SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ______)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
TREADCO, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Richard F. Cooper
Secretary
1101 South 21st Street
Fort Smith, AR 72901
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
[ ] Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
TREADCO, INC.
April 10, 1997
To the Shareholders of Treadco, Inc.:
You are cordially invited to attend the Annual Meeting of Shareholders of
Treadco, Inc. on Wednesday, May 7, 1997 at 1:00 p.m. at 3801 Old Greenwood
Road, Fort Smith, Arkansas 72903. A notice of the meeting, a proxy card and a
proxy statement containing information about the matters to be acted upon are
enclosed. It is important that your shares be represented at the meeting. We
look forward to the Annual Meeting of Shareholders and we hope you will
attend the meeting or be represented by proxy.
WE URGE YOU TO SIGN AND DATE YOUR ENCLOSED PROXY CARD AND PROMPTLY RETURN IT
IN THE ENCLOSED PRE-ADDRESSED, POSTAGE-PAID ENVELOPE EVEN IF YOU ARE PLANNING
TO ATTEND THE MEETING.
Robert A. Young III John R. Meyers
Chairman of the Board President - Chief Executive Officer
TREADCO, INC., POST OFFICE BOX 10048, FORT SMITH, ARKANSAS 72917-0048
TREADCO, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 7, 1997
To the Shareholders:
The Annual Meeting of Shareholders of Treadco, Inc., a Delaware corporation,
will be held at 3801 Old Greenwood Road, Fort Smith, Arkansas 72903 on
Wednesday, May 7, 1997 at 1:00 p.m. for the following purposes:
I. To elect two Class III Directors for terms to expire at the 2000 Annual
Meeting of Shareholders;
II. To ratify the appointment of Ernst & Young LLP as independent auditors
for fiscal year 1997;
III. To act upon such other matters as may properly be brought before the
meeting affecting the business and affairs of the Company.
Only shareholders of record at the close of business on March 10, 1997 will
be entitled to notice of and to vote at the meeting or any adjournment
thereof.
PLEASE COMPLETE, SIGN AND DATE YOUR ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED.
By Order of the Board of Directors,
Fort Smith, Arkansas Richard F. Cooper
April 10, 1997 Secretary
TREADCO, INC.
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Treadco, Inc.
("Treadco" or the "Company"), in connection with the solicitation of proxies
on behalf of the Treadco Board of Directors (the "Board") to be voted at the
Annual Meeting of Shareholders on May 7, 1997 ("1997 Annual Meeting") for the
purposes set forth in the accompanying Notice of Meeting. This Proxy
Statement and Notice of Meeting, the related proxy card and the 1996 Annual
Report to Shareholders are being mailed to shareholders beginning on or about
April 10, 1997. Treadco's principal place of business is 1101 South 21st
Street, Fort Smith, Arkansas 72901, and its telephone number is 501/788-6400.
RECORD DATE
The Board has fixed the close of business on March 10, 1997 as the record
date for the 1997 Annual Meeting. Only shareholders of record on that date
will be entitled to vote at the meeting in person or by proxy.
PROXIES
The proxies named on the enclosed proxy card were appointed by the Board to
vote the shares represented by the proxy card. Upon receipt by the Company of
a properly signed and dated proxy card, the shares represented thereby will
be voted in accordance with the instructions on the proxy card. If a
shareholder does not return a signed proxy card, his or her shares cannot be
voted by proxy. Shareholders are urged to mark the ovals on the proxy card to
show how their shares are to be voted. If a shareholder returns a signed
proxy card without marking the ovals, the shares represented by the proxy
card will be voted as recommended by the Board herein and in the proxy card.
The proxy card also confers discretionary authority to the proxies to vote on
any other matter not presently known to management that may properly come
before the meeting. Any proxy delivered pursuant to this solicitation is
revocable at the option of the person(s) executing the same (i) upon receipt
by the Company before the proxy is voted of a duly executed proxy bearing a
later date, (ii) by written notice of revocation to the Secretary of the
Company received before the proxy is voted or (iii) by such person(s) voting
in person at the Annual Meeting of Shareholders.
VOTING SHARES
On the record date, there were 2,752,555 shares of common stock outstanding
and entitled to vote ("Common Stock"). Each share of Common Stock is entitled
to one vote. The holders in person or by proxy of a majority of the total
number of the shares of Common Stock shall constitute a quorum for purposes
of the 1997 Annual Meeting.
PROPOSAL I: ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL I.
The Board is divided into three classes of directorships, with directors in
each class serving staggered three-year terms. At each annual meeting of
shareholders, the terms of directors in one of the three classes expire. At
that annual meeting of shareholders, directors are elected in a class to
succeed the directors whose terms expire, the terms of the directors so
elected to expire at the third annual meeting of shareholders thereafter.
Pursuant to the Company's Certificate of Incorporation, the Board has fixed
the number of directorships at six: two in the class to be elected at the
1997 Annual Meeting of Shareholders whose members' terms will expire at the
2000 Annual Meeting of Shareholders, two in the class whose members' terms
will expire at the 1998 Annual Meeting of Shareholders, and two in the class
whose members' terms will expire at the 1999 Annual Meeting of Shareholders.
