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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
HUGHES SUPPLY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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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(4) Date Filed:
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[HUGHES SUPPLY, INC. LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 2001
------------------------
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Shareholders of
Hughes Supply, Inc., a Florida corporation (the "Company"), will be held in the
principal executive offices of the Company at 20 North Orange Avenue, Suite 200,
Orlando, Florida 32801, on Tuesday, May 15, 2001, at 10:00 a.m., local time, for
the following purposes:
(1) To elect two Directors to serve for a three-year term expiring at
the 2004 Annual Meeting of Shareholders; and
(2) To consider and take action upon any other matters that may
properly come before the 2001 Annual Meeting of Shareholders or any
adjournment thereof.
The Board of Directors has fixed the close of business on March 28, 2001 as
the record date for the determination of the holders of shares of Common Stock
entitled to notice of and to vote at the 2001 Annual Meeting of Shareholders.
By Order of the
Board of Directors
/s/Benjamin Butterfield
BENJAMIN P. BUTTERFIELD
General Counsel and Secretary
Orlando, Florida
April 12, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER THAT
YOUR SHARES MAY BE REPRESENTED AT THE MEETING. NO POSTAGE IS NEEDED IF MAILED IN
THE UNITED STATES.
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HUGHES SUPPLY, INC.
20 NORTH ORANGE AVENUE
SUITE 200
ORLANDO, FLORIDA 32801
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PROXY STATEMENT
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The enclosed proxy is solicited by the Board of Directors of Hughes Supply,
Inc., a Florida corporation (the "Company"), in connection with the 2001 Annual
Meeting of Shareholders to be held in the principal executive offices of the
Company at 20 North Orange Avenue, Suite 200, Orlando, Florida 32801 on May 15,
2001, at 10:00 a.m., local time, or any adjournment thereof (the "Annual
Meeting"). The Company's Annual Report to Shareholders for the fiscal year ended
January 26, 2001 accompanies this Proxy Statement. This Proxy Statement and the
accompanying Notice of Annual Meeting of Shareholders and the enclosed proxy
card were first sent or given to shareholders of the Company on or about April
12, 2001.
Holders of record of the Company's Common Stock, $1.00 par value per share
(the "Common Stock"), as of the close of business on March 28, 2001 will be
entitled to vote at the Annual Meeting, and each holder of record of Common
Stock on such date will be entitled to one vote for each share held. As of March
28, 2001, there were 23,632,125 shares of Common Stock outstanding.
Shares of Common Stock cannot be voted at the Annual Meeting unless the
beneficial owner is present or represented by proxy. Any shareholder giving a
proxy may revoke it at any time before it is voted by giving written notice of
revocation to the Company, c/o Benjamin P. Butterfield, General Counsel and
Secretary, at the address shown above, or by executing and delivering prior to
the Annual Meeting a proxy bearing a later date. Any shareholder who attends the
Annual Meeting may revoke the proxy by voting his or her shares of Common Stock
in person.
All properly executed proxies, unless previously revoked, will be voted at
the Annual Meeting in accordance with the directions given. With respect to the
election of two Directors to serve until the 2004 Annual Meeting of Shareholders
(the "Election Proposal"), shareholders of the Company voting by proxy may vote
in favor of the nominees or may withhold their vote for the nominees. If no
specific instructions are given, shares of Common Stock represented by a
properly executed proxy will be voted FOR the Election Proposal and in the
discretion of the persons named therein as proxies on all other matters that may
be brought before the Annual Meeting.
The Amended and Restated By-Laws of the Company (the "By-Laws") provide
that a majority of the outstanding shares of Common Stock entitled to vote on a
given matter must be represented in person or by proxy at the Annual Meeting in
order to constitute a quorum for the transaction of business. When a quorum is
present at the Annual Meeting, the By-Laws provide that the affirmative vote of
a majority of the Common Stock represented and entitled to vote at the Annual
Meeting will decide the corporate action taken unless a different vote is
required by Florida law, the Company's Restated Articles of Incorporation, as
amended (the "Restated Articles"), or the By-Laws. Abstentions and broker
non-votes will be counted for purposes of determining the existence of a quorum
at the Annual Meeting.
The nominees for election as Directors will be elected by the affirmative
vote of a plurality of the shares of Common Stock present in person or by proxy
and actually voting at the Annual Meeting. Abstentions and broker non-votes will
have no effect on the outcome of the voting to elect the Directors. A broker
non-vote may occur when a nominee holding shares of Common Stock for a
beneficial owner does not vote on a proposal because such nominee does not have
discretionary voting power and has not received instructions from the beneficial
owner.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 28, 2001 certain information
with respect to the Common Stock, the only class of voting securities
outstanding, owned beneficially by each Director of the Company or Director
nominee, each current or former executive officer of the Company named in the
Summary Compensation Table, all Directors, Director nominees and current
executive officers of the Company as a group and any beneficial owners of more
than 5% of the outstanding Common Stock. Stock ownership information has been
furnished to the Company by such beneficial owners or is based upon information
contained in filings made by such beneficial owners with the Securities and
Exchange Commission (the "Commission").
AMOUNT AND NATURE OF APPROXIMATE PERCENT
DIRECTORS AND NAMED EXECUTIVES BENEFICIAL OWNERSHIP(1) OF CLASS(2)
- ------------------------------ ----------------------- -------------------
David H. Hughes.................................... 575,421 (3)(4)(5)(6) 2.37%
Vincent S. Hughes.................................. 416,208 (4)(5)(6)(7) 1.71%
John D. Baker II................................... 36,088 (8) *
Robert N. Blackford................................ 49,864 (8) *
H. Corbin Day...................................... 18,838 (8)(9) *
William P. Kennedy................................. 36,000 (8)(10) *
Michael L. Stanwood................................ 43,900 (11) *
Clyde E. Hughes III................................ 82,737 (12) *
Gradie E. Winstead, Jr. ........................... 76,548 (13) *
A. Stewart Hall, Jr. .............................. 176,218 (14) *
All Directors and Executive Officers as a Group (17
persons)......................................... 1,487,675 (15) 6.14%(16)
5% SHAREHOLDERS
National Rural Electric Cooperative Association
(17)............................................. 1,313,175 5.42%
4301 Wilson Blvd
Arlington, VA 22203
Dimensional Fund Advisors Inc.(18)................. 1,429,150 5.90%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
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* Less than 1%.
(1) Under the rules of the Commission, a person is deemed to be a beneficial
owner of a security if such person has or shares the power to vote or
direct the voting of such security or the power to dispose of or direct the
disposition of such security. A person is also deemed to be a beneficial
owner of a security if that person has the right to acquire beneficial
ownership within 60 days. Accordingly, more than one person may be deemed
to be a beneficial owner of the same securities. Unless otherwise indicated
by footnote, the named individuals have sole voting and investment power
with respect to the shares of Common Stock beneficially owned. Messrs.
David H. Hughes, A. Stewart Hall, Jr., Vincent S. Hughes, Michael L.
Stanwood, Clyde E. Hughes III and Gradie E. Winstead, Jr., are also
beneficiaries under the Company's Cash or Deferred Profit Sharing Plan (the
"Profit Sharing Plan") which holds 12,351 shares of Common Stock as
unallocated assets of the Profit Sharing Plan, and such persons disclaim
beneficial ownership of any of the shares held by the Profit Sharing Plan
and none of such shares are included in the table above as owned by such
persons.
(2) Calculated on the basis of 23,632,125 shares of Common Stock outstanding as
of March 28, 2001 and, with respect to each of the persons noted in the
table above, (i) the shares subject to options exercisable within 60 days
granted to such person and (ii) the shares subject to restricted stock
grants under the Hughes Supply, Inc. 1997 Executive Stock Plan (the "1997
Executive Stock Plan"), pursuant to which such person has the power to vote
or direct the voting of the shares. Figures shown only for those persons
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whose beneficial ownership of shares exceeds 1% of the Common Stock
outstanding or deemed to be outstanding for this calculation.
(3) Includes 99,150 shares of Common Stock subject to options held by Mr.
Hughes under the Hughes Supply, Inc. 1988 Stock Option Plan (the "1988
Stock Option Plan") or the 1997 Executive Stock Plan which are exercisable
within 60 days, 16,296 shares represented by restricted stock grants under
the 1997 Executive Stock Plan and 2,877 shares of Common Stock owned of
record by Mr. Hughes' spouse. Mr. Hughes is considered to have sole voting
power with respect to 384,580 shares, sole investment power with respect to
368,284 shares, and shared voting and investment power with respect to
190,841 shares.
(4) Each of the indicated Directors is an executive officer and director of,
and owns a one-third equity interest in Hughes, Inc., a corporation to
which the Company makes payments for the lease of certain properties. See
"Certain Transactions with Management."
