<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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-2.
</TABLE>
Treadco, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
TREADCO, INC.
(Logo)
April 10, 1998
To the Stockholders of Treadco, Inc.:
You are cordially invited to attend the Annual Meeting of Stockholders of
Treadco, Inc. on Wednesday, May 6, 1998 at 1:00 p.m. at 3801 Old Greenwood Road,
Fort Smith, Arkansas 72903. A notice of the meeting, a proxy card and a proxy
statement containing information about the matters to be acted upon are
enclosed. It is important that your shares be represented at the meeting. We
look forward to the Annual Meeting of Stockholders and we hope you will attend
the meeting or be represented by proxy.
WE URGE YOU TO SIGN AND DATE YOUR ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN
THE ENCLOSED PRE-ADDRESSED, POSTAGE-PAID ENVELOPE EVEN IF YOU ARE PLANNING TO
ATTEND THE MEETING.
/s/Robert A. Young III /s/John R. Meyers
Robert A. Young III John R. Meyers
Chairman of the Board President - Chief Executive Officer
TREADCO, INC., POST OFFICE BOX 10048, FORT SMITH, ARKANSAS 72917-0048
<PAGE> 3
TREADCO, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 6, 1998
To the Stockholders:
The Annual Meeting of Stockholders of Treadco, Inc., a Delaware corporation,
will be held at 3801 Old Greenwood Road, Fort Smith, Arkansas 72903 on
Wednesday, May 6, 1998 at 1:00 p.m. for the following purposes:
I. To elect two Class I Directors for terms to expire at the 2001
Annual Meeting of Stockholders;
II. To ratify the appointment of Ernst & Young LLP as independent auditors
for fiscal year 1998;
III. To act upon such other matters as may properly be brought before the
meeting affecting the business and affairs of the Company.
Only stockholders of record at the close of business on March 10, 1998 will be
entitled to notice of and to vote at the meeting or any adjournment thereof.
PLEASE COMPLETE, SIGN AND DATE YOUR ENCLOSED PROXY CARD AND RETURN IT PROMPTLY
IN THE ENVELOPE PROVIDED.
By Order of the Board of Directors,
/s/Richard F. Cooper
Fort Smith, Arkansas Richard F. Cooper
April 10, 1998 Secretary
<PAGE> 4
TREADCO, INC.
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of Treadco, Inc.
("Treadco" or the "Company"), in connection with the solicitation of proxies on
behalf of the Treadco Board of Directors (the "Board") to be voted at the Annual
Meeting of Stockholders on May 6, 1998 ("1998 Annual Meeting") for the purposes
set forth in the accompanying Notice of Meeting. This Proxy Statement and Notice
of Meeting, the related proxy card and the 1997 Annual Report to Stockholders
are being mailed to stockholders beginning on or about April 10, 1998. Treadco's
principal place of business is 1101 South 21st Street, Fort Smith, Arkansas
72901, and its telephone number is 501/788-6400.
RECORD DATE
The Board has fixed the close of business on March 10, 1998 as the record date
for the 1998 Annual Meeting. Only stockholders of record on that date will be
entitled to vote at the meeting in person or by proxy.
PROXIES
The proxies named on the enclosed proxy card were appointed by the Board to vote
the shares represented by the proxy card. Upon receipt by the Company of a
properly signed and dated proxy card, the shares represented thereby will be
voted in accordance with the instructions on the proxy card. If a stockholder
does not return a signed proxy card, his or her shares cannot be voted by proxy.
Stockholders are urged to mark the ovals on the proxy card to show how their
shares are to be voted. If a stockholder returns a signed proxy card without
marking the ovals, the shares represented by the proxy card will be voted as
recommended by the Board herein and in the proxy card. The proxy card also
confers discretionary authority to the proxies to vote on any other matter not
presently known to management that may properly come before the meeting. Any
proxy delivered pursuant to this solicitation is revocable at the option of the
person(s) executing the same (i) upon receipt by the Company before the proxy is
voted of a duly executed proxy bearing a later date, (ii) by written notice of
revocation to the Secretary of the Company received before the proxy is voted or
(iii) by such person(s) voting in person at the Annual Meeting of Stockholders.
VOTING SHARES
On the record date, there were 5,072,255 shares of common stock outstanding and
entitled to vote ("Common Stock"). Each share of Common Stock is entitled to one
vote. The holders in person or by proxy of a majority of the total number of the
shares of Common Stock shall constitute a quorum for purposes of the 1998 Annual
Meeting.
PROPOSAL I: ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL I.
The Board is divided into three classes of directorships, with directors in each
class serving staggered three-year terms. At each annual meeting of
stockholders, the terms of directors in one of the three classes expire. At that
annual meeting of stockholders, directors are elected in a class to succeed the
directors whose terms expire, the terms of the directors so elected to expire at
the third annual meeting of stockholders thereafter. Pursuant to the Company's
Certificate of Incorporation, the Board has fixed the number of directorships at
six: two in the class to be elected at the 1998 Annual Meeting of Stockholders
whose members' terms will expire at the 2001 Annual Meeting of Stockholders, two
in the class whose members' terms will expire at the 2000 Annual Meeting of
<PAGE> 5
Stockholders, and two in the class whose members' terms will expire at the
Annual Meeting of Stockholders.
