Notice of Annual Meeting of Stockholders Page 1
N O L A N D
NOLAND COMPANY
2700 Warwick Boulevard, Newport News, Virginia 23607
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held at 4:00 P.M. on April 26, 1995
Notice is hereby given that the Annual Meeting of Stockholders of
Noland Company, a Virginia corporation (the Corporation), will be
held, in accordance with the Bylaws of the Corporation, on
Wednesday, April 26, 1995, at 4:00 P.M. (Local Time) at the
principal office of the Corporation, 2700 Warwick Boulevard,
Newport News, Virginia, for the following purposes:
1. to elect five Directors to serve for the ensuing year;
2. to appoint Coopers & Lybrand L.L.P. to audit the
consolidated financial statements of the Corporation for the
year ending December 31, 1995; and
3. to transact such other business as may properly come before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 15,
1995, will be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
James E. Sykes Jr.
Secretary
April 3, 1995
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO
THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND
IN ORDER THAT A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR
SIGNED PROXY, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL
AID THE CORPORATION IN AVOIDING THE EXPENSE OF ADDITIONAL PROXY
SOLICITATION. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING. ANY
PERSON GIVING A PROXY MAY REVOKE IT BEFORE IT IS VOTED BY
DELIVERING ANOTHER PROXY, OR WRITTEN NOTICE OF REVOCATION, TO THE
SECRETARY OF THE CORPORATION.
Proxy Statement Page 2
NOLAND COMPANY
(a Virginia corporation)
2700 Warwick Boulevard
Newport News, Virginia 23607
PROXY STATEMENT
Annual Meeting of Stockholders to be
held at 4:00 P.M., April 26, 1995
Approximate date of mailing .... April 3, 1995
SOLICITATION AND REVOCATION OF PROXY
The proxy accompanying this statement is solicited by the Board
of Directors on behalf of the Corporation. All proxies in the
accompanying form which are properly executed by stockholders and
returned to the Secretary will be voted. Any proxy delivered
pursuant to this solicitation is revocable at the option of the
person executing the same at any time before it is exercised.
The cost of soliciting proxies, including the cost of preparing
and mailing the proxy materials, will be borne by the
Corporation. In addition to the use of the mails, proxies may be
solicited, personally or by telephone, by regular employees of
the Corporation.
A copy of the Corporation's Annual Report to stockholders for the
year ended December 31, 1994, which includes consolidated
financial statements, is furnished concurrently with this Proxy
Statement.
PURPOSES OF MEETING
The purposes of the Annual Meeting of Stockholders will be (1) to
elect five Directors to serve for the ensuing year; (2) to
appoint Coopers & Lybrand L.L.P. as independent auditors of the
Corporation for the ensuing year; and (3) to transact such other
business as may properly come before the meeting, or any
adjournment thereof.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of March 15, 1995, there were outstanding 3,700,876 shares of
Common Stock, the sole class of voting securities of the
Corporation. Holders of record at the close of business on that
date are entitled to one vote for each share.
The following are, to the knowledge of the Corporation,
beneficial owners as of March 15, 1995, of over five percent of
the Corporation's Common Stock:
Proxy Statement Page 3
Title and
Name and Class of Amount and Nature Percent of
address Voting Security of Beneficial Ownership Class
Jane K. Noland, Lloyd U.
Noland III, Susan C. Noland
and Anne N. Edwards
individually and as trustees of
The L. U. Noland 1982 Trust and
Lloyd U. Noland Jr.
2700 Warwick Blvd. Common 2,071,297 (1) 55.97%
Newport News, Virginia 23607 Stock shares
Henley Management Company, successor
by merger to Concord Investment Co. Common 465,050 12.60%
555 Skokie Blvd, Suite 555 Stock shares
Northbrook, Illinois 60062
(1) The trustees of The L. U. Noland 1982 Trust are Mr. Lloyd U. Noland Jr.'s
wife, Jane K. Noland, and his three children: Lloyd U. Noland III, Susan C.
