<PAGE> 1
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:
<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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
LANDAIR SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
LANDAIR SERVICES, INC. LOGO
August 11, 1998
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Landair Services, Inc.,
you are cordially invited to attend the Special Meeting of Shareholders on
Monday, August 24, 1998, at 11:00 a.m., local time, at the General Morgan Inn &
Conference Center, 111 North Main Street, Greeneville, Tennessee.
YOUR VOTE IS VERY IMPORTANT. Therefore, whether or not you plan to attend the
meeting in person, please complete, sign, date and return the enclosed proxy in
the envelope provided as promptly as possible. If you attend the meeting and
desire to vote in person, you may do so even though you have previously sent a
proxy.
I hope you will be able to join us, and we look forward to seeing you in
Greeneville.
Sincerely yours,
/s/Scott M. Niswonger
Scott M. Niswonger
Chairman of the Board,
President and Chief Executive Officer
<PAGE> 3
LANDAIR SERVICES, INC. LOGO
430 Airport Road
Greeneville, Tennessee 37745
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
---------------------
To the Shareholders of Landair Services, Inc.
A Special Meeting of Shareholders of Landair Services, Inc. (the "Company") will
be held in lieu of the Company's 1998 Annual Meeting of Shareholders on Monday,
August 24, 1998, beginning at 11:00 a.m., local time, at the General Morgan Inn
& Conference Center, 111 North Main Street, Greeneville, Tennessee.
Attendance at the Special Meeting will be limited to shareholders, those holding
proxies from shareholders and representatives of the press and financial
community. If you wish to attend the meeting but your shares are held in the
name of a broker, trust, bank or other nominee, you should bring with you a
letter from the broker, trustee, bank or nominee confirming your beneficial
ownership of the shares.
The purposes of this meeting are:
1. To elect six members of the Board of Directors with terms expiring
at the next Annual Meeting of Shareholders in 1999;
2. To amend the Company's Charter to change the name of the Company to
"Forward Air Corporation;"
3. To consider and act upon a proposal to ratify the appointment of
Ernst & Young LLP as the independent auditors of the Company; and
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only shareholders of Common Stock of record at the close of business on August
10, 1998 are entitled to notice of and to vote at the Special Meeting.
Shareholders are cordially invited to attend the meeting in person.
This Special Meeting as it relates to Proposals 1, 3 and 4 is being held in lieu
of the Company's annual meeting required by the Bylaws of the Company.
SHAREHOLDERS ARE URGED TO EXECUTE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING. ANY PROXY NOT
DELIVERED AT THE MEETING SHOULD BE MAILED TO REACH THE COMPANY'S PROXY
TABULATOR, SUNTRUST BANK -- ATLANTA, CORPORATE TRUST DEPARTMENT, ANNEX ROOM 225,
58 EDGEWOOD AVENUE, ATLANTA, GEORGIA 30303 BY 9:00 A.M. ON AUGUST 21, 1998. YOU
MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.
By Order of the Board of Directors
/s/Richard H. Roberts
Richard H. Roberts
Secretary
Greeneville, Tennessee
August 11, 1998
<PAGE> 4
LANDAIR SERVICES, INC.
430 Airport Road
Greeneville, Tennessee 37745
(423) 636-7000
---------------------
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
---------------------
This Proxy Statement is furnished to the shareholders of Landair Services, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors (the "Board") for use at the Special Meeting of Shareholders to be
held on August 24, 1998, beginning at 11:00 a.m., local time at the General
Morgan Inn & Conference Center, 111 North Main Street, Greeneville, Tennessee
and any adjournment thereof, for the purposes set forth in the foregoing Notice
of Special Meeting of Shareholders. This proxy material was first mailed to
shareholders on or about August 11, 1998.
If the enclosed form of proxy is executed and returned, it will be voted in
accordance with the instructions given, but may be revoked at any time insofar
as it has not been exercised by notifying the Secretary of the Company in
writing at the principal executive offices of the Company or by duly executing
and delivering a proxy bearing a later date. Each proxy will be voted FOR
Proposals 1, 2, 3 and 4 if no contrary instruction is indicated in the proxy,
and in the discretion of the proxies on any other matter which may properly come
before the shareholders at the Special Meeting.
There were 6,194,756 shares of common stock of the Company, $0.01 par value per
share (the "Common Stock"), issued and outstanding on July 20, 1998. A majority
of such shares, present or represented by proxy, will constitute a quorum.
Shareholders are entitled to one vote for each share of Common Stock held of
record at the close of business on August 10, 1998.
The cost of solicitation of proxies will be borne by the Company, including
expenses in connection with preparing, assembling and mailing this Proxy
Statement. Such solicitation will be made by mail, and also may be made by the
Company's executive officers or employees personally. The Company does not
anticipate paying any compensation to any other party for this solicitation of
proxies, but may reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to beneficial owners.
