<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
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 240.14a-11(c) or 240.14a-12
AMERICAN FREIGHTWAYS CORPORATION
(Name of Registrant as Specified in Its Charter)
AMERICAN FREIGHTWAYS CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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>
[LOGO OF AMERICAN FREIGHTWAYS APPEARS HERE]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 15, 1999
TO THE SHAREHOLDERS OF AMERICAN FREIGHTWAYS CORPORATION:
The Company cordially invites you to attend the 1999 Annual
Meeting of Shareholders of American Freightways Corporation (the
"Company"), an Arkansas corporation, to be held at the Comfort Inn
Convention Center, 1210 Hwy. 62-65 North, Harrison, Arkansas on
Thursday, April 15, 1999 at 10:00 a.m., central standard time, for
the following purposes:
1. To elect three (3) directors to the class whose term will
expire in 2002.
2. To adopt the Company's 1999 Chairman Stock Option Plan.
3. To adopt the Company's 1999 Employee Stock Purchase Plan.
4. To approve an amendment to the Company's Amended and Restated
1993 Stock Option Plan which would increase the number of
shares of common stock authorized for issuance thereunder by
2,000,000 shares.
5. To consider and act upon such other business as may properly
come before the meeting and the adjournment thereof.
Only shareholders of record at the close of business on
February 18, 1999 will be entitled to vote at the 1999 Annual
Meeting and the adjournment thereof.
The Company's Proxy Statement is submitted herewith. The 1998
annual report is being mailed to shareholders together with the
mailing of this Notice and Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
/s/F.S. Garrison
---------------------------
F.S. (Sheridan) Garrison,
Chairman and CEO
Harrison, Arkansas
March 11, 1999
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED
FORM OF PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH
YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE
ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO
REVOKE IT LATER OR TO VOTE YOUR SHARES IN PERSON IN THE EVENT YOU
SHOULD ATTEND THE MEETING.
<PAGE>
[AF LOGO HERE]
AMERICAN FREIGHTWAYS CORPORATION
2200 FORWARD DRIVE
HARRISON, ARKANSAS 72601
____________
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL 15, 1999 AND ADJOURNMENT THEREOF
____________
SOLICITATION AND REVOCATION OF PROXY
The enclosed proxy, for use only at the 1999 Annual Meeting of
Shareholders to be held at the Comfort Inn Convention Center, 1210
Hwy. 62-65 North, Harrison, Arkansas on Thursday, April 15, 1999 at
10:00 a.m., central standard time, and adjournment thereof, is
solicited on behalf of the Board of Directors of American
Freightways Corporation (the "Company"). Such solicitation is
being made primarily by mail, but may also be made in person or by
telephone by officers, directors, and regular employees of the
Company. All expenses incurred in the solicitation will be borne
by the Company.
Any shareholder executing a proxy retains the right to revoke
it at any time prior to exercise at the 1999 Annual Meeting. A
proxy may be revoked at any time before it is used, upon written
notice to Will Garrison, Secretary/Treasurer of the Company, by
executing a new proxy or by attending the meeting and voting in
person. If not revoked, all properly executed proxies received
will be voted at the meeting in accordance with the terms of the
proxy.
The Company knows of no matter to be brought before the
meeting other than that referred to in the accompanying notice of
annual meeting. If, however, any other matters properly come
before the meeting, the proxy solicited hereby confers
discretionary authority to the proxies to vote in their sole
discretion with respect to such matters, as well as other matters
incident to the conduct of the meeting.
This proxy material is first being mailed on March 11, 1999 to
shareholders.
OUTSTANDING SHARES AND VOTING RIGHTS
The outstanding shares of the Company as of February 18, 1999,
totaled 31,759,423 shares of common stock, all of one class. At
the meeting, each shareholder will be entitled to one vote, in
person or by proxy, for each share of stock owned of record at the
close of business on February 18, 1999. Votes will be tabulated by
inspectors of election appointed by the Company's Board of
Directors. The stock transfer books of the Company will not be
closed.
The enclosed form of proxy provides a method for shareholders
to withhold authority to vote for any one or more of the nominees
for the Board of Directors while still granting authority to the
proxy to vote for the remaining nominees. The names of all
nominees are listed on the proxy card. If you wish to grant the
proxy authority to vote for all nominees, check the box marked
"FOR". If you wish to withhold authority to vote for all nominees,
check the box marked "WITHHOLD". If you wish to withhold authority
to vote for any individual nominee, mark the "FOR ALL EXCEPT" box
and strike a line through that nominee's name. By checking the box
marked "WITHHOLD" your shares will neither be voted for nor against
any director but will be counted for quorum purposes. Broker non-
votes are not relevant to the determination of whether the proposal
to elect directors has been approved but will be counted for quorum
purposes.
Shareholders are not entitled to cumulative voting with
respect to the election of directors.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the name, age, term of office
as director of the Company, and ownership of the Company's common
stock with respect to each member of the Board of Directors, the
executive officers of the Company named under the caption
"Executive Compensation" and the directors and officers of the
Company as a group.
<TABLE>
<CAPTION>
YEAR FIRST
SERVING AS SHARES PERCENTAGE
NAME AGE DIRECTOR OWNED** (2)**
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
F.S. (Sheridan) Garrison 64 1982 10,886,708 32.9
Tom Garrison 39 1982 276,404 0.8
Will Garrison(1) 35 1995 117,868 0.4
Frank Conner 49 1989 * *
John Paul Hammerschmidt(1) 76 1997 * *
T.J. Jones 62 1989 * *
Ken Reeves 51 1989 * *
William P. Stiritz(1) 64 - 411,000 1.2
Doyle Z. Williams 59 1997 * *
All directors and executive
officers(including 14 persons) - - 11,847,551 35.8
</TABLE>
________________________
(1) Will Garrison, John Paul Hammerschmidt and William P.
Stiritz are nominees for the Board of Directors at the 1999
Annual Meeting.
(2) Percentage based upon 33,100,757 shares of the Company's
common stock as of February 18, 1999. Includes
31,759,423 shares outstanding and 1,341,334 shares issuable upon
exercise of options which are currently exercisable or which
will become exercisable within 60 days from the date of this
proxy statement.
*Denotes ownership of less than 1% of the total shares of common
stock.
**Includes shares issuable upon exercise of options which are
currently exercisable or which will become exercisable within 60
days from the date of this proxy statement.
