company management.
- The Board of Directors requires key members of management to attend all
Board of Directors meetings. At a minimum, the Chief Operating Officer,
Chief Financial Officer and General Counsel are to be in attendance.
Additionally, directors have complete access to management and
information concerning the Company's business activities and performance.
- Board of Directors committee assignments and chairpersonships of the
committees are rotated, generally on a two- to four-year cycle.
- The Board of Directors has established a suggested retirement age of 70,
although existing directors are exempt from this requirement. The Company
provides no retirement benefits to directors.
- The Board of Directors performs an annual evaluation of the President and
Chief Executive Officer.
- The Board of Directors performs an annual self-evaluation of its
performance.
A copy of the Framework is available to stockholders of the Company upon
request.
DIRECTOR STOCK OWNERSHIP GUIDELINES
In addition, in 1998, the Board of Directors adopted minimum stock
ownership guidelines that apply to all outside directors. Over the next three
years, each current outside director will be expected to acquire and hold the
Company's Common Stock valued in an amount equivalent to two times the
director's annual retainer. This stock must be owned outright and must be
acquired by stock option exercises or open-market purchases. Additionally, to
encourage stock ownership by directors, the Board of Directors adopted the 1998
7
<PAGE> 11
Directors' Stock Incentive Plan, subject to approval by the Company's
stockholders. If this plan is approved, directors will be given the opportunity
to elect to receive all or a portion of their annual cash retainer in the form
of stock options.
EXECUTIVE OFFICERS OF THE COMPANY
The following sets forth the names, ages and positions held by the
executive officers of the Company:
Jack W. Haugsland (age 58) joined the Company in May 1995 as Executive Vice
President and Chief Operating Officer. From 1992 to 1995, Mr. Haugsland was
President and Chief Executive Officer of Gray Line Worldwide. From 1990 to 1992,
Mr. Haugsland held the position of Senior Vice President -- Operations for the
Company; and from 1986 to 1990, Mr. Haugsland served as President of Greyhound
Travel Services, Inc., a former subsidiary of the Company. Mr. Haugsland began
employment with the Company's predecessor in 1964. Mr. Haugsland is also a board
member of the American Bus Association and of the Travel Industry Association of
America.
J. Floyd Holland (age 62) has served as Senior Vice President -- Operations
since September 1994 and is responsible for equipment maintenance, engineering,
environmental compliance and purchasing. Certain of the Company's bus operating
subsidiaries also report to Mr. Holland. From October 1992 to September 1994, he
served as Vice President -- Maintenance of the Company. From July 1987 to
September 1992, he was Vice President -- Fleet Operations and was responsible
for fleet planning and allocation. From October 1979 to July 1987, Mr. Holland
served as Vice President of Operations and Transportation of Trailways. Mr.
Holland held various management positions with predecessors of the Company since
he began employment in 1958 with Trailways Lines, Inc. Mr. Holland has been a
member of the Board of Directors and Executive Committee of the National Bus
Traffic Association since 1991.
Frederick F. Richards, III (age 38) was named Senior Vice President and
Chief Information Officer on December 9, 1997. Mr. Richards oversees information
technology development and services, accounting operations, and the telephone
information centers. From 1987 to December 1997, Mr. Richards worked as an
independent management consultant and provided consulting services to the
Company from 1987 to 1990 and again from 1994 to December 1997. Recently, Mr.
Richards integrated and managed the centralized driver and equipment dispatch
and planning operations for the Company. Mr. Richards also managed the
integration of automated ticketing with revenue reporting and fare and schedule
quotation systems in the late 1980s. Mr. Richards is the son-in-law of A. A.
Meitz, a director of the Company since November 21, 1995.
Ralph J. Borland (age 50) has served as Vice President -- Marketing and
Sales since January 1, 1998, and is responsible for selling the Company's
regularly scheduled service, charter bus and related products and is responsible
for the passenger marketing, advertising, promotion and pricing activities of
the Company. He previously served as Vice President -- Sales and Service, where
he was responsible for charter sales, Hispanic initiatives and the casino and
special services markets and, previously, as Vice President -- Customer
Satisfaction. Mr. Borland also served as Vice President -- Marketing from March
1987 to April 1993. Mr. Borland joined the Company's predecessor in 1972.
T. Scott Kirksey (age 40) joined the Company in June 1995 as Vice
President -- Financial Planning and Reporting and is responsible for the
business and strategic planning for the Company, as well as corporate accounting
and financial reporting. Prior to joining the Company, Mr. Kirksey was Corporate
Controller for Hat Brands, Inc. from 1993 and served as Director of Financial
Planning, Budgeting and Treasury and Vice President/Controller of Telemedia
Services for Neodata Corporation from 1990 to 1993.
Jeffrey W. Sanders (age 36) joined the Company on June 1, 1997 as Vice
President -- Corporate Development and is responsible for corporate acquisitions
and new business development, treasury, corporate finance, tax and investor
relations. Prior to joining the Company, Mr. Sanders was Vice President --
Controller of Motor Coach Industries International, Inc. from January 1, 1995 to
January 10, 1997 and Director -- Financial Reporting and Consolidations from
October 18, 1993 to December 31, 1994. From January 1, 1985 to October 15, 1993,
Mr. Sanders held various positions, including senior manager in the audit
department, with Deloitte & Touche LLP.
8
<PAGE> 12
Mark E. Southerst (age 40) was elected as Vice President and General
Counsel and Secretary in January 1995. Mr. Southerst was previously employed by
the Company as Associate General Counsel, since July 1988. Prior to joining the
Company, Mr. Southerst served as in-house legal counsel for Burlington Northern
Railroad Company from 1983 to July 1988. Mr. Southerst also serves as a director
of the National Bus Traffic Association and a legal advisor to the ATA
Litigation Center, a trade association specializing in legal issues affecting
motor carriers.
PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company's financial statements for the fiscal year ended December 31,
1997 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.
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, 1998, 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 of Directors 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 OF DIRECTORS 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, 1998.
PROPOSAL NO. 3
APPROVAL OF 1998 DIRECTORS' STOCK INCENTIVE PLAN
PROPOSAL
The 1998 Directors' Stock Incentive Plan (the "1998 Directors' Incentive
Plan") was adopted by the Board of Directors on March 3, 1998, subject to
approval by the Company's stockholders. A copy of the 1998 Directors' Incentive
Plan is attached as Exhibit A to this Proxy Statement. As of March 3, 1998,
options to purchase approximately 142,000 shares of Common Stock remained
available to be granted to Directors under the Company's 1991 Stock Option Plan
and the 1993 and 1995 Non-Employee Director Stock Option Plans. The Board of
Directors believes that the remaining number of options under the 1991, 1993 and
1995 plans is likely to be exhausted in the near-term. Additionally, the Board
of Directors wishes to encourage increased stock ownership by directors by
allowing them to elect to receive all or a portion of their annual retainer in
stock options, rather than in cash. Accordingly, because the Board of Directors
believes that director stock ownership is important to the long-term performance
of the Company and endorses the use of stock options to attract, retain and
motivate directors, the Board of Directors has concluded that it is appropriate
to increase the number of shares of Common Stock available to be granted under
the Company's stock option and incentive plans.
9
<PAGE> 13
COMMON STOCK
The aggregate number of shares of Common Stock in respect of which options
(an "Option") may be granted under the 1998 Directors' Incentive Plan may not
exceed 500,000. This number and the terms of any Option will be adjusted
proportionately if the Common Stock is split, combined or altered by a share
dividend or a merger, recapitalization or other corporate event. No other
repricing of Options after they are granted is permitted. If any Option granted
under the 1998 Directors' Incentive Plan is canceled, terminates or expires for
any reason without having been exercised in full, the shares of Common Stock
related to the unexercised portion of the Option may again be subject to an
Option grant under the 1998 Directors' Incentive Plan. The shares of Common
Stock issued upon the exercise of Options granted under the 1998 Directors'
Incentive Plan will be authorized but unissued shares or treasury shares or will
be purchased on the open market or from private sources. The proceeds of the
exercise of Options will be general corporate funds of the Company. If the 1998
Directors' Incentive Plan is approved by the stockholders, the 1995 Plan will be
merged into the 1998 Directors' Incentive Plan and any shares remaining under
the 1995 Plan will be added to the number of shares in respect of which Options
may be granted under the 1998 Directors' Incentive Plan. All Options granted
under the 1995 Plan that are unvested at the time the 1995 Plan is merged into
the 1998 Directors' Incentive Plan will continue to vest according to the
vesting provisions of the 1995 Plan.