This Special Meeting as it relates to Proposals 1, 3 and 4 is being held in lieu
of the Company's annual meeting required by the Bylaws of the Company.
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the "beneficial ownership," as that term is
defined in the rules of the Securities and Exchange Commission (the
"Commission") of the Common Stock of (i) each director; (ii) the Chief Executive
Officer and the four other highest paid executive officers (the "Named Executive
Officers"); (iii) all directors and executive officers as a group, and; (iv)
each other person known to be a "beneficial owner" of more than five percent
(5%) of any class of capital stock of the Company based on information available
to the Company on May 31, 1998. Except as otherwise indicated, the shareholders
listed in the table have sole voting and investment powers with respect to the
Company's Common Stock owned by them.
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE NUMBER COMMON SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OF SHARES(2) OUTSTANDING(2)
- --------------------------------------- ---------------- --------------
<S> <C> <C>
Bruce A. Campbell........................................... 68,450(3) 1%
Edward W. Cook.............................................. 32,328(4) *
James A. Cronin, III........................................ 33,750(5) *
Hon. Robert Keith Gray...................................... 51,350(6) *
Scott M. Niswonger.......................................... 3,129,520(7) 51
Princeton Services, Inc. ................................... 644,100(8) 10
Michael A. Roberts.......................................... 53,895(9) *
Richard H. Roberts.......................................... 39,554(10) *
Wellington Management Company, LLP.......................... 434,600(11) 7
All directors and executive officers as a group (9
persons).................................................. 3,441,172(12) 56
</TABLE>
- ---------------
* Less than one percent.
(1) The business address of each listed executive officer and director is c/o
Landair Services, Inc., 430 Airport Road, Greeneville, Tennessee 37745.
(2) For the purpose of determining "beneficial ownership," the rules of the
Commission require that every person who has or shares the power to vote or
dispose of shares of stock be reported as a "beneficial owner" of all
shares as to which such power exists. As a consequence, many persons may be
deemed to be the "beneficial owners" of the same securities. The Commission
rules also require that certain shares of stock that a beneficial owner has
the right to acquire within sixty days of the date set forth above pursuant
to the exercise of stock options are deemed to be outstanding for the
purpose of calculating the percentage of ownership of such owner, but are
not deemed outstanding for the purpose of calculating the percentage of
ownership of any other person.
(3) Includes 14,586 shares which are issuable pursuant to options which are
exercisable within sixty days of the date set forth above.
(4) Includes 1,000 shares held by Mr. Cook's spouse and 29,000 shares which are
issuable pursuant to options which are exercisable within sixty days of the
date set forth above.
(5) Includes 33,750 shares which are issuable pursuant to options which are
exercisable within sixty days of the date set forth above.
(6) Includes 18,750 shares which are issuable pursuant to options which are
exercisable within sixty days of the date set forth above.
(7) Includes 300 shares held by Mr. Niswonger as custodian for his grandson and
300 shares which are held by Mr. Niswonger's spouse as custodian for one of
her children.
2
<PAGE> 6
(8) Princeton Services, Inc. ("PSI"), 800 Scudders Mill Road, Plainsboro, New
Jersey 08536, as a parent holding company and the general partner of
Merrill Lynch Asset Management, L.P. d/b/a Merrill Lynch Asset Management
("MLAM") and Fund Asset Management, L.P. d/b/a Fund Asset Management
("FAM"), may be deemed to beneficially own shares. MLAM and FAM are
investment advisers registered under Section 203 of the Investment Advisers
Act of 1940, as amended, and may be deemed to beneficially own certain
shares by virtue of acting as investment advisers to one or more investment
companies registered under Section 8 of the Investment Company Act of 1940,
as amended, and to certain private accounts. As of May 31, 1998, one such
investment company advised by FAM, the Merrill Lynch Special Value Fund,
Inc., held 428,500 shares. Certain accounts managed by MLAM held, as of May
31, 1998, 215,600 shares. None of the companies have sole voting
dispositive power over the shares, and each of the companies has shared
voting and dispositive power over all of the shares.
(9) Includes 1,185 shares held by Mr. Roberts' spouse and 32,175 shares which
are issuable pursuant to options which are exercisable within sixty days of
the date set forth above.
(10) Includes 37,500 shares which are issuable pursuant to options which are
exercisable within sixty days of the date set forth above.
(11) Wellington Management Company, LLP ("WMC"), 75 State Street, Boston,
Massachusetts 02109, is an investment adviser registered with the
Commission under the Investment Advisers Act of 1940, as amended. As of
March 31, 1998, WMC, in its capacity as investment adviser, may be deemed
to have beneficial ownership of 434,600 shares that are owned by numerous
investment advisory clients, none of which is known to have such interest
with respect to more than five percent of the class. As of March 31, 1998,
WMC did not have sole voting or dispositive power over the shares, had
shared voting power over 260,000 shares and shared dispositive power over
all of the shares.