It is intended that the shares represented by the accompanying proxy will be
voted at the 1997 Annual Meeting for the election of nominees William A.
Marquard and Robert B. Gilbert as the two directors in the class of
directorships whose members' terms will expire in 2000, unless the proxy
specifies otherwise. Each nominee has indicated his willingness to serve as a
member of the Board, if elected.
If, for any reason not presently known, Messrs. Marquard and/or Gilbert will
not be available for election at the time of the 1997 Annual Meeting, the
shares represented by the accompanying proxy may be voted for the election in
his/their stead of substitute nominee(s) designated by the Board or a
committee thereof, unless the proxy withholds authority to vote for all
nominees.
Assuming the presence of a quorum, to be elected a nominee must receive the
affirmative vote of the holders of a majority of the Common Stock present, in
person or by proxy, at the 1997 Annual Meeting.
DIRECTORS OF THE COMPANY
The following information relates to the nominees named above and to the
other persons whose terms as directors will continue after the 1997 Annual
Meeting.
Name Age Business Experience
CLASS III -- Term Expires May 1997
William A. Marquard 77 Mr. Marquard has been a Director of
the Company since it was formed in June 1991.
Mr. Marquard has been Chairman of the Board and
a Director of ABC since November 1988. In April
1992, Mr. Marquard was elected as a Director and
Vice Chairman of the Board of Kelso. From 1971
to 1983, Mr. Marquard was President and Chief
Executive Officer of American Standard Inc. and
from 1979 to 1985, he was Chairman of the Board
of American Standard Inc. Mr. Marquard resumed
his position as Chairman of the Board of
American Standard Inc. in February 1989 until
March 31, 1992, when he was named Chairman
Emeritus. Mr. Marquard also became Chairman of
the Board of ASI Holding Corporation in February
1989 until March 31, 1992, when he was named
Chairman Emeritus. Mr. Marquard is a Director of
Mosler, Inc., Americold Corporation, Earle M.
Jorgensen Co., and EarthShell Container
Corporation.
Robert B. Gilbert 72 Mr. Gilbert has been a Director of the
Company since December 1991. From April 1985 to
February 1991, Mr. Gilbert was President and
Chief Executive Officer of Rheem Manufacturing
Co. Since his February 1991 retirement, Mr.
Gilbert has been an independent consultant.
CLASS I -- Term Expires May 1998
Robert A. Young III 56 Mr. Young has been Chairman of the
Board of Directors of the Company since it was
formed in June 1991. Mr. Young served as the
Company's Chief Executive Officer from June 1991
through October 1995. Mr. Young has been Chief
Executive Officer of Arkansas Best Corporation
("ABC") since August 1988, President since 1973
and was Chief Operating Officer of ABC from 1973
to 1988. Mr. Young has been a Director of ABC
since 1970. Mr. Young also is a Director of
Mosler, Inc.
John H. Morris 53 Mr. Morris has been a Director of the
Company since it was formed in June 1991, and a
Director of ABC since July 1988. Mr. Morris
currently serves as President of The Gordon +
Morris Group. Mr. Morris served as a Managing
Director of Kelso & Company, Inc. ("Kelso") from
March 1989 to March 1992, was a General Partner
from 1987 to March 1989, and prior to 1987 was a
Vice President. Prior to 1985, Mr. Morris was
President of LBO Capital Corp. In February 1997,
Merchant's Transportation & Logistics Company,
and its subsidiaries, filed petitions under
Chapter 11 of the federal bankruptcy laws. Mr.
Morris served as a Director of such entities
through January 1997 and briefly served as the
President of such entities for about a two-week
period in November 1995 before these entities
became operating companies.
CLASS II -- Term Expires May 1999
John R. Meyers 49 Mr. Meyers was appointed the Company's
President-Chief Executive Officer in October
1995. Mr. Meyers served as Treasurer of the
Company from June 1991 through October 1995.
From 1979 through 1995 Mr. Meyers served as Vice
President-Treasurer of Arkansas Best
Corporation.
Nicolas M. Georgitsis 61 Mr. Georgitsis has been a Director of
the Company since it was formed in June 1991.
Mr. Georgitsis has been an independent
consultant since January 1991. From February
1986 to January 1991, Mr. Georgitsis was Senior
Vice President of American Standard Inc. in
charge of Transportation Products. Mr.
Georgitsis is a Director of Mosler, Inc., and
Tyler Refrigeration.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board meets on a regularly scheduled basis four times a year
to review significant developments affecting the Company and to act on
matters requiring Board approval. It also holds special meetings when Board
action is required between scheduled meetings. The Board met four times
during 1996. During 1996, each member of the Board participated in at least
75% of all Board and applicable committee meetings held during the period for
which he was a Director.
The Board has established Audit, Executive Compensation and Development, and
Stock Option committees to assist it in the discharge of its
responsibilities. The functions of those committees, their current members
and the number of meetings held during 1996 are described below. The Board
does not have a committee for nomination of directors. The Board nominates
candidates for director.
