SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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 (S) 240.14a-11(c) or (S) 240.14a-12
AMERICAN FREIGHTWAYS CORPORATION
(Name of Registrant as Specified in Its Charter)
AMERICAN FREIGHTWAYS CORPORATION
(Name of Person(s) Filing Proxy Statement)
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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[LOGO OF AMERICAN FREIGHTWAYS APPEARS HERE]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 27, 1997
TO THE SHAREHOLDERS OF AMERICAN FREIGHTWAYS CORPORATION:
The Company cordially invites you to attend the 1997 Annual Meeting of
Shareholders of American Freightways Corporation, an Arkansas Corporation (the
"Company"), to be held at 2200 Forward Drive, Harrison, Arkansas on Thursday,
March 27, 1997 at 6:00 p.m., local time, for the following purposes:
1. To elect three (3) directors to the class whose term will expire in
2000.
2. To consider and act upon such other business as may properly come
before the meeting and any adjournment thereof.
Only shareholders of record at the close of business on February 13, 1997
will be entitled to vote at the 1997 Annual Meeting and any adjournment thereof.
The Company's Proxy Statement is submitted herewith. The annual report for
the year ended December 31, 1996 is being mailed to shareholders together with
the mailing of this Notice and Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
/s/F. S. Garrison
--------------------------------------------------
F.S. (Sheridan) Garrison,
Chairman of the Board of Directors,
President and Chief Executive Officer
Harrison, Arkansas
March 7, 1997
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED FORM OF PROXY
SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER
THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY DOES
NOT AFFECT YOUR RIGHT TO REVOKE IT LATER OR TO VOTE YOUR SHARES IN PERSON IN
THE EVENT YOU SHOULD ATTEND THE MEETING.
[LOGO OF AMERICAN FREIGHTWAYS APPEARS HERE]
AMERICAN FREIGHTWAYS CORPORATION
2200 FORWARD DRIVE
HARRISON, ARKANSAS 72601
____________
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
MARCH 27, 1997 AND ADJOURNMENTS THEREOF
____________
SOLICITATION AND REVOCATION OF PROXY
The enclosed proxy, for use only at the 1997 Annual Meeting of Shareholders
to be held at 2200 Forward Drive, Harrison, Arkansas on Thursday, March 27, 1997
at 6:00 p.m., local time, and adjournment thereof, is solicited on behalf of the
Board of Directors of American Freightways Corporation (the "Company"). Such
solicitation is being made primarily by mail, but may also be made in person or
by telephone or telegraph by officers, directors, and regular employees of the
Company. All expenses incurred in the solicitation will be borne by the Company.
Any shareholder executing a proxy retains the right to revoke it at any
time prior to exercise at the 1997 Annual Meeting. A proxy may be revoked at any
time before it is used, upon written notice to Tom Garrison, Secretary/Treasurer
of the Company, by executing a new proxy or by attending the meeting and voting
in person. If not revoked, all properly executed proxies received will be voted
at the meeting in accordance with the terms of the proxy.
The Company knows of no matter to be brought before the meeting other than
that referred to in the accompanying notice of annual meeting. If, however, any
other matters properly come before the meeting, the proxy solicited hereby
confers discretionary authority to the proxies to vote in their sole discretion
with respect to such matters, as well as other matters incident to the conduct
of the meeting.
This proxy material is first being mailed to shareholders on March 7, 1997.
OUTSTANDING STOCK AND VOTING RIGHTS
The outstanding shares of the Company as of February 13, 1997, totaled
31,260,496 shares of common stock, all of one class. At the meeting, each
shareholder will be entitled to one vote, in person or by proxy, for each share
of stock owned of record at the close of business on February 13, 1997. Votes
will be tabulated by inspectors of election appointed by the Company's Board of
Directors. The stock transfer books of the Company will not be closed.
The enclosed form of proxy provides a method for shareholders to withhold
authority to vote for any one or more of the nominees for the Board of Directors
while still granting authority to the proxy to vote for the remaining nominees.
The names of all nominees are listed on the proxy card. If you wish to grant the
proxy authority to vote for all nominees, check the box marked "FOR". If you
wish to withhold authority to vote for all nominees, check the box marked
"WITHHOLD". If you wish to withhold authority to vote for any individual
nominee, mark the "FOR ALL EXCEPT" box and strike a line through that nominee's
name. By checking the box marked "WITHHOLD" your shares will neither be voted
for nor against any director but will be counted for quorum purposes. Broker
non-votes are not relevant to the determination of whether the proposal to elect
directors has been approved but will be counted for quorum purposes.