Noland and Anne N. Edwards. The trust assets include 906,996 shares of Common
Stock of the Corporation and a majority of the outstanding voting stock of
Basic Construction Company, which, in turn, owns 893,967 shares of the
Corporation's Common Stock. Since the trustees have the sole power to vote and
to dispose of shares held in the L. U. Noland 1982 Trust, each trustee may be
deemed to have beneficial ownership of 1,800,963 shares of the Corporation's
Common Stock (including the shares owned by Basic Construction Company). The
trustees share the power to vote and direct the disposition of such shares.
Each trustee owns the following additional shares of the Corporation's Common
Stock, with sole power to vote and dispose of all of such shares except for
155,138 shares attributed to Jane K. Noland, but owned by her husband, Lloyd U.
Noland Jr.; 1,095 shares attributed to Anne N. Edwards, but owned by her
husband; and 2,190 shares attributed to Lloyd U. Noland III but owned by his
wife and one of his children:
Jane K. Noland 182,270
Lloyd U. Noland III 39,497
Susan C. Noland 26,736
Anne N. Edwards 21,831
Lloyd U. Noland III also has voting power only over 2,000 shares of restricted
stock. All of such shares are included in the above table. As a group, the
Noland family may be deemed to be the owners of an aggregate of 2,071,297
shares or 55.97 percent of the outstanding Common Stock.
THE BOARD OF DIRECTORS AND ITS STANDING COMMITTEES
The Corporation is managed under the direction of the Board of Directors and
its Executive Committee, by the Chairman of the Board and other officers to
whom authority has been delegated.
Proxy Statement Page 4
During 1994, the Board of Directors met four times and all members were
present at all meetings. On six occasions, the Board acted by written
consent. Members of the Board who are employees of the Corporation serve
without compensation. Mr. Goolsby and Mr. McElroy, as non-employee
Directors, received $11,000 each in 1994. Mr. Goolsby and Mr. McElroy
received a retainer of $7,500 and $500 for each Committee meeting attended.
The Board elected an Executive Committee consisting of Messrs. Noland III
and Henderson. When the Board is not in session, the Executive Committee
generally has the authority of the Board except that the Virginia Stock
Corporation Act prohibits certain actions by committees. During 1994, the
Executive Committee met seven times. All members were present at all
meetings.
The Board appointed an Executive Compensation Committee consisting of
Messrs. Goolsby and McElroy, with Mr. McElroy acting as chairman. The
Committee's primary functions are to make recommendations to the Board of
Directors concerning remuneration arrangements for executive officers and to
review and make recommendations concerning the administration of certain
benefit plans. During 1994, the Executive Compensation Committee met one
time. All members were present at the meeting.
The Board appointed an Audit Committee consisting of Messrs. Goolsby and
McElroy, with Mr. Goolsby acting as chairman. The Audit Committee functions
in an oversight capacity with respect to the Corporation's auditing,
accounting, reporting, and control functions and assists the entire Board in
fulfilling its fiduciary responsibilities with respect to these functions.
During 1994, the Audit Committee met two times. All members were present at
all meetings.
The Corporation does not have a nominating committee.
ELECTION OF DIRECTORS
It is intended that proxies in the accompanying form will be voted by the
persons named therein (unless authority is withheld) in favor of the
nominees named for Directors for the term of one year or until their
successors are elected and qualified. In case any of such nominees is
unexpectedly unable to serve, the Proxies will be voted for the election of
the others so named and may be voted for substitute nominees. The election
of each nominee for Director requires the affirmative vote of the holders of
a plurality of the shares of Common Stock cast in the election of Directors.
Votes that are withheld and shares held in street names ("Broker Shares")
that are not voted in the election of Directors will not be included in
determining the number of votes cast.
Mr. Donald G. Hurley, reelected April 20, 1994, for a one-year term,
resigned from the Board January 1, 1995, coincident with his retirement from
the Corporation after 38 years of service. Mr. Frank A. Wimbush, the new
Senior Vice President - Marketing and Branch Operations was elected by the
Board to serve Mr. Hurley's unexpired term. Mr. Wimbush will stand for
election at the April 26, 1995 stockholders' meeting.
Directorships Page 5
NOMINEES FOR DIRECTOR
There are no family relationships among any of the nominees and any officer;
nor is there any arrangement or understanding between any nominee and any
other person pursuant to which the nominee was selected. Each of the
nominees for the office of Director is a member of the present Board of
Directors.
