_________________________
1801 Art Museum Drive, Suite 300
Jacksonville, Florida 32207
Phone (904) 396-5733
Fax (904) 396-2715
December 27, 2007
Dear Shareholder:
I invite you to attend our Annual Meeting of Shareholders,
which will be held on Wednesday, February 6, 2008, at 10:00 a.m. at
155 East 21st Street, 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
2008 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.......................................................7
Proposal No. 1 - Election of Directors...................................8
Proposal No. 2 - Ratification of Independent Registered Public
Accounting Firm.......................................................10
Shareholder Return Performance..........................................10
Compensation Discussion and Analysis....................................11
Compensation Committee Report...........................................18
Executive Compensation..................................................19
Non-Employee Director Compensation......................................23
Related Party Transactions..............................................28
Common Stock Ownership of Certain Beneficial Owners.....................29
Common Stock Ownership by Directors and Executive Officers..............30
Audit Committee Report..................................................31
Independent Registered Public Accounting Firm...........................32
Additional Information..................................................33
Annex A - Compensation Committee Charter
Annex B - Nominating and Corporate Governance Committee Charter
PATRIOT TRANSPORTATION HOLDING, INC.
1801 Art Museum Drive, Jacksonville, Florida 32207
--------------------------------------------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TIME AND DATE 10:00 a.m. on Wednesday, February 6, 2008
PLACE 155 East 21st Street
Jacksonville, Florida
ITEMS OF BUSINESS (1) To elect three directors to a 4 year
term.
(2) To ratify the Audit Committee's
selection of the Independent Registered
Public Accounting Firm.
(3) To transact such other business as may
properly come before the Meeting and
any adjournment.
RECORD DATE You are entitled to vote if you were a
shareholder of record at the close of
business on Monday, December 10, 2007.
ANNUAL REPORT Our 2007 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 27, 2007.
PROXY STATEMENT
The Board of Directors (the "Board") of Patriot Transportation
Holding, Inc. ("Patriot", "we", "us", "our" 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, to ratify
the Audit Committee's selection of the independent registered public accounting
firm and to conduct such other business as may properly come before the Annual
Meeting.
Annual Meeting Admission
You are invited to attend the meeting in person. The meeting will be
held at 10:00 a.m. on Wednesday, February 6, 2008 at 155 East 21st Street,
Jacksonville, Florida.
Proof of ownership of Patriot stock, as well as a form of personal
photo identification, must be presented in order to be admitted to the meeting.
If your shares are held in the name of a bank, broker or other holder of record,
you must bring a brokerage statement or other proof of ownership with you to
the meeting. No cameras, recording equipment, electronic devices, large
bags, briefcases, or packages will be permitted in the meeting.
We reserve the right to adopt other rules and to implement
additional security measures for the 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 10, 2007, 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 3,051,064 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, American Stock Transfer & Trust
Company, 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 three
directors to serve for a four 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 ratify the Audit Committee's selection of the Independent Registered
Public Accounting Firm. Our Board recommends that you vote "FOR"
ratification.
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 are unavailable as
a candidate for director, the persons named as 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, 2008.
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 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 American Stock Transfer & Trust Company.
All communications concerning shareholders of record accounts, including
address changes, name changes, common stock transfer requirements, and
similar matters can be handled by contacting American Stock Transfer & Trust
Company at 1-800-937-5449, or in writing at American Stock Transfer & Trust
Company, 59 Maiden Lane, Plaza Level, New York, NY 10038.
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.
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
our 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. These 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 these 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 (as revised on January 28, 2004)
and the Code of Business Conduct and Ethics (as revised on May 2, 2007) are
available on our Web site at www.patriottrans.com under 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 2007 and the function of each Committee are described below.
During fiscal 2007, the Board of Directors held six meetings. The
Audit Committee held six meetings, the Compensation Committee held four
meetings, and the Nominating and Corporate Governance Committee held three
meetings during fiscal 2007. During fiscal 2007, the Executive Committee
held two meetings and acted on one matter by written consent. The
independent directors met in executive sessions 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 Mr. Paul who was
unable to attend one meeting of the Nominating and Corporate Governance
Committee and one meeting of the Audit Committee and Mr. Winston who was
unable to attend one meeting of the Compensation Committee, in each case
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;
* Recommends whether the audited financial statements should be
included in the Company's Annual Report on Form 10-K; and
* Reviews and approves all transactions between the Company and
any related person that are required to be disclosed under the rules of
the Securities Exchange Commission that have not previously been approved
by the Company's independent directors.
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 has also 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 (as revised on December 6, 2006) is available on our website
at www.patriottrans.com under Corporate Governance.
Compensation Committee
Committee Functions. The primary functions of the Compensation
Committee are 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 (as revised on May 2,
2007) is attached hereto as Annex A and available at www.patriottrans.com
under Corporate Governance.
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
(as revised on May 2, 2007) is attached hereto as Annex B and available
at www.patriottrans.com under Corporate Governance.
Executive Committee
John E. Anderson, Edward L. Baker and John D. Baker II 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.
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
Independence 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 Independence Standards set forth below, and recommends
one or more of such individuals for appointment to the Board.
Director Independence 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 Independence 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
Independence 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.
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 three nominees in Class II to be re-elected. Class II
Directors will hold office until the 2012 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 D. Baker II 59 Class II 1986 Vulcan Materials
Former President and Chief (Term Exp. Company
Executive Officer, 2012) Wachovia
Florida Rock Industries, Inc. Corporation
(construction materials company)
Luke E. Fichthorn III
Partner in Twain Associates (a
private investment banking firm) 66 Class II 1989
(Term Exp.
2012)
H. W. Shad III
Owner, Bozard Ford Company 61 Class II 2004
(an automobile dealership) (Term Exp.
2012)
Directors Continuing in Office
- ------------------------------
John E. Anderson 62 Class I 2005
President and Chief Executive (Term Exp.
Officer 2011)
Edward L. Baker 72 Class III 1986
Chairman of the Board of the (Term Exp.
Company and Former Chairman of 2009)
the Board of Florida Rock
Industries, Inc. (construction
materials company)
Thompson S. Baker II 49 Class IV 1994
President of Florida Rock (Term Exp.
Division of Vulcan Materials 2010)
Company (construction materials
company)
Charles E. Commander III 67 Class III 2004
Partner with Foley & Lardner, (Term Exp.
L.L.P. (a law firm) 2009)
Robert H. Paul III 73 Class I 1992
Chairman of the Board of (Term Exp.
Southeast Capital, LLC 2011)
(real estate investment firm)
Martin E. Stein, Jr. 55 Class IV 1992 Regency Center
Chairman and Chief Executive 2010) Corporation
Officer of Regency Centers Stein Mart, Inc.
Corporation (a commercial real
estate services firm)
James H. Winston 74 Class I 1992
President of LPMC, Inc. (an (Term Exp.
investment real estate firm); 2011)
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 John E. Anderson,
John D. Baker II, Thompson S. Baker II, and Robert H. Paul III.
Mr. Anderson was elected as a director on October 5, 2005. Mr.
Anderson previously served as a director from 1989 to January 1, 2004.
From 2002 to November 21, 2006, Mr. Anderson served as a director of
Winn-Dixie Stores, Inc. On February 21, 2005, Winn-Dixie Stores, Inc.
filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy
Code. On December 5, 2007, Mr. Anderson announced his intention to retire
as President and Chief Executive Officer of the Company, effective February
6, 2008. Mr. Anderson has served as the Company's President and Chief
Executive Officer since 1989. Mr. Anderson will continue to serve on the
Company's Board of Directors.
John D. Baker II was elected as a director in 1986. From February
1996 to November 16, 2007, Mr. Baker served as President and Chief Executive
Officer of Florida Rock Industries, Inc., a construction aggregates, cement
and concrete company. On December 5, 2007, the Company's Board of Directors
appointed John D. Baker II to succeed Mr. Anderson as President and Chief
Executive Officer of the Company.
Thompson S. Baker II was elected as a director in 1994. From August,
1991 to November 16, 2007, Mr. Baker served as the President of the
Aggregates Group of Florida Rock Industries, Inc.
Robert H. Paul III was elected as a director in 1992. Mr. Paul served
as the Chairman of the Board of Southeast-Atlantic Beverage Corporation,
a manufacturer of soft drink products, for more than five years until 2007,
when the company was sold.
