OLD DOMINION FREIGHT LINE, INC.
EXECUTIVE OFFICES: 1730 WESTCHESTER DRIVE
HIGH POINT, NORTH CAROLINA 27262
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1997
The Annual Meeting of Stockholders of Old Dominion Freight Line, Inc.,
will be held Monday, May 5, 1997, at 10:00 A.M., in the Fourth Floor Conference
Room of the Company's Executive Offices, 1730 Westchester Drive, High Point,
North Carolina, for the following purposes:
1. To elect a board of five directors of the Company.
2. To transact such other business as may be brought before the
meeting.
Stockholders of record at the close of business on March 28, 1997, are
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Joel B. McCarty, Jr.
SECRETARY
High Point, North Carolina
April 4, 1997
IF YOU DO NOT INTEND TO BE PRESENT AT THE MEETING, PLEASE
SIGN, DATE AND RETURN THE ACCOMPANYING PROXY PROMPTLY SO
THAT YOUR SHARES OF COMMON STOCK MAY BE REPRESENTED AND
VOTED AT THE MEETING. A RETURN ENVELOPE IS ENCLOSED FOR
YOUR CONVENIENCE.
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
EXECUTIVE OFFICES: 1730 WESTCHESTER DRIVE
HIGH POINT, NORTH CAROLINA 27262
---------------
PROXY STATEMENT
---------------
This Proxy Statement is first being sent to stockholders on April 4,
1997, in connection with the solicitation of proxies for use at the Annual
Meeting of Stockholders of Old Dominion Freight Line, Inc. (the "Company"), to
be held on Monday, May 5, 1997, and at any adjournment thereof.
ELECTION OF DIRECTORS
The Bylaws provide that the number of directors shall be not less than
five nor more than nine. The Board of Directors has determined that the Board
should be comprised of five members and has nominated the following five
individuals to serve as directors until the next Annual Meeting and until their
successors shall have been elected and shall qualify. Unless authority is
withheld, it is intended that Proxies received in response to this solicitation
will be voted in favor of the following five nominees, all of whom are currently
directors:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF THE COMPANY'S COMMON
STOCK AS OF MARCH 28, 1997
VOTING AND
INVESTMENT
POWER (1) IN ALL CAPACITIES
PERCENT
NAME, AGE, PRINCIPAL OCCUPATION AND OF
OTHER POSITIONS AND OFFICES WITH THE DIRECTOR TOTAL COMMON
COMPANY SINCE SOLE SHARED SHARES STOCK
<S> <C> <C> <C> <C> <C>
-2-
Earl E. Congdon, 66 (2)(3)(4) 1952 See "Principal Stockholders".
Chairman of the Board and
Chief Executive Officer of
the Company
High Point, North Carolina
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF THE COMPANY'S COMMON
STOCK AS OF MARCH 28, 1997
VOTING AND
INVESTMENT
POWER (1) IN ALL CAPACITIES
PERCENT
NAME, AGE, PRINCIPAL OCCUPATION AND OF
OTHER POSITIONS AND OFFICES WITH THE DIRECTOR TOTAL COMMON
COMPANY SINCE SOLE SHARED SHARES STOCK
<S> <C> <C> <C> <C> <C>
John R. Congdon, 64 (2)(3)(4) 1955 See "Principal Stockholders".
Vice Chairman of the Board
of Directors of the Company;
President of Old Dominion
Truck Leasing, Inc.
Richmond, Virginia
John A. Ebeling, 59 (2) 1985 94,868 (6) -- 94,868 (6) 1.1 %
President and Chief Operating
Officer of the Company
High Point, North Carolina
Harold G. Hoak, 67 (4)(5) 1991 1,000 -- 1,000 Less than 1%
Retired (former Regional
Vice President of Wachovia
Bank of North Carolina, N.A.)
Charlotte, North Carolina
Franz F. Holscher, 75 (3)(4)(5) 1991 1,000 -- 1,000 Less than 1%
Retired (former Chairman of
Thurston Motor Lines)
Gastonia, North Carolina
</TABLE>
- ---------------
(1) Except as otherwise indicated, each director has sole voting and sole
investment power with respect to the shares beneficially owned by such
director.
(2) Member of Executive Committee.
(3) Member of Compensation Committee.
(4) Member of Stock Option Plan Committee.
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<PAGE>
(5) Member of Audit Committee.
(6) Includes 14,000 shares obtainable upon exercise of stock options
exercisable within 60 days.
Earl E. Congdon has been with the Company since 1950 and has served as
Chairman of the Board and Chief Executive Officer since 1985 and as a director
since 1952. He is a son of E. E. Congdon, one of the founders of Old Dominion.
