FROZEN FOOD EXPRESS INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 2001
TO THE SHAREHOLDERS OF
FROZEN FOOD EXPRESS INDUSTRIES, INC.:
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of Frozen Food Express Industries, Inc. (the "Company"), a
Texas corporation, will be held on Thursday, April 26, 2001, at 3:30 p.m.,
Dallas, Texas time, at Bank of America Plaza, 901 Main Street, 70th Floor,
Dallas, Texas 75201 for the following purposes:
1. To elect two Class I directors for a one-year term; three
Class II directors for a two-year term; and three Class III
directors for a three-year term, and until their respective
successors are elected and qualified; and
2. Transacting such other business as may properly be brought
before the Annual Meeting or any adjournment thereof.
You are encouraged to attend the Annual Meeting in person. Whether or
not you plan to attend the Annual Meeting, please complete, date, sign and
return the accompanying proxy at your earliest convenience. A reply envelope is
provided for this purpose, which needs no postage if mailed in the United
States. Your immediate attention is requested in order to save your Company
additional solicitation expense.
Information regarding the matters to be acted upon at the Annual
Meeting is contained in the Proxy Statement attached to this Notice.
Only shareholders of record at the close of business on March 15, 2001
are entitled to notice of and to vote at such meeting or any adjournment
thereof.
By Order of the Board of Directors
/S/ LEONARD W. BARTHOLOMEW
--------------------------
Dallas, Texas LEONARD W. BARTHOLOMEW
March 30, 2001 Secretary
FROZEN FOOD EXPRESS INDUSTRIES, INC.
1145 EMPIRE CENTRAL PLACE
P. O. BOX 655888
DALLAS, TEXAS 75265-5888
TELEPHONE: (214) 630-8090
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 26, 2001
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the management of Frozen Food
Express Industries, Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held at Bank of America Plaza, 901 Main Street, 70th Floor,
Dallas, Texas, on the 26th day of April, 2001 (the "Annual Meeting"), and at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. This Proxy Statement and accompanying proxy are
being mailed or delivered to shareholders on or about March 30, 2001.
Solicitations of proxies may be made by personal interview, mail, telephone or
telegram by directors, officers and regular employees of the Company. The
Company may also request banking institutions, brokerage firms, custodians,
trustees, nominees and fiduciaries to forward solicitation material to the
beneficial owners of the Company's $1.50 par value Common Stock (the "Common
Stock") held of record by such persons and may reimburse such forwarding
expenses. All costs of preparing, printing, assembling and mailing the form of
proxy and the material used in the solicitation thereof and all clerical and
other expenses of solicitation will be borne by the Company.
ANNUAL REPORT
The Company's Annual Report to Shareholders, covering the fiscal year
ended December 31, 2000, including audited financial statements, is also being
mailed to the shareholders entitled to notice of and vote at the Annual Meeting
in the envelope containing this Proxy Statement. The Annual Report does not form
any part of the material for solicitation of proxies.
SIGNATURES OF PROXIES IN CERTAIN CASES
If a shareholder is a corporation, the accompanying proxy should be
signed in its full corporate name by the President or another authorized
officer, who should indicate his title. If a shareholder is a partnership, the
proxy should be signed in the partnership name by an authorized person. If stock
is registered in the name of two or more trustees or other persons, the proxy
should be signed by each of them. If stock is registered in the name of a
decedent, the proxy should be signed by an executor or an administrator. The
executor or administrator should attach to the proxy appropriate instruments
showing his qualification and authority. Proxies signed by a person as agent,
attorney, administrator, executor, guardian or trustee should indicate such
person's full title following his signature.
REVOCATION OF PROXY
All shares represented by a valid proxy will be voted. A proxy may be
revoked at any time before it is voted by the giving of written notice to that
effect to the Secretary of the Company, by executing and delivering a
later-dated proxy or by attending the Annual Meeting and voting in person.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. Abstentions and broker non-votes will
be counted in determining the presence of a quorum. A "broker non-vote" occurs
when a nominee holding shares for a beneficial owner has voted on certain
matters at the Annual Meeting pursuant to discretionary authority or
instructions from the beneficial owner but may not have received instructions or
exercised discretionary voting power with respect to other matters.
Each shareholder will be entitled to one vote, in person or by proxy,
for each share of such stock owned of record at the close of business on March
15, 2001. A shareholder may, by checking the appropriate box on the proxy: (i)
vote for all director nominees as a group; (ii) withhold authority to vote for
all director nominees as a group; or (iii) vote for all director nominees as a
group except those nominees identified by the shareholder in the appropriate
area. Cumulative voting for directors is not permitted.
1
OUTSTANDING CAPITAL STOCK; PRINCIPAL SHAREHOLDERS
At the close of business on the 15th day of March, 2001, the record
date for determination of shareholders entitled to notice of, and to vote at,
the Annual Meeting, there were outstanding and entitled to be voted 16,468,628
shares of Common Stock. The following table sets forth certain information, as
of March 15, 2001, with respect to each person known to the management of the
Company to be a beneficial owner of more than five percent of the outstanding
Common Stock.
