_________________________
200 W. Forsyth Street
7th Floor
Jacksonville, Florida 32202
Phone (904) 396-5733
December 12, 2012
Dear Shareholder:
I invite you to attend our Annual Meeting
of Shareholders, which will be held on
Wednesday, February 6, 2013, at 10:00 a.m. in
the Riverfront Conference Room at 245
Riverside Avenue, 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 are a
shareholder of record and 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,
/s/ Thompson S. Baker II
Thompson S. Baker II
President and Chief Executive Officer
2013 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 Leadership Structure and Committee Membership 5
Nominating Process 8
Proposal No. 1 - Election of Directors 9
Proposal No. 2 - Ratification of Independent Registered
Public Accounting Firm 11
Proposal No. 3 - Advisory Vote on Executive Compensation 11
Shareholder Return Performance 12
Compensation Discussion and Analysis 13
Compensation Committee Report 21
Executive Compensation 21
Non-Employee Director Compensation 26
Related Party Transactions 29
Common Stock Ownership of Certain Beneficial Owners 29
Common Stock Ownership by Directors and Executive
Officers 30
Audit Committee Report 31
Independent Registered Public Accounting Firm 32
Additional Information 33
PATRIOT TRANSPORTATION HOLDING, INC.
200 W. Forsyth Street, 7th Floor, Jacksonville, Florida 32202
--------------------------------------------------------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TIME AND DATE
10:00 a.m. on Wednesday, February 6, 2013
PLACE
Riverfront Conference Room
245 Riverside Avenue
Jacksonville, Florida
ITEMS OF BUSINESS
(1) To elect as directors the two nominees
named in the attached proxy statement
for a 4 year term.
(2) To ratify the Audit Committee's
selection of the independent
registered public accounting
firm.
(3) To hold an advisory vote
on executive compensation.
(4) To transact such other
business as may properly come
before the meeting and any
adjournment.
RECORD DATE
You are entitled to vote if you were a
shareholder of record at the close of
business on Monday, December 10, 2012.
ANNUAL REPORT
Our 2012 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
are a shareholder of record and
you attend the meeting, you may
withdraw your proxy and vote in
person.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON FEBRUARY 6, 2013:
This Notice of Annual Meeting and Proxy Statement and the 2012
Annual Report are available on our website at www.patriottrans.com.
John D. Milton, Jr.
Corporate Secretary
This Proxy Statement and Proxy Card are being distributed on or
about December 12, 2012.
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 as
directors the three nominees named in this proxy statement, to
ratify the Audit Committee's selection of the independent registered
public accounting firm, to hold an advisory vote on executive
compensation and to conduct such other business as may properly
come before the Annual Meeting.
Annual Meeting Admission
You are invited to attend the meeting in person. The
meeting will be held at 10:00 a.m. on Wednesday, February 6,
2013 in the Riverfront Conference Room at 245 Riverside Avenue,
Jacksonville, Florida.
We reserve the right to require proof of ownership of
Patriot stock, as well as a form of personal photo identification, in
order for you to be admitted to the meeting. If your shares are held
in the name of a bank, broker or other holder of record, you must
bring a brokerage statement or other proof of ownership with you to
the meeting. No cameras, recording equipment, electronic devices,
large bags, briefcases, or packages will be permitted in the meeting.
We reserve the right to adopt other rules and to
implement additional security measures for the meeting.
Quorum
A quorum is the minimum number of shares required to
hold a meeting. A majority of the outstanding shares of our common
stock must be represented in person or by proxy at the meeting to
establish a quorum. Both abstentions and broker non-votes are
counted as present for determining the presence of a quorum. Broker
non-votes, however, are not counted as shares present and entitled to
be voted with respect to the matter on which the broker has not voted.
Thus, broker non-votes will not affect the outcome of any of the
matters to be voted on at the Annual Meeting. Generally, broker
non-votes occur when shares held by a broker for a beneficial owner
are not voted with respect to a particular proposal because (1) the
broker has not received voting instructions from the beneficial owner
and (2) the broker lacks discretionary voting power to vote such
shares.
Shareholders Entitled to Vote
Each share of our common stock outstanding as of the
close of business on December 10, 2012, 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 9,446,620 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 on whether
to elect the three director nominees named in this proxy statement to serve
as directors for a four year term. Our Board recommends that you vote
"FOR" each nominee of the Board.
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.
The shareholders also will make a non-binding advisory vote
on whether to approve the compensation of the named executive officers
as described in this proxy statement. Our Board recommends that you
vote "FOR" approval of the proposed executive compensation.
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 will be approved if the number of votes
cast in favor of the proposal exceeds the number of votes cast against
the proposal.
If you are a beneficial owner and do not provide the
shareholder of record with voting instructions, your shares may
constitute "broker non-votes." A "broker non-vote" occurs when a
bank, broker or other holder of record holding shares for a beneficial
owner does not vote on a particular proposal because that holder
does not have discretionary voting power under New York Stock
Exchange ("NYSE") rules and has not received instructions from the
beneficial owner. If you are a beneficial owner, your bank, broker or
other holder of record is permitted under NYSE rules to vote your
shares on the ratification of our independent registered public
accounting firm even if the record holder does not receive voting
instructions from you. The record holder may not vote on the
election of directors or on the advisory proposal regarding executive
compensation without voting instructions from you, however.
Without your voting instructions on these matters, a broker non-vote
will occur. 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 are a shareholder of record
and you sign your proxy 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 2.
Results of the Vote
We will announce preliminary voting results at the
meeting and publish final results in a Current Report on Form
8-K within four (4) business days following the meeting.
Delivery of Proxy Materials
This Notice of Annual Meeting and Proxy Statement
and the 2012 Annual Report are available on our website at
www.patriottrans.com under Investor Relations. Instead of receiving
future copies of our Proxy Statement and accompanying materials
by mail, beneficial owners may be able to receive copies of these
documents electronically. Please check the information provided
in the proxy materials sent to you by your bank or other holder of
record regarding the availability of this service.
Householding
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 200 W. Forsyth Street, 7th Floor, 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 200 W. Forsyth
Street, 7th Floor, 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 and Compensation
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.
Anderson, 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.
During fiscal 2012, the independent directors met in executive session
eight times, and Mr. Commander presided over executive sessions of
the independent directors.
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, 200 W. Forsyth Street, 7th Floor, 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.
Risk Oversight
The Board of Directors exercises direct oversight of
strategic risk to the Company. Management annually (or periodically
in the event greater frequency is required due to unforeseen
circumstances) prepares an enterprise risk assessment and
mitigation strategy that it reviews with the Audit Committee. The
Audit Committee reports to the Board of Directors, which in turn,
provides guidance on risk appetite, assessment and mitigation.
BOARD LEADERSHIP STRUCTURE AND
COMMITTEE MEMBERSHIP
Board Leadership
John D. Baker II serves as Executive Chairman of the
Company's Board of Directors. Mr. Baker served as President and
Chief Executive Officer of the Company from February 6, 2008 until
September 30, 2010. He served as President and Chief Executive
Officer of Florida Rock Industries, Inc. from February 1996 to
November 16, 2007. He has served as a director of the Company
since 1986.
