SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Landstar System, Inc.
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LOGO(R)
LANDSTAR SYSTEM, INC.
13410 SUTTON PARK DRIVE SOUTH
JACKSONVILLE, FLORIDA 32224
March 23, 2001
To the Shareholders of Landstar System, Inc.:
You are cordially invited to attend the Annual Meeting of Shareholders of
Landstar System, Inc. on Wednesday, May 16, 2001, at 10:00 a.m., local time, at
the Ponte Vedra Inn, Ponte Vedra Beach, Florida, 32082. A notice of meeting, a
proxy card, the 2000 Annual Report and a Proxy Statement containing information
about the matters to be acted upon are enclosed. It is important that your
shares be represented at the meeting. Accordingly, we urge you to sign and date
the enclosed proxy card and promptly return it in the enclosed pre-addressed,
postage-paid envelope even if you are planning to attend the meeting.
We look forward to the Annual Meeting of Shareholders, and we hope you will
attend the meeting or be represented by proxy.
/s/ Jeffrey C. Crowe
Jeffrey C. Crowe
Chairman of the Board,
President and
Chief Executive Officer
LOGO(R)
LANDSTAR SYSTEM, INC.
13410 SUTTON PARK DRIVE SOUTH
JACKSONVILLE, FLORIDA 32224
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2001
Notice is hereby given that the 2001 Annual Meeting of Shareholders of
Landstar System, Inc., a Delaware corporation (the "Company"), will be held at
the Ponte Vedra Inn, Ponte Vedra Beach, Florida 32082, on Wednesday, May 16,
2001, at 10:00 a.m., local time, for the following purposes:
(1) To elect three Class II Directors for terms to expire at the 2004
Annual Meeting of Shareholders;
(2) To ratify the appointment of KPMG LLP as the Company's independent
auditors for fiscal year 2001;
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on March 20, 2001 will
be entitled to notice of and to vote at the meeting. A list of shareholders
eligible to vote at the meeting will be available for inspection at the meeting
at the Ponte Vedra Inn at the address set forth above and during business hours
from May 7, 2001 to the date of the meeting at the Company's corporate
headquarters at the address set forth above.
All shareholders are cordially invited to attend the meeting in person.
Whether you expect to attend the Annual Meeting or not, your proxy vote is very
important. TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES OR CANADA.
By Order of the Board of Directors
/s/ Michael L. Harvey
MICHAEL L. HARVEY
Vice President,
General Counsel,
and Secretary
Jacksonville, Florida
March 23, 2001
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED
AND RETURNED PROMPTLY
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LANDSTAR SYSTEM, INC.
PROXY STATEMENT
March 23, 2001
INTRODUCTION
This Proxy Statement is furnished to the shareholders of Landstar System,
Inc. (the "Company") in connection with the solicitation of proxies on behalf of
the Board of Directors of the Company (the "Board") to be voted at the Annual
Meeting of Shareholders to be held on Wednesday, May 16, 2001 at 10:00 a.m.,
local time (the "2001 Annual Meeting"). The 2000 Annual Report to Shareholders
(which does not form a part of the proxy solicitation material), including the
financial statements of the Company for fiscal year 2000, is enclosed herewith.
The mailing address of the principal executive offices of the Company is 13410
Sutton Park Drive South, Jacksonville, Florida 32224. This Proxy Statement,
accompanying form of proxy, Notice of Meeting and 2000 Annual Report are being
mailed to the shareholders of the Company on or about March 23, 2001.
RECORD DATE
The Board has fixed the close of business on March 20, 2001 as the record
date for the 2001 Annual Meeting. Only shareholders of record on that date will
be entitled to vote at the meeting in person or by proxy.
PROXIES
Shares cannot be voted at the meeting unless the owner thereof is present
in person or by proxy. The proxies named on the enclosed proxy card were
appointed by the Board to vote the shares represented by the proxy card. If a
shareholder does not return a signed proxy card, his or her shares cannot be
voted by proxy. Shareholders are urged to mark the boxes on the proxy card to
show how their shares are to be voted. All properly executed and unrevoked
proxies in the accompanying form that are received in time for the meeting will
be voted at the meeting or any adjournment thereof in accordance with any
specification thereon, or if no specification is made, will be voted "FOR" the
election of the named nominees and ratification of KPMG LLP as independent
auditors for the Company as set forth in this Notice of 2001 Annual Meeting. The
proxy card also confers discretionary authority on the proxies to vote on any
other matter not presently known to management that may properly come before the
2001 Annual Meeting.
Any proxy delivered pursuant to this solicitation is revocable at the
option of the person(s) executing the same (i) upon receipt by the Company
before the proxy is voted of a duly executed proxy bearing a later date, (ii) by
written notice of revocation to the Secretary of the Company received before the
proxy is voted, or (iii) by such person(s) voting in person at the 2001 Annual
Meeting.
The Board has selected Mellon Investor Services, L.L.C. as Inspectors of
Election (the "Inspectors") pursuant to the Company's Bylaws, as amended. The
Inspectors shall ascertain the number of shares outstanding, determine the
number of shares represented at the 2001 Annual Meeting by proxy or in person
and count all votes and ballots. Each shareholder shall be entitled to one vote
for each share of Common Stock (as defined hereafter) and such votes may be cast
either in person or by written proxy.
VOTING SECURITIES
The Company has only one class of voting securities, its common stock, par
value $.01 per share (the "Common Stock") outstanding. On March 20, 2001,
8,518,533 shares of Common Stock were outstanding. At the 2001 Annual Meeting,
each shareholder of record at the close of business on March 20, 2001 will be
entitled to one vote for each share of Common Stock owned on that date as to
each matter properly presented
1
to the 2001 Annual Meeting. The holders of a majority of the total number of the
issued and outstanding shares of Common Stock shall constitute a quorum for
purposes of the 2001 Annual Meeting.
ELECTION OF DIRECTORS
The Board is divided into three classes, with Directors in each class
serving staggered three-year terms. At each annual meeting of shareholders, the
terms of Directors in one of the three classes expire. At that annual meeting of
shareholders, Directors are elected in a class to succeed the Directors whose
terms expire, with the terms of the Directors so elected to expire at the third
annual meeting of shareholders thereafter. Pursuant to the Company's Bylaws, new
Directors elected by the remaining Board members to fill a vacancy on the Board
shall hold office for a term expiring at the annual meeting of shareholders at
which the term of office of the class of which they have been elected expires
and until such Director's successors shall have been duly elected and qualified.
There are seven members of the Board of Directors; three Class II Directors to
be elected at the 2001 Annual Meeting of Shareholders (whose members' terms will
expire at the 2004 Annual Meeting of Shareholders), two Class III Directors
whose terms will expire at the 2002 Annual Meeting of Shareholders, and two
Class I Directors whose terms will expire at the 2003 Annual Meeting of
Shareholders.
It is intended that the shares represented by the accompanying form of
proxy will be voted at the 2001 Annual Meeting for the election of nominees
Merritt J. Mott, William S. Elston and Diana M. Murphy as the Directors
comprising Class II whose members' terms will expire at the 2004 Annual Meeting
of Shareholders, unless the proxy specifies otherwise. Each nominee has
indicated his or her willingness to serve as a member of the Board, if elected.
