<PAGE>
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:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
<PAGE>
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. (the "Company") will be held at the Company's corporate
headquarters located at One Celadon Drive, Indianapolis, Indiana 46235-4207 on
Tuesday, November 28, 2000 at 10:00 a.m. (local time) for the following
purposes:
1. Election of Directors for the ensuing year;
2. To approve an amendment to the Celadon Group, Inc. 1994 Stock
Option Plan; 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 October 23,
2000 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the meeting. Any action may be taken on the foregoing
matters at the meeting on the date specified above, or on any date or dates to
which the meeting may be adjourned or postponed. A list of stockholders entitled
to vote at the meeting will be available for examination by any stockholder for
any purpose germane to the meeting at our main office during the ten days prior
to the meeting, as well as at the meeting.
By order of the Board of Directors
Paul A. Will
Secretary
October 27, 2000
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>
CELADON GROUP, INC.
One Celadon Drive
Indianapolis, Indiana 46235
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 Tuesday, November 28, 2000, beginning at 10:00 a.m.,
local time, at the Company's corporate headquarters and principal executive
offices located at One Celadon Drive, Indianapolis, Indiana 46235-4207. If not
otherwise specified, all properly executed proxies received pursuant to this
solicitation, and not revoked, will be voted in the election of directors FOR
the persons named below and FOR the amendment to the Celadon Group, Inc. 1994
Stock Option Plan (the "Stock Option Plan").
Stockholders who execute proxies may revoke them at any time before
they are exercised by giving written notice of revocation to the Secretary of
the Company at the address of the Company, by executing a subsequent proxy
relating to the same shares and presenting it to the Secretary of the Company,
or by attending the meeting and voting in person (attendance at the meeting,
will not, in and of itself, constitute revocation of a proxy).
Directors will be elected by a plurality of the votes present in person
or represented by proxy at the Meeting and entitled to vote on election of
directors. Approval of the amendment to the Stock Option Plan, and any other
matters that come before the Meeting for action, will require the affirmative
vote of the holders of a majority of the stock duly voted on the matter. In the
election of directors, stockholders may either vote "FOR" all nominees for
election or withhold their votes from one or more nominees for election. Votes
that are withheld and shares held by a broker, as nominee, that are not voted
(so-called "broker non-voters") in the election of directors will not be
included in determining the number of votes cast. With respect to the vote on
the amendment to the Stock Option Plan, and any other matter that comes before
the Meeting for action, stockholders may vote "FOR," "AGAINST" or "ABSTAIN" with
respect to such matters. Proxies marked to abstain will have the same effect as
votes against such matters and broker non-votes will have no effect on such
matters. Unless a proxy is properly revoked pursuant to the procedures described
above, the Board of Directors, as proxy for the stockholder, will have the
discretion to vote on any other matters that come before the Meeting on behalf
of the stockholder as directed by a majority of the Board of Directors in their
best judgment. A majority of the shares of the Company's common stock, present
in person or represented by proxy, shall constitute a quorum for purposes of the
Meeting. Proxies marked to abstain and broker non-votes are counted for purposes
of determining a quorum.
<PAGE>
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.
As of October 23, 2000, the record date for the Meeting, the Company
had outstanding 7,788,242 shares of common stock, par value $.033 per share (the
"Common Stock"), entitled to vote at the meeting, each share being entitled to
one vote. Only stockholders of record at the close of business on October 23,
2000 will be entitled to vote at the Meeting. This Proxy Statement and the
accompanying proxy are being sent to such stockholders on or about October 27,
2000.
MATTER TO COME BEFORE THE ANNUAL MEETING
PROPOSAL 1: ELECTION OF DIRECTORS
At the Meeting, five directors are to be elected to hold office until
the Annual Meeting of Stockholders in 2002 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, Anthony Heyworth, Michael Miller and John
Kines. All of the individuals are currently directors of the Company, and all of
the named individuals are nominees of the Board of Directors. 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.
The table in the section below entitled "Directors and Executive
Officers" sets forth certain information about each nominee for election to the
Board of Directors, as well as each of the Company's executive officers.
It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to one or more
nominees) will be voted at the Meeting for the election of the nominees
identified below. If any nominee is unable to serve, the shares represented by
all such proxies will be voted for the election of such substitute as the Board
of Directors may recommend. At this time, the Board of Directors knows of no
reason why any of the nominees might be unable to serve, if elected.
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 Committee
Report on Executive Compensation--Chief Executive Officer's Compensation."
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF ALL FIVE NOMINEES.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Stephen Russell 60 President, Chief Executive Officer and Chairman
Paul A. Will 34 Vice President - Chief Financial Officer and Secretary
Michael W. Dunlap 38 Vice President - Treasurer
Paul A. Biddelman(1) 54 Director of the Company
Michael Miller(2) 55 Director of the Company
Anthony Heyworth(1) 56 Director of the Company
John Kines(1)(2) 59 Director of the Company
Kilin To(2)(3) 57 Director of the Company
</TABLE>
(1) Members of the Audit Committee
(2) Members of the Compensation Committee
(3) Resigned effective September 25, 2000
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 the
Truckload Carriers Association ("TCA") and chairman of the International
committee of the TCA from 1997-1999, and a member of the North American
Transportation Alliance advisory board. Mr. Russell is a director of Star Gas
Corporation (the General Partner of Star Gas L.P.), a home heating and LPG
company. Mr. Russell has been a member of the Board of Advisors of the Cornell
University Johnson Graduate School of Management since 1983.
Mr. Will has been Vice President - Chief Financial Officer and
Secretary of the Company since December 1998. He was Vice President-Secretary
and Controller of the Company from September 1996 to December 1998. 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. 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 July 1993.
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., and Star
Gas Corporation (the General Partner of Star Gas Partners L.P.), a home heating
and LPG company, and Insituform Technologies, Inc.
3
<PAGE>
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. To has been a director of the Company since 1988. He has been a
managing partner of Sycamore Management, Inc., since 1995. He also had been a
Vice President of Citicorp Venture Capital, Ltd. ("CVC"), a subsidiary of
Citicorp N.A., from 1984 to 1995. He resigned as a director of the Company
effective September 25, 2000, as he has relocated to Asia.
Mr. Heyworth has been a director of the Company since 1999. He retired
from KeyCorp in February 2000 as Vice Chairman, commercial banking, KeyBank N.A.
after a 35 year career with this $85 billion financial services company. He
continues as Chairman of KeyBank Central Indiana, having served as President and
Chief Executive since 1991. He joined the former Central National Bank in 1965
and was Executive Vice President when the bank merged with Society National Bank
of Cleveland in 1986 and Key Bank in 1994.
Mr. Kines was appointed as a director of the Company on June 9, 2000.
He retired from Associates First Capital Corp. ("Associates") in May 2000 as
President of the Diversified Service Group after a 22 year career with
Associates.
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.
