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 3, 1999
The Annual Meeting of Stockholders of Old Dominion Freight Line, Inc.,
will be held Monday, May 3, 1999, 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, 1999, 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 2, 1999
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 or about April 2,
1999, 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 3, 1999, 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 seven in 1999. 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, 1999
---------------------------------------------
VOTING AND
INVESTMENT POWER (1) IN ALL CAPACITIES
-------------------- ----------------------
NAME, AGE, PRINCIPAL OCCUPATION PERCENT OF
AND OTHER POSITIONS AND OFFICES DIRECTOR TOTAL COMMON
WITH THE COMPANY SINCE SOLE SHARED SHARES STOCK
- ---------------- ----- ---- ------ ------ -----
Earl E. Congdon, 68 (2)(3)(4) 1952 See "Principal Stockholders".
Chairman of the Board and
Chief Executive Officer of
the Company
John R. Congdon, 66 (2)(3)(4) 1955 See "Principal Stockholders".
Vice Chairman of the Board
of Directors of the Company;
Chairman of Old Dominion
Truck Leasing, Inc.
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF THE COMPANY'S COMMON
STOCK AS OF MARCH 16, 1999
---------------------------------------------
VOTING AND
INVESTMENT POWER (1) IN ALL CAPACITIES
-------------------- ----------------------
NAME, AGE, PRINCIPAL OCCUPATION PERCENT OF
AND OTHER POSITIONS AND OFFICES DIRECTOR TOTAL COMMON
WITH THE COMPANY SINCE SOLE SHARED SHARES STOCK
- ---------------- ----- ---- ------ ------ -----
John A. Ebeling, 61 (2) 1985 39,468 (6) -- 39,468 (6) Less than
Vice Chairman of the Board 1%
of Directors of the Company
Harold G. Hoak, 69 (4)(5) 1991 1,000 -- 1,000 Less than
Retired (former Regional 1%
Vice President of Wachovia
Bank of North Carolina, N.A.)
Franz F. Holscher, 77 (3)(4)(5) 1991 1,000 -- 1,000 Less than
Retired (former Chairman 1%
of Thurston Motor Lines, Inc.)
David S. Congdon, 42 1998 See "Principal Stockholders".
President and Chief Operating
Officer of the Company
John R. Congdon, Jr., 42 1998 See "Principal Stockholders".
Vice Chairman 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 18,600 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 Chairman 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 within
the trucking industry.
David S. Congdon was elected a director in 1998. He 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. was elected a director in 1998. He currently serves
as Vice Chairman 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, 1999, 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
---------------- -------------------- -------
David S. Congdon 1,415,937 (2) 17.0%
1730 Westchester Drive
High Point, NC 27262
Old Dominion Truck Leasing, Inc. 1,095,876 (3) 13.2%
7511 Whitepine Road
Richmond, VA 23237
John R. Congdon 981,209 (4)(5) 11.8%
7511 Whitepine Road
Richmond, VA 23237
Earl E. Congdon 980,413 (5)(6) 11.8%
20 Harborage Isle
Fort Lauderdale, FL 33316
Dimensional Fund Advisors Inc. 602,400 (7) 7.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Fidelity Management & Research 529,500 (8) 6.4%
Company
82 Devonshire Street
Boston, MA 02109
Audrey L. Congdon 486,986 (9) 5.8%
1730 Westchester Drive
High Point, NC 27262
John R. Congdon, Jr. 462,209 (10) 5.6%
9800 Drouin Drive
Richmond, VA 23233
Karen C. Vanstory 459,084 (11) 5.5%
5412 Horse Trail Road
Summerfield, NC 27358
-4-
NAME AND ADDRESS OF
BENEFICIAL OWNER NUMBER OF SHARES (1) PERCENT
---------------- -------------------- -------
Susan C. Terry 450,987 (12) 5.4%
10801 North Bank Road
Richmond, VA 23233
Jeffrey W. Congdon 419,716 (13) 5.0%
643 Walsing Drive
Richmond, VA 23229
All Executive Officers and 4,518,642 (14) 53.8%
Directors of the Company as
a Group (10 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) Includes 1,764 shares owned of record by the named stockholder, 3,657
shares owned in the Company's 401(k) plan, 14,200 shares obtainable upon
exercise of stock options exercisable within 60 days, 284,967 shares
held as trustee of a revocable trust, 101,517 shares held as trustee or
custodian for minor children of the stockholder, 835,746 shares through
shared voting and investment rights as trustee under the Earl E. Congdon
Intangible Trust, 103,000 shares through shared voting and investment
rights as trustee under the Kathryn W. Congdon Intangible Trust, 65,086
shares held by Mr. Congdon's wife as trustee of an irrevocable trust and
6,000 shares owned by Mr. Congdon's wife.
