SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
OLD DOMINION FREIGHT LINE, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
OLD DOMINION FREIGHT LINE, INC.
EXECUTIVE OFFICES: 1730 WESTCHESTER DRIVE
HIGH POINT, NORTH CAROLINA 27262
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1998
The Annual Meeting of Stockholders of Old Dominion Freight Line, Inc.,
will be held Monday, May 4, 1998, at 10:00 A.M., in the Fourth Floor Conference
Room of the Company's Executive Offices, 1730 Westchester Drive, High Point,
North Carolina, for the following purposes:
1. To elect a board of seven directors of the Company.
2. To transact such other business as may be brought before the
meeting.
Stockholders of record at the close of business on March 16, 1998, are
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
/s/ Joel B. McCarty, Jr.
Joel B. McCarty, Jr.
SECRETARY
High Point, North Carolina
April 3, 1998
IF YOU DO NOT INTEND TO BE PRESENT AT THE MEETING,
PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
PROMPTLY SO THAT YOUR SHARES OF COMMON STOCK MAY BE
REPRESENTED AND VOTED AT THE MEETING. A RETURN
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
OLD DOMINION FREIGHT LINE, INC.
EXECUTIVE OFFICES: 1730 WESTCHESTER DRIVE
HIGH POINT, NORTH CAROLINA 27262
---------------
PROXY STATEMENT
---------------
This Proxy Statement is being sent to stockholders on April 3, 1998, in
connection with the solicitation of proxies for use at the Annual Meeting of
Stockholders of Old Dominion Freight Line, Inc. (the "Company"), to be held on
Monday, May 4, 1998, and at any adjournment thereof.
ELECTION OF DIRECTORS
The Bylaws provide that the number of directors shall be not less than
five nor more than nine. The Board of Directors has determined that the number
of directors should be increased from five to seven in 1998. The number of
directors, within the maximum and minimum, is to be determined at each Annual
Meeting by resolution adopted by the shareholders or, in the absence of such
resolution, the number of directors elected at the meeting shall constitute the
number of directors of the Company. The Board has nominated the following seven
individuals to serve as directors until the next Annual Meeting and until their
successors shall have been elected and shall qualify. Unless authority is
withheld, it is intended that Proxies received in response to this solicitation
will be voted in favor of the following seven nominees:
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF THE COMPANY'S COMMON
STOCK AS OF MARCH 16, 1998
------------------------------------------------------
VOTING AND
INVESTMENT POWER (1) IN ALL CAPACITIES
---------------------- --------------------------
NAME, AGE, PRINCIPAL PERCENT OF
OCCUPATION AND OTHER POSITIONS DIRECTOR TOTAL COMMON
AND OFFICES WITH THE COMPANY SINCE SOLE SHARED SHARES STOCK
- ---------------------------- ----- ---- ------ ------ -----
Earl E. Congdon, 67 (2)(3)(4) 1952 See "Principal Stockholders".
Chairman of the Board and
Chief Executive Officer of
the Company
John R. Congdon, 65 (2)(3)(4)
Vice Chairman of the Board 1955 See "Principal Stockholders".
of Directors of the Company;
President of Old Dominion
Truck Leasing, Inc.
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF THE COMPANY'S COMMON
STOCK AS OF MARCH 16, 1998
------------------------------------------------------
VOTING AND
INVESTMENT POWER (1) IN ALL CAPACITIES
---------------------- --------------------------
NAME, AGE, PRINCIPAL PERCENT OF
OCCUPATION AND OTHER POSITIONS DIRECTOR TOTAL COMMON
AND OFFICES WITH THE COMPANY SINCE SOLE SHARED SHARES STOCK
- ---------------------------- ----- ---- ------ ------ -----
John A. Ebeling, 60 (2) 1985 57,668 (6) -- 57,668 (6) Less than 1%
Vice Chairman of the Board
of Directors of the Company
Harold G. Hoak, 68 (4)(5) 1991 1,000 -- 1,000 Less than 1%
Retired (former Regional
Vice President of Wachovia
Bank of North Carolina, N.A.)
Franz F. Holscher, 76 (3)(4)(5) 1991 1,000 -- 1,000 Less than 1%
Retired (former Chairman of
Thurston Motor Lines)
David S. Congdon, 41 -- See "Principal Stockholders".
President and Chief Operating
Officer of the Company
John R. Congdon, Jr., 41 -- See "Principal Stockholders".
Vice President - Administration of Old
Dominion Truck Leasing, Inc.
- --------------
(1) Except as otherwise indicated, each director has sole voting and sole
investment power with respect to the shares beneficially owned by such
director.
(2) Member of Executive Committee.
(3) Member of Compensation Committee.
(4) Member of Stock Option Plan Committee.
(5) Member of Audit Committee.
(6) Includes 16,800 shares obtainable upon exercise of stock options
exercisable within 60 days.