It is intended that the shares represented by the accompanying proxy will be
voted at the 1998 Annual Meeting for the election of nominees Robert A. Young,
III and John H. Morris as the two directors in the class of directorships whose
members' terms will expire in 2001, unless the proxy specifies otherwise. Each
nominee has indicated his willingness to serve as a member of the Board, if
elected.
If, for any reason not presently known, either Messrs. Young or Morris will not
be available for election at the time of the 1998 Annual Meeting, the shares
represented by the accompanying proxy may be voted for the election in his/their
stead of substitute nominee(s) designated by the Board or a committee thereof,
unless the proxy withholds authority to vote for all nominees.
Assuming the presence of a quorum, to be elected a nominee must receive the
affirmative vote of the holders of a majority of the Common Stock present, in
person or by proxy, at the 1998 Annual Meeting.
DIRECTORS OF THE COMPANY
The following information relates to the nominees named above and to the other
persons whose terms as directors will continue after the 1998 Annual Meeting.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NAME AGE BUSINESS EXPERIENCE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS I -- TERM EXPIRES MAY 1998
Robert A. Young III . . . . . . . . 57 Mr. Young has been Chairman of the Board of Directors of the Company
since it was formed in June 1991. Mr. Young served as the Company's
Chief Executive Officer from June 1991 through October 1995. Mr. Young
has been Chief Executive Officer of Arkansas Best Corporation ("ABC")
since August 1988, President since 1973 and was Chief Operating Officer
of ABC from 1973 to 1988. Mr. Young has been a Director of ABC since
1970. Mr. Young also is a Director of Mosler, Inc.
John H. Morris . . . . . . . . . . 54 Mr. Morris has been a Director of the Company since it was formed in
June 1991, and a Director of ABC since July 1988. Mr. Morris currently
serves as President of The Gordon + Morris Group. Mr. Morris is a
Director of Outsourcing Services Group. Mr. Morris served as a Managing
Director of Kelso & Company, Inc. ("Kelso") from March 1989 to March
1992, was a General Partner from 1987 to March 1989, and prior to 1987
was a Vice President. Prior to 1985, Mr. Morris was President of LBO
Capital Corp. In February 1997, Merchant's Transportation & Logistics
Company, and its subsidiaries, filed petitions under Chapter 11 of the
federal bankruptcy laws. Mr. Morris served as a Director of such
entities through January 1997 and briefly served as the President of
such entities for about a two-week period in November 1995 before these
entities became operating companies.
</TABLE>
(2)
<PAGE> 6
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NAME AGE BUSINESS EXPERIENCE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS II -- TERM EXPIRES MAY 1999
John R. Meyers . . . . . . . . . . 50 Mr. Meyers was appointed the Company's President-Chief Executive
Officer in October 1995. Mr. Meyers served as Treasurer of the Company
from June 1991 through October 1995. From 1979 through 1995 Mr. Meyers
served as Vice President-Treasurer of Arkansas Best Corporation.
Nicolas M. Georgitsis . . . . . . . 62 Mr. Georgitsis has been a Director of the Company since it was formed
in June 1991. Mr. Georgitsis has been an independent consultant since
January 1991. From February 1986 to January 1991, Mr. Georgitsis was
Senior Vice President of American Standard Inc. in charge of
Transportation Products. Mr. Georgitsis is a Director of Mosler, Inc.,
and member of the Operating Board of Trust Company of the West (Latin
America Fund).
CLASS III -- TERM EXPIRES MAY 2000
William A. Marquard . . . . . . . 78 Mr. Marquard has been a Director of the Company since it was formed in
June 1991. Mr. Marquard has been Chairman of the Board and a Director
of ABC since November 1988. In April 1992, Mr. Marquard was elected as
a Director and Vice Chairman of the Board of Kelso. From 1971 to 1983,
Mr. Marquard was President and Chief Executive Officer of American
Standard Inc. and from 1979 to 1985, he was Chairman of the Board of
American Standard Inc. Mr. Marquard resumed his position as Chairman of
the Board of American Standard Inc. in February 1989 until March 31,
1992, when he was named Chairman Emeritus. Mr. Marquard also became
Chairman of the Board of ASI Holding Corporation in February 1989 until
March 31, 1992, when he was named Chairman Emeritus. Mr. Marquard is a
Director of Mosler, Inc., Earle M. Jorgensen Co., and EarthShell
Container Corporation.
Robert B. Gilbert . . . . . . . . . 73 Mr. Gilbert has been a Director of the Company since December 1991.
