<PAGE>
March 9, 2000
VIA OVERNIGHT MAIL
- - ----------------------------------
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Landstar System, Inc.
Preliminary Proxy Materials
----------------------------
Dear Sir or Madam:
On behalf of Landstar System, Inc. (the "Corporation"), I enclose
Herewith for electronic filing pursuant to Rule 14a-5(a) under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), a preliminary
copy of each of the Notice of Annual Meeting of Shareholders, Proxy Statement,
Forms of Proxy Cards and certain related materials in connection with the
annual meeting of the shareholders of the Corporation to be held on
May 16, 2000 (the "Annual Meeting").
At the Annual Meeting, the shareholders of the Corporation will be asked
(i) to elect two nominees to the Board of Directors, (ii) to approve an
amendment of the Certificate of Incorporation of the Corporation to increase
the number of authorized shares of Common Stock to 50,000,000, and the number
of authorized shares of Preferred Stock to 5,000,000; (iii) to approve an
amendment to the Landstar System, Inc. 1994 Directors Stock Option Plan of the
Corporation (as amended, the "Option Plan") and (iv) to ratify appointment of
KPMG LLP as independent auditors for the Company. (Please note that a copy of
the Option Plan is attached to the Proxy Statement as Appendix A and the
Amendment to the Option Plan as Appendix B).
The Corporation proposes to release the enclosed proxy materials for final
printing no later than March 20, 2000, so that definitive copies of the
enclosed proxy materials can be mailed to the Corporation's shareholders on or
about March 24, 2000.
Please telephone me collect at (904)390-1226, if I may be of any
assistance in answering any questions which may arise in connection with your
review of the Proxy Statement and related materials. Should you have any
written comments thereto, please fax the comment letter to me at (904)390-1239.
Very truly yours,
Michael L. Harvey
MLH:caw
Enclosures
<PAGE>
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:
<TABLE>
<S> <C>
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Landstar System, 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 filing 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:
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<PAGE>
LANDSTAR SYSTEM, INC.
13410 Sutton Park Drive South
Jacksonville, Florida 32224
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 16, 2000
Notice is hereby given that the 2000 Annual Meeting of Shareholders of Landstar
System, Inc., a Delaware corporation (the "Company"), will be held at the Ponte
Vedra Inn, Ponte Vedra Beach, Florida 32082, on Tuesday, May 16, 2000,
at 10:00 a.m., local time, for the following purposes:
(1) To elect two Class I Directors for terms to expire at the 2003 Annual
Meeting of Shareholders;
(2) To ratify the appointment of KPMG LLP as the Company's independent
auditors for fiscal year 2000;
(3) To consider approval of an increase in the number of shares available
for distribution from the Company's 1994 Directors Stock Option Plan;
(4) To consider approval of an amendment to Article IV of the Certificate
of Incorporation to increase the authorized capital stock of the
Company; and
(5) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on March 20, 2000 will
be entitled to notice of and to vote at the meeting. A list of shareholders
eligible to vote at the meeting will be available for inspection at the
meeting at the Ponte Vedra Inn at the address set forth above and during
business hours from May 6, 2000 to the date of the meeting at the Company's
corporate headquarters at the address set forth above.
All shareholders are cordially invited to attend the meeting in person.
Whether you expect to attend the Annual Meeting or not, your proxy vote is
very important. TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATED OR CANADA.
By Order of the Board of Directors
MICHAEL L. HARVEY
Vice President,
General Counsel,
and Secretary
Jacksonville, Florida
March 24, 2000
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED
AND RETURNED PROMPTLY
=========================================================
<PAGE>
LANDSTAR SYSTEM, INC.
PROXY STATEMENT
March 24, 2000
INTRODUCTION
This Proxy Statement is furnished to the shareholders of Landstar System,
Inc. (the "Company") in connection with the solicitation of proxies on
behalf of the Board of Directors of the Company (the "Board") to be voted
at the Annual Meeting of Shareholders to be held on Tuesday, May 16, 2000
(the "2000 Annual Meeting"). The 1999 Annual Report to Shareholders (which does
not form a part of the proxy solicitation material), including the financial
statements of the Company for fiscal year 1999, is enclosed herewith. The
mailing address of the principal executive offices of the Company is 13410
Sutton Park Drive South, Jacksonville, Florida 32224. This Proxy Statement,
accompanying form of proxy, Notice of Meeting and 1999 Annual Report are being
mailed to the shareholders of the Company on or about March 24, 2000.
RECORD DATE
The Board has fixed the close of business on March 20, 2000 as the record
date for the 2000 Annual Meeting. Only shareholders of record on that date
will be entitled to vote at the meeting in person or by proxy.
PROXIES
Shares cannot be voted at the meeting unless the owner thereof is present
in person or by proxy. The proxies named on the enclosed proxy card were
appointed by the Board to vote the shares represented by the proxy card. If a
shareholder does not return a signed proxy card, his or her shares cannot be
voted by proxy. Shareholders are urged to mark the boxes on the proxy card to
show how their shares are to be voted. All properly executed and unrevoked
proxies in the accompanying form that are received in time for the meeting will
be voted at the meeting or any adjournment thereof in accordance with any
specification thereon, or if no specification is made, will be voted "FOR" the
election of the named nominees, ratification of KPMG LLP as independent
auditors for the Company, approval of an increase in shares available for
distribution under the 1994 Directors Stock Option Plan, and approval of the
amendment to the Articles of Incorporation to increase the authorized capital
stock of the Company in each case as set forth in this Notice of 2000 Annual
Meeting. The proxy card also confers discretionary authority on the proxies
to vote on any other matter not presently known to management that may properly
come before the 2000 Annual Meeting.
Any proxy delivered pursuant to this solicitation is revocable at the option
of the person(s) executing the same (i) upon receipt by the Company before the
proxy is voted of a duly executed proxy bearing a later date, (ii) by written
notice of revocation to the Secretary of the Company received before the proxy
is voted, or (iii) by such person(s) voting in person at the 2000 Annual
Meeting.
1
<PAGE>
The Board has selected ChaseMellon Shareholder Services, L.L.C. as
Inspectors of Election (the "Inspectors") pursuant to the Company's Bylaws,
as amended. The Inspectors shall ascertain the number of shares outstanding,
determine the number of shares represented at the 2000 Annual Meeting by proxy
or in person and count all votes and ballots. Each shareholder shall be
entitled to one vote for each share of Common Stock (as defined hereafter) and
such votes may be cast either in person or by written proxy.
VOTING SECURITIES
The Company has only one class of voting securities, its common stock, par
value $.01 per share (the "Common Stock") outstanding. On March 20, 2000,
9,071,333 shares of Common Stock were outstanding. At the 2000 Annual
Meeting, each shareholder of record at the close of business on March 20, 2000
will be entitled to one vote for each share of Common Stock owned on that date
as to each matter properly presented to the 2000 Annual Meeting. The holders
of a majority of the total number of the issued and outstanding shares of
Common Stock shall constitute a quorum for purposes of the 2000 Annual Meeting.
ELECTION OF DIRECTORS
The Board is divided into three classes, with Directors in each class serving
staggered three-year terms. At each annual meeting of shareholders, the
terms of Directors in one of the three classes expire. At that annual meeting
of shareholders, Directors are elected in a class to succeed the Directors
whose terms expire, with the terms of the Directors so elected to expire at
the third annual meeting of shareholders thereafter. Pursuant to the
Company's Bylaws, new Directors elected by the remaining Board members to fill
a vacancy on the Board shall hold office for a term expiring at the annual
meeting of shareholders at which the term of office of the class of which they
have been elected expires and until such Director's successors shall have been
duly elected and qualified. There are seven members of the Board of Directors;
two Class I Directors to be elected at the 2000 Annual Meeting of Shareholders
(whose members' terms will expire at the 2003 Annual Meeting of Shareholders),
two Class II Directors whose terms will expire at the 2001 Annual Meeting of
Shareholders, and three Class III Directors whose terms will expire at the 2002
Annual Meeting of Shareholders.
It is intended that the shares represented by the accompanying form of proxy
will be voted at the 2000 Annual Meeting for the election of nominees Ronald W.
Drucker and Henry H. Gerkens as the Directors comprising Class I whose members'
terms will expire at the 2003 Annual Meeting of Shareholders, unless the proxy
specifies otherwise. Each nominee has indicated his or her willingness to serve
as a member of the Board, if elected.
If, for any reason not presently known, Ronald W. Drucker or Henry H. Gerkens
are not available for election at the time of the 2000 Annual Meeting, the
shares represented by the accompanying form of proxy may be voted for the
election in his/their stead of substitute nominee(s) designated by the Board or
a committee thereof, unless the proxy withholds authority to vote for all
nominees.
2
<PAGE>
Assuming the presence of a quorum, to be elected, a nominee must receive the
affirmative vote of the holders of a majority of the Common Stock, present,
in person or by proxy, at the 2000 Annual Meeting. Abstentions from voting
and broker non-votes will have no effect on the outcome of this proposal.
John B. Bowron has chosen not to stand for re-election as a Director at the
2000 Annual Meeting of Shareholders.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL
3
<PAGE>
DIRECTORS OF THE COMPANY
The following information describes the principal occupation or employment,
other affiliations and business experience of each nominee named above and to
the other persons whose terms as Directors will continue after the 2000 Annual
Meeting.
<TABLE>
<CAPTION>
Name Age Business Experience
---- --- -------------------
<S> <C> <C>
CLASS I - Nominees for election to serve as Directors until 2003 Annual Meeting
Ronald W. Drucker 58 Mr. Drucker has been a Director of the Company and Landstar
System Holdings, Inc. (a wholly-owned subsidiary of the
Company) ("LSHI") since April 1994. Mr. Drucker is a
consultant and he serves as the Chairman of the National
Defense Transportation Association ("NDTA") Business
Practices Committee. He also served as Chairman of the Board
of Encompass, a global logistics information joint venture of
AMR and CSX Corporations from 1989 through 1997. Between
1966 and 1992, Mr. Drucker served with CSX predecessor
companies in various capacities. He is a member of the
American Railway Engineering Association and the American
Society of Civil Engineers and serves as a member of the
Boards of Directors of SunTrust Bank-North Florida, N.A.,
Railworks, Inc., The Cooper Union for the Advancement of
Science and Art, Jacksonville University and The New World
Symphony.
Henry H. Gerkens 49 Mr. Gerkens has been Executive Vice President and Chief
Financial Officer of the Company and LSHI since November 1994.