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (1) CLASS
- ------------------------------------------------------------------------------
Frozen Food Express Industries, Inc 4,516,483 27.42%
401(k) Savings Plan
The Charles Schwab Trust Company
425 Market Street, 7th Floor
San Francisco, CA 94105
Royce & Associates, Inc. 1,482,292 (2) 9.00%
and Royce Management Company
1414 Avenue of the Americas
New York, New York 10019
Sarah M. Daniel (3) 1,449,560 8.80%
612 Linda
El Paso, Texas 79922
Dimensional Fund Advisors, Inc. 1,331,586 (4) 8.09%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Lucile B. Fielder (3) 1,326,974 8.06%
104 South Commerce St.
Lockhart, TX 78644
Stoney M. Stubbs, Jr.(5) 1,252,787 (6) 7.60%
158 Jellico Circle
Southlake, Texas 76092
- ---------------------------------------
(1) Except as otherwise noted, each beneficial owner has sole voting and
investment power with respect to all shares owned by him, and all shares
are directly held by the person named.
(2) Information concerning the number of shares beneficially owned by Royce &
Associates, Inc. ("Royce") and Royce Management Company ("RMC") is as of
December 31, 2000, and was obtained from a Schedule 13G, dated February 5,
2001, jointly filed by Royce, RMC and Charles M. Royce with the Securities
and Exchange Commission (the "SEC"). The Schedule 13G confirms that Royce
and RMC are both investment advisers and members of a "group". Royce has
sole voting and dispositive power over 1,464,222 shares and RMC has sole
voting and dispositive power over 18,070 shares. Mr. Royce may be deemed to
be a controlling person of Royce and RMC and as such may be deemed to
beneficially own the shares beneficially owned by Royce and RMC. The
Schedule 13G indicates that Mr. Royce does not own any shares outside of
Royce and RMC and disclaims beneficial ownership of the shares held by
Royce and RMC.
(3) Ms. Daniel has sole voting and dispositive power over 66,597 shares, of
which 5,280 shares are held as custodian for her daughter, and joint voting
and dispositive power with her husband over 59,631 shares, and shared
voting and dispositive power with Ms. Fielder over 1,323,332 shares owned
by Weller Investment, Ltd. Ms. Fielder has sole voting and dispositive
power over 3,642 shares, of which 730 shares are held as custodian for her
daughter, and shared voting and dispositive power with Ms. Daniel over
1,323,332 shares owned by Weller Investment Ltd.
(4) Information concerning the number of shares owned by Dimensional Fund
Advisors, Inc. is as of December 31, 2000 and was obtained from a Schedule
13G dated February 2, 2001.
(5) Mr. Stubbs holds, and has held for the past twenty-one years, the offices
of Chairman of the Board, President and Chief Executive Officer of the
Company and FFE. Mr. Stubbs is the nephew of Edgar O. Weller, a director of
the Company.
(6) Includes 5,027 shares which Mr. Stubbs has the right to acquire pursuant to
options exercisable within 60 days, 198,593 shares allocated to his account
in the Frozen Food Express Industries, Inc. 401(k) Savings Plan, 17,341
shares allocated to his account in the FFE Transportation Services, Inc.
401(k) Wrap Plan, and 769,387 shares held in family partnerships controlled
by Mr. Stubbs.
ACTION TO BE TAKEN UNDER THE PROXY
Properly executed and returned proxies will be voted, unless otherwise
specified thereon, (i) for the election of the nominees named in the following
table as directors of the Company, and (ii) in the transaction of such other
business as may properly come before the Annual Meeting or any adjournment
thereof in accordance with the judgment of the proxies. The management of the
Company does not know of any such other matter or business. If any nominee is
unable or be unwilling to accept nomination, the persons acting under the proxy
will vote for the election, in his stead, of such other person as the management
of the Company may recommend. The management of the Company has no reason to
believe that any of the nominees will be unable or unwilling to serve if elected
to office. To be elected, each director must receive the affirmative vote of the
holders of a plurality of the issued and outstanding shares of Common Stock
represented in person or by proxy at the Annual Meeting. Abstentions and broker
non-votes will have no effect in the election of directors.
2
NOMINEES FOR DIRECTORS
In June 2000 the Board of Directors amended the Company's Bylaws to
provide for a staggered Board of nine Directors divided into three classes that
are equal or nearly equal in number to each other. The term of office of the
first class, Class I, expires at the annual meeting of the stockholders held in
2002 and until their successors are elected and qualified. The term of office of
the second class, Class II, expires at the annual meeting of stockholders' held
in 2003 and until their successors are elected and qualified. The term of office
of the third class, Class III, expires at the annual meeting of stockholders
held in 2004 and until their successors are elected and qualified. Thereafter,
all directors' terms will expire at each third succeeding annual meeting of
stockholders after the corresponding election.
The amended Bylaws provide that the Board of Directors shall consist of
nine directors. Presently, there are eight Directors. Management is attempting
to identify qualified candidates to stand for election at the 2002 annual
meeting. Accordingly, management has nominated eight persons to be elected
Directors at this annual meeting.