(5) Includes 60,967 shares of Common Stock held by Hughes, Inc., the
corporation described in footnote (4) above. David H. Hughes and Vincent S.
Hughes are considered to share voting and investment power with respect to
such shares and all such shares are reported in the table above as
beneficially owned by each of David H. Hughes and Vincent S. Hughes. David
H. Hughes and Vincent S. Hughes are brothers.
(6) Includes 126,997 shares of Common Stock held by three trusts of which David
H. Hughes and Vincent S. Hughes are co-trustees. All of the shares held by
these trusts are included in the table above as beneficially owned by each
of David H. Hughes and Vincent S. Hughes.
(7) Includes 27,900 shares of Common Stock represented by options under the
1988 Stock Option Plan or the 1997 Executive Stock Plan which are
exercisable within 60 days, 8,148 shares represented by restricted stock
grants under the 1997 Executive Stock Plan and 29,821 shares of Common
Stock owned of record by Mr. Hughes' spouse. Mr. Hughes is considered to
have sole voting power with respect to 198,423 shares, sole investment
power with respect to 190,275 shares, and shared voting and investment
power with respect to 217,785 shares.
(8) Includes the number of shares of Common Stock subject to options granted
under the Directors' Stock Option Plan (the "Directors' Plan") for
nonemployee Directors as follows: John D. Baker II, 30,088; Robert N.
Blackford, 30,088; H. Corbin Day, 18,838; and William P. Kennedy, 10,000.
(9) 525,117 shares of Common Stock are owned of record by Jemison Investment
Co., Inc., a Delaware corporation ("Jemison"). Mr. Day is the Chairman of
the Board of Directors of Jemison, and he and members of his immediate
family own an equity interest in Jemison. Mr. Day disclaims beneficial
ownership of these shares.
(10) Includes 10,000 shares held through Vital Support Charitable Foundation,
for which Mr. Kennedy acts as Chairman, 500 shares held through the Ashley
E. Kennedy Trust and 500 shares held through the Courtney B. Kennedy Trust.
Mr. Kennedy acts as Trustee for both of the aforementioned trusts. Mr.
Kennedy is considered to have sole investment and voting power with respect
to 26,000 shares and shared voting and investment power with respect to
10,000 shares.
(11) Includes 33,900 shares of Common Stock represented by options under the
1988 Stock Option Plan or the 1997 Executive Stock Plan which are
exercisable within 60 days. Mr. Stanwood is considered to have sole voting
power with respect to all of these shares and sole investment power with
respect to 33,900 shares.
(12) Includes 46,400 shares of Common Stock represented by options under the
1988 Stock Option Plan or the 1997 Executive Stock Plan which are
exercisable within 60 days and 13,148 shares represented by restricted
stock grants under the 1997 Executive Stock Plan. Mr. Hughes is considered
to have sole voting power with respect to 75,638 shares, sole investment
power with respect to 62,490 shares, and shared voting and investment power
with respect to 7,099 shares.
(13) Includes 53,248 shares of Common Stock represented by options under the
1988 Stock Option Plan or the 1997 Executive Stock Plan which are
exercisable within 60 days and 13,148 shares represented by restricted
stock grants under the 1997 Executive Stock Plan. Mr. Winstead is
considered to have sole
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voting power with respect to 66,396 shares, sole investment power with
respect to 53,248 shares, and shared voting and investment power with
respect to 10,152 shares.
(14) Mr. Hall resigned as President and Chief Operating Officer and as a
Director of the Company, effective March 28, 2001. Includes 111,774 shares
of Common Stock represented by options under the 1988 Stock Option Plan or
the 1997 Executive Stock Plan which are exercisable within 60 days. Mr.
Hall is considered to have sole voting and investment power with respect to
all of these shares.
(15) Includes an aggregate of 495,025 shares of Common Stock subject to options
under the 1988 Stock Option Plan or the 1997 Executive Stock Plan and
exercisable within 60 days and 160,225 shares of Common Stock subject to
restricted stock grants under the 1997 Executive Stock Plan held by
executive officers of the Company as a group, as well as 89,014 shares of
Common Stock subject to unexercised stock options under the Directors' Plan
held by nonemployee Directors of the Company as a group. Directors and
executive officers hold sole voting power with respect to 1,307,708 shares,
sole investment power with respect to 1,121,187 shares and shared
investment power with respect to 155,397 shares.
(16) Calculated on the basis of 24,216,164 shares of Common Stock, including
23,632,125 shares outstanding and 584,039 shares subject to options. The
shares subject to stock options have been deemed outstanding for the
purpose of computing such percentage.
(17) This information is based upon a Schedule 13G filed with the Commission
dated February 14, 2001.
(18) This information is based upon a Schedule 13G filed with the Commission
dated February 2, 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Directors,
executive officers and persons who beneficially own more than 10% of the Common
Stock to file with the Commission initial reports of beneficial ownership and
reports of changes in beneficial ownership of such Common Stock. Directors,
executive officers and beneficial owners of more than 10% of the Common Stock
are required by Commission rules to furnish the Company with copies of all such
reports. To the Company's knowledge, based solely upon a review of the copies of
such reports furnished to the Company and written representations from the
Company's Directors and executive officers that no other reports were required,
the Company believes that only the following Section 16(a) filing requirements
applicable to the Company's Directors and executive officers were not timely
complied with during the fiscal year ended January 26, 2001: Mr. Kenneth H.
Stephens failed to timely file a Form 4 reporting an exercise of an option and
payment of the exercise price through the surrender of existing shares on
November 28, 2000 until a Form 4 was filed on December 18, 2000; Mr. William P.
Kennedy failed to report his initial indirect ownership of shares of Common
Stock through a partnership on his Form 3 in March 1999 and that partnership's
sale of shares in September 2000 until a Form 4 was filed in November 2000; and
Mr. James C. Plyler, Jr. failed to report his indirect acquisition of shares
through a family partnership in December 1998 and December 1999 until a Form 4
was filed in March 2000.
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE OFFICERS
Executive officers are normally elected annually by the Board of Directors
following each annual meeting of shareholders to serve for a one-year term and
until their successors are elected and qualified. The compensation of the
Company's executive officers is established by the Board of Directors after
receiving the recommendation of the Compensation Committee of the Board of
Directors (the "Compensation Committee"). The following sets forth the name of
each executive officer of the Company and the principal positions and offices he
holds with the Company. Unless otherwise indicated, each of these officers has
been employed by the Company or a subsidiary of the Company for more than five
years and has served as an executive officer of the Company for at least five
years.
NAME AGE POSITION
- ---- --- --------
David H. Hughes........................ 57 Chairman of the Board and Chief Executive Officer
since November 1986.
Thomas Morgan.......................... 47 President and Chief Operating Officer since March
2001. Previously Mr. Morgan was CEO of enfoTrust
Networks from February 2000 to March 2001, CEO of
Value America from March 1999 to November 1999, CEO
of U.S. Office Products from November 1997 to
February 1999, President and Chief Operating Officer
of U.S. Office Products from June 1997 to November
1997, and President of the North American Office
Products Group of U.S. Office Products from February
1997 to June 1997. Prior to joining U.S. Office
Products, Mr. Morgan spent more than twenty years
with Genuine Parts Company, most recently as
Executive Vice President of S.P. Richards Company.
Vincent S. Hughes...................... 60 Vice President since April 1972.
Jasper L. Holland, Jr.................. 59 Vice President since June 1994. Group President
since February 2000.
Clyde E. Hughes III.................... 53 Vice President since June 1994. Group President
since February 2000.
Michael L. Stanwood.................... 48 Group President since February 2000. Previously Mr.
Stanwood served as President of a subsidiary
operation since May 1996 and as President of
Southwest Stainless, Inc. from 1971 until May 1996.
Robert A. Machaby...................... 50 Group President since February 2000. Previously Mr.
Machaby served as District Manager from April 1996
to February 2000 and as Sales Manager from August
1994 to April 1996.
James C. Plyler, Jr.................... 57 Vice President since February 1996. Previously Mr.
Plyler served as President of a subsidiary
operation.
Sidney J. Strickland, Jr............... 50 Vice President of Administration since August 1994.
Gradie E. Winstead, Jr. ............... 51 Vice President since June 1994. Group President
since February 2000.
John R. Clark.......................... 54 Vice President -- Corporate Credit Manager since
November 1999. Previously Mr. Clark served as
Corporate Credit Manager for the Company from May
1985 to November 1999.
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NAME AGE POSITION
- ---- --- --------
Thomas M. Ward II...................... 43 Vice President -- Chief of Information Technology
since November 1999. Mr. Ward was Chief of
Information Technology from September 1998 to
November 1999. Previously Mr. Ward served as
Director of Information Technology for JLK Direct
Distribution, Inc. from March 1998 to September 1998
and Director of Information Systems for Ferguson
Enterprises, Inc. from 1990 to March 1998.