John R. Congdon has been with the Company since 1953 and has served as
Vice Chairman of the Board since 1985 and as a director since 1955. He is also
the President of Old Dominion Truck Leasing, Inc., a North Carolina corporation
that is engaged in full service leasing of tractors, trailers and other
equipment, to which he devotes more than half of his time. He is a son of E. E.
Congdon, one of the founders of Old Dominion, and the brother of Earl E.
Congdon.
John A. Ebeling has been President and Chief Operating Officer since
joining the Company in August of 1985 and was first elected a director in August
of 1985. Mr. Ebeling was previously employed by ANR Freight Systems from 1978 to
1985, holding the positions of Chairman and Chief Executive Officer.
Harold G. Hoak was elected a director in August of 1991. Now retired,
he serves on the Board of Directors of the Charlotte Merchants Foundation, Inc.
He was President and General Manager of the Charlotte Merchants Association,
Inc., from 1989 to 1994. Mr. Hoak was formerly employed by Wachovia Bank of
North Carolina, N.A., from 1956 to 1989 and served as Regional Vice President
for the Southern Region from 1976 to 1989.
Franz F. Holscher was elected a director in August of 1991. He served
in a number of executive positions from 1970 to 1987 with Thurston Motor Lines
and was the Chairman from July of 1984 through December 31, 1987, when he
retired. Mr. Holscher has been active in a number of organizations and
associations in the trucking industry.
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<PAGE>
PRINCIPAL STOCKHOLDERS
As of March 28, 1997, or such other date as indicated in the footnotes
to the table, to the knowledge of management, the only persons owning
beneficially more than five percent (5%) of the Company's Common Stock, its only
class of voting security, are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF
BENEFICIAL OWNER NUMBER OF SHARES (1) PERCENT
<S> <C> <C>
Earl E. Congdon 1,029,913 (2)(3) 12.4%
1730 Westchester Drive
High Point, NC 27262
John R. Congdon 975,842 (3)(4) 11.7%
1730 Westchester Drive
High Point, NC 27262
Old Dominion Truck Leasing, Inc. 1,107,098 (5) 13.3%
7511 Whitepine Road
Richmond, VA 23237
David S. Congdon 455,779 (6) 5.5%
1730 Westchester Drive
High Point, NC 27262
John R. Congdon, Jr. 449,009 (7) 5.4%
9800 Drouin Drive
Richmond, VA 23233
Karen C. Vanstory 441,084 (8) 5.3%
5412 Horse Trail Road
Summerfield, NC 27358
Susan C. Terry 437,787 (9) 5.3%
10801 North Bank Road
Richmond, VA 23233
Dimensional Fund Advisors Inc. 429,100 (10) 5.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Franklin Resources, Inc. 419,000 (11) 5.0%
777 Mariners Island Boulevard
San Mateo, CA 94404
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF
BENEFICIAL OWNER NUMBER OF SHARES (1) PERCENT
<S> <C> <C>
Audrey L. Congdon 417,945 (12) 5.0%
606 Hillcrest Drive
High Point, NC 27261
All Executive Officers and 3,236,879 (13) 38.8%
Directors of the Company as
a Group (7 persons)
</TABLE>
- ----------------
(1) Except as described below, each person or group identified possesses
sole voting and investment power with respect to the shares shown
opposite the name of such person or group.
(2) Includes 936,913 shares held as trustee of a revocable trust, 10,000
shares owned by Mr. Congdon's wife and 83,000 shares owned by Mr.
Congdon's wife as trustee of a revocable trust.
(3) Does not include any of the shares owned by Old Dominion Truck
Leasing, Inc.
(4) Includes 974,110 shares held as trustee of a revocable trust and
1,732 shares owned by Mr. Congdon's wife as trustee of a revocable
trust.
(5) The voting stock of Old Dominion Truck Leasing, Inc. ("Leasing"), is
owned by Earl Congdon as trustee of a revocable trust (32.4%), John R.
Congdon Revocable Trust (25.5%) and members of Earl Congdon's and John
Congdon's respective families (42.1%). Earl Congdon is Chairman of the
Board of Leasing, and John Congdon is President and Chief Executive
Officer. The Company's Common Stock owned by Leasing will be voted as
directed by Earl Congdon and John Congdon or, in the event of
disagreement, one-half of the shares will be voted as directed by Earl
Congdon or his personal representative, attorney-in-fact or executor
and one-half will be voted as directed by John Congdon or his personal
representative, attorney-in-fact or executor. Any future sales or other
disposition of such shares and the disposition of the proceeds of any
sales will be determined by the Board of Directors of Leasing.
