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Section 240.14a-101 Schedule 14A
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Celadon Group, Inc.
- ------------------------------------------------------------------------
Name of Registrant as Specified In Its Charter
- ------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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CELADON GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
CELADON GROUP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Celadon
Group, Inc. ("Celadon" or the "Company") will be held at the Company's Corporate
Headquarters located at One Celadon Drive, Indianapolis, Indiana 46235-4207 on
Friday, May 28, 1999 at 10:00 a.m. (local time) for the following purposes:
1. Election of Directors for the ensuing year;
2. Approval of the appointment of Independent Auditors for 1999, and
3. To transact such other business as may properly be brought before the
meeting.
The Board of Directors has fixed the close of business on April 23, 1999,
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the meeting.
By order of the Board of Directors
Paul A. Will
Secretary
May 7, 1999
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO INSURE THAT YOUR SHARES ARE VOTED.
<PAGE>
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PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Proxy Statement.................................................. 1
Directors and Executive Officers................................. 1
Compensation of Directors and Executive Officers............ 5
Employment Agreements....................................... 9
Stock Price Performance Chart............................... 13
Security Ownership of Principal Stockholders and Management. 14
Certain Relationships and Related Transactions.............. 16
Ratification of Appointment of Ernst & Young LLP................. 17
Stockholders' Proposals.......................................... 17
General.......................................................... 18
</TABLE>
<PAGE>
<PAGE>
CELADON GROUP, INC.
9503 E. 33rd Street
Indianapolis, Indiana 46236
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Celadon Group, Inc. (the "Company") to be
voted at the Annual Meeting of Stockholders of the Company (the "Meeting") to be
held on May 28, 1999, at the Company's corporate headquarters located at One
Celadon Drive, Indianapolis, Indiana 46235. If not otherwise specified, all
proxies received pursuant to this solicitation will be voted in the election of
directors FOR the persons named below, and FOR the ratification of the
appointment of Ernst & Young LLP as independent auditors for the current fiscal
year.
Stockholders who execute proxies may revoke them at any time before they
are exercised by giving written notice to the Secretary of the Company at the
address of the Company, by executing a subsequent proxy and presenting it to the
Secretary of the Company, or by attending the meeting and voting in person.
As of April 23, 1999, the record date for the Meeting, the Company had
outstanding 7,751,657 shares of Common Stock which are entitled to vote at the
Meeting, each share being entitled to one vote. Only stockholders of record at
the close of business on April 23, 1999 will be entitled to vote at the Meeting,
and this Proxy Statement and the accompanying proxy are being sent to such
stockholders on or about May 7, 1999.
DIRECTORS AND EXECUTIVE OFFICERS
At the Meeting, five directors are to be elected to hold office until the
Annual Meeting of Stockholders in 2000 and until their respective successors
have been elected and qualified. It is the intention of the persons named in the
enclosed form of proxy to vote for the election as directors of the Company,
Stephen Russell, Paul A. Biddelman, Michael Miller, Joel E. Smilow and Kilin To.
All of the individuals are currently directors of the Company, and all of the
named individuals are nominees of the Board of Directors. The Board of Directors
recommends that the stockholders vote FOR the election of all five nominees.
1
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<PAGE>
The directors and executive officers, and key employees of the Company and
its subsidiaries are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Stephen Russell 59 President, Chief Executive Officer and Chairman
Ronald S. Roman 54 Senior Executive Vice President and Chief Operating
Officer
Robert Goldberg 47 Executive Vice President - Chief Financial Officer
Michael W. Dunlap 37 Vice President - Treasurer of the Company
Paul A. Will 32 Vice President - Secretary and Controller of the
Company
Paul A. Biddelman(1) 53 Director of the Company
Michael Miller(1) 53 Director of the Company
Joel E. Smilow(2) 65 Director of the Company
Kilin To(2) 55 Director of the Company
</TABLE>
- ---------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
Mr. Russell has been Chairman of the Board and Chief Executive Officer of
the Company since its inception in July 1986. He is also a director of Petroleum
Heat and Power Company, Inc., a director of the Interstate Truckload Carriers
Conference, a director of the American Trucking Association ("ATA"), a director
of the Truckload Carriers Association ("TCA"), chairman of the international
committees of both the ATA and TCA, and a member of the North American
Transportation Alliance advisory board. Mr. Russell has been a member of the
Board of Advisors of Cornell University -- Johnson Graduate School of Management
since 1983.
Mr. Roman has been Senior Executive Vice President - Chief Operating
Officer of the Company since June 1997. He was Executive Vice President - Fleet
Management and Customer Service of Celadon Trucking Services, Inc. from July
1996 to June 1997. From October 1985 to July 1996, Mr. Roman was employed by
North American Van Lines, Inc., an over-the-road household goods and high value
product full truckload transportation company, holding executive positions,
primarily Vice President - Fleet Services, from October 1985 to August 1995.
Mr. Goldberg has been Executive Vice President - Chief Financial Officer of
the Company since February 1998. From November 1993 to December 1997, Mr.
Goldberg was President of Trans-Star, Inc., a refrigerated trucking company.
From October 1992 to October 1993, Mr. Goldberg was Vice President - Chief
Financial Officer of Proline Carriers, Inc., a van trucking company. Mr.
Goldberg is a certified public accountant.