While the roles of Executive Chairman and Chief
Executive Officer are held separately, the Board of Directors does
not have a policy as to whether the Executive Chairman is an affiliated
director or a member of Company management. When the Executive
Chairman is an affiliated director or a member of Company
management, or when the independent directors determine that it is in
the best interests of the Company, the independent directors will
annually appoint a lead independent director.
Charles E. Commander, III currently serves as lead
independent director. The lead independent director presides over
executive sessions of the independent directors and performs other
duties as may be assigned from time to time by the Board of Directors.
Our Board of Directors believes its current leadership
structure is appropriate because it effectively allocates authority,
responsibility and oversight between management and the independent
members of our Board of Directors. It does this by giving primary
responsibility for the operational leadership and strategic direction of
the Company to our Chief Executive Officer, while enabling the lead
independent director to facilitate our Board of Directors' independent
oversight of management. The Board of Directors believes its
programs for overseeing risk, as described under the "Risk
Oversight" section above, would be effective under a variety of
leadership frameworks and therefore do not materially affect its
choice of structure.
Board Committees
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 2012
and the function of each Committee are described below.
During fiscal 2012, the Board of Directors held four
meetings. The Audit Committee held four meetings, the Compensation
Committee held one meeting, and the Nominating and Corporate
Governance Committee held one meeting during fiscal 2012. During
fiscal 2012, the Executive Committee did not hold any formal meetings
but voted on various matters by unanimous 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
-------- ------ -------------- ------------ ------
Edward L. Baker
X*
John D. Baker II X
Charles E.
Commander III
X
X
Thompson S. Baker II 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.
* Reviews and reassesses the Compensation Committee charter
for adequacy on an annual basis.
The charter of the Compensation Committee (as revised on
December 1, 2010) has been formally adopted by the Company and 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, Edward L. Baker, Thompson S.
Baker II and John D. Milton, Jr., 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 Qualification 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 Qualification Standards
The Nominating 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.
In considering diversity in the selection of nominees, the Nominating
Committee looks for individuals with varied experience, background,
knowledge, skills and viewpoints in order to achieve and maintain a
group of directors that, as a whole, provides effective oversight of the
management of the Company. Although our nomination policy does
not prescribe specific standards for diversity, the Board and
Nominating Committee do look for nominees with a diverse set of
skills that will complement the existing skills and experience of our
directors and provide an overall balance of diversity of perspectives,
backgrounds and experiences.
Identification, Evaluation and Selection of Nominees
In the event the Nominating Committee recommends an
increase in the size of the Board or a vacancy occurs, the Nominating
Committee may consider qualified nominees from several sources,
including current Board members and search firms. The Nominating
Committee may from time to time retain a search firm to help the
Nominating Committee identify qualified director nominees for
consideration by the Nominating Committee. The Nominating
Committee evaluates qualified director nominees against the current
director qualification standards described above and reviews
qualified director nominees with the Board. The Nominating
Committee and the Chairman of the Board interview candidates that
meet the director qualification standards, and the Nominating
Committee selects nominees that best suit the Board's current needs
and recommends one or more of such individuals for appointment to
the Board.
Nominees Proposed by Shareholders for Consideration by the
Committee
The Nominating Committee will consider properly
submitted shareholder nominees for candidates for membership on
the Board of Directors. Shareholders proposing individuals for
consideration by the Nominating 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.
200 W. Forsyth Street, 7th Floor
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 2014, the Corporate Secretary must receive the
proposal no later than 5 p.m. Eastern Time on September 30,
2013. 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 advance 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 2017 annual meeting. If you are
a shareholder of record, 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 Board unanimously recommends a vote FOR the
election of these nominees as directors.
Director Nominees
The following paragraphs provide brief biographies of
each of our nominees. These biographies include information
regarding the person's service as a director, business experience,
director positions held currently or at any time during the last five
years, and information regarding involvement in certain legal or
administrative proceedings, if applicable. These biographies also
describe the experience, qualifications, attributes and skills that
caused the Nominating Committee and the Board to determine
that the person should serve as a director of the Company.
Edward L. Baker
Edward L. Baker, age 77, is Chairman Emeritus of
the Company. Mr. Baker has served as a director of the Company
since 1986. He served as Chairman of the Board of Florida Rock
Industries, Inc. from February 1986 to
November 16, 2007. Our Board has concluded that Mr. Baker
should serve as a director because his many years of service as a
director and his service as Chairman of Florida Rock Industries
provide the Board with valuable insights regarding our business.
Mr. Baker is a nominee as a Class III director with a term
expiring in 2017.
Charles E. Commander,III
Mr.Commander, age 72, is a retired partner at the law firm
Foley&Lardner, LLP, where he practiced corporate, financial
institutions and real estate law and was previously a member of
that firm's management committee. Mr.Commander has been a
director of the Company since 2004. Mr.Commander currently
serves on the boards of EverBank Financial Corp., a diversified
financial services company, and BSR Trust, LLC, which is
engaged in developing and managing residential rental properties.
Our Board has concluded that Mr.Commander should serve as
a director because his many years of legal experience and his
service on other boards provides our Board valuable insights
regarding our business and on corporate governance and
management issues. Mr.Commander has served on numerous
civic and charitable organizations. He received a B.S. in
Commerce from Washington& Lee University and a J.D. from
The University of Florida. Mr.Commander is a nominee as a
Class III director whose term would expire in 2017.
Directors Continuing in Office
The following table sets forth information with respect to
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.
John E. Anderson Class I
Retired President 67 (Term Exp. 2005
and Chief Executive 2015)
Officer of the Company
John D. Baker II
Class II Wells Fargo
Executive Chairman 64 (Term Exp. 1986 & Company
Former President and 2016) Progress
Chief Executive Officer Energy, Inc.
Texas Industries,
Inc.
Thompson S. Baker II Class IV
President and Chief 54 (Term Exp. 1994 Intrepid Capital
Executive Officer 2014) Management, Inc.
of the Company
Luke E. Fichthorn III Class II
Partner in Twain Associates 71 (Term Exp. 1989
(private financial consulting firm) 2016)
Robert H. Paul III Class I
Chairman of the Board 78 (Term Exp. 1992
of Southeast Capital, 2015)
LLC (real estate investment firm)
H. W. Shad III Class II
Owner, Bozard Ford 66 (Term Exp. 2004
Company (automobile 2016)
dealership)
Martin E. Stein, Jr. Class IV
Chairman and Chief 60 (Term Exp. 1992 Regency Centers
Executive Officer of 2014) Corporation
Regency Centers (commercial Stein Mart, Inc.
Corporation
real estate services firm)
James H. Winston Class I
President of LPMC, Inc. 79 (Term Exp. 1992
(investment real 2015)
estate firm); President of Citadel Life & Health
Insurance Co.
All of the nominees and directors have been employed
in their respective positions for the past five years except John E.
Anderson, 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.
Edward L. Baker has served as a director of the Company
since 1986 and became an employee of the Company 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 served as President and Chief Executive
Officer of the Company from February 6, 2008 until September
30, 2010. 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 has served as President and Chief
Executive Officer of the Company since October 1, 2010. He
was elected as a director in 1994. Mr. Baker served as the
President of the Florida Rock Division of Vulcan Materials
Company from November 16, 2007 until September 2010.