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
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Hancock Askew & Co., LLP as the
Company's independent registered public accounting firm to examine the
consolidated financial statements of the Company, subject to satisfactory
negotiation of an annual fee agreement. The Board of Directors seeks an
indication from shareholders of their approval or disapproval of the
Audit Committee's appointment of Hancock Askew & Co., LLP (HA) as the
Company's Independent Registered Public Accounting Firm (auditors).
HA has been our independent auditor since June 21, 2006, and no
relationship exists other than the usual relationship between auditor and
client.
If the appointment of HA as auditor for fiscal year 2008 is not
approved by the shareholders, the adverse vote will be considered a
direction to the Audit Committee to consider other auditors for next year.
However, because of the difficulty in making any substitution of auditors
so long after the beginning of the current year, HA will remain the
Company's Independent Registered Public Accounting Firm for fiscal year
2008, unless the Audit Committee finds other good reason for making a
change.
Representatives of HA will be available to respond to questions
at the annual meeting of shareholders.
SHAREHOLDER RETURN PERFORMANCE
The following table and graph compare 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, 2002 and ending on September
30, 2007. The graph assumes that $100 was invested on September 30, 2002
in the Company's common stock and in each of the indices and assumes the
reinvestment of dividends.
<CHART OMITTED>
Cumulative Total Return
-----------------------
9/30/02 9/30/03 9/30/04 9/30/05 9/30/06 9/30/07
Patriot Transportation
Holding, Inc. 100.00 140.98 153.91 321.78 353.91 460.61
NASDAQ Stock Market
(U.S.) 100.00 150.59 162.89 185.48 196.37 236.60
NASDAQ Trucking &
Transportation 100.00 144.26 164.78 205.15 240.50 288.69
COMPENSATION DISCUSSION AND ANALYSIS
This section explains our compensation philosophy and all material
elements of the compensation we provide to our Chief Executive Officer, our
Chief Financial Officer and our other three most highly compensated
executive officers who served in such capacities during the fiscal year
ended September 30, 2007 (the "named executive officers"). The named
executive officers are John E. Anderson, our President and Chief Executive
Officer, Ray M. Van Landingham, our Vice President and Chief Financial
Officer, David H. deVilliers, Jr., our Vice President and President of
FRP Development Corp., Robert E. Sandlin, President of Florida Rock &
Tank Lines, Inc., and Terry S. Phipps, President of SunBelt Transport,
Inc.
On December 5, 2007, the Company's Board of Directors appointed
John D. Baker II to succeed Mr. Anderson as President and Chief Executive
Officer of the Company. Compensation arrangements for Mr. Baker have not
been determined and no material plans, contracts or arrangements to which
Mr. Baker is a party or participant entered into in connection with Mr.
Baker's appointment as the Company's President and Chief Executive Officer.
Overview
* The objectives of our compensation program are to attract, retain and
motivate talented leaders and to support our strategic objectives and
core values.
* We provide our executive officers with the following types of
compensation: salary, cash-based short term incentives, equity-based
long-term incentives and other benefits and perquisites.
* We encourage a pay-for-performance environment by linking cash
incentive awards to the achievement of measurable business and
individual performance goals.
* We entered into a letter agreement on December 5, 2007 with John E.
Anderson, our Chief Executive Officer, who announced his intention
to retire from the Company on February 6, 2008. We also entered
into change-in-control agreements with Messrs. deVilliers,
Sandlin and Phipps.
* For fiscal 2008, we increased base salaries for our named executive
officers on average by 2.69%. We also established performance
goals for fiscal 2008 that will allow the named executive officers
to earn a cash bonus of up to 60% to 100% of their annual base salaries.
* We did not make any equity-based awards to the named executive officers
for fiscal years 2007 or 2008.
The Compensation Committee
Our Compensation Committee ("Committee") establishes and oversees
our compensation and employee benefits programs and approves the elements
of total compensation for the executive officers. Robert H. Paul III,
Martin E. Stein, Jr., and James H. Winston serve as the members of the
Compensation Committee. Mr. Paul, who has served on our Board of Directors
for approximately 15 years, is the Committee Chairman. Each member of the
Compensation Committee qualifies as an independent director under the
listing standards of The Nasdaq Stock Market; a non-employee director for
purposes of Rule 16b-3 of the Exchange Act; and an outside director for
purposes of Section 162(m) of the Internal Revenue Code.
Compensation Philosophy
The following principles guide our compensation decisions:
We Focus on Strategic Objectives
Our compensation decisions are driven by Patriot's business strategy.
We intend that our compensation decisions will attract and retain leaders
and motivate them to achieve Patriot's strategic objectives.
We Believe in Pay for Performance
We believe that pay should be directly linked to performance. This
philosophy has guided many compensation-related decisions:
* A substantial portion of executive officer compensation is
contingent on, and variable with, achievement of objective business unit
and/or individual performance objectives.
* Our stock incentive plan prohibits discounted stock options,
reload stock options and re-pricing of stock options.
* We have capped the benefit levels under the Management Security
Plan. Our executive officers do not accrue additional benefits under
any other supplemental executive retirement plan.
Compensation Should Reflect Position and Responsibility
Total compensation and accountability should generally increase
with position and responsibility. Consistent with this philosophy:
* Total compensation is higher for individuals with greater
responsibility and greater ability to influence the Company's achievement
of targeted results and strategic initiatives.
* As position and responsibility increase, a greater portion of
the executive officer's total compensation is performance-based pay
contingent on the achievement of performance objectives.
Compensation Should be Reasonable and Responsible
It is essential that Patriot's overall compensation levels be
sufficiently competitive to attract talented leaders and motivate those
leaders to achieve superior results. At the same time, we believe that
compensation should be set at responsible levels. Our executive
compensation programs are intended to reflect the understanding that
this Company belongs to our shareholders.
Variable Performance-Based Pay as a Percentage of Potential Compensation
The Committee believes that both long and short term compensation
of executive officers should correlate to the Company's overall financial
performance. Incentive payouts will be larger with strong performance and
smaller if the Company's financial results decline. For example, for
fiscal 2007, Messrs. Anderson and deVilliers were eligible to receive
performance-based cash bonuses of up to 100% of their base
salaries, and Messrs. Van Landingham, Sandlin and Phipps were eligible
to earn cash bonuses of up to 60% of their base salaries.
Overview and Objectives of our Executive Compensation Program
The compensation program for our executive officers is designed
to attract, motivate, reward and retain highly qualified individuals who
can contribute to the Company's growth with the ultimate objective of
improving shareholder value. Our compensation program consists of
several forms of compensation: base salary, cash incentive bonuses,
equity compensation and other benefits and perquisites.
The compensation program is designed to integrate with the
Company's business plan and the opportunities and challenges facing the
Company in an ever-evolving business environment. Accordingly, the
Committee does not use predetermined guidelines or benchmarking to
determine the elements and levels of compensation for our executive
officers or to allocate between cash and long term or equity incentives.
The Committee receives and reviews a variety of information
throughout the year to assist it in carrying out its responsibilities.
The Committee reviews financial reports comparing Company performance
on a year-to-date basis versus budget and receives operating reports at
each regular Board meeting. The Chief Executive Officer provides the
Committee with an assessment of the Company's achievements and
performance, his evaluation of individual performance and his
recommendations for annual compensation, and annual performance targets
and equity compensation awards. The Committee makes all final decisions
regarding the compensation of our executive officers. When making
individual compensation decisions for executive officers, the Committee
takes many factors into account, including the individual's performance,
tenure, experience and responsibilities; the performance of the Company
or the executive's business unit; retention considerations; the
recommendations of management; and the individual's historic
compensation.
The Compensation Committee does strive to assure that a
significant portion of the potential compensation of the named executive
officers is contingent, performance-based compensation linked to the
achievement of specific objectives. To achieve this goal, incentive
bonuses are established as a percentage of their base salaries.
Components of Executive Compensation
Base Salary
General. Base pay is a critical element of executive
compensation because it provides executives with a base level of monthly
income. In determining base salaries, we consider the executive's
qualifications and experience, scope of responsibilities and future
potential, the goals and objectives established for the executive, the
executive's past performance, internal pay equity and the tax
deductibility of base salary. As part of determining annual increases,
the Committee also considers the Chief Executive Officer's written
recommendations, the observations of the Chief Executive Officer and
the Committee members regarding individual performance and internal
pay equity considerations.
Fiscal 2007 and 2008 Actions. We set base salaries on a
calendar year basis. The following table reflects the adjustments made
to the base salaries of the named executive officers for calendar years
2007 and 2008.