2
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<PAGE>
Mr. Dunlap has been Vice President - Treasurer of the Company since July
1996. He served as Vice President of Finance for National Freight, Inc., a
regional truckload transportation company, from October 1993 to July 1996, and
as Vice President - Treasurer for Burlington Motor Carriers, Inc., from October
1989 to October 1993.
Mr. Will has been Vice President-Secretary and Controller of the Company
since September 1996. He was Vice President-Controller for Celadon Trucking
Services, Inc. from January 1996 to September 1996 and Controller from September
1993 to January 1996. He served as Controller for American Hi-Lift, a company
engaged in the business of renting aerial work platform equipment, from February
1992 to September 1993. Mr. Will is a certified public accountant.
Mr. Biddelman has been a director of the Company since October 1992. Mr.
Biddelman has been President of Hanseatic Corporation, a private investment
company, since December 1997, and served as Treasurer of that company from April
1992 to December 1997. He is also a director of Premier Parks, Inc., Electronic
Retailing Systems International, Inc., Star Gas LLC (the General Partner of
Star Gas Partners, L.P.), and Insituform Technologies, Inc.
Mr. Miller has been a director of the Company since February 1992. Mr.
Miller has been Chairman of the Board and Chief Executive Officer of Aarnel
Funding Corporation, a venture capital/real estate company since 1974, a partner
of Independence Realty, an owner and manager of real estate properties, since
1989, and President and Chief Executive Officer of Miller Investment Company,
Inc., a private investment company, since 1990.
Mr. Smilow has been a director of the Company since December 1996.
Mr. Smilow served as Chief Executive Officer of Playtex Products, Inc. and it
predecessors ("Playtex") from 1969 until July 10, 1995 and served as Chairman
of Playtex from 1969 until June 1995.
Mr. To has been a director of the Company since 1988. He has been a
managing partner of Sycamore Management, Inc., since 1995. He was a Vice
President of Citicorp Venture Capital, Ltd. ("CVC"), a subsidiary of Citicorp
N.A., from 1984 to 1995.
All directors of the Company hold office until the next annual meeting of
stockholders of the Company or until their successors are elected and qualified
or they resign. Mr. Russell and Hanseatic Corporation are parties to a
stockholders agreement pursuant to which they have agreed to vote their shares
of Common Stock for the other's designee. Those designees are Messrs. Russell
and Biddelman. See "Security Ownership of Principal Stockholders and Management"
and "Certain Relationships and Related Transactions--Transactions with Directors
and Stockholders". Executive officers hold office until their successors are
chosen and qualified, subject to their removal by the Board of Directors, to any
employment agreements or their resignation. See "Compensation of Directors and
Executive Officers--Employment Agreements."
3
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Pursuant to Section 145 of the Delaware General Corporation Law, the
Company's Certificate of Incorporation provides that the Company shall, to the
full extent permitted by law, indemnify all directors, officers, incorporators,
employees, or agents of the Company against liability for certain of their acts.
The Company's Certificate of Incorporation provides that, with a number of
exceptions, no director of the Company shall be liable to the Company for
damages for breach of his fiduciary duty as a director.
The Audit Committee consists of Paul A. Biddelman and Michael Miller. The
Audit Committee meets with management and the Company's independent auditors to
determine the adequacy of internal controls and other financial reporting
matters. The Compensation Committee consists of Joel E. Smilow and Kilin To. The
Compensation Committee reviews general policy matters relating to compensation
and benefits of employees and officers of the Company, administers the Company's
Employee Stock Purchase Plan and administers the Company's Stock Option Plan.
Effective November 1, 1996, the full Board of Directors became the
administrators of the Company's Stock Option Plan. The Company does not have a
nominating committee or a committee performing similar functions.
The Board of Directors of the Company met ten times during the fiscal year
ended June 30, 1998. In addition, on two occasions, the Board of Directors took
action pursuant to unanimous written consent. Of the current directors, one
failed to attend at least 75% of those meetings plus any committee meeting of
the Board of which he was a member. The Company's Audit Committee met one time
during the year ended June 30, 1998. The Compensation Committee met five times
during the year ended June 30, 1998.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Under the securities laws of the United States, the Company's directors,
officers, and any persons owning more than 10 percent of the Common Stock are
required to report their ownership of Common Stock and any changes in that
ownership, on a timely basis, to the Securities and Exchange Commission. Based
on material provided to the Company, all such required reports were filed on a
timely basis in fiscal 1998.