DIRECTORS' OPTIONS
Only directors who are not employees of the Company are eligible to receive
Options under the 1998 Directors' Incentive Plan. On the date of each annual
meeting of stockholders, an Option for shares of Common Stock will automatically
be granted to each eligible Director. Under a first-year transition rule
applicable for the 1998 Annual Meeting, the number of Option shares will be
determined as follows:
(a) An eligible Director who last received a grant of options under
the 1995 Plan in 1995 will automatically be granted an Option for 20,834
shares of Common Stock;
(b) An eligible Director who last received a grant of options under
the 1995 Plan in 1996 will automatically be granted an Option for 14,167
shares of Common Stock; and
(c) An eligible Director who last received a grant of options under
the 1995 Plan in 1997 or a director who is newly elected in 1998 will
automatically be granted an Option for 7,500 shares of Common Stock.
Beginning with the 1999 annual meeting of stockholders, an Option for 7,500
shares of Common Stock will automatically be granted to each eligible Director.
The 7,500 share amount may be adjusted upward or downward by the Stock Option
Committee on an annual basis if it is determined that such adjustment is
advisable on account of competitive circumstances in the marketplace, the price
of the Company's Common Stock, then current recruitment efforts or on account of
any other factors deemed relevant by the Stock Option Committee. On any date
when a person is appointed as a Director to fill a vacancy on the Board of
Directors, an Option will be automatically granted to such person for a number
of shares of Common Stock equal to 7,500 (or such other number which is in
effect at the prior Annual Meeting) multiplied by a fraction, the numerator of
which equals the number of whole calendar months remaining before the next
annual meeting of stockholders and the denominator of which equals twelve.
In addition to the automatic grant of Options discussed above, an eligible
Director will be given the opportunity to elect to receive all or a portion of
his or her annual cash retainer in the form of additional Options for shares of
Common Stock. The number of Options that a Director making such election will
receive will be determined using a valuation formula established by the Stock
Option Committee of the Board of Directors.
All Options granted under the 1998 Directors' Incentive Plan are
non-qualified options and will have an exercise price equal to the fair market
value of a share of Common Stock on the date of grant, which is defined as the
average high and low prices of a share of the Common Stock on the securities
exchange on which it is
10
<PAGE> 14
listed. On March 3, 1998, the high and low prices of a share of Common Stock on
the American Stock Exchange were $4 15/16 and $4 3/4. The exercise price must be
paid in cash at the time of exercise.
Each Option will be exercisable on the date of grant. Each Option lapses
and ceases to be exercisable upon the earliest of: (i) ten years from the date
of grant; (ii) six months after the Director ceases to be a director because of
disability; (iii) twelve months after the Director ceases to be a director
because of death; (iv) immediately, if the 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 Director voluntarily terminates service on the Board of Directors without
the consent of the Company; (v) five years after the date on which the Director
terminates service (other than for death, disability, for cause or without
consent) if, at the time of termination, the Director has served at least a
three-year term of office; or (vi) 30 days after the date on which the Director
terminates service (other than death, disability, for cause or without consent)
if, at the time of termination, the Director has not served at least a
three-year term of office.
If a Director is absent from meetings of the Board of Directors because of
a physical or mental disability, for purposes of the Plan, such Director will
not be considered to have ended service with the Board of Directors while the
Director has that disability, unless the Director resigns or is not re-elected
by the stockholders.
DURATION, AMENDMENT AND TERMINATION
No Option may be granted under the 1998 Directors' Incentive Plan after
March 3, 2008. The Board of Directors may at any time terminate the 1998
Directors' Incentive Plan, or amend the 1998 Directors' Incentive Plan as it may
deem advisable; however, no amendment will be effective without the approval of
the stockholders of the Company if it materially increases the benefits accruing
to participants under the 1998 Directors' Incentive Plan; materially increases
the number of shares of Common Stock which may be issued under the 1998
Directors' Incentive Plan; or materially modifies the requirements as to
eligibility for participation in the 1998 Directors' Incentive Plan. No
amendment or termination of the 1998 Directors' Incentive Plan may alter or
impair the rights of a person to whom an Option was granted (a "Grantee"), under
any Option made before the adoption of such amendment or termination by the
Board of Directors, without the written consent of such Grantee.
TRANSFER RESTRICTIONS
No Option or other benefit under the 1998 Directors' Incentive Plan may be
sold, pledged or otherwise transferred other than by will or the laws of descent
and distribution; and no Option may be exercised during the life of the Grantee
to whom it was granted except by such Grantee.
TAXATION
GRANTEES SHOULD CONSULT THEIR INDIVIDUAL TAX ADVISERS BEFORE ELECTING TO
RECEIVE ALL OR A PORTION OF THEIR RETAINER AS OPTIONS, EXERCISING ANY OPTION OR
DISPOSING OF ANY SHARES ACQUIRED ON THE EXERCISE OF AN OPTION.
It is intended that the Options are not taxed upon grant. The Grantee is
taxed, as ordinary income, on the exercise of such an Option to the extent that
the fair market value on the date of exercise exceeds the exercise price. The
Grantee's basis for determining capital gain or capital loss upon sale of the
shares is the fair market value on the date of exercise. The Company is entitled
to a deduction equal to the ordinary income realized by the Grantee upon the
exercise of the Options.
11
<PAGE> 15
1998 DIRECTORS' INCENTIVE PLAN BENEFITS
The following table sets forth the number of shares of Common Stock that
will be received under the 1998 Directors' Incentive Plan by each of the current
directors of the Company who are entitled to participate in the 1998 Directors'
Incentive Plan, to the extent such Options are determinable.
1998 DIRECTORS' STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
DIRECTORS' OPTIONS
NAME AND POSITION NUMBER OF SHARES
----------------- ------------------
<S> <C>
Thomas G. Plaskett.......................................... 20,834(a)
Non-Executive Director
Richard J. Caley............................................ 7,500(a)
Non-Executive Director
Linda Chavez................................................ 7,500(a)
Non-Executive Director
A. A. Meitz................................................. 7,500(a)
Non-Executive Director
Frank L. Nageotte........................................... 20,834(a)
Non-Executive Director
Alfred E. Osborne, Jr....................................... 14,167(a)
Non-Executive Director
Stephen M. Peck............................................. 14,167(a)
Non-Executive Director
Ernest P. Werlin............................................ 14,167(a)
Non-Executive Director
</TABLE>
- ---------------
(a) Represents proposed grant of Options under the 1998 transition rule.
Beginning with the 1999 annual meeting of stockholders, each Director is
eligible to receive a grant of Options to purchase 7,500 (or such other
number as is determined on an annual basis by the Stock Option Committee)
shares of Common Stock at each annual meeting of stockholders. In addition,
Directors may elect to take all or a portion of their annual retainers in
Options.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares present, or
represented, and entitled to vote at the Annual Meeting will be required to
approve the 1998 Directors' Incentive Plan. See "VOTING REQUIREMENTS."
BOARD OF DIRECTORS RECOMMENDATION
The Board of Directors unanimously recommends a vote FOR the approval of
the 1998 Directors' Stock Incentive Plan.
12
<PAGE> 16
PROPOSAL NO. 4
ELECT THE ENTIRE BOARD OF DIRECTORS EACH YEAR
SHAREHOLDER PROPOSAL
This shareholder resolution is submitted by John Chevedden, 2215 Nelson
Ave., No. 206, Redondo Beach, CA 90278, on behalf Lee Greenwood, holder of 1,000
shares of Greyhound Lines, Inc. Stock:
"Resolved: The shareholders of Greyhound request the Board of Directors
take the necessary steps to amend the company's governing instruments, including
the corporate by-laws, to ELECT THE ENTIRE BOARD OF DIRECTORS EACH YEAR with an
independent lead director. This includes the requirement that less frequent than
annual election of the entire board can be re-instituted only with a majority
vote of shareholders.
