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:
__________________________________________________________________
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:
__________________________________________________________________
5) 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:_________________________________________________________
[LOGO OF AMERICAN FREIGHTWAYS APPEARS HERE]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1998
TO THE SHAREHOLDERS OF AMERICAN FREIGHTWAYS CORPORATION:
The Company cordially invites you to attend the 1998 Annual Meeting of
Shareholders of American Freightways Corporation (the "Company"), an Arkansas
Corporation, to be held at the Comfort Inn Convention Center, 1210 Hwy. 62-65
North, Harrison, Arkansas on Thursday, April 23, 1998 at 2:00 p.m., central
standard time, for the following purposes:
1. To elect three (3) directors to the class whose term will expire in
2001.
2. To consider and act upon such other business as may properly come before
the meeting and the adjournment thereof.
Only shareholders of record at the close of business on March 6, 1998 will
be entitled to vote at the 1998 Annual Meeting and the adjournment thereof.
The Company's Proxy Statement is submitted herewith. The 1997 annual report
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, President and CEO
Harrison, Arkansas
March 19, 1998
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
APRIL 23, 1998 AND ADJOURNMENT THEREOF
____________
SOLICITATION AND REVOCATION OF PROXY
The enclosed proxy, for use only at the 1998 Annual Meeting of
Shareholders to be held at the Comfort Inn Convention Center, 1210 Hwy. 62-65
North, Harrison, Arkansas on Thursday, April 23, 1998 at 2:00 p.m., central
standard 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
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 1998 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 on March 19, 1998 to
shareholders.
OUTSTANDING SHARES AND VOTING RIGHTS
The outstanding shares of the Company as of March 6, 1998, totaled
31,567,689 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 March 6, 1998. 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
Name Age Director Owned Percentage (2)
- ------------------------------------------------------------------------------------------------------------------------
F.S. (Sheridan) Garrison (3) 63 1982 10,280,308 32.6 (1)
Tom Garrison 38 1982 238,204 0.8 (1)
Will Garrison 34 1995 75,968 0.2 (1)
Frank Conner 48 1989 * *
Ben A. Garrison 66 1987 1,405,000 4.5 (1)
John Paul Hammerschmidt (4) 75 1997 * *
T.J. Jones 61 1989 * *
Ken Reeves (3) 50 1989 * *
Doyle Z. Williams (3) (4) 58 1997 * *
All directors and executive officers - - 12,039,021 38.1 (1)
(including 13 persons)
________________________
(1) See "Principal Shareholders."
(2) Percentage based upon 31,567,689 shares of the Company's common stock
outstanding as of March 6, 1998.
(3) F.S. (Sheridan) Garrison, Ken Reeves and Doyle Z. Williams are nominees for
the Board of Directors at the 1998 Annual Meeting.
(4) John Paul Hammerschmidt was appointed to the Board of Directors on May 20,
1997. Doyle Z. Williams was appointed to the Board of Directors on
November 1, 1997.
* 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 2000 Annual Meeting
and the terms of the directors in Class III will expire at the 1998 Annual
Meeting. Messrs. F.S. (Sheridan) Garrison, Ken Reeves and Doyle Z. Williams,
currently members of the class whose term will expire at the 1998 Annual
Meeting, are nominees for election at the 1998 Annual Meeting for terms ending
in 2001.
A majority of the votes of the common stock cast at the 1998 Annual
Meeting (or the adjournment 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.
Certain information for each nominee and each director is set forth
below.
NOMINEES FOR ELECTION AS CLASS III DIRECTORS - TERMS ENDING IN 2001
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, has been an attorney-at-law in
private practice since 1973 in Harrison, Arkansas.
Doyle Z. Williams, a Director since November 1997, has been the Dean of
the College of Business Administration at the University of Arkansas since 1993.
From 1978 to 1993, he was professor of accounting at the University of Southern
California where he served as the founding Dean of the School of Accounting from
1979 to 1987.
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 joined American Freightways in 1986 and serves the Company
as Assistant Secretary-Treasurer and Executive Vice President-Operations.
John Paul Hammerschmidt has served on the Board of Directors since May
1997. Mr. Hammerschmidt served 26 years as the U. S. Representative for the
Third District of Arkansas until his retirement in 1993. He was the ranking
minority member of the House Transportation Infrastructure Committee and the
House Veterans Affairs Committee. He served on various sub-committees and co-
authored the Intermodal Surface Transportation Efficiency Act (ISTEA). Mr.
Hammerschmidt also serves as a member of the Board of Directors of the following
companies: Dillard's Department Stores, Inc., Southwestern Energy Co., First
Federal Bancshares of Arkansas and the Metropolitan Washington Airport
Authority.