4
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid or accrued
by the Company for services rendered during fiscal 1998, 1997 and 1996 to the
Chief Executive Officer of the Company, each of the four other most highly paid
executive officers of the Company whose annual cash compensation exceeded
$100,000, and the former Executive Vice President and Chief Financial Officer of
the Company who resigned April 1, 1998 and whose cash compensation exceeded
$100,000 prior to his resignation, (collectively, the "Named Executive
Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
-----------
Annual Compensation Securities
Fiscal ------------------------------ Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation
- ----------------------------------- --------- ------------ -------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Stephen Russell 1998 $ 498,858 $ 339,077 -- $ 75,576(1)(2)(3)
Chairman of the Board 1997 482,143 236,957 -- 81,642(1)(2)(3)
and Chief Executive Officer 1996 438,711 -- 20,000 110,446(1)(2)
Ronald S. Roman 1998 $ 155,815 $ 67,753 10,000 $ 6,547(2)(3)(4)(5)
Senior Executive Vice President, 1997 137,837 7,500 35,000 33,125(3)(4)(5)
Chief Operating Officer
Robert Goldberg 1998 $ 43,783 $ 18,790 20,000 $ 1,454(3)(4)(5)
Executive Vice President
Chief Financial Officer
Michael W. Dunlap 1998 $ 110,681 $ 46,683 5,000 $ 3,645(2)(3)(4)
Vice President, Treasurer 1997 99,121 20,000 5,000 10,302(3)(4)(5)
Don S. Snyder (6)(7)
Executive Vice President, Chief 1998 $ 136,445 $ 40,000 -- $ 9,514(2)(3)(4)
Financial Officer 1997 174,015 40,000 35,000 20,082(2)(3)(4)(5)
1996 41,350 10,000 -- --
</TABLE>
- ------------
5
<PAGE>
<PAGE>
(1) Includes the premiums paid by the Company for term insurance and
split-dollar insurance for which the Company has an assignment against
the cash value for premiums paid, as follows: $71,239 in fiscal 1998,
$69,478 in fiscal 1997 and $99,587 in fiscal 1996.
(2) Includes the Company's contribution under the Company's 401(k) Profit
Sharing Plan, as follows: Stephen Russell-- $2,500 in fiscal 1998,
$2,375 in fiscal 1997 and $2,375 in fiscal 1996; Ronald Roman -- $1,210
in fiscal 1998; Don S. Snyder -- $549 in fiscal 1998 and $792 in fiscal
1997; Michael W. Dunlap -- $1,023 in fiscal 1998.
(3) Includes premiums and reimbursement under an Executive health and
disability benefit program as follows, Stephen Russell -- $1,839 in
fiscal 1998, $9,789 in fiscal 1997, $8,484 in fiscal 1996; Ronald S.
Roman -- $2,709 in fiscal 1998, $634 in fiscal 1997; Robert Goldberg --
$53 in fiscal 1998; Don S. Snyder -- $7,885 in fiscal 1998 and $611 in
fiscal 1997; Michael W. Dunlap -- $1,611 in fiscal 1998 and $413 in
fiscal 1997.
(4) Includes premiums on the employee portion of split dollar life
insurance premiums as follows: Ronald S. Roman -- $2,627 in fiscal 1998
and $985 in fiscal 1997; Robert Goldberg -- $250 in fiscal 1998; Don S.
Snyder -- $1,080 in fiscal 1998 and $694 in fiscal 1997; Michael W. Dunlap
-- $1,011 in fiscal 1998 and $379 in fiscal 1997.
(5) Includes relocation related expense reimbursements as follows: Ronald
S. Roman -- $31,506 in fiscal 1997; Robert Goldberg -- $1,151 in fiscal
1998; Don S. Snyder -- $17,985 in fiscal 1997; Michael W. Dunlap --
$9,510 in fiscal 1997.
(6) In connection with Don S. Snyder's relocation, the Company acquired his
personal residence and has incurred $122,325 in cost associated with
the acquisition and marketing of his home in Ft. Worth, Texas pursuant
to his employment contract. Such amount is not included in the above
table.
(7) Don S. Snyder resigned as Executive Vice President, Chief Financial
Officer of the Company, on April 1, 1998.
6
<PAGE>
<PAGE>
Stock Options
The following table contains information concerning the grant of stock
options to the named Executive Officers.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------- Potential
Realizable
Number of Value at Assumed
Securities % of total Annual Rates of
Underlying Options Stock Price
Options Granted to Exercise or Appreciation For
Granted Employees Base Price Expiration Option Term(1)
Name (Shares) In Fiscal Year Per Share Date 5% 10%
- --------------------- ------------ ----------------- --------------- ------------ ------------------------
<S> <C> <C> <C> <C> <C> <C>
Stephen Russell 0 -- -- -- -- --
Ronald S. Roman 10,000(2) 10% $14.50 10/01/07 $ 91,200 $ 231,100
Robert Goldberg 20,000(3) 20% $14.25 02/23/08 $ 179,200 $ 454,200
Michael W. Dunlap 5,000(4) 5% $12.63 08/29/07 $ 39,700 $ 100,600
Don S. Snyder 0 -- -- -- -- --
</TABLE>
- ---------------------
(1) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%)
on the Company's Common Stock over the term of the options. These numbers
are calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
growth. Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the timing of such exercise and the future
performance of the Company's Common Stock. There can be no assurance that
the rates of appreciation assumed in this table can be achieved or that the
amounts reflected will be received by the option holder.
(2) Options for 3,334 shares became exercisable on October 1, 1998, and options
for 3,333 shares will become exercisable on each of October 1, 1999 and
October 1, 2000.
(3) Options for 6,667 shares became exercisable on February 23, 1999. Options
for 6,667 will become exercisable on February 23, 2000 and options for
6,666 shares will become exercisable on February 23, 2001.
(4) Options for 1,667 shares became exercisable on August 29, 1998. Options for
1,667 shares become exercisable on August 29, 1999, and options for 1,666
shares become exercisable on August 29, 2000.