To face today's challenges and avoid the setbacks of the past, Greyhound's
11,400 shareholders and 11,000 employees need the best Board to answer each year
for issues like these:
1) Continue the good strategic moves that Greyhound has made:
Greyhound and Amtrak agree on new routes and partnerships for seamless
inter-modal exchange of passengers. New Greyhound connections to Amtrak stations
include Cincinnati to Chicago and Macon to Atlanta. Greyhound and Amtrak now
share stations in 24 cities.
Trains February 1997
AirTran Airlines links its flight schedules with Greyhound commuter buses.
Atlanta Constitution June 6, 1997
2) Answer the competitive challenges:
Peter Pan Bus Lines successfully competes with Greyhound in the northeastern
U.S.
Boston Globe May 2, 1997
3) Maintain the momentum of Greyhound's turnaround:
Greyhound is improving after losing $77 million in 1994 and $17 million in 1995.
Atlanta Journal
Constitution June 16, 1996
4) Improve corporate governance and accountability:
Four (4) Greyhound directors own no Greyhound stock.
Greyhound proxy statement 1997
The Business Week Nov. 25, 1996 Cover Story said for the 'The Best Board:
PLACE THE ENTIRE BOARD UP FOR ELECTION EVERY YEAR.'
'If employees, bankers, suppliers and management sense you've taken care of
yourself -- but are asking them to sacrifice -- you won't save the company,'
said Gerald Greenwald, United Airlines CEO.
Annual election will give greater incentive to the Board to address the
challenges highlighted in these published reports.
Institutional Shareholder Services recommends a yes vote for electing the
entire board each year. ISS is a proxy advisory firm that prepares detailed
studies on shareholder resolutions for professional money managers. Greyhound
employees get annual reviews, yet give directors a 3-year holiday between
shareholder review. Greyhound directors have an additional hiatus through the
lack of any formal evaluation of directors.
Greyhound's 11,400 shareholders and 11,000 employees need the Best Board."
13
<PAGE> 17
BOARD OF DIRECTORS RECOMMENDATION
The Board of Directors unanimously recommends a vote AGAINST this
shareholder proposal. As set forth elsewhere in this Proxy Statement, the Board
of Directors has adopted extensive governance policies. The Chairman of the
Board of Directors is an "independent" outside director. Additionally, at least
two times annually, the outside directors meet privately and are led in those
sessions by a director selected by the outside directors. The Board of Directors
also performs an annual self-evaluation of its performance. The Board of
Directors also believes that staggered, three-year terms have promoted stability
and continuity of leadership, which has been key in supporting the Company's
financial turnaround and return to profitability. It has also served to ensure
that members of the Board of Directors make a long-term commitment to the
Company and has allowed members of the Board of Directors to become
knowledgeable about the Company and its industry.
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, 1997, 1996 and
1995, 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($)(4) OPTIONS(#) SATION($)(5)
--------------------------- ---- ------------ ----------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Craig R. Lentzsch 1997 391,250 290,503 -- 187,182 0 100,133
President and Chief 1996 350,013 112,228 86,603 55,163 100,000 86,169
Executive Officer and Director 1995 350,000 175,000 -- 0 440,000 79,836
Jack W. Haugsland(6) 1997 255,000 154,913 -- 119,990 0 74,288
Executive Vice President 1996 225,008 79,029 -- 36,775 60,000 55,393
and Chief Operating Officer 1995 141,490 64,000 -- 0 400,000 154,815
J. Floyd Holland 1997 164,987 89,093 -- 58,704 0 49,562
Senior Vice President -- 1996 155,956 36,735 -- 0 30,000 50,310
Operations 1995 145,000 43,500 19,293 0 158,000 60,140
Mark E. Southerst(7) 1997 154,305 72,909 -- 46,580 0 38,176
Vice President and General 1996 128,050 28,486 -- 0 45,000 33,646
Counsel and Secretary 1995 116,439 30,215 -- 0 100,000 16,446
Stuart N. Robinson(8) 1997 144,750 68,394 -- 33,243 0 41,623
Former Vice President -- 1996 142,313 29,254 -- 0 25,000 22,478
Marketing 1995 135,000 35,438 -- 0 127,500 19,543
</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.
(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 in 1995, $12,000 consisted of a car allowance and $6,303 consisted
of supplemental long-term disability insurance premiums paid by the Company.
(4) As of December 31, 1997, Mr. Lentzsch held 50,600 shares of restricted
stock, with an aggregate value of $186,082. Of these shares granted to Mr.
Lentzsch, 5,000 shares will vest on April 1, 1998, 10,000 shares
14
<PAGE> 18
will vest on January 22, 1999, 5,000 shares will vest on April 1, 1999 and
10,300 shares will vest on May 20, 1999. As of December 31, 1997, Mr.
Haugsland held 32,667 shares of restricted stock, with an aggregate value of
$120,133. Of these shares granted to Mr. Haugsland, 3,333 shares will vest
on April 1, 1998, 6,500 shares will vest on January 22, 1999, 3,333 shares
will vest on April 1, 1999 and 6,500 shares will vest on May 20, 1999. As of
December 31, 1997, Mr. Holland held 12,700 shares of restricted stock, with
an aggregate value of $46,704. Of these shares granted to Mr. Holland, 3,250
shares will vest on January 22, 1999 and 3,100 shares will vest on May 20,
1999. As of December 31, 1997, Mr. Southerst held 10,100 shares of
restricted stock, with an aggregate value of $37,143. Of these shares
granted to Mr. Southerst, 2,500 shares will vest on January 22, 1999 and
2,550 shares will vest on May 20, 1999. As of December 31, 1997, Mr.
Robinson held 7,000 shares of restricted stock, with an aggregate value of
$25,743. Mr. Robinson forfeited all restricted stock when he terminated
employment with the Company on January 1, 1998. Holders of restricted stock
are entitled to any dividends declared and paid. However, to date, no
dividends have been paid, nor are any expected to be paid in the foreseeable
future.
(5) For 1997, includes $91,613, $57,972, $40,524, $34,815 and $32,028 in accrued
benefits under the Company's Supplemental Executive Retirement Plan
("SERP"); $4,750, $11,181, $2,475, $1,518 and $7,952 in Company
contributions to the 401(k) and non-qualified savings plans; and $3,770,
$5,135, $6,563, $1,843 and $1,633 in term life insurance premiums paid by
the Company for Messrs. Lentzsch, Haugsland, Holland, Southerst and
Robinson, respectively.
(6) Mr. Haugsland became Executive Vice President and Chief Operating Officer on
May 15, 1995.
(7) Mr. Southerst became Vice President and General Counsel and Secretary on
January 24, 1995.
(8) Mr. Robinson terminated employment with the Company effective January 1,
1998. Upon the termination of his employment, Mr. Robinson forfeited all
benefits accrued under the Company's SERP and the 1997 restricted stock
awards set forth in the above table.
EMPLOYMENT CONTRACTS
Craig R. Lentzsch. Mr. Lentzsch's terms of employment are governed by an
employment contract that continues until November 14, 1998, subject to
automatic, successive one-year renewals unless and until terminated. The
contract provides for an annual base salary to Mr. Lentzsch, currently $405,000,
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 are all currently vested and exercisable. If the Company terminates or
does not renew Mr. Lentzsch's employment contract without good cause (as
defined) or if 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: (A) the applicable incentive bonus; or (B) $100,000. 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, 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. Mr. Lentzsch also participates in the Company's 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, 1999. Thereafter, the contract
will renew annually unless and until terminated. The contract provides for an
annual base salary to Mr. Haugsland, currently $265,000, 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,
15
<PAGE> 19
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 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.
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 12 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 of Directors, 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, who receives a fee
of $1,000) for each meeting of such committee at which the director is present.
Pursuant to a deferred compensation plan, Outside Directors are entitled to
defer receipt of all or a portion of their annual retainer fees until
termination of service on the Board of Directors.