% Increase % Increase
Name and Title 2007 Base Salary from 2006 2008 Base Salary from 2007
- -------------- ---------------- --------- ---------------- ---------
John E. Anderson $370,800 3.0% $370,800 0%
President and CEO
Ray M. Van Landingham $161,000 4.2% $165,830 3.0%
Vice President,
Secretary, Treasurer
and Chief Financial
Officer
David H. deVilliers,
Jr. $284,080 2.0% $292,600 3.0%
Vice President and
President, FRP
Development Corp.
Robert E. Sandlin $186,760 3.6% $195,000 4.4%
President, Florida
Rock & Tank Lines,
Inc.
Terry S. Phipps $135,000 0% $144,000 6.7%
President, SunBelt
Transport, Inc.
Analysis. Based in large part on the recommendations of the
Chief Executive Officer, the Committee approved modest increases in the
base salaries of the named executive officers for 2007 and 2008. No
increase was granted to Mr. Phipps in 2007 due to a decline in SunBelt
Transport's performance in a very challenging business environment. No
adjustment was made to Mr. Anderson's base salary for 2008 in light of
his pending retirement. Mr. Phipps was awarded a higher percentage
increase than the other named executive officers due to very challenging
and unpredictable business conditions and in light of his having foregone
any salary increase since January 1, 2006. Mr. Sandlin was awarded a
percentage increase consistent with the performance of Florida Rock & Tank
Lines during fiscal 2007.
Cash Incentive Compensation
Management Incentive Compensation Plan. The Management Incentive
Compensation Plan (the "MIC Plan") provides officers and key
employees an opportunity to earn an annual cash bonus for achieving
specified, performance-based goals established for the fiscal year.
Performance goals under the MIC Plan are tied to measures of operating
performance rather than appreciation in stock price and are discussed
below with respect to each named executive officer.
The Compensation Committee has established performance objectives
for the transportation subsidiaries based on targeted levels of after-tax
return on average capital employed. We believe that after-tax return-on-
capital employed (ROCE) is an important measure of performance in an asset-
intensive business, both to evaluate management's performance and to
demonstrate to shareholders that capital has been used wisely over the long
term. For purposes of this bonus calculation, return on average capital
employed is defined as the subsidiary's net income excluding the after-tax
cost of financing, divided by its total monthly average capital employed.
On the other hand, the Compensation Committee established real
estate performance objectives for Mr. deVilliers based on operating properties
in the portfolio (gross profit on developed buildings and average occupancy
rates for properties in service more than 12 months), special projects and
new development. The Committee believes that these objectives are more
appropriate measures of overall performance for the real estate group because
they encompass the fundamental functions which primarily account for value
added in real estate development.
Fiscal 2007 and 2008 Actions. The following chart describes the
performance objectives and potential bonuses for the named executive officers
for fiscal years 2007 and 2008:
Potential
Bonus as a %
Name & Title Year of Salary Performance Targets
------------ ---- --------- -------------------
John E. Anderson 2008 N/A N/A(1)
2007 100% Achievement by Florida Rock & Tank
Lines and SunBelt of targeted levels
of after-tax ROCE(2)(3)(5)
Achievement of Real Estate
Group objectives(4)(5)
Ray M. Van
Landingham 2008 60% Achievement by Florida Rock & Tank
Lines of a targeted level of after-
tax ROCE(2)(5)
Achievement of Real Estate Group
objectives(4)(5)
2007 60% Achievement by Florida Rock & Tank
Lines and SunBelt of targeted levels
of after-tax ROCE(2)(5)
Achievement of Real Estate Group
objectives(4)(5)
David H. deVilliers,
Jr. 2008 100% Achievement of Real Estate Group
objectives(4)(5)
2007 100% Achievement of Real Estate Group
objectives(4)(5)
Robert E. Sandlin 2008 60% Achievement by Florida Rock & Tank
Lines of a targeted level of
ROCE(2)(3)
2007 60% Achievement by Florida Rock & Tank
Lines of a targeted level of
ROCE(2)(3)
Terry S. Phipps 2008 60% Discretionary(6)
2007 60% Achievement by SunBelt of targeted
levels of ROCE(2)(3)
(1) On December 5, 2007, Mr. Anderson announced his intention to retire
as President and Chief Executive Officer of the Company, effective
February 6, 2008.
(2) The named executive officers are eligible to receive a bonus up to
the specified percentage of their base salary if the named business
unit achieves the specified level of after-tax ROCE. If after-tax ROCE
exceeds a threshold level but is less than the target level, the bonus
is prorated. The threshold and target after-tax ROCE levels for
Florida Rock & Tank Lines were 11.1% and 12.1% for 2007 and 14.8% and
18.3% for 2008. The threshold and target after-tax ROCE levels for
Sunbelt for 2007 were 7.1% and 8.6%.
(3) A portion of the earned bonus is contingent on the achievement of
specific safety objectives measured by preventable accident frequency
ratios.
(4) Real estate objectives consist of weighted, targeted achievement
levels in three broad areas, (1) operating properties (achievement
of a targeted dollar amount of gross profit from the portfolio of
developed buildings ($7,650,000 for 2007 and $9,281,423 for 2008)
and achievement of an average occupancy rate of 95.1% for 2007 and
2008), (2) special projects (completion of certain special projects),
and (3) completion of certain pending development projects within
budgeted levels.
(5) A portion of the executive's earned bonus is contingent on a
determination that the Company's (or, in Mr. deVilliers case, the
real estate group's) internal control over financial reporting was
effective for the applicable year.
(6) Mr. Phipps' bonus for fiscal 2008 is discretionary but is contingent
on the achievement of a specified safety objective. No ROCE target
was established for SunBelt for fiscal 2008 due to the current level
of uncertainty in the construction market.
Analysis. Cash-based incentive compensation comprises a significant
portion of the potential total compensation of the named executive officers.
For fiscal 2007, cash-based incentive compensation comprised 31.8%, on
average, of the total compensation of the named executive officers. We
believe that these incentives play a significant role in helping the
Company achieve its business objectives.
Stock Options and Restricted Stock
General. Long-term equity incentives help to motivate executives
to make decisions that focus on long-term growth and thus increase
shareholder value. The Committee believes that such grants help align our
executive officers' interests with the Company's shareholders. When our
executives deliver sustained returns to our shareholders, equity incentives
permit an increase in their own compensation.
Traditionally, the Committee made equity compensation awards in
the form of stock options. All stock options incorporate the following
features: the term of the grant does not exceed 10 years; the grant price
is not less than the market price on the date of grant; grants do not
include "reload" provisions; re-pricing of options is prohibited, unless
approved by the shareholders; and to encourage employee retention, options
vest 20% per year over five years beginning with the first anniversary of
the date of grant.
In fiscal 2006, the Committee made awards of restricted stock to
the named executive officers. These restricted stock grants vest ratably
over a four year period. The Committee decided to use restricted stock
rather than stock options to lower the dilution cost to shareholders.
Fiscal 2007 and 2008 Actions. No equity compensation awards were
made in fiscal 2007 or fiscal 2008.
Analysis. The Committee believes that equity compensation is an
important element of overall compensation. At the same time, the Committee
recognizes that equity grants impose a dilution cost to the shareholders.
While no grants were made for 2007 and 2008, the Committee plans to continue
to evaluate the use of equity compensation as a tool to motivate management.
Health and Welfare Benefits
Our executive officers are covered under the same health and
welfare plans, including our 401(k) plan, as our other salaried employees.
The executive officers also participate in a supplemental medical expense
reimbursement plan.
Our Management Security Plan was adopted many years ago as a
retention tool to provide retirement benefits (based on annual base
salaries) to certain senior executives. The Management Security Plan
provides for annual payments to participants (or their beneficiaries)
until the later of (i) their date of death or (ii) 15 years after their
retirement or death. The annual payments are set at two times the
benefit level during the first year and at the annual benefit level
in subsequent years. The benefit levels originally increased with base
salaries but the Company capped the benefit levels at 50% of base salaries
as of December 31, 2002. The plan has been closed to
newly hired executives for several years. Of the named executive
officers, Mr. Anderson and Mr. deVilliers participate in the Management
Security Plan.
Severance and Change of Control Agreements
Until December 2007, none of our named executive officers had
any arrangements that provide for payment of severance payments or payment
of any benefits upon a change-in-control of Patriot, except for change-
in-control provisions that accelerate vesting of stock options or
restricted stock under our equity compensation plans.