7
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Report on Repricing of Options
<TABLE>
<CAPTION>
Length of
Market Exercise Original Term
Number Price at Price at New Remaining at
of Options Time of Time of Exercise Date of
Name Date Repriced Repricing(1) Repricing Price Repricing
---- ---- -------- ------------ --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Stephen Russell 8/1/97 25,000 $12.00 $20.00 $12.00 7 yrs, 1 mo.
</TABLE>
The repricing was a component of Mr. Russell's renegotiated employment
agreement. The repricing in lieu of additional cash compensation to be paid
pursuant to the terms of the amended agreement. See "Executive Compensation -
Employment Agreements."
Option Exercises and Holdings
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the last fiscal
year and unexercised options held at June 30, 1998. Don S. Snyder, former
Executive Vice President and Chief Financial Officer of the Company, exercised
35,000 options at an exercise price of $10.00 per share during fiscal 1998.
Aggregated Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at June 30, 1998 at June 30, 1998 (1)
---------------------------------- ----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- --------------- ------------------ ------------------ ---------------
<S> <C> <C> <C> <C>
Stephen Russell 70,000 -- $ 489,375 $ --
Ronald S. Roman 11,668 33,332 121,675 288,319
Robert Goldberg -- 20,000 -- 95,000
Michael W. Dunlap 1,667 8,333 19,171 70,205
Don S. Snyder (2) -- -- -- --
</TABLE>
- ------------
(1) Fair market value of underlying securities was $19.00 per share based on the
closing price of the Company's Common Stock on June 30, 1998.
(2) Don S. Snyder resigned as an officer and employee of the Company, effective
April 1, 1998.
8
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Directors Compensation
Non-employee directors of the Company receive an annual fee of $15,000,
payable quarterly, for serving as a director of the Company. Such directors
receive $1,250 per quarter for serving on committees. Board members are
reimbursed for their reasonable, documented expenses for each meeting attended.
Non Employee Director Stock Option Plan
On March 31, 1997, the Board of Directors adopted the Celadon Group, Inc.
Non-Employee Director Stock Option Plan, effective as of April 1, 1997 (the
"Director Option Plan"). The adoption of the Director Option Plan was approved
by stockholders at the annual meeting of stockholders held December 1, 1997. The
Director Option Plan is administered by a committee (the "Committee") of the
Board of Directors of the Company (the "Board"), appointed from time-to-time by
the Board.
The Director Option Plan authorizes the issuance of up to 100,000 shares of
Common Stock upon the exercise of non-qualified stock options granted to
non-employee directors of the Company. All non-employee directors of the Company
are eligible to be granted options under the Director Stock Option Plan. A
Non-Employee Director is a director serving on the Company's Board who is not an
active employee of the Company and/or a subsidiary or parent company of the
Company, as defined in Sections 424(e) and 424(f) of the Internal Revenue Code
of 1986, as amended (the "Code"). Pursuant to the terms of the Director Stock
Option Plan, each non-employee director of the Company who is first elected to
the Board after April 1, 1997, will be granted, as of the first day of the month
coincident with or next following the date of his or her election, an option to
purchase 8,000 shares of Common Stock. Following the initial grant described in
the preceding sentence, each non-employee will receive on each April 1
thereafter, an option to purchase 4,000 shares of Common Stock. No non-employee
director qualified for an initial grant during fiscal 1998. On April 1, 1998,
each of the four non-employee directors of the Company as of April 1, 1998 was
granted an option to purchase 4,000 shares of Common Stock.
Employment Agreements
The Company had a four-year employment agreement expiring January 21, 1998
with Stephen Russell, Chairman and Chief Executive Officer of the Company,
providing for an initial annual salary of $395,000, which salary was to be
increased 7.5% annually during the term of the agreement, plus a bonus computed
annually. Effective October 1, 1996, the Committee agreed to amend Mr. Russell's
contract to reflect his assumption of increased responsibilities following the
resignation of Leonard R. Bennett, the former President of the Company, on July
3, 1996. The amendment provided that Mr. Russell would receive five percent of
profit before tax in excess of $3,000,000 in lieu of the bonus computed under
his original contract. On August 1, 1997, the Compensation Committee of the
Board of Directors renegotiated the general terms of Mr. Russell's current
employment contract. As a result of such negotiations, the term of Mr. Russell's
employment
9
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<PAGE>
contract has been extended for three years to January 21, 2001. In lieu of a
fixed percentage annual base salary increase, Mr. Russell now receives an annual
base salary increase equal to the change in the Consumer Price Index, and stock
options awarded to Mr. Russell on September 9, 1994 to acquire 25,000 shares of
Common Stock at an exercise price of $20.00 per share were repriced to $12.00,
the closing sale price of the Company Common Stock on the NASDAQ National Market
on August 1, 1997. In lieu of a bonus based on a stipulated percentage of pretax
income above a minimum level, Mr. Russell participates in an incentive bonus
program designed for all members of the Company's senior management. Depending
upon the Company's performance which is measured against goals established by
the Compensation Committee annually, Mr. Russell earns a bonus as a percentage
of his base salary of between 0% and 105%. The agreement also provides that in
the event of termination: (i) as a result of a change in control of the Company,
Mr. Russell will receive a lump sum severance allowance in an amount equal to
two times his annual compensation; (ii) without cause or by Mr. Russell for
cause, Mr. Russell will be entitled to receive his salary for the remainder of
the term of the agreement or one year, whichever is greater; and (iii) as a
result of the disability of Mr. Russell, he will be entitled to receive 50% of
his salary during the two-year period commencing on the date of his termination.