Outside Directors are currently 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) ten years from the
date of grant; (ii) six 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) five
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
16
<PAGE> 20
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. If the 1998 Directors' Stock Incentive Plan is approved by the
stockholders, there will be no further option grants under the 1995 Plan. See,
"APPROVAL OF 1998 DIRECTORS' STOCK INCENTIVE PLAN" for additional details
concerning the terms of the proposed option awards to Outside Directors.
STOCK OPTION PLANS
During the fiscal year ended December 31, 1997, there were no options
granted to the Named Executive Officers of the Company.
The following table reflects information with respect to option exercises
by the Named Executive Officers during the fiscal year ended December 31, 1997,
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, 1997.
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 0 777,000 163,000 1,365,243 183,108
Jack W. Haugsland............ 0 0 305,000 155,000 360,623 114,998
J. Floyd Holland............. 0 0 207,900 91,600 116,526 51,894
Mark E. Southerst............ 0 0 84,500 68,750 102,689 36,289
Stuart N. Robinson........... 0 0 103,250 74,250 113,743 42,008
</TABLE>
- ---------------
(1) Computed based upon the difference between $3 11/16 per share, the fair
market value at December 31, 1997, 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 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
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." Additionally, Messrs. Caley and Peck serve as members of the Option
Committee, which oversees, administers and approves grants under the Company's
stock option and incentive plans. In 1997, there were no interlocks or insider
participation on the part of any members of the Compensation Committee, except
as noted herein. Mr. Meitz, a member of the Compensation Committee, is the
father-in-law of Frederick F. Richards, III, the Senior Vice President and Chief
Information Officer of the Company. Mr. Richards was elected an officer of the
Company on December 9, 1997. Prior to becoming an employee of the Company and
since November 1994, Mr. Richards was engaged by the Company as an independent
management consultant on an at-will basis, supplying consulting services to the
Company on a variety of operational and technology issues. In 1997, Mr. Richards
received $340,000 in hourly consulting fees and contractual incentive payments
for these services. Under Compensation Committee procedures, Mr. Meitz is not
present during discussions of Mr. Richards' compensation terms, performance or
other related matters, abstains from voting on matters involving or affecting
Mr. Richards and does not serve on the committee of the Board of Directors that
administers and makes stock incentive awards and grants. Mr. Meitz was elected
to the Company's Board of Directors in November 1995.
17
<PAGE> 21
Additionally, for one meeting of the Compensation Committee in 1997, Mr.
Plaskett served as a temporary committee member due to the illness of one member
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 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 Plan (the "MIP") and the Company's Option Committee, composed of
Messrs. Caley and Peck, non-employee directors, oversees, administers and
approves grants under the Company's stock option and incentive plans. The
Compensation Committee formulates and maintains continuous oversight of all
aspects of compensation for the Company's 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 the first
quarter of the next year and salary adjustments, if any, are generally
implemented at the end of the first quarter. On an annual basis, the
Compensation Committee reviews the Chief Executive Officer's performance,
based on a list of objectives established during the prior year and
discusses with the Chief Executive Officer the performance reviews of
other executive officers of the Company. At various times during the
year, the Compensation Committee receives reports from the Chief
Executive Officer regarding an individual officer's performance.
- Performance-Based Incentive Payments. Executive officers have the
potential to receive annual incentive payments under the Company's MIP,
based on the Company's performance relative to specific financial targets
established for the fiscal year. The Compensation Committee establishes
these performance targets near the beginning of the year, once the
Company's budget and annual plan for the year is finalized. The Company
must meet or exceed these minimum financial performance objectives in
order for any payments to be made. Payments are also contingent upon the
individual maintaining a satisfactory performance.
- 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, which tends to align the officer's compensation 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." As the Company
establishes long-term profitability and a pattern of bottom-line growth, the
Compensation Committee believes it is critical for the Company to meet
short-term performance targets. Therefore, incentive payments under the
Company's MIP are designed to motivate executive officers to meet or exceed
short-term (measured on a one-year or less period) financial performance
targets. Additionally, the Company's compensation policies are also designed to
provide material long-term, equity-based incentive opportunities to ensure that
executive officers are motivated over the long term to respond to the Company's
business challenges and opportunities.
18
<PAGE> 22
STOCK OWNERSHIP GUIDELINES
Recently, the Company established minimum stock ownership guidelines that
apply to the Chief Executive Officer, the executive management team, as well as
senior managers (salary grades 16 and above) of the Company. Over the next three
years, or five years in the case of a new hire or promotion, managers will be
expected to acquire and hold the Company's common stock valued in an amount
equivalent to a "multiple" of the employee's annual salary at the time the plan
was adopted. The Chief Executive Officer will be required to own common stock
valued at three times his annual salary. For executive officers, the ownership
requirement is either one times, one and one-half times or two times the base
salary, depending on grade level. This stock must be owned outright and must be
acquired by stock award exercises or open-market purchases. This program, as
well as the other equity-based incentives, is designed to align employees'
interests with those of the Company's stockholders.
COMPENSATION METHODOLOGY
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). During 1997, the Compensation
Committee continued its review of the Company's programs and attempted to modify
and refine certain features and aspects of the plans in response to the findings
from the 1996 study. 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 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, despite modifications made in 1996 and 1997,
remain below the average when compared to the programs of other companies.
At the start of each fiscal year, the Compensation Committee establishes
financial goals under the MIP for the Company. In 1997, the Compensation
Committee based the financial targets on the Company's earnings before interest,
taxes, depreciation and amortization ("EBITDA"). The Compensation Committee
believed that the EBITDA target established for 1997 was an aggressive target
that required the Company to "stretch" to meet it. Each executive officer,
including the Chief Executive Officer, 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 an executive officer based on
an evaluation of individual performance. Under the MIP in effect in 1997, 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.
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. 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
19
<PAGE> 23
compensation plans and award levels 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. In 1997, due to significant limitations in
the available shares under the stock incentive plans, the Compensation Committee
opted to make restricted stock awards to the executive officers. In keeping with
the Compensation Committee's desire to provide equity-based incentives to
numerous employees within the Company, beyond the executive management team, the
Compensation Committee also made stock option awards to many non-officer
employees of the Company. The Compensation Committee was able to do this because
the restricted stock awards to executive officers require fewer shares than
stock options to deliver equal value, thereby conserving shares for awards to
the other employees.
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 Chief Executive
Officer 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 effectiveness of the Company's compensation
practices. The Company's MIP 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 1997 financial
performance relative to the established EBITDA goal and determined that the
Company exceeded the performance target established for 1997. Therefore, payouts
under the MIP were in excess of the target percentage established for each
participant.
As of January 1, 1997, the annual base salary of the Company's President
and Chief Executive Officer, Craig R. Lentzsch, was $350,000. In April 1997, Mr.
Lentzsch's annual base salary was increased by $55,000. This salary increase was
made in recognition of the substantial improvements in the Company's financial
and operational performance during 1996 versus 1995 and represented the first
base salary increase awarded to Mr. Lentzsch since he joined the Company in
November 1994. For 1997, Mr. Lentzsch earned a bonus of $290,503 (which was paid
in 1998), the amount determined to be due under the Company's MIP and
commensurate with the Company's financial performance versus the established
performance goals. During 1997, the Compensation Committee approved restricted
stock grants to executive officers. Mr. Lentzsch received a 40,600-share grant.
This grant compares with stock option grants made during 1995 and 1996 of
440,000 and 100,000 shares, respectively. Overall, the terms of Mr. Lentzsch's
employment and compensation reflect the Compensation Committee's philosophy of
creating short-term, "at risk" incentive pay, as well as long-term incentives
through the use of material stock awards.
Compensation and Organization
Committee:
Richard J. Caley
A. A. Meitz
Stephen M. Peck
20
<PAGE> 24
STOCK PRICE PERFORMANCE
The following graph depicts the Company's Common Stock price performance
relative to the performance of the Standard & Poor's 500 Composite Index and the
Standard & Poor's Transportation Index.