(6) Includes 1,764 shares owned of record by the named stockholder, 3,445
shares owned in the Company's 401(k) plan, 11,000 shares obtainable
upon exercise of stock options, 292,081 shares held as trustee of a
revocable trust, 20,250 shares held as trustee of an irrevocable trust,
91,617 shares held as custodian for minor children of the stockholder,
31,622 shares held by Mr. Congdon's wife as trustee of an irrevocable
trust and 4,000 shares owned by Mr. Congdon's wife.
(7) Includes 298,964 shares held as trustee of a revocable trust, 139,041
shares held as trustee for the benefit of minor children and 11,004
shares held as custodian for minor children of the stockholder.
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<PAGE>
(8) Includes 2,714 shares owned of record by the named stockholder, 307,726
shares held as trustee of a revocable trust, 39,027 shares held as
trustee of an irrevocable trust and 91,617 shares held as custodian for
minor children of the stockholder.
(9) Includes 287,742 shares held as trustee of a revocable trust, 134,449
shares held as trustee for the benefit of minor children and 15,596
shares held as custodian for minor children of the stockholder.
(10) Based on information provided by Dimensional Fund Advisors Inc.
("Dimensional") as reflected in a Schedule 13G dated February 5, 1997,
filed with the Securities and Exchange Commission, and subsequent
discussions with Company representatives, Dimensional, a registered
investment advisor, is deemed to have beneficial ownership of 429,100
shares of Old Dominion Freight Line, Inc. stock as of December 31,
1996, all of which shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment company, or in
series of the DFA Investment Trust Company, a Delaware business trust,
or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional
Fund Advisors Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
(11) Based on information provided by Franklin Resources, Inc. ("FRI") as
reflected in a Schedule 13G dated February 12, 1997, filed with the
Securities and Exchange Commission, and subsequent discussions with
Company representatives, 419,000 shares of Old Dominion stock are
beneficially owned by one or more open or closed-end investment
companies or other managed accounts which are advised by direct and
indirect investment advisory subsidiaries (the "Adviser Subsidiaries")
of FRI. Such advisory contracts grant to such Adviser Subsidiaries all
voting and investment power over the securities owned by such advisory
clients. Therefore, such Adviser Subsidiaries may be deemed to be the
beneficial owner of the securities.
(12) Includes 1,764 shares owned of record by the named stockholder, 6,750
shares held as trustee of a revocable trust, 13,500 shares held as
trustee of an irrevocable trust, 61,078 shares held as custodian for
minor children, 303,658 shares held by Mrs. Congdon's husband as
trustee of a revocable trust, 14,539 shares held by Mrs. Congdon's
husband as trustee of an irrevocable trust, 11,900 shares obtainable
upon exercise of Mrs. Condgon's husband's stock options and 4,756
shares owned by Mrs.
Congdon's husband.
(13) Includes shares owned by Old Dominion Truck Leasing, Inc.
COMPLIANCE WITH BENEFICIAL OWNERSHIP REPORTING RULES
Section 16(a) of the Securities Exchange Act of 1934 requires certain
of the Company's officers and its directors and persons who own more than 10% of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange
-6-
<PAGE>
Commission ("SEC"). Such officers, directors and stockholders are required by
the SEC regulations to furnish the Company with copies of all such reports that
they file.
Based solely on a review of copies of reports filed with the SEC since
January 1, 1996, and of written representations by certain officers and
directors, all persons subject to the reporting requirements of Section 16(a)
filed the required reports on a timely basis except as follows: Earl E. Congdon
(four filings - purchases by wife), Earl E. Congdon Trust (one filing - purchase
by Leasing), John R. Congdon (one filing - purchase by Leasing), John R. Congdon
Revocable Trust (one filing - purchase by Leasing) and John A. Ebeling (one
filing - release of shares under a restricted stock agreement). All reports
known to the Company required to be filed as of the date of this Proxy
Statement have been filed.