He served as Vice President and Chief Financial Officer of the
Company from January 1993 to November 1994 and held the same
positions at LSHI from August 1988 to November 1994. He is
also an officer of each of the subsidiaries (the
"Subsidiaries") of LSHI: namely, Landstar Gemini, Inc. (a
wholly-owned subsidiary of LSHI) ("Landstar Gemini"), Landstar
Inway, Inc. (a wholly-owned subsidiary of LSHI) ("Landstar
Inway"), Landstar Ligon, Inc. (a wholly-owned subsidiary of
LSHI) ("Landstar Ligon"), Landstar Contractor Financing, Inc.
(a wholly-owned subsidiary of LSHI) ("LCFI"), Risk Management
Claim Services, Inc., (a wholly-owned subsidiary of LSHI)
("RMCS"), Landstar Ranger, Inc. (a wholly-owned subsidiary of
LSHI) ("Landstar Ranger"), Signature Technology Services, Inc.
(a wholly-owned subsidiary of LSHI) ("STSI"), Landstar
Corporate Services, Inc. (an indirect wholly-owned subsidiary
of LSHI) ("LCSI"), Landstar Express America, Inc. (a wholly-
owned subsidiary of LSHI) ("Landstar Express America"),
Landstar Logistics, Inc. (a wholly-owned subsidiary of LSHI)
("Landstar Logistics") and has also been Vice President of
Signature Insurance Company ("Signature"), (a wholly-owned
subsidiary of LSHI) since February 1997.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS OF THE COMPANY (continued)
Name Age Business Experience
---- --- -------------------
CLASS II - Directors whose terms expire at 2001 Annual Meeting
<S> <C> <C>
Merritt J. Mott 54 Mr. Mott has been a Director of the Company and LSHI since
August 1994. He is the Owner and Chief Executive Officer of
Rockford Sanitary Systems, Inc. He has been President and Co-
Founder of T & M Fabricating, Inc. since 1993. From 1980
through 1996 he served in various capacities at Mott Bros.
Company including Chief Financial Officer, Executive Vice
President and Director. Mr. Mott was a Director of Rockford
Health Plans from 1994 through 1997 and has been a trustee of
the William Howard Trust since 1984.
William S. Elston 59 Mr. Elston has been a Director of the Company and LSHI since
February 1998. He was President and CEO of Clean Shower, L.P.
from November 1998 to December 1999. He served as Managing
Director/Executive Vice President of DHR, International, an
executive recruiting firm, from February 1995 to November
1998. He was Executive Vice President, Operations, of
Steelcase, Inc., from April 1994 to January 1995. Mr. Elston
was President and Chief Executive Officer of GATX Logistics,
Inc. from 1990 through March 1994. He has been a member of
the Board of Directors of Southern Petroleum Systems since
January 1998.
Diana M. Murphy 43 Ms. Murphy has been a Director of the Company and LSHI since
February 1998 and has been a Partner in the investment firm of
Chartwell Capital Management Company since 1997. Ms. Murphy
was an associate with Chartwell Capital and served as interim
President for one of Chartwell's portfolio companies,
Strategic Media Research, Inc. in 1996. She was Senior Vice
President for The Baltimore Sun, a division of Times Mirror
Corporation from 1992 to 1995. Ms. Murphy is also a member of
the Boards of Strategic Media Research, Inc. and Sandbox.com.
CLASS III - Directors whose term expire at 2002 Annual Meeting
David G. Bannister 44 Mr. Bannister has been a Director of the Company since April
1991 and a Director of LSHI since October 1988. Mr. Bannister
is a Managing Director of Grotech Capital Group, a private
equity and venture capital firm. Prior to joining Grotech in
May 1998, Mr. Bannister was a Managing Director at BT Alex.
Brown Incorporated. Mr. Bannister also serves on the Boards of
Directors of Allied Holdings, Inc., Nationtax Online, Inc.,
homebytes.com incorporated and Simondelivers.com, Inc.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS OF THE COMPANY (continued)
Name Age Business Experience
---- --- -------------------
<S> <C> <C>
Jeffrey C. Crowe 53 Mr. Crowe has been Chairman of the Board, President and Chief
Executive Officer of the Company since April 1991. He has
been President and Chief Executive Officer of LSHI since June
1989 and Chairman of the Board of LSHI since March 1991. Mr.
Crowe has been President of Signature since February 1997.
Mr. Crowe served in a number of capacities at the American
Trucking Association, Inc. ("ATA") including Secretary and a
member of the ATA Executive Committee and served as a Director
of the ATA Foundation since November 1989 until his
resignation from ATA in 1998. He has also served as Chairman
of the NDTA commencing October 1993. From May 1990 to
September 1993, he served as Chairman of the Surface
Transportation Committee of the NDTA and also served as
Chairman of the Board of Deliver, U.S.A., an affiliate of ATA,
from 1990 to 1996 as well as a Vice President at large of the
ATA from November 1989 to 1996. He has served as a Director of
Silgan Holdings Inc. since May 1997, a Director of National
Chamber Foundation since November 1997, and a Director of
U.S. Chamber of Commerce since February 1998. He has been a
Director of Sun Trust Bank North-Florida, N.A., since January
1999.
</TABLE>
6
<PAGE>
INFORMATION REGARDING BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board. The
Board meets on a regularly scheduled basis four times a year to review
significant developments affecting the Company and to act on matters requiring
Board approval. It also holds special meetings and acts by written consent
when important matters require Board action between scheduled meetings.
Attendance at Board Meetings
During the 1999 fiscal year, the Board held four regularly scheduled meetings,
two special telephonic meetings, and acted by unanimous written consent four
times. During such fiscal year all Directors attended 75% or more of the
combined total meetings of the Board and its respective committees during the
period in which they served as Directors or committee members.
Committees of the Board
The Board has established an Audit Committee, a Compensation Committee, a
Nominating Committee, a Safety Committee and a Strategic Planning Committee
to devote attention to specific subjects and to assist in the discharge of
its responsibilities. The functions of those committees, their current members
and the number of meetings held during 1999 are described below. The Board
does not have an Executive Committee.
Audit Committee
Members: Ronald W. Drucker, Merritt J. Mott and Diana M. Murphy
The Audit Committee recommends to the Board the appointment of the independent
auditors for the Company and monitors the performance of such firm; reviews and
approves the scope and results of the annual audit; and evaluates with the
independent auditors the Company's annual audit and annual consolidated
financial statements; reviews with management the status of internal accounting
controls; and evaluates problem areas having a potential financial impact on the
Company which may be brought to its attention by management, the independent
auditors or the Board. In addition, the Audit Committee reviews the
independent auditors' fees for services rendered to the Company. The Audit
Committee held two meetings during 1999 and did not act by written consent
in 1999.
Compensation Committee
Members: David G. Bannister, William S. Elston and Merritt J. Mott
The Compensation Committee functions include (i) reviewing and making
determinations subject to review by the Board with respect to matters having
to do with the compensation of senior executive officers and Directors of the
Company and (ii) administering certain plans relating to the compensation of
officers. The Compensation Committee held four regularly scheduled meetings
and did not act by written consent during 1999.
7
<PAGE>
Nominating Committee
Members: Jeffrey C. Crowe, David G. Bannister and Ronald W. Drucker
The Nominating Committee functions include (i) identifying persons for future
nomination for election to the Board of Directors. No meetings were held in
fiscal 1999 by the Nominating Committee. Stockholders who wish to submit names
to the Nominating Committee for consideration should do so in writing addressed
to the Nominating Committee, c/o Corporate Secretary, Landstar System, Inc.,
13410 Sutton Park Drive South, Jacksonville, Florida 32224. Nominee Directors
Henry H. Gerkens and Ronald W. Drucker were nominated by the Nominating
Committee at a meeting on February 2, 2000.
Safety Committee
Members: Jeffrey C. Crowe, David G. Bannister and Diana M. Murphy
The Safety Committee functions include the development and implementation of
safety goals and strategies to be implemented by the Company. The Safety
Committee held two meetings during 1999 and did not act by written consent.
Strategic Planning Committee
Members: John B. Bowron, Ronald W. Drucker, William S. Elston and
Diana M. Murphy
The Strategic Planning Committee functions include the development of strategic
objectives and policies and procedures to achieve the strategic objectives of
the Company. The Strategic Planning Committee solicits the views of the Board
of Directors and Senior Management and recommends strategic directions to the
Board for implementation. The Strategic Planning Committee held two meetings
during 1999.
8
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, age, principal occupation and business
experience during the last five years of each of the current executive officers
of the Company. The executive officers of the Company serve at the discretion
of the Board and until their successors are duly elected and qualified. For
information regarding ownership of the Common Stock by the executive officers
of the Company, see "Security Ownership by Management and Others." There are no
family relationships among any of the Directors and executive officers of the
Company or the Subsidiaries.
<TABLE>
<CAPTION>
Name Age Business Experience
---- --- -------------------
<S> <C> <C>
John B. Bowron 65 Mr. Bowron has been a Director of the Company since April 1991
and served as Senior Vice President of the Company from
January 1993 until December 1997 at which time he became Vice
President. He also has been a Director of LSHI since October
1988. He was Chairman of the Board of Landstar Gemini from
October 1990 to April 1997. Mr. Bowron was Chairman of the
Board of Landstar Ranger from April 1990 to November 1994. He
served as a Director of Montgomery Tank Lines, Inc. ("MTL")
and also served on the MTL Compensation Committee from May
1955 through April 1998. Mr. Bowron has chosen not to stand
for re-election as a Director at the 2000 Annual Meeting of
Shareholders and will retire in May 2000.
Jeffrey C. Crowe 53 See previous description under "Directors of the Company."
Henry H. Gerkens 49 See previous description under "Directors of the Company."
Michael L. Harvey 55 Mr. Harvey has been Vice President and General Counsel of the
Company since January 1993. He has been Secretary of the
Company, and Vice President, General Counsel and Secretary of
LSHI since August 1992. Mr. Harvey is also an officer of each
of the Subsidiaries, except Signature.
