_________________________
501 Riverside Avenue
Suite 500
Jacksonville, Florida 32202
Phone (904) 396-5733
December 23, 2008
Dear Shareholder:
I invite you to attend our Annual Meeting of Shareholders, which
will be held on Wednesday, February 4, 2009, at 10:00 a.m. at 155 E. 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 D. Baker II
President and Chief Executive Officer
2009 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.............................................18
Non-Employee Director Compensation.................................25
Related Party Transactions.........................................29
Common Stock Ownership of Certain Beneficial Owners................30
Common Stock Ownership by Directors and Executive Officers.........31
Audit Committee Report.............................................32
Independent Registered Public Accounting Firm......................33
Additional Information.............................................34
PATRIOT TRANSPORTATION HOLDING, INC.
501 Riverside Avenue, Suite 500, Jacksonville, Florida 32202
------------------------------------------------------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TIME AND DATE 10:00 a.m. on Wednesday, February 4, 2009
PLACE 155 E. 21st Street
Jacksonville, Florida
ITEMS OF BUSINESS (1) To elect two 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 12, 2008.
ANNUAL REPORT Our 2008 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
John D. Milton, Jr.
Secretary
This Proxy Statement and Proxy Card are being distributed on or
about December 23, 2008.
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 4, 2009 at 155 E. 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 12, 2008, 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 3,039,386 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 these proxy materials
are being forwarded to you by your broker, trustee, or nominee who is
considered the shareholder of record of those shares. As the beneficial
owner, you have the right to direct your broker, trustee or nominee on how
to vote and are also invited to attend the meeting. However, since you
are not the shareholder of record, you may not vote these shares in person
at the meeting. Your broker, trustee, or nominee is obligated to provide
you with a voting instruction card for you to use.
* PROFIT SHARING PLAN AND TRUST - If your shares are held in your
account in the Patriot Transportation Holding, Inc. Profit Sharing and
Deferred Earnings Plan (the "Profit Sharing Plan"), you are considered the
beneficial owner of these shares and the trustee of the plan is the
shareholder of record. Participants in the Profit Sharing Plan may direct
the trustee how to vote the shares allocated to their account by following
the voting instructions contained on the proxy card. If voting instructions
are not received for shares in the Profit Sharing Plan, those shares will
be voted in the same proportion as the shares in such plan for which voting
instructions are received.
Proposals You Are Asked to Vote On and the Board's Voting Recommendations
At the Annual Meeting, the shareholders will vote to elect two
directors to serve for a four year term. 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, 2009.
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 John D. Milton, Jr. at (904)
396-5733 or by mail at 501 Riverside Avenue, Suite 500, Jacksonville,
Florida 32202.
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 501
Riverside Avenue, Suite 500, 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.
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,
501 Riverside Avenue, Suite 500, Jacksonville, Florida 32202.
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 7,
2008) 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 2008 and the function of each Committee are described below.
During fiscal 2008, the Board of Directors held five meetings. The
Audit Committee held five meetings, the Compensation Committee held four
meetings, and the Nominating and Corporate Governance Committee held one
meeting during fiscal 2008. During fiscal 2008, the Executive Committee
held one meeting and acted on two matters 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.
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/Corporate
Director Audit Compensation Governance Executive
-------- ----- ------------ ---------- ---------
John E. Anderson
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 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 available at www.patriottrans.com under
Corporate Governance.
Executive Committee
John D. Baker II and Edward L. Baker 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 Committee will consider properly submitted shareholder nominees
for candidates for membership on the Board of Directors. Shareholders
proposing individuals for consideration by the Committee must include at
least the following information about the proposed nominee: the proposed
nominee's name, age, business or residence address, principal occupation
or employment, and whether such person has given written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected. Shareholders should send the required information about the
nominee to:
Corporate Secretary
Patriot Transportation Holding, Inc.
501 Riverside Avenue, Suite 500
Jacksonville, Florida 32202
In order for an individual proposed by a shareholder to be
considered by the Committee for recommendation as a Board nominee for
the Annual Meeting of Shareholders to be held in early 2010, the
Corporate Secretary must receive the proposal no later than 5 p.m. Eastern
Time on September 30, 2009. Such proposals must be sent via registered,
certified or express mail. The Corporate Secretary will send properly
submitted shareholder proposed nominations to the Committee Chair for
consideration at a future Committee meeting. Individuals proposed by
shareholders in accordance with these procedures will receive the same
consideration that individuals identified to the Committee through other
means receive.