-7-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides a three-year overview of the cash
compensation paid to the named officers of the Company:
<TABLE>
<CAPTION>
Long-Term Compensation
- -------------------------------------------------------------------------------------- --------------------------------
Annual Compensation Awards
=======================================================================================================================
(a) (b) (c) (d) (f) (g) (i)
Restricted
Salary Bonus(1) Stock Options/SARs All Other Compensation
Name and Principal Position Year ($) ($) Award(s) (#) ($)(2)
($)
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Earl E. Congdon 1996 $ 270,400 $ 174,175 0 0 $ 12,209 (3)
Chairman of the Board and
Chief Executive Officer
------------------- --------------- ---------------- --------------- ------------------------
1995 $ 270,400 $ 191,443 0 0 $ 12,260
------------------- --------------- ---------------- --------------- ------------------------
1994 $ 268,000 $ 305,041 0 0 $ 12,211
================================= ================== =============== ================ =============== =========================
[GRAPHIC OMITTED]
John R. Congdon 1996 $ 140,400 0 0 0 $ 16,495 (3)
Vice Chairman of the Board
------------------- --------------- ---------------- --------------- ------------------------
1995 $ 140,400 0 0 0 $ 16,091
------------------- --------------- ---------------- --------------- ------------------------
1994 $ 138,000 0 0 0 $ 18,592
================================= ================== ================ ================ =============== ========================
John A. Ebeling(4) 1996 $ 185,380 $ 116,723 0 0 $ 3,313(3)
President and Chief
Operating Officer
------------------- --------------- ---------------- --------------- ------------------------
1995 $ 185,380 $ 111,789 $ 421,674(5) 2,000 $ 7,875
------------------- --------------- ---------------- --------------- ------------------------
1994 $ 182,989 $ 192,907 0 3,000 $ 3,174
================================= =================== =============== ================ =============== =========================
J. Wes Frye 1996 $ 112,140 $ 37,351 0 0 $ 9,501 (3)
Treasurer, Chief Financial
Officer and
Assistant Secretary
------------------- --------------- ---------------- --------------- ------------------------
1995 $ 108,620 $ 35,772 0 1,500 $ 4,008
------------------- --------------- ---------------- --------------- ------------------------
1994 $ 104,148 $ 61,730 0 2,500 $ 2,898
================================= ================== ================ ================ =============== ========================
Joel B. McCarty, Jr. 1996 $ 100,820 $ 43,231 0 0 $ 3,704 (3)
General Counsel and
Secretary
------------------- --------------- ---------------- --------------- ------------------------
1995 $ 98,400 $ 29,893 0 1,500 $ 3,614
------------------- --------------- ---------------- --------------- ------------------------
1994 $ 98,280 $ 61,730 0 2,500 $ 3,174
================================= =================== =============== ================ =============== ========================
</TABLE>
<PAGE>
(1) Pursuant to an executive profit-sharing bonus program, the Company pays
incentive cash bonuses to certain executive officers based upon the
Company's income before taxes during the preceding fiscal year. Under the
terms of his employment agreement, John Ebeling was paid a cash bonus of
$116,723 for services rendered during 1996, which is included in the
bonuses paid under the executive bonus program.
(2) Includes pretax contributions to the Company's 401(k) plan, excess premiums
paid on group life insurance and the compensation element of premiums paid
on split-dollar life insurance policies. The Company is a party to certain
split-dollar life insurance agreements with certain members of the families
of Earl Congdon and John Congdon pursuant to which the Company pays a
portion of the premiums on life insurance policies insuring their lives in
the aggregate face amounts of $16,374,808 and $15,902,032, respectively.
The total benefits currently payable to the Company under the policies upon
the death of Earl Congdon and John Congdon are $1,171,416 and $2,419,815,
respectively. The Company's interest in the death benefit and cash
surrender value of each policy is determined by reference to the amount of
gross premiums paid by the Company, which in 1996, 1995 and 1994 were
$525,394, $495,791 and $208,598, respectively.
(3) Allocation of 1996 All Other Compensation:
<TABLE>
<CAPTION>
401(k) Split-Dollar Personal Use of Excess Life
Name Contribution Life Insurance Company Car Insurance Premiums
<S> <C> <C> <C> <C>
Earl E. Congdon $ 3,245 $ 7,704 -- $ 1,260
John R. Congdon 1,685 14,108 -- 702
John A. Ebeling 2,225 $ 638 450
J. Wes Frye 1,346 - 7,981 174
Joel B. McCarty, Jr. 1,210 -- 2,044 450
</TABLE>
(4) Pursuant to an Employment Agreement between the Company and John
Ebeling, dated August 27, 1985, as last amended on April 7, 1988, Mr.
Ebeling, as President and Chief Operating Officer of the Company, is
entitled to a yearly salary of $150,000, which may be adjusted upward
by the Board of Directors, plus a performance bonus equal to 1.25% of
the Company's pretax profits. The agreement provides that, upon the
termination of Mr. Ebeling's employment without cause or upon a sale of
substantially all the business operations of the Company, Mr. Ebeling
would receive his salary for a period of 18 months thereafter. The
agreement prohibits Mr. Ebeling from acquiring, holding an interest in,
or associating with any other entity engaged in business as a motor
carrier in any state in which the Company operates. Pursuant to the
agreement, the Board of Directors has adjusted the annual salary of Mr.
Ebeling to $185,380. All amounts paid to Mr. Ebeling for the previous
three years are included in the table above.
