UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-K/A
Amendment No. 1
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2000
Commission file number 0-14781
M.S. Carriers, Inc.
(Exact name of registrant as specified in its charter)
Tennessee 62-1014070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3171 Directors Row, Memphis, TN 38131
(Address of principal executive offices) (Zip Code)
(901) 332-2500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value Nasdaq National Market
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes __X__ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the registrant's $.01 par value common stock
held by non-affiliates of the registrant as of April 25, 2001 was
$235,511,287 (based on the closing sale price of $28.23 per share on that
date, as reported by NASDAQ).
As of April 25, 2001, 11,234,101 shares of the registrant's common stock
were
outstanding.
1
EXPLANATORY NOTE
The annual report on Form 10-K for the year ended December 31, 2000 of M.S.
Carriers, Inc. is hereby amended to include the information required by Part
III (Items 10, 11, 12 and 13).
Table of Contents
PART III
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . . . 3
Item 11. Executive Compensation . . . . . . . . . . . . . . 4
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . . 12
Item 13. Certain Relationships and Related Transactions . . 15
2
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information Regarding Directors And Executive Officers
Information concerning the names, ages, positions within the Company and
business experience of the Company's current directors and executive
officers is set forth below.
MICHAEL S. STARNES, 56, is the Chairman of the Board, President and
Chief Executive Officer of the Company, positions he has held since 1978.
Mr. Starnes is a director of RFS Hotel Investors, Inc. and Mid-America
Apartment Communities. He has been a Director of the Company since 1978 and
is a member of the Executive Compensation Committee.
JAMES W. WELCH, 57, is the Senior Vice President - Marketing of the
Company, a position he has held since May 1989. Mr. Welch joined the
Company in 1982 as a Vice President - Sales and served in that capacity
until 1989. He has been a Director of the Company since 1982.
M.J. BARROW, 56, is the Senior Vice President - Finance and
Administration, Chief Financial Officer and Secretary-Treasurer of the
Company, positions he has held since at least May 1989. Mr. Barrow joined
the Company in 1982 as Controller and Treasurer and shortly thereafter was
named Vice President - Finance. In February 1986, Mr. Barrow was named
Secretary-Treasurer and Chief Financial Officer of the Company. He has been
a Director of the Company since 1982.
MORRIS H. FAIR, 71, has been a Financial Advisor with PaineWebber since
November 1999. From April 1995 through October 1999 he was associated with
Raymond James & Associates, Inc. From September 1988 through December 1997,
he was Senior Vice President of Union Planters Corporation. Mr. Fair was
Chairman of the Board of UMIC Securities Corporation of Memphis, Tennessee,
with which he was associated from 1966 to 1988. He has been a Director of
the Company since 1986 and is a member of the Audit and Executive
Compensation Committees.
JACK H. MORRIS, III, 70, is Chief Executive Officer of Auto Glass of
Memphis, Inc. with which he has been associated since 1951. He has been a
Director of the Company since 1986 and is a member of the Audit and
Executive Compensation Committees.
EDWARD A. LABRY, III, age 38, is President and member of the board of
directors of Concord EFS, Inc. and its subsidiary EFS National Bank,
Memphis, Tennessee, with which he has been associated since 1984. He has
been a Director of the Company since September 1999 and is a member of the
Audit and Executive Compensation Committees.
MIKE REAVES, 56, is the Senior Vice President - Driver Services of the
Company, a position he has held since May 1996. He joined the Company in
June 1994 and was named Vice President - Driver Services in May 1995. Prior
to joining the Company, he was employed by Yellow Corporation, the parent
corporation of several less-than-truckload carriers, in various management
positions.
3
JOHN M. HUDSON, 59, is the Vice President - Human Resources of the
Company, a position he has held since May 1996. He joined the Company in
1990 and was named Vice President - Human Resources in 1991 and Vice
President - Process and Individual Development in 1994. In 1996, he resumed
his duties as Vice President - Human Resources.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and 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
Commission (the "SEC"). Officers, directors and greater than 10%
stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely upon a review of
the copies of such forms furnished to the Company, the Company believes that
its officers, directors and greater than 10% beneficial owners complied with
all Section 16(a) filing requirements applicable to them during the
Company's preceding fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
The following table and related notes summarize the compensation paid by
the Company to its Chief Executive Officer and the four other most highly
compensated executive officers for the three fiscal years ended December 31,
2000.