On December 5, 2007, John E. Anderson announced his retirement
as the Company's President and Chief Executive Officer effective February
6, 2008. Mr. Anderson has served as the Company's President and Chief
Executive Officer since 1989. Mr. Anderson will continue to serve on the
Company's Board of Directors.
Also on December 5, 2007, the Board of Directors approved certain
retirement benefits to Mr. Anderson in recognition of his years of service
to the Company. Effective on Mr. Anderson's retirement:
* The Company will make a lump sum payment to Mr. Anderson equal
to his accrued benefit under the Management Security Plan
(approximately $1.5 million);
* The Company will repurchase all of Mr. Anderson's outstanding
stock options and restricted stock based on the fair value of
the stock on the retirement date (approximately $1.2 million
based on the closing price on December 4, 2007);
* The Company will pay an additional bonus to Mr. Anderson of
approximately $2 million. The amount of the bonus will be
calculated so that the aggregate after tax value of the
benefits to Mr. Anderson, inclusive of the bonus, is $3
million.
The Company expects that the total impact of these payments on
the Company's earnings for fiscal 2008 to be approximately $2.3 million
before taxes or $1.4 million after taxes.
The Committee believes that these severance benefits
appropriately reward Mr. Anderson for his leadership of the Company over
the last 19 years.
On December 5, 2007, the Company also entered into change-in-
control agreements with Messrs. deVilliers, Sandlin and Phipps. In light
of Mr. Anderson's departure and the recent sale of Florida Rock Industries,
Inc., the Committee believed that it was appropriate to enter into these
agreements to help the Company retain these key executives. The agreements
are "double trigger" agreements that will pay benefits to the executives,
under certain circumstances, if they are terminated following a change-in-
control of the Company or a sale of their particular business unit.
Mr. deVilliers' agreement provides that if he is terminated
following a change-in-control or a sale of his business unit other than
for "cause" or if he resigns following such event for "good reason," the
benefits under his Management Security Plan shall become fully vested and
the present value of such benefits shall be paid to Mr. deVilliers. In the
case of Messrs. Phipps and Sandlin, the agreements provide that Messrs.
Phipps and Sandlin each will be entitled to receive an amount equal to two
times their base salary plus maximum bonus if, during the two years after a
change-in-control or sale of their business unit their employment is
terminated other than for "cause" or he resigns for "good reason." In
addition, Messrs. Sandlin and Phipps will become fully vested in their
stock options and restricted stock.
For this purpose, cause is generally defined as (i) conviction
for commission of a felony, (ii) willful misconduct or gross negligence
or material violation of policy resulting in material harm to his employer,
(iii) repeated and continued failure by the executive to carry out, in all
material respects, the employer's reasonable and lawful directions, or (iv)
fraud, embezzlement, theft or material dishonesty. Good reason is generally
defined as (i) a material reduction in compensation or benefits, (ii) a
requirement that the executive relocate, or (iii) any material diminution
in the executive's duties, responsibilities, reporting obligations, title
or authority.
We believe these change-in-control arrangements, the value of
which are contingent on a change of control transaction, effectively
create incentives for our executive team to build shareholder value and
to obtain the highest value possible should we be acquired in the future,
despite the risk of losing employment. These change of control arrangements
for our executive officers are "double trigger," meaning that acceleration
of vesting is not awarded upon a change of control unless the executive's
employment is terminated involuntarily (other than for cause) or by the
executive for good reason within 24 months following the transaction. We
believe this structure strikes a proper balance by not providing these
benefits to executives who continue to enjoy employment with an acquiring
company in the event of a change of control transaction. We also believe
this structure is more attractive to potential acquiring companies, who may
place significant value on retaining members of our executive team and who
may perceive this goal to be undermined if executives receive significant
acceleration payments in connection with such a transaction and are no
longer required to continue employment.
Personal Benefits
Our executives receive a limited number of personal benefits certain
of which are considered taxable income to them and which are described in
the footnotes to the section of this proxy statement entitled "Summary
Compensation Table."
Compensation Policies
- ---------------------
Internal Pay Equity
We believe that internal pay equity is an important factor to be
considered in establishing compensation for the officers. We have not
established a policy regarding the ratio of total compensation of the
Chief Executive Officer to that of the other officers, but we do review
compensation levels to ensure that appropriate equity exists.
Tax Deductibility of Compensation Should be Maximized Where Appropriate
The Company generally seeks to maximize the deductibility for
tax purposes of all elements of compensation. For example, the Company
always has issued nonqualified stock options that result in a tax
deduction to the Company upon exercise. Section 162(m) of the Internal
Revenue Code generally disallows a tax deduction to public corporations
for non-qualifying compensation in excess of $1.0 million paid to any
such persons in any fiscal year. We review compensation plans in light
of applicable tax provisions, including Section 162(m), and may revise
compensation plans from time to time to maximize deductibility. However,
we may approve compensation that does not qualify for deductibility when
we deem it to be in the best interests of the Company.
Financial Restatement
It is the Board of Directors' Policy that the Compensation
Committee will, to the extent permitted by governing law, have the sole
and absolute authority to make retroactive adjustments to any cash or
equity based incentive compensation paid to executive officers and
certain other officers where the payment was predicated upon the
achievement of certain financial results that were subsequently the
subject of a restatement. Where applicable, the Company will seek to
recover any amount determined to have been inappropriately received by
the individual executive.
COMPENSATION COMMITTEE REPORT
We have reviewed and discussed the foregoing Compensation
Discussion and Analysis with management. Based on our review and
discussion with management, we have recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in this proxy
statement.
Submitted by: Robert H. Paul III
Martin E. Stein, Jr.
James H. Winston
EXECUTIVE COMPENSATION
Fiscal 2007 Summary Compensation Table
- --------------------------------------
The following table sets forth information concerning the
compensation of our named executive officers for the year ended September
30, 2007:
Summary Compensation Table
Name and Year Salary Bonus Non-Equity Change in All Total($)
Principal ($) ($) Incentive Pension other
Position Plan Comp- Value Compen-
ensation and sation
Nonquali- ($)(3)
fied
Deferred
Compensation
Earnings
($)(2)
- --------- ---- ------ ----- ---------- ------------ ------ -------
John E.
Anderson, 2007 $368,100 --- $278,100 $240,288 $23,076 $909,564
President
and CEO
(PEO)
Ray M. Van 2007 $159,375 --- $ 74,865 --- $15,992 $250,232
Landingham,
Vice President
and Chief
Financial Officer
(PFO)
David H. 2007 $282,687 --- $255,672 $ 80,257 $13,714 $632,323
deVilliers,
Jr., Vice
President and
President, FRP
Development Corp.
Robert E. 2007 $185,157 --- $112,056 --- $17,630 $314,843
Sandlin,
President,
Florida Rock
& Tank Lines, Inc.
Terry S. 2007 $135,000 $10,000 --- --- $13,924 $158,924
Phipps,
President,
SunBelt Transport, Inc.
(1) This column represents amounts paid under the MIC Plan.
(2) This column represents the increase in the actuarial present value of
the named executive officer's future benefits under the Management
Security Plan. or more detail, see the disclosure under the Pension
Benefits table below.
(3) The amounts shown under All Other Compensation include: the benefit
to the executive for personal use of a Company provided vehicle;
matching contributions under our Profit Sharing and Deferred Earnings
Plan (executives participate on the same terms as other employees);
benefits paid under our Medical Reimbursement Plan, under which we
reimburse certain officers for personal medical expenses not covered
by insurance; and certain country, social and civic club membership
dues. In addition to these benefits, the named executive officers
participate in group plans, including our group health insurance and
life insurance plans, on the same terms as other employees.
Fiscal 2007 Grants of Plan-Based Awards
- ---------------------------------------
No option grants were made to the named executive officers during
fiscal 2007. The following table sets forth information concerning estimated
future payouts under cash incentive plans for the named executive officers.