The agreement also includes a two-year non-compete covenant commencing upon
termination of employment. As consideration for such non-compete covenant, the
Company has agreed to pay Mr. Russell 50% of his salary during the two years
following the termination of the employment agreement.
The Company has an employment agreement with Ronald S. Roman, Senior
Executive Vice President - Chief Operating Officer, expiring September 30, 1999.
The agreement, as amended on June 30, 1997 coincident with Mr. Roman's promotion
to his current position, provides for annual compensation of $130,000, $150,000
and $165,000 for the periods ended June 30, 1997 and 1998 and September 30,
1999, respectively. This agreement was further amended effective July 1, 1998 to
increase Mr. Roman's current annual salary to $200,000. The contract provides
for the granting of an option to Mr. Roman to acquire 10,000 shares of the
Company's Common Stock at an exercise price of $7.50 per share and 25,000 shares
at an exercise price of $9.00 per share and two additional grants of a minimum
of 10,000 shares annually under the Company's Stock Option Plan. Additionally,
Mr. Roman receives either a company automobile or a monthly car allowance and
the right to participate in any bonus, insurance or other benefit plan provided
to the Company's executives generally. Pursuant to the June 30, 1997 amendment
of Mr. Roman's employment agreement, the Company also pays the dues and fees
associated with Mr. Roman's club membership. The agreement contains a one-year
non-compete covenant effective from the date employment is terminated by either
Mr. Roman or the Company for any reason. If the Company terminates the agreement
without cause, as consideration for such non-compete covenant, Mr. Roman will
receive a lump sum severance payment of $165,000 as of the date of termination.
The Company had an employment agreement with Don S. Snyder, formerly
Executive Vice President, Chief Financial Officer of the Company that expired on
April 1, 1998. This employment agreement was not renewed. Mr. Snyder resigned
from his position with the Company effective April 1, 1998. Prior to its
termination, Mr. Snyder's employment agreement provided for an annual salary of
$160,000, plus an annual bonus, stock options and other benefits generally
available to Company executives, in each case subject to termination by Mr.
Snyder or the Company upon the occurrence of certain events.
10
<PAGE>
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Company's Board of Directors (the
"Committee") was formed in September 1993 and is currently comprised of two
non-employee directors of the Company. The Committee is responsible for
approving all executive employment contracts, changes in compensation (base
salary and bonus), and other forms of compensation paid to the Company's
executive officers in general. Until November 1996, the Committee also was
responsible for approving the issuance of all employee stock options. The policy
of the Committee is to consider on a subjective basis the executive's ability,
contribution and dedication toward the enhancement of stockholder value. For
fiscal year 1998, the Committee adopted a formal management incentive plan for
senior employees of the Company. Awards under the plan will only be made after
achieving predetermined levels of profitability. The plan is designed to
attract, retain and motivate individuals who are responsible for enhancing
shareholder value through increased profitability of the Company.
In fiscal year 1994, the Committee approved a four-year employment contract
for Stephen Russell, President and Chief Executive Officer which provides for a
base salary of $395,000 with annual increases of 7.5%. The Committee believed
this base compensation was competitive as compared to a range of base salaries
of executives in similar positions with companies in the Company's peer group.
In addition, the employment contract provided for a bonus determined on the
basis of three percent of profit before tax in excess of $3,000,000, not to
exceed $360,000. Effective October 1, 1996, the Committee agreed to amend Mr.
Russell's contract to reflect his assumption of increased responsibilities
following the resignation of Leonard R. Bennett, the former President of the
Company. The amendment provided that Mr. Russell would receive five percent of
profit before tax in excess of $3,000,000. On August 1, 1997, the Compensation
Committee of the Board of Directors renegotiated the general terms of Mr.
Russell's current employment contract which expires January 21, 1998. The
employment contract was extended for three years to January 21, 2001. In lieu of
a fixed percentage annual base salary increase, Mr. Russell will receive an
annual base salary increase equal to the change in the Consumer Price Index, and
stock options awarded to Mr. Russell on September 9, 1994 to acquire 25,000
shares of Common Stock at an exercise price of $20.00 per share were repriced to
$12.00, the closing sale price of the Company's Common Stock on the NASDAQ
National Market on August 1, 1997. In lieu of a bonus based on a stipulated
percentage of pretax income above a minimum level, Mr. Russell participates in
an incentive bonus program designed for all members of the Company's senior
management. Depending upon the Company's performance which is measured against
goals established by the Compensation Committee annually, Mr. Russell earns a
bonus as a percentage of his base salary of between 0% and 105%. The Committee
believes this provides a direct link between the executive's compensation and
Company performance and resulting enhancement of stockholder value as well as
his substantial contribution to the improved performance of the Company in 1997.
Stock option grants are awarded on a discretionary, case by case basis,
after consideration of an individual's position, contribution to the Company,
length of service with the Company, number of options held, if any, and other
compensation.
11
<PAGE>
<PAGE>
The Company has not formulated a policy with respect to qualifying
compensation paid to executive officers for deductibility under Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code") regarding the
deductibility of compensation exceeding $1 million in a taxable year paid to an
executive officer. However, the amendments to the Stock Option Plan set forth
under "Compensation Plans" are intended to meet the requirements of Section
162(m) of the Code.