Named below are the Board of Directors' nominees for election as
directors and information with respect to nominees and all directors and
executive officers of the Company, as a group, including the beneficial
ownership of Common Stock as of March 15, 2001, by such persons and group. Each
nominee has served continuously as a director since the date of his first
election or appointment to the Board:
AMOUNT
AND NATURE
PRINCIPAL OCCUPATION FIRST TERM OF PERCENT
DURING PAST FIVE YEARS BECAME A EXPIRATION BENEFICIAL OF
NAME AGE AND DIRECTORSHIPS DIRECTOR DATE CLASS OWNERSHIP(1) CLASS
- ----------------------------------------------------------------------------------------------------------------------------
Stoney M. (Mit) Stubbs, Jr. 64 Chairman of the Board, President and 1977 2004 III 1,252,787(2) 7.60%
Chief Executive Officer of the
Company
Edgar O. Weller 83 Vice Chairman of the Board of the 1969 2002 I 546,685 3.32%
Company
Leroy Hallman 85 Attorney, Retired 1975 2002 I 26,650(3) *
Brian R. Blackmarr 59 CEO, Fusion Laboratories, Inc. 1990 2003 II 31,250(4) *
since January 2000, President,
eBusLink, Inc. since August
1999, and previously President
B.R. Blackmarr & Associates Inc.
T. Michael O'Connor 46 Chief Executive Officer, Ecosource, 1992 2004 III 31,250(5) *
Inc., Managing Partner T. J.
O'Connor Cattle Co. and Member
of Texas A&M University Board of
Regents
W. Mike Baggett 54 Chairman, President and CEO 1999 2003 II 5,775(6) *
Winstead Sechrest & Minick, P.C.
Charles G. Robertson(7) 59 Executive Vice President of the 1982 2004 III 412,956(8) 2.51%
Company
F. Dixon McElwee, Jr.(7) 54 Senior Vice President of the 1999 2003 II 7,534(9) *
Company and FFE since September
1999 and, prior thereto,
Executive Vice President and
Chief Financial Officer for
Cameron-Ashley Building Products
All directors and executive officers, as a group (8 people) 2,314,887(10) 14.00%
- -----------------------------------------------------------
* less than 1%
(1) Except as otherwise noted, all shares are held directly, and the owner has
sole voting and investment power.
(2) Includes 5,027 shares issuable pursuant to options exercisable by Mr.
Stubbs within 60 days, 198,593 shares allocated to his account in the
Frozen Food Express Industries, Inc. 401(k) Savings Plan, 17,341 shares
allocated to his account in the FFE Transportation Services, Inc. 401(k)
Wrap Plan, and 769,387 shares held in family partnerships controlled by Mr.
Stubbs.
(3) Includes 5,625 shares issuable pursuant to options exercisable by Mr.
Hallman within 60 days and 7,475 shares held by a trust of which Mr.
Hallman is the Trustee.
(4) Includes 11,250 shares issuable pursuant to options exercisable by Mr.
Blackmarr within 60 days.
(5) Represents 31,250 shares issuable pursuant to options exercisable by Mr.
O'Connor within 60 days.
(6) Includes 5,625 shares issuable pursuant to options exercisable by Mr.
Baggett within 60 days.
(7) Mr. Robertson is also Executive Vice President and a director of FFE. Mr.
McElwee is also Senior Vice President and a director of FFE.
(8) Includes 2,545 shares issuable pursuant to options exercisable by Mr.
Robertson within 60 days, 128,595 shares allocated to his account in the
Frozen Food Express Industries, Inc. 401(k) Savings Plan, 11,965 shares
allocated to his account in the FFE Transportation Services, Inc. 401(k)
Wrap Plan, and 192,236 shares held by a family partnership controlled
by Mr. Robertson.
(9) Represents 1,479 shares allocated to Mr. McElwee's account in the Frozen
Food Express Industries, Inc. 401(k) Savings Plan and 6,055 shares
allocated to his account in the FFE Transportation Services, Inc. 401(k)
Wrap Plan.
(10) Includes 63,197 shares issuable pursuant to options exercisable within 60
days, 328,667 shares allocated to the accounts of executive officers
pursuant to the Frozen Food Express Industries, Inc. 401(k) Savings Plan,
35,361 shares allocated to the accounts of executive officers pursuant to
the FFE Transportation Services, Inc, 401(k) Wrap Plan and 961,623 shares
held by family partnerships controlled by directors and executive officers,
and 7,475 shares held by a trust of which a Director is Trustee.
3
The Board of Directors held seven meetings during 2000. Each incumbent
director attended during 2000 at least 75%, except Mr. O'Connor who attended
67%, of the aggregate of (i) the total number of meetings of the Board of
Directors held during the period that he was a director and (ii) the total
number of meetings held by all committees on which he served. The Board of
Directors has standing compensation, audit and information services committees.
The Compensation Committee consists of Messrs. Blackmarr, Chairman, and
Baggett. It met once during 2000 and is charged with recommending compensation
arrangements for the directors and executive officers of the Company and
recommending compensation programs for FFE.
