Notice of Annual Meeting of Stockholders Page 1
N O L A N D
NOLAND COMPANY
80 29th Street, Newport News, Virginia 23607
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held at 10:00 A.M. on April 20, 2000
Notice is hereby given that the Annual Meeting of Stockholders of
Noland Company, a Virginia corporation (the Corporation), will be
held, in accordance with the Bylaws of the Corporation, on
Thursday, April 20, 2000, at 10:00 A.M. (Local Time) at the
principal office of the Corporation, 80 29th Street, Newport
News, Virginia, for the following purposes:
1. to elect six Directors to serve for the ensuing year;
2. to approve an increase in the number of shares available for
the 1993 Noland Company Restricted Stock Plan from 50,000
shares to 100,000 shares;
3. to appoint PricewaterhouseCoopers LLP to audit the
consolidated financial statements of the Corporation for the
year ending December 31, 2000; and
4. to transact such other business as may properly come before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 8,
2000, will be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
James E. Sykes Jr.
Secretary
March 30, 2000
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO
THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND
IN ORDER THAT A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR
SIGNED PROXY, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL
AID THE CORPORATION IN AVOIDING THE EXPENSE OF ADDITIONAL PROXY
SOLICITATION. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT
TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING. ANY PERSON
GIVING A PROXY MAY REVOKE IT BEFORE IT IS VOTED BY DELIVERING
ANOTHER PROXY, OR WRITTEN NOTICE OF REVOCATION, TO THE SECRETARY
OF THE CORPORATION.
Page 2
NOLAND COMPANY
(a Virginia corporation)
80 29th Street
Newport News, Virginia 23607
Proxy Statement
Annual Meeting of Stockholders to be
held at 10:00 A.M., April 20, 2000
Approximate date of mailing .... March 30, 2000
SOLICITATION AND REVOCATION OF PROXY
The proxy accompanying this statement is solicited by the Board
of Directors on behalf of the Corporation. All proxies in the
accompanying form which are properly executed by stockholders and
returned to the Secretary will be voted. Any proxy delivered
pursuant to this solicitation is revocable at the option of the
person executing the same at any time before it is exercised.
The cost of soliciting proxies, including the cost of preparing
and mailing the proxy materials, will be borne by the
Corporation. In addition to the use of the mails, proxies may be
solicited, personally or by telephone, by regular employees of
the Corporation.
A copy of the Corporation's Annual Report to stockholders for the
year ended December 31, 1999, which includes consolidated
financial statements, is furnished concurrently with this Proxy
Statement.
PURPOSES OF MEETING
The purposes of the Annual Meeting of Stockholders will be (1) to
elect six Directors to serve for the ensuing year; (2) to
approve an increase in the number of shares available for
the 1993 Noland Company Restricted Stock Plan from 50,000
shares to 100,000 shares; (3) to appoint PricewaterhouseCoopers
LLP as independent auditors of the Corporation for the ensuing
year; and (4) to transact such other business as may properly
come before the meeting, or any adjournment thereof.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of March 8, 2000, there were outstanding 3,700,876 shares of
Common Stock, the sole class of voting securities of the
Corporation. Holders of record at the close of business on that
date are entitled to one vote for each share.
The following are, to the knowledge of the Corporation,
beneficial owners as of March 8, 2000, of over 5% of the
Corporation's Common Stock:
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Title and
Name and Class of Amount and Nature Percent of
address Voting Security of Beneficial Ownership Class
Jane K. Noland, Lloyd U.
Noland III, Susan C. Noland
and Anne N. Edwards
individually and as trustees of
The L. U. Noland 1982 Trust and
Lloyd U. Noland Jr.
80 29th Street Common 2,077,302(1) 56.13%
Newport News, Virginia 23607 Stock shares
Edmundson International, Inc.
31356 Via Colinas Common 654,925 17.70%
Westlake Village, CA 91362 Stock shares
Marvin C. Schwartz
c/o Neuberger & Berman
605 Third Avenue Common 194,899
New York, New York 10158 Stock shares 5.27%
(1) The trustees of The L. U. Noland 1982 Trust are Mr. Lloyd U.