If, for any reason not presently known, Merritt J. Mott, William S. Elston
or Diana M. Murphy are not available for election at the time of the 2001 Annual
Meeting, the shares represented by the accompanying form of proxy may be voted
for the election in his/her/their stead of substitute nominee(s) designated by
the Board or a committee thereof, unless the proxy withholds authority to vote
for all nominees.
Assuming the presence of a quorum, to be elected, a nominee must receive
the affirmative vote of the holders of a majority of the Common Stock, present,
in person or by proxy, at the 2001 Annual Meeting. Abstentions from voting and
broker non-votes will have no effect on the outcome of this proposal.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL
2
DIRECTORS OF THE COMPANY
The following information describes the principal occupation or employment,
other affiliations and business experience of each nominee named above and to
the other persons whose terms as Directors will continue after the 2001 Annual
Meeting.
NAME AGE BUSINESS EXPERIENCE
---- --- -------------------
CLASS II -- NOMINEES TO SERVE AS DIRECTORS UNTIL THE 2004 ANNUAL MEETING
Merritt J. Mott................ 55 Mr. Mott has been a Director of the Company and Landstar
System Holdings, Inc. (a wholly-owned subsidiary of the
Company) ("LSHI") since August 1994. He is the Owner and
Chief Executive Officer of Rockford Sanitary Systems, Inc.
He has been President and was Co-Founder of T & M
Fabricating, Inc. since 1993. From 1980 through 1996 he
served in various capacities at Mott Bros. Company including
Chief Financial Officer, Executive Vice President and
Director. Mr. Mott was a Director of Rockford Health Plans
from 1994 through 1997 and has been a trustee of the William
Howard Trust since 1984.
William S. Elston.............. 60 Mr. Elston has been a Director of the Company and LSHI since
February 1998 and an Executive Recruiting Consultant since
December 1999. He was President and CEO of Clean Shower,
L.P. from November 1998 to December 1999. He served as
Managing Director/Executive Vice President of DHR,
International, an executive recruiting firm, from February
1995 to November 1998. He was Executive Vice President of
Operations, Steelcase, Inc., from April 1994 to January
1995. Mr. Elston was President and Chief Executive Officer
of GATX Logistics, Inc. from 1990 through March 1994. He has
been a member of the Board of Directors of Southern
Petroleum Systems since January 1998.
Diana M. Murphy................ 44 Ms. Murphy has been a Director of the Company and LSHI since
February 1998 and has been a Managing Director in the
private equity firm of Chartwell Capital Management Company
since 1997. Ms. Murphy was an associate with Chartwell
Capital and served as interim President for one of
Chartwell's portfolio companies, Strategic Media Research,
Inc. in 1996. She was Senior Vice President for The
Baltimore Sun, a division of The Tribune Corporation from
1992 to 1995. Ms. Murphy also serves on the Boards of
Directors of Sandbox.com, Raymedica, Inc. and eMotion.com.
CLASS III -- DIRECTORS WHOSE TERMS EXPIRE AT THE 2002 ANNUAL MEETING
David G. Bannister............. 45 Mr. Bannister has been a Director of the Company since April
1991 and a Director of LSHI since October 1988. Mr.
Bannister is a General Partner of Grotech Capital Group, a
private equity and venture capital firm. Prior to joining
Grotech in May 1998, Mr. Bannister was a Managing Director
at BT Alex. Brown Incorporated. Mr. Bannister also serves on
the Boards of Directors of Allied Holdings, Inc., Nationtax
Online, Inc., homebytes.com incorporated, Simondelivers.com,
Inc., eSkye.com, Inc. and iFleet, Inc.
3
DIRECTORS OF THE COMPANY (continued)
NAME AGE BUSINESS EXPERIENCE
---- --- -------------------
Jeffrey C. Crowe............... 54 Mr. Crowe has been Chairman of the Board, President and
Chief Executive Officer of the Company since April 1991. He
has been President and Chief Executive Officer of LSHI since
June 1989 and Chairman of the Board of LSHI since March
1991. Mr. Crowe has been President of Signature Insurance
Company ("Signature") (a wholly-owned subsidiary of LSHI)
since February 1997. Mr. Crowe served in a number of
capacities at the American Trucking Association, Inc.
("ATA") including Secretary and a member of the ATA
Executive Committee and served as a Director of the ATA
Foundation since November 1989 until his resignation from
ATA in 1998. He has also served as Chairman of the National
Defense Transportation Association ("NDTA") commencing
October 1993. From May 1990 to September 1993, he served as
Chairman of the Surface Transportation Committee of the NDTA
and also served as Chairman of the Board of Deliver, U.S.A.,
an affiliate of ATA, from 1990 to 1996 as well as a Vice
President at large of the ATA from November 1989 to 1996. He
has served as a Director of Silgan Holdings Inc. since May
1997, a Director of National Chamber Foundation since
November 1997, and a Director of U.S. Chamber of Commerce
since February 1998. He has been a Director of SunTrust
Bank-North Florida, N.A. since January 1999. Mr. Crowe will
commence serving as a member of the Board of Advisors for
the US Merchant Marine Academy Global Maritime and
Transportation School on April 25, 2001.
CLASS I -- DIRECTORS WHOSE TERMS EXPIRE AT THE 2003 ANNUAL MEETING
Ronald W. Drucker.............. 59 Mr. Drucker has been a Director of the Company and LSHI
since April 1994. Mr. Drucker is a consultant and he serves
as the Chairman of the NDTA Business Practices Committee. He
also served as Chairman of the Board of Encompass, a global
logistics information joint venture of AMR and CSX
Corporations from 1989 through 1997. Between 1966 and 1992,
Mr. Drucker served with CSX predecessor companies in various
capacities. He is a member of the American Railway
Engineering and Maintenance-of-Way Association and the
American Society of Civil Engineers and serves as a member
of the Boards of Directors of SunTrust Bank-North Florida,
N.A., Railworks, Inc., The Cooper Union for the Advancement
of Science and Art, and The New World Symphony.
4
DIRECTORS OF THE COMPANY (continued)
NAME AGE BUSINESS EXPERIENCE
---- --- -------------------
Henry H. Gerkens............... 50 Mr. Gerkens has been Executive Vice President and Chief
Financial Officer of the Company and LSHI since November
1994. He served as Vice President and Chief Financial
Officer of the Company from January 1993 to November 1994
and held the same positions at LSHI from August 1988 to
November 1994. He is also an officer of each of the
subsidiaries (the "Subsidiaries") of LSHI: namely, Landstar
Gemini, Inc. (a wholly-owned subsidiary of LSHI) ("Landstar
Gemini"), Landstar Inway, Inc. (a wholly-owned subsidiary of
LSHI) ("Landstar Inway"), Landstar Ligon, Inc. (a
wholly-owned subsidiary of LSHI) ("Landstar Ligon"),
Landstar Contractor Financing, Inc. (a wholly-owned
subsidiary of LSHI) ("LCFI"), Risk Management Claim
Services, Inc., (a wholly-owned subsidiary of LSHI)
("RMCS"), Landstar Ranger, Inc. (a wholly-owned subsidiary
of LSHI) ("Landstar Ranger"), Signature Technology Services,
Inc. (a wholly-owned subsidiary of LSHI) ("STSI"), Landstar
Corporate Services, Inc. (an indirect wholly-owned
subsidiary of LSHI) ("LCSI"), Landstar Express America, Inc.