The Audit Committee consists of Messrs. Hallman, Chairman, Weller and
O'Connor. During 2000, the Committee held two meeting at which it reviewed with
representatives of Arthur Andersen LLP the results of its 1999 annual audit,
plans for the 2000 annual audit and other services provided by the Independent
Public Accountants.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $1,000 for each
meeting attended, $500 for each telephonic meeting attended and $500 for each
committee meeting attended that is not on the same day as a Board meeting.
The 1995 Non-Employee Director Stock Option Plan (the "Director Plan")
is intended to advance the interests of the Company and its shareholders by
attracting and retaining experienced and able independent Directors. Upon a
non-employee director's initial appointment or election to the Board, he or she
is granted an option to purchase 9,375 shares of Common Stock. Upon reelection
such Directors are granted an option to purchase 1,875 shares of Common Stock.
Each such director was granted an option to purchase 1,875 shares with an
exercise price of $1.63 per share on April 27, 2000. Exercise prices are fifty
percent (50%) of the fair market value of the Common Stock at the close of
business on the day prior to the date of grant. The exercise price may be paid
in cash, check or shares of Common Stock. No option shall be granted pursuant to
the Director Plan after March 3, 2005. Grants are subject to adjustments to
reflect certain changes in capitalization.
If a non-employee director has served for one or more years prior to
the grant of an option, the option is immediately exercisable for one-seventh of
the number of shares subject to the option for each full year such non-employee
director has served. On each anniversary thereafter, one-seventh of the number
of shares subject to the option become exercisable. Options expire after the
tenth anniversary of grant. Upon death options become fully exercisable and may
be exercised by the beneficiary under the optionee's will or the executor of
such optionee's estate at any time prior to the second anniversary of his or her
death. If an optionee ceases to be a director for any other reason the vested
options may be exercised at any time prior to the second anniversary of the date
he or she ceases to be a director. In no event, however, shall the period during
which options may be exercised extend beyond the term of the options. No shares
from the options may be sold until the expiration of six months after the date
of grant.
4
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
The following graph compares the cumulative total shareholder return on
the Company's Common Stock for the last five years to the S&P 500 Index and the
Media General Industry Group Index #774 - Trucking Companies, consisting of the
Company and 45 other trucking companies (assuming the investment of $100 in the
Company's Common Stock, the S&P 500 Index and the Media General Index on
December 31, 1995, and reinvestment of all dividends).
[FIVE-YEAR SHAREHOLDER RETURN COMPARISON GRAPH HERE]
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Frozen Food Express Industries, Inc. 1.00 1.00 .88 .42 .22 .18
MG Industry Group Index 1.00 1.33 1.25 1.20 1.26 1.36
S&P 500 Index 1.00 1.31 1.66 1.98 1.78 1.73
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE:
Set forth below is information with respect to the compensation paid by
the Company for services rendered during 2000, 1999 and 1998, to each executive
officer (collectively, the "Executive Officers"):
LONG-TERM COMPENSATION
AWARDS
-------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
----------------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS TOTAL(1) AWARDS $(2) OPTIONS/SARS #(3) COMPENSATION(4)
- ------------------------------------------------------------------------------------------------------------------------
Stoney M. Stubbs, Jr. 2000 $317,613 -- $317,613 $ 22,636 222,299 $20,265
Chairman of the Board 1999 $317,613 -- $317,613 $ 18,713 3,500 $20,819
President and Chief 1998 $302,866 $176,746 $479,612 $ 75,029 38,000 $27,883
Executive Officer of the
Company and FFE
Charles G. Robertson 2000 $247,595 -- $247,595 $ 21,854 154,489 $11,310
Executive Vice President 1999 $247,595 -- $247,595 19,225 3,500 $12,018
of the Company and FFE 1998 $233.998 $122,900 $356,898 $ 59,446 28,000 $19,143
F. Dixon McElwee, Jr. 2000 $209,043 -- $209,043 $ 11,921 24,225 --
Senior Vice President 1999 $184,263 -- $184,263 $ 188 3,500 $ 3,753
of the Company and FFE 1998 $ 47,316 $ 70,463 $117,779 $ 30,484 25,000 --
- --------------------------------------
(1) Personal benefits provided to each of the named individuals under various
Company programs do not exceed the disclosure thresholds established under
SEC rules and are not included in this total.
(2) Includes restricted phantom stock units awarded pursuant to the FFE
Transportation Services, Inc. 2000 Executive Bonus and Phantom Stock Plan
(the "Executive Plan") or in accordance with the Company's Supplemental
Executive Retirement Plan (the "SERP") or common stock issued to a trust
for benefit of participants in the FFE Transportation Services, Inc. 401(k)
Wrap Plan (the "Wrap Plan"). Phantom stock units generally will be adjusted
to prevent dilution in the event of any cash and non-cash dividends,
recapitalizations and similar transactions affecting the Common Stock. An
officer may elect to cash out any number of the phantom stock units between
December 1 and December 15 of any year. In that event an amount equal to
product of the greater of (i) the Fair Market Value of a share of Common
Stock as of the last business day of the calendar year in which such
election is made and (ii) the average of the Fair Market Values of a share
of Common Stock as of the last business day of each calendar month of the
calendar year in which such election is made multiplied by the number of
units that the officer elected to cash out shall be paid to the officer. In
the event of certain mergers, the sale of all or substantially all of the
Company's assets and certain similar transactions (a "Reorganization")
within six months after the date an officer has been paid for units and as
a result of such Reorganization the holders of Common Stock receive cash
for each share so held in an amount in excess of the amount paid to such
officer for such units, then such excess shall be paid to the officer.