Earl E. Congdon has been employed by the Company since 1950 and has
served as Chairman of the Board and Chief Executive Officer since 1985 and as a
director since 1952. He is a son of E. E. Congdon, one of the founders of Old
Dominion.
John R. Congdon has been employed by the Company since 1953 and has
served as Vice Chairman of the Board since 1985 and as a director since 1955. He
is also the President of Old Dominion Truck Leasing, Inc., a North Carolina
corporation that is engaged in full service leasing of tractors, trailers and
other equipment, to which he devotes more than half of his time. He is a son of
E. E. Congdon, one of the founders of Old Dominion, and the brother of Earl E.
Congdon.
-2-
John A. Ebeling has been a Vice Chairman of the Board of Directors
since May 1997. He formerly served as President and Chief Operating Officer from
August 1985 to May 1997 and was first elected a director in August 1985. Mr.
Ebeling was previously employed by ANR Freight Systems from 1978 to 1985,
holding the positions of Chairman and Chief Executive Officer.
Harold G. Hoak was elected a director in August 1991. Now retired, he
serves on the Board of Directors of the Charlotte Merchants Foundation, Inc. He
was President and General Manager of the Charlotte Merchants Association, Inc.,
from 1989 to 1994. Mr. Hoak was formerly employed by Wachovia Bank of North
Carolina, N.A., from 1956 to 1989 and served as Regional Vice President for the
Southern Region from 1976 to 1989.
Franz F. Holscher was elected a director in August 1991. He served in a
number of executive positions from 1970 to 1987 with Thurston Motor Lines and
was the Chairman from July 1984 through December 1987, when he retired. Mr.
Holscher has been active in a number of organizations and associations in the
trucking industry.
David S. Congdon has been employed by the Company since 1978 and, since
May 1997, has served as President and Chief Operating Officer. He has held
various positions in the Company including Vice President Quality and Field
Services, Vice President - Quality, Vice President - Transportation and
President - Dominion Furniture Express (a former division of Old Dominion that
specialized in furniture transportation), and he has held other positions in
operations and engineering. He is the son of Earl. E. Congdon.
John R. Congdon, Jr. currently serves as Vice President -
Administration of Old Dominion Truck Leasing, Inc. (a company owned by Earl E.
Congdon, John R. Congdon and members of the Congdon family), where he has been
employed since May 1979. He is the son of John R. Congdon.
-3-
PRINCIPAL STOCKHOLDERS
As of March 16, 1998, or such other date as indicated in the footnotes
to the table, to the knowledge of management, the only persons beneficially
owning more than five percent (5%) of the Company's Common Stock, its only class
of voting security, are as follows:
NAME AND ADDRESS OF
BENEFICIAL OWNER NUMBER OF SHARES (1) PERCENT
------------------- -------------------- -------
Old Dominion Truck Leasing, Inc. 1,095,876 (2) 13.2%
7511 Whitepine Road
Richmond, VA 23237
Earl E. Congdon 1,016,713 (3)(4) 12.2%
1730 Westchester Drive
High Point, NC 27262
John R. Congdon 975,842 (4)(5) 11.7%
1730 Westchester Drive
High Point, NC 27262
Dimensional Fund Advisors Inc. 601,600 (6) 7.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Fidelity Management & Research 511,000 (7) 6.1%
Company
82 Devonshire Street
Boston, MA 02109
David S. Congdon 462,693 (8) 5.6%
1730 Westchester Drive
High Point, NC 27262
John R. Congdon, Jr. 449,009 (9) 5.4%
9800 Drouin Drive
Richmond, VA 23233
Karen C. Vanstory 445,884 (10) 5.4%
5412 Horse Trail Road
Summerfield, NC 27358
Susan C. Terry 437,787 (11) 5.3%
10801 North Bank Road
Richmond, VA 23233
-4-
NAME AND ADDRESS OF
BENEFICIAL OWNER NUMBER OF SHARES (1) PERCENT
------------------- -------------------- -------
Audrey L. Congdon 423,645 (12) 5.1%
606 Hillcrest Drive
High Point, NC 27261
Franklin Resources, Inc. 419,000 (13) 5.0%
777 Mariners Island Boulevard
San Mateo, CA 94404
All Executive Officers and 4,066,394 (14) 48.5%
Directors of the Company as
a Group (9 persons)
- ----------------
(1) Except as described below, each person or group identified possesses
sole voting and investment power with respect to the shares shown
opposite the name of such person or group.
(2) The voting stock of Old Dominion Truck Leasing, Inc. ("Leasing"), is
owned by Earl E, Congdon as trustee of a revocable trust (32.4%), John
R. Congdon Revocable Trust (25.5%) and members of Earl E. Congdon's and
John R. Congdon's respective families (42.1%). Earl E. Congdon is
Chairman of the Board of Leasing, and John R. Congdon is President and
Chief Executive Officer. The Company's Common Stock owned by Leasing
will be voted as directed by Earl E. Congdon and John R. Congdon or, in
the event of disagreement, one-half of the shares will be voted as
directed by Earl E. Congdon or his personal representative,
attorney-in-fact or executor and one-half will be voted as directed by
John R. Congdon or his personal representative, attorney-in-fact or
executor. Any future sales or other disposition of such shares and the
disposition of the proceeds of any sales will be determined by the
Board of Directors of Leasing.