3
CLASS II DIRECTORS - TERMS ENDING IN 2000
Tom Garrison joined American Freightways in 1982 and serves the Company
as Secretary-Treasurer and Corporate 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.
Mr. Ben A. Garrison and Mr. F.S. (Sheridan) Garrison are brothers.
Messrs. Tom and Will Garrison are sons of Mr. F.S. (Sheridan) 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 I Directors of the
Board of Directors for the 1999 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 9, 1998.
The Company has a standing Compensation Committee composed of Mr. T.J.
Jones, Mr. Ken Reeves and Mr. John Paul Hammerschmidt. 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 the Company's executive 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, Mr. John Paul Hammerschmidt and Dr. Doyle Z. Williams. 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 three 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 March 6, 1998, 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
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OWNED SHARES (2)
--------------------------------------------------------------------------------------
F.S. (Sheridan) Garrison (1) 10,280,308 32.6 %
Orbis Investment Management Limited (3) 1,657,000 5.2 %
Ben A. Garrison (1) 1,405,000 4.5 %
Tom Garrison (1) 238,204 0.8 %
Will Garrison (1) 75,968 0.2 %
_________________________
(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 31,567,689 shares of the Company's common stock
outstanding as of March 6, 1998.
(3) Includes shares held by the following entities: Orbis Optimal Global Fund,
L.P., Orbis Global Equity Limited, Orbis Asset Management Limited and Orbis
Investment Management Limited. The address of Orbis Investment Management
Limited is 34 Bermudiana Road, Hamilton HM 11, Bermuda. Information
derived from Schedule 13D filed by shareholders.
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 six 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 (c) Compensation Compensation
-------------------------------------------------=========================
Awards
Name and Position Year Salary (a) ($) Options/SARs (#) (b) ($)
- ----------------------------------------------------------------------------------------------=========================
F.S. (Sheridan) Garrison 1997 270,000 0/0 9,125
President and CEO 1996 257,500 0/0 8,813
1995 257,500 50,000/0 8,691
Tom Garrison 1997 185,000 20,000/0 4,625
Corporate Vice President 1996 125,000 10,000/0 4,219
1995 125,000 4,000/0 5,000
Will Garrison 1997 185,000 20,000/0 7,000
Executive Vice President 1996 125,000 10,000/0 3,750
Operations 1995 125,000 4,000/0 5,000
Frank Conner 1997 180,000 15,000/0 6,875
Executive Vice President 1996 185,577 10,000/0 7,014
Accounting & Finance 1995 94,167 2,500/0 1,000
Gary Bouch 1997 125,519 8,000/0 1,350
Vice President-Transportation 1996 37,101 500/0 0
1995 0 0/0 0
Terry Higginbotham 1997 120,000 10,000/0 4,800
Vice President-Sales 1996 95,000 10,000/0 3,800
1995 89,347 1,000/0 3,574
Wil DeOrsey* 1997 155,000 12,000/0 844
Vice President-Operations 1996 84,710 7,000/0 0
1995 0 0/0 0
=======================================================================================================================
___________________________
* Mr. DeOrsey resigned from the Company effective December 19, 1997.
(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 of $24,000 plus
$1,000 per Board Meeting attended and $500 per committee meeting attended or
$1,000 per committee meeting if serving as chairman. The Company reimburses all
directors for their travel expenses. The Company has adopted a non-employee
elected director stock option plan and a non-employee appointed director stock
option plan. The plans provide for the automatic granting of 2,000 (6,000
commencing February 1, 1998) options to purchase shares of the Company's common
stock at the fair market value of such common stock on February 1 of each year
or at the date such director was appointed to the Board. The options vest and
become exercisable at 20% per year for five years (at 33 1/3% per year for three
years for options granted on February 1, 1998 and thereafter) and may not be
exercised later than ten years after the date of grant. During 1997, 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
$13.44 per share; Mr. John P. Hammerschmidt options to acquire 2,000 shares of
the Company's common stock at a purchase price of $11.00 per share; and Dr.
Doyle Z. Williams options to acquire 2,000 shares of the Company's common stock
at a purchase price of $15.44 per share. Except as indicated above, American
Freightways' officers are not compensated for their services as directors.