(3) 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%). John R. Congdon is
Chairman of the Board of Leasing and Earl E. Congdon is Vice Chairman of
the Board. 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.
(4) Includes 937,810 shares held as trustee of a revocable trust, 41,667
shares through shared voting and investment rights as trustee of the
Earl E. Congdon Family Trust and 1,732 shares owned by Mr. Congdon's
wife as trustee of a revocable trust for which Mr. Congdon disclaims
beneficial ownership.
(5) Does not include any of the shares owned by Old Dominion Truck Leasing,
Inc.
-5-
(6) Includes 835,746 shares through shared voting and investment rights as
grantor of the Earl E. Congdon Intangible Trust, 41,667 shares through
shared voting and investment rights as grantor of the Earl E. Congdon
Family Trust and 103,000 shares owned beneficially by Mr. Congdon's
wife's as trustee of a revocable trust with respect to which Mr. Congdon
disclaims beneficial ownership.
(7) Based on information provided by Dimensional Fund Advisors Inc.
("Dimensional"), as reflected in a Schedule 13G filed February 11, 1999,
with the Securities and Exchange Commission (the "SEC"), Dimensional, an
investment advisor registered under Section 203 of the Investment
Advisors Act of 1940, is deemed to have beneficial ownership of 602,400
shares of the Company's stock as of December 31, 1998. Dimensional
furnishes investment advice to four investment companies registered
under the Investment Company Act of 1940 and serves as investment
manager to certain other investment vehicles, including commingled group
trusts. (These investment companies and investment vehicles are the
"Portfolios"). In its role as investment advisor and investment manager,
Dimensional possesses both voting and investment power over the Old
Dominion shares owned by the Portfolios. All securities reported in the
Schedule 13G were owned by the Portfolios, of which, Dimensional
disclaims beneficial ownership.
(8) Based on information obtained from a Schedule 13G, dated February 12,
1999, 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 529,500 shares 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.
(9) Includes 1,764 shares owned of record by the named stockholder, 306,500
shares held as trustee of a revocable trust, 67,678 shares held as
trustee or custodian for minor children of the stockholder, 52,241
shares through shared voting rights as trustee under the Karen C.
Vanstory Irrevocable Trust, 36,847 shares held by Mrs. Congdon's husband
as trustee of an irrevocable trust, 15,200 shares obtainable upon
exercise of Mrs. Condgon's husband's stock options exercisable within 60
days and 6,756 shares owned by Mrs. Congdon's husband.
(10) Includes 297,314 shares held as trustee of a revocable trust and 164,895
shares held as trustee or custodian for the benefit of the stockholder's
minor children.
(11) Includes 2,714 shares owned of record by the named stockholder, 302,612
shares held as trustee of a revocable trust, 52,241 shares through
shared voting and investment rights as grantor of an irrevocable trust
and 101,517 shares held as trustee or custodian for minor children of
the stockholder.
(12) Includes 286,092 shares held as trustee of a revocable trust and 164,895
shares held as trustee or custodian for the benefit of the stockholder's
minor children.
(13) Includes 309,736 shares held as trustee of a revocable trust and 109,980
shares held as trustee or custodian for the benefit of the stockholder's
minor children.
-6-
(14) Includes shares owned by Old Dominion Truck Leasing, Inc.