(a wholly-owned subsidiary of LSHI) ("Landstar Express
America"), Landstar Logistics, Inc. (a wholly-owned
subsidiary of LSHI) ("Landstar Logistics") and has also been
Vice President of Signature since February 1997.
5
INFORMATION REGARDING BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board.
The Board meets on a regularly scheduled basis four times a year to review
significant developments affecting the Company and to act on matters requiring
Board approval. It also holds special meetings and acts by written consent when
important matters require Board action between scheduled meetings.
ATTENDANCE AT BOARD MEETINGS
During the 2000 fiscal year, the Board held four regularly scheduled
meetings and acted by unanimous written consent nine times. During such fiscal
year all Directors attended 75% or more of the combined total meetings of the
Board and its respective committees during the period in which they served as
Directors or committee members.
COMMITTEES OF THE BOARD
The Board has established an Audit Committee, a Compensation Committee, a
Nominating Committee, a Safety Committee and a Strategic Planning Committee to
devote attention to specific subjects and to assist in the discharge of its
responsibilities. The functions of those committees, their current members and
the number of meetings held during 2000 are described below. The Board does not
have an Executive Committee.
AUDIT COMMITTEE
Members: Ronald W. Drucker, Merritt J. Mott and Diana M. Murphy
The Audit Committee recommends to the Board the appointment of the
independent auditors for the Company and monitors the performance of such firm;
reviews and approves the scope and results of the annual audit; and evaluates
with the independent auditors the Company's annual audit and annual consolidated
financial statements; reviews with management the status of internal accounting
controls; and evaluates problem areas having a potential financial impact on the
Company which may be brought to its attention by management, the independent
auditors or the Board. In addition, the Audit Committee reviews the independent
auditors' fees for services rendered to the Company. The Audit Committee held
three meetings during 2000, three special telephonic meetings and did not act by
written consent in 2000.
On December 14, 1999 the SEC approved amendments to the National
Association of Securities Dealers, Inc. National Market System's ("NASDAQ")
independent director and audit committee listing standards, requiring, among
other things, that the Company adopt a formal written charter detailing
responsibilities of the Audit Committee. At its meeting on May 16, 2000, the
Audit Committee adopted the charter attached hereto as Appendix A.
COMPENSATION COMMITTEE
Members: David G. Bannister, William S. Elston and Merritt J. Mott
The Compensation Committee functions include (i) reviewing and making
determinations subject to review by the Board with respect to matters having to
do with the compensation of senior executive officers and Directors of the
Company and (ii) administering certain plans relating to the compensation of
officers. The Compensation Committee held four regularly scheduled meetings and
acted by written consent one time during 2000.
NOMINATING COMMITTEE
Members: David G. Bannister, Ronald W. Drucker, Merritt J. Mott and Diana
M. Murphy
The Nominating Committee functions include identifying persons for future
nomination for election to the Board of Directors. The Nominating Committee held
one meeting during 2000 and did not act by written consent. Stockholders who
wish to submit names to the Nominating Committee for consideration should do so
in writing addressed to the Nominating Committee, c/o Corporate Secretary,
Landstar System, Inc., 13410 Sutton Park Drive South, Jacksonville, Florida
32224.
6
SAFETY COMMITTEE
Members: Jeffrey C. Crowe, David G. Bannister, Ronald W. Drucker, Henry H.
Gerkens and Diana M. Murphy
The Safety Committee functions include the development and implementation
of safety goals and strategies to be implemented by the Company. The Safety
Committee held three meetings during 2000 and did not act by written consent.
STRATEGIC PLANNING COMMITTEE
Members: Ronald W. Drucker, William S. Elston, Henry H. Gerkens and Diana
M. Murphy
The Strategic Planning Committee functions include the development of
strategic objectives and policies and procedures to achieve the strategic
objectives of the Company. The Strategic Planning Committee solicits the views
of the Board of Directors and Senior Management and recommends strategic
directions to the Board for implementation. The Strategic Planning Committee
held two meetings during 2000 and did not act by written consent.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board is responsible for providing independent,
objective oversight of the Company's accounting functions and internal controls.
The Audit Committee is composed of three directors, each of whom is independent
as defined by the National Association of Securities Dealers' listing standards.
The Audit Committee operates under a written charter approved by the Board of
Directors. At its meeting on May 16, 2000, the Audit Committee adopted the
charter attached hereto as Appendix A.
Management is responsible for the Company's internal controls and financial
reporting process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards accepted in the United
States of America and to issue a report thereon. The Audit Committee's
responsibility is to monitor and oversee these processes.
In connection with these responsibilities, the Audit Committee met with
management and the independent accountants to review and discuss the December
30, 2000 financial statements. The Audit Committee also discussed with the
independent accountants the matters required by Statement on Auditing Standards
No. 61 (Communication with Audit Committees). The Audit Committee also received
written disclosures from the independent accountants required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
and the Audit Committee discussed with the independent accountants that firm's
independence. The Audit Committee also reviewed and discussed the December 30,
2000 financial statements with management.
Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management and the independent accountants, the Audit Committee recommended
that the Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 30, 2000, to be filed with the Securities and Exchange Commission.
During fiscal year 2000 the Company incurred the following fees for
services rendered by KPMG LLP. Fees for fiscal year 2000 audit and quarterly
reviews: $488,000. Fees for tax consulting, tax compliance and audit of employee
benefit plan work: $258,220.
THE AUDIT COMMITTEE
Merritt J. Mott, Chairman
Ronald W. Drucker
Diana M. Murphy
7
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, age, principal occupation and
business experience during the last five years of each of the current executive
officers of the Company. The executive officers of the Company serve at the
discretion of the Board and until their successors are duly elected and
qualified. For information regarding ownership of the Common Stock by the
executive officers of the Company, see "Security Ownership by Management and
Others." There are no family relationships among any of the Directors and
executive officers of the Company or the Subsidiaries.
NAME AGE BUSINESS EXPERIENCE
---- --- -------------------
Jeffrey C. Crowe.......................... 54 See previous description under "Directors of the
Company."
Henry H. Gerkens.......................... 50 See previous description under "Directors of the
Company."
Michael L. Harvey......................... 56 Mr. Harvey has been Vice President and General
Counsel of the Company since January 1993. He has
been Secretary of the Company, and Vice President,
General Counsel and Secretary of LSHI since August
1992. Mr. Harvey is also an officer of each of the
Subsidiaries, except Signature.
Robert C. LaRose.......................... 46 Mr. LaRose has been Vice President-Finance and
Treasurer of the Company and LSHI since October
1995. He served as Vice President and Controller of
the Company from January 1993 to October 1995 and
held the same positions at LSHI from March 1989 to
October 1995. He is also an officer of each of the
Subsidiaries. Mr. LaRose was Assistant Treasurer of
the Company from May 1991 to January 1993.