Noland Jr.'s wife, Jane K. Noland, and his three children: Lloyd
U. Noland III, Susan C. Noland and Anne N. Edwards. The trust
assets include 906,996 shares of Common Stock of the Corporation
and a majority of the outstanding voting stock of Basic
Construction Company, which, in turn, owns 893,967 shares of the
Corporation's Common Stock. Since the trustees have the sole
power to vote and to dispose of shares held in the L. U. Noland
1982 Trust, each trustee may be deemed to have beneficial
ownership of 1,800,963 shares of the Corporation's Common Stock
(including the shares owned by Basic Construction Company). The
trustees share the power to vote and direct the disposition of
such shares. Each trustee owns the following additional shares of
the Corporation's Common Stock, with sole power to vote and
dispose of all of such shares except for 155,138 shares
attributed to Jane K. Noland, but owned by her husband, Lloyd U.
Noland Jr.; 1,095 shares attributed to Anne N. Edwards, but owned
by her husband; and 2,190 shares attributed to Lloyd U. Noland
III but owned by his wife and one of his children:
Jane K. Noland 182,270
Lloyd U. Noland III 45,502
Susan C. Noland 26,736
Anne N. Edwards 21,831
Lloyd U. Noland III also has voting power only over 8,000 shares
of restricted stock. All of such shares are included in the above
table. As a group, the Noland family may be deemed to be the
owners of an aggregate of 2,077,302 shares or 56.13% of the
outstanding Common Stock.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of the forms required by Section 16(a)
of the Securities Exchange Act of 1934, as amended, that have
been received by the Corporation, the Corporation believes there
has been compliance with all filing requirements applicable to
its officers, directors and beneficial owners of greater than 10%
of the Corporation's Common Stock.
THE BOARD OF DIRECTORS AND ITS STANDING COMMITTEES
The Corporation is managed under the direction of the Board of
Directors and its Executive Committee, by the Chairman of the
Board and other officers to whom authority has been delegated.
On June 1, 1999, by written consent, the Board increased the
number of Directors from six to seven and selected Mr. C. Edward
Pleasants to serve as the new Director. Mr. Pleasants joined the
Audit and Compensation Committee at that time. Mr. Pleasants
will stand for re-election at the April 20, 2000 meeting.
In 1999, each Director attended at least 75% of the aggregate of
(i) the total number of meetings of the Board of Directors held
during 1999 and (ii) the total number of meetings of all Board
committees on which the Director served.
During 1999, the Board of Directors met four times. On six
occasions, the Board acted by written consent. Members of the
Board who are employees of the Corporation serve without
compensation. Prior to July 1, 1999 non-employee Directors
received a quarterly retainer of $1,875 and $500 for each
Committee meeting attended. Subsequent to June 30, 1999, each
non-employee Director receives a quarterly award of Noland
Company Common Stock having an aggregate fair market value of
$3,000 (see compensation of Executive Officers and Directors).
Each non-employee Director also receives $1,000 per Committee
Meeting.
The Board elected an Executive Committee consisting of Messrs.
Noland III, King and Henderson. When the Board is not in session,
the Executive Committee generally has the authority of the Board
except that the Virginia Stock Corporation Act prohibits certain
actions by committees. During 1999, the Executive Committee met
seven times.
The Board appointed an Executive Compensation Committee
consisting of Messrs. Allen, Goolsby, McElroy and Pleasants, with
Mr. McElroy acting as chairman. The Committee's primary
functions are to make recommendations to the Board of Directors
concerning remuneration arrangements for executive officers and
to review and make recommendations concerning the administration
of certain benefit plans. During 1999, the Executive Compensation
Committee met one time.
The Board appointed an Audit Committee consisting of Messrs.
Allen, Goolsby, McElroy and Pleasants, with Mr. Goolsby acting as
chairman. The Audit Committee functions in an oversight capacity
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with respect to the Corporation's auditing, accounting,
reporting, and control functions and assists the entire Board in
fulfilling its fiduciary responsibilities with respect to these
functions. During 1999, the Audit Committee met two times.
The Corporation does not have a nominating committee.
ELECTION OF DIRECTORS
It is intended that proxies in the accompanying form will be
voted by the persons named therein (unless authority is
withheld)in favor of the nominees named for Directors for the
term of one year or until their successors are elected and
qualified. In case any of such nominees is unexpectedly unable to
serve, the proxies will be voted for the election of the others
so named and may be voted for substitute nominees. The election
of each nominee for Director requires the affirmative vote of the
holders of a plurality of the shares of Common Stock cast in the
election of Directors.
Votes that are withheld and shares held in street name ("Broker
Non-Votes") that are not voted in the election of Directors will
not be included in determining the number of votes cast.