(3) Includes 913,713 shares held as trustee of a revocable trust and
103,000 shares owned by Mr. Congdon's wife as trustee of a revocable
trust.
(4) Does not include any of the shares owned by Old Dominion Truck Leasing,
Inc.
(5) Includes 974,110 shares held as trustee of a revocable trust and 1,732
shares owned by Mr. Congdon's wife as trustee of a revocable trust.
(6) Based on information provided by Dimensional Fund Advisors Inc.
("Dimensional"), as reflected in a Schedule 13G filed February 11, 1998
with the Securities and Exchange Commission (the "SEC"), Dimensional, a
registered investment advisor, is deemed to have beneficial ownership
of 601,600 shares of the Company's stock as of December 31, 1997, all
of which shares are held in portfolios of DFA Investment Dimensions
Group Inc., a registered open-end investment company, or in series of
the DFA Investment Trust Company, a Delaware business trust, or the DFA
Group Trust and DFA Participation Group Trust, investment
-5-
vehicles for qualified employee benefit plans, all of which Dimensional
Fund Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(7) Based on information obtained from a Schedule 13G, dated February 14,
1998, filed with the SEC, Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR Corp. and an investment
adviser registered under Section 203 of the Investment Advisers Act of
1940, is the beneficial owner of 511,000 shares, or 6.1%, of common
stock outstanding as a result of acting as investment adviser to
various investment companies registered under Section 8 of the
Investment Company Act of 1940.
(8) Includes 1,764 shares owned of record by the named stockholder, 3,559
shares owned in the Company's 401(k) plan, 13,000 shares obtainable
upon exercise of stock options exercisable within 60 days, 287,667
shares held as trustee of a revocable trust, 91,617 shares held as
custodian for minor children of the stockholder, 60,086 shares held by
Mr. Congdon's wife as trustee of an irrevocable trust and 5,000 shares
owned by Mr. Congdon's wife.
(9) Includes 298,964 shares held as trustee of a revocable trust, 139,041
shares held as trustee for the benefit of minor children and 11,004
shares held as custodian for minor children of the stockholder.
(10) Includes 2,714 shares owned of record by the named stockholder, 304,312
shares held as trustee of a revocable trust, 47,241 shares as
beneficiary of an irrevocable trust and 91,617 shares held as custodian
for minor children of the stockholder.
(11) Includes 287,742 shares held as trustee of a revocable trust, 134,449
shares held as trustee for the benefit of minor children and 15,596
shares held as custodian for minor children of the stockholder.
(12) Includes 1,764 shares owned of record by the named stockholder, 307,532
shares held as trustee of a revocable trust, 61,078 shares held as
custodian for minor children, 33,515 shares held by Mrs. Congdon's
husband as trustee of an irrevocable trust, 14,000 shares obtainable
upon exercise of Mrs. Condgon's husband's stock options exercisable
within 60 days and 5,756 shares owned by Mrs. Congdon's husband.
(13) Based on information provided by Franklin Resources, Inc. ("FRI"), as
reflected in a Schedule 13G dated February 12, 1997, filed with the
SEC, 419,000 shares of Old Dominion stock are beneficially owned by one
or more open or closed-end investment companies or other managed
accounts which are advised by direct and indirect investment advisory
subsidiaries (the "Adviser Subsidiaries") of FRI. Such advisory
contracts grant to such Adviser Subsidiaries all voting and investment
power over the securities owned by such advisory clients. Therefore,
such Adviser Subsidiaries may be deemed to be the beneficial owner of
the securities.
(14) Includes shares owned by Old Dominion Truck Leasing, Inc.
-6-
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires certain
of the Company's officers and its directors and persons who own more than 10% of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the SEC. Such officers, directors and
stockholders are required by the SEC regulations to furnish the Company with
copies of all such reports that they file.
Based solely on a review of copies of reports filed with the SEC since
January 1, 1997, and of written representations by certain officers and
directors, all persons subject to the reporting requirements of Section 16(a)
filed the reports required to be filed in 1997 on a timely basis.
