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 under Rule 14a-12
MOTOR CARGO INDUSTRIES, INC
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
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[X] No fee required.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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MOTOR CARGO INDUSTRIES, INC.
845 WEST CENTER STREET
NORTH SALT LAKE, UTAH 84054
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 6, 2001
April 30, 2001
To the Shareholders of Motor Cargo Industries, Inc.:
You are cordially invited to attend the Annual Meeting of Shareholders
(the "Meeting") of Motor Cargo Industries, Inc., a Utah Corporation (the
"Company"), to be held on Wednesday, June 6, 2001, at 10:00 a.m., local time, at
the Grand America Hotel, 555 South Main Street, Salt Lake City, Utah for the
following purposes:
1. To elect six directors.
2. To ratify the selection of Grant Thornton LLP as independent
auditors to audit the Consolidated Financial Statements of the Company and its
subsidiaries for the year ending December 31, 2001.
3. To transact such other business as may properly come before
the Meeting or any adjournments of the Meeting.
Only holders of record of the Company's common stock, no par value, at
the close of business on April 19, 2001 will be entitled to notice of and to
vote at the Meeting. Please sign, date and mail the enclosed proxy so that your
shares may be represented at the Meeting if you are unable to attend and vote in
person.
By order of the Board of Directors.
MARVIN L. FRIEDLAND
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
MOTOR CARGO INDUSTRIES INC.
845 WEST CENTER STREET
NORTH SALT LAKE, UTAH 84054
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 6, 2001
INTRODUCTION
This Proxy Statement is being furnished to the Shareholders (the
"Shareholders") of Motor Cargo Industries, Inc., a Utah corporation (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors for use at the Annual Meeting of Shareholders of the Company (the
"Meeting") to be held on June 6, 2001 and at any adjournments thereof.
At the Meeting, Shareholders will be asked:
(1) To elect six directors.
(2) To ratify the selection of Grant Thornton LLP as
independent auditors to audit the Consolidated Financial Statements of the
Company for the year ending December 31, 2001.
(3) To transact such other business as may properly come
before the Meeting or any adjournments of the Meeting.
The Board of Directors has fixed the close of business on April 19,
2001 as the record date for the determination of the holders of common stock, no
par value ("Common Stock") entitled to notice of and to vote at the Meeting.
Each such Shareholder will be entitled to one vote for each share of Common
Stock held on all matters to come before the Meeting and may vote in person or
by proxy authorized in writing. At the close of business on April 19, 2001,
there were 6,473,140 shares of Common Stock entitled to vote.
This Proxy Statement and the accompanying form of proxy are first being
sent to holders of the Common Stock on or about April 30, 2001.
THE MEETING
DATE, TIME AND PLACE
The Meeting will be held on June 6, 2001, at 10:00 a.m., local time, at
the Grand America Hotel, 555 South Main Street, Salt Lake City, Utah.
MATTERS TO BE CONSIDERED
At the Meeting, Shareholders will be asked to consider and vote to (i)
elect six directors, and (ii) ratify the selection of independent auditors. See
"ELECTION OF DIRECTORS," and "RATIFICATION OF SELECTION OF INDEPENDENT
AUDITORS." The Board of Directors knows of no matters that are to be brought
before the Meeting other than as set forth in the Notice of Meeting. If any
other matters properly come before the Meeting, the persons named in the
enclosed form of proxy or their substitutes will vote in accordance with their
best judgment on such matters.
RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE
Shareholders as of the Record Date (i.e., the close of business on
April 19, 2001) are entitled to notice of and to vote at the Meeting. As of the
Record Date, there were 6,473,140 shares of Common Stock outstanding and
entitled to be voted. Each share of Common Stock entitles its holder to one
vote.
REQUIRED VOTES
ELECTION OF DIRECTORS. Under Utah law, the affirmative vote of the
holders of a plurality of the shares of Common Stock voted at the Meeting is
required to elect each director. Consequently, only shares that are voted in
favor of a particular nominee will be counted toward such nominee's achievement
of a plurality. Shares present at the Meeting that are not voted for a
particular nominee or shares present by proxy where the Shareholder properly
withheld authority to vote for such nominee (including broker non-votes) will
not be counted toward such nominee's achievement of a plurality.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS. The ratification of
the selection of Grant Thornton LLP as independent auditors is being submitted
to Shareholders because the Board of Directors believes that such action follows
sound corporate practice and is in the best interests of the Shareholders. If
the Shareholders do not ratify the selection by the affirmative vote of a
majority of the shares of Common Stock voted at the Meeting, the selection of
independent auditors will be reconsidered by the Board. If the Shareholders
ratify the selection, the Board, in its discretion, may still direct the
appointment of new independent auditors at any time during the year if the Board
believes that such a change would be in the interests of the Company and its
Shareholders.