(5) Pursuant to a Restricted Stock Agreement, dated August 19, 1991, the
Board of Directors awarded John Ebeling 153,336 shares of the Company's
Common Stock. Under the Restricted Stock Agreement, the shares were
issued in Mr. Ebeling's name. The Company held the certificates for the
shares, which were originally scheduled to be released to Mr. Ebeling
in four
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<PAGE>
installments, each consisting of 25% of the shares issued under the
agreement, on January 1 of 1994, 1996, 1998 and 2000. The shares not
released were subject to forfeiture in the event Mr. Ebeling should
voluntarily cease his continuous employment with the Company or the
Company should terminate his employment for cause. Should Mr. Ebeling
retire at or after attaining age 60 in 1997, all shares not previously
released would have been released to him on January 1, 2000.
Involuntary termination of employment without cause, termination due to
disability or death would have resulted in the prompt release of all
shares not previously released at the date of termination.
Notwithstanding the scheduled release of shares and the forfeiture
provisions, the Board of Directors was permitted under the agreement,
in its discretion, to release any and all shares held by the Company at
any time. Pending release or forfeiture of the restricted shares, Mr.
Ebeling was entitled to exercise all rights of a stockholder with
respect to the restricted shares, except the right to pledge or convey
ownership, and he was entitled to receive any dividends that may have
been paid to holders of the Company's Common Stock. In both December of
1993 and June of 1995, the Board of Directors authorized the release of
38,334 shares to Mr. Ebeling, who turned over 18,150 and 18,706 of
those shares, respectively, to the Company as withholding for federal
and state tax payments and received certificates for the balance of the
shares released. At December 31, 1996, the dollar value of the
unreleased shares was $814,598. In January of 1997, the Board of
Directors authorized the release of the remaining 76,668 shares to Mr.
Ebeling, who turned over 37,412 of those shares to the Company as
withholding for federal and state tax payments. Pursuant to the Board's
action, Mr. Ebeling received a certificate for 19,628 in the first
quarter of 1997 and received a certificate for the remaining 19,628
shares on April 1, 1997. In authorizing the release of the remaining
shares, the Board of Directors restricted Mr. Ebeling from selling the
shares received until the originally scheduled release dates for the
shares under the agreement unless or until he should cease to retain
his present position with the Company.
STOCK OPTIONS
The Company's Board of Directors and stockholders have approved and
adopted the 1991 Employee Stock Option Plan of Old Dominion Freight Line, Inc.
(the "Option Plan"), for the benefit of key employees. The Option Plan covers
250,000 shares of the Company's Common Stock. The Option Plan provides for the
granting of stock options that qualify as incentive stock options pursuant to
Section 422 of the Internal Revenue Code as well as so-called nonqualified
options. The granting of an incentive stock option or, in general, its exercise,
will not result at the time of grant or exercise in taxable income to the
optionee, with certain exceptions. The grant of a nonqualified stock option will
not result in taxable income to the optionee. The exercise of a nonqualified
stock option will result in compensation income equal to the difference between
the option price and the fair market value of the stock acquired upon the
exercise. All officers except Earl Congdon and John Congdon are eligible to
participate in the Option Plan.
There were no options granted in 1996.
Options to purchase 224,000 shares under the Option Plan have been
granted. As of March 28, 1997, there are options outstanding covering 43,000
shares of Common Stock at the exercise price of $13.875 per share, 43,000 shares
at the exercise price of $17.875 per share, 39,500 shares at the exercise price
of $19.25 per share, 29,500 shares at the
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<PAGE>
exercise price of $19.00 per share and 26,500 shares at the exercise price of
$10.00 per share. All of the options have been granted as incentive options. The
Option Plan has been registered with the Securities and Exchange Commission.
The following table reflects cumulative information regarding grants
under the Option Plan:
<TABLE>
<CAPTION>
Options/SARs Exercises and Year-End Value Table
==================================================================================================================
Aggregate Option/SAR Exercises in Last Fiscal Year, and Fiscal Year-End Option/SAR Value
=============================== -------------- ------------ -------------------------- ===========================
(a) (b) (c) (d) (e)
Number of Unexercised Value of Unexercised
Shares Value Options/SARs at FY-End In-The-Money Options/SARs
Name Acquired on Realized Exercisable/Unexercisable at FY-End
Exercise (#) ($) (#) Exercisable/Unexercisable
($)
=============================== ============= ============= ========================== ===========================
<S> <C> <C> <C> <C>
Earl E. Congdon * * * *
=============================== ============= ============= ========================== ===========================
John R. Congdon * * * *
=============================== ============= ============= ========================== ===========================
John A. Ebeling 0 0 14,000 Exercisable $ 250 Exercisable
6,000 Unexercisable $ 1,000 Unexercisable
=============================== ============= ============= ========================== ============================
J. Wes Frye 0 0 12,500 Exercisable $ 188 Exercisable
5,000 Unexercisable $ 750 Unexercisable
=============================== ============== ============ ========================== ===========================
Joel B. McCarty, Jr. 0 0 12,500 Exercisable $ 188 Exercisable
5,000 Unexercisable $ 750 Unexercisable
=============================== ============== ============ ========================== ===========================
</TABLE>
- --------------
* Not eligible to participate in the Option Plan.