5
The following table sets forth the total number of phantom stock units
awarded under the Executive Plan, the SERP and the Wrap Plan for 2000, 1999 and
1998, to each executive officer of the Company:
2000 1999 1998
--------------------------------
Mr. Stubbs 11,497 4,829 9,526
Mr. Robertson 11,100 4,961 7,548
Mr. McElwee 6,055 48 3,871
During 2000, a "grantor" trust was established in connection with the Wrap
Plan to hold Company assets to satisfy obligations under the Plan. the
Company has transferred shares of treasury stock to the trustee for the
benefit of Messrs. Stubbs, Robertson and McElwee of 3,110, 3,623 and 2,662,
respectively. As of December 31, 2000, the total number of phantom stock
units allocated to the accounts of Messrs. Stubbs, Robertson, and McElwee
was 100,541; 66,917 and 3,393, respectively. The total value of such
accounts, based upon the market price of a share of Common Stock on
December 31, 2000 was $197,945; $131,746 and $6,680, respectively, for
Messrs. Stubbs, Robertson, and McElwee.
(3) Options to acquire shares of the Company's Common Stock.
(4) Company contributions to the Frozen Food Express Industries, Inc. 401(k)
Savings Plan (the "Savings Plan") and the value of benefits, as determined
under a methodology required by the United States Securities and Exchange
Commission ("SEC"), ascribed to life insurance policies whose premiums are
paid by the Company for the benefit of the persons in the amounts indicated
below:
SPLIT DOLLAR
NAME YEAR SAVINGS PLAN LIFE INSURANCE
-------------------------- --------- ------------- ---------------
Mr. Stubbs 2000 -- $20,265
1999 -- $20,819
1998 $6,500 $21,383
Mr. Robertson 2000 -- $11,310
1999 -- $12,018
1998 $6,500 $12,643
Mr. McElwee 2000 -- --
1999 $3,753 --
1998 -- --
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Following is information concerning the grant of stock options to the
Executive Officers in 2000 under the Company's 1992 Incentive and Nonstatutory
Stock Option Plan:
INDIVIDUAL GRANTS
-------------------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT
SECURITIES OPTIONS/SARS ASSUMED ANNUAL RATES
UNDERLYING GRANTED TO EXERCISE OF STOCK PRICE
OPTIONS/SARS EMPLOYEES OR APPRECIATION
GRANTED IN FISCAL BASE PRICE EXPIRATION FOR OPTION TERM (1)
NAME (#)(2) YEAR ($/SH) DATE 5% 10%
- --------------------------------- -------------- -------------- ----------- ------------- ------------- -------------
Mr. Stubbs 222,299 31.6% $2.81 06/15/2010 $ 392,845 $ 995,547
Mr. Robertson 154,489 22.0% $2.81 06/15/2010 $ 273,012 $ 691,866
Mr. McElwee 24,225 3.5% $2.81 06/15/2010 $ 42,810 $ 108,490
All Holders of Common Stock (3) N/A N/A $2.81 N/A $ 29,103,916 $73,755,038
- ------------------------------
(1) Represents assumed rates of appreciation only. Actual gains depend on the
future performance of the Common Stock and overall stock market conditions.
There can be no assurance that the amounts reflected in this table will be
achieved.
(2) All options granted were granted on June 15, 2000, under the 1992 Incentive
and Nonstatutory Stock Option Plan, are exercisable one year from the date
of grant, are exercisable for ten years from the date of grant, and were
granted with an exercise price equal to the market price of the Common
Stock on the date of grant.
(3) Assumes a total of 16,469,000 shares of Common Stock outstanding with a per
share value of $2.81 (the closing sales price of the Common Stock on June
14, 2000) held from June 15, 2000, until June 15, 2010.
6
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION/SAR
VALUES
The following table provides information, with respect to each Executive
Officer, concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year ending December 31,
2000:
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL YEAREND AT FISCAL YEAREND
SHARES ACQUIRED VALUE (#) EXERCISABLE/ ($) EXERCISABLE/
NAME ON EXERCISE (#) REALIZED (1) UNEXERCISABLE(2) UNEXERCISABLE (3)
- ------------------ -------------------- ----------------------- ---------------------- ----------------------
Mr. Stubbs -- $-- 266,555 / 222,299 $-- /$--
Mr. Robertson -- $-- 184,297 / 154,489 $-- /$--
Mr. McElwee -- $-- 28,500 / 24,225 $-- /$--
(1) Calculated on the basis of the difference between the closing price for the
Company's Common Stock on the date of exercise and the option exercise
price multiplied by the number of shares of Common Stock underlying the
option exercised.
(2) On January 18, 2001, Messrs. Stubbs, Robertson, and McElwee entered into
cancellation of option agreements with the Company to cancel 222,299,
154,489, and 24,225 options, respectively.
