SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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
[_] Definitive Proxy Statement Commission Only (as permitted
[X] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
COPART, INC.
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(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.
NA
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
NA
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
NA
________________________________________________________________________________
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):
NA
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
NA
________________________________________________________________________________
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: NA
2) Form, Schedule or Registration Statement No.: NA
3) Filing Party: NA
4) Date Filed: NA
(SC14A-07/98)
<PAGE>
[LOGO]
Copart, Inc.
October 26, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of Copart, Inc. (the "Company") to be held on Tuesday, December 8, 1998 at 9:00
a.m., at the Company's corporate headquarters located at 5500 E. Second Street,
Benicia, CA 94510 (see directions on back of proxy statement). The formal Notice
of Annual Meeting of Shareholders and Proxy Statement accompanying this letter
describes the business to be acted upon.
Please sign and return your Proxy now whether or not you plan to attend the
meeting. If you attend the meeting, you may still vote in person even if you
have previously returned a signed proxy.
Sincerely,
WILLIS J. JOHNSON
Chief Executive Officer
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YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE ANNUAL MEETING IN
THE EVENT YOU ARE NOT PERSONALLY PRESENT, PLEASE DATE, SIGN AND RETURN PROMPTLY
THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. EXECUTION OF THE PROXY WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ARE PRESENT AT THE MEETING.
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<PAGE>
COPART, INC.
-------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 8, 1998
-------------
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Copart, Inc. (the "Company") will be held on Tuesday, December 8,
1998 at 9:00 a.m., pacific standard time, at the Company's corporate
headquarters located at 5500 E.Second Street, Benicia, California 94510 for the
following purposes:
1. To elect seven Directors of the Company for the ensuing year or until
their successors have been elected and qualified;
2. To ratify KPMG Peat Marwick LLP as independent auditors for the Company
for fiscal year 1999;
3. To transact such other business as may properly come before the meeting
or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on October 13, 1998,
as the record date for determining shareholders entitled to notice of, and to
vote at, the Annual Meeting. The stock transfer books will not be closed between
the record date and the date of the Annual Meeting.
Please read carefully the following Proxy Statement which describes the
matters to be voted upon at the Annual Meeting, and then complete, sign and
return your Proxy as promptly as possible. Should you receive more than one
Proxy because your shares are registered in different names and addresses, each
Proxy should be signed and returned to assure that all your shares will be
voted. If you attend the Annual Meeting and vote by ballot, your Proxy will be
revoked automatically and only your vote at the Annual Meeting will be counted.
Sincerely,
WILLIS J. JOHNSON
Chief Executive Officer
Benicia, California
October 26, 1998
<PAGE>
COPART, INC.
5500 E. Second Street
Benicia, California 94510
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 8, 1998
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Copart, Inc., a California corporation (the "Company"), for use at the Annual
Meeting of Shareholders to be held on Tuesday, December 8, 1998 (the "Annual
Meeting"). The Annual Meeting will be held at 9:00 a.m., pacific standard time,
at the Company's corporate headquarters located at 5500 E. Second Street,
Benicia, California. Shareholders of record at the close of business on October
13, 1998 (the "Record Date") will be entitled to notice of and to vote at the
Annual Meeting. The Company's principal executive offices are located at 5500 E.
Second Street, Benicia, CA 94510. The Company's telephone number at that address
is (707) 748-5000.
The Proxy Statement and accompanying proxy (the "Proxy") and Notice of
Annual Meeting were first mailed to shareholders on or about October 26, 1998.
Record Date, Voting and Share Ownership
On October 13, 1998, the record date for determination of shareholders
entitled to vote at the Annual Meeting, there were 13,303,237 shares of Common
Stock outstanding held by 258 shareholders of record. No shares of the Company's
Preferred Stock are outstanding. Every shareholder voting in the election of
directors may cumulate such shareholder's votes and give one candidate a number
of votes equal to the number of directors to be elected (seven) multiplied by
the number of shares held by such shareholder as of the Record Date, or
distribute such number of votes on the same principle among as many candidates
as the shareholder thinks fit, provided that votes cannot be cast for more than
the number of candidates to be elected. However, no shareholder shall be
entitled to cumulate votes for a candidate unless such candidate's name has been
placed in nomination prior to the voting and the shareholder, or any other
shareholder, has given notice at the meeting prior to the voting of the
intention to cumulate votes. On all other matters, each share has one vote.
