SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(X) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by Rule
14a-b(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
Kenan Transport Company
- -------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement If Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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: _/
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
_/ Set forth the amount on which the filing fee is calculated and state
how it was determined.
( ) Fee previously paid 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:
KENAN TRANSPORT COMPANY
CHAPEL HILL, NORTH CAROLINA
Notice of Annual Meeting of Shareholders
May 6, 1996
The Annual Meeting of the Shareholders of KENAN TRANSPORT COMPANY, a
North Carolina corporation, will be held at The Kenan Center, Bowles Drive
(adjacent to the Dean Smith Student Activities Center), Chapel Hill, North
Carolina, at 10:00 A.M. local time on Monday, May 6, 1996, for the
following purposes:
(1) To elect a Board of Directors for the ensuing year;
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
It is requested that you read carefully this Notice of Annual Meeting
and the accompanying Proxy Statement for information on the matters to be
considered and acted upon.
The Board of Directors of the Company has fixed the close of business
on March 4, 1996, as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting.
Information relating to the Company's activities and operations during
the fiscal year ended December 31, 1995, is contained in the Company's
Annual Report, which is enclosed.
Your Proxy is enclosed. You are cordially invited to attend the meeting
in person, but if you do not expect to attend, please date and sign your
Proxy and return it promptly in the enclosed envelope.
WILLIAM L. BOONE
Secretary
March 29, 1996
Chapel Hill, North Carolina
KENAN TRANSPORT COMPANY
P.O. Box 2729
Chapel Hill, North Carolina 27515-2729
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of KENAN TRANSPORT COMPANY (the
"Company") for the Annual Meeting of the Shareholders to be held on May 6,
1996 at 10:00 A.M. local time, at The Kenan Center, Bowles Drive (adjacent
to the Dean Smith Student Activities Center), Chapel Hill, North Carolina.
This Proxy Statement and the accompanying Proxy were mailed on or about
March 29, 1996.
Holders of shares of the Common Stock of the Company of record at the
close of business on March 4, 1996, will be entitled to vote at the Annual
Meeting of Shareholders.
Shareholders who execute and return proxies will retain the right to
revoke them at any time before they are voted. When executed and not so
revoked, proxies will be voted in accordance therewith.
The solicitation of proxies by the Board of Directors will be by mail.
The total expense of such solicitation will be borne by the Company and
will include reimbursement paid to brokerage firms and others for their
expenses in forwarding solicitation material regarding the meeting to
beneficial owners. Further solicitation of proxies may be made by
telephone or oral communication with some shareholders of the Company
following the original solicitation. All such further solicitation will
be made by regular employees of the Company who will not be additionally
compensated therefor, or by its transfer agent, and the cost will be borne
by the Company.
OUTSTANDING SECURITIES AND VOTING RIGHTS
Only shareholders of record at the close of business on March 4, 1996,
will be entitled to notice of and to vote at the Annual Meeting. On such
date, the number
1
of outstanding shares of Common Stock, no par value, was 2,389,497. Each
share of Common Stock is entitled to one vote.
The enclosed Proxy is designed to permit each shareholder of record at
the close of business on the record date to vote in the election of
directors and on other matters coming before the meeting. Two directors of
the Company, Messrs. Frank H. Kenan and Lee P. Shaffer, have been
designated as proxies to vote shares in accordance with the instructions
on the Proxy.
PRINCIPAL SHAREHOLDERS
The following information shows the ownership on March 4, 1996, of Common
Stock of the Company by each person who owned of record, or was known by
the Company to own beneficially, more than five percent (5%) of such
stock:
Shares Owned
Name and Address (1) Beneficially Percent
- ---------------------------- ------------------- ---------
Frank H. Kenan
P.O. Box 2729
Chapel Hill, NC 27515-2729 866,400 (2) 36.3%
Quest Advisory Corp.
1414 Avenue of the Americas
New York, NY 10019 178,670 (3) 7.5%
Lee P. Shaffer
P.O. Box 2729
Chapel Hill, NC 27515-2729 159,598 6.7%
(1) Does not include Owen G. Kenan, Thomas S. Kenan, III and Morgan
Guaranty Trust Company of New York, who may be deemed beneficial
owners of more than five percent (5%) of the Common Stock of the
Company solely by reason of their positions as trustees of a trust
holding 300,000 shares of such Common Stock.