Mr. Goolsby, Mr. Henderson, Mr. McElroy and Mr. Noland III have served in
the respective positions shown for more than five years.
Shares of
Common Stock
First Beneficially Percent
Name, Age, Position Became Owned on of
and Directorships Director March 15, 1995 Class(1)
Allen C. Goolsby - Age 55 1989 700 -
Partner, Hunton & Williams
(Attorneys); Director of
CSX Trade Receivables Corp.;
Ethyl Corporation; First Colony
Corporation.
Arthur P. Henderson Jr. - Age 51 1983 1,229 -
Vice President-Finance
John L. McElroy Jr. - Age 64 1990 1,500 -
Chairman of the Board, Wheat
First Butcher Singer, Inc.(2)
(Investment Bankers);
Director of Piper Jaffray, Inc.
Lloyd U. Noland III - Age 51 1979 1,840,460(3) 49.73%
Chairman of the Board and
President; Director of Central
Fidelity Banks, Inc.
Frank A. Wimbush - Age 49 1995
Senior Vice President - Marketing
and Branch Operations since March
1995. Previously Vice President-
Sales and Marketing for All-Phase
Electric Supply Company from 1988
through 1994.
All officers and directors of 1,843,389 49.86%
the Corporation as a group (12) shares
(1) Less than .2 percent except as indicated.
(2) Wheat First Butcher Singer maintains a primary market in the
Corporation's Common Stock and, from time to time, holds Noland
Company shares in its trading account. As of March 15, 1995, the
trading account was short 1,206 shares.
(3) See Voting Securities and Principal Holders Thereof on page 1.
Except as described on page 2 with respect to shares held by the Noland
family, each Director and Officer has the sole power to vote the shares of
common stock attributed to him in this table.
COMPENSATION OF EXECUTIVE OFFICERS
The following table presents information relating to total compensation of
the Chief Executive Officer and the four next most highly compensated
executive officers of the Corporation who earned more than $100,000 for the
fiscal years ended December 31, 1994, 1993 and 1992. There were only three
executive officers, other than Mr. Noland, who earned more than $100,000 for
1994, 1993 or 1992.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
Restricted
Stock All Other
Name and Salary Bonus Awards(2) Compensation(1)
Principal Position Year $ $ $ $
Lloyd U. Noland III 1994 $ 95,772 $ 55,000 $38,000 $ 2,377
Chief Executive
Officer 1993 $ 73,630 $ 26,500 - $ 1,017
1992 $ 71,900 $ 23,600 - $ 862
Charles A. Harvey 1994 $ 79,457 $ 35,500 $19,000 $ 1,969
Vice President -
Corporate Data 1993 $ 69,112 $ 24,000 - $ 880
1992 $ 71,658 $ 20,350 - $ 742
Arthur P. Henderson, Jr. 1994 $ 73,812 $ 41,000 $19,000 $ 1,828
Vice President -
Finance 1993 $ 67,150 $ 26,000 - $ 886
1992 $ 67,600 $ 23,000 - $ 748
Donald G. Hurley 1994 $ 69,012 $ 32,500 - $ 1,709
Vice President -
Marketing 1993 $ 59,100 $ 27,500 - $ 816
1992 $ 62,200 $ 26,000 - $ 683
(1) Profit sharing allocation
(2) Restricted stock awards valued at market price on December 31, 1994
of $19 per share. Shares issued in 1994 to Lloyd U. Noland III, Charles
A. Harvey and Arthur P. Henderson, Jr. were 2,000; 1,000; and 1,000,
respectively. Recipients have the right to receive dividends and vote
the restricted shares.
Directorships Page 7
EMPLOYMENT AND SEVERANCE ARRANGEMENT
In addition to his base compensation the Corporation has agreed to pay Mr.
Wimbush for 1995 a minimum bonus of $41,700. The Corporation has also
agreed that if Mr. Wimbush's employment is terminated by the Corporation
for any reason other than neglect of duty, malfeasance, breach of integrity
or criminal wrongdoing, he will receive a severance payment equal to the
amount of one year's then current base salary.