J. Stephen Zepf........................ 51 Treasurer and Chief Financial Officer since April
1984.
Benjamin P. Butterfield................ 41 General Counsel since March 1996. Secretary since
May 1997. Assistant Secretary from March 1996 to May
1997. Previously, Mr. Butterfield was a shareholder
of the law firm of Maguire, Voorhis & Wells, P.A.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any previous filings
made by the Company under the Securities Act of 1933 or the Exchange Act that
might incorporate future filings, including this Proxy Statement, in whole or in
part, the following Compensation Committee Report on Executive Compensation and
the Shareholder Return Performance Graph shall not be incorporated by reference
into any of such filings.
Introduction
The compensation of the Company's executive officers is established
annually by the Board of Directors acting upon the recommendation of the
Compensation Committee. The members of the Compensation Committee are
nonemployee Directors appointed by the Board of Directors immediately following
each annual meeting of shareholders. During the last fiscal year, the executive
management group consisted of all the executive officers of the Company
including A. Stewart Hall, Jr., the Company's President and Chief Operating
Officer who resigned on March 28, 2001, but did not include Kenneth H. Stephens
and James C. Plyler, Jr. Executive management compensation determinations for
the last fiscal year were made by the Compensation Committee on January 25,
2000.
Compensation Policy and Committee Recommendation
The goal of the Company's executive compensation policy is to attract,
retain and motivate qualified executive management under a competitive
compensation program which regards individual performance and increases
shareholder value. To achieve this goal, the Compensation Committee evaluated
the respective positions, the competitive market for the required management
skills, individual performance and potential, and the potential for motivating
Company and individual performance. Before finalizing its recommendation, the
Compensation Committee also considered the recommendation of the Company's Chief
Executive Officer with respect to the compensation of each of the other
executive officers.
Compensation Program
The main components of the Company's executive management compensation
program are base salaries, annual and long-term performance based incentive
bonus plans, stock plans and retirement plans. Each of these components is
discussed in the remainder of this report.
Information with respect to the compensation paid to the Chief Executive
Officer of the Company and the other four most highly compensated executive
officers of the Company for the last fiscal year and for each of the two
previous fiscal years, descriptions of certain of the compensation plans
referred to in this report, and a Shareholder Return Performance Graph
illustrating cumulative share return with respect to the Common Stock are set
forth elsewhere herein following this report.
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Base Salaries
Base salaries are intended to establish a level of compensation which,
together with the other components of the compensation program, will help the
Company attract and retain the talent needed to meet the challenges of the
competitive industry in which it operates while maintaining an acceptable level
of fixed labor costs. The Compensation Committee's recommendation with respect
to base salaries was based upon the Compensation Committee's evaluation of the
responsibility and scope of each position, the level of pay for comparable
positions in the industry and, with respect to each of the executive officers,
his performance over an extended period of time, and the value and potential to
him of other elements of the Company's compensation program.
Annual Incentive Plans
The Company's annual incentive plans are intended to motivate and reward
short-term performance by providing cash bonus payments based upon required
performance goals defined, depending upon the particular plan, as income before
taxes measured against the Company's profit, return on investment, return on
investment and return on sales, or sales, general and administrative expenses as
a percentage of sales. Upon achievement of the required performance goal, the
bonus paid to a participant is determined, depending upon the particular plan,
as a percentage of the base salary of the participant or as the sum of a
percentage of the funds available for the payment of such bonus and a percentage
of the participant's base salary up to a designated maximum percentage of the
participant's base salary. The designation of the annual incentive plan
participants, the definition of the required performance goals, and the
determination of bonuses to be paid upon the achievement of the required
performance goals are established annually by the Compensation Committee.
With respect to each specific annual incentive plan, the Compensation
Committee adopted ambitious performance goals which are sufficiently achievable
to provide a meaningful incentive for superior performance, and recommended as
participants those executive officers who are in positions most responsible for
the success of the Company. Each member of the executive management group was
designated by the Compensation Committee as a participant in a specific annual
incentive plan during the last fiscal year.
Long-Term Incentive Bonus Plans
The Company's Chief Executive Officer and Chief Financial Officer also
participate in certain Senior Executives' Long-Term Incentive Bonus Plans which
are intended to motivate and reward sustained performance. Mr. Hall, the
Company's former President, had been a participant in such plans, but his
participation terminated upon his resignation. Under each of these plans an
incentive bonus is paid if a designated earnings per share goal is met during
the designated performance period of three or more fiscal years. Such incentive
bonus payments, in each case, are determined by applying a percentage, based
upon achievement, of the applicable earnings per share goals, to the base
salaries of the participants. During the last fiscal year the designated
officers participated in senior executives' long-term incentive plans adopted in
previous fiscal years.
During the 2001 fiscal year, the Company did not adopt a performance plan
under the Senior Executives' Long-Term Incentive Bonus Plan for the three fiscal
year period up to and including the Company's fiscal year to be ended January
24, 2003. However, in March 2001, the Company did adopt such a performance plan,
pursuant to which each participant would receive a bonus equal to a percentage
of his base salary for the final year of the performance period if, and to the
extent, the Company's earnings per share during the performance period reach or
exceed the required goal. Any such bonus would be payable in cash and Common
Stock.
Stock Plan
The 1997 Executive Stock Plan is intended to act as an incentive to enhance
shareholder value by providing to plan participants an opportunity to benefit
from increases in the value of the Common Stock.
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Participation under the 1997 Executive Stock Plan is limited to executive
officers and other selected key employees of the Company and its subsidiaries.
The Company granted an aggregate of 482,000 options under the 1997 Executive
Stock Plan on May 16, 2000, and an aggregate of 1,000 restricted stock grants on
November 20, 2000.
Retirement Plans
The retirement plans in the Company's executive compensation program,
including the Supplemental Executive Retirement Plan (the "Retirement Plan") and
the Profit Sharing Plan, are intended to encourage and reward long-term
employment with the Company.
The Retirement Plan was adopted on September 30, 1986. Ten of the executive
officers, all of those who were fifty-five years of age or younger on the date
of adoption of the Retirement Plan, are participants under the Retirement Plan.
The Profit Sharing Plan is a contributory plan for the benefit of
substantially all employees of the Company. Each of the executive officers is a
participant under the Profit Sharing Plan. Participants may make limited
contributions under the Profit Sharing Plan by salary reduction. Contributions
by the Company under the Profit Sharing Plan include those required to match a
portion of a participant's contribution and may include limited additional
contributions within the discretion of the Board of Directors. The Company's
discretionary contribution to the Profit Sharing Plan for the last fiscal year
is allocated among the participants based upon the relative salaries of the
participants.
Compensation of the Chief Executive Officer
Mr. David H. Hughes, the Company's Chairman of the Board and Chief
Executive Officer, is eligible to participate in the same components of the
executive officers' compensation program available to the other executive
officers described above, and the determination of the Compensation Committee
with respect to Mr. Hughes' compensation was made in the manner outlined above
with respect to the executive officers. During the last fiscal year the
Compensation Committee implemented an increase in Mr. Hughes' base salary from
$300,000 to $340,000 in order to compensate him in a manner more consistent with
his responsibilities. The Compensation Committee believes that Mr. Hughes' base
salary is conservative in comparison to his peers in the industry. For the last
fiscal year Mr. Hughes' annual compensation was $340,000, as Mr. Hughes did not
earn a bonus under the annual incentive plan. Furthermore, Mr. Hughes earned a
bonus payment under the Senior Executives' Long-Term Incentive Bonus Plan for
the three fiscal year performance period ended January 26, 2001. During the last
fiscal year, Mr. Hughes also received a grant of 22,500 stock options pursuant
to the 1997 Executive Stock Plan.
Conclusion
The Compensation Committee believes that the policies articulated above
will continue to ensure that the interests of the Company's executive management
group are tied to the interests of the Company's shareholders.
Submitted by the Compensation Committee of the Board of Directors.
H. Corbin Day, Chairman
John D. Baker II
Robert N. Blackford
William P. Kennedy
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SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The Company's compensation program for executive management includes base
salaries, annual and long-term performance based on incentive bonus plans, stock
plans and retirement plans. The compensation of each executive officer was
established by the Board of Directors acting upon the recommendations of the
Compensation Committee. With respect to each executive officer, base salary and
selected other components of the compensation package are integrated on an
individual basis in an effort to carry out the Company's executive compensation
policy.
The following table sets forth the annual, long-term and other compensation
for the Company's Chief Executive Officer and each of the other four most highly
compensated executive officers (the "named executives") during the last fiscal
year, as well as the total annual compensation paid to each individual for the
two previous fiscal years.