Abstentions and broker non-votes will not be counted in determining the
votes cast in connection with the ratification of the selection of independent
auditors, but will have the effect of reducing the number of affirmative votes
required to achieve a majority for such matter by reducing the total number of
shares from which the majority will be calculated.
2
PRINCIPAL SHAREHOLDER. The Company has been advised by its principal
shareholder, Harold R. Tate, that he intends to vote the 3,858,000 shares of
Common Stock that he owns, representing approximately 59.6% of the Company's
outstanding shares of Common Stock, FOR the election of the six persons
nominated by the Board of Directors to serve as directors, and FOR the
ratification of the selection of Grant Thornton LLP as the Company's independent
auditors to audit the accounts of the Company and its subsidiaries for 2001.
VOTING AND REVOCATION OF PROXIES
Shareholders are requested to complete, date, sign and promptly return
the accompanying form of proxy in the enclosed envelope. Shares of Common Stock
represented by properly executed proxies received by the Company and not revoked
will be voted at the Meeting in accordance with the instructions contained
therein. If instructions are not given, proxies will be voted FOR election of
each nominee for director named herein, and FOR ratification of the selection of
independent auditors.
Any proxy signed and returned by a Shareholder may be revoked at any
time before it is voted by filing with the Secretary of the Company, at the
address of the Company set forth herein, written notice of such revocation or a
duly executed proxy bearing a later date or by attending the Meeting and voting
in person. Attendance at the Meeting will not in and of itself constitute
revocation of a proxy.
PROXY SOLICITATION
The Company will bear the costs of solicitation of proxies for the
Meeting. In addition to solicitation by mail, directors, officers and regular
employees of the Company may solicit proxies from Shareholders by telephone,
telegram, personal interview or otherwise. Such directors, officers and
employees will not receive additional compensation but may be reimbursed for
out-of-pocket expenses in connection with such solicitation. Brokers, nominees,
fiduciaries and other custodians have been requested to forward soliciting
material to the beneficial owners of shares of Common Stock held of record by
them, and such custodians will be reimbursed for their reasonable expenses.
INDEPENDENT AUDITORS
The Company has been advised that representatives of Grant Thornton
LLP, the Company's independent auditors for 2000, will attend the Meeting, will
have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
ELECTION OF DIRECTORS
At the Meeting, six directors are to be elected to serve until the next
Meeting or until their successors are elected and qualified. The persons named
in the enclosed form of proxy have advised that, unless contrary instructions
are received, they intend to vote FOR the six nominees named by the Board of
Directors and listed on the following table. The Board of Directors does not
expect that any of the nominees will be unavailable for election as a director.
However, if by reason of an unexpected occurrence one or more of the nominees is
not available for election, the
3
persons named in the form of proxy have advised that they will vote for such
substitute nominees as the Board of Directors of the Company may propose. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES NAMED
BELOW.
The names and certain information concerning the experience and
background of the nominees for election as directors are set forth below.
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
Harold R. Tate 74 Chief Executive Officer, Chairman
of the Board, Director
Louis V. Holdener 63 President and Chief Operating Officer, Director
Marvin L. Friedland 59 Vice President, General Counsel and
Secretary, Director
Robert Anderson 80 Director
James Clayburn LaForce, Jr. 72 Director
Merlin J. Norton 71 Director
HAROLD R. TATE has over 50 years experience in the trucking industry
and has served as Chairman of the Board of the Company and its predecessors
since 1947. Mr. Tate served as Chief Executive Officer of the Company and its
predecessors from 1947 to March 1997, and was again elected as the Company's
Chief Executive Officer effective April 1, 2001. Mr. Tate also serves as a
member of the Board of Trustees of the Buffalo Bill Historical Center.
LOUIS V. HOLDENER has over 30 years experience in the trucking
industry. Mr. Holdener has been employed by the Company since 1965, and was
named President and Chief Operating Officer of the Company and appointed to the
Board of Directors effective April 1, 2001. Mr. Holdener has also served as
President of Motor Cargo, the Company's primary operating subsidiary, since
1991, and served as Vice President of the Company from 1997 to 2001. Prior to
1991, Mr. Holdener served in various positions with the Company, including Vice
President of Operations of Motor Cargo.
MARVIN L. FRIEDLAND has served as Vice President and General Counsel of
the Company and its predecessors since 1982. Prior to joining the Company, Mr.
Friedland was an attorney in private practice. Mr. Friedland was appointed to
the Board of Directors in 1996. Mr. Friedland is a Certified Public Accountant
and a member of the California Bar and the Utah Bar.
ROBERT ANDERSON has served as a director of the Company since December
1, 1997. Mr. Anderson was formerly Chairman and Chief Executive Officer of
Rockwell International Corporation. He has served as Chairman Emeritus of
Rockwell International Corporation since 1990. Mr. Anderson is also a director
of Gulfstream Aerospace Corporation and Aftermarket Technology Corp.