<TABLE>
<CAPTION>
S&P 500 S&P
Measurement Period Greyhound Composite Transportation
(Fiscal Year Covered) Lines, Inc. Index Index
<S> <C> <C> <C>
12/92 100.00 100.00 100.00
12/93 90.20 110.06 119.04
12/94 18.14 111.34 100.08
12/95 33.82 152.78 139.23
12/96 33.33 187.46 159.05
12/97 27.45 249.43 205.58
</TABLE>
The graph above assumes an investment of $100 in the Company's Common
Stock, the Standard & Poor's 500 Composite Index and the Standard & Poor's
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 on the outcome of the election of
directors. 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) will have no effect on the outcome of the election of
directors.
With regard to Proposal Nos. 2, 3 and 4, votes may be cast for or against
these proposals, or stockholders may abstain from voting. Approval of these
proposals requires the affirmative votes of at least a majority of the shares
voted at the meeting. Therefore, abstentions will have the effect of votes
against the approval of these proposals 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 ending December 31, 1998;
(iii) FOR the approval of the Greyhound Lines, Inc. 1998 Directors' Stock
Incentive Plan; (iv) AGAINST a proposal to elect the entire Board of Directors
every year; and (v) in accordance with the discretion of the named
attorneys-in-fact on other matters, if any, properly brought before the Annual
Meeting.
21
<PAGE> 25
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 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, 1997, all
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with, except that Forms 4 for Ms. Chavez and Mr.
Nageotte due for May 1997 were filed late in June 1997. Additionally, the May
1997 Form 4 for Mr. Nageotte was amended and re-filed in February 1998.
CERTAIN RELATIONSHIPS AND OTHER MATTERS
From November 1994 until December 8, 1997, Frederick F. Richards, III was
engaged by the Company as an independent management consultant on an at-will
basis, supplying consulting services to the Company on a variety of operational
and technology issues. In 1997, Mr. Richards received $340,000 in hourly
consulting fees and contractual incentive payments for these services. Mr.
Richards was elected an officer of the Company on December 9, 1997. 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 1999 annual meeting of stockholders of the Company must be
received by no later than December 1, 1998 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, 1997, 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 1, 1998
22
<PAGE> 26
EXHIBIT A
GREYHOUND LINES, INC.
1998 DIRECTORS' STOCK INCENTIVE PLAN
---------------------
MARCH 3, 1998
---------------------
PREAMBLE:
1. Greyhound Lines, Inc. a Delaware corporation ("Greyhound" or the
"Company"), by means of this 1998 Directors' Stock Incentive Plan (the "Plan")
desires to afford certain of its and its Parent's and Subsidiaries' directors an
opportunity to acquire a proprietary interest in the Company and thus to create
in such persons an increased interest in and a greater concern for the welfare
of the Company.
2. The Company has determined that the foregoing objectives will be
promoted by granting Options (as hereinafter defined) under this Plan to certain
directors of the Company and its Parent and Subsidiaries, if any, pursuant to
this Plan.
3. The Company formerly adopted the Greyhound Lines, Inc. 1995 Directors'
Stock Incentive Plan (the "1995 Plan"), which shall be merged into this Plan
upon the adoption of this Plan by the Board of Directors and its approval by the
shareholders of the Company, and any Shares (as defined in the 1995 Plan) in
respect of which options could have been granted but were not under the 1995
Plan, and any such Shares that would have again become available for option
grants under the 1995 Plan, shall be available instead under this Plan in
addition to the aggregate number of Shares set forth in Section 3.1 of this
Plan.
TERMS:
ARTICLE 1.
DEFINITIONS.
SECTION 1.1. General. Certain words and phrases used in this Plan shall
have the meanings given to them below this Section.
"1995 Plan" means the Greyhound Lines, Inc. 1995 Directors' Stock Incentive
Plan.
"Board of Directors" means the board of directors of Greyhound.
"Change in Control" means (a) the acquisition by any person (defined for
the purposes of this definition to mean any person within the meaning of Section
13(d) of the Exchange Act), other than Greyhound or an employee benefit plan
created by the Board of Directors for the benefit of its Employees, either
directly or indirectly, of the beneficial ownership (determined under Rule 13d-3
of the Regulations promulgated by the SEC under Section 13(d) of the Exchange
Act) of securities issued by Greyhound having 30% or more of the voting power of
all the voting securities issued by Greyhound in the election of directors at
the next meeting of the holders of voting securities to be held for such
purpose; (b) the election of a majority of the Directors elected at any meeting
of the holders of voting securities of Greyhound who are persons who were not
nominated for such election by the Board of Directors or a duly constituted
board of directors of the Board of Directors having authority in such matters;
(c) the approval by the stockholders of Greyhound of a merger or consolidation
with another person, other than a merger or consolidation in which the holders
of Greyhound's voting securities issued and outstanding immediately before such
merger or consolidation continue to hold voting securities in the surviving or
resulting corporation (in the same relative proportions to each other as existed
before such event) comprising 80% or more of the voting power for all purposes
of the surviving or resulting corporation; or (d) the approval by the
stockholders of Greyhound of a transfer of substantially all of the assets of
Greyhound to another person other than a transfer to a transferee, 80% or more
of the voting power of which is owned or controlled by Greyhound or by the
holders of Greyhound's voting securities issued and outstanding immediately
before such transfer in the same relative proportions to each other as existed
before such event.
(1)
<PAGE> 27
"Code" means the Internal Revenue Code of 1986 and the regulations
thereunder, as now in effect or hereafter intended.
"Committee" means the Committee of the Board of Directors that administers
the Plan under Section 2.1 below.
"Common Stock" means the common stock, par value $.01 per share, of the
Company.
"Date of Grant" means the date an Option is first granted.
"Director" means a member of the Board of Directors.
"Disability" shall have the meaning ascribed in the Company's long-term
disability plan; provided, however, that "Disability" shall mean a permanent and
total disability, as defined in Code Section 22(e)(3).
"Effective Date" means the date this Plan was first adopted by the Board of
Directors.
"Employee" means any common-law employee of Greyhound or any Parent or
Subsidiary of Greyhound and any person who is an Officer of Greyhound or any
Parent or Subsidiary of Greyhound pursuant to the Bylaws or comparable governing
document of such company.
"Exchange Act" means the Securities Exchange Act of 1934 and the
regulations thereunder, as now in effect or hereafter amended.
"Exercise Price" means, with respect to an Option, the amount of
consideration that must be delivered to the Company in order to purchase a
single Share thereunder.
"Fair Market Value of a Share" means the arithmetic mean between the high
and the low price per share on the principal national securities exchange or the
NASDAQ -- National Market System on which the Shares are listed or admitted to
trading, on the date of determination or, if such price can not be determined
for the date of determination, the most recent date for which such prices can
reasonably be ascertained.
"Grantee" means any person to whom an Option has been granted and any heir
or legal representative to whom an Option has been transferred by will or the
laws of descent and distribution.
"Incentive Stock Option" or "ISO" means an Option intended to comply with
the terms and conditions set forth in Section 422 of the Code.
"Meeting Date" means the date of each annual meeting of the stockholders of
Greyhound at which Directors are elected.
"Nonqualified Option" means a Stock Option other than an Incentive Stock
Option.
"Officer" means an officer of the Company as defined in 17 C.F.R.
sec.240.16a-1(f) as now in effect or hereafter amended.
"Option" or "Stock Option" means a right granted under the Plan to a
Participant to purchase a stated number of Shares.
"Option Agreement" means an agreement evidencing an Option substantially in
the form of Attachment A hereto.
"Parent" means a parent of a given corporation as such term is defined in
Section 424(e) of the Code.
"Participant" means a person who is eligible to receive and has received an
Option under the Plan.
"Plan" means this Plan (including the 1995 Plan which is merged herein) as
it may be amended or restated from time to time.
"Rule 16b-3" means Rule 16b-3 (17 C.F.R. sec.240.16b-3) promulgated under
Section 16(b) of the Exchange Act as now in effect or hereafter amended.
"SEC" means the Securities and Exchange Commission.
(2)
<PAGE> 28
"Shares" means shares of Common Stock.