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.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Hancock Askew & Co.,
LLP ("Hancock Askew") as the Company's independent registered
public accounting firm (auditors) to examine the consolidated
financial statements of the Company, subject to satisfactory
negotiation of an annual fee agreement for fiscal 2013. The Board
of Directors seeks an indication from shareholders of their approval
or disapproval of the Audit Committee's appointment of Hancock
Askew as the Company's 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 2013 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 2013, 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.
PROPOSAL NO. 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
We included a non-binding advisory vote on our
executive compensation program (also referred to as a "say on pay"
proposal) in our proxy statement last year. At our 2012 Annual
Meeting of Shareholders, approximately 99.5% of the votes cast
in the "say on pay" advisory vote were "FOR" approval of our
executive compensation. This year, in accordance with Section
14A of the Securities Exchange Act of 1934, as amended, we
are again asking shareholders to vote "FOR" approval of our
executive compensation program.
As discussed in the Compensation Discussion and
Analysis, we design our executive officer compensation program
to attract, motivate, and retain the key executives who drive our
success and industry leadership. Our
compensation program consists of several forms of compensation:
base salary, cash incentive bonuses, equity compensation and other
benefits and perquisites. Pay that reflects performance and alignment
of that pay with the interests of long-term shareholders are key
principles that underlie our compensation program. The Board
believes that our current executive compensation program directly
links executive compensation to our performance and aligns the
interest of our executive officers with those of our shareholders.
Shareholders are urged to read the "Compensation
Discussion and Analysis" section of this proxy statement, which
discusses how our executive compensation policies and practices
implement our compensation philosophy, and the "Executive
Compensation" section of this proxy statement, which contains
tabular information and narrative discussion about the
compensation of our named executive officers.
Because this is an advisory vote, it will not be binding
on the Board. However, the Board and the Compensation
Committee will review and take into account the outcome of the
vote when considering future executive compensation decisions.
Accordingly, the Board proposes that you indicate
your support for the Company's compensation philosophy, policies,
and procedures and their implementation in fiscal year 2013 as
described in this Proxy Statement.
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, 2007 and ending on September 30, 2012. The graph assumes
that $100 was invested on September 30, 2007 in the Company's
common stock and in each of the indices and assumes the
reinvestment of any dividends.
Table Intentionally Omitted
Cumulative Total Return
------------------------
9/07 9/08 9/09 9/10 9/11 9/12
-------------------------------------------
Patriot Transportation Holdings, Inc.
100.00
80.33
76.77
71.31
61.65
85.05
NASDAQ Composite 100.00
69.59
74.97
85.07
86.96
110.86
NASDAQ Transportation
100.00
65.32
69.79
79.78
68.93
80.50
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,
2012 (the "named executive officers"). The named executive officers
for fiscal 2012 are Thompson S. Baker II, our President and Chief
Executive Officer, John D. Milton, Jr., our Executive Vice President
and Chief Financial Officer, David H. deVilliers, Jr., Vice President
and President of FRP Development Corp., Robert E. Sandlin, Vice
President and President of Florida Rock & Tank Lines, Inc. and
John D. Klopfenstein, our Controller and Chief Accounting Officer.
Overview
*
The objectives of our compensation program are to attract,
retain and motivate talented leaders and to support our strategic
objectives and core values.
*
We provide our executive officers with the following types of
compensation: salary, cash-based short term incentives, equity-
based long-term incentives and other benefits and perquisites.
*
We encourage a pay-for-performance environment by linking
cash incentive awards to the achievement of measurable
business and individual performance goals.
*
For fiscal 2013, we granted increases in base salaries for
Mr. deVilliers, Mr. Sandlin and Mr. Klopfenstein in light of
their performance. We did not increase the base salaries of
Mr. Baker or Mr. Milton.
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 19 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. Additionally, no member of the Compensation Committee
accepts, directly or indirectly, any consulting, advisory or other
compensatory fee from the Company or its subsidiaries (other
than fees received due to services on the Board and its
committees or fixed amounts of compensation under the
Company's retirement plans for prior service with the
Company).
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 and have closed the plan to new participants. Only
one of our named executive officers participates in 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.
Compensation Should be Reasonable and Responsible
It is essential that Patriot's overall compensation levels be
sufficiently competitive to attract and retain 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.
The Committee discussed the results of the previous year's
shareholder advisory vote on executive compensation. The
Committee has determined, based in part upon the fact that
approximately 99% of the shares voting on the matters voted in
favor of the Company's compensation philosophy, policies and
procedures for fiscal 2012, that the current executive compensation
provision effectively aligns the interests of our executive officers with
that of 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 achievement
of the Company's financial objectives. For example, for fiscal 2012,
Mr. Thompson Baker was eligible to receive performance-based cash
bonuses of up to 100% of his base salary, Mr. Klopfenstein was
eligible to receive a performance-based cash bonus of up to 53.5%
of his base salary, Mr. Milton was eligible to receive a performance-
based cash bonus of up to 60% of his base salary, Mr. Sandlin was
eligible to receive a performance-based cash bonus of up to 100%
of his base salary and Mr. deVilliers was eligible to receive a
performance-based cash bonus of up to 100% of his base salary.
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 andequity 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;
the individual's historic compensation and the results of
the previous year's shareholder advisory vote on executive
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.
2012 "Say on Pay" Advisory Vote on Executive Compensation
We included a non-binding advisory vote on our
executive compensation program (also referred to as a "say
on pay" proposal) in our proxy statement last year. At our
2012 Annual Meeting of Shareholders, approximately 99.5%
of the votes cast in the "say on pay" advisory vote were "FOR"
approval of our executive compensation. The Compensation
Committee evaluated the results of the 2012 advisory vote
together with the other factors and data discussed in the
Compensation Discussion and Analysis in determining executive
compensation policies and decisions. The Compensation
Committee believes that the outcome of our say on pay vote
reflects our shareholders' support of our compensation
approach and did not make any material changes to our fiscal
2012 executive compensation policies and decisions as a
result of the 2012 advisory vote. We value the opinions of
our shareholders and will continue to consider the outcome
of future say on pay votes when designing our compensation
programs and policies and making compensation decisions.
The Board of Directors has determined to hold an
annual shareholder advisory vote on executive compensation
until the next required vote on the frequency of shareholder
advisory votes on executive compensation.
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 of the
Committee members regarding individual performance and
internal pay equity considerations.
Fiscal 2012 and 2013 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 2012 and 2013.
Name and Title 2012 Base
% Increase 2013 Base % Increase
Salary from 2011 Salary from 2012
--------------- ---------- ------------ ----------- -----------
Thompson S. Baker II
President and CEO
$395,000
0%
$395,000
0%
John D. Milton, Jr.
$165,000
0%
$165,000
0%
Executive Vice President and
Chief Financial Officer
David H. deVilliers, Jr.
$310,000
0%
$316,000
2%
Vice President and President,
FRP Development Corp.