COMMITTEES OF THE BOARD
The Audit Committee consists of Paul A. Biddelman, Anthony Heyworth and
John Kines. 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 Board of Directors has determined that all
members of the Audit Committee are "independent" as defined in the applicable
standards of the Nasdaq National Market. The Board of Directors has adopted a
written charter for the Audit Committee. A copy of the current charter is
attached hereto as Appendix A.
The Compensation Committee consists of Michael Miller and John Kines.
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.
The Company does not have a nominating committee. The functions
normally performed by a nominating committee are performed by the Company's
Board of Directors as a whole.
4
<PAGE>
MEETINGS OF THE BOARD
The Board of Directors of the Company met four times during the fiscal
year ended June 30, 2000. No current director, while he was an elected director,
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 two times
during the year ended June 30, 2000. The Compensation Committee met one time
during the year ended June 30, 2000.
REPORT OF THE AUDIT COMMITTEE
The following report does not constitute solicitation material and is
not considered filed or incorporated by reference into any other Company filing
under the Securities Act of 1933 or the Securities Exchange Act of 1934, unless
we state otherwise.
The Audit Committee reviews the Company's financial reporting process
on behalf of the Board of Directors. Management is responsible for the financial
controls. The independent auditors are responsible for expressing an opinion on
the conformity of the audited financial statements with accounting principles
generally accepted in the United States.
In fulfilling its responsibilities:
The Audit Committee reviewed and discussed the audited financial
statements contained in the 2000 Annual Report on SEC Form 10-K
with the Company's management and the independent auditors.
The Audit Committee discussed with the independent auditors, the
matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication with Audit Committees).
The Audit Committee received from the independent auditors
written disclosures regarding the auditors' independence, as
required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and discussed
with the auditors their independence from the Company and its
management.
In reliance on the reviews and discussions noted above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Company's Annual Report
on SEC Form 10-K for the year ended June 30, 2000, for filing with the
Securities and Exchange Commission.
Respectfully submitted by the members of the Audit Committee of the
Board of Directors:
Paul A. Biddleman (Chairman)
Anthony Heyworth
John Kines
5
<PAGE>
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
(the "SEC"). Based on material provided to the Company, all such required
reports, except Form 5's with respect to options of directors, were filed on a
timely basis in fiscal 2000. The Company expects the Form 5's to be filed soon.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid or
accrued by the Company for services rendered during fiscal 2000, 1999 and 1998
to the Chief Executive Officer of the Company, and each of the other executive
officers of the Company whose annual cash compensation exceeded $100,000
(collectively, the "Named Executive Officers") during fiscal 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
SHARES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
--------------------------- ---- ------ ----- ---------------- ---------------------------
<S> <C> <C> <C> <C> <C>
Stephen Russell 2000 $514,347 $200,000 20,000 (7) $92,290 (1)(2)(3)(4)(5)
President 1999 505,170 --- --- 98,759 (1)(2)(3)(4)(5)
1998 487,627 339,077 --- 86,807 (1)(2)(3)(4)(5)
Robert Goldberg (9) 2000 $212,308 $82,500 40,000 (8) $11,171 (2)(3)(4)(5)
Executive Vice President 1999 157,108 --- 20,000 37,504 (2)(3)(4)(5)(6)
Chief Operating Officer 1998 42,135 18,790 20,000 3,930 (3)(4)(5)(6)
Paul A. Will 2000 $131,923 $60,000 30,000 (8) $10,680 (2)(3)(4)(5)
Executive Vice President 1999 109,382 --- 10,000 12,784 (2)(3)(4)(5)
Chief Financial Officer 1998 96,920 42,341 5,000 10,794 (2)(3)(4)(5)
Michael W. Dunlap 2000 $115,000 $25,000 2,500 $8,655 (2)(3)(4)(5)
Vice President, Treasurer 1999 114,135 --- 5,000 10,007 (2)(3)(4)(5)
1998 105,434 46,683 5,000 8,892 (2)(3)(4)(5)
</TABLE>
(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: $78,121in fiscal 2000, $79,194 in
fiscal 1999, and $71,239 in fiscal 1998.
(2) Includes the Company's contribution under the Company's 401(k) Profit
Sharing Plan, as follows: Stephen Russell - $1,946 in fiscal 2000, $2,500
in fiscal 1999, and $2,500 in fiscal 1998; Robert Goldberg - $2,186 in
fiscal 2000, and $423 in fiscal 1999; Paul A. Will - $1,612 in fiscal 2000,
$1,345 in fiscal 1999, and $1,195 in fiscal 1998; Michael W. Dunlap -
$1,377 in fiscal 2000, $1,532 in fiscal 1999 and $1,023 in fiscal 1998
(3) Includes premiums and reimbursement under an executive health and
disability benefit program as follows: Stephen Russell - $250 in fiscal
2000, $7,245 in fiscal 1999, and $1,837 in fiscal 1998; Robert Goldberg -
$4,421 in fiscal 2000, $2,601 in fiscal 1999, and $53 in fiscal 1998; Paul
A. Will - $3,334 in fiscal 2000, $5,600 in fiscal 1999, and $4,133 in
fiscal 1998; Michael W. Dunlap - $1,120 in fiscal 2000, $2,064 in fiscal
1999, and $1,611 in fiscal 1998.
6
<PAGE>
(4) Includes premiums on the employee portion of split dollar life insurance
premiums as follows: Robert Goldberg - $930 in fiscal 2000, $930 in fiscal
1999, and $250 in fiscal 1998; Paul A. Will - $328 in fiscal 2000, $439 in
fiscal 1999, and fiscal 1998; Michael W. Dunlap - $758 in fiscal 2000,
$1,011 in fiscal 1999, and $1,011 in fiscal 1998.
(5) Includes the Company's car allowance as follows: Stephen Russell - $11,973
in fiscal 2000, $9,820 in fiscal 1999, and $11,231 in fiscal 1998; Robert
Goldberg - $3,634 in fiscal 2000, $5,400 in fiscal 1999, and $1,648 in
fiscal 1998; Paul Will - $5,400 in fiscal 2000, $5,400 in fiscal 1999, and
$5,247 in fiscal 1998; Michael Dunlap - $5,400 in fiscal 2000, $5,400 in
fiscal 1999, and $5,247 in fiscal 1998.
(6) Includes relocation related expense reimbursements as follows: Robert
Goldberg - $28,150 in fiscal 1999 and $1,979 in fiscal 1998.
(7) The Compensation Committee determined to pay a special award to Mr. Russell
in March 2000 for the initiation of TruckersB2B.
(8) Robert Goldberg received 7,000 shares of the Company's common stock at fair
market value of $8.00 per share. Paul Will received 5,000 shares of the
Company's common stock at fair market value of $8.00 per share. In
addition, the officers received an amount in excess of the fair market
values to cover all applicable taxes.
(9) Robert Goldberg became a consultant to the Company, for a one year period
ending on September 19, 2001, for which he was paid $236,626.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options to the Named Executive Officers in fiscal 2000. No stock appreciation
rights were granted in fiscal 2000.