Mr. John L. McElroy, re-elected April 21, 1999 will retire from
the Board coincident with the April 20, 2000 meeting and will not
stand for re-election.
NOMINEES FOR DIRECTOR
There are no family relationships among any of the nominees and
any officer; nor is there any arrangement or understanding
between any nominee and any other person pursuant to which the
nominee was selected. Each of the nominees for the office of
Director is a member of the present Board of Directors.
Mr. Allen, Mr. Goolsby, Mr. Henderson, and Mr. Noland III have
served in the respective positions shown for more than five
years.
Shares of
Common Stock
First Beneficially Percent
Name, Age, Position Became Owned on of
and Directorships Director March 8, 2000 Class(1)
Thomas N. Allen - Age 61 1995 1000 -
Chairman, East Coast Oil
Corp. (Retail Gasoline/
Convenience Stores)
Allen C. Goolsby - Age 60 1989 700 -
Partner, Hunton & Williams
(Attorneys)
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Arthur P. Henderson Jr. - Age 56 1983 5,734 -
Vice President-Finance
Kenneth C. King - Age 57 1998 2,581 -
Vice President-Marketing since
April 1, 1998. Previously
Manager of Noland Company's
Frederick, Maryland, Complex since 1977.
C. Edward Pleasants - Age 59 1999 1,000 -
Chairman Emeritus, Pleasants
Hardware Company; Director of
BB&T Corporation and PHC Holdings.
Lloyd U. Noland III - Age 56 1979 1,846,465(2) 49.89%
Chairman of the Board and
President; Director of Wachovia
Corporation(2)
All officers and directors of 1,866,632 50.44%
the Corporation as a group (13) shares
(1) Less than .2 % except as indicated.
(2) See Voting Securities and Principal Holders Thereof on
page 1.
Except as described on page 2 with respect to shares held by the
Noland family, each Director and Officer has the sole power to
vote the shares of Common Stock attributed to him in this table.
CERTAIN TRANSACTIONS
The Corporation is in the fourth year of a ten-year agreement to
lease an existing office building for its corporate headquarters.
The building is owned by Basic Construction Company (see Voting
Securities and Principal Holders Thereof). Under the terms of the
lease, the Corporation will pay an annual rental fee of
approximately $260,000 per year. The Corporation will bear the
direct costs of utilities and real estate taxes. The terms of the
lease were based on an evaluation by an independent real estate
firm.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table presents information relating to total
compensation of the Chief Executive Officer and the four next
most highly compensated executive officers of the Corporation who
earned more than $100,000 for the fiscal year ended December 31,
1999.
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SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
Restricted Stock All Other
Name and Salary Bonus Awards(2) Compensation(1)
Principal Position Year $ $ $ $
Lloyd U. Noland III 1999 $145,140 $60,000 $ 17,875 $ 3,468
Chief Executive
Officer 1998 $145,140 $30,000 $ 25,875 $ 2,495
1997 $135,233 $30,000 $ - $ 2,311
Kenneth C. King 1999 $135,000 $60,000 $ 17,875 $ 3,226
Vice President -
Marketing and Branch 1998 $115,530 $41,198 $ 25,875 $29,066(3)
Operations
1997 $ 68,431 $42,157 $ - $ 968
Arthur P. Henderson Jr. 1999 $ 89,650 $42,500 $ 13,406 $ 2,142
Vice President -
Finance 1998 $ 85,800 $30,000 $ 19,406 $ 1,475
1997 $ 83,889 $30,000 $ - $ 1,428
Jean F. Preston 1999 $ 85,000 $42,500 $ 13,406 $ 2,031
Vice President -
Corporate Data 1998 $ 75,510 $28,000 $ 19,406 $ 1,298
1997 $ 65,084 $20,275 $ - $ 1,061
Ronald K. Binger 1999 $ 78,396 $26,000 $ 8,938 $ 1,852
Vice President -
Director of Operations 1998 $ 78,396 $20,250 $ 12,938 $ 1,332
1997 $ 74,282 $20,250 $ - $ 1,263
(1) Profit sharing allocation.
(2) Restricted stock awards valued at market price of $17.875 per
share on December 31, 1999, and $25.875 per share on December 31,
1998. Recipients have the right to receive dividends and vote the
restricted shares.
(3) Includes one-time relocation allowance for Mr. King.
