UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
SCHEDULE 14A INFORMATION
Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant |X|
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PATRIOT TRANSPORTATION HOLDING, INC.
(Name of Registrant as Specified in Its Charter)
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(Names of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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_________________________
1801 Art Museum Drive, Suite 300
Jacksonville, Florida 32207
Phone (904) 396-5733
Fax (904) 396-2715
December 29, 2005
Dear Shareholder:
I invite you to attend our Annual Meeting of Shareholders,
which will be held on Wednesday, February 1, 2006, at 2:00 p.m.
at 155 East 21st Street, 6th Floor, Jacksonville, Florida.
Details regarding the business to be conducted at the
meeting are described in the accompanying Notice of Annual
Meeting of Shareholders and Proxy Statement. At the meeting, I
will report on the Company's operations and plans. We also will
leave time for your questions.
We hope that you are able to attend the meeting. Whether or
not you plan to attend, it is important that your shares be
represented and voted at the meeting. Therefore, I urge you to
promptly vote and submit your proxy by signing, dating and
returning the enclosed proxy card in the enclosed envelope. If
you decide to attend the Annual Meeting, you will be able to vote
in person, even if you previously have submitted your proxy.
Thank you for your ongoing support of Patriot Transportation
Holding, Inc.
Sincerely,
John E. Anderson
President and Chief Executive
Officer
2006 ANNUAL MEETING OF SHAREHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
Notice of Annual Meeting of Shareholders ii
Proxy Statement 1
Corporate Governance 4
Board Structure and Committee Membership 5
Nominating Process 8
Non-Employee Director Compensation 9
Proposal No. 1 - Election of Directors 11
Proposal No. 2 - Approval of 2006 Stock Incentive Plan 12
Shareholder Return Performance 20
Executive Compensation 22
Compensation Committee Report 24
Related Party Transactions 27
Common Stock Ownership of Certain Beneficial Owners 27
Common Stock Ownership by Directors and Executive Officers 28
Audit Committee Report 29
Independent Auditor 30
Additional Information 31
Annex A - 2006 Stock Incentive Plan 33
PATRIOT TRANSPORTATION HOLDING, INC.
1801 Art Museum Drive, Jacksonville, Florida 32207
--------------------------------------------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TIME AND DATE 2:00 p.m. on Wednesday, February 1, 2006
PLACE 155 East 21st Street, 6th Floor
Jacksonville, Florida
ITEMS OF BUSINESS (1) To elect two directors to a
4 year term and one director
to a 1 year term.
(2) To approve the 2006 Stock
Incentive Plan
(3) To transact such other business
as may properly come before the
Annual Meeting and any
adjournment or postponement.
RECORD DATE You are entitled to vote if you
were a shareholder of record at the
close of business on Monday,
December 5, 2005.
ANNUAL REPORT Our 2005 Annual Report, which is
not part of the proxy soliciting
materials, is enclosed.
PROXY VOTING Please submit a proxy as soon as
possible so that your shares can be
voted at the meeting in accordance
with your instructions. If you
attend the meeting, you may
withdraw your proxy and vote in
person.
BY ORDER OF THE BOARD OF DIRECTORS
Ray M. Van Landingham
Secretary
This Proxy Statement and Proxy Card are being distributed on or
about December 29, 2005.
PROXY STATEMENT
The Board of Directors (the "Board") of Patriot
Transportation Holding, Inc. ("Patriot" or the "Company") is
soliciting proxies for the Annual Meeting of Shareholders. You
are receiving a proxy statement because you own shares of Patriot
common stock that entitle you to vote at the meeting. By use of
a proxy, you can vote whether or not you attend the meeting. The
proxy statement describes the matters we would like you to vote
on and provides information on those matters so you can make an
informed decision.
The information included in this proxy statement relates to
proposals to be voted on at the meeting, voting process,
compensation of directors and our most highly paid officers, and
other required information.
Purpose of the Annual Meeting
The purpose of the Annual Meeting is to elect directors and
to conduct the business described in the Notice of Annual
Meeting.
Annual Meeting Admission
You are invited to attend the meeting in person. The meeting
will be held at 2:00 p.m. on Wednesday, February 1, 2006 at 155
East 21st Street, Jacksonville, Florida.
No cameras, recording equipment, electronic devices, large
bags, briefcases, or packages will be permitted in the Annual
Meeting.
Quorum
A quorum is the minimum number of shares required to hold a
meeting. A majority of the outstanding shares of our common
stock must be represented in person or by proxy at the meeting to
establish a quorum. Both abstentions and broker non-votes are
counted as present for determining the presence of a quorum.
Broker non-votes, however, are not counted as shares present and
entitled to be voted with respect to the matter on which the
broker has not voted. Thus, broker non-votes will not affect the
outcome of any of the matters to be voted on at the Annual
Meeting. Generally, broker non-votes occur when shares held by a
broker for a beneficial owner are not voted with respect to a
particular proposal because (1) the broker has not received
voting instructions from the beneficial owner and (2) the broker
lacks discretionary voting power to vote such shares.
Shareholders Entitled to Vote
Each share of our common stock outstanding as of the close
of business on December 5, 2005, the record date, is entitled to
one vote at the Annual Meeting on each matter properly brought
before the meeting. As of that date, there were 2,965,075 shares
of common stock issued and outstanding.
Many Patriot shareholders hold their shares through a
stockbroker, bank, trustee, or other nominee rather than directly
in their own name. As summarized below, there are some
distinctions between shares held of record and those owned
beneficially:
* SHAREHOLDER OF RECORD - If your shares are registered
directly in your name with Patriot's Transfer Agent,
Wachovia Bank, N.A., you are considered the shareholder
of record of those shares and these proxy materials are
being sent directly to you by
Patriot. As the shareholder of record, you have the right
to grant your voting proxy directly to Patriot or to vote
in person at the meeting.
* BENEFICIAL OWNER - If your shares are held in a stock
brokerage account, by a bank, trustee, or other nominee,
you are considered the beneficial owner of shares held in
street name and those proxy materials are being forwarded
to you by your broker, trustee, or nominee who is considered
the shareholder of record of those shares. As the beneficial
owner, you have the right to direct your broker, trustee or
nominee on how to vote and are also invited to attend the
meeting. However, since you are not the shareholder of
record, you may not vote these shares in person at the meeting.
Your broker, trustee, or nominee is obligated to provide you
with a voting instruction card for you to use.
* PROFIT SHARING PLAN AND TRUST - If your shares are held in
your account in the Patriot Transportation Holding, Inc. Profit
Sharing and Deferred Earnings Plan (the "Profit Sharing Plan"),
you are considered the beneficial owner of these shares and the
trustee of the plan is the shareholder of record. Participants
in the Profit Sharing Plan may direct the trustee how to vote the
shares allocated to their account by following the voting
instructions contained on the proxy card. If voting instructions
are not received for shares in the Profit Sharing Plan, those
shares will be voted in the same proportion as the shares in such
plan for which voting instructions are received.
Proposals You Are Asked to Vote On and the Board's Voting Recommendations
At the Annual Meeting, the shareholders will vote to elect
two directors to serve for a four year term and one director to
serve for a one year term. Our Board recommends that you vote
"FOR" each nominee of the Board.
At the Annual Meeting, the shareholders also will vote on
the proposal to approve the 2006 Stock Incentive Plan. Our Board
recommends that you vote "FOR" the approval of the 2006 Stock
Incentive Plan.
Other than the proposals described in this proxy statement,
the Board is not aware of any other matters to be presented for a
vote at the Annual Meeting. If you grant a proxy, any of the
persons named as proxy holders will have the discretion to vote
your shares on any additional matters properly presented for a
vote at the meeting. If any of our nominees is unavailable as a
candidate for director, the above-named proxy holders will vote
your proxy for another candidate or candidates as may be
nominated by the Board of Directors.
Required Vote
The nominees for election as directors at the Annual Meeting
will be elected by a plurality of the votes cast at the meeting.
This means that the director nominee with the most votes for a
particular slot is elected for that slot. Votes withheld from
one or more director nominees will have no effect on the election
of any director from whom votes are withheld.
All other proposals require the affirmative "FOR" vote of a
majority of those shares present in person or represented by
proxy at the meeting and entitled to vote on the matter. If you
are a beneficial owner and do not provide the shareholder of
record with voting instructions, your shares may constitute
broker non-votes, as described in the section on page one
entitled Quorum. In tabulating the voting result for any
particular proposal, shares that constitute broker non-votes will
not be included in vote totals and will have no effect on the
outcome of any vote.
Voting Methods
If you hold shares directly as the shareholder of record,
you may vote by granting a proxy or, if you hold shares
beneficially in street name, by submitting voting instructions to
your broker or nominee. If you own shares beneficially as a
participant in the Profit Sharing Plan, you may vote by
submitting voting instructions to the trustee. Please refer to
the summary instructions included on your proxy card or, for
shares held in street name, the voting instructions card included
by your broker or nominee.
Changing Your Vote
You may change your proxy instructions at any time prior to
the vote at the Annual Meeting. For shares held directly in your
name, you may accomplish this by granting a new proxy or by
voting in person at the Annual Meeting. For shares held
beneficially by you, you may change your vote by submitting new
voting instructions to your broker or nominee.
Counting the Vote
In the election of directors, you may vote "FOR" all of the
nominees or your vote may be "WITHHELD" from one or more of the
nominees. For the other proposals, you may vote "FOR,"
"AGAINST," or "ABSTAIN." If you sign your proxy card or broker
voting instruction card with no further instructions, your shares
will be voted in accordance with the recommendations of the
Board. Shares held in your account in the Profit Sharing Plan
will be voted by the trustee as described in Shareholders
Entitled to Vote on page 1.
Results of the Vote
We will announce preliminary voting results at the meeting
and publish final results in our Quarterly Report on Form 10-Q
for the quarter ending March 31, 2006.
Delivery of Proxy Materials
Securities and Exchange Commission rules now allow us to
deliver a single copy of an annual report and proxy statement to
any household at which two or more shareholders reside, if we
believe the shareholders are members of the same family. This
rule benefits both you and the Company. We believe it eliminates
irritating duplicate mailings that shareholders living at the
same address receive and it reduces our printing and mailing
costs. This rule applies to any annual reports, proxy
statements, proxy statements combined with a prospectus, or
information statements. Each shareholder will continue to
receive a separate proxy card or voting instruction card.
Your household may have received a single set of proxy
materials this year. If you prefer to receive your own copy now
or in future years, please request a duplicate set by contacting
Ray M. Van Landingham at (904) 396-5733 Ext. 103 or by mail at
1801 Art Museum Drive, Jacksonville, Florida 32207.
If a broker or other nominee holds your shares, you may
continue to receive some duplicate mailings. Certain brokers will
eliminate duplicate account mailings by allowing shareholders to
consent to such elimination, or through implied consent if a
shareholder does not request continuation of duplicate mailings.
Since not all brokers and nominees may offer shareholders the
opportunity this year to eliminate duplicate mailings, you may
need to contact your broker or nominee directly to discontinue
duplicate mailings from your broker to your household.
List of Shareholders
The names of shareholders of record entitled to vote at the
Annual Meeting will be available at the Annual Meeting and for
ten days prior to the meeting for any purpose germane to the
meeting, between the hours of 9:00 a.m. and 4:30 p.m., at our
principal executive offices at 1801 Art Museum Drive,
Jacksonville, Florida, by contacting the Secretary of the
Company.
Cost of Proxy Solicitation
Patriot will pay for the cost of preparing, assembling,
printing, mailing, and distributing these proxy materials. In
addition to mailing these proxy materials, the solicitation of
proxies or votes may be made in person, by telephone, or by
electronic communication by our directors, officers, and
employees, who do not receive any additional compensation for
these solicitation activities. We will also reimburse brokerage
houses and other custodians, nominees, and fiduciaries for their
reasonable out-of-pocket expenses for forwarding proxy and
solicitation materials to beneficial owners of stock.
Transfer Agent
Our Transfer Agent is Wachovia Bank, N.A. All
communications concerning shareholders of record accounts,
including address changes, name changes, common stock transfer
requirements, and similar issues can be handled by contacting
Wachovia Bank, N.A. at 1-800-829-8432, or in writing at Wachovia
Bank, N.A., Corporate Trust Client Services NC-1153, 1525 West
W.T. Harris Boulevard - 3C3, Charlotte, NC 28288-1153.
CORPORATE GOVERNANCE
Director Independence
The Board of Directors is committed to good business
practices, transparency in financial reporting and the highest
level of corporate governance.
The Board has determined that a majority of the Board of
Directors are independent of management in accordance with the
listing standards of The Nasdaq Stock Market. All of the members
of the Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee are independent
directors. In accordance with Nasdaq listing standards, the
Board must determine that a director has no relationship that, in
the judgment of the Board, would interfere with the exercise of
independent judgment by the director in carrying out his or her
responsibilities. The listing standards specify the criteria by
which the independence of our directors will be determined. The
listing standards also prohibit Audit Committee members from any
direct or indirect financial relationship with the Company, and
restrict commercial relationships of all directors with the
Company. Directors may not be given personal loans or extensions
of credit by the Company, and all directors are required to deal
at arm's length with the Company and its subsidiaries, and to
disclose any circumstances that might be perceived as a conflict
of interest.
The Board of Directors has determined that Messrs.
Commander, Fichthorn, Paul, Shad, Stein and Winston are
independent under these standards. Only one of the Company's
directors is an employee of the Company.
Meetings of Independent Directors
Independent directors regularly meet in executive sessions
without management and may select a director to facilitate the
meeting.
Communication with Directors
The Board of Directors has adopted the following process for
shareholders to send communications to members of the Board.
Shareholders may communicate with the chairs of the Audit,
Compensation, and Nominating and Corporate Governance Committees
of the Board, or with our independent directors, by sending a
letter to the following address: Board of Directors, Patriot
Transportation Holding, Inc., c/o Corporate Secretary, 1801 Art
Museum Drive, Jacksonville, Florida 32207.
Director Attendance at Annual Meeting of Shareholders
The Company's policy is that our directors are expected to
attend the Annual Meeting of Shareholders unless extenuating
circumstances prevent them from attending. All directors
attended last year's Annual Meeting of Shareholders, except for
Charles E. Commander III, who was unable to attend due to
extenuating circumstances.
Business Conduct Policies
We believe that operating with honesty and integrity has
earned us trust from our customers, credibility within our
communities, and dedication from our employees. Our senior
executive and financial officers are bound by a Financial Code of
Ethical Conduct. In addition, our directors, officers and
employees are required to abide by our Code of Business Conduct
and Ethics to ensure that our business is conducted in a
consistently legal and ethical manner. Our business conduct
policies cover many topics, including conflicts of interest,
protection of confidential information, fair dealing, protection
of the Company's assets and compliance with laws, rules and
regulations.
Employees are required to report any conduct that they
believe in good faith to be an actual or apparent violation of
the business conduct policies. The Audit Committee has adopted
procedures to receive, retain, and treat complaints received
regarding accounting, internal accounting controls, or auditing
matters, and to allow for the confidential and anonymous
submission by employees of concerns regarding questionable
accounting or auditing matters.