From April 1985 to February 1991, Mr. Gilbert was President and Chief
Executive Officer of Rheem Manufacturing Co. Since his February 1991
retirement, Mr. Gilbert has been an independent consultant.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board meets on a regularly scheduled basis four times a year to
review significant developments affecting the Company and to act on matters
requiring Board approval. It also holds special meetings when Board action is
required between scheduled meetings. The Board met four times during 1997.
During 1997, each member of the Board participated in at least 75% of all Board
and applicable committee meetings held during the period for which he was a
Director.
(3)
<PAGE> 7
The Board has established Audit, Executive Compensation and Development, and
Stock Option committees to assist it in the discharge of its responsibilities.
The functions of those committees, their current members and the number of
meetings held during 1997 are described below. The Board does not have a
committee for nomination of directors. The Board nominates candidates for
director.
Audit Committee. The Audit Committee recommends to the Board the appointment of
the firm selected to be independent public accountants for the Company and
monitors the performance of such firm; reviews and approves the scope of the
annual audit and quarterly reviews and evaluates with the independent public
accountants the Company's annual audit and annual consolidated financial
statements; reviews with management the status of internal accounting controls;
and evaluates problem areas having a potential financial impact on the Company
which may be brought to its attention by management, the independent public
accountants or the Board. Messrs. Gilbert and Georgitsis currently are members
of the Audit Committee. The Audit Committee met three times during 1997.
Executive Compensation and Development Committee. The Executive Compensation and
Development Committee is responsible for reviewing executive management's
performance and for determining appropriate compensation. Messrs. Marquard,
Georgitsis and Gilbert currently are members of the Executive Compensation and
Development Committee. The Executive Compensation and Development Committee met
two times in 1997.
Stock Option Committee. The Stock Option Committee administers the Company's
Incentive Stock Option Plan. The Stock Option Committee has the power to
determine from time to time the individuals to whom options shall be granted,
the number of shares granted, and the time or times at which options shall be
granted. Messrs. Georgitsis and Gilbert currently are members of the Stock
Option Committee. The Stock Option Committee met two times during 1997.
Director Compensation. Messrs. Young and Meyers receive no compensation for
services as a Director or committee member. Non-employee directors receive a
$25,000 annual retainer, $1,000 for each Board meeting attended, and $500 for
each committee meeting attended, if the committee meeting is held other than in
conjunction with a Board meeting.
Messrs. Georgitsis and Gilbert, as members of the Stock Option Committee, each
received automatic stock options under the Company's 1991 Stock Option Plan on
January 2, 1997, for 5,000 shares of the Company's Common Stock at a fair market
value exercise price of $10.25 per share. Messrs. Marquard, Young and Morris,
non-employee Directors, each received stock options under the Company's 1991
Stock Option Plan on January 28, 1997 for 5,000 shares of the Company's Common
Stock at a fair market value of $10.375 per share. On each anniversary date of
the grant, 20% of the options vest and thereafter can be exercised through the
tenth year after the grant date.
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth certain information concerning beneficial
ownership of the Company's Common Stock as of March 10, 1998, by (i) each person
who is known by the Company to own beneficially more than five percent (5%) of
the outstanding shares of Common Stock, (ii) each director and named executive
officer of the Company and (iii) all directors and executive officers as a
group.
(4)
<PAGE> 8
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
SHARES PERCENTAGE
BENEFICIALLY OF SHARES
OWNED OUTSTANDING
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(i) NAME / ADDRESS
Arkansas Best Corporation ("ABC") (1)(4)................................... 2,319,700 45.7%
3801 Old Greenwood Road
Fort Smith, AR 72903
Shapiro Capital Management Co., Inc. (2)................................... 1,156,579 22.8%
3060 Peach Tree Road
Atlanta, GA 30305
Dimensional Fund Advisors Inc. (3)......................................... 273,992 5.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
<TABLE>
<CAPTION>
(ii) NAME POSITION
<S> <C> <C> <C>
William A. Marquard (5) ................. Director 24,000 *
Robert A. Young III (4)(5)............... Director 2,335,700 46.0%
John H. Morris (5)....................... Director 14,000 *
Robert B. Gilbert (5).................... Director 14,000 *
Nicolas M. Georgitsis (5)................ Director 18,000 *
John R. Meyers (5)....................... Director/President/CEO 16,624 *
Daniel V. Evans (5) ..................... Executive Vice President/COO 24,579 *
(III) All Directors and Executive Officers as a Group (10 total)......... 2,446,903 48.2%
</TABLE>
- ------------------
*Less than 1%
(1) ABC's shares of the Company are subject to a pledge of assets to
Societe Generale, Southwest Agency, as Agent, under ABC's Credit
Agreement. Such arrangement, in the event of an uncured event of
default under ABC's Credit Agreement, could result at a subsequent date
in a change of control of the Company. ABC is not currently in default
under its Credit Agreement and does not expect such a default to occur.
(2) According to the most recent Schedule 13G it has provided to the
Company, Shapiro Capital Management Co., Inc. is an investment adviser
registered under the Investment Advisers Act of 1940. Shapiro Capital
Management Co., Inc. has the following voting and investment powers
with respect to such shares: (a) sole voting power, 1,156,579; (b)
shared voting power, not applicable; (c) sole investment power,
1,156,579; (d) shared investment power, not applicable.