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
GENERAL
The Board of Directors presently consists of nine members
divided into three classes, with three directors in each class
serving three-year terms (and, in each case, until their respective
successors are duly elected and qualified). The terms of the
directors in Class I will expire at the 1999 Annual Meeting, the
terms of the directors in Class II will expire at the 2000 Annual
Meeting and the terms of the directors in Class III will expire at
the 2001 Annual Meeting. Messrs. W. Garrison, Hammerschmidt and
Stiritz are nominees for election at the 1999 Annual Meeting for
terms ending in 2002.
A majority of the votes of the common stock cast at the 1999
Annual Meeting (or the adjournment thereof) is required to elect
directors. Each Nominee has consented to being named in this Proxy
Statement and to serve if elected. If a Nominee should for any
reason become unavailable for election, proxies may be voted with
discretionary authority by the proxy holder for a substitute
designated by the Board.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF
EACH NOMINEE. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED
UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
Certain information for each nominee and each director is set
forth below.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS - TERMS ENDING IN 2002
Will Garrison joined American Freightways in 1986 and has
served on the Board of Directors since March 1995. He currently
serves the Company as Secretary/Treasurer and Corporate Vice
President.
John Paul Hammerschmidt has served on the Board of Directors
since May 1997. Mr. Hammerschmidt served 26 years as the U. S.
Representative for the Third District of Arkansas until his
retirement in 1993. He was the ranking minority member of the
House Transportation Infrastructure Committee and the House
Veterans Affairs Committee. He served on various sub-committees
and co-authored the Intermodal Surface Transportation Efficiency
Act (ISTEA). Mr. Hammerschmidt also serves as a member of the
Board of Directors of the following companies: Dillard's
Department Stores, Inc., Southwestern Energy Co., First Federal
Bancshares of Arkansas and the Metropolitan Washington Airport
Authority.
William P. Stiritz is a nominee for the Board of Directors at
the Annual Meeting. Mr. Stiritz served Ralston Purina Company for
the past thirty-five years, as its Chief Executive Officer from
1981 until 1997 and its Chairman from 1981 until present. Mr.
Stiritz also serves as Chairman of the Board of Directors, Chief
Executive Officer and President of Agribrands International and
Chairman of the Board of Directors of Ralcorp Holdings, Inc. In
addition, he serves on the Board of Directors of the following
public companies: Angelica Corporation, Ball Corporation, May
Department Stores Company, Reinsurance Group of America and Vail
Resorts, Inc.
CLASS II DIRECTORS - TERMS ENDING IN 2000
Tom Garrison joined American Freightways in 1982 and serves
the Company as Chief Operating Officer and President.
T.J. Jones has served on the Board of Directors since March
1989. Mr. Jones helped organize the Company in 1982 and previously
served as the Company's Executive Vice President-Operations until
retirement in 1994.
Frank Conner has served on the Board of Directors since March
1989. In November 1995, Mr. Conner was elected to serve as the
Executive Vice President-Accounting and Finance, Chief Financial
Officer, of the Company. Mr. Conner joined American Freightways in
1994 as Vice President-Special Projects. He previously served as
Executive Vice President/General Manager of McKesson Service
Merchandising in Harrison, Arkansas.
<PAGE>
CLASS III DIRECTORS - TERMS ENDING IN 2001
F.S. (Sheridan) Garrison, the founder of American Freightways,
has been the Chief Executive Officer and Chairman of the Board of
Directors of the Company since its inception in 1982.
Ken Reeves, a Director since March 1989, has been an attorney-
at-law in private practice since 1973 in Harrison, Arkansas.
Doyle Z. Williams, a Director since November 1997, has been
the Dean of the Sam M. Walton College of Business Administration at
the University of Arkansas since 1993. From 1978 to 1993, he was
professor of accounting at the University of Southern California
where he served as the founding Dean of the School of Accounting
from 1979 to 1987.
Messrs. Tom and Will Garrison are sons of Mr. F.S. (Sheridan)
Garrison. Except for the foregoing, no family relationships exist
among any of the persons named above.
COMMITTEES
The Company presently does not have a standing nominating
committee. The Board of Directors nominates persons for director.
The Board will consider suggestions by shareholders for names of
nominees as Class II Directors of the Board of Directors for the
2000 Annual Meeting, provided that such suggestions are made in
writing and delivered to Mr. Will Garrison, Secretary/Treasurer of
the Company, on or before December 22, 1999.
The Company has a standing Compensation Committee composed of
Mr. T.J. Jones, Mr. Ken Reeves and Mr. John Paul Hammerschmidt.
The Compensation Committee is charged with, among other things, the
supervision and administration of the Company's employee benefit
plans and the review and approval of the Company's executive
officers' salaries, as well as review of the general wage policy of
the Company.
The Company has an Audit Committee which is composed of Mr.
Ken Reeves, Mr. John Paul Hammerschmidt and Dr. Doyle Z. Williams.
The Audit Committee recommends candidates to serve as the Company's
auditors, reviews the reports of the Company's auditors and has the
authority to investigate the financial and business affairs of the
Company.
During the past fiscal year, the Board of Directors met on
seven occasions, the Compensation Committee met on two occasions
and the Audit Committee met on two occasions. Each Director
attended at least 75% of the total of such meetings of the Board
and committees of the Board on which such Director served.
PROPOSAL II
PROPOSAL TO APPROVE THE
AMERICAN FREIGHTWAYS CORPORATION
1999 CHAIRMAN STOCK OPTION PLAN
The Board of Directors adopted, subject to approval by the
Company's shareholders at the Annual Meeting, the American
Freightways Corporation 1999 Chairman Stock Option Plan (the
"Chairman Plan"), to be effective April 15, 1999 (the "Effective
Date"). The full text of the Chairman Plan is included as
"Appendix A" to this Proxy Statement and reference is made to such
Appendix for a complete statement of the provisions of the Chairman
Plan. The Board of Directors believes that it is in the best
interest of the Company to adopt the Chairman Plan.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE 1999 CHAIRMAN STOCK
OPTION PLAN. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED
UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
<PAGE>
GENERAL TERMS OF THE CHAIRMAN PLAN; SHARES AVAILABLE FOR ISSUANCE
The purpose of the Chairman Plan is to attract and retain the
services of the Company's experienced and knowledgeable Chairman
and to provide additional incentive for the Chairman to continue to
work for the best interests of the Company and its shareholders.