The Financial Code of Ethical Conduct and the Code of
Business Conduct and Ethics are available on our Web site at
www.patriottrans.com under Investor Relations - Corporate
Governance.
BOARD STRUCTURE AND COMMITTEE MEMBERSHIP
The Board is divided into four classes serving staggered
four-year terms. The Board has ten directors and the following
four committees: the Audit Committee, the Compensation Committee,
the Nominating and Corporate Governance Committee, and the
Executive Committee. The membership during fiscal 2005 and the
function of each Committee are described below.
During fiscal 2005, the Board of Directors held five
meetings. The Audit Committee and the Compensation Committee
each held four meetings during fiscal 2005 and the Nominating and
Corporate Governance Committee held two meetings during fiscal
2005. During the fiscal year ended September 30, 2005, the
Executive Committee held one formal meeting. An ad hoc committee
of independent
directors had two formal meetings during fiscal 2005, in
addition to executive sessions of the independent directors
following Board meetings. All of our directors attended at
least 75% of the meetings of the Board and all
committees on which the director served, except for Martin E.
Stein, Jr. who was unable to attend one meeting of the ad hoc
committee of independent directors due to extenuating
circumstances.
The following chart shows the composition of the committees
of the Board of Directors. Except for the Executive Committee,
each of the committees of the Board is composed exclusively of
independent directors.
Nominating and
Corporate
Director Audit Compensation Governance Executive
-------- ----- ------------ ------------- ---------
John E. Anderson X
Edward L. Baker X*
John D. Baker II X
Charles E. Commander
III X X
Robert H. Paul III X X* X
H. W. Shad III X*
Martin E. Stein Jr. X X*
James H. Winston X
X - Committee Member * -- Committee Chair
Audit Committee
The Audit Committee assists the Board in its oversight of
the Company's accounting and financial reporting processes and
the audit of the Company's financial statements, the integrity of
the Company's financial statements, compliance with legal and
regulatory requirements, and the qualifications, independence,
and performance of the Company's independent auditor. In addition
to other responsibilities, the Audit Committee also:
* Reviews the annual audited and the quarterly consolidated
financial statements;
* Discusses with the independent auditor all critical
accounting policies to be used in the consolidated financial
statements, all alternative treatments of financial information
that have been discussed with management, other material
communications between the independent auditor and management,
and the independent auditor's observations regarding the
Company's internal controls;
* Reviews earnings press releases prior to issuance;
* Appoints, oversees, and approves compensation of the
independent auditor;
* Approves all audit and permitted non-audit services provided
by the independent auditor;
* Reviews findings and recommendations of the independent
auditor and management's response to the recommendations of the
independent auditor; and
<PAGE<
* Recommends whether the audited financial statements should
be included in the Company's Annual Report on Form 10-K.
The Board of Directors has determined that all Audit
Committee members are independent and are able to read and
understand financial statements. The Board of Directors also has
determined that the Chair of the Committee, H.W. Shad III,
qualifies as an "audit committee financial expert" within the
meaning of SEC regulations. The charter of the Audit Committee
is available at www.patriottrans.com under Corporate Governance.
Compensation Committee
Committee Functions. The primary function of the
Compensation Committee is to (1) discharge the responsibilities
of the Board of Directors relating to the compensation of the
Company's executive officers, and (2) prepare an annual report on
executive compensation to be included in the Company's proxy
statement. In addition, the Compensation Committee:
* Reviews and approves the Company's goals and objectives
relevant to the compensation of the Chief Executive Officer
and evaluates his job performance in light of those goals
and objectives;
* Establishes compensation levels, including incentive and
bonus compensation, for the Chief Executive Officer;
* Establishes and determines, in consultation with the Chief
Executive Officer, the compensation levels of other senior
executive officers;
* Reviews, periodically, with the Chairman and the Chief
Executive Officer the succession plans for senior executive
officers and makes recommendations to the Board regarding the
selection of individuals to occupy these positions; and
* Administers the Company's stock plans.
The charter of the Compensation Committee is available at
www.patriottrans.com under Corporate Governance.
Compensation Committee Interlocks and Insider Participation.
None of the members of the Compensation Committee (i) was an
officer or employee of the Company or any of its subsidiaries
during the fiscal year, (ii) was formerly an officer of the
Company or any of its subsidiaries, or (iii) had any relationship
requiring disclosure by the Company under the rules of the
Securities and Exchange Commission requiring disclosure of
certain relationships and related party transactions. None of
our executive officers serves as a member of the board of
directors or compensation committee of any entity that has one or
more executive officers serving on our Board of Directors or
Compensation Committee.
Nominating and Corporate Governance Committee.
Under its Charter, the principal functions of the Nominating
and Corporate Governance Committee are to (1) identify
individuals who are qualified to serve on the Company's Board of
Directors, (2) recommend for selection by the Board of Directors
the director nominees for the next annual meeting of the
shareholders, (3) review and recommend to the Board changes to
the corporate
governance practices of the Company, and (4) oversee the
annual evaluation of the Board. In addition, the Nominating and
Corporate Governance Committee establishes criteria for Board
membership.
The charter of the Nominating and Corporate Governance
Committee is available at www.patriottrans.com under Corporate
Governance.
Executive Committee
Edward L. Baker, John D. Baker II and John E. Anderson
comprise the Executive Committee. To the extent permitted by
law, the Executive Committee exercises the powers of the Board
between meetings of the Board of Directors. During the fiscal
year ended September 30, 2005, the Executive Committee held one
formal meeting.
NOMINATING PROCESS
Role of the Nominating and Corporate Governance Committee in the
Nominating Process
The Nominating and Corporate Governance Committee
("Nominating Committee") identifies individuals that the
Nominating Committee believes are qualified to become Board
members in accordance with the Director Qualifications Standards
set forth below, and recommends selected individuals to the Board
for nomination to stand for election at the next meeting of
shareholders of the Company in which directors will be elected.
In the event there is a vacancy on the Board between meetings of
shareholders, the Nominating Committee identifies individuals
that the Nominating Committee believes are qualified to become
Board members in accordance with the Director Qualifications
Standards set forth below, and recommends one or more of such
individuals for appointment to the Board.
Director Qualifications Standards
The Committee has established the following standards and
qualifications for members of the Board of Directors:
* Each director shall at all times represent the interests
of the shareholders of the Company.
* Each director shall at all times exhibit high standards of
integrity, commitment and independence of thought and
judgment.
* Each director shall dedicate sufficient time, energy and
attention to ensure the diligent performance of his or her
duties, including attending shareholder meetings and
meetings of the Board and Committees of which he or she is
a member, and by reviewing in advance all meeting materials.
* The Board shall meet the applicable standards of
independence from the Company and its management.
* The Board shall encompass a range of talent, skill and
expertise sufficient to provide sound and prudent guidance
with respect to all of the Company's operations and interests.
Identification, Evaluation and Selection of Nominees
In the event the Committee recommends an increase in the
size of the Board or a vacancy occurs, the Committee may consider
qualified nominees from several sources, including current Board
members, and search firms. The Committee may from time to time
retain a search firm to help the Committee identify qualified
director nominees for consideration by the Committee. The
Committee evaluates qualified director nominees against the
current Director Qualifications Standards described above and
reviews qualified director nominees with the Board. The
Committee and the Chairman of the Board interview candidates that
meet the Director Qualifications Standards, and the Committee
selects nominees that best suit the Board's current needs and
recommends one or more of such individuals for appointment to the
Board.
Nominees Proposed by Shareholders for Consideration by the
Committee
The Nominating Committee does not consider recommendations
from shareholders for director nominees as the Board of Directors
believes that it has sufficient resources to recruit qualified
directors.
Nominations by Shareholders at Annual Meeting
The Company's Articles of Incorporation provide that only
persons who are nominated in accordance with the procedures set
forth in the Articles of Incorporation shall be eligible for
election as directors by the shareholders. Under the Articles of
Incorporation, directors may be nominated, at a meeting of
shareholders at which directors are being elected, by (1) the
Board of Directors or any committee or person authorized or
appointed by the Board of Directors, or (2) by any shareholder
who is entitled to vote for the election of directors at the
meeting and who complies with certain notice procedures. These
notice procedures require that the nominating shareholder make
the nomination by timely notice in writing to the Secretary of
the Company. To be timely, the notice must be received at the
principal executive offices of the Company not less than forty
(40) days prior to the meeting except that, if less than fifty
(50) days' notice or prior public disclosure of the date of the
meeting is given to shareholders, the notice must be received no
later than ten (10) days after the notice of the date of the
meeting was mailed or such public disclosure was made. The
notice must contain certain prescribed information about the
proponent and each nominee, including such information about each
nominee as would have been required to be included in a proxy
statement filed pursuant to the rules of the Securities and
Exchange Commission had such nominee been nominated by the Board
of Directors.
NON-EMPLOYEE DIRECTOR COMPENSATION
The following table summarizes our compensation arrangements
with non-employee directors for the 2005 and 2006 fiscal years.
2005 2006
---- ----
All Non-Employee Directors:
Annual Retainer $10,000 $15,000
Fee Per Meeting Attended $ 1,000 $ 1,500
Stock Options Per Meeting
Attended(1) 1,000 0
Shares Granted Annually(2) 0 500
Audit Committee:
Annual Fee Chairman $10,000 $10,000
Member $ 5,000 $ 5,000
Meeting Fees Chairman(3) $ 500 $ 1,500
Member(3) $ 300 $ 1,000
Other Committees:
Annual Fee Chairman None $ 2,000
Member None $ 1,000
Meeting Fees Chairman $ 500 $ 1,500
Member $ 300 $ 1,000
(1) In 2005, non-employee directors received an automatic grant
of options to purchase 1,000 shares of common stock for each
regularly scheduled director meeting attended. These
options are exercisable immediately, have an exercise price
equal to the closing price of the Company's common stock on
the date of the meeting, and expire ten years after the
grant date.
(2) Subject to approval of the shareholders.
(3) The Audit Committee members receive no meeting fees for
the four regularly scheduled quarterly meetings; the meeting
fees shown would apply only to additional meetings.
The following table shows the compensation paid to each of
our non-employee directors during the 2005 fiscal year.
Board and Board and
Committee Committee Total Cash Stock
Director Retainers Meeting Fees Compensation Options
-------- --------- ------------ ------------ -------
Edward L. Baker $10,000 $5,300 $15,300 5,000
John D. Baker II $10,000 $5,000 $15,000 5,000
Thompson S. Baker II $10,000 $5,000 $15,000 5,000
Charles E.
Commander III $15,000 $5,600 $20,600 4,000
Luke E. Fichthorn
III(1) $10,000 $5,000 $15,000 5,000
Robert H. Paul III $15,000 $7,200 $22,200 4,000
H. W. Shad III $20,000 $5,600 $25,600 5,000
Martin E. Stein Jr. $10,000 $7,500 $17,500 5,000
James H. Winston $10,000 $5,800 $15,800 4,000
(1) Mr. Fichthorn also receives consulting fees of $30,000 per
year for financial consulting services provided to the
Company.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Under our Articles of Incorporation, the Board of Directors
is divided into four classes. One class of directors is elected
at each annual meeting of shareholders for a four-year term of
office. We have listed below two nominees in Class IV to be re-
elected and one nominee in Class I to be re-elected. Class I
Directors will hold office until the 2007 annual meeting, and
Class IV directors will hold office until the 2010 annual
meeting. Your proxy will be voted for the election of the
persons nominated unless you indicate otherwise. If any of the
nominees named should become unavailable for election for any
presently unforeseen reason, the persons named in the proxy shall
have the right to vote for a substitute as may be designated by
the Board of Directors to replace such nominee, or the Board may
reduce the number of directors accordingly.
The following table sets forth information with respect to
each nominee for election as a director and each director whose
term of office continues after this annual meeting of
shareholders. Reference is made to the sections entitled "Common
Stock Ownership of Certain Beneficial Owners" and "Common Stock
Ownership by Directors and Officers" for information concerning
stock ownership of the nominees and directors.
Director Nominees
- -----------------
Director Director Other
Name and Principal Occupation Age Class Since Directorships
- ----------------------------- --- ----- ----- -------------
John E. Anderson 60 Class I 2005 Winn Dixie
President and Chief Executive (Term Stores, Inc.
Officer Exp.
2007)
Thompson S. Baker II 47 Class IV 1994 Florida Rock
Vice President of Florida (Term Industries,
Rock Industries, Inc. Exp.2010) Inc.
Martin E. Stein, Jr. 53 Class IV 1992 Regency
Chairman and Chief Executive (Term Centers
Officer of Regency Centers Exp. 2010) Corporation
Corporation (a commercial Stein Mart,
real estate services firm) Inc.
Directors Continuing in Office
- ------------------------------
Director Director Other
Name and Principal Occupation Age Class Since Directorships
- ----------------------------- --- ----- ----- -------------
Edward L. Baker 70 Class 1988 Florida Rock
Chairman of the Board of the III Industries,
Company and of Florida Rock (Term Inc.
Industries, Inc. Exp. 2009)
Industries, Inc.
John D. Baker II 57 Class II 1988 Florida Rock
President and Chief (Term Industries,
Executive Officer of Exp. 2008) Inc.
Florida Rock Industries, Hughes
Inc. Supply, Inc.
Wachovia
Corporation
Charles E. Commander III 65 Class 2004 Everbank
Partner with Foley & Lardner III Financial
(a law firm) (Term Corp.
Exp. 2009)
Luke E. Fichthorn III 64 Class II 1989 Florida Rock
Partner in Twain Associates (Term Industries,
(a private investment Exp. 2008) Inc.
banking firm); Chairman of 2008) Bairnco
the Board and Chief Corporation
Executive Officer of
Bairnco Corporation
(manufacturer)
Robert H. Paul III 71 Class I 1992
Chairman of the Board of (Term
Southeast-Atlantic Beverage Exp. 2007)
Corporation (a manufacturer
of soft drink products)
H. W. Shad III 59 Class II 2004
Principal, Mike Shad, P.L. (Term
(a business Exp. 2008)
Valuation and management
consulting firm)
James H. Winston 72 Class I 1992 Stein Mart,
President of LPMC of Jax, (Term Inc.
Inc. (an investment real Exp. 2007) Winston
estate firm); President of Hotels, Inc.
Omega Insurance Company;
President of Citadel Life &
Health Insurance Co.
All of the nominees and directors have been employed in
their respective positions for the past five years except H.W.
Shad III.
Mr. Shad is the principal of Mike Shad, P.L., a firm that
provides management consulting and business valuation services,
primarily to the retail automobile industry. Prior to forming
this firm, Mr. Shad served as Senior District Vice President to
AutoNation, Inc., an automobile retailer. Prior to joining
AutoNation, Mr. Shad acquired, operated and later sold two
automobile dealerships in Jacksonville, Florida.
Mr. Anderson was elected as a director on October 5, 2005.