(2) Includes 2,440 shares owned beneficially by Mr. Kenan's wife. The
shares shown as beneficially owned by Mr. Kenan do not include
300,000 shares owned by a trust of which Mr. Kenan is an income
beneficiary and a trustee and 3,900 shares held by The Kenan Family
Foundation, a nonprofit corpora-
2
tion of which Mr. Kenan is a director. These 303,900 shares together
with the shares shown as beneficially owned by Mr. Kenan aggregate
1,170,300 shares and constitute 49.0% of the outstanding shares of
Common Stock.
(3) Shares owned as of December 31, 1995, as reported to the Company on
a Schedule 13G dated February 14, 1996. The Schedule 13G reports
that Quest Advisory Corp. exercises sole voting and dispositive
power over the shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of the Company's Common Stock, as of March 4, 1996,
by its directors, nominees for election as directors, named executive
officers and by all directors and officers as a group:
Name of Officer, Director Shares Owned
Beneficial Owner and/or Nominee Beneficially Percent
- -------------------- ------------------- ------------------ -------
Frank H. Kenan Officer, Director 866,400 (1)(2) 36.3%
Lee P. Shaffer Officer, Director 159,598 6.7%
William L. Boone Officer 38,531 1.6%
L. Avery Corning Officer 0 *
Gary J. Knutson Officer 7,134 *
William C. Friday Director 2,500 *
Owen G. Kenan Director 32,820 (2)(3) 1.4%
Thomas S. Kenan, III Director 39,980 (2) 1.7%
Braxton Schell Director 700 *
Paul Wright, Jr. Director 3,175 *
All Directors and Executive
Officers as a group (13 Persons) 1,163,275 (2) 48.7%
* Represents less than 1%.
(1) Includes 2,440 shares owned beneficially by Mr. Frank H. Kenan's
wife.
(2) The shares shown as beneficially owned by Messrs. Frank H. Kenan,
Owen G. Kenan and Thomas S. Kenan, III do not include 300,000 shares
owned by
3
a trust of which they are income beneficiaries as well as trustees,
and 3,900 shares held by The Kenan Family Foundation, a nonprofit
corporation of which each is a director. These 303,900 shares
together with the shares shown as beneficially owned by Frank H.
Kenan aggregate 1,170,300 shares and constitute 49.0% of the
outstanding shares of Common Stock. These 303,900 shares together
with the shares shown as beneficially owned by Owen G. Kenan
aggregate 336,720 shares and constitute 14.1% of the outstanding
shares of Common Stock. These 303,900 shares together with the
shares shown as beneficially owned by Thomas S. Kenan, III aggregate
343,880 shares and constitute 14.4% of the outstanding shares of
Common Stock. These 303,900 shares together with the shares shown
as beneficially owned by all directors and officers as a group
aggregate 1,467,175 shares and constitute 61.4% of the outstanding
shares of Common Stock.
(3) Includes 1,380 shares owned by Mr. Owen G. Kenan's wife, 10,950
shares held by his wife as custodian for their children under the
Uniform Gifts to Minors Act and 11,490 shares held by a trust of
which Owen G. Kenan serves as trustee.
ELECTION OF DIRECTORS
At the meeting, the shareholders will elect the Company's directors.
The Board of Directors has set the number of directors to be elected at
the 1996 Annual Meeting at seven. All members of the present Board are
nominees for election to hold office until the next annual meeting of the
shareholders and until their successors have been duly elected. The
nominees will be elected if they receive a plurality of the votes cast for
their election. Abstentions and broker nonvotes will not affect the
election results if a quorum is present.
If the enclosed Proxy is duly executed and received in time for the
meeting and if no contrary specifications are made as provided therein, it
is the intention of the persons named therein to vote the shares
represented thereby for the seven persons nominated for election as
directors of the Company. If any nominee should refuse or be unable to
serve, the Proxy will be voted for such persons as shall be designated by
the Board of Directors to replace any such nominee. The Board of
4
Directors presently has no knowledge that any of the nominees will refuse or be
unable to serve.