Subject to adjustment upon changes in capitalization of the
Company, the Chairman Plan provides for the issuance of options to
purchase up to an aggregate of 250,000 shares of the Company's
common stock to the Chairman (as described below). In the event of
any corporate changes affecting the Company's common stock, such as
reorganizations, share splits, share dividends, mergers,
consolidations or otherwise, the Company will make appropriate
adjustments in the number of shares of common stock reserved under
the Chairman Plan. The Chairman Plan is intended to replace the
Company's 1993 Chairman Stock Option Plan which expired in 1998.
ELIGIBILITY
Subject to shareholder approval, the Chairman Plan provides
that the Company's Chairman shall be granted options based on the
increase, if any, in the Company's after-tax net income for the
most recently completed fiscal year over after-tax net income for
the preceding fiscal year, on each January 1 following the
Effective Date with the last grant date being January 1, 2004, as
follows:
<TABLE>
<CAPTION>
Net Income Increase Options
------------------- -------
<S> <C>
15 - 17.5% 10,000
17.6 - 20% 20,000
20.1 - 25% 30,000
25.1 - 29% 40,000
29.1% and above 50,000
</TABLE>
GRANTS AND EXERCISES OF OPTIONS
NEW PLAN BENEFITS
1999 CHAIRMAN PLAN
<TABLE>
<CAPTION>
NAME AND POSITION (1) DOLLAR VALUE (2) NUMBER OF SHARES (3)
- --------------------- ---------------- --------------------
<S> <C> <C>
F. S. Garrison
Chairman & CEO N/A 50,000
</TABLE>
__________________________
(1) Executive officers, other than the Chairman, are not eligible
to participate in the Chairman Plan.
(2) All options under the Chairman Plan will be granted at fair
market value. Accordingly, the dollar value benefit is based
upon future appreciation in the Company's common stock and
therefore is not presently determinable.
(3) Mr. Garrison shall be granted options on each January 1
following the Effective Date to acquire the number of shares
(in increments ranging from 10,000 to 50,000 shares) which
corresponds to the percentage (in increments ranging from 15%
and above) by which the Company's after-tax net income for the
most recently completed fiscal year exceeded after-tax net
income for the preceding fiscal year. Because this amount is
not determinable for the 1999 fiscal year, Mr. Garrison would
have received options for 50,000 shares for the 1998 fiscal
year if the Chairman Plan had been in effect based on a 1997
after-tax net income of $17,801,000 and a 1998 after-tax net
income of $27,501,000.
Options under the Chairman Plan will be automatically granted
to the Chairman as set forth above. The exercise price of the
options will be the fair market value (as determined under the
plan) of the underlying shares on the date of grant. Unless the
Compensation Committee fixes a shorter vesting period, the options
shall vest and become exercisable in 20% increments per year,
beginning on the first anniversary following the date such options
were granted. All options under the Chairman Plan expire on the
tenth anniversary of the grant date.
<PAGE>
TERMINATION
In the event the Chairman ceases his duties for any reason
other than termination for cause, his options shall cease to
continue vesting, but such options, to the extent vested and
exercisable at the date he ceased to be Chairman, shall continue to
be exercisable for such period as specified in the option grant.
TRANSFERABILITY
No option shall be assignable or transferable by the Chairman
except by will or by the laws of descent and distribution, except
that the Compensation Committee shall have the authority to grant
options which may be transferred by the Chairman to any member of
his immediate family or to a trust or other entity for the
exclusive benefit of the Chairman or his immediate family.
DURATION AND MODIFICATION
The Chairman Plan will remain in effect until January 1, 2004.
The Compensation Committee will have complete authority to
terminate or amend the Chairman Plan, except that the Compensation
Committee may not alter or diminish any rights under any options
granted under the Chairman Plan, without the consent of the
Chairman. In addition, the Compensation Committee may not effect
any amendment without shareholder approval if such approval is
required in order to assure the Chairman Plan's continued
qualification under Rule 16-b3 of the Exchange Act.
FEDERAL INCOME TAX CONSEQUENCES
The grant of options will not result in taxable income to the
Chairman or a tax deduction for the Company. The Board expects
that the stock options granted under the Chairman Plan will qualify
for deductibility under Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"). The exercise of an option will
result in taxable ordinary income to the Chairman and a
corresponding deduction for the Company, in each case equal to the
difference between the fair market value of the shares on the date
the option was granted and the fair market value on the date the
option was exercised.
RATIFICATION BY SHAREHOLDERS OF THE CHAIRMAN PLAN
Approval of the Chairman Plan requires the affirmative vote of
the holders of a majority of the outstanding shares of common stock
of the Company present in person or by proxy at the Annual Meeting.
In the event that the proposal to approve the Chairman Plan is
approved by the Company's shareholders, the Chairman Plan will
become effective April 15, 1999.
PROPOSAL III
PROPOSAL TO APPROVE THE AMERICAN FREIGHTWAYS
CORPORATION 1999 EMPLOYEE
STOCK PURCHASE PLAN
The Board of Directors approved the American Freightways
Corporation 1999 Employee Stock Purchase Plan (the "Stock Purchase
Plan") on January 20, 1999, subject to approval by the Company's
shareholders at the Annual Meeting. The full text of the Stock
Purchase Plan is included as "Appendix B" to this Proxy Statement
and reference is made to such Appendix for a complete statement of
the provisions of the Stock Purchase Plan. The Board of Directors
believes that it is in the best interests of the Company to adopt
the Stock Purchase Plan.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE STOCK PURCHASE
PLAN. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
<PAGE>
GENERAL TERMS OF THE STOCK PURCHASE PLAN; SHARES AVAILABLE FOR
ISSUANCE
The Stock Purchase Plan provides eligible employees of the
Company an opportunity to acquire a proprietary interest in the
Company through the purchase of shares of the Company's common
stock at a discount through voluntary payroll deductions or lump-
sum contributions. The Company intends to have the Stock Purchase
Plan qualify as an "employee stock purchase plan" under Section 423
of the Code. The Stock Purchase Plan permits eligible employees to
authorize payroll deductions or make lump-sum contributions that
will be utilized to purchase shares of the Company's common stock
during a series of consecutive offering periods. Employees may
purchase shares of common stock pursuant to the Stock Purchase Plan
at a purchase price equal to the lower of (i) 85% of the closing
price of the Company's common stock on the first day of the
applicable offering period, or (ii) 85% of the closing price of the
Company's common stock on the last day of the applicable offering
period (the "Purchase Price").