Approval of the Board's decision to retain KPMG Peat Marwick LLP as independent
auditors for fiscal year 1999 will be decided by the affirmative vote of a
majority of the shares present or represented and entitled to vote on such
matter. Abstentions with respect to any matter are treated as shares present or
represented at the Annual Meeting and entitled to vote on that matter and thus
have the same effect as negative votes. If shares are not voted by the broker
who is the record holder of the shares, or if shares are not voted in other
circumstances in which proxy authority is defective or has been withheld with
respect to any matter, these non-voted shares are not deemed to be present or
represented for purposes of determining whether shareholder approval of that
matter has been obtained, although they are deemed to be present for purposes of
establishing a quorum for the transaction of business.
Revocability of Proxies
If you are unable to attend the Annual Meeting, you may vote by Proxy. The
enclosed Proxy is solicited by the Company's Board of Directors and, when
returned properly completed, will be voted as you direct your Proxy. Unless
otherwise instructed in the Proxy, the proxyholder will vote the Proxies
received by them FOR each of the two proposals described herein.
Any person giving a Proxy has the power to revoke it at any time before its
exercise. It may be revoked by filing with Paul A. Styer, Senior Vice President,
General Counsel and Secretary of the Company at the Company's principal
executive offices, Copart, Inc., 5500 E. Second Street, Benicia, California
94510, a notice of revocation or another signed Proxy with a later date. You may
also revoke your Proxy by attending the Annual Meeting and voting in person.
<PAGE>
Solicitation
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting materials furnished to shareholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram, or other means by Directors, officers, employees or agents
of the Company. No compensation will be paid to these individuals for any such
services. Except as described above, the Company does not presently intend to
solicit proxies other than by mail.
Deadline for Receipt of Shareholder Proposals
Shareholders are entitled to present proposals for action at forthcoming
shareholder meetings of the Company if they comply with the requirements of the
appropriate proxy rules promulgated by the Securities and Exchange Commission
(the "SEC"). Proposals of shareholders of the Company that are intended to be
presented by such shareholders at the Company's 1999 Annual Meeting of
Shareholders must be received by the Company at its principal executive offices
no later than June 28, 1999, in order that they may be considered for inclusion
in the proxy statement and form of proxy relating to that meeting.
The proxy card attached hereto and to be used in connection with the
Company's current 1998 Annual Meeting grants the proxy holders discretionary
authority to vote on any matter properly raised at the 1998 Annual Meeting and
the Company presently intends to use a similar form of proxy card for its 1999
Annual Meeting of Shareholders. If a shareholder intends to submit a proposal at
the Company's 1999 Annual Meeting which is not eligible for inclusion in the
proxy statement and form of proxy relating to that shareholder meeting, a new
rule recently established by the Securities and Exchange Commission requires
that such proposals must be received by the Company at its principal executive
offices no later than September 10, 1999. If such a shareholder fails to comply
with the foregoing notice provision for proposals not included in the proxy
statement and related form of proxy, the proxy holders will be allowed to use
their discretionary voting authority if such a proposal is properly raised at
the Company's 1999 Annual Meeting of Shareholders.
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MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL ONE -- ELECTION OF DIRECTORS
One of the purposes of the Annual Meeting is to elect directors to hold
office until the next annual meeting or until their respective successors are
elected and have been qualified. The number of authorized Directors is currently
seven. The Board of Directors has selected the seven nominees listed below for
election as Directors. Each person nominated for election has agreed to serve if
elected and Management has no reason to believe that any nominee will be
unavailable to serve. Unless otherwise instructed in the Proxy, the proxy
holders will vote the Proxies received by them FOR the nominees named below. The
seven candidates receiving the highest number of affirmative votes of the shares
entitled to vote at the Annual Meeting will be elected Directors of the Company.
The Board of Directors recommends that the shareholders vote FOR the
election of each of the following nominees to serve as Directors of the Company
for the ensuing year until the next Annual Meeting or until their successors are
elected and qualified.
Nominees
Set forth below is information regarding the nominees, all of whom are
currently directors of the Company, including information furnished by them as
to principal occupations, certain other directorships held by them, any
arrangements pursuant to which they were or are selected as Directors or
nominees and their ages as of the Record Date:
<TABLE>
<CAPTION>
Name Age Principal Occupation
---- --- --------------------
<S> <C> <C>
Willis J. Johnson (1) ............ 51 Chief Executive Officer of the Company
A. Jayson Adair .................. 29 President of the Company
Harold Blumenstein ............... 59 General Partner, Paragon Properties Company
James Grosfeld (1)(2) ............ 61 Independent Investor
James E. Meeks ................... 49 Executive Vice President and Chief Operating Officer of the
Company
Marvin L. Schmidt ................ 54 Senior Vice President of Corporate Development of the
Company
Jonathan Vannini (1)(2) .......... 36 Independent Investor
</TABLE>
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(1) Member of the Compensation Committee.