Audit Committee. The Audit Committee recommends to the Board the appointment
of the firm selected to be independent public accountants for the Company and
monitors the performance of such firm; reviews and approves the scope of the
annual audit and quarterly reviews and evaluates with the independent public
accountants the Company's annual audit and annual consolidated financial
statements; reviews with management the status of internal accounting
controls; and evaluates problem areas having a potential financial impact on
the Company which may be brought to its attention by management, the
independent public accountants or the Board. Messrs. Gilbert and Georgitsis
currently are members of the Audit Committee. The Audit Committee met two
times during 1996.
Executive Compensation and Development Committee. The Executive Compensation
and Development Committee is responsible for reviewing executive management's
performance and for determining appropriate compensation. Messrs. Marquard,
Georgitsis and Gilbert currently are members of the Executive Compensation
and Development Committee. The Executive Compensation and Development
Committee met two times in 1996.
Stock Option Committee. The Stock Option Committee administers the Company's
Incentive Stock Option Plan. The Stock Option Committee has the power to
determine from time to time the individuals to whom options shall be granted,
the number of shares granted, and the time or times at which options shall be
granted. Messrs. Georgitsis and Gilbert currently are members of the Stock
Option Committee. The Stock Option Committee met four times during 1996.
Director Compensation. Messrs. Young and Meyers receive no compensation for
services as a Director or committee member. Non-employee directors receive a
$25,000 annual retainer, $1,000 for each Board meeting attended, and $500 for
each committee meeting attended, if the committee meeting is held other than
in conjunction with a Board meeting.
Messrs. Georgitsis and Gilbert, as members of the Stock Option Committee,
each received automatic stock options under the Company's 1991 Stock Option
Plan on January 2, 1996, for 5,000 shares of the Company's Common Stock at a
fair market value exercise price of $5.75 per share. Messrs. Marquard and
Morris, non-employee Directors, each received stock options under the
Company's 1991 Stock Option Plan on January 30, 1996 for 5,000 shares of the
Company's Common Stock at a fair market value of $6.75 per share, and Mr.
Young, also a non-employee Director, received stock options for 5,000 shares
on May 8, 1996 at a fair market value of $7.125 per share and 15,000 shares
on October 24, 1996 at a fair market value of $10.00 per share. Stock options
granted to the Directors prior to 1996 were amended to provide for an
exercise price of $10.00 per share. Prior exercise prices ranged from $11.250
to $15.250 per share. On each anniversary date of the grant, 20% of the
options vest and thereafter can be exercised through the tenth year after the
grant date.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth certain information concerning beneficial
ownership of the Company's Common Stock as of March 10, 1997, by (i) each
person who is known by the Company to own beneficially more than five percent
(5%) of the outstanding shares of Common Stock, (ii) each director and named
executive officer of the Company and (iii) all directors and executive
officers as a group.
Shares Percentage
Beneficially of Shares
Owned Outstanding (7)
------------- ----------------
(i) Name / Address
Arkansas Best Corporation ("ABC") (1)(4) 2,319,700 45.7%
3801 Old Greenwood Road
Fort Smith, AR 72903
Shapiro Capital Management Co., Inc. (2) 558,925 11.0%
3060 Peach Tree Road, NW
Atlanta, GA 30305
Dimensional Fund Advisors Inc. (3) 273,992 5.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Shares Percentage
Beneficially of Shares
Owned Outstanding (7)
------------- ----------------
(ii) Name Position
William A. Marquard (5) Director 19,000 *
Robert A. Young III (4) Director 2,330,700 45.4
John H. Morris (5) Director 9,000 *
Robert B. Gilbert (5) Director 9,000 *
Nicolas M. Georgitsis (5) Director 13,000 *
John R. Meyers (5) Director/
President/CEO 10,500 *
Daniel V. Evans (5)(6) Vice President 18,536 *
(iii) All Directors and
Executive Officers
as a Group (11 total) 2,409,736 47.0
- - -------------
*Less than 1%
<FN>
<F1>
(1) ABC's shares of the Company are subject to a pledge of assets to
Societe Generale, Southwest Agency, as Agent, under ABC's Credit
Agreement. Such arrangement, in the event of an uncured event of default
under ABC's Credit Agreement, could result at a subsequent date in a
change of control of the Company. ABC is not currently in default under
its Credit Agreement and does not expect such a default to occur.
<F2>
(2) According to the most recent Schedule 13G it has provided to the
Company, Shapiro Capital Management Co., Inc. is an investment adviser
registered under the Investment Advisers Act of 1940. Shapiro Capital
Management Co., Inc. has the following voting and investment powers with
respect to such shares: (a) sole voting power, 558,925; (b) shared
voting power, not applicable; (c) sole investment power, 558,925; (d)
shared investment power, not applicable.
<F3>
(3) According to the most recent Schedule 13G it has provided to the
Company, Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 273,992
shares of TREADCO, 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.
<F4>
(4) Mr. Young directly owns 10,000 shares of Company Common Stock. Mr.
Young beneficially owns 2,109,828 shares, or 10.8%, of ABC's voting
common stock. Under federal securities law since Mr. Young is deemed to
be a controlling person of ABC, Mr. Young may be deemed to beneficially
own all 2,319,700 shares of Company Common Stock owned by ABC, which
shares are included as beneficially owned by him. Mr. Young's business
address is 3801 Old Greenwood Road, Fort Smith, AR 72903.