LONG TERM COMPENSATION
ANNUAL ----------------------------------
COMPENSATION RESTRICTED SECURITIES
----------------- STOCK UNDERLYING LTIP ALL OTHER
FISCAL SALARY BONUS AWARDS OPTIONS/SAR PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) AWARDS ($) ($)(2)
- --------------------------- ------ ------- ------- ---------- ----------- ------- ------------
David H. Hughes.................. 2001 340,000 0 0 22,500 142,432(3) 5,345
Chairman of the Board, Chief 2000 300,000 150,000 390,040 0 133,536(4) 2,916
Executive Officer and President 1999 280,000 113,075 0 0 280,000(5) 6,498
Michael L. Stanwood.............. 2001 200,000 200,000 0 20,000 0 5,265
Group President 2000 200,000 200,000 0 0 0 3,569
1999 200,000 167,917 156,000 0 0 0
Gradie E. Winstead, Jr........... 2001 200,000 160,000 0 20,000 0 3,871
Vice President and 2000 175,000 154,584 195,020 500 0 3,050
Group President 1999 155,000 155,000 0 500 0 2,960
Clyde E. Hughes III.............. 2001 185,000 143,375 0 20,000 0 4,190
Vice President and 2000 165,000 187,000 195,020 0 0 2,612
Group President 1999 155,000 155,000 0 500 0 2,800
A. Stewart Hall, Jr.(6).......... 2001 300,000 0 0 22,500 125,676(3) 6,612
2000 260,000 130,000 390,040 0 115,732(4) 2,758
1999 240,000 96,922 0 0 240,000(5) 4,479
- ---------------
(1) The amounts in this column are calculated by multiplying the number of
shares awarded by the closing price of the Common Stock on the date of grant
as reported by the New York Stock Exchange. The aggregate number and value
of restricted shares of Common Stock held by each individual appearing in
the table above at January 26, 2001 is set forth below:
AGGREGATE NUMBER OF AGGREGATE VALUE OF
NAME RESTRICTED SHARES RESTRICTED SHARES+
- ---- ------------------- ------------------
David H. Hughes.................................. 16,296 $279,476
Michael L. Stanwood.............................. 10,000 171,500
Gradie E. Winstead, Jr. ......................... 13,148 225,488
Clyde E. Hughes III.............................. 13,148 225,488
A. Stewart Hall, Jr. ............................ 26,296 450,976
- ---------------
+ Calculated by multiplying the aggregate number of shares of restricted
Common Stock held by the named individual on January 26, 2001 by $17.15, the
closing price of the Common Stock on such date as reported by the New York
Stock Exchange. The individuals named above will receive any dividends
declared with regard to the shares of restricted stock received by them.
(2) Includes the amounts indicated below for the 1999, 2000 and 2001 fiscal
years: (i) the cost of premiums paid by the Company for life insurance
provided to the name executive; and (ii) matching contributions made to the
accounts of the named executive in the Profit Sharing Plan.
2001 2000 1999 2001 2000 1999
INSURANCE INSURANCE INSURANCE MATCHING MATCHING MATCHING
EXECUTIVE PREMIUM PREMIUM PREMIUM CONTRIBUTION CONTRIBUTION CONTRIBUTION
- --------- --------- --------- --------- ------------ ------------ ------------
David H. Hughes......................... $2,762 $ 83 $1,823 $2,583 $2,833 $4,675
Michael L. Stanwood..................... 1,688 696 0 3,577 2,873 0
Gradie E. Winstead, Jr. ................ 1,321 235 1,010 2,550 2,815 1,950
Clyde E. Hughes III..................... 1,640 212 1,250 2,550 2,400 1,550
A. Stewart Hall, Jr. ................... 2,904 162 2,048 3,708 2,596 2,431
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(3) Bonus payments under the Senior Executives' Long-Term Bonus Plan for the
three fiscal year performance period ended January 26, 2001.
(4) Bonus payments under the Senior Executives' Long-Term Bonus Plan for the
three fiscal year performance period ended January 28, 2000.
(5) Bonus payments under the Senior Executives' Long-Term Incentive Bonus Plan
for the three fiscal year performance period ended January 29, 1999.
(6) Mr. Hall resigned as President and Chief Operating Officer and as a Director
of the Company, effective March 28, 2001. See "Change-in-Control and
Severance Arrangements."
BONUS PLANS
The Company has annual incentive plans for members of its executive
management, and for its sales, branch and department managers and other key
employees. Bonuses are awarded under the annual incentive plans upon achievement
of required performance goals by applying the percentage provided for under such
plans to the base salaries of members of its executive management. Individual
bonuses may also be awarded to executive management and other key employees by
the Board of Directors based upon job performance or other criteria within the
discretion of the Board of Directors.
The Company also has long-term performance based incentive bonus plans to
provide incentive compensation to reward selected key senior executives for
achieving specified Company performance goals. The Chief Executive Officer and
the Chief Financial Officer are the selected participants in the Senior
Executives' Long-Term Incentive Bonus Plans for fiscal years 2001 and 2002. Mr.
Hall, the Company's former President, had been a participant in the plans for
fiscal years 2001 and 2002, but his participation terminated upon his
resignation. Each of these plans is a performance plan providing for the payment
of an incentive bonus at the end of the three fiscal year performance period if
the Company's earnings per share criteria in the plan are met.
The Senior Executives' Long-Term Incentive Bonus Plans for fiscal years
2001 and 2002 were adopted by the Board of Directors on March 18, 1998 and March
22, 1999, respectively, and were incorporated into the Senior Executives'
Long-Term Incentive Bonus Plan approved by the shareholders at the 1994 Annual
Meeting and amended on January 25, 1996. Each such plan provides for payments
based upon cumulative growth in the Company's earnings per share during the
three fiscal year performance periods ending with January 26, 2001 and January
25, 2002, respectively. Under each of the plans, the participants would receive
a bonus of from 25% to 100% of base salary for the final year of the performance
period if the Company achieves the required earnings per share for such
performance period.
Any bonus earned would be paid in equal portions of cash and shares of
Common Stock of the Company at the fair market value on the final day of the
applicable performance period. Under the Senior Executives' Long-Term Incentive
Bonus Plan for the three fiscal year performance period ending January 26, 2001,
the Company achieved the earnings required for the payment of bonuses equal to
approximately 42% of the base salary for each participant. The payouts under
such plan aggregated $341,419 and, in accordance with the plan, were paid one
half in cash and one half in shares of Common Stock of the Company valued on the
fair market value of the stock on the last day of the 2001 fiscal year.
In March 2001, the Company adopted a Senior Executives' Long-Term Incentive
Bonus Plan for fiscal year 2003.
Under the Senior Executives' Long-Term Incentive Bonus Plan, as amended on
January 25, 1996, the Compensation Committee, in its sole discretion, may
establish separate performance plans and designate the performance periods,
goals, participants and bonus payments to be made under such plans if the
required performance goals are achieved.
STOCK OPTION PLANS
The 1997 Executive Stock Plan authorizes the granting of incentive stock
options and non-qualified options, both of which are exercisable for shares of
Common Stock, and also permits the granting of stock appreciation rights
("SARs") either alone or in conjunction with the granting of options. Under the
1997
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Executive Stock Plan, the number of shares of Common Stock reserved for use is
1,750,000 and the number of shares which may, but need not be, granted as
restricted shares of Common Stock is 875,000. As of March 28, 2001, the 1997
Executive Stock Plan authorizes the granting of options, in addition to those
currently outstanding, for the purchase of up to 659,279 shares of Common Stock
by any Key Employee (as defined in the 1997 Executive Stock Plan) of the
Company. Under the 1997 Executive Stock Plan, options may be granted at prices
not less than market value on the date of grant, but prices for incentive stock
options granted to employees who own more than 10% of the Common Stock must be
granted at least 110% of such market value. Options may be granted from to time
through the earlier of December 31, 2006 or the date upon which all of the stock
reserved under the 1997 Executive Stock Plan has been issued or no longer is
available for use under the 1997 Executive Stock Plan. Such options may be
exercisable for up to 10 years from the date of grant, except in the case of
employees owning more than 10% of the Common Stock, for whom incentive stock
options may be exercisable only up to 5 years from the date of grant. The 1997
Executive Stock Plan permits the granting of incentive stock options and other
stock options, restricted stock and the granting of SARs either alone or in
conjunction with the granting of options. As of March 28, 2001, 526,379 shares
are available for grants of restricted stock. Under the terms of the 1997
Executive Stock Plan, the Compensation Committee of the Board of Directors has
the authority, solely within its discretion, to determine the terms of and to
make grants of any additional options under the 1997 Executive Stock Plan. The
Compensation Committee granted an aggregate of 482,000 options on May 16, 2000.