4
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Other Compensation
Defined
Contribution Life
Name and Principal Position Year Salary Bonus Options Plans (1) Insurance(2)
Michael S. Starnes 2000 $325,728 $120,000 - $ 6,823 $67,764
Chairman of the Board 1999 325,728 316,113 - 10,769 60,358
President and Chief 1998 340,281 216,986 - 5,000 60,319
Executive Officer
James W. Welch 2000 179,178 80,000 - 5,376 4,440
Senior Vice President - 1999 179,178 201,522 - 5,375 4,225
Marketing 1998 179,178 144,657 - 5,000 4,183
M.J. Barrow 2000 161,765 80,000 - 6,484 4,715
Senior Vice President - 1999 161,765 201,522 - 4,004 4,482
Finance and Administration 1998 161,765 144,657 - 5,000 4,442
Secretary, Treasurer
Mike Reaves 2000 150,000 50,000 - 6,130 6,590
Senior Vice President - 1999 150,000 201,522 - 4,384 6,549
Driver Services 1998 150,000 144,657 - 2,000 6,533
John M. Hudson 2000 115,500 - - 3,905 -
Vice President - 1999 115,500 22,000 - 3,465 -
Human Resources 1998 125,529 43,399 5,000 2,000 -
(1) The Company's contribution to the named individual's accounts in the Company's Retirement Savings Plan
and Deferred Compensation Plan.
(2) Premiums paid by the Company on split-dollar life insurance policies covering the named individual.
5
Option Grants In 2000
The Company did not grant any stock options to the Chief Executive
Officer or the four other most highly compensation executive officers during
the year ended December 31, 2000.
6
Aggregated Option Exercises In 2000 And Year-End Value Table
The following table sets forth information with respect to stock options exercised by the Chief
Executive Officer and each of the four most highly compensated executive officers during the year ended
December 31, 2000.
Number of Value of Unexercised
Unexercised Options In-the-Money Options
At December 31, 2000 At December 31, 2000(1)
Shares Acquired Value
Name on Exercise Realized(2) Exercisable Unexercisable Exercisable Unexercisable
Michael S. Starnes - - 84,000 6,000 $1,014,000 $ 88,500
James W. Welch 40,000 $417,500 48,000 12,000 605,750 145,500
M.J. Barrow 40,000 417,500 48,000 12,000 605,750 145,000
Mike Reaves - - 30,000 12,000 374,625 145,500
John M. Hudson 17,500 182,657 24,000 6,000 319,060 77,340
(1) These amounts are the aggregate of the number of options multiplied by the difference between the
closing sale price of $32.75 of the Common Stock on the last trading day in 2000 minus the exercise
price of those options.
(2) This amount is the aggregate of the number of shares acquired upon exercise multiplied by the difference
between the closing sale price of $17.625 of the Common Stock on the date the options were exercised
minus the exercise price of those options.
7
Compensation of Directors
Directors who are not full-time employees receive a fee of $3,000 for each
meeting of the Board they attend and for each Committee Meeting they attend if
not held on a day on which a meeting of the Board is held. Directors who are
also officers of the Company receive no additional compensation for services
as directors. Under the Company's Non-Employee Directors Stock Option Plan,
which was approved by the shareholders, each non-employee director receives an
automatic, non-discretionary award of an option to purchase 2,500 shares of
Common Stock upon election to the Board. The option price per share is equal
to the fair market value of the Common Stock on the date of the grant. Each
stock option shall vest and become exercisable in five (5) equal annual
installments on the anniversary dates of the date of the grant. If a non-
employee director ceases to be a director of the Company for any reason other
than death or disability, all options granted to him or her shall immediately
terminate; provided, however, the non-employee director shall have thirty (30)
days from the date on which he or she ceased to be a director to exercise any
portion of the option which was exercisable on the date that the non-employee
director ceased to be a director of the Company.
Employment Contracts
The Company has employment agreements with senior executive officers.
Under each of these employment agreements, the Executive Compensation Committee
of the Company's Board of Directors determines the annual base salary of the
executive officer and may award discretionary bonuses to the executive officer.
Each executive officer is entitled to participate in all employee benefit plans
generally available to the Company's employees. The Company shall reimburse
all ordinary and necessary business expenses incurred by each of these
executive officers. Each of these employment agreements provides that the
employment of the executive officer may be terminated by either the Company or
the executive officer upon thirty days' notice. Mr. Welch's employment
agreement contain certain non-competition and confidentiality provisions which
continue after the term of his employment.