<F5>
(5) Includes stock option shares of Common Stock which are vested and
will vest within 60 days of the record date as follows: Messrs.
Marquard, 9,000 total, 7,000 are vested and 2,000 will vest within 60
days; Morris, 9,000 total, 7,000 are vested and 2,000 will vest within
60 days; Gilbert, 9,000 total, 8,000 are vested and 1,000 will vest
within 60 days; Georgitsis, 9,000 total, 8,000 are vested and 1,000 will
vest within 60 days; Young, 1,000 will vest within 60 days; Evans,
17,000 vested shares; and Meyers, 6,000 vested shares.
<F6>
(6) Includes following shares allocated to Mr. Evans through March 10,
1997: 1,155 shares to ESOP; 80 shares to Investment Plan account.
<F7>
(7) Percentages for (i) and (ii) include stock option shares listed in
footnote (5) above in the denominator and numerator.
</FN>
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, age, principal occupation and
business experience during the last five years of each of the current
executive officers of the Company. The executive officers serve at the
pleasure of the Board. For information regarding ownership of the Common
Stock by the executive officers of the Company, see "PRINCIPAL SHAREHOLDERS
AND MANAGEMENT OWNERSHIP." There are no family relationships among directors
and executive officers of the Company.
Name Age Business Experience
John R. Meyers 49 See previous description.
President -
Chief Executive
Officer
Daniel V. Evans 49 Mr. Evans has served as Executive Vice
Executive Vice President-Chief Operating Officer since
President - October 1995, and served as Vice
Chief Operating President-Adminis-tration of the Company
Officer from June 1991 through October 1995. Mr.
Evans served as Vice President-
Administration of ABC-Treadco, Inc. from
1989 to 1991, and served as Director of
Administration from 1977 to 1989.
Donald L. Neal 66 Mr. Neal has been Vice President-Chief
Vice President- Financial Officer of the Company since it
Chief Financial was formed in June 1991. Since 1979, Mr.
Officer Neal has served as Senior Vice President-
Chief Financial Officer of Arkansas Best
Corporation.
R. David Slack 54 Mr. Slack has been Vice President-
Vice President- Comptroller of the Company since August
Comptroller 1993. Mr. Slack has been Vice President-
Comptroller of Arkansas Best Corporation
since January 1990, for which he
previously served as Comptroller and a
director in the Accounting Department.
David E. Loeffler 50 Mr. Loeffler was appointed the Company's
Treasurer Treasurer in December 1995. Mr. Loeffler
was appointed Vice President-Treasurer of
Arkansas Best Corporation in December
1995. From 1992 to 1995 Mr. Loeffler was
a private investor and in investing
managing. From 1983 to 1992 he was Senior
Vice President - Finance and
Administration and Chief Financial
Officer for Yellow Freight System, Inc.
Richard F. Cooper 45 Mr. Cooper has served as Secretary of the
Secretary Company since it was formed in June 1991.
Mr. Cooper has been Vice President-
Administration since 1995, Vice President-
Risk Management from 1991 to 1995,
Secretary since 1987, and Vice President-
General Counsel since 1986 for Arkansas
Best Corporation.
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid during
each of the Company's last three fiscal years to the Company's Chief Executive
Officer and the Company's other executive officer who earned in excess of
$100,000, based on salary and bonus earned during 1996.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (I)
Securities
Name Other Restricted Underlying
and Annual Stock Options/ LTIP All Other
Principal Salary Bonus Compensation Award(s) SARs Payouts Compensation
Position Year ($) ($)(1) ($) ($)(2) (#)(3) ($) ($(4)
John R. Meyers (5) 1996 $200,000 $ - - $ - $30,000 - $ 2,004
President-Chief 1995 34,556 - - 270,000 - - -
Executive Officer 1994 - - - - - - -
Daniel V. Evans 1996 150,000 - - - 35,000 - 2,740
Vice President- 1995 105,941 32,649 - 135,000 - - 4,476
Administration 1994 90,000 21,368 - - - - 10,932
<FN>
<F1>
(1) Reflects bonus earned during the fiscal year. Bonuses are normally paid
during the next fiscal year.
<F2>
(2) Reflects value of performance units Awarded, based on Company's Common
Stock trading price of $9.00 per share on October 24, 1995, the date of
Award.
<F3>
(3) Lists options to acquire shares of the Company's Common Stock.
Includes 15,000 options for Mr. Evans repriced on October 24, 1996 to
$10 per option. The options were originally priced at $11.25 to $15.75.
<F4>
(4)"All Other Compensation" includes the following for Messrs. Meyers and
Evans: (i) Company matching of contributions to the Company's Employees
Investment Plan of $2,004 and $2,740 for each named executive, respectively.
<F5>
(5)Mr. Meyers was appointed President-Chief Executive Officer in October 1995.
</FN>
OPTIONS/SAR EXERCISES AND HOLDINGS
The following table provides information related to options exercised by the
named executive officers during the 1996 fiscal year and the number and value of
options held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Shares Number of Securities Value of Unexercised
Acquired Value Underlying Unexercised Options/ In-the-Money Options/SARs
on Exercise Realized SARs at Fiscal Year-End (#) at Fiscal Year-End ($)(1)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
John R. Meyers - - - 30,000 $ - $112,500
Daniel V. Evans - - 13,000 22,000 6,500 76,000
<FN>
<F1>
(1) The closing price for the Company's Common Stock as reported by the
Nasdaq Stock Market on December 31, 1996 was $10.50. Value is calculated
on the basis of the difference between the option exercise price and $10.50
multiplied by the number of shares of Common Stock underlying the option.