Grants of Plan-Based Awards
---------------------------
Name Grant Date Estimated Future Payouts Under Non-Equity
- ---- ---------- Incentive Plan Awards
-----------------------------------------
Threshold Target Maximum
($)(1) ($)(2) ($)(3)
--------- ------ --------
John E. Anderson,
President and CEO 11/14/07 N/A -- N/A
Ray M. Van
Landingham,
Vice President and
Chief Financial
Officer 11/14/07 $6,965 -- $99,498
David H.
deVilliers, Jr.,
Vice President and
President, FRP
Development Corp. 11/14/07 $0 -- $292,600
Robert E. Sandlin,
President, Florida
Rock & Tank Lines,
Inc. 11/14/07 $23,400 -- $117,000
Terry S. Phipps,
President, SunBelt
Transport, Inc. 11/14/07 $0 -- $86,400
(1) Mr. Sandlin is eligible to receive a bonus equal to 20% of his base
salary if Florida Rock & Tank Lines achieves a threshold level of
after-tax ROCE for fiscal 2008. The bonus is prorated up to a
maximum amount of 60% of his base salary, for the achievement of a
stretch target of after-tax ROCE. Thirty percent of the earned bonus
is contingent on the achievement of specific safety objectives measured
by preventable accident frequency ratios. Mr. deVilliers is entitled
to a bonus for the achievement of specific goals, with the bonus for
each goal established as a percentage of his base salary up to a
maximum of 100% of his base salary if all goals are achieved. The
bonuses for Messrs. Anderson and Van Landingham are tied to the
achievement of these objectives. The Compensation Committee may
award a discretionary bonus to Mr. Phipps of up to 60% of his base
salary for fiscal 2008 due to continuing unusually severe and
unpredictable business conditions.
(2) Not applicable.
(3) The maximum bonus amounts represent 100% of base salary for Mr.
deVilliers and 60% of base salaries for Messrs. Van Landingham, Sandlin
and Phipps.
(4) A portion Mr. Van Landingham's and Mr. deVilliers' earned bonus is
contingent on a determination that the Company's (or, in Mr. deVilliers'
case, the real estate group's) internal control over financial reporting
was effective for the applicable year.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning stock options and
restricted stock held by the named executive officers at September 30, 2007:
Option Awards Stock Awards
Name Number Number of Option Option Number of Market Value
of Securities Exercise Exercise Shares or of Shares or
Securities Underlying Price Date Units of Units of
Underlying Unexercised ($) Stock That Stock That
Unexercised Options Have Not Have Not
Options (#) Vested Vested
(#) Unexercisa- (#) ($)
Exercisable ble
- ---- ----------- ----------- -------- -------- ---------- ------------
John E. 8,000 3,000 $22.23 11/20/12
Anderson, 4,000 6,000 $43.501 12/28/14
President and 600 $59,004
CEO
Ray M. Van 2,711 2,000 $22.23 11/20/12
Landingham, 2,000 3,000 $43.501 12/28/14
Vice President 450 $44,253
and Chief
Financial
Officer
David H. 12,000 3,000 $22.23 11/20/12
deVilliers, 3,000 4,500 $43.501 12/28/14
Jr., 450 $44,253
Vice President
and President,
FRP Development
Corp.
Robert E. 0 2,000 $22.23 11/20/12
Sandlin, 0 3,000 $43.501 12/28/14
President, 450 $44,253
Florida Rock &
Tank Lines, Inc.
Terry S. Phipps, 1,000 1,000 $28.75 11/04/13
President, 0 2,000 $31.88 04/15/14
SunBelt Transport, 450 $44,253
Inc.
Fiscal 2007 Option Exercises
- ----------------------------
The following table provides information regarding stock option
exercises by the named executive officers and vesting of restricted stock
during fiscal 2007.
Option Exercises and Stock Vested
Option Awards Stock Awards
Name Number of Value Realized Number of Value Realized
Shares on Exercise Shares on Vesting
Acquired ($) Acquired ($)
on Exercise on Vesting
(#) (#)
(a) (b) (c) (d) (e)
- ------ ----------- -------------- ----------- -------------
John E. Anderson, --- --- 200 $18,672
President and CEO
Ray M. Van Landingham, 3,085 $221,437 150 $14,004
Vice President and
Chief Financial Officer
David H. deVilliers, --- --- 150 $14,004
Jr.,
Vice President and
President, FRP Development
Corp.
Robert E. Sandlin, 3,000 $180,489 150 $14,004
President, Florida Rock
& Tank Lines, Inc.
Terry S. Phipps, 2,000 $112,370 150 $14,004
President, SunBelt
Transport, Inc.
Pension Benefits
- ----------------
The following table describes pension benefits to the named
executive officers as of September 30, 2007. There were no payments
of pension benefits to the named executive officers during fiscal 2007.
Name Plan Name Number of Years Present
Credited Service Value of
(#)(1) Accumulated
Benefit
($)(2)
------ ---------- ---------------- ------------
John E. Anderson MSP Plan -- $1,446,290
David H. deVilliers,
Jr. MSP Plan -- $513,313
(1) Messrs. Anderson and deVilliers have met the requisite years of
service requirement under the MSP Plan.
(2) The present value has been calculated based on a life expectancy
of 82 years and using a discount rate of six percent (6%).
Our Management Security Plan (the "MSP Plan") provides the
following benefits to certain officers and key employees (and their
beneficiaries) upon retirement or death:
Triggering Event Annual Benefit
---------------- --------------
Normal Retirement at age 65 or older Two times the Annual Benefit
Level during year 1 and the
Annual Benefit Level in
subsequent years until the
participant's death.
Death of Participant after his Retirement Continuation of participant
benefit until the 15th
anniversary of the
participant's retirement (or
the earlier death of the
participant's designated
beneficiary).
Death of Participant prior to his Retirement Two times the Annual Benefit
Level during year 1 and the
Annual Benefit Level in
subsequent years until the
later of (i) the 15th
anniversary of the
participant's death or (ii)
the date that participant
would have turned 65 (or
in either case, the earlier
death of the designated
beneficiary).
The Annual Benefit Levels are equal to 50% of the participating
executive's base salary as of December 31, 2002. The Annual Benefit Levels
for participating named executive officers are: $160,000 for Mr. Anderson;
and $123,600 for Mr. deVilliers. On December 5, 2007, the Company entered
into a letter agreement with Mr. Anderson providing for vesting of all of his
benefits under the Management Security Plan upon retirement (the present value
of which will be paid to him upon his retirement).
Nonqualifed Deferred Compensation
- ---------------------------------
None of the named executive officers receives any nonqualified
deferred compensation.
NON-EMPLOYEE DIRECTOR COMPENSATION
Compensation Arrangements for Fiscal 2007 and 2008
The following table describes the compensation arrangements with
our non-employee directors for the 2007 and 2008 fiscal years.
All Non-Employee Directors:
---------------------------
Annual Retainer $15,000
Fee Per Meeting Attended $ 1,500
Shares Granted Annually 500
Audit Committee:
Annual Fee Chairman $10,000
Member $ 5,000
Meeting Fees Chairman(1) $ 1,500
Member(1) $ 1,000
Other Committees:
Annual Fee Chairman $ 2,000
Member $ 1,000
Meeting Fees Chairman $ 1,500
Member $ 1,000
(1) The Audit Committee members receive no meeting fees for the
four regularly scheduled quarterly meetings; the meeting fees
shown apply only to additional meetings.
Actual Fiscal 2007 Director Compensation
The following table shows the compensation paid to each of our
non-employee directors during the 2007 fiscal year.
Director Compensation for Fiscal 2007
-------------------------------------
Fees Earned or Stock Awards Option All Other
Paid in Cash ($)(1) Awards Compensation
Name ($) ($)(4) ($)(2)(3) Total ($)
- ---- -------------- ------------ ------- ------------- ---------
Edward L. Baker $24,000 $43,065 -0- -0- $67,065(2)
John D. Baker II $24,000 $43,065 -0- -0- $67,065
Thompson S. Baker
II $24,000 $43,065 -0- -0- $67,065
Charles E.
Commander III $33,500 $43,065 -0- -0- $76,565
Luke E.
Fichthorn III $21,000 $43,065 -0- -0- $67,065(3)
Robert H. Paul
III $42,000 $43,065 -0- -0- $85,065
H. W. Shad III $35,500 $43,065 -0- -0- $78,565
Martin E. Stein,
Jr. $34,000 $43,065 -0- -0- $77,065
James H. Winston $26,500 $43,065 -0- -0- $69,565
(1) Each non-employee director was awarded 500 shares of the Company's
common stock on February 7, 2007. The value was determined using
the closing price of the Company's common stock on the Nasdaq Stock
Market on February 7, 2007 which was $86.13.
(2) The Company also provides Mr. Baker, the Chairman of the Board, with
a Company vehicle.
(3) Mr. Fichthorn also receives consulting fees of $30,000 per year for
financial consulting services provided to the Company.