(12) Includes 197,711 shares which are issuable pursuant to options which are
exercisable within sixty days of the date set forth above.
3
<PAGE> 7
PROPOSAL 1 -- ELECTION OF DIRECTORS
Six directors will be elected at the meeting, each to hold office until the next
Annual Meeting of Shareholders and until a successor has been duly elected and
qualified. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE SIX
NOMINEES NAMED BELOW. DULY EXECUTED PROXIES WILL BE SO VOTED UNLESS RECORD
HOLDERS SPECIFY A CONTRARY CHOICE ON THEIR PROXIES. If for any reason a nominee
is unable to serve as a director, it is intended that the proxies solicited
hereby will be voted for such substitute nominee as the Board may propose. The
Board has no reason to expect that the nominees will be unable to serve and,
therefore, at this time it does not have any substitute nominees under
consideration. Proxies cannot be voted for a greater number of persons than the
number of named.
The nominees for election shall be elected by a plurality of the votes cast by
the shares of Common Stock entitled to vote at the Special Meeting. Shareholders
have no right to vote cumulatively for directors, but rather each shall have one
vote for each director for each share of Common Stock held by such shareholder.
DIRECTOR NOMINEES
The following persons are the nominees for election to serve as directors. All
nominees are presently directors of the Company. There are no family
relationships between any of the director nominees. Certain information relating
to the nominees, which has been furnished to the Company by the individuals
named, is set forth below.
<TABLE>
<S> <C>
BRUCE A. CAMPBELL Director since 1993
Greeneville, Tennessee Age 46
</TABLE>
Mr. Campbell has been Executive Vice President and Chief Operating Officer of
the Company since April 1990. Prior to joining the Company in 1990, Mr. Campbell
served as Vice President of Ryder-Temperature Controlled Carriage in Nashville,
Tennessee from September 1985 until December 1989.
<TABLE>
<S> <C>
EDWARD W. COOK Director since 1994
Greeneville, Tennessee Age 40
</TABLE>
Mr. Cook joined the Company as Chief Financial Officer and Senior Vice President
in September 1994. Since May 1995, he has also served as Treasurer. Prior to
joining the Company, Mr. Cook was employed by Ernst & Young LLP for eleven
years, most recently as a senior manager in the Nashville, Tennessee office.
During the period of March 1986 through February 1988, Mr. Cook served as
Controller and Assistant Secretary of Ryder-Temperature Controlled Carriage in
Nashville, Tennessee.
<TABLE>
<S> <C>
JAMES A. CRONIN, III Director since 1993
Aurora, Colorado Age 43
</TABLE>
Since June 1996, Mr. Cronin has served as Chief Operating Officer, Executive
Vice President, Finance and director of Ascent Entertainment Group, Inc., and
director of On Command Corp., both multimedia entertainment companies. From June
1992 until June 1996, he was a private investor. Mr. Cronin was a partner in
Alfred Checchi Associates, a private investment firm in Los Angeles, California
from September 1989 to June 1992. Mr. Cronin served as President and Chief
Executive Officer of Tiger International, Inc. and The Flying Tiger Line from
September 1987 to August 1989.
4
<PAGE> 8
<TABLE>
<S> <C>
THE HON. ROBERT KEITH GRAY Director since 1993
Miami, Florida Age 72
</TABLE>
Mr. Gray is Chairman and Chief Executive Officer of Gray and Company II, a
public relations company, a position he has held since November 1992. From 1981
to the present, Mr. Gray has also been Chairman of Gray Investment Companies and
Powerhouse Leasing Corp. From 1991 to 1992, Mr. Gray was Chairman of Hill &
Knowlton Public Affairs Worldwide/USA and was its Chief Executive Officer from
1986 to 1991. Mr. Gray has served as Appointment Secretary to the President and
was a member of the Eisenhower Cabinet.
<TABLE>
<S> <C>
SCOTT M. NISWONGER Director since 1981
Greeneville, Tennessee Age 51
</TABLE>
Mr. Niswonger is a co-founder of the Company and has served as its President
since its founding in 1981, and as Chairman of the Board and Chief Executive
Officer since February 1988. Mr. Niswonger also serves as a director of the
Regional Advisory Board of First Tennessee Bank National Association.
<TABLE>
<S> <C>
RICHARD H. ROBERTS Director since 1995
Greeneville, Tennessee Age 44
</TABLE>
Mr. Roberts has served as Senior Vice President and General Counsel of the
Company since July 1994, and as Secretary of the Company since May 1995. Prior
to joining the Company, Mr. Roberts was a partner with the Baker, Worthington,
Crossley & Stansberry law firm from January 1991, and an associate of the firm
from June 1985. Mr. Roberts also serves as a director of Miller Industries, Inc.