COMPENSATION OF DIRECTORS
Each of the Company's outside directors receives an annual retainer of
$8,000 plus $500 for each meeting attended, including Board meetings and
meetings of committees of the Board of Directors not held in conjunction with a
meeting of the Board. Such directors also receive reimbursement of expenses
incurred as a director. Directors who are also officers of the Company receive
no such fees.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") is responsible for
conducting an annual review of the Company's compensation plan for its executive
officers including the evaluation of the components of the plan, the standards
of performance measurement and the relationship between performance and
compensation. The Committee reviews the compensation of each executive officer
and makes specific recommendations to the Board of Directors based on factors
that include the individual officer's performance, the ability of the Company to
attract and retain qualified, experienced personnel and whether the plan
provides appropriate motivation to achieve goals outlined by the Board of
Directors.
In determining the compensation of the Chief Executive Officer, the
Committee began its evaluation prior to the time of the public offering in
October, 1991. The base salary was determined, in part, by comparison with the
compensation of chief executive officers of other companies of comparable size
and levels of profitability. Since that time, the Chief Executive Officer has
received
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<PAGE>
salary increases of 2% in 1992 and 2% in 1994. There were no increases
in salary in 1995 or 1996. The base salary is reviewed each year and compared to
that of other chief executive officers as reported in various publications, such
as FORBES magazine. The incentive bonus for the Chief Executive Officer is based
upon performance of the Company's profits, a program that has been in place for
many years, and the Compensation Committee believes that this is a fair measure
of executive bonus compensation. The bonus amounts for 1996, 1995 and 1994 are
reflected in the Summary Compensation Table. The Chief Executive Officer is not
eligible to receive options under the Company's stock option plan.
The base salary for all other officers is based upon the experience and
qualifications of each officer, while remaining competitive in the industry in
recruiting and retaining a well-qualified and effective management team. The
incentive bonus for the officers is based upon the same criteria as the Chief
Executive Officer, the performance of the Company as measured by profits.
During 1993, Section 162(m) was added to the Internal Revenue Code (the
"Code") that generally limits amounts that can be deducted for compensation paid
to executives to $1 million, unless certain requirements are met. No executive
receives compensation in excess of $1 million; therefore, there are no
compensation amounts that are nondeductible. The Committee will monitor the
applicability of this section of the Code to the Company's compensation program.
The Compensation Committee,
Franz Holscher, Chairman
Earl Congdon
John Congdon
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Earl Congdon, Chairman of the Board of the Company and its Chief
Executive Officer, and John Congdon, Vice Chairman of the Board, are members of
the Compensation Committee. Mr. Holscher is not an employee of the Company and
receives no compensation other than directors' fees from the Company.
Earl E. Congdon and John R. Congdon are each 50% owners of E & J
Enterprises, a Virginia general partnership ("E & J"), that leases trailers to
the Company. Pursuant to an agreement dated August 1, 1991, the Company leased
163 trailers from E & J at a monthly rental of $44,010. This lease expired on
July 31, 1996, but was extended for an additional term of three years, expiring
on July 31, 1999. The extended lease requires declining monthly payments ranging
from $35,045 in the first year to $33,415 in the third year. Under the original
and extended lease, the Company is responsible for insurance of, and maintenance
and repairs to, the trailers. The Company has no purchase rights at the end of
the lease term. Upon termination of the lease prior to July 31, 1999, for
specified reasons, E & J may require the Company to purchase the trailers for
cash at fair market value, and failure to purchase may result in a liability to
E & J for the difference between the fair market value and the net amount
realized by E & J upon a sale to third parties. The Company paid $474,330 in
1996 for trailers leased from E & J under the original and extended lease
agreements, both of which were treated as capital leases.
-12-
<PAGE>
In December of 1988, the Company sold to E & J certain tracts of
unimproved land and a vacant service center facility in exchange for a
noninterest-bearing receivable in the amount of $579,798. E & J has repaid the
amount outstanding under the receivable as parcels of the property have been
sold. As of December 31, 1996, the amount outstanding on the receivable was
$195,677.