-7-
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides a three-year overview of the cash compensation paid
to the five most highly compensated executive officers of the Company:
===================================================================================================================================
Long-Term Compensation
- -----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Awards
- -----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (f) (g) (i)
Restricted Securities
Salary Bonus(1) Stock Underlying All Other
Name and Principal Position Year ($) ($) ($) Options (#) Compensation ($)(2)
============================================ =======================================================================================
Earl E. Congdon 1997 $ 276,600 $ 336,039 0 0 $ 12,498 (3)
Chairman of the Board and Chief Executive
Officer
------ ------------- --------------- ---------------- ----------- -------------------
1996 $ 270,400 $ 174,175 0 0 $ 12,209
------ ------------- --------------- ---------------- ----------- -------------------
1995 $ 270,400 $ 191,443 0 0 $ 12,260
============================================ =======================================================================================
John A. Ebeling(4) 1997 $ 155,813 $ 164,043 $ 766,680(5) 0 $ 8,619 (3)
Vice Chairman of the Board
------ ------------- --------------- ---------------- ----------- -------------------
1996 $ 185,380 $ 116,723 0 0 $ 3,313
------ ------------- --------------- ---------------- ----------- -------------------
1995 $ 185,380 $ 111,789 $ 421,674(5) 2,000 $ 7,875
============================================ =======================================================================================
David S. Congdon 1997 $ 131,215 $ 91,726 0 0 $ 2,486 (3)
President and Chief Operating Officer
------ ------------- --------------- ---------------- ----------- -------------------
1996 $ 109,020 $ 37,351 0 0 $ 3,660
------ ------------- --------------- ---------------- ----------- -------------------
1995 $ 104,300 $ 35,772 0 1,000 $ 2,235
============================================ =======================================================================================
John B. Yowell 1997 $ 122,020 $ 79,467 0 0 $ 2,529 (3)
Executive Vice President
------ ------------- --------------- ---------------- ----------- -------------------
1996 $ 109,280 $ 37,351 0 0 $ 4,434
------ ------------- --------------- ---------------- ----------- -------------------
1995 $ 106,360 $ 35,772 0 1,000 $ 2,913
============================================ =======================================================================================
J. Wes Frye 1997 $ 116,975 $ 67,208 0 0 $ 5,358 (3)
Treasurer, Chief Financial Officer and
Assistant Secretary
------ ------------- --------------- ---------------- ----------- -------------------
1996 $ 112,140 $ 37,351 0 0 $ 9,501
------ ------------- --------------- ---------------- ----------- -------------------
1995 $ 108,620 $ 35,772 0 1,500 $ 4,008
===================================================================================================================================
-8-
(1) Pursuant to an executive profit-sharing bonus program, the Company pays
incentive cash bonuses to certain executive officers based upon the
Company's income before taxes during the preceding fiscal year.
(2) Includes pretax contributions by the Company to the Old Dominion 401(k)
retirement plan, personal use of Company cars, excess premiums paid on
group life insurance and the compensation element of premiums paid on
split-dollar life insurance policies. The Company is a party to certain
split-dollar life insurance agreements with certain members of the
families of Earl E. Congdon and John R. Congdon pursuant to which the
Company pays a portion of the premiums on life insurance policies
insuring their lives in the aggregate face amounts of $16,475,054 and
$16,093,911, respectively. The total benefits currently payable to the
Company under the policies upon the death of Earl E. Congdon and John
R. Congdon are $1,393,844 and $2,699,614, respectively. The Company's
interest in the death benefit and cash surrender value of each policy
is determined by reference to the amount of gross premiums paid by the
Company, which in 1997, 1996 and 1995 were $452,162, $525,394 and
$495,791, respectively.
(3) Allocation of 1997 All Other Compensation:
401(k) Split-Dollar Personal Use of Excess Life
Name Contribution Life Insurance Company Car Insurance Premiums
---- ------------ -------------- ----------- ------------------
Earl E. Congdon $ 3,319 $ 7,919 -- $ 1,260
John A. Ebeling 1,870 -- $ 6,047 702
David S. Congdon 1,575 -- 809 102
John B. Yowell 1,464 -- 891 174
J. Wes Frye 1,404 -- 3,666 288
(4) Pursuant to an Employment Agreement between the Company and John A.
Ebeling, dated August 27, 1985, as last amended on April 7, 1988, Mr.
Ebeling is entitled to a yearly salary of $150,000, which may be
adjusted by the Board of Directors, plus a performance bonus equal to
1.25% of the Company's pretax profits. The agreement provides that,
upon the termination of Mr. Ebeling's employment without cause or upon
a sale of substantially all the business operations of the Company, Mr.
Ebeling would receive his salary for a period of 18 months thereafter.
The agreement prohibits Mr. Ebeling from acquiring, holding an interest
in, or associating with any other entity engaged in business as a motor
carrier in any state in which the Company operates. Pursuant to the
agreement, the Board of Directors has adjusted the 1997 annual salary
of Mr. Ebeling to $185,380; however, effective August 1, 1997, Mr.
Ebeling requested and received approval from the Board of Directors to
reduce his work hours by one-half and agreed to a reduction in
compensation equal to one-half of his salary and performance bonus for
a period of two years. All amounts paid to Mr. Ebeling for the previous
three years are included in the table above.