(3) According to the most recent Schedule 13G it has provided to the
Company, Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 273,992
shares of Company 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. Dimensional disclaims beneficial ownership of all
such shares.
(4) Mr. Young directly owns 10,000 shares of Company Common Stock. Mr.
Young beneficially owns 2,203,828 shares, or 11.2%, of ABC's voting
common stock. Under federal securities law since Mr. Young is deemed to
be a controlling person of ABC, Mr. Young may be deemed to beneficially
own all 2,319,700 shares of Company Common Stock owned by ABC, which
shares are included as beneficially owned by him. Mr. Young's business
address is 3801 Old Greenwood Road, Fort Smith, AR 72903.
(5)
<PAGE> 9
(5) Includes stock option shares of Common Stock which are vested and will
vest within 60 days of the record date as follows: Messrs. Marquard,
14,000 total, 12,000 are vested and 2,000 will vest within 60 days;
Morris, 14,000 total, 12,000 are vested and 2,000 will vest within 60
days; Gilbert, 14,000 total, 13,000 are vested and 1,000 will vest
within 60 days; Georgitsis, 14,000 total, 13,000 are vested and 1,000
will vest within 60 days; Young, 6,000 total, 5,000 are vested and
1,000 will vest within 60 days; Evans, 22,000 vested shares; and
Meyers, 12,000 vested shares.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, age, principal occupation and business
experience during the last five years of each of the current executive officers
of the Company. The executive officers serve at the pleasure of the Board. For
information regarding ownership of the Common Stock by the executive officers of
the Company, see "PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP." There are no
family relationships among directors and executive officers of the Company.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AGE BUSINESS EXPERIENCE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John R. Meyers . . . . . . . 50 See previous description.
President -
Chief Executive Officer
Daniel V. Evans . . . . . . . 50 Mr. Evans has served as Executive Vice President-Chief Operating Officer since October
Executive Vice President - 1995, and served as Vice President-Adminis- tration of the Company from June 1991 through
Chief Operating Officer October 1995. Mr. Evans served as Vice President-Administration of ABC-Treadco, Inc. from
1989 to 1991, and served as Director of Administration from 1977 to 1989.
David E. Loeffler . . . . . . 51 Mr. Loeffler was appointed Vice President - Chief Financial Officer and Treasurer of the
Vice President - Company and Arkansas Best Corporation ("ABC") in April, 1997. From December 1995 to April
Chief Financial Officer 1997, he was Vice President-Treasurer of ABC. From 1992 to 1995, Mr. Loeffler was a private
and Treasurer investor and in investment management. From 1983 to 1992 he was Senior Vice President -
Finance and Administration and Chief Financial Officer for Yellow Freight System, Inc.
Richard F. Cooper . . . . . . 46 Mr. Cooper has served as Secretary of the Company since it was formed in June 1991. Mr.
Secretary Cooper has been Vice President- Administration since 1995, Vice President-Risk Management
from 1991 to 1995, Secretary since 1987, and Vice President-General Counsel since 1986 for
Arkansas Best Corporation.
J. Lavon Morton . . . . . . 47 Mr. Morton was appointed Vice President-Financial Reporting of the Company and of Arkansas
Vice President- Best Corporation ("ABC") in May 1997. Mr. Morton joined ABC as Assistant Treasurer in
Financial Reporting December 1996. From October 1984 until November 1996, Mr. Morton was a Partner in Ernst &
Young LLP. From 1972 until 1984, Mr. Morton was employed by Ernst & Young LLP. Mr. Morton
is a Certified Public Accountant.
</TABLE>
(6)
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid during
each of the Company's last three fiscal years to the Company's Chief Executive
Officer and the Company's other executive officer who earned in excess of
$100,000, based on salary and bonus earned during 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------------- ---------------------- --------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
NAME OTHER RESTRICTED
AND ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($)(1) ($) ($)(2) (#)(3) ($) ($)(4)
- ------------------------------------- --------- --------- ------ ------------ --------- ------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John R. Meyers (5) .................. 1997 $200,000 $ - $ - $ - $ - $ - $ 2,000
President-Chief 1996 $200,000 - - - 30,000 - 2,004
Executive Officer 1995 34,556 - - 270,000 - - -
Daniel V. Evans ..................... 1997 $150,000 $ - $ - $ - $ - $ - $ 1,625
Vice President-Administration ....... 1996 150,000 - - - 35,000 - 2,740
1995 105,941 32,649 $ - 135,000 - - 2,652
</TABLE>
(1) Reflects bonus earned during the fiscal year. Bonuses are normally paid
during the next fiscal year.
(2) Reflects value of performance units awarded, based on Company's Common
Stock trading price of $9.00 per share on October 24, 1995, the date of
award.
(3) Lists options to acquire shares of the Company's Common Stock. Includes
15,000 options for Mr. Evans repriced on October 24, 1996 to $10 per
option. The options were originally priced at $11.25 to $15.75.