<TABLE>
<CAPTION>
Number of
Securities % of total Potential Realizable
Underlying Options Value at Assumed Rates of
Options Granted to Exercise of Stock Price 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> <C>
Stephen Russell 20,000 (4) 6% $6.125 12/7/09 $77,000 $195,200
Robert Goldberg 20,000 (2) 6% $8.00 9/19/01 $100,600 $255,000
20,000 (2) 6% $6.125 9/19/01 $77,000 $195,200
Paul A. Will 10,000 (3) 3% $8.00 8/11/09 $50,300 $127,500
20,000 (4) 6% $6.125 12/7/09 $77,000 $195,200
Michael W. Dunlap 2,500 (5) 1% $6.125 12/7/09 $9,600 $24,400
---------------
</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 SEC 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 20,000 shares became exercisable effective October 10, 2000 by
consent of the Compensation Committee.
7
<PAGE>
(3) Options for 3,334 shares became exercisable on August 11, 2000 and options
for 3,333 shares will become exercisable on each of August 11, 2001 and
August 11, 2002.
(4) Options for 6,667 shares will become exercisable on December 7, 2000 and
options for 6,666 shares will become exercisable on each of December 7,
2001 and December 7, 2002.
(5) Options for 834 shares will become exercisable on December 7, 2000 and
options for 833 shares will become exercisable on each of December 7, 2001
and December 7, 2002.
REPORT ON OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning the exercise of
options during the last fiscal year and unexercised options held at June 30,
2000 with respect to the Named Executive Officers. There were no options
exercised during fiscal 2000.
OPTION VALUES AT JUNE 30, 2000
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at June 30, 2000 at June 30, 2000(1)
---------------------------- --------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
--------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Stephen Russell 70,000 20,000 $25,000 $102,500
Robert Goldberg 6,668 53,333 6,667 180,833
Paul A. Will 11,669 38,331 15,834 141,666
Michael W. Dunlap 10,001 7,499 20,417 16,146
</TABLE>
-------------
(1) Fair market value of underlying securities was $11.25 per share based on
the closing price of the Company's Common Stock on June 30, 2000.
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.
The Celadon Group, Inc. Non-Employee Director Stock Option Plan (the
"Director Option Plan") provides for the granting to non-employee directors of
non-qualified stock options to purchase an aggregate of not more than 100,000
shares of Common Stock (subject to adjustment in certain circumstances). Under
the Director Plan, each non-employee director on April 1, 1997 was granted a
non-qualified stock option to purchase 4,000 shares of Common Stock and each new
non-employee director upon the date of his or her election or appointment will
be granted a non-qualified stock option to purchase 8,000 shares of Common
Stock. In addition, each non-employee director who was elected within the one
year period ending March 31, 1997 was granted an additional stock option to
purchase 8,000 shares of Common Stock. On each April 1st after the non-employee
director is first elected to the Board, each non-employee director is granted a
non-qualified stock option to purchase 4,000 shares of Common Stock.
8
<PAGE>
Stock options granted to non-employee directors vest on the six month
anniversary of the date of grant, assuming that the non-employee director is a
director on that date. All stock options granted to non-employee directors and
not previously exercisable become vested and fully exercisable immediately upon
the occurrence of a change in control of the Company.
All stock options granted pursuant to the Director Plan will expire on
the tenth anniversary of the date of grant. Stock Options that are exercisable
upon a non-employee director's termination of directorship for any reason other
than death, disability or cause, prior to the complete exercise of the stock
option (or deemed exercise thereof), will remain exercisable following such
termination until the earlier of (i) the expiration of the 90 day period
following the non-employee director's termination of directorship or (ii) the
remaining term of the stock option. Stock options that are exercisable upon a
non-employee director's termination of directorship for disability or death will
remain exercisable by the non-employee director or, in the event of his or her
death, by the non-employee director's estate or by the person given authority to
exercise such stock options by his or her will or by operation of law, until the
earlier of (i) the first anniversary of the non-employee director's termination
of directorship or (ii) the remaining term of the stock option. Upon a
non-employee director's removal from the Board for cause, all outstanding stock
options of such director will immediately terminate and will be null and void.
Paul Biddelman, Michael Miller, Anthony Heyworth and Kilin To were each
granted 4,000 shares on April 1, 2000 pursuant to the Director Option Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
ROLE OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors (the
"Compensation Committee") was formed in September 1993 and is currently
comprised of two non-employee directors of the Company. The Compensation
Committee is responsible for determining the Company's compensation program for
its executive officers, including the Named Executive Officers. The Committee
also administers the Stock Plan and the Incentive Plan and, subject to the
provisions of such plans, determines grants under the plans for all employees,
including the Named Executive Officers.
The Compensation Committee has furnished this report on the Company's
executive compensation policies. This report describes the Compensation
committee's compensation policies applicable to the Company's executive officers
and provides specific information regarding the compensation of the Company's
Chief Executive Officer. (The information contained in the "Compensation
Committee Report on Executive Compensation" shall not be deemed to be
"soliciting material" or to be "filed" with the commission, nor shall such
information be incorporated by reference into any future filings under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), except to the extent that the Company specifically
incorporates it by reference into such filing.)
9
<PAGE>
PRINCIPLES OF EXECUTIVE COMPENSATION AND PROGRAM COMPONENTS
The Company's executive compensation philosophy is designed to attract
and retain outstanding executives and to foster employee commitment and align
employee and stockholder interests. To this end, the Company has sought to
provide competitive levels of compensation that integrate pay with the Company's
annual and long-term performance goals and reward above-average corporate
performance.
Annual compensation for executive officers is tied to Celadon's
financial performance. In fiscal year 2000, the Compensation Committee adopted a
formal management incentive plan (the "Incentive Plan") for senior employees of
the Company. Awards under the Incentive Plan will only be made after achieving
predetermined levels of profitability. The Incentive Plan is designed to
attract, retain and motivate individuals who are responsible for enhancing
shareholder value through increased profitability of the Company.
Federal tax laws limit the deduction a publicly held company is allowed
for compensation paid to its chief executive officer and its four most highly
compensated executive officers. Generally, amounts in excess of $1 million
(other than performance-based compensation) paid in any tax year to a covered
executive cannot be deducted. The Committee will consider ways to maximize the
deductibility of executive compensation, while retaining the discretion the
Committee deems necessary to compensate executive officers in a manner
commensurate with performance and the competitive environment for executive
talent.
STOCK PLAN
The Stock Plan is intended to enhance the profitability and value of
Celadon for the benefit of its stockholders by enabling Celadon (i) to offer
stock-based incentives to employees, thereby creating a means to raise the level
of stock ownership by such individuals in order to attract, retain and reward
such individuals and strengthen the mutuality of interests between such
individuals and stockholders, and (ii) to grant non-discretionary, nonqualified
stock options to non-employee directors, thereby creating a means to attract,
retain and reward such non-employee directors and strengthen the mutuality of
interests between non-employee directors and stockholders. The Stock Plan
permits the grant of incentive stock options and nonqualified stock options 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.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mr. Russell is employed pursuant to an employment agreement dated
January 21, 1994, as amended thereafter, providing for his continued employment
until January 21, 2004. The employment period shall be automatically renewed for
successive two-year terms unless the Company or Mr. Russell gives written notice
to the other at least 90 days prior to the expiration of the then current
employment period of their intention to terminate Mr. Russell's employment. The
employment agreement provides Mr. Russell with a base salary equal to $521,000
(as
10
<PAGE>
adjusted annually for increases in the Consumer Price Index). In addition, Mr.