Robert C. Luminati........................ 60 Mr. Luminati has been Vice President and Chief
Information Officer of the Company since January
1997. He served as Vice President Management
Information Systems from January 1993 to 1997. He
held the same position at LSHI from August 1989 to
January 1993.
Gary W. Hartter........................... 59 Mr. Hartter has been President of Landstar Ranger
since January 1998. He has also been a Vice
President of LSHI since January 1998. Mr. Hartter
was Vice President of the Company effective
September 1997 but resigned in January 1998 to
become President of Landstar Ranger. From September
1991 to November 1996 Mr. Hartter was President of
Trism Specialized, Inc. Mr. Hartter became
President of Landstar Gemini in February 2000.
8
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS. During 2000, Directors who were not employees
of the Company received an annual Director's fee of $20,000, plus a fee of
$2,000 for each Board meeting attended and a fee of $1,000 for each meeting of a
committee attended if the committee meeting was held on a day other than a day
on which a Board meeting was held. Directors are also reimbursed for expenses
incurred in connection with attending Board meetings. Pursuant to the Company's
1994 Directors Stock Option Plan, each Director who was an Eligible Director (as
defined therein) on November 30, 1994 received an option to purchase 12,000
shares of the Company's Common Stock. Also, pursuant to the Company's 1994
Directors Stock Option Plan, commencing in 1996, on the first business day after
each annual meeting of shareholders of the Company, each Eligible Director who
was elected or re-elected as a Director at such annual meeting received an award
of options (a "Term Award") to purchase an additional 12,000 shares of the
Company's Common Stock.
At a regularly scheduled meeting of the Board of Directors on December 9,
1998, the Board acted to approve a recommendation of the Compensation Committee
to reduce the number of shares available for a Term Award on an annual basis
from 12,000 options to 9,000 options to purchase shares of the Company's Common
Stock. The 1994 Directors Stock Option Plan has been amended to reflect this
reduction. Accordingly, Mr. Mott, Mr. Elston and Ms. Murphy (the Director
Nominees who are eligible for re-election at the annual meeting of shareholders,
May 16, 2001) will receive 9,000 shares pursuant to the 1994 Directors Stock
Option Plan as amended. All of such options have an exercise price equal to the
fair market value of the Company's Common Stock on the date of grant and are
subject to vesting requirements and other terms of the Company's 1994 Directors
Stock Option Plan. Directors who are also officers of the Company do not receive
any additional compensation for services as a Director or for services on
committees of the Board or for meetings or attendance fees.
COMPENSATION OF EXECUTIVE OFFICERS. The following table summarizes the
compensation paid to the Chief Executive Officer and each of the Company's four
most highly compensated other executive officers for services rendered to the
Company and its subsidiaries during the 2000, 1999 and 1998 fiscal years
(collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
NO. OF
ANNUAL COMPENSATION SECURITIES
---------------------------------------- UNDERLYING
ANNUAL OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) GRANTED COMPENSATION(3)
--------------------------- ---- --------- ----- --------------- ---------- ------------
Jeffrey C. Crowe............. 2000 $420,000 $ 765,000 $114,718 16,400 $145,963
Chairman of the Board, 1999 350,000 1,220,000 91,111 10,800 129,175
President & Chief 1998 350,000 980,000 47,972 31,600 63,925
Executive Officer
Henry H. Gerkens............. 2000 275,000 440,000 56,918 11,400 68,929
Director, Executive Vice 1999 220,000 670,000 44,759 7,500 54,333
President & Chief Financial 1998 220,000 515,000 28,500 20,900 34,208
Officer
Robert C. LaRose............. 2000 200,000 225,000 34,435 7,400 40,659
Vice President Finance & 1999 170,000 325,000 26,443 4,900 33,303
Treasurer 1998 170,000 280,000 24,920 13,700 28,891
Robert C. Luminati........... 2000 200,000 205,000 23,371 4,900 28,907
Vice President & Chief 1999 170,000 325,000 21,758 3,000 32,992
Information Officer 1998 170,000 280,000 17,924 8,800 29,454
Gary W. Hartter.............. 2000 205,000 165,000 19,232 6,200 9,846
President of Landstar
Ranger 1999 175,000 225,935 2,931 4,000 8,694
& Landstar Gemini 1998 175,000 187,000 5,106 9,300 1,694
---------------
(1) Amounts shown include any salary deferred at the election of the Named
Executive Officer under the Landstar 401(k) Savings Plan and/or the Landstar
Supplemental Executive Retirement Plan.
9
(2) Amounts shown represent amounts reimbursed during the fiscal year for the
payment of taxes on behalf of the above Named Executives.
(3) Amounts for 2000 include contributions in the amount of $6,800 which were
made by the Company under the Landstar 401(k) Savings Plan on behalf of each
of the Named Executives and contributions made by the Company under the
Landstar Supplemental Executive Retirement Plan on behalf of Mr. Crowe in
the amount of $10,000, Mr. Gerkens in the amount of $4,200, Mr. LaRose in
the amount of $1,200 and Mr. Hartter in the amount of $1,400. Amounts for
2000 include the dollar value of term life insurance premiums paid by the
Company on behalf of Messrs. Crowe, Gerkens, LaRose, Luminati and Hartter in
the amounts of $1,415, $1,592, $446, $2,507 and $1,646, respectively.
Amounts for 2000 include $46,000, $23,000, $18,400 and $19,600 which
represents principal and interest forgiven under loans extended to each of
Messrs. Crowe, Gerkens, LaRose and Luminati, respectively, in connection
with their relocation in 1997. Amounts for 2000 also include $64,750,
$28,350 and $11,830, which represents interest forgiven under loans extended
to each Messrs. Crowe, Gerkens and LaRose, respectively, in connection with
the exercise of their stock options and $16,998, $4,987 and $1,983,
respectively, which represents interest forgiven under loans extended to
assist them with the income tax liability incurred as a result of the
exercise of stock options.
There were 98,400 options granted under the Company's 1993 Employee Stock
Option Plan in fiscal year 2000. The following table sets forth the number of
and information about stock options granted in fiscal 2000 to each of the Named
Executives of the Company.
NUMBER OF SECURITIES UNDERLYING OPTIONS GRANTED
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
NO. OF SECURITIES % OF OF STOCK PRICE APPRECIATION
UNDERLYING TOTAL FOR OPTION TERM
OPTIONS OPTIONS EXERCISE EXPIRATION ---------------------------
GRANTED(1) GRANTED PRICE DATE 5% 10%
----------------- ------- -------- ------------ ---------- ------------
Jeffrey C. Crowe....... 16,400 16.7% $46.875 Feb. 2, 2010 $483,463 $1,225,190
Henry H. Gerkens....... 11,400 11.6% 46.875 Feb. 2, 2010 336,066 851,656
Robert C. LaRose....... 7,400 7.5% 46.875 Feb. 2, 2010 218,148 552,829
Robert C. Luminati..... 4,900 5.0% 46.875 Feb. 2, 2010 144,449 366,063
Gary W. Hartter........ 6,200 6.3% 46.875 Feb. 2, 2010 182,773 463,181
---------------
(1) All the options granted shall become exercisable in five equal installments
on each of the first five anniversaries of the respective dates of grant,
provided the executive is employed by the Company on each such anniversary
date.