</FN>
OPTION GRANTS DURING 1996 FISCAL YEAR
The following table provides information related to options granted to the named
executive officers during 1996.
OPTIONS/SAR GRANTS TABLE
Potential Realizable
Value at Assumed
Annual Rate of Stock
Price Appreciation
Individual Grants for Option Term (1)
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities % of Total
Underlying Options/SARs Exercise
Options/SARs Granted to or Base
Granted Employees in Price Expiration
Name (#)(2)(3)(4) Fiscal Year ($/sh)(5) Date 5%($) 10%($)
John R. Meyers 30,000 25.0% $6.750 01/29/06 $127,500 $322,800
Daniel V. Evans 20,000 16.7% $6.750 01/29/06 85,000 215,200
10,000 (6) 8.3% $10.000 10/22/01 42,500 107,600
5,000 (6) 4.2% $10.000 07/20/03 21,250 53,800
<FN>
<F1>
(1)The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior
to the expiration of their term, assuming the specified compounded rates of
appreciation on the Company's Common Stock over the term of the options.
These numbers do not take into account provisions of certain options
providing for termination of the option following termination of employment,
nontransferability or vesting over periods of up to five years.
<F2>
(2)Options granted in 1996 are exercisable starting 12 months after the grant
date, with 20% of the shares covered thereby becoming exercisable at that
time and with an additional 20% of the option shares becoming exercisable on
each successive anniversary date, with full vesting occurring on the fifth
anniversary date.
<F3>
(3)The options were granted for a term of 10 years, subject to earlier
termination in certain events related to termination of employment.
<F4>
(4)In the event of a change in control, the Stock Option Plan permits the
Committee to accelerate vesting and to enable an employee to "put" the
excess of the fair market value over the exercise price of the options to
the Company.
<F5>
(5)The Stock Option Plan permits the exercise of options by delivery of shares
of Common Stock owned by the optionee in lieu of or in addition to cash or
by financing made available by the Company.
<F6>
(6)In October 1996, all grants issued prior to 1996 were amended and restated
changing the exercise price to $10. The options were originally priced from
$11.25 to $15.75.
</FN>
OPTION REPRICINGS DURING 1996 FISCAL YEAR
The following table provides information related to repricing of options held by
any named executive officers during the last ten completed fiscal years.
TEN-YEAR OPTION/SAR REPRICINGS
(a) (b) (c) (d) (e) (f) (g)
Length of
Original
Market Price Exercise Option Term
Number of of Stock at Price at Remaining
Options/SARs Time of Time of New at Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended Amendment Amendment Price ($) Amendment
Daniel V. Evans 10/24/96 10,000 $10.00 $15.75 $10.00 5 Yrs. 0 Mos.
Executive Vice
President-Chief 10/24/96 5,000 $10.00 $11.25 $10.00 6 Yrs. 8 Mos.
Operating
Officer
REPORT ON EXECUTIVE COMPENSATION BY THE EXECUTIVE
COMPENSATION AND DEVELOPMENT COMMITTEE
AND STOCK OPTION COMMITTEE
The Company is engaged in the manufacture and sale of retread truck tires and
the sale of new truck tires. It competes with other businesses which have
similar operations, but it also competes with businesses which focus on only
a portion of the Company's operations, such as businesses which only sell new
tires or which only manufacture retread tires. The Company considers this
multi-faceted aspect of its operations a strength; however, it necessitates
maintaining an executive management team which is knowledgeable in the
Company's unique combination of new and retread tire marketing and retread
tire production.
The Company's philosophy that compensation of the executive management team
should be materially linked to both operating and stock price performance
with the goal of enhancing the value of the Company is administered by its
Executive Compensation and Development Committee ("Compensation Committee")
and its Stock Option Committee.
The Compensation Committee is comprised of Messrs. Georgitsis, Gilbert and
Marquard and the Stock Option Committee is comprised of Messrs. Georgitsis
and Gilbert. All Committee Members are non-employee directors. The
Compensation Committee, at its discretion, reviews and grants all forms of
executive compensation except stock options. The Stock Option Committee, at
its discretion, grants stock options to the executive group pursuant to the
Company's stock option plan which was previously approved by the Company's
Board of Directors and shareholders.
In furtherance of the Company's philosophy, the executive management team's
compensation is primarily composed of the following blend of short-term and
long-term items, all designed to motivate daily, annual and multi-year
executive performance that results in increased value of the Company for its
shareholders:
(i) Base Salary. The Compensation Committee reviews and sets the base
salaries of the Company's executive officers, normally on an annual
basis. In setting salary levels, the Compensation Committee considers a
variety of subjective and objective criteria such as: variety of
experience and years of service with the Company; special expertise and
talents of the individual; recent and historical operating results of
the Company; industry and general economic conditions which may affect
the Company's performance; and the Compensation Committee members'
knowledge and experience in determining appropriate salary levels and
total compensation programs for executives.