Mr. Anderson previously served as a director from 1989 to January
1, 2004. Mr. Anderson has served as a director of Winn-Dixie
Stores, Inc., since 2002. On February 21, 2005, Winn-Dixie
Stores, Inc. filed for voluntary reorganization under Chapter 11
of the U.S. Bankruptcy Code.
Edward L. Baker and John D. Baker II are brothers. Thompson
S. Baker II is the son of Edward L. Baker.
Please see Related Party Transactions for a discussion of
other transactions and relationships between the Company and
Florida Rock Industries, Inc. ("FRI").
PROPOSAL NO. 2
APPROVAL OF 2006 STOCK INCENTIVE PLAN
The Board of Directors recommends that shareholders approve
the Company's 2006 Stock Incentive Plan (which we refer to as the
2006 Plan). The 2006 Plan would govern grants of stock-based
awards to employees. The 2006 Plan would replace the 2000 Stock
Option Plan, under which grants of stock options were previously
made. A maximum of 300,000 shares of our common stock will be
reserved for issuance under the 2006 Plan.
The 2006 Plan is an "omnibus" stock plan that provides for a
variety of equity award vehicles to maintain flexibility. The
2006 Plan will permit the grant of stock options, stock
appreciation rights, restricted stock awards, restricted stock
units and stock awards.
Based upon the recommendation of the Board's Compensation
Committee, the Board of Directors has unanimously approved the
2006 Plan, subject to shareholder approval at the Annual Meeting.
The 2006 Plan is designed to support the Company's long-term
business objectives in a manner consistent with our executive
compensation philosophy. The Board believes that by allowing the
Company to continue to offer its employees long-term, performance-
based compensation through the 2006 Plan, the Company will
promote the following key objectives:
* aligning the interest of employees with those of the
shareholders through increased employee ownership of the
Company; and
* attracting, motivating and retaining experienced and
highly qualified employees who will contribute to the
Company's financial success.
Including the shares available under the 2006 Plan, the
potential equity overhang from all stock incentives granted and
available to employees would be approximately 17.7%. Equity
overhang is calculated as (i) the sum of the 337,900 shares
issuable under currently outstanding options plus the 300,000
shares that would be available under the 2006 Plan, divided by
(ii) the sum of the 2,965,075 shares outstanding as of the record
date plus the 337,900 shares issuable under currently outstanding
options plus the 300,000 shares available under the 2006 Plan.
The 2006 Plan does not permit the repricing of options or
stock appreciation rights without the approval of shareholders or
the granting of discounted options or stock options with reload
features, and does not contain an "evergreen" provision to
automatically increase the number of shares issuable under the
2006 Plan.
The following is a summary of the 2006 Plan. The full text
of the 2006 Plan is attached as Annex A to this proxy statement,
and the following summary is qualified in its entirety by
reference to this Annex A.
Plan Administration
The selection of employee participants in the 2006 Plan, the
level of participation of each participant and the terms and
conditions of all awards will be determined by the Compensation
Committee. It is intended that each member of the Compensation
Committee will be an "independent director" for purposes of the
Company's Corporate Governance Guidelines, the Compensation
Committee Charter and the Nasdaq listing requirements, a "non-
employee Director" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, and an "outside
director" within the meaning of Section 162(m) of the Internal
Revenue Code. The Compensation Committee is comprised of three
Directors, each meeting all of these independence criteria.
The Compensation Committee will have the discretionary
authority to interpret the 2006 Plan, to prescribe, amend and
rescind rules and regulations relating to the 2006 Plan, and to
make all other determinations necessary or advisable for the
administration of the 2006 Plan. The Committee may delegate
authority to administer the 2006 Plan as it deems appropriate,
subject to the express limitations
set forth in the 2006 Plan. In the case of awards under the 2006
Plan to non-employee Directors, the powers of the Compensation
Committee will be exercised by the full Board.
Limits on Plan Awards
The Board has reserved a maximum of 300,000 shares for
issuance pursuant to stock options, stock appreciation rights,
restricted stock awards, restricted stock units and stock awards
under the 2006 Plan. A participant may receive multiple awards
under the 2006 Plan. The maximum number of shares that may be
granted to any one participant in any fiscal year is 100,000
shares.
Shares delivered under the 2006 Plan will be authorized but
unissued shares of our common stock, treasury shares or shares
purchased in the open market or otherwise. To the extent that any
award payable in shares is forfeited, cancelled, returned to the
Company for failure to satisfy vesting requirements or upon the
occurrence of other forfeiture events, or otherwise terminates
without payment being made, the shares covered thereby will no
longer be charged against the maximum share limitation and may
again be made subject to awards under the 2006 Plan. Any awards
settled in cash will not be counted against the maximum share
reserve under the 2006 Plan. Any shares exchanged by a
participant or withheld from a participant as full or partial
payment to the Company of the exercise price or the tax
withholding upon exercise or payment of an award will not be
returned to the number of shares available for issuance under the
2006 Plan.
Eligibility and Participation
All of our full-time employees of the Company and its
affiliates, as well as the Company's non-employee directors, will
be eligible to participate in the 2006 Plan. From time to time,
the Compensation Committee (or as to non-employee directors, the
Board) will determine who will be granted awards, the number of
shares subject to such grants and all other terms of awards. The
Company expects that awards generally will be limited to
executive officers, key employees and directors.
As described in Non-Employee Director Compensation, each non-
employee director will be awarded on an annual basis 500 shares
of our common stock under the 2006 Plan pursuant to a
compensation program adopted by the Board of Directors.
Types of Plan Awards
The Company's current equity compensation awards to
employees are comprised of stock options. The 2006 Plan would
provide for a variety of other equity instruments to provide
greater flexibility to the Company. The types of securities that
may be issued under the 2006 Plan are described below.
Stock Options
Stock options granted under the 2006 Plan may be either non-
qualified stock options or incentive stock options qualifying
under Section 422 of the Code. The price of any stock option
granted may not be less than the fair market value of our common
stock on the date the option is granted. The option price is
payable in cash, shares of our common stock, through a broker-
assisted cashless exercise or as otherwise permitted by the
Compensation Committee.
The Compensation Committee determines the terms of each
stock option grant at the time of the grant. The Committee has
discretion to provide for an exercise term of up to ten years.
The Committee specifies at the time each option is granted the
time or times at which, and in what proportions, an option
becomes vested and exercisable. Vesting may be based on the
continued service of the participant for specified time periods
or on the attainment of specified business performance goals
established by the Committee or both. The Committee may
accelerate the vesting of options at any time.
Stock Appreciation Rights
A stock appreciation right (which we refer to as an SAR)
entitles the participant, upon settlement, to receive a payment
based on the excess of the fair market value of a share of our
common stock on the date of settlement over the base price of the
right, multiplied by the applicable number of shares of our
common stock. SARs may be granted on a stand-alone basis or in
tandem with a related stock option. The base price may not be
less than the fair market value of a share of our common stock on
the date of grant. The Compensation Committee will determine the
vesting requirements and the payment and other terms of an SAR,
including the effect of termination of service of a participant.
Vesting may be based on the continued service of the participant
for specified time periods or on the attainment of specified
business performance goals established by the Committee or both.
The Committee may accelerate the vesting of SARs at any time.
Generally, all SARS will terminate after the seven-year period
from the date of the grant, but the Committee retains discretion
to provide for an exercise term of up to ten years. SARs may be
payable in cash or in shares of our common stock or in a
combination of both.
The Company has not issued any SARs under any of its
currently effective equity compensation plans, and does not
currently have any SARs outstanding.
Restricted Stock
A restricted stock award represents shares of our common
stock that are issued subject to restrictions on transfer and
vesting requirements as determined by the Compensation Committee.
Vesting requirements may be based on the continued service of the
participant for specified time periods or on the attainment of
specified business performance goals established by the Committee
or both. Subject to the transfer restrictions and vesting
requirements of the award, the participant will have the same
rights as any of our shareholders, including all voting and
dividend rights, during the restriction period, unless the
Committee determines otherwise at the time of the grant.
Stock Units
An award of stock units provides the participant the right
to receive a payment based on the value of a share of our common
stock. Stock units may be subject to such vesting requirements,
restrictions and conditions to payment as the Compensation
Committee determines are appropriate. Vesting requirements may be
based on the continued service of the participant for a specified
time period or on the attainment of specified business
performance goals established by the Committee or both. A stock
unit award may also be granted on a fully vested basis, with a
deferred payment date. Stock unit awards are payable in cash or
in shares of our common stock or in a combination of both. Stock
units may also be granted together with related dividend
equivalent rights.
Stock Awards
A stock award represents shares of our common stock that are
issued free of restrictions on transfer and free of forfeiture
conditions and as to which the participant is entitled all the
rights of a shareholder. A stock award may be granted for past
services, in lieu of bonus or other cash compensation, as
director compensation or for any other valid purpose as
determined by the Compensation Committee.
Section 162(m) Awards
Awards of options and stock appreciation rights granted
under the 2006 Plan should qualify for the "performance-based
compensation" exception under Section 162(m) of the Code pursuant
to their expected terms. In addition, awards of restricted stock,
stock units or stock awards that meet certain conditions may
qualify under Section 162(m) and the 2006 Plan if the awards meet
certain conditions. These conditions require, among other
matters, that the terms of these awards state, in terms of an
objective formula or standard, the method of computing the amount
of compensation payable under the award, and must preclude
discretion to increase the amount of compensation payable under
the terms of the awards (but may give the Compensation Committee
discretion to decrease the amount of compensation payable).
Effect of Change in Control
Awards under the 2006 Plan are generally subject to special
provisions upon the occurrence of a "change in control" (as
defined in the 2006 Plan) transaction with respect to the
Company. Under the 2006 Plan, if within twelve months of a change
in control there occurs a "triggering event" (as defined in the
2006 Plan) with respect to the employment of the participant, any
outstanding stock options, SARs or other equity awards under the
2006 Plan will generally become fully vested and exercisable,
and, in certain cases, paid to the participant. A triggering
event is defined generally to include a termination of employment
by the Company other than for cause, a termination of employment
by the participant following a reduction in position, pay or
other constructive termination event, or a failure by the
successor company to assume or continue the outstanding awards
under the 2006 Plan. Payments under awards that become subject to
the excess parachute tax rules may be reduced under certain
circumstances.
Limited Transferability
All options, stock appreciation rights, restricted stock and
restricted stock units granted under the 2006 Plan are
nontransferable except upon death, either by the participant's
will or the laws of descent and distribution or through a
beneficiary designation, or in the case of nonqualified options,
during the participant's lifetime to immediate family members of
the participant and others as may be approved by the Compensation
Committee.
Adjustments for Corporate Changes
In the event of recapitalizations, reclassifications or
other specified events affecting the Company or shares of our
common stock, appropriate and equitable adjustments may be made
to the number and kind of shares of our common stock available
for grant, as well as to other maximum limitations under the 2006
Plan, and the number and kind of shares of our common stock or
other rights and prices under outstanding awards.
Term, Amendment and Termination
The 2006 Plan will have a term of ten years expiring on
February 1, 2016, unless terminated earlier by the Board of
Directors. The Board may at any time and from time to time and in
any respect amend or modify the Plan. The Board may seek the
approval of any amendment or modification by the Company's
shareholders to the extent it deems necessary or advisable in its
sole discretion for purposes of compliance with Section 162(m) or
Section 422 of the Code, the listing requirements of the Nasdaq
Stock Market or for any other purpose. No amendment or
modification of the 2006 Plan will adversely affect any
outstanding award without the consent of the participant or the
permitted transferee of the award.
Plan Benefits
Subject to the approval of the 2006 Plan by the
Shareholders, the Board has approved grants of stock and
restricted stock to the persons and groups described in the
following table.
Number of
Dollar Value ($) Shares of
Of Restricted Restricted
Name and Position Stock(1) Stock(2)
- ----------------- ---------------- ----------
John E. Anderson $55,584 800
President and CEO
David H. deVilliers, Jr. $41,688 600
Vice President
Terry S. Phipps $41,688 600
President, SunBelt
Transportation, Inc.
Robert E. Sandlin $41,688 600
President, Florida Rock & Tank
Lines, Inc.
Ray M. Van Landingham $41,688 600
Vice President and CFO
Non-Executive Director Group $312,660 4,500(3)
Executive Group (All Executive $250,128 3,600
Officers of the Company as a
group)
Non-Executive Officer Employee $764,280 11,000(4)
Group (All employees, including
all officers who are not
Executive Officers, as a group)
(1) As determined using a value of $69.48 per share, the closing
price of our common stock on The Nasdaq Stock Market on December
7, 2005.
(2) Except with respect to grants to non-employee directors,
shares of restricted stock subject to these grants are subject to
vesting in annual installments over a vesting period of four
years from January 1, 2006.
(3) Each of the nine Non-employee directors will be entitled to
an unrestricted stock award of 500 shares per year.
Other than the grants described above, the benefits or
amounts that will be received by or allocated to officers and
directors under the 2006 Plan are not determinable because such
benefits or amounts, if any, will be awarded in the future at the
discretion of the Compensation Committee.
Equity Compensation Plan Information
The following table summarizes our equity compensation plan
information as of September 30, 2005.
Equity Compensation Plan Information
------------------------------------
Number of
securities
remaining
available for
future issuance
under equity
Number of compensation
securities to Weighted- plans
be issued upon average (excluding
exercise of exercise price issued and
outstanding of outstanding outstanding
options, options, options,
warrants and warrants and warrants and
Plan category rights rights rights)
- ------------- ------ ------ -------
Equity
compensation
plans approved
by security holders: 337,900 $30.72 109,700
Equity
compensation
plans not
approved by
security holders: 0 0 0
TOTAL 337,900 $30.72 109,700
Tax Treatment of Awards
Incentive Stock Options
An incentive stock option results in no taxable income to
the optionee or a deduction to the Company at the time it is
granted or exercised. However, the excess of the fair market
value of the shares acquired over the option price is an item of
adjustment in computing the alternative minimum taxable income of
the optionee. If the optionee holds the stock received as a
result of an exercise of an incentive stock option for at least
two years from the date of the grant and one year from the date
of exercise, then the gain realized on disposition of the stock
is treated as a long-term capital gain. If the shares are
disposed of during this period, however, (i.e., a "disqualifying
disposition"), then the optionee will include in income, as
compensation for the year of the disposition, an amount equal to
the excess, if any, of the fair market value of the shares, upon
exercise of the option over the option price (or, if less, the
excess of the amount realized upon disposition over the option
price). The excess, if any, of the sale price over the fair
market value on the date of exercise will be a short-term capital
gain. In such case, the Company will be entitled to a deduction,
in the year of such a disposition, for the amount includible in
the optionee's income as compensation. The optionee's basis in
the shares acquired upon exercise of an incentive stock option is
equal to the option price paid, plus any amount includible in his
or her income as a result of a disqualifying disposition.
Non-Qualified Stock Options
A non-qualified stock option results in no taxable income to
the optionee or deduction to the Company at the time it is
granted. An optionee exercising such an option will, at that
time, realize taxable compensation in the amount of the
difference between the option price and the then market value of
the shares. Subject to the applicable provisions of the Code, a
deduction for federal income tax purposes will be allowable to
the Company in the year of exercise in an amount equal to the
taxable compensation recognized by the optionee.