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, 1998, and of 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 1998 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
Awards
Annual Compensation
- ----------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (f) (g) (i)
Restricted Securities
Salary Bonus(1) Stock Underlying All Other
Name and Principal Position Year ($) ($) Award(s) Options Compensation
($) (#) ($)(2)
- ----------------------------------------------------------------------------------------------------------------------
Earl E. Congdon
Chairman of the Board and Chief
Executive Officer 1998 $289,400 $356,344 0 0 $ 16,573 (3)
---------------------------------------------------------------------------------
1997 $276,600 $336,039 0 0 $ 12,498
---------------------------------------------------------------------------------
1996 $270,400 $174,175 0 0 $ 12,209
- ----------------------------------------------------------------------------------------------------------------------
David S. Congdon
President and Chief Operating
Officer 1998 $170,800 $202,663 0 0 $2,545 (3)
---------------------------------------------------------------------------------
1997 $131,215 $ 91,726 0 0 $ 2,486
---------------------------------------------------------------------------------
1996 $109,020 $ 37,351 0 0 $ 3,660
- ----------------------------------------------------------------------------------------------------------------------
John B. Yowell
Executive Vice President 1998 $135,700 $ 89,086 0 0 $ 2 ,460 (3)
---------------------------------------------------------------------------------
1997 $122,020 $ 79,467 0 0 $ 2,529
---------------------------------------------------------------------------------
1996 $109,280 $ 37,351 0 0 $ 4,434
- ----------------------------------------------------------------------------------------------------------------------
John A. Ebeling(4)
Vice Chairman of the Board 1998 $101,388 $111,358 0 0 $8,057 (3)
---------------------------------------------------------------------------------
1997 $155,813 $ 164,043 $ 766,680(5) 0 $ 8,619
---------------------------------------------------------------------------------
1996 $185,380 $ 116,723 0 0 $ 3,313
- ----------------------------------------------------------------------------------------------------------------------
J. Wes Frye
Treasurer, Chief Financial
Officer and Assistant
Secretary 1998 $127,255 $ 71,269 0 0 $3,460 (3)
---------------------------------------------------------------------------------
1997 $116,975 $ 67,208 0 0 $ 5,358
---------------------------------------------------------------------------------
1996 $112,140 $ 37,351 0 0 $ 9,501
======================================================================================================================
-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 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 $16,579,074 and
$16,273,344, respectively. The total benefits currently payable to the
Company under the policies upon the death of Earl E. Congdon and John R.
Congdon are $1,442,245 and $2,843,427, 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 1998, 1997 and 1996 were $392,848, $452,162 and
$525,394, respectively.
(3) Allocation of 1998 All Other Compensation:
401(k) Split-Dollar Personal Use of Excess Life
Name Contribution Life Insurance Company Car Insurance Premiums
--------------- ------------ --------------- --------------- ------------------
Earl E. Congdon $ 3,473 $ 8,083 $ 3,757 $ 1,260
David S. Congdon 2,050 - 393 102
John B. Yowell 1,628 - 658 174
John A. Ebeling 1,217 - 6,138 702
J. Wes Frye 1,527 - 1,645 288
(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 adjusted the 1997 annual salary of Mr.
Ebeling to $201,032; 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.
(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 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 1998.
Options to purchase 224,000 shares under the Option Plan have been
granted. As of March 16, 1999, 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
22,500 shares at the exercise price of $10.00 per share. All of the options have
been granted as incentive options. The sale of shares issuable under the Option
Plan have been registered with the SEC.
-10-
The following table reflects cumulative information regarding grants
under the Option Plan:
============================================================================================================================
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
- ----------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Securities Underlying Value of Unexercised In-The-
Shares Acquired Value Realized Unexercised Options at FY-End Money Options at FY-End
Name on Exercise(#) ($) Exercisable/Unexercisable(#) Exercisable/Unexercisable($)
- ----------------------------------------------------------------------------------------------------------------------------
Earl E. Congdon * * * *
- ----------------------------------------------------------------------------------------------------------------------------
David S. Congdon 0 0 14,200 Exercisable $ 825 Exercisable
800 Unexercisable $ 550 Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------
John B. Yowell 0 0 15,200 Exercisable $ 825 Exercisable
800 Unexercisable $ 550 Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------
John A. Ebeling 0 0 18,600 Exercisable $ 1,650 Exercisable
1,400 Unexercisable $ 1,100 Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------
J. Wes Frye 0 0 16,400 Exercisable $ 1,238 Exercisable
1,100 Unexercisable $ 825 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 $1,200 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, 3.8% in 1997 and 1.9% in 1998. The
Chief Executive's increase in base salary in 1998 of 1.9% was primarily an
inflationary adjustment. 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 upon a percentage,
determined by the Compensation Committee, of pre-tax profits. The bonus
-11-
amounts for 1998, 1997 and 1996 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. No stock options were granted to any individual in 1998.