James R. Hertwig 48 Mr. Hertwig has been Executive Vice President of the Company
and LSHI and President of Landstar Logistics since October
1995. He was President of Landstar Gemini from January 1997
until December 1999. Mr. Hertwig served as President of
Carolina Freight Carriers from October 1994 to September 1995
and as Vice President of Carolina Freight Corp. from January
1994 to October 1994. From October 1994 to September 1995, he
served as Chairman of the Board of Red Arrow Freight Lines.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF THE COMPANY (continued)
Name Age Business Experience
---- --- -------------------
<S> <C> <C>
Robert C. LaRose 45 Mr. LaRose has been Vice President-Finance and Treasurer of
the Company and LSHI since October 1995. He served as Vice
President and Controller of the Company from January 1993 to
October 1995 and held the same positions at LSHI from March
1989 to October 1995. He is also an officer of each of the
Subsidiaries. Mr. LaRose was Assistant Treasurer of the
Company from May 1991 to January 1993.
Robert C. Luminati 59 Mr. Luminati has been Vice President Chief Information Officer
of the Company since January 1997. He served as Vice
President Management Information Systems from January 1993 to
1997. He held the same position at LSHI from August 1989 to
January 1993.
G. Thomas Beam 57 Mr. Beam has been President of Landstar Ligon and a Vice
President of LSHI since December 1999. He served as Vice
President of Finance at Landstar Ligon from June 1993 to
December 1999.
Gary L. Hartter 58 Mr. Hartter has been President of Landstar Ranger since
January 1998. He has also been a Vice President of LSHI since
January 1998. Mr. Hartter was Vice President of LSI effective
September 1997 but resigned in January 1998 to become
President of Landstar Ranger. From September 1991 to November
1996 Mr. Hartter was President of Trism Specialized, Inc.
Ruth C. Day 37 Ms. Day was Vice President of Finance of Landstar Ranger from
January 1996 to December 1999. Prior to joining Landstar
Ranger, Ms. Day served as the Vice President of Financial
Planning for LSHI from July 1993 to December 1995. Other
positions held by Ms. Day at Landstar have included Vice
President of Finance for Ligon from April 1990 to July 1993.
Ms. Day has been Vice President - Administrative Services for
LSI since January 2000.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF THE COMPANY (continued)
Name Age Business Experience
---- --- -------------------
<S> <C> <C>
James R. Martin 60 Mr. Martin has been Vice President Corporate Development of
the Company since October 1998. Mr. Martin was President of
Landstar Poole, Inc. (a former wholly-owned subsidiary of
LSHI) from March 1997 until August 1998. He has been a Vice
President of LSHI since October 1995. He was President of
LCSI from January 1994 until March 1997. He was Assistant
Treasurer and Secretary of Landstar Ranger from August 1995
through March 1997. He was Vice President and Treasurer of
Landstar Gemini from February 1991 through March 1997. Mr.
Martin previously served as Vice President of Finance at
Landstar Ranger from December 1989 to August 1995 and Vice
President of Finance at Landstar Ligon from June 1985 to
December 1989. He currently serves as President of STSI.
Jeffrey L. Pundt 49 Mr. Pundt has been President of Landstar Inway and a Vice
President of LSHI since June 1996. Mr. Pundt served as
Executive Vice President of Landstar Inway from September 1994
to June 1996 and as a Vice President of Landstar Inway from
September 1986 to September 1994.
Ronald G. Stanley 49 Mr. Stanley has been President of Landstar Express America and
a Vice President of LSHI since February 1996. Previously he
was Vice President-Marketing and Sales at Roadway Global Air.
</TABLE>
11
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation of Directors. During 1999, Directors who were not employees of
the Company received an annual Director's fee of $20,000, plus a fee of $2,000
for each board meeting attended and a fee of $1,000 for each meeting of a
committee attended if the committee meeting was held on a day other than a day
on which a Board meeting was held. Directors are also reimbursed for expenses
incurred in connection with attending Board meetings. Pursuant to the
Company's 1994 Directors Stock Option Plan, each Director who was an Eligible
Director (as defined therein) on November 30, 1994 received an option to
purchase 12,000 shares of the Company's Common Stock. Also, pursuant to the
Company's 1994 Directors Stock Option Plan, commencing in 1996, on the first
business day after each annual meeting of shareholders of the Company, each
Eligible Director who was elected or re-elected as a Director at such annual
meeting received an award of options (a "Term Award") to purchase an additional
12,000 shares of the Company's Common Stock.
At a regularly scheduled meeting of the Board of Directors on December 9, 1998,
the Board acted to approve a recommendation of the Compensation Committee to
reduce the number of shares available for a Term Award on an annual basis
from 12,000 options to 9,000 options to purchase shares of the Company's Common
Stock. The 1994 Directors Stock Option Plan has been amended to reflect
this reduction. Accordingly, Mr. Drucker, Director Nominee and eligible for
re-election at the annual meeting of shareholders, May 16, 2000 will receive
9,000 shares pursuant to the 1994 Directors Stock Option Plan as amended.
All of such options have an exercise price equal to the fair market value of
the Company's Common Stock on the date of grant and are subject to vesting
requirements and other terms of the Company's 1994 Directors Stock Option
Plan. Directors who are also officers of the Company do not receive any
additional compensation for services as a Director or for services on
committees of the Board or for meetings or attendance fees.
Compensation of Executive Officers. The following table summarizes the
compensation paid to the Chief Executive Officer and each of the Company's
four most highly compensated other executive officers for services rendered
to the Company and its subsidiaries during the 1999, 1998 and 1997 fiscal years
(collectively, the "Named Executives").
12
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
No. of
Securities
Annual Compensation Underlying
Annual Other Annual Options All Other
Name and Principal Position Year Salary(1) Bonus Compensation(2) Granted Compensation(3)
- - --------------------------- ---- --------- ----- -------------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Jeffrey C. Crowe 1999 $350,000 $1,220,000 $91,111 10,800 $129,175
Chairman of the Board, 1998 350,000 980,000 47,972 31,600 63,925
President & Chief 1997 350,000 176,400 320,105 0 441,925
Executive Officer
Henry H. Gerkens 1999 220,000 670,000 44,759 7,500 54,333
Executive Vice President & 1998 220,000 515,000 28,500 20,900 34,208
Chief Financial Officer 1997 220,000 92,400 133,282 0 175,838
Robert C. LaRose 1999 170,000 325,000 26,443 4,900 33,303
Vice President Finance & 1998 170,000 280,000 24,920 13,700 28,891
Treasurer 1997 162,629 43,218 104,119 0 135,798
Robert C. Luminati 1999 170,000 325,000 21,758 3,000 32,992
Vice President & Chief 1998 170,000 280,000 17,924 8,800 29,454
Information Officer 1997 156,458 42,630 22,850 0 19,474
James R. Hertwig 1999 180,000 235,000 13,653 4,600 8,434
Executive Vice President & 1998 180,000 200,000 4,722 13,400 3,934
President of Landstar Logistics 1997 170,000 57,800 3,241 0 1,234
</TABLE>
- - ----------------------
(1) Amounts shown include any salary deferred at the election of the Named
Executive Officer under the Landstar 401(k) Savings Plan and/or the Landstar
Supplemental Executive Retirement Plan.
(2) Amounts shown represent amounts reimbursed during the fiscal year for
the payment of taxes on behalf of the above Named Executives.
(3) Amounts for 1999 include contributions in the amount of $6,400 which were
made by the Company under the Landstar 401(k) Savings Plan on behalf of each of
the Named Executives and contributions made by the Company under the Landstar
Supplemental Retirement Plan on behalf of Mr. Crowe in the amount of $7,600,
Mr. Gerkens in the amount of $2,400, Mr. LaRose in the amount of $400, and Mr.
Hertwig in the amount of $800. Amounts for 1999 also include the dollar value
of term life insurance premiums paid by the Company on behalf of Messrs.
Crowe, Gerkens, LaRose, Luminati and Hertwig in the amounts of $1,425,
$1,608, $428, $2,555, and $1,234, respectively. Amounts for 1999 include
$49,000, $24,500, $19,600, and $20,800 which represents principal and interest
forgiven under loans extended to each of Messrs. Crowe, Gerkens, LaRose and
Luminati, respectively, in connection with their relocation in 1997, and
$64,750, $19,425, $6,475 and $3,237, respectively, which represents interest
forgiven under loans extended in connection with the exercise of their stock
options.
13
<PAGE>
There were 62,600 options granted under the Company's 1993 Employee Stock
Option Plan in fiscal year 1999.
The following table sets forth the number of and information about stock
options granted in fiscal 1999 to each of the Named Executives of the Company.
NUMBER OF SECURITIES UNDERLYING OPTIONS GRANTED
<TABLE>
CAPTION>
No. of Securities % of Potential Realizable Value at
Underlying Total Assumed Annual Rates of Stock
Options Options Exercise Price Appreciation for Option Term
Granted (1) Granted Price Expiration Date 5% 10%
----------------- ------- ------- --------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey C. Crowe 10,800 17.3% $35.734 Feb. 9, 2009 $242,708 $615,069
Henry H. Gerkens 7,500 12.0% $35.734 Feb. 9, 2009 168,547 427,131
Robert C. LaRose 4,900 7.8% $35.734 Feb. 9, 2009 110,117 279,059
Robert C. Luminati 3,000 4.8% $35.734 Feb. 9, 2009 67,419 170,852
James R. Hertwig 4,600 7.3% $35.734 Feb. 9, 2009 103,375 261,974
</TABLE>
(1) All the options granted shall become exercisable in five equal installments
on each of the first five anniversaries of the date of the respective dates
of grant, provided the executive is employed by the Company on each such
anniversary date.
The following table sets forth the number and value of all options exercised
by the Named Executives.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
Shares Acquired Value
On Exercise Realized (1)
Robert C. Luminati 2,500 $66,250
(1) The value realized represents the difference between the fair market value
of the shares acquired on exercise as of January 7, 1999 (the exercise date)
and the exercise price of the option. The fair market value was calculated
based upon the last reported sales price per share of Common Stock as quoted
on the National Association of Securities Dealers, Inc. National Market System
("NASDAQ") on January 7, 1999.
14
<PAGE>
The following table sets forth the number and value at December 25, 1999 of all
exercisable and unexercisable options held by each of the Named Executives.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
December 25, 1999 at December 25, 1999 (1)
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jeffrey C. Crowe 38,320 44,080 $295,672 $174,859
Henry H. Gerkens 21,980 (2) 27,420 187,535 100,009
Robert C. LaRose 12,140 (3) 17,460 102,373 61,821
Robert C. Luminati 7,460 (4) 10,840 64,951 36,350
James R. Hertwig 11,680 19,820 125,440 105,895
</TABLE>
(1) The value of in-the-money options represents the difference between the
fair market value of the shares as of December 23, 1999 and the exercise price
of the option. The fair market value was calculated based upon the last
reported sales price per share of Common Stock as quoted on the NASDAQ in
the Company's fiscal year ended December 25, 1999, which was December 23, 1999.