(4) "All Other Compensation" includes the following for Messrs. Meyers and
Evans: (i) Company matching of contributions to the Company's 401(k)
Savings Plan of $2,000 and $1,625 for each named executive, respectively.
(5) Mr. Meyers was appointed President-Chief Executive Officer in October
1995.
(7)
<PAGE> 11
OPTIONS/SAR EXERCISES AND HOLDINGS
The following table provides information related to options exercised by the
named executive officers during the 1997 fiscal year and the number and value of
options held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED VALUE UNDERLYING UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/SARS
ON EXERCISE REALIZED SARS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John R. Meyers - - 6,000 24,000 $ 20,250 $81,000
Daniel V. Evans - - 18,000 17,000 15,250 54,125
</TABLE>
(1) The closing price for the Company's Common Stock as reported by the Nasdaq
Stock Market on December 31, 1997 was $10.125. Value is calculated on the
basis of the difference between the option exercise price and $10.125
multiplied by the number of shares of Common Stock underlying the option.
REPORT ON EXECUTIVE COMPENSATION BY THE EXECUTIVE
COMPENSATION AND DEVELOPMENT COMMITTEE
AND STOCK OPTION COMMITTEE
The Company is engaged in the manufacture and sale of retread truck tires and
the sale of new truck tires. It competes with other businesses which have
similar operations, but it also competes with businesses which focus on only a
portion of the Company's operations, such as businesses which only sell new
tires or which only manufacture retread tires. The Company considers this
multi-faceted aspect of its operations a strength; however, it necessitates
maintaining an executive management team which is knowledgeable in the Company's
unique combination of new and retread tire marketing and retread tire
production.
The Company's philosophy that compensation of the executive management team
should be materially linked to both operating and stock price performance with
the goal of enhancing the value of the Company is administered by its Executive
Compensation and Development Committee ("Compensation Committee") and its Stock
Option Committee.
The Compensation Committee is comprised of Messrs. Georgitsis, Gilbert and
Marquard and the Stock Option Committee is comprised of Messrs. Georgitsis and
Gilbert. All Committee Members are non-employee directors. The Compensation
Committee, at its discretion, reviews and grants all forms of executive
compensation except stock options and performance award units. The Stock Option
Committee, at its discretion, grants stock options and performance award units
to the executive group pursuant to the Company's stock option plan and
performance award program, respectively. Both plans have been previously
approved by the Company's Board of Directors and stockholders.
In furtherance of the Company's philosophy, the executive management team's
compensation is primarily composed of the following blend of short-term and
long-term items, all designed to motivate daily, annual and multi-year executive
performance that results in increased value of the Company for its stockholders:
(i) Base Salary. The Compensation Committee reviews and sets the base
salaries of the Company's executive officers, normally on an annual
basis. In setting salary levels, the Compensation Committee considers a
variety of subjective and objective criteria such as: variety of
experience and years of service with the Company; special expertise and
talents of the individual; recent and historical operating results of
the
(8)
<PAGE> 12
Company; industry and general economic conditions which may affect
the Company's performance; and the Compensation Committee members'
knowledge and experience and consultant's analysis of the appropriate
salary levels and total compensation programs for executives.
(ii) Annual Incentive Plan. The Company's Annual Incentive Plan is based on
Return on Capital Employed ("ROCE"), which is defined as the total of:
(i) current and long-term external debt, (ii) long-term operating
leases, and (iii) equity. Net Income for the ROCE calculation is net
income before extraordinary items and incentive compensation and after
adding back the after tax effect of interest expense. The incentive
compensation for each participant is determined by a matrix relating a
Percent of Target to ROCE achieved. The resulting percent is multiplied
by the Target Incentive Salary Percent for the participant. The
resulting percent is multiplied by the participant's annual salary.
(iii) Stock Option Plan. The Stock Option Committee is responsible for the
granting of stock options to the executive group under the Company's
1991 Stock Option Plan ("1991 Plan"). Under current stock option
agreements with the executives, the grant's value to the optionee is
directly based on the public trading price of the Company's stock. The
optionee vests in 20% of the total shares granted on each of the five
subsequent anniversary dates of the grant, and has up to 10 years from
the date of the grant to exercise part or all of his grant. The Company
believes that this combination of 20% annual vesting with a 10-year
exercise period blends its desire to tie the optionee's motivation
under the stock option grant to both short-term and long-term
performance of the Company's stock. Under the 1991 Plan, the Stock
Option Committee generally has discretion regarding size, recipients
and other non-exercise-price terms and conditions of grants. Such
discretion allows, but does not require, the Stock Option Committee to
consider prior stock option grants to executives when considering new
grants. Stock option grants made to the executive group have been based
in part on information provided by an independent consultant and on the
judgment of the Stock Option Committee members.