The Compensation Committee granted an aggregate of 1,000 restricted stock grants
on November 20, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning options granted to
the named executives during the fiscal year ended January 26, 2001:
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS(1) OPTION TERM(2)
- ---------------------------------------------------------------------------------------- ---------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE
UNDERLYING TO EMPLOYEES IN PRICE EXPIRATION
NAME OPTIONS GRANTED FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- --------------- ---------------- -------- ---------- --------- ---------
David H. Hughes............. 22,500 4.67% $18.75 5/16/10 $265,315 $672,360
Michael L. Stanwood......... 20,000 4.15% $18.75 5/16/10 235,835 597,653
Gradie E. Winstead, Jr...... 20,000 4.15% $18.75 5/16/10 235,835 597,653
Clyde E. Hughes III......... 20,000 4.15% $18.75 5/16/10 235,835 597,653
A. Stewart Hall, Jr......... 22,500 4.67% $18.75 5/16/10 265,315 672,360
- ---------------
(1) Each of these options was granted pursuant to the Company's 1997 Executive
Stock Plan and is subject to the terms of such plan. All of these options
vested on May 16, 2000.
(2) Potential gains are net of the exercise price but before taxes associated
with the exercise. Amounts represent hypothetical gains that could be
achieved for the respective options if they were exercised at the end of the
option term. The assumed 5% and 10% rates of stock appreciation are based on
appreciation from the exercise price per share. These rates are provided in
accordance with the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of the future Common
Stock price. Actual gains, if any, on stock option exercises are dependent
on the future financial performance of the Company, overall stock market
conditions and the option holders' continued employment through the vesting
period.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table summarizes options exercised during the fiscal year
ended January 26, 2001 and presents the value of unexercised options held by the
named executives at fiscal year end:
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES JANUARY 26, 2001(#) AT JANUARY 26, 2001($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
David H. Hughes........ 0 0 99,150 0 229,241 0
Michael L. Stanwood.... 0 0 33,900 0 0 0
Gradie E. Winstead,
Jr................... 0 0 53,248 500 97,088 0
Clyde E. Hughes III.... 0 0 46,400 0 54,750 0
A. Stewart Hall, Jr.... 0 0 111,774 0 339,487 0
- ---------------
(1) The value of unexercised in-the-money options represents the aggregate
amount of the excess of $17.15, the closing price for a share of Common
Stock on January 26, 2001, over the relevant exercise price of all
"in-the-money" options held on such date.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company has Supplemental Executive Retirement Plan Agreements with
certain of its executive officers providing for the payment by the Company of
supplemental retirement compensation in addition to any compensation paid under
the Company's other benefit programs. The Company is obligated to pay
supplemental retirement compensation, pursuant to the Supplemental Retirement
Plan Agreements, to each of such officers (i) after retirement of such executive
officer from the service of the Company, or (ii) upon such officer's total
disability while in the employ of the Company, provided such disability
continues until the executive officer's normal retirement date. Supplemental
retirement compensation will be based upon the salary portion of such executive
officer's annual compensation (not including any bonus or other compensation)
for the final year of employment prior to retirement, or for the final year of
employment prior to the disability preceding disability retirement, as the case
may be, ("final salary"), and will be payable monthly following such retirement
for a period of 15 years. The rate per annum of supplemental retirement
compensation in the case of retirement or disability retirement at age 65 shall
be equal to 35% of final salary or, in the case of early retirement or early
disability retirement with the approval of the Company prior to age 65 but not
earlier than age 55, shall be reduced proportionately from 96% of 35% of final
salary upon retirement at age 64 to 60% of 35% of final salary upon retirement
at age 55. Death benefits are payable under each of the agreements in the event
of death while employed by the Company but prior to disability retirement. Death
benefits are payable monthly for a period of 10 years after death at the rate
per annum equal to 35% of final base salary. Benefits under the Supplemental
Executive Retirement Plan Agreements are totally nonvested, unfunded retirement
and death benefits. Based on their annual compensation through the end of the
Company's fiscal year ended January 26, 2001 and assuming normal retirement age
has been attained, the current named executive officers would be entitled to
projected annual payments under the Supplemental Executive Retirement Plan
Agreements as follows: Mr. David H. Hughes, $119,000; Mr. Clyde E. Hughes,
$64,750; and Mr. Gradie E. Winstead, Jr., $70,000. Mr. Michael L. Stanwood is
not a party to a Supplemental Executive Retirement Plan Agreement with the
Company.
CASH OR DEFERRED PROFIT SHARING PLAN
The Profit Sharing Plan is for the benefit of substantially all employees
of the Company and its subsidiaries. Putnam Investments is trustee of the Profit
Sharing Plan. The Profit Sharing Plan is administered by an administrative
committee appointed by the Company's Board of Directors. Eligible employees may
contribute to the Profit Sharing Plan by salary reduction, and before imposing
federal income taxes, from 2% to 15% of their cash compensation up to a maximum
of $9,500 per year as adjusted for inflation ($10,500 for 2001). On employee
contributions of up to 6% of the employee's cash compensation, the Company will
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contribute a matching contribution of 50% of the employee's contribution.
Additional discretionary contributions by the Company, which may be either a
fixed dollar amount of a percentage of profits, may be made to the Profit
Sharing Plan at the discretion of the Company's Board of Directors, but all
employee and Company contributions may not exceed the maximum amount deductible
for federal income tax purposes. Allocations of discretionary Company
contributions are made to the accounts of active participants on the basis of
their compensation. The full amounts credited to their accounts (valued in
accordance with the Profit Sharing Plan) are distributed to participants upon
their death or retirement. For participants who cease to be employees prior to
death or retirement, the amounts distributed are 100% of the participant's
contribution account and the vested percentage of the participant's Company
contribution account based upon the participant's period of service as follows:
less than 3 years, 0%; 3 years, 20%; 4 years, 40%; 5 years, 60%; 6 years, 80%; 7
years or more, 100%. The Company did not contribute to the Profit Sharing Plan
during the fiscal year ended January 26, 2001.
CHANGE-IN-CONTROL AND SEVERANCE ARRANGEMENTS
In December 1999 the Company entered into agreements with each of the
current named executives that provide for severance payments in the event of
termination of their employment with the Company following a "change in control"
of the Company if such termination is by the Company without cause or by the
named executive for "good reason." The agreements have a two-year term that, in
the event of a change in control of the Company during such term, extends to
sixty days following twenty-four months after the change in control. In the
event of such a termination by the named executive for good reason or by the
Company without cause during the term of the agreement and within twenty-four
months following the change in control, the named executive is entitled to
receive a lump sum severance payment within fifteen days following termination
equal to the lesser of (1) the product of three times the average annual
compensation (including base salary, bonuses, fringe benefits and deferred
compensation) paid to the named executive during the three-year period prior to
the termination date (or, if higher, in effect prior to the event constituting
"good reason") or (2) one dollar less than three times the named executive's
annualized includible compensation for income tax purposes during the five-year
period preceding the change in control. In general, a "change in control" under
the agreements is defined as the acquisition of 49% of more of the voting power
of the Company's common stock, the current Directors ceasing to be a majority of
the Directors within a twenty-four month period, or the sale of substantially
all of the Company's assets by or merger of the Company. "Good reason" for the
named executives to terminate employment under the agreements is generally any
reduction in compensation, loss of title or position, significant diminution of
duties and responsibilities or relocation requirement.
In connection with Mr. Hall's resignation effective March 28, 2001, as
President and Chief Operating Officer and a Director of the Company, the Board
approved a retirement agreement with Mr. Hall. The agreement provides in
material part that, without further employment by the Company, Mr. Hall is to
receive (a) continued payment of his regular base salary through January 31,
2003, (b) payment thereafter pursuant to his Supplemental Executive Retirement
Plan Agreement ($95,550 per year for 15 years), and (c) a lump sum payment of
$978,000 for the cancellation of 26,296 shares of restricted stock (valued at
their award price) awarded to him under the 1997 Executive Stock Plan, and to
compensate him for the income tax effect of receiving such lump sum payment. In
addition, Mr. Hall and his spouse will continue to be covered under the
Company's group health plan through January 1, 2003 and subsequently will be
provided selected health care benefits up to age 65. The Company will also
transfer to Mr. Hall his life insurance policy and continue to pay the annual
premium on the policy until the earlier of his death, his termination of the
policy or the completion of 15 years of premium payments (including payments
made prior to the agreement). The agreement includes Mr. Hall's covenant not to
compete with or solicit employees of the Company throughout the United States
for a period of two years and not to use or disclose confidential information of
the Company. In addition, the agreement includes a mutual release of Mr. Hall
and the Company of certain other rights arising prior to the date of his
resignation.