Shareholders are not entitled to cumulative voting with respect to the
election of directors.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the name, age, term of office as director of
the Company, and ownership of the Company's Common Stock with respect to each
member of the Board of Directors, the executive officers of the Company named
under the caption "Executive Compensation" and the directors and officers of the
Company as a group.
YEAR FIRST
ELECTED SHARES PERCENTAGE
Name AGE DIRECTOR OWNED (2)
- --------------------------------------------------------------------------------------------------
F.S. (Sheridan) Garrison 62 1982 10,602,308 33.92(1)
Tom Garrison (3) 36 1982 258,204 0.83(1)
Will Garrison 33 1995 83,968 0.27(1)
Frank Conner (3) 47 1989 * *
Ben A. Garrison 65 1987 1,505,000 4.81(1)
T.J. Jones (3) 60 1989 * *
Ken Reeves 49 1989 * *
Tony R. Balisle (4) 58 1995 * *
All directors and executive officers - - 12,857,570 41.13(1)
(including 15 persons)
- ------------------------
(1) See "Principal Shareholders."
(2) Percentage based upon 31,260,496 shares of the Company's Common Stock
outstanding as of February 13, 1997.
(3) Tom Garrison, Frank Conner and T.J. Jones are nominees for the Board of
Directors at the 1997 Annual Meeting.
(4) Mr. Balisle resigned from the Company effective August 1, 1996.
* Denotes ownership of less than 1% of the total outstanding shares of common
stock.
2
ELECTION OF DIRECTORS
GENERAL
The Board of Directors presently consists of nine members divided into
three classes, with three directors in each class serving three-year terms (and,
in each case, until their respective successors are duly elected and qualified).
The terms of the directors in Class I will expire at the 1999 Annual Meeting,
the terms of the directors in Class II will expire at the 1997 Annual Meeting
and the terms of the directors in Class III will expire at the 1998 Annual
Meeting. Messrs. Tom Garrison, Frank Conner and T.J. Jones, currently members of
the class whose term will expire at the 1997 Annual Meeting, are nominees for
election at the 1997 Annual Meeting for terms ending in 2000.
A majority of the votes of the Common Stock cast at the 1997 Annual Meeting
(or any adjournments thereof) is required to elect directors. Each Nominee has
consented to being named in this Proxy Statement and to serve if elected. If a
Nominee should for any reason become unavailable for election, proxies may be
voted with discretionary authority by the proxy holder for a substitute
designated by the Board.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF EACH
NOMINEE. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS SHAREHOLDERS
SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
Mr. Tony R. Balisle, formerly Executive Vice President-Operations of the
Company and a member of the class whose term will expire in 1999, resigned,
effective August 1, 1996, as an officer and director of the Company. The Board
of Directors is currently evaluating candidates to fill vacancies on the Board.
Certain information for each nominee and each director whose term expires
in 1998 and 1999 is set forth below.
NOMINEES FOR ELECTION AS CLASS II DIRECTORS - TERMS ENDING IN 2000
Tom Garrison joined American Freightways in 1982 and serves the Company as
Secretary-Treasurer and Vice President.
T.J. Jones has served on the Board of Directors since March 1989. Mr. Jones
helped organize the Company in 1982 and previously served as the Company's
Executive Vice President-Operations until retirement in 1994.
Frank Conner has served on the Board of Directors since 1989. In November,
1995 Mr. Conner was elected to serve as the Executive Vice President-Accounting
and Finance, Chief Financial Officer, of the Company. Mr. Conner joined American
Freightways in 1994 as Vice President-Special Projects. He previously served as
Executive Vice President/General Manager of McKesson Service Merchandising in
Harrison, Arkansas.
CLASS III DIRECTORS - TERMS ENDING IN 1998
F.S. (Sheridan) Garrison, the founder of American Freightways, has been the
President, Chief Executive Officer and Chairman of the Board of Directors of the
Company since its inception in 1982.
Ken Reeves, a Director since March, 1989, is an attorney-at-law in private
practice since 1973 in Harrison, Arkansas.
The third position of this class is currently vacant.
3
CLASS I DIRECTORS - TERMS ENDING IN 1999
Ben A. Garrison helped organize the Company in 1982 and until his
retirement in 1994, served as Senior Vice President of the Company.