RETIREMENT BENEFITS
Payments by the Corporation to the Improved Retirement Plan for
Employees of Noland Company (the Plan), are made based on
recommendations by the Plan's actuary. The Plan is a defined
benefit "Career Average" plan. Annual retirement benefits are
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computed by adding, for each year of credited service, the sum of
1.333 % of compensation (up to "Covered Compensation") and
1.933 % of compensation over "Covered Compensation." Covered
Compensation is generally the average of the Social Security wage
bases over a working career.
The amounts shown below do not include Social Security benefits
and are not subject to any reductions on account of such
benefits.
Estimated annual benefits (assuming continued employment to age
65 on a life-only annuity basis) accrued to date and payable at
age 65 to Lloyd U. Noland III, Kenneth C. King, Arthur P.
Henderson Jr., Jean F. Preston and Ronald K. Binger are $68,945,
$56,655, $48,092, $57,943 and $35,560, respectively.
Effective July 1, 1999 the Board approved a change in
compensation for outside Directors and adopted the 1999 Outside
Directors Stock Plan (the Plan). The Plan provides for awards,
at each quarterly award date, of whole and fractional shares of
Noland Company Common Stock with an aggregate fair market share
of $3,000 each. To satisfy its obligations under the Plan, the
Company created the Noland Company Common Stock Benefit Trust
(the Trust). The Trust is a "grantor trust" as defined in
section 671 of the Internal Revenue Code of 1986, as amended.
The Company contributes to the Trust Noland Company Common Stock
that shall be held by the Trust until paid to participants and
beneficiaries of the Plan as soon as practicable after the
participant ceases to be a member of the Board. In addition,
each outside Director is paid $1000 for each Committee meeting
attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee consists of Messrs. Allen,
Goolsby, McElroy and Pleasants. Mr. Goolsby is a member of the
law firm Hunton & Williams, which has provided legal services to
the Corporation for many years.
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee (the Committee) is charged
with the responsibility of making an initial determination
regarding any changes in executive compensation policy and making
recommendations to the Board of Directors with respect to
compensation of the Corporation's executive officers.
The Committee believes that the Corporation's compensation
program should provide competitive overall compensation for
executive officers, including base salaries and short and long-
term incentives. The Committee has concluded that the close link
between the Corporation's business and the cyclical building and
construction industry make it prudent for the Corporation to
maintain a conservative approach to base compensation, while at
the same time providing competitive total pay opportunities to
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its executive officers through long and short-term incentives.
Targeted bonuses range from 20% of base compensation for certain
key employees to 50% of base compensation for the principal
executive officer.
Base compensation for executive officers in 1999 reflected the
Committee's conservative approach to base compensation with only
a small increase in aggregate base compensation for executive
officers. In determining executive cash bonuses for 1999, the
Committee focused primarily on profits before LIFO inventory
adjustments, extra compensation and income taxes, and each
executive officer's performance for the year against previously
established targets. The Committee did not assign a specific
value to each factor. Bonus awards for 1999 were made to 18 key
employees and officers nominated by the Chief Executive Officer.
Total awards of $473,000 were higher than 1998 awards of
$304,000. While the Committee was concerned that revenues only
increased 3.7% in 1999, the other key goal -- net income before
LIFO adjustment, extra compensation and taxes -- reached
$14,014,000 as compared to 1998's $9,846,000. This significant
increase justifies the substantial increase in bonus awards.
The Committee also believes that officers and other key employees
should own an equity interest in the Corporation. In this
connection, the Committee also approved restricted stock awards
to 19 key employees of an aggregate of 10,000 shares of the
Corporation's common stock.
Mr. Noland's base compensation for 1999 was $145,000, which was
the same as his base compensation for 1998. For 1999 Mr. Noland
was awarded a cash bonus of $60,000 in recognition of his
achievement of a number of performance goals approved by the
Committee at the beginning of the year, including completion of
inventory management initiatives that had a significant positive
affect on 1999 results, completion of credit centralization and
expansion in the use of technology throughout the Corporation.
The Committee also was pleased that earnings per share of common
stock increased from $1.59 in 1998 to $2.22 in 1999. In
establishing the 1999 bonus, the Committee did not assign a
specific value to any one factor. Mr. Noland's 1999 bonus was
twice the amount of his 1998 bonus. Mr. Noland also received a
restricted stock award of 1,000 shares of the Corporation's
common stock.
Overall, the Committee believes that its compensation plan
provides significant incentives to the executive officers and
other key employees to improve performance and shareholder
return. To provide increased incentive for 2000, the bonus pool
will have an even greater amount available for awards if earnings
are in excess of targeted levels.