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 two nominees in Class III to be re-elected. Class III
Directors will hold office until the 2013 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
----------------------------- ---- ----- ----- -------------
Edward L. Baker 73 Class III 1996
Chairman of the Board of the Company (Term Exp.
2013)
Charles E. Commander III 68 Class III 2004
Partner with Foley & Lardner, (Term Exp.
L.L.P. (a law firm) 2013)
Directors Continuing in Office
- ------------------------------
John E. Anderson
Retired President and Chief
Executive Officer of the Company 63 Class I 2005
(Term Exp.
2011)
John D. Baker II
President and Chief Executive
Officer 60 Class II 1986 Vulcan Materials
(Term Exp. Company
2012) Wachovia
Corporation
Thompson S. Baker II
President of Florida Rock Division
of Vulcan Materials Company
(construction materials company) 50 Class IV 1994
(Term Exp.
2010)
Luke E. Fichthorn III
Partner in Twain Associates
(a private financial consulting
firm) 67 Class II 1989
(Term Exp.
2012)
Robert H. Paul III
Chairman of the Board of
Southeast Capital, LLC
(real estate investment firm) 74 Class I 1992
(Term Exp.
2011)
H. W. Shad III
Owner, Bozard Ford Company
(an automobile dealership) 62 Class II 2004
(Term Exp.
2012)
Martin E. Stein, Jr.
Chairman and Chief Executive
Officer of Regency Centers
Corporation (a commercial real
estate services firm) 56 Class IV 1992 Regency Centers
(Term Exp. Corporation
2010) Stein Mart, Inc.
James H. Winston
President of LPMC, Inc.
(an investment real estate
firm); President of Citadel
Life & Health Insurance Co. 75 Class I 1992
(Term Exp.
2011)
All of the nominees and directors have been employed in their
respective positions for the past five years except John E. Anderson,
Edward L. Baker, John D. Baker II, Thompson S. Baker II, and Robert H.
Paul III.
Mr. Anderson served as President and Chief Executive Officer of
the Company from 1989 to February 6, 2008. Mr. Anderson was elected as
a director on October 5, 2005 and previously served as a director of the
Company 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.
Edward L. Baker has served as a director of the Company since
1986 and became an employee of the Company (serving as Chairman of the
Board) in February 2008. From February 1986 to November 16, 2007, Mr.
Baker served as Chairman of the Board of Florida Rock Industries, Inc.,
a construction aggregates, cement and concrete company.
John D. Baker II has served as President and Chief Executive
Officer of the Company since February 6, 2008. He 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.
Thompson S. Baker II was elected as a director in 1994. Mr.
Baker has served as the President of the Florida Rock Division of Vulcan
Materials Company since November 16, 2007. 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 for fiscal 2009. 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 (Hancock Askew) as the Company's Independent Registered Public
Accounting Firm (auditors).
Hancock Askew 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 Hancock Askew as auditor for fiscal year
2009 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,
Hancock Askew will remain the Company's Independent Registered Public
Accounting Firm for fiscal year 2009, unless the Audit Committee finds
other good reason for making a change.
Representatives of Hancock Askew 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, 2003 and ending on
September 30, 2008. The graph assumes that $100 was invested on
September 30, 2003 in the Company's common stock and in each of the
indices and assumes the reinvestment of any dividends.
Chart Omitted
Cumulative Total Return
-----------------------
9/30/03 9/30/04 9/30/05 9/30/06 9/30/07 9/30/08
Patriot Transportation
Holding, Inc. 100.00 109.17 228.24 251.03 326.71 262.46
NASDAQ Composition
Index 100.00 107.78 122.80 131.27 158.39 118.78
NASDAQ Transportation
Index 100.00 115.16 145.60 171.51 206.46 146.66
COMPENSATION DISCUSSION AND ANALYSIS
This section explains our compensation philosophy and all material
elements of the compensation we provide to the individuals who served as
Chief Executive Officer and Chief Financial Officer and our other three
most highly compensated executive officers who served in such capacities
during the fiscal year ended September 30, 2008 (the "named executive
officers"). The named executive officers are John D. Baker II, our current
President
and Chief Executive Officer, John E. Anderson, former President
and Chief Executive Officer, John D. Milton, Jr., our current Executive
Vice President and Chief Financial Officer, Ray M. Van Landingham, our
former Vice President and Chief Financial Officer, Edward L. Baker, our
Chairman of the Board, David H. deVilliers, Jr., 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.