Will Garrison is a Vice President of the Company. He has served the Company
as Assistant Secretary-Treasurer and as Vice President since 1986.
The third position of this class is currently vacant due to the resignation
of Mr. Tony R. Balisle on August 1, 1996.
Mr. Ben A. Garrison and Mr. F.S. Garrison are brothers. Messrs. Tom and
Will Garrison are sons of Mr. F.S. Garrison. Except for the foregoing, no family
relationships exist among any of the persons named above.
COMMITTEES
The Company presently does not have a standing nominating committee. The
Board of Directors nominates persons for director. The Board will consider
suggestions by shareholders for names of nominees as Class III Directors of the
Board of Directors for the 1998 Annual Meeting, provided that such suggestions
are made in writing and delivered to Mr. Tom Garrison, Secretary/Treasurer of
the Company, on or before October 10, 1997.
The Company has a standing Compensation Committee composed of Mr. T.J.
Jones, Mr. Ken Reeves and Mr. F.S. Garrison. The Compensation Committee is
charged with, among other things, the supervision and administration of the
Company's employee benefit plans and the review and approval of officers'
salaries as well as review of the general wage policy of the Company.
The Company has an Audit Committee which is presently composed of Mr. Ken
Reeves and Mr. T.J. Jones. The Audit Committee recommends candidates to serve as
the Company's auditors, reviews the reports of the Company's auditors and has
the authority to investigate the financial and business affairs of the Company.
During the past fiscal year, the Board of Directors met on five occasions,
the Compensation Committee met on three occasions and the Audit Committee met on
two occasions. Each Director attended at least 75% of the total of such meetings
of the Board and committees of the Board on which such Director served.
4
PRINCIPAL SHAREHOLDERS
As of February 13, 1997, the only shareholders known by the Company to own,
directly or indirectly, more than 5% of the Company's Common Stock, the only
class of the Company's capital stock presently outstanding, are reflected in the
following table:
NUMBER OF SHARES PERCENT OF
BENEFICALLY OUTSTANDING
NAME AND ADDRESS OWNED SHARES (2)
------------------------------------------------------------------------
F.S. Garrison (1) 10,602,308 33.92%
FMR Corporation (3) 1,630,200 5.21%
Ben A. Garrison (1) 1,505,000 4.81%
Tom Garrison (1) 258,204 0.83%
Will Garrison (1) 83,968 0.27%
- -------------------------
(1) The address of this shareholder is 2200 Forward Drive, Harrison, Arkansas,
72601. Amounts shown include shares held under trust or otherwise by or
for the benefit of certain immediate family members.
(2) Percentage based upon 31,260,496 shares of the Company's Common Stock
outstanding as of February 13, 1997.
(3) Includes shares held for the benefit of certain affiliates of FMR
Corporation as reported in a Schedule 13G dated as of February 14, 1997.
The address of FMR Corporation is 82 Devonshire Street, Boston,
Massachusetts 02109.
5
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows all of the cash compensation paid or to be paid
by the Company, as well as certain other compensation paid, to the Chief
Executive Officer and the five highest paid executive officers of the Company
for such period in all capacities in which they served:
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------
| | | Annual | Long-Term | All Other |
| | | Compensation| Compensation |Compensation|
| | | (c) | | |
| | |-------------|---------------|------------|
| | | Salary | Awards | |
| | | (a) | Options/SARs | (b) |
| Name and Position | Year | ($) | (#) | ($) |
|-------------------------------------|---------|-------------|---------------|------------|
| | | | | |
| F.S. Garrison | 1996 | 257,500 | 0/0 | 8,813 |
| President and CEO | 1995 | 257,500 | 50,000/0 | 8,691 |
| | 1994 | 250,000 | 30,000/0 | 7,865 |
| | | | | |
| Tom Garrison | 1996 | 125,000 | 10,000/0 | 4,219 |
| Vice President | 1995 | 125,000 | 4,000/0 | 5,000 |
| | 1994 | 90,000 | 4,000/0 | 3,394 |
| | | | | |
| Will Garrison | 1996 | 125,000 | 10,000/0 | 3,750 |
| Vice President | 1995 | 125,000 | 4,000/0 | 5,000 |
| | 1994 | 90,000 | 4,000/0 | 3,394 |
| | | | | |
| Frank Conner | 1996 | 185,577 | 10,000/0 | 7,014 |
| Executive Vice President | 1995 | 94,167 | 2,500/0 | 1,000 |
| Accounting & Finance | 1994 | 37,500 | 2,000/0 | 0 |
| | | | | |
| Carl Thomas | 1996 | 103,000 | 4,200/0 | 4,120 |
| Vice President | 1995 | 101,250 | 3,000/0 | 4,050 |
| Safety & Security | 1994 | 91,250 | 3,000/0 | 3,443 |
| | | | | |
| Tony R. Balisle* | 1996 | 127,083 | 8,000/0 | 5,487 |
| | 1995 | 175,000 | 5,000/0 | 7,000 |
| | 1994 | 109,783 | 3,000/0 | 4,429 |
| | | | | |
- --------------------------------------------------------------------------------------------
___________________________
* Mr.Balisle resigned from the Company effective August 1, 1996.