The optionee's basis in such shares is equal to the sum of
the option price plus the amount includible in his or her income
as compensation upon exercise. Any gain (or loss) upon subsequent
disposition of the shares will be a long-term or short-term gain
(or loss), depending upon the holding period of the shares.
If a non-qualified option is exercised by tendering
previously owned shares of the Company's common stock in payment
of the option price, then, instead of the treatment described
above, the following generally will apply: a number of new shares
equal to the number of previously owned shares tendered will be
considered to have been received in a tax-free exchange; the
optionee's basis and holding period for such number of new shares
will be equal to the basis and holding period of the previously
owned shares exchanged. The optionee will have compensation
income equal to the fair market value on the date of exercise of
the number of new shares received in excess of such number of
exchanged shares; the optionee's basis in such excess shares will
be equal to the amount of such compensation income; and the
holding period in such shares will begin on the date of exercise.
Stock Appreciation Rights
Generally, the recipient of a stand-alone SAR will not
recognize taxable income at the time the stand-alone SAR is
granted. If an employee receives the appreciation inherent in the
SARs in cash, the cash will be taxed as ordinary income to the
employee at the time it is received. If an employee receives the
appreciation inherent in the SARs in stock, the spread between
the then current market value and the base price will be taxed as
ordinary income to the employee at the time it is received. In
general, there will be no federal income tax deduction allowed to
the Company upon the grant or termination of SARs. However, upon
the settlement of an SAR, the Company will be entitled to a
deduction equal to the amount of ordinary income the recipient is
required to recognize as a result of the settlement.
Other Awards
The current United States federal income tax consequences of
other awards authorized under the 2006 Plan are generally in
accordance with the following: (i) restricted stock is generally
subject to ordinary income tax at the time the restrictions
lapse, unless the recipient elects to accelerate recognition as
of the date of grant; (ii) stock unit awards are generally
subject to ordinary income tax at the time of payment, and (iii)
unrestricted stock awards are generally subject to ordinary
income tax at the time of grant. In each of the foregoing cases,
the Company will generally be entitled to a corresponding federal
income tax deduction at the same time the participant recognizes
ordinary income.
Section 162(m)
Compensation of persons who are "covered employees" of the
Company is subject to the tax deduction limits of Section 162(m)
of the Code. Awards that qualify as "performance-based
compensation" are exempt from Section 162(m), thus allowing the
Company the full federal tax deduction otherwise permitted for
such compensation. If approved by the Company's shareholders, the
2006 Plan will enable the Compensation Committee to grant awards
that will be exempt from the deduction limits of Section 162(m).
Deferred Compensation.
Any deferrals made under the 2006 Plan, including awards
granted under the plan that are considered to be deferred
compensation, must satisfy the requirements of Section 409A of
the Internal Revenue Code to avoid adverse tax consequences to
participating employees. These requirements include
limitations on election timing, acceleration of payments, and
distributions. The Company intends to structure any deferrals and
awards under the 2006 Plan to meet the applicable tax law requirements.
State Tax Consequences.
State tax consequences may in some cases differ from those
described above.
On December 7, 2005, the closing price of our common stock
traded on the Nasdaq was $69.48 per share.
Your Board of Directors unanimously recommends a vote "FOR" the
proposal to approve the 2006 Stock Incentive Plan.
SHAREHOLDER RETURN PERFORMANCE
The following graph compares the performance of the
Company's common stock to that of the Total Return Index for The
NASDAQ Stock Market-US Index and The NASDAQ Trucking and
Transportation Stock Index for the period commencing September
30, 2000 and ending on September 30, 2005. The graph assumes
that $100 was invested on September 30, 2000 in the Company's
common stock and in each of the indices and assumes the
reinvestment of dividends.
(Graph Omitted)
Cumulative Total Return
-----------------------
9/30/00 9/30/01 9/30/02 9/30/03 9/30/04 9/30/05
------- ------- ------- ------- ------- -------
<s> <c> <c> <c> <c> <c> <c>
Patriot Transportation 100.00 107.29 134.49 189.61 206.99 432.76
Holding, Inc.
NASDAQ Stock Market (U.S.) 100.00 40.72 32.86 50.65 53.68 60.97
NASDAQ Trucking &
Transportation 100.00 92.70 99.66 157.03 162.07 162.92
</table>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the
compensation of the Company's Chief Executive Officer and the
four other most highly compensated executives who served in such
capacities during the fiscal year ended September 30, 2005.
Long-Term All other
Annual Compensation Compensation
Compensation(2) Awards ($)(5)
--------------- -------- ------
<s> <c> <c> <c> <c> <c>
Name and Salary Bonus Securities Under-
Principal Position(1) Year ($)(3) ($)(4) Lying Options
- --------------------- ---- ------ ------ ------------- ------------
John E. Anderson 2005 345,441 330,577 10,000 22,192
President 2004 335,380 250,000 -0- 17,812
2003 322,667 -0- 15,000 19,740
David H. deVilliers Jr. 2005 265,850 241,020 7,500 14,295
Vice President 2004 258,345 244,400 -0- 9,951
2003 251,835 228,042 15,000 14,575
Terry S. Phipps 2005 129,808 78,000 -0- 16,960
President of SunBelt 2004 102,885 53,125 10,000 3,500
Transportation
Robert E. Sandlin 2005 177,081 105,060 5,000 19,886
President of Florida 2004 168,713 72,229 -0- 10,868
Rock & Tank Lines, INc. 2003 149,752 -0- 10,000 9,912
Ray M. Van Landingham 2005 147,470 90,000 5,000 26,345
Vice President, 2004 138,860 49,798 -0- 13,153
Treasurer, Secretary 2003 133,600 -0- 10,000 18,401
and Chief Financial
Officer
</table>
(1) Terry S. Phipps joined SunBelt as Vice President on May 12,
2003 and was appointed President of SunBelt effective April
5, 2004.
(2) Columns relating to "other annual compensation" and
"restricted stock awards" have been omitted because no
compensation required to be reported in such columns was
awarded to, earned by, or paid to the named executives
during the periods covered by such columns.
(3) The amounts in this column include salary and bonus deferred
at the executive's election under the Company's Profit
Sharing and Deferred Earnings Plan.
(4) The amounts in this column include bonuses which are accrued
in the year earned and paid in the following year.
(5) The amounts shown under All Other Compensation include: the
benefit to the executive for personal use of a Company
provided vehicle; matching contributions under our Profit
Sharing and Deferred Earnings Plan (executives participate
on the same terms as other employees); benefits paid under
our Medical Reimbursement Plan, under which we reimburse
certain officers for personal medical expenses not covered
by insurance; and certain country, social and civic club
membership dues. In addition to these benefits, the named
executive officers participate in group plans, including our
group health insurance and life insurance plans, on the same
terms as other employees.
Option Grants In Last Fiscal Year
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Options Term
------------------------------------------ -----------------
Percent of
Total
Options/
Number of SARs
Securities Granted Exerice
Underlying to or Base
Options/SARs Employees Price Expiration
Name Granted (#) In Fiscal ($/Sh) Date 5% ($) 10% ($)
(a) (b) (c) (d) (e) (f) (g)
- ------------------ --------- ------- ------ ---------- ------- --------
<s> <c> <c> <c> <c> <c> <c>
John E. Anderson 10,000 13.5 43.501 12-28-2014 273,578 693,275
David H. deVilliers Jr. 7,500 10.1 43.501 12-28-2014 205,184 519,956
Robert E. Sandlin 5,000 6.8 43.501 12-28-2014 136,789 346,638
Ray M. Van Landingham 5,000 6.8 43.501 12-28-2014 136,789 346,638
</Table>
Option Exercises and Fiscal Year-End Values
The following table shows information with respect to stock
options exercised during the fiscal year ended September 30, 2005
and the number and value of unexercised options held by each
executive officer named in the Summary Compensation Table who
holds options.
Number of Unexercised Value of Unexercisabled
Options at September In-The-Money Options
30, 2005 At September 30, 2005(1)
---------------------- ------------------------
Acquired Value Un- Un-
on Realized Exercisable Exercisable Exercisable Exercisable
Name Exercise ($) # # $ $
- ----- -------- ----- ----- ------ -------- --------
<s> <c> <c> <c> <c> <c> <c>
John E. Anderson 4,000 $114,314 2,000 19,000 $ 92,940 $670,220
David H. deVilliers Jr. -0- -0- 6,000 16,500 $278,820 $607,222
Robert E. Sandlin 2,000 $ 61,540 -0- 11,000 -0- $404,815
Ray M. Van Landingham 2,000 $ 56,776 2,000 11,000 $ 92,940 $404,815
Terry S. Phipps 2,000 $ 42,408 -- 8,000 -0- $307,080
</Table>
(1) The closing price of the Company's common stock as reported
on The NASDAQ Stock Market on September 30, 2005 (the last
trading day in fiscal 2005) of $68.70, less the exercise
price, was used in calculating the value of exercisable and
unexercisable options.
Pension Plan
The Company has a Management Security Plan (the "MSP Plan")
for certain officers. Benefit levels have been established on
the basis of base compensation at September 30, 2002. Upon
reaching normal retirement age, a participant is entitled to
receive twice the amount of his benefit level in equal monthly
payments for 12 months and thereafter the benefit level until his
death. The MSP Plan provides that in the event a participant
dies prior to his retirement, his beneficiary will receive twice
the amount of such participant's benefit level in monthly
payments for a period of 12 months and thereafter the benefit
level in monthly payments for the next 168 months or until such
time as such participant would have reached age 65, whichever is
later. If a participant dies after his retirement, his
beneficiary, if any, will receive such participant's benefit for
a period of 15 years from the date of the participant's
retirement or until the death of the beneficiary, whichever
occurs first.
The annual retirement benefit levels in effect at September
30, 2005 for the named executive officers were:
John E. Anderson $160,000
David H. deVilliers Jr. $123,600
Other executives named in the Summary Compensation Table are not
eligible to participate in the MSP Plan.
COMPENSATION COMMITTEE REPORT
Role of Committee
The Compensation Committee's duties and responsibilities
include:
* review and approval of the Company's goals and objectives
relevant to the compensation of the Chief Executive Officer;
* evaluating the job performance of the Chief Executive
Officer in light of those goals and objectives;
* determining the compensation levels (including base,
incentive and equity compensation) of the Chief Executive Officer
and other senior executive officers;
* administering the Company's stock option plans and the
Management Incentive Compensation program;
* making recommendations to the Board of Directors with
respect to any incentive and equity-based compensation plans; and
* periodically reviewing, with the Chairman and Chief
Executive Officer, the succession plans for senior executive
officers and making recommendations to the Board relating to
those succession plans.
The Committee operates under a written charter adopted by
the Board.
Compensation Philosophy
The Compensation Committee believes that the Company's
executive compensation programs should promote the creation of
shareholder value by:
* enabling the Company to attract, retain and motivate skilled
and experienced personnel that are critical to the Company's long-
term success;
* aligning executive compensation with the short-term and long-
term financial performance of the Company; and
* aligning executive compensation with the achievement of
specific non-financial goals that are important to the Company,
including accident prevention and appropriate real estate
development expansion.
Elements of Executive Compensation
Base Salary
The Committee annually reviews and determines the base
salaries of the Chief Executive Officer and other senior
executive officers. In making its determinations regarding base
salaries, the Committee considers the executive's qualifications
and experience, scope of responsibilities and future potential,
the goals and objectives established for the executive and the
extent to which those goals and objectives are achieved,
competitive salary practices, other elements of the executive's
compensation (including incentive and equity based compensation
and other benefits) and such other factors as the Committee may
deem relevant.
Management Incentive Compensation Plan
The Company's Management Incentive Compensation ("MIC") plan
provides a direct financial incentive in the form of an annual
cash bonus to participants to achieve their business unit's and
the Company's goals and objective. Awards to individuals are
based on their achieving annual predetermined objectives and the
importance of and degree of difficulty in achieving those
objectives. Goals for the transportation group for the fiscal
year ended 2005 focused on the achievement of certain safety and
accident prevention objectives and after-tax returns on total
capital employed. MIC-based objectives for real estate
emphasized such key performance indicators as operating profit
from the developed portfolio, lease-up periods for new buildings
placed in service during the fiscal year, growth-related new
development and average occupancy for the existing portfolio.
Management Security Plan
The Management Security Plan provides for certain payments
to certain senior executive officers upon retirement or death.
Additional Benefits
Senior executive officers participate in employee benefit
plans generally available to employees. In addition, certain
senior executive officers participate in a Medical Reimbursement
Plan and receive certain other additional perquisites.
Equity Based Compensation
Under the 2000 Stock Option Plan, the Company may grant
qualified or non-qualified options to executive officers,
directors and other key employees. During the 2005 fiscal year,
the Company granted non-qualified options to acquire a total of
27,500 shares of the Company's common stock to the executive
officers named in the Summary Compensation Table. All options
granted have been granted at an option price equal to the fair
market value of the Company's common stock on the date of grant,
vest ratably over a five year period and expire ten years after
the grant date. In subjectively determining the number of
options to be granted to an individual, including the Chief
Executive Officer, the Compensation Committee takes into account
all elements of the individual's compensation, the individual's
scope of responsibility and ability to affect both short and long
term performance and add value to the Company, and such other
factors as the Compensation Committee may deem relevant.
On the recommendation of the Compensation Committee, the
Board of Directors has adopted, subject to approval of the
shareholders, the 2006 Stock Incentive Plan in order to provide
greater flexibility to the Compensation Committee in structuring
future incentive compensation opportunities tied to the
performance of the Company's common stock.
CEO Compensation
The members of the Compensation Committee meet in executive
session each year to evaluate the performance of the Chief
Executive Officer, to approve his MIC bonus for the prior fiscal
year and to determine his base salary and MIC objectives for the
current year, and to consider and approve any equity incentive
compensation grants to the Chief Executive Officer.
Effective January 1, 2006, the Compensation Committee
approved a base salary of $360,000 for Mr. Anderson, representing
an increase of 3.4% over his base salary for the prior year. In
approving this base salary, the Compensation Committee considered
all of the components of Mr. Anderson's compensation, including
base salary, stock options, incentive compensation, and other
benefits, the Company's performance and the Compensation
Committee's evaluation of Mr. Anderson's performance in leading
the Company. No particular weighting was applied to these
factors.
The Compensation Committee approved a cash bonus to Mr.
Anderson under the MIC plan of $330,557 for fiscal 2005 based on
the level of achievement of previously established objectives
relating to achievement of transportation safety objectives and
achievement of specified milestones and financial targets in the
real estate and transportation groups. For fiscal 2006, the
Compensation Committee established specific individual goals and
objectives for Mr. Anderson based on the achievement of specific
return on capital employed targets for the transportation and
real estate group, certain financial and development milestones
in the real estate group, specific safety goals in the
transportation group and compliance with the requirements of
Section 404 of the Sarbanes-Oxley Act of 2002. Mr. Anderson is
eligible to earn an MIC bonus of up to $360,000 for fiscal 2006
based on the extent to which these objectives are achieved,
subject to the achievement of certain minimum performance levels.