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.
* For fiscal 2009, we make no increases in the base salaries of our
Chairman, our Chief Executive Officer and our Chief Financial
Officer. We granted modest increases in base salaries for our other
named executive officers.
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 16 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 usually
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 2008, Messrs. John Baker and deVilliers were eligible to receive
performance-based cash bonuses of up to 100% of their base salaries, and
Messrs. Edward Baker, Milton, 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 2008 and 2009 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
2008 and 2009.
%Increase %Increase
Name and Title 2008 Base Salary from 2007 2009 Base Salary from 2008
- ---------------- ---------------- ----------- ---------------- ----------
John D. Baker II $250,000 * $250,000 0%
President and CEO
Edward L. Baker $150,000 * $150,000 0%
Chairman of the
Board
John D. Milton,
Jr. $165,000
* $165,000 0%
Executive Vice
President and
Chief Financial
Officer
David H. deVilliers,
Jr. $292,600 3.0% $301,375 3%
Vice President and
President, FRP
Development Corp.
Robert E. Sandlin $195,000 4.4% $200,850 3%
President, Florida
Rock & Tank Lines,
Inc.
Terry S. Phipps $144,000 6.7% $149,040 4%
President, SunBelt
Transport, Inc.
* Messrs. John D. Baker II and Edward L. Baker became employees of
the Company in February 2008. Mr. Milton joined the Company in June
2008.
Analysis. Based in large part on the recommendations of the
Chief Executive Officer and the challenging business environment
facing the Company, the Committee approved modest increases in the
base salaries of Messrs. deVilliers, Sandlin and Phipps for 2009 and
made no increases to the base compensation of Messrs. John Baker,
Edward Baker and John Milton. Mr. Phipps was awarded a higher
percentage increase in 2008 than the other named executive officers
due to very challenging and unpredictable business conditions and in
light of his having foregone prior salary increases.
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.
The Compensation Committee traditionally 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 traditionally has
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 2008 and 2009 Actions. The following chart describes the
performance objectives and potential bonuses for the named executive officers
for fiscal years 2008 and 2009:
Potential
Bonus as a %
Name & Title Year of Salary Performance Targets
------------ ---- --------- -------------------
John D. Baker II 2009 100% To be determined(1)
2008 100% Discretionary(2)
Edward L. Baker 2009 60% To be determined(1)
2008 60% Discretionary(2)
John D. Milton,
Jr. 2009 60% To be determined(1)
2008 60% Discretionary(2)
David H.
deVilliers, Jr. 2009 100% To be determined(1)
2008 100% Achievement of Real Estate
Group objectives(3)(4)
Robert E. Sandlin 2009 60% To be determined(1)
2008 60% Achievement by Florida Rock
& Tank Lines of a targeted
level of ROCE(5)
Terry S. Phipps 2009 60% To be determined(1)
2008 60% Discretionary(6)
(1) MIC Plan objectives have not yet been determined for fiscal 2009.
The Company anticipates that the Committee will establish MIC
Plan goals for the real estate and transportation group that are
generally consistent with performance measures generally used in
prior years and that the goals for Messrs. John Baker, Edward Baker
and John Milton will be linked to the achievement of the goals
established for the real estate group and the transportation group.
The Company also anticipates that, for certain officers, the bonus will
be contingent on a determination that the Company's internal control
over financial reporting was effective for fiscal 2009.
(2) Bonus payments to Messrs John Baker, Edward Baker and John Milton
were discretionary for fiscal 2008 as they joined the Company during
fiscal 2008.
(3) For 2008, real estate objectives consisted 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 ($9,281,423) and achievement of an average occupancy rate
of 95%), (2) special projects (completion of certain special projects),
and (3) completion of certain pending development projects within
budgeted levels.
(4) A portion of Mr. deVillier's bonus for fiscal 2008 was contingent on
a determination that the real estate group's internal control over
financial reporting was effective for the applicable year.