Robert E. Sandlin
$236,250
5%
$248,000
5%
Vice President and President,
Florida Rock & Tank Lines, Inc.
John D. Klopfenstein
$168,000
5%
$176,000
5%
Controller and Chief Accounting Officer
</table>
Analysis. The Committee increased the base
salaries of Messrs. deVilliers, Sandlin and Klopfenstein for
fiscal 2013 in light of their management performance. The
Committee did not increase the base salaries of Messrs.
Baker and Milton based on the Committee's view that
their existing base salaries were adequate in light of their
total compensation packages.
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 Transportation Group's net income excluding the
after-tax cost of financing, divided by its total monthly average
capital employed.
The Compensation Committee historically established
performance objectives for the Developed Buildings and Land
segment based on operating properties in the portfolio (usually
gross profit on developed buildings and average occupancy
rates for properties in service more than 12 months), special
projects and new development. For fiscal 2013, the
Compensation Committee established a bonus pool that is
tied to the achievement of targeted levels of adjusted after-
tax return on capital employed (calculated as described
below).
Fiscal 2012 and 2013 Actions. The following chart
describes the performance objectives and potential bonuses
for the named executive officers for fiscal years 2012 and 2013:
Name Year
Potential Performance Targets
Bonus as a %
of Salary
------------------------------------------------------------------------
Thompson S. Baker II
2013
100%
Achievement by the Company of a
targeted level of net income for fiscal
2013(1)(3)(4)(5).
2012
100%
Achievement by the Transportation
Group of targeted levels of after-tax
ROCE(2), achievement by Developed
Properties Rentals segment of real estate
objectives, including targeted level of
adjusted after-tax ROCE(3) , and
achievement of a targeted level of
operating profit for the Company. (4)(5)
John D. Milton, Jr.
2013
100%
Mr. Milton can earn a bonus equal to
60% of his base salary for achievement by
the Company of a targeted level of net
income for fiscal 2013(1)(3)(4)(5).
2012
60%
Achievement by the Transportation Group
of targeted levels of after-tax ROCE(2),
achievement by Developed Properties
Rentals segment of real estate objectives,
including targeted level of adjusted after-tax
ROCE(3) , and achievement of a targeted
level of operating profit for the Company. (4)(5)
David H. deVilliers, Jr.
2013
100%
Achievement of Developed Properties
Rentals segment objectives, including targeted
level of adjusted after-tax ROCE.(3)(4)
2012
100%
Achievement of Developed Properties Rentals
segment objectives, including targeted level of
adjusted after-tax ROCE.(3)(4)
Robert E. Sandlin
2013
100%
Achievement by the Transportation Group of a
targeted level of ROCE.(2)(4)(5)
2012
100%
Achievement by the Transportation Group of a
targeted level of ROCE.(2)(4)(5)
John D. Klopfenstein
2013
50%
Achievement of a targeted level of net income
for the Company. (1)(3)(4)(5)
2012
53.5%
Achievement by the Transportation Group of
targeted levels of after-tax ROCE(2), achievement
by Developed Buildings and Land segment of
real estate objectives, including targeted level of
adjusted after-tax ROCE(3) , and achievement of
a targeted level of operating profit for the
Company. (4)(5)
</table>
(1)
For purposes of bonus calculations only, the specified
level of net income for the Company for fiscal 2013 is
$13,901,000. If actual net income is less than
$13,901,000 but is equal to or greater than $11,234,335,
the bonus will be prorated between 20% and 100%.
(2)
With respect to the Transportation Group, the specified
officers are or were eligible to receive a bonus up to the
specified percentage of his base salary if the named
business unit achieved a 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 the Transportation Group was 14.0% and
17.9% for 2012. For 2013, the threshold and target
after-tax ROCE levels for the transportation group are
13% and 14.83%. Capital employer for 2013 will
exclude the effect of prepaid insurance premiums to a
captive insurer and the potential replacement purchase
of the Knoxville terminal. For 2012 and 2013, a portion
of the earned bonus is contingent on the achievement of
certain objectives established under the Company's
Achieve Continuous Improvement program related to
volume increases, entry into new markets, safety
performance, customer service, fuel efficiency, productivity,
training, personnel development and evaluation and recruiting.
(3)
For fiscal 2012, bonuses with respect to the Developed
Properties Rentals were contingent on the achievement of
adjusted after-tax return on capital employed (Adjusted after-
tax ROCE, calculated as described below) between a minimum
of 8.81% (at which level the available bonus pool was 45%)
and a maximum of 9.90% (at which level the available bonus
pool was 100%). If the Adjusted after-tax ROCE is less
than 9.90% but was more than 8.81%, the available bonus
pool will be prorated between 45% and 100%.For this
purpose, Adjusted after-tax ROCE was calculated as an
amount equal to: (i) the sum of (A) the Developed Properties
Rentals segment's income before tax for fiscal 2012, plus
(B) 85% of the depreciation attributed to the Developed
Properties Rentals segment, plus (C) the parent company
overhead expense allocated to the Developed Buildings and
Land segment, plus (D) interest on mortgage indebtedness,
less (E) the profits related to the Anacostia and Bird River
residential properties, less (F) straight-lined rents plus (G)
one-half of the rents to be received for fiscal 2013 from lease
commitments signed by new tenants during fiscal 2012, but
not producing any rental income in fiscal 2012 less (H) income
taxes on the resulting total with full applicable depreciation.
For lease commitments signed by new tenants during 2012
and producing less than six months of rental income in fiscal
2012, an additional number of months of rental income from
fiscal 2013 will be added to give total credit for 6 months of
rental income from such new tenants; divided by (ii) an amount
equal to the total monthly average capital employed in the
Developed Properties Rentals segment, excluding all mortgage
indebtedness and the book values of the Anacostia property
and Bird River residential property.Total bonuses payable for
achievement of real estate objectives may not exceed an amount
equal to fifteen percent (15%) of the numerator used in
calculating the Adjusted after-tax ROCE for the Developed
Properties Rentals segment.For fiscal 2013, bonuses for the
Developed Properties Rentals segment are contingent on the
achievement of adjusted after-tax return on capital employed
(as described below) between a minimum of 4.42% (at which
the available bonus pool is 20%) and a maximum of 6.05%
(at which the available bonus
pool is 100%). If the adjusted after-tax return on capital
employed is less than 6.05% but is more than 4.42%, the
available bonus pool will be prorated between 20% and
100%. For fiscal 2013, adjusted after-tax return on capital
employed will be calculated as: (i) the sum of (A) the
Developed Properties Rentals segment's operating profit
for fiscal 2013, plus (B) the indirect management company
overhead expense and parent company overhead expense
allocated to the Developed Properties Rentals segment, plus
(C) any net loss on the Anacostia property, less (D) any net
income from the 21st Street property, plus (E) any gain on
sale of the Bird River residential property, less (F) income
taxes on the resulting total, calculated using a 40% assumed
income tax rate; divided by (ii) the total monthly average
capital employed in the Developed Properties Rentals
segment (identifiable assets of the Developed Properties
Rentals segment less the Anacostia Riverfront property and
less the 21st Street property, and less liabilities (other than
mortgage indebtedness and deferred income taxes). In
calculating the adjusted after-tax return on capital employed
for the Developed Properties Rentals segment for 2013 and
the Company's net income for 2013 (for bonus purposes
only), the following adjustments will be made: (i) for leases
executed in fiscal 2013, the amount to be included in revenues
will be the greater of the lease revenues under the lease for
fiscal 2013 or fifty percent (50%) of the lease revenues under
the lease for fiscal 2014; (ii) a credit will be given for the
quantifiable benefit from any Code Section 1031 exchange;
(iii) for finished lot sales, credit will be given for revenue
received over the floor area ratio (FAR) basis; and (iv) if
capital is expended in the Developed Properties Rentals
segment in excess of budgeted capital expenditures it will be
excluded from the calculation of capital employed.