Old Dominion Truck Leasing, Inc. ("Leasing"), a North Carolina
corporation owned by Earl Congdon, John Congdon and members of the Congdon
family, is engaged in the business of purchasing and leasing tractors, trailers
and other vehicles. Since 1986, the Company and Leasing have combined their
requirements for the purchase of tractors, trailers, equipment, parts, tires and
fuel. In addition, the Company provides vehicle repair, maintenance and service
to Leasing at the Company's cost and has granted to Leasing a right of first
refusal for the Company's future tractor and trailer leases, exercisable on the
same terms offered to the Company by third parties. In 1996, the Company charged
Leasing $966,523 for vehicle repair, maintenance and fuel services. The Company
intends to continue to combine its purchases of tractors, trailers, equipment,
parts, tires and fuel with those of Leasing. The Company believes that, by so
doing, it is often able to obtain pricing discounts because of the increased
level of purchasing. While this is beneficial to the Company, management
believes that the termination of this relationship would not have a material
adverse impact upon the Company's results of operations.
Leasing owns and operates a vehicle maintenance and service facility in
Richmond, Virginia, and operates similar facilities owned by the Company in
Chesapeake, Virginia; Baltimore, Maryland; and Jacksonville, Florida. The
Company purchases maintenance from Leasing on an as needed basis. Amounts paid
to Leasing for such services in 1996 were $401,297. Old Dominion believes that
the prices it pays for such services are lower than would be charged by
unaffiliated third parties for the same quality work and intends to continue to
purchase maintenance and service from Leasing, provided that its prices continue
to be favorable to the Company. Leasing paid the Company $42,000 in 1996 for use
of the facilities in Chesapeake, Baltimore and Jacksonville.
The Company leases a service center facility in Greensboro, North
Carolina, from an irrevocable trust created by Earl E. Congdon and John R.
Congdon, for the benefit of their families. The Company accounts for this lease
as an operating lease, which has a term of five years, beginning on July 15,
1995, and expiring on July 14, 2000. The lease requires escalating annual
payments ranging from $29,000 per month in the first year to $31,391 in the
fifth year and requires the Company to maintain insurance, maintenance and
repairs to the facility. The Company made payments totaling $351,480 in 1996
under this lease.
The Company is a party to certain split dollar life insurance policies,
of which certain members of the families of Earl E. Congdon and John R. Congdon
are designated beneficiaries. See Note (2) under the Summary Compensation Table,
above.
The E & J lease and the equipment purchasing and servicing arrangement
with Leasing permit the Company to obtain certain equipment and services at
prices comparable to, or more favorable than, prices charged by unaffiliated
third parties. The Company believes that the rent paid under the lease for the
Greensboro service center is comparable to, or more favorable than, prices
charged by unaffiliated third parties.
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Each of the foregoing transactions has been reviewed by the Audit
Committee of the Company's Board of Directors, which consists of the two
nonemployee directors. The Audit Committee has approved the transactions that
continue to be in effect as being fair to the Company. The Audit Committee
believes that the terms and conditions of the foregoing transactions are
substantially the same as, or more favorable to the Company than, would be
available from nonaffiliates. The Company does not intend to enter into any new
transactions with any officers, directors or their affiliates. Any extensions,
modifications or renewals of existing transactions with such persons must be
approved, in advance, by the Audit Committee as being on terms no less favorable
to the Company than the terms that could be obtained in a similar transaction
with an unaffiliated party.
PERFORMANCE GRAPH
The following graph compares the total stockholder cumulative returns,
assuming the reinvestment of all dividends, of $100 invested on January 1, 1992,
in the Company's Common Stock, Nasdaq Trucking & Transportation Stocks and The
Nasdaq Stock Market (US) for the five-year period ended December 31, 1996:
[GRAPHIC OMITTED]
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CORPORATE GOVERNANCE
The Company's Board of Directors held five meetings during 1996. All
directors attended all meetings of the Board of Directors and committees on
which they serve.
The Board of Directors has four standing committees: Executive
Committee, Audit Committee, Compensation Committee and Stock Option Plan
Committee.
The Executive Committee consists of Messrs. Earl Congdon (Chairman),
John Congdon and John Ebeling. The Executive Committee is empowered to act
between meetings of the Board of Directors with powers of the full Board, except
with respect to certain matters. This committee did not meet in 1996.