(5) Mr. Sandlin was eligible to receive a bonus up to the specified
percentage of his base salary if the named business unit achieved
the specified level of after-tax ROCE. If after-tax ROCE exceeded a
threshold level but was less than the target level, the bonus would
be prorated. The threshold and target after-tax ROCE levels for
Florida Rock & Tank Lines were 14.8% and 18.3% for 2008. A portion
of the earned bonus was contingent on the achievement of specific
safety objectives measured by preventable accident frequency ratios.
(6) Mr. Phipps' bonus for fiscal 2008 was discretionary but was
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 2008, cash-based incentive compensation
comprised 27%, on average, of the total compensation of each of the named
executive officers (excluding Messrs. Anderson and Van Landingham, who
retired during the year). 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 has 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
certain 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 2008 and 2009 Actions. The Committee awarded Mr. Milton
options to purchase 10,000 shares of the Company's common stock,
effective on June 16, 2008 (Mr. Milton's start date). In December 2008,
the Committee approved an additional grant of 10,000 options to Mr.
Milton effective upon the first anniversary of his start date. The options
vest 25% per year over five years, beginning on the first anniversary of
the grant date and expire on the tenth anniversary of the grant date.
The option price is the closing price of the Company's common stock on the
grant date.
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 only one grant was made for 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. Mr. deVilliers is the only named executive
officer who currently participates 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, the Board of Directors approved certain
retirement benefits to Mr. Anderson in recognition of his years of service
to the Company. Upon Mr. Anderson's retirement, the Company paid him
$4,851,000 for his accrued benefit under the Management Security Plan, the
fair value of his outstanding stock options and restricted stock and an
additional bonus.
The Compensation Committee also approved in fiscal 2008 a
retirement payment of $165,830 to Mr. Van Landingham, who retired as Vice
President and Chief Financial Officer effective June 16, 2008.
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 $1.0 million paid to any such persons
in any fiscal year. We review compensation plans in light of applicable tax
provisions, including Section 162(m), and may revise compensation plans from
time to time to maximize deductibility. However, we may approve compensation
that does not qualify for deductibility when we deem it to be in the best
interests of the Company.
Financial Restatement
It is the Board of Directors' Policy that the Compensation Committee
will, to the extent permitted by governing law, have the sole and absolute
authority to make retroactive adjustments to any cash or equity based
incentive compensation paid to executive officers and certain other officers
where the payment was predicated upon the achievement of certain financial
results that were subsequently the subject of a restatement. Where
applicable, the Company will seek to recover any amount determined to have
been inappropriately received by the individual executive.
COMPENSATION COMMITTEE REPORT
We have reviewed and discussed the foregoing Compensation Discussion
and Analysis with management. Based on our review and discussion with
management, we have recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this proxy statement.
Submitted by: Robert H. Paul III
Martin E. Stein, Jr.
James H. Winston
EXECUTIVE COMPENSATION
Fiscal 2008 Summary Compensation Table
- --------------------------------------
The following table sets forth information concerning the
compensation of our named executive officers for the year ended
September 30, 2008:
Summary Compensation Table
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Name and Year Salary Bonus Option Non-Equity Change in All Other Total
Principal ($) ($) Awards Incentive Pension Compen- Compens- ($)
Position (1) Plan Value sation ation($)
Compens- and ($)(4)
ation(2) Nonquali-
fied
Deferred
Compen-
sation
Earnings
($)(3)
- --------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c> <c>
John D.
Baker II 2008 $162,500 -- -- $132,828 -- $21,803 $317,131
President
and CEO
PEO)(5)
John E.
Anderson,
Retired
President
and CEO
(PEO) 2008 $139,050 $2,125,325 $394,151 -- $60,916 $4,564 $2,724,006
2007 $368,100 -- $89,180 $278,100 $240,288 $23,076 $998,744
John D.
Milton, Jr.
Executive
Vice
President
and CFO
(PFO) 2008 $48,125 -- $26,890 $23,062 -- $858 $98,935
Ray M. Van
Landingham,
Retired Vice
President
and Chief
Financial
Officer
(PFO) 2008 $123,165 $166,530 $33,602 $63,430 -- $21,951 $408,678
2007 $159,375 -- $52,980 $74,865 -- $15,992 $303,212
Edward L.