(4) The following table sets forth information regarding stock options
held by our non-employee directors as of September 30, 2007:
Number of
Securities
Underlying
Unexercised Option Exericse Option Expiration
Director Options Price ($) Date
-------- ----------- --------------- ------------------
Edward L. Baker 1,000 15.125 12/05/2010
1,000 18.000 02/06/2011
1,000 19.870 05/01/2011
1,000 17.510 07/31/2011
1,000 17.350 10/02/2011
1,000 17.930 12/04/2011
1,000 29.000 02/05/2012
1,000 30.440 04/30/2012
1,000 22.660 08/06/2012
1,000 21.600 10/02/2012
1,000 23.770 12/03/2012
1,000 25.910 02/04/2013
1,000 28.200 08/05/2013
1,000 30.100 09/30/2013
1,000 30.590 12/02/2013
1,000 31.731 02/03/2014
1,000 32.750 08/03/2014
1,000 34.000 10/05/2014
1,000 44.910 11/30/2014
1,000 45.500 01/25/2015
1,000 44.500 05/03/2015
1,000 60.400 08/02/2015
John D. Baker II 1,000 15.125 12/02/2010
1,000 18.000 02/06/2011
1,000 19.870 05/01/2011
1,000 17.510 07/31/2011
1,000 17.350 10/02/2011
1,000 17.930 12/07/2011
1,000 29.000 02/05/2012
1,000 30.440 04/30/2012
1,000 22.660 08/06/2012
1,000 21.600 10/02/2012
1,000 23.770 12/03/2012
1,000 25.910 02/04/2013
1,000 26.400 05/07/2013
1,000 28.200 08/05/2013
1,000 30.100 09/30/2013
1,000 30.590 12/02/2013
1,000 31.731 02/03/2014
1,000 31.900 05/04/2014
1,000 32.750 08/03/2014
1,000 34.000 10/05/2014
1,000 44.910 11/30/2014
1,000 45.500 01/25/2015
1,000 44.500 05/03/2015
1,000 60.400 08/02/2015
Thompson S. Baker II 1,000 15.125 12/05/2010
1,000 18.000 02/06/2011
1,000 19.870 05/01/2011
1,000 17.510 07/31/2011
1,000 17.350 10/02/2011
1,000 17.930 12/04/2011
1,000 29.000 02/05/2012
1,000 30.400 04/30/2012
1,000 22.660 08/06/2012
1,000 21.600 10/02/2012
1,000 23.770 12/03/2012
1,000 25.910 02/04/2013
1,000 26.400 05/07/2013
1,000 28.200 08/05/2013
1,000 30.100 09/30/2013
1,000 30.590 12/02/2013
1,000 31.731 02/03/2014
1,000 31.900 05/04/2014
1,000 32.750 08/03/2014
1,000 34.000 10/05/2014
1,000 44.910 11/30/2014
1,000 45.500 01/25/2015
1,000 44.500 05/03/2015
1,000 60.400 08/02/2015
Charles E. Commander
III 1,000 31.731 02/03/2014
1,000 31.900 05/04/2014
1,000 32.750 08/03/2014
1,000 34.000 10/05/2014
1,000 44.910 11/30/2014
1,000 44.500 05/03/2015
1,000 60.400 08/02/2015
Luke E. Fichthorn III 1,000 15.125 12/05/2010
1,000 18.000 02/06/2011
1,000 19.870 05/01/2011
1,000 17.510 07/31/2011
1,000 17.350 10/02/2011
1,000 17.930 12/04/2011
1,000 29.000 02/05/2012
1,000 30.440 04/30/2012
1,000 22.660 08/06/2012
1,000 21.600 10/02/2012
1,000 23.770 12/03/2012
1,000 25.910 02/04/2013
1,000 26.400 05/07/2013
1,000 28.200 08/05/2013
1,000 30.100 09/30/2013
1,000 30.590 12/02/2013
1,000 31.731 02/03/2014
1,000 31.900 05/04/2014
1,000 32.750 08/03/2014
1,000 34.000 10/05/2014
1,000 44.910 11/30/2014
1,000 45.500 01/25/2015
1,000 44.500 05/03/2015
1,000 60.400 08/02/2015
Robert H. Paul III 1,000 15.125 12/05/2010
1,000 18.000 02/06/2011
1,000 17.510 07/31/2011
1,000 17.350 10/02/2011
1,000 17.930 12/04/2011
1,000 22.660 08/06/2012
1,000 21.600 10/02/2012
1,000 23.770 12/03/2012
1,000 25.910 02/04/2013
1,000 26.400 05/07/2013
1,000 28.200 08/05/2013
1,000 30.100 09/30/2013
1,000 30.590 12/02/2013
1,000 31.731 02/03/2014
1,000 31.900 05/04/2014
1,000 32.750 08/03/2014
1,000 34.000 10/05/2014
1,000 44.910 11/30/2014
1,000 45.500 01/25/2015
1,000 60.400 08/02/2015
Number of
Securities
Underlying
Unexercised Option Exericse Option Expiration
Director Options Price ($) Date
-------- ----------- --------------- ------------------
H.W. Shad III 1,000 32.750 08/03/2014
1,000 34.000 10/05/2014
1,000 44.910 11/30/2014
1,000 45.500 01/25/2015
1,000 44.500 05/03/2015
1,000 60.400 08/02/2015
Martin E. Stein, Jr. 1,000 15.125 12/05/2010
1,000 18.000 02/06/2011
1,000 17.350 10/02/2011
1,000 17.930 12/04/2011
1,000 29.000 02/05/2012
1,000 30.440 04/30/2012
1,000 22.660 08/06/2012
1,000 21.600 10/02/2012
1,000 23.770 12/03/2012
1,000 25.910 02/04/2013
1,000 26.400 05/07/2013
1,000 30.100 09/30/2013
1,000 30.590 12/02/2013
1,000 31.900 05/04/2014
1,000 34.000 10/05/2014
1,000 44.910 11/30/2014
1,000 45.500 01/25/2015
1,000 44.500 05/03/2015
1,000 60.400 08/02/2015
James H. Winston 1,000 15.125 12/05/2010
1,000 18.000 02/06/2011
1,000 17.350 10/02/2011
1,000 17.930 12/04/2011
1,000 29.000 02/05/2012
1,000 30.440 04/30/2012
1,000 22.660 08/06/2012
1,000 21.600 10/02/2012
1,000 23.770 12/03/2012
1,000 25.910 02/04/2013
1,000 26.400 05/07/2013
1,000 30.100 09/30/2013
1,000 30.590 12/02/2013
1,000 31.900 05/04/2014
1,000 32.750 08/03/2014
1,000 34.000 10/05/2014
1,000 44.910 11/30/2014
1,000 45.500 01/25/2015
1,000 60.400 08/02/2015
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
2007 fiscal year, or (ii) 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.
RELATED PARTY TRANSACTIONS
Florida Rock Industries, Inc.
Four directors of the Company, Edward L. Baker, John D. Baker II,
Thompson S. Baker II, and Luke E. Fichthorn III were also directors of FRI
during fiscal 2007. The four directors beneficially owned approximately
47% of the stock of the Company and 24% of the stock of FRI as of October
31, 2007.
Transportation, Management and Leasing Services
The Company hauls construction aggregates, diesel fuel, cement
and other products for FRI and leases to FRI construction aggregates
mining and other properties. The Company has numerous competitors at
all terminal and mine sites and the rates charged are, accordingly,
established by competitive conditions. FRI paid rents, royalties and
transportation services to subsidiaries of Patriot totaling $8,349,000
in fiscal 2007. Approximately 5.4% of the Company's revenue was
attributable to FRI during the 2007 fiscal year. In addition, under
an agreement, FRI provided certain management and related services,
including administrative and property management services to the Company
and its subsidiaries. FRI charged the Company $191,000 for such services
during the fiscal year ended September 30, 2007.
Joint Venture
On October 4, 2006, a subsidiary of the Company (FRP) entered
into a Joint Venture Agreement with FRI. The Joint Venture Agreement
established a real estate joint venture to develop approximately 4,300
acres of land near Brooksville, Florida. Under the terms of the joint
venture, FRP has contributed its fee interest in approximately 3,443
acres that it leased to FRI under a long-term mining lease. FRI will
continue to mine the property and pay royalties to FRP for as long as
mining does not interfere with the development of the property.
FRP also reimbursed FRI approximately $3,018,000 for one-half
of the acquisition costs of a 288 acre contiguous parcel acquired by FRI
from a third party in 2006. The 288 acre parcel was contributed to the
Joint Venture.