(2) Mr. Gerkens exercised 5,000 of these options on December 30, 1999.
(3) Mr. LaRose exercised 3,000 of these options on December 30, 1999.
(4) Mr. Luminati exercised 2,500 of these options on January 27, 2000.
15
<PAGE>
Indebtedness of Management
In connection with the relocation of the Company's corporate headquarters
from Shelton, Connecticut to Jacksonville, Florida, the Company made loans to
Messrs. Crowe, Gerkens, and LaRose, in 1997, and to Messrs. Luminati and Harvey
in 1998, in the amounts of $200,000, $100,000, $80,000, $80,000, and $40,000
respectively to assist them in their individual relocation to the Jacksonville
area. Each loan bears interest at a rate of 7.5% and is repayable annually
over a five-year period. On each anniversary date of such loan, the principal
and interest amounts then due will be forgiven provided the executive is still
employed by the Company. In 1998, the Company made loans to Messrs. Crowe,
Gerkens and LaRose in the amounts of $925,000, $277,500, and $92,500, in
connection with the exercise of options to purchase 50,000, 15,000 and 5,000
shares of the Company's Common Stock at $18.50 per share, respectively. In
1999, the Company made loans to Messrs. Gerkens, LaRose, Luminati, Martin,
Harvey and Ms. Day in the amounts of $127,500, $76,500, $46,250, $92,500,
$9,250 and $46,250, in connection with the exercise of options to purchase
5,000, 3,000, 2,500, 5,000, 500 and 2,500 shares of the Company's Common stock
at $25.50, $25.50, $18.50, $18.50, $18.50 and $18.50 per share, respectively.
In 2000, the Company made loans to Messrs. Luminati, Martin, Harvey and Ms. Day
in the amounts of $63,750, $63,750, $38,250, and $38,250, in connection with
the exercise of options to purchase 2,500, 2,500, 1,500 and 1,500 shares of the
Company's Common Stock at $25.50 per share, respectively. Each loan bears
interest at an annual rate of 7%. Interest on the loans will be forgiven
annually provided the executive is still employed by the Company. Principal
is repayable in a single lump sum on the fifth anniversary of the loan. Also
during 1999, the Company made loans to Messrs. Crowe, Gerkens, LaRose and
Martin in the amounts of $242,833, $71,249, $28,323 and $26,915 to assist them
with the income tax liability incurred as a result of the exercise of stock
options. The loans bear interest at 7%. Interest on the loans will be
forgiven annually if the executives are still employed by the Company.
Principal is repayable in a single lump sum on the fifth anniversary of the
loan, or sooner under certain circumstances.
Key Executive Employment Protection Agreements
On January 23, 1998, the Board approved the execution of the Key Executive
Employment Protection Agreements for Messrs. Crowe, Gerkens, LaRose, Luminati
and Hertwig and six other executives of the Company. Each agreement
provides certain severance benefits to Messrs. Crowe, Gerkens, LaRose,
Luminati, Hertwig, and such six other executives in the event of a change
of control of the Company (as defined in the agreements). Each agreement
provides, generally, that if a covered executive's employment is terminated
by the Company without "cause" (as defined in the agreements) or by the
executive for good reason (as so defined), in either such case, in connection
with or within the two year period following the change in control or if a
covered executive terminates his employment for any reason six months following
the change in control, such executive will be entitled to severance benefits
consisting of a cash amount equal to three times for Mr. Crowe, two times for
Mr. Gerkens and one time for Messrs. LaRose, Luminati and Hertwig and the
six other executives of the sum of (A) the executive's annual base salary;
and (B) the amount that would have been payable to the executive as a target
bonus for the year in which the change of control occurs. Each agreement also
provides for continuation of medical benefits and for certain tax gross-ups
to be made to a covered executive in the event payments to the executive are
subject to the excise tax on "parachute payments" imposed under Section 4999
of the Internal Revenue Code of 1986.
16
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Overall Policy
The Company's executive compensation philosophy is designed to attract and
retain the best possible executive talent and to motivate these executives
to develop and implement the Company's business strategy. These objectives
are to be attained by tying a significant portion of each executive's
compensation to the Company's success in meeting specified corporate
performance goals and, through the grant of stock options, to appreciation
in the Company's stock price. Additionally, the Company also recognizes
individual contributions as well as overall business results.
The executive compensation program is reviewed annually by the Compensation
Committee. Periodically, at the Compensation Committee's sole discretion,
an independent review of the executive compensation program may be performed
by outside consultants.
The Compensation Committee is responsible for decisions regarding executive
compensation, including a determination of the compensation awarded to those
individuals whose compensation is detailed in this proxy statement, subject
to review by the Board. The key elements of the Company's executive
compensation consist of base salary, annual bonus and stock options. The
Compensation Committee's policies with respect to each of these elements,
including the basis for the compensation awarded to Mr. Crowe, the Company's
chief executive officer, are discussed below.
Base Salaries
Base salaries for newly hired executive officers are initially determined by
evaluating the responsibilities of the position held and the experience of the
individual. Salary adjustments are determined by evaluating the performance of
the Company and of each executive officer, and also take into account new
responsibilities. In the case of executive officers with responsibility for
an operating subsidiary, the financial results of such operating subsidiary
are also considered.
Effective January 1, 2000, Mr. Crowe's salary was increased 20% from $350,000
to $420,000. In determining Mr. Crowe's salary, the Compensation Committee
took into account the Company's overall performance.
Annual Bonus
The Company's executive officers were eligible to receive an annual bonus
under the Company's 1999 Incentive Compensation Plan (the "1999 ICP"). The
1999 ICP provided for bonus payments to be made to eligible operating
subsidiary employees upon the achievement of a consolidated earnings per
share target and operating income targets of the individual operating
subsidiary. Bonus payments with respect to eligible corporate employees under
the 1999 ICP were dependent upon achievement of the consolidated earnings per
share target. These performance criteria were established at the beginning of
1999 by the Compensation Committee.
17
<PAGE>
In 1999, all executive officers, including the Named Executives, received
bonuses pursuant to the 1999 ICP, of which a portion was paid to each of the
Named Executives in Common Stock. The Compensation Committee, in awarding
these bonus amounts, considered the overall Company's performance and the
criteria established at the beginning of the year.
Stock Options
Under the Company's 1993 Stock Option Plan, stock options are granted to
the Company's executive officers. The Compensation Committee determines the
number of stock options to be granted pursuant to guidelines it develops based
on an officer's job responsibilities and individual performance evaluation.
Stock options are granted with an exercise price equal to the fair market value
of the Common Stock on the date of grant and generally vest over five years.
This approach is designed to encourage the creation of long-term shareholder
value since no benefit can be realized from such options unless the stock price
exceeds the exercise price.
As of March 6, 2000, Mr. Crowe owned 170,176 shares of the Company's Common
Stock and holds options to purchase an additional 98,800 shares. The
Compensation Committee believes that significant equity interests in the
Company held by the Company's management helps to align the interests of
shareholders and management and maximize shareholder returns over the long
term.
Policy as to Section 162(m) of the Code
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
denies a publicly traded company a federal income tax deduction for
compensation in excess of $1 million paid to certain of its executive officers
unless the amount of such excess is payable based solely upon the attainment of
objective performance criteria. The Company has undertaken to qualify
substantial components of the incentive compensation it makes available to
its executive officers for the performance exception to nondeductibility.
Stock option grants under the Company's 1993 Employee Stock Option Plan
currently meet these requirements. In 1995, the Company received shareholder
approval for the Management Incentive Compensation Plan so that annual awards
payable thereunder would qualify for the performance exception under Section
162(m). The Compensation Committee believes that tax deductibility of
compensation is an important factor, but not the sole factor, to be considered
in setting executive compensation policy. Accordingly, the Compensation
Committee generally intends to take such reasonable steps as are required
to avoid the loss of a tax deduction due to Section 162(m) but reserves the
right to pay amounts which are not deductible in appropriate circumstances.
18
<PAGE>
Conclusion
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to significant thresholds
of corporate performance and stock price appreciation. The Company's 1999
results achieved far exceeded the target criteria established in the 1999
ICP. As such, bonuses were paid under the 1999 ICP. The Committee will
continue to review all executive compensation and benefit matters presented
to it and will act based upon the best information available to it and in the
best interests of the Company, its shareholders and employees.
Compensation Committee of the Board
David G. Bannister
William S. Elston
Merritt J. Mott
19
<PAGE>
PERFORMANCE COMPARISON
The following graph illustrates the return that would have been realized
(assuming reinvestment of dividends) by an investor who invested $100 in
each of the Company's Common Stock, the Standard & Poor's 500 Stock Index and
the Dow Jones Transportation Stock Index for the period commencing December
30, 1994 through December 25, 1999.
<TABLE>
<CAPTION>
STOCK Daily Stock Price History
51509810 Landstar Sys Inc
00000117 Standard & Poors 500 Stocks
00000111 Dow Jones 20 Transports
TS13 Close Price (D) - Def Adj
TS1 Date of Data - Daily
-----------Value of $100 Investment------------
Dow Jones
Landstar S&P 500 DJ 20 Transports
-------- ------- ----------------
<S> <C> <C> <C>
12/30/1994 100.00 100.00 100.00
03/31/1995 96.18 109.02 112.42
06/30/1995 78.63 118.61 120.18
09/30/1995 73.66 127.25 134.31
12/31/1995 81.68 134.11 136.15
03/31/1996 76.34 140 55 147.91
06/30/1996 88.55 146 02 149.95
09/30/1996 81.68 149 65 142.89
12/31/1996 70.99 161.39 155.03
03/31/1997 72.52 164.25 162.08
06/30/1997 85.88 192.73 186.50
09/30/1997 81.68 206.26 218.53
12/31/1997 80.53 211.30 223.81
03/31/1998 98.47 239.89 245.84
06/30/1998 106.68 246.88 238.85
09/30/1998 86.07 221.44 181.77
12/31/1998 124.43 267.65 216.44
03/31/1999 101.15 280.09 226.73
06/30/1999 110.21 298.89 233.97
09/30/1999 106.11 279.29 199.94
12/24/1999 116.79 317.53 198.46
</TABLE>
20
<PAGE>
SECURITY OWNERSHIP BY MANAGEMENT AND OTHERS
The following table sets forth certain information concerning the beneficial
ownership of the Company's Common Stock as of March 6, 2000 by (i) each person
who is known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each Director, nominee for election as a Director
and Named Executive of the Company, and (iii) all Directors and current
executive officers as a group.