Baker
Chairman of
the Board(5) 2008 $97,500 -- -- $47,808 -- $67,160 $212,468
David H.
deVilliers,
Jr., Vice
President
and President,
FRP Development
Corp. 2008 $292,600 -- $45,638 $292,600 $86,526 $10,332 $727,696
2007 $282,687 -- $74,705 $255,672 $80,257 $13,714 $704,035
Robert E.
Sandlin,
President,
Florida Rock
& Tank Lines,
Inc. 2008 $195,000 -- $33,602 $117,000 -- $32,437 $378,039
2007 $185,157 -- $52,980 $112,056 -- $17,630 $367,823
Terry S.
Phipps,
President,
SunBelt
Transport,
Inc. 2008 $144,000 -- $41,344 $10,000 -- $23,665 $219,009
2007 $135,000 -- $41,344 $10,000 -- $13,924 $200,268
(1) Amounts reflect Patriot's expense recognized for outstanding stock
awards calculated in accordance with SFAS 123R.
(2) This column represents amounts paid under the MIC Plan.
(3) This column represents the increase in the actuarial present value
of the named executive officer's future benefits under the Management
Security Plan. For more detail, see the disclosure under the Pension
Benefits table below. In February 2008, the Company paid to Mr.
Anderson $1,330,823, representing his accrued benefit under the
Management Security Plan, in connection with his retirement.
(4) 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.
(5) Messrs. John Baker and Edward Baker served as non-employee directors
until February 2008. Amounts shown do not include compensation received
as non-employee directors. For this information, see "Non-Employee
Director Compensation."
Other Annual Compensation from Summary Compensation Table
- ---------------------------------------------------------
The following table contains a breakdown of the compensation and
benefits for fiscal 2008 included under All Other Compensation in the
Summary Compensation table above.
Matching Personal Use Medical Use of Miscellaneous
Contributions of Company Reimbursement Company (3)
Car (1) Aircraft
(2)
- --------------------------------------------------------------------------------
John D. Baker II $2,813 -- $1,550 $17,440 --
John E. Anderson $1,391 -- $2,441 -- $732
John D. Milton,
Jr. $206 $652 -- -- --
Ray M. Van
Landingham $7,518 $5,610 $8,823 -- $480
Edward L. Baker $1,688 -- $110 $43,411 --
David H.
deVilliers, Jr. $6,941 -- $3,391 -- --
Terry S. Phipps $4,537 $2,233 $16,905 -- --
Robert E. Sandlin $6,935 $1,311 $6,413 -- $7,446
(1) The amounts shown represent benefits paid under our Medical
Reimbursement Plan, under which we reimburse certain officers for
personal medical expenses not covered by insurance.
(2) We have operations throughout many of the Southeastern and Mid-
Atlantic States. Our senior executive officers are required to
travel extensively to these operations and to other locations as
part of their responsibilities. To facilitate this travel, we
purchased a company airplane in fiscal 2008. We encourage Edward
L. Baker and John D. Baker II to use our airplane for non-business
as well as business travel for safety and security reasons and to
make the best use of their time. They reimburse us for non-business
use for fuel used, crew travel expenses, airport fees, catering,
passenger ground transportation plus an additional charge per day
of the lesser of $500 or the amount of fuel used. The amount shown
represents the difference between the allocated total costs excluding
depreciation of use of our airplane for non-business use and the
amount reimbursed by the Named Executive Officer.
(3) The amounts shown under the Miscellaneous column represent payment
of country club and social club dues and purchase of tickets to
sporting events on behalf of the Named Executive Officers and other
miscellaneous reimbursed expenses. These club memberships and tickets
generally are maintained for business entertainment but may be used
for personal use. The entire amount has been included, although we
believe that only a portion of this cost represents a perquisite.
Fiscal 2008 Grants of Plan-Based Awards
- ---------------------------------------
The following table sets forth information concerning option grants
and estimated future payouts under cash incentive plans for the named executive
officers.
Grants of Plan-Based Awards
<s> <c> <c> <c> <c> <c>
Name Grant Estimated Future Payouts All Other Exercise or Grant
Date Under Non-Equity Option Base Price Date Fair
Incentive Plan Awards Awards: Of Option Value of
--------------------- Number of Awards Stock and
Threshold Target Maximum Securities ($/Share) Option
($)(1) ($)(2) ($)(3) Underlying Awards(4)
Options (#)
- -------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c>
John D. Baker
II
President and
CEO 12/3/08 N/A N/A $250,000 -- -- --
John D. Milton,
Jr.