Compensation Committee Interlocks and Insider Participation
The Executive Compensation Committee administers, reviews and approves the
salaries and other remuneration arrangements for senior management. The
members of the Committee during 2000 were Messrs. Starnes, President and Chief
Executive Officer of the Company, Fair, Morris and Labry. Mr. Starnes is
President and Chief Executive Officer of the Company and the three members of
the Committee other than Mr. Starnes evaluate his performance. Mr. Starnes
does not participate in the Committee's deliberations concerning his
compensation.
Mr. Labry is President and a member of the Board of Directors of Concord
EFS, Inc. and its subsidiary EFS National Bank, Memphis, Tennessee. Concord
is a vertically integrated electronic transaction processor, providing
transaction authorization, data capture, settlement and funds transfer services
to the trucking industry and other selected markets. Concord's primary
activities include providing credit, debit, check authorization and electronic
benefits transfer (EBT) processing services to supermarket, petroleum,
convenience store and other retailers. Concord also provides electronic
payment and payroll services to trucking companies, truck stops and other
segments of the market. During 2000, Concord processed transactions in the
aggregate amount of $86,283,194 for the Company.
8
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee of the M.S. Carriers' Board of
Directors has furnished this report on executive compensation for fiscal year
2000.
Compensation Philosophy and Objectives
The Company applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the
premise that superior performance of the Company results from the coordinated
efforts of all employees working toward common objectives. The Company strives
to achieve those objectives through teamwork that is focused on meeting the
expectations of the Company's customers and shareholders.
The Company's goal is to attract, retain and reward employees who contribute
to the long-term success of the Company. The philosophy underlying the
compensation plans is the alignment of compensation with the Company's business
objectives and performance. In addition, the Company seeks to align the
interests of all employees with those of the shareholders. Key principles of
this philosophy are:
O Providing fairness in compensation plans which deliver pay commensurate
with the Company's performance and the individual's performance.
O Providing equity-based incentives for the employees to insure that they
are motivated over the long term to manage the Company's business as
owners rather than just employees.
Executive Officer Compensation
Salary and Bonuses. The Company strives to structure the base salaries and
annual bonuses of the Company's executive officers to be competitive with those
provided to similarly situated executives with other publicly held truckload
motor carriers. In establishing compensation, the Committee considers (i) the
Company's financial performance, as well as the role and contribution of the
particular executive officer with respect to such performance; (ii) individual
performance and responsibility, past performance and potential with the
Company; (iii) compensation information disclosed by similar publicly held
truckload carriers; and (iv) compensation levels disclosed by other publicly
held companies headquartered in Memphis, Tennessee. Salary levels are largely
subjective, with individual performance and responsibility being the most
important factor.
The Committee establishes a formula for determining bonuses for its
executives and other senior management employees. During the first quarter of
2000, the Committee determined that the 2000 bonus pool for senior management
would be based upon the Company's level of diluted earnings per share for the
year. The Committee set $2.39 per share as the minimum level of earnings to
be achieved by the Company before any amount would be allocated to the bonus
pool. It was determined that if diluted earnings per share were to exceed
$2.39, the bonus pool would be increased by a predetermined percentage of after
tax earnings. No amounts were allocated to the bonus pool as the Company's
actual diluted earnings per share were less than $2.39 per share.
9
The Committee determined that it was appropriate to award discretionary
bonuses to certain members of senior management. This determination was
ultimately based on the Committee's judgment regarding the individual officer's
performance and potential with the Company. The Committee approved
discretionary bonuses aggregating $550,000 which were awarded to 12 senior
management employees.
The Committee believes that the compensation of the Company's officers as
a group, historically and during the last fiscal year, has been comparable to
that of other publicly held truckload motor carriers.
Stock Options. The Company's Stock Option Plans are the vehicles utilized
to provide long-term incentives to executive officers. Grants under these
plans are tied to the value of the Company's Common Stock, thereby providing
an additional incentive for executive officers to maximize shareholder value.
Options granted under the plans have a term of ten years and typically vest
over a five-year period. An executive officer receives value from the grant
of options under these plans if the Company's Common Stock appreciates over the
long term and the executive officer continues in the employ of the Company.