<TABLE>
<CAPTION> Amount and
Nature of Ownership
Beneficial Percent of
Name of Beneficial Owner Position(s) Ownership Class (1)
- - ------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
(i)
Capital Guardian Trust Company and
The Capital Group Companies, Inc. (2)(3) 632,600 6.9%
Wedge Capital Management (2)(4) 625,200 6.8%
Kestrel Investment Management Corporation (2)(5) 497,500 5.4%
(ii)
David G. Bannister (6) Director 29,960 *
Ronald W. Drucker (7) Director Nominee 29,000 *
Merritt J. Mott (8) Director 18,000 *
John B. Bowron Director 500 *
William S. Elston (9) Director 4,300 *
Diana M. Murphy (10) Director 4,300 *
Jeffrey C. Crowe (11) Director and 212,596 2.3%
Chairman, President and
Chief Executive Officer
Henry H. Gerkens (12) Director Nominee and 79,800 *
Executive Vice President and
Chief Financial Officer
James R. Hertwig (13) Executive Vice President 14,720 *
and President of Landstar Logistics
Robert C. LaRose (14) Vice President, Finance 60,000 *
and Treasurer
Robert C. Luminati (15) Vice President and 30,172 *
Chief Information Officer
(iii)
All Directors and current executive officers 582,188 6.2%
as a group (18 persons) (16)(17)
</TABLE>
- - ----------------------
*Less than 1%
21
<PAGE>
(1) The percentages are based upon 9,183,233 shares, which equal the
outstanding shares of the Company as of March 6, 2000. With respect to the
calculation of the percentages for beneficial owners who hold options
exercisable within 60 days of March 6, 2000, the number of shares of Common
Stock on which the percentage is based also includes the number of shares
underlying such options.
(2) In accordance with the rules of the Securities and Exchange Commission,
the information set forth is based on the most recent Schedule 13G (and
amendments thereto) filed by this entity.
(3) Capital Guardian Trust Company and Capital Group International, Inc.
filed their Schedule 13G on February 12, 1997, and amended their Schedule 13G
on November 7, 1997, on February 10, 1998, on February 8, 1999, on July 9,
1999 and again on February 10, 2000. Capital Group International, Inc. is
the parent holding company of a group of investment management companies that
hold investment power and, in some cases, voting power over shares of the
Company. The investment management companies, which include a "bank" as
defined in Section 3(a)6 of the Securities Exchange Act of 1934 (the "Act")
and several investment advisers registered under Section 203 of the Investment
Advisers Act of 1940, provide investment advisory and management services for
their respective clients which include registered investment companies and
institutional accounts. Capital Group International Inc., does not have any
investment power or voting power over any of the 632,600 shares of Common Stock
reported herein (representing 6.9% of Common Stock outstanding); however,
Capital Group International, Inc. may be deemed to "beneficially own" such
securities by virtue of Rule 13d-3 under the Act. Capital Guardian Trust
Company ("Capital Guardian"), a bank as defined in Section 3(a)6 of the Act
and a wholly-owned subsidiary of Capital Group International, Inc., is the
beneficial owner of 579,300 of such shares, or 6.3% of the Common Stock
outstanding, as a result of its serving as the investment manager of various
institutional accounts. Capital Guardian has sole dispositive power over such
579,300 shares with sole voting power over 390,800 of such shares. The
remaining 53,300 shares reported as beneficially owned by Capital Group
International, Inc. are beneficially owned by other subsidiaries of Capital
Group International, Inc., none of which by itself owns 5% or more of the
Common Stock outstanding. The business address of each of the foregoing is
11100 Santa Monica Boulevard, Los Angeles, California 90025-3302.
(4) According to the Schedule 13G filed by Wedge Capital Management L.L.P.
("Wedge") on January 12, 2000, Wedge is an Investment Adviser registered under
Section 203 of the Investment Advisers Act of 1940 and is deemed to be the
beneficial owner of 625,200 shares of Common Stock, representing 6.8% of the
Common Stock outstanding. Wedge has sole voting and dispositive power with
respect to all such beneficially owned shares. The business address of Wedge
is 2920 One First Union Center, 301 South College Street, Charlotte, North
Carolina 28202-6002.
(5) According to the Schedule 13G filed February 14, 2000, Kestrel Investment
Management Corporation ("Kestrel") is the beneficial owner of 497,500 shares of
Common Stock pursuant to various agreements whereby it acts as investment
advisor; and sole voting power is vested in 396,600 of such shares of Common
Stock. The beneficially owned shares represent 5.4% of the Common Stock
outstanding. David J. Steirman and Abbott J. Keller are deemed to be the
beneficial owners of such shares since they are the sole shareholders of
Kestrel. The business address of Kestrel is 411 Borel Avenue, Suite 403, San
Mateo, California 94402.
22
<PAGE>
(6) Includes 24,000 shares that may be acquired upon the exercise of options.
(7) Includes 5,000 shares held in trust for which Mr. Drucker has shared voting
and investment power with SunTrust Bank - Trust Department of SunTrust
Bank-North Florida, N.A. and 24,000 shares that may be acquired upon the
exercise of options.
(8) Includes 100 shares held in trust for Mr. Mott's son; 100 shares held in
trust for Mr. Mott's daughter; and 16,000 shares that may be acquired upon
the exercise of options.
(9) Includes 4,000 shares that may be acquired upon the exercise of options.
(10) Includes 4,000 shares that may be acquired upon the exercise of options.
(11) Includes 42,420 shares that may be acquired upon the exercise of options.
(12) Includes 19,800 shares that may be acquired upon the exercise of options.
(13) Includes 13,420 shares that may be acquired upon the exercise of options.
(14) Includes 11,000 shares that may be acquired upon the exercise of options.
(15) Includes 6,100 shares that may be acquired upon the exercise of options.
(16) Represents amount of shares deemed to be beneficially owned either
directly or indirectly by all Directors and current executive officers as
a group.
(17) Includes 212,160 shares that may be acquired upon the exercise of options.
23
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and Directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, Directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on review of the copies of such forms furnished to the Company,
or written representations that no Form 5 was required, the Company believes
that during the year ended December 25, 1999, all Section 16(a) filing
requirements which are applicable to its officers, Directors and greater than
ten-percent beneficial owners were accomplished except the following.
During 1999, G. Thomas Beam, President of Landstar Ligon, Inc., purchased
approximately $4,480 worth of the Company's Common Stock through the Company's
401(k) Plan and Mr. Beam's Form 5 was filed on March 9, 2000.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of KPMG LLP served as independent auditors for the Company for the
fiscal year ended December 25, 1999. Pursuant to the recommendation of the
Audit Committee, the Board has appointed that firm to continue in that capacity
for fiscal year 2000, and recommends that a resolution be presented to
shareholders at the 2000 Annual Meeting to ratify that appointment. A
representative of KPMG LLP will be present at the 2000 Annual Meeting and will
have an opportunity to make a statement and respond to appropriate questions
from shareholders.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL
PROPOSAL TO APPROVE AMENDMENT
TO THE LANDSTAR SYSTEM, INC.
1994 DIRECTORS STOCK OPTION PLAN
The Board of Directors (the "Board") of Landstar System, Inc. (the "Company")
has adopted, subject to shareholder approval, an amendment (the "Amendment")
to the Landstar System, Inc. 1994 Directors Stock Option Plan (the "Option
Plan") in order to increase the maximum number of shares of Common Stock of
the Company, par value $.01 per share (the "Common Stock") subject to options
that may be outstanding at any time under the Option Plan from 120,000 to
210,000. The Board believes that an increase in performance-related incentives
will further attract, retain and motivate the best qualified directors and
further enhance the long-term mutuality of interest between the Company's
shareholders and the directors of the Company. The Amendment does not
otherwise modify any of the material terms of the Option Plan. The material
terms are summarized below.
24
<PAGE>
Subject to shareholder approval of the Amendment, the maximum number of shares
of Common Stock subject to options that may be outstanding at any time under
the Option Plan is 210,000. The shares may be unissued shares or treasury
shares. If there is a stock split, stock, dividend, recapitalization, or other
relevant change affecting the Company's shares of Common Stock, appropriate
adjustments will be made by the Board in the number of shares that may be
issued in the future and in the number of shares and price under all
outstanding options granted before the event. If shares subject to an option
are not issued, those shares will again be available for inclusion in future
option grants. Payment of cash in lieu of shares subject to an option will
not be considered to be the issuance of a corresponding number of shares of
Common Stock. The options granted under the Directors Plan are not intended
to qualify as "incentive stock options" under the Internal Revenue Code of
1986, as amended.
The Directors Plan is administered by the Board. Each person who is a director
of the Company, and who is not an officer or employee of the Company or any of
its subsidiaries is eligible to participate in the Directors Plan (an "Eligible
Director"). Each of these provisions is described more fully below and in the
full text of the Plan set forth in Appendix A and in the amendment to the Plan
set forth in Appendix B.
Option Grants
Initial Awards. Each person who was an Eligible Director on November 30, 1994
received an award of options with respect to 12,000 shares of Common Stock on
such date (an "Initial Award"). On December 9, 1998 the Board of Directors
reduced the number of shares issuable from 12,000 shares to 9,000 shares of
common stock. The following directors have received options pursuant to the
plan: William S. Elston, 12,000 shares on May 21, 1998, Merritt J. Mott,
12,000 shares on May 21, 1998, Diana M. Murphy, 12,000 shares on May 21, 1998,
and David G. Bannister, 9,000 shares on May 20, 1999. Each other person who
becomes an Eligible Director as a result of his (i) election to complete the
unexpired portion of another Director's term or (ii) election, as a result of
the expansion of the size of the Board, to serve a term of less than three
years (each, a "Limited Term") shall receive options, on the date such Eligible
Director becomes a Director, to purchase the largest number of whole shares of
Common Stock equal to the product of (x)3,000 shares times (y) a fraction, the
numerator of which is the number of days in such Limited Term and the
denominator of which is 365.
Exercise Price. All options granted under the Directors Plan will have an
exercise price per share equal to the Fair Market Value (as defined in the
Directors Plan) of a share of Common Stock on the date of grant.
Exercisability.