(ii) Incentive Plan. The Company's Incentive Plan is designed to measure
each individual facility participant's performance against set levels
of return on net assets employed and increased sales. The Company's
named executive officers will be measured on the total Company's
performance using the new formula's criteria. Through its dual
measurements of return on net assets employed and increase in sales,
the Compensation Committee believes the executive management team will
be more fully measured on the overall growth of the Company. Each named
executive officer's incentive pay is based on the relation of his base
salary to the base salary of all other named executive officers in the
Incentive Plan.
(iii)Stock Option Plan. The Stock Option Committee is responsible for the
granting of stock options to the executive group under the Company's
1991 Stock Option Plan ("1991 Plan"). Under current stock option
agreements with the executives, the grant's value to the optionee is
directly based on the public trading price of the Company's stock. The
optionee vests in 20% of the total shares granted on each of the five
subsequent anniversary dates of the grant, and has up to 10 years from
the date of the grant to exercise part or all of his grant. The Company
believes that this combination of 20% annual vesting with a 10-year
exercise period blends its desire to tie the optionee's motivation
under the stock option grant to both short-term and long-term
performance of the Company's stock. Under the 1991 Plan, the Stock
Option Committee generally has discretion regarding size, recipients
and other non-exercise-price terms and conditions of grants. Such
discretion allows, but does not require, the Stock Option Committee to
consider prior stock option grants to executives when considering new
grants. Stock option grants made to the executive group have been based
in part on information provided by an independent consultant and on the
judgment of the Stock Option Committee members. On October 24, 1996,
the Stock Option Committee voted to reprice two Stock Options
previously granted to Mr. Evans, the Company's Executive Vice President
on October 23, 1991 and July 21, 1993 with exercise prices of $15.75
and $11.25 per share, respectively. The two options were repriced at
$10.00 per share, the closing price for the Company's common stock on
October 24, 1996. The Committee believes the repricings were
appropriate and necessary for the options to continue to act as
incentives since the trading price of the Company's Common Stock had
been adversely affected by the Company's previous franchisor's
termination of the Company's franchises and other actions which are the
subject of a lawsuit filed by the Company against its former
franchisor.
(iv) Performance Award Program. The Stock Option Committee is responsible
for the granting of unit awards to the executive group under the
Company's 1995 Performance Award Program ("1995 Program"). Under the
1995 Program, the value of unit awards are equal to the closing price
of the Company's common stock on the day prior to the granting of the
award. The unit value increases or decreases in tandem with the trading
price of the Company's stock price. Each year additional units are
added to the award which equal a percentage of the number of units held
by each recipient. This percentage is equal to the Company's cumulative
return on equity minus 8%. The units vest 10% after one year, an
additional 20% after year two, an additional 30% after year three and
the final 40% at the end of year four. All awards vest immediately upon
death, disability, retirement at age 65 or older or in the event of a
change-in-control of the Company. Payments may be made in either cash
or other property at the Committee's choice after the fifth anniversary
of each award. The Awards are not assignable or transferable. The Stock
Option Committee has the right to vary the terms and eligibility for
the unit awards and to discontinue the 1995 Program. The 1995 Program
was developed in part on advice provided by an independent consultant
and upon the judgment of the Stock Option Committee members.
The Company's Chief Executive Officer ("CEO"), John R. Meyers' compensation
package is set by the Compensation Committee based on the same philosophy as
the other members of the Company's executive management team.
The Company's current executive management team averages over 20 years'
employment with the Company or its affiliated companies. The Company believes
that to enable it to continue its past growth and succeed in the future, it
must be able to retain its executive management team and to attract
additional qualified executives when needed.
The Company believes its executive management team's compensation package is
closely linked to the interests of the Company's shareholders.
Executive Compensation and
Development Committee Stock Option Committee
Nicolas M. Georgitsis Nicolas M. Georgitsis
Robert B. Gilbert Robert B. Gilbert
William A. Marquard
This Report will not be deemed to be incorporated by reference in any filing
by the Company under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent that the Company specifically incorporates
this Report by reference.
EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
There were none based on information provided to the Company and the
Company's knowledge.
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total return for the
Company, the Nasdaq Market Index, and an index of peer companies selected by
the Company.
COMPARISON OF CUMULATIVE TOTAL RETURN
Among Treadco, Inc., Nasdaq Market Index & Peer Group
Fiscal Year Ending
- - -----------------------------------------------------------------------------
Company 1991 1992 1993 1994 1995 1996
- - -----------------------------------------------------------------------------
Treadco, Inc. 100 96.04 103.76 99.84 38.82 72.37
Peer Group 100 97.87 133.43 101.88 102.49 90.96
Broad Market 100 100.98 121.13 127.17 164.96 204.98
The above comparisons assume $100 was invested on January 1, 1992 in the
Company's Common Stock and each of the foregoing indices and assumes
reinvestment of dividends. All calculations have been prepared by Media
General Financial Services. The shareholder return shown on the graph above
is not necessarily indicative of future performance.