The following information is furnished with respect to nominees:
Principal Occupation; Business
Experience Past Five Years; Director
Name Age Other Directorships Since
- ----------------------- --- ----------------------------------- --------
Frank H. Kenan 83 Chairman of the Board of Directors, 1949
Chief Executive Officer and
Treasurer of the Company
Lee P. Shaffer 57 President and Chief Operating 1967
Officer of the Company
William C. Friday 76 President, The William R. Kenan, 1988
Jr. Fund, Chapel Hill, NC
Owen G. Kenan (1) 52 President and Chief Executive 1978
Officer, Kenan Enterprises, Inc.
and Kenan Oil Company, Inc.,
Chapel Hill, NC; Director, Central
Carolina Bank & Trust Company
Thomas S. Kenan, III (1) 58 President, The Westfield Company, 1964
Durham, NC
Braxton Schell 72 Attorney at Law, Schell Bray 1986
Aycock Abel & Livingston L.L.P.,
Greensboro, NC; Director, Texfi
Industries, Inc.
Paul Wright, Jr. 84 Retired, Former Vice Chairman of 1971
the Board of Central Carolina Bank
& Trust Company, Durham, NC
<FN>
<F1>
(1) Messrs. Owen G. Kenan and Thomas S. Kenan, III are sons of Mr. Frank
H. Kenan.
</F1>
5
The Board of Directors met one time during 1995. All directors attended
that meeting. In addition, the Board took action by unanimous written
consent eight times during 1995.
The Board of Directors has no standing nominating committee. The Board
has an Audit Committee, the purpose of which is to assist the Board of
Directors in assuring that the Company's financial reports are fairly
presented and accurate, that there is an adequate system of internal
accounting controls and that the auditors are independent and effectively
performing their duties. The Committee members are Messrs. William C.
Friday, Frank H. Kenan and Paul Wright, Jr. The Audit Committee met two
times during 1995. The Company has a Compensation Committee which met two
times during 1995. See "Compensation Committee Report" and "Compensation
Committee Interlocks and Insider Participation."
The Company has a standing Executive Committee which may exercise all
the authority of the Board of Directors in the management and affairs of
the Company, except that the Committee may not authorize distributions;
approve or propose to shareholders action that North Carolina law requires
be approved by shareholders; fill vacancies on the Board of Directors or
on any committee; amend the Articles of Incorporation; adopt, amend, or
repeal bylaws; approve a plan of merger not requiring shareholder
approval; authorize or approve reacquisition of shares of capital stock of
the Company, except according to a formula or method prescribed by the
Board of Directors; or authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative
rights, preferences, and limitations of a class or series of shares. The
Executive Committee members are Messrs. Frank H. Kenan, Lee P. Shaffer and
Thomas S. Kenan, III. The Executive Committee took action by unanimous
written consent five times during 1995.
6
COMPENSATION AND RELATED MATTERS
The following table sets forth the annual compensation paid or
accrued by the Company to or for the account of the Chief Executive
Officer and the next four most highly compensated executive officers of
the Company for the years ended December 31, 1995, 1994 and 1993:
Summary Compensation Table
Annual
Compensation
----------------------- All Other
Name and Principal Salary Bonus Compensation
Position Year ($) ($) (1)($)
- ------------------------- ---- --------- --------- ------------
Frank H. Kenan, 1995 -- -- --
Chairman, Chief 1994 -- -- --
Executive Officer 1993 -- -- --
Lee P. Shaffer, 1995 271,400 100,000 56,918
President, Chief 1994 261,000 237,808 49,911
Operating Officer 1993 251,000 225,500 43,542
William L. Boone, 1995 153,400 -- 23,279
Vice President-Finance 1994 151,094 77,880 23,862
1993 134,100 67,050 20,243
L. Avery Corning, 1995 113,000 -- 7,280
Vice President- 1994 14,125 -- --
Operations and Sales 1993 -- -- --
Gary J. Knutson, 1995 98,500 -- 12,102
Vice President - 1994 94,139 48,840 12,504
Marketing 1993 88,900 44,450 11,309
(1) Other compensation includes benefits paid or accrued by the Company
pursuant to the Company's Profit Sharing Retirement Plan (PSRP) and
Supplemen-
7
tal Executive Retirement Plan (SERP). Plan benefits accrued for the
year ended December 31, 1995 are presented below:
PSRP SERP
Name ($) ($)
------------------ ------ ------
Lee P. Shaffer 7,185 49,733
William L. Boone 7,185 16,094
L. Avery Corning 2,260 5,020
Gary J. Knutson 4,718 7,384
Compensation of Directors
Directors who are not employees of the Company were paid $1,000 for
serving on the Board. Audit Committee members and Compensation Committee
members were paid an additional $1,000 annual fee.