Robert H. Paul III, Chair
Martin E. Stein, Jr.
James H. Winston
Members of the Compensation Committee
RELATED PARTY TRANSACTIONS
Four directors of the Company, Edward L. Baker, John D.
Baker II, Thompson S. Baker II, and Luke E. Fichthorn III are
also directors of FRI. The four directors beneficially own
approximately 48.4% of stock of the Company and 26% of the stock
of FRI as of October 31, 2004. Accordingly, Edward L. Baker,
John D. Baker II and Thompson S. Baker II, who own approximately
46.8% of the stock of the Company and 25.8% of the stock of FRI,
may be considered to be control persons of both the Company and
FRI.
The Company and FRI routinely are engaged in business
together through the hauling by the Company of construction
aggregates and other products for FRI and the leasing to FRI of
construction aggregates mining and other properties. The Company
has numerous aggregates hauling competitors at all terminal and
mine sites and the rates charged are, accordingly, established by
competitive conditions. Approximately 5.1% of the Company's
revenue was attributable to FRI during the 2005 fiscal year. In
addition, under an agreement, FRI provided certain management and
related services, including administrative, human resources,
health benefits and property management services to the Company
and its subsidiaries. FRI charged the Company $174,000 for such
services during the fiscal year ended September 30, 2005.
Mr. Fichthorn provided the Company with financial consulting
and other services during the fiscal year ended 2005 for which he
received $30,000.
In the opinion of the Company, the terms, conditions,
transactions and payments under the agreements with the persons
described above were not less favorable to the Company than those
which would have been available from unaffiliated persons.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table and notes set forth the beneficial
ownership of common stock of the Company by each person known by
the Company to own beneficially more than 5% of the common stock
of the Company. Percentage calculations are based on the
outstanding shares of the Company's common stock on December 7,
2005.
Title of Name and Address Amount and Nature Percentage
Class of Beneficial Owner of Beneficial of Class
- ------- ------------------- Ownership --------
---------
Common Baker Holdings, LP 1,061,521 35.8%
Edward L. Baker 139,683(1) 4.7%
John D. Baker II 141,379(1) 4.8%
P.O. Box 4667 ------------ ------
Jacksonville, FL 32201 1,342,583 45.3%
Common Royce & Associates, LLC 334,300(2) 11.3%
1414 Avenue of the
Americas
New York, NY 10019
(1) Edward L. Baker and John D. Baker II have shared voting
power and dispositive power over the shares owned by Baker
Holdings, LP and each have a pecuniary interest in 353,840
shares owned by Baker Holdings, LP. See Common Stock
Ownership by Directors and Executive Officers and the
accompanying notes for further details on shares
beneficially owned by Edward L. Baker and John D. Baker II.
(2) In a Schedule 13G filed with the Securities and Exchange
Commission on February 1, 2005, Royce & Associates, LLC
reported that, as of December 31, 2004, it had sole voting
and dispositive power with respect to 334,300 shares.
COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table and notes set forth the beneficial
ownership of common stock of the Company by each director and
each non-director named in the Summary Compensation Table and by
all officers and directors of the Company as a group as of
October 31, 2005.
Name of Amount and Nature of Percentage of Class
Of Beneficial Owner Beneficial Ownership(1) -------------------
- ------------------- -----------------------
John E. Anderson 27,806 *
Edward L. Baker 847,364(2)(3) 28.5%
John D. Baker II 495,219(2)(4) 16.7%
Thompson S. Baker II 46,301(5) 1.5%
Charles E. Commander III 9,000 *
David H. deVilliers Jr. 13,387 *
Luke E. Fichthorn III 45,043(6) 1.4%
John D. Klopfenstein 1,500 *
Robert H. Paul III 21,100 *
Terry S. Phipps 1,176 *
Robert E. Sandlin 5,418 *
H. W. Shad 6,500 *
Martin E. Stein Jr. 61,300(7) 2.1%
Ray M. Van Landingham 5,000 *
James H. Winston 24,000 *
All Directors and Officers
As a group (15 people) 1,610,114 54.3%
* Less than 1%
(1) The preceding table does not include the shares of
restricted stock described in the Plan Benefits Table
included under Proposal No. 2 - Approval of the 2006 Stock
Incentive Plan because the grants of restricted stock are
subject to shareholder approval. The preceding table
includes the following shares held under the Company's
Profit Sharing and Deferred Earnings Plan and shares
underlying options that are exercisable within 60 days of
October 31, 2005.
Shares Under
Profit Sharing Shares Under
Plan Option
------ ------
John E. Anderson -0- 7,000
Edward L. Baker 2,542 22,000
John D. Baker II 1,549 24,000
Thompson S. Baker II 7 24,000
Charles E. Commander III -0- 7,000
David H. deVilliers Jr. 1,323 10,500
Luke E. Fichthorn III -0- 24,000
John D. Klopfenstein -0- 1,500
Robert H. Paul III -0- 20,000
Terry S. Phipps 176 1,000
Robert E. Sandlin 2,418 3,000
H.W. Shad III -0- 6,000
Martin E. Stein, Jr. -0- 19,000
Ray M. Van Landingham -0- 5,000
James H. Winston -0- 19,000
All directors and officers
as a group (15 people) 8,015 193,000
(2) Edward L. Baker and John D. Baker II have shared voting and
investment power with respect to the 1,061,521 shares owned
by Baker Holdings, LP. The table attributes 707,681 of
these shares to Edward L. Baker (353,840 shares in which he
has a beneficial interest and 353,841 shares in which
another person has a beneficial interest) and excludes them
from the ownership totals for John D. Baker II. The
remaining 353,840 shares, in which John D. Baker II has a
beneficial interest, are attributed to John D. Baker II.
(3) Includes 88,543 shares held in trust for the benefit of
children of John D. Baker II as to which Edward L. Baker has
sole voting power and sole investment power but as to which
he disclaims beneficial ownership; 432 shares held by a
trust for which Edward L. Baker is a co-trustee with
SunTrust Bank and to which he has potential income rights;
and 400 shares directly owned by his wife, as to which he
disclaims beneficial ownership.
(4) Includes 1,963 shares directly owned by the living trust of
Mr. Baker's wife, as to which he disclaims beneficial
ownership. The amount shown for Mr. Baker does not include
an aggregate of 98,543 shares held by certain trusts that
are administered either by an independent trustee or by
Edward L. Baker, as trustee, for the benefit of either his
spouse or his children and in which neither John D. Baker II
nor Edward L. Baker have a pecuniary interest.
(5) Includes 733 shares directly owned by Mr. Baker's spouse;
and 2,199 shares held for the benefit of Mr. Baker's minor
children.
(6) Includes 100 shares owned by the spouse of Mr. Fichthorn as
to which he disclaims any beneficial interest and 4,000
shares directly owned by the M/B Disbro Trust, of which Mr.
Fichthorn is a co-trustee and beneficiary.
(7) Includes 40,300 shares owned by Regency Square II, a Florida
general partnership. Mr. Stein owns a 2.5248% partnership
interest and is a co-trustee and a beneficiary of a
testamentary trust that holds a 46.21% interest in the
partnership. John D. Baker II also is a co-trustee of this
testamentary trust and so may be deemed to have shared
voting and dispositive power as to the shares owned by the
partnership. These shares are excluded from the totals
shown for John D. Baker II, who disclaims any beneficial
interest in such shares.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Company's financial
reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial
statements and the reporting process, including the system of
internal controls. The Audit Committee also selects the
Company's independent registered public accounting firm.
In this context, the Audit Committee has met and held
discussions with management and the independent registered public
accounting firm regarding the fair and complete presentation of
the Company's results. The Committee has discussed significant
accounting policies applied by the Company
in its financial statements, as well as alternative
treatments. Management represented to the Committee that the
Company's consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the
United States of America, and the Committee has reviewed and
discussed the consolidated financial statements with
management and the independent registered public accounting
firm. The Committee discussed with the independent registered
public accounting firm matters required to be discussed by
Statement on Auditing Standards No. 61 (Communications With Audit
Committees).
In addition, the Audit Committee has discussed with the
independent auditor the auditor's independence from the Company
and its management, including the matters in the written
disclosures required by the Independence Standards Board Standard
No. 1 (Independence Discussions With Audit Committees). The
Committee also has considered whether the independent auditor's
provision of non-audit services to the Company is compatible with
the auditor's independence. The Committee has concluded that the
independent auditor is independent from the Company and its
management.
The Audit Committee discussed with the Company's independent
auditors the overall scope and plans for their respective audits.
The Audit Committee meets with the independent auditors, with and
without management present, to discuss the results of their
examinations, the evaluations of the Company's internal controls,
and the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to
above, the Audit Committee recommended to the Board of Directors,
and the Board has approved, that the audited financial statements
be included in the Company's Annual Report on Form 10-K for the
year ended September 30, 2005, for filing with the Securities and
Exchange Commission.
Submitted by: H.W. Shad III, Chairman
Charles E. Commander III
Robert H. Paul III
Members of the Audit Committee
The Audit Committee Report does not constitute soliciting
material, and shall not be deemed to be filed or incorporated by
reference into any other Company filing under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent that the Company specifically
incorporates the Audit Committee Report by reference therein.
INDEPENDENT AUDITOR
The Audit Committee has engaged PricewaterhouseCoopers LLP
to serve as the Company's principal public accountants for a
three year term beginning with fiscal year 2005. Representatives
of PricewaterhouseCoopers LLP are expected to be present at the
shareholders' meeting with the opportunity to make a statement if
they so desire and will be available to respond to appropriate
questions.
The following table presents fees for professional audit
services rendered by PricewaterhouseCoopers LLP for the audit of
the Company's financial statements for the years ended September
30, 2005 and September 30, 2004, and fees billed by
PricewaterhouseCoopers LLP for other services during those
periods.
2005 2004
---- ----
Audit Fees (1) $ 89,800 $131,475
Audit Related Fees (2) $ 17,464 $ 8,800
Tax Fees (3) $ 58,745 $ 27,700
All Other Fees -0- -0-
--------- ---------
Total $166,009 $167,975
(1) Audit fees consisted of audit work performed in the
preparation of the financial statements, as well as work that
generally only the independent auditor can reasonably be
expected to provide, such as statutory audits.
(2) Audit related fees consisted principally of audits of
employee benefit plans.
(3) Tax fees consisted principally of assistance related to tax
compliance and reporting.
Pre-Approval of Audit and Non-Audit Services:
Under the Company's amended Audit Committee Charter, the
Audit Committee is required to pre-approve all auditing services
and permissible non-audit services, including related fees and
terms, to be performed for the Company by its independent
auditor, subject to the de minimus exceptions for non-audit
services described under the Exchange Act which are approved by
the Audit Committee prior to the completion of the audit. The
Audit Committee pre-approved all audit services, audit-related
services and tax review, compliance and planning services
performed for the Company by PricewaterhouseCoopers during fiscal
2005.
ADDITIONAL INFORMATION
Shareholder Proposals
Proposals of shareholders intended to be included in the
Company's proxy statement and form of proxy relating to the
annual meeting of shareholders to be held in early 2006 must be
delivered in writing to the principal executive offices of the
Company no later than August 25, 2006. The inclusion of any
proposal will be subject to the applicable rules of the
Securities and Exchange Commission.
Except for shareholder proposals to be included in the
Company's proxy materials, the deadline for nominations for
directors submitted by a shareholder is forty days before the
next annual meeting, and for other shareholder proposals is
November 8, 2006. Proposals must be sent to the Secretary of the
Company at our principal executive offices. Any notice from a
shareholder nominating a person as director must include certain
additional information as specified in our Articles of
Incorporation.
The Company may solicit proxies in connection with next
year's annual meeting which confer discretionary authority to
vote on any shareholder proposals of which the Company does not
receive notice by November 8, 2006.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's executive officers, directors and
beneficial owners of 10% or more of the Company's outstanding
common stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission,
NASDAQ and the Company. Based solely on a review of the copies
of such forms furnished to the Company and written
representations from the Company's executive officers and
directors, the Company believes all persons subject to these
reporting requirements filed the required reports on a timely
basis, except that Mr. Paul was one day late on two occasions in
reporting the sale of a total of 1400 shares due to the broker's
failure to notify him of the completion of the trade.
Annual Report on Form 10-K
Shareholders may receive without charge a copy of Patriot
Transportation Holding, Inc.'s annual report to the Securities
and Exchange Commission on Form 10-K including the financial
statements and the financial statement schedules by writing to
the Secretary at 1801 Art Museum Drive, Jacksonville, Florida
32207. This report also is available through our website,
www.patriottrans.com.
BY ORDER OF THE BOARD OF DIRECTORS
December 29, 2005 Ray M. Van Landingham
Secretary
PLEASE RETURN THE ENCLOSED FORM OF PROXY,
DATED AND SIGNED, IN THE ENCLOSED ADDRESSED
ENVELOPE, WHICH REQUIRES NO POSTAGE.
ANNEX A
2006 STOCK INCENTIVE PLAN
1. Purpose. The purpose of the Patriot Transportation
Holding, Inc. 2006 Stock Incentive Plan is to further align the
interests of employees and directors with those of the
shareholders by providing incentive compensation opportunities
tied to the performance of the Common Stock and by promoting
increased ownership of the Common Stock by such individuals. The
Plan is also intended to advance the interests of the Company and
its shareholders by attracting, retaining and motivating key
personnel upon whose judgment, initiative and effort the
successful conduct of the Company's business is largely
dependent.
2. Definitions. Wherever the following capitalized
terms are used in the Plan, they shall have the meanings
specified below:
"Affiliate" means (i) any entity that would be treated
as an "affiliate" of the Company for purposes of Rule 12b-2 under
the Exchange Act and (ii) any joint venture or other entity in
which the Company has a direct or indirect beneficial ownership
interest representing at least one-third (1/3) of the aggregate
voting power of the equity interests of such entity or one-third
(1/3) of the aggregate fair market value of the equity interests
of such entity, as determined by the Committee.
"Award" means an award of a Stock Option, Stock
Appreciation Right, Restricted Stock Award, Stock Unit Award or
Stock Award granted under the Plan.
"Award Agreement" means a written or electronic notice
or agreement setting forth the terms and conditions of an Award
granted to a Participant. An Award Agreement may be in the form
of a notice from the Company to the Participant and need not be
signed by the Company or by the Participant.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Common Stock" means the Company's common stock, par
value $0.10 per share.
"Committee" means the Compensation Committee of the
Board, or such other committee of the Board appointed by the
Board to administer the Plan.
"Company" means Patriot Transportation Holding, Inc., a
Florida corporation.
"Date of Grant" means the date on which an Award under
the Plan is made by the Committee, or such later date as the
Committee may specify to be the effective date of an Award.
"Disability" means a Participant being considered
"disabled" within the meaning of Section 409A(a)(2)(C) of the
Code, unless otherwise provided in an Award Agreement.