(3) The closing price for the Company's Common Stock as reported by the Nasdaq
Stock Market on December 31, 2000, was $1.9688. Value is calculated on the
basis of the difference between $1.9688 and the option exercise price of an
"in-the-money" option multiplied by the number of shares of Common Stock
underlying the option.
CHANGE IN CONTROL AGREEMENTS
The Company has entered into Change in Control Agreements ("Agreements")
with the Executive Officers, pursuant to which each Executive Officer is
entitled to severance benefits in the event of a "change in control" of the
Company during the term of his employment.
Under the terms of the Agreements, if an Executive Officer (i) is
terminated by the Company without cause during the six month period following a
change in control ("Transition Period"), (ii) resigns for "good reason" (as
defined in the Agreements) during the Transition Period, or (iii) resigns for
any reason during the ten day period following a change in control or during the
thirty day period following the Transition Period, then the Company is required
to provide the Executive Officer with certain payments and benefits. Such
payments and benefits include (a) payment of accrued and unpaid base salary, car
allowance, plus accrued and unpaid bonus, if any, for the prior fiscal year plus
a pro-rated bonus (as defined in the Agreements) for the year during which such
Executive Officer's employment is terminated; (b) payment of a lump sum amount
equal to the sum of 2.9 times the Executive Officer's annual pay (as defined in
the Agreement); (c) payment of the unvested account balance under the Company's
401(k) Savings Plan and 401(k) Wrap Plan; (d) continued participation, at the
same premium rate charged when actively employed, in the Company's employee
welfare plans, until the expiration of two years following the change in control
or cash equivalent; (e) vesting of all stock options on change of control; and
(f) "gross-up" payments, if applicable, in the amount necessary to satisfy any
excise tax imposed on the Executive Officer by the Internal Revenue Code.
REPORT OF THE AUDIT COMMITTEE
We have reviewed and discussed with management the Company's audited
financial statements as of and for the year ended December 31, 2000.
We have discussed with Arthur Andersen LLP, the Company's independent
public accountants, the matters required to be discussed by Statement of
Auditing Standards No. 61, COMMUNICATION WITH AUDIT COMMITTEES, as amended by
the Auditing Standards Board of the American Institute of Certified Public
Accountants.
We have received and reviewed the written disclosures and the letter from
the independent public accountants required by independent Standard No. 1,
INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES, as amended, by the Independent
Standards Board, and have discussed with the independent public accountants
their independence.
Based on the reviews and discussions referred to above, we recommend to the
Board of Directors that the financial statements referred to above be included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2000.
For the year 2000, the Company paid Arthur Andersen LLP $120,000 for audit
services and $13,600 for non-audit and consulting services.
Leroy Hallman, Chairman
Edgar O. Weller
T. Michael O'Connor
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report has been prepared by Messrs. Brian R. Blackmarr, Chairman, and
W. Mike Baggett, serving as the Company's Compensation Committee during 2000. We
are responsible for overseeing the development and administration of all
compensation policies and programs for executive officers of the Company.
We seek to design compensation programs that align the interests of such
officers with the Company's shareholders. We have implemented compensation
programs we believe will enhance the profitability of the Company, and reward
such officers for efforts to achieve enhanced profitability. We believe the
compensation programs allow the Company to attract, motivate, and retain the
services of its executive officers.
The executive compensation package is designed to retain senior management
by providing total compensation comparable to the Company's competitors. To
align the interests of the Company's executives with the interests of
shareholders, a substantial portion of each executive's compensation is provided
through annual and long-term incentive plans. Such plans place a substantial
portion of the executives' compensation packages at risk and serve as an
integral component of the Company's executive compensation philosophy. We
believe the executives' attentions are better balanced between achieving
short-term business goals and increasing the long-term value of the Company with
a "pay-at-risk" policy. The programs reward executive officers for successful
leadership when certain levels of Company performance are achieved. The
Company's executive officer compensation program also provides base salary,
supplemental retirement benefits and other benefits, including medical and
retirement plans generally available to all Company employees.
We periodically retain the services of an outside consulting firm to review
the Company's executive compensation practices. Such a review was completed in
April 1999, and recommendations for base salary, short-term bonus, and long-term
incentive were developed. These reviews also cover retirement benefits for the
Company's executive officers as measured against the competitive pay practices
of a peer group of publicly-traded trucking companies. The major components of
executive compensation are detailed below.
BASE SALARY
As part of the review performed by outside consultants, base salary levels
of the executives are reviewed to ensure comparability with other
publicly-traded trucking companies. Base salary levels of executive officers
have been set below the market median of the amounts paid to such peer group
executives in the past. We believe that many of the 45 companies included in the
market index for the five-year shareholder return comparison differ from the
Company in size and nature of services provided. Therefore, we directed our
outside consultants to compare compensation practices with a peer group of ten
publicly traded companies with operations most similar to the Company's.