In making option grants to executive officers, the Committee evaluates the
individual officer's past and expected future contributions to the Company's
long-term success. In 2000, the Committee did not award any stock option to
executive officers.
Chief Executive Officer. Due to Mr. Starnes' substantial responsibility
and contributions to the Company, Mr. Starnes' base salary is set significantly
above the base salaries of the other executive officers. In setting Mr.
Starnes' salary, the Committee specifically considered (i) Mr. Starnes'
performance as Chairman, President and Chief Executive Officer; (ii) the
Company's financial results and (iii) the compensation paid to chief executive
officers of other publicly held truckload motor carriers. The factors were
considered subjectively, and none was given any specific weight. The Committee
believes Mr. Starnes' total compensation is appropriate in view of the
Company's operating results in 2000.
EXECUTIVE COMPENSATION COMMITTEE
Jack H. Morris, III, Chairman
Morris H. Fair
Edward A. Labry, III
Michael S. Starnes
10
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return of the Company, the Nasdaq
Stock Market (U.S.) Index and the Nasdaq Trucking and Transportation Index from
December 29, 1995 to December 29, 2000. The graph assumes that $100 was
invested on December 29, 1995, and any dividends were reinvested.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG M.S. CARRIERS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ TRUCKING & TRANSPORTATION INDEX
[GRAPH]
YEAR ENDING DECEMBER 31
1995 1996 1997 1998 1999 2000
- -----------------------------------------------------------------------------
M.S. Carriers, Inc. 100.00 80.00 124.38 164.69 119.38 163.75
- -----------------------------------------------------------------------------
Nasdaq Stock Market 100.00 123.04 150.69 212.51 394.94 237.68
(U.S.) Index
- -----------------------------------------------------------------------------
Nasdaq Trucking and
Transportation Index 100.00 110.39 141.34 127.07 122.84 111.72
11
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 2001,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known to the Company to be the beneficial owner of more than 5% of
the Company's Common Stock; (ii) each director of the Company; (iii) each
executive officer named in the Summary Compensation Table; and (iv) all
directors and executive officers as a group.
OWNERSHIP OF COMMON STOCK
Name and Addresses of Amount and Nature of Percent
Beneficial Owner (1) Beneficial Ownership (2) of Class
Michael S. Starnes
c/o M.S. Carriers, Inc.
3171 Directors Row
Memphis, Tennessee 38131 2,779,085(3) 24.7%
The Capital Guardian Trust Company
and Capital Group International, Inc.
11100 Santa Monica Blvd.
Los Angeles, CA 90025 1,208,400(4) 10.8%
FMR Corp.
82 Devonshire Street
Boston, MA 02109 1,121,383(5) 10.0%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 826,800 7.4%
Vanguard Explorer Fund, Inc.
P.O. Box 2600
VM # V34
Valley Forge, PA 19482 826,100(6) 7.4%
Wellington Management Company, LLP
75 State Street
Boston, MA 02109 809,850(7) 7.2%
James W. Welch 157,536(8) 1.4%
M.J. Barrow 104,953(9) *
Mike Reaves 37,238(10) *
John M. Hudson 50,297(11) *
Morris H. Fair 15,000(12) *
Jack H. Morris, III 22,500(13) *
Edward A. Labry, III 9,000(14) *
All named officers and directors as
a group (8 persons) 3,175,609 27.6%
* Indicates less than 1%.
12
(1) Unless otherwise indicated, the address of each director and officer is
3171 Directors Row, Memphis, Tennessee 38131.
(2) Beneficial ownership of Common Stock consists of sole voting and
investment power except as otherwise indicated.
(3) The shares of Common Stock shown as beneficially owned by Michael S.
Starnes represent 2,688,730 shares owned directly by him, 355 shares
allocated to his account in the Company's Retirement Savings Plan and
90,000 shares which he may acquire through the exercise of stock options
within 60 days of March 31, 2001. Swift Transportation Co., Inc. claims
shared voting power with respect to 2,688,730 shares owned directly by Mr.
Starnes.
(4) According to a Schedule 13G dated February 12, 2001, The Capital Guardian
Trust Company and Capital Group International, Inc. claims as of
December 29, 2000, sole voting power with respect to 908,900 shares and
sole investment power with respect to 1,208,400 shares.
(5) According to a Schedule 13G dated April 10, 2001, FMR claims as of March
31, 2001, sole voting power with respect to 324,273 shares and sole
investment power with respect to 1,121,383 shares.