BOARD OF DIRECTORS AND COMMITTEES
During the last year, the Board held four meetings. The Board maintains an
Executive Committee, an Audit Committee, a Compensation Committee and a
Nominating Committee. These committees do not have a formal meeting schedule,
but are required to meet at least once each year.
Current members of the Executive Committee are Messrs. Campbell, Cook, Niswonger
and Roberts. The Executive Committee is authorized to act on behalf of and to
carry out the functions of the Board to the extent permitted by law and the
Bylaws of the Company.
Current members of the Audit Committee are Messrs. Cronin and Gray. The Audit
Committee recommends engagement of the independent auditors, considers the fee
arrangement and scope of the audit, reviews the financial statements and the
independent auditors' report, considers comments made by the independent
auditors with respect to the Company's internal control structure, and reviews
internal accounting procedures and controls with the Company's financial and
accounting staff. The Audit Committee held two meetings during 1997.
Current members of the Compensation Committee are Messrs. Cronin, Gray and
Niswonger. The Compensation Committee is responsible for determining the overall
compensation levels of certain of the Company's executive officers and
administering the Company's employee stock option plan and other employee
benefit plans. The Compensation Committee held one meeting during 1997.
5
<PAGE> 9
Current members of the Nominating Committee are Messrs. Campbell, Cronin and
Niswonger. The Nominating Committee is responsible for establishing the criteria
for and reviewing the qualifications of individuals for election as members of
the Board. When a vacancy on the Board occurs or is anticipated, the Committee
presents its recommendation of a replacement director to the Board. The
Committee also makes recommendations as to exercise of the Board of Director's
authority to determine the number of its members, within the limits provided by
the Bylaws of the Company. Shareholders wishing to communicate with the
Nominating Committee concerning potential director candidates may do so by
corresponding with the Secretary of the Company and including the name and
biographical data of the individual being suggested. The Nominating Committee
held one meeting during 1997.
All directors hold office at the pleasure of the shareholders. All of the
incumbent directors attended at least 75% of the total number of meetings of the
Board and committees on which they served during 1997.
COMPENSATION OF DIRECTORS
Employee directors of the Company do not receive additional compensation for
Board of Director or committee service. In lieu of an annual retainer,
non-employee directors are paid a fee of $1,500 for each Board meeting and
$1,500 for each committee meeting attended, together with reasonable traveling
expenses. No additional fee is paid for committee meetings held on the same day
as Board meetings.
Each of the non-employee directors of the Company was granted options to
purchase 15,000 shares of the Common Stock pursuant to a non-qualified option
agreement at an exercise price equal to the fair market value ($14.00 per share)
at the time of the Company's initial public offering. In May 1995, the Company
adopted a Non-Employee Director Stock Option Plan (the "Director Plan") which
provided that the existing non-employee directors receive an option for the
purchase of 7,500 shares at an exercise price equal to the closing sales price
of the Common Stock on May 16, 1995 ($13.625 per share). Thereafter, the
Director Plan provides that on the first business day following each annual
meeting of shareholders (beginning with the May 1996 Annual Meeting) each
non-employee director be granted an option for the purchase of 7,500 shares of
Common Stock at an exercise price equal to the closing sales price of the Common
Stock on the date of grant. Accordingly, on May 22, 1996 and May 21, 1997, each
non-employee director received an option to purchase 7,500 shares at an exercise
price of $15.00 and $14.00 per share, respectively. Each individual who
subsequently becomes a non-employee director shall automatically be granted an
option to purchase 7,500 shares of Common Stock on the first business day after
becoming a director.
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND OTHERS
The Company incurred $280,000 in rent expense in 1997 for an aircraft leased
from Sky Night, L.L.C., which is owned by Mr. Niswonger. The Company and its
subsidiaries had no further transactions in which any director or executive
officer, or any member of the immediate family of any director or executive
officer, had a material direct interest reportable under applicable rules of the
Commission.
6
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS IN 1997
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation paid or to be
paid by the Company to the Named Executive Officers for the years shown in all
capacities in which they served.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- ----------------------------
NUMBER OF
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION(1)
- --------------------------- ---- -------- -------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Scott M. Niswonger................ 1997 $269,377 $169,250 $-0- -0- $10,600
Chairman, President and 1996 268,781 -0- -0- -0- 16,061
Chief Executive Officer 1995 262,080 -0- -0- -0- 16,768
Bruce A. Campbell................. 1997 $147,100 $117,075 $-0- 15,000 $10,561
Executive Vice President and 1996 146,521 -0- -0- 20,000 7,356
Chief Operating Officer 1995 142,315 -0- -0- -0- 5,302
Edward W. Cook.................... 1997 $104,300 $ 84,975 $-0- 10,000 $10,133
Chief Financial Officer, Senior 1996 103,753 -0- -0- 10,000 8,919
Vice President and Treasurer 1995 100,750 -0- -0- -0- 6,359
Michael A. Roberts................ 1997 $108,200 $ 26,018 $-0- 5,000 $10,172
Senior Vice President, 1996 107,831 -0- -0- 10,000 10,004
Forward Air Sales and Marketing 1995 105,000 -0- -0- -0- 6,496
Richard H. Roberts................ 1997 $ 90,000 $ 89,250 $-0- 10,000 $ 9,952
Senior Vice President, General 1996 89,173 -0- -0- 10,000 10,327
Counsel and Secretary 1995 79,892 -0- -0- -0- 10,301
</TABLE>
- ---------------
(1) Includes car allowance and employer matching portion of 401(k)
contributions.