Russell is eligible to participate in an incentive bonus program designed for
all members of the Company's senior management pursuant to which he may receive
a bonus in an amount equal to between 0% and 105% of his base salary. The
employment agreement also provides that Mr. Russell is entitled to participate
in all employment benefit plans of the Company and all other fringe benefit
plans generally available to employees of the Company.
The agreement provides that in the event of termination: (i) by the
Company without cause (including the non-renewal of the employment period by the
Company) or by Mr. Russell for cause, Mr. Russell will be entitled to receive
his salary for the remainder of the then employment period or one year,
whichever is greater; (ii) by reason of his disability, Mr. Russell will be
entitled to receive 50% of his salary during the two-year period commencing on
the date of his termination; and (iii) by reason of his death, Mr. Russell's
estate will be entitled to receive a pro-rata portion of the bonus for the
fiscal year in which his death occurs and to receive 50% of his salary until the
earlier of the end of the then current employment period or one year after the
date of death. The employment agreement includes a two-year non-compete covenant
commencing on termination of employment.
Upon the occurrence of a change in control (as defined in the
employment agreement), the amended agreement provides that if (i) at any time
within two years of a change in control or within 180 days prior to a change in
control, Mr. Russell's employment is terminated by the Company without cause or
by Mr. Russell for cause or (ii) at any time during the 90-day period
immediately following the date which is six months after the change in control
Mr. Russell terminates his employment for any reason, Mr. Russell shall be
entitled to receive (1) a lump sum payment in an amount equal to three times his
base salary and three times the highest annual bonus paid to him within three
years prior to the change in control; (2) any accrued benefits; (3) a pro-rata
portion of the bonus for the fiscal year in which the change in control occurs;
(4) continued medical and dental benefits for Mr. Russell (and eligible
dependents) for 36 months; (5) outplacement services for one year; and (6) upon
the occurrence of the change in control, full and immediate vesting of all stock
options and equity awards. The agreement also provides that Mr. Russell is
entitled to receive a gross-up payment on any payments made to Mr. Russell that
are subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code; provided, however, that if the total payments made to Mr. Russell do not
exceed 110% of the greatest amount that could be paid to Mr. Russell such that
the receipt of payments would not give rise to any excise tax, then no gross-up
payment will be made and the payments made to Mr. Russell, in the aggregate,
will be reduced to an amount that would result in no excise tax being triggered.
TERMINATION OF EMPLOYMENT AGREEMENT
Mr. Will is party to a separation agreement, with the Company, whereby
the Company has the right at any time with or without prior written notice to
Mr. Will to terminate or obtain his resignation. The agreement provides that in
the event of termination: (i) Mr. Will will be entitled to receive one year
salary less normal withholding; (ii) a pro-rata bonus payment equal to the then
current bonus formula for the time employed in the current fiscal year up to
date of
11
<PAGE>
termination in that fiscal year less normal withholdings; (iii) a lump sum
payment equal to twelve months of COBRA premiums for the group medical and
dental plans; (iv) a lump sum payment equal to twelve months car allowance; and
(v) may exercise any vested or unvested stock options employee has in accordance
with the terms of the Stock Option Plan for a period of one year from employee's
termination.
REPORT ON REPRICING OF OPTIONS
<TABLE>
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 Repricing Price Repricing
---- ---- ---------- --------- --------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Stephen Russell(1) 8/1/97 25,000 $12.00 $20.00 $12.00 7 yrs, 1 mos
Robert Goldberg(2) 8/11/99 20,000 $8.00 $14.25 $8.00 8 yrs, 7 mos
Paul Will(2)(3) 8/11/99 2,500 $8.00 $14.50 $8.00 4 yrs, 6 mos
8/11/99 2,500 $8.00 $15.25 $8.00 5 yrs, 1 mos
8/11/99 5,000 $8.00 $14.50 $8.00 8 yrs, 7 mos
</TABLE>
(1) 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.
(2) On August 11, 1999, the Company cancelled the out-of-the-money options and
issued replacement options.
(3) Mr. Will's replacement options were issued as one replacement option of
10,000 shares.
COMPENSATION COMMITTEE
Michael Miller (Chairman)
John Kines
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>
STOCK PRICE PERFORMANCE
The following graph compares the cumulative total return to
stockholders of the Company's Common Stock to the cumulative total returns of
the Nasdaq Stock Market - U.S. and the Nasdaq Truck and Transportation Index for
the period June 1995 through June 2000. The graph assumes that $100 was invested
on June 30, 1995.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
CELADON GROUP, INC.
THE NASDAQ INDEX, AND THE TRUCK AND TRANSPORTATION INDEX
<TABLE>
<CAPTION>
COMPANY/INDEX/PEER GROUP 6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
------------------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Celadon $100 $50.82 $75.41 $124.59 $55.74 $73.77
Nasdaq Index $100 $128.39 $156.15 $205.58 $296.02 $437.30
Truck & Transportation Index $100 $110.89 $127.20 $153.77 $157.03 $119.23
</TABLE>
Under the rules of the 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.
13
<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 SEC,
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 Named
Executive Officers, and (iv) by all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF COMMON
STOCK AS OF SEPTEMBER 20, 2000 (1)
-------------------------------------------
NAME AND
POSITION SHARES %
--------------------------- ---------------------------- ------------
<S> <C> <C>
Stephen Russell...................................... 989,804 (2)(3) 12.7%
Chairman of the Board, President and Chief
Executive Officer of the Company
Robert Goldberg...................................... 67,000 (3) *
Executive Vice President, Chief Operating Officer
Paul A. Will......................................... 30,003 (3) *
Vice President, Chief Financial Officer
Michael W. Dunlap.................................... 14,167 (3) *
Vice President - Treasurer
Paul A. Biddelman.................................... 40,500 (3)(4) *
Director of the Company
Michael Miller....................................... 40,500 (3) *
Director of the Company
Anthony Heyworth..................................... 13,000 (3) *
Director of the Company
Kilin To............................................. 64,585 (3) *
Director of the Company
Hanseatic Corporation................................ 627,232 (4) 8.1%
Wolfgang Traber...................................... 627,232 (4) 8.1%
Brinson Partners, Inc................................ 566,505 (5) 7.3%
Dimensional Fund Advisors, Inc....................... 523,200 (6) 7.1%
Dorsey Gardner....................................... 533,000 (7) 6.8%
Vizcaya Investments, Inc............................. 763,200 (8) 9.8%
All executive officers and directors as a group
(seven persons)................................... 1,259,559 (9) 16.2%
</TABLE>
-------------
*Represents beneficial ownership of not more than one percent of the outstanding
Common Stock.