JAMES CLAYBURN LAFORCE, JR. has served as a director of the Company
since December 1, 1997. Mr. LaForce is Dean Emeritus of the John B. Anderson
School of Management, University of California, Los Angeles. He is also a
director of BlackRock Funds, CancerVax Corporation, The Timken Company, Jacobs
Engineering Group, Inc. and Provident Investment Council Mutual Funds, and he is
a trustee of the Trust for Investment Managers.
4
MERLIN J. NORTON has served as a director of the Company since April 9,
2001. Mr. Norton is Chairman of Great Western Leasing and Sales, a provider of
trailers, storage containers and other equipment. Mr. Norton served as Chairman
of the Board of PST Vans, Inc. from 1980 to 1987. Prior to that, Mr. Norton
served as Chairman of the Board of FB Truckline Company from 1968 to 1978.
INFORMATION CONCERNING
THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES
The current committees of the Company's Board of Directors include an
Audit Committee, a Compensation Committee and a Performance-Based Compensation
Committee.
The functions of the Audit Committee are to recommend to the Board
independent auditors for the Company, to analyze the reports and recommendations
of such auditors and to review internal audit procedures and controls. The Audit
Committee consists of Robert Anderson, James Clayburn LaForce, Jr. and Merlin J.
Norton. Four meetings of the Audit Committee were held in 2000.
The functions of the Compensation Committee are to review and adjust
the salaries of the principal officers and key executives of the Company. The
Compensation Committee also administers the Company's executive compensation and
benefit plans. The Compensation Committee consists of Harold R. Tate, Robert
Anderson, James Clayburn LaForce, Jr. and Merlin J. Norton. One meeting of the
Compensation Committee was held in 2000.
The sole function of the Performance-Based Compensation Committee is to
qualify certain stock options and rights granted under the Company's 1997 Stock
Option Plan as "performance-based compensation" within the meaning of Section
162(m) of the Internal Revenue Code. The Performance-Based Compensation
Committee consists of Robert Anderson and James Clayburn LaForce, Jr. No
meetings of the Performance Based Compensation Committee were held in 2000.
The Board of Directors held a total of four regular meetings in 2000.
During 2000, each incumbent director attended 75% or more of the total number of
meetings of the Board and the committees of the Board on which he served that
were held during the periods he served.
5
EXECUTIVE OFFICERS
OF THE COMPANY
The following table sets forth certain information with respect to the
present executive officers and key employees of the Company.
NAME AGE POSITION
- ---- --- --------
Harold R. Tate 74 Chairman and Chief Executive Officer, Director
Louis V. Holdener 63 President and Chief Operating Officer, Director
Marvin L. Friedland 59 Vice President and General Counsel, Secretary, Director
Lynn H. Wheeler 59 Vice President and Chief Financial Officer
R. Scott Price 37 Vice President of Sales and Marketing
Matthew T. McClure (1) 39 Vice President of Operations (Motor Cargo)
Steven E. Wynn(1) 51 Vice President of Human Resources (Motor Cargo)
Kevin L. Avery(1) 43 Vice President of Traffic (Motor Cargo)
(1) Messers McClure, Wynn and Avery are officers of the Company's principal
operating subsidiary, Motor Cargo, and are not officers of the Company.
HAROLD R. TATE has over 50 years of experience in the trucking industry
and has served as Chairman of the Board of the Company and its predecessors
since 1947. Mr. Tate served as Chief Executive Officer of the Company and its
predecessors from 1947 to March 1997, and was again elected as the Company's
Chief Executive Officer effective April 1, 2001. Mr. Tate also serves as a
member of the Board of Trustees of the Buffalo Bill Historical Center.
LOUIS V. HOLDENER has over 30 years experience in the trucking
industry. Mr. Holdener has been employed by the Company since 1965, and was
named President and Chief Operating Officer of the Company and appointed to the
Board of Directors effective April 1, 2001. Mr. Holdener has also served as
President of Motor Cargo, the Company's primary operating subsidiary, since
1991, and served as Vice President of the Company from 1997 to 2001. Prior to
1991, Mr. Holdener served in various positions with the Company, including Vice
President of Operations of Motor Cargo.
MARVIN L. FRIEDLAND has served as Vice President and General Counsel of
the Company and its predecessors since 1982. Prior to joining the Company, Mr.
Friedland was an attorney in private practice. Mr. Friedland was appointed to
the Board of Directors in 1996. Mr. Friedland is a Certified Public Accountant
and a member of the California Bar and the Utah Bar.
LYNN H. WHEELER has been employed by the Company since 1983 and has
served as Vice President of Finance of Motor Cargo since 1988. Mr. Wheeler was
appointed Vice President and Chief Financial Officer of the Company in March
1997. Mr. Wheeler is a Certified Public Accountant, a Certified Internal Auditor
and a member of the American Institute of Certified Public Accountants.