Subject to adjustment upon changes in capitalization of the
Company, the number of shares of common stock that may be issued
under the Stock Purchase Plan will be 1,500,000 shares. In the
event of any corporate changes affecting the Company's common
stock, such as reorganizations, share splits, share dividends,
mergers, consolidations or otherwise, the Company will make
appropriate and proportionate adjustments in the number of shares
of common stock reserved under the Stock Purchase Plan.
ELIGIBILITY
Employees of the Company are eligible to participate in the
Stock Purchase Plan, on a voluntary basis, if they meet certain
conditions. To be eligible, an employee must (i) have completed
more than thirty (30) days of service with the Company prior to an
Enrollment Date (as defined below) and (ii) not be deemed to own
stock possessing five percent (5%) or more of the total combined
voting power or value of common stock of the Company.
OFFERING PERIODS AND EMPLOYEE PARTICIPATION
In each of the ten years of the Stock Purchase Plan, beginning
May 1, 1999 and ending April 30, 2009, there will be two six-month
offering periods commencing May 1 and November 1 of each year (the
"Enrollment Dates") and ending on the following October 31 or April
30, as applicable. An eligible employee may elect to participate
in the Stock Purchase Plan on May 1 or November 1 following his
satisfaction of the eligibility requirements by executing and
filing an enrollment form prior to the applicable Enrollment Date.
During an offering period a participant may authorize payroll
deductions from his compensation and may deposit funds with the
Company through lump-sum contributions, each to be used for the
purpose of funding the exercise of the options granted during that
offering period. However, the total amount that a participant may
contribute to the Stock Purchase Plan through payroll deductions
and contributions may not exceed $2,000 for the offering period.
All funds received or held by the Company under the Stock Purchase
Plan through payroll deductions and contributions are general
assets of the Company, free of any trust or other restriction, and
may be used for any corporate purpose. No interest on such funds
will be credited to or paid to any participant under the Stock
Purchase Plan.
GRANTS AND EXERCISES OF OPTIONS
On the Enrollment Date of each offering period, a participant
will be deemed to have been granted an option to purchase the
largest number of whole shares of common stock, determined by
dividing (i) the amount of such participant's payroll deductions
and lump-sum contributions accumulated during the offering period
by (ii) an amount equal to the Purchase Price. The maximum number
of shares that may be purchased by a participant during an offering
period is 400. The participant's option will be deemed to have
been exercised automatically on the last day of the offering period
unless he notifies the Company of his desire not to exercise his
options. A participant will have no interest in shares of common
stock covered by the participant's option until such option has
been exercised.
<PAGE>
DELIVERY
As soon as practicable after each date on which a purchase of
shares occurs ("Exercise Date"), the Company will deliver the
purchased shares to the participant.
TRANSFERABILITY
Neither the payroll deductions or deposits credited to a
participant's account nor any rights with respect to an option
granted under the Stock Purchase Plan may be assigned, transferred,
pledged, or otherwise disposed of by the participant, other than by
will or the laws of descent and distribution. Any such attempted
assignment, transfer, pledge, or other disposition will be
ineffective and the Company may treat any such act as an election
to withdraw from participation in the Stock Purchase Plan.
DURATION AND MODIFICATION
The Stock Purchase Plan will remain in effect until April 30,
2009. The Board of Directors will have complete authority to
terminate or amend the Stock Purchase Plan, except that the Board
of Directors may not, without the approval of the Company's
shareholders, increase the maximum number of shares of common stock
that may be issued under the Stock Purchase Plan.
FEDERAL INCOME TAX CONSEQUENCES
The Stock Purchase Plan, and the right of participants to make
purchases thereunder, is intended to qualify under the provisions
of Sections 421 and 423 of the Code. Under these provisions, no
income will be taxable to a participant until the shares purchased
under the Stock Purchase Plan are sold or otherwise disposed of.
Upon sale or other disposition of the shares, the participant will
generally be subject to tax and the amount of the tax will depend
upon the holding period. If the shares are sold or otherwise
disposed of more than (a) two years from the first day of the
offering period and (b) more than one year from the date of
transfer of the shares to the participant, then the participant
will recognize ordinary income measured as the lesser of (i) the
excess of the fair market value of the shares at the time of such
sale or disposition over the purchase price, or (ii) an amount
equal to 15% of the fair market value of the shares as of the first
day of the offering period. Any additional gain will be treated as
long-term capital gain. If the shares are sold or otherwise
disposed of before the expiration of these holding periods, the
participant will recognize ordinary income generally measured as
the excess of the fair market value of the shares on the date the
shares are purchased over the price at which the participant
purchased the shares under the Stock Purchase Plan. Any additional
gain or loss on such sale or disposition will be long-term or short-
term capital gain or loss, depending on the holding period. The
Company will not be entitled to a deduction for amounts taxed as
ordinary income or capital gain to a participant except to the
extent ordinary income is recognized by participants as a result of
a sale or disposition of shares prior to the expiration of the
holding periods described above.
RATIFICATION BY SHAREHOLDERS OF THE STOCK PURCHASE PLAN
Approval of the Stock Purchase Plan will require the
affirmative vote of the holders of a majority of the outstanding
shares of common stock of the Company present in person or by proxy
at the Annual Meeting. Upon approval of the Stock Purchase Plan by
the Company's shareholders, the Stock Purchase Plan will become
effective on May 1, 1999, and employees of the Company will be
entitled to enroll for participation in the Stock Purchase Plan.
<PAGE>
PROPOSAL IV
PROPOSAL TO APPROVE THE AMENDMENT TO
AMERICAN FREIGHTWAYS CORPORATION
AMENDED AND RESTATED 1993 STOCK OPTION PLAN
On January 20, 1999, the Board of Directors adopted, subject
to approval by the Company's shareholders at the Annual Meeting, an
amendment to the American Freightways Amended and Restated 1993
Stock Option Plan
(the "Stock Option Plan"), which would increase the number of
shares of common stock authorized for issuance thereunder by
2,000,000 shares (the "Amendment"). The full text of the Stock
Option Plan is included as "Appendix C" to this Proxy Statement and
reference is made to such Appendix for a complete statement of the
provisions of the Stock Option Plan.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE
STOCK OPTION PLAN. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED
UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
GENERAL TERMS OF THE STOCK OPTION PLAN; SHARES AVAILABLE FOR
ISSUANCE
The Stock Option Plan was originally adopted and approved by
the shareholders of the Company in March 1993. The purpose of the
Stock Option Plan is to provide key employees who are responsible
for the continued growth of the Company the opportunity to acquire
a proprietary interest in the Company through the purchase of
shares of Company common stock, thereby more closely aligning their
interests with that of the Company's shareholders.