(2) Member of the Audit and Stock Option Grant Committees.
Willis J. Johnson, co-founder of the Company, has served as Chief Executive
Officer of the Company since 1986, and has been a Board member since 1982. Mr.
Johnson served as President of the Company from 1986 until May 1995. Mr. Johnson
was an officer and director of U-Pull-It, Inc. ("UPI"), a self-service auto
dismantler which he co-founded in 1982, from 1982 through September 1994. Mr.
Johnson sold his entire interest in UPI in September 1994. Mr. Johnson has over
26 years of experience in owning and operating auto dismantling companies.
A. Jayson Adair has served as President of the Company since November 1996
and as a director since September 1992. From April 1995 until October 1996, Mr.
Adair served as Executive Vice President. From August 1990 until April 1995, Mr.
Adair served as Vice President of Sales and Operations and from June 1989 to
August 1990, Mr. Adair served as the Company's Manager of Operations.
Harold Blumenstein has served as a director of the Company since March
1994. Mr. Blumenstein is a general partner of Paragon Properties Company, a real
estate development, investment and management company, where he has been
employed since January 1971. Mr. Blumenstein holds a B.A. in Economics and
Accounting from Wayne State University.
James Grosfeld has served as a director since November 1993. From November
1993 until November 1994, Mr. Grosfeld also served as Chairman of the Board of
the Company. Mr. Grosfeld, an independent investor, served as Chairman of the
Board and Chief Executive Officer of Pulte Corporation, a home-building
corporation, from 1974 to 1990. In addition to serving as Co-Chairman of the
Executive Committee, Mr. Grosfeld serves as
3
<PAGE>
consultant and director of Pulte Corporation, and a director of each of the
publicly-traded BlackRock Financial Management funds.
James E. Meeks has served as Vice President and Chief Operating Officer of
the Company since September 1992 when he joined the Company concurrent with the
Company's purchase of South Bay Salvage Pool (the "San Martin Operation"). Mr.
Meeks has served as Executive Vice President and Director since October 1996 and
as Senior Vice President since April 1995. From April 1986 to September 1992,
Mr. Meeks, together with his family, owned and operated the San Martin
Operation. Mr. Meeks is also an officer, director and part owner of Cas & Meeks,
Inc., a towing and subhauling service company, which he has operated since 1991.
Mr. Meeks has also been an officer and director of E & H Dismantlers, a
self-service auto dismantler, since 1967. Mr. Meeks has over 31 years of
experience in the vehicle dismantling business.
Marvin L. Schmidt has served as Senior Vice President of Corporate
Development since May 1995. Mr.Schmidt served as Vice President of the Company's
Western Region and a director of the Company since July 1993, when he joined the
Company concurrent with the Company's acquisition of County Salvage, Inc. From
January 1989 until July 1993, Mr. Schmidt owned and operated County Salvage,
Inc. in Los Angeles. Mr. Schmidt has over 25 years of experience as an owner and
operator of auto dismantling and parts businesses.
Jonathan P. Vannini is a private investor who was a general partner at HPB
Associates, an investment partnership, until 1996. He was employed by HPB
Associates from August 1987 until March 1996. Since February 1993 he has served
as an outside director of Copart, Inc. Mr. Vannini holds a Master of Science in
Business Administration from Columbia University.
There are no family relationships among any of the directors or executive
officers of the Company, except that A. Jayson Adair is the son-in-law of Willis
J. Johnson.
In 1990, the Commodity Futures Trading Commission ("CFTC") brought a civil
action against MultiVest Options, Inc. ("MOI") alleging various violations of
the Commodity Exchange Act ("CEA") and certain rules and regulations of the
CFTC. Mr. Grosfeld was the principal stockholder of the ultimate parent
corporation of MOI, but, according to Mr. Grosfeld, was never an officer or
director of MOI and did not participate in the day-to-day conduct of its
business. Without admitting or denying the allegations of the CFTC complaint,
MOI consented to the entry of a permanent injunction and appointment of a
receiver. MOI discontinued its business operations in 1990. Mr. Grosfeld was not
specifically named in the CFTC proceeding or in the injunction related thereto.