(5) Pursuant to a Restricted Stock Agreement, dated August 19, 1991, the
Board of Directors awarded John A. Ebeling 153,336 shares of the
Company's Common Stock. Under the Restricted Stock Agreement, the
shares were issued in Mr. Ebeling's name. The Company held the
certificates for the shares, which were originally scheduled to be
released to Mr. Ebeling in
-9-
four installments, each consisting of 25% of the shares issued under
the agreement, on January 1 of 1994, 1996, 1998 and 2000. The shares
not released were subject to forfeiture in the event Mr. Ebeling
voluntarily ceased his continuous employment with the Company or the
Company terminated his employment for cause. Notwithstanding the
scheduled release of shares and the forfeiture provisions, the Board of
Directors was permitted under the agreement, in its discretion, to
release any and all shares held by the Company at any time. Pending
release or forfeiture of the restricted shares, Mr. Ebeling was
entitled to exercise all rights of a stockholder with respect to the
restricted shares, except the right to pledge or convey ownership, and
he was entitled to receive any dividends that may have been paid to
holders of the Company's Common Stock. In both December 1993 and June
1995, the Board of Directors authorized the release of 38,334 shares to
Mr. Ebeling, who turned over 18,150 and 18,706 of those shares,
respectively, to the Company as withholding for federal and state tax
payments and received certificates for the balance of the shares
released. In January 1997, the Board of Directors authorized the
release of the remaining 76,668 shares to Mr. Ebeling, who turned over
37,412 of those shares to the Company as withholding for federal and
state tax payments. Pursuant to the Board's action, Mr. Ebeling
received a certificate for 19,628 in the first quarter of 1997 and
received a certificate for the remaining 19,628 shares on April 1,
1997. In authorizing the release of the remaining shares, the Board of
Directors restricted Mr. Ebeling from selling the shares received until
the originally scheduled release dates for the shares under the
agreement unless or until he should cease to retain his present
position with the Company.
STOCK OPTIONS
The Company's Board of Directors and stockholders have approved and
adopted the 1991 Employee Stock Option Plan of Old Dominion Freight Line, Inc.
(the "Option Plan"), for the benefit of key employees. The Option Plan covers
250,000 shares of the Company's Common Stock. The Option Plan provides for the
granting of stock options that qualify as incentive stock options pursuant to
Section 422 of the Internal Revenue Code as well as nonqualified options. The
granting of an incentive stock option or, in general, its exercise, will not
result at the time of grant or exercise in taxable income to the recipient, with
certain exceptions. The grant of a nonqualified stock option will not result in
taxable income to the recipient. The exercise of a nonqualified stock option
will result in compensation income equal to the difference between the option
price and the fair market value of the stock acquired upon the exercise. Earl E.
Congdon and John R. Congdon are not eligible to participate in the Option Plan.
There were no options granted in 1997.
Options to purchase 224,000 shares under the Option Plan have been
granted. As of March 16, 1998, there are options outstanding covering 43,000
shares of Common Stock at the exercise price of $13.875 per share, 43,000 shares
at the exercise price of $17.875 per share, 39,500 shares at the exercise price
of $19.25 per share, 29,500 shares at the exercise price of $19.00 per share and
24,100 shares at the exercise price of $10.00 per share. All of the options have
been granted as incentive options. The sale of shares issuable under the Option
Plan have been registered with the SEC.
-10-
The following table reflects cumulative information regarding grants
under the Option Plan:
==========================================================================================================================
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
- --------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Securities
Shares Value Underlying Unexercised Value of Unexercised
Acquired on Realized Options at FY-End In-The-Money Options at FY-End
Name Exercise (#) ($) Exercisable/Unexercisable (#) Exercisable/Unexercisable (#)
- ---------------------------------------------------------------------------------------------------------------------------
Earl E. Congdon * * * *
- ------------------------------- -------------- ------------ -------------------------- --------------------------------
John A. Ebeling 0 0 16,800 Exercisable $ 12,450 Exercisable
3,200 Unexercisable $ 6,300 Unexercisable
- ------------------------------- -------------- ------------ -------------------------- --------------------------------
David S. Congdon 0 0 13,000 Exercisable $ 8,975 Exercisable
2,000 Unexercisable $ 3,150 Unexercisable
- ------------------------------- -------------- ------------ -------------------------- --------------------------------
John B. Yowell 0 0 14,000 Exercisable $ 9,663 Exercisable
2,000 Unexercisable $ 3,150 Unexercisable
- ------------------------------- -------------- ------------ -------------------------- --------------------------------
J. Wes Frye 0 0 14,900 Exercisable $ 10,713 Exercisable
2,600 Unexercisable $ 4,725 Unexercisable
===========================================================================================================================
* Not eligible to participate in the Option Plan.
COMPENSATION OF DIRECTORS
Each of the Company's outside directors receives an annual retainer of
$10,000 plus $1,000 for each meeting attended, including Board meetings and
meetings of committees of the Board of Directors not held in conjunction with a
meeting of the Board. Such directors also receive reimbursement of expenses
incurred as a director. Directors who are also officers of the Company receive
no such fees or expense reimbursement.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") is responsible for
conducting an annual review of the Company's compensation plan for its executive
officers including the evaluation of the components of the plan, the standards
of performance measurement and the relationship between performance and
compensation. The Committee reviews the compensation of each executive officer
and makes specific recommendations to the Board of Directors based on factors
that include the individual officer's performance, the ability of the Company to
attract and retain qualified, experienced personnel and whether the plan
provides appropriate motivation to achieve goals outlined by the Board of
Directors.