(footnotes continued on next page)
14
<PAGE>
(footnotes continued from previous page)
(1) Based upon 7,788,242 shares of Common Stock outstanding at September 20,
2000.
(2) Excludes 627,232 shares of Common Stock beneficially owned by Hanseatic
Corporation ("Hanseatic") that are subject to a stockholders agreement
between Hanseatic and Stephen Russell (the "Stockholders Agreement")
pursuant to which Hanseatic and Mr. Russell have agreed to vote for each
other's nominees to the Board of Director of the Company. The foregoing
information is based upon a Schedule 13D filed by Hanseatic with the SEC on
April 7, 2000. 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 certain directors and executive
officers of the Company had the right to acquire through the exercise of
options within 60 days of September 20, 2000, as follows: Stephen Russell -
70,000 shares; Bob Goldberg - 60,000 shares; Paul A. Will - 15,003 shares;
Michael W. Dunlap - 14,167 shares; Paul A. Biddelman - 40,500 shares;
Michael Miller - 40,500 shares; Anthony Heyworth - 12,000 shares; and Kilin
To - 40,500 shares.
(4) 627,232 shares of Common Stock are held by Hanseatic Americas LDC, a
Bahamian limited duration company of which the sole managing member is
Hansabel Partners LLC, a Delaware limited liability company of which
Hanseatic is the sole managing member. Effective April 1, 2000, Mr.
Biddelman ceased to exercise voting or investment power with respect to
such shares, as a result of modifications to the corporate governance
arrangements of Hanseatic. In addition, Mr. Wolfgang Traber is the holder
of a majority of the shares of capital stock of Hanseatic. Excludes 919,804
shares of Common Stock owned by Mr. Russell that are subject to the
Stockholders Agreement. The address of Hanseatic, Mr. Traber and Mr.
Biddelman is 450 Park Avenue, New York, NY 10022. The foregoing information
is based upon a Schedule 13D filed by Hanseatic with the SEC on April 7,
2000.
(5) Brinson Partners, Inc. ("BPI") is a registered investment adviser deemed
beneficially own 566,505 shares of Common Stock (the "BPI shares"). BPI is
an indirect wholly-owned subsidiary of UBS AG, 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 of 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. The
foregoing information is based upon a Schedule 13G filed by BPI with the
SEC on February 10, 2000.
(6) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to beneficially own 523,200 shares of Common Stock, 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. The address of Dimensional Fund Advisors, Inc. is
1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401. The foregoing
information is based upon a Schedule 13G filed by Dimensional with the SEC
on February 3, 2000.
(7) Of such shares, Dorsey Gardner ("Gardner") reports sole voting and
dispositive power over 268,000 shares, Hollybank Investment L.P., a
Delaware limited partnership ("Hollybank"), reports sole voting and
dispositive power over 143,500 shares, Thistle Investment LLC, a Delaware
limited liability company ("Thistle"), reports sole voting and dispositive
power over 120,000 shares and Timothy G. Caffrey ("Caffrey") reports sole
voting and dispositive power over 1,500 shares. Gardner, as General Partner
of Hollybank, may be deemed to beneficially own the shares of Common Stock
beneficially owned by Hollybank. Gardner disclaims beneficial ownership of
such shares. Caffrey, as manager of Thistle, may be deemed to beneficially
own the shares of Common Stock beneficially owned by Thistle. Caffrey
disclaims ownership of such shares. The business address of Gardner,
Hollybank and Thistle is P.O. Box 190240, Miami Beach, FL 33119. The
business address of Caffrey is One International Place, Suite 2401, Boston,
MA 02110. The foregoing information is based upon a Schedule 13G filed by
the foregoing persons with the SEC on March 22, 2000.
15
<PAGE>
(8) Of such shares, Vizcaya Investments, Inc., a British Virgin Islands
corporation ("Vizcaya"), reports sole voting and dispositive power over
494,800 shares, Atlantic Balanced Fund Inc., a British Virgin Islands
corporation ("Atlantic Balanced"), reports sole voting and dispositive
power over 100,300 shares, Fernando Montero reports shared voting and
dispositive power over 68,100 shares, Cecilia Montero reports shared voting
and dispositive power over 68,100 shares, Atlantic Security Bank ("Atlantic
Security") reports sole voting and dispositive power over 50,000 shares,
Southampton Finance Corp. ("Southampton") reports sole voting and
dispositive power over 50,000 shares and Fernando Montero Defined Benefit
Pension Trust (the "Trust") reports shared voting and dispositive power
over 18,100 shares. Atlantic Balanced and Atlantic Security are wholly
owned by Atlantic Security Holding Corp., a Cayman Islands corporation and
wholly owned subsidiary of Credicorp Ltd., a Bermuda corporation. The
business address of Vizcaya, Atlantic Balanced, Atlantic Security and
Southampton is Calle 50 y Aquilino de la Guardia, Torre Banco Continental,
Piso 28 and 29, Ciudad de Panama, Panama. The business address of Fernando
Montero, Cecilia Montero and the Trust is 2665 South Bayshore Drive, Suite
1001, Coconut Grove, FL 33133. The foregoing information is based upon a
Schedule 13G filed by the foregoing persons with the SEC on April 27, 2000.
(9) Excludes 627,232 shares of Common Stock beneficially owned by Hanseatic
that are subject to the Stockholders Agreement.
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.
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 739,371 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. This warrant to purchase
12,121 shares of Common Stock expired on September 30, 1998. 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>
The Company and Citicorp Venture Capital, Ltd. ("CVC"), a principal
stockholder of the Company, 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 and warrants (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.
PROPOSAL 2: APPROVAL OF AMENDMENT TO
THE CELADON GROUP, INC. 1994 STOCK OPTION PLAN
The affirmative vote of at least a majority of the shares of Common
Stock present in person or represented by proxy and entitled to vote on this
matter at the meeting is required to approve the amendment to the Celadon Group,
Inc. 1994 Stock Option Plan, as amended and restated effective August 19, 1997
(the "Stock Option Plan").
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE STOCKHOLDERS
VOTE THEIR SHARES FOR THE AMENDMENT TO THE CELADON GROUP, INC. 1994 STOCK OPTION
PLAN.
AMENDMENT TO 1994 STOCK OPTION PLAN
On October 10, 2000, the Board of Directors approved the amendment to
the Stock Option Plan, subject to stockholder approval, to provide (i) that the
aggregate number of shares of Common Stock subject to awards under the Stock
Option Plan be increased from 800,000 to 1,050,000. There are 150,000 options
required per executive contracts, in fiscal 2001, with TruckersB2B management
which will be issued only in the event that there is no public offering of
TruckersB2B.