ANNUAL INCENTIVE/BONUS COMPENSATION
The Company's shareholders reapproved the incentive compensation program in
1999. The program is designed to reward key employees for the Company's
performance based on the achievement of performance goals established prior to
the particular year. Components of annual incentive compensation include an
Incentive Bonus Plan (the "Incentive Plan") covering all full-time FFE employees
(including executive officers) and the FFE Transportation Services, Inc. 1999
Executive Bonus and Phantom Stock Plan (the "Executive Plan"), which covers only
the key executive leadership. Both plans focus on operational efficiencies. An
executive officer's total cash compensation rises above the peer group market
median as the Company's performance rises above the median performance of the
Company's peer group. For 1999 and 2000, reflecting Company performance, no cash
bonuses were awarded. Such bonuses averaged 59% of base salary in 1998.
LONG-TERM INCENTIVE COMPENSATION
The Company's long-term incentive compensation is comprised of stock
options and phantom equity programs. These serve to align the interests of the
executive officers and other key employees' with shareholder interests by
linking executive pay with shareholder return. These programs also act as a
counter-balance to the short-term goals and responsibilities of the Incentive
Plan and Executive Plan.
The 1992 Incentive and Nonstatutory Stock Option Plan, (the "1992 Plan") as
approved by shareholders, provides the exercise price for incentive stock
options may not be less than the fair market value of the Common Stock on the
date of grant. We or the Board determines the exercise price of nonstatutory
stock options under the 1992 Plan. The exercise price may not be less than 50%
of the fair market value of a share of the Common Stock on the date of grant.
Options granted under the 1992 Plan may not be outstanding for more than ten
years. In 2000, Mr. Stubbs was granted an option to purchase 222,299 shares of
Common Stock under the 1992 Plan.
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SUPPLEMENTAL EXECUTIVE RETIREMENT AND 401(K) WRAP PLANS
To provide supplemental retirement benefits to members of the key
management, the Company maintains the SERP and Wrap Plans, respectively. The
SERP provides benefits limited by the Internal Revenue Code of 1986 by awarding
phantom stock units. The Wrap Plan supplements the Company's 401(k) Plan by
allowing benefits supplemental to those limited by the Code.
Both the SERP and the Wrap Plan are unfunded deferred compensation
arrangements not subject to the annual reporting and disclosure requirements of
the Employee Retirement Income Security Act of 1974. Awards under both the SERP
and the Wrap Plan for fiscal year 2000 are disclosed in the Summary Compensation
Table.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
During 2000, Mr. Stubbs served as the Chairman of the Board, President, and
Chief Executive Officer. For 2000 and 1999, Mr. Stubbs' base salary was $317,613
as compared to $302,866 for 1998, respectively. For 2000, Mr. Stubbs did not
receive payments under the Company's Incentive Plan or Executive Plan. We
evaluate Mr. Stubbs' performance by the same criteria established for all
Company executives. We made an assessment of Mr. Stubbs' contributions to
enhancing the Company's performance, his individual performance, and the
compensation paid to chief executive officers of the Company's peer group to
determine Mr. Stubbs' total compensation.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Company has entered into Change in Control Agreements ("Agreements")
with certain executive officers whereby such individuals will be entitled to
receive payments if they are terminated without cause or resign with good reason
within specified periods following the occurrence of certain events deemed to
involve a change in control of the Company. See "Change in Control Agreements".
under the Omnibus Budget Reconciliation Act of 1993, the federal income tax
deduction for certain types of compensation paid to the chief executive officer
and the four other most highly compensated executive officers of publicly-held
companies is limited to $1 million per officer per fiscal year unless such
compensation meets certain requirements. We are aware of this limitation and
believe that no compensation paid by the Company will exceed the $1 million
limitation, except possibly a portion of the sums payable pursuant to the
Agreements, if paid.
Brian R. Blackmarr, Chairman
W. Mike Baggett
Members of the Compensation Committee
TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
A subsidiary of the Company leases certain tractors from Mr. Stubbs, Mr.
Robertson, and a family partnership controlled by Mr. Stubbs. Lease terms are
for three years and lease payments were determined by reference to amounts the
subsidiary pays to unaffiliated lessors for similar equipment leased under
similar terms. The subsidiary also rents certain trailers from these officers.
Trailer leases are cancelable without notice by either party on a month-to-month
basis, and rental payments were determined by reference to amounts the
subsidiary pays to unaffiliated lessors for similar trailers rented under
similar terms.. the Company and the related-party lessors have agreed, should
the month to month leases be terminated within twelve months following a change
in control of the Company, then the Company is required to pay to the lessors a
lump sum payment in cash equal to 24 times the most recent monthly rental.
Rentals paid during 2000 by the subsidiary pursuant to the lease agreements
were as follows: Mr. Stubbs and the family partnership - $1,392,000 and Mr.
Robertson - $754,000. The subsidiary has an option to purchase the tractors at
the end of the lease term for fair market value. During 2000, the Company
purchased (for market value) tractors valued at $989,000 from Mr. Stubbs and the
family partnership and $473,000 from Mr. Robertson. The aggregate future minimum
lease payments to Mr. Stubbs and the family partnership and Mr. Robertson under
the tractor leases are approximately $1,094,000 and $578,000, respectively, in
2001, $712,000 and $411,000, respectively, in 2002, and $307,000 and $147,000,
respectively, in 2003.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Blackmarr, and Baggett and
is charged with recommending compensation arrangements for the directors and
executive officers of the Company and recommending compensation programs for the
company. No payments other than director fees were made to Compensation
Committee members during 2000, and neither had any relationships requiring
disclosure according to applicable rules and regulations of the Securities and
Exchange Commission.