6
R. SCOTT PRICE joined the Company in 1986 and has served as a Vice
President of Sales and Marketing of the Company since February 1999. From
October 1997 to February 1999, Mr. Price served as a Vice President of the
Company responsible for overseeing MCDS. From 1995 to 1997, Mr. Price served as
Vice President of Sales of Motor Cargo. From 1986 to 1995, Mr. Price held
various positions with Motor Cargo, including Service Center Manager and
Director of Corporate Accounts.
MATTHEW T. MCCLURE joined the Company in 1987 and has served as Vice
President of Operations of Motor Cargo since January 2001. Prior to that, Mr.
McClure served as Director of Linehaul Operations for Motor Cargo from 1998 to
2001. From 1987 to 1998, Mr. McClure served in various positions with the
Company.
STEVEN E. WYNN has been employed by Motor Cargo since 1973 and has
served as Vice President of Human Resources of Motor Cargo since February 1999.
From 1991 to 1999, Mr. Wynn served as Vice President of Operations of Motor
Cargo. From 1973 to 1991, Mr. Wynn served in various positions, including
Director of Linehaul Operations and Director of Operations for Motor Cargo.
KEVIN L. AVERY joined the Company in 1985 and has served as Vice
President of Traffic of Motor Cargo since 1992. From 1985 to 1992, Mr. Avery
served in various positions, including Director of Pricing, Rate Department
Manager and Director of Quality Assurance for Motor Cargo.
7
PRESENT BENEFICIAL OWNERSHIP OF COMMON STOCK
Set forth below is certain information as of March 31, 2001 with
respect to the beneficial ownership of shares of Common Stock by (i) each person
who, to the knowledge of the Company, is the beneficial owner of more than 5% of
the outstanding shares of Common Stock (the Company's only class of voting
securities), (ii) each director and nominee for director, (iii) executive
officers named in the Summary Compensation Table on page 9 (the "Named Executive
Officers") and (iv) all directors and executive officers as a group.
NAME AND ADDRESS OF RIGHT TO ACQUIRE
BENEFICIAL OWNER(1) AMOUNT AND NATURE OF WITHIN 60 DAYS OF
CERTAIN BENEFICIAL OWNERS: BENEFICIAL OWNERSHIP(2) MARCH 31, 2001 PERCENT OF CLASS
- -------------------------- ----------------------- -------------- ----------------
Averitt, Inc.(3) 369,600 5.7%
J.P. Morgan Chase & Co.(4) 438,455 6.8%
DIRECTORS:
Harold R. Tate 3,858,000 59.6%
Louis V. Holdener 15,640 20,000 Less than 1%
Marvin L. Friedland 188,153 16,250 3.2%
Robert Anderson -- 8,750 Less than 1%
James Clayburn LaForce, Jr. 2,000 8,750 Less than 1%
Merlin J. Norton - - -
Nondirector Named
Executive Officers:
- -------------------
Marshall L. Tate(5) 141,153 32,500 2.7%
Lynn H. Wheeler 1,000 13,750 Less than 1%
R. Scott Price - 12,500 Less than 1%
All directors and executive officers
as a group (11 persons) 4,206,461 133,250 65.7%
- --------
(1) Unless otherwise indicated in these footnotes, the mailing address of each
beneficial owner listed is 845 West Center Street, North Salt Lake, Utah
84054.
(2) Except as otherwise noted, each of the beneficial owners listed in the
above table has, to the knowledge of the Company, sole voting and
investment power with respect to the indicated shares of Common Stock.
(3) The mailing address for Averitt, Inc. is Corporate Service Center,
Perimeter Place One, 518 Old Kentucky Road, Cookeville, Tennessee 38501.
(4) The mailing address for J.P. Morgan Chase & Co., and its wholly-owned
subsidiary, Robert Fleming, Inc., is 270 Park Avenue, New York, New York
10017.
(5) Marshall Tate resigned as President and Chief Executive Officer of the
Company on March 31, 2001.