The Stock Option Plan currently authorizes the granting of
stock options ("Options") and stock appreciation rights ("SARs") to
purchase or acquire up to 2,000,000 shares of common stock. As of
February 18, 1999, approximately 109,200 shares of common stock
were available for issuance under the Stock Option Plan. The
Amendment to the Stock Option Plan would increase the maximum
number of shares authorized for issuance under the Stock Option
Plan to 4,000,000, subject to adjustment as provided in the Stock
Option Plan for certain changes in the Company's capital structure,
such as reorganizations, share splits, share dividends, mergers,
consolidations, or otherwise, and the number of shares currently
available for grant thereunder to 2,109,200. The Stock Option Plan
is currently scheduled to expire on February 1, 2003, unless
otherwise extended.
ELIGIBILITY; GRANTS AND EXERCISES OF OPTIONS
The Stock Option Plan provides that key employees of the
Company are eligible to participate therein. The Compensation
Committee has the authority, in its discretion, to determine the
employees to whom Options or SARs will be granted. In making such
determination, the Compensation Committee considers an employee's
length of service, amount of earnings, responsibilities and duties
and other factors relevant to such employee's contribution to the
Company. No determination has been made with respect to future
recipients of Options or SARs under the Stock Option Plan and it is
not possible to specify the names or positions of persons to whom
Options or SARs will be granted, or the number of shares, within
the limitations of the Stock Option Plan, to be covered by such
Options or SARs. However, as required by Securities and Exchange
Commission rules, the following table shows the number and dollar
value benefit of all options granted under the Stock Option Plan
during fiscal 1998 to (i) the Chief Executive Officer, (ii) each of
the other named executive officers, (iii) all current executive
officers as a group, (iv) all non-executive directors as a group,
and (v) all non-executive officers and employees as a group.
<PAGE>
PLAN BENEFITS
AMENDED AND RESTATED 1993 STOCK OPTION PLAN
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
NAME AND POSITION DOLLAR VALUE(2) NUMBER OF OPTIONS(1)
- -----------------------------------------------------------------------
<S> <C> <C>
F.S. Garrison, Chairman of the
Board of Directors and CEO $ 0 0
Tom Garrison, President, COO
and Director 96,250 20,000
Will Garrison, Corporate Vice
President, Secretary/Treasurer
and Director 96,250 20,000
Frank Conner, Executive Vice
President-Accounting & Finance,
CFO and Director 72,188 15,000
Dennis Beal, Executive Vice
President-Physical Assets 57,750 12,000
Terry Higginbotham, Executive
Vice President-Marketing 72,188 15,000
Terry Stambaugh, Executive Vice
President-Human Resources 57,750 12,000
All current executive
officers as a group 501,301 104,000
All non-executive directors
as a group 0 0
All non-executive officers
and employees as a group $1,590,822 331,550
</TABLE>
- -------------------------------------------------------------------
(1) Represents fiscal 1998 option grants.
(2) Dollar value benefit based upon closing price of Company's
common stock as of February 18, 1999. These options were
granted at exercise prices ranging from $9.6875 to $10.1875
per share, which was the fair market value of the underlying
shares on the date of grant.
The Stock Option Plan is solely administered by the
Compensation Committee of the Board of Directors. The Options
granted under the Stock Option Plan are intended to be either
incentive stock options ("Incentive Options") within the meaning of
Section 422 of the Code, or Options that do not meet the
requirements for Incentive Options ("Nonqualified Options"), but
the Company makes no warranty as to the qualification of any Option
as an Incentive Option. Unless the Compensation Committee shall
determine otherwise, any Options granted must have an exercise
period of no more than ten years. Additionally, the exercise price
per share for each Option may not be less than the fair market
value of the underlying shares on the date of the grant. Options
may be exercised upon notice to the Company and payment of the
option exercise price.
In addition to Options, the Stock Option Plan also provides
for the grant of SARs which may be granted either (i) alone, (ii)
simultaneously with the grant of an Option (either Incentive or
Nonqualified) and in conjunction therewith or in the alternative
thereto, or (iii) subsequent to the grant of a Nonqualified Option
and in conjunction therewith or in the alternative therewith. An
SAR entitles the holder, upon exercise of such SAR, to receive from
the Company shares of common stock, cash or any combination of the
two as specified in the exercise request (but subject to the
approval of the Compensation Committee with respect to any cash
payment) having an aggregate value equal to the product of (i) the
excess of the fair market value on the date of the exercise request
over the exercise price per share specified in such SAR or its
related Option, multiplied by (ii) the number of shares for which
such SAR may be exercised; provided, however, that the Compensation
Committee, in its discretion, may impose a maximum limitation on
the amount of cash, the fair market value of shares, or a
combination thereof, which may be received by an optionee upon
exercise of a SAR.
RATIFICATION BY SHAREHOLDERS OF THE AMENDMENT TO THE STOCK OPTION
PLAN
Approval of the Amendment to the Stock Option Plan requires
the affirmative vote of the holders of a majority of the
outstanding shares of common stock of the Company present in person
or by proxy at the Annual Meeting.
<PAGE>
PRINCIPAL SHAREHOLDERS
As of February 18, 1999, the only shareholders known by the
Company to own, directly or indirectly, more than 5% of the
Company's common stock, the only class of the Company's capital
stock presently outstanding, are reflected in the following table:
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OWNED* TOTAL SHARES(2)*
- -------------------------------------------------------------------
<S> <C> <C>
F.S. (Sheridan) Garrison(1) 10,886,708 32.9%
Dimensional Fund Advisors(3) 1,671,300 5.0%
Tom Garrison(1) 276,404 0.8%
Will Garrison(1) 117,868 0.4%
</TABLE>
_________________________
(1) The address of this Shareholder is 2200 Forward Drive,
Harrison, Arkansas 72601. Amounts shown include shares held
under trust or otherwise by or for the benefit of certain
immediate family members.
(2) Percentage based upon 33,100,757 shares of the Company's
common stock as of February 18, 1999. Includes 31,759,423
shares outstanding and 1,341,334 shares issuable upon exercise
of options which are currently exercisable or which will become
exercisable within 60 days from the date of this proxy
statement.
(3) The address of this shareholder is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401.
*Includes shares issuable upon exercise of options which are
currently exercisable or which will become exercisable within 60
days from the date of this proxy statement.