Subsequently, in 1990 certain individuals who had previously purchased and sold
commodity options through MOI brought a class action lawsuit against the parent
and affiliated companies of MOI and Mr. Grosfeld alleging that the defendants,
among other things, violated the antifraud provisions of the CEA and asserting
other federal and state law claims. Mr. Grosfeld denied the allegations
contained in the action and maintained that the litigation was without merit. On
March 31, 1997, the court approved a settlement of the action and the lawsuit
was dismissed.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than ten percent
of a registered class of the Company's equity securities to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
ten percent shareholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) reports they file.
Based solely upon a review of the copies of such reports furnished to the
Company and written representations from such officers, directors and greater
than ten percent shareholders that no other reports were required to be made,
the Company believes that there was full compliance for the fiscal year ended
July 31, 1998 with all Section 16(a) filing requirements applicable to the
Company's officers, directors and greater-than-ten percent shareholders, except
that Paul A. Styer reported late the exercise of stock options and a sale
transaction on Form 4, and Wayne R. Hilty reported late his initial statement of
beneficial holding on Form 3.
Board Committees and Meetings
During the fiscal year ended July 31, 1998, the Board of Directors held
four (4) meetings. As of July 31, 1998, the Company had three standing
Committees: an Audit Committee, Stock Option Grant Committee and a
4
<PAGE>
Compensation Committee. The Company has no nominating committee or any committee
performing similar functions.
The Audit Committee is primarily responsible for approving the services
performed by the Company's independent auditors, reviewing financial statements
of the Company, and reviewing reports of the Company's accounting practices and
systems of internal accounting controls. The Audit Committee currently consists
of Directors Vannini and Grosfeld. The Audit Committee held one (1) meeting
during the last fiscal year.
The Stock Option Grant Committee is responsible for the administration of
the Company's 1992 Stock Option Plan. The Compensation Committee is generally
responsible for, among other things, reviewing and approving the Company's
compensation policies and setting the compensation levels for those Company
executive officers and senior managers reporting directly to the Company's
President whose compensation is not otherwise established pursuant to employment
agreements reviewed or approved by the Board of Directors. The Compensation
Committee consists of Directors Grosfeld, Johnson and Vannini and the Stock
Option Grant Committee consists of Directors Grosfeld and Vannini. The
Compensation Committee and Stock Option Grant Committee each held two (2)
meetings during the last fiscal year.
During the last fiscal year, no director attended fewer than 75% of the
aggregate number of meetings of the Board of Directors and meetings of
Committees of the Board on which he serves that were held during the period for
which he has been a member.
5
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information known to the Company
regarding the ownership of the Company's Common Stock as of the Record Date for
(i) all persons known by the Company to be beneficial owners of five percent or
more of the Company's Common Stock, (ii) each Director and nominee for director,
(iii)any other Named Officer (as said term is defined hereinafter in "Executive
Compensation -- Summary of Cash and Certain Other Compensation") and (iv) all
executive officers and Directors of the Company as a group. Unless otherwise
indicated, each of the shareholders has sole voting and investment power with
respect to the shares beneficially owned, subject to community property laws
where applicable, except as otherwise indicated.
<TABLE>
<CAPTION>
Number Percent of Total
Five Percent Shareholders, Directors and Executive Officers (1) of Shares Shares Outstanding
-------- ------------------
<S> <C> <C>
Richard C. Blum & Associates, L.P (2) ............................... 1,312,210 9.86%
909 Montgomery Street, Suite 400
San Francisco, CA 94133
State of Wisconsin Investment Board (3) ............................. 1,140,000 8.57%
P.O. Box 7842
Madison, WI 53707
Scudder Kemper Investments, Inc. (4) ................................ 915,900 6.89%
345 Park Avenue
New York, NY 10154
Willis J. Johnson ................................................... 2,797,119 21.03%
James Grosfeld ...................................................... 1,191,500 8.96%
A. Jayson Adair (5) ................................................. 127,061 *
James E. Meeks (6) .................................................. 82,479 *
Marvin L. Schmidt (7) ............................................... 333,200 2.47%
Harold Blumenstein (8) .............................................. 146,844 1.10%
Jonathan Vannini (9) ................................................ 469 *
Paul A. Styer (10) .................................................. 52,591 *
All directors and executive officers as a group (nine persons) (11) . 4,733,645 34.66%
</TABLE>
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* Represents less than 1% of the outstanding Common Stock.
(1) Unless otherwise set forth, the mailing address for each of the persons
listed in this table is: c/o Copart, Inc., 5500 E. Second Street, Benicia,
CA 94510.