(6) According to a Schedule 13G dated February 12, 2001, Vanguard Explorer
Fund, Inc. claims as of December 31, 2000, sole voting power and shared
investment power with respect to 826,100 shares.
(7) According to a Schedule 13G dated February 12, 2001, Wellington Management
Company, LLP claims as of December 31, 2000, shared voting power with
respect to 211,950 shares and shared investment power with respect to
809,850 shares.
(8) The shares of Common Stock shown as beneficially owned by James W. Welch
represent 85,000 shares owned directly by him, 20,536 shares allocated to
his account in the Company's Retirement Savings Plan and 52,000 shares
which he may acquire through the exercise of stock options within 60 days
of March 31, 2001.
(9) The shares of Common Stock shown as beneficially owned by M.J. Barrow
represent 43,321 shares owned directly by him, 9,632 shares allocated to
his account in the Company's Retirement Savings Plan and 52,000 shares
which he may acquire through the exercise of stock options within 60 days
of March 31,2001. Excludes 120 shares owned by Mr. Barrow's spouse
and 60 shares owned of record by Mr. Barrow as custodian for his
adult children.
(10) The shares of Common Stock as beneficially owned by Mike Reaves represent
500 shares owned directly by him, 2,738 shares allocated to his account
in the Company's Retirement Savings Plan and 34,000 shares which he may
acquire through the exercise of stock options within 60 days of March 31,
2001.
(11) The shares of Common Stock shown as beneficially owned by John M. Hudson
represent 18,390 shares owned directly by him, 3,907 shares allocated to
his account in the Company's Retirement Savings Plan and 28,000 shares
which he may acquire through the exercise of stock options within 60 days
of March 31, 2001.
13
(12) The shares of Common Stock shown as beneficially owned by Morris H. Fair
represent 12,500 shares owned directly by him and 2,500 shares which he
may acquire through the exercise of stock options within 60 days of March
31, 2001.
(13) The shares of Common Stock shown as beneficially owned by Jack H. Morris,
III represent 20,000 shares owned directly by him and 2,500 shares which
he may acquire through the exercise of stock options within 60 days of
March 31, 2001.
(14) The shares of Common Stock shown as beneficially owned by Edward A.
Labry, III represent 8,500 shares owned directly by him and 500 shares
which he may acquire through the exercise of stock options within 60 days
of March 31, 2001.
14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2000, Clarence R. Starnes was employed by the Company and received
compensation of $80,252. Clarence R. Starnes is the brother of Michael S.
Starnes.
During 2000, the Company loaned James W. Welch, a director and Senior Vice
President of the Company, the sum of $287,600 in connection with Mr. Welch's
exercise of an option to acquire 40,000 shares of the Company's common stock.
This indebtedness is evidenced by a promissory note and secured by a pledge
of the 40,000 shares. The promissory note is due and payable on December 31,
2001. The indebtedness bears interest at 30-day LIBOR plus .65% payable at
maturity. As of March 31, 2001, the sum of $287,600 plus accrued interest was
outstanding.
During 2000, the Company loaned M.J. Barrow, a director and Senior Vice
President of the Company, the sum of $287,600 in connection with Mr. Barrow's
exercise of an option to acquire 40,000 shares of the Company's common stock.
This indebtedness is evidenced by a promissory note and secured by a pledge
of the 40,000 shares. The promissory note is due and payable on December 31,
2001. The indebtedness bears interest at 30-day LIBOR plus .65% payable at
maturity. As of March 31, 2001, the sum of $287,600 plus accrued interest was
outstanding.
During 2000, the Company loaned John M. Hudson, Vice President of the
Company, the sum of $125,825 in connection with Mr. Hudson's exercise of an
option to acquire 17,500 shares of the Company's common stock. This
indebtedness is evidenced by a promissory note and secured by a pledge of the
17,500 shares. The promissory note is due and payable on December 31, 2001.
The indebtedness bears interest at 30-day LIBOR plus .65% payable at maturity.
As of March 31, 2001, the sum of $125,825 plus accrued interest was
outstanding.
See "Compensation Committee Interlocks and Insider Participation" above
for a description of certain transactions between the Company and members of
the Executive Compensation Committee.
15
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
M.S. Carriers, Inc.
By: s/ Michael S. Starnes
Michael S. Starnes
Chairman of the Board, President and
Chief Executive Officer
16