(4)
For each year, a portion of the bonus for each officer was
contingent on a determination that the internal control over
financial reporting for the company (or their respective business
unit) was effective for the applicable year.
(5)
The fiscal 2012 bonuses for Messrs. Thompson S. Baker II,
John D. Milton, Jr. and John D. Klopfenstein were based
35% on the achievement by the Transportation Group of
targeted levels of after-tax ROCE, 35% on achievement by
the Developed Buildings and Land segment of real estate
objectives, and 30% on achievement of operating profit of
$15,821,000 and were subject to certain other
contingencies described in footnotes 3 and 4. A portion of
the bonuses for Messrs. Thompson S. Baker II, Klopfenstein,
Milton and Sandlin for 2012 and 2013 was or is contingent
on the achievement of certain individual objectives relating to
strategic planning, occupancy level for developed buildings
by year end, completion of the Anacostia PUD modification
process, completion of other specified strategic objections,
participation in the Transportation Group's continuous
improvement program, risk management, continuing financial
analysis and investor relations.
Analysis. Cash-based incentive compensation comprises a significant
portion of the potential total compensation of the named executive officers.
For fiscal 2012, cash-based incentive compensation comprised 34%, on
average, of the total compensation of each of the named executive officers.
We believe that these incentives play a significant role in helping the
Company achieve its business objectives.
Stock Options
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 grantshelp 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, most options vest
over a period of years.
Fiscal 2012 and 2013 Actions.
In fiscal 2013, the Committee approved the award of options
to acquire 17,840 shares to Thompson S. Baker. In making the grant, the
Compensation Committee considered the performance of Mr. Baker, his
total compensation package and his importance to the Company, and the
fact that Mr. Baker had not received any prior equity-based awards for
his service as Chief Executive Officer.
In fiscal 2012, the Committee approved the award of options
to acquire 10,595 shares each to Messrs. deVilliers and Sandlin and
3,000 shares to Mr. Klopfenstein. In fiscal 2013, the Committee approved
the award of options to acquire 8,920 shares each to Messrs. deVilliers
and Sandlin and 3,000 shares to Mr. Klopfenstein.
In making such grants, the Compensation Committee considered the
past performance of Messrs. deVilliers, Sandlin and Klopfenstein,
their total compensation packages and the importance of Messrs.
deVilliers and Sandlin to the real estate and transportation groups.
In each of fiscal 2012 and fiscal 2013, the Committee
approved the award to Mr. Milton of options to acquire 7,500 shares.
In making this grant, the Compensation Committee considered Mr.
Milton's past performance, base salary and bonus, his qualifications
and responsibilities and his ability to impact the future performance
of the Company.
All of the options described above vest 20% per year
beginning the first anniversary of the grant date, except that Mr.
Milton's options vest immediately. All options expire on the tenth
anniversary of the grant date. The per share option price for all
options 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. The Committee made
grants to the named executive officers because the Committee
believes that equity incentives should be a significant part of
their compensation package. The Committee plans to continue
to evaluate the use of equity compensation as a tool to motivate
management.
Health and Welfare Benefits
In addition to participating in the same health and
welfare plans, including our 401(k)plan, as our other salaried
employees, our executive officers 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 Company entered into
change-in-control agreements with Messrs. deVilliers Sandlin and
Klopfenstein. 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. Sandlin and Klopfenstein, the
agreements provide that each of them will be entitled to receive an
amount equal to two times his base salary plus maximum bonus if,
during the two years after a change-in-control or sale of Florida
Rock & Tank Lines, Inc. his employment is terminated other than
for "cause" or he resigns for "good reason." In addition, each of
them will become fully vested in his 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.
Compensation Risk Assessment
The Committee considers the risks that may result from
the Company's compensation policies and practices.The
Committee believes that our compensation policies and
practices for our executives are reasonable and properly align
their interests with those of our shareholders. The Committee
believes that there are a number of factors that cause our
compensation policies and practices to not have a material
adverse effect on the Company. The fact that our executive
officers have their annual incentive compensation tied to
return on capital employed encourages actions that promote
profitability. Our equity-based incentives further align the
interest of our executives with the long term interests of our
shareholders. In addition, we believe that there are significant
checks in place so that employees whose compensation may
have a shorter term focus are managed by employees and
officers whose compensation has a longer term focus.
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 d
eduction to public corporations for non-qualifying compensation
in excess of $1.0 million paid to any such persons in any fiscal
year. We review compensation plans in light of applicable tax
provisions, including Section162(m), and may revise
compensation plans from time to time to maximize deductibility.
However, we may approve compensation that does not qualify
for deductibility when we deem it to be in the best interests of
the Company.
Financial Restatement
It is the Board of Directors' Policy that the
Compensation Committee will, to the extent permitted by
governing law, have the sole and absolute authority to make
retroactive adjustments to any cash or equity based incentive
compensation paid to executive officers and certain other officers
where the payment was predicated upon the achievement of
certain financial results that were subsequently the subject of a
restatement. Where applicable, the Company will seek to
recover any amount determined to have been inappropriately
received by the individual executive.
COMPENSATION COMMITTEE REPORT
We have reviewed and discussed the foregoing
Compensation Discussion and Analysis with management.
Based on our review and discussion with management, we
have recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this
proxy statement.
Submitted by: Robert H. Paul III
Martin E. Stein, Jr.
James H. Winston
EXECUTIVE COMPENSATION
Fiscal 2012 Summary Compensation Table
The following table sets forth information
concerning the compensation of our named executive
officers for the year ended September 30, 2012:
Summary Compensation Table
Name Year Salary Stock Option Non-Equity Change in All Other Total
and Principal
($) Awards Awards Incentive Plan Pension Compensation ($)
Position 1) (1)
Compensation Value and ($)(4)
(2) Nonquali-
fied Deferred
Compensation
Earnings
($)(3)
-----------------------------------------------------------------------------------------------
Thompson
S. Baker II 2012 $395,000 --- $359,055 $26,326 $780,381
President 2011
$395,000
--- ---
$197,500
---
$9,210
$601,710
and CEO
(PEO)
John D.
Milton, Jr. 2012
$165,000
$52,650
$89,991
$21,154
$328,795
Executive 2011
$165,000
---
$60,880
$99,000
---
$21,853
$346,733
Vice
2010
$165,000
---
$89,975
$95,189
---
$29,895
$380,058
President and CFO
(PFO)
David H.
deVilliers, Jr., 2012
$310,000
$100,000
$310,000
$118,206
$15,184
$853,390
Vice 2011
$310,000
--- $100,000
$310,000
$109,179
$20,422
$849,601
President and
2010
$307,844
---
$100,000
$286,223
$100,931
$12,662
$807,660
President, FRP
Development Corp.