"Subsidiary" means a subsidiary of a given corporation as such term is
defined in Section 424(f) of the Code.
SECTION 1.2. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles.
SECTION 1.3. Effect of Definitions. The definitions set forth in Section
1.1 above shall apply equally to the singular, plural, adjectival, adverbial and
other forms of any of the words and phrases defined regardless of whether they
are capitalized.
ARTICLE 2.
ADMINISTRATION.
SECTION 2.1. Committee. The Plan shall be administered by a committee of
the Board of Directors consisting of two or more Directors, each of whom is a
"Non-Employee Director" as defined in Rule 16b-3. Unless the Board of Directors
designates another of its committees to administer the Plan, the Plan shall be
administered by a committee consisting of those members of the Compensation and
Organization Committee of the Board of Directors who are Non-Employee Directors,
but, if the Compensation and Organization Committee is abolished or its
membership does not contain two persons who comply with the requirements of the
first sentence of this Section 2.1, the Board of Directors shall either
reconstitute the Compensation and Organization Committee in compliance with or
create another Committee that complies with the requirements of the first
sentence of this Section 2.1 to administer the Plan. The Committee may be
referred to as the Stock Option Committee.
SECTION 2.2. Authority. Subject to the express provisions of the Plan and
in addition to the powers granted by other sections of the Plan, the Committee
has the authority, in its discretion, to: (a) define, prescribe, amend and
rescind rules, regulations, procedures, terms and conditions relating to the
Plan; (b) make all other determinations necessary or advisable for administering
the Plan, including, but not limited to, interpreting the Plan, correcting
defects, reconciling inconsistencies and resolving ambiguities; and (c) review
and resolve all claims of Grantees and Participants. The actions and
determinations of the Committee on matters related to the Plan shall be
conclusive and binding upon the Company and all Grantees and Participants.
ARTICLE 3.
SHARES.
SECTION 3.1. Number. The aggregate number of Shares in respect of which
Options may be granted under the Plan shall not exceed 500,000 (which number of
Shares is hereby reserved for issuance under the Plan out of the authorized but
unissued Shares). Notwithstanding the foregoing, the number of Shares identified
in the previous sentence shall be increased by that number of Shares in respect
of which options may now or in the future be granted under the 1995 Plan, which
is being merged into this Plan coincident with its adoption and its approval by
the shareholders of the Company.
SECTION 3.2. Cancellations. Options granted under the Plan are canceled,
terminate or expire for any reason without having been exercised or matured in
full, the Shares related to the unexercised portion of an Option shall be
available again for the purpose of the Plan.
SECTION 3.3. Anti-Dilution.
(a) If the Shares are split or if a dividend of Shares is paid on the
Shares, the number of Shares on which each then-outstanding Option is based and
the number of Shares as to which Options may be granted under this Plan shall be
automatically increased by the ratio between the number of Shares outstanding
immediately after such event and the number of Shares outstanding immediately
before such event and the Exercise Price thereof shall be automatically
decreased by the same ratio, and if the Shares are combined into
(3)
<PAGE> 29
a lesser number of Shares, the number of Shares for which each then-outstanding
Option is based and the number of Shares as to which Options may be granted
under the Plan shall be automatically decreased by such ratio and the Exercise
Price thereof shall be automatically increased by such ratio.
(b) In the event of any other change in the Shares, through
recapitalization, merger, consolidation or exchange of shares or otherwise,
there shall automatically be substituted for each Share subject to an
unexercised Option and each Share available for additional grants of Options,
the number and kind of shares or other securities into which each outstanding
Share was changed, and the Exercise Price shall be increased or decreased
proportionately so that the aggregate Exercise Price for the securities subject
to each Option shall remain the same as immediately before such event.
SECTION 3.4. Source. Except as otherwise determined by the Board of
Directors, the Shares issued under the Plan shall be authorized but unissued
Shares. However, Shares which are to be delivered under the Plan may also be
obtained by the Company from its treasury, by purchases on the open market or
from private sources. The proceeds of the exercise of any Option shall be
general corporate funds of the Company. No Shares may be sold under any Option
Agreement for less than the par value thereof. No fractional Shares shall be
issued or sold under the Plan nor will any cash payment be made in lieu of
fractional Shares.
SECTION 3.5. Rights of a Stockholder. No Grantee or other person claiming
under or through any Grantee shall have any right, title or interest in or to
any Shares allocated or reserved under the Plan or subject to any Option except
as to such Shares, if any, for which certificates representing such Shares have
been issued to such Grantee.
SECTION 3.6 Securities Laws. No Option shall be exercised nor shall any
Shares or other securities be issued or transferred pursuant to an Option unless
and until all applicable requirements imposed by federal and state securities
laws and by any stock exchanges upon which the Shares may be listed, have been
fully complied with. As a condition precedent to the exercise of an Option or
the issuance of Shares pursuant to the grant or exercise of an Option, the
Company may require the Grantee to take any reasonable action to meet such
requirements including providing undertakings as to the investment intent of the
Grantee, accepting transfer restrictions on the Shares issuable thereunder and
providing opinions of counsel, in form and substance acceptable to the Company,
as to the availability of exemptions from such requirements.
ARTICLE 4.
ELIGIBILITY.
Only Directors who are not Employees shall be eligible to receive Options
under this Plan.
ARTICLE 5.
DIRECTORS' STOCK OPTIONS.
SECTION 5.1. Formula Grant of Options.
(a) On the 1998 Meeting Date, an Option of 7,500 Shares shall be
automatically granted to each Director upon the conclusion of the meeting who
either:
(i) received a Grant of Options under the 1995 Plan in connection with
the 1997 Meeting Date or thereafter and prior to the 1998 Meeting Date, or
(ii) was appointed as a Director to fill a vacancy on the Board of
Directors at or after the 1997 Meeting Date and prior to the 1998 Meeting
Date.
(b) On the 1998 Meeting Date, an Option of 14,167 Shares shall be
automatically granted to each Director upon the conclusion of the meeting who
received a Grant of Options under the 1995 Plan in connection with the 1996
Meeting Date or thereafter and prior to the 1997 Meeting Date.
(4)
<PAGE> 30
(c) On the 1998 Meeting Date, an Option of 20,834 Shares shall be
automatically granted to each Director upon the conclusion of the meeting who
received a Grant of Options under the 1995 Plan in connection with the 1995
Meeting Date or thereafter and prior to the 1996 Meeting Date.
(d) On the 1999 Meeting Date and on each Meeting Date thereafter, an Option
shall be automatically granted to each Director upon the conclusion of the
meeting. The number of Shares with regard to which an Option will be granted
shall be 7,500 Shares; provided, however, that the Committee may adjust the
number of Shares on an annual basis either upward or downward if it determines
that such an adjustment is advisable on account of competitive circumstances in
the marketplace, the price of Company's Common Stock, then-current recruitment
efforts or on account of any other factors deemed relevant by the Committee. Any
such adjustment shall be made and announced by the Committee prior to the
Meeting Date for which such adjustment is effective.
(e) On any date on or following the 1998 Meeting Date when a person is
first elected to the Board of Directors or is appointed as a Director to fill a
vacancy on the Board of Directors, an Option shall be automatically granted to
such person of the number of Shares equal to 7,500 (or such other number of
Shares granted automatically to Directors under paragraph (d) above on the
immediately-preceding Meeting Date) multiplied by a fraction, the numerator of
which equals the number of whole calendar months remaining until the next
Meeting Date and the denominator of which equals twelve (12).