(a) Amounts shown include cash and non-cash compensation earned and received by
executive officers as well as amounts earned but deferred at the election
of those officers.
(b) Amounts consist solely of Company contributions to executives' accounts
under the Company's defined contribution plan.
(c) Does not include the value of perquisites and other benefits where the
aggregate value of such compensation, if any, does not exceed the lesser of
$50,000 or 10% of the total amount of annual salary and bonus for any named
executive.
6
DIRECTOR COMPENSATION
Non-employee directors are paid an annual retainer for attending all
regular and special meetings of the Board of Directors. The Company reimburses
all directors for their travel expenses in attending meetings. In 1993, the
Company adopted a non-statutory stock option plan for non-employee directors.
No more than 50,000 shares may be issued under this plan. This plan provides
for the automatic granting of options to purchase 2,000 shares of Company's
Common Stock at the fair market value of such common stock on February 1 of each
year, which options vest and become exercisable at 20% per year for 5 years and
may not be exercised later than 10 years after the date of grant. During 1996,
the Company granted to Mr. Ken Reeves, Mr. T. J. Jones and Mr. Ben A. Garrison
options to acquire 2,000 shares of the Company's Common Stock each at a purchase
price of $10.50 per share. Except as indicated above, American Freightways'
officers are not compensated for their services as directors.
OPTIONS/STOCK APPRECIATION RIGHT ("SAR") GRANTS
The following table sets forth information with respect to the named
executives concerning options granted in the last fiscal year and their
potential realizable value:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------------------------------------------------------
| | | POTENTIAL REALIZABLE |
| | | VALUE AT ASSUMED |
| | | ANNUAL RATES OF STOCK |
| | |PRICE APPRECIATION FOR |
| | INDIVIDUAL GRANTS | OPTION TERM (c) |
|-----------------------------------------------------------------------------------------------------------------------------|
| | | | | | | |
| | NUMBER OF | % OF TOTAL | | | | |
| | SECURITIES | OPTIONS/ | | | | |
| | UNDERLYING | SARS | | | | |
| | OPTIONS | GRANTED TO | EXERCISE | | | |
| | SARs | EMPLOYEES | OR BASE | | | |
| | GRANTED | IN FISCAL | PRICE | EXPIRATION | 5% | 10% |
| NAME | (#) | YR (%) | ($/Sh) (b) | DATE | ($) | ($) |
|-----------------------------------------------------------------------------------------------------------------------------|
|F.S. Garrison | 0/0 | 0/0 | - | - | - | - |
| | | | | | | |
|Tom Garrison (a) | 8,000/0 | 2.6403/0 | 10.3125 | 1/02/06 | 51,884 | 131,484 |
| | | | | | | |
| | 2,000/0 | 0.6601/0 | 10.3125 | 9/13/06 | 12,971 | 32,871 |
| | | | | | | |
|Will Garrison (a) | 8,000/0 | 2.6403/0 | 10.3125 | 1/02/06 | 51,884 | 131,484 |
| | | | | | | |
| | 2,000/0 | 0.6601/0 | 10.3125 | 9/13/06 | 12,971 | 32,871 |
| | | | | | | |
|Frank Conner (a) | 8,000/0 | 2.6403/0 | 10.3125 | 1/02/06 | 51,884 | 131,484 |
| | | | | | | |
| | 2,000/0 | 0.6601/0 | 10.3125 | 9/13/06 | 12,971 | 32,871 |
| | | | | | | |
|Carl Thomas (a) | 4,200/0 | 1.3861/0 | 10.3125 | 1/02/06 | 27,239 | 69,029 |
| | | | | | | |
|Tony R. Balisle*(a) | 8,000/0 | 2.6403/0 | 10.3125 | 1/02/06 | 51,884 | 131,484 |
- -------------------------------------------------------------------------------------------------------------------------------
- ------------------------
* Mr. Balisle resigned from the Company effective August 1, 1996.