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OTHER BENEFITS
The Company provides a group term life insurance benefit equal to two times
base annual pay up to a maximum of $680,000 its executive and certain management
employees who meet eligibility requirements. Other key employees have a maximum
group term life insurance benefit of $100,000, based on one times base annual
pay.
CASH COMPENSATION OF DIRECTORS
Nonemployee Directors of the Company receive an annual retainer of $20,000
and attendance fees of $1,000 for each Board meeting attended in person or by
telephone conference. For each meeting of a committee of the Board of Directors
such nonemployee Directors receive an attendance fee of $500 for attendance in
person or by telephone conference. Directors who are employees of the Company do
not receive directors' or committee members' fees. John D. Baker II, Robert N.
Blackford, H. Corbin Day and William P. Kennedy served as nonemployee Directors
and received nonemployee Director's fees during the fiscal year ended January
26, 2001.
DIRECTORS' STOCK OPTION PLAN
Each of the nonemployee Directors is a participant in the Directors' Plan.
Under the Directors' Plan, options for the purchase of Common Stock are granted
to the participants on the date of each annual meeting of the Board of Directors
following each annual meeting of the shareholders. Under the Directors' Plan, as
amended through 1999, options may be granted with respect to 302,500 shares, and
options with respect to an aggregate of 20,000 shares are granted following each
annual meeting of the shareholders to be equally divided among the participants.
Options granted under the Directors' Plan are granted for the purchase of shares
at a purchase price of 100% of the current market value of the Common Stock on
the date of the grant and expire 10 years after the date of the grant or earlier
in the event of termination of service as a nonemployee Director or under the
circumstances set forth in the Directors' Plan. Such options are not incentive
stock options within the meaning of Section 422 of the Internal Revenue Code, as
amended (the "Code"). During the last fiscal year, options with respect to an
aggregate of 20,000 shares divided equally between the four nonemployee
Directors (who served as Directors for the entire fiscal year), were granted at
a purchase price of $18.75 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
As indicated in the Compensation Committee Report on Executive Compensation
set forth elsewhere in this Proxy Statement, David H. Hughes, the Chairman of
the Board and Chief Executive Officer of the Company, consulted with the
Compensation Committee with respect to the compensation of the executive
management group and submitted to the Compensation Committee his recommendation
for compensation of the other members of the group. Mr. Hughes, who is not a
member of the Compensation Committee, consulted with the Compensation Committee
and provided his recommendation at the Compensation Committee's request.
Robert N. Blackford, a Director of the Company and a member of the
Compensation Committee, is a member of the law firm of Holland & Knight LLP
which served as counsel to the Company during the fiscal year ended January 26,
2001.
CERTAIN TRANSACTIONS WITH MANAGEMENT
The Company and certain of its subsidiaries lease certain buildings and
properties from Hughes, Inc., a company of which David H. Hughes, Vincent S.
Hughes and Russell V. Hughes (formerly an executive officer of the Company) are
the officers and directors, and in which each owns a one-third interest. During
the last fiscal year 14 such leases were in effect in Florida. Each lease was
entered into prior to March 11, 1992 and was renewed effective as of April 1,
1998, except for one lease that was not renewed that is currently on a
month-to-month basis. Such leases typically relate to branch facilities
including buildings ranging in size from approximately 15,000 to 116,000 square
feet together with outside parking and storage areas ranging in size
14
17
from approximately 35,000 square feet to several acres. The two largest
buildings leased from Hughes, Inc. are the Orlando Electric sales branch
facility which is approximately 116,000 square feet and the Orlando Plumbing
sales branch facility which is approximately 64,000 square feet.
Under leases in effect during the fiscal year ended January 26, 2001, the
Company and its subsidiaries made rental payments to Hughes, Inc. aggregating
$1,283,895. The Company also pays real estate taxes, building insurance and
repairs, other than structural repairs, with respect to the leased properties.
During the last fiscal year the Company paid real estate taxes and building
insurance on the leased properties of $202,229 and $11,100, respectively.
Maintenance repairs paid by the Company during the last fiscal year were not
substantial and were, in the opinion of management, normal for the types of
properties leased.
The Company leases certain buildings and properties from SWS-TX Realty,
Inc. ("SWS-TX Realty"), Jem-Realty, LLC ("Jem-Realty"), SWS-GA Realty, Inc.
("SWS-GA Realty") and SJ Limited Partnership ("SJ Partnership"). H. Corbin Day
and Michael L. Stanwood are the sole shareholders of SWS-TX Realty and SWS-GA
Realty, and Jem-Realty is a wholly-owned subsidiary of Jemison. Michael L.
Stanwood is a limited partner of SJ Partnership and a director of Jemison.
During the last fiscal year, seven such leases were in effect with respect to
five locations in Texas, one location in Georgia, and one location in North
Carolina. Five of the leases except one were entered into on May 13, 1996. All
of the leases except one will expire on May 12, 2002. One of the leases pertains
to a property located in Texas and was entered into on July 1, 1998 and expired
on June 30, 2000. The remaining lease in Texas was entered into on May 1, 1999
and will expire on April 30, 2004. Each lease typically relates to branch
facilities ranging in size from approximately 15,000 to 44,500 square feet,
together with outside storage and parking. Under leases in effect during the
fiscal year ended January 26, 2001, the Company made rental payments to SWS-TX
Realty, Jem-Realty, SWS-GA Realty and SJ Partnership aggregating $581,357.
During the last fiscal year, the Company paid aggregate real estate taxes and
building insurance on the leased properties of $52,806 and $3,158 respectively.
The Company also pays for repairs, other than structural repairs, with respect
to the leased properties. Maintenance repairs paid by the Company during the
last fiscal year were not substantial and were, in the opinion of management,
normal for the types of properties leased.
During the fiscal year ended January 26, 2001, the Company purchased
approximately $603,019 worth of merchandise from Jasper Lee Enterprises, Inc.
("Jasper Enterprises"). Jasper Enterprises sells promotional and other marketing
related items. Diane E. Holland, wife of Jasper L. Holland, Jr., a Vice
President and Group President of the Company, is the sole shareholder of Jasper
Enterprises.
During the fiscal year ended January 26, 2001, the Company purchased
approximately $1,001,558 in goods and services from Travel Concepts in
connection with travel services provided to the Company. Travel Concepts is
owned jointly by Gradie E. Winstead, Jr. a Vice President and Group President of
the Company, and his wife Tara Winstead. Mr. Winstead is also a Director and
Vice President of Travel Concepts.
The Company believes that the terms of the transactions described above are
at least as favorable to the Company as those which could have been obtained
from unrelated parties.
Robert N. Blackford, a Director of the Company, is a member of the law firm
of Holland & Knight LLP which served as counsel to the Company during the fiscal
year ended January 26, 2001.
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SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares during the five year period ended January 26,
2001, the yearly percentage change in the cumulative total shareholder return of
the Company's Common Stock with the cumulative total return of the S&P SmallCap
600 and the cumulative total return of an industry group consisting of those
peer group companies identified in the graph which have been selected by the
Company as reporting companies whose lines of business are comparable to those
of the Company.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG HUGHES SUPPLY, INC., THE S&P SMALLCAP 600 INDEX
AND A PEER GROUP
HUGHES SUPPLY, INC. S&P SMALLCAP 600 PEER GROUP
------------------- ---------------- ----------
1/96 100.00 100.00 100.00
1/97 121.78 123.07 116.65
1/98 174.12 149.06 146.43
1/99 136.83 154.22 146.83
1/00 96.37 170.11 130.81
1/01 97.84 196.26 158.65
* $100 INVESTED ON 1/31/96 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING JANUARY 31.
PEER GROUP
----------------
Building Materials Holding Corp.
A.M. Castle & Co.
Centex Corp.
Florida Rock Industries, Inc.
W.W. Grainger, Inc.
Industrial Distribution Group, Inc.
Lawson Products, Inc.
Lennar Corporation
Noland Company
SCP Pool Corp.
Watsco Inc.
Wesco International, Inc.
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BOARD OF DIRECTORS AND COMMITTEES
BOARD OF DIRECTORS' MEETINGS AND ATTENDANCE
During the last fiscal year, the Board of Directors of the Company held a
total of five meetings. Each member of the Board of Directors attended 100% of
the aggregate of (i) the total number of meetings of the Board of Directors, and
(ii) the total number of meetings held by all committees of the Board of
Directors on which he served, except that Mr. Kennedy attended less than 75%
percent of the meetings of the Audit Committee during fiscal 2001.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has standing Executive, Audit,
Compensation, Long-Term Incentive Plan, and Directors' Stock Option Plan
Committees. The memberships of the standing committees of the Board of Directors
are listed in the Directors' biographies set forth below under "Election of
Directors." The Company does not have a nominating committee.