The Audit Committee consists of Franz Holscher and Harold Hoak, the
Company's nonemployee directors. The Audit Committee's responsibilities are to
recommend to the Board of Directors the firm to be engaged to audit the
Company's financial statements and to review with the independent auditors the
plan for, and results of, the auditing engagement and Old Dominion's internal
accounting controls. The Audit Committee reviews the activities and
recommendations of the internal audit function. The Audit Committee has reviewed
transactions between the Company and entities in which officers or directors of
the Company or their affiliates have material interests and has determined that
such existing transactions are fair to the Company. The Company does not intend
to enter into any new transactions with officers, directors or their affiliates,
and any extensions, modifications or renewals of existing transactions with such
persons must be approved in advance by the Audit Committee as being on terms no
less favorable to the Company than the terms that could be obtained in a similar
transaction with an unaffiliated party. The Audit Committee met three times in
1996.
The Compensation Committee consists of Franz Holscher (Chairman), Earl
Congdon and John Congdon. The Compensation Committee meets periodically to
review and approve the salaries and classifications of the Company's executive
officers and other significant employees and its personnel policies. The
Compensation Committee met once in 1996.
The Stock Option Plan Committee consists of Earl Congdon (Chairman),
John Congdon, Harold Hoak and Franz Holscher. The Committee has authority to
administer the Company's 1991 Employee Stock Option Plan, including authority to
determine persons eligible to receive options and the terms upon which options
are granted. The Stock Option Plan Committee met once in 1996.
INDEPENDENT AUDITORS
Ernst & Young LLP has served the Company as independent auditors since
1994. A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting of Stockholders with the opportunity to make a statement if he
desires to do so and to answer any questions that concern that firm's work for
the Company.
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The Audit Committee and the Board of Directors have approved all of the
nonaudit services by Ernst & Young LLP and believe they have no effect on audit
independence. The Audit Committee has authorized management to engage the
Company's independent accountants in nonaudit services relating to preparation
of tax returns and working with state and federal agents on audits, but other
matters require prior approval from the Audit Committee.
GENERAL
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of the Company, and the entire cost of such solicitation will be borne
by the Company. In addition to solicitation by mail, arrangements will be made
with brokerage houses and other custodians, nominees and fiduciaries to send
proxy material to their principals, and the Company will reimburse them for
their reasonable expenses in so doing.
The Board of Directors has fixed March 28, 1997, as the record date for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting. On March 28, 1997, there were 8,308,196 outstanding shares of
Common Stock of the Company, each entitled to one vote.
Stockholders do not have cumulative voting rights in the election of
directors. Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present. With
regard to the election of directors, votes may be cast in favor or withheld.
Votes that are withheld will be excluded entirely from the vote and will have no
effect, although they will be counted for purposes of establishing the presence
of a quorum. Under the rules of the New York Stock Exchange, Inc., brokers who
hold shares in street name for customers have authority to vote on certain items
when they have not received instructions from beneficial owners. Brokers that do
not receive instructions are entitled to vote on the election of directors.
Where a choice is specified on any Proxy as to the vote on any matter
to come before the meeting, the Proxy will be voted in accordance with such
specification. If no specification is made but the Proxy is properly signed, the
shares represented thereby will be voted in favor of each proposal. Such
proxies, whether submitted by stockholders of record or by brokers holding
shares in street name for their customers ("broker non-votes"), will be voted in
favor of nominees for directors. Broker non-votes will not be counted either way
in voting on other matters (where direction of beneficial owners is required)
and, therefore, will have the effect of negative votes.
Any stockholder submitting the accompanying Proxy has the right to
revoke it by notifying the Secretary of the Company in writing at any time prior
to the voting of the Proxy. A Proxy is suspended if the person giving the Proxy
attends the meeting and elects to vote in person.
Management is not aware that any matters, other than those specified
above, will be presented for action at the meeting, but, if any other matters do
properly come before the meeting, the persons named as agents in the Proxy will
vote upon such matters in accordance with their best judgment.
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ANNUAL REPORT ON FORM 10-K
Stockholders may obtain a copy of the Company's Annual Report on Form
10-K as filed with the Securities and Exchange Commission for the year ended
December 31, 1996, without charge by writing to J. Wes Frye, Treasurer, Chief
Financial Officer and Assistant Secretary, Old Dominion Freight Line, Inc., Post
Office Box 2006, High Point, North Carolina 27261. Exhibits are not included,
but copies of them may be obtained from the Company upon payment of copying
charges.
DEADLINE FOR STOCKHOLDERS' PROPOSALS
Any stockholder desiring to present a proposal for action at the
Company's 1998 Annual Meeting must deliver the proposal to the Company at its
executive offices no later than December 31, 1997.
By Order of the Board of Directors
/s/ Joel B. McCarty, Jr.
Joel B. McCarty, Jr.
SECRETARY
High Point, North Carolina
April 4, 1997
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