An Initial Award made to an Eligible Director will become exercisable on a
cumulative basis in three equal annual installments commencing on the first
anniversary of the date of grant, subject to acceleration of exercisability
in certain circumstances as indicated below. Notwithstanding the foregoing,
an Initial Award made to an Eligible Director serving a Limited Term will
generally become exercisable (i) with respect to Limited Terms of more than
one year in duration, as to options covering 3,000 shares of Common Stock on
each anniversary of the date of grant, with any remaining options to become
25
<PAGE>
exercisable on the last day of such Limited Term or (ii) with respect to
Limited Terms of less than one year in duration, the total number of options
subject to the Initial Award will become exercisable on the last day of such
Limited Term.
Each Term Award granted under the Directors Plan will become exercisable on
a cumulative basis in three equal installments commencing on the first
anniversary of the date of grant, subject to acceleration of exercisability
in certain circumstances as indicated below.
Option Term
If not previously exercised, each Option will expire upon the tenth anniversary
of the date of the grant thereof or, upon the earliest termination of the
Eligible Director's status as a Director of the Company (or, if applicable,
on the day following the last day on which such option is exercisable as
described below under "Termination of Director Status").
Termination of Director Status
Termination due to Death or Disability. In the event an Eligible Director
ceases to serve as a member of the Board due to death or disability, any
option granted to such Eligible Director which is then outstanding (whether
or not exercisable prior to the date of termination) may be exercised by the
Eligible Director or his designated beneficiary or estate, within one year
following the Eligible Director's termination of service or prior to the
expiration date of the term of the Option, whichever period is shorter.
Termination for Any Other Reason. If an Eligible Director ceases to serve
as a member of the Board for any other reason, (resignation, failure to stand
for re-election or failure to be re-elected), any option granted to such
Eligible Director may be exercised, to the extent it was exercisable at such
date of termination, within thirty days following the Eligible Director's
termination of service or prior to the expiration date of the term of the
option, whichever period is shorter.
Change in Control Provisions
In the event of a "Change in Control" (as defined in the Directors Plan),
all options will become immediately exercisable.
Federal Income Tax Aspects
The following is a brief summary of the federal income tax consequence of
awards made under the Directors Plan based upon the federal income tax laws
in effect on the date hereof. This summary is not intended to be exhaustive,
and does not describe state, local or foreign tax consequences.
No income is realized by the Director at the time a non-qualified stock option
is granted. Generally upon exercise of a non-qualified stock option, the
Director will realize ordinary income in an amount equal to the difference
between the price paid for the shares and the fair market value of the shares
on the date of exercise. The Company will be entitled to a tax deduction in
the same amount. Any appreciation (or depreciation) after the date of exercise
will be either short-term or long-term capital gain or loss, depending upon
the length of time that the Director has held the shares.
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Other Information
The Board may terminate or suspend the Directors Plan at any time but such
termination shall not affect any options then outstanding under the Directors
Plan. Unless terminated by action of the Board, the Directors Plan will
continue in effect until November 11, 2004, but awards granted prior to such
date will continue in effect until they expire in accordance with their terms.
The Board may also amend the Directors Plan as it deems advisable which it did
when it reduced the number of shares awardable from 12,000 to 9,000. The
Board presently intends to submit all material amendments to the Directors
Plan to the shareholders for their approval to the extent required by Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended.
The following table illustrates the awards that were made under the Directors
Plan in 1998 and 1999. It is expected that options covering an aggregate of
9,000 shares will be awarded in 2000. Executive Officers and non-executive
employees of the Company are not eligible to participate in the Directors Plan.
PLAN BENEFITS
1994 Directors Stock Option Plan
Name and Position Number of Shares Subject to Options
1998
---------------------------
William S. Elston 12,000
Merritt J. Mott 12,000
Diana M. Murphy 12,000
1999
---------------------------
David G. Bannister 9,000
Approval
Approval of the proposal to the Amendment to the Directors Plan requires the
affirmative vote of a majority of all shares of Common Stock present in
person or represented by proxy and entitled to vote at the 2000 Annual
Meeting. Abstention from voting on the proposal will have the same effect
as voting against the proposal. Broker non-votes will have no effect on the
outcome.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL
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PROPOSAL TO AMEND COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED STOCK
The Board of Directors recommends that the Company's Certificate of
Incorporation be amended so as to increase the authorized number of shares of
Common Stock, par value $.01 per share, from 20,000,000 to 50,000,000 and the
number of shares of Preferred Stock, par value $.01 per share (the "Preferred
Stock"), from 2,000,000 to 5,000,000. The main text of the amendment would
read as follows:
"The aggregate number of shares of all classes of stock which the Company shall
have authority to issue is 55,000,000 of which 50,000,000 shall be common stock
of the par value of $0.01 per share and 5,000,000 shall be Preferred Stock of
the par value of $1.00 per share."
* * *
The total number of shares of all classes of stock which the Company presently
has authority to issue is Twenty Two Million (22,000,000) shares, divided into
(a) Twenty Million (20,000,000) shares of Common Stock, and (b) Two Million
(2,000,000) shares of Preferred Stock.
As of the close of business on December 25, 1999, of the 20,000,000 shares of
Common Stock presently authorized by the Certificate of Incorporation,
9,154,933 shares were issued and outstanding, 3,909,041 were treasury shares,
and 1,042,700 shares were reserved for issuance under the Company's stock
option plans. As of the close of business on December 25, 1999, none of the
Company's authorized shares of Preferred Stock was issued or outstanding, but
2,000,000 of the Company's authorized shares of Preferred Stock were reserved
for issuance pursuant to the Company's Shareholder Rights Agreement. Thus, as
of the close of business on December 25, 1999, there were authorized and
unissued and unreserved only 5,893,326 shares of Common Stock and 2,000,000
shares of Preferred Stock. Adoption of this proposal would increase the number
of authorized, unissued and unreserved shares of Common Stock by 30,000,000 and
the number of such Preferred Shares by 3,000,000.
The Board of Directors has concluded that there is not presently a sufficient
number of shares of Common Stock to give the Company the ability to react
quickly to today's competitive, fast-changing environment. The additional
shares of Common Stock would provide the Company the necessary flexibility for
actions that the Company might wish to take relating to possible financing
programs, stock splits, stock dividends, acquisitions, mergers, employee plans
and other corporate purposes without the expense and delay of a special
stockholders' meeting to increase the authorized capital. No further action or
authorization by the Company's stockholders would be necessary prior to
issuance of the additional shares except as may be required by applicable law
and rules of any stock exchange on which the Company's securities may be
listed.
The additional shares for which authorization is sought would be identical with
the shares of Common Stock now authorized and outstanding and the additional
shares of Preferred Stock for which authorization is sought would be identical
with the shares of Preferred Stock now authorized.
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The proposed increase in the number of authorized shares of Common Stock is not
intended to impede a change of control of the Company. Further, the Company
is not aware of any current efforts to acquire control of the Company. It
should be noted, however, that the additional shares could be issued in
connection with defending the Company against a hostile takeover bid. The
issuance of additional shares of Common Stock could have the effect of diluting
earnings and the book value of outstanding shares of Common Stock, could be
used to dilute the stock ownership of a person or entity seeking to obtain
control of the Company, or could result in a private placement with purchasers
who might side with the Board of Directors if they chose to oppose a specific
change of control.
The Company is presently subject to certain provisions of its Certificate of
Incorporation and By-Laws that could under certain circumstances be construed
to have the effect of discouraging attempts, or making it more difficult to
gain control of the Company. The Certificate of Incorporation of the Company
authorizes the Board of Directors to issue one or more series of Preferred
Stock up to a maximum of the 2,000,000 shares presently available and to fix
the numbers, designations, rights, preferences, privileges and limitations of
such series. The issuance of such series could have effects similar to those
described in the preceding paragraph. The Company's By-Laws limit the ability
to call a special meeting of stockholders and to nominate Directors or propose
other proper business for consideration by stockholders at an annual meeting,
other than by inclusion in the Company's Proxy Statement and form of proxy.
These By-Laws could have the effect of impeding a holder of the Company's
shares from waging a proxy contest for control of the Company.
Change of control provisions in the Company's incentive plans and in certain
individual employment agreements could have the effect of increasing the cost
of any attempt to gain control of the Company.
The affirmative vote of holders of a majority of the outstanding shares of
Common Stock is required for approval of this proposal. Consequently, any
shares not voted (whether by abstention, broker non-vote or otherwise) will
have the same effect as votes against the proposed amendment to the Company's
Certificate. If the amendment is approved by the stockholders, it will become
effective upon the filing of a Certificate of Amendment in accordance with the
General Corporation Law of Delaware.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL
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SHAREHOLDER PROPOSALS
In accordance with regulations issued by the SEC, shareholder proposals
intended for presentation at the 2001 Annual Meeting of Shareholders must
be received by the Secretary of the Company no later than November 20, 2000,
if such proposals are to be considered for inclusion in the Company's Proxy
Statement. In accordance with the Company's Bylaws, shareholder proposals
intended for presentation at the 2001 Annual Meeting of Shareholders that are
not intended to be considered for inclusion in the Company's Proxy Statement
must be received by the Secretary of the Company not later than 35 days prior
to the 2001 Annual Meeting of Shareholders. Proposals should be mailed via
certified mail and addressed to Michael L. Harvey, Secretary, Landstar System,
Inc., 13410 Sutton Park Drive South, Jacksonville, Florida 32224.
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
meeting other than those set forth above. If any other matters properly come
before the meeting, the persons named in the enclosed form of proxy will vote
the shares represented by proxies in accordance with their best judgment on
such matters.
Proxies will be solicited by mail and may also be solicited in person or by
telephone by some regular employees of the Company. All expenses in connection
with the preparation of proxy material and the solicitation of proxies will be
borne by the Company.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY
By Order of the Board of Directors
MICHAEL L. HARVEY
Vice President,
General Counsel,
and Secretary
13410 Sutton Park Drive South
Jacksonville, FL 32224
THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO ANY SHAREHOLDER OF THE COMPANY WHO
SO REQUESTS, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 25, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
ANY SUCH REQUEST SHOULD BE DIRECTED TO LANDSTAR SYSTEM, INC., ATTENTION: HENRY
H. GERKENS, INVESTOR RELATIONS, 13410 SUTTON PARK DRIVE SOUTH, JACKSONVILLE,
FLORIDA 32224.
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APPENDIX A
LANDSTAR SYSTEM, INC.
1994 DIRECTORS STOCK OPTION PLAN
1. Purposes
The purposes of this Landstar System, Inc. 1994 Directors Stock Option Plan
(the "Plan") are to enable the Company to attract, retain and motivate the
best qualified directors and to enhance a long-term mutuality of interest
between the directors and stockholders of the Company by granting them options
to purchase the Company's stock.