The following table sets forth the number and value of all options
exercised by the Named Executives.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
SHARES ACQUIRED VALUE
ON EXERCISE REALIZED
--------------- --------
Jeffrey C. Crowe............................................ 40,000 $975,000(1)
Henry H. Gerkens............................................ 16,000 358,000(2)
Robert C. LaRose............................................ 8,000 179,000(2)
Robert C. Luminati.......................................... 2,500 48,438(3)
---------------
(1) The value realized represents the difference between the fair market value
of the shares acquired on exercise as of November 17, 2000 (the exercise
date) and the exercise price of the option. The fair market value was
calculated based upon the last reported sales price per share of Common
Stock as quoted on NASDAQ on November 17, 2000.
10
(2) The value realized represents the difference between the fair market value
of the shares acquired on exercise as of December 4, 2000 (the exercise
date) and the exercise price of the option. The fair market value was
calculated based upon the last reported sales price per share of Common
Stock as quoted on NASDAQ on December 4, 2000.
(3) The value realized represents the difference between the fair market value
of the shares acquired on exercise as of January 27, 2000 (the exercise
date) and the exercise price of the option. The fair market value was
calculated based upon the last reported sales price per share of Common
Stock as quoted on NASDAQ January 27, 2000.
The following table sets forth the number and value at December 30, 2000 of
all exercisable and unexercisable options held by each of the Named Executives.
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 30, 2000 AT DECEMBER 30, 2000(1)
---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Jeffrey C. Crowe........................... 14,800 44,000 $293,002 $686,338
Henry H. Gerkens........................... 9,860 29,940 195,996 465,502
Robert C. LaRose........................... 6,460 19,540 128,731 304,733
Robert C. Luminati......................... 8,120(2) 12,580 184,812 193,855
Gary W. Hartter............................ 6,720 16,280 202,948 292,037
---------------
(1) The value of in-the-money options represents the difference between the fair
market value of the shares as of December 29, 2000 and the exercise price of
the option. The fair market value was calculated based upon the last
reported sales price per share of Common Stock as quoted on the NASDAQ in
the Company's fiscal year ended December 30, 2000, which was December 29,
2000.
(2) Mr. Luminati exercised 4,000 of these options on January 15, 2001.
Indebtedness of Management
In connection with the relocation of the Company's corporate headquarters
from Shelton, Connecticut to Jacksonville, Florida, the Company made loans to
Messrs. Crowe, Gerkens and LaRose, in 1997, and to Messrs. Luminati and Harvey
in 1998, in the amounts of $200,000, $100,000, $80,000, $80,000 and $40,000,
respectively, to assist them in their individual relocations to the Jacksonville
area. Each loan made bears interest at a rate of 7.5% and is repayable annually
over a five year period. On each anniversary date of such loan, the principal
and interest amounts then due will be forgiven provided the executive is still
employed by the Company.
In 1998, the Company made loans to Messrs. Crowe, Gerkens and LaRose in the
amounts of $925,000, $277,500 and $92,500, in connection with the exercise of
options to purchase 50,000, 15,000 and 5,000 shares of the Company's Common
Stock at $18.50 per share, respectively. In 1999, the Company made loans to
Messrs. Crowe, Gerkens and LaRose in the amounts of $242,833, $71,249 and
$28,323, respectively, to assist them with the income tax liability incurred as
a result of the exercise of stock options. In 2000, Messrs. Crowe, Gerkens and
LaRose repaid $51,047, $48,782 and $23,000 of their income tax liability loans.
In 1999, the Company made loans to Messrs. Gerkens, LaRose, Luminati and
Harvey in the amounts of $127,500, $76,500, $46,250 and $9,250, in connection
with the exercise of options to purchase 5,000, 3,000, 2,500 and 500 shares of
the Company's Common stock at $25.50, $25.50, $18.50 and $18.50 per share,
respectively.
In 2000, the Company made loans to Messrs. Crowe, Gerkens, LaRose, Luminati
and Harvey in the amounts of $1,185,000, $474,000, $237,000, $63,750 and
$38,250, in connection with the exercise of options to purchase 40,000, 16,000,
8,000, 2,500 and 1,500 shares of the Company's Common Stock at $29.625, $29.625,
$29.625, $25.50 and $25.50 per share, respectively. In 2000, the Company also
made loans to Messrs. Crowe
11
and Gerkens in the amounts of $332,687 and $76,795, respectively, to assist them
with the income tax liability incurred as a result of the exercise of stock
options.
All of the loans made in connection with the exercise of stock options or
the income tax liability incurred as a result of the exercise of stock options
bear interest at 7%. Interest on the loans will be forgiven annually if the
executives are still employed by the Company. Principal is repayable in a single
lump sum on the fifth anniversary of the loan, or sooner under certain
circumstances.
Key Executive Employment Protection Agreements
On January 23, 1998, the Board approved the execution of the Key Executive
Employment Protection Agreements for Messrs. Crowe, Gerkens, LaRose, Luminati,
Hartter and Harvey. Each agreement provides certain severance benefits in the
event of a change of control of the Company (as defined in the agreements). Each
agreement provides, generally, that if a covered executive's employment is
terminated by the Company without "cause" (as defined in the agreements) or by
the executive for good reason (as so defined), in either such case, in
connection with or within the two year period following the change in control or
if a covered executive terminates his employment for any reason six months
following the change in control, such executive will be entitled to severance
benefits consisting of a cash amount equal to three times for Mr. Crowe, two
times for Mr. Gerkens and one time for Messrs. LaRose, Luminati, Hartter and
Harvey of the sum of (A) the executive's annual base salary; and (B) the amount
that would have been payable to the executive as a target bonus for the year in
which the change of control occurs. Each agreement also provides for
continuation of medical benefits and for certain tax gross-ups to be made to a
covered executive in the event payments to the executive are subject to the
excise tax on "parachute payments" imposed under Section 4999 of the Internal
Revenue Code of 1986.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Overall Policy
The Company's executive compensation philosophy is designed to attract and
retain the best possible executive talent and to motivate these executives to
develop and implement the Company's business strategy. These objectives are to
be attained by tying a significant portion of each executive's compensation to
the Company's success in meeting specified corporate performance goals and,
through the grant of stock options, to appreciation in the Company's stock
price. Additionally, the Company also recognizes individual contributions as
well as overall business results.
The executive compensation program is reviewed annually by the Compensation
Committee. Periodically, at the Compensation Committee's sole discretion, an
independent review of the executive compensation program may be performed by
outside consultants.
The Compensation Committee is responsible for decisions regarding executive
compensation, including a determination of the compensation awarded to those
individuals whose compensation is detailed in this proxy statement, subject to
review by the Board. The key elements of the Company's executive compensation
consist of base salary, annual bonus and stock options. The Compensation
Committee's policies with respect to each of these elements, including the basis
for the compensation awarded to Mr. Crowe, the Company's chief executive
officer, are discussed below.