(2) Represents shares reported in a Schedule 13D filed by Richard C. Blum &
Associates, L.P. ("Blum & Assoc.") with the SEC and reflects stock held as
of May 8, 1998. According to such Schedule 13D, Blum & Assoc. holds shared
voting power and shared dispositive power with respect to all of such
shares with Richard C. Blum & Associates, Inc. and Richard C. Blum. The
Company has not attempted to verify independently any of the information
contained in the Schedule 13D.
(3) Represents shares reported in a Schedule 13F filed by the State of
Wisconsin Investment Board with the SEC and reflects stock held as of June
30, 1998. The Company has not attempted to verify independently any of the
information contained in the Schedule 13F.
(4) Represents shares reported in a Schedule 13F filed by Scudder Kemper
Investments, Inc. with the SEC and reflects stock held as of June 30, 1998.
The Company has not attempted to verify independently any of the
information contained in the Schedule 13F.
(5) Includes 73,427 shares of Common Stock subject to options exercisable
within 60 days of the Record Date.
(6) Includes 69,438 shares of Common Stock subject to options exercisable
within 60 days of the Record Date.
(7) Includes 162,500 shares of Common Stock subject to options exercisable
within 60 days of the Record Date.
(8) Includes 6,844 shares of Common Stock subject to options exercisable within
60 days of the Record Date.
(9) Includes 469 shares of Common Stock subject to options exercisable within
60 days of the Record Date.
(10) Includes 37,902 shares of Common Stock subject to options exercisable
within 60 days of the Record Date.
(11) Includes 352,580 shares of Common Stock subject to options exercisable
within 60 days of the Record Date.
6
<PAGE>
EXECUTIVE COMPENSATION
Directors' Compensation
Non-employee Directors are reimbursed for expenses incurred in attending
Board and Committee meetings. During fiscal year 1998, all non-employee
Directors received quarterly compensation of $2,000.
Each non-employee Director is also eligible to receive periodic option
grants for shares of the Company's Common Stock pursuant to the automatic option
grant program in effect under the Company's 1994 Director Stock Option Plan (the
"Director Plan"). Mr. Grosfeld has waived all rights to receive automatic option
grants under the Director Plan.
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning the
compensation earned for services rendered in all capacities to the Company and
its subsidiaries during each of the last three fiscal years, by the Company's
Chief Executive Officer and each of the Company's other four most highly
compensated executive officers, collectively. The individuals whose compensation
is disclosed in the following table are hereafter referred to as the "Named
Officers".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
-------------------------------------- ------------------------------------
Securities
Fiscal underlying All other
Name and Principal Position Year Salary ($) Bonus ($) Options/SARs (#) compensation ($)
- -------------------- ---- ---------- --------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Willis J. Johnson ............................. 1998 $311,538 $150,000 100,000 $21,220(1)
Chief Executive Officer 1997 236,538 -- -- 16,488(2)
1996 225,000 -- -- 22,300(3)
A. Jayson Adair ............................... 1998 192,115 95,000 50,000 13,333(4)
President 1997 14,231 -- -- 13,080(4)
1996 125,000 -- 20,000 4,800(4)
James E. Meeks ................................ 1998 171,346 60,000 30,000 38,644(5)
Executive Vice President 1997 131,154 -- -- 36,300(6)
Chief Operating Officer 1996 120,192 -- -- 4,800(4)
Paul A. Styer ................................. 1998 171,346 20,000 20,000 6,000(7)
Senior Vice President, General 1997 156,538 -- -- 6,000(7)
Counsel, Secretary 1996 152,307 -- 10,000 6,000(7)
Marvin L. Schmidt ............................. 1998 155,769 40,000 20,000 6,000(7)
Senior Vice President of Corporate 1997 150,000 -- -- 6,000(7)
Development 1996 150,000 -- -- 6,000(7)
</TABLE>
- ----------
(1) Comprised of premiums on life insurance policies payable to beneficiaries
designated by Mr. Johnson in the amount of $10,539 and value to Mr. Johnson
of use of Company automobiles of $10,681.
(2) Comprised of premiums on life insurance policies payable to beneficiaries
designated by Mr. Johnson in the amount of $6,024 and value to Mr. Johnson
of use of Company automobiles of $10,464.
(3) Comprised of premiums on life insurance policies payable to beneficiaries
designated by Mr. Johnson in the amount of $7,100 and value to Mr. Johnson
of use of Company automobiles of $15,200.