8
EXECUTIVE COMPENSATION
Set forth below is certain information with respect to the compensation
paid by the Company to the Chairman of the Board, the President and Chief
Executive Officer and each of the other three most highly compensated current
executive officers of the Company, for services in all capacities to the Company
and its subsidiaries during the years ended 2000, 1999 and 1998.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------------------------------------------------
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDERLYING OTHER
NAME AND PRINCIPAL COMPEN- (STOCK OPTIONS/ LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION(1) AWARD(S) SARS(2) PAYOUTS SATION(3)
($) ($) ($) ($) (#) ($) ($)
- --------------------------------------------------------------------------------------------------------------------
Harold R. Tate 2000 250,000 - - - - - -
Chairman of the Board and 1999 250,000 - - - - - -
Chief Executive Officer(4) 1998 250,000 - - - - - -
Marshall L. Tate 2000 175,000 41,040 - - - - -
President and Chief 1999 175,000 23,625 - - 65,000 - -
Executive Officer 1998 175,000 21,000 - - - - -
until March 31, 2001(4)
Marvin L. Friedland 2000 140,769 25,080 - - - - 19,639
Vice President and 1999 130,000 16,800 - - 32,500 - 19,375
General Counsel 1998 130,000 16,000 - - - - 24,208
Louis V. Holdener 2000 146,538 33,659 - - - 22,552
President (4) 1999 135,000 23,625 - - 40,000 - 19,870
1998 135,000 21,000 - - - - 24,650
Lynn H. Wheeler 2000 112,231 25,080 - - - - 21,108
Vice President and 1999 98,000 16,800 - - 27,500 - 19,292
Chief Financial Officer 1998 98,000 16,000 - - - - 23,364
- ---------------------
(1) Perquisites and other personnel benefits, securities or property, in the
aggregate, are less than either $50,000 or 10% of the total annual salary
and bonus reported for the named executive officer.
(2) The options granted in 1999, were granted on January 26, 1999 and reflect
options that replaced options granted in 1997, which were cancelled, as
well as grants of new options. The options have an exercise price of $7.50
per share and vest in equal installments over a four year period beginning
with the first anniversary of the date the options were granted and each
year thereafter. See "1997 Stock Option Plan" below.
(3) Amounts in this column include matching contributions made by the Company
under its 401(k) plan on behalf of Mr. Friedland, Mr. Holdener and Mr.
Wheeler of $1,652, $4,597 and $3,868, respectively, in 2000. Amounts in
this column also include accrued benefits under salary continuation
agreements between the Company and Mr. Friedland, Mr. Holdener and Mr.
Wheeler of $17,987, $17,955 and $17,240, respectively, in 2000.
(4) Marshall L. Tate resigned as President and Chief Executive Officer, and as
a director of the Company, effective March 31, 2001. Harold R. Tate, the
Company's Chairman, was elected to serve as Chief Executive Officer of the
Company upon Marshall Tate's resignation. At that time, Louis V. Holdener
was also promoted to serve as President of the Company.
9
The following table provides information as to the value of options
held by each of the Named Executive Officers at the end of 2000 measured in
terms of the last reported sale price for the Company's Common Stock on December
29, 2000 ($6.75, as reported on the Nasdaq National Market System).
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARs
ON VALUE OPTIONS/SARs AT FY-END (#) AT FY-END ($)
NAME EXERCISE (#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ -------- ------------------------- -------------------------
Harold R. Tate - - 0/0 0/0
Marshall L. Tate - - 16,250/48,750 0/0
Marvin L. Friedland - - 8,125/24,375 0/0
Louis V. Holdener - - 10,000/30,000 0/0
Lynn H. Wheeler - - 6,875/20,625 0/0
1997 STOCK OPTION PLAN
On October 1, 1997, the Company's Board of Directors adopted the Motor
Cargo Industries, Inc. 1997 Stock Option Plan (the "1997 Stock Option Plan").
The purpose of the 1997 Stock Option Plan is to provide certain of the Company's
key employees who are responsible for the continued growth of the Company an
opportunity to acquire a proprietary interest in the Company and thereby create
in such key employees an increased interest in and a greater concern for the
welfare of the Company. The 1997 Stock Option Plan contains provisions for
granting various stock-based awards, including incentive stock options as
defined in Section 422 of the Internal Revenue Code of 1986 as amended (the
"Code"), nonqualified stock options and stock appreciation rights. The term of
the 1997 Stock Option Plan is ten years, subject to earlier termination or
amendment.
The Compensation Committee of the Board of Directors administers the
1997 Stock Option Plan. Under the terms of the 1997 Stock Option Plan, the
committee of the Board of Directors administering the plan is required to be
composed of two or more directors. The Compensation Committee has the authority
to interpret the 1997 Stock Option Plan and to determine and designate the
persons to whom options or awards shall be made and the terms, conditions and
restrictions applicable to each option or award (including, but not limited to,
the price, any restriction or limitation, any vesting schedule or acceleration
thereof, and any forfeiture restrictions). The Board of Directors may amend the
1997 Stock Option Plan but may not, without the prior approval of the
shareholders of the Company, amend the plan to increase the total number of
shares reserved for options and rights under the plan, reduce the exercise price
of any option granted under the plan that is intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code, modify the
provisions of the plan relating to eligibility, or materially increase the
benefits accruing to participants under the plan.
10
On January 26, 1999, the Board of Directors amended the 1997 Stock
Option Plan to permit administration by a committee consisting of "outside
directors" for the purpose of qualifying certain stock options and rights
granted under the 1997 Stock Option Plan as "performance-based compensation"
within the meaning of Section 162(m) of the Internal Revenue Code. The Board of
Directors has established the Performance-Based Compensation Committee,
consisting of Robert Anderson and James Clayburn LaForce, Jr., for this purpose.