7
(a) 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 vesting and becoming
exercisable on each successive anniversary date with full vesting occurring
on the fifth anniversary date. Unvested portions of options are forfeited
upon termination of employment. Under the terms of the Stock Option Plans,
the Board of Directors retains discretion subject to plan limits to modify
terms of outstanding options. The options were granted for a term of 10
years subject to earlier termination in certain events related to
termination of employment. The options qualify as "incentive stock
options" under the Internal Revenue Code.
(b) The exercise price reflects the fair market value of the underlying shares
on the grant date. The exercise price and tax withholding obligation
related to exercise may be paid by delivery or by offset of shares, subject
to certain conditions and limitations.
(c) As required by rules of the Securities and Exchange Commission, potential
values stated are based on the prescribed assumption that the Company's
Common Stock will appreciate in value from the date of grant to the end of
the option term (ten years from the date of grant) at annualized rates of
5% and 10% (total appreciation of 63% and 159%), respectively, and
therefore are not intended to forecast possible future appreciation, if
any, in the price of the Company's Common Stock.
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executives concerning exercise of options during the last fiscal year and
unexercised options and SARs held as of the end of the fiscal year:
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
- ----------------------------------------------------------------------------------------------------------------------------------
| | | | Number of Securities | |
| | | | Underlying | Value of Unexercised |
| | | | Unexercised | In-the Money |
| | Shares | | Options/SARs at FY- | Options/SARs at FY-En |
| | Acquired on | Value Realized | End Exercisable/ | Exercisable/ |
| Name | Exercise (#) | (a) ($) | Unexercisable (b) (#) | Unexercisable (c) ($)|
- ----------------------------------------------------------------------------------------------------------------------------------
| | | | | |
|F.S. Garrison | 0 | 0 | 322,000/258,000 | 0/0 |
| | | | | |
|Tom Garrison | 6,400 | 46,175 | 12,200/21,600 | 18,025/16,525 |
| | | | | |
|Will Garrison | 2,000 | 13,500 | 21,000/21,600 | 54,075/16,525 |
| | | | | |
|Frank Conner | 3,600 | 17,850 | 4,500/14,400 | 7,525/9,525 |
| | | | | |
|Carl Thomas | 9,600 | 67,200 | 24,000/14,400 | 74,550/11,813 |
| | | | | |
|Tony R. Balisle* | 4,800 | 25,950 | 5,200/19,800 | 0/14,900 |
- ----------------------------------------------------------------------------------------------------------------------------------
- ---------------
* Mr. Balisle resigned from the Company effective August 1, 1996.
(a) Market price of underlying securities at exercise date, minus exercise or
base price of "in the money" options.
(b) Unexercised options include certain options granted under the Company's
1989 Stock Option Plan which were due to expire in May, 1997 and February,
1998. The expiration dates of these options were extended to May, 2001 and
February, 2002, respectively. No other terms (including exercise price,
vesting, or the number of shares) of these options were modified.
(c) Market value of the Company's Common Stock at December 31, 1996 was $11.125
per share and was used to calculate value.
8
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors during 1996
consisted of Messrs. T. J. Jones (Chairman), F. S. Garrison and Ken Reeves. The
Compensation Committee is responsible for recommending to the Board of Directors
compensation levels for the Company's Executive Officers and the policies that
govern the Company's compensation and benefit plans.
The Company's compensation programs consist of base compensation, stock
options and contributions to its profit sharing plan. The programs are intended
to enable the Company to attract, retain, reward and motivate management
required to achieve the Company's aggressive Corporate objectives.
In reviewing the total compensation of the Company's Executive Officers,
the Compensation Committee compares American Freightways' corporate performance
with its industry peer group included in the performance graph (see page 11) and
a broader more generalized group of similarly sized and geographically located
companies. The Compensation Committee then evaluates the current Company
performance (in particular revenue growth, operating ratio and net margin), its
financial position (in particular debt to equity, current ratio and asset
utilization) and its long range goals against contributions made by key
employees in current performance and contribution toward achieving future
objectives. In dealing with the above factors the Compensation Committee must
use some subjectivity in assigning weights to each factor.