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. No executive
received compensation in excess of $1 million in 1998; therefore, there were no
compensation amounts that would be deemed nondeductible for the Company 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 $373,270 in
1998 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, 1998, 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. John R. Congdon is Chairman of the Board and Earl
E. Congdon is the Vice Chairman of the Board 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 1998, the Company charged
Leasing $181,152 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 1998, Leasing operated 15 vehicle maintenance and service facilities,
two of which were leased from the Company for a total of $25,500. These leased
facilities were located in Chesapeake, Virginia and Baltimore, Maryland. The
Company purchases maintenance from Leasing on an as needed basis, which in 1998,
totaled $309,706. 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 of 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 $365,680 in 1998 under this lease.
The trust has entered into a contract to purchase an additional 20 acres of land
adjacent to the property, subject to certain contingencies. The Company's Board
of Directors, after review by the Audit Committee, has authorized the Company to
lend the trust the sum of $380,000 to purchase the land at 7.5% interest to be
repaid and amortized in monthly installments over ten years. 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 renegotiated 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. This
need is illustrated by the Company's opening of a 60 door service center
facility in nearby High Point, NC in January, 1998. The Greensboro expansion
will allow the Company to consolidate the High Point service center with the
enlarged Greensboro facility and thus eliminate a two-facility operation. It is
anticipated that this will result in an increase in productivity and efficiency.
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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, on page 9 of this proxy statement.
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 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, 1994,
in the Company's Common Stock, Nasdaq Trucking & Transportation Stocks and The
Nasdaq Stock Market (US) for the five-year period ended December 31, 1998:
COMPARISON OF CUMULATIVE TOTAL RETURN
(Assumes $100 Invested on January 1, 1994)
1/1/94 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
Old Dominion Freight Line, Inc. 19.625 16.25 8 10.625 15.25 11.375
Nasdaq Trucking & Transportation Stocks 208.275 188.862 220.345 243.231 311.327 276.302
The Nasdaq Stock Market(US) 249.861 244.244 345.448 424.8 520.459 733.392
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CORPORATE GOVERNANCE
The Company's Board of Directors held four meetings during 1998. All
directors attended all meetings of the Board of Directors except for the January
1998 meeting, at which, John R. Congdon was not present.
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 1998.
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 1998, at which all members were
present.
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 1998, at which all members were
present.
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 1998.
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, 1999, as the record date for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting. On March 16, 1999, there were 8,312,196 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, 1998, 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 2000 Annual Meeting must deliver the proposal to the Company at its
executive offices no later than November 26, 1999.
In addition to any other applicable requirements, for business to be
properly brought before the annual meeting by a stockholder, even if the
proposal is not to be included in the Company's proxy statement, the Company's
bylaws provide that the stockholder must give timely notice of such business in
writing to the Secretary of the Company at least 60 days and not more than 90
days prior to the meeting, except that if public disclosure of the date of the
meeting is given less than 70 days prior to the meeting, notice by the
stockholder will be considered timely if received by the Secretary by the close
of business on the 10th day after public disclosure of the date of the meeting
was made. As to each item of business, the notice must contain (i) a brief
description of the business to be brought before the meeting and the reasons
therefore, (ii) the name and address of record of the stockholder and the number
of shares of the Company's stock owned of record or beneficially by the
stockholder and (iii) any material interest the stockholder has in the proposed
business.
By Order of the Board of Directors
/s/ Joel B. McCarty, Jr.
------------------------
Joel B. McCarty, Jr.
SECRETARY
High Point, North Carolina
April 2, 1999
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