OPTIONS/STOCK APPRECIATION RIGHT ("SAR") GRANTS
The following table sets forth information with respect to the named
executives concerning options granted in the last fiscal year and their
potential realizable value:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term (c)
==========================================================================================================================
Number of % of Total
Securities Options/ SARs Exercise
UNDERLYING Granted to or Base
Options/ SARs Employees in Price Expiration 5% 10%
Name Granted (#) Fiscal Yr (%) ($/Sh) (b) Date ($) ($)
- ---------------------------------------------------------------------------------------------------------=================
F.S. (Sheridan) Garrison 0/0 0/0 - - - -
Tom Garrison (a) 20,000/0 4.9480/0 11.00 1/02/07 138,357 350,623
Will Garrison (a) 20,000/0 4.9480/0 11.00 1/02/07 138,357 350,623
Frank Conner (a) 15,000/0 3.7110/0 11.00 1/02/07 103,768 262,968
Gary Bouch (a) 8,000/0 1.9792/0 11.00 1/02/07 55,343 140,249
Terry Higginbotham (a) 10,000/0 2.4740/0 11.00 1/02/07 69,178 175,312
Wil DeOrsey* (a) 12,000/0 2.9688/0 11.00 1/02/07 83,014 210,374
==========================================================================================================================
________________________
* Mr. DeOrsey resigned from the Company effective December 19, 1997.
7
(a) Options granted in 1997 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 VALUE OF UNEXERCISED
Underlying Unexercised IN-THE-MONEY
Shares Value Options/SARs at FY-End OPTIONS/SARS AT FY-END
Acquired on Realized Exercisable/ EXERCISABLE/
Name Exercise (#) (a) ($) Unexercisable (b) (#) UNEXERCISABLE (C) ($)
- ------------------------------------------------------------------------------------------------------------------
F.S. (Sheridan) Garrison 0 0 438,000/142,000 0/0
Tom Garrison 8,400 74,975 11,600/33,800 0/0
Will Garrison 6,000 58,125 22,800/33,800 21,600/0
Frank Conner 0 0 8,200/25,700 5,925/0
Gary Bouch 0 0 100/8,400 0/0
Terry Higginbotham 2,720 10,160 1,850/19,200 0/0
Wil DeOrsey* 0 0 1,400/0 0/0
=====================================================================================================================
_______________
* Mr. DeOrsey resigned from the Company effective December 19, 1997.
(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, 1997 was $9.875
per share and was used to calculate the value.
8
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors consisted
of Messrs. T. J. Jones (Chairman), Ken Reeves, F.S. (Sheridan) Garrison (until
January 21, 1998) and John Paul Hammerschmidt (since January 21, 1998). 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 401(k) retirement plan. The programs are
intended to enable the Company to attract, retain, reward and motivate
management required to achieve the Company's 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 1998 the Compensation Committee
considered a number of factors relating to the Company's results for 1997.
During 1997 the Company realized strong overall revenue growth while achieving
improved revenue yield. The Company also made improvements in operating ratio
and net margin. Increased utilization of revenue equipment contributed to an
improvement in the Company's debt to equity ratio. The revisions of the
Company's operations resulted in improved customer service, a shortened length
of haul and positioned the Company for continuing long term future growth.
The Committee felt that the 1997 improvements in Company performance
along with the positioning of the Company to meet long term goals 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 was of the view that in consideration of Mr.
Garrison's significant past and continuing contribution to the Company, as well
as a comparison of the overall compensation package for the CEO of similar sized
companies, Mr. Garrison's overall compensation is at the low end of the range
for his peer group.
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 overall
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
Ken Reeves
John Paul Hammerschmidt
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year, executive compensation was
administered by the compensation committee comprised of the individuals listed
above. Mr. Jones previously served as the Company's Executive Vice President-
Operations until his retirement in 1994 .
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:
1992 1993 1994 1995 1996 1997
================================================================================
American Freightways 100.00 169.89 170.97 89.25 95.70 84.95
S&P 500 100.00 110.08 111.53 153.45 188.68 251.63
Peer Group (2) 100.00 107.21 102.75 88.24 71.18 125.70
Assumes $100 invested on December 31, 1992
(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 1992.
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.
11
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
1997, is expected to be in attendance at the 1998 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 1999 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 9, 1998. 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 or telephone,
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, 1997, 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.
12
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, President and CEO
March 19, 1998
13
(FRONT)
[X] PLEASE MARK VOTES
AS IN THE EXAMPLE
AMERICAN FREIGHTWAYS CORPORATION
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date
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- ------------------------------------------ ---------------------------
Shareholder sign here Co-owner sign here
1. TO ELECT THREE DIRECTORS TO THE TERMS SET FORTH BELOW:
F.S. (Sheridan) Garrison WITH- FOR ALL
Ken Reeves FOR HOLD EXCEPT
Doyle Z. Williams [_] [_] [_]
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, APRIL 23, 1998
The undersigned shareholder(s) of American Freightways Corporation (the
"Company") hereby appoint F.S. (Sheridan) 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 1998 Annual Meeting of Shareholders to be held at the
Comfort Inn Convention Center, 1210 Hwy. 62-65 North, Harrison, Arkansas on
Thursday, April 23, 1998 at 2:00 p.m., central standard time, and the
adjournment 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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