Because none of the Corporation's executive officers receives
annual compensation in excess of $1 million, the Corporation has
not taken any position with respect to the cap on tax
deductibility of compensation in excess of that amount
established under the Omnibus Budget Reconciliation Act of 1993.
John L. McElroy Jr., Chairman
Thomas N. Allen
Allen C. Goolsby
C. Edward Pleasants
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Comparison of Five Year Cumulative Total Return Among Noland
Company, NASDAQ Market Value Index and Hughes Supply, Inc.
(Assumes $100 Invested on January 1, 1995)
(Assumes Dividend Reinvested)
A performance graph appears here. the following chart is the
information presented in the graph.
Data points are as follows:
1994 1995 1996 1997 1998 1999
Noland Company $100.00 $ 97.36 $126.44 $125.45 $146.25 $102.51
Hughes Supply, Inc. $100.00 $155.05 $240.40 $295.40 $249.86 $186.77
NASDAQ Market Index $100.00 $129.71 $161.18 $197.16 $278.08 $490.46
The return for Hughes Supply, Inc. has been adjusted to reflect
differences in market capitalization.
APPROVAL OF AMENDMENTS TO 1993 NOLAND COMPANY RESTRICTED STOCK
PLAN
At the Annual Meeting, the Board of Directors will offer a
resolution to approve an amendment to the 1993 Noland Company
Restricted Stock Plan (the Plan). The amendment increases the
number of shares covered by the Plan from 50,000 to 100,000. The
Plan provides for annual grants of the Corporation's common stock
to selected executives (approximately 20 individuals) of up to an
aggregate of 10,000 shares of Restricted Stock each year. The
approval of the amendment to the Plan requires the affirmative
vote of the holders of a majority of the votes cast on the
matter. Abstentions and Broker Shares voted as to any matter at
meetings that are not voted on this matter will not be counted as
votes cast for purposes of determining whether this matter is
approved.
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SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors will offer a resolution to reappoint
PricewaterhouseCoopers LLP as independent accountants of the
Corporation for the year 2000. PricewaterhouseCoopers LLP, a
nationally known firm of independent certified public
accountants, has audited the Corporation's financial statements
for the past thirty-two years. The Corporation has been advised
by PricewaterhouseCoopers LLP that neither that firm nor any of
its partners has any direct financial interest or material
indirect financial interest in the Corporation other than as
public accountants and auditors. PricewaterhouseCoopers LLP will
be represented at the stockholders' meeting. The firm's
representative will be available to respond to appropriate
questions from stockholders and will have an opportunity to make
a statement, if desired.
ANNUAL REPORT TO STOCKHOLDERS
The Noland Company 1999 Annual Report to stockholders, portions
of which are incorporated by reference into the annual report on
Form 10-K for the year ended December 31, 1999, as filed with the
Securities and Exchange Commission, accompanies this proxy
statement. Stockholders may obtain, without charge, a copy of the
Corporation's Form 10-K by forwarding a written request to R. L.
Welborn, Assistant Vice President - Finance, Noland Company, 80
29th Street, Newport News, Virginia 23607.
PROPOSALS FOR 2001 ANNUAL MEETING
Any stockholder desiring to make a proposal to be acted upon at
the 2001 annual meeting of stockholders must present such
proposal to the Corporation at its principal office in Newport
News, Virginia, not later than November 30, 2000, in order for it
to be considered for inclusion in the Corporation's Proxy
Statement.
GENERAL
Unless contrary instructions are indicated on the proxy, all
shares of Common Stock represented by valid proxies received
pursuant to this solicitation (and not revoked before they are
voted) will be voted FOR the election of the nominees for
Director named herein, FOR the amendment to increase the number
of shares available for the Noland Company Restricted Stock Plan,
and FOR the proposal to approve the appointment of
PricewaterhouseCoopers LLP as independent public accountants for
the year ended December 31, 2000.
The Board of Directors knows of no business other than that set
forth above to be transacted at the meeting, but if other matters
requiring the vote of the stockholders arise, the persons
designated as proxies will vote the shares of Common Stock
represented by the proxies in accordance with their judgment on
such matters. If a stockholder specifies a different choice on
the proxy, his or her shares of Common Stock will be voted in
accordance with the specification so made.
By order of the Board of Directors,
James E. Sykes Jr.
Secretary
Newport News, Virginia
March 30, 2000