"Eligible Person" means any person who is an employee
of the Company or any Affiliate or any person to whom an offer of
employment with the Company or any Affiliate is extended, as
determined by the Committee, or any person who is a Non-Employee
Director.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Fair Market Value" of a share of Common Stock as of a
given date shall be the closing price of such stock on the Nasdaq
Stock Market on the date as of which fair market value is to be
determined or, if there shall be no such sale on such date, the
next preceding day on which such a sale shall have occurred. If
Common Stock is not listed on the Nasdaq Stock Market on the date
as of which Fair Market Value is to be determined, the Committee
shall determine in good faith the Fair Market Value in whatever
manner it considers appropriate.
"Incentive Stock Option" means a Stock Option granted
under Section 6 hereof that is intended to meet the requirements
of Section 422 of the Code and the regulations thereunder.
"Non-Employee Director" means any member of the Board
who is not an employee of the Company.
"Nonqualified Stock Option" means a Stock Option
granted under Section 6 hereof that is not an Incentive Stock
Option.
"Participant" means any Eligible Person who holds an
outstanding Award under the Plan.
"Performance Objectives" means the performance
objectives established pursuant to this Plan for Participants who
have received Awards. Performance Objectives may be described in
terms of Company-wide objectives or objectives that are related
to the performance of the individual Participant or the
subsidiary, division, department or function within the Company
or subsidiary in which the Participant is employed. Performance
Objectives may be measured on an absolute or relative basis.
Relative performance may be measured by a group of peer companies
or by a financial market index. Any Performance Objectives
applicable to a Qualified Performance-Based Award shall be
limited to specified levels of or increases in the Company's or
subsidiary's return on equity, diluted earnings per share, total
earnings, earnings growth, return on capital, return on assets,
earnings before interest and taxes, sales, sales growth, gross
margin return on investment, share price (including but not
limited to, growth measures and total stockholder return),
operating profit, net earnings, cash flow (including, but not
limited to, operating cash flow and free cash flow), financial
return ratios, total return to shareholders, market share,
earnings measures/ratios, economic value added (EVA), balance
sheet measurements or internal rate of return. Except in the case
of a Qualified Performance-Based Award, if the Committee
determines that a change in the business, operations, corporate
structure or capital structure of the Company, or the manner in
which it conducts its business, or other events or circumstances
render the Performance Objectives unsuitable, the Committee may
modify such Performance Objectives or the related minimum
acceptable level of achievement, in whole or in part, as the
Committee deems appropriate and equitable.
"Performance Period" means a period of time within
which the Performance Objectives are to be achieved
"Plan" means the Patriot Transportation Holding, Inc.
2006 Stock Incentive Plan as set forth herein, as amended from
time to time.
"Qualified Performance-Based Award" means an Award or
portion of an Award that is intended to satisfy the requirements
for "qualified performance-based compensation" under Code
Section 162(m). The Committee shall designate any Qualified
Performance-Based Award as such at the time of grant.
"Restricted Stock Award" means a grant of shares of
Common Stock to an Eligible Person under Section 8 hereof that
are issued subject to such vesting and transfer restrictions as
the Committee shall determine and set forth in an Award
Agreement.
"Service" means a Participant's employment with the
Company or any Affiliate or a Participant's service as a Non-
Employee Director with the Company, as applicable.
"Stock Award" means a grant of shares of Common Stock
to an Eligible Person under Section 10 hereof that are issued
free of transfer restrictions (other than restrictions imposed by
law) and forfeiture conditions.
"Stock Appreciation Right" means a contractual right
granted to an Eligible Person under Section 7 hereof entitling
such Eligible Person to receive a payment, representing the
difference between the base price of the right and the Fair
Market Value of a share of Common Stock, at such time, and
subject to such conditions, as are set forth in the Plan and the
applicable Award Agreement.
"Stock Option" means a contractual right granted to an
Eligible Person under Section 6 hereof to purchase shares of
Common Stock at such time and price, and subject to such
conditions, as are set forth in the Plan and the applicable Award
Agreement.
"Stock Unit Award" means a contractual right granted to
an Eligible Person under Section 9 hereof representing notional
unit interests equal in value to a share of Common Stock to be
paid or distributed at such times, and subject to such
conditions, as set forth in the Plan and the applicable Award
Agreement.
3. Administration.
3.1 Committee Members. The Plan shall be
administered by a Committee comprised of no fewer than two
members of the Board. It is intended that each Committee member
shall satisfy the requirements for (i) an "independent director"
for purposes of the Company's Corporate Governance Guidelines and
any Standards of Board Independence in effect from time to time
and the Compensation Committee Charter, (ii) an "independent
director" under rules adopted by the Nasdaq Stock Market, (iii) a
"nonemployee director" for purposes of such Rule 16b-3 under the
Exchange Act and (iv) an "outside director" under Section 162(m)
of the Code. No member of the Committee shall be liable for any
action or determination made in good faith by the Committee with
respect to the Plan or any Award thereunder.
3.2 Committee Authority. The Committee shall have
such powers and authority as may be necessary or appropriate for
the Committee to carry out its functions as described in the
Plan. Subject to the express limitations of the Plan, the
Committee shall have authority in its discretion to determine the
Eligible Persons to whom, and the time or times at which, Awards
may be granted, the number of shares, units or other rights
subject to each Award, the exercise, base or purchase price of an
Award (if any), the time or times at which an Award will become
vested, exercisable or payable, the performance goals and other
conditions of an Award, the duration of the Award, and all other
terms of the Award. Subject to the terms of the Plan, the
Committee shall have the authority to amend the terms of an Award
in any manner that is not inconsistent with the Plan, provided
that no such action shall adversely affect the rights of a
Participant with respect to an outstanding Award without the
Participant's consent. The Committee also shall have
discretionary authority to interpret the Plan, to make factual
determinations under the Plan, and to make all other
determinations necessary or advisable for Plan administration,
including, without limitation, to correct any defect, to supply
any omission or to reconcile any inconsistency in the Plan or any
Award Agreement hereunder. The Committee may prescribe, amend,
and rescind rules and regulations relating to the Plan. The
Committee's determinations under the Plan need not be uniform and
may be made by the Committee selectively among Participants and
Eligible Persons, whether or not such persons are similarly
situated. The Committee shall, in its discretion, consider such
factors as it deems relevant in making its interpretations,
determinations and actions under the Plan including, without
limitation, the recommendations or advice of any officer or
employee of the Company or such attorneys, consultants,
accountants or other advisors as it may select. All
interpretations, determinations and actions by the Committee
shall be final, conclusive, and binding upon all parties.
3.3 Delegation of Authority. The Committee shall
have the right, from time to time, to delegate to one or more
officers of the Company the authority of the Committee to grant
and determine the terms and conditions of Awards granted under
the Plan, subject to the requirements the Florida Business
Corporation Act and such other limitations as the Committee shall
determine. In no event shall any such delegation of authority be
permitted with respect to Awards to any Eligible Person who is
subject to Rule 16b-3 under the Exchange Act or Section 162(m) of
the Code. The Committee shall also be permitted to delegate, to
any appropriate officer or employee of the Company,
responsibility for performing certain ministerial functions under
the Plan. In the event that the Committee's authority is
delegated to officers or employees in accordance with the
foregoing, all provisions of the Plan relating to the Committee
shall be interpreted in a manner consistent with the foregoing by
treating any such reference as a reference to such officer or
employee for such purpose. Any action undertaken in accordance
with the Committee's delegation of authority hereunder shall have
the same force and effect as if such action was undertaken
directly by the Committee and shall be deemed for all purposes of
the Plan to have been taken by the Committee.
3.4 Grants to Non-Employee Directors. Any Awards
or formula for granting Awards under the Plan made to Non-
Employee Directors shall be approved by the Board. The Board
shall exercise all rights, powers and authorities vested in the
Committee under the Plan with respect to Awards to Non-Employee
Directors, and all provisions of the Plan referring to the
Committee shall be interpreted in a manner consistent with the
foregoing by treating any such reference as a reference to the
Board for such purpose.
4. Shares Subject to the Plan.
4.1 Maximum Share Limitations. Subject to
adjustment pursuant to Section 4.2 hereof, the maximum aggregate
number of shares of Common Stock that may be issued and sold
under all Awards granted under the Plan shall be three hundred
thousand (300,000) shares (the "Maximum Share Limitation"). The
maximum number of shares of Common Stock that may be subject to
Stock Awards, Restricted Stock Awards, Stock Options, and Stock
Unit Awards and Stock Appreciation Rights granted to any one
Participant during any fiscal year shall be one hundred thousand
(100,000) shares. Shares of Common Stock issued and sold under
the Plan may be either authorized but unissued shares or shares
held in the Company's treasury. To the extent that any Award
involving the issuance of shares of Common Stock is forfeited,
cancelled, returned to the Company for failure to satisfy vesting
requirements or other conditions of the Award, or otherwise
terminates without an issuance of shares of Common Stock being
made thereunder, the shares of Common Stock covered thereby will
no longer be counted against the Maximum Share Limitation and may
again be made subject to Awards under the Plan. Any Awards or
portions thereof that are settled in cash and not in shares of
Common Stock shall not be counted against the Maximum Share
Limitation.
4.2 Adjustments. If there shall occur any change
with respect to the outstanding shares of Common Stock by reason
of any recapitalization, reclassification, stock dividend,
extraordinary dividend, stock split, reverse stock split or other
distribution with respect to the shares of Common Stock,
or any merger, reorganization, consolidation, combination, spin-off
or other similar corporate change, or any other change affecting the
Common Stock, the Committee may, in the manner and to the extent
that it deems appropriate and equitable to the Participants and
consistent with the terms of the Plan, cause an adjustment to be
made in (i) the Maximum Share Limitation provided in Section 4.1
hereof, (ii) the number and kind of shares of Common Stock,
units, or other rights subject to then outstanding Awards, (iii)
the exercise or base price for each share or unit or other right
subject to then outstanding Awards, and (iv) any other terms of
an Award that are affected by the event. Notwithstanding the
foregoing, in the case of Incentive Stock Options, any such
adjustments shall, to the extent practicable, be made in a manner
consistent with the requirements of Section 424(a) of the Code.
5. Participation and Awards.
5.1 Designations of Participants. All Eligible
Persons are eligible to be designated by the Committee to receive
Awards and become Participants under the Plan. The Committee has
the authority, in its discretion, to determine and designate from
time to time those Eligible Persons who are to be granted Awards,
the types of Awards to be granted and the number of shares of
Common Stock or units subject to Awards granted under the Plan.
In selecting Eligible Persons to be Participants and in
determining the type and amount of Awards to be granted under the
Plan, the Committee shall consider any and all factors that it
deems relevant or appropriate.
5.2 Determination of Awards. The Committee shall
determine the terms and conditions of all Awards granted to
Participants in accordance with its authority under Section 3.2
hereof. An Award may consist of one type of right or benefit
hereunder or of two or more such rights or benefits granted in
tandem or in the alternative. In the case of any fractional share
or unit resulting from the grant, vesting, payment or crediting
of dividends or dividend equivalents under an Award, the
Committee shall have the discretionary authority to (i) disregard
such fractional share or unit, (ii) round such fractional share
or unit to the nearest lower or higher whole share or unit, or
(iii) convert such fractional share or unit into a right to
receive a cash payment. To the extent deemed necessary by the
Committee, an Award shall be evidenced by an Award Agreement.
5.3 Performance Based Awards. The Committee may
authorize grants of Stock Options, Restricted Stock Awards, Stock
Unit Awards and Stock Awards (a "Performance Award"), which shall
become payable to the Participant upon the achievement of
specified Performance Objectives, upon such terms and conditions
as the Committee may determine in accordance with the following
provisions:
5.3.1 Amount of Award. Each grant shall
specify the number of shares of underlying Common Stock to which
it pertains, which may be subject to adjustment to reflect
changes in compensation or other factors.
5.3.2 Performance Period. The Performance
Period with respect to each Performance Award shall be specified
by the Committee and shall commence on a date not earlier than
ninety (90) days prior to the Grant Date.
5.3.3 Performance Objectives. Each grant
shall specify the Performance Objectives that are to be achieved
by the Participant.
5.3.4 Threshold Performance Objectives. Each
grant may specify in respect of the specified Performance
Objectives a minimum acceptable level of achievement below which
no payment will be
made and may set forth a formula for
determining the amount of any payment to be made if performance
is at or above such minimum acceptable level but falls short of
the maximum achievement of the specified Performance Objectives.
5.3.5 Payment of Performance Award. Each grant
shall specify the time and manner of payment of the Performance
Award that shall have been earned.
5.3.6 Maximum Payment. Any Performance
Award shall specify that the amount payable with respect thereto
may not exceed a maximum specified by the Committee on the Grant
Date.
5.3.7 Qualified Performance Based Awards.
All Performance Awards that are intended to be Qualified
Performance Based Awards shall be structured to comply with the
applicable requirements of Section 162(m) of the Code.
6. Stock Options.
6.1 Grant of Stock Options. A Stock Option may be
granted to any Eligible Person selected by the Committee. Subject
to the provisions of Section 6.8 hereof and Section 422 of the
Code, each Stock Option shall be designated, in the discretion of
the Committee, as an Incentive Stock Option or as a Nonqualified
Stock Option.
6.2 Exercise Price. The exercise price per share
of a Stock Option shall not be less than 100 percent of the Fair
Market Value of the shares of Common Stock on the Date of Grant,
provided that the Committee may in its discretion specify for any
Stock Option an exercise price per share that is higher than the
Fair Market Value on the Date of Grant.
6.3 Vesting of Stock Options. The Committee shall
in its discretion prescribe the time or times at which, or the
conditions upon which, a Stock Option or portion thereof shall
become vested and/or exercisable, and may accelerate the vesting
or exercisability of any Stock Option at any time. The
requirements for vesting and exercisability of a Stock Option may
be based on the continued Service of the Participant with the
Company or its Affiliates for a specified time period (or
periods) or on the attainment of specified performance goals
established by the Committee in its discretion.
6.4 Term of Stock Options. The Committee shall in
its discretion prescribe in an Award Agreement the period during
which a vested Stock Option may be exercised, provided that the
maximum term of a Stock Option shall be ten years from the Date
of Grant. Except as otherwise provided in this Section 6 or as
otherwise may be provided by the Committee, no Stock Option may
be exercised at any time during the term thereof unless the
Participant is then in the Service of the Company or one of its
Affiliates.
6.5 Stock Option Exercise; Tax
Withholding. Subject to such terms and conditions as shall be
specified in an Award Agreement, a Stock Option may be exercised
in whole or in part at any time during the term thereof by notice
in the form required by the Company, together with payment of the
aggregate exercise price therefor and applicable withholding tax.