Executive Vice
President and
CFO 12/3/08 N/A N/A $99,000 10,000 $86.24 $368,778
Edward L.
Baker
Chairman of
the Board 12/3/08 N/A N/A $90,000 -- -- --
John E.
Anderson,
Former President
and CEO -- -- -- -- -- -- --
Ray M.
Van Landingham,
Former Vice
President and
Chief Financial
Officer -- -- -- -- -- -- --
David H.
deVillers, Jr.,
Vice President
and President
FRP Development
Corp. 12/3/08 N/A N/A $301,375 -- -- --
Robert E.
Sandlin,
President,
Florida Rock
& Tank Lines,
Inc. 12/3/08 N/A N/A $120,510 -- -- --
Terry S. Phipps,
President,
SunBelt
Transport,
Inc. 12/3/08 N/A N/A $89,430 -- -- --
(1) Messrs. John Baker and deVilliers are eligible to earn bonuses of up
to 100% of their respective base salaries for fiscal 2009. Messrs.
Edward Baker, Milton, Sandlin and Phipps are eligible to earn bonuses
of up to 60% of their respective base salaries for fiscal 2009. The
performance objectives and threshold and target performance levels
for these executives have not yet been determined for fiscal 2009.
(2) Not applicable.
(3) The maximum bonus amounts represent 100% of base salary for John
Baker and David deVilliers and 60% of base salaries for Messrs.
Edward Baker, Milton, Sandlin and Phipps.
(4) The value shown for the options granted to Mr. Milton reflects the
SFAS 123R expense associated with the options using the Black-Scholes
pricing model, estimating the fair value of stock options using the
following assumptions: (i) risk-free interest rate of 3.94%, (ii) no
dividend yield, (iii) volatility of Patriot common stock of 37.07%
and (iv) expected life of stock options of 6 years. The stock options
granted to Mr. Milton vest ratably over 4 years and have a term of 10
years.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning stock options and
restricted stock held by the named executive officers at September 30,
2008:
Option Awards Stock Awards
- ----------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
Name Number Number of Option Option Number of Shares Market Value of
of Securities Exercise Expiration or Units of Stock Shares or Units
Securites Underlying Price Date That Have Not of Stock That
Underlying Unexercised ($) Vested (#) Have Not
Unexercised Options Vested ($)
(#) (#)
Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------
Edward L. Baker
(1)
Chairman 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 11/30/2015
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)
President and
CEO 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 03/30/2013
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
John D. Milton,
Jr.
Executive Vice
President and
CFO -- 10,000 86.24 06/15/2008 -- --
John E. Anderson,
Former President
and CEO -- -- -- -- -- --
Ray M. Van
Landingham, Former
Vice President and
Chief Financial
Officer -- -- -- -- -- --
David H. 15,000 -- 22.23 11/20/2012 300 $23,700
deVilliers, Jr., 4,500 3,000 43.501 12/28/2014
Vice President
and President,
FRP Development
Corp.
Robert E. Sandlin, 0 1,780 22.23 11/20/2012 300 $23,700
President, 1,000 2,000 43.501 12/28/2014
Florida Rock &
Tank Lines, Inc.
Terry S. Phipps, 0 1,000 28.75 11/04/2013 300 $23,700
President, SunBelt 0 1,000 31.88 04/15/2014
Transport, Inc.
(1) Messrs. Edward Baker and John Baker received their option grants in
their former capacity as non-employee directors.
Fiscal 2008 Option Exercises
- ----------------------------
The following table provides information regarding stock option
exercises by the named executive officers and vesting of restricted stock
during fiscal 2008.