FRI contributed 553 acres that it owns as well as its leasehold
interest in the 3,443 acres that it leased from FRP. The joint venture
is jointly controlled by FRI and FRP, and they each have a mandatory
obligation to fund additional capital contributions of up to $2 million.
Capital contributions of $500,000 each were made in fiscal 2007.
Distributions will also be made on a 50-50 basis.
The property does not yet have the necessary entitlements for
real estate development. Approval to develop real property in Florida
entails an extensive entitlements process involving multiple and
overlapping regulatory jurisdictions and the outcome is inherently
uncertain. The Company currently expects that the entitlement process
may take several years to complete.
In connection with the Joint Venture, the Company also extended
certain lease agreements between FRP and FRI on FRI's corporate
headquarters in Jacksonville, Florida, and the Astatula and Marion
Sand mining properties, also in Florida. The Company and FRI also
agreed that a 2,500 acre tract of the Grandin mining property, in Florida,
due to be released will remain subject to the lease and available for
future mining.
Consulting Arrangement
Mr. Fichthorn provided the Company with financial consulting
and other services during the fiscal year ended 2007 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.
Policies and Procedures
The Audit Committee of the Board of Directors is responsible for
reviewing and approving all material transactions with any related party
not previously approved by the Company's Independent Directors. This
responsibility is set forth in writing in our Audit Committee Charter, a
copy of which charter is available at www.patriottrans.com under Corporate
Governance. In certain cases, transactions have been approved by a
committee consisting of all Independent Directors. Related parties include
any of our directors or executive officers, and certain of our shareholders
and their immediate family members.
To identify related party transactions, each year, we submit and
require our directors and officers to complete Director and Officer
Questionnaires identifying any transactions with us in which the officer
or director or their family members have an interest. We review related
party transactions due to the potential for a conflict of interest. A
conflict of interest occurs when an individual's private interest
interferes, or appears to interfere, in any way with our interests.
Our Code of Business Conduct and Ethics requires all directors, officers
and employees who may have a potential or apparent conflict of interest to
immediately notify our Chief Financial Officer.
We expect our directors, officers and employees to act and make
decisions that are in our best interests and encourage them to avoid
situations which present a conflict between our interests and their own
personal interests. Our directors, officers and employees are prohibited
from taking any action that may make it difficult for them to perform their
duties, responsibilities and services to Patriot in an objective and
effective manner. In addition, we are strictly prohibited from extending
personal loans to, or guaranteeing personal obligations of, any director
or officer. Exceptions are only permitted in the reasonable discretion of
the Board of Directors.
A copy of our Code of Business Conduct and Ethics (as revised on
May 2, 2007) is available at www.patriottrans.com under Corporate
Governance.
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 14, 2007.
Name and Address Amount and Nature
of Beneficial of Beneficial
Title of Class Owner Ownership Percentage of Class
- -------------- ---------------- ----------------- -------------------
Common Baker Holdings, L.P. 1,061,521 34.8%
Edward L. Baker 136,669(1) 4.5%
John D. Baker II 180,692(1) 5.9%
1801 Art Museum Drive ------------ -----
Jacksonville, FL 32207 1,378,450 44.5%
Common Royce & Associates, LLC 309,700(2) 10.1%
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, L.P.
and each have a pecuniary interest in 353,840 shares owned by Baker
Holdings, L.P.; however, none of the shares of Baker Holdings, L.P.
are included in the reported beneficial ownership of Edward L. Baker
and John D. Baker II in the table above. 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 January 24, 2007, Royce & Associates, LLC reported that, as of
December 31, 2006, it had sole voting and dispositive power with
respect to 309,700 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 December 14, 2007.
Title Name of Amount and Nature of
of Class Beneficial Owner Beneficial Ownership(1) Percentage of Class
- -------- ---------------- ----------------------- -------------------
Common John E. Anderson 38,606 1.3%
Common Edward L. Baker 1,198,190 (2)(3) 39.0%
Common John D. Baker II 1,242,213 (2)(4)(7) 40.4%
Common Thompson S. Baker II 40,568 (5) 1.3%
Common Charles E. Commander III 10,000 *
Common David H. deVilliers Jr. 23,557 *
Common Luke E. Fichthorn III 46,053 (6) 1.5%
Common John D. Klopfenstein 800 *
Common Robert H. Paul III 22,100 *
Common Terry S. Phipps 1,975 *
Common Robert E. Sandlin 6,009 *
Common H. W. Shad III 7,500 *
Common Martin E. Stein, Jr. 62,300 (7) 2.0%
Common Ray M. Van Landingham 8,311 *
Common James H. Winston 25,000 *
Common All Directors and Officers
As a group (15 people) 1,671,219 51.2%
* Less than 1%
(1) 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 December
14, 2007.
Shares Under
Profit Sharing Plan Shares Under Option
------------------- -------------------
John E. Anderson -0- 17,000
Edward L. Baker -0- 22,000
John D. Baker II -0- 24,000
Thompson S. Baker II -0- 24,000
Charles E. Commander III -0- 7,000
David H. deVilliers Jr. 1,457 19,500
Luke E. Fichthorn III -0- 24,000
John D. Klopfenstein -0- 500
Robert H. Paul III -0- 20,000
Terry S. Phipps 1,375 -0-
Robert E. Sandlin 2,409 3,000
H.W. Shad III -0- 6,000
Martin E. Stein, Jr. -0- 19,000
Ray M. Van Landingham -0- 7,711
James H. Winston -0- 19,000
All directors and officers as a
group (15 people) 5,241 212,711
(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, L.P. Each of them holds a pecuniary interest in
353,840 shares owned by Baker Holdings, L.P., and each of them
disclaims beneficial ownership of the shares owned by Baker
Holdings, L.P., except to the extent of their pecuniary interest.
In the table above, all of the shares owned by Baker Holdings, L.P.
are included in the reported beneficial ownership of each of John D.
Baker II and Edward L. Baker.
(3) Includes 86,639 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 and 10,000 shares held in a trust administered by an
independent trustee for the benefit of Mr. Baker's spouse and
children, as to which he disclaims beneficial ownership. The amount
shown for Mr. Baker does not include an aggregate of 86,639 shares
held by certain trusts that are administered by Edward L. Baker, as
trustee, for the benefit of Mr. Baker's children and in which neither
John D. Baker II nor Edward L. Baker has 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. John D. Baker II 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.
During fiscal 2007, the Audit Committee held six formal meetings.
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 and the assessment
of the Company's internal control over financial reporting. 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 received the written
disclosures and the letter from the independent auditor required by the
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees) and has discussed with the independent auditor the
auditor's independence from the Company and its management. 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 reviewed and discussed Company policies with
respect to risk assessment and risk 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,
2007, 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 REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Hancock Askew & Co., LLP ("HA")
to serve as the Company's principal public accountants, subject to
satisfactory negotiation of an annual fee agreement. Representatives of
HA 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.
On June 21, 2006, the Audit Committee dismissed
PricewaterhouseCoopers LLP ("PwC") as the Company's principal public
accountants and engaged HA. PwC's reports on the consolidated financial
statements of the Company for the fiscal years ended September 30, 2004
and September 30, 2005, did not contain any adverse opinion or disclaimer
of opinion, nor were they qualified or modified as to uncertainty, audit
scope, or accounting principles.
In addition, during the Company's fiscal years ended September 30,
2004 and September 30, 2005 and the subsequent interim period through the
date on which the Audit Committee dismissed PwC, there were no disagreements
between the Company and PwC on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to PwC's satisfaction, would have caused
them to make reference to the subject matter of the disagreement in connection
with their reports; and there were no reportable events as described in Item
304(a)(1)(v) of Regulation S-K.
During the Company's fiscal years ended September 30, 2004 and
September 30, 2005 and the subsequent interim period through the date on
which the Audit Committee engaged HA, the Company did not consult HA with
respect to the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's reportable events as set forth in Items
304(a)(2)(i) and (ii) of Regulation S-K.
Audit and Non-Audit Fees
The following table presents fees billed or to be billed by
the Company's independent registered public accounting firm for the audit
of the Company's financial statements for fiscal years 2006 and 2007 and
for other services performed during such periods.
2007 2006
---- ----
Audit Fees, Hancock Askew & Co., LLP (1) $ 219,931 $ 214,850
Audit Fees, PricewaterhouseCoopers LLP (1) 9,500 79,800
Audit Related Fees, PricewaterhouseCoopers
LLP (2) 2,500 19,000
Audit Related Fees, Hancock Askew & Co.,
LLP(2) 15,500 -0-
Tax Fees (3) -0- 72,458
All Other Fees -0- -0-
----------- -----------
Total $ 247,431 $ 386,108
(1) Audit services include work performed in connection with the review
of the Company's quarterly financial statements, the audit of the
Company's annual financial statements and the audit of management's
assessment of internal control over financial reporting.