COMPENSATION COMMITTEE
Joel E. Smilow
Kilin To
Compensation Committee Interlocks and Insider Participation
The Company and Citicorp Venture Capital, Ltd. ("CVC"), of which Mr. To was
an officer, are parties to a registration rights agreement relating to the
Common Stock owned by CVC. The Company, Mr. Russell and Hanseatic, a corporation
of which Paul A. Biddelman, a director of the Company, is an officer, are all
parties to a stockholders' agreement relating to the election of Mr. Russell and
a Hanseatic designee to the Board of Directors.
For a further description of the foregoing transactions, see "Security
Ownership of Principal Stockholders and Management"and "Certain Relationships
and Related Transactions."
12
<PAGE>
<PAGE>
Stock Price Performance
The following graph is a comparison of the cumulative total return to
stockholders of the Company from the date its Common Stock commenced trading on
the NASDAQ National Market to June 30, 1998 to the cumulative total returns of
the NASDAQ Stock Market - U.S. and the NASDAQ Truck and Transportation Index for
that period.
Under the rules of the Securities and Exchange Commission ('SEC"), this
graph is not deemed "Soliciting Material" and is not incorporated by reference
in any filings with the SEC under the Securities Act of 1993 or the Securities
Exchange Act of 1934.
COMPARISON OF 53 MONTH CUMULATIVE TOTAL RETURN*
AMONG CELADON GROUP, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ TRUCKING & TRANSPORTATION INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Cumulative Total Return
--------------------------------------------------
1/21/94 6/94 6/95 6/96 6/97 6/98
<S> <C> <C> <C> <C> <C> <C>
CELADON GROUP, INC. 100.00 94.83 105.17 53.45 79.31 131.03
NASDAQ STOCK MARKET (U.S.) 100.00 89.44 119.39 153.29 186.39 246.02
NASDAQ TRUCKING & TRANSPORTATION 100.00 89.40 99.98 110.82 127.10 153.17
</TABLE>
13
<PAGE>
<PAGE>
Security Ownership of Principal Stockholders and Management
The following table sets forth certain information furnished to the Company
regarding the beneficial ownership of Common Stock (i) by each person who, to
the knowledge of the Company, based upon filings with the Securities and
Exchange Commission, beneficially owns more than five percent of the outstanding
shares of the Common Stock, (ii) by each director of the Company, (iii) by each
of the executive officers named in the Summary Compensation Table, and (iv) by
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Beneficial Ownership of Common
Stock as of April 23, 1999 (1)
------------------------------
Name and
Position Shares %
- -------- ------ ------
<S> <C> <C>
Stephen Russell...................................... 989,804(2)(3) 12.8%
President, Chief Executive Officer and
Chairman
Ronald S. Roman...................................... 3,334(3) *
Senior Executive Vice President and Chief
Operating Officer
Robert Goldberg (3).................................. 6,667(3) *
Executive Vice President and
Chief Financial Officer
Michael W. Dunlap.................................... 5,276(3) *
Vice President - Treasurer
Paul A. Will......................................... 10,834(3) *
Vice President - Controller
Paul A. Biddelman.................................... 1,015,435(3)(4) 13.1%
Director of the Company
Michael Miller....................................... 42,500(3) *
Director of the Company
Joel E. Smilow....................................... 135,200(3) 1.7%
Director of the Company
Kilin To............................................. 56,585(3) *
Director of the Company
All executive officers and directors as a group
(11 persons)...................................... 1,270,579(5) 16.4%
FIVE PERCENT OWNERS
Brinson Partners, Inc. (6)........................... 422,900(7) 5.5%
Citicorp Venture Capital Ltd......................... 438,358(8) 5.7%
Dimensional Fund Advisors (9)........................ 497,300(7) 6.4%
FSIP, LLC (10)....................................... 446,700(7) 5.8%
Hanseatic Corporation................................ 982,935(4) 12.7%
Wolfgang Traber...................................... 982,935(4) 12.7%
</TABLE>
- -----------
*Represents beneficial ownership of not more than one percent of the outstanding
Common Stock.
14
<PAGE>
<PAGE>
(1) Based upon 7,751,657 shares of Common Stock outstanding at April 23, 1999.
(2) Excludes 982,935 shares of Common Stock reported as beneficially owned by
Hanseatic in filings with the Commission, all of which may be deemed to
be beneficially owned by Mr. Russell by virtue of a stockholders
agreement among Mr. Russell, Hanseatic and the Company. Mr. Russell
disclaims beneficial ownership of such shares. Mr. Russell's address is One
Celadon Drive, Indianapolis, IN 46235-4207.
(3) Includes shares of Common Stock which the directors and executive
officers had the right to acquire through the exercise of options within
60 days of April 23, 1999, as follows: Stephen Russell - 70,000 shares;
Ronald S. Roman - 3,334 shares; Robert Goldberg - 6,667 shares; Michael
W. Dunlap - 5,276 shares; Paul A. Will - 10,834 shares; Paul A. Biddelman
- 32,500 shares; Michael Miller - 32,500 shares; Joel E. Smilow - 16,000
shares; and Kilin To - 32,500 shares.