Option Exercises and Stock Vested
Option Awards Stock Awards
- -------------------------------------------------------------------------------
Name Number of Value Realized Number of Value Realized
Shares on Exercise Shares on Vesting
Acquired ($) Acquired ($)
on Exercise on Vesting
(#) (#)
(a) (b) (c) (d) (e)
- ---------------------------------------------------------------------------
Edward L. Baker -- -- -- --
John D. Baker II -- -- -- --
John D. Milton,
Jr. -- -- -- --
John E. Anderson,
President and CEO 21,000 $1,179,590 600 $50,318
Ray M. Van
Landingham, Vice
President and
Chief Financial
Officer 9,711 $517,197 150 $14,018
David H. deVilliers,
Jr., Vice President
and President, FRP
Development Corp. -- -- 150 $14,018
Robert E. Sandlin,
President, Florida
Rock & Tank Lines,
Inc. 220 $15,349 150 $14,018
Terry S. Phipps,
President, SunBelt
Transport, Inc. 2,000 $118,671 150 $14,018
Pension Benefits
- ----------------
The following table describes pension benefits to the named
executive officers as of September 30, 2008 under our Management Security
Plan ("MSP Plan"). Mr. deVilliers is the only named executive officer who
participates in the MSP Plan. The Company paid to Mr. Anderson $1,330,823,
representing the present value of his accrued pension benefit under the MSP
Plan upon Mr. Anderson's retirement in February 2008.
Name Plan Name Number of Years Present
Credited Service Value of
(#)(1) Accumulated
Benefit
($)(2)
- ------------------------------------------------------------------------------
David H. deVilliers, Jr. MSP Plan -- $588,924
(1) Mr. deVilliers has 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 Mr. deVilliers upon his retirement or death:
Triggering Event Annual Benefit
---------------- ---------------
Normal Retirement at age 65 $247,200 during year 1 and $123,600
or older in subsequent years until his death.
Death of Participant after Continuation of annual benefit until
his Retirement the 15th anniversary of his retirement
(or the earlier death of his designated
beneficiary).
Death of Participant prior to his $247,200 during year 1 and $123,600
Retirement in subsequent years until the later
of(i) the 15th anniversary of his
death or (ii) the date that he would
have turned 65 (or in either case,
the earlier death of his designated
beneficiary).
Nonqualifed Deferred Compensation
- ---------------------------------
None of the named executive officers receives any nonqualified
deferred compensation.
NON-EMPLOYEE DIRECTOR COMPENSATION
Compensation Arrangements for Fiscal 2008 and 2009
The following table describes the compensation arrangements with
our non-employee directors for the 2008 and 2009 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 2008 Director Compensation
The following table shows the compensation paid to each of our
non-employee directors during the 2008 fiscal year.
Director Compensation for Fiscal 2008
All Other
Fees Earned or Stock Awards Option Compensation
Name Paid in Cash ($) ($)(1) Awards ($) ($) Total($)
- ------------------------------------------------------------------------------
Edward L. Baker $9,500 $39,535 -0- -0- $49,035(2)
John D. Baker II $9,500 $39,535 -0- -0- $49,035(2)
John E. Anderson $13,000 $39,535 -0- -0- $52,535
Thompson S. Baker
II $21,000 $39,535 -0- -0- $60,535
Charles E.
Commander III $30,500 $39,535 -0- -0- $70,035
Luke E. Fichthorn
III $22,500 $39,535 -0- -0- $62,035(3)
Robert H. Paul
III $37,000 $39,535 -0- -0- $76,535
H. W. Shad III $34,000 $39,535 -0- -0- $73,535
Martin E. Stein,
Jr. $31,000 $39,535 -0- -0- $70,535
James H. Winston $27,500 $39,535 -0- -0- $67,035
(1) Each non-employee director was awarded 500 shares of the Company's
common stock on February 6, 2008. The value was determined using the
closing price of the Company's common stock on the Nasdaq Stock Market
on February 6, 2008 which was $79.07.
(2) Messrs. Edward Baker and John Baker received compensation as non-
employee directors until they became employees of the Company in
February 2008. The Company also provided Mr. Baker, the Chairman of
the Board, with a Company vehicle.
(3) Mr. Fichthorn also receives consulting fees of $30,000 per year for
financial consulting services provided to the Company.
The following table sets forth information regarding stock options
held by our non-employee directors as of September 30, 2008:
Number of
Securities
Underlying
Unexercised Options Exercise Price Option Expiration
Director Options ($) Date
- ----------------------------------------------------------------------------
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 30.440 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
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
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 17.510 07/31/2011
1,000 17.350 10/02/2011
1,000 17.930 12/04/2011
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 31.900 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
(1) Messrs. Edward L. Baker and John D. Baker II became employees of
the company in February 2008.
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 2008 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 2008 until the merger of Florida Rock Industries, Inc. with
Vulcan Materials Company on November 16, 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.