Payment of the exercise price shall be made in the manner set
forth in the Award Agreement, unless otherwise provided by the
Committee: (i) in cash or by cash equivalent acceptable to the
Committee, (ii) by payment in shares of Common Stock that have
been held by the Participant for at least six months (or such
period as the Committee may deem appropriate, for accounting
purposes or otherwise) valued at the Fair Market Value of such
shares on the date of exercise, (iii) through an open-market,
broker-assisted sales transaction pursuant to which the Company
is promptly delivered the amount of proceeds necessary to satisfy
the exercise price, (iv) by a combination of the methods
described above or (v) by such other method as may be approved by
the
Committee and set forth in the Award Agreement. In addition
to and at the time of payment of the exercise price, the
Participant shall pay to the Company the full amount of any and
all applicable income tax, employment tax and other amounts
required to be withheld in connection with such exercise, payable
under such of the methods described above for the payment of the
exercise price as may be approved by the Committee and set forth
in the Award Agreement.
6.6 Limited Transferability of Nonqualified Stock
Options. All Stock Options shall be nontransferable except (i)
upon the Participant's death, in accordance with Section 13.2
hereof or (ii) in the case of Nonqualified Stock Options only,
for the transfer of all or part of the Stock Option to a
Participant's "family member" (as defined for purposes of the
Form S-8 registration statement under the Securities Act of
1933), as may be approved by the Committee in its discretion at
the time of proposed transfer. The transfer of a Nonqualified
Stock Option may be subject to such terms and conditions as the
Committee may in its discretion impose from time to time.
Subsequent transfers of a Nonqualified Stock Option shall be
prohibited other than in accordance with Section 13.2 hereof.
6.7 Additional Rules for Incentive Stock Options.
(a) Eligibility. An Incentive Stock Option
may only be granted to an Eligible Person who is considered
an employee for purposes of Treasury Regulation 1.421-7(h)
with respect to the Company or any Affiliate that qualifies
as a "subsidiary corporation" with respect to the Company
for purposes of Section 424(f) of the Code.
(b) Annual Limits. No Incentive Stock Option
shall be granted to a Participant as a result of which the
aggregate Fair Market Value (determined as of the Date of
Grant) of the stock with respect to which incentive stock
options under Section 422 of the Code are exercisable for
the first time in any calendar year under the Plan and any
other stock option plans of the Company or any subsidiary or
parent corporation, would exceed $100,000, determined in
accordance with Section 422(d) of the Code. This limitation
shall be applied by taking stock options into account in the
order in which granted.
(c) Termination of Employment. An Award of an
Incentive Stock Option may provide that such Stock Option
may be exercised not later than 3 months following
termination of employment of the Participant with the
Company and all Subsidiaries, or not later than one year
following a permanent and total disability within the
meaning of Section 22(e)(3) of the Code, as and to the
extent determined by the Committee to comply with the
requirements of Section 422 of the Code.
(d) Other Terms and Conditions;
Nontransferability. Any Incentive Stock Option granted
hereunder shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as
are deemed necessary or desirable by the Committee, which
terms, together with the terms of the Plan, shall be
intended and interpreted to cause such Incentive Stock
Option to qualify as an "incentive stock option" under
Section 422 of the Code. An Award Agreement for an Incentive
Stock Option may provide that such Stock Option shall be
treated as a Nonqualified Stock Option to the extent that
certain requirements applicable to "incentive stock options"
under the Code shall not be satisfied. An Incentive Stock
Option shall by its terms be nontransferable other than by
will or by the laws of descent and distribution, and shall
be exercisable during the lifetime of a Participant only by
such Participant.
(e) Disqualifying Dispositions. If shares of
Common Stock acquired by exercise of an Incentive Stock
Option are disposed of within two years following the Date
of Grant or one year following the transfer of such shares
to the Participant upon exercise, the
Participant shall,
promptly following such disposition, notify the Company in
writing of the date and terms of such disposition and
provide such other information regarding the disposition as
the Company may reasonably require.
6.8 Repricing Prohibited. Subject to the anti-
dilution adjustment provisions contained in Section 4.2 hereof,
without the prior approval of the Company's shareholders,
evidenced by a majority of votes cast, neither the Committee nor
the Board shall cause the cancellation, substitution or amendment
of a Stock Option that would have the effect of reducing the
exercise price of such a Stock Option previously granted under
the Plan, or otherwise approve any modification to such a Stock
Option that would be treated as a "repricing" under the then
applicable rules, regulations or listing requirements adopted by
the Nasdaq Stock Market.
7. Stock Appreciation Rights.
7.1 Grant of Stock Appreciation Rights. A Stock
Appreciation Right may be granted to any Eligible Person selected
by the Committee. Stock Appreciation Rights may be granted on a
basis that allows for the exercise of the right by the
Participant or that provides for the automatic payment of the
right upon a specified date or event. Stock Appreciation Rights
shall be exercisable or payable at such time or times and upon
conditions as may be approved by the Committee, provided that the
Committee may accelerate the exercisability or payment of a Stock
Appreciation Right at any time.
7.2 Freestanding Stock Appreciation Rights. A
Stock Appreciation Right may be granted without any related Stock
Option and may be subject to such vesting and exercisability
requirements as specified by the Committee in an Award Agreement.
Such vesting and exercisability requirements may be based on the
continued Service of the Participant with the Company or its
Affiliates for a specified time period (or periods) or on the
attainment of specified performance goals established by the
Committee in its discretion. A Stock Appreciation Right will be
exercisable or payable at such time or times as determined by the
Committee, provided that the maximum term of a Stock Appreciation
Right shall be ten years from the Date of Grant. The base price
of a Stock Appreciation Right granted without any related Stock
Option shall be determined by the Committee in its sole
discretion; provided, however, that the base price per share of
any such freestanding Stock Appreciation Right shall not be less
than 100 percent of the Fair Market Value of the shares of Common
Stock on the Date of Grant.
7.3 Tandem Stock Option/Stock Appreciation
Rights. A Stock Appreciation Right may be granted in tandem
with a Stock Option, either at the time of grant or at any time
thereafter during the term of the Stock Option. A tandem Stock
Option/Stock Appreciation Right will entitle the holder to elect,
as to all or any portion of the number of shares subject to such
Stock Option/Stock Appreciation Right, to exercise either the
Stock Option or the Stock Appreciation Right, resulting in the
reduction of the corresponding number of shares subject to the
right so exercised as well as the tandem right not so exercised.
A Stock Appreciation Right granted in tandem with a Stock Option
hereunder shall have a base price per share equal to the per
share exercise price of the Stock Option, will be vested and
exercisable at the same time or times that a related Stock Option
is vested and exercisable, and will expire no later than the time
at which the related Stock Option expires.
7.4 Payment of Stock Appreciation Rights. A Stock
Appreciation Right will entitle the holder, upon exercise or
other payment of the Stock Appreciation Right, as applicable, to
receive an amount determined by multiplying: (i) the excess of
the Fair Market Value of a share of Common Stock on the date of
exercise or payment of the Stock Appreciation Right over the base
price of such Stock Appreciation Right, by (ii) the number of
shares as to which such Stock Appreciation Right is exercised or
paid. Subject to the requirements of Section 409A of the Code,
payment of the amount determined under the foregoing may be made,
as approved by the Committee and set forth in the Award
Agreement,
in shares of Common Stock valued at their Fair Market
Value on the date of exercise or payment, in cash, or in a
combination of shares of Common Stock and cash, subject to
applicable tax withholding requirements.
7.5 Repricing Prohibited. Subject to the anti-
dilution adjustment provisions contained in Section 4.2 hereof,
without the prior approval of the Company's shareholders,
evidenced by a majority of votes cast, neither the Committee nor
the Board shall cause the cancellation, substitution or amendment
of a Stock Appreciation Right that would have the effect of
reducing the base price of such a Stock Appreciation Right
previously granted under the Plan, or otherwise approve any
modification to such a Stock Appreciation Right that would be
treated as a "repricing" under the then applicable rules,
regulations or listing requirements adopted by the Nasdaq Stock
Market.
8. Restricted Stock Awards.
8.1 Grant of Restricted Stock Awards. A Restricted
Stock Award may be granted to any Eligible Person selected by the
Committee. The Committee may require the payment by the
Participant of a specified purchase price in connection with any
Restricted Stock Award.
8.2 Vesting Requirements. The restrictions imposed
on shares granted under a Restricted Stock Award shall lapse in
accordance with the vesting requirements specified by the
Committee in the Award Agreement, provided that the Committee may
accelerate the vesting of a Restricted Stock Award at any time.
Such vesting requirements may be based on the continued Service
of the Participant with the Company or its Affiliates for a
specified time period (or periods) and/or on the attainment of
specified performance goals established by the Committee in its
discretion. If the vesting requirements of a Restricted Stock
Award shall not be satisfied, the Award shall be forfeited and
the shares of Common Stock subject to the Award shall be returned
to the Company.
8.3 Restrictions. Shares granted under any
Restricted Stock Award may not be transferred, assigned or
subjected to any encumbrance, pledge, or charge until all
applicable restrictions are removed or have expired, unless
otherwise allowed by the Committee. Failure to satisfy any
applicable restrictions shall result in the subject shares of the
Restricted Stock Award being forfeited and returned to the
Company. The Committee may require in an Award Agreement that
certificates representing the shares granted under a Restricted
Stock Award bear a legend making appropriate reference to the
restrictions imposed, and that certificates representing the
shares granted or sold under a Restricted Stock Award will remain
in the physical custody of an escrow holder until all
restrictions are removed or have expired.
8.4 Rights as Shareholder. Subject to the
foregoing provisions of this Section 8 and the applicable Award
Agreement, the Participant shall have all rights of a shareholder
with respect to the shares granted to the Participant under a
Restricted Stock Award, including the right to vote the shares
and receive all dividends and other distributions paid or made
with respect thereto. The Committee may provide in an Award
Agreement for the payment of dividends and distributions to the
Participant at such times as paid to shareholders generally or at
the times of vesting or other payment of the Restricted Stock
Award.
8.5 Section 83(b) Election. If a Participant makes
an election pursuant to Section 83(b) of the Code with respect to
a Restricted Stock Award, the Participant shall file, within 30
days following the Date of Grant, a copy of such election with
the Company and with the Internal Revenue Service, in accordance
with the regulations under Section 83 of the Code. The Committee
may provide in an Award Agreement that the Restricted Stock Award
is conditioned upon the Participant's making or refraining from
making an election with respect to the Award under Section 83(b)
of the Code.
9. Stock Unit Awards.
9.1 Grant of Stock Unit Awards. A Stock Unit Award
may be granted to any Eligible Person selected by the Committee.
The value of each stock unit under a Stock Unit Award is equal to
the Fair Market Value of the Common Stock on the applicable date
or time period of determination, as specified by the Committee. A
Stock Unit Award shall be subject to such restrictions and
conditions as the Committee shall determine. A Stock Unit Award
may be granted together with a dividend equivalent right with
respect to the shares of Common Stock subject to the Award, which
may be accumulated and may be deemed reinvested in additional
stock units, as determined by the Committee in its discretion.
9.2 Vesting of Stock Unit Awards. On the Date of
Grant, the Committee shall in its discretion determine any
vesting requirements with respect to a Stock Unit Award, which
shall be set forth in the Award Agreement, provided that the
Committee may accelerate the vesting of a Stock Unit Award at any
time. Vesting requirements may be based on either or both (i) the
continued Service of the Participant with the Company or its
Affiliates for a specified time period (or periods), and (ii) the
attainment of specified performance goals established by the
Committee in its discretion. A Stock Unit Award may also be
granted on a fully vested basis, with a deferred payment date.
9.3 Payment of Stock Unit Awards. A Stock Unit
Award shall become payable to a Participant at the time or times
determined by the Committee and set forth in the Award Agreement,
which may be upon or following the vesting of the Award. Payment
of a Stock Unit Award may be made, at the discretion of the
Committee, in cash or in shares of Common Stock, or in a
combination thereof, subject to applicable tax withholding
requirements. Any cash payment of a Stock Unit Award shall be
made based upon the Fair Market Value of the Common Stock,
determined on such date or over such time period as determined by
the Committee.
9.4 No Rights as Shareholder. The Participant
shall not have any rights as a shareholder with respect to the
shares subject to a Stock Unit Award until such time as shares of
Common Stock are delivered to the Participant pursuant to the
terms of the Award Agreement.
10. Stock Awards.
10.1 Grant of Stock Awards. A Stock Award may be
granted to any Eligible Person selected by the Committee. A Stock
Award may be granted for past services, in lieu of bonus or other
cash compensation, as directors' compensation or for any other
valid purpose as determined by the Committee. A Stock Award
granted to an Eligible Person represents shares of Common Stock
that are issued without restrictions on transfer (other than as
provided by law) and other incidents of ownership and free of
forfeiture conditions, except as otherwise provided in the Plan
and the Award Agreement. The Committee may, in connection with
any Stock Award, require the payment of a specified purchase
price.
10.2 Rights as Shareholder. Subject to this Section
10 and the applicable Award Agreement, upon the issuance of the
Common Stock under a Stock Award the Participant shall have all
rights of a shareholder with respect to the shares of Common
Stock, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect
thereto.
11. Change in Control.
11.1 Effect of Change in Control. Except to the
extent an Award Agreement provides for a different result (in
which case the Award Agreement will govern and this Section 11 of
the
Plan shall not be applicable), notwithstanding anything
elsewhere in the Plan or any rules adopted by the Committee
pursuant to the Plan to the contrary, if a Triggering Event shall
occur within the 12-month period beginning with a Change in
Control of the Company, then, effective immediately prior to such
Triggering Event, (i) each outstanding Stock Option and Stock
Appreciation Right, to the extent that it shall not otherwise
have become vested and exercisable, shall automatically become
fully and immediately vested and exercisable, without regard to
any otherwise applicable vesting requirement, (ii) each
Restricted Stock Award shall become fully and immediately vested
and all forfeiture and transfer restrictions thereon shall lapse,
and (iii) each outstanding Stock Unit Award shall become
immediately and fully vested and payable.
11.2 Definitions
(a) Good Cause. For purposes of this Section
11 (but not for purposes of Section 12), the term "Good
Cause" shall mean a determination by the Committee that a
Participant (i) has been convicted of, or entered a plea of
nolo contendere to, a crime that constitutes a felony under
Federal or state law, (ii) has engaged in willful gross
misconduct in the performance of the Participant's duties to
the Company or an Affiliate or (iii) has committed a
material breach of any written agreement with the Company or
any Affiliate with respect to confidentiality,
noncompetition, nonsolicitation or similar restrictive
covenant. A termination on account of Good Cause shall be
communicated by written notice to the Participant, and shall
be deemed to occur on the date such notice is delivered to
the Participant.
(b) Change in Control. For purposes of this
Section 11, a "Change in Control" shall be deemed to have
occurred upon:
(i) The acquisition (other than from the
Company) by any person, entity or "group," within the
meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act") (excluding any acquisition or holding
by (A) the Company or its subsidiaries; (B) the
directors of the Company as of December 7, 2005 and
their respective Affiliates; (C) any employee benefit
plan of the Company or its Affiliates which acquires
beneficial ownership of voting securities of the
Company) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50%
or more of either the then outstanding shares of Common
Stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) Individuals who, as of December 7, 2005,
constitute the Board (as of the date hereof the
"Incumbent Board") cease for any reason to constitute
at least a majority of the Board, provided that any
person becoming a director subsequent to the date
hereof whose election, or nomination for the election
by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising
the Board shall be, for purposes of this Plan,
considered as though such person were a member of the
Incumbent Board.