In determining the compensation of the Chief Executive Officer, the
Committee began its evaluation prior to the time of the public offering in
October 1991. The base salary was determined, in part, by comparison with the
compensation of chief executive officers of other companies of comparable size
and levels of profitability. The base salary is reviewed each year and compared
to that of other chief executive officers as reported in various publications,
such as FORBES magazine. Since 1991, the Chief Executive Officer has received
salary increases of 2% in 1992, 2% in 1994 and 3.8% in 1997. The Chief
Executive's increase in base salary in 1997 of 3.8% was based upon an
inflationary adjustment, since no increase had been granted since 1994, as well
as an adjustment for the financial performance of the Company. The incentive
bonus for the Chief Executive Officer is based upon the Company's profitability,
a program that has been in place for many years, and the Compensation Committee
believes that this is a fair measure of executive bonus compensation. The bonus
is based
-11-
upon a percentage, determined by the Compensation Committee, of pre-tax profits.
The bonus amounts for 1997, 1996 and 1995 are reflected in the Summary
Compensation Table. Both the base salary and the incentive bonus are evaluated
in determining overall compensation. The Chief Executive Officer is not eligible
to receive options under the Company's stock option plan.
The base salary for all other officers is based upon the experience and
qualifications of each officer, with the additional objective of remaining
competitive in the industry in recruiting and retaining a well-qualified and
effective management team. The incentive bonus for officers is determined by the
Compensation Committee and is based upon the same criteria as the Chief
Executive Officer, the performance of the Company as measured by its
profitability.
During 1993, Section 162(m) was added to the Internal Revenue Code (the
"Code") that generally limits amounts that can be deducted for compensation paid
to executives to $1 million, unless certain requirements are met. With the
release of the remaining shares under the Restricted Stock Agreement in 1997,
John A. Ebeling's total compensation exceeded $1 million; however, all amounts
were deductible in 1997 under Section 162(m) of the Code. The Committee will
continue to monitor the applicability of this section of the Code to the
Company's compensation program each year.
The Compensation Committee,
Franz F. Holscher, Chairman
Earl E. Congdon
John R. Congdon
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Earl E. Congdon, Chairman of the Board of the Company and its Chief
Executive Officer, and John R. Congdon, Vice Chairman of the Board, are members
of the Compensation Committee. Mr. Holscher is not an employee of the Company
and receives no compensation other than directors' fees from the Company.
Earl E. Congdon and John R. Congdon are each 50% owners of E & J
Enterprises ("E & J"), a Virginia general partnership that leases trailers to
the Company. Pursuant to an agreement dated August 1, 1991, the Company leased
163 trailers from E & J at a monthly rental of $44,010. This lease expired on
July 31, 1996, but was extended for an additional term of three years, expiring
on July 31, 1999. The extended lease requires declining monthly payments ranging
from $35,045 in the first year to $33,415 in the third year. Under the original
and extended lease, the Company is responsible for insurance coverage,
maintenance and repairs to the trailers. The Company has no purchase rights at
the end of the lease term. Upon termination of the lease prior to July 31, 1999,
for specified reasons, E & J may require the Company to purchase the trailers
for cash at fair market value, and failure to purchase may result in a liability
to E & J for the difference between the fair market value and the net amount
realized by E & J upon a sale to third parties. The Company paid $416,465 in
1997 for trailers leased from E & J under the lease agreement, which was treated
as a capital lease.
In December 1988, the Company sold to E & J certain tracts of
unimproved land and a vacant service center facility in exchange for a
non-interest-bearing receivable in the amount of $579,798. E & J has repaid the
amount outstanding under the receivable as parcels of the property have been
sold. As of December 31, 1997, the amount outstanding on the receivable was
$195,677.
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Old Dominion Truck Leasing, Inc., a North Carolina corporation owned by
Earl E. Congdon as trustee of a revocable trust (32.4%), John R. Congdon
Revocable Trust (25.5%) and members of Earl E. Congdon's and John R. Congdon's
families (42.1%), is engaged in the business of purchasing and leasing tractors,
trailers and other vehicles. Earl E. Congdon is Chairman of the Board of Leasing
and John R. Congdon is the President, Chief Operating Officer and a Director of
Leasing. Both individuals also serve on the Board of Directors and Compensation
Committee of Old Dominion Freight Line. Since 1986, the Company and Leasing have
combined their requirements for the purchase of tractors, trailers, equipment,
parts, tires and fuel. In addition, the Company provides vehicle repair,
maintenance and service to Leasing at the Company's cost and has granted to
Leasing a right of first refusal for the Company's future tractor and trailer
leases, exercisable on the same terms offered to the Company by third parties.