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows all of the cash compensation paid or
to be paid by the Company, as well as certain other compensation
paid, to the Chief Executive Officer and the six highest paid
executive officers of the Company for such period in all capacities
in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
=============================================================================
ANNUAL LONG-TERM ALL OTHER
COMPENSATION(C) COMPENSATION COMPENSATION
--------------------------------------------------
AWARDS
NAME AND POSITION YEAR SALARY(A)($) OPTIONS/SARS(#) (B)($)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
F.S. (Sheridan) Garrison 1998 295,000 50,000/0 6,400
Chairman and CEO 1997 270,000 0/0 9,125
1996 257,500 0/0 8,813
Tom Garrison 1998 210,000 20,000/0 6,400
President and COO 1997 185,000 20,000/0 4,625
1996 125,000 10,000/0 4,219
Will Garrison 1998 210,000 20,000/0 6,400
Corporate Vice President 1997 185,000 20,000/0 7,000
And Secretary/Treasurer 1996 125,000 10,000/0 3,750
Frank Conner 1998 190,000 15,000/0 6,400
Executive Vice President 1997 180,000 15,000/0 6,875
Accounting & Finance 1996 185,577 10,000/0 7,014
Dennis Beal 1998 160,000 12,000/0 4,200
Executive Vice President 1997 91,769 1,000/0 0
Physical Assets 1996 0 0/0 0
Terry Higginbotham 1998 160,000 15,000/0 6,400
Executive Vice President 1997 120,000 10,000/0 4,800
Marketing 1996 95,000 10,000/0 3,800
Terry Stambaugh 1998 160,000 12,000/0 1,400
Executive Vice President 1997 60,652 5,000/0 0
Human Resources 1996 0 0/0 0
=========================================================================
</TABLE>
___________________________
(a) Amounts shown include cash and non-cash compensation earned
and received by executive officers as well as amounts earned
but deferred at the election of those officers.
(b) Amounts consist solely of Company contributions to executives'
accounts under the Company's defined contribution plan.
(c) Does not include the value of perquisites and other benefits
where the aggregate value of such compensation, if any, does
not exceed the lesser of $50,000 or 10% of the total amount of
annual salary and bonus for any named executive.
<PAGE>
DIRECTOR COMPENSATION
Non-employee directors are paid an annual retainer of $24,000
plus $1,000 per Board Meeting attended and $500 per committee
meeting attended or $1,000 per committee meeting if serving as
chairman. The Company reimburses all directors for their travel
expenses. The Company has adopted a non-employee elected director
stock option plan and a non-employee appointed director stock
option plan. The plans provide for the automatic granting of 2,000
(6,000 commencing February 1, 1998) options to purchase shares of
the Company's common stock at the fair market value of such common
stock on January 2 of each year or at the date such director was
appointed to the Board. The options vest and become exercisable at
20% per year for five years (at 33 1/3% per year for three years
for options granted on February 1, 1998 and thereafter) and may not
be exercised later than ten years after the date of grant. During
1998, the Company granted to Mr. Ben A. Garrison, Mr. John Paul
Hammerschmidt, Mr. T. J. Jones, Mr. Ken Reeves and Dr. Doyle Z.
Williams options to acquire 6,000 shares of the Company's common
stock each at a purchase price of $9.6875 per share. Except as
indicated above, the Company's officers are not compensated for
their services as directors.
OPTIONS/STOCK APPRECIATION RIGHT ("SAR") GRANTS
The following table sets forth information with respect to the
named executives concerning options granted in the last fiscal year
and their potential realizable value:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
================================================================================
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF
STOCK PRICE
APPRECIATION
FOR OPTION
INDIVIDUAL GRANTS TERM (C)
-------------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/ EMPLOYEES OR BASE
SARS IN FISCAL PRICE EXPIRATION
NAME GRANTED(#) YR(%) ($/SH)(B) DATE 5%($) 10%($)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
F.S. (Sheridan)
Garrison 50,000 10.3 9.69 2/01/08 304,621 771,969
Tom Garrison(a) 20,000 4.1 10.19 1/02/08 128,137 324,725
Will Garrison(a) 20,000 4.1 10.19 1/02/08 128,137 324,725
Frank Conner(a) 15,000 3.1 10.19 1/02/08 96,103 243,544
Dennis Beal(a) 12,000 2.5 10.19 1/02/08 76,882 194,835
Terry Higginbotham(a) 15,000 3.1 10.19 1/02/08 96,103 243,544
Terry Stambaugh(a) 12,000 2.5 10.19 1/02/08 76,882 194,835
================================================================================
</TABLE>
____________________
(a) Options granted in 1998 are exercisable starting 12 months
after the grant date with 20% of the shares covered thereby
becoming exercisable at that time and with an additional 20%
of the option shares vesting and becoming exercisable on each
successive anniversary date with full vesting occurring on the
fifth anniversary date. Unvested portions of options are
forfeited upon termination of employment. Under the terms of
the Stock Option Plans, the Board of Directors retains
discretion subject to plan limits to modify terms of
outstanding options. The options were granted for a term of
10 years subject to earlier termination in certain events
related to termination of employment. The options qualify as
"incentive stock options" under the Internal Revenue Code.
(b) The exercise price reflects the fair market value of the
underlying shares on the grant date. The exercise price and
tax withholding obligation related to exercise may be paid by
delivery or by offset of shares, subject to certain conditions
and limitations.
<PAGE>
(c) As required by rules of the Securities and Exchange
Commission, potential values stated are based on the
prescribed assumption that the Company's common stock will
appreciate in value from the date of grant to the end of the
option term (ten years from the date of grant) at annualized
rates of 5% and 10% (total appreciation of 63% and 159%),
respectively, and therefore are not intended to forecast
possible future appreciation, if any, in the price of the
Company's common stock.
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to the
named executives concerning exercise of options during the last
fiscal year and unexercised options and SARs held as of the end of
the fiscal year:
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
===============================================================================
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS/ IN-THE-MONEY
SHARES VALUE SARS AT FY-END OPTIONS/SARS AT
ACQUIRED ON REALIZED EXERCISABLE/ FY-END EXERCISABLE/
NAME EXERCISE(#) (A)($) UNEXERCISABLE(B)(#) UNEXERCISABLE(C)($)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
F.S. (Sheridan)
Garrison 0 0 554,000/76,000 0/92,175
Tom Garrison 0 0 21,000/44,400 5,048/42,677
Will Garrison 0 0 32,200/44,400 44,496/42,677
Frank Conner 0 0 14,500/34,400 16,366/33,836
Dennis Beal 0 0 200/12,800 0/16,122
Terry Higginbotham 0 0 6,500/29,550 3,986/31,712
Terry Stambaugh 0 0 1,000/16,000 0/16,122
===============================================================================
</TABLE>
_______________
(a) Market price of underlying securities at exercise date, minus
exercise or base price of "in the money" options.