(c) Constructive Termination. For purposes of this
Section 11, a "Constructive Termination" shall mean a
termination of employment by a Participant within sixty (60)
days following the occurrence of any one or more of the
following events without the Participant's written consent
(i) any material reduction in position, title (for Vice
Presidents or above), base compensation, annual incentive
compensation opportunity, aggregate employee benefits or
(ii) a requirement that the Participant's location of
employment be relocated by more than fifty (50) miles. A
Constructive Termination shall be communicated by written
notice to the Committee,
and shall be deemed to occur on the
date such notice is delivered to the Committee, unless the
circumstances giving rise to the Constructive Termination
are cured within five (5) days of such notice.
(d) Triggering Event. For purposes of this Section
11, a "Triggering Event" shall mean (i) the termination of
Service of a Participant by the Company or an Affiliate (or
any successor thereof) other than on account of death,
Disability or Good Cause, (ii) the occurrence of a
Constructive Termination or (iii) any failure by the Company
(or a successor entity) to assume, replace, convert or
otherwise continue any Award in connection with the Change
in Control (or another corporate transaction or other change
effecting the Common Stock) on the same terms and conditions
as applied immediately prior to such transaction, except for
equitable adjustments to reflect changes in the Common Stock
pursuant to Section 4.2 hereof.
12. Forfeiture Events.
12.1 General. The Committee may specify in an Award
Agreement at the time of the Award that the Participant's rights,
payments and benefits with respect to an Award shall be subject
to reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain specified events, in addition to any
otherwise applicable vesting or performance conditions of an
Award. Such events may include, but shall not be limited to,
termination of Service for cause, violation of material Company
policies, breach of noncompetition, confidentiality or other
restrictive covenants that may apply to the Participant, or other
conduct by the Participant that is detrimental to the business or
reputation of the Company.
12.2 Termination for Cause. Unless otherwise
provided by the Committee and set forth in an Award Agreement, if
a Participant's employment with the Company or any Affiliate
shall be terminated for cause, the Company may, in its sole
discretion, immediately terminate such Participant's right to any
further payments, vesting or exercisability with respect to any
Award in its entirety. The Company shall have the power to
determine whether the Participant has been terminated for cause
and the date upon which such termination for cause occurs. Any
such determination shall be final, conclusive and binding upon
the Participant. In addition, if the Company shall reasonably
determine that a Participant has committed or may have committed
any act which could constitute the basis for a termination of
such Participant's employment for cause, the Company may suspend
the Participant's rights to exercise any option, receive any
payment or vest in any right with respect to any Award pending a
determination by the Company of whether an act has been committed
which could constitute the basis for a termination for "cause" as
provided in this Section 12.2.
12.3 Definition of Cause. For purposes of this
Section 12, the term "cause" shall have the meaning assigned to
such term in the Award Agreement applicable to such Award. If
the term "cause" is not defined in the applicable Award
Agreement, the term "cause", shall be deemed to include (i) Good
Cause (as defined in Section 11), (ii) material violations of
Company policies, (iii) material breaches of any agreement
between the Participant and the Company, (iv) breaches of any
fiduciary duty to the Company, (v) acts of dishonesty in
connection with employment, (vi) material failures to perform the
Participant's duties or responsibilities which failure is not
cured within a reasonable period of time (as determined by the
Committee), and (vii) any other conduct or reason that the
Committee determines should constitute "cause."
13. General Provisions.
13.1 Award Agreement. To the extent deemed
necessary by the Committee, an Award under the Plan shall be
evidenced by an Award Agreement in a written or electronic form
approved by the Committee setting forth the number of shares of
Common Stock or units subject to the Award, the exercise price,
base price, or purchase price of the Award, the time or times at
which an Award will become vested, exercisable or payable and the
term of the Award. The Award Agreement may also set forth the
effect on an Award of termination of Service under certain
circumstances. The Award Agreement shall be subject to and
incorporate, by reference or otherwise, all of the applicable
terms and conditions of the Plan, and may also set forth other
terms and conditions applicable to the Award as determined by the
Committee consistent with the limitations of the Plan. Award
Agreements evidencing Incentive Stock Options shall contain such
terms and conditions as may be necessary to meet the applicable
provisions of Section 422 of the Code. The grant of an Award
under the Plan shall not confer any rights upon the Participant
holding such Award other than such terms, and subject to such
conditions, as are specified in the Plan as being applicable to
such type of Award (or to all Awards) or as are expressly set
forth in the Award Agreement. The Committee need not require the
execution of an Award Agreement by a Participant, in which case,
acceptance of the Award by the Participant shall constitute
agreement by the Participant to the terms, conditions,
restrictions and limitations set forth in the Plan and the Award
Agreement as well as the administrative guidelines of the Company
in effect from time to time.
13.2 No Assignment or Transfer;
Beneficiaries. Except as provided in Section 6.7 hereof,
Awards under the Plan shall not be assignable or transferable by
the Participant, except by will or by the laws of descent and
distribution, and shall not be subject in any manner to
assignment, alienation, pledge, encumbrance or charge.
Notwithstanding the foregoing, the Committee may provide in the
terms of an Award Agreement that the Participant shall have the
right to designate a beneficiary or beneficiaries who shall be
entitled to any rights, payments or other benefits specified
under an Award following the Participant's death. During the
lifetime of a Participant, an Award shall be exercised only by
such Participant or such Participant's guardian or legal
representative. In the event of a Participant's death, an Award
may to the extent permitted by the Award Agreement be exercised
by the Participant's beneficiary as designated by the Participant
in the manner prescribed by the Committee or, in the absence of
an authorized beneficiary designation, by the legatee of such
Award under the Participant's will or by the Participant's estate
in accordance with the Participant's will or the laws of descent
and distribution, in each case in the same manner and to the same
extent that such Award was exercisable by the Participant on the
date of the Participant's death.
13.3 Deferrals of Payment. The Committee may in its
discretion permit a Participant to defer the receipt of payment
of cash or delivery of shares of Common Stock that would
otherwise be due to the Participant by virtue of the exercise of
a right or the satisfaction of vesting or other conditions with
respect to an Award. If any such deferral is to be permitted by
the Committee, the Committee shall establish rules and procedures
relating to such deferral in a manner intended to comply with the
requirements of Section 409A of the Code, including, without
limitation, the time when an election to defer may be made, the
time period of the deferral and the events that would result in
payment of the deferred amount, the interest or other earnings
attributable to the deferral and the method of funding, if any,
attributable to the deferred amount.
13.4 Rights as Shareholder. A Participant shall
have no rights as a holder of shares of Common Stock with respect
to any unissued securities covered by an Award until the date the
Participant becomes the holder of record of such securities.
Except as provided in Section 4.2 hereof, no adjustment or other
provision shall be made for dividends or other shareholder
rights, except to the extent that the Award Agreement provides
for dividend payments or dividend equivalent rights.
13.5 Employment or Service. Nothing in the Plan, in
the grant of any Award or in any Award Agreement shall confer
upon any Eligible Person any right to continue in the Service of
the Company or any of its Affiliates, or interfere in any way
with the right of the Company or any of its
Affiliates to
terminate the Participant's employment or other service
relationship for any reason at any time.
13.6 Securities Laws. No shares of Common Stock
will be issued or transferred pursuant to an Award unless and
until all then applicable requirements imposed by Federal and
state securities and other laws, rules and regulations and by any
regulatory agencies having jurisdiction, and by any exchanges
upon which the shares of Common Stock may be listed, have been
fully met. As a condition precedent to the issuance of shares
pursuant to the grant or exercise of an Award, the Company may
require the Participant to take any reasonable action to meet
such requirements. The Committee may impose such conditions on
any shares of Common Stock issuable under the Plan as it may deem
advisable, including, without limitation, restrictions under the
Securities Act of 1933, as amended, under the requirements of any
exchange upon which such shares of the same class are then
listed, and under any blue sky or other securities laws
applicable to such shares. The Committee may also require the
Participant to represent and warrant at the time of issuance or
transfer that the shares of Common Stock are being acquired only
for investment purposes and without any current intention to sell
or distribute such shares.
13.7 Tax Withholding. The Participant shall be
responsible for payment of any taxes or similar charges required
by law to be withheld from an Award or an amount paid in
satisfaction of an Award, which shall be paid by the Participant
on or prior to the payment or other event that results in taxable
income in respect of an Award. The Award Agreement may specify
the manner in which the withholding obligation shall be satisfied
with respect to the particular type of Award.
13.8 Unfunded Plan. The adoption of the Plan and
any reservation of shares of Common Stock or cash amounts by the
Company to discharge its obligations hereunder shall not be
deemed to create a trust or other funded arrangement. Except upon
the issuance of Common Stock pursuant to an Award, any rights of
a Participant under the Plan shall be those of a general
unsecured creditor of the Company, and neither a Participant nor
the Participant's permitted transferees or estate shall have any
other interest in any assets of the Company by virtue of the
Plan. Notwithstanding the foregoing, the Company shall have the
right (but not the obligation) to implement or set aside funds in
a grantor trust, subject to the claims of the Company's creditors
or otherwise, to discharge its obligations under the Plan.
13.9 Other Compensation and Benefit Plans. The
adoption of the Plan shall not affect any other share incentive
or other compensation plans in effect for the Company or any
Affiliate, nor shall the Plan preclude the Company from
establishing any other forms of share incentive or other
compensation or benefit program for employees of the Company or
any Affiliate. The amount of any compensation deemed to be
received by a Participant pursuant to an Award shall not
constitute includable compensation for purposes of determining
the amount of benefits to which a Participant is entitled under
any other compensation or benefit plan or program of the Company
or an Affiliate, including, without limitation, under any pension
or severance benefits plan, except to the extent specifically
provided by the terms of any such plan.
13.10 Plan Binding on Transferees. The Plan
shall be binding upon the Company, its transferees and assigns,
and the Participant, the Participant's executor, administrator
and permitted transferees and beneficiaries.
13.11 Severability. If any provision of the
Plan or any Award Agreement shall be determined to be illegal or
unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.
13.12 Foreign Jurisdictions. The Committee may
adopt, amend and terminate such arrangements and grant such
Awards, not inconsistent with the intent of the Plan, as it may
deem necessary or desirable to comply with any tax, securities,
regulatory or other laws of other jurisdictions with respect to
Awards that may be subject to such laws. The terms and conditions
of such Awards may vary from the terms and conditions that would
otherwise be required by the Plan solely to the extent the
Committee deems necessary for such purpose. Moreover, the Board
may approve such supplements to or amendments, restatements or
alternative versions of the Plan, not inconsistent with the
intent of the Plan, as it may consider necessary or appropriate
for such purposes, without thereby affecting the terms of the
Plan as in effect for any other purpose.
13.13 Substitute Awards in Corporate
Transactions. Nothing contained in the Plan shall be construed
to limit the right of the Committee to grant Awards under the
Plan in connection with the acquisition, whether by purchase,
merger, consolidation or other corporate transaction, of the
business or assets of any corporation or other entity. Without
limiting the foregoing, the Committee may grant Awards under the
Plan to an employee or director of another corporation who
becomes an Eligible Person by reason of any such corporate
transaction in substitution for awards previously granted by such
corporation or entity to such person. The terms and conditions of
the substitute Awards may vary from the terms and conditions that
would otherwise be required by the Plan solely to the extent the
Committee deems necessary for such purpose.
13.14 Governing Law. The Plan and all rights
hereunder shall be subject to and interpreted in accordance with
the laws of the State of Florida, without reference to the
principles of conflicts of laws, and applicable Federal
securities laws.
14. Effective Date; Amendment and Termination.
14.1 Effective Date. The Plan shall become
effective upon its adoption by the Board, on December 7, 2006,
subject to approval by the Company's shareholders on the date of
the 2006 Annual Meeting of Shareholders. Upon approval of the
Plan by the Shareholders, no further stock options shall be
granted under the Company's 2000 Stock Option Plan.
14.2 Amendment. The Board may at any time and from
time to time and in any respect, amend or modify the Plan. The
Board may seek the approval of any amendment or modification by
the Company's shareholders to the extent it deems necessary or
advisable in its discretion for purposes of compliance with
Section 162(m) or Section 422 of the Code, the listing
requirements of The Nasdaq Stock Market or other exchange or
securities market or for any other purpose. No amendment or
modification of the Plan shall adversely affect any Award
theretofore granted without the consent of the Participant or the
permitted transferee of the Award.
14.3 Termination. The Plan shall remain available
for the grant of Awards until January 31, 2016 or such earlier
date as the Board may determine. The expiration of the
Committee's authority to grant Awards under the Plan will not
affect the operation of the terms of the Plan or the rights and
obligations of Participants and the Company with respect to
Awards granted on or prior to the expiration date of the Plan.
PATRIOT TRANSPORTATION HOLDING, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS CALLED FOR FEBRUARY 1,
2006.
The undersigned hereby appoints Edward L. Baker and John D.
Baker II, or either of them, the attorneys, agents and proxies of
the undersigned with full power of substitution to vote all the
shares of common stock of Patriot Transportation Holding, Inc.
(the "Company") which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Company to be held at 155
East 21st Street, Jacksonville, Florida on February 1, 2006, at 2
o'clock in the afternoon, local time, and all adjournments
thereof, with all the powers the undersigned would possess if
then and there personally present. Without limiting the general
authorization and power hereby given, the above proxies are
directed to vote as instructed on the matters below:
1. The election of two directors to serve for a term of four
years and one director to serve for a term of one year.
/ / FOR the nominees listed / / WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below
Thompson S. Baker II and Martin E. Stein, Jr. are the
nominees for a term of four years.
John E. Anderson is the nominee for a term of one year.
To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided.
_________________________________________________________________
2. The approval of the 2006 Stock Incentive Plan
/ / FOR / / AGAINST / / ABSTAIN
3. To transact such other business as may properly come
before the meeting or any adjournments thereof.
(Continued and to be signed on other side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Shares represented by properly executed and returned proxies
will be voted at the meeting in accordance with the undersigned's
directions or, if no directions are indicated, will be voted in
favor of the election of the nominees proposed in this proxy
statement and approval of the 2006 Stock Incentive Plan and, if
any other matters properly come before the meeting, in accordance
with the best judgment of the persons designated as proxies.
The undersigned hereby revokes any proxy heretofore given
with respect to the shares owned by the undersigned, acknowledges
receipt of the Notice and the Proxy Statement for the meeting
accompanying this proxy, each dated December 29, 2005, and
authorizes and confirms all that the appointed proxies or their
substitutes, or any of them, may do by virtue hereof.
Dated:
Signature
Signature, if held jointly
IMPORTANT: Please date this proxy
and sign exactly as your name or
names appear(s) hereon. If the
stock is held jointly, signatures
should include both names. Personal
representatives, trustees,
guardians and others signing in a
representative capacity should give
full title. If you attend the
meeting you may, if you wish,
withdraw your proxy and vote in
person.
PLEASE RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE.
Proxy Statement dated December 29, 2005