7
<PAGE> 11
1997 OPTION GRANTS, AGGREGATED OPTION EXERCISES AND OPTION VALUES
Options granted by the Company during the last year to the Named Executive
Officers are set forth in the following table.
OPTION GRANTS IN LAST YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------
NAME(1) GRANTED LAST YEAR ($/SHARE) DATE 5% 10%
- ------- ---------- ------------ ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Bruce A. Campbell................. 15,000 13.54 $10.00 01/31/07 $94,334 $239,061
Edward W. Cook.................... 10,000 9.03 10.00 01/31/07 62,889 159,374
Michael A. Roberts................ 5,000 4.51 10.00 01/31/07 31,445 79,687
Richard H. Roberts................ 10,000 9.03 10.00 01/31/07 62,889 159,374
</TABLE>
- ---------------
(1) Mr. Niswonger has not been granted any options for the purchase of Common
Stock.
The following table sets forth the year-end aggregated option exercises by the
Named Executive Officers and the year-end value of unexercised options held by
the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST YEAR
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
OPTION EXERCISES IN
LAST YEAR NUMBER OF SECURITIES VALUE OF UNEXERCISED
---------------------- UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS HELD AT YEAR-END YEAR-END(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME(1) ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bruce A. Campbell............. 5,000 $67,500 48,400 36,300 $732,725 $483,150
Edward W. Cook................ -0- -0- 25,000 25,000 165,313 263,438
Michael A. Roberts............ -0- -0- 23,385 17,540 354,049 242,333
Richard H. Roberts............ -0- -0- 25,000 25,000 154,063 259,688
</TABLE>
- ---------------
(1) Mr. Niswonger has not been granted any options for the purchase of Common
Stock.
(2) Represents the closing price for the Common Stock on December 31, 1997 of
$24.25 less the exercise price for all outstanding exercisable and
unexercisable options for which the exercise price is less than the December
31, 1997 closing price. Exercisable options have been held at least one year
from the date of grant.
8
<PAGE> 12
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Company does not currently have an employment agreement with any of the
Named Executive Officers.
Upon the occurrence of a Change in Control or Potential Change in Control (as
such terms are described below) under the Company's Amended and Restated Stock
Option and Incentive Plan (the "Stock Option and Incentive Plan"), all
outstanding options and any stock appreciation rights that have been outstanding
for at least six months will become fully exercisable and vested, and the
restrictions applicable to the benefits available under any other award under
the Stock Option and Incentive Plan will lapse, unless otherwise determined by
the Compensation Committee (the "Committee") of the Board of Directors. Unless
otherwise determined by the Committee at or after grant but prior to the
occurrence of any Change in Control, the value of all vested options and other
awards granted under the Stock Option and Incentive Plan will be cashed out at
the Change in Control Price upon the occurrence of a Change in Control or
Potential Change in Control. Options and other awards granted to executive
officers, directors and other persons who are subject to Section 16 of the
securities Exchange Act of 1934, as amended (the "Exchange Act"), will only be
cashed out if they have been held for at least six months and, unless otherwise
determined by the Committee, the Change in Control or Potential Change in
Control was outside the control of the holder of the option or other award.
Under the Stock Option and Incentive Plan, a "Change in Control" is defined to
include (i) any Change in Control that would be required to be reported in
response to any form or report to the Commission, or any stock exchange on which
the Company's shares are listed; (ii) the acquisition by any person (other than
the Company, a subsidiary of the Company or any employee benefit plan of the
Company or any of its subsidiaries) of beneficial ownership of securities of the
Company representing twenty percent or more of the combined voting power of the
Company; or (iii) a change in the Board of Directors of the Company if, as a
result of such change, the persons who were the members of the Board of
Directors two years prior to such change cease to constitute at least a majority
of the members of the Board of Directors. Persons who were elected by or on the
recommendation or approval of at least three-quarters of the members of the
Board of Directors who were in office at the beginning of such period are deemed
to have been in office during such two year period for purposes of this
provision. A Change in Control is also deemed to occur if a majority of the
members of the Committee in office prior to the happening of any event
determines in its sole discretion that as a result of such event there has been
a Change in Control. A "Potential Change in Control" is deemed to occur upon (i)
the approval by shareholders of any agreement which, if consummated, would
result in a Change in Control, or (ii) the acquisition by any person (other than
the Company, a subsidiary of the Company or any employee benefit plan of the
Company or any of its subsidiaries) of beneficial ownership of securities of the
Company representing five percent or more of the combined voting power of the
Company's securities and the adoption by the Committee of a resolution to the
effect that a Potential Change in Control of the Company has occurred. The
"Change in Control Price" is defined as the highest price per share paid for the
Common Stock in any transaction reported on The Nasdaq Stock Market or any other
exchange or market that is the principal trading market for the Common Stock or
any other bona fide transaction related to such Change in Control or Potential
Change in Control at any time during the sixty day period prior to the Change in
Control or Potential Change in Control. In the case of incentive stock options
and stock appreciation rights related thereto, the Change in Control Price is
determined based solely on transactions reported for the date on which the
cash-out or the exercise of the stock appreciation right occurs.