2. Definitions
Unless the context requires otherwise, the following words as used in the Plan
shall have the meanings ascribed to each below, it being understood that
masculine, feminine and neuter pronouns are used interchangeably, and that
each comprehends the others.
(a) "Award" shall mean any Option awarded under the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Change in Control" means the occurrence, of any of the following events:
(i) any "person," including a "group" (as such terms are used in Sections
13(d) and 14(d)(2) of the Act), but excluding the Company, any of its
Subsidiaries, any employee benefit plan of the Company or any of its
subsidiaries is or becomes the "beneficial owner" (as defined in Rule
13(d)(3) under the Act), directly or indirectly, of securities of the
Company representing the greater of 35% or more of the combined voting power of
the Company's then outstanding securities, provided that a Change in Control
shall not occur pursuant to a transaction which is approved by the Board but
is not approved by the stockholders of the Company (unless the transaction is
one described in (iii) below); or
(ii) the stockholders of the Company shall approve a definitive agreement
(a) for the merger or other business combination of the Company with or into
another corporation, a majority of the directors of which were not directors
of the Company immediately prior to the merger and in which the stockholders
of the Company immediately prior to the effective date of such merger directly
or indirectly own less than 50% of the voting power in such corporation or (b)
for the sale or other disposition of all or substantially all of the assets of
the Company; or
(iii) the purchase of Common Stock pursuant to any tender or exchange offer
made by any "person," including a "group" (as such terms are used in Sections
13(d) and 14(d)(2) of the Act), other than the Company, any of its
subsidiaries, an employee benefit plan of the Company or any of its
subsidiaries for 35% or more of the Common Stock of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Company" shall mean Landstar System, Inc., a Delaware corporation, and
any successor thereto.
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(f) "Common Stock" shall mean the common stock of the Company, par value
$.01, any common stock into which such common stock may be changed, and any
common stock resulting from any reclassification of such common stock.
(g) "Eligible Director" shall mean a director of the Company who is not an
officer or employee of the Company or any of its subsidiaries.
(h) "Fair Market Value" means, on any date, the average of the bid and asked
for price of a Share as reported on the National Association of
Dealers Automated Quotation/National Market System ("NASDAQ/NMS") (or on such
other recognized market or quotation system on which the trading prices of the
Share are traded or quoted at the relevant time) on such date. In the event
that there are no Share transactions reported on NASDAQ/NMS(or such other
system) on such date, Fair Market Value shall mean the closing price on the
immediately preceding date on which Share transactions were so reported.
(i) "Initial Award" shall mean an Option to purchase 12,000 Shares (or
such lesser number as determined pursuant to Section 6(a)) with an exercise
price per Share equal to the Fair Market Value of a Share on the date of grant.
(j) "Option" shall mean the right to purchase Shares at a stated price for a
specified period of time. For purposes of the Plan, the Options are
nonstatutory stock options not intended to qualify under Section 422 of the
Code.
(k) "Share" shall mean a share of Common Stock.
(l) "Term Award" shall mean an Option to purchase 12,000 Shares, with an
exercise price per Share equal to the Fair Market Value of a Share on the
date of grant.
3. Effective Date
Subject to Section 11(b) hereof, the effective date of the Plan shall be
November 11, 1994.
4. Administration
(a) Powers of the Board. This Plan shall be administered by the Board.
The Board may delegate its powers and functions hereunder to a duly appointed
committee of the Board. The Board shall have full authority to interpret this
Plan; to establish, amend and rescind rules for carrying out this Plan; to
administer this Plan; to incorporate in any option agreement such terms and
conditions, not inconsistent with this Plan, as it deems appropriate; to
construe the respective option agreements and this Plan; and to make all other
determinations and to take such steps in connection with this Plan as the
Board, in its discretion, deems necessary or desirable for administering this
Plan.
(b) Disinterested Status. Notwithstanding the foregoing, neither the Board,
any committee thereof nor any person designated pursuant to (c) below may take
any action which would cause any Eligible Director to cease to be a
"disinterested person" for purposes of Rule 16b-3 promulgated under the
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Securities Exchange Act of 1934, as amended, as then in effect or any successor
provisions ("Rule 16b-3"), with regard to this Plan or any other stock option
or other equity plan of the Company. In particular, neither the Board nor any
committee thereof shall have any discretion as to
(i) the selection of Eligible Directors as eligible to receive awards
pursuant to the Plan; or
(ii) the number of Shares subject to Options awarded pursuant to Section 6.
(c) Delegation. The Board may designate the Secretary of the Company, other
officers or employees of the Company or competent professional advisors to
assist the Board in the administration of this Plan, and may grant authority
to such persons to execute agreements or other documents on its behalf.
(d) Agents and Indemnification. The Board may employ such legal counsel,
consultants and agents as it may deem desirable for the administration of this
Plan, and may rely upon any opinion received from any such counsel or
consultant and any computation received from any such consultant or agent.
No member or former member of the Board or any committee thereof or any person
designated pursuant to paragraph (c) above shall be liable for any action or
determination made in good faith with respect to this Plan. To the maximum
extent permitted by applicable law and the Company's Certificate of
Incorporation and By-Laws, each member or former member of the Board or any
committee thereof or any person designated pursuant to (c) above shall be
indemnified and held harmless by the Company against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of
a claim with the approval of the Company) arising out of any act or omission
to act in connection with this Plan, unless arising out of such person's own
fraud or bad faith. Such indemnification shall be in addition to any rights
of indemnification the person may have as a director, officer or employee or
under the Certificate of Incorporation of the Company or the By-Laws of the
Company. Expenses incurred by the Board in the engagement of any such counsel,
consultant or agent shall be paid by the Company.
5. Shares; Adjustment Upon Certain Events
(a) Shares Available. Shares to be issued under this Plan shall be made
available, at the discretion of the Board, either from authorized but unissued
Shares or from issued Shares reacquired by the Company. The aggregate number
of Shares that may be issued under this Plan shall not exceed 120,000 Shares,
except as provided in this Section. Shares subject to any Option granted
hereunder which expires or is terminated or cancelled prior to exercise will
be available for future grants under the Plan.
(b) No Limit on Corporate Action. The existence of this Plan and Shares
granted hereunder shall not affect in any way the right or power of the Board
or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any
issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting Common Stock, the dissolution or liquidation of the Company or any
sale or transfer of all or part of its assets or business, or any other
corporate act or proceeding.
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(c) Adjustments Upon Certain Events. In the event of any Share dividend or
Share split, recapitalization (including, without limitation, the payment
of an extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares, or other similar
corporate change, the aggregate number of Shares available for Options under
Section 5(a) or subject to outstanding Options and the respective prices
applicable to outstanding Options shall be appropriately adjusted.
(d) No Adjustment If Value Received. Except as hereinbefore expressly
provided, the issuance by the Company of shares of stock of any class or
securities convertible into shares of stock of any class, for cash, property,
labor or services, upon direct sale, upon the exercise of rights or warrants
to subscribe therefor, or upon conversion of shares or other securities, and in
any case whether or not for fair value, shall not affect, and no adjustment by
reason thereof shall be made with respect to the number of Shares subject to
Options to be awarded to an Eligible Director pursuant to Section 6.
6. Option Awards
(a) Initial Awards. Each person who is an Eligible Director on November
30, 1994 shall receive an Initial Award on such date. During the term of the
Plan, each other person who becomes an Eligible Director as a result of his (i)
election to complete the unexpired portion of another director's term or (ii)
election, as a result of the expansion of the size of the Board, to serve a
term of less than three years (each, a "Limited Term") shall receive Options,
on the date such Eligible Director becomes a director, to purchase the largest
number of whole shares of Common Stock to equal to the product of (x) 4,000
shares times (y) a fraction, the numerator of which is the number of days in
such Limited Term and the denominator of which is 365.
(b) Term Awards. Commencing in 1996, on the first business day after each
annual meeting of stockholders of the Company occurring during the term of the
Plan, each Eligible Director who was elected or reelected as a Director at such
annual meeting (other than for a Limited Term) shall receive a Term Award.
(c) Option Agreement. Options shall be evidenced by a written option
agreement embodying the terms of this Section 6.
(d) Option Term. If not previously exercised each Option shall expire upon
the tenth (10th) anniversary of the date of the grant thereof or, upon the
earlier termination of the Eligible Director's status as a director of the
Company (or, if applicable, on the day following the last day on which such
Option is exercisable under Section 7 below).
(e) Exercisability.
(i) Subject to Section 11(b) hereof, an Initial Award made to an Eligible
Director shall become exercisable on a cumulative basis in three equal annual
installments commencing on the first anniversary of the date of grant, subject
to the acceleration provisions of Section 7 hereof. Notwithstanding the
foregoing and subject to the acceleration provisions of Section 7 hereof, an
Initial Award made to an Eligible Director serving a Limited Term as provided
for in Section 6(a) above shall become exercisable (i) with respect to Limited
Terms of more than one year in duration, as to Options covering 4000 shares of
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Common Stock on each anniversary of the date of grant, with any remaining
Options to become exercisable on the last day of such Limited Term or (ii) with
respect to Limited Terms of less than one year in duration, the total number of
Options subject to the Initial Award shall become exercisable on the last day
of such Limited Term.
(ii) Subject to Section 11(b) hereof, each Term Award granted under this
Plan shall be become exercisable on a cumulative basis in three equal
installments commencing on the first anniversary of the date of grant, subject
to the acceleration provisions of Section 7 hereof.
(f) Procedure for Exercise. An Eligible Director electing to exercise one
or more Options shall give written notice to the Secretary of the Company of
such election and of the number of Shares he has elected to purchase. Shares
purchased pursuant to the exercise of Options shall be paid for at the time of
exercise in cash or by delivery to the Company of unencumbered Shares owned
by the Participant for at least six (6) months (or such longer period as is
required by applicable accounting standards to avoid a charge to earnings) or
a combination thereof. Upon receipt of payment the Company shall deliver to
the Eligible Director as soon as practicable a certificate or certificates for
the Shares then purchased.
7. Termination of Director Status
(a) Termination due to Death or Disability. In the event an Eligible
Director ceases to serve as a member of the Board due to death or disability,
any Option granted to such Eligible Director which is then outstanding (whether
or not exercisable prior to the date of termination) may be exercised by the
Eligible Director or his designated beneficiary, and if none is named, in
accordance with Section 14(c) hereof, within one (1) year following the
Eligible Director's termination of service or prior to the expiration date of
the term of the Option, whichever period is shorter.