RETIREMENT BENEFITS
Payments by the Corporation to the Improved Retirement Plan for Employees
of Noland Company (the Plan), are made based on recommendations by the
Plan's actuary. The Plan is a defined benefit "Career Average" plan.
Annual retirement benefits are computed by adding, for each year of
credited service, the sum of 1.333 percent of compensation (up to "Covered
Compensation") and 1.933 percent of compensation over "Covered
Compensation." Covered Compensation is generally the average of the Social
Security wage bases over a working career.
The amounts shown below do not include Social Security benefits and are not
subject to any reductions on account of such benefits.
Estimated annual benefits (assuming continued employment to age 65 on a
life-only annuity basis) accrued to date and payable at age 65 to Lloyd U.
Noland III, Charles A. Harvey, Arthur P. Henderson, Jr. and Donald G.
Hurley are $52,789, $46,451, $41,553 and $25,979, respectively.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee consists of Messrs. McElroy and
Goolsby. Mr. Goolsby is a member of the law firm Hunton & Williams, which
has provided legal services to the Corporation for many years.
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
The executive compensation policy of the Corporation traditionally has
provided for base compensation and cash bonus awards, in each case at
relatively modest levels. The purpose of the cash bonus awards has been to
link more closely the individual's compensation to the performance of the
Corporation as a whole and to reward those individuals who make the
greatest contribution to the Corporation's successes.
In 1993 the Board of Directors established an Executive Compensation
Committee (the Committee) consisting of Messrs. Goolsby and McElroy. The
Committee was charged with the responsibility of making an initial
determination regarding any changes in executive compensation policy and
making recommendations to the Board of Directors with respect to
compensation of the Corporation's executive officers. Following its
creation, the committee spent significant time on an in-depth review of the
executive compensation program.
The Committee took an in-depth look at the Corporation's compensation
practices for its executive officers, retaining Towers Perrin as an outside
consultant to review past practices and propose possible modifications.
The Committee concluded that the Corporation's level of executive
Directorships Page 8
compensation was below the average levels paid by the great majority of
other companies, including companies of comparable size and companies in
the same or similar businesses. The Committee proposed, and the Board of
Directors approved, a policy of providing competitive overall compensation
for executive officers, including base salaries and short and long-term
incentives. The Committee concluded that the close link between the
Corporation's business and the cyclical building and construction industry
make it prudent for the Corporation to maintain a conservative approach to
base compensation, while at the same time providing competitive total pay
opportunities to its executive officers through long and short-term
incentives. The Committee determined that total compensation must be tied
more closely to performance, both corporate and individual. It also
concluded that the financial incentives for the executive officers should
be related to the shareholders' interest by providing these executives with
an interest in the Corporation's common stock.
With these premises, the Committee recommended, and the Company adopted,
increases in executive officers' base compensation to be phased in over
several years, as well as modifications of the Corporation's bonus plan to
provide opportunities for increased bonuses for those executives who make
significant contributions to the Corporation's success. In addition, the
Committee proposed, and the Company adopted, the 1993 Noland Company
Restricted Stock Plan. That Plan provides for annual grants to certain of
the Corporation's executive officers not to exceed in the aggregate of
10,000 shares of the Corporation's common stock in any year. The
executive's interest in any shares is contingent on continued employment
with the Corporation. Shares awarded begin vesting three years from the
date of the grant and become fully vested after seven years from the grant
date.
Base compensation for executive officers in 1994 reflected the first year
of implementation of the Committee's recommendations. While the aggregate
increases of the four principal executive officers was only $44,000, the
sum of the base compensation for these individuals increased approximately
16.5%. In determining executive cash bonuses for 1994, the Committee
considered the Corporation's significant improvement in performance for the
year and took into consideration the Corporation's policy of maintaining
conservative levels of base compensation with appropriate rewards for
excellent performance to be effected through the bonus plan. In making the
bonus awards, the Committee focused primarily on revenues, profits before
LIFO inventory adjustments and income taxes, and the executive's
performance for the year against previously established targets. The
committee did not assign a specific value to each factor.