(4) Comprised of use of Company automobiles.
(5) Comprised of forgiveness of debt in the amount of $31,500 and value to Mr.
Meeks of use of Company automobiles of $7,144.
(6) Comprised of forgiveness of debt in the amount of $31,500 and value to Mr.
Meeks of use of Company automobile of $4,800.
(7) Comprised of automobile expense allowance.
7
<PAGE>
Option Grants
The following table provides information with respect to the stock option
grants made during the 1998 fiscal year under the Company's 1992 Stock Option
Plan (the "Option Plan") to the Named Officers. No stock appreciation rights
were granted to any of the Named Officers during fiscal 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value At
Assumed Annual Rates Of
Stock Price Appreciation
Individual Grants Over Option Term
-------------------------------------------------------- -----------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise
Granted in Fiscal Price Expiration
Name (#)(1) Year (2) ($/Share)(3) Date 5%($)(4) 10%($)(4)
---- ---------- ---------- ------------ ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Willis J. Johnson .................... 100,000 35.33 17.50 5/27/08 1,101,000 2,789,000
A. Jayson Adair ...................... 50,000 17.67 17.50 5/27/08 550,500 1,394,500
James E. Meeks ....................... 30,000 10.60 17.50 5/27/08 330,300 836,700
Paul A. Styer ........................ 20,000 7.07 17.50 5/27/08 220,200 557,800
Marvin L. Schmidt .................... 20,000 7.07 17.50 5/27/08 220,200 557,800
</TABLE>
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(1) Each option was granted under the Option Plan and will become exercisable
for the option shares in one or more installments over the optionee's
period of service with the Company. Options vest over a five-year period at
a rate of 20% per year. Each option has a maximum term of ten years,
subject to earlier termination in the event of the optionee's cessation of
employment with the Company.
(2) Based upon options to purchase an aggregate of 283,000 shares granted by
the Company in fiscal 1998.
(3) The exercise price may be paid in cash, in shares of the Company's Common
Stock valued at fair market value on the exercise date or through a
cashless exercise procedure involving a same-day sale of the purchased
shares. The Company may also finance the option exercise by loaning the
optionee sufficient funds to pay the exercise price for the purchased
shares and the Federal and state income tax liability incurred by the
optionee in connection with such exercise.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the rules of the Securities Exchange Commission and do not
represent the Company's estimate or projection of future Common Stock
prices. There is no assurance provided to any executive officer or any
other holder of the Company's Common Stock that the actual stock price
appreciation over the option term will be at the assumed 5% or 10% levels
or at any other specific level. Assuming the specified rates of annual
compounding, the total appreciation during the term of such options results
in an increase of 62.9% (at 5% per year) and 159.4% (at 10% per year).
Option Exercise and Year-end Holdings
The following table sets forth information concerning exercises of options
during fiscal 1998 and the value of unexercised options held as of the end of
the 1998 fiscal year by the Named Officers.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number Of Securities
Underlying Value Of Unexercised
Unexercised Options At In-The-Money Options At
Fiscal Year End Fiscal Year End(2)
----------------------------- -----------------------------
Shares
acquired Value
on exercise Realized
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Willis J. Johnson ............... -- $ -- -- 100,000 $ -- $387,500
A. Jayson Adair ................. 50,000 821,900 61,458 71,042 527,212 367,475
James E. Meeks .................. -- -- 63,791 48,709 769,084 268,103
Paul A. Styer ................... 6,000 101,313 33,792 31,708 302,927 166,636
Marvin L. Schmidt ............... -- -- 162,500 20,000 3,148,438 77,500
</TABLE>
- ----------
(1) Represents the Market value of underlying securities on the date of
exercise, minus the exercise price.
(2) Represents the Market value of underlying securities at fiscal year end
(for in-the-money options only) minus the exercise price. The closing price
for the Company's Common Stock at fiscal year end as quoted on the Nasdaq
National Market System was $21.375.
Employment Contracts
Mr. Johnson is entitled to participate in the Company's benefit plans and
is entitled to four weeks paid vacation per year, use of Company automobiles,
and a $1 million life insurance policy with the beneficiary being designated by
Mr. Johnson.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has general
responsibility for establishing the compensation payable to the Company's
executive officers and other key executives. The Company's Stock Option Plan
Committee has the sole and exclusive authority to administer the Company's 1992
Stock Option Plan under which grants may be made to such individuals. While the
Compensation Committee has responsibility for establishing the level of
compensation payable to the Company's executive officers, the decisions reached
by the Committee with respect to the compensation paid to them for the 1998
fiscal year were to a substantial extent similar to the terms and requirements
of employment agreements that have since terminated.