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 $8,021,000 in fiscal 2008. Approximately
4.7% of the Company's revenue was attributable to FRI during the 2008 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 during a portion of fiscal 2008. FRI
charged the Company $45,000 for such services during the fiscal year ended
September 30, 2008.
Consulting Arrangement
Mr. Fichthorn provided the Company with financial consulting and
other services during the 2008 fiscal year 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 7, 2008) 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 November 28, 2008.
Name and
Address of Amount and Nature
Beneficial of Beneficial Percentage of
Title of Class Owner Ownership Class
- -------------- ----- ----------- -----
Common Baker Holdings, L.P. 1,061,521 34.9%
Edward L. Baker 101,622(1) 4.5%
John D. Baker II 181,192(1) 6.0%
------------ -----
1801 Art Museum Drive 1,379,882 45.4%
Jacksonville, FL 32207
Common Royce & Associates, LLC 312,688(2) 10.3%
1414 Avenue of the Americas
New York, NY 10019
(1) Edward L. Baker and John D. Baker II have shared voting power
and dispositive power over the shares owned by Baker Holdings,
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 February 4, 2008, Royce & Associates, LLC reported
that, as of December 31, 2007, it had sole voting and dispositive
power with respect to 312,688 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 November 28, 2008.
Title Name of Amount and Nature of
of Class Beneficial Owner Beneficial Ownership(1) Percentage of Class
-------- ---------------- ----------------------- -------------------
Common John E. Anderson 21,800 *
Common Edward L. Baker 1,163,143(2)(3) 39.0%
Common John D. Baker II 1,242,713(2)(4)(7) 40.4%
Common Thompson S. Baker II 41,068(5) 1.4%
Common Charles E. Commander III 10,500 *
Common David H. deVilliers Jr. 23,600 *
Common Luke E. Fichthorn III 46,543(6) 1.5%
Common John D. Klopfenstein 3,179 *
Common John D. Milton, Jr. 5,500 *
Common Robert H. Paul III 22,600 *
Common Terry S. Phipps 1,450 *
Common Robert E. Sandlin 6,803 *
Common H.W. Shad III 8,000 *
Common Martin E. Stein, Jr. 62,800(7) 2.1%
Common James H. Winston 25,500 *
Common All Directors and Officers
As a group (15 people) 1,659,225 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 November 28, 2008.
Shares Under
Profit Sharing Plan Shares Under Option
------------------- -------------------
John E. Anderson -0- -0-
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. -0- 21,000
Luke E. Fichthorn III -0- 24,000
John D. Klopfenstein 1,879 1,000
Robert H. Paul III -0- 20,000
Terry S. Phipps -0- 1,000
Robert E. Sandlin 2,423 3,780
H.W. Shad III -0- 6,000
Martin E. Stein, Jr. -0- 19,000
James H. Winston -0- 19,000
(2) Edward L. Baker and John D. Baker II have shared voting and
investment power with respect to the 1,061,521 shares owned by
Baker Holdings, 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 51,092 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
51,092 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 2008, the Audit Committee
held five 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 auditor
the overall scope and plans for the audit. 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, 2008, 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.
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 2007 and 2008 and for other
services performed during such periods.
2007 2008
---- ----
Audit Fees (1) $ 219,931 $ 241,431
Audit Related Fees (2) 15,500 19,090
Tax Fees -0- -0-
All Other Fees -0- -0-
---------- ----------
Total $ 235,431 $ 260,521
(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.
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 2008.
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 2010 must be delivered in
writing to the principal executive offices of the Company no later
than August 29, 2009. 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, 2009. 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, 2009.
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. Mr. deVilliers was late on reporting one sale of
a total of 1,457 shares due to a miscommunication with his investment
adviser.
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 501 Riverside
Avenue, Suite 500, Jacksonville, Florida 32202. This report also is available
through our website, www.patriottrans.com.
BY ORDER OF THE BOARD OF DIRECTORS
December 23, 2008 John D. Milton, Jr.
Secretary
PLEASE RETURN THE ENCLOSED FORM OF PROXY, DATED AND SIGNED, IN THE
ENCLOSED ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE.
PATRIOT TRANSPORTATION HOLDING, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS CALLED FOR FEBRUARY 4, 2009.
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 E. 21st Street, Jacksonville, Florida on February 4, 2009,
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 two 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
Edward L. Baker and Charles E. Commander 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 2009.
/ / 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 23, 2008, 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 23, 2008