The following description of the Stock Option Plan is a summary of the
principal provisions of the Stock Option Plan and is qualified in its entirety
by reference to the Stock Option Plan, a copy of which may be obtained upon
written request to the Company's Investor Relations Department at the Company's
principal business address.
17
<PAGE>
PURPOSE OF THE PLAN
The purposes of the Stock Option Plan are to enable the Company to
attract, retain, and motivate selected management and other key employees who
are important to the Company and to create a long-term mutuality of interest
between such persons and the Company's stockholders by granting stock options to
purchase Common Stock ("Options"), stock appreciation rights ("SARs") and
restricted stock awards (collectively, Options, SARs and restricted stock awards
are referred to herein as "Awards").
ADMINISTRATION
The Stock Option Plan is administered by a committee (the "Committee")
of the Board of Directors, appointed from time to time by the Board of
Directors. The committee is intended to consist of two or more directors, each
of whom will be a non-employee director as defined in Rule 16b-3 promulgated
under Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and an outside director as defined under Section 162(m) of the
Code. If no Committee exists which has the authority to administer the Stock
Option Plan, the functions of the Committee will be exercised by the Board of
Directors. The Committee has full authority to interpret the Stock Option Plan
and decide any questions under the Stock Option Plan and to make such rules and
regulations and establish such processes for administration of the Stock Option
Plan as it deems appropriate subject to the provisions of the Stock Option Plan.
Any interpretation and decision made by the Committee is final and conclusive.
AVAILABLE SHARES
The Stock Option Plan, as amended, authorizes the issuance of up to
1,050,000 shares of Common Stock upon the exercise of Options, SARs and
restricted stock awards. As of September 30, 2000, there were outstanding
Options to acquire 611,682 shares of Common Stock and 825 shares of restricted
stock under the Stock Option Plan. No SARs have been issued under the Stock
Option Plan. In general, if Awards are for any reason canceled, or expire or
terminate unexercised, the shares covered by such Awards will again be available
for the grant of Awards, except that shares subject to a restricted stock award
that are forfeited after the optionee has received dividends or other benefits
of ownership (excluding voting rights) will not be available for the grant of
Awards. In the event that an optionee delivers shares of Common Stock as payment
of withholding or other taxes or the purchase price of shares of Common Stock
acquired upon the exercise of an Option, such shares will not count against the
maximum aggregate limit or shares of Common Stock that are available under the
Stock Option Plan, except with respect to incentive stock options. The maximum
number of shares of Common Stock with respect to which Awards could be granted
to any individual under the Stock Option Plan during any fiscal year of the
Company may not exceed 75,000.
The Stock Option Plan provides that appropriate adjustments will be
made in the number and kind of securities subject to outstanding Awards and the
purchase price to prevent dilution of or enlargement of an optionee's rights in
the event of a stock split, stock dividend, merger, consolidation or
reorganization that satisfies the requirements set forth in the Stock Option
Plan.
18
<PAGE>
ELIGIBILITY
Selected management and other key employees who are employed by the
Company or a parent or subsidiary corporation of the Company, as defined in
Sections 424(e) and 424(f) of the Code, are eligible to be granted Awards under
the Stock Option Plan.
GRANT OF AWARDS
The Committee determines, subject to the provisions of the Stock Option
Plan, the persons to whom and the time or times at which grants shall be made,
the number of shares of Common Stock subject to an Option or restricted stock
award, the number of Options which will be treated as incentive stock options
("ISOs") or nonqualified stock options, the duration of each Option, the
specific restrictions applicable to restricted stock awards, and other terms and
provisions of the Awards. In determining persons who are to receive Awards and
the number of shares of Common Stock to be covered by each Award, the Committee
will consider the person's position, responsibilities, service, accomplishments,
present and future value to the Company, the anticipated length of his future
service, and other relevant factors.
The purchase price for the Options will be at least 100 percent of the
fair market value (as defined in the Stock Option Plan) of the Common Stock at
the time of the grant of the Options. In the case of an ISO granted to an
optionee owning more than 10 percent of the combined voting power of all classes
of stock of the Company or any parent or subsidiary corporation of the Company
(as defined in Sections 424(e) and 424(f) of the Code) at the time the ISO is
granted, the purchase price for the ISO will be at least 110 percent of the fair
market value of the Common Stock at the time the ISO is granted.
Shares purchased pursuant to the exercise of Options will be paid for
at the time of exercise as follows: (i) cash, (ii) by delivery of unencumbered
shares of Common Stock held for at least 6 months, or (iii) a combination
thereof. If the Common Stock is traded on a national securities exchange or
system sponsored by the National Association of Securities Dealers, payment in
full or in part may also be made through a "cashless exercise" procedure whereby
the optionee delivers irrevocable instructions to a broker to deliver promptly
to the Company an amount equal to the purchase price.
The Stock Option Plan also permits the Committee in its discretion, to
provide for further nonqualified stock options for a number of shares equal to
the number of shares surrendered ("Reload Options"), if an optionee exercises an
Option by surrendering other shares of Common Stock held by the optionee for at
least six months prior to such date of surrender. The purchase price of a Reload
Option shall be equal to the fair market value of the Common Stock on the date
of exercise of the original Option and may be exercised in accordance with the
terms and conditions as the Committee may determine.
Except where an Option expires earlier (as described below), if not
previously exercised, each Option will expire upon the tenth anniversary of the
grant hereof (five years in the case of a 10 percent stockholder). No Options
may be granted after January 4, 2004.
19
<PAGE>
The aggregate fair market value (determined at the time of grant) of
the Common Stock with respect to which ISOs are exercisable for the first time
by an optionee during any calendar year shall not exceed $100,000.
The Stock Option Plan permits the Committee to grant to all eligible
person's shares of Common Stock, subject to such restrictions as the Board of
Directors may determine (a restricted stock award). The Committee may grant SARs
under the Plan. SARs may be granted either alone or in addition to other Awards,
and may, but need not, relate to a specific Option. A SAR may be exercised only
at a time when the fair market value of a share of the Common Stock exceeds the
fair market value on the date of grant of the SAR and the SAR is otherwise
exercisable. If a SAR relates to a specific Option, at the time of its exercise,
the employee must surrender the privilege of exercising the related Option to
the extent that the employee exercises the SAR. If a SAR is exercised, the
holder is entitled to receive, in cash or in shares of Common Stock, or a
combination thereof, at the discretion of the Committee, the excess of the fair
market value of shares for which the right is exercised over the fair market
value on the date of grant of the SAR. The exercise of SARs is subject to
certain restrictions set forth in the Stock Option Plan.
The Committee may at any time accelerate the vesting of Options and
SARs and the removal of restrictions from restricted stock awards. In the event
of a merger or other type of corporate transaction which results in a change of
control of the Company (as defined in the Stock Option Plan), Options granted
pursuant to the Stock Option Plan automatically vest and become immediately
exercisable in full, and any forfeiture restrictions contained in any restricted
stock award automatically terminate, under certain circumstances.