(b) Termination for Any Other Reason. If an Eligible Director ceases to
serve as a member of the Board for any other reason, (resignation, failure to
stand for reelection or failure to be reelected), any Option granted to such
Eligible Director may be exercised, to the extent it was exercisable at such
date of termination, within thirty (30) days following the Eligible Director's
termination of service or prior to the expiration date of the term of the
Option, whichever period is shorter.
8. Change in Control.
In the event of a Change in Control, each Option granted to an Eligible
Director shall become fully vested.
9. Nontransferability of Awards
No Award shall be transferable by the Eligible Director otherwise than by will
or under the applicable laws of descent and distribution, unless such transfer
shall be acceptable under Rule 16b-3 and is approved by the Board or its
authorized delegate. In addition, no Award shall be assigned, negotiated,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and no Award shall be subject to execution, attachment or similar process.
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Upon any attempt to transfer, assign, negotiate, pledge or hypothecate any
Award, or in the event of any levy upon any Award by reason of any attachment
or similar process, in either case contrary to the provisions hereof, such
Award shall immediately become null and void.
10. Rights as a Stockholder
An Eligible Director (or a permitted transferee of an Option) shall have no
rights as a stockholder with respect to any Shares covered by his Option until
he shall have become the holder of record of such Share(s), and no adjustments
shall be made for dividends in cash or other property or distribution or other
rights in respect to any such Shares, except as otherwise specifically
provided for in this Plan.
11. Determinations
Each determination, interpretation or other action made or taken pursuant to
the provisions of this Plan by the Board shall be final and binding for all
purposes and upon all persons, including, without limitation, the Company,
the directors, officers and other employees of the Company, the Eligible
Director and their respective heirs, executors, administrators, personal
representatives and other successors in interest.
12. Termination, Amendment and Modification
(a) Termination and Amendment. This Plan shall terminate at the close of
business on November 11, 2004, unless sooner terminated pursuant to paragraph
(b) below or by action of the stockholders of the Company, and no Awards shall
be granted under this Plan thereafter. The Board at any time or from time to
time may amend this Plan to effect (i) amendments necessary or desirable in
order that this Plan and the Awards shall conform to all applicable laws and
regulations and (ii) any other amendments deemed appropriate. Notwithstanding
the foregoing, (i) to the extent mandated by Rule 16b-3, the provisions of the
Plan relating to the award of Shares may not be amended more than once every
six months other than to comport with changes in the Code and the rules
thereunder and (ii) the Board may not effect any amendment that would require
the approval of the stockholders of the Company under Rule 16b-3 or the listing
requirements of NASDAQ/NMS (if applicable to the Company at the time such
amendment is adopted or will be effective) unless such approval is obtained.
(b) Failure to Obtain Initial Shareholder Approval. Notwithstanding anything
else in this Plan to the contrary, the Plan and any Awards granted thereunder
are subject to approval by the holders of the Common Stock at the 1995 Annual
Meeting of Stockholders of the Company and shall terminate and be rendered void
and without effect if such approval is not received.
(c) No Effect on Existing Rights. Except as provided in paragraph (b) above
or as otherwise required by law, no termination, amendment or modification of
this Plan may, without the consent of an Eligible Director or the permitted
transferee of an Award, alter or impair the rights and obligations arising
under any then outstanding Award.
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13. Non-Exclusivity
Neither the adoption of this Plan by the Board nor the submission of this Plan
to the stockholders of the Company for approval shall be construed as creating
any limitations on the power of the Board to adopt such other compensatory
arrangements as it may deem desirable, including, without limitation, payments
of cash amounts related to the tax liabilities arising directly or indirectly
from the issuance of Shares in respect of an Eligible Director hereunder.
14. General Provisions
(a) No Right to Serve as a Director. This Plan shall not impose any
obligations on the Company to retain any Eligible Director as a director nor
shall it impose any obligation on the part of any Eligible Director to remain
as a director of the Company, provided that each Eligible Director by accepting
each Award shall represent to the Company that it is his good faith intention
to continue to serve as a director of the Company until the next annual meeting
of stockholders and that he agrees to do so unless a change in circumstances
arises.
(b) No Right to Particular Assets. Nothing contained in this Plan and no
action taken pursuant to this Plan shall create or be construed to create a
trust of any kind or any fiduciary relationship between the Company and any
Eligible Director, the executor, administrator or other personal representative
or designated beneficiary of such Eligible Director, or any other persons.
Any reserves that may be established by the Company in connection with this
Plan shall continue to be part of the general funds of the Company, and no
individual or entity other than the Company shall have any interest in such
funds until paid to an Eligible Director. To the extent that any Eligible
Director or his executor, administrator, or other personal representative, as
the case may be, acquires a right to receive any payment from the Company
pursuant to this Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company.
(c) Beneficiary Designation. Each Eligible Director under the Plan may from
time to time name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
or by whom any right under the Plan is to be exercised in case of his death.
Each designation will revoke all prior designations by the same Eligible
Director, shall be in a form prescribed by the Company, and will be effective
only when filed by the Eligible Director in writing with the Company during his
lifetime. In the absence of any such designation, benefits remaining unpaid at
the Eligible Director's death shall be paid to or exercised by the Eligible
Director's surviving spouse, if any, or otherwise to or by his estate.
(d) Listing of Shares and Related Matters. If at any time the Board shall
determine in its discretion that the listing, registration or qualification
of the Shares covered by this Plan upon any national securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the delivery of Shares under this Plan, no Shares will be delivered unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Board.
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(e) Notices. Each Eligible Director shall be responsible for furnishing the
Board with the current and proper address for the mailing of notices and
delivery of agreements and Shares. Any notices required or permitted to be
given shall be deemed given if directed to the person to whom addressed at such
address and mailed by regular United States mail, first-class and prepaid. If
any item mailed to such address is returned as undeliverable to the addressee,
mailing will be suspended until the Eligible Director furnishes the proper
address.
(f) Severability of Provisions. If any provision of this Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof, and this Plan shall be construed and enforced as
if such provision had not been included.
(g) Incapacity. Any benefit payable to or for the benefit of a minor, an
incompetent person or other person incapable of receipting therefor shall be
deemed paid when paid to such person's guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Board, the Company and other parties with respect
thereto.
(h) Headings and Captions. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of this Plan,
and shall not be employed in the construction of this Plan.
(i) Controlling. This Plan shall be construed and enforced according to
the laws of the State of Delaware.
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APPENDIX B
FIRST AMENDMENT TO
THE LANDSTAR SYSTEM, INC.
1994 DIRECTORS STOCK OPTION PLAN
WHEREAS, LANDSTAR SYSTEM, INC. (the "Company") adopted the 1994 Directors
Stock Option Plan (the "Plan"); and
WHEREAS, pursuant to Section 12 of the Plan, the Board of Directors retained
the right to amend the Plan;
NOW, THEREFORE, the Plan is amended as follows:
1. Section 2(1) of the Plan is deleted in its entirety and a new Section 2(1)
added to read as follows:
"Term Award" shall mean an Option to purchase 9,000 Shares, with an exercise
price per Share equal to the Fair Market Value of a Share on the date of grant.
2. This First Amendment to the Plan shall be effective as of May 19, 1999.
IN WITNESS WHEREOF, the Company has caused this First Amendment to be executed
by its duly authorized officer on the 24 day of March, 1999.
LANDSTAR SYSTEM, INC.
Michael L. Harvey, Secretary
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March 24, 2000
To the Shareholders of Landstar System, Inc.:
You are cordially invited to attend the Annual Meeting of Shareholders of
Landstar System, Inc. on Tuesday, May 16, 2000, at 10:00 a.m., local time, at
the Ponte Vedra Inn, Ponte Vedra Beach, Florida, 32082. A notice of the
meeting, a proxy card, the 1999 Annual Report and a proxy statement containing
information about the matters to be acted upon are enclosed. It is important
that your shares be represented at the meeting. Accordingly, we urge you to
sign and date the enclosed proxy card and promptly return it in the enclosed
pre-addressed, postage-paid envelope even if you are planning to attend the
meeting.
We look forward to the Annual Meeting of Shareholders, and we hope you will
attend the meeting or be represented by proxy.
LOGO
Jeffrey C. Crowe
Chairman of the Board,
President and
Chief Executive Officer
LANDSTAR SYSTEM, INC.
13410 SUTTON PARK DRIVE SOUTH, JACKSONVILLE, FL 32224
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Robert C. LaRose and Michael L. Harvey,
jointly and severally, as Proxies, each with the power to appoint his
substitute, and hereby authorizes each or both of them to represent and to
vote, as designated on the reverse side, all the shares of Common Stock of
Landstar System, Inc. held of record by the undersigned on March 20, 2000, at
the Annual Meeting of Shareholders to be held on May 16, 2000 or any
adjournment thereof. None of the matters to be acted upon, each of which has
been proposed by Landstar System, Inc. (the "Company"), is related to or
conditioned on the approval of other matters.
**CONTINUED AND TO BE SIGNED ON REVERSE SIDE**
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FOLD AND DETACH HERE
<PAGE>
This proxy when properly executed will be voted in accordance with the
specifications made herein by the undersigned shareholder. If no
direction is made, this proxy will be voted FOR Proposals 1 through 4.
<PAGE>
1. ELECTION OF DIRECTORS
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name below)
FOR all nominees listed to the right RONALD W. DRUCKER
(except as marked to the contrary) / / HENRY H. GERKENS
WITHHOLD AUTHORITY to vote for all
nominees listed to the right / /
2. RATIFICATION OF THE APPOINTMENT OF KPMG LLP as independent
auditors of the Company for fiscal year 2000.
FOR / / AGAINST / / ABSTAIN / /
3. PROPOSAL TO APPROVE AMENDMENT TO THE LANDSTAR SYSTEM, INC. 1994 DIRECTORS
STOCK OPTION PLAN.
FOR / / AGAINST / / ABSTAIN / /
4. PROPOSAL TO AMEND COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED STOCK.
FOR / / AGAINST / / ABSTAIN / /
5. In their discretion, each of the Proxies is authorized to vote upon such
other business as may properly come before the meeting or any adjournment
thereof.
Please sign exactly as your name appears below. When shares are held by joint
tenants, both should sign. When signed as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED:___________________________
_________________________________
Signature
_________________________________
Signature if held jointly
**PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE**
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FOLD AND DETACH HERE