Compensation Committee Report
The Compensation Committee of the Board of Directors is responsible for
the Company's compensation policy, salary levels and incentive programs
for executives. By working with senior management and reviewing available
industry information, the Committee monitors executive compensation to
fulfill the objectives set forth below.
Compensation Philosophy
- -----------------------
The Company maintains a compensation program that provides executive
employees with base salaries at competitive market levels and the
opportunity to earn incentive compensation when targeted performance goals
are achieved. For certain executive employees, a portion of the annual
incentive compensation is in the form of stock. In addition, the Company
offers retirement benefits to its executives in the form of a Profit
Sharing Plan and a Supplemental Executive Retirement Plan. Through these
three forms of compensation, the Company seeks to attract, motivate and
retain executives who can contribute to the success of the business and
afford these executive employees the opportunity to earn an owner-
8
ship interest in the Company and thereby align the interests of management
with those of shareholders.
Salary
- ------
In establishing salary levels for executives, the Committee annually
monitors salaries at other businesses through two broad-based wage
surveys, one of which is specific to the trucking industry. Salary levels
are set to compare with averages as reported for similar-sized companies
based on revenue.
The Committee evaluates compensation levels by comparing the Company's
performance results to performance results of competitors in the tank
truck industry. Performance comparisons are based on profits, profit
margins and operating ratios of the Company and its competitors as a
group. According to the most recent industry data available, the operating
ratio and profit margins of the Company compared favorably with other tank
truck carriers.
Incentive Compensation
- ----------------------
Under the Company's Stock Bonus Plan, selected officers and key
executive employees may earn incentive compensation. Under this Plan,
executives earn stock in the Company for years in which the Company's
annual net income exceeds the average of the prior three years net income.
A maximum bonus for a participant in any year is 75% of salary. An
executive may elect to receive up to 50% of the bonus for the year in
cash, but at least 50% of the bonus for the year is payable in Company
stock in order to provide management an ownership interest in the
Company's success. No bonuses were earned under the Plan for 1995. The
Company also offers incentive compensation programs, which are also linked
to the achievement of performance targets, for managers who do not
participate in the Stock Bonus Plan.
CEO and President Compensation
- ------------------------------
Mr. Frank H. Kenan, the Chief Executive Officer of the Company,
receives no salary or other compensation in such capacity. Salary levels
for the other Named Executive Officers for 1995, 1994 and 1993 are
reported in the Summary Compensation Table.
9
A discretionary bonus of $100,000 was paid in 1995 to Mr. Shaffer,
President and Chief Operating Officer of the Company. This amount is
included in the Summary Compensation Table. The Committee approved the
this bonus and recommended it to the Board in view of the Company's
overall performance, increases in assets, book value and earnings during
Mr. Shaffer's thirty-two years as President, and his compensation compared
to other transportation company executives.
Frank H. Kenan Braxton Schell
William C. Friday Paul Wright, Jr.
Compensation Committee Interlocks and Insider Participation
Mr. Frank H. Kenan serves as Chairman of the Board and Chief Executive
Officer of the Company.
The Company leases its corporate offices in University Square at 143
West Franklin Street in Chapel Hill, North Carolina from Mr. Frank H.