Base Salaries
Base salaries for newly hired executive officers are initially determined
by evaluating the responsibilities of the position held and the experience of
the individual. Salary adjustments are determined by evaluating the performance
of the Company and of each executive officer, and also take into account new
responsibilities. In the case of executive officers with responsibility for an
operating subsidiary, the financial results of such operating subsidiary are
also considered.
12
Annual Bonus
The Company's executive officers were eligible to receive an annual bonus
under the Company's 2000 Incentive Compensation Plan (the "2000 ICP"). The 2000
ICP provided for bonus payments to be made to eligible executive officers upon
achievement of a consolidated earnings per share target. The 2000 ICP provided
for bonus payments to be made to eligible corporate and operating subsidiary
employees upon the achievement of a consolidated earnings per share target or an
operating income target or a combination thereof. These performance criteria
were established at the beginning of 2000 by the Compensation Committee.
In February 2001, all executive officers, including the Named Executives,
received bonuses pursuant to the 2000 ICP. The Compensation Committee, in
awarding these bonus amounts, considered the overall Company's performance and
the criteria established at the beginning of the year.
Stock Options
Under the Company's 1993 Stock Option Plan, stock options are granted to
the Company's executive officers and certain other key employees. The
Compensation Committee determines the number of stock options to be granted
pursuant to guidelines it develops based on an officer's, or other key
employee's, job responsibilities and individual performance evaluation. Stock
options are granted with an exercise price equal to the fair market value of the
Common Stock on the date of grant and generally vest over five years. This
approach is designed to encourage the creation of long-term shareholder value
since no benefit can be realized from such options unless the stock price
exceeds the exercise price.
As of March 6, 2001, Mr. Crowe held 160,176 shares of the Company's Common
Stock and held options to purchase an additional 74,100 shares. The Compensation
Committee believes that significant equity interests in the Company held by the
Company's management helps to align the interests of shareholders and management
and maximize shareholder returns over the long term.
Policy as to Section 162(m) of the Code
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
denies a publicly traded company a federal income tax deduction for compensation
in excess of $1 million paid to certain of its executive officers unless the
amount of such excess is payable based solely upon the attainment of objective
performance criteria. The Company has undertaken to qualify substantial
components of the incentive compensation it makes available to its executive
officers for the performance exception to nondeductibility. Stock option grants
under the Company's 1993 Employee Stock Option Plan currently meet these
requirements. In 1995, the Company received shareholder approval for the
Management Incentive Compensation Plan so that annual awards payable thereunder
would qualify for the performance exception under Section 162(m). The
Compensation Committee believes that tax deductibility of compensation is an
important factor, but not the sole factor, to be considered in setting executive
compensation policy. Accordingly, the Compensation Committee generally intends
to take such reasonable steps as are required to avoid the loss of a tax
deduction due to Section 162(m) but reserves the right to pay amounts which are
not deductible in appropriate circumstances.
Conclusion
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to significant thresholds of
corporate performance and stock price appreciation. The Company's results
achieved the target criteria established in the 2000 ICP. As such, bonuses were
paid under the 2000 ICP. The Committee will continue to review all executive
compensation and benefit matters
13
presented to it and will act based upon the best information available to it and
in the best interests of the Company, its shareholders and employees.
Compensation Committee of the Board
David G. Bannister, Chairman
William S. Elston
Merritt J. Mott
14
PERFORMANCE COMPARISON
The following graph illustrates the return that would have been realized
(assuming reinvestment of dividends) by an investor who invested $100 in each of
the Company's Common Stock, the Standard & Poor's 500 Stock Index and the Dow
Jones Transportation Stock Index for the period commencing December 30, 1995
through December 29, 2000.
Landstar Graphic
LANDSTAR S&P 500 DJ 20 TRANSPORTS
-------- ------- ----------------
12/29/95 100.00 100.00 100.00
3/31/96 93.46 104.80 108.64
6/30/96 108.41 108.88 110.13
9/30/96 100.00 111.59 104.95
12/31/96 86.92 120.26 113.87
3/31/97 88.79 122.92 119.05
6/30/97 105.14 143.71 136.98
9/30/97 100.00 153.80 160.51
12/31/97 98.60 157.56 164.39
3/31/98 120.56 178.88 180.57
6/30/98 130.61 184.09 175.43
9/30/98 105.37 165.12 133.51
12/31/98 152.34 199.57 158.98
3/31/99 123.83 208.85 166.53
6/30/99 134.93 222.87 171.85
9/30/99 129.91 208.26 146.85
12/31/99 160.05 238.54 150.29
3/31/00 204.67 243.30 139.49
6/30/00 222.67 236.16 133.54
9/30/00 166.82 233.23 127.29
12/29/00 207.24 214.36 148.74
15
SECURITY OWNERSHIP BY MANAGEMENT AND OTHERS
The following table sets forth certain information concerning the
beneficial ownership of the Company's Common Stock as of March 6, 2001 by (i)
each person who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each Director, nominee for election as
a Director and Named Executive of the Company, and (iii) all Directors and
current executive officers as a group.
AMOUNT AND
NATURE OF OWNERSHIP
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER POSITION(S) OWNERSHIP CLASS(1)
------------------------ ----------- ---------- ----------
(i)
FMR Corp.(2)(3).................. 1,195,907 14.0%
Capital Guardian Trust Company
and Capital Group
International, Inc.(2)(4)...... 722,300 8.5%
Wedge Capital Management(2)(5)... 453,300 5.3%
Kestrel Investment Management
Corp.(2)(6).................... 508,000 6.0%
(ii)
David G. Bannister(7)............ Director 32,960 *
Ronald W. Drucker(8)............. Director 29,000 *
Merritt J. Mott(9)............... Director Nominee 22,000 *
William S. Elston(10)............ Director Nominee 8,300 *
Diana M. Murphy(11).............. Director Nominee 8,300 *
Jeffrey C. Crowe(12)............. Director and Chairman, President
and Chief Executive Officer 182,356 2.1%
Henry H. Gerkens(13)............. Director and Executive Vice
President and Chief Financial
Officer 70,960 *
Gary W. Hartter(14).............. President of Landstar Ranger &
Landstar Gemini 11,060 *
Robert C. LaRose(15)............. Vice President, Finance and
Treasurer 46,800 *
Robert C. Luminati(16)........... Vice President and Chief
Information Officer 26,312 *
(iii)
All Directors and current
executive officers as a group
(11 persons)(17)(18)........... 458,388 5.3%
---------------
* Less than 1%
(1) The percentages are based upon 8,518,533 shares, which equal the
outstanding shares of the Company as of March 6, 2001. With respect to the
calculation of the percentages for beneficial owners who hold options
exercisable within 60 days of March 6, 2001, the number of shares of Common
Stock on which the percentage is based also includes the number of shares
underlying such options.
(2) In accordance with the rules of the Securities and Exchange Commission, the
information set forth is based on the most recent Schedule 13G (and
amendments thereto) filed by this entity.