This report is divided into two parts. Part One is a brief description of
the compensation arrangements in effect for the 1998 fiscal year for the
Executive Officers of the Company, including the Named Officers in the Summary
Compensation Table. Part Two is a discussion of the factors which governed the
compensation payable to the Chief Executive Officer for the 1998 fiscal year.
Part One -- Existing Compensation Arrangements
The compensation arrangements for fiscal 1998 with the Company's executive
officers were negotiated directly between the Company and such individuals. The
Compensation Committee believes that the salaries and benefits under the current
or former employment agreements with the Company's executive officers are
commensurate with the Company's financial performance to date. During fiscal
1998, the employment agreement between the Company and the Chief Executive
Officer expired and such person is employed on an "at-will" basis. The base
salaries of Willis J. Johnson, A. Jayson Adair, James E. Meeks, and Paul A.
Styer were increased to $350,000, $225,000, $185,000, and $170,000, respectively
effective July 24, 1998. The Compensation Committee intends to review these
salary levels on a regular basis and to make such adjustments to them as it sees
fit based on the performance of the Company and the employee.
The Stock Option Committee awarded stock options to executive officers in
order to align the long-term interests of the executive officers with those of
the shareholders as specified in the Option Grant table. The Committee awarded
stock option grants to the Named Officers and other key management employees
based upon the improved financial performance of the Company.
9
<PAGE>
Part Two -- CEO Compensation
Willis J. Johnson, the co-founder of the Company served as President and
Chief Executive Officer from 1986 until May 1995, and has served as CEO since
May 1995. Based upon the Company's improved performance during fiscal year 1998,
the Compensation Committee increased Mr. Johnson's base salary to $350,000
effective July 24, 1998.
The Compensation Committee believes that the salary and benefits paid to
Mr. Johnson during fiscal 1998 are commensurate with the Company's financial
performance, based upon the growth of the Company's operating profit and net
income. Any bonus compensation recommended by the Compensation Committee to be
payable to Mr. Johnson in future years will be based upon Company growth and
financial performance, and subject to approval by the Board of Directors,
excluding Mr. Johnson.
Tax Limitation.As a result of federal tax legislation, a publicly-held company
such as the Company will not be allowed a federal income tax deduction for
compensation paid to certain executive officers, to the extent that compensation
exceeds $1 million per officer in any fiscal year. The Company presently intends
to structure its future compensation packages in a manner to comply with the $1
million compensation cap.
Compensation Committee
Willis J. Johnson James Grosfeld Jonathan Vannini
Stock Option Committee
James Grosfeld Jonathan Vannini
Performance Graph
The following graph shows a comparison of the cumulative total shareholder
returns for the Company, the NASDAQ Stock Market -- US Companies Index and
NASDAQ, American Stock Exchange, and New York Stock Exchange SIC Peer Group
5010-5019 Index (Motor Vehicle and Automotive Equipment) for the period of
March17, 1994, the date the Company's Common Stock commenced trading on the
NASDAQ National Market, through July 31, 1998.
Comparison of Cumulative Total Return(*)
Copart, Inc. (CPRT)
Among NASDAQ Stock Market--US Companies Index NASDAQ Stock Market and
American Stock Exchange and New York Stock Exchange
SIC Peer Group 5010-5019 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<TABLE>
<CAPTION>
3/14/94 7/94 7/95 7/96 7/97 7/98
<S> <C> <C> <C> <C> <C> <C>
Copart, Inc. $100 $112 $158 $123 $138 $164
Peer Group 100 95 99 110 127 135
NASDAQ Stock Market (U.S.) 100 90 126 138 203 240
</TABLE>
* Assumes $100 invested on 3/17/94 in stock or index and including the
reinvestment of all dividends. Fiscal years ending July 31.
10
<PAGE>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Exchange Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, which might incorporate future
filings made by the Company under those statues, the preceding Compensation
Committee Report on Executive Compensation and Performance Graph are not
incorporated by reference into any of those previous filings; nor is such report
or graph to be incorporated by reference into any future filings which the
Company may make under those statues.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are Willis J. Johnson, James
Grosfeld and Jonathan Vannini. Except for Willis J. Johnson, who serves as the
Company's Chief Executive Officer, none of these individuals was at any time
during the fiscal year ended July 31, 1998 or at any other time an officer or
employee of the Company.