9
<PAGE> 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the Committee was comprised of two non-employee directors, Messrs.
Cronin and Gray, and Mr. Niswonger. There were no Compensation Committee
interlocks. See "Transactions with Directors, Executive Officers and Others."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's general compensation policies on executive officer compensation
are administered by the Committee; however, the Committee submits its
determinations to the full Board for its comments and concurrence. A majority of
members of the Committee are non-employee directors. It is the responsibility of
the Committee to determine whether the executive compensation policies are
reasonable and appropriate to meet their stated objectives and effectively serve
the best interests of the Company and its shareholders.
The three components of executive officer compensation are base salary, annual
bonus awards and stock option grants, except for the Chief Executive Officer
whose compensation includes only base salary and annual bonus awards. In
addition to the Committee's determinations on base salary and bonus awards, the
Committee administers the Company's Restated Employee Stock Purchase Plan and
Stock Option and Incentive Plan and determines the options to be granted to
executive officers.
The Company believes that its executive compensation policy should be reviewed
annually and should be reviewed in light of the Company's financial performance,
its annual budget, its position within its industry sector and the compensation
policies of similar companies in its business sector. The Committee believes
that in addition to corporate performance, it is appropriate to consider, in
setting and reviewing executive compensation, the level of experience and the
responsibilities of each executive as well as the personal contributions a
particular individual may make to the success of the corporate enterprise. Such
qualitative factors are taken into account in considering levels of
compensation. No relative weight is assigned to these qualitative factors, which
are applied subjectively by the Committee. The base compensation of the Named
Executive Officers increased by 5% in 1997.
In order to be able to increase the equity incentives available to executive
officers and other key employees, and to continue to be able to offer new
options, the Committee recommended, in February 1995, that the Board increase
the number of authorized shares issuable under the Stock Option and Incentive
Plan from 600,000 shares to 1,000,000 shares of Common Stock, and this increase
was approved by shareholders at the 1995 Annual Meeting of Shareholders. No
stock options were granted in 1995. In 1996 and 1997, 284,500 and 110,750 stock
options were granted, respectively. In July 1995, the Company adopted the
Restated Employee Stock Purchase Plan, which received shareholder approval at
the 1996 Annual Meeting of Shareholders. All executive officers, other than the
Chief Executive Officer, are entitled to participate in the Restated Employee
Stock Purchase Plan.
The Committee's philosophy with respect to the compensation of the Company's
Chief Executive Officer is essentially the same as its philosophy with respect
to other executive officers. Because the Chief Executive Officer owns
approximately 51% of the Common Stock, however, his personal net worth is more
closely related to the performance of the Common Stock than other executive
officers. The Committee has not awarded stock options to the Chief Executive
Officer.
10
<PAGE> 14
Section 162(m) of the Internal Revenue Code was enacted as part of the 1993
Omnibus Budget Reconciliation Act and generally disallows a corporate deduction
for compensation over $1,000,000 paid to the Company's Chief Executive Officer
or any other of the four most highly compensated officers. The Committee
continues to analyze the potential impact of this limitation. Under the
regulations and the transition rules, executive compensation pursuant to the
Stock Option and Incentive Plan is expected to qualify as "performance based"
compensation and therefore be excluded from the $1,000,000 limit. Other forms of
compensation provided by the Company, however, are not excluded from the limit.
The Committee currently anticipates that substantially all compensation to be
paid in future years will be deductible under Section 162(m) because of the
spread between present levels of executive officer compensation and the limit
under the regulation. In any event, the Committee believes that performance
based compensation is desirable and can be structured in a manner to qualify as
performance based compensation under Section 162(m).
James A. Cronin, III
Robert Keith Gray
Scott M. Niswonger
11
<PAGE> 15
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's cumulative
shareholder return on its Common Stock with the Nasdaq Trucking and
Transportation Stocks Index and The Nasdaq Stock Market Index commencing
November 16, 1993 (the initial trading date of the Common Stock) and ending
December 31, 1997. The graph assumes a base investment of $100 made on November
16, 1993 and the respective returns assume reinvestment of dividends paid.