(b) Unexercised options include certain options granted under the
Company's 1989 Stock Option Plan which are due to expire May
2001 and February 2002.
(c) Market value of the Company's common stock at December 31,
1998 was $11.53 per share and was used to calculate the value.
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors
consisted of Messrs. T. J. Jones (Chairman), Ken Reeves and John
Paul Hammerschmidt. The Compensation Committee is responsible for
recommending to the Board of Directors compensation levels for the
Company's Executive Officers and the policies that govern the
Company's compensation and benefit plans.
The Company's compensation programs consist of base
compensation, stock options and contributions to its 401(k)
retirement plan. The programs are intended to enable the Company
to attract, retain, reward and motivate management required to
achieve the Company's corporate objectives.
In reviewing the total compensation of the Company's Executive
Officers, the Compensation Committee compares American Freightways'
corporate performance with its industry peer group included in the
performance graph (see page 17) and a broader more generalized
group of similarly sized and geographically located companies. The
Compensation Committee then evaluates the current Company
performance (in particular revenue growth, operating ratio and net
margin), its financial position (in particular debt to equity,
current ratio and asset utilization) and its long range goals
against contributions made by key employees in current performance
and contribution toward achieving future objectives. In dealing
with the above factors the Compensation Committee must use some
subjectivity in assigning weights to each factor.
In evaluating compensation levels for 1999 the Compensation
Committee considered a number of factors relating to the Company's
results for 1998. During 1998 the Company completed the
restructuring of its line haul operation and implemented limited
geographical expansion. As a result of management's efforts, the
Company realized strong revenue growth while achieving improved
revenue yield. The Company also made improvements in operating
ratio and net margin and experienced improved customer service and
a shortened length of haul. The Committee also believes that
management's efforts have positioned the Company for continuing
growth.
The Committee felt that the 1998 improvements in Company
performance along with the positioning of the Company to meet long
term goals reflected favorably on the performance of the Company's
management.
The annual compensation programs of the Company are weighted
heavily towards a base salary. In setting executive base salaries,
subject to approval of the Board of Directors, the Committee
considers many factors including corporate performance in meeting
both long and short term objectives, current market conditions and
relative size of the Company. The Compensation Committee places
the most weight (over 60%) on corporate performance with other
considerations given between 15-20% of the weight. Among other
things, the Compensation Committee evaluates the individual's
experience, responsibilities, management and leadership abilities
and job performance and the necessity of qualifying compensation
under Section 162(m) of the Code (which is not currently relevant).
The Company currently has no long term incentive program other
than stock option grants. The Compensation Committee is of the
view that options more closely align the interests of the Company's
executive officers with the interests of its shareholders. The
Compensation Committee believes in the longer term the value of the
stock will be most directly related to revenue growth and earnings
per share.
The base salary for Mr. F. S. (Sheridan) Garrison, the
Company's CEO, is determined by evaluating the same factors
generally considered for the Company's other executives. The
Committee was of the view that in consideration of Mr. Garrison's
significant past and continuing contribution to the Company, as
well as a comparison of the overall compensation package for the
CEO of similar sized companies, Mr. Garrison's overall compensation
is at the low end of the range for his peer group.
The Chairman Stock Option Plan, a non-discretionary plan
providing for the grant of options based solely on annual growth in
the Company's earnings per share, expired in 1998. The
Compensation Committee believes that the purpose of the plan, to
reward the Company's Chairman for achievement by the Company of
certain growth in earnings, should be perpetuated. Accordingly, as
a temporary replacement for the expired Chairman Plan, the
Compensation Committee recommended (and the full Board of Directors
of the Corporation unanimously approved, with Mr. Sheridan Garrison
abstaining) that Mr. Sheridan Garrison receive the grant of an
option to acquire 50,000 shares of Company common stock, which
option will vest in 20% increments over five years. A grant of
this amount
<PAGE>
and with these terms would have automatically been
granted to Mr. Garrison under the now-expired Chairman Plan. In
addition, the Compensation Committee recommended the adoption of a
new Chairman Stock Option Plan having substantially similar terms
as the now-expired plan. Such a new plan is the subject of
Proposal II "Proposal to Approve the American Freightways
Corporation 1999 Chairman Stock Option Plan."
The Committee believes the compensation package of base salary
and stock options has fairly compensated the Company's executives
in the past. The overall compensation package is in the mid to low
range in comparison to both its industry peers represented in the
performance graph (see page 17) and the generalized group of
companies. The Committee will continue to review the programs to
ensure that the combination of base salary and incentives are fair
to the Company and the employees and that the compensation package
is related to overall performance of both the employees and the
Company in relation to long term objectives of the Company.
THE COMPENSATION COMMITTEE
T.J. Jones
Ken Reeves
John Paul Hammerschmidt
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year, executive compensation
was administered by the Compensation Committee comprised of the
individuals listed above. Mr. Jones previously served as the
Company's Executive Vice President-Operations until his retirement
in 1994.
<PAGE>
COMPANY PERFORMANCE
The following graph shows a five year comparison of cumulative
total returns for American Freightways, the S&P 500 index and an
index of peer companies selected by the Company:
[Performance Graph appears here]
5 YEAR CUMULATIVE TOTAL RETURN SUMMARY
<TABLE>
<CAPTION>
=========================================================================
STARTING
BASIS
DESCRIPTION 1993 1994 1995 1996 1997 1998
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AMERICAN FREIGHTWAYS ($) $100.00 $100.63 $ 52.53 $ 56.33 $ 50.00 $ 58.38
S & P 500 ($) $100.00 $101.30 $139.40 $171.40 $228.59 $293.91
PEER GROUP ONLY ($) $100.00 $ 95.22 $ 80.46 $ 85.09 $124.47 $109.85
=========================================================================
</TABLE>
(1) Total return based on $100 initial investment and reinvestment of
dividends, if applicable
(2) Peer group total return based on market capitalization.
Peer group comprised of nine publicly-traded, less-
than-truckload carriers.