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INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as independent public accountants for 2000. It
is expected that representatives of Arthur Andersen LLP will be present at the
Annual Meeting, with the opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions. The Company intends to
select its independent public accountants for 2001 after receiving the
recommendation of the Audit Committee expected at the Audit Committee's May 2001
meeting.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Rules promulgated under Section 16(a) of the Securities Exchange Act of
1934, as amended, require the Company's executive officers and directors and
person who own more than ten percent of a registered class of the Company's
equity securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and Nasdaq(R). Such persons are
required by SEC regulations to furnish the Company with copies of such forms
they file. The Company believes that, during 2000, all section 16(a) filing
requirements applicable to such persons were complied with.
SHAREHOLDER PROPOSALS AT 2002 ANNUAL MEETING
Shareholders intending to present proposals at the 2002 Annual Meeting and
desiring to have those proposals included in the Company's proxy statement and
form of proxy relating to that meeting must submit such proposals, in compliance
with Rule 14A-8 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to the Secretary of the Company on or before November 30, 2001.
For proposals that shareholders intend to present at the 2002 Annual Meeting of
Shareholders outside the processes of Rule 14A-8 of the Exchange Act, unless the
shareholder notifies the Secretary of the Company of such intent by February 11,
2002, any proxy solicited by the Company for such Annual Meeting will confer on
the holder of the proxy discretionary authority to vote on the proposal so long
as such proposal is properly presented at the Annual Meeting.
By Order of the Board of Directors
/S/ Leonard W. Bartholomew
--------------------------
Dallas, TX LEONARD W. BARTHOLOMEW
March 30, 2001 Secretary
A copy of the Company's Annual Report on Form 10-K for 2000, may be obtained
without charge upon written request to the Secretary of the Company, P.O. Box
655888, Dallas, Texas 75265-5888.
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DETACH HERE
FROZEN FOOD EXPRESS INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS - APRIL 26, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (1) acknowledges receipt of the notice, dated
March 30, 2001, of the Annual Meeting of Shareholders of Frozen Food Express
Industries, Inc. (herein called the "Company") to be held on Thursday, April 26,
2001, at 3:30 p.m., Dallas, Texas time, in the Bank of America Plaza, 901 Main
Street, 70th Floor, Dallas, Texas 75201, and the Proxy Statement, also dated
March 30, 2001, in connection therewith (herein called the "Proxy Statement"),
and (2) constitutes and appoints Stoney M. Stubbs, Jr., and F. Dixon McElwee,
Jr., and each of them (if only one be present, then by that one alone), his
attorneys and proxies, with full power of substitution and revocation to each,
for and in the name, place and stead of the undersigned, to vote, and act with
respect to, all of the shares of capital stock of the Company standing in the
name of the undersigned or with respect to which the undersigned is entitled to
vote and act, at said meeting and at any adjournment thereof. The Board of
Directors recommends a vote FOR each of the Company's proposals set forth on the
reverse.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1.
(Continued and to be signed on reverse side.)
[SEE REVERSE SIDE] [SEE REVERSE SIDE]
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Please mark
/x/ votes as in
this example.
Please mark boxes in blue or black ink.
1. ELECTION OF OFFICERS
To elect 8 directors, of which 2 directors will be Class I directors to serve
until the next Annual Meeting of Shareholders and until their successors are
duly elected and qualified; 3 directors will be Class II directors to serve
until the Annual Meeting to be held in 2003 and until their successors are duly
elected and qualified; and 3 directors will be Class III directors to serve
until the Annual Meeting and until their successors are duly elected and
qualified.
Nominess: Class I (one-year term): Class II (two-year term): Class III (three-year term):
----------------------- ------------------------ ----------------------------
[01] Edgar O. Weller [03] Brian R. Blackmarr [06] Stoney M. Stubbs, Jr.
[02] Leroy Hallman [04] W. Mike Baggett [07] T. Michael O'Connor
[05] F. Dixon McElwee, Jr. [08] Charles Robertson
FOR ALL NOMINEES: / / WITHHELD FROM ALL NOMINESS / /
FOR ALL NOMINEES EXCEPTED AS NOTED BELOW / /
- ---------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. or any adjournment thereof.
MARK HERE
FOR ADDRESS / /
CHANGE AND
NOTE AT LEFT
Please promptly complete, date, sign and return this proxy using the enclosed
envelope.
When shares are held by joint tenants, both should sign. When signing as an
agent, attorney, administrator, executor, guardian or trustee, please give full
title as such. If a corporation, please sign in full corporate name by President
or other authorized officer who should indicate his title. If a partnership,
please sign in partnership name by authorized person. Please date, sign and mail
this proxy card in the enclosed envelope. No postage is required if mailed in
the United States.
Signature: ________________________ Date: ____________________
Signature: ________________________ Date: ____________________
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