The Company is engaged in the manufacture and sale of retread truck tires and
the sale of new truck tires. The Company believes its peers are either
privately-held companies, or subsidiaries or divisions of larger publicly-
held companies and therefore, such comparisons are not feasible. Accordingly,
the Company has chosen to compare their shareholder return to companies
selected on the basis of similar market capitalization. Media General
Financial Services selected, from its database of over 7,000 publicly-held
companies, the companies which have the same market capitalization, plus or
minus one percent, as the Company. The following 31 companies were selected
to comprise the Company's market capitalization peer group:
AMERICAS INCOME TRUST JERRY'S FAMOUS DELI INC.
ASANTE TECHNOLOGIES INC. KEYSTONE CONSOLIDATED
ATLANTIC GULF COMMUNITIES LASERSIGHT INC.
BALDWIN TECHNOLOGY INC. A NASTECH PHARMACEUTICALS
BERTUCCI'S INC. NATIONAL INCOME RLTY TR
C-PHONE CORPORATION NATIONAL PICTURE & FRAME
CALIFORNIA REAL ESTATE INV. NATIONAL-STANDARD CO
CHINA TIRE HOLDINGS LTD. PORTEC INC.
CONTINENTAL MTGE & EQUITY SCOTT & STRINGFELLOW FIN
DOMINION BRIDGE CORP SIERRAWEST BANCORP
ELANTEC SEMICONDUCTOR SSE TELECOM INC.
FIRST INVESTORS FIN SERVICES TAIWAN EQUITY FUND INC.
HAIN FOOD GROUP INC. TRIMEDYNE INC.
HATTERAS INCOME SECS TURKISH INVEST FD
INTRAV INC. ZYCAD CORPORATION
INVIVO CORPORATION
The Performance Graph will not be deemed to be incorporated by reference in
any filing by the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates the graph by reference.
RETIREMENT AND SAVINGS PLANS
The Company maintains a retirement plan that generally provides fixed
benefits payable in annuity form upon retirement at age 65. Benefits also may
be paid in the form of a lump sum at the participant's election. Credited
years of service for each of the individuals named in the "EXECUTIVE
COMPENSATION - SUMMARY COMPENSATION TABLE" are: Mr. Meyers, 1 year; Mr.
Evans, 25 years. Benefits are based upon a participant's number of years of
service with the Company and on a participant's average total earnings
(exclusive of extraordinary remuneration and expense allowances and subject
to the annual Code limitation after 1993 of $150,000 as adjusted to reflect
cost of living increases) during any five consecutive calendar years during
the participant's employment with the Company since 1980, which will give the
participant the highest average monthly earnings.
The following table illustrates the total estimated annual benefits payable
from the retirement plan upon retirement at age 65, in the form of a single
life annuity, to persons in the specified compensation and years-of-service
classifications. Benefits listed in the table are not subject to deductions
for Social Security or other offset amounts. Participants also are entitled
to receive income from employee contributions, if any, plus 7.5 percent
interest in addition to the amounts shown.
Highest
Five Year
Average Years of Service
Compensation 15 20 25 30 35
$ 50,000 $ 7,500 $10,000 $ 12,500 $ 15,000 $ 17,500
100,000 15,000 20,000 25,000 30,000 35,000
150,000 22,500 30,000 37,500 45,000 52,500
200,000 22,500 30,000 37,500 45,000 52,500
500,000 22,500 30,000 37,500 45,000 52,500
The Company has agreed to provide reimbursement for otherwise unreimbursed
medical expenses to Mr. Meyers and Mr. Evans. These benefits are presently
covered by an insurance program and commence upon the employee's retirement
at age 60 or older from the Company and continue for the life of the employee
(and spouse or other eligible dependents).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CHANGE-IN-CONTROL ARRANGEMENTS
On October 25, 1995, the Company entered into an Employment Agreement with
Mr. Evans. The Agreement is for a period of three years at a monthly base
salary of $12,500 plus a one-time payment in January 1996 of $32,649
representing incentive pay for 1995. Upon a change in control of ownership of
the Company, as defined in the Agreement, Mr. Evans would be entitled to a
payment equal to 2.99 times his average annual base salary and bonus for the
prior five years. The Agreement also provides that Mr. Evans will not compete
with the Company during the three-year period beginning on the date the
Agreement was executed or for one year from the date a change in control
occurs, whichever is longer.
Pursuant to the Company's 1995 Performance Award Program, the Company has
entered into Unit Award Agreements with Mr. Meyers and Mr. Evans. The
Agreements provide that upon a change in control of ownership of the Company,
as defined in the Agreements, all unvested units immediately vest with unit
award payments to be made to the recipient at the expiration of the award
period, unless the Stock Option Committee determines to purchase the units at
the date of the change in control or take other action to maintain and
protect the rights of the recipient.
The Company's Stock Option Agreements with Messrs. Meyers and Evans provide
that in the event of a change in control of ownership of the Company, as
defined in the Agreement, all unvested options immediately vest.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Transition Services Agreement. Effective as of July 1, 1991, the Company and
Arkansas Best Corporation ("ABC") are parties to a Transition Services
Agreement, pursuant to which ABC provides the Company with certain general
and administrative services, which ABC has historically provided in
connection with the Company's operations of its business. Such services
include maintaining corporate and accounting books and records, tax, legal,
risk management and data processing and other computer-related services. The
Transition Services Agreement is effective until terminated by either party
on 90 days' prior written notice. The Company pays ABC for general and
administrative services a fee equal to 1.25% of the Company's total revenues.