Mr. Noland's base compensation for 1994 was fixed at $95,160, a 26 percent
increase over his base compensation as of the end of 1993. The substantial
percentage increase reflects the implementation of the Committee's new
compensation plan. For 1994 Mr. Noland was awarded a cash bonus of
$55,000, reflecting a significant improvement in the Corporation's
operations and Mr. Noland's achievement of a number of performance goals
established by the Committee at the beginning of the year, including
achievement of goals in sales, gross profit margins and return on equity as
well as targeted improvements in personnel and operations. The committee
did not assign a specific value to each factor.
Directorships Page 9
Overall, the Committee believes that its recent compensation plan has
provided significant new incentives to the executive officers to improve
performance and shareholder return. Further, the Committee believes that
the new incentives have helped to produce the significant improvement in
the Company's performance.
Because none of the Corporation's executive officers receives annual
compensation in excess of $1 million, the Corporation has not taken any
position with respect to the cap on tax deductibility of compensation in
excess of that amount established under the Omnibus Budget Reconciliation
Act of 1993.
John L. McElroy Jr. Allen C. Goolsby
Directorships Page 10
Comparison of Five Year Cumulative Total Return Among Noland Company,
NASDAQ Market Value Index and Hughes Supply, Inc.
(Assumes $100 Invested on January 1, 1990)
A performance graph appears here. The following chart is the information
presented in the graph.
Data points are as follows:
1989 1990 1991 1992 1993 1994
Noland Company $100 $54.75 $ 60.85 $ 72.79 $ 78.73 $ 93.50
Hughes Supply, Inc. $100 $60.99 $ 59.65 $ 82.47 $112.87 $107.41
NASDAQ Market Index $100 $81.12 $104.14 $105.16 $126.14 $132.44
The return for Hughes Supply, Inc. has been adjusted to reflect differences
in market capitalization.
Page 11
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors will offer a resolution to reappoint Coopers &
Lybrand L.L.P. as independent accountants of the Corporation for the year
1995. Coopers & Lybrand L.L.P., a nationally known firm of independent
certified public accountants, has audited the Corporation's financial
statements for the past twenty-seven years. The Corporation has been
advised by Coopers & Lybrand L.L.P. that neither that firm nor any of its
partners has any direct financial interest or material indirect financial
interest in the Corporation other than as public accountants and auditors.
Coopers & Lybrand L.L.P. will be represented at the stockholders' meeting.
The firm's representative will be available to respond to appropriate
questions from stockholders and will have an opportunity to make a
statement, if desired.
ANNUAL REPORT TO STOCKHOLDERS
The Noland Company 1994 Annual Report to stockholders, portions of which
are incorporated by reference into the annual report on Form 10-K for the
year ended December 31, 1994, as filed with the Securities and Exchange
Commission, accompanies this proxy statement. Stockholders may obtain,
without charge, a copy of the Corporation's Form 10-K by forwarding a
written request to R. L. Welborn, Assistant Vice President - Finance,
Noland Company, 2700 Warwick Blvd., Newport News, Virginia 23607.
PROPOSALS FOR 1996 ANNUAL MEETING
Any stockholder desiring to make a proposal to be acted upon at the 1996
annual meeting of stockholders must present such proposal to the
Corporation at its principal office in Newport News, Virginia, not later
than December 5, 1995, in order for it to be considered for inclusion in
the Corporation's Proxy Statement.
GENERAL
Unless contrary instructions are indicated on the proxy, all shares of
Common Stock represented by valid proxies received pursuant to this
solicitation (and not revoked before they are voted) will be voted FOR the
election of the nominees for Director named herein, and FOR the proposal to
approve the appointment of Coopers & Lybrand L.L.P. as independent public
accountants for the year ended December 31, 1995.
The Board of Directors knows of no business other than that set forth above
to be transacted at the meeting, but if other matters requiring the vote of
the stockholders arise, the persons designated as proxies will vote the
shares of Common Stock represented by the proxies in accordance with their
judgment on such matters. If a stockholder specifies a different choice on
the proxy, his or her shares of Common Stock will be voted in accordance
with the specification so made.
By order of the Board of Directors,
James E. Sykes Jr.
Secretary
Newport News, Virginia
April 3, 1995