Robert E. 2012
$233,437
$100,000
$174,825
$22,878 $531,140
Sandlin,
2011
$221,250 ---
$100,000
$157,500
---
$18,203
$496,953
Vice 2010
$207,713
---
$100,000
$126,000
--- $22,167
$455,880
President and
President, Florida
Rock & Tank Lines,
Inc.
John D.
2012
$166,000
$28,314
$76,356
$24,394
$295,064
Klopfenstein, 2011
$157,500
---
$32,156
$85,600
---
$16,442
$291,698
Controller 2010
$144,000
---
$39,446
$73,268
---
$15,459
$272,173
and Chief
Accounting Officer
</table>
(1) Amounts reflect the value of the award at
grant date.
(2) This column represents amounts paid under the
MIC Plan. The performance objectives and
threshold and target performance levels for
these executives are described under the
"Compensation Discussions and Analysis"
section of the proxy statement.
(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.
(4) The amounts shown under All Other Compensation
include: the benefit to the executive for personal use
of a Company provided vehicle; the benefit to the
executive for personal use of the Company airplane;
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.
Other Annual Compensation from Summary Compensation Table
The following table contains a breakdown of the compensation
and benefits for fiscal 2012 and 2011 included under All Other
Compensation in the Summary Compensation table above.
Matching Personal Use of Medical
Contributions
Company Car
Reimbursement(1)
Miscellaneous(2)
---------------------------------------------------------------------------
Thompson S. Baker II
2012
$7,500
$7,231
$11,181
$414
2011
$7,350
0
$1,480
$380
John D. Milton, Jr.
2012
$7,350
$10,140
$2,445
$1,219
2011
$7,350
$10,741
$2,454
$1,308
2010
$5,838
$19,532
$2,513
$2,012
John D. Klopfenstein
2012
$7,530
$5,951
$10,643
$270
2011
$6,923
$6,357
$2,892
$270
2010
$5,692
$7,009
$2,488
$270
David H. deVilliers, Jr.
2012
$7,350
$1,607
$5,039
$1,188
2011
$7,738 $2,314
$9,285
$1,085
2010
$7,157
$2,110
$2,582
$774
Robert E. Sandlin
2012
$7,603
$1,593
$7,597
$6,085
2011
$7,809
$1,265
$5,240
$3,889
2010
$7,343
$2,008
$6,435
$6,289
</table>
(1) The amounts shown represent benefits paid
under our Medical Reimbursement Plan,
under which we reimburse certain officers
for personal medical expenses not covered by
insurance.
(2) The amounts shown under the Miscellaneous
column represent payment of country club and social
club dues and purchase of tickets to sporting events
on behalf of the named executive officers and other
miscellaneous reimbursed expenses. These club
memberships and tickets generally are maintained for
business entertainment but may be used for personal
use. The entire amount has been included, although we
believe that only a portion of this cost represents a
perquisite.
Fiscal 2012 and 2013 Grants of Plan-Based Awards
The following table sets forth information concerning option
grants and estimated future payouts under cash incentive plans for
the named executive officers.
Grants of Plan-Based Awards
Name
Grant Date
Estimated Future Payouts Under Non- All Other Exercise Grant Date
Equity Incentive Plan Awards
Option or Base Fair Value of
Awards: Price of Stock and
Threshold Target Maximum Number of Option Option
($)(1) ($)(2) ($)(3) Securities Awards Awards(5)
Underlying ($/Share)
Options (#)(4)
---------------------------------------------------------------------------------------------------
Thompson S. 12/5/12 N/A N/A $395,000 17,840 26.20 $200,000
Baker II 12/6/11 N/A N/A $395,000 -- -- --
President and
CEO
John D. 12/5/12
N/A
N/A
$165,000
7,500
26.20
$55,125
Milton, Jr.
12/6/11
N/A
N/A
$99,000
7,500 22.25
52,650
Executive Vice
President and
CFO
David H. 12/5/12
N/A
N/A
$316,000
8,920
26.20
$100,000
deVilliers, Jr., 12/6/11
N/A
N/A
$310,000
10,595
22.25
100,000
Vice President and
President FRP
Development Corp.
Robert E.
12/5/12
N/A
N/A
$252,000
8,920
26.20
$100,000
Sandlin,
12/6/11
N/A
N/A
$236,250
10,595
22.25
100,000
Vice President
and President,
Florida Rock &
Tank Lines, Inc.
John D. 12/5/12
N/A
N/A
$94,160
3,000
26.20
33,630
Klopfenstein,
12/6/11
N/A
N/A
$89,880
3,000
22.25
28,314
Controller and
Chief Accounting
Officer
</table>
(1) Messrs. Baker, Milton, deVilliers and Sandlin are
eligible to earn a bonus of up to100% of their base
salaries for fiscal 2013. Mr. Klopfenstein is eligible
to earn a bonus of up to 53.5% of his base salary
for fiscal 2013. The performance objectives and
threshold and target performance levels for these
executives are described above under
"Compensation Discussion and Analysis."
(2) Not applicable.
(3) The maximum bonus amounts represent 100%
of base salary for Messrs. Baker, Milton, deVilliers
and Sandlin and 53.5% of base salary for Mr.
Klopfenstein.
(4) The value shown for option awards reflects the
FASB ASC Topic 718 (column l) 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 rates of 1.490% for the fiscal
2012 grants to Messrs. deVilliers,
Sandlin and Klopfenstein and 0.390% for the
grant to Mr. Milton, risk-free interest rates of 1.04%
for the fiscal 2013 grants to Messrs. Baker, deVilliers,
Sandlin and Klopfenstein and 0.34% for the grant to
Mr. Milton (ii) no dividend yield, (iii) volatility of
38.83% for the fiscal 2012 grants to Messrs.
deVilliers, Sandlin and Klopfenstein and 46.28% for
the fiscal 2012 grant to Mr. Milton, volatility of 40.3%
for the fiscal 2013 grants to Messrs. deVilliers, Sandlin
and Klopfenstein and 40.92% for the fiscal 2013 grant
to Mr. Milton, (iv) expected life of stock options of 7
years for the fiscal 2012 grants (3 years in the case of
the fiscal 2012 grant to Mr. Milton) and 7 years for the
fiscal 2013 grants (3 years in the case of the fiscal 2013
grant to Mr. Milton). The stock options granted to Mr.
Milton in fiscal 2012 and 2013 vest immediately. The
stock options granted to Messrs. Baker, deVilliers,
Sandlin, and Klopfenstein vest ratably over 5 years.
All stock options 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, 2012:
Option Awards
Stock Awards
Name Number Number of Options Option Number of Market Value
of Securities Exercise Expiration Shares or Units of Shares or
Securities Underlying Price Date of Stock That Units of Stock
Underlying Unexercised ($) Have Not Vested That Have
Unexercised Options (#) (#) Not Vested ($)
Options (#) Unexercisable
Exercisable
-----------------------------------------------------------------------------------------------------
Thompson S.