Certain other expenses (for example data processing and computer-related
services) are charged to the Company at their actual cost to ABC. The Company
paid ABC approximately $2.6 million, $2.5 million, and $2.2 million, for the
years ended December 31, 1996, 1995 and 1994, respectively, for the services
ABC rendered pursuant to the Transition Services Agreement (including use of
office space for which the Company is responsible for real estate taxes,
insurance, utilities, maintenance and certain other customary lease
expenses).
Tire Asset Transfer Agreements. Effective as of July 1, 1991, in connection
with the separation of the Company's assets from ABC-Treadco, Inc. (a wholly-
owned subsidiary of ABC), the Company assumed all obligations and liabilities
(including contingent liabilities) relating to its business formerly operated
by ABC-Treadco, Inc. or otherwise associated with its business assets, and
agreed to indemnify and hold ABC-Treadco, Inc. harmless from all obligations
and liabilities relating to the operations of its business prior to such
date. In turn, ABC-Treadco, Inc. has agreed to indemnify and hold the Company
harmless from all obligations and liabilities (including contingent
liabilities) not relating to the Company's business.
Taxes. Effective as of July 1, 1991, ABC, ABC-Treadco, Inc. and the Company
entered into an agreement to indemnify each other against certain tax
liabilities and to allocate among them tax deficiencies and refunds, if any,
arising with respect to periods prior to September 12, 1991.
Registration Rights. Pursuant to the terms of a Registration Rights Agreement
dated as of July 1, 1991, the Company has agreed that upon the request of
ABC, the Company will register, on up to two occasions, the sale of Company
Common Stock owned by ABC or its affiliates that ABC requests be registered
under the Securities Act of 1933, as amended, and applicable state securities
laws. The Company's obligation is subject to certain limitations relating to
the timing and size of registrations and other similar matters. The Company
also is obligated to offer ABC the right to include shares of Common Stock
owned by it or its affiliates in certain registration statements filed by the
Company. The Company will indemnify ABC and its officers, directors and
controlling persons for securities law liabilities in connection with any
such offering, other than liabilities resulting from information furnished in
writing by ABC. The Company is obligated to pay all expenses incidental to
such registration, excluding underwriters' discounts and commissions.
Other Arrangements. Affiliates of ABC paid the Company $2.5 million, $2.6
million, and $2.0 million, for new and retread tires in 1996, 1995, and 1994,
respectively.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers, directors, and persons who own more than
10% of a registered class of the Company's equity securities are required to
file, under the Securities Exchange Act of 1934, reports of ownership and
changes of ownership with the Securities and Exchange Commission.
Based solely on information provided to the Company, the Company believes
that during the preceding year its executive officers, directors, and 10%
shareholders have complied with all applicable filing requirements.
PROPOSAL II: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL II.
The firm of Ernst & Young LLP served as independent auditors for the Company
for the fiscal year ended December 31, 1996. Pursuant to the recommendation
of the Audit Committee, the Board has appointed that firm to continue in that
capacity for the fiscal year 1997, and recommends that a resolution be
presented to shareholders at the 1997 Annual Meeting to ratify that
appointment.
In the event the shareholders fail to ratify the appointment of Ernst & Young
LLP, the Board will appoint other independent public accountants as auditors.
Representatives of Ernst & Young LLP will attend the 1997 Annual Meeting.
They will have the opportunity to make a statement and respond to appropriate
questions from shareholders.
OTHER MATTERS
The Board does not know of any matters that will be presented for action at
the 1997 Annual Meeting other than those described above and matters incident
to the conduct of the meeting. If, however, any other matters not presently
known to management should come before the 1997 Annual Meeting, it is
intended that the shares represented by the accompanying proxy will be voted
on such matters in accordance with the discretion of the holders of such
proxy.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by directors, officers, or regular employees of the Company in
person, by telephone, telegram, or other means. The Company has retained
Corporate Investor Communications, Inc. to assist in the solicitation and
sending of proxy material. The Company will pay approximately $1,000 for
these services.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Pursuant to Securities and Exchange Commission regulations, shareholder
proposals submitted for next year's proxy statement must be received by the
Company no later than the close of business on December 11, 1997 to be
considered. Proposals should be addressed to Richard F. Cooper, Secretary,
Treadco, Inc., 3801 Old Greenwood Road, Fort Smith, AR 72903. In order to
prevent controversy about the date of receipt of a proposal, the Company
strongly recommends that any shareholder wishing to present a proposal submit
the proposal by certified mail, return receipt requested.
GENERAL
Upon written request, the Company will provide shareholders with a copy of
its Annual Report on Form 10-K to the Securities and Exchange Commission
(including financial statements and schedules thereto) for the fiscal year
ended December 31, 1996, without charge. Direct written requests to: Randall
M. Loyd, Director, Financial Reporting, Treadco, Inc., 3801 Old Greenwood
Road, Fort Smith, AR 72903.
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY
Fort Smith, Arkansas RICHARD F. COOPER
Date: April 10, 1997 Secretary