(4) Of such shares, 946,021 shares of Common Stock are held by Hanseatic
Americas LDC, a Bahamian limited duration company in which the sole
managing member is Hansabel Partners LLC, a Delaware limited liability
company in which Hanseatic is the sole managing member. The remaining
shares are held by Hanseatic for discretionary customer accounts.
Mr. Biddelman is the President of Hanseatic and holds shared voting
and investment power with respect to the shares held by Hanseatic.
In addition, Mr. Wolfgang Traber is the holder of a majority of
the shares of capital stock of Hanseatic. Excludes 989,804 shares
of Common Stock owned by Mr. Russell that are subject to a
stockholders agreement among Mr. Russell, Hanseatic and the Company. The
address of Hanseatic, Mr. Traber and Mr. Biddelman is 450 Park Avenue,
New York, New York 10022.
(5) Does not include 982,935 shares of Celadon Stock reported as beneficially
owned by Hanseatic in filings with the Commission, all of which are deemed
to be beneficially owned by Mr. Biddelman. Mr. Biddelman is the President
of Hanseatic and holds shared investment and voting power with respect to
the shares held by Hanseatic.
(6) Brinson Partners, Inc. ("BPI") is a registered inestment adviser deemed
to have beneficial ownership of 422,900 shares of Celadon Common Stock
(the "BPI shares") as of December 31, 1998. BPI is an indirect
wholly-owned subsidiary of UBSAG, which is classified as a bank pursuant
to Section 3(a)(b) of the Securities Act of 1933, as amended. UBS AG has
reported indirect beneficial ownership if the BPI Shares by reason of its
ownership of BPI and intermediate holding companies. The address of
Brinson Partners is 209 South LaSalle, Chicago, IL 60604-1295. The
address of UBS AG is Banhofstrasse 45 8021, Zurich, Switzerland.
(7) This information is based upon Schedules 13G filed with the Securities
and Exchange Commission.
(8) The address of Citicorp Venture Capital, Ltd. is 399 Park Avenue, New
York, New York.
(9) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 503,900 shares of
Celadon Common Stock as of September 8, 1998, all of which shares are
held in portfolios of DFA Investment Dimensions Group Inc., a registered
open-end investment company, or in series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all
such shares. The address of Dimensional Fund Advisors Inc. is 1299 Ocean
Avenue, 11th Floor, Santa Monica, CA 90401.
(10) The address of FSIP, LLC is 230 Park Avenue, New York, New York.
15
<PAGE>
<PAGE>
Except as otherwise indicated, the Company has been advised that the
beneficial holders listed in the table above have sole voting and investment
power regarding the shares shown as being beneficially owned by them. Except as
noted in the footnotes, none of such shares is known by the Company to be shares
with respect to which the beneficial owner has the right to acquire beneficial
ownership.
The Company, Stephen Russell and Hanseatic are parties to a stockholders
agreement which provides that, as long as Hanseatic and Mr. Russell each
beneficially own at least five percent of the outstanding shares of Common
Stock, the Company shall use its best efforts to insure that one member of the
Company's Board of Directors is a designee of Hanseatic and that another member
of the Company's Board of Directors is a designee of Mr. Russell. In addition,
Mr. Russell and Hanseatic have agreed to vote all shares of Common Stock owned
by them in favor of the election of such nominees or, upon the death of Mr.
Russell, for the designee of the holder of a majority of Mr. Russell's shares of
Common Stock on the date of death.
Certain Relationships and Related Transactions
Transactions with Directors and Stockholders
The Company and Hanseatic, a corporation of which Paul Biddelman, a
director of the Company, is an officer, entered into a registration rights
agreement, dated as of October 8, 1992, in connection with Hanseatic's purchase
of a 9.25% Senior Subordinated Convertible Note (the "Hanseatic Note") for an
aggregate purchase price of $8,000,000. The Hanseatic Note was converted in
February 1994, into 731,371 shares of Common Stock (equivalent to a conversion
price of $10.82 per share). In connection with the purchase of the Hanseatic
Note, the Company paid Hanseatic a $160,000 facility fee and issued to Hanseatic
a warrant to purchase 12,121 shares of Common Stock at any time prior to
September 30, 1998, at an exercise price of $10.82 per share. Until October
1998, Hanseatic and its permitted transferees have the right to require the
Company to file, subject to certain terms and conditions, a registration
statement in respect of any or all of the shares of Common Stock (subject to a
minimum of 363,636 shares) covered by such agreement which are then held by the
requesting holders. In addition, Hanseatic and its permitted transferees have
the right to require the Company to include, subject to certain exceptions, any
or all shares of Common Stock covered by such agreement in any registration
statement filed by the Company. Such "piggyback" rights terminate on September
30, 2001.
The Company, Hanseatic and Stephen Russell are parties to a stockholders'
agreement, dated as of October 8, 1992, which was amended on July 3, 1996. The
agreement provides that each party shall vote its shares of Common Stock for the
election as director of one designee of the other party. See "Security Ownership
of Principal Stockholders and Management."