Baker II
3,000 7.923
12/03/2012 -- --
3,000 8.637 02/04/2013
3,000 8.800 05/07/2013
3,000 9.400 08/05/2013
3,000 10.033 09/30/2013
3,000 10.197 12/02/2013
3,000 10.577 02/03/2014
3,000 10.633 05/04/2014
3,000 10.917 08/03/2014
3,000 11.333 10/05/2014
3,000 14.970 11/30/2014
3,000 15.167 01/25/2015
3,000 14.833 05/03/2015
3,000 20.133 08/02/2015
John D. 30,000 -- 28.75 06/15/2018
Milton, Jr. 22,500 7,500 24.45 06/16/2019
Executive 7,500 -- 32.16 12/02/2019
Vice President 7,500 -- 25.60 12/01/2020
and CFO 7,500 -- 22.25 12/06/2021
David H. 22,500 -- 14.500 12/28/2014
deVilliers, Jr., 7,200 4,800 25.26 08/19/2019
Vice President 3,042 4,563 32.16 12/02/2019
and President, 1,866 7,464 25.60 12/01/2020
FRP Development -- 10,595 22.25 12/06/2021
Corp.
Robert E. 9,000 -- 14.500 12/28/2014
Sandlin, Vice 7,200 4,800 25.26 08/19/2019
President 3,042 4,563 32.16 12/02/2019
and President, 1,866 7,464 25.60 12/01/2020
Florida Rock -- 10,595 22.25 12/06/2021
& Tank Lines,
Inc.
John D. 1,500 -- 14.500 12/28/2014 -- --
Klopfenstein, 1,200 1,800 32.16 12/02/2019
Controller and 600 2,400 25.60 12/01/2020
Chief -- 3,000 22.25 12/06/2021
Accounting
Officer
</table>
(1) John D. Baker II received his option grants in
his former capacity as a non-employee director.
Fiscal 2012 Option Exercises
The following table provides information
regarding stock option exercises by the named
executive officers and vesting of restricted stock
during fiscal 2012.
Option Exercises and Stock Vested
Option Awards
Stock Awards
Name Number of Value Realized Number of Value Realized
Shares on Exercise Shares on Vesting
Acquired ($) Acquired ($)
on Exercise on Vesting
(#) (#)
(a) (c) (d) (e)
---------------------------------------------------------------------------------------------------
Thompson S. Baker II
12,000
168,369
--
--
John D. Milton, Jr.
--
--
-- --
David H. deVilliers, Jr., 39,605 $599,220 -- --
Vice President and President,
FRP Development Corp.
Robert E. Sandlin, -- -- -- --
Vice President and President,
Florida Rock & Tank Lines, Inc.
John D. Klopfenstein, -- -- -- --
Controller and Chief Accounting Officer
</table>
Pension Benefits
The following table describes pension benefits
to the named executive officers as of September 30,
2012 under our Management Security Plan ("MSP
Plan"). Mr. deVilliers is the only named executive
officer who participates in the MSP Plan.
Name
Plan Name
Number of Years Present
Credited Service Value of
(#) Accum-
ulated
Benefit
($)(2)
-----------------------------------------------------
David H. deVilliers,
Jr.
MSP Plan
(1)
$969,802
(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
Annual Benefit
-------------------------------- ---------------
Normal Retirement at age 65 or older
$247,200 during year 1
and $123,600 in
subsequent years
until his death.
Death of Participant after his
Retirement
Continuation of
annual benefit until
the 15th anniversary
of his retirement
(or the earlier death
of his designated
beneficiary).
Death of Participant prior to his
Retirement
$247,200 during
year 1 and $123,600
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).
Nonqualified Deferred Compensation
None of the named executive officers receives
any nonqualified deferred compensation.
NON-EMPLOYEE DIRECTOR COMPENSATION
Compensation Arrangements for Fiscal 2012 and 2013
The following table describes the compensation
arrangements with our non-employee directors for the 2012
and 2013 fiscal years.
All Non-Employee Directors:
Annual Retainer $15,000
Fee Per Meeting Attended $ 1,500
Shares to be Granted in Fiscal
2013 2,500
Shares Granted in Fiscal 2012
2,000
Audit Committee:
Annual Fee Chairman $10,000
Member $ 5,000
Meeting Fees Chairman(1) $ 1,500
Member(1) $ 1,000
Compensation Committee:
Annual Fee Chairman $ 5,000
Member $ 1,000
Meeting Fees Chairman $ 1,500
Member $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 the
year-end additional meeting.
Actual Fiscal 2012 Director Compensation
The following table shows the compensation
paid to each of our non-employee directors during
the 2012 fiscal year.
Director Compensation for Fiscal 2012
Name Fees Earned or Stock Awards Option All Other Total ($)
Paid in Cash ($) ($)(1)(2) Awards Compensation
($)(3)
($)
----------------------------------------------------------------------------------------
John E. Anderson
$22,500
$42,700
-0-
-0-
$65,200
Charles E.
Commander III
$28,500 $42,700
-0-
-0-
$71,200
Luke E. Fichthorn
III
$22,500
$42,700
-0-
-0-
$65,200(4)
Robert H. Paul III
$35,000
$42,700
-0-
-0-
$77,700
H. W. Shad III
$32,500
$42,700
-0-
-0-
$75,200
Martin E. Stein, Jr.
$26,500
$42,700
-0-
-0-
$69,200
James H. Winston
$23,000
$42,700
-0-
-0-
$65,700
</table>
(1) Each non-employee director was awarded
2,000 shares of the Company's common
stock on February 1, 2012. The value was
determined using the closing price of the
Company's common stock on the Nasdaq
Stock Market on February 1, 2012 which
was $21.35.
(2) For stock awards, the aggregate grant date
fair value computed in accordance with
FASB Topic 718(Column (c)).
(3) For awards of options, with or without
tandem SAR's (including awards that have
subsequently been transferred), the aggregate
grant date fair value computes in accordance
with FASB ASC Topic 718 (Column (d)).
(4) Mr. Fichthorn also receives consulting fees
of $30,000 per year for financial consulting
services provided to the Company.
The following table sets forth information regarding
stock options held by our non-employee directors as
of September 30, 2012:
Director
Number of Option Exercise Option Expiration
Securities Price ($) Date
Underlying
Unexercised Options
-------------------------------------------------------------------------------------------------
Charles E. Commander III
3,000
10.577
02/03/2014
3,000 10.633 05/04/2014
3,000 10.917 08/03/2014
3,000 11.333 10/05/2014
3,000 14.970 11/30/2014
3,000 14.833 05/03/2015
3,000 20.133 08/02/2015
Luke E. Fichthorn III
3,000
8.637 02/04/2013
3,000 8.800 05/07/2013
3,000 9.400 08/05/2013
3,000 10.033 09/30/2013
3,000 10.197 12/02/2013
3,000 10.577 02/03/2014
3,000 10.633 05/04/2014
3,000 10.917 08/03/2014
3,000 11.333 10/05/2014
3,000 14.970 11/30/2014
3,000 15.167 01/25/2015
3,000 14.833 05/03/2015
3,000 20.133 08/02/2015
Robert H. Paul III
3,000 7.923 12/03/2012
3,000 8.637 02/04/2013
3,000 8.800 05/07/2013
3,000 9.400 08/05/2013
3,000 10.033 09/30/2013
3,000 10.197 12/02/2013
3,000 10.577 02/03/2014
3,000 10.633 05/04/2014
3,000 10.917 08/03/2014
3,000 11.333 10/05/2014
3,000 14.970 11/30/2014
3,000 15.167 01/25/2015
3,000 20.133
08/02/2015
H.W. Shad III
--
--
--
Martin E. Stein, Jr.