Kenan. Under a five-year lease that became effective January 1, 1995,
annual base lease payments for 18,892 square feet of office space in years
1995 through 1999 are $283,380, $289,048, $294,715, $300,383 and $306,050,
respectively. The Board of Directors, Mr. Kenan abstaining, has approved
the lease contract. Based upon studies performed by the Company of rental
rates for comparable facilities, the Company is satisfied that the rent
paid to Mr. Kenan does not exceed market rates in the area.
Mr. Schell is a partner in Schell Bray Aycock Abel & Livingston L.L.P.,
which provides legal services to the Company.
10
Performance Graph
The following graph shows a five-year comparison of cumulative total
shareholder returns for the Company, the NASDAQ Market Index and an index
of peer companies. The comparison assumes a $100 investment on January 1,
1991 and reinvestment of dividends.
Measurement Period (MP) Kenan
- ----------------------- Transport NASDAQ Peer
(Fiscal Year Covered) Company Market Group
- ----------------------- --------- ---------- ---------
MP - 01/01/91 $100.00 $100.00 $100.00
FYE 12/31/91 125.41 128.38 150.41
FYE 12/31/92 148.74 129.64 183.92
FYE 12/31/93 187.50 155.50 208.33
FYE 12/31/94 191.40 163.26 200.30
FYE 12/31/95 229.80 211.77 169.80
(1) The peer group chosen consists of companies listed under Standard
Industrial Classification Code 4213 - trucking, except local.
11
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the independent public accountants for
the Company in 1995 and they will be considered for appointment for 1996
at the Board of Directors' meeting following the meeting of shareholders.
A representative of the firm will be in attendance at the shareholders'
meeting and will have the opportunity to make a statement if he desires to
do so and will be available to respond to shareholder questions.
OTHER MATTERS
The Board of Directors knows of no other matters that may properly be,
or which are likely to be, brought before the meeting; however, if any
other matters are properly brought before the meeting, the persons who are
named in the enclosed Proxy or their substitutes will vote in accordance
with their best judgement on such matters.
SHAREHOLDER PROPOSALS
Shareholder proposals to be presented at the next annual meeting of the
Company's shareholders must be received by the Company at its principal
offices, Fifth Floor, University Square-West, 143 West Franklin Street,
Chapel Hill, North Carolina 27516-3910, on or before December 1, 1996 in
order to be included in the Company's next Proxy Statement for such annual
meeting.
By Order of the Board of Directors
WILLIAM L. BOONE
Secretary
March 29, 1996
Chapel Hill, North Carolina
12
APPENDIX
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF THE SHAREHOLDERS OF
KENAN TRANSPORT COMPANY
The undersigned having received Notice of Meeting and Proxy
Statement dated March 29, 1996, hereby appoints FRANK H. KENAN and LEE P.
SHAFFER, and each or any of them as proxies, with full power of
substitution and revocation, to represent the undersigned and to vote as
designated below, all shares of Common Stock of KENAN TRANSPORT COMPANY,
which the undersigned is entitled to vote at the Annual Meeting of the
Shareholders of the Company to be held on May 6, 1996 at The Kenan Center,
Bowles Drive, Chapel Hill, North Carolina at 10:00 A.M., local time or any
adjournment thereof.
UNLESS OTHERWISE SPECIFIED BELOW, THIS PROXY WHEN PROPERLY EXECUTED
WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR.
(1) ELECTION OF DIRECTORS
[ ] For all nominees listed below; except vote withheld for the
nominees whose names are written in the space below
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
FRANK H. KENAN THOMAS S. KENAN, III LEE P. SHAFFER PAUL WRIGHT, JR.
WILLIAM C. FRIDAY OWEN G. KENAN BRAXTON SCHELL
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
(Continued on Reverse Side)
(Continued from Reverse Side)
(2) In their discretion, the Proxies are authorized to vote upon such
other matters as may properly come before the meeting.
Dated , 1996
-------------
Signature
-----------------------------
Signature
-----------------------------
Please sign the proxy exactly as name appears. Joint owners should
each sign. Trustees and other signing in a representative capacity should
indicate the capacity in which they sign.
PLEASE MARK, SIGN AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.