The Executive Committee acted one time by written consent during the last
fiscal year to approve the merger of certain subsidiaries. The Executive
Committee has authority to act on matters of general corporate governance when
the Board of Directors is not in session.
The Audit Committee met five times during the last fiscal year (including
one action by written consent). At its meetings, the Audit Committee appointed
the Company's independent auditors for fiscal 2001, reviewed the reports of the
Company's internal audit staff, reviewed the professional services provided by
the independent auditors together with the range of audit and nonaudit fees,
reviewed and adopted a written charter, reviewed the Company's proxy statement
and Form 10-K, and reviewed quarterly earnings releases. The Audit Committee
acts under a written charter adopted by the Board of Directors, a copy of which
is attached to this proxy statement as Appendix A. All members of the Audit
Committee are "independent" as such term is defined in Sections 303.01(B)(2)(a)
and (3) of the New York Stock Exchange's listing standards.
The Compensation Committee met five times during the last fiscal year
(including one action by written consent) and reviewed and made recommendations
to the Board of Directors with respect to the compensation of members of the
Company's executive management group. It also issued stock options and
restricted stock grants under the 1997 Executive Stock Plan. Information with
respect to the Compensation Committee's recommendation for the last fiscal year
is set forth elsewhere in this Proxy Statement under "Compensation Committee
Report on Executive Compensation."
The Long-Term Incentive Plan Committee met once during the last fiscal year
to approve pay-out under the fiscal 2001 plan and to consider alternatives to
the existing plan. The Long-Term Incentive Plan Committee was established on
January 25, 1996, pursuant to an amendment to the Senior Executives' Long-Term
Incentive Plan, to administer the plan and any separate performance plans
adopted thereunder. It is the duty of the Long-Term Incentive Plan Committee to
interpret the plan and to establish and administer separate performance plans
under the plan, including the designation of applicable performance periods, the
selection of participants, the establishment and application of performance
goals and the determination of performance bonus payments under such plans.
The Directors' Stock Option Plan Committee has the authority to interpret
the provisions of the Directors' Plan. The Directors' Stock Option Plan
Committee did not meet during the last fiscal year.
FAMILY RELATIONSHIPS BETWEEN CERTAIN DIRECTORS AND EXECUTIVE OFFICERS
The following family relationship exists between Directors and executive
officers of the Company:
David H. Hughes and Vincent S. Hughes are brothers.
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ELECTION OF DIRECTORS
(PROPOSAL ONE)
The Company's Restated Articles and Bylaws provide that the Board of
Directors of the Company shall be divided into three approximately equal classes
of Directors. The Company's Board of Directors is currently comprised of six
Directors, with each class consisting of two Directors. Each Director is elected
for a three-year term, with one class of Directors being elected at each annual
meeting of shareholders. Following the resignation of Mr. Hall as a Director,
the Board set the number of Directors at six and restructured the classification
the Board so that each class would have two Directors. As a result, Mr. William
P. Kennedy was added to the class of Directors whose term is expiring at the
2001 Annual Meeting.
The Board of Directors has nominated John D. Baker II and William P.
Kennedy for election as Directors at the Annual Meeting. Messrs. Baker and
Kennedy currently are members of the Board of Directors and have consented to
serve as Directors if elected. If elected at the Annual Meeting, Messrs. Baker
and Kennedy will serve until the 2004 Annual Meeting and until the election and
qualification of their respective successors or until their earlier death,
resignation or removal.
VOTING INFORMATION WITH REGARD TO THE ELECTIONS PROPOSAL
It is the intention of the persons named as proxies to vote the proxies FOR
the election to the Board of Directors of the nominees named above, unless a
shareholder directs otherwise. In the event that a vacancy (which is not
anticipated) arises prior to the Annual Meeting, the proxy may be voted for a
substitute nominee designated by the Board of Directors.
The affirmative vote of a plurality of the votes cast by the holders of
Common Stock will be required to elect the nominees as Directors of the Company
for the ensuing three year term. Abstentions and broker non-votes will have no
effect on the outcome of the voting to elect the Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
NAMED IN THIS PROPOSAL.
DIRECTOR INFORMATION
Set forth below is information concerning the nominees to be elected at the
Annual Meeting for a three-year term expiring at the 2004 Annual Meeting, as
well as certain information concerning the Directors whose terms extend beyond
the Annual Meeting. Set forth below with respect to each director or director
nominee is his name, age, principal occupation and business experience for the
past five years and length of service as a Director.
DIRECTORS TO BE ELECTED AT THE ANNUAL MEETING
JOHN D. BAKER II
AGE: 52
Mr. Baker has served as a Director of the Company since March 1994. Mr.
Baker also serves as a member of the Company's Compensation, Directors' Stock
Option Plan, Long-Term Incentive Plan and Audit Committees. Mr. Baker currently
serves as President, Chief Executive Officer and director of Florida Rock
Industries, Inc. Mr. Baker also serves as a director of Patriot Transportation
Holding, Inc. Mr. Baker's term as a director of the Company expires at the 2001
Annual Meeting.
WILLIAM P. KENNEDY
AGE: 57
Mr. Kennedy has served as a Director since March 1999. Mr. Kennedy
currently serves as Chief Executive Officer of Nephron Pharmaceuticals
Incorporated, a manufacturer of sterile pharmaceutical products. Mr. Kennedy
serves as a member of the Company's Compensation, Long-Term Incentive Plan and
Audit Committees. From 1981 to 1997, Mr. Kennedy served as Chairman and Chief
Executive Officer of Rotech Medical, a home health services company. Mr.
Kennedy's term as a Director of the Company expires at the 2001 Annual Meeting.
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21
DIRECTORS WHOSE TERMS EXTEND BEYOND THE ANNUAL MEETING
ROBERT N. BLACKFORD
AGE: 64
Mr. Blackford has served as a Director since December 1970 and served as
the Company's Secretary from February 1974 to May 1997. Mr. Blackford also
serves as a member of the Company's Compensation, Directors' Stock Option Plan
and Long-Term Incentive Plan Committees. Mr. Blackford is an attorney in
Orlando, Florida with the law firm of Holland & Knight LLP, the successor to the
law firm of Maguire, Voorhis & Wells, P.A., where he has practiced since 1968.
Mr. Blackford's term as a Director of the Company expires at the 2003 Annual
Meeting.
H. CORBIN DAY
AGE: 63
Mr. Day has served as a Director of the Company since October 1996. Mr. Day
currently serves as Chairman of Jemison Investment Co., Inc. Mr. Day serves as a
member of the Company's Compensation, Directors' Stock Option Plan, Long-Term
Incentive Plan and Audit Committees. Mr. Day is also a member of the Board of
Directors of Protective Life Corporation. Mr. Day's term as a Director of the
Company expires at the 2003 Annual Meeting.
DAVID H. HUGHES
AGE: 57
Mr. Hughes has served as the Company's Chairman of the Board and Chief
Executive Officer since November 1986, as its President and Chief Operating
Officer since March 2001, and as a Director since August 1968. Mr. Hughes also
serves as a member of the Company's Executive Committee. Mr. Hughes served as
President of the Company from June 1972 to March 1994. Mr. Hughes is also a
director of SunTrust Banks, Inc. and Brown & Brown, Inc. Mr. Hughes' term as a
Director of the Company expires at the 2002 Annual Meeting.
VINCENT S. HUGHES
AGE: 60
Mr. Hughes has served as Vice President of the Company since April 1972 and
as a Director since April 1966. Mr. Hughes also serves as a member of the
Company's Executive Committee. Mr. Hughes' term as a Director of the Company
expires at the 2002 Annual Meeting.
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22
AUDIT COMMITTEE REPORT
In connection with the preparation of the Company's Annual Report for the
year ended January 26, 2001:
- The Audit Committee reviewed and discussed the audited financial
statements with management;
- The Audit Committee discussed with the independent auditors the material
required to be discussed by SAS 61; and
- The Audit Committee reviewed the written disclosures and the letter from
the independent auditors required by the Independence Standards Board
Standard No. 1 and discussed with the auditors any relationships that may
impact their objectivity and independence and satisfied itself as to the
auditors' independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors of the Company that the audited financial
statements be included in the Annual Report for the year ended January 26, 2001.
Submitted by the Audit Committee of the Board of Directors.
John D. Baker II
H. Corbin Day
William P. Kennedy
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23
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP served as the Company's independent auditors for
the fiscal year ended January 26, 2001. The Company has engaged
PricewaterhouseCoopers LLP as its auditors for fiscal year ending January 25,
2002, subject to fee negotiation. Representatives of PricewaterhouseCoopers LLP
are expected to be present at the Annual Meeting where they will have an
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions.