The Compensation Committee continues to administer all other aspects of the 1997
Stock Option Plan.
The Company has reserved 500,000 shares of Common Stock for issuance
pursuant to the 1997 Stock Option Plan. As of March 31, 2001, options to
purchase a total of 364,100 shares of Common Stock were outstanding under the
1997 Stock Option Plan, including options to purchase an aggregate of 165,000
shares held by certain Named Executive Officers. All such outstanding options
vest over a four year period, with 25% of these options vesting on each of the
first, second, third and fourth anniversaries of the date of grant.
401(k) PROFIT SHARING PLAN
The Company maintains a defined contribution plan (the "401(k) Plan"),
which is intended to satisfy the tax qualification requirements of the Internal
Revenue Code of 1986, as amended (the "Code"). All Company personnel who work
1,000 or more hours per year are eligible to participate in the 401(k) Plan
after one year of service with the Company. The 401(k) Plan permits participants
to contribute between 1% and 15% of their annual compensation from the Company,
subject to the limit imposed by the Code. The Company is obligated to match at
least 25% of employee contributions, up to 6% of a participant's annual
compensation. All amounts contributed by a participant fully vest immediately. A
participant becomes vested over time and is fully vested in any Company matching
contributions after seven years of service. The 401(k) Plan also permits
discretionary contributions by the Company. Expenses for Company contributions
amounted to $475,000, $421,000 and $495,000 in 1998, 1999 and 2000,
respectively.
PENSION PLAN
The Company has a defined benefit pension plan (the "Pension Plan")
covering substantially all of its employees. Benefits under the Pension Plan are
based upon years of service and hours of service in each year of service. A
participant is fully vested after five years of employment. Once vested,
employees are entitled to receive an annual benefit for each year of service in
which such employee worked at least 1,000 hours. The amount of benefit for each
year of service ranges from $144 for 1,000 hours of service to $240 for 1,800
hours or more of service. Harold R. Tate receives an annual benefit of $17,256
under the Pension Plan. The estimated annual benefits payable upon retirement at
normal retirement age for Marshall L. Tate, Marvin L. Friedland, Louis V.
Holdener, and Lynn H. Wheeler are $4,105, $5,832, $7,320, and $5,572,
respectively.
11
SALARY CONTINUATION AGREEMENTS
The Company has salary continuation agreements with certain key
management employees, including Marvin L. Friedland, Louis V. Holdener and Lynn
H. Wheeler. Under the agreements, the Company is obligated to provide for each
such employee or his beneficiaries, during a period of not more than ten years
after the employee's death, disability or retirement, annual benefits ranging
from $17,000 to $23,000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Prior to November 28, 1997, the Board of Directors did not have a
compensation committee and the Board of Directors as a whole determined the
compensation to be paid to the executive officers of the Company. On November
28, 1997, the Board of Directors established a compensation committee. The
functions of the Compensation Committee are to review and adjust the salaries of
the principal officers and key executives of the Company. The Compensation
Committee also administers the Company's executive compensation and benefit
plans. The Compensation Committee consists of Harold R. Tate, Robert Anderson,
James Clayburn LaForce, Jr. and Merlin J. Norton.
The Compensation Committee considers a number of factors in
establishing compensation for executive officers, including the Chief Executive
Officer and the other Named Executive Officers. The goal of the Compensation
Committee is to create compensation packages for officers and key employees that
will attract, retain and motivate executive personnel who are capable of
achieving the Company's short-term and long-term financial and strategic goals.
Executive compensation at the Company is made up of three elements: (i) base
salary, (ii) bonuses and (iii) grants of equity-based compensation (e.g. stock
options and restricted stock).
BASE SALARY. Base salaries for all of the executive officers of the
Company for 1998 and 1999 were established by the Board of Directors of the
Company based upon each employee's job responsibilities. During 2000, the
Compensation Committee adjusted salaries of the executive officers, other than
the Chairman and the President and Chief Executive Officer, in order to bring
these salaries in line with market rates.
BONUSES. The Board of Directors awarded cash bonuses to executive
officers during 1998 based upon the financial performance of the Company. The
Compensation Committee awarded bonuses for 1999 and 2000. The Compensation
Committee considered a number of factors in awarding bonuses, including the
financial performance of the Company and the achievement by the Company of
short-term and long-term financial and strategic goals.
12
STOCK OPTIONS AND RESTRICTED STOCK. In addition to salary and bonus,
the Company has adopted the 1997 Stock Option Plan. Under the 1997 Stock Option
Plan, officers and key employees are eligible to receive awards of stock
options, stock appreciation rights and restricted stock. The number of stock
options and/or shares of restricted stock granted to each executive officer is
determined by a competitive compensation analysis and each individual's salary
and responsibility.