No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
CERTAIN TRANSACTIONS
James E. Meeks, an executive officer of the Company, owns an interest in
Cas & Meeks, Inc., a private towing service, which supplied approximately
$608,400 in transport services to the Company in fiscal 1998. The Company
believes that these services were provided on terms no less favorable to the
Company than could be obtained from unaffiliated third parties. On October 20,
1995, the Company loaned Mr. Meeks the sum of $95,000 bearing interest at 8% per
annum, payable in annual installments of $23,750, with the balance payable at
the end of four years. The loan was made to assist Mr. Meeks in re-locating his
personal residence closer to the Company's corporate headquarters. The October
20, 1996 payment of $31,500 (principal and accrued interest) was forgiven by the
Company and accounted for as additional compensation expense. The October 20,
1997 payment of $31,500 (principal and accrued interest) was forgiven by the
Company and accounted for as additional compensation expense.
Willis J. and Reba J. Johnson are the owners of the real property and
improvements of the Fresno, California facility and lease said premises to the
Company for current monthly lease payments of $8,582 under a lease dated August
1, 1992, which expires, with inclusion of all extension options, in July 2000,
and contains a provision whereby the Company has an option to purchase the real
property and improvements. Total payments under this lease aggregated $88,800 in
fiscal 1998. The Company believes that the terms of this lease are no less
favorable to the Company than could be obtained from unaffiliated third parties.
Under the terms of a lease agreement effective July 1, 1993 between the
Schmidt Family Trust dated September 29, 1982 (the "Schmidt Trust") and the
Company, the Company leases property in the Los Angeles, California, area from
the Schmidt Trust (the "Los Angeles Lease"). The initial term of the Los Angeles
Lease was five years, expiring June 30, 1998, with an option for a second
five-year term following the expiration of the initial term. The Company
exercised its option to extend the lease for an additional five-year term on May
1, 1998. Until June 30, 1999, the annual rent under the Los Angeles Lease is
$59,420, payable monthly in equal installments. Marvin L. Schmidt, the Company's
Senior Vice President of Corporate Development and a Director, is a beneficiary
of the Schmidt Trust.
PROPOSAL TWO--RATIFICATION OF INDEPENDENT AUDITORS
The Company is asking the shareholders to ratify the selection of KPMG Peat
Marwick LLP as the Company's independent auditors for the fiscal year ending
July 31, 1999.
In the event the shareholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Approval of the appointment of KPMG
Peat Marwick LLP requires the affirmative vote of a majority of the shares
present at the Annual Meeting in person or by proxy and entitled to vote as of
the Record Date. Even if the selection is ratified, the Board in its discretion
may direct the appointment of a different independent accounting firm at any
time during the year if the Board feels that such a change would be in the best
interests of the Company and its shareholders.
11
<PAGE>
KPMG Peat Marwick LLP have been the Company's independent auditors since
their appointment in July 31, 1994 and have been recommended to the shareholders
for ratification as auditors for the year ending July 31,1999. A representative
of KPMG Peat Marwick LLP is expected to be present at the Annual Meeting, will
have the opportunity to make a statement if he or she desires to do so, and will
be available to respond to appropriate questions.
The Board of Directors recommends that the shareholders vote FOR the
ratification of the selection of KPMG Peat Marwick LLP to serve as the Company's
independent auditors for the fiscal year ending July 31, 1999.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend. Discretionary authority with respect to
such other matters is granted by the execution of the enclosed Proxy.
FOR THE BOARD OF DIRECTORS
COPART, INC.
Dated: October 26, 1998
PAUL A. STYER, Secretary
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Site of the 1998 Annual Shareholder Meeting
Directions to: Copart Salvage Auto Auctions
5500 E. Second Street
Benicia, California 94510
From: San Francisco Airport
Exit the airport on Highway 101 Northbound toward San Francisco. As you
enter San Francisco follow the signs directing you towards the Bay Bridge. This
is Interstate 80 Eastbound. Follow Interstate 80 over the Bay Bridge and
continue Eastbound on Interstate 80. When you reach the other side of the Bay
Bridge stay in the left lanes. Follow Interstate 80 approximately 15 miles to
the Carquinez Bridge. After crossing the Carquinez Bridge, exit onto Interstate
780 towards Benicia. Follow 780 approximately 7 miles, get in the left lane and
make a left turn onto 680 Eastbound towards Sacramento. The second exit is Lake
Herman Rd. Turn left over freeway and make the first left turn onto East Second,
then go to the first building on the left at 5500 E. Second Street.
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14