If the employment of any optionee terminates for cause (as defined in
the Stock Option Plan), any Options or SARs held by the optionee terminate. If
the employment of an optionee otherwise terminates, any Options or SARs held by
the optionee may be exercised during a period of 30 days after such termination,
unless such termination of employment occurs by reasons of retirement with the
consent of the Committee, disability or death. If the employment of any optionee
terminates by reason of retirement with the consent of the Committee or
disability, nonqualified stock options or SARs exercisable at the time of such
termination may be exercised for a period of up to three years after such
termination; ISOs exercisable at the time of such termination may be exercised
for a period of up to three months after retirement with the consent of the
committee and up to twelve months after disability. If the employment of any
optionee terminates by reason of death or if an optionee dies during the period
which Option or SARs are otherwise exercisable after retirement or disability,
Options or SARs exercisable at the time of termination of employment or such
later date, may be exercised by the executor or administrator of such optionee's
estate within one year of death.
20
<PAGE>
AMENDMENT AND TERMINATION OF PLAN
The Stock Option Plan provides that it may be amended or terminated by
the Board of Directors of the Committee at any time; provided, however, that (i)
no such action shall affect or in any way impair an optionee's rights under any
Award previously granted under the Stock Option Plan and (ii) no amendment or
change shall, without stockholder approval, increase the maximum number of
shares of Common Stock which may be issued or transferred under the Stock Option
Plan, change the provisions of the Stock Option Plan regarding the purchase
price of Options, extend the period during which Awards may be granted or
exercised, or change the eligible class of employees under the Stock Option
Plan.
MISCELLANEOUS
Optionees may be limited under Section 16(b) of the Exchange Act to
certain specific exercise, election or holding periods with respect to the
Awards granted to them under the Stock Option Plan. Options granted under the
Stock Option Plan are subject to restrictions on transfer and exercise. No
Option granted under the Stock Option Plan may be exercised prior to the time
period for exercisability, subject to acceleration in the event of a change in
control of the Company (as defined in the Stock Option Plan). Although Options
will generally be nontransferable (except by will or the laws of descent and
distribution), the Committee may determine at the time of grant or thereafter
that a nonqualified stock option that is otherwise nontransferable is
transferable in whole or in part and in such circumstances, and under such
conditions, as specified by the Committee.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the principal U.S. federal income tax
consequences with respect to Options under the Stock Option Plan is based on
statutory authority and judicial and administrative interpretations as of the
date of this Proxy Statement, which are subject to change at any time (possibly
with retroactive effect) and may vary in individual circumstances. Therefore,
the following is designed to provide only a general understanding of the federal
income tax consequences (state and local income tax and estate tax consequences
are not addressed below). This discussion is limited to the U.S. federal income
tax consequences to individuals who are citizens or residents of the U.S., other
than those individuals who are taxed on a residence basis in a foreign country.
NONQUALIFIED STOCK OPTIONS. In general, an optionee will realize no
taxable income upon the grant of nonqualified stock options and the Company will
not receive a deduction at the time of such grant, unless the nonqualified stock
option has a readily ascertainable fair market value (as determined under
applicable tax law) at the time of grant. Upon exercise of a nonqualified stock
option, an optionee generally will recognize ordinary income in an amount equal
to the excess of the fair market value of the stock on the date of exercise over
the purchase price. Upon a subsequent sale of the stock by the optionee, the
optionee will recognize short-term or long-term capital gain or loss, depending
upon his or her holding period for the stock. Subject to the limitation under
Section 162(m) of the Code (as described below), the Company will generally be
allowed a deduction equal to the amount recognized by the optionee as ordinary
income in connection with the exercise of the nonqualified stock option.
21
<PAGE>
INCENTIVE STOCK OPTIONS. Options granted under the Stock Option Plan
may be ISOs, provided that such Options satisfy the requirements of the Code
therefor. In general, neither the grant nor the exercise of an ISO will result
in taxable income to the optionee or a deduction to the Company. The sale of
Common Stock received pursuant to the exercise of an ISO which satisfied the
requirement of an ISO, as well as the holding period requirement described
below, will result in long-term capital gain or loss to the optionee equal to
the difference between the amount realized on the sale and the purchase price
and will not result in a tax deduction to the Company. To receive ISO treatment,
the optionee must not dispose of the Common Stock purchased pursuant to the
exercise of an ISO either (i) within two years after the ISO is granted or (ii)
within one year after the date of exercise and must exercise the ISO within
certain time periods (generally, no later than 3 months after the optionee's
termination of employment).
If all requirements for ISO treatment other than the holding period
requirement are satisfied, the recognition of income by the optionee is deferred
until disposition of the Common Stock, but, in general, any gain in an amount
equal to the lesser of (i) the fair market value of the Common Stock on the date
of exercise or, with respect to officers and directors, the date that sale of
such stock would not create liability under Section 16(b) of the Exchange Act
minus the purchase price or (ii) the amount realized on the disposition minus
the purchase price, is treated as ordinary income. Any remaining gain is treated
as long-term or short-term capital gain depending on the optionee's holding
period for the stock disposed of. Subject to the limitation under Section 162(m)
of the Code (as described below), the Company will be entitled to a deduction at
that time equal to the amount of ordinary income realized by the optionee.
CERTAIN OTHER TAX ISSUES. In general, Section 162(m) of the Code denies
a publicly held corporation a deduction for federal income tax purposes for
compensation in excess of $1,000,000 per year per person to its chief executive
officer and the other officers whose compensation is disclosed in its proxy
statement, subject to certain exceptions. Options will generally qualify under
one of these exceptions if they are granted under a plan that states the maximum
number of shares with respect to which Options may be granted to any employee
during a specified period and the plan under which Options are granted is
approved by stockholders and is administered by a compensation committee
comprised of outside directors. The Stock Option Plan is intended to satisfy
these requirements with respect to Options. Awards of restricted stock that are
granted or vest upon the attainment of pre-established performance goals
generally satisfy the exception for performance based compensation under Section
162(m) of the Code; awards of restricted stock (not subject to the attainment of
performance goals) generally do not satisfy the exception for performance based
compensation under Section 162(m) of the Code.
In addition, any entitlement to a tax deduction on the part of the
Company is subject to the applicable federal tax rules, and in the event that
the exercisability of an Option is accelerated because of a change in control,
payments relating to the Options, either alone or together with certain other
payments may constitute parachute payments under Section 280G of the Code, which
excess amounts may be subject to excise taxes and be nondeductible by the
Company.
22
<PAGE>
The Company has the right under the Stock Option Plan to deduct from
any payment to be made to an optionee, or to otherwise require, prior to the
issuance or delivery of any shares of Common Stock or the payment of any cash
pursuant to the Stock Option Plan, payment by the optionee of any federal, state
or local taxes required by law to be withheld. An optionee may generally satisfy
such withholding obligation by reducing the number of shares of Common Stock
otherwise deliverable or by delivering shares of Common Stock already owned.
The Stock Option Plan is not subject to any of the requirements of the
Employee Retirement Income Security Act of 1974, as amended. The Stock Option
Plan is not, nor is it intended to be, qualified under Section 401(a) of the
Code.