(3) According to an amendment, filed February 14, 2001 to its Schedule 13G, FMR
Corp. is the beneficial owner of 1,195,907 shares of Common Stock,
representing 14.232% of the Common Stock outstanding. 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 also the beneficial owner of 501,537 shares, or
5.968% of the Common Stock outstanding, as a result of acting as investment
adviser to various companies (the "Funds") registered under Section 8 of
the Investment Company Act of 1940. Such shares are voted by Fidelity in
accordance with written guidelines established by the Funds' boards of
trustees. Edward C. Johnson 3d (Chairman of FMR Corp.), FMR Corp. and the
Funds each has sole power to dispose of the 501,537 shares owned by the
16
Funds. Fidelity Management Trust Company ("Fidelity Management"), a
wholly-owned subsidiary of FMR Corp. beneficially owns 691,570 shares, or
8.23% of the Common Stock outstanding, as a result of its serving as
investment manager of the institutional account(s). Edward C. Johnson 3d
and FMR Corp., through its control of Fidelity Management, each has sole
dispositive power over 691,570 shares and sole voting power over 664,770
shares, and no power to vote or direct the voting of 29,600 shares of
Common Stock owned by the institutional account(s) reported herein,
including 2,800 shares, beneficially owned by Fidelity International
Limited. Strategic Advisers, Inc., a wholly-owned subsidiary of FMR Corp.
and an investment adviser registered under Section 203 of the Investment
Advisers Act provides investment advisory services to individuals. It does
not have sole power to vote or direct the voting of shares of certain
securities held for clients and has sole dispositive power over such
securities. As such, FMR Corp.'s beneficial ownership may include shares
beneficially owned through Strategic Advisers, Inc., Edward C. Johnson 3d
and various members of his family own FMR Corp. voting stock. These Johnson
family members, through their ownership of voting stock and the execution
of a shareholders' voting agreement, may be deemed to form a controlling
group with respect to FMR Corp. The business address of each of the
foregoing is 82 Devonshire Street, Boston, Massachusetts 02109.
(4) Capital Guardian Trust company and Capital Group International, Inc. filed
their Schedule 13G on February 13, 1997, and amended their Schedule 13G on
November 7, 1997, on July 9, 1999, on February 11, 2000, and again on
February 9, 2001. Capital Group International, Inc. is the parent holding
company of a group of investment management companies that hold investment
power and, in some cases, voting power over shares of the Company. The
investment management companies, which include a "bank" as defined in
Section 3(a)(6) of the Securities Exchange Act of 1934 (the "Act")and
several investment advisers registered under Section 203 of the Investment
Advisers Act of 1940, provide investment advisory and management services
for their respective clients which include registered investment companies
and institutional accounts. Capital Group International, Inc., does not
have any investment power or voting power over any of the 722,300 shares of
Common Stock reported herein (representing 8.6% of Common Stock
outstanding); however, Capital Group International, Inc. may be deemed to
"beneficially own" such securities by virtue of Rule 13d-3 under the Act.
Capital Guardian Trust Company ("Capital Guardian"), a bank as defined in
Section 3(a)(6) of the Act and a wholly-owned subsidiary of Capital Group
International, Inc., is the beneficial owner of 663,700 of such shares, or
7.9% of the Common Stock outstanding, as a result of its serving as the
investment manager of various institutional accounts. Capital Guardian has
sole dispositive power over such 663,700 shares with sole voting power over
453,200 of such shares. The remaining 58,600 shares reported as
beneficially owned by Capital Group International, Inc. are beneficially
owned by other subsidiaries of Capital Group International, Inc., none of
which by itself owns 5% or more of the Common Stock outstanding. The
business address of each of the foregoing is 11100 Santa Monica Boulevard,
Los Angeles, California 90025-3302.
(5) Wedge Capital Management L.L.P. ("Wedge") filed their Schedule 13G on
January 12, 2000, and amended their Schedule 13G on January 5, 2001. Wedge
is an investment adviser registered under Section 203 of the Investment
Advisers Act of 1940 and is deemed to be the beneficial owner of 453,300
shares of Common Stock, representing 5.4% of Common Stock outstanding.
Wedge has sole voting and dispositive power with respect to all such
beneficially owned shares. The business address of Wedge is 2920 One First
Union Center, 301 South College Street, Charlotte, North Carolina
28202-6002.
(6) Kestrel Investment Management Corp. ("Kestrel") filed their Schedule 13G on
February 14, 2000, and amended their Schedule 13G on December 31, 2000.
Kestrel is the beneficial owner of 508,000 shares of Common Stock, pursuant
to various agreements whereby it acts as investment adviser to certain
persons, in which it also holds an ownership interest. Sole voting power is
vested in 459,000 of such shares of Common Stock. The beneficially owned
shares represent 6.1% of the Common Stock outstanding. David J. Steirman
and Abbott J. Keller are deemed to be the beneficial owners of such shares
since they are the sole shareholders of Kestrel. The business address of
Kestrel is 411 Borel Avenue, Suite 403, San Mateo, California 94402.
(7) Includes 27,000 shares that may be acquired upon the exercise of options.
17
(8) Includes 5,000 shares held in trust for which Mr. Drucker has shared voting
and investment power with SunTrust Bank-Trust Department of SunTrust
Bank-North Florida, N.A. and 24,000 shares that may be acquired upon the
exercise of options.
(9) Includes 100 shares held in trust for Mr. Mott's son; 100 shares held in
trust for Mr. Mott's daughter, and 20,000 shares that may be acquired upon
the exercise of options.
(10) Includes 8,000 shares that may be acquired upon the exercise of options.
(11) Includes 8,000 shares that may be acquired upon the exercise of options.
(12) Includes 22,180 shares that may be acquired upon the exercise of options.
(13) Includes 14,960 shares that may be acquired upon the exercise of options.
(14) Includes 11,060 shares that may be acquired upon the exercise of options.
(15) Includes 9,800 shares that may be acquired upon the exercise of options.
(16) Includes 6,240 shares that may be acquired upon the exercise of options.
(17) Represents amount of shares deemed to be beneficially owned either directly
or indirectly by all Directors and current executive officers as a group.
(18) Includes 157,680 shares that may be acquired upon the exercise of options.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and Directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, Directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Form 5 was required, the Company
believes that during the fiscal year ended December 30, 2000, all Section 16(a)
filing requirements which are applicable to its officers, Directors and greater
than ten percent beneficial owners were accomplished except the following.
During 2000, G. Thomas Beam purchased approximately $450.06 worth of the
Company's Common Stock through the Company's 401(k) Plan and Mr. Beam's Form 5
was filed on September 21, 2000.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of KPMG LLP served as independent auditors for the Company for the
fiscal year ended December 30, 2000. Pursuant to the recommendation of the Audit
Committee, the Board has appointed that firm to continue in that capacity for
fiscal year 2001, and recommends that a resolution be presented to shareholders
at the 2001 Annual Meeting to ratify that appointment. A representative of KPMG
LLP will be present at the 2001 Annual Meeting and will have an opportunity to
make a statement and respond to appropriate questions from shareholders.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL
18
SHAREHOLDER PROPOSALS
In accordance with regulations issued by the SEC, shareholder proposals
intended for presentation at the 2002 Annual Meeting of Shareholders must be
received by the Secretary of the Company no later than November 20, 2001, if
such proposals are to be considered for inclusion in the Company's Proxy
Statement. In accordance with the Company's Bylaws, shareholder proposals
intended for presentation at the 2001 Annual Meeting of Shareholders that are
not intended to be considered for inclusion in the Company's Proxy Statement
must be received by the Secretary of the Company not later than 35 days prior to
the 2001 Annual Meeting of Shareholders. Proposals should be mailed via
certified mail and addressed to Michael L. Harvey, Secretary, Landstar System,
Inc., 13410 Sutton Park Drive South, Jacksonville, Florida 32224.