In evaluating compensation levels for 1997 the Compensation Committee
considered a number of factors relating to the Company's results for 1996. The
Company and LTL carriers in general faced a challenging environment in 1996. The
LTL carriers experienced a continuation of the excess capacity created within
the industry during 1995, which led to continued price discounting. Increased
fuel prices also restricted margins. During 1996, the Company's management
implemented revisions in operations in order to improve customer service and
operating efficiency. Management expects these steps to enhance the Company's
position for long-term future growth.
The Committee felt that a number of these factors were outside the
Company's control. The Committee also felt that the positioning of the Company
to meet the Company's long term goals and the growth in the Company's revenues
in 1996 reflected favorably on the performance of the Company's management.
The annual compensation programs of the Company are weighted heavily
towards a base salary. In setting executive base salaries, subject to approval
of the Board of Directors, the Committee considers many factors including
corporate performance in meeting both long and short term objectives, current
market conditions and relative size of the Company. The Compensation Committee
places the most weight (over 60%) on corporate performance with other
considerations given between 15-20% of the weight. Among other things, the
Compensation Committee evaluates the individual's experience, responsibilities,
management and leadership abilities and job performance and the necessity of
qualifying compensation under Section 162(m) of the Internal Revenue Code (which
is not currently relevant).
The Company currently has no long term incentive program other than stock
option grants. The Compensation Committee is of the view that options more
closely align the interest of the Company's executive officers with the interest
of its shareholders. The Compensation Committee believes in the longer term the
value of the stock will be most directly related to revenue growth and earnings
per share.
The base salary for Mr. F. S. (Sheridan) Garrison, the Company's CEO, is
determined by evaluating the same factors generally considered for the Company's
other executives. The Committee made special note of Mr. Garrison's leadership
in a very challenging environment during 1996, especially the positioning of the
Company for the long term. The Committee was of the view that in comparison to
other companies of similar size and considering his contributions in a very
challenging environment the Chairman's salary should be increased. However, at
the insistence of the Chairman, the Committee did not recommend an increase to
the Board.
9
The stock option plan for the Chairman is a non-discretionary plan with the
number of options granted tied to the annual growth rate of earnings per share.
The formula is set in the plan that was approved by the shareholders in the 1993
annual meeting. It cannot be adjusted or waived by the Committee or the Board
without amending the plan and obtaining shareholder approval.
The Committee believes the compensation package of base salary and stock
options has fairly compensated the Company's executives in the past. The
compensation package is in the mid to low range in comparison to both its
industry peers represented in the performance graph (see page 11) and the
generalized group of companies. The Committee will continue to review the
programs to ensure that the combination of base salary and incentives are fair
to the Company and the employees and that the compensation package is related to
overall performance of both the employees and the Company in relation to long
term objectives of the Company.
THE COMPENSATION COMMITTEE
T.J. Jones
F.S. Garrison
Ken Reeves
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
F.S. Garrison, who also serves as CEO of the Company, is on the
Compensation Committee, but does not participate in setting or reviewing the CEO
compensation package.
Other than stated above, there exists no interlocking relationships on the
Compensation Committee.
10
COMPANY PERFORMANCE
The following graph shows a five year comparison of cumulative total
returns for American Freightways, the S&P 500 index and an index of peer
companies selected by the Company:
[performance graph appears here]
1991 1992 1993 1994 1995 1996
----------------------------------------------------
American Freightways $100.00 $132.86 $225.71 $227.14 $118.57 $127.14
S&P 500 $100.00 $107.62 $118.46 $120.03 $165.13 $203.05
Peer Group (2) $100.00 $112.04 $120.12 $115.12 $ 98.87 $ 76.31
Assumes $100 invested on December 31, 1991
(1) Total return assumes reinvestment of dividends, if applicable.
(2) Peer group total return based on market capitalization.
Peer group comprised of seven publicly-traded, less-than-truckload
carriers.
The total cumulative return on investments (change in the year-end stock
price plus applicable reinvested dividends) for each of the periods for the
Company, the peer group and the S&P 500 is based on the stock price or market
index at the end of fiscal year 1991.
The above graph compares the Company with that of the S&P 500 and a group
of peer companies with the investment weighted on market capitalization.