<TABLE>
<CAPTION>
Nasdaq
Trucking and
Measurement Period Landair Transportation Nasdaq Stock
(Fiscal Year Covered) Services, Inc. Stocks Index Market Index
<S> <C> <C> <C>
Nov. 16, 1993 100.00 100.00 100.00
Dec. 25, 1993 132.14 98.32 98.23
Dec. 31, 1994 110.71 91.68 98.48
Dec. 31, 1995 94.64 106.91 139.27
Dec. 31, 1996 71.43 117.99 171.30
Dec. 31, 1997 173.21 151.03 210.18
</TABLE>
12
<PAGE> 16
PROPOSAL 2 -- AMENDMENT TO THE COMPANY'S CHARTER
On July 9, 1998, the Board approved the pro rata distribution (the
"Distribution") by the Company to its shareholders of all the outstanding shares
of the common stock, $0.01 par value per share (the "Landair Corporation Common
Stock"), of Landair Corporation, a Tennessee corporation and a wholly owned
subsidiary of the Company. As a result of the Distribution, each holder of
record of Common Stock as of the record date for the Distribution will receive
one share of Landair Corporation Common Stock for each share of Common Stock
held on such record date. Landair Corporation will become a new, independent,
publicly-traded company, that upon completion of the Distribution will own and
operate the Company's truckload operations. The Company will continue to provide
scheduled trucking services to air freight forwarders, fully integrated air
cargo carriers and domestic and international airlines through its Forward Air
operations.
In anticipation of the Distribution, the Board has approved, subject to
shareholder approval, an amendment to the Charter of the Company that will
change the name of the Company to "Forward Air Corporation" (the "Charter
Amendment"). The Board believes that it is in the best interest of the Company
and its shareholders to change the Company's name to more closely associate the
Company with the Forward Air operations.
The complete text of the Charter Amendment is set forth in the Articles of
Amendment to the Charter, a copy of which is included as Exhibit A to this Proxy
Statement. The Charter Amendment will become effective upon filing with the
Secretary of State of the State of Tennessee, which is expected to be
accomplished as promptly as possible.
Subject to shareholder approval of the Charter Amendment, the Board intends to
change the Company's Nasdaq National Market trading symbol to "FWRD" to reflect
the change in the Company's name.
The Charter Amendment will be approved if the votes cast in favor of the Charter
Amendment exceed the votes cast against it. Abstentions and broker non-votes
will not be considered in the vote. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THIS PROPOSAL.
PROPOSAL 3 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board, acting upon the recommendation of the Audit Committee, has appointed
the independent public accounting firm of Ernst & Young LLP to serve as the
Company's independent auditors for 1998. As in the past, the Board has
determined that it would be desirable to request ratification of its appointment
by the shareholders of the Company. If the shareholders do not ratify the
appointment of Ernst & Young LLP, the appointment of independent public
accountants will be reconsidered by the Board. A representative of Ernst & Young
LLP is expected to be present at the Special Meeting and will have the
opportunity to make a statement if he or she so desires and will be available to
respond to appropriate questions.
A majority of the votes of all shares present, represented and entitled to vote
is necessary for approval of this proposal. THE BOARD OF DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE FOR RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITORS FOR THE COMPANY FOR 1998. UNLESS OTHERWISE DIRECTED
THEREIN, THE PROXIES SOLICITED HEREBY WILL BE VOTED FOR APPROVAL OF ERNST &
YOUNG LLP.
13
<PAGE> 17
OTHER MATTERS
The Board of the Company knows of no other matters that may come before the
meeting; however, if any other matters should properly come before the meeting
or any adjournment thereof, it is the intention of the persons named in the
proxy to vote the proxy in accordance with their best judgment.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act and the disclosure requirements of Item 405 of
Regulation S-K require the directors and executive officers of the Company, and
any persons holding more than ten percent of any class of equity securities of
the Company, to report their ownership of such equity securities and any
subsequent changes in that ownership to the Commission, The Nasdaq Stock Market
and the Company. Based solely on a review of the written statements and copies
of such reports furnished to the Company by its executive officers and
directors, the Company believes that during 1997 all Section 16(a) filing
requirements applicable to its executive officers, directors and shareholders
were timely satisfied, except that Bruce A. Campbell inadvertently filed a late
Form 4 in connection with the sale of 2,600 shares of Common Stock in July 1997.
DEADLINE FOR SUBMISSION TO SHAREHOLDERS OF PROPOSALS TO BE PRESENTED AT THE 1999
ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented for action at the 1999 Annual Meeting of
Shareholders by any shareholder of the Company must be received by the Secretary
of the Company not later than December 1, 1998 in order for such proposal to be
considered for inclusion in the Company's Proxy Statement and proxy relating to
its 1999 Annual Meeting of Shareholders. Nothing in this paragraph shall be
deemed to require the Company to include any shareholder proposal which does not
meet all the requirements for such inclusion established by the Commission at
the time in effect.