SECTION 5.2. Elective Grant of Options. In addition to the Options
described in Section 5.1 above, the Committee may permit a Director to
voluntarily elect to forego the payment of all or a portion of his or her annual
retainer to be received from the Company for service for the ensuing year as a
Director and to receive instead Options under the Plan. Any such election by a
Director may be made in 25% increments of his or her annual retainer amount,
with the portion of such retainer which is not elected to be paid as an Option
to be payable to the Director in cash. Any such election by a Director (or by an
individual who is first seeking election as a Director) shall be made in writing
prior to the Meeting Date on which such retainer is payable for service after
such Meeting Date, and shall be made in accordance with rules established by the
Committee. The number of Options to be received by a Director who has made such
an election shall be determined on an annual basis in accordance with a formula
established from time to time in the sole and absolute discretion of the
Committee. The formula that will apply at a particular Meeting Date will be
established by the Committee prior to the time that an election is made by a
Director that applies to that Meeting Date. Any election made by a Director that
is valid for a Meeting Date shall remain in full force and effect as to the
percentage of his or her annual retainer to be received as Options unless such
election is subsequently revoked in writing; provided, however, that all
Directors shall be notified of the formula that will apply for each Meeting Date
prior to any deadline established by the Committee for revocation of a prior
election by a Director.
SECTION 5.3. Exercise Price. The Exercise Price of an Option shall be equal
to the Fair Market Value of a Share on the Date of Grant. Except as authorized
under Section 3.3 of the Plan, the Exercise Price of an Option shall not be
changed following the Date of Grant.
SECTION 5.4. Term.
(a) Each Option granted under the 1995 Plan shall vest and first be
exercisable as to one-third of the Shares originally subject to the Option on
each of the first three anniversaries of the Date of Grant under the 1995 Plan
if the Participant is then a Director. Each Option granted under this Plan shall
vest and first be exercisable on the Date of Grant if the Participant is then a
Director; and
(b) each Option previously granted under the 1995 Plan shall lapse and
cease to be exercisable in accordance with its current terms and each Option
granted under this Plan shall lapse and cease to be exercisable upon the
earliest of:
(i) the expiration of ten years from the Date of Grant;
(ii) six months after the Participant ceases to be a Director because
of Disability;
(iii) twelve months after the Participant ceases to be a Director
because of death;
(5)
<PAGE> 31
(iv) immediately, if the Participant 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 Participant voluntarily terminates service on the Board of Directors
without the consent of the Company;
(v) five years after the Participant ceases to be a Director for any
reason other than death, Disability, termination by the stockholders for
cause or voluntary termination without consent if, at the time of
termination, the Participant has served at least a three-year term on the
Board of Directors; or
(vi) 30 days after the Participant ceases to be a Director for any
reason other than death, Disability, termination by the stockholders for
cause or voluntary termination without consent if, at the time of
termination, the Participant has served less than a three-year term of
office on the Board of Directors.
Notwithstanding the foregoing, all Options under the 1995 Plan that have
not previously been exercised nor lapsed and ceased to be exercisable shall vest
fully and become exercisable upon the occurrence of any Change in Control.
SECTION 5.5. Not Incentive Stock Options. An Option under this Article 5
shall not be treated as an Incentive Stock Option.
SECTION 5.6. Exercise. An Option shall be exercised by the delivery of the
Option Agreement therefor (if requested by the Company) with the notice of
exercise attached thereto properly completed and duly executed by the Grantee
named therein to the Treasurer of the Company or his or her designee, together
with the aggregate Exercise Price for the number of Shares as to which the
Option is being exercised, after the Option has become exercisable and before it
has ceased to be exercisable. An Option may be exercised as to less than all the
Shares purchasable thereunder but not for a fractional Share. No Option may be
exercised as to less than 50 Shares unless it is exercised as to all of the
Shares then available thereunder. The Exercise Price shall be paid in cash by
(a) delivery of a certified or cashier's check payable to the order of the
Company in such amount; or (b) wire transfer of immediately-available funds to a
bank account designated by the Company. Promptly after an Option is properly
exercised, the Company shall issue to the Grantee a certificate representing the
Shares purchased thereunder.
SECTION 5.7. Option Agreement. Promptly after the Date of Grant, Greyhound
shall duly execute and deliver to the Grantee an Option Agreement setting forth
the terms of the Option. Option Agreements are neither negotiable instruments
nor securities (as such term is defined in Article 8 of the Uniform Commercial
Code). Lost and destroyed Option Agreements may be replaced without bond.
SECTION 5.8. Disability. If a Participant is absent from meetings of the
Board of Directors because of a physical or mental Disability, for purposes of
the Plan, such Participant will not be considered to have ended his or her
service with the Board of Directors while such Participant has that Disability,
unless he or she resigns or is not re-elected by the stockholders.
ARTICLE 6.
GENERAL PROVISIONS.
SECTION 6.1. No Rights. Nothing in the Plan or any Option or any instrument
executed pursuant to the Plan will confer upon any Participant any right to
continue to be a Director of the Company or affect the right of the stockholders
to terminate the directorship of any Participant.
SECTION 6.2. Limited Liability. The liability of the Company under this
Plan or in connection with any exercise of any Option is limited to the
obligations expressly set forth in the Plan and in the grant of any Option, and
no term or provision of this Plan nor of any Option shall be construed to impose
any duty, obligation or liability on the Company not expressly set forth in the
Plan or any grant of any Option.
SECTION 6.3. Assumption of Options. Upon the dissolution or liquidation of
the Company, or upon a reorganization, merger or consolidation of the Company
with one or more other entities as a result of which the Company is not the
surviving entity, or upon a sale of substantially all the assets of the Company
to
(6)
<PAGE> 32
another entity, any Options outstanding theretofore granted or sold hereunder
must be assumed by the surviving or purchasing entity, with appropriate
adjustments as to the number and kind of shares and price. Nothing in this
Section 6.3 shall be deemed to alter or supersede any provision of the Plan
relating to the vesting or maturity of Options granted under the 1995 Plan upon
a Change in Control.
SECTION 6.4. No Transfer. No Option or other benefit under the Plan may be
sold, pledged or otherwise transferred other than by will or the laws of descent
and distribution; and no Option may be exercised during the life of the
Participant to whom it was granted except by such Participant.
SECTION 6.5. Expenses. All costs and expenses incurred in connection with
the administration of the Plan, including any excise tax imposed upon the
transfer of Shares pursuant to the exercise of an Option, shall be borne by the
Company.
SECTION 6.6. Notices. Notices and other communications required or
permitted to be made under the Plan shall be in writing and shall be deemed to
have been duly given if personally delivered or if sent by first class mail
addressed (a) if to a Grantee, at his or her residence address set forth in the
records of the Company; or (b) if to the Company, to its President at its
principal executive office.
SECTION 6.7. Third Parties. Nothing herein expressed or implied is intended
or shall be construed to give any person other than the Grantees rights or
remedies under this Plan.
SECTION 6.8. Saturdays, Sundays and Holidays. Where this Plan authorizes or
requires a payment or performance on a Saturday, Sunday or public holiday, such
payment or performance shall be deemed to be timely if made on the next
succeeding business day; provided, however, that this Section 6.8 shall not be
construed to extend the ten-year period referred to in Section 5.4, above.
SECTION 6.9. Rules of Construction. The captions and section numbers
appearing in this Plan are inserted only as a matter of convenience. They do not
define, limit or describe the scope or intent of the provisions of this Plan. In
this Plan, words in the singular number include the plural, and in the plural
include the singular, and words of the masculine gender include the feminine and
the neuter, and, when the sense so indicates, words of the neuter gender may
refer to any gender.
SECTION 6.10. Governing Laws. The validity, terms, performance and
enforcement of this Plan shall be governed by laws of the State of Delaware that
are applicable to agreements negotiated, executed, delivered and performed
solely in the State of Delaware.
SECTION 6.11. Effective Date of the Plan. The Plan shall become effective
upon its approval by the affirmative vote of the holders of a majority of the
outstanding shares present, or represented, and entitled to vote at a meeting of
the stockholders of Greyhound.
SECTION 6.12. Amendment and Termination. No Option shall be granted under
the Plan more than ten years after the Effective Date. The Board of Directors
may, at any time, terminate the Plan, or make such amendment of the Plan as it
may deem advisable; provided, however, that no amendment shall be effective
without the approval of the stockholders of the Company by the affirmative vote
of the holders of a majority of the outstanding Shares present, or represented,
and entitled to vote at a meeting of stockholders duly held, if it were to:
(a) materially increase the benefits accruing Participants under the
Plan;
(b) materially increase the number of Shares which may be issued under
the Plan; or
(c) materially modify the requirements as to eligibility for
participation in the Plan;
and, further, provided, however, that no amendment or termination of the Plan
shall be effective to materially alter or impair the rights of a Grantee under
any Option made before the adoption of such amendment or termination by the
Board of Directors, without the written consent of such Grantee. No termination
or amendment of this Plan or any Option nor waiver of any right or requirement
under this Plan or any Option shall be binding on the Company unless it is in a
writing duly entered into its records and executed by a duly authorized Officer.