The total cumulative return on investments (change in the year-
end stock price plus applicable reinvested dividends) for each of
the periods for the Company, the peer group and the S&P 500 is
based on the stock price or market index at the end of fiscal year
1993.
The above graph compares the Company with that of the S&P 500
and a group of peer companies with the investment weighted on
market capitalization. Companies in the peer group are as follows:
Arkansas Best Corporation, Arnold Industries, Inc., CNF
Transportation, Inc., Consolidated Freightways, Jevic
Transportation, Old Dominion Freight Line, Inc., Roadway Express,
USFreightways Corporation and Yellow Corporation.
For fiscal year 1998 the following changes were made to the
peer group: Consolidated Freightways was added due to a spin-off
from CNF Transportation, Inc.; Jevic Transportation was added upon
its initial public offering in October 1997; Roadway Express was
added due to changes in organizational structure being more
comparable to the peer group and Caliber Systems was deleted from
the peer group as a result of its acquisition by FDX Corporation.
The stock price performance depicted in the above graph is not
necessarily indicative of future price performance.
CERTAIN TRANSACTIONS
Any transactions between the Company and its officers,
directors, principal shareholders or other affiliates will be
approved by a majority vote of the Company's disinterested
directors and will continue to be on terms no less favorable to the
Company than could be obtained from unaffiliated third parties.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the Securities Exchange Act of 1934, the Company's
executive officers, directors and those persons who own more than
ten percent of the Company's common stock are required to file
reports of ownership and subsequent changes of ownership with the
Securities and Exchange Commission. Specific due dates have been
established for these reports, and the Company is required to
disclose in this Proxy Statement any failure to file by these
dates. Based upon a review of the copies of such reports filed
with the Commission and written representations from the Company's
directors and executive officers, the Company believes that during
the preceding year all filing requirements applicable to executive
officers and directors have been met.
AUDITORS TO BE PRESENT
A representative of Ernst & Young LLP, the Company's auditors
for fiscal 1998, is expected to be in attendance at the 1999 Annual
Meeting and will be afforded the opportunity to make a statement.
The representative will also be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be included in the Company's proxy
statement for the 2000 Annual Meeting should be directed to Mr.
Will Garrison, Secretary/Treasurer of the Company, and must be
received by the Company on or before December 22, 1999. Any such
proposal must comply with the requirements of Rule 14a-8 of the
Securities Exchange Act of 1934.
Additionally, any shareholder proposal presented at the 2000
Annual Meeting but not received by the Company on or before January
31, 2000, will not be included in the proxy statement but may be
voted upon using the discretionary voting authority conferred to
the proxies to vote in their sole discretion with respect to such
matters.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company.
Solicitations may be made personally, by written communications or
telephone, and may be made by directors and regular employees of
the Company.
ADDITIONAL INFORMATION AVAILABLE
Upon written request, the Company will furnish, without
charge, a copy of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, as filed with the United
States Securities and Exchange Commission, including the financial
statements and schedules thereto. The written request should be
sent to Mr. Frank Conner, Chief Financial Officer, American
Freightways Corporation, P.O. Box 840, Harrison, Arkansas 72602-
0840.
<PAGE>
OTHER MATTERS
So far as now known, there is no business other than that
described above to be presented to the shareholders for action at
the meeting. Should other business come before the meeting, votes
may be cast pursuant to proxies in respect to any such business in
the best judgment of the persons acting under the proxies.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE URGED
TO SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED
IN THE UNITED STATES.
By Order of the Board of Directors
/s/F.S. Garrison
---------------------------
F.S. (Sheridan) Garrison,
Chairman and CEO
March 11, 1999
(FRONT)
[x] PLEASE MARK VOTES AS IN THE EXAMPLE
AMERICAN FREIGHTWAYS CORPORATION
RECORD DATE SHARES:
Please be sure to sign and date this Proxy.
______________________________
Date
______________________________ ______________________________
Shareholder sign here Co-owner sign here
1. TO ELECT THREE DIRECTORS TO THE CLASS WHOSE TERM WILL EXPIRE
IN 2002.
Will Garrison
John Paul Hammerschmidt
William P. Stiritz
INSTRUCTION: To withhold authority to vote for any individual
nominee, mark the "FOR ALL EXCEPT" box and strike a line through
that nominee's name in the list above.
[ ]FOR
[ ]WITHHOLD
[ ]FOR ALL EXCEPT
2. TO ADOPT THE COMPANY'S 1999 CHAIRMAN STOCK OPTION PLAN.
[ ]FOR
[ ]WITHHOLD
3. TO ADOPT THE COMPANY'S 1999 EMPLOYEE STOCK PURCHASE PLAN.
[ ]FOR
[ ]WITHHOLD
4. TO APPROVE AN AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED
1993 STOCK OPTION PLAN WHICH WOULD INCREASE THE NUMBER OF SHARES OF
COMMON STOCK AUTHORIZED FOR ISSUANCE THEREUNDER BY 2,000,000
SHARES.
[ ]FOR
[ ]WITHHOLD
5. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting and the
adjournment thereof.
Mark box at right if an address change or comment has been noted on
the reverse side of this card. [ ]
<PAGE>
(BACK)
AMERICAN FREIGHTWAYS CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREHOLDERS, APRIL 15, 1999
The undersigned shareholder(s) of American Freightways Corporation
(the "Company") hereby appoint F.S. (Sheridan) Garrison and Tom
Garrison, and each or either of them, the true and lawful agents
and attorneys-in-fact for the undersigned, with power of
substitution, to attend the meeting and to vote the stock owned by
or registered in the name of the undersigned, as instructed on the
reverse side, at the 1999 Annual Meeting of Shareholders to be held
at the Comfort Inn Convention Center, 1210 Hwy. 62-65 North,
Harrison, Arkansas on Thursday, April 15, 1999 at 10:00 a.m.,
central standard time, and the adjournment thereof, for the
transaction of the business following on the reverse side hereof.
The Proxy when properly executed will be voted in the manner
directed herein by the undersigned.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2, 3 and 4.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as name(s) appears on the reverse. If stock is
in the name of two or more persons, each should sign. Persons
signing as attorney, executor, administrator, trustee, guardian or
other fiduciary, please give full title as such. If a corporation,
signature should be by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
HAS YOUR ADDRESS CHANGED?
_________________________
_________________________
_________________________
_________________________
DO YOU HAVE ANY COMMENTS:
_________________________
_________________________
_________________________
_________________________