(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. Amounts shown were billed by
PricewaterhouseCoopers LLP.
(4) Includes additional fees billed with respect to fiscal 2006 after
the date the proxy statement for the 2007 annual meeting of the
shareholders was filed.
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
Hancock Askew & Co., LLP during fiscal 2007.
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 2009 must be delivered
in writing to the principal executive offices of the Company no later
than August 29, 2008. 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 12, 2008. 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 12, 2008.
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. Phipps was late on
two occasions in reporting four transactions with respect to the exercise
of two options and sale of a total of 2,000 shares.
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 of the
Company 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 27, 2007 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
COMPENSATION COMMITTEE CHARTER
(as revised and adopted May 2, 2007)
See attached.
Revised and adopted May 2, 2007
COMPENSATION COMMITTEE CHARTER
Purpose
- -------
The Compensation Committee (the "Committee") is a committee of
the board of directors ("Board") of Patriot Transportation Holding, Inc.
(the "Company"). The Committee's primary role is to discharge the
responsibilities of the Board relating to the compensation of the
Company's executive officers.
Committee Membership
- --------------------
The Committee shall consist of three (3) or more independent
directors. Each member shall be: (i) independent within the meaning of
the NASDAQ listing standards and any independence standards established
by the Board from time to time, (ii) a "non-employee director" for
purposes of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended, and (iii) an "outside director" within the meaning of
Section 162(m) of the Internal Revenue Code.
Meetings
- --------
The Committee shall meet at least twice annually or more
frequently, as may be necessary or appropriate.
Committee Duties and Responsibilities
- -------------------------------------
The Committee shall have the duty and responsibility to:
Compensation
1. Determine compensation philosophy, principles and policies
applicable to executive compensation;
2. Review and approve the Company's goals and objectives
relevant to the compensation of the Chief Executive Officer ("CEO")
of the Company;
3. Evaluate the job performance of the CEO in light of the
Company's goals and objectives;
4. Determine and approve the compensation level of the CEO
based on the Committee's evaluation of his job performance;
5. Review annually with the Chairman of the Board ("Chairman")
and the CEO the performance of the other executive officers;
6. Review and approve the compensation levels of the other
named executive officers;
Compensation Plans
7. Administer the Company's incentive compensation plans and
equity-based plans;
8. Make recommendations to the Board with respect to the
adoption of new incentive compensation plans and equity-based plans;
9. Set objective performance goals and potential bonus levels
for named executive officers within the first quarter of each fiscal
year;
10. Certify that performance targets and material terms have
been met prior to payment of bonuses to named executive officers;
Succession Plans
11. Review, periodically, with the Chairman and the CEO, the
succession plans for executive officers and make recommendations to the
Board regarding the selection of individuals to occupy these positions;
Director Compensation
12. Make recommendations to the Board regarding compensation
arrangements for non-employee directors;
Charter and Report
13. Review and update this Charter periodically, as may be
necessary or appropriate;
14. Report to the Board regarding compliance with this Charter,
the activities of the Committee and any issues with respect to the duties
and responsibilities of the Committee;
Proxy Statement
15. Discuss with management the Compensation Discussion &
Analysis and recommend to the Board whether the Compensation Discussion
& Analysis should be included in the proxy statement;
16. Provide the Compensation Committee Report to be included in
the proxy statement to shareholders; and
Miscellaneous
17. Perform any other activities consistent with this Charter,
the Company's Bylaws and all applicable laws and listing standards, as
the Committee deems necessary or appropriate.
Self-Evaluation
- ---------------
The Committee shall perform and conduct an annual self-evaluation
of its performance to determine and assess whether the Committee is
fulfilling all of its duties and responsibilities hereunder and under
all applicable laws and listing standards and shall report the results
to the Board.
Compensation Consultants
- ------------------------
The Committee shall have the sole and direct authority to
engage, retain, approve payment of compensation to, and terminate
any compensation consultant retained to assist the Committee in the
evaluation of the compensation of the executive officers. The Company
shall be solely responsible for the payment of any such compensation
consultants. The Company shall not engage the compensation consultants
employed by the Committee to perform any work for the Company without
the prior approval of the Compensation Committee.
Subcommittees
- -------------
The Committee shall have the authority, as it deems appropriate,
to delegate to any subcommittee or committee member any of its duties or
responsibilities under this Charter or any applicable law or listing
standard.
_______________________________
ANNEX B
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER
(as revised and adopted May 2, 2007)
See attached.
Revised and adopted May 2, 2007
NOMINATING AND CORPORATE GOVERNANCE
COMMITTEE CHARTER
Purpose
- --------
The Nominating and Corporate Governance Committee (the
"Committee") is a committee of the board of directors (the "Board")
of Patriot Transportation Holding, Inc. (the "Company"). The primary
functions of the Committee are to (i) identify and recommend to the
Board individuals who are qualified to serve on the Board, (ii) review
and recommend to the Board changes to the corporate governance
practices and guidelines of the Company, and (iii) oversee the annual
evaluation of the Board.
Committee Membership
- --------------------
The Committee shall consist of three (3) or more independent
directors. Each member shall be independent within the meaning of the
NASDAQ listing standards and any independence standards established by
the Board from time to time.
Meetings
- --------
The Committee shall meet at least twice annually or more
frequently, as may be necessary or appropriate.
Committee Duties and Responsibilities
- -------------------------------------
The Committee shall have the duty and responsibility to:
Director Qualification and Nominations
1. Establish the qualifications and criteria for Board
membership;
2. Consider, recommend and recruit candidates, and review
candidates recommended by shareholders, to serve on the Board;
3. Recommend the director nominees selected by the Committee
for approval by the Board and the shareholders;
4. Conduct, or engage one or more third parties to conduct,
the appropriate and necessary inquiries into the backgrounds,
experience and qualifications of possible candidates to serve on the
Board;
Board Committees
5. Establish the qualifications and criteria for members of
the committees of the Board;
6. Recommend to the Board directors to serve on other Board
committees, monitor the functions of such committees, and make
recommendations to the Board regarding the functions of such other
committees and committee reporting to the Board;
Charter, Policies and Reports
7. Review and update this Charter, periodically as may be
necessary or appropriate;
8. Review on a regular basis, and recommend development of
and changes to, any director independence standards and corporate
governance guidelines or policies and the Company's Financial Code of
Ethical Conduct and Code of Business Conduct and Ethics;
9. Report, on a periodic basis, to the Board regarding
compliance with this Charter, the activities of the Committee and any
issues with respect to the duties and responsibilities of the Committee;
Annual Evaluation
10. Oversee the annual evaluation of the Board; and
Miscellaneous
11. Perform any other activities consistent with this Charter,
the Company's Bylaws and all applicable laws and listing standards, as
the Committee deems necessary or appropriate.
Self-Evaluation
- ---------------
The Committee shall perform and conduct an annual self-evaluation
of its performance to determine and assess whether the Committee is
fulfilling all of its duties and responsibilities hereunder and under
all applicable laws and listing standards and shall report the results
to the Board.
Director Search Firm
- --------------------
The Committee shall have the sole and direct authority to engage,
retain, approve payment of compensation to, and terminate any director
search firm retained to identify and recommend possible candidates for
Board membership. The Company shall be solely responsible for the
payment of any such director search firm.
Subcommittees
- -------------
The Committee shall have the authority, as it deems appropriate,
to delegate to any subcommittee or committee member any of its duties
and responsibilities under this Charter or any applicable law or listing
standard.
__________________________________
PATRIOT TRANSPORTATION HOLDING, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS CALLED FOR FEBRUARY 6, 2008.
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 6, 2008,
at 10 o'clock in the morning, 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 three directors to each serve for a term
of four years.
/ / FOR the nominees listed / / WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below
John D. Baker II, Luke E. Fichthorn III and H.W. Shad III
are the nominees for a term of four years.
To withhold authority to vote for any individual nominee, write that
nominee's name in the space provided.
___________________________________________________________________
2. The ratification of the Audit Committee's selection of Hancock
Askew & Co., LLP, as the Independent Registered Public Accounting Firm
(auditors) for fiscal 2008.
/ / 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 ratification of the
Independent Registered Public Accounting Firm 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 27, 2007, 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 27, 2007