AUDIT FEES. PricewaterhouseCoopers LLP billed the Company $219,250, in the
aggregate, for professional services rendered by them for the audit of the
Company's annual financial statements for the fiscal year ended January 26,
2001, and the reviews of the interim financial statements included in the
Company's Forms 10-Q filed during the fiscal year ended January 26, 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION
FEES. PricewaterhouseCoopers LLP provided no professional services to the
Company of the nature described in Paragraph (c)(4)(ii) of Rule 2-01 of
Regulation S-X during the fiscal year ended January 26, 2001.
ALL OTHER FEES. PricewaterhouseCoopers LLP billed the Company $678,799, in
the aggregate, for all other services rendered by them (other than those covered
above under "Audit Fees" and "Financial Information Systems Design and
Implementation Fees") during the fiscal year ended January 26, 2001.
The Audit Committee considered whether PricewaterhouseCoopers' provision of
the above non-audit services is compatible with maintaining such firm's
independence
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Shareholders who wish to submit a proposal for consideration at the 2002
Annual Meeting should submit the proposal in writing to the Company at the
address set forth on page 1 of this Proxy Statement. A proponent of a proposal
is required to have been a record or beneficial owner of at least 1% or $2,000
in market value of Common Stock of the Company for a period of at least one year
and must continue to own such securities through the date on which the 2002
Annual Meeting is held. The Company has the right to request documentary support
(as provided in Rule 14a-8 promulgated by the Commission pursuant to the
Exchange Act) of the proponent's ownership claim within 14 calendar days after
receipt of the proposal, and the proponent shall furnish appropriate
documentation within 14 days after receiving such request. Proposals must be
received by the Company on or before December 14, 2001 for inclusion in next
year's proxy materials. Shareholders who intend to present a proposal at the
2002 Annual Meeting without inclusion of such proposal in the Company's proxy
materials are required to provide notice of such proposal to the Company in
accordance with the By-Laws no later than January 15, 2002. Shareholders who
submit proposals must, in all other respects, comply with Rule 14a-8 under the
Exchange Act.
MISCELLANEOUS
The Board of Directors does not intend to present and knows of no other
person who intends to present any matter of business at the Annual Meeting other
than as set forth in the accompanying Notice of Annual Meeting of Shareholders.
However, if other matters properly come before the meeting, it is the intention
of the persons named on the enclosed proxy card to vote in accordance with their
best judgment.
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24
The Company will bear the costs of preparing and mailing the Proxy
Statement, proxy card and other material that may be sent to shareholders in
connection with this solicitation. In addition to solicitations by mail,
officers and other employees of the Company may solicit proxies personally or by
telephone or telegram.
By Order of the Board of Directors
[/s/ Benjamin P. Butterfield]
BENJAMIN P. BUTTERFIELD
General Counsel and Secretary
Orlando, Florida
April 12, 2001
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY; THEREFORE, SHAREHOLDERS WHO
DO NOT EXPECT TO ATTEND THE 2001 ANNUAL MEETING IN PERSON ARE REQUESTED TO FILL
IN, SIGN AND RETURN THE PROXY FORM AS SOON AS POSSIBLE.
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25
APPENDIX A
HUGHES SUPPLY, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee (Committee) of Hughes Supply,
Inc. (Company) is to assist the Board of Directors (Board) in fulfilling its
financial oversight responsibilities. The Committee's primary duties and
responsibilities are to:
Serve as an independent and objective party to monitor the financial
reporting process and internal control system of the Company;
Review and appraise the audit efforts of the independent accountants
and internal auditing department; and
Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department, and the Board.
II. COMPOSITION
The Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent, and free from any relationship
that, in the opinion of the full Board, would interfere with the exercise of
such directors' independent judgment as a member of the Committee. The
determination of independence shall be made in accordance with the definition of
independence included in, and other provisions of the Rules of the New York
Stock Exchange, Inc. (NYSE). All members of the Committee shall have a working
familiarity with basic finance and accounting practices and any new member shall
become financially literate within a reasonable period of time. At least one
member shall have accounting or financial management expertise. The
determination of financial literacy and expertise shall be interpreted by the
Board.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until their successors shall
be duly elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
III. MEETINGS
The Committee shall meet at least four times annually or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the director of the
internal auditing department and the independent accountants in separate
executive sessions to discuss any matters the Committee or any of these groups
believes should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
Document/Reports Review
The Committee will:
1. Review and update this Charter annually, or as conditions dictate.
2. Submit a written affirmation form to the NYSE annually in compliance
with the Rules of the NYSE within 30 days of the Company's annual
meeting of shareholders.
3. Review the Company's annual financial statements and any reports or
other financial information submitted to the Securities and Exchange
Commission or to be made public.
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Audit Committee Charter
Page 2
4. Review with financial management and the independent accountants the
Company's Form 10-Q prior to its filing. The Chair of the Committee may
represent the entire Committee for purposes of this review.
5. Review the Executive Summaries of the internal reports to management
prepared by the internal auditing department.
Independent Accountants
6. Recommend to the Board the selection of the independent accountants who
are accountable to the Committee and the Board. This selection will
consider independence and the effectiveness of the independent
accountants. The Committee will approve fees to be paid for services
rendered. On an annual basis, the outside auditor will submit a formal
written statement delineating all services provided to, and
relationships with the Company, and the Committee will review and
discuss with the independent accountants these services and all other
significant relationships the accountants may have developed with the
Company to determine such accountants' independence.
7. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
8. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fairness and
accuracy of the Company's financial statements.
Financial Reporting
9. In consultation with the independent accountants and the internal
auditors, review the integrity of the Company's financial reporting
processes, both internal and external.
10. Consider the independent accountants' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.
11. Consider and approve only, major changes to the Company's accounting
and auditing principles and practices as suggested by the independent
accountants, management, or the internal auditing department.
12. Review with management, the independent accountants and the internal
auditors any significant accounting estimates made in management's
preparation of the financial statements.
13. Review separately with the independent accountants and the internal
auditing department any significant difficulties encountered during the
course of their audits including any restrictions on the scope of work
or access to required information.
14. Review any significant disagreement between management and the
independent accountants in connection with the preparation of the
financial statements.
15. Review with the independent accountants other matters related to the
conduct of the audit required to be communicated to the Committee under
generally accepted auditing standards.
Ethical and Legal Compliance
16. Review activities, organizational structure, and qualifications of the
internal audit department, including the selection and or discharge of
the Director of Internal Audit.
17. Review, with the Company's counsel, significant legal compliance
matters.
18. Review, with the Company's counsel, any legal matter that could have a
significant impact on the Company's financial statements.
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Audit Committee Charter
Page 3
19. Review the status of tax returns and tax audits.
The Committee shall have the power and authority to perform whatever acts
it deems necessary to carry out its responsibilities under this Charter,
including the authority to undertake investigations into the affairs of the
Company in the course of conducting the business of the Committee and to retain
such outside advisors, professionals and experts as the Committee shall deem
necessary or advisable for the purpose and at the expense of the Company.
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PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
HUGHES SUPPLY, INC.
MAY 15, 2001
Please Detach and Mail in the Envelope Provided
29
HUGHES SUPPLY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated April 12, 2001, and does
hereby appoint David H. Hughes, Benjamin P. Butterfield and Vincent S. Hughes,
and any of them, with full power of substitution, as proxy or proxies of the
undersigned, to represent the undersigned and vote all shares of Hughes Supply,
Inc. Common Stock which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Shareholders of Hughes Supply, Inc. to be held
at the principal executive offices of the Company, 20 North Orange Avenue, Suite
200, Orlando, Florida, 32801, at 10:00 a.m., on May 15, 2001 and at any
adjournment(s) thereof.
TO BE SIGNED ON OTHER SIDE
30
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE.
Proposal 1. Election of Directors
[ ] FOR all nominees listed at right NOMINEES: Class I
(except as marked to the contrary below) Nominees for a
three-year term
expiring in 2004:
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed at right John D. Baker II
William P. Kennedy
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
_________________________________________
Proposal 2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
Shares of Common Stock
__________
PLEASE COMPLETE, DATE AND SIGN AND RETURN THIS PROXY PROMPTLY.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, IT
WILL BE VOTED IN FAVOR OF PROPOSAL 1. THE PROXIES MAY VOTE IN THEIR DISCRETION
AS TO OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
SIGNATURE(S): Dated: ________, 2001
------------------ --------------------------
Signature, if held jointly
NOTE: Please sign exactly as your name(s) appear hereon. When signing as
attorney, executor, administrator, trustee or guardian, give your full title as
such. If the signatory is a corporation, sign the full corporate name by a duly
authorized officer.