Harold R. Tate
Robert Anderson
James Clayburn LaForce, Jr.
Merlin J. Norton
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of the Company's Chairman and Chief
Executive Officer and three non-employee directors. Currently, the members of
the Compensation Committee are Harold R. Tate, Robert Anderson, James Clayburn
LaForce, Jr. and Merlin J. Norton. None of the executive officers of the Company
serve as a director of another corporation in a case where an executive Officer
of such other corporation serves as a Director of the Company.
CORPORATE PERFORMANCE
The following graph compares the performance (total return on
investment as measured by the change in the year-end stock price plus reinvested
dividends) of $100 invested in the Common Stock of the Company with that of $100
invested in the U.S. Nasdaq Index and $100 invested in the Nasdaq Transportation
Index for the period from November 24, 1997 to December 31, 2000. Index data was
furnished by Standard & Poor's Compustat Services, Inc. Prior to the Company's
initial public offering in November 1997, there was no established trading
market for the Company's Common Stock. Accordingly, no performance comparison is
presented for any period prior to November 25, 1997.
[Graphic Material Omitted: The Company's Shareholder Return Performance Graph
is Described in Tabular Data Form Below]
Base period Indexed Returns Years Ending
Company/Index 25 Nov 97 Dec 97 Dec 98 Dec 99 Dec 00
- ------------- ----------- ------ ------ ------ ------
Motor Cargo Industries, Inc 100 100.00 66.67 38.54 56.25
Nasdaq US 100 99.07 139.71 259.66 156.26
Nasdaq Transportation 100 101.45 91.21 88.16 80.13
13
COMPENSATION OF DIRECTORS
The Company pays each non-employee director $2,500 for each meeting of
the Board of Directors and $500 for each telephonic meeting of the Board of
Directors attended. The Company also reimburses such directors for their
expenses incurred in connection with their activities as directors. On November
24, 1997, in connection with the Company's initial public offering, a
non-qualified option to purchase 10,000 shares of Common Stock at the initial
public offering price of $12.00 per share was granted to each of Robert Anderson
and James Clayburn LaForce, Jr. These options vest over a four-year period, with
25% of these options vesting on each of the first, second, third and fourth
anniversaries of the date of grant.
On January 26, 1999, the Board of Directors of the Company adopted the
1999 Stock Option Plan for Non-Employee Directors (the "1999 Stock Option
Plan"). The purpose of the plan is to encourage the highest level of performance
from those members of the Board of Directors who are not employees of the
Company by providing them with a proprietary interest in the financial success
of the Company. Pursuant to the 1999 Stock Option Plan, on January 26, 1999, the
Board of Directors of the Company approved the cancellation of the existing
stock options held by Messrs. Anderson and LaForce and granted new options to
Mr. Anderson and Mr. LaForce. An option to purchase 17,500 shares of Common
Stock at $7.50 per share was granted to each of Mr. Anderson and Mr. LaForce.
The Board of Directors granted an option to Merlin J. Norton to purchase 17,500
shares of Common Stock at $8.19 per share upon his appointment to the Board of
Directors on April 9, 2001. All outstanding options under the 1999 Stock Option
Plan vest over a four-year period, with 25% of these options vesting on each of
the first, second, third and fourth anniversaries of the date of grant.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year and Form 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year, and any written representations furnished to the Company, the
Company believes that for the year ended December 31, 2000, all persons subject
to the reporting requirements of Section 16(a) of the Exchange Act filed the
required reports on a timely basis.
AUDIT COMMITTEE REPORT
The members of the Audit Committee are Robert Anderson, James Clayburn
LaForce, Jr. and Merlin J. Norton, each of whom is independent as defined in
Rule 4200(a)(15) of the National Association of Securities Dealers' listing
standards. The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is included as Appendix A to this Proxy Statement.
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended December 31, 2000 with
management. The Audit Committee has also discussed with Grant Thornton LLP, the
Company's independent auditors, the matters required to be discussed by SAS 61.
The Audit Committee has also received the written disclosures and the letter
from Grant Thornton required by Independence Standards Board
14
Standard No. 1 and has discussed with Grant Thornton the matter of Grant
Thornton's independence.
Based on the review and discussions described in the preceding
paragraph, the Audit Committee recommended to the Board of Directors that the
Company's audited financial statements for the fiscal year ended December 31,
2000 be included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 for filing with the Securities and Exchange Commission.
RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS
The Board of Directors recommends that the Shareholders ratify the
selection of Grant Thornton LLP, certified public accountants, as independent
auditors to audit the accounts of the Company and its subsidiaries for 2001.
Grant Thornton LLP are currently independent auditors for the Company.