In 1997, the Company charged Leasing $443,661 for vehicle repair, maintenance
and fuel services. The Company intends to continue to combine its purchases of
tractors, trailers, equipment, parts, tires and fuel with those of Leasing. The
Company believes that, by so doing, it is often able to obtain pricing discounts
because of the increased level of purchasing. While this is beneficial to the
Company, management believes that the termination of this relationship would not
have a material adverse impact upon the Company's results of operations.
In 1997, Leasing operated 15 vehicle maintenance and service
facilities, three of which were leased from the Company for a total of $36,000.
These leased facilities were located in Chesapeake, Virginia; Baltimore,
Maryland; and Jacksonville, Florida. The Company purchases maintenance from
Leasing on an as needed basis, which in 1997, totaled $365,230. Old Dominion
believes that the prices it pays for such services are lower than would be
charged by unaffiliated third parties for the same quality work and intends to
continue to purchase maintenance and service from Leasing, provided that its
prices continue to be favorable to the Company.
On July 15, 1995, the Company renewed a lease for a service center
facility in Greensboro, North Carolina, from an irrevocable trust created by
Earl E. Congdon and John R. Congdon, for the benefit of their families. The
Company accounts for this lease as an operating lease, which has a term of five
years, expiring on July 14, 2000. The lease requires escalating annual payments
ranging from $29,000 per month in the first year to $31,391 in the fifth year
and requires the Company to maintain insurance, maintenance and repairs to the
facility. The Company made payments totaling $358,510 in 1997 under this lease.
The trust is currently negotiating the purchase of additional land adjacent to
the property. Upon completion of the land purchase, the Company plans to
construct and extend additional dock facilities from the existing structure,
which will be treated as a leasehold improvement. Prior to the land purchase and
subsequent construction, it is anticipated that the existing lease will be
re-negotiated for a longer term; however, the final details of the structure of
this transaction have not been determined. The expansion of the Greensboro
facility will accommodate the need for additional capacity that has resulted
from growth in business levels. The expansion will also allow the Company to
consolidate operations in the immediate area surrounding Greensboro into one
facility from the two separate facilities currently operated, which should
result in an increase in productivity and efficiency.
The Company is a party to certain split dollar life insurance policies,
of which certain members of the families of Earl E. Congdon and John R. Congdon
are designated beneficiaries. See Note (2) under the Summary Compensation Table,
above.
The E & J lease and the equipment purchasing and servicing arrangement
with Leasing permit the Company to obtain certain equipment and services at
prices comparable to, or more favorable than, prices charged by unaffiliated
third parties. The Company believes that the rent paid under the lease for
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the Greensboro service center is comparable to, or more favorable than, prices
charged by unaffiliated third parties.
Each of the foregoing transactions has been reviewed by the Audit
Committee of the Company's Board of Directors, which consists of the two
nonemployee directors. The Audit Committee has approved the transactions that
continue to be in effect as being fair to the Company. The Audit Committee
believes that the terms and conditions of the foregoing transactions are
substantially the same as, or more favorable to the Company than, would be
available from nonaffiliates. The Company intends to enter into a re-negotiation
and extension of the Greensboro, North Carolina lease as described above. Any
extensions, modifications or renewals of existing transactions with such persons
must be approved, in advance, by the Audit Committee as being on terms no less
favorable to the Company than the terms that could be obtained in a similar
transaction with an unaffiliated party.
PERFORMANCE GRAPH
The following graph compares the total stockholder cumulative returns,
assuming the reinvestment of all dividends, of $100 invested on January 1, 1993,
in the Company's Common Stock, Nasdaq Trucking & Transportation Stocks and The
Nasdaq Stock Market (US) for the five-year period ended December 31, 1997:
COMPARISON OF CUMULATIVE TOTAL RETURN
(ASSUMES $100 INVESTED ON JANUARY 1, 1993)
1/1/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
------ -------- -------- -------- -------- --------
(Dollars)
Old Dominion Freight Line, Inc. $100 $ 90 $ 75 $ 37 $ 49 $ 70
Nasdaq Trucking & Transportation Stocks 100 121 110 128 142 182
The Nasdaq Stock Market (US) 100 115 112 159 195 240
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CORPORATE GOVERNANCE
The Company's Board of Directors held four meetings during 1997. All
directors attended all meetings of the Board of Directors and committees on
which they serve.
The Board of Directors has four standing committees: Executive
Committee, Audit Committee, Compensation Committee and Stock Option Plan
Committee.
The Executive Committee consists of Messrs. Earl E. Congdon (Chairman),
John R. Congdon and John A. Ebeling. The Executive Committee is empowered to act
between meetings of the Board of Directors with powers of the full Board, except
with respect to certain matters. This committee did not meet in 1997.