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
meeting other than those set forth above. If any other matters properly come
before the meeting, the persons named in the enclosed form of proxy will vote
the shares represented by proxies in accordance with their best judgment on such
matters.
Proxies will be solicited by mail and may also be solicited in person or by
telephone by some regular employees of the Company. All expenses in connection
with the preparation of proxy material and the solicitation of proxies will be
borne by the Company.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD PROMPTLY
By Order of the Board of Directors
/s/ Michael L. Harvey
Michael L. Harvey
Vice President,
General Counsel,
and Secretary
13410 Sutton Park Drive South
Jacksonville, FL 32224
THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO ANY SHAREHOLDER OF THE COMPANY
WHO SO REQUESTS, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 30, 2000, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
ANY SUCH REQUEST SHOULD BE DIRECTED TO LANDSTAR SYSTEM, INC., ATTENTION: HENRY
H. GERKENS, INVESTOR RELATIONS, 13410 SUTTON PARK DRIVE SOUTH, JACKSONVILLE,
FLORIDA 32224.
19
APPENDIX A
LANDSTAR SYSTEM, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the Corporation's policies, procedures and practices
at all levels. The Audit Committee's primary duties and responsibilities are to:
Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.
Review and appraise the audit efforts of the Corporation's independent
accountants.
Provide an open avenue of communication among the independent
accountants, financial and senior management, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee. A
director will not be considered "independent" if, among other things, he or she
has:
- been employed by the corporation or its affiliates in the current or past
three years;
- accepted any compensation from the corporation or its affiliates in
excess of $60,000 during the previous fiscal year (except for board
service, retirement plan benefits, or non-discretionary compensation);
- an immediate family member who is, or has been in the past three years,
employed by the corporation or its affiliates as an executive officer;
- been a partner, controlling shareholder or an executive officer of any
for-profit business to which the corporation made, or from which it
received, payments (other than those which arise solely from investments
in the corporation's securities) that exceed five percent of the
organization's consolidated gross revenues for that year, or $200,000,
whichever is more in any of the past three years; or
- been employed as an executive of another entity where any of the
company's executives serve on that entity's compensation committee.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee
members may enhance their familiarity with finance and accounting by
participating in educational programs conducted by the Corporation or an outside
consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full committee
membership.
III. MEETINGS
The Committee shall meet at least twice annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the independent
accountants in separate executive sessions to discuss any matters that the
Committee or each of
20
these groups believe should be discussed privately. In addition, the Committee
or at least its Chair should meet with the independent accountants and
management quarterly to review the Corporation's financials consistent with IV.
4. below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
DOCUMENTS/REPORTS REVIEW
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports or
other financial information submitted to any governmental body, or the public,
including any certification, report, opinion, or review rendered by the
independent accountants.
3. Review with financial management and the independent accountants the
10-Q and 10-K prior to their filing or prior to the release of earnings. The
Chair of the Committee may represent the entire Committee for purposes of this
review.
INDEPENDENT ACCOUNTANTS
4. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the fees and
other compensation to be paid to the independent accountants. On an annual
basis, the Committee should review and discuss with the accountants all
significant relationships the accountants have with the Corporation to determine
the accountants' independence.
5. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances warrant.
6. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and accuracy of
the organization's financial statements.
FINANCIAL REPORTING PROCESSES
7. In consultation with the independent accountants, review the integrity
of the organization's financial reporting processes, both internal and external.
8. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in its
financial reporting.
9. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the independent
accountants and management.
PROCESS IMPROVEMENT
10. Establish system of reporting to the Audit Committee by each of
management and the independent accountants regarding any significant judgments
made in management's preparation of the financial statements and the view of
each as to appropriateness of such judgments.
11. Following completion of the annual audit, review separately with each
of management, the independent accountants and any significant difficulties
encountered during the course of the audit, including any restrictions on the
scope of work or access to required information.
12. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the financial
statements.
13. Review with the independent accountants and management the extent to
which changes or improvements in financial or accounting practices, as approved
by the Audit Committee, have been implemented.
ETHICAL AND LEGAL COMPLIANCE
14. Establish, review and update periodically a Code of Corporate
Compliance and ensure that management has established a system to enforce this
Code.
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15. Review management's monitoring of the Corporation's compliance with the
organization's Code, and ensure that management has the proper review system in
place to ensure that Corporation's financial statements, reports and other
financial information disseminated to governmental organizations, and the public
satisfy legal requirements.
16. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
17. Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements.
18. Perform any other activities consistent with this Charter, the
Corporation's Bylaws and governing law, as the Committee or the Board deems
necessary or appropriate.
22
LANDSTAR SYSTEM, INC.
13410 SUTTON PARK DRIVE SOUTH
JACKSONVILLE, FL 32224
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Robert C. LaRose and Michael L. Harvey,
jointly and severally, as Proxies, each with the power to appoint his
substitute, and hereby authorizes each or both of them to represent and to
vote, as designated on the reverse side, all of the shares of Common Stock of
Landstar System, Inc. held of record by the undersigned on March 20, 2001, at
the Annual Meeting of Shareholders to be held on May 16, 2001 or any
adjournment thereof. None of the matters to be acted upon, each of which has
been proposed by Landstar System, Inc. (the "Company"), is related to or
conditioned on the approval of other matters.
**CONTINUED AND TO BE SIGNED ON REVERSE SIDE**
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FOLD AND DETACH HERE
This proxy when properly executed will be voted in accordance with the
specifications made herein by the undersigned shareholder. If no
direction is made, this proxy will be voted FOR Proposals 1 and 2.
1. ELECTION OF DIRECTORS
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name below)
FOR all nominees listed to the right MERRITT J. MOTT
(except as marked to the contrary) / / WILLIAM S. ELSTON
DIANA M. MURPHY
WITHHOLD AUTHORITY to vote for all
nominees listed to the right / /
2. RATIFICATION OF THE APPOINTMENT OF KPMG LLP as independent
auditors of the Company for fiscal year 2001.
FOR / / AGAINST / / ABSTAIN / /
3. In their discretion, each of the Proxies is authorized to vote upon such
other business as may properly come before the meeting or any adjournment
thereof.
Please sign exactly as your name appears below. When shares are held by joint
tenants, both should sign. When signed as attorney, as executor, administrator,
trustee or guardian, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED:___________________________
_________________________________
Signature
_________________________________
Signature if held jointly
**PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE**
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FOLD AND DETACH HERE