AUDIT FEES
The aggregate fees billed for professional services rendered for the
audit of the Company's annual financial statements for the fiscal year ended
December 31, 2000 and the reviews of the financial statements included in the
Company's Forms 10-Q for such year were $80,379.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Grant Thornton LLP did not render professional services to the Company
relating to financial information systems design and implementation during the
fiscal year ended December 31, 2000.
ALL OTHER FEES
The aggregate fees billed for services rendered by Grant Thornton LLP
for services rendered, other than audit services and financial information
systems design and implementation services, for the fiscal year ended December
31, 2000 were $50,135.
The Audit Committee has considered whether the provision of the other
services described in the preceding paragraphs is compatible with maintaining
Grant Thornton's independence.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K to Shareholders is
being furnished to Shareholders concurrently herewith. Exhibits to the Annual
Report on Form 10-K will be furnished to Shareholders upon payment of
photocopying charges.
15
PROPOSALS BY SHAREHOLDERS
Proposals that Shareholders wish to include in the Company's Proxy
Statement and form of proxy for presentation at the Company's 2001 Annual
Meeting of Shareholders must be received by the Company at 845 West Center
Street, North Salt Lake, Utah 84054, Attention Marvin L. Friedland, Secretary,
no later than January 1, 2002. Any such proposal must be in accordance with the
rules and regulations of the Securities and Exchange Commission. With respect to
proposals submitted by a Shareholder other than for inclusion in the Company's
2002 Proxy Statement and related form of proxy, timely notice of any such
proposal must be received by the Company in accordance with the By-Laws of the
Company no later than March 16, 2002. Any proxies solicited by the Board of
Directors for the 2002 Annual Meeting may confer discretionary authority to vote
on any proposals notice of which is not timely received.
By Order of the Board of Directors
Marvin L. Friedland
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
April 30, 2001
16
APPENDIX A
MOTOR CARGO INDUSTRIES
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the board of directors to be known as the audit
committee. The audit committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, could interfere
with their exercise of independent judgment as a committee member.
STATEMENT OF POLICY
The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting reporting practices of the
corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors, the internal auditors, and the financial management of the
corporation.
RESPONSIBILITIES
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the corporation are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
1. Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and its
divisions and subsidiaries.
2. Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current
year and the audit procedures to be utilized, and at the conclusion
thereof review such audit, including any comments or recommendations of
the independent auditors.
3. Review with the independent auditors, the company's internal auditor,
and financial and accounting personnel, the adequacy and effectiveness
of the accounting and financial controls of the corporation, and elicit
any recommendations for the improvement of such internal control
procedures or particular areas where new or more detailed controls or
procedures are desirable. Particular emphasis should be given to the
adequacy of such internal controls to expose any payments,
transactions, or procedures that might be
A-1
deemed illegal or otherwise improper. Further, the committee
periodically should review company policy statements to determine their
adherence to the code of conduct.
4. Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the
shareholders. Any changes in accounting principles should be reviewed.
5. Provide sufficient opportunity for the independent auditors to meet
with the members of the audit committee without members of management
present. Among the items to be discussed in these meetings are the
independent auditors' evaluation of the corporation's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of the audit.
6. Review with financial management and the independent accountants the
financial statements prior to the filing of the form 10Q or to the
release of earnings.
7. Submit the minutes of all meetings of the audit committee to, or
discuss the matters discussed at each committee meeting with, the board
of directors.
8. Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if,
in its judgment, that is appropriate.
A-2
PROXY
MOTOR CARGO INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harold R. Tate and Marvin L. Friedland,
and each of them, as Proxies, with full power of substitution, and hereby
authorizes them to represent and vote, as designated below, all shares of Common
Stock of the Company held of record by the undersigned on April 19, 2001 at the
Annual Meeting of Shareholders to be held at the Little America Hotel, 500 South
Main Street, Salt Lake City, Utah on June 6, 2001 at 10:00 a.m. (local time), or
any adjournment thereof.
1. Proposal to elect six Directors:
FOR all nominees listed below WITHHOLD authority to vote
(except as indicated to the contrary below) for all nominees listed below
--- ---
INSTRUCTION: To withhold authority to vote for any individual nominee, cross a
line through the nominee's name in the list below.
Nominees: Harold R. Tate - Louis V. Holdener - Marvin L. Friedland - Robert
Anderson - James Clayburn LaForce, Jr. - Merlin J. Norton
2. Proposal to ratify the selection of FOR AGAINST ABSTAIN
Grant Thornton LLP as the independent
auditors to audit the Consolidated ____ ____ ____
Financial Statements of the Company
and its subsidiaries for the year
ending December 31, 2001.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
Please sign and date this Proxy where shown below and return it promptly.
No postage is required if this proxy is returned in the enclosed envelope and
mailed in the United States.
Signed: ____________________________ Signed: ___________________________
Date: _____________, 2001
NOTE: (Please sign above exactly as the shares are registered. When shares are
held by joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.)