NEW PLAN BENEFITS
As of September 30, 2000, options to acquire 782,411 of the 800,000
shares of Common Stock authorized under the Stock Option Plan had been granted.
Under the existing Stock Option Plan, Stephen Russell has been granted
nonqualified options to acquire 90,000 shares at exercise prices ranging from
$6.125 to $13.625, expiring between June 2005 and December 2009; Robert Goldberg
has been granted an ISO to acquire 20,000 shares at an exercise price of $8.00
expiring August 2009, and nonqualified options to acquire 40,000 shares at
exercise prices ranging from $6.125 to $10.25 per share expiring between
February 2009 and December 2009; Paul A. Will has been granted ISOs to acquire
50,000 shares at exercise prices ranging from $6.125 to $14.50, expiring between
March 2006 and December 2009; and Michael Dunlap has been granted incentive
stock options to acquire 17,500 shares at exercise prices ranging from $6.125 to
$12.625, expiring between August 2006 and December 2009. Additionally, under the
Stock Option Plan the non-employee directors as a group have been granted
nonqualified options to purchase 73,500 shares at exercise prices ranging from
$10.00 to $20.00, expiring between January 2004 and March 2006. All current
executive officers as a group have been granted ISOs and nonqualified options to
purchase a total of 217,500 shares at exercise prices ranging from $6.125 to
$14.50, expiring between June 2005 and December 2009.
All other current employees of the Company have been granted ISOs for a
total of 320,682 shares at prices ranging from $6.125 to $26.00 expiring between
January 2004 and June 2010.
On October 2, 2000, the closing sale price of the Common Stock on the
NASDAQ National Market was $7.75 per share.
The Board of Directors believes that the Company's ability to grant
additional stock options, SARs, and restricted stock awards is important to the
Company's ability to recruit and retain qualified personnel.
23
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for the fiscal year ended
June 30, 2000 were Ernst & Young LLP ("E&Y"). Representatives of E&Y are
expected to attend the Meeting to respond to appropriate questions and make a
statement if they so desire.
STOCKHOLDERS' PROPOSALS
Under the proxy rules adopted under the Securities Exchange Act of
1934, as amended, in the event the Company receives notice of a stockholder
proposal to take action at the next annual meeting that is not submitted for
inclusion in the company's proxy materials, the persons named on the proxy sent
by the Company to its stockholders intend to exercise their discretion to vote
on such proposal in accordance with their best judgment, if notice of the
proposal is not received at our administrative office by September 15, 2001.
STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING. Stockholders
interested in submitting a proposal for inclusion in the proxy materials for the
Company's annual meeting of stockholders in 2001 may do so by following the
procedures prescribed in SEC Rule 14a-8. To be eligible for inclusion,
stockholder proposals must be received by the Company's Corporate Secretary no
later than July 2, 2001.
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.
The Company intends to furnish to its stockholders a copy of the
Company's 2000 Annual Report on Form 10-K filed with the SEC.
Indianapolis, Indiana
October 27, 2000
24
<PAGE>
APPENDIX A
Celadon Group, Inc.
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter governs the operations of the audit committee. The committee shall
review and reassess the charter at least annually and obtain the approval of the
board of directors. The committee shall be appointed by the board of directors
and shall comprise at least three directors, each of whom are independent of
management and the Company. Members of the committee shall be considered
independent if they have no relationship that may interfere with the exercise of
their independence from management and the Company. All committee members shall
be financially literate, or shall become financially literate within a
reasonable period of time after appointment to the committee, and at least one
member shall have accounting or related financial management expertise.
STATEMENT OF POLICY
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, the internal auditors
and management of the Company. In discharging its oversight role, the committee
is empowered to investigate any matter brought to its attention with full access
to all books, records, facilities, and personnel of the Company and the power to
retain outside counsel, or other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the audit committee is to oversee the Company's
financial reporting process on behalf of the board and report the results of
their activities to the board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible for
auditing those financial statements. The committee in carrying out its
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. The committee
should take the appropriate actions to set the overall corporate "tone" for
quality financial reporting, sound business risk practices, and ethical
behavior.
<PAGE>
The following shall be the principal recurring processes of the audit committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
appropriate.
The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit committee, as representatives of the
Company's shareholders. The committee shall have the ultimate authority and
responsibility to evaluate and, where appropriate, recommend the
replacement of the independent auditors. The committee shall discuss with
the auditors their independence from management and the Company and the
matters included in the written disclosures required by the Independence
Standards Board. Annually, the committee shall review and recommend to the
board the selection of the Company's independent auditors, subject to
shareholders' approval.
The committee shall discuss with the internal auditors and the independent
auditors the overall scope and plans for their respective audits including
the adequacy of staffing and compensation. Also, the committee shall
discuss with management, the internal auditors, and the independent
auditors the adequacy and effectiveness of the accounting and financial
controls, including the Company's system to monitor and manage business
risk, and legal and ethical compliance programs. Further, the committee
shall meet separately with the internal auditors and the independent
auditors, with and without management present, to discuss the results of
their examinations.
The committee shall review the interim financial statements with management
and the independent auditors prior to the filing of the Company's Quarterly
Report on Form 10-Q. Also, the committee shall discuss the results of the
quarterly review and any other matters required to be communicated to the
committee by the independent auditors under generally accepted auditing
standards. The chair of the committee may represent the entire committee
for the purposes of this review.
The committee shall review with management and the independent auditors the
financial statements to be included in the Company's Annual Report on Form
10-K (or the annual report to shareholders if distributed prior to the
filing of Form 10-K), including their judgment about the quality, not just
acceptability, of accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial statements.
Also, the committee shall discuss the results of the annual audit and any
other matters required to be communicated to the committee by the
independent auditors under generally accepted auditing standards.
2
<PAGE>
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 Tuesday,
November 28, 2000 at 10:00 a.m., (local time) at the Company's Corporate
Headquarters located at One Celadon Drive, Indianapolis, Indiana 46235, and at
any adjournment or postponement 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 OR POSTPONEMENT 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>
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: (01) Stephen Russell, (02) Paul A. Biddelman,
(03) Michael Miller, (04) Anthony Heyworth, (05) John Kines
<TABLE>
<CAPTION>
VOTE FOR ALL
FOR WITHHELD EXCEPT
<S> <C> <C>
[ ] [ ] [ ]
</TABLE>
INSTRUCTION: To vote for all nominees, mark the box "FOR" with an "X". To
withhold your vote for all nominees, mark the box "VOTE WITHHELD" with an "X".
To withhold your vote for one or more nominees but not all nominees, mark the
box "FOR ALL EXCEPT" with an "X" and strike a line through the name(s) of the
nominee(s) above for whom you wish to withhold your vote.
<TABLE>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Ratification of an amendment to the Celadon [ ] [ ] [ ]
Group, Inc. 1994 Stock Option Plan.
</TABLE>
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:________