Holders of shares of Common Stock desiring to have proposals submitted for
consideration at future meetings of the shareholders should consult the
applicable rules and regulations of the Commission with respect to such
proposals, including the permissible number and length of proposals and other
matters governed by such rules and regulations.
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will be voted
in accordance with the instructions set forth an the back side of the proxy
card. Abstentions and "non-votes" will be counted for the purpose of determining
a quorum. Abstentions and non-votes are treated as votes against the proposals
presented to the shareholders other than the election of directors. Because
directors are elected by a plurality of the votes cast, abstentions are not
considered in the election. A "non-vote" occurs when a nominee holding shares
for a beneficial owner votes on one proposal, but does not vote on another
proposal because the nominee does not have discretionary voting power and has
not received instructions from the beneficial owner.
MISCELLANEOUS
It is important that proxies be returned promptly to avoid unnecessary expense.
Therefore, shareholders who do not expect to attend in person are urged,
regardless of the number of shares of Common Stock owned, to date, sign and
return the enclosed proxy promptly.
14
<PAGE> 18
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1997 WAS MAILED TO SHAREHOLDERS ON OR ABOUT MAY 19, 1998 AND IS
AVAILABLE UPON WRITTEN REQUEST. REQUESTS SHOULD BE MADE IN WRITING TO RICHARD H.
ROBERTS, SECRETARY, LANDAIR SERVICES, INC., P.O. BOX 1058, GREENEVILLE,
TENNESSEE 37744-1058.
By Order of the Board of Directors
Richard H. Roberts
Secretary
Greeneville, Tennessee
August 11, 1998
15
<PAGE> 19
EXHIBIT A
ARTICLES OF AMENDMENT TO THE CHARTER
OF
LANDAIR SERVICES, INC.
Pursuant to the provisions of Section 48-20-106 of the Tennessee Business
Corporation Act, the undersigned corporation adopts the following articles of
amendment (the "Articles of Amendment") to its charter (the "Charter"):
1. Name of Corporation. The name of the corporation is Landair
Services, Inc.
2. Section 1 of the Charter is hereby deleted in its entirety and
replaced with the following:
"The name of the corporation is Forward Air Corporation."
3. Adoption. These Articles of Amendment were duly adopted by the
Board of Directors and the shareholders of the corporation on
August 24, 1998.
4. Effective Date. These Articles of Amendment will be effective when
filed with the Secretary of State.
Dated: August 24, 1998.
LANDAIR SERVICES, INC.
By:
------------------------------------
Richard H. Roberts
Senior Vice President and Secretary
<PAGE> 20
Appendix A
PROXY
LANDAIR SERVICES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF LANDAIR SERVICES, INC.
The undersigned, having received the Notice of Special Meeting and Proxy
Statement, hereby appoints Scott M. Niswonger, Bruce A. Campbell and Richard H.
Roberts and each of them, proxies with full power of substitution, for and in
the name of the undersigned, to vote all shares of common stock of Landair
Services, Inc. owned of record by the undersigned on all matters which may come
before the 1998 Special Meeting of Shareholders to be held at the General Morgan
Inn & Conference Center, 111 North Main Street, Greeneville, Tennessee, on
August 24, 1998, at 11:00 a.m., local time, and any adjournments thereof, unless
otherwise specified herein. The proxies, in their discretion, are further
authorized to vote for the election of a person to the Board of Directors if any
nominee named herein becomes unable to serve or for good cause will not serve,
are further authorized to vote on matters which the Board of Directors does not
know a reasonable time before making the proxy solicitation will be presented at
the meeting, and are further authorized to vote on other matters which may
properly come before the 1998 Special Meeting and any adjournments thereof.
1. Election of Directors
<TABLE>
<S> <C>
[ ] FOR the nominees listed below (except as marked to the [ ] WITHHOLD AUTHORITY to vote for all
contrary below) nominees listed below
</TABLE>
Bruce A. Campbell; Edward W. Cook; James A. Cronin, III; Hon. Robert Keith
Gray; Scott M. Niswonger and Richard H. Roberts
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
2. Amendment to the Company's Charter.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of the appointment of Ernst & Young LLP as independent
auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
(see reverse side)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" ALL OF THE
DIRECTOR NOMINEES AND "FOR" PROPOSALS 2 AND 3.
Do you plan to attend the
Special Meeting?
[ ] Yes [ ] No
PLEASE SIGN AND DATE BELOW AND
RETURN PROMPTLY.
Please sign exactly as name
appears hereon. Joint Owners
should each sign. When signing
as attorney, executor,
administrator, trustee or
guardian, please give full
title as such.
------------------------------
------------------------------
Signature(s) Date