The Audit Committee consists of Franz F. Holscher and Harold G. Hoak,
the Company's nonemployee directors. The Audit Committee's responsibilities are
to recommend to the Board of Directors the firm to be engaged to audit the
Company's financial statements and to review with the independent auditors the
plan for, and results of, the auditing engagement and Old Dominion's internal
accounting controls. The Audit Committee also reviews the activities and
recommendations of the internal audit function. The Audit Committee has reviewed
transactions between the Company and entities in which officers or directors of
the Company or their affiliates have material interests and has determined that
such existing transactions are fair to the Company. Any new transactions with
officers, directors or their affiliates, and any extensions, modifications or
renewals of existing transactions with such persons must be approved in advance
by the Audit Committee as being on terms no less favorable to the Company than
the terms that could be obtained in a similar transaction with an unaffiliated
party. The Audit Committee met two times in 1997.
The Compensation Committee consists of Franz F. Holscher (Chairman),
Earl E. Congdon and John R. Congdon. The Compensation Committee meets
periodically to review and approve the salaries and classifications of the
Company's executive officers and other significant employees and its personnel
policies. The Compensation Committee met once in 1997.
The Stock Option Plan Committee consists of Earl E. Congdon (Chairman),
John R. Congdon, Harold G. Hoak and Franz F. Holscher. The Committee has
authority to administer the Company's 1991 Employee Stock Option Plan, including
authority to determine persons eligible to receive options and the terms upon
which options are granted. The Stock Option Plan Committee did not meet in 1997.
INDEPENDENT AUDITORS
Ernst & Young LLP has served the Company as independent auditors since
1994. A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting of Stockholders with the opportunity to make a statement if he
desires to do so and to answer any questions that concern that firm's work for
the Company.
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The Audit Committee and the Board of Directors have approved all of the
nonaudit services by Ernst & Young LLP and believe they have no effect on audit
independence. The Audit Committee has authorized management to engage the
Company's independent accountants in nonaudit services relating to preparation
of tax returns and working with state and federal agents on audits, but other
matters require prior approval from the Audit Committee.
GENERAL
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of the Company, and the entire cost of such solicitation will be borne
by the Company. In addition to solicitation by mail, arrangements will be made
with brokerage houses and other custodians, nominees and fiduciaries to send
proxy material to their principals, and the Company will reimburse them for
their reasonable expenses in so doing.
The Board of Directors has fixed March 16, 1998, as the record date for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting. On March 16, 1998, there were 8,310,596 outstanding shares of
Common Stock of the Company, each entitled to one vote.
Stockholders do not have cumulative voting rights in the election of
directors. Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present. With
regard to the election of directors, votes may be cast in favor or withheld.
Votes that are withheld will be excluded entirely from the vote and will have no
effect, although they will be counted for purposes of establishing the presence
of a quorum. Under the rules of the New York Stock Exchange, Inc., brokers who
hold shares in street name for customers have authority to vote on certain items
when they have not received instructions from beneficial owners. Brokers that do
not receive instructions are entitled to vote on the election of directors.
Where a choice is specified on any Proxy as to the vote on any matter
to come before the meeting, the Proxy will be voted in accordance with such
specification. If no specification is made but the Proxy is properly signed, the
shares represented thereby will be voted in favor of each proposal. Such
proxies, whether submitted by stockholders of record or by brokers holding
shares in street name for their customers ("broker non-votes"), will be voted in
favor of nominees for directors. Broker non-votes will not be counted either way
in voting on other matters (where direction of beneficial owners is required)
and, therefore, will have the effect of negative votes.
Any stockholder submitting the accompanying Proxy has the right to
revoke it by notifying the Secretary of the Company in writing at any time prior
to the voting of the Proxy. A Proxy is suspended if the person giving the Proxy
attends the meeting and elects to vote in person.
Management is not aware that any matters, other than those specified
above, will be presented for action at the meeting, but, if any other matters do
properly come before the meeting, the persons named as agents in the Proxy will
vote upon such matters in accordance with their best judgment.
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ANNUAL REPORT ON FORM 10-K
STOCKHOLDERS MAY OBTAIN A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED
DECEMBER 31, 1997, WITHOUT CHARGE BY WRITING TO J. WES FRYE, TREASURER, CHIEF
FINANCIAL OFFICER AND ASSISTANT SECRETARY, OLD DOMINION FREIGHT LINE, INC., POST
OFFICE BOX 2006, HIGH POINT, NORTH CAROLINA 27261. EXHIBITS ARE NOT INCLUDED,
BUT COPIES OF THEM MAY BE OBTAINED FROM THE COMPANY UPON PAYMENT OF COPYING
CHARGES.
DEADLINE FOR STOCKHOLDERS' PROPOSALS
Any stockholder desiring to present a proposal for action at the
Company's 1999 Annual Meeting must deliver the proposal to the Company at its
executive offices no later than November 27, 1998.
By Order of the Board of Directors
/s/ Joel B. McCarty, Jr.
Joel B. McCarty, Jr.
SECRETARY
High Point, North Carolina
April 3, 1998
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