(iv) Performance Award Program. The Stock Option Committee is responsible
for the granting of unit awards to the executive group under the
Company's 1995 Performance Award Program ("1995 Program"). Under the
1995 Program, the value of unit awards are equal to the closing price
of the Company's common stock on the day prior to the granting of the
award. The unit value increases or decreases in tandem with the trading
price of the Company's stock price. Each year additional units are
added to the award which equal a percentage of the number of units held
by each recipient. This percentage is equal to the Company's cumulative
return on equity minus 8%. The units vest 10% after one year, an
additional 20% after year two, an additional 30% after year three and
the final 40% at the end of year four. All awards vest immediately upon
death, disability, retirement at age 65 or older or in the event of a
change-in-control of the Company. Payments may be made in either cash
or other property at the Committee's choice after the fifth anniversary
of each award. The Awards are not assignable or transferable. The Stock
Option Committee has the right to vary the terms and eligibility for
the unit awards and to discontinue the 1995 Program. The 1995 Program
was developed in part on advice provided by an independent consultant
and upon the judgment of the Stock Option Committee members.
As the Company's Chief Executive Officer ("CEO"), John R. Meyers' compensation
package is set by the Compensation Committee and Stock Option Committee based on
the same philosophy as the other members of the Company's executive management
team.
The Company's current executive management team averages over 20 years'
employment with the Company or its affiliated companies. The Board believes that
to enable the Company to continue its past growth and succeed in the future, it
must be able to retain its executive management team and to attract additional
qualified executives when needed.
The Board believes the executive management team's compensation package is
closely linked to the interests of the Company's stockholders. The Board's
policy is to take reasonable steps to avoid having any compensation not be
deductible to the Company under Section 162(m) under the Internal Revenue Code
of 1986, as amended.
(9)
<PAGE> 13
EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE STOCK OPTION COMMITTEE
Nicolas M. Georgitsis Nicolas M. Georgitsis
Robert B. Gilbert Robert B. Gilbert
William A. Marquard
This Report will not be deemed to be incorporated by reference in any filing by
the Company under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
Report by reference.
EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
There were none based on information provided to the Company and the Company's
knowledge.
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total return for the
Company, the Nasdaq Market Index, and an index of peer companies selected by the
Company.
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG TREADCO, INC., NASDAQ MARKET INDEX & PEER GROUP
- ------------------------------FISCAL YEAR ENDING--------------------------------
COMPANY 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
TREADCO INC 100 108.05 103.96 40.43 75.36 73.60
PEER GROUP 100 86.78 68.89 79.29 77.85 76.69
BROAD MARKET 100 119.95 125.94 163.35 202.99 248.30
</TABLE>
The above comparisons assume $100 was invested on January 1, 1993 in the
Company's Common Stock and each of the foregoing indices and assumes
reinvestment of dividends. Al calculations have been prepared by Media General
Financial Services. The stockholder return shown on the graph above is not
necessarily indicative of future performance.
The Company is engaged in the manufacture and sale of retread truck tires and
the sale of new truck tires. The Company believes its peers are either
privately-held companies, or subsidiaries or divisions of larger publicly-held
companies and therefore, such comparisons are not feasible. Accordingly, the
Company has chosen to compare their
(10)
<PAGE> 14
stockholder return to companies selected on the basis of similar market
capitalization. Media General Financial Services selected, from its database of
over 7,000 publicly-held companies, the companies which have the same market
capitalization, plus or minus one percent, as the Company. The following 27
companies were selected to comprise the Company's market capitalization peer
group:
COMMUNITY BANKSHARES PONDER INDUSTRIES INC
CONNETICS CORP PRESLEY COMPANIES
CYTEL CORP PTI HOLDING INC
DATA I/O CORP PURE WORLD INC
DELTA NATURAL GAS CO PUTNAM NY INV GRD MUN TR
GENEMEDICINE INC PVC CONTAINER CORP
HEALTHDYNE INFO ENTERPRS REPUBLIC AUTOMOTIVE PTS
HOMECORP INC SULCUS HOSPITALITY TECHS
HUMPHREY HOSPITALITY TRO LEARNING INC
ID BIOMEDICAL CORP UNIT INSTRUMENTS INC
KBK CAPITAL CORP VYREX CORPORATION
MATTHEWS STUDIO EQUIP WESTBANK CORP
MERIT MEDICAL SYSTEMS WESTWOOD HOMESTEAD FINL
NATIONAL SECURITY GROUP
The Performance Graph will not be deemed to be incorporated by reference in any
filing by the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates the graph by reference.
RETIREMENT AND SAVINGS PLANS
The Company maintains a retirement plan that generally provides fixed benefits
payable in annuity form upon retirement at age 65. Benefits also may be paid in
the form of a lump sum at the participant's election. Credited years of service
for each of the individuals named in the "EXECUTIVE COMPENSATION - SUMMARY
COMPENSATION TABLE" are: Mr. Meyers, 2 years; Mr. Evans, 26 years. Benefits are
based upon a participant's number of years of service with the Company and on a
participant's average total earnings (exclusive of extraordinary remuneration
and expense allowances and subject to the annual Code limitation after 1993 of
$150,000 as adjusted to reflect cost of living increases) during any five
consecutive calendar years during the participant's employment with the Company
since 1980, which will give the participant the highest average monthly
earnings.