16
<PAGE>
<PAGE>
The Company and CVC, a principal stockholder of the Company, and of which
Kilin To, a director of the Company, was an officer, entered into a registration
rights agreement, dated as of April 7, 1988, in connection with CVC's purchase
of 1,000,000 shares of Series F Convertible Preferred Stock of the Company and
warrants exercisable to purchase Common Stock of the Company (all of which have
been converted or exercised, as the case may be, at a weighted average price of
$3.08 per share into shares of Common Stock). Under the terms of such agreement,
CVC and its permitted transferees have the right to require the Company to file,
subject to certain terms and conditions, a registration statement for any or all
of the 476,894 shares of Common Stock covered by such agreement which are then
held by the requesting holders. In addition, CVC and its permitted transferees
have the right to require the Company to include, subject to certain exceptions,
any or all of the shares of Common Stock covered by such agreement in any
registration statement filed by the Company.
In July 1996, the Company guaranteed eight individual one year bank loans
to eight executives aggregating $270,000. The loans ranged in amounts from
$9,000 to $54,000, were full recourse to the individual executive and were
secured by a total of 30,000 shares of Common Stock owned by the executives
individually. In February 1997, one of the original debtors withdrew and was
replaced by two additional executives. On January 1, 1998, the Company repaid
the outstanding bank loans and assumed the bank's rights as lender. The loans
are secured by a total of 30,000 shares of Common Stock owned by the executives
individually. During fiscal 1998, the Company purchased as treasury stock 18,000
of the 30,000 shares of Common Stock securing the loans. The remaining 12,000
shares secure $108,000 of outstanding executive loans.
RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP
The Board of Directors has appointed Ernst & Young LLP as the independent
auditors for the Company for the current fiscal year. A representative of Ernst
& Young LLP is expected to be present at the Meeting with the opportunity to
make a statement if such representative desires to do so, and is expected to
respond to appropriate questions. The Board of Directors recommends a vote FOR
the ratification of the appointment of Ernst & Young LLP as auditors.
STOCKHOLDERS' PROPOSALS
Proposals of stockholders to be presented at the next annual meeting must
be received for inclusion in the Company's proxy statement and form of proxy by
June 19, 1999.
17
<PAGE>
<PAGE>
GENERAL
The Board of Directors does not know of any matters other than those
specified in the Notice of Annual Meeting of Stockholders that will be presented
for consideration at the meeting. However, if other matters properly come before
the meeting, it is the intention of the persons named in the enclosed proxy to
vote thereon in accordance with their judgement. In the event that any nominee
is unable to serve as a director at the date of the meeting, the enclosed form
of proxy will be voted for any nominee who shall be designated by the Board of
Directors to fill such vacancy.
Under Delaware Law and the Company's Certificate of Incorporation and
By-laws, if a quorum is present, directors are elected by a plurality of the
votes cast by the holders of shares entitled to vote thereon. A majority of the
outstanding shares entitled to vote, present in person or represented by proxy
constitutes a quorum. Shares represented by proxies withholding votes from
nominees will be counted only for purposes of determining a quorum.
The entire cost of soliciting proxies hereunder will be borne by the
Company. Proxies will be solicited by mail, and may be solicited personally by
directors, officers or regular employees of the Company who will not be
compensated for their services. The Company will reimburse brokers and banks for
their reasonable expenses for forwarding material to beneficial owners for whom
they hold stock.
The Company intends to furnish to its stockholders a copy of the Company's
1998 Annual Report on Form 10-K/A filed with the Securities and Exchange
Commission.
Indianapolis, Indiana
May 7, 1999
18
<PAGE>
<PAGE>
CL258B
APPENDIX 1
DETACH HERE
PROXY
CELADON GROUP
9503 East 33rd Street
One Celadon Drive
Indianapolis, Indiana 46235-4207
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Stephen Russell, Paul Biddelman and Paul
A. Will and each of them, with full power of substitution, proxies of the
undersigned, to vote all shares of Common Stock of Celadon Group, Inc. (the
"Company") that the undersigned would be entitled to vote if personally present
at the Annual Meeting of Stockholders of the Company to be held on Friday, May
28, 1999 at 10:00 a.m., (local time) at the Company's Corporate Headquarters
located at One Celadon Drive, Indianapolis, Indiana 46235, and at any
adjournments thereof. The undersigned hereby revokes any proxy heretofore given
with respect to such shares.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSAL
2. IF MORE THAN ONE OF SAID PROXIES OR THEIR SUBSTITUTES SHALL BE PRESENT AND
VOTE AT SAID MEETING, OR ANY ADJOURNMENT THEREOF, A MAJORITY OF THEM SO PRESENT
AND VOTING (OR IF ONLY ONE TO BE PRESENT AND VOTE, THEN THAT ONE) WILL HAVE AND
MAY EXERCISE ALL THE POWERS HEREBY GRANTED.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
<PAGE>
CL258A DETACH HERE
[X] Please mark
votes as in
this example.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED WILL BE VOTED IN THE MANNER
DIRECTED BELOW. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES AND THE PROPOSALS LISTED BELOW.
1. Election of Directors.
NOMINEES: Stephen Russell, Paul A. Biddelman,
Michael Miller, Joel E. Smilow, Kilin To.
FOR [ ] [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ]______________________________________
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Ratification of appointment of [ ] [ ] [ ]
Ernst & Young LLP as auditors.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT. [ ]
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE WHEN MAILED IN THE USA.
Please sign below exactly as your name appears. When shares are held by joint
tenants, both shall sign. When signing as attorney, 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.
Signature: _________________ Date: _____ Signature: _________________ Date:_____