(7)
<PAGE> 33
ATTACHMENT A
DIRECTORS' OPTION AGREEMENT
GREYHOUND LINES, INC.
P.O. BOX 660362
DALLAS, TX 75266-0362
(Date of Grant)
(Name of Grantee)
(Street)
(City, State, Zip)
Congratulations. You have been granted a Stock Option under Greyhound's
1998 Directors' Stock Incentive Plan (the "Plan") on the following terms:
1. NUMBER OF SHARES. The number of Shares of Common Stock of Greyhound
Lines, Inc. that you may purchase under this Option is: 'Number'
2. EXERCISE PRICE. The exercise price to purchase Shares under this Option
is $)Price/ per share.
3. VESTING. All Shares subject to this Option are fully vested and are
exercisable upon Grant.
4. LAPSE. This Option will lapse and cease to be exercisable upon the
earliest of:
(i) the expiration of 10 years from the date of this Agreement;
(ii) six months after you cease to be a Director because of your
Disability;
(iii) twelve months after you cease to be a Director because of your
death;
(iv) immediately after you are 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 you
voluntarily terminate service on the Board of Directors without the consent
of the Company;
(v) five years after you cease to be Director for any reason other
than your death, Disability, termination by the stockholders for cause or
voluntary termination without consent if, at the time of termination, you
have served at least a three-year term of office on the Board of Directors;
or
(vi) 30 days after you cease to be a Director for any reason other
than your death, Disability, termination by the stockholders for cause or
voluntary termination without consent if, at the time of termination, you
have served less than a three-year term of office on the Board of
Directors.
5. TAXATION. This Option is a Nonqualified Option. You will have taxable
income upon the exercise of this Option.
6. EXERCISE. This Option may be exercised by the delivery of this Agreement
(if requested by the Company), with the notice of exercise properly completed
and signed by you, to the Treasurer of the Company or his or her designee,
together with the aggregate Exercise Price for the number of Shares as to which
the Option is being exercised, after the Option has become exercisable and
before it has ceased to be exercisable. The Exercise Price must be paid in cash
by (a) delivery of a certified or cashier's check payable to the order of
Greyhound in such amount; or (b) wire transfer of immediately-available funds to
a bank account by Greyhound. This Option may be exercised as to less than all of
the Shares purchasable hereunder, but not for a fractional share, nor may it be
exercised as to less than 50 Shares unless it is exercised as to all of the
Shares then available hereunder.
7. NO TRANSFER. This Option may not be sold, pledged nor otherwise
transferred other than by will or the laws of descent and distribution; and it
may only be exercised during your lifetime by you. This Agreement is neither a
negotiable instrument nor a security (as such term is defined in Article 8 of
the Uniform Commercial Code).
A-1
<PAGE> 34
8. NOT AN EMPLOYMENT AGREEMENT. This Agreement is not an employment
agreement and nothing contained herein gives you any right to continue to be a
Director of the Company or affect the right of the stockholders to terminate
your directorship.
9. PLAN CONTROLS. This Agreement is an Option Agreement (as such term is
defined in the Plan) under Article 5 of the Plan. The terms of this Agreement
are subject to, and controlled by, the terms of the Plan, as it is now in effect
or may be amended from time to time hereafter, which are incorporated herein as
if they were set forth in full. Any words or phrases defined in the Plan have
the same meanings in this Agreement. Greyhound will provide you with a copy of
the Plan promptly upon your written or oral request made to its Treasurer.
10. MISCELLANEOUS. This Agreement sets forth the entire agreement of the
parties with respect to the subject matter hereof and its supersedes and
discharges all prior agreements (written or oral) and negotiations and all
contemporaneous oral agreements concerning such subject matter. This Agreement
may not be amended or terminated except by a writing signed by the party against
whom any such amendment or termination is sought. If any one or more provisions
of this Agreement shall be found to be illegal or unenforceable in any respect,
the validity and enforceability of the remaining provisions hereof shall not in
any way be affected or impaired thereby. This Agreement shall be governed by the
laws of the State of Delaware.
Please acknowledge your acceptance of this Agreement by signing the
enclosed copy in the space provided below and returning it promptly to
Greyhound.
GREYHOUND LINES, INC.
By:
----------------------------------
(Name of Officer) (Title)
Accepted and Agreed to as of
the date first set forth above:
- ------------------------------------
(Name of Grantee)
SPOUSAL WAIVER
The undersigned spouse of the above identified Grantee waives and releases all
rights and interests which such spouse might now have or hereafter acquire in
the rights granted to the Grantee above, as such Grantee's spouse or ex-spouse
(regardless of whether such rights and interests are statutory or otherwise),
including but not limited to claims of community property or marital property
interests or dower. Such spouse also hereby agrees that he or she shall not
request that the Award granted above be transferred to such spouse in any
divorce, dissolution or similar proceeding.
- ------------------------------------
(Name of Spouse)
A-2
<PAGE> 35
- -------------------------------------------------------------------------------
PROXY
GREYHOUND LINES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Thomas G. Plaskett, Craig R. Lentzch 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 Majestic Theatre, 1925 Elm Street, Dallas, Texas 75201, on
Friday, May 15, 1998, 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(s)
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 adjournment(s) thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE DIRECTOR NOMINEES "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
ACCOUNTANTS, "FOR" THE 1998 DIRECTORS' STOCK INCENTIVE PLAN; AND "AGAINST" THE
PROPOSAL TO ELECT THE ENTIRE BOARD OF DIRECTORS EVERY YEAR. THIS PROXY WILL BE
VOTED AS YOU DIRECT; IN THE ABSENCE OF SUCH DIRECTION, IT WILL BE VOTED IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
(Continued on reverse side)
- -------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
ADMISSION TICKET
GREYHOUND LINES, INC.
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, MAY 15, 1998
10:00 A.M.
THE MAJESTIC THEATRE
1925 ELM STREET
DALLAS, TEXAS 75201
- -------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
<PAGE> 36
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTOR'S RECOMMENDATIONS, SIGN AND DATE THIS CARD IN THE SPACE BELOW. NO
BOXES NEED TO BE CHECKED.
Please mark [ ]
your votes as
indicted in
this example
(1) ELECTION OF DIRECTORS Craig R. Lentzsch, Frank L. Nageotte,
Thomas G. Plaskett
FOR VOTE Withheld Instruction: TO WITHHOLD AUTHORITY TO I PLAN TO ATTEND THE
all from all nominees VOTE FOR ONE OR MORE INDIVIDUAL NOMINEES MEETING [ ]
nominees listed to the right. WRITE THAT NOMINEE'S NAME ON THE LINE
PROVIDED BELOW:
[ ] [ ] ________________________________________
(2) RATIFICATION OF APPOINTMENT OF (3) APPROVAL OF GREYHOUND LINES, INC. (4) PROPOSAL TO ELECT
ARTHUR ANDERSEN LLP AS INDEPENDENT 1998 DIRECTORS' STOCK INCENTIVE THE ENTIRE BOARD OF
ACCOUNTANTS FOR FISCAL YEAR 1998. PLAN. DIRECTORS EVERY YEAR.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
- - - - - - DATED
- -------------------------, 1998
-
- --------------------------------------
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 -
1. Majestic Theatre 4. Greyhound Lines Terminal
1925 Elm St. 205 S. Lamar
2. One Dallas Centre 5. Greyhound Maintenance Center [MAP OF DOWNTOWN DALLAS, TEXAS]
350 N. St. Paul 315 Continental Ave.
3. Hampton Inn
1015 Elm St.
214-742-5678
- --------------------------------------------------------------------------------------------------------------------
- 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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