The following table illustrates the total estimated lump sum benefit payable
from the retirement plan upon retirement at age 65 to persons in the specified
compensation and years-of-service classifications. Benefits listed in the table
are not subject to deductions for Social Security or other offset amounts.
Participants also are entitled to receive income from employee contributions, if
any, plus 7 1/2% interest in addition to the amounts shown.
(11)
<PAGE> 15
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
HIGHEST
FIVE YEAR YEARS OF SERVICE
AVERAGE ----------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 50,000 ........................ $ 63,750 $ 85,000 $ 106,250 $ 127,500 $ 148,750
100,000 ........................ 127,500 170,000 212,500 255,000 297,500
150,000 ........................ 191,250 255,000 318,750 382,500 446,250
200,000 ........................ 204,000 272,000 340,000 408,000 476,000
500,000 ........................ 204,000 272,000 340,000 408,000 476,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The Company has agreed to provide reimbursement for otherwise unreimbursed
medical expenses to Mr. Meyers and Mr. Evans. These benefits are presently
covered by an insurance program and commence upon the employee's retirement
at age 60 or older from the Company and continue for the life of the employee
(and spouse or other eligible dependents).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CHANGE-IN-CONTROL ARRANGEMENTS
On October 25, 1995, the Company entered into an Employment Agreement with Mr.
Evans. The Agreement is for a period of three years at a monthly base salary
of $12,500 plus a one-time payment in January 1996 of $32,649 representing
incentive pay for 1995. Upon a change in control of ownership of the Company, as
defined in the Agreement, Mr. Evans would be entitled to a payment equal to
2.99 times his average annual base salary and bonus for the prior five years.
The Agreement also provides that Mr. Evans will not compete with the Company
during the three-year period beginning on the date the Agreement was executed or
for one year from the date a change in control occurs, whichever is longer.
Pursuant to the Company's 1995 Performance Award Program, the Company has
entered into Unit Award Agreements with Mr. Meyers and Mr. Evans. The Agreements
provide that upon a change in control of ownership of the Company, as defined
in the Agreements, all unvested units immediately vest with unit award payments
to be made to the recipient at the expiration of the award period, unless the
Stock Option Committee determines to purchase the units at the date of the
change in control or take other action to maintain and protect the rights of the
recipient.
The Company's Stock Option Agreements with Messrs. Meyers and Evans provide that
in the event of a change in control of ownership of the Company, as defined
in the Agreement, all unvested options immediately vest.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Transition Services Agreement. Since July 1, 1991, the Company and Arkansas Best
Corporation ("ABC") have been parties to a Transition Services Agreement,
pursuant to which ABC provides the Company with certain general and
administrative services, which ABC has historically provided in connection with
the Company's operations of its business. Such services include maintaining
corporate and accounting books and records, tax, legal, risk management and
data processing and other computer-related services. The Transition Services
Agreement is effective until terminated by either party on 90 days' prior
written notice. The Company pays ABC for general and administrative services a
fee equal to 1.25% of the Company's total revenues. Certain other expenses (for
example data processing and computer-related services) are charged to the
Company at their actual cost to ABC. The Company paid ABC approximately $2.6
million, $2.6 million, and $2.5 million, for the years ended December 31,
1997, 1996 and 1995, respectively, for the services ABC rendered pursuant to the
Transition Services Agreement (including use of office space for which the
Company is responsible for real estate taxes, insurance, utilities, maintenance
and certain other customary lease expenses).
(12)
<PAGE> 16
Tire Asset Transfer Agreements. Effective as of July 1, 1991, in connection with
the separation of the Company's assets from ABC-Treadco, Inc. (a wholly-owned
subsidiary of ABC), the Company assumed all obligations and liabilities
(including contingent liabilities) relating to its business formerly operated by
ABC-Treadco, Inc. or otherwise associated with its business assets, and agreed
to indemnify and hold ABC-Treadco, Inc. harmless from all obligations and
liabilities relating to the operations of its business prior to such date. In
turn, ABC-Treadco, Inc. has agreed to indemnify and hold the Company harmless
from all obligations and liabilities (including contingent liabilities) not
relating to the Company's business.
Taxes. Effective as of July 1, 1991, ABC, ABC-Treadco, Inc. and the Company
entered into an agreement to indemnify each other against certain tax
liabilities and to allocate among them tax deficiencies and refunds, if any,
arising with respect to periods prior to September 12, 1991.