3,000
8.637
02/04/2013
3,000 8.800 05/07/2013
3,000 10.033 09/30/2013
3,000 10.197 12/02/2013
3,000 10.633 05/04/2014
3,000 11.333 10/05/2014
3,000 14.970 11/30/2014
3,000 15.167 01/25/2015
3,000 14.833 05/03/2015
3,000 20.133 08/02/2015
James H. Winston
3,000 11.333 10/05/2014
3,000 14.970 11/30/2014
3,000 15.167 01/25/2015
3,000 20.133 08/02/2015
</table>
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 2012 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
Consulting Arrangement
Mr. Fichthorn provided the Company with
financial consulting and other services during the 2012
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 10, 2012.
Title of Class
Name and Address Amount and Nature of Percentage
of Beneficial Owner
Beneficial Ownership of Class
-----------------------------------------------------------------------
Common
Edward L. Baker 734,070 (1) 7.4%
John D. Baker II 1,380,139(1) 14.0%
200 W. Forsyth Street7th Floor
Jacksonville, FL 32202
Common
Sarah B. Porter and 913,911 9.3%
Cynthia P. Ogden, as
trustees for the separate
trust for Sarah B. Porter
created under the Cynthia
L'Engle Baker Trust
u/a/d April 30, 1965
1165 5th Avenue #10-D
New York, NY 10029
Common
Royce & Associates, LLC 1,389,840(2) 14.97%
1414 Avenue of the Americas
New York, NY 10019
Common
T. Rowe Price Associates, Inc. 869,778(3) 9.3%
100 E. Pratt Street
Baltimore, MD 21202
(1) See Common Stock Ownership by Directors
and Executive Officers and the accompanying
notes for further details on shares beneficially
owned by Edward L. Baker and John D. Baker II.
(2) In a Schedule 13G filed with the Securities and
Exchange Commission on January 19, 2012,
Royce & Associates, LLC reported that, as of
December 31, 2011, it had sole voting and
dispositive power with respect to 1,389,840 shares.
(3) In a Schedule 13G filed with the Securities and
Exchange Commission on February 9, 2012, T. Rowe
Price Associates, Inc. reported that, as of December
31, 2011, it has sole voting power with respect to
2,870 shares and sole dispositive power with respect
to 869,778 shares, which number includes 864,808
shares to which T. Rowe Price Small Cap Value
Fund, Inc. has sole voting power.
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 10, 2012.
Title Name of Amount and Nature of Percentage of
of Class Beneficial Beneficial Owernship(1) of Class
Owner
---------------------------------------------------------------------------------
Common
John E. Anderson
67,400
*
Common
Edward L. Baker
734,070(2)
7.4%
Common
John D. Baker II
1,380,139(3)(6)
14.0%
Common
Thompson S. Baker II 120,345(4)
1.2%
Common
Charles E. Commander
III 38,000
*
Common
David H. deVilliers Jr.
56,534
*
Common
Luke E. Fichthorn III
123,804 (5)
1.3%
Common
John D. Klopfenstein
14,084.6
*
Common
John D. Milton, Jr. 93,500
1.0%
Common
Robert H. Paul III
59,300
*
Common
Robert E. Sandlin
39,295.5
*
Common
H. W. Shad III
10,500
*
Common
Martin E. Stein, Jr. 179,900 (6)
1.8 %
Common
James H. Winston
46,500
*
Common
All Directors and Officers
As a group (14 people) 2,963,372 30.1%
* Less than 1%
</table>
(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
10, 2012.
Shares Under Shares Under Option
Profit Sharing Plan
------------------- ----------------------
John E. Anderson
-0-
-0-
Edward L. Baker
-0-
33,000
John D. Baker II
-0-
39,000
Thompson S. Baker II
-0-
39,000
Charles E. Commander
III
-0-
21,000
David H. deVilliers Jr.
-0-
34,608
Luke E. Fichthorn III
-0-
39,000
John D. Klopfenstein
8,984.6
5,100
John D. Milton, Jr.
-0-
75,000
Robert H. Paul III
-0-
39,000
Robert E. Sandlin
12,231.5
26,614
H.W. Shad III
-0-
-0-
Martin E. Stein, Jr.
-0-
30,000
James H. Winston
-0-
12,000
(2) Includes 174,597 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.
(3) Includes 5,889 shares directly owned by the living
trust of Mr. Baker's wife and 20,001 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 174,597 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. The amount shown for Mr.
Baker also does not include shares owned by his
adult son, Edward L. Baker II, that were previously
held in trust and previously included in Mr. Baker's
reported ownership.
(4) Includes 2,199 shares directly owned by Mr. Baker's
spouse and 6,597 shares held for the benefit of Mr.
Baker's minor children.
(5) Includes 300 shares owned by the spouse of Mr.
Fichthorn as to which he disclaims any beneficial interest
and 9,000 shares owned by the M/B Disbro Trust, of
which Mr. Fichthorn is a co-trustee and beneficiary.
(6) Includes 120,900 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
2012, the Audit Committee held four 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), as amended by
the Public Company Accounting Oversight Board (PCAOB) in
Rule 3200T.
In addition, the Audit Committee has received the written
disclosures and the letter from the independent auditor required
by the applicable requirements of PCAOB regarding the
independent auditor's communications with us concerning
independence 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,
2012, 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 independent registered public
accounting firm, 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
2011 and 2012 and for other services performed during such
periods.
2011
2012
----- ------
Audit Fees (1)
$ 214,613
$ 217,643
Audit Related Fees (2) 19,500
21,133
Tax Fees
-0-
-0-
All Other Fees
-0-
-0-
------------- ------------
Total
$ 234,113
$ 238,776
(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 internal control over financial reporting.
(2) Audit related fees consisted principally of audits
of employee benefit plans and services relating
to a reply to a SEC comment letter.
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 2012.
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 2014 must
be delivered in writing to the principal executive offices of the
Company no later than August 25, 2013. 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 10, 2013. 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 10, 2013.
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,
other than:
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
200 W. Forsyth Street, 7th Floor, Jacksonville, Florida
32202. This report also is available through our website,
www.patriottrans.com.
BY ORDER OF THE BOARD OF DIRECTORS
December 12, 2012 John D. Milton, Jr.
Secretary
PLEASE RETURN THE ENCLOSED FORM OF PROXY,
DATED AND SIGNED, IN THE ENCLOSED ADDRESSED
ENVELOPE, WHICH REQUIRES NO POSTAGE.