Companies in the peer group are as follows: Arkansas Best Corporation, Arnold
Industries, Inc., Caliber Systems, CNF Transportation, Inc., Old Dominion
Freight Line, Inc., US Freightways Corporation and Yellow Corporation.
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance.
CERTAIN TRANSACTIONS
Any transactions between the Company and its officers, directors, principal
shareholders other affiliates will be approved by a majority vote of the
Company's disinterested directors and will continue to be on terms no less
favorable to the Company than could be obtained from unaffiliated third parties.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the Securities Exchange Act of 1934, the Company's executive
officers, directors and those persons who own more than ten percent of the
Company's Common Stock are required to file reports of ownership and subsequent
changes of ownership with the Securities and Exchange Commission. Specific due
dates have been established for these reports, and the Company is required to
disclose in this proxy statement any failure to file by these dates. Based upon
a review of the copies of such reports filed with the Commission and written
representations from the Company's directors and executive officers, the Company
believes that during the preceding year all filing requirements applicable to
executive officers and directors have been met.
AUDITORS TO BE PRESENT
A representative of Ernst & Young LLP, the Company's auditors for fiscal
1996, is expected to be in attendance at the 1997 Annual Meeting and will be
afforded the opportunity to make a statement. The representative will also be
available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be presented at the 1998 Annual Meeting should
be directed to Mr. Tom Garrison, Secretary/Treasurer of the Company, and must be
received by the Company on or before October 10, 1997. Any such proposal must
comply with the requirements of Rule 14a-8 of the Securities Exchange Act of
1934.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. Solicitations
may be made personally, by written communications, telephone or telegraph, and
may be made by directors and regular employees of the Company.
ADDITIONAL INFORMATION AVAILABLE
Upon written request, the Company will furnish, without charge, a copy of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996, as filed with the United States Securities and Exchange Commission,
including the financial statements and schedules thereto. The written request
should be sent to Mr. Frank Conner, Chief Financial Officer, American
Freightways Corporation, P.O. Box 840, Harrison, Arkansas 72602-0840.
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OTHER MATTERS
So far as now known, there is no business other than that described above
to be presented to the shareholders for action at the meeting. Should other
business come before the meeting, votes may be cast pursuant to proxies in
respect to any such business in the best judgment of the persons acting under
the proxies.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE URGED TO SIGN,
DATE AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
/s/ F. S. GARRISON
--------------------------------------------
F.S. (Sheridan) Garrison,
Chairman of the Board of Directors
President and Chief Executive Officer
March 7, 1997
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(FRONT)
[X] PLEASE MARK VOTES
AS IN THE EXAMPLE
AMERICAN FREIGHTWAYS CORPORATION
RECORD DATE SHARES:
Please be sure to sign and Date_______________
date this Proxy.
- ----------------------------- -----------------------------
Shareholder sign here Co-owner sign here
1. TO ELECT THREE DIRECTORS TO THE TERMS SET FORTH BELOW:
Tom Garrison WITH- FOR ALL
Frank Conner FOR HOLD EXCEPT
T. J. Jones [_] [_] [_]
INSTRUCTION: To withhold authority to vote for any individual nominee,
mark the "FOR ALL EXCEPT" box and strike a line through that nominee's
name in the list above.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Mark box at right if an address change or comment has been noted on the reverse
side of this card.[_]
(BACK)
AMERICAN FREIGHTWAYS CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREHOLDERS, MARCH 27, 1997
The undersigned shareholder(s) of American Freightways Corporation (the
"Company") hereby appoint F.S. Garrison and Tom Garrison, and each or either of
them, the true and lawful agents and attorneys-in-fact for the undersigned, with
power of substitution, to attend the meeting and to vote the stock owned by or
registered in the name of the undersigned, as instructed on the reverse side,
at the 1997 Annual Meeting of Shareholders to be held at 2200 Forward Drive,
Harrison, Arkansas on Thursday, March 27,1997 at 6:00 p.m., local time, and at
any adjournments thereof, for the transaction of the business following on the
reverse side hereof.
The Proxy when properly executed will be voted in the manner directed herein by
the undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign exactly as name(s) appears on the reverse. If stock is in the name
of two or more persons, each should sign. Persons signing as attorney, executor,
administrator, trustee, guardian or other fiduciary, please give full title as
such. If a corporation, signature should be by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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