Registration Rights. Pursuant to the terms of a Registration Rights Agreement
dated as of July 1, 1991, the Company has agreed that upon the request of
ABC, the Company will register, on up to two occasions, the sale of Company
Common Stock owned by ABC or its affiliates that ABC requests be registered
under the Securities Act of 1933, as amended, and applicable state securities
laws. The Company's obligation is subject to certain limitations relating to
the timing and size of registrations and other similar matters. The Company also
is obligated to offer ABC the right to include shares of Common Stock owned
by it or its affiliates in certain registration statements filed by the
Company. The Company will indemnify ABC and its officers, directors and
controlling persons for securities law liabilities in connection with any such
offering, other than liabilities resulting from information furnished in
writing by ABC. The Company is obligated to pay all expenses incidental to
such registration, excluding underwriters' discounts and commissions.
Other Arrangements. Affiliates of ABC paid the Company $2.4, $2.5 million and
$2.8 million, for new and retread tires in 1997, 1996 and 1995, respectively.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers, directors, and persons who own more than 10%
of a registered class of the Company's equity securities are required to
file, under the Securities Exchange Act of 1934, reports of ownership and
changes of ownership with the Securities and Exchange Commission.
Based solely on information provided to the Company, the Company believes that
during the preceding year its executive officers, directors, and 10%
stockholders have complied with all applicable filing requirements.
PROPOSAL II: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL II.
The firm of Ernst & Young LLP served as independent auditors for the Company for
the fiscal year ended December 31, 1997. Pursuant to the recommendation of
the Audit Committee, the Board has appointed that firm to continue in that
capacity for the fiscal year 1998, and recommends that a resolution be presented
to stockholders at the 1998 Annual Meeting to ratify that appointment.
In the event the stockholders fail to ratify the appointment of Ernst & Young
LLP, the Board will appoint other independent public accountants as auditors.
Representatives of Ernst & Young LLP will attend the 1998 Annual Meeting.
They will have the opportunity to make a statement and respond to appropriate
questions from stockholders.
(13)
<PAGE> 17
OTHER MATTERS
The Board does not know of any matters that will be presented for action at the
1998 Annual Meeting other than those described above and matters incident to the
conduct of the meeting. If, however, any other matters not presently known to
management should come before the 1998 Annual Meeting, it is intended that the
shares represented by the accompanying proxy will be voted on such matters in
accordance with the discretion of the holders of such proxy.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by directors, officers, or regular employees of the Company in person,
by telephone, telegram, or other means. The Company has retained Corporate
Investor Communications, Inc. to assist in the solicitation and sending of proxy
material. The Company will pay approximately $1,000 for these services.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Pursuant to Securities and Exchange Commission regulations, stockholder
proposals submitted for next year's proxy statement must be received by the
Company no later than the close of business on December 11, 1998 to be
considered. Proposals should be addressed to Richard F. Cooper, Secretary,
Treadco, Inc., 3801 Old Greenwood Road, Fort Smith, AR 72903. In order to
prevent controversy about the date of receipt of a proposal, the Company
strongly recommends that any stockholder wishing to present a proposal submit
the proposal by certified mail, return receipt requested.
GENERAL
Upon written request, the Company will provide stockholders with a copy of its
Annual Report on Form 10-K to the Securities and Exchange Commission (including
financial statements and schedules thereto) for the fiscal year ended December
31, 1997, without charge. Direct written requests to: Randall M. Loyd,
Controller, Treadco, Inc., 1101 South 21st Street, Fort Smith, AR 72901.
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY
/s/Richard F. Cooper
Fort Smith, Arkansas RICHARD F. COOPER
Date: April 10, 1998 Secretary
(14)
<PAGE> 18
PROXY PROXY
TREADCO, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS -- MAY 6, 1998
Richard F. Cooper, with the power of substitution and revocation, is hereby
authorized to represent the undersigned, with all powers which the undersigned
would possess if personally present, to vote all shares the undersigned is
entitled to vote at the Annual Meeting of Stockholders of Treadco, Inc. to be
held at 3801 Old Greenwood Road, Fort Smith, Arkansas 72903, at 1:00 P.M. CDT
on Wednesday, May 6, 1998, and at any postponements or adjournments of that
meeting, as set forth below, and in their discretion upon any other business
that may properly come before the meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED,
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED AND FOR EACH OF THE OTHER
PROPOSALS SPECIFIED HEREIN.
**CONTINUED AND TO BE SIGNED ON REVERSE SIDE**
<PAGE> 19
TREADCO, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [X]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
WITHHELD
FOR all from all FOR all nominees, except vote withheld from the following
nominees nominees nominee(s):
I. Nominees: Robert A. Young, III and [ ] [ ] [ ]
John H. Morris.
FOR AGAINST ABSTAIN
II. To ratify the appointment of Ernst & Young LLP [ ] [ ] [ ]
as the Company's independent certified public
accountants.
PLEASE SIGN EXACTLY AS NAME APPEARS
HEREON. JOINT OWNERS SHOULD EACH SIGN.
WHERE APPLICABLE, INDICATE OFFICIAL
POSITION OR REPRESENTATIVE CAPACITY.
DATE:
---------------------------------
--------------------------------------
SIGNATURE
--------------------------------------
SIGNATURE
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE PROPOSALS.
o FOLD AND DETACH HERE o
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
